UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the quarterly period ended
June 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-21994
GLYKO BIOMEDICAL LTD.
(Exact name of small business issuer as specified in its charter)
Canada 68-0230537
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11 Pimentel Court, Novato, California 94949
(address of principal executive offices)
(415) 382-6653
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 21,523,044 common shares outstanding
as of July 31, 1997.
<PAGE>
GLYKO BIOMEDICAL LTD.
TABLE OF CONTENTS
Page
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited).
Consolidated Balance Sheets as of
June 30, 1997 and December 31, 1996........................................3
Consolidated Statements of Operations for the three
and six month periods ended June 30, 1997 and 1996.........................4
Consolidated Statements of Cash Flows for the six
month periods ended June 30, 1997, and 1996................................5
Notes to Consolidated Financial Statements.................................6
ITEM 2.
Management's Discussion and Analysis
or Plan of Operation.......................................................9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings................................................15
ITEM 2. Changes in Securities............................................15
ITEM 3. Defaults upon Senior Securities..................................15
ITEM 4. Submission of Matters to a Vote of Security Holders .............15
ITEM 5. Other Information................................................15
ITEM 6. Exhibits and Reports on Form 8-K.................................15
Signature...................................................................16
2
<PAGE>
PART I.
ITEM 1. Financial Statements
GLYKO BIOMEDICAL LTD.
CONSOLIDATED BALANCE SHEETS
(unaudited, in U.S. dollars)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
--------------------- ----------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 510,417 $ 210,992
Trade receivables 152,745 156,176
Inventories 75,793 68,452
Other current assets 36,381 26,025
--------------------- ----------------------
Total current assets 775,336 461,645
Property, plant and equipment, net 164,676 108,045
Other assets 2,206 2,200
--------------------- ---------------------
Total assets $ 942,218 $ 571,890
===================== =====================
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 127,409 $ 174,732
Accrued liabilities 157,659 204,504
Deferred rent and related costs 301,629 269,718
Payable to stockholder 219,811 219,811
--------------------- ----------------------
Total current liabilities 806,508 868,765
--------------------- ----------------------
Total liabilities 806,508 868,765
Stockholders' equity (deficit):
Common stock, no par value, unlimited
shares authorized, 21,523,044 and
17,243,044 shares issued and
outstanding at June 30, 1997 and
December 31, 1996, respectively 13,131,250 12,203,065
Common stock warrants 929,585 433,897
Accumulated deficit (13,925,125) (12,933,837)
--------------------- ----------------------
Total stockholders' equity (deficit) 135,710 (296,875)
--------------------- ----------------------
Total liabilities and
stockholders' equity (deficit) $ 942,218 $ 571,890
===================== ======================
</TABLE>
See accompanying notes
3
<PAGE>
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in U.S. dollars)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------------- ----------------------------------
1997 1996 1997 1996
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Sales of products and services $ 276,126 $ 247,979 $ 517,280 $ 652,930
Other revenues 378,115 11,740 628,135 49,830
--------------- --------------- ---------------- ----------------
Total revenues: 654,241 259,719 1,145,415 702,760
Expenses:
Cost of products and services 161,024 112,189 259,175 258,819
Research and development 411,947 267,393 1,256,717 544,814
Selling, general and administrative 329,291 348,464 643,746 723,706
--------------- --------------- ---------------- ----------------
Total expenses: 902,262 728,046 2,159,638 1,527,339
--------------- --------------- ---------------- ----------------
Loss from operations (248,021) (468,327) (1,014,223) (824,579)
Interest income 6,076 3,794 7,999 7,439
Other income / (expense) 7,682 9,341 14,936 13,129
--------------- --------------- ---------------- ----------------
Net loss $ (234,263) $ (455,192) $ (991,288) $ (804,011)
=============== =============== ================ ================
Net loss per common share $ (0.01) $ (0.03) $ (0.05) $ (0.05)
=============== =============== ================ ================
Weighted average number of shares
used in computing per share amounts 21,523,044 15,155,922 19,501,933 14,863,557
=============== =============== ================ ================
</TABLE>
See accompanying notes
4
<PAGE>
GLYKO BIOMEDICAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in U.S. dollars)
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------------
1997 1996
---------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (991,288) $ (804,011)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 30,327 31,959
Change in assets and liabilities:
Trade receivables 3,431 186,264
Inventories (7,341) (2,197)
Other current assets (10,362) (482)
Accounts payable (47,323) (33,987)
Accrued liabilities (46,845) (29,979)
Deferred revenue - (105,479)
Deferred rent and related costs 31,911 77,142
---------------- ---------------
Total adjustments (46,202) 123,241
---------------- ---------------
Net cash used in operating activities (1,037,490) (680,770)
Cash flows from investing activities:
Capital expenditures (86,958) (9,093)
---------------- ---------------
Net cash used in investing activities (86,958) (9,093)
Cash flows from financing activities:
Repayments on capital lease obligation - (10,396)
Proceeds from the issuance of common
stock and warrants 1,449,380 1,077,138
Offering costs (25,507) (22,617)
---------------- ---------------
Net cash provided by financing activities 1,423,873 1,044,125
---------------- ---------------
Net increase in cash 299,425 354,262
Cash and cash equivalents, beginning of period 210,992 620,720
---------------- ---------------
Cash and cash equivalents, end of period $ 510,417 $ 974,982
================ ===============
Supplemental disclosure of non-cash financing activities:
Common stock and common stock warrants issued
in exchange for financing services $ 160,881 $ 129,539
</TABLE>
See accompanying notes
5
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
---------------------
The accompanying consolidated financial statements and related footnotes
have been prepared in conformity with U.S. generally accepted accounting
principles using U.S. dollars. The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries,
Glyko, Inc. and BioMarin Pharmaceutical, Inc. All significant intercompany
accounts and transactions have been eliminated. The balance sheets as of
June 30, 1997 and December 31, 1996 and the related statements of
operations and cash flows for the periods ended June 30, 1997 and 1996 are
unaudited but have been prepared on substantially the same basis as the
annual audited financial statements. Certain reclassifications have been
made to the consolidated financial statements in the prior periods to
conform to classifications used in the current period. In the opinion of
management, the unaudited consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the consolidated financial position, results of
operations and cash flows for those periods presented. The unaudited
results for the period ended June 30, 1997 are not necessarily indicative
of results to be expected for the entire year.
The Company's Report of Independent Public Accountants for the year ended
December 31, 1996 indicates that there is substantial doubt about the
Company's ability to continue as a going concern reflecting both the
necessity and the uncertainty of future funding. Such funding may come
individually or collectively from stock issuances, licensing and marketing
agreements or by collaborative research agreements with strategic partners.
No assurance can be given that additional financing will be available or,
if available, that it will be on terms acceptable to the Company or its
stockholders. If adequate funding is not obtained, operations may be
adversely affected. These factors raise substantial doubt about the
Company's ability to continue as a going concern. The Company will delay or
eliminate expenditures in respect of certain products under development
such as additional analytical kits and diagnostic tests in the event
sufficient funding is unavailable. As a result of additional funding
obtained in the third quarter of 1997 by BioMarin Pharmaceutical, Inc., as
discussed in Note 3, the Company believes that its available cash will
allow it to fund planned operations through the end of 1997.
The accompanying financial statements should be read in conjunction with
the Company's annual report on form 10-KSB for the fiscal year ended
December 31, 1996.
Product Sales
-------------
The Company recognizes product revenues and related cost of sales upon
shipment of products. Service revenues are recognized upon completion of
services as evidenced by the transmission of reports to customers. Other
revenues, principally licensing and distribution fees, are recognized upon
completion of applicable contractual obligations.
Net Loss per Common and Common Equivalent Share
-----------------------------------------------
Net loss per common and common equivalent share is computed using the
weighted average number of common shares outstanding during each period
presented. Common equivalent shares from stock options and warrants are
excluded from the computation if their effect is anti-dilutive.
In 1997, the Company will report its loss per common and common equivalent
share based upon the recently issued Statement of Financial Accounting
Standards No. 128 (SFAS No. 128), "Earnings per Share". The pro forma
effect of this accounting change on the six months ended June 30 is:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Primary EPS as reported $ (0.05) $ (0.05)
Pro forma effect of SFAS No. 128 0.00 0.00
-------- --------
Basic EPS pro forma $ (0.05) $ (0.05)
======== ========
Fully Diluted EPS as reported $ (0.05) $ (0.05)
Pro forma effect of SFAS No. 128 0.00 0.00
-------- --------
Diluted EPS pro forma $ (0.05) $ (0.05)
======== ========
</TABLE>
6
<PAGE>
GLYKO BIOMEDICAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Termination of Millipore Marketing Agreement
--------------------------------------------
Through 1993 and the first quarter of 1994 the Company sold its products
directly and through sales to Millipore Corporation, ("Millipore") for
resale. During this time Millipore held marketing rights to Glyko products
under the terms of a distribution agreement between Millipore and the
Company. Late in 1993 Millipore announced their intention to exit the
bioscience business and in April 1994 Millipore and the Company agreed to
terminate their distribution agreement. Millipore has granted the Company
all marketing rights to Glyko analytic products and has waived its option
to purchase the Company's analytic business. In turn, Millipore will
receive 500,000 shares of Glyko Biomedical Ltd. common stock, subject to
Canadian regulatory approval. In the third quarter of 1994, the Company
recorded a charge to operations of $219,811 for costs related to the
termination of the Agreement. This amount represents the estimated fair
market value of stock to be issued as a result of the termination of the
Agreement. The Toronto Stock Exchange has turned down the issuance of the
500,000 shares due to an arms-length issue and requires that an independent
valuation be performed in order to reconsider the issuance of these shares.
No such valuation has been performed to date.
3. Private Equity Placement Offerings
-----------------------------------
During the second quarter of 1995, the Company closed a private equity
placement offering (the Q295 Financing). Investors participating in the
Q295 Financing purchased approximately 4.786 million units which each
consisted of one share of common stock and one five year warrant to
purchase one share of common stock. The Company issued units in exchange
for cash, and also in exchange for the settlement of certain outstanding
liabilities. The units were priced at Cdn.$0.80 with an exercise price on
the warrant of Cdn.$0.90. The Company established a balance sheet value for
the common stock warrants by subtracting the discounted fair market value
for one share of the Company's common stock from the price of one unit. The
common stock warrants expire in 2000. The Q295 Financing raised
approximately $2.78 million, consisting of approximately $2.36 million in
cash and $420,000 for the settlement of a stockholder/director bridge loan
and certain other liabilities.
During the second quarter of 1996, the Company closed a second private
equity placement offering (the Q296 Financing). Investors participating in
the Q296 Financing purchased 2.5 million units each consisting of one share
of common stock and one half of a two year warrant. One warrant is required
to purchase one share of common stock. The units were priced at Cdn.$0.60
with an exercise price on the warrant of Cdn.$0.80. The Q296 Financing
raised approximately $1.077 million. An additional 175,000 units and
250,000 warrants valued at approximately $130,000 were distributed to
brokers in exchange for services rendered in connection with the Q296
Financing. The Company utilized the Black-Scholes model to value all the
warrants issued in the Q296 Financing at approximately $156,000.
On March 21, 1997, the Company closed a Cdn.$2.0 million financing (the
Q197 Financing) to fund the start-up of BioMarin Pharmaceutical, Inc. which
was formed to develop the Company's pharmaceutical products. As a result of
this financing, the Company issued 4.0 million units at Cdn.$0.50 per unit,
each unit consisting of one common share and one common share purchase
warrant. Each warrant can be exercised for one share of common stock at
Cdn.$1.00 per share, expiring on March 21, 1999. An additional 280,000
units and 280,000 warrants valued at approximately $131,000 were
distributed to the brokers in exchange for services rendered in connection
with the Q197 Financing. The Company utilized the Black-Scholes model to
value all the warrants issued in the Q197 Financing at approximately
$496,000.
In the third quarter of 1997, BioMarin raised $880,000 in a private
placement financing. As a result of the financing, BioMarin issued common
stock shares.
7
<PAGE>
4. Commitments
-----------
Related to a certain licensing agreement, the Company has agreed to
issue 100,000 shares of the Company's common stock for further
consideration. These shares were not issued as of June 30, 1997.
BioMarin has agreed to fund research and development activities at various
research facilities. Funding is expected to be $1,413,000 through the
end of 1997 and $326,000 in 1998. The contracts can be terminated through
90-days written notice by either party.
8
<PAGE>
ITEM 2.
GLYKO BIOMEDICAL LTD.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report contains certain forward looking statements which involve
risks and uncertainties, including statements regarding the Company's
strategy, financial performance and revenue sources. The Company's
actual results could differ materially from the results anticipated in
these forward looking statements as a result of certain factors set
forth under "Risk Factors" and elsewhere in this report.
Overview:
Glyko Biomedical Ltd. is a Canadian holding company that owns all of the capital
stock of Glyko, Inc. and BioMarin Pharmaceutical, Inc. Glyko, Inc. and BioMarin
Pharmaceutical, Inc. are operating companies based in California. The following
discussion and the accompanying consolidated financial statements include the
accounts of Glyko Biomedical Ltd., Glyko, Inc., and BioMarin Pharmaceutical,
Inc. presented on a consolidated basis. Numerical references in the following
discussion are rounded to the nearest thousand. Since its inception in October
1990, Glyko has engaged in research and development of new techniques to analyze
and manipulate carbohydrates for research, diagnostic and pharmaceutical
purposes. The Company has developed a line of analytic instrumentation
laboratory products that include an imaging system, analysis software and
chemical analysis kits. The Company is continuing to develop additional chemical
kits for use with the imaging system, and is also developing a line of
carbohydrate diagnostic products. In March, 1997, the Company raised Cdn.$2.0
million to fund the start-up of BioMarin Pharmaceutical, Inc. which was formed
to develop the Company's pharmaceutical products. The Company has incurred a net
loss in each period since its inception and expects to continue to incur losses
at least through 1997. For the period from its inception to June 30, 1997, the
Company has incurred cumulative losses of $13,925,000.
The Three Month Periods Ended June 30, 1997 and 1996
Revenue for the second quarter of 1997 was $654,000 and consisted primarily of
sales of products and services of $276,000 and other revenues representing
development and licensing fees of $350,000, and grant revenues of $28,000. Sales
of products and services consisted of sales of chemical analysis kits, fees for
custom and contract analytical services and sales of imaging systems. Revenue
for the second quarter of 1996 was $260,000 and consisted of sales of products
and services of $248,000 and other revenues of $12,000. Sales of products and
services consisted of sales of imaging systems, sales of chemical analysis kits,
and fees for custom analytical services. The increase in product revenues in the
second quarter of 1997 compared to the same period in 1996 was due principally
to increased sales volume due.
Cost of products and services in the second quarter of 1997 was $161,000
compared to $112,000 for the same period in 1996. Increased sales volume of
products and increased cost of contract service revenues were the primary reason
for the increase in cost of products and services.
Research and development expenses were $412,000 for the second quarter of 1997
compared to $267,000 for the same period in 1996. Research fees related to the
development of BioMarin's pharmaceutical products were primarily responsible for
the significant increase in overall expense. The Company anticipates that future
BioMarin research and development expenditures will be funded by future 1997
financings for BioMarin.
Selling, general and administrative expenses were $329,000 in the second quarter
of 1997, compared to $348,000 for the same period in 1996, a decrease of
$19,000. The decrease is primarily due to the cut-back in staff in October 1996.
9
<PAGE>
The Six Month Periods Ended June 30, 1997 and 1996
Revenue for the first six months of 1997 was $1,145,000 and consisted primarily
of sales of products and services of $517,000 and other revenues representing
development and licensing fees of $600,000 and grant revenues of $28,000. Sales
of products and services consisted of sales of chemical analysis kits, fees for
custom and contract analytical services and sales of imaging systems. Revenue
for the first six months of 1996 was $703,000 and consisted of sales of products
and services of $653,000 and other revenues of $50,000. Sales of products and
services consisted of sales of imaging systems, sales of chemical analysis kits,
and fees for custom analytical services. Other revenues consisted principally of
grant revenues. The decline in product revenues in the first six months of 1997
compared to the same period in 1996 was due principally to reduced sales volume
due to the relocation of the Company's California facilities in February which
caused approximately eight weeks of delays in fulfilling orders.
Cost of products and services in the first six months of 1997 was $259,000
compared to $259,000 for the same period in 1996. Increased custom service
revenues with lower profit margins was the primary reason for the increase in
cost of products and services.
Research and development expenses were $1,257,000 for the first six months of
1997 compared to $545,000 for the same period in 1996. Research fees related to
the development of BioMarin's pharmaceutical products were primarily responsible
for the significant increase in overall expense. The Company anticipates that
future BioMarin research and development expenditures will be funded by future
1997 financings for BioMarin.
Selling, general and administrative expenses were $644,000 in the first six
months of 1997, compared to $724,000 for the same period in 1996, a decrease of
$80,000. The decrease is mainly due to the cut-back in staff in October 1996 and
the reduction in rent expense due to the Company's relocation of its California
operations to a smaller facility in February, 1997.
Liquidity and Capital Resources
During the second quarter of 1995, the Company closed a private equity placement
offering (the Q295 Financing). Investors participating in the Q295 Financing
purchased approximately 4.786 million "units" that consisted of one share of
common stock and one five year warrant to purchase one share of common stock.
The Company issued units in exchange for cash, and also in exchange for the
settlement of certain outstanding liabilities. The units were priced at
Cdn.$0.80 with an exercise price on the warrant of Cdn.$0.90. The Q295 Financing
raised approximately $2.78 million, consisting of approximately $2.36 million in
cash and $420,000 for the settlement of a stockholder/director bridge loan and
other liabilities.
During the second quarter of 1996, the Company closed a second private equity
placement offering (the Q296 Financing). Investors participating in the Q296
Financing purchased 2.5 million units each consisting of one share of common
stock and one half of a two year warrant. One warrant is required to purchase
one share of common stock. The units were priced at Cdn.$0.60 with an exercise
price on the warrant of Cdn.$0.80. The Q296 Financing raised approximately
$1.077 million. An additional 175,000 units and 250,000 warrants valued at
approximately $130,000 were distributed to brokers in exchange for services
rendered in connection with the Q296 Financing. The Company utilized the
Black-Scholes model to value all the warrants issued in the Q296 Financing at
approximately $156,000.
On March 21, 1997, the Company closed a Cdn.$2.0 million financing (the
Q197 Financing) to fund the start-up of BioMarin Pharmaceutical, Inc. which was
formed to develop the Company's pharmaceutical products. As a result of this
financing, the Company issued 4.0 million units at Cdn.$0.50 per unit, each unit
consisting of one common share and one common share purchase warrant. Each
warrant can be exercised for one share of common stock at Cdn.$1.00 per share,
expiring on March 21, 1999. An additional 280,000 units and 280,000 warrants
valued at approximately $131,000 were distributed to the brokers in exchange for
services rendered in connection with the Q197 Financing. The Company utilized
10
<PAGE>
the Black-Scholes model to value all the warrants issued in the Q197 Financing
at approximately $496,000. The Company's net cash position increased by $299,000
in the first six months of 1997. Net cash proceeds of $1.424 million from the
Q197 Financing were offset by cash used in operating activities of $1.037
million. Cash used in operating activities in the first six months of 1997
reflected the operating loss of $991,000 plus the payment of liabilities accrued
on last year's books partially offset by the collections of accounts receivable
and a deferral of payments for rent and related costs. Capital expenditures for
the first six months of 1997 were relatively insignificant at $87,000.
Management believes the proceeds of the Q197 Financing, the one-time
distribution agreement earned in the first six months of 1997 and an OEM
agreement fee, a licensing and development fee and grant revenues earned in the
second quarter of 1997 along with funds raised in BioMarin in a private
placement financing of $880,000 in Q397 will allow the Company to maintain
liquidity at least through the end of 1997. To maintain liquidity beyond the end
of 1997, the Company will have to; raise additional capital, reduce expenses
considerably, increase sales significantly, or realize some combination of these
factors. There can be no assurance that the Company will be successful in
maintaining liquidity. Management may consider selling certain assets or
technology rights to raise additional capital. The Company will continue to seek
additional funding through various means including but not limited to stock
issuances, licensing and marketing agreements and collaborative research
agreements with strategic partners. However, there can be no assurance that such
agreements will be reached and that additional funding will be obtained. See
"Risk Factors - Future Capital Requirements."
In 1997, management expects spending to increase due to the research and program
expenses of BioMarin. It is anticipated that these expenditures will be funded
by subsequent 1997 financings for BioMarin. The Company is not committed to make
any significant capital expenditures.
11
<PAGE>
RISK FACTORS
Future Capital Requirements - Uncertainty of Future Funding
The Company's Report of Independent Public Accountants for the year ended
December 31, 1996 indicates that there is substantial doubt about the Company's
ability to continue as a going concern reflecting both the necessity and the
uncertainty of future funding. Such funding may come individually or
collectively from stock issuances, licensing and marketing agreements or by
collaborative research agreements with strategic partners. No assurance can be
given that additional financing will be available or, if available, that it will
be on terms acceptable to the Company or its stockholders. If adequate funding
is not obtained, operations may be adversely affected. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The Company will delay or eliminate expenditures in respect of certain products
under development such as additional analytical kits and diagnostic tests in the
event sufficient funding is unavailable. As a result of additional funding
obtained in the third quarter of 1997 by BioMarin Pharmaceutical, Inc., the
Company believes that its available cash will allow it to fund planned
operations through the end of 1997.
See "Management's Discussion or Plan of Operation - Liquidity and Capital
Resources".
History of Operating Losses - Uncertainty of Future Profitability
The Company commenced its research activities in December 1990 and first
recorded revenues in December 1992. The Company has not yet made a net annual
operating profit. There is no assurance that sales will increase in future
quarters. The accumulated deficit as of June 30, 1997 was approximately $13.9
million. The Company anticipates that operating losses may continue. See
"Management's Discussion and Analysis or Plan of Operation."
Diagnostic Products - No Prior Commercial Manufacturing or Marketing
In 1996 the Company began marketing its first diagnostic product, the Urinary
Carbohydrate Analysis Kit. In order to manufacture its diagnostic products in
commercial quantities and to market products independently, the Company will
need to expand its production and marketing capabilities and/or establish
arrangements with third parties having the capacity for such manufacturing or
marketing. Anticipated operating revenues and cash resources will not be
sufficient to expand manufacturing and marketing capabilities for diagnostic
products currently under development. There can be no assurance that the Company
will be able to successfully market or manufacture its diagnostic products. To
the extent that the Company arranges with third parties to manufacture or market
any diagnostic products, the commercial success of such products may depend upon
the efforts of those third parties.
Early Stage of Diagnostic Product Development
Only one of the Company's diagnostic products has been approved for commercial
sale, the Urinary Carbohydrate Analysis Kit. Potential products currently under
development by the Company will require significant additional development, and
some must undergo several phases of clinical testing and will likely require
significant further investment prior to their final commercialization. See
"Uncertainty of Regulatory Approval." Anticipated operating revenues and cash
resources will not be sufficient to facilitate significant further development
of diagnostic products. There can be no assurance that any of the Company's
products under development, either now or in the future, will be successfully
developed, prove to be effective in clinical trials, receive required regulatory
approvals, be capable of being produced in commercial quantities at reasonable
costs, or be successfully marketed.
Technology and Competition
The primary competitive factors in biotechnology are the ability to create and
maintain scientifically advanced technology, to attract and maintain personnel,
and to have available adequate financial resources to maintain the Company
through its research, development and commercialization of technology stages.
12
<PAGE>
The technology on which the Company's business is based uses proven laboratory
methods of electrophoresis and bioseparation. Nevertheless there is a technical
risk associated with reducing-to-practice the basic technology for new
applications. There is no assurance that the Company will be able to develop an
economical or practical way to separate human materials for clinical diagnosis,
or that it will be able to devise specific reagents required to obtain a needed
reaction. Other companies may develop basic carbohydrate technology which
directly competes for the carbohydrate diagnostic market. Furthermore,
conventional diagnostic technology (such as enzyme or radioactive immunoassay)
may accomplish new breakthroughs in analyzing carbohydrates (which so far has
been difficult). Additionally, other newer technologies such as nucleic acid
hybridization may become competitive and erode the Company's potential shares of
diagnostic markets.
Competition in bioinstrumentation is intense. Many companies, universities, and
research organizations are engaged in the research and development of products
in the areas being developed by the Company. Many of these have financial,
technical, manufacturing and marketing resources greater than those of the
Company. Several major research instrument companies have undertaken recently to
establish capabilities in carbohydrate technology and may apply such technology
for essentially the same purpose as the Company. As a result carbohydrate
technology will become an area of more intense competition. In order to compete
successfully the Company must expand its efforts to develop new products and
uses for its current products in research and diagnosis. There can be no
assurance that the Company will be able to do so effectively.
Patents and Proprietary Technology
The Company's success will depend in part on its ability to obtain patents,
protect trade secrets and not infringe the patents of others. The Company has
been issued patents as well as filed applications for U.S. and foreign patents
and has exclusive licenses to patents or patent applications of others. The
Company intends in the future to apply for patents in various jurisdictions for
inventions forming part of its technology. No assurance can be given that patent
applications will result in the issue of patents or that, if issued, patents
obtained by the Company will confer on the Company a preferred position with
respect to the technology or products claimed.
There can be no assurance that others will not independently develop products
similar to the Company's, duplicate the Company's products or design around the
Company's patents. In addition the Company may be required to obtain licenses to
others' patents. No assurance can be given that such licenses can be obtained on
terms acceptable to the Company. These factors could cause the Company to
encounter delays in product market introductions or adversely affect the
Company's development or sale of products requiring licenses from third parties.
The Company's products and technologies could be subject to claims of
infringement by others. Patent conflicts and litigation can be expensive, and
could have a material adverse effect on the Company's results of operations.
Product Liability and Lack of Insurance
The Company is subject to the risk of exposure to product liability claims in
the event that the use of its technology results in adverse effects during
testing or commercial sale. The Company currently does not maintain product
liability insurance. There can be no assurance that the Company will be able to
obtain product liability insurance coverage at economically reasonable rates, or
that such insurance will provide adequate coverage against all possible claims.
Uncertainty of Regulatory Approval
The Company's diagnostics products will require regulatory approval by
government agencies. This includes pre-clinical and clinical testing and
approval processes in the U.S. and other countries. Compliance can take several
years and require substantial expenditures. There can be no assurance that
difficulties or excessive costs will not be encountered by the Company in this
process or that required approvals will be obtained. The Company will not be
able to market its diagnostic products until required approvals have been
obtained.
13
<PAGE>
Dependence on Key Personnel
The Company's success will depend in large part upon its ability to attract and
retain highly qualified scientific and management personnel. The Company faces
competition for such personnel from other companies, academic institutions,
government entities and other organizations. The Company depends on its key
management, including John Klock and Christopher Starr, and the departure of
either person could have a material adverse effect on the Company. Pursuant to
employment contracts signed effective July 1, 1997, 30% of Klock's and Starr's
time will be committed to Glyko, Inc. and 70% will be committed to BioMarin
Pharmaceutical, Inc.
14
<PAGE>
PART II.
ITEM 1. Legal Proceedings. None
ITEM 2. Changes in Securities: None
ITEM 3. Defaults upon Senior Securities. None
ITEM 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting, held on June 26, 1997, the Company's
shareholders took the following action:
(a) The following directors were elected to serve until the next Annual
Meeting:
<TABLE>
Vote
<CAPTION>
Director Elected For Against Withheld
---------------------- ------------------ ----------------- ---------------
<S> <C> <C> <C>
John C. Klock, M.D. 11,606,849 Nil 200
R. William Anderson 11,606,849 Nil 200
John H. Craig 11,606,849 Nil 200
John S. Glass 11,606,849 Nil 200
Gwynn R. Williams 11,606,849 Nil 200
Mark I. Young 11,606,849 Nil 200
</TABLE>
(b) Arthur Andersen LLP was appointed as the Company's auditors,
by a vote of 11,606,849 shares in favor,
nil shares against, and 200 shares withheld.
There were 9,915,995 shares which abstained from all matters
presented to the meeting including broker non-votes.
ITEM 5. Other Information. None
ITEM 6. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as part of this report
Exhibit 10.1, First Amendment to Bio-Rad Laboratories, Inc. Agreement
(confidential portions of Exhibit 10.1 have been omitted
pursuant to a request for confidential treatment
and filed separately with the Commission)
Exhibit 10.2, Array Medical License and Development
Agreement (confidential portions of Exhibit 10.2
have been omitted pursuant to a request for
confidential treatment and filed separately with the Commission)
Exhibit 27, Financial Data Schedule.
(b) Reports on Form 8K
No reports were filed on Form 8-K during the three months
ended June 30, 1997.
15
<PAGE>
SIGNATURE
June 30, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Glyko Biomedical Ltd.
Date: August 13, 1997 By:/s/ John C. Klock
John C. Klock, M.D.
President and Chief Executive
Officer
16
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
FIRST AMENDMENT TO DEVELOPMENT AND SUPPLY AGREEMENT
AND TECHNOLOGY LICENSE AGREEMENT
This is the First Amendment (the "Amendment") to that certain
Development and Supply Agreement entered into as of February 16, 1995 (the
"Supply Agreement") and that certain Technology License Agreement made and
entered into as of February 16, 1995 (the "License Agreement") by and between
Glyko, Inc. ("Glyko") and Bio-Rad Laboratories, Inc. ("Bio-Rad"). The
Development and Supply Agreement and the Licensing Agreement are sometimes
referred to hereafter as the "Agreements". This Amendment is entered into as of
April 5, 1997 (the "Effective Date").
In consideration of the mutual covenants set forth herein and in the
Agreements, Glyko and Bio-Rad agree as follows:
Priority. The parties agree that the Agreements are hereby amended as
set forth in this Amendment. Any inconsistency between this Amendment and the
Agreements shall be resolved in favor of the intent of the parties as expressed
by this Amendment. Terms used herein with the initial letter capitalized which
are not otherwise defined herein, shall have the meaning given said terms in the
Agreements.
1. Terms Concerning Bio-Rad License
a. Exercise of License. Notwithstanding Sections 2.1 and 2.3 of the
License Agreement, Bio-Rad's license under Section 2 of the License Agreement
and Bio-Rad's right to request technology transfer under Section 2.3 of the
License Agreement shall become effective upon the Effective Date. Upon the
Effective Date, Glyko shall fulfill its obligations under Section 2.3 by
performing the technology transfer described in Section 4.a.
of this Amendment.
b. Modification of Termination. Section 9.1(b) of the Supply Agreement
is hereby deleted. Notwithstanding Section 5.1(i) of the License Agreement, and
Sections 9.1, 9.2 and 9.3 of the Supply Agreement, Glyko shall have no right to
terminate the License Agreement, and the License Agreement shall not terminate,
in the event that the Supply Agreement expires or is terminated. However, in the
event that, on or after the fourth anniversary of the Effective Date, Glyko
receives from Bio-Rad any order (whether under and in accordance with the Supply
Agreement or otherwise) for any Current or Future Licensed Products, then Glyko
shall have the right to terminate the license(s) granted to Bio-Rad under
Section 2 of the License Agreement (but not Bio-Rad's license to Sell Enzymes
under Section 2 of the License Agreement) immediately upon giving written notice
to Bio-Rad. However, Bio-Rad shall have the right to purchase and sell its
completed outstanding, unfilled orders with Glyko and to complete all
outstanding orders to Bio-Rad customers.
1
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
c. Scope of License. The definition of "Enzymes" in Section 1.3 of
the License Agreement is modified by adding the following at the end of that
section, before the period "which Glyko makes commercially available to
customers through its catalog or other means as of or within thirty six
36) months after the Effective Date".
Section 1.6 of the License Agreement is deleted and replaced with the following:
" 'Licensed Products' shall mean Current Licensed Products and Future Licensed
Products. Licensed Products shall expressly exclude Enzymes unless and until
Bio-Rad properly obtains the Enzymes under Section 1.d. of the First Amendment
hereof, at which time such Enzymes shall be included in the definition of
Licensed Products for the purposes of Sections 2.1, 2.2, 4.3, 4.4, 4.8, 8, 9 and
10 of the License Agreement."
A new Section 1.12 is added to the License Agreement as follows: "Current
Licensed Products" shall mean products identical to the following Glyko products
which Glyko makes generally available to its customers through its catalog or
other means as of the Effective Date: the SE1000 Imager, the SE2000 Imager, the
N-linked Profiling Kit, the O-linked Profiling Kit, the Monosaccharide Kit, the
Deglycosylation Kit, the Deglycosylation Plus Kit, the N-linked Sequencing Kit,
the Glycosaminoglycan Identification Kit, the Capillary Electrophoresis Kit, the
Glycosphingolipid Kit, and non-enzyme components of the above such as N-linked
Gels, O-linked Gels, Monosaccharide Gels, ANTS, ANDA, AMAC, buffers, standards
and controls which infringe a Valid Claim of the Licensed Patents". The
above-mentioned items infringe a valid claim of the licensed patents.
A new Section 1.13 is added to the License Agreement as follows: " 'Future
Licensed Products' shall mean enhancements, improvements and future versions of
the Current Licensed Products which Glyko makes generally available to its
customers through its catalog and other means at any time six (6) months after
the Effective Date and which infringe a Valid Claim of the Licensed Patents".
The words "in object code format" are added to the first paragraph of Section
2.1 of the License Agreement after the words "FACE software". The words
"pertaining to such technology" are deleted from subsection (ii) of Section 2.1
of the License Agreement.
The following are added as the second and third paragraphs of Section 2.1 of the
License Agreement:
"In addition to the above license, Glyko grants to Bio-Rad a nontransferable,
nonexclusive license, under the Licensed Patents and all intellectual property
rights of Glyko in and to the Enzymes, to Sell Enzymes (which have been properly
purchased by Bio-Rad under the Supply Agreement) worldwide within the field of
Carbohydrate
2
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Analysis solely for use in research and development of biological substances and
not for use in non-research, clinical diagnosis and treatment of disease.
Bio-Rad shall not manufacture Enzymes or enzymes derived from or using Enzymes
except as permitted by this Agreement.
Bio-Rad shall not sell any Licensed Products to any third party that Bio-Rad is
aware uses or supplies, directly or indirectly, such Licensed Products for the
purpose of non-research, clinical diagnosis and treatment of disease".
The second sentence of Section 2.4 of the License Agreement is deleted.
d. Back-Up License to Enzymes. Glyko shall, within 30 days after the
Effective Date, at Bio-Rad's expense, deposit with the American Type Culture
Collection (the "ATCC") in Bio-Rad's name, clones of all Enzymes made
commercially available by Glyko through its catalog as of the Effective Date,
along with documentation necessary to grow the clones, purify them and perform
quality control for them. Glyko shall, at Bio-Rad's expense, update such deposit
periodically with improvements to such Enzymes made commercially available by
Glyko through its catalog or other means within thirty six months after the
Effective Date. If Bio-Rad elects to exercise its license to improved Enzymes,
Glyko shall update its deposit at Bio-Rad's expense within 30 days of its
notification by Bio-Rad of its election to license improved Enzymes. If
available from ATCC, the parties agree to use their best efforts to have ATCC
agree not to transfer or release such clones to Bio-Rad unless and until Glyko
shall: i) institute insolvency, receivership or bankruptcy proceedings or any
other proceedings for the settlement of its debts, ii) have such proceedings
instituted against it, which are not dismissed or otherwise resolved in Glyko's
favor within sixty (60) days thereafter, iii) make a general assignment for the
benefit of creditors, iv) dissolve or cease to conduct business in the normal
course, or v) if Glyko is unable to supply Bio-Rad any Enzymes for a period of
180 days. In addition, Bio-Rad hereby represents and warrants to Glyko that
Bio-Rad shall not request any transfer or release of such clones to Bio-Rad, nor
accept any such transfer or release, unless and until Glyko shall i) institute
insolvency, receivership or bankruptcy proceedings or any other proceedings for
the settlement of its debts, ii) have such proceedings instituted against it,
which are not dismissed or otherwise resolved in Glyko's favor within sixty (60)
days thereafter, iii) make a general assignment for the benefit of creditors,
iv) dissolve or cease to conduct business in the normal course or v) if Glyko is
unable to supply Bio-Rad any Enzymes for a period of 180 days.
Upon Bio-Rad's obtaining the Enzymes in accordance with this Section 1.d, Glyko
shall grant to Bio-Rad, and does hereby grant to Bio-Rad, a nontransferable,
nonexclusive license, under the Licensed Patents and all intellectual property
rights of Glyko in and to the Enzymes, to manufacture, use and Sell enzymes
derived from or using Enzymes which are identical to the Enzymes, provided, that
Bio-Rad shall manufacture, use and Sell such identical enzymes solely within the
field of Carbohydrate Analysis for use in research and development of biological
substances and not for use in non-research, clinical diagnosis or treatment of
disease. Bio-Rad shall not sell any Licensed Products to any party that Bio-Rad
is aware uses or supplies, directly or indirectly, such Licensed
3
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Product for the purpose of diagnosis and treatment of disease. Upon the granting
of the above license, the enzymes manufactured by Bio-Rad shall be included in
the definition of Licensed Products for the purposes of Sections 8, 9 and 10 of
the License Agreement.
Section 5.3 (c) of the License Agreement is hereby deleted.
e. Due Diligence in Manufacturing Products. On and after the Effective Date,
Bio-Rad shall use all reasonable efforts to begin manufacturing and have
manufactured the Licensed Products. In all events, as of the fourth anniversary
of the Effective Date, Bio-Rad shall manufacture and have manufactured the
Licensed Products and Future Licensed Products (with the exception of enzymes
except as expressly permitted by this Amendment).
f. Royalties on Licensed Products. Section 4.2 of the License Agreement is
deleted and replaced with the following: "In consideration of the licenses
granted to it under this Agreement, Bio-Rad shall pay to Glyko royalties equal
to XXXXXX of Net Sales of (i) Future Licensed Products and (ii)
enzymes manufactured by or for Bio-Rad (upon Bio-Rad's obtaining the Enzymes in
accordance with Section 1.d. of the First Amendment hereof) which are derived
from or use the Enzymes".
2. Terms Concerning Supply by Glyko to Bio-Rad
a. Discontinuance of Minimums and Technology Access Fees.
In consideration of the first payment made by Bio-Rad under Section 3.a.i.
of this Amendment, Sections 4.2(e) and 4.2(f), (along with Exhibit C ) of
the Supply Agreement, as well as Sections 5.2 and 5.3 thereof are deleted,
provided that the second payment is made in accordance with this Agreement.
b. Term of Agreement. The phrase "December 31, 1997" in Section 9.1(a)
of the Supply Agreement is replaced with "the fourth anniversary of the
Effective Date of the First Amendment to Development and Supply Agreement and
Technology License Agreement entered into between the parties." The following is
added at the end of the same Section 9.1(a), before the period: "; provided,
that (i) this Agreement shall continue in force and effect solely with respect
to Bulk Enzymes (and no other products) until the eighth anniversary of the
Effective Date and (ii) in the event that the License Agreement is terminated by
Glyko under Section 1.b of the First Amendment hereof, this Agreement shall
continue in force and effect until the eighth anniversary of the Effective Date.
If Glyko is the sole source of an Enzyme Bio-Rad sells, then Glyko will continue
to supply Bio-Rad with bulk quantities of such Enzyme at the then-existing
discount to Bio-Rad until such time as an alternate source for the Enzyme is
available to Bio-Rad. "
c. Addition of Enzymes. The Enzymes shall be included within the
Supply Agreement as products to
4
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
be supplied to Bio-Rad under the Supply Agreement in accordance with the terms
and conditions of the Supply Agreement applicable to the "Modified FACE
Products". Glyko shall be the sole owner of all Intellectual Property with
respect to the Enzymes.
d. Prices. Section 4.2(b)(ii) of the Supply Agreement is
deleted. Section 4.2(c) of the Supply Agreement is deleted. Exhibit B of the
Supply Agreement is hereby deleted and replaced with the following:
PRICING DISCOUNTS
Individual Individual Orders
Orders $50,000 or over In
Under $50,000 Purchase Price
In Purchase
Price
1. FACE Kits XX XX
2. FACE Hardware XX XX
3. Pre-cast Gels XX XX
4 Capillary Electrophoresis
Reagents XX XX
5. Hardware not Manufactured
by Glyko XX XX
6. FACE Software XX XX
7. Resale Enzymes XX XX
Individual Orders Individual Orders
Under $50,000 In Purchase Price $25,000 or over In
Purchase Price for
One Enzyme
8. Bulk Enzymes XX XX
As used above, "Resale Enzymes" shall mean Enzymes packaged in
tubes to be resold in such tubes and "Bulk Enzymes" shall mean a single amount
of Enzyme purchased from Glyko in minimum orders of $25,000 per individual order
per Enzyme type.
e. Additional Terms and Conditions. Glyko shall ship all orders
submitted by Bio-Rad and accepted by Glyko under Section 4.2(h) of the Supply
Agreement within forty-five (45) days after Glyko's acceptance, provided that
(i) no such order (and no orders in the aggregate within 90 days of each other)
exceed(s) 150% of the largest individual order previously submitted by Bio-Rad
for the same item and (ii) Bio-Rad's orders are submitted along with all
necessary labels, paperwork, packaging, instructions and other items reasonably
necessary for Glyko to make a shipment acceptable to Bio-Rad. In the event that,
subject to the foregoing provisions, Glyko fails to ship any such order within
forty five (45) days after Glyko's acceptance, Glyko shall give Bio-Rad a credit
against future purchases by Bio-Rad under the Supply Agreement in the amount of
one percent
5
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
(1%) of the purchase price of such order per day for each day beyond the 45-day
period that Glyko fails to ship such order up to a maximum of 30% of the value
of such delayed order. In the event that, subject to the foregoing provisions,
Glyko fails to ship any such order within seventy five ( 75 ) days after Glyko's
acceptance, Glyko shall be deemed in default under the Supply Agreement.
f. Most Favored Reseller. Section 4.2(d) of the Supply Agreement
is modified to read as follows:
"Upon Bio-Rad's written request from time to time, Glyko will make
available to Bio-Rad discounts which are equal to the lowest provided to any
other reseller of Glyko's Products which require similar services by Glyko to
reseller such as: (i) applying their labels, (ii) including in the packaging of
the products manuals, quality control documents, certifications and/or other
documents provided by such reseller and (iii) designing custom packaging
according to such reseller's specifications, or using artwork provided by such
reseller for packaging, to the extent that Bio-Rad orders substantially similar
quantities as such reseller and meets any additional provisions (such as
payments, minimum purchases, and other considerations) met by such reseller. The
foregoing provisions shall exclude (a) resellers who are parent corporations,
subsidiaries of Glyko, (b) one-time sales to actual or prospective investors in
Glyko and companies in which Glyko has invested at least a 5% equity stake and
(c) one-time sales to present and prospective suppliers to Glyko.
g. Price Protection. In the event that, at any time during the term of
the Supply Agreement, Bio-Rad is the sole customer of Glyko for the FACE Kits,
Enzymes, FACE Hardware or Capillary Electrophoresis Reagents, then during the
time that Bio-Rad is the sole customer, Glyko will supply Bio-Rad with FACE
Kits, Enzymes, FACE Hardware and Capillary Electrophoresis Reagents at the
discount rate in effect at the time that Bio-Rad becomes the sole customer.
Additionally, in order to limit unreasonable increases in prices Glyko charges
Bio-Rad for such sole-source products, Glyko agrees not to increase such cost to
Bio-Rad by more than 10% per annum except as required by an increase in cost of
goods or raw materials , license or royalty payments or other reasonable costs
incurred during the usual course of business.
6
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
3. Consideration to Glyko; Issuance of Shares
a. Consideration to Glyko. In addition to all other amounts
payable by Bio-Rad under the Supply Agreement and the License Agreement (except
Section 4.1 of the License Agreement as set forth below), Bio-Rad
shall make payments to Glyko as follows:
i. License Fee. Bio-Rad shall pay Glyko the sum of
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX within seven (7) days after the
Effective Date. In addition, Bio-Rad shall pay Glyko the sum of XXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXupon the earlier of: (i) the completion
of the technology transfer contemplated in Section 4.a. below or (ii) the six
month anniversary of the Effective Date. Upon Bio-Rad's payment of the
foregoing amounts, no fees shall be due by Bio-Rad under Section 4.1 of the
License Agreement.
ii. Technology Transfer Fees. Bio-Rad shall, within 30 days
after the date of Glyko's invoice therefor, pay Glyko for each hour that Bio-Rad
employees are at Glyko's premises observing manufacturing processes and
procedures for the products set forth in Appendix A and/or copying Glyko
Information (as defined in Section 4.a. below). The hourly fee (prorated in
15-minute increments for partial hours) shall be (i) $45.00 for observation
and/or copying by Bio-Rad employees without the assistance of Glyko personnel,
or (ii) $95.00 per hour (prorated in 15-minute increments for partial hours) for
observation and/or copying by Bio-Rad with the assistance of Glyko personnel and
for any other time that Bio-Rad employees use the assistance of Glyko personnel.
iii. Modifications to Software and Browser. In
consideration of Glyko's obligations under Section 4.b below, Bio-Rad shall pay
Glyko the sum of XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX at the time Bio-Rad
requests such work under Section 4.b. below.
b. Issuance of Shares to Bio-Rad. Glyko shall, promptly after Glyko's
receipt of the XXXXXXXXXX payment in Section 3.a.i. above, obtain the necessary
corporate approvals and request approval from the Toronto Stock Exchange for the
issuance and placement in escrow with Montreal Trust of XXXXXXXXXXXXXXXXXXX
XXXXXXX common shares of Glyko Biomedical Ltd. Under the escrow agreement
between Glyko and Bio-Rad and Montreal Trust, Bio-Rad may not sell or otherwise
transfer any such shares until the two year anniversary of the issue date, and
thereafter Bio-Rad may sell or otherwise transfer no more than XXXXXXXXXXXXX
XXXXXX of such shares in any consecutive three month period. Upon the receipt
of the XXXXXXXXXX payment in Section 3.a.i above, Glyko, Bio-Rad and Montreal
Trust will execute the escrow agreement and the shares will be transferred to
Bio-Rad.
7
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
4. Technology Transfer; Modifications to Software and Browser
a. Technology Transfer. Upon the Effective Date, Glyko shall provide Bio-Rad
with ten copies of the written specifications for all of the items listed on
Appendix A hereto. In no event shall Bio-Rad copy such specifications. Such
specifications shall be treated as Confidential Information of Glyko and
protected under the provisions of Section 7 of the License Agreement.
On and after the Effective Date, but not after the fourth anniversary of the
Effective Date, Glyko will permit Bio-Rad personnel (not exceeding five at any
one time) to visit Glyko's premises and observe manufacturing processes and
procedures for the products set forth in Appendix A and/or to copy all Glyko
information necessary to enable Bio-Rad to manufacture the Glyko products listed
in Appendix A hereto and any Future Licensed Products (the "Glyko Information").
Glyko shall, upon Bio-Rad's reasonable request and subject to Glyko personnel's'
availability, make Glyko personnel available to Bio-Rad during such visits and
otherwise to enable Bio-Rad to observe manufacturing processes and procedures
for the products set forth in Appendix A and/or to copy the Glyko Information.
With respect to Future Licensed Products, Glyko shall provide Bio-Rad with items
7-9 of Appendix A for such Future Licensed Products promptly after Bio-Rad's
written request therefor which request references this Section 4.a.
b. Modifications to Software and Browser. Upon Bio-Rad's written
request, Glyko agrees to modify the current version of Glyko's FACE software
(including the Web browser) in accordance with Appendix B. Modifications to such
software and browser other than those set forth in Appendix B, if any, shall be
governed by the provisions of Section 2 of the Supply Agreement. Upon the
completion of such modifications, such modified FACE software shall (i) be
available for purchase by Bio-Rad as part of FACE Hardware under the Supply
Agreement and (ii) be included within the Licensed Products under the License
Agreement for the purposes of the License Agreement.
5. Repurchase of Inventory by Glyko. Glyko shall have no obligation on
or after the Effective Date to repurchase any products in Bio-Rad's inventory
which Bio-Rad received or receives from Glyko.
6. Effectiveness of License Agreement and Supply Agreement. Except as
modified or deleted under the terms of this Amendment, all terms and conditions
of the License Agreement and the Supply Agreement shall remain in
full force and effect.
7. Waiver of Breaches Prior to Effective Date. Each party, on behalf of itself
and its past and present Affiliates, directors, officers, employees, agents,
partners, representatives, successors and assigns, hereby releases, acquits and
forever discharges the other party and its past and present Affiliates,
directors, officers, employees, agents, partners, representatives, successors,
assigns, and direct, indirect, mediate and
8
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
immediate customers (the "Released Parties"), from any and all actions, causes
of action, claims, counterclaims, demands, damages, debts, obligations and
liabilities, of whatever kind or nature, at law or in equity, known or unknown,
existing or in the future, which relate to or arise out of the subject matter
of, and/or the occurrences surrounding any and both of the License Agreement and
the Supply Agreement. As used in this Section 7, an "Affiliate" of a party shall
mean any corporation or other business entity which directly or indirectly
controls, is controlled by, or is under common control with the subject entity.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the Effective
Date.
BIO-RAD LABORATORIES, INC. GLYKO, INC.
By: /s/ Sandfor Wadler By:/s/ John C. Klock
Name: Sanford Walder Name John C. Klock
Title: Vice President Title: President
9
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED
Appendix A
Technology Transfer Items
1. Working mechanical drawings for SE-1000 Imager sold by Bio-Rad to it
customers as of the Effective Date.
2. Bill of Materials for SE-1000 Imager sold by Bio-Rad to its customers
as of the Effective Date.
3. Names and addresses of all Glyko suppliers of parts for the SE-1000
Imager sold by Bio-Rad to its customers as of the Effective Date.
4. Working mechanical drawings for SE-2000 Imager sold by Glyko to
its customers as of the Effective Date.
5. Bill of Materials for the SE-2000 Imager sold by Glyko to its
customers as of the Effective Date.
6. Names and addresses of all Glyko suppliers of parts for the SE-2000
Imager sold by Glyko to its customers as of the Effective Date.
7. Names and addresses of all Glyko suppliers of parts (excluding any Enzymes)
for all of the following Glyko FACE kits sold by Glyko to its customers as of
the Effective Date: the SE1000 Imager, the SE2000 Imager, the N-linked Profiling
Kit, the O-linked Profiling Kit, the Monosaccharide Kit, the Deglycosylation
Kit, the Deglycosylation Plus Kit, the N-linked Sequencing Kit, the
Glycosaminoglycan Identification Kit, the Capillary Electrophoresis Kit, the
Glycosphingolipid Kit, and non-enzyme components of the above such as N-linked
Gels, O-linked Gels, Monosaccharide Gels, ANTS, ANDA, AMAC, buffers, standards
and controls.
8. Bill of Materials (excluding Enzymes) for all of the following Glyko FACE
kits sold by Glyko to its customers as of the Effective Date: the SE1000 Imager,
the SE2000 Imager, the N-linked Profiling Kit, the O-linked Profiling Kit, the
Monosaccharide Kit, the Deglycosylation Kit, the Deglycosylation Plus Kit, the
N-linked Sequencing Kit, the Glycosaminoglycan Identification Kit, the Capillary
Electrophoresis Kit, the Glycosphingolipid Kit, and non-enzyme components of the
above such as N-linked Gels, O-linked Gels, Monosaccharide Gels, ANTS, ANDA,
AMAC, buffers, standards and controls.
9. Standard operating procedures (excluding Enzymes) for all of the following
Glyko FACE kits sold by Glyko to its customers as of the Effective Date: the
SE1000 Imager, the SE2000 Imager, the N-linked Profiling Kit, the O-linked
Profiling Kit, the Monosaccharide Kit, the Deglycosylation Kit, the
Deglycosylation Plus Kit, the N-linked Sequencing Kit, the Glycosaminoglycan
Identification Kit, the Capillary Electrophoresis Kit, the Glycosphingolipid
Kit, and non-enzyme components of the above such as N-linked Gels, O-linked
Gels, Monosaccharide Gels, ANTS, ANDA, AMAC, buffers, standards and controls.
10. Source code for the 2.48 version of the FACE software, as it exists
as of the Effective Date.
10
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CONFIDENTIAL TREATMENT REQUESTED
Appendix B
Cosmetic Changes to Software and Browser
Glyko will make changes to its FACE version 2.48 analytic software.
Improvements shall consist of (i) inclusion of the ability to colorize gel
banding patterns and a proprietary camera driver for the Glyko-manufactured CCD
camera, (ii) adding the current proprietary Glyko-created Web browser which will
access the Bio-Rad home page on the World Wide Web instead of the Glyko home
page and the pull-down menus will be changed to conform to the same number of
Bio-Rad home page locations and (iii) ensuring that every place that the current
version 2.48 Glyko FACE software says "Glyko" it is replaced with "Bio-Rad" and
every place there is "FACE" will be replaced with "GelDoc."
::ODMA\PCDOCS\SQL2\320117\2
::ODMA\PCDOCS\SQL2\320117\2
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CONFIDENTIAL TREATMENT REQUESTED
LICENSE AND DEVELOPMENT AGREEMENT
This agreement, is made and entered into as of the 23rd day of April
1997; ("Effective Date") by and between Array Medical, Inc., a New Jersey
Corporation, having its principal place of business at One Harvard Way,
Hillsborough Campus, Somerville, New Jersey 08876 ("Licensee") and Glyko, Inc.,
a Delaware Corporation, having its principal place of business at 11 Pimentel
Court, Novato, California 94949 ("Licensor").
WHEREAS Licensor acknowledges that Licensee has marketing,
development, and distribution expertise in the field of non-centralized
laboratory, alternate site marketplaces and
WHEREAS Licensor has proprietary Technology relating to carbohydrate
analysis, including, without limitation, patents, patent applications, know-how
and other proprietary information and:
WHEREAS Licensee desires to license Licensor's Technology in the Field
as defined herein for measuring heparin and/or AT-III and/or other hemostasis
related factors and/or drugs and/or glucose in body fluids and/or tissues.
NOW, THEREFORE, in consideration of the mutual promises and valuable
consideration set forth herein, and intending to be legally bound hereby, the
parties agree as follows:
1. DEFINITIONS:
"Field" shall mean non-centralized laboratory and other hospital
alternate site testing locations' including, but not necessarily limited to
general medical wards, surgery suites, 'renal dialysis sites, interventional
radiology laboratories, neonatology suites, obstetrics and gynecology suites,.
neurology. suites, critical care departments, catheterization labs, and other
similar specialty procedural medicine locations or stat labs adjacent,
connected or near to these locations whether or not these alternate site:
settings are managed and/or staffed by hospital or non-hospital clinical
laboratories. As further clarity, centralized hospital clinical laboratories,
free-standing independent clinical laboratories, physician office laboratories
and consumer, over-the-counter markets are excluded from the Field.
"Jointly Held Technology" shall mean new inventions, whether or not
patentable,: which result from the development work funded by Licensee.
Jointly Held Technology will be owned jointly by the Licensor and Licensee.
"Know-how" shall mean trade secrets, developments, inventions,
discoveries, concepts, ideas, formulations, research or other materials,
designs, equipment, apparatus, processes, methods techniques and plans, whether
or not patented or patentable, as well as related know-how and improvements,
modifications or other derivations thereof, relating to, or used in connection
with, the Technology.
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CONFIDENTIAL TREATMENT REQUESTED
"Major Country" is defined as the United States, Canada, Mexico,
United Kingdom, France, Germany, Italy, Japan, China, Australia, Spain,
Russia, Sweden, the Czech Republic, Poland, and Hungary.
"Net Sales" shall mean the gross sales revenues received from
Products sold by Licensee, minus any transportation charges incurred by
Licensee, (other than those specifically reimbursed to or by a third party)
trade class discounts and rebates, quantity or cash discounts allowed or paid
by Licensee. credits or allowances given or made on account of returns,
recalls or rejections of previously delivered Products, insurance and sales or
excise taxes and other governmental charges or duties imposed on the import or
export of Products.
"patents" shall mean all right, title and interest in and to all
patents and patent applications, all divisions, continuations, reissues,
substitutes and extensions thereof, as well as the inventions described and
claimed therein and all US or foreign patents which may be granted thereon,
relating to, or used in conjunction with the Technology.
"Products" shall mean products which, at the time of sale by Licensee
are used to measure heparin and "Additional Products" shall mean AT-III and/or
other hemostasis related factors and/or drugs and/or glucose in body fluids
and/or tissues both or either of which type of product (a) are at least
partially covered by one or more pending claims of an application or one or
more valid claims of a patent within the Patents, and/or (b) are produced,
processed, or otherwise manufactured by: any method and/or process covered by
one or more pending claims of an application or one or more valid, claims of a
patent within the Patents, and/or (c) utilize proprietary Know-how of Licensor
and/or (d) utilize Jointly Held Technology
"Integrated Systems Products" shall mean Products and /or
Additional Products-which accept a sample from an automatic
sample transport device and automatically performs many tests
in a given period of time and records, manages, and displays
the results. Licensee presently envisions that such Products
and Additional Products will be developed by a third party
using said party's technology licensed to Licensee.
"Stand-Alone Products" shall mean Products and/or Additional
Products which require the sample to be manually transported
to an analyzer and where tests are performed singly.
"Product Development Agreement" shall mean an agreement, between
Licensor and Licensee and for which agreement cannot be unreasonably withheld or
delayed, which will include a Product Development Plan with funds for such
development provided by Licensee.
'Product Development Plan" shall mean a plan (for either or both a
Stand-Alone or Integrated. Systems Product), devised and agreed to by Licensor
and Licensee, the agreement to which cannot be unreasonably withheld or delayed,
which sets out the specific objectives and development
endeavors for the completion of production-ready Products suitable for
clinical and/or field trials.
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CONFIDENTIAL TREATMENT REQUESTED
"Prototype Product Performance Objectives" are, using whole blood or
other samples designated by Licensee, a prototype reagent and instrument system
that performs a quantitative, solid phase, fluorescent assay of heparin in less
than five minutes in the range of 2-10 U/ml using a reader which provides
digital read-out and memory/plot functions and includes a kit with appropriate
standards, controls and protocol with the projected cost of goods of the
instrument (reader and software) of XXXX as a target and a maximum of XXXXXXX.
"Sub-License Revenues" are those up-front, if any, sub-license fees
(excluding payments for services) and royalties received by Licensee which are
derived from the grant of sub-license rights to Technology in the Field.
"Technology" shall mean including, without limitation, Patents,:
Know-how and other proprietary information owned and/or developed and/or
licensed by Licensor, including: all improvements, which are or may be
applicable to the Field.
2. GRANT
A. Licensor grants to Licensee a worldwide sole and exclusive
license to Technology and to make, have made, use, import,
export and/or sell Products in the Field, both Stand-Alone and
Integrated Systems Products.
B. Subject to 38 below, the life of the License is the greater of
the 1ife of the last to expire patent in each Major Country on
Licensor's Technology or Jointly Held Technology or if no
patents issue in a Major Country or sales are in other than a
Major Country, ten years from the Effective Date.
c. Licensor grants Licensee an option to solely and exclusively
license and enter into a development agreement (similar in
structure and terms to this agreement)for Additional Products
in the Field, including, but not limited to, ATIII, Functional
Heparin, Glucose or others which may be designated by
Licensee. This option will expire 90 days from achievement
of the Prototype Product Performance objectives unless
extended by mutual agreement. Exercise of this option for any
one Additional Product will extend the option for 90 days
following demonstration of feasibility for each subsequent
Additional Product.
D. Licensor grants Licensee rights to sub-license the
Technology with respect to products and Additional Products
which are licensed in accordance with 2C and Licensee
agrees to pay Licensor XXX of all Sub-License Revenue received
by Licensee.
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CONFIDENTIAL TREATMENT REQUESTED
3. TERMS
A. In exchange for the Grant, Licensee will pay Licensor a license
and development fee of XXXXXXXXXXXXXXXX of which will be paid
to Licensor at execution, XXXXXXXX at each of 2 subsequent
60 day periods thereafter and XXXXXXXX of which will be paid to
Licensor upon achievement of the Prototype Product Performance
Objectives which Licensor will, with all reasonable efforts
and diligence, endeavor to achieve within 6 months from
execution. This fee will include (a) all time and materials
necessary for Licensor to perform work to achieve the
Prototype Product Performance Objectives (b) the transfer to
Licensee or its designee of research quantities of reagents,
enzymes, controls, calibrators, etc. and (c) consultation and
transfer of Know-How regarding use of the Technology in an
Integrated Systems Product.
B. The license granted in 2A will lapse unless Licensee commences
preparations for the final development and manufacturing of
either a Stand-Alone or Integrated Systems Product, either by
Licensor or another supplier selected by Licensee, within: 90
days from the day of achievement of the Prototype Product
Performance Objectives. If development is to be done by
Licensor, Licensee will give notice to Licensor within the 90
day period and the development will be done in accordance with a
Product Development Agreement.
C. Licensee will pay Licensor a royalty of XXX of Licensee's Net
Sales of-Integrated Systems Products (unless Licensor is the
developer of said Product in which case the royalty will be XXX)
and a royalty of XXX on Licensee's Net Sales of Stand-Alone
Products. Such royalties, as well as revenues received from
sub-licenses, will be-paid to Licensor by Licensee within 60
days following the end of each calendar quarter. Any
licensing fees and/or royalties due third parties in order to
practice any of Licensor`s Technology will be paid by Licensor.
Any licenses and/or royalties due third parties in order for
Licensee to practice any of the Jointly Held Technology will be
paid by Licensee.
D Following successful completion of the objectives as set out in
the Product Development Plan, Licensor and Licensee will enter
into one or more supply agreements wherein Licensor will supply
Licensee (or its designee) with Products or components, e.g.,
enzymes, fluorophores, readers, etc. of Products providing that
Licensor can sell such Products or components to Licensee at the
lowest available prices based upon competitive comparisons.
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CONFIDENTIAL TREATMENT REQUESTED
4. PATENT PROSECUTION
To the extent that Products which result from the development work
funded by Licensee utilize Technology, Licensor will be responsible for
prosecuting and maintaining Patents derived from such Technology.
B To the extent that Jointly Held Technology is patentable, Licensee will
be responsible. for prosecuting and maintaining such patents. Each
party will have the right to use, royalty free, such Jointly Held
Technology for its own products and to sub-license Jointly Held
Technology, providing that the other party agrees, and such agreement
shall not be unreasonably withheld or delayed to the terms of such
sub-licenses. All consideration from such sub-licenses, excluding
payments for services, will be shared equally by the parties.
5. PATENT INFRINGEMENT
Should Licensor or Licensee become aware of a product in
commerce in the Field: and which appears to infringe Licensor's
Patents and/or patents which are included in Jointly Held
Technology in any geographic territory, the party discovering
the alleged infringer will notify the other immediately.
B. Licensee will cooperate with Licensor in all reasonable ways
with respect to the potential infringer in the Field and action
against the infringer will be taken at Licensee's expense and
will be initiated at the sole discretion of Licensee. Licensor
agree to be a named party in any suit and will cooperate in all
reasonable ways with Licensee and its counsel. If suit against
the alleged infringing party is brought in Licensee's name,
consideration, if any, obtained as a result of successful
action against an infringer will be paid to Licensee which will
1) subtract from such amounts expenses it incurred during the
action including legal fees, court fees, travel and related
expenses and management time at a reasonable rate and 2) for a
Stand -Alone Product pay XXXXXXXXXXXXXXXXXXX of the remaining
amounts, if any, to Licensor and for an Integrated Systems
Product, pay XXXX of the remaining amounts, if any. If suit
against is brought in Licensor's name Licensor will l) subtract
from such amounts expenses it incurred during the action
including legal fees, court fees, travel and related expenses
and management time at a reasonable rate and 2) for a
Stand -Alone Product retain XXXXXXXXXXXXXXX of the remaining
amounts, if any, and for an Integrated Systems Product, retain
XXX of the remaining amounts, if any, paying the remaining
amount to Licensee. Licensee can seek injunctive relief or
settlement action at its sole discretion.
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CONFIDENTIAL TREATMENT REQUESTED
C. Should Licensee or Licensor be notified by another party that
said other party believes Licensor and Licensee are
infringing their rights in using the Technology and/or
Jointly Held Technology in the Field, Licensor and Licensee
will collaborate in all reasonable ways with regard to a
position Licensee should take with respect to such claims of
infringement and action, at Licensee's sole discretion, will
be decided upon and taken. Licensee will bear the full
expense of any action and defense and will retain any award
of damages.
6. RECORDS
A. Licensee will, within 60 days after the end of each calendar
quarter during the term of this Agreement, provide Licensor
an accounting indicating the unit sales for each calendar
quarter and a calculation of royalties, license and
sub-license fees due Licensor.
B. Licensor will have the right, one time per year and during
normal business hours, to examine Licensee's records
solely with respect to determining royalties due Licensor.
Licensor will also have the right, one time per year, to
request an audit of Licensee's records solely for
purposes of determining royalties due. If said audit
uncovers a discrepancy in royalty due Licensor of 10% or
greater, such payment necessary to adjust royalties will be
paid to Licensor within 30 days and Licensee shall pay
for said audit. If results of the audit show a
discrepancy in royalty due Licensor of less than 10% or
if results of the audit show that Licensee has overpaid
Licensor, Licensor shall pay for the cost of the audit.
C. Licensee shall retain records which pertain to royalties
for at least 5 years for each year of commercial sale,
defined as sale of Product to unaffiliated parties.
7. CONFIDENTIALITY AND NON-COMPETE
A. Licensor agrees to maintain the confidentiality of all
information obtained from and developed by Licensee, including
Jointly Held Technology. Licensee agrees to maintain the
confidentiality of all information obtained from Licensor,
including design and related issues. Where necessary to disclose
such information to a third party in order to exercise its
rights herein under, Licensee will require said third party to
first be obligated to keep such information confidential.
Neither Licensor nor Licensee is bound by this provision if and
when such information becomes public knowledge, other than by
Licensee or Licensor making such information public in
contravention to this paragraph.
B. Licensor agrees to not compete against Licensee in any way with
respect to the Field for the period of Grant.
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CONFIDENTIAL TREATMENT REQUESTED
S. REPRESENTATIONS
A. As of the date hereof, Licensor represents and warrants to
Licensee that Licensor is a duly authorized and validly
existing corporation organized under the Laws of the State of
Delaware and has the unrestricted power and authority and the
unqualified right to execute, deliver and perform this
agreement and to consummate the transactions contemplated
hereby. Moreover, Licensor represents and warrants the neither
the execution nor the compliance with or fulfillment of terms
and provisions hereof conflict with, breach or violate any
agreement, obligation, contract, mortgage, lien, lease, or
other instrument or restriction to which the Licensor is or
becomes party. Additionally, Licensor warrants that Licensor
has good, void, and marketable title to the Technology, free
and clear of any lien, restriction, security interest or
encumbrance and that Licensor has not granted and will not
grant any license or similar rights to any other entity or
party with respect to the Technology that would limit in any
way the rights of the Licensee as contemplated herein.
B As of the date hereof, Licensee represents to Licensor that
Licensee is a duly authorized and validly existing corporation
organized under the laws of the state of New Jersey and has the
requisite power and authority to enter into and carry out the
terms and conditions of this Agreement. Additionally, Licensee
warrants that all corporate action required to be taken by
Licensee to consummate this Agreement and the transactions
contemplated herein has been taken and no further approval of
any Board, court, or other governmental body is necessary in
order to permit Licensee to carry out the activities
contemplated herein.
Moreover, Licensee warrants that there is no suit, action, Or
proceeding, pending or threatened (to the best knowledge of
Licensee) against Licensee before or by any entity which brings
into question the validity of this agreement or the transactions
contemplated herein.
C Licensor represents and warrants that it has disclosed all
material information about the Technology, its scientific basis,
performance results, technical feasibility of developing
Products as contemplated herein, patent status, including claims
of infringement and/or interference, litigation, and related
makers.
D Licensor represents and warrants that it presently has no
business relationship nor is Licensor in discussions regarding
any relationship which would run counter to or limit in any way
the rights of the Licensee as contemplated herein.
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CONFIDENTIAL TREATMENT REQUESTED
9. INDEMNIFICATION
A. Licensor shall defend and indemnify Licensee and its directors,
officers, employees and agents against any and all claims,
suits or demands for liability, damages, costs, and expenses
that arise from a breach of any representation given by
Licensor and contained in this agreement, provided that
Licensee shall promptly notify Licensor of any threatened or
filed claim as soon as said claim becomes known to Licensee.
B. Licensee shall defend and indemnify Licensor against any and
all claims, suits or demands for liability, damages, costs, and
expenses that arise from a breach of any representation or
warranty given by Licensee and contained in this agreement, and
any claim arising from the use of Product following sale or
other distribution to a third party. Licensee shall maintain
reasonable product liability insurance.
10. TERMINATION
A. Subject to 3B, this Agreement shall continue in full force and
effect until the expiration of the term of the Grant as per 2B.
If either party shall martially breach any terms or
provisions of this Agreement, then the other party may
terminate this Agreement, without prejudice to any of
its other legal and equitable rights and remedies, and without
further notice or action, thirty (30) days after giving the
breaching party written notice of such breach, unless the
breaching party (1) cures the breach within such 30 day period
or (2) within such 30 day period cured the breach as far as
it can be without continuing ill-effect or (3) claims and
subsequently proves or receives a favorable ruling under
Section 14 herein that the alleged material breach is trivial
or never occurred.
B. Termination of this Agreement shall not relieve either party of
any payment obligations to the other at the time of such
termination. without limiting the generality of the foregoing,
the provisions relating to the non-disclosure of confidential
information set forth in Section 7 above shall survive the
termination of this Agreement.
C Notwithstanding the foregoing, Licensee shall have the right to
terminate this Agreement by providing 60 days written notice to
Licensor which can sell off inventory, held at the time of
termination, for up to six (6) months and pay royalties due.
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CONFIDENTIAL TREATMENT REQUESTED
11. ASSIGNMENT
A. Either party may delegate its rights and the performance of
its obligations under this Agreement to any of its Affiliates
without the consent of the other party provided however that
such party shall remain responsible for any act or omission by
its Affiliates which would constitute a breach of the terms of
this Agreement.
B. Save as provided for in this Agreement, neither party shall
assign any of its rights or benefits or delegate any of its
duties or obligations hereunder. Any such attempted
assignment or delegation in contravention of this Section
shall be null, void and without effect.
12. WAIVER AND ALTERATION
A. The waiver of a breach hereunder may be effected only in
writing signed by the waiving party and shall not constitute
a waiver of any subsequent or other breach.
B. A provision in this Agreement may be altered only in writing
signed by both parties.
13. IMPLEMENTATION
Each party shall execute any instruments reasonably believed by the
other party to be reasonably necessary to implement the provisions of
this Agreement.
14. DISPUTE RESOLUTION
Should the parties have a dispute about any term or provision of the
Agreement and should the parties be unable to settle this dispute
through negotiations, the dispute will be subjected to binding
arbitration with each party designating one arbitrator and those two
arbitrators designating a third. The arbitration will take place in the
State of New Jersey if the dispute is initiated by Licensor and in the
State of California if the dispute is initiated by Licensee. Each party
will pay its own expenses for said arbitration with the party against
whom the arbitration results reimbursing the other party its reasonable
costs.
1 5 SURVIVAL
Sections 6C, 7, 9,14, and the royalty-free license to Jointly Held
Technology in 4B-and this clause shall survive expiration or
termination of this Agreement.
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CONFIDENTIAL TREATMENT REQUESTED
CONSTRUCTION
This Agreement shall be construed in accordance with the laws of the
State of New Jersey.
17 ENTIRE UNDERSTANDING
Licensor and Licensee agree that this Agreement, when executed,
represents the complete Agreement between Licensor and Licensee and
modifications thereto can only be made in writing, executed by both
Licensor and Licensee.
19. RELATIONSHIP OF PARTIES
Licensor and Licensee acknowledge that the parties are independent
organizations and that, other than as expressly set out in this
Agreement, neither has any rights to the other party's technology nor
any right to represent the other.
18. NOTICES
All notices given hereunder shall be in writing sent registered or
certified mail, postage prepaid, or by express courier guaranteeing
overnight delivery, addressed:
Array Medical, Inc.
One Harvard Way
Hillsborough Campus
Somerville, NJ 08876
ATTN: Terry E. Brady, President
Glyko, Inc.
11 Pimentel Court
Novato, California 94949
ATTN: Dr. John Klock, President
BY THE SIGNATURES BELOW, the parties represent their authority to bind
their respective entities and organizations to this Agreement and hereby state
their Agreement to the provisions as set out herein.
GLYKO INC. ARRAY MEDICAL, INC.
/s/ John Klock, M.D /s/ Terry E. Brady
John Klock, M. D
President Terry E. Brady
President and CEO
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