UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
_______________
Date of Report (Date of earliest event reported): April 7, 1997
SERAGEN, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-19855 04-2662345
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
97 South Street, Hopkinton, Massachusetts 01748
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (508) 435-2331
Exhibit Index on page 4.
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Item 7. Financial Statements and Exhibits.
______ __________________________________
Exhibit Number Description
_____________ ___________
99.1 The Registrant's Press Release dated April 9, 1997
(previously filed)
99.2 (*) Amendment to Sales and Distribution Agreement and
Development Agreement, dated April 7, 1997, between
the Registrant and Eli Lilly and Company (filed
herewith) (previously filed as Exhibit 99.2 to the
Registrant's report on Form 8-K with respect to an
April 7, 1997 event; in its report on Form 8-K with
respect to a June 10, 1997 event, the Registrant
disclosed certain terms of the agreement for which
confidential treatment had been granted previously.)
99.3 Stock Purchase Agreement, dated April 7, 1997, by and
between the Registrant and Eli Lilly and Company
(previously filed)
________________________________________________________________________
Notes:
(*) All exhibit descriptions followed by (*) indicate
documents with respect to which Confidential Treatment
has been granted.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SERAGEN, INC.
____________
(Registrant)
Date: June 19, 1997 /s/Reed R. Prior
_________________
Reed R. Prior
Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
_____________
Exhibit Sequential
Number Description Page Number
_______ ___________ ___________
99.1 The Registrant's Press Release dated April 9,
1997 (previously filed)
99.2 Amendment to Sales and Distribution Agreement
and Development Agreement, dated April 7,
1997, between the Registrant and Eli Lilly
and Company (filed herewith) (previously filed
as Exhibit 99.2 to the Registrant's report on
Form 8-K with respect to an April 7, 1997 event;
in its report on Form 8-K with respect to a
June 10, 1997 event, the Registrant disclosed
certain terms of the agreement for which
confidential treatment had been granted
previously.) 5
99.3 Stock Purchase Agreement, dated April 7, 1997,
by and between the Registrant and Eli Lilly
and Company (previously filed)
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EXHIBIT 99.2
AMENDMENT TO SALES AND DISTRIBUTION AGREEMENT
AND DEVELOPMENT AGREEMENT
Amendment (the "Amendment") dated as of April 7, 1997 between Eli Lilly
and Company, an Indiana corporation ("Lilly"), and Seragen, Inc., a Delaware
corporation ("Seragen"), to the Sales and Distribution Agreement (the "Sales
Agreement") dated as of August 3, 1994 between Lilly and Seragen, as
previously amended by an Amendment to Sales and Distribution Agreement dated
May 28, 1996 between Lilly and Seragen, and to the Development Agreement (the
"Development Agreement") dated as of August 3, 1994 between Lilly and Seragen,
each of the Sales Agreement and the Development Agreement having been amended
by an Amendment dated December 16, 1994 and an Amendment re: Steering
Committee effective June 30, 1995, in each case between Lilly and Seragen.
WHEREAS, the Sales Agreement governs certain marketing and distribution
rights with respect to Seragen's fusion protein technology;
WHEREAS, the Development Agreement governs the conduct of certain basic
and clinical research performed with respect to Seragen's fusion protein
technology;
WHEREAS, Lilly and Seragen desire to amend the Sales Agreement and the
Development Agreement;
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NOW, THEREFORE, the parties hereto agree as follows;
1. Capitalized terms used herein and not otherwise defined shall have
the same meaning herein as in the Sales Agreement or the Development
Agreement, as applicable.
2. Concurrent with the execution of this Amendment, Seragen will
issue to Lilly 1,000,000 shares (the "Shares") of Seragen's Common Stock, $.01
par value per share, in consideration of Lilly's agreement to enter into this
Amendment. In connection with such issuance, the parties agree to execute a
Stock Purchase Agreement substantially in the form of Exhibit A hereto.
3. (a) The parties confirm that as of the date of this Amendment,
the only Lilly Indication is the application of IL-2 Fusion Toxin for
treatment of Cancer ("IL-2 Cancer Indication"). For purposes of this
Amendment, all indications other than Lilly Indications shall be referred to
as "Non-Lilly Indications." Notwithstanding any provisions of the Sales
Agreement or the Development Agreement relating to the time within which Lilly
may exercise its options to make the application of IL-2 Fusion Toxin or other
molecules for treatment of any non-cancer indications Lilly Indications and to
promote such molecules for such indications and regardless of whether a
Confirmatory Study has been undertaken or completed with respect to any
indication or molecule, the parties hereby agree that Lilly's option to
designate any indication a Lilly Indication or develop and promote Fusion
Toxins (including, without limitation, IL-2 Fusion Toxin, EGF Fusion Toxin
and New Fusion Toxins) for indications other than the IL-2 Cancer Indication
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is terminated and Lilly will no longer have the option to make any other
therapeutic application of a Fusion Toxin or New Fusion Toxin a Lilly
Indication under either the Sales Agreement or the Development Agreement;
provided however, that Lilly shall retain the option to determine that IL-2
Fusion Toxin for the treatment of acute graft versus host disease in post
cancer-related transplantation indications (and excluding specifically any
other organ transplantation indications) (the "Transplantation Indication") is
a Lilly Indication as provided in paragraph 3(b). Seragen shall have no
obligation to perform any Confirmatory Studies or other studies for any Fusion
Toxin or New Fusion Toxin. Except as expressly provided in paragraph 5 below,
Lilly shall retain all rights to the IL-2 Cancer Indication.
(b) For a period of two years following FDA market approval of
IL-2 Fusion Toxin for the treatment of any Lilly Indication (other than the
Transplantation Indication ), Lilly shall have the right to make a
determination to initiate clinical trials (either for registration or for
scientific investigation) for the application of IL-2 Fusion Toxin for
treatment of the Transplantation Indication. If, during such two year period,
Lilly makes a determination not to initiate, and pay for (although Lilly shall
not be required to pay for investigator-initiated trials that are funded from
other sources), clinical trials for the application of IL-2 Fusion Toxin for
treatment of the Transplantation Indication, Lilly shall give Seragen prompt
notification of such determination. In the event that Lilly notifies Seragen
that it has elected not to initiate clinical trials for the application of
IL-2 Fusion Toxin for treatment of the Transplantation Indication during such
two year period and in any event upon the expiration of such two year period
(provided that Seragen shall have given Lilly written notice at least 60 days
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prior to the expiration of such period that Seragen desires that such rights
be granted), the Transplantation Indication shall become a Non-Lilly
Indication and Lilly shall take all actions reasonably requested by Seragen to
transfer to Seragen, or assign rights to Seragen under, all marketing and
other approvals and other rights, if any, owned by Lilly with respect thereto.
4. The parties confirm that, while Lilly has the right to develop,
distribute and promote the use of IL-2 Fusion Toxin for any IL-2 Cancer
Indication, Lilly has no obligation under the Sales Agreement or the
Development Agreement to develop, distribute and promote IL-2 Fusion Toxin for
the treatment of any cancer other than cutaneous T-cell lymphoma ("CTCL") and
for CTCL only within the United States. The parties agree that Lilly shall
have the right, upon [ * ] prior written notice to Seragen, to cease
development efforts and to terminate the Sales Agreement and the Distribution
Agreement upon the occurrence of any of the following events: (I) Seragen
shall not have submitted the US Biologics License Application ("BLA") for
CTCL to the FDA by [ * ], (ii) Seragen shall not have received notice from
the FDA that its BLA for CTCL has been accepted for filing and filed by the
FDA within [ * ] of the date on which the BLA was first submitted to the FDA;
(iii) Seragen shall not have received an approvable letter from the FDA for
treatment of CTCL within [ * ] of the date on which the BLA is accepted for
filing and filed by the FDA; (iv) Seragen shall not have received final FDA
approval for CTCL within [ * ] of the date of the approvable letter; (v) the
parties determine that Lilly's costs and expenses (comprising only those costs
and expenses directly reimbursable to Seragen, or to third parties with
Seragen's consent, but not including any internal costs of Lilly) of obtaining
final FDA approval for CTCL from January 1, 1997 through the date of such
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approval will exceed [ * ] (the "Cap"), unless Seragen bears all costs and
expenses in excess of the Cap, which costs shall include, after the attainment
of the Cap, and only for the purpose of determining costs to be borne by
Seragen, costs of preparation, submission and management of regulatory
applications and all other Lilly activities related to the development and
approval of IL-2 Fusion Toxin for CTCL, including internal costs (as
determined by Lilly from its books and records in accordance with its standard
cost allocation practices) and all out of pocket expenses; (vi) the clinical
studies known as protocols 4-11 and 4-14 shall not have been completed by
[*]; (vii) on or before July 1, 1997, Seragen shall not have received either
investment proceeds after the date hereof of at least $5,000,000 or a
commitment after the date hereof from a prospective investor or prospective
investor to invest at least $5,000,000, subject to completion of due
diligence, and such investment is in fact made by not later than August
1,1997, (viii) on or before October 1, 1997, Seragen shall not have received
total investment proceeds after the date hereof of at least$15,000,000;
(ix) Seragen and/or Boston University shall fail to provide the
clinical, regulatory, manufacturing and other services Seragen is obligated to
provide to Lilly under the Sales Agreement such that Seragen shall be in
material breach under the Sales Agreement and Seragen shall have failed to
cure such breach within sixty (60) days after Lilly shall have given notice
thereof to Seragen, as provided in Section 13 of the Sales Agreement in
accordance therewith, (x) Seragen and Boston University shall have failed to
close the transactions contemplated by the Asset Purchase Agreement dated as
of February 14, 1997 between Seragen and Boston University (the "Asset
Purchase Agreement") by [*] or Seragen shall be in breach of any provision of
the Asset Purchase Agreement or the Services Agreement dated as of February
14, 1997 between Seragen and Boston University, or (xi) on the basis of an
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audit to be conducted by Lilly, Lilly shall have concluded that the
Seragen/Boston University manufacturing facility or procedures are inadequate
to permit FDA approval thereof and that such inadequacy could not reasonably
be expected to be remedied prior to the FDA preapproval inspection in
connection with the BLA for CTCL, and shall have given Seragen written notice
thereof, specifying in reasonable detail the basis for its conclusions, and
Don Hill of Hill Consulting Company or an independent third party selected
(within a ten day period of Seragen's receipt of the notice) by the mutual
agreement of the parties shall have confirmed that the inadequacy could not
reasonably be expected to be remedied prior to the FDA preapproval inspection
in connection with the BLA for CTCL. The rights of termination provided above
shall be in addition to and shall not in any way limit any right of Lilly to
cease development efforts or terminate the Sales Agreement or the Distribution
Agreement provided for in the Sales Agreement, including Section 15.2(e)
thereof, or the Distribution Agreement, including Section 12.2(d) thereof. In
the event of any termination by Lilly, Lilly shall reimburse Seragen for all
reasonable out-of-pocket expenses actually paid by Seragen to clinical
investigators, contract research organizations or similar third parties not
affiliated with Seragen or Boston University for any amount payable to such
parties incurred prior to termination of the development efforts with respect
to IL-2 Fusion Toxin for CTCL, or incurred following such termination but as a
result of such termination to the extent noncancellable (without penalty),
provided that Lilly had approved in advance the services to be provided by
such persons and such expenses would have been reimbursable by Lilly under the
Sales Agreement or the Development Agreement had termination not occurred.
5. (a) Lilly shall have the right (but except as set forth in
subparagraph (b) below, not the obligation) to serve as Seragen's sole
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distributor for all intravenous or intramuscular formulations of IL-2 Fusion
Toxin for any Lilly Indication within the Territory. In addition, Lilly shall
have the right (but except as set forth in subparagraph (b) below, not the
obligation) to serve as Seragen's sole distributor for all formulations of
IL-2 Fusion Toxin for intravenous or intramuscular administration for any
Non-Lilly Indication in the Territory, except for the European Union Countries
(as defined below). Lilly shall have no right to distribute formulations of
IL-2 Fusion Toxin for subcutaneous or topical administration.
(b) Lilly shall be obligated to distribute IL-2 Fusion Toxin only for
Lilly Indications, and only in the United States, subject to the terms of the
Sales Agreement and the Development Agreement, and to Lilly's rights of
termination provided for in paragraph 4 of this Amendment. In those
territories other than the European Union Countries where Lilly distributes
IL-2 Fusion Toxin for Lilly Indications, it shall also distribute the same
formulation for Non-Lilly Indications, unless Lilly and Seragen agree
otherwise.
(c) Lilly will perform Fill/Finish for Seragen for the frozen
formulation of IL-2 Fusion Toxin approved in the BLA for Lilly Indications in
accordance with the Sales Agreement for sales in the U.S. In addition, if
requested by Seragen to do so, Lilly will also fill/finish the same
formulation for any Non-Lilly Indication for sales in the U.S. Lilly shall
receive a fee of [ * ] per vial for fill/finish services, plus, for Non-Lilly
Indications, a distribution fee equal to [ * ] of Seragen's net sales,
calculated as provided in the Sales Agreement. If Seragen requests that Lilly
provide fill/finish services for any other formulation, or if the FDA or
Seragen requests that Lilly use any fill/finish process different from that
described in the BLA for CTCL, Lilly and Seragen shall negotiate in good faith
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the extent to which Lilly will provide such services and the fees Lilly shall
receive therefor. Notwithstanding the foregoing, if Lilly elects pursuant to
paragraph 4 to terminate the Sales Agreement and/or Development Agreement, it
shall have no further obligation to perform Fill/Finish, provided, however,
that following such termination Lilly shall provide Seragen with a six month
supply of Product for which Lilly has agreed to perform Fill/Finish for
Seragen pursuant to this paragraph and for all Lilly Indications.
6. (a) Seragen acknowledges that having granted distribution and
promotion rights to Lilly under the Sales Agreement, Seragen has no right to
distribute or promote the sale of pharmaceutical formulations comprising IL-2
Fusion Toxin for the treatment of cancer in the Territory. Therefore, Seragen
agrees that it will not compete with Lilly, either directly or through its
distributors or sublicensees, by selling pharmaceutical formulations of IL-2
Fusion Toxin for use in the treatment of cancer in the Territory during the
term of the Sales Agreement.
(b) Under the Sales Agreement as in effect prior to this
Amendment, Seragen granted to Lilly the right to exclusively distribute in the
Territory pharmaceutical formulations comprising IL-2 Fusion Toxin. Pursuant
to paragraph 5 of this Amendment, Lilly has relinquished to Seragen certain
rights to promote and distribute IL-2 Fusion Toxin for indications other than
Lilly Indications.
(c) In consideration of Lilly agreeing to relinquish certain of
its rights to promote and distribute IL-2 Fusion Toxin for indications other
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than Lilly Indications and in furtherance of Seragen's agreement not to
compete with Lilly in the sale of IL-2 Fusion Toxin for Lilly Indications and
to prevent inadvertent violations of such agreement, Seragen agrees that if
Lilly has reason to believe that formulations of IL-2 Fusion Toxin sold by
Seragen either itself or through its distributors or sublicensees, have been
used for the treatment of Lilly Indications in the Territory, Lilly shall have
the right at its sole expense to conduct a survey of Product use pursuant to
Section 8.3 of the Sales Agreement. If a survey determines that, for the
period under study, IL-2 Fusion Toxin sold by Seragen or its agents represents
5% more of all units of IL-2 Fusion Toxin used to treat Lilly Indications in
the Territory, Seragen will reimburse Lilly for its lost profit on such sales,
determined by multiplying the number of units so sold by Seragen or its
agents, by the price per unit at which Lilly was then selling IL-2 Fusion
Toxin for such Lilly Indication, less Lilly's per unit cost of Bulk Product
and Fill/Finish with respect to such unit.
7. (a) Notwithstanding anything in the Sales Agreement or the
Development Agreement to the contrary, but subject to Lilly's rights to serve
as sole distributor set forth in paragraph 5 above, the parties agree that
Seragen shall be entitled to enter into an arrangement with one strategic
partner other than Lilly in each of the following geographic areas: Canada,
U.S. and the European Union Countries (as defined in paragraph 7(b)) for the
development, manufacture, promotion, and, where permissible under paragraph 5
above, distribution and/or sale of IL-2 Fusion Toxin for the treatment of
indications other than Lilly Indications. In addition, Seragen shall be
entitled to enter into an arrangement with one strategic partner in areas
encompassing all other parts of the world, provided that there is not more
than one strategic partner in each country. Lilly shall have the right to
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contract for third party services or assign any of its obligations under the
Sales Agreement, the Distribution Agreement or this Amendment to any reputable
and creditworthy supplier or company having the resources necessary to meet
the obligations in a timely manner.
(b) The term "European Union Countries" shall mean Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom,
and any other countries that subsequently become members of the European
Union.
8. The parties confirm that Lilly did not acquire the right to
promote or distribute Product containing IL-2 Fusion Toxins for any
indications in Taiwan, China, Hong Kong, Japan, South Korea and North Korea
pursuant to Section 3.4 of the Sales Agreement.
9. Section 1.23 of the Sales Agreement shall be modified to read as
follows:
"Territory" means all countries of the world other than the East
Asian countries (i.e. Japan, South Korea, North Korea, China, Hong
Kong, and Taiwan).
For a period of two years following FDA BLA approval of IL-2 Fusion Toxin for
the treatment of any Lilly Indication, Lilly shall have the right to make a
determination to pursue the regulatory approval, promotion and distribution of
IL-2 Fusion Toxin for the treatment of any Lilly Indication in one or more
European Union Countries. If, during such two year period, Lilly makes a
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determination not to pursue the promotion and distribution of IL-2 Fusion
Toxin for the treatment of any Lilly Indication in the European Union
Countries, Lilly shall give Seragen prompt notification of such determination.
In the event that Lilly notifies Seragen that it has elected not to pursue
the promotion and distribution of IL-2 Fusion Toxin for the treatment of any
Lilly Indication in the European Union Countries during such two year period
and in any event upon the expiration of such two year period if Lilly has not
elected to pursue the promotion and distribution of IL-2 Fusion Toxin for the
treatment of any Lilly Indication in the European Union Countries during such
two year period (provided that Seragen shall have given Lilly written notice
at least 60 days prior to the expiration of such period that Seragen desires
that such rights be granted), Lilly shall relinquish to Seragen the exclusive
right to promote and distribute IL-2 Fusion Toxin for such Lilly Indication in
the European Union Countries, and shall take all actions reasonably requested
by Seragen to transfer to Seragen, or assign rights to Seragen under, all
marketing and other approvals and other rights owned by Lilly with respect
thereto. Notwithstanding the foregoing, if Lilly has elected with respect to
any Lilly Indication to pursue registration pursuant to a centralized
registration or national registration in at least two of the following three
countries: United Kingdom, Germany and France, it shall retain the right to
promote and distribute IL-2 Fusion Toxin for such Lilly Indication in all of
the European Union Countries.
10. Lilly acknowledges that Seragen is currently seeking to negotiate an
amendment to the payment and other terms of its License Agreement (the
"Ajinomoto License") with Ajinomoto Company, Inc. ("Ajinomoto") with respect
to IL-2 Fusion Toxin. Seragen agrees that Seragen will not take any action
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inconsistent with its obligation under Section 8.1 of the Development
Agreement to obtain rights under the patent and foreign equivalents referred
to therein before the first commercial sale of an IL-2 Fusion Toxin. To
assist Seragen in meeting its commitments under the existing or any
renegotiated license with Ajinomoto, Lilly hereby agrees to pay to Ajinomoto
on behalf of Seragen $4.3 million, subject to the following: (i) Lilly shall
not be obligated to pay more than $2.8 million in calendar year 1997; (ii)
Seragen shall permit Lilly to credit $1.5 million of the amount Lilly pays to
Ajinomoto against the next milestone payment due to Seragen by Lilly pursuant
to Section 2.3 of the Sales Agreement, and shall not be obligated to pay more
than $2.8 million to Ajinomoto until the first $1.5 million milestone payment
pursuant to Section 2.3 of the Sales Agreement is due to Seragen; and (iii)
Lilly shall not be obligated to make any payments to Ajinomoto following
termination of the Sales Agreement or the Development Agreement pursuant to
paragraph 4 of this Amendment or otherwise.
11. Seragen hereby grants to Lilly a perpetual, royalty-free,
fully-paid license (to be exercised only as provided in the last sentence of
this paragraph) to all rights necessary for Lilly to develop IL-2 Fusion Toxin
for Lilly Indications, to manufacture Bulk Product for Lilly Indications, and
to use, sell, distribute and promote IL-2 Fusion Toxin for Lilly Indications,
including an exclusive license in the Territory to all patents, patent
applications, technology and know-how of Seragen relating to, and solely for
use in, the development of IL-2 Fusion Toxin for Lilly Indications, the
manufacture of Bulk Product for Lilly Indications, and the use, sale,
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distribution and promotion of IL-2 Fusion Toxin for Lilly Indications, and an
assignment of all trademarks for IL-2 Fusion Toxin for use in Lilly
Indications. Seragen shall use its best efforts to assist Lilly in obtaining
rights to any licenses held by third parties. Except as provided elsewhere in
this Amendment, Lilly may not exercise any of the rights provided in this
paragraph 11 unless [ * ] shall have occurred.
12. Except as expressly modified herein, the Sales Agreement and the
Development Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the day and year first above written.
ELI LILLY AND COMPANY
By:/s/ August M. Wantanbe
_________________________
August M. Wantanbe
Executive Vice President
By:/s/ Reed R. Prior
______________________
Reed R. Prior
Chairman and Chief Executive Officer
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