SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
--------------------
[x] QUARTERLY REPORT PURSUANT SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File No. 0-18728
INTERNEURON PHARMACEUTICALS, INC.
(exact name of registrant as specified in its charter)
Delaware 04-3047911
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
One Ledgemont Center, 99 Hayden Avenue 02173
Lexington, Massachusetts (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code (617) 861-8444
(Former name, former address and former fiscal year, if changed since last
report): Not Applicable
Indicate by check 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 periods 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 ___
---
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
Class Outstanding at July 31, 1996:
Common Stock $.001 par value 40,899,343 shares
<PAGE>
INTERNEURON PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and September 30, 1995 . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the Three and Nine Months
ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows for the Nine Months ended
June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
<TABLE>
<S> <C> <C>
June 30, September 30,
1996 1995
------------------ ----------------
ASSETS
Current assets:
Cash and cash equivalents $ 148,344 $ 16,781
Marketable securities 24,249 18,208
Inventories 8,663 -
Accounts receivable and other assets 4,104 856
------------------ ----------------
Total current assets 185,360 35,845
Marketable securities 1,019 -
Property and equipment, net 1,637 1,671
------------------ ----------------
$ 188,016 $ 37,516
================= ================
LIABILITIES
Current liabilities:
Accounts payable $ 2,345 $ 1,161
Accrued expenses 12,770 7,994
Deferred revenue 2,126 -
Current portion of capital lease obligations 560 506
------------------ ----------------
Total current liabilities 17,801 9,661
Long-term portion of capital lease obligations 499 782
Other long-term liabilities 18 44
Minority interest 19,664 5,638
STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value, authorized 5,000,000 shares: Series B, 239,425
shares issued and outstanding at June 30, 1996 and September 30, 1995,
respectively (liquidation preference at
June 30, 1996 $3,018); 3,000 3,000
Series C, 5,000 shares issued and outstanding at June 30, 1996
and September 30, 1995, respectively (liquidation preference at
June 30, 1996 $500); 500 500
Common stock, par value $.001; 60,000,000 shares authorized; 40,587,061 and
33,284,006 shares issued and outstanding at
June 30, 1996 and September 30, 1995, respectively 41 33
Additional paid-in capital 246,603 96,650
Accumulated deficit (100,110) (78,792)
--------------- ---------------
Total stockholders' equity 150,034 21,391
-------------- ---------------
$ 188,016 $ 37,516
============== ---------------
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
3
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the three and nine months ended June 30, 1996 and 1995
(Unaudited)
(Amounts in thousands except per share data)
<TABLE>
THREE MONTHS ENDED JUNE 30, NINE MONTHS ENDED JUNE 30,
--------------------------- -------------------------
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
Revenues:
Product revenue $ 1,100 $ - $ 1,167 $ -
Contract and license fees 1,067 2,714 7,248 2,844
Investment income 1,224 256 2,357 657
-------- --------- --------- ---------
Total revenues 3,391 2,970 10,772 3,501
Costs and expenses:
Cost of product revenue 661 - 727 -
Research and development 4,955 3,972 11,615 11,251
Selling, general and administrative 4,392 2,088 11,416 5,590
Purchase of in-process research
and development - - 8,234 -
-------- --------- --------- ---------
Total costs and expenses 10,008 6,060 31,992 16,841
-------- --------- --------- ---------
Net loss from operations ( 6,617) (3,090) (21,220) (13,340)
Minority interest 444 108 ( 98) 194
-------- --------- --------- ---------
Net loss $(6,173) $ (2,982) $(21,318) $(13,146)
========= ========== ========= =========
Net loss per common share $ (0.16) $ ( 0.10) $ (0.60) $ (0.44)
========= ========== ========= =========
Weighted average common
shares outstanding 38,300 30,806 35,702 30,081
========= ========== ========= =========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
4
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INTERNEURON PHARMACEUTICALS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the nine months ended June 30, 1996 and 1995
(Unaudited)
(Dollars in thousands)
<TABLE>
NINE MONTHS ENDED JUNE 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (21,318) $ (13,146)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 582 564
(Gain) on disposal of fixed assets (20) (29)
Minority interest in net income/loss of
consolidated subsidiaries 98 (194)
Purchase of in-process research and development 8,098 -
Noncash compensation 1,234 25
Change in assets and liabilities:
Receivables and other assets (3,247) (266)
Inventories (8,663) -
Accounts payable 1,184 (432)
Deferred revenue 2,126 -
Accrued expenses and other liabilities 4,880 1,816
----------- ------------
Net cash (used) by operating activities (15,046) (11,662)
----------- ------------
Cash flows from investing activities:
Capital expenditures (453) (322)
Purchase of marketable securities (43,169) (13,010)
Proceeds from maturities and sales of
marketable securities 36,108 5,104
Proceeds from disposal of fixed assets 63 41
----------- ------------
Net cash provided by investing activities (7,451) (8,187)
----------- ------------
Cash flows from financing activities:
Net proceeds from issuance of stock and other 124,084 13,259
equity transactions
Net proceeds from issuance of stock by subsidiaries 30,344 5,970
Proceeds from sale/leaseback 131 140
Principal payments of capital lease obligations (499) (315)
----------- ------------
Net cash provided by financing activities 154,060 19,054
----------- ------------
Net change in cash and cash equivalents 131,563 (795)
Cash and cash equivalents at beginning of period 16,781 11,263
----------- ------------
Cash and cash equivalents at end of period $ 148,344 $ 10,468
=========== =============
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
5
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INTERNEURON PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION:
The consolidated financial statements included herein have been prepared
by Interneuron Pharmaceuticals, Inc. without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion of management,
the accompanying unaudited consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the consolidated financial position, results of operations and
cash flows of the Company. The consolidated financial statements included herein
should be read in conjunction with the audited consolidated financial statements
and the notes thereto included in the Company's Form 10K for the fiscal year
ended September 30, 1995.
The consolidated financial statements include the accounts of Interneuron
Pharmaceuticals, Inc. ("Interneuron" or the "Company") and its subsidiaries,
Progenitor, Inc. ("Progenitor"), Transcell Technologies, Inc. ("Transcell"),
Intercardia, Inc. ("Intercardia"), and InterNutria, Inc. ("InterNutria"). All
significant intercompany activity has been eliminated.
B. SIGNIFICANT ACCOUNTING POLICIES:
REVENUE RECOGNITION: Product revenue consists of product sales which are
recognized at the later of shipment or satisfaction of performance obligations.
Cash received in advance of product shipments or satisfaction of performance
obligations is recorded as deferred revenue. Contract and license fee revenue
consists of non-sales related milestones, research and development grants,
contractual research and development and shared-funding arrangements and is
recognized the later of when services are performed or when contractual
obligations are met.
INVENTORIES: Inventories are valued at the lower of cost (first-in,
first-out method) or market. Costs for dexfenfluramine drug substance have been
capitalized since the time such product was recommended for approval by an
Advisory Committee of the U.S. Food and Drug Administration ("FDA").
RECLASSIFICATIONS: Certain amounts have been reclassified to conform with
fiscal 1996 classifications.
C. INVENTORIES:
Inventories at June 30, 1996 consisted of the following:
Raw material $5,804,000
Finished goods 2,859,000
----------
$8,663,000
==========
D. STOCKHOLDERS' EQUITY:
In June 1996, the Company completed a public offering of 3,000,000 shares
of Common Stock at $39.00 per share and received proceeds, net of issuance
costs, of approximately $109,180,000.
6
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During the nine month period ended June 30, 1996, a warrantholder exercised
700,000 warrants pursuant to a cashless exercise provision, resulting in a net
issuance of 574,984 shares of Common Stock.
The Company's Class B Warrants expired on March 15, 1996. Each Class B
Warrant entitled the holder to purchase one share of Common Stock at a price of
$4.75. During the six month period ended March 31, 1996, approximately 2,402,000
Class B Warrants were exercised (including 165,000 that were exercised on a
cashless basis by an affiliate of the Company resulting in the issuance of
138,432 shares of Interneuron Common Stock) resulting in net proceeds to the
Company of approximately $10,625,000 and the issuance of approximately 2,375,000
shares of Common Stock.
In March 1996, a Registration Statement on Form S-3 was declared effective
relating to the resale of an aggregate of approximately 3,533,000 shares of
Common Stock held by or issuable to certain selling stockholders primarily in
connection with financing transactions completed during fiscal 1995. Of these
shares, 399,079 shares were issuable upon the exercise of warrants other than
Class B Warrants.
In January 1996, the Company issued 342,792 shares of Common Stock for the
purchase of 20% of the remaining outstanding capital stock of CPEC, Inc.,
("CPEC") not owned by Intercardia (also, see Note E).
In addition to the 40,587,000 shares of Common Stock outstanding at June
30, 1996, there were approximately 14,000,000 shares issuable (i) under the
Company's stock option and stock purchase plans, (ii) upon conversion of all
authorized, both issued and unissued, shares of preferred stock, (iii) in, the
event the maximum amount of shares are issued upon exercise of put protection
rights, (iv) pursuant to the various technology acquisition transactions, and
(v) upon exercise of outstanding warrants.
The Company and its subsidiaries continue to seek additional financing
(including private placements and initial and follow-on public offerings) and/or
collaborative arrangements.
E. SUBSIDIARIES:
In December 1995, InterNutria acquired from Walden Laboratories, Inc.
("Walden"), the technology and know-how to produce a specially formulated
dietary supplement for women's use during their pre-menstrual period called PMS
Escape in exchange for $2,400,000, payable in two installments of Interneuron
Common Stock, the first in late 1996 and the second in late 1997, at the
then-prevailing market price. The Company's Chairman is a stockholder of Walden
but will not receive shares of Interneuron Common Stock from this transaction.
The Company recorded a charge of approximately $2,150,000 in the three month
period ended December 31, 1995 in connection with this transaction.
In December 1995, Intercardia executed a Development and Marketing
Collaboration and License Agreement with Astra Merck, Inc. ("Astra Merck") (the
"Astra Merck Collaboration") to provide for the development, commercialization
and marketing in the U.S. of a twice-daily formulation of bucindolol for the
treatment of congestive heart failure. Intercardia received $5,000,000 upon
execution of the Astra Merck Collaboration, which was recognized as Contract and
license fee revenue in the first quarter of fiscal 1996, and may receive
additional payments based upon achievement of certain milestones and royalties
based on net sales of bucindolol in the U.S. Intercardia has agreed to pay Astra
Merck $10,000,000 in December 1997 and to reimburse Astra Merck for one-third of
certain product launch costs, up to a total of $11,000,000. In the event
Intercardia elects not to make these payments, royalties payable by Astra Merck
to Intercardia will be substantially reduced.
7
<PAGE>
In January 1996, Interneuron acquired the remaining 20% of the
outstanding capital stock of CPEC not owned by Intercardia by issuing an
aggregate of 342,792 shares of Interneuron's Common Stock to the former CPEC
minority stockholders. As a result of this transaction, the Company recorded a
charge for the purchase of in-process research and development of approximately
$6,084,000 in the three month period ended March 31, 1996.
In February 1996, Intercardia completed an initial public offering of
2,530,000 shares of Intercardia common stock at $15.00 per share resulting in
proceeds, net of offering costs, of approximately $35,000,000 (the "Intercardia
IPO"). Interneuron purchased 333,333 shares of the Intercardia IPO for a total
of approximately $5,000,000. Interneuron's ownership in Intercardia's
outstanding capital stock decreased from approximately 88% at September 30, 1995
to approximately 60% as a result of the Intercardia IPO. In certain
circumstances, Interneuron has the right to purchase additional shares of
Intercardia common stock at fair market value to provide that Interneuron's
equity ownership in Intercardia does not fall below 51%. As a result of the
Intercardia IPO, put protection rights that could have caused the Company to
issue in June 1998 up to approximately 1,914,000 shares of Interneuron Common
Stock expired. As a result of the Intercardia IPO and Interneuron's purchase of
333,333 shares thereof, Interneuron recognized in the three month period ended
March 31, 1996 a gain on its investment in Intercardia of approximately
$16,350,000 which has been recorded in the Company's Additional paid-in capital
but not in the Company's Consolidated Statement of Operations. The Company also
recorded an addition to minority interest of approximately $13,650,000 to
reflect these minority stockholders' interest in the Company's consolidated net
assets.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
Statements in this Form 10-Q that are not descriptions of historical
facts are forward-looking statements that are subject to risks and
uncertainties. Actual results could differ materially from those currently
anticipated due to a number of factors, including those set forth in the
Company's SEC filings under "Risk Factors", including, in particular risks
relating to the commercialization of Redux, such as marketing, safety,
regulatory, patent, product liability, supply and other risks; uncertainties
relating to clinical trials; the early stage of products under development;
risks relating to product launches and managing growth; government regulation,
patent risks, dependence on third parties and competition.
The following discussion should be read in conjunction with the
unaudited Consolidated Financial Statements and Notes thereto appearing
elsewhere in this report. Unless the context indicates otherwise, all references
to the Company include Interneuron and its subsidiaries.
GENERAL - REDUX
On April 29, 1996, Redux received FDA clearance for marketing as a
twice-daily prescription drug for the treatment of obesity, including weight
loss and maintenance, in patients on a reduced calorie diet who have a body mass
index ("BMI") of greater than or equal to 30 kg/m2 or greater than or equal to
27 kg/m2 in the presence of other risk factors (e.g., hypertension, diabetes, or
hyperlipidemia). Under a license agreement with the Company, Redux is being
marketed by the Wyeth-Ayerst division of American Home Products Corp. ("AHP"),
which formally launched the product in June 1996, in exchange for royalties and
milestone payments from AHP to the Company. To supplement AHP's marketing
efforts, the Company has developed an approximately 30-person sales force to
copromote Redux to selected diabetologists, endocrinologists, bariatricians and
weight management specialists. Although a portion of the Company's copromotion
costs
8
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will be funded by AHP for approximately two years from launch, the Company is
incurring substantial additional costs relating to the Company's sales force and
in connection with the promotion of Redux. In addition, the Company is incurring
substantial costs relating to the build-up of Redux inventories, which are being
manufactured for the Company on a contract basis by Boehringer Ingelheim
Pharmaceuticals, Inc. ("Boehringer").
The Company obtained U.S. rights to Redux to treat abnormal
carbohydrate craving and obesity from Les Laboratoires Servier ("Servier") in
exchange for royalties on net sales payable by the Company to Servier. The use
patent on dexfenfluramine expires in mid 2000. The Company believes it is
entitled under the Waxman-Hatch Act to a minimum three year period of
exclusivity, during which applications for generic versions of the drug may not
be approved. Although the Company has applied for a five year period of
exclusivity and for patent extension, there can be no assurance of receipt of
such exclusivity or extension or of a timely decision. Redux may be subject to
substantial competition. AHP also sells Pondimin to treat obesity. In addition,
other drugs, including sibutramine, for which an NDA has been filed, and
technologies are under regulatory review or development to treat obesity.
Included in the FDA-approved labeling for Redux are references to
certain risks which may be associated with dexfenfluramine and which were
highlighted during the FDA's review of the drug. One issue relates to whether
there is an association between anorectic drugs, including dexfenfluramine, and
the development of primary pulmonary hypertension ("PPH"), a rare but serious
lung disorder. An epidemiologic study conducted in Europe examining risk factors
for PPH showed that among other factors, weight reduction drugs including
dexfenfluramine, systemic hypertension, and obesity itself were associated with
a higher risk of PPH. The Company believes the study may be published shortly
and that reclassification and inclusion of certain previously excluded cases by
the authors of the study will estimate the yearly occurrence to be higher than
the occurrence rate originally reported. Since the Company did not conduct the
study and does not have access to the primary study data, the revised estimate
of the occurrence rate will not be known until publication of the study and
confirmation of the results. Although the Company cannot predict the regulatory
response of the FDA's review of the revised data, Redux labeling may be modified
to reflect the revised estimate. Although the Company believes that the benefits
of weight loss by obese patients meeting the labeling criteria for Redux
outweigh the risk of developing PPH, issues relating to PPH including the
regulatory response to the revised data, may adversely affect the market for,
and the sales and marketing of, Redux as well as the Company's business,
financial condition and results of operations.
A second issue discussed in the FDA-approved labeling for Redux is
whether dexfenfluramine is associated with certain neurochemical changes in the
brain. Certain studies related to this issue, conducted by third parties,
purport to show that very high doses of dexfenfluramine cause prolonged
serotonin depletion in certain animals, which some researchers believe is an
indication of neurotoxicity. The Company presented data relating to the lack of
neurocognitive effects in patients taking Redux and believes that, as
demonstrated in human trials, these animal studies are clinically irrelevant to
humans because of pharmacokinetic differences between animals and humans
(resulting in much higher brain concentrations of dexfenfluramine and its active
metabolite in certain animals than in humans) and because of the high dosages
used in animal studies. The Company has agreed with the FDA to conduct a Phase
4, or post marketing, study of Redux. Although the precise nature of this study
has not been determined, Interneuron expects the Phase 4 study to be a
double-blind placebo-controlled trial involving approximately 200 patients
9
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to further evaluate long-term neurocognitive function, using standardized
neuro-psychological tests, in patients taking Redux. Approximately 50% of the
costs of the Phase 4 study, which will be conducted over an approximately two to
three year period, is expected to be paid by AHP. Adverse results, if any, of
this study may adversely affect the market, and/or marketing, of the drug and
the Company.
LIQUIDITY AND CAPITAL RESOURCES
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES:
At June 30, 1996, the Company had cash, cash equivalents and marketable
securities of $173,612,000, primarily reflecting receipt of (i) approximately
$109,000,000 of net proceeds to Interneuron from the June 1996 public offering
of 3,000,000 shares of Common Stock, (ii) approximately $30,000,000 of net
proceeds to Intercardia, excluding $5,000,000 received from Interneuron, from
the February 1996 Intercardia IPO and (iii) approximately $15,000,000 of net
proceeds to Interneuron from the exercise of the Class B Warrants, options and
other warrants subsequent to September 30, 1995.
REDUX:
During the second and third quarters of fiscal 1996, the Company
increased inventory levels in connection with the scale-up of the manufacturing
process to support the launch of Redux. Inventory levels depend to a large
extent on forecasts provided by AHP. There can be no assurance that AHP's
forecasts and the Company's production planning will be accurate, which may
result in higher inventory costs to the Company or inadequate or excessive
supplies of the product. In addition, there can be no assurance that the
manufacture of the capsules and their sale to AHP will result in profits to
Interneuron. There may be potential seasonality associated with Redux
inventories and revenues which the Company is not currently able to determine.
The Company is highly dependent upon AHP to market Redux and upon Redux
to generate revenues. The Company's agreements with AHP provide for base
royalties to the Company of 11.5% of AHP's net sales (equal to the royalties
required to be paid by the Company to Servier) and for additional royalties,
ranging from a minimum of 5% of the first $50 million of net sales if
dexfenfluramine is not descheduled to a maximum of 11% of net sales over $200
million if dexfenfluramine is descheduled and the Company does manufacture Redux
(12% of net sales over $200 million if the Company does not manufacture Redux)
(subject to a 50% reduction if generic drug competition exceeds a 10% market
share percentage in two consecutive quarters). There can be no assurance that
these sales levels will be achieved. In connection with the April 1996 receipt
of FDA marketing clearance of Redux, the Company received a $500,000 milestone
payment from AHP and is entitled to an additional $6,000,000 payment and a
$3,500,000 equity investment if dexfenfluramine is descheduled as a controlled
substance within 12 months from the FDA approval date.
INTERCARDIA:
In February 1996, Intercardia completed the Intercardia IPO resulting
in net proceeds to Intercardia of approximately $35,000,000. Interneuron
purchased shares in the Intercardia IPO for a total of approximately $5,000,000.
Interneuron's ownership in Intercardia's outstanding capital stock decreased
from approximately 88% at September 30, 1995 to approximately 60% as a result of
these transactions.
10
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In December 1995, Intercardia received $5,000,000 upon execution of the
Astra Merck Collaboration, which obligates Astra Merck to fund certain future
U.S. development, marketing and manufacturing costs and to assume Intercardia's
funding obligation for the BEST Study, including the drug supplies and
monitoring costs, and royalty obligation to Bristol-Myers Squibb Company.
Intercardia will be entitled to royalties based on net sales by Astra Merck.
Intercardia has agreed to pay Astra Merck $10,000,000 in December 1997 and to
reimburse Astra Merck for one-third of certain product launch costs, up to a
total of $11,000,000. In the event Intercardia elects not to make these
payments, royalties payable by Astra Merck to Intercardia will be substantially
reduced.
OTHER SUBSIDIARIES:
In December 1995, InterNutria acquired from Walden technology and
know-how subsequently resulting in the PMS Escape product in exchange for
$2,400,000, payable in two installments of Interneuron Common Stock, the first
in late 1996 and the second in late 1997, at the then-prevailing market price.
InterNutria commenced a test-launch of PMS Escape in a regional market in March
1996 while continuing clinical studies of the product. The costs related to this
test-launch and continuing clinical studies are estimated to be approximately
$2,500,000 in fiscal 1996. There can be no assurance of the success of the test
launch or the clinical studies.
Interneuron is currently funding operations of Progenitor, Transcell
and InterNutria. Expenses of the Subsidiaries, including those required under
collaboration agreements, constitute a significant part of the Company's overall
expenses.
In June 1996, Progenitor filed a registration statement relating to an
initial public offering of its Common Stock. There can be no assurance this
offering will be completed. A registration statement relating to these
securities has been filed with the SEC but has not yet become effective. These
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This report shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any
sales of these securities in any state in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any such state.
CLINICAL STUDIES:
In addition to Redux-related expenses, the Company's principal
expenditures are for product development and clinical trials, including expenses
required under collaborative agreements. In particular, the Company is
performing a pivotal Phase 3 clinical trial to test whether treatment of stroke
with citicoline limits infarct size in humans. The Company also commenced a
second pivotal Phase 3 clinical trial and related studies for citicoline in the
third fiscal quarter ended June 30, 1996. The two Phase 3 clinical trials are
expected to proceed at least into fiscal 1997.
The costs of the clinical trials and related studies and the
preparation of the NDA are estimated, based upon current trial protocols, to
aggregate approximately $15,000,000 . The Company is unable to predict with
certainty the costs of related studies which will depend upon FDA requirements.
Further, as the Company currently intends to market citicoline directly,
additional funds will be required for manufacturing, distribution and selling
efforts. The Company will also incur substantial development costs in connection
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with Phase 2/3 clinical trials on pagoclone expected to commence in 1996, and on
other products under development including those which may be acquired by the
Company in the future.
OTHER:
Accounts receivable and other assets of $4,104,000 at June 30, 1996
include approximately $1,500,000 of Intercardia's receivable from Astra Merck
for bucindolol development costs assumed by Astra Merck and Interneuron's
receivable from AHP for Redux Capsules and support for Redux sales force
expenses pursuant to the Copromotion Agreement entered into in June 1996. See
Item 5. Other Information.
Accrued expenses of $12,770,000 at June 30, 1996 includes accruals for
purchases of Redux Capsules and dexfenfluramine drug substance and the
subsidiaries' accruals relating to clinical trials and developmental studies and
product marketing.
As of June 30, 1996, the Company was party to various consulting
agreements and employment agreements with officers and directors containing
minimum aggregate annual payments of approximately $1,700,000. Certain
employment agreements are subject to additional bonuses and annual increases as
may be determined by the Company's Board of Directors.
The Company's strategy includes evaluation of various technology,
product or company acquisition and/or financing opportunities (including private
placements and initial and follow-on equity offerings) and the Company and
certain of its subsidiaries are currently engaged in discussions relating to
such opportunities, although it has no agreements or commitments relating to any
particular opportunity. Any such initiatives may involve the issuance of
securities of Interneuron or its subsidiaries and/or financial commitments to
fund product development.
While the Company believes it has sufficient cash for currently planned
expenditures in fiscal 1996 and 1997, it may seek additional funds through other
equity and/or debt financings and corporate collaborations to provide working
capital financing and funding for new business opportunities and future growth.
In addition, certain subsidiaries are exploring various financings (including
issuances of securities in public offerings or private placements),
collaborations or business combinations. If such efforts are not successful,
certain activities at these subsidiaries may be reduced. Although Interneuron
may acquire additional equity in subsidiaries through participation in
financings or conversion of inter-company debt, equity financings by a
subsidiary will likely reduce Interneuron's percentage ownership of that
subsidiary and funds held by the subsidiaries will generally not be available to
Interneuron. The Company's goal is for its subsidiaries to establish independent
operations and financing through corporate alliances, third-party financings,
mergers or other business combinations, with Interneuron generally retaining an
ongoing equity interest. The nature of any such transaction is expected to vary
depending on the business and capital needs of each subsidiary and the state of
development of their respective technologies or products.
RESULTS OF OPERATIONS
Total revenues increased $421,000, or 14%, to $3,391,000 during the three
month period ended June 30, 1996 from $2,970,000 in the three month period ended
June 30, 1995 and $7,271,000, or 208%, to $10,772,000 in the nine month period
ended June 30, 1996 from $3,501,000 in nine month period ended June 30, 1995.
The three month period increase was the result of increased investment
12
<PAGE>
and product revenue substantially offset by a decrease in contract and license
fee revenue. The nine month period increase was the result of increased
investment income and contract and license fee and product revenue.
Product revenue in the three month period ended June 30, 1996 consists
primarily of sales of Redux Capsules and dexfenfluramine drug substance to AHP.
The Company intends to recognize as product revenue total royalties received
from AHP based upon AHP-reported net sales of Redux and as cost of product
revenue total royalties due to Servier for such AHP-reported net sales. AHP
reports net sales to the Company in the quarter after actual shipment of Redux.
Contract and license fee revenue decreased $1,647,000, or 61%, to
$1,067,000 in the three month period ended June 30, 1996 from $2,714,000 in the
three month period ended June 30, 1995 and increased $4,404,000, or 155%, to
$7,248,000 in the nine month period ended June 30, 1996 from $2,844,000 in the
nine month period ended June 30, 1995. The decrease in the 1996 three month
period was the result of the receipt in the third quarter of fiscal 1995 of
$2,500,000 by Progenitor pursuant to its license agreement with Chiron which was
offset in part by Interneuron's receipt in the third quarter of fiscal 1996 of a
$500,000 milestone payment from AHP and revenues derived under the Copromotion
Agreement with AHP to support Interneuron's sales force. Additionally, the
increase in the 1996 nine month period reflects $5,000,000 received by
Intercardia in December 1995 pursuant to the Astra Merck Collaboration and other
contract revenue.
Investment income increased $968,000, or 378%, to $1,224,000 in the three
month period ended June 30, 1996 from $256,000 in the three month period ended
June 30, 1995 and $1,700,000, or 258%, to $2,357,000 in the nine month period
ended June 30, 1996 from $657,000 in the nine month period ended June 30, 1995.
These increases are due to higher invested cash balances resulting primarily
from proceeds from Interneuron's and Intercardia's public offerings and the
exercise of Interneuron's Class B Warrants and other warrants and options.
Total costs and expenses increased $3,948,000, or 65%, to $10,008,000 in
the three month period ended June 30, 1996 from $6,060,000 during the three
month period ended June 30, 1995 and $15,151,000, or 90%, to $31,992,000 in the
nine month period ended June 30, 1996 from $16,841,000 during the nine month
period ended June 30, 1995. During the 1996 nine month period, the Company
incurred charges aggregating $8,234,000, equal to 54% of the increased costs and
expenses, for the purchase of in-process research and development. These charges
(of which approximately $8,098,000 are noncash) related to (i) the Company's
acquisition of the remaining 20% of CPEC not owned by Intercardia in exchange
for the issuance of 342,792 shares of Interneuron Common Stock and (ii) the
Company's November 1995 acquisition from Walden of technology and know-how to
produce a specially formulated dietary supplement for women's use during their
pre-menstrual period in exchange for the issuance of Interneuron Common Stock in
November 1996 and 1997.
The 1996 three and nine months periods include cost of product revenue
related to Redux. During these periods cost of product revenue consisted
primarily of cost of Redux Capsules and dexfenfluramine drug substance. The
three month period ended June 30, 1996 is the first period in which the Company
recognized revenues from sales of Redux Capsules and dexfenfluramine drug
substance. A certain amount of the dexfenfluramine drug substance was purchased
prior to the FDA Advisory Panel's recommendation for approval of Redux and was
fully expensed when purchased (the "Clinical Dexfenfluramine Drug Substance")
and thus no cost was associated with the sale of such
13
<PAGE>
amount during the 1996 periods. The Company's inventory of Clinical
Dexfenfluramine Drug Substance was entirely sold as of June 30, 1996, therefore,
the Company will record increased cost of product revenue for dexfenfluramine
drug substance sold in future periods as a percent of product revenue.
Research and development expenses increased $983,000, or 25%, to $4,955,000
in the three month period ended June 30, 1996 from $3,972,000 during the three
month period ended June 30, 1995 and $364,000, or 3%, to $11,615,000 in the nine
month period ended June 30, 1996 from $11,251,000 during the nine month period
ended June 30, 1995. These increases are the result of several factors. During
the fiscal 1996 periods, Intercardia incurred costs related to research on
catalytic antioxidant small molecules and the establishment of a development
staff to manage the development of bucindolol and other technologies and
InterNutria incurred costs relating to the development of its products. The
three and nine month periods ended June 30, 1995 included a non-recurring
$750,000 charge pursuant to Progenitor's obligation under the Chiron Agreement
to fund certain manufacturing costs at Chiron. While the Company commenced a
second citicoline Phase 3 clinical trial during the three month period ended
June 30, 1996, total research and development expenses relating to citicoline
were substantially reduced in the nine month period ended June 30, 1996 from the
nine month period ended June 30, 1995 during which the first Phase 3 citicoline
clinical trial was being conducted.
Selling, general and administrative expenses increased $2,304,000, or 110%,
to $4,392,000 in the three month period ended June 30, 1996 from $2,088,000
during the three month period ended June 30, 1995 and $5,826,000, or 104%, to
$11,416,000 during the nine month period ended June 30, 1996 from $5,590,000
during the nine month period ended June 30, 1995. These increases reflect the
addition of management personnel by Intercardia and InterNutria in the third
quarter of fiscal 1995, costs relating to InterNutria's commencement of a
regional test launch of PMS Escape and related sales, marketing and public
relations expenses and additional general and administrative costs including
increased wages and benefits and insurance premiums. During the quarter ended
June 30, 1996, Interneuron hired an approximately 30 person sales force to
copromote Redux along with Wyeth- Ayerst and incurred related hiring and
carrying costs. The expenses in the nine months ended June 30, 1996 include
severance and related charges pertaining to certain management changes at
Transcell. Interneuron is expected to incur additional costs in fiscal 1996 and
1997 relating to a regional test launch of Melzone expected to commence in
calendar 1996. Copromotion costs are expected to increase substantially in
future periods.
The Company allocates net income earned by the subsidiaries to the minority
stockholders of the subsidiaries; net losses incurred by the subsidiaries are
allocated to the extent such stockholders have an interest in the Company's
consolidated net assets. This allocation is reflected as minority interest on
the Consolidated Statements of Operations.
As a result of the foregoing, the Company incurred net losses of
($6,173,000) and ($21,318,000), or ($.16) and ($.60) per share, for the three
and nine month periods ended June 30, 1996, respectively, compared to net losses
of ($2,982,000) and ($13,146,000), or ($.10) and ($.44) per share, for the three
and nine month periods ended June 30, 1995. Weighted average common shares
increased in the fiscal 1996 periods reflecting additional equity issuances.
Activities of the subsidiaries continue to represent a significant
percentage of the Company's consolidated expenses and represented 49% (including
$2,150,000 for the purchase of in-process
14
<PAGE>
research and development by InterNutria) and 53% of the consolidated expenses in
the nine month periods ended June 30, 1996 and 1995, respectively. While the
rate of spending by Progenitor and Transcell (except for the restructuring
charge relating to the management change incurred in the nine month period ended
June 30, 1996) is essentially unchanged in fiscal 1996 from fiscal 1995,
increased spending by Intercardia and InterNutria has increased the total amount
of expenses pertaining to the subsidiaries.
The Company from time to time explores various technology, product or
company acquisitions and/or financing opportunities and is currently engaged in
discussions relating to such opportunities. Any such initiatives may involve the
issuance of shares of Interneuron's Common Stock and/or financial commitments to
fund product development, either of which may adversely affect the Company's
consolidated financial condition or results of operations.
PART II
Item 5. OTHER INFORMATION
On June 7, 1996, Interneuron completed a public offering of 3,000,000
shares of Common Stock at a public offering price of $39.00 per share resulting
in net proceeds to Interneuron of approximately $109,000,000.
In June 1996, the Company entered into a three-year copromotion
agreement with Wyeth Ayerst Laboratories. The agreement provides for Interneuron
to promote Redux to certain diabetologists, endocrinologists, bariatricians and
weight management specialists, subject to certain restrictions, and receive
payments from Wyeth Ayerst for a portion of the Company's actual costs for up to
33 salespersons during the first and second years. Interneuron is entitled to
varying percentages of profit derived from sales generated by its sales force,
after deducting costs, including cost of product revenue, royalties to
Interneuron, and Interneuron's proportionate share of advertising and promotion
costs. Total payments to Interneuron for sales force payments and profit sharing
would not exceed $10,000,000 per year. Interneuron also agreed if requested by
Wyeth Ayerst, to promote other products of Wyeth Ayerst that fit within the
physician specialists targeted by Interneuron's sales force. Interneuron's Redux
sales force cannot promote another company's product except under certain
conditions. Interneuron may terminate the agreement at any time on six months
notice. The copromotion agreement can be terminated by Wyeth Ayerst under
certain conditions, including if sales generated by Interneuron do not exceed a
specified level per year.
15
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.4 - Certificate of Designation establishing Series C Preferred Stock
(17)
4.6 - Form of Registrant Warrant issued in subsidiary private
placement (25)
4.7 - Form of Registrant Warrant to be issued to Paramount Capital,
Inc., D.H. Blair & Co., Inc. or designees (25)
10.5 (a) - Consultant and Non-competition Agreement between the Registrant,
Richard Wurtman, M.D. (34)
10.5 (b) - Consultant and Non-competition Agreement between InterNutria,
Inc. and Judith Wurtman, Ph.D. (34)
10.6 - Assignment of Invention and Agreement between Richard Wurtman,
M.D., Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant
and Lindsay Rosenwald, M.D. (1)
10.9(a) - Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
10.12(a) - Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier ("Servier") dated
February 7, 1990 ("License Agreement") (1)
10.12(b) - Revised Appendix A to License Agreement (1)
10.12(c) - Amendment Agreement between Registrant and Servier, Orsem and
Oril, Produits Chimiques dated November 19,1992(3)(12)
10.12(d) - Amendment Agreement dated April 28, 1993 between Registrant and
Servier (16)
10.12 (e) - Consent and Amendment Agreement among Servier, American Home
Products Corp. and Registrant. (34)
10.13 - Trademark License Agreement between the Registrant and Orsem
dated February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products
Chimiques dated February 7, 1990 (1)(3)
10.15(a) - Form of Indemnification Agreement between the Registrant and
Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
10.22(a) - License Agreement dated January 15, 1993, as amended, between
the Registrant and Grupo Ferrer (3)(16)
10.25 - License Agreement between the Registrant and the Massachusetts
Institute of Technology (4)
10.28 - Letter Agreement between the Registrant and Bobby W. Sandage,
Jr., Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's offices
in Lexington, Massachusetts (7)
16
<PAGE>
10.29(a) - First Amendment to Lease dated as of October 14, 1994 between
Registrant and Ledgemont Realty Trust (25)
10.30 - License Agreement dated January 1, 1992 between the Trustees of
Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the
Registrant and the Trustees of Princeton University (3)(8)
10.32 - Consulting Agreement dated as of July 1, 1991 between the
Registrant and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio University,
The Castle Group, Inc. and Scimark Corporation (assigned to
Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio University
(18)
10.35 - Technology License Contract dated December 18, 1991 between the
Registrant and the Mayo Foundation for Medical Education and
Research (3) (8)
10.36 - Exclusive License Agreement dated February 24, 1992 between the
Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between the
Registrant and Massachusetts Institute of Technology (9)
10.39 - Employment Agreement between Transcell Technologies, Inc. and
Elizabeth Tallet dated November 11, 1992 and Guarantee by
Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement between
Registrant and American Cyanamid Company dated November 19, 1992
(3)(12)
10.41 - Equity Investment Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and American
Cyanamid Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Servier dated November
19,1992 (12)
10.45 - Agreement between Registrant and Parexel International
Corporation dated October 22, 1992 (as of July 21, 1992) (3) (14)
10.46 - License Agreement dated February 9, 1993 between the Registrant
and Massachusetts Institute of Technology (3)(15)
10.47 - Sublease between Enichem America and Transcell Technologies, Inc.
including guarantee by the Registrant (15)
10.49 - License Agreement between Registrant and Elan Corporation, plc
dated September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and
Princeton University dated October 14, 1993 (3)(18)
10.51 - Letter Agreement between the Registrant and Mark S. Butler (18)
10.52 - License Agreement dated February 18, 1994 between Registrant and
Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994 (20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and Massachusetts
Institute of Technology dated March 1, 1994 (20)
17
<PAGE>
10.56 - License Agreement between Progenitor, Inc. and Albert Einstein
College of Medicine of Yeshiva University dated as of February 1,
1994 (20)
10.57 - Employment Letter dated February 28, 1994 between the Registrant
and Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits between
Phoenix Leasing and Registrant (agreements for Transcell and
Progenitor are substantially identical), with form of continuing
guarantee for each of Transcell and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel
International Corporation dated as of March 15, 1994 (3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the
Registrant, Intercardia, Inc., Cardiovascular Pharmacology
Engineering Consultants, Inc. (CPEC), Myocor, Inc. and the sellers
named therein (23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement (23)
10.61 - License Agreement dated December 6, 1991 between Bristol-Myers
Squibb and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and Bristol-
Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor, Inc.
dated as of November 1994 with Registrant guaranty (25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994 (25)
10.64 - Form of Investor Rights Agreement among Progenitor, Transcell,
Registrant and each investor in the subsidiary private placement
(25)
10.64(a) - Form of Investor Rights Agreement among Intercardia, the
Registrant and each investor in the Intercardia private placement
(25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.67 - Employment Agreement between Intercardia and Clayton I. Duncan
with Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia, Inc. and
Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock Purchase
Plan, as amended (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia, Inc. and
Highwoods/Forsyth Limited Partnership, with Registrant Guaranty
(27)
10.70(a) - License and Collaboration Agreement by and between Progenitor,
Inc., and Chiron Corporation dated March 31, 1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between the
Registrant and Reliance Insurance Company, including Warrant and
exhibits (29)
10.72 - Sponsored Research and License Agreement dated as of May 1, 1995
between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995 (31)
10.74 - Securities Purchase Agreement dated as of August 16, 1995 between
the Registrant and BT Holdings (New York), Inc., including
Warrant issued to Momint (nominee of BT Holdings) (32)
10.75 - Stock Purchase Agreement dated as August 23, 1995 between the
Registrant and Paresco, Inc. (32)
18
<PAGE>
10.76 - Stock Purchase Agreement dated as of September 15, 1995 between the
Registrant and Silverton International Fund Limited (32)
10.77 - Subscription Agreement dated September 21, 1995, as of August 31,
1995, including Registration Rights Agreement between Registrant
and GFL Advantage Fund Limited. (32)
10.78 - Contract Manufacturing Agreement dated November 20,1995 between
Registrant and Boehringer Ingelheim Pharmaceuticals, Inc. (3) (34)
10.79 - Development and Marketing Collaboration and License Agreement
between Astra Merck, Inc., Intercardia, Inc. and CPEC, Inc., dated
December 4, 1995. (33)
10.80 - Intercompany Services Agreement between Registrant and Intercardia,
Inc. (33)
10.81 - Asset Purchase Agreement dated November 14, 1995 among Registrant,
InterNutria, Inc., and Walden Laboratories, Inc. (34)
10.82 - Employment Agreement between Registrant and Glenn L. Cooper, M.D.
dated April 30, 1996 effective as of May 13, 1996 (37)
10.83 - Copromotion Agreement effective June 1, 1996 between Wyeth-Ayerst
Laboratories and Interneuron Pharmaceuticals, Inc. (3)
10.84 - Master Consulting Agreement between Interneuron Pharmaceuticals,
Inc. and Quintiles, Inc. dated July 12, 1996
10.85 - Amendment No. 1 dated July 3, 1996 to Master Consulting Agreement
between Interneuron Pharmaceuticals, Inc. and Quintiles, Inc.
dated July 12, 1996 (3)
23 - Consent of Coopers & Lybrand L.L.P. (34)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No. 33-2408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1990.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408) filed
December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the three months ended March 31, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November 30,
1992.
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408) filed
on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
19
<PAGE>
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993 (18) Incorporated by
reference to the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1993
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31,
1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20, 1994
(25) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From
10-Q for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form 8-K
dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form 8-K
dated May 16, 1995; Exhibit 10.70 (a) supersedes Exhibit 10.70.
(31) Incorporated by reference to Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1995.
(32) Incorporated by referring to Registrant's Report on Form 8-K dated August
16, 1995.
(33) Incorporated by reference to Registration Statement filed on Form S-1
(No. 33-80219) by Intercardia, Inc. on December 8, 1995.
(34) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995.
(36) Incorporated by reference to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (File No. 333-1273) filed March 15, 1996.
(37) Incorporated by reference to Registrant's Registration Statement on Form
S-3 (File No. 333- 03131) filed May 3, 1996
(b) Reports on Form 8-K
During the three month period ended June 30, 1996, the Company filed reports
on Form 8-K dated April 29, 1996 and June 6, 1996, each reporting
information under Item 5.
20
<PAGE>
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 thereunto duly authorized.
INTERNEURON PHARMACEUTICALS, INC.
By: /S/ GLENN L. COOPER
----------------------------------
Glenn L. Cooper, M.D., President
and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1996
By: /S/ THOMAS F. FARB
----------------------------------
Thomas F. Farb,
Executive Vice President,
Finance Chief Financial Officer
and Treasurer
(Principal Financial and
Accounting Officer)
21
<PAGE>
EXHIBIT INDEX
3.4 - Restated Certificate of Incorporation of Registrant (17)
3.5 - By-Laws of Registrant (1)
4.4 - Certificate of Designation establishing Series C Preferred Stock
(17)
4.6 - Form of Registrant Warrant issued in subsidiary private placement
(25)
4.7 - Form of Registrant Warrant to be issued to Paramount Capital, Inc.,
D.H. Blair & Co., Inc. or designees (25)
10.5(a) - Consultant and Non-competition Agreement between the Registrant,
Richard Wurtman, M.D. (34)
10. (b) - Consultant and Non-competition Agreement between InterNutria, Inc.
and Judith Wurtman, Ph.D. (34)
10.6 - Assignment of Invention and Agreement between Richard Wurtman,M.D.,
Judith Wurtman and the Registrant (1)
10.7 - Management Agreement between the Registrant
and Lindsay Rosenwald, M.D. (1)
10.9(a) - Restated and Amended 1989 Stock Option Plan (7)
10.10 - Form of Indemnification Agreement (1)
10.11 - Restated Amendment to MIT Option Agreement (1)
10.12(a) - Patent and Know-How License Agreement between the
Registrant and Les Laboratoires Servier ("Servier") dated February
7, 1990 ("License Agreement") (1)
10.12(b) - Revised Appendix A to License Agreement (1)
10.12(c) - Amendment Agreement between Registrant and Servier, Orsem and Oril,
Produits Chimiques dated November 19,1992(3)(12)
10.12(d) - Amendment Agreement dated April 28, 1993 between Registrant and
Servier (16)
10.12(e) - Consent and Amendment Agreement among Servier, American Home
Products Corp. and Registrant. (34)
10.13 - Trademark License Agreement between the Registrant and Orsem dated
February 7, 1990 (1)
10.14 - Supply Agreement between the Registrant and Oril Products Chimiques
dated February 7, 1990 (1)(3)
10.15(a) - Form of Indemnification Agreement between the Registrant and
Alexander M. Haig, Jr. (1)
10.16 - Assignment of Invention by Richard Wurtman, M.D. (1)
10.22(a) - License Agreement dated January 15, 1993, as amended, between the
Registrant and Grupo Ferrer (3)(16)
10.25 - License Agreement between the Registrant and the Massachusetts
Institute of Technology (4)
10.28 - Letter Agreement between the Registrant and Bobby W. Sandage, Jr.,
Ph.D. (7)
10.29 - Amended Lease dated December 12, 1991 for Registrant's offices in
Lexington, Massachusetts (7)
10.29(a)- First Amendment to Lease dated as of October 14, 1994 between
Registrant and Ledgemont Realty Trust (25)
22
<PAGE>
10.30 - License Agreement dated January 1, 1992 between the Trustees of
Princeton University and the Registrant (3)(8)
10.31 - Research Agreement dated as of July 1, 1991 between the Registrant
and the Trustees of Princeton University (3)(8)
10.32 - Consulting Agreement dated as of July 1, 1991 between the Registrant
and Daniel Kahne, Ph.D. (3)(8)
10.33 - License Agreement dated January 28, 1992 between Ohio University,
The Castle Group, Inc. and Scimark Corporation (assigned to
Progenitor, Inc.) (3)(8)
10.34 - Sponsored Research Agreement between Scimark Corporation
(assigned to Progenitor, Inc.) and Ohio University (3)(8)
10.34(a) - Letter Amendment between Progenitor, Inc. and Ohio University (18)
10.35 - Technology License Contract dated December 18, 1991 between the
Registrant and the Mayo Foundation for Medical Education and
Research (3) (8)
10.36 - Exclusive License Agreement dated February 24, 1992 between the
Registrant and Purdue Research Foundation (9)
10.37 - License Agreement dated as of February 15, 1992 between the
Registrant and Massachusetts Institute of Technology (9)
10.39 - Employment Agreement between Transcell Technologies, Inc. and
Elizabeth Tallet dated November 11, 1992 and Guarantee by
Registrant (13)
10.40 - Patent and Know-How Sublicense and Supply Agreement between
Registrant and American Cyanamid Company dated November 19, 1992
(3)(12)
10.41 - Equity Investment Agreement between Registrant and American Cyanamid
Company dated November 19, 1992 (12)
10.42 - Trademark License Agreement between Registrant and American Cyanamid
Company dated November 19, 1992 (12)
10.43 - Consent Agreement between Registrant and Servier dated November 19,
1992 (12)
10.45 - Agreement between Registrant and Parexel International Corporation
dated October 22, 1992 (as of July 21, 1992) (3) (14)
10.46 - License Agreement dated February 9, 1993 between the Registrant and
Massachusetts Institute of Technology (3)(15)
10.47 - Sublease between Enichem America and Transcell Technologies, Inc.
including guarantee by the Registrant (15)
10.49 - License Agreement between Registrant and Elan Corporation, plc dated
September 9, 1993 (3)(18)
10.50 - License Agreement between Transcell Technologies, Inc. and Princeton
University dated October 14, 1993 (3)(18)
10.51 - Letter Agreement between the Registrant and Mark S. Butler (18)
10.52 - License Agreement dated February 18, 1994 between Registrant and
Rhone-Poulenc Rorer, S.A. (20)
10.54 - Form of Purchase Agreement dated as of February 24, 1994 (20)
10.54(a) - Form of Amendment to Purchase Agreement (20)
10.55 - Patent License Agreement between Registrant and Massachusetts
Institute of Technology dated March 1, 1994 (20)
10.56 - License Agreement between Progenitor, Inc. and Albert Einstein
College of Medicine of Yeshiva University dated as of February 1,
1994 (20)
23
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10.57 - Employment Letter dated February 28, 1994 between the Registrant and
Thomas F. Farb (21)
10.58 - Master Equipment Lease including Schedules and Exhibits between
Phoenix Leasing and Registrant (agreements for Transcell and
Progenitor are substantially identical), with form of continuing
guarantee for each of Transcell and Progenitor (22)
10.59 - Exhibit D to Agreement between Registrant and Parexel International
Corporation dated as of March 15, 1994 (3)(22)
10.60(a) - Acquisition Agreement dated as of May 13, 1994 among the Registrant,
Intercardia, Inc., Cardiovascular Pharmacology Engineering
Consultants, Inc. (CPEC), Myocor, Inc. and the sellers named therein
(23)
10.60(b) - Amendment dated June 15, 1994 to the Acquisition Agreement (23)
10.61 - License Agreement dated December 6, 1991 between Bristol-Myers Squibb
and CPEC, as amended (3)(23)
10.61(a) - Letter Agreement dated November 18, 1994 between CPEC and Bristol-
Myers Squibb (25)
10.62 - Lease Agreement between Thomas R. Eggers and Progenitor, Inc. dated
as of November 1994 with Registrant guaranty (25)
10.63 - Form of Stock Purchase Agreement dated December 15, 1994 (25)
10.64 - Form of Investor Rights Agreement among Progenitor, Transcell,
Registrant and each investor in the subsidiary private placement
(25)
10.64(a) - Form of Investor Rights Agreement among Intercardia, the Registrant
and each investor in the Intercardia private placement (25)
10.65 - 1994 Long-Term Incentive Plan (25)
10.67 - Employment Agreement between Intercardia and Clayton I. Duncan with
Registrant guarantee (25)
10.67(a) - Amendment to Employment Agreement between Intercardia, Inc. and
Clayton I. Duncan (27)
10.68 - Interneuron Pharmaceuticals, Inc. 1995 Employee Stock Purchase Plan,
as amended (27)
10.69 - Office Lease, dated April 24, 1995 between Intercardia, Inc. and
Highwoods/Forsyth Limited Partnership, with Registrant Guaranty (27)
10.70(a) - License and Collaboration Agreement by and between Progenitor, Inc.,
and Chiron Corporation dated March 31, 1995 (3) (30)
10.71 - Securities Purchase Agreement dated June 2, 1995 between the
Registrant and Reliance Insurance Company, including Warrant and
exhibits (29)
10.72 - Sponsored Research and License Agreement dated as of May 1, 1995
between Progenitor and Novo Nordisk (3) (30)
10.73 - Form of Stock Purchase Agreement dated as of June 28, 1995 (31)
10.74 - Securities Purchase Agreement dated as of August 16, 1995 between the
Registrant and BT Holdings (New York), Inc.,
including Warrant issued to Momint (nominee of BT Holdings) (32)
10.75 - Stock Purchase Agreement dated as August 23, 1995 between the
Registrant and Paresco, Inc. (32)
10.76 - Stock Purchase Agreement dated as of September 15, 1995 between the
Registrant and Silverton International Fund Limited (32)
24
<PAGE>
10.77 - Subscription Agreement dated September 21, 1995, as of August 31, 1995,
including Registration Rights Agreement between Registrant and GFL
Advantage Fund Limited. (32)
10.78 - Contract Manufacturing Agreement dated November 20,1995 between
Registrant and Boehringer Ingelheim Pharmaceuticals, Inc. (3) (34)
10.79 - Development and Marketing Collaboration and License Agreement between
Astra Merck, Inc., Intercardia, Inc. and CPEC, Inc., dated December 4,
1995.(33)
10.80 - Intercompany Services Agreement between Registrant and Intercardia,
Inc. (33)
10.81 - Asset Purchase Agreement dated November 14, 1995 among Registrant,
InterNutria, Inc., and Walden Laboratories, Inc. (34)
10.82 - Employment Agreement between Registrant and Glenn L. Cooper, M.D.
dated April 30, 1996 effective as of May 13, 1996 (37)
10.83 - Copromotion Agreement effective June 1, 1996 between Wyeth-Ayerst
Laboratories and Interneuron Pharmaceuticals, Inc. (3)
10.84 - Master Consulting Agreement between Interneuron Pharmaceuticals, Inc.
and Quintiles, Inc. dated July 12, 1996
10.85 - Amendment No. 1 dated July 3, 1996 to Master Consulting Agreement
between Interneuron Pharmaceuticals, Inc. and Quintiles, Inc. dated
July 12, 1996 (3)
23 - Consent of Coopers & Lybrand L.L.P. (34)
27 - Financial Data Schedule
- ---------------------------
(1) Incorporated by reference to the Registrant's registration statement on
Form S-1 (File No. 33-2408) declared effective on March 8, 1990.
(3) Confidential Treatment requested for a portion of this Exhibit.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1990.
(7) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registrant's registration statement on Form S-1 (File No. 33-32408) filed
December 18, 1991.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1991.
(9) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended March 31, 1992.
(12) Incorporated by reference to the Registrant's Form 8-K dated November 30,
1992.
(13) Incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form S-1 (File No. 33-32408) filed
on December 21, 1992.
(14) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1992.
(15) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the three months ended December 31, 1992
(16) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the six months ended March 31, 1993
(17) Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the nine months ended June 30, 1993
25
<PAGE>
(18) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993
(20) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 or Amendment No. 1 (File no. 33-75826)
(21) Incorporated by reference to the Registrant's Form 8-K dated March 31, 1994
(22) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
for the six months ended March 31, 1994
(23) Incorporated by reference to the Registrant's Form 8-K dated June 20, 1994
(25) Incorporated by reference to the Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994
(27) Incorporated by reference to the Registrant's Quarterly Report on From 10-Q
for the six months ended March 31, 1995
(29) Incorporated by reference to the Registrant's Quarterly Report on Form 8-K
dated June 2, 1995
(30) Incorporated by reference to the Registrant's Quarterly Report on Form 8-K
dated May 16, 1995; Exhibit 10.70 (a) supersedes Exhibit 10.70.
(31) Incorporated by reference to Registrant's Quarterly Report on Form 10-Q
for the nine months ended June 30, 1995.
(32) Incorporated by referring to Registrant's Report on Form 8-K dated August
16, 1995.
(33) Incorporated by reference to Registration Statement filed on Form S-1
(No. 33-80219) by Intercardia, Inc. on December 8, 1995.
(34) Incorporated by reference to Registrant's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995.
(36) Incorporated by reference to Amendment No. 1 to Registrant's Registration
Statement on Form S-3 (File No. 333-1273) filed March 15, 1996.
(37) Incorporated by reference to Registrant's Registration Statement on Form
S-3 (File No. 333-03131) filed May 3, 1996
26
Exhibit 10.83
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by an * and [], have
been separately filed with the Commission.
COPROMOTION AGREEMENT
This Copromotion Agreement effective June 1, 1996, between WYETH-AYERST
LABORATORIES, 555 E. Lancaster Avenue, St. Davids, PA 19087 ("Wyeth-Ayerst") and
INTERNEURON PHARMACEUTICALS, INC., One Ledgemont Center, 99 Hayden Avenue, Suite
340, Lexington, MA 02173( " Interneuron " ).
WHEREAS, Interneuron has granted Wyeth-Ayerst exclusive patent and
know-how licenses to make, have made, use and sell finished pharmaceuticals
containing dexfenfluramine hydrochloride ("REDUX") for the treatment of obesity
in the United States. its territories and possessions and the Commonwealth of
Puerto Rico (the "Territory") pursuant to Patent and Know-How Sublicense and
Supply Agreement effective as of November 19, 1992, (the "Sublicense Agreement")
as amended pursuant to Consent and Amendment Agreement effective as of November
21, 1994 (the "Amendment Agreement"); and
WHEREAS, pursuant to Paragraph 6.4.2 of the Sublicense Agreement,
Interneuron retained copromotion rights to REDUX in the Territory, the details
of such copromotion, including the practitioner categories to whom Interneuron
would promote REDUX to be agreed to by Wyeth-Ayerst and Interneuron;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, it is hereby agreed as follows:
1. DEFINITIONS
When used in this Agreement, the following terms shall have the
following respective meanings:
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
(a) "Contract Month" shall mean each one month period during the term
of this Agreement beginning June 1, 1996.
(b) "Contract Quarter" shall mean each three month period during the
term of this Agreement beginning June 1, 1996, provided, however the First
Contract Quarter shall end June 30, 1996.
(c) "Contract Year" shall mean each one year period during the term of
this Agreement beginning June 1, 1996.
(d) "Copromotion" shall mean those activities normally undertaken by a
pharmaceutical company's sales force to implement marketing plans and strategies
aimed at encouraging the appropriate use of a particular prescription
pharmaceutical product.
(e) "Detail" shall mean a one-on-one, face-to-face meeting, in an
individual or group practice setting, between one or more physician prescribers
and one Interneuron professional representative during which product information
is communicated that is in addition to any discussion regarding the physician's
sample needs. When used as a verb, "Detail" shall mean to engage in a Detail.
(f) "First Position Detail" shall mean [*]
(g) "REDUX Sales Force" shall mean up to thirty-three (33) regular,
full-time employees of Interneuron, thirty (30) of whom shall be employed and
trained as professional representatives to Detail REDUX to the Interneuron
Categories and three (3) of whom shall provide field sales management for the
REDUX Sales Force.
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
(h) "Sample" shall mean a unit of REDUX that is not intended to be sold
and is intended to promote the sale of REDUX.
2. COPROMOTION BY INTERNEURON
Interneuron shall copromote REDUX in the Territory by causing its REDUX
Sales Force to Detail to individual physicians, and small group practices of
physicians, who are bariatricians, nutritionists, full time-weight management
specialists, endocrinologists and diabetologists (the "Interneuron Categories").
Attached hereto as Exhibit A is an electronic list of physicians and small group
practices which shall constitute the candidates in the Interneuron Categories.
Exhibit A shall be periodically updated by mutual agreement of the parties.
The Interneuron Categories shall not include national and regional
weight loss organizations, e.g. NutriSystems, Weight Watchers, etc., which offer
multiple weight loss approaches and/or where physician supervised weight loss is
not the primary intervention. Physicians with multi-location offices or clinics
shall not PER SE be considered to be excluded as national or regional weight
loss organizations.
Physicians who Wyeth-Ayerst actively Details (defined as four (4) calls
in the previous twelve (12) months) on the effective date hereof may be excluded
from the Interneuron Categories.
[*]
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
3. DETAILING ADDITIONAL WYETH-AYERST PRODUCTS
During the first two (2) Contract Years, the REDUX Sales Force shall,
if Wyeth- Ayerst in its sole discretion so requests, Detail to the Interneuron
Categories additional Wyeth-Ayerst products at the time of Details for REDUX.
Wyeth-Ayerst shall provide promotional materials and samples to Interneuron at
no cost for such detailing. Upon mutual agreement, physicians other than those
in the Interneuron Categories may be detailed by the REDUX Sales Force
hereunder. For detailing additional Wyeth-Ayerst products in the first Contract
Year, Interneuron shall receive no compensation other than the Interneuron sales
force subsidy provided in Section 4(a). For such additional detailing in the
second Contract Year, Wyeth-Ayerst shall pay Interneuron [*] per full product
Detail. 4. INTERNEURON SALES FORCE SUBSIDY AND PROFIT SHARING
(a) SALES FORCE SUBSIDY. For the first two (2) Contract
Years, Wyeth-Ayerst shall pay the following percentages of Interneuron's actual
REDUX Sales Force costs:
Year 1 - 100%
Year 2 - 50%
Provided, however, that the REDUX Sales Force shall not exceed thirty-three (33)
regular, full-time employees and Wyeth-Ayerst's payment obligation shall be
based on the above percentages of Interneuron actual REDUX Sales Force costs,
including, but not limited to, payroll, fringe benefits, travel expenses, sales
training costs, commissions and bonuses documented by Interneuron to
Wyeth-Ayerst's reasonable satisfaction, not in excess of [*] per
representative per Contract Year. Interneuron shall provide
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
Wyeth-Ayerst within ten (10) days of the end of each Contract Month a monthly
schedule of REDUX Sales Force expenses along with a roster of sales people
setting forth their dates of hire. Within thirty (30) days of receipt of such
schedule, Wyeth- Ayerst will pay the amount provided for herein.
(b) PROFIT SHARING. For the first three (3) Contract Years,
Wyeth-Ayerst shall pay Interneuron the following percentages of REDUX Brand
Profit, as defined below, by physician category, for physicians or small groups
in the Interneuron Categories detailed by the REDUX Sales Force at least [*]
times each Contract Year:
Bariatricians
Nutritionists Endocrinologists
WEIGHT MGT. SPECIALISTS DIABETOLOGISTS
----------------------- --------------
Year 1 [ * ] [ * ]
Year 2 [ * ] [ * ]
Year 3 [ * ] [ * ]
Profit shall mean REDUX Net Sales (including any and all sales of REDUX
by Wyeth-Ayerst made prior to June 1, 1996) in the Interneuron Categories less
cost of goods sold, distribution costs, the costs of detail aids and other
promotional materials and samples for the REDUX Sales Force and allocated costs
for direct advertising and promotion expenses. REDUX Net Sales shall mean the
gross amount invoiced for REDUX less transportation charges or allowances, if
any, included in such price; trade, quantity or cash discounts, service
allowances and broker's or agent's commissions, if any, allowed or paid; credits
or allowances, if any, given or made on account of price adjustments, returns,
bad debts (actual write-offs only), off-invoice promotional
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
discounts, rebates, any and all federal, state or local government rebates
whether in existence now or enacted at any time during the Term of this
Agreement (e.g.. HCFA or Medicaid rebates), rejections, recalls or REDUX
destruction (voluntarily made or requested or made by an appropriate government
agency, sub-division or department); and any tax, excise or governmental charge
upon or measured by the production, sale, transportation, delivery, or use of
REDUX. Net Sales shall be measured for the Interneuron Categories by utilizing
the Xponent Rx database supplemented by additional data sources appropriate in
Wyeth-Ayerst's reasonable judgment to accurately measure direct and indirect
sales to dispensing physicians in the Interneuron Categories. The above listed
deductions from Net Sales used to compute Profit hereunder shall be at cost. No
intercompany transfer profit shall be considered in calculating Profit
hereunder. All expenses considered under this profit sharing calculation will be
applied using Generally Accepted Accounting Principals ("GAAP"). Direct
marketing expenses shall not include internal overheads. Cost of goods sold and
distribution expenses for Redux are currently estimated to average [*] of Net
Sales. Direct advertising and promotion expenses will be allocated based on Net
Sales.
(c)MAXIMUM INTERNEURON COMBINED SALES FORCE SUBSIDY AND PROFIT SHARING.
Wyeth-Ayerst's combined sales force subsidy and profit sharing payments to
Interneuron shall not exceed $10,000,000 in any Contract Year.
(d) Profit sharing payments to Interneuron under this Section shall be
made on a Contract Quarter basis within [*] days of the end of each
Contract Quarter together with supporting calculations. If the IMS data base is
not available to
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
be used for the profit sharing calculation, Wyeth will use reasonable estimates
based on historical sales to perform the required profit sharing calculation.
[*] percent of each quarterly payment for the first three (3) Contract
Quarters of each Contract Year shall be retained by Wyeth-Ayerst and remitted,
as adjusted, with the payment for the Fourth Contract Quarter which shall
reflect all adjustments to the sales force subsidy and profit sharing payments
to Interneuron for the Contract Year.
5. MARKETING, PRICING AND SALES FORCE
(a) Wyeth-Ayerst shall have the sole authority for the
pricing, marketing strategy and tactics for REDUX. All promotional and detailing
materials shall be supplied by Wyeth-Ayerst and not by Interneuron. The
determination of the content, the quantity, and the method of distribution of
the promotional materials and literature related to REDUX shall be the sole
responsibility of Wyeth-Ayerst. In connection with the Copromotion of REDUX,
Interneuron shall use only promotional materials and literature provided by
Wyeth-Ayerst, which shall be used only for the purposes of this Agreement and
shall be returned to Wyeth-Ayerst upon termination of this Agreement. All
copyright and other intellectual property rights therein shall remain vested in
Wyeth- Ayerst.
(b) Interneuron's REDUX Sales Force shall remain exclusively under the
authority of the field sales management of Interneuron. Interneuron shall have
full responsibility for the dissemination of information regarding REDUX to its
REDUX Sales Force based on information provided by Wyeth-Ayerst.
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(c) Wyeth-Ayerst shall have the sole right and responsibility for
establishing and modifying the terms and conditions with respect to the sale of
REDUX, including any terms and conditions relating to or affecting the price at
which REDUX will be sold, any discount attributable to payments on receivables,
distribution of REDUX, credit to be granted or refused and the like.
(d) Wyeth-Ayerst shall inform Interneuron of list price increases or
decreases for REDUX in the Territory at the time such information is provided to
Wyeth-Ayerst's sales force.
(e) Wyeth-Ayerst shall be exclusively responsible for accepting and
filling purchase orders, billing, and returns with respect to REDUX. If
Interneuron receives an order for REDUX, it shall make best efforts to, within
forty-eight (48) hours, transmit such order to Wyeth-Ayerst for acceptance or
rejection, which acceptance or rejection shall be at Wyeth-Ayerst's sole
discretion. REDUX Net Sales in the final Contract Year of the term or any
extended term of this Agreement shall include sales made on all orders received
prior to the end of such Contract Year regardless of the date of acceptance or
fulfillment of such orders by Wyeth-Ayerst.
(f) The appointment of Interneuron hereunder, shall not create a joint
venture, or an employer-employee relationship or a principal-agent relationship
other than as specifically provided in this Agreement or in the Sublicense
Agreement or Amendment Agreement.
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The information below marked by * and [] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
(g) Nothing in this Agreement shall be deemed to authorize Interneuron
to act for, represent, or bind Wyeth-Ayerst or any of its affiliates other than
as specifically provided by this Agreement.
(h) Neither party shall have any responsibility for the hiring,
termination, compensation or benefits of the other party's employees. No
employee or representative of a party shall have an authority to bind or
obligate the other party to this Agreement for any sum or in any manner
whatsoever, or to create or impose any contractual or other liability on the
other party without said party's authorized written approval.
6. TERM AND TERMINATION
(a) The initial term of this Agreement, unless sooner terminated
hereunder, shall be for three (3) years from June 1, 1996. Wyeth-Ayerst shall
have the option of extending the Agreement for one (1) or two (2) years
following the initial term on terms and conditions to be agreed upon by the
parties, provided that Wyeth-Ayerst shall give Interneuron three (3) months
prior written notice of any such extension. Interneuron may elect not to
copromote REDUX for an extended one (1 ) or two (2) year term.
(b) Either party may terminate this Agreement on thirty (30) days prior
written notice if the other party is in default and such default has not been
cured within thirty (30) days of such notice. Wyeth-Ayerst may terminate this
Agreement on thirty (30) days notice if REDUX is withdrawn from the market and
on ninety (90) days notice if total REDUX sales do not exceed [*] million in any
Contract Year or if Interneuron generated sales do not exceed [*] million in any
Contract Year. Interneuron may
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terminate at any time on six (6) months notice. Upon notice of termination by
either Wyeth-Ayerst or Interneuron, Wyeth-Ayerst may immediately begin to phase
in its own detailing to the physicians Interneuron is calling on.
7. NONCOMPETITION
During the first eighteen (18) months of this Agreement, the REDUX
Sales Force will not promote another company's product. Thereafter, the REDUX
Sales Force will not promote another company's product without Wyeth-Ayerst's
prior consent which shall not be unreasonably withheld. Such consent is
conditioned on the products not being a weight loss product; not being
competitive with other Wyeth-Ayerst products, and that REDUX remain in First
Position Detail with full product presentation for the entire term of this
Agreement.
Interneuron shall not promote another anti-obesity drug during the term
of this Agreement. This provision is not intended to preclude Interneuron's
copromotion of other anti-obesity drugs for Wyeth-Ayerst nor does it grant
rights to Interneuron to do so. Interneuron shall not promote another
anti-obesity prescription drug product for one year following expiration of this
Agreement or one year following termination by Wyeth- Ayerst because of default
by Interneuron or termination by Interneuron except for default by Wyeth-Ayerst.
8. SAMPLES
(a) Samples of REDUX, to be used by Interneuron only for
sampling to Interneuron Categories, shall be sent to Interneuron at an agreed
upon site and at Wyeth-Ayerst's expense when REDUX has been descheduled as a
controlled
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substance. The storage and distribution of such Samples to the REDUX Sales Force
shall be at Interneuron's expense. Storage and distribution of such Samples by
Interneuron and sampling by the REDUX Sales Force shall be in compliance with
all federal, state and local laws and regulations and Wyeth-Ayerst procedures
concerning prescription drug samples, including but not limited to, all laws
concerning sample accountability. Wyeth-Ayerst shall have the right to audit
Interneuron's compliance with the above-referenced laws and regulations upon
reasonable notice and at reasonable times not to exceed twice a Contract Year.
For purposes of this article, such audit may, at Wyeth-Ayerst's option, be
conducted by either Wyeth-Ayerst's employees or consultants.
(b) The decision to sample shall be determined by Wyeth-Ayerst, the
quantity of Samples to be provided to Interneuron and the method of
distribution, including any limitations thereon, shall be determined jointly by
the parties.
(c) Interneuron shall, within sixty (60) days of the end of each
Contract Quarter during the term of this Agreement, provide to Wyeth-Ayerst a
summary analysis of the number of Samples distributed to Interneuron Categories
during the Contract Quarter.
(d) Interneuron shall be an Authorized Distributor of Record for REDUX
for purposes of the requirements of the Prescription Drug Marketing Act of 1987
(the "PDMA") and shall comply with the PDMA, FDA regulations and applicable
state law requirements regarding the marketing, sale and distribution of REDUX,
including but not limited to applicable wholesale drug distribution licensing
guidelines and requirements.
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(e) Interneuron shall establish and adhere to written procedures to
assure that Interneuron and the REDUX Sales Force comply with all requirements
of the PDMA. For this purpose, Wyeth-Ayerst shall provide for each REDUX Sales
Force employee a copy of the Wyeth-Ayerst Sample Accountability Manual, the
receipt of which shall be acknowledged and compliance agreed to by each such
REDUX Sales Force employee. Interneuron shall notify Wyeth-Ayerst immediately
upon learning that any REDUX Samples shipped by Wyeth-Ayerst to Interneuron have
been lost or have not been received as scheduled. In the event that Interneuron
or any of the REDUX Sales Force fails to comply or causes Wyeth-Ayerst to fail
to comply with applicable legal requirements and as a direct result a civil
penalty is assessed against Wyeth-Ayerst or any of its affiliates or employees,
then Interneuron shall hold harmless and indemnify Wyeth-Ayerst, its affiliates
or its employees from any such civil penalty or other damages or losses related
thereto, including reasonable attorneys' fees unless such failure was caused by
Wyeth-Ayerst.
9. ADVERSE REACTION REPORTING AND REGULATORY MATTERS
(a) Interneuron shall notify Wyeth-Ayerst within twenty-four
(24) hours if Interneuron receives any notice of a serious or unexpected adverse
drug experience associated with the use of REDUX. The terms "serious,"
"unexpected," and "adverse drug experience" as used in this Section 9(a) shall
have the same meaning as the definitions set forth in Title 21 of the Code of
Federal Regulations, Section 314.80(a), and in effect at the time of
Interneuron's notice of report to Wyeth-Ayerst. Interneuron shall notify
Wyeth-Ayerst immediately upon receiving notice of (1) information
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concerning any incident that causes REDUX or its labeling to be mistaken for, or
applied to, another article; or (2) information concerning any change or
deterioration in REDUX. Any repeated failure to notify Wyeth-Ayerst under this
provision shall be grounds for termination, at Wyeth-Ayerst's option.
(b) Interneuron shall report monthly to Wyeth-Ayerst all other
significant information concerning any complaint of any kind regarding REDUX,
its labeling, quality or packaging, including but not limited to, any adverse
drug experience not reported pursuant to Section 9(a) above.
(c) It is understood and agreed that the reporting
requirements set forth in this Section 9 are based on Wyeth-Ayerst policies and
procedures and regulatory reporting requirements. Accordingly, in the event of
changes to regulatory requirements or Wyeth-Ayerst policies and procedures for
adverse experience reporting, Interneuron agrees to comply with all reasonable
revised notification procedures as requested in writing by Wyeth-Ayerst.
(d) Wyeth-Ayerst shall evaluate all adverse drug experiences
associated with REDUX, including those reported to Wyeth-Ayerst by Interneuron,
and appropriately report serious or unexpected adverse drug experiences to FDA.
10. RETURN/RECALL
(a) Any REDUX returned to Interneuron shall be shipped to
Wyeth- Ayerst's nearest facility, with any reasonable or authorized shipping or
other documented direct cost to be paid by Wyeth-Ayerst. Interneuron shall incur
no liability
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of any nature in the handling of such returns. Interneuron, at its option, may
advise the customer who made the return that the REDUX has been returned to
Wyeth-Ayerst.
(b) At Wyeth-Ayerst's request, Interneuron shall reasonably
assist Wyeth-Ayerst in obtaining and receiving REDUX that has been recalled, and
any direct documented costs incurred by Interneuron with respect to
participating in such recall shall be reimbursed by Wyeth-Ayerst.
11. FORCE MAJEURE
Neither of the parties shall be liable or be in breach of any provision
of this Agreement for any failure or omission on its part to perform any
obligations because of force majeure, including, but not limited to war, riot,
fire, explosion, flood, sabotage, accident or breakdown of machinery;
unavailability of fuel, labor, containers or transportation facilities;
accidents of navigation or breakdown or damages of vessels. or other conveyances
for air, land or sea; other impediments or hindrances to transportation; strike
or other labor disturbances; governmental regulation, or any other cause beyond
the reasonable control of the party; and provided that such failure or omission
resulting from one of the above causes is cured as soon as practicable after the
occurrence of one or more of the abovementioned causes.
12. RECORD AND AUDIT PROVISIONS
Each party shall keep accurate records in sufficient detail (a)
Interneuron of the number of Details and the positioning of such Details for
REDUX and other information regarding all Details for REDUX or additional
Wyeth-Ayerst products and (b) Wyeth- Ayerst of the financial computations
required to make payments to Interneuron which
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<PAGE>
are required under this Agreement. Each party, upon reasonable advance notice to
the other party, and at the requesting party's expense, shall permit an
independent, certified public accountant of the requesting party, except one to
whom the other party has reasonable objections, to have access during ordinary
business hours to the other party's records which pertain to the performance of
this Agreement. Such examination shall not take place more than twice a Contract
Year during the term of this Agreement. These requests with respect to any year
shall terminate two (2) years after the end of such year.
13. WARRANTY AND INDEMNITY
(a) Each party warrants and represents to the other that it
has the full right and authority to enter into this Agreement, and that it is
not aware of any impediment that would inhibit its ability to perform its
obligations under this Agreement.
(b) Wyeth-Ayerst shall indemnify, defend, and hold Interneuron
harmless from any claims, damages, actions, liabilities, losses, costs and
expenses, including reasonable attorneys' fees, (hereinafter "Claims") of a
third party, arising from the promotion of REDUX by Wyeth-Ayerst in violation of
approved labeling or any applicable statute or regulation, or any breach by
Wyeth-Ayerst of its obligations under this Agreement unless such Claims arise
from a manufacturing or design defect of REDUX, Interneuron's breach of its
responsibilities under this Agreement or a negligent or wrongful act of
Interneuron. Interneuron shall notify Wyeth-Ayerst immediately of any such
Claims and shall cooperate with Wyeth-Ayerst in the defense of such Claims.
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<PAGE>
(c) Interneuron shall indemnify and hold Wyeth-Ayerst harmless
from any Claims of a third party arising out of the storage and distribution of
REDUX or Samples of REDUX by Interneuron, the Copromotion of REDUX by
Interneuron in violation of approved labeling or any applicable statute or
regulation, any breach by Interneuron of its obligations under the Agreement, a
manufacturing or design defect of REDUX, unless such Claims arise from
Wyeth-Ayerst's breach of its responsibilities under this Agreement, or a
negligent or wrongful act of Wyeth-Ayerst. Wyeth-Ayerst shall notify Interneuron
immediately of any such claim, damage or loss and shall cooperate with
Interneuron in the defense of such Claims.
(d) Each party agrees to give the other prompt written notice
of any Claims made for which the other might be liable under the foregoing
indemnification together with the opportunity to defend, negotiate, and settle
such Claims. The party seeking indemnification under this Agreement shall
provide the other party with all information in its possession, authority, and
assistance necessary to enable the indemnifying party to carry on the defense of
such Claims. Neither party shall be responsible or bound by any settlement made
without its prior written consent.
13. WAIVER/MODIFICATION
Any term or condition of this Agreement may be waived or modified at
any time by the party entitled to the benefit thereof by a written instrument
executed by both parties. No delay or failure on the part of any party in
exercising any rights hereunder and no partial or single exercise thereof, will
constitute a waiver of such rights or of any rights hereunder.
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<PAGE>
14. GOVERNING LAW
This Agreement shall be construed and the respective rights of the
parties hereto determined according to the substantive laws of the State of New
Jersey notwithstanding the provisions to the contrary governing conflict of laws
under such law.
15. SEVERANCE
If any one or more of the provisions of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality or enforceability
of the remaining provisions hereof shall not in any way be affected or impaired
thereby. To the extent permitted by applicable law, each party waives any
provision of law which renders any provision hereof invalid, illegal or
unenforceable in any respect. In the event any provision of this Agreement shall
be held to be invalid, illegal or unenforceable, the parties hereto shall
negotiate in good faith to substitute a valid, legal and enforceable provision
which, insofar as practical, implements the purposes hereof.
16. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties in
respect of the subject matter hereof and supersedes and cancels all previous
agreements, negotiations, commitments and writings between the parties hereto
with respect to the subject matter hereof and may not be changed or modified in
any manner or released, discharged, abandoned or otherwise terminated unless in
writing and signed by the duly authorized officers or representatives of the
parties.
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<PAGE>
17. NOTICE
Any notice or request required or permitted to be given in connection
with this Agreement shall be deemed to have been sufficiently given if sent by
prepaid registered mail or telecopier to the intended recipient as set forth
below or such other business address as may have been furnished in writing by
the intended recipient to the sender. The date of mailing or telecopying shall
be deemed to be the effective date on which notice was given, provided that all
telecopies shall have been confirmed either electronically or by the intended
recipient if such confirmation is received within twenty-four (24) hours of its
transmission.
WYETH-AYERST
Joseph M. Mahady, President
Pharmaceutical Division
with copy to:
Charles N. Ross, Esq., Director
Legal Division
INTERNEURON
Glenn L. Cooper, M.D., President
and Chief Executive Officer
with copy to:
Mark S. Butler, Esq.,
Executive Vice President and
Chief Administrative Officer
18. PUBLIC ANNOUNCEMENTS
Any public announcements or publicity with respect to this Agreement or
the transaction contemplated herein shall be at such time and in such manner as
Wyeth- Ayerst and Interneuron shall agree, provided that nothing herein shall
prevent either
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<PAGE>
party, following notice and opportunity to review by the other, from making such
public announcements as such party's legal obligations require.
19. SUPREMACY OF SUBLICENSE AGREEMENT
Nothing in this Agreement: shall in any way supersede, alter or
diminish any rights either of the parties may have under the Sublicense
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by the duly authorized officers effective as of June 1, 1996.
WYETH-AYERST LABORATORIES
By: /s/ Joseph M. Mahady
---------------------
Name: Joseph M. Mahady
Title: President, Pharmaceutical Division
INTERNEURON PHARMACEUTICALS INC.
By: /s/ Mark S. Butler
-------------------
Name: Mark S. Butler
Title: EVP
-19-
Exhibit 10.84
MASTER CONSULTING AGREEMENT
This Master Consulting Agreement (hereinafter "Agreement") when signed by both
parties will set forth the terms and conditions between Interneuron
Pharmaceuticals, Inc. (hereinafter "Interneuron") and Quintiles, Inc.
(hereinafter "Quintiles") under which Quintiles agrees to provide consulting
services as described below to Interneuron as hereinafter set forth.
1.0 TERM. This Agreement shall commence on the date of execution and shall
continue until terminated as hereinafter provided by either party.
2.0 CONFIDENTIALITY. It is understood that during the course of this
Agreement, Quintiles and its employees may be exposed to data and
information which is confidential and proprietary to Interneuron. All
such data and information (hereinafter "Interneuron Confidential
Information") written or verbal, tangible or intangible, made
available, disclosed, or otherwise made known to Quintiles and its
employees as a result of services under this Agreement shall be
considered confidential and shall be considered the sole property of
Interneuron. All information regarding clinical trials or clinical
trial management and all information regarding Quintiles' operations,
including but not limited to Quintiles Property (as defined in Section
3.0 below), disclosed by Quintiles to Interneuron in connection with
this Agreement is proprietary, confidential information belonging to
Quintiles (the "Quintiles Confidential Information", and together with
the Interneuron Confidential Information, the "Confidential
Information"). The Confidential Information shall be marked as
confidential or otherwise represented by the disclosing party as
confidential either before or within a reasonable time after its
disclosure. The Confidential Information shall be used by the receiving
party and its employees only for purposes of performing the receiving
party's obligations hereunder. Each party agrees that it will not
reveal, publish or otherwise disclose the Confidential Information of
the other party to any third party without the prior written consent of
the disclosing party, provided that the foregoing obligations shall not
apply to Confidential Information which:
(a) is or becomes generally available to the public other than as a
result of a disclosure by the receiving party;
(b) becomes available to the receiving party on a non-confidential
basis from a source which is not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation to the
disclosing party;
(c) the receiving party develops independently of any disclosure by
the disclosing party;
(d) was in the receiving party's possession or known to the receiving
party prior to its receipt from the disclosing party; or
J:\DOCS\BTPM_NY_\1046\0052777.01
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<PAGE>
(e) is required by law to be disclosed.
This obligation of confidentiality and non-disclosure shall remain in
effect for a period of five years after the termination of this
Agreement.
3.0 SERVICES TO BE PROVIDED. Quintiles shall provide strategic planning,
expert consultation, clinical, statistical, statistical programming,
data processing, data management, regulatory, clerical, and project
management services as requested by Interneuron. The specific details
of each assignment or task will be separately negotiated and contracted
for in writing subject to the terms and conditions of this Agreement.
All data and information necessary for Quintiles to conduct project
assignments will be forwarded by Interneuron to Quintiles. All data and
information generated or derived by Quintiles as the result of services
performed by Quintiles under this Agreement shall be and remain the
exclusive property of Interneuron. Any inventions that may evolve from
the data and information described above or as the result of services
performed by Quintiles under this Agreement shall belong to Interneuron
and Quintiles agrees to assign all inventions and/or patents to
Interneuron. It is acknowledged that Quintiles is possessed of certain
computer technical expertise and software which have been independently
developed by Quintiles without the benefit of any information provided
by Interneuron. Interneuron and Quintiles agree that any computer
software programs, statistical methodologies or other formulae or
analyses used by Quintiles under or during the term of this Agreement
are the product of Quintiles' technical expertise possessed and
developed by Quintiles prior to the date of the Agreement and are the
sole and separate property of Quintiles. It is further acknowledged
that Quintiles' professional staff is possessed of certain technical
expertise and conceptual expertise in areas of drug development which
have been independently developed by Quintiles without the benefit of
any information provided by Interneuron. Interneuron and Quintiles
agree that such technical expertise processes, methods, approach or
analyses used by Quintiles under or during the term of the Agreement
are the product of Quintiles' technical expertise possessed and
developed by Quintiles prior to the date of this Agreement and are the
sole and separate property of Quintiles.
At the completion of services by Quintiles, all materials and all other
data, regardless of the method of storage or retrieval, shall either be
(i) delivered to Interneuron at its offices in Lexington,
Massachusetts, and in such form as is then currently in the possession
of Quintiles, (ii) retained by Quintiles for Interneuron for a period
of two years, or (iii) disposed of, at the direction and written
request of Interneuron unless such materials are otherwise required to
be stored or maintained by Quintiles as a matter of law or regulation.
4.0 INDEPENDENT CONTRACTOR RELATIONSHIP. For the purposes of this
Agreement, the parties hereto are independent contractors and nothing
contained in this Agreement shall be construed to place them in the
relationship of partners, principal and agent, employer/employee or
J:\DOCS\BTPM_NY_\1046\0052777.01
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<PAGE>
joint venturers. Quintiles agrees that it shall have no power or right
to bind or obligate Interneuron, nor shall Quintiles hold itself out as
having such authority.
5.0 PERFORMANCE OF SERVICES. In carrying out its responsibilities under
this Agreement, Quintiles agrees to assure that these services are
conducted in compliance with, when appropriate, any applicable protocol
and specifications and with all applicable laws, rules and regulations
including, but not limited to, the U.S. Food, Drug and Cosmetic Act and
the regulations promulgated pursuant thereto.
6.0 CONFLICT OF AGREEMENT. Quintiles represents and warrants to Interneuron
that it is not a party to any agreement which would prevent it from
fulfilling its obligations under this Agreement and that during the
term of this Agreement, Quintiles will not enter into an agreement to
provide services which would in any way prevent it from providing the
services contemplated under this Agreement.
7.0 PUBLICATION. From time to time it may be to the mutual interest of
Quintiles and Interneuron to publish articles relating to services
performed as a part of this Agreement. Publication of project
assignment results in whole or in part, shall be within the sole and
absolute discretion of Interneuron. Results may not be published or
referred to, in whole or in part, without the prior expressed written
consent of Interneuron. Interneuron reserves the unqualified right to
reject any article utilizing any data generated from Quintiles'
services under this Agreement before such article is presented or
submitted for publication.
8.0 LIMITATION OF LIABILITY. Neither Quintiles nor its affiliates nor any
of its or their respective directors, officers, employees or agents
shall have any liability whatsoever under this Agreement or otherwise
except with respect to damages attributable to Quintiles' gross
negligence or intentional misconduct. Notwithstanding the foregoing,
neither Quintiles, nor its affiliates, nor any of its or their
respective directors, officers, employees or agents shall have any
liability for any special, incidental, or consequential damages,
including, but not limited to the loss of opportunity, loss of the use
of any data or information supplied hereunder, loss of revenue or
profit, in connection with or arising out of this Agreement, the
services performed by Quintiles hereunder or the existence, furnishing,
functioning, or Interneuron's use of any information, documentation or
services provided pursuant to this Agreement, even if Quintiles shall
have been advised of the possibility of such damages. In addition, in
no event shall the collective, aggregate liability of Quintiles and its
affiliates and its and their respective directors, officers, employees
and agents under this Agreement exceed the amount of compensation
actually received by Quintiles from Interneuron pursuant to this
Agreement for the assignment or task from which such liability arose;
provided, however, if Quintiles is determined to have acted in a manner
that constitutes gross negligence or intentional misconduct, then, with
respect to such acts, the collective, aggregate liability shall not
exceed 1.5 times the amount of compensation specified above (but in no
event shall the collective, aggregate liability of Quintiles and its
J:\DOCS\BTPM_NY_\1046\0052777.01
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<PAGE>
affiliates and its and their respective directors, officers, employees
and agents under this Agreement for all tasks and assignments exceed
the amount of compensation actually received by Quintiles from
Interneuron pursuant to this Agreement).
9.0 INDEMNIFICATION. Interneuron shall indemnify, defend and hold harmless
Quintiles, its affiliates and its and their respective directors,
officers, employees and agents (each, an "Indemnified Party") from and
against any and all losses, claims, actions, damages, liabilities,
costs and expenses, (including reasonable attorney's fees and court
costs) (collectively, "Losses"), relating to or arising from or in
connection with this Agreement (including, without limitation, any
Losses alleged to arise from or in connection with any study, test,
product or potential product to which this Agreement relates) or any
litigation, investigation or other proceeding relating to any of the
foregoing, except to the extent such Losses are determined to have
resulted solely from gross negligence or intentional misconduct of the
Indemnified Party seeking indemnity hereunder. Interneuron shall not
indemnify, hold harmless, or defend an Indemnified Party from claims or
damages to the extent such claims or damages are determined to have
resulted solely from the following:
a. negligent acts and/or omissions of any of the Indemnified Parties;
b. failure of any of the Indemnified Parties to adhere to all
provisions of the protocol relating to the Study furnished to
Quintiles by Interneuron and to written recommendations and written
instructions that have been delivered by Interneuron to Quintiles
concerning the administration and use of any of the drug
substances, including placebo, involved in the Study; or
c. failure of any of the Indemnified Parties to comply with any
applicable laws or regulations.
10.0 INDEMNIFICATION PROCEDURE. Quintiles shall: (a) give Interneuron notice
of any such claim or law suit (including a copy thereof served upon
Quintiles) and all relevant data relating thereto within fifteen (15)
days after such claim or law suit was served upon Quintiles; and (b)
Quintiles and its employees shall fully cooperate with Interneuron and
its legal representatives in the investigation of any matter the
subject of indemnification; (c) Quintiles shall not unreasonably
withhold its approval of the settlement of any such claim, liability,
or action by Interneuron the subject of this Indemnification provision;
; and (d) Quintiles shall not, except at its own cost, voluntarily make
any payment or incur any expense in connection with any Losses without
the prior written consent of Interneuron.
11.0 TERMINATION. This Agreement may be terminated without cause by
Interneuron or by Quintiles at any time during the term of the
Agreement on ninety (90) days prior written notice to Quintiles or
Interneuron, as appropriate. In the event this Agreement is
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<PAGE>
terminated, Interneuron's sole obligation to Quintiles shall be to pay
to Quintiles any fees for services rendered then due and owing to
Quintiles because of any completed performance of Quintiles'
obligations hereunder; Interneuron will pay all actual costs to
complete activities associated with the termination and close out of
projects; Interneuron will pay all additional costs incurred by the
project that are required to fulfill regulatory requirements, provided
that Interneuron shall not pay any such costs incurred after ninety
(90) days from the date of written notice of termination, unless
approved in writing by Interneuron. Upon the termination of this
Agreement, Quintiles shall deliver to Interneuron all data and
materials provided by Interneuron to Quintiles for the conduct of
services under this Agreement. All statistical data, all statistical
reports, all data entries and any other documentation produced as the
result of services performed by Quintiles under the terms of this
Agreement shall be delivered to Interneuron at such time as payment has
been made to Quintiles for all services performed.
In the event this Agreement is terminated, Quintiles reserves the right
to retain one copy of all materials provided to Interneuron as the
result of services performed by Quintiles under this Agreement for a
period of five (5) years which will remain sealed unless a dispute
arises regarding the services performed by Quintiles hereunder.
12.0 FORCE MAJEURE. In the event Quintiles shall be delayed or hindered in
or prevented from the performance of any act required, hereunder by
reasons of strike, lockouts, labor troubles, inability to procure
materials, failure of power or restrictive government or judicial
orders, or decrees, riots, insurrection, war, Acts of God, inclement
weather or other similar reason or cause beyond Quintiles' control,
then performance of such act shall be excused for the period of such
delay.
13.0 FEE SCHEDULE. It is the understanding of the parties that the total
cost of project assignments under this Agreement will not exceed the
amounts which may be agreed to in individual assignment agreements
which must be separately negotiated and contracted for.
Quintiles will invoice Interneuron monthly or as separately agreed for
services rendered hereunder and payment shall be made by Interneuron
within thirty (30) days of receipt of itemized invoices for work
completed.
14.0 EXPENSES. Quintiles shall be reimbursed by Interneuron for all usual
and customary travel and lodging expenses incurred in the performance
of services provided herein which have been requested or approved by
Interneuron. Payment for such services shall be made to Quintiles
within thirty (30) days of receipt by Interneuron of invoices or other
evidence of such expenditures.
15.0 REVIEW OF WORK. During the term of this Agreement, Quintiles will
permit Interneuron's representative(s) to examine the work performed
hereunder and the facilities at which the work is conducted at
reasonable times and in a reasonable manner to determine that the
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<PAGE>
project assignment is being conducted in accordance with the agreed
task and that the facilities are adequate. Furthermore, upon reasonable
prior notice, Interneuron shall be permitted to inspect all potential
patient records, and all pertinent information pertaining to the Study
and, at its option, monitor the Study or any portion thereof, at the
various clinical sites prior to, during and for a reasonable time after
the Study is completed, all subject any applicable legal restrictions
regarding the confidentiality of patient records.
16.0 NOTICES. Any notice required or permitted to be given hereunder by
either party hereunder shall be in writing and shall be deemed given on
the date received if delivered personally or three days after the date
postmarked if sent by registered or certified U.S. mail, return receipt
requested, postage prepaid or by nationally recognized overnight
delivery service to the following addresses:
If to Quintiles: Kenneth A. Williams, Dr.P.H.
Vice President, Contracts Management and
Planning Quintiles, Inc.
P.O. Box 13979
Research Triangle Park, North Carolina 27709-3979
If to Interneuron: Bobby W. Sandage, Jr., Ph.D.
Executive Vice President Research and Development
Interneuron Pharmaceuticals, Inc.
99 Hayden Avenue, Suite 340
Lexington, Massachusetts 02173
17.0 ASSIGNMENT. Quintiles may assign or subcontract all or a portion of the
work provided for in any separately contracted amendment to this
Agreement to an affiliate of Quintiles; provided, however, that in no
event shall such assignment or subcontracting of work to an affiliate
release Quintiles from any of its obligations hereunder and any such
affiliate shall be bound by the terms and conditions of this agreement
as if such affiliate was an original party hereto.
18.0 GOVERNING LAW. This Agreement shall be construed, governed,
interpreted, and applied in accordance with the laws of the State of
North Carolina. If any one or more provisions of this Agreement shall
be found to be illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
19.0 SURVIVAL. The obligations of the parties contained in Sections 2.0, 7.0
and 8.0 hereof, including, without limitation, the indemnity
obligations contained in Sections 9.0 and 10.0 shall survive the
closing of this Agreement.
20.0 ENTIRE AGREEMENT. This Agreement contains the entire understandings of
the parties with respect to the subject matter herein, and supersedes
all previous Agreements (oral
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and written), negotiations and discussions. The parties, from time to
time during the term of this Agreement, may modify any of the
provisions hereof only by an instrument in writing duly executed by the
parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
through their duly authorized officers on the date(s) set forth below.
ACKNOWLEDGED, ACCEPTED AND AGREED TO:
Quintiles, Inc. Interneuron Pharmaceuticals, Inc.
By: /s/ K.A. Williams By: /s/ Glenn L. Cooper
-------------------------- -----------------------------
K. A. Williams, Dr. P.H. Glenn L. Cooper
Vice President President
Contracts Management and Planning
Date: July 12, 1996 Date: July 12, 1996
------------------------------- ------------------------------
FEDERAL ID # 56-1323952
J:\DOCS\BTPM_NY_\1046\0052777.01
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Exhibit 10.85
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by a * and [ ], have been
separately filed with the Commission.
AMENDMENT NO. 1 TO MASTER CONSULTING AGREEMENT
The Master Consulting Agreement, by and between Interneuron and Qunitiles,
consisting of one (1) page, dated 3 July, 1996, is hereby amended as follows:
(1) The following Attachments shall be made a part of the Master Consulting
Agreement, to wit:
ATTACHMENT NO. 1
SCOPE OF WORK (Protocol No. [ * ])
ATTACHMENT NO. 2
PROJECT BUDGET (Protocol No. [ * ])
ATTACHMENT NO. 3
PAYMENT SCHEDULE (Protocol No. [ * ])
Quintiles, Inc. Interneuron Pharmaceuticals
By: /S/ K.A. WILLIAMS By /S/ GLENN L. COOPER
----------------- -------------------
K.A. Williams, Dr. P.H. Glenn L. Cooper
Vice President, President
Contracts Management & Planning
Date: July 3, 1996 Date: July 12, 1996
------------ -------------
FEDERAL ID # 56-1323952
<PAGE>
The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
ATTACHMENT NO. 1
SCOPE OF WORK
PROTOCOL NO.
* *
* *
* *
* *
<PAGE>
The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
ATTACHMENT NO. 2
PROJECT BUDGET
PROTOCOL NO.
* *
* *
* *
* *
<PAGE>
The information below marked by * and [ ] has been omitted pursuant to a request
for confidential treatment. The omitted portion has been separately filed with
the Commission.
ATTACHMENT NO. 3
PAYMENT SCHEDULE
PROTOCOL NO.
* *
* *
* *
* *
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<S> <C> <C>
ITEM NUMBER ITEM DESCRIPTION AT JUNE 30, 1996
- ----------- ---------------- ----------------
5-02(1) Cash and cash items $148,344,000
5-02(2) Marketable securities $ 25,268,000
5-02(3)(a)(1) Notes and accounts receivable - trade $ 2,620,000
5-02(4) Allowances for doubtful accounts $ -
5-02(6) Inventory $ 8,663,000
5-02(9) Total current assets $185,360,000
5-02(13) Property, plant and equipment $ 3,588,000
5-02(14) Accumulated depreciation $ (1,951,000)
5-02(18) Total assets $188,016,000
5-02(21) Total current liabilities $ 17,801,000
5-02(22) Bonds, mortgages and similar debt $ -
5-02(28) Preferred stock - mandatory redemption $ -
5-02(29) Preferred stock - no mandatory redemption $ 3,500,000
5-02(30) Common Stock $ 41,000
5-02(31) Other stockholders' equity* $146,493,000
5-02(32) Total liabilities and stockholders' equity $188,016,000
- ---------------------------
* Additional paid - in capital - $246,603,000
Accumulated Deficit - $ (100,110,000)
<PAGE>
EXHIBIT 27 (cont'd)
<S> <C> <C>
Nine Months
ITEM NUMBER ITEM DESCRIPTION ENDED JUNE 30, 1996
- ----------- ---------------- -------------------
5-03(b)1(a) Net sales of tangible products $ 1,167,000
5-03(b)1 Total revenues $ 10,772,000
5-03(b)2(a) Cost of tangible goods sold -
5-03(b)2 Total costs and expense applicable to $ 727,000
sales and revenues $ 727,000
5-03(b)3 Other costs and expenses $ -0-
5-03(b)5 Provision for doubtful accounts and notes $ -
5-03(b)(8) Interest and amortization of debt discount $ 238,000
5-03(b)(10) Income before taxes and other items $ (21,220,000)
5-03(b)(11) Income tax expense $ -
5-03(b)(14) Income/loss continuing operations $ (21,220,000)
5-03(b)(15) Discontinued operations $ -
5-03(b)(17) Extraordinary items $ -
5-03(b)(18) Cumulative effect - changes in accounting
principles $ -
5-03(b)(19) Net income or loss $ (21,220,000)
5-03(b)(20) Earnings (loss) per share - primary $ (.60)
5-03(b)(20) Earnings per share - fully diluted N/A
</TABLE>
