<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
-----------
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
OR
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
COMMISSION FILE NUMBER: 0-28324
BIOTRANSPLANT INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 04-3119555
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
CHARLESTOWN NAVY YARD, BUILDING 75 THIRD AVENUE
CHARLESTOWN, MASSACHUSETTS 02129
(Address of principal executive offices)
(617) 241-5200
(Registrant's telephone number, 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
--- ---
As of November 12, 1996, there were 8,548,874 shares of the Registrant's
Common Stock outstanding.
================================================================================
<PAGE> 2
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Page No.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets as of December 31, 1995
and September 30, 1996......................................... 3
Condensed Consolidated Statement of Operations for the three and
nine months ended September 30, 1995 and 1996, and for the
period from inception (March 20, 1990) to September 30, 1996... 4
Condensed Consolidated Statement of Cash Flows for nine months
ended September 30, 1995 and 1996, and for the period from
inception (March 20, 1990) to September 30, 1996............... 5
Notes to Condensed Consolidated Financial Statements............... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...................................... 7
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................. 10
SIGNATURES..................................................... 10
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30,
December 31, 1996
1995 (Unaudited)
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,848,549 $ 15,896,560
Marketable securities -- 17,632,072
Accounts receivable 250,000 150,841
Deposits and other prepaid expenses 343,303 759,020
------------ ------------
Total current assets 3,441,852 34,438,493
Property and equipment - net 1,830,219 1,422,160
Other assets 99,563 74,673
------------ ------------
TOTAL ASSETS $ 5,371,634 $ 35,935,326
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current obligation under capital leases $ 450,768 $ 426,343
Accounts payable 187,225 222,934
Accrued expenses 967,430 1,186,908
Deferred revenue 1,750,000 2,000,000
------------ ------------
Total current liabilities 3,355,423 3,836,185
------------ ------------
Long-term obligation under capital lease 614,939 298,567
------------ ------------
Convertible notes payable to stockholders 1,000,000
--
------------ ------------
Redeemable convertible preferred stock at net amount paid in, 15,586,345 shares issued
and outstanding at December 31, 1995 29,241,474 --
------------ ------------
Stockholders' equity (deficit):
Preferred stock, $.01 par value, authorized 2,000,000 shares; issued and
outstanding - no shares -- --
Common stock, $.01 par value, authorized 25,000,000 shares; issued and outstanding
126,594 shares at December 31, 1995 and 8,548,874 shares at September 30, 1996 1,266 85,489
Additional paid-in capital 1,230,343 65,256,995
Accumulated deficit (30,071,811) (33,541,910)
------------ ------------
Total stockholders equity (deficit) (28,840,202) 31,800,574
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,371,634 $ 35,935,326
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
<PAGE> 4
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended Cumulative
September 30, September 30, Since
1995 1996 1995 1996 Inception
---------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues:
License fees $ -- $ -- 2,000,000 $ 2,000,000 $ 9,000,000
Research and development 3,000,000 1,250,000 3,875,000 4,500,000 13,000,000
Interest income 11,057 493,333 105,494 874,345 1,399,822
---------- ----------- ----------- ----------- ------------
Total revenues 3,011,057 1,743,333 5,980,494 7,374,345 23,399,822
---------- ----------- ----------- ----------- ------------
Expenses:
Research and development 2,458,601 3,244,848 7,359,751 8,923,289 45,198,496
General and administrative 477,946 794,423 1,317,052 1,810,598 10,076,197
Interest 265,887 27,776 618,190 110,557 1,667,039
---------- ----------- ----------- ----------- ------------
Total expenses 3,202,434 4,067,047 9,294,993 10,844,444 56,941,732
---------- ----------- ----------- ----------- ------------
Net loss $ (191,377) $(2,323,714) $(3,314,499) $(3,470,099) $(33,541,910)
========== =========== =========== =========== ============
Pro forma net loss per common share $ (0.05) $ (0.27) $ (0.83) $ (0.50)
========== =========== =========== ===========
Shares used in computing pro forma
net loss per common share 4,015,254 8,548,756 4,012,567 6,999,687
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE> 5
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended Cumulative
September 30, Since
1995 1996 Inception
----------- ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(3,314,499) $ (3,470,099) $(33,541,910)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 672,052 504,160 2,380,927
Noncash interest expense -- 15,583 465,477
Noncash expenses related to options and warrants 251,559 24,890 1,110,573
Changes in current assets and liabilities:
Accounts receivable -- 99,159 (150,841)
Deposits and prepaid expenses 154,686 (415,717) (759,020)
Accounts payable 14,594 35,709 222,934
Accrued expenses (33,181) 219,478 1,186,908
Deferred revenue 3,125,000 250,000 2,000,000
----------- ------------ ------------
Net cash provided by (used in) operating activities 870,211 (2,736,837) (27,084,952)
----------- ------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (81,584) (96,100) (3,178,353)
Disposal of property and equipment, net -- -- 28,040
Purchase of marketable securities -- (17,632,072) (17,632,072)
----------- ------------ ------------
Net cash used in investing activities (81,584) (17,728,172) (20,782,385)
----------- ------------ ------------
Cash flows from financing activities:
Proceeds from convertible notes payable to stockholders 1,000,000 -- 9,400,000
Payments of obligations under capital leases (422,893) (340,797) (1,469,299)
Proceeds from sale/leaseback of equipment -- -- 771,968
Net proceeds from equipment leases -- -- 1,422,240
Net proceeds from sale of redeemable convertible preferred stock -- 5,889,530 25,661,526
Proceeds from sale of common stock 7,354 27,964,287 27,977,462
----------- ------------ ------------
Net cash provided by financing activities 584,461 33,513,020 63,763,897
----------- ------------ ------------
Net increase in cash and cash equivalents 1,373,088 13,048,011 15,896,560
Cash and cash equivalents, beginning of period 2,343,126 2,848,549 --
----------- ------------ ------------
Cash and cash equivalents, end of period $ 3,716,214 $ 15,896,560 $ 15,896,560
=========== ============ ============
Supplemental disclosures and noncash transactions:
Increase in equipment under capital leases $ -- $ -- $ (2,210,270)
=========== ============ ============
Conversion of convertible notes payable to stockholders and
accrued interest into redeemable convertible preferred stock $ -- $ 1,055,816 $ 9,905,710
=========== ============ ============
Issuance of warrants $ -- $ -- $ 741,737
=========== ============ ============
Interest paid during the period $ 146,840 $ 94,901 $ 1,309,830
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
5
<PAGE> 6
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. OPERATIONS AND BASIS OF PRESENTATION
BioTransplant Incorporated (the "Company") was incorporated on March 20, 1990.
The Company is developing proprietary anti-rejection pharmaceuticals and organ
transplantation systems which represent a comprehensive approach to inducing
long-term specific transplantation tolerance in humans.
The Company is in the development stage and is devoting substantially all of its
efforts toward product research and development and raising capital. The Company
is subject to a number of risks similar to those of other development stage
companies, including dependence on key individuals, competition from substitute
products and larger companies, the development of commercially usable products,
obtaining regulatory approval for products under development, the development
and marketing of commercial products, and the need to obtain adequate additional
financing necessary to fund the development of its products.
During May 1996, the Company completed an initial public offering of 3,220,000
shares of common stock resulting in net proceeds of approximately $28.0 million
(see Note 4).
The interim financial statements herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
representation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's initial public
offering Prospectus dated May 8, 1996, which is part of the Company's
Registration Statement on Form S-1, as amended and filed with the SEC (Reg. No.
333-2144).
2. CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents and marketable securities are classified as held-to-maturity
and are stated at amortized cost, which approximates market value. Cash
equivalents include short-term, highly liquid investments with original
maturities of less than three months from the date of purchase. Marketable
securities consist primarily of corporate notes with maturities of less than one
year from the date of purchase. At September 30, 1996 the weighted average
maturity of marketable securities was 4 months.
3. PRO FORMA NET LOSS PER COMMON SHARE
Pro forma net loss per common share is based on the pro forma weighted average
number of common shares outstanding during the periods presented, assuming the
automatic conversion of all shares of Series A, B, D and E redeemable
convertible preferred stock then outstanding into 3,212,896 shares of common
stock at September 30, 1995. Pursuant to the requirements of the SEC, common
stock and preferred stock issued during the 12 months immediately preceding the
initial public offering, plus shares of common stock that became issuable during
the same period pursuant to the grant of common stock options and warrants, have
been included in the calculation of pro forma weighted average number of common
shares outstanding for all periods presented until the effective date of the
Company's initial public offering using the treasury stock method.
4. INITIAL PUBLIC OFFERING
In May 1996, the Company completed an initial public offering of 3,220,000
shares of common stock for $9.50 per share, resulting in net proceeds of
approximately $28.0 million. In addition, all outstanding shares of Series A, B,
D and E redeemable convertible preferred stock were automatically converted into
5,202,154 shares of common stock upon the closing of the initial public
offering.
6
<PAGE> 7
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion of the financial condition and results of operations of
the Company for the three and nine months ended September 30, 1995 and 1996
should be read in conjunction with the accompanying unaudited condensed
consolidated financial statements and the related notes thereto.
This report may contain certain forward looking statements which involve risks
and uncertainties. Such statements are subject to certain factors which may
cause the Company's plans and results to differ significantly from the plans and
results discussed in forward looking statements. Factors that may cause such
differences include, but are not limited to, the progress of the Company's
research and development programs, the Company's ability to compete
successfully, the Company's ability to attract and retain qualified personnel,
the Company's ability to enter into and maintain collaborations with third
parties , the Company's ability to enter into and progress in clinical trials,
the time and costs involved in obtaining regulatory approvals, the costs
involved in obtaining and enforcing patents, proprietary rights and any
necessary licenses, the ability of the Company to establish development and
commercialization capacities or relationships, the costs of manufacturing, the
Company's ability to obtain additional funds, and those other risks discussed
under the heading "Risk Factors" in the Prospectus dated May 8, 1996 included in
the Company's Registration Statement on Form S-1, as amended (Reg. No.
333-2144).
OVERVIEW
Since commencement of operations in 1990, the Company has been a development
stage company engaged primarily in the research and development of proprietary
anti-rejection pharmaceuticals and organ transplantation systems which represent
a comprehensive approach to inducing long-term specific transplantation
tolerance in humans. The major sources of the Company's working capital have
been the proceeds of sales of equity securities, sponsored research funding and
license fees and capital lease financings. The Company has not generated any
revenues from the sales of products to date, and does not expect to receive any
product revenues for several years. The Company will be required to conduct
significant research, development, testing and regulatory compliance activities
that, together with general and administrative expenses, are expected to result
in significant and increasing operating losses for at least the next several
years.
In 1993, the Company and Sandoz entered into a collaboration agreement (as
amended and restated in September 1995) for the development and
commercialization of xenotransplantation products utilizing gene transduction.
Under the agreement, Sandoz has committed research funding through March 1998 of
$20.0 million, of which $14.0 million had been received as of September 30,
1996, and agreed to pay license fees of $10.0 million, of which $7.0 million had
been received as of September 30, 1996. Sandoz has also agreed to fund certain
development and premarketing costs of such products, portions of which, under
certain circumstances, may be repayable from the Company's operating profits
from sales of such products.
In October 1995, the Company and MedImmune formed a collaborative research
agreement for the development of products to treat and prevent organ rejection.
MedImmune paid the Company a $2.0 million license fee at the time of execution
of the agreement, and agreed to fund and assume responsibility for clinical
testing and commercialization of BTI-322 and other related products. MedImmune
has agreed to provide research support and make milestone payments which could
total up to an additional $14.0 million, of which $1.0 million had been received
as of September 30, 1996.
7
<PAGE> 8
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Revenues for the three months ended September 30, 1996 decreased to $1.7 million
from $3.0 million for the three months ended September 30, 1995. The anticipated
decrease was primarily due to the timing of $3.0 million in sponsored research
funding from Sandoz during the three months ended September 30, 1995, compared
to $1.0 million during the three months ended September 30, 1996, as a result of
the amendment and restatement of the collaboration agreement with Sandoz in
September, 1995. Under the terms of the amended and restated agreement, Sandoz
has committed an additional $10.0 million of sponsored research funding for a
total of $20.0 million in funding as described in the preceding "Overview"
discussion. This anticipated decrease in revenues was in part offset by a
$250,000 increase in sponsored research funding recognized in connection with
the collaboration formed with MedImmune. Additionally, interest income increased
to $493,000 for the three months ended September 30, 1996 from $11,000 for the
three months ended September 30, 1995. The increase was due primarily to higher
cash balances available for investment as a result of the initial public
offering of the Company's common stock, completed in May 1996.
Research and development expenses increased to $3.2 million for the three months
ended September 30, 1996 from $2.5 million for the three months ended September
30, 1995. This increase was primarily due to additional external research
support, including $214,000 in payments made to Stem Cell Sciences, combined
with increases in research and development staff together with the associated
increases in supplies and support services, partially offset by decreased
expenditures related to the human clinical safety trials for BTI-322.
General and administrative expenses increased to $794,000 for the three months
ended September 30, 1996 from $478,000 for the three months ended September 30,
1995. This increase was primarily due to increases in outside professional
services in connection with market research and business development in part
offset by decreased salary and related expenses for general and administrative
functions.
Interest expense decreased to $28,000 for the three months ended September 30,
1996 from $266,000 for the three months ended September 30, 1995. The decrease
was primarily due to the conversion of $4.4 million and $1.0 million of
convertible notes payable to stockholders, and the accrued interest thereon,
into redeemable convertible preferred stock in October 1995 and February 1996,
respectively. The redeemable convertible preferred stock was automatically
converted to shares of common stock upon the closing of the Company's initial
public offering. The decrease was also attributable to decreasing balances on
existing obligations under capital leases.
As a result of the above factors, the Company incurred a net loss for the three
months ended September 30, 1996 of $2.3 million, or $0.27 per share, compared to
a net loss of $191,000, or $0.05 per share for the three months ended September
30, 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Revenues increased to $7.4 million for the nine months ended September 30, 1996
from $6.0 million for the nine months ended September 30, 1995. The increase in
revenues was primarily due to increased research and development revenues in
connection with $750,000 in sponsored research funding from the collaboration
formed with MedImmune. Sponsored research funding from the collaboration with
Sandoz was $3.8 million for the nine months ended September 30, 1996 compared to
$3.9 for the nine months ended September 30, 1996. Interest income increased to
$874,000 for the nine months ended September 30, 1996 from $105,000 for the nine
months ended September 30, 1995. The increase was due primarily to higher cash
balances available for investment as a result of the Company's initial public
offering, completed in May 1996.
Research and development expenses increased to $8.9 million for the nine months
ended September 30, 1996 from $7.4 million for the nine months ended September
30, 1995. This increase was primarily due to approximately $714,000 of research
support to Stem Cell Sciences, combined with increases in research and
development staff together with the associated increases in supplies and support
services, partially offset by decreased expenditures related to the human
clinical safety trials for BTI-322.
General and administrative expenses increased to $1.8 million for the nine
months ended September 30, 1996 from $1.3 million for the nine months ended
September 30, 1995. This increase was primarily due to increases in outside
professional services in connection with market research and business
development in part offset by decreased salary and related expenses for general
and administrative personnel.
8
<PAGE> 9
Interest expense decreased to $111,000 for the nine months ended September 30,
1996 from $618,000 for the nine months ended September 30, 1995. The decrease
was primarily due to the conversion of $4.4 million and $1.0 million of
convertible notes payable, and the accrued interest thereon, to stockholders
into redeemable convertible preferred stock in October 1995 and February 1996,
respectively. The redeemable convertible preferred stock was automatically
converted into 738,208 shares of common stock upon the closing of the Company's
initial public offering. In addition, the decrease was in part attributable to
decreasing balances on existing obligations under capital leases
As a result of the above factors, the Company incurred a net loss for the nine
months ended September 30, 1996 of $3.5 million, or $0.50 per share, compared to
a net loss of $3.3 million, or $0.83 per share for the nine months ended
September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company completed an initial public offering of 3,220,000
shares of common stock at a price of $9.50 per share, and received net proceeds
of approximately $28.0 million. In addition, all outstanding shares of Series A,
B, D and E redeemable convertible preferred stock were automatically converted
into 5,202,154 shares of common stock upon the closing of the initial public
offering.
Since its inception and prior to the completion of the Company's initial public
offering, the Company's operations have been funded principally through the net
proceeds of an aggregate of $36.2 million from private placements of equity
securities. The Company has also received $21.0 million from a research and
development and collaboration agreement with Sandoz, $3.0 million from an
alliance agreement with MedImmune and $2.2 million in equipment lease financing.
The proceeds of the private placements, notes payable and capital leases and
cash generated from the corporate collaborations with Sandoz and MedImmune have
been used to fund operating losses of approximately $33.5 million and the
investment of approximately $3.7 million in equipment and leasehold improvements
through September 30, 1996. The Company had no significant commitments as of
September 30, 1996 for capital expenditures.
During the nine months ended September 30, 1996, the Company paid Stem Cell
Sciences approximately $929,000 for research support through December, 1996 and
to maintain its pro rata equity interest in Stem Cell Sciences. In addition, the
Company has an option to purchase additional shares of Stem Cell Sciences prior
to December 1996, to maintain its pro rata equity interest. If the Company does
not make such further investment, its rights to certain technologies become
nonexclusive.
The Company had cash and cash equivalents and marketable securities of $33.5 and
working capital of $30.6 million as of September 30, 1996, reflecting the net
proceeds of $28.0 million from the initial public offering as described above.
The Company has entered into sponsored research and consulting agreements with
certain hospitals, academic institutions and consultants, requiring periodic
payments by the Company. Aggregate minimum funding obligations under these
agreements, which include certain cancellation provisions, total approximately
$6.9 million, which includes approximately $3.9 million and $1.5 million in 1996
and 1997, respectively.
The Company anticipates that its existing funds, including the proceeds from its
initial public offering and interest earned thereon, should be sufficient to
fund its operating and capital requirements as currently planned through the end
of 1997. However, the Company's cash requirements may vary materially from those
now planned, due to many factors, including, but not limited to, the progress of
the Company's research and development programs, the scope and results of
preclinical and clinical testing, changes in existing and potential
relationships with corporate collaborators, the time and cost in obtaining
regulatory approvals, the costs involved in obtaining and enforcing patents,
proprietary rights and any necessary licenses, the ability of the Company to
establish development and commercialization capacities or relationships, the
costs of manufacturing and other factors.
The Company expects to incur substantial additional costs, including costs
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, manufacturing and the expansion of its
facilities. The Company will need to raise substantial additional funds, through
additional financings including public or private equity offerings and
collaborative arrangements with corporate partners. There can be no assurance
that funds will be available on terms acceptable to the Company, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate certain of its product development programs or to license to
others the right to commercialize products or technologies that the Company
would otherwise seek to develop and commercialize itself, any of which would
have a material and adverse effect on the Company.
9
<PAGE> 10
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
+10.1 Development and Supply Agreement between BioTransplant Incorporated
and Activated Cell Therapy, dated August 22, 1996
+10.2 Supply Agreement between BioTransplant Incorporated and Neose
Technologies, Inc., dated September 20, 1996
11.1 Statement: Computation of Pro Forma Net Loss Per Common Share
27 Financial Data Schedule.
b) Reports on Form 8-K
None.
- -------------------
+ Confidential Treatment reguested as to certain portions.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BioTransplant Incorporated
(Registrant)
Date: November 14, 1996 /s/ Elliot Lebowitz
----------------------------------------------
Elliot Lebowitz
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Richard V. Capasso
----------------------------------------------
Richard V. Capasso
Director of Finance
(Principal Financial and Accounting Officer)
10
<PAGE> 1
EXHIBIT 10.1
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
DEVELOPMENT AND SUPPLY AGREEMENT
THIS DEVELOPMENT AND SUPPLY AGREEMENT, including the attached Exhibits
(the "Agreement"), effective as of August 22, 1996 (the "Effective Date"), is
made and entered into by and between ACTIVATED CELL THERAPY, INC., a Delaware
corporation with principal offices at 291 North Bernardo Avenue, Mountain View,
California 94043 ("ACT") and BIOTRANSPLANT, INC., a Delaware corporation with
principal offices at Building 75, 3rd Avenue, Charlestown Navy Yard,
Charlestown, Massachusetts 02129 ("BioTransplant").
1. DEFINITIONS
1.1 "ACT Intellectual Property Rights" shall mean any and all
intellectual property rights of ACT, held either alone or together with third
parties, relating to cell-separation and cell enrichment technology, including
but not limited to the intellectual property described by, contained in or
covered by: (i) the registered patents and pending United States of America and
foreign patent applications set forth on Exhibit 1.1; (ii) any additions,
continuations, continuations in part or divisionals based thereon; (iii) any
patent or intellectual property rights obtained from any of the foregoing patent
applications, reissues or extensions; and (iv) any and all trade secrets and
other intellectual property rights relating to the foregoing.
1.2 "Affiliate" shall mean any person, firm or corporation that
controls, is controlled by, or is under common control with either of the
parties. For purposes of this Section 1.2, "control" shall mean ownership,
directly or indirectly, of fifty percent (50%) or more of the voting stock of
the subject party.
1.3 "Agreement Year" shall mean the twelve (12) month period beginning
on the Effective Date and each subsequent twelve (12) month period thereafter.
1.4 "Device(s)" shall mean ACT's cell separation devices, either the 50
ml tubes or the ACT 300 Device, along with ACT's buoyant density material,
specifications for which are to be added to the agreement as Exhibit 1.4 upon
finalization pursuant to Section 3.1.1 or 4.3.1.
1.5 "Field" shall mean human and porcine bone marrow processing for the
purpose of isolating human and/or porcine hematopoietic progenitor cells to be
used to establish immune tolerance in *************** recipients of solid organ
transplants (including but not limited to ******** and ********** transplants).
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
1.6 "First Commercial Sale" shall mean the first sale of any Product by
BioTransplant, its Affiliates or Distributor, following approval of its
marketing by an appropriate governmental agency or when governmental approval is
not required, the first sale in any such country.
1.7 *************************** shall mean ************** and ******
referred to in Section 3.1.3.
1.8 "Manufacturing Procedures" shall mean the proprietary good
manufacturing practices procedures of ACT relating to the manufacture of
Devices. As used throughout this Agreement, Manufacturing Procedures shall mean
the then most current procedures and other information relating to the
manufacture of Devices.
1.9 "Net Sales" shall mean the sum of all amounts received by
BioTransplant or any Affiliate thereof from non-Affiliated third party
purchasers of Products less (i) allowances for rejections or returns, (ii)
transportation (including insurance), handling or shipping charges reflected in
invoices and paid by BioTransplant or its Affiliates for shipment to the
customer from BioTransplant (or its Affiliates), and (iii) taxes and duties
levied, paid, absorbed or allowed by BioTransplant or its Affiliates, (iv)
customary quantity discounts, rebates actually granted and disallowed
reimbursements. Samples or free goods or placements for clinical or marketing
trials shall not be included in the calculation of Net Sales.
In the event a sale is made between BioTransplant and an Affiliate for
resale the Net Sales for determining a payment under this Agreement shall be the
higher of (i) net sales to the Affiliate calculated in the manner of Net Sales
or (ii) the Net Sales of the Affiliate.
1.10 "Product(s)" shall mean a kit or other assembly of one Device
**************************************************************** and materials
sold by BioTransplant or an Affiliate in such kit or assembly.
2. GRANT OF RIGHTS
2.1 Rights. Subject to the terms and conditions of this Agreement, ACT
hereby grants to BioTransplant exclusive, worldwide rights to use Devices (which
use ACT Intellectual Property Rights) to develop, manufacture, market and sell
and have manufactured, marketed and sold, Products, in the Field.
2.2 No Other Rights. BioTransplant will not make or use Devices or
promote, market, sell or otherwise distribute Devices, or sublicense any rights
to Devices received hereunder, for any purpose or in any manner that is
inconsistent with the terms and conditions herein. Except as expressly provided
herein, no other rights or interests are granted to BioTransplant relating to
Devices or the ACT Intellectual Property Rights.
<PAGE> 3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
2.3 Initial Fee. BioTransplant shall make a nonrefundable payment of
******************************************** to ACT payable in quarterly
installments during the first Agreement Year of *******************************
********************* per quarter with the first quarterly installment due
within ten (10) days after execution of this Agreement. This shall be payable by
wire transfer to Account No. 01447-66379 at Bank of America, Castro St., Mt.
View, CA branch, for benefit of Activated Cell Therapy, Inc., ABA routing number
121 000 358.
3. SUPPLY OF DEVICE AND PAYMENT
3.1 Device Supply.
3.1.1 Subject to the terms of this Agreement, BioTransplant shall
purchase from ACT, and ACT shall supply to BioTransplant, either directly or
through a third party supplier designated by ACT, the quantities of Device
ordered by BioTransplant. ACT shall supply Devices exclusively to BioTransplant
for use in the Field. The Devices supplied to BioTransplant shall conform to the
description and specifications set forth in Exhibit 1.4 (which may be amended
from time to time with the mutual consent of the parties) and shall be
manufactured, handled and packaged in accordance with all applicable laws and
regulations.
3.1.2 ACT agrees to supply Devices exclusively to BioTransplant
for its use in the Field.
3.1.3 BioTransplant shall have the choice of the ********** per
bone marrow source to be supplied ********************************************
unless the parties agree on a substitute ******** pursuant to Article 4.
BioTransplant shall give ACT notice of the **************** material chosen at
least ******** prior to desired commercial production. Written orders for
development use shall be sent to ACT at least, for tubes, **************** and
for ACT 300 devices, *************** prior to expected delivery. After ********
from the Effective Date, the order time for ACT 300 devices shall be
***************************. The same requirements as to order number compared
with forecast as in Section 3.5 shall be followed.
3.2 Minimum Purchases and Fees.
3.2.1 Until the First Commercial Sale of a Product, BioTransplant
agrees to order minimum amounts of Devices for research and development use as
follows:
<PAGE> 4
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
<TABLE>
<CAPTION>
Calendar ACT 300 Device Minimum Purchase
Year 50 ml Tubes (150 ml) Annual Fee
- -------- ----------- --------------- ----------------
<S> <C> <C> <C>
1996 *** *** ********
1197 *** *** ********
</TABLE>
1998 forward: Same amounts and prices as 1997
BioTransplant may vary the mix of the above amounts with *** tubes
equalling one ACT 300 device. For each tube ordered, if BioTransplant requires
more than the above amounts in any year, the Annual Fee shall be adjusted by
adding *********** *************** for each additional ACT 300 device and
***************************** for each additional tube. There shall not be any
decrease in the fee for a lesser amount used. This schedule of fees and minima
shall be used until a Product is commercialized at which time the fees in
Section 3.2.2 shall be implemented.
ACT shall credit BioTransplant against the 1996 commitment for 1996
purchases prior to the Effective Date in the amount of ** tubes and *****.
3.2.2 Beginning with the First Commercial Sale of a Product,
BioTransplant shall order at least the minimum amounts of Devices as listed for
1997 in Section 3.2.1 at a price equal to the greater of (i) ******************
********* per procedure in which a Product is used or (ii) a percent of
BioTransplant's Net Sales per Product procedure, which shall be ****************
******************************************************************************.
If a Product is sold in other than an arm's length transaction, the Net Sales
shall be based on the higher of (i) the Net Sales in the transaction or (ii) the
average Net Sales in arm's length transactions for the quarter in which the
transaction was made.
3.3 Good Manufacturing Practices. ACT shall manufacture the Devices
according to Good Manufacturing Practice requirements of the United States Food
and Drug Administration.
3.4 Forecasts. BioTransplant shall provide ACT annually prior to
December 1 with a written forecast showing the amount of Devices to be purchased
during each quarter of the following year, such forecasts to be advisory only
for purposes of ACT's planning its manufacturing. For 1996, BioTransplant shall
provide such forecast within twenty (20) days after the Effective Date.
3.5 Orders for Commercial Use. BioTransplant shall provide ACT with
written orders at least **************** prior to expected delivery; provided
that in the case of the first commercial order BioTransplant shall provide ACT
with a written order as soon as practical after BioTransplant receives notice
that the Product will receive regulatory approval. ACT shall deliver such orders
within **************** to the extent the order
<PAGE> 5
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
does not exceed ******************************** of the forecast for that
quarter. ACT shall have an additional **************** to deliver the amount
exceeding **** of forecast. Orders shall be in a minimum amount to be determined
according to the production lot size of the chosen ******* material and shall be
placed no more than once a quarter.
3.6 Payment. BioTransplant shall pay all invoices within thirty (30)
days of invoice which shall be issued no earlier than shipment of order and
annually for the Annual Minimum Purchase Fee of Section 3.2.1 or Section 3.2.2
if not already paid pursuant to orders placed. In the event that any payment is
delinquent, interest shall accrue on any overdue amount at the rate of one-half
percent (0.5%) per month or the maximum rate permitted by law, whichever is
less.
3.6.1 For purposes of invoicing by ACT, BioTransplant shall
advise ACT on a quarterly basis, within 60 days after the end of each quarter,
of its Net Sales per Product procedure during the preceding quarter whenever the
percent price called for by Section 3.2.2 would exceed *************************
per Product procedure.
3.6.2 The Net Sales per Product procedure reported for the
previous quarter shall be used for invoicing purposes during a quarter and a
reconciliation shall be made during the following quarter if the price invoiced
to BioTransplant would be different if actual Net Sales for the quarter of
invoicing to BioTransplant were used.
3.6.3 BioTransplant shall keep accurate records for a rolling
three (3) year period, beginning with BioTransplant's First Commercial Sale of
Product, of its Net Sales during such period in sufficient detail to enable
determination and verification of payments payable to ACT hereunder. At ACT's
request and expense and upon thirty (30) days, notice during working hours, but
not more than once in any calendar year, BioTransplant shall permit such records
to be examined by an independent auditor reasonably acceptable to BioTransplant,
appointed by ACT, to verify the amount of payment due. Such auditor shall not
disclose to ACT any information other than that information relating solely to
the accuracy of, or the necessity for, any payment made hereunder, and in no
event shall such auditor disclose any other particulars not necessary to the
verification of the payments for the period in question.
3.6.4 In determining Net Sales with respect to sales made in
currencies other than United States Dollars, the Net Sales shall first be
determined for the local currency concerned and then converted to United States
Dollars at the exchange rate for U.S. Dollars for the last day of each month of
the quarter for which payment is due, such average to be determined from the
exchange rates published by the Wall Street Journal or a comparable publication.
<PAGE> 6
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
3.7 Shipment. All Device shipments will be made by ground
transportation unless other instructions are given by BioTransplant, FOB ACT's
plant in Mt. View, California or such other source in the U.S. designated by
ACT. Title and risk of loss will pass to BioTransplant upon delivery by ACT to a
common carrier. All freight, insurance and other supplying expenses shall be
borne by BioTransplant. ACT shall obtain freight insurance and bill
BioTransplant for the cost thereof. BioTransplant shall be responsible for
filing any freight claims.
3.8 Acceptance. Except in the case of latent defects where notification
shall be within the Device Shelf Life as specified by ACT, BioTransplant shall
notify ACT in writing within **************** after receipt of Devices if any
Device fails to meet the specifications in Exhibit 1.4, specifying the reason or
reasons for rejection. BioTransplant shall, upon request by ACT, return a sample
or the entire shipment of Devices that fail to meet specification to ACT at
ACT's cost. If ACT agrees that the Device(s) fails to meet specifications, ACT
shall endeavor to replace such Device(s) and redeliver to BioTransplant within
******************** after ACT's receipt of BioTransplant's written notice of
rejection. If ACT does not deliver replacement Devices within such ******
period, ACT shall promptly refund the purchase price paid by BioTransplant, or,
at BioTransplant's option, credit the purchase price against future shipments of
Devices. The procedures in this Section shall not constitute a waiver of any
other rights of the parties. Any disputes arising relating to BioTransplant's
rejection of any Device shall be resolved by arbitration pursuant to Section 8.1
if the parties have not reached an accommodation within forty five days after
ACT's receipt of BioTransplant's written notice of rejection.
3.9 Alternative Supply. In the event ACT is unable to deliver Devices
within **************** after the *************** delivery period, in addition
to any other remedies BioTransplant may have, ACT and BioTransplant shall agree
on a third party manufacturer to make the Device for BioTransplant. ACT shall
transfer to such third party the know-how for such manufacture, to be kept in
confidence by the third party. ACT shall contract with the third party for such
manufacture, to continue for the period ACT is unable to deliver, and ACT shall
pay the third party for such manufacture and invoice BioTransplant pursuant to
the terms of this Agreement.
3.10 Inspection. BioTransplant shall have the right, upon reasonable
notice and no more than once in any calendar year (or more often only if
required by law or regulation), to inspect the manufacturing facility and
records for the Device for compliance with Good Manufacturing Practices as
prescribed by the U.S. Food and Drug Administration.
4. DEVELOPMENT
4.1 Initial ******* Materials. BioTransplant shall test the Initial
******* Materials for use in their Products. If BioTransplant is not able to
achieve the desired results with the Initial ******* materials, BioTransplant
shall so notify ACT.
<PAGE> 7
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
4.2 Development Team. Upon receipt of the notification referred to in
Section 4.1, the parties shall form a development team *************************
*****************************************************************; the parties
may change their representatives by notice to each other. The team shall meet in
person or by conference call at least quarterly during any development program
and shall prepare a written program*********************************************
************************* shall include the **************************** and the
************************* by the ***********************. *******************
with ************** for ******************************* may be ****************
************************************************************************. The
development team shall coordinate and monitor the progress of each development
program and amend the program as needed.
4.3 Additional ******* Materials. Using the program developed
pursuant to 4.2, ***************************************************************
each in a **********************************************************************
******** for each ******************************* and *************************
**************************************************. Such additional materials
may be sent to BioTransplant initially in ************** as decided by the
development team. BioTransplant shall report back their testing results and
inform ACT whether or not additional *****************, up to a total maximum of
**, should be prepared. Each ******* material shall be delivered within ******
******** after BioTransplant's written request.
4.3.1 BioTransplant's Choice of ******* Material. BioTransplant
shall inform ACT in writing ************* materials it will use in its Products.
For example, ************************** may be ********************************
**********. Specifications for such ******* material shall be added to Exhibit
1.4 at this time.
4.3.2 GMP Manufacture. ACT will manufacture, or have
manufactured, the chosen ******* material under GMP conditions for clinical
development use and monitor the stability of such ******* material over the
duration of the clinical program, but not to exceed two years for any given lot.
The completion of the GMP manufacture of **************************************
****************************** shall be ***************************************
********************** after BioTransplant's notification of the chosen *******
material. If additional material is required by BioTransplant, such material
must be produced pursuant to Section 4.3.3. Information for regulatory use is
covered by Section 7.5.
4.3.3 Scale-Up Production. BioTransplant shall inform ACT in
writing when it is ready to commence scale-up and implementation of the
production of the chosen ******* solution. ACT shall complete such scale-up and
have ************************************************* of the chosen *******
material manufactured under GMP scale-up conditions delivered to BioTransplant
within ************ after BioTransplant's notification of readiness.
<PAGE> 8
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
4.3.4 Development Costs. BioTransplant shall pay ACT for the work
(and the Devices listed in the respective Section 4.3 subsection) to be
performed by ACT with respect to each Additional ******* Material under Sections
4.3, 4.3.2 and 4.3.3 as follows:
Section 4.3 *****************************************************
of which may be credited once against Section 3.2's Annual
Minimum Purchase Fee because of the substitution of materials
Section 4.3.2 ***************************************************
of which may be credited once against Section 3.2's Annual
Minimum Purchase Fee because of the substitution of materials.
Section 4.3.3 ***************************************************
of which may be credited for one Additional Density Material
against Section 3.2's Annual Minimum Purchase Fee in each of two
years because of the substitution of materials.
4.4 Proprietary Information Ownership. ACT shall be the owner of all
proprietary information arising out of the development work solely performed by
ACT pursuant to this Article 4. BioTransplant shall be the owner of all
proprietary information arising solely out of its development work. The parties
shall jointly own any inventions conceived of together ("Collaboration Joint
Inventions"). Inventorship with respect to all Collaboration Joint Inventions
shall be determined in accordance with United States Patent Law. During the term
of this Agreement, each party shall notify the other party in writing within
thirty (30) days of any Collaboration Joint Invention initiated by or on behalf
of the notifying party.
4.4.1 ACT and BioTransplant shall be co-assignees on all
Collaboration Joint Inventions with equal ownership rights under such
Collaboration Joint Inventions as fully entitled by law. The parties shall
require their respective employees to assign all rights and ownership included
in the Collaboration Joint Inventions to ACT or BioTransplant, respectively, and
to assist, without charge in the preparation and prosecution, as appropriate, of
patent applications included within the Collaboration Joint Inventions and
execute those documents as necessary to secure rights in such Collaboration
Joint Inventions for both ACT and BioTransplant. BioTransplant shall have the
rights granted under this Agreement exclusively in the Field for Collaboration
Joint Inventions. Each party shall have a right of first refusal for a license
to Collaboration Joint Inventions outside the Field. The party wishing to grant
a license to a third party for a Collaboration Joint Invention outside the Field
("Licensor") shall give the other party ("Licensee") notice thereof including
the relevant terms of such license; the other party shall have forty five (45)
days in which to inform the Licensee party wishing to grant such license whether
it wishes to obtain such license on an exclusive basis. If the Licensee wishes a
license on the terms in the notice, the parties shall negotiate an
<PAGE> 9
agreement in good faith; if the parties are unable to reach agreement within
ninety (90) days from the Licensee's notice, Licensor shall be free to enter
into an agreement with a third party on the terms given in the notice to
Licensee. ACT shall file, prosecute and maintain the first patent application
and patent with respect to Collaboration Joint Inventions and BioTransplant
shall pay fifty percent (50%) of the costs of same within thirty (30) days of
receipt of invoice from ACT. Thereafter the parties shall alternate such
prosecution and invoicing of the other party as aforesaid.
4.4.2 ACT and BioTransplant shall require their respective
employees to assign all rights and ownership included in the Collaboration Joint
Inventions to ACT or BioTransplant, respectively, and to assist, without charge
to the other party, in the preparation and prosecution, as appropriate, of
patent applications included within the Collaboration Joint Inventions and
execute those documents as necessary to secure rights in such Collaboration
Joint Inventions for both ACT and BioTransplant.
4.5 Development Reports. At least once every six (6) months
BioTransplant shall provide ACT with a written report summarizing results of
their development activity as it relates to Device(s) in the preceding period
and giving an estimate of a market launch date.
4.6 Publication. Prior to its submitting for publication,
BioTransplant and ACT shall submit to the other party any manuscript containing
a reference to the Field. The receiving party shall have thirty (30) days in
which to review for determination as to any effect on patents and to provide
comments.
4.7 Labelling by BioTransplant. BioTransplant shall include ACT's
patent number(s) on any Product labelling, to the extent practicable, with the
text and positioning to be determined by the parties.
5. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
5.1 Representations and Warranties.
5.1.1 BioTransplant represents and warrants that it has the right
and authority to enter into this Agreement.
5.1.2 ACT represents and warrants that:
5.1.2.1 ACT is the owner of the ACT Intellectual Property
Rights;
5.1.2.2 To the best of ACT's knowledge, BioTransplant's
exercise of rights granted by ACT to BioTransplant herein does not and will not
infringe patent rights, trade secret rights or other intellectual property
rights of any third party;
5.1.2.3 Neither ACT nor any affiliate of ACT has previously
granted nor will grant any rights to any third party that are inconsistent with
the rights granted to BioTransplant herein; nor do or will the rights granted
herein conflict with any other agreement or license to which ACT or any
Affiliate of ACT is or becomes a party;
<PAGE> 10
5.1.2.4 The Device will conform to the specifications set
forth in Exhibit 1.4 and will be manufactured and handled in compliance with
United States of America Food and Drug Administration laws and regulations and
all other applicable laws and regulations in the country of manufacture.
5.2 Limitation of Warranties. EXCEPT FOR THE EXPRESS WARRANTIES IN
THIS ARTICLE 5, ACT AND BIOTRANSPLANT PROVIDE EXPRESS OR IMPLIED, EITHER IN FACT
OR BY OPERATION OF LAW, STATUTORY OR OTHERWISE, AND BIOTRANSPLANT AND ACT EACH
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
5.3 Indemnification.
5.3.1 BioTransplant Obligations. BioTransplant hereby agrees to
defend and indemnify ACT against, and hold ACT harmless from third party claims
resulting in any loss, cost, liability or expense (including court costs and
reasonable fees of attorneys and other professionals) arising out of or in
connection with a breach of BioTransplant's representations and warranties in
Section 5.1.1 or on account of BioTransplant's use or sale of Device or
Products, excluding any loss, cost, liability or expense covered by Section
5.3.2 or resulting from a breach of this Agreement by ACT or the breach of any
of ACT's representations and warranties set forth in 5.1.2. above, or negligence
and willful misconduct by ACT; provided that (i) BioTransplant shall have sole
control of such defense, though ACT, in its discretion, may participate in such
defense through attorneys of its choice at its cost; (ii) ACT does not settle
any claim without BioTransplant's prior written consent; and (iii) ACT shall
provide notice promptly to BioTransplant of any actual or threatened claim of
which ACT becomes aware. In the event of any such claim, ACT shall provide
BioTransplant, at BioTransplant's expense, information and assistance as
BioTransplant may reasonably request for purposes of defense of such claim.
5.3.2 ACT Obligations. ACT hereby agrees to defend and indemnify
BioTransplant against, and hold BioTransplant harmless from third party claims
resulting in any loss, cost, liability or expense (including court costs and
reasonable fees of attorneys and other professionals) arising out of or in
connection with any breach of ACT's representations and warranties in Section
5.1.2 or ACT's use or sale of Device or a product containing Device or ACT's
manufacture, shipment or handling of Device, excluding any loss, cost, liability
or expense covered by Section 5.3.1 or resulting from a breach of this Agreement
or negligence or willful misconduct by BioTransplant, provided that (i) ACT
shall have sole control of such defense though BioTransplant, in its discretion,
may participate in such defense through attorneys of its choice at its cost;
(ii) BioTransplant does not settle any claim without ACT's prior written
consent; and (iii) BioTransplant shall provide notice promptly to ACT of any
actual or threatened claim of which BioTransplant becomes aware. In the event of
any such claim, BioTransplant shall provide ACT, at ACT's expense, information
and assistance as ACT may reasonably request for purposes of defense of such
claim.
<PAGE> 11
5.3.3 Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTIES WITH RESPECT TO MATERIALS OR
INFORMATION PROVIDED TO THE OTHER PURSUANT HERETO, AND EACH PARTY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND
NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
5.3.4 Limitation Of Damages. IN NO EVENT SHALL THE LIABILITY OF
EITHER PARTY FOR BREACH OF THIS AGREEMENT INCLUDE ANY INCIDENTAL OR
CONSEQUENTIAL LOSSES OR DAMAGES, EVEN IF SUCH PARTY HAD BEEN PREVIOUSLY ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.
5.4 Patents. Nothing in this Agreement shall be construed as a
warranty or representation by ACT as to the validity or scope of the ACT
Intellectual Property Rights, or as a warranty or representation that any of the
patent applications of the ACT Intellectual Property Rights will issue as
patents, or that the use of the Device(s) will not infringe any third party
rights. ACT hereby disclaims any warranty, express or implied, with respect to
the ACT Intellectual Property Rights, including, without limitation, any
warranty of fitness for any particular purpose or non-infringement of any third
party rights.
6. USE OF NAMES/INDEPENDENT CONTRACTOR
6.1 Use of Names. Neither Party shall use the name of the other in
any public statements, without the other's written permission, which written
permission shall not be unreasonably withheld. Public statements include,
without limitation, oral or written statements, such as shareholder reports,
prospectuses, communications with investment analysts, press releases or other
communications with the media.
6.2 Independent Contractor. Notwithstanding anything herein to the
contrary, each party's status relative to the other shall be, at all times
during the term of this Agreement, that of an independent contractor. Nothing in
this Agreement shall be construed to give a party the power or authority to act
or make representations for, or on behalf of, or to bind or commit the other
party.
7. CONFIDENTIALITY
7.1 Disclosure. During the term of this Agreement, the parties may
disclose confidential/proprietary information to the other relating to and
including, but not limited to, the Technology. Confidential information may
include for example, data, know-how, formula, processes, designs, sketches,
plans, specifications, reports, forecasts, inventions, ideas, or discoveries.
The receiving party will exercise reasonable care to prevent disclosure of the
other party's confidential information, and internal dissemination of the
disclosing party's confidential information by the receiving party shall be
limited to those employees whose duties justify their need to know such
information, and then only if such employees are similarly bound by like
obligations of
<PAGE> 12
confidentiality and only with a clear understanding of the terms of this
Agreement, and the receiving party agrees to use the confidential information
only for the purposes of this Agreement.
7.2 Confidentiality Exceptions. Notwithstanding the terms of Section
7.1, the receiving party shall not be prevented from using or disclosing
information that:
(a) the receiving party can demonstrate by written or other
tangible records was known to it prior to receipt from the disclosing party;
(b) is now, or becomes in the future, public knowledge other than
through breach of the confidentiality or non-use provisions of this Agreement by
the receiving party;
(c) is lawfully obtained by the receiving party from sources
independent of the other party; or
(d) is disclosed or used five (5) years after the termination of
this Agreement.
7.3 Reduction to Writing. All confidential information orally
disclosed must be reduced to written or other tangible form and submitted to the
original receiving party within thirty (30) days of oral communication of the
confidential information.
7.4 Prior Agreement. All confidential information disclosed by ACT to
BioTransplant pursuant to the Confidentiality Agreement between the parties
dated August 16, 1995 shall be governed by this Agreement, and the provisions of
this Article 7 shall supersede that agreement.
7.5 Regulatory Use. Notwithstanding anything to the contrary in the
other provisions of this Agreement, BioTransplant will be permitted to disclose
confidential information of ACT if required by law or to regulatory agencies in
support of applications to market the Products. ACT gives BioTransplant the
right to cross reference ACT'S FDA regulatory file for the Device for purposes
of supporting BioTransplant's regulatory filings for Products. Aside from the
preceding, BioTransplant shall request permission of ACT, which shall not be
unreasonably withheld, for use of confidential information regarding Devices
possessed by ACT that is necessary for regulatory purposes for Products; such
request shall include the extent and purpose of disclosure necessary and the
person(s) to whom it is to be given. ACT will consider other requests for use of
confidential information as made by BioTransplant. In any event, any
confidential information that ACT agrees may be disclosed to a third party will
be done only after such third party agrees to be bound by confidentiality
obligations at least as stringent as set forth above.
<PAGE> 13
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
8. ALTERNATIVE DISPUTE RESOLUTION
8.1 Any dispute, controversy or claim, including any dispute relating
to patent infringement but not to patent validity, arising out of or relating to
this Agreement, shall be settled by binding arbitration in accordance with the
Arbitration Rules of the American Arbitration Association. The arbitration
tribunal shall consist of three (3) arbitrators, and the arbitration proceedings
shall be carried out in San Francisco, California. The party initiating
arbitration shall nominate one (1) arbitrator in the request for arbitration and
the other party shall nominate a second arbitrator. The two (2) arbitrators so
named will then jointly appoint the third (3rd) arbitrator as chairman of the
arbitration tribunal. If either party fails to nominate its arbitrator, or if
the arbitrators named by the parties fail to agree on the person to be named as
chairman within sixty (60) days of notice of filing of the arbitration with the
non-filing party, the Office of the American Arbitration Association in the
State of California shall make the necessary appointments of an arbitrator or
the chairman of the tribunal. The proceedings and any award or decision of the
arbitrators shall be confidential information that shall not be disclosed by
either Party without the written consent of the other Party. The award of the
arbitration tribunal shall be final and judgment upon such an award may be
entered in any competent court or application may be made to any competent court
for judicial acceptance of such an award and an order of enforcement. The law of
the State of California (regardless of the choice of law principles of
California or any other jurisdiction) shall govern this Agreement and be used by
the arbitrators for resolving any dispute, controversy or claim.
9. TERM AND TERMINATION
9.1 Term. This Agreement shall be effective for ten (10) years from the
Effective Date.
9.2 Renewal. If BioTransplant gives written notice to ACT of its desire
to renew this agreement for a ******** period, and such notice is given at least
************ prior to termination, or any extension, ACT shall give
BioTransplant written notice within **************** of BioTransplant's notice,
of the price and other terms at which ACT would sell Devices during such renewal
period. If BioTransplant accepts such pricing and terms, the Agreement shall be
renewed subject to all the other terms and conditions of this Agreement.
9.3 Breach. ACT may terminate this Agreement following thirty (30)
days, written notice (the "notice period") to BioTransplant in the event
BioTransplant (a) fails to make any payment within the notice period, which
payment is due and payable under this Agreement and has been in arrears for more
than ninety (90) days from the date such payment is due, or (b) commits a
material breach of any other obligation of this Agreement which is not cured
within the notice period; or (c) becomes insolvent; or (d)
<PAGE> 14
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
has filed against it a petition in bankruptcy that BioTransplant consents to,
acquiesces in or fails to cure within ninety (90) days of such filing, or (e)
makes a general assignment for the benefit of creditors or has a receiver
appointed for it before the expiration of the notice period. BioTransplant may
cease making payments pursuant to Section 3.2.2(ii) in the event of a material
breach of this Agreement by ACT and until such breach is cured by ACT, or until
arbitration proceedings find in favor of ACT, in either of which cases withheld
payments shall be paid to ACT within thirty (30) days. Any failure to make such
payments in such event of breach by ACT shall not be deemed a breach by
BioTransplant.
9.4 Commercialization. If BioTransplant has not commercialized a
Product within ************* of the Effective Date of this Agreement, ACT shall
have the right to terminate this Agreement, provided, however, that if there is
a regulatory filing for a Product pending at the ******** point, the parties
shall meet to agree on an appropriate extension of the ******** period.
9.5 Other Rights. Termination of this Agreement shall not affect any
rights or obligations accrued prior to the effective date of such termination,
specifically BioTransplant's obligation to make payments for amounts accrued to
the date of termination, including minimum purchase amounts for the year of
termination.
9.6 Bankruptcy. If the bankruptcy trustee of either party as a debtor
or either party as a debtor-in-possession rejects this Agreement under Section
365 of the U.S. Bankruptcy Code, the non-debtor party may elect to retain its
rights to the Collaboration Joint Inventions licensed from the debtor party
under this Agreement (and any supplementary Agreements), including but not
limited to the exclusive license rights under this Agreement, for the duration
of this Agreement (including any extensions as provided herein) to the full
extent contemplated by this Agreement, and the debtor party's rights to
Collaboration Joint Inventions licensed from the non-debtor party shall
terminate, subject to the obligations and restrictions imposed on the non-debtor
party and the debtor party and the trustee of the debtor party by law (11 U.S.C.
365). Upon the request of the non-debtor party, the debtor party shall transfer
to the non-debtor party all Collaboration Joint Inventions in existence on the
date of the rejection of this Agreement by the trustee of the debtor party, for
the exercise of non-debtor party's license rights in Collaboration Joint
Inventions granted under this Agreement. Notwithstanding a non-debtor's election
to retain its rights to the Collaboration Joint Inventions after the rejection
of this Agreement under Section 365 of the U.S. Bankruptcy Code by a bankruptcy
trustee of the debtor, the non-debtor party shall have no further obligations of
any kind, including any obligation to make payments to the debtor party (except
for the royalty payments as required under Section 365 of the U.S. Bankruptcy
Code) under this Agreement. The provisions in this Section 9.6 shall apply
equally to ACT Intellectual Property licensed to BioTransplant under this
Agreement if ACT is the debtor.
<PAGE> 15
9.7 Termination.
9.7.1 BioTransplant may terminate this Agreement on ninety (90)
days' prior written notice to ACT but only for one of the following reasons: (i)
BioTransplant ceases to do any business as defined in the Field; or (ii)
BioTransplant ceases to use no longer uses both its AlloMune (induction of
specific transplant tolerance to allow transplantation of mismatched human
organs) and XenoMune (induction of specific transplant tolerance to miniswine
donor organs into humans) Systems to treat or prevent organ rejection; or (iii)
if, at the end of ********* from the Effective Date, BioTransplant has been
unable in good faith to develop a Product solely because of safety or efficacy
issues caused by the Device.
9.7.2 ACT may terminate this Agreement on ninety (90) days' prior
written notice to BioTransplant only if ACT ceases to do business in the cell
separation area.
10. NOTICES
Any notice required by this Agreement shall be sent by registered or
certified air mail or delivered by courier to the following:
For BioTransplant:
BioTransplant Incorporated
Building 75, Third Avenue
Charlestown Navy Yard
Charlestown, MA 02129
Attention: Chief Scientific Officer
For ACT:
Activated Cell Therapy, Inc.
291 North Bernardo
Mt. View, CA 94043
Attention: President
11. MISCELLANEOUS
11.1 Governing Law. This Agreement shall be governed by and
interpreted in accordance with the law of the State of California (regardless of
the choice of law principles of California or any other jurisdiction).
11.2 Amendment. This Agreement may not be amended except by written
agreement signed by both of the Parties hereto.
11.3 Unenforceability. If any provision of this Agreement is or
becomes or is deemed to be unenforceable,
<PAGE> 16
(a) such provision will be deemed amended to conform to
applicable laws of such jurisdiction so as to be valid and enforceable, or, if
it cannot be so amended without materially altering the intention of the
parties, it will be stricken and a new provision will be negotiated consistent
with the purpose and intent of this Agreement;
(b) the validity, legality and enforceability of such provision
will not in any way be affected or impaired thereby in any other jurisdiction;
and
(c) the remainder of this Agreement will remain in full force and
effect.
11.4 Survival. The provisions of Sections 4.7 and 5.3, and Articles 7
and 8 and 11.4 shall survive any expiration or termination of this Agreement.
11.5 Assignment. This Agreement shall not be assignable by either of
the parties without the prior written consent of the other party except that
BioTransplant or ACT without the consent of the other party may assign this
Agreement to an Affiliate or to a successor in interest or transferee of all or
substantially all of the portion of the business to which this Agreement
relates.
Subject to the limitations on assignment herein, this Agreement shall
be binding upon and inure to the benefit of said successors in interest and
assigns of BioTransplant and ACT. Any such successor or assignee of a party's
interest shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by said party and such Assignment
shall not relieve the Assignor of any of its obligations under this Agreement.
11.6 Force Majeure. Neither party shall be liable for any delay or
default in such party's performance hereunder if such default or delay is caused
by events beyond such party's reasonable control including, but not limited to,
acts of God, war or insurrection, civil unrest, disease affecting livestock used
in the production of Products, compliance with a governmental authority,
destruction of productive facilities or materials by earthquake, fire, flood or
storm, labor disturbances, epidemic, failure of suppliers, public utilities or
common carriers. After six (6) months of a force majeure situation the parties
shall meet to try to find a solution to such situation.
11.7 Severability. In the event that any provision of this Agreement
is in conflict with rule of law or statutory provision or is otherwise
unenforceable under the applicable laws or regulations of any country, such
provision shall be deemed stricken from this Agreement, and the remaining
provisions of this Agreement shall continue in full force and effect, but only
if consistent with the economic intent of the parties as evidenced by this
Agreement as a whole.
11.8 Waiver. No failure by either to take any action or assert any
right hereunder shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such right.
<PAGE> 17
11.9 Entire Agreement. This Agreement constitutes the entire
understanding between the Parties, and supersedes and replaces all prior
discussions, writings and agreements relating to the subject matter hereof.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
entered into and to be executed in duplicate originals by their duly authorized
representatives as of the Effective Date.
ACTIVATED CELL THERAPY, INC. BIOTRANSPLANT INC.
BY /s/ Richard Bastiani /s/ Elliot Lebowitz
---------------------------- ----------------------------------
NAME Richard Bastiani Elliot Lebowitz
---------------------------- ----------------------------------
TITLE President President
---------------------------- ----------------------------------
DATE August 22, 1996 August 28, 1996
---------------------------- ----------------------------------
<PAGE> 18
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXHIBIT 1.1
ACT INTELLECTUAL PROPERTY
1. Patent Rights (U.S. listed; also included in the ACT Intellectual
Property Rights are Continuations in Part and cases pending in foreign
jurisdictions for the following cases)
<TABLE>
<CAPTION>
APPLICATION TITLE FILING DATA ISSUE DATE INVENTOR
<S> <C> <C> <C> <C>
3/25/87
07/049,863 Cell Separation process US Patent 4,927,750 5/22/90 Dorn
4/9/86
06/849,819 Reagent for cell separation US Patent 4,927,749 5/22/90 Dorn
08/299,469 Methods for enriching CD34
human hematopietic 8/31/94
progenitor cells US Patent 5,474,687 12/12/95 VanVlasselaer
****************
********* ************* ******* ******** VanVlasselaer
</TABLE>
Numerous patent applications are pending in the U.S., Europe and Asia.
2. Trade Secrets and Proprietary Rights
Proprietary knowledge concerning or relating to cell separation and cell
enrichment of hematopoietic cells and other cells and cell lineages derived
therefrom including proprietary knowledge regarding cell separation and cell
enrichment technology using density gradient materials and materials to adjust
the density of the cells.
<PAGE> 1
EXHIBIT 10.2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SUPPLY AGREEMENT
This Agreement is entered into as of September 20, 1996 by and between
BioTransplant, Inc., a corporation having its principal place of business at
Building 75, 3rd Avenue, Charlestown Navy Yard, Charlestown, MA 02129 ("BTI")
and Neose Technologies, Inc., a corporation having its principal place of
business at 102 Witmer Road, Horsham, PA 19044 ("NEOSE").
WITNESSETH:
WHEREAS, the parties hereto desire that NEOSE supply PRODUCT to BTI (as
hereinafter defined); and
WHEREAS, BTI will evaluate PRODUCT in its ******************* model to
*********************************************** and/or *************************
*************************** and
WHEREAS, BTI and NEOSE desire to set forth in this Agreement the terms
and conditions of such supply;
NOW, THEREFORE, the parties hereto agree as follow:
1. DEFINITIONS
1.1 "PRODUCT" shall mean the *****************************************
******
1.2 "SPECIFICATIONS" shall mean, with respect to the PRODUCT, the
specifications, test procedures, process descriptions, and other
information relating to such PRODUCT as set forth in Schedule A,
which may be amended from time to time by mutual agreement in
writing.
2. PURCHASE OF PRODUCTS
2.1 (a) NEOSE shall sell and BTI shall purchase **********************
of PRODUCT meeting the SPECIFICATIONS.
(b) Subject to Section 2.4, BTI shall have the option to purchase
and NEOSE shall supply an additional ************************ of
PRODUCT under the terms of this Agreement. Such option may be
exercised at any time by BTI by written notice to NEOSE on or
before **************.
2.2 The price of PRODUCT shall be ***************.
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
2.3 NEOSE shall use its best efforts to deliver the PRODUCT set forth
in Section 2.1(a) on or before ****************.
2.4 The parties contemplate that in the event BTI's evaluation of
PRODUCT in its ***************************************************
******************************************************************
****************************************************. If on or
before ************, NEOSE ***************************************
******************** BTI, NEOSE *************** BTI and *********
************************* under this Section 2. In addition, this
Agreement shall be terminated at that time.
3. DELIVERY, PAYMENT AND RISK OF LOSS
3.1 BTI shall pay to NEOSE the price of each shipment or transfer of
PRODUCT as follows: (i) ***************** upon ordering PRODUCT by
BTI; (ii) subject to Section 4.1, ******************** upon
delivery; (iii) ******************** upon completion by BTI of its
evaluation of PRODUCT in BTI's *************************; and
(iv) ******************** upon the *******************************
***************************** between the parties or the *********
**************************************************************;
provided that this payment shall *********************************
**************************************************************.
Payment shall be remitted in immediately available funds in the
invoice currency. Unless otherwise agreed between the parties the
invoice currency shall be U.S. Dollars.
3.2 Title to PRODUCT sold hereunder, and risk of loss with respect to
such PRODUCT, shall pass to BTI upon delivery of the PRODUCT to a
carrier designated by BTI at NEOSE's manufacturing facility. Upon
the passage of title, NEOSE's liability shall cease, and BTI shall
be the owner of such PRODUCT for all purposes.
3.3 No provision on NEOSE's purchase order forms which may purport to
impose different conditions upon the parties hereto shall modify
the terms of this Agreement.
4. ACCEPTANCE OF PRODUCT
4.1 BTI shall have ten (10) days from receipt of any delivery of
PRODUCT to examine such PRODUCT. BTI shall promptly notify NEOSE
of any defective PRODUCT and shall return to or otherwise dispose
of any defective shipments in accordance with NEOSE's instructions
at NEOSE's cost and expense. NEOSE shall promptly, but no later
than sixty (60) days after notice from BTI provide for replacement
delivery or give full credit to BTI for any defective shipments as
the parties may agree.
<PAGE> 3
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
5. INDEMNIFICATION
5.1 NEOSE agrees to indemnify and hold harmless BTI from or against
all third party liability, claims, losses, damages and expenses,
including reasonable attorneys fees, arising out of the supply of
PRODUCT to BTI under this Agreement; provided that such liability,
claim or loss etc. does not result from the negligence or
intentional misconduct of BTI.
5.2 BTI agrees to indemnify and hold harmless NEOSE from or against
all third party liability, claims, losses, liens and expenses
arising out of its use or sale of PRODUCT; provided that such
liability, claim or loss etc. does not result from the negligence
or intentional misconduct of NEOSE.
5.3 Each party shall notify the other promptly of any claim or
threatened claim, lawsuit or other proceeding under this Paragraph
and shall fully cooperate with all reasonable requests of the
indemnifying party with respect thereto. The party liable for
indemnification hereunder may, at its own expense, provide
attorneys reasonably acceptable to the indemnified party hereunder
to defend against any actions brought or filed against such
indemnified party with respect to the indemnity contained herein,
whether or not such actions are rightfully brought. In such event,
the indemnifying party shall have the right to control the
defense, settlement or compromise of any such action. This
Paragraph shall survive expiration or termination of this
Agreement.
6. WARRANTIES
6.1 NEOSE warrants that PRODUCT at the time of delivery to BTI shall
meet the SPECIFICATIONS.
6.2 Each party represents and warrants that it has the full right and
authority to enter into this Agreement and that it is not aware of
any impediment which would inhibit its ability to perform the
terms and conditions imposed on it.
7. TERM AND TERMINATION
7.1 This Agreement is effective as of the date first above written
and, unless sooner terminated as provided herein, shall continue
for the earlier of one (1) year **********************************
***************************************. This Agreement may be
extended by mutual agreement of the parties hereto.
7.2 This agreement may be terminated by either party if:
(a) (i) the other party fails to observe, perform or otherwise
breaches any of its material covenants, agreements or
obligations under this
<PAGE> 4
Agreement in any material respect and (ii) such failure
continues for a period of thirty (30) days after receipt by
the other party of notice thereof from the electing party
specifying such failure. Following such period, the electing
party has ninety (90) days to give notice to the other party
of its election to terminate this agreement; or
(b) the other party files or institutes bankruptcy,
reorganization, liquidation, receivership or similar
proceedings under any debt relief laws or fails for more than
sixty (60) days to take steps to oppose the initiation of
such actions against it.
7.3 The termination of this Agreement shall not affect any outstanding
obligations of BTI or NEOSE hereunder, including but not limited
to any payments owed under the provisions of this Agreement while
it was in effect. Any such amount owed to a party shall be paid
within thirty (30) days of the termination of this Agreement. The
provisions of Sections 5 and 8.1 shall survive the termination of
this Agreement.
8. MISCELLANEOUS PROVISIONS
8.1 This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts without giving
effect to its conflict of law rules and regulations.
8.2 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter thereof and
supersedes all prior agreements in this respect. There shall be no
amendments or modifications to this Agreement, except by a written
document which is signed by both parties.
8.3 The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular
article or section.
8.4 Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not
constitute a waiver of a party's right to the future enforcement
of its rights under this Agreement, excepting only as to an
expressed written and signed waiver as to a particular matter for
a particular period of time.
8.5 In the event any provision of this Agreement should be held
invalid, illegal or unenforceable, the remaining provisions shall
not be affected or impaired and the parties will use all
reasonable efforts to replace the applicable provision within a
valid, legal and enforceable provision which insofar as practical
implements the purposes hereof.
<PAGE> 5
9. FORCE MAJEURE
Neither party shall be liable to the other for any default hereunder
which is due to cause beyond the control of the party in default,
including but not limited to the actions or inactions of any government
agency or instrumentality; breakdown of plant or machinery or shortages
of labor, fuel, transportation of materials, fires, floods,
earthquakes, war, riots or instructions. If either party shall seek to
rely on Force Majeure it shall give written notice to the other
indicating the details of the act which it claims has put due
performance of its obligations beyond its control. In addition, the
affected party shall exert all reasonable efforts to eliminate or cure
any Force Majeure event and to resume performance with all possible
speed. In the event this cannot be done within six (6) months, the
parties shall either resolve the matter by mutual agreement or
terminate this Agreement.
10. SUCCESSORS
The rights and obligations included in this agreement shall be binding
upon the parties hereto and their successors and permitted assigns.
11. ASSIGNMENT
This Agreement may not be assigned by either party without the consent
of the other except either party may assign this Agreement without
consent in the event of a merger or acquisition or a transfer of all of
its business or assets relating to this Agreement.
12. NOTICES
Any notice required or permitted to be given under this agreement shall
be deemed to have been sufficiently given and delivered upon the
earlier of (i) when received at the address set forth herein or (ii)
three (3) business days after being mailed by registered or certified
mail, postage prepaid with return receipt requested, addressed to the
party to be notified at its address stated in the Agreement or at such
other address as may hereafter be furnished in writing to the notifying
party or (iii) on the day when sent by facsimile as confirmed by
registered or certified mail.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective representatives hereunto duly authorized as of the
day and year first above written.
BIOTRANSPLANT, INC. NEOSE TECHNOLOGIES, INC.
By: /s/ Julia Greenstein By: /s/ Sheryl Neff
------------------------------- ---------------------------------
<PAGE> 6
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SCHEDULE A
SPECIFICATIONS
*************** Specifications
********************* will have the following structure:
*************************************************
*************************************
shipments will contain at least ************************* as
determined by *********** chromatography
each batch will be a ************, and will be accompanied by
**** chromatograms demonstrating the degree of purity
contaminants may consist of *********************************
***************************************************
***********************************************************
<PAGE> 1
EXHIBIT 11.1
BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
(A Development Stage Company)
<TABLE>
COMPUTATION OF PRO FORMA NET LOSS PER COMMON SHARE (1)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1996 1995 1996
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Loss: $ (191,377) $(2,323,714) $(3,314,499) $(3,470,099)
========== =========== =========== ===========
Shares Used in Computing Pro Forma Net Loss Per
Common Share: Weighted Average Common Stock
Outstanding During the Period 126,310 8,548,756 123,623 6,683,869
Conversion of Redeemable Convertible
Preferred Stock (1) 3,212,896 -- 3,212,896 --
Dilutive Effect of Common Equivalent Shares
Issued Subsequent to March 1, 1995 (2) 676,048 -- 676,048 315,818
---------- ----------- ----------- -----------
4,015,254 8,548,756 4,012,567 6,999,687
---------- ----------- ----------- -----------
Pro Forma Net Loss Per Common Share $ (0.05) $ (0.27) $ (0.83) $ (0.50)
========== =========== =========== ===========
<FN>
- ------------------------
(1) Effective with the closing of the Company's initial public offering of common stock, all shares of
redeemable convertible preferred stock automatically converted into shares of common stock. Accordingly the
equivalent number of weighted average common shares that would have been outstanding during each period
presented have been included as outstanding.
(2) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83, common stock, preferred
stock, stock options and warrants issued at prices below the initial public offering price per share ("cheap
stock") during the twelve month period immediately preceding the filing date of the Company's Registration
Statement for its initial public offering have been included as outstanding for all periods presented until
the effective date of the Company's initial public offering. The dilutive effect of the common and common
stock equivalents was computed in accordance with the treasury stock method.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AT SEPTEMBER 30, 1996 AND THE CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,896,560
<SECURITIES> 17,632,072
<RECEIVABLES> 150,841
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34,438,493
<PP&E> 3,737,861
<DEPRECIATION> 2,315,701
<TOTAL-ASSETS> 35,935,326
<CURRENT-LIABILITIES> 3,836,185
<BONDS> 0
<COMMON> 85,489
0
0
<OTHER-SE> 65,256,995
<TOTAL-LIABILITY-AND-EQUITY> 35,935,326
<SALES> 0
<TOTAL-REVENUES> 7,374,345
<CGS> 0
<TOTAL-COSTS> 10,733,887
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 110,557
<INCOME-PRETAX> (3,470,099)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,470,099)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,470,099)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> (.50)
</TABLE>
