================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
(Mark one)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934. For the quarterly period ended September 30, 1998.
or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934. For the transition period from ___________ to
___________.
Commission File Number:
0-24814
-----------------------------
SUGEN, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3629196
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
230 East Grand Avenue, South San Francisco, California 94080
(address of principal executive offices)
(650) 553-8300
(Registrant's telephone number, including area code)
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock $.01 par value;
16,399,209 shares outstanding at October 31, 1998.
================================================================================
<PAGE>
SUGEN, Inc.
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION --------
Item 1. Financial Statements and Notes
Condensed Consolidated Balance Sheets - September 30, 1998
and December 31, 1997 3
Condensed Consolidated Statements of Operations -
for the three and nine months ended September 30, 1998 and 1997 4
Condensed Consolidated Statements of Cash Flows - for the nine
months ended September 30, 1998 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS AND NOTES
SUGEN, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, December 31,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS (unaudited) (1)
Current assets:
Cash and cash equivalents $ 15,390 $ 23,816
Short-term investments 38,912 51,479
Prepaid expenses and other current assets 1,174 991
--------- ---------
Total current assets 55,476 76,286
Property and equipment, net 5,600 4,601
Other assets 2,604 3,938
--------- ---------
$ 63,680 $ 84,825
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,732 $ 1,991
Accrued liabilities 13,767 10,267
Deferred contract revenue 625 625
Capital lease obligations - current portion 2,534 2,277
--------- ---------
Total current liabilities 19,658 15,160
Long-term liabilities:
Capital lease obligations - non-current portion 4,741 3,152
Senior custom convertible notes 7,369 17,500
--------- ---------
Total long-term liabilities 12,110 20,652
Stockholders' equity:
Common stock 154,494 141,579
Deferred compensation (839) (695)
Note receivable from stockholder (883) (883)
Accumulated deficit (120,860) (90,988)
--------- ---------
Total stockholders' equity 31,912 49,013
--------- ---------
$ 63,680 $ 84,825
========= =========
<FN>
(1) Derived from audited financial statements at this date.
See accompanying notes.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
SUGEN, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Contract revenue (includes amounts from
related party) $ 5,164 $ 1,336 $ 9,160 $ 4,307
Costs and expenses:
Research and development 12,682 8,728 33,825 25,304
General and administrative 2,925 1,660 6,769 4,650
-------- -------- -------- --------
Total costs and expenses 15,607 10,388 40,594 29,954
-------- -------- -------- --------
Operating loss (10,443) (9,052) (31,434) (25,647)
Other income and expenses:
Interest income 815 576 2,677 1,879
Interest expense (337) (249) (1,204) (593)
-------- -------- -------- --------
Other income, net 478 327 1,473 1,286
-------- -------- -------- --------
Net loss $ (9,965) $ (8,725) $(29,961) $(24,361)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.62) $ (0.66) $ (1.90) $ (1.86)
======== ======== ======== ========
Shares used in computing basic and diluted net loss
per share 16,171 13,137 15,746 13,079
======== ======== ======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
SUGEN, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(In thousands)
(unaudited)
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net loss $(29,961) $(24,361)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,858 2,271
Deferred revenue -- 250
Changes in operating assets and liabilities:
Prepaid expenses and other current assets (183) 72
Other assets (163) (1,339)
Accounts payable 741 1,037
Accrued liabilities 3,557 580
-------- --------
Net cash used in operating activities (23,151) (21,490)
-------- --------
Cash flows from investing activities
Sales/maturities (purchases) of short-term investments, net 12,656 4,998
Purchases of property and equipment, net (3,358) (1,800)
-------- --------
Net cash provided by investing activities 9,298 3,198
-------- --------
Cash flows from financing activities
Proceeds from issuance of common stock, net 3,581 1,118
Proceeds from issuance of senior custom convertible notes -- 17,500
Proceeds from lease financing of property and equipment 3,702 1,895
Payments under capital lease obligations (1,856) (1,540)
-------- --------
Net cash provided by financing activities 5,427 18,973
-------- --------
Net (decrease) increase in cash and cash equivalents (8,426) 681
Cash and cash equivalents at beginning of period 23,816 24,852
-------- --------
Cash and cash equivalents at end of period $ 15,390 $ 25,533
======== ========
<FN>
See accompanying notes.
</FN>
</TABLE>
5
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Organization and Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements include the
accounts of SUGEN, Inc. (the "Company") and its wholly-owned subsidiaries.
All material intercompany transactions and balances have been eliminated in
consolidation. The condensed consolidated financial statements as of
September 30, 1998, the condensed consolidated statements of operations for
the three and nine months ended September 30, 1998 and 1997, and the
condensed consolidated statements of cash flows for the nine months ended
September 30, 1998 and 1997, have been prepared by the Company and are
unaudited. In the opinion of management, all necessary adjustments
(consisting only of normal recurring adjustments) which the Company
considers necessary for the fair presentation of the financial position at
such date and the operating results and cash flows for those periods are
included. The accompanying condensed consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1997 included in the Company's Form
10-K filed with the U.S. Securities and Exchange Commission. The results of
the Company's operations for any interim period are not necessarily
indicative of the results of the Company's operations for a full fiscal
year.
Subsidiary
In June 1998, the Company established SUGEN International AG ("SUGEN
International"), incorporated in the Canton of Zug, Switzerland, as a
wholly-owned subsidiary having no independent operations through September
30, 1998. SUGEN Europe AG ("SUGEN Europe") was established in August 1998,
as a wholly-owned subsidiary of SUGEN International. SUGEN International
and SUGEN Europe will hold certain rights to the Company's technology
portfolio outside of North America.
Formation Costs
Formation costs associated with the establishment of the subsidiaries are
expensed as incurred. These costs include legal, tax and accounting fees.
Foreign Currency Translation
The functional currency of the Company's wholly-owned subsidiaries is the
Swiss Franc. Assets and liabilities of the subsidiaries are translated at
the United States Dollar exchange rate in effect at each period end.
Amounts included in the subsidiaries' statements of operations are
translated at the average rate of exchange prevailing during the period.
Adjustments resulting from the translation of financial statements
denominated in Swiss Francs, if significant, are reflected as a separate
component of consolidated stockholders' equity.
6
<PAGE>
SUGEN, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
2. Accrued Liabilities
The components of accrued liabilities consist of the following:
September 30, December 31,
1998 1997
------- -------
(In thousands)
Accrued research & development services $ 8,017 $ 5,351
Accrued compensation 1,479 1,176
Accrued professional fees 1,203
859
Other 3,068 2,881
------- -------
$13,767 $10,267
======= =======
3. Research and Development Collaboration Agreements
Allergan, Inc.
In July 1998, the first milestone in connection with the Company's
collaboration with Allergan, Inc. was achieved in the angiogenesis program
for the treatment of ophthalmic diseases. The $437,500 Allergan milestone,
net of royalties, is included in contract revenue.
Taiho Pharmaceutical Ltd.
In July 1998, the Company entered into an agreement with Taiho
Pharmaceutical Ltd. ("Taiho") for the development and commercialization of
the Company's angiogenesis inhibitors for the prevention and treatment of
cancer. In connection with this agreement, Taiho will receive marketing
rights in Japan, while the Company will retain marketing rights for the
rest of the world. The Company received an initial research payment, and
will receive research and development funding and additional payments upon
the achievement of certain milestones. The Company has retained the rights
to manufacture and supply products to Taiho for sale in Japan.
4. Senior Custom Convertible Notes
From January through September 30, 1998, $10.2 million of principal and
accrued and unpaid interest relating to the Company's outstanding senior
custom convertible notes were converted into 854,106 shares of Common Stock
at a weighted average price of $12.05 per share.
7
<PAGE>
SUGEN, Inc.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information contained herein, the following
discussion contains words such as "intends," "believes," "anticipates," "plans,"
"expects" and similar expressions which are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which are subject to the "safe harbor" created by those sections. The Company's
actual results could differ materially from the results discussed in these
forward-looking statements. Factors that could cause or contribute to such
differences include the factors discussed below as well as the factors discussed
in the Company's Form 10-K for the year ended December 31, 1997. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
release the results of any revision to these forward-looking statements which
may be made to reflect events or circumstances occurring after the date hereof
or to reflect the occurrence of unanticipated events.
Overview
SUGEN, Inc. ("SUGEN" or the "Company") was founded in July 1991 to discover
and develop new classes of small molecule drugs which target specific cellular
signal transduction pathways. These signalling pathways are involved in a
variety of chronic and acute pathological diseases, including cancer and
diabetes as well as in dermatologic, ophthalmic, neurologic and immune
disorders. The Company's most advanced product candidate is SU101, a PDGF TK
signalling antagonist. The Company initiated a Phase III clinical trial for use
of SU101 as a treatment for refractory malignant glioma during the first quarter
of 1998. Additionally, SUGEN currently has underway multiple Phase II studies
including SU101 in combination with BCNU in front-line glioma, mono-therapy in
ovarian and non-small cell lung cancer and mono-therapy and in combination with
mitozantrone in hormone refractory prostate cancer. To date, approximately 313
patients, including patients with brain, ovarian, prostate and non-small cell
lung cancers, have been treated with SU101 in eleven Company-sponsored clinical
trials. The Company's second cancer product candidate, SU5416, is a Flk-1/KDR TK
antagonist which inhibits angiogenesis (the process by which blood vessels are
formed). Currently, the Company is conducting multiple Phase I clinical trials
for SU5416 in solid tumors in Europe and the U.S. and a Phase I/II study of
SU5416 in Kaposi's sarcoma. In addition, the Company is conducting a Phase I
clinical trial for SU5271, an EGF antagonist, for the treatment of psoriasis.
Through September 30, 1998, substantially all of the Company's revenue apart
from interest income has been earned pursuant to collaborations with Zeneca
Limited ("Zeneca"), ASTA Medica Aktiengesellschaft ("ASTA Medica"), Vision
Pharmaceuticals L.P., an affiliate of Allergan, Inc., and Allergan, Inc.
(collectively "Allergan") and Taiho Pharmaceutical Ltd. ("Taiho"). The Company
intends to pursue its cancer drug discovery programs independently in North
America and its programs in other disease areas in collaboration with
established pharmaceutical companies.
In June 1998, the Company established SUGEN International AG ("SUGEN
International"), incorporated in the Canton of Zug, Switzerland, as a
wholly-owned subsidiary having no independent operations through September 30,
1998. SUGEN Europe AG ("SUGEN Europe") was established in August 1998, as a
wholly-owned subsidiary of SUGEN International. SUGEN International and SUGEN
Europe will hold certain rights to the Company's technology portfolio outside of
North America.
8
<PAGE>
The Company has not been profitable since inception and expects to incur
substantial losses for the foreseeable future, primarily due to the expansion of
preclinical and clinical development activities as more of its proprietary
cancer-related programs progress into the clinic. The Company expects that
losses will fluctuate from quarter to quarter and that such fluctuations may be
substantial. As of September 30, 1998, the Company's accumulated deficit was
$120.9 million.
Results of Operations
The Company's revenues for the three and nine months ended September 30,
1998 were $5.2 million and $9.2 million, respectively. These results compare to
revenues of $1.3 million and $4.3 million for the same periods last year.
Revenues for the three and nine months ended September 30, 1998 included
contract revenue from the Zeneca, Taiho and Allergan collaborations, milestones
and contract services revenue (services rendered by ASTA Medica pursuant to the
collaboration but on non-collaboration programs) and recognition of the initial
research payment received in connection with a collaboration with ProChon
Biotech Limited. In 1997, revenue included contract revenue from the Allergan
and Zeneca collaborations and contract services revenue earned under the ASTA
Medica collaboration for non-collaboration programs. The Company expects to
fully utilize the remaining available credit for contract services provided by
ASTA Medica by the end of 1998, and thereafter will only recognize revenue under
the ASTA Medica collaboration upon the achievement of specified milestones.
Research and development expenses increased to $12.7 million and $33.8
million for the three and nine months ended September 30, 1998, respectively,
from $8.7 million and $25.3 million for the same periods last year. The increase
during 1998 was primarily due to higher personnel related costs associated with
the expansion of clinical development activities, including expanded Phase II
studies and initiating a Phase III study of the Company's lead anti-cancer
compound, SU101. The initiation of Phase I and Phase I/II studies of the
Company's second cancer product candidate, SU5416, also contributed to higher
expenses during 1998. The Company expects that its research and development
expenses will continue to grow in future periods due to the hiring of personnel,
additional preclinical studies, the progression of SU101, SU5416 and additional
drug candidates in clinical trials, and research and development activities
pursuant to the Company's commitments under anticipated future collaborations.
General and administrative expenses for the three and nine months ended
September 30, 1998 were $2.9 million and $6.8 million, respectively. These
results compare to expenses of $1.7 million and $4.7 million for the same
periods last year. The increase in 1998 was primarily due to higher headcount
related costs, costs associated with the formation of the Company's
international subsidiaries, as well as additional expenses in the areas of
corporate and business development. The Company expects that its general and
administrative expenses will continue to increase in order to support the
Company's expanding research and development efforts both internationally and
domestically.
Interest income for the three and nine months ended September 30, 1998 was
$815,000 and $2.7 million, respectively, compared to $576,000 and $1.9 million
earned for the same periods last year. The increase from prior year was due to
higher investment balances arising primarily from issuances of the Company's
capital stock and senior custom convertible notes. Interest expense for the
three and nine months ended September 30, 1998 was $337,000 and $1.2 million,
respectively, compared to $249,000 and $593,000 for the same periods last year.
This increase was primarily due to the Company's continued use of capital lease
financing for equipment and property improvements and expenses related to the
issuance of senior custom convertible notes.
9
<PAGE>
Liquidity and Capital Resources
At September 30, 1998, the Company had cash, cash equivalents and
short-term investments of approximately $54.3 million compared to approximately
$75.3 million at December 31, 1997. The decrease in cash and investments during
the nine months ended September 30, 1998 was primarily due to operating losses
partially offset by the issuance of Common Stock.
Through September 1998, the Company's principal sources of financing have
been its initial and follow-on public offerings of Common Stock, placements of
the Company's Preferred and Common Stock and senior custom convertible notes,
and funds received under the Company's corporate collaborations. The Company's
current principal sources of liquidity are its research and development
collaborations with Zeneca, Taiho, Allergan and ASTA Medica, its cash, cash
equivalents and short-term investments and capital lease financing. At September
30, 1998, the Company had a capital lease line of $2.7 million available for the
purchase of equipment and facility improvements.
The Company has entered into license and research agreements whereby the
Company funds research projects performed by others or in-licenses compounds
from third parties. Some of the agreements may require the Company to make
milestone and royalty payments. Under these programs, commitments for external
research funding are approximately $1.7 million, $1.6 million, $1.4 million and
$1.1 million in 1998, 1999, 2000 and 2001, respectively. Most of these
commitments are cancelable within a three-to-nine month period and limit the
amounts payable by the Company for sponsored research under the programs after
notice of cancellation. The Company anticipates renewing certain contracts that
expired in 1997 which will increase future commitments beyond the levels
indicated above for 1999 through 2001.
From time to time, the Company evaluates potential investments in
complementary businesses, products or technologies. Currently, the Company is
considering modest investments in such complementary businesses during 1998. The
Company has no other present undertakings, commitments or agreements with
respect to investments in other businesses.
Net additions of equipment and leasehold improvements for the nine months
ended September 30, 1998 were $3.4 million compared to $1.8 million spent during
the same period last year. Capital additions during the year primarily related
to costs associated with the Company's new build-to-suit facility. Capital
additions during the first nine months of 1997 primarily included the costs
associated with a limited facility expansion and the continued investment in
enhancing the Company's laboratory capabilities. In October 1998, the Company's
build-to-suit facility was completed, coinciding with the expiration of the
pre-existing facility leases. A majority of facility improvement costs
associated with the build-out and equipping of the new facility have been
financed through a tenant improvements allowance negotiated with the landlord as
part of the long term lease agreement and through additional financial
facilities arranged with third parties. It is expected that the Company's
capital lease obligations, related interest expense and facility related
expenses will increase in future periods, including non-recurring move related
costs in the fourth quarter of 1998.
The Company estimates that its existing capital resources together with
facility and equipment financing, expected revenues from current collaborations
and net income from investment activities, will be sufficient to fund its
planned operations into 2000. However, there can be no assurance that the
underlying assumed levels of revenue and expense will prove accurate. Whether or
not these assumptions prove to be accurate, the Company will need to raise
substantial additional capital to fund its operations. The Company intends to
seek such additional funding through collaborative arrangements, public or
private equity or debt financings and capital lease transactions; however, there
can be no assurance that additional financing will be available on acceptable
terms, or at all. If additional funds are
10
<PAGE>
raised by issuing equity securities, further dilution to stockholders may
result. In addition, in the event that additional funds are obtained through
arrangements with collaborative partners, such arrangements may require the
Company to relinquish rights to certain of its technologies, product candidates
or products that the Company would otherwise seek to develop or commercialize
itself. If adequate funds are not available, the Company may be required to
delay, reduce the scope of or eliminate one or more of its research or
development programs, which could have a material adverse effect on the Company.
The Year 2000 Issue is the result of computer programs being written using
two digits rather than four digits to define the applicable year. This could
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions, or
engage in similar normal business activities. The Company has reviewed its
existing software programs to identify and address programs that may require
upgrading or reprogramming to address the Year 2000 Issue and believes its
internal applications systems are currently in compliance. The Company has
initiated formal communications with all of its significant suppliers and other
significant third parties to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
Issues. The project is estimated to be completed early to mid 1999, which is
prior to any anticipated impact on its operations. Additionally, the Company is
in the process of developing contingency plans for implementation in the event
the Company, its significant suppliers or other significant third parties fail
to adequately address Year 2000 issues. Such plans principally involve
identifying alternative vendors or internal remediation. There can be no
assurance that any such plans will fully mitigate such failures or problems.
Furthermore, there may be certain significant third parties, such as utilities,
telecommunication companies, or material vendors where alternative arrangements
or sources are limited or unavailable.
To date, the Company has not incurred material Year 2000 compliance costs
and does not expect any future costs to have a material impact on the Company's
financial results. However, there can be no assurance that all third parties,
with whom the Company works to achieve Year 2000 compliance on a timely basis
for systems related to their interactions with the Company, or that failure to
achieve Year 2000 by such entities will not have a material adverse effect on
the Company.
The Company is at an early stage of development and must be evaluated in
light of the uncertainties and complications present in a biotechnology company.
The Company has been in existence only since 1991 and to date three drug
candidates (SU101, SU5271 and SU5416) have entered clinical trials. To achieve
profitable operations on a continuing basis, the Company, alone or with
collaborative partners, must successfully develop, manufacture, introduce and
market its proposed products. Products, if any, resulting from the Company's
research and development programs are not expected to be commercially available
for several more years, even if they are developed successfully and proven to be
safe and effective. The Company has experienced significant operating losses
since its inception. The Company expects to incur significant operating losses
at least for the next several years and expects cumulative losses to increase as
the Company's research and development efforts, including preclinical and
clinical testing, are expanded. Substantially all of the Company's revenues to
date have been received pursuant to the Company's collaborations. Should the
Company or its collaborators fail to perform in accordance with the terms of any
of their agreements, any consequent loss of revenue under the agreements could
have a material adverse effect on the Company's results of operations. Some of
the Company's currently proposed products are subject to development and
licensing arrangements with the Company's collaborators. Therefore, the Company
is in part dependent on the research and development efforts of these
collaborators with respect to those products and is entitled only to a portion
of the revenues, if any, realized from the commercial sale of those products
covered by the collaborations in many jurisdictions. Before obtaining regulatory
clearance for the commercial sale of any of its products under development, the
Company must demonstrate through preclinical studies and clinical trials that
the potential product is safe and efficacious for use in humans for each target
indication. The failure to
11
<PAGE>
adequately demonstrate the safety and efficacy of a product under clinical
development could delay or prevent regulatory clearance of the potential product
and could have a material adverse effect on the Company. The foregoing risks
reflect the Company's early stage of development and the nature of the Company's
industry and potential products. Also inherent at the Company's stage of
development are a range of additional risks, including uncertainties regarding
protection of patents and proprietary rights, government regulation,
competition, employee issues, manufacturing uncertainties, the Company's lack of
sales and marketing capabilities, uncertainty of market acceptance of the
Company's products, and uncertainties regarding pharmaceutical pricing and
reimbursement.
12
<PAGE>
PART II. OTHER INFORMATION
Item 5. OTHER INFORMATION
Charles M. Hartman resigned from the Company's Board of Directors
effective July 30, 1998. This resignation reflects the normal transition of
venture capital representatives of the board of directors of companies in
which a venture fund's investment stake has been reduced as a result of
distributing venture fund shares.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior
Participating Preferred Stock of the Registrant (3)
10.74+ Collaboration Agreement, dated July 28, 1998, between the
Registrant, SUGEN International, AG, and Taiho
Pharmaceutical Co., Ltd.
27 Financial Data Schedule
- ------------------------
+ The Registrant has requested confidential treatment with
respect to portions of this Exhibit.
(1) Incorporated by reference to identically numbered
exhibits filed in response to Item 16 "Exhibits" of the
Company's Registration Statement on Form S-1, as
amended (File Number 33-77074), which became effective
October 4, 1994.
(2) Incorporated by reference to identically numbered
exhibits filed in response to Item 14 "Exhibits" of the
Company's Annual Report of Form 10-K for the year ended
December 31, 1994.
(3) Filed as an exhibit to the Form 8-K Current Report dated
July 26, 1995 and incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 11, 1998 SUGEN, Inc.
----------------------------------
By: /s/ Stephen Evans-Freke By: /s/ James L. Knighton
------------------------------------ -----------------------------
Stephen Evans-Freke James L. Knighton
Chairman of the Board and Senior Vice President and
Principal Executive Officer Principal Financial Officer
14
<PAGE>
SUGEN, Inc.
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
3.1 Restated Certificate of Incorporation (2)
3.2(ii) Bylaws of the Registrant (1)
3.3 Certificate of Designation of Series A Junior
Participating Preferred Stock of the Registrant (3)
10.74+ Collaboration Agreement, dated July 28, 1998, between the
Registrant, SUGEN International, AG, and Taiho
Pharmaceutical Co., Ltd.
27 Financial Data Schedule
- ------------------------
+ The Registrant has requested confidential treatment with
respect to portions of this Exhibit.
(1) Incorporated by reference to identically numbered
exhibits filed in response to Item 16 "Exhibits" of the
Company's Registration Statement on Form S-1, as
amended (File Number 33-77074), which became effective
October 4, 1994.
(2) Incorporated by reference to identically numbered
exhibits filed in response to Item 14 "Exhibits" of the
Company's Annual Report of Form 10-K for the year ended
December 31, 1994.
(3) Filed as an exhibit to the Form 8-K Current Report dated
July 26, 1995 and incorporated herein by reference.
15
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SS.SS.200.80(B)(4),
200.83 AND 240.24B-2
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is made and entered into
as of July 28, 1998 (the "Effective Date") by and among SUGEN, Inc., a Delaware
corporation having offices at 351 Galveston Road, Redwood City, CA 94063-4720
("SUGENUS"), SUGEN INTERNATIONAL, AG, a Swiss corporation, with offices at
Innere Gueterstrasse 4, 6304 Zug, Switzerland ("SUGEN"), and TAIHO
PHARMACEUTICAL CO., LTD., a Japanese corporation, with offices at 1-27,
Kandanishiki-cho, Chiyoda-ku, Tokyo, 101 Japan ("Taiho").
RECITALS
WHEREAS, SUGENUS, SUGEN and Taiho desire to collaborate in the further
development, manufacture and commercialization of products useful for the
treatment and prevention of cancer by mediation of tumor angiogenesis; and
WHEREAS, SUGENUS has discovered and commenced development of two
proprietary compounds designated SU5416 and SU6668, which mediate tumor
angiogenesis and has granted to SUGEN rights to commercialize such compounds
outside the United States; and
WHEREAS, SUGEN and SUGENUS have entered into a cost-sharing agreement
(the "Cost-Sharing Agreement") whereunder SUGENUS has granted rights in
technology and intellectual property owned or controlled by SUGENUS outside of
the United States; and
WHEREAS, SUGEN is a wholly owned subsidiary of SUGENUS, which is a
leader in the research and development of small molecule drugs that modulate
intracellular signaling pathways, and
WHEREAS, Taiho is engaged in the research, development and
commercialization of pharmaceutical products; and
WHEREAS, the parties intend to engage in activities to identify,
research and develop other compounds that mediate tumor angiogenesis and that
may be useful in the treatment or prevention of cancer in humans;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
premises contained herein, the parties agree as follows:
1. DEFINITIONS
As used herein, the following capitalized terms shall have the
following meanings:
1.
<PAGE>
1.1 "Affiliate" shall mean any company or entity controlled by,
controlling, or under common control with a party hereto and shall include
without limitation any company fifty percent (50%) or more of whose voting stock
or participating profit interest is owned or controlled, directly or indirectly,
by a party, and any company which owns or controls, directly or indirectly,
fifty percent (50%) or more of the voting stock of a party.
1.2 "Bulk Compound" shall mean the active ingredient of SU5416 or
SU6668 appropriate for use in the manufacture of a Product.
1.3 "Clinical Trial Cost" shall have the meaning assigned to it in
Exhibit C.
1.4 "Collaboration" shall have the meaning provided in Section 2.1.
1.5 "Collaboration Know-How" shall mean any and all tangible or
intangible know-how, trade secrets, inventions (whether or not patentable),
data, preclinical and clinical results, physical, chemical or biological
material, and other information that is both (a) useful in the Field or that
relates to SU5416 or SU6668 or Products, and (b) in any way derived from or
developed pursuant to activities undertaken by either Taiho or SUGEN in the
conduct of the Collaboration.
1.6 "Collaboration Patents" shall mean all foreign and domestic patents
(including extensions, reissues, re-examinations and inventors certificates
relating thereto) that issue from patent applications (including substitutions,
provisionals, divisionals, continuations and continuations-in-part of such
applications) that claim inventions in the Collaboration Know-How and that are
filed by or on behalf of one or both of Taiho or SUGEN.
1.7 "Collaboration Technology" shall mean the Collaboration Patents and
the Collaboration Know-How.
1.8 "Collaboration Term" shall mean the period commencing upon the
Effective Date and ending on [...***...], or on such later date as the parties
may mutually agree, during which the parties shall conduct the Collaboration.
1.9 "Confidential Information" shall mean each party's confidential
information, inventions, know how or data disclosed pursuant to this
Collaboration Agreement, including without limitation technical, business
development manufacturing, marketing, financial, personnel and other business
information and plans, and the terms of this Agreement, whether in oral,
written, graphic or electronic form.
1.10 "Development Plan" shall mean the plan established pursuant to
Section 3.1 governing the development of Products, including, but not limited
to, all aspects of preclinical and clinical development.
- -----------------------
* Confidential Treatment Requested
2.
<PAGE>
1.11 "Field" shall mean the prevention and treatment of cancer in
humans by mediating Tumor Angiogenesis [...***...].
1.12 "IND" shall mean an Investigational New Drug Application filed
with the United States Food and Drug Administration, or the equivalent
application or filing necessary to commence human clinical trials in another
country, as applicable.
1.13 "Jointly Funded Trials" shall have the meaning given to it in
Section 3.6.
1.14 "JWP Sales" shall mean, with respect to sales of Products by
Taiho, its Affiliates and sublicensees, all revenues calculated by [...***...]
of a Product.
1.15 "JWP Selling Price" shall mean the per unit price, at which Taiho,
its Affiliates and sublicensees [...***...].
1.16 "NDA" shall mean a New Drug Application filed with the United
States Food and Drug Administration, or the equivalent application filed in
another country or supranational authority.
1.17 "Phase I" means those clinical trials on sufficient numbers of
normal volunteers and patients that are designed to establish safe drug doses
and to support testing in Phase II Clinical Trials.
1.18 "Phase I/II" means those clinical trials on sufficient numbers of
patients which incorporate elements of both Phase I and Phase II clinical trials
and are intended to support further clinical testing.
1.19 "Phase II" means those clinical trials on sufficient numbers of
patients that are designed to establish the safety and biological activity of a
drug for its intended use, and to define warnings, precautions and adverse
reactions that are associated with the drug in the dosage range to be
prescribed.
1.20 "Phase III" means those trials on sufficient numbers of patients
that are designed to establish that a drug is safe and efficacious for its
intended use, and to define warnings, precautions and adverse reactions that are
associated with the drug in the dosage range to be prescribed, and supporting
Regulatory Approval of such drug or label expansion of such drug.
1.21 "Product" shall mean any pharmaceutical product containing SU5416
or SU6668 for use in the Field, and including all formulations, line extensions,
or modes of administration thereof.
1.22 "Regulatory Approval" shall mean any and all approvals (including
price and reimbursement approvals), licenses, registrations, or authorizations
of any country, federal, state
- -----------------------
* Confidential Treatment Requested
3.
<PAGE>
or local regulatory agency, department, bureau or other government entity that
is necessary for the manufacture, use, storage, import, transport and/or sale of
a Product in a country.
1.23 "Shared Expenses" shall mean the aggregate costs [...***...] in
performing [...***...] and [...***...] completed after the Effective Date and
required by the Development Plan.
1.24 "SU5416" shall mean the compound with the chemical name
[...***...], designated by SUGENUS as SU005416.
1.25 "SU6668" shall mean the compound with the chemical name
[...***...], designated by SUGENUS as SU006668.
1.26 "SUGEN Know-How" shall mean, to the extent useful in the Field,
tangible or intangible know-how, trade secrets, inventions (whether or not
patentable), data, preclinical and clinical results, physical, chemical or
biological material, and other information that SUGEN owns, controls or to which
it has a license (with the right to sublicense or subcontract) on the Effective
Date, and any replication or any part of such information or material.
1.27 "SUGEN Patents" shall mean, to the extent useful in the Field, all
foreign and domestic: (a) patents issued and existing as of the Effective Date;
and (b) patents issuing from patent applications that are pending as of the
Effective Date (including substitutions, provisionals, divisionals,
continuations and continuations-in-part of such applications); and (c)
extensions, reissues, re-examinations and inventors certificates relating to the
foregoing patents, which, in each case, SUGEN owns or controls or to which SUGEN
has a license (with the right to sublicense or subcontract). SUGEN Patents
existing as of the Effective Date include the patents and applications listed in
Exhibit B attached hereto.
1.28 "SUGEN Technology" shall mean the SUGEN Patents and SUGEN
Know-How.
1.29 "Sugen Territory" shall mean all countries and territories in the
world, other than the Taiho Territory.
1.30 "Taiho Know-How" shall mean, to the extent useful in the Field,
tangible or intangible know-how, trade secrets, inventions (whether or not
patentable), data, preclinical and clinical results, physical, chemical or
biological material, and other information that Taiho owns, controls or to which
it has a license (with the right to sublicense or subcontract) on the Effective
Date, and any replication or any part of such information or material.
1.31 "Taiho Patents" shall mean, to the extent useful in the Field, all
foreign and domestic: (a) patents issued or existing as of the Effective Date;
and (b) patents issuing from patent applications that are pending as of the
Effective Date (including substitutions, provisionals, divisionals,
continuations and continuations-in-part of such applications); and (c)
extensions, reissues, re-examinations and inventors certificates relating to the
foregoing patents,
- -----------------------
* Confidential Treatment Requested
4.
<PAGE>
which, in each case, Taiho owns or controls or to which Taiho has a license
(with the right to sublicense or subcontract).
1.32 "Taiho Technology" shall mean the Taiho Patents and Taiho
Know-How.
1.33 "Taiho Territory" shall mean Japan and such additional countries
if they are added as provided in Section 5.3.
1.34 "Third Party" shall mean any person or entity other than Taiho,
SUGEN and SUGENUS, and their respective Affiliates.
1.35 "Tumor Angiogenesis" shall mean the formation of a microvascular
network that supplies blood to a tumor.
1.36 "Valid Claim" shall mean a claim of (a) an issued patent, which
claim has not lapsed, been disclaimed or become abandoned and which claim has
not been declared invalid or unenforceable by a court of competent jurisdiction
in a decision from which no appeal has or can be taken, or (b) a pending patent
application, which claim has not been abandoned or canceled.
2. COLLABORATION SCOPE AND GOVERNANCE
2.1 Scope of the Collaboration. The parties intend to collaborate in
the research, development, manufacture and commercialization of Products in the
Field, and in the research and development of Candidate Compounds as provided in
this Agreement (the "Collaboration"). Taiho acknowledges that SUGENUS will
perform for SUGEN activities under the Collaboration with a view to the sale of
Products.
2.2 Research Management Committee. Promptly after the Effective Date,
the parties will form a Research Management Committee ("RMC") comprised
[...***...]. One member of the RMC shall be selected to act as the chairperson
of the RMC, with each chairperson acting for a term of twelve (12) months.
[...***...]. All decisions of the RMC shall be unanimous. The RMC shall meet on
a quarterly basis or at such other frequency as the RMC agrees. The parties
shall agree upon the time and place of meetings, substitutions and
qualifications of RMC members, and other similar matters. Within thirty (30)
days after each meeting, the RMC chairperson will provide the parties with a
written report describing, in reasonable detail, the status of the
Collaboration, a summary of the results and progress to date, the issues
requiring resolution, and the agreed resolution of previously reported issues. A
reasonable number of additional representatives of a Party may attend meetings
of the RMC in a non-voting capacity.
2.3 Research Management Committee Functions and Powers. The RMC shall:
(1) determine the specific goals for the Collaboration,
(2) define, establish and execute the Development Plan,
- -----------------------
* Confidential Treatment Requested
5.
<PAGE>
(3) manage the ongoing research and development
activities conducted under the Collaboration, and
(4) monitor the progress and results of such work.
To assist it in achieving Collaboration goals, the RMC shall:
(1) establish, as needed, working groups on a
project-by-project basis consisting of
representatives of both Taiho and SUGEN;
(2) set the objectives for such working groups;
(3) monitor their progress in meeting such objectives
(4) encourage and facilitate ongoing cooperation between
SUGEN and Taiho;
(5) establish, update and review plans for accomplishing
Collaboration goals;
(6) allocate tasks and coordinate activities required to
perform the Collaboration;
(7) monitor the progress of the Collaboration and SUGEN's
and Taiho's diligence in carrying out their
responsibilities thereunder; and
(8) carry out the other duties and responsibilities
assigned to it in this Agreement.
2.4 Information and Reports. Except as otherwise provided, SUGEN and
Taiho will make available and disclose to one another, as requested by the RMC,
all results of the work conducted pursuant to the Collaboration prior to and in
preparation for RMC meetings in a form and format to be designated by the RMC.
All such information and reports shall be provided in English.
2.5 RMC Dispute Resolution. If the RMC is unable to decide or resolve
an issue unanimously, either Taiho or SUGEN may refer such issue to the senior
executives of each of SUGEN and Taiho or a designee thereof, who shall not be
members of the RMC. Such officers of Taiho and SUGEN will meet promptly
thereafter and shall negotiate in good faith to resolve such issue. If they
cannot resolve the issue within thirty (30) days of commencing such
negotiations, the issue shall be resolved as provided in Section 13.2.
3. DEVELOPMENT OF PRODUCTS
3.1 Development of Products. SUGEN and Taiho have attached as Exhibit A
a summary of their responsibilities for development of Products. The RMC may
amend Exhibit A by written agreement from time to time. As provided in Section
2.3, the RMC shall establish a more detailed Development Plan for the
development of Products, which Development Plan shall reflect the allocation of
responsibilities provided in Exhibit A, as amended from time to time.
6.
<PAGE>
During the Collaboration Term, SUGEN and Taiho shall perform development
activities assigned to them pursuant to the Development Plan.
3.2 Disclosure of Study Data. SUGEN and Taiho agree to keep each other
fully informed on a reasonable basis of the development and commercialization of
Products, including but not limited to providing periodic written updates on the
progress of each filing for Regulatory Approval. In particular, each such party
shall transfer to the other party promptly upon request data, information and
results of non-clinical studies performed pursuant to the Collaboration.
Additionally, SUGEN shall provide to Taiho a copy of data, information and
results generated during those Phase I clinical trials and for which Taiho
reimburses a portion of SUGEN's Clinical Trial Costs pursuant to Section 3.6,
and Taiho shall provide to SUGEN a copy of information and results generated
during any non-clinical and clinical studies conducted by Taiho. [...***...]. If
SUGEN, however, [...***...] in an amount equal to [...***...].
3.3 Non-Clinical Supply of Products. SUGEN will supply SU5416, SU6668
or Products to Taiho [...***...] for SUGEN's and Taiho's performance of
non-clinical studies under the Development Plan.
3.4 Clinical Supply of Products. SUGEN shall manufacture or have
manufactured Products in reasonable quantities necessary for clinical studies of
Products, as required under the Development Plan. The cost of manufacturing and
supplying such Products for clinical trials shall be shared by SUGEN and Taiho
as provided in Section 3.6.
3.5 Non-Clinical Development Expenses. SUGEN and Taiho shall
[...***...] of the Shared Expenses for each Product. Taiho and SUGEN each shall
provide to the other on a quarterly basis a summary of the Shared Expenses
incurred by such party during the prior calendar quarter, no later than forty
five (45) days after the end of such quarter. If during a given calendar quarter
such a party's Shared Expenses [...***...] incurred by each party during such
calendar quarter. For all other expenses of non-clinical development of
[...***...], the party performing such activities shall bear all expenses for
such activities, unless otherwise agreed by such parties.
3.6 Reimbursement of Clinical Trial Costs.
(a) SUGEN shall be responsible for costs of conducting
clinical trials of Products outside of the Taiho Territory, subject to
reimbursement by Taiho as provided below. If Taiho conducts clinical trials for
Products in the Taiho Territory, it shall be solely responsible for all costs of
such trials.
(b) Taiho shall reimburse SUGEN [...***...] of the Clinical
Trial Costs of conducting (i) any [...***...], together with (ii) [...***...]
(collectively, the "Jointly Funded Trials").
- -----------------------
* Confidential Treatment Requested
7.
<PAGE>
(c) Taiho may [...***...] during the performance of clinical
trials [...***...], and [...***...]. If the Supplemental Information is to be
used [...***...] then the Supplemental Information shall be provided in summary
form [...***...] for such use in an amount equal to [...***...]. SUGEN will use
commercially reasonable efforts to support Taiho's regulatory filings in the
Taiho Territory.
(d) Taiho shall make any payments due to SUGEN pursuant to
this Section 3.6 within thirty (30) days after receipt of an invoice therefor
from SUGEN.
3.7 Exclusivity. SUGEN and Taiho each acknowledge and agree that during
the term of this Agreement, they will not directly or indirectly market or sell
in the other party's territory any product competitive with Products in the
Field other than Products acquired by SUGEN pursuant to Sections 5.4 or 12.3.
4. SUPPLY OF BULK COMPOUND OR PRODUCTS
4.1 SUGEN Manufacturing Option. For each Product, SUGEN may, in its
sole discretion, elect whether it will manufacture and supply to Taiho, its
Affiliates or sublicensees either Bulk Compound or finished Product for sale in
the Taiho Territory. SUGEN will confer with Taiho prior to making any election
pursuant to this Article 4. In the event SUGEN elects not to manufacture and
supply to Taiho, its Affiliates or sublicensees either Bulk Compound or finished
Product, then Taiho shall manufacture or have manufactured Bulk Compound and
finished Product for commercial supply at its sole expense, and SUGEN will
receive the royalty on JWP Sales of Products provided for in Section 6.4. In the
event SUGEN elects to manufacture and supply Bulk Compound, it will receive
Supply Price payments as provided in Section 6.5. In the event SUGEN elects
hereunder to manufacture and supply finished Products, it will receive Supply
Price payments as provided for in Section 6.6. SUGEN must make this election by
providing written notice to Taiho at least [...***...] prior to the projected
date that the RMC specifies for filing the first application for Regulatory
Approval for such Product in the Taiho Territory.
4.2 Manufacturing and Supply Agreement for Bulk Compound. If SUGEN
elects pursuant to Section 4.1 to manufacture and supply Bulk Compound, then
immediately after such election is made, SUGEN and Taiho shall negotiate and
enter into a manufacturing and supply agreement governing the commercial supply
of such Bulk Compound. Such manufacturing and supply agreement shall provide
that SUGEN will be appointed as the exclusive supplier of Bulk Compound to
Taiho, its Affiliates or sublicensees, and shall contain the payment terms set
forth in Section 6.5 and Section 6.7, in addition to such other terms as are
typically contained in agreements for the manufacture and supply of bulk
compound for the manufacture of pharmaceutical products similar in nature and
market potential to such Product.
4.3 Manufacturing and Supply Agreement for Finished Product. If SUGEN
elects pursuant to Section 4.1 to manufacture and supply to Taiho finished
Product, then immediately
- -----------------------
* Confidential Treatment Requested
8.
<PAGE>
after such election is made, SUGEN and Taiho shall negotiate and enter into a
manufacturing and supply agreement governing the commercial supply of such
Product. Such manufacturing and supply agreement shall provide that SUGEN will
be appointed as the exclusive supplier of such finished Product to Taiho, its
Affiliates or sublicensees, and shall contain the payment terms set forth in
Section 6.6 and Section 6.7, in addition to such other terms as are typically
contained in agreements for the manufacture and supply of pharmaceutical
products of similar in nature and market potential to such Product.
5. LICENSE GRANTS AND GRANTS TO INTELLECTUAL PROPERTY; EXCLUSIVITY
5.1 Research and Development Licenses.
(a) Grant by SUGEN. SUGEN hereby grants to Taiho and its
Affiliates during the term of this Agreement a nonexclusive, worldwide,
royalty-free license under the SUGEN Technology and its interest in
Collaboration Technology, solely to the extent necessary or appropriate to carry
out Taiho's responsibilities under the Collaboration.
(b) Grant by Taiho. Taiho hereby grants to SUGEN and its
Affiliates during the term of this Agreement a nonexclusive, worldwide,
royalty-free license under the Taiho Technology and its interest in
Collaboration Technology, solely to the extent necessary or appropriate to carry
out SUGEN's responsibilities under the Collaboration.
(c) Sublicensing. Taiho and SUGEN each shall have the right to
grant sublicenses under the license granted to it pursuant to this Section 5.1
to Affiliates and Third Parties to the extent necessary or appropriate to carry
out its responsibilities under the Collaboration. Each such sublicense shall be
on terms substantially consistent with those provided in this Agreement.
5.2 Commercialization Licenses.
(a) Grant by SUGEN. Subject to the other provisions of this
Agreement, SUGEN hereby grants to Taiho and its Affiliates during the term of
this Agreement an exclusive, royalty-bearing license under the SUGEN Technology
and its interest in Collaboration Technology to use, sell, offer for sale and
import Products in the Taiho Territory. If SUGEN elects not to manufacture and
supply to Taiho either Bulk Compound or finished Product pursuant to Section
4.1, the foregoing commercialization license to Taiho shall also include the
right to manufacture or have manufactured Bulk Compound and finished Product in
the Taiho Territory. If SUGEN elects to manufacture and supply to Taiho Bulk
Compound pursuant to Section 4.1, the foregoing license granted to Taiho shall
also include the right to manufacture or have manufactured finished Product from
Bulk Compound supplied by SUGEN to Taiho, its Affiliates or sublicensees.
(b) Grant by Taiho. Subject to the other provisions of this
Agreement, Taiho hereby grants to SUGEN and its Affiliates during the term of
this Agreement an exclusive, royalty-free license under the Taiho Technology and
its interest in Collaboration Technology to make and have made, use, sell, offer
for sale and import Products in the SUGEN Territory.
- -----------------------
* Confidential Treatment Requested
9.
<PAGE>
(c) Sublicensing. Taiho and SUGEN each shall have the right to
grant sublicenses under the license granted to it pursuant to this Section 5.2
to Affiliates and to Third Parties; provided, however, that if either such party
or its Affiliate grants a sublicense to a Third Party pursuant to this Section
5.2(c), it shall so notify the other and provide to the other a copy of the
agreement governing such sublicense. Each such sublicense shall be on terms
substantially consistent with those provided in this Agreement.
5.3 Right of First Negotiation. In the event SUGEN decides to
collaborate in the commercialization of Product in the Field in [...***...],
SUGEN shall notify Taiho of its intention and, if Taiho shall promptly notify
SUGEN of its desire so to do, negotiate in good faith with Taiho for a
reasonable time regarding such a potential collaboration with Taiho.
5.4 Diligence Obligations. Taiho shall devote the same degree of
attention, resources and diligence to its efforts to develop, manufacture,
market and sell Products as it devotes to its other products of equivalent
economic potential. In the event that Taiho does not [...***...], then the
rights granted to Taiho under this Article 5 with respect to such Product shall
terminate and the rights granted to SUGEN pursuant to this Article 5 shall be
expanded to apply on a worldwide basis with respect to such Product; provided,
however, that in the event [...***...]. SUGEN shall notify Taiho promptly of the
approval of the first NDA for a Product in the SUGEN Territory.
5.5 Transfer of Technology. During the term of this Agreement, SUGEN
and Taiho each will provide the other party with reasonable technical assistance
relating to the use of such party's know-how and the practice of its patents
included in the SUGEN Technology or the Taiho Technology, as applicable in the
Field, solely to the extent permitted under the licenses granted herein.
6. FEES AND PAYMENTS
6.1 Initial Research Payment. On the Effective Date, Taiho shall pay to
SUGEN an initial research payment of $[...***...] for research and development
costs incurred by SUGEN prior to the Effective Date.
6.2 Research and Development Funding. Taiho shall pay to SUGEN the
amounts set forth below to support SUGEN's research and development activities
under the Collaboration during each year of the Collaboration Term. Such
payments will be made on a [...***...], except that the amount due [...***...].
Not later than March 31 of the year following the year for which each such
payment is made, SUGEN will furnish Taiho a statement in respect of each such
payment setting forth in reasonable detail the work performed and costs incurred
by SUGEN.
- -----------------------
* Confidential Treatment Requested
10.
<PAGE>
Payment Period Amount Due
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
6.3 Milestone Payments to SUGEN. Taiho will pay to SUGEN milestone
payments in the amounts listed below, within ten (10) business days after the
occurrence of the following events:
Milestones First Product* Each Subsequent Product**
Start of [...***...] $[...***...] $[...***...]
Filing of [...***...] $[...***...] $[...***...]
[...***...] $[...***...] $[...***...]
* The amounts listed in the middle column are payable only with respect to the
first Product for which the specified milestone is achieved.
** The amounts listed in the right column are payable with respect to each
Product for which the specified milestone is achieved after Taiho has paid the
amount due to SUGEN for the first Product in the middle column for such
milestone.
6.4 Royalty.
(a) Royalty. If SUGEN elects under Section 4.1 not to
manufacture and supply either Bulk Compound or finished Product, Taiho shall pay
SUGEN a royalty of [...***...] of JWP Sales of Products in the Taiho Territory;
provided, however, [...***...].
(b) Third Party Royalties. [...***...] on the sale of Products
[...***...].
6.5 Supply Price for Bulk Compound. If SUGEN elects to supply Bulk
Compound for a given Product pursuant to Section 4.1, Taiho, its Affiliates and
sublicensees will pay to SUGEN a Supply Price for supply of such Bulk Compound
equal to
- -----------------------
* Confidential Treatment Requested
11.
<PAGE>
(1) [...***...] of the JWP Selling Price of Product
[...***...] following [...***...]; or
(2) [...***...] of the JWP Selling Price of Product
[...***...] following [...***...]; or
(3) [...***...] of the JWP Selling Price of Product
[...***...] as provided for in paragraph (2) above.
6.6 Supply Price for Finished Product. If SUGEN elects to supply the
finished form of a given Product pursuant to Section 4.1, Taiho, its Affiliates
and sublicensees will pay to SUGEN a Supply Price for supply of such Product
equal to
(1) [...***...] of the JWP Selling Price of Product
[...***...] following [...***...]; or
(2) [...***...] of the JWP Selling Price of Product
[...***...] following ; [...***...] or
(3) [...***...] of the JWP Selling Price of Product
[...***...] as provided for in paragraph (2) above.
6.7 Payments; Reports. If SUGEN elects not to manufacture either Bulk
Compound or finished Product pursuant to Section 4.1, the royalty obligation
under Section 6.4 shall accrue at the time of sale of the Products to a Third
Party. Royalty obligations that accrue during a particular quarter, shall be
paid within [...***...] after the end of each calendar quarter, and other
payments owing shall be made as specified herein. Each payment of royalties and
amounts due to SUGEN under Sections 6.5 and 6.6 shall be accompanied by a
statement of the amount of JWP Sales during such period on a product-by-product
basis, and all other information necessary to determine the appropriate amount
of such payments, and any additional information or reports required under the
Agreement. If SUGEN elects to manufacture and supply to Taiho, its Affiliates
and sublicensees either Bulk Compound or finished Product, the manufacturing and
supply agreement to be negotiated by SUGEN and Taiho, pursuant to Section 4.3
shall specify the payment and Taiho's reporting requirements for Supply Price
payments due to SUGEN on the JWP Selling Price of Products.
6.8 Currency. The amounts due to SUGEN pursuant to Sections [...***...]
shall be paid in [...***...]. The amounts due to SUGEN pursuant to Sections
[...***...] shall be paid in [...***...].
6.9 Records and Audit. During the term of this Agreement and for a
period of [...***...] thereafter, Taiho shall keep complete and accurate records
pertaining to the sale or other disposition of the Products commercialized by
it, in sufficient detail to permit SUGEN to confirm the accuracy of all payments
due hereunder. SUGEN shall have the right to cause an
- -----------------------
* Confidential Treatment Requested
12.
<PAGE>
independent, certified public accountant to audit such records to confirm
Taiho's JWP Sales, JWP Selling Price, royalty payments and Supply Price
payments, as applicable; provided, however, that such auditor shall not disclose
Taiho's Confidential Information to SUGEN, except to the extent such disclosure
is necessary to verify the amount of royalties and other payments due under this
Agreement. Such audit rights may be exercised [...***...]after the royalty
period to which the relevant records relate, upon prior notice to Taiho and
during normal business hours. Any amounts shown to be owing by such audits shall
be paid immediately with interest in the amount of [...***...] from the date
first owed until paid. SUGEN shall bear the full cost of such audit unless such
audit discloses a variance in the amounts paid by Taiho of more than [...***...]
from the amount of royalties and/or other payments actually owed. In such case,
Taiho shall bear the full cost of such audit. The terms of this Section shall
survive any termination or expiration of this Agreement for a period of
[...***...].
6.10 Withholding of Taxes. Taiho and SUGEN agree that the [...***...]
may be treated by [...***...]. Taiho and SUGEN agree that [...***...].
Notwithstanding the foregoing, if [...***...], it shall provide to [...***...]
appropriate documentation with respect thereto.
7. THIRD GENERATION PRODUCTS
7.1 General. In the event Taiho and SUGEN agree that neither SU5416 nor
SU6668 can be successfully developed as an oral product such parties may wish to
conduct a development program in the Field to identify one or more additional
compounds for development as Products. Such a development program would be
conducted pursuant to a workplan mutually agreeable to such parties which would
set forth the project objectives, the activities to be undertaken by each party
and the responsibilities of each such party for funding the costs to carry out
the workplan.
8. OWNERSHIP; INTELLECTUAL PROPERTY
8.1 Ownership. Taiho acknowledges and agrees that SUGEN or its
Affiliates is and shall remain the sole owner of the SUGEN Technology and
SUGEN's interest in the Collaboration Technology and that Taiho has no rights
therein other than the license rights specifically granted herein. SUGEN
acknowledges and agrees that Taiho or its Affiliates is and shall remain the
sole owner of the Taiho Technology and Taiho's interest in the Collaboration
Technology and that SUGEN has no rights therein other than the license rights
specifically granted herein.
8.2 Ownership of Technology. Inventorship with respect to inventions
made pursuant to work carried out under the Collaboration shall be determined in
accordance with United States rules of inventorship. Taiho and SUGEN or their
Affiliates shall each own solely all inventions made solely by their employees,
agents and consultants, and such parties or their Affiliates shall own jointly
all inventions jointly made by employees, agents and consultants of both such
parties hereunder; provided, however, that intellectual property rights with
respect to inventions relating to compounds derived from SU5416 or SU6668, or
the use thereof, regardless of the identity of
- -----------------------
* Confidential Treatment Requested
13.
<PAGE>
the inventor, shall be solely owned by or assigned to SUGEN or its Affiliates.
Any assignments necessary to accomplish the foregoing are hereby made and Taiho
will execute such further documents as may be reasonably requested by SUGEN with
respect thereto.
8.3 Patent Prosecution. Taiho Patents and SUGEN Patents, and
applications therefore, shall be filed, prosecuted and maintained by Taiho and
SUGEN or their Affiliates, respectively, at such party's option and at its own
expense; provided, however, that Taiho and SUGEN shall consult with and consider
the comments of the other party with respect to the prosecution of applications
for SUGEN Patents and Taiho Patents, to the extent licensed under Article 6,
that are pending as of the Effective Date. Applications for Collaboration
Patents for inventions owned by or assigned to one such party pursuant to
Section 8.1 above shall be filed, prosecuted and any resulting patents
maintained by such party, at such party's option and its own expense. SUGEN or
its Affiliates shall be responsible for filing and prosecuting applications for,
and maintaining, jointly owned Collaboration Patents, using counsel of its
choice, throughout the world. Taiho shall reimburse SUGEN for [...***...] of all
expenses SUGEN incurs for filing applications for, and maintenance of, such
jointly-owned Collaboration Patents worldwide. In the event that SUGEN decides
not to proceed with prosecuting an application for, or maintaining, a
Collaboration Patent for which it is responsible under this Section 8.3, it
shall give Taiho sixty (60) days' notice before any relevant deadline and
transmit all information reasonable and appropriate relating to such
Collaboration Patent, and Taiho or its Affiliates shall have the right to
pursue, at its own expense, prosecution of such application for, or maintenance
of, such patent, in which event SUGEN shall assign all of its rights in such
patent to Taiho.
8.4 Disclosure of Inventions. SUGEN and Taiho will disclose promptly to
each other all discoveries or inventions made hereunder, including discoveries
or inventions made by employees, consultants or contractors of SUGEN or Taiho,
respectively, pursuant to the Collaboration, prior to any public disclosure or
filing of patent applications and allowing sufficient time for comment and
review by the other party.
8.5 Infringement of Patents by Third Parties.
(a) Notice. Taiho and SUGEN each shall promptly notify the
other in writing of any alleged or threatened infringement of the Collaboration
Patents, SUGEN Patents or Taiho Patents which may adversely impact the rights of
the parties hereunder, of which it becomes aware.
(b) Cooperation. Both Taiho and SUGEN agree that neither will
notify a Third Party (except for the parties' outside litigation counsels) of
the infringement of any of the Collaboration Patents by a Third Party in the
Field without first obtaining the consent of the other such party, which consent
shall not be unreasonably denied. Both such parties will cooperate with each
other to terminate such infringement without litigation, with each such party
being responsible for the payment of its own out-of-pocket costs (including
legal costs) relating thereto. Any monetary settlement reached shall,
[...***...].
- -----------------------
* Confidential Treatment Requested
14.
<PAGE>
(c) Enforcement Action. In the event that any alleged or
threatened infringement of the Collaboration Patents by a Third Party in the
Field in the Taiho Territory cannot be terminated without litigation, Taiho
shall have the first right, but not the obligation, to take appropriate action
against any person or entity directly or contributorily infringing such
Collaboration Patent in the Taiho Territory. In the event Taiho fails to
institute an infringement suit or take other reasonable action in response to
such infringement within ninety (90) days after notice in accordance with
paragraph (a) above, SUGEN shall have the right, but not the obligation, upon
thirty (30) days' notice to Taiho to institute such suit or take other
appropriate action in its own name, the joint owners' names, or both. Regardless
of which such party brings such enforcement action, the other party hereby
agrees to cooperate reasonably in any such effort, including, if required,
bringing a legal action or furnishing a power of attorney. Such party not
bringing the action shall have the right to participate in such action at its
own expense with its own counsel and any recovery obtained by settlement or
otherwise shall be disbursed as follows: Each such party shall first recover any
reasonable expenses incurred in such action (including counsel fees).
Thereafter, such parties shall [...***...]. Taiho Patents and SUGEN Patents will
be defended by Taiho and SUGEN as determined by it in its sole discretion,
respectively, throughout the world.
8.6 Infringement of Third Party Patent Rights.
(a) Joint Strategy. In the event that the manufacture, use or
sale of a Product becomes the subject of a claim of infringement of a patent,
copyright or other proprietary right by a Third Party anywhere in the world, and
without regard to which party is charged with said infringement, and the venue
of such claim, Taiho and SUGEN shall promptly confer to discuss the claim.
(b) Defense. Unless Taiho and SUGEN otherwise agree, Taiho
shall have the first right but not the obligation to assume the primary
responsibility at its expense for the conduct of the defense of any such claim
brought in the Taiho Territory, and SUGEN shall have the right, but not the
obligation, to participate in any such suit at its sole option and at its own
expense. Each such party shall reasonably cooperate with the party conducting
the defense of the claim. Unless such parties otherwise agree, SUGEN shall have
the first right but not the obligation to assume the primary responsibility at
its expense for the conduct of the defense of any such claim brought in the
SUGEN Territory. Neither Taiho nor SUGEN shall enter into any settlement that
affects the other such party's rights or interests without such other party's
written consent, not to be unreasonably withheld.
8.7 Patent Marking. Taiho shall mark, if necessary, all products
manufactured, used or sold under the terms of this Agreement, or their
containers, in accordance with the applicable patent marking laws, as required.
9. CONFIDENTIALITY
- -----------------------
* Confidential Treatment Requested
15.
<PAGE>
9.1 Confidentiality. Except to the extent expressly authorized by this
Agreement or otherwise agreed in writing by the parties, each party agrees that,
for the term of this Agreement and for [...***...] thereafter, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other party pursuant to this Agreement unless
the receiving party can demonstrate by competent written proof that such
Confidential Information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement;
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality to a Third Party, by a Third Party who had no
obligation to the disclosing party not to disclose such information to others;
or
(e) was independently discovered or developed by the receiving
party without the use of Confidential Information belonging to the disclosing
party.
9.2 Authorized Disclosure. Each party may disclose Confidential
Information belonging to the other party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patents relating to Products;
(b) regulatory filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) conducting pre-clinical or clinical trials of Products;
and
(f) disclosure to Affiliates, sublicensees, employees,
consultants or agents who are bound by similar terms of confidentiality and
non-use at least equivalent in scope to those set forth in this Article 12.
Notwithstanding the foregoing, in the event a party is required to make
a disclosure of the other party's Confidential Information pursuant to this
Section 9.2, it will, give advance notice to
- -----------------------
* Confidential Treatment Requested
16.
<PAGE>
the other party of such disclosure and endeavor in good faith to secure
confidential treatment of such information.
9.3 Publications. If a party desires to publish a paper or make a
presentation relating to the parties' work under the Collaboration or to
Products, whether written or oral, that party shall at least thirty (30) days
before submission of the proposed publication or presentation to a Third Party,
submit such proposed publication or presentation in written form to the other
party for review. The reviewing party will determine whether any of its
confidential information that may be contained in such publication or
presentation should be modified or deleted, and whether to propose that a patent
application should be filed on any invention disclosed therein. The reviewing
party shall have thirty (30) days for written publications or seven (7) days for
abstracts for oral presentations or posters in which to review each such
proposed publication or presentation. The review period may be extended for an
additional thirty (30) days if the reviewing party reasonably requests such
extension to allow time for the preparation and filing of relevant patent
applications. In no event shall a party publish or present any Confidential
Information of the other party without the written consent of that party.
10. REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties. Each party represents and warrants
that:
(a) Corporate Power. It is duly organized and validly existing
under the laws of its state or country of incorporation, and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
(b) Due Authorization. It is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder. The person or
persons executing this Agreement on its behalf has been duly authorized to do so
by all requisite corporate action.
(c) Binding Agreement. This Agreement is legally binding upon
it and enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement does not conflict with any agreement, instrument
or understanding, oral or written, to which it is a party or by which it may be
bound, nor violate any material law or regulation of any court, governmental
body or administrative or other agency having jurisdiction over it.
(d) Grant of Rights; Maintenance of Agreements. It has not,
and will not during this Agreement, grant any right to any Third Party which
would conflict with the rights granted to the other party hereunder. It has (or
will have at the time performance is due) maintained and will maintain and keep
in full force and effect all agreements (including license agreements) and
filings (including patent filings) necessary to perform its obligations
hereunder.
(e) Validity. It is aware of no action, suit or inquiry or
investigation instituted by or before any court or governmental agency which
questions or threatens the validity of this Agreement.
17.
<PAGE>
10.2 SUGEN Representations and Warranties. SUGEN represents and
warrants that it owns or holds licenses to the SUGEN Patents and SUGEN Know-How
and has sufficient rights and power to grant the licenses to Taiho which it
purports to grant herein.
10.3 SUGEN Disclaimer. EXCEPT AS SET FORTH IN SECTION 10.2 ABOVE, THE
SUGEN TECHNOLOGY IS PROVIDED "AS IS" AND SUGEN EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING
FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, WITH RESPECT THERETO.
Without limiting the generality of the foregoing, SUGEN expressly does not
warrant (i) the success of any development or clinical trial, study or test
commenced by Taiho under this Agreement, or (ii) the safety or usefulness for
any purpose of the Drug Candidates or the Licensed Technology.
10.4 Taiho Representations, Warranties and Covenants. Taiho represents
and warrants that it owns or holds licenses to the Taiho Patents and Taiho
Know-How and has sufficient rights and power to grant the licenses to SUGEN
which it purports to grant herein. Taiho agrees that it shall not file any
opposition with any government authority in the Taiho Territory having
jurisdiction over patent-related matters with respect to any SUGEN Patent or
Collaboration Patent.
10.5 Taiho Disclaimer. EXCEPT AS SET FORTH IN SECTION 10.4 ABOVE, THE
TAIHO TECHNOLOGY IS PROVIDED AS IS AND TAIHO EXPRESSLY DISCLAIMS ANY AND ALL
WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION THE
WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES OR ARISING
FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES, WITH RESPECT THERETO.
Without limiting the generality of the foregoing, Taiho expressly does not
warrant (i) the success of any development or clinical trial, study or test
commenced by it under this Agreement, or (ii) regulatory approval, product
introduction, safety, usefulness or commercial success of any Product.
11. INDEMNIFICATION
11.1 Indemnification. Taiho and SUGEN each hereby agree to save, defend
and hold the other such party and its agents and employees harmless from and
against any and all suits, claims, actions, demands, liabilities, expenses
and/or loss, including reasonable legal expense and attorneys' fees, other than
claims for infringement as provided in Section 8.6 (collectively, "Claims")
resulting directly or indirectly from actions by the indemnifying party, its
Affiliates, agents or sublicensees in connection with the manufacture, use or
sale of Products, but only to the extent such Claims result from the negligence
or willful misconduct of the indemnifying
18.
<PAGE>
party or its employees and agents and only to the extent such Claims do not
result from the negligence or willful misconduct of the party seeking
indemnification.
11.2 Control of Defense. Any entity entitled to indemnification under
this Article shall give written notice to the indemnifying party of any Claims
that may be subject to indemnification, promptly after learning of such Claims,
and the indemnifying party shall assume the defense of such Claims with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed by
the indemnifying party with counsel so selected, the indemnifying party will not
be subject to any liability for any settlement of such Claims made by the
indemnified party without its consent (but such consent will not be unreasonably
withheld or delayed), and will not be obligated to pay the fees and expenses of
any separate counsel retained by the indemnified party with respect to such
Claims.
12. TERM AND TERMINATION OF AGREEMENT
12.1 Term. Except as provided under Section 12.2 below, the term of
this Agreement shall commence upon the Effective Date and shall expire on a
Product by Product basis on the later of (i) [...***...] of the first commercial
launch of a Product in the Taiho Territory, and (ii) [...***...] of the
Effective Date. Upon expiration of this Agreement pursuant to this Section 12.1,
Taiho and SUGEN each shall have a fully paid, exclusive license to use any
Collaboration Know-How to make, have made, use and sell Products, and a fully
paid, nonexclusive license under the other's interest in the Collaboration
Know-How for any other use within the Field.
12.2 Termination for Material Breach. Taiho and SUGEN each shall have
the right to terminate the Agreement for material breach of this Agreement by
the other upon [...***...] written notice to the other party, if such material
breach remains uncured upon the expiration of such period of time; provided,
however, that such period of time shall be extended if such breach cannot be
cured within such period, for so long as the breaching party continues to use
diligent efforts to cure such breach until actually cured. Upon termination, all
licenses granted to such non-breaching party shall survive and all licenses
granted to the breaching party under the Agreement shall automatically
terminate, but such termination shall not impair any other rights the
non-breaching party may have at law or equity.
12.3 Termination of Programs.
(a) Taiho shall have the right to terminate the Collaboration
with respect to either SU5416 or SU6668. In the event of such termination, the
rights granted to Taiho under Article 5 with respect to such compound shall
terminate and the rights granted to SUGEN under Article 5 with respect to such
compound shall survive such termination and shall be expanded to apply on a
worldwide basis.
(b) Taiho shall have the right to terminate the Collaboration
with respect to both SU5416 and SU6668 if:
- -----------------------
* Confidential Treatment Requested
19.
<PAGE>
(1) (i) in [...***...] both compounds
[...***...]; or
(ii) both compounds [...***...];
and
(2) [...***...] to address these problems.
In the event Taiho terminates the Collaboration with respect to both
SU5416 and SU6668, the Agreement shall terminate unless the parties have
mutually agreed to continue the Collaboration with respect to a third generation
product as provided for in Article 7. If the Agreement is terminated pursuant to
this Section 12.3(b), all rights granted to Taiho under Article 5 shall
terminate and all rights granted to SUGEN under Article 5 shall survive such
termination and shall be expanded to apply on a worldwide basis.
12.4 Accrued Rights; Surviving Obligations. Termination of this
Agreement shall not affect any accrued rights of either party. The terms of
Sections 6.9, 8.1, 8.2, 12.3, 12.4, 14.4, 14.5, 14.7, 14.9, 14.10, 14.11 and
14.12, Articles 1, 9, 10, 11 and 13 of this Agreement shall survive termination
of this Agreement. Promptly after termination of this Agreement each party shall
return or dispose of any Confidential Information and other know how of the
other party in accordance with its instructions, including without limitation
any compounds, assays or other biological or chemical materials.
13. GOVERNING LAW; DISPUTE RESOLUTION
13.1 Governing Law. This Agreement shall be governed by New York law,
excluding its choice of law rules.
13.2 Dispute Resolution. In the event of any dispute, the parties shall
refer such dispute to the Chairman of the board of directors of SUGEN and the
Chairman of the board of directors of Taiho for attempted resolution by good
faith negotiations within thirty (30) days after such referral is made. In the
event such officers are unable to resolve such dispute within such thirty (30)
day period, either party may invoke the provisions of Section 13.3 below.
13.3 Jurisdiction and Venue. Except as provided in Section 13.2 above,
any claim or controversy arising out of or related to this Agreement or any
breach hereof shall be submitted to a state or federal court of general
jurisdiction in the State of New York, and the parties hereby consent to the
jurisdiction and venue of such court.
14. GENERAL PROVISIONS
14.1 Notices. All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed by registered or certified
mail, Federal Express or DHL addressed to the signatory to whom such notice is
required or permitted to be given and
- -----------------------
* Confidential Treatment Requested
20.
<PAGE>
transmitted by facsimile to the number indicated below. All notices shall be
deemed to have been given when mailed, as evidenced by the postmark at the point
of mailing, or faxed.
All notices to Taiho shall be addressed as follows:
Taiho Pharmaceutical Co., Ltd.
1-27, Kandanishiki-cho
Chiyoda-ku, Tokyo, 101 Japan
Attention: President of the Board
Fax: 03-3233-4318
All notices to SUGENUS shall be addressed as follows:
SUGEN, Inc.
531 Galveston Road
Redwood, City, CA 94063-4720
Attention: Chairman of the Board
Fax: (650) 369-0913
All notices to SUGEN shall be addressed as follows:
SUGEN International, AG
c/o Acton Treuhand, AG
Innere Gueterstrasse 4
6304 Zug
Switzerland
Attention: President of the Board
Any party may, by written notice to the other, designate a new address
or fax number to which notices to the party giving the notice shall thereafter
be mailed or faxed.
14.2 Compliance with Laws. Taiho and SUGEN shall review in good faith
and cooperate in taking actions to ensure the compliance of this Agreement with
all applicable laws. Taiho and SUGEN shall each provide the other such party
with such reasonable assistance as may be required for the party requesting such
assistance to comply with all laws, ordinances, rules, regulations and the like
of all governmental units or agencies having jurisdiction pertaining to this
Agreement, including without limitation, obtaining all import, export and other
permits, certificates, licenses or the like required by such laws, ordinances,
rules, regulations and the like, necessary to permit the parties to perform
hereunder and to exercise their respective rights hereunder.
14.3 Force Majeure. No party shall be liable for any delay or failure
of performance to the extent such delay or failure is caused by circumstances
beyond its reasonable control and that by the exercise of due diligence it is
unable to prevent, provided that the party claiming excuse uses its best efforts
to overcome the same.
21.
<PAGE>
14.4 Entirety of Agreement. This Agreement embodies the entire, final
and complete agreement and understanding between the parties and replaces and
supersedes all prior discussions and agreements between them with respect to its
subject matter. No modification or waiver of any terms or conditions hereof
shall be effective unless made in writing and signed by a duly authorized
officer of each party.
14.5 Non-Waiver. The failure of a party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not constitute a waiver or relinquishment, to any extent, of the
right to assert or rely upon any such terms or conditions on any future
occasion.
14.6 Disclaimer of Agency. None of the parties is, nor will be deemed
to be, the legal representative or agent of the other, nor shall any party have
the right or authority to assume, create, or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
14.7 Severability. If a court of competent jurisdiction declares any
provision of this Agreement invalid or unenforceable, or if any government or
other agency having jurisdiction over either SUGEN or Taiho deems any provision
to be contrary to any laws, then that provision shall be severed and the
remainder of the Agreement shall continue in full force and effect. To the
extent possible, the parties shall revise such invalidated provision in a manner
that will render such provision valid without impairing the parties' original
intent.
14.8 Affiliates; Assignment. Except as otherwise provided herein, none
of the parties may assign its rights or delegate its duties under this Agreement
without the prior written consent of the other party, not to be unreasonably
withheld; provided, however, that any party may assign its rights or delegate
its duties under this Agreement to any of its Affiliates or to any successor by
merger or sale of substantially all of its business to which this Agreement
relates in a manner such that the assignor will remain liable and responsible
for the performance and observance of all its duties and obligations hereunder.
This Agreement shall be binding upon the successors and permitted assigns of the
parties. Any attempted delegation or assignment not in accordance with this
Section 14.8 shall be of no force or effect.
14.9 Headings. The headings contained in this Agreement have been added
for convenience only and shall not be construed as limiting.
14.10 Limitation of Liability. No party shall be liable to another for
indirect, incidental, consequential or special damages, including but not
limited to lost profits, arising from or relating to any breach of this
Agreement, regardless of any notice of the possibility of such damages. Nothing
in this Section is intended to limit or restrict the indemnification rights or
obligations of any party.
14.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
22.
<PAGE>
14.12 English Language. This Agreement has been prepared in the English
language and shall be construed in the English language.
14.13 Public Announcement. Except for such disclosure as is deemed
necessary, in the reasonable judgment of a party, to comply with applicable laws
or regulations, no announcement, news release, public statement, publication or
presentation relating to the existence of this Agreement, or the terms hereof,
will be made without the other party's prior written approval, which approval
shall not be unreasonably withheld. The parties agree that they will use
reasonable efforts to coordinate the initial announcement or press release
relating to the existence of this Agreement so that such initial announcement or
press release by each is made contemporaneously.
23.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement.
SUGEN, INC. TAIHO PHARMACEUTICAL CO., LTD.
By:/s/ Stephen Evans-Freke By: /s/ Dr. Yukio Kobayashi
------------------------------- -------------------------------
Name:Stephen Evans-Freke Name: Dr. Yukio Kobayashi
----------------------------- -----------------------------
Title: Chairman of the Board Title: President
--------------------------- ----------------------------
SUGEN INTERNATIONAL, AG
By: /s/ Stephen Evans-Freke
-------------------------------
Name: Stephen Evans-Freke
-----------------------------
Title: President of the Board
---------------------------
24.
<PAGE>
EXHIBIT A
DEVELOPMENT RESPONSIBILITIES
[...***...]
o SUGEN is responsible for [...***...].
In addition to development responsibilities listed above, as of the Effective
Date, SUGEN is conducting the following pre-clinical studies:
SU6668:
- ---------
1. [...***...];
2. [...***...];
3. [...***...];
4. [...***...];
5. Safety Pharmacology:
[...***...];
[...***...];
[...***...];
6. [...***...];
7. [...***...];
8. [...***...];
9. [...***...];
10. [...***...].
SU5416:
- ---------
1. [...***...].
- -----------------------
* Confidential Treatment Requested
1.
<PAGE>
EXHIBIT B
SUGEN Patents
[...***...]
- -----------------------
* Confidential Treatment Requested
2.
<PAGE>
EXHIBIT C
Clinical Trial Costs
Clinical Trial Costs shall mean [...***...] incurred or expended by
SUGEN or its Affiliates for a Product including without limitation the
following:
1. [...***...] including without limitation [...***...]
(1) [...***...];
(2) [...***...]; and
(3) [...***...].
2. [...***...] to SUGEN of conducting clinical trials, including but
not limited to the [...***...].
3. [...***...] shall include an allocation for [...***...].
- -----------------------
* Confidential Treatment Requested
i.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FROM 10-Q FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 15,390
<SECURITIES> 38,912
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55,476
<PP&E> 14,918
<DEPRECIATION> 9,318
<TOTAL-ASSETS> 63,680
<CURRENT-LIABILITIES> 19,658
<BONDS> 0
0
0
<COMMON> 154,494
<OTHER-SE> 122,582
<TOTAL-LIABILITY-AND-EQUITY> 63,680
<SALES> 0
<TOTAL-REVENUES> 5,164
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,682
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 337
<INCOME-PRETAX> (9,965)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,965)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,965)
<EPS-PRIMARY> (0.62)
<EPS-DILUTED> (0.62)
</TABLE>
