SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File No. 0-19131
MEDIMMUNE, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1555759
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
35 West Watkins Mill Road, Gaithersburg, MD 20878
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301)417-0770
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
As of March 31, 1999, 55,622,518 shares of Common Stock, par value $0.01 per
share, were outstanding.
<PAGE>
MEDIMMUNE, INC.
Index to Form 10-Q
Part I Financial Page
Item 1. Financial Statements
Balance Sheets 1
Statements of Operations 2
Condensed Statements of Cash Flows 3
Notes to Financial Statements 4-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-11
Part II Other Information 11-12
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
CytoGam and RespiGam are registered trademarks of the Company and Synagis
is a trademark of the Company.
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<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS
MEDIMMUNE, INC.
BALANCE SHEETS
(in thousands, except share data)
<S> <C> <C>
March 31, December 31,
1999 1998
---------- ----------
ASSETS: (Unaudited)
Cash and cash equivalents $ 30,090 $ 37,959
Marketable securities 163,964 96,923
Trade receivables, net 39,586 31,682
Contract receivables, net 2,743 3,155
Inventory, net 17,163 19,760
Deferred tax assets 21,568 22,595
Other current assets 929 4,292
---------- ----------
Total Current Assets 276,043 216,366
Property and equipment, net 76,249 74,822
Inventory-noncurrent 4,312 4,949
Deferred tax assets, net 51,917 54,923
Other assets 8,320 2,060
---------- ----------
Total Assets $416,841 $353,120
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable, trade $ 2,045 $ 4,052
Accrued expenses 48,877 33,397
Product royalties payable 17,544 14,948
Accrued interest 1,515 2,580
Other current liabilities 2,904 2,993
--------- ----------
Total Current Liabilities 72,885 57,970
Long-term debt 80,926 83,195
Other liabilities 2,130 2,122
---------- ----------
Total Liabilities 155,941 143,287
---------- ----------
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,524,525 shares; none issued or outstanding -- --
Common stock, $.01 par value; authorized
120,000,000 shares; issued and outstanding
55,622,518 at March 31, 1999 and
54,654,842 at December 31, 1998 556 547
Paid-in capital 311,541 289,318
Accumulated deficit (51,197) (80,032)
--------- ---------
Total Shareholders' Equity 260,900 209,833
--------- ---------
Total Liabilities and Shareholders' Equity $416,841 $353,120
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
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<TABLE>
<CAPTION>
MEDIMMUNE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands except per share data)
For the
Three months ended
March 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Revenues:
Product sales $126,996 $42,893
Other 1,725 16,445
-------- --------
Total revenues 128,721 59,338
Costs and Expenses:
Cost of sales 31,267 22,275
Research and development 8,783 5,668
Selling, administrative and general 37,049 12,926
Other operating expenses 5,868 5,802
-------- --------
Total expenses 82,967 46,671
-------- --------
Operating Income 45,754 12,667
Interest income 2,187 1,700
Interest expense (928) (1,162)
-------- --------
Income before income taxes 47,013 13,205
Provision for income taxes 18,178 -
-------- --------
Net earnings $28,835 $13,205
======== ========
Basic earnings per share $0.52 $0.25
======== ========
Shares used in calculation
of basic earnings per share 55,162 51,888
======== ========
Diluted earnings per share $0.45 $0.22
======== ========
Shares used in calculation of
diluted earnings per share 65,468 63,155
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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<TABLE>
<CAPTION>
MEDIMMUNE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands) For the
three months ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $28,835 $13,205
Noncash items:
Deferred taxes 18,103 -
Depreciation and amortization 848 632
Amortization of discount on marketable
securities (343) (413)
Other (663) (445)
Other changes in assets and liabilities 14,179 (2,181)
-------- --------
Net cash provided by operating
activites 60,959 10,798
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in marketable securities (66,698) (68,177)
Capital expenditures (1,583) (1,114)
Other (6,350) -
-------- --------
Net cash provided by investing
activities (74,631) (69,291)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common
stock and exercise of stock options 8,160 73,776
Decrease in long-term debt (2,357) (516)
-------- --------
Net cash provided by financing
activities 5,803 73,260
-------- --------
Net (decrease) increase in cash and cash
equivalents (7,869) 14,767
Cash and cash equivalents at beginning
of period 37,959 29,984
-------- --------
Cash and cash equivalents at end of period $30,090 $44,751
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MEDIMMUNE, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
General
The financial information presented as of March 31, 1999, and for the three
months ended March 31, 1999 and 1998, is unaudited. In the opinion of the
Company's management, the financial information contains all adjustments (which
consist only of normal recurring adjustments) necessary for a fair presentation
of such financial information.
Inventory
Inventory net of reserves, consists of the following (in thousands):
<TABLE>
<CAPTION>
<S> <C> <C>
March 31, December 31,
1999 1998
------------- -------------
Raw Materials $8,802 $9,794
Work in Process 7,957 9,188
Finished Goods 4,716 5,727
------- --------
21,475 24,709
Less noncurrent inventory (4,312) (4,949)
------- --------
$17,163 $19,760
======== ========
</TABLE>
The Company has purchased plasma and other raw materials for use in production
in the Company's Frederick manufacturing facility, which is subject to U.S. Food
and Drug Administration ("FDA") licensure and approval. Due to the uncertainty
surrounding the likelihood and timing of FDA approval, all inventory for
this facility has been classified as noncurrent in the accompanying balance
sheet.
As a result of the June 1998 FDA approval of the Company's second generation RSV
product, Synagis, and the market acceptance of Synagis, the Company reserved
approximately $9.2 million against its RespiGam inventory in the second quarter
of 1998, as no further significant product sales are expected to result from
this inventory in the foreseeable future. As of March 31, 1999, approximately
$8.0 million of the reserve remains. The remaining RespiGam plasma inventory of
$2.7 million has been written down to the value the Company expects to recover
upon sale to third parties. Should the Company be unable to sell the plasma at
its net book value, a further adjustment in a subsequent quarter may be
necessary.
Finished goods at March 31, 1999 and December 31, 1998 include approximately
$1.6 million of by-products that result from the production of the Company's
principal products at one of its contract manufacturers and are held for resale.
The March 31, 1999 and December 31, 1998 balances are net of a reserve of
$1.6 million.
4
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Property and Equipment
Property and equipment, stated at cost, consists of the following (in
thousands):
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<CAPTION>
<S> <C> <C>
March 31, December 31,
1999 1998
------------ ------------
Land $ 2,147 $ 2,147
Buildings & building improvements 7,489 7,085
Leasehold improvements 13,235 12,736
Laboratory, manufacturing and
facilities equipment 11,318 10,841
Office furniture, computers, and
equipment 5,953 5,739
Construction in progress 48,748 48,067
--------- --------
88,890 86,615
Less accumulated depreciation and
amortization (12,641) (11,793)
--------- ---------
$76,249 $74,822
========= =========
</TABLE>
Construction in progress includes costs incurred in connection with the design
and construction of the Company's manufacturing facility and includes
capitalized interest costs of $6.0 million and $5.3 million at March 31, 1999
and December 31, 1998, respectively.
Buildings includes the purchase in December 1998 of a new facility in Frederick,
Maryland. This facility is expected to provide additional warehouse and
administrative space. Buildings also includes costs associated with the portions
of the Company's manufacturing facility placed in service during 1998.
Construction of the manufacturing facility is complete and validation and
start-up activities are ongoing. The Company will continue to capitalize costs,
primarily capitalized interest, related to the facility until placed in service.
The portions of the facility that are subject to inspection and approval by the
FDA will be placed in service and depreciation will commence upon receipt of
such approval.
Income Tax Provision
The income tax provision in the current quarter has been computed using an
effective combined federal and state tax rate of 38.6%. The cash obligation of
such provision has been offset by the utilization of deductions generated by the
exercise of stock options and the utilization of deferred taxes, comprised
mostly of net operating loss carryforwards. As required, the tax benefit of
stock option exercise deductions has been recorded directly to stockholders'
equity.
Earnings per Share
The Company computes earnings per share in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Basic
earnings per share is computed based on the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
based on the weighted average shares outstanding and the dilutive common stock
equivalents outstanding during the period. The dilutive effect of convertible
debt is measured using the "if converted" method. The dilutive effect of stock
options is measured using the treasury stock method. Common stock equivalents
are not included in periods where there is a loss as they are anti-dilutive. The
following is a reconciliation of the numerators and denominators of the diluted
EPS computation for the periods reported.
5
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<TABLE>
<CAPTION>
<S> <C> <C>
March 31, March 31,
1999 1998
---------- ----------
Numerator:
Net earnings $ 28,835 $13,205
Interest on 7% convertible notes, net of
amounts capitalized and for 1999, net of
related taxes 358 578
--------- ---------
Numerator for diluted EPS $ 29,193 $13,783
========= =========
Denominator:
Weighted average shares outstanding 55,162 51,888
Effect of dilutive securities:
Stock options 4,208 5,169
7% convertible notes 6,098 6,098
--------- --------
Denominator for diluted EPS 65,468 63,155
========= ========
</TABLE>
Options to purchase 1,315,100 shares of common stock with prices ranging from
$55.00 to $59.50 per share were outstanding in the first quarter of 1999 and
options to purchase 386,800 shares of common stock with prices ranging from
$24.75 to $28.13 per share were outstanding in the first quarter of 1998, but
were not included in the computation of diluted earnings per share because they
were anti-dilutive.
6
<PAGE>
Restatements
Prior year share and per share amounts have been restated to give effect to the
two-for-one stock split on December 31, 1998.
New Accounting Pronouncement
Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. SFAS No. 133
requires companies to recognize all derivatives as either assets or liabilities,
with the instruments measured at fair value. The accounting for changes in fair
value, gains or losses, depends on the intended use of the derivative and its
resulting designation. The statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company will adopt SFAS No. 133
by January 1, 2000. Because of the Company's minimal use of derivatives,
management does not anticipate that the adoption of SFAS No. 133 will have a
material effect on the earnings or financial position of the Company.
7
<PAGE>
ITEM 2.
MEDIMMUNE, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
Product sales increased 196% to $127.0 million in first quarter 1999 from $42.9
million in first quarter 1998, principally due to sales of Synagis. Sales of
Synagis for the 1999 quarter were $116.2 million and during the 1998/1999
respiratory syncytial virus ("RSV") season totaled $226.0 million. Synagis
sales in the first quarter of 1999 included $1.5 million of international sales
to the Company's exclusive international distributor of Synagis, Abbott
Laboratories. RespiGam sales of $0.3 million were recorded in first quarter 1999
versus $32.1 million in first quarter 1998, reflecting the shift in customer
demand from RespiGam to Synagis for prevention of RSV disease and adequate
levels of inventories of RespiGgam at wholesalers and hospitals. CytoGam
sales decreased 10% to $9.7 million in the 1999 quarter from $10.8 million in
first quarter 1998 reflecting a change in the sales mix of domestic versus
international units, (international units have a lower selling price) and an
increase in government rebate allowances, offset by a 9% increase in total units
sold. Product sales in the 1999 quarter also include $0.8 million of by-product
sales. Other revenues in the 1999 first quarter of $1.7 million primarily
reflect payments from SmithKline Beecham ("SKB") for development of a human
papillomavirus vaccine while the 1998 quarter included a $15.0 million
payments from SKB upon signing of the collaborative alliance.
Gross margins improved to 75% in the first quarter of 1999 versus 48% in the
first quarter of 1998. Gross margins in 1999 were favorably impacted by Synagis
sales, which carry a significantly lower per-unit cost than the Company's
plasma-derived products.
Research, development and clinical spending increased 55% to $8.8 million in the
first quarter of 1999 from $5.7 million in the first quarter of 1998. Expenses
in 1999 include costs of the Company's congenital heart disease clinical trial
using Synagis and various clinical studies relating to MEDI-507, the Company's
anti-CD2 monoclonal antibody.
Selling, administrative and general expenses increased to $37.0 million in this
year's quarter from $12.9 million in the 1998 quarter, an increase of 187%.
Expenses in 1999 include increased marketing and selling expenses as well as
commission charges and co-promotion expenses to the Ross Products Division of
Abbott Laboratories, all in connection with the launch and continued promotion
of Synagis. Marketing, selling and co-promotion expenses for Synagis are
expected to continue to be higher than those for RespiGam or CytoGam.
8
<PAGE>
Other operating expenses of $5.9 million in the 1999 period increased from $5.8
million in the 1998 period. Costs in 1998 include scale-up of production for
Synagis at a third-party manufacturer as well as start-up activities at the
Company's pilot plant and Frederick Manufacturing Center ("FMC"), while costs in
1999 include ongoing start-up and validation activities at the FMC.
Interest income of $2.2 million was earned in the 1999 first quarter, compared
to $1.7 million in the first quarter of 1998 reflecting higher cash balances
available for investment, partially offset by a decrease in interest rates which
lowered the overall portfolio yield. Interest expense of $1.0 million and $1.2
million was incurred in the 1999 and 1998 quarters, respectively, reflecting
primarily interest due on the Company's convertible debt, net of capitalized
interest.
An income tax provision of $18.2 million was recorded for the first quarter of
1999. No income tax provision was recorded in the first quarter of 1998, due to
the existence of net operating loss carryforwards as well as uncertainty
surrounding achievement of profitability for the entire year.
Net earnings in the 1999 first quarter were $28.8 million, or $0.52 basic and
$0.45 diluted earnings per share. Shares used in computing basic and diluted
earnings per share in 1999 were 55.2 million and 65.5 million, respectively. Net
earnings for the first quarter of 1998 were $0.25 basic and $0.22 diluted
earnings per share. Shares used in computing basic and diluted earnings per
share in 1998 were 51.9 million, and 63.2 million shares, respectively.
Quarterly financial results may vary significantly due to seasonality of Synagis
product sales as well as fluctuations in CytoGam sales, milestone payments,
research funding and expenditures for research, development and marketing.
Synagis sales are expected to occur primarily during, and in proximity to, the
RSV season, which typically occurs in the Northern Hemisphere between
October and April. The Company believes that most of the Synagis needed for the
1998/1999 RSV season in the U.S. was purchased prior to the end of the first
quarter 1999, and therefore, no further significant sales are expected for this
season.
LIQUIDITY AND CAPITAL RESOURCES
Cash and marketable securities at March 31, 1999 were $194.1 million compared to
$134.9 million at 1998 year end. Net cash provided by operating activities in
the three months ended March 31, 1999 was $61.0 million, reflecting
primarily the net earnings for the 1999 quarter and an increase in accrued
expenses and royalties payable. Capital expenditures of $1.6 million, net of
capitalized interest, for the quarter were primarily for lab equipment and
facilities expansion and improvements at the Company's Gaithersburg
manufacturing facility. The Company's existing funds at March 31, 1999, together
with funds expected to be generated from product sales and investment income,
are expected to provide sufficient liquidity to meet the anticipated needs of
the business for the foreseeable future, absent the occurrence of any unforeseen
events.
9
<PAGE>
YEAR 2000 READINESS
The Company has established a Year 2000 Project Team comprised of
representatives from key functional areas to complete a review of its internal
and external systems for Year 2000 readiness. The Year 2000 issue is expected to
affect the systems of the Company and various entities with which the Company
interacts, including the Company's marketing partners, suppliers and various
vendors. The Year 2000 Project is designed to address three major areas: (1)
information technology systems, (2) hardware, equipment and instrumentation,
including embedded systems, and (3) third party relationships. The Company's
plan involves inventorying, assessing and prioritizing those items which have
Year 2000 implications; remediating (repairing, replacing or upgrading)
non-compliant items; testing items with major exposure to ensure compliance; and
developing contingency plans to minimize potential business interruption. The
inventory, assessment and prioritization phase of the project is substantially
complete.
With regard to the Company's information technology systems, hardware, equipment
and instrumentation, the Company has identified mission critical and
non-critical items and is in the process of updating and/or replacing items that
are non-compliant. The Company believes that it should be able to substantially
complete implementation of critical aspects of its Year 2000 plan prior to the
commencement of the year 2000. Because the Company has relied primarily on
off-the-shelf software for its information technology needs and because much of
the hardware, equipment and instrumentation is currently compliant, the Company
does not anticipate that the costs for internal remediation efforts will be
significant. The Company does not separately track the internal costs of its
Year 2000 compliance efforts and therefore these costs are unknown. As of March
31, 1999, the Company estimates that it has spent no more than $75,000
replacing, upgrading or repairing the systems and/or equipment that are
non-compliant and expects the cost to complete these efforts should not exceed
$300,000. The Company presently anticipates that its remediation efforts will be
substantially complete by June 1, 1999. Testing of certain business critical
items is expected to be completed by the third quarter 1999.
In addition to the risks associated with the Company's own computer systems and
equipment, the Company has relationships with, and is in varying degrees
dependent upon, a large number of third parties that provide information, goods
and services to the Company. These include, but are not limited to, third party
manufacturers, suppliers, customers, and distributors. The Company has
identified and visited the facilities of third parties with whom the Company has
material relationships to assess their Year 2000 readiness. Critical systems and
Year 2000 plans were reviewed. The Company may also be affected by the failure
of other third parties to be Year 2000 compliant even if they do not do business
directly with the Company. For example, the failure of state, federal and
private payers or reimbursers to be Year 2000 compliant and thus unable to make
timely, proper or complete payments to sellers and users of the Company's
products, could have a material adverse effect on the Company.
10
<PAGE>
The Company does not currently have a Year 2000 contingency plan established.
The Company expects to have finalized a contingency plan which will address the
most likely worst case Year 2000 scenario by mid- 1999. The Company believes
that its most likely worst case scenario would be delays in product shipments
due to a complete or partial manufacturing shutdown. To mitigate this risk, the
Company plans, among other things, to stock extra inventory.
With regard to the Company's Year 2000 readiness plan, there can be no
assurances: 1) that the Company will be able to identify all aspects of its
business that are subject to Year 2000 problems, including issues of its
customers or suppliers, 2) that the Company's software vendors, third parties
and others will be correct in their assertions that they are Year 2000 ready, 3)
that the Company's estimate of the cost of Year 2000 readiness will prove
ultimately to be accurate, 4) that the Company will be able to successfully
address its Year 2000 issues and that this could result in interruptions in, or
failures of, certain normal business activities or operations that may have a
material adverse effect on the Company's business, results of operations and
financial condition.
--------------------
THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS OF HISTORICAL
FACTS ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT MANAGEMENT'S
CURRENT VIEWS, ARE BASED ON CERTAIN ASSUMPTIONS AND ARE SUBJECT TO RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, REGULATORY APPROVAL TIMING, PRODUCT
DEMAND AND MARKET ACCEPTANCE RISKS, PATENT AND INTELLECTUAL PROPERTY RISKS, YEAR
2000 RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT AND RELIANCE ON THIRD-PARTY
MANUFACTURERS INCLUDING, BUT NOT LIMITED TO, CAPACITY AND SUPPLY CONSTRAINTS,
PRODUCTION YIELDS, REGULATORY APPROVAL TIMING AND FOREIGN EXCHANGE RISKS, AS
WELL AS OTHER RISKS DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY
ANTICIPATED AS A RESULT OF THE FOREGOING OR OTHER FACTORS.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11
<PAGE>
10.95 Research and Assignment and License Agreement, dated as
of February 24, 1999 by and between IXSYS, Inc. and
MedImmune, Inc.
10.96 License Agreement, dated as of February 24, 1999 by and
between IXSYS, Inc. and MedImmune, Inc.
10.97 Selection Agreement, dated as of February 24, 1999 by
and between IXSYS, Inc. and MedImmune, Inc.
10.98 Stock Purchase Agreement, dated as of February 24, 1999
by and between IXSYS, Inc. and MedImmune, Inc.
b) Reports on Form 8-K:
<TABLE>
<CAPTION>
<C> <S>
Report Date Event reported
2/1/99 MedImmune Reports Record Year
2/26/99 MedImmune and IXSYS Enter Four Product
Antibody Alliance
</TABLE>
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.
MEDIMMUNE, INC.
(Registrant)
Date: May 14, 1999 /s/David M. Mott
Vice Chairman and Chief Financial Officer
12
Exhibit 10.95
RESEARCH AND ASSIGNMENT AND LICENSE AGREEMENT
This Research and Assignment and License Agreement (this
"Agreement") is effective as of February 24, 1999 ("the EFFECTIVE
DATE") by and between Ixsys, Inc., a Delaware corporation, having
an address at 3520 Dunhill Road, San Diego, CA 92121 ("IXSYS"),
and MedImmune, Inc., a Delaware Corporation, having offices at 35
West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE").
WHEREAS, MEDIMMUNE desires that IXSYS perform certain
research and development to modify a certain antibody; and
WHEREAS, IXSYS desires to perform such work on the terms and
conditions of this Agreement.
NOW THEREFORE in consideration of the mutual promises and
other good and valuable consideration, the parties agree as
follows:
SECTION 1 - Definitions.
The terms used in this Agreement have the following meaning:
1.1 "AFFILIATE," as applied to a person or entity, means
any other person or entity controlling or controlled by or under
common control with such person or entity. The term "control"
means possession of the power to direct or cause the direction of
the management and policies whether through the ownership of
voting securities, by contract or otherwise. The ownership of
voting securities of a person, organization or entity, however,
shall not, in and of itself, constitute "control" for purposes of
this definition, unless said ownership is of a majority of the
outstanding securities entitled to vote of such person,
organization or entity. Affiliate shall also mean a limited
partnership in which a subsidiary of such person, organization or
entity is a general partner.
1.2 "ANTIBODY" means an antibody that specifically binds to
(CONFIDENTIAL TREATMENT REQUESTED) (including, but not limited
to, variants, chimeric antibodies, humanized antibodies,
recombinant antibodies, grafted antibodies, single chain
antibodies, and the like) developed by IXSYS during the term of
the PROGRAM or a fragment of such an antibody.
1.3 "ASSIGNED MATERIALS AND INFORMATION" means all
ANTIBODIES, cell lines used by IXSYS for producing ANTIBODIES,
polynucleotides encoding ANTIBODIES, assays, vectors and
constructs for producing ANTIBODIES, sequence information
regarding such ANTIBODIES and polynucleotides, and the results of
the testing and evaluation of such ANTIBODIES and information and
data useful for the manufacture, making and use of ANTIBODY, in
each case which is developed by IXSYS during the term of the
PROGRAM, and only in the case of assays, vectors and constructs,
only to the extent IXSYS or its AFFILIATES has the right during
the term of the PROGRAM to assign such to MEDIMMUNE.
1.4 "ASSIGNED PATENT(S)" means any patent or patent
application (or equivalents thereof, such as extensions or other
rights that give the right to exclude others such as
Supplementary Protection Certificates) anywhere in the world to
the extent a claim thereof would be infringed by the manufacture,
use, or sale of a product comprising an ANTIBODY and that is
based on ANTIBODY and/or ASSIGNED MATERIALS AND INFORMATION.
1.5 "DESIGNATED AMOUNT" means the total worldwide sales of
products comprising the EXISTING ANTIBODY sold by or on behalf of
MEDIMMUNE for the twelve-month period prior to the time a PRODUCT
receives all licensing and pricing approvals for sale of PRODUCT
in a country.
1.6 (CONFIDENTIAL TREATMENT REQUESTED) means (CONFIDENTIAL
TREATMENT REQUESTED).
1.7 "EXISTING IXSYS PATENT(S)" means any patent or patent
application (or equivalents thereof, such as extensions or other
rights that give the right to exclude others such as
Supplementary Protection Certificates) anywhere in the world to
the extent the claims of which would be infringed by the
manufacture, use or sale of a product comprising an ANTIBODY, and
only to the extent that it is either owned by or licensed to
IXSYS (with the right to grant sublicenses) or as to which IXSYS
otherwise has licensable rights, in each case, as of the
EFFECTIVE DATE.
1.8 "FIRST COMMERCIAL SALE" means, in each country, (a) the
first sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or
SUBLICENSEE following approval of its marketing by the
appropriate governmental agency for the country in which the sale
is to be made, or (b) when governmental approval is not required,
the first commercial sale of a PRODUCT by MEDIMMUNE, its
AFFILIATE or SUBLICENSEE in that country.
1.9 "FTE" means one full time equivalent scientific
investigator, together with all reasonably necessary materials,
equipment and facilities used thereby.
1.10 "MATERIALS" means ANTIBODIES, cell lines used or
developed by IXSYS for producing ANTIBODIES, polynucleotides
encoding ANTIBODIES, and the assays, vectors and constructs for
producing ANTIBODIES, in each case only to the extent owned by or
licensed to IXSYS (with the right to grant sublicenses) or as to
which IXSYS otherwise has transferable rights, and in the
possession and control of IXSYS, in each case, that exists as of
the EFFECTIVE DATE.
1.11 "NET SALES" means, with respect to any PRODUCT, the
invoiced sales price of such PRODUCT sold by MEDIMMUNE, its
AFFILIATES and SUBLICENSEES to independent customers who are not
AFFILIATES, less (a) actual and customary credits, allowances,
discounts and rebates to, and chargebacks from the account of,
such independent customers for spoiled, damaged, out-dated,
rejected or returned PRODUCT; (b) actual freight and insurance
costs incurred in transporting such PRODUCT to such customers;
(c) actual and customary cash, quantity and trade discounts;
(d) sales, use, value-added and taxes or governmental charges
(excluding what is commonly known as income taxes) incurred in
connection with the exportation or importation of such PRODUCT;
(e) the cost to MEDIMMUNE of the devices for dispensing or
administering such PRODUCT as well as diluents or similar
materials which accompany such PRODUCT as it is sold and (f)
reasonable allowance for bad debt, all of the above in accordance
with Generally Accepted Accounting Principles. For purposes of
determining NET SALES, a sale shall have occurred when an invoice
therefor shall be generated or the PRODUCT shipped for delivery.
Sales of PRODUCTS by MEDIMMUNE, an AFFILIATE or SUBLICENSEE to
any AFFILIATE or SUBLICENSEE which is a reseller thereof shall be
excluded, and only the subsequent sale of such PRODUCTS by
AFFILIATES or SUBLICENSEES to unrelated parties shall be deemed
NET SALES hereunder.
1.12 "PRODUCT" means a product comprising (i) an ANTIBODY,
the manufacture, use or sale of which infringes a VALID PATENT
CLAIM under the ASSIGNED PATENTS or under the EXISTING IXSYS
PATENTS as to which MEDIMMUNE retains a license under this
Agreement, (ii) an ANTIBODY assigned to MEDIMMUNE by IXSYS under
this Agreement, or (iii) an ANTIBODY which is derived from an
ANTIBODY assigned to MEDIMMUNE under this Agreement.
1.13 "PROGRAM" means the research and development program
described generally in Section 2.1.
1.14 "ROYALTY PERIOD" means, with respect to each PRODUCT in
each country in the LICENSED TERRITORY, (a) if the manufacture,
use, offer for sale, sale or import of such PRODUCT in such
country at the time of the FIRST COMMERCIAL SALE infringes a
VALID PATENT CLAIM (if in an issued patent) but for the license
granted by this Agreement, the royalty period continues for as
long as such VALID PATENT CLAIM remains in effect and (if in an
issued patent) is infringed thereby but for the license granted
by this Agreement, or (b) otherwise, (CONFIDENTIAL TREATMENT
REQUESTED) years from the date of the FIRST COMMERCIAL SALE of
such PRODUCT in such country.
1.15 (CONFIDENTIAL TREATMENT REQUESTED)
1.16 "SUBLICENSEE" means any AFFILIATE or THIRD PARTY that
is granted a sublicense by MEDIMMUNE under this Agreement.
1.17 "THIRD PARTY(IES)" means a person or entity other than
IXSYS or MEDIMMUNE or any of their AFFILIATES.
1.18 The term "VALID PATENT CLAIM" shall mean either (a) a
claim of an issued and unexpired patent included within the
ASSIGNED PATENTS or the EXISTING IXSYS PATENTS, which has not
been held permanently revoked, unenforceable or invalid by a
decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise or (b) a
claim of a pending patent application included within the
ASSIGNED PATENTS or the EXISTING IXSYS PATENTS, which claim was
filed in good faith and has not been abandoned or finally dis
allowed without the possibility of appeal or refiling of such
application, the subject matter of which has not been pending for
more than five (5) years, including the pendency of any prior
application.
1.19 The use herein of the plural shall include the
singular, and the use of the masculine shall include the
feminine.
1.20 All dollars are United States Dollars.
SECTION 2 - The PROGRAM
2.1 (a) IXSYS shall perform a program of research and
development in accordance with this Section 2 to produce modified
antibodies to the (CONFIDENTIAL TREATMENT REQUESTED), and shall
use its commercially reasonable efforts to produce a modified
antibody of the (CONFIDENTIAL TREATMENT REQUESTED) that
(CONFIDENTIAL TREATMENT REQUESTED) as compared to (CONFIDENTIAL
TREATMENT REQUESTED), as measured in the (CONFIDENTIAL TREATMENT
REQUESTED) model.
(b) The parties shall prepare a mutually acceptable
written workplan for the PROGRAM. Any such workplan shall be
modified and supplemented from time to time only by the mutual
written agreement of the parties.
(c) The research and development work to be performed
by IXSYS under the PROGRAM shall not be performed by a THIRD
PARTY without the written approval of MEDIMMUNE.
(d) IXSYS shall allocate not less than (CONFIDENTIAL
TREATMENT REQUESTED) FTEs to conduct the PROGRAM and at the
request of MEDIMMUNE upon sixty (60) days' prior written notice,
IXSYS shall be required to allocate up to (CONFIDENTIAL TREATMENT
REQUESTED) FTEs to conduct the PROGRAM, provided that once the
FTEs are increased, MEDIMMUNE will not have the right to decrease
the number of FTEs.
(e) The PROGRAM shall commence on the date thirty (30)
days after the EFFECTIVE DATE and continue for a term of
(CONFIDENTIAL TREATMENT REQUESTED) thereafter provided however at
the request of MEDIMMUNE, and upon sixty (60) days' prior written
notice to IXSYS, the term shall be extended for up to
(CONFIDENTIAL TREATMENT REQUESTED) in (CONFIDENTIAL TREATMENT
REQUESTED) increments.
2.2 It is understood that MEDIMMUNE intends to measure the
potency of ANTIBODY obtained from IXSYS in the (CONFIDENTIAL
TREATMENT REQUESTED) model to determine the potency thereof with
a view toward developing and commercializing such an ANTIBODY. It
is further understood and agreed that ANTIBODY obtained from
IXSYS that is tested, if any, shall be determined by MEDIMMUNE,
within its sole and absolute discretion, that MEDIMMUNE, within
its sole and absolute discretion, shall determine whether or not
to develop and/or commercialize a PRODUCT and which, if any,
PRODUCT shall be developed and commercialized and in which, if
any, countries it should be developed and commercialized.
2.3 (a) MEDIMMUNE shall pay IXSYS at the rate equal to
(CONFIDENTIAL TREATMENT REQUESTED) per FTE required to be
allocated to the PROGRAM as set forth above, payable in equal
quarterly installments of (CONFIDENTIAL TREATMENT REQUESTED) per
FTE per quarter in advance on the EFFECTIVE DATE and each three
(3) month anniversary thereof during the term of the PROGRAM for
the period of Section 2.1(e) which amount covers both direct and
indirect expenses. If the number of FTEs is increased in any
quarter, the pro-rata amount for such quarter for such increase
shall be paid for the remainder of such quarter (and provided
that such payment shall be due on the effective date of such
increase if the notice and effective date of such increase is in
the same calendar quarter).
(b) MEDIMMUNE shall not be required to make any
payments to IXSYS for research that exceeds the aggregate amount
described in Section 2.3(a), and IXSYS shall not be required to
perform research or development under the PROGRAM that exceeds
such aggregate amount, unless agreed to in writing by both
parties.
2.4 Within ten (10) days after the EFFECTIVE DATE,
MEDIMMUNE shall provide IXSYS with such quantity (as reasonably
sufficient to enable IXSYS to conduct the PROGRAM) of the
(CONFIDENTIAL TREATMENT REQUESTED), polynucleotides encoding the
(CONFIDENTIAL TREATMENT REQUESTED) and (CONFIDENTIAL TREATMENT
REQUESTED), the (CONFIDENTIAL TREATMENT REQUESTED) and together
with any other information and data which the parties mutually
agree is reasonably necessary for IXSYS to conduct the PROGRAM.
Additionally, during the term of the PROGRAM, MEDIMMUNE shall
provide IXSYS, at MEDIMMUNE's sole cost, with such technical
assistance as IXSYS reasonably requests regarding the use of such
assay under the PROGRAM.
2.5 During the term of the PROGRAM, IXSYS shall permit
representatives of MEDIMMUNE, upon reasonable notice during
normal business hours at MEDIMMUNE's expense, to visit the
facilities where IXSYS is conducting the PROGRAM and during such
visits shall make employees of IXSYS, who are performing research
and development under the PROGRAM, reasonably available to
representatives of MEDIMMUNE to discuss such research and
development and the results thereof.
2.6 Not later less than once each calendar quarter during
the term of the PROGRAM, and not more than thirty (30) days after
conclusion of the term of the PROGRAM, IXSYS, at the cost and
expense of IXSYS, shall transfer to MEDIMMUNE the ASSIGNED
MATERIALS AND INFORMATION and any other MATERIALS not previously
transferred to MEDIMMUNE hereunder.
2.7 For a period of six (6) months after the conclusion of
the term of the PROGRAM, IXSYS, at the cost and expense of IXSYS,
shall provide MEDIMMUNE with such technical assistance as
reasonably requested by MEDIMMUNE with respect to the use of the
ASSIGNED MATERIALS AND INFORMATION, and MATERIALS hereunder.
2.8 Except as permitted by MEDIMMUNE, during the term of
the PROGRAM and for a period of (CONFIDENTIAL TREATMENT
REQUESTED) years thereafter, IXSYS and its AFFILIATES shall not
(1) research, develop, make, have made, use or sell any antibody
or any antibody fragment directed to (CONFIDENTIAL TREATMENT
REQUESTED) or any polynucleotide encoding the foregoing, (2)
perform research or development work for a THIRD PARTY with
respect to any such antibody, fragment or polynucleotide , or (3)
research, develop, make, have made, use or sell or grant rights
to a THIRD PARTY with respect to any such antibody, fragment or
polynucleotide that was conceived or reduced to practice during
the term of the PROGRAM or within a period of (CONFIDENTIAL
TREATMENT REQUESTED) years thereafter.
2.9 IXSYS shall have the right to publish the results of
IXSYS' work under the PROGRAM; provided, however, that IXSYS
shall provide MEDIMMUNE the opportunity to review any proposed
manuscripts or any other proposed disclosure describing such work
sixty (60) days prior to their submission for publication or
other proposed disclosure. MEDIMMUNE and IXSYS shall discuss
whether or not such publication or disclosure should occur and it
is expressly understood that MEDIMMUNE shall have the sole right
to make a final determination as to whether or not such
publication or disclosure shall occur provided that such
determination is not unreasonable. It shall not be unreasonable
to deny publication on the basis that the information proposed to
be published is not generally available to the public and may aid
a competitor in developing a competitive product.
SECTION 3 - Assignment and License Grants.
3.1 (a) IXSYS hereby grants to MEDIMMUNE and MEDIMMUNE
hereby accepts from IXSYS a sole and exclusive worldwide right
and license (or sublicense, as applicable) (1) under and to
EXISTING IXSYS PATENTS to research, develop, make, have made,
use, import, export and sell, offer to sell or have sold PRODUCTS
and (2) to make, have made and to use MATERIALS for all the
purposes of Section 3.1(a)(1). Notwithstanding anything to the
contrary in this Agreement, the rights and licenses granted to
MEDIMMUNE under this Agreement exclude any right or license
(express or implied) under any IXSYS patent rights or know-how
regarding the generation, discovery or modification of antibody
libraries, antibodies or fragments thereof, generally.
(b) To the extent that the rights and licenses granted
to MEDIMMUNE under Section 3.1(a) is a sublicense under a license
agreement between IXSYS and a THIRD PARTY, the rights and
licenses granted to MEDIMMUNE under such sublicense are limited
to the extent that IXSYS has the right to grant sublicenses under
such license agreement and such sublicense is subject to the
terms, conditions and restrictions of such license agreement that
are applicable to a sublicensee thereunder. MEDIMMUNE shall not
take or omit to take any action the effect of which would cause
IXSYS to be in breach of IXSYS' obligations under such license
agreements (without regard to any applicable cure or notice
requirements thereof).
3.2 MEDIMMUNE shall have the right to grant sublicenses
under the licenses and sublicenses granted under Section 3.1
(with the right to grant further sublicenses, subject to any
terms, conditions and restrictions on further sublicensing under
any license agreement under which MEDIMMUNE is a sublicensee) to
its AFFILIATES and THIRD PARTIES. Each such sublicense shall be
subject to the terms and conditions of this Agreement.
3.3 The licenses granted hereunder include the right of
MEDIMMUNE, its AFFILIATES and SUBLICENSEES to grant to the
purchaser thereof the right to use and/or resell a purchased
PRODUCT for which a royalty has been paid hereunder on NET SALES
of such PRODUCT (determined in accordance with Section 1.11),
without payment of any further royalty to IXSYS.
3.4 (a) IXSYS agrees to assign and hereby assigns to
MEDIMMUNE all right, title and interest in and to the ASSIGNED
MATERIALS AND INFORMATION together with all ASSIGNED PATENTS and
other intellectual property rights arising therefrom.
(b) IXSYS agrees to cooperate with MEDIMMUNE and cause
its employees to cooperate with MEDIMMUNE and to perform all
acts, at MEDIMMUNE's request on reasonable notice and during
normal business hours, as reasonably necessary (i) to perfect
MEDIMMUNE's ownership interest in and to the ASSIGNED MATERIALS
AND INFORMATION together with all ASSIGNED PATENTS and other
intellectual property rights arising therefrom, and (ii) to
facilitate the preparation, filing, prosecution and enforcement
of the ASSIGNED PATENTS. MEDIMMUNE shall reimburse IXSYS on
demand for the reasonable cost to IXSYS (at the rate set forth in
Section 2.3(a) plus all out-of-pocket expenses) incurred in
connection therewith.
(c) IXSYS hereby reserves the nonexclusive,
nontransferable right to use information and data that are
included in ASSIGNED MATERIALS AND INFORMATION for its own
internal research use; provided, however, that IXSYS shall not
use the ASSIGNED MATERIALS AND INFORMATION to make, have made,
use or sell any antibody directed to (CONFIDENTIAL TREATMENT
REQUESTED), or perform research or development work for a THIRD
PARTY with respect to any such antibody.
SECTION 4 - Confidentiality.
4.1 During the term of this Agreement, IXSYS agrees not to
provide or disclose to a THIRD PARTY any MATERIALS without the
written permission of MEDIMMUNE.
4.2 After the date of this Agreement, subject to Section
2.9, IXSYS agrees not to provide or disclose to a THIRD PARTY any
ASSIGNED MATERIALS AND INFORMATION without the written permission
of MEDIMMUNE.
4.3 During the term of this Agreement, it is contemplated
that each party will disclose to the other party confidential
information which is owned or controlled by the party providing
such information or which that party is obligated to maintain in
confidence and which is designated by the party providing such
information as confidential ("Confidential Information"). Each
party shall have the right to refuse to accept the other party's
Confidential Information. Each party agrees to retain the other
party's Confidential Information in confidence, to limit
disclosure of any such Confidential Information to its officers,
directors, employees, consultants, sublicensees and permitted
assigns on a need to know basis, to use the other party's
Confidential Information only for the purposes of this Agreement,
and not to disclose any such Confidential Information to any
other person or entity without the prior written consent of the
party providing such Confidential Information. For the avoidance
of doubt ASSIGNED MATERIALS AND INFORMATION are Confidential
Information of MEDIMMUNE.
4.4 The obligations of confidentiality and non-use of
Sections 4.1, 4.2 and 4.3 will not apply to:
(i) Confidential Information generally known
to the public prior to its disclosure hereunder;
or
(ii) Confidential Information that
subsequently becomes known to the public by some
means other than a breach of this Agreement;
(iii) Confidential Information that is
subsequently disclosed to the receiving party by a
third party having a lawful right to make such
disclosure; or
(iv) is approved for release by the parties.
4.5 Neither party shall disclose any terms or conditions of
this Agreement to any third party without the prior consent of
the other party; provided, however, that a party may disclose the
terms or conditions of this Agreement, (a) on a need-to-know
basis to its legal and financial advisors to the extent such
disclosure is reasonably necessary in connection with such
party's activities expressly permitted by this Agreement and
ordinary and customary business operations, and (b) to a third
party in connection with (i) an equity investment in such party,
(ii) a merger, consolidation, change in control or similar
transaction by such party, or (iii) the transfer or sale of all
or substantially all of the assets of such party.
Notwithstanding the foregoing, prior to execution of this
Agreement the parties have agreed upon the substance of
information that may be used to describe the terms and conditions
of this transaction, and each party may disclose such
information, as modified by mutual written agreement of the
parties, without the consent of the other party.
4.6 The obligations of this Section 4 shall not apply to
the extent that a party is required to disclose information by
applicable law, regulation or bona fide legal process, provided
that the party required to make the disclosure takes reasonable
steps to restrict and maintain confidentiality of such disclosure
and provides reasonable prior notice to the other party.
4.7 Notwithstanding the foregoing, MEDIMMUNE shall have the
right to disclose Confidential Information of IXSYS to a THIRD
PARTY with whom MEDIMMUNE has or proposes to enter into a
business relationship and who undertakes an obligation of
confidentiality and non-use with respect to such information, at
least as restrictive as the obligation under this Section 4.
4.8 The parties' obligations under this Section 4 shall
terminate five (5) years after the expiration or termination of
this Agreement.
SECTION 5 - Royalties.
5.1 During the ROYALTY PERIOD, MEDIMMUNE shall pay
royalties to IXSYS for PRODUCTS as follows:
(a) (CONFIDENTIAL TREATMENT REQUESTED) of that portion
of NET SALES of PRODUCTS in a calendar year up to the DESIGNATED
AMOUNT;
(b) (CONFIDENTIAL TREATMENT REQUESTED) of that portion
of NET SALES of PRODUCTS in a calendar year above the DESIGNATED
AMOUNT.
The cumulative NET SALES for a calendar year shall be
calculated based on worldwide NET SALES.
5.2 In the event that a PRODUCT is sold in combination with
a therapeutically active component that is not a PRODUCT (such
combination being a "Combination Product"), then NET SALES of
such Combination Product upon which a royalty is paid shall be
subject to the following adjustment. If the PRODUCT and the
other therapeutically active component are sold separately in a
country, then NET SALES of such Combination Product in such
country upon which a royalty is paid shall be multiplied by the
fraction A/A+B, where A equals the average sales price of such
PRODUCT sold separately in such country, and B equals the average
sales price of the other therapeutically active component sold
separately in such country. Otherwise, the parties shall enter
into good faith negotiations and attempt to reach mutual
agreement to determine an appropriate adjustment to the NET SALES
of such Combination Product in a country to reflect the relative
contributions of the PRODUCT and the other therapeutically active
component to the value of the Combination Product in such
country. If such mutual agreement is not reached within ninety
(90) days after commencement of such negotiations, then the NET
SALES of such Combination Product in such country shall be
determined by binding arbitration under Section 11.2.
5.3 MEDIMMUNE shall keep, and shall cause each of its
AFFILIATES and SUBLICENSEES to keep, full and accurate books of
account containing all particulars that may be necessary for the
purpose of calculating all royalties payable to IXSYS. Such
books of account, with all necessary supporting data, shall be
kept at their principal place of business, and for the three (3)
years next following the end of the calendar year to which each
pertains, shall be open for inspection by an independent
certified accountant selected by IXSYS and reasonably acceptable
to MEDIMMUNE upon reasonable notice during normal business hours
at IXSYS' expense for the sole purpose of verifying royalty
statements or compliance with this Agreement, but in no event
more than once in each calendar year. All information and data
offered shall be used only for the purpose of verifying royalties
and shall be treated as MEDIMMUNE Confidential Information
subject to the obligations of this Agreement.
5.4 With each quarterly payment, MEDIMMUNE shall deliver to
IXSYS a full and accurate accounting of the calculation of the
royalties owing hereunder to include at least the following
information:
(a) Quantity of each PRODUCT subject to royalty sold
(by country) by MEDIMMUNE, its AFFILIATES and SUBLICENSEES;
(b) NET SALES for each PRODUCT (by country);
(c) The calculation of the gross royalties (before
deductions) for each PRODUCT (by country) and any deductions,
offsets and credits therefrom; and
(d) Total royalties payable to IXSYS for each PRODUCT
(by country) and the total royalties payable to IXSYS for all
PRODUCTS (for all countries).
5.5 In each year the amount of royalty due shall be
calculated quarterly as of March 31, June 30, September 30 and
December 31 (each being the last day of an "ACCOUNTING PERIOD")
and shall be paid quarterly within the sixty (60) days next
following such date. Every such payment shall be supported by
the accounting prescribed in Section 5.4 and shall be made in
United States currency. Whenever for the purpose of calculating
royalties conversion from any foreign currency shall be required,
such conversion shall be at the average of the rate of exchange
(local currency per US$1) published in the Western Edition of The
Wall Street Journal under the caption "Currency Trading" for the
last business day of each month during the applicable ACCOUNTING
PERIOD.
5.6 If the transfer of or the conversion into United States
Dollar equivalent of any remittance due hereunder is not lawful
or possible in any country, such remittance shall be made by the
deposit thereof in the currency of the country to the credit and
account of IXSYS or its nominee in any commercial bank or trust
company located in that country, prompt notice of which shall be
given to IXSYS. IXSYS shall be advised in writing in advance by
MEDIMMUNE and provide to MEDIMMUNE a nominee, if so desired.
5.7 Any tax required to be withheld by MEDIMMUNE under the
laws of any foreign country for the account of IXSYS shall be
promptly paid by MEDIMMUNE for and on behalf of IXSYS to the
appropriate governmental authority, and MEDIMMUNE shall furnish
IXSYS with proof of payment of such tax. Any such tax actually
paid on IXSYS' behalf shall be deducted from royalty payments due
IXSYS.
5.8 Only one royalty shall be due and payable under each of
the applicable subsections under this Section 5 for the
manufacture, use and sale of a PRODUCT irrespective of the number
of patents or claims thereof which cover the manufacture, use and
sale of such PRODUCT.
5.9 (a) MEDIMMUNE shall pay to IXSYS the following
milestone payments upon the occurrence of the following events
with respect to a PRODUCT:
Event Payment
(i) Demonstration in the (CONFIDENTIAL TREATMENT
REQUESTED) model that a PRODUCT has a (CONFIDENTIAL
TREATMENT REQUESTED) as compared to (CONFIDENTIAL
TREATMENT REQUESTED) $ (CTR)
(ii) Demonstration in the (CONFIDENTIAL TREATMENT
REQUESTED) model that a PRODUCT has a (CONFIDENTIAL
TREATMENT REQUESTED) as compared to (CONFIDENTIAL
TREATMENT REQUESTED) $ (CTR)
(iii) Filing an IND (or its foreign equivalent)
for a PRODUCT $ (CTR)
(iv) Obtains approval of a Biologics License
Application (or its foreign equivalent) for a
PRODUCT $ (CTR)
(b) The milestone payments under Section 5.9(a) are
due and payable sixty (60) days after the applicable milestone
occurs.
(c) (CONFIDENTIAL TREATMENT REQUESTED) of all
milestone payments paid under Section 5.9(a) are creditable
against up to (CONFIDENTIAL TREATMENT REQUESTED) of each royalty
payment that is to be made pursuant to Section 5.1 until the full
amount of such credit has been taken..
(d) The total payment under Section 5.9(a)(i) and
5.9(a)(ii) shall not exceed (CONFIDENTIAL TREATMENT REQUESTED),
and the total milestone payments for any and all PRODUCT shall
not exceed (CONFIDENTIAL TREATMENT REQUESTED).
SECTION 6 - Warranties.
6.1 Each of IXSYS and MEDIMMUNE warrants and represents to
the other that:
(a) it has the corporate power and authority and the
legal right to enter into this Agreement and to perform its
obligations hereunder;
(b) it has taken all necessary corporate action on its
part to authorize the execution and delivery of this Agreement
and the performance of its obligations hereunder; and
(c) this Agreement has been duly executed and delivered
on its behalf, and constitutes a legal, valid, binding
obligation, enforceable against it in accordance with its terms.
6.2 IXSYS represents and warrants to MEDIMMUNE that:
(a) it has not previously granted and, prior to
expiration or termination of this Agreement, will not grant any
rights in the EXISTING IXSYS PATENTS, ASSIGNED PATENTS,
MATERIALS, and ASSIGNED MATERIALS AND INFORMATION that conflict
with the rights and licenses granted to MEDIMMUNE herein;
(b) all persons performing research by or on behalf of
IXSYS under the PROGRAM will be obligated to assign to IXSYS (for
re-assignment to MEDIMMUNE hereunder), the ownership of ASSIGNED
MATERIALS AND INFORMATION, the ASSIGNED PATENTS and all other
intellectual property rights arising therefrom.
6.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
SECTIONS 6.1 and 6.2, NEITHER PARTY MAKES ANY REPRESENTATION OR
EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF
ANY PATENT RIGHTS ISSUED OR PENDING.
SECTION 7 - Indemnification.
7.1 MEDIMMUNE agrees to indemnify and hold harmless IXSYS,
its directors, officers, employees and agents (collectively, the
"Indemnitees") from and against all losses, liabilities, damages
and expenses (including reasonable attorneys' fees and costs)
incurred in connection with any claims, demands, actions or other
proceedings by any third party arising from (a) the research,
development, manufacture, use or sale of ANTIBODIES or PRODUCTS
by MEDIMMUNE, its AFFILIATES or SUBLICENSEES, (b) the use of
PRODUCTS by any purchasers thereof, (c) the use by MEDIMMUNE, its
AFFILIATES or SUBLICENSEES of the EXISTING IXSYS PATENTS, the
ASSIGNED MATERIALS AND INFORMATION or the ASSIGNED PATENTS,
(d) any act or omission by MEDIMMUNE, its AFFILIATES OR
SUBLICENSEES the effect of which would cause IXSYS to be in
breach of its obligations under the license agreements described
in Section 3.1(b) (without regard to any applicable cure or
notice requirements thereof, or (e) patent infringement by IXSYS
during the PROGRAM based on a claim that an ANTIBODY or ligand or
assay provided by MEDIMMUNE to IXSYS infringes a patent of a
THIRD PARTY.
7.2 If any such claims or actions are made, IXSYS shall be
defended at MEDIMMUNE's sole expense by counsel selected by
MEDIMMUNE and reasonably acceptable to IXSYS provided that IXSYS
may, at its own expense, also be represented by counsel of its
own choosing.
7.3 MEDIMMUNE's indemnification under Section 7.1 shall not
apply to the extent any loss, liability, damage or expense is
attributable to the gross negligence or intentional misconduct of
the Indemnitees.
7.4 MEDIMMUNE may not settle any such claim, demand, action
or other proceeding or otherwise consent to an adverse judgment
in any such action or other proceeding that diminishes the rights
or interests of the Indemnitees without the express written
consent of the Indemnitees.
7.5 IXSYS shall notify MEDIMMUNE promptly of any claim,
demand, action or other proceeding under Section 7.1 and shall
reasonably cooperate with all reasonable requests of MEDIMMUNE
with respect thereto.
SECTION 8 - Assignment; Successors.
8.1 This Agreement shall not be assigned or otherwise
transferred (in whole or in part, whether voluntarily, by
operation of law or otherwise) by either of the parties without
the prior written consent of the other party (which consent shall
not be unreasonably withheld); provided, however, that either
party may, without such consent, assign this Agreement and its
rights and obligations hereunder to an AFFILIATE or in connection
with the transfer or sale of all or substantially all of its
business, or in the event of its merger, consolidation, change in
control or similar transaction, provided that such assignment by
IXSYS does not cause the termination of the rights and licenses
granted to MEDIMMUNE under this Agreement. Any permitted
assignee shall assume all obligations of its assignor under this
Agreement. Any purported assignment or transfer in violation of
this Section 8.1 shall be void.
8.2 Subject to the limitations on assignment herein, this
Agreement shall be binding upon and inure to the benefit of said
successors in interest and assigns of MEDIMMUNE and IXSYS.
SECTION 9 - Term and Termination.
9.1 Except as otherwise specifically provided herein and
unless sooner terminated pursuant to Section 9.2 or 9.3 of this
Agreement, this Agreement and the licenses and rights granted
thereunder shall remain in full force and effect until MEDIMMUNE
has no further royalty obligation hereunder at which time
MEDIMMUNE shall have a fully paid up, non-cancelable,
nonexclusive license to make, have made and use MATERIALS to
research, develop, make, have made, use, import, export, sell,
offer to sell, or have sold PRODUCTS.
9.2 MEDIMMUNE shall have the right to terminate this
Agreement upon ninety (90) days prior written notice to IXSYS.
9.3 IXSYS shall have the right to terminate this Agreement
if and only if MEDIMMUNE breaches its obligations under Section
5 or 7. If such a breach shall occur, IXSYS shall provide
MEDIMMUNE with written notice of such breach and if such breach
is not cured within thirty (30) days after such written notice,
IXSYS may terminate this Agreement by written notice to
MEDIMMUNE, provided such written notice is given within thirty
(30) days after the expiration of such initial thirty (30) day
period.
9.4 Upon any termination of this Agreement, MEDIMMUNE, at
its option, shall be entitled to sell any completed inventory of
PRODUCT which remains on hand as of the date of the termination,
so long as MEDIMMUNE pays to IXSYS the royalties applicable to
said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
9.5 In the event that this Agreement is terminated under
Section 9.2 or 9.3, any sublicense granted under this Agreement
shall remain in full force and effect as a direct license between
IXSYS and the SUBLICENSEE under the terms and conditions of the
sublicense agreement, subject to the SUBLICENSEE agreeing to be
bound to IXSYS under such terms and conditions within thirty (30)
days after IXSYS provides written notice to the SUBLICENSEE of
the termination of this Agreement. At the request of MEDIMMUNE,
IXSYS will acknowledge to a SUBLICENSEE IXSYS' obligations to the
SUBLICENSEE under this paragraph.
9.6 The provisions of Sections 2.8, 2.9, 3.4(c), 4, 7, 9.4,
9.5 and 9.6 shall survive any expiration or termination of this Agreement.
9.7 Upon expiration or termination of this Agreement for any
reason, nothing herein shall be construed to release either party
from any obligation that matured prior to the effective date of
such expiration or termination.
9.8 All rights and licensing granted under or pursuant to
this Agreement by IXSYS to MEDIMMUNE are, and shall irrevocably
be deemed to be, "intellectual property" as defined in Section
101(56) of the Bankruptcy Code. In the event of the commencement
of a case by or against either party under any Chapter of the
Bankruptcy Code, this Agreement shall be deemed an executory
contract and all rights and obligations hereunder shall be
determined in accordance with Section 365(n) thereof. Unless a
party rejects this Agreement and the other party decides not to
retain its rights hereunder, the other party shall be entitled to
a complete duplicate of (or complete access to, as appropriate)
all intellectual property and all embodiments of such
intellectual property held by the party and the party shall not
interfere with the rights of the other party, which are expressly
granted hereunder, to such intellectual property and all
embodiments of such intellectual property from another entity.
Further, this Agreement shall be deemed, upon presentation to
another entity, to be the same as an express instruction by the
party to such other entity to provide such intellectual property
and all embodiments of such intellectual property directly to the
other party. Without limiting the foregoing provisions in this
paragraph, the other party shall be entitled to all post-
bankruptcy-petition improvements, updates, or developments of
intellectual property created hereunder. If such intellectual
property is not fully developed as of the commencement of any
bankruptcy case, the other party shall have the right to complete
development of the property.
SECTION 10 - Force Majeure.
10.1 No failure or omission by the parties hereto in the
performance of any obligation of this Agreement (other than an
obligation for the payment of money) shall be a breach of this
Agreement, nor shall it create any liability, if the same shall
arise from any cause or causes beyond the reasonable control of
the affected party, including, but not limited to, the following,
which for purposes of this Agreement shall be regarded as beyond
the control of the party in question: acts of God; acts or
omissions of any government; any rules, regulations, or orders
issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm;
flood; earthquake; accident; war; rebellion; insurrection; riot;
invasion; strikes; and lockouts or the like; provided that the
party so affected shall use its commercially reasonable efforts
to avoid or remove such causes or nonperformance and shall
continue performance hereunder with the utmost dispatch whenever
such causes are removed.
SECTION 11 - General Provisions.
11.1 The relationship between IXSYS and MEDIMMUNE is that of
independent contractors. IXSYS and MEDIMMUNE are not joint
venturers, partners, principal and agent, master and servant,
employer or employee, and have no relationship other than as
independent contracting parties. IXSYS shall have no power to
bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE
shall have no power to bind or obligate IXSYS in any manner.
11.2 Any matter or disagreement under Section 5.2, which this
Agreement specifies is to be resolved by arbitration shall be
submitted to a mutually selected single arbitrator to so decide
any such matter or disagreement. The arbitrator shall conduct
the arbitration in accordance with the Rules of the American
Arbitration Association, unless the parties agree otherwise. If
the parties are unable to mutually select an arbitrator, the
arbitrator shall be selected in accordance with the procedures of
the American Arbitration Association. The decision and award
rendered by the arbitrator shall be final and binding. Judgment
upon the award may be entered in any court having jurisdiction
thereof. Any arbitration pursuant to this section shall be held
in San Diego, California or such other place as may be mutually
agreed upon in writing by the parties. The prevailing party in
any such arbitration shall be entitled to recover from the other
party all reasonable attorneys' fees and costs incurred by the
prevailing party in connection therewith.
11.3 This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
thereof and supersedes all prior agreements in this respect.
There shall be no amendments or modifications to this Agreement,
except by a written document which is signed by both parties.
11.4 This Agreement shall be construed and enforced in
accordance with the laws of the State of California without
regard to the conflicts of law principles thereof.
11.5 The headings in this Agreement have been inserted for
the convenience of reference only and are not intended to limit
or expand on the meaning of the language contained in the
particular article or section.
11.6 Any delay in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other
matter shall not constitute a waiver of a party's right to the
future enforcement of its rights under this Agreement, excepting
only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.
11.7 Any notices given pursuant to this Agreement shall be in
writing, delivered by any means, addressed to the other party at
its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addressor
and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
IXSYS, INC. MEDIMMUNE, INC.
By: /s/ Janine M. Taylor By: /s/ David M. Mott
Name: Janine M. Taylor Name: David M. Mott
Title: President & Chief Operating Title: Vice Chairman &
Officer Chief Financial Officer
Exhibit 10.97
SELECTION AGREEMENT
This Selection Agreement (this "Agreement") is effective as of
February 24, 1999 ("the EFFECTIVE DATE") by and between Ixsys,
Inc., a Delaware corporation, having an address at 3520 Dunhill
Road, San Diego, CA 92121 ("IXSYS"), and MedImmune, Inc. a
Delaware Corporation, having offices at 35 West Watkins Mill
Road, Gaithersburg, MD 20878 ("MEDIMMUNE").
WHEREAS, MEDIMMUNE desires to have IXSYS perform certain research
and development with respect to certain antibodies yet to be
determined; and
WHEREAS, IXSYS desires to perform such research and development
on the terms and conditions of this Agreement.
NOW THEREFORE in consideration of the mutual promises and other
good and valuable consideration, the parties agree as follows:
SECTION 1 - Antibody Selection.
1.1 Within twenty four (24) months after the EFFECTIVE DATE,
MEDIMMUNE shall designate by written notice to IXSYS, two (2)
antibodies for which MEDIMMUNE desires to have IXSYS perform
separate research and development programs (each, a "PROGRAM") to
modify such antibodies.
1.2 The written notice described in Section 1.1 for each PROGRAM
shall specify the following:
(a) the identity and sequence of the antibody;
(b) the identity of the desired target ligand;
(c) the desired assay by which to measure the specificity and
affinity of the antibody and modifications to such antibody
developed under the applicable PROGRAM;
(d) the personnel resources (specified as the number of full
time equivalent personnel) to be expended by Ixsys under the
applicable PROGRAM, which shall not be less than (CONFIDENTIAL
TREATMENT REQUESTED) or more than (CONFIDENTIAL TREATMENT
REQUESTED) without the prior written consent of IXSYS; and
(e) the term of the applicable PROGRAM, which shall not be less
than (CONFIDENTIAL TREATMENT REQUESTED) months or more than
(CONFIDENTIAL TREATMENT REQUESTED) months without the prior
written consent of IXSYS.
1.3 Within thirty (30) days after MEDIMMUNE delivers to IXSYS
the written notice described in Section 1.1 for a PROGRAM, the
parties shall duly execute and deliver a Research and Assignment
and License Agreement in the form attached hereto as Appendix A,
with the blanks on Exhibit 1 thereto completed as provided above
and only those modifications as the parties mutually agree in
writing.
SECTION 2 - Assignment; Successors.
2.1 This Agreement shall not be assigned or otherwise
transferred (in whole or in part, whether voluntarily, by
operation of law or otherwise) by either of the parties without
the prior written consent of the other party (which consent shall
not be unreasonably withheld); provided, however, that either
party may, without such consent, assign this Agreement and its
rights and obligations hereunder in connection with the transfer
or sale of all or substantially all of its business, or in the
event of its merger, consolidation, change in control or similar
transaction. Any permitted assignee shall assume all obligations
of its assignor under this Agreement. Any purported assignment
or transfer in violation of this Section 2.1 shall be void.
2.2 Subject to the limitations on assignment herein, this
Agreement shall be binding upon and inure to the benefit of said
successors in interest and assigns of MEDIMMUNE and IXSYS.
SECTION 3 - General Provisions.
3.1 The relationship between IXSYS and MEDIMMUNE is that of
independent contractors. IXSYS and MEDIMMUNE are not joint
venturers, partners, principal and agent, master and servant,
employer or employee, and have no relationship other than as
independent contracting parties. IXSYS shall have no power to
bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE
shall have no power to bind or obligate IXSYS in any manner.
3.2 This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
thereof and supersedes all prior agreements in this respect.
There shall be no amendments or modifications to this Agreement,
except by a written document which is signed by both parties.
3.3 This Agreement shall be construed and enforced in accordance
with the laws of the State of California without regard to the
conflicts of law principles thereof.
3.4 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular
article or section.
3.5 Any delay in enforcing a party's rights under this Agreement
or any waiver as to a particular default or other matter shall
not constitute a waiver of a party's right to the future
enforcement of its rights under this Agreement, excepting only as
to an expressed written and signed waiver as to a particular
matter for a particular period of time.
3.6 Any notices given pursuant to this Agreement shall be in
writing, delivered by any means, addressed to the other party at
its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addressor
and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.
To MEDIMMUNE: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax No. (973) 994-1744
Attn: Elliot M. Olstein, Esq.
To IXSYS: Ixsys, Inc.
3520 Dunhill Road
San Diego, CA 92121
Attention: President
Copy to: Pillsbury Madison & Sutro LLP
235 Montgomery Street, 16th Floor
San Francisco, California 94104
Attention: Thomas E. Sparks, Jr.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
IXSYS, INC. MEDIMMUNE, INC.
By: /s/ Janine M. Taylor By: /s/ David M. Mott
Name: Janine M. Taylor Name: David M. Mott
Title: President & Chief Operating Title: Vice Chairman &
Officer Chief Financial Officer
EXHIBIT 10.96
LICENSE AGREEMENT
This License Agreement (this "Agreement") is effective as of
February 24, 1999 ("the EFFECTIVE DATE") by and between Ixsys,
Inc., a Delaware corporation, having an address at 3520 Dunhill
Road, San Diego, CA 92121 ("IXSYS"), and MedImmune, Inc., a
Delaware Corporation, having offices at 35 West Watkins Mill
Road, Gaithersburg, MD 20878 ("MEDIMMUNE").
WHEREAS, MEDIMMUNE desires to obtain from IXSYS an exclusive
worldwide right and license to certain antibodies; and
WHEREAS, IXSYS desires to grant such rights on the terms and
conditions of this Agreement.
NOW THEREFORE in consideration of the mutual promises and
other good and valuable consideration, the parties agree as
follows:
SECTION 1 - Definitions.
The terms used in this Agreement have the following meaning:
1.1 "AFFILIATE," as applied to a person or entity, means
any other person or entity controlling or controlled by or under
common control with such person or entity. The term "control"
means possession of the power to direct or cause the direction of
the management and policies whether through the ownership of
voting securities, by contract or otherwise. The ownership of
voting securities of a person, organization or entity, however,
shall not, in and of itself, constitute "control" for purposes of
this definition, unless said ownership is of a majority of the
outstanding securities entitled to vote of such person,
organization or entity. Affiliate shall also mean a limited
partnership in which a subsidiary of such person, organization or
entity is a general partner.
1.2 "ANTIBODY(IES)" means (1) an antibody that specifically
binds to (CONFIDENTIAL TREATMENT REQUESTED) (including, but not
limited to, chimeric antibodies, humanized antibodies,
recombinant antibodies, grafted antibodies, single chain
antibodies, and the like) or an antibody fragment that
specifically binds to (CONFIDENTIAL TREATMENT REQUESTED) or (2) a
polynucleotide that encodes any of the foregoing. For the
avoidance of doubt, ANTIBODY includes, but is not limited to,
derivatives of (CONFIDENTIAL TREATMENT REQUESTED) antibody,
fragments thereof and modifications, variants and derivatives
thereof, such as humanized, chimeric, grafted and CDR modified
versions thereof and fragments of such versions, including, but
not limited to, the humanized antibody referred to as VITAXIN.
Notwithstanding the foregoing, ANTIBODY shall exclude the
(CONFIDENTIAL TREATMENT REQUESTED) murine antibody produced by
the cell line (CONFIDENTIAL TREATMENT REQUESTED) deposited with
the American Type Culture Collection.
1.3 "FIRST COMMERCIAL SALE" means, in each country, (a) the
first sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or
SUBLICENSEE following approval of its marketing by the
appropriate governmental agency for the country in which the sale
is to be made, or (b) when governmental approval is not required,
the first commercial sale of a PRODUCT by MEDIMMUNE, its
AFFILIATE or SUBLICENSEE in that country.
1.4 "IXSYS KNOW-HOW" means all information and data
(including, but not limited to, formulae, procedures, protocols,
techniques and results of experimentation and testing) that are
necessary or useful for MEDIMMUNE to make, use or sell an
ANTIBODY (including an ANTIBODY that constitutes a component or
ingredient of a product), in each case only to the extent owned
by or licensed to IXSYS or its AFFILIATES (with the right to
grant sublicenses) or as to which IXSYS or its AFFILIATES
otherwise has licensable rights as of the EFFECTIVE DATE or
(subject to Section 1.15) thereafter during the term of this
Agreement.
1.5 "IXSYS LICENSE AGREEMENTS" means the agreements listed
in Appendix A.
1.6 "IXSYS PATENT(S)" means any patent or patent
application (or equivalents thereof, such as extensions or other
rights that give the right to exclude others such as
Supplementary Protection Certificates) anywhere in the world, to
the extent the claims of which would be infringed by the
manufacture, use or sale of a product comprising an ANTIBODY and
only to the extent that it is either owned by or licensed to
IXSYS or its AFFILIATES (with the right to grant sublicenses) or
as to which IXSYS or its AFFILIATES otherwise has licensable
rights, in each case, as of the EFFECTIVE DATE or (subject to
Section 1.15) thereafter during the term of this Agreement
(including, but not limited to, those of Appendix B and those
licensed under the IXSYS LICENSE AGREEMENTS).
1.7 "LICENSED TERRITORY" means all countries of the world.
1.8 "MATERIALS" means ANTIBODIES, the cell lines for
producing such ANTIBODIES, the polynucleotides encoding such
ANTIBODIES, and the assays, vectors and constructs for producing
such ANTIBODIES, in each case only to the extent owned by or
licensed to IXSYS or its AFFILIATES (with the right to grant
sublicenses) or as to which IXSYS or its AFFILIATES otherwise has
transferable rights, and in the possession and control of IXSYS
or its AFFILIATES, as of the EFFECTIVE DATE or (subject to
Section 1.15) thereafter during the term of this Agreement. For
the avoidance of doubt, MATERIALS includes the existing cell line
and associated vectors for producing the humanized version of
(CONFIDENTIAL TREATMENT REQUESTED) known as VITAXIN and VITAXIN
variants in the possession and control of IXSYS as of the
EFFECTIVE DATE.
1.9 "NET SALES" means, with respect to any PRODUCT, the
invoiced sales price of such PRODUCT sold by MEDIMMUNE, its
AFFILIATES and SUBLICENSEES to independent customers who are not
AFFILIATES, less (a) actual and customary credits, allowances,
discounts and rebates to, and chargebacks from the account of,
such independent customers for spoiled, damaged, out-dated,
rejected or returned PRODUCT; (b) actual freight and insurance
costs incurred in transporting such PRODUCT to such customers;
(c) actual and customary cash, quantity and trade discounts;
(d) sales, use, value-added and taxes or governmental charges
(excluding what is commonly known as income taxes) incurred in
connection with the exportation or importation of such PRODUCT;
(e) the cost to MEDIMMUNE of the devices for dispensing or
administering such PRODUCT as well as diluents or similar
materials which accompany such PRODUCT as it is sold, and (f) a
reasonable allowance for bad debt, all in accordance with
Generally Accepted Accounting Principles. For purposes of
determining NET SALES, a sale shall have occurred when an invoice
therefor shall be generated or the PRODUCT shipped for delivery.
Sales of PRODUCTS by MEDIMMUNE, an AFFILIATE or SUBLICENSEE to
any AFFILIATE or SUBLICENSEE which is a reseller thereof shall be
excluded, and only the subsequent sale of such PRODUCTS by
AFFILIATES or SUBLICENSEES to unrelated parties shall be deemed
NET SALES hereunder.
1.10 "PRODUCT" means a product comprising (i) an ANTIBODY,
the manufacture, use or sale of which infringes a VALID PATENT
CLAIM as to which MEDIMMUNE retains a license under this
Agreement, (ii) an ANTIBODY provided and licensed to MEDIMMUNE
by IXSYS under this Agreement, or (iii) an ANTIBODY which is
derived from an ANTIBODY provided and licensed to MEDIMMUNE under
this Agreement.
1.11 "ROYALTY PERIOD" means, with respect to each PRODUCT in
each country in the LICENSED TERRITORY, (a) if the manufacture,
use, offer for sale, sale or import of such PRODUCT in such
country at the time of the FIRST COMMERCIAL SALE infringes a
VALID PATENT CLAIM (if in an issued patent) but for the license
granted by this Agreement, the royalty period continues for as
long as such VALID PATENT CLAIM remains in effect and (if in an
issued patent) is infringed thereby but for the license granted
by this Agreement, or (b) otherwise, (CONFIDENTIAL TREATMENT
REQUESTED) years from the date of the FIRST COMMERCIAL SALE of
such PRODUCT in such country.
1.12 "SUBLICENSEE" means any AFFILIATE or THIRD PARTY that
is granted a sublicense by MEDIMMUNE under the licenses and
sublicenses granted by this Agreement.
1.13 "THIRD PARTY(IES)" means a person or entity other than
IXSYS or MEDIMMUNE or any of their AFFILIATES.
1.14 The term "VALID PATENT CLAIM" shall mean either (a) a
claim of an issued and unexpired patent included within the IXSYS
PATENTS, which has not been held permanently revoked,
unenforceable or invalid by a decision of a court or other gover
nmental agency of competent jurisdiction, unappealable or
unappealed within the time allowed for appeal, and which has not
been admitted to be invalid or unenforceable through reissue or
disclaimer or otherwise or (b) a claim of a pending patent
application included within the IXSYS PATENTS, which claim was
filed in good faith and has not been abandoned or finally
disallowed without the possibility of appeal or refiling of such
application, the subject matter of which has not been pending for
more than (CONFIDENTIAL TREATMENT REQUESTED) years, including the
pendency of any prior application.
1.15 In the event of the good faith transfer or sale of all
or substantially all of IXSYS' assets (including this Agreement)
to a THIRD PARTY, or in the event of the good faith merger,
consolidation, or similar transaction with a THIRD PARTY, in
which IXSYS is not the surviving entity, (a) the subject matter
of the ANTIBODIES, IXSYS KNOW-HOW, IXSYS PATENTS and MATERIALS
shall not include any antibody or fragment, data or information,
patent or patent application or material of the surviving entity
or the purchaser of IXSYS' assets existing prior to the effective
date of such transaction or acquired or arising on or after the
effective date of such transaction, if the surviving entity or
the purchaser of IXSYS' assets, prior to such effective date. was
working on the research, development, manufacture or
commercialization of an ANTIBODY, and (b) the subject matter of
IXSYS KNOW-HOW and IXSYS PATENTS shall exclude any data or
information, or patent or patent application, regarding antibody
production generally, of the surviving entity or the purchaser of
IXSYS' assets existing prior to the effective date of such
transaction or acquired or arising on or after the effective date
of such transaction, if the surviving entity or the purchaser of
IXSYS' assets, prior to such effective date, was in the business
of commercial production of antibodies.
1.16 The use herein of the plural shall include the
singular, and the use of the masculine shall include the
feminine.
1.17 All dollars are United States Dollars.
SECTION 2 - Transfer of IXSYS KNOW-HOW and MATERIALS.
2.1 Within thirty (30) days of the EFFECTIVE DATE, IXSYS,
at the cost and expense of IXSYS, shall transfer to MEDIMMUNE the
IXSYS KNOW-HOW and MATERIALS existing as of the EFFECTIVE DATE.
Promptly after the end of each calendar quarter thereafter during
the term of this Agreement, IXSYS, at the cost and expense of
IXSYS, shall transfer to MEDIMMUNE the IXSYS KNOW-HOW and
MATERIALS not previously delivered to MEDIMMUNE.
2.2 For a period of six (6) months after the EFFECTIVE
DATE, IXSYS, at the cost and expense of IXSYS, shall provide
MEDIMMUNE with such technical assistance as reasonably requested
by MEDIMMUNE with respect to the use of the IXSYS PATENTS, IXSYS
KNOW-HOW and MATERIALS hereunder.
2.3 (a) IXSYS, at its cost and expense, shall deliver to
MEDIMMUNE (i) a (CONFIDENTIAL TREATMENT REQUESTED) liter batch of
the ANTIBODY that is a humanized form of (CONFIDENTIAL TREATMENT
REQUESTED) antibody which humanized antibody is known as VITAXIN
that is currently being produced by (CONFIDENTIAL TREATMENT
REQUESTED) for IXSYS under Good Manufacturing Practices with
delivery expected in (CONFIDENTIAL TREATMENT REQUESTED), and (ii)
the associated documentation delivered by (CONFIDENTIAL TREATMENT
REQUESTED) to IXSYS in connection therewith that is required for
use in human clinical testing and commercial development and
manufacturing of such produced VITAXIN.
(b) In the event that IXSYS does not deliver VITAXIN
in accordance with Section 2.3(a), then MEDIMMUNE shall have the
right to deduct from any and all payments due and payable to
IXSYS under this Agreement an amount equal to (CONFIDENTIAL
TREATMENT REQUESTED).
2.4 IXSYS shall have the right to publish IXSYS' KNOW-HOW;
provided, however, that IXSYS shall provide MEDIMMUNE the
opportunity to review any proposed manuscripts or any other
proposed disclosure describing such work sixty (60) days prior to
their submission for publication or other proposed disclosure.
MEDIMMUNE and IXSYS shall discuss whether or not such publication
or disclosure should occur and it is expressly understood that
MEDIMMUNE shall have the sole right to make a final determination
as to whether or not such publication or disclosure shall occur
provided that such determination is not unreasonable. It shall
not be unreasonable to deny publication on the basis that the
information proposed to be published is not generally available
to the public and may aid a competitor in developing a
competitive product.
SECTION 3 - License Grants.
3.1 (a) IXSYS hereby grants to MEDIMMUNE and MEDIMMUNE
hereby accepts from IXSYS a sole and exclusive right and license
(or sublicense, as applicable) for the LICENSED TERRITORY (i)
under and to IXSYS PATENTS and IXSYS KNOW-HOW to research,
develop, make, have made, use, import, export and sell, offer to
sell or have sold PRODUCTS and (ii) to make, have made and use
the MATERIALS for all of the purposes of 3.1(a)(i).
Notwithstanding anything to the contrary in this Agreement, the
rights and licenses granted to MEDIMMUNE under this Agreement
exclude any right or license (express or implied) under any IXSYS
patent rights or know-how regarding the generation, discovery or
modification of antibody libraries, antibodies or fragments
thereof, generally.
(b) To the extent that the rights and licenses granted
to MEDIMMUNE under Section 3.1(a) is a sublicense under an IXSYS
LICENSE AGREEMENT, the rights, and licenses granted to MEDIMMUNE
under such sublicense are limited to the extent that IXSYS is
licensed under the IXSYS LICENSE AGREEMENT and such sublicense is
subject to the terms, conditions and restrictions of the IXSYS
LICENSE AGREEMENT that are applicable to a sublicense thereunder.
MEDIMMUNE shall not take or omit to take any action the effect of
which would cause IXSYS to be in breach of IXSYS' obligations
under the IXSYS LICENSE AGREEMENTS (without regard to any
applicable cure or notice requirements thereof).
3.2 MEDIMMUNE shall have the right to grant sublicenses
under the licenses and sublicenses granted under Section 3.1 to
its AFFILIATES and THIRD PARTIES (with the right to grant further
sublicenses, subject to any terms, conditions and restrictions on
further sublicensing under IXSYS LICENSE AGREEMENTS). MEDIMMUNE
shall deliver to IXSYS a copy of each such sublicense promptly
after execution of the same. Each such sublicense shall be
subject to the terms and conditions of this Agreement.
3.3 The licenses granted hereunder include the right of
MEDIMMUNE, its AFFILIATES and SUBLICENSEES to grant to the
purchaser thereof the right to use and/or resell a purchased
PRODUCT for which a royalty has been paid hereunder on NET SALES
of such PRODUCT (determined in accordance with Section 1.9),
without payment of any further royalty to IXSYS.
3.4 The provisions of Section 11.3(b) set forth MEDIMMUNE's
only diligence obligations to IXSYS with respect to research,
development and commercialization of PRODUCT, and the sole and
exclusive remedy for failure to meet such obligations.
3.5 IXSYS acknowledges that MEDIMMUNE is in the business of
developing, manufacturing and selling of medical processes and
products and that nothing in this Agreement shall be construed as
restricting such business or imposing on MEDIMMUNE the duty to
market, and/or sell and exploit PRODUCT for which royalties are
due hereunder to the exclusion of or in preference to any other
product or process.
3.6 Subject to Section 11.3(b), MEDIMMUNE shall have sole
discretion for making all decisions relating to the
commercialization and marketing of PRODUCT.
3.7 Except as otherwise expressly provided in this
Agreement, or the parties otherwise expressly agree in writing,
neither party shall obtain any right or license in any patent
rights, know-how, materials or technology of the other party (by
implication, estoppel or otherwise) for any purpose.
3.8 IXSYS shall in good faith request that its licensor
under each IXSYS LICENSE AGREEMENT provide the consent of
Appendix C.
SECTION 4 - Confidentiality.
4.1 During the term of this Agreement, IXSYS agrees not to
provide or disclose to a THIRD PARTY any MATERIALS without the
written permission of MEDIMMUNE.
4.2 After the date of this Agreement, subject to Section
2.4, IXSYS agrees not to disclose to a THIRD PARTY any IXSYS KNOW-
HOW without the written permission of MEDIMMUNE.
4.3 During the term of this Agreement, it is contemplated
that each party will disclose to the other party confidential
information which is owned or controlled by the party providing
such information or which that party is obligated to maintain in
confidence and which is designated by the party providing such
information as confidential ("Confidential Information"). Each
party shall have the right to refuse to accept the other party's
Confidential Information. Each party agrees to retain the other
party's Confidential Information in confidence, to limit
disclosure of any such Confidential Information to its officers,
directors, employees, consultants, sublicensees and permitted
assigns on a need to know basis. Each party agrees to use the
other party's Confidential Information only as permitted by this
Agreement, and not to disclose any such Confidential Information
to any other person or entity without the prior written consent
of the party providing such Confidential Information. For the
avoidance of doubt, IXSYS KNOW-HOW and MATERIALS will be
Confidential Information of IXSYS.
4.4 The obligations of confidentiality and non-use of
Sections 4.2 and 4.3 will not apply to:
(a) Confidential Information generally known
to the public prior to its disclosure hereunder;
or
(b) Confidential Information that
subsequently becomes known to the public by some
means other than a breach of this Agreement;
(c) Confidential Information that is
subsequently disclosed to the receiving party by a
third party having a lawful right to make such
disclosure; or
(d) is approved for release by the parties.
4.5 Neither party shall disclose any terms or conditions of
this Agreement to any third party without the prior consent of
the other party; provided, however, that a party may disclose the
terms or conditions of this Agreement, (a) on a need-to-know
basis to its legal and financial advisors to the extent such
disclosure is reasonably necessary in connection with such
party's activities expressly permitted by this Agreement and
ordinary and customary business operations, and (b) to a third
party in connection with (i) an equity investment in such party,
(ii) a merger, consolidation, change in control or similar
transaction by such party, or (iii) the transfer or sale of all
or substantially all of the assets of such party.
Notwithstanding the foregoing, prior to execution of this
Agreement the parties have agreed upon the substance of
information that may be used to describe the terms and conditions
of this transaction, and each party may disclose such
information, as modified by mutual written agreement of the
parties, without the consent of the other party.
4.6 The obligations of this Section 4 shall not apply to
the extent that a party is required to disclose information by
applicable law, regulation or bona fide legal process, provided
that the party required to make the disclosure takes reasonable
steps to restrict and maintain confidentiality of such disclosure
and provides reasonable prior notice to the other party.
4.7 Notwithstanding the foregoing, MEDIMMUNE shall have the
right to disclose Confidential Information of IXSYS to a THIRD
PARTY with whom MEDIMMUNE has or proposes to enter into a
business relationship and who undertakes an obligation of
confidentiality and non-use with respect to such information, at
least as restrictive as the obligation under this Section 4.
4.8 The parties' obligations under this Section 4 shall
terminate five (5) years after the expiration or termination of
this Agreement.
SECTION 5 - Patents.
5.1 IXSYS (or its licensor) shall file, prosecute and
maintain IXSYS PATENTS through patent counsel selected by IXSYS
(or its licensor). IXSYS shall consult with and keep MEDIMMUNE
advised with respect thereto. MEDIMMUNE shall pay all reasonable
out-of-pocket costs (including reasonable attorneys' fees and
costs) incurred in connection therewith by IXSYS after the
EFFECTIVE DATE.
5.2 With respect to any IXSYS PATENTS, each patent
application, office action, response to office action, request
for terminal disclaimer, and request for reissue or reexamination
or extension of any patent issuing from such application shall be
provided to MEDIMMUNE sufficiently prior to the filing of such
application, response or request to allow for review and comment
by MEDIMMUNE. IXSYS agrees to consider such comments and follow
reasonable comments unless IXSYS believes that such comments are
adverse to the interests of IXSYS.
5.3 IXSYS shall not allow any IXSYS PATENTS licensed to
MEDIMMUNE to lapse or be surrendered, or abandoned without the
written consent of MEDIMMUNE (other than those that are abandoned
in the ordinary course of prosecution in connection with the
filing of a continuation or continuation in part application
therefor).
5.4 The obligations of IXSYS under Sections 5.1 - 5.3 with
respect to IXSYS PATENTS that are sublicensed to MEDIMMUNE shall
only be to the extent that it is permitted under the IXSYS
LICENSE AGREEMENTS.
SECTION 6 - Royalties.
6.1 Subject to Sections 6.1, 6.2, 6.3, 6.4 and 6.12(e),
during the ROYALTY PERIOD, MEDIMMUNE shall pay royalties to IXSYS
for PRODUCTS as follows:
(a) (CONFIDENTIAL TREATMENT REQUESTED) of that portion
of NET SALES of PRODUCTS in a calendar year up to (CONFIDENTIAL
TREATMENT REQUESTED);
(b) (CONFIDENTIAL TREATMENT REQUESTED) of that portion
of NET SALES of PRODUCTS in a calendar year in excess of
(CONFIDENTIAL TREATMENT REQUESTED) up to (CONFIDENTIAL TREATMENT
REQUESTED);
(c) (CONFIDENTIAL TREATMENT REQUESTED) of that portion
of NET SALES of PRODUCTS in a calendar year that exceeds
(CONFIDENTIAL TREATMENT REQUESTED).
(d) For a PRODUCT for which the ROYALTY PERIOD is
(CONFIDENTIAL TREATMENT REQUESTED) years under Section 1.11 , the
royalty rate under Section 6.1(a), (b) and (c), after taking into
account any applicable increase or decrease, shall be reduced in
each case by (CONFIDENTIAL TREATMENT REQUESTED) in any country in
which one or more THIRD PARTIES is selling ANTIBODY (other than
ANTIBODY intended for research use only), and the aggregate
dollar volume of the sales of ANTIBODY by such THIRD PARTIES
equals or exceeds (CONFIDENTIAL TREATMENT REQUESTED) of the
aggregate market for ANTIBODY and all other products labeled
for the same use in such country. Any dispute regarding the
appropriate market for purposes of such determination shall be
submitted to binding arbitration under Section 13.2.
(e) The cumulative NET SALES for a calendar year shall
be calculated based on worldwide NET SALES.
6.2 In the event that a PRODUCT is sold in combination with
a therapeutically active component that is not a PRODUCT (such
combination being a "Combination Product"), then NET SALES of
such Combination Product upon which a royalty is paid shall be
subject to the following adjustment. If the PRODUCT and the
other therapeutically active component are sold separately in a
country, then NET SALES of such Combination Product in such
country upon which a royalty is paid shall be multiplied by the
fraction A/A+B, where A equals the average sales price of such
PRODUCT sold separately in such country, and B equals the average
sales price of the other therapeutically active component sold
separately in such country. Otherwise, the parties shall enter
into good faith negotiations and attempt to reach mutual
agreement to determine an appropriate adjustment to the NET SALES
of such Combination Product in a country to reflect the relative
contributions of the PRODUCT and the other therapeutically active
component to the value of the Combination Product in such
country. If such mutual agreement is not reached within ninety
(90) days after commencement of such negotiations, then the
determination shall be submitted to binding arbitration under
Section 13.2.
6.3 With respect to any PRODUCT for which the cumulative
royalty rate owed by MEDIMMUNE to a THIRD PARTY(IES) based on
sales in any country, including the royalty rates under the IXSYS
LICENSE AGREEMENTS, exceeds (CONFIDENTIAL TREATMENT REQUESTED),
the royalty rate under Sections 6.1(b) and (c) for such PRODUCT
in such country shall be reduced by (CONFIDENTIAL TREATMENT
REQUESTED) of such excess, but in no event shall any of such
royalty rates for such PRODUCT in such country be reduced to less
than (CONFIDENTIAL TREATMENT REQUESTED).
6.4 With respect to any PRODUCT for which the cumulative
royalty rate owed by MEDIMMUNE to a THIRD PARTY(IES) based on
sales in any country, including the royalty rates under the IXSYS
LICENSE AGREEMENTS, is less than (CONFIDENTIAL TREATMENT
REQUESTED), the royalty rate under Sections 6.1(a), (b) and (c)
for such PRODUCT in such country shall be increased by
(CONFIDENTIAL TREATMENT REQUESTED) of such deficiency but in no
event shall such royalty rates for such PRODUCT in such country
be increased by more than (CONFIDENTIAL TREATMENT REQUESTED).
6.5 MEDIMMUNE additionally shall pay to IXSYS all royalties
and other amounts owed by IXSYS under the IXSYS LICENSE
AGREEMENTS that are based on development milestones, sales or
manufacturing of PRODUCT by MEDIMMUNE, its AFFILIATES and
SUBLICENSEES. IXSYS shall timely remit such amounts to the
applicable THIRD PARTY. All other payments due under IXSYS
LICENSE AGREEMENTS shall be paid by IXSYS.
6.6 MEDIMMUNE shall keep, and shall cause each of its
AFFILIATES and SUBLICENSEES to keep, full and accurate books of
account containing all particulars that may be necessary for the
purpose of calculating all royalties payable to IXSYS. Such
books of account, together with all necessary supporting data,
shall be kept at their principal place of business, and for the
three (3) years next following the end of the calendar year to
which each pertains, shall be open for inspection by an
independent certified accountant selected by IXSYS and reasonably
acceptable to MEDIMMUNE upon reasonable notice during normal
business hours at IXSYS' expense for the sole purpose of
verifying royalty statements or compliance with this Agreement,
but in no event more than once in each calendar year. All
information and data offered shall be used only for the purpose
of verifying royalties and shall be treated as MEDIMMUNE
Confidential Information subject to the obligations of this
Agreement.
6.7 With each quarterly payment, MEDIMMUNE shall deliver to
IXSYS a full and accurate accounting of the calculation of the
royalties owing hereunder to include at least the following
information:
(a) Quantity of each PRODUCT subject to royalty sold
(by country) by MEDIMMUNE, its AFFILIATES and SUBLICENSEES;
(b) NET SALES for each PRODUCT (by country);
(c) The calculation of the gross royalties (before
deductions) for each PRODUCT (by country) and any deductions,
offsets and credits therefrom; and
(d) Total royalties payable to IXSYS for each PRODUCT
(by country) and the total royalties payable to IXSYS for all
PRODUCTS (for all countries).
6.8 In each year the amount of royalty due shall be
calculated quarterly as of March 31, June 30, September 30 and
December 31 (each being the last day of an "ACCOUNTING PERIOD")
and shall be paid quarterly within the sixty (60) days next
following such date. Every such payment shall be supported by
the accounting prescribed in Section 6.7 and shall be made in
United States currency. Whenever for the purpose of calculating
royalties conversion from any foreign currency shall be required,
such conversion shall be at the average of the rate of exchange
(local currency per US$1) published in the Western Edition of The
Wall Street Journal under the caption "Currency Trading" for the
last business day of each month during the applicable ACCOUNTING
PERIOD.
6.9 If the transfer of or the conversion into United States
Dollar equivalent of any remittance due hereunder is not lawful
or possible in any country, such remittance shall be made by the
deposit thereof in the currency of the country to the credit and
account of IXSYS or its nominee in any commercial bank or trust
company located in that country, prompt notice of which shall be
given to IXSYS. IXSYS shall be advised in writing in advance by
MEDIMMUNE and provide to MEDIMMUNE a nominee, if so desired.
6.10 Any tax required to be withheld by MEDIMMUNE under the
laws of any foreign country for the account of IXSYS shall be
promptly paid by MEDIMMUNE for and on behalf of IXSYS to the
appropriate governmental authority, and MEDIMMUNE shall furnish
IXSYS with proof of payment of such tax. Any such tax actually
paid on IXSYS' behalf shall be deducted from royalty payments due
IXSYS.
6.11 Only one royalty shall be due and payable under each of
the applicable subsections under this Section 6 for the
manufacture, use and sale of a PRODUCT irrespective of the number
of patents or claims thereof which cover the manufacture, use and
sale of such PRODUCT.
6.12 (a) MEDIMMUNE shall pay to IXSYS the following
milestone payments upon the occurrence of the following events
with respect to a PRODUCT and all or a portion of such milestone
payment may be made by the purchase of common stock of IXSYS in
accordance with Section 6.12(d):
A. PRODUCT for (CONFIDENTIAL TREATMENT REQUESTED) indication
Event Payment
(1) Initiate Phase II Clinical Trial
CTR
(2) Initiate a Phase III Clinical Trial
CTR
(3) Submission of a Biologics License Application
in the United States or an equivalent for Europe
(or any country in Europe) or Japan
CTR
(4) Approval of a Biologics License Application in the
United States CTR
(5) Approval to sell in Europe (or any country in
Europe) including pricing approvals
CTR
(6) Approval to sell in Japan including pricing approvals
CTR
B. PRODUCT for (CONFIDENTIAL TREATMENT REQUESTED) indication.
Event Payment
(1) Initiate Phase II Clinical Trial
CTR
(2) Initiate a Phase III Clinical Trial
CTR
(3) Submission of a Biologics License Application
in the United States or an equivalent for Europe
(or any country in Europe) or Japan
CTR
(4) Approval of a Biologics License Application in the
United States CTR
(5) Approval to sell in Europe (or any country in
Europe) including pricing approvals
CTR
(6) Approval to sell in Japan including pricing approvals
CTR
C. Sales Milestones
Event Payment
(1) Cumulative NET SALES of PRODUCTS
in a calendar year exceeds (CONFIDENTIAL
TREATMENT REQUESTED) CTR
(2) Cumulative NET SALES of PRODUCTS
in a calendar year exceeds (CONFIDENTIAL
TREATMENT REQUESTED) CTR
(b) Each of the (CONFIDENTIAL TREATMENT REQUESTED)
milestones shall be paid (CONFIDENTIAL TREATMENT REQUESTED)
whereby the total milestone payment for all PRODUCTS is: (i)
(CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) A ; (ii)
(CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) B ; and
(iii) (CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) C.
(c) The milestone payments under Section 6.12(a) are due
and payable sixty (60) days after the applicable milestone
occurs.
(d) At its option, MEDIMMUNE may make the milestone payment
due under Section 6.12(a) in the form of a purchase of common
stock of IXSYS on the date the applicable milestone payment is
due in a dollar amount equal to the applicable milestone payment
that is due at a price per share equal to (CONFIDENTIAL TREATMENT
REQUESTED) per share if the milestone occurs prior to the first
anniversary of the EFFECTIVE DATE, and thereafter at a price per
share equal to the greater of (i) (CONFIDENTIAL TREATMENT
REQUESTED) per share (which (CONFIDENTIAL TREATMENT REQUESTED)
per share price shall be adjusted for stock splits that occur
after the EFFECTIVE DATE), or (ii)(A) (CONFIDENTIAL TREATMENT
REQUESTED) prior to the date the applicable milestone is
achieved, or (B) if such shares are not traded on a stock
exchange , (CONFIDENTIAL TREATMENT REQUESTED) of the most recent
share price in a good faith, arm's length sale of equity
securities of IXSYS to any THIRD PARTY (independent of an overall
transaction that includes a transfer of technology or marketing
rights and independent of a sale to employees of IXSYS pursuant
to a stock plan) or to MEDIMMUNE. Any such purchase of IXSYS
common stock shall be made pursuant to a stock purchase agreement
substantially in the form of the stock purchase agreement
described in Section 6.13. In no event shall MEDIMMUNE have the
right to purchase a number of shares by which MEDIMMUNE and its
AFFILIATES, in the aggregate, will own more than (CONFIDENTIAL
TREATMENT REQUESTED) of the total outstanding shares of IXSYS, at
the time, on a fully diluted basis. MEDIMMUNE will not have the
right to make the milestone payment in the form of a purchase of
common stock of IXSYS under this Section 6.12(d) if (i) at least
(CONFIDENTIAL TREATMENT REQUESTED) of the total outstanding
shares of IXSYS, on a fully diluted basis, is owned by a single
person or entity, (ii) there has been a good faith merger,
consolidation or similar transaction with a THIRD PARTY in which
IXSYS is not the surviving entity, or (iii) there has been the
good faith sale of all or substantially all of IXSYS' assets
(including this Agreement) to a THIRD PARTY.
(e) (CONFIDENTIAL TREATMENT REQUESTED) of all
milestone payments paid in cash under Section 6.12(a) and
(CONFIDENTIAL TREATMENT REQUESTED) of all milestone payments made
by the purchase of common stock of IXSYS under Section 6.12(d),
are creditable against up to (CONFIDENTIAL TREATMENT REQUESTED)
of each royalty payment that is to be made pursuant to Section
6.1 until the full amount of such credit has been taken.
6.13 At the option of IXSYS, this Agreement shall terminate
and be void ab initio if, by the end of the second business day
after the EFFECTIVE DATE, MEDIMMUNE shall not have purchased
common stock of IXSYS in a cumulative dollar amount equal to
(CONFIDENTIAL TREATMENT REQUESTED) at a price per share of
(CONFIDENTIAL TREATMENT REQUESTED) pursuant to a stock purchase
agreement dated as of the EFFECTIVE DATE between the parties.
SECTION 7 - Infringement.
7.1 (a) If any of the IXSYS PATENTS under which MEDIMMUNE
is licensed hereunder is infringed by the sale by a THIRD PARTY
of a PRODUCT, subject to the provisions of the IXSYS LICENSE
AGREEMENTS, MEDIMMUNE shall have the right and option but not the
obligation to bring an action for such infringement, at its sole
expense, against such THIRD PARTY in the name of IXSYS and/or in
the name of MEDIMMUNE and/or in the name of a licensor of IXSYS,
as the case may be, and to join IXSYS or its licensor as a party
plaintiff if required. MEDIMMUNE shall promptly notify IXSYS of
any such infringement and shall keep IXSYS informed as to the
prosecution of any action for such infringement. No settlement,
consent judgment or other voluntary final disposition of the suit
which adversely affects IXSYS PATENTS may be entered into without
the consent of IXSYS, which consent shall not unreasonably be
withheld.
(b) In the event that MEDIMMUNE shall undertake the
enforcement under Section 7.1(a) of the IXSYS PATENTS by
litigation, subject to the provisions of the IXSYS LICENSE
AGREEMENTS, any recovery of damages by MEDIMMUNE for any such
suit shall be applied first pro rata in satisfaction of any
unreimbursed out of pocket expenses and legal fees of MEDIMMUNE
regarding such suit. The balance remaining from any such
recovery shall be divided between MEDIMMUNE and IXSYS, as follows
(i) for that portion, if any, based on lost profits, IXSYS shall
recover the royalty IXSYS would have received under this
Agreement if such sales had been made by MEDIMMUNE; and (ii) for
any other recovery, IXSYS shall receive (CONFIDENTIAL TREATMENT
REQUESTED) of the remaining amount.
7.2 In the event that MEDIMMUNE elects not to pursue an
action for infringement, upon written notice to IXSYS by
MEDIMMUNE that an unlicensed THIRD PARTY is an infringer of a
VALID PATENT CLAIM of IXSYS PATENTS licensed to MEDIMMUNE, IXSYS
shall have the right and option, but not the obligation at its
cost and expense to initiate infringement litigation and to
retain any recovered damages.
7.3 In any infringement suit either party may institute to
enforce the IXSYS PATENTS pursuant to this Agreement, the other
party hereto shall, at the request of the party initiating such
suit, reasonably cooperate and, to the extent reasonably
possible, have its employees testify when requested and make
available relevant records, papers, information, samples,
specimens, and the like. All reasonable out-of-pocket costs
incurred in connection with rendering cooperation requested
hereunder shall be paid by the party requesting cooperation.
SECTION 8 - Warranties.
8.1 Each of IXSYS and MEDIMMUNE warrants and represents to
the other that:
(a) it has the corporate power and authority and the
legal right to enter into this Agreement and to perform its
obligations hereunder;
(b) it has taken all necessary corporate action on its
part to authorize the execution and delivery of this Agreement
and the performance of its obligations hereunder; and
(c) this Agreement has been duly executed and delivered
on its behalf, and constitutes a legal, valid, binding
obligation, enforceable against it in accordance with its terms.
8.2 IXSYS represents and warrants to MEDIMMUNE that:
(a) it has not previously granted and, prior to
expiration or termination of this Agreement, will not grant any
rights in the IXSYS PATENTS or IXSYS KNOW-HOW that conflict with
the rights and licenses granted to MEDIMMUNE herein;
(b) IXSYS has provided to MEDIMMUNE a true, complete
and correct copy of the IXSYS LICENSE AGREEMENTS (including any
amendments thereto), IXSYS has performed all obligations under
such agreements to enable IXSYS to grant the license granted to
MEDIMMUNE hereunder, and there are no other requirements
necessary for IXSYS to grant such license. IXSYS has neither
received nor delivered any written notice of default under the
IXSYS LICENSE AGREEMENTS. IXSYS hereby covenants and agrees that
(i) it shall not consent to any amendment or modification or
termination of the IXSYS LICENSE AGREEMENTS without the prior
written consent of MEDIMMUNE; (ii) shall keep the IXSYS LICENSE
AGREEMENTS in full force and effect during the respective terms
thereof; (iii) shall not assign IXSYS LICENSE AGREEMENTS without
the written consent of MEDIMMUNE (which consent shall not be
unreasonably withheld), except that such consent shall not be
required for assignment in connection with the transfer or sale
of all or substantially all of its business, or in the event of
its merger, consolidation, change in control or similar
transaction, (x) provided that such assignment is subject to this
Agreement and (y) such assignment does not adversely affect the
IXSYS LICENSE AGREEMENTS or IXSYS rights thereunder; (iv)
MEDIMMUNE will be promptly advised of any notice that IXSYS has
breached or that an IXSYS LICENSE AGREEMENT will be terminated,
and to the extent permitted under the IXSYS LICENSE AGREEMENTS,
MEDIMMUNE shall have the right but not the obligation to cure any
such breach; and (v) prior to the EFFECTIVE DATE, IXSYS has
provided to MEDIMMUNE all information and data in its possession
and control regarding the safety and efficacy of the ANTIBODY
known as VITAXIN.
(c) The IXSYS PATENTS that exist as of the Effective
Date are listed in Appendix B. IXSYS has neither received nor
delivered any written claim, nor has actual knowledge of any
claim, asserting the invalidity, unenforceability or misuse of
the IXSYS PATENTS.
8.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
SECTIONS 8.1 and 8.2, NEITHER PARTY MAKES ANY REPRESENTATION OR
EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF
ANY PATENT RIGHTS ISSUED OR PENDING.
SECTION 9 - Indemnification.
9.1 MEDIMMUNE agrees to indemnify and hold harmless IXSYS,
its directors, officers, employees and agents (collectively, the
"Indemnitees") from and against all losses, liabilities, damages
and expenses (including reasonable attorneys' fees and costs)
incurred in connection with any claims, demands, actions or other
proceedings by any third party arising from (a) the research,
development, manufacture, use or sale of ANTIBODIES or PRODUCTS
by MEDIMMUNE, its AFFILIATES or SUBLICENSEES, (b) the use of
PRODUCTS by any purchasers thereof, (c) the use by MEDIMMUNE, its
AFFILIATES or SUBLICENSEES of the IXSYS PATENTS, IXSYS KNOW-HOW
or MATERIALS, or (d) any act or omission by MEDIMMUNE, its
AFFILIATES OR SUBLICENSEES the effect of which would cause IXSYS
to be in breach of its obligations under the IXSYS LICENSE
AGREEMENTS (without regard to any applicable cure or notice
requirements thereof).
9.2 If any such claims or actions are made, IXSYS shall be
defended at MEDIMMUNE's sole expense by counsel selected by
MEDIMMUNE and reasonably acceptable to IXSYS provided that IXSYS
may, at its own expense, also be represented by counsel of its
own choosing.
9.3 MEDIMMUNE's indemnification under Section 9.1 shall not
apply to the extent any loss, liability, damage or expense is
attributable to the gross negligence or intentional misconduct of
the Indemnitees.
9.4 MEDIMMUNE may not settle any such claim, demand, action
or other proceeding or otherwise consent to an adverse judgment
in any such action or other proceeding that diminishes the rights
or interests of the Indemnitees without the express written
consent of the Indemnitees.
9.5 IXSYS shall notify MEDIMMUNE promptly of any claim,
demand, action or other proceeding under Section 9.1 and shall
reasonably cooperate with all reasonable requests of MEDIMMUNE
with respect thereto.
SECTION 10 - Assignment; Successors.
10.1 This Agreement shall not be assigned or otherwise
transferred (in whole or in part, whether voluntarily, by
operation of law or otherwise) by either of the parties without
the prior written consent of the other party (which consent shall
not be unreasonably withheld); provided, however, that either
party may, without such consent, assign this Agreement and its
rights and obligations hereunder to an AFFILIATE or in connection
with the transfer or sale of all or substantially all of its
business, or in the event of its merger, consolidation, change in
control or similar transaction, provided that such assignment by
IXSYS does not cause the termination of the rights and licenses
granted to MEDIMMUNE under this Agreement. Any permitted
assignee shall assume all obligations of its assignor under this
Agreement. Any purported assignment or transfer in violation of
this Section 10.1 shall be void.
10.2 Subject to the limitations on assignment herein, this
Agreement shall be binding upon and inure to the benefit of said
successors in interest and assigns of MEDIMMUNE and IXSYS.
SECTION 11 - Term and Termination.
11.1 Except as otherwise specifically provided herein and
unless sooner terminated pursuant to Section 11.2 or 11.3 of this
Agreement, this Agreement and the licenses and rights granted
thereunder shall remain in full force and effect until MEDIMMUNE
has no further royalty obligation hereunder, at which time
MEDIMMUNE shall have a fully paid-up, non-cancelable,
nonexclusive license (i) under the IXSYS KNOW-HOW to research,
develop, make, have made, use, import, export and sell, offer to
sell or have sold PRODUCTS and (ii) to make, have made and use
the MATERIALS for all of the purposes of Section 11.1(i).
11.2 MEDIMMUNE shall have the right to terminate this
Agreement upon ninety (90) days prior written notice to IXSYS.
11.3 (a) In addition to the right to terminate under Section
11.3(b), IXSYS shall have the right to terminate this Agreement
if and only if MEDIMMUNE breaches its obligations under Section 6
or 9. If such a breach shall occur, IXSYS shall provide
MEDIMMUNE with written notice of such breach and if such breach
is not cured within thirty (30) days after such written notice,
IXSYS may terminate this Agreement by written notice to
MEDIMMUNE, provided such written notice is given within thirty
(30) days after the expiration of such initial thirty (30) day
period.
(b) If, in any calendar year, MEDIMMUNE (or its agent)
has not performed one of the following with respect to a PRODUCT
selected by MEDIMMUNE:
(i) expended (CONFIDENTIAL TREATMENT REQUESTED) in
the calendar year for research and/or development and/or
production which in good faith is directed to a PRODUCT;
(ii) engaged in good faith in a Phase I trial with
respect to a PRODUCT;
(iii) engaged in good faith in a Phase II trial
with respect to a PRODUCT;
(iv) engaged in good faith in a Phase III trial
with respect to a PRODUCT;
(v) good faith preparation and/or good faith review
of documents for filing a Biologics License Application (or its
equivalent) in the United States, Europe or Japan with respect to
a PRODUCT;
(vi) good faith review and/or good faith analysis
of clinical protocols and/or data with respect to a PRODUCT
including but not limited to investigating a serious adverse
event in a clinical trial;
(vii) engaged in good faith in the manufacturing of
GMP ANTIBODY for use in human clinical trials in the United
States, Europe or Japan, provided however that MEDIMMUNE shall in
good faith commence such human clinical trials of such ANTIBODY
within twelve (12) months after commencement of such
manufacturing.
(viii) a Biologics License Application (or its
equivalent) is on file in the United States, Europe or Japan for
a PRODUCT;
(ix) a Biologics License Application (or its
equivalent) has been approved for a PRODUCT in the United States,
Japan or Europe.
then in such event, as IXSYS' sole and exclusive remedy,
within sixty (60) days after the end of such calendar year, IXSYS
shall have the right to send a written notice to MEDIMMUNE that
this Agreement shall be terminated, and if within sixty (60) days
after MEDIMMUNE receives such written notice MEDIMMUNE has not
cured such failure, this Agreement shall be terminated.
(c) If MEDIMMUNE receives a notice of termination under
Section 11.3(a) or 11.3(b), MEDIMMUNE shall have the right to
contest such termination by requesting arbitration under Section
13.2, and if MEDIMMUNE requests such arbitration, this Agreement
shall be terminated only if in such arbitration there is a final
determination that IXSYS has the right to terminate this
Agreement, as provided in this Section 11.3.
11.4 Upon any termination of this Agreement, MEDIMMUNE, at
its option, shall be entitled to sell any completed inventory of
PRODUCT which remains on hand as of the date of the termination,
so long as MEDIMMUNE pays to IXSYS the royalties applicable to
said subsequent sales in accordance with the same terms and
conditions as set forth in this Agreement.
11.5 In the event that this Agreement is terminated under
Section 11.2 or under Section 11.3 :
(a) MEDIMMUNE shall take all actions necessary to
assign and deliver to IXSYS all remaining quantities of all
ANTIBODIES and PRODUCTS developed by or on behalf of MEDIMMUNE
under this Agreement, all clinical and preclinical data and
information regarding such ANTIBODIES and PRODUCTS, and all
registrations and regulatory filings regarding such ANTIBODIES
and PRODUCTS that exist as of the time of termination, in each
case to the extent that MEDIMMUNE has transferable rights
thereto.
(b) IXSYS shall agree to pay a reasonable royalty to
MEDIMMUNE to compensate MEDIMMUNE for the relative value of its
contributions to ANTIBODIES and PRODUCT. The parties shall enter
into good faith negotiations and attempt to reach mutual
agreement to determine such a reasonable royalty. If such mutual
agreement is not reached within ninety (90) days after
commencement of such negotiations, then the determination shall
be submitted to binding arbitration under Section 13.2.
(c) Any sublicense granted under this Agreement shall
remain in full force and effect as a direct license between IXSYS
and the SUBLICENSEE under the terms and conditions of the
sublicense agreement, subject to the SUBLICENSEE agreeing to be
bound to IXSYS under such terms and conditions within thirty (30)
days after IXSYS provides written notice to the SUBLICENSEE of
the termination of this Agreement. At the request of MEDIMMUNE,
IXSYS will acknowledge to a SUBLICENSEE IXSYS' obligations to the
SUBLICENSEE under this paragraph.
11.6 The provisions of Sections 4, 9, 11.1, 11.4, 11.5 and
11.6 shall survive any expiration or termination of this
Agreement.
11.7 Upon expiration or termination of this Agreement for any
reason, nothing herein shall be construed to release either party
from any obligation that matured prior to the effective date of
such expiration or termination.
11.8 All rights and licensing granted under or pursuant to
this Agreement by IXSYS to MEDIMMUNE are, and shall irrevocably
be deemed to be, "intellectual property" as defined in Section
101(56) of the Bankruptcy Code. In the event of the commencement
of a case by or against either party under any Chapter of the
Bankruptcy Code, this Agreement shall be deemed an executory
contract and all rights and obligations hereunder shall be
determined in accordance with Section 365(n) thereof. Unless a
party rejects this Agreement and the other party decides not to
retain its rights hereunder, the other party shall be entitled to
a complete duplicate of (or complete access to, as appropriate)
all intellectual property and all embodiments of such
intellectual property held by the party and the party shall not
interfere with the rights of the other party, which are expressly
granted hereunder, to such intellectual property and all
embodiments of such intellectual property from another entity.
Further, this Agreement shall be deemed, upon presentation to
another entity, to be the same as an express instruction by the
party to such other entity to provide such intellectual property
and all embodiments of such intellectual property directly to the
other party. Without limiting the foregoing provisions in this
paragraph, the other party shall be entitled to all post-
bankruptcy-petition improvements, updates, or developments of
intellectual property created hereunder. If such intellectual
property is not fully developed as of the commencement of any
bankruptcy case, the other party shall have the right to complete
development of the property.
SECTION 12 - Force Majeure.
12.1 No failure or omission by the parties hereto in the
performance of any obligation of this Agreement (other than an
obligation for the payment of money) shall be a breach of this
Agreement, nor shall it create any liability, if the same shall
arise from any cause or causes beyond the reasonable control of
the affected party, including, but not limited to, the following,
which for purposes of this Agreement shall be regarded as beyond
the control of the party in question: acts of God; acts or
omissions of any government; any rules, regulations, or orders
issued by any governmental authority or by any officer,
department, agency or instrumentality thereof; fire; storm;
flood; earthquake; accident; war; rebellion; insurrection; riot;
invasion; strikes; and lockouts or the like; provided that the
party so affected shall use its commercially reasonable efforts
to avoid or remove such causes or nonperformance and shall
continue performance hereunder with the utmost dispatch whenever
such causes are removed.
SECTION 13 - General Provisions.
13.1 The relationship between IXSYS and MEDIMMUNE is that of
independent contractors. IXSYS and MEDIMMUNE are not joint
venturers, partners, principal and agent, master and servant,
employer or employee, and have no relationship other than as
independent contracting parties. IXSYS shall have no power to
bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE
shall have no power to bind or obligate IXSYS in any manner.
13.2 Any matter or disagreement under Section 6.1(d), 6.2,
11.3(c) or 11.5(b), which this Agreement specifies is to be
resolved by arbitration shall be submitted to a mutually selected
single arbitrator to so decide any such matter or disagreement.
The arbitrator shall conduct the arbitration in accordance with
the Rules of the American Arbitration Association, unless the
parties agree otherwise. If the parties are unable to mutually
select an arbitrator, the arbitrator shall be selected in
accordance with the procedures of the American Arbitration
Association. The decision and award rendered by the arbitrator
shall be final and binding. Judgment upon the award may be
entered in any court having jurisdiction thereof. Any
arbitration pursuant to this section shall be held in San Diego,
California or such other place as may be mutually agreed upon in
writing by the parties. The prevailing party in any such
arbitration shall be entitled to recover from the other party all
reasonable attorneys' fees and costs incurred by the prevailing
party in connection therewith.
13.3 This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter
thereof and supersedes all prior agreements in this respect.
There shall be no amendments or modifications to this Agreement,
except by a written document which is signed by both parties.
13.4 This Agreement shall be construed and enforced in
accordance with the laws of the State of California without
regard to the conflicts of law principles thereof.
13.5 The headings in this Agreement have been inserted for
the convenience of reference only and are not intended to limit
or expand on the meaning of the language contained in the
particular article or section.
13.6 Any delay in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other
matter shall not constitute a waiver of a party's right to the
future enforcement of its rights under this Agreement, excepting
only as to an expressed written and signed waiver as to a
particular matter for a particular period of time.
13.7 Any notices given pursuant to this Agreement shall be in
writing, delivered by any means, addressed to the other party at
its address indicated below, or to such other address as the
addressee shall have last furnished in writing to the addresser
and (except as otherwise provided in this Agreement) shall be
effective upon receipt by the addressee.
To MEDIMMUNE: MedImmune, Inc.
35 West Watkins Mill Road
Gaithersburg, MD 20878
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax No. (973) 994-1744
Attn: Elliot M. Olstein, Esq.
To IXSYS: Ixsys, Inc.
3520 Dunhill Road
San Diego, CA 92121
Attention: President
Copy to: Pillsbury Madison & Sutro LLP
235 Montgomery Street, 16th Floor
San Francisco, California 94104
Attention: Thomas E. Sparks, Jr.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
IXSYS, INC. MEDIMMUNE, INC.
By: /s/ Janine M. Taylor By: /s/ David M. Mott
Name: Janine M. Taylor Name: David M. Mott
Title: President & Chief Operating Title: Vice Chairman &
Officer Chief Financial Officer
Exhibit 10.98
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
the 24th day of February, 1999 by and between IXSYS, INC., a
Delaware corporation (the "Company"), and MedImmune, Inc.
("Purchaser").
W I T N E S S E T H:
WHEREAS, the Company and Purchaser have entered into a
License Agreement dated as of even date herewith (the "License
Agreement") pursuant to which the Company has granted the
Purchaser a license to certain technology; and
WHEREAS, pursuant to Section 6.13 of the License Agreement,
the Purchaser has agreed to purchase the Common Stock described
in this Agreement on the terms and conditions set forth herein:
NOW, THEREFORE, the parties hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 Sale and Issuance of Common Stock. Subject to the
terms and conditions of this Agreement, Purchaser agrees to
purchase and the Company agrees to sell and issue to Purchaser
(CONFIDENTIAL TREATMENT REQUESTED) shares of the Company's
Common Stock at the Closing for a purchase price (the "Purchase
Price") of (CONFIDENTIAL TREATMENT REQUESTED) per share.
1.2 Closing. The purchase and sale of the Common Stock
shall take place at the offices of the Company at 3520 Dunhill
Street, San Diego, California, at 10:00 A.M. on February 24,
1999 (the "Closing"). At the Closing the Company shall deliver
to Purchaser a certificate representing the Common Stock which
Purchaser is purchasing against delivery to the Company by
Purchaser of a bank wire in the amount of (CONFIDENTIAL
TREATMENT REQUESTED) payable to the Company's order.
2. Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchaser that:
2.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and as
proposed to be conducted and is qualified to do business as a
foreign corporation and is in good standing in each jurisdiction
in which qualification is necessary under applicable law, except
where the failure to be so qualified would not have a material
adverse effect on its business.
2.2 Authorization. All corporate action on the part of
the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement,
the performance of all obligations of the Company hereunder and
the authorization, issuance and delivery of the Common Stock
being sold hereunder, to the extent that the foregoing requires
performance on or prior to the Closing, has been taken or will
be taken on or prior to the Closing, and this Agreement
constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its
terms.
2.3 Valid Issuance of Common Stock. The Common Stock
which is being purchased by Purchaser hereunder, when issued,
sold and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable.
2.4 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state, local or
provincial governmental authority on the part of the Company is
required in connection with the consummation of the transactions
contemplated by this Agreement, except for any post-sale filings
pursuant to applicable state securities laws, which filings will
be effected within the applicable time periods.
2.5 No Conflicts. Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated
hereby will result in the breach or violation of any of the
terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having
jurisdiction over the Company or any of its properties, (ii) any
agreement or instrument to which the Company is a party or by
which the Company is bound or to which any of the properties of
the Company is subject or (iii) the certificate of incorporation
or by-laws or other organizational documents of the Company,
which breach or violation would be materially adverse to the
Company.
2.6 Capitalization. At the Closing, the authorized
capital stock of the Company will be (i) (CONFIDENTIAL TREATMENT
REQUESTED) shares of Common Stock and (ii) (CONFIDENTIAL
TREATMENT REQUESTED) shares of Preferred Stock. Immediately
prior to the Closing, (CONFIDENTIAL TREATMENT REQUESTED) shares
of common stock and (CONFIDENTIAL TREATMENT REQUESTED) shares of
preferred stock (convertible as of the Closing into
(CONFIDENTIAL TREATMENT REQUESTED) shares of Common Stock)
were issued and outstanding.
3. Representations, Warranties and Covenants of Purchaser.
Purchaser hereby represents, warrants and covenants that:
3.1 Authorization. This Agreement constitutes its valid
and legally binding obligation.
3.2 No Conflicts. Neither the execution, delivery and
performance of this Agreement by Purchaser nor the consummation
by Purchaser of the transactions contemplated hereby will result
in the breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule,
regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over Purchaser
or any of its properties, (ii) any agreement or instrument to
which Purchaser is a party or by which Purchaser is a party or
by which Purchaser is bound or to which any of the properties of
Purchaser is subject or (iii) the certificate of incorporation
or by-laws or other organizational documents of Purchaser, which
breach or violation would be materially adverse to Purchaser.
3.3 Purchase Entirely for Own Account. This Agreement is
made with Purchaser in reliance upon Purchaser's representation
to the Company, which by Purchaser's execution of this Agreement
Purchaser hereby confirms, that the Common Stock will be
acquired for investment for Purchaser's own account, not as a
nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Purchaser has no
present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement,
Purchaser further represents that Purchaser does not have any
contract, undertaking, agreement or arrangement with any person
to sell, transfer or grant participations to such person or to
any third person, with respect to any of the Common Stock.
Purchaser represents that it has full power and authority to
enter into this Agreement.
3.4 Investment Experience. Purchaser acknowledges that
it is able to fend for itself, can bear the economic risk of its
investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and
risks of the investment in the Common Stock.
3.5 Restricted Common Stock. Purchaser understands that
the shares of Common Stock it is purchasing are characterized as
"restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold
without registration under the Securities Act of 1933, as
amended (the "Securities Act"), only in certain limited
circumstances. In this connection Purchaser represents that it
is familiar with Securities and Exchange Commission (the "SEC")
Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
3.6 Accredited Investor. Purchaser is an accredited
investor as defined in Rule 501(a) of Regulation D of the SEC
under the Securities Act.
3.7 Confidentiality. Purchaser hereby represents,
warrants and covenants that it shall maintain in confidence, and
shall not use or disclose without the prior written consent of
the Company, any information identified as confidential that is
furnished to it by the Company in connection with this Agreement
(as opposed to information furnished pursuant to the License
Agreement or other agreements between the parties). This
obligation of confidentiality shall not apply, however, to any
information (a) in the public domain through no unauthorized act
or failure to act by Purchaser, (b) lawfully disclosed to
Purchaser by a third party who possessed such information
without any obligation of confidentiality, (c) known previously
by Purchaser or lawfully developed by Purchaser independent of
any disclosure by the Company or (d) required to be disclosed by
applicable law, regulation or bona fide legal process provided
Purchaser takes reasonable steps to restrict and maintain the
confidentiality of such disclosure and provides reasonable prior
notice to the Company. Purchaser further covenants that
Purchaser shall return to the Company all tangible materials
containing such information upon request by the Company. This
confidentiality covenant shall expire, as to any particular
disclosure, five years after such disclosure.
3.8 Right of First Offer in Favor of the Company. Before
any shares of the Common Stock purchased hereunder may be sold
or transferred, such shares shall first be offered to the
Company as follows:
(a) Purchaser shall promptly deliver a notice to the
Company stating (i) its bona fide intention to sell or transfer
such shares, (ii) the number of such shares to be sold or
transferred, and the basic terms and conditions of such sale or
transfer, (iii) the price for which it proposes to sell or
transfer such shares, and (iv) proof satisfactory to the Company
that the proposed sale or transfer will not violate any
applicable federal or state securities laws. The notice shall
be signed by Purchaser and state that Purchaser has a binding
commitment to sell the number of shares specified in such notice
to a third party on the terms stated in such notice.
(b) Within 30 days after the receipt of the notice
(the "Notice Period"), the Company may elect to purchase all or
a portion of the shares to which such notice refers, at the
price per share specified in the notice. The election to
purchase shall be made by written notice to Purchaser. If the
Company elects not to purchase all such shares, the Company may
assign its rights to purchase any shares not purchased by the
Company.
(c) If all of the shares to which the notice refers
are not elected to be purchased, as provided in subparagraph
3.8(b) hereof, Purchaser may sell the shares to the purchaser or
transferee disclosed to the Company as provided below at a price
not less than the price specified in the notice, provided that
(i) Purchaser has disclosed to the Company the identity of the
proposed purchaser or transferee within five (5) business days
of expiration of the Notice Period and prior to consummation of
the sale or transfer, (ii) such sale or transfer is consummated
within three months of the date of said notice to the Company,
and (iii) any such sale is made in compliance with applicable
federal and state securities laws and not in violation of any
other contractual restrictions to which Purchaser is bound. The
third-party purchaser shall acquire the shares of stock subject
to the Company's rights of first offer and shall require
compliance with the procedures described in this Section 3.8.
(d) Any proposed transfer on terms and conditions
different from those set forth in the notice, as well as any
subsequent proposed transfer shall again be subject to the
Company's rights of first offer and shall require compliance
with the procedures described in this Section 3.8.
(e) Notwithstanding anything to the contrary
contained in this Agreement, this Section 3.8 shall be
terminated and shall have no further force and effect six (6)
months after the effective date of the Company's registration of
its common equity securities pursuant to Section 12 of the
Securities Exchange Act of 1934 (the "34 Act Registration").
3.9 Further Limitations on Disposition. Without in any
way limiting the representations set forth above and
notwithstanding the provisions of Section 3.8, Purchaser further
agrees that:
(a) Purchaser shall not directly or indirectly sell,
offer to sell, contract to sell, grant any option to purchase or
otherwise transfer or dispose of all or any portion of the
Common Stock purchased hereunder, in violation of the Securities
Act, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or the rules of the Commission promulgated
thereunder, including Rule 144 under the Securities Act. If
reasonably requested by the Company, Purchaser shall have
furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company and its counsel, that any permitted
transfer or disposition will not require registration of such
shares under the Securities Act. It is agreed that the Company
will not require opinions of counsel for transactions made
pursuant to Rule 144, as currently in existence, except in
unusual circumstances.
(b) During the period commencing as of the Closing
until (CONFIDENTIAL TREATMENT REQUESTED) months following the
conclusion of the last research and development program
conducted pursuant to the Research and Assignment and License
Agreements entered into between Purchaser and the Company
simultaneously herewith or which may later be entered into
pursuant to the Selection Agreement entered into between
Purchaser and the Company simultaneously herewith the number of
shares of Common Stock of the Company purchased hereunder which
Purchaser may, directly or indirectly, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise
transfer or dispose of during the preceding (CONFIDENTIAL
TREATMENT REQUESTED) shall not exceed (CONFIDENTIAL TREATMENT
REQUESTED) of the Company's outstanding Common Stock or Common
Stock into which outstanding Preferred Stock of the Company is
then convertible.
(c) During the period commencing as of the effective
date of the Company's 34 Act Registration until (CONFIDENTIAL
TREATMENT REQUESTED) days thereafter Purchaser shall not,
directly or indirectly sell, offer to sell, contract to sell,
grant any option to purchase or otherwise transfer or dispose of
(i) any of the Common Stock purchased hereunder pursuant to this
Agreement at any time during the first (CONFIDENTIAL TREATMENT
REQUESTED) day(s) of such period and (ii) not more than
(CONFIDENTIAL TREATMENT REQUESTED) of the Common Stock purchased
hereunder at any time during the succeeding (CONFIDENTIAL
TREATMENT REQUESTED) day(s) of such period.
(d) Prior to Purchaser entering into any agreement or
commitment to sell, grant options to purchase or otherwise
transfer or dispose of any shares of Common Stock purchased
hereunder, Purchaser agrees to provide the Board of Directors or
President of the Company at least fourteen (14) days prior
written notice of Purchaser's intent to transfer or dispose of
such shares and to discuss with the Company in good faith a plan
for transferring or disposing of the shares in any orderly
fashion.
(e) Without limiting the foregoing, prior to the
effective date of the Company's 34 Act Registration, Purchaser
shall not, without the prior written consent of the Company,
directly or indirectly sell, offer to sell, grant an option to
purchase or otherwise transfer or dispose of any of the Common
Stock to any person engaged in any business directly competitive
with the Company. For purposes of this subsection 3.9(d)
"directly competitive" shall mean the field of(CONFIDENTIAL
TREATMENT REQUESTED), or such other (CONFIDENTIAL TREATMENT
REQUESTED) field in which at least (CONFIDENTIAL TREATMENT
REQUESTED) of the Company's work force (on a full time
equivalent basis) is engaged at the time of the proposed
transfer.
3.10 Standstill Provisions. Commencing as of the Closing
and until the first anniversary of the effective date of the
Company's 34 Act Registration, Purchaser (including all
affiliates or agents of Purchaser) shall not acquire beneficial
ownership of any shares of common stock of the Company, any
securities convertible into or exchangeable for common stock, or
any other right to acquire common stock, except by way of stock
dividends or other distributions to Purchaser as a holder of the
Common Stock generally, from the Company or any other person or
entity, without the prior written consent of the Company, which
consent may be withheld in the Company's sole discretion, if
such acquisition should cause Purchaser (including all
affiliates of Purchaser) to beneficially own more (CONFIDENTIAL
TREATMENT REQUESTED) of the Company's outstanding voting stock
(assuming the full conversion of all convertible securities of
the Company held by Purchaser and its affiliates); provided,
however, that in no event shall (i) the original purchase of the
Common Stock pursuant to this Agreement, (ii) the purchase of
additional shares of Common Stock in lieu of milestone payments
payable pursuant to the License Agreement or (iii) any reduction
in the outstanding shares of the Company's capital stock (or
rights or options), cause a violation of this Section 3.10. In
order to facilitate Purchaser's compliance with this Section
3.10, upon the written request of Purchaser the Company shall
inform Purchaser of the number of outstanding shares of the
Company's voting stock, and Purchaser may rely on such
information in any purchase it makes within 30 days of the
receipt of such information.
3.11 Voting Agreement. Purchaser agrees that it shall, so
long as it holds shares of the Company's Common Stock, vote such
shares with respect to any proposed sale of all or substantially
all of the assets, merger, combination or reorganization of the
Company in the same manner as stockholders holding a majority of
the voting securities of the Company and who are not themselves
a party to any such sale, merger, combination or reorganization.
This Section 3.11 shall terminate and shall have no further
force and effect twelve (12) months after the effective date of
the Company's 34 Act Registration.
3.12 Legends. It is understood that the certificates
evidencing the Common Stock may bear one or all of the following
legends:
(a) "The securities represented by this certificate
have not been registered under the Securities Act of 1933. They
may not be sold, offered for sale, pledged or hypothecated in
the absence of a registration statement in effect with respect
to the securities under such Act or an opinion of counsel satis
factory to the Company that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
(b) "The securities represented by this certificate
are subject to certain rights of first offer and repurchase and
certain restrictions on resale set forth in the Stock Purchase
Agreement dated February 24, 1999 between the Company and
MedImmune, Inc. A copy of such restrictions and rights of first
offer and repurchase may be obtained from the Company upon
request."
(c) Any legend required by the laws of the State of
California or other jurisdiction.
3.13 Stop-Transfer Instructions. In order to enforce the
provisions of Sections 3.8 and 3.9 hereof, the Company may
impose stop-transfer instructions with respect to the shares of
the Common Stock held by Purchaser (and the shares or securities
of every other person subject to the foregoing restrictions).
3.14 Transfers to Affiliates. Notwithstanding the
provisions of Sections 3.8 and 3.9(b) and (c) hereof, Purchaser
may transfer the Common Stock to any affiliate of Purchaser who
agrees to be bound by the terms of this Agreement. For purposes
of this Section 3.14, "affiliate" shall mean any entity which
controls or is controlled by Purchaser, and "control" shall mean
ownership of at least (CONFIDENTIAL TREATMENT REQUESTED) of the
voting stock or other ownership interest.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE COMMON
STOCK WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF
CALIFORNIA AND THE ISSUANCE OF SUCH COMMON STOCK OR THE PAYMENT
OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF COMMON STOCK
IS EXEMPT FROM QUALIFICATIONS BY SECTION 25100, 25102 OR 25105
OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES
TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH
QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
5. Covenants.
5.1 Delivery of Financial Statements. The Company shall
deliver to Purchaser such financial statements of the Company
which the Company from time to time distributes to other holders
of the Company's Common Stock, concurrently with such
distribution.
5.2 Registration Rights. Purchaser shall have such
registration rights with respect to the Common Stock as are set
forth on EXHIBIT A attached hereto; provided, however, that
Purchaser shall agree to be bound by the provisions of such
EXHIBIT A as a condition precedent to the enjoyment of any such
rights and, at the written request of the Company in connection
with any request by Purchaser to exercise such rights, Purchaser
shall execute a specific acknowledgement and agreement to be so
bound (or else Purchaser shall be deemed to have forfeited such
rights).
6. Miscellaneous.
6.1 Successors and Assigns. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties.
Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obli
gations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
6.2 Governing Law. This Agreement shall be governed by
and construed under the laws of the State of California
(irrespective of its choice of law principles).
6.3 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument.
6.4 Titles and Subtitles. The titles and subtitles used
in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
6.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal
delivery to the party to be notified (or upon the date of
attempted delivery where delivery is refused) or, if sent by
telecopier, telex, telegram, or other facsimile means, upon
receipt of appropriate confirmation of receipt, or upon deposit
with the United States Postal Service, by registered or
certified mail, or next day air courier, with postage and fees
prepaid and addressed to the party entitled to such notice at
the address indicated for such party on the signature page
hereof, or at such other address as such party may designate by
10 days' advance written notice to the other parties to this
Agreement.
6.6 Finder's Fee. Each party represents that it neither
is nor will be obligated for any finder's fee or commission in
connection with this transaction. Purchaser agrees to indemnify
and hold harmless the Company from any liability for any
commission or compensation in the nature of a finder's fee (and
the costs and expenses of defending against such liability or
asserted liability) for which Purchaser or any of its officers,
partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless Purchaser
from any liability for any commission or compensation in the
nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for
which the Company or any of its officers, employees or
representatives is responsible.
6.7 Amendments and Waivers. Any term of this Agreement
may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the
Common Stock purchased under this Agreement. Any amendment or
waiver effected in accordance with this paragraph shall be
binding upon each holder of Common Stock purchased under this
Agreement at the time outstanding, each future holder of such
Common Stock, and the Company.
6.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accor
dance with its terms.
6.9 Entire Agreement. This Agreement and the Related
Agreements embody the entire agreement and understanding of the
parties hereto and thereto in respect of the subject matter
contained herein and therein and supersede all prior agreements
and understandings between the parties with respect to such
subject matter. No party shall be liable or bound to any other
party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first above written.
IXSYS, INC. MEDIMMUNE, INC.
By: /s/ Janine M. Taylor By: /s/ David M. Mott
Name: Janine M. Taylor Name: David M. Mott
Title: President & Chief Operating Title: Vice Chairman &
Officer Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
MedImmune, Inc.'s quarterly report on Form 10-Q for the three months
ended March 31, 1999 and is qualified in its entirety by reference to
such filing.
</LEGEND>
<CIK> 0000873591
<NAME> MEDIMMUNE, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-END> Mar-31-1999
<CASH> 30,090
<SECURITIES> 163,964
<RECEIVABLES> 42,329
<ALLOWANCES> 0
<INVENTORY> 21,475
<CURRENT-ASSETS> 276,043
<PP&E> 76,249
<DEPRECIATION> 0
<TOTAL-ASSETS> 416,841
<CURRENT-LIABILITIES> 72,885
<BONDS> 80,926
0
0
<COMMON> 556
<OTHER-SE> 260,344
<TOTAL-LIABILITY-AND-EQUITY> 416,841
<SALES> 126,996
<TOTAL-REVENUES> 128,721
<CGS> 31,267
<TOTAL-COSTS> 82,967
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 928
<INCOME-PRETAX> 47,013
<INCOME-TAX> 18,178
<INCOME-CONTINUING> 28,835
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,835
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.45
</TABLE>
