<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual Report pursuant to Section 13 or 15(d) of the
SECURITIES AND EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission File Number 0-21379
CUBIST PHARMACEUTICALS, INC.
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(Exact Name of registrant as specified in its charter)
Delwaware 22-3192085
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(State of Incorporation) (I.R.S. Employer I.D. No.)
24 Emily Street, Cambridge, MA 02139
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(Address of Principal Executive Offices and Zip Code)
(617) 576-1999
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(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.001 per share
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(Title of Class)
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
such filing requirements for the past 90 days. Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-X is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. /x/
The aggregate market value of the registrant's common stock, $.001
par value per share ("Common Stock"), held by non-affiliates of the
registrant as of March 14, 1997 was approximately $55,422,808 based on
5,155,610 shares held by such non-affiliates at the closing price of a share
of Common Stock of $10.75 as reported on the Nasdaq National Market on such
date. Affiliates of the Company (defined as officers, directors and owners of
10 percent or more of the outstanding share of Common Stock) owned 4,392,741
shares of Common Stock outstanding on such date. The number of outstanding
shares of Common Stock ofthe Company on March 14, 1997 was 9,548,351.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive Proxy Statement to be delivered
to stockholders in connection with the Annual Meeting of Stockholders to be held
on May 19, 1997 are incorporated by reference into Part III hereof. With the
exception of the portions of such Proxy Statement expressly incorporated into
this Annual Report on Form 10-K by reference, such Proxy Statement shall not be
deemed filed as part of this Annual Report on Form 10-K.
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2
Part IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents Filed as part of Form 10-K
1. Financial Statements.
The following financial statements and supplementary data are
included in Part II Item 8 filed as part of this report:
- Balance Sheets as of December 31, 1995 and 1996
- Statements of Operations for the years ended December 31, 1994,
1995 and 1996
- Statements of Stockholders' Equity for the years ended
December 31, 1994, 1995 and 1996
- Statements of Cash Flows for the years ended December 31, 1994,
1995 and 1996
- Notes to Financial Statements
- Report of Independent Auditors
2. Financial Statement Schedule.
None.
Schedules not listed above have been omitted because they are
notapplicable, not required or the information required is shown in the
financialstatements or the notes thereto.
3. List of Exhibits.
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EXHIBITS
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<S> <C>
*3.3 Restated Certificate of Incorporation of the Registrant.
*3.4 Amended and Restated By-Laws of the Registrant, as amended to date.
*4.1 Specimen certificate for shares of Common Stock.
*10.1 Patent License Agreement between the Registrant and the Massachusetts Institute of
Technology, dated March 10, 1994.
*10.2 License Agreement between the Registrant and the Board of Trustees of Leland Stanford Junior
University, dated April 1, 1994.
*10.3 Employment Agreement between the Registrant and Scott M. Rocklage, dated June 20, 1994.
*10.4 Consulting Agreement between the Registrant and Paul R. Schimmel, dated May 1, 1992.
*10.5 Consulting Agreement between the Registrant and Julius Rebek, Jr., dated May 1, 1992.
*10.6 Amended and Restated 1993 Stock Option Plan.
*10.7 Collaborative Research Agreement between the Registrant and Pfizer Inc., dated
December 15, 1995.
</TABLE>
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3
<TABLE>
<S> <C>
*10.8 Collaborative Research and License Agreement between the Registrant and Merck & Co., Inc.,
dated June 13, 1996.
*10.9 Collaborative Research and License Agreement between the Registrant and Bristol-Myers Squibb
Company and the Registrant, dated June 25, 1996.
*10.10 Supply and Services Agreement, dated as of November 1, 1995, by and between Terrapin
Technologies, Inc. and the Registrant.
*10.11 Screening Agreement, dated November 28, 1995, between the Registrant and Monsanto
Company.
*10.12 Letter Agreement, dated January 18, 1996, between Pharm-Eco Laboratories, Inc. and the
Registrant.
*10.13 Agreement with ArQule, Inc., dated June 4, 1996.
*10.14 Lease Agreement between Registrant and Stimpson Family Trust dated April 30, 1993,
regarding 24 Emily Street, Cambridge, MA., as amended by the First Amendment to
Lease, dated September 19, 1994.
*10.15 Form of Employee Confidentiality and Nondisclosure Agreement.
*10.16 Master Lease Agreement between the Registrant and Comdisco, Inc., dated as of August 30,
1993, as amended February 7, 1995, and as further amended on February 26, 1996.
*10.17 Series B Convertible Preferred Stock Purchase Warrant between the Registrant and
Comdisco, Inc., dated August 30, 1993.
*10.18 Series C Convertible Preferred Stock Purchase Warrants between the Registrant and
Comdisco, Inc., dated February 28, 1995 and February 26, 1996.
*10.19 Series C Convertible Preferred Stock Purchase Options issued to Dr. Paul Schimmel and Dr.
Julius Rebek in May 1995, as amended by certain Letter Agreements, dated October 23, 1995, between the
Registrant and each of Dr. Schimmel and Dr. Rebek.
*10.20 Amended and Restated Stockholders Rights Agreement by and among the Registrant and the
parties signatory thereto.
**10.21 Secured Promissory Note, dated as of July 21, 1994, by Scott M. Rocklage to the
Registrant.
**10.22 Amendment to Promissory Note, dated as of July 21, 1996, by and between the Registrant and
Scott M. Rocklage.
**10.23 Promissory Note, dated as of October 18, 1995, by and between the Registrant and Scott M. Rocklage.
+10.24 Compound Library Screening Agreement between the Registrant and Genzyme
Corporation, dated February 24, 1997.
+10.25 Library Sample Evaluation Agreement between the Registrant and Pharmacopeia, Inc., dated
as of September 11, 1996.
**11.1 Computation of Income Per Share.
**23.2 Consent of Coopers & Lybrand L.L.P.
</TABLE>
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* Incorporated by reference from the Company's Registration Statement on Form
S-1 (Registration No. 333-6795).
**Previously filed with the Company's 10-K filed with the Commission on March
31, 1997.
+ Confidential Treatment requested as to certain portions: omitted portions have
been filed separately with the Commission. (Refiled with this Amendment No. 1 to
Annual Report on Form 10-K.)
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4
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this amendment to
its Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
CUBIST PHARMACEUTICALS, INC.
Date: October 21, 1998 By: /s/ Thomas A. Shea
-----------------------
Thomas A. Shea
Senior Director of Finance &
Administration, Treasurer
(Authorized Officer and Principal
Financial and Accounting Officer)
<PAGE>
Confidential Treatment Exhibit 10.24
COMPOUND LIBRARY SCREENING AGREEMENT
This Agreement, effective as of the date last written below, is between
Genzyme Corporation ("Genzyme") and Cubist Pharmaceuticals, Inc. ("Cubist").
1. Information Exchange.
(a) Within thirty (30) days after receiving an executed original of
this Agreement, each party shall provide the other with such information as
the Receiving Party (as defined in Paragraph 6) may reasonably request for
the purpose of evaluating the therapeutic potential of any products that may
arise from a collaboration between the parties. Such information shall
include **********************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
****************************************************************************
**************************. Genzyme shall confirm to Cubist that each
biological target disclosed by Cubist is not the subject of any research
program currently conducted by Genzyme internally or with any third party
collaborator.
(b) The Receiving Party shall determine in its sole
discretion whether to proceed with the screening activities described in
Paragraph 2 and shall notify the other party of such determination. If either
party determines not to proceed with such screening activities, this
Agreement shall terminate upon receipt of notice to the other party of such
determination. If both parties elect to proceed with the screening
activities, Genzyme will provide Cubist with Compounds as described in
Paragraph 2 within thirty (30) days after receipt of Cubist's notice to
proceed.
2. Screening of Compound Libraries and Deconvolution Services.
(a) Subject to the provisions of Paragraph 1, Genzyme will
make available to Cubist all compounds within Genzyme's libraries as of the
effective date this Agreement ("Compounds"). Compounds added to Genzyme's
libraries after such date will be made available to Cubist on a semiannual
basis during the term of this Agreement. Compounds will be
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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2
delivered in quantities of ****************************************************
***************** (a "Mixture"). Genzyme grants Cubist a non-exclusive,
worldwide right to use the Compounds to screen against biological targets
identified by Cubist to evaluate the biological activity of the Compounds. Such
right may not be sublicensed and does not include the right to sell or otherwise
transfer the Compounds to third parties. Cubist will use commercially reasonable
efforts to screen all Compounds provided by Genzyme against each of the targets
identified by Cubist pursuant to Paragraph 1 (a).
(b) Subject to a Mixture satisfying criteria agreed upon by
Cubist and Genzyme for biological activity (e.g., potency and
dose-responsiveness) against a target screened by Cubist, Genzyme will provide
the following services: ******************************************************
*******************************************************************************
******************************************************************************
*******************************************************************************
*********************************************************************.
3. Availability of License.
(a) Cubist shall notify Genzyme of all Active Compounds
identified by Cubist. "Active Compound" shall mean a Compound that has exhibited
biological activity against a target warranting, in Cubist's reasonable business
judgment, further development.
(b) If any Active Compound previously has been committed to a
third party or to an internal Genzyme program, Cubist shall have no rights in or
to such Active Compound. In all other cases, Genzyme shall disclose to Cubist
the chemical composition and structure of the Active Compound and Cubist shall
have a right of first negotiation to obtain a license (the "Negotiation Right"),
in accordance with the procedures set forth in Paragraph 3(c).
(c) Cubist may exercise the Negotiation Right upon written
notice to Genzyme which is received by Genzyme at any time during the term of
this Agreement, whereupon the parties will engage in good faith negotiations to
establish the terms and conditions of a mutually acceptable research
collaboration agreement. Such research collaboration agreement will provide,
among other matters, for the following: (i) establishments of committees to
manage the collaboration; (ii) licenses under intellectual property rights of
each party to conduct medicinal chemistry and preclinical development of the
Active Compound; (ii)
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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3
responsibilities of the parties for specific preclinical development activities;
(iv) commercialization strategy for the Active Compound following preclinical
development; and (v) sharing of commercialization revenues after recovery by
each party of its preclinical development costs.
(d) If the parties are unable to negotiate and execute a
mutually acceptable collaboration agreement within ************* after the date
upon which Cubist exercised the Negotiation Right, Genzyme shall have the right
to license the Active Compound to any third party, subject to non-disclosure
restrictions set forth in Paragraph 6.
4. Use and Transfer Restrictions. Cubist acknowledges and agrees that
the Compounds (including without limitation all Active Compounds) are
proprietary to and owned by Genzyme and or may be covered by claims of U.S. and
international patents or parent applications of Genzyme. Cubist agrees to use
the Compounds only for the purposes set forth in this Agreement. Cubist agrees
(i) not transfer such Compounds to any third party without the prior written
consent of Genzyme, (ii) to permit access to the Compounds only to its employees
and consultants requiring such access, (iii) to inform such employees and
consultants of the proprietary nature of the Compounds, and (iv) to take
reasonable precautions, at least as stringent as those observed by Cubist to
protect its own proprietary material, to ensure that such employees and
consultants observe the obligations of Cubist pursuant to this Paragraph. Upon
the expiration or termination of this Agreement, Cubist shall, at the
instruction of Genzyme, either destroy or return any unused Compounds.
5. Compliance with Law. Cubist agrees to comply with all federal, state
and local laws and regulations applicable to the use, storage, disposal, and
transfer of all the Compounds, including without limitation the Toxic Substances
Control Act (15 USC 2601 et. seq.) and implementing regulations (in particular,
40 CFR 720.36 [Research and Development Exemption]), the Food, Drug, and
Cosmetic Act (21 USC 301 et. seq.) and implementing regulations, and all Export
Administration Regulations of the Department of Commerce. Cubist assumes sole
responsibility for any violation of such laws or regulations by Cubist or any of
its affiliates.
6. Confidential Information.
(a) As used in this Agreement, the term "Confidential
Information" means any technical or business information furnished by one party
("Disclosing Party") to the other party ("Receiving Party") in connection with
this Agreement and specifically designated as confidential
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
4
including, without limitation, any information disclosed by the parties pursuant
to Paragraphs 1, 2 and 3 of this Agreement. Such Confidential Information may
also include, without limitation, trade secrets, know-how, inventions,
formulations, compositions, technical data or specifications, testing methods,
business or financial information, research and development activities, product
and marketing plans, customer and supplier information. Confidential Information
that is disclosed in writing shall be marked with the legend "confidential".
Confidential Information that is disclosed orally or visually shall be
documented in a written notice prepared by the Disclosing Party and delivered to
the Receiving Party within thirty (30) days of the date of disclosure. Such
notice shall summarize the Confidential Information disclosed to the Receiving
Party and reference the time and place of disclosure.
(b) The Receiving Party shall and shall cause its employees
engaged in the research to: (i) maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential Information to its directors, officers,
employees, consultants, and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purposes set forth in this Agreement; (ii) use
all Confidential Information solely for purposes set forth in this Agreement;
and (iii) reproduce the Confidential Information only to the extent necessary to
effect the purpose set forth in this Agreement, with all such reproductions
being considered Confidential Information.
(c) The obligations of the Receiving Party under Paragraph
6(b) shall not apply to the extent that the Receiving Party can demonstrate by
written documentation that certain Confidential Information: (i) was in the
public domain prior to the time of its disclosure under this Agreement; (ii)
entered the public domain after the time of its disclosure under this Agreement
through means other than an unauthorized disclosure resulting from any act or
omission by the Receiving Party; (iii) was independently developed or discovered
by the Receiving party prior to the time of its disclosure under this Agreement;
(iv) is or was disclosed to the Receiving Party at any time, whether prior to or
after the time of its disclosure under this Agreement, by a third party having
no fiduciary relationship with the Disclosing Party and having no obligations of
confidentiality with respect to such Confidential Information; or (v) is
required to be disclosed to comply with applicable laws or regulations, or with
a court or administrative order, provided that the Disclosing Party receives
prior written notice of such disclosure and
<PAGE>
5
that the Receiving party takes all reasonable and lawful actions to obtain
confidential treatment for such disclosure and, if possible, to minimize the
extent of such disclosure.
(d) The Receiving Party agrees that the Disclosing Party (or
any third party entrusting its own confidential information to the Disclosing
Party) is and shall remain the exclusive owner of the Confidential Information
disclosed by the Disclosing Party and all patent, copyright, trademark, trade
secret, and other intellectual property rights in, or arising from such
Confidential Information. No option, license, or conveyance of such rights to
the Receiving Party is granted or implied under this Agreement. If any such
rights are to be granted to the Receiving Party, such grant shall be expressly
set forth in a separate written instrument.
(e) Upon the termination by either party of this Agreement,
the Receiving Party shall return to the Disclosing Party all originals, copies,
and summaries of documents, materials, and other tangible manifestations of
Confidential Information in the possession or control of the Receiving Party.
The obligations set forth in this Agreement shall remain in effect for a period
of five (5) years after such termination by either party.
(f) The Receiving Party agrees that any breach of its
obligations under this Paragraph 6 will cause irreparable harm to the Disclosing
Party; therefore, the Disclosing Party shall have, in addition to any remedies
available at law, the right to obtain requitable relief to enforce this
Agreement.
7. No Warranties. Any Compounds delivered pursuant to this Agreement
are understood to be experimental in nature and may have hazardous Properties.
GENZYME MAKES NO REPRESENTATIONS, AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUNDS, THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
THAT THE USE OF THE COMPOUNDS WILL NOT INFRINGE ANY PATENT OR OTHER INTELLECTUAL
PROPERTY RIGHTS OF A THIRD PARTY.
8. Indemnification. Cubist assumes all liability for, and agrees to
indemnify, defend, and hold harmless Genzyme and its directors, officers,
representatives, employees, and agents against, all losses, expenses (including
without limitation any reasonable legal expenses), claims, demands, damages,
judgments, suits, or other actions arising form
<PAGE>
6
the use, storage, or disposal of the Compounds by Cubist and its affiliates and
sublicenses, or form any breach of its obligations under Paragraph 5 of this
Agreement. Genzyme assumes all liability for, and agrees to indemnify, defend,
and hold harmless Cubist and its directors, officers, representatives,
employees, and agents against, all losses, expenses (including without
limitation any reasonable legal expenses), claims, demands, damages, judgements,
suits, or other actions arising from the use, storage, or disposal of the
Compounds by Genzyme and its affiliates.
9. Termination. Subject to early termination pursuant to Paragraph
1(b), this Agreement shall commence on the date last written below and continue
for a period of six (6) months. Thereafter, this Agreement shall be
automatically extended for successive additional six (6) month period unless, by
written notice given at least thirty (30) days prior tot he expiration of any
such period, either party elects to cause this Agreement to terminate at the end
of the then-current peried, Sections 3 (paragraph (d) only), 4, 5, 6, 7 and 8,
shall survive termination of this Agreement.
10. Miscellaneous. This Agreement shall not be assigned or otherwise
transferred by either party without the prior written consent of the other party
to this Agreement. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts. This Agreement constitutes the entire
understanding of the parties and supersedes all prior agreements, written or
oral, with respect to the subject matter hereof. Any notice required or
permitted under this Agreement shall be in writing delivered personally or by
facsimile (and promptly confirmed by personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to the other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee. Each party shall obtain prior written permission from the other
before using the name, symbol and/or marks of the other in any form of
publicity.
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7
ACCEPTED AND AGREED:
GENYZME CORPORATION CUBIST PHARMACEUTICALS, INC.
By: /s/ James R. Rasmussen By: /s/ Scott M. Rocklage
----------------------- ---------------------
Name: James R. Rasmussen Name: Scott M. Rocklage
----------------------- ---------------------
Title: Senior VP, Research Title: President and CEO
----------------------- ---------------------
Date: February 24, 1997 Date: February 24, 1997
----------------------- ---------------------
Address: Address:
Genzyme Corporation Cubist Pharmaceuticals, Inc.
One Kendall Square 24 Emily Street
Cambridge, Massachusetts 02319 Cambridge, Massachusetts 02139
Tel: (617) 252-7500 Tel: (617) 576-1999
Fax: (617) 252-7600 Fax: (617) 576-0232
<PAGE>
CONFIDENTIAL TREATMENT Exhibit 10.25
LIBRARY SAMPLE EVALUATION AGREEMENT
This Library Sample Evaluation Agreement (the "Agreement"), effective
as of September 11, 1996 (the "Effective Date"), is made by and between
Pharmacopeia, Inc., a Delaware corporation having a principal place of business
at 101 College Road East, Princeton, New Jersey 08540 ("Pharmacopeia"), and
Cubist Pharmaceuticals, Inc., a Delaware corporation having a principal place of
business at 24 Emily Street, Cambridge, Massachusetts 02139 ("Cubist").
BACKGROUND
A. Pharmacopeia has developed novel proprietary methods for the
generation of encoded compound libraries. Pharmacopeia believes that its
proprietary technology, by rapidly producing diverse and targeted compound
libraries, will accelerate the drug discovery process and increase productivity
of drug discovery programs.
B. Cubist wishes to obtain from Pharmacopeia samples of combinatorial
libraries to be screened by Cubist against certain agreed targets, and
Pharmacopeia is willing to provide such samples to Cubist for such purpose, on
the terms and conditions set forth herein.
NOW THEREFORE, it is agreed by and between the parties as follows:
1. DEFINITIONS
1.1 "Columbia License" means that certain License Agreement effective
as of July 16, 1993, as amended and restated as of October 6, 1995, entered by
and between Pharmacopeia, Inc., the Trustees of Columbia University in the City
of New York and the Cold Spring Harbor Laboratory.
1.2 "Confidential Information" means (i) any proprietary or
confidential information or material in tangible form disclosed hereunder that
is marked as "Confidential" at the time it is delivered to the receiving party,
or (ii) proprietary or confidential information disclosed orally hereunder which
is identified as confidential or proprietary when disclosed and such disclosure
of confidential information is confirmed in writing within thirty (30) days by
the disclosing party.
<PAGE>
1.3 "Library Compound" means any compound contained in a Library
Sample.
1.4 "Library Sample" means a sample of compounds selected from a
Pharmacopeia compound library and transferred to Cubist pursuant to this
Agreement.
1.5 "Licensed Patents" means any patent applications that claim any
compound in the library from which the Library Sample is derived; any
substitutions, divisions, continuations, and continuations-in-part of the
preceding patent applications; any foreign counterparts of the preceding
applications; and any patents issuing on the preceding applications, including
registrations, revalidations, reissues, reexaminations, extensions or other
governmental actions which extend claims or durations of such patents; in each
case, which is owned or controlled, in whole or part, by license, assignment or
otherwise by Pharmacopeia during the term of this Agreement, and subject to any
limitations and prohibitions of such license or sublicense. It is understood
that the Licensed Patents shall not include any intellectual property owned or
licensed by Pharmacopeia relating to creation or use of combinatorial libraries,
tag and/or marker compound engineering and encoding, and/or high throughput
screening assays (hereinafter the "Excluded Technology").
1.6 "Screening Period" means the four (4) month period following the
date of shipment by Pharmacopeia of each Library Sample to Cubist or such longer
period as may be established under Section 2.3.2 below.
1.7 "Target" means any molecular target set for on Exhibit B hereto,
and any other molecular targets agreed in writing by Cubist and Pharmacopeia.
2. LIBRARY SAMPLE
2.1 Library Sample. Subject to the terms and conditions of this
Agreement, Pharmacopeia shall provide four copies of the Library Sample to
Cubist for screening by Cubist against the Targets as set forth in more detail
on Exhibit A. The Library Sample shall be available delivery to Cubist as soon
as practicable following Cubist's payment of the Library Sample Access Fee
pursuant to Section 5.1.
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3
2.2 Limited Use. The Library Sample shall be used by Cubist solely to
conduct screening of the Targets. It is understood and agreed that Cubist shall
not*************************************************************************.
Cubist will not ***************************************************************
*******************************************************************************
**********. Cubist will not transfer the Library Sample or any of the Library
Compounds to any third party without Pharmacopeia's prior written consent.
Cubist agrees that it will not ***********************************************
**********************************.
2.3 Screening by Cubist.
2.3.1 Target Exclusivity. To provide Cubist a period of
exclusivity for screening of the Library Sample against the Targets,
Pharmacopeia agrees that until the termination of the Screening Period, as such
period may be extended, Pharmacopeia shall not knowingly deliver to any third
party any compound from the Library Sample for screening against any of the
Targets; provided, Pharmacopeia may itself screen or provide to third parties
compounds from such Library Sample, or the library from which it was derived,
for screening against any molecular target which is not a Target hereunder at
such time.
2.3.2 Extentions of Screening Period. Cubist may request that
Pharmacopeia extend the Screening Period for an additional period (after the
initial four (4) month Screening Period) by notifying Pharmacopeia no later than
thirty (30) days prior to the date on which such Screening Period will expire.
It is understood and agreed that if Pharmacopeia, in its sole discretion, does
not so extend the Screening Period, Cubist shall have no further rights to
screen the Library Sample. The length of any such additional period will be as
agreed by the parties.
2.4 Rearrays. After joint review of the screening data and upon mutual
agreement, Pharmacopeia shall rearray (at one compound per well) those wells
identified by the parties as containing compounds with activity against any of
the Targets.
2.5 Additional Library Sample. If Cubist screens the initial Library
Sample but does not identify any Library Compound with respect to which it
wishes to negotiate with Pharmacopeia for a further agreement pursuant to
Section 4.1, Cubist may request up to four copies of a further Library Sample
with notice to Pharmacopeia during the Screening Period. Pharmacopeia then shall
provide to Cubist a further
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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4
Library Sample drawn from a different Pharmacopeia library, and Cubist may
screen such further Library Sample, subject to the terms and conditions herein.
Pursuant to this Section 2.5, Cubist may receive Library Samples from
************** additional Pharmacopeia compound libraries. Upon shipment of such
further Library Sample, Cubist's right to negotiate a further agreement with
respect to any Library Compound in a previous Library Sample shall terminate.
2.6 Additional Targets. At any time during the Screening Period, Cubist
may provide Pharmacopeia notice that Cubist wishes to drop a Target from this
Agreement and designate an additional target as a Target for all purposes of
this Agreement. Within fifteen (15) days of receipt of such notice, Pharmacopeia
shall, at its sole discretion, accept or deny the designation of each such
proposed target as a Target by notice to Cubist. Upon Pharmacopeia's notice of
such acceptance, if any, Cubist's right to negotiate a further agreement with
respect to such dropped Target shall terminate.
2.7 Ownership of Library Samples. Pharmacopeia, shall retain all right,
title and interest in and to the Library Sample and Library Compounds, and all
Pharmacopeia intellectual property rights related thereto.
3. LICENSE
3.1 Screening License. Subject to the terms and conditions of this
Agreement, Pharmacopeia grants to Cubist a non-exclusive, non-transferable
license, under the applicable Licensed Patents solely to screen the Library
Sample to identify Library Compounds with activity against one or more of the
Targets.
3.2 Columbia Sublicense. Subject to the terms and conditions of this
Agreement and Columbia License, if necessary, Pharmacopeia will grant to Cubist
a non-exclusive, non-transferable sublicense under the Columbia License solely
to screen the Library Sample to identify Library Compounds with activity against
one or more of the Targets.
3.3 Retained Rights. No right or license in or to intellectual property
rights of Pharmacopeia relating to the Library Sample or Library Compounds (or
otherwise) is granted nor implied hereunder, except for the sole purpose of
conducting the screening. Pharmacopeia retains rights not expressly granted to
Cubist in Section 3.1 above, including without limitation, the right make, have
made and use Library Compounds in the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
5
Library Sample for its own research purposes. It is understood and agreed that
the license granted to Cubist in Section 3.1 above does not include the right to
create, make or have made combinatorial libraries, tags, markers or other
encoding compositions, or use methods or processes relating to the preceding.
4. FURTHER AGREEMENTS
4.1 Negotiation of Further Agreement. If Cubist determines that one or
more Library Compounds have biological activity with respect to a Target and
wishes to negotiate with Pharmacopeia a further agreement relating to such
Library Compounds, Cubist may notify Pharmacopeia thereof during the Screening
Period. In such event, the parties shall negotiate in good faith the terms of a
further agreement for a period of ************************* from Pharmacopeia's
receipt of such notice, or such longer period as the parties may agree (the
"Negotiation Period"). The nature of such further agreement may be a license,
collaboration or any other form as may be agreed by the parties. If the parties
fail to enter into a further written agreement with respect to a particular
Library Compounded during the Negotiation Period, Cubist shall acquire no right
to such Library Compound.
4.2 No Decodes. Until the parties reach definitive agreement pursuant
to Section 4.1, or unless otherwise agreed in writing by the parties,
Pharmacopeia shall not knowingly decode any Library Compound identified by
Cubist to Pharmacopeia as having activity with respect to any Target.
4.3 Screening By Pharmacopeia. If Cubist notifies Pharmacopeia as
provided in Section 4.1, but the parties fail to enter into a further agreement,
following the first anniversary of the end of the Screening Period, Pharmacopeia
may screen and allow others to screen the Library Sample and the library from
which it was derived against any Target; provided, Pharmacopeia may disclose to
third parties that the Library Sample has been screen against such a Target, but
shall not disclose to third parties that Cubist screened the Library Sample or
the results of such screening.
4.4 No Notice of Library Compound Activity. If Cubist fails to provide
Pharmacopeia notice pursuant to Section 4.1 that it wishes to negotiate a
further agreement with respect to any Library Compound in a particular Library
Sample during the Screening Period, following the end of such Screening Period
Pharmacopeia may screen and allow third
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
6
parties to screen, such Library Sample and the library from which it was derived
for activity against any Target, without further obligation to Cubist, and may
commercialize any Library Compound therein itself or with third parties.
4.5 Third Party Rights. It is understood that Pharmacopeia is in the
business of providing combinatorial libraries to third parties, and that
Pharmacopeia may grant such third parties rights to acquire licenses for
compounds in or derived from compounds in such libraries prior to the execution
of any further agreement between the parties hereto. Accordingly, any rights
granted to Cubist in a further agreement between the parties hereto shall be
limited to the extent that (i) a third party (either alone or jointly with
Pharmacopeia) has filed a patent application with respect to such a compound
prior to the filing by Cubist (either alone or jointly with Pharmacopeia) of a
patent application with respect to such a compound, (ii) Pharmacopeia has
previously granted a third party a license or other rights with respect to such
a compound, or (iii) as shown by contemporaneous documentation, Pharmacopeia has
previously decided to develop a particular compound on its own behalf. It is
further understood that compounds provided to third parties in the course of
Pharmacopeia's other business activities may result in third party patent
applications and patents, including patent applications and patents owned by
such third parties, or owned jointly by Pharmacopeia and such third parties,
which could affect the rights Cubist may wish to acquire from Pharmacopeia with
respect to any Library Compound.
5. PAYMENTS
5.1 Library Sample Access Fee. Within thirty (30) days of the Effective
Date, Cubist shall pay to Pharmacopeia a fee of ***************
**********************************.
5.2 Payment Method. All payments due under this Agreement shall be made
to an account designated by Pharmacopeia. All payments hereunder shall be made
in U.S. dollars. Any payments that are not paid on the date such payments area
due under this Agreement shall bear interest to the extent permitted by
applicable law at the prime rate as reported by the Chase Manhattan Bank, New
York, New York, on the date such payment is due, plus an additional two percent
(2%), calculated on the number of days such payment is delinquent.
5.3 Tax Matters. Any sales taxes, use taxes, transfer taxes or
similar governmental charges required to be paid in connection with the
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
7
transfer of the Library Sample shall be the sole responsibility of Cubist. In
the event that Pharmacopeia is required to pay any such amounts, Cubist shall
promptly remit payment to Pharmacopeia of such amounts.
6. CONFIDENTIALITY
6.1 Confidential Information. Except as expressly provided herein, the
parties agree that, for the term of this Agreement and for five (5) years
thereafter, the receiving party shall not disclose and except as expressly
provided in this Article 6, shall not use for any purpose other than the
performance of this Agreement, any Confidential Information furnished to it by
the disclosing party hereto pursuant to this Agreement except to the extent that
it can be established by the receiving party by competent proof that such
information:
(a) was already known to the receiving party, other than under
an obligation of confidentiality, at the time of disclosure;
(b) was generally available to the public or otherwise part of
the public domain 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 breach of this Agreement;
(d) was independently developed by the receiving party as
demonstrated by documented evidenced prepared contemporaneously with such
independent development; or
(e) was subsequently lawfully disclosed to the receiving party
by a person other than a party.
6.2 Permitted Use and Disclosures. Each party hereto may use or
disclose Confidential Information disclosed to it by the other party to the
extent such use or disclosure is reasonably necessary and permitted in the
exercise of the rights granted hereunder, prosecuting or defending litigation,
or complying with applicable governmental regulations or court orders or
otherwise submitting information to tax or other governmental authorities,
provided that if a party is required make any such disclosure of another party's
Confidential Information, other than pursuant to a confidentiality agreement, it
will give reasonable advance notice to the other party of such disclosure and,
save to the extent inappropriate in the case of patent applications, will use
its reasonable efforts to secure
<PAGE>
8
confidential treatment of such Confidential Information in consultation with the
other prior to its disclosure (whether through protective orders or otherwise)
and disclose only the minimum necessary to comply with such requirements.
6.3 Nondisclosure of Terms. Each of the parties hereto agrees not to
disclose to any third party the terms of this Agreements without the prior
written consent of the other party hereto, except to such party's attorneys,
advisors, investors and other on a need to know basis under circumstances that
reasonably ensure the confidentiality thereof, or to the extent required by law.
7. INDEMNIFICATION
7.1 Cubist. Cubist agrees to indemnify, defend and hold Pharmacopeia
and its directors, officers, employees and agents (the "Pharmacopeia
Indemnitees") harmless from and against any losses, costs, claims, damages,
liabilities or expense (including reasonable attorneys' and professional fees
and court and other expenses of litigation) arising out of or in connection with
third party claims relating to the use of the Library Sample under this
Agreement, except to the extent due to the negligence or intentional misconduct
of Pharmacopeia.
7.2 Pharmacopeia. Pharmacopeia agrees to indemnify, defend and hold
Cubist and its Affiliates and their respective directors, officers, employees
and agents (the "Cubist Indemnitees") harmless from and against any losses,
costs, claims, damages, liabilities or expense (including reasonable attorneys'
fees and court and other expenses of litigation) arising out of or in connection
with third party claims relating to the preparation and delivery of the Library
Sample, except to the extent due to the negligence or intentional misconduct of
Cubist.
8. TERM AND TERMINATION
8.1 Term. The term of this Agreement shall begin as of the Effective
Date and, unless terminated earlier as provided in this Article 8, continue in
full force and effect until the later of (i) the end of the Screening Period, as
it may be extended, or (ii) the end of the Negotiation Period.
8.2 Termination for Cause. Either party may terminate this Agreement in
the event the other party shall have materially breached or
<PAGE>
9
defaulted in the performance of any of its obligations hereunder, and such
default shall have continued for ****************** after written notice thereof
was provided to the breaching party by the nonbreaching party. Any termination
shall become effective at the end of such *********** period unless the
breaching party (or any other party on its behalf) has cured any such breach or
default prior to the expiration of the *************** period or has commenced
the cure within such *********** period and thereafter uses its best efforts to
complete the cure as soon as practicable; provided, in the case of a failure to
pay any amount due hereunder, such default may be the basis of a termination
************ following the date that notice of such default was provided to the
breaching party.
8.3 Termination Upon Bankruptcy or Insolvency. If voluntary or
involuntary proceedings by or against a party are instituted in bankruptcy under
any insolvency law, or a receiver or custodian is appointed for such party, or
proceedings are instituted by or against such party for corporate reorganization
or the dissolution of such party, which proceedings, if involuntary, shall not
have been dismissed within sixty (60) days thereafter, the other party may
immediately terminate this Agreement effective upon notice of such termination.
8.4 Termination by Cubist. Cubist shall have the right to terminate
this Agreement on sixty (60) days prior written notice to Pharmacopeia.
8.5 Effect of Breach or Termination.
8.5.1 Accrued Obligations. Termination of this Agreement for
any reason shall not release any party hereto from any liability which, at the
time of such termination, has already accrued to the other party or which is
attributable to a period prior to such termination nor preclude either party
from pursuing all rights and remedies it may have hereunder or at law or in
equity with respect to any breach of this Agreement.
8.5.2 Return of Materials. Upon any termination of this
Agreement, Cubist and Pharmacopeia shall promptly return to the other party all
Confidential Information of the other (except for one (1) copy which may be
retained solely for archival purposes), and Cubist shall return to Pharmacopeia
or destroy any remaining Library Compounds.
8.5.3. Survival. Sections 2.7. 4.2, 4.3, 5.3, 8.5 and 8.6, and
Articles 6, 7 and 9 of this Agreement shall survive the expiration or
termination of this Agreement for any reason.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
10
9. MISCELLANEOUS
9.1 Governing Law. This Agreement and any dispute arising from the
performance breach hereof shall be governed by and construed and enforced in
accordance with, the laws of state of New Jersey without reference to conflicts
of laws principles.
9.2 No Implied Licenses. Only the licenses granted pursuant to the
express terms of the Agreement shall be of any legal force or effect. No license
rights shall be created by implication, estoppel or otherwise.
9.3 Waiver. It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth shall
be deemed a waiver as to any subsequent and/or similar breach or default.
9.4 Assignment. This Agreement shall not be assignable by either party
to any third party hereto without the written consent of the other party, except
either party may assign this Agreement, without such consent, to an entity that
acquires all or substantially all of the business or assets of such party to
which this Agreement pertains, whether by merger, reorganization, acquisition,
sale, or otherwise. This Agreement shall be binding upon and accrue to the
benefit of the parties hereto and their successors and any permitted assigns.
9.5 Independent Contractors. The relationship of the parties hereto is
that of independent contractors. The parties hereto are not deemed to be agents,
partners or joint venturers of the others for any purpose as a result of this
Agreement or the transactions contemplated thereby.
9.6 Disclaimer of Warranties. THE LIBRARY SAMPLE PROVIDED HEREUNDER IS
PROVIDED AS-IS. PHARMACOPEIA MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES
OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE LICENSED PATENTS,
LIBRARY SAMPLE, THE LIBRARY COMPOUNDS, OR ANY CONFIDENTIAL INFORMATION DISCLOSED
PURSUANT TO ARTICLE 6, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, VALIDITY OF THE LICENSED
PATENTS, OR NONFRINGEMENT BY THE PRECEDING OF ANY INTELLECTUAL PROPERTY RIGHTS
OR THIRD PARTIES.
<PAGE>
11
9.7 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or by registered or
certified mail, return receipt requested, postage prepaid, in each case to the
respective address specified below, or such other address as may be specified in
writing to the other parties hereto and shall be deemed to have been given upon
receipt:
Pharmacopeia: Pharmacopeia, Inc.
101 College Road East
Princeton, New Jersey 08540
Attn: Chief Executive Officer
Cubist: Cubist Pharmaceuticals, Inc.
24 Emily Street
Cambridge, Massachusetts 02139
Attn: Chief Executive Officer
9.8 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
9.9 No Consequential Damages. IN NO EVENT SHALL ANY PARTY TO THIS
AGREEMENT HAVE ANY LIABILITY TO THE OTHER FOR ANY SPECIAL, INDIRECT,
CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING UNDER THIS AGREEMENT UNDER ANY
THEORY OF LIABILITY.
9.10 Complete Agreement. This Agreement with its Exhibits, constitutes
the entire agreement between the parties with respect to the subject matter
hereof, and all prior agreements respecting the subject matter hereof, either
written or oral, express or implied, shall be abrogated, canceled, and are null
and void and of no effect. No amendment or change hereof or addition hereto
shall be effective or binding on either of the parties hereto unless reduced to
writing and executed by the respective duly authorized representatives of
Pharmacopeia and Cubist.
9.11 Dispute Resolution. Any dispute under this Agreement which is not
settled by mutual consent shall be finally settled by binding arbitration,
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association by one (1) arbitrator appointed in accordance with said
rules. The arbitration shall be held in
<PAGE>
12
New York, New York. The costs of the arbitration, including administrative and
arbitrators' fees, shall be shared equally by the parties, and each party shall
bear its own costs and attorneys' and witness' fees. The decision of the
arbitrator shall be written, final and non-appealable and may be enforced in any
court of competent jurisdiction.
9.12 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall be
deemed to be one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives and delivered as of the
Effective Date.
CUBIST PHARMACEUTICALS, INC. PHARMACOPEIA, INC.
By: /s/ Neal Farber By: /s/ Joseph A. Mollica
----------------------- ----------------------------
Name: Neal Farber, Ph.D. Name: Joseph A. Mollica, Ph.D.
----------------------- ----------------------------
Title: UP Corporate Development Title: Chairman and Chief
Executive Officer
----------------------- ----------------------------
<PAGE>
13
EXHIBIT A
1. Each copy of the Library Sample provided by Pharmacopeia to
Cubist shall consist **********************************************************
**********************.
2. After Cubist has completed screening the Library
Sample,***********************************************************************
***********************************************************************.
3. Pharmacopeia will*****************************************
*******************************************************************************
*******************************************************************************
*********************************************************************.
4. The production process is*********************************
*******************************************************************************
*****************************************************************************
***.
5. Pharmacopeia shall not ***********************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
********.
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
<PAGE>
14
EXHIBIT B
The Targets include:
1. ************************************************
2. ************************************************
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
