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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Mark One
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
/X/ OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d)
/ / OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________.
Commission File No. 0-19529
ALTEON INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3304550
(State or other jurisdiction of ( I.R.S. Employer Identification No.)
incorporation or organization)
170 Williams Drive, Ramsey, New Jersey 07446
(Address of principal executive offices) (zip code)
(201) 934-5000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the equity stock held by
non-affiliates of the Registrant: $16,298,445 at March 17, 1999 based on the
last sales price on that date.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of March 17, 1999.
Class Number of Shares
Common Stock, $.01 par value 18,888,660
Documents Incorporated by reference
The Proxy Statement to be filed with respect to the Annual Meeting of
Stockholders to be held on June 2, 1999 is incorporated by reference into Part
III.
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ITEM 1. BUSINESS.
OVERVIEW
Alteon is engaged in the discovery and development of pharmaceutical
products for the treatment of the complications of diabetes and age-related
diseases. The Company's efforts have focused primarily on developing its lead
first-in-class compound, pimagedine, as an agent to inhibit or block abnormal
glucose/protein complexes, known as Advanced Glycosylation End-products
("A.G.E.s"), that lead to diabetic complications such as kidney disease and
retinopathy. Alteon has completed certain clinical trials of pimagedine and is
currently evaluating its future development.
A.G.E.s accumulate throughout the body at a rate dependent on
glucose levels. This accumulation and the subsequent crosslinking of A.G.E.s to
other proteins results in a progressive loss of function of certain organs,
blood vessels and nerves. High levels of A.G.E.s are found in persons with
diabetes, a disease characterized by elevated glucose levels. The Company is
also utilizing its technical expertise in the field of diabetes to develop
compounds focused on glucose regulation and control.
The status of Alteon's clinical development programs for pimagedine
in diabetic complications is as follows:
Overt Nephropathy. The Company has thus far tested the safety and
efficacy of oral pimagedine in a Phase III clinical trial, called the ACTION I
trial (A Clinical Trial In Overt Nephropathy) in Type I diabetics with overt
nephropathy. The trial was conducted at 56 clinical sites and involved 690
patients. In November 1998, the Company announced that a preliminary analysis of
the ACTION I trial showed that the data for the trial's primary endpoint did not
reach statistical significance.
The Company is continuing the evaluation of pimagedine's primary
outcome and key secondary endpoints, some of which show statistical
significance. Based on an ongoing in-depth analysis of the Phase III ACTION I
trial results, the Company is preparing a comprehensive pre-NDA data package on
pimagedine for submission to the U.S. Food and Drug Administration ("FDA") in
order to seek input from the FDA regarding the future development of pimagedine.
Based upon its evaluation of the ACTION I trial results and the outcome of its
communications with the FDA, the Company will decide whether to file a New Drug
Application ("NDA") for pimagedine, conduct additional trials, or terminate the
development of pimagedine for overt nephropathy.
A second Phase III trial of pimagedine in patients with Type II
diabetes and overt nephropathy, called the ACTION II trial, was initiated in
July 1995. In March 1998, the Company discontinued this trial because of an
insufficient risk/benefit ratio based upon data then available.
End-Stage Renal Disease ("ESRD"). Alteon initiated a Phase II trial
in ESRD in January 1996. An interim analysis in July 1997 revealed positive
trend data in survival of treated patients versus placebo patients. Based on
these findings, the Company expanded this trial to a pivotal Phase III trial.
Alteon is evaluating this program as part of its overall evaluation of
pimagedine.
In addition to the clinical programs for pimagedine in diabetic
complications, Alteon has a number of research programs under way to expand its
research and development pipeline. The key programs are:
A.G.E. Crosslink Breakers. The Company has identified novel orally
available compounds that in preclinical testing demonstrate the ability to
chemically break what were previously believed to be permanent, A.G.E.-mediated
bonds between proteins. A.G.E. crosslink breakers offer the possibility of the
first therapeutic approach to removing A.G.E. crosslinks. These compounds are
being evaluated in preclinical models for their potential to reverse certain
cardiovascular complications, as well as ophthalmic and dermatological
conditions. A lead agent, ALT-711, has completed a series of Phase I human
safety trials.
Glucose Lowering Agents. The Company has identified novel orally
available compounds which in preclinical models of diabetes demonstrate the
ability to lower blood glucose and free fatty acids by a potentially
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new mechanism of action. The Company is actively pursuing additional studies in
order to advance the most promising compound to clinical lead status.
Alteon has strategic alliances with Genentech, Inc. ("Genentech"),
Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi"), Roche Diagnostics, GmbH,
formerly Corange International Ltd., acting through Boehringer Mannheim
Diagnostics ("Roche"), Gamida for Life, formerly Eryphile BV ("Gamida"), and
IDEXX Laboratories, Inc. ("IDEXX") to develop and market pimagedine and A.G.E.
diagnostics for human or veterinary uses in specific territories throughout the
world. The strategic alliance with Genentech will terminate as of June 30, 1999
unless Genentech and the Company agree to amend their contractual arrangements
before that date. The Company anticipates that during 1999 it will review with
its corporate partners their arrangements in light of the Company's current
development plans and priorities. In order to expand its internal research and
development capacities, Alteon has licensed technology and/or patent rights from
The Rockefeller University ("Rockefeller University"), The Picower Institute for
Medical Research ("The Picower Institute") and Washington University in St.
Louis, Missouri ("Washington University").
Alteon owns or has exclusive rights to 91 issued or allowed United
States patents and has 22 additional patent applications pending in the United
States. Alteon also owns or has exclusive rights to over 25 issued or granted
non-U.S. patents and has over 67 patent applications pending in Europe, Japan,
Australia and Canada. Alteon intends to continue pursuing this filing strategy
and intends to vigorously defend its intellectual property position against
infringement.
This document includes certain forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The words "believes," "anticipates," "expects," and similar
expressions are intended to identify such forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated by the statements
made by the Company. Factors described in this Annual Report on Form 10-K,
including without limitation those identified in the section captioned "Forward
Looking Statements" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," could cause the Company's actual results
to differ materially from those expressed in any forward-looking statements made
by the Company.
BACKGROUND
The human body is composed of a complex network of cells which
interact and communicate with each other through the actions of proteins,
hormones and other chemical messengers to carry out and maintain bodily
functions. This interactive network incorporates various tissue and organ
systems in the body, including the nervous system, the endocrine (hormone)
system and the immune system. Changes in the balance of, and the interactions
in, these systems occur in a variety of disease states including diabetes,
cardiovascular disease and inflammatory conditions.
In healthy individuals, physiological glucose levels are tightly
regulated by the opposing actions of two hormones -- insulin, which lowers blood
glucose, and glucagon, which elevates blood glucose. Diabetes arises from either
1) a severe decrease of insulin production and subsequent uptake and utilization
of glucose, generally referred to as Type I or Insulin Dependent Diabetes
Mellitus ("IDDM"), or 2) a loss in responsiveness to insulin, generally referred
to as Type II or Non-Insulin Dependent Diabetes Mellitus ("NIDDM").
Concurrently, the ability to moderate the glucose-elevating effects of glucagon
is diminished, leading to the persistent hyperglycemic (excess blood sugar)
state of diabetes. In both cases, glucose levels rise significantly and, if not
brought under control, increase the rate of formation of A.G.E.s.
These A.G.E. complexes form continuously over time at a rate
dependent upon glucose levels, subsequently crosslink to other proteins and
ultimately accumulate in various tissues, vessels and organs. As the rate of
accumulation increases, A.G.E. crosslinked proteins become rigid and aggregated.
It is this process which the Company believes results in progressive loss of
function of certain organs, blood vessels and nerves. In healthy individuals
this process occurs naturally, though slowly, as the body ages. In diabetic
patients, the rate of A.G.E. accumulation and the extent of protein crosslinking
is accelerated. The Company believes that this is a major factor contributing to
diabetic complications. The Diabetes Control and Complications Trial ("DCCT"), a
multi-center investigation conducted under the auspices of the National
Institutes of Health, demonstrated that elevated blood
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glucose levels significantly increase the rate of progression of eye, kidney,
blood vessel and nerve complications from diabetes. More than 50% of people with
diabetes in the United States develop diabetic complications which range from
mild to severe.
Studies conducted in animal models at numerous independent
institutions worldwide suggest that A.G.E.s are responsible for diabetic
complications including kidney disease (nephropathy), eye disease (retinopathy),
nerve disease (neuropathy) and hardening of the arteries (atherosclerosis). More
recent studies implicate A.G.E.s in age-related disorders such as cardiovascular
disease, Alzheimer's disease and stroke. Alteon believes certain complications,
such as atherosclerosis, hypertension and the progressive decline in renal
function that occur eventually in non-diabetics, may also be A.G.E.-related, as
this pathological process is cumulative in effect over the lifetime of any
individual.
Alteon's lead compound, pimagedine, also has been shown to inhibit
certain inflammatory conditions. The Company believes that this is due to
pimagedine's inhibitory effect on one of the enzymes responsible for synthesis
of nitric oxide ("NO"), a naturally occurring molecule which, when overproduced,
may lead to or result in serious complications. There is increasing evidence
that NO plays a significant role in acute and chronic inflammation, and may play
a role in inflammatory diseases such as asthma, inflammatory skin conditions,
rheumatoid arthritis and inflammatory bowel disease. Inhibition of the inducible
enzyme responsible for formation of NO, inducible nitric oxide synthase
("iNOS"), has been shown in animal models to mitigate the inflammatory disease
process.
TECHNOLOGY
A.G.E.-Formation Inhibitors
Alteon's most advanced therapeutic program is the development of
drugs that inhibit A.G.E.-formation. These compounds are designed to prevent
major diabetic and age-related complications by blocking the formation of
A.G.E.s and subsequent crosslinking of A.G.E.s to other proteins. Alteon's lead
compound, pimagedine, has been shown to inhibit A.G.E.-formation and subsequent
crosslink formation in preclinical models. Data from Alteon's human clinical
trials provided evidence of this activity in humans. Alteon and its corporate
partners have been developing pimagedine to slow the progression of various
complications of diabetes, such as diabetic nephropathy.
Alteon is also engaged in research programs on second-generation
A.G.E.-formation inhibitors to identify compounds that have advantages over
pimagedine, such as increased efficacy or a more favorable safety profile. The
Company has proposed one compound, ALT-946, for further development.
A.G.E. Crosslink Breakers
The Company is developing the A.G.E. crosslink breaker class of
compounds for several therapeutic indications. Studies in animal models,
including primates, in several laboratories around the world have demonstrated
rapid reversal of impaired cardiovascular functions through a unique mechanism
of action. The breakers compounds reverse the stiffening of arteries as well as
stiffening of the heart that accompanies the development of diabetes and aging.
Reductions in blood pressure that have been observed suggest that crosslink
breakers may prove beneficial in the treatment of hypertension in the elderly.
The Company is also evaluating development of the breaker class for
reversing the stiffening and subsequent dehydration of skin through a topical
formulation. The crosslinking of matrix proteins in the dermis is believed to be
responsible for the deep wrinkling phenomenon of aging. The Company is also
pursuing investigations into the role of A.G.E. crosslinking in restricting the
flow of fluid through the eye, the consequence of which causes elevated
intraocular pressure which is central to the development of glaucoma.
Preliminary studies in aged primates demonstrates a persistent improvement in
fluid flow following a single intraocular injection.
Glucose Lowering Agents
The inability to utilize glucose effectively in Type II diabetes is
due to a defect in the response of glucose utilizing tissues (e.g. skeletal
muscle) to insulin. The Company has identified novel orally available compounds
that
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lower blood glucose and free fatty acid levels in preclinical models of
Type II diabetes. These compounds, collectively called Glucose Lowering Agents
("G.L.A."), are chemically distinct from and exhibit a different mechanism of
action than the thiazolidinedione compounds, a class of compounds that has been
the focus of many pharmaceutical companies because of potential beneficial
effects on glucose and triglyceride levels. Analysis of plasma lipids suggests
that the regulation of fat metabolism leads to improved glucose utilization and
may be an important feature in the mechanism of action for the G.L.A. class.
This series of compounds prevents weight gain in obese/diabetic animal models,
suggesting a possible role for use in the treatment of obesity. The Company is
actively pursuing preclinical studies with these compounds in order to advance
the most promising compound to clinical lead status.
The following chart illustrates the process of A.G.E.-formation and
crosslinking and is qualified by the more detailed description in the text. It
also highlights those areas within the A.G.E. cascade where Alteon is attempting
to offer chemical agents to intervene pharmaceutically.
[ NOTE: THE PRINTED COPY OF THIS FORM 10-K CONTAINS A ]
[ GRAPHICAL REPRESENTATION OF THE FOLLOWING. THE "||" ]
[ REPRESENT ARROWS POINTING FROM "GLUCOSE LOWERING ]
[ AGENTS" TO "GLUCOSE," FROM "A.G.E. FORMATION INHIBITORS" ]
[ TO "PROTEINS" AND "A.G.E.S," AND FROM "A.G.E. CROSSLINK ]
[ BREAKERS" TO "CROSSLINKED A.G.E.S" ]
[ ]
[ A.G.E. CASCADE ]
[ -------------- ]
[ ]
[ Glucose + Proteins ====} A.G.E.s ====} Crosslinked A.G.E.s ]
[ ' ' ' ' ]
[ || || || || ]
[ || || || || ]
[ Glucose Lowering A.G.E. A.G.E. ]
[ Agents Formation Inhibitors Crosslink ]
[ Breakers ]
[ ]
iNOS Technology
Pimagedine is a preferential inhibitor of iNOS in animal models,
thereby decreasing the formation of NO, a molecule which has been shown in
preclinical models to play a role in acute and chronic inflammation. Independent
researchers have reported that treatment with pimagedine reduces inflammation in
specific preclinical models. Pimagedine has also been shown to decrease the
migration of macrophages (inflammatory cells) to the site of tissue damage and
prevents the release of cytokines and consequent release of NO. The Company has
developed a topical formulation of pimagedine for the treatment of inflammatory
skin diseases.
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PRINCIPAL PRODUCTS UNDER DEVELOPMENT
The following table summarizes Alteon's principal products in research
and development:
<TABLE>
<CAPTION>
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
Product Candidate/ Mechanism DEVELOPMENT MARKETING
Target Indications Of Action STATUS(1) RIGHTS (2)
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Pimagedine Oral Genentech/
Diabetic Complications A.G.E. Yamanouchi/Gamida/
Overt Nephropathy (Type I) Completed Phase III IDEXX
End-Stage Renal Disease Phase III
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
ALT-946 Alteon/
Diabetic Complications A.G.E. Preclinical Genentech
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
A.G.E. Crosslink Breakers Alteon/
Cardiovascular Disease A.G.E. Phase I Yamanouchi
Ophthalmic A.G.E. Preclinical
Dermatological A.G.E. Preclinical
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
Glucose Lowering Agents (4) Research Alteon
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
Pimagedine Topical
Dermatological iNOS Alteon/
Allergic Contact Dermatitis Veterinary IDEXX(3)
- ------------------------------------- ---------------------- ---------------------------- ----------------------------
Pimagedine Intravenous (4) Alteon(3)/Genentech
Stroke IND Gamida
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) "Completed Phase III" indicates that the trial has been completed and that
Alteon is continuing analysis of the results. "Phase III" clinical trials
indicate that Alteon is testing the compound in humans for safety and
efficacy in an expanded patient population at multiple clinical sites.
"Preclinical" includes toxicological and pharmacokinetics assessment of
candidate compounds as well as formulation of a product in an appropriate
dosage form. "Phase I" clinical trials indicate that the drug has been given
to human subjects and tested for safety, dosage tolerance, absorption,
metabolism, distribution and excretion and the Company is analyzing the
results. "Research" includes identification and evaluation of compounds in
vitro and in animal models. IND stands for Investigational New Drug. See "
-- Government Regulation."
(2) Where indicated, the Company's corporate partner, Genentech has rights to
market products in all areas of the world except for the territories
reserved to Yamanouchi and Gamida. The strategic alliance with Genentech
will terminate as of June 30, 1999 unless Genentech and the Company agree to
amend their contractual arrangements before that date. Yamanouchi has
rights, or under certain circumstances the option to acquire rights, to
market products in Japan, South Korea, Taiwan and The People's Republic of
China. Where indicated, the Company's corporate partner Gamida has rights to
market products in Israel, Jordan, South Africa, Cyprus and Bulgaria. Where
indicated, the Company's corporate partner IDEXX has rights to develop and
market pimagedine and A.G.E. diagnostics for certain veterinary uses. See "
-- Corporate Strategic Alliances."
(3) In June 1995, Alteon obtained a license from Washington University, St.
Louis, for patents covering the use of pimagedine to inhibit iNOS. Alteon
and Yamanouchi are currently determining marketing rights for certain
potential products based upon this mechanism of action.
(4) Mechanism not fully elucidated.
- --------------------------------------------------------------------------------
The Company incurred research and development expenditures of $18,720,000,
$23,264,000, $24,592,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. Expenditures were reduced by reimbursements from corporate
partners in 1996 in the amount of $1,226,000. No amounts were reimbursed in 1997
and 1998.
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Pimagedine Oral
Diabetic Kidney Disease. Kidney disease is a significant cause of
morbidity and mortality in patients with Type I and Type II diabetes. It is a
chronic and progressive disease. One of the early signs of kidney damage is
microalbuminuria (characterized by leakage of small amounts of protein into the
urine) which progresses to overt nephropathy (characterized by leakage of large
amounts of protein into the urine) and ultimately to end-stage renal disease
(advanced renal disease requiring dialysis). Approximately 35% of patients with
Type I diabetes and approximately 10-15% of patients with Type II diabetes
develop nephropathy. As of 1995, there were approximately 1,000,000 diabetics
diagnosed with kidney disease in the United States. The only product approved to
treat nephropathy in patients with Type I diabetes is the anti-hypertensive
captopril, an angiotensin-converting enzyme ("A.C.E.") inhibitor. The Company
believes that pimagedine acts through a mechanism different from captopril and
therefore if used in conjunction with captopril may have a complementary
therapeutic effect. The Company believes the results of the ACTION I trial
support this conclusion. See "--Competition."
Overt Nephropathy. The Company conducted a randomized double-blind,
placebo-controlled, multi-center, Phase III clinical trial to evaluate the
safety and efficacy of pimagedine in Type I diabetic patients with overt
nephropathy, the ACTION I trial. The trial was initiated in January 1994. The
primary objective of the trial was to evaluate the safety and efficacy of
pimagedine in preserving renal function in Type I patients. Enrollment in the
trial was completed in August 1996 with 690 patients from 56 investigational
sites in the United States and Canada. Patients were treated for a minimum of
two years and received twice daily oral doses of pimagedine, adjusted for kidney
function. Under this protocol, pimagedine treatment was in addition to the best
available therapeutic regimen chosen by the treating physicians.
In November 1998, the Company announced results of a preliminary
analysis of data from the ACTION I trial. Although the results showed that
pimagedine reduced the risk of doubling of serum creatinine, the study's primary
endpoint, the data did not reach statistical significance. Pimagedine therapy
resulted in significant improvements in several key measurements: reduced
urinary protein, reduced LDL cholesterol and triglycerides, reduced diastolic
blood pressure and reduced progression of retinopathy. Additional data suggested
a trend toward improvements in other measures of renal function including
estimated creatinine clearance and glomerular filtration rate. The drug was
generally well tolerated.
Medical and clinical consultants have advised the Company to continue
evaluation of pimagedine. Based on an ongoing in-depth analysis of the Phase III
ACTION I trial results, the Company is preparing a comprehensive pre-NDA data
package on pimagedine to submit to the FDA. Based upon its evaluation of the
ACTION I trial results and the outcome of its communications with the FDA, the
Company will decide whether to file an NDA for pimagedine in the treatment of
overt nephropathy in Type I diabetes, conduct additional trials, or terminate
the development of pimagedine as a therapy for overt nephropathy in Type I
diabetics. The FDA has notified the Company that should an NDA for pimagedine
ever be filed, it will receive a fast track designation.
A second Phase III trial of pimagedine, in patients with Type II
diabetes and overt nephropathy (ACTION II), was initiated in July 1995 and used
a trial design similar to the ACTION I trial. The objective of this study was to
evaluate the safety and efficacy of pimagedine in preserving renal function in
Type II patients. In March 1998, the Company discontinued this trial because of
an insufficient risk/benefit ratio based upon data then available.
End-Stage Renal Disease (ESRD). As kidneys fail, there is a significant
increase in circulating A.G.E.s because of the patient's inability to clear
these compounds. This occurs to a greater degree in diabetic patients because of
their more rapid rate of A.G.E.-formation. A.G.E.s are not removed to a
significant degree by dialysis in part due to the large size of certain A.G.E.
proteins. The high A.G.E. burden in diabetic patients is thought to be
responsible for the rapid progression of diabetic complications in dialysis
patients. The Company believes that elevated A.G.E. levels also contribute to
higher levels of cardiovascular morbidity and mortality in diabetic patients.
Approximately 50,000 diabetics develop ESRD annually in the United States.
Diabetics with ESRD have a cardiovascular mortality (myocardial infarction and
cerebral vascular mortality) which is higher than other patient groups with
renal failure. Erythropoietin ("EPO") is often used to treat the anemia
resulting from the loss of kidney function and there is no known agent useful
for treatment of ESRD.
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The Company is conducting a randomized, double-blind,
placebo-controlled, multi-center, Phase III clinical trial to evaluate the
safety and efficacy of pimagedine in diabetic patients with ESRD on
hemodialysis, a form of dialysis used by approximately 80% of dialysis patients
in the United States. This clinical trial was initiated as a Phase II study in
January 1996, with an enrollment of approximately 120 patients who received oral
doses of pimagedine three times per week in conjunction with their dialysis
treatment. Interim analyses performed after 90 patients were in the study for a
minimum of six months revealed a positive trend in the survival of treated
patients versus placebo patients and a positive effect on certain lipid
measurements. In addition, the drug appeared well tolerated in this very ill
patient population. Based on discussions with Alteon's end-stage renal disease
consultants and with the FDA, Alteon converted the trial into a pivotal Phase
III evaluation, focusing on all-cause mortality as the primary endpoint. An
independent External Review Committee has been established to assess on a
periodic basis the ongoing risk/benefit ratio and the clinical results of this
pivotal study. Alteon is evaluating this program as part of its overall
evaluation of further development of pimagedine.
Pimagedine Intravenous
Stroke. Every year approximately 500,000 patients in the United States
suffer a stroke and approximately one-third of these individuals die, making
stroke the third leading cause of death by disease. According to the American
Heart Association, in 1994 the economic cost of stroke due to health care
expense and loss of productivity was estimated to be nearly $30 billion.
Individuals at increased risk for stroke include those with hypertension,
smokers, obese individuals, diabetics and those with hyperlipidemia. Currently,
several pharmaceutical and biopharmaceutical companies are conducting
preclinical studies and clinical trials on numerous compounds for the treatment
of stroke.
Animal studies have demonstrated that pimagedine, when given prior to
or after indication of stroke by occlusion of the middle cerebral artery,
reduced the volume of tissue death by 30%.
Alteon has completed acute toxicity studies in animals with an
intravenous formulation of pimagedine. The Company has filed an IND with the
FDA.
Pimagedine Topical
Inflammatory Skin Disease. Nitric oxide ("NO") has been shown to play a
role in the inflammatory disease process. Preclinical studies with pimagedine
have shown a significant reduction in both NO production as well as skin
inflammation. Based on these findings, the Company believes that pimagedine
could have a beneficial effect in certain inflammatory diseases such as contact
dermatitis and eczema. Currently, topical steroids are the treatment of choice
for these indications but are contraindicated for prolonged use. A topical
formulation of pimagedine has been developed. The Company has filed an IND for
these indications.
A.G.E. Crosslink Breakers
Several classes of novel compounds have been identified which are
capable of breaking the crosslinks formed as a result of A.G.E. accumulation.
These compounds are currently under evaluation in various animal models to
assess their potential for treatment of a variety of diseases including
cardiovascular disease, certain ophthalmic disease states and certain skin
conditions. The most promising drug candidate, ALT-711, has recently completed a
series of Phase I human safety trials. In preclinical studies, ALT-711 has been
shown, in primates, to restore large artery elasticity and reverse aorta
stiffness by catalytically breaking the A.G.E. crosslinks between proteins,
potentially leading to a reversal of the deterioration of the cardiovascular
system.
Glucose Lowering Agents
The Company is currently investigating the glucose lowering potential
of several compounds initially identified from a natural product screening
program. These compounds, which are structurally different from the
thiazolidinediones, have been identified as having activity similar to the
thiazolidinediones without the same side effect profile. Additional mechanistic
studies on these compounds are currently under way, as is additional preclinical
testing designed to identify a potential lead compound for future clinical
development.
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Diagnostic Programs
Alteon is utilizing its A.G.E. technology to develop diagnostic tests
that may be used to assess A.G.E. levels and monitor drug therapy in diabetic
patients. Because the levels of circulating and tissue-bound A.G.E.s are
correlated with the pathology of diabetes and aging, measurement of A.G.E.
levels could provide valuable information on the stage of disease prior to the
appearance of clinical signs. The Company believes these tests, if developed,
will complement its drug products by enabling physicians to better diagnose and
treat patients with the potential to develop significant diabetic complications
before progression of their disease to a more advanced state.
STATUS OF CLINICAL TRIALS
Completed Trials for Pimagedine
The Company began clinical trials in 1987. Seven Phase I clinical
trials have been completed to assess the safety and pharmacokinetics of
pimagedine. Single and multiple-dose studies were conducted. Pimagedine was
administered to a total of 127 human subjects in this program, including healthy
subjects, diabetic patients with normal renal function, diabetic patients with
varying degrees of renal impairment and diabetic patients in hemodialysis
programs. No serious side effects were reported. The most commonly observed side
effects were headaches, heartburn, nausea, lightheadedness and drowsiness.
In addition, in 1989, two 28-day safety studies were completed in
diabetic patients with varying degrees of renal insufficiency as well as in
healthy subjects. Thirty-seven patients received pimagedine. The most common
side effects reported were nausea, vomiting and other gastro-intestinal
disturbances.
As a result of the gastro-intestinal side effects seen in preclinical
toxicology studies and earlier trials, the FDA required the Company to modify
its original Phase II/III protocol to include certain gastric function tests,
including endoscopy. In August 1994, based on such tests in the first 31
patients receiving pimagedine, an independent safety committee recommended and
the FDA allowed removal of the routine endoscopy requirement. At the same time,
the FDA permitted the inclusion of women of childbearing potential in the trial.
In April 1997, Alteon and Gamida completed a randomized, double-blind,
placebo-controlled, Phase II clinical trial to evaluate the effect of pimagedine
on plasma lipid levels and A.G.E.s in patients with diabetes and elevated serum
cholesterol levels. Dyslipidemia is a condition characterized by an abnormal
lipid profile. The elevation of one lipid component, low-density lipoprotein, is
known to be a significant risk factor in cardiovascular disease. Diabetic
patients are twice as likely as nondiabetic individuals to die from coronary
artery disease, and the annual incidence of cardiovascular complications is
increased significantly in patients with Type II diabetes. This Phase II
clinical trial enrolled 89 patients in Israel who were treated for a minimum of
three months and who received twice daily oral doses of pimagedine, adjusted for
kidney function. The primary objective of this study was to evaluate the safety
and efficacy of pimagedine in reducing levels of low-density lipoproteins
("LDLs") in Type II diabetic patients with varying degrees of renal function and
elevated LDLs.
A comprehensive statistical report of the trial after audit of the
results concluded: "Comparisons of percentage change from baseline of lipid
parameters between pimagedine and placebo treatment arms shows steeper decreases
in the pimagedine arm almost in all parameters, all populations. In cholesterol,
triglycerides and VLDL the decreases are significant by "last observation
carried forward" analysis. In LDL, the decrease in the pimagedine group is
significant at the 8th week."
While not an endpoint of the Israeli trial, albumin in the urine was
also reduced in patients identified as having albuminuria (excretion of more
than 30 mg of albumin in 24 hours).
In July 1997, the Company announced that its Phase II trial evaluating
pimagedine in diabetic patients with end-stage renal disease was being extended
into a pivotal Phase III trial focusing on mortality as the primary endpoint.
This decision was based upon an interim analysis of the ongoing Phase II trial,
which revealed a positive trend in the survival of treated patients versus
placebo patients. Interim analysis also showed a positive effect on certain
lipid measurements, similar to those seen in other studies. In addition, the
drug appeared to be well tolerated in this patient population.
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The Company also conducted a randomized double-blind,
placebo-controlled, multi-center, Phase III clinical trial to evaluate the
safety and efficacy of pimagedine in Type I diabetic patients with overt
nephropathy, the ACTION I trial. The trial was initiated in January 1994. The
primary objective of the trial was to evaluate the safety and efficacy of
pimagedine in preserving renal function in Type I patients. Enrollment in the
trial was completed in August 1996 with 690 patients from 56 investigational
sites in the United States and Canada. Patients were treated for a minimum of
two years and received twice daily oral doses of pimagedine, adjusted for kidney
function.
In November 1998, the Company announced results of a preliminary
analysis of data from the ACTION I trial. A preliminary analysis of the primary
endpoint showed that pimagedine reduced the risk of doubling of serum
creatinine, the study's primary endpoint, but the data did not reach statistical
significance. Pimagedine therapy resulted in significant improvements in several
key measurements: reduced urinary protein, reduced LDL cholesterol and
triglycerides, reduced diastolic blood pressure and reduced progression of
retinopathy. Additional data suggested a trend toward improvements in other
measures of renal function including estimated creatinine clearance and
glomerular filtration rate. The drug was generally well tolerated. In-depth
analysis of the ACTION I trial results is ongoing.
Completed Trials for ALT-711
Phase I human safety trials of ALT-711, the Company's lead A.G.E.
crosslink breaker, were initiated in June 1998. The single dose and multiple
dose studies have been completed and data analysis is ongoing.
Ongoing Clinical Trials
As of December 31, 1998, approximately 209 patients have been enrolled
in the Company's expanded pivotal Phase III clinical trial in end-stage renal
disease. See "--End-Stage Renal Disease."
In 1996, the Company retained Quintiles, Inc. to provide clinical trial
services to support the Phase III ACTION trials. The major areas of service
include project management, NDA preparation, clinical site monitoring and data
management.
CORPORATE STRATEGIC ALLIANCES
Genentech, Inc.
In December 1997, Alteon and Genentech entered into a stock purchase
agreement and a development collaboration and license agreement providing for
the development and marketing of pimagedine and second-generation
A.G.E.-formation inhibitors. In December 1997, Genentech purchased Common Stock
and Series G Preferred Stock for an aggregate purchase price of $15,000,000. The
use of these funds was unrestricted to the Company. The agreement provided for
Genentech to fund the continued development of pimagedine and support possible
additional clinical trials for expanded indications of the drug through the
periodic purchase of up to $48,000,000 in Series H Preferred Stock. As of
October 1998, Genentech had purchased $22,544,000 of Series H Preferred Stock.
The agreements also provide for Genentech to fund agreed-upon development costs
for second-generation A.G.E.-formation inhibitors.
Pursuant to the development collaboration and license agreement, Alteon
granted Genentech an exclusive license to use and sell pimagedine in all areas
of the world except for Japan, China, South Korea and Taiwan, territories
covered under Alteon's agreement with Yamanouchi, and Israel, Jordan, Bulgaria,
Cyprus and South Africa, territories covered under Alteon's agreement with
Gamida (the "Genentech Territory"). Alteon also granted Genentech an exclusive
license to use and sell second-generation A.G.E.-formation inhibitor products
(and any future Alteon compounds in this class), to be selected by Genentech
after review of Alteon's A.G.E-formation inhibitor portfolio, in the Genentech
Territory. The license provided that Alteon receive cash payments from Genentech
upon meeting certain milestones and royalties on net sales of pimagedine and
second-generation A.G.E.-formation products within the Genentech Territory.
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By letter agreement dated February 11, 1999, Alteon and Genentech
agreed that the development collaboration and license agreement will terminate
effective June 30, 1999 unless prior to that date the parties agree to amend the
agreement. The parties further agreed that Genentech's obligations to purchase
shares of stock of Alteon, pursuant to the stock purchase agreement, terminated
effective December 31, 1998. The letter agreement provides that Genentech will
continue to provide funding (in cash rather than through purchases of Series H
Preferred Stock) for agreed-upon development costs for pimagedine until June 30,
1999.
Yamanouchi Pharmaceutical Co., Ltd.
In July 1989, Alteon and Yamanouchi entered into a series of agreements
pursuant to which the parties formed a strategic alliance to develop and
commercialize Alteon's A.G.E.-related technology in Japan, South Korea, Taiwan
and The People's Republic of China (the "Yamanouchi Territory"). Under this
arrangement, the parties agreed to collaborate on further research and
development, Yamanouchi purchased shares of Alteon stock and Alteon granted to
Yamanouchi an exclusive license to commercialize Alteon's technology in the
Yamanouchi Territory in exchange for royalty payments on net sales, if any.
Yamanouchi has the right to terminate the agreement upon 90 days' prior written
notice to Alteon. This license expires as to each product in each licensed
country upon the later of 15 years from the date of the agreement, the
expiration of the last patent applicable to the product or five years after the
first commercial sale of the product in the country.
Pursuant to the license agreement, Alteon granted Yamanouchi the right
to manufacture pimagedine bulk material for sale in the Yamanouchi Territory.
With respect to certain second-generation A.G.E.-formation inhibitors, Alteon
has the option to supply all of Yamanouchi's reasonable requirements of active
ingredient bulk materials for sale within the Yamanouchi Territory.
Alteon and Yamanouchi also entered into a research and development
collaboration agreement to provide for joint collaboration on further research
and development, specifically Alteon's A.G.E.-formation and protein crosslinking
technology. Yamanouchi also agreed to fund preclinical studies, including most
toxicology studies on pimagedine and any other products that the parties jointly
agree to develop including a second-generation A.G.E.-formation inhibitor and a
macrophage stimulator. The collaboration agreement provides that any joint
development program is terminable by either party upon 60 days' prior written
notice. The agreement terminates in June 1999, unless otherwise extended. In
September 1992, Alteon and Yamanouchi amended the research and development
collaboration agreement to clarify their relative responsibilities for patent
prosecution and payment thereof.
Pursuant to the agreement, Yamanouchi has provided financial support
for most of the preclinical toxicity studies and has completed Phase I clinical
trials on pimagedine in Japan. Yamanouchi has not yet initiated Phase II
clinical trials in Japan.
Roche Diagnostics
In December 1994, the Company entered into an exclusive licensing
arrangement with Roche for Alteon's technology for diagnostic applications.
Under this alliance, Alteon will be entitled to receive royalties based on net
sales of research and commercial assays developed by Roche and based on Alteon's
A.G.E. technology. Roche will receive exclusive worldwide rights to the
technology for diagnostic applications outside the territory covered by the
agreement with Yamanouchi for the Yamanouchi Territory.
Under the agreement, Roche has agreed to develop immunoassays to detect
A.G.E.-hemoglobin, ApoB-A.G.E. and A.G.E.-serum protein/peptides. Development of
reagents and formats for the A.G.E. competitive ELISA and a procedure for
measuring hemoglobin-A.G.E. was completed in 1998. Continuation of the program
to adapt these reagents to automated clinical assays is contingent upon FDA
approval of pimagedine and will advance along with any product launch of
pimagedine.
The agreement gives Roche discretion over commercial development. Roche
may terminate the license agreement upon 90 days' prior written notice.
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Gamida
In November 1995, the Company entered into clinical testing and
distribution agreements with Gamida. Under these agreements, Gamida conducted,
at its own expense, a Phase II multi-site clinical trial in Israel, in
accordance with the protocol developed by Alteon, to evaluate pimagedine in
patients with diabetes and elevated serum cholesterol levels. Gamida will
receive the exclusive right to distribute pimagedine, if successfully developed
and approved for marketing, in Israel, Bulgaria, Cyprus, Jordan and South
Africa. The distribution agreement is for a term ending 10 years after the date
of regulatory approval for the sale of pimagedine in Israel; thereafter, it will
be automatically renewed for successive three-year periods unless terminated by
either party on the last day of the initial or renewal term. See "--Status of
Clinical Trials."
IDEXX
In June 1997, Alteon entered into a license and supply agreement with
IDEXX pursuant to which Alteon licensed to IDEXX pimagedine as a potential
therapeutic in companion animals (dogs, cats and horses) and its A.G.E.
diagnostics technology for companion animal use. IDEXX will be responsible for
the development, licensing and marketing of pimagedine and A.G.E. diagnostics
for such use on a worldwide basis. Alteon will be entitled to receive milestone
payments and royalties on sales of the licensed products.
The Company anticipates that during 1999 it will review with its
corporate partners their arrangements in light of the Company's current
development plans and priorities.
ACADEMIC RESEARCH AND LICENSE AGREEMENTS
Washington University, St. Louis
In June 1995, the Company obtained an exclusive, worldwide,
royalty-bearing license from Washington University for patents covering the use
of pimagedine as an inhibitor of iNOS. The agreement requires the Company to pay
certain licensing fees upon the attainment of development milestones as well as
a royalty on net sales or a share of sub-licensing profits on products covered
by the patents. The license also covers patents developed through any subsequent
research collaboration between the parties which Alteon agrees to fund.
Cerami Consulting Corporation and Warren Laboratories
On April 1, 1998 the Company entered into an agreement with Cerami
Consulting Corporation ("Cerami Consulting"), a corporation of which Dr. Anthony
Cerami, a founder and a member of the Board of Directors of the Company, is the
President, pursuant to which Cerami Consulting has provided consulting services
to the Company. Additionally, on April 1, 1998, the Company entered into a
research agreement with Kenneth S. Warren Laboratories, Inc. ("Warren
Laboratories") pursuant to which Warren Laboratories agreed to conduct research
and development of such of the Company's technology as the parties may agree
upon. Warren Laboratories is a non-profit corporation of which Dr. Cerami is a
trustee and the President. Both agreements provided for termination by either
party on six month's notice. On November 17, 1998, the Company notified Cerami
Consulting and Warren Laboratories of its intention to terminate the agreements
effective May 17, 1999. The Company is in negotiations with Cerami Consulting
and Warren Laboratories regarding the restructuring of these agreements.
The Rockefeller University
Pursuant to an agreement with Rockefeller University, Alteon has
exclusive, worldwide and perpetual rights to the technology and inventions
relating to A.G.E.s and other protein crosslinking, including those relating to
the complications of diabetes and aging. See "--Patents, Trade Secrets and
Licenses."
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The Picower Institute for Medical Research
Pursuant to an agreement with The Picower Institute, a not-for-profit
biomedical science institution of which Dr. Cerami was the President, the
Company has received an exclusive worldwide, royalty-bearing license for certain
commercial health care applications of A.G.E.-related inventions. See
"--Patents, Trade Secrets and Licenses."
MANUFACTURING
The Company has no manufacturing facilities for either production of
bulk chemicals or the manufacturing of pharmaceutical dosage forms. The Company
relies on third party contract manufacturers to produce the raw materials and
chemicals used as the active drug ingredients in its pharmaceutical products and
to perform the tasks necessary to process, package and distribute these products
in finished form. In September 1997, Alteon entered into an agreement with Ganes
Chemicals Inc. to provide a portion of the Company's requirements of bulk
pimagedine. The Company has established relationships with other companies for
the spray drying, tableting, packaging and commercial distribution of
pimagedine.
Such third party contractors will be inspected by the Company and its
consultants to confirm compliance with current Good Manufacturing Practice
("cGMP") required for pharmaceutical products. The Company believes it will be
able to obtain sufficient quantities of bulk chemical at reasonable prices to
satisfy anticipated needs. There can be no assurance, however, that the Company
can continue to meet its needs for supply of bulk chemicals or that
manufacturing limitations will not delay clinical trials or possible
commercialization. See "--Corporate Strategic Alliances."
MARKETING AND SALES
Alteon plans to market and sell its products, if successfully developed
and approved, directly or through co-promotion or other licensing arrangements
with third parties. Such arrangements may be exclusive or nonexclusive and may
provide for marketing rights worldwide or in a specific market.
For certain of its products Alteon has licensed exclusive marketing
rights, formed joint marketing arrangements or granted distribution rights
within specified territories with its corporate partners, Yamanouchi, Roche,
Gamida, IDEXX and Genentech. See "--Corporate Strategic Alliances."
PATENTS, TRADE SECRETS AND LICENSES
Proprietary protection for the Company's product candidates, processes
and know-how is important to its business. Alteon aggressively files and
prosecutes patents covering its proprietary technology, and, if warranted, will
defend its patents and proprietary technology. As appropriate, the Company seeks
patent protection for its proprietary technology and products in the United
States and Canada and in key commercial European and Asia/Pacific countries. The
Company also relies upon trade secrets, know-how, continuing technological
innovation and licensing opportunities to develop and maintain its competitive
position.
Pimagedine is not a novel compound and is not protected by a
composition-of-matter patent. In 1992, a United States patent on the use of
pimagedine was issued to Rockefeller University and subsequently exclusively
licensed to Alteon with claims relating to the inhibition of A.G.E.-formation.
The patent claims the new use of a known agent for the treatment of the
complications of diabetes and aging. In 1994, corresponding patents were granted
in France, Germany, Italy, the United Kingdom and other European countries. A
corresponding patent was issued in Japan in 1995. The Company continues to
pursue and patent chemical analogs of known A.G.E.-formation inhibitors, as well
as novel compounds having potential inhibitory properties.
Alteon obtained several patents covering certain novel compounds in the
A.G.E. crosslink breaker category. These compounds have the ability to break
what were previously believed to be permanent, A.G.E.-mediated bonds between
proteins. The use of these compounds offers the possibility of the first
therapeutic approach to the removal of A.G.E. crosslinks.
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The Company believes that its licensed and owned patents provide a
substantial proprietary base that will allow Alteon and its collaborative
partners to commercialize products in this field. There can be no assurance,
however, that pending or future applications will issue, that the claims of any
patents which do issue will provide any significant appreciation of the
Company's technology, or that the Company's directed discovery research will
yield compounds and products of therapeutic and commercial value.
In 1987, the Company acquired an exclusive, royalty-free, worldwide
license (including the right to sub-license to others) to issued patents, patent
applications and trade secrets from Rockefeller University relating to the
A.G.E.-formation and crosslinking technology currently under development at
Alteon. The investors of the patented technology include Drs. Michael A.
Brownlee, Anthony Cerami and Helen Vlassara, members of Alteon's Scientific
Advisory Board, and Dr. Peter C. Ulrich, formerly the Company's Director of
Chemistry and now an employee of Cerami Consulting. Additional patent
applications have since been filed on discoveries made in support of the
technology from research conducted at Rockefeller University, The Picower
Institute and the Company's laboratories.
Pursuant to the Company's agreement with The Picower Institute, certain
patentable inventions and discoveries relating to A.G.E. technology have been
licensed exclusively to the Company. In consultation with the Company, The
Picower Institute is responsible for the worldwide filing and prosecution of
patent applications and maintenance of patents for such inventions. Alteon will
contribute 50% of the cost of such activities.
As of December 31, 1998, the Company's patent estate of owned and/or
licensed patent rights consisted of 91 issued patents or allowed United States
patent applications, none of which expire prior to 2001, and 22 pending patent
applications in the United States, the majority of which are A.G.E.-related.
Included in Alteon's patent estate are two issued United States patents on the
use of pimagedine for inhibition of iNOS, licensed from Washington University.
Alteon also owns or has exclusive rights to over 25 issued or granted non-United
States patents and has over 67 patent applications pending in Europe, Japan,
Australia and Canada.
The Company intends to continue to focus its research and development
efforts on the synthesis of novel compounds and on the search for additional
therapeutic applications to expand and broaden the Company's rights within its
technological and patent base. The Company is also prepared to in-license
additional technology that may be useful in building its proprietary position.
Where appropriate, the Company utilizes trade secrets and unpatentable
improvements to enhance its technology base and improve its competitive
position. Alteon requires all employees, scientific consultants and contractors
to execute confidentiality agreements as a condition of engagement by the
Company. There can be no assurance, however, that the Company can limit
unauthorized or wrongful disclosures of unpatented trade secret information.
The Company believes that its estate of licensed and owned issued
patents, if upheld, and pending applications, if granted and upheld, will be a
substantial factor in the Company's success. The patent positions of
pharmaceutical firms, including Alteon, are generally uncertain and involve
complex legal and factual questions. Consequently, even though Alteon is
currently prosecuting such patent applications in the United States and foreign
patent offices, the Company does not know whether any of such applications will
result in the issuance of any additional patents or, if any additional patents
are issued, whether the claims thereof will provide significant proprietary
protection or will be circumvented or invalidated.
Competitors or potential competitors have filed for or have received
United States and foreign patents and may obtain additional patents and
proprietary rights relating to compounds or processes competitive with those of
the Company. Accordingly, there can be no assurance that the Company's patent
applications will result in patents being issued or that, if issued, the claims
of the patents will afford protection against competitors with similar
technology; nor can there be any assurance that others will not obtain patents
that the Company would need to license or circumvent. See "--Competition."
The Company's success will depend, in part, on its ability to obtain
patent protection for its products, preserve its trade secrets and operate
without infringing on the proprietary rights of third parties. There can be no
assurance that the Company's current patent estate will enable the Company to
prevent infringement by third parties
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or that competitors will not develop competitive products outside the protection
that may be afforded by the claims of such patents. To the extent the Company
relies on trade secrets and unpatented know-how to maintain its competitive
technological position, there can be no assurance that others may not develop
independently the same or similar technologies. Failure to maintain its current
patent estate or to obtain requisite patent and trade secret protection, which
may become material or necessary for product development, could delay or
preclude the Company or its licensees or marketing partners from marketing their
products and could thereby have a material adverse effect on the Company's
business, financial condition and results of operations.
GOVERNMENT REGULATION
The Company and its products are subject to comprehensive regulation by
the FDA in the United States and by comparable authorities in other countries.
These national agencies and other federal, state and local entities regulate,
among other things, the preclinical and clinical testing, safety, effectiveness,
approval, manufacture, labeling, marketing, export, storage, record keeping,
advertising and promotion of the Company's products.
The process required by the FDA before the Company's products may be
approved for marketing in the United States generally involves (i) preclinical
new drug laboratory and animal tests, (ii) submission to the FDA of an IND,
which must become effective before clinical trials may begin, (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the drug for its intended indication, (iv) submission to the FDA of an NDA, and
(v) FDA review of the NDA in order to determine, among other things, whether the
drug is safe and effective for its intended uses. There is no assurance that the
FDA review process will result in product approval on a timely basis, if at all.
Preclinical tests include laboratory evaluation of product chemistry
and formulation, as well as animal studies to assess the potential safety and
efficacy of the product. Certain preclinical tests are subject to FDA
regulations regarding current Good Laboratory Practices. The results of the
preclinical tests are submitted to the FDA as part of an IND and are reviewed by
the FDA prior to the commencement of clinical trials or during the conduct of
the clinical trials, as appropriate.
Clinical trials are conducted under protocols that detail such matters
as the objectives of the study, the parameters to be used to monitor safety and
the efficacy criteria to be evaluated. Each protocol must be submitted to the
FDA as part of the IND. Further, each protocol must be reviewed and approved by
an institutional review board.
Clinical trials are typically conducted in three sequential phases,
which may overlap. During Phase I, when the drug is initially given to human
subjects, the product is tested for safety, dosage tolerance, absorption,
metabolism, distribution and excretion. Phase II involves studies in a limited
patient population to (i) evaluate preliminarily the efficacy of the product for
specific, targeted indications, (ii) determine dosage tolerance and optimal
dosage, and (iii) identify possible adverse effects and safety risks. Phase III
trials are undertaken in order to further evaluate clinical efficacy and to
further test for safety within an expanded patient population. The FDA may
suspend clinical trials at any point in this process if it concludes that
clinical subjects are being exposed to an unacceptable health risk.
FDA approval of the Company's products, including a review, for the
appropriate indication(s), of the manufacturing processes and facilities used to
produce such products, will be required before such products may be marketed in
the United States. The process of obtaining approvals from the FDA can be
costly, time consuming and subject to unanticipated delays. There can be no
assurance that approvals of the Company's proposed products, processes, or
facilities will be granted on a timely basis, if at all. Any delay or failure to
obtain such approvals would have a material adverse effect on the Company's
business, financial condition and results of operations. Moreover, even if
regulatory approval is granted, such approval may include significant
limitations on indicated uses for which a product could be marketed.
Among the conditions for NDA approval is the requirement that the
prospective manufacturer's manufacturing procedures conform to cGMP
requirements, which must be followed at all times. In complying with those
requirements, manufacturers (including a drug sponsor's third party contract
manufacturers) must continue to expend time, money and effort in the area of
production and quality control to ensure compliance. Domestic manufacturing
establishments are subject to periodic inspections by the FDA in order to
assess, among other things,
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cGMP compliance. To supply a product for use in the United States, foreign
manufacturing establishments must comply with cGMP and are subject to periodic
inspection by the FDA or by regulatory authorities in certain of such countries
under reciprocal agreements with the FDA.
Both before and after approval is obtained, a product, its
manufacturer, and the holder of the NDA for the product are subject to
comprehensive regulatory oversight. Violations of regulatory requirements at any
stage, including the preclinical and clinical testing process, the approval
process, or thereafter (including after approval) may result in various adverse
consequences, including the FDA's delay in approving or refusal to approve a
product, withdrawal of an approved product from the market, and/or the
imposition of criminal penalties against the manufacturer and/or NDA holder. In
addition, later discovery of previously unknown problems may result in
restrictions on such product, manufacturer, or NDA holder, including withdrawal
of the product from the market. Also, new government requirements may be
established that could delay or prevent regulatory approval of the Company's
products under development.
The FDA has implemented accelerated approval procedures for certain
pharmaceutical agents that treat serious or life-threatening diseases and
conditions, especially where no satisfactory alternative therapy exists. The
Company believes that certain of its products in development may qualify for
accelerated approval. The FDA has advised the Company that any NDA filed for
pimagedine based on the ACTION trials will qualify for accelerated approval
procedures. The Company cannot predict the ultimate impact, however, of the
FDA's accelerated approval of procedures on the timing or likelihood of approval
of any of its potential products or those of any competitor. In addition, the
approval of a product under the accelerated approval procedures may be subject
to various conditions, including the requirement to verify clinical benefit in
post-marketing studies, and the authority on the part of the FDA to withdraw
approval under streamlined procedures if such studies do not verify clinical
benefit.
For marketing outside the United States, the Company will be subject to
foreign regulatory requirements governing human clinical trials and marketing
approval for drugs and diagnostic products. The requirements governing the
conduct of clinical trials, product licensing, pricing and reimbursement vary
widely from country to country. The Company does not currently have any
facilities or personnel outside of the United States.
In addition to regulations enforced by the FDA, the Company also is
subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and potential future federal,
state or local regulations. The Company's research and development involves the
controlled use of hazardous materials, chemicals and various radioactive
compounds. Although the Company believes that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by state
and federal regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that result and any
such liability could exceed the resources of the Company.
COMPETITION
A number of companies are pursuing the research and development of
pharmaceutical agents to treat the complications of diabetes and age-related
diseases. The Company is not aware of any other pharmaceutical company
developing an A.G.E.-formation inhibitor which has reached the clinical
development stage and it has no knowledge of any company pursuing a product to
break crosslinked A.G.E. proteins. Conversely, Alteon is aware of many companies
which are pursuing research and development of compounds for the lowering of
glucose levels and the selective inhibition if iNOS.
Many of the Company's potential competitors have substantially greater
financial, technical and human resources than the Company and may be
better-equipped to develop, manufacture and market products. In addition, many
of these companies have extensive experience in preclinical testing and human
clinical trials. These companies may develop and introduce products and
processes competitive with or superior to those of the Company.
The Company's competition will be determined in part by the potential
indications for which the Company's compounds are developed and ultimately
approved by regulatory authorities. For certain of the Company's potential
products, an important factor in competition may be the timing of market
introduction of its or
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its competitors' products. Accordingly, the relative speed with which Alteon can
develop products, complete the clinical trials and approval processes and supply
commercial quantities of the products to the market are important competitive
factors. The Company expects that competition among products approved for sale
will be based on, among other things, product efficacy, safety, reliability,
availability, price and patent position.
Competitive drugs based on other therapeutic mechanisms may be
efficacious in treating diabetic complications. The development by others of
non-A.G.E.-related treatment modalities for diabetic complications could render
pimagedine and other Alteon products in the diabetic field non-competitive or
obsolete. Therapeutic approaches being pursued include curing diabetes via gene
therapy or islet cell transplantation, as well as pharmaceutical intervention
with agents such as the aldose reductase inhibitors.
Results of the DCCT showed that tight glucose control reduced the
incidence of diabetic complications. Numerous companies are pursuing other
methods to manage glucose control and to reduce the incidence of diabetic
complications. In addition, several companies have initiated research with drugs
that inhibit vascularization as a potential treatment of diabetic retinopathy.
In the event one or more of these initiatives are successful, the market for the
Company's products may be reduced or eliminated.
The treatment of diabetic complications with use of existing agents
such as lipid lowering agents or A.C.E. inhibitors also appears beneficial. The
A.C.E. inhibitor, captopril, has been approved by the FDA for patients with
diabetic nephropathy. Alteon's clinical trials were designed assuming patients'
baseline therapy would include A.C.E. inhibitor treatment. The patent covering
captopril expired in March 1996. Other pharmaceutical companies have chosen to
market and sell this drug which has led to a significant decrease in its price.
Sales of captopril may reduce or eliminate the market for any product developed
by the Company for this indication.
The Company is aware of the development by several pharmaceutical
companies of thiazolidinedione derivatives ("glitazones") for treatment of Type
II diabetes. In January 1997, Warner-Lambert Company was given approval and
clearance by the FDA for the marketing of Rezulin (TM) (troglitazone), an
anti-diabetic drug designed to target insulin resistance in Type II diabetes.
The Company's competitive position also depends upon its ability to
attract and retain qualified personnel, obtain protection or otherwise develop
proprietary products or processes and secure sufficient capital resources.
SCIENTIFIC ADVISORY BOARD
The Company's Scientific Advisory Board consists of individuals with
recognized expertise in the medical complications of diabetes and aging,
biochemistry and pharmaceutical science and related fields who advise the
Company about present and long-term scientific planning, research and
development. Members of the Scientific Advisory Board consult and meet with
Company management informally on a frequent basis. All members of the Scientific
Advisory Board are employed by employers other than the Company and may have
commitments to, or consulting or advisory agreements with, other entities that
may limit their availability to the Company. These companies may also be
competitors of Alteon. The members of the Scientific Advisory Board have agreed,
however, not to provide any services to any other entities that might conflict
with the activities that they provide as members of the Scientific Advisory
Board. Each member also has executed a confidentiality agreement for the benefit
of the Company. Although members of the Scientific Advisory Board may devote
significant time and energy to the affairs of the Company, except for members of
the Scientific Advisory Board with consulting contracts with Alteon, no members
are expected to devote more than a small portion of their time to Alteon.
The following persons are members of Alteon's Scientific Advisory
Board:
Anthony Cerami, Ph.D., President of Cerami Consulting
Corporation.
Michael A. Brownlee, M.D., Anita and Jack Saltz Chair of
Diabetes Research at the Albert Einstein College of Medicine,
and a Professor in the Department of Medicine and Co-Director of
the Diabetes Research Center.
18
<PAGE> 19
Helen Vlassara, M.D., Director, Division of Experimental
Diabetes and Aging, Department of Geriatrics at the Mount Sinai
Medical Center.
Scott M. Grundy, M.D., Ph.D., Chairman of the Department of
Clinical Nutrition and Director of the Center for Human
Nutrition at the University of Texas Southwestern Medical Center
at Dallas, Texas, and a Professor of Internal Medicine and
Biochemistry.
Bruce Merrifield, Ph.D., a Nobel Laureate and the John D.
Rockefeller Professor Emeritus at Rockefeller University.
Leslie Z. Benet, Ph.D., Professor and Chairman, Department of
Biopharmaceutical Sciences, University of California, San
Francisco.
Richard Bucala, M.D., Ph.D., Professor and Head, Laboratory of
Medical Biochemistry at The Picower Institute.
EMPLOYEES
As of March 31, 1999, Alteon employed 47 persons (13 of whom held a
Ph.D., M.D. or other advanced degree), of whom 33 were engaged in research and
development and 14 were engaged in administration and management. A significant
number of the Company's management and professional employees have had prior
experience with pharmaceutical, biotechnology or medical product companies.
Alteon believes that it has been successful in attracting skilled and
experienced personnel. None of the Company's employees are covered by collective
bargaining agreements and all employees are covered by confidentiality
agreements. The Company believes that its relationship with its employees is
good.
FORWARD-LOOKING STATEMENTS
Statements in this Form 10-K that are not statements or descriptions of
historical facts are "forward-looking" statements under Section 21E of the
Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995 and are subject to numerous risks and
uncertainties. These forward-looking statements and other forward-looking
statements made by the Company or its representatives are based on a number of
assumptions. The words "believes," "expects," "anticipates," "intends,"
"estimates" or other expressions which are predictions of or indicate future
events and trends and which do not relate to historical matters identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements as they involve risks and uncertainties, and
actual results could differ materially from those currently anticipated due to a
number of factors, including those set forth in this section and elsewhere in,
or incorporated by reference into, this Form 10-K. These factors include, but
are not limited to, the risks set forth below. The forward-looking statements
represent the Company's judgment and expectations as of the date of this Report.
The Company assumes no obligation to update any such forward-looking statements.
Need for Future Funding; Uncertainty of Access to Capital
Alteon anticipates that its existing available cash and cash
equivalents and short-term investments will be adequate to satisfy its working
capital requirements for its current and planned operations into 2000. Alteon
will require substantial new funding in order to continue the research, product
development, preclinical testing and clinical trials of its product candidates,
including pimagedine if the Company decides to continue its development and
ALT-711, the Company's lead A.G.E. crosslink breaker candidate. The Company will
also require additional funding for operating expenses, the pursuit of
regulatory approvals for its product candidates and the establishment of
marketing and sales capabilities. The Company's future capital requirements will
depend on many factors, including continued scientific progress in its research
and development programs, the size and complexity of these programs, progress
with preclinical testing and clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in filing, prosecuting and
enforcing patent claims, competing technological and market developments, the
establishment of additional collaborative arrangements, the cost of
manufacturing arrangements, commercialization activities, and the cost of
product in-licensing and strategic acquisitions, if any. There can be no
19
<PAGE> 20
assurance that the Company's cash reserves and other liquid assets, including
funding that may be received from the Company's corporate partners and equity
sales and interest income earned thereon, will be adequate to satisfy its
capital and operating requirements.
Alteon intends to seek funding initially through arrangements with
corporate collaborators. It may in the future seek funding through public or
private sales of the Company's securities, including equity securities, when and
if conditions permit. In addition, the Company may pursue opportunities to
obtain debt financing, including capital leases, in the future. There can be no
assurance, however, that additional funding will be available on reasonable
terms, if at all. Any additional equity financing would be dilutive to the
Company's stockholders. If adequate funds are not available, Alteon may be
required to curtail significantly or eliminate one or more of its research and
development programs. If Alteon obtains funds through arrangements with
collaborative partners or others, it may be required to relinquish rights to
certain of its technologies or product candidates.
Uncertainties Related to the Early Stage of Development;
Technological Uncertainties
All of the Company's product candidates are in the research or
development stage, and all revenues to date have been generated from
collaborative research agreements and financing activities, or interest income
earned on these funds. No revenues have been generated from product sales. There
can be no assurance that product revenues can be realized on a timely basis, if
at all.
Alteon has not yet requested or received regulatory approval for any
product from the FDA or any other regulatory body. Before obtaining regulatory
approvals for the commercial sale of any of its products under development, the
Company must demonstrate through preclinical studies and clinical trials that
the product is safe and effective for use in each target indication. The results
from preclinical studies and early clinical trials may not be predictive of
results that will be obtained in large-scale testing, and there can be no
assurance that any clinical trials undertaken by the Company will demonstrate
sufficient safety and efficacy to obtain the requisite regulatory approvals or
will result in marketable products.
There can be no assurance that Alteon will succeed in the development
and marketing of any therapeutic or diagnostic product. To achieve profitable
operations, the Company must, alone or with others, successfully identify,
develop, introduce and market proprietary products. Such products will require
significant additional investment, development and preclinical and clinical
testing prior to potential regulatory approval and commercialization.
The development of new pharmaceutical products is highly uncertain and
subject to a number of significant risks. Potential products that appear to be
promising at early stages of development may not reach the market for a number
of reasons. Potential products may be found ineffective or cause harmful side
effects during preclinical testing or clinical trials, fail to receive necessary
regulatory approvals, be difficult to manufacture on a large scale, be
uneconomical, fail to achieve market acceptance or be precluded from
commercialization by proprietary rights of third parties. There can be no
assurance that the Company will undertake additional clinical trials or that the
Company's product development efforts will be successfully completed, that
required regulatory approvals can be obtained or that any products, if
introduced, will be successfully marketed or achieve customer acceptance.
Commercial availability of any Alteon products, including pimagedine, is not
expected for a number of years, if at all.
Uncertainty of Future Profitability
At December 31, 1998, the Company had an accumulated deficit of
$107,856,621. The Company anticipates that it will incur substantial,
potentially greater losses in the future. There can be no assurance that the
Company's products under development will be successfully developed or that its
products, if successfully developed, will generate revenues sufficient to enable
the Company to earn a profit. Alteon expects to incur substantial additional
operating expenses over the next several years as its research, development and
clinical trial activities increase. Alteon does not expect to generate revenues
from the sale of products, if any, for a number of years. The Company's ability
to achieve profitability depends in part on its ability to enter into agreements
for product development, obtain regulatory approval for its products and develop
the capacity, or enter into agreements, for the manufacture, marketing and sale
of any products. There can be no assurance that Alteon will obtain required
20
<PAGE> 21
regulatory approvals, or successfully develop, manufacture, commercialize and
market product candidates or that the Company will ever achieve product revenues
or profitability.
Dependence on Collaborative Relationships
The Company's strategy for development and commercialization of certain
of its products is dependent upon entering into various arrangements with
research collaborators, corporate partners and others and upon the subsequent
success of these third-parties in performing their obligations.
Alteon has established collaborative arrangements with Yamanouchi,
Gamida, Roche, IDEXX and Genentech with respect to the development of drug
therapies and diagnostics utilizing the Company's scientific platforms. The
arrangement with Genentech will terminate on June 30, 1999 unless the parties
agree to amend their arrangements. The Company anticipates that during 1999 it
will review with its corporate partners their arrangements in light of the
Company's current development plans and priorities. Alteon is seeking to
establish new collaborative relationships to provide the funding necessary for
continuation of its product development but there can be no assurance that such
effort will be successful. The Company will, in some cases, be dependent upon
these outside partners to conduct preclinical testing and clinical trials and to
provide adequate funding for the Company's development programs. Under certain
of these arrangements, the Company's corporate partners may have all or a
significant portion of the development and regulatory approval responsibilities.
Failure of the corporate partners to develop marketable products or to gain the
appropriate regulatory approvals on a timely basis, if at all, would have a
material adverse effect on the Company's business, financial condition and
results of operations.
In most cases, the Company cannot control the amount and timing of
resources which its corporate partners devote to the Company's programs or
potential products. If any of the Company's corporate partners breach or
terminate their agreements with the Company or otherwise fail to conduct their
collaborative activities in a timely manner, the preclinical or clinical
development or commercialization of product candidates or research programs will
be delayed, and the Company will be required to devote additional resources to
product development and commercialization or terminate certain development
programs. The termination of collaborative arrangements would have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that disputes will not arise in the future
with respect to the ownership of rights to any technology developed with
third-parties. These and other possible disagreements between collaborators and
the Company could lead to delays in the collaborative research, development or
commercialization of certain product candidates or could require or result in
litigation or arbitration, which would be time-consuming and expensive and would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Alteon's corporate partners may develop, either alone or with others,
products that compete with the development and marketing of the Company's
products. Competing products, either developed by the corporate partners or to
which the corporate partners have rights, may result in their withdrawal of
support with respect to all or a portion of the Company's technology, which
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Uncertainties Related to Patents and Proprietary Technology
The Company's success will depend on its ability to obtain patent
protection for its products, preserve its trade secrets, prevent third-parties
from infringing upon its proprietary rights and operate without infringing upon
the proprietary rights of others, both in the United States and abroad.
The degree of patent protection afforded to pharmaceutical inventions
is uncertain and the Company's potential products are subject to this
uncertainty. Pimagedine is not a novel compound and is not covered by a
composition-of-matter patent. The patents covering pimagedine are use patents
containing claims covering therapeutic indications and the use of specific
compounds and classes of compounds to inhibit A.G.E. formation. Competitors may
develop and commercialize pimagedine or pimagedine-like products for indications
outside of the protection provided by the claims of the Company's use patents.
Physicians, pharmacies and wholesalers could then substitute for the Company's
pimagedine products. Substitution for the Company's pimagedine products would
have a material adverse effect on the Company's business, financial condition
and results of operations. Use patents may afford a lesser degree of protection
in certain foreign countries due to their patent laws. In addition, although the
21
<PAGE> 22
Company has several patent applications pending to protect proprietary
technology and potential products, there can be no assurance that these patents
will be issued, that the claims of any patents which do issue will provide any
significant protection of the Company's technology or products, or that the
Company will enjoy any patent protection beyond the expiration dates of its
currently issued patents.
There can be no assurance that competitors will not develop competitive
products outside the protection that may be afforded by the claims of the
Company's patents. The Company is aware that other parties have been issued
patents and have filed patent applications in the United States and foreign
countries with respect to other agents which impact A.G.E. or A.G.E. crosslink
formation.
The Company also relies upon unpatented trade secrets and improvements,
unpatented know-how and continuing technological innovation to maintain, develop
and expand its competitive position, which it seeks to protect, in part, by
confidentiality agreements with its corporate partners, collaborators, employees
and consultants. The Company also has invention or patent assignment agreements
with its employees and certain, but not all, corporate partners and consultants.
There can be no assurance that relevant inventions will not be developed by a
person not bound by an invention assignment agreement. There can be no assurance
that binding agreements will not be breached, that the Company would have
adequate remedies for such breach, or that the Company's trade secrets will not
otherwise become known to or be independently discovered by competitors.
Uncertainties Related to Government Regulation; No Assurance of
Regulatory Approval
Alteon's research, preclinical testing and clinical trials of its
product candidates are, and the manufacturing and marketing of its products will
be, subject to extensive and rigorous regulation by numerous governmental
authorities in the United States and in other countries where the Company
intends to test and market its product candidates.
Prior to marketing, any product developed by the Company must undergo
an extensive regulatory approval process. This regulatory process, which
includes preclinical testing and clinical trials, and may include post-marketing
surveillance, of each compound to establish its safety and efficacy, can take
many years and can require the expenditure of substantial resources. Data
obtained from preclinical and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval. In
addition, delays or rejections may be encountered based upon changes in FDA
policy for drug approval during the period of product development and FDA
regulatory review of each submitted NDA. Similar delays may also be encountered
in foreign countries. There can be no assurance that regulatory approval will be
obtained for any drugs developed by the Company. Moreover, regulatory approval
may entail limitations on the indicated uses of the drug. Further, even if
regulatory approval is obtained, a marketed drug and its manufacturer are
subject to continuing review and discovery of previously unknown problems with a
product or manufacturer which may have adverse effects on the Company's
business, financial condition and results of operations, including withdrawal of
the product from the market. Violations of regulatory requirements at any stage,
including preclinical testing and clinical trials, the approval process or
post-approval, may result in various adverse consequences including the FDA's
delay in approving, or its refusal to approve, a product withdrawal of an
approved product from the market and the imposition of criminal penalties
against the manufacturer and NDA holder. Except for pimagedine, which has been
allowed to proceed into human clinical trials for diabetic patients with
nephropathy, end-stage renal disease, dyslipidemia and dermatological conditions
and an IND for treatment of stroke (intravenous), the Company has not submitted
any other IND application for any product candidate, and no products have been
approved for commercialization in the United States or elsewhere. No assurance
can be given that the Company will be able to obtain FDA approval for any
products. Failure to obtain requisite governmental approvals or failure to
obtain approvals of the scope requested will delay or preclude the Company or
its licensees or marketing partners from marketing the Company's products or
limit the commercial use of such products and will have a material adverse
effect on the Company's business, financial condition and results of operations.
Intense Competition and Risk of Technological Obsolescence; Alternate
Cures or Therapies for Diabetes
The Company is engaged in pharmaceutical fields characterized by
extensive research efforts and rapid technological progress. Many established
pharmaceutical and biotechnology companies with resources greater than those of
the Company are attempting to develop products that would be competitive with
the Company's products.
22
<PAGE> 23
Other companies may succeed in developing products that are safer, more
efficacious or less costly than any that may be developed by Alteon and may also
be more successful than Alteon in production and marketing. Rapid technological
development by others may result in the Company's products becoming obsolete
before the Company recovers a significant portion of the research, development
or commercialization expenses incurred with respect to those products.
Certain technologies under development by other pharmaceutical
companies could result in a cure for diabetes or the reduction of the incidence
of diabetes and its complications. For example, a number of companies are
investigating islet cell transplantation as a possible cure for Type I diabetes.
Results of a study conducted by the National Institutes of Health, known as the
DCCT, published in 1993, showed that tight glucose control reduced the incidence
of diabetic complications. Numerous companies are pursuing methods to control
glucose levels. In addition, several large companies have initiated or expanded
research, development and licensing efforts to build a diabetic pharmaceutical
franchise focusing on diabetic nephropathy, neuropathy, retinopathy and related
conditions. An example of this is research seeking anti-angiogenesis drugs for
the potential treatment of diabetic retinopathy. Furthermore, the Company is
aware of several pharmaceutical companies which are developing thiazolidinedione
derivatives ("glitazones") for the treatment of Type II diabetes. In January
1997, Warner-Lambert Company was given approval and clearance by the FDA for the
marketing of Rezulin(TM) (troglitazone), an anti-diabetic drug designed to
target insulin resistance in Type II diabetes. It is possible that one or more
of these initiatives may reduce or eliminate the market for the Company's
products.
In addition, captopril, a product marketed by Bristol-Myers Squibb
Company, has been approved for Type I diabetics with overt nephropathy. The
patent covering captopril expired in February 1996. Other pharmaceutical
companies have chosen to market and sell this drug, resulting in a substantial
decrease in price. This decline in price for captopril may significantly reduce
or eliminate the market for any product developed by the Company for this
indication.
Uncertainties Related to Pharmaceutical Pricing and Reimbursement
The Company's business, financial condition and results of operations
may be materially adversely affected by the continuing efforts of government and
third-party payors to contain or reduce the costs of health care through various
means. For example, in certain foreign markets, pricing and/or profitability of
prescription pharmaceuticals are subject to government control. In the United
States, the Company expects that there will continue to be federal and state
initiatives to control and/or reduce pharmaceutical expenditures. In addition,
increasing emphasis on managed care in the United States will continue to put
pressure on pharmaceutical pricing. Cost control initiatives could decrease the
price that the Company receives for any products it may develop and sell in the
future and have a material adverse effect on the Company's business, financial
condition and results of operations. Further, to the extent that cost control
initiatives have a material adverse effect on the Company's corporate partners,
the Company's ability to commercialize its products may be adversely affected.
The Company's ability to commercialize pharmaceutical products may
depend in part on the extent to which reimbursement for the products will be
available from government health administration authorities, private health
insurers and other third-party payors. Significant uncertainty exists as to the
reimbursement status of newly approved health care products, and third-party
payors, including Medicare, are increasingly challenging the prices charged for
medical products and services. There can be no assurance that any third-party
insurance coverage will be available to patients for any products developed by
the Company. Government and other third-party payors are increasingly attempting
to contain health care costs by limiting both coverage and the level of
reimbursement for new therapeutic products and by refusing in some cases to
provide coverage for uses of approved products for disease indications for which
the FDA has not granted labeling approval. If adequate coverage and
reimbursement levels are not provided by government and other third-party payors
for the Company's products, the market acceptance of these products would be
adversely affected.
Uncertainties Related to Marketing and Sales
For certain of its products, the Company has licensed exclusive
marketing rights to its corporate partners or formed collaborative marketing
arrangements within specified territories in return for royalties to be received
on sales, a share of profits or beneficial transfer pricing. These agreements
are terminable at the discretion of the
23
<PAGE> 24
Company's partners upon as little as 90 days' prior written notice. If the
licensee or marketing partner terminates an agreement or fails to market a
product successfully, the Company's business, financial condition and results of
operations may be adversely affected.
Alteon currently has no experience in marketing or selling
pharmaceutical products. In order to achieve commercial success for any approved
product, Alteon must either develop a marketing and sales force or, where
appropriate or permissible, enter into arrangements with third parties to market
and sell its products. There can be no assurance that Alteon will develop
successfully marketing and sales experience or that it will be able to enter
into marketing and sales agreements with others on acceptable terms, if at all,
or that any such arrangements, if entered into, will not be terminated. If the
Company develops its own marketing and sales capability, it will compete with
other companies that currently have experienced, well funded and larger
marketing and sales operations. To the extent that the Company enters into
co-promotion or other sales and marketing arrangements with other companies, any
revenues to be received by Alteon will be dependent on the efforts of others,
and there can be no assurance that their efforts will be successful.
No Manufacturing Experience; Reliance on Third-Party Manufacturing
The Company has no experience in manufacturing products for commercial
purposes and does not have manufacturing facilities. Consequently, the Company
is dependent on contract manufacturers for the production of products for
development and commercial purposes. The manufacture of the Company's products
for clinical trials and commercial purposes is subject to cGMP regulations
promulgated by the FDA. The Company has contracted or will be contracting with
third parties for the manufacture and distribution of pimagedine. However, in
the event that the Company is unable to obtain or retain third-party
manufacturing for its products, it will not be able to commercialize such
products as planned. There can be no assurance that the Company will be able to
enter into agreements for the manufacture of future products with manufacturers
whose facilities and procedures comply with cGMP and other regulatory
requirements. The Company's current dependence upon others for the manufacture
of its products may adversely affect its profit margin, if any, on the sale of
future products and the Company's ability to develop and deliver such products
on a timely and competitive basis.
Potential Product Liability; Uncertainties Related to Insurance
The use of any of the Company's potential products in clinical trials
and the sale of any approved products, including the testing and
commercialization of pimagedine, may expose the Company to liability claims
resulting from the use of products or product candidates. These claims might be
made directly by consumers, pharmaceutical companies or others. The Company
maintains product liability insurance coverage for claims arising from the use
of its products in clinical trials. However, coverage is becoming increasingly
expensive, and no assurance can be given that the Company will be able to
maintain insurance or, if maintained, that insurance can be acquired at a
reasonable cost or in sufficient amounts to protect the Company against losses
due to liability that could have a material adverse effect on the Company's
business, financial conditions and results of operations. There can be no
assurance that the Company will be able to obtain commercially reasonable
product liability insurance for any product approved for marketing in the future
or that insurance coverage and the resources of the Company would be sufficient
to satisfy any liability resulting from product liability claims. A successful
product liability claim or series of claims brought against the Company could
have a material adverse effect on its business, financial condition and results
of operations.
Attraction and Retention of Key Employees and Consultants
The Company is highly dependent on the principal members of its
management and scientific staff. The loss of services of any of these personnel
could impede the achievement of the Company's development objectives.
Furthermore, recruiting and retaining qualified scientific personnel to perform
research and development work in the future will also be critical to the
Company's success. There can be no assurance that the Company will be able to
attract and retain personnel on acceptable terms given the competition between
pharmaceutical and health care companies, universities and non-profit research
institutions for experienced scientists. In addition, the Company relies on
consultants and members of its Scientific Advisory Board to assist the Company
in formulating its research and development strategy. All of Alteon's
consultants and the members of the Scientific Advisory Board are
24
<PAGE> 25
employed outside the Company and may have commitments to or consulting or
advisory contracts with other entities that may limit their availability to the
Company.
Hazardous Materials
The Company's research and development activities involve the
controlled use of hazardous materials, chemicals and various radioactive
compounds. Although the Company believes that its safety procedures for handling
and disposing of hazardous materials comply with the standards prescribed by
state and federal regulations, the risk of accidental contamination or injury
from these materials cannot be completely eliminated. In the event of an
accident, the Company could be held liable for any damages or fines that result.
Such liability could have a material adverse effect on the Company's business,
financial condition and results of operations.
ITEM 2. PROPERTIES.
The Company leases a 37,000 square foot building in Ramsey, New
Jersey, which contains its executive and administrative offices and research
laboratories. The lease, which commenced on November 1, 1993, has a 10-year
term. In addition, the lease has two five-year renewal options.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock is traded on the Nasdaq National Market
under the symbol "ALTN." The following table sets forth, for the calendar
periods indicated, the range of high and low sale prices for the Common Stock of
the Company on the Nasdaq National Market:
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
1997
----
First Quarter $6.625 $3.000
Second Quarter 5.125 2.250
Third Quarter 5.875 3.438
Fourth Quarter 9.188 4.500
1998
----
First Quarter $13.125 $4.563
Second Quarter 5.500 3.250
Third Quarter 5.000 2.188
Fourth Quarter 5.500 0.531
</TABLE>
As of March 17, 1999, there were 342 holders of the Common Stock, with
beneficial stockholders in excess of 400. On March 17, 1999, the last sale price
reported on the Nasdaq National Market for the Common Stock was $0.875 per
share.
The Company has neither paid nor declared dividends on its Common Stock
since its inception and does not plan to pay dividends in the foreseeable
future. Any earnings which the Company may realize will be returned to finance
the growth of the Company.
In December 1997, the Company and Genentech entered into a stock
purchase agreement pursuant to which Genentech agreed to buy shares of Common
Stock, Series G Preferred Stock and Series H Preferred Stock (the "Securities").
On December 19, 1997 the Company sold to Genentech 837,314 shares of Common
Stock and
25
<PAGE> 26
939 shares of Series G Preferred Stock for an aggregate purchase price
of $15,000,000. On July 27, 1998 and October 1, 1998, Genentech purchased
$8,000,000 (800 shares) and $14,544,000 (1,454.37 shares) respectively of Series
H Preferred Stock. The Securities were offered and sold to a single accredited
investor in compliance with the requirements of Rule 506 under the Securities
Act of 1933, and accordingly the transaction was exempt from registration under
such Act. Each share of Series G Preferred Stock is convertible at any time into
a number of shares of Common Stock determined by dividing $10,000 by the average
of the closing sales price of the Common Stock, as reported on the Nasdaq
National Market, for the twenty business days immediately preceding the date of
conversion (the "Conversion Price"). The shares of Series H Preferred Stock will
be convertible on the same basis at any time after the earlier of (i) the
granting of approval by the FDA for the marketing and sale of any pimagedine
product specified in the development collaboration and license agreement between
the Company and Genentech, (ii) termination by Genentech of the development
collaboration and license agreement or, (iii) December 1, 2002. In addition,
subject to certain volume limitations, the Series H Preferred Stock may be
converted at any time when the Company's market capitalization is less than
twice the price paid by Genentech for all shares of Series G Preferred Stock and
Series H Preferred Stock then held by Genentech.
The market prices for securities of biotechnology and pharmaceutical
companies, including Alteon, have historically been highly volatile, and the
market has from time to time experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in the Company's operating results,
announcements of technological innovations or new therapeutic products by the
Company or others, clinical trial results, developments concerning agreements
with collaborators, governmental regulation, developments in patent or other
proprietary rights, public concern as to safety of drugs developed by the
Company or others, future sales of substantial amounts of Common Stock by
existing stockholders and general market conditions can have an adverse effect
on the market price of the Common Stock.
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<PAGE> 27
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data set forth below should be read in
conjunction with the audited financial statements and related notes included
elsewhere in this Annual Report on Form 10-K. The selected financial data for
the five years ended December 31, 1998 has been derived from the audited
financial statements of the Company.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1995 1996 1997 1998
-------- --------- --------- --------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Investment income........................ $ 1,797 $ 1,888 $ 2,295 $ 1,510 $ 1,321
Expenses:
Research and development................. 8,573 10,004 17,494 23,264 24,592
Elimination of previously accrued
loss contingency -- -- -- -- (1,771)
General and administrative............... 3,706 3,699 3,517 3,633 4,842
Interest................................. 43 68 47 25 4
-------- -------- -------- -------- --------
Total expenses......................... 12,322 13,771 21,058 26,922 27,667
-------- -------- -------- -------- --------
Net loss.................................... (10,525) (11,883) (18,763) (25,412) (26,346)
Preferred stock dividends
and discount amortization................ -- -- -- 1,091 2,207
-------- -------- -------- -------- --------
Net loss applicable to common
Stockholders............................. $(10,525) $(11,883) $(18,763) $(26,503) $(28,553)
======== ======== ======== ======== ========
Basic loss per share to common
Stockholders............................. $ (0.85) $ (0.90) $ (1.20) $ (1.60) $ (1.57)
======== ======== ======= ======== ========
Diluted loss per share to common
Stockholders............................. $ (0.85) $ (0.90) $ (1.20) $ (1.60) $ (1.57)
======== ======== ======= ======== ========
Weighted average common shares used
in computing basic and diluted loss
per share................................ 12,431 13,170 15,640 16,566 18,211
====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1994 1995 1996 1997 1998
-------- -------- -------- -------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
short-term investments ........... $ 36,435 $ 45,197 $ 34,500 $ 28,974 $ 24,132
Working capital ..................... 35,540 44,433 26,542 22,390 20,093
Total assets ........................ 43,612 52,216 40,139 33,508 27,652
Long-term capital lease obligations.. 750 467 162 -- --
Accumulated deficit ................. (22,154) (34,037) (52,800) (79,303) (107,857)
Stockholders' equity ................ 41,214 49,716 31,371 26,455 23,338
</TABLE>
27
<PAGE> 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
OVERVIEW
Since its inception in October 1986, Alteon has devoted
substantially all of its resources to its research, drug discovery and
development programs. To date, Alteon has not generated any revenues from the
sale of products and does not expect to generate any such revenues for a number
of years, if at all. Alteon has incurred an accumulated deficit of $107,856,621
as of December 31, 1998 and expects to incur operating losses, potentially
greater than losses in prior years, for a number of years.
Alteon has financed its operations through proceeds from an initial
public offering of Common Stock in 1991, a follow-on offering of Common Stock
completed in 1995, and private placements of common and preferred equity
securities, revenue from its collaborations with HMRI and Yamanouchi,
reimbursement of certain of Alteon's research and development expenses by its
collaborative partners, and investment income earned on cash balances and
short-term investments.
In December 1997, Alteon and Genentech entered into a stock purchase
agreement and a development collaboration and license agreement providing for
the development and marketing of pimagedine and second-generation
A.G.E.-formation inhibitors. In December 1997, Genentech purchased Common Stock
and Series G Preferred Stock for an aggregate purchase price of $15,000,000. On
July 27, 1998 and October 1, 1998, Genentech purchased $8,000,000 and
$14,544,000 respectively, of Series H Preferred Stock.
By letter agreement dated February 11, 1999, Alteon and Genentech
agreed that Genentech's obligations to purchase shares of stock of Alteon
pursuant to the stock purchase agreement terminated effective December 31, 1998.
The letter agreement provides that Genentech will continue to provide funding
(in cash rather than through purchases of Series H Preferred Stock) for
agreed-upon development costs for pimagedine until June 30, 1999.
Although the Company anticipates increased expenditures in research
and development expenses as it develops products and conducts its clinical
trials, a portion of such development expenses are expected to be reimbursed by
Alteon's collaborative partners. Yamanouchi has agreed to fund preclinical
studies, including most toxicology studies, on pimagedine and any other products
that the parties jointly agree to develop, including a second generation
A.G.E.-formation inhibitor and a macrophage stimulator. Gamida conducted, at its
own expense, a Phase II clinical trial in Israel to evaluate pimagedine in
patients with diabetes and elevated serum cholesterol levels, which was
completed in April 1997. Yamanouchi and Gamida do not fund Alteon's research or
early product development expenses.
The Company anticipates that during 1999 it will review with its
corporate partners their arrangements in light of the Company's current
development plans and priorities.
The Company's business is subject to significant risks including,
but not limited to, (i) its ability to obtain funding, (ii) the risks inherent
in its research and development efforts, including clinical trials, (iii)
uncertainties associated both with obtaining and enforcing its patents and with
the patent rights of others, (iv) the lengthy, expensive and uncertain process
of seeking regulatory approvals, (v) uncertainties regarding government reforms
and product pricing and reimbursement levels, (vi) technological change and
competition, (vii) manufacturing uncertainties, and (viii) dependence on
collaborative partners and other third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
products will prove ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
28
<PAGE> 29
RESULTS OF OPERATIONS
Years Ended December 1998, 1997, 1996
Revenues
Total revenues for 1998, 1997 and 1996 were $1,321,000, $1,510,000
and $2,295,000, respectively. Revenues in 1998, 1997 and 1996 were derived from
interest earned on cash and cash equivalents and short-term investments. The
decrease in investment income in 1998 over 1997 was attributed to the decrease
in cash and cash equivalents and short-term investment balances during most of
1998.
Operating Expenses
The Company's total expenses increased to $27,667,000 in 1998, from
$26,922,000 in 1997 and $21,058,000 in 1996 and consisted primarily of research
and development expenses offset by the elimination of a previously accrued loss
contingency. (See Note 6 of Notes to Financial Statements.) Research and
development expenses, net of reimbursements from its collaborative partners,
were $24,592,000 in 1998, $23,264,000 in 1997 and $17,494,000 in 1996. Research
and development expenses increased in 1998 from 1997 by $1,328,000, or 6%. This
increase was primarily due to increased expenses related to the A.G.E. crosslink
breaker program including Phase I clinical trial costs and the expansion of the
ESRD trial offset by a decrease in the ACTION trial costs due to the termination
of the ACTION II trial. Research and development expenses increased in 1997 from
1996 by $5,770,000, or 33.0% due to the costs associated with ACTION trials
throughout 1997. The Company was reimbursed $1,226,000 in 1996 by its
collaborative partners for research and development expenditures. No amounts
were reimbursed in 1997 and 1998.
General and administrative expenses were $4,842,000 in 1998 as
compared to $3,633,000 in 1997 and $3,517,000 in 1996. The increase in 1998 over
1997 was due to increased personnel related costs, consulting, investor
relations and insurance costs.
Interest expense was $4,000 in 1998, $25,000 in 1997 and $47,000 in
1996. The decrease in interest expense was primarily due to the amortization
schedule for the capital lease arrangement which commenced in June 1994 for
leasehold improvements on the Company's headquarters and research facility.
Net Loss
At December 31, 1998, the Company had available net operating tax
loss carryforwards, which expire in various amounts from the years 2006 through
2013, of approximately $98 million for income tax purposes. In addition, the
Company had research and development credit carryforwards of approximately $6
million. The Company had net losses of $26,346,000 in 1998, $25,412,000 in 1997
and $18,763,000 in 1996.
The Company does not believe that inflation has had a material
impact on the results of its operations.
LIQUIDITY AND CAPITAL RESOURCES
Alteon had cash and cash equivalents and short-term investments at
December 31, 1998 of $24,132,000 compared to $28,974,000 at December 31, 1997.
This is a decrease in cash and cash equivalents and short-term investments for
the twelve months ended December 31, 1998 of $4,842,000. This consisted of
$27,567,000 of cash used in operations consisting primarily of research and
development expenses, personnel and related costs and facility expenses and
$481,000 of capital expenditures. This was offset by $22,578,000 of financing
activities primarily related to the sale of Preferred Stock to Genentech and the
reclassification of restricted cash of $620,000. In June 1998, in accordance
with a new lease agreement the escrow funds were returned to the Company. As of
December 31, 1998, Alteon had invested $7,820,000 in capital equipment and
leasehold improvements.
The Company's research and development expenses, to date, have been
funded primarily by research and development collaborative arrangements and
sales of equity securities. In programs that are subject to joint development
agreements, the Company expects to incur substantial additional research and
development costs,
29
<PAGE> 30
including costs related to drug discovery, preclinical research and clinical
trials. The Company anticipates that it will be able to offset a portion of its
research and development expenses and its clinical development expenses with
funding from its collaborative partners.
Alteon anticipates that its existing available cash and cash
equivalents and short term investments will be adequate to satisfy its working
capital requirements for its current and planned operations into 2000.
In December 1997, Alteon and Genentech entered into a stock purchase
agreement and a development collaboration and license agreement providing for
the development and marketing of pimagedine and second-generation
A.G.E.-formation inhibitors. In December 1997, Genentech purchased Common Stock
and Series G Preferred Stock for an aggregate purchase price of $15,000,000. On
July 27, 1998 and October 1, 1999, Genentech purchased $8,000,000 and
$14,544,000 respectively, of Series H Preferred Stock.
By letter agreement dated February 11, 1999, Alteon and Genentech
agreed that Genentech's obligations to purchase shares of stock of Alteon
pursuant to the stock purchase agreement terminated effective December 31, 1998.
The letter agreement provides that Genentech will continue to provide funding
(in cash rather than through purchases of Series H Preferred Stock) for
agreed-upon development costs for pimagedine until June 30, 1999.
The amount of the Company's future capital requirements will depend
on numerous factors, including the progress of the Company's research and
development programs, the conduct of preclinical tests and clinical trials, the
development of regulatory submissions, the costs associated with protecting
patents and other proprietary rights, the development of marketing and sales
capabilities and the availability of third party funding.
Because of the Company's long-term capital requirements, it may seek
access to the public or private equity markets whenever conditions are
favorable. The Company may also seek additional funding through corporate
collaborations and other financing vehicles, potentially including off-balance
sheet financing through limited partnerships or corporations. There can be no
assurance that such funding will be available at all or on terms acceptable to
the Company. If adequate funds are not available, the Company may be required to
curtail significantly one or more of its research or development programs. If
the Company obtains funds through arrangements with collaborative partners or
others it may be required to relinquish rights to certain of its technologies or
product candidates.
Alteon's corporate partners may develop, either alone or with
others, products that compete with the development and marketing of the
Company's products. Competing products, either developed by the corporate
partners or to which the corporate partners have rights, may result in their
withdrawal of support with respect to all or a portion of the Company's
technology, which would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's current priorities are the evaluation and possible
continued development of pimagedine and the development of ALT-711, its lead
A.G.E. crosslink breaker candidate. If the Company decides to continue the
development of pimagedine after its consultations with the FDA, it expects to
seek one or more corporate partners to provide necessary funding. The Company is
actively seeking one or more corporate partners to help fund the development of
ALT-711. The Company believes that additional development of this compound and
other product candidates will require the Company to find sources of funding.
The Company had received notification from the Nasdaq Stock Market,
Inc. ("Nasdaq") that the Company is not presently in compliance with the Nasdaq
maintenance standard which requires that the Company's Common Stock maintain a
closing bid price of greater than or equal to $1.00. Pursuant to the Nasdaq
rules the Company has ninety (90) calendar days in which to regain compliance
with this requirement. During this time the Company's Common Stock will continue
to be listed on Nasdaq. If within this period the Common Stock complies with the
closing bid price requirement for a minimum of ten (10) consecutive trading
days, the Common Stock will continue to be listed on Nasdaq at the end of the
ninety (90) day period. If the Company is unable to comply with this requirement
on or before the end of the ninety (90) day period ending June 22, 1999, the
Company's Common Stock will be delisted from Nasdaq effective at the opening of
business on June 24, 1999. No assurance can be given that the Common Stock will
meet the closing bid price requirement during this period. Delisting could have
30
<PAGE> 31
a material adverse effect on the Company and its ability to raise additional
capital on favorable terms as well as on stockholder liquidity.
The Company is conducting a review of its computer systems to
identify any issues which may result from the year 2000 date recognition
problem, which is the result of computer programs being written using two digits
rather than four to define the applicable year. The Company believes that with
minor modifications to its systems, which it expects to complete before December
31, 1999, the year 2000 issue will not pose significant operation problems for
its internal computer systems as so modified. The year 2000 assessments and
modifications are generally being done in-house. Therefore, the primary costs
associated with this project are included in payroll expenditures.
The Company is assessing the possible effect on its operations of
year 2000 problems faced by its third party vendors. The Company believes that
the primary area in which its operations could be materially affected by year
2000 problems of its vendors relates to its use of contract research
organizations ("CROs") to provide services in connection with portions of its
clinical trials. The CROs have advised the Company that they are addressing the
year 2000 compliance issue and are in the process of assessing their systems
which may be vulnerable to the year 2000 issue. The Company continues to monitor
their readiness. However, if year 2000 problems prevent the CROs from performing
their work for the Company, the Company will not be able to develop internal
systems to replace the CROs and will have to find other CROs which are able to
perform. As a result, the Company could incur substantial delays in its clinical
trials. In addition, power failures caused by year 2000 problems faced by
utilities could compromise animal studies in progress at the Company's
facilities. This could cause material delays in the Company's research and
development programs.
The Company's operations and financial conditions could be adversely
and materially affected by other year 2000 problems including, without
limitation, (i) unexpected failures by third party vendors, (ii) failures by
governmental agencies causing delays in approval of new products, (iii) failures
in global banking systems and capital markets, and (iv) failures to identify
year 2000 problems in critical systems within the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's exposure to market risk for changes in interest rates
relates primarily to the Company's investment in marketable securities. The
Company does not use derivative financial instruments in its investments. The
Company's investments consist primarily of debt instruments of the U.S.
government, government agencies, financial institutions and corporations with
strong credit ratings. The table below presents principal amounts and related
weighted average interest rates expected by maturity date for the Company's
investment portfolio.
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 Thereafter
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets
------
Cash equivalents:
Fixed rate.................. $10,839,586 -- -- -- -- --
Average interest rate....... 5.38% -- -- -- -- --
Short-term investments:
Fixed rate.................. $13,292,666 -- -- -- -- --
Average interest rate....... 5.57% -- -- -- -- --
Total investment securities: $24,132,252 -- -- -- -- --
Average interest rate....... 5.48% -- -- -- -- --
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements required to be filed pursuant to this Item 8
are appended to this Annual Report on Form 10-K. A list of the financial
statements filed herewith is found at "Index to Financial Statements and
Schedules" on page F-1.
31
<PAGE> 32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
For information concerning this item, see the information under
"Election of Directors," "Executive Officers" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's Proxy Statement to be filed
with respect to the Annual Meeting of Stockholders to be held on June 2, 1999,
which information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
For information concerning this item, see the information under
"Executive Compensation" in the Company's Proxy Statement to be filed with
respect to the Annual Meeting of Stockholders to be held on June 2, 1999, which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
For information concerning this item, see the information under
"Security Ownership of Certain Beneficial Owners and Management" in the
Company's Proxy Statement to be filed with respect to the Annual Meeting of
Stockholders to be held on June 2, 1999, which information is incorporated
herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For information concerning this item, see the information under
"Certain Relationships and Related Transactions" in the Company's Proxy
Statement to be filed with respect to the Annual Meeting of Stockholders to be
held on June 2, 1999, which information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements.
The Company's audited financial statements, financial statement
schedules and the Report of Independent Public Accountants are appended to this
Annual Report on Form 10-K. Reference is made to the Index to Financial
Statements and Schedules on page F-1.
(b) Reports on Form 8-K.
On November 16, 1998, the Company filed a current report on Form 8-K
under Item 5 which reported the preliminary analysis of data from the Company's
clinical trial of pimagedine in Type I diabetic patients with overt nephropathy.
(c) Exhibits.
The exhibits required to be filed are listed on the Index to Exhibits
attached hereto, which is incorporated herein by reference.
32
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 this 30th day of March
1999.
ALTEON INC.
By: /s/ Kenneth I. Moch
-------------------
Kenneth I. Moch
President and Chief Executive Officer
33
<PAGE> 34
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Mark Novitch Chairman of the Board March 30 , 1999
- -----------------------
Mark Novitch
/s/ Kenneth I. Moch President and Chief Executive Officer March 30, 1999
- ----------------------- (principal executive officer)
Kenneth I. Moch
/s/ Elizabeth O'Dell Vice President, Finance and Administration, Secretary and March 30, 1999
- ----------------------- Treasurer (principal finance and accounting officer)
Elizabeth O'Dell
/s/ Marilyn G. Breslow Director March 30, 1999
- -----------------------
Marilyn G. Breslow
/s/ Robert N. Butler Director March 30, 1999
- -----------------------
Robert N. Butler
/s/ Anthony Cerami Director March 30, 1999
- -----------------------
Anthony Cerami
/s/ Alan J. Dalby Director March 30, 1999
- -----------------------
Alan J. Dalby
/s/ David McCurdy Director March 30, 1999
- -----------------------
David McCurdy
</TABLE>
34
<PAGE> 35
Form 10-K - Item 14(a) (1)
Alteon Inc.
List of Financial Statements
Page
The following financial statements of Alteon Inc. are included in Item 8:
Report of independent public accountants - Arthur Andersen LLP ..............F-2
Financial statements:........................................................F-3
Balance sheets as of December 31, 1997 and 1998.........................F-3
Statements of operations for the years ended December 31, 1996,
1997 and 1998...........................................................F-4
Statements of stockholders' equity for the period from December
31, 1996 to December 31, 1998...........................................F-5
Statements of cash flows for the years ended December 31, 1996,
1997 and 1998...........................................................F-6
Notes to financial statements ..................................F-7 -- F-14
F-1
<PAGE> 36
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Alteon Inc.:
We have audited the accompanying balance sheets of Alteon Inc. (a Delaware
corporation) as of December 31, 1997 and 1998, and the related statements of
operations, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alteon Inc. as of December 31,
1997 and 1998, and the results of its operations and cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 16, 1999
F-2
<PAGE> 37
<TABLE>
<CAPTION>
ALTEON INC.
BALANCE SHEETS
DECEMBER 31,
---------------------------------
1997 1998
------------ -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ..................................................... $ 20,423,675 $ 10,839,586
Short-term investments ........................................................ 8,550,063 13,292,666
Other current assets .......................................................... 468,680 274,145
------------ -------------
Total current assets ....................................................... 29,442,418 24,406,397
Property and equipment, net ..................................................... 3,183,362 2,985,156
Deposits and other assets ....................................................... 261,358 260,080
Restricted cash ................................................................. 620,400 --
------------ -------------
Total assets ................................................................. $ 33,507,538 $ 27,651,633
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .............................................................. $ 921,637 $ 1,035,417
Accrued expenses .............................................................. 5,969,384 3,277,858
Obligations under capital leases .............................................. 161,581 --
------------ -------------
Total liabilities .......................................................... 7,052,602 4,313,275
------------ -------------
CONTINGENCIES AND COMMITMENTS (NOTES 3 AND 6)
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 1,993,086 shares authorized
and 942 and 771 of Series G, 0 and 2,315 of Series H shares
issued and outstanding as of December 31, 1997 and
1998, respectively .......................................................... 9 31
Common stock, $.01 par value; 30,000,000 shares
authorized and 17,922,319 and 18,814,740 shares issued and
outstanding as of December 31, 1997 and 1998, respectively .................. 179,223 188,147
Additional paid-in capital .................................................... 105,585,019 131,005,033
Accumulated deficit ........................................................... (79,303,374) (107,856,621)
Accumulated other comprehensive income/(loss) ................................. (5,941) 1,768
------------ -------------
Total stockholders' equity ................................................. 26,454,936 23,338,358
------------ -------------
Total liabilities and stockholders' equity ...................................... $ 33,507,538 $ 27,651,633
============ =============
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE> 38
<TABLE>
<CAPTION>
ALTEON INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Investment income ................................ $ 2,295,394 $ 1,510,673 $ 1,320,538
Expenses:
Research and development ......................... 17,494,193 23,264,385 24,591,769
Elimination of previously accrued loss
contingency.................................... -- -- (1,770,975)
General and administrative ....................... 3,516,599 3,632,917 4,842,176
Interest ......................................... 47,394 25,061 3,610
------------ ------------ ------------
Total expenses ................................ 21,058,186 26,922,363 27,666,580
------------ ------------ ------------
Net loss ........................................... (18,762,792) (25,411,690) (26,346,042)
------------ ------------ ------------
Preferred stock dividends and discount amortization -- 1,091,401 2,207,205
------------ ------------ ------------
Net loss applicable to common stockholders ......... $(18,762,792) $(26,503,091) $(28,553,247)
============ ============ ============
Basic loss per share to common stockholders ........ $ (1.20) $ (1.60) $ (1.57)
============ ============ ============
Diluted loss per share to common stockholders ...... $ (1.20) $ (1.60) $ (1.57)
============ ============ ============
Weighted average common shares used in
computing basic and diluted loss per share ..... 15,640,399 16,566,290 18,210,902
============ ============ ============
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 39
<TABLE>
<CAPTION>
ALTEON INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Preferred Stock Common Stock
-------------------- ---------------------------
Shares Amount Shares Amount
-------- ------- ---------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 ................. -- -- 15,387,985 $153,880
Net loss ............................... -- -- -- --
Change in unrealized losses ............ -- -- -- --
Comprehensive loss ..................... -- -- -- --
Exercise of employee stock options ..... -- -- 314,840 3,148
Deferred compensation expense in
connection with the issuance
of non-qualified stock options ..... -- -- -- --
----- ----- ---------- --------
Balance, December 31, 1996 ................. -- -- 15,702,825 157,028
Net loss ............................... -- -- -- --
Change in unrealized losses ............ -- -- -- --
Comprehensive loss ..................... -- -- -- --
Issuance of 6%, cumulative preferred
stock valued at $1,000 per share,
net of transaction costs ........... 5,000 50 -- --
Conversion of all 6%, cumulative
convertible preferred
stock to common stock .............. (5,000) (50) 1,203,099 12,031
Preferred stock discount
amortization ....................... -- -- -- --
Issuance of Series G preferred stock
valued at $10,000 per share to
Genentech, Inc., net of
transaction costs .................. 939 9 -- --
Issuance of Series G preferred
stock dividends .................... 3 -- -- --
Issuance of common stock to
Genentech, Inc. ................... -- -- 837,314 8,373
Exercise of employee stock options ..... -- -- 179,081 1,791
Deferred compensation expense in
connection with the issuance of
non-qualified stock options
and options granted to non-employees -- -- -- --
----- ----- ---------- --------
Balance, December 31, 1997 ................. 942 9 17,922,319 179,223
Net loss ............................... -- -- -- --
Change in unrealized losses ............ -- -- -- --
Comprehensive loss ..................... -- -- -- --
Issuance of Series H preferred stock
valued at $10,000 per share to
Genentech, Inc., net of
transaction costs .................. 2,254 23 -- --
Issuance of Series G and H preferred
stock dividends .................... 133 1 -- --
Conversion of Series G preferred
stock to common stock .............. (243) (2) 822,204 8,222
Preferred stock discount
amortization ....................... -- -- -- --
Exercise of employee stock options ..... -- -- 70,217 702
Deferred compensation expense in
connection with the issuance of
non-qualified stock options
and options granted to
non-employees ...................... -- -- -- --
----- ----- ---------- --------
Balance, December 31, 1998 ................. 3,086 $ 31 18,814,740 $188,147
===== ===== ========== ========
</TABLE>
<PAGE> 40
<TABLE>
<CAPTION>
ALTEON INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)
Accumulated
Additional Other Total
Paid-in Accumulated Comprehensive Stockholders'
Capital Deficit Income/(Loss) Equity
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1995 ................. $ 83,607,054 $ (34,037,491) $ (7,706) $ 49,715,737
Net loss ............................... -- (18,762,792) -- (18,762,792)
Change in unrealized losses ............ -- -- 3,989 3,989
-------------
Comprehensive loss ..................... -- -- -- (18,758,803)
-------------
Exercise of employee stock options ..... 381,560 -- -- 384,708
Deferred compensation expense in
connection with the issuance
of non-qualified stock options ..... 29,532 -- -- 29,532
------------ ------------- ------ -----------
Balance, December 31, 1996 ................. 84,018,146 (52,800,283) (3,717) 31,371,174
Net loss ............................... -- (25,411,690) -- (25,411,690)
Change in unrealized losses ............ -- -- (2,224) (2,224)
-------------
Comprehensive loss ..................... -- -- -- (25,413,914)
-------------
Issuance of 6%, cumulative preferred
stock valued at $1,000 per share,
net of transaction costs ........... 4,812,277 -- -- 4,812,327
Conversion of all 6%, cumulative
convertible preferred
stock to common stock .............. (12,014) -- -- (33)
Preferred stock discount
amortization ....................... 1,065,161 (1,065,161) -- --
Issuance of Series G preferred stock
valued at $10,000 per share to
Genentech, Inc., net of
transaction costs .................. 9,266,313 -- -- 9,266,322
Issuance of Series G preferred
stock dividends .................... 26,240 (26,240) -- --
Issuance of common stock to
Genentech, Inc. ................... 5,601,627 -- -- 5,610,000
Exercise of employee stock options ..... 119,165 -- -- 120,956
Deferred compensation expense in
connection with the issuance of
non-qualified stock options
and options granted to non-employees 688,104 -- -- 688,104
------------ ------------- ------ -----------
Balance, December 31, 1997 ................. 105,585,019 (79,303,374) (5,941) 26,454,936
Net loss ............................... -- (26,346,042) -- (26,346,042)
Change in unrealized losses ............ -- -- 7,709 7,709
-------------
Comprehensive loss ..................... -- -- -- (26,338,333)
-------------
Issuance of Series H preferred stock
valued at $10,000 per share to
Genentech, Inc., net of
transaction costs .................. 22,543,706 -- -- 22,543,729
Issuance of Series G and H preferred
stock dividends .................... 1,327,768 (1,327,768) -- 1
Conversion of Series G preferred
stock to common stock .............. (8,220) -- -- --
Preferred stock discount
amortization ....................... 879,437 (879,437) -- --
Exercise of employee stock options ..... 195,451 -- -- 196,153
Deferred compensation expense in
connection with the issuance of
non-qualified stock options
and options granted to
non-employees ...................... 481,872 -- -- 481,872
------------ ------------- ------ -----------
Balance, December 31, 1998 ................. $131,005,033 $(107,856,621) $1,768 $23,338,358
============ ============= ====== ===========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 41
<TABLE>
<CAPTION>
ALTEON INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1996 1997 1998
-------------- -------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss ................................................... $ (18,762,792) $ (25,411,690) $ (26,346,042)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ........................ 790,770 711,839 678,773
Amortization of deferred compensation ................ 29,532 688,104 481,872
Changes in operating assets and liabilities:
Receivables from corporate partner ................ 602,999 -- --
Other current assets .............................. 18,216 180,489 194,535
Other assets ...................................... (13,674) 5,613 1,278
Accounts payable and accrued expenses ............. 6,550,303 (1,409,900) (2,577,746)
------------- ------------- -------------
Net cash used in operating activities ............. (10,784,646) (25,235,545) (27,567,330)
------------- ------------- -------------
Cash Flows from Investing Activities:
Capital expenditures ....................................... (376,624) (21,187) (480,566)
Purchases of marketable securities ......................... (104,285,343) (105,272,696) (115,976,783)
Sales and maturities of marketable securities .............. 132,292,363 112,934,079 111,241,889
Restricted cash ............................................ 103,400 103,400 620,400
------------- ------------- -------------
Net cash provided by (used in) investing activities 27,733,796 7,743,596 (4,595,060)
------------- ------------- -------------
Cash Flows from Financing Activities:
Proceeds from issuance of common stock ..................... 384,708 5,730,956 196,153
Proceeds from issuance of preferred stock .................. -- 14,078,616 22,543,729
Payments under capital lease obligations ................... (282,990) (305,317) (161,581)
Proceeds from sales-leaseback financing .................... 254,975 125,516 --
------------- ------------- -------------
Net cash provided by financing activities ......... 356,693 19,629,771 22,578,301
------------- ------------- -------------
Net (decrease)/increase in cash and cash equivalents ......... 17,305,843 2,137,822 (9,584,089)
Cash and cash equivalents, beginning of period ............... 980,010 18,285,853 20,423,675
------------- ------------- -------------
Cash and cash equivalents, end of period ..................... $ 18,285,853 $ 20,423,675 $ 10,839,586
============= ============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest ............................ $ 47,394 $ 25,061 $ 3,610
============= ============= =============
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE> 42
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Alteon Inc. (the "Company") was founded in 1986 and is engaged in the
discovery and development of novel therapeutic and diagnostic products to treat
the complications of diabetes and age-related diseases. The Company conducts its
business in one operating segment. The Company's products are designed to
inhibit, measure and reverse damage to cells, tissues and organs caused by
Advanced Glycosylation End-product ("A.G.E.") formation and cross-linking
resulting from glucose in the body's circulatory system. All of the Company's
products are in research or development, and no revenues have been generated
from product sales. The Company is currently conducting a pivotal Phase III
clinical trial evaluating pimagedine as a treatment for diabetic end-stage renal
disease. In addition, in November 1998, the Company announced that a preliminary
analysis of the Phase III ACTION I trial of pimagedine in Type I diabetic
patients with overt nephropathy showed that the data from the trial's primary
endpoint did not reach statistical significance on an intent to treat analysis.
The Company is continuing its evaluation of pimagedine and expects to hold
discussions with the FDA about the future status of the compound. The Company's
lead A.G.E. crosslink breaker, ALT-711, is expected to begin Phase II clinical
trials in 1999.
The Company's business is subject to significant risks including, but
not limited to, (i) its ability to obtain funding, (ii) the risks inherent in
its research and development efforts, including clinical trials, (iii)
uncertainties associated both with obtaining and enforcing its patents and with
the patent rights of others, (iv) the lengthy, expensive and uncertain process
of seeking regulatory approvals, (v) uncertainties regarding government reforms
and product pricing and reimbursement levels, (vi) technological change and
competition, (vii) manufacturing uncertainties, and (viii) dependence on
collaborative partners and other third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
products will prove ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents and Short-Term Investments
Cash and cash equivalents include cash and highly liquid investments
which have a maturity of less than three months at the time of purchase.
Short-term investments are recorded at fair market value. As of December 31,
1998, short-term investments were invested in debt instruments of the U.S.
government, government agencies, financial institutions and corporations with
strong credit ratings. They consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1998
---- ----
<S> <C> <C>
U.S. Government Agency Funds ... $ 8,550,063 $ 8,107,933
Corporate Obligations .......... -- 5,184,733
----------- -----------
$ 8,550,063 $13,292,666
=========== ===========
</TABLE>
These amounts represent market value of the short-term investments at
December 31, 1997 and December 31, 1998. The amortized cost of these short-term
investments was $8,552,658 and $13,291,910 at December 31, 1997 and December 31,
1998, respectively.
F-7
<PAGE> 43
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the useful lives
of owned assets which range from three to five years. Leasehold improvements and
equipment under capital leases are amortized using the straight-line method over
the shorter of the lease term or the useful life of the assets.
Patent Costs
Patent costs are expensed as incurred.
Research and Development
Expenditures for research and development are charged to operations as
incurred. Research and development expenditures were $17,494,000, $23,264,000
and $24,592,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. The Company was reimbursed $1,226,000 in 1996 by its collaborative
partners for research and development expenditures. No amounts were reimbursed
in 1997 and 1998. (See Note 4.)
Net Loss Per Share
Basic loss per share is based on the average numbers of shares
outstanding during the year. Diluted loss per share is the same as basic loss
per share, as the inclusion of common stock equivalents would be antidilutive.
New Accounting Pronouncements
In June 1998, SFAS No. 133 - "Accounting for Derivative Instruments and
Hedging Activities" was issued and is effective for fiscal years beginning after
June 15, 1999 although earlier application is permitted. SFAS No. 133 is not
expected to have a material impact on the Company's financial position or
results of operations. In February 1998, Statement of Position (SOP) 98-1 -
"Accounting for Costs of Computer Software Developed or Purchased for Internal
Use" was issued and is effective for fiscal years beginning after December 15,
1998. SOP 98-1 is not expected to have a material impact on the Company's
financial position or results of operations.
Reclassifications
Certain prior year amounts have been reclassified to conform to current
year presentation. Effective January 1, 1998, the Company adopted Statement of
Financial Accounting Standard (SFAS) No. 130 - Reporting Comprehensive Income.
This standard increased financial reporting disclosures and had no impact on the
Company's financial position or results of operations. Certain reclassifications
have been made to the December 31, 1997 and 1996 Consolidated Financial
Statements to conform with the financial reporting requirements of SFAS No. 130.
NOTE 2 -- PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1998
---- ----
<S> <C> <C>
Laboratory equipment ......................... $ 1,225,485 $ 1,324,828
Furniture and equipment ...................... 675,965 681,362
Computer equipment ........................... 548,779 598,920
Leasehold improvements ....................... 4,908,545 5,215,069
----------- -----------
7,358,774 7,820,179
Less: Accumulated depreciation & amortization (4,175,412) (4,835,023)
----------- -----------
$ 3,183,362 $ 2,985,156
=========== ===========
</TABLE>
F-8
<PAGE> 44
NOTE 2 -- PROPERTY AND EQUIPMENT (CONTINUED)
Laboratory equipment and furniture include approximately $1,136,000
under capital leases at December 31,1997. Accumulated amortization relating to
leased assets totaled approximately $432,000 at December 31, 1997. (See Note 5.)
NOTE 3 -- COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENTS
Genentech, Inc. ("Genentech")
In December 1997, Alteon and Genentech entered into a stock purchase
agreement and a development collaboration and license agreement providing for
the development and marketing of pimagedine and second-generation
A.G.E.-formation inhibitors. In December 1997, Genentech purchased Common Stock
and Series G Preferred Stock for an aggregate purchase price of $15,000,000. The
use of these funds was unrestricted to the Company. The agreement provided for
Genentech to fund the continued development of pimagedine and support possible
additional clinical trials for expanded indications of the drug through the
periodic purchase of up to $48,000,000 in Series H Preferred Stock. As of
October 1998, Genentech had purchased $22,544,000 of Series H Preferred Stock.
The agreements also provide for Genentech to fund agreed-upon development costs
for second-generation A.G.E.-formation inhibitors.
Pursuant to the development collaboration and license agreement, Alteon
granted Genentech an exclusive license to use and sell pimagedine in all areas
of the world except for Japan, China, South Korea and Taiwan, territories
covered under Alteon's agreement with Yamanouchi, and Israel, Jordan, Bulgaria,
Cyprus and South Africa, territories covered under Alteon's agreement with
Gamida (the "Genentech Territory"). Alteon also granted Genentech an exclusive
license to use and sell second-generation A.G.E.-formation inhibitor products
(and any future Alteon compounds in this class), to be selected by Genentech
after review of Alteon's A.G.E-formation inhibitor portfolio, in the Genentech
Territory. The license provided that Alteon receive cash payments from Genentech
upon meeting certain milestones and royalties on net sales of pimagedine and
second-generation A.G.E.-formation products within the Genentech Territory.
By letter agreement dated February 11, 1999, Alteon and Genentech
agreed that the development collaboration and license agreement will terminate
effective June 30, 1999 unless prior to that date the parties agree to amend the
agreement. The parties further agreed that Genentech's obligations to purchase
shares of stock of Alteon, pursuant to the stock purchase agreement, terminated
effective December 31, 1998. The letter agreement provides that Genentech will
continue to provide funding (in cash rather than through purchases of Series H
Preferred Stock) for agreed-upon development costs for pimagedine until June 30,
1999.
NOTE 4 -- OTHER DEVELOPMENT AGREEMENTS
In 1989, the Company and Yamanouchi Pharmaceutical Co., Ltd.
("Yamanouchi") formed a strategic alliance to develop and commercialize the
Company's A.G.E. technology. Under this arrangement, the parties agreed to
collaborate on further research and development, and the Company granted to
Yamanouchi an exclusive license to commercialize the Company's technology in
Japan, South Korea, Taiwan and The People's Republic of China.
In December 1994, the Company entered into an exclusive licensing
arrangement for Alteon's diagnostic technology with Roche Diagnostic GmbH,
formerly Corange International Limited, acting through its subsidiary Boehringer
Mannheim Diagnostics ("Roche"). Under the agreement, Roche received exclusive
worldwide rights to Alteon's technology for diagnostics application, subject to
an option held by Yamanouchi for Japan, South Korea, Taiwan and The People's
Republic of China. Yamanouchi is Alteon's exclusive licensee for its A.G.E.
technology in the aforementioned countries. Pursuant to the agreement, Alteon
received an initial payment in January 1995, and will be entitled to receive
ongoing royalties based on net sales of research test kits and commercial assays
developed by Roche which are based on Alteon's A.G.E. technology.
F-9
<PAGE> 45
NOTE 4 -- OTHER DEVELOPMENT AGREEMENTS (CONTINUED)
In June 1995, the Company obtained an exclusive, worldwide,
royalty-bearing license from Washington University for patents covering the use
of pimagedine as an inhibitor of inducible nitric oxide synthase. The agreement
requires the Company to pay certain licensing fees upon the attainment of
development milestones as well as a royalty on net sales or a share of
sub-licensing profits of products covered by the patents. The license also
covers patents developed through any subsequent research collaboration between
the parties which is funded by Alteon.
In November 1995, the Company entered into clinical testing and
distribution agreements with Gamida for Life ("Gamida"), formerly Eryphile BV.
Under these agreements, Gamida conducted, at its own expense, a Phase II
multi-site clinical trial in Israel, in accordance with the protocol developed
by Alteon, evaluating pimagedine in patients with diabetes and elevated serum
cholesterol levels. Gamida will receive the exclusive right to distribute
pimagedine, if successfully developed and approved for marketing, in Israel,
Bulgaria, Cyprus, Jordan and South Africa. The distribution agreement is for a
term ending 10 years after the date of regulatory approval for the sale of
pimagedine in Israel; thereafter, it will be automatically renewed for
successive three-year periods unless terminated by either party on the last day
of the initial or a renewal term.
In June 1997, Alteon entered into a license and supply agreement with
IDEXX Laboratories, Inc. ("IDEXX") pursuant to which Alteon licensed to IDEXX
pimagedine as a potential therapeutic in companion animals (dogs, cats and
horses) and its A.G.E. diagnostics technology for companion animal use. IDEXX
will be responsible for the development, licensing and marketing of pimagedine
and A.G.E. diagnostics for such use on a worldwide basis. Alteon will be
entitled to receive milestone payments and royalties on sales of the licensed
products.
The Company anticipates that during 1999 it will review with its
corporate partners their arrangements in light of the Company's current
development plans and priorities.
Alteon's commercial partners may develop, either alone or with others,
products that compete with the development and marketing of the Company's
products. Competing products, either developed by the commercial partners or to
which the commercial partners have rights, may result in their withdrawal of
support with respect to all or a portion of the Company's technology, which
would have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company has also entered into various arrangements with independent
research laboratories to conduct studies in conjunction with the development of
the Company's technology. The Company receives certain rights to inventions or
discoveries that may arise from this research. (See Note 9.)
NOTE 5 -- ACCRUED EXPENSES
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1998
---- ----
<S> <C> <C>
Accrued clinical trial expense (See Note 6) $4,515,983 $1,958,457
Accrued payroll and related expenses ...... 429,316 670,946
Accrued consultants/contracts ............. 338,737 16,767
Accrued rent .............................. 320,323 265,410
Accrued professional ...................... 151,445 197,161
Accrued patent ............................ 140,252 48,215
Accrued relocation ........................ 12,203 --
Other ..................................... 61,125 120,902
---------- ----------
$5,969,384 $3,277,858
========== ==========
</TABLE>
The Company's headquarters and research facility rent is being expensed
on a straight-line basis over the ten-year lease period. (See Note 6.)
F-10
<PAGE> 46
NOTE 6 -- CONTINGENCIES AND COMMITMENTS
Contingencies
In December 1990, the Company and Marion Merrell Dow, Inc., which was
subsequently acquired by an affiliate of Hoechst AG and renamed Hoechst Marion
Roussel, Inc. ("HMRI"), formed a strategic alliance to develop and commercialize
the Company's A.G.E. technology for therapeutics in the areas of diabetic and
aging complications. In 1996, HMRI ended the collaboration as a result of HMRI's
continuing prioritization of its new product pipeline, and the Company regained
all rights granted to HMRI covering the Company's technology. In June 1998, the
Company and HMRI resolved various open issues arising from the termination of
their collaboration. As a result, the previously established accrual in the
amount of $1.8 million has been eliminated and credited to the Statement of
Operations.
Commitments
The Company leases its headquarters and research facility and related
equipment and furniture under non-cancelable operating leases. As of December
31, 1998 future minimum rentals under operating leases that have initial or
remaining non-cancelable terms in excess of one year are as follows:
<TABLE>
<CAPTION>
OPERATING
LEASES
---------
<S> <C>
1999 ................................... $ 743,258
2000 ................................... 599,410
2001 ................................... 536,500
2002 ................................... 536,500
2003 ................................... 447,083
Thereafter ............................. --
----------
$2,862,751
==========
</TABLE>
Rent expense for each of the years in the three-year period ended
December 31, 1998, was $570,612, $573,962 and $584,510, respectively. In 1994,
the Company entered into a sales-leaseback transaction for certain headquarters
and research facility assets (principally, leasehold improvements) generating
proceeds of $1,136,037. The related lease was accounted for as a capital lease
payable over four years with 7.6% interest. In June 1998, the Company exercised
its purchase option on this lease.
As of December 31, 1997, the Company had restricted cash of $620,400
which represented the escrow amount related to the Company's leased headquarters
and research facility. In June 1998, in accordance with a new lease agreement
the escrow funds were returned to the Company.
NOTE 7 -- STOCKHOLDERS' EQUITY
Common/Preferred Stock Issuances
On November 1, 1991, the Company completed an initial public offering
of Common Stock with net proceeds to the Company of $47,406,581. In conjunction
with the offering, all of the then outstanding shares of Preferred Stock were
converted into 6,725,627 shares of Common Stock.
In October and November 1995, the Company completed a follow-on
offering of Common Stock, which included the sale of 2,000,000 shares and
300,000 shares, respectively, at a price of $9.00 per share which provided net
proceeds to the Company of $19,035,000.
On April 24, 1997, the Company raised $4.8 million net of offering
costs, through the issuance of 5,000 shares of its $0.01 par value, 6%
Cumulative Convertible Preferred Stock ("Preferred Stock"). This stock was
convertible at a discount to market. In connection with this issuance, the
Company issued to the purchasers,
F-11
<PAGE> 47
NOTE 7 -- STOCKHOLDERS' EQUITY (CONTINUED)
warrants to purchase 60,000 shares of its Common Stock at an exercise price of
$4.025 per share. As of December 1997, all the Preferred Stock has been
converted and approximately $1,065,000 of Preferred Stockholder Dividends were
recorded which included the amortization of the conversion discount and
warrants, and the 6% preferred dividends.
In December 1997, the Company and Genentech entered into a stock
purchase agreement pursuant to which Genentech agreed to buy shares of Common
Stock, Series G Preferred Stock and Series H Preferred Stock. (See Note 3.) In
December 1997, Genentech purchased Common Stock and Series G Preferred Stock for
an aggregate purchase price of $15,000,000. On July 27, 1998 and October 1,
1998, Genentech purchased $8,000,000 and $14,544,000 respectively, of Series H
Preferred Stock. As of December 31, 1998, approximately $2,207,000 of Preferred
Stockholder Dividends and amortization of Preferred Stock conversion discount
were recorded. Series G Preferred Stock and Series H Preferred Stock Dividends
are payable quarterly in shares at a rate of 8.5%. Each share of Series G
Preferred Stock is convertible at any time into a number of shares of Common
Stock determined by dividing $10,000 by the average of the closing sales price
of the Common Stock, as reported on the Nasdaq National Market for the twenty
business days immediately preceding the date of conversion (the "Conversion
Price"). The shares of Series H Preferred Stock will be convertible on the same
basis at any time after the earlier of (i) the granting of approval by the U.S.
Food and Drug Administration for the marketing and sale of any pimagedine
product specified in the Development Collaboration and License Agreement between
the Company and Genentech, (ii) termination by Genentech of the Development
Collaboration and License Agreement or, (iii) December 1, 2002. In addition,
subject to certain volume limitations, the Series H Preferred Stock may be
converted at any time when the Company's market capitalization is less than
twice the price paid by Genentech for all shares of Series G Preferred Stock and
Series H Preferred Stock then held by Genentech.
Stock Option Plan
The Company has established two stock option plans for its employees,
officers, directors, consultants and independent contractors. Options to
purchase up to 4,192,000 shares of Common Stock may be granted under the first
plan and options to purchase up to 2,000,000 million shares of common stock may
be granted under the second plan.
The plans are administered by a committee of the Board of Directors,
which may grant either non-qualified or incentive stock options. The committee
determines the exercise price and vesting schedule at the time the option is
granted. Options vest over various periods and may expire no later than 10 years
from date of grant. Each option entitles the holder to purchase one share of
Common Stock at the indicated exercise price. The plans also provide for certain
antidilution and change in control rights, as defined.
The following table summarizes the activity in the Company's stock
options:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE EXERCISE PRICE
OPTIONS PER SHARE PER SHARE
------- --------- ---------
<S> <C> <C> <C>
Balance, December 31, 1995 3,104,631
Granted .................. 418,083 $1.00 - 15.00 $6.83
Exercised ................ (314,840) 0.30 - 10.25 1.22
Canceled ................. (47,079) 4.36 - 15.00 8.16
---------- -----
Balance, December 31, 1996 3,160,795 $6.44
Granted .................. 852,110 3.88 - 6.56 5.60
Exercised ................ (179,081) 0.30 - 6.56 .68
Canceled ................. (174,384) 0.89 - 14.13 6.75
---------- -----
Balance, December 31, 1997 3,659,440 $6.51
Granted .................. 1,232,950 0.88 - 8.50 1.98
Exercised ................ (70,217) 0.30 - 8.63 2.79
Canceled ................. (22,913) 3.88 - 15.00 8.72
---------- -----
Balance, December 31, 1998 4,799,260 $5.39
==========
</TABLE>
F-12
<PAGE> 48
NOTE 7 -- STOCKHOLDERS' EQUITY (CONTINUED)
In December 1998, the Company issued 800,000 options at $.875 per share
of which 310,383 were in excess of shares available to grant under the Company's
stock option plans. The Company intends to request an increase in its authorized
stock option plan shares at its June 1999 Shareholders Meeting. In January 1999,
395,003 options were canceled due to the resignation and retirement of two
executive officers. On March 16, 1999, 600,000 of the options granted in
December 1998 were canceled and replaced with new options which included 310,983
of the options canceled due to such resignations. (See Note 11.) The March 1999
date establishes for accounting purposes the measurement date for these options.
Since the fair market value per share of Common Stock on the measurement date
was less than the option price per share, no compensation expense will be
recorded.
At December 31, 1998, 2,878,212 options were exercisable at a weighted
average price of $6.37 per share. The weighted average fair value of the options
granted was $4.13, $2.89 and $1.71 during 1996, 1997 and 1998, respectively. The
outstanding stock options at December 31, 1998 have a weighted average remaining
contractual life of 6.6 years. Included in options at December 31, 1998, are
920,004 options granted to certain executives with option prices ranging from
$0.875 per share to $11.15 per share. Such options vest upon the earlier of 10
years after grant or upon achievement of certain Company milestones.
The Company accounts for its stock option plans under APB Opinion No.
25, under which no compensation cost (excluding those options granted below fair
market value) has been recognized. Had compensation costs for these plans been
determined consistent with FASB Statement No. 123, the Company's pro forma net
loss and loss per share applicable to common stockholders for 1996, 1997 and
1998 would have been $19.4 million, $28.0 million and $30.5 million and, $1.24,
$1.74 and $1.67, respectively. Because FASB Statement No. 123 has not been
applied to options granted prior to January 1, 1995, the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.
Under FASB Statement No. 123, the fair value of each stock option grant
is estimated on the date of grant using the Black-Scholes option pricing model
with the following assumptions used for grants in 1996, 1997 and 1998,
respectively: risk free interest rates ranging 5.38% to 6.64%, 5.73% to 6.78%
and 4.32% to 5.63%, respectively; expected life of 2.02 years over the vesting
periods; and expected volatility of 70%.
In February 1999, the Board of Directors approved the repricing of
stock options outstanding as of February 2, 1999.
NOTE 8 -- SAVINGS AND RETIREMENT PLAN
The Company maintains a savings and retirement plan under Section
401(k) of the Internal Revenue Code which allows eligible employees to annually
contribute a portion of their annual salary to the plan. In 1998, the Company
began making discretionary contributions at a rate of 25% of an employee's
contribution up to a maximum of 5% of their base salary. The Company made
contributions of $57,000 as of December 31, 1998. No contributions were made
during 1996 or 1997.
NOTE 9 -- RELATED PARTY TRANSACTIONS
Since the Company's inception, the Company has entered into certain
collaborative agreements with organizations with which Dr. Anthony Cerami, the
Chairman of the Company's Scientific Advisory Board and member of the Company's
Board of Directors, was affiliated. These organizations included The Picower
Institute for Medical Research ("The Picower Institute"), The Rockefeller
University, Cerami Consulting Corporation and the Kenneth S. Warren
Laboratories. The Company paid to the organizations $1,006,000, $284,000 and
$731,000 in 1996, 1997, and 1998, respectively. In addition, the Company paid
patent maintenance fees for technology related to the organizations of $137,000,
$168,000 and $207,000 in 1996, 1997 and 1998, respectively. Although the Company
has terminated its collaborative relationship with The Picower Institute, the
Company has a royalty obligation on all net sales and other revenues associated
with certain technologies developed.
F-13
<PAGE> 49
NOTE 9 -- RELATED PARTY TRANSACTIONS (CONTINUED)
The Chairman of the Company's Scientific Advisory Board and two other
Scientific Advisory Board members provide consulting services to the Company.
Consulting fees paid to these members totaled $178,000, $136,000 and $89,000 in
1996, 1997 and 1998, respectively.
In 1993, a former Company officer (see Note 11) received a loan which
bore interest at a rate equal to the prime rate as published in the Wall Street
Journal, adjusted quarterly, for the purpose of purchasing a home. The loan is
secured by a second mortgage on the premises purchased by the officer. In
January 1999, the terms of the loan were amended so that if the residence is
sold, the principal amount and interest will be paid in full; otherwise,
interest will stop accruing as of July 1999 and the principal and interest shall
be paid in equal installments in January 2000, July 2000, and July 2001. In the
event an installment is not paid when due, interest shall accrue at a rate of
one percent per month until payment is made. The loan and accrued interest
balance was $261,946, $259,925 and $257,264 as of December 31, 1996, 1997, and
1998, respectively. In 1997 and 1998 interest payments of $25,000 were made.
NOTE 10 -- INCOME TAXES
At December 31, 1998, the Company had available net operating tax loss
carryforwards, which expire in the years 2006 through 2013, of approximately $98
million for income tax purposes. In addition, the Company has research and
development credit carryforwards of approximately $6 million. The amount of net
operating loss and research and development credit carryforwards which can be
utilized in any one period may become limited by Federal income tax regulations
if a cumulative change in ownership of more than 50% occurs within a three year
period.
The components of the deferred tax assets and the valuation allowance
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1997 1998
---- ----
<S> <C> <C>
NOL carryforwards ............. $ 30,000,000 $ 39,200,000
Research and development credit 4,000,000 5,900,000
Other temporary differences ... 2,400,000 3,000,000
------------ ------------
Gross deferred tax assets ..... 36,400,000 48,100,000
Valuation allowance ........... (36,400,000) (48,100,000)
------------ ------------
Net-deferred tax assets ....... $ -- $ --
============ ============
</TABLE>
A valuation allowance was established since the realization of the
deferred tax assets is uncertain.
NOTE 11 -- KEY EMPLOYEES
The Chairman and Chief Executive Officer resigned from the Company
effective December 31, 1998 and the President and Chief Operating Officer
retired from the Company effective January 31, 1999. In December 1998, the
Senior Vice President, Finance and Business Development and Chief Financial
Officer was elected to the Board of Directors and to the office of President and
Chief Executive Officer. A member of the Board of Directors was elected to the
position of Chairman.
F-14
<PAGE> 50
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- ------- ----------------------
3.1 Restated Certificate of Incorporation. (Incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1 (File
Number 33-42574) which became effective on November 1, 1991).
3.2 Certificate of the Voting Powers, Designations, Preference and Relative
Participating, Optional and Other Special Rights and Qualifications,
Limitations or Restrictions of Series F Preferred Stock of the Company.
(Incorporated by reference to Exhibit 4.2 to the Company's Current
Report on Form 8-K filed on August 4, 1995).
3.3 Certificate of Designations of Series G Preferred Stock of Alteon Inc.
(Incorporated by reference to Exhibit 3.4 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
3.4 Certificate of Amendment of Certificate of Designations of Series G
Preferred Stock of Alteon Inc. (Incorporated by reference to Exhibit
3.4 to the Company's Report on Form 10-Q filed on August 14, 1998).
3.5 Certificate of Designations of Series H Preferred Stock of Alteon Inc.
(Incorporated by reference to Exhibit 3.5 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
3.6 Amended Certificate of Designations of Series H Preferred Stock of
Alteon Inc. (Incorporated by reference to Exhibit 3.6 to the Company's
Report on Form 10-Q filed on August 14, 1998).
3.7 By-laws, as amended. (Incorporated by reference to Exhibit 3.1 to the
Company's Current Report on Form 8-K filed on April 22, 1996).
4.1 Stockholders' Rights Agreement dated as of July 27, 1995 between Alteon
Inc. and Registrar and Transfer Company, as Rights Agent. (Incorporated
by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K
filed on August 4, 1995).
4.2 Amendment to Stockholders' Rights Agreement dated as of April 24, 1997
between Alteon Inc. and Registrar and Transfer Company, as Rights
Agent. (Incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K filed on May 9, 1997).
4.3 Registration Rights Agreement dated as of April 24, 1997 between Alteon
Inc. and the investors named on the signature page thereof.
(Incorporated by reference to Exhibit 4.1 to the Company's Current
Report on Form 8-K filed on May 9, 1997).
4.4 Form of Common Stock Purchase Warrant. (Incorporated by reference to
Exhibit 4.2 to the Company's Current Report on Form 8-K filed on
May 9, 1997).
4.5 Amendment to Stockholders' Rights Agreement dated as of December 1,
1997 between Alteon Inc. and Registrar and Transfer Company, as Rights
Agent. (Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K filed on December 10, 1997).
10.1+ Amended and Restated 1987 Stock Option Plan. (Incorporated by reference
to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.2+ Amended 1995 Stock Option Plan. (Incorporated by reference to
Exhibit 10.2 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
E-1
<PAGE> 51
10.3 Form of Employee's or Consultant's Invention Assignment, Confidential
Information and Non-Competition Agreement executed by all key employees
and consultants as employed or retained from time to time.
(Incorporated by Reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (File Number 33-42574) which became
effective on November 1, 1991).
10.4 Amendment and Assignment of Research and Option Agreement dated as of
September 25, 1987 among Telos Development Corporation ("Telos"), The
Rockefeller University ("The Rockefeller"), the Company and Anthony
Cerami. (Incorporated by reference to Exhibit 10.5 to the Company's
Registration Statement on Form S-1 (File Number 33-42574) which became
effective on November 1, 1991).
10.5 License Agreement dated as of September 25, 1987 among Telos, Applied
Immune Sciences, Inc., the Company and The Rockefeller as amended by
letter agreement dated September 25, 1987 and letter agreement dated
August 15, 1991. (Incorporated by reference to Exhibit 10.6 to the
Company's Registration Statement on Form S-1 (File Number 33-42574)
which became effective on November 1, 1991).
10.6* License Agreement dated as of June 16, 1989 between the Company and
Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi"). (Incorporated by
reference to Exhibit 10.17 to the Company's Registration Statement on
Form S-1 (File Number 33-42574) which became effective on November 1,
1991).
10.7* Research and Development Collaboration Agreement dated as of June 16,
1989 between the Company and Yamanouchi. (Incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on Form S-1 (File
Number 33-42574) which became effective on November 1, 1991).
10.8* Research and License Agreement dated as of September 5, 1991 between
the Company and The Picower Institute for Medical Research.
(Incorporated by reference to Exhibit 10.29 to the Company's
Registration Statement on Form S-1 (File Number 33-42574) which became
effective on November 1, 1991).
10.9 Amendment dated as of September 17, 1992 to the Research and
Development Collaboration Agreement dated as of June 16, 1989, between
the Company and Yamanouchi. (Incorporated by reference to Exhibit 10.31
to the Company's Annual Report on Form 10-K for the year ended December
31, 1992).
10.10 Lease Agreement dated January 11, 1993 between Ramsey Associates and
the Company. (Incorporated by reference to Exhibit 10.34 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1992).
10.11+ Employment Agreement dated July 13, 1993 between the Company and Jere
E. Goyan. (Incorporated by reference to Exhibit 10.32 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993).
10.12+ Employment Agreement dated as of February 28, 1994 between the Company
and James J. Mauzey. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on March 9, 1994).
10.13* License Agreement dated as of December 30, 1994 between the Company and
Corange International Limited. (Incorporated by reference to Exhibit
10.38 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.14+ Employment Agreement dated as of February 27, 1995 between the Company
and Kenneth I. Moch. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on March 20, 1995).
10.15+ Employment Agreement dated as of March 27, 1995 between the Company and
Kenneth Cartwright. (Incorporated by reference to Exhibit 10.37 to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995).
E-2
<PAGE> 52
10.16* Research Collaboration and License Agreement dated as of June 2, 1995
between Washington University and the Company. (Incorporated by
reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q filed on August 11, 1995).
10.17 Distribution Agreement dated September 25, 1995 between the Company and
Eryphile BV. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on November 24, 1995).
10.18 Clinical Testing Agreement dated September 25, 1995 between the Company
and Eryphile BV. (Incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K filed on November 24, 1995).
10.19+ Employment Agreement dated as of October 21, 1995 between the Company
and Elizabeth O'Dell. (Incorporated by reference to Exhibit 10.42 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1995).
10.20+ Alteon Inc. Change in Control Severance Benefits Plan. (Incorporated by
reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
filed on March 13, 1996).
10.21+ Letter Agreement dated July 10, 1996 between the Company and Jere E.
Goyan amending Employment Agreement dated July 13, 1993. (Incorporated
by reference to Exhibit 10.30 to the Company's Annual Report on Form
10-K for the year ended December 31, 1997).
10.22+ Letter Agreement dated January 29, 1997 between the Company and Kenneth
Cartwright amending Employment Agreement dated March 27, 1995.
(Incorporated by reference to Exhibit 10.31 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.23+ Letter Agreement dated January 29, 1997 between the Company and
Elizabeth A. O'Dell amending Employment Agreement dated October 21,
1995. (Incorporated by reference to Exhibit 10.32 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).
10.24+ Letter Agreement dated January 30, 1997 between the Company and James
J. Mauzey amending Employment Agreement dated February 28, 1994.
(Incorporated by reference to Exhibit 10.33 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.25+ Letter Agreement dated March 27, 1997 between the Company and Kenneth
Cartwright amending Employment Agreement dated March 27, 1995, as
amended. (Incorporated by reference to Exhibit 10.34 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1997).
10.26* Clinical Services Agreement dated as of August 11, 1996 between the
Company and Quintiles, Inc. (Incorporated by reference to Exhibit 10.35
to the Company's Annual Report on Form 10-K for the year ended December
31, 1996).
10.27 Preferred Stock Investment Agreement dated as of April 24, 1997 between
Alteon Inc. and the investors named on the signature page thereof.
(Incorporated by reference to Exhibit 10.1 to the Company's Current
Report on Form 8-K filed on May 9, 1997).
10.28* License and Supply Agreement dated June 17, 1997 between IDEXX
Laboratories, Inc. and Alteon Inc. (Incorporated by reference to
Exhibit 10.1 to the Company's Report on Form 10-Q filed on August 13,
1997).
10.29* Supply Agreement dated September 12, 1997 between Ganes Chemicals Inc.
and Alteon Inc. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on October 3, 1997).
10.30+ Letter Agreement dated September 15, 1997 between the Company and
Kenneth I. Moch amending Employment Agreement dated February 27, 1995.
(Incorporated by reference to Exhibit 10.35 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
E-3
<PAGE> 53
10.31+ Letter Agreement dated October 21, 1997 between the Company and
Elizabeth A. O'Dell amending Employment Agreement dated October 21,
1995, as amended. (Incorporated by reference to Exhibit 10.2 to the
Company's Report on Form 10-Q filed on November 12, 1997).
10.32 Stock Purchase Agreement dated as of December 1, 1997 between Alteon
Inc. and Genentech, Inc. (Incorporated by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on December 10, 1997).
10.33* Development Collaboration and License Agreement dated as of December 1,
1997 between Alteon Inc. and Genentech, Inc. (Incorporated by reference
to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on
December 10, 1997).
10.34+ Letter Agreement dated February 24, 1998 between the Company and Jere
E. Goyan amending Employment Agreement dated July 13, 1993, as amended.
(Incorporated by reference to Exhibit 10.39 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997).
10.35* Letter Agreement dated as of April 1, 1998 between Alteon Inc. and
Cerami Consulting Corporation. (Incorporated by reference to Exhibit
10.1 to the Company's Report on Form 10-Q filed on August 14, 1998).
10.36* Letter Agreement dated as of April 1, 1998 between Alteon Inc. and
Kenneth S. Warren Laboratories, Inc. (Incorporated by reference to
Exhibit 10.2 to the Company's Report on Form 10-Q filed on August 14,
1998).
10.37 Amendment to Stock Purchase Agreement and Development Collaboration and
License Agreement dated as of April 29, 1998 between Alteon Inc. and
Genentech, Inc. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on May 6, 1998).
10.38 Letter Agreement dated June 30, 1998 between Alteon Inc. and Hoechst
Marion Roussel, Inc. (Incorporated by reference to Exhibit 10.4 to the
Company's Report on Form 10-Q filed on August 14, 1998).
10.39** Amendment to Clinical Services Agreement dated as of July 15, 1998
between the Company and Quintiles, Inc.
10.40 Letter Agreement dated February 11, 1999 between Alteon Inc. and
Genentech, Inc. (Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K filed on February 19, 1999).
27 Financial Data Schedule.
- ---------------
* Confidentiality has been granted for a portion of this exhibit.
** Confidential treatment has been requested for a portion of this
exhibit.
+ Denotes a management contract or compensatory plan or arrangement
required to be filed as an exhibit pursuant to Item 14(c) to this
Form 10-K.
E-4
<PAGE> 1
[NOTE: CERTAIN PORTIONS OF THIS DOCUMENT HAVE BEEN MARKED TO INDICATE THAT
CONFIDENTIALITY HAS BEEN REQUESTED FOR THIS CONFIDENTIAL INFORMATION. THE
CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.]
EXHIBIT 10.39
[ ALTEON LETTERHEAD ]
AMENDMENT TO
CLINICAL SERVICES AGREEMENT
THIS AMENDMENT TO CLINICAL SERVICES AGREEMENT (this "Amendment") is
entered into as of this 15 day of July 1998, by and between Alteon Inc., a
Delaware corporation, with offices at 170 Williams Drive, Ramsey, New Jersey
07446 ("ALTEON"), and Quintiles, Inc., a North Carolina corporation, with
offices at 1007 Slater Road, Durham, North Carolina 27703 ("QUINTILES") (each of
ALTEON and QUINTILES, a "Party" and collectively, the "Parties").
PRELIMINARY STATEMENTS
A. The Parties previously entered into that certain Clinical Services
Agreement, dated as of August 11, 1996 (the "Agreement").
B. The parties wish to amend the scope of the Services to be provided
by Quintiles under the Agreement, upon the terms and conditions set forth in
this Amendment.
C. Pursuant to Section 5.1 of the Agreement, Attachment C thereto set
forth the total estimated budget for the Services to be performed by QUINTILES
under the Agreement which has subsequently been modified by the process detailed
in Sections 1.2(p) and 5.9.
D. Section 5.1 of the Agreement contemplates that the Parties may amend
the Budget from time to time, upon the agreement of the Parties.
E. In addition to expanding the Scope of the Services, the Parties wish
to establish fixed terms of the Budget with respect to the Services that
QUINTILES has performed and will perform under the Agreement and the means by
which such Budget terms with respect to the Studies under Protocols Numbers
AGPR0002 and AGPR0009, PR0016, PR0014, IND Annual Safety Report preparation (the
"Subject Studies"), and preparation and management of the NDA application for
the Compound under Protocol Number AGPR0002 (the "NDA Preparation"), may be
adjusted in the future, all upon the terms and conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the Preliminary Statements and the
mutual covenants and promises set forth in this Amendment, the Parties hereby
agree to amend the Agreement as follows:
1. Revised Budget and Time Lines. The Budget is hereby amended as
reflected in Attachment A attached. The Parties acknowledge and agree that such
Budget, as so amended, shall constitute the final Budget, subject to the Budget
Adjustments set forth in Section 4 of this Amendment, unless such Budget is
further amended pursuant to Sections 1.2(p) and 5.9 of the Agreement. QUINTILES
estimates that its actual cost to complete the Subject Studies is
<PAGE> 2
approximately $* in excess of the total amount stated in the Budget attached
hereto as Attachment A. In consideration of QUINTILES' agreement to the reduced
total amount stated in the Budget, ALTEON agrees to waive any right it may have
to dispute the costs, fees and expenses previously invoiced by QUINTILES, and
releases any over-payment or over-billing claims it may have regarding such
costs, fees and expenses. ALTEON acknowledges that the Budget attached hereto as
Attachment A supersedes all prior estimates or agreements, oral or written,
regarding the amount of costs, fees and expenses that shall be paid pursuant to
the Agreement and this Amendment. In addition, the time lines applicable to the
Agreement are hereby amended as reflected in Attachment A attached hereto, which
supersedes all prior estimated or agreed time lines regarding the Agreement and
this Amendment.
2. Amendment of Section 5.2. The first sentence of Section 5.2 of the
Agreement hereby is amended such that, following such amendment, such sentence
is replaced in its entirety as follows:
"ALTEON shall pay to QUINTILES the fees and other
out-of-pocket costs set forth in the Budget. ALTEON shall not
be required to make payments with respect thereto that are in
excess of the amounts set forth in the Budget, except to the
extent that ALTEON previously shall have approved such excess
fees and costs."
3. No Further Automatic Budget Adjustments. From and after the date of
this Amendment Section 5.8 of the Agreement is no longer applicable and there
shall be no adjustment of the Budget under such Section 5.8. Any future
adjustments to the Budget shall be effected using the procedure set forth in
Section 5.9 of the Agreement, regardless of the magnitude thereof, except as set
forth in Section 4 of this Amendment. With respect solely to the Services to be
provided by QUINTILES in connection with the NDA Preparation, ALTEON agrees that
it will not unreasonably withhold approval of a cost increase, even if it
involves a fixed price Service, if the proposed changes in budgets or time lines
result from, among other appropriate reasons, forces outside the reasonable
control of QUINTILES or changes in the assumptions upon which the initial budget
or time lines were based. QUINTILES reserves the right to postpone effecting any
future material increases in the scope of the Services until such time as the
parties agree to and execute a written amendment or change order by the process
detailed in Sections 1.2(p) and 5.9.
4. Certain Budget Adjustments with Respect to Subject Studies under
Protocols Numbers AGPR0002 and AGRP0009.
4.1 In the event that the number of days of on-site clinical
monitoring reasonably required to complete the Services with respect to each of
the Subject Studies after January 31, 1998, is greater or less than the number
of the remaining days of such visits forecast in Attachment A, the applicable
line item in the Budget shall be appropriately adjusted, at a rate of $* per day
(adjusted in increments of one-half days). Likewise, in the event the number of
* Confidential Treatment Requested
-2-
<PAGE> 3
clinical monitoring visits required to complete the Services with respect to
each of the Subject Studies after January 31, 1998 is greater or less than the
remaining number of such visits forecasts in Attachment A, the applicable line
item in the Budget shall be appropriately adjusted at a rate of 1.4 days per
visit for travel time, trip planning, and report writing, at a rate of $* per
day. Monitoring Travel miscellaneous cost will be considered a variable direct
pass-through expense which will be reconciled at the end of this project.
4.2 In the event that the number of SAEs reasonably required
to be processed to complete the Services with respect to each of the Studies
after January 31, 1998, is greater or less than the number of the remaining such
SAEs forecast in Attachment A, the applicable line item in the Budget shall be
appropriately adjusted, at a rate of $* per SAE.
4.3 In the event that the number of CRF pages reasonably
required to be tracked to complete the Services with respect to each of the
Subject Studies after January 31, 1998, is greater or less than the number of
the remaining such pages forecast in Attachment A, the applicable line item in
the Budget shall be appropriately adjusted, at a rate of $* per page.
4.4 In the event that the number of pages reasonably required
to be entered into the databases and audited to complete the Services with
respect to each of the Subject Studies after January 31, 1998, is greater or
less than the number of such pages forecast in Attachment A, the Budget shall be
appropriately adjusted, at a rate of $* per page (i.e., six minutes per page, at
$* per minute) with respect to the Subject Study under Protocol Number AGPR0002,
and $* per page (i.e., seven minutes per page, at $* per minute) with respect to
the Subject Study under Protocol Number AGPR0009.
4.5 ALTEON shall pay QUINTILES the amounts stated in the
Budget according to the Payment Schedule attached hereto as Attachment B. Only
the unit-based items referenced in Sections 4.1, 4.2, 4.3 and 4.4 above and
variable expense as defined in each project budget shall be subject to upward or
downward adjustments, unless the Agreement is modified pursuant to its Sections
1.2(p) or 5.9. Upon ALTEON's request from time to time, and, in any event,
within 30 days after the completion of the Services, QUINTILES shall provide
ALTEON with written evidence of the then current number of the respective units
referred to in this Section 4 which QUINTILES has consumed. All adjustments to
the Budget pursuant to this Section 4 shall be made in connection with ALTEON's
final payment under the Budget; provided, however, that if the aggregate effect
of adjustments under this Section 4 reduces the amount of such final payment
below zero, QUINTILES shall pay ALTEON the amount necessary to make up such
deficiency within 30 days after the completion of the Services.
4.6 Fixed Price Revisions. The following provisions are no
longer applicable due to the fixed price/fixed unit price nature of the
Agreement, as amended: Section 3.2(b); the second and third sentences of Section
5.1; the second, third and fourth sentences of Section 5.3; the clause at the
end of Section 5.4 stating "and supplemental information (as contemplated by
Section 5.3)"; Section 5.6; the last clause of Section 5.10 stating "and in
sufficient detail to
* Confidential Treatment Requested
-3-
<PAGE> 4
permit ALTEON to confirm the accuracy of the invoices submitted pursuant to this
Section 5"; and Section 5.11.
5. Scope of Work Amendment. Simultaneously with the execution of this
Amendment, the Parties will execute a scope of work amendment to the Agreement,
pursuant to which QUINTILES shall undertake the NDA Preparation, at a total
agreed-to budget of $*. The Payment Schedule for such work is attached hereto as
Attachment B.
6. Personnel Change. Due to Randy Anderson's departure, Section 1.3(b)
of the Agreement is no longer applicable, and the name "Randy Anderson" is
hereby replaced by "Tom Atkins" in Sections 1.3(b) and 1.5(b).
7. Capitalized Terms. All capitalized terms not otherwise defined in
this Amendment shall have the respective meanings assigned thereto in the
Agreement.
8. Continuing Effect of Agreement. Except as amended herein, in all
other respects the Agreement shall remain in full force and effect and be
unaffected by this Amendment.
* * *
* Confidential Treatment Requested
-4-
<PAGE> 5
IN WITNESS WHEREOF, each of the Parties has caused its duly authorized
representative to execute this Amendment as of the date first set forth above.
ALTEON INC.
By: /s/ Kenneth I. Moch
-------------------------------
Name: Kenneth I. Moch
----------------------------
Title: CFO
--------------------------
QUINTILES, INC.
By: /s/ Paula B. Stafford
------------------------------
Paula B. Stafford
Vice President, Business Development
-5-
<PAGE> 6
ATTACHMENT A
REVISED FINAL BUDGET
-6-
<PAGE> 7
AMENDMENT TO THE CLINICAL SERVICES AGREEMENT
Attachment A: Budget for Protocols AGPR002 and AGPR009
<TABLE>
PROJECT SET-UP INITIATION
<S> <C>
Project Transfer and Start-Up *
Development of Study Files *
CRA Meeting *
SUBTOTAL PROJECT SET-UP AND INITIATION: *
CLINICAL TRIAL MANAGEMENT
Clinical Monitoring - Interim, Close-Out Visits *
Clinical In-House Administration *
Drug Distribution Management *
SUBTOTAL CLINICAL TRIAL MANAGEMENT *
MEDICAL SUPPORT
AE Processing and Reporting *
SUBTOTAL MEDICAL SUPPORT: *
CLINICAL DATA MANAGEMENT
Database Design and Maintain *
CRF Tracking *
Edit Specifications, Pre-Entry Edit, DCF Queries Resolution *
Data Entry, Database Audit *
Coding - Disease, Medication, Adverse Events *
SUBTOTAL CLINICAL DATA MANAGEMENT *
BIOSTATISTICAL ANALYSIS
Annotated Report Outline *
Statistical Integrated Study Report *
SUBTOTAL BIOSTATISTICAL ANALYSIS *
SUPPORT SERVICES
Project Management *
Administrative Support *
Client Meetings *
SUBTOTAL SUPPORT SERVICES: *
TOTAL QUINTILES FEES *
MISCELLANEOUS COSTS
Monitoring Travel *
Client Meeting Travel *
CRA Meeting Travel *
Computer Support *
Copying, Printing, Postage, Telephone, Supplies *
Videoconferencing *
SUBTOTAL MISCELLANEOUS COSTS *
GRAND TOTAL *
LESS QUINTILES CONSIDERATION *
ADJUSTED TOTAL *
</TABLE>
* Confidential Treatment Requested
Page 1
<PAGE> 8
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT A
BUDGET NOTES - PROTOCOL NUMBERS AGPR002 AND AGPR009
(PIMA010 AND PIMA020)
The following variable expense units are defined under this project:
CLINICAL TRIAL MANAGEMENT
Clinical Monitoring
PIMA010
Unit Costing:
$* per day for time on site.
Estimate of Time on site to Complete Trial:
25 visits at 2 days on site
145 visits at 3 days on site
49 visits at 1.5 days on site (closeout visits)
Actual time on site to be determined by time sheets
Fixed Amount of 1.4 days per visit for travel time and trip planning and report
writing at $* per day rate
PIMA020
Unit Costing:
$* per day for time on site.
Estimate of Time on Site to Complete Trial:
28 visits at 1.5 days on site
140 visits at 2.0 days on site
71 visits at 1.5 days on site (closeout visits)
Actual time on site to be determined by time sheets
Fixed Amount of 1.4 days per visit for travel time and trip planning and report
writing at $* per day rate
Monitoring Travel miscellaneous cost will be a variable pass-through expense
which will be reconciled at the end of the project.
MEDICAL SUPPORT
AE Processing
PIMA010
Estimate to Complete:
200 SAE's at a unit cost of $*
* Confidential Treatment Requested
2
<PAGE> 9
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT A
BUDGET NOTES - PROTOCOL NUMBERS AGPR002 AND AGPR009
(PIMA010 AND PIMA020)
(Based on an average rate of 20 per month for 10 remaining months
(February through November).
PIMA020
Estimate to Complete:
150 SAE's at a unit cost of $*
(Based on an average rate of 25 per month for 6 remaining months
(February through July)
Construction of an estimated 300 Total Cardiovascular files (estimated
$*)
170 are completed
130 estimated new cases in remaining months
CLINICAL DATA MANAGEMENT
CRF Tracking
PIMA010
Estimate to Complete:
29,000 pages remaining at a unit cost of $*
PIMA020
Estimate to Complete:
11,210 pages remaining at a unit cost of $*
DATA ENTRY, DATABASE AUDIT
PIMA010
Estimate to Complete:
29,000 pages remaining at a unit cost of $*
PIMA020
Estimate to Complete
11,750 pages remaining at a unit cost of $*
* Confidential Treatment Requested
3
<PAGE> 10
AMENDMENT TO CLINICAL SERVICES AGREEMENT
Attachment A: Budget for
SAE Reporting for Protocol PRO014 and PRO016
<TABLE>
<S> <C>
MEDICAL SUPPORT
AE Processing and Reporting *
SUBTOTAL MEDICAL SUPPORT *
TOTAL QUINTILES FEES *
MISCELLANEOUS COSTS
Computer Support, Copying, Printing, Shipping *
SUBTOTAL MISCELLANEOUS COSTS *
GRAND TOTAL *
</TABLE>
The above calculations were based on an average of 11 serious adverse events
reported monthly. It is assumed that reporting of events will continue for
another 18 months (March 1998 through August 1999). This yields a total of 198
more Serious Adverse Events to process at a cost of $* per SAE. Allowance for an
extension study or safety evaluation phase has not been included. Note: Alteon
has been adding investigator sites for the 014 Protocol in the recent months.
This increase in investigator sites may result in an increase in the monthly
reporting rate.
* Confidential Treatment Requested
Page 4
<PAGE> 11
AMENDMENT TO CLINICAL SERVICES AGREEMENT
Attachment A: Budget for Annual Safety IND Report
<TABLE>
<S> <C>
Regulatory *
Med. Ops *
Rep. Coordin *
Stat Program *
Biostats *
RDQC *
TOTALS *
</TABLE>
Contract Modification signed May 21, 1997
Scope of Work: to prepare three (3) annual safety IND update reports (for years
1997, 1998, and 1999). The cost for the second and third report was budgeted at
a lower rate than the first based on the assumption that the second and third
reports will be identical in content and structure as the first report. Two of
the three reports have been prepared. It is assumed that the scope of the IND
report for 1999 will remain the same as in previous years.
Information on percentage and workcode breakdown provided by Susan Kenny (x1463)
on Aug. 4, 1997
* Confidential Treatment Requested
Page 5
<PAGE> 12
AMENDMENT TO CLINICAL SERVICES AGREEMENT
Attachment A: Budget for the NDA Preparation for Pimagedine
<TABLE>
<S> <C> <C>
NDA PREPARATION
o Table of Contents *
o Application Summary (Clinical Section only) *
o CMC *
o Labeling *
o Non-Clinical Pharmacology and Toxicology *
o Human PK and Bioavailability and Clinical Pharmacology *
o Microbiology *
o Overall Clinical Summary *
o Clinical Pharmacology *
o Individual Study Reports
Action I Study Report *
Action II Study Report *
o Patent Narratives *
o Integrated Summary of Safety (Integrated database creation,
Analysis and Tables) *
o Integrated Summary of Efficacy (Analysis and Tables) *
o Integrated Summary of Benefits & Risks *
o Safety Update Report (See Optional Costs category on next page) *
o Statistical Methods Section (ISS Methods Insert) *
o CRF Tabulations (See Optional Costs category on next page) *
o Case Report Forms *
o Patent Information and Certification *
o NDA Compilation & Cross Referencing *
o Project Management (includes Administrative Support) *
o Clinical Pharmacology Support *
Sub-Total NDA Preparation *
CONTINUED ON THE NEXT PAGE
Other Services
o NDA Strategy/Pre-NDA Meeting *
o Other Services:
Expert Consulting-Biostatistics, Clinical Sciences and Regulatory Services *
Face to Face Client Meetings (6 meetings; 6 attendees at each) *
Teleconference Client Meetings (Weekly; 8 attendees at each) *
Project Startup and Planning *
Sub-Total Other Services *
Total Services *
Miscellaneous Costs
o Travel
Client Meetings *
6 meetings at Alteon, 6 attendees at each meeting
Pre-NDA Meeting *
o Telephone, Supplies, and Computer Support *
o Shipping of NDA Volumes
Hand Delivery of NDA to FDA (based on 2 copies of 90 volume submission) *
Federal Express Delivery of remaining 4 copies of 90 volume application
to Alteon *
Sub-Total Miscellaneous Costs *
TOTAL NDA BUDGET COST *
OPTIONAL COSTS (Not Included in Total Budget Costs)
</TABLE>
<PAGE> 13
<TABLE>
<S> <C>
o Safety Update Report *
o CRF Tabulations *
o Action II efficacy tables and text in ISE *
Subtotal Optional Costs *
Total Costs including Optional Costs *
</TABLE>
* Confidential Treatment Requested
Page 6
<PAGE> 14
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT A
BUDGET NOTES - NDA PREPARATION OF PIMAGEDINE
As described in the proposal for "Revised Scope of Work for New Drug Application
Services and Action I & Action II Final Study Reports" dated July 1, 1998
("Proposal), Quintiles' scope of work for the NDA Preparation for Pimagedine
includes Regulatory Affairs Consulting, Clinical Sciences, Biostatistics,
Programming, QC, and Project Management services. Assumptions are based on
discussions between Quintiles and Alteon. Deviations in these assumptions may
require a modification to the budget and/or timelines.
GENERAL NOTES
Quintiles' participation in this project is based on * consecutive
months beginning *. Should the time line increase/decrease, the budget
will be adjusted accordingly.
The budget is based on Quintiles' 1998 daily rates. If the Services
hereunder last longer than one (1) year, Quintiles' costs may be
increased at the beginning of each year, commencing one year after the
date the Agreement is executed, to reflect increases or decreases in
Quintiles' costs on a prospective basis only. Quintiles' costs may be
increased or decreased for the next twelve (12) month period using the
percentage change in the wages/earnings survey as published in The
Economist for the applicable currencies over the preceding twelve (12)
month period.
Any costs associated with audits performed by Alteon at Quintiles'
facilities will be invoiced to Alteon at cost.
BIOSTATISTICAL AND CLINICAL SCIENCES SERVICES
Costs for error resolution for the following data to be received from
external vendors have not been included in the budget: Covance
laboratory data, Scripps Labs' data, Fundus photography data
(University of Wisconsin, Madison), GFR data (from Covance), the
Quality of Life data (from Reilly Associates), and plasma pimagedine
data (from Alteon).
Quintiles has assumed that a final transfer of all data from each
vendor will be received as locked databases no later than * for the
Action I study and no later than * for the Action II study. Quintiles
assumes that at least 2 interim transfers of each of these databases
will be received (at approximately * months prior to the last patient
visit and at * months prior to the last patient visit for the Action I
study and at
* Confidential Treatment Requested
<PAGE> 15
approximately * weeks and * weeks prior to the last patient visit for
the Action II study). Quintiles will carry out checks prior to database
lock to determine and seek error resolution for any systematic problems
or inconsistencies found in each of these databases. However, it is
assumed that final responsibility for locking each vendor database will
reside with each individual vendor. Any additional costs incurred by
Quintiles as a result of errors or inconsistencies in any of the
databases delivered to Quintiles as a locked database will be billed on
a fee-for-service basis. This will include costs for re-running
analysis files or tables.
Quintiles has assumed that no changes to the definition of the Per
Protocol population will take place after database lock. Any costs (due
to re-programming analysis files and re-running tables) as a result of
changes to the definition of the Per Protocol population after database
lock will be billed on a fee-for-service basis.
Quintiles has assumed that adverse events of special interest
(including the exact definition of flu syndrome) for the NDA will have
been defined (or the rule for selecting them has been defined) by *.
Any costs (due to re-programming analysis files and re-running tables)
as a result of changes to the definition of special interest adverse
events after * will be billed on a fee-for-service basis.
Quintiles has budgeted for a data review meeting for the Action I study
and a data review meeting for the Action II study with an anticipated
date of * working days prior to database lock in each case. For these
meetings Quintiles will provide data dumps ( SAS Proc Prints of raw
data) for all CRF data only. In addition, frequencies (for binary
data), and the highest and lowest values as well as quantiles (for
continuous data) will be provided for CRF data on the following
variables: key disposition variables, demographics, the primary
efficacy parameter, adverse events, and key laboratory parameters
(including those which are key secondary parameters). Any outstanding
discrepant dates or other questionable or missing information related
to the primary efficacy parameter will be fully summarized. It is
assumed that no new DCFs will be issued as a result of discussions at
the data review meetings, as otherwise delays are likely to result for
all subsequent deliverables.
Costs to develop the Integrated Summary of Safety(ISS) Annotated Report
Outline(ARO), Integrated Summary of Efficacy(ISE) ARO, Action I ARO,
Action II ARO, ISS Table Shells, ISE Table Shells, ISS Tables, ISE
Tables, Data Listings for Action I and Action II, CRF Tabulations for
Action I and Action II (if no FDA waiver is given), text for the Action
I integrated clinical and statistical study report, text for the Action
II abbreviated integrated clinical and statistical study report, ISE
text, ISS text, text for the remainder of the Clinical Section, text
for the Clinical Data Summary, text for the Risk-Benefit section, and
text for the Statistical Methodology section of the NDA have all been
included in the budget. Those tables to be included in the ISS, the
ISE, the Action I study report, and the Action II abbreviated study
report are specified in Appendices 1 and 2. Estimated costs include one
round of review and incorporation of consolidated comments from Alteon
to create the final version for all Tables, Data
* Confidential Treatment Requested
<PAGE> 16
Listings, CRF Tabulations, Action I ARO, Action II ARO, text for the
Action I study report, ISE text, ISS text, text for the remainder of
the Clinical Section, text for the Clinical Data Summary, and
Statistical Methodology text. Estimated costs for the ISS ARO, the ISE
ARO, Table Shells, and text for the Action II abbreviated study report,
allow for two rounds of review and incorporation of comments. In all
cases it is assumed that Alteon provides one integrated set of comments
(including comments from George Washington University and any other
third parties). For the Risk-Benefit section costs assume that
Quintiles will produce one draft version after which Alteon will
finalize the document.
It is assumed that the final SAE documentation (SAE reporting and
source documentation) is received from all investigator sites by * for
the Action I study and * for the Action II study.
Any additional tables, figures, or listings Alteon requires outside of
the approved AROs for the ISS, the ISE, the Action I study, or the
Action II study will be discussed and any additional fees negotiated
with Alteon.
All patient narratives will be prepared by Alteon. Should Alteon
request that Quintiles prepare patient narratives, Quintiles will
provide Alteon a cost estimate for development of patient narratives.
At Alteon's request, Quintiles will send printouts of the concomitant
medication and AE coding mappings on two occasions, once prior to
Action II database lock and once prior to Action I database lock.
Quintiles has assumed that all Quintiles and Alteon reconciliation
between Quintiles' coding dictionaries and the coding dictionaries used
in other studies (including the ESRD study conducted by ACER/EXCEL)
will have taken place prior to Action II database lock. Quintiles
estimated dates for production of the ISE and ISS tables assume that no
changes to coding dictionaries occur after Action II database lock for
terms that are present in Action II, and no changes occur after Action
I database lock for terms that are present in Action I. In addition,
any costs (due to re-running analysis files or tables) as a result of
changes in coding after database lock will be billed on a
fee-for-service basis.
Costs for 10 days of expert consulting each from the Biostatistics,
Clinical Sciences and Regulatory departments have been included in the
budget. Estimated costs are based on daily rates of $* for
Biostatistics; $* for Clinical Sciences and $* for Regulatory. Any
additional expert consultancy above 10 days from any of these
departments will be billed on a fee-for-service basis.
Costs have been included for two (2) Quintiles' attendees (one from
Clinical Sciences and one from Biostatistics) at the Pre-NDA meeting.
Any additional attendees at Alteon's request will be billed to Alteon
on a fee-for-service basis.
Costs have been included for Quintiles' expert review of the text for
the ISS, the ISE, the
* Confidential Treatment Requested
<PAGE> 17
Action I study report, the Action II abbreviated study report, the
remainder of the Clinical Section, the Clinical Data Summary, and the
Risk-Benefit section by Clinical Sciences, the Project Medical Officer
(or another M.D.), Regulatory, and Biostatistics. For the statistical
methodology section and all AROs costs have been included for expert
reviews by Biostatistics, Clinical Sciences, and Regulatory. For tables
and table shells costs include expert review by Biostatistics and
Clinical Sciences. For data listings and CRF tabulations (if required)
costs include expert review by Biostatistics. All expert reviews will
be carried out prior to delivery of these items to Alteon.
Costs are included for a QC review of all deliverables of AROs, table
shells, tables, data listings, CRF tabulations, and text. These QC
reviews will have taken place prior to delivery of the items to Alteon.
Quintiles will generate 399 tables (141 for Action I alone, a further
149 for Action II alone, and a further 109 for Action I and Action II
combined), including 64 unique tables, and 20 figures for the ISS. A
full list of the ISS tables which Quintiles has assumed will be
required is provided in Appendix 1.
Quintiles will generate 85 tables (including 35 unique tables), and 24
figures for the ISE, all of which will be based on Action I alone. A
full list of the ISE tables which Quintiles has assumed will be
required, is provided in Appendix 2.
Quintiles will produce 215 tables for the Action I study report, 86
unique tables, and 33 figures. A total of 211 of these tables and all
figures will be identical (other than header information) to a
corresponding ISS or ISE table. A full list of the Action I tables
which Quintiles has assumed will be required is provided in Appendices
1 and 2.
Quintiles will produce 230 tables for the Action II abbreviated study
report, 88 unique tables, and 32 figures. A total of 153 of these
tables and 11 figures will be identical (other than header information)
to a corresponding ISS table. A full list of the Action II tables which
Quintiles has assumed will be required is provided in Appendices 1 and
2.
Additional analyses outside of the lists of tables provided in
Appendices 1 and 2 can be provided, on a fee-for-service basis.
However, certain additional ISE analyses (including any exploratory
analyses, any reasonable case analysis, and any additional figures) may
take longer than 7 weeks after database lock.
It is assumed that a total of 25 data listings will be produced for the
Action I study and 25 data listings will be produced for the Action II
study.
Quintiles would recommend that Alteon seek a waiver from the FDA for
CRF tabulation production. However, if Alteon does not receive a
waiver, Quintiles estimates that CRF tabulation production for Action I
and Action II would cost approximately $* altogether.
* Confidential Treatment Requested
<PAGE> 18
It is assumed that the statistical methodology section of the NDA will
be at most 60 pages of text (at 1.5 line spacing). Further, it is
assumed to cover only statistical methodology corresponding to analyses
produced by Quintiles in the ISS or ISE, together with analysis
discussion in the text of the ISS or ISE by Quintiles. These methods
will be discussed in the stats trial methodology section of the NDA
based on the methods sections from the corresponding study reports. It
is assumed that statistical methodology for analysis of Quality of Life
and plasma pimagedine will be provided to Quintiles as drop-in
sections.
Quintiles has assumed that no tables from any study other than Action I
and Action II will be required for the ISS and no tables from any study
other than Action I will be required for the ISE. If additional tables
are required from other studies in the ISS or ISE then these will be
billed on a fee-for-service basis. ISS or ISE tables produced from
studies other than Action I and Action II may take longer than those
produced for Action I and II.
Costs include tasks required to produce the key draft ISS tables for
Action I within * weeks of Action I database lock and the remaining
draft ISS tables (except for AE prevalence tables) for Action I will be
delivered in * batches at weekly intervals over the following * weeks.
Costs also include tasks required to produce AE prevalence tables
within a further * weeks. Those tables which correspond to the "key"
ISS text (as defined by Alteon) will be given highest priority.
However, exactly which tables will be included in each of the these *
batches is also dependent on data-driven issues.
Costs include tasks required to produce ISS tables based on Action II
alone in 3 batches with the first delivered within * weeks of Action II
database lock and the last delivered within * weeks of database lock.
Costs for production of the integrated ISS database assume that adverse
events, laboratory data, and vital signs is the only safety data that
is fully integrated, and that this is based only on Action I and Action
II. It is further assumed that the only data that is partially
integrated is that part of the demographics, medications, and medical
history needed for the interaction analyses in the ISS and the ISE. It
is assumed that ECGs, efficacy data, and all other data will not be
integrated at all. Quintiles estimates that those ISS tables based on
the integrated database will be submitted to Alteon within * weeks of
the integrated database lock.
Costs for the ISE assume that the last draft table for Action I from
the list specified in Appendix 2 will be produced within * weeks after
Action I database lock (subject to the assumptions set out in this
proposal). Some ISE tables will be delivered in batches prior to this
date, but exactly which tables will be included in any particular batch
is highly dependent on data-driven issues. Those tables corresponding
to the most important efficacy parameters will be given the highest
priority. However, it is anticipated that those analyses based on
survival endpoints (including analysis for the primary efficacy
parameter) will be in a later batch as they are likely to be most
affected by (data-driven) special cases, which arise very shortly
before database lock.
* Confidential Treatment Requested
<PAGE> 19
Quintiles estimates that any additional safety tables needed for the
Action I or Action II study reports will be produced according to the
timeline (relative to the individual study's database lock) described
above. Likewise Quintiles estimates that any additional efficacy or
other non-safety tables needed for the Action I or Action II study
reports will be produced according to the timeline (relative to the
individual study's database lock) described above.
For the ISE and for the Action II efficacy analyses Quintiles has
assumed that the programs written by George Washington University to
produce the ESMC analyses (except for any code that reveals information
that would unblind a patient) will be received electronically by *.
Further, it is assumed that any additional code covering information
related to a patient's treatment assignment, together with all results
from interim analyses will be provided electronically * after
unblinding.
For the ISE, it is further assumed that agreement is reached between
Quintiles, George Washington University, and Alteon by * for Action I
and Action II on all analyses and all data analysis rules to be used in
the ISS/ISE, the Action I and Action II study reports, and in the
interim and final analyses to be carried out by George Washington
University for either study. If different analysis rules are followed
by George Washington University or Alteon compared with the rules to be
adopted by Quintiles in the ISE and the ISS, then additional costs will
result for the reconciliation of these results with the results
produced by Quintiles. This will be billed on a fee-for-service basis.
It is assumed that Quintiles writes the Action I Integrated Clinical &
Statistical Study report. The results section is assumed to be based on
the 215 tables specified in Appendices 1 and 2 (85 tables identical to
Action I ISE tables a further 126 tables identical to Action I ISS
tables and 4 additional tables). It is assumed that methods and results
sections covering plasma pimagedine data, (including relationship of
plasma pimagedine to efficacy or safety) and Quality of Life date will
be written by their corresponding vendors or will be written by Alteon,
and it is assumed that these sections will be supplied to Quintiles as
drop-in sections and that these will use section numbering as specified
by Quintiles. Further, it is assumed that text covering results for
Quality of life and plasma pimagedine data for the ISE (and for the ISS
if appropriate) will be supplied as a drop-in section.
It is assumed that Quintiles writes the Action II abbreviated
Integrated Clinical & Statistical Study. The results section is assumed
to be based on the 209 tables specified in Appendices 1 and 2 (153
tables identical to Action II ISS tables, and 77 additional tables). It
is assumed that methods and results sections covering plasma pimagedine
data and Quality of Life will be written by their corresponding vendors
or will be written by, (including relationship of plasma pimagedine to
efficacy or safety) Alteon. It is assumed that these sections will be
supplied to Quintiles as drop-in sections and that these will use
section numbering as specified by Quintiles. Further, it is assumed
that text covering results for Quality of life and plasma pimagedine
data for the ISE (and for the ISS if
* Confidential Treatment Requested
<PAGE> 20
appropriate) will be supplied as a drop-in section.
Quintiles has assumed that an integrated set of comments is received
from Alteon within * days of shipment of each batch of ISS or ISE
tables. Further, Quintiles has assumed that draft tables will be
revised to produce final tables as indicated by the integrated comments
from Alteon, within at most * weeks of receipt of comments, except for
the last batch of ISE tables where revised tables will be shipped
within * of receiving comments. This timeline assumes that as a result
of Alteon's comments on each batch of ISS or ISE tables, no new tables
are required, no additions to tables are required, no changes are made
to any definitions, and no additional exploratory analyses are needed.
Quintiles has assumed that Alteon is able to obtain FDA agreement to
the ISS ARO, the ISE ARO, and the data analysis rules for the ISS and
ISE by *. Quintiles also assumes that no additional analyses are
required as a result of the Pre-NDA meeting scheduled for *. If such
additional analyses are required then these will be billed on a
fee-for-service basis and this is likely to impact on the NDA timeline.
Quintiles has assumed that all data on patients who are lost to
follow-up (including any additional data collected as a result of
active searching for these lost to follow-up patients) is received at
Quintiles by * for Action I patients and by * for Action II patients.
Quintiles has assumed that the last DCF for any data retrieved for lost
to follow-up patients is resolved by * for Action I patients and by *
for Action II patients. Any delays in receipt of this information may
lead to delays in all subsequent dates on the timeline.
This budget estimate does not include costs for Quintiles to scan CRFs.
Any support provided by Quintiles in connection with the scanning of
CRFs have not been included in the budget. If required, this support
will be invoiced to Alteon at a daily rate of $*.
In order to lock the database for Action II within * months of the last
patient visit it is assumed that all CRF pages are available be
collected at the last monitoring visit (estimated to be on *). Further,
it is assumed that all DCFs receive a resolution from the sites within
*.
It is assumed that the Action II abbreviated study report will be at
most 120 pages in length (from Introduction to Conclusions based on 1.5
spacing) with 25-30 panels (in-text tables). No cost for patient
narratives has been included, but if it is required for Quintiles to
produce these then they will be charged on a fee-for-service basis.
It is assumed that the Action I study report will be 150-160 pages in
length (from Introduction to Conclusions based on 1.5 spacing) with
30-40 panels (in-text tables). No cost for, patient narratives has been
included, but if it is required for Quintiles to produce
* Confidential Treatment Requested
<PAGE> 21
these then they will be charged on a fee-for-service basis.
Quintiles costs and timelines assume that for the ISE only Action I
will be summarized from tables included in the ISE itself. It is also
assumed that the only additional studies summarized in the ISE text
will be Action II and the Dyslipidemia study. Costs for the ISE assume
that there will be 150-200 pages of text (at 1.5 line spacing).
Quintiles has also given separate costs for including tables based on
Action II in the ISE. In this option, such tables would be a subset of
the tables produced for the Action II study report and would differ
from study report only in header information.
Quintiles costs and timelines assume that for the ISS only Action I and
Action II will be summarized from tables included in the ISS itself. It
is also assumed that the only additional studies summarized in the ISS
text will be those studies listed in Appendix 3. Costs for the ISS
assume that there will be 250-300 pages of text (at 1.5 line spacing).
Costs and timelines for the ISE and ISS text writing assume that
Quintiles is not responsible for production of analyses, tables, or
study report text for any studies other than Action I or Action II.
Further, it is assumed that for all studies other than Action I and
Action II a final and complete study report together with a set of
tables is provided to Quintiles by *. In addition it is assumed that
final and complete information is received on deaths, serious adverse
events, and adverse events that caused discontinuation for all of these
additional studies by *.
It is assumed that Alteon will be responsible for preparing all text
for the NDA, other than the Statistical Methodology section, ISE, ISS,
remainder of the Clinical Section, the Clinical Data Summary, the
Risk-Benefit section, the Action I study report, and the Action II
abbreviated study report.
Quintiles has also included as an option, costs for the 120 day Safety
Update. This assumes that there will be 40-45 tables, and 100-120 pages
of text (at 1.5 line spacing). Costs have been included for one (1)
draft version after which Quintiles will incorporate Alteon's comments
to produce the final version. The costs assume that the tables will be
based only on data from Action I compassionate use and AE updates to
Action I data in the NDA if needed. Any additional data for the ESRD
study will be discussed in the text only.
NDA COMPILATION AND SUBMISSION
Quintiles has estimated the NDA to be 90 volumes. Labor costs
associated with the compilation of six (6) copies of the application
have been included in the budget. Labor costs for each additional copy
over six (6) is estimated at $* per copy.
For every volume over 90, an additional cost of $* per volume will be
added. Any changes to a paginated volume requested by Alteon will also
incur an additional cost
* Confidential Treatment Requested
<PAGE> 22
of $* per volume.
The estimated cost for the hand delivery of the application to the FDA
is $*. This cost has been included in the budget. If Alteon desires to
use Federal Express in lieu of hand delivery, the estimated cost would
be approximately $*. These estimates are based on the delivery of 180
volumes to the FDA (2 copies of a 90 volume submission). Actual
delivery or shipping costs for the final NDA submission will be
invoiced to Alteon at cost.
The estimated cost for shipping the NDA to Alteon via Federal Express
is $* per copy. The budget includes the shipping of 4 copies to Alteon
(one master and three copies).
PROJECT MANAGEMENT
Quintiles has included an estimated cost for providing Alteon with
study progress reports, as needed.
Cost estimates include six client meetings with Alteon (at Alteon) have
been included in the budget. It is estimated that six project team
members from Quintiles will attend the face-to-face client meetings.
Costs have also been included for weekly teleconferences between Alteon
and Quintiles in the budget. It is estimated that eight project team
members from Quintiles will participate in these weekly
teleconferences.
* Confidential Treatment Requested
<PAGE> 23
ATTACHMENT B
REVISED PAYMENT SCHEDULES
<PAGE> 24
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT B: SUMMARY PAYMENT SCHEDULE
Protocols AGPF0002 and AGPF0009, Drug Safety Monitoring and NDA
*
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Page 1
<PAGE> 25
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT B: PROJECT PAYMENT SCHEDULE
002 and AGPF0009
*
Safety Monitoring
*
NDA
*
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Page 2
<PAGE> 26
ATTACHMENT C
SCOPE OF WORK AMENDMENT
<PAGE> 27
AMENDMENT TO CLINICAL SERVICES AGREEMENT
ATTACHMENT C
REVISED SCOPE OF WORK
FOR
NEW DRUG APPLICATION SERVICES
AND
ACTION I & ACTION II FINAL STUDY REPORTS
Prepared for:
Alteon, Inc.
Submitted by:
Quintiles, Inc.
Research Triangle Park, North Carolina
July 1, 1998
<PAGE> 28
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1.0 Executive Summary ...............................................1
2.0 Services Checklist ..............................................2
3.0 Project Timeline for Tasks Involving Action I ...................4
4.0 Project Timeline for Tasks Involving Action II Alone ............7
5.0 Scope of Work ...................................................8
6.0 Budget .........................................................15
7.0 Budget Notes ...................................................17
</TABLE>
Appendix 1: Proposed List of Tables for the Alteon Integrated Summary of
Safety
Appendix 2: Proposed List of Tables and Figures for the Alteon Integrated
Summary of Efficacy, together with a Proposed List of the
Corresponding Tables and Figures in Action I and Action II
Study Reports
<PAGE> 29
1.0 EXECUTIVE SUMMARY
The enclosed documents are a revised scope of work and timeline for the
IDDM Pimagedine NDA submission. The scope of work and timeline has been
revised to reflect the additional tasks requested at the April 16, 1998
meeting between Alteon and Quintiles.
1
<PAGE> 30
2.0 SERVICES CHECKLIST
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------- --------------- ----------------
ACTIVITY ALTEON QUINTILES
- ----------------------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
PROJECT MANAGEMENT X X
- ----------------------------------------------------------------------------------- --------------- ----------------
DATA MANAGEMENT
- ----------------------------------------------------------------------------------- --------------- ----------------
Last Patient Visit (Action I Study) X X
- ----------------------------------------------------------------------------------- --------------- ----------------
Last Patient Visit (Action II Study) X X
- ----------------------------------------------------------------------------------- --------------- ----------------
Database Lock (Action I Study) X
- ----------------------------------------------------------------------------------- --------------- ----------------
Database Lock (Action II Study) X
- ----------------------------------------------------------------------------------- --------------- ----------------
Preparation For Data Review Meetings For Action I & Action II Study X
- ----------------------------------------------------------------------------------- --------------- ----------------
BIOSTATISTICAL OPERATIONS
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop Annotated Report Outline (ARO) and Table Shells for Integrated Summary of X
Safety (ISS)
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO and Table Shells for Integrated Summary of Efficacy (ISE) X
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO for Action I study X
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO for Action II study X
- ----------------------------------------------------------------------------------- --------------- ----------------
Pre-NDA Meeting Planning/Attendance X X
- ----------------------------------------------------------------------------------- --------------- ----------------
Preparation for Data Review Meetings for Action I and Action II studies X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare text for Statistical Methodology Section covering analyses for tables X
produced by Quintiles in the ISS or ISE
- ----------------------------------------------------------------------------------- --------------- ----------------
Integration of Action I and Action II ISS Databases (IDB) X
- ----------------------------------------------------------------------------------- --------------- ----------------
Statistical Analyses and Tables for the Action I study report X
- ----------------------------------------------------------------------------------- --------------- ----------------
Statistical Analyses and Tables for the Action II study report X
- ----------------------------------------------------------------------------------- --------------- ----------------
Statistical Analysis and Tables for ISE from Action I study only (a subset of
the X tables produced for the Action I study report)
- ----------------------------------------------------------------------------------- --------------- ----------------
Statistical Analysis and Tables for ISS from Action I study, Action II study (a
X subset of the tables produced for the Action I and Action II study reports),
and from IDB
- ----------------------------------------------------------------------------------- --------------- ----------------
Produce Data Listings for Action I and Action II X
- ----------------------------------------------------------------------------------- --------------- ----------------
CRF Scanning and Indexing X
- ----------------------------------------------------------------------------------- --------------- ----------------
Produce CRF Tabulations for Action I and Action II Study (if no FDA waiver is X
obtained)
- ----------------------------------------------------------------------------------- --------------- ----------------
</TABLE>
2
<PAGE> 31
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------- --------------- ----------------
ACTIVITY ALTEON QUINTILES
- ----------------------------------------------------------------------------------- --------------- ----------------
<S> <C> <C>
Produce an abbreviated integrated clinical & statistical study report for Action X
II
- ----------------------------------------------------------------------------------- --------------- ----------------
Produce an integrated clinical & statistical study report for Action I X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare ISE Text X
- ----------------------------------------------------------------------------------- --------------- ----------------
CLINICAL SCIENCES
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO and Table Shells for ISS X
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO and Table Shells for ISE X
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO for Action I study X
- ----------------------------------------------------------------------------------- --------------- ----------------
Develop ARO for Action II study X
- ----------------------------------------------------------------------------------- --------------- ----------------
Pre-NDA Meeting Planning/Attendance X X
- ----------------------------------------------------------------------------------- --------------- ----------------
Produce an abbreviated integrated clinical & statistical study report for Action X
II
- ----------------------------------------------------------------------------------- --------------- ----------------
Produce an integrated clinical & statistical study report for Action I X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare ISE Text X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare ISS Text X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare remaining parts of Clinical Section X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare Clinical Data Summary (Item 3) X
- ----------------------------------------------------------------------------------- --------------- ----------------
Prepare draft Risk-Benefit Section X
- ----------------------------------------------------------------------------------- --------------- ----------------
REGULATORY OPERATIONS
- ----------------------------------------------------------------------------------- --------------- ----------------
Regulatory Consulting X
- ----------------------------------------------------------------------------------- --------------- ----------------
NDA Compilation X
- ----------------------------------------------------------------------------------- --------------- ----------------
</TABLE>
3
<PAGE> 32
3.0 PROJECT TIMELINE FOR TASKS INVOLVING ACTION I
<TABLE>
<S> <C>
MILESTONE
Draft ISS ARO and Draft ISE ARO to Alteon *
Contract Signature *
Alteon's Comments on Draft ISS &
ISE AROs Received *
Final ISS & ISE AROs Developed *
Alteon's Comments received on
Final ISS & ISE AROs *
Draft Action I ARO to Alteon *
Alteon's Draft Action I ARO
Comments To Quintiles *
Last Patient completes Action I study *
Final Action I ARO To Alteon *
Action I Data Review Meeting *
Data Review Updates Complete for
Action I study *
Locked Database for Action I study *
Key Draft ISS Tables for Action I
Available *
Last Draft ISS Tables for Action I
Available (from Appendix 1 of the
March 18, 1998 proposal) *
Integrated Database (IDB) Lock *
Last Draft Additional ISS Tables for
Action I Available *
Last Draft Action I ISE Tables Available *
Last Draft ISS Tables Available from
Integrated Database for Action I & II *
</TABLE>
* Confidential Treatment Requested
4
<PAGE> 33
<TABLE>
<S> <C>
MILESTONE
Alteon Review of ISS Tables (for Action I alone) Complete *
Alteon Review of Action I ISE Tables Complete *
Alteon Review Complete for ISS Tables
Based on IDB *
Final ISS Tables (for Action I alone) Available *
Final Action I ISE Tables Available *
Final Draft ISS Tables Available from IDB *
Draft Action I Study Report Complete (already QC-ed
and Expert Reviewed) *
Alteon Review of First Draft of Action I Study
Report Complete *
Three Day Roundtable on Action I
Study Report Completed *
Draft ISE Text Complete (already QC-ed
and Expert Reviewed) *
Final Action I Study Report Complete(already QC-ed
and Expert Reviewed) *
Alteon review of First Draft of ISE Text Complete *
One Day Roundtable on ISE Text *
Draft ISS Text Complete (already QC-ed
and Expert Reviewed) *
Alteon review of First Draft of ISS Text Complete *
</TABLE>
* Confidential Treatment Requested
5
<PAGE> 34
<TABLE>
<S> <C>
MILESTONE
Final ISE Text Complete (already QC-ed
and Expert Reviewed) *
Final NDA Items to Quintiles for Compilation
(Except Risk-Benefit Section & Introduction
to Section 8) *
Two Day Roundtable on ISS Text Complete *
CRF Tabulations for Action I Complete *
Draft Clinical Data Summary & Quintiles' part
of Application Summary both Complete *
Final ISS Text Complete (already QC-ed
and Expert Reviewed) *
Draft Risk-Benefit Section Complete *
Alteon's review of Draft Clinical Data
Summary & Application Summary Complete *
Alteon Finalization of Risk Benefit Section Complete *
Draft Introduction to Section 8 (Clinical
Section) Complete *
Alteon Review of Introduction to Clinical
Section Complete *
Final Introduction to Clinical Section Complete. *
Final Clinical Data Summary & Quintiles' part of
Application Summary both Complete *
NDA Submitted to FDA *
</TABLE>
* Confidential Treatment Requested
6
<PAGE> 35
Note: This timeline is as Proposal 4, but with the following
changes/assumptions:
1. Alteon review of last batch of draft tables for Action I, ISE, and ISS
is completed within * days of these tables being produced.
2. There are 2 drafts of the Action II report, but only 1 draft of the
Action I report, the ISS, and the ISE.
3. Safety text from Action II study is suitable for inclusion in the ISS
without change and no additional text on safety data from Action II is
needed for the ISS. Safety text from Action I study is suitable for
inclusion in the ISS without change and no additional text on safety
data from Action I is needed for the ISS (other than for Action I data
integrated with Action II data).
4. Efficacy text from Action I study is suitable for inclusion in the ISE
without change and no additional text on efficacy data from Action I is
needed for the ISE.
5. Roundtables scheduled for Action I text, the ISE, and the ISS to take
place in RTP. Prior to the start of each session integrated written
comments (including comments from Alteon, Genentech, and any other 3rd
parties) are to be supplied to Quintiles. During these sessions text to
be modified online as far as possible, but by the end of each session
all further changes are to have been clearly identified.
6. It is assumed that no changes are needed to the text (for Action I
study report, the ISE, or the ISS) after Quintiles delivers the second
(final) version to Alteon.
7. Alteon is available at RTP to provide early input to the remaining
documents (Clinical Data Summary, part of the Application Summary, and
the Risk-Benefit Section).
8. Dates are now included for Action I and Action II AROs.
* Confidential Treatment Requested
7
<PAGE> 36
4.0 PROJECT TIMELINE FOR TASKS INVOLVING ACTION II ALONE
<TABLE>
<S> <C>
Milestone
Last Patient completes Action II study *
Draft Action II ARO To Alteon *
Alteon's Draft Action II ARO Comments to Quintiles *
Final Action II ARO to Alteon *
Action II Data Review Meeting *
Data Review Updates Complete for Action II study *
Locked Database for Action II study *
Last Action II ISS Tables Available *
Last Action II ISE Tables Available *
Alteon Review of Action II Tables Complete *
Final Action II Tables Complete *
First Draft of Action II Abbreviated Report Complete *
Alteon Review of First Draft of Action II Text Complete *
Second Draft of Action II Abbreviated Report Complete *
Alteon Review of Second Draft of Action II Text Complete *
Final Action II Abbreviated Report Complete *
CRF Tabulations for Action II Complete *
</TABLE>
* Confidential Treatment Requested
8
<PAGE> 37
5.0 SCOPE OF WORK
PROJECT MANAGEMENT
1. Quintiles will assign a Project Manager to serve as Alteon's
primary contact within Quintiles. The Project Manager is
responsible for maintaining the flow of project information to
Alteon and the Quintiles Project Team. The Project Manager
will:
o Maintain regular contact with Alteon concerning
project issues and timelines
o Conduct team meetings weekly or as needed and
generate and distribute minutes of team meetings
o Coordinate and attend the meetings for follow-up on
action items, and implementation of resolutions
o Forward reports to Alteon monthly, or as needed, and
provide internal status reports to senior Quintiles
staff
o Coordinate communications within the entire Project
Team
o Track the budget and report, clarify, and justify
budgetary issues Prepare assessment of task
completion reports. Review monthly Work in Progress
(WIP) reports. Review monthly Budget vs. Actual
reports by tasks. Prepare monthly variance analysis
and projection of overall cost to complete
o Generate and monitor timelines on a monthly, or as
needed, basis
o Monitor task completion and report to the Contracts
Manager any modifications or significant events that
could affect the administration of the contract
o Give day-to-day direction to the Quintiles Project
Team and communicate goals, deadlines, and strategy
to team members
o Ensure that ICH guidelines are adhered to for every
task associated with the NDA submission
o Provide regular updates to Alteon on the progress of
the project, including issues, and proposed
resolutions
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<PAGE> 38
BIOSTATISTICAL AND CLINICAL SCIENCES SERVICES
2. Quintiles' Biostatistical Operations and Clinical Sciences Project Team
members will provide the following services:
a. Prepare an Annotated Report Outline (ARO) for the Integrated
Summary of Safety (ISS) prior to the Pre-NDA meeting and
subsequently produce table shells (Clinical Sciences and
Biostatistics)
b. Prepare an ARO for the Integrated Summary of Efficacy (ISE)
prior to the Pre-NDA meeting and subsequently produce table
shells (Biostatistics and Clinical Sciences)
c. Prepare an ARO for the Action I study (Biostatistics and
Clinical Sciences)
d. Prepare an ARO for the Action II study (Biostatistics and
Clinical Sciences)
e. Integrate the Action I and Action II ISS Databases for the
purpose of analyzing and producing tables for the Integrated
Summaries of Safety (Programming, Biostatistics, and QC)
f. Generate the final analyses for the Action I study report
(Biostatistics, Programming, and QC)
g. Generate the final analyses for the Action II study report
(Biostatistics, Programming, and QC)
h. Generate the final analyses for the ISS tables from the Action
I study, the Action II study (a subset of the tables produced
for the Action I and Action II study reports), and in cases
where Action I and Action II data is combined (Biostatistics,
Programming, and QC)
i. Generate the final analyses for the ISE tables from the Action
I study only, which will be a subset of the analyses in the
Action I study report (Biostatistics, Programming, and QC)
j. Write the statistical methods section of the NDA covering
analyses for Tables produced by Quintiles in the ISS or ISE
(Biostatistics and QC)
k. Prepare for and participate in the Data Review Meetings for
the Action I and Action II studies (Biostatistics,
Programming, and QC)
10
<PAGE> 39
1. Generate the final data listings for the Action I and Action
II studies (Programming, Biostatistics, and QC)
m. Generate the CRF Tabulations for the Action I and Action II
studies (Programming, Biostatistics, and QC) if no FDA waiver
is obtained
n. Produce an abbreviated integrated clinical and statistical
report for the Action II study (Biostatistics, Clinical
Sciences, and QC)
o. Produce an integrated clinical and statistical report for the
Action I study (Biostatistics, Clinical Sciences, and QC)
p. Prepare ISE text (Clinical Sciences, Biostatistics, and QC)
q. Prepare ISS text (Clinical Sciences, Biostatistics, and QC)
r. Prepare remaining parts of the Clinical Section (Clinical
Sciences and QC)
s. Prepare Clinical Data Summary (Clinical Sciences and QC)
t. Prepare draft Risk-Benefit section (Clinical Sciences and QC)
3. Data Review Meetings will be held with Alteon for Action I and Action
II prior to database lock for each study.
4. Quintiles will develop AROs for the ISS, the ISE, the Action I study
report, and the Action II abbreviated study report. Two (2) draft
versions of the ISS and ISE AROs and one (1) draft version of the AROs
for the study reports will be submitted to Alteon. Quintiles will
incorporate Alteon's comments after each draft.
5. Quintiles will provide Alteon with two (2) draft versions of each of
the following: ISS table shells, ISE table shells, and additional table
shells needed for the Action I or Action II study reports (excluding
those produced by third parties). Quintiles will incorporate Alteon's
comments after each draft.
6. Quintiles will integrate the adverse events, laboratory data, and vital
signs data from the Action I and Action Il studies to form an
integrated database for safety. Partial integration (as needed for the
interaction analyses in the ISE and/or ISS) will be carried out for
demographics, medications, and medical history. No integration is
planned for ECGs, efficacy, or any other data.
11
<PAGE> 40
7. Quintiles will generate 399 tables (141 for Action I alone, a further
149 for Action II above, and a further 109 for Action I and Action II
combined), including 64 unique tables, and 20 figures for the ISS. A
full list of the ISS tables which Quintiles has assumed will be
required is provided in Appendix 1.
8. Quintiles will generate 85 tables (including 35 unique tables), and 24
figures for the ISE, all of which will be based on Action I alone. A
full list of the ISE tables which Quintiles has assumed will be
required, is provided in Appendix 2.
9. Quintiles will produce 25 data listings for the Action I study report
and 25 data listings for the Action II study report. After receipt of
one integrated set of comments from Alteon, the corresponding final
data listings will be produced in each case.
10. Quintiles will produce 215 tables for the Action I study report, 86
unique tables, and 33 figures. A total of 211 of these tables and all
figures will be identical (other than header information) to a
corresponding ISS or ISE table. A full list of the Action I tables
which Quintiles has assumed will be required is provided in Appendices
I and 2.
11. Quintiles will produce 230 tables for the Action II abbreviated study
report, 88 unique tables, and 32 figures. A total of 153 of these
tables and 11 figures will be identical (other than header information)
to a corresponding ISS table. A full list of the Action II tables which
Quintiles has assumed will be required is provided in Appendices 1 and
2.
12. Quintiles will produce CRF tabulations for the Action I and Action II
studies unless a waiver is provided by the FDA. After receipt of one
integrated set of comments from Alteon, the final CRF Tabulations will
be produced in each case.
13. Quintiles will provide Alteon with one (1) draft version of the
Statistical Methodology Section of the NDA, including details on all
statistical methodology used in the analyses carried out by Quintiles
for the ISS and ISE tables. After receipt of one integrated set of
comments from Alteon, the final version will be produced incorporating
these comments.
14. Quintiles estimates that the key draft ISS tables based on Action I
will be submitted to Alteon for review * weeks after Action I database
lock. The remaining draft ISS tables based on Action 1, except for the
AE prevalence tables, will be delivered in two further batches within *
weeks after Action I database lock. The AE prevalence tables will be
produced within * weeks of Action I database lock. Quintiles estimates
that the ISS tables based on Action
* Confidential Treatment Requested
12
<PAGE> 41
II alone will be produced in 3 batches with the first delivered * weeks
after Action II database lock, and the last delivered within * weeks of
Action II database lock. Quintiles estimates that those ISS tables
based on data combined from Action I and Action II will be submitted to
Alteon for review within * weeks of database lock for the integrated
database. In all cases one draft version of the tables will be
produced, and one final version will be produced that incorporates
Alteon's comments on the draft tables.
15. Quintiles estimates that the last draft ISE tables based on Action I
will be delivered within * weeks after Action I database lock (subject
to the set of assumptions given in Section 5 of this proposal). Some
ISE tables will be delivered in batches prior to this date. In all
cases one draft version of the tables will be produced, and one final
version will be produced that incorporates Alteon's comments on the
draft tables.
16. Quintiles estimates that those additional safety tables needed for the
Action I or Action II study reports (as specified in Appendix 1) will
be produced according to the timeline (relative to the individual
study's database lock) described in #14. Likewise Quintiles estimates
that any additional efficacy or other non-safety tables needed for the
Action I or Action 11 study reports (as specified in Appendix 2) will
be produced according to the timeline (relative to the individual
study's database lock) described in # 15.
17. Quintiles will provide Alteon with two (2) draft versions of the Action
II study report text. For the Action I study report text, the ISE text,
the ISS text, text for the remainder of the Clinical Section, and text
for the Clinical Data Summary (Item 3) Quintiles will provide one (1)
draft version. For the Risk-Benefit section Quintiles has assumed that
Alteon will finalize this document after Quintiles produces the first
draft. Roundtable discussion will be held to discuss comments on Action
I study report, ISE, Text, ISS Text. Quintiles will incorporate
comments from roundtable discussions and submit final version to
Alteon.
18. Quintiles will provide ten days of biostatistical consultation
services. Any additional biostatistical consultation will be charged to
Alteon on a fee-for-service basis.
19. Quintiles will provide two (2) attendees (one from Clinical Sciences
and one from Biostatistics) at the Pre-NDA meeting. Any additional
attendees will be billed to Alteon on a fee-for-service basis.
* Confidential Treatment Requested
13
<PAGE> 42
REGULATORY SERVICES-NDA COMPILATION AND SUBMISSION
20. Quintiles will format this NDA submission according to
specifications reviewed and approved by Alteon and meeting
current FDA guidelines. Quintiles' responsibilities will
include the overall duplication and assembly of the NDA.
This process consists of developing a table of contents and
a cross-referencing index, formatting, organizing, labeling,
paginating, duplicating, and assembling each volume.
21. Quintiles will paginate each volume of the application and
prepare a table of contents for each section. Quintiles will
perform quality assurance activities on the master copy to
assure completeness and accuracy. Quintiles will visually
inspect each page of all photocopied documents for clarity
and completeness, ensuring all pages are present and
correct.
22. The submission will follow NDA guidelines. Quintiles will
provide the master document and six (6) copies; one (1)
archival copy to FDA, one (1) review copy to FDA, three (3)
copies (and the master document to Alteon), and one (1) copy
retained by Quintiles. Checklists will be used to assure
completeness of the NDA technical sections. Quintiles will
archive its copy of the NDA for three (3) years.
23. Upon five (5) days verbal or written notice to Quintiles,
Alteon may conduct quality assurance audits of Quintiles'
operations at Quintiles at mutually agreed upon times. The
audits will include, but not be limited to, procedures for
the processing and quality assurance (QA) of the NDA
compilation. Alteon will make every effort to avoid
interfering with the routine of Quintiles' personnel during
these audits.
24. Alteon will make a final inspection of the application no
later than * weeks prior to submission to FDA. If some NDA
volumes are not compiled for submission within this time
because they arrive at Quintiles at a date later than *
weeks before submission date, Alteon will not review the
finalized volumes before submission. Any shortcomings or
revisions needed because of Quintiles' error will be
corrected by Quintiles at no cost to Alteon. Any new
additions or revisions requested by Alteon at this time will
be made at Quintiles' standard rates and may delay the
submission.
25. Quintiles will make arrangements for packing the NDA with
each carton identifying the box number, Alteon, the volume
numbers, and whether the carton contents contains archival
or review copies. Quintiles will make arrangements for
shipment of two (2) copies of the application to the FDA,
and the master and three (3) copies to Alteon.
* Confidential Treatment Requested
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<PAGE> 43
26. Quintiles will assume responsibility for FDA refusal-to-file
due to problems in format, legibility and ease to review.
Quintiles will not assume responsibility for FDA
refusal-to-file due to lack of sufficient data to support
the safety and effectiveness of Pimagedine.
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<PAGE> 44
6.0 BUDGET
The following budget is based on the assumptions, tasks, and delivery
schedules detailed in this proposal. Should the scope of the project
change or additional services be requested, a revised budget will be
submitted for Alteon's approval prior to the initiation of these
services. This quotation is valid for 90 days.
16
<PAGE> 45
ALTEON, INC.
ESTIMATED NDA BUDGET for 11 MONTHS
<TABLE>
<CAPTION>
<S> <C> <C>
NDA Preparation
o Table of Contents *
o Application Summary (Clinical Section only) *
o CMC *
o Labeling *
o Non-Clinical Pharmacology and Toxicology *
o Human PK and Bioavailability and
Clinical Pharmacology *
o Microbiology *
o Overall Clinical Summary *
o Clinical Pharmacology *
o Individual Study Reports
Action I Study Report *
Action II Study Report *
o Patent Narratives *
o Integrated Summary of Safety (Integrated
database creation, Analyses and Tables) *
o Integrated Summary of Efficacy (Analysis and Tables) *
o Integrated Summary of Benefits & Risks *
o Safety Update Report (See Optional Costs
category on next page) *
o Statistical Methods Section (ISS Methods Insert) *
o CRF Tabulations (See Optional Costs
category on next page) *
o Case Report Forms *
o Patent Information and Certification *
o NDA Compilation & Cross Referencing *
o Project Management (includes Administrative Support) *
o Clinical Pharmacology Support *
Sub-Total NDA Preparation *
CONTINUED ON NEXT PAGE
OTHER SERVICES
o NDA Strategy/Pre-NDA Meeting *
o Other Services:
Expert Consulting-Biostatistics, Clinical
Sciences and Regulatory Services *
Face to Face Client Meetings (6 meetings;
6 attendees at each) *
Teleconference Client Meetings (Weekly;
8 attendees at each) *
Project Startup and Planning *
SUB-TOTAL OTHER SERVICES *
TOTAL SERVICES *
MISCELLANEOUS COSTS
o Travel
Client Meetings *
6 meetings at Alteon; 6 attendees at each
meeting
Pre-NDA Meeting *
o Telephone, Supplies, and Computer Support *
o Shipping of NDA Volumes
Hand Delivery of NDA to FDA (based on
2 copies of 90 volume submission) *
Federal Express Delivery of remaining
4 copies of 90 volume application to
Alteon *
Sub-Total Miscellaneous Costs *
TOTAL NDA BUDGET COST *
</TABLE>
<PAGE> 46
<TABLE>
<CAPTION>
<S> <C>
OPTIONAL COSTS (Not Included in Total Budget Costs)
o Safety Update Report *
o CRF Tabulations *
o Action II efficacy tables and text in ISE *
Subtotal Optional Costs *
Total Costs Including Optional Costs *
</TABLE>
* Confidential Treatment Requested
<PAGE> 47
7.0 BUDGET NOTES
Quintiles' scope of work for the NDA Preparation for Pimagedine includes
Regulatory Affairs Consulting, Clinical Sciences, Biostatistics, Programming,
QC, and Project Management services. Assumptions are based on discussions
between Quintiles and Alteon. Deviations in these assumptions may require a
modification to the budget and/or timelines.
GENERAL NOTES
Quintiles' participation in this project is based on * consecutive months
beginning *. Should the time line increase/decrease, the budget will be adjusted
accordingly.
The budget is based on Quintiles' 1998 daily rates. If the Services hereunder
last longer than one (1) year, Quintiles' costs may be increased at the
beginning of each year, commencing one year after the date the Agreement is
executed, to reflect increases or decreases in Quintiles' costs on a prospective
basis only. Quintiles' costs may be increased or decreased for the next twelve
(12) month period using the percentage change in the wages/earnings survey as
published in The Economist for the applicable currencies over the preceding
twelve (12) month period.
Any costs associated with audits performed by Alteon at Quintiles' facilities
will be invoiced to Alteon at cost.
BIOSTATISTICAL AND CLINICAL SCIENCES SERVICES
Costs for error resolution for the following data to be received from external
vendors have not been included in the budget: Covance laboratory data, Scripps
Labs' data, Fundus photography data (University of Wisconsin, Madison), GFR data
(from Covance), the Quality of Life data (from Reilly Associates), and plasma
pimagedine data (from Alteon).
Quintiles has assumed that a final transfer of all data from each vendor will be
received as locked databases no later than * for the Action I study and no later
than * for the Action II study. Quintiles assumes that at least 2 interim
transfers of each of these databases will be received (at approximately * months
prior to the last patient visit and at * months prior to the last patient visit
for the Action I study and at approximately * weeks and * weeks prior to the
last patient visit for the Action II study). Quintiles will carry out checks
prior to database lock to determine and seek error resolution for any systematic
problems or inconsistencies found in each of these
* Confidential Treatment Requested
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<PAGE> 48
databases. However, it is assumed that final responsibility for locking each
vendor database will reside with each individual vendor. Any additional costs
incurred by Quintiles as a result of errors or inconsistencies in any of the
databases delivered to Quintiles as a locked database will be billed on a
fee-for-service basis. This will include costs for re-running analysis files or
tables.
Quintiles has assumed that no changes to the definition of the Per Protocol
population will take place after database lock. Any costs (due to re-programming
analysis files and re-running tables) as a result of changes to the definition
of the Per Protocol population after database lock will be billed on a
fee-for-service basis.
Quintiles has assumed that adverse events of special interest (including the
exact definition of flu syndrome) for the NDA will have been defined (or the
rule for selecting them has been defined) by *. Any costs (due to re-programming
analysis files and re-running tables) as a result of changes to the definition
of special interest adverse events after * will be billed on a fee-for-service
basis.
Quintiles has budgeted for a data review meeting for the Action I study and a
data review meeting for the Action II study with an anticipated date of *
working days prior to database lock in each case. For these meetings Quintiles
will provide data dumps (SAS Proc Prints of raw data) for all CRF data only. In
addition, frequencies (for binary data), and the highest and lowest values as
well as quantiles (for continuous data) will be provided for CRF data on the
following variables: key disposition variables, demographics, the primary
efficacy parameter, adverse events, and key laboratory parameters (including
those which are key secondary parameters). Any outstanding discrepant dates or
other questionable or missing information related to the primary efficacy
parameter will be fully summarized. It is assumed that no new DCFs will be
issued as a result of discussions at the data review meetings, as otherwise
delays are likely to result for all subsequent deliverables.
Costs to develop the Integrated Summary of Safety (ISS) Annotated Report Outline
(ARO), Integrated Summary of Efficacy (ISE) ARO, Action I ARO, Action II ARO,
ISS Table Shells, ISE Table Shells, ISS Tables, ISE Tables, Data Listings for
Action I and Action II, CRF Tabulations for Action I and Action II (if no FDA
waiver is given), text for the Action I integrated clinical and statistical
study report, text for the Action II abbreviated integrated clinical and
statistical study report, ISE text, ISS text, text for the remainder of the
Clinical Section, text for the Clinical Data Summary, text for the Risk-Benefit
section, and text for the Statistical Methodology section of the NDA have all
been included in the budget. Those tables to be included in the ISS, the ISE,
the Action I study report, and the Action II abbreviated study report are
specified in Appendices 1 and 2. Estimated costs include one round of review and
incorporation of consolidated comments from Alteon to create the final version
for all Tables, Data Listings, CRF Tabulations, Action I ARO, Action II ARO,
text for the Action I study
* Confidential Treatment Requested
19
<PAGE> 49
report, ISE text, ISS text, text for the remainder of the Clinical Section, text
for the Clinical Data Summary, and Statistical Methodology text. Estimated costs
for the ISS ARO, the ISE ARO, Table Shells, and text for the Action II
abbreviated study report, allow for two rounds of review and incorporation of
comments. In all cases it is assumed that Alteon provides one integrated set of
comments (including comments from George Washington University and any other
third parties). For the Risk-Benefit section costs assume that Quintiles will
produce one draft version after which Alteon will finalize the document.
It is assumed that the final SAE documentation (SAE reporting and source
documentation) is received from all investigator sites by * for the Action I
study and * for the Action II study.
Any additional tables, figures, or listings Alteon requires outside of the
approved AROs for the ISS, the ISE, the Action I study, or the Action II study
will be discussed and any additional fees negotiated with Alteon.
All patient narratives will be prepared by Alteon. Should Alteon request that
Quintiles prepare patient narratives, Quintiles will provide Alteon a cost
estimate for development of patient narratives.
At Alteon's request, Quintiles will send printouts of the concomitant medication
and AE coding mappings on two occasions, once prior to Action II database lock
and once prior to Action I database lock. Quintiles has assumed that all
Quintiles and Alteon reconciliation between Quintiles' coding dictionaries and
the coding dictionaries used in other studies (including the ESRD study
conducted by ACER/EXCEL) will have taken place prior to Action II database lock.
Quintiles estimated dates for production of the ISE and ISS tables assume that
no changes to coding dictionaries occur after Action Il database lock for terms
that are present in Action II, and no changes occur after Action I database lock
for terms that are present in Action I. In addition, any costs (due to
re-running analysis files or tables) as a result of changes in coding after
database lock will be billed on a fee-for-service basis.
Costs for 10 days of expert consulting each from the Biostatistics, Clinical
Sciences and Regulatory departments have been included in the budget. Estimated
costs are based on daily rates of $* for Biostatistics; $* for Clinical Sciences
and $* for Regulatory. Any additional expert consultancy above 10 days from any
of these departments will be billed on a fee-for-service basis.
Costs have been included for two (2) Quintiles' attendees (one from Clinical
Sciences and one from Biostatistics) at the Pre-NDA meeting. Any additional
attendees at Alteon's request will be billed to Alteon on a fee-for-service
basis.
* Confidential Treatment Requested
20
<PAGE> 50
Costs have been included for Quintiles' expert review of the text for the ISS,
the ISE, the Action I study report, the Action II abbreviated study report, the
remainder of the Clinical Section, the Clinical Data Summary, and the
Risk-Benefit section by Clinical Sciences, the Project Medical Officer (or
another M.D.), Regulatory, and Biostatistics. For the statistical methodology
section and all AROs costs have been included for expert reviews by
Biostatistics, Clinical Sciences, and Regulatory. For tables and table shells
costs include expert review by Biostatistics and Clinical Sciences. For data
listings and CRF tabulations (if required) costs include expert review by
Biostatistics. All expert reviews will be carried out prior to delivery of these
items to Alteon.
Costs are included for a QC review of all deliverables of AROs, table shells,
tables, data listings, CRF tabulations, and text. These QC reviews will have
taken place prior to delivery of the items to Alteon.
Quintiles will generate 399 tables (141 for Action I alone, a further 149 for
Action II alone, and a further 109 for Action I and Action II combined),
including 64 unique tables, and 20 figures for the ISS. A full list of the ISS
tables which Quintiles has assumed will be required is provided in Appendix 1.
Quintiles will generate 85 tables (including 35 unique tables), and 24 figures
for the ISE, all of which will be based on Action I alone. A full list of the
ISE tables which Quintiles has assumed will be required, is provided in Appendix
2.
Quintiles will produce 215 tables for the Action I study report, 86 unique
tables, and 33 figures. A total of 211 of these tables and all figures will be
identical (other than header information) to a corresponding ISS or ISE table. A
full list of the Action I tables which Quintiles has assumed will be required is
provided in Appendices 1 and 2.
Quintiles will produce 230 tables for the Action II abbreviated study report, 88
unique tables, and 32 figures. A total of 153 of these tables and 11 figures
will be identical (other than header information) to a corresponding ISS table.
A full list of the Action II tables which Quintiles has assumed will be required
is provided in Appendices 1 and 2.
Additional analyses outside of the lists of tables provided in Appendices 1 and
2 can be provided, on a fee-for-service basis. However, certain additional ISE
analyses (including any exploratory analyses, any reasonable case analysis, and
any additional figures) may take longer than 7 weeks after database lock.
It is assumed that a total of 25 data listings will be produced for the Action I
study and 25 data listings will be produced for the Action II study.
Quintiles would recommend that Alteon seek a waiver from the FDA for CRF
tabulation production. However, if Alteon does not receive a waiver, Quintiles
estimates that CRF
21
<PAGE> 51
tabulation production for Action I and Action II would cost approximately $*
altogether.
It is assumed that the statistical methodology section of the NDA will be at
most 60 pages of text (at 1.5 line spacing). Further, it is assumed to cover
only statistical methodology corresponding to analyses produced by Quintiles in
the ISS or ISE, together with analysis discussion in the text of the ISS or ISE
by Quintiles. These methods will be discussed in the stats trial methodology
section of the NDA based on the methods sections from the corresponding study
reports. It is assumed that statistical methodology for analysis of Quality of
Life and plasma pimagedine will be provided to Quintiles as drop-in sections.
Quintiles has assumed that no tables from any study other than Action I and
Action II will be required for the ISS and no tables from any study other than
Action I will be required for the ISE. If additional tables are required from
other studies in the ISS or ISE then these will be billed on a fee-for-service
basis. ISS or ISE tables produced from studies other than Action I and Action II
may take longer than those produced for Action I and II.
Costs include tasks required to produce the key draft ISS tables for Action I
within * weeks of Action I database lock and the remaining draft ISS tables
(except for AE prevalence tables) for Action I will be delivered in * batches at
weekly intervals over the following * weeks. Costs also include tasks required
to produce AE prevalence tables within a further * weeks. Those tables which
correspond to the "key" ISS text (as defined by Alteon) will be given highest
priority. However, exactly which tables will be included in each of the these *
batches is also dependent on data-driven issues.
Costs include tasks required to produce ISS tables based on Action II alone in 3
batches with the first delivered within * weeks of Action II database lock and
the last delivered within * weeks of database lock. Costs for production of the
integrated ISS database assume that adverse events, laboratory data, and vital
signs is the only safety data that is fully integrated, and that this is based
only on Action I and Action II. It is further assumed that the only data that is
partially integrated is that part of the demographics, medications, and medical
history needed for the interaction analyses in the ISS and the ISE. It is
assumed that ECGs, efficacy data, and all other data will not be integrated at
all. Quintiles estimates that those ISS tables based on the integrated database
will be submitted to Alteon within * weeks of the integrated database lock.
Costs for the ISE assume that the last draft table for Action I from the list
specified in Appendix 2 will be produced within * weeks after Action I database
lock (subject to the assumptions set out in this proposal). Some ISE tables will
be delivered in batches prior to this date, but exactly which tables will be
included in any particular batch is highly dependent on data-driven issues.
Those tables corresponding to the most
* Confidential Treatment Requested
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<PAGE> 52
important efficacy parameters will be given the highest priority. However, it is
anticipated that those analyses based on survival endpoints (including analysis
for the primary efficacy parameter) will be in a later batch as they are likely
to be most affected by (data-driven) special cases, which arise very shortly
before database lock.
Quintiles estimates that any additional safety tables needed for the Action I or
Action II study reports will be produced according to the timeline (relative to
the individual study's database lock) described above. Likewise Quintiles
estimates that any additional efficacy or other non-safety tables needed for the
Action I or Action II study reports will be produced according to the timeline
(relative to the individual study's database lock) described above.
For the ISE and for the Action II efficacy analyses Quintiles has assumed that
the programs written by George Washington University to produce the ESMC
analyses (except for any code that reveals information that would unblind a
patient) will be received electronically by *. Further, it is assumed that any
additional code covering information related to a patient's treatment
assignment, together with all results from interim analyses will be provided
electronically * after unblinding.
For the ISE, it is further assumed that agreement is reached between Quintiles,
George Washington University, and Alteon by * for Action I and Action II on all
analyses and all data analysis rules to be used in the ISS/ISE, the Action I and
Action II study reports, and in the interim and final analyses to be carried out
by George Washington University for either study. If different analysis rules
are followed by George Washington University or Alteon compared with the rules
to be adopted by Quintiles in the ISE and the ISS, then additional costs will
result for the reconciliation of these results with the results produced by
Quintiles. This will be billed on a fee-for-service basis. Alteon will be
alerted to any differences in analysis rules prior to reconciliation.
It is assumed that Quintiles writes the Action I Integrated Clinical &
Statistical Study report. The results section is assumed to be based on the 215
tables specified in Appendices 1 and 2 (85 tables identical to Action I ISE
tables a further 126 tables identical to Action I ISS tables and 4 additional
tables). It is assumed that methods and results sections covering plasma
pimagedine data, (including relationship of plasma pimagedine to efficacy or
safety) and Quality of Life date will be written by their corresponding vendors
or will be written by Alteon, and it is assumed that these sections will be
supplied to Quintiles as drop-in sections and that these will use section
numbering as specified by Quintiles. Further, it is assumed that text covering
results for Quality of life and plasma pimagedine data for the ISE (and for the
ISS if appropriate) will be supplied as a drop-in section.
It is assumed that Quintiles writes the Action II abbreviated Integrated
Clinical &
* Confidential Treatment Requested
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<PAGE> 53
Statistical Study. The results section is assumed to be based on the 209 tables
specified in Appendices 1 and 2 (153 tables identical to Action II ISS tables,
and 77 additional tables). It is assumed that methods and results sections
covering plasma pimagedine data and Quality of Life will be written by their
corresponding vendors or will be written by, (including relationship of plasma
pimagedine to efficacy or safety) Alteon. It is assumed that these sections will
be supplied to Quintiles as drop-in sections and that these will use section
numbering as specified by Quintiles. Further, it is assumed that text covering
results for Quality of life and plasma pimagedine data for the ISE (and for the
ISS if appropriate) will be supplied as a drop-in section.
Quintiles has assumed that an integrated set of comments is received from Alteon
within * days of shipment of each batch of ISS or ISE tables. Further, Quintiles
has assumed that draft tables will be revised to produce final tables as
indicated by the integrated comments from Alteon, within at most * weeks of
receipt of comments, except for the last batch of ISE tables where revised
tables will be shipped within * of receiving comments. This timeline assumes
that as a result of Alteon's comments on each batch of ISS or ISE tables, no new
tables are required, no additions to tables are required, no changes are made to
any definitions, and no additional exploratory analyses are needed.
Quintiles has assumed that Alteon is able to obtain FDA agreement to the ISS
ARO, the ISE ARO, and the data analysis rules for the ISS and ISE by *.
Quintiles also assumes that no additional analyses are required as a result of
the Pre-NDA meeting scheduled for *. If such additional analyses are required
then these will be billed on a fee-for-service basis and this is likely to
impact on the NDA timeline.
Quintiles has assumed that all data on patients who are lost to follow-up
(including any additional data collected as a result of active searching for
these lost to follow-up patients) is received at Quintiles by * for Action I
patients and by * for Action II patients.
Quintiles has assumed that the last DCF for any data retrieved for lost to
follow-up patients is resolved by * for Action I patients and by * for Action II
patients. Any delays in receipt of this information may lead to delays in all
subsequent dates on the timeline.
This budget estimate does not include costs for Quintiles to scan CRFs. Any
support provided by Quintiles in connection with the scanning of CRFs have not
been included in the budget. If required, this support will be invoiced to
Alteon at a daily rate of $*.
In order to lock the database for Action II within * months of the last patient
visit it is assumed that all CRF pages are available be collected at the last
monitoring visit (estimated to be on *). Further, it is assumed that all DCFs
receive a
* Confidential Treatment Requested
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<PAGE> 54
resolution from the sites within *.
It is assumed that the Action II abbreviated study report will be at most 120
pages in length (from Introduction to Conclusions based on 1.5 spacing) with
25-30 panels (in-text tables). No cost for patient narratives has been included,
but if it is required for Quintiles to produce these then they will be charged
on a fee-for-service basis.
It is assumed that the Action I study report will be 150-160 pages in length
(from Introduction to Conclusions based on 1.5 spacing) with 30-40 panels
(in-text tables). No cost for patient narratives has been included, but if it is
required for Quintiles to produce these then they will be charged on a
fee-for-service basis.
Quintiles costs and timelines assume that for the ISE only Action I will be
summarized from tables included in the ISE itself. It is also assumed that the
only additional studies summarized in the ISE text will be Action II and the
Dyslipidemia study. Costs for the ISE assume that there will be 150-200 pages of
text (at 1.5 line spacing).
Quintiles has also given separate costs for including tables based on Action II
in the ISE. In this option, such tables would be a subset of the tables produced
for the Action II study report and would differ from study report only in header
information.
Quintiles costs and timelines assume that for the ISS only Action I and Action
II will be summarized from tables included in the ISS itself. It is also assumed
that the only additional studies summarized in the ISS text will be those
studies listed in Appendix 3. Costs for the ISS assume that there will be
250-300 pages of text (at 1.5 line spacing).
Costs and timelines for the ISE and ISS text writing assume that Quintiles is
not responsible for production of analyses, tables, or study report text for any
studies other than Action I or Action II. Further, it is assumed that for all
studies other than Action I and Action II a final and complete study report
together with a set of tables is provided to Quintiles by *. In addition it is
assumed that final and complete information is received on deaths, serious
adverse events, and adverse events that caused discontinuation for all of these
additional studies by *.
It is assumed that Alteon will be responsible for preparing all text for the
NDA, other than the Statistical Methodology section, ISE, ISS, remainder of the
Clinical Section, the Clinical Data Summary, the Risk-Benefit section, the
Action I study report, and the Action II abbreviated study report.
Quintiles has also included as an option, costs for the 120 day Safety Update.
This assumes that there will be 40-45 tables, and 100-120 pages of text (at 1.5
line spacing). Costs have been included for one (1) draft version after which
Quintiles will incorporate Alteon's comments to produce the final version. The
costs assume that the tables will be
* Confidential Treatment Requested
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<PAGE> 55
based only on data from Action I extension study and AE updates to Action I data
in the NDA if needed. Any additional data for the ESRD study will be discussed
in the text only.
NDA COMPILATION AND SUBMISSION
Quintiles has estimated the NDA to be 90 volumes. Labor costs associated with
the compilation of six (6) copies of the application have been included in the
budget. Labor costs for each additional copy over six (6) is estimated at $* per
copy.
For every volume over 90, an additional cost of $* per volume will be added. Any
changes to a paginated volume requested by Alteon will also incur an additional
cost of $* per volume. The estimated cost for the hand delivery of the
application to the FDA is $*. This cost has been included in the budget. If
Alteon desires to use Federal Express in lieu of hand delivery, the estimated
cost would be approximately $*. These estimates are based on the delivery of 180
volumes to the FDA (2 copies of a 90 volume submission). Actual delivery or
shipping costs for the final NDA submission will be invoiced to Alteon at cost.
The estimated cost for shipping the NDA to Alteon via Federal Express is $* per
copy. The budget includes the shipping of 4 copies to Alteon (one master and
three copies).
PROJECT MANAGEMENT
Quintiles has included an estimated cost for providing Alteon with study
progress reports, as needed.
Cost estimates include six client meetings with Alteon (at Alteon) have been
included in the budget. It is estimated that six project team members from
Quintiles will attend the face-to-face client meetings.
Costs have also been included for weekly teleconferences between Alteon and
Quintiles in the budget. It is estimated that eight project team members from
Quintiles will participate in these weekly teleconferences.
* Confidential Treatment Requested
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<PAGE> 56
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
Table Numbering Conventions:
1. All tables have numbers of the form X.X.X.
2. The first level (1.X.X, 2.X.X, etc) represents the nature of the data,
e.g., Patient Descriptives, AEs, Labs, etc.
3. The second level (X.1, X.2, X.3) indicates whether the table is based
on the Action I data (X. 1), or the Action II data (X. 2), or the
integrated database (X.3).
4. The third level (X.X.1, X.X.2, etc) represents the table number within
this data type-study combination.
5. Missing table numbers in any column indicates that the corresponding
tables will not be produced for that data (Action I, Action II, or
IDB).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PATIENT DESCRIPTIVES
- ----------------------------------------------------------------------------------------------------------------------
Patient Disposition - Study completion and treatment cessation 1.1.0 1.2.0 1.3.0
information - Enrolled patients (including information on
discontinuations due to dialysis and/or transplantation)
- ----------------------------------------------------------------------------------------------------------------------
Listing of patients excluded from the ITT population 1.1.1 1.2.1
- ----------------------------------------------------------------------------------------------------------------------
Patient Disposition by Center - Number of Patients Enrolled, Evaluated, 1.1.2 1.2.2
Ceased Treatment, and Dropped Out at each Center
- ----------------------------------------------------------------------------------------------------------------------
Patient disposition by visit (This table will show the number of 1.1.3 1.2.3
patients on-treatment at the protocol correct dose, on-treatment at the
protocol incorrect dose, off-treatment, dropped out, and lost to follow-up
at each visit for each treatment)
- ----------------------------------------------------------------------------------------------------------------------
Number of Patients with Major Protocol Deviations 1.1.4 1.2.4
- ----------------------------------------------------------------------------------------------------------------------
Listing of Patients with Major Protocol Deviations 1.1.5 1.2.5
- ----------------------------------------------------------------------------------------------------------------------
COMPLIANCE AND EXPOSURE TO STUDY MEDICATION
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 1
<PAGE> 57
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total duration of exposure to study medication overall and by 6-month 2.1.0 2.2.0 2.3.0
intervals (not accounting for gaps in study medication administration)
- ----------------------------------------------------------------------------------------------------------------------
Duration of exposure to study medication overall and by 6-month 2.1.1 2.2.1
intervals (accounting for gaps in study medication administration)
- ----------------------------------------------------------------------------------------------------------------------
Dose Titration (Including information on the number of times the dose 2.1.2 2.2.2
was changed, number of times patient was taken off study medication,
overall and by reason)
- ----------------------------------------------------------------------------------------------------------------------
Study medication compliance (This table will show the number of patients 2.1.3 2.2.3
in each of the following categories - < 80% compliance, 80%-120%
compliance, and > 120% compliance)
- ----------------------------------------------------------------------------------------------------------------------
DEMOGRAPHICS, BACKGROUND CHARACTERISTICS, AND MEDICAL HISTORY
- ----------------------------------------------------------------------------------------------------------------------
Patient demographics (age, age category, sex, race, weight, weight 3.1.0 3.2.0 3.3.0
category, height, BMI)
- ----------------------------------------------------------------------------------------------------------------------
Background Characteristics (smoking, duration of diabetes, Baseline 3.1.1 3.2.1 3.3.1
HbA1c, Baseline serum creatinine, Baseline GFR, Baseline proteinuria,
Baseline 24-hour urine creatinine clearance, Systolic BP, Systolic BP
category, Diastolic BP, Diastolic BP category, Insulin type, Insulin
daily dose, Baseline Triglycerides, Baseline Total cholesterol, Baseline
HDL cholesterol, Baseline LDL cholesterol, Total cholesterol to HDL ratio,
and for Action II only - cardiovascular morbidity)
- ----------------------------------------------------------------------------------------------------------------------
Medical History (including body system categories and several groups of 3.1.2 3.2.2 3.3.2
parameters from Baseline ECG form)
- ----------------------------------------------------------------------------------------------------------------------
PRIOR AND CONCOMITANT MEDICATIONS
- ----------------------------------------------------------------------------------------------------------------------
Incidence of prior medications at baseline In Appendix Table A1.0 of study report
only
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 2
<PAGE> 58
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Incidence of concomitant medications taken prior to randomization In Appendix Table A2.0 of study report
only
- ----------------------------------------------------------------------------------------------------------------------
Incidence of key concomitant medications taken during the double-blind 4.1.0 4.2.0 4.3.0
treatment period [ACE inhibitors, [beta symbol]-blockers, diuretics,
Calcium channel antagonists, insulin (overall and by type), each prohibited
medication + for Action II only: troglitazone, sulfonylureas, metformin,
[alpha symbol]-glucosidase inhibitors, lipid lowering agents]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of concomitant medications taken during the double-blind A1.0 A1.1
treatment period
- ----------------------------------------------------------------------------------------------------------------------
ADVERSE EVENTS
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events 5.1.0 5.2.0 5.3.0
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Adverse Events in first 12 weeks by 2 week intervals 5.1.1 5.2.1 5.3.1
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Adverse Events by 3-month intervals 5.1.2 5.2.2 5.3.2
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Adverse 5.1.3 5.2.3 5.3.3
Events in first 12 weeks by 2 week intervals (based on
treatment-emergence relative to the start of the interval)
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Adverse Events by 3-month intervals 5.1.4 5.2.4 5.3.4
(based on treatment-emergence relative to the start of the interval)
- ----------------------------------------------------------------------------------------------------------------------
Cumulative Incidence of Treatment Emergent Adverse Events in first 12 5.1.5 5.2.5 5.3.5
weeks by 2 week intervals (based on treatment-emergence relative to the
time of randomization)
- ----------------------------------------------------------------------------------------------------------------------
Cumulative Incidence of Treatment Emergent Adverse Events by 3 month 5.1.6 5.2.6 5.3.6
intervals (based on treatment-emergence relative to the time of
randomization)
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events by Severity 5.1.7 5.2.7 5.3.7
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 3
<PAGE> 59
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Overall Incidence of Treatment Emergent Adverse Events by Drug 5.1.8 5.2.8 5.3.8
Relationship
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events by Severity and 5.1.9 5.2.9 5.3.9
Drug Relationship
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events of Special 5.1.10 5.2.10 5.3.10
Interest by Preferred Term
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Adverse Events of Special Interest in first 12 weeks by 2 5.1.11 5.2.11 5.3.11
week intervals
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Adverse Events of Special Interest by 3-month intervals 5.1.12 5.2.11 5.3.11
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Adverse Events of Special Interest in 5.1.13 5.2.13 5.3.13
first 12 weeks by 2 week intervals (based on treatment-emergence
relative to the start of the interval)
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Adverse Events of Special Interest by 3 5.1.14 5.2.14 5.3.14
month intervals (based on treatment-emergence relative to the start of
the interval)
- ----------------------------------------------------------------------------------------------------------------------
Cumulative Incidence of Treatment Emergent Adverse Events of Special 5.1.15 5.2.15 5.3.15
Interest in first 12 weeks by 2 week intervals (based on
treatment-emergence relative to the time of randomization)
- ----------------------------------------------------------------------------------------------------------------------
Cumulative Incidence of Treatment Emergent Adverse Events of Special 5.1.16 5.2.16 5.3.16
Interest by 3 month intervals (based on treatment-emergence relative to
the time of randomization)
- ----------------------------------------------------------------------------------------------------------------------
WITHDRAWALS DUE TO ADVERSE EVENTS
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events Leading to 6.1.0 6.2.0 6.3.0
Permanent Discontinuation of Study Medication
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Adverse Events Leading to 6.1.1 6.2.1 6.3.1
Temporary Discontinuation of Study Medication
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 4
<PAGE> 60
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Incidence of Treatment Emergent Adverse Events Leading to Permanent 6.1.2 6.2.2 6.3.2
Discontinuation in first 12 weeks by 2 week intervals
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Adverse Events Leading to Permanent 6.1.3 6.2.3 6.3.3
Discontinuation by 3-month intervals
- ----------------------------------------------------------------------------------------------------------------------
Listing of Adverse Events Leading to Permanent Discontinuation of 6.1.4 6.1.4 6.1.4
Treatment (part of) (part of)
- ----------------------------------------------------------------------------------------------------------------------
SERIOUS ADVERSE EVENTS
- ----------------------------------------------------------------------------------------------------------------------
Overall Incidence of Treatment Emergent Serious Adverse Events 7.1.0 7.2.0 7.3.0
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Serious Adverse Events in first 12 weeks by 2 week 7.1.1 7.2.1 7.3.1
intervals
- ----------------------------------------------------------------------------------------------------------------------
Prevalence of Serious Adverse Events by 3-month intervals 7.1.2 7.2.2 7.3.2
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Serious Adverse Events in first 12 weeks 7.1.3 7.2.3 7.3.3
by 2 week intervals
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment Emergent Serious Adverse Events by 3-month 7.1.4 7.2.4 7.3.4
intervals
- ----------------------------------------------------------------------------------------------------------------------
Listing of All Serious Adverse Events 7.1.5 7.1.5 7.1.5
(part of) (part of)
- ----------------------------------------------------------------------------------------------------------------------
DEATHS
- ----------------------------------------------------------------------------------------------------------------------
Incidence of all Deaths-- by Cause of Death (In the Action II study 8.1.0 8.2.0 8.3.0
separate section of table will be included giving cause of death as
adjudicated by the cardiovascular mortality and morbidity committee and
cause of death as reported on the serious adverse events report form)
- ----------------------------------------------------------------------------------------------------------------------
Listing of all Deaths 8.1.1 8.1.1 8.1.1
(part of) (part of) (part of)
- ----------------------------------------------------------------------------------------------------------------------
LABORATORY MEASURES
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 5
<PAGE> 61
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.0 9.2.0 9.3.0
at each visit - Hematology (Hemoglobin, Hematocrit, RBC Count, WBC
Count, Platelet Count, Reticulocyte Count, MCV + Iron parameters) [by
6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.1 9.2.1 9.3.1
at each visit - Liver Function Tests (Total Alkaline Phosphatase, Bone
Specific Alkaline Phosphatase, LDH, AST, ALT, Total Bilirubin) [by
6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.2 9.2.2 9.3.2
at each visit - Kidney Function Test (BUN) [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.3 9.2.3 9.3.3
at each visit - Serum Protein and Uric Acid Levels (Total Protein,
Albumin, Uric Acid) [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.4 9.2.4 9.3.4
at each visit - Electrolytes & CO2 [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.5 9.2.5 9.3.5
at each visit - Lipids (Total Cholesterol, Triglycerides, LDL cholesterol
& HDL cholesterol) [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.6 9.2.6 9.3.6
at each visit - Glycemic Control Tests (HbA1c, Fasting Blood Glucose)
[by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and change from Baseline Values Post-Baseline 9.1.7 9.2.7 9.3.7
at each visit - Serological Markers (MPO, ANCA, ANA) [by 6 month
intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 6
<PAGE> 62
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Actual Values and Actual Frequencies at Baseline and Change from 9.1.8 9.2.8 9.3.8
Baseline Values Post-Baseline and Change from Baseline Frequencies
Post-Baseline at each visit - Urinalysis (pH, Specific Gravity, Casts, ------------------------------------------
RBC, WBC, Glucose, Protein) [by 6 month intervals for IDB] Glucose & Protein will be presented only
in Action I & II study reports
- ----------------------------------------------------------------------------------------------------------------------
Actual Values at Baseline and Change from Baseline Values Post-Baseline 9.1.9 9.2.9 9.3.9
at each visit - 24 hour Urine Collections (Creatinine, Urea Nitrogen,
Calcium, Phosphorus, & Hydroxyproline) [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.10 9.2.10
by visit - Hematology [Overall includes separate counts for 1, 2, or 3
consecutive CI values. By visit results are for prevalence of CI values
for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.11 9.2.11
by visit - Liver Function Tests [Overall includes separate counts for 1,
2, or 3 consecutive CI values. By visit results are for prevalence of CI
values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.12 9.2.12
by visit - Kidney Function Test [Overall includes separate counts for 1,
2, or 3 consecutive CI values. By visit results are for prevalence of CI
values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.13 9.2.13
by visit - Serum Protein and Uric Acid Levels [Overall includes separate
counts for 1, 2, or 3 consecutive CI values. By visit results are for
prevalence of CI values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 7
<PAGE> 63
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.14 9.2.14
by visit - Electrolytes and CO2 [Overall includes separate counts for 1,
2, or 3 consecutive CI values. By visit results are for prevalence of
CI values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.15 9.2.15
by visit - Lipids [Overall includes separate counts for 1, 2, or 3
consecutive CI values. By visit results are for prevalence of CI values
for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.16 9.2.16
9.1.16 9.2.16 by visit - Glycemic Control Tests [Overall includes separate
counts for 1, 2, or 3 consecutive CI values. By visit results are for
prevalence of CI values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Treatment-emergent Clinically Important Values overall and 9.1.17 9.2.17
by visit - Serological Markers [Overall includes separate counts for
1, 2, or 3 consecutive CI values. By visit results are for prevalence of
CI values for patients who are not CI at baseline]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of Significant Upper GI Endoscopy Measurements (Lanza Scale 9.1.18 9.2.18
Score > 3) - overall and by visit
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.19 9.2.19 9.3.10
Last value) - Hematology
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.20 9.2.20 9.3.11
Last value) - Liver Function Tests
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.21 9.2.21 9.3.12
Last value) - Kidney Function Test
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 8
<PAGE> 64
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.22 9.2.22 9.3.13
Last value) - Serum Protein and Uric Acid Levels
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.23 9.2.23 9.3.14
Last value) - Electrolytes and CO2
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.24 9.2.24 9.3.15
Last value) - Lipids
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.25 9.2.25 9.3.16
Last value) - Glycemic Control Tests
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.26 9.2.26 9.3.17
Last value) - Serological Markers
- ----------------------------------------------------------------------------------------------------------------------
Shift Tables Based on Normal Ranges (Baseline to Minimum, Maximum, & 9.1.27 9.2.27 9.3.18
Last value) - 24 hour Urine Collections
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Hematology A2.0 A2.1
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Liver A3.0 A3.1
Function Tests
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Kidney A4.0 A4.1
Function Test
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Serum Protein A5.0 A5.1
And Uric Acid Levels
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Electrolytes A6.0 A6.1
and CO2
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important A7.0 A7.1
Laboratory Abnormalities - Lipids
- ----------------------------------------------------------------------------------------------------------------------
Listing of Clinically Important Laboratory Abnormalities - Glycemic A8.0 A8.1
control tests
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 9
<PAGE> 65
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Listing of Clinically Important Laboratory Abnormalities - Serological A9.0 A9.1
Markers
- ----------------------------------------------------------------------------------------------------------------------
VITALS SIGNS
- ----------------------------------------------------------------------------------------------------------------------
Sitting Vital Signs - Systolic Blood Pressure - Actual Values at 10.1.0 10.2.0 10.3.0
Baseline and Change from Baseline at each visit [by 6 month intervals
for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Sitting Vital Signs - Diastolic Blood Pressure - Actual Values at 10.1.1 10.2.1 10.3.1
Baseline and Change from Baseline at each visit [by 6 month intervals
for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Sitting Vital Signs - Heart Rate - Actual Values at Baseline and Change 10.1.2 10.2.2 10.3.2
from Baseline [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Standing Vital Signs - Systolic Blood Pressure - Actual Values at 10.1.3 10.2.3 10.3.3
Baseline and Change from Baseline at each visit [by 6 month intervals
for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Standing Vital Signs - Diastolic Blood Pressure - Actual Values at 10.1.4 10.2.4 10.3.4
Baseline and Change from Baseline at each visit [by 6 month intervals
for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Standing Vital Signs - Heart Rate - Actual Values at Baseline and Change 10.1.5 10.2.5 10.3.5
from Baseline at each Visit [by 6 month intervals for IDB]
- ----------------------------------------------------------------------------------------------------------------------
Incidence of clinically relevant vital signs abnormalities overall and 10.1.6 10.2.6
by 6 month visits - (clinically relevant abnormalities will be based on
the FDA Division of Neuropharmacological Products guideline. Results at
6 month visits are based on cumulative incidence)
- ----------------------------------------------------------------------------------------------------------------------
Listing of clinically relevant vital signs abnormalities A10.0 A10.1
- ----------------------------------------------------------------------------------------------------------------------
ECGS
- ----------------------------------------------------------------------------------------------------------------------
QRS and Qtc ['c' subscript] - Actual values at Baseline and Change from 11.1.0 11.2.0
Baseline at each visit
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 10
<PAGE> 66
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shift Tables from Baseline at each Visit (Normal, Abnormal) (Overall and 11.1.1 11.2.1
for 9 groups of ECG parameters)
- ----------------------------------------------------------------------------------------------------------------------
Listing of abnormal ECG measurements A11.0 A11.1
- ----------------------------------------------------------------------------------------------------------------------
PHYSICAL EXAMINATION
- ----------------------------------------------------------------------------------------------------------------------
Physical Examination - Shifts from Baseline to Last Visit This table will be produced only for the
Action I and Action II study reports
- ----------------------------------------------------------------------------------------------------------------------
Weight - Change from Baseline to Each Visit This table will be produced only for the
Action I and Action II study reports
- ----------------------------------------------------------------------------------------------------------------------
DRUG-DEMOGRAPHIC INTERACTIONS
- ----------------------------------------------------------------------------------------------------------------------
Adverse events of special interest and the most common adverse events 12.1.0- 12.2.0- 12.3.0-
by: age category, sex, race, baseline BMI, smoking history, levels of 12.1.12 12.2.12 12.3.12
baseline serum creatinine, levels of baseline HbA1c, duration of diabetes
at baseline, levels of baseline GFR, baseline retinopathy (Y/N),
proteinuria, levels of baseline urine area nitrogen, levels of baseline LDL
- ----------------------------------------------------------------------------------------------------------------------
Serious adverse events by: age category, sex, race, baseline BMI, 12.1.13- 12.2.13- 12.3.13-
smoking history, levels of baseline serum creatinine, levels of baseline 12.1.25 12.2.25 12.3.25
HbA1c, duration of diabetes at baseline, levels of baseline GFR, baseline
retinopathy (Y/N), proteinuria, levels of baseline urine urea nitrogen,
levels of baseline LDL
- ----------------------------------------------------------------------------------------------------------------------
DRUG-DRUG INTERACTIONS
- ----------------------------------------------------------------------------------------------------------------------
Adverse events of special interest and the most common adverse events 13.1.0- 13.2.0- 13.3.0-
by: captopril, all ACE inhibitors (including captopril), calcium 13.1.4 13.2.10 13.3.4
channel antagonists, [beta symbol]-blockers, diuretics. In addition for the
Action II study these tables will also cover: metformin, troglitazone,
[alpha symbol]-glucosidase inhibitors, sulfonylureas, insulin, lipid
lowering agents, and Fen-Phen/Redux.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 1 - Page 11
<PAGE> 67
APPENDIX 1: PROPOSED LIST OF TABLES FOR THE ALTEON INTEGRATED SUMMARY OF SAFETY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Integrated Summary of Safety (ISS)
Title
------------------------------------------
Integrated
Action I Action II Database
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Serious adverse events by: captopril, all ACE inhibitors (including 13.1.5- 13.2.11- 13.3.5-
captopril), calcium channel antagonists, [beta symbol]-blockers, 13.1.9 13.2.21 13.3.9
diuretics. In addition for the Action II study these tables will also
cover: metformin, troglitazone, [alpha symbol]-glucosidase inhibitors,
sulfonylureas, insulin, and lipid lowering agents
- ----------------------------------------------------------------------------------------------------------------------
DRUG-DISEASE INTERACTIONS
- ----------------------------------------------------------------------------------------------------------------------
Adverse events of special interest and the most common adverse events 14.1.0- 14.2.0- 14.3.0-
by: PVD, baseline cardiovascular morbidity (not present, active, not 14.1.3 14.2.3 14.3.3
active), uncontrolled hypertension (DBP >= 90), uncontrolled
hypertension (SBP >= 140)
- ----------------------------------------------------------------------------------------------------------------------
Serious adverse events by: PVD, baseline cardiovascular morbidity (not 14.1.4- 14.2.4- 14.3.4-
present, active, not active), uncontrolled hypertension (DBP >= 90), 14.1.7 14.2.7 14.3.7
uncontrolled hypertension (SBP >=140)
- ----------------------------------------------------------------------------------------------------------------------
FIGURES
- ----------------------------------------------------------------------------------------------------------------------
Plot of Number of SAEs versus Number of Patients at Risk over Time 1.1.0 1.2.0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
All safety tables are based on the ITT population
Appendix 1 - Page 12
<PAGE> 68
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
Table Numbering Conventions:
1. All tables have numbers of the form X.X.
2. The first level (1.X, 2.X, etc) represents the nature of the data,
e.g., Patient Descriptives, Efficacy, etc.
4. The second level (X.1, X.2, etc) represents the table number within
this type of data.
5. Missing table numbers in any column indicates that the corresponding
tables will not be produced for that document (ISE, Action I Study
Report, or Action II Study Report).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PATIENT DESCRIPTIVES
- --------------------------------------------------------------------------------------------------------------------------------
Patient disposition - Study completion and treatment cessation information 1.0 1.0 1.0
- - Enrolled patients
- --------------------------------------------------------------------------------------------------------------------------------
Overview of analysis populations (This table will contain information 1.1 1.1 1.1
regarding the number of ITT, Safety, and Per Protocol patients at each
visit, as well as the number that are valuable for the primary efficacy
parameter.)
- --------------------------------------------------------------------------------------------------------------------------------
Listing of patients excluded from the ITT population 1.2 1.2 1.2
- --------------------------------------------------------------------------------------------------------------------------------
Listing of patients excluded from the Per Protocol population 1.3 1.3 1.3
- --------------------------------------------------------------------------------------------------------------------------------
Patient disposition by center - Number of patients enrolled, evaluated, 1.4 1.4 1.4
ceased treatment, and dropped out at each center - ITT population
- --------------------------------------------------------------------------------------------------------------------------------
Patient disposition by visit - ITT population & Per Protocol populations 1.5 1.5 1.5
(This table will show the number of patients on-treatment at the protocol
correct dose, on-treatment at protocol incorrect dose, off-treatment, dropped
out, and lost to follow-up at each visit for each treatment)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 1
<PAGE> 69
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Number of patients with major protocol deviations - ITT 1.6 1.6 1.6
- --------------------------------------------------------------------------------------------------------------------------------
COMPLIANCE AND EXPOSURE TO STUDY MEDICATION
- --------------------------------------------------------------------------------------------------------------------------------
Total duration of exposure to study medication overall and by 6-month 2.0 - 2.1 2.0 - 2.1 2.0 - 2.1
intervals (not accounting for gaps in study medication administration) -
ITT & Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Duration of exposure to study medication overall and by 6-month intervals 2.2 - 2.3 2.2 - 2.3 2.2 - 2.3
(accounting for gaps in study medication administration) - ITT & Per
Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Dose titrations - ITT & per protocol populations (including information on 2.4 - 2.5 2.4 - 2.5 2.4 - 2.5
the number of times the dose was changed, number of times patient was
taken off study medication, overall and by reason)
- --------------------------------------------------------------------------------------------------------------------------------
Study medication compliance - ITT population (This table will show the 2.6 2.6 2.6
number of patients in each of the following categories: < 80% compliance,
80% - 120% compliance, and > 120% compliance)
- --------------------------------------------------------------------------------------------------------------------------------
DEMOGRAPHICS, BACKGROUND CHARACTERISTICS, AND MEDICAL HISTORY
- --------------------------------------------------------------------------------------------------------------------------------
Patient demographics - ITT & Per Protocol populations (age, age category, 3.0 - 3.1 3.0 - 3.1 3.0 - 3.1
sex, race, weight, weight category, height, BMI)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 2
<PAGE> 70
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Background Characteristics - ITT & Per Protocol populations (smoking, 3.2-3.3 3.2-3.3 3.2-3.3
duration of diabetes, Baseline HbA1c, Baseline serum creatinine, Baseline
GFR, Baseline proteinuria, Baseline 24-hour urine creatinine clearance, Systolic
BP, Systolic BP category, Diastolic BP, Diastolic BP category, Insulin type,
Insulin daily dose, Baseline Triglycerides, Baseline Total cholesterol, Baseline
HDL Cholesterol, Baseline LDL cholesterol, Total cholesterol to HDL ratio, and
for Action II only - cardiovascular morbidity)
- --------------------------------------------------------------------------------------------------------------------------------
Medical History - ITT & Per Protocol population (including body system 3.4-3.5 3.4-3.5 3.4-3.5
categories and several groups of parameters from the Baseline ECG form)
- --------------------------------------------------------------------------------------------------------------------------------
PRIOR AND CONCOMITANT MEDICATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Incidence of prior medications at baseline - ITT population A1.0 A1.0
- --------------------------------------------------------------------------------------------------------------------------------
Incidence of concomitant medications taken prior to randomization - ITT A2.0 A2.0
population
- --------------------------------------------------------------------------------------------------------------------------------
Incidence of key concomitant medications taken during the double-blind 4.0 4.0 4.0
treatment period - ITT population [ACE inhibitors, [beta symbol]-blockers,
diuretics, Calcium channel antagonists, insulin (overall and by type),
each prohibited medication + for Action II only: troglitazone,
sulfonylureas, metformin, [alpha symbol]-glucosidase inhibitors, lipid
lowering agents]
- --------------------------------------------------------------------------------------------------------------------------------
Incidence of concomitant medications taken during the double-blind A3.0 A3.0
treatment period - ITT population
- --------------------------------------------------------------------------------------------------------------------------------
EFFICACY MEASURES
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 3
<PAGE> 71
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Time to first doubling of serum creatinine verified by a confirmation 5.0-5.1 5.0-5.1 5.0-5.1
visit - ITT & Per Protocol populations (This table will give logrank p-values
both the stratified by pooled center and unstratified, as well as Kaplan-Meier
estimates of survival probabilities at 3 month intervals.)
- --------------------------------------------------------------------------------------------------------------------------------
Time to composite event of doubling of serum creatinine or end stage renal 5.2-5.3 5.2-5.3 5.2-5.3
disease (maintenance dialysis or transplant) - ITT & Per Protocol
populations (logrank test)
- --------------------------------------------------------------------------------------------------------------------------------
Time to first doubling of serum creatinine verified by a confirmation 5.4 5.4 5.4
visit-- results from interim analyses - ITT population (log rank test, KM
estimate of survival)
- --------------------------------------------------------------------------------------------------------------------------------
Time to composite event of end stage renal disease (dialysis or 5.5-5.6 5.5-5.6 5.5-5.6
transplantation) or death - ITT & Per Protocol populations (logrank test)
- --------------------------------------------------------------------------------------------------------------------------------
Time to all cause mortality - ITT & Per Protocol populations 5.7-5.8 5.7-5.8 5.7-5.8
- --------------------------------------------------------------------------------------------------------------------------------
Time to cardiovascular mortality or morbidity - ITT & Per Protocol 5.9-5.10
population
- --------------------------------------------------------------------------------------------------------------------------------
Time to end stage renal disease (dialysis or transplantation) - ITT & Per 5.11-5.12
protocol population
- --------------------------------------------------------------------------------------------------------------------------------
Rate of change in log GFR determined by iothalamate clearance - ITT & Per 5.9-5.10 5.9-5.10 5.13-5.14
Protocol populations (2-stage random effects model)
- --------------------------------------------------------------------------------------------------------------------------------
Rate of change in serum creatinine - ITT & per Protocol Populations 5.11-5.12 5.11-5.12 5.15-5.16
(2-stage random effects model)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 4
<PAGE> 72
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5.13-5.14 5.13-5.14 5.17-5.18
Rate of decline in estimated creatinine clearance (calculated by the
Cockrauft & Gault method) - ITT & Per Protocol populations (2-stage random
effects model)
- --------------------------------------------------------------------------------------------------------------------------------
Rate of change in measured creatinine clearance from 24-hour urine 5.15-5.16 5.15-5.16 5.19-5.20
collection - ITT & per protocol populations (2-stage random effects
model)
- --------------------------------------------------------------------------------------------------------------------------------
Change from baseline in urinary protein excretion from 24-hour urine 5.17-5.18 5.17-5.18 5.21-5.22
5.17-5.18 5.17-5.18 5.21-5.22 collection - ITT & Per Protocol populations
(Repeated measures over all time points as well as testing at each time point)
- --------------------------------------------------------------------------------------------------------------------------------
Change from baseline to endpoint in retinal data (Diabetic Retinopathy) 5.19-5.20 5.19-5.20 5.23-5.24
overall and stratified by prior photo coagulation - ITT & Per Protocol
populations
- --------------------------------------------------------------------------------------------------------------------------------
Proportion changing from Baseline to Endpoint by at least 3 units - ITT & 5.21-5.22 5.21-5.22 5.25-5.26
Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Shifts from baseline to endpoint for individual retinal events - ITT & Per 5.23-5.24 5.23-5.24 5.27-5.28
Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Shifts from baseline to endpoint-- retinal slit lamp examinations - ITT & 5.25-5.26 5.25-5.26 5.29-5.30
Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Drug-Demographic Interactions for the Primary Efficacy Parameter of Time
to First Doubling of Serum Creatinine Verified by a Confirmation Visit
(ITT Population only)
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 5
<PAGE> 73
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
These tables will cover: age category, sex, race, baseline BMI, smoking 6.0-6.12 6.0-6.12 6.0-6.12
history, levels of baseline serum creatinine, levels of baseline HbA1c,
duration of diabetes at baseline, levels of baseline GFR, baseline retinopathy
(Y/N), proteinuria, levels of baseline urine urea nitrogen, levels of baseline
LDL
- --------------------------------------------------------------------------------------------------------------------------------
DRUG-DRUG INTERACTIONS FOR THE PRIMARY EFFICACY PARAMETER OF TIME TO FIRST
DOUBLING OF SERUM CREATININE VERIFIED BY A CONFIRMATION VISIT (ITT
POPULATION ONLY)
- --------------------------------------------------------------------------------------------------------------------------------
These tables will cover: captopril, all ACE inhibitors (including 7.0-7.4 7.0-7.4 7.0-7.10
captopril), calcium channel antagonists, [beta symbol]-blockers,
diuretics. In addition for the Action II study these tables will also
cover: metformin, troglitazone, [alpha symbol]-glucosidase inhibitors,
sulfonylureas, insulin, and lipid lowering agents
- --------------------------------------------------------------------------------------------------------------------------------
DRUG-DISEASE INTERACTIONS FOR THE PRIMARY EFFICACY PARAMETER OF TIME TO
FIRST DOUBLING OF SERUM CREATININE VERIFIED BY A CONFIRMATION VISIT (ITT
POPULATION ONLY)
- --------------------------------------------------------------------------------------------------------------------------------
These tables will cover: PVD, baseline cardiovascular morbidity (not 8.0-8.3 8.0-8.3 8.0-8.3
present, active, not active), uncontrolled hypertension (DBP > = 90),
uncontrolled hypertension (SBP >= 140)
- --------------------------------------------------------------------------------------------------------------------------------
FIGURES
- --------------------------------------------------------------------------------------------------------------------------------
Kaplan-Meier plot of time to first doubling of Serum Creatinine verified 1.0-1.1 1.0-1.1 1.0-1.1
by a confirmation visit - ITT & Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 6
<PAGE> 74
APPENDIX 2: PROPOSED LIST OF TABLES AND FIGURES FOR THE ALTEON INTEGRATED
SUMMARY OF EFFICACY, TOGETHER WITH A PROPOSED LIST OF THE
CORRESPONDING TABLES AND FIGURES IN ACTION I AND ACTION II
STUDY REPORTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Table number Table number Table number
Title in ISE in Action I in Action II
(based on Study Report Study Report
Action I)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Kaplan-Meier plot of time to composite event of end stage renal disease 1.2-1.3 1.2-1.3 1.2-1.3
(maintenance dialysis or transplant) or doubling of serum creatinine - ITT
& Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Kaplan-Meier plot of time to earlier of mortality, dialysis, or 1.4-1.5 1.4-1.5 1.4-1.5
transplantation - ITT & Per Protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Kaplan-Meier plot of time to all-cause mortality - ITT & per protocol 1.6-1.7 1.6-1.7 1.6-1.7
populations
- --------------------------------------------------------------------------------------------------------------------------------
Kaplan-Meier plot of time to event of end stage renal disease or death - 1.8-1.9 1.8-1.9 1.8-1.9
ITT & per protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Plot of rate of change in serum creatinine over time - ITT & per protocol 1.10-1.11 1.10-1.11 1.10-1.11
populations
- --------------------------------------------------------------------------------------------------------------------------------
Plot of rate of change in estimated creatinine clearance over time - ITT & 1.12-1.13 1.12-1.13 1.12-1.13
per protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Plot of rate of change in measured creatinine clearance over time - ITT & 1.14-1.15 1.14-1.15 1.14-1.15
per protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
Plot of rate of change in GFR over time determined by iothalamate 1.16-1.17 1.16-1.17 1.16-1.17
clearance - ITT & per protocol populations
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Appendix 2 - Page 7
<PAGE> 75
APPENDIX 3: SUMMARY OF NDA SECTIONS, PRIMARY RESPONSIBILITIES, ESTIMATED
NUMBER OF VOLUMES AND DATE OF FINAL RECEIPT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
NDA ITEM NO. PRIMARY ESTIMATE NO. OF FINAL DOCUMENTS
RESPONSIBILITY VOLUMES RECEIVED AT QUINTILES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Item 1: Index (Table of Contents) Quintiles 1 N/A
- --------------------------------------------------------------------------------------------------------------------------
Item 2: Labeling Alteon 0.25 *
- --------------------------------------------------------------------------------------------------------------------------
Item 3: Overall NDA Summary Quintiles/ 0.75 *
Alteon(1)
- --------------------------------------------------------------------------------------------------------------------------
Item 4: CMC Section Alteon
Drug Substance 1 *
(all sections except Physical &
Chemical Characteristics)
Physical & Chemical Characteristics *
Drug Product (all sections except Methods of 2 *
Manufacturing & Pkg and Stability)
Methods of Manufacturing & Pkg *
Stability *
Methods Validation and Samples 1 *
Environmental Assessment *
- --------------------------------------------------------------------------------------------------------------------------
Item 5: Nonclinical Pharmacology & Toxicology Alteon 50? *
Technical Summary & References *
Individual Study Reports *
- --------------------------------------------------------------------------------------------------------------------------
Item 6: Human Pharmacokinetics & Bioavailability Alteon 20? *
Technical Summary & References *
Individual Study Reports
Phase I single, oral ascending dose (1987) *
CPK88003 *
RPK89002 *
AGC89005 *
AGC89008 *
Multiple dose safety & PK in volunteers (1996) *
AGC9011 *
- --------------------------------------------------------------------------------------------------------------------------
Item 7: Microbiology Section N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Confidential Treatment Requested
Appendix 3 - Page 1
<PAGE> 76
APPENDIX 3: SUMMARY OF NDA SECTIONS, PRIMARY RESPONSIBILITIES, ESTIMATED
NUMBER OF VOLUMES AND DATE OF FINAL RECEIPT
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
NDA ITEM NO. PRIMARY ESTIMATE NO. OF FINAL DOCUMENTS
RESPONSIBILITY VOLUMES RECEIVED AT QUINTILES
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Item 8: Clinical Data Section Quintiles
Overall Summary (include items designated with "*" below) Quintiles/ 1 *
Alteon(2)
*Clinical Pharmacology Summary
Individual Study Reports (completed studies) Quintiles 1 *
AGPR0002 (ACTION I)
AGPR0015 (Microalbuminuria) Quintiles 10 *
AGPR0016 (Dyslipidemia) Alteon 1? *
AGC89003 (Phase II) Alteon 1? *
AGC89006 (Phase II) Alteon 1? *
Alteon 1? *
*Brief Synopses (protocol and CRF for ongoing studies)
AGPR00014 (ESRD)
*Safety Report (discontinued studies) Alteon 1 *
AGPR0009 (ACTION II)
Patient Narratives (1200+) Quintiles 10 *
Integrated Summary of Safety
Integrated Summary of Efficacy Alteon 4+ *
*Summary of Risk/Benefit Quintiles 10 *
Literature Review/References Quintiles 5 *
Quintiles/Alteon 25 *
Alteon 5 *
- --------------------------------------------------------------------------------------------------------------------------
Item 9: 120-Day Safety Update Alteon or N/A N/A
Quintiles
- --------------------------------------------------------------------------------------------------------------------------
Item 10: Statistical Section Quintiles 1 *
- --------------------------------------------------------------------------------------------------------------------------
Item 11: Case Report Tabulations N/A N/A N/A
(requesting waiver from FDA)
- --------------------------------------------------------------------------------------------------------------------------
Item 12: Case Report Forms Alteon 1 *
(submitting images)
- --------------------------------------------------------------------------------------------------------------------------
Item 13: Patent Information Alteon (incl in Vol 1) *
- --------------------------------------------------------------------------------------------------------------------------
Item 14: Patient Certification Alteon (incl in Vol 1) *
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
1. Alteon will supply Chemistry Manufacturing and Controls, Nonclinical
Pharmacology & Toxicology, and Human Pharmacokinetics & Bioavailability
portions of the Overall NDA Summary.
2. Alteon will supply the Human Pharmacokinetics & Bioavailability
portions of the Clinical Data Overall Summary
* Confidential Treatment Requested
Appendix 3 - Page 2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
BALANCE SHEETS, STATEMENTS OF OPERATIONS, CASH FLOW STATEMENTS AND THE STATEMENT
OF STOCKHOLDERS' EQUITY FILED AS PART OF ALTEON INC'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH (B) ANNUAL REPORT ON FORM 10-K.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 10,839,586
<SECURITIES> 13,292,666
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 24,406,397
<PP&E> 2,985,156
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,651,633
<CURRENT-LIABILITIES> 4,313,275
<BONDS> 0
0
31
<COMMON> 188,147
<OTHER-SE> 23,150,180
<TOTAL-LIABILITY-AND-EQUITY> 27,651,633
<SALES> 0
<TOTAL-REVENUES> 1,320,538
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,662,970
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,610
<INCOME-PRETAX> (26,346,042)
<INCOME-TAX> 0
<INCOME-CONTINUING> (26,346,042)
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