<PAGE>
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 0-19732
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CORVAS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0238812
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3030 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
(619) 455-9800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
Indicate by check mark whether the Registrant (l) 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 / /
--- ---
At May 1, 1996, there were 12,601,691 shares of Common Stock, $0.001 par
value, of the Registrant issued and outstanding.
<PAGE>
CORVAS INTERNATIONAL, INC.
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Balance Sheets as of March 31, 1996 and
December 31, 1995 1
Condensed Statements of Operations for the Three Months
Ended March 31, 1996 and 1995 2
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 1996 and 1995 3
Notes to Condensed Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION
Item 1 Legal Proceedings 8
Item 2 Changes in Securities 8
None
Item 3 Defaults Upon Senior Securities 8
None
Item 4 Submission of Matters to a Vote of Security Holders 8
None
Item 5 Other Information 8
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits 8
(b) Reports on Form 8-K 8
SIGNATURE 9
<PAGE>
Part I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CORVAS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,114 $ 1,427
Short-term debt securities held to maturity
and time deposits, partially restricted 23,794 11,024
Receivables 301 338
Note receivable from related party 120 0
Other current assets 486 250
--------- ----------
Total current assets 25,815 13,039
Property and equipment, net 1,375 1,423
Note receivable from related party 180 0
--------- ----------
$ 27,370 $ 14,462
--------- ----------
--------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 155 $ 272
Accrued expenses 377 461
Accrued benefits 0 0
Accrued vacation 228 205
Accrued litigation settlement expenses 193 313
Current portion of capital lease obligation 79 77
Deferred rent 23 34
Deferred revenue 3,190 4,305
--------- ----------
Total current liabilities 4,245 5,667
--------- ----------
Long-term capital lease obligation 7 27
Stockholders' equity:
Preferred stock - Series A 1 1
Common stock 13 9
Additional paid-in capital 84,323 69,346
Accumulated deficit (61,219) (60,588)
--------- ----------
Total stockholders' equity 23,118 8,768
Commitments and contingencies
--------- ----------
$ 27,370 $ 14,462
--------- ----------
--------- ----------
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
In thousands, except per share amounts (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1996 1995
--------- --------
<S> <C> <C>
REVENUES:
Net product sales $ 21 $ 46
Revenue from collaborative agreements 2,085 1,000
Royalties 81 34
--------- --------
Total revenues 2,187 1,080
--------- --------
COSTS AND EXPENSES:
Cost of products sold 24 5
Research and development 2,299 2,259
General and administrative 793 682
--------- --------
Total costs and expenses 3,116 2,946
--------- --------
Loss from operations (929) (1,866)
--------- --------
OTHER INCOME:
Interest income, net 268 249
Other income (expense) 30 (32)
--------- --------
298 217
--------- --------
Net loss $ (631) $ (1,649)
--------- --------
--------- --------
Net loss per share $ (0.05) $ (0.18)
--------- --------
--------- --------
Shares used in calculation
of net loss per share 11,507 9,359
--------- --------
--------- --------
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
In thousands (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (631) $ (1,649)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 211 192
Amortization of premiums and discounts on
investments 68 21
Amortization of deferred compensation 0 21
Stock compensation expense 0 12
Change in assets and liabilities:
Decrease in receivables 37 45
Increase in other current assets (236) (218)
Decrease in accounts payable, accrued
expenses, accrued benefits, accrued vacation
and accrued litigation settlement expenses (298) (1,323)
Decrease in deferred revenue (1,115) (1,000)
Decrease in deferred rent (11) (36)
------- --------
Net cash used in operating activities (1,975) (3,935)
------- --------
Cash flows from investing activities:
Purchases of investments held to maturity (15,927) (5,111)
Proceeds from maturity of investments held to
maturity 3,200 6,200
Purchases of property and equipment (164) (103)
Proceeds from the sale of property and equipment 0 278
Loans to employees (300) 0
------- --------
Net cash provided by (used in) investing
activities (13,191) 1,264
------- --------
Cash flows from financing activities:
Principal payments under capital lease obligation (19) (17)
Net proceeds from issuance of common stock 14,872 5
------- --------
Net cash provided by (used in) financing
activities 14,853 (12)
Effect of exchange rate changes on cash 0 (157)
------- --------
Net increase (decrease) in cash and cash equivalents (313) (2,840)
Cash and cash equivalents at beginning of period 1,427 3,687
------- --------
Cash and cash equivalents at end of period $ 1,114 $ 847
------- --------
------- --------
Supplemental disclosures:
Interest paid $ 2 $ 3
------- --------
------- --------
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CORVAS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) THE COMPANY
Corvas International, Inc. (the "Company") was incorporated on March 27,
1987 under the laws of the State of California. In July 1993, the Company
reincorporated in the State of Delaware. The Company is engaged in the design
and development of a new generation of therapeutic agents for the prevention and
treatment of major cardiovascular and inflammatory diseases.
Previous financial statements of the Company were consolidated to include
the accounts of Corvas International, Inc. in San Diego and its Belgian
subsidiary, Corvas International, N.V. Operating activities at the Belgian
subsidiary ceased in December 1994 and the subsidiary was liquidated in December
1995.
(2) BASIS OF PRESENTATION
The interim financial information contained herein is unaudited but, in
management's opinion, includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation. The financial
statements should be read in conjunction with the Company's audited financial
statements and notes thereto for the year ended December 31, 1995.
Results for the interim periods are not necessarily indicative of results
for other interim periods or for the full year.
(3) NOTES RECEIVABLE
The notes receivable as of March 31, 1996 consist of loans to an officer of
the Company issued in connection with his employment with the Company. The
$120,000 loan, which is unsecured and bears no interest, is due and payable in
full on the earlier of one year from the loan date or the officer's termination
for cause. The $180,000 loan bears interest at 6% per annum and is secured by
his primary residence. This loan is due and payable in full on the earlier of
five years from the loan date or the officer's termination for cause.
(4) NET LOSS PER SHARE
Net loss per share for the three months ended March 31, 1996 and 1995 is
computed using the weighted average number of common share equivalents
outstanding.
(5) STOCKHOLDERS' EQUITY
On February 2, 1996, the Company completed a private placement of equity
securities consisting of 3,000,000 units, resulting in proceeds of $14,835,000,
net of estimated issuance costs. Each unit consisted of one share of common
stock and one callable warrant to purchase one additional share of common stock.
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, INCLUDING STATEMENTS REGARDING THE PERIOD OF TIME DURING WHICH
THE COMPANY'S EXISTING CAPITAL RESOURCES AND INTEREST EARNED THEREON WILL BE
ADEQUATE TO SATISFY ITS CAPITAL REQUIREMENTS. THE COMPANY'S ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN THIS SECTION AND THOSE DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K/A.
OVERVIEW
Formed in 1987, Corvas International, Inc. (the "Company") is a
biopharmaceutical firm engaged in the design and development of a new generation
of therapeutic agents for the prevention and treatment of major cardiovascular
and inflammatory diseases. To date, the Company has not generated significant
revenues from product sales. The Company has not been profitable since
inception and expects to incur substantial additional operating losses on an
annual basis over the next several years as the Company attempts to sustain, and
possibly expand, its research and development and clinical trial efforts. No
assurance can be given that the Company can generate sufficient revenues to
become profitable at all or on a sustained basis. At March 31, 1996, the
Company had an accumulated deficit of $61,219,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Operating revenues increased from $1,080,000 in the quarter ended March 31,
1995 to $2,187,000 in first quarter of 1996. This increase is mainly
attributable to a $1,000,000 option extension fee received from Schering
Corporation ("Schering-Plough") pursuant to a strategic alliance agreement for
the prevention and treatment of chronic cardiovascular disorders. Accounting
for $85,000 of this increase is revenue recognized pursuant to the research and
option agreement initiated in October 1995 with Pfizer Inc. ("Pfizer") to
collaborate on the development of neutrophil inhibitory factor, an anti-
inflammatory agent.
First quarter total costs and expenses increased from $2,946,000 in 1995 to
$3,116,000 in 1996. Research and development expenditures remained relatively
constant comparing these periods, increasing by $40,000. General and
administrative expenses increased by $111,000 in the first quarter of 1996 over
the same quarter of 1995 due to increased personnel costs and investor relations
activities.
Comparing the first quarters of 1995 to 1996, total other income increased
from $217,000 to $298,000. The majority of this increase resulted from the sale
of material to Pfizer in conjunction with the above-mentioned collaboration.
Differences in the timing and composition of revenues earned and expenses
incurred may contribute to quarter-to-quarter variations in operating results.
Subject to the availability of additional capital, the Company expects that all
expenses will increase over the next several years as the Company's research and
development programs progress.
5
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily through
private placements of convertible preferred stock, the initial public offering
of common stock, a private placement of equity securities, interest income
earned on cash and investment balances, and revenues from collaborative
agreements, research grants and license agreements. On February 2, 1996, the
Company completed a private placement of equity securities consisting of
3,000,000 units, resulting in proceeds of $14,835,000, net of estimated issuance
costs. Each unit consisted of one share of common stock and one callable
warrant to purchase one additional share of common stock. The Company's
principal sources of liquidity are its cash and cash equivalents, time deposits
and debt securities which, net of a restricted time deposit, totaled $24,848,000
as of March 31, 1996. Working capital at March 31, 1996 was $21,570,000.
Available cash is invested in accordance with an investment policy set by the
Board of Directors, which has the objective to maximize income with preservation
of principal and maintenance of adequate liquidity. The policy provides
guidelines concerning the quality, term and liquidity of investments. The
Company presently invests its excess cash in U.S. government securities.
The Company expects to incur substantial additional costs in the
foreseeable future, including costs related to sustaining and possibly expanding
research and development activities and preclinical and clinical testing, and
that such costs will continue to increase. As a result, the Company expects it
will experience substantial additional operating losses over the next several
years. With the cash infusion from the recent private placement, the Company
believes its existing capital resources and interest earned thereon will be
adequate to satisfy its capital requirements into 1998. In addition, the
Company may also receive milestone payments and royalties on sales of products
resulting from its alliances. However, there can be no assurance that products
will be successfully developed and commercialized or that the Company will
receive any such amounts under these alliances.
The Company's future capital requirements will depend on many factors,
including, but not limited to, the following factors: continued scientific
progress in its drug discovery programs; the magnitude of these programs;
progress of preclinical testing and clinical trials; the time and costs involved
in obtaining regulatory approvals; the costs involved in filing, prosecuting,
maintaining and enforcing patent claims; competing technological and market
developments; changes in its existing research relationships; the ability of the
Company to establish and maintain collaborative or licensing arrangements; the
cost of manufacturing scale-up; and effective commercialization activities and
arrangements. The Company leases its laboratory and office facilities and
certain equipment under operating and capital leases. It is expected that the
Company will need to acquire additional property and equipment as research and
development activities progress. The Company anticipates the need for expansion
of its laboratory and office facilities over the next several years.
The Company's business is subject to significant risks, including but not
limited to the risks associated with its research and development efforts,
obtaining and enforcing patents, the lengthy and expensive regulatory approval
process, product reimbursement levels, competition from other products,
dependence on collaborative partners and other third parties, and the
availability of capital. Even if the Company's products appear promising at an
early stage of development, they may not reach the market for a number of
reasons. Such reasons include the possibilities that the potential products:
will be ineffective or found to be unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.
6
<PAGE>
Uncertainties associated with the duration and expense of preclinical and
clinical testing of any of the Company's products make it difficult to predict
the Company's capital requirements, and unexpected developments and/or
regulatory requirements could greatly increase the cost of development of such
products and affect the timing of anticipated revenues from product sales.
Failure by the Company to obtain regulatory approval for any product will
preclude its commercialization. In addition, failure by the Company to obtain
patent protection may make certain of its products commercially unattractive.
To continue its product development efforts, the Company will be required
to raise substantial additional funds through public or private sales of its
securities and through collaborative arrangements. The Company's ability to
raise additional funds through such sales of securities depends in part on
investors' perceptions of the biotechnology industry in general and of the
Company in particular. The market for biotechnology company stocks has
historically been highly volatile and, accordingly, there can be no assurance
that additional funding will be available, or, if available, that it will be
available on acceptable terms. The Company is seeking to enter into additional
collaborative relationships to support development and commercialization under
which rights to certain of its technologies or products will be granted. There
can be no assurance that the Company will be able to conclude such relationships
on satisfactory terms, if at all, or that agreements with its collaborators will
successfully reduce its funding requirements. In addition, the Company has no
established bank financing arrangements, and there can be no assurance that it
will be able to establish such arrangements on satisfactory terms, if at all.
If adequate funds are not available, the Company may be required to
significantly delay, scale back or eliminate one or more of its drug discovery
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would not
otherwise relinquish.
The Company, several of its current and former directors, and Centocor,
Inc. were parties to a legal proceeding filed February 18, 1993 in the U. S.
District Court for the Southern District of California. The complaint was filed
by a shareholder of the Company who represented a class of persons who purchased
Corvas stock from January 30, 1992 through April 14, 1992. A settlement was
agreed upon and judgment of the Court entered on August 28, 1995. The Company
continues to deny all claims of wrongdoing and maintains this denial as part of
the settlement agreement. Of the $535,000 charge recorded in 1994 related to
this settlement, $193,000 remains accrued at March 31, 1996.
In 1993, the U.S. Patent and Trademark Office declared an interference and
is currently in the process of determining the priority of invention between a
patent for which some rights are licensed to the Company and a patent
application for which rights are licensed to another party. The subject matter
of these licenses is recombinant tissue factor which is used by Ortho Diagnostic
Systems, Inc. ("Ortho") to determine the blood clotting abilities of patients.
The Company believes that its licensed patent should be upheld and is contesting
the other party's claims of prior invention. However, there can be no assurance
that such patent will be upheld.
7
<PAGE>
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company, several of its current and former directors, and Centocor,
Inc. were parties to a legal proceeding filed February 18, 1993 in the U.S.
District Court for the Southern District of California. The complaint was filed
by a shareholder of the Company who represented a class of persons who purchased
Corvas stock from January 30, 1992 through April 14, 1992. A settlement was
agreed upon and judgment of the Court entered on August 28, 1995. The Company
continues to deny all claims of wrongdoing and maintains this denial as part of
the settlement agreement. Of the $535,000 charge recorded in 1994 related to
this settlement, $193,000 remains accrued at March 31, 1996.
In 1993, the U.S. Patent and Trademark Office declared an interference and
is currently in the process of determining the priority of invention between a
patent for which some rights are licensed to the Company and a patent
application for which rights are licensed to another party. The subject matter
of these licenses is recombinant tissue factor which is used by Ortho Diagnostic
Systems, Inc. ("Ortho") to determine the blood clotting abilities of patients.
The Company believes that its licensed patent should be upheld and is contesting
the other party's claims of prior invention. However, there can be no assurance
that such patent will be upheld.
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
Effective May 10, 1996, David S. Kabakoff, Ph.D., has resigned as
President and Chief Executive Officer of the Company. He will remain as
Chairman of the Board. Also effective May 10, 1996, Randall E. Woods has
joined Corvas as President and Chief Executive Officer. Mr. Woods previously
served as President of the U.S. Operations, Boehringer Mannheim
Pharmaceuticals Corporation from March 1994 to March 1996 and was Vice
President of Marketing and Sales from December 1993 to March 1994. Prior
to that, he served in various capacities at Eli Lilly & Company from 1973
to December 1993. Mr. Woods received an M.B.A. degree from Western Michigan
University.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit Number Description
-------------- -----------
10.50 Consulting Agreement between the Company and
David S. Kabakoff, dated as of May 1, 1996.
b. Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated February 2, 1996,
announcing the completion of a private placement of equity securities resulting
in proceeds of $14,835,000, net of estimated issuance costs.
8
<PAGE>
SIGNATURE
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.
CORVAS INTERNATIONAL, INC.
Date: May 10, 1996 By: /s/ John E. Crawford
---------------------------
John E. Crawford
Executive Vice President,
Chief Financial Officer and
Chief Accounting Officer
9
<PAGE>
CORVAS INTERNATIONAL, INC. AND SUBSIDIARY
INDEX TO EXHIBITS
Number Description
- - ------ -----------
10.50 Consulting Agreement between the Company and
David S. Kabakoff, dated as of May 1, 1996.
<PAGE>
DAVID S. KABAKOFF, PH.D./CORVAS CONSULTING AGREEMENT
This Consulting Agreement (hereinafter "Agreement") is made this 1 day of
May, 1996, (hereinafter "Effective Date") by and between Corvas International,
Inc., a California Corporation having its principal place of business at 3030
Science Park Road, San Diego, California 92121 (hereinafter "COMPANY"), and
David S. Kabakoff, Ph.D., 16947 Circa del Sur, Rancho Santa Fe, CA 92067
(hereinafter "CONSULTANT").
In consideration of the mutual covenants contained herein, the parties
agree as follows:
1. Effective as of this day CONSULTANT shall serve as a consultant to
CORVAS in its business field of research and development of therapeutic products
in the field of thrombosis and vascular disease.
2. This Agreement does not create an employer-employee relationship
between CONSULTANT and CORVAS. CONSULTANT agrees that all services hereunder
will be rendered by him, as an independent contractor.
3. CONSULTANT shall perform services under the Agreement for the
consideration and for the period described in Attachment A. Any modification of
consideration shall be as mutually agreed upon in writing by the parties from
time to time.
4. CONSULTANT shall not disclose to CORVAS any information, suggestions,
products, product developments or process with respect to which CONSULTANT is
under any actual or implied duty to any third party to keep secret or to advise,
suggest, or develop such information, and nothing in this Agreement shall impose
an obligation on the CONSULTANT to act contrary to any such actual or implied
duty to others. CORVAS shall be free to use all information that CONSULTANT
conveys to it without any further obligation to CONSULTANT.
5. CONSULTANT represents that he is not a party to any existing agreement
which would prevent his entering into this Agreement. Should any potential
conflict arise between CONSULTANT's obligations to others and consulting
services to be provided to CORVAS, CONSULTANT agrees to promptly disclose such
conflict to CORVAS.
6. (a) CONSULTANT shall promptly disclose in writing to the President or
other officials designated by CORVAS to receive such
Page 1
<PAGE>
disclosures, complete information concerning each and every invention,
discovery, development, improvement, device, design, apparatus, practice,
process, method or product (hereinafter referred to as "Invention(s)") whether
considered by CONSULTANT as patentable or not, made, conceived or reduced to
practice by CONSULTANT during the term of this Agreement and RESULTING FROM ANY
WORK PERFORMED BY CONSULTANT FOR CORVAS PURSUANT TO THIS AGREEMENT. CONSULTANT
hereby agrees that any Inventions made, conceived or reduced to practice by him
during the term of this Agreement and pursuant hereto, are the sole property of
CORVAS, and CONSULTANT agrees to assign and hereby assigns to CORVAS, its
successor or assigns, all his right, title and interest in and to said
Inventions, and any patent applications or Letters Patent thereon. CORVAS shall
have the sole discretion whether to obtain, maintain, modify or enforce any
domestic or foreign patent for any Inventions assigned to CORVAS pursuant to the
terms of this Agreement. CORVAS is free to enter into any licensing or
assignment agreement with any third party or to use whatever means it deems best
to develop, promote or market any Invention assigned to CORVAS pursuant to the
terms of this Agreement.
(b) CONSULTANT agrees that, at any time during the term of this
Agreement or thereafter, upon request and with further compensation therefor,
and at no expense to him, to do all lawful acts, including the execution of
papers and oaths and the giving of testimony, that in the opinion of CORVAS, its
successors or assigns, may be necessary or desirable for obtaining, sustaining,
reissuing or enforcing Letters Patent in the United States and throughout the
world for said Inventions, and for perfecting, recording or maintaining the
title of CORVAS, its successors or assigns, to said Inventions and to any patent
applications made and any Letters Patent or copyright registrations granted for
said Inventions in the United States and throughout the world.
7. Any reports, specifications or other materials prepared by CONSULTANT
for the purpose of or pursuant to this Agreement shall be the property of CORVAS
exclusively and shall be maintained in confidence by CONSULTANT.
8. CONSULTANT recognizes that in performance under this Agreement he will
have contact with information of substantial value to CORVAS, which is not
generally known and which gives CORVAS an advantage over its competitors who do
not know or use it, including, but not limited to techniques, designs, drawings,
processes, inventions, developments, prototypes, sales and customer information,
and business
Page 2
<PAGE>
and financial information, relating to the business, products, practices or
techniques of CORVAS (hereinafter "Confidential Information"). CONSULTANT
agrees, at all times, to regard and preserve as confidential such information,
and to refrain from publishing or disclosing any part of such Confidential
Information in any manner at any time to unauthorized third parties and
CONSULTANT shall not use it, except on behalf of CORVAS, without written consent
of CORVAS. CONSULTANT further agrees, at all times to refrain from any other
acts or omissions that would reduce the value of such Confidential Information
to CORVAS. CONSULTANT agrees to take all reasonable precautions to assure
compliance with the provisions of this paragraph.
9. Any information, reports, documents or other materials disclosed to
CONSULTANT, which are of a trade secret or confidential nature, and are
identified as such, are solely the property of CORVAS, are to be returned to
CORVAS at the termination of this Agreement and the CONSULTANT shall not during
the term of this Agreement, or for five (5) years thereafter, disclose such
information to others or use such information for commercial benefit of
CONSULTANT or others, except, however, that:
(i) As to a particular matter, CONSULTANT and CORVAS may agree
in writing to waiver of such requirement; and
(ii) Nothing in the Agreement shall in any way restrict the right
of CONSULTANT to use, disclose, or otherwise deal with any information which (i)
on the Effective Date of this Agreement shall be generally available to the
public or thereafter shall become so available through no act of CONSULTANT;
(ii) shall have been in the possession of the CONSULTANT at the time of
disclosure to CONSULTANT by CORVAS; (iii) shall not have been acquired by
CONSULTANT directly or indirectly from CORVAS pursuant or incidentally to this
Agreement; or (iv) shall have been acquired by CONSULTANT from any person
entitled to make disclosure to CONSULTANT other than CORVAS.
10. The CONSULTANT's duties of confidence to CORVAS and other duties
pursuant to this Agreement, shall survive the termination of this Agreement for
any reason.
,
11. This Agreement may be terminated prior to expiration of its term by
mutual written consent, or may be terminated by the Company
at any time for cause. CONSULTANT may terminate this Agreement upon thirty (30)
days written notice delivered to COMPANY, provided
Page 3
<PAGE>
that CONSULTANT shall be bound by all duties hereunder which survive termination
including the duty of confidentiality. Renewals of this Agreement must be
negotiated in writing during the term of this Agreement, and shall be conducted
by mutual agreement. The CONSULTANT agrees on behalf of himself and any other
person or persons claiming any benefit under him, that this Agreement and the
rights of CONSULTANT hereunder shall not be assigned in any way. Any attempt to
assign, transfer, or otherwise dispose of this Agreement shall be null and void.
12. This Agreement contains the entire understanding of the parties with
respect to the matters contained herein. To the extent that any terms of this
Agreement are inconsistent, other terms and conditions shall remain in full
force and effect. This Agreement shall be subject to and governed by the laws
of the State of California irrespective of the fact that the CONSULTANT may
become a resident of a different state.
Agreed to and Accepted: Agreed to and Accepted:
CORVAS INTERNATIONAL, INC. CONSULTANT
/s/ John E. Crawford /s/ David S. Kabakoff
- - ----------------------------- ---------------------------
John E. Crawford David S. Kabakoff, Ph.D.
Executive Vice President President and CEO
& Chief Financial Officer
Date: April 29, 1996 Date: April 29, 1996
----------------------- ---------------------
Page 4
<PAGE>
Attachment A
CONSULTANT will serve as President and Chief Executive Officer and agrees to
commit forty percent (40%) of his professional time to executing these
responsibilities during the month of May, 1996 and twenty-five percent (25%) of
his professional time during the month of June, 1996. During May, CONSULTANT
will be compensated at forty percent (40%) of his salary as a full-time employee
of Corvas which was effective prior to May 1, 1996 ($255,000). During June he
will be compensated at twenty-five percent (25%) of his previous full-time
salary. Such compensation will terminate on such a date as a successor begins
serving as President and Chief Executive Officer.
Beginning July 1, 1996, CONSULTANT will serve as a consultant and continue to
serve on the Board of Directors. Consideration for such services will be the
continued vesting of stock options as indicated on Schedule B attached to this
document.
CORVAS will reimburse CONSULTANT for reasonable travel and other related
expenses incurred in performance of services under this Agreement.
CONSULTANT will submit invoices and receipts for such expenses for
reimbursement. When CONSULTANT's travel includes other business purposes,
CORVAS will reimburse an appropriate share of expenses.
Page 5
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<PAGE>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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0
1
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<SALES> 21
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<OTHER-EXPENSES> 0
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<INCOME-PRETAX> (631)
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<CHANGES> 0
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