UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File number: 0-19750
---------
MATRIX PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2957068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34700 Campus Drive, Fremont, California 94555
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (510) 742-9900
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 preceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Number of shares of Common Stock, $.01 par value, outstanding as of June 30,
1997: 21,291,530.
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MATRIX PHARMACEUTICAL, INC.
INDEX
PART I. FINANCIAL INFORMATION
<CAPTION>
Item 1. Financial Statements Page No.
<S> <C>
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations -
Three Months and Six Months Ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Risk Factors 12
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 24
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MATRIX PHARMACEUTICAL, INC.
(a development stage company)
Condensed Consolidated Balance Sheets
(In thousands)
June 30, December 31,
1997 1996
--------- ---------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 18,407 $ 20,138
Short-term investments 27,441 38,997
Inventories 1,224 758
Other current assets 2,103 2,283
--------- ---------
Total current assets 49,175 62,176
Property and equipment, net 18,371 17,152
Non-current investments 50,038 55,449
Deposits and other assets, net 158 173
--------- ---------
$ 117,742 $ 134,950
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,052 $ 2,636
Accrued compensation 818 1,045
Accrued clinical trials 1,599 1,239
Other accrued liabilities 1,470 2,135
Current portion of debt and capital
lease obligations 607 660
--------- ---------
Total current liabilities 7,546 7,715
Long Term liabilities:
Debt and capital lease obligations,
less current portion 11,644 11,724
Deferred other income 2,193 --
--------- ---------
Total long-term liabilities 13,837 11,724
Stockholders' equity
Capital stock 224,707 222,256
Notes receivable from shareholders (2,313) --
Other (617) (856)
Deficit accumulated during the
development stage (125,418) (105,889)
--------- ---------
Total stockholders' equity 96,359 115,511
--------- ---------
$ 117,742 $ 134,950
========= =========
See accompanying notes
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MATRIX PHARMACEUTICAL, INC.
(a development stage company)
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
Costs and expenses:
Research and development 7,798 6,304 14,343 12,004
Selling, general and administrative 4,791 2,176 8,413 4,304
-------- -------- -------- --------
Total costs and expenses 12,589 8,480 22,756 16,308
-------- -------- -------- --------
Loss from operations (12,589) (8,480) (22,756) (16,308)
Interest and other income, net 1,561 1,274 3,227 2,024
-------- -------- -------- --------
Net loss $(11,028) $ (7,206) $(19,529) $(14,284)
======== ======== ======== ========
Net loss per share $ (0.52) $ (0.34) $ (0.92) $ (0.76)
======== ======== ======== ========
Weighted average number
of shares outstanding 21,276 20,877 21,267 18,909
======== ======== ======== ========
<FN>
See accompanying notes
</FN>
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<TABLE>
MATRIX PHARMACEUTICAL, INC.
(a development stage company)
Condensed Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(In thousands)
(Unaudited)
<CAPTION>
For the Six Months
Ended June 30
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(19,529) $(14,284)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation, amortization and other 1,189 627
Changes in assets and liabilities:
Inventories (930) --
Deferred other income 2,753 --
Other changes in assets and liabilities (481) (1,064)
-------- --------
Net cash used by operating activities (16,998) (14,721)
Cash flows from investing activities:
Capital expenditures (1,790) (1,352)
Investment in available-for-sale securities (16,000) (96,431)
Proceeds of available-for-sale securities -- 8,404
Maturities of investments 33,000 6,221
-------- --------
Cash flows provided (used) by investing activities 15,210 (83,158)
Cash flows from financing activities:
Payments on debt and capital lease obligations (178) (281)
Net cash proceeds from issuance of: -- --
Debt and capital lease financing 24 --
Capital stock 211 68,328
-------- --------
Cash flows provided by financing activities 57 68,047
Net decrease in cash and cash equivalents (1,731) (29,832)
Cash and cash equivalents at the beginning of period 20,138 55,675
-------- --------
Cash and cash equivalents at the end of period $ 18,407 $ 25,843
======== ========
Supplemental schedule of noncash investing and
financing activities:
Notes receivable from shareholders in exchange for
capital stock $ 2,313 $ --
======== ========
<FN>
See accompanying notes
</FN>
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MATRIX PHARMACEUTICAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
1. Basis of presentation
The results of operations for the interim periods shown in
this report are not necessarily indicative of results to be expected
for the year ending December 31, 1997. In the opinion of management,
the information contained herein reflects all adjustments necessary to
make the results of operations for the interim periods a fair statement
of such operations. All such adjustments are of a normal recurring
nature.
These condensed consolidated financial statements should be
read in conjunction with the Company's audited consolidated financial
statements for the year ended December 31, 1996, which were included in
the Company's Annual Report on Form 10-K, filed with the Securities and
Exchange Commission.
2. Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary after elimination of all
material intercompany balances and transactions.
3. Net loss per share
Net loss per share is computed using the weighted average
number of shares of common stock outstanding during the period. In
February 1997, the Financial Accounting Standards Board issued the
Statement of Financial Accounting Standard No. 128 (SFAS 128),
"Earnings per Share," which the Company is required to adopt for its
fiscal year ending December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. The Company's compliance with
SFAS 128 is not expected to have a material impact on the Company's
calculation of per share earnings or loss.
4. Cash and cash equivalents, short-term investments, and non-current
investments
The Company invests its excess cash in government and
corporate securities. Highly liquid investments with maturities of
three months or less at the date of acquisition are considered by the
Company to be cash equivalents. Investments with maturities beyond
three months at the date of acquisition and that mature within one year
from the balance sheet date are considered to be short-term
investments. Investments with maturities longer than one year from the
balance sheet date are classified as short-term investments or
non-current investments based on the Company's intended holding period.
The Company maintains its cash, cash equivalents and
investments in several different instruments held by a bank and a
brokerage house. This diversification of risk is consistent with the
Company's investment policy which is to maintain liquidity and ensure
the safety of principal.
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The Company determines the appropriate classification of debt
securities at the time of purchase and reevaluates such designation as
of each balance sheet date. The amortized cost of debt securities is
adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in interest and other income.
Realized gains and losses and declines in value judged to be
other-than-temporary are also included in interest and other income.
The cost of securities sold is based on the specific identification
method. Debt securities are classified as held-to-maturity when the
Company has the positive intent and ability to hold the securities to
maturity and are carried at amortized cost.
Debt securities which are not classified as held-to-maturity
and which are not held for resale in anticipation of short-term market
movements are classified as available-for-sale. Available-for-sale
securities are carried at fair value, with the unrealized gains and
losses, net of tax, reported in a separate component of stockholders'
equity.
5. Litigation
On December 21, 1994, Collagen Corporation ("Collagen") filed
a lawsuit against the Company in Santa Clara County Superior Court
alleging misappropriation of trade secrets concerning the Company's
manufacturing process for collagen and seeking unspecified damages and
injunctive relief. The Company denied all allegations of the complaint
and subsequently filed a cross-complaint against Collagen and Howard
Palefsky, Collagen's former Chairman and Chief Executive Officer,
seeking recovery of damages for defamation, violations of state law
unfair competition.
On May 23, 1997, the lawsuit between the parties was settled
on mutually agreeable terms and dismissed with prejudice. All claims by
and against all parties have been released. Matrix agreed that for a
period of five years it shall not manufacture or sell products directly
competitive with Collagen's current core products. Collagen has granted
Matrix a non-exclusive license to certain Collagen intellectual
property for certain non-monetary consideration.
6. Notes receivable from stockholders
In March 1997, the Board of Directors authorized a special
risk sharing arrangement designated as the Shared Investment Program
("Program"). Under the Program, the Company's executive officers and
other key managerial personnel were given the opportunity to purchase
shares of Common Stock in an individually designated amount per
participant determined by the Committee of the Board of Directors. A
total of 370,000 shares were purchased under the Program by nine
eligible employees at $6.25 per share, the fair market value of the
Common Stock on June 25, 1997, for an aggregate consideration of
$2,312,500. The purchase price will be paid through the participant's
delivery of a full-recourse promissory note payable to the Company.
Each note bears interest at 6.69% compounded semi-annually and has a
maximum term of nine years. The note will be secured by a pledge of the
purchased shares with the Company. The Company recorded a notes
receivable from participants in this program for $2,312,500 in the
equity section in the Consolidated Balance Sheet.
7. New accounting pronouncements
In June 1997, the Financial Accounting Standards Board issued
the Statement of Financial Accounting Standard No. 130 (SFAS 130),
"Reporting Comprehensive Income," which the Company is required to
adopt for its fiscal year ended December 31, 1998. This Statement
requires
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that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. In June 1997, the Financial Accounting Standards
Board issued the Statement of Financial Accounting Standard No. 131
(SFAS 131), "Disclosures about Segments of an Enterprise and Related
Information," which the Company is required to adopt for its fiscal
year ended December 31, 1998. This Statement establishes standards for
the way that public business enterprises report information about
operating segments in annual financial statements and in interim
financial reports issued to shareholders. It also establishes standards
for related disclosures about products and services, geographic areas,
and major customers. Both standards will require additional
disclosures, but will not have a material effect on the Company's
financial position or results of operations.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q contains, in addition to historical
statements, forward-looking statements, including without limitation, statements
regarding the timing and outcome of regulatory reviews and clinical trials.
Forward-looking statements are based on management's current expectations and
are subject to a number of risks and uncertainties that could cause actual
results to differ materially from expected results. For additional information,
including risk factors, such as no assurance of regulatory approvals;
uncertainties associated with clinical trials; history of losses; future
profitability uncertain; additional financing requirements and uncertain access
to capital markets; limited sales and marketing experience; limited
manufacturing experience; dependence on sources of supply; rapid technological
change; substantial competition; uncertainty regarding patents and proprietary
rights; uncertainty of pharmaceutical pricing; and no assurance of adequate
reimbursement, please see the "Risk Factors" section included in the Company's
1996 Form 10-K and in this Form 10-Q as well as other factors discussed below
and elsewhere in this report.
Results of Operations
Three Months and Six Months Ended June 30, 1997 and 1996
Since the Company's inception in 1985, the primary focus of its
operations has been research and development and, to date, it has not received
any revenues from the commercial sale of products. The Company has a history of
operating losses and expects to incur substantial additional losses over the
next several years as it continues to develop its current and future products.
For the period from its inception to June 30, 1997, the Company has incurred a
cumulative net loss of $125,418,000.
The Company had no revenue in either of the second quarters of 1997 and
1996 nor in the first six months of 1997 and 1996.
Research and development expenses for the second quarter of 1997
increased by 24% to $7,798,000 as compared to $6,304,000 for the second quarter
of 1996. For the first six months of 1997, research and development expenses
increased by 19% to $14,343,000 compared to $12,004,000 in 1996. These quarterly
and year-to-date increases were primarily due to a higher level of production
expenses for AccuSite(TM), increases in manufacturing research and development
and clinical personnel costs, increased clinical trial costs to support the
IntraDose Injectable Gel cancer program, and higher occupancy costs. This
increase was partially offset by lower expenses on clinical trials for
AccuSite(TM).
Selling, general and administrative expenses for the second quarter of
1997 increased by 120% to $4,791,000 as compared to $2,176,000 for the second
quarter of 1996. For the first six months of 1997, selling, general and
administrative expenses increased by 95% to $8,413,000 versus $4,304,000 for the
same period in 1996. This increase was primarily due to higher legal expenses
related to the Collagen litigation which was settled during the second quarter
of 1996, market launch expenses for AccuSite, recruiting and relocation
expenses, and higher personnel expenses. The legal expenses related to the
Collagen lawsuit were $2,286,000 and $3,720,000 for the quarter and six months
ended June 30, 1997, respectively, compared to $350,000 and $860,000 for the
comparative periods of 1996.
Net interest and other income increased to $1,561,000 for the second
quarter of 1997 as compared to $1,274,000 for the second quarter of 1996. For
the first six months of 1997, net interest
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and other income increased to $3,227,000 compared to $2,024,000 in 1996. The
increase for the quarter and six months ended June 30, 1997 reflected rental
income from the lease of a section of the Company's San Diego facility. In
addition, for the six months ended June 30, 1997, interest income increased as a
result of higher cash balances in effect during the first quarter of 1997 as
compared to the same period in the prior year.
Liquidity and Capital Resources
At June 30, 1997, the Company had $95.9 million in cash, cash
equivalents and marketable securities compared to $114.6 million at December 31,
1996. During the six months ended June 30, 1997, $25.2 million in cash was used
primarily to fund operating activites, inventory, and capital purchases. This
was partially offset by interest and rental receipts of $3.6 million as well as
$2.8 million received as part of a non-compete agreement.
The Company has financed its operations and capital asset acquisitions
from its inception through the sale of equity securities, interest income, and
capital lease and debt financing. The Company expects to finance its continued
operating requirements principally with cash on hand, sales from AccuSite as
well as additional capital that may be generated through equity and debt
financings and collaborative agreements.
The Company's working capital and capital requirements will depend on
numerous factors, including the progress of the Company's research and
development programs, preclinical testing and clinical trial activities, the
timing and cost of obtaining regulatory approvals, the levels of resources that
the Company devotes to the development of manufacturing and marketing
capabilities, technological advances and the status of competitors.
In December 1995, the Company purchased a research and manufacturing
facility in San Diego, California for $13.1 million. This facility requires
validation and process installation investments that will require capital
expenditures of approximately $10.5 million of which $1.0 million has been
incurred through June 30, 1997.
The Company expects to incur substantial additional costs relating to
the continued clinical development of its products, continued research and
development programs, the development of marketing and manufacturing
capabilities, the purchase of additional capital equipment and general working
capital requirements. The Company anticipates that its existing and committed
capital resources including the proceeds of its April 1996 public offering and
commercial sales of AccuSite will enable it to maintain its current and planned
operations at least through 1998. The Company may require additional outside
financing to complete the process of bringing current products to market, and
while the Company is not aware of any limitations on future sources of capital,
there can be no assurance that such financing will be available on favorable
terms, if at all.
Capital expenditures for environmental control efforts were not
material during the first six months of 1997 and 1996.
The Company began selling and marketing activities with respect to
AccuSite in the United Kingdom during the first quarter of 1997. The Company
anticipates sales to gradually build in the United Kingdom as support is gained
and the product is accepted by pharmacy formularies. However, the Company does
not expect any material sales until 1998. Also, during the first half of 1997,
the Company
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signed agreements pursuant to which one company has exclusive rights to
distribute AccuSite in Italy and another company has exclusive rights to
distribute AccuSite in Spain and Portugal.
The Company has filed separate regulatory submissions for AccuSite in
Germany, France and Italy. Additionally, the regulatory approval in the United
Kingdom was submitted in certain other countries of the European Union under the
mutual recognition process. In June 1997, AccuSite was recommended for marketing
authorization in Belgium, Denmark, Finland, Ireland, Luxembourg, and the
Netherlands through the mutual recognition process. Such recommendations
typically lead to approval within 30-90 days. However, there can be no assurance
that the Company will receive approval in such countries during such time
period, if at all.
In the United States, the Company received an action letter in December
1996 from the Food and Drug Administration (FDA) identifying issues that need to
be resolved before the Company's New Drug Application (NDA) for AccuSite can be
approved for the treatment of genital warts. In March 1997, the Company
submitted an amendment to its NDA that the Company believes addresses the
questions raised in the FDA's action letter and during a subsequent meeting. If
the Company fails to commercialize its program for genital warts in the United
States, this would have a material adverse impact on the future revenues of the
company.
In August 1997, the Company signed an agreement pursuant to which one
company has exclusive rights to distribute AccuSite to dermatology and
obstetrics and gynecology audiences in the United States.
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PART II. OTHER INFORMATION
RISK FACTORS
No Assurance of Regulatory Approvals
The preclinical and clinical testing, manufacturing, and marketing of
the Company's products are subject to extensive regulation by numerous
governmental authorities in the United States and other countries, including,
but not limited to, the FDA. Among other requirements, FDA approval of the
Company's products, including a review of the manufacturing processes and
facilities used to produce such products, will be required before such products
may be marketed in the United States. Similarly, marketing approval by a foreign
governmental authority is typically required before such products may be
marketed in a particular foreign country. Matrix has no products approved by the
FDA and one product approved by a foreign authority and does not expect to
achieve profitable operations unless other product candidates now under
development receive FDA and foreign regulatory approval and are thereafter
commercialized successfully.
In order to obtain FDA approval of a product, the Company must
demonstrate to the satisfaction of the FDA that such product is safe and
effective for its intended uses and that the Company is capable of manufacturing
the product with procedures that conform to the FDA's current good manufacturing
practice ("cGMP") regulations, which must be followed at all times. The Company
has had only limited experience in submitting and pursuing regulatory
applications. The process of obtaining FDA approvals can be costly, time
consuming, and subject to unanticipated delays. There can be no assurance that
such approvals will be granted to the Company on a timely basis, or at all.
The process of obtaining FDA regulatory approval involves a number of
steps that, taken together, may involve seven years or more from the initiation
of clinical trials and require the expenditure of substantial resources. Among
other requirements, this process requires that the product undergo extensive
preclinical and clinical testing and that the Company file an NDA requesting FDA
approval. When a product contains more than one component that contributes to
the product's effect, as do many of the Company's current product candidates,
the FDA may request that additional data be submitted in order to demonstrate
the contribution of each such component to clinical efficacy. In addition, when
there has been a manufacturing change in a product component (either in the
process by which the component is manufactured or the site at which it is
manufactured) during product development, as is the case with the collagen gel
used in the Company's AccuSite product, the FDA may request that additional data
be submitted to demonstrate that the manufacturing change has not affected the
clinical performance of the product. In addition, the manufacturing facilities
for a product must be inspected and accepted by the FDA as being in compliance
with cGMP regulations prior to approval of the product. There can be no
assurance that the Company's current manufacturing facilities in San Jose and
Milpitas will continue to be accepted by the FDA, or that its San Diego facility
will be accepted in the future, and failure to receive or maintain such
acceptance would have a material adverse effect on the Company's business.
Matrix has used three different sources of collagen gel in the products
on which it has conducted clinical trials: Koken Co., Ltd. ("Koken"), Collagen
Corporation ("Collagen") and its own production. The Company intends to use
collagen gel of its own manufacture in products it markets commercially if
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FDA approval is received. Accordingly, the Company has not referenced Collagen's
Pre-Market Approval files in its NDA. (See "-- Litigation" )
However, as noted above, when there has been a manufacturing change in
a product, such as a change in the supplier of a component, the FDA may request
that additional data be submitted to demonstrate that the manufacturing change
has not affected the clinical performance of the product as shown in earlier
clinical trials. Accordingly, Matrix has conducted a series of preclinical
studies to show comparability of products made from Collagen, Koken and Matrix
collagen gel, a human pharmacokinetic study to show comparability of products
made with Matrix and Collagen collagen gel, and Phase III clinical trials
showing comparability in clinical performance of a product made with Koken
collagen gel and a product made with Collagen collagen gel. The Company also
conducted a Phase III(b) clinical trial to demonstrate the comparable clinical
performance of a product made with Matrix collagen gel to a product made with
Collagen collagen gel. The Company believes that all studies conducted to date
have supported the comparable clinical performance of products made with
collagen gel from all three sources, but there can be no assurance that the FDA
will agree. In addition, there can be no assurance that the FDA will not require
further clinical demonstrations either of the comparability of a product made
with Matrix collagen gel to product made with Collagen collagen gel or Koken
collagen gel, or the safety and efficacy of a product made with Matrix collagen
gel. If questions arise during the FDA review process about comparability or
about the safety and efficacy of a product made with collagen, it could delay
the approval process or prevent approval and will increase the costs of
obtaining such approval.
The Company's analysis of the results of its clinical studies submitted
as part of an NDA is subject to review and interpretation by the FDA, which may
differ from the Company's analysis. There can be no assurance that the Company's
data or its interpretation of data will be accepted by the FDA. In addition,
delays or rejections may be encountered based upon changes in applicable law or
FDA policy during the period of product development and FDA regulatory review.
Any failure to obtain, or delay in obtaining, FDA approvals would adversely
affect the ability of the Company to market its proposed products. Moreover,
even if FDA approval is granted, such approval may include significant
limitations on indicated uses for which a product could be marketed.
Both before and after approval is obtained, a product, its
manufacturer, and the holder of the NDA for the product are subject to
comprehensive regulatory oversight. Violations of regulatory requirements at any
stage, including the preclinical and clinical testing process, the approval
process or thereafter (including after approval), may result in adverse
consequences, including the FDA's delay in approving or refusal to approve a
product, withdrawal of an approved product from the market, and/or the
imposition of criminal penalties against the manufacturer and/or the NDA holder.
In addition, later discovery of previously unknown problems relating to a
marketed product may result in restrictions on such product, manufacturer, or
the NDA holder, including withdrawal of the product from the market. Also, new
government requirements may be established that could delay or prevent
regulatory approval of the Company's products under development. See
"--Uncertainty of Pharmaceutical Pricing; No Assurance of Adequate
Reimbursement.
The Company's NDA for AccuSite was accepted for filing by the FDA in
November 1995. In December 1996, the Company announced that it received an
action letter from the FDA identifying issues that will need to be resolved
before the Company's NDA for AccuSite can be approved for the treatment of
genital warts.
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The FDA letter cited the information submitted by Matrix to be
inadequate and said that the AccuSite application is consequently not approvable
as submitted. The FDA's response raised issues relating to clinical matters (the
importance of the persistence of one side effect as it relates to product
equivalence, length of patient follow-up, and a potential risk of serious side
effects -- though no such side effects were observed in clinical studies),
chemistry matters (e.g., expiration dating and sampling plans) and microbiology
issues (e.g., filter and equipment sterilization validations). In February 1997,
the Company met with FDA officials to discuss the clinical issues raised in the
agency's December 1996 letter. In March 1997, Matrix filed an amendment to its
NDA that the Company believes addresses the questions raised in the action
letter and during the subsequent meeting. However, there can be no assurance
that the FDA may not ask for additional information on these issues, or raise
new issues, either of which could delay or preclude marketing approval. If the
Company fails to commercialize its program for genital warts in the United
States, this could have a material adverse impact on the Company.
The processes required by European regulatory authorities before the
Company's products can be marketed in Western Europe are similar to those in the
United States. First, appropriate preclinical laboratory and animal tests as
well as analytical product quality tests must be done, followed by submission of
a clinical trial exemption ("CTX") or similar documentation before human
clinical trials can be initiated. Upon completion of adequate and
well-controlled clinical trials in humans that establish that the drug is safe
and efficacious, regulatory approval of a Market Authorization Application (MAA)
must be obtained from the relevant regulatory authorities.
The Company filed its MAA for AccuSite in the United Kingdom in August
1995 and subsequently filed an MAA in Germany, France and Italy. In May 1996,
the Company was notified by the Medicines Control Agency in the United Kingdom
that a product license had been granted for AccuSite for the treatment of
genital warts. In December 1996, the Company submitted an application for mutual
recognition of the United Kingdom approval by various members of the European
Union to which it did not make a national submission. In June 1997, AccuSite was
recommended for marketing authorization in Belgium, Denmark, Finland, Ireland,
Luxembourg and the Netherlands through the mutual recognition process. The
recommendations should lead to formal approvals within 30-90 days. However,
there can be no assurance of mutual recognition by other participating countries
of the approval obtained in the United Kingdom. During the regulatory process,
the MAA was withdrawn from Spain, Greece, Portugal, and Austria, and a national
application was withdrawn from Sweden. As with the United States FDA review
process, there are numerous risks associated with the MAA review. Additional
data may be requested by the regulatory agency reviewing the MAA to demonstrate
the contribution of a product component to the clinical safety and efficacy of a
product or to compare the efficacy of the product to other treatments, or to
confirm the comparable performance of materials produced by a changed
manufacturing process or at a changed manufacturing site.
Uncertainties Associated with Clinical Trials
Matrix has conducted and plans to continue to undertake extensive and
costly clinical testing to assess the safety and efficacy of its potential
products. Failure to comply with FDA regulations applicable to such testing can
result in delay, suspension, or cancellation of such testing, and/or refusal by
the FDA to accept the results of such testing. In addition, the FDA or the
Company may modify or suspend clinical trials at any time if it concludes that
the subjects or patients participating in such trials are being exposed to
unacceptable health risks. Further, there can be no assurance that human
clinical testing will show any current or future product candidate to be safe
and effective or that data derived therefrom will be suitable for submission to
the FDA.
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The Company is currently conducting multiple clinical trials in the
United States and certain foreign countries, including four ongoing Phase III
trials. The rate of completion of the Company's clinical trials is dependent
upon, among other factors, the rate of patient enrollment. Patient enrollment is
a function of many factors, including the size of the patient population, the
nature of the protocol, the proximity of patients to clinical sites and the
eligibility criteria for the study. The Company has experienced slower than
planned accrual of patients with its ongoing Phase III trials. Further delays in
completing enrollment in these trials or delays in other clinical studies may
result in increased costs and delays, which could have a material adverse effect
on the Company. Generally similar considerations apply to clinical testing that
is subject to regulatory oversight by foreign authorities and/or that is
intended to be used in connection with foreign marketing applications.
History of Losses; Future Profitability Uncertain
Matrix was incorporated in 1985 and has experienced significant losses
since that date. As of June 30, 1997, the Company's accumulated deficit was
approximately $125.4 million. The Company has not generated revenues from its
products and expects to incur significant additional losses over the next
several years. The Company's ability to achieve a profitable level of operations
is dependent in large part on successfully developing products, obtaining
regulatory approvals for its products, and making the transition to an
organization producing commercial products and entering into agreements for
product commercialization. No assurance can be given that the Company's product
development efforts will be completed, that required regulatory approvals will
be obtained, that any products will be manufactured and marketed successfully,
or that profitability will be achieved.
Additional Financing Requirements and Uncertain Access to Capital Markets
The Company has expended and will continue to expend substantial funds
to complete the research, development and marketing of its products. The Company
may require additional funds for these purposes through additional equity or
debt financings, collaborative arrangements with corporate partners or from
other sources. No assurance can be given that such additional funds will be
available on acceptable terms, if at all. If adequate funds are not available
from operations or additional sources of financing, the Company's business could
be materially and adversely affected. Based on its current operating plan, the
Company anticipates that its existing capital resources will be adequate to
satisfy its capital needs through 1998. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
Limited Sales and Marketing Experience
The Company intends to market and sell certain of its products, if
successfully developed and approved, through its own dedicated salesforce in the
United States. However, for AccuSite, the Company has entered into a sales and
marketing agreement with Savage Laboratories, the U.S. marketing division of
Altana, Inc., to sell, market and distribute AccuSite to dermatology and
obstetrics and gynecology audiences in the United States. With the exception of
the United Kingdom, the Company's strategy is to secure sales and marketing
agreements, in the major European territories, for its products. The Company
currently has limited marketing and sales staff, utilizes a small contract sales
organization in the UK, and has not entered into co-promotion or distribution
arrangements other than for Italy, Spain, Portugal and the United States. The
Company is developing a sales and marketing plan for AccuSite and its other
products in clinical development. In order to market its products directly, a
sales force with technical expertise must be developed. There can be no
assurance that the Company will be able to establish a successful direct sales
organization or co-promotion or distribution arrangements. In
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addition, there can be no assurance that there will be sufficient sales of
AccuSite or other products to fund related expenses, many of which must be
incurred before sales commence. Failure to establish a marketing and sales
capability in the United States and/or outside the United States may have a
material adverse effect on the Company.
Limited Manufacturing Experience
The Company's ability to conduct clinical trials on a timely basis, to
obtain regulatory approvals and to commercialize its products will depend in
part upon its ability to manufacture its products, either directly or through
third parties, at a competitive cost and in accordance with applicable FDA and
other regulatory requirements, including cGMP regulations. The Company is
currently manufacturing commercial quantities of AccuSite and supplies of
IntraDose for its clinical trials at its manufacturing facilities in San Jose
and Milpitas, California. The Company anticipates that its facilities in San
Jose and Milpitas should provide sufficient production capacity to meet clinical
and early commercial requirements of its AccuSite product and selected
components for IntraDose into 1998. However, there can be no assurance that the
Company will be able to produce adequate quantities of its products for
commercial marketing and for its clinical trials; or that the Company will be
able to manufacture in a cost-effective manner; or that the Company's current
manufacturing facilities will continue to be accepted by the FDA.
In December 1995, the Company purchased a research and manufacturing
facility in San Diego, California. The Company intends to use this facility to
meet its long-term commercial scale production requirements. This facility
requires validation and process installation investments that will require
capital expenditures of approximately $10.5 million of which $1 million has been
incurred through June 30, 1997. The Company estimates that this facility will
not be available for production until late 1998. There can be no assurance that
the Company will be able to validate and scale up this facility in a timely
manner or that this facility will be adequate for Matrix's long-term needs
without delay to the Company's ability to meet product demand. Matrix expects to
continue to use selected contract manufacturers, in addition to its own
manufacturing capability, for some or all of its product components. Failure to
establish additional manufacturing capacity on a timely basis may have a
material adverse effect on the Company.
Dependence on Sources of Supply
Several of the materials used in the Company's products are available
from a limited number of suppliers. These items, including collagen gel and
various bulk drug substances used in the Company's products, have generally been
available to Matrix and others in the pharmaceutical industry on commercially
reasonable terms. If the Company's manufacturing facilities are not able to
produce sufficient quantities of collagen gel in accordance with applicable
regulations, the Company would have to obtain collagen gel from another source
and gain regulatory approval for that source. There can be no assurance that the
Company would be able to locate an alternative, cost-effective source of supply
of collagen gel. Matrix has negotiated and intends to continue to negotiate
supply agreements, as appropriate, for the raw materials and components utilized
in its products. Matrix is also in the process of attempting to obtain approval
of second sources for as many as possible of these supplies. Any interruption of
supply could have a material adverse effect on the Company's ability to
manufacture its products, and thus the ability to complete the clinical trials
or to commercialize products. In addition, the Company's ability to
commercialize its IntraDose Injectable Gel product in the United States could be
limited by the issuance in 1996 of a U.S. patent for cisplatin, a
chemotherapeutic drug that is the active compound in IntraDose, if the
newly-issued patent were upheld and if IntraDose were found to infringe
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that patent, and if the Company were unable to obtain a license under that
patent. See "--Uncertainty Regarding Patents and Proprietary Rights."
Litigation
On December 21, 1994, Collagen Corporation ("Collagen") filed a lawsuit
against the Company in Santa Clara County Superior Court alleging
misappropriation of trade secrets concerning the Company's manufacturing process
for collagen and seeking unspecified damages and injunctive relief. The Company
denied all allegations of the complaint and subsequently filed a cross-complaint
against Collagen and Howard Palefsky, Collagen's former Chairman and Chief
Executive Officer, seeking recovery of damages for defamation, violations of
state law unfair competition.
On May 23, 1997, the lawsuit between the parties was settled on
mutually agreeable terms and dismissed with prejudice. All claims by and against
all parties have been released. Matrix agreed that for a period of five years it
shall not manufacture or sell products directly competitive with Collagen's
current core products. Collagen has granted Matrix a non-exclusive license to
certain Collagen intellectual property for certain non-monetary consideration.
Uncertainty Regarding Patents and Proprietary Rights
The Company's success depends in part on its ability to obtain patent
protection for its products and to preserve its trade secrets and operate
without infringing on the proprietary rights of third parties. No assurance can
be given that the Company's pending patent applications will be approved or that
any patents will provide competitive advantages for the Company's products or
will not be successfully challenged or circumvented by its competitors. The
Company has not conducted an exhaustive patent search and no assurance can be
given that patents do not exist or could not be filed which would have a
material adverse effect on the Company's ability to market its products or
maintain its competitive position with respect to its products. The Company's
patents may not prevent others from developing competitive products using
related technology. Other companies obtaining patents claiming products or
processes useful to the Company may bring infringement actions against the
Company. As a result, the Company may be required to obtain licenses from others
to develop, manufacture or market its products. There can be no assurance that
the Company will be able to obtain any such licenses on commercially reasonable
terms, if at all. The Company also relies on trade secrets and proprietary
know-how which it seeks to protect, in part, by confidentiality agreements with
its employees, consultants, suppliers and licensees. There can be no assurance
that these agreements will not be breached, that the Company would have adequate
remedies for any breach, or that the Company's trade secrets will not otherwise
become known or be independently developed by competitors.
No assurance can be given that any patent issued to, or licensed by,
the Company will provide protection that has commercial significance. In this
regard, the patent position of pharmaceutical compounds and compositions is
particularly uncertain. Even issued patents may later be modified or revoked by
the United States Patent and Trademark Office ("PTO") in proceedings instituted
by Matrix or others. During an opposition proceeding in Japan, the Company
became aware of a reference which may affect the scope of its United States
Patent claims which cover the collagen gel matrix products. The Company has
brought this reference to the attention of the PTO for a determination of the
extent to which the claims should be modified in light of this reference. No
assurance can be given concerning the outcome of the determination, although the
Company believes that modifications of the claims that may be required because
of the reference will not materially adversely affect the Company's proprietary
protection for its products. In addition, no assurance can be given that the
Company's patents will afford
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protection against competitors with similar compounds or technologies, that
others will not obtain patents claiming aspects similar to those covered by the
Company's patents or applications, or that the patents of others will not have
an adverse effect on the ability of the Company to do business. Moreover, the
Company believes that obtaining foreign patents may be more difficult than
obtaining domestic patents because of differences in patent laws, and recognizes
that its patent position therefore may be stronger in the United States than
abroad. In addition, the protection provided by foreign patents, once they are
obtained, may be weaker than that provided by domestic patents.
In addition, no assurance can be given that the Company's patents will
afford protection against competitors with similar compounds or technologies,
that others will not obtain patents claiming aspects similar to those covered by
the Company's patents or applications, or that the patents of others will not
have an adverse effect on the ability of the Company to do business. In 1996,
for instance, a composition-of-matter patent for the cytotoxic drug cisplatin
was granted in the United States to a pharmaceutical company whose use patent on
cisplatin as an anti-tumor agent expired in December 1996. The Company, on
advice of patent counsel, believes the new patent for cisplatin, the active
agent in the Company's IntraDose product, was improperly awarded and should be
found invalid. However, if the new patent on cisplatin is upheld and if
IntraDose were found to infringe that patent, there can be no assurance that the
Company would be able to obtain a license to the patent in order to
commercialize IntraDose in the United States.
Rapid Technological Change and Substantial Competition
The pharmaceutical industry is subject to rapid and substantial
technological change. Technological competition in the industry from
pharmaceutical and biotechnology companies, universities, governmental entities
and others diversifying into the field is intense and is expected to increase.
Most of these entities have significantly greater research and development
capabilities, as well as substantially more marketing, financial and managerial
resources than the Company, and represent significant competition for the
Company. Acquisitions of, or investments in, competing biotechnology companies
by large pharmaceutical companies could increase such competitors' financial,
marketing and other resources. There can be no assurance that developments by
others will not render the Company's products or technologies noncompetitive or
that the Company will be able to keep pace with technological developments.
Competitors have developed or are in the process of developing technologies that
are, or in the future may be, the basis for competitive products. Some of these
products may have an entirely different approach or means of accomplishing
similar therapeutic effects than products being developed by the Company. These
competing products may be more effective and less costly than the products
developed by the Company. In addition, conventional drug therapy, surgery and
other more familiar treatments and modalities will offer competition to the
Company's products.
Any product which the Company succeeds in developing and for which it
gains regulatory approval must then compete for market acceptance and market
share. Accordingly, important competitive factors, in addition to completion of
clinical testing and the gaining of regulatory approval, will include product
efficacy, safety, timing and scope of regulatory approvals, availability of
supply, marketing and sales capability, reimbursement coverage, pricing and
patent protection.
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Uncertainty of Pharmaceutical Pricing; No Assurance of Adequate Reimbursement
The future revenues and profitability of and availability of capital
for biopharmaceutical companies may be affected by the continuing efforts of
governmental and third party payers to contain or reduce the costs of health
care through various means. For example, in certain foreign markets pricing or
profitability of prescription pharmaceuticals is subject to government control.
In the United States, there have been, and the Company expects that there will
continue to be, a number of federal and state proposals to implement similar
government control. While the Company cannot predict whether any such
legislative or regulatory proposals will be adopted, the announcement or
adoption of such proposals could have a material adverse effect on the Company's
prospects. Additionally, the cost of prescription drugs is receiving substantial
attention in the United States Congress. Legislation enacted in 1990, and
amended and strengthened in 1992, requires pharmaceutical manufacturers to
rebate to the government a portion of their revenues from drugs furnished to
Medicaid patients. In 1992, legislation was enacted that extends these
requirements to cover outpatient pharmaceuticals, and also mandates a reduction
in pharmaceutical prices charged to certain federally-funded facilities as well
as to certain hospitals serving a disproportionate share of low-income patients.
It is likely that Congressional attention will continue to focus on the cost of
drugs generally, and particularly on increases in drug prices in excess of the
rate of inflation, given recent government initiatives pertaining to the overall
reform of the U.S. health care system, and those specifically directed at
lowering total costs. The Company cannot predict the likelihood of passage of
federal and state legislation related to health care reform or lowering drug
costs.
The Company's ability to commercialize its products successfully will
depend in part on the extent to which appropriate reimbursement levels for the
cost of such products and related treatment are obtained from government
authorities, private health insurers and other organizations, such as health
maintenance organizations ("HMOs"). Third-party payors are increasingly
challenging the prices charged for medical products and services. Also, the
trend towards managed health care in the United States and the concurrent growth
of organizations such as HMOs, which could control or significantly influence
the purchase of health care services and products, as well as legislative
proposals to reform health care or reduce government insurance programs, may all
result in lower prices for the Company's products. The cost containment measures
that health care payors and providers are instituting and the effect of any
health care reform could adversely affect the Company's ability to sell its
products and may have a material adverse effect on the Company.
Dependence Upon Qualified and Key Personnel
Because of the specialized nature of the Company's business, the
Company's ability to maintain its competitive position depends on its ability to
attract and retain qualified management and scientific personnel. Competition
for such personnel is intense. There can be no assurance that the Company will
be able to continue to attract or retain such persons. During the quarter, the
Company's Chief Executive Officer resigned. The Company's Board of Directors is
currently conducting a search for a new Chief Executive Officer. The loss of key
personnel or the failure to recruit additional personnel could have a material
adverse effect on the Company's business.
Product Liability Exposure; Limited Insurance Coverage
The Company faces an inherent business risk of exposure to product
liability claims in the event that the use of products during research or
commercialization results in adverse effects. While the Company will continue to
attempt to take appropriate precautions, there can be no assurance that it will
avoid significant product liability exposure. The Company maintains product
liability insurance for
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clinical studies and commercial product. However, there can be no assurance that
such coverage will be adequate or that adequate insurance coverage for future
clinical or commercial activities will be available at all, or at acceptable
cost, or that a product liability claim would not materially adversely affect
the business or financial condition of the Company.
Hazardous Materials and Product Risks
The Company's research and development involves the controlled use of
hazardous materials, such as cytotoxic drugs, other toxic and carcinogenic
chemicals and various radioactive compounds. Although the Company believes that
its safety procedures for handling and disposing of such materials comply with
the standards prescribed by federal, state and local regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result, and any such liability could be extensive. The
Company is also subject to substantial regulation relating to occupational
health and safety, environmental protection, hazardous substance control, and
waste management and disposal. The failure to comply with such regulations could
subject the Company to, among other things, fines and criminal liability.
Certain of the chemotherapeutic agents employed by the Company in its
Therapeutic Implant, ADV and Therapeutic Adhesive products are known to have
toxic side effects, particularly when used in traditional methods of
administration. Each product incorporating such a chemotherapeutic agent will
require separate FDA approval as a new drug under the procedures specified
above. Bovine collagen is a significant component of the Company's protein
matrix. Two rare autoimmune connective tissue conditions, polymyositis and
dermatomyositis ("PM/DM"), have been alleged to occur with increased frequency
in patients who have received cosmetic collagen treatments. Based upon the
occurrence of these conditions, the FDA requested a major manufacturer of bovine
collagen products for cosmetic applications to investigate the safety of such
uses of its collagen. In October 1991, an expert panel convened by the FDA to
examine this issue found no statistically significant relationships between
injectable collagen and the occurrence of autoimmune disease, but noted that
certain limitations in the available data made it difficult to establish a
statistically significant association.
In addition, bovine sourced materials are of some hypothetical concern
because of transmission of Bovine Spongiform Encelphalopaty ("BSE"). The Company
has taken all precautions to minimize the risk of contamination of its collagen
with BSE including the use of U.S sourced cow hides. Materials made of cow hides
are considered to be the lowest risk of transmission of BSE.
Volatility of Stock Price; No Dividends
The market prices for securities of biopharmaceutical and biotechnology
companies (including the Company) have historically been highly volatile, and in
addition, the market has from time to time experienced significant price and
volume fluctuations that are unrelated to the operating performance of
particular companies. Future announcements concerning the Company, its
competitors or other biopharmaceutical products, governmental regulation,
developments in patent or other proprietary rights, litigation or public concern
as to the safety of products developed by the Company or others and general
market conditions may have a significant effect on the market price of the
Common Stock. The Company has not paid any cash dividends on its Common Stock
and does not anticipate paying any dividends in the foreseeable future.
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Anti-Takeover Provisions
The ability of the Board of Directors of the Company to issue shares of
Preferred Stock without stockholder approval and a stockholder rights plan
adopted by the Company may, alone or in combination, have certain anti-takeover
effects. The Company also is subject to provisions of the Delaware General
Corporation Law which may make certain business combinations more difficult.
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MATRIX PHARMACEUTICAL, INC.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1997 Annual Meeting of Stockholders was held on June 25, 1997. The
following directors, all of whom served in such capacity prior to the meeting,
were re-elected by the stockholders:
For Withheld
--- --------
J. Stephan Dolezalek 19,244,145 936,103
Edward E. Luck 19,237,594 942,654
John E. Lyons 19,245,245 935,003
Julius L. Pericola 19,245,645 934,603
Alan E. Salzman 18,506,442 1,673,806
The following additional matters were submitted to the stockholders for vote and
approved at the meeting:
o Approval of an amendment to the Company's 1988 Restricted Stock
Plan ("the Plan") in order to (1) increase the maximum number of
shares of common stock authorized for issuance under the Plan by
an additional 2,000,000 shares and (2) the extension of the term
of the Plan from September 2, 1998 to December 31, 2002. Of the
total shares voting on the foregoing resolution, 7,836,268 voted
in favor, 5,849,061 voted against, 1,607,880 abstained, and broker
non-votes were 4,887,039.
o Approval of a series of amendments to the Company's 1991 Director
Stock Option Plan (the "Directors Plan"), including an increase in
the maximum number of shares of common stock authorized for
issuance under the Director's Plan by an addition of 250,000
shares. Of the total shares voting on the foregoing resolutions,
8,104,237 voted in favor, 5,590,924 voted against, 1,611,834
abstained, and broker non-votes were 4,873,253.
o Ratification of the appointment of Ernst and Young as independent
auditors of the Company for the fiscal year ending December 31,
1997. Of the total shares voting on the foregoing resolution,
20,123,305 voted in favor, 35,125 voted against, 24,818 abstained,
and broker non-votes were 3,000.
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MATRIX PHARMACEUTICAL, INC.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Exhibit Table
- ------ -------------
10.46* Settlement and License Agreement effective as of May 23, 1997
by and between Collagen Corporation and the Company
10.47* Distribution Agreement made as of August 4, 1997 by and
between the Company and Altana, Inc.
10.48(1) 1988 Restricted Stock Plan (Amended and Restated through March
19, 1997)
10.49(2) Form of Stock Issuance Agreement
10.50(3) 1991 Directors Stock Option Plan (Amended and Restated through
March 19, 1997)
10.51(4) Form of Non-Statutory Stock Option Agreement
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no Current Reports on Form 8-K filed
during the quarter ended June 30, 1997.
- --------
* Confidential treatment has been requested as to certain portions of this
agreement. Such omitted confidential information has been designated by an
asterisk and has been filed separately with the Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended, pursuant to an
application for confidential treatment.
1 Incorporated by reference to Exhibit 99.1 of Registration Statement on Form
S-8 (No. 333-32213).
2 Incorporated by reference to Exhibit 99.6 of Registration Statement on Form
S-8 (No. 333-32213).
3 Incorporated by reference to Exhibit 99.7 of Registration Statement on Form
S-8 (No. 333-32213).
4 Incorporated by reference to Exhibit 99.8 of Registration Statement on Form
S-8 (No. 333-32213).
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MATRIX PHARMACEUTICAL, INC.
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.
MATRIX PHARMACEUTICAL, INC.
<TABLE>
<CAPTION>
<S> <C>
Date: August 12, 1997 By: /s/ James R. Glynn
-------------------------------- ------------------
James R. Glynn
Interim Chief Executive Officer and President
Chief Operating Officer
Chief Financial Officer
Signing on behalf of the registrant and as principal
executive and financial officer
</TABLE>
Page 24
SETTLEMENT AND LICENSE AGREEMENT
* * *
[Agreement consisting of 24 pages, including Exhibit A consisting of 12 pages,
redacted in its entirety. Exhibit B follows.]
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
<PAGE>
EXHIBIT B
Press Release
Matrix Pharmaceutical and Collagen Corporation each announced today the
settlement of a lawsuit between the two companies which had been pending since
1994.
The now-settled lawsuit involved Collagen's claims of trade secret
misappropriation against Matrix and two former Collagen employees hired by
Matrix in 1992 as well as cross- complaints against Collagen by Matrix and the
two employees for defamation and violations of state law unfair competition. All
claims by and against all parties have been released.
Matrix has agreed that for a period of five years it shall not manufacture
or sell products that are directly competitive with Collagen's current core
products. Collagen has granted Matrix a nonexclusive license to certain Collagen
intellectual property, for certain non-monetary consideration.
The lawsuit is being dismissed with prejudice.
DISTRIBUTION AGREEMENT
This Agreement is made as of August 4, 1997 by and between Matrix
Pharmaceutical, Inc., 34700 Campus Dr., Fremont, California 94555, a company
duly organized and existing under the laws of Delaware, United States of
America, ("Matrix") and Altana, Inc., Melville, New York, a company duly
organized and existing under the laws of New York ("Altana").
WITNESSETH:
Whereas, Matrix is the owner and manufacturer of the Product (hereinafter
defined) and is interested in having its Product marketed, sold and distributed
in the Field and in the Territory (each as hereinafter defined); and
Whereas, Altana has facilities, distribution systems and sales personnel capable
of selling the Product and is interested in marketing, selling and distributing
the Product in the Territory, and
Whereas, Matrix and Altana jointly agree that it is mutually desirable to enter
into this Agreement with respect to the supply, marketing, distribution and sale
of the Product.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
1. DEFINITIONS.
1.1. The term "Product" shall mean formulations of Matrix's AccuSite(TM)
(fluorouracil/epinephrine) injectable gel and any future formulations
involving fluorouracil/epinephrine) collagen for the treatment of
condyloma acuminata (genital warts) in commercial quantities and in
finished dosage form, as further described in Supplement A hereto.
1.2. The term "Field" shall mean the treatment of condyloma acuminata by
dermatologists and OB/GYN specialists.
1.3. The term "Territory" shall mean the United States of and Puerto Rico
for dermatology and OB/GYN markets.
1.4. The term "Parties" shall mean Matrix and Altana.
1.5. The term "Agreement" shall mean this document and any and all
supplements, schedules and amendments hereto.
1.6. The term "Net Sales" shall mean with respect to Product, the aggregate
amount invoiced by Altana (including by its Affiliates) for or on
account of any sale to a non-affiliated purchaser of such Product in
the Territory,
1
<PAGE>
less deductions for: a) normal and customary trade, quantity and cash
discounts allowed; and b) allowances or credits to customers on account
or return of Product.
1.7. The term "Distribution Period" shall mean the period beginning on the
date of the first offer for commercial sale of Products in the
Territory and ending five (5) years thereafter. This Agreement may be
extended beyond the original five (5) year term as set forth in section
11.2 below.
1.8. The term "Specifications" shall mean the specifications (including
methods package from NDA) for Products set forth and contained in the
FDA approval which authorizes the marketing of the Product for use by
humans in the Territory.
1.9. The term "Affiliate" shall mean any corporation, association, company,
organization or other entity which is directly or indirectly
controlling, controlled by, or under common control with Matrix or
Altana (as applicable). For the purpose of this definition, the term
"control" means the direct or indirect ownership of 50% or more of the
voting power of the subject entity.
1.10. The term "GMP" means those manufacturing practice regulations set forth
in Good Manufacturing Practices for Finished Pharmaceuticals, as
required by the applicable regulations in the Territory.
1.11. The term "FDA" means the United States Food and Drug Administration or
any successor agency.
1.12 The term "Year One" shall mean the date of product introduction through
the end of the next calendar year. However, Year One shall not exceed
18 months.
2. GRANT OF RIGHTS.
Altana shall have exclusive rights during the term of this Agreement to
promote, distribute, sell and resell the Product in the Field and in
the Territory and shall purchase its requirements therefor exclusively
from Matrix in accordance with the terms and conditions of this
Agreement. Altana shall seek or otherwise solicit orders for the
Product only from persons and entities located and taking delivery and
intending to sell within the Territory.
Prior to granting a license to market and sell the Product in the field
of urology to a third party, Matrix will grant Altana the exclusive
right, for a period of 90 days, to negotiate terms and conditions under
which Matrix would enter into such a license with Altana provided that
if Matrix and Altana do not agree on mutually satisfactory terms and
conditions within
2
<PAGE>
such 90 day period, despite good faith efforts to do so, then Matrix
shall ultimately be free to license such rights to third parties on
such terms and conditions as it deems appropriate.
3. PLACING OF ORDERS AND DELIVERY.
3.1. Matrix shall supply Altana with and Altana shall purchase from Matrix
all of Altana's requirements for Product for resale in the Territory in
accordance with the terms and conditions set forth in this Agreement.
3.2. Altana shall place orders with Matrix for the finished Product. Matrix
agrees to deliver the Product, as specified in such orders, to Altana
at the address agreed upon at the delivery date specified in each order
on the condition that each order is received by Matrix at least two (2)
months prior to the delivery date in question.
3.3. In consideration for the rights granted herein, Altana shall use its
diligent efforts, commensurate with those it would use for its own
products, to market, create a demand for and continuously develop sales
of the product in the Territory throughout the life of this Agreement.
3.4. Supplement C sets forth Altana's good faith estimate of the initial
sales forecast for quantities of Products that Altana expects to
market, sell and distribute during each of the first five (5) years of
this Agreement (the "Initial Forecast"). The Initial Forecast shall
apply to the first three years of the original term of this Agreement.
Thereafter, Altana shall in good faith prepare and annually provide to
the Marketing and Sales Committee its revised estimates of Net Sales of
Products for the then upcoming three year period. If accepted by
Matrix, such new forecasts shall become Accepted forecasts and shall
govern the Parties responsibilities for the period they cover. If not
accepted by Matrix, the Initial Forecast shall control.
3.5. All firm orders for Product placed by Altana shall be deemed to
incorporate Matrix's standard Terms and Conditions of Purchase in force
at the time of order placement, except where such terms or conditions
are varied or inconsistent with this Agreement. In the event of any
such inconsistency, this Agreement shall control. Altana shall place
firm orders for Product consistent with the Initial Forecast or the
then applicable Accepted Forecast, as applicable, at least sixty (60)
days prior to the scheduled delivery dates therefor. Any such orders
shall be deemed accepted by Matrix as of the date of their receipt,
unless within fifteen (15) days of its receipt, Matrix advises Altana
to the contrary, setting forth alternative delivery dates no later than
thirty (30) days from the original delivery date in accordance with
Matrix's then current delivery schedule for the Product in comparable
volumes.
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3.6. Matrix warrants that it shall fill each Altana firm order submitted in
accordance with this Agreement. Matrix shall supply Altana with at
least the quantities of Product set forth on Supplement C (the
applicable Forecasts) and shall use its commercially reasonable efforts
to supply Altana with any quantities ordered in excess of the
applicable Forecast requirements. If there is a shortfall in Matrix's
ability to supply Product, it shall immediately notify Altana of such
shortfall and provide an indication of the likely duration thereof. In
the event of any shortfall, Matrix will provide Altana with an
allocation of Product pro rata to its worldwide sales.
3.7. Product is to be delivered FOB Matrix manufacturing facilities,
California, after which Altana will pay all charges, including without
limitation transportation charges and insurance premiums. Title to, and
risk of loss of, the Product shall remain with Matrix until delivery at
the FOB point, at which time Altana shall assume title to and risk of
loss of the Product.
3.8. At the time of each Product shipment, Matrix shall invoice Altana an
amount equal to * per unit of finished Product shipped to Altana.
Altana shall pay each such invoice within thirty days of its date.
4. REVENUE SHARING AND PAYMENT.
4.1. Within forty-five (45) days after the end of each calendar quarter, and
starting with the first calendar quarter for which there are sales of
Product recorded, Altana shall deliver to Matrix a cash payment (or
Matrix shall deliver to Altana a cash payment), in U.S. dollars, in
each case equal to the applicable percentage of Altana's aggregate Net
Sales revenues from sales of Product during the prior quarter less the
amount previously paid to Matrix for Product sold during such quarter
(such that if the deduction for Product payments results in a negative
sum, the payment shall be made by Matrix to bring such sum to $0.00):
(a) For year one, fifty percent (50%) (to help defray Altana start-up
and marketing expenses; (b) years two and three (except as provided
below) (i) seventy percent (70%) (to repay Matrix for its foregoing the
upfront licensing fee) until such time as Net Sales revenue during such
second and third years has reached $50.0 million; (ii) thereafter and
for all subsequent years, sixty percent (60%) until Net Sales for each
such year exceeds the Initial Forecast or the Accepted Forecast Net
Sales amounts for such year; and (iii) once the Initial Forecast or
Accepted Forecast Net Sales Amount has been exceeded fifty percent
(50%) through the end of each such year.
4.2. Matrix and Altana agree that prior to any FDA approval for the Product
for use in the treatment of basal cell cancer and other future
indications, they shall develop a marketing plan (the "Expanded
Marketing Plan") for
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
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such indication and shall thereafter appropriately revise the Minimum
Net Sales amounts set forth in Supplement C to include appropriate
sales revenues therefor. Upon such agreement, the definition of Product
shall be expanded to include the treatment of basal cell cancer. As
part of such expanded marketing plans, Matrix and Altana shall agree to
the appropriate compensation to be paid to Matrix for its efforts in
developing and registering such new indications with the objective of
sharing the incremental costs for such indications on the same basis as
the Parties share revenues, resulting from such new indications.
4.3. Altana and its Affiliates shall keep and maintain detailed and accurate
books and records with regard to Net Sales, marketing expenses, and the
calculation thereof. Such books and records shall be in at least
sufficient detail to permit a third party auditor to verify the Net
Sales and marketing expenses for the Product and the quantities of
Product shipped during each calendar quarter. An independent auditor of
national standing shall be entitled, on Matrix' behalf, not more than
once each year and during normal business hours, to review and audit
such books and records. Such audit and review shall be contingent upon
one week's advance notice from Matrix to Altana and such audit and
review shall be at Matrix's expense; however, Altana shall bear any
such expense if the review or audit shows an underpayment of more than
five percent (5%) for the applicable period, in which case Altana shall
promptly reimburse Matrix for such expenses and pay the deficiency.
4.4 Any payments made by either party for Medicare or Medicaid rebate will
be shared by the parties based on the then applicable revenue sharing
percentage.
4.5. All payments to Matrix shall be made in U.S. dollars in the United
States to such account and bank as Matrix shall specify to Altana in
writing.
5. ALTANA OBLIGATIONS. Altana warrants and/or covenants, as applicable,
that it shall:
5.1. Meet or exceed at least fifty percent (50%) of the then applicable
annual Net Sales amounts set forth in the Initial Forecast or in any
Accepted Forecast, as then applicable. In the event that Altana fails
to meet such Minimum Net Sales amounts after Year One for any two
consecutive years, Matrix shall have the right to terminate this
Agreement provided that Matrix materially has fulfilled its obligations
under Section 3.6.
5.2. Use its diligent efforts to promote the sale of Product in the Field
and in the Territory and will furnish a detailed marketing and sales
plan with respect to the Product, three (3) months prior to the
beginning of each calendar year. Such plan shall be reviewed by the
Marketing and Sales Committee (as described in Section 12 below).
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In all instances, the Product shall be marketed under Matrix's
trademarks therefor, provided that Altana shall also be entitled to
display its name and logo thereon. Matrix shall grant Altana an
exclusive license to use the trademarks described in Supplement D, in
the Territory, upon the terms and conditions set forth in the Trademark
License Agreement entered into by the parties of even date herewith,
attached hereto as Supplement D and made a part hereof. All packaging,
labels, labeling, and marketing materials for the Product shall be in
accordance with applicable regulations in the Territory and shall be
approved in advance in writing by Matrix or a Matrix appointed
designee. Altana shall not distribute or have distributed any written
information regarding the Product which bears any Matrix trademark
without the prior written approval of Matrix. Permission to use the
Matrix trademarks in marketing the Product is granted solely for
purposes of this Agreement and shall immediately lapse upon any
termination of this Agreement. Altana acknowledges that in utilizing
such trademarks it shall be Altana's responsibility to promote the
goodwill associated with such trademarks and that Altana shall in all
cases comply with all applicable governmental requirements relating to
the sale or marketing of pharmaceutical products in the Territory.
Nothing herein grants Altana any other rights, title or interest in any
such trademarks, and Altana recognizes that Matrix is the sole owner
thereof and covenants that it will not take any action which might
prejudice or adversely affect the validity or Matrix's ownership
thereof.
5.3. Maintain a sales force of approximately seventy five (75), but in no
event less than sixty-five (65), sales persons each of whom shall be
predominantly directed at dermatology or OB/GYN sales opportunities and
are trained to sell the Product.
5.4. Present the Product in a first-call position to the appropriate
relevant target physicians in its sales calls for at least twelve (12)
months after its launch in the Territory. Altana will launch the
product in the Territory within ninety (90) days of regulatory
approval.
5.5. Expend not less than the amounts set forth on Exhibit B for each year
listed thereon in actual out-of-pocket marketing expenses related to
sales of the Product in the Field and in the Territory.
Supplement B sets forth Altana's Marketing expenses that Altana shall
incur to market, sell, and distribute during each of the first five (5)
years of this Agreement (the "Initial Forecast"). The Marketing
expenses shall apply to the first three (3) years of the original term
of this Agreement. Thereafter, Altana shall in good faith prepare and
annually provide to Marketing and Sales Committee its revised estimates
of marketing expenses for the then upcoming three (3)-year period. If
accepted by
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Matrix, such new Marketing expenses shall govern the Parties
responsibilities for the period they cover. If not accepted by Matrix,
the Initial Forecast shall control.
5.6. Ascertain and comply with all applicable laws and regulations and
standards of industry or professional conduct in connection with the
use, distribution or promotion of the Product, including without
limitation, those applicable to product claims, labeling, approvals,
registrations and notifications. To use commercially reasonable
efforts, at its sole expense, to obtain and maintain any applicable
approvals, registrations, notifications or the like with regard to
marketing, using (for therapeutic use), selling, reselling, labeling or
otherwise promoting or making claims regarding the Product or its use.
5.7. Provide medical affairs service for the Territory on behalf of Matrix
with respect to the Product. Altana's responsibilities shall include,
but are not limited to, the following:
(A) Altana shall operate a service that will provide prompt and
accurate responses to all inquiries. Such responses shall be
made verbally by phone or in writing by letter, facsimile or
electronic means as appropriate. Altana responses will be
consistent with Matrix specifications and standard operating
procedures to be mutually agreed upon.
(B) Matrix shall provide Altana with an initial set of anticipated
questions and approved responses.
(C) Altana shall be responsible for ensuring compliance of
responses with the appropriate requirements of regulatory
authorities.
(D) Altana shall follow appropriate reasonable standard operating
procedures agreed by both Parties, for collecting information
from calls concerning Adverse Events (as defined below), and
for reporting and transferring such information to Matrix.
(E) Altana shall maintain accurate and complete records of all
inquiries and responses, both verbal and written. Within five
(5) business days after the end of each month. Altana shall
provide Matrix with reports detailing the number and type of
responses handled during that month, as well as any additional
reports agreed upon by both Parties, and provide these in a
format agreed upon by both Parties.
(F) Altana shall ensure that the information database to be used
in providing medical affairs services is compatible with
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specifications as set forth in Supplement E. Upon termination
of this Agreement, Altana shall immediately transfer all
database records to Matrix in a useable and organized form.
5.8. Keep for five years after termination of this Agreement records of all
product sales and customers sufficient to adequately administer any
recall of the Product and to fully cooperate in any decision by the FDA
or any other regulatory body having jurisdiction to recall, retrieve
and/or replace the Product.
5.9. Maintain proper facilities for the storage and transport of Product
pursuant to the Specifications, including, without limitation, storage
at temperatures between 2 and 8 degrees Celsius, protected from light.
5.10. Refrain from establishing or maintaining any branch, warehouse or
distribution depot for the Product outside the Territory, and shall not
engage in any advertising or promotional activities relating to the
Product directed primarily to potential customers located outside the
Territory.
5.11. Facility Inspection. Upon reasonable written notice, Matrix shall have
the right from time to time to inspect Altana's Product distribution
facility(ies) and medical affairs database to verify its compliance
with the terms of this Agreement.
5.12. Inspections by Government Agencies. Altana shall promptly notify Matrix
of any inspections by any regulatory representatives of any facility at
which the Product is being or will be distributed, to the extent such
inspections pertain to the Product or the distribution thereof, and
shall send Matrix copies of the results of any such inspections,
including actions taken by the inspected party or any other entity to
remedy conditions cited in such inspections.
6. MATRIX OBLIGATIONS. Matrix warrants and/or covenants that it shall:
6.1. Obtain the registration for commercial sale in the Territory for the
Product, including carrying out any clinical studies required by
regulatory authorities for such registration. Notwithstanding the
foregoing, if any new studies required by such regulatory authorities
are in Matrix's judgment too expensive to warrant commercialization of
the Product in the Territory, then Matrix may terminate this Agreement
without further liability.
6.2. Supply Altana with packaged, labeled, finished Product F.O.B.
California.
6.3. Be responsible for testing clearance to the F.O.B. point.
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6.4. Expend not less than $1 million in year one for marketing the product,
$750,000 in year two for marketing the product, $600,000 in year three,
$500,000 in year four, and $400,000 in year five.
6.5. Be responsible for all Adverse Event reporting to the FDA and other
government agencies outside of the Territory with respect to the
Product. Matrix shall advise Altana of any adverse event reporting done
by Matrix on the Product outside the Territory.
6.6. Hold and maintain the Product license application for the registration
for sale of the Product in the Territory and be responsible for
establishing the Product price, after consulting with Altana.
6.7. Supply the Product to Altana in accordance with the provisions set
forth in Section 3.6.
6.8 Be responsible for disposal of Product packaging materials which are
deemed unusable due to changes imposed by the FDA or as agreed by the
parties.
6.9 Facility Inspection. Upon reasonable written notice, Altana shall have
the right from time to time to inspect Matrix's Product manufacturing
facility(ies) and medical affairs database to verify its compliance
with the terms of this Agreement.
6.10 Inspections by Government Agencies. Matrix shall promptly notify Altana
of any inspections by any regulatory representatives of any facility at
which the Product is being or will be distributed, to the extent such
inspections pertain to the Product or the distribution thereof, and
shall send Altana copies of the results of any such inspections,
including actions taken by the inspected party or any other entity to
remedy conditions cited in such inspections.
7. PATENTS.
7.1 Matrix represents and warrants that it has the right to grant the
licenses granted to Altana herein, that it has no knowledge of any
rights of third parties that would interfere with the practice of any
Matrix patent licensed hereunder or require the payment of any royalty
by Matrix or Altana to any such third party. Matrix further agrees that
it shall indemnify and hold Altana harmless from any liability, cost or
expense resulting from any breach of the foregoing representation.
8. WARRANTIES/LIABILITIES.
8.1. Matrix warrants that the Product delivered hereunder shall comply in
all material respects with the specifications set forth on Supplement A
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hereto and shall comply with Good Manufacturing Practices. If the
Product needs to meet additional specifications due to new government
requirements in the Territory, Altana will inform Matrix of such
specifications and both Parties will study the best way to fulfill said
requirements.
8.2. Altana warrants to Matrix that all of the Product units distributed by
Altana hereunder shall have been distributed and stored in conformance
with the regulations of the applicable regulatory authority at the time
of such distribution and storage.
8.3. DISCLAIMER. EXCEPT THOSE REPRESENTATIONS MADE TO ALTANA IN THIS
AGREEMENT, MATRIX MAKES NO OTHER REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE PRODUCT AND MATRIX HEREBY EXPRESSLY DISCLAIMS ANY
WARRANTIES IMPOSED BY STATUTE OR LAW, SUCH AS WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, EXCEPT WHERE SUCH
WARRANTIES MAY NOT BE DISCLAIMED BY LAW OR STATUTE APPLICABLE TO THIS
AGREEMENT.
8.4. Limited Liability. NEITHER PARTY WILL BE LIABLE FOR ANY SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES UNDER THIS AGREEMENT, EXCEPT TO THE
EXTENT THAT APPLICABLE LAWS DO NOT PERMIT SUCH LIMITATION.
8.5. During the term of this Agreement, each party shall within the time
periods prescribed from time to time by applicable laws, notify the
other party of all information coming into its possession concerning
any Adverse Event to a Product. In addition, Matrix shall provide
Altana with copies of periodic or expedited Adverse Event, safety or
recall correspondence with any governmental agency regarding the
Product, excluding any manufacturing information constituting Matrix
trade secrets. Matrix and Altana will derive a schedule for timeliness
of copying routine safety correspondence to Altana. Non-routine,
expedited safety correspondence will be copied promptly by Matrix and
sent to Altana. Matrix and Altana shall each notify the other promptly
if any batch or lot of Product is alleged or proven to be the subject
of a recall, market withdrawal or correction; provided, however, in the
event of any disagreement as to any matters relating to such recall,
market withdrawal or correction, Matrix shall have final authority on
such matters. All costs of any such recall, market withdrawal or
correction shall be borne by Matrix, unless such recall, market
withdrawal or correction is the result of an action or inaction by
Altana or its Affiliates inconsistent with its obligations under this
Agreement.
8.6. If Altana determines that the Product does not conform to the
Specifications, it shall promptly so notify Matrix in writing within
sixty (60)
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days of its receipt of such Product shipment. Altana and Matrix shall
confer on the matter and within sixty (60) days after receipt of
Altana's notice, Matrix shall notify Altana as to whether it concurs
with Altana's determination. If Matrix concurs then Matrix shall
promptly replace the nonconforming shipment with a like quantity of
conforming Product. If Matrix disagrees with Altana's determination,
the Parties will attempt to resolve the dispute through a meeting of
their respective Chief Executive Officers. If such dispute is not
resolved within thirty (30) days, then the Parties shall agree to
submit the allegedly nonconforming Product and original lot samples
retained by Matrix to a mutually agreeable independent laboratory for
testing. The determination of such laboratory shall be binding on the
Parties, provided that Matrix shall at any time have the right to deem
Product nonconforming, which Matrix determination shall be final.
Altana shall hold all nonconforming Product for Matrix's review and
disposal thereof.
9. INFRINGEMENT; INDEMNIFICATION.
9.1. Obligations in Case of Infringing Third Party.
9.1.1. Matrix and Altana shall each promptly inform the other
following the discovery of any infringement or unauthorized
use by a third party of any patent or other proprietary right
or other intellectual property right ("Proprietary Right")
owned or controlled by Matrix or Altana relating to the
manufacture, sale or use of the Product in the Territory. The
Parties shall undertake such efforts to obtain a
discontinuance of such infringement or unauthorized use as are
mutually agreed, and, if not successful, Matrix shall have the
first right but not the obligation to bring an infringement
action or file any other appropriate action or claim directly
related to the infringement of a Matrix Patent. The costs of
patent enforcement and related recoveries in the Territory
incurred by Matrix shall be included as shared costs or
revenues and allocated between the parties on the basis then
applicable to revenues pursuant to Section 4 above. If Matrix
does not commence a particular infringement action within 90
days after it first received written notice thereof, Altana,
after notifying Matrix in writing, shall be entitled to bring
such infringement action or any other appropriate action or
claim, the expense and recoveries of which shall again be
shared as set forth above. Matrix and Altana shall each pay
50% of any related out-of-pocket costs for any such suit
relating to infringement in the Territory, and shall share in
the same proportion any sums received, obtained, collected or
recovered, whether by judgment, settlement or otherwise as a
result of such suit in the same proportion.
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9.1.2. If either Altana or Matrix elects not to participate in such
an infringement suit, then such party shall give prompt notice
to the other. The other party may, but is not required to,
obtain a discontinuance of the alleged infringement or
unauthorized use or bring an infringement suit. Any
infringement suit shall be in the name of the party electing
to bring action or jointly as may be required by the law of
the forum. The party electing not to bring suit shall execute
such legal papers and shall render all reasonable assistance
necessary for the prosecution of such suit as may be
reasonably required by the other party; provided that the
party proceeding with such suit shall reimburse the
out-of-pocket expenses incurred by the other party in
connection with such assistance. Any such expenses and
compensation must be approved in advance.
9.1.3. It is understood that the party that institutes suit or action
pursuant to paragraph 9.1.2 above shall bear solely all costs
and expenses in connection therewith and shall be entitled to
retain and keep any and all sums received, obtained, collected
or recovered, whether by judgment, settlement or otherwise as
a result of such suit.
9.2. Indemnification.
9.2.1. Subject to Altana's compliance with its obligations as set
forth below, Matrix agrees to indemnify and hold harmless
Altana, its Affiliates, officers, directors and agents from
and against any and all losses, claims, damages, liabilities
and expenses, ("Liabilities") arising out of, relating to or
resulting from any action, suit or claim alleging that the
manufacture, use or sale of Product infringes, contributorily
infringes or induces the infringement of any patent, trade
secret or other Proprietary Right held by a third party (an
"Infringement Claim") or any action, suit or claim alleging
any product liability or similar claim relating to or arising
out of the manufacture, use or sale of the Product (a "Product
Claim" and together with an Infringement Claim, an
("Indemnified Claim"), except to the extent any such Liability
arises out of Altana's or its Affiliates' (i) negligence or
intentional misconduct, or (ii) storage, handling or
distribution of the Product other than in compliance with the
Specifications therefor or GMP regulations. In the event of
any patent infringement, Matrix shall use its commercially
reasonable efforts to obtain a license under any such patent.
9.2.2. Subject to Matrix's compliance with its obligations as set
forth below, Altana agrees to indemnify and hold harmless
Matrix its Affiliates, officers, directors and agents from and
against all Liabilities arising out of, relating to or
resulting from any product
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liability or similar claim relating to or arising out of
Altana's or its Affiliates' (i) negligence or intentional
misconduct, or (ii) storage, handling or distribution of the
Product or improper training of physicians in the use of the
Product, in each case other than in compliance with the
Specifications therefor or GMP regulations.
9.2.3. Each party agrees to notify the other within ten (10) days of
notification of any Indemnified Claim. Each party shall
consult with the other party, and keep the other party
reasonably informed, as to material developments with respect
to any Indemnified Claim for which a party seeks
indemnification hereunder. Any related correspondence sent to
other parties-in-interest in such indemnified Claim, and any
documents filed or served in connection with such Indemnified
Claim, by or on behalf of a party hereto (or the third party
that is the subject of such Indemnified Claim), shall be
provided to the other party promptly after such items are
sent, filed or served (as the case may be), and any related
correspondence or documents that a party (or such third party)
receives in connection with such Indemnified Claim shall
promptly be provided to the other party. The defendant named
in the Indemnified Claim shall retain decision-making
authority in defending the Indemnified Claim, but in no event
shall a party be responsible for any amounts paid in
settlement of an Indemnified Claim unless such party approves
the settlement. Notwithstanding anything herein to the
contrary, all costs of litigation or similar proceedings
(including legal fees, court costs, related travel fees, etc.)
shall be solely and completely the obligation and liability of
the party which bears the risk, and such party shall hold the
other party hereto harmless from and against the same.
9.2.4. Notwithstanding the foregoing, the obligation to share
reimbursements or contributions from third parties shall not
apply to proceeds under insurance policies that Altana or
Matrix, respectively, receives from its insurance carriers
(including, if applicable, a captive insurance carrier).
9.3. The foregoing obligation of Matrix does not apply with respect to
Product or portions or components thereof (i) not supplied by Matrix,
(ii) which are modified after shipment by Matrix, if the alleged
infringement or liability relates to such modification, (iii) combined
with other products, processes or materials where the alleged
infringement or liability relates to such combination, (iv) where
Altana continues allegedly the infringing or liability causing activity
after being notified thereof or after being informed of modifications
that would have avoided the alleged infringement or liability, or (v)
where Altana's use of the Product is not in accordance with the License
and the liability or infringement arises from
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such misuse; Altana will indemnify Matrix and its officers, directors,
agents, and employees from all damages, settlements, attorneys' fees
and expenses related to a claim of infringement, misappropriation or
liability excluded from Company's indemnity obligation by this
sentence.
9.4. The Parties acknowledge that the ultimate liability of the Parties
hereto to third parties for Infringement and Personal Injury Claims
will be decided by the court or other ruling entity having jurisdiction
over the matter under the laws of the relevant country. The provisions
of this Section 9 are not intended to modify such finding of ultimate
liability but, rather, reflect an agreed upon cost sharing arrangement
between the Parties hereto.
10. CONFIDENTIALITY.
10.1. All documents and information made available by or on behalf of Matrix
to Altana shall be kept secret and confidential by Altana and shall not
be disclosed to any persons except employees, government authorities
and parties appointed or approved by Matrix, which are directly engaged
in operations relating to the Product.
10.2. Altana shall take all steps as are reasonably necessary to ensure that
its staff is aware of and complies with the provisions of this Section
10.
10.3. The restrictions herein contained shall not extend to information that:
(i) was already known to Altana and not directly or indirectly received
from Matrix; or (ii) was in the public domain at the time of its
receipt, or entered the public domain thereafter through no fault of
Altana.
10.4. The provisions of this Section 10 shall remain in force during the term
of this Agreement and for a further period of five (5) years following
the termination hereof.
11. DURATION AND TERMINATION.
11.1. This Agreement shall become effective upon signing of the Parties on
the day first above written.
11.2. If not earlier terminated, this Agreement shall remain in force for a
period of five (5) years after the first shipments for sale of the
Product in the Territory. Thereafter, this Agreement may be renewed (a)
by mutual written consent of the Parties or (b) automatically for a
three (3)-year periods if Altana has met eighty percent (80%) Accepted
Forecast sales level for the prior two (2) years (with the Parties
agreeing to determine in good faith the forecast sales levels for a
three (3) year period on a rolling annual basis beginning after the
third year of the original five year term. Once accepted by Matrix,
such new or revised forecasts shall be referred to as "Accepted
Forecasts").
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11.3. Either party shall be entitled to terminate this Agreement at any time
in the event of a material breach of any terms or conditions of this
Agreement by the other Party which has not been remedied within thirty
(30) days after written notice thereof.
11.4 In the event of the insolvency or adjudication in bankruptcy or the
making of an assignment for the benefit of creditors by either Party,
this Agreement may be terminated immediately, at the option of the
other Party, by providing written notice.
11.5. Upon expiration or termination of this Agreement each Party shall
ensure that all Information disclosed to the other Party by it and any
documentation or duplications thereof in its possession shall promptly
be returned to the other Party.
12. MARKETING AND SALES COMMITTEE.
Within thirty (30) days of the date of this Agreement, Altana and
Matrix shall each appoint two (2) persons to an AccuSite(TM) marketing
and sales advisory committee (the "Committee") for the Territory. This
Committee will make recommendations regarding the Product launch plan
including marketing introduction, the sales plan for specific target
audiences in the Field (i.e., dermatologists, or OB / GYN). The role of
the Committee will be advisory only to review the marketing plan and
clinical program designed to support marketing and sales efforts. With
respect to the advice given by the Committee, the party charged with
the obligation to which such advice applies shall reasonably and in
good faith consider such advice, but such party shall be entitled
ultimately to proceed as it reasonably deems appropriate in view of its
obligations under this Agreement.
The Marketing and Sales Committee will be responsible for reviewing and
making recommendations to Matrix on matters relating to sales forecasts
and marketing expenses as set forth in Sections 3.4 and 5.1
respectively.
13. FORCE MAJEURE.
A party shall be excused from performing its obligations (other than an
obligation for paying sums when due) under this Agreement if its
performance is restricted or prevented by any cause beyond its control,
including but not limited to, Acts of God, fire, explosion, weather,
war insurrection, riots, or government action. Performance shall be
excused only to the extent of and during the reasonable continuance of
such disability.
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14. INSURANCE.
Both Parties shall maintain comprehensive insurance policies in the
Territory covering Product liability in an amount customary in the
industry for Products competing with or similar to the Products. The
Parties agree to exchange Certificates of Insurance each year during
the term of the Agreement.
15. ASSIGNABILITY.
This agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns. Altana shall not
assign, delegate, sublicense or otherwise transfer its rights or
obligations hereunder or any interest herein (including any assignment
or transfer occurring by operation of law) without the prior written
consent of Matrix except that this agreement and the rights and
obligations hereunder may be freely transferable in the Territory by
Altana to companies under the control of Altana or under the same
control as Altana.
Matrix may freely assign or transfer any or all of its rights,
obligations or interest herein in connection with the sale, assignment,
or transfer of all or substantially all of Matrix's business or to an
Affiliate provided, however, that Matrix may only assign its
manufacturing obligations hereunder to another FDA approved
manufacturing facility.
16. NOTICES.
Notices and other communications provided for hereunder shall be in
writing and mailed by registered mail or sent by facsimile or telex to
the address set forth below or at such address as the receiving party
shall have previously notified the sending party, and shall be deemed
received (i) fifteen (15) business days after mailing (with postage
prepaid) or (ii) upon transmission if sent by facsimile or telex and
promptly confirmed in writing by mail:
MATRIX ALTANA
------ ------
Matrix Pharmaceutical, Inc. Altana, Inc.
34700 Campus Dr. 60 Baylis Road
Fremont, California 94555 Melville, New York 11747
17. REFORMATION AND SEVERABILITY.
If any provision of this Agreement is declared invalid by any tribunal
of competent jurisdiction, then such provision shall be deemed
automatically adjusted to conform to the requirements for validity as
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declared at such time, and, as so adjusted, shall be deemed a provision
of this Agreement as though originally included herein. In the event
that the provision invalidated is of such nature that it cannot be so
adjusted, the provision shall be deemed deleted from this Agreement as
though the provision had never been included herein. In either case,
the remaining provisions of this Agreement shall remain in effect.
18. COUNTERPARTS AND HEADINGS.
This Agreement may be executed in any number of copies, each of which
when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same
instrument. Headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this
Agreement for any other purpose and will not affect in any way the
meaning or interpretation of this Agreement.
19. WAIVER.
If any party should at any time refrain from enforcing its rights
arising from a breach or default by the other party of any of the
provisions of this Agreement, such waiver shall not be construed as a
continuing waiver regarding that breach or default or other breaches or
defaults of the same or other provisions of the Agreement.
20. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of California and the United States of America without regard
to conflicts of laws principles thereof. At any time during the Term of
this Agreement the applicable laws in the Territory will be respected.
21. RELATION OF PARTIES.
The parties are independent contractors and nothing in this Agreement
shall imply any principal or agent relationship or other joint
relationship and neither party shall have the power or authority to
expressly or impliedly obligate the other party.
22. ENTIRE AGREEMENT.
Each of the Parties hereto agrees that there are no other agreements,
understandings, or representations, oral or written, other than as set
forth herein, and that this Agreement supersedes and replaces any and
all prior and contemporaneous agreements, understandings,
representations, statements, or other communications relating to the
subject matter hereof. The Parties hereto further agree that this
17
<PAGE>
Agreement constitutes the sole and entire agreement between the Parties
relating to the subject matter hereof.
In witness whereof, the Parties have duly executed the Agreement as of
the date first above set forth.
MATRIX PHARMACEUTICAL, INC. ALTANA, INC.
By: /s/ JAMES R. GLYNN By: /s/ GEORGE W. COLE
-------------------------- ------------------------
James R. Glynn George W. Cole
Title: COO, CFO Title: President
-------------------------- ------------------------
18
<PAGE>
Exhibit A
IDENTIFICATION OF THE PRODUCT
AccuSite(TM) Injectable Gel is a new combination of previously known active
ingredients, fluorouracil (5-FU) and epinephrine.
AccuSite(TM) (fluorouracil / epinephrine) Injectable Gel is a clear to
opalescent, colorless to slightly yellow, sterile gel containing fluorouracil,
an antineoplastic agent and epinephrine, a vasoconstrictor, in a purified bovine
collagen matrix. The drug product is provided in a kit containing two sterile,
nonpyrogenic, prefilled syringes: one syringe contains a fluorouracil gel and
the other syringe contains an epinephrine solution. The drug product kit also
includes a mixing adapter. The contents of the syringes should be mixed
immediately before use. Each kit will provide on milliliter after mixing.
Each milliliter of AccuSite(TM) Injectable Gel contains 30 mg of fluorouracil
and 0.1 mg of epinephrine. Each milliliter also contains 20 mg purified bovine
collagen, 0.05 mg edetate disodium dihydrate, 1.2 mg monobasic sodium phosphate,
2.9 mg dibasic sodium phosphate, 1.6 mg sodium chloride, and up to 0.15 mg
sodium metabisulfite in water for injection, with sodium hydroxide and / or
hydrochloric acid to adjust the pH.
AccuSite(TM) Injectable Gel is designed for direct intralesional injection
(intradermal injection under target lesions and surrounding tissues). The
chemotherapeutic agent, 5-FU, is delivered in a viscous collagen matrix. The
addition of the vasoconstrictor epinephrine assists in the extent of local
retention of 5-FU.
Fluorouracil Gel: Fluorouracil gel contains 33.3 mg / mL fluorouracil, purified
bovine collagen, monobasic sodium phosphate, dibasic sodium phosphate and sodium
chloride in water for injection with sodium hydroxide and / or hydrochloric acid
to adjust the pH. Fluorouracil (5-fluoro-2,4-(1H,3H)-pyrimidinedione, C4H3FN2O2)
is a white to practically white crystalline powder that is sparingly soluble in
water. The molecular weight of fluorouracil is 130.08.
Fluorouracil is a cytotoxic drug which is believed to act through inhibition of
DNA synthesis by means of blockade of thymidylate synthetase involved in the
formation of thymidine monophosphate. It may also become incorporated into RNA,
and may inhibit uracil utilization in RNA biosynthesis. The activity of 5-FU
against a wide variety of tumors and the expected toxicities following
intravenous administration are well established.
1
<PAGE>
Epinephrine Solution: Epinephrine solution contains 1 mg / mL epinephrine,
edetate disodium (dihydrate) and sodium metabisulfite with sodium hydroxide and
/ or hydrochloric acid to adjust pH, in water for injection. Epinephrine is
(R)-4-[1-hydroxy-2(methylamino)ethyl]-1-1-benzenediol, C9H13NO3 (molecular
weight: 183.21). Epinephrine is very slightly soluble in water and in alcohol.
The AccuSite(TM) Injectable Gel formulation is designed to retain therapeutic
concentrations of 5-FU in the tumor, thereby minimizing systemic exposure to the
drug.
AccuSite(TM) Injectable Gel is indicated for the treatment of external
condylomata acuminata (genital warts) by intradermal / intralesional injection
once a week for up to six weeks, or to complete response.
(Other specifications and details to be mutually agreed upon in accordance with
applicable regulatory requirements)
2
<PAGE>
Exhibit B
Marketing Expense
(000)
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
* * * * *
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
1
<PAGE>
Exhibit C
Initial Sales Forecast
(000)
1998 1999 2000 2001 2002
---- ---- ---- ---- ----
Sales * * * * *
Units * * * * *
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
1
<PAGE>
Exhibit D
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement ("Agreement") is effective as of this
4th day of August 1997 ("Effective Date"), by and between Matrix Pharmaceutical,
Inc. ("Matrix"), a Delaware corporation, having offices at 34700 Campus Drive,
Fremont, California 94555, U.S.A., and Altana, Inc., a New York corporation
("Altana"), having offices at Melville, New York.
In consideration of the mutual covenants and promises contained herein,
the parties hereto agree as follows:
1. Definitions.
The following terms shall have the meanings set forth below:
a. "Distribution Agreement" shall mean the Distribution Agreement, of
even date herewith, entered into by the parties hereto.
b. "Licensed Mark" shall mean the trademark AccuSite(TM) or its
successor; provided however, that the appearance and/or style of the
AccuSite(TM) mark may change from time to time in Matrix's sole discretion. As
of the Effective Date, the Licensed Mark is the subject of the following pending
trademark registration application: RM95C005680 filed on 10/6/95.
c. "Product" shall have the meaning set forth in the Distribution
Agreement.
d. "Territory" shall mean the United States of America and Puerto Rico.
2. License Right Granted.
a. In partial consideration of the consideration set forth in the
Distribution Agreement, Matrix hereby grants to Altana, and Altana accepts, upon
the terms and conditions set forth herein, an exclusive, non-transferable,
non-sublicensable, royalty-free license to use the Licensed Mark in the
Territory solely in connection with the Product.
b. Altana hereby acknowledges and agrees that, except as set forth
herein, Altana has no rights, title or interest in or to the Licensed Mark and
that all use of the Licensed Mark by Altana shall inure to the benefit of
Matrix. Altana covenants that it will not take any action that might prejudice
or adversely affect Matrix's rights in the Licensed Mark. Altana shall not have
the right to use the Licensed Mark as a trade name, company name, trade style or
fictitious business name.
1
<PAGE>
c. Altana understands and agrees that it does not have the right to use
the Licensed Mark in any manner that conflicts with the rights of any third
party. If, in Matrix's reasonable determination, Altana's use of the Licensed
Mark infringes the rights of any third party or weakens or impairs Matrix's
rights in the Licensed Mark, then Altana agrees to immediately terminate or
modify such use in accordance with Matrix's instructions. In the event Altana
fails to terminate or modify such use as directed by Matrix, Matrix may
terminate this Agreement.
d. Matrix agrees to defend, indemnify and hold Altana harmless from
liability resulting from infringement by the Licensed Mark of any trademark,
service mark or trade name right of a third party, provided that (i) Matrix is
promptly notified of any and all threats, claims and proceedings related
thereto, (ii) Matrix shall have sole control of the defense and / or settlement
thereof at its costs and expenses, (iii) upon Matrix's request, Altana
immediately ceases use of the Licensed Mark and (iv) upon Matrix's request,
Altana provides Matrix with reasonable assistance and information available to
Altana for such defense. The foregoing obligation of Matrix does not apply if
(a) Altana continues allegedly infringing activity after being notified thereof
or after being informed of modifications that would have avoided the alleged
infringement or (b) Altana's use of the Licensed Mark is not strictly in
accordance with the terms and provisions of this Agreement.
3. Quality Standards.
a. All packaging, labels, labeling and marketing materials for the
Product shall be in accordance with applicable regulations and shall be approved
in advance in writing by Matrix or a Matrix appointed designee. Altana shall not
distribute or have distributed any written information regarding the Product
that bears the Licensed Mark without the prior written approval of Matrix. If
Matrix believes that the Licensed Mark is being used in a manner that could
diminish Matrix's rights in or protection of the Licensed Mark, Altana agrees,
at Altana's sole cost and expense, to make whatever changes and / or corrections
Matrix deems necessary to protect the Licensed Mark.
b. Altana agrees that it shall not engage, participate or otherwise
become involved in any activity or course of action that diminishes and/or
tarnishes the image and/or reputation of the Licensed Mark.
c. Matrix shall have the right to inspect Altana's operations and
facilities during normal business hours upon reasonable prior notice, with the
sole purpose of any such inspection being to verify that Altana is in compliance
with the terms of this Agreement in maintaining the good will of the trademarks.
d. Altana agrees to conduct its activities under this Agreement in a
lawful manner.
e. Altana agrees to use the Licensed Mark in accordance with and only
on or in connection with the Product.
2
<PAGE>
4. Use and Display of Licensed Mark.
a. All usage by Altana of the Licensed Mark shall include the trademark
symbol and shall be in the following form, as appropriate: AccuSite(TM). All
literature and materials printed, distributed or electronically transmitted by
Altana and containing the Licensed Mark shall include the following notice:
AccuSite(TM) is a trademark of Matrix Pharmaceutical, Inc.
5. Term and Termination.
a. This Agreement shall commence on the Effective Date and shall
continue in effect for a period coterminous with the term of the Distribution
Agreement, unless earlier terminated in accordance with the terms and conditions
set forth herein.
b. This Agreement shall automatically terminate upon termination (for
whatever reason) of the Distribution Agreement.
c. This Agreement and the license granted herein may be terminated by
Matrix if Altana fails to perform or comply with a material provision of this
Agreement and such breach or default is not cured by Altana within thirty (30)
days after written notice of termination is received by Altana.
6. Cooperation and Protection.
a. Altana agrees to reasonably cooperate with and assist Matrix in
protecting and defending the Licensed Mark and shall promptly notify Matrix in
writing of any infringements, claims or actions by others (which come to the
attention of Altana) in derogation of the Licensed Mark; provided, however, that
Matrix shall have the initial right to determine whether any action shall be
taken on account of any such infringement, claim or action. If Matrix elects not
to pursue such infringement by written notice to Altana, Altana may, but is not
required to, seek to obtain a discontinuance of the alleged infringement or
unauthorized use or bring an infringement suit. The party not bringing such
action or suit shall execute such legal papers and shall render all reasonable
assistance necessary for the prosecution of such suit as may be reasonably
required by the other party; provided that the party proceeding with such suit
shall reimburse the out-of-pocket expenses incurred by the other party in
connection with such assistance. Any such expenses and compensation must be
approved in advance. It is understood that the party that institutes suit or
action shall bear solely all costs and expenses in connection therewith and
shall be entitled to retain and keep any and all sums received, obtained,
collected or recovered, whether by judgment, settlement or otherwise as a result
of such suit.
3
<PAGE>
b. Altana agrees not to apply for registration of the Licensed Mark (or
any mark confusingly similar thereto) anywhere in the Territory.
7. Assignment.
Altana may not assign this Agreement or any of its rights or
obligations under this Agreement without the prior written consent of Matrix,
other than to an Affiliate (as defined in Distribution Agreement) provided that
Altana shall remain liable for its obligations hereunder.
8. Notices.
All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given only if personally delivered, delivered by a
major commercial rapid delivery courier service or mailed by certified or
registered mail, return receipt requested, postage prepaid, to a party at the
address set forth on the first page hereof or such other address as a party last
provided to the other by written notice.
9. General.
a. Amendment, Modification and Waiver. The failure of either party to
enforce its rights or to require performance by the other party of any term or
condition of this Agreement shall not be construed as a waiver of such rights or
of its right to require future performance of that term or condition. Any
amendment or modification of this Agreement or any waiver of any breach of any
term or condition of this Agreement must be in a writing signed by both parties
in order to be effective, and any such waiver shall not be construed as a waiver
of any continuing or succeeding breach of such term or condition, a waiver of
the term or condition itself or a waiver of any right under this Agreement.
b. Governing Law. This Agreement shall be governed and interpreted
under the laws of the State of California, United States of America, without
regard to the conflicts of law provisions thereof.
c. Severability. In the event that any provision of this Agreement
shall be determined by a court of competent jurisdiction to be illegal or
unenforceable, that provision will be limited or eliminated to the minimum
extent necessary so that this Agreement shall otherwise remain in full force and
effect and enforceable.
d. Survival. Sections 7 and 10(b) hereof shall survive the termination
of this Agreement.
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be executed by their authorized representatives as of the date first above
written.
MATRIX PHARMACEUTICAL, INC. ALTANA, INC.
By: /s/ JAMES R. GLYNN /s/ GEORGE W. COLE
--------------------------------- -------------------------------
James R. Glynn George W. Cole
COO, CFO Title: President
5
<PAGE>
Exhibit E
Safety Reporting and Exchange of Safety Information Between
Matrix Pharmaceutical, Inc. and Altana Inc.
Altana Inc. (Altana) will be marketing and selling AccuSite(TM) Injectable Gel
in the United States of America, as outlined in the Distribution Agreement.
Matrix Pharmaceutical, Inc. (Matrix), either directly or through other
licensees, will coordinate pharmacovigilance activities for AccuSite in
allcountries where AccuSite may be commercialized. The purpose of this document
is to outline pharmacovigilance responsibilities between Matrix and Altana.
The following definitions will be used to insure consistency between Altana and
Matrix.
Definitions:
Adverse Event: An adverse event (AE) is any adverse event associated with
the use of a drug in humans, whether or not considered drug related,
including the following: an adverse event occurring in the course of the
use of a drug product in professional practice; an adverse event occurring
from drug overdose, whether accidental or intentional; an adverse event
occurring from drug abuse; an adverse event occurring from drug withdrawal;
and any significant failure of expected pharmacological action.
An AE can therefore be any unfavorable and unintended sign (including an
abnormal laboratory finding), symptom, or disease temporally associated
with the use of a drug product, whether or not related to the drug product.
Adverse Drug Reaction: An adverse drug reaction (ADR) refers to adverse
events for which there is a causal relationship between a drug product and
the event. The causality is at least a reasonable possibility, i.e., the
relationship cannot be ruled out.
All spontaneous AE reports should be considered ADRs for regulatory
reporting purposes.
Serious adverse event or adverse drug reaction: Any untoward medical
occurrence (or event) that at any dose:
o Is fatal: This serious criterion applies if the subject's or
patient's death is suspected as being a direct outcome of the reported
AE.
o Is life threatening: This serious criterion applies if the subject or
patient, in the view of the treating physician, is at substantial risk
of dying from the ADR/AE as it occurs (e.g., gastrointestinal
hemorrhage, bone
1
<PAGE>
marrow suppression). It does not apply if an AE hypothetically might
have caused death if it were more severe.
o Requires or prolongs inpatient hospitalization: This serious
criterion applies if the reported AE requires at least a 24-hour
inpatient hospitalization or prolongs an existing hospitalization. A
hospitalization for an elective procedure or routinely scheduled
treatments is not a serious AE because a procedure and/or a treatment
is not an untoward medical occurrence.
o Results in persistent or significant disability/incapacity: This
serious criterion applies if the "disability" caused by the reported AE
results in a substantial disruption of the subject's or patient's
ability to carry out normal life functions (e.g., blindness secondary
to a cerebrovascular accident). Any disability that is permanent is
also serious.
o Is a congenital anomaly/birth defect: This serious criterion applies
if a subject or patient exposed to a medicinal product gives birth to a
child with a congenital anomaly or birth defect.
o Is a new cancer: This serious criterion applies if the patient is
diagnosed with a cancer. If the patient is known to have a cancer prior
to treatment with a Matrix product, then this criterion applies if the
patient develops a new cancer of a different type.
o Is associated with an overdose: This serious criterion applies if an
overdose of the product was associated with an adverse event.
o Necessitates medical or surgical intervention to preclude permanent
impairment of a body function or permanent damage to a body structure:
This serious criterion applies if the reported AE requires treatment to
prevent significant damage to the subject or patient (e.g.,
administration of acetylcysteine to prevent permanent liver damage from
Tylenol(R) overdose-induced liver toxicity). Changes in dosage,
discontinuation of therapy, and routine treatment with a prescription
medication are not in themselves considered serious by this criterion.
Nonserious adverse event or adverse drug reaction: Any untoward medical
occurrence (or event) that at any dose does not meet the criteria as
serious will be classified as nonserious.
Scope of Responsibilities
2
<PAGE>
Altana Inc.: Altana will be responsible for the following activities:
o Receipt and follow-up of adverse event information from health
professionals (including physicians, surgeons, pharmacists, nurses,
etc.) and consumers in the U.S. and submission to Matrix.
o Medical verification of any consumer report describing a serious
adverse event. This means contacting the consumer's physician to
verify any report of a serious adverse event and obtaining additional
information, as needed.
o Transfer of individual case information for all reported serious
adverse events to Matrix Pharmaceutical as soon as possible and no
later than 2 calendar days of initial receipt and subsequent receipt
of additional information, if any. Information can be transferred by
paper (via fax) or electronically.
o Transfer of individual case information for all reported nonserious
adverse events to Matrix Pharmaceutical within 5 days of initial
receipt and subsequent receipt of additional information, if any.
Information can be transferred by paper (via fax) or electronically.
o Transfer of individual case information for all product complaints
that may be associated with an adverse event to Matrix Pharmaceutical
as soon as possible and no later than 5 calendar days of initial
receipt and subsequent receipt of additional information, if any.
Information can be transferred by paper (via fax) or electronically.
o Communication of ideas to improve the efficient and economical flow
of adverse event information between Altana and Matrix.
3
<PAGE>
Matrix Pharmaceuticals, Inc. Matrix will be responsible for the
following activities:
o Compliance with local pharmacovigilance laws or regulations in the
United States of America.
o Assessment of individual case reporting responsibilities and
coordination of submission to regulatory health authorities,
including FDA and other countries.
o Providing summaries and patient information on reported cases and
facilitating Altana's understanding of safety and pharmacovigilance
information.
o Entry of reports into and maintenance of a safety database for
spontaneous and other postmarketing adverse events collected
worldwide.
o Preparation of periodic safety update reports (e.g., FDA Periodic
Report, CIOMS-II) for submission to multiple regulatory authorities.
o Providing assistance as necessary to answer questions, etc. from
Altana. This includes both assistance to understand and complete
safety reporting responsibilities and providing information that will
allow Altana to answer questions from health professionals, etc.
o Providing assistance, education and guidance for collecting and
processing adverse event reports with AccuSite(TM).
o Coordinating the collection of and providing analysis, processing and
reporting for any clinical trial safety information involving
AccuSite.
o Maintenance of AccuSite package insert and other regulatory
documents.
Transfer of Information
o Information can be transferred by paper (via fax) or electronically.
4
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