<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, 1998
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
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, 1998, there were 14,039,493 shares of Common Stock, $0.001 par
value, of the Registrant issued and outstanding.
<PAGE>
CORVAS INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Balance Sheets as of March 31, 1998 and
December 31, 1997 1
Condensed Statements of Operations for the Three Months
Ended March 31, 1998 and 1997 2
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 1998 and 1997 3
Notes to Condensed Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3 Quantitative and Qualitative Disclosures About Market Risk 8
PART II OTHER INFORMATION
Item 1 Legal Proceedings 9
Item 2 Changes in Securities 9
None
Item 3 Defaults Upon Senior Securities 9
None
Item 4 Submission of Matters to a Vote of Security Holders 9
None
Item 5 Other Information 9
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits 9
(b) Reports on Form 8-K 9
None
SIGNATURES 10
</TABLE>
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CORVAS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,441 $ 2,044
Short-term debt securities held to maturity
and time deposits, partially restricted 21,292 24,076
Receivables 1,102 289
Notes receivable from related parties 153 153
Other current assets 499 340
-------- --------
Total current assets 24,487 26,902
Property and equipment, net 1,560 1,312
-------- --------
$ 26,047 $ 28,214
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 435 $ 299
Accrued expenses 827 623
Accrued vacation 226 191
Deferred revenue 3,263 4,656
-------- --------
Total current liabilities 4,751 5,769
-------- --------
Stockholders' equity:
Preferred stock - Series A 1 1
Preferred stock - Series B 0 0
Common stock 14 14
Additional paid-in capital 92,347 92,179
Accumulated deficit (71,066) (69,749)
-------- --------
Total stockholders' equity 21,296 22,445
Commitments and contingencies
-------- --------
$ 26,047 $ 28,214
-------- --------
-------- --------
</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,
------------------------
1998 1997
<S> <C> <C>
REVENUES:
Revenue from collaborative agreements $ 1,746 $ 1,075
License fees and milestones 1,000 3,850
Net product sales 34 10
Royalties 43 36
------- -------
Total revenues 2,823 4,971
------- -------
COSTS AND EXPENSES:
Research and development 3,584 2,349
General and administrative 866 848
Cost of products sold 17 4
------- -------
Total costs and expenses 4,467 3,201
------- -------
Income (loss) from operations (1,644) 1,770
------- -------
OTHER INCOME:
Interest income, net 322 388
Other income 5 0
------- -------
327 388
------- -------
Net income (loss) $(1,317) $ 2,158
------- -------
------- -------
Basic net income (loss) per share $ (0.09) $ 0.15
------- -------
------- -------
Shares used in calculation of basic net
income (loss) per share 13,972 14,147
------- -------
------- -------
Diluted net income (loss) per share $ (0.09) $ 0.14
------- -------
------- -------
Shares used in calculation of diluted net
income (loss) per share 13,972 15,397
------- -------
------- -------
</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,
------------------------
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,317) $ 2,158
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 151 157
Amortization of premiums and discounts on investments (260) (159)
Stock compensation expense 25 0
Change in assets and liabilities:
Increase in receivables (813) (774)
Increase in other current assets (159) (564)
Increase in accounts payable, accrued
expenses and accrued vacation 375 63
Decrease in deferred revenue (1,393) (1,000)
-------- --------
Net cash used in operating activities (3,391) (119)
Cash flows from investing activities:
Purchases of investments held to maturity (13,251) (22,677)
Proceeds from maturity of investments held to maturity 16,295 20,985
Purchases of property and equipment (480) (173)
Proceeds from sale of property and equipment 81 0
-------- --------
Net cash provided by (used in) investing activities 2,645 (1,865)
-------- --------
Cash flows from financing activities:
Principal payments under capital lease obligation 0 (20)
Net proceeds from issuance of common stock 143 195
-------- --------
Net cash provided by financing activities 143 175
-------- --------
Net decrease in cash and cash equivalents (603) (1,809)
Cash and cash equivalents at beginning of period 2,044 2,202
-------- --------
Cash and cash equivalents at end of period $ 1,441 $ 393
-------- --------
-------- --------
</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 in the
fields of blood clot formation (thrombosis), inflammation, cancer and other
diseases.
(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, 1997. Results
for the interim periods are not necessarily indicative of results for other
interim periods or for the full year.
(3) NET INCOME (LOSS) PER SHARE
Pursuant to Statement of Financial Accounting Standards No. 128,
"Earnings per Share" ("SFAS 128"), financial statements for periods ending
after December 15, 1997 must reflect basic and diluted income (loss) per
share as defined. Accordingly, basic income (loss) has been computed based
upon the weighted average common stock outstanding during the period and
diluted income (loss) per share has been computed based upon the weighted
average number of shares outstanding during the period plus the dilutive
effects of common stock equivalents. Common stock equivalents have been
calculated under the treasury stock method and are not included in the per
share calculations where the effect of their inclusion would be
anti-dilutive. Basic and diluted income (loss) per share have been
calculated as follows in thousands:
<TABLE>
<CAPTION>
For the three months ended For the three months ended
March 31, 1998 March 31, 1997
-------------------------------------- -------------------------------------
Weighted Weighted
Earnings Average Shares Per Share Earnings Average Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- -------------- --------- ----------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Basic Income (Loss) Per Share:
Net Income (Loss) $(1,317) 13,972 $(0.09) $2,158 14,147 $0.15
Effect of Dilutive Securities 0 1,250
Diluted Income (Loss) Per Share:
Net Income (Loss) available to
common stockholders plus
------- ------ ------ ------ ------ -----
common stock equivalents $(1,317) 13,972 $(0.09) $2,158 15,397 $0.14
------- ------ ------ ------ ------ -----
------- ------ ------ ------ ------ -----
</TABLE>
(4) COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 established standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. The adoption of SFAS 130 did not have a significant impact since
the Company's net income/(loss) approximates comprehensive income/(loss) for
the three month periods ended March 31, 1998 and 1997.
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. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
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 in the fields of blood clot formation
(thrombosis), inflammation, cancer and other diseases. To date, the Company
has not generated significant revenues from product sales. The Company has
not been profitable on an annual basis since inception and expects to incur
substantial additional operating losses on an annual basis over the next
several years as the Company expands its research and development programs.
There is no assurance that the Company will successfully develop,
commercialize, manufacture or market its products or generate sufficient
revenues to become profitable on a sustained basis or at all. At March 31,
1998, the Company had an accumulated deficit of $71,066,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
Operating revenues decreased from $4,971,000 for the three months ended
March 31, 1997 to $2,823,000 in the corresponding period of 1998. This
$2,148,000 decrease was primarily due to a $2,850,000 decrease in license
fees and milestones, which was partially offset by a $671,000 increase in
revenue from collaborative agreements. In the first quarter of 1998, revenue
from collaborative agreements consisted of (i) $1,000,000 attributable to the
Company's strategic alliance agreement with Schering Corporation
("Schering-Plough") to collaborate on the discovery and commercialization of
orally active inhibitors of coagulation Factor Xa, (ii) $394,000 related to a
separate agreement with Schering-Plough regarding the design and development
of oral inhibitors of a key protease necessary for hepatitis C virus
replication, (iii) $240,000 recognized pursuant to a research and development
agreement with Vascular Genomics Inc. ("VGI") covering a novel vascular
targeting technology, and (iv) $112,000 attributable to the Company's license
and development agreement with Pfizer Inc. ("Pfizer") to collaborate on the
development of neutrophil inhibitory factor ("NIF"). The first quarter of
1998 also included license fees and milestones of $1,000,000, as a result of
a milestone achieved upon Pfizer's commencement of a Phase I clinical trial
of NIF. The remaining revenues in the first quarter of 1998 of $77,000 were
attributable to royalties and product sales. The Company discontinued its
manufacturing operations, and expects to complete the previously-disclosed
transaction with Ortho-Clinical Diagnostics Inc. ("Ortho"), a Johnson &
Johnson company, in 1998. Revenue from collaborative agreements in the first
quarter of 1997 included (i) $1,000,000 attributable to the Schering-Plough
collaboration regarding inhibitors of coagulation Factor Xa and (ii) $75,000
recognized pursuant to the NIF collaboration with Pfizer. License fees and
milestones in the first quarter of 1997 consisted of (i) a $3,000,000
milestone achieved upon selection of a clinical development compound in the
Company's strategic alliance agreement with Schering-Plough to develop orally
active thrombin inhibitors and (ii) $850,000 pursuant to the Pfizer
collaboration.
5
<PAGE>
Total costs and expenses incurred in the first quarter increased from
$3,201,000 in 1997 to $4,467,000 in 1998. This $1,266,000 increase is
primarily due to increased research and development expenditures. The
majority of this increase relates to the manufacture of clinical supplies for
NAP5 and the Company's conduct of clinical studies of NAPc2. General and
administrative expenditures increased only slightly comparing the first
quarters of 1997 and 1998.
Total other income decreased from $388,000 in the first quarter of 1997
to $327,000 in the same period one year later. Decreased cash balances
available for investment caused interest income to decrease by $66,000.
Subject to the availability of additional capital, the Company expects
its expenses to increase over the next several years as the Company's
research and development programs progress. The Company also expect both its
expenses and losses to fluctuate from quarter to quarter and that such
fluctuations may, at times, be substantial.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's operations have been funded primarily
through public offerings and private placements of equity securities,
revenues and milestones from collaborative agreements, license fees and
research grants, and interest income earned on cash and investment balances.
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 $22,673,000 as of March 31, 1998. Working capital at
March 31, 1998 was $19,736,000. Available cash is invested in accordance with
an investment policy set by the Board of Directors, which has the objectives
to preserve principal, maintain adequate liquidity and maximize income. The
policy provides guidelines concerning the quality, term and liquidity of
investments. The Company presently invests its excess cash in
interest-bearing, investment-grade securities.
Net cash used in operations was $3,391,000 in the three months ended
March 31, 1998, compared to $119,000 for the same period one year earlier.
This was due to increased cash usage and a decrease in operating revenues in
1998, mainly as a result of a $3,000,000 milestone payment received from
Schering-Plough in the first quarter of 1997. In the three months ended
March 31, 1998, net cash of $2,645,000 was provided by investing activities,
compared to net cash of $1,865,000 used in investing activities in the
corresponding quarter of 1997. This was attributable to the usage of
investment maturities to fund ongoing operations in 1998. Net cash provided
by financing activities decreased slightly from $175,000 in the first quarter
of 1997 to $143,000 in the first quarter of 1998. This was attributable to
the exercise of fewer stock options in this quarter of 1998 compared to 1997.
The Company expects to incur substantial additional costs in the
foreseeable future, including costs related to clinical and preclinical
studies and expanding its research and development activities. The Company
expects such costs to continue to increase and, as a result, expects to
experience substantial additional operating losses and negative cash flows
from operations over the next several years. In particular, increased costs
are anticipated as the clinical development of NAPc2 continues, including a
Phase II trial planned to commence in the second half of 1998. The Company
believes its existing capital resources and interest earned thereon should be
sufficient to satisfy its anticipated funding requirements for at least the
next 12 months. In addition, the Company may also receive additional funds
through milestone payments and royalties on sales of products in connection
with its alliances. However, there is no assurance that the Company will
receive any additional amounts under existing or any future alliances.
6
<PAGE>
Strategic collaborations with Schering-Plough and Pfizer provide for
payments to the Company if and when certain milestones are met. However,
there is no assurance that any future milestones will be achieved. In the
quarter ended March 31, 1998, Pfizer commenced a clinical trial for NIF which
triggered a $1,000,000 milestone payment. The next milestone in the
collaboration with Schering-Plough covering thrombin inhibitors is $1,000,000
to be paid upon filing by Schering-Plough of an Investigational New Drug
Application ("IND"), or its foreign equivalent, for initiating clinical
trials in the U.S. or in any corresponding foreign jurisdiction. In the
Company's collaboration with Schering-Plough covering inhibitors of the
hepatitis C virus, the next milestone is a $500,000 payment upon
identification of an initial lead compound in this program. In addition to
these milestones, the Company may also receive additional milestone payments
and royalties on sales of products in connection with its existing alliances,
as well as from any future alliances. If all of the milestones on all of the
Company's existing collaborations are met, Corvas could receive up to a total
of $97,050,000 in future milestone payments and research and development
funding over the next several years. However, there is no assurance that the
Company will achieve any such milestones or receive any such amounts under
these or any future alliances.
In June 1997, the Company entered into an option agreement to acquire
all of the outstanding stock of VGI, a vascular targeting company. If this
option is exercised prior to its termination on June 30, 2000, the
acquisition will be made with newly-issued Corvas Common Stock or, in certain
circumstances at the option of the Company, a combination of cash and 633,600
shares of Common Stock. The aggregate acquisition price, which is based on
the timing of option exercise, ranges from a minimum of $14,352,000 as of
March 31, 1998 to a maximum of $19,960,000. If this option is exercised, the
Company expects a noncash charge to earnings for in-process research and
development. If Corvas elects not to exercise its option, VGI may require the
Company to purchase 19.9% of its outstanding stock for $3,960,000 in Corvas
Common Stock. During the option period, Corvas will make monthly option
payments of approximately $83,000 to VGI. In addition, under a research and
development agreement, VGI is required to make monthly payments of $80,000 to
Corvas to be applied to research and development covering the VGI technology.
Although the net impact of these payments is not material, the Company may
incur substantial additional costs to develop this technology. Corvas may
enter into one or more collaborative relationships to develop and
commercialize this technology. However, there is no assurance that the
Company will be able to establish such relationships on satisfactory terms,
that such relationships will successfully reduce the costs associated with
research and development of this technology, that the option will be
exercised, or that this technology will prove to be effective.
Future capital requirements of the Company will depend on many factors,
including, but not limited to, the following: continued scientific progress
in its drug discovery programs; the magnitude of these programs; the progress
of preclinical testing and clinical trials; the 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 to maintain collaborative or licensing arrangements; the cost
of manufacturing scale-up; and the effectiveness of activities and
arrangements to commercialize existing and potential products. The Company
leases its laboratory and office facilities under an operating lease and
anticipates that it will need to expand its facilities over the next several
years.
7
<PAGE>
To continue its long-term product development efforts, the Company must
raise substantial additional funds through public or private sales of
securities, collaborative arrangements or other methods of financing. 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
is no assurance that additional funding will be available, or, if available,
that it will be available on acceptable terms. If additional funds are
raised by issuing securities, further dilution to stockholders will likely
result. The Company may enter into additional collaborative relationships to
develop and commercialize certain of its current or future technologies or
products. There is no assurance that the Company will be able to establish
such relationships on satisfactory terms, if at all, or that agreements with
collaborators will successfully reduce the Company's funding requirements.
In addition, the Company has not attempted to establish bank financing
arrangements, and there is no assurance that it would 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 discontinue one or more of its drug discovery programs or other aspects of
its operations, 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 or at prices below that at which the Company
would otherwise choose to relinquish such rights.
In 1993, the U.S. Patent and Trademark Office (the "USPTO") declared an
interference to determine the priority of invention between a patent for
which some rights are licensed to the Company (the "Licensed Patent") and a
patent application for which rights are held by other parties (the "First
Patent Application"). In 1996, the USPTO added a second patent application
to the proceeding (the "Second Patent Application") and redeclared the
interference. Rights to the Second Patent Application are held by other
parties, at least some of which also hold rights in the First Patent
Application. The subject matter of the patent and these applications is
recombinant tissue factor, which is used by Ortho to determine the blood
clotting abilities of patients. The Company is contesting the other parties'
claims of prior invention; however, there can be no assurance that the
Licensed Patent will be upheld.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
8
<PAGE>
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1993, the U.S. Patent and Trademark Office (the "USPTO") declared an
interference to determine the priority of invention between a patent for
which some rights are licensed to the Company (the "Licensed Patent") and a
patent application for which rights are held by other parties (the "First
Patent Application"). In 1996, the USPTO added a second patent application
to the proceeding (the "Second Patent Application") and redeclared the
interference. Rights to the Second Patent Application are held by other
parties, at least some of which also hold rights in the First Patent
Application. The subject matter of the patent and these applications is
recombinant tissue factor, which is used by Ortho-Clinical Diagnostics Inc.
("Ortho"), a Johnson & Johnson company, to determine the blood clotting
abilities of patients. The Company is contesting the other parties' claims
of prior invention; however, there can be no assurance that the Licensed
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
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
10.63 Letter of Agreement between the Company and
Schering Corporation and Schering-Plough Ltd.,
dated as of April 27, 1998.
10.64 Eleventh Amendment to Lease, dated as of
April 23, 1998.
27.1 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended March 31,
1998.
9
<PAGE>
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.
CORVAS INTERNATIONAL, INC.
Date: May 12, 1998 By: /s/ RANDALL E. WOODS
------------------------------------
Randall E. Woods
President and Chief Executive Officer
Date: May 12, 1998 By: /s/ CAROLYN M. FELZER
------------------------------------
Carolyn M. Felzer
Senior Director of Finance
Principal Financial Officer
10
<PAGE>
EXHIBIT 10.63
[LETTERHEAD OF SCHERING CORPORATION]
April 16, 1998
Mr. Randall E. Woods
President and Chief Executive Officer
Corvas International, Inc.
3030 Science Park Road
San Diego, California 92121
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. section 200.80 (b)(4),
200.83 and 200.24b-2
cc: Jonathan Spicehandler, M.D.
Cecil B. Pickett, Ph.D.
Ashit K. Ganguly, Ph.D.
Corporate Secretary, Corvas International
Brian C. Cunnigham, Esq., Cooley Godward LLP
RE: HCV Research Program
Dear Mr. Woods:
This is in reference to the License and Collaboration Agreement by and
between Corvas International, Inc. (hereinafter "Corvas") and Schering
Corporation and Schering-Plough Ltd. (hereinafter collectively called
"Schering"), effective as of June 11, 1997, including the Exhibits thereto
(the "Agreement").
This Letter of Agreement serves to set forth the terms under which the
parties have agreed to extend the Research Program Term for an additional
period of one (1) year (the "Extension Year"), to expire two (2) years from
the Effective Date of the Agreement.
In accordance with Section 2.3 of the Agreement, the Research Committee
has agreed that Schering will provide research funding to support [***] FTEs
at the rate of [***] per FTE during the Extension Year. The total of
Schering's research funding obligation under the Agreement during the
Extension Year is therefore [***], which obligation shall be equally
apportioned between Schering Corporation and Schering-Plough Ltd., and shall
be payable in four quarterly installments due on the first business day of
each calendar quarter during the Extension Year (i.e., on July 1, 1998,
October 1, 1998, January 1, 1999, and April 1, 1999).
*** CONFIDENTIAL TREATMENT REQUESTED<PAGE>
<PAGE>
Mr. Randall E. Woods April 16, 1998
Except as expressly amended and supplemented hereby, all other terms of
the Agreement shall remain in full force and effect.
We at Schering look forward to continued success in our collaborative
research efforts under the Agreement.
Please indicate your acceptance and agreement to the provisions set
forth in this Letter of Agreement by signing below on behalf of Corvas and
returning one signed original to Schering.
Very truly yours,
Schering Corporation Schering-Plough Ltd.
/s/ DAVID POORVIN, PH.D. /s/ DAVID POORVIN, PH.D.
------------------------ ------------------------
David Poorvin, Ph.D. David Poorvin, Ph.D.
Vice President Prokurist
Acknowledged and Agreed to
Corvas International, Inc.
By: /s/ RANDALL E. WOODS
----------------------
Date: April 27, 1998
<PAGE>
EXHIBIT 10.64
ELEVENTH AMENDMENT TO LEASE
This Eleventh Amendment to that certain Lease (this "Eleventh
Amendment") dated as of the 23 day of April, 1998, between HUB PROPERTIES
TRUST, a Maryland real estate investment trust ("LANDLORD") and Corvas
International, Inc., a Delaware corporation ("TENANT").
WHEREAS, Hartford Accident and Indemnity Company (the "ORIGINAL
LANDLORD") and Corvas, Inc. (the "ORIGINAL TENANT) entered into a certain
lease dated March 28, 1989 of a portion of the premises located at 3030
Science Park Road, San Diego, California, as amended by certain Lease
Amendments dated March 23, 1990 and May 18, 1990; and
WHEREAS, Corvas International, Inc., a California corporation ("CORVAS")
succeeded to the interests of Original Tenant as set forth in Consent to
Assignment of Lease dated March 13 1991; and
WHEREAS, Original Landlord and Corvas entered into a Third Lease
Amendment dated May 16, 1991; Fourth Lease Amendment dated January 21, 1992;
Fifth Lease Amendment dated April 15, 1992; Sixth Lease Amendment dated July
16, 1992; and Seventh Lease Amendment dated January 18, 1993; and
WHEREAS, Tenant succeeded to the interests of Corvas as set forth in
Consent to Assignment of Lease dated September 14, 1993; and
WHEREAS, Talcott Realty I Limited Partnership succeeded to the interests
of Original Landlord; and
WHEREAS, Talcott and Tenant entered into an Eighth Lease Amendment dated
July 7, 1995 and a Ninth Lease Amendment dated March 15, 1996; and
WHEREAS, Landlord succeeded to the interests of Talcott as set forth in
Assignment and Assumption of Leases, Contracts and Other Property Interests
dated December 5, 1996; and
WHEREAS, Landlord and Tenant entered into a Tenth Amendment to Lease
dated May 12, 1997; and
WHEREAS, for purposes of this Eleventh Amendment, the above-referenced
lease dated March 28, 1989 as amended on March 23, 1990; May 18, 1990; May
16, 1991; January 21, 1992; April 15, 1992; July 16, 1992; January 18, 1993;
July 7, 1995; March 15, 1996 and May 12, 1997 shall be hereinafter defined
collectively as "the LEASE"; and
WHEREAS, Tenant wishes to exercise its final option to extend the term
of the Lease and Landlord is willing to agree to such extension upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Landlord and Tenant agree that the Lease is hereby amended as
follows:
1. The definition of "TERMINATION DATE" as set forth in Section II.E.
of the Lease shall be amended by deleting the date "September 30, 1998"
therefrom and inserting the date of "September 30, 1999" in its place.
<PAGE>
2. The definition of "BASE RENT" as set forth in Section II.G of the
Lease shall be amended by inserting the following at the end thereof:
"10/01/98-09/30/99, $1,005,934.48."
3. The definition of "MONTHLY INSTALLMENTS OF BASE RENT" set forth in
Section II.H. of the Lease shall be amended by inserting the following at the
end thereof:
"10/01/98-09/30/99, $83,827.87."
4. Section II.F is hereby deleted in its entirety.
5. Section II.W.a. (a) of the Lease shall be amended by inserting the
following at the end thereof:
"10/01/98-09/30/99, $33.34."
6. Tenant warrants and represents that it has dealt with no broker in
connection with the execution of this Eleventh Amendment and agrees to
indemnify Landlord and hold it harmless from and against any and all
brokerage claims arising therefrom.
7. Except as herein specifically amended, this Lease is hereby
ratified and confirmed.
IN WITNESS WHEREOF, the parties have hereto executed this Eleventh
Amendment the date first above-written.
LANDLORD:
HUB PROPERTIES TRUST,
a Maryland real estate investment trust
By: /s/ DAVID J. HEGARTY
-------------------------------
Name: David J. Hegarty
Its: President
TENANT:
CORVAS INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ RANDALL E. WOODS
-------------------------------
Name: Randall E. Woods
Its: President & CEO
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,441
<SECURITIES> 21,292
<RECEIVABLES> 1,255
<ALLOWANCES> 0
<INVENTORY> 47
<CURRENT-ASSETS> 24,487
<PP&E> 5,011
<DEPRECIATION> 3,451
<TOTAL-ASSETS> 26,047
<CURRENT-LIABILITIES> 4,751
<BONDS> 0
0
1
<COMMON> 14
<OTHER-SE> 21,281
<TOTAL-LIABILITY-AND-EQUITY> 26,047
<SALES> 34
<TOTAL-REVENUES> 2,823
<CGS> 17
<TOTAL-COSTS> 4,467
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,317)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,317)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
