<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 1999
REGISTRATION NO. 333-87489
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
IMCLONE SYSTEMS INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 04-2834797
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>
180 VARICK STREET
NEW YORK, NY 10014
(212) 645-1405
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JOHN B. LANDES, ESQ.
VICE PRESIDENT, BUSINESS DEVELOPMENT
AND GENERAL COUNSEL
IMCLONE SYSTEMS INCORPORATED
180 VARICK STREET
NEW YORK, NY 10014
(212) 645-1405
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
RICHARD A. DRUCKER, ESQ. PATRICK O'BRIEN, ESQ.
DAVIS POLK & WARDWELL ROPES & GRAY
450 LEXINGTON AVENUE ONE INTERNATIONAL PLACE
NEW YORK, NEW YORK 10017 BOSTON, MASSACHUSETTS 02110
(212) 450-4000 (617) 951-7000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
- ------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS (Subject to Completion)
Issued November 2, 1999
2,500,000 Shares
[IMCLONE LOGO]
ImClone Systems Incorporated
COMMON STOCK
------------------------
IMCLONE SYSTEMS INCORPORATED IS OFFERING 2,500,000 SHARES OF ITS COMMON STOCK.
------------------------
OUR COMMON STOCK IS LISTED FOR TRADING ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "IMCL." ON OCTOBER 29, 1999, THE REPORTED LAST SALE PRICE OF THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET WAS $27 7/8 PER SHARE.
------------------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 10.
------------------------
PRICE $ A SHARE
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<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
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<S> <C> <C> <C>
Per Share................................................. $ $ $
Total..................................................... $ $ $
</TABLE>
We have granted the underwriters the right to purchase up to an additional
375,000 shares to cover over-allotments.
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on
November , 1999.
------------------------
MORGAN STANLEY DEAN WITTER MERRILL LYNCH & CO.
PRUDENTIAL VECTOR HEALTHCARE WARBURG DILLON READ LLC
a unit of Prudential Securities
November , 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 5
Risk Factors............................ 10
Use of Proceeds......................... 20
Price Range of Common Stock............. 20
Dividend Policy......................... 20
Capitalization.......................... 21
Dilution................................ 22
Selected Consolidated Financial Data.... 23
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 24
Business................................ 33
Management.............................. 50
Principal Stockholders.................. 55
Description of Capital Stock............ 57
Material U.S. Federal Tax Considerations
for Non-U.S. Holders of Common
Stock................................. 62
Underwriters............................ 64
Legal Matters........................... 65
Experts................................. 65
Where You Can Find More Information..... 66
Index to Financial Statements........... F-1
</TABLE>
------------------------
In this prospectus, "ImClone," the "company," "we," "us" and "our" refer to
ImClone Systems Incorporated. You should rely only on the information contained
in this prospectus. We have not authorized anyone to provide you with
information different from that contained in this prospectus. We are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of the common stock.
------------------------
FORWARD-LOOKING STATEMENTS
The statements incorporated by reference or contained in this prospectus
discuss our future expectations, contain projections of our results of
operations or financial condition, and include other "forward-looking"
information within the meaning of Section 27A of the Securities Act of 1933, as
amended. Our actual results may differ materially from those expressed in
forward-looking statements made or incorporated by reference in this prospectus.
Forward-looking statements that express our beliefs, plans, objectives,
assumptions or future events or performance may involve estimates, assumptions,
risks and uncertainties. Therefore, our actual results and performance may
differ materially from those expressed in the forward-looking statements.
Forward-looking statements often, although not always, include words or phrases
such as the following:
- "will likely result"
- "are expected to"
- "will continue"
- "is anticipated"
- "estimate"
- "intends"
- "plans"
- "projection"
- "outlook"
2
<PAGE> 4
You should not unduly rely on forward-looking statements contained or
incorporated by reference in this prospectus. Actual results or outcomes may
differ materially from those predicted in our forward-looking statements due to
the risks and uncertainties inherent in our business, including risks and
uncertainties in:
- clinical trial results
- obtaining and maintaining regulatory approval
- market acceptance of and continuing demand for our products
- the impact of competitive products and pricing
- our ability to obtain additional financing to support our operations
- factors discussed in the documents listed below
You should read and interpret any forward-looking statements together with
the following documents:
- our most recent Annual Report on Form 10-K
- our Quarterly Reports on Form 10-Q
- the risk factors contained in this prospectus under the caption "Risk
Factors"
- our other filings with the Securities and Exchange Commission
Any forward-looking statement speaks only as of the date on which that
statement is made. We will not update any forward-looking statement to reflect
events or circumstances that occur after the date on which such statement is
made.
------------------------
ImClone was incorporated in Delaware in 1984 and began its principal
research and development operations in March 1986. Our principal executive
offices and laboratories are located at 180 Varick Street, New York, New York
10014, and our telephone number is (212) 645-1405.
3
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[This page intentionally left blank]
4
<PAGE> 6
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. This summary may not contain all of the
information that you should consider before deciding to invest in our common
stock. You should read this entire prospectus carefully, including the "Risk
Factors" section, the financial statements and the notes to those statements,
and the documents incorporated by reference in this prospectus. Unless otherwise
indicated, all information in this prospectus assumes no exercise of the
underwriters' overallotment option.
IMCLONE
OVERVIEW
ImClone is a biopharmaceutical company engaged in the research and
development of novel cancer treatments. We are currently pursuing three research
and development programs that we believe show promise for treating cancer:
growth factor inhibitors, cancer vaccines and angiogenesis inhibitors. Our lead
product candidate, C225, is a therapeutic antibody that inhibits stimulation of
a receptor found on the cells of certain solid tumors. C225 has been shown in
several Phase I/II trials to have an acceptable safety profile, to be well
tolerated and, when administered in conjunction with either radiation therapy or
chemotherapy, to enhance tumor reduction. We are currently testing C225 in
pivotal trials for treating head and neck cancer and in a Phase II clinical
trial for colorectal cancer.
Our next most advanced product candidate, BEC2, is a cancer vaccine. We and
our partner Merck KGaA are testing BEC2 for preventing recurrence or progression
of small-cell lung cancer in a multinational pivotal Phase III trial. We are
also developing inhibitors of angiogenesis, or the growth of new blood vessels,
to treat various kinds of cancer and other diseases. We have identified an
antibody for angiogenesis inhibition, c-p1C11, and we plan to file an
application with the FDA in the fourth quarter of 1999 in order to commence
clinical trials.
C225 CANCER THERAPEUTIC
C225 is a monoclonal antibody that binds to a receptor, known as the
Epidermal Growth Factor, or EGF, receptor. The EGF receptor is overexpressed on
the cells of approximately one-third of all types of solid tumors. For these
tumor types, the percentage of EGF receptor positive patients varies. For
example, 90% of all head and neck cancer patients are positive for the EGF
receptor, as well as a majority of colorectal and non small-cell lung cancer
patients. The activation of the EGF receptor is believed to play a critical role
in the proliferation of these types of tumor cells. C225 attaches to the EGF
receptor and blocks this activation, thereby inhibiting cell proliferation. We
are developing C225 as a therapeutic for treating, in conjunction with
conventional radiation therapy or chemotherapy, those cancer types characterized
by high levels of, and dependence upon, the EGF receptor.
Completed Clinical Trials
Since December 1994, we have completed several Phase I/II clinical trials
to evaluate the safety and potential efficacy of C225. In these studies, we have
given C225 to approximately 200 patients intravenously, both alone and in
combination with conventional cancer therapies.
In June 1999, we completed a Phase I/II trial in which 12 patients with
advanced head and neck cancer were treated with C225 in combination with
cisplatin, a widely used chemotherapeutic drug. At the completion of the trial,
two of the nine evaluable patients had achieved a complete response (meaning
that the tumor was reduced beyond measurable size) and four had achieved a
partial response (meaning that the tumor was reduced by at least 50%). Most of
the patients had previously received treatment, including standard chemotherapy,
radiation therapy or experimental treatments, and either did not respond or
thereafter relapsed. In particular, three of the six responders (including the
two complete responders) had previously been treated with a regimen containing
cisplatin and relapsed following such treatment.
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<PAGE> 7
In January 1999, we completed a Phase I/II trial in which 16 patients with
advanced head and neck cancer were treated with C225 in combination with
radiation therapy. At the completion of the trial, all 15 evaluable patients had
responded to therapy; 13 of the patients had achieved a complete response and
two had achieved a partial response. This compares with historical response
rates of approximately 40% in similar patients treated with radiation alone.
In all trials to date, while most patients have experienced skin rashes and
three of the approximately 200 patients treated have experienced anaphylactic
reactions, C225 has otherwise been generally well tolerated by patients. While
encouraging, the results from these trials are not sufficient to establish that
C225 is safe or effective in treating cancer.
Ongoing Clinical Trials
We have initiated two pivotal Phase III trials of C225 in treating head and
neck cancer. One trial is evaluating the administration of C225 in combination
with radiation as first-line therapy for advanced head and neck cancer that has
not metastasized, or spread to other parts of the body. Enrollment commenced in
April 1999, and we expect the study to take approximately two-and-one-half years
to complete. The other Phase III trial is examining the effects of
administration of C225 in combination with cisplatin as first-line therapy for
metastatic or recurrent head and neck cancer. Enrollment is expected to commence
in November 1999, and we expect the study to take one-and-one-half years to
complete.
We have also initiated two additional Phase II C225 trials in patients who
have not responded to conventional therapies. In the first trial, we are testing
C225 in combination with cisplatin in patients with refractory head and neck
cancer. In the second trial, we are testing C225 in combination with irinotecan,
another commonly used chemotherapeutic agent, in patients with EGF
receptor-positive refractory colorectal cancer. We expect that enough
information may be available from these studies during the first half of 2000 to
determine whether the data are sufficient to support an application for FDA
approval of C225.
In addition, we expect to conduct several additional Phase II clinical
trials to continue to determine other types of cancer on which C225 may be
effective. These may include pancreatic, lung and renal cancer. We also expect
to conduct C225 clinical trials with Merck KGaA in Europe.
Marketing and Development
We have entered into a development and marketing agreement with Merck KGaA
relating to C225. We have retained the right to market C225 within the United
States and Canada, for which we are building our own sales force. Merck KGaA has
the right to market C225 internationally; however, in Japan we will co-develop
and co-market C225 with Merck KGaA. In addition, we will manufacture C225 for
any and all commercial sales. Merck KGaA is required to pay us fees for various
milestone achievements as well as royalties on all C225 sold by them. Merck KGaA
has also agreed to provide a guaranty of our credit agreement obligations
relating to the construction of our new C225 commercial manufacturing facility.
BEC2 CANCER VACCINE
BEC2 is a monoclonal antibody that we are developing as a cancer vaccine.
This vaccine is given to a patient following successful treatment of a tumor and
is intended to activate the patient's immune responses to protect against spread
or recurrence of the tumor. BEC2 mimics GD3, a molecule expressed on the surface
of several types of cancer cells. By mimicking GD3, BEC2 stimulates an immune
response against cells expressing GD3.
We have tested BEC2 in Phase I clinical trials against certain forms of
cancer, including both small-cell lung cancer and melanoma. In one such trial,
15 patients with small-cell lung cancer who had previously received chemotherapy
and radiation therapy and achieved a partial or complete response were treated
with BEC2. At the time the results were analyzed, approximately 27% of the
patients had survived nearly five years following diagnosis. These survival
rates are longer than historical survival rates for similar patients receiving
6
<PAGE> 8
conventional therapy and formed the basis for going forward with Phase III
studies. This trial is not sufficient to establish that BEC2 is safe or
effective in treating cancer.
In conjunction with and funded primarily by Merck KGaA, we have initiated a
570-patient Phase III multinational clinical trial for BEC2 in the treatment of
limited disease small-cell lung cancer. The trial will examine patient survival
two years after a course of therapy. We expect to complete enrollment in the
trial during 2001.
We have entered into a development and marketing agreement with Merck KGaA
relating to BEC2. Under this agreement, we have retained the right to co-promote
BEC2 with Merck KGaA within North America, and we have granted Merck KGaA
exclusive rights to develop and market BEC2 outside of North America. In
addition, we intend to be the worldwide manufacturer of BEC2.
MONOCLONAL ANTIBODY INHIBITOR OF ANGIOGENESIS
Our lead anti-angiogenesis product candidate, c-p1C11, is an antibody that
targets KDR, a principal receptor for a growth factor known as Vascular
Endothelial Growth Factor, or VEGF. By blocking the binding of VEGF to KDR,
c-p1C11 is designed to inhibit or eliminate tumor growth. We expect to file an
application with the FDA by the end of 1999 in order to commence clinical trials
of c-p1C11.
OTHER RESEARCH
In addition to the development of our lead product candidates, we continue
to conduct research, both independently and in collaboration with academic and
commercial partners, in a number of areas related to our core focus of growth
factor inhibitors, cancer vaccines and angiogenesis inhibitors.
7
<PAGE> 9
THE OFFERING
Common stock offered.......... 2,500,000 shares
Common stock to be outstanding
after the offering............ 28,129,007 shares
Over-allotment option......... 375,000 shares
Use of proceeds............... We intend to use the proceeds from this
offering:
- to fund the expansion of clinical trials
- to fund a portion of the costs of our new
manufacturing facilities
- to develop a sales force in the United States
- for general corporate purposes, including
research and development expenses, and other
working capital
Dividend policy............... We have never declared cash dividends on our
common stock and have no present intention of
declaring such cash dividends in the
foreseeable future. Any future determination to
pay dividends will be at the discretion of our
board of directors and will be dependent upon
then existing conditions, including our
financial condition, results of operations,
contractual restrictions, capital requirements,
business prospects and other factors our board
of directors deems relevant.
Nasdaq National Market
Symbol........................ IMCL
The number of shares of our common stock to be outstanding after the
offering does not take into account 7,675,550 shares of our common stock
issuable upon exercise of outstanding options and warrants, having a weighted
average exercise price of $9.65 per share, as of October 27, 1999. This number
also does not include the 400,000 shares of series A preferred stock currently
held by Merck KGaA, of which 100,000 shares are currently convertible into
800,000 shares of our common stock. This number also does not include common
stock that will be issued for cash to Merck KGaA upon the achievement of certain
milestones set forth in our agreement with Merck KGaA relating to C225.
8
<PAGE> 10
SUMMARY FINANCIAL DATA
The following financial data should be read in conjunction with, and are
qualified by reference to, "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ ------------------
1996 1997 1998 1998 1999
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(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................................... $ 600 $ 5,348 $ 4,193 $ 2,615 $ 883
Operating expenses:
Research and development................... 11,482 16,455 21,049 8,846 13,505
General and administrative................. 3,961 5,356 7,145 2,959 3,677
Net interest and other income(1)............. (95) (972) (2,619) (1,409) (90)
-------- -------- -------- ------- --------
Loss before extraordinary item............... (14,748) (15,491) (21,382) (7,781) (16,209)
Extraordinary loss on extinguishment of
debt....................................... 1,267 -- -- -- --
-------- -------- -------- ------- --------
Net loss..................................... (16,015) (15,491) (21,382) (7,781) (16,209)
Preferred dividends.......................... -- 163 3,668 1,825 1,862
-------- -------- -------- ------- --------
Net loss to common stockholders.............. $(16,015) $(15,654) $(25,050) $(9,606) $(18,071)
======== ======== ======== ======= ========
Basic and diluted net loss per common
share...................................... $ (0.83) $ (0.67) $ (1.03) $ (0.40) $ (0.73)
======== ======== ======== ======= ========
Weighted average shares outstanding.......... 19,371 23,457 24,301 24,251 24,718
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------
ACTUAL AS ADJUSTED(2)
--------- --------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and securities....................... $ 40,678 $ 105,309
Working capital............................................. 21,314 85,945
Total assets................................................ 58,098 122,729
Long-term obligations, less current portion................. 3,786 3,786
Accumulated deficit......................................... (155,055) (155,055)
Stockholders' equity........................................ 33,136 97,767
</TABLE>
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(1) Net interest and other income is presented net of interest income, interest
expense and realized gains and losses on securities available for sale.
(2) As adjusted to reflect receipt of the estimated net proceeds from the sale
of 2,500,000 shares of common stock at an assumed offering price of $27 7/8
per share. See "Use of Proceeds" and "Capitalization."
9
<PAGE> 11
RISK FACTORS
You should carefully consider each of the following risks and all of the
other information set forth in this prospectus before deciding to invest in
shares of our common stock. Some of the following risks relate principally to
our business and the industry in which we operate. Other risks relate
principally to the securities market and ownership of our common stock. The
risks described below are not the only ones facing our company. Additional risks
not presently known to us or that we currently believe to be immaterial may also
adversely affect our business. Our business, financial condition or results of
operations could be materially adversely affected by any of these risks. The
trading price of our common stock could decline due to any of these risks, and
you may lose all or part of your investment.
OUR LEAD PRODUCT CANDIDATES ARE IN DEVELOPMENT, AND WE CANNOT BE CERTAIN THAT
ANY OF OUR PRODUCTS WILL BE COMMERCIALIZED
Our lead product candidates, C225 and BEC2, are in clinical trials. Before
we can commercialize any of our product candidates and begin to sell them to
generate revenues, we will need to demonstrate in pivotal clinical trials that
they are safe and effective and obtain the necessary approvals from the United
States Food and Drug Administration and similar foreign regulatory agencies. It
is not certain that clinical trials will demonstrate that our products are safe
and effective, or that we can obtain the required regulatory approvals to
commercialize them. With respect to C225, there can be no assurance that, even
if we were to ultimately receive regulatory approval, we would be able to
receive such approval based on the results of our ongoing Phase II clinical
trials. Further, even if we successfully develop a product, there is no
assurance that we will be able to successfully manufacture or market that
product. If we are unable to successfully commercialize C225 and BEC2, our
liquidity and financial condition could be materially negatively affected.
WE HAVE BEEN OPERATING AT A LOSS AND EXPECT TO INCUR SIGNIFICANT FUTURE LOSSES
We have had significant operating losses in each year and have not earned a
profit in any year since we formed ImClone. These operating losses and failure
to be profitable have been due mainly to the significant amount of money that we
have had to spend on research and development. As of June 30, 1999, we had an
accumulated deficit of approximately $155 million. We expect to continue to have
significant additional operating losses as we continue to expand our product
development and clinical trials and initiate marketing efforts. We may never
commercialize any of our products or achieve profitability.
WE MAY NOT BE ABLE TO OBTAIN THE EXTENSIVE GOVERNMENT APPROVALS REQUIRED TO
BRING OUR PRODUCTS TO MARKET
The research, pre-clinical development, clinical trials, manufacturing and
marketing of our products are all subject to extensive regulation by U.S. and
foreign governmental authorities. Although we intend to seek expedited approval
for certain of our products, including C225, there can be no assurance that the
FDA will grant us expedited review status for any of our potential filings.
Failure to receive regulatory approvals for our product candidates and
operations in our expected timeframes could have a material negative effect on
our liquidity and financial condition. The FDA and similar foreign regulatory
authorities regulate our clinical trials as well as our manufacturing and
marketing operations. They require us to comply with product-specific testing
and approval processes. It may take many years and cost a significant amount of
money to obtain the required regulatory approvals for our products. Once we
begin clinical trials for a new biologic therapeutic or vaccine product, it may
take five or more years to receive the required FDA approval to commercialize
that product and begin to sell and market it to the public. It may also take
several years to develop a new in vitro diagnostic product, depending upon the
clinical data requirements or approval process specified by the FDA for the
approval of the product. The FDA may also request additional data which could
substantially extend these approval processes. We cannot be certain that any of
our products will be shown to be safe and effective or that we will ultimately
receive FDA approval at the end of these approval processes. In addition, even
if granted, product approvals may be withdrawn or limited at a later time if
products do not comply with regulatory standards or if unexpected problems occur
following initial marketing.
Since our product candidates are still in clinical trials, we have not yet
sought or received regulatory approval for the commercial sale of any of our
products or for any manufacturing techniques or facilities. We and our licensees
may experience long delays or excessive costs when we do attempt to get
necessary approvals or licenses. Future federal, state, local or foreign
legislative or administrative acts could also prevent or delay
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<PAGE> 12
regulatory approval of our products or the products of our licensees. We cannot
be certain that we or our corporate partners will be able to get the necessary
approvals for clinical testing, manufacturing or marketing of our products, or
that we will meet our expected timeframes for any such approvals. Any of the
following events, if they were to occur, could delay or preclude us from further
developing, marketing or realizing full commercial use of our products, which in
turn would have a material adverse effect on our business, financial condition
and results of operations:
- failure to obtain or maintain requisite governmental approvals
- failure to obtain approvals of clinically intended use of our products
under development
- identification of serious and unanticipated adverse side effects from
our products under development
Manufacturers of drugs also must comply with the applicable FDA good
manufacturing practice regulations, which include quality control and quality
assurance requirements as well as the corresponding maintenance of records and
documentation. Manufacturing facilities are subject to ongoing periodic
inspection by the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed as part of the product approval process before
they can be used in commercial manufacturing. We or our present or future
suppliers may be unable to comply with the applicable good manufacturing
practice regulations and other FDA regulatory requirements.
OUR SUCCESS DEPENDS UPON OUR ABILITY TO PROTECT OUR INTELLECTUAL PROPERTY AND
OUR PROPRIETARY TECHNOLOGY
The patent position of ImClone, like that of other biopharmaceutical
companies, is generally very uncertain and involves complex legal and factual
questions. Our success will depend, in part, on whether we can:
- obtain patents to protect our own products
- obtain licences to use certain technologies of third parties, which may
be protected by patents
- protect our trade secrets and know-how
- operate without infringing the intellectual property and proprietary
rights of others
We may not be able to obtain patents that adequately protect our own
products. Also, our proprietary technologies could conflict with the rights of
others. Our ability to commercialize and market our products using any such
technologies could be materially and negatively affected.
We have exclusive licenses or assignments to 63 issued patents worldwide.
Thirty-seven of those are issued U.S. patents. We have exclusive licenses or
assignments to approximately 43 families of patent applications that relate to
our proprietary technology in the U.S. and in foreign countries. We cannot be
certain that patents will be issued as a result of any of these pending
applications. Nor can we be certain that any issued patents would protect or
benefit us or give us adequate protection from competing products. For example,
issued patents may be circumvented or challenged and declared invalid. In
addition, under many of the agreements under which we have licenses to the
patents or patent applications of others, we are required to meet specified
milestone or diligence requirements in order to keep our licenses. We cannot be
certain that we will satisfy any of these requirements.
We know that others have filed patent applications in various countries
that relate to several areas in which we are developing products. Some of these
patent applications have already been issued as patents and some are still
pending. The pending patent applications may issue as patents. Issued patents
are entitled to a rebuttable presumption of validity under the laws of the U.S.
and certain other countries. These issued patents may therefore limit our
ability to develop commercial products. If we need licenses to such patents to
permit us to develop or market our products, we cannot be certain that we would
be able to get such licenses on acceptable terms.
Proprietary trade secrets and unpatented know-how are important to our
research and development activities. We cannot be certain that others will not
develop the same or similar technologies on their own.
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<PAGE> 13
Although we have taken steps, including entering into confidentiality agreements
with our employees and third parties, to protect our trade secrets and
unpatented know-how and keep them secret, third parties may still obtain such
information.
The following are some of the specific areas in which we may be negatively
affected by the patents and patent applications of others:
We have an exclusive license to an issued U.S. patent for the murine form
of C225, our EGF receptor antibody product. We believe that this patent covers
C225 under the patent law doctrine of equivalents. Under this doctrine, the
subject matter of a claim is deemed to cover variations that do substantially
the same thing, in substantially the same way, to achieve the same result,
especially if the variation is known and routine. We believe, in this instance,
the doctrine of equivalents would extend protection to C225. Our licensor of
this patent did not obtain patent protection outside the U.S. for this antibody.
While this patent covers only our antibody and would not block third parties
from obtaining patents covering other antibodies to the EGF receptor, we are
pursuing additional patent protection for the use of any antibody that inhibits
the EGF receptor in combination with chemotherapy or radiation therapy, or when
used to treat refractory patients. We have exclusively licensed, from
Rhone-Poulenc Rorer, a family of patent applications seeking to cover the use of
antibodies to the EGF receptor in conjunction with chemotherapeutic agents. A
Canadian patent was issued in this family, and the patent examiner in Europe has
indicated an intent to issue a European patent. U.S. prosecution continues. We
are also currently prosecuting additional patent applications in the U.S. and
elsewhere. We cannot be certain that patents will ever be issued in respect of
these patent applications or that we will have sufficient protection for C225.
We are aware of a U.S. patent issued to a third party that includes claims
covering the use, subject to certain restrictions, of antibodies to the EGF
receptor and cytotoxic factors to inhibit tumor growth. We have retained special
patent counsel, Kenyon & Kenyon, which has advised us that in its opinion,
subject to the assumptions and qualifications set forth in such opinion, no
valid claim of this third party patent is infringed by reason of our manufacture
or sale, or medical professionals' use, of C225 alone or in combination with
chemotherapy or radiation therapy and, therefore, in the event of litigation for
infringement of this third party patent, a court should find that no valid claim
of this third party patent is infringed. We have also received an opinion from
our regular patent counsel, Hoffmann & Baron, LLP, that we do not infringe this
third party patent. Based upon these opinions, as well as our review, in
conjunction with our regular patent counsel, of other relevant patents, we
believe that we will be able to commercialize C225 alone and in combination with
chemotherapy and radiation therapy provided we successfully complete our
clinical trials and receive the necessary FDA approvals. These opinions of
counsel, however, are not binding on any court or the U.S. Patent and Trademark
Office. In addition, there can be no assurance that we will not in the future,
in the U.S. or any other country, be subject to patent infringement claims,
patent interference proceedings or adverse judgments in patent litigation.
The C225 monoclonal antibody is chimerized, meaning that it is made of
antibody fragments derived from more than one type of animal (specifically, in
the case of C225, mouse and human). Patents have been issued to other
biotechnology companies that cover the chimerization of antibodies. Therefore,
we may be required to obtain licenses under these patents, some of which have
already been obtained, before we can commercialize our own chimerized monoclonal
antibodies, including C225. We cannot be certain that we will be able to obtain
such licenses in the territories where we want to commercialize, or how much
such licenses would cost.
We know that others have been issued patents in the U.S. and Europe
covering anti-idiotypic antibodies or their use for the treatment of tumors.
These patents, if valid, could be interpreted to cover our BEC2 monoclonal
antibody and certain uses of BEC2. Merck KGaA, our worldwide licensee of BEC2,
has informed us that it has obtained non-exclusive, worldwide licenses to these
patents in order to market BEC2 in its territory. We are entitled to co-promote
BEC2 in North America. However, we cannot be certain that we can obtain the
necessary licenses on commercially acceptable terms, if at all.
We have patents and have filed patent applications to protect our
proprietary rights to anti-angiogenic therapeutics, as well as therapeutic
methods of treating angiogenic disease. We are aware that others have
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<PAGE> 14
filed patent applications that could affect our ability to commercialize some of
our anti-angiogenic therapeutics or therapeutic treatments.
We are aware that third parties have filed patent applications in areas
that could affect our ability or Abbott Laboratories's ability to commercialize
our diagnostic products. These areas could include target amplification
technology and signal amplification technology. Third party patents have already
been issued in the field of target amplification such as polymerase chain
reaction technology.
There has been significant litigation in the biopharmaceutical industry
over patents and other proprietary rights. The defense and prosecution of
intellectual property suits and related legal and administrative proceedings can
be both costly and time consuming. Litigation and interference proceedings could
result in substantial expense to us and significant diversion of effort by our
technical and management personnel. An adverse determination in any such
interference or litigation, particularly with respect to C225, to which we may
become a party could subject us to significant liabilities to third parties or
require us to seek licenses from third parties. If required, the necessary
licenses may not be available on acceptable terms or at all. Adverse
determinations in a judicial or administrative proceeding or failure to obtain
necessary licenses could prevent us, in whole or in part, from commercializing
our products, which could have a material adverse effect on our business,
financial condition and results of operations.
WE CURRENTLY HAVE LIMITED MANUFACTURING CAPACITY AND WILL NEED TO ENTER INTO
ARRANGEMENTS WITH THIRD PARTY MANUFACTURERS
So far, we have manufactured only small quantities of our products in the
laboratory and our pilot-scale manufacturing facility. In some cases, we have
produced enough for pre-clinical animal trials and early-stage clinical trials.
We can only be profitable if our products are manufactured in commercial
quantities in compliance with regulatory requirements and at acceptable costs.
However, it may be difficult for us to produce large enough quantities for
late-stage clinical trials or for more than one product candidate. Production in
commercial quantities will require us to expand our manufacturing capabilities
significantly and hire and train additional personnel. We have limited
experience in clinical-scale manufacturing and no experience in commercial-scale
manufacturing. To date, C225 has been manufactured at a 2,000 liter scale. We
expect that the commercial supply of C225 will be manufactured at the 10,000
liter scale. There can be no assurance, however, that we will be successful in
scaling up the production process for C225 to the 10,000 liter scale. Therefore,
we cannot be certain that we will be able to make the transition to late-stage
clinical or commercial production of C225 or any other of our products
successfully. In addition, we cannot be certain that our production costs will
not be higher than expected.
We are in the process of acquiring land adjacent to our current facility in
New Jersey on which we plan to build a commercial-scale manufacturing plant for
our products. The cost to build such a facility will be high and the
construction process will take several years. We have completed plans for, and
will begin construction of the plant before we have received FDA approval for
any of our product candidates. If we do not obtain FDA approval for these
product candidates, the financing and other costs associated with the new
manufacturing facility could have an adverse effect on our liquidity and
financial condition. Alternatively, if any of our products are approved for
sale, and we encounter difficulty or delays in completing the new manufacturing
facility, obtaining the required FDA approval of the facility or in
manufacturing commercial quantities of our products, such difficulties or delays
could have a material adverse effect on our business, financial condition or
results of operations.
If we obtain FDA approval of C225 prior to FDA approval of our proposed
manufacturing facility, we will need to obtain commercial-scale quantities of
C225 from one or more contract manufacturers in order to have sufficient
quantities of C225 for product launch. In any event, we intend to seek to enter
into arrangements with contract manufacturers in order to provide a second
source for our products as well as additional capacity for the manufacture of
our products. To date, we have entered into an agreement with Boehringer
Ingelheim Pharmaceuticals KG ("BI") under which BI has manufactured C225 in
relatively small quantities to supplement the quantities of C225 that we produce
and use in clinical trials. We may pursue an agreement with another third party
relating to the manufacture of C225 for both clinical trials and commercial
sale. We
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<PAGE> 15
cannot be certain that we will be able to enter into this agreement or any other
agreements with third party manufacturers on terms acceptable to us or at all.
Even if we are able to enter into such agreements, we cannot be certain that we
will be able to produce or obtain sufficient quantities for the commercial sale
of our products. Any delays in producing or obtaining commercial quantities of
our products could have a material adverse effect on our business, financial
condition and results of operations.
We are also dependent upon a sole supplier of a component of the media used
in the production of C225. If this supply were to cease, it could hinder our
ability to manufacture C225 in the quantities required.
OUR BUSINESS DEPENDS UPON OUR CORPORATE PARTNERS
So far, we have earned almost all of our revenues from research and
development funding and license fees and royalties paid to us under agreements
with our corporate partners. We expect this to continue over the next several
years. License fees may be payable to us either when we first enter into an
agreement or when and if we or our corporate partners, depending on the
agreement, reach agreed-upon research, regulatory and commercialization
milestones, or both. We do not receive any of these payments at regular
intervals; the amounts have fluctuated in the past and we expect them to
continue to fluctuate in the future. In most cases, our corporate partners can
terminate these arrangements, including their payment obligations, on relatively
short notice under specified circumstances. We cannot be certain that we will
continue to receive revenues from these arrangements, or that we will enter into
any new similar agreements.
The successful development, marketing and sale of our products worldwide is
subject to the risk of financial or other difficulties with respect to our
relationships with our corporate partners. The amount and timing of payments we
receive under our arrangements with these parties depend upon variables that are
out of our control. In addition, our corporate partners or their affiliates may
be developing their own products or technologies which may directly compete with
products that are the subject of their arrangements with us. While we believe
that our corporate partners are or will be economically motivated to work toward
successful arrangements with us, we cannot be certain that their corporate
interests and motivations will remain consistent with ours.
In December 1998, we entered into an agreement with Merck KGaA, a
German-based drug company, relating to the development, marketing and sale of
C225. Under this agreement:
- we have retained the rights to develop and market C225 within the United
States and Canada
- we have granted Merck KGaA exclusive rights, except in Japan, to develop
and market C225 outside of the United States and Canada
- we have agreed to supply Merck KGaA, and Merck KGaA has agreed to
purchase, C225 for the conduct of clinical trials and the
commercialization of the product outside the United States and Canada
- we will co-develop and co-market C225 in Japan with Merck KGaA
- we have granted Merck KGaA an exclusive license outside of the United
States and Canada, without the right to sublicense, to apply certain of
our patents to a humanized EGF receptor antibody on which Merck KGaA has
performed preclinical studies
In return, Merck KGaA agreed to pay up-front fees and to make cash payments
and equity investments in our business if specific milestones are achieved.
Merck KGaA will also pay us royalties on any sales of C225 outside the United
States and Canada. In addition, Merck KGaA has agreed to provide a guaranty of
our obligations under a credit agreement relating to the construction of our new
C225 manufacturing facility.
We have also granted Merck KGaA a license to develop and market BEC2
worldwide. We have retained the right to co-promote BEC2 with Merck KGaA within
North America and it is intended that we will be the bulk manufacturer of BEC2
for worldwide production. In return, Merck KGaA has agreed to pay up-front
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<PAGE> 16
fees, to make cash milestone payments and to make royalty payments to us on all
sales of BEC2 outside North America.
If Merck KGaA fails to complete development of or does not commence
commercialization of C225 and BEC2, we would not receive any royalties on sales
by Merck KGaA, although the product rights would revert to us. Merck KGaA can
terminate its relationship with us under the agreement with respect to C225 at
its discretion on any milestone payment date. If Merck KGaA were to terminate
that agreement or we failed to meet certain requirements of that agreement, we
would lose one of our primary sources of funding and would have to look
elsewhere for financing. As well as losing future payments, if Merck KGaA were
to terminate the agreement because it determined that commercialization of C225
was economically unfeasible, we would have to pay back up to 50% of the
cash-based milestone payments made to date out of revenues, if any, based upon a
royalty rate applied to the gross profit from C225 sales or C225 license fees in
the United States and Canada. Additionally, the termination of the agreement due
to Merck KGaA's failure to provide the guaranty of our credit agreement
obligations with respect to our new C225 manufacturing facility, or our failure
to obtain the necessary collateral license agreements, would require us to
return all milestone payments made to date. Finally, upon termination we would
be required to use our reasonable best efforts to have Merck KGaA released from
its guaranty of our credit agreement obligations with respect to our new C225
manufacturing facility. This release of Merck KGaA would likely cause the
acceleration of our obligations under this credit agreement. Thus, termination
of the agreement with Merck KGaA relating to C225 could have a material adverse
effect on our business, financial condition and results of operations.
WE WILL CONTINUE TO NEED SIGNIFICANT AMOUNTS OF ADDITIONAL CASH AND WE CANNOT BE
SURE THAT ADDITIONAL CASH WILL BE AVAILABLE TO US
At this time and for the foreseeable future, we will need to spend a
significant amount of money for, among others, the following purposes:
- ongoing pre-clinical and clinical trials of our product candidates
- research and development of new products
- establishing both clinical-scale and commercial-scale manufacturing
capability in our own facilities and/or in the facilities of others
- marketing our products if we receive necessary regulatory approvals
- payment of dividends on our convertible series A preferred stock
We believe that our existing cash on hand and amounts expected to be
available under our credit facilities, together with net proceeds from this
offering, will be sufficient to fund ImClone through at least 2001. We are also
entitled to reimbursement from our corporate partners for certain research and
development expenditures and to certain milestone payments. However, we will
only receive future milestone payments from our corporate partners if we meet
specified research and development milestones. We have not yet achieved some of
those milestones and we cannot be certain that we will ever do so. Our C225
agreement with Merck KGaA is subject to termination at Merck's discretion on
certain dates and so we cannot be certain of the level of future payments, if
any, under this agreement. The cash available from our existing corporate
partners may be insufficient to meet our needs. We may also need to seek
additional capital through equity or debt financings or from other sources. We
cannot be certain that we will successfully complete any such arrangements or
financings. If adequate funds are not available from operations or additional
sources of financing, we may have to delay, reduce the scope of or eliminate one
or more of our research or development programs, which would materially and
adversely affect our business, financial conditions and operations.
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<PAGE> 17
ACCEPTANCE OF OUR PRODUCTS IN THE MARKETPLACE IS UNCERTAIN, AND FAILURE TO
ACHIEVE MARKET ACCEPTANCE WILL HARM OUR BUSINESS
Even if approved for marketing, our products may not achieve market
acceptance. The degree of market acceptance of our products will depend upon a
number of factors, including:
- the receipt of regulatory approvals for the uses that we are studying
- the establishment and demonstration in the medical community of the
safety and clinical efficacy of our products and their potential
advantages over existing therapeutic products
- pricing and reimbursement policies of government and third-party payors
such as insurance companies, health maintenance organizations and other
plan administrators
Physicians, patients, payors or the medical community in general may be
unwilling to accept, utilize or recommend any of our products.
WE NEED TO ESTABLISH OUR SALES, MARKETING AND DISTRIBUTION CAPABILITY
To date, we have had no experience in selling, marketing or distributing
new products. If we are successful in developing and obtaining regulatory
approval for our products under development, we will need to establish our
sales, marketing and distribution capability. Under our agreement with Merck
KGaA for C225, we have the exclusive right to market C225 in the United States
and Canada if it is approved for sale there. We also will co-develop C225 with
Merck KGaA in Japan. Under our agreement with Merck KGaA for BEC2, we have the
right to co-promote BEC2 in North America if it is approved for sale there. If
and when we want to market a new product on our own, we will need expertise in
sales and marketing. We currently plan to build our own sales force to market
and sell C225 in the United States and Canada. However, we cannot be certain
that we will be able to hire and train qualified or experienced sales and
marketing personnel or that any marketing or sales efforts by such personnel
will be successful. If we are unable to recruit or retain suitable sales and
marketing personnel, it could have a material adverse effect on our business,
financial condition and results of operations.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE
Our products are now in research and various stages of development or
clinical studies. Accordingly, we do not sell or receive any revenues from sales
of these products. At this time, most of our revenues come from payments we
receive from our corporate partners under license and research arrangements. Our
results of operations historically have fluctuated on a quarterly basis and can
be expected to continue to be subject to quarterly fluctuations. The level of
our revenues and results of operations at any given time is based primarily on
the following factors:
- the status of development of our various products
- the time at which we enter into research and license agreements with
corporate partners that provide for payments to us, and the timing and
accounting treatment of payments to us under those agreements
- whether or not we achieve specified research or commercialization
milestones
- timely payment by our corporate partners of amounts payable to us
- the addition or termination of research programs or funding support
- variations in the level of expenses related to our proprietary products
during any given period
We believe that quarterly comparisons of our financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance. These fluctuations may cause the price of our stock to fluctuate,
perhaps substantially.
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OUR SUCCESS DEPENDS UPON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL AND
CONSULTANTS
Our ability to successfully develop marketable products and to maintain a
competitive position will depend in large part on our ability to attract and
retain highly qualified scientific and management personnel. We will also need
to develop and maintain relationships with leading research institutions and
consultants. Our success is also very dependent upon the principal members of
our management, scientific staff and scientific advisory board, many of whom
have special expertise and would be difficult to replace. Competition for such
personnel and relationships is intense, and we cannot be certain that we will be
able to continue to attract and retain such personnel and maintain such
relationships.
WE MAY NOT BE ABLE TO KEEP PACE WITH TECHNOLOGICAL CHANGE OR WITH THE ADVANCES
OF OUR COMPETITORS
The biopharmaceutical industry is subject to rapid and significant
technological change. We have many competitors, including major drug and
chemical companies, specialized biotechnology firms, universities and other
research institutions. These competitors may develop technologies and products
that are more effective than our products or which would make our technology and
products obsolete and non-competitive. Many of these competitors have much
greater financial and technical resources and production and marketing
capabilities than we do. In addition, many of our competitors have much more
experience than we do in pre-clinical testing and human clinical trials of new
or improved drugs, as well as in obtaining FDA and other regulatory approvals.
We know that competitors are developing or manufacturing various products
that are used for the prevention, diagnosis or treatment of diseases that we
have targeted for product development. Some of these competitive products use
therapeutic approaches that compete directly with certain of our product
candidates. Our competitors may succeed in obtaining FDA approval for their
competitive products sooner than we do for ours. This could hurt our ability to
further develop and market our products. Also, if we do begin significant
commercial sales of our products, we will have to compete with the established
manufacturing and marketing capabilities of our competitors. Manufacturing and
marketing are areas in which we have limited or no experience.
WE MAY HAVE PRODUCT LIABILITY EXPOSURE
Because our product candidates are new treatments for diseases, with
limited, if any, past use on humans, their use during testing or after approval
could expose us to product liability claims. We cannot be certain that we would
have enough money available to satisfy any liability that might result from any
such claims. We try to obtain indemnification from our corporate partners
against certain of these types of claims. However, we cannot be certain that
these parties would honor any such indemnity obligations. Although we carry
product liability insurance, we cannot be certain that this coverage will be
adequate to protect us in the event of a successful product liability claim or
that the insurance will continue to be available on commercially reasonable
terms.
HEALTH CARE INSURERS AND OTHER ORGANIZATIONS MAY NOT PAY FOR OUR PRODUCTS, OR
MAY IMPOSE LIMITS ON REIMBURSEMENTS
The continuing efforts of government and insurance companies, health
maintenance organizations and other payors of healthcare costs to contain or
reduce costs of health care may affect our future revenues and profitability,
and the future revenues and profitability of our potential customers, suppliers
and collaborative partners and the availability of capital. For example, in
certain foreign markets, pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States, given
recent federal and state government initiatives directed at lowering the total
cost of health care, the U.S. Congress and state legislatures will likely
continue to focus on health care reform, the cost of prescription
pharmaceuticals and on the reform of the Medicare and Medicaid systems. While we
cannot predict whether any such legislative or regulatory proposals will be
adopted, the announcement or adoption of such proposals could have a material
adverse effect on our business, financial condition and results of operations.
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Our ability to commercialize our products successfully will depend in part
on the extent to which appropriate reimbursement levels for the cost of our
products and related treatment are obtained by governmental authorities, private
health insurers and other organizations, such as HMOs. Third-party payors are
increasingly challenging the prices charged for medical products and services.
Also, the trend toward managed health care in the United States and the
concurrent growth of organizations such as HMOs, which could control or
significantly influence the purchase of health care services and products, as
well as legislative proposals to reform health care or reduce government
insurance programs, may all result in lower prices for or rejection of our
products. The cost containment measures that health care payors and providers
are instituting and the effect of any health care reform could materially
adversely affect our ability to operate profitably.
OUR COMPUTER SYSTEMS, AND OTHER COMPUTER SYSTEMS THAT AFFECT OUR BUSINESS, MAY
EXPERIENCE PROBLEMS WHEN THE CALENDAR YEAR CHANGES FROM 1999 TO 2000
We have completed a review of our internal computer systems, and we are in
the process of making inquiries of groups with which we do business with respect
to their computer systems, to determine whether these systems will experience a
"Year 2000 problem." A Year 2000 problem would result from a computer system
recognizing the first two digits of a year after the year 1999 as "19" instead
of "20," thereby reading the wrong year. We cannot be certain that we will be
able to successfully do this, or that the groups with which we do business will
identify and replace their computer systems which would cause a Year 2000
problem. The failure to identify and remedy Year 2000 problems could disrupt
important operations which could affect the development and ultimate marketing
of potential products as well as put us at a competitive disadvantage relative
to companies that have corrected such problems.
OUR STOCK PRICE MAY BE VOLATILE
The market price for our common stock could decline below the past or
current public offering prices. We believe that the following factors, among
others, have caused the market price of our common stock to fluctuate
substantially, and that they will continue to do so in the future:
- the results of preclinical testing and clinical trials by us or our
competitors
- the formation or termination of our corporate alliances
- determinations regarding our patent applications and those of others
- variations in our quarterly operating results
The stock market has recently experienced extreme price and volume
fluctuations. These fluctuations have especially affected the market price of
the stock of many high technology and healthcare-related companies. Such
fluctuations have often been unrelated to the operating performance of these
companies. Nonetheless, these broad market fluctuations may negatively affect
the market price of our common stock.
EVENTS WITH RESPECT TO OUR SHARE CAPITAL COULD CAUSE THE PRICE OF OUR COMMON
STOCK TO DECLINE
Sales of substantial amounts of our common stock in the open market, or the
availability of such shares for sale, could adversely affect the price of our
common stock. Upon completion of this offering, we expect to have 28,129,007
shares of common stock outstanding, excluding shares reserved for issuance upon
the exercise of outstanding stock options, warrants and preferred stock (or
28,504,007 shares of common stock outstanding if the underwriters'
over-allotment option is exercised in full). The following securities that may
be exercised for, or are convertible into, shares of our common stock were
issued and outstanding as of October 27, 1999:
- Warrants. Various warrants to purchase 1,791,590 shares of our common
stock, all of which are currently exercisable, at an average exercise
price of approximately $2.96 per share (subject to adjustment in certain
circumstances).
- Options. Stock options to purchase 5,883,960 shares of our common stock
at an average exercise price of approximately $11.68 per share (subject
to adjustment in certain circumstances); of this total, 2,526,669 are
currently exercisable at an average exercise price of approximately $7.06
per share.
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<PAGE> 20
- Series A Preferred Stock. 400,000 shares of our Series A Preferred Stock
are outstanding, of which 100,000 shares are currently convertible into
800,000 shares of our common stock, at a conversion price of $12.50 per
share. These shares are held by Merck KGaA.
The shares of our common stock that may be issued under the warrants and
options are either currently registered with the SEC, or will be registered with
the SEC before the shares are purchased by the holders of the warrants and
options.
Under our license agreement with Merck KGaA for C225, we are entitled to
receive from Merck KGaA up to $60 million upon our achievement of various
milestones in the development of C225. In connection with making the final $30
million of these milestone payments, Merck KGaA is entitled to receive milestone
shares from us, which, if issued, will be shares of our common stock (or other
capital stock convertible into our common stock). The number of milestone shares
issued will be determined based on premiums to then-market prices of our common
stock at the time the milestones are achieved. As of October 27, 1999, Merck
KGaA has not acquired any milestone shares convertible into common stock.
We have granted Merck KGaA certain registration rights regarding the shares
of common stock that they may acquire upon conversion of the series A preferred
shares and upon receipt of milestone shares. Specifically, Merck KGaA has the
right to require us to register, at our expense, the number of shares of common
stock into which the shares of series A preferred stock are converted according
to their terms and the number of milestone shares that are issued. Merck KGaA
may also exercise rights to have such registrable common stock registered at any
time that we file a registration statement for other shares of our common stock.
Merck KGaA may exercise these rights at any time after conversion of its shares
of series A preferred stock into shares of common stock or receipt of milestone
shares. As of October 27, 1999, Merck KGaA has not converted any series A
preferred stock into common stock.
We, our directors, our officers and certain other stockholders have agreed
that, without the prior written consent of Morgan Stanley & Co. Incorporated on
behalf of the underwriters, none of us will, during the period ending 90 days
after the date of this prospectus, sell or otherwise dispose of any shares of
our common stock, subject to certain exceptions.
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USE OF PROCEEDS
We will receive net proceeds from this offering of about $64.6 million at
an assumed public offering price of $27 7/8 per share after deducting the
underwriting discounts and estimated expenses ($74.5 million if the underwriters
exercise their over-allotment option in full). We intend to use such proceeds:
- to fund the expansion of clinical trials
- to fund a portion of the costs of our new manufacturing facilities
- to develop a sales force in the United States
- for general corporate purposes, including research and development
expenses, and other working capital
Pending the use of the net proceeds of this offering, we will invest the
funds in short-term, interest-bearing, investment-grade securities.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"IMCL." The following table sets forth, for the periods indicated, the range of
high and low sale prices for our common stock. On October 29, 1999, the reported
last sale price for our common stock was $27 7/8 per share.
<TABLE>
<CAPTION>
COMMON
STOCK PRICE
-----------
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1997
First Quarter............................................. $10 1/8 $5 3/4
Second Quarter............................................ 7 7/8 4 5/8
Third Quarter............................................. 8 1/8 4 5/8
Fourth Quarter............................................ 8 1/2 5 21/32
YEAR ENDED DECEMBER 31, 1998
First Quarter............................................. 8 7/16 5 5/8
Second Quarter............................................ 13 7/8 7 5/8
Third Quarter............................................. 13 7/8 8 1/4
Fourth Quarter............................................ 12 1/8 5 9/16
YEAR ENDED DECEMBER 31, 1999
First Quarter............................................. 16 15/16 8 3/4
Second Quarter............................................ 26 15 1/2
Third Quarter............................................. 39 1/2 21 5/16
Fourth Quarter (through October 29, 1999)................. 33 3/16 16 1/4
</TABLE>
DIVIDEND POLICY
We have never declared cash dividends on our common stock and have no
present intention of declaring such cash dividends in the foreseeable future.
Any future determination to pay dividends will be at the discretion of our board
of directors and will be dependent upon then existing conditions, including our
financial condition, results of operations, contractual restrictions, capital
requirements, business prospects, and other factors our board of directors deems
relevant.
In addition, the terms of our Series A Convertible Preferred Stock (the
"series A preferred stock") restrict our ability to pay dividends on our common
stock. See "Description of Capital Stock."
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CAPITALIZATION
The following table sets forth the total capitalization of our company at
June 30, 1999 and as adjusted to reflect our receipt of the estimated net
proceeds from our sale of 2,500,000 shares of common stock pursuant to this
offering at an assumed offering price of $27 7/8 per share. This table should be
read in conjunction with the Selected Consolidated Financial Data appearing on
page 23 in this prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
------------------------
ACTUAL AS ADJUSTED
--------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Long-term debt.............................................. $ 2,200 $ 2,200
Other long-term liabilities, less current portion........... 1,586 1,586
Stockholders' equity:
Preferred stock, $1.00 par value; 4,000,000 shares
authorized; series A preferred stock: 400,000 shares
authorized, issued and outstanding, actual and 400,000
as adjusted (preference in liquidation $43,702,000).... 400 400
Common stock, $.001 par value; 60,000,000 shares
authorized; 25,397,474 shares issued and 25,346,657
shares outstanding, actual; 27,897,474 shares issued
and 27,846,657 shares outstanding, as adjusted......... 25 28
Additional paid-in capital................................ 188,118 252,746
Accumulated deficit....................................... (155,055) (155,055)
Treasury stock, at cost; 50,817 shares actual and 50,817
as adjusted............................................ (492) (492)
Note receivable--officer and stockholder.................. (137) (137)
Accumulated other comprehensive income.................... 277 277
--------- ---------
Total stockholders' equity............................. 33,136 97,767
--------- ---------
Total capitalization.............................. $ 36,922 $ 101,553
========= =========
</TABLE>
The number of shares of our common stock to be outstanding after the
offering does not take into account 7,675,550 shares of our common stock
issuable upon exercise of outstanding options and warrants, having a weighted
average exercise price of $9.65 per share, as of October 27, 1999. This number
also does not include the 400,000 shares of series A preferred stock currently
held by Merck KGaA, of which 100,000 shares are currently convertible into
800,000 shares of our common stock. This number also does not include common
stock that will be issued for cash to Merck KGaA upon the achievement of certain
milestones set forth in our agreement with Merck KGaA relating to C225.
21
<PAGE> 23
DILUTION
Our net tangible book deficit on June 30, 1999 was $(7.8) million or
$(0.31) per common share. Net tangible book deficit per common share is
determined by dividing our tangible net worth, which equals total tangible
assets less total liabilities less the liquidation value of the series A
preferred stock, excluding accrued dividends, by the aggregate number of shares
of our common stock outstanding. After giving effect to the sale by us of the
2,500,000 shares of common stock in this offering, at an assumed public offering
price of $27 7/8, per share, our net tangible book value at June 30, 1999 would
have been $56.8 million, or $2.04 per common share. This represents an immediate
increase in net tangible book value to existing stockholders of $2.35 per common
share and an immediate dilution to new investors of $25.84 per common share. The
following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed public offering price per common share.............. $27.88
Net tangible book deficit per common share as of June 30,
1999................................................... $(0.31)
Increase per share attributable to new investors.......... 2.35
------
Net tangible book value per common share after offering..... 2.04
------
Dilution per share to new investors......................... $25.84
======
</TABLE>
Dilution is determined by subtracting net tangible book value per common
share after the offering from the public offering price per common share.
22
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected financial data of ImClone should be read in
conjunction with, and are qualified by reference to, "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the financial
statements and notes thereto included elsewhere in this prospectus. The
statement of operations data for the years ended December 31, 1996, 1997 and
1998 and the balance sheet data as of December 31, 1997 and 1998 are derived
from, and qualified by reference to, the audited financial statements included
elsewhere in this prospectus, and should be read in conjunction with those
financial statements and notes thereto. The statement of operations data for the
six-month periods ended June 30, 1998 and 1999 and the balance sheet data as of
June 30, 1999 are derived from our unaudited financial statements included
elsewhere in this prospectus, and which, in our opinion, have been prepared on a
basis consistent with the audited financial statements and reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of our results of operations and financial position. Results
for the six months ended June 30, 1999 are not necessarily indicative of results
that may be expected for the entire year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------- ------------------
1994 1995 1996 1997 1998 1998 1999
-------- ------- -------- -------- -------- ------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... $ 950 $ 800 $ 600 $ 5,348 $ 4,193 $ 2,615 $ 883
Operating expenses:
Research and development................. 11,816 8,768 11,482 16,455 21,049 8,846 13,505
General and administrative............... 3,348 3,739 3,961 5,356 7,145 2,959 3,677
Net interest and other income(1)........... (2,365) (2,066) (95) (972) (2,619) (1,409) (90)
Equity in loss of affiliate................ 342 -- -- -- -- -- --
-------- ------- -------- -------- -------- ------- --------
Loss before extraordinary item............. (12,191) (9,641) (14,748) (15,491) (21,382) (7,781) (16,209)
Extraordinary loss on extinguishment
of debt.................................. -- -- 1,267 -- -- -- --
-------- ------- -------- -------- -------- ------- --------
Net loss................................... (12,191) (9,641) (16,015) (15,491) (21,382) (7,781) (16,209)
Preferred dividends (including assumed
incremental yield of $51 in 1997, $1,268
in 1998, $635 in 2Q98 and $672 in
2Q99).................................... -- -- -- 163 3,668 1,825 1,862
-------- ------- -------- -------- -------- ------- --------
Net loss to common stockholders............ $(12,191) $(9,641) $(16,015) $(15,654) $(25,050) $(9,606) $(18,071)
======== ======= ======== ======== ======== ======= ========
Basic and diluted net loss per common
share:
Loss before extraordinary item........... $ (1.12) $ (0.72) $ (0.76) $ (0.67) $ (1.03) $ (0.40) $ (0.73)
Extraordinary loss on extinguishment of
debt................................... -- -- (0.07) -- -- -- --
-------- ------- -------- -------- -------- ------- --------
Net loss per share......................... $ (1.12) $ (0.72) $ (0.83) $ (0.67) $ (1.03) $ (0.40) $ (0.73)
======== ======= ======== ======== ======== ======= ========
Weighted average shares outstanding........ 10,903 13,311 19,371 23,457 24,301 24,251 24,718
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
----------------------------------------------------------- --------------
1994 1995 1996 1997 1998 1999
-------- -------- --------- --------- --------- --------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
securities..................... $ 3,032 $ 10,207 $ 13,514 $ 59,610 $ 46,739 $ 40,678
Working capital.................. (1,470) 3,735 7,695 56,671 35,073 21,314
Total assets..................... 17,467 22,803 25,885 75,780 62,252 58,098
Long-term obligations, less
current portion................ 4,487 4,235 2,775 3,430 3,746 3,786
Accumulated deficit.............. (76,317) (85,958) (101,973) (117,464) (138,846) (155,055)
Stockholders' equity............. 8,176 11,823 16,589 68,226 45,174 33,136
</TABLE>
- ------------
(1) Net interest expense and other income is presented net of interest income,
interest expense and realized gains and losses on securities available for
sale.
23
<PAGE> 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis by our management is provided to
identify certain significant factors which affected our financial position and
operating results during the periods included in the accompanying financial
statements.
OVERVIEW
We are a biopharmaceutical company engaged in the research and development
of novel cancer treatments. We are currently pursuing three research and
development programs that we believe show promise for treating cancer: growth
factor inhibitors, therapeutic cancer vaccines and angiogenesis inhibitors.
Since our inception in April 1984, we have devoted substantially all of our
efforts and resources to research and development conducted on our own behalf
and through collaborations with corporate partners and academic research and
clinical institutions. We have not derived any commercial revenue from product
sales. As a result of our substantial research and development costs, we have
incurred significant operating losses and we have generated a cumulative net
loss of approximately $155 million for the period from our inception to June 30,
1999. We expect to incur significant additional operating losses.
Substantially all of our revenues were generated from license and research
arrangements with collaborative partners. Such revenues, as well as our results
of operations, have fluctuated and are expected to continue to fluctuate
significantly from period to period due to:
- the status of development of our various products
- the time at which we enter into research and license agreements with
corporate partners that provide for payments to us, and the timing and
accounting treatment of payments to us under these agreements
- whether or not we achieve specified research or commercialization
milestones
- timely payment by our corporate partners of amounts payable to us
- the addition or termination of research programs or funding support
- variations in the level of expenses related to our proprietary products
during any given period
Before we can commercialize our products and begin to sell them to generate
revenues, they will need additional development and clinical testing, which will
cost a lot of money. Generally, to make a profit we will need to successfully
develop, test, introduce and market our products. It is not certain that any of
our products will be successfully developed or that required regulatory
approvals to commercialize them can be obtained. Further, even if we
successfully develop a product, there is no assurance that we will be able to
successfully manufacture or market that product or that customers will buy it.
See "Risk Factors -- Our lead product candidates are in development, and we
cannot be certain that any of our products will be commercialized."
In December 1998, we entered into an agreement with Merck KGaA, a
German-based drug company, relating to the development, marketing and sale of
C225. Under this agreement: we have retained the rights to develop and market
C225 within the United States and Canada; we have granted Merck KGaA exclusive
rights, except in Japan, to develop and market C225 outside of the United States
and Canada; we have agreed to supply Merck KGaA, and Merck KGaA will purchase
from us, C225 for the conduct of clinical trials and the commercialization of
the product outside of the United States and Canada; we will co-develop C225 in
Japan with Merck KGaA; and we have granted Merck KGaA an exclusive license
outside of the United States and Canada, without the right to sublicense, to
certain of our patents to apply to a humanized antibody to the EGF receptor on
which Merck KGaA has performed preclinical studies.
In return, Merck KGaA has agreed, subject to the terms of the agreement, to
(1) pay us $30 million in up-front fees and early cash-based milestone payments
based upon our achievement of the milestones set forth in the agreement, (2) pay
us an additional $30 million if further milestones are achieved for which Merck
KGaA will receive equity in ImClone which will be priced at varying premiums to
the then-market price of
24
<PAGE> 26
the common stock depending upon the timing of the achievement of the respective
milestones, (3) provide us, subject to certain terms, a guaranty of our
obligations under a $30 million credit facility relating to the construction of
a new C225 commercial manufacturing facility, (4) fund clinical development of
C225 outside of the United States and Canada and (5) pay us royalties on future
sales of C225 in its territory, if any.
This agreement may be terminated by Merck KGaA in various instances,
including (1) at its discretion on any date on which a milestone is achieved (in
which case no milestone payment will be made), (2) for a one-year period after
first commercial sale of C225 in Merck KGaA's territory, upon Merck KGaA's
reasonable determination that the product is economically unfeasible (in which
case Merck KGaA is entitled to receive back 50% of the cash-based milestone
payments then paid to date, but only out of revenues received, if any, based
upon a royalty rate applied to the gross profit from C225 sales or C225 license
fees in the United States and Canada), or (3) in the event we do not obtain
certain collateral license agreements, in which case Merck KGaA also is entitled
to a return of all cash milestone payments to date, plus liquidated damages of
$500,000. Upon termination of the agreement, we would also be required to use
our best reasonable efforts to cause the release of Merck KGaA as guarantor of
the credit facility for our new manufacturing facility.
Through October 27, 1999, Merck KGaA has paid us $14 million in up-front
and milestone fees and has confirmed that we have achieved milestones with
respect to which we are entitled to receive an additional $6 million in
payments. As of June 30, 1999, $12 million had been received and recorded as
fees potentially refundable from a corporate partner and will be recognized as
revenues upon Merck KGaA's agreeing on the production concept for the new C225
manufacturing facility and our obtaining the necessary collateral license
agreements. In April 1999, the parties agreed on the production concept for the
manufacturing facility and are currently working toward securing Merck KGaA's
guaranty of our obligations under a $30 million credit facility. We are also in
the process of negotiating the necessary collateral license agreements.
We have also granted Merck KGaA a license to develop and market BEC2
worldwide. We have retained the right to co-promote BEC2 with Merck KGaA within
North America and it is intended that we will be the bulk manufacturer of BEC2
for worldwide production. In return, Merck KGaA has agreed to pay up-front fees,
to make cash milestone payments and to make royalty payments to us on all sales
of BEC2 outside North America. In return, Merck KGaA has made research support
payments to us totaling $4.7 million and is required to make milestone payments
to us of up to $22.5 million, of which $3 million has been received through
October 27, 1999. In addition, Merck KGaA is required to make royalty payments
to us on any sales of BEC2 outside North America, with a portion of the
milestone and research support payments received under the agreement being
creditable against the amount of royalties due.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
Revenues. Revenues for the six months ended June 30, 1999 and 1998 were
$883,000 and $2,615,000, respectively, a decrease of $1,732,000, or 66%.
Revenues for the six months ended June 30, 1999 primarily consisted of (1)
$150,000 in research support from our partnership with American Home Products
Corporation ("American Home") in infectious disease vaccines, (2) $533,000 in
research and support payments from our research and license agreement with Merck
KGaA for our principal cancer vaccine product candidate, BEC2, and (3) $195,000
in royalty revenue from our strategic alliance with Abbott Laboratories
("Abbott") in diagnostics. Revenues for the six months ended June 30, 1998
consisted of (1) $150,000 in research support from our partnership with American
Home in infectious disease vaccines, (2) $1 million in milestone revenue and
$1.3 million in research and support payments from our research and license
agreement with Merck KGaA for BEC2 (3) $117,000 in royalty revenue from our
strategic alliance with Abbott in diagnostics and (4) $98,000 from a Phase I
Small Business Innovation Research grant from the National Cancer Institute (the
"NCI") for a program in cancer-related angiogenesis. The decrease in revenues
for the six months ended June 30, 1999 was primarily attributable to (1) the
decrease in research and support revenue as a result of the completion of all
research and support payments due from our research and license agreement with
Merck KGaA for BEC2 and (2) a decrease in milestone revenue which can vary
25
<PAGE> 27
widely from period to period depending upon the timing of the achievement of
various research and development milestones for products under development.
Operating Expenses: Research and Development. Total operating expenses for
the six months ended June 30, 1999 and 1998 were $17,182,000 and $11,805,000,
respectively, an increase of $5,377,000, or 46%. Research and development
expenses for the six months ended June 30, 1999 and 1998 were $13,505,000 and
$8,846,000, respectively, an increase of $4,659,000 or 53%. Such amounts for the
six months ended June 30, 1999 and 1998 represented 79% and 75%, respectively,
of total operating expenses. The increase in research and development expenses
for the six months ended June 30, 1999 was primarily attributable to (1) the
costs associated with an agreement for the supplemental further development and
manufacture of clinical grade C225, our lead interventional therapeutic product
candidate for cancer, to support ongoing and future human clinical trials, (2)
the costs associated with the initiation of Phase III clinical studies of C225,
(3) expenditures in the functional areas of product development, manufacturing,
clinical and regulatory affairs associated with C225 and (4) expenditures
associated with additional staffing in the area of discovery research.
General and Administrative Expenses. General and administrative expenses
include administrative personnel costs, costs incurred in connection with
pursuing arrangements with corporate partners and technology licensors, and
expenses associated with applying for patent protection for our technology and
products. Such expenses for the six months ended June 30, 1999 and 1998 were
$3,677,000 and $2,959,000, respectively, an increase of $718,000, or 24%. The
increase in general and administrative expenses primarily reflected (1)
additional support staffing for our expanding research, development, clinical
manufacturing and marketing efforts, particularly with respect to C225 and (2)
expenses associated with the pursuit of strategic corporate alliances and other
corporate development expenses. We expect general and administrative expenses to
increase in future periods to support our planned increases in research,
development, clinical and manufacturing efforts.
Interest and Other Income or Loss and Interest Expense. Interest income
was $1,168,000 for the six months ended June 30, 1999 compared to $1,607,000 for
the six months ended June 30, 1998, a decrease of $439,000, or 27%. The decrease
was primarily attributable to the decrease in our investment portfolio as a
result of funding our operations. Interest expense was $246,000 and $200,000 for
the six months ended June 30, 1999 and 1998, respectively, an increase of
$46,000, or 23%. Interest expense for both periods primarily included (1)
interest on an outstanding Industrial Development Revenue Bond issued in 1990
(the "1990 IDA Bond") with a principal amount of $2.2 million and (2) interest
recorded on various capital lease obligations under a December 1996 Financing
Agreement (the "1996 Financing Agreement") and an April 1998 Financing Agreement
(the "1998 Financing Agreement") with Finova Technology Finance, Inc.
("Finova"). The increase was primarily attributable to entering into additional
capital leases. We recorded losses on securities available for sale for the six
months ended June 30, 1999 in the amount of $832,000 as compared to gains of
$2,000 for the six months ended June 30, 1998. The loss for the six months ended
June 30, 1999 is primarily attributable to the $828,000 write-down of our
investment in CombiChem Inc. ("CombiChem") as a result of other than a temporary
decline. We have not sold these securities. On October 7, 1999, CombiChem
announced that it is being acquired and holders of its shares will receive cash
consideration of approximately $6.75 per share, which would represent a
financial reporting gain with respect to our CombiChem shares of approximately
$900,000, after considering the aforementioned write-down. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
Net Losses. We had net losses to common stockholders of $18,071,000, or
$0.73 per share, for the six months ended June 30, 1999 compared with
$9,606,000, or $0.40 per share, for the six months ended June 30, 1998. The
increase in the net losses and per share net loss to common stockholders was due
primarily to the factors noted above.
YEARS ENDED DECEMBER 31, 1998 AND 1997
Revenues. Revenues for the years ended December 31, 1998 and 1997 were
$4,193,000 and $5,348,000, respectively, a decrease of $1,155,000, or 22%.
Revenues for the year ended December 31, 1998 consisted of
26
<PAGE> 28
(1) $300,000 in research support from our partnership with American Home in
infectious disease vaccines, (2) $1 million in milestone revenue and $2.5
million in research and support payments from our agreement with Merck KGaA for
BEC2, (3) $295,000 in royalty revenue from our strategic alliance with Abbott in
diagnostics and (4) $98,000 from a Phase I Small Business Innovation Research
grant from the NCI for a program in cancer-related angiogenesis. Revenues for
the year ended December 31, 1997 consisted of (1) $300,000 in research support
from our partnership with American Home in infectious disease vaccines, (2) $2
million in milestone revenue and $1.7 million in research and support payments
from our agreement with Merck KGaA for BEC2 and (3) $1 million in milestone
revenue and $381,000 in royalty revenue from our strategic alliance with Abbott
in diagnostics. The decrease in revenues for the year ended December 31, 1998
was primarily attributable to a decrease in milestone revenue which can vary
widely from period to period depending upon the timing of the achievement of
various research and development milestones for products under development.
Operating Expenses: Research and Development. Total operating expenses for
the years ended December 31, 1998 and 1997 were $28,194,000 and $21,811,000,
respectively, an increase of $6,383,000, or 29%. Research and development
expenses for the years ended December 31, 1998 and 1997 were $21,049,000 and
$16,455,000, respectively, an increase of $4,594,000 or 28%. Such amounts for
both years ended December 31, 1998 and 1997 represented 75% of total operating
expenses. The increase in research and development expenses for the year ended
December 31, 1998 was partially attributable to (1) the costs associated with an
agreement in principle for the supplemental further development and manufacture
of clinical grade C225 to support ongoing and future human clinical trials, (2)
expenditures associated with additional staffing in the area of discovery
research, (3) the initiation of new supported research programs with academic
institutions, (4) the establishment of corporate in-licensing arrangements and
(5) expenditures in the functional areas of product development, manufacturing,
clinical and regulatory affairs associated with C225. This increase was
partially offset by the one-time $2.2 million non-cash compensation expense
recorded for the year ended December 31, 1997 in connection with the extension
of the term of an officer's warrant to purchase 397,000 shares of common stock.
General and Administrative Expenses. General and administrative expenses
include administrative personnel costs, costs incurred in connection with
pursuing arrangements with corporate partners and technology licensors, and
expenses associated with applying for patent protection for our technology and
products. Such expenses for the years ended December 31, 1998 and 1997 were
$7,145,000 and $5,356,000, respectively, an increase of $1,789,000, or 33%. The
increase in general and administrative expenses primarily reflected (1)
additional support staffing for expanding our research, development, clinical
and manufacturing efforts, particularly with respect to C225 and (2) expenses
associated with the pursuit of strategic corporate alliances and other corporate
development expenses. We expect general and administrative expenses to increase
in future periods to support our planned increases in research, development,
clinical and manufacturing efforts.
Interest and Other Income and Interest Expense. Interest and other income
was $3,054,000 for the year ended December 31, 1998 compared to $1,523,000 for
the year ended December 31, 1997, an increase of $1,531,000, or 101%. The
increase was primarily attributable to the increased interest income earned from
higher cash balances in our investment portfolio resulting from the private
placement of series A preferred stock completed in December 1997. Interest
expense was $435,000 and $551,000 for the years ended December 31, 1998 and
1997, respectively, a decrease of $116,000, or 21%. Interest expense for both
periods primarily included (1) interest on the 1990 IDA Bond, which has a
principal amount of $2.2 million, (2) interest recorded on capital lease
obligations and (3) interest recorded on a liability to Pharmacia and Upjohn
Inc. ("Pharmacia"), for the reacquisition of the worldwide rights to a
recombinant mutein form of Interleukin-6 ("IL-6m") as well as clinical material
manufactured and supplied to us by Pharmacia. The decrease was primarily
attributable to the (1) December 1997 repayment of an IDA Bond issued in 1986
(the "1986 IDA Bond") with a principal amount of $2.1 million and (2) February
1998 repayment of the remaining liability to Pharmacia.
Net Losses. We had net losses to common stockholders of $25,050,000, or
$1.03 per share, for the year ended December 31, 1998 compared with $15,654,000,
or $0.67 per share, for the year ended December 31,
27
<PAGE> 29
supply of C225 for both clinical trials and commercial sale. We cannot be
certain that we will be able to enter into this agreement or any other
agreements with third party manufacturers on terms acceptable to us or at all.
Even if we are able to enter into such agreements, we cannot be certain that we
will be able to produce or obtain sufficient quantities for the commercial sale
of our products. Any delays in producing or obtaining commercial quantities of
our products could have a material adverse effect on our business, financial
condition and results of operations.
We are also dependent upon a sole supplier of a component of the media used
in the production of C225. If this supply were to cease, it could hinder our
ability to manufacture C225 in the quantities required.
OUR BUSINESS DEPENDS UPON OUR CORPORATE PARTNERS
So far, we have earned almost all of our revenues from research and
development funding and license fees and royalties paid to us under agreements
with our corporate partners. We expect this to continue over the next several
years. License fees may be payable to us either when we first enter into an
agreement or when and if we or our corporate partners, depending on the
agreement, reach agreed-upon research, regulatory and commercialization
milestones, or both. We do not receive any of these payments at regular
intervals; the amounts have fluctuated in the past and we expect them to
continue to fluctuate in the future. In most cases, our corporate partners can
terminate these arrangements, including their payment obligations, on relatively
short notice under specified circumstances. We cannot be certain that we will
continue to receive revenues from these arrangements, or that we will enter into
any new similar agreements.
The successful development, marketing and sale of our products worldwide is
subject to the risk of financial or other difficulties with respect to our
relationships with our corporate partners. The amount and timing of payments we
receive under our arrangements with these parties depend upon variables that are
out of our control. In addition, our corporate partners or their affiliates may
be developing their own products or technologies which may directly compete with
products that are the subject of their arrangements with us. While we believe
that our corporate partners are or will be economically motivated to work toward
successful arrangements with us, we cannot be certain that their corporate
interests and motivations will remain consistent with ours.
In December 1998, we entered into an agreement with Merck KGaA, a
German-based drug company, relating to the development, marketing and sale of
C225. Under this agreement:
- we have retained the rights to develop and market C225 within the United
States and Canada
- we have granted Merck KGaA exclusive rights, except in Japan, to develop
and market C225 outside of the United States and Canada
- we have agreed to supply Merck KGaA, and Merck KGaA has agreed to
purchase, C225 for the conduct of clinical trials and the
commercialization of the product outside the United States and Canada
- we will co-develop and co-market C225 in Japan with Merck KGaA
- we have granted Merck KGaA an exclusive license outside of the United
States and Canada, without the right to sublicense, to apply certain of
our patents to a humanized EGF receptor antibody on which Merck KGaA has
performed preclinical studies
In return, Merck KGaA agreed to pay up-front fees and to make cash payments
and equity investments in our business if specific milestones are achieved.
Merck KGaA will also pay us royalties on any sales of C225 outside the United
States and Canada. In addition, Merck KGaA has agreed to provide a guaranty of
our obligations under a credit agreement relating to the construction of our new
C225 manufacturing facility.
We have also granted Merck KGaA a license to develop and market BEC2
worldwide. We have retained the right to co-promote BEC2 with Merck KGaA within
North America and it is intended that we will be the bulk manufacturer of BEC2
for worldwide production. In return, Merck KGaA has agreed to pay up-front
28
<PAGE> 30
Net Losses. We had net losses to common stockholders of $15,654,000, or
$0.67 per share, for the year ended December 31, 1997, compared with
$16,015,000, or $0.83 per share, for the year ended December 31, 1996. The year
ended December 31, 1996 included a $1,267,000 or $0.07 per share extraordinary
loss on early extinguishment of debt. This extraordinary loss resulted from the
issuance of our common stock in lieu of cash repayment of a $2.5 million loan
due the Oracle Group and a $180,000 long-term note owed to one of our directors.
The decrease in the per share net loss to common stockholders is due primarily
to the increased number of shares of our common stock outstanding as a result of
the March 1997 public offering of our common stock.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, our principal sources of liquidity consisted of cash and
cash equivalents and short-term securities available for sale of approximately
$40.7 million. Since inception we have financed our operations through the
following means:
- Public and private sales of equity securities in financing transactions
have raised approximately $163.8 million in net proceeds.
- We have earned approximately $33,738,000 from license fees, contract
research and development fees and royalties from collaborative partners,
including approximately $883,000 earned during the six months ended June
30, 1999. Additionally, we have received $14 million, $12 million of
which we had received and recorded as of June 30, 1999, in potentially
refundable fees from our C225 development and license agreement with
Merck KGaA. And, as of October 27, 1999, Merck KGaA has confirmed that
we have achieved milestones, with respect to which we are entitled to
receive an additional $6 million in payments. The amounts from Merck
KGaA have yet to be recognized as revenue.
- We have earned approximately $9.6 million in interest income, including
approximately $1.2 million earned during the six months ended June
30,1999.
- The sale of the IDA Bonds in each of 1985, 1986 and 1990 raised an
aggregate of $6.3 million, the proceeds of which have been used for the
acquisition, construction and installation of our research and
development facility in New York City, and of which $2.2 million is
outstanding as of June 30, 1999.
The 1990 IDA Bond in the outstanding principal amount of $2.2 million
becomes due in 2004. We will incur annual interest on the 1990 IDA Bond
aggregating approximately $250,000. In order to secure our obligations to the
New York Industrial Development Agency ("NYIDA") under the 1990 IDA Bond, we
have granted the NYIDA a security interest in facility equipment purchased with
the bond proceeds.
We signed a definitive agreement in April 1999 with BI for the further
development, production scale-up and manufacture of our lead therapeutic product
candidate, C225, for use in human clinical trials. Services pursuant to this
agreement commenced in April 1998 pursuant to an agreement in principle. We
estimate that the total cost under the agreement, including the cost of
additional amounts of material we have the right to request, will be
DM12,100,000 (or $6,392,000, as of June 30, 1999). As of June 30, 1999, we had
incurred approximately DM3,940,000, of which DM3,130,000 had been paid, for
services provided under this agreement. We do not currently hedge our exposure
to the foreign currency risk associated with this agreement. We may pursue an
agreement with another third party relating to the manufacture of C225 for both
clinical trials and commercial sale. Any such agreement would likely require us
to expend substantial funds over the next several years for process development
and for supply of C225.
We have obligations under various capital leases for certain laboratory,
office and computer equipment and also certain building improvements primarily
under the 1996 Financing Agreement and the 1998 Financing Agreement with Finova.
The 1996 Financing Agreement allowed us to finance the lease of equipment and
make certain building and leasehold improvements to existing facilities
involving amounts totaling approximately $2.5 million. Each lease has a fair
market value purchase option at the expiration of a 42-month term. Pursuant to
the 1996 Financing Agreement, we issued to Finova a warrant expiring December
31, 1999 to purchase 23,220 shares of our common stock at an exercise price of
$9.69 per share. We
29
<PAGE> 31
recorded a non-cash debt discount of approximately $125,000 in connection with
this financing, which discount is being amortized over the 42-month term of the
first lease. The 1996 Financing Agreement with Finova expired in December 1997
and we utilized only $1.7 million of the full $2.5 million under the agreement.
In April 1998, we entered into the 1998 Financing Agreement with Finova totaling
approximately $2 million. The terms of the 1998 Financing Agreement are
substantially similar to the now expired 1996 Financing Agreement except that
each lease has a 48-month term. As of June 30, 1999, we had entered into twelve
individual leases under both the 1996 Financing Agreement and the 1998 Financing
Agreement aggregating a total cost of $3.7 million. The 1998 Financing Agreement
expired in May 1999.
We rent our New York City facility under a lease which was scheduled to
expire in March 1999. We renewed the entire lease for a term commencing as of
January 1, 1999 through December 2004 and have begun to retrofit the facility to
better suit our needs at an expected cost of approximately $2 million.
Under our agreement with Merck KGaA for C225, we developed, in consultation
with Merck KGaA, a production concept for a new manufacturing facility for the
commercial production of C225. Merck KGaA is to provide us, subject to certain
conditions, with a guaranty under a $30 million credit facility for the
build-out of this facility. We have determined to erect this facility adjacent
to our current manufacturing facility in New Jersey, which supplies C225 to
support our clinical trials. We plan to begin construction on this facility in
the first half of 2000 and estimate that the total cost will be approximately
$45 million. We are currently in the process of finalizing the terms of the loan
agreement and guaranty. We expect to fund the remaining cost of this facility
through a combination of cash on hand and equipment financing transactions.
Total capital expenditures made during the six months ended June 30, 1999
were $2,542,000, of which $532,000 has been reimbursed in accordance with the
terms of the 1998 Financing Agreement with Finova. Of the total capital
expenditures made during the six months ended June 30, 1999, $1.4 million
related to the purchase of equipment for and costs associated with the retrofit
of our corporate office and research laboratories in New York. The balance of
capital additions includes $933,000 associated with the construction of the
commercial manufacturing facility to be erected adjacent to our current
manufacturing facility in New Jersey. The remaining $217,000 related to
improving and equipping our existing manufacturing facility.
The holders of the 400,000 shares of series A preferred stock are entitled
to receive cumulative dividends at an annual rate of $6.00 per share. Dividends
accrue as of the issuance date of the series A preferred stock and are payable
on the outstanding series A preferred stock in cash on December 31 of each year
beginning December 31, 1999 or at the time of conversion or redemption of the
series A preferred stock on which the dividend is to be paid, whichever is
sooner. Accrued dividends were $3,702,000 at June 30, 1999.
We believe that our existing cash on hand and amounts expected to be
available under our credit facilities, together with the net proceeds from this
offering, should enable us to maintain our current and planned operations
through at least 2001. We are also entitled to reimbursement for certain
research and development expenditures and to certain milestone payments,
including $16 million in cash-based milestone payments and $30 million in
equity-based milestone payments from our C225 development and license agreement
with Merck KGaA, which are to be paid subject to our attaining research and
development milestones, certain of which have recently been attained, and
certain other conditions. There can be no assurance that we will achieve the
unachieved milestones. Additionally, the termination of the agreement due to our
failure to obtain the necessary collateral license agreements would require us
to return all milestone payments made to date, plus $500,000 in liquidated
damages. Our future working capital and capital requirements will depend upon
numerous factors, including, but not limited to:
- progress of our research and development programs, pre-clinical testing
and clinical trials
- our corporate partners fulfilling their obligations to us
- timing and cost of seeking and obtaining regulatory approvals
- timing and cost of manufacturing scale-up and effective
commercialization activities and arrangements
- level of resources that we devote to the development of marketing and
sales capabilities
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<PAGE> 32
- costs involved in filing, prosecuting and enforcing patent claims
- technological advances
- status of competitors
- our ability to maintain existing and establish new collaborative
arrangements with other companies to provide funding to support these
activities
- costs of establishing both clinical scale and commercial scale
manufacturing capacity in our facility and those of others
In order to fund our capital needs after 2001, we will require significant
levels of additional capital and we intend to raise the capital through
additional arrangements with corporate partners, equity or debt financings, or
from other sources including the proceeds of product sales, if any. There is no
assurance that we will be successful in consummating any such arrangements. If
adequate funds are not available, we may be required to significantly curtail
our planned operations.
At December 31, 1998, we had net operating loss carryforwards for United
States federal income tax purposes of approximately $129.5 million, which expire
at various dates from 2000 through 2018. At December 31, 1998 we had research
credit carryforwards of approximately $3.6 million, which expire at various
dates from 2009 through 2018. Under Section 382 of the Internal Revenue Code of
1986, as amended, a corporation's ability to use net operating loss and research
credit carryforwards may be limited if the corporation experiences a change in
ownership of more than 50 percentage points within a three-year period. Since
1986, we have experienced two such ownership changes. As a result, we are only
permitted to use in any one year approximately $5.2 million of our available net
operating loss carryforwards that relate to periods before these ownership
changes. Similarly, we are limited in using our research credit carryforwards.
It has not been determined whether the offering described in this prospectus
will result in additional ownership changes that would further limit the use of
our net operating losses and research credit carryforwards.
MARKET RISK
Our holdings of financial instruments are comprised of a mix of any of U.S.
corporate debt, foreign corporate debt, U.S. government debt, foreign
government/agency guaranteed debt and commercial paper. All such instruments are
classified as securities available for sale. Generally, we do not invest in
portfolio equity securities or commodities or use financial derivatives for
trading purposes. Our debt security portfolio represents funds held temporarily
pending use in our business and operations. We manage these funds accordingly.
We seek reasonable assuredness of the safety of principal and market liquidity
by investing in rated fixed income securities while at the same time seeking to
achieve a favorable rate of return. Our market risk exposure consists
principally of exposure to changes in interest rates. Our holdings are also
exposed to the risks of changes in the credit quality of issuers. We typically
invest in the shorter-end of the maturity spectrum, or if longer, in highly
liquid debt instruments with periodic interest rate adjustments. We also have
certain foreign exchange currency risk. The table below presents the principal
amounts and related weighted average interest rates by year of maturity for our
investment portfolio as of June 30, 1999:
<TABLE>
<CAPTION>
2004 AND
1999 2000 2001 2002 2003 THEREAFTER TOTAL FAIR VALUE
---- ---------- ---------- ---- ---- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed Rate............ -- $2,739,000 -- -- -- -- $ 2,739,000 $ 2,744,000
Average Interest
Rate................ -- 5.10% -- -- -- -- 5.20% --
Variable Rate......... -- -- $1,136,000(1) -- -- $33,952,000(1) $35,088,000 $35,262,000
Average Interest
Rate................ -- -- 5.43% -- -- 5.17% 5.18% --
-- ---------- ---------- -- -- ----------- ----------- -----------
-- $2,739,000 $1,136,000(1) -- -- $33,952,000(1) $37,827,000 $38,006,000
== ========== ========== == == =========== =========== ===========
</TABLE>
- ------------
(1) These holdings consist of U.S. corporate and foreign corporate floating rate
notes. Interest on the securities are adjusted at fixed dates using
prevailing interest rates. These holdings are highly liquid and we consider
the potential for loss of principal to be minimal.
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<PAGE> 33
YEAR 2000
The "Year 2000 problem" involves mainly the inability of certain computer
programs and microprocessing devices to differentiate between the year 1900 and
the year 2000 because two-digit rather than four-digit fields were used to
identify the year. There are a variety of related "date" problems, including the
use by older programs and devices of algorithms that will fail to correctly
identify the year 2000 and certain other years in the twenty-first century as
leap years. A Year 2000 problem could cause a computer system or microprocessor
that is date sensitive to malfunction, resulting in system failures. Such
failures could cause disruptions of our operations, including, without
limitation, the systems in place at our Somerville, New Jersey clinical-scale
manufacturing facility, computers, communication devices and laboratory
instrumentation and systems which use date-based information in our research and
development and scientific testing or, possibly, in our pre-clinical or clinical
trials.
To deal with the Year 2000 problem we have developed a Year 2000 program
that has three main phases: (1) review of information technology and
non-information-technology systems for the purposes of assessing the potential
impact of Year 2000 on our business and identifying non-Year 2000 compliant
systems; (2) remediation and development of contingency plans; and (3) testing.
These phases are not necessarily sequential. We have a Year 2000 team to
coordinate and carry out the various phases and Reporting Responsible Persons in
each critical area, including computer hardware, software, other hardware,
laboratory equipment, collaborators and process/clinical development. While we
believe that our program is and will be adequate to address Year 2000 problems,
there can be no assurance that our operations will not be adversely affected.
While we have devoted significant resources to dealing with the Year 2000
problem, our efforts to date have not caused the deferral of any other
significant information technology projects.
We have reviewed the potential impact of the "Y2K" bug on our research and
development, product development, manufacturing, financial, communication and
administrative operations. We determined which systems are critical to our
business. We also determined which systems were non-Year 2000 compliant.
We are in the process of remediating through corrective programming
modifications or system replacement all mission critical systems that we
identified as non-compliant. We believe that this process is substantially
completed. In addition, for systems that we have identified as non-mission
critical, we also intend to either correct them through programming changes or
replace them with compliant software and any necessary hardware or, possibly,
simply discontinue using the system.
We have incurred approximately $350,000 on our Year 2000 program through
June 30, 1999. This includes the purchase of third-party software and required
hardware to run such software as well as the cost of modifying software. We
estimate that any additional costs incurred to complete our remediation plan
will not be material.
In addition to the review of internal systems, we are making inquiries of
our critical suppliers, corporate partners, manufacturers, clinical study sites,
service suppliers, communications providers, lessors, utilities, and banks whose
system failures or non-compliant products could have an adverse impact on our
operations. While we are not currently aware of any material Year 2000 problems
involving such entities that are likely to adversely affect us, there can be no
assurance that there will not be such problems or that, if discovered, they will
be timely remediated.
We have developed contingency plans to deal with possible disruptions of
important operations such as discovery research, product development,
manufacturing and ongoing clinical trials. Such disruptions could affect the
development and ultimate marketing of potential products as well as put us at a
competitive disadvantage relative to companies that have corrected such
problems. These contingency plans may need to be refined as more information
becomes available.
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<PAGE> 34
BUSINESS
OVERVIEW
We are a biopharmaceutical company engaged in the research and development
of novel cancer treatments. We focus on what we believe are three promising
strategies for treating cancer: growth factor inhibitors, therapeutic cancer
vaccines and angiogenesis inhibitors.
Our lead product candidate, C225, is a therapeutic monoclonal antibody that
inhibits stimulation of a receptor for growth factors upon which certain solid
tumors depend in order to grow. C225 has been shown in several Phase I/II trials
to have an acceptable safety profile, to be well tolerated and, when
administered with either radiation therapy or chemotherapy, to enhance tumor
reduction. C225 is currently in pivotal trials for treating head and neck
cancer. Upon the receipt of regulatory approval, we intend to market C225 in the
United States and Canada. We will rely on our development and marketing partner,
Merck KGaA, to market C225 outside the United States and Canada and to pay us a
royalty on all such sales. We are responsible for the manufacture and supply of
C225 for all clinical trials and eventual commercial sales.
Our next most advanced product candidate, BEC2, is a cancer vaccine. In
partnership with Merck KGaA, we are testing BEC2 for preventing recurrence or
progression of small-cell lung cancer in a Phase III pivotal trial. Upon the
receipt of regulatory approval, we intend to co-promote BEC2 with Merck KGaA in
North America. Merck KGaA will be responsible for developing and marketing BEC2
outside North America and will be obligated to pay us royalties on all such
sales. In addition, we intend to be the worldwide manufacturer of BEC2.
We are also developing inhibitors of angiogenesis, which could be used to
treat various kinds of cancer and other diseases. We have identified c-p1C11 as
our lead clinical candidate for angiogenesis inhibition. c-p1C11 is an antibody
that binds selectively and with high affinity to KDR, a principal VEGF receptor,
thereby inhibiting angiogenesis. We plan to file an application with the FDA in
the fourth quarter of 1999 in order to commence clinical trials of c-p1C11.
In addition to the development of our lead product candidates, we continue
to conduct research, both independently and in collaboration with academic and
corporate partners, in a number of areas related to our core focus of growth
factor inhibitors, cancer vaccines and angiogenesis inhibitors. We have also
developed diagnostic products and vaccines for certain infectious diseases, and
we have licensed the rights to these products and vaccines to corporate
partners.
DEVELOPMENT PROGRAMS
C225 CANCER THERAPEUTIC
The activation of the EGF receptor is believed to play a critical role in
the rapid proliferation of certain types of tumor cells and select normal cells.
Certain cancer types are characterized by the overexpression of the EGF
receptor. For example, according to the NCI, more than 61,000 cases of head and
neck cancer are diagnosed in the United States each year. More than 90% of head
and neck cancer cases have been shown to overexpress the EGF receptor on the
surface of the tumor cells. Similarly, according to the NCI, there are
approximately 132,000 cases of colorectal cancer diagnosed in the United States
each year, and in roughly half of these cases, the tumor cells have an
overexpression of the EGF receptor. Other types of cancer are also
characterized, in certain patients, by overexpression of the EGF receptor
including lung, renal and pancreatic cancer. By preventing the binding of
critical growth factors to the EGF receptor, we believe it is possible to
inhibit the growth of these tumors.
C225 is a chimerized (part human, part mouse) monoclonal antibody that
selectively binds to the EGF receptor and thereby inhibits growth of cells
dependent upon activation of the EGF receptor for replication. We have tested
C225 in numerous clinical trials, including several Phase I/II trials at
Sloan-Kettering, Yale Cancer Center, University of Virginia, MD Anderson Cancer
Center and the University of Alabama. In these studies, we have given C225
intravenously at selected doses, both alone and in combination with radiation
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<PAGE> 35
therapy or chemotherapy. To date, we have tested C225 in approximately 200
patients with various solid cancers, such as head and neck, colorectal, lung,
renal, breast and prostate cancers.
In June 1999, we completed a Phase I/II trial in which 12 patients with
advanced head and neck cancer were treated with C225 in combination with
cisplatin, a widely used chemotherapeutic drug. At the completion of the trial,
two of the nine evaluable patients had achieved a complete response and four had
achieved a partial response. Most of the patients had previously received
treatment, including standard chemotherapy, radiation therapy or experimental
treatments, and either did not respond or thereafter relapsed. In particular,
three of the six responders (including the two complete responders) had
previously been treated with a regimen containing cisplatin and relapsed
following such treatment.
In January 1999, we completed a Phase I/II trial in which 16 patients with
advanced head and neck cancer were treated with C225 in combination with
radiation therapy. At the completion of the trial, all 15 evaluable patients had
responded to therapy; 13 of the patients had achieved a complete response and
two had achieved a partial response. This compares to historical response rates
of approximately 40% in similar patients treated with radiation alone.
We believe these trials have established an appropriate dosing regimen and
have provided preliminary evidence of efficacy. The primary side effect observed
in these trials has been a folliculitis skin rash, similar in appearance to
acne, that has varied in severity depending on the patient. The rash subsides
following completion of therapy. Additionally, of the approximately 200 patients
who have received C225 to date, three have experienced an anaphylactic reaction
to the drug. For that reason, we have established protocols for the initiation
of therapy in any patient whereby an initial dose of limited quantity is
administered in the presence of a physician. If an anaphylactic reaction is
experienced, dosing is terminated immediately and appropriate measures are taken
to mollify the symptoms.
While the data from the C225 clinical trials conducted to date have been
encouraging, the results from these trials are not sufficient to establish that
C225 is safe or effective in treating cancer.
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<PAGE> 36
In order to establish whether C225 is safe and effective in treating cancer
in a large patient population and to continue to determine the types of tumors
on which C225 is most effective, we have begun the Phase II and Phase III
clinical trials summarized below. In each of these trials, C225 is being used in
combination with standard cancer therapies.
<TABLE>
<CAPTION>
NUMBER OF
PATIENTS TO
BE ENROLLED
TRIAL/INDICATION TREATMENT IN STUDY COMMENTS
- -------------------- ------------------ ----------- ---------------------------------------
<S> <C> <C> <C>
PHASE III - C225 + radiation 416 - open-label, stratified, randomized
head and neck (vs. radiation study
cancer alone) - study initiated February 1999
- 8-week course of - patient treatment commenced April
treatment 1999
- 50+ sites expected
- primary endpoint: local regional
disease control at one year
PHASE III - C225 + cisplatin 114 - double-blinded, placebo-controlled,
head and neck (vs. placebo + randomized study
cancer cisplatin) - conducted in cooperation with the
- 8-week course of Eastern Cooperative Oncology Group
treatment - study initiated June 1999
- patient treatment expected to
commence November 1999
- 50+ sites expected
- primary endpoint: progression-free
survival
PHASE II - C225 + cisplatin 175 - open-label, stratified,
refractory head - 6-week course of non-randomized study
and neck cancer treatment - 98 patients expected to be treated
(patients with C225
previously failed - patients are stratified by disease
regimen containing progression or stable disease
cisplatin) - study initiated June 1999
- patient treatment commenced September
1999
- 40+ sites expected
- primary endpoint: response rate
PHASE II - C225 + 98 - open-label, stratified,
refractory irinotecan non-randomized study
colorectal cancer - 6-week course of - patients are stratified by disease
(patients treatment progression or stable disease
previously failed - study initiated July 1999
regimen containing - patient treatment commenced October
irinotecan) 1999
- 20+ sites expected
- primary endpoint: response rate
</TABLE>
We expect that results will be available from the two Phase III studies
described above during 2001. We expect that enough information may be available
from the two Phase II studies described above during the first half of 2000 to
determine whether the data are sufficient to support an application for FDA
approval of C225. We expect to conduct several additional Phase II clinical
trials to continue to determine whether C225 may be effective in treating other
types of cancer. These may include pancreatic, lung and renal cancer. We also
expect to conduct C225 clinical trials with Merck KGaA in Europe. There can be
no assurance that we will receive regulatory approval for C225 based on the
results of our ongoing Phase II clinical trials or any of our other ongoing or
anticipated C225 clinical trials.
We have entered into a development and marketing agreement with Merck KGaA
relating to C225. Under this agreement, we have retained the right to develop
and market C225 within the United States and Canada, and we have granted Merck
KGaA the exclusive right, except in Japan (where we will co-develop
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<PAGE> 37
and co-market C225 with Merck KGaA), to develop and market C225 outside of the
United States and Canada. Under the agreement, we will manufacture C225. In
return, Merck KGaA has agreed to pay up-front fees and to make cash milestone
payments and equity investments in our business if specific milestones are
achieved. Merck KGaA will also pay us royalties on any sales of C225 outside of
the United States and Canada. Through October 27, 1999, we have received $14
million in up-front fees and milestone payments from Merck KGaA and has
confirmed that we have achieved milestones with respect to which we are entitled
to receive an additional $6 million in payments under this agreement. In
addition, Merck KGaA has agreed to provide a guaranty of our credit agreement
obligations relating to the construction of our new C225 commercial
manufacturing facility.
As described above, we are testing C225 in several different types of
cancer. While in certain cancer types, like head and neck cancer, the EGF
receptor is overexpressed in nearly every patient with such cancer, in others,
like colorectal cancer, many patients will not be positive for the EGF receptor.
Currently, for the purpose of testing of patients in the colorectal cancer
trial, a diagnostic assay must be used to determine which patients are positive
for the EGF receptor. Patients must be positive for the EGF receptor to be
included in this trial. Currently, such diagnostic tests are being performed in
a laboratory setting as there are no commercialized assays available for such
purpose. If C225 is approved for treating particular cancer types, standard
diagnostic kits will need to be available commercially. We are in late stage
discussions with several different companies capable of developing, obtaining
regulatory approval for and commercializing such an assay in a timely fashion so
that it will be readily available both for our ongoing clinical trials and for
commercialization.
BEC2 CANCER VACCINE
A cancer vaccine works by the administration of an antigen or the mimic of
an antigen that is found on the surface of certain types of cancer cells and
which activates immune responses to protect against metastasis or recurrence of
the tumor. A cancer vaccine will generally be given after the tumor has
responded to initial treatment. Often, an antigen mimic can produce a stronger
immune response than that produced by the original antigen that it resembles.
BEC2 is a monoclonal antibody that we are developing as a cancer vaccine.
BEC2 mimics GD3, a molecule expressed on the surface of several types of cancer
cells. By mimicking GD3, BEC2 stimulates an immune response against cells
expressing GD3.
We have tested BEC2 in Phase I clinical trials at Sloan-Kettering against
certain forms of cancer, including both limited disease and extensive disease
small-cell lung carcinoma and melanoma (skin cancer). Limited disease small-cell
lung carcinoma is limited to the lungs. Extensive disease small-cell lung
carcinoma means that the disease has migrated to other parts of the body. In one
such trial, 15 patients with small-cell lung carcinoma who had previously
received chemotherapy and radiation therapy and achieved a partial or complete
response were treated with BEC2. At the time the results were analyzed,
approximately 27% of the patients had survived nearly five years following
diagnosis. These survival rates are longer than historical survival rates for
similar patients receiving conventional therapy and formed the basis for going
forward with Phase III studies. This trial is not sufficient to establish that
BEC2 is safe or effective in treating cancer.
In conjunction with Merck KGaA, we have initiated a 570-patient
multinational pivotal Phase III trial for BEC2 in the treatment of limited
disease small-cell lung cancer. The trial will examine patient survival two
years after course of therapy. We expect to complete enrollment in the trial
during 2001.
We have entered into a development and marketing agreement with Merck KGaA
relating to BEC2. We have retained the right to co-promote BEC2 with Merck KGaA
within North America, and we have granted Merck KGaA exclusive rights to develop
and market BEC2 outside of North America. Under the agreement, Merck KGaA is
also funding the Phase III pivotal trial. In addition, we intend to be the
worldwide manufacturer of BEC2.
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<PAGE> 38
MONOCLONAL ANTIBODY INHIBITOR OF ANGIOGENESIS
Our general experience with growth factors, particularly the use of C225 to
block the EGF receptor, has enabled us to pursue another promising approach for
the treatment of cancer, the inhibition of angiogenesis. Angiogenesis is the
natural process of new blood vessel growth. VEGF is one of a group of molecules
that helps regulate angiogenesis. Tumor cells as well as normal cells produce
VEGF. Once produced by the tumor cells, VEGF stimulates the production of new
blood vessels and ensures an adequate blood supply to the tumor, enabling the
tumor to grow. KDR is a growth factor receptor found almost exclusively on the
surface of human endothelial cells, which are the cells that line all blood
vessels. VEGF must recognize and bind to this KDR receptor in order to stimulate
the endothelial cells to grow and cause new blood vessels to form. We believe
that interference with the binding of VEGF to the KDR receptor inhibits
angiogenesis, and can potentially be used to slow or halt tumor growth.
c-p1C11 is a chimerized monoclonal antibody, which specifically binds to
the KDR receptor. By doing so, it prevents VEGF from binding to that receptor,
which, in turn, blocks endothelial cell growth and inhibits angiogenesis.
c-p1C11 therefore helps inhibit or eliminate cancer by preventing the growth of
new blood vessels and depriving the tumor of the blood supply that it requires
to grow. We expect to file an IND application with the FDA by the end of 1999 in
order to commence clinical trials of c-p1C11.
We believe c-p1C11 will be effective in treating many solid tumors and that
it may also be useful in treating other diseases such as diabetic retinopathy,
age-related macular degeneration, and rheumatoid arthritis that, like cancer,
depend on the growth of new blood vessels.
IMCLONE'S RESEARCH PROGRAMS
GENERAL
In addition to concentrating on our products in development, we perform
ongoing research, including research in each of the areas of our ongoing
clinical programs of growth factor inhibitors, therapeutic cancer vaccines and
angiogenesis inhibitors. We have assembled a scientific staff with expertise in
a variety of disciplines, including oncology, immunology, molecular and cellular
biology, antibody engineering, protein and synthetic chemistry and
high-throughput screening. In addition to pursuing research programs in-house,
we collaborate with academic institutions and corporations to support our
research and development efforts.
RESEARCH ON GROWTH FACTOR INHIBITORS
We are conducting a research program to develop inhibitors to the
cell-signal transduction pathways of a class of enzymes referred to as tyrosine
kinases. These pathways have been shown to be involved in the rapid
proliferation of tumor cells. We are developing monoclonal antibodies to inhibit
the binding of growth factors to cellular receptors that trigger these pathways,
thereby potentially inhibiting cell division and tumor growth. We are also
developing small molecule inhibitors to the tyrosine kinase pathways.
In October 1997, we entered into an agreement with CombiChem, a
combinational chemistry company, to utilize their library of structures of
chemical compounds to help us identify and synthesize novel small molecule
candidates that interfere with the function of growth factor receptors.
Performance under this agreement is substantially complete but for the transfer
to us of small molecule candidates and related information. We have also entered
into an agreement with the Institute for Molecular Medicine in Freiburg,
Germany, which permits us to test small molecules as therapeutic candidates to
see if they are effective in inhibiting various tyrosine kinase receptors.
RESEARCH ON CANCER VACCINES
We are conducting research to discover possible cancer vaccines as another
route to cancer treatment. Cancer vaccines would activate immune responses to
tumors to protect against metastasis or recurrence of cancer. We are focusing
our cancer-vaccine research efforts on developing melanoma vaccines.
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<PAGE> 39
In addition to the development of BEC2, we are conducting research on a
possible melanoma vaccine based on the melanoma antigen gp75. A melanoma is a
tumor or cancerous growth of the skin. Animal studies have shown that a gp75
cancer vaccine is very effective in creating an immune response in the body
against melanoma cells, and may prevent or inhibit growth of experimental
melanoma tumors in mice. Additionally, we are investigating the use of other
melanoma antigens to be used in conjunction with gp75 for the development of an
effective vaccine. We are also investigating various modes of enhancing the
capacity of the vaccine to elicit an immune response. We have retained North
American marketing and manufacturing rights for gp75 and have licensed to Merck
KGaA the rights to manufacture and market gp75 outside North America.
RESEARCH ON ANGIOGENESIS INHIBITORS
We are conducting research on small molecules to develop inhibitors of
enzymes important in angiogenesis.
In addition, we are continuing to work with DC101 in animal models. DC101
is an antibody that neutralizes the FLK-1 receptor, which is the mouse receptor
to VEGF that corresponds to KDR in humans. Such models have shown that DC101
inhibits tumor growth, and we are now focusing on establishing protocols for
combination therapies of DC101 with radiation therapy or chemotherapy.
Preliminary studies have shown that such combination results in better efficacy
than with the DC-101 antibody alone. We are supporting research in this area at
Sunnybrook Health Science Center, University of Toronto ("Sunnybrook Health
Science Center").
In connection with our anti-angiogenesis research program, we are also
doing research to see whether antibodies that inhibit vascular-specific cadherin
("VE-cadherin") also inhibit angiogenesis. Cadherins are a family of cell
surface molecules that help organize tissue structures. Researchers believe that
VE-cadherin plays an important role in angiogenesis by organizing endothelial
cells into vascular tubes, which is a necessary step in the formation of new
blood vessels. As we stated above, advanced tumor growth is dependent on the
formation of a capillary blood vessel network in the tumor to ensure an adequate
blood supply to the tumor. Therefore, antibodies that inhibit VE-cadherin may
inhibit such capillary formation in tumors, and help fight cancer by cutting-off
an adequate blood supply to the tumor. We intend to test various monoclonal
antibodies against VE-cadherin to see if they are effective in inhibiting the
function of the VE-cadherin, and the growth of blood vessels.
In connection with our VE-cadherin research program, we have been assigned
the exclusive rights to VE-cadherin-2, a recently developed form of VE-cadherin,
and to antibodies that inhibit VE-cadherins. We also collaborate with the Mario
Negri Institute for Pharmacological Research, Milan, Italy (the "Mario Negri
Institute"), to do pharmacological research to better determine the role of
VE-cadherin in angiogenesis.
MISCELLANEOUS RESEARCH AREAS
We are conducting additional research outside of our three principal areas
of clinical focus. These include: (1) a means to induce apoptosis (programmed
cell-death) in order to enhance tumor cell killing, including looking for small
molecules that enhance the apoptosic process; (2) efforts to isolate endothelial
stem cells and to determine the utility of such isolated cells, possibly in
stimulation of wound healing, muscle regeneration or repair of damage to
blood-deprived tissues; and (3) development of a panel of genes potentially
useful for the maintenance and stimulation of stem cells.
RESEARCH COLLABORATIONS AND CLINICAL COLLABORATIONS
We engage in collaborations with academic institutions and private industry
in the course of conducting our research and clinical studies. We are
collaborating with CombiChem to discover and develop novel small molecules for
use against selected targets for the treatment of cancer utilizing high
throughput screening techniques. We support research at the Mario Negri
Institute to explore the role that a family of proteins, called VE-cadherins,
plays in angiogenesis. At the University of Texas, Southwestern Medical Center
we are further studying the role VE-cadherins play in angiogenesis by studying
VE-cadherin-2, a type of VE-
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cadherin, in animal models. At the Sunnybrook Health Science Center, we are
supporting research to evaluate whether chemotherapy combined with neutralizing
antibodies to the FLK-1/VEGF receptor will result in a synergistic
anti-angiogenic response. At Princeton University and the University of
Pennsylvania, we are collaborating in the development of an extensive panel of
stem cell and stromal cell genes, toward the identification of genes critical to
stem cell maintenance and stimulation.
In the clinical area, at the University of Wisconsin-Madison Medical
School, we are conducting additional studies of C225 in head and neck cancers in
combination with radiation therapy. The European Organization for Research and
Treatment of Cancer is involved in managing the worldwide data for the BEC2
Phase III study.
At Sloan Kettering, we collaborate both in the research area and clinical
area. We support research on both potential cancer vaccine products BEC2 and
gp75. We have been testing BEC2 in Phase I clinical trials at Sloan-Kettering
against certain forms of cancer, including small cell lung carcinoma and
melanoma.
Our collaborations with Merck KGaA in developing our C225 and BEC2 products
are described in the following section.
COLLABORATIONS WITH MERCK KGAA
C225 License and Development Agreement. In December 1998, we entered into
an agreement with Merck KGaA relating to the development and commercialization
of C225. Under this agreement:
- we have retained the rights to market C225 within the United States and
Canada
- we have granted Merck KGaA exclusive rights, except in Japan, to market
C225 outside of the United States and Canada
- we have agreed to supply Merck KGaA, and Merck KGaA has agreed to
purchase, C225 for the conduct of clinical trials and the
commercialization of the product outside the United States and Canada
- we will co-develop and co-market C225 in Japan with Merck KGaA
- we have granted Merck KGaA an exclusive license outside of the United
States and Canada, without the right to sublicense, to apply certain of
our patents to a humanized EGF receptor antibody on which Merck KGaA has
performed preclinical studies
In return, Merck KGaA is:
- paying to us $30 million in up-front fees and early cash-based milestone
payments based upon achievement of certain milestones set forth in the
agreement, of which $14 million has been received through October 27,
1999 and Merck KGaA has confirmed that we have achieved milestones with
respect to which we are entitled to receive an additional $6 million in
payments
- paying to us an additional $30 million assuming achievement of further
milestones for which Merck KGaA will receive equity (the "milestone
shares") in our company, which will be at prices at varying premiums to
the then market price of the common stock depending upon the timing of
the achievement of the respective milestones
- providing to us, subject to certain terms, a $30 million guaranty for
the construction of a manufacturing facility by us for the commercial
production of C225
- funding clinical development of C225 outside of the United States and
Canada
- required to pay us royalties on its future sales of C225 outside of the
United States and Canada, if any
The milestone shares, if issued, will be shares of our common stock (or a
non-voting security convertible into our common stock). The number of shares
issued to Merck KGaA will be determined by dividing the particular milestone
payment due by the purchase price of the common stock when the milestone is
achieved. The purchase price will relate to the then market price of our common
stock, plus a premium which varies,
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depending upon whether the milestone is achieved early, on-time or late. The
milestone shares will be a non-voting preferred stock, or other non-voting stock
convertible into our common stock if issuing shares of common stock to Merck
KGaA would result in Merck KGaA owning greater than 19.9% of our common stock.
These convertible securities will not have voting rights. They will be
convertible at a price determined in the same manner as the purchase price for
shares of our common stock if shares of common stock were to be issued. They
will not be convertible into common stock if, as a result of the conversion,
Merck KGaA would own greater than 19.9% of our common stock. This 19.9%
limitation is in place through December 2002. After this date, Merck KGaA must
sell shares it receives as a result of conversion to the extent such shares
result in Merck KGaA's owning in excess of 19.9% of our common stock. We have
granted Merck KGaA certain registration rights regarding the shares of common
stock that it may acquire upon conversion of the series A preferred stock and
milestone shares.
This agreement may be terminated by Merck KGaA in various instances,
including (1) at its discretion on any date on which a milestone is achieved (in
which case no milestone payment will be made), (2) for a one-year period after
first commercial sale of C225 in Merck KGaA's territory, upon Merck KGaA's
reasonable determination that the product is economically unfeasible (in which
case Merck KGaA is entitled to receive back 50% of the cash-based milestone
payments then paid to date, but only out of revenues received, if any, based
upon a royalty rate applied to the gross profit from C225 sales or C225 license
fees in the United States and Canada), or (3) in the event we do not obtain
certain collateral license agreements in which case Merck KGaA also is entitled
to a return of all cash amounts with respect to milestone payments to date, plus
liquidated damages of $500,000. In April 1999, the parties agreed on the
production concept for the manufacturing facility and are currently working
toward securing Merck KGaA's guaranty of our obligations under a $30 million
credit facility relating to the construction of the manufacturing facility. In
the event of termination of the agreement, we will be required to use our best
reasonable efforts to cause the release of Merck KGaA as guarantor.
In the year ended December 31, 1998, we recorded $4 million as a fee
potentially refundable from our corporate partner under this agreement and in
the six months ended June 30, 1999, we recorded an additional $8 million as a
fee potentially refundable from our corporate partner under this agreement.
BEC2 Research and License Agreement. Effective April 1990, we entered into
an agreement with Merck KGaA relating to the development and commercialization
of BEC2 and the recombinant gp75 antigen. Under this agreement:
- we have granted Merck KGaA a license to develop and market BEC2
worldwide
- we have retained the right to co-promote BEC2 within North America
- it is intended that we will be the bulk product manufacturer of BEC2 to
support worldwide sales
- we are required to give Merck KGaA the opportunity to negotiate a
license in North America to gp75 before granting such a license to any
third party
In return, Merck KGaA:
- has made research support payments to us totaling $4.7 million
- is required to make milestone payments to us of up to $22.5 million, of
which $3 million has been received through October 27, 1999, based on
milestones achieved in the product development of BEC2
- is required to make royalty payments to us on all sales of the licensed
products outside North America, if any, with a portion of the earlier
funding received under the agreement being creditable against the amount
of royalties due
Merck KGaA is responsible for conducting the clinical trials and regulatory
submissions outside North America, and we are responsible for conducting those
within North America. Costs worldwide to conduct a multi-site, multinational
Phase III clinical trial to obtain approval for the indication of the treatment
of limited disease small-cell lung carcinoma for BEC2 are the responsibility of
Merck KGaA. These include our
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out-of-pocket costs (but do not include costs of establishing a manufacturing
facility) for manufacturing materials for clinical trials, conduct of clinical
trials and regulatory submissions (other than drug approval fees which are the
responsibility of Merck KGaA or ourselves in our respective territories). If
these expenses, including such expenses of Merck KGaA, exceed DM17 million, such
excess expenses will be shared 60% by Merck KGaA and 40% by us. As of October
27, 1999, this expense level had not yet been reached. We will negotiate, with
Merck KGaA, the allocation of costs for the conduct of additional clinical
trials for other indications. We are responsible for providing the supply of the
active agent outside of North America at the expense of Merck KGaA, and the
parties intend that the cost of goods sold in North America be paid out of gross
sales of any licensed product in North America in accordance with a co-promotion
agreement to be negotiated.
The agreement terminates upon the later of (1) the last to expire of any
patents issued and covered by the technology (2) or fifteen years from the date
of the first commercial sale. After termination, the license will survive
without further royalty payment and is irrevocable. The agreement may be
terminated earlier by us in the event Merck KGaA fails to pursue in a timely
fashion regulatory approval or sale of a licensed product in a country in which
it has the right to do so. It also may be terminated earlier by Merck KGaA if
milestones are not achieved.
In the year ended December 31, 1998, we recorded $3.5 million, and for the
six-month period ended June 30, 1999, we recorded $533,000, in revenue from
Merck KGaA under this agreement, which consisted of milestone and research and
support payments.
In connection with the December 1997 amendment to the agreement with Merck
KGaA for BEC2, Merck KGaA purchased from us 400,000 shares of our series A
preferred stock for a total price of approximately $40 million. See "Description
of Capital Stock." In addition, Merck KGaA may nominate one member to our board
of directors.
OTHER CORPORATE COLLABORATIONS
ABBOTT LABORATORIES
We have licensed some of our diagnostic products and techniques to Abbott
on a worldwide basis. In mid-1995, Abbott launched its first DNA-based
diagnostic test in Europe, using our Repair Chain Reaction ("RCR") DNA probe
technology. Abbott's test is used to diagnose the sexually transmitted diseases
chlamydia and gonorrhea, as well as mycobacteria. The RCR DNA probe technology
uses DNA amplification techniques to detect the presence of DNA or RNA in
biological samples thereby indicating the presence of disease.
In December 1996, we amended our agreement with Abbott to allow Abbott to
exclusively license our patented DNA signal amplification technology,
AMPLIPROBE, to Chiron Diagnostics. DNA signal amplification technology such as
AMPLIPROBE also uses DNA signal amplification techniques in detecting the
presence of DNA or RNA in biological samples, thereby indicating the presence of
disease. Abbott receives a royalty payment from Chiron on all sales of Chiron
branched DNA diagnostic probe technology in countries covered by our patents.
Abbott, in turn, pays any such royalties it receives to us. The Chiron branched
DNA diagnostic probe technology has recently been sold to Bayer Pharmaceutical
Corporation.
Under the agreement Abbott has paid us up-front fees and research support,
and is obligated to pay milestone fees and royalties on sales. In June 1997, we
received two milestone payments from Abbott totaling $1 million, as a result of
a patent issuance in Europe for our RCR technology. This is partially creditable
against royalties as described below. The issuance of the patent also entitles
us to receive royalty payments on sales in covered European countries for
products using our RCR technology. Abbott will be entitled to deduct from
royalties otherwise due, 25% of such royalties due for a two-year period and 50%
thereafter until a total of $500,000 has been deducted. In March 1999, we
received a notice of allowance from the U.S. Patent Office for our RCR
technology. The patent issuance upon this notice of allowance will entitle us to
a $500,000 milestone payment from Abbott and royalties on sales for a two-year
period from initiation of U.S. sales by Abbott for products using our RCR
technology. The agreement terminates upon the later of (1) the last to
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expire of any patents issued covered by the technology or (2), if no patents are
granted, twenty years, subject to certain earlier termination provisions
contained in the agreement.
For the year ended December 31, 1998 we received a total of $295,000, and
in the six-month period ended June 30, 1999 we received a total of $195,000, in
royalty fees pursuant to our strategic alliance with Abbott.
AMERICAN HOME PRODUCTS
In December 1987, we entered into a vaccine development and licensing
agreement with American Cyanamid Company ("Cyanamid") that provided Cyanamid an
exclusive worldwide license to manufacture and sell vaccines developed during
the research period of the agreement. In connection with the agreement, Cyanamid
purchased 410,001 shares of our common stock. During the three-year research
period of the agreement, which period expired in December 1990, we were engaged
in the development of two vaccine candidates, the first of which was for N.
gonorrhea based on recombinant proteins, and the second of which was for Herpes
Simplex Virus based on recombinant glycoproteins B and D.
In September 1993, Cyanamid's Lederle-Praxis Biologicals division and
ImClone entered into a research collaboration agreement, which by its terms
supersedes the earlier agreement as to N. gonorrhea vaccine candidates, but not
as to Herpes Simplex Virus vaccine candidates. The successor to Cyanamid,
American Home, has the responsibility under this agreement to pay research
support to us, as well as milestone fees and royalties on sales of any N.
gonorrhea vaccine that might arise from the collaboration. In January 1998, this
agreement was extended to continue annual research funding payable to us in the
amount of $300,000 through September 1999 and to extend the period by which
American Home was required to have filed an IND application to initiate clinical
trials with a vaccine candidate. In October 1999, this milestone was achieved
requiring American Home to make a $500,000 payment to us.
American Home has the responsibility under both agreements for conducting
pre-clinical and clinical trials of the vaccine candidates, obtaining regulatory
approval, and manufacturing and marketing the vaccines. American Home is
required to pay royalties to us in connection with sales of the vaccines, if
any.
In the year ended December 31, 1998 we recorded revenues of $300,000, and
in the six-month period ended June 30, 1999 we recorded revenues of $150,000,
under the American Home agreements.
IMMUNEX CORPORATION
We are the exclusive licensees of a family of patents and patent
applications covering the FLK-2/FLT-3 receptor. FLK-2/FLT-3 growth factor is a
protein that binds to and activates the FLK-2/FLT-3 receptor. The FLK-2/FLT-3
growth factor is owned by Immunex.
In December 1996, we entered into a non-exclusive license and supply
agreement with Immunex under which we granted Immunex an exclusive worldwide
license to the FLK-2/FLT-3 receptor for the limited use of the manufacture of
the FLK-2/FLT-3 growth factor. Immunex is currently testing the growth factor in
human trials for stem cell stimulation and for tumor inhibition. Under this
agreement, we receive royalty and licensing fees from Immunex, and Immunex has
granted us a license to use the FLK-2/FLT-3 growth factor for use in our ex vivo
research on stem cells. In addition, Immunex has granted us a world-wide
non-exclusive license to use and sell the FLK-2/FLT-3 growth factor,
manufactured by Immunex, for ex-vivo stem cell expansion, together with an
exclusive license to distribute the growth factor with our own proprietary
products for ex-vivo expansion. Immunex will also supply FLK-2/FLT-3 growth
factor to us. Subject to earlier termination provisions contained in the
agreements, our license terminates in December 2001, subject to a five-year
renewal period, and Immunex's license terminates thirteen years after the first
commercial sale of the product.
In the year ended December 31, 1998, and in the six-month period ended June
30, 1999, we recorded no revenue from Immunex under this agreement.
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MANUFACTURING
Under each of our C225 and BEC2 agreements with Merck KGaA we are required
to supply to Merck KGaA and Merck KGaA is required to obtain from us C225 and
BEC2, respectively, for clinical trials and commercial supply.
We own and operate a manufacturing facility for biologics in Somerville,
New Jersey for the manufacture of clinical trial materials. At this facility we
manufacture a portion of the C225 utilized for clinical trials and are
developing the purification process for c-p1C11 and are in the early stages of
its production for clinical trials. This facility is operated in accordance with
Good Manufacturing Practices (GMP) which is a requirement for product
manufactured for use in clinical trials and for commercial sale.
We intend to build a new manufacturing facility adjacent to our current
manufacturing facility in Somerville, New Jersey. This new facility will contain
three 10,000 liter fermentors and will be dedicated to the commercial production
of C225. Under our agreement with Merck KGaA for C225, Merck KGaA is providing
us, subject to certain terms, with a $30 million guaranty to apply toward the
build-out of this new facility. In April 1999, we agreed on the production
concept for this facility with Merck KGaA and expect to break ground during the
first half of 2000, subject to obtaining the necessary permits from the local
authority. The facility will cost approximately $45 million and will be built on
a lot adjacent to our Somerville, New Jersey facility, which we are in the
process of purchasing for approximately $700,000. The facility will be dedicated
to the production of C225 and will have an area of approximately 85,000 square
feet with 20,000 square feet remaining for expansion.
BI is supplying us with quantities of C225 required for our clinical trials
that exceed the capacity of our current facility under an April 1999 development
agreement. The total cost under this agreement, including amounts of additional
C225 we had the right to request, will be approximately DM12,100,000 (or
$6,392,000 as of June 30, 1999), of which approximately DM3,940,000 had been
incurred and DM3,130,000 had been paid as of June 30, 1999.
We intend to continue to utilize the services of a contract manufacturer to
provide a supplemental supply of C225 for both clinical trials and commercial
supply. If we obtain FDA approval of C225 prior to FDA approval of our proposed
manufacturing facility, we will need to obtain commercial-scale quantities of
C225 from contract manufacturers in order to have sufficient quantities of C225
for product launch. We may pursue an agreement with another third party relating
to the manufacture of C225 for both clinical trials and commercial sale.
Under our development agreement with BI we demonstrated our ability to
successfully transfer the technology necessary for the production and
purification of C225. The stable manufacturing process for C225 has been
duplicated in both BI's manufacturing facility and ours. This process has been
performed in a number of different sized fermentors, including 1,200 liter scale
in our facility and 2,000 liter scale in BI's facility. This prior successful
scale-up makes us confident that we will be successful in scaling up to 10,000
liters in our new facility and that the process can be successfully transferred
to a contract manufacturer for supplemental supply.
MARKETING
We intend to develop the capacity to market our cancer therapeutic products
directly in the U.S. and Canada. As part of this strategy, in our agreement with
Merck KGaA for C225, we have retained all rights to commercialize C225 in the
U.S. and Canada. We also have co-promotion rights for commercialization of our
BEC2 cancer vaccine in North America pursuant to our BEC2 agreement with Merck
KGaA. We intend to build an internal sales force and establish the appropriate
promotional campaigns and infrastructure.
In November 1998, we hired a Vice-President of Marketing with experience in
the commercial launch of a monoclonal antibody cancer therapeutic to develop our
internal marketing capabilities. As we prepare for the marketing of C225 in the
U.S. and Canada, we will be hiring directors of field sales and sales operations
in 1999, regional sales managers in the first quarter of 2000 and approximately
40 sales people prior to the commencement of C225 sales. We believe that a sales
force of this size can adequately address the North
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American oncology market for this drug, because a manageable number of
oncologists are responsible for prescribing most of the cancer therapeutics in
North America. Other functions related to commercialization will be outsourced,
especially those requiring considerable manpower and infrastructure resources
such as inventory control, distribution, accounts receivable and reimbursement.
We are currently designing our campaign to elicit the active involvement of
leaders in the oncology field to broaden the knowledge of the potential
significance of C225.
We intend that the sales capability we will build for C225 will allow us to
directly market other cancer therapeutics that we may develop, including
c-p1C11, when and if we receive such regulatory approval.
We expect that with respect to other cancer therapeutics that we may
develop, we may enter into development agreements with third parties that may
include co-marketing or co-promotion arrangements. In the alternative, we may
grant exclusive marketing rights to our corporate partners in return for
up-front fees, milestone payments, and royalties on sales.
PATENTS AND TRADE SECRETS
GENERALLY
We seek patent protection for our proprietary technology and products in
the United States and abroad. Patent applications have been submitted and are
pending in the United States, Canada, Europe and Japan as well as other
countries. The patent position of biopharmaceutical firms generally is highly
uncertain and involves complex legal and factual questions. Our success will
depend, in part, on whether we can:
- obtain patents to protect our own products
- obtain licenses to use the technologies of third parties, which may be
protected by patents
- protect our trade secrets and know-how
- operate without infringing the intellectual property and proprietary
rights of others
For a discussion of the risks and uncertainties associated with our
intellectual property position, see "Risk Factors -- Our success depends upon
our ability to protect our intellectual property and our proprietary
technology."
PATENT RIGHTS; LICENSES
We currently have exclusive licenses or assignments to 63 issued patents
worldwide that relate to our proprietary technology in the United States and
foreign countries, 37 of which are issued United States patents. In addition, we
currently have exclusive licenses or assignments to approximately 43 families of
patent applications.
C225. We have an exclusive license from the University of California at
San Diego to an issued U.S. patent for the murine form of C225, our EGF receptor
antibody product. We believe that this patent covers C225 under the patent law
doctrine of equivalents. Under this doctrine, the subject matter of a claim is
deemed to cover variations that do substantially the same thing, in
substantially the same way, to achieve the same result, especially if the
variation is known and routine. We believe, in this instance, the doctrine of
equivalents would extend protection to C225. Our licensor did not obtain patent
protection outside the U.S. for this antibody. While this patent covers only our
antibody and would not block third parties from obtaining patents covering other
antibodies to the EGF receptor, we are pursuing additional patent protection
that may limit the ability of third parties to commercialize EGF receptor
antibodies for the treatment of cancer. Specifically, we are pursuing patent
protection for the use of any antibody that inhibits the EGF receptor in
combination with chemotherapy or radiation therapy. We have exclusively
licensed, from Rhone-Poulenc Rorer, a family of patent applications seeking to
cover the use of antibodies to the EGF receptor in conjunction with
chemotherapeutic agents. A Canadian patent was issued in this family, and the
patent examiner in Europe has indicated an intent to issue a European patent.
U.S. prosecution continues. We have filed additional patent applications based
on our own research that would cover the use of C225 or any other
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EGF receptor inhibitor in conjunction with radiation therapy, and the use of
C225 or any other EGF receptor inhibitor in refractory patients, either alone or
in combination with chemotherapy or radiation therapy. We have patent
applications pending that include claims on (1) the use of C225 to significantly
inhibit the growth of tumor cells, (2) humanized forms of the antibody and
antibody fragments and (3) chimeric and humanized forms of the antibody and
fragments of the antibody used with other drugs, including chemotherapeutic
agents.
Our exclusive license agreements with the University of California, San
Diego and Rhone-Poulenc Rorer require us to pay royalties on sales of C225 that
are covered by these licenses.
We are aware of a U.S. patent issued to a third party that includes claims
covering the use, subject to certain restrictions, of antibodies to the EGF
receptor and cytotoxic factors to inhibit tumor growth. We have retained special
patent counsel, Kenyon & Kenyon, which has advised us that in its opinion,
subject to the assumptions and qualifications set forth in such opinion, no
valid claim of this third party patent is infringed by reason of our manufacture
or sale, or medical professionals' use, of C225 alone or in combination with
chemotherapy or radiation therapy and, therefore, in the event of litigation for
infringement of this third party patent, a court should find that no valid claim
of this third party patent is infringed. We have also received an opinion from
our regular patent counsel, Hoffmann & Baron, LLP, that we do not infringe this
third party patent. Based upon these opinions, as well as our review, in
conjunction with our regular patent counsel, of other relevant patents, we
believe that we will be able to commercialize C225 alone and in combination with
chemotherapy and radiation therapy provided we successfully complete our
clinical trials and receive the necessary FDA approvals. These opinions of
counsel, however, are not binding on any court or the U.S. Patent and Trademark
Office. In addition, there can be no assurance that we will not in the future,
in the U.S. or any other country, be subject to patent infringement claims,
patent interference proceedings or adverse judgments in patent litigation.
C225 is a "chimerized" monoclonal antibody, which means it is made of
antibody fragments derived from more than one type of animal. Patents have been
issued to other biotechnology companies that cover the chimerization of
antibodies. Therefore, we may be required to obtain licenses under these patents
before we can commercialize our own chimerized monoclonal antibodies, including
C225. Some of these licenses have already been obtained. We cannot be certain
that we will be able to obtain the rest of such licenses in the territories
where we want to commercialize C225, or how much such licenses would cost.
BEC2. We have exclusively licensed from Sloan-Kettering a family of
patents and patent applications relating to our BEC2 monoclonal anti-idiotypic
antibody. We know that others have been issued patents in the U.S. and Europe
covering anti-idiotypic antibodies or their use for the treatment of tumors.
These patents, if valid, could be interpreted to cover our BEC2 monoclonal
antibody and certain uses of BEC2. Merck KGaA, our licensee of BEC2, has
informed us that it has obtained non-exclusive, worldwide licenses to these
patents in order to market BEC2 in its territory. We are entitled to co-promote
BEC2 in North America with Merck KGaA, however, we cannot be certain that we
could obtain such licenses on commercially acceptable terms, if at all.
Our license from Sloan-Kettering requires us to pay royalties on sales of
BEC2.
Angiogenesis Inhibitors. With respect to our research on inhibitors to
angiogenesis based on the FLK-1 receptor, we are the exclusive licensee from
Princeton University of a family of patents and patent applications covering the
FLK-1 receptor and antibodies to the receptor and its human homolog, KDR. We are
also the assignee of a family of patents and patent applications filed by our
scientists covering angiogenesis-inhibiting antibodies to receptors that bind
VEGF. One of the patents licensed from Princeton claims the use of FLK-1/KDR
receptor antibodies to isolate cells expressing the FLK-1/KDR receptor on their
cell surfaces. Additionally, we are a co-owner of a recently filed patent
application claiming the use of FLK-1/KDR receptor antibodies to isolate
endothelial progenitor cells that express FLK-1/KDR on their cell surfaces. At
present, we are seeking exclusive rights to this invention from the co-owners.
Our license from Princeton University requires us to pay royalties on sales
that would otherwise infringe the licensed patents, which cover antibodies to
the FLK-1/KDR receptor including c-p1C11.
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VE Cadherin. We have an assignment of a family of patent applications
covering novel cadherin molecules that are involved in endothelial cell
interactions. These interactions are believed to be involved in angiogenic
processes. The subject patent applications also cover antibodies that bind to,
and affect, the cadherin molecules.
Diagnostics. Our diagnostics program has been licensed for commercial
development to Abbott Laboratories. The program includes target amplification
technology and detection methods, such as RCR technology, signal amplification
technology, such as AMPLIPROBE, and p53 mutation detection for assisting in
cancer diagnosis. Our proprietary position with respect to our diagnostics
program is based on numerous families of patents and patent applications. We
have either an assignment from our own scientists or exclusive license from
academic institutions to these families of patents and patent applications. We
have an exclusive license to an issued patent assigned to Princeton University
related to the underlying technology for our AMPLIPROBE signal amplification and
detection system. We are aware that patent applications have been filed by, and
that patents have been issued to, third parties in the field of DNA
amplification technology. This could affect Abbott's ability to commercialize
our diagnostic products, and our ability to collect royalties for such
commercialization.
There has been significant litigation in the biopharmaceutical industry
over patents and other proprietary rights. The defense and prosecution of
intellectual property suits and related legal and administrative proceedings can
be both costly and time consuming. Litigation and interference proceedings could
result in substantial expense to us and significant diversion of effort by our
technical and management personnel. An adverse determination in any such
interference or litigation, particularly with respect to C225, to which we may
become a party could subject us to significant liabilities to third parties or
require us to seek licenses from third parties. If required, the necessary
licenses may not be available on acceptable terms or at all. Adverse
determinations in a judicial or administrative proceeding or failure to obtain
necessary licenses could prevent us, in whole or in part, from commercializing
our products, which could have a material adverse effect on our business,
financial condition and results of operations.
Trade Secrets. With respect to certain aspects of our technology, we rely,
and intend to continue to rely, on trade secrets, unpatented proprietary
know-how and continuing technological innovation to protect our competitive
position. Such aspects of our technology include methods of isolating and
purifying antibodies and other proteins, collections of plasmids in viable host
systems, and antibodies that are specific for proteins that are of interest to
us. We cannot be certain that others will not independently develop
substantially equivalent proprietary information or techniques.
Relationships between us and our employees, scientific consultants and
collaborators provide these persons with access to our trade secrets, know-how
and technological innovation under confidentiality agreements with the parties
involved. Similarly, our employees and consultants enter into agreements with us
that require that they do not disclose confidential information of ours and they
assign to us all rights to any inventions made while in our employ relating to
our activities.
We seek patent protection for our proprietary technology and products, in
the United States and abroad. Patent applications have been submitted and are
pending in the United States, Canada, Europe and Japan as well as other
countries.
GOVERNMENT REGULATION
The research and development, manufacture and marketing of human
therapeutic and diagnostic products are subject to regulation primarily by the
FDA in the United States and by comparable authorities in other countries. These
national agencies and other federal, state and local entities regulate, among
other things, research and development activities (including testing in animals
and in humans) and the testing, manufacturing, handling, labeling, storage,
record keeping, approval, advertising and promotion of the products that we are
developing. Noncompliance with applicable requirements can result in refusal to
approve product licenses or other applications, or revocation of approvals
previously granted. Noncompliance also can result in fines, criminal
prosecution, recall or seizure of products, total or partial suspension of
production or refusal to allow a company to enter into governmental supply
contracts.
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<PAGE> 48
The process of obtaining requisite FDA approval has historically been
costly and time consuming. Current FDA requirements before a new human drug or
biological product may be marketed in the United States include (1) the
successful conclusion of pre-clinical laboratory and animal tests, if
appropriate, to gain preliminary information on the product's safety, (2) filing
with the FDA of an IND application to conduct human clinical trials for drugs or
biologics, (3) the successful completion of adequate and well-controlled human
clinical investigations to establish the safety and efficacy of the product for
its recommended use and (4) filing by a company and approval by the FDA of a New
Drug Application ("NDA") for a drug product or a Biological License Application
("BLA") for a biological product to allow commercial distribution of the drug or
biologic.
Pre-clinical tests include the evaluation of the product in the laboratory
and in animal studies to assess the potential safety and efficacy of the product
and its formulation. The results of the pre-clinical tests are submitted to the
FDA as part of an IND application to support the evaluation of the product in
human subjects or patients.
Clinical trials involve administration of the product to patients under
supervision of a qualified principal investigator. Such trials are typically
conducted in three sequential phases, although the phases may overlap. In Phase
I, the initial introduction of the drug into human subjects, the product is
tested for safety, dosage tolerance, absorption, metabolism, distribution, and
excretion. Phase II involves studies in a limited patient population to (1)
determine the biological or clinical activity of the product for specific,
targeted indications, (2) determine dosage tolerance and optimal dosage, and (3)
identify possible adverse effects and safety risks. If Phase II evaluations
indicate that a product is effective and has an acceptable benefit-to-risk
relationship, Phase III trials may be undertaken to further evaluate clinical
efficacy and to further test for safety within an expanded patient population.
The FDA reviews the results of the clinical trials and may order the temporary
or permanent discontinuation of clinical trials at any time if it believes the
product candidate exposes clinical subjects to an unacceptable health risk.
Investigational products used in clinical studies must be produced in compliance
with GMP pursuant to FDA regulations.
On November 21, 1997, President Clinton signed into law the Food and Drug
Administration Modernization Act. That act codified the FDA's policy of granting
"fast track" approval for cancer therapies and other therapies intended to treat
severe or life threatening diseases and having potential to address unmet
medical needs. Previously, the FDA approved cancer therapies primarily based on
patient survival rates or data on improved quality of life. The FDA considered
evidence of partial tumor shrinkage, while often part of the data relied on for
approval, insufficient by itself to warrant approval of a cancer therapy, except
in limited situations. Under the FDA's new policy, which became effective on
February 19, 1998, the FDA has broadened authority to consider evidence of
partial tumor shrinkage or other clinical outcomes for approval. This new policy
is intended to facilitate the study of cancer therapies and shorten the total
time for marketing approvals. We intend to take advantage of this policy;
however, it is too early to tell what effect, if any, these provisions may have
on the approval of our product candidates.
Some of our cancer treatments require the use of in vitro diagnostic
products to test patients for particular traits. In vitro diagnostic products
are generally regulated by the FDA as medical devices. In general, the FDA must
approve a new diagnostic product that is not "substantially equivalent" to a
legally marketable product much in the way it must approve drugs and biological
products. Specifically, the device must be tested under an investigational
device exemption ("IDE") and receive FDA approval under a premarket approval
application ("PMA") before it can be commercially marketed. Substantially
equivalent devices go through a clearance process at the FDA that is generally
less onerous than the PMA process but also can require data submission and other
rigorous review.
Under current law, each domestic and foreign drug and device
product-manufacturing establishment must be registered with the FDA before
product approval. Domestic and foreign manufacturing establishments must meet
strict standards for compliance with GMP regulations and licensing
specifications after the FDA has approved an NDA, BLA or PMA. The FDA and
foreign regulatory authorities periodically inspect domestic and foreign
manufacturing facilities where applicable.
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<PAGE> 49
Sales outside the United States of products we develop will also be subject
to regulatory requirements governing human clinical trials and marketing for
drugs and biological products and devices. The requirements vary widely from
country to country, but typically the registration and approval process takes
several years and requires significant resources. In most cases, if the FDA has
not approved a product for sale in the United States the product may be exported
for sale outside of the United States only if it has been approved in any one of
the following countries: the European Union, Canada, Australia, New Zealand,
Japan, Israel, Switzerland and South Africa. There are specific FDA regulations
that govern this process.
Our ability to earn sufficient returns on our products may depend in part
on the extent to which government health administration authorities, private
health coverage insurers and other organizations will provide reimbursement for
the costs of such products and related treatments. Significant uncertainty
exists as to the reimbursement status of newly approved health care products,
and there can be no assurance that adequate third-party coverage will be
available.
ENVIRONMENTAL AND SAFETY MATTERS
We use hazardous materials, chemicals, viruses and various radioactive
compounds in our research and development activities. Accordingly, we are
subject to regulations under federal, state and local laws regarding work force
safety, environmental protection and hazardous substance control, and to other
present and possible future federal, state and local regulations. We have in
place safety procedures for storing, handling and disposing of these materials.
However, we cannot completely eliminate the risk of contamination or injury. We
could be held liable for any resulting damages, injuries or civil penalties, and
our trials could be suspended. In addition, environmental laws or regulations
may impose liability for the clean-up of contamination at properties we own or
operate, regardless of fault.
These environmental laws and regulations do not currently materially
adversely affect our operations, business or assets. However, these laws may
become more stringent, other facts may emerge, and our processes may change, and
therefore the amount and timing of expenditures in the future may vary
substantially from those currently anticipated.
COMPETITION
Competition in the biopharmaceutical industry is intense and based
significantly on scientific and technological factors. These factors include the
availability of patent and other protection for technology and products, the
ability to commercialize technological developments and the ability to obtain
governmental approval for testing, manufacturing and marketing. We compete with
specialized biopharmaceutical firms in the United States, Europe and elsewhere,
as well as a growing number of large pharmaceutical companies that are applying
biotechnology to their operations. Many biopharmaceutical companies have focused
their development efforts in the human therapeutics area, including cancer. Many
major pharmaceutical companies have developed or acquired internal biotechnology
capabilities or made commercial arrangements with other biopharmaceutical
companies. These companies, as well as academic institutions, governmental
agencies and private research organizations, also compete with us in recruiting
and retaining highly qualified scientific personnel and consultants. Our ability
to compete successfully with other companies in the pharmaceutical field will
also depend to a considerable degree on the continuing availability of capital
to us.
We are aware of certain products under development or manufactured by
competitors that are used for the prevention, diagnosis, or treatment of certain
diseases we have targeted for product development. Various companies are
developing biopharmaceutical products that potentially directly compete with our
product candidates. These include areas such as (1) the use of small molecules
to the receptor or antibodies to those receptors to treat cancer, (2) the use of
anti-idiotypic antibody or recombinant antigen approaches to cancer vaccine
therapy, (3) the development of inhibitors to angiogenesis, (4) and the use of
hematopoietic growth factors to treat blood system disorders to or for stem cell
or gene therapy. Some of these product candidates are in advanced stages of
clinical trials.
We expect that our products under development and in clinical trials will
address major markets within the cancer sector. Our competition will be
determined in part by the potential indications for which drugs are
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<PAGE> 50
developed and ultimately approved by regulatory authorities. Additionally, the
timing of market introduction of some of our potential products or of
competitors' products may be an important competitive factor. Accordingly, the
relative speed with which we can develop products, complete pre-clinical
testing, clinical trials and approval processes and supply commercial quantities
to market are expected to be important competitive factors. We expect that
competition among products approved for sale will be based on various factors,
including product efficacy, safety, reliability, availability, price, and patent
position.
HUMAN RESOURCES
We initiated our in-house research and development in 1986. We have
assembled a scientific staff with a variety of complementary skills in a broad
base of advanced research technologies, including oncology, immunology,
molecular and cell biology, antibody engineering, protein and synthetic
chemistry and high-throughput screening. We have also recruited a staff of
technical and professional employees to carry out manufacturing of clinical
trial materials at our Somerville, New Jersey facility. Of our 165 full-time
personnel on October 15, 1999, 69 were employed in our product development,
clinical and manufacturing programs, 50 in research, and 46 in administration.
Our staff includes 20 persons with Ph.D.s and three with M.D.s.
PROPERTIES
RESEARCH FACILITY -- NEW YORK, NEW YORK
We have occupied two contiguous leased floors at 180 Varick Street in New
York City since 1986. The current lease for the two floors was effective as of
January 1, 1999 and expires in December 2004. The annual rent under the lease
for 1999 is $720,000, which increases by 3% per year for subsequent years. Rent
expense for the New York facility, prior to our recent lease renewal, was
approximately $574,000, $554,000, and $508,000 for the years ended December 31,
1998, 1997 and 1996, respectively. We have completed a design concept and are in
the process of renovating the facility to better fit our needs. The renovation
is expected to cost approximately $2.0 million and is expected to be completed
by November 1999.
The original acquisition, construction and installation of our New York
research and development facilities were financed principally through the sale
of IDA Bonds issued by the NYIDA. Equipment at these facilities purchased with
the proceeds of the bond secure the payment of debt service on the outstanding
IDA Bond.
MANUFACTURING FACILITY -- SOMERVILLE, NEW JERSEY
In June 1992, we acquired certain property and a building in Somerville,
New Jersey at a cost to us of approximately $4,665,000, including expenses. We
have retrofitted the building to serve as our clinical-grade manufacturing
facility. When purchased, the facility had in place various features, including
clean rooms, air handling, electricity, and water for injection systems and
administrative offices. The cost for completion of facility modifications was
approximately $5.4 million.
We currently operate the facility to develop and manufacture materials for
our clinical trials. Under certain circumstances, we also may use the facility
for the manufacturing of commercial products. The timing and any additional
costs of adapting the facility for commercial manufacturing depend on several
factors, including the progress of products through clinical trials. In January
1998, we completed the construction and commissioning of a new 1,750 square foot
process development center at this facility dedicated to manufacturing process
optimization for existing products and the pre-clinical and Phase I development
of new biological therapeutics.
We are in the process of purchasing, for approximately $700,000, a lot
adjacent to our Somerville, New Jersey facility. We intend to build a new
manufacturing facility on this site for commercial supply of C225, which we
estimate will cost approximately $45 million.
LEGAL PROCEEDINGS
There are currently no material legal proceedings pending against us or any
of our property.
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<PAGE> 51
MANAGEMENT
SENIOR OFFICERS AND DIRECTORS
The following table lists the senior officers and directors of ImClone as
of October 27, 1999. Below the table is information about the business
experience of each person listed.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Robert F. Goldhammer............. 68 Chairman of the Board and Director(1)(2)(3)
Samuel D. Waksal, Ph.D. ......... 53 President, Chief Executive Officer and Director(2)(4)
Harlan W. Waksal, M.D. .......... 46 Executive Vice President, Chief Operating Officer and
Director(2)(3)(4)
Carl Goldfischer................. 41 Vice President and Chief Financial Officer
John B. Landes................... 51 Vice President, Business Development and General Counsel
Peter Bohlen, Ph.D. ............. 56 Vice President, Research
Michael Feldman, Ph.D. .......... 73 Vice President, Discovery Research
Ronald A. Martell................ 37 Vice President, Marketing
S. Joseph Tarnowski, Ph.D. ...... 46 Vice President, Product and Process Development
Michael A. Trapani............... 44 Vice President, Regulatory Affairs and Quality Assurance
Jean Carvais, M.D. .............. 72 Director
Vincent T. DeVita, Jr., M.D. .... 64 Director(5)(4)
Paul B. Kopperl.................. 66 Director(5)(1)(3)
William R. Miller................ 71 Director(5)(3)
David M. Kies.................... 55 Director(1)(3)
John Mendelsohn, M.D. ........... 63 Director(3)(4)
Richard Barth.................... 68 Director(5)(1)
</TABLE>
- ------------
(1) Member of Compensation and Stock Option Committee
(2) Member of Executive Committee
(3) Member of Nominating and Corporate Governance Committee
(4) Member of Research Oversight Committee
(5) Member of Audit Committee
Robert F. Goldhammer has served as ImClone's Chairman of the Board since
February 1991 and has been a Director of ImClone since October 1984. Mr.
Goldhammer has been a partner of Concord International Investment Group, L.P.
since 1991. He was a partner of Rohammer Corporation, a private investment
company, from 1989 to 1991. He was a managing director of Kidder, Peabody Group
Inc., an investment banking firm, from May 1988 to January 1989. He is a
director of Esterline Technologies Corporation.
Samuel D. Waksal, Ph.D., President of ImClone, is a founder of ImClone and
has been its Chief Executive Officer and a Director since August 1985 and
President since March 1987. From 1982 to 1985, Dr. Waksal was a member of the
faculty of Mt. Sinai School of Medicine as Associate Professor of Pathology and
Director of the Division of Immunotherapy within the Department of Pathology. He
has served as visiting Investigator of the National Cancer Institute, Immunology
Branch, Research Associate of the Department of Genetics, Stanford University
Medical School, Assistant Professor of Pathology at Tufts University School of
Medicine and Senior Scientist for the Tufts Cancer Research Center. Dr. Waksal
was a scholar of the Leukemia Society of America from 1979 to 1984. Dr. Waksal
currently serves on the Executive Committee of the New York Biotechnology
Association, the Board of Directors of Cadus Pharmaceutical Corporation and is
Chairman of the New York Council for the Humanities. Dr. Samuel Waksal and Dr.
Harlan Waksal are brothers.
Harlan W. Waksal, M.D. is a founder of ImClone and has been a Director
since April 1984. He has directed ImClone's research and development since April
1985, and has served as ImClone's Executive Vice
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<PAGE> 52
President and Chief Operating Officer since March 1987. From 1985 to March 1987,
Dr. Waksal served as ImClone's President. Dr. Waksal received his training in
Internal Medicine from Tufts-New England Medical Center Hospital and in
Pathology from Kings County Hospital in Brooklyn, New York from 1982 to 1987.
From 1984 to 1985, Dr. Waksal was Chief Resident in Pathology at Kings County
Hospital. He received his Medical Degree from Tufts University School of
Medicine in 1979. He is currently Adjunct Assistant Professor in the Department
of Pathology at Downstate Medical Center, New York. Dr. Harlan Waksal and Dr.
Samuel Waksal are brothers.
Carl S. Goldfischer, M.D. has served as Vice President, Finance and Chief
Financial Officer since May 1996. From June 1994 until joining ImClone, Dr.
Goldfischer served as a healthcare analyst with Reliance Insurance Company. From
June 1991 until June 1994, Dr. Goldfischer was Director of Research for D. Blech
& Co., an investment banking firm. Dr. Goldfischer received a doctorate of
medicine from Albert Einstein College of Medicine in 1988 and served as a
resident in radiation oncology at Montefiore Hospital of the Albert Einstein
College of Medicine until 1991. Dr. Goldfischer is a director of Immulogic
Pharmaceutical Corporation. Dr. Goldfischer has indicated that he intends to
resign from ImClone to resume his career in investment banking in the near
future.
John B. Landes has served as Vice President, Business Development and
General Counsel since November 1992. Prior thereto, he was Vice President,
Administration and Legal since December 1984. He also has been Secretary of
ImClone since April 1985 and served as its Treasurer from April 1984 through
September 1991, except for an interim period from December 1988 to February
1991. From 1978 to 1984, Mr. Landes was an associate attorney with the Boston
law firm of Mahoney, Hawkes and Goldings.
Peter Bohlen, Ph.D. has been Vice President, Research of ImClone since
September 1996. From November 1995 to July 1996 he was Senior Director of Ixsys,
a privately-held biotechnology company. From October 1987 to June 1996 he was
department head of the Molecular Biology Section of American Cyanamid Company's
Medical Research Division and director of the company's angiogenesis program. He
also has held academic positions at the Salk Institute, San Diego and the
University of Zurich, Switzerland. Dr. Bohlen received his Ph.D. in chemistry
from the University of Berne in Switzerland. In 1983, he received the Cloetta
Award in Switzerland for his contributions in the field of protein analysis.
Michael Feldman, Ph.D. became Vice President, Discovery Research for
ImClone in May 1995. Prior thereto he served as Director of Basic Research for
ImClone since 1993. Dr. Feldman is former head of the Department of Cell Biology
at the Weizmann Institute of Science in Rehovot, Israel, and a former dean of
its graduate school. He has done pioneering work in the areas of transplantation
immunology, differentiation of lymphocytes and cancer immunology. In 1984, he
received the Griffuel Award in France for his work in cancer metastasis, and in
1986 received the Rothschild Award for his work in immunology. Dr. Feldman is a
member of the Israeli Academy of Sciences and Humanities and the World Academy
of Arts and Sciences. Dr. Feldman is currently on long-term disability.
Ronald A. Martell has served as ImClone's Vice President, Marketing since
November 1998. Prior to joining ImClone he worked at Genentech, Inc. for ten
years where he held various positions. Most recently, from 1996 until joining
ImClone, he served as Genentech's Group Manager of Oncology Products where he
directed the launch of Herceptin, Genentech's monoclonal antibody product
approved to treat breast cancer. From 1995 to 1996 he served as Senior Product
Manager where he launched Pulmozyme for cystic fibrosis in Europe. From 1994
through 1995 he served as Manager of Genentech's Piedmont Sales Division. Prior
to that, he served from 1993 as Associate Product Manager for Genentech's
Pulmozyme.
S. Joseph Tarnowski, Ph.D. has served as ImClone's Vice President, Product
and Process Development since January 1999. Prior to joining ImClone, he held
various positions with CellPro Inc., the principal business of which was the
development, manufacture and marketing of automated systems that utilize
monoclonal antibodies to purify large quantities of specific cells for
therapeutic and diagnostic applications. He joined CellPro in June 1992 as Vice
President of Operations and was appointed to the position of Vice President of
Research and Development in June 1995 and became Senior Vice President and Chief
Technical Officer in December 1996. From November 1986 to May 1992, Dr.
Tarnowski was Director, Process and Product Development of Scios Nova Inc.
(formerly California Biotechnology Inc.), a company that develops
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<PAGE> 53
recombinant human proteins for therapeutic uses. Dr. Tarnowski received a Ph.D.
in Biochemistry from the University of Tennessee in 1979 and was a Postdoctoral
Fellow at the Roche Institute of Molecular Biology from 1979 through 1981.
Michael A. Trapani has served as ImClone's Vice President, Regulatory
Affairs & Quality Assurance since June 1999. He has more than 20 years'
experience in the pharmaceutical industry, with the majority of his experience
in the drug approval area. From January 1996 through May 1999, he held various
positions at Cytogen Corp., Princeton, New Jersey, most recently as its Vice
President, Regulatory Affairs & Quality Assurance. Prior to that, he served from
September 1993 until January 1996 as Senior Director, Regulatory Affairs for
Pharmacia Adria, Columbus, Ohio. From 1981 through 1993 he served in various
positions at Kabi Pharmacia, Piscataway, New Jersey, ending as its Executive
Director, Regulatory Affairs. Mr. Trapani began his career in 1977 with the Food
and Drug Administration. Mr. Trapani received a B.S. degree in Biology from
Brooklyn College and an MBA degree from Seton Hall Graduate School of Business.
Jean Carvais, M.D. has been a Director of ImClone since July 1993, and has
since 1984 been an independent consultant to companies in the pharmaceutical
industry. Prior to that time, Dr. Carvais was President of The Research
Institute of Roger Bellon, S.A., now a division of Rhone-Poulenc. As such, he
was involved in the development of a line of anti-cancer drugs, including
Bleomycin and Adriamycin, as well as a new line of antibiotics and quinolones.
Following the acquisition of Roger Bellon, S.A. by Rhone-Poulenc, Dr. Carvais
became a member of Rhone-Poulenc's central research committee which directs the
company's worldwide research and development activities. Dr. Carvais has served
as a director of Columbia Laboratories, Inc. since 1996.
Vincent T. DeVita, Jr., M.D. has been a Director of ImClone since February
1992. Since 1995 Dr. DeVita has served as Director of the Yale Cancer Center as
well as Professor of Medicine and Professor of Epidemiology and Public Health at
Yale University School of Medicine, New Haven, Connecticut. From September 1988
through June 1995, Dr. DeVita served as Attending Physician at Sloan-Kettering,
New York, and through June 1991 as Physician-in-Chief. From 1980 to 1988, he
served under Presidential appointment as Director of the National Cancer
Institute, where he had held various positions since 1966. During his years with
the National Cancer Institute, Dr. DeVita was instrumental in developing the
first successful combination cancer chemotherapy program. This work ultimately
led to effective regimens of curative chemotherapy for a variety of cancers. Dr.
DeVita's numerous awards include the 1990 Armand Hammer Cancer Prize and the
1982 Albert and Mary Lasker Medical Research Award for his contribution to the
cure of Hodgkin's disease. Dr. DeVita received his M.D. from the George
Washington University School of Medicine, Washington, DC, in 1961.
Paul B. Kopperl has served as a Director of ImClone since December 1993. He
is President of Pegasus Investments, Inc., Boston, a private investment
management firm established in 1994. He has served as President of Delano &
Kopperl, Inc., a private business strategy and venture investing firm in Boston
and its predecessor firms from 1976 to the present. From 1967 through 1975 he
was Vice President and a principal of Kidder, Peabody & Co. Incorporated, New
York, an investment banking firm. From 1959 to 1967 he was an associate with
Goldman, Sachs & Co., New York. Mr. Kopperl is a Trustee and Governor of the
Dana-Farber Cancer Institute, Boston, and over the years has served as a trustee
or director of numerous not-for-profit educational, performing arts and social
welfare organizations and businesses.
William R. Miller has been a Director of ImClone since June 1996. Mr.
Miller served as Vice Chairman of the Board of Directors of the Bristol-Myers
Squibb Company from 1985 until 1991, at which time he retired. Mr. Miller is a
director of Isis Pharmaceuticals, Inc., Transkaryotic Therapies, Inc., Westvaco
Corporation and Xomed Surgical Products, Inc. He is Chairman of the Board of
Vion Pharmaceuticals, Inc. and SIBIA Neurosciences, Inc. He is Chairman of the
Board of Trustees of the Cold Spring Harbor Laboratory and is a past Chairman of
the Board of the Pharmaceutical Manufacturers Association. Mr. Miller is a
Trustee of the Manhattan School of Music, Metropolitan Opera Association and
Opera Orchestra of New York. He is a member of Oxford University Chancellor's
Court of Benefactors, Honorary Fellow of St. Edmund Hall and Chairman of the
English-Speaking Union of the United States.
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<PAGE> 54
David M. Kies has been a Director of ImClone since June 1996. Mr. Kies is a
Partner of the New York based law firm Sullivan & Cromwell, specializing in
mergers and acquisitions, securities and general corporate matters. Mr. Kies
joined Sullivan & Cromwell in 1968, and was elected a partner of the firm in
1976. From 1991 until 1995, he was the managing partner of the firm's London
office.
John Mendelsohn, M.D. has been a Director of ImClone since February 1998.
He has served as the President of M.D. Anderson Cancer Center, University of
Texas, where he has also been Professor of Medicine since 1996. From 1985 to
1996 he was Chairman of the Department of Medicine at Sloan-Kettering, New York,
as well as holder of the Winthrop Rockefeller Chair in Medical Oncology at
Sloan-Kettering. He was also Professor and Vice-Chairman of Medicine at Cornell
University Medical College and an attending physician at both Memorial and New
York Hospitals. Dr. Mendelsohn served on the faculty of the University of
California, San Diego and was instrumental in the creation of the University's
Cancer Center, where he served as Director from 1976 to 1985. Dr. Mendelsohn's
work has focused on growth factors and their role in regulating the
proliferation of cancer cells through cell surface receptors. Dr. Mendelsohn was
responsible for developing specific monoclonal antibodies that block receptors,
including epidermal growth factor receptors, which mediate growth factor
activation of cell and growth and division. Dr. Mendelsohn is currently a board
member of Enron Corp., the Richard Lounsbery Foundation and the Greater Houston
Partnership, and a fellow of the New York Academy of Medicine. In 1997, Dr.
Mendelsohn was elected to the Institute of Medicine of the National Academy of
Sciences.
Richard Barth has been a Director of ImClone since October 1996. Mr. Barth
served as Chairman of the Board of Ciba-Geigy Corporation, United States from
1990 until December 1996, and was President and Chief Executive Officer of
Ciba-Geigy Corporation from 1986 until April 1996. Mr. Barth is a member of the
Board of Directors of numerous organizations, including Novartis Corporation,
United States, The Bank of New York, Bowater, Inc., and New York Medical
College.
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<PAGE> 55
SCIENTIFIC ADVISORY BOARD
The following table lists the members of ImClone's Scientific Advisory
Board as of October 27, 1999 and their primary professional affiliations.
<TABLE>
<CAPTION>
NAME PROFESSIONAL AFFILIATION(S)
- ---- ---------------------------
<S> <C>
Thomas Deuel, M.D............. Professor of Medicine, Director of the Division of Growth
Regulation, Harvard Medical School
Charles A. Dinarello, M.D..... Professor of Medicine, University of Colorado School of
Medicine
Michael Feldman, Ph.D. ....... Vice President, Discovery Research, ImClone Systems
Incorporated; Member of the Israeli Academy of Sciences
and Humanities and the World Academy of Arts and Sciences
Zvi Fuks, M.D................. Chairman of the Department of Radiation Oncology, Memorial
Sloan-Kettering Cancer Center
Gerald T. Keusch, M.D. ....... Professor and the Head of the Division of Geographic
Medicine and Infectious Disease, Tufts University School of
Medicine
Arnold Levine, Ph.D........... Chairman of the Department of Molecular Biology, Harry C.
Weiss Professor of Molecular Biology, Princeton University
John Mendelsohn, M.D.......... President, MD Anderson Cancer Center, University of Texas
Malcolm Moore, Ph.D........... Enid A. Haupt Professor of Cell Biology, Head of the James
Ewing Laboratory of Development Hematopoiesis at Memorial
Sloan-Kettering Cancer Center
Richard C. Mulligan, Ph.D..... Mallinckrodt Professor of Genetics, Harvard Medical School;
Investigator, Howard Hughes Medical Institute, Children's
Hospital, Boston
Robert Schneider, Ph.D........ Associate Professor, Department of Biochemistry, New York
University Medical Center
Thomas Shenk, Ph.D............ Professor of Molecular Biology, Princeton University;
(Chairman, Scientific Advisory American Cancer Society Professor, Howard Hughes Medical
Board) Institute
P. Frederick Sparling, M.D.... Professor and Chairman of the Department of Medicine and
Professor of Microbiology and Immunology, University of
North Carolina School of Medicine
Samuel D. Waksal, Ph.D. ...... President and Chief Executive Officer, ImClone Systems
Incorporated
</TABLE>
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<PAGE> 56
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information that we know about the
beneficial ownership of our common stock as of October 27, 1999, except as
otherwise indicated, by (1) each of our directors, (2) each of our officers who
beneficially owns our common stock and (3) all of our directors and executive
officers as a group. Except as otherwise indicated, the persons or entities
listed below have sole voting and investment power with respect to all shares
owned by them.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED(1)(2)
- ---------------- ------------------ ------------------------
<S> <C> <C>
Samuel D. Waksal, Ph.D. ....................... 1,302,583(3) 4.9%
Harlan W. Waksal, M.D. ........................ 1,065,780(4) 4.1%
Robert F. Goldhammer........................... 855,390(5) 3.3%
John B. Landes................................. 241,000(6) *
John Mendelsohn, M.D. ......................... 183,476(7) *
Carl S. Goldfischer, M.D. ..................... 179,400 *
Michael Feldman, Ph.D. ........................ 165,500(8) *
David M. Kies.................................. 158,450(9) *
Peter Bohlen, Ph.D. ........................... 80,315(10) *
Paul B. Kopperl................................ 69,460(11) *
Vincent T. DeVita, Jr., M.D. .................. 69,092(12) *
Jean Carvais, M.D. ............................ 48,542(13) *
William R. Miller.............................. 36,147 *
Richard Barth.................................. 35,250(14) *
All directors and executive officers as a group
(11 persons)(15)............................. 4,003,570 14.4%
</TABLE>
- ------------
* Less than 1%.
(1) Unless otherwise noted, each person's address is in care of ImClone Systems
Incorporated, 180 Varick Street, Seventh Floor, New York, New York 10014.
(2) The percentage of voting stock owned by each stockholder is calculated by
dividing (1) the number of shares deemed to be beneficially held by such
stockholder as of October 27, 1999, as determined in accordance with Rule
13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), by (2) the sum of (A) 25,629,007 which is the number of shares of
common stock outstanding as of October 27, 1999 plus (B) the number of
shares of common stock issuable upon exercise of currently exercisable
options and warrants held by such stockholder. For purposes of this
security ownership table "currently exercisable options" and "currently
exercisable warrants" consist of options and warrants exercisable as of
October 27, 1999 or within 60 days after October 27, 1999. Shares of our
series A preferred stock are not included in the denominator because they
do not have voting rights.
(3) Includes 350,000 shares issuable upon the exercise of currently exercisable
warrants and 415,000 shares issuable upon the exercise of currently
exercisable options. Does not include an additional 1,000,000 shares
issuable upon the exercise of an option, 200,000 shares of which will
become exercisable on May 24, 2000, subject only to Dr. Waksal's continued
employment with ImClone.
(4) Includes 240,000 shares issuable upon the exercise of currently exercisable
options; 310,680 shares issuable upon the exercise of currently exercisable
warrants; and 2,600 shares owned by Dr. Waksal's sons. Does not include an
additional 650,000 shares issuable upon the exercise of an option, 130,000
shares of which will become exercisable on May 24, 2000, subject only to
Dr. Waksal's continued employment with ImClone.
(5) Includes 113,542 shares issuable upon the exercise of currently exercisable
options; 379,990 shares issuable upon the exercise of currently exercisable
warrants; and 13,314 shares held in trust as to which Mr. Goldhammer
disclaims beneficial ownership.
(6) Includes 101,500 shares issuable upon the exercise of currently exercisable
options and 104,000 shares issuable upon the exercise of currently
exercisable warrants.
(7) Consists of 183,476 shares issuable upon the exercise of currently
exercisable options.
(8) Includes 105,000 shares issuable upon the exercise of currently exercisable
options.
(9) Includes 18,750 shares issuable upon the exercise of currently exercisable
options and 8,200 shares held by Mr. Kies as custodian for his son.
(10) Includes 79,500 shares issuable upon the exercise of currently exercisable
options.
(11) Includes 42,500 shares issuable upon the exercise of currently exercisable
options and 500 shares held by Mr. Kopperl's spouse as to which Mr. Kopperl
disclaims beneficial ownership.
(12) Includes 68,792 shares issuable upon the exercise of currently exercisable
options.
(13) Consists of 48,542 shares issuable upon the exercise of currently
exercisable options.
(14) Includes 33,750 shares issuable upon exercise of currently exercisable
options.
(footnotes on next page)
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<PAGE> 57
(15) Includes an aggregate of (1) 2,205,022 shares issuable upon the exercise of
currently exercisable options and warrants and (2) 13,814 shares as to
which beneficial ownership is disclaimed. Shares held by Mr. Landes, Dr.
Feldman and Dr. Bohlen have not been included as they are not considered to
be executive officers of ImClone. In addition, each of Messrs. Martell and
Trapani and Dr. Tarnowski, none of whom is considered to be an executive
officer of ImClone, beneficially owns a de minimus number of shares of our
common stock, which are not reflected in the table.
On October 18, 1999, a Schedule 13D filing under the Securities Exchange
Act of 1934 was made jointly by High River Limited Partnership, Riverdale LLC
and Carl C. Icahn disclosing their beneficial ownership had increased to 5.1% of
ImClone's common stock, based on the number of shares outstanding as of
September 1, 1999. Riverdale LLC is the general partner of High River Limited
Partnership. Riverdale LLC is wholly owned by Carl C. Icahn. The Schedule 13D
states that the shares of ImClone's common stock were acquired for investment
purposes. According to the Schedule 13D filing, the principal business address
of High River Limited Partnership and Riverdale LLP is 100 South Bedford Road,
Mount Kisco, New York 10549 and the principal business address of Carl C. Icahn
is c/o Icahn Associates Corp., 767 Fifth Avenue, 47th Floor, New York, New York
10153.
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<PAGE> 58
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 60,000,000 shares of common stock,
par value $.001 per share ("common stock"), and 4,000,000 shares of preferred
stock, par value $1.00 per share. As of October 27, 1999, there were 25,629,007
shares of common stock outstanding held of record by approximately 372
stockholders and there were 400,000 shares of series A preferred stock
outstanding, which are all held by Merck KGaA.
The registrar and transfer agent for the common stock is Equiserve.
COMMON STOCK
Holders of shares of common stock are entitled to one vote per share on
matters to be voted upon by our stockholders. Holders of shares of common stock
do not have cumulative voting rights. Therefore, the holders of more than 50% of
the shares of the common stock will have the ability to select all of our
directors. Holders of shares of common stock will be entitled to receive
dividends when, as and if declared by our board of directors. In the event of a
liquidation, dissolution or winding up of ImClone, holders of common stock have
the right to share ratably in all assets remaining after the payment of all
liabilities, subject to preference in liquidation of any outstanding preferred
stock. Holders of common stock have neither preemptive rights nor rights to
convert their common stock into any other securities and are not subject to
future calls or assessments by ImClone. There are no redemption or sinking fund
provisions applicable to the common stock. The rights, preferences and
privileges of the holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of the series A preferred stock, as well
as any additional preferred stock that ImClone may designate and issue in the
future.
PREFERRED STOCK
Our board of directors has the authority to issue preferred stock in one or
more series, and to fix the rights, preferences, privileges and restrictions,
including the dividend, conversion, voting, redemption (including sinking fund
provisions) and other rights, liquidation preferences and the number of shares
constituting any series and the designations of such series, without any further
vote or action by our stockholders. The provisions of any preferred stock could
adversely affect the voting power of the holders of common stock and could,
among other things, have the effect of delaying, deferring or preventing a
change in control of ImClone.
SERIES A PREFERRED STOCK
In December 1997, in connection with an amendment to our research and
license agreement with Merck KGaA for BEC2, Merck KGaA purchased from us 400,000
shares of series A preferred stock for total consideration of $40 million.
Holders of series A preferred stock generally have no voting rights, except:
- that two-thirds of the outstanding shares must consent to changes in the
terms of the series A preferred stock;
- in certain cases, if we default in the timely payment of dividends on the
series A preferred stock, the holders will have the right to elect a
nominee to our board of directors; and
- as otherwise required by law.
The holders of the series A preferred stock are entitled to receive annual
cumulative dividends of $6.00 per share. Dividends on the outstanding series A
preferred stock accrue as of their issuance date and are payable in cash
annually on or the earlier of
- December 31st of each year beginning December 31, 1999 or
- at the time of conversion or redemption of the series A preferred stock
on which the dividend is to be paid.
Up to 100,000 shares of series A preferred stock as of December 31, 1998
were convertible into 800,000 shares of common stock and an additional 100,000
shares will become convertible, into a number of shares of
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<PAGE> 59
common stock based on the applicable conversion price, on each of January 1,
2000, January 1, 2001 and January 1, 2002.
During the period from issuance through December 31, 1999, the series A
preferred stock is convertible at a price of $12.50 per share. During the period
from January 1, 2000 through December 31, 2000 the series A preferred stock is
convertible at a price equal to the average of the closing prices for the common
stock for the five trading days ending one trading day prior to December 31,
1999. During the period from January 1, 2001 through December 31, 2001 the
series A preferred stock is convertible at a price equal to the average of the
closing prices for the common stock for the five trading days ending one trading
day prior to December 31, 2000. During the period from January 1, 2002 through
December 31, 2002 the series A preferred stock is convertible at a price equal
to 88% of the average of the closing prices for the common stock for the five
trading days ending one trading day prior to December 31, 2001 (the "beneficial
conversion feature"). Anytime after January 1, 2003 the series A preferred stock
is convertible at a price equal to the average of the closing prices for the
common stock for the five trading days ending one trading day prior to the
receipt by us of the notice of conversion.
The conversion price is subject to adjustment in the case of certain
dilutive events. Further, in the event the average market price of the common
stock for the five consecutive trading days ending one trading day prior to any
trading day during which any series A preferred stock is outstanding exceeds
150% of the conversion price then in effect, we have the right, as long as such
price exceeds 150% of the conversion price, to require the holder of the series
A preferred stock to convert all its series A preferred stock as may then be
convertible. We may also redeem in whole or any part of the series A preferred
stock then outstanding at a redemption price of $120 per share, plus accrued and
unpaid dividends thereon.
In the event of our liquidation, dissolution or winding up, holders of the
series A preferred stock are entitled to receive in cash out of our assets
available for distribution to our stockholders an amount equal to the stated
value of $100 per share outstanding, plus accrued and unpaid dividends. Such
payments will be made before any amount will be paid to the holders of the
common stock or holders of other classes or series of our capital stock or if
the assets are insufficient to pay the full amount due to the holders of series
A preferred stock such holders will receive a pro rata portion thereof.
In accordance with the terms of the series A preferred stock, we are
required to recognize an assumed incremental yield of $5,455,000 (calculated at
the date of issuance and based on the beneficial conversion feature noted
above). This amount is being amortized as a preferred stock dividend over a
four-year period beginning with the day of issuance. Accrued dividends payable
were $3,702,000 or $9.25 per share at June 30, 1999. Additionally, we have
recognized a cumulative incremental yield attributable to a beneficial
conversion feature of $1,991,000 through June 30, 1999.
MILESTONE SHARES
Under our license agreement with Merck KGaA for C225, we are entitled to
receive from Merck KGaA up to $60 million upon our achievement of various
milestones in the development of C225. In connection with making the final $30
million of these milestone payments, Merck KGaA is entitled to receive milestone
shares from us, which, if issued, will be shares of our common stock (or other
capital stock convertible into our common stock). We describe the milestone
shares more fully under the heading "Business -- Collaborations with Merck
KGaA -- C225 License and Development Agreement."
OPTIONS AND WARRANTS
OPTIONS
In February 1986, our board of directors adopted an incentive stock option
plan and a non-qualified stock option plan (the "86 Plans"). In February 1996,
we adopted an additional incentive stock option plan and non-qualified stock
option plan (the "96 Plans"). In May 1998, we adopted an additional
non-qualified stock option plan (the "98 Plan"). Combined the 86 Plans, the 96
Plans, as amended, and the 98 Plan, as amended, provide for the granting of
options to purchase up to 6,500,000 shares of common stock to our key employees,
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<PAGE> 60
directors, consultants and advisors. Incentive stock options may not be granted
at a price less than the fair market value of the stock at the date of grant and
may not be granted to non-employees. Options may not be granted under the 98
Plan to officers or directors. Options under all the plans, unless earlier
terminated, expire ten years from the date of grant. Certain options granted
under these plans vest over one-to-five-year periods. At October 27, 1999,
options to purchase 3,663,960 shares of common stock were outstanding under the
86 Plans, the 96 Plans and the 98 Plan, and 1,046,490 shares were available for
grant under the 96 Plans and the 98 Plan. Options may no longer be granted under
the 86 Plans pursuant to the terms of the 86 Plans.
In September 1998 and January 1999, we granted to both our Vice President
of Marketing and Vice President of Product and Process Development options to
purchase 60,000 shares of common stock each. These options were not granted
under any of the above mentioned incentive stock option or non-qualified stock
option plans. The terms of these options are substantially similar to those
granted under the 98 Plan.
In May 1999, our stockholders approved the grant of an option to our
President and Chief Executive Officer and Executive Vice President and Chief
Operating Officer to purchase 1,000,000 and 650,000 shares, respectively, of
common stock at a per share exercise price equal to $18.25, the last reported
sale price of the common stock on the date shareholder approval was obtained.
The options will vest no later than seven years from the grant date and
specified amounts are subject to earlier vesting if specified common stock price
thresholds are met.
During April 1995, we completed the sale of the remaining one-half of our
shares of capital stock of Cadus Pharmaceutical Corporation, a Delaware
corporation, for $3.0 million to High River LP, a Delaware limited partnership.
In exchange for receiving a now-expired right to repurchase all outstanding
shares of capital stock of Cadus held by High River, ImClone granted to High
River two options to purchase shares of common stock. One option is for 150,000
shares at an exercise price per share equal to $2.00, subject to certain
adjustments and the other option is for 300,000 shares at an exercise price per
share equal to $0.69, subject to certain adjustments. Both options expire on
April 26, 2000. The 450,000 options have a weighted average exercise price of
$1.13.
WARRANTS
As of October 27, 1999, a total of 1,791,590 shares of common stock were
issuable upon exercise of outstanding warrants. Such warrants have been issued
to our officers, directors, other employees, certain scientific advisory board
members, as well as certain investors and certain credit providers. The
warrants, all of which are currently exercisable, have exercise prices ranging
from $.0625 to $13.33 per share, with an average exercise price of approximately
$2.96. The warrants have standard anti-dilution provisions including adjustments
for stock splits, reverse stock splits and stock dividends as well as
adjustments for capital reorganizations.
REGISTRATION RIGHTS
We have granted Merck KGaA certain registration rights regarding the shares
of common stock that it may acquire upon conversion of the series A preferred
shares and upon receipt of milestone shares. Specifically, Merck KGaA has the
right to require us to register upon its request once during any 12-month
period, up to a total of four times, at our expense, the number of shares of
common stock into which the shares of series A preferred stock are converted
according to their terms and the number of milestone shares that are issued.
Merck KGaA may also exercise rights to have such registrable common stock
registered at any time that we file a registration statement for other shares of
our common stock. Merck KGaA may exercise these rights at any time after
conversion of its shares of series A preferred stock into shares of common stock
or receipt of milestone shares. However, Merck KGaA has waived its rights to
exercise these registration rights in connection with this offering and during
the period ending 90 days after the date of this prospectus. As of October 27,
1999, Merck KGaA has not converted any series A preferred stock into common
stock and has not acquired any milestone shares.
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<PAGE> 61
LIMITATION OF LIABILITY
As permitted by the Delaware General Corporation Law, our certificate of
incorporation provides that our directors shall not be personally liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
- for any breach of the director's duty of loyalty to ImClone or its
stockholders
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
- under Section 174 of the Delaware General Corporation Law, relating to
prohibited dividends or distributions or the repurchase or redemption of
stock or
- for any transaction from which the director derives an improper personal
benefit
As a result of this provision, we and our stockholders may be unable to
obtain monetary damages from a director for breach of his duty of care. Although
stockholders may continue to seek injunctive or other equitable relief for an
alleged breach of fiduciary duty by a director, stockholders may not have any
effective remedy against the challenged conduct if equitable remedies are
unavailable.
We have obtained directors and officers liability insurance against claims
made in the aggregate amount of $13 million per loss and per year. In addition,
our by-laws provide for indemnification of all officers and directors against
liabilities or expenses incurred in connection with any action, suit or
proceeding if the director or officer acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, our best interests, unless the
action, suit or proceeding involved liability by the director or officer to us
and no court determines that such director or officer is entitled to
indemnification. Our by-laws also provide that expenses incurred by a director
or officer in defending any such action may be advanced by us if the director or
officer agrees to repay such amount if it is subsequently determined that he is
not entitled to indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers or persons controlling ImClone pursuant to the foregoing provisions, we
have been informed that in the opinion of the SEC such indemnification is
against public policy and is therefore unenforceable.
BUSINESS COMBINATION PROVISIONS
The business combination provision contained in Section 203 of the Delaware
General Corporation Law ("Section 203") defines an interested stockholder as any
person that
- owns, directly or indirectly 15% or more of the outstanding voting stock
of a corporation or
- is an affiliate or associate of a corporation and was the owner of 15% or
more of the outstanding voting stock at any time within the three-year
period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder, and the
affiliates and the associates of such person.
Under Section 203, a resident domestic corporation may not engage in any
business combination with any interested stockholder for a period of three years
following the date such stockholder became an interested stockholder, unless
- prior to such date the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder
- upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time
the transaction commenced (excluding, for determining the number of
shares outstanding, (a) shares owned by persons who are directors and
officers and (b) employee stock plans, in certain instances) or
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<PAGE> 62
- on or subsequent to such date the business combination is approved by the
board of directors and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder
The restrictions imposed by Section 203 will not apply to a corporation if
- the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 and
- the corporation by the action of its stockholders holding a majority of
outstanding stock adopts an amendment to its certificate of incorporation
or by-laws expressly electing not to be governed by Section 203
Such amendment will not be effective until 12 months after adoption and
shall not apply to any business combination between such corporation and any
person that became an interested stockholder of such corporation on or prior to
such adoption.
We have not elected out of the statute and therefore the restrictions
imposed by Section 203 will apply to us.
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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of the material U.S. federal income
and estate tax consequences of the ownership and disposition of common stock by
a beneficial owner that is a "Non-U.S. Holder." A "Non-U.S. Holder" is a person
or entity that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership, or a foreign estate or
trust.
This discussion is based on the Internal Revenue Code of 1986, as amended
(the "Code"), and administrative interpretations as of the date of this
prospectus, all of which are subject to change, including changes with
retroactive effect. This discussion does not address all aspects of U.S. federal
income and estate taxation that may be relevant to Non-U.S. Holders in light of
their particular circumstances and does not address any tax consequences arising
under the laws of any state, local or foreign jurisdiction. Prospective holders
should consult their tax advisors with respect to the particular tax
consequences to them of owning and disposing of common stock, including the
consequences under the laws of any state, local or foreign jurisdiction.
DIVIDENDS
Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding tax at a 30% rate or a reduced rate specified by an
applicable income tax treaty. For purposes of determining whether tax is to be
withheld at a reduced rate under an income tax treaty, ImClone will presume that
dividends paid on or before December 31, 2000 to an address in a foreign country
are paid to a resident of that country unless it has knowledge that the
presumption is not warranted.
In order to obtain a reduced rate of withholding for dividends paid after
December 31, 2000, a Non-U.S. Holder will be required to provide an Internal
Revenue Service Form W-8BEN certifying its entitlement to benefits under a
treaty. In addition, in certain cases where dividends are paid to a Non-U.S.
Holder that is a partnership or other pass-through entity, persons holding an
interest in the entity may need to provide the required certification.
The withholding tax does not apply to dividends paid to a Non-U.S. Holder
that provides a Form 4224 or, after December 31, 2000, a Form W-8ECI, certifying
that the dividends are effectively connected with the Non-U.S. Holder's conduct
of a trade or business within the United States. Instead, the effectively
connected dividends will be subject to regular U.S. income tax as if the
Non-U.S. Holder were a U.S. resident. A non-U.S. corporation receiving
effectively connected dividends may also be subject to an additional "branch
profits tax" imposed at a rate of 30% (or a lower treaty rate) on an earnings
amount that is net of the regular tax.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
on gain realized on a sale or other disposition of common stock unless:
- the gain is effectively connected with a trade or business of the
Non-U.S. Holder in the United States
- in the case of certain Non-U.S. Holders who are non-resident alien
individuals and hold the common stock as a capital asset, the
individuals are present in the United States for 183 or more days in the
taxable year of the disposition
- the Non-U.S. Holder is subject to tax under the provisions of the Code
regarding the taxation of U.S. expatriates or
- ImClone is or has been a U.S. real property holding corporation at any
time within the five-year period preceding the disposition or the
Non-U.S. Holder's holding period, whichever period is shorter
The tax relating to stock in a U.S. real property holding corporation does not
apply to a Non-U.S. Holder whose holdings, actual and constructive, at all times
during the applicable period, amount to 5% or less of the common stock of a U.S.
real property holding corporation, provided that the common stock is regularly
traded
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on an established securities market. Generally, a corporation is a U.S. real
property holding corporation if the fair market value of its U.S. real property
interests, as defined in the Code and applicable regulations, equals or exceeds
50% of the aggregate fair market value of its worldwide real property interests
and its other assets used or held for use in a trade or business. ImClone may
be, or may prior to a Non-U.S. Holder's disposition of common stock become, a
U.S. real property holding corporation.
INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING
ImClone must report to the IRS the amount of dividends paid, the name and
address of the recipient, and the amount of any tax withheld. A similar report
is sent to the Non-U.S. Holder. Under tax treaties or other agreements, the IRS
may make its reports available to tax authorities in the recipient's country of
residence. Dividends paid on or before December 31, 2000 at an address outside
the United States are not subject to backup withholding, unless the payor has
knowledge that the payee is a U.S. person. However, a Non-U.S. Holder may need
to certify its non-U.S. status in order to avoid backup withholding at a 31%
rate on dividends paid after December 31, 2000 or dividends paid on or before
that date at an address inside the United States.
U.S. information reporting and backup withholding generally will not apply
to a payment of proceeds of a disposition of common stock where the transaction
is effected outside the United States through a non-U.S. office of a non-U.S.
broker. However, a Non-U.S. Holder may need to certify its non-U.S. status in
order to avoid information reporting and backup withholding at a 31% rate on
disposition proceeds where the transaction is effected by or through a U.S.
office of a broker. In addition, U.S. information reporting requirements may
apply to the proceeds of a disposition effected by or through a non-U.S. office
of a U.S. broker, or by a non-U.S. broker with specified connections to the
United States.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. When withholding results in an overpayment of taxes, a refund may be
obtained if the required information is furnished to the IRS.
FEDERAL ESTATE TAX
An individual Non-U.S. Holder who is treated as the owner of, or has made
certain lifetime transfers of, an interest in the common stock will be required
to include the value of the stock in his gross estate for U.S. federal estate
tax purposes, and may be subject to U.S. federal estate tax unless an applicable
estate tax treaty provides otherwise.
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UNDERWRITERS
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, the underwriters named below, for whom Morgan
Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Prudential Securities Incorporated and Warburg Dillon Read LLC are acting as
representatives, have severally agreed to purchase, and the company has agreed
to sell to them, severally, the respective number of shares of common stock set
forth opposite the names of such underwriters below:
<TABLE>
<CAPTION>
NUMBER
OF
NAME SHARES
- ---- ---------
<S> <C>
Morgan Stanley & Co. Incorporated...........................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................
Prudential Securities Incorporated..........................
Warburg Dillon Read LLC.....................................
---------
Total.................................................. 2,500,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the shares of common stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The underwriters are obligated to take
and pay for all of the shares of common stock offered hereby (other than those
covered by the underwriters' over-allotment option described below) if any such
shares are taken.
The underwriters initially propose to offer part of the shares of common
stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $ a share under the public offering price. Any
underwriter may allow, and such dealers may reallow, a concession not in excess
of $ a share to other underwriters or to certain dealers. After the
initial offering of the shares of common stock, the offering price and other
selling terms may from time to time be varied by the representatives.
The company has granted to the underwriters an option, exercisable for 30
days from the date of this prospectus, to purchase up to an aggregate of 375,000
additional shares of common stock at the public offering price set forth on the
cover page hereof, less underwriting discounts and commissions. The underwriters
may exercise such option solely for the purpose of covering over-allotments, if
any, made in connection with the offering of the shares of common stock offered
hereby. To the extent such option is exercised, each underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares of common stock as the number set forth
next to such underwriter's name in the table above bears to the total number of
shares of common stock set forth next to the names of all underwriters in the
table above. If the underwriters' option is exercised in full, the total price
to the public would be $ , the total underwriters' discounts and
commission would be $ and total proceeds to the company would be
$ .
Each of the company and the directors, officers and certain other
stockholders of the company has agreed that, without the prior written consent
of Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not
during the period ending 90 days after the date of this prospectus:
- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of,
64
<PAGE> 66
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock or
- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock
whether any such transaction described above is to be settled by delivery of
common stock or such other securities, in cash or otherwise.
The restrictions described above do not apply to:
- the sale of shares to the underwriters
- the issuance by the company of shares of common stock upon the exercise
of an option or a warrant or the conversion of a security outstanding on
the date of this prospectus of which the underwriters have been advised
in writing or
- transactions by any person other than the company relating to shares of
common stock or other securities acquired in open market transactions
after the completion of the offering of the shares
In order to facilitate the offering of the common stock, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the common stock. Specifically, the underwriters may over-allot in
connection with the offering, creating a short position in the common stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the common stock, the underwriters may bid for, and purchase, shares of
common stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
common stock in the offering, if the syndicate repurchases previously
distributed common stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the common stock above independent market
levels. The underwriters are not required to engage in these activities and may
end any of these activities at any time.
The underwriters and dealers may engage in passive market making
transactions in the common stock in accordance with Rule 103 of Regulation M
promulgated by the SEC. In general, a passive market maker may not bid for, or
purchase, the common stock at a price that exceeds the highest independent bid.
In addition, the net daily purchases made by any passive market maker generally
may not exceed 30% of its average daily trading volume in the common stock
during a specified two month prior period, or 200 shares, whichever is greater.
A passive market maker must identify passive market making bids as such or
maintain the market price of the common stock above independent market levels.
Underwriters and dealers are not required to engage in passive market making and
may end passive market making activities at any time.
The company and the underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters relating to the issuance of the shares of common
stock offered hereby will be passed upon for ImClone by Davis Polk & Wardwell,
New York, New York, and for the Underwriters by Ropes & Gray, Boston,
Massachusetts.
EXPERTS
The statements in this prospectus under the captions "Risk Factors -- Our
success depends upon our ability to protect our intellectual property and our
proprietary technology" and "Business -- Patents and Trade Secrets" on matters
of U.S. intellectual property law other than references in such sections to the
opinion of Kenyon & Kenyon, have been reviewed and approved by Hoffmann & Baron,
LLP, intellectual property counsel for ImClone, as experts in U.S. intellectual
property law, and are included herein in reliance upon such review and approval.
The statements in this prospectus in the second sentence of each of the eighth
65
<PAGE> 67
paragraph under the caption "Risk Factors -- Our success depends upon our
ability to protect our intellectual property and our proprietary technology" and
in the third paragraph under the caption "Business -- Patents and Trade
Secrets -- Patent Rights; Licenses -- C225" on matters of U.S. intellectual
property law that refer to the opinion of Kenyon & Kenyon, have been reviewed
and approved by Kenyon & Kenyon, special intellectual property counsel for
ImClone, as experts in U.S. intellectual property law, and are included herein
in reliance upon such review and approval.
The consolidated financial statements of ImClone Systems Incorporated and
its subsidiary as of December 31, 1998 and 1997, and for each of the years in
the three-year period ended December 31, 1998, have been included herein and in
the registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon authority of
said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on these public reference rooms. Our filings with the SEC are also
available to the public from the SEC's web site at http://www.sec.gov. Our
common stock is traded on the NASDAQ National Market under the ticker symbol
"IMCL." You may also read and copy our filings with the SEC at the NASDAQ
National Market offices located in Washington, D.C.
We filed a registration statement on Form S-3 to register the shares
offered by this prospectus with the Commission. As allowed by SEC rules, this
prospectus does not contain all the information that you can find in the
registration statement or the exhibits to the registration statement. The SEC
allows us to "incorporate by reference" the information we file with them. This
means that we can disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be a
part of this prospectus, except if it is superseded by information in this
prospectus or by later information that we file with the Commission. Information
that we file with the SEC after the date of this prospectus will automatically
update and supersede the information contained or incorporated by reference in
this prospectus. We incorporate by reference the documents listed below, as well
as any future filings we may make with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, before the time that all of the shares offered by
this prospectus have been sold or de-registered. These documents contain
important information about our company and its financial condition.
- our Annual Report on Form 10-K for the fiscal year ended December 31,
1998
- our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, 1999 and June 30, 1999
- our Proxy Statement dated April 21, 1999 filed in connection with our
May 24, 1999 Annual Meeting of Stockholders
- our Current Report on Form 8-K filed on October 7, 1999
You may request a copy of these filings, excluding all exhibits unless we
have specifically incorporated by reference an exhibit, at no cost, by writing
or telephoning us at:
ImClone Systems Incorporated
180 Varick Street
New York, New York 10014
(212) 645-1405
Attention: Catherine M. Vaczy, Associate General Counsel
When you are deciding whether to purchase the shares being offered by this
prospectus, you should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making any offer of
the shares in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
66
<PAGE> 68
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
AUDITED FINANCIAL STATEMENTS:
Independent Auditors' Report................................ F-2
Consolidated Balance Sheets at December 31, 1998 and 1997... F-3
Consolidated Statements of Operations and Comprehensive Loss
for the Years Ended December 31, 1998, 1997, and 1996..... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1998, 1997, and 1996............. F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997, and 1996......................... F-7
Notes to Consolidated Financial Statements.................. F-8
UNAUDITED FINANCIAL STATEMENTS:
Unaudited Consolidated Balance Sheet at June 30, 1999....... F-27
Unaudited Consolidated Statements of Operations and
Comprehensive Loss for the Six Months Ended June 30, 1999
and 1998.................................................. F-28
Unaudited Consolidated Statements of Cash Flows for the Six
Months Ended June 30, 1999 and 1998....................... F-29
Unaudited Notes to Consolidated Financial Statements........ F-30
</TABLE>
F-1
<PAGE> 69
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
ImClone Systems Incorporated:
We have audited the consolidated financial statements of ImClone Systems
Incorporated and subsidiary as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of ImClone
Systems Incorporated and subsidiary as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1998, in conformity with generally accepted
accounting principles.
KPMG LLP
Princeton, New Jersey
February 19, 1999
F-2
<PAGE> 70
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
ASSETS ------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 3,888 $ 2,558
Securities available for sale............................. 42,851 57,052
Prepaid expenses.......................................... 470 596
Other current assets...................................... 1,196 589
-------- ---------
Total current assets................................ 48,405 60,795
-------- ---------
Property and equipment:
Land...................................................... 340 340
Building and building improvements........................ 10,519 8,969
Leasehold improvements.................................... 4,846 4,832
Machinery and equipment................................... 7,834 6,315
Furniture and fixtures.................................... 640 550
Construction in progress.................................. 115 2,159
-------- ---------
Total cost.......................................... 24,294 23,165
Less accumulated depreciation and amortization............ (12,877) (11,294)
-------- ---------
Property and equipment, net............................. 11,417 11,871
-------- ---------
Patent costs, net........................................... 860 944
Deferred financing costs, net............................... 46 55
Other assets................................................ 1,524 2,115
-------- ---------
$ 62,252 $ 75,780
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 1,109 $ 1,731
Accrued expenses and other................................ 4,847 1,440
Interest payable.......................................... 45 68
Deferred revenue.......................................... 75 208
Fee potentially refundable from corporate partner......... 4,000 --
Current portion of long-term liabilities.................. 744 677
Preferred stock dividends payable......................... 2,512 --
-------- ---------
Total current liabilities........................... 13,332 4,124
-------- ---------
Long-term debt.............................................. 2,200 2,200
Other long-term liabilities, less current portion........... 1,546 1,118
Preferred stock dividends payable........................... -- 112
-------- ---------
Total liabilities................................... 17,078 7,554
-------- ---------
Commitments and contingencies
Stockholders' equity:
</TABLE>
<TABLE>
Preferred stock, $1.00 par value; authorized 4,000,000 shares; issued and outstanding
Series A Convertible Preferred Stock: 400,000 at December 31, 1998 and
December 31, 1997 (preference in liquidation $42,512 and $40,112, respectively). 400 400
<S> <C> <C>
Common stock, $.001 par value; authorized 45,000,000 shares; issued 24,567,312 and
24,265,072 at December 31, 1998 and December 31, 1997, respectively; outstanding
24,516,495, and 24,214,255 at December 31, 1998 and December 31, 1997,
respectively........................................................ 25 24
Additional paid-in capital............................................ 184,853 185,706
Accumulated deficit................................................... (138,846) (117,464)
Treasury stock, at cost; 50,817 shares at December 31, 1998 and December 31,
1997................................................................ (492) (492)
Note receivable--officer and stockholder.............................. (142) --
Accumulated other comprehensive income (loss):
Unrealized (loss) gain on securities available for sale............. (624) 52
-------- ---------
Total stockholders' equity...................................... 45,174 68,226
-------- ---------
$ 62,252 $ 75,780
======== =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 71
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Revenues:
License fees from third parties.......................... $ 1,000 $ 3,000 $ 75
Research and development funding from third parties and
other................................................. 3,193 2,348 525
-------- -------- --------
Total revenues................................... 4,193 5,348 600
-------- -------- --------
Operating expenses:
Research and development................................. 21,049 16,455 11,482
General and administrative............................... 7,145 5,356 3,961
-------- -------- --------
Total operating expenses......................... 28,194 21,811 15,443
-------- -------- --------
Operating loss............................................. (24,001) (16,463) (14,843)
-------- -------- --------
Other:
Interest and other income................................ (3,054) (1,523) (918)
Interest expense......................................... 435 551 823
-------- -------- --------
Net interest and other income.................... (2,619) (972) (95)
-------- -------- --------
Loss before extraordinary item............................. (21,382) (15,491) (14,748)
Extraordinary loss on extinguishment of debt............... -- -- 1,267
-------- -------- --------
Net loss................................................... (21,382) (15,491) (16,015)
Preferred dividends (including assumed incremental yield
attributable to beneficial conversion feature of $1,268
and $51 for the years ended December 31, 1998 and 1997,
respectively)............................................ 3,668 163 --
-------- -------- --------
Net loss to common stockholders............................ $(25,050) $(15,654) $(16,015)
======== ======== ========
Net loss per common share:
Basic and diluted:
Loss before extraordinary item........................ $ (1.03) $ (0.67) $ (0.76)
Extraordinary loss on extinguishment of debt.......... -- -- (0.07)
-------- -------- --------
Net loss................................................. $ (1.03) $ (0.67) $ (0.83)
======== ======== ========
Weighted average shares outstanding........................ 24,301 23,457 19,371
======== ======== ========
Comprehensive loss:
Net loss................................................... $(21,382) $(15,491) $(16,015)
Other comprehensive income (loss):
Unrealized gain on securities available for sale:
Unrealized holding gain (loss) arising during the
period.............................................. (638) 99 (49)
Less: Reclassification adjustment for realized gain
(loss) included in net loss......................... 38 (2) --
-------- -------- --------
Total other comprehensive income (loss).......... (676) 101 (49)
-------- -------- --------
Total comprehensive loss......................... $(22,058) $(15,390) $(16,064)
======== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 72
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON STOCK ADDITIONAL
----------------- ------------------- PAID-IN ACCUMULATED TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT STOCK
-------- ------ ---------- ------ ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995... -- $ -- 16,819,622 $17 $ 97,914 $ (85,958) $(150)
-------- ---- ---------- --- -------- --------- -----
Issuance of common stock....... 2,200,000 2 13,560
Options exercised.............. 266,275 846
Warrants exercised............. 604,892 1 2,960
Options granted to
non-employees................ 95
Extinguishment of debt......... 357,333 3,260
Debt discount.................. 125
Treasury shares................ (19)
Changes in unrealized loss on
securities available for
sale.........................
Net loss....................... (16,015)
-------- ---- ---------- --- -------- --------- -----
Balance at December 31, 1996... -- -- 20,248,122 20 118,760 (101,973) (169)
-------- ---- ---------- --- -------- --------- -----
Issuance of preferred stock.... 400,000 400 39,597
Issuance of common stock....... 3,000,000 3 23,152
Options exercised.............. 147,450 223
Warrants exercised............. 869,500 1 1,385
Options granted to
non-employees................ 189
Options/warrants granted to
employees.................... 2,512
Treasury shares................ (323)
Changes in unrealized loss on
securities available for
sale.........................
Preferred stock dividends...... (112)
Net loss....................... (15,491)
-------- ---- ---------- --- -------- --------- -----
Balance at December 31, 1997... 400,000 400 24,265,072 24 185,706 (117,464) (492)
-------- ---- ---------- --- -------- --------- -----
Options exercised.............. 154,097 1 613
Warrants exercised............. 143,755 200
Issuance of shares through
employee stock purchase
plan......................... 4,388 33
Options granted to
non-employees................ 540
Options granted to employees... 150
Changes in unrealized gain on
securities available for
sale.........................
Note receivable--officer and
stockholder..................
Interest on note
receivable--officer and
stockholder.................. 11
Preferred stock dividends...... (2,400)
Net loss....................... (21,382)
-------- ---- ---------- --- -------- --------- -----
Balance at December 31, 1998... 400,000 $400 24,567,312 $25 $184,853 $(138,846) $(492)
======== ==== ========== === ======== ========= =====
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 73
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY -- (CONTINUED)
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOTE ACCUMULATED
RECEIVABLE OTHER
OFFICER AND COMPREHENSIVE
STOCKHOLDER LOSS TOTAL
----------- ------------- --------
<S> <C> <C> <C>
Balance at December 31, 1995........................ $ -- $ -- $ 11,823
----- ----- --------
Issuance of common stock............................ 13,562
Options exercised................................... 846
Warrants exercised.................................. 2,961
Options granted to non-employees.................... 95
Extinguishment of debt.............................. 3,260
Debt discount....................................... 125
Treasury shares..................................... (19)
Changes in unrealized loss on securities available
for sale.......................................... (49) (49)
Net loss............................................ (16,015)
----- ----- --------
Balance at December 31, 1996........................ -- (49) 16,589
----- ----- --------
Issuance of preferred stock......................... 39,997
Issuance of common stock............................ 23,155
Options exercised................................... 223
Warrants exercised.................................. 1,386
Options granted to non-employees.................... 189
Options/warrants granted to employees............... 2,512
Treasury shares..................................... (323)
Changes in unrealized loss on securities available
for sale.......................................... 101 101
Preferred stock dividends........................... (112)
Net loss............................................ (15,491)
----- ----- --------
Balance at December 31, 1997........................ -- 52 68,226
----- ----- --------
Options exercised................................... 614
Warrants exercised.................................. 200
Issuance of shares through employee stock purchase
plan.............................................. 33
Options granted to non-employees.................... 540
Options granted to employees........................ 150
Changes in unrealized gain on securities available
for sale.......................................... (676) (676)
Note receivable--officer and stockholder............ (131) (131)
Interest on note receivable--officer and
stockholder....................................... (11) --
Preferred stock dividends........................... (2,400)
Net loss............................................ (21,382)
----- ----- --------
Balance at December 31, 1998........................ $(142) $(624) $ 45,174
===== ===== ========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 74
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
-------- --------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(21,382) $ (15,491) $(16,015)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 1,769 1,797 1,704
Expense associated with issuance of options and
warrants............................................. 690 2,729 95
Extraordinary loss on extinguishment of debt............ -- -- 1,267
Discounted interest amortization........................ -- -- 156
Write-off of patent costs............................... 235 146 --
(Gain) loss on sale of investments...................... (38) 2 --
Changes in:
Prepaid expenses..................................... 126 (474) (7)
Other current assets................................. (607) (110) (453)
Due from officer and stockholder..................... -- 101 31
Other assets......................................... (62) (37) (14)
Interest payable..................................... (23) (170) (105)
Accounts payable..................................... (622) 672 67
Accrued expenses and other........................... 3,407 75 540
Deferred revenue..................................... (133) 208 --
Fee potentially refundable from corporate partner.... 4,000 -- --
-------- --------- --------
Net cash used in operating activities.............. (12,640) (10,552) (12,734)
-------- --------- --------
Cash flows from investing activities:
Acquisitions of property and equipment.................... (472) (1,657) (272)
Purchases of securities available for sale................ (62,779) (241,623) (32,665)
Sales and maturities of securities available for sale..... 76,996 195,450 21,836
Investment in CombiChem, Inc. ............................ -- (2,000) --
Additions to patents...................................... (254) (212) (343)
-------- --------- --------
Net cash provided by (used in) investing
activities....................................... 13,491 (50,042) (11,444)
-------- --------- --------
Cash flows from financing activities:
Net proceeds from issuance of preferred stock............. -- 39,997 --
Net proceeds from issuance of common stock................ -- 23,154 13,562
Proceeds from exercise of stock options and warrants...... 682 1,581 3,807
Proceeds from issuance of common stock under the employee
stock purchase plan..................................... 33 -- --
Purchase of treasury stock................................ -- (323) (19)
Proceeds from equipment and building improvement
financings.............................................. 594 -- --
Repayment of long-term debt............................... -- (2,113) --
Payments of other liabilities............................. (830) (1,878) (645)
-------- --------- --------
Net cash provided by financing activities.......... 479 60,418 16,705
-------- --------- --------
Net increase (decrease) in cash and cash equivalents........ 1,330 (176) (7,473)
Cash and cash equivalents at beginning of period............ 2,558 2,734 10,207
-------- --------- --------
Cash and cash equivalents at end of period.................. $ 3,888 $ 2,558 $ 2,734
======== ========= ========
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 75
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND BASIS OF PREPARATION
ImClone Systems Incorporated (the "Company") is a biopharmaceutical company
engaged primarily in the research and development of therapeutic products for
the treatment of cancer and cancer related disorders. The Company employs
accounting policies that are in accordance with generally accepted accounting
principles in the United States.
The biopharmaceutical industry is subject to rapid and significant
technological change. The Company has numerous competitors, including major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions. These competitors may succeed in
developing technologies and products that are more effective than any that are
being developed by the Company or that would render the Company's technology and
products obsolete and non-competitive. Many of these competitors have
substantially greater financial and technical resources and production and
marketing capabilities than the Company. In addition, many of the Company's
competitors have significantly greater experience than the Company in
pre-clinical testing and human clinical trials of new or improved pharmaceutical
products and in obtaining Food and Drug Administration ("FDA") and other
regulatory approvals on products for use in health care. The Company is aware of
various products under development or manufactured by competitors that are used
for the prevention, diagnosis or treatment of certain diseases the Company has
targeted for product development, some of which use therapeutic approaches that
compete directly with certain of the Company's product candidates. The Company
has limited experience in conducting and managing pre-clinical testing necessary
to enter clinical trials required to obtain government approvals and has limited
experience in conducting clinical trials. Accordingly, the Company's competitors
may succeed in obtaining FDA approval for products more rapidly than the
Company, which could adversely affect the Company's ability to further develop
and market its products. If the Company commences significant commercial sales
of its products, it will also be competing with respect to manufacturing
efficiency and marketing capabilities, areas in which the Company has limited or
no experience.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the financial statements of
ImClone Systems Incorporated and its wholly-owned subsidiary EndoClone
Incorporated. All significant intercompany balances and transactions have been
eliminated in consolidation.
(B) CASH EQUIVALENTS
Cash equivalents consist primarily of U.S. Government instruments,
commercial paper, master notes and other readily marketable debt instruments.
The Company considers all highly liquid debt instruments with original
maturities not exceeding three months to be cash equivalents.
(C) INVESTMENTS IN SECURITIES
The Company classifies its investment in debt and equity securities in one
of three categories: trading, available-for-sale, or held-to-maturity. Trading
securities are bought and held principally for the purpose of selling them in
the near term. Held-to-maturity securities are those debt securities in which
the Company has the ability and intent to hold the security until maturity. All
other securities not included in trading or held-to-maturity are classified as
available-for-sale.
Trading and available-for-sale securities are recorded at fair value.
Held-to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains and
losses on trading securities are included in earnings. Unrealized holding gains
and losses, net of related tax effect, on available-for-sale securities are
excluded from earnings and are reported as a separate
F-8
<PAGE> 76
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
component of accumulated comprehensive loss until realized. Realized gains and
losses from the sale of available-for-sale securities are determined on a
specific identification basis.
A decline in the market value of any available-for-sale or held-to-maturity
security below cost that is deemed to be other than temporary results in a
reduction in carrying amount to fair value. The impairment is charged to
earnings and a new cost basis for the security is established. Premiums and
discounts are amortized or accreted over the life of the related
held-to-maturity security as an adjustment to yield using the effective interest
method. Dividend and interest income is recognized when earned.
At December 31, 1998 and 1997, all investments in securities were
classified as available-for-sale.
(D) LONG-LIVED ASSETS
Property and equipment are stated at cost. Equipment under capital leases
are stated at the present value of minimum lease payments. Depreciation of fixed
assets is provided by straight-line methods over estimated useful lives of three
to twelve years, and leasehold improvements are being amortized over the related
lease term or the service lives of the improvements, whichever is shorter.
Patent and patent application costs are capitalized and amortized on a
straight-line basis over their respective expected useful lives, up to a 15-year
period.
The Company reviews long-lived assets for impairment when events or changes
in business conditions indicate that their full carrying value may not be
recovered. Assets are considered to be impaired and written down to fair value
if expected associated cash flows are less than the carrying amounts. Fair value
is generally the present value of the expected associated cash flows.
(E) DEFERRED FINANCING COSTS
Costs incurred in obtaining the Industrial Development Revenue Bonds (Note
6) are amortized using the straight-line method over the terms of the related
bonds.
(F) REVENUE RECOGNITION
License fees are recognized if the Company enters into license agreements
with third parties that provide for the payment of non-refundable fees when the
agreement is signed or when all parties concur that specified goals are
achieved. These fees are recognized as license fee revenues in accordance with
the terms of the particular agreement.
Research and development funding revenue is derived from collaborative
agreements with third parties and is recognized in accordance with the terms of
the respective contracts.
Royalty revenue is recognized when earned and collection is probable.
Royalty revenue is derived from sales of products by corporate partners using
licensed Company technology.
Revenue recognized in the accompanying statements of operations is not
subject to repayment. Amounts received that are subject to repayment if certain
specified goals are not met are classified as fees potentially refundable and
recognized as revenue upon the achievement of such specified goals. Revenue
received that is related to future performance is classified as deferred revenue
and recognized when the revenue is earned.
(G) STOCK-BASED COMPENSATION PLANS
The Company has two types of stock-based compensation plans, stock option
plans and a stock purchase plan. The Company accounts for its stock-based
compensation plans in accordance with the provisions of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations. As such, compensation expense would be recorded on the
date of grant only if the
F-9
<PAGE> 77
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
market price on the date of grant of the underlying stock exceeded the exercise
price. The Company provides the pro forma net income and pro forma earnings per
share disclosures for employee stock option grants made in 1995 and future years
as if the fair-value-based method defined in Statement of Financial Accounting
Standards ("SFAS") No. 123 had been applied.
(H) RESEARCH AND DEVELOPMENT
Research and development expenditures made pursuant to certain research and
development contracts with academic institutions, and other research and
development costs, are expensed as incurred.
(I) INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
(J) USE OF ESTIMATES
Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
(K) NET LOSS PER COMMON SHARE
Basic and diluted loss per common share is based on the net loss for the
relevant period, adjusted for cumulative Series A Preferred Stock dividends and
the assumed incremental yield attributable to beneficial conversion feature of
$3,668,000, $163,000 and none for the years ended December 31, 1998, 1997 and
1996, respectively, divided by the weighted average number of shares issued and
outstanding during the period. For purposes of the diluted loss per share
calculation, the exercise or conversion of all potential common shares is not
included since their effect would be anti-dilutive for all years presented. As
of December 31, 1998, 1997 and 1996, the Company had approximately 10,933,000,
9,444,000 and 5,380,000, respectively, potential common shares outstanding
including convertible preferred stock, stock options and stock warrants. The
potential shares of Common Stock to which the Series A Preferred Stock is
convertible is based on the future market price of the Company's Common Stock.
The potential Common Stock outstanding relating to Preferred Stock conversion
for the years ended December 31, 1998 and 1997 has been estimated based on the
respective closing prices of the Common Stock at December 31, 1998 and December
31, 1997.
(L) COMPREHENSIVE INCOME (LOSS)
On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. Comprehensive income (loss) consists of net income (loss)
and net unrealized gains (losses) on securities and is presented in the
consolidated statements of operations and comprehensive loss. Prior year
financial statements have been reclassified to conform to the requirements of
SFAS No. 130.
(M) RECLASSIFICATION
Certain amounts previously reported have been reclassified to conform to
the current year's presentation.
F-10
<PAGE> 78
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) SECURITIES AVAILABLE FOR SALE
The amortized cost, gross unrealized holding gains, gross unrealized
holding losses and fair value for available-for-sale securities by major
security type at December 31, 1998 and 1997, were as follows:
At December 31, 1998:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST HOLDING GAINS HOLDING LOSSES FAIR VALUE
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Commercial paper................ $ 4,738,000 $ -- $ -- $ 4,738,000
U.S. government debt............ 2,000,000 2,000 -- 2,002,000
U.S. corporate debt............. 21,633,000 69,000 (48,000) 21,654,000
Foreign corporate debt.......... 14,150,000 44,000 (42,000) 14,152,000
Foreign government/agency
guaranteed debt............... 302,000 3,000 -- 305,000
----------- -------- -------- -----------
$42,823,000 $118,000 $(90,000) $42,851,000
=========== ======== ======== ===========
</TABLE>
At December 31, 1997:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST HOLDING GAINS HOLDING LOSSES FAIR VALUE
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Commercial paper................ $12,104,000 $ 4,000 $ -- $12,108,000
U.S. government debt............ 23,568,000 24,000 (5,000) 23,587,000
U.S. corporate debt............. 3,992,000 4,000 -- 3,996,000
Foreign corporate debt.......... 4,719,000 7,000 -- 4,726,000
Foreign government/agency
guaranteed debt............... 12,617,000 18,000 -- 12,635,000
----------- -------- -------- -----------
$57,000,000 $ 57,000 $ (5,000) $57,052,000
=========== ======== ======== ===========
</TABLE>
Maturities of debt securities classified as available-for-sale were as
follows at December 31, 1998:
Years ended December 31,
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
1999.............................................. $11,257,000 $11,260,000
2000.............................................. 7,151,000 7,198,000
2001.............................................. 1,764,000 1,757,000
2002.............................................. -- --
2003.............................................. -- --
2004 and thereafter............................... 22,651,000 22,636,000
----------- -----------
$42,823,000 $42,851,000
=========== ===========
</TABLE>
Proceeds from the sale of investment securities available-for-sale were
$35,604,000, $9,115,000 and $2,596,000 for the years ended December 31, 1998,
1997 and 1996, respectively. Gross realized gains included in income in 1998 and
1997 were $41,000 and $1,000, respectively and gross realized losses included in
income in 1998 and 1997 were $3,000 in both years. There were no realized gains
or losses in 1996.
F-11
<PAGE> 79
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(4) OTHER ASSETS
The following items are included in other assets:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Deposits...................................... $ 176,000 $ 115,000
Investment in CombiChem, Inc.................. 1,348,000 2,000,000
---------- ----------
$1,524,000 $2,115,000
========== ==========
</TABLE>
In October 1997, the Company entered into a Collaborative Research and
License Agreement with CombiChem, Inc. ("CombiChem") to discover and develop
novel small molecules for use against selected targets for the treatment of
cancer. The companies are utilizing CombiChem's Discovery Engine(TM) and
Universal Informer Library(TM) to generate small molecules for screening in the
Company's assays for identification of lead candidates. The Company is providing
CombiChem with research funding through October 1999 in the amount of $500,000
annually and milestone payments and royalties on marketed products, if any,
resulting from the collaboration. Concurrent with the execution of the
Collaborative Research and License Agreement, the Company entered into a Stock
Purchase Agreement pursuant to which the Company purchased 312,500 shares of
common stock of CombiChem, as adjusted, for aggregate consideration of
$2,000,000. The Company recorded an unrealized loss of $652,000 and none as of
December 31, 1998 and 1997, respectively, on this investment due to a reduction
in the market value of the stock. The Company deems this reduction in market
value to be temporary and therefore this unrealized loss was recorded as a
component of accumulated other comprehensive loss.
(5) ACCRUED EXPENSES AND OTHER
The following items are included in accrued expenses and other:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Salaries and other payroll related expenses... $1,256,000 $ 773,000
Legal and accounting fees..................... 484,000 169,000
Research and development contract services.... 2,032,000 --
Other......................................... 1,075,000 498,000
---------- ----------
$4,847,000 $1,440,000
========== ==========
</TABLE>
(6) LONG-TERM DEBT
On December 31, 1986, the New York City Industrial Development Agency (the
"NYIDA") issued on behalf of the Company an Industrial Development Revenue Bond
(the "1986 Bond") bearing annual interest at 10.75% in the amount of $2,113,000
with a maturity date of December 15, 1994. The proceeds from the sale of the
1986 Bond were used by the Company for the acquisition, construction and
installation of the Company's research and development facility in New York
City. During December 1994, the 1986 Bond's original maturity date of December
15, 1994 was extended to June 15, 1996. During June 1996, the Company and the
NYIDA extended the maturity date an additional eighteen months to December 15,
1997. The Company repaid the obligation on December 15, 1997.
In August 1990, the NYIDA issued another Industrial Development Revenue
Bond (the "1990 Bond") bearing annual interest at 11.25% in the amount of
$2,200,000. The 1990 Bond is due May 1, 2004. The 1990 Bond includes a provision
that if the Company terminates its lease on its New York City facility, a
portion of
F-12
<PAGE> 80
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
which was scheduled to expire in March 1999, the 1990 Bond will become due 60
days prior to such date. The Company renewed the entire lease for the New York
City facility effective as of January 1, 1999 through December 2004. The
proceeds from the sale of the 1990 Bond were used by the Company for the
acquisition, construction and installation of the Company's research and
development facility in New York City.
The Company has granted a security interest in substantially all equipment
located in its New York City facility to secure the obligation of the Company to
the NYIDA relating to the 1990 Bond. Interest expense on the 1986 and 1990 Bonds
was approximately $248,000 for the year ended December 31, 1998, and $465,000
for each of the years ended December 31, 1997 and 1996, respectively.
(7) OTHER LONG-TERM LIABILITIES
Other long-term liabilities are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Liability to reacquire IL-6m rights........... $ -- $ 283,000
Liability under capital lease obligations..... 2,253,000 1,469,000
Liability under license agreement............. 37,000 43,000
---------- ----------
2,290,000 1,795,000
Less current portion.......................... (744,000) (677,000)
---------- ----------
$1,546,000 $1,118,000
========== ==========
</TABLE>
In July 1993, the Company entered into an agreement with Erbamont, Inc.,
now a subsidiary of Pharmacia and Upjohn, Inc. ("Pharmacia"), to acquire the
worldwide rights to IL-6m, a blood cell growth factor, which had been licensed
to Pharmacia pursuant to a development and licensing agreement. In consideration
of the return of rights and the transfer of certain material and information,
the Company had paid $1,400,000 and entered into a repayment agreement for an
additional $2,400,000 payable over 24 months commencing March 1996. At December
31, 1998, all amounts due Pharmacia under the repayment agreement were paid in
full. Additionally, the Company is required to pay Pharmacia up to $2,700,000 in
royalties on eventual sales of IL-6m, if any.
The Company is obligated under various capital leases for certain
laboratory, office and computer equipment and also certain building improvements
primarily under a December 1996 financing agreement (the "1996 Financing
Agreement") and an April 1998 financing agreement (the "1998 Financing
Agreement") with Finova Technology Finance, Inc. ("Finova"). The 1996 Financing
Agreement allowed the Company to finance the lease of equipment and make certain
building and leasehold improvements to existing facilities involving amounts
aggregating approximately $2,500,000. Each lease has a fair market value
purchase option at the expiration of a 42-month term. Pursuant to the 1996
Financing Agreement, the Company issued to Finova a warrant expiring December
31, 1999 to purchase 23,220 shares of Common Stock at an exercise price of $9.69
per share. The Company recorded a non-cash debt discount of approximately
$125,000 in connection with this financing, which discount is being amortized
over the 42-month term of the first lease. The 1996 Financing Agreement with
Finova expired in December 1997 and the Company did not utilize the full
$2,500,000 under the agreement. In April 1998, the Company entered into the 1998
Financing Agreement with Finova aggregating approximately $2,000,000. The terms
of the 1998 Financing Agreement are substantially similar to the now expired
1996 Financing Agreement except that each lease has a 48-month term and no
warrants were issued. As of December 31, 1998, the Company had entered into ten
individual leases under both the 1996 Financing Agreement and the 1998 Financing
Agreement aggregating a total cost of $3,069,000 and had $676,000 available
under the 1998 Financing Agreement. The 1998 Financing Agreement terminates
March 31, 1999 and the Company is in discussions regarding its
F-13
<PAGE> 81
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
extension for an additional 60 days. There are no financial covenants associated
with these financing agreements. See Notes 13 and 15.
At December 31, 1998 and 1997, the gross amount of laboratory equipment,
office equipment, building improvements and furniture and fixtures and the
related accumulated depreciation and amortization recorded under all capital
leases were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Laboratory, office and computer equipment..... $2,407,000 $1,204,000
Building improvements......................... 861,000 831,000
Furniture and fixtures........................ 92,000 --
---------- ----------
3,360,000 2,035,000
Less accumulated depreciation and
amortization................................ (643,000) (291,000)
---------- ----------
$2,717,000 $1,744,000
========== ==========
</TABLE>
In connection with the Company's production and eventual marketing of
certain products, the Company entered into a license agreement that requires
minimum annual royalty payments throughout the term of the agreement. The
agreement expires in 2004 and calls for minimum annual payments of $10,000,
which are creditable against royalties that may be due from sales. To the extent
the minimum annual royalties are not expected to be offset by sales, the Company
has charged the net present value of these payments to operations. An interest
rate of 10% was used to discount the cash flows.
In July 1995, a director loaned the Company $180,000 in exchange for a
long-term note due two years from issuance at an annual interest rate of 8%. As
part of the transaction, the director was granted 36,000 warrants to purchase
Company Common Stock at $1.50 per share and an additional 36,000 warrants to
purchase Common Stock at $3.00 per share. In May 1996, the Company and the
director exchanged the note for 24,000 shares of Common Stock and the Company
paid the accrued and unpaid interest on the note in the amount of $10,000 in
cash. The Company recorded an extraordinary loss of $39,000 on the
extinguishment of the debt. The Company has registered such shares of Common
Stock with the Securities and Exchange Commission (the "Commission") under a
registration statement in accordance with the provisions of the Securities Act
of 1933, as amended (the "1933 Act").
On August 11, 1995, the Oracle Group purchased 1,000,000 shares of Common
Stock for a purchase price of $1.5 million and made a loan to the Company in the
aggregate amount of $2.5 million with a two-year maturity, but subject to
mandatory prepayment, in whole or in part, upon the occurrence of certain
events, including the raising of certain additional funds. The loan carried an
annual interest rate of 8%. The Oracle Group includes Oracle Partners, LP,
Quasar International Partners C.V., Oracle Institutional Partners LP, Sam Oracle
Fund, Inc. and Warren B. Kanders. The Oracle Group also received warrants
exercisable at any time until August 10, 2000 entitling the holders thereof to
purchase 500,000 shares of Common Stock at a price of $1.50 per share and
500,000 shares of Common Stock at a price of $3.00 per share. As a result of the
Company's offerings of shares of its Common Stock in November 1995 and February
1996, the Oracle Group was entitled to require the Company to apply 20 percent
of the gross proceeds of the sale of the shares of Common Stock from the
offerings to repay the loan.
In May 1996, the Company and the Oracle Group exchanged the notes in the
aggregate outstanding principal amount of $2.5 million for 333,333 shares of
Common Stock and the Company paid the accrued and unpaid interest on the notes
in the amount of $143,000 in cash. The Company recorded an extraordinary loss of
$1,228,000 on the extinguishment of the debt. The Company has registered such
shares of Common Stock with the Commission under a registration statement in
accordance with the provisions of the 1933 Act.
F-14
<PAGE> 82
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(8) COLLABORATIVE AGREEMENTS
In December 1990, the Company entered into a development and
commercialization agreement with Merck KGaA ("Merck KGaA") with respect to its
principal cancer vaccine product candidate, BEC2 and the recombinant gp75
antigen (collectively "BEC2"). The agreement has been amended a number of times,
most recently in December 1997. The agreement grants Merck KGaA a license, with
the right to sublicense, to manufacture and market BEC2 for all indications
outside of North America. Merck KGaA has also been granted a license, without
the right to sublicense, to market but not manufacture BEC2 in North America.
The Company has the right to co-promote BEC2 in North America. In return, the
Company is entitled to $4,700,000, of which $4,167,000 has been recognized as of
December 31, 1998, in research support payments. Merck KGaA is also required to
make milestone payments up to $22,500,000, of which $3,000,000 has been
recognized as of December 31, 1998, based on milestones achieved in the licensed
products' development. Merck KGaA is also required to pay royalties on the
eventual sales of BEC2 outside of North America, if any. Revenues arising from
sales of BEC2 in North America will be distributed in accordance with the terms
of a co-promotion agreement to be negotiated by the parties.
In December 1998, the Company entered into a development and license
agreement with Merck KGaA with respect to its lead interventional therapeutic
product candidate for cancer, C225. In exchange for exclusive rights to market
C225 outside of North America and co-development rights in Japan, the Company
can receive $30,000,000, of which $4,000,000 has been received as of December
31, 1998, in up-front fees and early cash-based milestone payments assuming
achievement of defined milestones. An additional $30,000,000 can be received
assuming the achievement of further milestones for which Merck KGaA will receive
equity in the Company. The equity underlying these milestone payments will be
priced at varying premiums to the then market price of the Common Stock
depending upon the timing of the achievement of the respective milestones.
Additionally, Merck KGaA will, subject to certain terms, provide the Company a
$30,000,000 secured line of credit or guaranty for the build-out of a
manufacturing facility for the commercial development of C225. Merck KGaA will
pay the Company a royalty on future sales of C225 outside of North America, if
any. Merck KGaA has also agreed not to own greater than 19.9% of the Company's
voting securities through December 3, 2002. The agreement may be terminated by
Merck KGaA on any date on which a milestone is achieved (in which case no
milestone payment will be made) or for a one year period after the first
commercial sale of C225 in Merck KGaA's territory, upon Merck KGaA's reasonable
determination that the product is economically unfeasible (in which case Merck
KGaA is entitled to receive back 50% of the cash based milestones then paid to
date, but only based upon a royalty rate applied to the Company's sales in North
America, if any). In the event of termination of the agreement, the due date for
the payment of the line of credit for the manufacturing facility will be
accelerated, or in the event of a guaranty, the Company will be required to use
its best efforts to release Merck KGaA as guarantor. In the event by April 15,
1999 the Company and Merck KGaA fail to agree on a concept for the manufacturing
facility or Merck KGaA fails to provide the Company with the credit facility or
guaranty then the agreement may be terminated by either party, in which case
Merck KGaA is entitled to receive back all milestone payments made to date.
Additionally, the Company must timely obtain certain collateral license
agreements and the failure to do so will also entitle Merck KGaA to receive back
all milestone payments made to date. The $4,000,000 milestone payment received
in December 1998 has been recorded as a fee potentially refundable from
corporate partner and will be recognized as revenue upon the parties mutual
agreement of the manufacturing facility concept and obtaining the defined
collateral license agreements.
Revenues for the years ended December 31, 1998, 1997 and 1996 were
$4,193,000, $5,348,000 and $600,000 respectively. Revenues for the year ended
December 31, 1998 consisted of (i) $300,000 in research support from the
Company's partnership with the Wyeth/Lederle Vaccine and Pediatrics Division of
American Home in infectious disease vaccines, (ii) $1,000,000 in milestone
revenue and $2,500,000 in research and support payments from the Company's
research and license agreement with Merck KGaA with respect to the Company's
BEC2 product candidate, (iii) $295,000 in royalty revenue from the Company's
F-15
<PAGE> 83
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
strategic alliance with Abbott in diagnostics, and (iv) $98,000 from a Phase I
Small Business Innovation Research grant from the National Cancer Institute for
a program in cancer-related angiogenesis. Revenues for the year ended December
31, 1997 consisted of (i) $300,000 in research support from the Company's
partnership with American Home in infectious disease vaccines, (ii) $2,000,000
in milestone revenue and $1,667,000 in research and support payments from the
Company's research and license agreement with Merck KGaA with respect to the
Company's BEC2 product candidate, and (iii) $1,000,000 in milestone revenue and
$381,000 in royalty revenue from the Company's strategic alliance with Abbott in
diagnostics. Revenues for the year ended December 31, 1996 consisted of (i)
$300,000 in research support from the Company's partnership with American Home
in infectious diseases, (ii) $225,000 in royalty revenue from the Company's
strategic alliance with Abbott in diagnostics, and (iii) $75,000 in license fees
from the Company's cross-licensing agreement with Immunex Corporation for novel
hematopoietic growth factors.
Revenues were derived from the following geographic areas:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1998 1997 1996
---------- ---------- --------
<S> <C> <C> <C>
United States................................... $ 693,000 $1,681,000 $600,000
Germany......................................... 3,500,000 3,667,000 --
---------- ---------- --------
$4,193,000 $5,348,000 $600,000
========== ========== ========
</TABLE>
(9) PREFERRED STOCK
In connection with the December 1997 amendment to the Company's research
and license agreement with Merck KGaA, Merck KGaA purchased from the Company in
December 1997 400,000 shares of the Company's Series A Convertible Preferred
Stock (the "Series A Preferred Shares" or "Series A Preferred Stock") for total
consideration of $40,000,000. The holders of the Series A Preferred Shares are
entitled to receive annual cumulative dividends of $6.00 per share. Dividends
accrue as of the issuance date of the Series A Preferred Shares and are payable
on the outstanding Series A Preferred Shares in cash annually on December 31 of
each year beginning December 31, 1999 or at the time of conversion or redemption
of the Series A Preferred Shares on which the dividend is to be paid, whichever
is sooner. Up to 100,000 Series A Preferred Shares as of December 31, 1998 were
convertible and an additional 100,000 Series A Preferred Shares will become
convertible on each of January 1, 2000, January 1, 2001 and January 1, 2002.
During the period from issuance through December 31, 1999, the Series A
Preferred Shares are convertible at a price equal to $12.50 per share; during
the period from January 1, 2000 through December 31, 2000 the Series A Preferred
Shares are convertible at a price equal to the average of the closing prices for
the Common Stock for the five trading days ending on December 31, 1999; during
the period from January 1, 2001 through December 31, 2001 the Series A Preferred
Shares are convertible at a price equal to the average of the closing prices for
the Common Stock for the five trading days ending on December 31, 2000; during
the period from January 1, 2002 through December 31, 2002 the Series A Preferred
Shares are convertible at a beneficial conversion price equal to 88% of the
average of the closing prices for the Common Stock for the five trading days
ending on December 31, 2001; and anytime after January 1, 2003 the Series A
Preferred Shares are convertible at a price equal to the average of the closing
prices for the Common Stock for the five trading days ending on December 31,
2002. The conversion price is subject to adjustment in the case of certain
dilutive events. Further, in the event the average market price of the Common
Stock for the five consecutive trading days ending one trading day prior to any
trading day during which any Series A Preferred Shares are outstanding exceeds
150% of the conversion price then in effect, the Company has the right to
require the holder of the Series A Preferred Shares to convert all such shares
that may be convertible. The Company may also redeem in whole or any part of the
Series A Preferred Shares then outstanding at a redemption price of $120 per
Preferred Share, plus accrued and unpaid dividends thereon. In the event of any
voluntary or
F-16
<PAGE> 84
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
involuntary liquidation, dissolution or winding up of the Company, the holders
of the Series A Preferred Shares shall be entitled to receive in cash out of the
assets of the Company, whether from capital or from earnings, available for
distribution to its stockholders, before any amount shall be paid the holders of
the Common Stock or holders of other classes or series of capital stock of the
Company, an amount equal to the preference in liquidation; provided that, if the
assets are insufficient to pay the full amount due to the holders of Series A
Preferred Shares, such holders will receive a pro rata portion thereof. In
accordance with the terms of the Series A Preferred Stock, the Company is
required to recognize an assumed incremental yield of $5,455,000 (calculated at
the date of issuance and based on the beneficial conversion feature noted
above). Such amount is being amortized as a preferred stock dividend over a
four-year period beginning with the day of issuance. Accrued dividends payable
were $2,512,000 or $6.28 per share at December 31, 1998. Additionally, the
Company has recognized an incremental yield attributable to a beneficial
conversion feature of $1,319,000 at December 31, 1998.
(10) STOCK OPTIONS AND WARRANTS
(A) STOCK OPTION PLANS:
In February 1986, the Company adopted and the shareholders thereafter
approved an Incentive Stock Option Plan and a Non-Qualified Stock Option Plan
(the "86 Plans"). In February 1996, the Company's Board of Directors adopted and
the shareholders thereafter approved an additional Incentive Stock Option Plan
and Non-Qualified Stock Option Plan (the "96 Plans"). In May 1998, the Company's
Board of Directors adopted an additional Non-Qualified Stock Option Plan (the
"98 Plan") which shareholders are not required to approve. Combined, the 86
Plans, the 96 Plans, as amended, and the 98 Plan provide for the granting of
options to purchase up to 5,500,000 shares of Common Stock to key employees,
directors, consultants and advisors of the Company. Incentive stock options may
not be granted at a price less than the fair market value of the stock at the
date of grant and may not be granted to non-employees. Options may not be
granted under the 98 Plan to officers or directors. Options under all the plans,
unless earlier terminated, expire ten years from the date of grant. Certain
options granted under these plans vest over one-to-five-year periods. At
December 31, 1998, options to purchase 4,409,124 shares of Common Stock were
outstanding and 453,405 shares were available for grant. Options may no longer
be granted under the 86 Plans pursuant to the terms of the 86 Plans.
F-17
<PAGE> 85
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
A summary of stock option activity follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- ----------------
<S> <C> <C>
Balance at December 31, 1995......................... 1,366,954 $2.34
1996 activity:
Granted............................................ 1,077,875 9.32
Exercised.......................................... (266,275) 3.18
Canceled........................................... (74,977) 2.58
---------
Balance at December 31, 1996......................... 2,103,577 5.80
1997 activity:
Granted............................................ 456,194 6.62
Exercised.......................................... (147,450) 1.51
Canceled........................................... (35,226) 8.60
---------
Balance at December 31, 1997......................... 2,377,095 6.19
1998 activity:
Granted............................................ 2,432,976 10.19
Exercised.......................................... (154,097) 3.98
Canceled........................................... (246,850) 11.04
---------
Balance at December 31, 1998......................... 4,409,124 $8.20
=========
</TABLE>
In May 1996, the Company granted an officer an option to purchase 225,000
shares of the Company's Common Stock at an exercise price below the market price
of the stock on the date of grant. The Company is recognizing compensation
expense as prescribed under APB Opinion No. 25.
In September 1998 and January 1999, the Company granted options to its Vice
President of Marketing and Vice President of Product and Process Development to
respectively purchase 60,000 shares of Common Stock. These options were not
granted under any of the above mentioned Incentive Stock Option or Non-
Qualified Stock Option Plans. The terms of these options are substantially
similar to those granted under the 98 Plan.
During the years ended December 31, 1998, 1997 and 1996, the Company
granted options to purchase 124,000, 32,000 and 116,000 shares, respectively, of
its Common Stock to certain Scientific Advisory Board members and outside
consultants in consideration for future services. The fair value of these grants
was calculated using the Black-Scholes option pricing model. See Note 10(c) for
weighted average assumptions used. During the years ended December 31, 1998,
1997 and 1996, the Company recognized approximately $540,000, $189,000 and
$95,000, respectively, in compensation expense relating to the options granted
to Scientific Advisory Board members and outside consultants. During the years
ended December 31, 1998, 1997 and 1996, the Company granted options to outside
members of its Board of Directors to purchase approximately 44,000, 153,000 and
158,000 shares, respectively, of its Common Stock.
During April 1995, the company completed the sale of the remaining one-half
of its shares of capital stock of Cadus for $3.0 million to High River. In
exchange for receiving a now-expired right to repurchase all outstanding shares
of capital stock of Cadus held by High River, the Company granted to High River
two options to purchase shares of Common Stock. One option if for 150,000 shares
at an exercise price per share equal to $2.00, subject to adjustment under
certain circumstances, and the other option is for 300,000 shares at an exercise
price per share equal to $0.69, subject to adjustment under certain
circumstances. Both options will expire on April 26, 2000. The 450,000 options
have a weighted average exercise price of $1.13.
F-18
<PAGE> 86
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(B) WARRANTS
As of December 31, 1998, a total of 2,263,590 shares of Common Stock were
issuable upon exercise of outstanding warrants. Such warrants have been issued
to certain officers, directors and other employees of the Company, certain
Scientific Advisory Board members, certain investors and certain credit
providers and investors.
A summary of warrant activity follows:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- ----------------
<S> <C> <C>
Balance at December 31, 1995......................... 3,891,567 $ 3.15
1996 activity:
Granted............................................ 23,220 9.69
Exercised.......................................... (604,892) 4.89
Canceled........................................... (33,050) 12.92
---------
Balance at December 31, 1996......................... 3,276,845 2.41
1997 activity:
Granted............................................ 397,000 1.50
Exercised.......................................... (869,500) 1.56
Canceled........................................... (397,000) 1.50
---------
Balance at December 31, 1997......................... 2,407,345 2.71
1998 activity:
Granted............................................ -- --
Exercised.......................................... (143,755) 1.39
Canceled........................................... -- --
---------
Balance at December 31, 1998......................... 2,263,590 $ 2.80
=========
</TABLE>
In March 1997, the Company extended for a two-year period the term of an
officer's warrant to purchase 397,000 shares of the Company's Common Stock at a
per share exercise price equal to $1.50. In connection with this transaction,
the Company recognized non-cash compensation expense of approximately
$2,233,000.
During September 1996, the Company repriced certain warrants held by
investors to purchase 80,700 shares of Common Stock in order to promote their
exercise prior to pending expiration. The warrants were repriced to an amount
which was ten percent less than the average closing price for the Common Stock
for the thirty days leading up to and including the day prior to the date of
exercise. The fair market value of the warrants was reflected as a cost of
capital.
During November 1996, the Company repriced certain warrants held by
investors to purchase 130,000 shares of Common Stock in order to promote their
exercise prior to pending expiration. The warrants were repriced to an amount
which was ten percent less than the average closing price for the Common Stock
for the thirty days leading up to and including the day prior to the date of
exercise. The fair market value of the warrants was reflected as a cost of
capital.
F-19
<PAGE> 87
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The outstanding warrants (which are all currently exercisable) expire and
are exercisable for the number of shares of Common Stock as shown below:
<TABLE>
<S> <C>
December 1999............................................. 35,520
March 2000................................................ 6,150
July 2000................................................. 72,000
August 2000............................................... 925,000
November 2000............................................. 12,720
March 2001................................................ 2,500
May 2001.................................................. 847,700
June 2003................................................. 12,000
December 2005............................................. 350,000
---------
Total................................................ 2,263,590
=========
</TABLE>
(C) SFAS NO. 123 DISCLOSURES:
The following tables summarize the weighted average fair value of stock
options and warrants granted to employees and directors during the years ended
December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
OPTION PLANS
----------------------------------------------------------
1998 1997 1996
------------------ ---------------- ----------------
SHARES $ SHARES $ SHARES $
--------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Exercise price is less than market
value at date of grant........... -- $ -- -- $ -- 225,000 $6.36
Exercise price equals market value
at date of grant................. 900,476(1) $5.52 424,194(1) $4.29 736,875(1) $5.31
Exercise price exceeds market value
at date of grant................. 1,408,500 $6.28 -- $ -- -- $ --
</TABLE>
- ------------
(1) Does not include 124,000 shares in 1998, 32,000 shares in 1997 and 116,000
shares in 1996 under options granted to non-employees. The fair value of
these non-employee grants has been recorded as compensation expense as
prescribed by SFAS No. 123.
<TABLE>
<CAPTION>
WARRANTS
--------------------------------------------------------
1998 1997 1996
--------------- ----------------- ----------------
SHARES $ SHARES $ SHARES $
------ ----- -------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Exercise price is less than market
value at date of grant............ -- $ -- 397,000(1) $5.91 -- --
Exercise price equals market value
at date of grant.................. -- $ -- -- $ -- 23,220 $5.39
Exercise price exceeds market value
at date of grant.................. -- $ -- -- $ -- -- $ --
</TABLE>
- ------------
(1) The only grant of warrants during 1997 was the extension of an officer's
warrant to purchase 397,000 shares of Common Stock. The extension has been
considered a cancellation of the original grant and the issuance of a new
below market grant. Accordingly, the Company recognized compensation expense
consistent with APB Opinion No. 25.
The fair value of stock options and warrants was estimated using the
Black-Scholes option pricing model. The Black-Scholes model considers a number
of variables including the exercise price and the expected life of the option,
the current price of the Common Stock, the expected volatility and the dividend
yield of the
F-20
<PAGE> 88
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
underlying Common Stock, and the risk-free interest rate during the expected
term of the option. The following summarizes the weighted average assumptions
used:
<TABLE>
<CAPTION>
OPTION PLANS WARRANTS
----------------------- ----------------------
1998 1997 1996 1998 1997 1996
----- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Expected life (years)...................... 5.3 5.0 3.5 -- 2.0 2.0(1)
Interest rate.............................. 5.58% 6.00% 5.00% -- 6.00% 5.00%
Volatility................................. 76.03% 72.29% 85.13% -- 72.29% 85.13%
Dividend yield............................. 0% 0% 0% -- 0% 0%
</TABLE>
- ------------
(1) The weighted average expected life does not include the warrants repriced in
1996 as they were exercised simultaneously.
The following table summarizes information concerning stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICES AT 12/31/98 TERM PRICE AT 12/31/98 PRICE
- ----------------------------- ----------- ----------- -------- ------------- --------
<S> <C> <C> <C> <C> <C>
$0.563 - 2.00................ 665,825 2.36 $ 1.13 637,575 $ 1.14
3.75 - 6.00................. 510,125 8.38 5.71 396,751 5.73
6.063 - 7.875............... 602,727 8.76 6.44 66,003 7.08
8.125 - 10.625.............. 492,300 8.13 8.95 257,092 8.57
10.875 - 11.33............... 504,147 7.40 10.88 300,602 10.88
11.375....................... 1,319,000 9.42 11.38 -- --
11.50 - 13.33................ 315,000 9.23 11.84 14,250 13.03
--------- ---------
4,409,124 7.76 $ 8.20 1,672,273 $ 5.46
========= =========
</TABLE>
As of December 31, 1998, the outstanding warrants to purchase 2,263,590
common shares were all exercisable and have a weighted average remaining
contractual term of 2.9 years. The weighted average remaining contractual term
at December 31, 1998 for the 6,150, outstanding warrants exercisable at $.63 per
share is 1.2 years, the 12,300 exercisable at $.69 per share is 1.0 year, the
1,313,420 exercisable at $1.50 per share is 2.1 years, the 498,500 exercisable
at $3.00 per share is 1.6 years, the 350,000 exercisable at $5.50 per share is
7.0 years, the 12,000 exercisable at $7.00 per share is 4.5 years, the 23,220
exercisable at $9.69 per share is 1.0 year, the 6,000 exercisable at $10.00 per
share is 1.9 years, and the 42,000 exercisable at $13.33 per share is 2.3 years.
The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its options and warrants. Except as previously indicated, no
compensation cost has been recognized for its stock option and warrant grants.
Had compensation cost for the Company's stock option grants been determined
based on the fair value at the grant dates for awards consistent with the method
of SFAS No. 123, the Company's net loss and loss per share would have been
increased or decreased to the pro forma amounts indicated below.
F-21
<PAGE> 89
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Net loss to common stockholders
As reported........................ $(25,050,000) $(15,654,000) $(16,015,000)
Pro forma.......................... (32,306,000) (17,283,000) (19,653,000)
Loss per share
Basic and diluted:
As reported........................ $ (1.03) $ (0.67) $ (0.83)
Pro forma.......................... (1.33) (0.74) (1.01)
</TABLE>
The pro forma effect on the loss for the years ended December 31, 1998,
1997, and 1996 is not necessarily indicative of the pro forma effect on future
years' operating results since it does not take into effect the pro forma
compensation expense related to grants made prior to January 1, 1995.
(11) EMPLOYEE STOCK PURCHASE PLAN
In April 1998, the Company's Board of Directors adopted the ImClone Systems
Incorporated 1998 Employee Stock Purchase Plan (the "ESPP"), subject to
shareholders' approval which was received in May 1998. The ESPP allows eligible
employees to purchase shares of the Company's Common Stock through payroll
deductions at the end of quarterly purchase periods. To be eligible, an
individual must be employed for a period of not less than six months, he or she
is required to work more than 20 hours per week for at least five months per
calendar year and he or she may not own greater than 5% of the Company's Common
Stock. Pursuant to the ESPP, the Company has reserved 500,000 shares of Common
Stock for issuance. On the first day of each quarterly purchase period, each
eligible employee participating in such quarterly purchase period will be
granted an option to purchase a number of shares of Common Stock determined by
dividing such employee's contributions accumulated prior to the last day of the
quarterly period by the purchase price. The purchase price is equal to 85% of
the market price per share on the last day of each quarterly purchase period. An
employee may purchase stock from the accumulation of payroll deductions of up to
a maximum of 15% of his or her compensation, limited to $25,000 per year. As of
December 31, 1998, participating employees have purchased 4,388 shares of Common
Stock at an aggregate purchase price of approximately $33,000 and 495,612 shares
were available for future purchases. No compensation expense has been recorded
in connection with the ESPP.
F-22
<PAGE> 90
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(12) INCOME TAXES
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
1998 and December 31, 1997 are presented below.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
Deferred tax assets:
Liability to reacquire IL-6m rights and materials... $ -- $ 262,000
Research and development carryforward............... 3,642,000 2,303,000
Compensation relating to the issuance of stock
options and warrants............................. 376,000 189,000
Net operating loss carryforwards.................... 57,169,000 52,408,000
Other............................................... 3,424,000 1,116,000
------------ ------------
Total gross deferred tax assets....................... 64,611,000 56,278,000
Less valuation allowance............................ (64,611,000) (56,278,000)
------------ ------------
Net deferred tax assets............................. -- --
------------ ------------
Deferred tax liabilities:
Total gross deferred tax liabilities................ -- --
------------ ------------
Net deferred tax.................................... $ -- $ --
============ ============
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The net change
in the total valuation allowance for the years ended December 31, 1998 and 1997
was an increase of $8,333,000 and $5,460,000, respectively. The tax benefit
assumed using the Federal statutory tax rate of 34% has been reduced to an
actual benefit of zero due principally to the aforementioned valuation
allowance.
At December 31, 1998, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $129,485,000 which expire at
various dates from 2000 through 2018. At December 31, 1998, the Company had
research credit carryforwards of approximately $3,642,000 which expire at
various dates between years 2009 and 2018. Pursuant to Section 382 of the
Internal Revenue Code of 1986, as amended, the annual utilization of a company's
net operating loss and research credit carryforwards may be limited if the
Company experiences a change in ownership of more than 50 percentage points
within a three-year period. Since 1986, the Company experienced two such
ownership changes. Accordingly, the Company's net operating loss carryforwards
available to offset future federal taxable income arising before such ownership
changes are limited to $5,159,000 annually. Similarly, the Company is restricted
in using its research credit carryforwards arising before such ownership changes
to offset future federal income tax expense.
(13) COMMITMENTS
LEASES
The Company leases its New York City facility under an operating lease, a
portion of which was scheduled to expire in March 1999. The Company renewed the
entire lease effective as of January 1, 1999 through December 2004. The annual
minimum rent for 1999 is $720,000 and increases 3% annually for each year
thereafter. Rent expense for the New York City facility was approximately
$574,000, $554,000, and $508,000 for the years ended December 31, 1998, 1997 and
1996, respectively. See also Note 6.
F-23
<PAGE> 91
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Future minimum lease payments under the capital and operating leases are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
---------- ----------
<S> <C> <C>
Years ending December 31,
1999.............................................. $ 900,000 $ 769,000
2000.............................................. 889,000 780,000
2001.............................................. 520,000 794,000
2002.............................................. 248,000 815,000
2003.............................................. -- 823,000
2004.............................................. -- 835,000
---------- ----------
2,557,000 4,816,000
Less interest expense............................... (304,000) --
---------- ----------
$2,253,000 $4,816,000
========== ==========
</TABLE>
SUPPORTED RESEARCH
The Company has entered into various research and license agreements with
certain academic institutions and others to supplement the Company's research
activities and to obtain for the Company rights to certain technology. The
agreements generally require the Company to fund the research and to pay
royalties based upon percentages of revenues, if any, on sales of products
developed from technology arising under these agreements.
CONSULTING AGREEMENTS
The Company has consulting agreements with several of its Scientific
Advisory Board members and other consultants. These agreements generally are for
a term of one year or are terminable at the Company's option.
CONTRACT SERVICES
In April, 1998, the Company entered into an agreement in principle with a
pharmaceutical manufacturer for the supplemental further development, production
scale-up and manufacture of its lead therapeutic product candidate, C225, for
use in human clinical trials. Services pursuant to this agreement commenced in
April 1998 and are anticipated to conclude in October 1999. The total project
cost is DM8,950,000, or as of December 31, 1998, approximately $5,424,000. As of
December 31, 1998, the Company had incurred a liability of approximately
$1,897,000 (U.S. dollar equivalent) for services provided to date under this
agreement.
(14) RETIREMENT PLANS
The Company maintains a 401(k) retirement plan available to all full-time,
eligible employees. Employee contributions are voluntary and are determined on
an individual basis, limited to the maximum amount allowable under federal tax
regulations. The Company, at its discretion, may make certain contributions to
the plan. The Company contributed approximately $47,000 to the plan for the year
ended December 31, 1998. No such contributions were made to the plan during the
years ended December 31, 1997 and 1996.
F-24
<PAGE> 92
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(15) SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING
Activities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Cash paid during the year for:
Interest............................................. $ 422,000 $ 707,000 $ 817,000
========== ========== ==========
Non-cash investing and finance activities:
Finova capital asset and lease obligations
additions......................................... 731,000 1,324,000 421,000
========== ========== ==========
Fair value of Finova warrant......................... -- -- 125,000
========== ========== ==========
Other capital lease obligations...................... -- 28,000 --
========== ========== ==========
Unrealized gain (loss) on securities
available-for-sale................................ (676,000) 101,000 (49,000)
========== ========== ==========
Extinguishment of Oracle Group debt for stock........ -- -- 2,500,000
========== ========== ==========
Extinguishment of director debt for stock............ -- -- 180,000
========== ========== ==========
Preferred Stock dividend............................. 2,400,000 163,000 --
========== ========== ==========
Warrant exercise paid with a note, including accrued
interest.......................................... 142,000 -- --
========== ========== ==========
</TABLE>
(16) RELATED PARTY TRANSACTIONS
The Company has scientific consulting agreements with two members of the
Board of Directors. Expenses relating to these agreements were $112,000 for each
of the years ended December 31, 1998, 1997 and 1996.
Through March 1995, the Company made miscellaneous non interest bearing
cash advances to the President and CEO of the Company totaling approximately
$156,000. The officer provided the Company with a demand promissory note
pursuant to which the officer was obligated to repay the debt over a twenty-four
month period ending April 30, 1997. In March 1997, the Company accepted a new
promissory note (the "new promissory note") in the aggregate amount of $110,000
from the officer. The new promissory note was payable as to $15,000 no later
than May 15, 1997 and the remainder upon the earlier of on demand by the Company
or December 31, 1997 and bore interest at the rate of 5% compounded quarterly.
The new promissory note covered the remaining balance of the original note,
interest thereon and additional miscellaneous cash advances made since the date
of the original note totaling $15,000. At December 31, 1997, the new promissory
note was paid in full by the officer.
In January 1996, the Company paid Concord International Investment Group,
LP, approximately $163,000 for services rendered by it to the Company in
connection with structuring a contemplated product related financing for C225.
Mr. Robert F. Goldhammer, Chairman of the Board of Directors, is a limited
partner of Concord International Investment Group, LP.
In August 1995 and January 1996, the Company paid Delano & Kopperl
Financial Advisors, Inc. a total of approximately $69,000 for services rendered
by it to the Company in connection with structuring a contemplated product
related financing for C225. Paul B. Kopperl, a director of the Company, is
President, director, and 25% shareholder of Delano & Kopperl Financial Advisors,
Inc.
In January 1998, the Company accepted a promissory note totaling
approximately $131,000 from its President and CEO in connection with the
exercise of a warrant to purchase 87,305 shares of the Company's
F-25
<PAGE> 93
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
common stock. The note is due no later than two years from issuance and is full
recourse. Interest is payable on the first anniversary date of the promissory
note and on the stated maturity or any accelerated maturity at the annual rate
of 8.5%. At December 31, 1998, the total amount due the Company, including
interest, was approximately $142,000 and is classified in the stockholders'
equity section of the balance sheet as a note receivable from officer and
stockholder.
In October 1998, the Company accepted an unsecured promissory note totaling
$100,000 from its Executive Vice President and COO. The note is payable on
demand including interest at the annual rate of 8.25% for the period that the
loan is outstanding. At December 31, 1998, the total amount due the Company,
including interest, is approximately $102,000.
In August 1998, the Company entered into a utilization agreement with a
company to provide certain support services. This company is considered a
related party because of common management. The Company is being reimbursed
$2,000 per month for providing laboratory space and related support.
(17) FAIR VALUE OF FINANCIAL INSTRUMENTS
For the years ended December 31, 1998 and 1997, the following methods and
assumptions were used to estimate the fair value of each class of financial
instrument:
CASH AND CASH EQUIVALENTS, ACCOUNTS PAYABLE, ACCRUED AND OTHER CURRENT
LIABILITIES
The carrying amounts approximate fair value because of the short maturity
of those instruments.
LONG-TERM DEBT
Discounted cash flow analyses were used to determine the fair value of
long-term debt because quoted market prices on these instruments were
unavailable. The fair value of these instruments approximated the carrying
amount.
F-26
<PAGE> 94
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30,
1999
ASSETS --------
<S> <C>
Current assets:
Cash and cash equivalents................................. $ 2,672
Securities available for sale............................. 38,006
Prepaid expenses.......................................... 434
Other current assets...................................... 1,378
--------
Total current assets................................ 42,490
--------
Property and equipment:
Land...................................................... 340
Building and building improvements........................ 10,690
Leasehold improvements.................................... 4,878
Machinery and equipment................................... 8,427
Furniture and fixtures.................................... 641
Construction in progress.................................. 1,860
--------
Total cost.......................................... 26,836
Less accumulated depreciation and amortization............ (13,742)
--------
Property and equipment, net......................... 13,094
--------
Patent costs, net........................................... 892
Deferred financing costs, net............................... 41
Other assets................................................ 1,581
--------
$ 58,098
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 944
Accrued expenses and other................................ 3,568
Interest payable.......................................... 43
Deferred revenue.......................................... --
Fee potentially refundable from corporate partner......... 12,000
Current portion of long-term liabilities.................. 919
Preferred stock dividends payable......................... 3,702
--------
Total current liabilities........................... 21,176
--------
Long-term debt.............................................. 2,200
Other long-term liabilities, less current portion........... 1,586
--------
Total liabilities................................... 24,962
--------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value; authorized 4,000,000
shares; issued and outstanding Series A Convertible:
400,000 at June 30, 1999 (preference in liquidation
$43,702)................................................ 400
Common stock, $.001 par value; authorized 60,000,000
shares; issued 25,397,474 at June 30, 1999, outstanding
25,346,657 at June 30, 1999............................. 25
Additional paid-in capital................................ 188,118
Accumulated deficit....................................... (155,055)
Treasury stock, at cost; 50,817 shares at June 30, 1999... (492)
Note receivable--officer and stockholder.................. (137)
Accumulated other comprehensive income:
Unrealized gain on securities available for sale, net... 277
--------
Total stockholders' equity.......................... 33,136
--------
$ 58,098
========
</TABLE>
See accompanying notes to consolidated financial statements.
F-27
<PAGE> 95
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------
1999 1998
-------- -------
<S> <C> <C>
Revenues:
Product development milestone revenues.................... $ -- $ 1,000
Research and development funding from third parties and
other.................................................. 883 1,615
-------- -------
Total revenues.................................... 883 2,615
-------- -------
Operating expenses:
Research and development.................................. 13,505 8,846
General and administrative................................ 3,677 2,959
-------- -------
Total operating expenses.......................... 17,182 11,805
-------- -------
Operating loss.............................................. (16,299) (9,190)
-------- -------
Other:
Interest income........................................... (1,168) (1,607)
Interest expense.......................................... 246 200
Loss (gain) on securities available for sale.............. 832 (2)
-------- -------
Net interest and other income..................... (90) (1,409)
-------- -------
Net loss.................................................... (16,209) (7,781)
Preferred dividends (including assumed incremental yield
attributable to beneficial conversion feature of $672 and
$635 for the six months ended June 30, 1999 and 1998,
respectively)............................................. 1,862 1,825
-------- -------
Net loss to common stockholders............................. $(18,071) $(9,606)
======== =======
Basic and diluted net loss per common share................. $ (0.73) $ (0.40)
======== =======
Weighted average shares outstanding......................... 24,718 24,251
======== =======
Comprehensive loss:
Net loss.................................................. $(16,209) $(7,781)
Other comprehensive income (loss):
Unrealized holding gain arising during the period......... 69 204
Less: Reclassification adjustment for realized gain (loss)
included in
net loss............................................... (832) 2
-------- -------
Total other comprehensive income (loss)........... 901 202
-------- -------
Total Comprehensive loss.......................... $(15,308) $(7,579)
======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-28
<PAGE> 96
IMCLONE SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(16,209) $ (7,781)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 925 883
Expense associated with issuance of options and
warrants.............................................. 1,064 310
Loss (gain) on securities available for sale............ 832 (2)
Changes in:
Prepaid expenses..................................... 138 20
Other current assets................................. (284) (49)
Other assets......................................... (135) (35)
Interest payable..................................... (2) (25)
Accounts payable..................................... (165) (151)
Accrued expenses and other........................... (1,279) (744)
Deferred revenue..................................... (75) 75
Fee potentially refundable from corporate partner.... 8,000 --
-------- --------
Net cash used in operating activities.............. (7,190) (7,499)
-------- --------
Cash flows from investing activities:
Acquisitions of property and equipment.................... (2,010) (570)
Purchases of securities available for sale................ (18,508) (28,760)
Sales and maturities of securities available for sale..... 23,500 37,997
Additions to patents...................................... (87) (81)
-------- --------
Net cash provided by investing activities.......... 2,895 8,586
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options and warrants...... 3,335 150
Proceeds from issuance of common stock under the employee
stock purchase plan..................................... 50 --
Proceeds from equipment and building improvement
financings.............................................. 94 593
Payments of other liabilities............................. (411) (514)
Interest received on note receivable -- officer and
stockholder............................................. 11 --
-------- --------
Net cash provided by financing activities.......... 3,079 229
-------- --------
Net (decrease) increase in cash and cash equivalents........ (1,216) 1,316
Cash and cash equivalents at beginning of period............ 3,888 2,558
-------- --------
Cash and cash equivalents at end of period.................. $ 2,672 $ 3,874
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-29
<PAGE> 97
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements of ImClone Systems Incorporated
("ImClone" or the "Company") as of June 30, 1999 and for the six months ended
June 30, 1999 and 1998 are unaudited. In the opinion of management, these
unaudited financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation. These financial
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, as filed with the Securities and Exchange
Commission.
Results for the interim periods are not necessarily indicative of results
for the full years.
(2) COMMITMENTS
The Company signed a definitive agreement in April 1999 with Boehringer
Ingelheim Pharmaceuticals KG ("BI Pharmaceuticals") for the further development,
production scale-up and manufacture of the Company's lead therapeutic product
candidate, C225, for use in human clinical trials. Services pursuant to this
agreement commenced in April 1998 pursuant to an agreement in principle. The
Company estimates that the total cost under the agreement, including the cost of
additional amounts of material the Company has the right to request, will be
DM12,100,000 or $6,392,000. As of June 30, 1999, the Company has incurred
approximately DM3,940,000 of which DM3,130,000 has been paid, for services
provided under this agreement.
(3) RELATED PARTY TRANSACTIONS
In January 1998, the Company accepted a promissory note totaling
approximately $131,000 from its President and CEO in connection with the
exercise of a warrant to purchase 87,305 shares of the Company's common stock,
$.001 par value (the "Common Stock"). The note is due no later than two years
from issuance and is full recourse. Interest was paid on the first anniversary
date of the promissory note at an annual rate of 8.5% and is payable on the
stated maturity or any accelerated maturity. At June 30, 1999, the total amount
due the Company, including interest, was approximately $137,000 and is
classified in the stockholders' equity section of the balance sheet as a note
receivable from officer and stockholder.
In October 1998, the Company accepted an unsecured promissory note totaling
$100,000 from its Executive Vice President and COO. The note was payable on
demand including interest at the annual rate of 8.25% for the period that the
loan is outstanding. In April 1999, the note, including all interest, was paid
in full.
In January 1999, the Company accepted an unsecured promissory note totaling
$60,000 from its Vice President, Product and Process Development. The note was
payable upon the earlier of the Company's demand or July 28, 1999 including
interest at an annual rate of 8.75% for the period that the loan was
outstanding. The loan was made in connection with the acceptance of employment
and the corresponding relocation of the officer. At June 30, 1999, the total
amount due the Company, including interest, was approximately $62,000 and is
included as a component of other current assets. In July 1999, the note,
including all interest, was paid in full.
(4) EARNINGS PER SHARE
Basic and diluted Earnings Per Share ("EPS") are computed based on the net
loss for the relevant period, adjusted for cumulative Series A Convertible
Preferred Stock (the "Series A Preferred Stock" or "Series A Preferred Shares")
dividends and the assumed incremental yield attributable to the beneficial
conversion feature in the preferred stock, divided by the weighted average
number of shares outstanding
F-30
<PAGE> 98
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
during the period. Potentially dilutive securities, including convertible
preferred stock, options and warrants, have not been included in the diluted EPS
computation because they are anti-dilutive.
(5) COMPREHENSIVE INCOME (LOSS)
The following table reconciles net loss to comprehensive loss:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1999 1998
------------ -----------
<S> <C> <C>
Net loss.................................................... $(16,209,000) $(7,781,000)
Other comprehensive income:
Unrealized holding gain arising during the period......... 69,000 204,000
Less: Reclassification adjustment for realized gain (loss)
included in net loss................................ (832,000) 2,000
------------ -----------
Total other comprehensive income....................... 901,000 202,000
------------ -----------
Total comprehensive loss.................................... $(15,308,000) $(7,579,000)
============ ===========
</TABLE>
(6) LOSS ON SECURITIES AVAILABLE FOR SALE
In October 1997, the Company entered into a Collaborative Research and
License Agreement with CombiChem Inc. ("CombiChem"). Concurrent with this
agreement, the Company entered into a Stock Purchase Agreement pursuant to which
the Company purchased 312,500 shares of common stock of CombiChem, as adjusted,
for a total purchase price of $2,000,000. The investment has been classified as
available for sale and a long-term asset. The market value of the investment in
CombiChem has declined substantially from the date of original investment and
the Company has deemed this decline in market value to be other than temporary.
Accordingly, the cost basis in the investment in CombiChem has been adjusted and
a loss on securities available for sale of $828,000 was recorded in March 1999.
These securities have not been sold by the Company.
(7) COMMON STOCK
On May 24, 1999, the date of the annual shareholders meeting, the
stockholders approved the amendment of the Company's certificate of
incorporation to increase the total number of share of Common Stock the Company
is authorized to issue from 45,000,000 shares to 60,000,000 shares.
(8) STOCK OPTIONS AND WARRANTS
On May 24, 1999, the date of the annual shareholders meeting, the
stockholders approved an amendment to the Company's 1996 Incentive Stock Option
Plan (the "1996 ISO Plan") to increase the total number of shares of Common
Stock which may be issued pursuant to options which may be granted under the
1996 ISO PLAN from 3,000,000 to 4,000,000, which number shall be reduced by the
number of shares of Common Stock which have been or may be issued pursuant to
options granted under the Company's 1996 Non-Qualified Stock Option Plan (the
"1996 Non-Qualified Plan").
The stockholders also approved amendments to the Company's 1996
Non-Qualified Plan to (i) increase the total number of shares of Common Stock
which may be issued pursuant to options which may be granted under the 1996
Non-Qualified Plan from 3,000,000 to 4,000,000, which number shall be reduced by
the number of shares of common stock which have been or may be issued pursuant
to options granted under the
F-31
<PAGE> 99
IMCLONE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
Company's 1996 ISO Plan, and (ii) increase the annual option grant made to
members of the Board of Directors and the Chairman who are not full-time
employees of the Company under the 1996 Non-Qualified Plan. The annual option
grant to non-employee members of the Board of Directors increased from 2,500 to
15,000 and the annual option grant to the Chairman increased from 2,500 to
30,000.
The stockholders approved the grant of an option to the Company's President
and Chief Executive Officer to purchase 1,000,000 shares of Common Stock at a
per share exercise price equal to $18.25, the last reported sale price of the
Common Stock on the date shareholder approval was obtained at the annual
shareholders meeting. The options will vest no later than six years from the
grant date and specified amounts are subject to earlier vesting if specified
Company Common Stock price thresholds are met.
The stockholders approved the grant of an option to the Company's Executive
Vice President and Chief Operating Officer to purchase 650,000 shares of Common
Stock at a per share exercise price equal to $18.25, the last reported sale
price of the Common Stock on the date shareholder approval was obtained at the
annual shareholders meeting. The options will vest no later than six years from
the grant date and specified amounts are subject to earlier vesting if specified
Company Common Stock price thresholds are met.
(9) RECLASSIFICATION
Certain amounts previously reported have been reclassified to conform to
the current year's presentation.
(10) COLLABORATIVE AGREEMENTS
The Company has a development and license agreement with Merck KGaA
("Merck") with respect to C225, its lead interventional therapeutic product for
the treatment of cancer. In exchange for certain marketing and development
rights, the Company can receive up to $60,000,000 in milestone payments
($30,000,000 of which are equity based) assuming the achievement of certain
milestones and a $30,000,000 secured line of credit or guaranty for the
build-out of a manufacturing facility for the commercial production of C225. The
agreement provides that among other reasons, it may be terminated by either
party if the Company and Merck failed to agree on a production concept for the
manufacturing facility or if Merck had not provided the Company with the credit
facility or guaranty by April 15, 1999, in which case Merck is entitled to
receive back all milestone payments made to date. Additionally, the Company must
timely obtain certain collateral license agreements, and the failure to do so
will entitle Merck to receive back all milestone payments made to date. In April
1999 the parties agreed on the production concept for the manufacturing facility
and are currently working toward securing the credit facility or guaranty. As of
June 30, 1999, the Company has received $12,000,000 in milestone payments. These
payments have been recorded as fees potentially refundable from corporate
partner and will be recognized as revenue upon Merck's providing the credit
facility or guaranty and the Company's obtaining the defined collateral license
agreements.
F-32
<PAGE> 100
ImClone Logo
<PAGE> 101
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
AMOUNT
TO BE PAID
----------
<S> <C>
Registration fee............................................ $ 28,102
NASD filing fee............................................. 10,609
Nasdaq National Market additional share listing fee......... 17,500
Transfer agent's fees....................................... 25,000
Printing and engraving expenses............................. 130,000
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 150,000
Blue Sky fees and expenses.................................. 10,000
Miscellaneous............................................... 3,789
--------
Total............................................. $875,000
========
</TABLE>
Each of the amounts set forth above, other than the Registration fee and
the NASD filing fee, is an estimate.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Certificate of Incorporation and Bylaws set forth the extent to which
our officers and directors may be indemnified by us against any liabilities
which they may incur. The general effect of such provisions is that, on the
terms and conditions set forth in our Certificate of Incorporation and Bylaws,
any person made a party or threatened to be made a party to an action, suit or
proceeding by reason of the fact that he or she is or was a director or officer,
or is or was serving as a director, officer, employee or agent of another
corporation or other enterprise at our request, shall be indemnified by us
against expenses (including attorneys' fees, judgments, fines and amounts paid
in settlement) reasonably incurred or suffered by him or her in connection with
such action, suit or proceeding, to the full extent permitted under the laws of
the State of Delaware; provided, however, that, subject to certain limited
exceptions, we shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by our Board of Directors. Our Certificate of Incorporation gives
our Board of Directors the authority to extend such indemnification to our
employees and other agents as well.
The general effect of the indemnification provisions contained in Section
145 of the General Corporation Law of the State of Delaware (the "DGCL") is as
follows: A director or officer who, by reason of such directorship or
officership, is involved in any action, suit or proceeding (other than an action
by or in the right of the corporation) may be indemnified by the corporation
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe that his or her conduct was unlawful. A director or
officer who, by reason of such directorship or officership, is involved in any
action or suit by or in the right of the corporation may be indemnified by the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which he or she shall have been adjudged to be liable to
the corporation unless and only to the extent that a court of appropriate
jurisdiction shall approve such indemnification.
II-1
<PAGE> 102
Our Certificate of Incorporation provides that, to the maximum extent
permitted under the DGCL, a director of ImClone shall not be personally liable
to us or to any stockholders for monetary damages for breach of fiduciary duty
as a director of ImClone. Section 102(b)(7) of the DGCL permits a corporation to
include in its certificate of incorporation a provision that eliminates or
limits the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided, that such provision shall not eliminate or limit the liability of a
director (1) for any breach of the Director's duty of loyalty to the corporation
or its stockholders, (2) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3) under Section
174 of the DGCL or (4) for any transaction from which the director derived in
improper personal benefit.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following exhibits are filed as part of this Registration Statement or
incorporated by reference herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement
3.1+ Certificate of Incorporation, and all amendments thereto
3.1A++ Amendment dated June 4, 1999 to the Company's certificate of
incorporation, as amended
3.2+ Amended and Restated By-Laws of the Company
4.1+ Form of Warrant issued to the Company's officers and
directors under Warrant Agreements
4.2+ Stock Purchase Agreement between Erbamont Inc. and the
Company, dated May 1, 1989
4.3+ Stock Purchase Agreement between American Cyanamid Company
and the Company dated December 18, 1987
4.4+ Form of Subscription Agreement entered into in connection
with September 1991 private placement
4.5+ Form of Warrant issued in connection with September 1991
private placement
4.6+ Preferred Stock Purchase Agreement between the Company and
Merck KGaA dated December 3, 1997
4.7+ Certificate of Designations, Preferences and Rights of
Series A Convertible Preferred Stock
5.1* Opinion of Davis Polk & Wardwell
10.1+ Company's 1986 Employee Incentive Stock Option Plan,
including form of Incentive Stock Option Agreement
10.2+ Company's 1986 Non-qualified Stock Option Plan, including
form of Non-qualified Stock Option Agreement
10.3+ Company's 401(k) Plan
10.4+ Research and License Agreement between Merck KGaA and the
Company dated December 19, 1990
10.5+ Hematopoietic Growth Factors License Agreement between
Erbamont, N.V. and the Company, dated September 28, 1990
10.6+ Agreement between Cyanamid and the Company dated December
18, 1987 and supplemental letter agreement between Cyanamid
and the Company dated September 6, 1991
10.7+ Agreement between Hadasit Medical Research Services &
Development, Ltd. and the Company
10.8+ Agreement between Hadasit Medical Research Services &
Development, Ltd. and the Company dated September 21, 1989
10.9+ Supported Research Agreement between Memorial
Sloan-Kettering Cancer Center (MSKCC) and the Company dated
March 26, 1990
</TABLE>
II-2
<PAGE> 103
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.10+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.11+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.12+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.13+ Research Agreement between the Trustees of Princeton
University (Princeton) and the Company dated January 1, 1991
10.14+ Research Agreement between Princeton and the Company dated
May 1, 1991
10.15+ Research Agreement between Princeton and the Company dated
May 1, 1991
10.16+ License Agreement between Princeton and the Company dated
March 20, 1991
10.17+ License Agreement between Princeton and the Company dated
May 29, 1991
10.18+ License Agreement between Princeton and Oncotech, Inc. dated
September 3, 1987
10.19+ Supported Research Agreement between The University of North
Carolina at Chapel Hill ("UNC") and the Company effective
July 5, 1988
10.20+ License Agreement between UNC and the Company dated July 5,
1988
10.21+ License Agreement between UNC and the Company dated July 27,
1988
10.22+ Supported Research Agreement between UNC and the Company
effective April 1, 1989
10.23+ License Agreement between UNC and the Company dated July 1,
1991
10.24+ Agreement between Celltech Limited and the Company dated May
23, 1991
10.25+ Form of Non-disclosure and Discovery Agreement between
employees of the Company and the Company
10.26.1+ Industrial Development Revenue Bonds (1985 ImClone Systems
Incorporated Project)
10.26.1.1+ Lease Agreement, dated as of October 1, 1985, between the
New York City Industrial Development Agency (NYCIDA) and the
Company, as Lessee
10.26.1.2+ Indenture of Trust, dated as of October 1, 1985, between
NYCIDA and United States Trust Company of New York (US
Trust), as Trustee A
10.26.1.3+ Company Sublease Agreement, dated as of October 1, 1985,
between the Company and NYCIDA
10.26.1.4+ Tax Regulatory Agreement, dated October 9, 1985, from NYCIDA
and the Company to US Trust, as Trustee
10.26.1.5+ Lessee Guaranty Agreement, dated as of October 1, 1985,
between the Company and US Trust, as Trustee
10.26.1.6+ First Supplemental Indenture of Trust, dated as of November
1, 1985 from the NYCIDA to US Trust
10.26.1.7+ Third Supplemental Indenture of Trust, dated as of October
12, 1990 from NYCIDA to US Trust
10.26.2+ Industrial Development Revenue Bonds (1986 ImClone Systems
Incorporated Project)
10.26.2.1+ First Amendment to Company Sublease Agreement, dated as of
December 1, 1986, between the Company, as Sublessor, and
NYCIDA as Sublessee
10.26.2.2+ First Amendment to Lease Agreement, dated as of December 1,
1986, between NYCIDA and the Company, as Lessee
10.26.2.3+ Second Supplement Indenture of Trust, dated as of December
1, 1986 between NYCIDA and US Trust, as Trustee
10.26.2.4+ Tax Regulatory Agreement, dated December 31, 1986, from
NYCIDA and the Company to US Trust, as Trustee
</TABLE>
II-3
<PAGE> 104
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.26.2.5+ First Amendment to Lessee Guaranty Agreement, dated as of
December 1, 1986, between the Company and US Trust, as
Trustee
10.26.2.6+ Bond Purchase Agreement, dated as of December 31, 1986,
between NYCIDA and New York Muni Fund, Inc., as Purchaser
10.26.2.7+ Letter of Representation and Indemnity Agreement, dated as
of December 31, 1986, from the Company to NYCIDA and New
York Muni Fund, Inc., as Purchaser
10.26.3+ Industrial Development Revenue Bonds (1990 ImClone Systems
Incorporated Project)
10.26.3.1+ Lease Agreement, dated as of August 1, 1990, between NYCIDA
and the Company, as lessee
10.26.3.2+ Company Sublease Agreement, dated as of August 1, 1990,
between the Company, as Sublessor, and NYCIDA
10.26.3.3+ Indenture of Trust, dated as of August 1, 1990, between
NYCIDA and US Trust, as Trustee
10.26.3.4+ Guaranty Agreement, dated as of August 1, 1990, from the
Company to US Trust, as Trustee
10.26.3.5+ Tax Regulatory Agreement, dated August 1, 1990, from the
Company and NYCIDA to US Trust, as Trustee
10.26.3.6+ Agency Security Agreement, dated as of August 1, 1990, from
the Company, as Debtor, and the NYCIDA to US Trust, as
Trustee
10.26.3.7+ Letter of Representation and Indemnity Agreement, dated as
of August 14, 1990, from the Company to NYCIDA, New York
Mutual Fund, Inc., as the Purchaser and Chase Securities,
Inc., as Placement Agent Company to NYCIDA
10.27+ Lease Agreement between 180 Varick Street Corporation and
the Company, dated October 8, 1985, and Additional Space and
Modification Agreement between 180 Varick Street Corporation
and the Company, dated June 13, 1989
10.28+ License Agreement between The Board of Trustees of the
Leland Stanford Junior University and the Company effective
May 1, 1991
10.29+ License Agreement between Genentech, Inc. and the Company
dated December 28, 1989
10.30+ License Agreement between David Segev and the Company dated
December 28, 1989
10.31+ Letter of Intent between the Company and Dr. David Segev
dated November 18, 1991
10.32+ Agreement between the Company and Celltech Limited dated
March 11, 1992
10.33+ Agreement of Sale dated June 19, 1992 between the Company
and Korsch Tableting Inc.
10.34+ Research and License Agreement, having an effective date of
December 15, 1992, between the Company and Abbott
Laboratories
10.35+ Research and License Agreement between the Company and
Chugai Pharmaceutical Co., Ltd. dated January 25, 1993
10.36+ License Agreement between the Company and the Regents of the
University of California dated April 9, 1993
10.37+ Contract between the Company and John Brown, a division of
Trafalgar House, dated January 19, 1993
10.38+ Collaboration and License Agreement between the Company and
the Cancer Research Campaign Technology, Ltd., signed April
4, 1994, with an effective date of April 1, 1994.
10.39+ Termination Agreement between the Company and Erbamont Inc.
dated July 21, 1993
10.40+ Research and License Agreement between the Company and
Cyanamid dated September 15, 1993
10.41+ Clinical Trials Agreement between the Company and the
National Cancer Institute dated November 23, 1993
</TABLE>
II-4
<PAGE> 105
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.42+ License Agreement between the Company and UNC dated December
1, 1993
10.43+ Notice of Termination for the research collaboration between
the Company and Chugai Pharmaceutical Co., Ltd. dated
December 17, 1993
10.44+ License Agreement between the Company and Rhone-Poulenc
Rorer dated June 13, 1994
10.45+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and GFL Ultra Fund Limited dated August
12, 1994
10.46+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and GFL Ultra Fund Limited dated
November 4, 1994
10.47+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and Anker Bank Zuerich dated November
10, 1994
10.48+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to capital stock of Cadus
Pharmaceutical Corporation
10.49+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to 300,000 shares of common stock of
ImClone Systems Incorporated
10.50+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to 150,000 shares common stock of
ImClone Systems Incorporated
10.51+ Stock Purchase Agreement, dated as of August 10, 1995, by
and between ImClone Systems Incorporated and the members of
the Oracle Group
10.52+ Form of Warrant issued to the members of the Oracle Group
10.53+ Loan Agreement, dated as of August 10, 1995, by and between
ImClone Systems Incorporated and the members of the Oracle
Group
10.54+ Security Agreement, dated as of August 10, 1995, by and
between ImClone Systems Incorporated and the members of the
Oracle Group
10.55+ Mortgage, dated August 10, 1995, made by ImClone Systems
Incorporated for the benefit of Oracle Partners, L.P., as
Agent
10.56+ Financial Advisory Agreement entered into between the
Company and Genesis Merchant Group Securities dated November
2, 1995
10.57+ Repayment Agreement (with Confession of Judgment, and
Security Agreement) entered into between the Company and
Pharmacia, Inc. on March 6, 1996
10.58+ License Amendment entered into between the Company and
Abbott Laboratories on August 28, 1995, amending the
Research and License Agreement between the parties dated
December 15, 1992
10.59+ Amendment of September 1993 to the Research and License
Agreement between the Company and Merck KGaA of April 1,
1990
10.60+ Amendment of October 1993 to the Research and License
Agreement between the Company and Merck KGaA of April 1,
1990
10.61+ Employment agreement dated May 17, 1996 between the Company
and Carl S. Goldfischer
10.62+ Financial Advisory Agreement dated February 26, 1997 between
the Company and Hambrecht & Quist LLC.
10.63+ Exchange Agreement exchanging debt for common stock dated as
of April 15, 1996 among the Company and members of The
Oracle Group.
10.64+ Collaborative Research and License Agreement between the
Company and CombiChem, Inc. dated October 10, 1997
</TABLE>
II-5
<PAGE> 106
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.65+ Amendment of May 1996 to Research and License Agreement
between the Company and Merck KGaA of April 1, 1990
10.66+ Amendment of December 1997 to Research and License Agreement
between the Company and Merck KGaA of April 1, 1990
10.67+ Equipment Leasing Commitment from Finova Technology Finance,
Inc.
10.68+ Development and License Agreement between the Company and
Merck KGaA dated December 14, 1998
10.69+ Lease dated as of December 15, 1998 for the Company's
premises at 180 Varick Street, New York, New York
10.70+ Engagement Agreement, as amended between the Company and
Diaz & Altschul Capital LLC
10.71+ Amendment dated March 2, 1999 to Development and License
Agreement between the Company and Merck KGaA
10.72 Agreement for Supply of Material dated as of January 1, 1997
between the Company, Connaught Laboratories Limited, a
Pasteur Merieux Company, and Merck KGaA
10.73# Development and Supply Agreement dated as of April 30, 1999
between the Company and Boehringer Ingelheim Pharma KG
21.1+ Subsidiaries
23.1 Consent of KPMG LLP
23.2* Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.3 Consent of Kenyon & Kenyon
23.4 Consent of Hoffmann & Baron, LLP
24.1* Power of Attorney (included on signature page to
Registration Statement filed September 21, 1999)
99.1+ 1996 Incentive Stock Option Plan, as amended
99.2+ 1996 Non-Qualified Stock Option Plan, as amended
99.3+ ImClone Systems Incorporated 1998 Non-Qualified Stock Option
Plan
99.4+ ImClone Systems Incorporated 1998 Employee Stock Purchase
Plan
99.5+ Option Agreement, dated as of September 1, 1998, between the
Company and Ron Martell
99.6++ 1996 Non-Qualified Stock Option Plan, as amended
99.7++ 1996 Incentive Stock Option Plan, as amended
</TABLE>
- ------------
* Previously filed.
+ Previously filed with, or incorporated by reference in, the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
++ Previously filed with the registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1999.
# Confidential treatment has been requested for a portion of this exhibit;
material subject to the request for confidential treatment has been filed
separately with the SEC.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
II-6
<PAGE> 107
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") that are incorporated by reference in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act) (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-7
<PAGE> 108
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
1st day of November, 1999.
IMCLONE SYSTEMS INCORPORATED
By /s/ JOHN B. LANDES
------------------------------------
Name: John B. Landes
Title: Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed by the following persons in
the capacities indicated on the 1st day of November, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
* Chairman of the Board and Director
- ---------------------------------------------------
Robert F. Goldhammer
* President, Chief Executive Officer and Director
- --------------------------------------------------- (Principal Executive Officer)
Samuel D. Waksal
* Executive Vice President, Chief Operating Officer
- --------------------------------------------------- and Director
Harlan W. Waksal
* Vice President of Finance and Chief Financial
- --------------------------------------------------- Officer (Principal Financial and Accounting
Carl Goldfischer Officer)
* Director
- ---------------------------------------------------
Jean Carvais
* Director
- ---------------------------------------------------
Vincent T. DeVita, Jr.
* Director
- ---------------------------------------------------
Paul B. Kopperl
* Director
- ---------------------------------------------------
William R. Miller
* Director
- ---------------------------------------------------
David M. Kies
* Director
- ---------------------------------------------------
John Mendelsohn
* Director
- ---------------------------------------------------
Richard Barth
*By /s/ JOHN B. LANDES
----------------------------------------------
John B. Landes,
Attorney-in-Fact
</TABLE>
II-8
<PAGE> 109
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement
3.1+ Certificate of Incorporation, and all amendments thereto
3.1A++ Amendment dated June 4, 1999 to the Company's certificate of
incorporation, as amended
3.2+ Amended and Restated By-Laws of the Company
4.1+ Form of Warrant issued to the Company's officers and
directors under Warrant Agreements
4.2+ Stock Purchase Agreement between Erbamont Inc. and the
Company, dated May 1, 1989
4.3+ Stock Purchase Agreement between American Cyanamid Company
and the Company dated December 18, 1987
4.4+ Form of Subscription Agreement entered into in connection
with September 1991 private placement
4.5+ Form of Warrant issued in connection with September 1991
private placement
4.6+ Preferred Stock Purchase Agreement between the Company and
Merck KGaA dated December 3, 1997
4.7+ Certificate of Designations, Preferences and Rights of
Series A Convertible Preferred Stock
5.1* Opinion of Davis Polk & Wardwell
10.1+ Company's 1986 Employee Incentive Stock Option Plan,
including form of Incentive Stock Option Agreement
10.2+ Company's 1986 Non-qualified Stock Option Plan, including
form of Non-qualified Stock Option Agreement
10.3+ Company's 401(k) Plan
10.4+ Research and License Agreement between Merck KGaA and the
Company dated December 19, 1990
10.5+ Hematopoietic Growth Factors License Agreement between
Erbamont, N.V. and the Company, dated September 28, 1990
10.6+ Agreement between Cyanamid and the Company dated December
18, 1987 and supplemental letter agreement between Cyanamid
and the Company dated September 6, 1991
10.7+ Agreement between Hadasit Medical Research Services &
Development, Ltd. and the Company
10.8+ Agreement between Hadasit Medical Research Services &
Development, Ltd. and the Company dated September 21, 1989
10.9+ Supported Research Agreement between Memorial
Sloan-Kettering Cancer Center (MSKCC) and the Company dated
March 26, 1990
10.10+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.11+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.12+ License Agreement between MSKCC and the Company, dated March
26, 1990
10.13+ Research Agreement between the Trustees of Princeton
University (Princeton) and the Company dated January 1, 1991
10.14+ Research Agreement between Princeton and the Company dated
May 1, 1991
10.15+ Research Agreement between Princeton and the Company dated
May 1, 1991
10.16+ License Agreement between Princeton and the Company dated
March 20, 1991
10.17+ License Agreement between Princeton and the Company dated
May 29, 1991
</TABLE>
<PAGE> 110
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.18+ License Agreement between Princeton and Oncotech, Inc. dated
September 3, 1987
10.19+ Supported Research Agreement between The University of North
Carolina at Chapel Hill ("UNC") and the Company effective
July 5, 1988
10.20+ License Agreement between UNC and the Company dated July 5,
1988
10.21+ License Agreement between UNC and the Company dated July 27,
1988
10.22+ Supported Research Agreement between UNC and the Company
effective April 1, 1989
10.23+ License Agreement between UNC and the Company dated July 1,
1991
10.24+ Agreement between Celltech Limited and the Company dated May
23, 1991
10.25+ Form of Non-disclosure and Discovery Agreement between
employees of the Company and the Company
10.26.1+ Industrial Development Revenue Bonds (1985 ImClone Systems
Incorporated Project)
10.26.1.1+ Lease Agreement, dated as of October 1, 1985, between the
New York City Industrial Development Agency (NYCIDA) and the
Company, as Lessee
10.26.1.2+ Indenture of Trust, dated as of October 1, 1985, between
NYCIDA and United States Trust Company of New York (US
Trust), as Trustee A
10.26.1.3+ Company Sublease Agreement, dated as of October 1, 1985,
between the Company and NYCIDA
10.26.1.4+ Tax Regulatory Agreement, dated October 9, 1985, from NYCIDA
and the Company to US Trust, as Trustee
10.26.1.5+ Lessee Guaranty Agreement, dated as of October 1, 1985,
between the Company and US Trust, as Trustee
10.26.1.6+ First Supplemental Indenture of Trust, dated as of November
1, 1985 from the NYCIDA to US Trust
10.26.1.7+ Third Supplemental Indenture of Trust, dated as of October
12, 1990 from NYCIDA to US Trust
10.26.2+ Industrial Development Revenue Bonds (1986 ImClone Systems
Incorporated Project)
10.26.2.1+ First Amendment to Company Sublease Agreement, dated as of
December 1, 1986, between the Company, as Sublessor, and
NYCIDA as Sublessee
10.26.2.2+ First Amendment to Lease Agreement, dated as of December 1,
1986, between NYCIDA and the Company, as Lessee
10.26.2.3+ Second Supplement Indenture of Trust, dated as of December
1, 1986 between NYCIDA and US Trust, as Trustee
10.26.2.4+ Tax Regulatory Agreement, dated December 31, 1986, from
NYCIDA and the Company to US Trust, as Trustee
10.26.2.5+ First Amendment to Lessee Guaranty Agreement, dated as of
December 1, 1986, between the Company and US Trust, as
Trustee
10.26.2.6+ Bond Purchase Agreement, dated as of December 31, 1986,
between NYCIDA and New York Muni Fund, Inc., as Purchaser
10.26.2.7+ Letter of Representation and Indemnity Agreement, dated as
of December 31, 1986, from the Company to NYCIDA and New
York Muni Fund, Inc., as Purchaser
10.26.3+ Industrial Development Revenue Bonds (1990 ImClone Systems
Incorporated Project)
10.26.3.1+ Lease Agreement, dated as of August 1, 1990, between NYCIDA
and the Company, as lessee
10.26.3.2+ Company Sublease Agreement, dated as of August 1, 1990,
between the Company, as Sublessor, and NYCIDA
</TABLE>
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.26.3.3+ Indenture of Trust, dated as of August 1, 1990, between
NYCIDA and US Trust, as Trustee
10.26.3.4+ Guaranty Agreement, dated as of August 1, 1990, from the
Company to US Trust, as Trustee
10.26.3.5+ Tax Regulatory Agreement, dated August 1, 1990, from the
Company and NYCIDA to US Trust, as Trustee
10.26.3.6+ Agency Security Agreement, dated as of August 1, 1990, from
the Company, as Debtor, and the NYCIDA to US Trust, as
Trustee
10.26.3.7+ Letter of Representation and Indemnity Agreement, dated as
of August 14, 1990, from the Company to NYCIDA, New York
Mutual Fund, Inc., as the Purchaser and Chase Securities,
Inc., as Placement Agent Company to NYCIDA
10.27+ Lease Agreement between 180 Varick Street Corporation and
the Company, dated October 8, 1985, and Additional Space and
Modification Agreement between 180 Varick Street Corporation
and the Company, dated June 13, 1989
10.28+ License Agreement between The Board of Trustees of the
Leland Stanford Junior University and the Company effective
May 1, 1991
10.29+ License Agreement between Genentech, Inc. and the Company
dated December 28, 1989
10.30+ License Agreement between David Segev and the Company dated
December 28, 1989
10.31+ Letter of Intent between the Company and Dr. David Segev
dated November 18, 1991
10.32+ Agreement between the Company and Celltech Limited dated
March 11, 1992
10.33+ Agreement of Sale dated June 19, 1992 between the Company
and Korsch Tableting Inc.
10.34+ Research and License Agreement, having an effective date of
December 15, 1992, between the Company and Abbott
Laboratories
10.35+ Research and License Agreement between the Company and
Chugai Pharmaceutical Co., Ltd. dated January 25, 1993
10.36+ License Agreement between the Company and the Regents of the
University of California dated April 9, 1993
10.37+ Contract between the Company and John Brown, a division of
Trafalgar House, dated January 19, 1993
10.38+ Collaboration and License Agreement between the Company and
the Cancer Research Campaign Technology, Ltd., signed April
4, 1994, with an effective date of April 1, 1994.
10.39+ Termination Agreement between the Company and Erbamont Inc.
dated July 21, 1993
10.40+ Research and License Agreement between the Company and
Cyanamid dated September 15, 1993
10.41+ Clinical Trials Agreement between the Company and the
National Cancer Institute dated November 23, 1993
10.42+ License Agreement between the Company and UNC dated December
1, 1993
10.43+ Notice of Termination for the research collaboration between
the Company and Chugai Pharmaceutical Co., Ltd. dated
December 17, 1993
10.44+ License Agreement between the Company and Rhone-Poulenc
Rorer dated June 13, 1994
10.45+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and GFL Ultra Fund Limited dated August
12, 1994
10.46+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and GFL Ultra Fund Limited dated
November 4, 1994
10.47+ Offshore Securities Subscription Agreement between ImClone
Systems Incorporated and Anker Bank Zuerich dated November
10, 1994
</TABLE>
<PAGE> 112
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.48+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to capital stock of Cadus
Pharmaceutical Corporation
10.49+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to 300,000 shares of common stock of
ImClone Systems Incorporated
10.50+ Option Agreement, dated as of April 27, 1995, between
ImClone Systems Incorporated and High River Limited
Partnership relating to 150,000 shares common stock of
ImClone Systems Incorporated
10.51+ Stock Purchase Agreement, dated as of August 10, 1995, by
and between ImClone Systems Incorporated and the members of
the Oracle Group
10.52+ Form of Warrant issued to the members of the Oracle Group
10.53+ Loan Agreement, dated as of August 10, 1995, by and between
ImClone Systems Incorporated and the members of the Oracle
Group
10.54+ Security Agreement, dated as of August 10, 1995, by and
between ImClone Systems Incorporated and the members of the
Oracle Group
10.55+ Mortgage, dated August 10, 1995, made by ImClone Systems
Incorporated for the benefit of Oracle Partners, L.P., as
Agent
10.56+ Financial Advisory Agreement entered into between the
Company and Genesis Merchant Group Securities dated November
2, 1995
10.57+ Repayment Agreement (with Confession of Judgment, and
Security Agreement) entered into between the Company and
Pharmacia, Inc. on March 6, 1996
10.58+ License Amendment entered into between the Company and
Abbott Laboratories on August 28, 1995, amending the
Research and License Agreement between the parties dated
December 15, 1992
10.59+ Amendment of September 1993 to the Research and License
Agreement between the Company and Merck KGaA of April 1,
1990
10.60+ Amendment of October 1993 to the Research and License
Agreement between the Company and Merck KGaA of April 1,
1990
10.61+ Employment agreement dated May 17, 1996 between the Company
and Carl S. Goldfischer
10.62+ Financial Advisory Agreement dated February 26, 1997 between
the Company and Hambrecht & Quist LLC
10.63+ Exchange Agreement exchanging debt for common stock dated as
of April 15, 1996 among the Company and members of The
Oracle Group.
10.64+ Collaborative Research and License Agreement between the
Company and CombiChem, Inc. dated October 10, 1997
10.65+ Amendment of May 1996 to Research and License Agreement
between the Company and Merck KGaA of April 1, 1990
10.66+ Amendment of December 1997 to Research and License Agreement
between the Company and Merck KGaA of April 1, 1990
10.67+ Equipment Leasing Commitment from Finova Technology Finance,
Inc.
10.68+ Development and License Agreement between the Company and
Merck KGaA dated December 14, 1998
10.69+ Lease dated as of December 15, 1998 for the Company's
premises at 180 Varick Street, New York, New York
</TABLE>
<PAGE> 113
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ------------------------------------------------------------
<S> <C>
10.70+ Engagement Agreement, as amended between the Company and
Diaz & Altschul Capital LLC
10.71+ Amendment dated March 2, 1999 to Development and License
Agreement between the Company and Merck KGaA
10.72 Agreement for Supply of Material dated as of January 1, 1997
between the Company, Connaught Laboratories Limited, a
Pasteur Merieux Company, and Merck KGaA
10.73# Development and Supply Agreement dated as of April 30, 1999
between the Company and Boehringer Ingelheim Pharma KG
21.1+ Subsidiaries
23.1 Consent of KPMG LLP
23.2* Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.3 Consent of Kenyon & Kenyon
23.4 Consent of Hoffmann & Baron, LLP
24.1* Power of Attorney (included on signature page to
Registration Statement filed September 21, 1999)
99.1+ 1996 Incentive Stock Option Plan, as amended
99.2+ 1996 Non-Qualified Stock Option Plan, as amended
99.3+ ImClone Systems Incorporated 1998 Non-Qualified Stock Option
Plan
99.4+ ImClone Systems Incorporated 1998 Employee Stock Purchase
Plan
99.5+ Option Agreement, dated as of September 1, 1998, between the
Company and Ron Martell
99.6++ 1996 Non-Qualified Stock Option Plan, as amended
99.7++ 1996 Incentive Stock Option Plan, as amended
</TABLE>
- ------------
* Previously filed.
+ Previously filed with, or incorporated by reference in, the registrant's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998.
++ Previously filed with the registrant's Quarterly Report on Form 10-Q for the
period ended June 30, 1999.
# Confidential treatment has been requested for a portion of this exhibit;
material subject to the request for confidential treatment has been filed
separately with the SEC.
<PAGE> 1
Exhibit 1.1
2,875,000 SHARES
IMCLONE SYSTEMS INCORPORATED
COMMON STOCK, $.001 PAR VALUE
UNDERWRITING AGREEMENT
___________, 1999
<PAGE> 2
[___________], 1999
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
Warburg Dillon Read LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
IMCLONE SYSTEMS INCORPORATED, a Delaware corporation (the "COMPANY"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "UNDERWRITERS") 2,500,000 shares of its Common Stock, $.001 par
value (the "FIRM SHARES"). The Company also proposes to issue and sell to the
several Underwriters not more than an additional 375,000 shares of Common Stock,
$.001 par value, of the Company (the "ADDITIONAL SHARES"), if and to the extent
that you shall have determined to exercise, on behalf of the Underwriters, the
right to purchase such shares of common stock granted to the Underwriters in
Section 2 hereof. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "SHARES." The shares of Common Stock, $.001 par
value, of the Company to be outstanding after giving effect to the sales
contemplated hereby are hereinafter referred to as the "COMMON STOCK."
The Company has filed with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (File No. 333-87489),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is hereinafter referred to as the "REGISTRATION STATEMENT";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "PROSPECTUS." The term "preliminary prospectus" as used in
this Agreement shall mean each preliminary prospectus included in the
Registration Statement prior to the time it becomes effective. Unless otherwise
indicated, any reference herein to the Registration Statement, the Prospectus or
the preliminary prospectus shall include all documents incorporated therein by
reference. If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any reference
herein to the term "REGISTRATION STATEMENT" shall be deemed to include such Rule
462 Registration Statement.
<PAGE> 3
1. Representations and Warranties. The Company represents and warrants
to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) (i) Each document, if any, filed or to be filed pursuant
to the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and incorporated by reference in the Prospectus complied, or
will comply when so filed, in all material respects with the Exchange
Act and the applicable rules and regulations of the Commission
thereunder, (ii) the Registration Statement, when it became effective,
did not contain and, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (iii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iv)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(d) Each subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business
or its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not
3
<PAGE> 4
have a material adverse effect on the Company and its subsidiaries,
taken as a whole; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly by the
Company, free and clear of all liens, encumbrances, equities or claims.
(e) This Agreement has been duly authorized, executed and
delivered by the Company.
(f) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or conflict with,
result in a breach of any of the terms and provisions of, or constitute
a default under the certificate of incorporation or by-laws of the
Company or any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company
or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for
the performance by the Company of its obligations under this Agreement,
except such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement).
4
<PAGE> 5
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party
or to which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act
and the applicable rules and regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (including, without limitation, all laws and regulations
relating to biohazardous materials) ("ENVIRONMENTAL LAWS"), (ii) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses
or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(p) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) the
Company and its
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<PAGE> 6
subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in
the ordinary course of business; (ii) the Company has not purchased any
of its outstanding capital stock, nor declared, paid or otherwise made
any dividend or distribution of any kind on its capital stock other
than ordinary and customary dividends; and (iii) there has not been any
material change in the capital stock, short-term debt or long-term debt
of the Company and its consolidated subsidiaries, except in each case
as described or contemplated in the Prospectus.
(q) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real or personal property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its
subsidiaries, in each case except as described in the Prospectus.
(r) Except as set forth in the Prospectus under the caption
"Business Patents and Trade Secrets - Patents Rights; Licenses - C225",
the Company and its subsidiaries own or possess all material patents,
patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service
marks and trade names ("INTELLECTUAL PROPERTY") currently employed by
them in connection with the business now operated by them and necessary
for the conduct of their business as described in the Prospectus (the
"COMPANY INTELLECTUAL PROPERTY"), and, except as described in the
Prospectus, neither the Company nor any of its subsidiaries has
received any notice of any infringement of or conflict with the
Intellectual Property rights of others, which, singly or in the
aggregate would result in any material adverse effect on the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole. To the best of
the Company's knowledge, the Company Intellectual Property does not
infringe upon or conflict with the Intellectual Property rights of
others, in a manner which, singly or in the aggregate would result in
any material adverse effect on the Company and its subsidiaries, taken
as a whole.
(s) The Company and its subsidiaries have duly and properly
filed or caused to be filed with the United States Patent and Trademark
Office (the "PTO")
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<PAGE> 7
and applicable foreign and international patent authorities all patent
applications described or referred to in the Prospectus (the "COMPANY
PATENT APPLICATIONS"), and believe they have complied with the PTO's
duty of candor and disclosure for the Company Patent Applications; the
Company and its subsidiaries are unaware of any facts material to a
determination of patentability regarding the Company Patent
Applications not called to the attention of the PTO; the Company and
its subsidiaries are unaware of any facts not called to the attention
of the PTO which would preclude the grant of a patent for the Company
Patent Applications; the Company and its subsidiaries have no knowledge
of any facts which would preclude them from having valid license rights
or clear title to the Company Patent Applications.
(t) No material labor dispute with the employees of the
Company or any of its subsidiaries exists, except as described in or
contemplated by the Prospectus, or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers or contractors that could result in any
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(u) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which
they are engaged (including, without limitation, the aspects of its
business involving biohazardous substances); neither the Company nor
any such subsidiary has been refused any insurance coverage sought or
applied for; and neither the Company nor any such subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole, except as described
in the Prospectus.
(v) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, including without limitation, all such certificates,
authorizations and permits required by the United States Food and Drug
Administration (the "FDA") or any other federal, state or foreign
agencies or bodies engaged in the regulation of pharmaceuticals or
biohazardous substances, except where the failure to obtain any such
certificate, authorization or permit, singly or in the aggregate, would
not have a material adverse effect on the Company or its subsidiaries,
taken as a whole; and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit which,
singly or in the aggregate could result in a material adverse effect on
the
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<PAGE> 8
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole. The
Company and its subsidiaries are in compliance in all material respects
with all applicable federal, state, local and foreign laws,
regulations, orders and decrees, including without limitation, all
regulations prescribed by the FDA or any other federal, state or
foreign agencies or bodies engaged in the regulation of pharmaceuticals
or biohazardous substances, except where noncompliance would not,
singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(w) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(x) KPMG LLP are, and during the periods covering their report
included in the Registration Statement and the Prospectus were,
independent accountants with respect to the Company as required by the
Securities Act. The financial statements of the Company and its
subsidiaries (together with the related notes thereto) included in the
Registration Statement present fairly the financial position and
results of operations of the Company and its subsidiaries at the
respective dates and for the respective periods to which they apply,
subject to normal year-end adjustments. Such financial statements
(together with the related notes thereto) have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved except as otherwise stated
therein.
(y) The Shares have been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance.
(z) Except as described in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such
securities with the Shares registered pursuant to the Registration
Statement. All persons who possess such rights have effectively waived
them with respect to the offering of the Shares.
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<PAGE> 9
(aa) Each material contract, agreement and license to which
the Company or any of its subsidiaries is bound is in full force and
effect and is legal, valid, binding and enforceable against the
Company, and to the Company's knowledge, against each other party. The
Company is not and to the Company's knowledge no other party is in
breach or default with respect to any such contract, agreement or
license, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination,
modification, or acceleration, under any such contract, agreement or
license. No party has repudiated any provision of any such contract,
agreement or license.
(bb) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations
of the Company or any of its subsidiaries will be affected by the Year
2000 Problem (that is, any significant risk that computer hardware or
software applications used by the Company and its subsidiaries will
not, in the case of dates or time periods occurring after December 31,
1999, function at least as effectively as in the case of dates or time
periods occurring prior to January 1, 2000); as a result of such
review, (i) the Company has no reason to believe, and does not believe,
that (A) there are any issues related to the Company's preparedness to
address the Year 2000 Problem that are of a character required to be
described or referred to in the Registration Statement or Prospectus
which have not been accurately described in the Registration Statement
or Prospectus and (B) the Year 2000 Problem will have a material
adverse effect on the condition, financial or otherwise, or on the
earnings, business or operations of the Company and its subsidiaries,
taken as a whole, or result in any material loss or interference with
the business or operations of the Company and its subsidiaries, taken
as a whole; and (ii) the Company reasonably believes, after due
inquiry, that the suppliers, vendors, customers or other material third
parties used or served by the Company and such subsidiaries are
addressing or will address the Year 2000 Problem in a timely manner,
except to the extent that a failure to address the Year 2000 Problem by
any supplier, vendor, customer or material third party would not have a
material adverse effect on the condition, financial or otherwise, or on
the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective number of Firm Shares set forth in Schedule I hereto
opposite its name at [$________] a share (the "PURCHASE PRICE").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the
9
<PAGE> 10
Additional Shares, and the Underwriters shall have a one-time right to purchase,
severally and not jointly, up to 375,000 Additional Shares at the Purchase
Price. If you, on behalf of the Underwriters, elect to exercise such option, you
shall so notify the Company in writing not later than 30 days after the date of
this Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section 4
hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule I hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, (B) the issuance by the Company of
shares of Common Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof of which the
Underwriters have been advised in writing, (C) the issuance by the Company of
additional options or warrants under the Company's existing stock-based
compensation plans, provided that such stock options or warrants are not
exercisable during such 90-day period or (D) the issuance by the Company of
shares of Common Stock to employees pursuant to the existing ImClone Systems
Incorporated 1998 Employee Stock Purchase Plan.
3. Terms of Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
[$_______] a share (the "PUBLIC OFFERING PRICE") and to certain dealers selected
by you at a price that represents a concession not in excess of [$_______] a
share under the Public Offering Price, and that any Underwriter may allow,
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<PAGE> 11
and such dealers may reallow, a concession, not in excess of [$______] a share,
to any Underwriter or to certain other dealers.
4. Payment and Delivery. Payment for the Firm Shares shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on [___________], 1999, or at
such other time on the same or such other date, not later than [__________],
1999, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE". The Closing of the
offering and sale of the Firm Shares will be held at the offices of Ropes &
Gray, 885 Third Avenue, New York, NY 10022.
Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., New York City time, on the date specified in the
notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than [________], 1999, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to as
the "OPTION CLOSING DATE". The Closing of the offering and sale of the
Additional Shares will be held at the offices of Ropes & Gray, 885 Third Avenue,
New York, NY 10022.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes
payable in connection with the transfer of the Shares to the Underwriters duly
paid, against payment of the Purchase Price therefor.
5. Conditions to the Underwriters' Obligations. The obligations of the
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date and the
Option Closing Date, as the case may be, are subject to the condition that the
Registration Statement shall have become effective not later than [________]
(New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date and the Option Closing Date, as the case
may be:
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<PAGE> 12
(i) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of
this Agreement) that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated
in the Prospectus.
(b) The Underwriters shall have received on the Closing Date
and the Option Closing Date, as the case may be, a certificate, dated
such date and signed by an executive officer of the Company, to the
effect set forth in Section 5(a)(i) above and to the effect that the
representations and warranties of the Company contained in this
Agreement are true and correct as of such date and that the Company has
complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before such
date.
The officer signing and delivering such certificate may rely
upon the best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date
and the Option Closing Date, as the case may be, an opinion of Davis
Polk & Wardwell, outside counsel for the Company, dated such date, in
the form attached hereto as EXHIBIT B.
(d) The Underwriters shall have received on the Closing Date
and the Option Closing Date, as the case may be, an opinion of John B.
Landes, Esq., General Counsel of the Company, dated such date in the
form attached hereto as EXHIBIT C.
(e) The Underwriters shall have received on the Closing Date
and the Option Closing Date, as the case may be, an opinion dated such
date of Hoffmann & Baron, patent counsel to the Company, in the form
attached hereto as EXHIBIT D.
(f) The Underwriters shall have received on the Closing Date
and the Option Closing Date, as the case may be, an opinion of Ropes &
Gray, counsel for the Underwriters, dated such date, in a form to be
agreed by the Underwriters.
The opinions of Davis Polk & Wardwell, John B. Landes, Esq.
and Hoffman & Baron described, respectively, in Sections 5(c), 5(d) and
5(e) above
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<PAGE> 13
shall be rendered to the Underwriters at the request of the Company and
shall so state therein.
(g) The Underwriters shall have received, on each of the date
hereof, the Closing Date and the Option Closing Date, a letter dated
such date, in form and substance satisfactory to the Underwriters, from
KPMG, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Registration Statement and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not
earlier than the date hereof.
(h) The "lock-up" agreements, each substantially in the form
of Exhibit A hereto, between you and certain shareholders, officers and
directors of the Company relating to sales and certain other
dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date and the Option Closing Date, as the case
may be.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the delivery to you on the
Option Closing Date of such other documents as you may reasonably
request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters
related to the issuance of the Additional Shares.
6. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish you, without charge, three signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated by reference) and to each other Underwriter a conformed
copy of the Registration Statement (without exhibits thereto but
including documents incorporated by reference) and to furnish to you in
New York City, without charge, prior to 10:00 a.m. New York City time
on the business day next succeeding the date of this Agreement and
during the period mentioned in Section 6(c) below, as many copies of
the Prospectus, any documents incorporated by reference, and any
supplements and amendments thereto or to the Registration Statement as
you may reasonably request. The terms "supplement" and "amendment" or
"amend" as used in this Agreement shall include all documents
subsequently filed by the Company with the Commission pursuant to the
Exchange Act that are deemed to be incorporated by reference in the
Prospectus.
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<PAGE> 14
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file
with the Commission within the applicable period specified in Rule
424(b) under the Securities Act any prospectus required to be filed
pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense for nine months following
the first date of the public offering of Shares, to the Underwriters
and to the dealers (whose names and addresses you will furnish to the
Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) To make generally available to the Company's security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 2001 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder.
7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company agrees to
pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company's counsel and the Company's accountants in connection
with the registration and delivery of the Shares under the Securities Act and
all other fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (ii) all
costs and expenses related to
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<PAGE> 15
the transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or producing
any Blue Sky memorandum in connection with the offer and sale of the Shares
under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
provided in Section 6(d) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky memorandum, (iv) all filing
fees and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering of the
Shares by the National Association of Securities Dealers, Inc., (v) all costs
and expenses incident to listing the Shares on the Nasdaq National Market, (vi)
the cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, and (ix) all other costs and expenses incident to
the performance of the obligations of the Company hereunder for which provision
is not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 8 entitled "Indemnity and Contribution", and
the last paragraph of Section 10 below, the Underwriters will pay all
of their costs and expenses, including fees and disbursements of their counsel,
stock transfer taxes payable on resale of any of the Shares by them and any
advertising expenses connected with any offers they may make.
8. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses,
claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim) caused by any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any amendment thereof, any
preliminary prospectus or the Prospectus (as amended or supplemented if
the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based
upon information relating to any
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<PAGE> 16
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from whom
the person asserting any such losses, claims, damages or liabilities
purchased Shares, or any person controlling such Underwriter, if a copy
of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if required
by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect
giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncompliance by the Company with Section 6(a)
hereof.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Underwriter, but only with
reference to information relating to such Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use in
the Registration Statement, any preliminary prospectus, the Prospectus
or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 8(a), or 8(b) such
person (the "INDEMNIFIED PARTY") shall promptly notify the person
against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the indemnifying
party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including
any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in
16
<PAGE> 17
the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated, in the case of parties
indemnified pursuant to Section 8(a), and by the Company, in the case
of parties indemnified pursuant to Section 8(b). The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to
therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other hand from the offering of
the Shares or (ii) if the allocation provided by clause (i) of this
sentence is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in
clause (i) of this sentence but also the relative fault of the Company
on the one hand and of the Underwriters on the other hand in connection
with the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one
hand and the Underwriters on the other hand in connection with the
offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, in each case as
set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the
Company on the one hand and the Underwriters on the other hand shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or
17
<PAGE> 18
omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective
number of Shares they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in Section 8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Underwriter shall
be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section
8 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements
of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of
the Shares.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in
18
<PAGE> 19
financial markets or any calamity or crisis that, in your judgment, is material
and adverse and (b) in the case of any of the events specified in clauses
9(a)(i) through 9(a)(iv), such event, singly or together with any other such
event, makes it, in your judgment, impracticable to market the Shares on the
terms and in the manner contemplated in the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule I bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you and the Company for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
19
<PAGE> 20
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
20
<PAGE> 21
[Underwriting Agreement]
Very truly yours,
IMCLONE SYSTEMS INCORPORATED
By:____________________________
Name:
Title:
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
Warburg Dillon Read LLC
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By:__________________________
Name:
Title:
<PAGE> 22
COMPANY PATENT APPLICATIONS
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF
FIRM SHARES
UNDERWRITER TO BE PURCHASED
----------- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
Warburg Dillon Read LLC
[NAMES OF OTHER UNDERWRITERS]
---------
Total....................................................... 2,500,000
</TABLE>
<PAGE> 23
EXHIBIT A
[FORM OF LOCK-UP LETTER]
_____________, 1999
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
Warburg Dillon Read LLC
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
The undersigned understands that Morgan Stanley & Co. Incorporated
("MORGAN STANLEY") proposes to enter into an Underwriting Agreement (the
"UNDERWRITING AGREEMENT") with ImClone Systems Incorporated, a Delaware
corporation (the "COMPANY"), providing for the public offering (the "PUBLIC
OFFERING") by the several Underwriters, including Morgan Stanley (the
"UNDERWRITERS"), of up to 2,875,000 shares (the "SHARES") of the Common Stock,
$.001 par value of the Company (the "COMMON STOCK").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 90 days after the date of the final prospectus
relating to the Public Offering (the "PROSPECTUS"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Shares to the Underwriters pursuant to the Underwriting
<PAGE> 24
Agreement or (b) transactions relating to shares of Common Stock or other
securities acquired in open market transactions after the completion of the
Public Offering. In addition, the undersigned agrees that, without the prior
written consent of Morgan Stanley on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 90 days after the
date of the Prospectus, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.
Very truly yours,
-------------------------
(Name)
-------------------------
(Address)
<PAGE> 25
EXHIBIT B
[Davis Polk & Wardwell Opinion]
__________, 1999
Morgan Stanley & Co. Incorporated
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Prudential Securities Incorporated
Warburg Dillon Read LLC
As representatives of the several underwriters
named in Schedule I to the Underwriting
Agreement referred to below
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
We have acted as counsel for ImClone Systems Incorporated, a Delaware
corporation (the "Company"), in connection with the Underwriting Agreement dated
________, 1999 (the "Underwriting Agreement") between the Company and you, as
representatives of the several underwriters named in Schedule I thereto (the
"Underwriters"). Pursuant to the Underwriting Agreement, the Company proposes to
sell, and you severally propose to purchase, 2,500,000 shares (the "Firm
Shares") of its common stock, par value $.001 per share, and 375,000 additional
shares (the "Additional Shares," and, collectively with the Firm Shares, the
"Shares"). This opinion is delivered pursuant to Section 5(c) of the
Underwriting Agreement.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as we have deemed necessary for the
purposes of rendering this opinion.
We have participated in the preparation of the registration statement
of the Company on Form S-3 (File No. 333-87489) and Amendment Nos. 1, 2, 3 [and
4] thereto (other than the documents incorporated by reference therein (the
"Incorporated Documents")) relating to the registration of the offering of
Shares filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act"), and have
reviewed the
<PAGE> 26
Morgan Stanley & Co. Incorporated 2 __________, 1999
Incorporated Documents. In addition, we have been advised that the Shares have
been approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
The registration statement on Form S-3, as amended at the time it was
declared effective, including the Incorporated Documents and the information
deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A
under the Securities Act, is hereinafter referred to as the "Registration
Statement", and the related prospectus (including the Incorporated Documents) in
the form first used to confirm sales of the Shares is hereinafter referred to as
the "Prospectus".
We have assumed the conformity of the documents filed with the
Commission via the Electronic Data Gathering, Analysis and Retrieval System
("EDGAR"), except for required EDGAR formatting changes, to physical copies of
the documents delivered to the Company and submitted for our examination.
Capitalized terms used but not otherwise defined herein are used as
defined in the Underwriting Agreement.
Based upon the foregoing, we are of the opinion that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of Delaware with corporate power and
authority to own its properties and conduct its business as described in the
Prospectus;
(ii) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(iii) The Shares have been duly authorized and when issued and
delivered in accordance with the terms of the Underwriting Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
is not subject to any preemptive or, to our knowledge, other similar rights.
(iv) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(v) The execution and delivery by the Company of, and the performance
of its obligations under, the Underwriting Agreement will not contravene any
provision of United States federal or New York state law that in our experience
is normally applicable to general business corporations in relation to
transactions of the type contemplated by the
<PAGE> 27
Morgan Stanley & Co. Incorporated 3 __________, 1999
Underwriting Agreement, or the certificate of incorporation or by-laws of the
Company, or any agreement, indenture, lease or other instrument to which the
Company is a party, or by which any of them or any of its respective properties
is bound that is an exhibit to the Registration Statement, including any exhibit
incorporated by reference therein.
(vi) No consent, approval, authorization or order of, or qualification
with, any governmental body or agency under United States federal or New York
state law that in our experience is normally applicable to general business
corporations in relation to transactions of the type contemplated by the
Underwriting Agreement (except that we express no opinion regarding intellectual
property law) is required for the performance by the Company of its obligations
under the Underwriting Agreement, except such as have been obtained and such as
may be required under state securities or Blue Sky laws in connection with the
offer and sale of the Shares.
(vii) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be required to register as an "investment company", as
such term is defined in the Investment Company Act of 1940, as amended.
(viii) There is no contract or agreement that is an exhibit to the
Registration Statement, including any exhibit incorporated by reference therein,
between the Company and any person granting such person the right to require the
Company to include any securities owned or to be owned by such person in the
securities registered pursuant to the Registration Statement, except for such
rights for which a waiver has been obtained with respect to the offering of the
Shares.
(ix) We do not know of any legal or governmental proceedings pending or
threatened to which the Company is a party or to which any of the properties of
the Company is subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement that are not described or filed as required (except that
we express no opinion with respect to matters of intellectual property law or
environmental law).
(x) We have been advised by the staff of the Commission that the
Registration Statement was declared effective under the Securities Act and, to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
<PAGE> 28
Morgan Stanley & Co. Incorporated 4 __________, 1999
instituted or are pending under the Securities Act.
We have considered the statements relating to legal matters or
documents included in (A) the Prospectus under the captions "Business --
Research Collaborations and Clinical Collaborations -- Collaborations with Merck
KGaA," "Description of Capital Stock" and "Underwriting" and (B) the
Registration Statement in Item 15. In our opinion, such statements fairly
summarize in all material respects such matters or documents.
We have not ourselves checked the accuracy, completeness or fairness
of, or otherwise verified, the information furnished with respect to other
matters in the Registration Statement or the Prospectus. We have generally
reviewed and discussed with your representatives, and with certain officers and
employees of, and counsel and independent public accountants for, the Company
the information furnished, whether or not subject to our check and verification.
On the basis of such consideration, review and discussion, but without
independent check or verification except for the matters referred to in the
immediately preceding paragraph, nothing has come to our attention that causes
us to believe that (i) the Registration Statement and Prospectus (except for the
financial statements and financial schedules and other financial and statistical
data included therein, as to which we express no belief) do not comply as to
form in all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder or (ii) (x)
the Registration Statement and the prospectus included therein (except for the
financial statements and financial schedules and other financial and statistical
data included therein, as to which we express no belief ) at the time the
Registration Statement became effective contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; or (y) the
Prospectus (except as stated) as of its date and as of the date hereof contained
or contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the General Corporation
Law of the State of Delaware and the federal laws of the United States.
This opinion is rendered solely to you in connection with the above
matter. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
<PAGE> 29
EXHIBIT C
[John Landes Esq. Opinion]
(i) the Company is duly qualified to transact
business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole
(ii) each subsidiary of the Company has been duly
incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries,
taken as a whole;
(iii) the shares of Common Stock outstanding prior to
the issuance of the Shares have been duly authorized and are
validly issued, fully paid and non-assessable;
(iv) all of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and,
are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims;
(v) (A) the statements in the Prospectus under the
caption "Business -- Government Regulation" and (B) the
description of agreements under which the Company has licensed
technology from third parties in the Prospectus under the
caption "Business --Patent Rights; Licenses", in each case
insofar as such statements or descriptions constitute
summaries of the legal matters documents or proceedings
referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings
and fairly summarize the matters referred to therein; and
<PAGE> 30
(vi) after due inquiry, such counsel does not know of
any legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its
subsidiaries is subject that are required to be described in
the Registration Statement or the Prospectus and are not so
described, of any statutes, regulations, contracts or other
documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described
or filed as required.
(vii) the execution and delivery by the Company of,
and the performance by the Company of its obligations under,
this Agreement will not contravene any provision of applicable
law or the certificate of incorporation or by-laws of the
Company or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any
of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over
the Company or any subsidiary, and no consent, approval,
authorization or order of, or qualification with, any
governmental body or agency is required for the performance by
the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of
the various states in connection with the offer and sale of
the Shares;
(viii) except as described in the Prospectus, there
are no contracts, agreements or understandings between the
Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement, and
all persons who possess such rights have effectively waived
them with respect to the offering of the Shares;
<PAGE> 31
EXHIBIT D
[Hoffmann & Baron, LLP Opinion]
At the request of ImClone Systems Incorporated (the "Company"), to
which we are and have acted as patent counsel, and in accordance with Section
5(e) of the underwriting agreement between the Company and the underwriters,
Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Prudential Securities Incorporated, and Warburg Dillon Read LLC
regarding the selling by the Company of shares of stock (the "Underwriting
Agreement"), we have reviewed and given careful consideration to the sections
entitled "Risk Factors-Our Success Depends Upon Our Ability to Protect Our
Intellectual Property and Our Proprietary Technology" and "Business-Patents and
Trade Secrets" in the Registration Statement and Prospectus.
Intellectual Property shall mean all patents, patent rights, licenses,
inventions and other proprietary rights, including trade secrets. Company
Intellectual Property shall mean the Intellectual Property sufficient to conduct
the Company's business as now, or as proposed to be, conducted by the Company as
described in the Prospectus. The Company's patent estate is made up of the
patent applications listed in Exhibit A (Company Patent Applications) and the
issued patents listed in Exhibit B (Company Patents).
In the opinion below, any reference to the term "to the best of our
knowledge" shall mean within the conscious awareness of the existence or absence
of any facts or other information by any lawyer at Hoffmann and Baron, LLP who
has performed substantive legal work for the Company. Statements said to be made
"after due inquiry" are based solely on our personal knowledge, and on
information and representations received from the Company after inquiry
sufficient to express a reasonably informed opinion.
It is our opinion that:
(i) the statements in the Registration Statement and Prospectus under
the captions "Risk Factors-Our Success Depends Upon Our Ability to Protect Our
Intellectual Property and Our Proprietary Technology" and "Business-Patents and
Trade Secrets" insofar as such matters constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(ii) to the best of our knowledge, after due inquiry, there are no
legal or governmental proceedings pending (other than prosecution of the Company
Patent Applications) relating to the Company, the claimed inventions of the
Company Patents, or the Company Patent Applications, and no such proceedings are
threatened or contemplated by governmental authorities or others;
(iii) to the best of our knowledge, after due inquiry, there are no
facts which would preclude the Company from having valid license rights or clear
title to the Company Patents or the Company Patent Applications, and based on
representations by the Company that the Company has not conveyed to third
parties any rights which have not been recorded in the PTO, the
<PAGE> 32
Company has valid license rights or clear record title to the Company
Intellectual Property free and clear of any liens or encumbrances;
(iv) (A) to the best of our knowledge, after due inquiry, the Company
has complied with the PTO duty of candor and disclosure for each of the Company
Patents and Company Patent Applications, and (B) we have no knowledge, after due
inquiry, that the Company lacks or will be unable to obtain any rights or
licenses to use all Company Intellectual Property;
(v) to the best of our knowledge: (A) there is no reasonable basis for
a finding of invalidity of any of the Company Patents that could have a material
adverse effect on the business, results of operations, or financial condition of
the Company; and (B) we have no reason to believe that any of the Company Patent
Applications will not issue as a patent, except to the extent that such failure
to issue as a patent would not have a material adverse effect on the business,
results of operations, or financial condition of the Company;
(vi) to the best of our knowledge, after due inquiry, the Company has
not received any notice of conflict with intellectual property rights or claims
of others with respect to any products or proposed products of the Company
described in the Prospectus, except for one notice of potential conflict of
which we notified you in writing;
(vii) except for third party rights described in the Prospectus to
which the company may require licenses, and other third party rights of which we
notified you in writing, licenses to which are, after due inquiry, available on
acceptable terms generally known in the industry, based upon a review of the
third party rights known to us, there are no patent rights of others which are
or would be infringed by the manufacture, sale or use of specific products or
processes referred to in the Prospectus, and therefore, in the event of
litigation, a court should find that no such third party rights are infringed by
the manufacture, sale or use of specific products or processes referred to in
the Prospectus; and
(viii) (A) we have no reason to believe that the portions of the
Registration Statement and the Prospectus under the captions "Risk Factors-Our
Success Depends on Our Ability to Protect Our Intellectual Property and Our
Proprietary Technology" and "Business-Patents and Trade Secrets" included
therein at the time the Registration Statement became effective contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and (B) we have no reason to believe that the portions of the Prospectus under
the captions "Risk Factors-Our Success Depends on Our Ability to Protect Our
Intellectual Property and Our Proprietary Technology," and "Business-Patents and
Trade Secrets" contain any untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
<PAGE> 1
Exhibit 10.72
AGREEMENT FOR SUPPLY OF MATERIAL
This AGREEMENT FOR SUPPLY OF MATERIAL (the "AGREEMENT"), among
CONNAUGHT LABORATORIES LIMITED, a Pasteur Merieux Connaught company,
incorporated under the laws of Ontario, Canada with offices at 1755
Steeles Avenue West, Toronto, Ontario, Canada M2R 3T4, ("PMC")
and
IMCLONE SYSTEMS INCORPORATED, a company existing and organized under
the laws of Delaware, USA with offices at 180 Varick Street, New York,
NY, USA 10014, ("IMCLONE")
and
MERCK KGaA, a company incorporated under the laws of Germany with
offices at Frankfurter Strasse 250, 64271 Darmstadt, Germany, ("MERCK")
is effective as of this 1st day of January, 1997 ("EFFECTIVE DATE"), with
respect to the following facts and circumstances:
WHEREAS PMC has a proprietary interest in and manufactures and sells a
product known as BCG vaccine, consisting of BCG in vaccine formulation with its
accompanying diluent in a 10-dose vial presentation (hereinafter the "BCG
MATERIAL"); and
WHEREAS ImClone and Merck severally have a proprietary interest in a
monoclonal anti-idiotypic antibody known as BEC2 (hereinafter "BEC2") and
jointly are performing clinical and pre-clinical research relating to the
treatment and/or prophylaxis of certain human cancers by administration of the
BEC2; and
WHEREAS ImClone and Merck intend to administer a combination therapy of
BEC2 and BCG Material to certain patients with small cell lung carcinoma
("SCLC") in a multi-national Phase III clinical trial being conducted in Europe,
Australia and the United States (hereinafter the "SILVA TRIAL") pursuant to the
protocol(s) and investigators' brochure(s) (hereinafter the "CLINICAL TRIAL
PROTOCOL") attached hereto as Exhibit "A"; and
WHEREAS, ImClone and Merck may administer a combination therapy of BEC2
and BCG Material to other patients in such additional clinical trials that are
necessary or advisable in the sole discretion of ImClone and Merck in connection
with or in furtherance of the SILVA Trial (the "ADDITIONAL CLINICAL TRIALS");
and
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WHEREAS ImClone and Merck are interested in securing a supply of the
BCG Material to be administered with BEC2 in the SILVA Trial and any such
Additional Clinical Trials, and PMC is willing to supply the BCG Material to
ImClone and Merck on the terms set forth herein.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Trials to be Conducted; Status of Recipient
ImClone and Merck are conducting the SILVA Trial and any Additional
Clinical Trials together, and will receive supplies of the BCG Material together
or independently for the sole purpose of conducting the SILVA Trial and the
Additional Clinical Trials (the SILVA Trial and the Additional Clinical Trials
are collectively referred to herein as the "CLINICAL TRIALS"). ImClone and Merck
shall be referred to for the purposes herein as the "RECIPIENT" and the term so
used shall mean ImClone and Merck together or either of them. ImClone and Merck
shall be jointly and severally liable in respect of the obligations set forth in
this Agreement, except as specifically noted hereinbelow.
2. Supply and Acceptance of Delivery
2(a). Quantities of the BCG Material
Subject to the terms of this Agreement and during the seven
(7) year period following the Effective Date (hereinafter the "Supply Period"),
PMC shall supply to the Recipient, and the Recipient shall accept delivery from
PMC of, the BCG Material for use in and during the Clinical Trials on the
following dates, in the following quantities and with the following expiry
dating:
(i) 2,000 vials with February/2000 expiry dating to
be shipped to ImClone for the SILVA Trial by no later than
July 30, 1998 according to PMC's shipping procedures and
labelled according to ImClone's reasonable labelling
requirements as set forth in Exhibit "B";
(ii) 2,000 vials with February/2000 expiry dating to
be shipped to Merck for the SILVA Trial within five (5)
business days of written notice from Merck to PMC, according
to PMC's shipping procedures and labelled according to Merck's
reasonable labelling requirements as set forth in Exhibit "C";
(iii) 500 vials with February/2000 expiry dating to
be shipped to Merck for the SILVA Trial as soon as possible,
but in no event later than four (4) months, following written
notice from Merck to PMC, according to PMC's shipping
procedures and labelled according to Merck's reasonable
labelling requirements as set forth in Exhibit "C";
<PAGE> 3
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(iv) such additional vials with such expiry dates and
shipment dates as shall be reasonably requested by ImClone and
Merck for conduct of the Clinical Trials, subject to the
provisions of Section 4(a) below and further subject to the
following:
(A) Recipient shall not request, for any two (2) year
period after December 31, 1999 during the Supply Period, any
additional vials in a quantity that is in excess of 4,000
vials in the aggregate;
(B) Recipient shall not request any additional vials
during the years 1998 and 1999;
(C) Recipient shall not request any vials after the
expiration of the Supply Period; and
(D) Recipient shall request additional vials for the
conduct of Additional Clinical Trials only in those countries
in which the SILVA Trial is being or has been conducted.
The parties acknowledge that the restrictions set forth in (A)
and (B) above have been derived from PMC's review of its planned production and
known commitments for the BCG Material during the Supply Period. In the event
Recipient requires vials of the BCG Material for the conduct of the Clinical
Trials that exceed such limitations, the parties will discuss whether PMC's then
planned production and known commitments would allow for the supply of such
additional BCG Material.
2(b). Cost of Supply
The parties agree that, subject to compliance by Recipient to
the terms of this Agreement, PMC shall supply the BCG Material during the Supply
Period to Recipient at no cost for the Recipient's use in the Clinical Trials.
2(c). Delivery; Risk of Loss
At Recipient's cost, PMC shall deliver or arrange for the
delivery of the BCG Material to Recipient, FOB at a point or points of
destination selected by Recipient, to a reputable carrier. Prior to any
delivery, Recipient shall forward import permits or other documents, as required
for shipment, to PMC to the attention of Ms. Joy Rennick, Logistics Coordinator,
(facsimile: 416-667-2275). Upon delivery of the BCG Material, Recipient shall
assume all risk of loss or damage for the BCG Material so delivered. All
temperature monitoring devices shall be returned by Recipient to PMC to the
attention of Ms. Rennick.
<PAGE> 4
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2(d). Technical Services Assistance
Upon the reasonable request by Recipient, and in consideration
of payment by ImClone of PMC's costs and services fees at a rate of One hundred
and seventy ($170.00) dollars per hour for clinical/medical personnel and
Ninety-eight ($98.00) dollars per hour for regulatory/logistics personnel, PMC
shall make, and has made, available its clinical/medical and
regulatory/logistics personnel (at their usual place of employment or by
telephone) to provide reasonable levels of technical assistance to the Recipient
in connection with PMC's Regulatory Manufacturing Documentation for the BCG
Material or in connection with the Recipient's Regulatory Filings required for
the Clinical Trials. ImClone shall pay PMC, by no later than July 15, 1998, the
amount of Twenty-eight thousand ($28,300.00) dollars, representing the sum of:
(i) $5,000.00 for the BCG vaccine/BEC2 compatibility test
studies conducted and related technician time;
(ii) $15,680.00 for 160 hours of regulatory/logistics services
assistance provided by Mrs. Doris Rudert-Dolby, Supervisor,
Regulatory Affairs;
(iii) $2,720.00 for 16 hours of clinical/medical services
assistance provided by Dr. Nanda Gosala and/or Dr. Robert
Wittes; and,
(iv) $4,900.00 for 50 hours of regulatory/logistics services
assistance provided by Ms. Joy Rennick, Logistics Coordinator.
ImClone agrees to pay for any further technical services
provided by PMC and tests conducted by or on behalf of PMC, in connection with
this Agreement or the Clinical Trials, at the hourly rates agreed to herein and
the costs to PMC of any such tests. The parties agree that the currency for
payment shall be Canadian dollars.
2(e). Negotiations for Future Commercial Supply
In the event that the Recipient wishes to seek registration
for the combination therapy of BEC2 and BCG Material, Recipient shall notify PMC
in writing. PMC and the Recipient agree that within sixty (60) days of said
written notice from the Recipient, the parties shall initiate good faith
negotiations toward the securing of a commercial supply agreement for the
purchase by Recipient of BCG Material with terms satisfactory to both parties,
including without limitation, purchase price. Failure to reach such agreement
during the Term within twelve months (12) of initiation of negotiations, or as
of such earlier time when it is clear that the parties cannot reach such
agreement, shall be grounds for termination of this Agreement by either PMC or
Recipient, upon thirty (30) days written notice to the other.
<PAGE> 5
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3. Preparation and Conduct of the SILVA Trial
3(a). Regulatory Filings; Manufacturing Regulatory Documentation
At Recipient's sole cost, Recipient shall file and be the
owner of record for all Regulatory Filings developed by the Recipient relating
to the Clinical Trials. "REGULATORY FILING" shall mean a filing with a
regulatory agency, for example, the US Food and Drug Administration ("FDA"),
that concerns the Clinical Trials. Recipient owns and shall retain all right,
title and interest in and to BEC2 (and any improvements, progeny, derivatives or
related materials thereof) and the Regulatory Filings. PMC shall permit the
Recipient to cross-reference PMC's Product License Application Supplement and
Drug Master File for BCG Material and/or otherwise excerpt portions of or
describe PMC's Product License Application Supplement and Drug Master File in
the Regulatory Filings, to enable the Recipient to complete Regulatory Filings
required for the Clinical Trials. Notwithstanding the foregoing, the parties
agree that despite Recipient's cross-referencing PMC's Product License
Application Supplement and Drug Master File for BCG Material and/or otherwise
excerpting portions of or describing PMC's Product License Application
Supplement and Drug Master File in the Regulatory Filings, PMC owns, and shall
retain all right, title and interest in and to the BCG Material (and any
improvements, progeny, derivatives or related materials thereof) and the
Manufacturing Regulatory Documentation. "MANUFACTURING REGULATORY DOCUMENTATION"
shall mean a Product License Application, Drug Master File or any other
regulatory filing or documentation owned, developed, submitted or prepared by or
on behalf of PMC and filed with appropriate regulatory authorities that contains
information concerning the BCG Material, including but not limited to
information concerning the BCG Material contained in the Regulatory Filings
which is excerpted from or describes PMC's Product License Application or Drug
Master File or other regulatory filing by or on behalf of PMC which concerns the
BCG Material, which information, Recipient agrees and undertakes, shall be
deemed and treated as Confidential Information. All non-public information
provided by one party to the other in preparing Regulatory Filings and the
Manufacturing Regulatory Documentation shall be deemed to be Confidential
Information of the disclosing party for the purposes of this Agreement.
3(b). Protocols for Clinical Trials; Results
At Recipient's sole cost, Recipient shall be responsible for
the design, implementation, and evaluation of any human clinical studies used to
obtain clinical data for use in preparing Regulatory Filings related to the
Clinical Trials. Recipient shall conduct the Clinical Trials in compliance with
current Good Clinical Practices ("cGCP") pursuant to FDA regulations. Recipient,
at its sole cost, shall provide PMC with a complete copy of the protocols and
investigators' brochures for the Clinical Trials, as well as copies of all
reports, abstracts and publications (subject to Section 5(c) herein) concerning
the data and results of the Clinical Trials. All right, title and interest in
and to the data and results of the Clinical Trials shall vest in Recipient;
provided that any information relating to the BCG Material shall remain the sole
property of PMC.
<PAGE> 6
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3(c). Adverse Reaction Reporting
Recipient shall promptly notify PMC of any serious adverse
reactions which result from the conduct of the Clinical Trials on the same basis
that such reporting is made to the appropriate regulatory authorities. Such
notices shall be sent by Recipient to PMC to the attention of Mrs. Doris
Rudert-Dolby, Supervisor, Regulatory Affairs (facsimile: 416-667-2912). For this
purpose, it is understood that an adverse reaction is subject to expedited
reporting to appropriate regulatory authorities if such adverse reaction
constitutes an "unexpected adverse reaction" and if the minimum criteria for
expedited reporting are met (as such criteria are set forth in the ICH Topic
E2A: Clinical Safety Data Management - Definitions and Standards for Expedited
Reporting, June 1, 1995). An "UNEXPECTED ADVERSE REACTION" is one the nature or
severity of which is not consistent with the information in the relevant source
document (i.e., the most recent version of the investigators' brochure). It is
further understood that "SCLC-related Deaths" are the end-points of the SILVA
Trial and are, therefore, not subject to expedited reporting.
3(d). PMC's Notice in Connection With Actions by Regulatory Authorities
PMC shall promptly notify Recipient of any threatened or
pending actions by regulatory authorities which may reasonably be believed to
affect the safety or efficacy claims of the BCG Material or to affect the supply
commitment contained in this Agreement. Any form of such notice that is not in
writing shall be promptly followed by notice in writing.
3(e). Recipient's Notice in Connection With Actions by Regulatory
Authorities
Recipient shall promptly notify PMC of any threatened or
pending actions by regulatory authorities which may reasonably be believed to
affect the safety or efficacy claims of BEC2 or of the combination therapy of
BEC2 and BCG Material or to affect the Clinical Trials. Any form of such notice
that is not in writing shall be promptly followed by notice in writing.
3(f). Recipient's Provision of Updated Investigators' Brochure
For the purpose of keeping PMC apprised of the status of the
Clinical Trials, Recipient shall provide to PMC a copy of all updated
investigators' brochures which Recipient is required to file with the FDA or
other regulatory agency anywhere.
4. Availability and Manufacture of BCG Material and of BEC2
4(a). BCG Material for Clinical Trials
During the Supply Period, PMC shall supply the BCG Material in
the quantities and according to the terms set forth in Sections 2(a)(i), (ii),
(iii) and (iv); provided, however, that with respect to the quantities and terms
set forth in Section 2(a)(iii) and (iv), PMC shall only be required to use
reasonable commercial efforts to make available to Recipient such BCG Material
as may be requested for the Additional Clinical Trials. With respect to the BCG
Material
<PAGE> 7
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requested pursuant to Sections 2(a)(iii) and 2(a)(iv), in the event of Force
Majeure or of supply shortage or production constraint, PMC shall allocate the
available quantities of BCG Material among PMC, its affiliates, customers and
distributors, including Recipient, in a commercially reasonable manner. Each lot
of BCG Material released to the Recipient for the Clinical Trials shall be
manufactured in compliance with current Good Manufacturing Practices ("cGMP")
pursuant to FDA regulations and according to manufacturing information in the
Manufacturing Regulatory Documentation. PMC shall, or shall cause a third party
to, perform quality control testing of the BCG Material released to the
Recipient to establish compliance with any release specifications required by
the Manufacturing Regulatory Documentation.
4(b). BEC2 for Clinical Trials
During the Term, Recipient shall use reasonable commercial
efforts to have sufficient quantities of BEC2 for use in the Clinical Trials. In
the event of Force Majeure or of supply shortage or production constraint,
Recipient shall notify PMC as soon as possible so as to permit PMC to allocate
the above-noted quantities of BCG Material among PMC, its affiliates, customers
and distributors at PMC's sole discretion. Each lot of BEC2 released by
Recipient for the Clinical Trials shall be manufactured in compliance with cGMP
pursuant to FDA regulations and according to manufacturing information in the
Regulatory Filings. Recipient shall, or shall cause a third party to, perform
quality control testing of BEC2 to establish compliance with any release
specifications required by the Regulatory Filings.
4(c). BCG Material Specifications
PMC shall provide BCG Material to the Recipient in the
available vialed formulations and vial sizes specified in the then current
Manufacturing Regulatory Documentation. PMC shall have no obligation under this
Agreement to develop any other vial sizes or formulations of BCG Material for
the Recipient. PMC shall use reasonable commercial efforts to maintain the
integrity and consistency of all specifications applicable to BCG. In the event
that PMC deems it necessary to revise any specifications, procedures or
Manufacturing Regulatory Documentation applicable to BCG Material, PMC shall
provide reasonable advance notice of any such revision to the Recipient for the
sole purpose of permitting Recipient to revise the Clinical Trial Protocol or
Regulatory Filings, as required. All specification changes that result in
procedures or limits that exceed or differ from those set forth in the
Manufacturing Regulatory Documentation shall be submitted to the FDA before
being implemented to the extent the FDA so requires such submission.
4(d). Documentation
Upon acceptance by Recipient of delivery of the BCG Material,
PMC shall provide the Recipient with a Certificate of Analysis applicable to
each lot of BCG Material delivered to the Recipient. Complete batch records and
sufficient retention samples for the BCG Material delivered to the Recipient
shall be maintained at PMC for inspection at any time by the Recipient at PMC's
place of business upon reasonable prior written notice to PMC. Any
<PAGE> 8
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confidential or proprietary information of PMC or of its affiliates contained in
such records or samples shall be deemed to be Confidential Information of PMC.
4(e). PMC Facility Audits
Upon reasonable prior written notice to PMC, the Recipient may
(but shall not be required to) have its representatives, acting reasonably,
audit PMC's production of the BCG Material to be used in the Clinical Trials for
compliance with cGMP; provided however that such representatives shall have
first signed a confidentiality agreement with PMC. Recipient and its
representatives shall comply with all applicable health, safety, environmental
and security laws and with PMC's policies and procedures while present at PMC's
facilities.
4(f). Recall or Withdrawals
In the event that a party is notified of a recall or
withdrawal of BEC2 or of the BCG Material in any country, or believes such
recall or withdrawal is necessary, it shall immediately notify the other
parties. The parties will consult on the necessity of, and appropriate actions
and mutually acceptable procedures to be taken in connection with, a recall or
withdrawal. If such recall or withdrawal is undertaken, the parties shall
cooperate in taking all reasonable and appropriate action necessary to complete
such recall or withdrawal in a timely fashion.
5. Confidentiality and Disclosure
5(a). General Obligations of Confidentiality
For a period of ten (10) years following any disclosure of
Confidential Information hereunder, the Recipient and PMC shall maintain in
confidence the respective Confidential Information received or obtained from the
other, and use such Confidential Information solely for the purposes
contemplated and permitted by this Agreement. Each party shall maintain
communications to the other parties in confidence. Each party acknowledges that
all Confidential Information exchanged or developed hereunder shall be owned by
the transferor and shall continue to be owned by the transferor following
transfer. "CONFIDENTIAL INFORMATION" shall mean any and all confidential or
proprietary information owned by PMC (or its affiliates) or by the Recipient or
either of ImClone or Merck (or their affiliates) that is provided to the other
parties. Confidential Information shall not be deemed to include information
that:
(i) is or becomes known publicly through no fault of the
receiving party;
(ii) is learned by the receiving party from a third party
entitled to disclose it;
(iii) is developed by the receiving party independently of
information obtained from the disclosing party as shown by the receiving party's
written records;
<PAGE> 9
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(iv) is already known to the receiving party before receipt
from the disclosing party, as shown by prior written records; or
(v) is released with the prior written consent of the
disclosing party.
5(b). Permitted Disclosures
Notwithstanding Section 5(a) hereof, PMC and the Recipient
shall, upon prior written notice to the other parties and only to the extent
necessary, have the right to disclose the other parties' Confidential
Information to regulatory or government agencies for the purposes of preparing
or supplementing any Regulatory Filing or Manufacturing Regulatory
Documentation, as applicable, or of otherwise assisting in securing
institutional or government approval to clinical test the BCG Material, or as
required by law within each country where the Clinical Trials are being
conducted.
5(c). Publications
The parties acknowledge that the data and results arising from
the Clinical Trials should be published and presented except to the extent where
such publication or presentation would be reasonably expected to materially
diminish the commercial value of the BCG Material, or to affect the
patentability of the BCG Material or any improvements thereof. The parties
further acknowledge that the Clinical Trials are multi-centre studies. Recipient
undertakes and shall ensure that the data and results arising from the Clinical
Trials shall not be published or presented by Recipient, by the coordinating
investigators or by other participating individuals or entities, until such time
as the Clinical Trials are completed and the data and results are analyzed
thereafter. Upon completion of the SILVA Trial, Recipient shall ensure that a
cooperative clinical administrative body, comprising the coordinating
investigators, shall prepare a report which will include a statistical analysis
and an appraisal of the final data and results from a medical viewpoint. Interim
publication or presentation of the Clinical Trials would include only
demographic data, for publicity purposes. Any publication, abstract or
presentation, whether verbal or written, of such data, results or report, or
excerpts or interpretations thereof, shall be submitted by Recipient to PMC for
review, pursuant to the following conditions:
(i) Recipient shall ensure that any article, paper,
manuscript, report, data, results, abstract, poster or notes shall not be
published or presented until the completion of the SILVA Trial and after
analysis of the final results of the SILVA Trial;
(ii) Recipient shall ensure that any such publication or
presentation acknowledges the contribution of the parties and their employees,
representatives or consultants as co-authors or as otherwise appropriate; and
(iii) Recipient shall ensure that the publishing party deliver
to PMC, at least sixty (60) days in advance of any such publication or
presentation, any article, paper, manuscript, report, data, results, abstract,
poster or notes proposed to be published or presented, in order to permit PMC,
acting reasonably:
<PAGE> 10
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(A) to apply for patents or make such other filings
or registrations as deemed advisable,
(B) to object to any part of such proposed
publication or presentation on the basis that it would be
reasonably expected to materially diminish the value of the
BCG Material and information related thereto,
(C) to require that any Confidential Information be
deleted from any such proposed publication or presentation, or
(D) to revise such proposed publication or
presentation accordingly.
Recipient undertakes and shall ensure that similar publication and presentation
procedures will be established for any Additional Clinical Trials.
5(d). Use of Names or Trademarks
The parties shall not originate any press release
concerning the entering into of this Agreement or the subject matter hereof
without the prior written approval of the other parties, which approval shall
not be unreasonably withheld. The parties shall not have the right to use the
name or any trade name or trademark of the other parties without prior written
approval. Reference to the existence of this Agreement may be made in the
regular course of business of the parties in informational disclosures
describing the business of the parties, upon prior written notice to the other
parties.
6. Warranties and Representations
6(a). Warranties and Representations of PMC.
Subject to Section 7(a), PMC represents and warrants to the
Recipient that:
(i) PMC is a corporation duly organized, validly existing and
in good standing and has all necessary corporate power to enter into and perform
its obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
by PMC have been duly authorized and approved by all necessary corporate action,
and the Agreement is binding upon and enforceable against PMC in accordance with
its terms (subject to bankruptcy and similar laws affecting the rights of
creditors generally);
(iii) each lot of the BCG Material delivered to the Recipient
for the Clinical Trials shall be manufactured, tested and released in compliance
with cGMP and the applicable Manufacturing Regulatory Documentation; and
<PAGE> 11
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(iv) any documentation provided to the Recipient by PMC
concerning the BCG Material or Manufacturing Regulatory Documentation shall be
accurate to the best of PMC's knowledge and ability.
6(b). Warranties and Representations of the Recipient
Recipient and each of ImClone and Merck represents and
warrants to PMC that:
(i) Recipient consist of corporations duly organized, validly
existing and in good standing and have all necessary corporate power to enter
into and perform their obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement
by the Recipient have been duly authorized and approved by all necessary
corporate action, and the Agreement is binding upon and enforceable against the
Recipient in accordance with its terms (subject to bankruptcy and similar laws
affecting the rights of creditors generally);
(iii) Recipient shall use BCG Material in compliance with all
applicable laws and regulations and shall conduct the Clinical Trials in
compliance with cGMP and cGCP;
(iv) Recipient is not aware of any special or unusual hazards
that would arise as a result of the combination of BEC2 and BCG Material for the
Clinical Trials to be conducted by Recipient;
(v) each lot of BEC2 for the Clinical Trials shall be
manufactured, tested and released in compliance with cGMP and the applicable
Regulatory Filings; provided that, in connection with such release only, each of
ImClone and Merck provides such warranty and representation with respect to the
territories in which they respectively are responsible for the conduct of the
Clinical Trials;
(vi) any documentation concerning the Clinical Trials, BEC2 or
Regulatory Filings shall be accurate to the best of Recipient's knowledge and
ability; and
(vii) Recipient does not guarantee any particular results from
the conduct of the Clinical Trials.
7. Limitation of Liability; Indemnification
7(a). Limitation of Liability
PMC has limited knowledge or awareness of, and has no control
over, the manner in which the Recipient intends to use the BCG Material. PMC
shall not be liable for any losses, damages, costs or expenses of any nature
incurred or suffered by the Recipient or by a third party, arising out of any
dispute or other claims or proceedings (including, without limitation, product
liability claims and claims by a third party alleging infringement of its
intellectual property rights
<PAGE> 12
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by the use or sale of BCG Material), made or brought as a result of the Clinical
Trials or against the Recipient, nor shall PMC be responsible in any way for
dealing with any such disputes, claims or proceedings, except to the extent that
any such dispute, claim or proceeding arises from (a) a breach by PMC of any
warranty set forth in Section 6(a) hereof, or (b) any failure by PMC to
manufacture, test, document or release the BCG Material in compliance with cGMP
and the applicable Manufacturing Regulatory Documentation. PMC shall not be
responsible for any interruption in supply that is caused by Force Majeure.
EXCEPT AS SET FORTH IN SECTION 6(a) HEREOF, PMC MAKES NO WARRANTIES, EXPRESS OR
IMPLIED, WRITTEN OR ORAL, INCLUDING WITHOUT LIMITATION ANY WARRANTIES OF
MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE OR OF NON-INFRINGEMENT OF
THIRD PARTY PATENTS. PMC SHALL NOT BE LIABLE FOR ANY LOSS, CLAIM, DAMAGE,
EXPENSE OR LIABILITY, OF ANY KIND OR NATURE, WHICH MAY ARISE FROM OR IN
CONNECTION WITH THIS AGREEMENT OR WITH THE CLINICAL TRIALS OR FROM THE USE,
HANDLING OR STORAGE OF BCG MATERIAL, BEC2 OR THEIR ANCILLARY MATERIALS BY
RECIPIENT OR BY ANY AFFILIATES, EMPLOYEES, AGENTS, CONTRACTORS, INVESTIGATORS OR
REPRESENTATIVES OF RECIPIENT. NO PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO
RECOVER FROM THE OTHER PARTIES ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES.
7(b). Recipient's Right to Indemnification
PMC hereby agrees to indemnify, defend and hold harmless
Recipient and its affiliates, officers, directors, employees and representatives
(collectively, the "RECIPIENT'S INDEMNITEES") from and against any liabilities,
claims, damages, costs, expense (including reasonable attorneys' fees), and
actions (collectively, "CLAIMS") arising out of or resulting from (i) the
failure by PMC to manufacture, test, document or release the BCG Material in
compliance with cGMP and the applicable Manufacturing Regulatory Documentation
or (ii) the breach by PMC or PMC's Indemnitees of any of its obligations or
warranties hereunder, except to the extent that any such Claims arise out of,
are based upon or result from the gross negligence or willful misconduct of
Recipient or Recipient's Indemnitees or a breach by Recipient or Recipient's
Indemnitees of any of Recipient's obligations or warranties under this Agreement
or under the Clinical Trial Protocol or Regulatory Filings. Recipient shall
promptly notify PMC of any Claims, upon becoming aware thereof, and permit PMC
at PMC's cost to defend against such Claims and shall cooperate with PMC in the
defense thereof. Recipient shall not enter into, or permit, any settlement of
any such Claims without the express written consent of PMC. Recipient may, at
its option and expense, have its own counsel participate in any proceeding that
is under the direction of PMC and will cooperate with PMC or its insurer in the
disposition of any such matter.
7(c). PMC's Right to Indemnification
Recipient hereby agrees to indemnify, defend and hold harmless
PMC and its affiliates, officers, directors, employees and representatives
(collectively, "PMC'S INDEMNITEES") from and against any liabilities, claims,
damages, costs, expense (including
<PAGE> 13
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reasonable attorneys' fees), and actions (collectively, "CLAIMS") arising out of
or resulting from (i) the Clinical Trials, (ii) the failure by Recipient to
manufacture, test, document or release BEC2 in compliance with cGMP and the
applicable Regulatory Filings, (iii) the breach by Recipient or Recipient's
Indemnitees of any of Recipient's obligations or warranties under this Agreement
or under the Clinical Trial Protocol or Regulatory Filings, (iv) the possession,
processing, shipment, storage, handling, administration or disposal of any BCG
Material supplied to Recipient hereunder, or (v) the possession, manufacture,
sale, use, distribution, processing, shipment, storage, handling, administration
or disposal of BEC2 by Recipient whether or not any BCG Material is combined
thereto, except to the extent that any such Claims arise out of, are based upon
or result from the gross negligence or willful misconduct of PMC or PMC's
Indemnitees or a breach by PMC or PMC's Indemnitees of any of PMC's obligations
or warranties under this Agreement. PMC shall promptly notify Recipient of any
Claims, upon becoming aware thereof, and permit Recipient at Recipient's cost
to defend against such Claims and shall cooperate with Recipient in the defense
thereof. PMC shall not enter into, or permit, any settlement of any such Claims
without the express written consent of Recipient. PMC may, at its option and
expense, have its own counsel participate in any proceeding that is under the
direction of Recipient and will cooperate with Recipient or its insurer in the
disposition of any such matter.
7(d). Recipient's Insurance
Each of ImClone and Merck shall obtain and maintain separate
product liability insurance and clinical trial liability insurance (naming PMC
either as an additional insured or policy beneficiary), with an acceptable
insurer, in the minimum amount of US$10,000,000 per occurrence. Such insurance
may not be cancelled or terminated except upon thirty (30) days' prior written
notice to PMC. Such insurance shall be obtained and maintained at the sole cost
and expense of ImClone and Merck. From time to time, at the request of PMC,
ImClone and Merck will cause certificates of such insurance to be provided to
PMC evidencing compliance with their respective obligations set forth herein.
8. Term and Termination
8(a). Expiration
This Agreement shall commence on the Effective Date and shall
terminate six (6) months after the expiration of the Supply Period, unless
earlier terminated as provided in Sections 8(b), (c) and (d) hereof (the
"TERM").
8(b). Termination by Any Party
Any party shall have the right to terminate this Agreement,
immediately upon written notice of termination to the other parties in the event
that:
<PAGE> 14
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(i) a party fails to perform or observe or otherwise breaches
any of its material obligations under this Agreement and such failure or breach
continues unremedied for a period of sixty (60) days after receipt by the
breaching party of a written notice thereof from the non-breaching party; and
(ii) a proceeding or case shall be commenced without the
application or consent of the other party and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering any
of the following shall be entered and continue unstayed and in effect, for a
period of forty-five (45) days from and after the date service of process is
effected upon the other party, seeking (A) the other party's liquidation,
reorganization, dissolution or winding-up, or the composition or readjustment of
its debts, (B) the appointment of a trustee, receiver, custodian, liquidation or
the like of the other party or of all or any substantial portion of their
assets, or (C) similar relief in respect of the other party under any law
relating to bankruptcy, insolvency, reorganization, winding-up or the
composition or readjustment of debts.
8(c). Termination due to Cessation of Clinical Trials
In the event Recipient in its sole discretion ceases the
Clinical Trials, and so advises PMC in writing in advance, either Recipient or
PMC may terminate this Agreement upon thirty (30) days prior written notice to
the other parties.
8(d). Termination in Connection With Further Negotiation
This Agreement may be terminated by the Recipient or PMC in
connection with the failure, during the Term, to enter into a separate agreement
for future commercial supply of BCG Material, as further set forth in Section
2(e) hereof.
8(e). Effects of Termination
In the event of any termination of this Agreement, all amounts
previously invoiced and unpaid or owed to PMC shall be due and payable by
Recipient on the date of termination. Following termination of the Agreement,
the Recipient shall return to PMC or destroy, at PMC's option, any quantities of
BCG Material. The parties agree that: (i) the provisions of Section 2(e),
Article 3 and Article 6 shall survive the termination or expiration of this
Agreement; (ii) the provisions of Article 5 hereof shall survive the termination
or expiration of this Agreement for the term specified in that Article; and
(iii) the provisions of Article 7 hereof shall survive termination or expiration
of this Agreement only with respect to Claims that arose from acts or
circumstances that occurred prior to termination.
9. Miscellaneous
9(a). No Implied Waivers; Rights Cumulative
No failure on the part of PMC or the Recipient to exercise,
and no delay in exercising, any right, power, remedy or privilege under this
Agreement, or provided by statute or
<PAGE> 15
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at law or in equity or otherwise, including, without limitation, the right or
power to terminate this Agreement, shall impair, prejudice or constitute a
waiver of any such right, power, remedy or privilege or be construed as a waiver
of any breach of this Agreement or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power, remedy or privilege.
9(b). Notices
All notices, requests and other communications to PMC or the
Recipient hereunder shall be in writing (including telecopy or similar
electronic transmissions) and shall be personally delivered or sent by telecopy
(fax) or other electronic facsimile transmission or by registered mail, or
certified mail, return receipt requested, postage prepaid, or by other form of
courier requiring receipt in each case to the respective address specified below
(or to such address as may be specified in writing to the other party hereto)
and shall be effective upon receipt thereof:
CONNAUGHT LABORATORIES LIMITED
1755 Steeles Avenue West
Toronto, Ontario, CANADA
M2R 3T4
Attn: Vice President and General Counsel
Facsimile: (416) 667-2860
<TABLE>
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with a copy to: Senior Vice President, and General Manager, Oncology Business Unit
</TABLE>
Facsimile: (416) 667-2990
MERCK KGaA
Frankfurter Strasse 250
64271 Darmstadt, GERMANY
Attn: Dr. Dieter Orth, License Department
Facsimile: 61 51 72 3378
<TABLE>
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with a copies to: Dr. Jurgen Uhl, Project Manager, Facsimile: 61 51 72 7580, and
Lothar Finke, TATONZ, Facsimile: 61 51 72 6905
</TABLE>
IMCLONE SYSTEMS INCORPORATED
180 Varick Street
New York NY 10014
U.S.A.
Attn: General Counsel
Facsimile: (212) 645-2054
<PAGE> 16
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9(c). Successors and Assigns
The terms and provisions of this Agreement shall inure to the
benefit of, and be binding upon, PMC, the Recipient, and their respective
successors and permitted assigns as provided in this Section. PMC and Recipient
shall have the right to assign or otherwise transfer any of its rights and
interests, or delegate any of its obligations, to an Affiliate of such party
provided that such Affiliate agrees in writing to carry out in full any
obligations that are assigned to it. PMC and Recipient shall have the right to
assign all of its rights and interests and delegate all of its obligations under
this Agreement to any entity that is the successor in interest to the assigning
party in any merger, consolidation or sale involving substantially all of the
business and assets of the assigning party. Any other assignment or delegation
shall only be valid and effective if the other parties have provided their
respective prior express written consent. Any attempt to assign or delegate any
portion of this Agreement in violation of this Section shall be null and void.
Subject to the foregoing, any reference to PMC or the Recipient hereunder shall
be deemed to include the successors thereto and permitted assigns thereof.
9(d). Force Majeure
No party shall be liable to the others, or be in default under
the terms of this Agreement, for its failure to fulfill its obligations
hereunder to the extent such failure arises for any reason or cause beyond its
control including, without limitation, strikes, lockouts, labor disputes, acts
of God, acts of nature, acts of governments or their agencies, fire, flood,
storm, power shortages or power failure, war, sabotage, inability to supply and
to obtain labor, raw materials, supplies, fuel or utilities, or inability to
obtain transportation, or any other circumstance or event beyond the reasonable
control of the party (each, "FORCE MAJEURE"), provided that the party relying on
the provisions of this Section 9(d) shall give notice to the other parties of
its inability to observe or perform the provisions of this Agreement. A party
shall notify the other parties if, at any time, it encounters a production or
manufacturing problem which in its reasonable opinion could reasonably be
expected to adversely affect its ability to supply BEC2 or BCG Material, as
applicable, for the Clinical Trials. Should such production or manufacturing be
so reduced, the party relying on these provisions shall have the right to
allocate such supply for its own use and among its affiliates, customers and
distributors, in such manner and on such basis as it may reasonably determine,
without compensation or penalty to the other parties.
9(e). Governing Law
This Agreement shall be governed by the laws of the Province of
Ontario. The parties specifically agree that the International Sale of Goods Act
does not apply hereto.
9(f). Entire Agreement
This Agreement, together with its Exhibits A, B and C,
constitutes, on and as of the Effective Date hereof, the entire agreement of and
among PMC, ImClone and Merck with respect to the subject matter hereof, and all
prior or contemporaneous understandings or
<PAGE> 17
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agreements, whether written or oral, between or among PMC, ImClone or Merck with
respect to such subject matter are hereby superseded, as of the Effective Date.
9(g) Relationship
Each of the parties is an independent contractor. No party is,
and nothing in this Agreement shall constitute any party as the employer,
employee, principal, agent or partner of, or joint venturer with, any other
party. No party has authority to enter into any agreement on behalf of the other
parties or to bind the other parties in any other manner, and no party shall act
or omit to act so as to suggest that it has such authority. No party shall incur
any obligations or liabilities, express or implied, by reason of, or with
respect to, the actions or omissions of the other parties or of persons for whom
they are responsible.
9(h) Counterparts
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the Effective Date.
IMCLONE SYSTEMS INCORPORATED
By: ___________________________
Name: _________________________
Title: ________________________
MERCK KGaA
By: ___________________________ By: ____________________________
Name: _________________________ Name: __________________________
Title: ________________________ Title: _________________________
CONNAUGHT LABORATORIES LIMITED
By: ___________________________ By: ___________________________
Name: _________________________ Name: _________________________
Title: ________________________ Title:_________________________
<PAGE> 18
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Exhibit "A" (Protocols, Investigators' Brochures)
to Agreement among PMC, ImClone and Merck effective as of January 1, 1997
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CLINICAL COORDINATOR: STATISTICIAN:
DR. C. DEBRUYNE D. CURRAN
83, AV. E. MOUNIER. BTE 11 83, AV. E. MOUNIER. BTE 11
B-1200 BRUSSELS B-1200 BRUSSELS
BELGIUM BELGIUM
PHONE: + 32 2 774 16 23 PHONE: + 32 2 774 16 70
FAX: + 32 2 772 67 01 FAX: + 32 2 772 67 01
E-MAIL: [email protected] E-MAIL: [email protected]
CENTRAL DATA MANAGEMENT:
EORTC DATA CENTER
83, AV. E. MOUNIER, BTE 11
B-1200 BRUSSELS
BELGIUM
PHONE: + 32 2 774 16 11
FAX: + 32 2 772 35 45
REGISTRATION / RANDOMIZATION
EUROPE NORTH-AMERICA AUSTRALIA/NEW ZEALAND
EORTC DATA CENTER QUINTILES PACIFIC, INC. QUINTILES PTY, INC
PHONE: + 32 2 774 16 00 PHONE: + 800 745 8624 PHONE: + 61 299 289 165
FAX: + 32 2 772 35 45 FAX.: + 650 938 3701 FAX.: + 61 299 567 455
EUROCODE (MODEM): + 32 2 772 04 26
EUROCODE (X25): + 206 221 51 24
INTERNET: TELNET ECVAX.EORTC.BE
HTTP://WWW.EORTC.BE/EUROCODE
SAFETY DESKS
EUROPE NORTH-AMERICA AUSTRALIA/NEW ZEALAND
EORTC IMCLONE QUINTILES PTY, INC
INVESTIGATIONAL AGENT UNIT CLINICAL AFFAIRS CLINICAL HELPDESK
SAFETY DESK SAFETY DESK PHONE: + 61 299 567 422
PHONE: +32 2 774 1640 PHONE: + 908 218 9588 FAX.: + 61 299 567 455
FAX.: +32 2 772 8027 FAX.: + 908 231 9885 E- MAIL:
E- MAIL: E-MAIL: [email protected]
[email protected] [email protected]
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MONITORING / LOCAL DATA CENTER
EUROPE NORTH - AMERICA AUSTRALIA/NEW ZEALAND
EORTC DATA CENTER QUINTILES PACIFIC, INC. QUINTILES AUSTRALIA PTY
83, AV. E. MOUNIER, BTE 11 331 A EAST EVELYN AVE NORTHPOINT, 100 MILLER
B-1200 BRUSSELS MOUNTAIN VIEW STREET
BELGIUM CA 94041 NORTH STREET NSW 2060
FAX: + 32 2 772 35 45 USA AUSTRALIA
FAX: +650 938 3701 FAX: +61 299 567 455
DRUG SUPPLY
EUROPE NORTH-AMERICA AUSTRALIA/NEW ZEALAND
DR. WIEGEL CLINICAL AFFAIRS DEPARTMENT MARISSA PEACOCK
MERCK KGAA IMCLONE SYSTEMS INC. QUINTILES AUSTRALIA PTY
PHONE: +49 6151 72 3845 PHONE: +908 218 9588 PHONE: +61 299 289 165
FAX: +49 6151 72 7965 FAX: +908 231 9885 FAX: +61 299 567 455
SPONSORS
EUROPE, AUSTRALIA, AND NEW ZEALAND IN NORTH AMERICA
MERCK KGAA. IMCLONE SYSTEMS INC.
FRANKFURTER STR. 250 170 VARIK STREET
D-64271 DARMSTADT NEW YORK, NY,
GERMANY USA
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TABLE OF CONTENTS
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1. TRIAL SUMMARY .................................................................. 8
2. RATIONALE ...................................................................... 10
2.1 ANTI-IDIOTYPIC ANTIBODIES .......................................... 10
2.2 BEC2 ANTI-IDIOTYPIC MONOCLONAL ANTIBODY ............................ 11
2.3 CLINICAL EXPERIENCE WITH BEC2 ...................................... 12
3. OBJECTIVES ..................................................................... 15
4. TRIAL DESIGN ................................................................... 15
4.1 GENERAL DESIGN ..................................................... 15
4.2 TREATMENT REGIMENS ................................................. 15
4.3 STRATIFICATION AT RANDOMIZATION .................................... 16
5. PATIENT POPULATION ............................................................. 17
5.1 AT REGISTRATION .................................................... 17
5.1.1 Inclusion criteria ......................................... 17
5.1.2 exclusion criteria ......................................... 17
5.2 AT RANDOMIZATION ................................................... 18
5.2.1 Inclusion criteria ........................................ 18
5.2.2 exclusion criteria ......................................... 18
6. DRUG INFORMATION ............................................................... 19
6.1 GENERAL INFORMATION ................................................ 19
6.2 BEC2/BCG VACCINE PREPARATION ....................................... 19
6.3 STORAGE ............................................................ 21
6.4 POSSIBLE ADVERSE EVENTS ............................................ 21
6.5 PACKAGING AND LABELING OF STUDY MEDICATION ......................... 22
6.6 CONCOMITANT TREATMENTS ............................................. 22
7. CLINICAL EVALUATION, LABORATORY TESTS AND FOLLOW-UP ............................ 23
7.1 AT REGISTRATION .................................................... 23
7.2 RESTAGING (WITHIN 6 WEEKS AFTER END OF INDUCTION THERAPY)........... 23
7.3 AT RANDOMIZATION (WITHIN 6 WEEKS AFTER THE END OF INDUCTION THERAPY) 24
7.4 FIRST 12 WEEKS AFTER RANDOMIZATION ................................. 24
7.4.1 vaccination cohort ......................................... 24
7.4.2 observation cohort ......................................... 25
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7.5 DURING FOLLOW-UP ................................................... 26
7.5.1 First FU (6 months after randomization) .................... 26
7.5.2 Further FU (starting 9 months after randomization
till progression of disease) ..................................... 26
7.6 AFTER PROGRESSION OF THE DISEASE ................................... 26
7.7 SUMMARY TABLE ...................................................... 27
8. MONITORING AND REPORTING OF ADVERSE EVENTS AND ADVERSE DRUG
REACTIONS ......................................................................... 28
8.1 DEFINITIONS ........................................................ 28
8.2 REPORTING ADVERSE EVENTS ........................................... 28
8.2.1 Documentation of Adverse Events ............................ 28
8.2.2 General evaluation of side-effects ......................... 29
8.2.3 Toxic deaths ............................................... 29
8.2.4 Evaluation of toxicity ..................................... 29
8.3 REPORTING PROCEDURES ............................................... 29
8.3.1 reporting serious adverse events (SAE) or serious
adverse drug reactions (SADR) .................................... 29
8.3.2 reporting non-serious adverse events (AE) and non-
serious adverse drug reactions (ADR) ............................. 30
9. REGISTRATION AND RANDOMIZATION PROCEDURES ...................................... 31
9.1 PATIENT REGISTRATION ............................................... 31
9.2 PATIENT RANDOMIZATION .............................................. 32
10. FORMS AND PROCEDURES FOR COLLECTING DATA ...................................... 33
10.1 CASE REPORT FORMS AND SCHEDULE FOR COMPLETION ..................... 33
10.2 PRACTICAL CONSIDERATIONS AND DATA FLOW ............................ 35
11. STATISTICAL CONSIDERATIONS .................................................... 37
11.1 PRIMARY AND SECONDARY ENDPOINTS ................................... 37
11.2 SAMPLE SIZE DETERMINATION ......................................... 37
11.3 DESCRIPTION OF STATISTICAL ANALYSIS ............................... 38
11.3.1 Primary analysis .......................................... 38
11.3.2 Supportive analyses ....................................... 38
11.3.3 Interim Analysis .......................................... 38
11.3.4 Safety .................................................... 39
11.3.5 Quality of Life Assessment ................................ 39
11.3.6 Health Economics data analysis ............................ 40
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11.3.7 Independent Data Monitoring Committee ..................... 40
12. QUALITY OF LIFE EVALUATION .................................................... 41
12.1 OBJECTIVES ........................................................ 41
12.2 QUESTIONNAIRE ..................................................... 41
12.3 DESIGN ............................................................ 42
12.4 QOL DATA COLLECTION ............................................... 42
13. HEALTH ECONOMICS .............................................................. 43
13.1 OBJECTIVES ........................................................ 43
13.2 HEALTH ECONOMIC VARIABLES ......................................... 44
14. STEERING COMMITTEE ............................................................ 45
15. BIOLOGICAL EFFICACY GROUP ..................................................... 45
16. QUALITY ASSURANCE ............................................................. 45
16.1 CONTROL OF DATA CONSISTENCY ....................................... 45
16.2 EXTERNAL REVIEW OF RESPONSES ...................................... 46
16.3 ON-SITE QUALITY CONTROL ........................................... 46
17. ETHICAL CONSIDERATIONS ........................................................ 46
17.1 PATIENT PROTECTION ................................................ 47
17.2 SUBJECT IDENTIFICATION ............................................ 47
17.3 PATIENT INFORMATION ............................................... 47
17.4 PATIENT CONSENT ................................................... 48
18. INVESTIGATOR COMMITMENT STATEMENT ............................................. 49
18.1 CONFIDENTIALITY STATEMENT ......................................... 49
19. ADMINISTRATIVE RESPONSIBILITIES ............................................... 49
19.1 PROTOCOL AMENDMENTS ............................................... 50
19.2 DEVIATIONS FROM THE PROTOCOL ...................................... 50
20. TRIAL SPONSORSHIP / FINANCING ................................................. 50
21. PATIENT INSURANCE COVERAGE .................................................... 50
22. PUBLICATION POLICY ............................................................ 51
23. ADMINISTRATIVE SIGNATURES ..................................................... 52
24. LIST OF PARTICIPATING COUNTRIES ............................................... 53
25. REFERENCES .................................................................... 54
26. APPENDICES .................................................................... 59
26.1 APPENDIX I: PERFORMANCE STATUS SCALES ............................. 60
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26.2 APPENDIX II: DRUG MEDICATION GUIDELINES ........................... 61
26.2.1 Drug supply ............................................... 61
26.2.2 Disposal of study drugs ................................... 61
26.2.3 BEC2/BCG Vaccine Patient Dose Kit ......................... 61
26.3 APPENDIX III: EORTC QUALITY OF LIFE EVALUATION .................... 62
26.3.1 EORTC Quality of Life evaluation:
guidelines for administration of questionnaires ................... 62
26.3.2 EORTC QLQ - C30 (version 2.0.) ............................ 64
26.3.3 EORTC QLQ - LC13 .......................................... 66
26.3.4 EORTC Health Thermometer .................................. 67
26.4 APPENDIX IV: PATIENT INFORMATION / INFORMED CONSENT TEMPLATE ...... 68
26.5 APPENDIX V: COMMON TOXICITY CRITERIA (NCIC - CTC) SCALE ........... 73
26.6 APPENDIX VI: DECLARATION OF HELSINKI .............................. 85
26.7 APPENDIX VII: WORKING PROCEDURE ON DATA ENTRY ..................... 89
26.8 APPENDIX VIII: ANCILLARY STUDIES ON BIOLOGICAL EFFICACY ........... 90
26.8.1 General Considerations .................................... 90
26.8.2 Humoral Response .......................................... 91
26.8.3 Other ancillary studies which will be performed
in selected centers .............................................. 91
26.9 APPENDIX IX: PPD TESTING .......................................... 93
26.9.1 Test Kits ................................................. 93
26.9.2 General Remarks ........................................... 93
26.9.3 PPD Testing ............................................... 93
26.10 APPENDIX X: INDUCTION THERAPY FLOW CHART ......................... 97
26.11 APPENDIX XI: OVERALL STUDY FLOW CHART ............................ 98
26.12 APPENDIX XII: VACCINATION INSTRUCTIONS ........................... 99
26.13 APPENDIX XIII: LIST OF ABBREVIATIONS ............................. 100
26.14 APPENDIX XIV: STUDY ACKNOWLEDGMENT ............................... 102
</TABLE>
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1. TRIAL SUMMARY
TITLE: The SILVA study: Survival in an International phase III prospective
randomized LD small cell Lung cancer Vaccination study with Adjuvant BEC2 and
BCG,
OBJECTIVES: The trial is designed to test the impact on survival of an adjuvant
BEC2/BCG vaccination of LD SCLC patients after induction therapy.
TYPE OF SUBJECTS: Newly diagnosed patients with LD SCLC, who have a clinical
response (CR or PR) at re-staging after first line treatment (chemo -
radiotherapy + / - prophylactic cranial irradiation).
NUMBER OF SUBJECTS: Approx. 820 patients with LD SCLC will be registered at time
of diagnosis in order to be able to randomize 570 responding patients.
TRIAL DESIGN: Stratified, randomized, prospective, international intergroup
phase III trial.
TREATMENT REGIMENS:
Induction therapy
Each participating center will decide on one of the following three options of
first line chemotherapy, of which 4 or 5 cycles will be given:
Cisplatin (60 - 100 mg/m(carat)2, day 1) + VP 16 (80 - 120 mg/m(carat)2
day 1,2 and 3);
OR
Carboplatin (AUC 4 - 6 )* + VP 16 (80 - 120 mg/m(carat)2 day 1,2 and 3);
OR
Cyclophosphamide (>= 1000 mg/m(carat)2, day 1) + Doxorubicin
(>= 40 mg/m(carat)2 day 1) + Etoposide (80 - 120 mg/m(carat)2 day 1, 2 and
3);
Chest radiotherapy is mandatory (according to local policy, concomitant or
sequential)
Prophylactic cranial irradiation is highly recommended for patients with
complete response.
* Dose (mg) = target AUC (4 - 6) x (Glomerular filtration rate + 25).
GFR is based on the Cockroft-Gault formula for creatinine clearance:
(140-age) X (weight in kg)
GFR = ------------------------------ x 0.85 (female) or x 1.00 (male)
72 x serum creatinine mg/100ml
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Trial treatment:
After 5, to a maximum of 7 months from diagnosis and within 6 weeks after
completion of ALL induction therapy, responding patients will be RANDOMIZED:
STANDARD ARM (OBSERVATION COHORT):
Best supportive care, but no cancer specific therapy (cytotoxic, radiation
or other tumor reductive therapy) can be given until documented
progression of disease
EXPERIMENTAL ARM (VACCINATION COHORT):
BEC2 (2.5 mg) + BCG intradermal injections (5 in total) at first day of
week 0, 2, 4, 6 and 10.
Stratification:
Institution, Karnofsky (60-70% vs. >= 80%), induction therapy ((VP16 in
combination with Cis or Carbo) vs. CDE), response (CR vs. PR) and radiation
(concomitant vs. sequential) at time point of randomization.
STATISTICAL CONSIDERATIONS:
Primary endpoint(s): Overall survival
Secondary endpoint(s): Progression free survival, Safety, QoL and Health
Economics.
Additional ancillary studies on biological efficacy will be performed.
Proposed start date: December 1997.
Analyses: Overall survival analysis will be performed when a total of 376 deaths
are reported. One interim analysis will be conducted when a total of 80 deaths
are reported.
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2. RATIONALE
The leading cause of cancer deaths in men and women in the USA is lung
cancer. Approximately 25% of all lung cancer patients have small cell lung
cancer (SCLC) (Ihde DC et al., 1997) and despite the majority of these
patients being successfully treated with primary chemotherapy, often in
combination with thoracic irradiation, relapses are common. Despite
advances in primary chemotherapy, the median survival for patients with
small cell lung cancer (SCLC) has not changed significantly in the last 20
years.
The overall prognosis following completion of primary therapy is dependent
on the stage of the disease. Patients with limited stage of disease
(confined to the thoracic cavity), which accounts for approximately 40% of
SCLC cases, achieved responses in 85-95% and a CR rate from 40-60%, with a
median survival of 14 months and a two year relapse free survival of 20%
with chemotherapy only (Giaccone 1993).
The addition of chest radiation to chemotherapy in limited disease has
slightly increased survival. A meta-analysis of all randomized trials
indicated a 14% reduction in the mortality rate (Pignon et al. 1992).
Several attempts have been performed to prevent relapse in SCLC after
induction therapy. Among them, poor results have been obtained by
interferon's as maintenance therapy (Ihde 1997). New approaches are
clearly indicated.
2.1 ANTI-IDIOTYPIC ANTIBODIES
Idiotopes are unique antigenic determinants of the variable region of
immunoglobulin molecules. Antibodies recognizing these idiotopes are
termed anti-idiotypic antibodies (anti-ids). The majority of anti-ids
recognize idiotopes within the framework region of the immunizing
monoclonal antibody, however, some anti-ids can be shown to recognize the
antigen binding site of the immunizing monoclonal antibody and mimic the
original antigen. Because of this property, they are of special interest
for their potential use as vaccines.
Immunization with anti-ids has been shown to induce protective immunity
against viral (Gaulton 1986, Ertl 1984, Kennedy 1984), bacterial (Stein
1984, McNamara 1984), and parasitic (Sacks 1985, Gryzych 1985) infections.
Anti-id vaccines that mimic carbohydrate or glycolipid antigens offer
potential advantages over vaccines utilizing the actual antigen. First,
anti-id vaccines can stimulate a humoral and possibly a cellular immune
response (Sharpe 1984), while carbohydrate antigens are not generally
effective in inducing cellular immunity. Second, anti-id vaccines may be
more immunogenic than the non-protein antigens they mimic. An
anti-idiotypic antibody mimicking bacterial lipopolysaccharide (LPS) was
effective in priming neonatal mice to develop a protective immune response
to LPS while LPS itself could not prime the mice (Stein 1984).
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Several anti-ids have been raised against monoclonal antibodies
recognizing cell surface tumor antigens. Immunization of animals with
these anti-idiotypic antibodies has been shown to result in the generation
of antibodies which recognize the original tumor antigen. Some
investigators have also observed that animals immunized with
anti-idiotypic antibodies demonstrate a cellular immune response by
developing a specific delayed-type hypersensitivity reaction against the
tumor antigen (Nepom 1984, Raychaudhuri 1986), although others have not
been able to demonstrate this (Kahn 1989). Tumor protection studies in
mice have shown that immunization with anti-idiotypic monoclonal
antibodies can prevent tumor growth in vivo (Raychaudhuri 1986, Dunn
1987).
There has been limited experience with immunizing solid tumor patients
with anti-idiotypic monoclonal antibodies. In a report by Mittelman et al
(1990), 37 patients with metastatic melanoma were treated with three to
twelve subcutaneous injections of MF11-30. No toxicity was observed. None
of the patients were induced to produce antibodies against melanoma.
However, one lymph node complete response was achieved which lasted 43
weeks. The same group (Mittelman 1992), immunized patients with a
different anti-idiotypic monoclonal antibody, designated MK2-23,
conjugated to keyhole limpet hemocyanin and mixed with BCG (Bacille
Calmette-Guerin) as an adjuvant. Of 23 evaluable patients 14 (61%)
developed detectable antibodies against melanoma. Three patients
experienced a partial tumor response. Toxicity was largely related to the
BCG administration and consisted of erythema, induration, and occasional
ulceration at the injection sites. Substantial information is available on
the use of BCG in different types of cancers as monosubstance for the
investigational treatment of malignancies from the period when
non-specific immunotherapies were broadly tested in the clinic (Rosenberg
1997).
2.2 BEC2 ANTI - IDIOTYPIC MONOCLONAL ANTIBODY
The GD3 ganglioside is reported to be distributed in various tumor cell
lines in amounts ranging from 0 percent (colon carcinoma) to 100 percent
(metastatic melanoma and small cell lung cancer) (Fuentes 1997, Houghton
personal communication). An IgG3 monoclonal antibody, R24, which
recognizes the human melanoma GD3 ganglioside was raised in syngenic
[(C57BL X BALB/c)F1] mice. Additional syngenic mice were immunized with
the R24 monoclonal antibody which resulted in the formation of two
anti-idiotypic monoclonal antibodies, designated BEC2 and BEC3 (Chapman
1991). Both were screened for antibody production in New Zealand white
rabbits, which express the GD3 ganglioside on normal tissue (brain,
adrenal, thymus, spleen, small bowel) in distributions similar to that
seen in humans (Iwamori 1978, 1981; Sekine 1985). Both BEC2 and BEC3
induced anti-mouse and anti-R24 antibodies, but only BEC2 induced anti-GD3
antibodies (Chapman 1991). No toxicity's were observed in the rabbits
immunized with BEC2 and necropsy results showed no evidence of
inflammation within tissues known to express GD3.
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Numerous publications have reported increased immunogenicity, desired
serological responses, and mild toxicity's of anti-id MAb in combination
with adjuvants (Mittelman 1990, 1992), aluminum salts (Glenny 1926) or
aluminum hydroxide-adsorbed vaccine preparations (Aprille 1966).
Vaccination with BEC2, a murine anti-idiotvpic monoclonal antibody, could
evoke specific IgM and IgG against GD3 in animal models (Chapman and
Houghton, 1991).
Based on these reports. ImClone Systems Inc., NY, NY sponsored and
conducted phase Ib/IIa studies with BEC2 alone and in combination with
various adjuvants.
2.3 CLINICAL EXPERIENCE WITH BEC2
Early clinical studies with BEC2 were initiated in 1992 in patients with
stage IV melanoma and small cell lung cancer and are summarized in the
INVESTIGATOR'S BROCHURE (ImClone/MerckKGaA, 1997).
Studies in melanoma:
Stage III and IV melanoma patients (n=134) were treated in 8 clinical
studies with BEC2 administered at doses ranging from 0.1 to 20.0 mg, with
and without adjuvant. BEC2 adverse events were not dose dependent and
adverse events most frequently reported were adjuvant related injection
site reactions, the severity of which was dependent of the adjuvant
administered. Grade 3 injection site reactions were reported with the use
of BCG, while injection site reactions associated with the use of all
other adjuvants were <= grade 2. In the largest of the 8 studies (n=31),
all of the BEC2 or BEC2 plus alum adjuvant related adverse events were
grade 1 or 2. The reported adverse events were injection site reactions.
In two other studies of BEC2 alone (n=15, n=6), adverse events were
limited to grade 1 except for one patient who developed a grade 2 fever.
The most common adverse events were mild and transient, and consisted of
flu-like symptoms (19%), fatigue (14%), and exacerbation of pre-existing
arthritic conditions (14%). The severity of adverse events in the other 5
studies were similar, although the frequency of reported events are lower.
Although high titer anti-BEC2 antibodies were detected in the majority of
patients treated and production appeared to be related to the adjuvant
preparation used, too few patients developed anti-GD3 antibodies to allow
conclusions to be drawn (Chapman 1994, McCaffery 1996).
In one study BEC2, given subcutaneously (s. c.) at a dose of 2.5 mg for
five bi-weekly doses, was tested in a group of 21 stage IV melanoma
patients. Eleven of the 21 patients developed antibodies against BEC2 but
only one developed antibodies against GD3 (Chapman et al., 1994). Chapman
suggested that the augmentation of immunogenicity, by addition of an
immune adjuvant, would result in high-titer antibodies against GD3
(Chapman, personal communication). In one report (McCaffery 1996) BEC2/BCG
as a fixed combination induced more humoral responses than the use of
other adjuvants or the Mab alone.
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Studies in SCLC:
GD3 is a ganglioside of particular interest as a target for immunotherapy
in SCLC as it is present on SCLC rumor cells (Grant et al., 1996;
Cordon-Cardo, personal communication).
A pilot study in limited disease (LD) and extensive disease (ED) SCLC
patients (n = 8) receiving i.d. BEC2, combined with BCG adjuvant, was
reported during the ASCO 1996 meeting. The only grade 3 toxicity was local
skin reactions likely related to BCG vaccination. Grade 2 toxicity were
mainly fever and malaise. The median survival has not been reached after
36 months (Grant et al., 1996).
Updated summary information (n = 15) for the BEC2 trial in SCLC (Grant
1997)
Patients with Limited Disease (n = 8)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Diagnosis End of induction Vaccination Last FU Survival Cause of death
(dd/mm/yy) therapy (dd/mm/yy) (dd/mm/yy) (dd/mm/yy) status
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
07/04/92 17/09/92 12/02/93 15/04/97 dead progression
------------------------------------------------------------------------------------------------
28/09/92 15/03/93 31/08/93 13/06/97 alive
------------------------------------------------------------------------------------------------
13/11/92 05/04/93 27/07/93 29/06/97 alive
------------------------------------------------------------------------------------------------
11/11/94 24/04/95 13/10/95 29/07/96 dead chronic obstructive
pulmonary disease
------------------------------------------------------------------------------------------------
19/05/95 15/10/95 02/02/96 15/04/97 alive
------------------------------------------------------------------------------------------------
08/09/95 ??/??/95 26/04/96 08/04/97 alive
------------------------------------------------------------------------------------------------
04/10/95 15/03/96 31/05/96 03/01/97 dead progression
------------------------------------------------------------------------------------------------
21/07/95 19/02/96 07/06/96 07/01/97 dead progression
------------------------------------------------------------------------------------------------
</TABLE>
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Patients with Extensive Disease (n = 7)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Diagnosis End of induction Vaccination Last FU Survival Cause of death
(dd/mm/yy) therapy (dd/mm/yy) (dd/mm/yy) (dd/mm/yy) status
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
06/07/92 08/01/93 12/02/93 24/03/94 dead progression
------------------------------------------------------------------------------------------------
??/10/92 05/10/93 01/06/93 02/07/97 alive
------------------------------------------------------------------------------------------------
??/09/92 22/03/93 15/06/93 18/02/94 dead progression
------------------------------------------------------------------------------------------------
05/07/94 15/06/95 07/12/95 19/02/96 dead motor vehicle
accident
------------------------------------------------------------------------------------------------
06/03/95 01/07/95 08/09/95 04/01/96 dead progression
------------------------------------------------------------------------------------------------
08/12/95 29/03/96 17/05/96 24/06/97 alive
------------------------------------------------------------------------------------------------
??/12/95 15/03/96 07/06/96 30/09/96 dead progression
------------------------------------------------------------------------------------------------
</TABLE>
The 1997 toxicity and serology profiles remain essentially unchanged from
that reported in 1996.
All of the above data suggest that the GD3 ganglioside expressed by
melanoma and SCLC tumors are relevant targets for immune therapy using
BEC2 and this study will further investigate that opportunity in LD SCLC
patients.
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3. OBJECTIVES
The trial is designed to test the impact of an adjuvant BEC2/BCG vaccination of
LD SCLC patients on survival. Secondary endpoints are "Progression free
survival", Safety, QoL and Health Economics. Additional ancillary studies on
Biological Efficacy will be performed.
4. TRIAL DESIGN
4.1 GENERAL DESIGN
This is a stratified randomized prospective international intergroup phase III
trial. Patients are registered into the study after establishing the diagnosis
of primary LD SCLC before the start of the induction therapy or within the first
cycle of induction therapy, given that this therapy is according to what is
mandatory by the protocol.
4.2 TREATMENT REGIMENS
Induction therapy
Each participating center will decide on one of the following three options of
first line chemotherapy, of which 4 or 5 cycles will be given:
Cisplatin (60 - 100 mg/m(carat)2, day 1) + VP 16 (80 - 120 mg/ m(carat)2,
day 1,2 and 3);
OR
Carboplatin (AUC 4 - 6)* + VP 16 (80 - 120 mg/ m(carat)2, day 1,2 and 3);
OR
Cyclophosphamide (>= 1000 mg/ m(carat)2, day 1) + Doxorubicin
(>= 40 mg/m(carat)2, day 1) + Etoposide (80 - 120 mg/ m(carat)2, day 1, 2
and 3);
Chest radiotherapy is mandatory (according to local policy, concomitant or
sequential)
Prophylactic cranial irradiation is highly recommended for patients with
complete response.
* Dose (mg) = target AUC (4 - 6) x (Glomerular filtration rate + 25).
GFR is based on the Cockroft-Gault formula for creatinine clearance:
(140-age) X (weight in kg)
GFR = ------------------------------ x 0.85 (female) or x 1.00 (male)
72 x serum creatinine mg/100ml
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Trial treatment:
Timing: After 5, to a maximum of 7 months from diagnosis and within 6 weeks
after completion of ALL induction therapy, responding patients will be
RANDOMIZED:
STANDARD ARM (OBSERVATION COHORT):
Best supportive care, but no cancer specific therapy (cytotoxic, radiation
or other tumor reductive therapy) can be given until documented
progression of disease
EXPERIMENTAL ARM (VACCINATION COHORT):
BEC2 (2.5 mg) + BCG intradermal injections (5 in total) at first day of
week 0, 2, 4, 6 and 10.
Treatment will always consist of 5 vaccinations over a period of 10 to 12
weeks unless one of the following should occur:
o intolerable toxicity precluding further treatment
o progression of disease
o patient refusal
o occurrence of pregnancy
Patients discontinuing therapy in the absence of progression should not receive
any other cancer treatment before their disease progresses, unless this is
clearly not in the interest of the patient. If a patient has not continued to
present him-/herself in the course of the study, the investigator must determine
the reason and the circumstances as completely and accurately as possible.
4.3 STRATIFICATION AT RANDOMIZATION
Patients will be stratified by institution, Karnofsky performance status (60-70%
versus 80-100%), induction therapy ((VP16 in combination with Cis or Carbo) vs.
CDE), radiation (concomitant vs. sequential) and response to induction therapy
(CR versus PR) using the minimization technique (Pocock & Simon 1975).
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5. PATIENT POPULATION
Please note that there are two time points in the trial where
inclusion/exclusion criteria will be checked:
REGISTRATION *
RANDOMIZATION (after restaging)
* within one month from start of induction therapy is allowed. However, it is
preferred to register before first line treatment
Before patient registration in the trial, written informed consent must be
obtained and documented according to national and local regulatory requirements
and the local rules followed in the institution.
= A patient who has not been registered will not be accepted for randomization.
5.1 AT REGISTRATION
5.1.1 INCLUSION CRITERIA
o Histo - cytological proven SCLC
o Limited disease (VA classification, Zelen 1973)
o Age >= 18years
o Karnofsky performance status >=60% (Appendix I)
o Patient should be fit enough to receive adequate chemo-radiotherapy
treatment
o Written informed consent
5.1.2 EXCLUSION CRITERIA
o Prior surgery, chemo-and/or radiotherapy for SCLC
o History of tuberculosis
o Known to be HIV positive
o Severe active infections such as hepatitis B
o Splenectomy or spleen radiation in history
o Prior therapy with proteins of murine origin
o Investigational agent or immune therapy within 1 month prior to
start induction therapy
o Serious unstable chronic illnesses
o Chronic use of SYSTEMIC antihistaminics, NSAID or systemic
corticosteroids
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o Any previous malignancy except adequately treated CIS of cervix or
non melanoma skin cancer or if previous malignancy was more than 5
years prior and there are no signs of recurrence
o Pregnancy, breast feeding or absence of adequate contraception for
fertile patients.
o Any psychological, familial, sociological or geographical condition
potentially hampering compliance with the study protocol and
follow-up schedule; those conditions should be assessed with the
patient before registration in the trial.
5.2 AT RANDOMIZATION
5.2.1 INCLUSION CRITERIA
o Patient completed adequate first line chemo-radiotherapy treatment
as mandated by the protocol
o Patients with clinical response at restaging (CR or PR) according to
the WHO handbook, Geneva 1979
o Purified Protein Derivative - negative to >= 5 TU (Tuberculin
Units), see Appendix IX
o Karnofsky performance status >= 60% (Appendix I)
o Adequate bone marrow, liver, heart and renal functions:
ASAT (GOT), serum creatinine< 1.5 x upper normal laboratory value,
WBC count> 3.0 x 10(carat)9/1 and
platelets count> 100 x 10(carat)9/1.
5.2.2 EXCLUSION CRITERIA
o Serious unstable chronic illnesses
o Chronic use of SYSTEMIC antihistaminics, NSAID or systemic
corticosteroids
o Active infections requiring SYSTEMIC antibiotics, antiviral, or
antifungal treatments
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6. DRUG INFORMATION
6.1 GENERAL INFORMATION
The BEC2 study agent, an anti-idiotypic murine monoclonal antibody, is released
for clinical use by ImClone Systems Inc., USA under appropriate manufacturing
conditions as those specified and stipulated in the United States Code of
Federal Regulations (US 21 CRF) and all guideline documents issued by the US
Food and Drug Administration as they pertain to biologic and
biotechnology-derived drugs as an injectable liquid in single use vials. Each
vial is designed to deliver 1.0 ml of a preservative-free solution containing
2.5 mg/ml of study agent. BEC2 will be supplied free of charge to the patient.
BCG study agents consist of one amber glass vial containing 1.5 mg of a
lyophilized powder and one vial containing 1.50 mL of an accompanying
preservative-free BCG diluent manufactured and released for clinical studies by
Pasteur Merieux Connaught, Canada. The lyophilized powder is an attenuated
strain of Mycobacterium bovis [Bacillus Calmette Guerin (BCG)] containing 8 - 32
x 10(carat)6 colony-forming units (CFU)/mL when reconstituted with 1.50 mL of
BCG diluent. The BCG diluent consists of preservative-free phosphate buffered
normal saline (PBS) plus a surfactant (Tween 80) in a single use vial. The BCG
study agents will be supplied free of charge to the patient.
For the EORTC 08971 study, a single-dose vaccine package consisting of
instructions for preparation of the BEC2/BCG vaccine and five vials [1 each of
BEC2 for injection, lyophilized BCG powder, BCG diluent, preservative-free PBS
and a sterile empty vial]. The PBS and sterile, empty vial are additional study
supplies needed for the preparation of the BEC2/BCG vaccine. Each of the five
vials is individually labeled and the vaccine package is labeled in a
tamper-evident manner. Investigators are NOT to use any vaccine package or
components of a vaccine package in which the tamper-evident seal is broken. The
vaccine package will be supplied free of charge to the patient.
6.2 BEC2/BCG VACCINE PREPARATION
The BEC2/BCG vaccine will be prepared for administration by reconstituting the
BCG powder with BCG diluent and mixing appropriately. Three different volumes of
BCG diluent are to be used to reconstitute the BCG powder, 0.30 mL for Treatment
1, 1.20 mL for Treatment 2, and 1.50 mL for Treatment 3, 4, and 5, creating a
reconstituted BCG solutions containing l.0x10(carat)8, 2.5,x10(carat)7, and
2.0x10(carat)7 CFU/mL respectively. For Treatments 1 and 2, 0.2 mL of the
reconstituted BCG solution are to be mixed directly with BEC2 to create the
BEC2/BCG vaccine (No intermediate dilution's of the reconstituted BCG solution
are required for Treatments 1 and 2). Intermediate dilution's (1:4, 1:8 and
1:40) of the reconstituted BCG solution are required for Treatments 3, 4, and 5
prior to creating the BEC2/BCG vaccine. The intermediate dilution's are prepared
with a syringe by combining 1.00 mL, 0.50 mL, and 0.10 mL of the reconstituted
BCG solution with 3.00 mL, 3.50 mL, and 3.90 mL, respectively, of PBS in the
sterile empty vial and mixing appropriately. Combine 0.2 mL (of either the
reconstituted BCG solution for Treatments 1 and 2 or the intermediate dilution
of BCG for Treatments 3, 4, and 5) with the 1 mL (2.5 mg) vial of BEC2 solution
and mix appropriately. The final BCG concentrations in the BEC2/BCG vaccine will
be 2.0x10(carat)7, 5.0x10(carat)6, 1.0x10(carat)6, 5.0x10(carat)5 and
1.0x10(carat)5 CFU/dose for Treatments 1 through 5 respectively. Suggested
mixing procedures are summarized in the following table:
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VOLUME REQUIREMENTS FOR BEC2/BCG VACCINE PREPARATION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
STEP 1 STEP 2 STEP 3 STEP 4 STEP 5 STEP 6
------------------------------------------------------------------------------------------------
Treatment BCG diluent PBS added Reconstituted BCG Reconstituted or BEC2 BEC2/BCG
Number added to to sterile added to sterile vial diluted BCG added to vaccine
BCG vial BEC2
powder
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 0.30 mL 0.00 mL 0.00 mL 0.20 ML 1.00 mL 1.20 mL
- ------------------------------------------------------------------------------------------------------------------
2 1.20 mL 0.00 mL 0.00 mL 0.20 mL 1.00 mL 1.20 mL
- ------------------------------------------------------------------------------------------------------------------
3 1.50 mL 3.00 mL 1.00 mL 0.20 mL 1.00 mL 1.20 mL
- ------------------------------------------------------------------------------------------------------------------
4 l.50 mL 3.5O mL 0.5O mL 0.20 m1 l.OO mL l.20 mL
- ------------------------------------------------------------------------------------------------------------------
5 l.50 mL 3.9O mL 0.lO mL 0.2O mL 1.OO mL l.20 mL
- ------------------------------------------------------------------------------------------------------------------
BEC2 alone N/A. N/A. N/A. N/A. 1.OO mL N/A.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
A detailed handout with information on the preparation of the vaccine will be
distributed.
NOTE: Only components of the BEC2/BCG vaccine package are to be used for the
preparation of the BEC2/BCG vaccine. Under NO CIRCUMSTANCES are substitution of
other components allowed for the preparation of the BEC2/BCG vaccine.
The prepared BEC2/BCG vaccine must be refrigerated at +2(degree)C to +8(degree)C
(+36(degree)F to +46(degree)F) temperatures and protected from ambient light
prior to use. The immediate (within one hour of preparation) use of the BEC2/BCG
vaccine is highly recommended. Each 1.2 mL of BEC2/BCG vaccine will be injected
intradermally at multiple sites (for detailed instructions see Appendix XII).
The BEC2/BCG vaccine must not be injected into limbs with no lymph nodes
(surgical resection). Intravasal injection of the BEC2/BCG vaccine must be
avoided under all circumstances. Any equipment, supplies or receptacles that the
BEC2/BCG vaccine contacts should be disposed of at the investigational center as
infectious, chemotherapy or biohazardous waste.
CAUTION: - BCG is a live bacterial suspension and precautions must be taken for
the appropriate handling and disposal. NEVER REMOVE THE RUBBER STOPPER FROM ANY
VIAL CONTAINING LYOPHILIZED BCG POWDER OR BCG LIQUID. Simultaneous preparation
of BCG under a sterile hood with any other drug is to be avoided. Following BCG
preparation, disinfect the sterile hood by appropriate methods and allow
adequate time to re-sterilize before subsequent use.
PRECAUTION: - BCG is NOT to be administered to any patient as a single agent.
Patients may only receive intradermal injections of either the combined BEC2/BCG
vaccine or BEC2 alone (BEC2 may only be administered as a single agent to
patients who have experienced a grade 4 skin reaction to the BCG component of
the BEC2/BCG vaccine - see section 6.4).
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6.3 STORAGE
The BEC2/BCG vaccine package (containing 5 vials, 1 each of BEC2 for injection,
lyophilized BCG powder, BCG diluent, preservative-free PBS, and a sterile, empty
vial) must be stored under refrigeration at +2(degree)C to +8(degree)C
(+36(degree)F to +46(degree)F) and protected from light. Do not freeze the
BEC2/BCG vaccine package. The BEC2/BCG vaccine package must be kept in a secure,
limited access storage area under the recommended storage conditions.
6.4 POSSIBLE ADVERSE EVENTS
Allergic reactions may occur during or following the administration of BEC2 or
BEC2/BCG vaccine. As a routine precaution, patients treated with BEC2 or
BEC2/BCG vaccine will be observed for one hour after the injection of the
vaccine with resuscitation equipment and other agents (epinephrine, prednisone
equivalents, etc.) available. Should an allergic reaction to the BEC2 or
BEC2/BCG vaccine occur, the patient must be treated according to the best
available medical practices. Patients should be instructed to report any delayed
reactions to the investigator immediately.
NOTE - In the event that a patient experiences a grade 1 or 2 allergic reaction
to BEC2 or BEC2/BCG vaccine, the patient may be pre-medicated with an
antihistamine (i.e., Diphenhydramine HCL) prior to receiving the next injection
of BEC2 or BEC2/BCG vaccine. Patients who experience a grade 3 or 4 allergic
reaction to BEC2 or BEC2/BCG vaccine will have treatments terminated and be
discontinued from the study. Allergy to any component of BEC2, including murine
products or by-product, or to BCG, including monosodium glutamate or Tween 80,
or grade 4 anaphylactic reactions to the BEC2/BCG vaccine are contraindications
to vaccination.
PRECAUTION: - Concomitant use of antimicrobial or immunosuppressive agents may
interfere with the adjuvant activity of BCG. The concomitant use of steroids
with BEC2/BCG vaccine may cause a BCG related systemic infection which may be
treated with antituberculosis medication. Immunisation with BEC2/BCG vaccine
should be deferred during the course of a moderate or severe febrile illness or
acute infection.
Expected adverse event of BEC2/BCG for this study include injection side
reaction of pain, inflammation, hematoma, hemorrhageor grade 3 skin toxicities
of ulceration or scar formation, in addition to regional lymphadenopathy.
Adverse events reported for all indications of the BCG product include
lymphadenopathy, suppurative lymphadenitis, osteomyelitis, arthritis, lupoid
reactions, and rare occurrences of disseminated BCG infections, granulomatous
illness (e.g. mild fever to severe hepatitis or pneumonitis; single cases were
lethal in immunocompromised patients).
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6.5 PACKAGING AND LABELING OF STUDY MEDICATION
The study medication will be packaged and each vial will be labeled. Components
of the labels will be: Content, Volume, Lot Number, Expire date, storage
conditions, mentioning the investigational usage only, warnings.
6.6 CONCOMITANT TREATMENTS
No concomitant chemotherapy, immunotherapy, radiation therapy,
immune-suppressant therapy, systemic corticosteroids or chronic use of
anti-histamines will be allowed during secondary therapy. Analgesics, sedatives,
antibiotics, antihistamines or other medication as well as red blood cells,
platelet or fresh frozen plasma transfusions may be given to assist in the
management of pain, infection, and other complications of the malignancy.
All concomitant medications and any changes in these, will be recorded, from day
of randomization until last follow-up visit, on the case report forms and in the
patient's medical chart, noting the type of medication, the dose, duration, and
indication.
PRECAUTION: The concomitant use of steroids with BEC2/BCG may cause a BCG
related systemic infection. If necessary, the infection may be treated with
anti-tuberculosis drugs.
NOTE: Concomitant antimicrobial or immunosuppressive agents may interfere with
the adjuvant activity of BCG.
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7. CLINICAL EVALUATION, LABORATORY TESTS AND FOLLOW-UP
The initial clinical examination, evaluation of the disease as well as blood
counts and serum chemistry should be performed within 14 days before the start
of treatment. All investigations performed before this date must be repeated.
7.1 AT REGISTRATION
- - Relevant medical history of the patient will be recorded
- - Pathological proven SCLC
- - Karnofsky performance status
- - Chest X-ray (in two projections)
- - Chest CT-scan (including supraclavicular lymphnodes) and upper abdomen CT
(including adrenal glands)
- - Brain CT- or MRI scan
- - Bone scan and bone marrow examinations are strongly recommended
- - Hematology including: Hb, WBC, differential, platelets
- - Biochemistry including: serum creatinine, LDH, ASAT (GOT), sodium, potassium,
calcium and glucose
- - Screening tests for active infections (and if applicable (beta) HCG for
fertile woman)
7.2 RESTAGING (WITHIN 6 WEEKS AFTER END OF INDUCTION THERAPY)
- - Chest X-ray
- - Chest CT-scan (including supraclavicular lymphnodes) and upper abdomen CT
(including adrenal glands)
- - No clinical evidence of distant metastases by physical examination
- --------------------------------------------------------------------------------
Patients who completed ADEQUATE chemo-radiotherapy treatment and having a PR or
CR at re-staging must be checked for randomization eligibility criteria.
- --------------------------------------------------------------------------------
THE PPD SHOULD BE TESTED A.S.A.P. IN PATIENTS ELIGIBLE FOR RANDOMIZATION.
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7.3 AT RANDOMIZATION (WITHIN 6 WEEKS AFTER THE END OF INDUCTION THERAPY)
- - Purified Protein Derivative - negative to >= 5 TU (Tuberculin Units)
- - Clinical examination should include Karnofsky Performance Status, weight and
vital signs (temperature, pulse, blood pressure).
- - Hematology including: Hb, WBC, differential, platelets
- - Biochemistry including: serum creatinine, LDH, ASAT (GOT), sodium, potassium.
calcium and glucose
- - Serum sample for humoral response
- - ECG (three lead)
- - Quality of Life assessment: QLQ-C30 version 2.0 complemented with the Lung
Module (QLQ-LC13) together with the EORTC Health Thermometer (see chapter 12)
- - Economic evaluation assessment: concomitant medications and hospitalizations
(see chapter 13)
7.4 FIRST 12 WEEKS AFTER RANDOMIZATION
7.4.1 VACCINATION COHORT
Vaccination with BEC2/BCG is planned 5 times on day 1 of week 0, 2, 4, 6 and
week 10: every attempt is made to do this on schedule. Should that not be
possible for reasons other than toxicity, it should be accomplished not earlier
than 1 day before or 2 days after the scheduled time point. In case of severe
toxicity (NCIC-CTC grade 3 or 4) the administration of the next vaccination may
be postponed by a total of two weeks throughout the whole vaccination period
(Vaccination has to be completed within a total of 12 weeks). The decision if
the next vaccination is postponed for some days or the vaccination is ceased at
all, shall also incorporate the subjective perception of the individual patient.
Before each vaccination:
- Karnofsky performance status
- Clinical symptoms reporting
- Clinical signs of disease progression
- Serum sample for humoral response
At week 6: - Quality of Life assessment: QLQ-C30 version 2.0 complemented with
the Lung Module (QLQ-LC13) together with the EORTC Health
Thermometer
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Two weeks after last vaccination (week 12):
- Karnofsky performance status
- Clinical symptoms reporting
- Clinical signs of disease progression
- Serum sampling for humoral response
- Chest X-ray
- Hematology including: Hb, WBC, differential, platelets
- Biochemistry including: serum creatinine, LDH, ASAT (GOT), sodium,
potassium, calcium and glucose
- Quality of Life assessment: QLQ-C30 version 2.0 complemented with
the Lung Module (QLQ-LC13) together with the EORTC Health
Thermometer
- Economic evaluation assessment (concomitant medications and
hospitalizations)
7.4.2 OBSERVATION COHORT
6 weeks after randomization:
- Karnofsky performance status
- Clinical symptoms reporting
- Clinical signs of disease progression
- Serum sample for humoral response
- Quality of Life assessment: QLQ-C30 version 2.0 complemented with
the Lung Module (QLQ-LC13) together with the EORTC Health
Thermometer
12 weeks after randomization:
- Kamofsky performance status
- Clinical symptoms reporting
- Clinical signs of disease progression
- Serum sample for humoral response
- Chest X-ray
- Hematology including: Hb, WBC, differential, platelets
- Biochemistry including: serum creatinine, LDH, ASAT (GOT), sodium,
potassium, calcium and glucose
- Quality of Life assessment: QLQ-C30 version 2.0 complemented with
the Lung Module (QLQ-LC13) together with the EORTC Health
Thermometer
- Economic evaluation assessment (concomitant medications and
hospitalizations)
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7.5 DURING FOLLOW-UP
7.5.1 FIRST FU (6 MONTHS AFTER RANDOMIZATION)
- Karnofsky performance status
- Clinical symptoms reporting
- Clinical signs of disease progression
- Serum sample for humoral response
- Chest X-ray
- Hematology including: Hb. WBC, differential, platelets
- Biochemistry including: serum creatinine, LDH, ASAT (GOT), sodium,
potassium, calcium and glucose
- EORTC Health thermometer
- Economic evaluation assessment (concomitant medications and
hospitalizations)
7.5.2 FURTHER FU (starting 9 months after randomization till progression of
disease)
7.5.2.1 every 3 months
- Karnofsky performance status
- Clinical signs of disease progression
- Chest X-ray
- EORTC Health thermometer
- Economic evaluation assessment (concomitant medications and
hospitalizations)
7.5.2.2 every 6 months
- Hematology including: Hb, WBC, differential, platelets
- Quality of Life assessment: QLQ-C30 version 2.0 complemented with
the Lung Module (QLQ-LC13)
As soon as progression appears during disease evaluation, a new Chest CT-scan
(including supraclavicular lymphnodes) and upper abdomen CT (including adrenal
glands) should be done to confirm the progression of disease.
7.6 AFTER PROGRESSION OF THE DISEASE
The patient should be followed every 3 months for survival. Additional
anti-tumor therapy will be recorded together with the EORTC Health Thermometer
and Economic evaluation assessments.
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7.7 SUMMARY TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
At At At
registration restaging randominization
- -----------------------------------------------------------------------------------------------
within 14 days for definition of timing within 14 days
prior to start ref. to chapter 7.2 prior to start
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Informed consent o
- -----------------------------------------------------------------------------------------------
Histology / Cytology o
- -----------------------------------------------------------------------------------------------
Medical history o ###
- -----------------------------------------------------------------------------------------------
Clinical examination* o
- -----------------------------------------------------------------------------------------------
Performance status o o
- -----------------------------------------------------------------------------------------------
ECG o
- -----------------------------------------------------------------------------------------------
Screening tests** o
- -----------------------------------------------------------------------------------------------
Clinical Evidence of o
Disease progression
- -----------------------------------------------------------------------------------------------
Haematology*** o o
- -----------------------------------------------------------------------------------------------
Serum chemistry**** o o
- -----------------------------------------------------------------------------------------------
Blood sampling for o
Humoral Response
- -----------------------------------------------------------------------------------------------
PPD results # o
- -----------------------------------------------------------------------------------------------
Chest X-ray o o
- -----------------------------------------------------------------------------------------------
Chest CT-scan o o
incl. upper abdomen
- -----------------------------------------------------------------------------------------------
Quality of Life o
- -----------------------------------------------------------------------------------------------
Health thermometer o
- -----------------------------------------------------------------------------------------------
Economic evaluation o
- -----------------------------------------------------------------------------------------------
Clinical symptoms o
- -----------------------------------------------------------------------------------------------
Vaccination
- -----------------------------------------------------------------------------------------------
<CAPTION>
First 12 weeks period After treatment
- -----------------------------------------------------------------------------------------------------------------
week 0,2,4,6,10 week 6 and 12 first FU=6 until PD after PD
months after every 3 months every 3 months
random
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Informed consent
- -----------------------------------------------------------------------------------------------------------------
Histology / Cytology
- -----------------------------------------------------------------------------------------------------------------
Medical history
- -----------------------------------------------------------------------------------------------------------------
Clinical examination*
- -----------------------------------------------------------------------------------------------------------------
Performance status o o o o
- -----------------------------------------------------------------------------------------------------------------
ECG
- -----------------------------------------------------------------------------------------------------------------
Screening tests**
- -----------------------------------------------------------------------------------------------------------------
Clinical Evidence of o o o o
Disease progression
- -----------------------------------------------------------------------------------------------------------------
Haematology*** (carat) o +
- -----------------------------------------------------------------------------------------------------------------
Serum chemistry**** (carat) o
- -----------------------------------------------------------------------------------------------------------------
Blood sampling for o o o
Humoral Response
- -----------------------------------------------------------------------------------------------------------------
PPD results #
- -----------------------------------------------------------------------------------------------------------------
Chest X-ray (carat) o o
- -----------------------------------------------------------------------------------------------------------------
Chest CT-scan @
incl. upper abdomen
- -----------------------------------------------------------------------------------------------------------------
Quality of Life o #
- -----------------------------------------------------------------------------------------------------------------
Health thermometer o o o o
- -----------------------------------------------------------------------------------------------------------------
Economic evaluation (carat) o o o
- -----------------------------------------------------------------------------------------------------------------
Clinical symptoms o o o
- -----------------------------------------------------------------------------------------------------------------
Vaccination o
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
## All inclusion and exclusion criteria should be fulfilled
* Clinical examination including weight and vital signs (temperature, pulse
blood pressure)
** Screening tests for active infections and if applicable also (beta)HCG
*** Hematology includes hemoglobin, white blood cells, differential and
platelets counts
**** Biochemistry includes serum creatinine, LDH, ASAT (GOT), sodium,
potassium, calcium and glucose
# PPD results of the PPD test using a commercially available standard test
(Appendix IX)
(carat) Examinations to be performed only at week 12
@ As soon as progression appears during disease evaluation, a new Chest
CT-scan (including supraclavicular lymphnodes) and upper abdomen CT
(including adrenal glands) should be done to confirm the progression of
disease.
+ Will be performed on a 6 monthly basis until progression of disease
- --------------------------------------------------------------------------------
Only for vaccination cohort
- --------------------------------------------------------------------------------
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8. MONITORING AND REPORTING OF ADVERSE EVENTS AND ADVERSE DRUG REACTIONS
8.1 DEFINITIONS
Adverse Drug Reactions (ADR) (in the pre-marketing phase with new medicinal
products) are all noxious and unintended responses to a medicinal product
related to any dose.
An Adverse Event (AE) is any untoward medical occurrence or experience in a
patient or clinical investigation subject which occurs following the
administration of the trial medication regardless of the dose or causal
relationship. This can include any unfavorable and unintended signs (such as
rash or enlarged liver), or symptoms (such as nausea or chest pain), an abnormal
laboratory finding (including blood tests, x-rays or scans) or a disease
temporarily associated with the use of the study medication.
(Note: For the purpose of this trial, in an attempt to eliminate bias adverse
events will be reported in both treatment cohorts i.e. in the observation cohort
regardless of whether or not the patient received trial medication).
Serious Adverse Events (SAE) or Serious Adverse Drug Reactions (SADR) are
defined as any undesirable experience occurring to a patient, whether or not
considered related to the investigational drug. Adverse events and adverse drug
reactions which are considered as serious are those which result in:
o death (excluding SCLC related death)
o a life -threatening event (i.e. the patient was at immediate risk of death
at the time the reaction was observed)
o a permanently disabling event
o hospitalization or prolongation of hospitalization
o persistent or significant disability/incapacity
o a congenital anomaly/birth defect
8.2 REPORTING ADVERSE EVENTS
8.2.1 DOCUMENTATION OF ADVERSE EVENTS
Adverse events which occur during the induction therapy consisting of
non-investigational treatment regimens do not need to be reported.
All adverse events and serious adverse events will be monitored and reported in
all patients (vaccination cohort and observation cohort).
In this trial it was decided to define the AE observation period from
randomization to the second follow up visit (6 months after randomization) for
the following reasons. The investigational treatment is a vaccine and therefore
is expected to act much longer in the patients organism than a small molecule.
The vaccine can not be detected in the circulation by standard methods of
pharmacokinetics, however, toxicity relating to the administered vaccine has to
be monitored. From humoral response studies it is well known that all patients
receiving BEC2/BCG vaccination will develop anti-BEC2-antibodies (= human anti
murine antibodies [HAMA]) of the IgG-class within 6
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weeks after vaccination at the latest. When high titters of HAMA are established
there is rapid clearance of any protein molecule of murine origin. Thus, it has
to be assumed that no BEC2 will be present in the patient after the
establishment of HAMA, since it will be rapidly cleared.
As a consequence, monitoring and reporting of all adverse events and all serious
adverse events will be performed until 6 months after randomization.
Any AE that occurs in the course of clinical study, must principally be
monitored and followed until:
- it has receded
- pathological laboratory findings have returned to
normal
- steady state has been achieved or
- it has been shown to be unrelated to the study
medication
8.2.2 GENERAL EVALUATION OF SIDE-EFFECTS
All reported adverse events should be graded according to the "Common Toxicity
Criteria" defined by the NCI (US) and extended by the NCIC (Canada) (see
Appendix V).
Non hematological acute side effects will be assessed and reported separately
for each cycle of therapy, and graded according to the "Common Toxicity
Criteria" defined by the NCI (US) and extended by the NCIC (Canada) (see
Appendix V).
8.2.3 TOXIC DEATHS
Toxic death is defined as death due to toxicity. This must be reported on the
summary form: the cause of death must be reported as "toxicity".
The evaluation of toxic deaths is independent of the evaluation of response
(patients can die from toxicity after a complete assessment of the response to
therapy)
8.2.4 EVALUATION OF TOXICITY
All patients who have been randomized will be included in overall toxicity
analyses.
8.3 REPORTING PROCEDURES
8.3.1 REPORTING SERIOUS ADVERSE EVENTS (SAE) OR SERIOUS ADVERSE DRUG REACTIONS
(SADR)
All Serious Adverse Events (SAE) and Serious Adverse Drug Reactions (SADR) must
be reported to the respective safety desk by fax within 24 hours of the initial
observation of the event. Details should be documented on the specified Serious
Adverse Event Form. Death related to SCLC is the primary end-point and therefore
will be excluded from reporting.
It should be recognized that Serious Adverse Events (SAE) and Serious Adverse
Drug Reactions (SADR) are subject to rapid reporting to Regulatory Authorities
by the sponsor (or any other party having taken over the sponsor's reporting
obligations) of the countries participating in the trial (as defined by the
national laws). This is not applicable to SAE or SADR which are considered
unrelated to the study product whether expected or not.
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In order to comply with regulatory reporting requirements, every possible effort
should be made to submit the completed documentation of any reported serious
adverse events or serious adverse drug reactions to the safety desk within 10
calendar days of the initial report of the event.
ALL FORMS MUST BE DATED AND SIGNED
BY THE RESPONSIBLE INVESTIGATOR.
The assessment of causality is made by the investigator using the following as a
guideline:
UNRELATED: There is no temporal coincidence between intake of study medication
and occurrence of the adverse event (e.g. no active medication was taken).
or
There is a temporal coincidence between the intake of study medication and
occurrence of the adverse event, but the adverse event can be attributed to
other obvious reasons (e.g. underlying disease, concomitant medication, other
causal factors). Contribution by the study medication is excluded.
REMOTE: There is a temporal coincidence between intake of study medication and
occurrence of the adverse event, but there are one or more obvious other reasons
which are known to explain the adverse event. A contribution of the study
medication is unlikely (according to present scientific knowledge no
pharmacological explanation is possible).
POSSIBLE :There is a temporal coincidence between intake of study medication and
occurrence of the adverse event. A contribution of the study medication is
possible (e.g. due to the pharmacological properties of the study medication),
but other explanations are also possible (e.g. underlying disease, concomitant
medication).
PROBABLE: There is a temporal coincidence between intake of study medication
and occurrence of the adverse event. A contribution of the study medication is
probable (e.g. due to the pharmacological properties of the study medication).
Improvement or recovery is noted after withdrawal of study medication. Specific
findings (e.g. positive allergy testing or antibodies against the study
medication) definitely indicate a contribution by the study medication.
NOT ASSESSABLE: The available information is insufficient to assess causality.
8.3.2 REPORTING NON-SERIOUS ADVERSE EVENTS (AE) AND NON-SERIOUS ADVERSE DRUG
REACTIONS (ADR)
All Adverse Events (AE) and Adverse Drug Reactions (ADR) will be recorded on the
toxicity forms. The investigator will decide if those events are related to the
medicinal product (i.e. unrelated, remote, possible, probable, and not
assessable) and the decision will be recorded on the toxicity forms.
PLEASE REPORT SERIOUS ADVERSE EVENTS BY FAX WITHIN 24 HOURS OF INITIAL
OBSERVATION TO THE LOCAL SAFETY DESK (REFERENCES SEE PAGE 2).
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9. REGISTRATION AND RANDOMIZATION PROCEDURES
9.1 PATIENT REGISTRATION
Registration should be done by calling the Local Data Center from 9.00 AM to
6.00 PM from Monday through Friday (please find phone numbers on page 2).
A patient will be registered by the Local Data Center after verification of
eligibility criteria through the EuroCODE or the INTERNET network.
Patient registration must be done within one month from start of induction
therapy.
A PATIENT WHO HAS NOT BEEN REGISTERED WILL NOT BE ACCEPTED FOR RANDOMIZATION.
A list of questions to be answered during the registration procedure is included
in the registration check-list, which is part of the case report forms. This
check-list should be completed by the responsible investigator before the
patient is registered.
o protocol number?
o institution number?
o callers name?
o name of the responsible investigator?
o patient's initials (maximum 4 letters)?
o patient's chart number (if available)?
o patient's birth date (day/month/year)?
o eligibility criteria:
- all eligibility criteria will be checked;
- actual values of the eligibility parameters will be requested
when applicable
o DATE foreseen for first line treatment?
At the end of the registration procedure, a number will be allocated to the
patient (patient sequential identification number). This number has to be
recorded on the registration check-list, along with the date of registration.
The sequential identification number attributed to the patient at the end of the
registration procedure identifies the patient and must be reported on all case
report forms.
AFTER FIRST LINE TREATMENT, PATIENTS NEED TO BE RE-STAGED. PATIENTS WITH CR OR
PR AT RE-STAGING MUST BE RANDOMIZED THROUGH THE FOLLOWING RANDOMIZATION
PROCEDURE:
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9.2 PATIENT RANDOMIZATION
Randomization should be done by calling the Local Data Center from 9.00 AM to
6.00 PM from Monday through Friday (please find phone numbers on page 2).
A patient will be randomized by the Local Data Center after verification of
eligibility criteria through the EuroCODE or the INTERNET network.
This must be done BEFORE the start of the investigational treatment
A list of questions to be answered during the randomization procedure is
included in the randomization check-list, which is part of the case report
forms. This check-list should be completed by the responsible investigator
before the patient is randomized.
o protocol number ?
o institution number ?
o callers name ?
o name of the responsible investigator ?
o registration or randomization ?
o patient's initials (maximum 4 letters) ?
o patient's birth date (day/month/year) ?
o eligibility criteria:
- all eligibility criteria will be checked;
- actual values of the eligibility parameters will be requested
when applicable
Allocation to the study arm will be automatically attributed.
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10. FORMS AND PROCEDURES FOR COLLECTING DATA
10.1 CASE REPORT FORMS AND SCHEDULE FOR COMPLETION
Data will be reported on the EORTC forms and faxed to the Local Data Center (see
page 2)
Original Case Report Forms will be collected at the end of the trial by the
local monitor.
Case report forms must be completed according to the following schedule:
A. Before registration:
o the patient must be registered by phone to the Local Data Center
(page 31).
o the following set of forms has to be completed and faxed to the
Local Data Center:
the registration check-list (form 1)
the on-study form (form 2)
a laboratory data form (form 3)
The optimal way to work is to complete the registration check-list and, if
possible, the above set of forms first, and to register the patient by
calling the Local Data Center as soon as data are complete; the date of
registration and patient sequential identification number are then
completed on the check-list, and the whole set can be faxed to the Local
Data Center within one week.
B. At time of re-staging:
o a re-staging form (form 4)
C. At randomization:
o the randomization check list (form 5)
o QLQ-C30 (version 2.0) with the QLQ-LC13
o the Health Thermometer
o Economic evaluation form (form 6)
o a laboratory data form (form 3)
o an clinical symptom form (form 7)
The optimal way to work is to complete the randomization check-list and,
if possible, the above set of forms first, and to randomize the patient by
calling the Local Data Center as soon as data are complete; the date of
randomization and patients treatment arm are then completed on the
check-list, and the whole set can be faxed to the Local Data Center within
one week.
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D. First 12 weeks after randomization
Vaccination cohort (week 0, 2, 4, 6, 10)
o a treatment form for each period of vaccination, every 2 weeks (form
8)
o an clinical symptom form for each period of vaccination, every 2
weeks (form 7)
o the Health Thermometer (only at week 6)
o QLQ-C30 (version 2.0) with the QLQ-LC13 (only at week 6)
Observation cohort (week 6)
o a "treatment" form (form 8)
o an "clinical symptom" form (form 7)
o the Health Thermometer
o QLQ-C30 (version 2.0) with the QLQ-LC13
E. Week 12 and week 24 after randomization (for all patients)
o an clinical symptom form (form 7)
o Economic evaluation form (form 6)
o a laboratory data form (form 3)
o a disease evaluation form (form 9)
o the Health Thermometer
o QLQ-C30 (version 2.0) with the QLQ-LC13 (only at week 12)
F. Further follow-up (starting 9 months after randomization till progression of
disease)
Every 3 months
o a disease evaluation form (form 9)
o the Health Thermometer
o Economic evaluation form (form 6)
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Every 6 months
o a laboratory data form (form 3)
o QLQ-C30 (version 2.0) with the QLQ-LC13
G. After disease progression and upon patient death
o a follow-up form (form 10)
o the Health Thermometer
o Economic evaluation form (form 6)
o a death report (form 99)
ALL FORMS MUST BE DATED AND SIGNED
BY THE RESPONSIBLE INVESTIGATOR.
10.2 PRACTICAL CONSIDERATIONS AND DATA FLOW
The investigator has to keep a written or electronic patient file for every
patient participating in the clinical study. In this file the available
demographic and medical information of a patient has to be documented (name,
date of birth, sex, patient history, concomitant diseases and medication,
examinations performed and clinical findings as mutually agreed upon forehand
observed clinical symptoms (if applicable) etc.). It must be possible to
identify each patient by using this patient file. The period during which the
patient is participating in the clinical study must be clearly stated.
Additionally, any other documents with source data, especially original
print-outs of data that were generated by technical equipment have to be filed
(e.g. laboratory value listings, ECG recordings etc.). All these documents have
to bear at least patient initials, patient number and the printing date.
The main objective is to obtain a complete documentation from each patient.
The case report forms must be filled in completely and legibly (with either blue
or black ball-point pen, acceptable for use on official documents) and signed by
the investigator as soon as the requested information is available, according to
the above described schedule. It is the responsibility of the investigator to
check that all case report forms are FAXED to the Local Data Center and that
they are completely and correctly filled out. Any amendments and corrections
necessary shall be undertaken and countersigned by the investigator, stating the
date of the amendment/correction. Errors must remain legible and may not be
deleted with correction aids (e.g. Tipp.Ex). The investigator must state his/her
reason for the correction of important data. In the case of a missing
data/remarks, the entry spaces provided for in the CRF should be canceled out so
as to avoid
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unnecessary follow up inquiries. The CRF's are documents and must be suitable
for submission to authorities.
The original copy will be collected at the end of the study (when number of
events is reached) and they will be returned to the sponsors. A copy of these
final CRF's must be kept at the investigators site, at the local data center and
at the EORTC data center.
The EORTC Data Center will perform consistency checks on the CRF's and issue
Query Forms in case of inconsistent data. Those Query Forms must be answered
during the monitoring visits and signed by the investigator. The original must
stay at the investigators site together with the original, corrected CRF's and a
copy of both forms (CRF and Query) must be faxed back to the EORTC Data Center.
The original of the CRF's at the investigator's site may not be modified unless
modifications are reported on a Query From, and the Query Form reference is
indicated on the CRF.
The investigator shall insure that documents forwarded contain no mention of any
patient names. It shall be the duty of the investigator to ensure that the
patient-identification sheets are stored at least 15 years beyond the end of the
clinical study. All original patient files must be stored for the longest
possible time permitted by the regulations of the hospital, research institute,
or practice in question.
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11. STATISTICAL CONSIDERATIONS
11.1 PRIMARY AND SECONDARY ENDPOINTS
Primary endpoint is overall survival, calculated by the time interval (in days)
from randomization to death regardless of cause. The survival times for patients
who are alive at the end of the study are censored.
Secondary endpoints are progression-free survival, safety, QoL and Health
Economics.
Progression free survival is defined by the time interval from randomization to
disease progression or death (whichever occurs first). The progression free
survival time of patients who are alive at the end of the study with no disease
progression are censored.
Progression-free survival data are interval censored. Therefore the
determination of disease progression has to follow an exact time schedule, which
is the same for all patients.
Follow-up examinations will be done every 3 months until death
After progression the patient will be followed up for determination of survival.
QoL will be evaluated at randomization, at 12 weeks and then six monthly until
progression.
The Health Thermometer and resource utilization data will be collected at
randomization and then every 3 months until patients death.
11.2 SAMPLE SIZE DETERMINATION
The patients are recruited at diagnosis of LD SCLC. After completion of
induction therapy, patients with CR or PR (fulfilling all inclusion / exclusion
criteria) will be randomized. These two phases will be referred to as
"registration phase" and "randomization phase".
To detect a 40% increase in the median duration of survival in the BEC2/BCG arm,
376 deaths are necessary, using a two-sided (alpha) of 5% (Collet 1996) and a
power of 90% (allowing for one interim analysis as described in section 11.3.3)
Assuming a median survival in the observation group of 15 months (since
randomization), a randomization phase of 2 years and another 2 years of
follow-up after randomizing the last patient, an estimate of 10% for drop-outs,
570 patients should be randomized and a number of about 820 patients to be
registered (assuming that about 70% of enrolled patients will be eligible for
randomization). The analysis will be performed when 376 deaths have been
observed among the randomized patients. These figures allow for one interim
analysis as described in section 11.3.3.
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11.3 DESCRIPTION OF STATISTICAL ANALYSIS
Comparison at baseline will be assessed in a descriptive manner.
11.3.1 PRIMARY ANALYSIS
The primary analysis of efficacy will be performed on all randomized patients
according to the intention-to-treat principle. Differences in survival will be
assessed by the log-rank test. Survival curves are calculated for each treatment
group with Kaplan-Meier estimates.
11.3.2 SUPPORTIVE ANALYSES
o Same as 11.3.1, based on all eligible patients (according to the inclusion /
exclusion criteria), irrespective of the compliance to protocol treatment.
o A multivariate Cox proportional hazards model (Cox, 1970) with a backward
variable selection procedure at the 5% level of significance will explore the
prognostic value of the following variables: age (as a continuous variable),
gender, Karnofsky performance status (60-70 vs. 80-100), induction therapy (VP16
in combination with Cis or Carbo vs. CDE), radiation (concomitant vs.
sequential), the continent (Europe vs. North America vs. Australia), LDH level,
Na level, Ca level, serum creatinine, WBC and WBC subsets count and thrombocytes
count. The treatment effect, adjusted for the significant factors in the Cox
model, will also be estimated and reported. The assumption of proportional
hazards will be checked. This Cox model will also explore the effect of the
interaction of these covariates with randomized treatment in order to assess
whether the treatment comparisons are consistent across different values of the
covariates.
o All explorative tests will be performed two-sided at a significance level
fixed at (alpha) = 5 %.
11.3.3 INTERIM ANALYSIS
The statistician of the trial will monitor the total number of deaths. One
interim analysis will be conducted when a total of 80 deaths are reported. The
analysis report will present all aspects of the trial. An alpha-spending
function (Lan and DeMets, 1983) (in order to be flexible with respect to the
timing of the analysis) with an O'Brien-Fleming boundary (O'Brien and Fleming,
1979) will be used. For example, if the interim analysis is performed when a
total of exactly 80 deaths are reported, the P value should be less than
0.000021 in order to statistically conclude a difference between the two
treatment arms. In this case, the final analysis will be performed with a
significance value of 0.04999. The nominal significance levels, however, will be
calculated using the program EaST.
If the interim analysis shows statistically significant results, the IDMC will
advise the SILVA Steering Committee to consider early disclosure of the results.
As for all other reports, besides the report which will be sent to the IDMC, no
efficacy data per treatment arm will be presented.
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11.3.4 SAFETY
Incidence and type of clinical symptoms and side effects will be summarized by
treatment groups. We anticipate an underestimation of adverse events in the
control arm because of difference in follow-up schedule during the first 12
weeks. A descriptive report of adverse events will be performed.
11.3.5 QUALITY OF LIFE ASSESSMENT
Data will be scored according to the algorithm described in the EORTC QLQ-C30
scoring manual. All scales and single items are scored on categorical scales and
linearly transformed to 0-100 scales where:
o A high score for a functional scale represents a high or healthy level of
functioning.
o A high score for the global health status/QoL represents high QoL.
o A high score for a symptom scale or item represents a high level of
symptomatology/problems
Data will be analyzed using descriptive statistics for the subscales and single
items for each study group at each of the assessment points. Compliance of
completing QoL questionnaires will be investigated at each time point.
The global health status/QoL scale (EORTC Scoring Procedures Manual) will be
used as an overall measure for QoL. Quality of Life between the two treatment
groups will be compared using the longitudinal mixed data model (PROC Mixed in
SAS). The model will allow the change of QoL in the two groups over time to be
investigated. The main effects for demographic and clinical factors will also be
analyzed (see factors mentioned in 11.3.2).
Mean group scores on the EORTC Health Thermometer will be transformed to a
utility Time Trade-Off score using a power function (Stiggelbout et al., 1996).
These adjusted scores will be used as the quality adjusted factor in the
cost-utility analysis.
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11.3.6 HEALTH ECONOMICS DATA ANALYSIS
Life years saved will be calculated either by non-parametric approach or by a
parametric approach depending on the shape of distribution.
The identified resource units and the effectiveness variables are the basis to
calculate incremental cost-effectiveness and cost-utility ratios. The robustness
of the results will be examined by extensive sensitivity analysis. In the light
of insufficient knowledge about the main sources of uncertainty in the data, one
approach to this will be to use threshold analysis, where critical values (i.e.
such that change the direction of the results) of the variables will be
determined. Another approach will be to use the endpoints of confidence
intervals for data collected in the clinical trial to identify the range of
values to test, combined with high and low boundary estimates for
"deterministic" data for variables taken from outside the trial (i.e. cost
data).
11.3.7 INDEPENDENT DATA MONITORING COMMITTEE
An Independent Data Monitoring Committee (IDMC) will be established comprising
of at least 5 independent experts (2 medical oncologists, two immunotherapists
and one statistician) who have no conflict of interest and agree with the
outline of the protocol. None of the members of the IDMC should be among the
participants in the trial. The committee will meet when the interim analysis has
been performed by the statistician of the trial. All possible aspects of the
trial will be the subject of the interim analysis (see section 11.3.3).
Following this meeting, the IDMC will report to the Steering Committee and may
recommend changes in the conduct of the trial.
The IDMC may call additional meetings if at any time there is concern about any
aspect of the trial. All data presented at the meetings will be considered
confidential.
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12. QUALITY OF LIFE EVALUATION
Reducing mortality and morbidity is still the most important factor in clinical
research. Nevertheless, issues such as reducing side effects, symptom relief and
patients satisfaction have also become relevant parameters in the evaluation of
medical strategies. Cancer treatments may produce adverse effects and diminish
the QoL even when survival is extended. Progress in the acceptance of new cancer
therapies is sometimes critically dependent on their QoL consequences. Thus,
formal assessment of QoL is important because mere extension of survival may not
be directly correlated with an improved QoL. Health related QoL is a
multidimensional concept which represents the physiological, psychological and
social influences of the disease and the therapeutic process from the patients
perspective (Schipper 1990). It comprises four principal components: physical,
psychological and social well-being, and daily-life functioning.
12.1 OBJECTIVES
In this study QoL is a secondary endpoint. The main objective of QoL assessment
within this clinical trial is to determine the impact of vaccination on overall
health/QoL. The H(o) hypothesis will be tested that there is no difference
between patients in both arms during and after treatment. A secondary objective
is to evaluate the effect of vaccination on the various symptoms and functioning
scales as treatment related side-effects may have a (temporary) negative
influence on the health related domains of QoL of these patients. The aim of QoL
evaluation in this study is to get a better understanding of the effects of
vaccination in terms of frequency and degree of treatment related side-effects
from the perspective of the patients. For this purpose a detailed questionnaire
including symptoms and functioning will be used.
Since a cost-effectiveness analysis will also be performed in this study it is
relevant to combine the three outcome measures, i.e., length of life, QoL and
economic aspects of the two treatment arms in one overall outcome measure such
as quality and cost adjusted survival by using e.g. a Quality Adjusted Life
Years (QALY) model. In order to be able to do this, a valuation of the health
related QoL is needed. For this purpose the EORTC Health Thermometer will be
used, which is a single question.
12.2 QUESTIONNAIRE
The instruments used are the EORTC core questionnaire (QLQ-C30 version 2.0), the
lung cancer module QLQ-LC13) and the EORTC Health Thermometer.
The QLQ-C30 is a well-validated and accepted instrument to measure various
domains that constitute QoL. It is a self-administered questionnaire consisting
of 30 questions. It incorporates 5 functional scales, 3 symptom scales, and a
global health/QoL scale. The remaining single items assess additional symptoms
commonly reported by cancer patients, as well as the perceived financial impact
of disease and treatment. All scales and single items meet the standards for
reliability. The reliability and validity of the questionnaire is highly
consistent across different language-cultural groups (Aaronson et al., 1993;
1994).
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The QLQ-C30 will be complemented by the EORTC lung module (QLQ-LC13). This
13-item module (Bergmann et al., 1994) comprises one multi-item scale and a
series of single items assessing lung cancer-associated symptoms and side
effects from conventional therapy, which has been developed to assess disease
specific symptoms in lung cancer patients.
The EORTC Health Thermometer comprises a single question in which the patient is
asked to rate his/her current health related QoL on a 0 to 100 scale, where 100
stands for "perfect health" and 0 for "worst imaginable health".
All instruments can be found in Appendix III of this protocol.
12.3 DESIGN
QoL will be evaluated in a longitudinal design in all patients entered in this
study. Baseline assessment will be performed at or prior to randomization.
Subsequent assessments will take place at week 6 and 12 after randomization.
Subsequent assessments will be performed every 6 months until progression.
Since the EORTC Health Thermometer will be used to adjust survival taking into
account QoL, it is imperative that this is assessed on a more regular basis.
Therefore the EORTC Health Thermometer will be used during follow-up at all
timepoints in which clinical data will be collected (see Appendix III).
12.4 QOL DATA COLLECTION
QLQ-C30 questionnaires must be filled out at the hospital when the patients
comes to the hospital for a scheduled visit. The questionnaire will be handed
out to the patients by the investigator or a study nurse prior to seeing the
doctor for clinical evaluations. Patients will be asked to fill out the
questionnaires as completely and accurately as possible. The average time to
complete the entire questionnaire is approximately 10-15 minutes.
The compliance of the QoL assessments will be reviewed twice a year and will be
a part of the descriptive report by Data Center for the Group's plenary
sessions.
Mastercopies of the QoL questionnaires (EORTC QLQ-C30, the QLQ-LC13, and the
EORTC Health Thermometer) will be sent to the institution together with CRF's.
The clinical forms will include a question whether the QoL forms have been
filled in -and if not, the reason why.
Guidelines for the administration of QLQ-C30 and QLQ-LC13 questionnaires are
added in Appendix III.
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13. HEALTH ECONOMICS
Lung cancer is one of the leading causes of cancer deaths throughout the world,
particularly among people aged 60 and older. Small cell lung cancer (SCLC)
represents approximately 20-25% of all lung cancers (Evans et al. 1996;
Rosenthal et al, 1992; Onkos 1995). Approximately 40% of patients who are
diagnosed with SCLC have limited-stage disease (Onkos 1995). The median survival
is short and long-term survivors are uncommon. In view of poor survival rates
between 13 and 16 months for patients with limited disease (Rosenthal et al,
1992), even with aggressive combined modality treatment, the cost/outcome
relation of potentially expensive therapies is an issue which needs to be
addressed.
Currently there are only few evaluations available on the costs of care in SCLC.
According to a Canadian study (Evans et al, 1995), diagnosis and initial
treatment of limited disease SCLC incurred average direct costs of $18691 per
case (reported in 1988 Canadian dollars). Annual follow up costs after the first
year amount to $944. The costs to determine relapse are established to be $1590,
while palliative radiotherapy and terminal care account for $10544. That means,
about 40% of the overall costs are associated with end of life care. From the
governments or payers perspective in Canada the main cost driver in the
management of SCLC is hospitalization. According to an Australian analysis
(Rosenthal et al, 1992), the direct median overall cost per patient for limited
disease SCLC is $18234 (reported in 1990 Australian dollars), and again
hospitalization is identified to be the main cost component. In the Australian
setting, the relative proportions of overall costs for initial chemotherapy,
radiotherapy and bed-days are 16%, 19% and 38% respectively. The remaining
expenditures relate to investigations (7%), follow up and the management of
relapse (12%). The treatment costs of terminal care have not been considered in
this evaluation. Finally, in an North American study (Baker et al, 1991) the
Continuous Medicare History Sample File is used to derive an estimate of the
lifetime direct medical expenses attributable to lung cancer without distinction
of cancer cell type and stage. In agreement with the other analyses, inpatient
hospital care constitutes anew the major source of expense.
13.1 OBJECTIVES
In the setting of this clinical trial, only data on the quantities of resources
consumed will be collected, without any attempt at attaching pecuniary values to
it. In a further step, however, the main costs of vaccination treatment versus
observation will be calculated from the payer's perspective. As unit costs for
the various types of resources there will be used official reimbursement rates,
fees or charges taken from official fee schedules for various procedures and
services, hospital acquisition prices for drugs, etc. Total average cost will be
calculated as the sum of the various resources multiplied with their unit costs.
If indicated by the outcomes of the clinical trial, cost-effectiveness and
cost-utility analysis will be performed by relating the incremental costs for
the treatment group compared to the observation group to the different outcomes.
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13.2 HEALTH ECONOMIC VARIABLES
Resource Utilization:
- --------------------------------------------------------------------------------
Concomitant drugs - generic name
- galenic form at each visit after
- dose randomization
- duration of therapy
- --------------------------------------------------------------------------------
Hospitalizations - number of hospitalizations at each visit after
- length of stay randomization
- ward
- reasons for admission
- --------------------------------------------------------------------------------
Additional anti-tumor - type of therapy after progression
therapy - doses
- schedules
- --------------------------------------------------------------------------------
Vaccination therapy starts only after completion of conventional treatment and
has no impact on the initial treatment phase. Therefore, the economic features
of chemotherapy and radiation are not considered in this study. Data collection
on resource consumption centers on medication, therapeutic measures, and
hospitalization, because
a) this information can be measured without any change of clinical study
design,
b) any outpatient resource utilization during the symptom free follow up
period is expected to be relatively low and irrespective of previous
therapy (the investigations are essentially protocol driven), and
c) in the course of the disease, hospitalization is the main cost component.
Effectiveness:
- --------------------------------------------------------------------------------
Life years gained - comparison of overall to be described retrospec-
survival tively at the time of data
analysis
- --------------------------------------------------------------------------------
Quality Adjusted Life - health state valuation Chapter 12
Years gained (QALY's) via rating scale
(Health Thermometer)
- --------------------------------------------------------------------------------
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14. STEERING COMMITTEE
The steering committee will be composed of the Chairman of the trial, a
representative of each cooperative group, a representative of the EORTC Data
Center, the statistician of the trial, a representative of Merck KGaA and a
representative of ImClone Systems Inc. They will be responsible for the conduct
of the study at the operational level. This incorporates the review of the
progress of the trial, discussion of the safety reports and any other aspects of
the trial except of efficacy data. Also the writing and approval of amendments
based on mutual agreement is to be done by this group. The Steering Committee
will meet every 6 months. Telephone conferences shall be held if necessary. All
activities of the Steering committee shall be documented by minutes which have
to be approved by all members of the committee.
15. BIOLOGICAL EFFICACY GROUP
The biological efficacy group will be responsible for the set up and
coordination of the "ancillary studies". Centers which run such studies will be
represented in this group (active members) as well as permanent advisors. This
group shall meet on a regular basis.
16. QUALITY ASSURANCE
It is agreed that the course of the clinical study shall be followed up at
regular intervals by the responsible monitors. They, as well as the
representatives of Merck KGaA and Imclone Inc. or designees and the appropriate
regulatory authority, are permitted to inspect the study documents (study
protocol, CRF's, study medication, original study-relevant patient's records).
All patient data shall be treated confidentially.
16.1 CONTROL OF DATA CONSISTENCY
Data forms will be entered in the database of the EORTC Data Center by a double
data entry procedure.
Computerized and manual consistency checks will be performed on newly entered
forms; Query Forms will be issued in case of inconsistencies.
Consistent forms will be validated by the Data Manager to be entered on the
master database. Inconsistent forms will be kept "on-hold" until full resolution
of inconsistencies.
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16.2 EXTERNAL REVIEW OF RESPONSES
Two external boards will review the primary diagnosis. restaging and relapse
data.
Extra-mural review of radiology
Two independent radiologists shall review all CT scans from the following
time points:
o Primary Diagnosis
o Restaging
o Time of Relapse
If the extent of disease at relapse for one particular should suggest that
there might have been a progress of disease at earlier follow ups, X-rays
from all follow ups have to be reviewed from this case.
Extra-mural review of pathology
Two independent pathologists will review a set of representative slides
(histology or cytology) which the diagnosis SCLC was based upon. For this
reviewing original slides shall be sent to the reviewers and will be
returned to the institution.
Reviews will only be done of those patients who were randomized.
16.3 ON-SITE QUALITY CONTROL
On-site quality control will be performed.
The aim of these site visits will be:
o to assess the consistency of the data reported on the case report
forms with the source data
o to resolve all previous unanswered queries
This quality control will be carried out retrospectively, based on data already
available at the Data Center. All modifications, amendments and/or additions
will be reported on query forms. This will enable a complete documentation of
the modifications brought to the original case report forms, in accordance with
the GCP standards and the EORTC policy.
17. ETHICAL CONSIDERATIONS
Before the start of the study, the study protocol shall be submitted to a
recognized Ethics committee for approval/appraisal; the Ethics committee's
written approval/appraisal of the study shall be appended to the study
documents. Any serious reservations brought forward by the Ethics Committee
against the performance of the clinical study in the present form must be
resolved before the study is commenced. The membership of the Ethical committee
should follow local guidelines and possibly meet the ICH requirements.
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17.1 PATIENT PROTECTION
The responsible investigator will ensure that this study is conducted in
agreement with either the Declaration of Helsinki (Tokyo, Venice, Hong Kong and
South Africa amendments), or the laws and regulations of the country, whichever
provides the greatest protection of the patient.
The protocol has been written, and the study will, be conducted according to the
ICH-guidelines for Good Clinical Practice.
The protocol will be approved by the EORTC Protocol Review Committee and by the
Local, Regional or National Review Boards.
For all countries involved: The national regulatory authorities will be notified
of the clinical trial in accordance with the national laws and requirements.
17.2 SUBJECT IDENTIFICATION
A sequential identification number will be automatically attributed to each
patient registered in the trial. This number will identify the patient. However,
in order to avoid identification errors, patients initials (maximum of 4
letters), date of birth and local chart number will be reported on the case
report forms.
17.3 PATIENT INFORMATION
An unconditional prerequisite for participation of a patient in the clinical
study is his/her consent after having been informed about the following points:
- - objectives of the study
- - therapeutic effects of and potential adverse reactions to the study
medication
- - potential benefit of participation in the study and therapeutic
alternatives
- - risks and additional examinations that the study may entail
- - for women, the warning that clinical studies may not be carried out in
pregnant women and that pregnancy should therefore be avoided. If
pregnancy occurs, the investigator must be notified immediately.
- - possible risks upon discontinuation of the study
- - procedure of the study, allocation to the individual treatment groups
- - the expected duration of the patients participation in the trial
- - the approximate number of patients involved in the trial
- - permitted and non-permitted concomitant medication and dietary aspects
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- - insurance coverage, mentioning that the patient may undertake additional
medical treatment during the time period of vaccination only after
consultation of the investigator
- - voluntary nature of participation in the study and the possibility to
withdraw from the study at any time without stating reasons and without
any disadvantages
- - opportunity for obtaining further information
- - mention that the patient may not have taken part in any other clinical
study during the past 30 days
- - mention that any change in any concomitant medication must be reported to
the investigator immediately
- - consent for the forwarding of the anonymous case report forms to the
monitors of the CRO's and the EORTC Data Center and later to Merck
KGaA/Imclone Inc. and the possibility for the inspection of study-relevant
data by third parties (e. g. Merck KGaA supervisory or regulatory
agencies) in agreement with data-protection regulations
- - permission from the patient for inspection of medical records in the
strictest confidence by personnel appointed by Merck KGaA and Imclone Inc.
and Regulatory Bodies.
The investigator must inform the patient verbally. The information should be
given both verbally as well as in writing. The wording must be chosen in such a
way as for the content to be fully and readily understandable for laypersons.
17.4 PATIENT CONSENT
For all countries:
The consent of the patient to participate in the clinical study has to be given
in writing prior to participation in the study. The consent shall be confirmed
in the CRF by the investigator. The signed and dated declaration of informed
consent shall remain at the investigator's site and must be stored in the
patient file.
This consent must be obtained in accordance with local governmental regulations
and must be approved by the IRB/Ethical committee of the investigational center.
A template of the patient information is enclosed in this protocol (Appendix
IV).
Documented informed consent must be obtained for all patients included in the
study before they are registered at the EORTC Data Center. This must be done in
accordance with the national and local regulatory requirements and the local
rules followed in the institution.
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18. INVESTIGATOR COMMITMENT STATEMENT
Investigators will only be authorized to register patients in this trial when
they have returned the following:
o a commitment statement, indicating that they will fully comply with
the protocol, including an estimation of their accrual, and a
statement of conflict of interest disclosure form
o a copy of the letter of acceptance of the protocol and informed
consent by their local ethical committee
o updated Curriculum Vitae
o the list of the institutional laboratory normal ranges (for labs
required by the protocol)
As soon as all the documents have been received, the new investigator will be
added to the "authorization list", and will be allowed to register patients in
the trial.
Patients registrations from centers not (yet) included on the authorization list
will not be accepted.
18.1 CONFIDENTIALITY STATEMENT
The investigator must agree to maintain the confidentiality of the study at all
times and must not reveal information relating to the Investigator's Brochure,
protocol, CRF's or associated documents without the express permission of both
sponsors.
19. ADMINISTRATIVE RESPONSIBILITIES
The Study Coordinator (in cooperation with the EORTC Data Center) will be
responsible for writing the protocol, reviewing all case report forms and
documenting his/her review on evaluation forms, discussing the contents of the
reports with the Data Manager and/or the Statistician, the sponsors, and
publishing the study results. He will also be generally responsible for
answering all clinical questions concerning eligibility, treatment, and
evaluation of the patients.
STUDY COORDINATOR: PROF. G. GIACCONE
The EORTC Data Center will be responsible for reviewing the protocol, collecting
case report forms, controlling the quality of the reported data, and generating
reports and analyses in cooperation with the Study Coordinator. All
methodological questions should be addressed to the EORTC Data Center.
THE SPONSOR WILL BE RESPONSIBLE FOR DRUG DISTRIBUTION (SEE PAGE 3)
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19.1 PROTOCOL AMENDMENTS
Should any change be required to the signed, final protocol, a protocol
amendment must be prepared. Written approval must be obtained for all amendments
from the Steering Committee, the Protocol Review Committee at the EORTC and at
Merck and ImClone prior to implementation. Thereafter the amendment will be
distributed to the centers for signing by the investigator and submission to the
appropriate Ethics Committee before implementation at that center.
19.2 DEVIATIONS FROM THE PROTOCOL
Deviations from the protocol - especially the prescription of doses NOT
scheduled in the study protocol -, other modes of administration, other
indications, and longer treatment periods shall not be permissible and shall not
be covered by the statutory patient insurance scheme.
20. TRIAL SPONSORSHIP / FINANCING
In Europe, Australia, and New Zealand: In North America:
Merck KGaA. ImClone Systems Inc.
21. PATIENT INSURANCE COVERAGE
In Europe, Australia and New Zealand:
Merck KGaA has insurance cover for the clinical trial (Colonia Insurance,
Germany: policy numbers 60 22 60 10204 and 60 22 60 10209) which provides
compensation for subjects participating in the trial and indemnity to any person
connected with the performance of the trial arising out the negligence resulting
in bodily injury and/or property damage. It will be invalidated by:
o Failure of the investigator to comply with the terms of the protocol
o Negligence of the investigator and any person connected with the
performance of the trial.
The investigator will indemnify and hold Merck KGaA harmless from any claim
caused by the above exceptions.
The investigator will notify Merck KGaA whenever he becomes aware of a potential
claim.
In North America:
ImClone Systems Incorporated has insurance coverage for clinical trials
(Columbia Casualty Insurance Company, Chicago IL, USA: policy number ADT 102 863
8853 and provides coverage to clinical investigators conducting Human Clinical
Trials for ImClone in compliance with FDA procedures and the Federal Food, Drug,
and Cosmetic Act as set forth in the Code of Federal Regulations, Title 21. This
policy extends coverage to worldwide as long as the Human Clinical Trial is in
compliance with country/local ordinances, standards, filings, and regulatory
requirements and test subjects have provided written consent prior to the
commencement of the trial.
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22. PUBLICATION POLICY
After conclusion of the study, a report shall be written by the EORTC Data
Center and the Coordinating Investigator that will include a statistical
analysis and an appraisal of the results from a medical viewpoint. This report
shall be based on the items listed in this study protocol.
The final publication of the trial results will be written on the name of all
participating groups. None of the participating groups should present any of the
data before publication of the final results of the overall trial. A draft
manuscript will be completed within 6 months from the final report, which will
be produced 18-24 months after the last patient has completed treatment. After
review by the co-authors and the sponsors, this manuscript will be sent to a
major scientific journal.
Authors of the manuscript may include the Study Coordinator, the investigators
who have included more than 5% of the eligible patients in the trial (by order
of inclusion), investigators who contributed significant work on the biological
mechanism of action of the vaccine, and the Data Center coordinator and
statistician in charge of the trial.
Interim publication or presentation of the study may include demographic and
toxicity data, but no data on activity may be made publicly available before the
recruitment is discontinued.
All publications, abstracts or presentations including data from the present
trial will be submitted for review to the Steering Committee at least two weeks
prior to submission for abstracts, and four weeks prior to submission for
manuscripts and slides for presentation. However, the sponsors will not be able
to veto any publication.
An additional report for registration of the drug will be written by the
sponsors.
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23. ADMINISTRATIVE SIGNATURES
Dr G Giaccone --------------------------- ----------------------
Study Coordinator Date
EORTC LCCG
D. Curran --------------------------- ----------------------
Biostatistician Date
EORTC Data Center
Dr Lothar H. Finke --------------------------- ----------------------
For Merck KGaA Date
Dr Harlan W. Waksal --------------------------- ----------------------
For ImClone Systems Inc. Date
Dr Larry Blankstein --------------------------- ----------------------
For Quintiles Inc. Date
Dr. P. Therasse --------------------------- ----------------------
Director EORTC Data Center Date
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24. LIST OF PARTICIPATING COUNTRIES
EUROPE EORTC Lung Cancer Cooperative Group
Spanish Lung Group
Other individual centers in Europe
NORTH AMERICA Memorial Sloan Kettering Cancer Center
Individual centers of the Veterans'
Administration
Other individual centers in North America
AUSTRALIA/NEW-ZEALAND Australian / New-Zealand individual centers
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Kahn M, Hellstrom I, Estin CD, Hellstrom KE. Monoclonal anti-idiotypic
antibodies related to the p97 human melanoma antigen. Cancer Res 1989;
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McCaffery M, Yao T-J, Williams L, Livingston P, Hougton A, Chapman P.
Immunization of melanoma patients with BEC2 anti-idiotypic monoclonal antibody
that mimics GD3 ganglioside: enhanced immunogenicity when combined with
adjuvant. Clinical Cancer Research 1996; 2:679-686.
McNamara MK, Ward RE, Kohler H. Monoclonal idiotype vaccine against
Streptococcus pneumonia infection. Science 1984; 226:1325-1326.
Mittelman A, Chen ZJ, Kageshita T, et al. Active specific immunotherapy in
patients with melanoma. A clinical trial with mouse anti-idiotypic monoclonal
antibodies elicited with syngeneic anti-high-molecular-weight
melanoma-associated antigen monoclonal antibodies. J Clin Invest 1990;
86:2136-2144.
Mittelman A, Chen ZJ, Yang H, Won GY, Ferrone S. Human high molecular weight
melanoma-associated antigen (HMW-MAA) mimicry by mouse anti-idiotypic monoclonal
antibody MK2-23: Induction of humoral anti-HMW-MAA immunity and prolongation of
survival in patients with stage IV melanoma. Proc Natl Acad Sci, USA 1992;
89:466-470.
Nepom GT, Nelson KA, Hol SL, Hellstrom I, Hellstrom KE. Induction of immunity to
a human tumor marker by in vivo administration of anti-idiotypic antibodies in
mice. Proc Natl Acad Sci, USA 1984; 81:2864-2867.
O'Brien PC, Fleming TR. A multiple testing procedure for clinical trials.
Pignon JP, Arriagada R, Ihde DC, et al. A meta-analysis of thoracic radiotherapy
for small-cell lung cancer. New Engl. J. Med. 327, 1618-1624, 1992.
Pocock SJ and Simon R. Sequential treatment assignment with balancing for
prognostic factors in the controlled clinical trial. Biometrics, 1975;
31:103-115.
Raychaudhuri S, Saeki Y, Fuji H, Kohler H. Tumor-specific idiotype vaccines. I.
Generation and characterization of internal image tumor antigen. J Immunol 1986;
137:1743-1749.
Rosenberg SA, DeVita VT, HeIlman 5, eds. Cancer. Principles and Practice of
Oncology, ed 5. Chapter 18, pp 361-364 Philadelphia: Lippincott-Raven 1997
Sacks Dl, Kirchoff LV, Hieny S. Sher A. Molecular mimicry of a carbohydrate
epitope on a major surface glycoprotein of Trypanosoma cruzi by using
anti-idiotype antibodies. J Immunol 1985; 135:4155-4159.
Sekine M, Ariga T, Miyatake T, Kase R, Suzuki A., Yamakawa T. An interspecies
comparison of gangliosides and neutral glycolipids in adrenal glands. J Biochem
1985;97:1219-1227.
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Sharpe AH, Gaulton GN, McDade KK. Fields BN. Greene MI. Syngeneic monoclonal
anti-idiotype can induce cellular immunity to reovirus. J Exp Med
1984;160:l195-1205.
Stein KE, Soderstrom T. Neonatal administration of idiotype or anti-idiotype
primes for protection against Eschericia coli K13 infection in mice. J Exp Med
1984;160:l00l-1011.
WHO handbook for reporting results of Cancer treatment. WHO offset publication
number 48, Geneva 1979.
Zelen M. Keynote Address on Biostatistics and Data Retrieval. Cancer
Chemotherapy 1973,4:31-42
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References for QoL
B Bergmann, NK Aaronson, S Ahmedzai, S Kaasa, M Sullivan for the EORTC Study
Group on Quality of Life; The EORTC QLQ-LC13: a modular supplement to the EORTC
core quality of life questionnaire (QLQ-C30) for use in lung cancer clinical
trials. Eur J Cancer (1994) 30A(5): 635-642.
H Schipper, J Clinch, V Powell; Definitions and conceptual issues; In Spilker B
(ed.) Quality of life assessment in clinical trials, pp. 11-24, Raven Press,
New York, 1990.
NK Aaronson et al.; The European Organization for Research and Treatment of
Cancer QLQ-C30: A Quality of Life instrument for use in international clinical
trials in onkology. J Natl Cancer Inst (1993) 85(5):365-376.
NK Aaronson, A Cull, S Kaasa, MAO Sprangers for the EORTC Study Group on Quality
of Life; The European Organization for Research and Treatment of Cancer (EORTC)
modular approach to quality of life assessment in oncology. Int. J. Ment. Health
(1994) 23(2): 75-96.
References for health economics
MA Rosenthal, PJ Webster, VJ Gebski, RC Stuart-Harris, AO Langlands, J
Boyages;The cost of treating small cell lung cancer; The Medical Journal of
Australia (1992) 156:605-610
MS Baker, LG Kessler, N Urban, RC Smucker; Estimating the treatment costs of
breast and lung cancer; Medical Care (1991) 29 No.1: 40-49
Onkos, Small Cell Lung Cancer; Decision0Resources,0Inc.; Waltham,
Massachussetts; October 1995
WK Evans, BP Will, JM Berthelot, MC Wolfson; Diagnostic and therapeutic
approaches to lung cancer in Canada and their costs; British Journal of Cancer
(1995) 72: 1270-1277
WK Evans, BP Will, JM Berthelot, MC Wolfson; The economics of lung cancer
management in Canada; Lung Cancer (1996) 14: 19-29
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26. APPENDICES
I. Performance Status Scale (Karnofsky / WHO)
II. Drug medication guidelines
III. EORTC Quality of Life evaluation
IV. Patient information / informed consent template
V. Common toxicity criteria (NCIC - CTC) scale
VI. Declaration of Helsinki
VII. Working procedure on data entry
VIII. Ancillary studies on biological efficacy
IX. PPD testing
X. Induction therapy flow chart
XI. Overall study flow chart
XII. Vaccination instructions
XIII. List of abbreviations
XIV. Study acknowledgment
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26.1 APPENDIX I: PERFORMANCE STATUS SCALES
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STATUS SCALES STATUS
- --------------------------------------------------------------------------------
KARNOFSKY ZUBROD-ECOG-
% WHO
Normal, no complaints 100 0 normal activity
Able to carry on normal activities 90 1 Symptoms, but
fully ambulatory
Minor signs or symptoms of disease
Normal activity with effort 80
Cares for self. Unable to carry on 70 2 Symptomatic, but
normal activity or to do active work in bed <50% of the
day.
Requires occasional assistance, but 60
able to care for most of his needs
Requires considerable assistance 50 3 Needs to be in bed
and frequent medical care >50% of the day,
but not bedridden
Disabled. Requires special care and 40
assistance
Severely disabled. Hospitalization 30 4 Unable to get out
indicated though death non imminent of bed
Very sick. Hospitalization 20
necessary. Active supportive
treatment necessary
Moribund 10
Dead 0 5 Dead
- --------------------------------------------------------------------------------
From: Minna J.D., Higgins G.A and Glatstein E.J. Cancer of the lung. In: DeVita
V, Hellman S., Roxenberg S., (Eds.). Cancer: Principles and Practice of
Oncology, Lippincott, Philadelphia, 1984, p.536.
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26.2 APPENDIX II: DRUG MEDICATION GUIDELINES
26.2.1 DRUG SUPPLY
Study material will be supplied by the sponsors free of charge.
Distribution of the study medication will be conducted from three
different distributors in the particular regions involved in this
trial (see page 3):
In Europe: Study drug will be supplied to the centers by Merck KGaA
In North America: Study drug will be supplied to the centers by
ImClone Systems Inc.
In Australia and New Zealand: Study drug will be supplied to the
centers by Quintiles Pty. under the authority of Merck KGaA
Depending on the commitment of the individual centers with regard to
the expected inclusion rate, the centers will be pre-stocked with a
basic supply of study medication. All regional distributors will
receive on-line notice of randomization by EUROCODE. Re-supply will
be shipped to the centers automatically. In case that there were any
problems with regard to supply of the study medication or the study
medication itself the following institutions should be contacted:
26.2.2 DISPOSAL OF STUDY DRUGS
The study medication may not be used for any purpose other than the
study in question, since the insurance coverage shall otherwise
become null and void.
Opened containers of BEC2, BCG, used transfer vials, or any product,
equipment, supplies or receptacles that contact the BEC2, BCG, or
BEC2//BCG vaccine must be considered chemotherapy or biohazardous
waste and disposed of accord to the documented procedures of the
investigational center. The documented procedure must be available
for review and approved by the sponsors or their designees prior to
initiating the study. Unopened BEC2/BCG vaccine packages may be
returned to the sponsors or their designees at the completion of the
investigational study or as directed by the sponsors or their
designees.
26.22 BEC2/BCG VACCINE PATIENT DOSE KIT
1) one vial BCG, lyophilized (2 mL amber vial, containing lyo powder
BCG)
2) BCG Diluent (2 mL clear glass vial, containing 1.5 mL clear
liquid)
3) BEC2 (2 mL clear glass vial, containing 1 mL clear liquid)
4) Sterile Empty Vial
5) Phosphate-buffered Saline
All vials will be in a single foam-inserted carton of approximate
size of 13 cm long, 3.5 cm wide and 6 cm high with an outer label.
Each patient kit will contain all materials necessary to administer
one patient dose of therapy regardless of which dose in the regime
it may be.
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26.3 APPENDIX III: EORTC QUALITY OF LIFE EVALUATION
26.3.1 EORTC QUALITY OF LIFE EVALUATION: GUIDELINES FOR ADMINISTRATION OF
QUESTIONNAIRES
The instructions given below are intended to provide some general guidelines for
collecting quality of life (QoL) data in EORTC studies. These instructions apply
for all types of questionnaires.
1. Who is the responsible person (RP) for QoL data collection?
The overall-responsible person for QoL data collection is the study-coordinator
of the trial. However, for practical reasons it is strongly recommended that one
person is responsible for the organization of QoL data collection in each
institution. This can be a physician, data manager, (research) nurse or a
psychologist. Such a person should have the full protocol at his/her disposal as
well as the questionnaire. This person would also be the intermediate contact
point in case of any necessary clarification asked by the Data Center.
2. Who should fill out the questionnaire?
In principle it is the patient him/herself who has to fill out QoL forms and
preferably without help from others. In case a patient is too sick to fill out
the questionnaire or if the patient is not able to fill out the questionnaire
for reasons such as forgetting his/her glasses, another person could read the
questions without making any comments and report the answers on the forms. If a
patient received this type of help, please note this on the form.
3. What instructions should be given to the patient?
At entry in a study, the RP should give the patient an explanation of the
objective of the study and instructions for filling out questionnaires.
The patient should be informed that participation in the QoL protocol is
voluntary and that the information provided is confidential (identification is
only for administrative purposes and includes patient's initials, date of birth
and today's date).
The following issues should be explained to the patient:
* The schedule of assessments.
* The questionnaire is a self administered questionnaire that should
be filled out preferably by the patient him(her)self.
* The patient should (circle) the choice that best corresponds to
his/her situation.
* There is no right or wrong answer to any of these questions.
* All questions should be answered.
The RP should make sure that the patient understands the instructions.
At each subsequent assessment as defined by the protocol, the patient should
receive the questionnaire by the RP or by other appropriate staff if the RP is
not available.
4. Where should the patient fill out the questionnaire?
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The patient should complete the questionnaire in the clinic, and, ideally in a
quiet, private room. If this is not possible, the waiting room is an acceptable
alternative. In general it does not take more than 5 to 10 minutes to fill out a
questionnaire, but patients should be given the time they need to answer all
questions.
5. When should the patient fill out the questionnaire?
When a QoL assessment is planned, the questionnaire should be given to the
patient preferably before the meeting with the physician, ensuring that the
patient has enough time to complete the questionnaire. If the patient receives a
therapy, the questionnaire should be filled out before administration of the
treatment. The questionnaire should not be taken home and/or mailed.
6. Review of the completed questionnaire.
After the patient has filled out the questions, the person handling the
questionnaire should:
* Check the answers for omissions, for incorrectly completed questions and
for inconsistent answers;
If this is the case:
* Please ask the patient for the reason of omissions or incorrect answers.
If the patient prefers not to answer a question this should be noted on
the form;
* Additional explanation may be provided, but the questions should not be
rephrased;
* Any additional comments could be added by the person handling the
questionnaire (if possible in English) followed by his name and signature.
7. Missing forms.
If for some reason the patient is unable or does not wish to complete a quality
of life questionnaire the reason and the date of visit should be documented on
the questionnaire and returned to the person responsible for completing the
CRF's (case record forms).
8. Mailing to the Data Center.
The questionnaire should be faxed to the Data Center with the CRF's. As it is
not possible to retrospectively collect missing quality of life forms, please
make sure the patient completes the questionnaire at the time-point when he/she
is supposed to fill it out.
Thank you very much for your cooperation. If you have any remarks on this
leaflet or if you need further information, please contact:
Quality of Life Unit - EORTC Data Center:
Phone: +32 2 774 16 06
Fax: +32 2 772 67 01
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26.3.2 EORTC QLQ - C30 (VERSION 2.0.)
We are interested in some things about you and your health. Please answer all of
the questions yourself by circling the number that best applies to you. There
are no "right" or "wrong" answers. The information that you provide will remain
strictly confidential.
Please fill in your initials: _____________
Your birthdate (Day, Month, Year): __________________
Today's date (Day, Month, Year): __________________
NO Yes
1. Do you have any trouble doing strenuous activities,
like carrying a heavy shopping bag or a suitcase? 1 2
2. Do you have any trouble taking a long walk? 1 2
3. Do you have any trouble taking a short walk outside of the
house? 1 2
4. Do you have to stay in a bed or a chair for most of the day? 1 2
5. Do you need help with eating, dressing, washing yourself or
using the toilet? 1 2
During the past week: Not at A Quite Very
All Little a Bit Much
6. Were you limited in doing either your work or
other daily activities? 1 2 3 4
7. Were you limited in pursuing your hobbies or
other leisure time activities? 1 2 3 4
8. Were you short of breath? 1 2 3 4
9. Have you had pain? 1 2 3 4
10. Did you need to rest? 1 2 3 4
11. Have you had trouble sleeping? 1 2 3 4
12. Have you felt weak? 1 2 3 4
13. Have you lacked appetite? 1 2 3 4
14. Have you felt nauseated? 1 2 3 4
15. Have you vomited? 1 2 3 4
Please go on to the next
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During the past week:
Not at A Quite Very
All Little a Bit Much
16. Have you been constipated? 1 2 3 4
17. Have you had diarrhea? 1 2 3 4
18. Were you tired? 1 2 3 4
19. Did pain interfere with your daily
activities? 1 2 3 4
20. Have you had difficulty in concentrating on
things, like reading a newspaper or watching
television? 1 2 3 4
21. Did you feel tense? 1 2 3 4
22. Did you worry? 1 2 3 4
23. Did you feel irritable? 1 2 3 4
24. Did you feel depressed? 1 2 3 4
25. Have you had difficulty remembering things? 1 2 3 4
26. Has your physical condition or medical
treatment interfered with your family life? 1 2 3 4
27. Has your physical condition or medical
treatment interfered with your social
activities? 1 2 3 4
28. Has your physical condition or medical
treatment caused you financial difficulties? 1 2 3 4
For the following questions please circle the number between 1 and 7 that best
applies to you
29. How would you rate your overall health during the past week?
1 2 3 4 5 6 7
Very Poor Excellent
30. How would you rate your overall quality of life during the past week?
1 2 3 4 5 6 7
Very Poor Excellent
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26.3.3 EORTC QLQ - LCl3
Patients sometimes report that they have the following symptoms. Please indicate
the extent to which you have experienced these symptoms during the past week.
- --------------------------------------------------------------------------------
During the past week: Not at A Quite Very
All Little a Bit Much
31. How much did you cough? 1 2 3 4
32. Did you cough blood? 1 2 3 4
33. Were you short of breath when you rested? 1 2 3 4
34. Were you short of breath when you walked? 1 2 3 4
35. Were you short of breath when you climbed
stairs? 1 2 3 4
36. Have you had a sore mouth or tongue? 1 2 3 4
37. Have you had trouble swallowing? 1 2 3 4
38. Have you had tingling hands or feet? 1 2 3 4
39. Have you had hair loss? 1 2 3 4
40. Have you had pain in your chest? 1 2 3 4
41. Have you had pain in your arm or shoulder? 1 2 3 4
42. Have you had pain in other parts of your body? 1 2 3 4
If yes, where _______________________________
43. Did you take any medicine for pain?
1 No 2 Yes
If yes, how much did it help? 1 2 3 4
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26.3.4 EORTC HEALTH THERMOMETER
Health can be defined as a state of physical, psychological, and social
well-being.
We would like to ask you to indicate on the scale below, how good or bad
you consider your overall health state during the past week. Please draw a
horizontal line at the most appropriate point on the scale somewhere
between 100 and 0, where 100 stands for 'Perfect health' and 0 means
'Worst imaginable health'.
-------------------------------------
Example: if during the past week your
overall health state has been almost
perfect, your mark on the thermometer
would be close to 100.
[GRAPHIC OMITTED]
-------------------------------------
-------------------------------------
During the past week: how do you rate
your overall health state?
-------------------------------------
[GRAPHIC OMITTED]
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26.4 APPENDIX IV: PATIENT INFORMATION/INFORMED CONSENT TEMPLATE
PROPOSAL FOR PATIENT INFORMED CONSENT FOR CLINICAL RESEARCH
You are being asked to participate in a clinical research study. In order to
decide whether or not you should agree to be part of this research study, you
should understand enough about its risks and benefits to make an informed
consent. This process is known as informed consent.
This consent form gives detailed information about the research study which the
doctor will discuss with you. Once you understand the study, you will be asked
to sign this form if you wish to participate. You will receive a copy to keep as
a record.
The research study being proposed to you is: SURVIVAL IN AN INTERNATIONAL PHASE
III PROSPECTIVE RANDOMIZED LD SMALL CELL LUNG CANCER VACCINATION STUDY WITH
ADJUVANT BEC2 AND BCG
PURPOSE OF RESEARCH STUDY
The purpose of this study is to determine whether immunization with the antibody
BEC2 in combination with BCG can stimulate your immune system to make antibodies
against small-cell lung cancer cells that might still remain in your body.
Antibodies are substances made by the immune system to target foreign invaders
such as bacteria. BEC2 is a mouse antibody containing a portion that resembles
G(D3) ganglioside. G(D3) is a substance found on the majority of small cell lung
cancers. BCG is a strain of the microbe Mycobacterium bovis and has been used to
immunize against tuberculosis. BCG has been used for many years with vaccines to
boost the effects of these vaccines. We are adding BCG to BEC2 in an attempt to
improve the ability of BEC2 to stimulate your immune system. When BEC2 is
injected into the body, the immune system will recognize BEC2 as foreign, since
it was made in a mouse, and produce antibodies against BEC2. It is expected that
some of these antibodies will be against the portion of BEC2 that resembles
G(D3) and that these antibodies will also react with G(D3) on any small-cell
lung cancer that might still be present in your body. We hope that these
antibodies will kill any remaining small-cell lung cancer cells in your body and
prevent the tumor from coming back.
The overall study design will consist of the following three parts:
Diagnosis, Standard Induction Therapy, and Restaging
First of all your doctor has to establish the diagnosis of limited disease small
cell lung cancer. Subsequently, a standard induction therapy will be given to
you, consisting of a combination of 2 or 3 anticancer drugs, for 4 or 5 cycles.
In addition, you will receive radiation therapy to your chest. You may also
undergo radiation therapy to the brain, if your physician recommends this
additional treatment.
The success of the induction therapy will be evaluated within a period of 6-8
weeks after administration of the last chemotherapy or radiation therapy. Even
if your tumor responds (decreases significantly in size or resolves completely
following chemotherapy), the cancer may
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recur. The clinical research study can only be offered to you if the induction
therapy results in a complete or partial remission. This means that the tumor as
found at initial diagnosis has to be reduced by a minimum of 50% at restaging by
chest-X-ray, clinical examination, and computed tomography of the thorax and
upper abdomen.
DESCRIPTION OF RESEARCH PROCEDURES
The aim of a clinical study is to prove or disprove that the new treatment is
superior to established treatment modalities and has acceptable side effects. In
this controlled clinical trial half of the patients will be treated with the
investigational treatment and half will not receive any farther treatment after
completion of standard induction therapy. This controlled clinical research
study can only offered to you if the standard induction therapy results in
complete or partial remission. This means that the tumor as found at initial
diagnosis has been reduced by a minimum of 50% at restaging by chest X-ray,
computed tomography of the thorax and upper abdomen and clinical examination. To
achieve a proper assignment of patients to both patients groups a procedure
called randomization will be performed. This is an assignment by chance. You
will be randomized to either the observation or experimental arm. If you are
assigned to the observation arm, you will receive no cancer specific therapy
until you have documented progression of disease. If you are assigned to the
experimental arm, you will receive 5 injections of BEC2 with BCG as an
outpatient over the course of ten weeks. BEC2 and BCG will be mixed together and
injected into the skin in your arms and legs. The first four injections will be
given two weeks apart; 1 month later you will be given the fifth injection.
Treatment will be stopped if you show progression of disease or if you refuse
further treatment. Approx. 60 ml blood will be drawn prior to each injection.
Additional blood samples may be requested after completing the course of
vaccinations. These blood tests are designed to detect whether your immune
system is producing antibodies against G(D3) ganglioside. In addition, these
blood tests can help detect side effects that might be caused by BEC2 and/or
BCG. You will be followed, starting 6 months after randomisation until you have
progression of disease. The total duration of the study, beginning from
induction therapy through vaccination and follow-up, is approx. 24 months.
Approximately 820 patients will be registered at time point of diagnosis in
order to be able to randomize 570 responding patients.
RISKS of the investigational treatment
Injection of BCG into the skin will result in inflammation, redness, swelling,
itching and crusting at the sites of injection. A low-grade fever, lasting 4-24
hours after each immunization, may occur. The inflamed injections sites may
drain a small amount of fluid for up to several weeks. The inflammation will
resolve and heal, and can leave a scar. BCG is a live but weakened bacteria, and
there is a small chance that a generalized infection could develop although this
is very unlikely. If a generalized infection were to develop it would be treated
with antibiotics. After receiving immunization with BCG certain tests for
tuberculosis will become positive, however this does not mean that you have
tuberculosis.
Side effects previously observed with the combination BEC2/BCG vaccine include:
fever, muscle aches, fatigue/general body weakness, elevated blood glucose
levels, flu-like symptoms, dry mouth, increased liver enzyme levels, and pain,
inflammation and scarring at the injection site.
G(D3) is found in a few normal tissues in addition to small cell lung cancer
cells. Therefore, if immunization with BEC2 induces antibodies against G(D3), it
is theoretically possible that these
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antibodies might also attack normal tissue and cause damage. For example,
inflammation of the adrenal gland could result in blood pressure changes.
Since BEC2 is a mouse protein, allergic reactions are possible. Generalized
allergic reactions, such as hives and itching, may occur. When very high doses
of mouse monoclonal antibodies (higher than we intend to use in this study) have
been injected intravenously into patients, more pronounced allergic reactions
were seen, such as wheezing, chest discomfort, fever, diarrhea, and nausea.
Life-threatening allergic reactions (anaphylactic shock) or death can
theoretically occur but are considered unlikely. Since BEC2 is a mouse
monoclonal antibody, you might not be eligible for future treatment with other
mouse monoclonal antibodies, as a result of your participation in this trial. In
the initial studies with BEC2, no significant allergic reactions or deaths due
to BEC2/BCG were observed. BEC2 is a mouse monoclonal antibody. BEC2 has no
known effect on the thyroid gland but may interfere with the results of
laboratory tests to evaluate thyroid function. The antibody may also interfere
with certain other laboratory tests.
RISKS of the standard induction therapy.
Side effects of chemotherapy and radiotherapy are well known, and will be in
detail explained to you by your doctor. They may slightly vary depending on the
drugs used, the schedule and the timing. Side effects of chemotherapy usually
consist of nausea and vomiting, hairloss, reduction of white blood cells and
platelets. Side effects of radiation therapy may include pain with swallowing
and fatigue.
General RISKS and considerations
Treatment under this protocol may involve unforeseeable risks to an unborn child
if a woman should become pregnant during the course of these immunizations. For
this reason, women of childbearing age must use effective contraceptive during
participation in this study. In addition, male patients should take the
necessary precautions to prevent pregnancy.
You will be informed of any new findings which might affect your willingness to
participate. If you are injured as a results of your participation in this
research study, emergency care, hospitalization and outpatient care will be made
available by the hospital. If you seek additional help whilst you are taking
part in this study, for what ever reason, your doctor must be informed.
BENEFITS
Although we hope that this research study will be of benefit to you, or that it
will help others, we cannot guarantee that it will help you directly.
FINANCIAL COST
You are responsible for the costs of routine physician visits and the usual
laboratory tests. There will be no charge to you for the BEC2 vaccine or for
tests performed to measure your immunity. If you are injured as a result of your
participation in this research study, care will be provided to you.
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INSURANCE
There is a possibility that unforeseen adverse events can occur with any
medication however you will be protected by an insurance policy against such
risk. (Colonia Insurance Germany, Policy Number: 60 20 60 10204). This is in
accordance with the laws of your country and will be available for all patients
taking part in this study.
PRIVACY
Your research and hospital records are confidential. Your name or any other
personally identifying information will not be used in reports or publications
resulting from this study. A record of your progress in this study will be
passed on to the EORTC data center and finally to the sponsors of this trial,
Merck KGaA and ImClone Systems Inc.. All documents received by the sponsors and
other parties acting in the name of the sponsors will be strictly confidential
and will be only identified by a trial number and your initials. A copy of this
documents will be held with your patient files. Moreover, your progress in the
study will be checked against your clinical records by sponsors or firms acting
in the names of the sponsor's employees. By signing this informend consent form
you authorize representatives of the The Food and Drug Administration, the EMEA,
or other authorized agents and the sponsors to inspect your medical records.
RIGHT TO REFUSE OR WITHDRAW
The choice to enter or not to enter this study is yours. You are in a position
to make a decision if you understand what the doctor has explained and what you
have read about the research study and other possible forms of care. If you
decide not to participate, you will be offered other treatment based on your
needs and your cancer. If you begin the study, you still have a right to
withdraw at any time. If you should withdraw, you will be offered other
available care which suits your needs and medical condition.
TERMINATION OF STUDY
Treatment with the investigational drug may be ended if your small cell lung
cancer recurs, if the doctors treating you see side effects that they consider
dangerous, if you refuse to have the treatments as recommended by your doctor or
if you refuse to have the tests needed to determine whether the treatment is
safe and effective, or if you become pregnant.
This research study has been reviewed by INSTITUTION'S Institutional Review
Board. This Board is legally responsable for making sure that research with
patients is appropriate and that the patient's rights and welfare are protected.
The physician in charge of this research study is ______________, telephone
number _____________ If you need more information about this study before you
decide to join, or at any other time, you may wish to contact him. In the event
that you do decide to participate, he should also be called if there are side
effects from the treatment. A non-physician whom you may call for information
about the consent process, research patient's rights, or research-related injury
is _______________, telephone number _________
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- --------------------------------------------------------------------------------
PATIENT INFORMED CONSENT FOR CLINICAL RESEARCH
Title: SURVIVAL IN AN INTERNATIONAL PHASE III PROSPECTIVE RANDOMIZED LD SMALL
CELL LUNG CANCER VACCINATION STUDY WITH ADJUVANT BEC2 AND BCG
Purpose: To determine whether immunization with BEC2 in combination with BCG
following chemotherapy in patients with limited disease small-cell lung cancer
results in longer survival than chemotherapy alone. The study will also study
the "progression free survival" in the two separate treatment groups, toxicities
associated with the study agents BEC2 and BCG, and the effect of these agents on
the patients quality of life.
STATEMENT OF PHYSICIAN OBTAINING INFORMED CONSENT
I have fully explained this research study to the patient ______________ In my
judgment, and the patient's, there was sufficient access to information,
including risks and benefits, to make an informed decision.
DATE:_________________
PHYSICIAN'S SIGNATURE:___________________
PHYSICIAN'S NAME:________________________
PATIENTS STATEMENT
I have read the description of the clinical research study or have had it
translated into a language I understand. I have also talked it over with the
doctor to my satisfaction. I understand that my participation is voluntary. I
know enough about the purpose, methods, risks, and benefits of the research
study to judge that I want to take part in it.
PATIENTS NAME:___________________________
PATIENTS SIGNATURE:______________________
DATE:_________________
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- --------------------------------------------------------------------------------
26.5 APPENDIX V: COMMON TOXICITY CRITERIA (NCIC - CTC) SCALE
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
ALLERGY
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
AL LER Allergy none transient rash, fever urticaria, fever = serum sickness, anaphylaxis
< 38(degrees)C, 38(degrees)C, bronchospasm, req
100.4(degrees)F 100.4(degrees)F, mild parenteral meds
bronchospasm
-----------------------------------------------------------------------------------------------------------
Fever felt to be caused by drug allergy should be coded as ALLERGY (AL LER). Non allergic drug fever (e.g.
as from biologics) should be coded under FLU-LIKE SYMPTOMS (FL FEV). If fever is due to infection, code
INFECTION only (IN FEC or IN NEU). NB: Protocols requiring detailed reporting of hypersensitivity
reactions, will include a Hypersensitivity Reaction module.
- ------------------------------------------------------------------------------------------------------------------------------------
AL OTH other * none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
BLOOT/BONE MARROW (SI UNITS)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
BL WBC White >=4.0 10(caret)9/1 3.0 - 3.9 2.0 - 2.9 1.0 - 1.9 < 1.0
Blood Count
(WBC)
- ------------------------------------------------------------------------------------------------------------------------------------
BL PLT Platelets WNL 10(caret)9/1 75.0 - normal 50.0 - 74.9 25.0 - 49.9 < 25.0
- ------------------------------------------------------------------------------------------------------------------------------------
BL HGB WNL g/1 100 - normal 80 - 99 65 - 79 < 65
Hemoglobin (Hgb)
- ------------------------------------------------------------------------------------------------------------------------------------
BL GRA >= 2.0 10(caret)9/1 1.5 - 1.9 1.0 - 1.4 0.5 - 0.9 < 0.5
granulocytes (i.e.
neuts + bands)
- ------------------------------------------------------------------------------------------------------------------------------------
BL LYM >= 2.0 10(caret)9/1 1.5 - 1.9 1.0 - 1.4 0.5 - 0.9 < 0.5
Lymphocytes
- ------------------------------------------------------------------------------------------------------------------------------------
BL HEM none mild, no transfusion gross, 1-2 units gross, 3-4 units massive, > 4
Hemorrhage (includes transfusion per transfusion per units transfusion
resulting from bruise/hematoma, episode episode per episode
thrombocytopenia petechiae)
(clinical)
- ------------------------------------------------------------------------------------------------------------------------------------
BL OTH Other * none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
CANCER RELATED SYMPTOMS
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
CA DEA Death - - - - -
from malignant
disease within 30
days of treatment *
(grade 5)
- ------------------------------------------------------------------------------------------------------------------------------------
CA PAI Cancer none pain, but no treatment pain controlled with pain controlled uncontrollable pain
pain * req non-opioids with opioids
- ------------------------------------------------------------------------------------------------------------------------------------
CA SEC Second none - - present -
malignancy *
- ------------------------------------------------------------------------------------------------------------------------------------
CA OTH Other * none mild moderate severe life threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
CARDIOVASCULAR
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
CD ART Arterial * none - - transient events (e.g. permanent event
(non myocardial) transient ischemic (e.g. cerebral
attack) vascular accident)
- ------------------------------------------------------------------------------------------------------------------------------------
CD VEN Venous * none superficial (excludes deep vein thrombosis deep vein thrombosis pulmonary embolism
IV site not req anticoagulant req anticoagulant
reaction -> code therapy therapy
SK LTO)
- ------------------------------------------------------------------------------------------------------------------------------------
CD DYS none asymptomatic, recurrent or req therapy req monitoring, or
Dysrhythmias transient, req no persistent, hypotension, or
therapy req no therapy ventricular tachy-
cardia, or
fibrillation
- ------------------------------------------------------------------------------------------------------------------------------------
CD EDE Edema * none 1+ or dependent in 2+ or dependent 3+ 4+, generalized
(eg. peripheral evening only throughout day anasarca
edema)
====================================================================================================================================
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
CD FUN Function none asymptomatic, decline asymptomatic, decline mild CHF, responsive severe or refractory
of resting ejection of resting ejection to therapy CHF
fraction of >=10% but fraction by >20% of
< 20% of baseline baseline value
value
- ------------------------------------------------------------------------------------------------------------------------------------
CD HBP none or no change asymptomatic, transient recurrent or persistent req therapy hypertensive crisis
Hypertension increase by > 20mm increase by
Hg (D)or to > 150/100 > 20mm Hg (D) or to
if previously WNL. > 150/100 if previously
No therapy req WNL.
No therapy req
- ------------------------------------------------------------------------------------------------------------------------------------
CD LBP none or no change changes req no therapy req fluid replacement req therapy + req therapy +
Hypotension (incl. transient or other hospitalization: hospitalization for
orthostatic therapy but no resolves within 48hrs > 48hrs after stopping
hypotension) hospitalization of stopping agent agent
- ------------------------------------------------------------------------------------------------------------------------------------
CD ISC Ischemia none non-specific T wave asymptomatic, ST + T angina without acute myocardial
(myocardial) flattening wave changes evidence for infarction infarction
suggesting ischemia
- ------------------------------------------------------------------------------------------------------------------------------------
CD PAI none pain, but no treatment pain controlled with pain controlled with uncontrollable pain
Pain (chest) * req non-opioids opioids
- ------------------------------------------------------------------------------------------------------------------------------------
CD PER none asymptomatic effusion pericarditis (rub, symptomatic effusion tamponade, drainage
Pericardial no intervention req chest pain, drainage req urgently req; or
ECG changes) constrictive
pericarditis
req surgery
- ------------------------------------------------------------------------------------------------------------------------------------
CD TAC none mild moderate severe life threatening
Sinus tachycardia *
- ------------------------------------------------------------------------------------------------------------------------------------
CD OTH Other * none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
COAGULATION
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
CG FIB Fibrinogen WNL 0.99-0.75 x N 0.74-0.50 x N 0.49-0.25 x N <= 0.24 x N
- ------------------------------------------------------------------------------------------------------------------------------------
CG PT WNL 1.01-1.25 x N 1.26-1.50 x N 1.51-2.00 x N > 2.00 x N
Prothrombin time
- ------------------------------------------------------------------------------------------------------------------------------------
CG PTT Partial WNL 1.01-1.66 x N 1.67-2.33 x N 2.34-3.00 x N > 3.00 x N
thromboplastin
time
- ------------------------------------------------------------------------------------------------------------------------------------
CG OTH Other * none mild moderate severe life threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
DENTITION (TEETH)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
DE DEC none mild moderate severe -
Tooth decay*
- ------------------------------------------------------------------------------------------------------------------------------------
DE PAI none pain, but no treatment pain controlled with pain controlled with uncontrollable pain
Toothache* non-opioids opioids
- ------------------------------------------------------------------------------------------------------------------------------------
DE OTH Other * none mild moderate severe life threatening
====================================================================================================================================
====================================================================================================================================
ENDOCRINE*
====================================================================================================================================
EN AME no irregular menses >= 3 months - -
Amenorrhea
- ------------------------------------------------------------------------------------------------------------------------------------
EN CUS normal mild pronounced - -
Cushingoid
- ------------------------------------------------------------------------------------------------------------------------------------
EN FLA none mild or < 1/day moderate & >= 1/day frequent & interferes -
Hot flashes with normal function
- ------------------------------------------------------------------------------------------------------------------------------------
EN GYN normal mild pronounced or painful - -
Gynecomastia
- ------------------------------------------------------------------------------------------------------------------------------------
EN IMP normal decrease in normal - absense of function -
Impotence/Libido function
- ------------------------------------------------------------------------------------------------------------------------------------
EN OTH Other none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
FLU-LIKE SYMPTOMS
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
FL FEV fever in none 37.1 - 38.0(degrees)C 38.1 - 40.0(degrees)C > 40.0(degrees)C > 40.0(degrees)C
absence of infect.* 98.7 - 100.4(degrees)F 100.5 - 104.4(degrees)F > 104.0(degrees)F (104.0(degrees)F)
(incl. drug fever) for < 24 hrs for > 24 hrs or fever
accompanied by
hypotension
---------------------------------------------------------------------------------------------------------
Fever felt to be caused by drug allergy should be coded as ALLERGY (AL LER). Non allergic drug fever
(e.g. as from biologics) should be coded under FLU-LIKE SYMPTOMS (FL FEV). If fever is due to infection,
code INFECTION only (IN FEC or IN NEU).
- ------------------------------------------------------------------------------------------------------------------------------------
FL HAY Hayfever* none mild moderate severe -
(includes sneezing,
nasal stuffiness,
post-nasal drip)
- ------------------------------------------------------------------------------------------------------------------------------------
FL JOI Arthralgia* none mild moderate severe -
(joint pain)
- ------------------------------------------------------------------------------------------------------------------------------------
FL LET Lethargy* none mild, fall of 1 level in moderate, fall of 2 severe, fall of 3 -
(fatigue, malaise) perf. status level in perf. status levels in perf.
status
- ------------------------------------------------------------------------------------------------------------------------------------
FL MYA Myalgia* none mild moderate severe -
(muscle ache)
- ------------------------------------------------------------------------------------------------------------------------------------
FL RIG none mild or brief pronounced or/and cyanosis -
Rigors/Chills* prolonged
(Gr 3 incl cyanosis)
- ------------------------------------------------------------------------------------------------------------------------------------
FL SWE Sweating* none mild moderate severe -
(diaphoresis)
- ------------------------------------------------------------------------------------------------------------------------------------
FL OTH Other* none mild moderate severe life threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
GASTROINTESTINAL
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GI ANO Anorexia* none mild moderate severe dehydration
- ------------------------------------------------------------------------------------------------------------------------------------
GI APP none mild moderate - -
Appetite increased*
- ------------------------------------------------------------------------------------------------------------------------------------
GI ASC Ascites none mild moderate severe life threatening
(non malignant)*
- ------------------------------------------------------------------------------------------------------------------------------------
GI DIA Diarrhea none increase of 2-3 stools increase of 4-6 stools increase of 7-9 stools increase of >= 10 stools
per day; or mild per day, or nocturnal per day, or per day, or grossly
increase of loose stools; or moderate incontinence, bloody diarrhea, or
watery colostomy increase in loose malabsorption, or grossly bloody
output compared to watery colostomy severe increase in loose clostomy output or
pre-trt output compared to watery colostomy loose watery colostomy
pre-trt output compared with output req parenteral
pre-trt support; dehydration
- ------------------------------------------------------------------------------------------------------------------------------------
GI DPH none dys.or odyn. not req dys. or odyn. req trt dys. or odyn. lasting dys. or odyn. with
Esophagitis/ trt, or painless ulcers > 14 days despite trt 10% loss of body wt,
dysphagia/ on esophagoscopy dehydration, hosp. req
odynophagia* (incl
recall reaction)
- ------------------------------------------------------------------------------------------------------------------------------------
GI DRY Mouth, none mild moderate severe -
nose dryness*
- ------------------------------------------------------------------------------------------------------------------------------------
GI FIS Fistula* none - - req intervention req operation
(intestinal,
esophageal, rectal)
- ------------------------------------------------------------------------------------------------------------------------------------
GI GAS none mild moderate severe -
Flatulence*
- ------------------------------------------------------------------------------------------------------------------------------------
GI HEA none mild moderate severe -
Heartburn*
(incl. dyspepsia)
- ------------------------------------------------------------------------------------------------------------------------------------
GI HEM none mild, no transfusion gross, 1-2 units gross, 3-4 units massive > 4 units
Gastrointestinal transfusion per transfusion per episode transfusion per episode
bleeding* episode
-----------------------------------------------------------------------------------------------------------
Bleeding resulting from thrombocytopenia should be coded under BL HEM, not GI
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GI NAU Nausea none able to eat reasonable intake significantly no significant intake -
intake decreased but can eat
- ------------------------------------------------------------------------------------------------------------------------------------
GI OBS Small no - intermittent, no req intervention req operation
bowel obstruction* intervention
- ------------------------------------------------------------------------------------------------------------------------------------
GI PAI none pain, but no treatment pain controlled with pain controlled with uncontrollable pain
Gastrointestinal req non-opioids opioids
pain/cramping*
(incl. rectal pain)
- ------------------------------------------------------------------------------------------------------------------------------------
GI PRO Proctitis none perianal itch, tenesmus or ulcerations tenesmus or ulcerations mucosal necrosis with
(rectal) hemorrhoids relieved with therapy, or other symptoms not hemorrhage or other
anal fissure relieved with therapy life threatening
proctosis
- ------------------------------------------------------------------------------------------------------------------------------------
GI STO Stomatitis/ none painless ulcers, painful erythema, painful erythema, mucosal necrosis
oral erythema, or mild edema, or ulcers, edema, or ulcers, and and/or req parenteral
soreness but can eat cannot eat or enteral support,
dehydration
- ------------------------------------------------------------------------------------------------------------------------------------
GI TAS Taste, none mild moderate severe -
sense of smell
altered*
- ------------------------------------------------------------------------------------------------------------------------------------
GI ULC none antacid req vigourous medical uncontrolled by perforation or bleeding
Gastritis/ulcer* management or non- medical management;
surgical art req surgery for GI
ulceration
- ------------------------------------------------------------------------------------------------------------------------------------
GI VOM Vomiting none 1 episode in 24hrs 2-5 episodes in 24 hrs 6-10 episodes in > 10 episodes in 24hrs
24hrs or req parenteral
support, dehydration
- ------------------------------------------------------------------------------------------------------------------------------------
GI OTH Other* none mild moderate severe life threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GRADE 0 1 2 3 4
====================================================================================================================================
<CAPTION>
====================================================================================================================================
GENITO-URINARY
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
GU BLA none light epithelial generalized severe generalized necrosis, or contracted
Bladder changes* atrophy, or minor telangiectasia telangiectasia (often bladder (capacity < 100
telangiectasia with petechiae) or ml), or fibrosis
reduction in bladder
capacity (< 15 ml)
- ------------------------------------------------------------------------------------------------------------------------------------
GU CRE WNL < 1.5 x N 1.5 - 3.0 x N 3.1 - 6.0 x N > 6.0 x N
Creatinine
- ------------------------------------------------------------------------------------------------------------------------------------
GU CYS Cystitis* none mild symptoms, req no symptoms relieved symptoms not relieved severe (life threatening)
(non bacterial) intervention completely with ther. despite therapy cystitis
--------------------------------------------------------------------------------------------------------------
Urinary tract infection should be coded under infection not GU
- ------------------------------------------------------------------------------------------------------------------------------------
GU FIS Fistula* none - - req intervention req operation
(vaginal,
vesicovaginal)
- ------------------------------------------------------------------------------------------------------------------------------------
GU FRE none freq of urination or freq of urination or freq with urgency and -
Frequency* nocturia twice pre-trt nocturia < hourly nocturia >= hourly
habit
- ------------------------------------------------------------------------------------------------------------------------------------
GU HEM negative micro only gross, no clots gross + clots req transfusion
Hematuria,
bleeding per vagina
--------------------------------------------------------------------------------------------------------------
Bleeding resulting from thrombocytopenia should be coded under BL HEM not GU.
- ------------------------------------------------------------------------------------------------------------------------------------
GU INC none mild moderate severe -
Incontinence*
- ------------------------------------------------------------------------------------------------------------------------------------
GU OBS Ureteral none unilateral, no surgery bilateral, no surgery not complete bilateral, complete bilateral
obstruction* req but stents, obstruction
nephrostomy tubes or
surgery req
- ------------------------------------------------------------------------------------------------------------------------------------
GU PAI Genito- none pain, but no treatment pain controlled with pain controlled with uncontrollable pain
urinary pain * (eg : req non-opioids opioids
dysuria,
dysmenorrhea,
dyspareunia)
====================================================================================================================================
====================================================================================================================================
GU PRT no change 1 + 2-3 + 4 + nephrotic syndrome
Proteinuria or < 0.3 g/% or 0.3-1.0 g/% or > 1.0 g/%
or < 3 g/l or 3-10 g/l or > 10 g/l
- ------------------------------------------------------------------------------------------------------------------------------------
GU VAG Vaginitis* none mild, no trt req moderate, relieved severe, not relieved life threatening
(+/- vaginal with trt with trt
discharge)
(non-infectious)
- ------------------------------------------------------------------------------------------------------------------------------------
GU OTH Other* none mild moderate severe life-threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
HEPATIC
====================================================================================================================================
HP ALK Alk. within normal <= 2.5 x N (Normal) 2.6 - 5.0 x N 5.1 - 20.0 x N > 20 x N
Phos or limits (WNL)
5'nucleotidase
- ------------------------------------------------------------------------------------------------------------------------------------
HP ALT WNL <= 2.5 x N (Normal) 2.6 - 5.0 x N 5.1 - 20.O x N > 20 x N
Transaminase
SGPT (ALT)
- ------------------------------------------------------------------------------------------------------------------------------------
HP AST WNL <= 2.5 x N (Normal) 2.6 - 5.0 x N 5.1 - 20.0 x N > 20 x N
Transaminase
SGOT (AST)
- ------------------------------------------------------------------------------------------------------------------------------------
HP BIL WNL - < 1.5 x N 1.5 - 3.0 x N > 3.0 x N
Bilirubin
- ------------------------------------------------------------------------------------------------------------------------------------
HP CLI Liver no change from - - precoma hepatic coma
(clinical) baseline
- ------------------------------------------------------------------------------------------------------------------------------------
HP LDH LDH* WNL <= 2.5 x N (Normal) 2.6 - 5.0 x N 5.1 - 20.0 x N > 20 x N
- ------------------------------------------------------------------------------------------------------------------------------------
HP OTH none mild moderate severe life-threatening
Other*
- ------------------------------------------------------------------------------------------------------------------------------------
Viral Hepatitis should be coded as infection rather than liver toxicity.
====================================================================================================================================
<CAPTION>
====================================================================================================================================
INFECTION
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
IN FEC none mild, no active therapy moderate, localized sever systemic life threatening
Infection infection, active infection, req sepsis, specify
therapy req parenteral trt, site
specify site
- ------------------------------------------------------------------------------------------------------------------------------------
IN NEU Febrile none - - present -
Neutropenia*
-------------------------------------------------------------------------------------------------------------------
Absolute Fever felt to be caused by drug allergy should be coded as ALLERGY (AL LER). Non-allergy drug fever (eg. as from
granulocyt biologics) should be coded under FLU-LIKE SYMPTOMS (FL FEV). If fever is due to infection, code INFECTION only
count < 1.0 x (IN FEC or IN NEU).
10(caret)9/1,
fever >= 38.5
(degrees)C
treated with
(or ought to
have been
treated with)
IV antibiotics
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
METABOLIC (SI UNITS)
====================================================================================================================================
MT AMY Amylase WNL < 1.5 x N 1.5 - 2.0 x N 2.1 - 5.0 x N > 5.1 x N
- ------------------------------------------------------------------------------------------------------------------------------------
MT HCA < 2.64 mmol/l 2.64 - 2.88 2.89 - 3.12 3.13 - 3.37 > 3.37
Hypercalcemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LCA > 2.10 mmol/l 2.10 - 1.93 1.92 - 1.74 1.73 - 1.51 <= 1.50
Hypocalcemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT HGL < 6.44 mmol/l 6.44 - 8.90 8.91 - 13.8 13.9 - 27.8 > 27.8 or
Hyperglycemia ketoacidosis
- ------------------------------------------------------------------------------------------------------------------------------------
MT LGL > 3.55 mmol/l 3.03 - 3.55 2.19 - 3.02 1.66 - 2.18 < 1.66
hypoglycemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LKA no change or > 3.5 3.1 - 3.5 2.6 - 3.0 2.1 - 2.5 <= 2.0
Hypokalemia* mmol/l
- ------------------------------------------------------------------------------------------------------------------------------------
MT LMA > 0.70 mmol/l 0.70 - 0.58 0.57 - 0.38 0.37 - 0.30 <= 0.29
Hypomagnesemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LNA no change or > 135 131 - 135 126 - 130 121 - 125 <= 120
Hyponatremia* mmol/l
- ------------------------------------------------------------------------------------------------------------------------------------
MT 0TH Other* none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
METABOLIC (SI UNITS)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
MT AMY Amylase WNL < 1.5 x N 1.5 - 2.0 x N 2.1 - 5.0 x N > 5.1 x N
- ------------------------------------------------------------------------------------------------------------------------------------
MT HCA < 2.64 mmol/l 2.64 - 2.88 2.89 - 3.12 3.13 - 3.37 > 3.37
Hypercalcemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LCA > 2.10 mmol/l 2.10 - 1.93 1.92 - 1.74 1.73 - 1.51 <= 1.50
Hypocalcemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT HGL < 6.44 mmol/l 6.44 - 8.90 8.91 - 13.8 13.9 - 27.8 > 27.8 or
Hyperglycemia ketoacidosis
- ------------------------------------------------------------------------------------------------------------------------------------
MT LGL > 3.55 mmol/l 3.03 - 3.55 2.19 - 3.02 1.66 - 2.18 < 1.66
hypoglycemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LKA no change or > 3.5 3.1 - 3.5 2.6 - 3.0 2.1 - 2.5 <= 2.0
Hypokalemia* mmol/l
- ------------------------------------------------------------------------------------------------------------------------------------
MT LMA > 0.70 mmol/l 0.70 - 0.58 0.57 - 0.38 0.37 - 0.30 <= 0.29
Hypomagnesemia
- ------------------------------------------------------------------------------------------------------------------------------------
MT LNA no change or > 135 131 - 135 126 - 130 121 - 125 <= 120
Hyponatremia* mmol/l
- ------------------------------------------------------------------------------------------------------------------------------------
MT 0TH Other* none mild moderate severe life threatening
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
NEUROLOGIC
====================================================================================================================================
NE CER none slight incoordination, intention tremor, locomotor ataxia cerebellar necrosis
Cerebellar dysdiadochokinesis dysmetria, slurred
speech, nystagmus
- ------------------------------------------------------------------------------------------------------------------------------------
NE CON none or no change mild moderate severe, ileus > 96 hrs
Constipation obstipation
- ------------------------------------------------------------------------------------------------------------------------------------
NE COR Cortical none mild somnolence moderate somnolence severe somnolence, coma, seizures,
(includes confusion, toxic psychosis
drowsiness) disorientation,
hallucinations
- ------------------------------------------------------------------------------------------------------------------------------------
NE DIZ none mild moderate severe -
Dizziness* (includes fainting)
(includes
lightheadedness)
- ------------------------------------------------------------------------------------------------------------------------------------
NE EXT none mild agitation moderate agitation torticollis, -
Extrapyramidal/ (includes restlessness) oculogyric crisis
Involuntary severe agitation
movement*
- ------------------------------------------------------------------------------------------------------------------------------------
NE HED Headache none mild moderate or severe unrelenting and -
but transient severe
- ------------------------------------------------------------------------------------------------------------------------------------
NE HER none or no change asymptomatic hearing tinnitus, symptomatic hearing loss hearing changes or
Altered hearing loss on audiometry hearing changes not interfering with deafness not
only req hearing aid or trt function but correctable
correctable with
hearing aid or trt
- ------------------------------------------------------------------------------------------------------------------------------------
NE INS Insomnia* none mild moderate severe -
- ------------------------------------------------------------------------------------------------------------------------------------
NE MOO Mood no change mild anxiety or moderate anxiety or severe anxiety or suicidal ideation
depression depression depression
- ------------------------------------------------------------------------------------------------------------------------------------
NE MOT Motor none or no change subjective weakness, mild objective objective weakness paralysis
no objective findings weakness without with impairment of
significant impairment function
of function
- ------------------------------------------------------------------------------------------------------------------------------------
NE PAI none pain, but no treatment pain controlled with pain controlled uncontrollable pain
Neurologic pain* req non-opioids with opioids
(eg : jaw pain)
- ------------------------------------------------------------------------------------------------------------------------------------
NE PER no change change, not disruptive disruptive to patient harmful to others psychosis
Personality to patient or family or family or self
change*
- ------------------------------------------------------------------------------------------------------------------------------------
NE SEN Sensory none or no change mild paresthesias of deep mild or moderate sensory loss or -
tendon reflexes (including objective sensory paresthesias that
tingling) loss, moderate interfere with
paresthesias function
- ------------------------------------------------------------------------------------------------------------------------------------
NE VIS Vision none or no change blurred vision - symptomatic blindness
subtotal
loss of vision
- ------------------------------------------------------------------------------------------------------------------------------------
NE 0TH Other* none mild moderate severe life-threatening
(includes pain)
------------------------------------------------------------------------------------------------------------------
Code chest vain CD PAI, muscle aches (myalgia) FL MYA, abdominal pain GI PAI, and local pain at IV site SK LTO.
For all other types of pain (eg. bone pain), code NE 0TH.
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
OCULAR
====================================================================================================================================
OC CAT Cataract* none mild moderate severe -
- ------------------------------------------------------------------------------------------------------------------------------------
OC CJN none erythema or chemosis req trt steroids or corneal ulceration -
Conjunctivis/ not req steroids or antibiotics or visible
Keratitis antibiotics opacification
- ------------------------------------------------------------------------------------------------------------------------------------
OC DRY Dry eye normal mild req artificial tears severe req enucleation
- ------------------------------------------------------------------------------------------------------------------------------------
OC GLA no change - - yes -
Glaucoma
- ------------------------------------------------------------------------------------------------------------------------------------
OC PAI Eye none pain, but no treatment pain controlled with pain controlled uncontrollable pain
pain * req non-opioids with opioids
- ------------------------------------------------------------------------------------------------------------------------------------
OC TEA Tearing * none mild moderate severe -
(watery eyes)
- ------------------------------------------------------------------------------------------------------------------------------------
OC 0TH Other none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
OSSEOUS (BONE)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
OS PAI Bone none pain, but no treatment pain controlled with pain controlled uncontrollable pain
pain * req non-opioids with opioids
- ------------------------------------------------------------------------------------------------------------------------------------
OS 0TH Other none mild moderate severe life threatening
(eg. avascular
necrosis)
====================================================================================================================================
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
PULMONARY
====================================================================================================================================
PU CMD Carbon > 90% decrease to 76 - 90% decrease to 51 - 75% decrease to 26 - 50% decrease to <= 25%
Monoxide Diffusion of pretreatment of pre-trt of pre-trt of pre-trt of pre-trt
Capacity (DLCO)* value
- ------------------------------------------------------------------------------------------------------------------------------------
PU COU Cough* norm mild moderate severe -
- ------------------------------------------------------------------------------------------------------------------------------------
PU EDE none - out-patient management in-patient management req incubation
Pulmonary edema*
- ------------------------------------------------------------------------------------------------------------------------------------
PU EFF none mild moderate severe life threatening
Pleural effusion*
(non-malignant)
- ------------------------------------------------------------------------------------------------------------------------------------
PU FIB Pulmonary normal radiographic changes, - changes with -
fibrosis* no symptoms symptoms
- ------------------------------------------------------------------------------------------------------------------------------------
PU HEM none mild, no transfusion gross, 1 - 2 units gross, 3 - 4 units massive, > 4 units
Hemoptysis* transfusion per transfusion per transfusion per
episode episode episode
---------------------------------------------------------------------------------------------------------------
Bleeding resulting from thrombocytopenia should be coded under BL HEM, not PU
- ------------------------------------------------------------------------------------------------------------------------------------
PU HIC none mild moderate severe -
Hiccoughs*
- ------------------------------------------------------------------------------------------------------------------------------------
PU PAI none pain, but not treatment pain controlled pain controlles uncontrollable pain
Pulmonary pain* req non-opioids with opioids
- ------------------------------------------------------------------------------------------------------------------------------------
PU PNE normal radiographic changes, steriods req oxygen req req assisted
Pneumonitis* symptoms do not req ventilation
(non-infectious) steriods
- ------------------------------------------------------------------------------------------------------------------------------------
PU SOB Shortness none or no change asymptomatic, with dyspnea on significant dyspnea at normal dyspnea at rest,
of breath (dyspnea) abnormality in PFT's exertion level of activity, apnea with cyanosis
(incl wheezing) apnea without
cyanosis
- ------------------------------------------------------------------------------------------------------------------------------------
PU VOI Voice none mild moderate severe -
changes* (incl.
hoarseness, loss
of voice)
- ------------------------------------------------------------------------------------------------------------------------------------
PU 0TH Other* none mild moderate severe life-threatening
- ------------------------------------------------------------------------------------------------------------------------------------
Pneumonia should be considered infection and not graded as pulmonary toxicity unless felt to be
resultant from pulmonary changes directly induced by treatment
====================================================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
====================================================================================================================================
GRADE 0 1 2 3 4
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
====================================================================================================================================
SKIN
====================================================================================================================================
SK ALO Alopecia no loss mild hair loss pronounced or total total body hair -
head hair loss loss
- ------------------------------------------------------------------------------------------------------------------------------------
SK CHA none localized pigmentation generalized subcut.fibrosis or generalized
Skin changes* (eg. changes pigmentation changes localized shallow ulcerations or
photosensitivity) or atrophy ulceration necrosis
- ------------------------------------------------------------------------------------------------------------------------------------
SK DES none dry desquamation moist desquamation confluent moist -
Desquamation* desquamation
- ------------------------------------------------------------------------------------------------------------------------------------
SK DRY Dry skin* none mild moderate severe -
- ------------------------------------------------------------------------------------------------------------------------------------
SK FAC Flushing* none mild moderate severe -
(eg:-facial)
- ------------------------------------------------------------------------------------------------------------------------------------
SK HEM none mild, not transfusion gross, 1 - 2 units gross, 3 - 4 units massive, > 4 units
Bruising/bleeding transfusion per transfusion per transfusion per
episode episode episode
---------------------------------------------------------------------------------------------------------------
Bleeding from thrombocytopenia should be coded under BL HEM, not SK
- ------------------------------------------------------------------------------------------------------------------------------------
SK LTO none pain pain and swelling, ulceration plastic surgery
Local toxicity with inflammation or indicated
(reaction at IV site) phlebitis
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
SK NAI none mild moderate severe -
Nail changes*
- ------------------------------------------------------------------------------------------------------------------------------------
SK PAI Skin pain* none pain, but no treatment pain controlled with pain controlled with uncontrollable pain
(include sclap non-opioids opioids
pain)
- ------------------------------------------------------------------------------------------------------------------------------------
SK RAS Rash/Itch* none or no change scattered macular or scattered macular or generalized exfoliative
(not to due to papular eruption or papular eruption or symptomatic macular, dermatitis or
allergy) (includes) erythema that is erythema with pruritus papular, or ulcerating
recall reaction) asymptomatic or other associated vesicular eruption dermatitis
symptoma
- ------------------------------------------------------------------------------------------------------------------------------------
SK 0TH Other* none mild moderate severe life threatening
====================================================================================================================================
<CAPTION>
====================================================================================================================================
WEIGHT
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
WT GAI < 5.0% 5.0 - 9.9% 10.0 - 19.9% >= 20.0% -
Weight Gain
- ------------------------------------------------------------------------------------------------------------------------------------
WT LOS < 5.0% 5.0 - 9.9% 10.0 - 19.9% >= 20.0% -
Weight Loss
====================================================================================================================================
<CAPTION>
====================================================================================================================================
OTHER
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
OT 0TH Other* none mild moderate severe life-threatening
---------------------------------------------------------------------------------------------------------------
For toxicity which do not have an existing code, but do fit into an existing toxicity category, use "other"
variable in the appropriate toxicity category (eg. code sinus tachycardia CARDIOVASCULAR OTHER (CD 0TH). Only
toxicities which do not fit into existing categories should be coded OTHER OTHER (OT 0TH).
====================================================================================================================================
</TABLE>
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26.6 APPENDIX VI: DECLARATION OF HELSINKI
WORLD MEDICAL ASSOCIATION DECLARATION
OF HELSINKI
Recommendations guiding physicians in
biomedical research involving human subjects
Adopted by the 18th World Medical Assembly
Helsinki, Finland, June 1964
and amended by the
29th World Medical Assembly
Tokyo, Japan, October 1975
35th World Medical Assembly
Venice, Italy, October 1983
and the
41st World Medical Assembly
Hong Kong, September 1989
and the
48th General Assembly
Somerset West, Republic of South Africa, October 1996
Introduction
It is the mission of the physician to safeguard the health of the people. His or
her knowledge and conscience are dedicated to the fulfilment of this mission.
The Declaration of Geneva of the World Medical Association binds the physician
with the words, "The health of my patient will be my first consideration," and
the International Code of Medical Ethics declares that, "A physician shall act
only in the patient's interest when providing medical care which might have the
effect of weakening the physical and mental condition of the patient."
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The purpose of biomedical research involving human subjects must be to improve
diagnostic, therapeutic and prophylactic procedures and the understanding of the
etiology and pathogenesis of disease.
In current medical practice most diagnostic, therapeutic or prophylactic
procedures involve hazards. This applies especially to biomedical research.
Medical progress is based on research which ultimately must rest in part on
experimentation involving human subjects.
In the field of biomedical research a fundamental distinction must be recognised
between medical research in which the aim is essentially diagnostic or
therapeutic for a patient, and medical research, the essential object of which
is purely scientific and without the implication of direct diagnostic or
therapeutic value to the person subjected to the research.
Special caution must be exercised in the conduct of research which may effect
the environment, and the welfare of animals used for research must be respected.
Because it is essential that the results of laboratory experiments be applied to
human beings to further scientific knowledge and to help suffering humanity, the
World Medical Association has prepared the following recommendations as a guide
to every physician in biomedical research involving human subjects. They should
be kept under review in the future. It must be stressed that the standards as
drafted are only a guide to physicians all over the world. Physicians are not
relieved from criminal, civil and ethical responsibilities under the laws of
their own countries.
I. Basic principles
1. Biomedical research involving human subjects must conform to generally
accepted scientific principles and should be based on adequately performed
laboratory and animal experimentation and on a thorough knowledge of the
scientific literature.
2. The design and performance of each experimental procedure involving human
subjects should be clearly formulated in an experimental protocol which
should be transmitted for consideration, comment and guidance to a
specially appointed committee independent of the investigator and the
sponsor provided that this independent committee is in conformity with the
laws and regulations of the country in which the research experiment is
performed.
3. Biomedical research involving human subjects should be conducted only by
scientifically qualified persons and under the supervision of a clinically
competent medical person. The responsibility for the human subject must
always rest with a medically qualified person and never rest on the
subject of the research, even though the subject has given his or her
consent.
4. Biomedical research involving human subjects cannot legitimately be
carried out unless the importance of the objective is in proportion to the
inherent risk to the subject.
5. Every biomedical research project involving human subjects should be
preceded by careful assessment of predictable risks in comparison with
foreseeable benefits to the subject or to others. Concern for the
interests of the subject must always prevail over the interests of science
and society.
6. The right of the research subject to safeguard his or her integrity must
always be respected. Every precaution should be taken to respect the
privacy of the subject and to minimize the impact of the study on the
subject's physical and mental integrity and on the personality of the
subject.
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7. Physicians should abstain from engaging in research projects involving
human subjects unless they are satisfied that the hazards involved are
believed to be predictable. Physicians should cease any investigation if
the hazards are found to outweigh the potential benefits.
8. In publication of the results of his or her research, the physician is
obliged to preserve the accuracy of the results. Reports of
experimentation not in accordance with the principles laid down in this
Declaration should not be accepted for publication.
9. In any research on human beings, each potential subject must be adequately
informed of the aims, methods, anticipated benefits and potential hazards
of the study and the discomfort it may entail. He or she should be
informed that he or she is at liberty to abstain from participation in the
study and that he or she is free to withdraw his or her consent to
participation at any time. The physician should then obtain the subject's
freely-given informed consent, preferably in writing.
10. When obtaining informed consent for the research project the physician
should be particularly cautious if the subject is in a dependent
relationship to him or her or may consent under duress. In that case the
informed consent should be obtained by a physician who is not engaged in
the investigation and who is completely independent of this official
relationship.
11. In case of legal incompetence, informed consent should be obtained from
the legal guardian in accordance with national legislation. Where physical
or mental incapacity makes it impossible to obtain informed consent, or
when the subject is a minor, permission from the responsible relative
replaces that of the subject in accordance with national legislation.
Whenever the minor child is in fact able to give consent, the minor's
consent must be obtained in addition to the consent of the minor's legal
guardian.
12. The research protocol should always contain a statement of the ethical
considerations involved and should indicate that the principles enunciated
in the present Declaration are complied with.
II. Medical research combined with professional care (Clinical research)
1. In the treatment of the sick person, the physician must be free to use a
new diagnostic and therapeutic measure, if in his or her judgement it
offers hope of saving life, re-establishing health or alleviating
suffering.
2. The potential benefits, hazards and discomfort of a new method should be
weighed against the advantages of the best current diagnostic and
therapeutic methods.
3. In any medical study, every patient - including those of a control group,
if any - should be assured of the best proven diagnostic and therapeutic
method. This does not exclude the use of inert placebo in studies where no
proven diagnostic or therapeutic method exist.
4. The refusal of the patient to participate in a study must never interfere
with the physician-patient relationship.
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5. If the physician considers it essential not to obtain informed consent.
the specific reasons for this proposal should be stated in the
experimental protocol for transmission to the independent committee (I, 2)
6. The physician can combine medical research with professional care, the
objective being the acquisition of new medical knowledge, only to the
extent that medical research is justified by its potential diagnostic or
therapeutic value for the patient.
III. Non-therapeutic biomedical research involving human subjects (Non-clinical
biomedical research)
1. In the purely scientific application of medical research carried out on a
human being, it is the duty of the physician to remain the protector of
the life and health of that person on whom biomedical research is being
carried out.
2. The subjects should be volunteers - either healthy persons or patients for
whom the experimental design is not related to the patient's illness.
3. The investigator or the investigating team should discontinue the research
if in his/her or their judgement it may, if continued, be harmful to the
individual.
4. In research on man, the interest of science and society should never take
precedence over considerations related to the wellbeing of the subject.
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26.7 APPENDIX VII: WORKING PROCEDURE ON DATA ENTRY
--------------------------------
Working Procedure on Data Entry:
--------------------------------
---------- -------------- ----------
US Centers AUS/NZ Centers EU centers
---------- -------------- ----------
| | |
| fax of CRF-page | fax of CRF-page |
| | |
| | |
------------- ------------- -----------------
Quintiles RTP Quintiles Pty EORTC data center
------------- -------------
| |
| |
| |
| |----------> Check on the Fax:
| PlausiChecks,
|-------------------------------> List of Questions
------------------
----------------------------------------| | |
| | |
| | |
------------- ------------- | |
Quintiles RTP Quintiles Pty <------------| |
------------- ------------- |
| | |
| | |
----------------------------------------------------------
first visit of the monitor to the study site:
* let change original CRF pages based on queries
* collect new copies of CRF
----------------------------------------------------------
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26.8 APPENDIX VIII: ANCILLARY STUDIES ON BIOLOGICAL EFFICACY
Besides the clinical end points of this trial ancillary studies will investigate
the biological mechanism of action in which a vaccination with BEC2/BCG acts in
humans.
26.8.1 GENERAL CONSIDERATIONS
The BEC2/BCG combination therapy is designed not to be a direct interventional
therapy or to be directly cytotoxic to tumor cells. The therapy is designed as a
vaccine or immunotherapy that, upon administration, would induce cancer patients
to generate immune responses that would potentially have an anti-tumor effect.
Therefore, study of the mechanism of action of a BEC2/BCG therapy would be a
study of the immune responses to the therapy and potential effects of those
responses.
BEC2/BCG may be acting through immunologic mechanisms resulting in the targeting
of residual tumor cells and by that prevent re-growth of tumor load which may be
later present as clinical relapse of metachronous metastasis. The target antigen
of BEC2/BCG is the tumor-associated antigen GD3, a glycosphingolipid. In order
to evaluate the possibility that BEC2/BCG may elicit a specific immunologic
response to the GD3 antigen, select patient populations will be evaluated for
the development of B cell and T cell responses. However, there is a potential
that the specific immune-response induced by BEC2/BCG may act as a starting
point for subsequent immune reactions which, while not being necessarily
6D3-specific, will be specific for the individual patients tumor. Thus,
ancillary biological assays will not only focus on the specific anti-GD3
response but also try to evaluate both humoral and cellular immune reactions
induced by BEC2/BCG. For statistical analysis it is desired to incorporate as
many patients as possible both from the vaccination and from the follow up
cohort into these ancillary study. Nevertheless, the assays on T-cell function,
Th1/Th2-shift, and minimal residual disease are very sophisticated demanding
elaborate structures and capabilities from the participating centers such as
cell culture capability, expedited sample shipment, liquid nitrogen freezing and
storage equipment. As a consequence ancillary studies except of the
anti-GD3-humoral response monitoring may not be done in all centers.
Furthermore, not all centers which meet the prerequisites to undertake those
studies may do the whole panel of them because of the high demands on logistics
and personnel.
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26.8.2 HUMORAL RESPONSE
The anti-BEC2 / GD3-specific B cell responses will be determined through the
evaluation of serial serum samples from individuals immunized with BEC2/BCG.
Serum of all vaccinated patients will be evaluated for the development of
antibodies to BEC2 and to GD3 (anti-GD3) following immunization. In addition, a
quantitative assessment of the titer of anti-GD3 antibodies, the temporal
relationship of immunization with BEC2/BCG to the time of anti-GD3 response
development, and the correlation of antibody response to patient survival will
be evaluated.
The demand on blood sampling is the following:
10 ml per sample point, samples at registration, restaging, vaccination
visits, first and second follow up visit, every three months during
subsequent follow up
total volume to be drawn during this trial: 110 ml
Additionally, circulating cytokines may be measured if the results from "Th1 /
Th2" data should indicate that doing so may be useful. For details see below.
26.8.3 OTHER ANCILLARY STUDIES WHICH WILL BE PERFORMED IN SELECTED CENTERS
26.8.3.1 Minimal residual disease
Recurrence of SCLC is believed to be due to minimal residual disease in patients
following treatment with conventional therapy. BEC2/BCG may act to induce an
immune response that eliminates these residual tumor cells. An assay using
nested PCR-detection of Gastrin-related peptide-messenger-RNA isolated from
mononuclear cell fractions prepared from full blood will be used to assay the
prevalence of circulating SCLC-cells in patients treated in this trial. For
these studies a separate informed consent form will be given to the patient.
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26.8.3.2 TH1 / TH2 shift
It has been recently found that SCLC tumors not only secrete growth factors that
induced anergy, but also that a certain proportion of SCLC-patients are and
remain anergic defined by their cytokine response regardless of chemotherapy.
Subsequent to induction chemotherapy these patients relapse significantly faster
than immune-competent patients. Thus, it is significant to analyze if adjuvant
vaccination with BEC2/BCG induces circumvention of this anergy and to evaluate
longitudinal if clinical characteristics, such as time to relapse and survival,
correlate with the patients immune status. For these studies a separate informed
consent form will be given to the patient.
26.83.3 Cellular Immunity
Cytotoxic T cell responses generated through BEC2/BCG therapy may also play a
role in reducing or eliminating residual tumor in patients. A set of assays on
isolated T-cells will focus on the immune-reactivity (cytokine release, mitosis)
to SCLC-tumor antigens (SCLC-cell preps, specific antigens, GD3) and the
Adjuvant BCG. Again, for these studies a separate informed consent form will be
given to the patient.
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26.9 APPENDIX IX: PPD TESTING
26.9.1 TEST KITS
Commercially available test kits shall be used for PPD testing. All
approved test kits are acceptable.
26.9.2 GENERAL REMARKS
All Patients to be randomized must be free from a history of previous
Tuberculosis and negative to 5 IU purified protein derivative (PPD) of
tuberculin . The purpose of the PPD-testing procedure is to identify individuals
who do not have a history of known Tuberculosis but show a strong reaction to
Tuberculin when exposed to that antigen. Similarly, these patients are very
likely to react to the BCG component of the BEC2/BCG-vaccination with grade III
or IV skin toxicity right after the first vaccination. This would be both an
intolerable burden to the patient and second it is likely to hamper the
biological efficacy of the vaccination at all. As a consequence, patients who
already react with a strong skin reaction to as little as 5 IU PPD shall be
excluded from vaccination.
For tuberculin testing intracutaneous tuberculin testing by intradermal
injection of the test dose is mandated. Tine or stamp type of tests may not be
used in this study.
26.93 PPD TESTING
The reaction to intracutaneously injected tuberculin is a delayed (cellular)
hypersensitivity reaction. The reaction which characteristically shows a delayed
course, reaching its peak more than 24 hours after administration, consists of
induration due to cell infiltration and occasionally vesiculation and necrosis.
Clinically, a delayed hypersensitivity reaction to tuberculin is a manifestation
of previous infection with M. Tuberculosis or a variety of non-tuberculosis
bacteria. In most cases sensitization is induced by natural mycobacterial
infection or by vaccination with BCG Vaccine.
The sensitization following infection with mycobacteria occurs primarily in the
regional lymph nodes. Small lymphocytes (T lymphocytes) proliferate in response
to the antigenic stimulus to give rise to specifically sensitized lymphocytes.
After several weeks, these lymphocytes enter the blood stream and circulate for
long periods of time. Subsequent re-stimulation of these sensitized lymphocytes
with the same or a similar antigen, such as the intradermal injection of
tuberculin, evokes a local reaction mediated by these cells. The tuberculin
reaction is characterized by the early predominance of mononuclear cells (small
and medium sized lymphocytes and monocytes). Only a small proportion of these
cells appear to be lymphocytes sensitized to tuberculin. Most cells are brought
into the reaction through the release of biologically active substances by
sensitized lymphocytes. An increase in vascular permeability leading to erythema
and edema also occurs in tuberculin reactions.
Characteristically, delayed hypersensitivity reactions to tuberculin begin at 5
to 6 hours, are maximal at 48 to 72 hours and subside over a period of days. In
those who are elderly or those who
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are being tested for the first time reactions may develop slowly and may not
peak until after 72 hours. Immediate hypersensitivity reactions to tuberculin or
to constituents of the diluent can also occur.
Not all infected persons will have a delayed hypersensitivity reaction to a
tuberculin test. A large number of factors has been reported to cause a
decreased ability to respond to the tuberculin test in the presence of
tuberculous infection including viral infections (measles, mumps, chickenpox),
live virus vaccinations (measles, mumps, polio), overwhelming tuberculosis,
other bacterial infections, drugs (corticosteroids and many other
immunosuppressive agents), and malignancy
26.9.3.1 Usage
For the initial intracutaneous (Mantoux) tuberculin test it is customary to use
5 U. S. unites (TU) per test dose of 0.1 ml.
26.9.3.2 Contraindications
PPD-Tests should not be administered to known tuberculin positive reactors
because of the severity of reactions (e. g., vesiculation, ulceration or
necrosis) that may occur at the test site in highly sensitive persons.
26.9.3.3 Warnings
Avoid injecting PPD subcutaneously. If this occurs, no local reaction will
develop, but a general febrile reaction and/or acute inflammation around old
tuberculosis lesions may occur in highly sensitive individuals.
26.9.3.4 Precautions
a) General
A separate STERILE syringe and needle must be used for each individual injection
to prevent possibility of transmission of viral hepatitis or other infectious
agents from one person to another.
The possibility of allergic reactions in individuals sensitive to the components
of the product should be borne in mind. Epinephrine Hydrochloride Solution
(1:1000) should be readily available for use in case an anaphylactic or acute
hypersensitivity reaction occurs.
Failure to store and handle PPD-Testing reagents as recommended will result in a
loss of potency and inaccurate test results.
b) Information for patients
Reactivity to the test may be depressed or suppressed for as long as 5 to 6
weeks in individuals who have received concurrent or recent immunization with
certain virus vaccines (measles, influenza), who have had viral infections
(rubeola, influenza, mumps and probably others) or who are receiving
corticosteroids or immunosuppressive agents.
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In those who are elderly or being tested for the first time reactions may
develop slowly and may not peak until after 72 hours. Vesiculation, ulceration
or necrosis may appear at the test site in highly sensitive persons. Pain,
pruritus and discomfort at the test site may also occur.
Positive reactions are 10 mm or more to 5 TU. Doubtful tuberculin reactions are
5 to 9 mm to 5 TU.
c) Drug interactions
Reactivity to the test may be depressed or suppressed in individuals who are
receiving corticosteroids or immunosuppressive agents. Reactivity to PPD may be
temporarily depressed by certain live virus vaccines (measles, mumps, rubeola).
Therefore, if a tuberculin test is to be performed, it should be administered
either before or simultaneously with the injection of measles, mumps and rubella
vaccines in combined form or as separate antigens.
d) Carcinogenesis, mutagenesis, impairment of fertility
The product is not used for extended treatment over a long period of time.
26.9.3.5 Drug Interactions
Reactivity to the test may be depressed or suppressed in individuals who are
receiving corticosteroids or immunosuppressive agents. Reactivity to PPD may be
temporarily depressed by certain live virus vaccines (measles, mumps, rubeola).
Therefore, if a tuberculin test is to be performed, it should be administered
either before or simultaneously with the injection of measles, mumps and rubeola
vaccines in combined form or as separate antigens (see also PRECAUTIONS).
Adverse Reactions
In highly sensitized individuals, strongly positive reactions including
vesiculation, ulceration or necrosis may occur at the test site. Cold packs or
topical steroid preparations may be employed for symptomatic relief of the
associated pain, pruritus and discomfort.
Strongly positive reactions may result in scarring at the test site.
Immediate erythematous or other reactions may occur at the injection site. The
reason(s) for these infrequent occurrences are presently unknown.
26.9.3.6 Dosage and Administration
THE TEST: The PPD test is performed by intracutaneously injecting, with a
syringe and needle, 0.1 ml of PPD solution. 5 TU per test dose shall be used.
The result is read 48 to 72 hours after administration and induration only is
considered in interpreting the test.
26.9.3.6.1 Method of administration:
The following procedure is recommended for performing the PPD test:
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1. The site of the test is the flexor surface of the forearm about 4 inches
below the bend of the elbow.
2. The skin of the forearm is first cleansed with alcohol and allowed to dry.
3. The test dose (0.1 ml) of Tuberculin PPD is administered with a 1 ml
syringe calibrated in tenths and fitted with a short, one-half inch, 26 or
27 gauge needle.
4. Disposable sterile syringes and needles may be used.
5. The rubber cap of the vial should be wiped with a sterile piece of cotton
moistened with alcohol and allowed to dry. The needle is then inserted
gently through the cap and the required amount of the Tuberculin PPD is
drawn into the syringe.
6. The point of the needle is inserted into the most superficial layers of
the skin with the needle bevel pointing upward. If the intracutaneous
injection is performed properly, a definite white bleb will rise at the
needle point, about 10 mm (3/8") in diameter. This will disappear within
minutes. No dressing is required.
In the event of a subcutaneous injection (i. e., no bleb formed), the test
should be repeated immediately at another site.
Parenteral drug products should be inspected visually for particulate matter and
discoloration prior to administration, whenever solutions and container permit.
26.9.3.6.2 Interpretation of the test:
The test should be read 48 to 72 hours after administration. Sensitivity is
indicated by induration, usually accompanied by erythema. The widest diameter of
distinctly palpable induration should be recorded in millimeters (mm). Presence
of edema and necrosis should also be recorded.
A positive reaction indicates a sensitivity to tuberculin, which may be the
result of a previous infection with mycobacteria. This infection, likely due to
Mycobacterium Tuberculosis, may have occurred years ago or may be of recent
origin.
Reactions should be interpreted as follows:
POSITIVE REACTION -- Any palpable induration measuring 10 mm or more is
considered a positive reaction. In the case of tuberculosis suspects or close
contacts of individuals with tuberculosis an induration of 5 mm or even smaller
should be interpreted as a positive reaction and appropriate additional
follow-up measures initiated.
DOUBTFUL REACTION -- Induration measuring 5 to 9 mm indicated a doubtful
reaction.
NEGATIVE REACTION -- Induration of less than 5 mm is considered negative.
Patients with a doubtful or negative reaction may be randomized, given a
negative history of typical or atypical Tuberculosis.
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26.10 APPENDIX X: INDUCTION THERAPY FLOW CHART
Treatment Flow Chart
Dx Restaging
| |
| | -------------------
Vaccine / Control
------------------- ----- -------------------
4 * ETO/Pt Rad.
------------------- -----
- --------------------------------------------------------------------------------
------
Rad.
------------------- -------------------
4 * ETO/Pt Vaccine / Control
------------------- -------------------
- --------------------------------------------------------------------------------
------------------- ----- -------------------
5 * CDE Rad. Vaccine / Control
------------------- ----- -------------------
- --------------------------------------------------------------------------------
===================================================== ===========
|
=========== ============================= |
| | | |
| | max 20 weeks | | 10 weeks
| max. | | max 6 weeks |
| | | |
| 2 weeks | | |
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26.11 APPENDIX XI: OVERALL STUDY FLOW CHART
Diagnosis |
|
----------------------- | Registration
|
Induction Therapy | within
| 1 month after start
Chemo + Radiation | of induction
|
----------|------------ |
| |
| |
--------------------------------------- | ------------------
Restaging |
|
PR / CR NC / Progression | 5-7 months
-----|-------------------|------------- | from diagnosis
| | |
| | |
----------- pre-randomization | ------------------
Rando- drop out |
mization |
----|------| | 12 weeks
| | |
| ----------| |
---------- | | ------------------
Control ---------------------------- |
Group Vaccination Group |
n = 285 n = 285 | ------------------
---------- BEC2/BCG 5X (10 weeks) |
---------------------------- | ~ 2 year
|
|
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26.12 APPENDIX XII: VACCINATION INSTRUCTIONS
The vaccination shall be done strictly intradermal. Both subcutaneous and
intravasal injection has to be avoided under all circumstances. The area to
vaccination shall be disinfected with a skin-disinfectant before vaccination.
Please make absolutely sure, that the disinfecting liquid has completely dried
before the administration is done!
Every single dose (1.2 ml) shall be given in eight (8) intradermal injections.
Injections shall be administered as a grid made of two columns and four rows.
Space between two injections shall be -- one (1) cm. For the first dose the
right upper arm shall be used (in left handed persons start with the left upper
arm). Second shall be given to the opposite upper arm. Third dose shall be given
to the left upper limb, fourth to the right upper limb and fifth again to the
left thigh. Please refer to the following sketches for illustration:
[GRAPHIC]
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[GRAPHIC] The SILVA study
- --------------------------------------------------------------------------------
26.13 APPENDIX XIII: LIST OF ABBREVIATIONS
(degree)C centigrade
AE/AE's adverse event/s
ASAT aspartate-amino-transferase = GOT
ASCO American Society of Clinical Oncology
anti-ids anti-idiotypic antibodies
AUC 5 Carboplatin
AUS Australia
BCG Bacille Calmette-Guerin
CDE Cyclophosphamide, Doxorubicin, Etoposide regimen
CET Central European time
CFU Colony forming unit
CIS Carcinoma in situ
CR Complete Remission
CT computed tomography
CRF case report form
D day
Dx Diagnosis
EaST Early stopping Rule
ECG Electrocardiogram
ED extensive disease
EORTC European Organization for the Research and Treatment of Cancer
F Fahrenheit
FDA Food and Drug Administration
GCP good clinical practice
GD3 ganglioside fraction GD3
GMP good manufacturing practice
GOT glutamine oxalacetic transferase
h hour(s)
HAMA human anti-mouse antibodies
HBsAg hepatitis B virus surface antigen
BHCG beta-human chorionic gonadotropin
HIV human immune deficiency virus
HE health economics
HMW-MAA high molecular weight melanoma associated antigen
HR heart rate
IDMC Independent Data Monitoring Committee
i.d. intradermally
i. v. intravenous
IgG immunoglobulin gamma
LD limited disease
LDH lactate dehydrogenase
LPS lipopolysaccharide
MAb monoclonal antibody
NCI National Cancer Institute (of the United States of America)
NCIC-CTC National Cancer Institute Canada-common tox. criteria
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[GRAPHIC] The SILVA study
- --------------------------------------------------------------------------------
NSAID non-steroidal anti-inflammatory drugs
NY New York
NZ New Zealand
PBS phosphate buffered saline
PCR polymerase chain reaction
PD progressive disease
PPD purified protein derivative
PR partial remission
PT prothrombin time
PTT partial thromboplastin time
QALY quality adjusted life years
QoL Quality of Life
SAE serious adverse event
SCLC small cell lung cancer
SGOT serum GOT
TU tuberculin units
USA The United States of America
V visit
VA Veterans Administration
VP Etoposide (VP-16)
vs. versus
W week
WBC white blood count
WHO World Health Organization
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[GRAPHIC] The SILVA study
- --------------------------------------------------------------------------------
26.14 APPENDIX XIV: STUDY ACKNOWLEDGMENT
STUDY ACKNOWLEDGMENT
I have read the protocol and agree that it contains all necessary details for
carrying out the study as described.
I will conduct this protocol as outlined therein and will make a reasonable
effort to complete the study within the time designated.
I will provide copies of the protocol and access to all information furnished by
the EORTC Data Center to study personnel under my supervision. I will discuss
this material with them to ensure that they are fully informed about the drug
and the study.
- ----------------------------------------------------------
Investigator's printed name and signature Date
- ----------------------------------------------------------
Monitor Date
Protocol Number: EORTC 08971
Site: ____________________________
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-19-
Exhibit "B" (Section 2(a), ImClone's labelling requirements)
to Agreement among PMC, ImClone and Merck effective as of January 1, 1997
- --------------------------------------------------------------------------------
<PAGE> 121
Exhibit B
BCG (lyophilized) 1.5 mg
(An Active Immunizing Agent)
For Intracutaneous Injection Only
Dose as per Clinical Protocol
Lot:
Exp.:
For Investigational Use Only
MUST NOT BE ADMINISTERED AS A SINGLE AGENT
Mfg.: Connaught Laboratories Limited
North York, ONT Canada
<PAGE> 122
-20-
Exhibit "C" (Section 2(a), Merck's labelling requirements)
to Agreement among PMC, ImClone and Merck effective as of January 1, 1997
- --------------------------------------------------------------------------------
<PAGE> 123
Exhibit C
BCG (lyophilized) 1.5 mg
(An Active Immunizing Agent)
For Intracutaneous Injection Only
Use according to study protocol EORTC 08971 only
Lot:
Exp.:
For Clinical Trial Use Only
MUST NOT BE ADMINISTERED AS A SINGLE AGENT
Mfg.: Connaught Laboratories Limited, North York, ONT Canada
Sponsor: Merck KGaA, 64271 Darmstadt, Germany
<PAGE> 1
EXHIBIT 10.73
CONFIDENTIAL TREATMENT REQUESTED
April 30th, 1999
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. DEFINITIONS
1.1 BI PHARMA KG
1.2 BI PHARMA KG Confidential Information
1.3 Cell Line
1.4 Certificate of Analysis
1.5 cGMP
1.6 C225
1.7 Effective Date
1.8 IMCLONE
1.9 IMCLONE Confidential Information
1.10 Master Cell Bank (MCB)
1.11 Manufacturer's Working Cell Bank (MWCB)
1.12 Phase I
1.13 Phase II
1.14 Phase III
1.15 Process
1.16 Product
1.17 Project
1.18 Project Fee
1.19 Project Manager
1.20 Project Team
1.21 Specifications
1.22 Start Date
2. COOPERATION BETWEEN THE PARTIES IN THE COURSE OF THE PROJECT
2.1 Designation of Project Manager
2.2 Project Team
2.3 Cooperation
2.4 Access to facilities
3. IMCLONE'S TASKS AND RESPONSIBILITIES
3.1 License to Use of IMCLONE Cell Line and Intellectual Property
3.2 Materials and Information to be Provided
3.3 Activities to be Performed
</TABLE>
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<TABLE>
<S> <C>
4. BI PHARMA KG'S TASKS AND RESPONSIBILITIES
4.1 BI PHARMA KG's Tasks
4.2 Control of Cell Line
4.3 Quarantine and Testing
4.4 Phase I/II Development Program
4.5 Responsibility for Failed Fermentations and Downstream Operations
4.6 Materials and Information to be Delivered
4.7 Product to be Delivered
4.8 Prior Approval
4.9 Retention Samples
4.10 Additional Work
5. PHASE I/II TO BE CONDUCTED ON FIXED-FEE BASIS
6. PHASE I/II PROJECT FEE
7. ADDITIONAL WORK / FUTURE ACTIVITIES
7.1 Additional Work
7.2 Future Activities
7.3 Others
8. OWNERSHIP OF PROJECT DATA
8.1 General
8.2 Intellectual Property Rights solely covering the Product
8.3 All other Intellectual Property Rights
9. REPRESENTATIONS. WARRANTIES AND INDEMNIFICATION
9.1 IMCLONE
9.2 BI PHARMA KG
10. LIMITATION OF LIABILITY
10.1 No Warranty of Merchantability of Fitness
10.2 Limitation of Liability
10.3 Maximum Amount
</TABLE>
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<TABLE>
<S> <C>
11. CONFIDENTIALITY
11.1 BI PHARMA KG
11.2 IMCLONE
11.3 Exceptions
11.4 Others
12. TERM AND TERMINATION
12.1 Term
12.2 Right to Terminate
12.3 Effect of Termination
13. MISCELLANEOUS
13.1 Force Majeure
13.2 Publicity
13.3 Notices
13.4 Applicable Law
13.5 Compliance with Laws
13.6 Independent Contractors
13.7 Waiver
13.8 Severability
13.9 Entirety
13.10 Assignment
</TABLE>
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CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT
(C225)
THIS CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT ("Agreement") is made as of
April 30, 1999 by and among ImClone Systems Incorporated, ("IMCLONE"), having
its principal business offices at 180 Varick Street, New York, New York 10014,
U.S.A. and Boehringer Ingelheim Pharma KG ("BI PHARMA KG") a German corporation
having its principal place of business at Birkendorfer Stra(beta)e 65, 88397
Biberach an der Riss, Federal Republic of Germany.
BACKGROUND
- ----------
IMCLONE is the proprietor of a hybridoma cell line [ *** ] which produces a
monoclonal antibody C225 directed against Epidermal Growth Factor Receptor
(EGFR) as a result of stable transfection with a C225 expression construct, as
well as methods for the purification and analysis of C225.
BI PHARMA KG owns specialized cell culture, processing, protein purification and
Iyophilization facilities that may be suitable for production of C225, and
employs personnel who have experience in production of proteins by cell culture
and purification processes as well as in registration of biopharmaceuticals.
IMCLONE desires to have BI PHARMA KG personnel evaluate, further develop, supply
and scale-up the production process for C225 in BI PHARMA KG's facilities.
IMCLONE and Dr. Karl Thomae GmbH (as of 01.01.1998 and in this Agreement
substituted by BI Pharma KG as the contractual assignee of all rights and
obligations thereunder) have previously entered into a Material Transfer
Agreement for Evaluation dated November 10/24, 1997 to evaluate potential
production and supply of C225.
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AGREEMENT
- ---------
IN CONSIDERATION OF the mutual covenants set forth in this Agreement, BI PHARMA
KG and IMCLONE hereby agree as follows:
1. DEFINITIONS
1.1 "BI PHARMA KG"
shall mean Boehringer Ingelheim Pharma KG.
1.2 "BI PHARMA KG Confidential Information"
shall mean all technical and other information relating to BI PHARMA
KG's facilities and associated technologies that is disclosed or
supplied to, IMCLONE by BI PHARMA KG (except IMCLONE Confidential
Information) pursuant to this Agreement, whether patented or
unpatented, including, without limitation, trade secrets, know-how,
processes, concepts, experimental methods and results and business and
scientific plans.
1.3 "Cell Line"
shall mean the IMCLONE cell line [ *** ] that expresses the Product.
1.4 "Certificate of Analysis"
shall mean a document to be established by mutual agreement describing
testing methods and results.
1.5 "cGMP"
shall mean the regulatory requirements for current good manufacturing
practices promulgated by the FDA under the Federal Food, Drug and
Cosmetic Act, as amended, 21 C.F.R. Section 210 et seq and 21 C.F.R.
Section 600-610, as applicable.
1.6 "C225"
shall mean a chimerized monoclonal antibody directed against EGFR
produced by the Cell Line.
1.7 "Effective Date"
shall mean the date first above written, which shall be the effective
date of this Agreement.
1.8 "IMCLONE"
shall mean ImClone Systems Incorporated or an affiliate of ImClone
Systems Incorporated.
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1.9 "IMCLONE Confidential Information"
shall mean the Cell Line, Process, Product and all technical,
scientific or business and other materials and information that are
disclosed or supplied to BI PHARMA KG by IMCLONE or developed on behalf
of IMCLONE by BI PHARMA KG (excluding BI PHARMA KG Confidential
Information) pursuant to this Agreement whether patented or unpatented,
including, without limitation, trade secrets, know-how, processes,
concepts, experimental methods and results and business and scientific
plans.
1.10 "Master Cell Bank (MCB)"
shall mean a cell bank established by BI PHARMA KG derived from a
suspension serum-free adapted cell line to be produced at BI PHARMA KG.
1.11 "Manufacturer's Working Cell Bank (MWCB)"
shall mean a cell bank established by BI PHARMA KG derived from the
MCB.
1.12 "Phase I"
shall refer to process transfer of the Process to a [ *** ] scale at BI
PHARMA KG, continued scale-up to a [ *** ] and [ *** ] pilot
fermentation scale and establishment of a downstream purification
process according to APPENDIX 1, all of which has been completed as of
the Effective Date.
1.13 "Phase II"
shall refer to demonstrating the process at small scale [ *** ],
performing Product equivalency testing and establishing a filling
process of the corresponding Product as well as the scale-up to [ *** ]
pilot scale and cGMP production of clinical grade material at that
scale to be undertaken by BI PHARMA KG pursuant to this Agreement and
according to the updated Master Projectplan (APPENDIX 1.1) dated
November 1998. The agreed upon process format for Phase II of the
project is given in APPENDIX 6. [ *** ].
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1.14 "Phase III"
shall refer to a second project, which may be implemented by separate
agreement between IMCLONE and BI PHARMA KG following completion of
Phase II activities, involving scaling the Process from the [ *** ]
fermentation scale implemented in Phase II to the [ *** ].
1.15 "Process"
shall refer to a proprietary IMCLONE process for using the Cell Line,
including defined procedures, equipment and analytical methodologies
for in-process control, release testing and Product characterization,
that has been used by IMCLONE to produce the Product at the laboratory
scale, which shall be disclosed by IMCLONE to BI PHARMA KG to enable BI
PHARMA KG to carry out the Project or, if and when applicable, the
modified process after further development and scale up by BI PHARMA KG
to the [ *** ] fermentation scale.
1.16 "Product"
shall mean the biologically active C225 produced by the Cell Line in
accordance with the Process.
1.17 "Project"
shall mean the Phase I and Phase II contract research program described
herein, in which IMCLONE shall transfer the Process to BI PHARMA KG to
be implemented, scaled-up and evaluated at the [ *** ] fermentation
scale in and by BI PHARMA KG's facility and equipment. The primary
objectives of the Project will be to transfer, establish and scale up
the Process in the BI PHARMA KG facility, successfully demonstrate that
Product can be reproducibly manufactured in BI PHARMA KG's facilities
at [ *** ] scale, and generate a report compiling a summary of data
generated in the Project. The proposed workscopes and timelines for the
Project are laid down in the Master Projectplans attached hereto as
APPENDIX 1 and APPENDIX 1.1. Phase I has been completed as of the date
of this Agreement.
1.18 "Project Fee"
shall have the meaning specified in Section 6 hereof.
1.19 "Project Manager"
shall have the meaning specified in Section 2.1 hereof.
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1.20 "Project Team"
shall have the meaning specified in Section 2.2 hereof.
1.21 "Specifications"
shall mean the specifications for the Product and the respective test
methods attached hereto as APPENDIX 5 on the basis of the
specifications provided by IMCLONE and as such specifications may be
amended from time to time by mutual agreement of IMCLONE and BI PHARMA
KG according to further development of the Process and Product.
1.22 "Start Date"
shall mean February 1, 1998 (according to the Master Projectplan
APPENDIX 1).
2. COOPERATION BETWEEN THE PARTIES IN THE COURSE OF THE PROJECT
2.1 Designation of Project Manager.
BI PHARMA KG and IMCLONE shall each identify a Project Manager, and if
they choose, the supervisor of the Project Manager. The Project Manager
or the Project Manager's supervisor will be exclusively responsible for
communicating all instructions and information concerning the Project
to the other party and shall be the person or people to whom such
instructions and information are communicated by the other party. Each
Project Manager or the Project Manager's supervisor will be available
on a weekly basis for consultation at prearranged times during the
course of the Project or as may otherwise be reasonably required or
advisable. In the absence of the Project Manager or the Project
Manager's supervisor, a substitute shall be appointed. Additional modes
or methods of communication and decision making may be implemented with
the mutual consent of each party.
2.2 Project Team.
BI PHARMA KG and IMCLONE shall each name representatives to a Project
Team, which shall consist of knowledgeable specialists in appropriate
disciplines who shall be responsible for planning and executing the
Project and any subsequent interactions between the parties. At regular
intervals, the Project Managers shall schedule meetings between each
company's representatives for the purpose of communicating Project
updates and providing a forum for strategic decision making and rapid
resolution of issues.
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Joint Project meetings shall be conducted by telephone-conference,
video-conference and face to face meetings. Meeting minutes shall be
prepared jointly by the Project Managers to record all issues discussed
and decisions made, subject to final approval of such minutes by both
parties. Such minutes are considered to be accepted by a party when
there is no objection made by such a party within a period of 7 (seven)
days after such minutes have been received by the respective party.
The present list of the members of the Project Team is attached hereto
as APPENDIX 2.
2.3 Cooperation.
BI PHARMA KG and IMCLONE each agree to work together collaboratively on
the Project as reasonably expeditiously as possible, with the objective
of completing the Project according to the mutual agreed timelines (see
APPENDIX 1 and APPENDIX 1.1).
In the course of the Project, BI PHARMA KG will at all times take into
consideration and implement the recommendations of IMCLONE as long as
they do not negatively influence other BI PHARMA KG biotech operations
and are agreed upon by the Project Team. In the absence of explicit
instructions from IMCLONE, BI PHARMA KG shall be entitled to employ its
reasonable judgment in carrying out the Project. BI PHARMA KG shall be
entitled to rely upon any instructions or directives provided by the
IMCLONE Project Manager or the IMCLONE Project Manager's supervisor
and, subject to Sections 4.5 and 4.7 below shall not be responsible for
failure to achieve any objective or the inability to adhere to any
guideline due to technical failures, incomplete direction or
documentation of Process variables, or other causes beyond the control
of BI PHARMA KG.
2.4 Access to facilities.
IMCLONE shall permit personnel of BI PHARMA KG, upon reasonable prior
written notice to IMCLONE, to visit its facilities during appropriate
times to observe the Process and certain analytical procedures for C225
as conducted by IMCLONE. BI PHARMA KG shall permit IMCLONE, upon
reasonable prior notice to BI PHARMA KG, to review the originals of all
batch records and other primary documents at its facilities and shall
allow IMCLONE personnel to be present in its facilities at appropriate
times (e.g. to observe the implementation of the Process). While
visiting the facility of the other party, personnel of BI PHARMA KG and
IMCLONE shall comply with all security and safety policies and
procedures of the other party.
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3. IMCLONE'S TASKS AND RESPONSIBILITIES
3.1 License to Use of IMCLONE Cell Line and Intellectual Property.
IMCLONE hereby grants to BI PHARMA KG a limited, non-exclusive right
and license, without the right to sublicense, to use IMCLONE
Confidential Information, including but not limited to the Cell Line
and Process, solely for the purpose of enabling BI PHARMA KG to carry
out its tasks and responsibilities under this Agreement with respect to
the Project.
3.2 Materials and Information to be Provided.
To enable BI PHARMA KG to begin the Project, IMCLONE shall provide:
(a) 10 vials of the MCB and/or MWCB for Project start, additional
quantities may be requested.
(b) a description of IMCLONE's methods for testing of the Cell Line
and its progenitor cell line.
(c) documentation describing the exact composition of the [ *** ] and
a sufficient quantity of actual medium to enable BI PHARMA KG to
begin to culture the Cell Line upon receipt from IMCLONE;
(d) a description of the Cell Line and of genetic construct used for
expression of the Product (for registration according to German
gene technology law ("Gentechnikgesetz")), and
(e) at BI PHARMA KG's reasonable request any additional information
concerning the Process, analytical test methods, reference
materials, and any critical reagents to facilitate the Project.
3.3 Activities to be Performed. As the Project is carried out, IMCLONE
shall:
(a) use reasonable efforts to perform the work and tasks as set forth
and detailed in APPENDIX 3.
(b) at BI PHARMA KG's request and subject to Section 2.4 above,
arrange for BI PHARMA KG personnel to visit IMCLONE's production
facility to observe and record the Process as carried out by
IMCLONE in its facility. Any such records shall be considered
IMCLONE Confidential Information.
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4. BI PHARMA KG'S TASKS AND RESPONSIBILITIES
4.1 BI PHARMA KG's Tasks.
In the course of this Agreement BI PHARMA KG shall perform the work and
tasks as laid down and detailed in APPENDIX 4 hereto.
4.2 Control of Cell Line.
BI PHARMA KG shall maintain (for safety reasons in two different
buildings) the Cell Line in safe and secure storage under its control
in its facilities and shall not permit the transfer of the Cell Line to
any third party that is not specifically authorized in writing by
IMCLONE (except to a contract laboratory used for the characterization
of the MCB or MWCB under substantially the same requirement of
confidentiality). BI PHARMA KG shall comply with all applicable
regulatory requirements relating to general safety and biosafety in
handling the Cell Line and any raw materials used in the Project.
4.3 Quarantine and Testing.
BI PHARMA KG will quarantine and test samples of the Cell Line already
provided to it in order to verify that the Cell Line is suitable for
introduction into BI PHARMA KG's facilities. The quarantine and testing
time is estimated to be about 2 (two) months.
4.4 Phase I/II Development Program.
Following quarantine testing of the MWCB (see APPENDIX 4) BI PHARMA KG
will transfer and establish the production process at laboratory scale
( [ *** ] fermentation scale) on the basis of Process information
supplied by IMCLONE. The agreed upon process format for Phase II of the
Project is given in APPENDIX 6. Material derived from such a process
will be tested for analytical equivalence with reference material from
IMCLONE. Remaining quantities may be used by IMCLONE at its discretion.
A scale-up will then be performed to the [ *** ] fermentation scale and
cGMP material [ *** ] for clinical trials will be produced at this
scale. The workscopes and timelines for such a program are given in the
Master Projectplans (see APPENDIX 1 and APPENDIX 1.1). The production
of further clinical material at [ *** ] fermentation scale, if required
by IMCLONE, has to be agreed upon separately in writing, and shall be
reflected in an amendment to this Agreement in accordance within the
terms set forth herein.
4.5 Responsibility for Failed Fermentations and Downstream Operations.
Responsibility for Failed Fermentations and Downstream Operations.
(a) IMCLONE acknowledges that the Project is experimental in nature
and that no favorable or useful result can be assured by BI PHARMA
KG.
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Accordingly, subject to the provisions of this Section 4.5, BI
PHARMA KG shall not be responsible to IMCLONE for any failure of
fermentations or downstream operations including, but not limited
to, purification, or inability to obtain useful yields of Product
or the success of the shift to the protein A process for reasons
not under BI PHARMA KG's control, and the Project Fee shall be
payable in full regardless of result unless the Project is
terminated prior to its scheduled completion pursuant to Section
12 hereof.
(b) BI PHARMA KG shall be responsible for all bioreactor fermentations
and downstream operations including, but not limited to,
purification that fail for reasons under BI PHARMA KG's control
including, but not limited to, operator error, mechanical failure,
or contamination and BI PHARMA KG shall repeat any such failed
fermentations and downstream operations at its expense to complete
the workscopes to be performed during the Project according to
Section 4.4 above.
4.6 Materials and Information to be Delivered.
BI PHARMA KG will provide IMCLONE with the following materials and
information at the times indicated:
(a) a summary of the test results generated during the 2 (two) months
quarantine period within 30 (thirty) days following the end of
such period;
(b) within 2 (two) months following completion of each Phase of the
Project (Phase I and Phase II), a report to IMCLONE, as laid down
detailed in APPENDIX 7 including, a summary of the data BI PHARMA
KG collects in the course of the Project and Certificates of
Analysis for release of Product for clinical use, if any;
(c) other interim results as reasonable in appropriate time periods or
requested by IMCLONE, as mutually agreed by the Project Team.
4.7 Product to be Delivered.
BI PHARMA KG shall supply Product to IMCLONE from the [ *** ] pilot
scale and all purified Product (cGMP grade) from the [ *** ] scale runs
performed by BI PHARMA KG. BI PHARMA KG shall also provide IMCLONE with
samples of vialed Product that is produced by it. All Product
delivered, if any, shall conform with the Specifications which have to
be mutually agreed upon as laid down in APPENDIX 5 and BI PHARMA KG
shall issue a Certificate of Analysis covering such Specifications.
If the Product is asserted by IMCLONE not to meet the Specifications,
both parties shall re-test the Product. If IMCLONE and BI PHARMA KG are
not able to agree, whether the Product meets the Specifications or
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not and the parties are unable to resolve their differences, then
either party may refer the matter to an independent specialized
institution of international reputation agreeable to both parties for
final analysis, which shall be binding on both parties hereto.
All Product produced in the course of the Project shall be retained by
BI PHARMA KG and stored under conditions specified by IMCLONE (and
reasonably acceptable to BI PHARMA KG) not longer than 1 (one) year,
and delivered to IMCLONE as instructed by IMCLONE and at the cost and
risk of IMCLONE.
4.8 Prior Approval.
Prior to implementing any deviation from the Project, BI PHARMA KG
shall notify IMCLONE and obtain the written approval of the Project
Manager of IMCLONE or other person designated in writing by IMCLONE.
4.9 Retention Samples.
According to a sampling plan to be agreed upon by the Project Team, BI
PHARMA KG shall isolate, identify and retain samples of raw materials
used in fermentations carried out in the course of the Project, of
Process media at appropriate time points in each fermentation, and of
Product at each stage of purification. Retention samples shall be
provided promptly to IMCLONE at its request. Shipment shall be at the
cost and risk of IMCLONE.
4.10 Additional Work.
On request of IMCLONE, BI PHARMA KG shall perform additional
development work to sustain the progress of the Project on conditions
in terms of money, time and scope to be subject to mutual agreement of
the parties hereto and defined in an amendment to the Master
Projectplans attached hereto as APPENDIX 1 and APPENDIX 1.1.
5. PHASE I/II TO BE CONDUCTED ON FIXED-FEE BASIS
The Project shall be conducted by BI PHARMA KG for IMCLONE on a fixed
fee basis, in consideration of payment by IMCLONE of the Project Fee.
The estimated duration of the Project shall be 21 (twenty-one) months
from the Start Date as outlined in APPENDIX 1 and APPENDIX 1.1. Phase I
of the Project has been completed as of the Effective Date.
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6. PHASE I/II PROJECT FEE
IMCLONE shall pay BI PHARMA KG a Project Fee of DM 8, 950,000
(eightmillionninehundredandfiftythousand Deutsche Mark) for the
services provided in carrying out the Project as defined in APPENDIX 1
and APPENDIX 1.1, regardless of the favorability or usefulness of the
results (see Section 4.5 above). Of this amount to date DM 3,130,000
has been paid for the completion of Phase I.
This fee includes all fees for BI PHARMA KG's services under the
Master Projectplans for Phase I and Phase II, including but not limited
to, fees for Cell Line validation, facility use, raw material testing,
in-process testing services including bulk and finished product
testing, environmental monitoring as appropriate, and other calibration
and validation activities required to facilitate the successful
completion of the technology transfer and production of the clinical
grade material at the [ *** ] fermentation scale.
Disposal of organic and hazardous waste is included in the Project Fee.
The Project Fee shall be payable in installments, each non-refundable
when paid, as described in APPENDIX 1 and APPENDIX 1.1. To the extent
BI PHARMA KG is required to repeat any fermentations or downstream
operations pursuant to Section 4.5 (b) above, any installment related
to the completion of the fermentation or downstream operation or
delivery of the Product, as the case may be, shall not be payable until
such fermentation or downstream operation or delivery of Product, as
the case may be, has been completed.
The cost of commercially available materials purchased by IMCLONE for
use at BI PHARMA KG to support development in GLP and cGMP shall be
creditable to the applicable invoice.
Each invoice shall be payable within 30 (thirty) days following receipt
thereof.
7. ADDITIONAL WORK / FUTURE ACTIVITIES
7.1 Additional Work.
BI PHARMA KG and IMCLONE may confer to determine if additional work
relating to Phase I or Phase II should be undertaken pursuant to
subsequent agreement between BI PHARMA KG and IMCLONE. Neither party
shall be obligated to conduct any further undertakings on behalf of the
other except as may be mutually agreed and set forth in a subsequent
written agreement.
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7.2 Future Activities.
In the event IMCLONE requires additional Product for the conduct of
clinical Phase III and/or for commercial supply and IMCLONE determines
in its sole discretion not to be the producer of that additional
quantities of Product, then IMCLONE and BI PHARMA KG shall engage in
good faith negotiations with respect to an agreement(s) for such
additional supply to contain usual and customary terms for similar
agreements under comparable circumstances. If the parties are unable to
agree to terms (including, but not limited to terms regarding quantity
of Product) within 120 (onehundredtwenty) days after BI PHARMA KG is
informed of IMCLONE's detailed request in writing, then IMCLONE may
engage in negotiations for such supply with other third parties;
provided, however, that IMCLONE shall not consummate any such agreement
with any third parties on terms that are in the aggregate more
favorable than those terms offered by BI PHARMA KG to IMCLONE without
first giving BI PHARMA KG an opportunity to accept the agreement(s) on
the terms offered to such third parties.
In case BI PHARMA KG will not exercise its right to enter into
negotiations with IMCLONE regarding an agreement to govern clinical
Phase III and/or commercial supply within 30 (thirty) days after the
written request of IMCLONE or if the parties are not able to conclude
such final agreement within 120 (onehundredtwenty) days after BI PHARMA
KG has received the written request of IMCLONE or if BI PHARMA KG has
not accepted the agreement(s) on the third party terms, then BI PHARMA
KG shall be deemed to have waived its rights granted under this Section
7.2.
7.3 Others.
IMCLONE shall not assert any right to use BI PHARMA KG facilities at
any future date as a result of its use of BI PHARMA KG facilities
pursuant to this Agreement, nor shall BI PHARMA KG assert any right to
use or have access to the Cell Line, Process, Product, MCB or MWCB as a
result of its activities pursuant to this Agreement.
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8. OWNERSHIP OF PROJECT DATA
8.1 General.
All information and intellectual property rights relating to the
transfer of information under Section 4.6 above, with the exception of
BI PHARMA KG Confidential Information, shall be the sole and exclusive
property of IMCLONE and IMCLONE shall have the right to use such
information for any purpose without further obligation to BI PHARMA KG.
For the purpose of this Agreement all information regarding BI PHARMA
KG's facility and technical equipment shall be considered BI PHARMA
KG'S Confidential Information.
8.2 Intellectual Property Rights solely covering the Product.
Any and all intellectual property rights solely covering the Product,
including, but not limited to, patents and patent applications arising
out of the activities performed under this Agreement shall be the sole
and exclusive property of IMCLONE, which shall have the sole right to
file such applications and will meet all costs in relation thereto.
Upon request of IMCLONE, BI PHARMA KG will assign any and all rights as
necessary to vest such ownership in IMCLONE.
8.3 All other Intellectual Property Rights.
All other intellectual property rights that arise out of the activities
performed under this Agreement, and that do not cover solely the
Product shall be the sole and exclusive property of BI PHARMA KG and
IMCLONE shall be granted a non-exclusive, royalty-free and worldwide
license solely for use to the Product.
9. REPRESENTATIONS. WARRANTIES AND INDEMNIFICATION
9.1 IMCLONE.
IMCLONE hereby represents, warrants and agrees that:
(a) IMCLONE is free to supply the Cell Line and IMCLONE Confidential
Information to BI PHARMA KG;
(b) IMCLONE is not aware of any special or unusual hazards involved in
handling the Cell Line or Product;
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(c) IMCLONE has full corporate authority to enter into this Agreement
and this Agreement is binding upon IMCLONE in accordance with its
terms; and
(d) IMCLONE shall indemnify, defend and hold BI PHARMA KG, its
affiliates, and their respective officers, employees and agents
harmless from and against all third party losses, damages, costs
and expenses (including, without limitation, reasonable attorneys'
fees), including injury to persons or damage to property resulting
from (i) any breach of the representations and warranties made by
IMCLONE under this Section, or (ii) any claim of infringement of
the intellectual property rights of a third party based upon BI
PHARMA KG's activities using the Cell Line or in implementing or
using the Process or producing the Product in accordance with the
instructions and documentation provided by IMCLONE or developed in
the course of the Project, except those which result from the
gross negligence or willful misconduct of an indemnified person or
entity and those for which BI PHARMA KG would have been liable if
BI PHARMA KG had used cell lines or processes other than Cell
Lines or Processes, or produced products other than Products.
9.2 BI PHARMA KG.
BI PHARMA KG hereby represents, warrants and agrees that:
(a) BI PHARMA KG has the lawful right to use the facilities and BI
PHARMA KG Confidential Information to be used for purposes set
forth in this Agreement;
(b) BI PHARMA KG is not aware of any special or unusual hazards that
would arise as a result of its carrying out of the Project as
planned;
(c) BI PHARMA KG has full corporate authority to enter into this
Agreement and this Agreement is binding upon BI PHARMA KG in
accordance with its terms; and
(d) BI PHARMA KG shall indemnify, defend and hold IMCLONE its
affiliates and their respective officers, employees and agents
harmless from and against all third party losses, damages, costs
and expenses (including, without limitation, reasonable attorneys'
fees), including injury to persons or damage to property,
resulting from (i) any breach of the representations and
warranties made by BI PHARMA KG under this Section, or (ii) any
claim that BI PHARMA KG has violated any applicable local law or
ordinance in carrying out
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its manufacturing responsibilities under this Agreement or (iii)
any claim of infringement of the intellectual property rights of a
third party, except those which result from gross negligence or
willful misconduct of an indemnified person or entity and those
based on BI PHARMA KG activities using the Cell Line or in
implementing or using the Process or producing the Product in
accordance with the instructions and documentation provided by
IMCLONE or developed in the course of the Project.
(e) BI PHARMA KG warrants that the Project shall be conducted as laid
down in APPENDIX 1 and APPENDIX 1.1 and in accordance with this
Agreement and, when appropriate, in compliance with cGMP, and that
any documentation of Project results or procedures provided to
IMCLONE by BI PHARMA KG shall be accurate in all material
respects. With regard to the results see Section 4.5 above.
10. LIMITATION OF LIABILITY
10.1 No Warranty of Merchantability or Fitness.
Subject to Section 9.2 above, BI PHARMA KG shall provide the results of
the Project to IMCLONE without any warranty of any kind, express or
implied, including, without limitation, any warranties of
merchantability or fitness for a particular purpose.
10.2 Limitation of Liability.
IMCLONE acknowledges that BI PHARMA KG has no control over the manner
in which IMCLONE intends to use any Product or results obtained in the
Project.
BI PHARMA KG shall not be liable to IMCLONE for any losses, damages,
costs or expenses of any nature incurred or suffered by IMCLONE or by a
third party, arising out of any dispute or other claims or proceedings
made by or brought against IMCLONE with respect to use of the results
of the Project, or the use of any Product by IMCLONE or by a third
party (including, without limitation, product liability claims and
claims by a third party alleging infringement of its intellectual
property rights), except as to those under Section 9.2 (d) above, nor
shall BI PHARMA KG be responsible in any way for dealing with any such
disputes, claims or proceedings; provided that it shall cooperate with
IMCLONE with respect to any such disputes or claims to the extent of
providing necessary or advisable information in connection with
IMCLONE's defense.
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10.3 Maximum Amount.
BI PHARMA KG undertakes to use its best efforts to perform the Project
under the Master Projectplans and to meet the target dates set forth in
APPENDIX 1 and APPENDIX 1.1 hereto. However, due to the biological
nature of the work to be performed hereunder BI PHARMA KG's liability
under this Agreement and its indemnification and hold harmless
obligations shall in no event amount to more than 10% (ten percent) of
the Project Fee. This limitation does not apply to willful breach or
misconduct of BI PHARMA KG or its officers, employees or agents.
11. CONFIDENTIALITY
11.1 BI PHARMA KG.
BI PHARMA KG shall not disclose IMCLONE Confidential Information to any
person other than its employees or employees of affiliated companies of
the Boehringer Ingelheim group who are bound by similar obligations of
confidentiality and who have a need to know such information in order
to perform their duties in carrying out the Project hereunder.
11.2 IMCLONE.
IMCLONE shall not disclose any BI PHARMA KG Confidential Information to
any person other than:
(a) its employees or consultants who are bound by substantially
similar obligations of confidentiality and who have a need to know
such information in order to provide direction to BI PHARMA KG or
evaluate the results of the Project; or
(b) regulatory authorities, for example, the FDA, that require such
information in order to review an IND or other regulatory filing.
11.3 Exceptions.
The obligations of confidentiality applicable to IMCLONE Confidential
Information and BI PHARMA KG Confidential Information shall not apply
to any information that is:
(a) known publicly or becomes known publicly through no fault of the
recipient;
(b) learned by the recipient from a third party entitled to disclose
it;
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(c) developed by the recipient independently of information obtained
from the disclosing party as evidenced by prior written records of
the recipient;
(d) already known to the recipient before receipt from the disclosing
party, as shown by its prior written records;
(e) required to be disclosed by law, regulation or the order of a
judicial or administrative authority; provided that the recipient
notifies the disclosing party immediately upon receipt at any such
order or becoming aware of any such law or regulation, or released
with the prior written consent of the disclosing party.
11.4 Others.
No right or license under any patent or proprietary right is granted
hereunder by virtue of the disclosure of IMCLONE Confidential
Information or BI PHARMA KG Confidential Information except as
expressly provided herein. The obligations of both parties under this
Section 11 shall survive the expiration or termination of this
Agreement.
Both IMCLONE and BI PHARMA KG shall use reasonable and customary
precautions to safeguard IMCLONE Confidential Information and BI
PHARMA KG Confidential Information, including ensuring that all
employees or consultants who are provided access to such information
are informed of the confidential and proprietary nature of such
information and understand that all such information is required to be
maintained confidential.
12. TERM AND TERMINATION
12.1 Term.
This Agreement shall come into force as of the date first above written
and commence retroactively as of the Start Date and, unless terminated
earlier as provided herein, shall terminate upon the date of payment of
the last sum due hereunder, or upon the date when the last services
required to be performed hereunder are performed, whichever date shall
last occur unless specifically extended by further written agreement.
12.2 Right to Terminate.
If it becomes apparent to either party at any stage of the Project that
it will not be possible to carry out the Project for scientific or
technical reasons or as a result of Force Majeure (as described in
Section 13 below), the parties shall permit 30 (thirty) business days
for discussion to
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resolve, if possible, the scientific or technical issue giving rise to
the problem. If the parties fail to resolve the problem within this 30
(thirty) day period, either party shall have the right to terminate
this Agreement, effective upon written notice to the other.
In the event of such a termination initiated by IMCLONE, the amount due
to BI PHARMA KG hereunder shall equal all expenses reasonably incurred
by BI PHARMA KG prior to such termination in respect of the purchase of
supplies or raw materials plus an allocation of the balance of the
Project for the period prior to such termination and for a period of 8
(eight) weeks thereafter. BI PHARMA KG shall cease all work following
notice by IMCLONE of termination, and shall attempt in good faith to
minimize expenses hereunder by, for example, canceling any orders that
can be canceled.
Either party may terminate this Agreement effective upon written notice
if either of the following events occurs:
(a) The other party commits a breach of this Agreement and the breach
is not remedied within 30 (thirty) days after the receipt of
notice identifying the breach, requiring its remedy and stating
the intent of the party to terminate in the absence of remedy; or
(b) The other party (i) becomes unable to pay its debts as they become
due, (ii) suspends payment of its debts, (iii) enters into or
becomes subject to corporate rehabilitation or bankruptcy
proceedings or liquidation or dissolution, (iv) makes an
assignment for the benefit of its creditors or (v) seeks relief
under any similar laws for debtor's relief.
12.3 Effect of Termination.
Upon the expiration or termination of this Agreement:
(a) At the request of IMCLONE, BI PHARMA KG shall deliver at the cost
and risk of IMCLONE all vials of the Cell Line, the MCB and the
MWCB, as well as description of all methods relating thereto to
IMCLONE or its designee and shall promptly return all IMCLONE
Confidential Information to IMCLONE; except for a single copy
and/or sample for documentation purposes only and
(b) IMCLONE shall promptly return all BI PHARMA KG Confidential
Information to BI PHARMA KG, except for a single copy and/or
sample for documentation purposes only.
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The respective rights of BI PHARMA KG and IMCLONE to
indemnification as set forth in Sections 9 and 10 above shall
survive termination of this Agreement with respect to any claims
that relate to or derive from the Project, or any acts or failures
to act, of either BI PHARMA KG or IMCLONE in connection with the
Project that occur prior to termination.
13. MISCELLANEOUS
13.1 Force Majeure.
Neither party shall be in breach of this Agreement if there is any
failure of performance under this Agreement (except for payment of any
amounts incurred hereunder prior to Force Majeure) occasioned by any
act of God, fire, act of government or state, war, civil commotion,
insurrection, embargo, prevention from or hindrance in obtaining energy
or other utilities, labor disputes of whatever nature or any other
reason beyond the control of either party.
13.2 Publicity.
Except as required by law (e.g. SEC-requirements), no press release or
other form of publicity regarding the Project or this Agreement shall
be permitted to be published unless both parties have indicated their
consent to the form of the release. Notwithstanding the foregoing,
IMCLONE may elect to issue a press release or other form of publicity
regarding the Project at any time, but shall first notify BI PHARMA KG
of such issuance and provide BI PHARMA KG with an opportunity to
comment thereon. Nothing in this Section 13.2 shall prevent the parties
from disclosing this Agreement as required by applicable laws, rules or
regulations.
13.3. Notices.
Any notice required or permitted to be given hereunder by either party
shall be in writing and shall be (i) delivered personally, (ii) sent
by registered mail, return receipt requested, postage prepaid or (iii)
delivered by facsimile with immediate telephonic confirmation of
receipt, to the addresses or facsimile numbers set forth below: If to
BI PHARMA KG: Boehringer Ingelheim Pharma KG
Birkendorfer Strasse 65
D-88397 Biberach an der Riss
Federal Republic of Germany
Attention: Dr. Wolfram Carius
Fax: + 0049 73 51/54-98049
Phone + 0049 73 51/54-9421
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If to IMCLONE: ImClone Systems Incorporated
180 Varick Street, 7th Floor
New York, New York 10014
Attention: Mr. John B. Landes,
Vice President,
Business Development and General Counsel
Fax: 001 212 645 1405
Phone: 001 212 645 2054
Each notice shall be deemed given (i) on the date it is received if it
is delivered personally, (ii) 1 (one) day after the date it is
postmarked if it is sent by certified United States mail, return
receipt requested, postage prepaid or (iii) on the date it is received
if it is sent by facsimile with immediate telephonic confirmation of
receipt.
13.4. Applicable Law.
This Agreement shall be governed by and construed in accordance with
the laws of Germany without regard to its choice of law principles. The
courts of the place of domicile of BI PHARMA KG shall have exclusive
jurisdiction over all legal matters and proceedings hereunder.
13.5 Compliance with Laws.
BI PHARMA KG shall perform the work hereunder in conformance with
GLP/cGMP, as applicable, and all German and/or EU laws, ordinances and
governmental rules or regulations pertaining thereto.
13.6. Independent Contractors.
Each of the parties hereto is an independent contractor and nothing
herein contained shall be deemed to constitute the relationship of
partners, joint venturers, nor of principal and agent between the
parties hereto. Neither party shall hold itself out to third persons as
purporting to act on behalf of, or serving as the agent of, the other
party.
13.7. Waiver.
No waiver of any term, provision or condition of this Agreement whether
by conduct or otherwise in any one or more instances shall be deemed to
be or construed as a further or continuing waiver of any such term,
provision or condition or of any other term, provision or condition of
this Agreement.
13.8 Severability.
If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction all other
provisions shall continue in full force and effect. The parties hereby
agree to attempt to substitute for
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any invalid or unenforceable provision a valid or enforceable provision
which achieves to the greatest extent possible the economic legal and
commercial objectives of the invalid or unenforceable provision.
13.9 Entirety.
This Agreement, including any exhibits and appendices attached hereto
and referenced herein, constitutes the full understanding of the
parties and a complete and exclusive statement of the terms of their
agreement, and no terms, conditions, understandings or agreements
purporting to modify or vary the terms thereof shall be binding unless
it is hereafter made in writing and signed by both parties.
13.10 Assignment.
Neither party may assign this Agreement to a third party, except an
affiliate (including a subsidiary or division), and either IMCLONE or
BI PHARMA KG may assign this Agreement in connection with the sale of
all or substantially all of such party's assets or similar transaction.
This Agreement shall be binding upon the successors and assigns of the
parties and the name of a party appearing herein shall be deemed to
include the names of its successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the Effective Date.
Biberach, ...............1999 New York, April 30, 1999
BOEHRINGER INGELHEIM PHARMA KG IMCLONE SYSTEMS INCORPORATED
ppa.
Dr. Jacob Prof. R. G. Werner By: John B. Landes
Member of the Board Head of Industrial
Biopharmaceuticals Title: VP, General Counsel
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APPENDICES:
- -----------
Appendix 1: Master Projectplan including Project Timeline
Appendix 1.1: Updated Master Projectplan including Project timeline
Appendix 2: Project Team
Appendix 3: IMCLONE's Tasks in Detail
Appendix 4: BI PHARMA KG's Tasks in Detail
Appendix 5: Test Methods and Specifications for C225
Appendix 6: Protein A Process Format
Appendix 7: Summary Data Reports for Phase I and Phase II
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Appendix 1 Page 1 of 2
- -------------------------------------------------------------------------------
Master Projectplan: C225
ImClone Systems, Inc./BI Pharma KG
Forecast of proposed Workscope and Cost Estimate
- -------------------------------------------------------------------------------
[ ***]
<PAGE> 27
Appendix 1.1 Page 1 of 4
- -------------------------------------------------------------------------------
Update May 1999 Master Projectplan: C225
ImClone Systems, Inc./BI Pharma KG
Forecast of proposed Workscope and Cost Estimate
- -------------------------------------------------------------------------------
[ ***]
<PAGE> 28
Appendix 2
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Function Boehringer Ingelheim ImClone
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Project Team Leader Dr. Helmut Hoffmann Mr. Ronald Martell (?)
Ms. Martie Bohn
- -------------------------------------------------------------------------------------------------------------
Head of Process Development Dr. Helmut Hoffmann (?)
- -------------------------------------------------------------------------------------------------------------
Cell Banking and Characterization, Dr. Stefanos Grammatikos Ms. Betsy Hornberger
Virus Testing Dr. Daniel Velez
Dr. S. Joseph Tarnowski
- -------------------------------------------------------------------------------------------------------------
Small Scale Cell Culture Labs Dr. Wolfgang Noe Mr. Joel Goldstein
Mr. Rajeew Gupta
Dr. Daniel Velez
Dr. S. Joseph Tarnowski
- -------------------------------------------------------------------------------------------------------------
Fermentation Pilot Plant Dr. Ralph Kempken Mr. Joel Goldstein
Mr. Rajeew Gupta
- -------------------------------------------------------------------------------------------------------------
Downstream Processing Dr. Joachim Walter Dr. Daniel Velez
Mr. Joel Goldstein
Dr. S. Joseph Tarnowski
- -------------------------------------------------------------------------------------------------------------
Protein Analytical Chemistry Dr. Michael Schluter Ms. Betsy Hornberger
- -------------------------------------------------------------------------------------------------------------
Process Validation Mr. Norbert Hentschel Mr. Glen Noonan
- -------------------------------------------------------------------------------------------------------------
Filling Mr. Hans Hormann Mr. Edward Patten
- -------------------------------------------------------------------------------------------------------------
Regulatory Dr. Uwe Bucheler Ms. Gretchen Toolan
- -------------------------------------------------------------------------------------------------------------
Documentation Dr. Uwe Bucheler Mr. Edward Patten
- -------------------------------------------------------------------------------------------------------------
Quality Assurance Mrs. Bettina Schulz
- -------------------------------------------------------------------------------------------------------------
Contract Mrs. Kipping
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 29
APPENDIX 3
IMCLONE'S TASKS IN DETAILS
[ *** ]
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APPENDIX 4
BI PHARMA KG's Tasks in Detail
[ *** ]
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APPENDIX 5: TEST METHODS AND SPECIFICATIONS FOR C225
[ *** ]
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APPENDIX 6
[ *** ] A Process Format
[***]
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APPENDIX 7
SUMMARY DATA REPORTS FOR PHASE I AND PHASE II
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
ImClone Systems Incorporated:
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Princeton, New Jersey
November 1, 1999
<PAGE> 1
Exhibit 23.3
[Letterhead of Kenyon & Kenyon]
CONSENT OF SPECIAL PATENT COUNSEL
We hereby consent to the reference to our firm under the caption "Experts"
in the Registration Statement on Form S-3 and related Prospectus of ImClone
Systems Incorporated.
By: /s/ Kenyon & Kenyon
--------------------------
Kenyon & Kenyon
New York, New York
November 1, 1999
<PAGE> 1
Exhibit 23.4
[Letterhead of Hoffmann & Baron, LLP]
CONSENT OF PATENT COUNSEL
We hereby consent to the reference to our firm under the caption "Experts"
in the Registration Statement on Form S-3 and related Prospectus of ImClone
Systems Incorporated.
By: /s/ Hoffmann & Baron, LLP
--------------------------
Hoffmann & Baron, LLP
Syosset, New York
November 1, 1999
