<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission file number 0-15847
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SEQUUS PHARMACEUTICALS, INC.
(Formerly Liposome Technology, Inc.)
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(Exact name of registrant as specified in its charter)
Delaware 94-3031834
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
960 Hamilton Court, Menlo Park, CA 94025
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(Address of principle executive offices)
(415) 323-9011
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
At July 21, 1995 the number of outstanding shares of the Company's common stock,
par value $.0001, was 21,518,519.
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SEQUUS PHARMACEUTICALS, INC.
INDEX
PART I. FINANCIAL INFORMATION Page No.
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ITEM 1. Condensed Financial Statements (unaudited)
Condensed Balance Sheet
June 30, 1995 and December 31, 1994 ...................... 1
Condensed Statement of Operations for the Three
Months and Six Months Ended June 30, 1995 and 1994 ........ 2
Condensed Statement of Cash Flows for the
Six Months Ended June 30, 1995 and 1994 ................... 3
Notes to Condensed Financial Statements ................... 5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 8
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K .......................... 17
Signature ........................................................... 18
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SEQUUS PHARMACEUTICALS, INC.
CONDENSED BALANCE SHEET
(in thousands except par value)
(unaudited)
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 14,515 $ 5,448
Short-term marketable investments 6,950 6,309
Trade accounts and interest receivable 120 285
Inventory 678 558
Prepaid expenses 703 922
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Total Current Assets 22,966 13,522
Equipment and improvements, net 3,317 3,808
Long-term marketable investments - 500
Other assets 310 368
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Total Assets $ 26,593 $ 18,198
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 781 $ 1,586
Accrued clinical costs 3,077 3,954
Accrued compensation 1,359 797
Other accrued liabilities 825 923
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Total Current Liabilities 6,042 7,260
Stockholders' Equity:
Preferred Stock, par value $.01 4 -
Common stock, par value $.0001 21 19
Additional paid-in capital 136,297 110,784
Accumulated deficit (115,771) (99,865)
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Total Stockholders' Equity 20,551 10,938
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Total Liabilities and Stockholders' Equity $ 26,593 $ 18,198
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed financial statements.
1
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SEQUUS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Net Sales $ 156 $ 713 $ 1,040 $ 946
Royalties and fees 30 17 38 40
------------ ------------ ------------ ------------
Total Revenues 186 730 1,078 986
Expenses:
Cost of goods sold 80 201 275 222
Research and development 5,247 6,773 10,729 12,893
Selling, general and administrative 1,752 1,653 6,193 3,813
------------ ------------ ------------ ------------
Total Expenses 7,079 8,627 17,197 16,928
Interest income 160 211 254 598
Interest expense (21) (12) (54) (14)
------------ ------------ ------------ ------------
Interest income, net 139 199 200 584
Net Loss $ (6,754) $ (7,698) $ (15,919) $ (15,358)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net loss per common share $ (0.33) $ (0.41) $ (0.80) $ (0.81)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Common and common equivalent shares
used in calculation of loss per share 20,638 18,933 19,880 18,915
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See accompanying notes to condensed financial statements.
2
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SEQUUS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (15,919) $ (15,358)
Adjustment to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 971 870
Decrease (increase) in assets:
Trade accounts and interest receivable 165 177
Inventories (120) (17)
Prepaid expenses 219 431
Other assets (7) -
Increase (decrease) in liabilities:
Accounts payable (805) (104)
Accrued clinical costs (877) 834
Accrued compensation 562 (284)
Other accrued liabilities (98) 52
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Net cash used by operating activities (15,909) (13,399)
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Cash flows from investing activities:
Available for sale securities:
Purchases (9,849) (12,401)
Sales - 20,560
Maturities 9,721 7,679
Capital expenditures (415) (908)
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Net cash (used) provided by investing activities (543) 14,930
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Cash flows from financing activities:
Sale of common stock 15,486 291
Sale of preferred stock 10,033 -
Principal payments under capital lease obligations - (18)
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Net cash provided by financing activities 25,519 273
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Net increase in cash and cash equivalents
(carried forward) $ 9,067 $ 1,804
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</TABLE>
See accompanying notes to condensed financial statements.
3
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(Continued)
SEQUUS PHARMACEUTICALS, INC.
CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1995 1994
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<S> <C> <C>
Net increase in cash and cash equivalents
(brought forward) $ 9,067 $ 1,804
Cash and cash equivalents at beginning of the period 5,448 3,073
------------ ------------
Cash and cash equivalents at end of the period $ 14,515 $ 4,877
------------ ------------
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</TABLE>
See accompanying notes to condensed financial statements.
4
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SEQUUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1995
(unaudited)
(1) BASIS OF PRESENTATION
INTERIM FINANCIAL INFORMATION
On June 26, 1995 the name of Liposome Technology, Inc. was changed to
SEQUUS Pharmaceuticals, Inc.
In the opinion of management, the accompanying unaudited condensed
financial statements of SEQUUS Pharmaceuticals, Inc. ("SEQUUS" or the
"Company") contain all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position as of
June 30, 1995, the results of operations for the three and six month
periods ended June 30, 1995 and 1994, and the changes in cash flows for the
six month periods ended June 30, 1995 and 1994.
These condensed financial statements should be read in conjunction with the
Company's audited financial statements for the year ended December 31,
1994, which were filed with the Securities and Exchange Commission on
Form 10-K, as amended.
Although the nature of the business is not seasonal, the results of
operations for the interim periods presented are not necessarily indicative
of the results to be expected for the full year.
CASH, CASH EQUIVALENTS AND INVESTMENTS
The Company invests its excess cash principally in high-grade investment
paper. Cash and cash equivalents consist of high-quality money market
instruments with original maturity of 90 days or less. Short-term
investments consist of high-quality money market instruments with original
maturity between 91 days and 12 months. Long-term investments consist of
high-quality financial instruments with original maturity in excess of 12
months.
The Company maintains its cash, cash equivalents and investments in several
different instruments with various banks and brokerage houses. This
diversification of risk is consistent with Company policy to maintain
liquidity and ensure the safety of principal.
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance
sheet date. At June 30, 1995, all debt securities are designated as
available-for-sale. Available-for-sale securities are carried at fair
value, with the unrealized gains and losses reported in stockholders'
equity. The amortized cost of debt securities in this category is adjusted
for amortization of premiums and discounts to maturity. Such amortization
is included in interest income along with interest earned. Realized gains
and losses and declines in value judged to be other-than-temporary on
available-for-sale securities are included in interest income.
5
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SEQUUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1995
(unaudited)
(2) INVESTMENTS
The following is a summary of available-for-sale securities as of June 30,
1995:
<TABLE>
<CAPTION>
Available-for-Sale Securities
---------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. government obligations $ 4,451 $ - $ - $ 4,451
U.S. corporate debt securities 1,499 - - 1,499
Foreign corporate debt securities 1,000 - - 1,000
------------ ------------ ------------ ------------
$ 6,950 $ - $ - $ 6,950
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
During the six months ended June 30, 1995, gross realized gains and losses
on sales of securities available-for-sale were immaterial. As of June 30,
1995 the average portfolio duration was approximately 24 days and
contractual maturity of the investments did not exceed 9 months.
(3) PROPERTY AND EQUIPMENT
Details of the Company's property and equipment are as follows (in
thousands):
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
------------ ------------
<S> <C> <C>
Office and laboratory equipment $ 6,380 $ 5,952
Leasehold improvements 3,940 3,953
Equipment under capital lease 356 356
------------ ------------
10,676 10,261
Less accumulated depreciation
and amortization (7,359) (6,453)
------------ ------------
$ 3,317 $ 3,808
------------ ------------
------------ ------------
</TABLE>
6
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SEQUUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1995
(unaudited)
(4) INVENTORIES
Inventories are stated at the lower of cost (principally first-in, first-
out) or market. The principal components of inventory are as follows (in
thousands):
<TABLE>
<CAPTION>
June 30, Dec. 31,
1995 1994
------------ ------------
<S> <C> <C>
Raw Materials $ 188 $ 268
Work-in-Progress 386 201
Finished Goods 104 89
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$ 678 $ 558
------------ ------------
------------ ------------
</TABLE>
(5) STOCKHOLDERS' EQUITY
On April 13, 1995, and in March 1995, the Company raised an aggregate of
$12 million (net proceeds $11.0 million) of equity capital with the sale of
480,000 shares of Series A Convertible Reset Preferred Stock ("convertible
reset preferred stock") together with warrants to purchase 808,320 shares
of common stock. Each share of convertible reset preferred stock is
convertible into common stock at an initial conversion price of $7.425 per
share of common stock, representing a ten percent (10%) premium to the
closing price of the common stock on March 24, 1995, the date the offering
was priced. The convertible reset preferred stock will automatically
convert into common stock at the option of the Company, in whole or in
part, in the event that the common stock has closed for 20 out of 30
consecutive trading days at a price in excess of approximately $13.00 per
share. In the event that the convertible reset preferred stock remains
outstanding on March 25, 1996, the conversion price will be reset to the
lesser of (i) the initial conversion price and (ii) the lowest 30-day
consecutive average closing market price of the common stock in the
preceding 12-month period, subject to a floor of $3.713 per share. The
warrants have a three-year life and are exercisable at a fixed price of
$7.425 pre share of common stock.
On May 25, 1995, the Company raised $15 million (net proceeds $14.3
million) through a private placement of Units. Each Unit consisted of one
share of common stock and a warrant to purchase one-half share of common
stock at an exercise price per share of $7.4328. The warrants are only
exercisable if the common stock portion of the Unit is held for one year by
the warrant holder. The price per Unit was $6.7571. Under the terms of
this financing, the investors also receive the first right to negotiate
with the Company to participate in the commercial development of the
Company's anticancer product, DOXIL-Registered Trademark- (also called
DOX-SL), in Brunei, China, Hong Kong, Indonesia, Malaysia, Singapore,
Taiwan and Thailand.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BACKGROUND
The Company is developing proprietary pharmaceutical products for the critical
care market, using patented liposome and lipid-based technologies. The
Company's strategy is to retain the rights to its key products. Accordingly,
SEQUUS is developing the capability to market and sell its products in the U.S.
and is establishing collaborative arrangements for the marketing and
distribution of its products abroad. The Company currently uses a contract
manufacturer for the commercial-scale production of its key products, thus
deferring the need to invest in a fixed manufacturing infrastructure and
retaining future flexibility.
The Company's near-term product development strategy includes: (i) obtaining
approval from the U.S. Food and Drug Administration (FDA) of New Drug
Applications (NDAs) for its key products AMPHOTEC-TM-(1) (amphotericin B
colloidal dispersion) Injection and DOXIL-Registered Trademark-(2) (pegylated
liposomal doxorubicin HCI) Injection and of Market Authorization Application
dossiers (MAA) from regulatory agencies in ex-US markets; (ii) completing the
full clinical development, registration and expanded labeling of these products
for a range of indications; (iii) exploring additional applications for DOXIL
technology; and (iv) creating advanced technology for future products.
SEQUUS may choose to license U.S. marketing or co-marketing rights to third
parties for selected products and may collaborate with third parties on the
development of future products, particularly those involving new therapeutic
agents proprietary to such third parties.
In August 1993, the Company signed a distribution agreement with Zeneca Limited
("Zeneca"), a major NYSE-listed (NYSE:ZEN) pharmaceutical and agricultural
bioscience company, under which Zeneca will market and sell AMPHOTEC in most
European countries. Under the terms of the agreement, the Company received and
recognized in the third quarter of 1993 a signing fee and a milestone payment in
the amount of $5.25 million which was earned by the Company's receipt of a
product license authorizing the sale of AMPHOTEC in the United Kingdom. The
Company manufactures and sells AMPHOTEC to Zeneca at a price which, subject to a
minimum, reflects the price(s) achieved by Zeneca in the market. The Company
will also receive additional milestone payments upon receipt of product licenses
in certain other European countries and upon the achievement of certain
cumulative sales totals.
In March 1994, SEQUUS and Zeneca announced the expansion of their August 1993
agreement to cover all countries not previously covered with the exception of
the United States, Canada, Japan and selected small markets. Subsequently,
SEQUUS announced Zeneca's commercial launch of AMPHOTEC in the U.K. in May
1994. For the six months ended June 30, 1995, 76% of the Company's product
sales represent sales of AMPHOTEC to Zeneca as compared to 65% for the first
half of 1994. A portion of the 1994 and 1995 sales reflect pipeline-filing
orders, and future sales levels will depend on the rate at which the product
penetrates existing approved markets in the U.K. and Ireland, as well as the
timing of additional product approvals in other European countries for which
applications have been filed. The Company expects to ship little or no
additional product to Zeneca for the remainder of 1995.
In June 1995 the Company responded to questions of the Committee on Proprietary
and Medicinal Products (CPMP) concerning AMPHOTEC and has requested a hearing
in the fall of 1995 concerning the response. The CPMP is composed of represen-
tatives from regulatory bodies of the member European Union (EU) countries.
---------------------------------------
(1) Also known as ABCD and AMPHOCIL
(2) Also called DOX-SL and S-Dox
8
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In the quarter ended June 30, 1995, the Company received approval from
Finland to market AMPHOTEC in that country. AMPHOTEC has previously been
approved in the United Kingdom and Ireland.
In February 1995, the FDA's Oncologic Drug Advisory Committee (ODAC) recommended
that the FDA not approve DOXIL under its regular approval procedures but did
recommend that the FDA approve DOXIL under Subpart H of 21 CFR Ch 1 Section
314.500 et seq. Accelerated Approval of New Drugs for Serious or Life-
Threatening Illnesses ("FDA Accelerated Approval Procedures"). Under the FDA
Accelerated Approval Procedures, such approval, if granted by the FDA, will be
subject to the additional requirement that following product launch, the Company
continue to study the drug to verify and describe its clinical benefit. Approval
by the FDA of the DOXIL NDA is dependent upon numerous factors, including
approval of prescribing information, the FDA's inspection and approval of the
Company's facilities, processes and procedures related to the development and
manufacture of the drug and similar inspection and approval of the Company's
suppliers, subcontractors and contract manufacturer. Many of these activities
have been completed. Prior to product launch, which SEQUUS is in the process of
planning, the Company and the FDA must also reach agreement on the Company's
promotional materials. There can be no assurance that the DOXIL NDA will be
approved under the FDA Accelerated Approval Procedures or otherwise. Even if
DOXIL is approved under FDA Accelerated Approval Procedures, FDA may withdraw
approval on an expedited basis following product launch if the Company fails to
show due diligence in conducting post-marketing studies or if these studies fail
to demonstrate clinical benefit to the FDA's satisfaction.
On June 26, 1995 the Company simultaneously formed SEQUUS Pharmaceuticals, Inc.,
merged it with Liposome Technology, Inc. and adopted SEQUUS Pharmaceuticals,
Inc. as the official name of the corporation. On the same day, the Board of
Directors appointed I. Craig Henderson, M.D. as Chief Executive Officer ("CEO")
and L. Scott Minick as President and Chief Operating Officer. In addition, Nick
V. Arvanitidis, Ph.D., a founder of the Company who served as Chairman and CEO,
retired from the Company and from the Board of Directors on June 26, 1995. Dr.
Henderson was subsequently appointed as Chairman of the Board and Mr. Minick was
appointed as a Director.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
During the three months ended June 30, 1995, net sales were $156,000 compared to
$713,000 recorded in the second quarter of the prior year of which approximately
$500,000 were attributed to AMPHOTEC pipeline fill by Zeneca. The level of
future sales to Zeneca depends on the rate of market penetration where AMPHOTEC
is approved and additional approvals by other European countries in which
applications have been filed. For the remainder of 1995, the Company
anticipates little or no sales to Zeneca.
Generally, most of the Company's operating expenses are incurred for research
and development (R&D), including preclinical and clinical development required
for new pharmaceutical products. The principal items of R&D expense are
personnel costs, costs of clinical trials, clinical production and supplies. In
the second quarter of 1995, R&D expenses declined by $1,526,000 compared to the
same period in 1994 when the Company was conducting extensive clinical
activities related to regulatory filings for the Company's DOXIL product. These
activities focused primarily on clinical trials of DOXIL in AIDS patients with
Kaposi's sarcoma (AIDS-KS). The Company anticipates expenditures for clinical
activities will increase later in 1995 as clinical trials for solid tumor cancer
are expanded.
9
<PAGE>
Selling, general and administrative expenses (SG&A) increased by $99,000 over
the second quarter of the prior year, principally reflecting preparation for the
anticipated launch of DOXIL in the United States. If DOXIL receives FDA
approval, the Company expects its marketing expenses to increase significantly
as it proceeds with the commercialization of DOXIL in the United States.
The Company's net loss for the quarter ended June 30, 1995 decreased to $6.7
million from $7.7 million in the second quarter of 1994. The loss per share was
$0.33 compared to $0.41 in the same period of the prior year.
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
During the six months ended June 30, 1995, product revenues were comparable to
the same period of the prior year, chiefly due to higher sales in the first
quarter of 1995.
R & D costs were lower in the first six months of 1995 than in 1994 by $2.2
million. This is a reflection of heavy spending in 1994 on clinical activities
in preparation for regulatory filings for approval of DOXIL in the treatment of
refractory AIDS-KS patients. The Company anticipates that clinical activity
and R&D spending will increase later in 1995 as clinical trials in solid tumor
trials are expanded.
SG&A costs increased $2.4 million in the first six months of 1995 compared to
1994 principally reflecting accrued expenses in connection with termination of
the employment of certain officers offset by decreased legal activities due to
the settlement of patent related litigation. As the Company proceeds with
commercialization of DOXIL in the United States it expects marketing expenses to
rise significantly.
The Company's net loss for the six month period ended June 30, 1995 of $15.9
million was an increase of $0.6 million over the first six months of 1994. The
loss per share was $0.80 compared to $0.81 in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents, and short-term and long-term investments
at June 30, 1995 were approximately $21.5 million, an increase of $9.2 million
from $12.3 million at December 31, 1994. This increase represents principally
cash provided by equity financing activities offset by operating expenditures.
The Company's strategy is to fund the preclinical and clinical development of
two of its proprietary products, AMPHOTEC and DOXIL, and the continued research
and development of additional STEALTH-Registered Trademark- liposome products in
the anticancer, antibiotic, anti-inflammatory and other areas. This strategy
will require significant operating and capital expenditures including the
construction of a pilot production facility which is currently in the planning
phase.
During the six months ended June 30, 1995, the Company raised an aggregate of
$27.0 million (net proceeds of $25.3 million) from equity financing. On March
31, 1995 and April 13, 1995, the Company raised an aggregate of $12 million (net
proceeds of $11.0 million) from a private placement of 480,000 shares of a new
issue of Series A Convertible Reset Preferred Stock and warrants to purchase
808,320 shares of common stock. On May 26, 1995 the Company raised $15.0 million
(net proceeds of $14.3 million) in a private placement of Units composed of one
share of common stock and a warrant to purchase one-half share of common stock;
the warrant is only exercisable if the holder retains the associated common
stock for one year. See Note 5 of the Notes to Condensed Financial Statements
above for a description of the terms of these financings.
10
<PAGE>
The Company believes that at current spending rates its existing cash balances
and interest income earned thereon together with revenues from sales will be
adequate to fund its planned activities through the fourth quarter of 1995 and
intends to seek additional financing if market conditions are favorable. If the
Company's products obtain regulatory approval, the Company will need additional
financing to support the full commercialization of its products, but no
assurance can be given that adequate financing will be available on satisfactory
terms, if at all. In this connection the Company filed a shelf registration
statement for possible future financings, whether in the context of strategic
alliances or otherwise. The registration statement was declared effective on
June 15, 1995. The registration statement covers the sale and issuance of up to
$50,000,000 of debt securities, common stock, preferred stock and/or warrants to
purchase common stock.
RISK FACTORS
HISTORY OF OPERATING LOSSES; NEED FOR ADDITIONAL FINANCING
The Company has incurred losses in each year since its inception and has
accumulated approximately $116 million in net losses through June 30, 1995. The
Company to date has generated limited revenues. There can be no assurance that
SEQUUS' revenues from product sales will be significant or sufficient to fund
operations. Owing to expenditures associated with self-funded research,
preclinical and clinical programs, marketing expenses and other activities
related to seeking regulatory approval and achieving commercialization of its
products, the Company expects operating losses to continue for a number of
years. Accordingly, additional financing will be required to fund the Company's
continuing operations. There can be no assurance that such financing will be
available on acceptable terms, if at all. The unavailability of such financing
could delay or prevent the development, testing, regulatory approval,
manufacturing or marketing of some or all of the Company's products.
DEVELOPING TECHNOLOGY; NO PROOF OF MARKET ACCEPTANCE
Although liposome and lipid-based products have been approved for sale in
certain European countries, no therapeutic product based on liposome or lipid-
based technology is presently commercially available in the U.S. (although
NeXstar Pharmaceuticals, Inc. has received an "approvable" letter from the
FDA with respect to a product competitive with DOXIL, as described under
"Competition and Technological Change" below). Each of the Company's products
must be clinically tested, approved for use by appropriate government agencies
and manufactured in commercial quantities before marketing can be undertaken.
Unanticipated side effects or unfavorable publicity concerning any product
incorporating liposome or lipid-based technologies could have an adverse effect
on the Company's ability to obtain physician, patient or third-party payer
acceptance and to sell products using the same or similar technology. There can
be no assurance as to the Company's ability, or the length of time required, to
achieve commercialization of the Company's products or that physicians, patients
or third-party payers will accept liposome products as readily as traditional
forms of medication or at all.
NO ASSURANCE OF REGULATORY APPROVALS
The production and marketing of the Company's products are subject to rigorous
preclinical and clinical testing and approval by the FDA and by comparable
agencies in other countries and, to an extent, by state regulatory authorities
prior to marketing. The process of conducting clinical trials and obtaining
regulatory approval for a product typically takes a number of years and involves
substantial expenditures. In addition, product approvals may be withdrawn or
limited for noncompliance with regulatory standards or the occurrence of
unforeseen problems following initial marketing. The Company has not received
regulatory approval in the United States for the commercial sale of any of its
principal products. The Company may encounter significant delays or excessive
costs in its efforts to secure necessary approvals or licenses. Future
federal, state, local or foreign legislative or administrative acts could also
prevent or delay regulatory approval of the Company's or its licensees'
products. There can be no assurance that the
11
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Company will be able to obtain the necessary approvals for manufacturing or
marketing the Company's products or that the clinical data it obtains in
clinical studies will be sufficient to establish the safety and effectiveness of
its products. Failure to obtain or maintain requisite governmental approvals,
or failure to obtain approvals of the clinical intended uses requested, could
delay or preclude the Company from further developing particular products or
from marketing their products, or limit the commercial use of the products and
thereby have a material adverse effect on the Company's liquidity and financial
condition. Even if the Company obtains regulatory approval for any particular
product, there can be no assurance that it will be economically feasible for the
Company to commercialize such product.
DOXIL REGULATORY STATUS. In September 1994, SEQUUS filed an NDA with the FDA
seeking approval to market DOXIL for treating AIDS-KS patients who have failed
or are intolerant to conventional combination chemotherapy. In February 1994,
the ODAC recommended that the FDA not approve DOXIL under its regular approval
procedures but did recommend that the FDA approve DOXIL under the FDA
Accelerated Approval Procedures. Under the FDA Accelerated Approval Procedures,
such approval, if granted by the FDA, will be subject to the additional
requirement that following product launch, the Company continue to study the
drug to verify and describe its clinical benefit. Approval by the FDA of the
DOXIL NDA is dependent upon numerous factors, including approval of prescribing
information, the FDA's inspection and approval of the Company's facilities,
processes and procedures related to the development and manufacture of the drug
and similar inspection and approval of the Company's suppliers, subcontractors
and contract manufacturer. Many of these activities have been completed. Prior
to product launch, which SEQUUS is in the process of planning, the Company and
the FDA must also reach agreement on the Company's promotional materials. There
can be no assurance that the DOXIL NDA will be approved on a timely basis, if at
all, and under FDA Accelerated Approval Procedures, FDA may withdraw approval on
an expedited basis following product launch if the Company fails to show due
diligence in conducting post-marketing studies or if these studies fail to
demonstrate clinical benefit to the FDA's satisfaction.
In December 1994, the Company submitted MAAs for DOXIL in the EU countries
seeking approval to use DOXIL in the first-line treatment of AIDS-KS. The MAA
submissions were made in accordance with the CPMP "High Technology List B
Concertation Procedures" procedures. Under the List B procedures, a company is
allowed to file for marketing approval simultaneously in all EU countries and
one EU country acts as "rapporteur" to coordinate the review process. The U.K.
Medicines Control Agency (MCA) will act as rapporteur for DOXIL. There can be
no assurance that the CPMP, which is composed of representatives from the
respective regulatory bodies in the EU countries, will determine that the
Company's clinical data have provided evidence of safety and efficacy in humans
adequate to support approval or that any of the MAAs will be approved on a
timely basis, if at all.
AMPHOTEC REGULATORY STATUS. In June 1995, SEQUUS received marketing approval
for AMPHOTEC in Finland after submitting an MAA in that country the previous
year. In June 1994, the Company submitted MAAs for AMPHOTEC in Sweden and the
10 EU countries where MAAs had not previously been filed. The submissions were
made in accordance with CPMP "Multistate" procedures. In June 1995, the Company
responded to a list of questions raised by the member states in October 1994.
There can be no assurance that the Company's responses will adequately address
the issues raised by the member states, that the CPMP will recommend approval
based on the responses, or that any additional member states will approve
AMPHOTEC.
The Company continues to prepare an NDA for AMPHOTEC based upon certain data
from open label clinical trials. There can be no assurance that the Company's
NDA for AMPHOTEC will be accepted for filing by the FDA, that the FDA will
determine that the Company's NDA provides sufficient evidence of safety and
efficacy in humans adequate to support FDA approval or that the NDA will be
approved on a timely basis, or at all.
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LIMITED MARKETING AND SALES EXPERIENCE; DEPENDENCE ON THIRD-PARTY DISTRIBUTOR
AND AGENTS
Although the Company has recently hired experienced sales personnel, the Company
has no experience in marketing and selling products. To date, all of the
Company's product revenues have come from sales either to a third-party
distributor (Zeneca) or through third-party agents. Ninety-one percent (91%) of
the Company's product revenues in fiscal 1994 and 76% of product revenues for
the six month period ended June 30, 1995 came from sales of AMPHOTEC to Zeneca.
Although the Company believes Zeneca and other third-party distributors or
agents would have an economic motivation to succeed in performing their
contractual responsibilities, the amount and timing of resources to be devoted
to these activities may not be within the control of the Company. There can be
no assurance that such parties will perform their obligations as expected or
that the Company will derive any revenue from such arrangements. The Company
intends to increase the size of its own marketing and sales organization to
participate in the marketing and sales of certain of its products. Developing
such a marketing and sales organization will require significant additional
expenditures, management resources and training time. There can be no assurance
that the Company will be able successfully to establish such a marketing and
sales organization.
As a consequence of this current dependence on a single customer, and unless and
until the Company receives any approvals for and begins to sell DOXIL, the
Company's future product revenues are largely dependent on Zeneca's success in
selling AMPHOTEC in approved markets, Zeneca's assessment of the timing and
likelihood of additional approvals for AMPHOTEC and of Zeneca's assessment of
its inventory requirements. There can be no assurance that these or other
factors will not lead to substantial fluctuations in the Company's product
revenues from period to period.
DEPENDENCE ON THIRD-PARTY MANUFACTURER; MANUFACTURING RISKS
The Company's present manufacturing capabilities are limited and are inadequate
for the large-scale production of its products under development. The Company
is dependent on Ben Venue Laboratories, Inc. ("Ben Venue"), a U.S. based
contract manufacturer, to manufacture commercial-scale quantities of AMPHOTEC
and DOXIL pursuant to supply agreements. There can be no assurance, however,
that Ben Venue will continue to meet FDA standards for the manufacture of
these products. There are only a limited number of other manufacturers with the
capability of manufacturing AMPHOTEC and DOXIL, and any alternative manufacturer
would require regulatory qualification to manufacture the product which would
likely take several months. In the event of any interruption of supply from the
contract manufacturer due to regulatory or other causes, there can be no
assurance that the Company could make alternative manufacturing arrangements.
To date, the Company and Ben Venue have manufactured fifteen (15) commercial-
scale batches of DOXIL, including the three (3) registration batches which are
required as part of the FDA's approval process, but there can be no assurance
that DOXIL can consistently be produced in accordance with specifications.
Similarly, there can be no assurance that the Company will be able to meet
routinely its manufacturing goals in a timely manner or to the continuing
satisfaction of regulatory agencies.
RAW MATERIALS
Although the Company has supply agreements in place with the suppliers of its
key raw materials, the number of alternative qualified suppliers of key raw
materials required for the manufacture of AMPHOTEC and DOXIL is limited. There
can be no assurance that the Company could make alternative supply arrangements
in the event of a supply interruption on commercially reasonable terms, if at
all.
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COMPETITION AND TECHNOLOGICAL CHANGE
The drugs being developed by the Company compete with existing and new drugs.
Many companies, including established pharmaceutical and chemical companies, and
university-related entities both in the U.S. and abroad are developing products
based on improved drug delivery technologies. Some of these companies are
active in liposome and lipid-based research and product development and many
have financial and technical resources and production and marketing capabilities
substantially greater than those of the Company. In addition, most such
companies have had significantly greater experience than the Company in
preclinical and clinical development activities and in obtaining regulatory
approval to manufacture and market pharmaceutical products. NeXstar
Pharmaceuticals, Inc. ("NeXstar"), which incorporates a predecessor company,
Vestar, Inc. (Vestar), devotes a significant portion of its resources to
liposomal drug delivery. NeXstar has regulatory approval in approximately 18
countries, primarily in Europe, to sell AmBisome, a liposomal amphotericin B
product with which SEQUUS expects AMPHOTEC to compete. NeXstar reported
AmBisome sales of $14 million in the quarter ended June 30, 1995. The Company
believes that NeXstar's wide approval of AmBisome and strong sales of that
product may give NeXstar a competitive advantage over AMPHOTEC as it receives
regulatory approval, which could have an adverse effect on the Company's sales
of AMPHOTEC. NeXstar has received an "approvable" letter from the FDA with
respect to its DaunoXome (liposome-based daunorubicin) product for use in first
line therapy of AIDS-KS patients with which SEQUUS expect DOXIL to compete. The
Liposome Company (TLC) is dedicated primarily to liposomal drug delivery. TLC
has submitted an NDA with the FDA and MAAs in several European countries for a
liposomal amphotericin B product and has received approval for this product in
the UK. SEQUUS believes that competition in all pharmaceutical products and in
all forms of drug delivery will continue to be intense. There can be no
assurance that other pharmaceutical companies will not develop more effective
drug delivery technologies than, or will not produce products superior to, those
of the Company.
DEPENDENCE ON KEY PERSONNEL; BUSINESS TRANSITION
The Company's success depends largely upon its ability to attract and retain
qualified scientific, engineering, manufacturing, sales and marketing and
management personnel. The Company faces competition for such personnel from
other companies, academic institutions, government entities and other
organizations. There can be no assurance that the Company will be successful in
hiring or retaining such personnel.
In addition, the Company experienced management changes among certain high level
executive officers in June 1995. See "Background" above. The new management
team faces significant challenges in transitioning the Company from research and
development to manufacturing and marketing as the Company's products obtain
regulatory approval. There can be no assurance that the management team can
successfully manage the transition of the Company's business.
PATENTS AND TRADE SECRETS
There has been increasing litigation in the biomedical, biotechnology and
pharmaceutical industries with respect to the manufacture, use and sale of new
therapeutic products that are the subject of conflicting patent rights. There
can be no assurance that any patents owned or controlled by the Company will
protect SEQUUS against further infringement litigation or afford commercially
significant protection of the Company's technology. The majority of the
Company's patents have not yet been tested in court to determine their validity
and scope. Moreover, the patent laws of foreign countries differ from those of
the U.S. and the degree of protection, if any, afforded by foreign patents may,
therefore, be different.
In October 1991, the Company received a letter from TLC alleging that DOXIL
infringes two TLC patents (the TLC Patents) relating to lyophilization (freeze-
drying) of liposomes. The Company's current DOXIL formulation is not
lyophilized and therefore does not infringe the TLC Patents. In addition, the
Company had previously asked its patent counsel to review, among other things,
the TLC Patents. In September
14
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1991, such counsel delivered an opinion to the Company that, among other things,
SEQUUS' doxorubicin products do not infringe any valid claim under either of
the TLC Patents. However, no assurance can be given that TLC will not make a
claim against SEQUUS with respect to the TLC Patents. In December 1994 in a
case involving TLC and Vestar the U.S. District Court in Wilmington, Delaware,
found one of the two TLC patents invalid and ordered it revoked.
In November 1991, the Company received a letter from TLC bringing to SEQUUS'
attention TLC's U.S. Patent No. 5,059,591 (the '591 Patent) containing claims
directed to amphotericin B/sterol compositions and their method of use.
Subsequently, SEQUUS' patent counsel delivered an opinion to the Company that,
among other things, AMPHOTEC does not infringe any claim of the '591 Patent.
However, no assurance can be given that TLC will not make a claim against SEQUUS
with respect to the '591 Patent.
The Company has a practice of monitoring patents and other developments in the
liposome field. To the extent that the Company becomes aware of patents of
other parties which the Company's processes or products might infringe, it is
the Company's practice to seek review of such patents by the Company's patent
counsel. In accordance with this practice, the Company's patent counsel has
reviewed a patent issued to TLC in January 1992 (the Loading Patent) which
covers, among other things, a process related to the loading of therapeutic drug
into liposomes. The Company's patent counsel has rendered an opinion that
infringement of the Loading Patent claims is unlikely to be found, and that
the Loading Patent should be held invalid and/or unenforceable on a variety of
grounds. The Company continues to proceed in product development in reliance
on this opinion. Such opinion does not, however, prevent TLC from commencing
litigation to enforce the Loading Patent, and no assurance as to the outcome of
such litigation can be given.
The Company's patent counsel has also rendered advice with respect to all other
patents which have been referred to such patent counsel that the Company's
products do not infringe any valid claim under such patents. Such advice does
not, however, prevent any third party from commencing litigation to enforce such
patents.
The Company has been required to defend itself in patent litigation in the past
and the uncertainties inherent in any other lawsuits that may be commenced in
the future with respect to any alleged patent infringement by the Company make
the outcome of any such litigation difficult to predict. The Company does not
believe that TLC would prevail in any suit it may file with respect to the
patents described above and, accordingly, does not believe that any such suit
would have a material adverse effect on the Company's operating results.
However, there can be no assurance that the Company will be successful in any
patent litigation brought by TLC or any other party, and a judgment adverse to
the Company in any such litigation could adversely affect the Company.
Moreover, the expense of such litigation may be substantial and could adversely
affect the Company, whether or not the Company is successful in such litigation.
Other public and private concerns control patents covering technology
potentially useful or necessary to the Company. The scope and validity of such
patents, the extent to which the Company may wish or need to acquire licenses
under such patents, and the cost or availability of such licenses, are currently
unknown. The Company relies on unpatented knowledge, and others may be able to
obtain access to, or independently develop, such expertise.
PRODUCT LIABILITY
Testing, manufacturing and marketing of the Company's products will entail risk
of product liability. There can be no assurance that the amount of insurance
the Company has obtained against the risk of product liability will be adequate,
that the amount of such insurance can be renewed or that the amount and scope of
any coverage obtained will be adequate to protect the Company in the event of a
successful product liability claim. The Company's business could be adversely
affected by a successful product liability claim.
15
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HEALTH CARE REFORM; UNCERTAINTY OF THIRD-PARTY REIMBURSEMENT
Political, economic and regulatory influences are subjecting the health care
industry in the United States to fundamental change. Although Congress has
failed to pass comprehensive health care reform legislation to date, the Company
anticipates that Congress, state legislatures and the private sector will
continue to review and assess alternative health care delivery and payment
systems. Potential approaches that have been considered include mandated basic
health care benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Legislative debate is expected to continue in the future, market forces
are expected to demand reduced costs and SEQUUS cannot predict what impact the
adoption of any federal or state health care reform measures or future private
sector reform may have on its business.
In both domestic and foreign markets, sales of the Company's potential products,
if any, will depend in part on the availability of reimbursement from third-
party payors such as government health administration authorities, private
health insurers and other organizations. Third-party payors are increasingly
challenging the price and cost-effectiveness of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products. There can be no assurance that the Company's proposed
products will be considered cost effective or that adequate third-party
reimbursement will be available to enable SEQUUS to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. Legislation and regulations affecting the pricing of
pharmaceuticals may change before the Company's proposed products are approved
for marketing and any such changes could further limit reimbursement for medical
products and services
VOLATILITY OF STOCK PRICE
The market price of the Common Stock, like the stock prices of many publicly
traded biotechnology companies, has been and may continue to be highly volatile.
A variety of events, both concerning and unrelated to the Company and the
biotechnology industry, such as announcements of technological innovations or
new commercial products by the Company or its competitors, governmental
regulation, developments relating to regulatory approvals, developments or
disputes relating to patent or proprietary rights, as well as period-to-period
fluctuations in the Company's financial results, may have a significant negative
impact on the market price of the Common Stock. Although the Common Stock
trades on the Nasdaq National Market, the trading volume has fluctuated and at
times has been quite low. Any large sale of securities of the Company,
including any sale of securities under the shelf registration statement
described under "Liquidity and Capital Resources" above, could have a
significant adverse effect on the market price of the Common Stock.
16
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PART II - OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.19 Employment Agreement between the Company and I. Craig Henderson
dated June 26, 1995.
10.20 Employment Agreement between the Company and L. Scott Minick
dated June 26, 1995.
10.21 Amendment dated June 15, 1995 to Memorandum of Agreement between
the Company and Nick V. Arvanitidis dated April 3, 1995.
10.22 Letter Agreement between the Company and Richard D. Mamelok dated
June 30, 1995 regarding Dr. Mamelok's separation from the
Company.
27 Financial Data Schedule
(b) Reports on Form 8-K. During the three months ended June 30, 1995, no
reports on Form 8-K were filed.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEQUUS PHARMACEUTICALS, INC.
----------------------------
(Registrant)
Date: August 10, 1995 By: /s/ Donald J. Stewart
------------------------
Donald J. Stewart
Vice President, Finance
(Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
10.19 Employment Agreement between the Company and I. Craig Henderson
dated June 26, 1995.
10.20 Employment Agreement between the Company and L. Scott Minick
dated June 26, 1995.
10.21 Amendment dated June 15, 1995 to Memorandum of Agreement between
the Company and Nick V. Arvanitidis dated April 3, 1995.
10.22 Letter Agreement between the Company and Richard D. Mamelok dated
June 30, 1995 regarding Dr. Mamelok's separation from the
Company.
27 Financial Data Schedule
19
<PAGE>
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 26th day of June, 1995, by and between LIPOSOME TECHNOLOGY, INC., a Delaware
corporation ("LTI" or the "Company") and I. Craig Henderson, M.D. ("Officer").
R E C I T A L
LTI desires to retain Officer as an employee of LTI and Officer desires to
be so retained on the terms and subject to the conditions set forth in this
Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. DUTIES. During the term of employment of Officer as provided in
Section 2, Officer agrees to be employed by and to serve LTI as Chief Executive
Officer and LTI agrees to employ and retain Officer in such capacities.
Officer's duties in such capacities shall be established by, and will be subject
to change from time to time by, the Board. Officer shall devote substantially
all of his business time, energy and skill to the affairs of LTI, and Officer
shall not undertake other business activities without the prior consent of the
Board. It is understood that in view of Dr. Henderson's standing within the
medical community, he will be allowed to undertake certain activities with the
permission of the Board, which permission shall not be unreasonably withheld.
Officer shall duly, punctually, and faithfully perform and observe any and all
rules and regulations which LTI may now or shall hereafter reasonably establish
governing the conduct of its business or its employees.
2. TERMS OF EMPLOYMENT
2.1 DEFINITIONS. For purposes of this Agreement the following terms
shall have the following meanings:
(a) "Termination for Cause" shall mean termination by LTI of
Officer's employment by LTI by reason of Officer's willful dishonesty towards,
fraud upon, or deliberate injury or attempted injury to LTI or by reason of
Officer's willful breach of this Agreement.
(b) "Termination Other Than For Cause" shall mean termination by
LTI of Officer's employment by LTI, other than in a Termination for Cause or a
Voluntary Termination.
(c) "Voluntary Termination" shall mean termination by officer of
Officer's employment by LTI.
2.2. TERM. Subject to earlier termination as provided in this Section
2, the term of employment of Officer by LTI under this Agreement shall be for
ten (10) years.
2.3 TERMINATION FOR CAUSE. Termination for Cause may be effected by
LTI at any time during the term of Officer's employment hereunder and shall be
effected by written notification to Officer. Upon Termination for Cause,
Officer shall immediately be paid all accrued salary and accrued vacation pay,
all to the date of termination, but Officer shall not be paid any other
compensation such as severance compensation or reimbursement of any kind.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding anything else
in this Agreement, LTI may effect a Termination Other Than for Cause at any time
during the term of Officer's employment hereunder upon giving written notice of
such termination to Officer. Upon any Termination Other Than for Cause, officer
shall immediately be paid all accrued salary and
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<PAGE>
accrued vacation pay, all to the date of termination, and severance compensation
and continuation of LTI-paid benefits, each as provided in Section 4.2.
2.5 VOLUNTARY TERMINATION. Other than as provided in Section 2.6,
upon Voluntary Termination during the term of Officer's employment hereunder,
Officer shall immediately be paid all accrued salary and accrued vacation pay,
all to the date of termination, but no other compensation or reimbursement of
any kind, including without limitation, severance compensation.
2.6 TERMINATION UPON "CHANGE OF CONTROL". In the event of a change
of control of the Company during the term of this Agreement, for example by
merger or acquisition, if thereafter Officer is no longer employed by the
surviving entity, or if thereafter Officer is no longer employed by the
surviving entity in substantially the same position and with the same duties as
described in Section 1 hereof, Officer at his sole discretion may elect to
terminate his employment by giving written notice of such termination to the
Board. Upon such termination, Officer shall immediately be paid all accrued
salary and all accrued vacation pay, all to the date of termination, and
severance compensation and continuation of LTI-paid benefits, each as provided
in Section 4.2. Upon such termination, Officer shall also be entitled to
vesting of any unvested portion of the shares (i.e., the Company's "Right of
Repurchase" as described in the 1987 Employee Stock Option Plan, as amended,
shall expire with respect to all common stock issuable upon exercise of stock
options).
3. COMPENSATION.
3.1 BASE SALARY. As payment for all of the services to be rendered
by Officer as provided in Section 1 and subject to the terms and conditions of
this Agreement, LTI agrees to pay to Officer during the term of Officer's
employment hereunder an annual salary (the "Base Salary") of Two Hundred Seventy
Five Thousand Dollars ($275,000.00). LTI further agrees to review Officer's
Base Salary on an annual basis and to consider increasing Officer's Base Salary
consistent with LTI's then-current executive compensation policy adopted by the
Board.
3.2 BONUSES. Officer shall be eligible to receive such bonuses, if
any, as may be consistent with LTI's executive compensation policy and granted
by the Board in the exercise of the Board's discretion. The current Executive
Bonus Plan is described in Exhibit 3.2 hereto. Officer understands and agrees
that the payment of any bonuses and the amount of such bonuses, if any, is
entirely within the discretion of the Board.
3.3 OTHER INCENTIVE PLANS AND BENEFITS. During the term of Officer's
employment hereunder, Officer shall be eligible to participate in such of LTI's
other fringe benefit and deferred incentive plans as are now generally available
or later made generally available to executive officers of LTI, including,
without limitation, medical, dental, long-term disability, life and health
insurance policies.
3.4 AUTOMOBILE AND EXPENSES. Officer may request the Board and the
Board will grant an automobile for Officer's use during the term of Officer's
employment hereunder provided that, in the Board's sole determination, the
Company has achieved or is close to achieving profitability. Provided that the
Board determines to grant an automobile for Officer's use, the Company shall pay
or reimburse Officer for insurance, fuel and maintenance for such automobile.
Officer shall be reimbursed for other expenses according to policies established
by the Board.
3.5 VACATION. During Officer's term of employment as provided in
Section 2, Officer shall be entitled to paid vacation at the rate of four (4)
weeks per calendar year in accordance with LTI's vacation policy. Vacation
shall be taken by Officer at such times as may be mutually agreed between
Officer and LTI and shall, if possible, be taken annually and not accumulated.
In no event shall Officer accrue more than six (6) weeks of paid vacation from
previous calendar years.
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<PAGE>
3.6 STOCK OPTIONS. The Board shall grant Officer an option to
purchase Three Hundred and Fifty Thousand (350,000) shares of LTI common stock.
This option shall "vest" as follows: LTI's Right of Repurchase shall expire with
respect to One Hundred Thousand (100,000) shares upon the effective date of this
Agreement and with respect to Sixty Two Thousand Five Hundred (62,500) shares
upon each of the first, second, third and fourth anniversary of the effective
date of this Agreement such that the Company's Right of Repurchase shall expire
with respect to all shares on the fourth anniversary of the effective date of
this Agreement. Not withstanding the foregoing, Officer may receive an
additional grant or grants of an option or options to purchase shares of LTI
common stock depending on the Board's assessment of performance and other
factors deemed relevant to the Board at the time such grant is made, if ever.
4. SEVERANCE COMPENSATION.
4.1 TERMINATION FOR CAUSE. If Officer's employment is terminated at
any time in a Termination for Cause, Officer shall not be paid any severance
compensation.
4.2 TERMINATION OTHER THAN FOR CAUSE. If Officer's employment is
terminated during the first year of this Agreement in a Termination Other Than
for Cause including Office's termination upon a change of control per Section
2.6, Officer shall be paid severance compensation in an amount equal to eighteen
(18) months' Base Salary less the sum of applicable taxes, other required
withholdings and any amount Officer may owe to LTI. Such severance compensation
shall be payable in a lump sum on the date of Officer's termination. LTI shall
also maintain and pay for Officer's benefits set forth in Section 3.3 during
this eighteen-month period. Following the first year and for the remainder of
the term of this Agreement, if Officer's employment is terminated in a
Termination Other Than for Cause including Officer's termination upon a change
of control per Section 2.6, Officer shall be paid severance compensation in an
amount equal to twelve (12) months' Base Salary less the sum of applicable
taxes, other required withholdings and any amount Officer may owe to LTI. Such
severance compensation shall be payable in a lump sum on the date of Officer's
termination. LTI shall also maintain and pay for Officer's benefits set forth
in Section 3.3 during this twelve-month period.
4.3 VOLUNTARY TERMINATION. If Officer's employment is a Voluntary
Termination (other than as provided for in Section 2.6), Officer shall not be
paid any severance compensation.
5. MISCELLANEOUS.
5.1 WAIVER. The waiver of breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of the
same or other provision hereof.
5.2 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and the Patent,
Copyright and Nondisclosure Agreement attached as Exhibit 5.2 between LTI and
Officer represent the entire understanding among the parties with respect to the
subject matter hereof, and together such documents supersede any and all prior
understandings, agreements or obligations between the parties with respect to
the subject matter hereof. All modifications to the Agreement must be in
writing and signed by the party against whom enforcement of such modification is
sought.
5.3 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by telefax or first class mail,
certified or registered with return receipt requested, and shall be deemed to
have been duly given three (3) days after mailing or twelve (12) hours after
transmission of a telefax to the respective persons named below:
If to LTI: Liposome Technology, Inc.
960 Hamilton Court
Menlo Park, CA 94025
Fax: 415/323-9106
3
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Attention: Board of Directors
If to Officer: I. Craig Henderson, M.D.
80 Clarendon Avenue
San Francisco, DA 94114
Fax: 415/753-0126
5.4 HEADINGS. The Section headings herein are intended for reference
and shall not by themselves determine the construction or interpretation of this
Agreement.
5.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly performed within the State of California by California
residents.
5.6 ARBITRATION. The Company and Officer agree that any controversy
or claim (contract, tort or statutory) under federal, state or local law between
LTI and Officer arising out of Officers' employment with LTI including, without
limitation, the construction or application of any of the terms, provisions or
conditions of this Agreement, shall, on written request of either party served
upon the other, be submitted to final and binding arbitration. Such arbitration
shall be conducted according to the Model Employment Arbitration Procedures of
the American Arbitration Association, except as otherwise provided herein. The
arbitration shall be conducted before the American Arbitration Association or
such other arbitration service as the parties may, by mutual agreement, select.
The arbitrator shall be appointed by agreement of the parties hereto or, if no
agreement can be reached, by the American Arbitration Association pursuant to
its rules.
Judgment on the award the arbitrator renders may be entered in any court
having jurisdiction over the parties. The arbitration shall be conducted in San
Mateo, California or such other jurisdiction as LTI's headquarters may be
located. Costs, including attorneys' fees, may be sought by the prevailing
party and awarded by the Arbitrator. This Section 5.6 shall survive the
expiration or termination of this Agreement. If any part of this Section 5.6 is
found to be void as a matter of law or public policy, the remainder of the
Section will continue to be in full force and effect.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the executors, administrators, heirs, legal
representatives, successors and assigns of the parties; provided, however, that
as the rights and duties of Officer hereunder are personal to him, no such
rights or duties may be assigned or delegated, whether voluntarily or by an
operation of law, without LTI's prior written consent.
5.8 WITHHOLDING. All sums payable to Officer hereunder shall be
reduced by all federal, state, local, and other withholding and similar taxes
and payments required by applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LIPOSOME TECHNOLOGY, INC. I. CRAIG HENDERSON, M.D.
By By:
----------------------------- ------------------------------
Title: Date:
------------------------- ----------------------------
Date:
--------------------------
4
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EXHIBIT 3.2
LTI EXECUTIVE BONUS PLAN
(June 1995)
Under the Executive Bons Plan, each of the Chief Executive Officer, President,
Vice Presidents, Corporate Secretary and Treasurer of the Company is eligible to
receive a cash bonus ranging from 50% to 150% of the amounts set forth below
based upon the Board's assessment of overall corporate performance during the
year. The bonus amounts based upon corporate performance are as follows: Chief
Executive Officer - 50% of base salary; President - 50% of base salary; Vice
Presidents - 15% of base salary; Corporate Secretary and Treasurer - 10% of
base salary. Under the terms of this portion of the Executive Bonus Plan,
either no or all eligible persons will receive the bonus to which they are
entitled. In addition to bonus awards based upon corporate performance, each
of the Vice Presidents, the Corporate Secretary and the Treasurer is eligible to
receive up to 10% of base salary based on individual performance.
5
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EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of
the 26th day of June, 1995, by and between LIPOSOME TECHNOLOGY, INC., a Delaware
corporation ("LTI" or the "Company") and L. Scott Minick ("Officer").
R E C I T A L
LTI desires to retain Officer as an employee of LTI and Officer desires to
be so retained on the terms and subject to the conditions set forth in this
Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. DUTIES. During the term of employment of Officer as provided in
Section 2, Officer agrees to be employed by and to serve LTI as President and
Chief Operating Officer and LTI agrees to employ and retain Officer in such
capacities. Officer's duties in such capacities shall be established by, and
will be subject to change from time to time by, the Chief Executive Officer or
the Board. Officer shall devote substantially all of his business time, energy
and skill to the affairs of LTI, and Officer shall not undertake other business
activities without the prior consent of the Board. It is understood that Mr.
Minick has certain obligations to OncoTherapeutics which he will be allowed to
fulfill with the permission of the Board, which permission shall not be
unreasonably withheld. Officer shall duly, punctually, and faithfully perform
and observe any and all rules and regulations which LTI may now or shall
hereafter reasonably establish governing the conduct of its business or its
employees.
2. TERMS OF EMPLOYMENT
2.1 DEFINITIONS. For purposes of this Agreement the following terms
shall have the following meanings:
(a) "Termination for Cause" shall mean termination by LTI of
Officer's employment by LTI by reason of Officer's willful dishonesty towards,
fraud upon, or deliberate injury or attempted injury to LTI or by reason of
Officer's willful breach of this Agreement.
(b) "Termination Other Than For Cause" shall mean termination by
LTI of Officer's employment by LTI, other than in a Termination for Cause or a
Voluntary Termination.
(c) "Voluntary Termination" shall mean termination by officer of
Officer's employment by LTI.
2.2. TERM. Subject to earlier termination as provided in this Section
2, the term of employment of Officer by LTI under this Agreement shall be for
ten (10) years.
2.3 TERMINATION FOR CAUSE. Termination for Cause may be effected by
LTI at any time during the term of Officer's employment hereunder and shall be
effected by written notification to Officer. Upon Termination for Cause,
Officer shall immediately be paid all accrued salary and accrued vacation pay,
all to the date of termination, but Officer shall not be paid any other
compensation such as severance compensation or reimbursement of any kind.
2.4 TERMINATION OTHER THAN FOR CAUSE. Notwithstanding anything else
in this Agreement, LTI may effect a Termination Other Than for Cause at any time
during the term of Officer's employment hereunder upon giving written notice of
such termination to Officer. Upon
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any Termination Other Than for Cause, officer shall immediately be paid all
accrued salary and accrued vacation pay, all to the date of termination, and
severance compensation and continuation of LTI-paid benefits, each as provided
in Section 4.2.
2.5 VOLUNTARY TERMINATION. Other than as provided in Section 2.6,
upon Voluntary Termination during the term of Officer's employment hereunder,
Officer shall immediately be paid all accrued salary and accrued vacation pay,
all to the date of termination, but no other compensation or reimbursement of
any kind, including without limitation, severance compensation.
2.6 TERMINATION UPON "CHANGE OF CONTROL". In the event of a change
of control of the Company during the term of this Agreement, for example by
merger or acquisition, if thereafter Officer is no longer employed by the
surviving entity, or if thereafter Officer is no longer employed by the
surviving entity in substantially the same position and with the same duties as
described in Section 1 hereof, Officer at his sole discretion may elect to
terminate his employment by giving written notice of such termination to the
Board. Upon such termination, Officer shall immediately be paid all accrued
salary and all accrued vacation pay, all to the date of termination, and
severance compensation and continuation of LTI-paid benefits, each as provided
in Section 4.2. Upon such termination, Officer shall also be entitled to
vesting of any unvested portion of the shares (i.e., the Company's "Right of
Repurchase" as described in the 1987 Employee Stock Option Plan, as amended,
shall expire with respect to all common stock issuable upon exercise of stock
options).
3. COMPENSATION.
3.1 BASE SALARY. As payment for all of the services to be rendered
by Officer as provided in Section 1 and subject to the terms and conditions of
this Agreement, LTI agrees to pay to Officer during the term of Officer's
employment hereunder an annual salary (the "Base Salary") of Two Hundred Twenty
Five Thousand Dollars ($225,000.00). LTI further agrees to review Officer's
Base Salary on an annual basis and to consider increasing Officer's Base Salary
consistent with LTI's then-current executive compensation policy adopted by the
Board.
3.2 BONUSES. Officer shall be eligible to receive such bonuses, if
any, as may be consistent with LTI's executive compensation policy and granted
by the Board in the exercise of the Board's discretion. The current Executive
Bonus Plan is described in Exhibit 3.2 hereto. Officer understands and agrees
that the payment of any bonuses and the amount of such bonuses, if any, is
entirely within the discretion of the Board.
3.3 OTHER INCENTIVE PLANS AND BENEFITS. During the term of Officer's
employment hereunder, Officer shall be eligible to participate in such of LTI's
other fringe benefit and deferred incentive plans as are now generally available
or later made generally available to executive officers of LTI, including,
without limitation, medical, dental, long-term disability, life and health
insurance policies.
3.4 AUTOMOBILE AND EXPENSES. Officer may request the Board and the
Board will grant an automobile for Officer's use during the term of Officer's
employment hereunder provided that, in the Board's sole determination, the
Company has achieved or is close to achieving profitability. Provided that the
Board determines to grant an automobile for Officer's use, the Company shall pay
or reimburse Officer for insurance, fuel and maintenance for such automobile.
Officer shall be reimbursed for other expenses according to policies established
by the Board.
3.5 VACATION. During Officer's term of employment as provided in
Section 2, Officer shall be entitled to paid vacation at the rate of four (4)
weeks per calendar year in accordance with LTI's vacation policy. Vacation
shall be taken by Officer at such times as may be mutually agreed between
Officer and LTI and shall, if possible, be taken annually and not
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accumulated. In no event shall Officer accrue more than six (6) weeks of paid
vacation from previous calendar years.
3.6 STOCK OPTIONS. The Board shall grant Officer an option to
purchase Two Hundred Seventy Five Thousand (275,000) shares of LTI common stock.
This option shall "vest" as follows: LTI's Right of Repurchase shall expire with
respect to Seventy Five Thousand (75,000) shares upon the effective date of this
Agreement and Fifty Thousand (50,000) shares upon each of the first, second,
third and fourth anniversary of the effective date of this Agreement such that
the Company's Right of Repurchase shall expire with respect to all shares on the
fourth anniversary of this effective date of this Agreement. Not withstanding
the foregoing, Officer may receive an additional grant or grants of an option or
options to purchase shares of LTI common stock depending on the Board's
assessment of performance and other factors deemed relevant to the Board at the
time such grant is made.
4. SEVERANCE COMPENSATION.
4.1 TERMINATION FOR CAUSE. If Officer's employment is terminated at
any time in a Termination for Cause, Officer shall not be paid any severance
compensation.
4.2 TERMINATION OTHER THAN FOR CAUSE. If Officer's employment is
terminated during the first year of this Agreement in a Termination Other Than
for Cause including Office's termination upon a change of control per Section
2.6, Officer shall be paid severance compensation in an amount equal to eighteen
(18) months' Base Salary less the sum of applicable taxes, other required
withholdings and any amount Officer may owe to LTI. Such severance compensation
shall be payable in a lump sum on the date of Officer's termination. LTI shall
also maintain and pay for Officer's benefits set forth in Section 3.3 during
this eighteen-month period. Following the first year and for the remainder of
the term of this Agreement, if Officer's employment is terminated in a
Termination Other Than for Cause including Officer's termination upon a change
of control per Section 2.6, Officer shall be paid severance compensation in an
amount equal to twelve (12) months' Base Salary less the sum of applicable
taxes, other required withholdings and any amount Officer may owe to LTI. Such
severance compensation shall be payable in a lump sum on the date of Officer's
termination. LTI shall also maintain and pay for Officer's benefits set forth
in Section 3.3 during this twelve-month period.
4.3 VOLUNTARY TERMINATION. If Officer's employment is a Voluntary
Termination (other than as provided for in Section 2.6), Officer shall not be
paid any severance compensation.
5. MISCELLANEOUS.
5.1 WAIVER. The waiver of breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of the
same or other provision hereof.
5.2 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement and the Patent,
Copyright and Nondisclosure Agreement attached as Exhibit 5.2 between LTI and
Officer represent the entire understanding among the parties with respect to the
subject matter hereof, and together such documents supersede any and all prior
understandings, agreements or obligations between the parties with respect to
the subject matter hereof. All modifications to the Agreement must be in
writing and signed by the party against whom enforcement of such modification is
sought.
5.3 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be given by telefax or first class mail,
certified or registered with return receipt requested, and shall be deemed to
have been duly given three (3) days after mailing or twelve (12) hours after
transmission of a telefax to the respective persons named below:
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If to LTI: Liposome Technology, Inc.
960 Hamilton Court
Menlo Park, CA 94025
Fax: 415/323-9106
Attention: Board of Directors
If to Officer: L. Scott Minick
60 Wellington Avenue
Ross, CA 94960
Fax: 415/455-9353
5.4 HEADINGS. The Section headings herein are intended for reference
and shall not by themselves determine the construction or interpretation of this
Agreement.
5.5 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly performed within the State of California by California
residents.
5.6 ARBITRATION. The Company and Officer agree that any controversy
or claim (contract, tort or statutory) under federal, state or local law between
LTI and Officer arising out of Officers' employment with LTI including, without
limitation, the construction or application of any of the terms, provisions or
conditions of this Agreement, shall, on written request of either party served
upon the other, be submitted to final and binding arbitration. Such arbitration
shall be conducted according to the Model Employment Arbitration Procedures of
the American Arbitration Association, except as otherwise provided herein. The
arbitration shall be conducted before the American Arbitration Association or
such other arbitration service as the parties may, by mutual agreement, select.
The arbitrator shall be appointed by agreement of the parties hereto or, if no
agreement can be reached, by the American Arbitration Association pursuant to
its rules.
Judgment on the award the arbitrator renders may be entered in any court
having jurisdiction over the parties. The arbitration shall be conducted in San
Mateo, California or such other jurisdiction as LTI's headquarters may be
located. Costs, including attorneys' fees, may be sought by the prevailing
party and awarded by the Arbitrator. This Section 5.6 shall survive the
expiration or termination of this Agreement. If any part of this Section 5.6 is
found to be void as a matter of law or public policy, the remainder of the
Section will continue to be in full force and effect.
5.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the executors, administrators, heirs, legal
representatives, successors and assigns of the parties; provided, however, that
as the rights and duties of Officer hereunder are personal to him, no such
rights or duties may be assigned or delegated, whether voluntarily or by an
operation of law, without LTI's prior written consent.
5.8 WITHHOLDING. All sums payable to Officer hereunder shall be
reduced by all federal, state, local, and other withholding and similar taxes
and payments required by applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
LIPOSOME TECHNOLOGY, INC. L. SCOTT MINICK
By: By:
-------------------------------- ----------------------------------
Title: Date:
----------------------------- --------------------------------
Date:
------------------------------
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EXHIBIT 3.2
LTI EXECUTIVE BONUS PLAN
(June 1995)
Under the Executive Bons Plan, each of the Chief Executive Officer, President,
Vice Presidents, Corporate Secretary and Treasurer of the Company is eligible to
receive a cash bonus ranging from 50% to 150% of the amounts set forth below
based upon the Board's assessment of overall corporate performance during the
year. The bonus amounts based upon corporate performance are as follows: Chief
Executive Officer - 50% of base salary; President - 50% of base salary; Vice
Presidents - 15% of base salary; Corporate Secretary and Treasurer - 10% of
base salary. Under the terms of this portion of the Executive Bonus Plan,
either no or all eligible persons will receive the bonus to which they are
entitled. In addition to bonus awards based upon corporate performance, each
of the Vice Presidents, the Corporate Secretary and the Treasurer is eligible to
receive up to 10% of base salary based on individual performance.
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EXHIBIT 10.21
ADDENDUM I TO MEMORANDUM OF AGREEMENT
BETWEEN
NICK ARVANITIDIS AND LIPOSOME TECHNOLOGY, INC. DATED APRIL 3, 1995
This Addendum I amends Paragraph 5 and Paragraph 13 in their entirety as
follows:
5. Stock Options. The vesting of all of my unvested stock options will be
accelerated to vest upon the retirement date. The exercise period on all
of my stock options will be extended for five years after the resignation
date except for the 7 December 1989 grant of an incentive stock option to
purchase 98,000 shares of Common Stock for an aggregate exercise price of
$140,875.00 and the 25 January 1990 grant of an incentive stock option to
purchase 4,392 shares of Common Stock for an aggregate exercise price of
$4,941.00. The terms and conditions relating to the 7 December 1989
incentive stock option grant and the 25 January 1990 grant shall remain
unchanged.
6. Accrued Compensation. Upon resignation, the Company will pay all my
accrued salary, vacation, and sabbatical pay as well as a bonus of
$125,000.00
Agreed by:
LIPOSOME TECHNOLOGY, INC.
By: By:
---------------------------- ---------------------------
Robert G. Faris Nick Arvanitidis
Date: June 15, 1995 Date: June 15, 1995
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EXHIBIT 10.22
Revised: June 30, 1995
Richard D. Mamelok
364 Churchill Avenue
Palo Alto, CA 94301
Dear Rick:
This letter confirms that you and SEQUUS Pharmaceutical, Inc. (SEQUUS) have
mutually agreed to end the employee/employer relationship effective at a date
determined by your successor. This letter outlines the terms of the separation
package offered to you by SEQUUS and your responsibilities to SEQUUS pursuant to
the Employment and Patent, Copyright and Nondisclosure Agreement dated October
21, 1992 and signed by you upon acceptance of SEQUUS' employment, a copy of
which is attached hereto.
By your signature below you acknowledge that:
1. You have returned to SEQUUS all physical property of SEQUUS in your
possession, including, but not limited to, the property listed in Exhibit I.
2. You shall not disclose any confidential or proprietary information
that you acquired while an employee of SEQUUS to any other person or use such
confidential or proprietary information in any manner that is detrimental to
SEQUUS' interest.
3. SEQUUS agrees that you retain the right to be named author on
publications reporting data from studies 30-10, 30-11, 30-12, 30-14, 07-03,
07-14a, 07-14b, 07-15, 07-16, 07-26, and on publications comparing data from
any of these trials to data derived from study 07-28. This would not include
review articles combining data from several studies, unless data from these
individuals studies were not published or accepted for publications as a full
length report (as distinguished from publication in abstract form) prior to the
publication of the review article.
3.a Upon your termination you will receive three (3) calendar months
of separation pay, paid to you as salary continuation at the level of your
average base salary and bonus over your tenure at SEQUUS. Therefore, during the
three (3) months period
(the "Salary Continuation Period") your salary will be continued such that you
will be on a paid leave of absence. You will not be eligible for any additional
bonus compensation during the Salary Continuation Period. You may pursue and
accept any employment you choose during this period without adverse effect on
your compensation during the Salary Continuation Period. Likewise, SEQUUS will
pay up to $12,000 for outplacement services.
3.b You will continue to "vest" in the Stock Option program according
to the vesting schedule until October 21, 1995. In addition, SEQUUS' Board of
Directors shall extend the time period for exercise of these options such that
you will have one (1) year from October 21, 1995 in which to exercise your
options to purchase SEQUUS common stock not subject to SEQUUS' right of
repurchase. You should be aware that this extension of the option exercise
period beyond the ninety (90) day period provided for in SEQUUS' 1987 Employee
Stock Option Plan changes the
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terms of your original grant. Specifically, if such grant was an "incentive
stock option" within the meaning of the Internal Revenue Code, the extension of
the option exercise period changes that option to a "nonqualified stock option".
For further information about incentive and nonqualifed stock options, please
see your tax advisor.
3.c Your insurance benefits consisting of medical, dental, life,
accidental death and dismemberment, vision care, business travel accident, sick
leave, and long term disability insurance as well as optional Stock Purchase
Plan, 401 (k) and FlexElect programs will end on the last day of the final month
of your active employment.
3.d You have the right to continue group health benefits under the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). SEQUUS agrees to pay
your COBRA cost until you are eligible for other coverage through an employer or
up to twelve (12) months whichever comes first. If, after this time, you elect
to continue benefits through COBRA provisions, you will be responsible for
compliance with all notification and payment schedules as required by law.
4. On behalf of yourself and your executors, administrators,
representatives, heirs, and assigns, you hereby release SEQUUS and its owners,
stockholders, affiliates, predecessors, directors, officers, employees,
insurers, representatives, and agents (the "SEQUUS Releasees") from any and all
manner of action or actions, cause or causes of action, in law or in equity,
suits, debts, liens, contracts, agreements, promises, liabilities, claims,
demands, damages, charges, losses, costs, or attorneys' fees or expenses of any
nature whatsoever, known or unknown, fixed or contingent, choate or inchoate,
which
you now have or may hereafter have against the SEQUUS Releasees, or any of them
by reason of any matter, cause, act or thing whatsoever from the beginning of
time arising out of Title VII or the Civil Rights Act of 1964, as amended; the
Equal Pay Act, as amended; the Age Discrimination in Employment Act, as amended;
the Employee Retirement Income Security Act, as amended; the Older Workers
Benefit Protection Act of 1990; the California Fair Employment and Housing Act,
as amended; the California Labor Code; and/or any other local, state, or federal
law governing discrimination in employment and/or the payment of wages and
benefits. You also hereby release the SEQUUS Releasees from any and all manner
of action or actions, cause or causes of action in law or in equity, suits,
debts, liens, contracts, agreements, promises, liabilities, claims, demands,
damages, charges, losses, costs, or attorney's fees or expenses, of any nature
whatsoever, that are known to you as of the effective date of this Agreement.
4.b. "YOU ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED BY YOUR LEGAL COUNSEL AND ARE
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
BEING AWARE OF SAID CODE SECTION, EXCEPT AS PROVIDED IN PARAGRAPH 4 ABOVE, YOU
HEREBY EXPRESSLY WAIVE ANY RIGHTS THAT YOU MAY HAVE THEREUNDER, AS WELL AS UNDER
ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT."
5. Acknowledgment of Waiver of Claims under ADEA. You acknowledge that you
are waiving and releasing any rights you may have under the Age Discrimination
in Employment Act of 1967 ("ADEA") and that this waiver and release is knowing
and voluntary. You acknowledge that the consideration given for this waiver and
release Agreement is in addition to anything of value to which you were already
entitled.
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In accordance with the Older Workers Benefit Protection Act of 1990, you
acknowledge that you are aware of the following:
(i) You have the right to consult with an attorney before accepting this
offer;
(ii) You have 21 days from the date set forth above to consider this offer;
and
(iii) You have seven days after accepting this offer to revoke your acceptance,
and your acceptance will not be effective until that revocation period has
expired.
6. SEQUUS releases you, your executors, administrators, representatives,
heirs and assigns from any and all manner of action or actions, cause or causes
of action, in law or in equity, suits, debts, liens, contracts, agreements,
promises, liabilities, claims, demands, damages, charges, losses, costs, or
attorneys' fees or expenses, of any nature whatsoever, that are known to the
Board of Directors of SEQUUS as of the effective date of this Agreement. The
Claims released herein include, without limiting the generality of the
foregoing, any Claims based upon contract, tort or statute arising out of, based
upon, or relating to your hire, employment, remuneration or termination of your
employment with SEQUUS.
7. The provisions of this agreement are severable. If any provision is held
to be invalid or unenforceable, it shall not affect the validity or the
enforceability of any other provisions.
8. You represent that you thoroughly read and considered all aspects of this
agreement, that you understand all of its provisions, and that you are
voluntarily entering into this agreement.
9. This agreement sets forth the entire agreement between you and SEQUUS and
supersedes any and all prior oral or written agreements or understandings
between you and SEQUUS concerning the termination of your employment.
10. This agreement may not be altered, amended, or modified except by a
written document signed by you and a representative of SEQUUS.
11. SEQUUS shall indemnify you and advance expenses as incurred by you in
defending any legal proceedings arising out of or based upon acts under taken by
you in the course and scope of your SEQUUS employment to the maximum extent
permitted under SEQUUS' Certificate of Incorporation, By-laws, the Delaware
General Corporation Law, any directors' and officers' liability insurance or
similar insurance policy maintained by SEQUUS and any indemnification agreement
between SEQUUS and you. The provisions of this paragraph shall inure to the
benefit of your estate, executor, administrator, heirs, legatees or devisees.
12. Each party agrees to refrain from any disparagement, criticism,
defamation, slander of the other, or tortious interference with the contracts
and relationships of the other.
13. SEQUUS represents and warrants that the undersigned has the authority to
act on behalf of SEQUUS and to bind SEQUUS and all who make claims through it to
the terms and conditions of the agreement. You represent and warrant that you
have the capacity to act on your behalf and on behalf of all who might claim
through you to bind them to the terms and conditions of this agreement.
14. This agreement shall be governed by and construed in accordance with the
laws of the State of California.
If the above terms are agreeable to you, please date and sign the original of
this letter in the places indicated below and return it to me. I encourage you
to carefully consider this offer and to consult with an attorney prior to
accepting it if you so desire.
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Sincerely,
SEQUUS Pharmaceutical, Inc.
Joseph M. Limber
Executive Vice President and
Acting Chief Operating Officer
Accepted and agreed to on this day of , 1995.
--- -------------
-----------------------------------
Richard D. Mamelok
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Exhibit I
PHYSICAL PROPERTY IN RICHARD D. MAMELOK POSSESSION
Key to SEQUUS Premises
AT&T Calling Card
Pager
5
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