<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NO. 0-20948
-------
AUTOIMMUNE INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 13-348-9062
(State of Incorporation) (I.R.S. Employer Identification No.)
128 SPRING STREET, LEXINGTON, MA 02421
(Address of Principal Executive Offices)
(781) 860-0710
(Registrant's Telephone No., including Area Code)
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
---------------- ---------------
Number of shares outstanding of the registrant's Common Stock
as of April 30, 2000:
Common Stock, par value $.01 16,759,623 shares outstanding
<PAGE>
AUTOIMMUNE INC.
QUARTER ENDED MARCH 31, 2000
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
PART I - FINANCIAL INFORMATION Number
Item 1 - Financial Statements
Balance Sheet
December 31, 1999 and March 31, 2000................... 2
Statement of Operations
for the three months ended March 31, 1999 and 2000
and for the period from inception (September 9, 1988)
through March 31, 2000................................. 3
Statement of Cash Flows
for the three months ended March 31, 1999 and 2000
and for the period from inception (September 9, 1988)
through March 31, 2000................................. 4
Notes to the Unaudited Financial Statements................. 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 7
Item 3 - Quantitative and Qualitative Disclosures about
Market Risk............................................ 8
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K................... 9
Signatures.................................................. 10
</TABLE>
1
<PAGE>
AUTOIMMUNE INC.
(A development stage company)
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------------- -------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,973,000 $ 3,478,000
Marketable securities - 6,783,000
Interest receivable - -
Prepaid expenses and other current assets 109,000 4,000
------------------- -------------------
Total current assets 7,082,000 10,265,000
Fixed assets, net - -
------------------- -------------------
$ 7,082,000 $ 10,265,000
=================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 64,000 $ 21,000
Accrued expenses 607,000 108,000
------------------- -------------------
Total current liabilities 671,000 129,000
------------------- -------------------
Commitments and contingencies
------------------- -------------------
Stockholders' equity:
Common stock, $.01 par value; 25,000,000 shares
authorized; 16,657,872 and 16,759,623 shares issued and
outstanding at December 31, 1999 and March 31, 2000,
respectively 167,000 167,000
Additional paid-in capital 117,714,000 117,907,000
Deficit accumulated during the development stage (111,470,000) (107,938,000)
Valuation allowance for marketable securities - -
------------------- -------------------
Total stockholders' equity 6,411,000 10,136,000
------------------- -------------------
$ 7,082,000 $ 10,265,000
=================== ===================
</TABLE>
2
<PAGE>
AUTOIMMUNE INC.
(A development stage company)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period from
inception
Three months ended (September 9, 1988)
March 31, March 31, through
1999 2000 March 31, 2000
---------------- --------------- -----------------------
<S> <C> <C> <C>
Revenue:
License rights $ - $ 4,000,000 $ 4,000,000
Option fees - - 2,200,000
Research and development
revenue under collaborative
agreements - - 955,000
---------------- --------------- -----------------
Total revenues - 4,000,000 7,155,000
---------------- --------------- -----------------
Costs and expenses:
Research and development:
Related party 384,000 220,000 19,552,000
All other 2,790,000 125,000 90,880,000
General and administrative 491,000 256,000 15,911,000
---------------- --------------- -----------------
Total costs and expenses 3,665,000 601,000 126,343,000
---------------- --------------- -----------------
Interest income 209,000 133,000 11,557,000
Interest expense (1,000) - (303,000)
---------------- --------------- -----------------
208,000 133,000 11,254,000
---------------- --------------- -----------------
Net income (loss) $ (3,457,000) $ 3,532,000 $ (107,934,000)
================ =============== =================
Net income (loss) per share-basic and diluted $ (0.21) $ 0.21
================ ===============
Weighted average common
shares outstanding-basic and diluted 16,555,640 16,694,166
================ ===============
</TABLE>
3
<PAGE>
AUTOIMMUNE INC.
(A development stage company)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
Period from
inception
(September 9, 1988)
Three months ended through
March 31, March 31, March 31,
1999 2000 2000
--------------------- --------------------- ----------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,457,000) $ 3,532,000 $ (107,934,000)
Adjustment to reconcile net loss to net cash
used by operating activities:
Interest expense related to demand notes
converted into Series A mandatorily
redeemable covertible preferred stock - - 48,000
Patent costs paid with junior convertible
preferred and common stock - - 3,000
Depreciation and amortization 132,000 - 4,464,000
Loss on sale/disposal of fixed assets (5,000) - 642,000
Decrease in capitalized patent costs - - 563,000
Decrease in interest receivable 7,000 - -
(Increase) decrease in prepaid expenses (31,000) 105,000 (4,000)
Increase (decrease) in accounts payable 298,000 (43,000) 21,000
Increase (decrease) in accrued expenses (91,000) (499,000) 108,000
--------------------- --------------------- ----------------------
Net cash provided (used) by operating activities (3,147,000) 3,095,000 (102,089,000)
--------------------- --------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale marketable securities (3,303,000) (6,783,000) (268,503,000)
Proceeds from sale/maturity of available-for-sale marketable 7,488,000 - - 250,709,000
securities
Proceeds from maturity of held-to-maturity marketable - - 11,011,000
securities
Proceeds from sale of equipment 5,000 - 306,000
Purchase of fixed assets (51,000) - (5,288,000)
Increase in patent costs - - (563,000)
Increase in other assets - - (125,000)
--------------------- --------------------- ----------------------
Net cash provided (used) by investing activities 4,139,000 (6,783,000) (12,453,000)
--------------------- --------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale-leaseback of fixed assets - - 2,872,000
Payments on obligations under capital leases (72,000) - (2,872,000)
Net proceeds from issuance of mandatorily redeemable
convertible preferred stock - - 10,011,000
Proceeds from bridge notes - - 300,000
Proceeds from issuance of common stock 13,000 193,000 105,509,000
Proceeds from issuance of convertible notes payable - - 2,200,000
--------------------- --------------------- ----------------------
Net cash provided (used) by financing activities (59,000) 193,000 118,020,000
--------------------- --------------------- ----------------------
Net increase (decrease) in cash and cash equivalents 933,000 (3,495,000) 3,478,000
Cash and cash equivalents, beginning of period 4,801,000 6,973,000 -
--------------------- --------------------- ----------------------
Cash and cash equivalents, end of period $ 5,734,000 $ 3,478,000 $ 3,478,000
===================== ===================== ======================
</TABLE>
4
<PAGE>
AUTOIMMUNE INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL DATA
The interim financial data as of March 31, 2000, for the three month
periods ended March 31, 1999 and 2000 and for the period from inception
(September 9, 1988) through March 31, 2000 are unaudited; however, in the
opinion of the Company, these interim data include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the results for these interim periods. These financial
statements should be read in conjunction with the financial statements and
the notes thereto for the period ended December 31, 1999 included in the
Company's Form 10-K. Results for interim periods are not necessarily
indicative of results for the entire year.
2. CASH EQUIVALENTS AND MARKETABLE SECURITIES
The following is a summary of cash equivalents held by the Company. Cash
equivalents are carried at fair market value, which approximated amortized
cost at December 31, 1999 and March 31, 2000:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------------- -----------------
<S> <C> <C>
Money market $ 659,000 $ 405,000
U.S. Government debt securities 6,270,000 2,871,000
------------------- -----------------
$6,929,000 $3,276,000
=================== =================
</TABLE>
The following is a summary of available-for-sale marketable securities held
by the Company at March 31, 2000 which are carried at fair market value:
<TABLE>
<CAPTION>
MATURITY FAIR UNREALIZED UNREALIZED AMORTIZED COST
TERM VALUE GAINS LOSSES
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MARCH 31, 2000
U.S. Government
debt securities within 1 year $6,783,000 $ - $ - $6,783,000
=============================================================
</TABLE>
There were no marketable securities at December 31, 1999. All of the
Company's marketable securities are classified as current at December 31,
1999 and March 31, 2000 as these funds are highly liquid and are available
to meet working capital needs and to fund current operations. Gross
realized gains and losses on sales of marketable securities for the three
month periods ended March 31, 1999 and 2000 were not significant.
Marketable securities which were purchased and sold in periods prior to
adoption of Statement of Financial Accounting Standards (SFAS) No. 115 on
January 1, 1994, other than held-to-maturity marketable securities, are
included in the category available-for-sale marketable securities in the
"period from inception" column of the statement of cash flows.
5
<PAGE>
AUTOIMMUNE INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
3. FIXED ASSETS
Fixed assets consist of the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIFE DECEMBER 31, MARCH 31,
(YEARS) 1999 2000
------------------- ---------------------- ----------------------
<S> <C> <C> <C>
Laboratory equipment 2 - 5 $160,000 $160,000
---------------------- ----------------------
160,000 160,000
Less - accumulated depreciation and
amortization 160,000 160,000
---------------------- ----------------------
$ - $ -
====================== ======================
</TABLE>
4. ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accrued expenses consist of the following:
DECEMBER 31, MARCH 31,
1999 2000
-------------------- --------------------
<S> <C> <C>
Accrued employee costs $ 37,000 $ 17,000
Accrued professional fees 92,000 91,000
Accrued severance 478,000 -
-------------------- --------------------
$607,000 $108,000
==================== ====================
</TABLE>
5. COMPREHENSIVE INCOME
Comprehensive loss for the three month period ended March 31, 1999 was
$3,462,000 and comprehensive income for the three month period ended March
31, 2000 was $3,532,000.
Net unrealized gain (loss) on marketable securities is comprised of the
following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1999 2000
----------------- ------------------
<S> <C> <C>
Unrealized holding gain (loss) arising during
the period $(2,000) $ -
Reclassification adjustment for (gain) loss
included in net income (3,000) -
----------------- ------------------
Net unrealized gain (loss) on marketable securities $(5,000) $ -
================= ==================
</TABLE>
6
<PAGE>
AUTOIMMUNE INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
OVERVIEW
Since its inception through March 31, 2000, the Company has incurred ongoing
losses from operations and has cumulative losses as of March 31, 2000 totaling
$107,934,000. To date, the Company has not recorded any revenues from the sale
of products. Revenues recorded through March 31, 2000 were earned in connection
with the sale of certain patent rights, granting of certain short-term rights
and contract research.
The Company expects to remain in the development stage for the foreseeable
future and accordingly, may continue to incur losses.
The sections of "Management's Discussion and Analysis of Financial Condition and
Results of Operations" captioned "Overview" and "Liquidity and Capital
Resources" contain forward-looking statements which involve risks and
uncertainties. What may occur in the future could differ significantly from what
is discussed in the forward-looking statements due to a number of important
factors, including, but not limited to, the developmental stage of the Company's
products and uncertainties of clinical trial results and regulatory approval;
the Company's capital requirements, history of operating losses and lack of
product revenue and its limited manufacturing and marketing experience; and the
risks of technological change and competition. These factors are more fully
discussed in the Company's most recent Annual Report on Form 10-K filed with the
Securities and Exchange Commission in the section captioned "Business - Factors
to be Considered". The discussion in the Annual Report on Form 10-K is hereby
incorporated by reference into this Quarterly Report.
THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 2000
Revenue was $4,000,000 for the three month period ended March 31, 2000. This
amount represents the initial payment by a subsidiary of Elan Plc for the
purchase of certain patent rights related to Alzheimer's disease. There was no
revenue in the three month period ended March 31, 1999.
Research and development expenses were $3,174,000 and $345,000 for the three
month periods ended March 31, 1999 and 2000, respectively. The decrease is due
to the cessation of Colloral clinical trials and the elimination of research and
development expenses except contract research support for The Brigham and
Women's Hospital and costs associated with maintaining the Company's patent
portfolio.
General and administrative expenses were $491,000 and $256,000 for the three
month periods ended March 31, 1999 and 2000, respectively. The decrease in
general and administrative expenses is due to the reduction of personnel costs.
Net interest income was $208,000 and $133,000 for the three month periods ended
March 31, 1999 and 2000, respectively. The decrease is due to a lower balance
of cash available for investment.
The net loss was $3,457,000 for the three month period ended March 31, 1999 and
net income was $3,532,000 for the three month period ended March 31, 2000. The
change reflects the revenue generated in 2000 and the reduction of operating
expenses. The net loss per share was $0.21 for the three months ended March 31,
1999 and net income per share was $0.21 for the three months ended March 31,
2000.
7
<PAGE>
AUTOIMMUNE INC.
LIQUIDITY AND CAPITAL RESOURCES
The Company 's needs for funds have historically fluctuated from period to
period as it has increased or decreased the scope of its research and
development activities. Since inception, the Company has funded these needs
almost entirely through sales of its equity securities.
The Company's working capital and capital requirements will depend on numerous
factors, including the strategic direction that the Company and its shareholders
choose, the level of resources that the Company devotes to the development of
its products, the extent to which it proceeds by means of collaborative
relationships and its competitive environment. The Company believes that current
cash and marketable securities, and the interest earned from the investment
thereof, will be sufficient to meet the Company's operating expenses and capital
requirements for at least five years. At the appropriate time, the Company may
intend to seek additional funding through public or private equity or debt
financing, collaborative arrangements or from other sources. If additional
funds are necessary but not available, the Company will have to modify its
business strategy, and its business will be materially adversely affected.
In order to preserve principal and maintain liquidity, the Company's funds are
invested in U.S. Treasury obligations and other short-term instruments. As of
March 31, 2000, the Company's cash and cash equivalents and marketable
securities totaled $10,261,000. Current liabilities at March 31, 2000 were
$129,000.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company invests all of its cash in U.S. Treasury obligations and money
market instruments. These investments are denominated in U.S. dollars. Due to
the conservative nature of these instruments, the Company does not believe that
it has material exposure to interest rate or market risk.
8
<PAGE>
AUTOIMMUNE INC.
PART II - OTHER INFORMATION
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
10.32 Letter Agreement, dated January 31, 2000, between AutoImmune
Inc. and Fletcher Spaght, Inc.++
10.33 Agreement for Assignment of Patent Rights, dated effective as
of January 29, 2000, among The Brigham and Women's Hospital,
Inc., AutoImmune Inc. and Neuralab Limited++
10.34 Letter Agreement, dated March 16, 2000 between AutoImmune Inc.
and The Brigham and Women's Hospital Inc.++
++ The Company has requested confidential treatment of the redacted
portions of this exhibit pursuant to Rule 24b-2, under the
Securities Exchange Act of 1934, as amended, and has separately
filed a complete copy of this Exhibit with the Securities and
Exchange Commission.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
9
<PAGE>
AUTOIMMUNE INC.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized:
AUTOIMMUNE INC.
Date: May 15, 2000 /s/ Robert C. Bishop
---------------------------------------
Robert C. Bishop
Chairman and Chief Executive Officer
/s/ Heather A. Ellerkamp
---------------------------------------
Heather A. Ellerkamp
Director of Finance and Treasurer
10
<PAGE>
* * * * *
PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED AND FILED SEPARATELY WITH
THE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 24(B)-2. THE LOCATION OF
THOSE OMITTED PORTIONS IS DENOTED
BY BRACKETS.
* * * * *
Exhibit 10.32
[LETTERHEAD OF FLETCHER SPAGHT, INC.}
January 31, 2000
Transmitted via fax: 781-237-7196
Robert Bishop, Ph.D.
Chairman and CEO
AutoImmune, Inc.
47 Carisbrooke Road
Wellesley, MA 02481
Dear Bob:
We are pleased to provide continued assistance to AutoImmune in the launch
of Colloral(R) as a non-prescription nutraceutical. The remainder of this letter
will describe the scope of our continued involvement and FSI's compensation for
the work to be undertaken.
BACKGROUND
In September 1999, Fletcher Spaght, Inc. (FSI) was retained by AutoImmune
to assess the potential of launching Colloral/(R)/ as a non-prescription
nutraceutical. FSI was also asked to develop the strategy for that launch, if
appropriate to do so.
Based on FSI's efforts it was determined that Colloral/(R)/ has a
potential market of [ ] at retail in the U.S. OTC
nutraceutical market. Nutraceutical growth has been explosive in recent years
given increased interest by consumers in homeopathic medicine, the aging of
baby-boomers oriented to participation in management of their health and
increased access to health-related information via the Internet. Nutraceuticals
are no longer relegated to specialty retail channels but have become mainstream
consumer items in traditional outlets, e.g., drug stores, supermarkets, mass
merchandisers, etc. Several nutraceuticals have become sizeable market segments,
most notably, chondroitin sulfate for osteoarthritis; sales of chondroitin
sulfate were expected to exceed (greater than) $l00 million in 1999. Given the
market potential and attractive outlook, FSI recommended moving forward to
develop an OTC launch strategy for Colloral/(R)/.
Given the market dynamics however OTC marketing knowledge/resources and
multi-channel distribution will be critical to the success of Colloral/(R)/, as
a non-prescription nutraceutical. Therefore, it is important that AutoImmune
secure a strong marketing and distribution partner(s) with visibility/reach in
specialty stores, traditional
<PAGE>
Robert Bishop, Ph.D.
January 31, 2000
Page 2
outlets and with homeopathic/holistic health practitioners versus launch
Colloral/(R)/ itself. For the right partner, AutoImmune could offer to license
the product in its entirety (including production) or to develop only a
marketing and distribution relationship. Manufacturing Colloral/(R)/ for the OTC
market is not an issue; production costs are minimal and manufacturing can be
outsourced at attractive margins.
If the partnership approach is not successful, AutoImmune could launch the
product itself as a "fall-back" option, pursuing an infomercial, mail campaign
and web sales strategy. Ramp-up under this scenario, however, would be slow and
resources which could otherwise be deployed in AutoImmune's base business, would
be diverted.
A comprehensive review of the industry identified (greater than) 120
potential partners of which (greater than) 55 were determined to be worth
exploring further. Contacts with an initial group of 30 potential partners were
initiated in November 1999 in anticipation of moving forward with the
partnership strategy.
CHARTER and APPROACH
The objective of this effort is to secure one (or more) marketing
partner(s) to commercialize Colloral/(R)/ in the U.S. and to maximize the
potential value of the product/marketing license(s) to AutoImmune.
To this end, Fletcher Spaght, Inc. (FSI) will:
. Continue to identify, screen and prioritize commercialization
partners on behalf of AutoImmune considering multiple factors
including
- types of customers served
- appreciation for the clinical investigation/support AutoImmune
has invested in
- interest in RA
- interest in a collagen product
- size/presence in the relevant market
- perceived capability to quickly ramp-up Colloral/(R)/ as a
nonprescription nutraceutical
. Contact potential partners on a "rolling basis" to develop interest
in possible licensing of the product in its entirety or,
alternatively, development of marketing and distribution
arrangements
- higher priority candidates to be contacted earlier in this
process
- contact priorities to take into consideration the extended
review timeframes normally associated with large vs. small
pharmaceutical/nutraceutical companies
. Fol1ow-up/pursue interested contacts for introductions/establishment
of negotiations with AutoImmune
- in this process FSI will secure confidentiality agreements on
behalf of AutoImmune
<PAGE>
Robert Bishop, Ph.D.
January 31, 2000
Page 3
. Facilitate the license or marketing/distribution partnership
negotiation process
As you know, this effort is already underway following the completion of
our market study in November. Some of the contacts identified to date have
already expressed interest in the licensing opportunity and we are working
diligent1y to expedite the introduction process.
TIMING and COST
This assignment is, to some extent, an open-ended process. However, we
recognize that it would be desirable for AutoImmune to close on a Colloral(R)
commercialization partnership quickly and at a high va1ue. In the spirit of
partnership between FSI and AutoImmune we propose to structure our compensation
to support these goals. Thus, we propose:
. A monthly retainer of $10,000 for five months, plus
. A success fee equal to 5% of like value (upfront, milestone and
royalty payments or operating profit) AutoImmune receives for any or
all U.S. rights to Colloral(R) for any deal completed on or before
December 31, 2001, less accumulated retainer fees paid
It is a possibility that AutoImmune could be acquired. Thus, in order to
protect FSI it is appropriate to describe how FSI would be compensated if
AutoImmune were to be acquired by/merged with another entity. If by reason of
merger/acquisition on or before December 31, 2000, licening Colloral(R) to a
third party is no longer of interest, FSI will receive a lump sum payment equal
to three times the accumulated professional fees incurred (valued at FSI's
normal billing rates) between January 1, 2000 and the termination of this
agreement, less accumulated retainer fees paid. If by reason of
merger/acquisition between January 1, 2001 and December 31, 2001, licensing
Colloral(R) to a third party is no longer of interest, FSI will receive a lump
sum payment equal to two times the accumulated professional fees incurred and
the termination of this agreement, less accumulated retainer fees paid,
In addition to our fees, FSI will request reimbursement of expenses
associated with communications (e.g., telephone, facsimile), to be invoiced at
4% of professional fees, plus reimbursement for other expenses (e.g., overnight
mail, travel, etc.) as incurred.
Given that this project is underway, an invoice for the initial mouth's
retainer of $10,000 has been sent to you. Future payments towards the retainer
will be billed monthly, i.e., at the beginning of February, March, April and
May. As well, expenses will be billed on a monthly basis until the completion of
the effort.
FSI asks that you honor all invoices within fifteen days of receipt.
* * * * *
3
<PAGE>
* * * * *
PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED AND FILED SEPARATELY WITH
THE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 24(B)-2. THE LOCATION OF
THOSE OMITTED PORTIONS IS DENOTED
BY BRACKETS.
* * * * *
Exhibit 10.33
AGREEMENT FOR ASSIGNMENT OF PATENT RIGHTS
This Agreement for Assignment of Patent Rights ("AGREEMENT") is made
effective as of the 29/th/ day of January, 2000 (the "EFFECTIVE DATE"), by and
among The Brigham and Women's Hospital, Inc., a Massachusetts charitable
corporation ("B&W") and AutoImmune Inc., a Delaware corporation ("AUTOIMMUNE")
(sometimes collectively referred to as "SELLER") and Neuralab Limited, a Bermuda
company ("BUYER").
RECITALS
A. B&W is the owner of the Patent Rights (as defined below).
B. AutoImmune contends that it is the exclusive licensee of the Patent
Rights from B&W pursuant to a certain Amended and Restated Research and
Development Agreement by and between B&W and AutoImmune dated as of September 9,
1988 and revised as of July 1, 1992 and April 14, 1995 (the "Exclusive
License").
C. In order to permit the sale and transfer of the Patent Rights from B&W
to Buyer free and clear of the Exclusive License, B&W and AutoImmune wish to
terminate the Exclusive License as to the Patent Rights and B&W wishes to sell
and assign, and Buyer wishes to purchase and acquire, all of B&W's right, title
and interest in and to the Patent Rights, free and clear of the Exclusive
License.
D. Buyer is an Affiliate (as defined below) of Elan Pharmaceuticals,
Inc., a Delaware corporation ("Elan").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties, covenants and promises set forth below, the parties hereby
represent, warrant and agree as follows:
1. DEFINITIONS
Terms in this Agreement that are capitalized shall have the meanings set
forth below or defined elsewhere in this Agreement. All references to
particular "Exhibits" and "Sections" mean Exhibits to and Sections of this
Agreement.
"AFFILIATE" shall mean, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, that Person, provided however, that in each case any such other Person
shall be considered to be an Affiliate only
<PAGE>
during he time during which such control exists. For purposes of this
definition, "control" (including, with correlative meaning, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct and/or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"CLOSING DATE" is defined in Section 3.
"CONDITION PRECEDENT" shall mean the condition precedent that, at the time
that a Subsequent Payment is due, there shall not be pending any written claim
from any third party (including without limitation [________________________
_________]) directed to Buyer, B&W and/or AutoImmune, claiming any interest in
the Patent Rights or to the underlying inventions or technology, including any
claim of any ownership, license or other rights therein, under any legal or
equitable theory, whether by implication, estoppel or in any other manner.
"EXCLUSIVE LICENSE" shall have the meaning set forth in Recital B.
"[________________________]" shall mean that certain [____________________]
by and among [_________________________________________________________________
______________] dated [_______________].
"PATENT RIGHTS" shall mean and include (i) all United States and foreign
applications for patents listed in Exhibit A, as well as all United States and
foreign patents that have or may hereafter issue in respect of such applications
for patents, and (ii) all applications for patents whose subject matter in whole
or in part is entitled to the benefit of the filing date(s) of any of the
applications for patents listed on Exhibit A and all Untied States and foreign
patents that have or may hereafter issue in respect of such applications for
patents, including in each case of the foregoing clauses (i) and (ii) of this
definition, without limitation, all continuations, continuations-in-part,
divisional patents, substitutions, Patent Cooperation Treaty applications,
United States provisional patent applications, continued prosecution
applications, utility models, supplementary protection certificates,
reexaminations, renewals, extensions and reissues, and all rights to sue for
past or future infringement thereof.
"PERSON" shall mean an individual or any legally recognized entity,
including any corporation, partnership, limited partnership, limited liability
company, association or trust.
"SUBSEQUENT PAYMENTS" is defined in Section 2.2(b).
2. SALE AND PURCHASE OF PATENT RIGHTS
2.1 TERMINATION OF EXCLUSIVE LICENSE, SALE, PURCHASE AND ASSIGNMENT.
Subject to the terms and conditions of this Agreement, on the Closing Date, B&W
and AutoImmune
-2-
<PAGE>
shall mutually terminate the Exclusive License as to the Patent Rights in
writing on such terms as they may agree upon, which are approved in writing by
Buyer, and B&W shall sell, assign and transfer to Buyer, and Buyer shall
purchase and acquire from B&W, B&W's entire right, title and interest in and to
the Patent Rights, free and clear of the Exclusive License. It is expressly
agreed that Buyer is not assuming or agreeing to pay any liabilities or
obligations of B&W and/or AutoImmune of any kind.
2.2 PURCHASE PRICE; PAYMENT; WARRANTS.
(a) The purchase price to be paid by Buyer to AutoImmune on the Closing
Date shall be $4,000,000. Such purchase price shall be paid by Buyer to
AutoImmune on the Closing Date by a wire transfer of immediately available funds
to such bank account(s) as AutoImmune designates in writing to Buyer.
(AutoImmune has agreed to pay B&W a portion of the purchase price payments under
this Agreement according to a separate agreement (the "SEPARATE AGREEMENT") by
and between AutoImmune and B&W, which is and shall be of no concern of Buyer.)
(b) Subject to the satisfaction of the Condition Precedent for each payment
set forth below, Buyer shall pay AutoImmune additional subsequent payments of
the purchase price as follows (collectively, the "SUBSEQUENT PAYMENTS"):
(i) Eighteen (18) months from the Closing Date: $[_________] to
AutoImmune; and
(ii) Thirty-six (36) months from the Closing Date: $[_________] to
AutoImmune.
Each such payment shall be made by a wire transfer of immediately available
funds to such bank accounts as AutoImmune may designate to Buyer in writing.
If a written claim is made such that the Condition Precedent for a given
Subsequent Payment is not satisfied, the party receiving the claim shall furnish
a copy thereof to the other parties and all other information with respect
thereto in its possession or in the possession of its Affiliates. In the event
that the Condition Precedent for a given Subsequent Payment is not satisfied as
of the date indicated, upon receipt of written notice from Buyer regarding any
subject third party claim(s), each party shall defend itself (using counsel of
its choice) against the subject third party claim(s) and Buyer's obligation to
make the corresponding Subsequent Payment shall be deferred and suspended until
such time as and when the subject third party claim(s) has been finally resolved
or settled to the effect that the subject third party has no claim of any
ownership, license or other rights therein, under any legal or equitable theory,
whether by implication, estoppel or in any other manner. Each party shall
provide such assistance to the other parties (such as by making relevant
documents and personnel reasonably available to the other parties and by giving
testimony and otherwise providing evidence, as appropriate) as the other parties
may reasonably request in connection with the defense of any
-3-
<PAGE>
such claim. Buyer shall be entitled to deduct and offset its attorneys' and
experts' fees and other defense costs incurred in regard to any such claim from
the Subsequent Payments.
(c) Concurrently with each of the Subsequent Payments actually made by
Buyer to AutoImmune in accordance with Section 2(b) above, AutoImmune shall
issue to Buyer its (1) Common Stock Warrant to purchase up to 375,000 shares of
the common stock of AutoImmune, and (II) Warrant Registration Rights Agreement,
both in the respective forms attached as Exhibit B hereto; provided, however,
that in the event AutoImmune is acquired prior to the date that the Common Stock
Warrant is required to be issued, the Common Stock Warrant shall be issued by
the entity that acquires AutoImmune and the number of shares of stock to be
issued by the acquiror shall be determined under Section 7(c) of the Common
Stock Warrant as if the Warrant had been issued by AutoImmune immediately prior
to the acquisition.
3. CLOSING
The closing shall take place simultaneously with the execution and delivery
hereof (such date, the "Closing Date") at the offices of Athena Neurosciences,
Inc., 800 Gateway Boulevard, South San Francisco, California.
4. REPRESENTATIONS AND WARRANTIES OF EACH PARTY
B&W, AutoImmune and Buyer each hereby represent and warrant to the other
parties that the following representations and warranties are true and correct
as of the Effective Date:
(a) Such Person is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with full
power to carry on its business and activities as now being conducted;
(b) Such Person has the corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. No other act, approval or
proceeding on such Person's part is or will be required to authorize the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby;
(c) The execution and delivery by such Person of this Agreement will not,
and the fulfillment of and compliance by it with the terms, conditions and
provisions hereof will not: (i) conflict with any of the terms, conditions or
provisions of such Person's articles or certificate of organization or by-laws,
(ii) violate any term, condition or provision of, or require any consent,
authorization or approval under, any judicial or arbitration judgment, order,
award, writ, injunction or decree applicable to it, or (iii) conflict with,
result in a breach of, constitute a default under (whether with or without the
giving of notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or require any consent,
authorization or approval under any document, instrument, agreement or
-4-
<PAGE>
license other than the [__________________________] or the Exclusive License
(which Exclusive License shall be terminated by B&W and AutoImmune as to the
Patent Rights immediately prior to the Closing as provided herein) to which it
is a party or by which it is bound or to which any of its assets or properties
are subject.
5. REPRESENTATIONS AND WARRANTIES OF B&W AND AUTOIMMUNE
B&W and AutoImmune each hereby respectively represent and warrant to Buyer
separately and not collectively as to each specific matter separately identified
that the following representations and warranties are true and correct as of the
Effective Date:
(a) B&W is the sole and exclusive owner of the entire right, title and
interest in and to the Patent Rights, subject only to the
[___________________________], the Exclusive License and any rights of the
United States Government solely with respect to grant funding, if any;
(b) AutoImmune represents and warrants that the Patent Rights are genuine
and legitimate pending patent applications and it has not taken or failed to
take and will not take or fail to take any action that might result in the
unpatentability, invalidity and/or unenforceability of the Patent Rights against
any third party. In addition, AutoImmune has received no information or claim
(other than claims by the parties to this Agreement and other than the notice
from the Mayo Foundation referred to in subsection (c) below) to the effect that
the Patent Rights may be subject to challenge, invalid or unenforceable.
B&W has not taken or failed to take and will not take or fail to take
any action that might result in the unpatentability, invalidity and/or
unenforceability of the Patent Rights against any third party. In addition, B&W
has received no information or claim (other than claims by the parties to this
Agreement and other than the notice from the Mayo Foundation referred to in
subsection (c) below) to the effect that the Patent Rights may be subject to
challenge, invalid or unenforceable;
(c) Other than (i) a notice from the Mayo Foundation to the effect that the
use of a certain mouse infringes the patent rights of Athena Neurosciences,
Inc., and (ii) claims that have been made by Buyer or any of its Affiliates, and
other than (A) United States Patent Nos. 5,753,624 and 5,851,996 assigned to
Milkhaus Laboratories, Inc., and (B) International Application No.
PCT/US91/01898 assigned to molecular RX, Inc., AutoImmune has not received any
notice or claim to the effect that the inventions, discoveries, improvements or
patentable subject matter covered by or included within the Patent Rights may
infringe, violate or misappropriate the patent or trade secret rights of any
third party.
Other than (i) a notice from the Mayo Foundation to effect that the
use of a certain mouse infringes the patent rights of Athena Neurosciences,
Inc., an (ii) claims that have been made by Buyer or any of its Affiliates, and
other than (A) United States Patent Nos.
-5-
<PAGE>
5,753,624 and 5,851,996 assigned to Milkhaus Laboratories, Inc., and (B)
International Application No. PCT/US91/01898 assigned to molecular RX, Inc., B&W
has not received any notice or claim to the effect that the inventions,
discoveries, improvements or patentable subject matter covered by or included
within the Patent Rights may infringe, violate or misappropriate the patent or
trade secret rights of any third party;
(d) Other than the [___________________________] and the Exclusive License,
AutoImmune has not granted any license or sublicense (including by implication,
estoppel or otherwise) or entered into any contract with any third party prior
to the Effective Date relating to otherwise concerning the Patent Rights.
Other than the [___________________________] and the Exclusive
License, B&W has not granted any license or sublicense (including by
implication, estoppel or otherwise) or entered into any contract with any third
party prior to the Effective Date relating to or otherwise concerning the Patent
Rights;
(e) Apart from any rights of the Untied States Government with respect to
grant funding, if any, or any claim (if any) of
[___________________________________________________], the sale and transfer of
the Patent Rights from B&W to Buyer as contemplated in this Agreement will be
free and clear of the Exclusive License and any encumbrances, liens, claims or
adverse interests created by AutoImmune.
Apart from any rights of the United States Government with respect to
grant funding, if any, or any claim (if any) of
[___________________________________________________] the sale and transfer of
the Patent Rights from B&W to Buyer as contemplated in this Agreement will be
free and clear of the Exclusive License and any encumbrances, liens, claims or
adverse interests created by B&W; and
(f)(1) B&W represents and warrants with respect to the Patent Rights that
it is ware of the provisions of 35 U.S.C. (S)(S) 201 through 211 (the statute)
and 37 C.F.R. Part 401 (the regulations) and has determined that the Patent
Rights do not constitute a "subject invention" under the statute or the
regulations.
(2) B&W undertakes, in the event that the United States were to claim
that the Patent Rights do constitute a "subject invention," to resolve the claim
of the United States in a manner consistent with B&W's representations and
warranties in subsections (a) and (e) of this Article Five (excluding all
exceptions therein respecting grant funding) using the procedure that 37 C.F.R.
(S) 401.11(d) provides.
Except as expressly provided in this Section 5, Seller makes no other
representations or warranties concerning the Patent Rights including any
warranties of merchantability or fitness for any particular purpose, express or
implied.
-6-
<PAGE>
5.5 REPRESENTATION AND WARRANTY OF BUYER
Buyer represents and warrants to B&W and AutoImmune that the following
representation and warranty is true and correct as of the Effective Date:
(a) Buyer has not received any written claim from any third party
(including without limitation
[___________________________________________________]) directed to Buyer
claiming any interest in the Patent Rights or to the underlying inventions or
technology, including any claim of any ownership, license or other rights
therein, under any legal or equitable theory, whether by implication, estoppel
or in any other manner.
6. BUYER'S CLOSING CONDITIONS
The obligation of Buyer to consummate the transaction contemplated by this
Agreement shall be subject to the fulfillment, or the waiver by Buyer, on or
prior to the Closing Date, of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by either Person of Seller pursuant to Section 4 and 5 shall
have been true and correct as of the Effective Date and shall be true and
correct at and as of the Closing Date (taking into account the termination of
the Exclusive License) as though made at and as of the Closing Date.
6.2 NO ADVERSE CLAIM. There shall not be pending any written claim from
any third party (including without limitation
[_____________________________________________________]) directed to Buyer,
AutoImmune and/or B&W claiming any interest in the Patent Rights or in the
underlying inventions or technology, including any claim of any ownership,
license or other rights therein, under any legal or equitable theory, whether by
implication, estoppel or in any other manner.
6.3 INSTRUMENTS OF TERMINATION, CONVEYANCE AND ASSIGNMENT. At the
Closing, B&W and AutoImmune shall have delivered to Buyer (a) a mutual
termination agreement terminating the Exclusive License as to the Patent Rights
in a form acceptable to Buyer, and (b) such assignment (in the form set forth in
Exhibit C) and other good and sufficient instruments of conveyance, transfer and
assignment, in form and substance reasonably satisfactory to Buyer and its
counsel, as are effective to vest in Buyer all right, title, and interest in and
to the Patent Rights, free and clear of the Exclusive License and all other
encumbrances, liens, claims and adverse interest of any kind created by either
Person of Seller other than any rights of the United States Government with
respect to grant funding, if any, or any claim (if any) of
[___________________________________________________].
-7-
<PAGE>
6.4 RELEASE AGREEMENT. B&W, AutoImmune, Athena Neurosciences, Inc. and
Elan shall have executed and delivered a Release Agreement in the form attached
hereto as Exhibit D.
6.5 INVENTOR COOPERATION AGREEMENTS. Each of the inventors of the Patent
Rights shall have executed and delivered to Buyer an Inventor Cooperation
Agreement in the form attached hereto as Exhibit E.
7. SELLER'S CLOSING CONDITIONS
The obligations of Seller to consummate the transaction contemplated by
this Agreement shall be subject to the fulfillment, or the waiver by each Person
of Seller, on or prior to the Closing Date, of the following conditions:
7.1 PURCHASE PRICE. The obligations of Seller to consummate the
transactions contemplated hereby shall be subject to payment by Buyer, on the
Closing Date, of the Closing Date purchase price in accordance with Section
2.2(a).
7.2 RELEASE AGREEMENT. B&W, AutoImmune, Athena Neurosciences, Inc. and
Elan shall have executed and delivered a Release Agreement in the form attached
hereto as Exhibit D.
7.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Buyer pursuant to Sections 4 and 5.5 shall have been true and
correct as of the Effective Date and shall be true and correct at and as of the
Closing Date as though made at and as of the Closing Date.
8. OBLIGATIONS AFTER CLOSING
8.1 DELIVERY OF CASE FILES, COOPERATION, ETC. No later than ten (10) days
after the Closing Date, B&W and AutoImmune shall each deliver to Buyer its
complete files, other than documents and other materials that constitute work
product in the civil actions that are the subject of the Release Agreement that
is attached to this Agreement as Exhibit D, relating to the Patent Rights,
including all patent prosecution files therefor. B&W and AutoImmune shall each
also, without further consideration, cause (i) its counsel to deliver their
complete files, other than documents and materials that constitute work product
in the civil actions that are the subject of the release that is attached to
this Agreement as Exhibit D, relating to the Patent Rights to Buyer and to
cooperate fully with Buyer to promptly transfer the prosecution of the Patent
Rights to Buyer and its counsel, and (ii) the inventors of the Patent Rights to
cooperate fully with Buyer (e.g., by signing assignments or other appropriate
documents or papers, taking oaths, giving testimony and/or being interviewed by
counsel, etc.) in the procurement, prosecution, maintenance, enforcement and/or
defense of the Patent Rights worldwide. Notwithstanding the foregoing, B&W and
AutoImmune shall not be obligated to transfer any
-8-
<PAGE>
privileged documents relating to the civil actions that are the subject of the
Release Agreement that is attached to this Agreement as Exhibit D.
8.2 FURTHER ASSURANCES. From and after the Closing Date, from time to
time, at Buyer's request and without further consideration, B&W and AutoImmune
shall each execute and deliver such other instruments and take such other action
as Buyer may reasonably request to transfer, deliver and vest in Buyer title to
and possession of the Patent Rights, to enforce Buyer's rights in the Patent
Rights and otherwise to consummate the transactions contemplated by the
Agreement.
8.3 INDEMNIFICATION.
(A) To the extent provided in this Section 8.3, B&W and AutoImmune shall
each indemnify and hold Buyer, its Affiliates and their respective officers,
directors, agens and shareholders harmless from and against any claim, demand or
action to the extent that such claim, demand or action arises from, is based on
or otherwise results from any breach of such Person's representations,
warranties or covenants under this Agreement. To the extent provided in this
Section 8.3, such Person will bear the expense of the defense of any such claim,
demand or action (including all attorneys' and experts' fees and court costs)
and pay any damages and settlements finally awarded by a court of competent
jurisdiction and all losses and costs that are attributable to such claim,
demand or action, provided that Buyer notifies such Person promptly in writing
of the claim, demand or action. Buyer shall allow such Person to direct the
defense or settlement of such claim, demand or action through counsel of such
Person's choice (reasonably acceptable to Buyer, such acceptance not be
unreasonably withheld or delayed) and shall cooperate fully with such person in
the defense thereof (such as by making relevant documents and personnel
reasonably available to such Person and by giving testimony and otherwise
providing evidence, as appropriate, at such Person's cost and expense), provided
that no settlement or compromise of any such claim, demand or action admitting
liability of or imposing duties of performance or non-performance upon Buyer may
be effected without the prior written consent of Buyer. Notwithstanding the
foregoing, Buyer shall be entitled (but not obligated) to participate in the
defense of any such claim, demand or action through separate counsel of its
choice at its expense. B&W and/or AutoImmune shall not be responsible for any
settlement or compromise made without its consent, which consent shall not be
unreasonably withheld or delayed.
(B) The total aggregate liability of each of B&W and AutoImmune under this
Section 8.3 or Article Five or otherwise for breach of any representation,
warranty or covenant (inclusive of all defense costs such as attorneys' and
experts' fees and court costs) shall be limited to (a) a right of deduction and
offset against the Subsequent Payments (up to a maximum of $2,850,000 in the
case of AutoImmune and a maximum of $150,000 in the case of B&W), provided that
Buyer must first so exhaust the Subsequent Payments if circumstances permit it
to do so, and (b) should the Subsequent Payments be so exhausted or in
circumstances in which Buyer is unable to exercise its right of deduction and
offset against
-9-
<PAGE>
them, a right to make a claim against AutoImmune or B&W for an amount up to the
amount of the purchase price that each has actually received hereunder or under
the Separate Agreement (in the case of AutoImmune, a maximum of $3,800,000 in
the event that the Subsequent Payments are exhausted and $6,650,000 in the event
that circumstances do not permit Buyer to exercise its right to exhaust the
Subsequent Payments; in the case of B&W, a maximum of $200,000 in the event that
Subsequent Payments are exhausted and $350,000 in the event that circumstances
do not permit Buyer to exercise its right to exhaust the Subsequent Payments).
Buyer's right under clause (b) of this paragraph is subject to (i) the exception
that, with respect to an indemnity claim by Buyer under this Section 8.3 or
Article Five or otherwise resulting from a breach by either B&W or AutoImmune of
its representations and warranties under Section 5(c), such total aggregate
liability shall be limited to the Subsequent Payments actually paid or payable
to each of them hereunder (a maximum of $2,850,000 in the case of AutoImmune and
a maximum of $150,000 in the case of B&W) and (ii) the exception that, with
respect to an indemnity claim by Buyer under this Section 8.3 or Article Five or
otherwise resulting from a breach by B&W of its representations and warranties
under Section 5(f), such total aggregate liability shall be limited to the
Subsequent Payments actually paid or payable to B&W hereunder (a maximum of
$150,000), and, in either case, Buyer shall, if circumstances permit, first
exercise its right of deduction and offset against the Subsequent Payments.
(C) Notwithstanding the limitations of Section B above, in the event Buyer
is able to establish that AutoImmune had actual knowledge that B&W, at the time
of entering into and closing this Agreement, was in breach any of its
representations and warranties contained in Article 5, in addition to Buyer's
rights against B&W under this Section 8.3, AutoImmune acknowledges and agrees
that Buyer shall have a right of deduction and offset against the Subsequent
Payments to be received by AutoImmune (up to a maximum of $2,850,000, and a
right to make a claim against AutoImmune for an amount up to the amount of the
purchase price that AutoImmune has actually received under this Agreement
($3,800,000 in the event that the Subsequent Payments have been exhausted and
$6,650,000 in the event that circumstances do not permit Buyer to exercise its
right to exhaust the Subsequent Payments), provided that Buyer shall, if
circumstances permit, first exercise its right of deduction and offset against
the Subsequent Payments.
(D) AutoImmune and B&W shall have no liability to Buyer under or with
respect to this Agreement except as provided in this Section 8.3.
8.4 DISCLAIMER OF CONSEQUENTIAL DAMAGES; ETC. Notwithstanding the
provisions of Section 8.3 or otherwise, in no event will B&W, AutoImmune or
Buyer be liable to any other party to this Agreement or its Affiliates for any
incidental, special, punitive, consequential or exemplary damages or lost
profits resulting from or arising under this Agreement, regardless of the cause
or theory of action (whether contract, tort, including strict liability and
negligence, or otherwise).
-10-
<PAGE>
9. GENERAL PROVISIONS
9.1 PAYMENT OF CERTAIN EXPENSES. Buyer shall be responsible for paying
all recording fees necessary to record the instruments of conveyance and
assignment contemplated herein. Subject to the foregoing, each party shall be
liable for its own costs and expenses incurred in connection with the
preparation, execution and performance of this Agreement.
9.2 WAIVER. Any of the terms and conditions of this Agreement may be
waived at any time and from time to time in writing by the party or parties
entitled to the benefits thereof without affecting any other terms or conditions
of this Agreement.
9.3 GOVERNING LAW AND FORUM. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the conflict of laws principles thereof. In the event of any claim or
dispute arising out of this Agreement, the parties hereby irrevocably consent
and submit to the exclusive jurisdiction of the federal and state courts in the
State of Delaware. Each party agrees to accept service of process by registered
or certified mail or the equivalent thereof direct to the address in effect
pursuant to the Release Agreement or by whatever other means are permitted by
such court. The parties irrevocably waive any claim that any suit, action or
proceeding brought in the federal or state court in the State of Delaware has
been brought in an inconvenient forum.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
an be binding upon the parties, and their successors and assigns.
9.5 INTERPRETATION. In any interpretation of this Agreement, it shall be
deemed that this Agreement was prepared jointly by the parties, and no ambiguity
shall be construed or resolved against any party on the premise or presumption
that such party was responsible for drafting this Agreement.
9.6 SEVERABILITY. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void, then all parties shall be relieved of all
obligations arising under such provision, but only to the extent that such
provision is illegal, unenforceable or void. Further this Agreement shall be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable while preserving its intent or, if that is not possible,
by substituting therefor another provision that is legal and enforceable and
achieves the same intended objective. If the remainder of this Agreement shall
not be affected by such illegal, unenforceable or void provision and its capable
of substantial performance, then each provision not so affected shall be
enforced to the extent permitted by law.
9.7. SINGULAR/PLURAL. Whenever in the context it appears appropriate, each
term stated either in the singular or the plural shall include both the singular
and the plural.
-11-
<PAGE>
9.8 HEADINGS. Section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
9.9 COUNTERPARTS. This Agreement and any amendments, waivers, consents
or supplements hereto may be executed in any number of counterparts, and by
different parties in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same agreement. Each such agreement shall become
effective upon the execution of a counterpart hereof or thereof by each of the
parties hereto.
9.10 MEDIA RELEASES. All media releases, public announcements and public
disclosures by B&W, AutoImmune or Buyer, or their respective Affiliates,
representatives, employees or agents, relating to this Agreement or its subject
matter or using the name of another party, but not including any announcement
intended solely for internal distribution by a party or its Affiliate or any
disclosure required (in the opinion of counsel for a party or its Affiliate) by
legal, accounting or regulatory requirements, shall be coordinated with and
approved in writing by the other parties prior to the release thereof.
9.11 WAIVER. No delay or omission by a party to exercise any right or
power hereunder shall impair any right or power or be construed to be a waiver
thereof. A waiver by any party of any of the covenants, conditions or
agreements to be performed by any other party or any breach thereof shall not be
construed to be a waiver of any succeeding breach thereof or of any other
covenant, condition or agreement contained herein. All remedies provided for in
this Agreement shall be cumulative and in addition to and not in lieu of any
other remedies available to any party at law, in equity or otherwise, and may be
enforced concurrently therewith or from time to time.
9.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including its Exhibits)
and the instruments of conveyance and other documents and agreements referred to
herein contain the entire agreement between the parties with respect to the
subject matter hereof, and supersede any prior agreement, understanding or
representations relating thereto. No representation, promise or inducement has
been made by either Person of Seller or Buyer that is not embodied in this
Agreement (including its Exhibits) or the instruments of conveyance or other
documents or agreements referred to herein. This Agreement may be amended or
modified only by a written instrument executed by B&W, AutoImmune and Buyer or
their respective successors and assigns.
9.13 SEVERAL AND NOT JOINT. All representations, warranties, covenants and
agreements of AutoImmune and B&W under this Agreement shall be several and not
joint.
(Signatures continues on next page.)
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the Effective Date.
SELLER:
THE BRIGHAM AND WOMEN'S HOSPITAL, INC.
By: /s/ William D. Terry
-----------------------------------
Name: William D. Terry, M.D.
----------------------------------
Title: V.P. of CSR&L
------------------------------
AUTOIMMUNE INC.
By: /s/ Robert C. Bishop
------------------------------------
Name: Robert C. Bishop, Ph.D.
-----------------------------------
Title: Chief Executive Officer
-----------------------------
BUYER:
NEURALAB LIMITED
By: /s/ Kevin Insley
------------------------------------
Name: Kevin Insley
-----------------------------------
Title: Vice President
------------------------------
-13-
<PAGE>
GUARANTY OF ELAN
----------------
For the valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and in consideration of B&W and AutoImmune (collectively, the
"Seller") executing and delivering the within Agreement for Assignment of Patent
Rights (the "Agreement"), Elan Pharmaceuticals, Inc. ("Elan") hereby
unconditionally guarantees to Seller, their respective successors and assigns,
full and prompt payment and performance of all of the obligations of Neuralab
Limited under the Agreement. This guaranty shall operate as continuing,
absolute and irrevocable. The liability of Elan hereunder shall be primary, and
Elan hereby waives all suretyship defenses to enforcement of this Guaranty. The
provisions of Section 9.3 of the Agreement shall apply to this Guaranty.
ELAN PHARMACEUTICALS, INC.
By: /s/ Paul Goddard
----------------
Name: Paul Goddard
--------------
Title: President & CEO
-----------------
<PAGE>
EXHIBIT A
PATENT RIGHTS
U.S. Provisional Number [__________] filed [________________]
U.S. Provisional Number [__________] filed [________________]
U.S. Patent Application [____________] filed [________________]
<PAGE>
EXHIBIT B
COMMON STOCK WARRANT
WARRANT REGISTRATION RIGHTS AGREEMENT
[to be attached]
<PAGE>
EXHIBIT C
THIS ASSIGNMENT, by THE BRIGHAM AND WOMEN'S HOSPITAL, INC. a Massachusetts
charitable corporation, and having its principal place of business in BOSTON,
MASSACHUSETTS (hereinafter referred to as "the Assignor"), witnesseth:
WHEREAS, by virtue of three (3) Assignments recorded in the United States
Patent and Trademark Office, at reel [____], frame [___], reel [____], frame
[____] and reel [____] frame [____] the Assignor is the owner of the entire
right, title and interest of the inventions set forth as follows:
Title of Invention: [_________________________________________________]
Alzheimer's Disease
Filing date: [________________] Serial No.: [__________];
Filing date: [________________] Serial No.: [__________]; and
Filing date: [________________] Serial No.: [__________]
WHEREAS, NEURALAB LIMITED, a corporation duly organized under and pursuant
to the laws of BERMUDA, and having its principal place of business at 102 ST.
JAMES COURT, FLATTS, SMITHS FL04 BERMUDA (hereinafter referred to as "the
Assignee") has acquired the entire right, title and interest in and to said
inventions, the right to file applications on said inventions and the entire
right, title and interest in and to any applications, including provisional
applications for Letters Patent of the United States or other countries claiming
priority to said applications, and in and to any Letters Patent or Patents,
United States or foreign, to be obtained therefor and thereon.
NOW, THEREFORE, effective as of March _____, 2000, for good and sufficient
consideration, the receipt and adequacy of which is hereby acknowledged, the
Assignor has sold, assigned, transferred, and set over, and by these presents
does sell, assign, transfer and set over, unto the Assignee, its successors,
legal representatives and assigns the entire right, title and interest in and to
the above-mentioned inventions, the right to file applications for Letters
Patent or Patents of the United States or other countries claiming priority to
said applications, and any and all Letters Patent or Patents of the United
States of America and all foreign countries that may be granted therefor and
thereon, and in and to any and all applications claiming priority to said
applications, divisions, continuations and continuations-in-part of said
applications, and reissues and extensions of said Letters Patent or Patents, and
all rights under the International Convention for the Protection of Industrial
Property and all rights to sue for past infringements thereof or thereon, the
same to be held and enjoyed by the Assignee, for its own use and behalf and the
use and behalf of its successors, legal representatives and assigns, to the full
end of the term or terms for which Letters Patent or Patents may be granted as
fully and entirely as the same would have been held and enjoyed by the Assignor
had this sale and assignment not been made;
<PAGE>
AND for the same consideration, the Assignor hereby covenants and agrees to
and with the Assignee, its successors, legal representatives and assigns, that
the Assignor will, whenever counsel of the Assignee, or the counsel of its
successors, legal representatives and assigns, shall advise that any proceeding
in connection with said inventions or said applications for Letters Patent or
Patents, or any proceeding in connection with Letters Patent or Patents for said
inventions in any country, including interference proceedings, is lawful and
desirable, or that any application claiming priority to said application,
division, continuation, or continuation-in-part of any applications for Letters
Patent or Patents, or any reissue or extension of any Letters Patent or Patents
to be obtained thereon, is lawful and desirable, sign all papers and documents,
take all lawful oaths, and do all acts necessary or required to be done for the
procurement, maintenance, enforcement and defense of Letters Patent or Patents
for said inventions, without charge to the Assignee, its successors, legal
representatives and assigns, but at the cost and expense of the Assignee, its
successors, legal representatives and assigns;
AND the Assignor hereby requests the Commissioner of Patents to issue any
and all said Letters Patent or Patents of the United States to the Assignee, as
the Assignee of said inventions and the Letters Patent or Patents to be issued
thereon for the sole use and behalf of the Assignee, its successors, legal
representatives and assigns;
AND Assignor acknowledges and confirms that this ASSIGNMENT is made in
connection with a certain Agreement for Assignment of Patent Rights dated
effective as of January 29, 2000 among Assignor, Assignee and AutoImmune, Inc.,
a Delaware corporation.
IN TESTIMONY WHEREOF, Assignor confirms that Assignor has signed its name
on the date indicated below.
THE BRIGHAM AND WOMEN'S
HOSPITAL, INC.
By: /s/ William D. Terry, M.D.
----------------------------
Title: Vice President
--------------
Date:
-----------------------
<PAGE>
EXHIBIT D
RELEASE AGREEMENT
[to be attached]
<PAGE>
EXHIBIT E
INVENTOR COOPERATION AGREEMENT
For good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Dr. [________________], of
[_______________________________________] hereby agrees to assist Neuralab
Limited a Bermuda company and/or its successors and assigns (the "BUYER"), in
every way Buyer deems reasonably necessary or desirable (but at the Buyer's
expense as provided below) to prosecute, procure and obtain and from time to
time maintain, enforce and/or defend patent applications and patents worldwide
on the inventions (the "INVENTIONS") which are claimed or based on or entitled
to the priority date of U.S. Provisional Patent Applications numbered
[__________], filed [______________] and [__________], filed [_________] and/or
U.S. Patent Application [__________] (collectively, the "APPLICATIONS").
Accordingly, I agree that whenever counsel to the Buyer advises me that any
proceeding in connection with the Applications or any patents resulting from any
patent applications based on the Inventions or claiming priority from the
Applications (collectively, the "PATENTS") in any country, including
interference proceedings, is lawful and desirable, or that any patent
application claiming priority from the Applications or claiming one or more of
the Inventions, or any division, continuation or continuation-in-part of any
such patent application, or any reissue or extension of any Patent, is lawful
and desirable, that I will sign all lawful papers, instruments and documents,
take all lawful oaths, give truthful testimony and do all acts reasonably
necessary or required of me for the procurement, prosecution, maintenance,
enforcement and/or defense of the Applications, resulting patent applications
and/or Patents, without additional charge to the Buyer for my time during the
period while I am employed at The Brigham and Women's Hospital, Inc., but at the
cost and expense of the Buyer for all costs and expenses involved (e.g., travel
expenses, postage, courier expenses, other out-of-pocket expenses, etc.).
My obligation to assist the Buyer as aforesaid in any and all countries
shall continue beyond the termination of my employment with The Brigham and
Women's Hospital, Inc., but Buyer shall compensate me at a reasonable rate after
such termination for my time actually spent at the Buyer's requested on such
assistance. Further, in the event that Buyer is unable for any reason
whatsoever to secure my signature to any lawful and necessary paper, document or
instrument required to apply for, prosecute, execute, renew, maintain, enforce
and/or defend any patent application, Patent or other document or instrument
with respect to an Invention (including renewals, extensions, continuations,
divisions or continuations in part thereof, but not including any declarations
supporting experimental results or opinions), I hereby irrevocably designate and
appoint Buyer and its duly authorized officers and agents, as my agents and
attorneys-in-fact to act for and in my behalf and instead of me, to execute and
file any such application, paper, document, instrument or renewal and to do all
other lawfully permitted acts to further the procurement, prosecution,
maintenance, enforcement and/or defense of the Applications, resulting patent
applications or Patents with the same legal force and effect as if executed by
me.
Dated: March 15, 2000
------------------
/s/
------------------------------
Dr. [________________]
<PAGE>
EXHIBIT F
INVENTOR COOPERATION AGREEMENT
For good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Dr. [________________], of
[_______________________________________] hereby agrees to assist Neuralab
Limited a Bermuda company and/or its successors and assigns (the "BUYER"), in
every way Buyer deems reasonably necessary or desirable (but at the Buyer's
expense as provided below) to prosecute, procure and obtain and from time to
time maintain, enforce and/or defend patent applications and patents worldwide
on the inventions (the "INVENTIONS") which are claimed or based on or entitled
to the priority date of U.S. Provisional Patent Applications numbered
[__________], filed [____________] and [_________], filed [___________] and/or
U.S. Patent Application [__________] (collectively, the "APPLICATIONS").
Accordingly, I agree that whenever counsel to the Buyer advises me that any
proceeding in connection with the Applications or any patents resulting from any
patent applications based on the Inventions or claiming priority from the
Applications (collectively, the "PATENTS") in any country, including
interference proceedings, is lawful and desirable, or that any patent
application claiming priority from the Applications or claiming one or more of
the Inventions, or any division, continuation or continuation-in-part of any
such patent application, or any reissue or extension of any Patent, is lawful
and desirable, that I will sign all lawful papers, instruments and documents,
take all lawful oaths, give truthful testimony and do all acts reasonably
necessary or required of me for the procurement, prosecution, maintenance,
enforcement and/or defense of the Applications, resulting patent applications
and/or Patents, without additional charge to the Buyer for my time during the
period while I am employed at The Brigham and Women's Hospital, Inc., but at the
cost and expense of the Buyer for all costs and expenses involved (e.g., travel
expenses, postage, courier expenses, other out-of-pocket expenses, etc.).
My obligation to assist the Buyer as aforesaid in any and all countries
shall continue beyond the termination of my employment with The Brigham and
Women's Hospital, Inc., but Buyer shall compensate me at a reasonable rate after
such termination for my time actually spent at the Buyer's requested on such
assistance. Further, in the event that Buyer is unable for any reason
whatsoever to secure my signature to any lawful and necessary paper, document or
instrument required to apply for, prosecute, execute, renew, maintain, enforce
and/or defend any patent application, Patent or other document or instrument
with respect to an Invention (including renewals, extensions, continuations,
divisions or continuations in part thereof, but not including any declarations
supporting experimental results or opinions), I hereby irrevocably designate and
appoint Buyer and its duly authorized officers and agents, as my agents and
attorneys-in-fact to act for and in my behalf and instead of me, to execute and
file any such application, paper, document, instrument or renewal and to do all
other lawfully permitted acts to further the procurement, prosecution,
maintenance, enforcement and/or defense of the Applications, resulting patent
applications or Patents with the same legal force and effect as if executed by
me.
Dated: March 15, 2000
-----------------
/s/
-----------------------
Dr. [________________]
<PAGE>
* * * * *
PORTIONS OF THIS EXHIBIT HAVE BEEN
OMITTED AND FILED SEPARATELY WITH
THE COMMISSION PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 24(B)-2. THE LOCATION OF
THOSE OMITTED PORTIONS IS DENOTED
BY BRACKETS.
* * * * *
Exhibit 10.34
March 16, 2000
The Brigham and Women's Hospital, Inc.
75 Francis Street
Boston, MA 02103
Ladies and Gentlemen:
1. Reference is made to the Amended and Restated Research and Development
Agreement made as of September 9, 1988, and revised as of July 1, 1992, and
April 14, 1995 (the "Research Agreement"). Capitalized terms used herein that
are not otherwise defined are used with the meanings defined in the Research
Agreement.
2. "Patent Rights" shall mean and include (i) all United States and
foreign applications for patents listed in Exhibit A, as well as all United
States and foreign patents that have or may hereafter issue in respect of such
applications for patents, and (ii) all applications for patents whose subject
matter in whole or in part is entitled to the benefit of the filing date(s) of
any of the applications for patents listed on Exhibit A and all United States
and foreign patents that have or may hereafter issue in respect of such
applications for patents, including in each case of the foregoing clauses (i)
and (ii) of this definition, without limitation, all continuations,
continuations-in-part, divisional patents, substitutions, Patent Cooperation
Treaty applications, United States provisional patent applications, continued
prosecution applications, utility models, supplementary protection certificates,
reexaminations, renewals, extensions and reissues, and all rights to sue for
past or future infringement thereof.
3. A question has arisen as to whether the Patent Rights resulted from
the Research Program and, therefore, constitute Developed Technology.
4. In order to resolve matters between the Company and BWH relating to
the Patent Rights, the Company acknowledges and agrees that BWH is the owner of
the Patent Rights and abandons its contention that the Company has any license
(exclusive or non-exclusive) or other rights under the Research Agreement to the
Patent Rights. BWH acknowledges and agrees that the purchase price to be
received for the sale and transfer of the Patent Rights to Neuralab Limited, an
affiliate of Elan Pharmaceuticals, Inc. (the "Buyer"), under a certain agreement
with an effective date of January 29, 2000 (the "Agreement"), including both the
initial payment of $4,000,000 and the two subsequent payments of $[_________]
and $[_________] for which the agreement provides, shall be paid to the Company,
except that the Company shall pay to BWH [____] percent ([_]%) of any purchase
price (including both the initial payment of $4,000,000 and the two subsequent
payments of $[_________] and $[_________] that the Company receives from the
Buyer for the Patent Rights (the "[_]% payments"); further, the Company shall
pay to BWH, in the event that the Company
<PAGE>
issues a warrant as provided in Section 2.2(c) of the Agreement and the warrant
is exercised, a sum (the BWH warrant exercise sum) equal to [____] percent of
the total exercise price that the Company receives under the warrant. BWH agrees
to tender promptly to the Company [____] per cent (the BWH warrant purchase
shares) of the total number of shares that the Company is required to issue upon
the exercise of the warrant upon the Company's submission to BWH of evidence in
form reasonably acceptable to BWH that the warrant has been exercised and that
the Company has delivered the total number of shares to the Buyer. The Company
and BWH acknowledge that the evidence in form reasonably acceptable to BWH that
the warrant has been exercised and that the Company has delivered the total
number of shares to the Buyer. The Company and BWH acknowledge that the
Agreement provides that the Company may issue warrants subject to the terms of
this Section Four on two occasions. The Company shall make each [_]% payment to
BWH within ten business days following the Company's receipt of payment from the
Buyer. The Company shall pay to BWH the warrant exercise sum prior to BWH's
delivery to the Company of the BWH warrant purchase shares.
5. Subject to the foregoing, the Research Agreement shall continue in
full force and effect in accordance with its terms.
6. This agreement may not be amended except by a written agreement
executed by BWH and the Company. This agreement shall take effect as an
instrument under seal, shall be binding upon and shall inure to the benefit of
the Company and BWH and their respective successors and assigns, and constitutes
the entire agreement between the parties with respect to its subject matter.
If the foregoing accurately sets forth our agreement, please so indicate by
signing below.
Very truly yours,
AUTOIMMUNE INC.
By /s/ Robert C. Bishop
--------------------
Robert C. Bishop , Ph.D.
Its Chief Executive Officer
AGREED:
THE BRIGHAM AND
WOMEN'S HOSPITAL, INC.
By /s/ William D. Terry
--------------------------------
William D. Terry, M.D.
Its Vice President, Corporate Sponsored
Research and Licensing
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,478,000
<SECURITIES> 6,783,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,265,000
<PP&E> 160,000
<DEPRECIATION> 160,000
<TOTAL-ASSETS> 10,265,000
<CURRENT-LIABILITIES> 129,000
<BONDS> 0
0
0
<COMMON> 118,074,000
<OTHER-SE> (107,938,000)
<TOTAL-LIABILITY-AND-EQUITY> 10,265,000
<SALES> 0
<TOTAL-REVENUES> 4,000,000
<CGS> 0
<TOTAL-COSTS> 601,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,532,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,532,000
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
</TABLE>
