SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 31, 2000
BioSpecifics Technologies Corp.
(Exact name of registrant as specified in its charter)
Delaware 0-19879 11-3054851
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
35 Wilbur Street, Lynbrook, New York 11563
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 593-7000
Not Applicable
(Former name or former address, if changed since last report)
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Item 5. Other Events
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The Company's subsidiary, Advance Biofactures Corp. ("ABC") and Knoll
Pharmaceutical Company ("KPC") are parties to a License Agreement dated August
16, 1993 (the "License Agreement"), which granted KPC an exclusive license to
market Collagenase Santyl(R) Ointment (the "Licensed Product") in North America.
On January 31, 2000, pursuant to a sublicense and assignment agreement (the
"Sublicense/Assignment Agreement"), to which ABC is not a party, KPC sublicensed
its rights to Smith & Nephew, Inc. ("S&N") with the consent of ABC. KPC will
assign its license rights to S&N following FDA approval of a compliance program
being undertaken by ABC. See "ABC's Compliance With FDA Regulations".
On January 31, 2000, ABC, KPC, and S&N entered into three agreements in
connection with the Sublicense/Assignment Agreement:
o Regulatory Compliance Agreement;
o Allocation of Responsibilities Agreement; and
o Adverse Event ("AE") Processing and Exchange Agreement for Collagenase
Santyl(R)Ointment.
Copies of these agreements are attached hereto as Exhibits 1, 2, and 3 hereto
and are incorporated herein by reference.
ABC's Compliance with FDA Regulations
-------------------------------------
In January and March of 1999, ABC was issued a List of Inspectional Observations
on FDA Form 483 (the "Form 483") from FDA inspectors, citing numerous
inspectional observations relating to deficiencies in the Company's compliance
with FDA regulations at its Lynbrook, New York and Curacao, Netherlands Antilles
facilities. In addition, on May 10, 1999, ABC received a letter from the FDA
(the "FDA Letter") citing certain inspectional observations relating to
deficiencies at its Lynbrook, New York facility, Curacao, Netherlands Antilles
facility, and contract manufacturing facility at KPC. The FDA Letter advised ABC
that the FDA will institute formal proceedings to revoke the ABC's Establishment
License to manufacture Collagenase Santyl(R) Ointment unless ABC provided
satisfactory assurances to the FDA, including submitting to the FDA a
comprehensive plan of corrective action to address the observations listed in
the Form 483 and the FDA Letter, and otherwise demonstrate compliance with
applicable regulatory requirements. The Company has provided the FDA with a plan
of corrective action and has had a number of meetings with the FDA to discuss
the plan of corrective action and the renovation of the Curacao production
facility. ABC has submitted a number of periodic updates to the FDA on progress
under the plan. ABC hired outside consultants and employed additional staff for
its Quality Unit. ABC continues to seek to employ additional staff for the
Quality Unit to assist in further developing and executing
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the plan of corrective action, and continues to reorganize the Quality Control
and Quality Assurance departments.
The Company produces the enzyme Collagenase ABC (the "enzyme"), the active
ingredient in Collagenase Santyl(R) Ointment, at its Lynbrook and Curacao
facilities. The Company will start extensive renovations at the Curacao facility
in March 2000, which will result in the suspension of enzyme production there.
The renovated Curacao facility will not produce enzyme until construction and
validation are completed. The Company voluntarily suspended the production of
the enzyme at the Lynbrook facility and is in the process of planning
renovations for that facility.
The Company estimates that in the best-case scenario, either one or both the
Curacao and Lynbrook facilities could be back in production by the fourth
quarter of calendar 2000 and have enzyme available for KPC during the second
quarter of 2001. Due to the uncertain duration of the FDA approval process
however, there can be no assurances that target dates will be met. In
anticipation of the renovation and suspension of manufacturing operations, the
Company has accumulated an inventory of enzyme which it estimates KPC can use to
contract manufacture Collagenase Santyl(R) Ointment into the third quarter of
2001.
Although the Company believes that it has made considerable progress in
addressing the FDA concerns addressed in the Form 483 and the FDA Letter, if the
Company is unable to further address these matters in a timely manner, there may
be delays in the delivery of the enzyme to KPC for use to contract manufacture
Collagenase Santyl(R) Ointment.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits
1. Regulatory Compliance Agreement
2. Allocation of Responsibilities Agreement
3. Adverse Event ("AE") Processing and Exchange Agreement for
Collagenase Santyl(R)Ointment
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BioSpecifics Technologies Corp.
By: /s/ Thomas L. Wegman
------------------------
Thomas L. Wegman
Executive Vice President
Dated: March 3, 2000
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Exhibit 1
REGULATORY COMPLIANCE AGREEMENT
This Agreement made this 31st day of January, 2000 between Advance Biofactures
Corporation, a New York corporation having offices at 35 Wilbur Street,
Lynbrook, NY 11563 (hereinafter called "ABC"), Knoll Pharmaceutical Company, a
New Jersey corporation having offices at 3000 Continental Drive - North, Mount
Olive, NJ 07828-1234 (hereinafter "KPC"), and Smith & Nephew, Inc, a Delaware
corporation having offices at 11775 Starkey Road, Largo, FL 33779-1970
(hereinafter "S&N").
WITNESSETH:
WHEREAS, ABC and KPC are parties to an Agreement dated August 16, 1993 (the
"License Agreement") pursuant to which ABC granted to KPC an exclusive license
to market the Licensed Product in the United States, including the Commonwealth
of Puerto Rico, and Canada with the right to sublicense upon prior written
consent of ABC (the "Licensed Rights");
WHEREAS, KPC and S&N desire to enter a long term contractual relationship
related to the Licensed Product, and seek continuity of supply of Licensed
Product in compliance with all relevant U. S. Food and Drug Administration
("FDA") laws and regulations;
WHEREAS, KPC desires to grant a sublicense of the Licensed Rights to S&N for the
period of time during which ABC will be addressing certain issues raised by FDA
related to the Product and its compliance with FDA laws and regulations, and S&N
desires to receive such sublicense (the "Sublicense");
<PAGE>
WHEREAS, ABC has submitted to FDA a comprehensive compliance plan which includes
remedial steps which ABC believes address the regulatory issues raised by FDA
(the "Compliance Plan"); and
WHEREAS, KPC desires to assign the Licensed Rights to S&N following FDA Approval
of the Curacao Facility (as the term "FDA Approval of the Curacao Facility" is
defined in paragraph 9) following the remediation of ABC's manufacturing
facility for Collagenase Powder located in Curacao (the "Curacao Facility"),
which remediation ABC has undertaken as part of the Compliance Plan, and S&N
desires to receive such assignment (the "Assignment");
NOW, THEREFORE, in consideration of the premises set forth herein, it is
mutually agreed between the parties hereto as follows:
1. Redacted
2. ABC agrees to make its reasonable best commercial efforts to fully fund
and timely implement in all material respects the Compliance Plan, and
will permit KPC and S&N, each at its own expense, to monitor, upon
reasonable notice and at reasonable times and in a manner not
interfering with the ability of ABC to conduct its business and
operations, ABC's progress against the Compliance Plan.
3. Redacted
4. (a) Redacted
(b) Upon reasonable notice and at reasonable times to monitor and in a
manner not interfering with the ability of KPC or S&N to conduct their
respective businesses and
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operations, KPC and S&N shall each permit ABC, at no cost to KPC and
S&N, to audit their compliance with (i) all relevant FDA laws and
regulations having an impact on the manufacturing or sale of the
Licensed Product or any other activity relating to the Licensed Product
and (ii) all reports KPC or S&N make or are required to make to the
FDA. This audit shall be conducted in accordance with generally
accepted industry standards for conducting audits of this type. ABC
agrees that any ABC representatives shall comply with all safety and
security rules of KPC or S&N in effect at the time of any such audit.
(c) In the event a party disagrees with any determination by another
party as provided in paragraph 4(a) above that action is required to
assure FDA compliance under generally accepted industry standards, the
parties agree to meet to discuss the matter. In the event the parties
are unable to resolve their disagreement during a 60 day period, they
will seek the opinion of a regulatory consultant acceptable to each
party, the cost of whom shall be borne equally by the parties. Each
party agrees that the decision of such regulatory consultant shall be
binding upon it; and further agrees that it shall undertake, at its
sole cost, any reasonable action that such regulatory expert determines
is required to assure FDA compliance under generally accepted industry
standards. In the event such action will require an extraordinary
expense, the parties agree to meet to discuss the matter.
(d) It is understood and agreed among the parties that ABC has the
primary regulatory responsibility with respect to all matters related
to the regulatory compliance with all relevant FDA laws and regulations
having an impact on the Collagenase Powder for use in the License
Product as well as for the Curacao Facility. Accordingly, the
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ultimate decision maker with respect to regulatory compliance in
connection with these matters is ABC, subject to the terms and
conditions herein.
5. ABC acknowledges that it is in the process of recruiting and seeking to
hire and maintain qualified quality assurance personnel, including
without limitation a Vice President of Quality Assurance. If by
September 30, 2000, ABC has encountered difficulties in filling the
Vice President position, the parties agree to discuss the options
available to address this requirement.
6. (a) Redacted
(b) Redacted
(c) During the term of this Agreement, ABC shall apprise KPC and S&N at
the conclusion of each calendar quarter of ABC's inventory of
Collagenase Powder.
(d) During such renovation and up to FDA Approval of the Curacao
Facility, if ABC is unable or unwilling to fill any KPC order for
Collagenase Powder made in accordance with the terms and conditions of
the License Agreement, ABC agrees that it shall immediately provide to
KPC all the necessary technical information and manufacturing know-how
for KPC to manufacture Collagenase Powder. Except to the extent it may
be required by FDA or other governmental entity to disclose (after
giving ABC a reasonable opportunity to seek judicial relief to prevent
such disclosure), KPC agrees to keep secret and not use for any purpose
other than as stated herein any such technical information and
manufacturing know-how. At such time as ABC is able and willing to fill
KPC orders for Collagenase Powder in accordance with the terms and
conditions of the License
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Agreement, KPC agrees to (i) cease manufacturing Collagenase Powder and
(ii) return to ABC, or destroy at ABC's direction, all such technical
information and manufacturing know-how. This obligation of secrecy
shall be for the period of time, and governed by the exceptions, found
in Article 8(I) of the License Agreement. KPC shall not permit any
non-affiliated third party to manufacture the Collagenase Powder.
7. The term of this Agreement shall commence upon execution hereof by all
parties and shall expire when FDA Approval of the Curacao Facility and
FDA Approval of the Compliance Plan shall have been obtained.
8. KPC and S&N acknowledge that ABC shall not be liable for monetary
damages resulting from any non-compliance by ABC with respect to any of
its obligations arising solely under this Agreement unless and to the
extent that such non-compliance is determined by a final non-appealable
order of a court of competent jurisdiction to have resulted from ABC's
bad faith. Except as provided in the previous sentence, the sole remedy
of KPC and S&N shall be injunctive or other equitable relief.
9. (a) Redacted
(b) Redacted
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate originals by their duly authorized representatives.
ADVANCE BIOFACTURES CORPORATION KNOLL PHARMACUETICAL COMPANY
By: /s/ Thomas Wegman By: /s/ Carter H. Eckert
----------------------- -----------------------
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Title: Executive Vice President Title: President
------------------------ -------------
Date: January 31, 2000 Date: January 31, 2000
---------------- ----------------
SMITH & NEPHEW, Inc
By: /s/ Rod Skaggs Jr.
---------------------
Title: President
------------------
Date: January 31, 2000
------------------
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Exhibit 2
ALLOCATION OF RESPONSIBILITIES AGREEMENT
This Agreement made this 31st day of January, 2000 between Advance
Biofactures Corporation, a New York corporation having offices at 35 Wilbur
Street, Lynbrook, NY 11563(hereinafter called "ABC"), Knoll Pharmaceutical
Company, a New Jersey corporation having offices at 3000 Continental Drive -
North, Mount Olive, NJ 07828-1234(hereinafter "KPC"), and Smith & Nephew, Inc, a
Delaware corporation having offices at 11775 Starkey Road, Largo, FL 33779-1970
(hereinafter "S&N").
WITNESSETH:
WHEREAS, ABC and KPC are parties to an Agreement dated August 16, 1993 (the
"License Agreement") pursuant to which ABC granted to KPC an exclusive license
to market the Licensed Product (as defined in the License Agreement) in the
United States, including the Commonwealth of Puerto Rico, and Canada with the
right to sublicense upon prior written consent of ABC (the "Licensed Rights");
WHEREAS, pursuant to the terms of a Sublicense and Assignment Agreement, KPC
desires to grant a sublicense of the Licensed Rights to S&N for the period of
time during which ABC will be addressing certain regulatory issues raised by the
<PAGE>
U. S. Food and Drug Administration ("FDA") related to the Licensed Product (the
"Compliance Program"), and S&N desires to receive such sublicense (the
"Sublicense");
WHEREAS, pursuant to the terms of a Sublicense and Assignment Agreement, KPC
desires to assign the Licensed Rights to S&N following FDA approval of the
Compliance Program, and S&N desires to receive such assignment (the
"Assignment");
WHEREAS, ABC and KPC are parties to a Sublicense Agreement dated December 13,
1999 (the "Sublicense Agreement"), which sets forth the conditions by which ABC
has consented to Knoll's Sublicense;
WHEREAS, one condition of the Sublicense Agreement was that ABC and KPC meet to
determine the allocation between KPC, S&N, or both, of the rights, duties, and
responsibilities under the License Agreement (the "Allocation") for the period
during which the Sublicense shall be in effect, and for the period following the
Assignment; and
WHEREAS, ABC, KPC and S&N desire to memorialize the Allocation in this
Allocation Agreement.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, it
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is mutually agreed between the parties hereto as follows:
1. The following sets forth the Allocation. The first column, entitled "License
Agreement" shall refer to the Articles and Paragraphs in the License Agreement
having the same designation. The second column entitled "Sublicense Period"
shall indicate the party or parties which shall have duties or responsibilities
under the Article or Paragraph referenced in the first column during the period
when the Sublicense shall be in effect. The third column entitled "Assignment
Period" shall indicate the party or parties which shall have duties or
responsibilities under the Article or Paragraph referenced in the first column
following the Assignment.
<TABLE>
<CAPTION>
License Sublicense Assignment
- ------- ---------- ----------
Agreement Period Period
- --------- ------ ------
<S> <C> <C>
1A KPC S&N, without the right to sublicense except to a
subsidiary or affiliate
1B KPC and S&N S&N
2A KPC; provided however, that action or inaction S&N provided that the phrase "starting with the
by S&N shall be deemed the action or inaction of year 2001" shall be inserted after the phrase
KPC and provided further that the phrase "Product for any year" in line 10 of 2A of the
"starting with the year 2001" shall be inserted License Agreement.
after the phrase "Product for any year" in line
10 of 2A of the License Agreement.
2B KPC KPC, except S&N shall be substituted for KPC in
3A [Redacted] [Redacted]
3B KPC KPC
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3C KPC KPC
4A KPC KPC shall pay royalties to ABC; and S&N shall
provide information on Net Sales of the Licensed
Product.
4B KPC and S&N KPC and S&N shall each keep accurate records for
calculating royalties and shall make such records
available for examination. S&N shall confer with
ABC respecting sales and marketing of Licensed
Product.
5 N/A N/A
6 KPC and S&N KPC and S&N
7 KPC and S&N; provided, ABC shall seek permission S&N; provided, ABC shall seek permission from S&N
from KPC or S&N to reference or make copies of to reference or make copies of reports unless such
reports from the source of such reports unless reports have appeared in published literature.
such reports have appeared in published
literature.
8A KPC KPC
8B KPC with respect to payment for Collagenase KPC with respect to payment for Collagenase Powder
Powder and Services, as both terms are defined and Services and KPC's anticipated requirements of
in the License Agreement, used in Licensed Collagenase Powder for manufacture of new dosage
Product, and KPC's anti-cipated requirements of forms of Licensed Product. S&N with respect to
Collagenase Powder for manufacture of new dosage marketing new dosage forms of Licensed Products
forms of Licensed Product. S&N with respect to and one-time payment therefor.
marketing new dosage forms of Licensed Products
and one time payment therefor.
8C KPC KPC
8D KPC KPC
8E KPC KPC
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8F KPC KPC
8G KPC KPC
8H KPC KPC
8I KPC and S&N KPC and S&N
9 KPC KPC with respect to the supply of Licensed
Product, and S&N with respect to matters related
to the exclusive license.
10A KPC The License Agreement shall renew as of the date
that the Assignment is granted, and shall remain
in effect until August 16, 2013 (i.e.; the right
under this provision of KPC or S&N to terminate
the License Agreement at the end of the initial
ten year term shall be deemed waived). The term
of the License Agreement shall thereafter
automatically renew for an additional term of ten
(10) years; provided S&N may terminate the License
Agree-ment as of August 16, 2013 upon not less
than six (6) months prior written notice to ABC."
10B KPC and S&N; provided, however, that the words KPC and S&N; provided, however, that the words
"enzymatic pharmaceutical" shall be inserted "enzymatic pharmaceutical" shall be inserted after
after the word "another" in line 3 of 10B of the the word "another" in line 3 of 10B of the License
License Agreement. The owner of the Santyl(R) Agreement. The owner of the Santyl(R); trademark as
trademark as of the date of termination shall be of the date of termination shall be obligated to
obligated to assign such trademark to ABC. assign such trademark to ABC.
10C KPC In the event of a default by KPC or S&N which
could result in termination of the License
Agreement, ABC and the non-defaulting party shall
use their best efforts to avoid termination with
respect to the non-defaulting party, and shall
seek a commercially reasonable
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alternative means of achieving the main goals and
purposes of the License Agreement.
10D N/A N/A
11 KPC KPC and S&N
12A KPC KPC and S&N
12B KPC An assignment under the License Agreement by ABC,
KPC, or S&N shall require the prior written
consent of the other two parties.
13A KPC KPC
13B KPC KPC and S&N
14 N/A N/A
15 N/A N/A
</TABLE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate originals by their duly authorized representatives.
ADVANCE BIOFACTURES CORPORATION KNOLL PHARMACEUTICAL COMPANY
By: /s/ Thomas Wegman By: /s/ Carter H. Eckert
----------------- ----------------------
Title: Executive Vice President Title: President
------------------------ ---------
Date: January 31, 2000 Date: January 31, 2000
---------------- ----------------
SMITH & NEPHEW, INC
By: /s/ Rod Skaggs Jr.
----------------------
Title: President
----------------
Date: January 31, 2000
-------------------
6
Adverse Event ("AE") Processing and Exchange Agreement for Collagenase Santyl(R)
Ointment
Between
Advance Biofactures Corporation ("ABC"), Knoll Pharmaceutical Company ("KPC")
and
Smith & Nephew, Inc. ("S&N")
The following sets forth the agreement of S&N, KPC and ABC on the procedures to
be established and followed to assure the expeditious exchange of adverse event
(AE) information related to Santyl(R) Collagenase Ointment (the "Product").
(1) All reports of Product AEs received by KPC or S&N will be sent by overnight
mail to ABC, with a copy to the other party, no later than the fourth calendar
day following their receipt by KPC or S&N.
(2) All reports of Product AEs received by ABC will be sent by overnight mail to
KPC and S&N no later than the fourth calendar day following their receipt by
ABC.
(3) Each party hereto will acknowledge receipt of each report of an AE from the
other parties by providing the company identification number it assigned to that
AE report to the party originally receiving the AE and the other party hereto.
(4) In the case of a 15 day reportable event, ABC will submit the event to FDA
in accordance with all relevant regulations and will provide KPC and S&N with a
copy of the dated cover letter to FDA at the time submitted to FDA.
(5) KPC and S&N will forward to ABC and each other on a monthly basis a report
listing all AEs and follow-ups for the Product that were received during the
prior calendar month, or a statement that none was received. This will include
all follow-ups or, if not available, documentation of efforts to follow-up.
(6) ABC will review KPC's and S&N's monthly reports listing AEs and follow-ups
(as set forth in paragraph 5 above) and promptly notify the party or parties if
any of its or their listed AE reports had not been received by ABC pursuant to
paragraph 1 hereinabove.
(7) KPC and S&N will follow their respective standard operating procedures for
follow-up of Product AEs. Any information obtained on follow-up will be
forwarded to ABC, with a copy to the other party, by overnight mail no later
than the fourth calendar day following receipt of such information. If follow-up
is unavailable, KPC or S&N, or both, will provide documentation of the efforts
made to follow-up.
(8) ABC will notify KPC and S&N of any information obtained on follow-up of
Product AEs by forwarding such information to KPC and S&N by overnight mail no
later than the fourth calendar day following receipt by ABC.
<PAGE>
(9) ABC will prepare and submit Periodic Reports for the Product in accordance
with FDA regulations. ABC will provide KPC and S&N from the Product Periodic
Report information relevant to the assessment of the safe use of the Product, no
later than 10 calendar days prior to the Periodic Reports' FDA submission due
date. KPC and S&N will review this report for accuracy and completeness, and
notify ABC of their respective conclusions no later than 5 calendar days from
receipt thereof.
(10) Each party agrees to promptly forward to the other parties hereto any
information which could potentially affect the safe use of the Product by
patients.
(11) Each party agrees to fully cooperate with the other parties' audits of its
AE collection practices and recordkeeping for the Product. The auditing party
will provide no less than two (2) weeks prior notice of its intention to conduct
such an audit; provided, such audits will be conducted no more frequently than
once annually, unless otherwise mutually agreed.
(12) With respect to ABC and KPC, this Agreement supercedes the existing Adverse
Event Processing and Exchange Agreement between the parties respecting the
Product.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate originals by their duly authorized representatives.
ADVANCE BIOFACTURES CORPORATION
By s/Thomas Wegman
------------------
Title Executive Vice President
------------------------------
Date January 31, 2000
---------------------
KNOLL PHARMACEUTICAL COMPANY SMITH & NEPHEW, INC.
By s/Carter H. Eckert By s/Rod Skaggs Jr.
------------------ ----------------
Title President Title President
--------------- ---------------
Date January 31, 2000 Date January 31, 2000
---------------- ----------------
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