UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 1996.
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
-------- SECURITIES EXCHANGE ACT OF 1934 FOR THE
TRANSITION PERIOD FROM TO .
---------- ------------
Commission File Number 0-22570
Lynx Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3161073
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3832 Bay Center Place
Hayward, CA 94545
(Address of principal executive offices) (Zip Code)
(510) 670-9300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-------- --------
The number of shares of Common Stock, Series B Preferred Stock, Series C
Preferred Stock, and Series D Preferred Stock outstanding as of June 30, 1996
were 2,342,045, 332,288, 123,299 and 40,000, respectively. The Series B, Series
C and Series D Preferred Stock are convertible into Common Stock on a
ten-for-one basis.
<PAGE>
Lynx Therapeutics, Inc.
INDEX
PART I: FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1996
and December 31, 1995 ........................................ 3
Condensed Consolidated Statements of Operations - three and six
months ended June 30, 1996 and 1995 ......................... 4
Condensed Consolidated Statements of Cash Flows - six
months ended June 30, 1996 and 1995 ......................... 5
Notes to Condensed Consolidated Financial Statements ............ 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............... 7
PART II: OTHER INFORMATION
Item 1. Legal Proceedings .............................................. 10
Item 2. Changes in Securities .......................................... 10
Item 3. Defaults Upon Senior Securities ................................ 10
Item 4. Submission of Matters to a Vote of Security Holders ............ 10
Item 5. Other Information .............................................. 10
Item 6. Exhibits and Reports on Form 8-K ............................... 10
Signatures................................................................. 10
2.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<CAPTION>
June 30, December 31,
1996 1995*
--------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 7,098 $ 13,779
Accounts receivable and receivables from employees 100 88
Prepaid expenses and other current assets 224 79
--------------------------------------------
Total current assets 7,422 13,946
Property and equipment:
Leasehold improvements 2,988 2,501
Laboratory and other equipment 2,676 2,157
--------------------------------------------
5,664 4,658
Less accumulated depreciation and amortization (1,901) (1,461)
--------------------------------------------
Net property and equipment 3,763 3,197
Notes receivable from employees 772 542
--------------------------------------------
$ 11,957 $ 17,685
============================================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 628 $ 693
Accrued compensation 215 206
Accrued professional fees 130 187
Other accrued liabilities 424 130
--------------------------------------------
Total current liabilities 1,397 1,216
Deferred revenue from related party 1,875 2,625
Other noncurrent liabilities 131 102
Stockholders' equity:
Preferred stock 27,189 27,189
Common stock 13,407 13,394
Notes receivable from stockholders (660) (660)
Deferred compensation (34) (51)
Unrealized loss on marketable securities (3) (2)
Accumulated deficit (31,345) (26,128)
--------------------------------------------
Total stockholders' equity 8,554 13,742
--------------------------------------------
$ 11,957 $ 17,685
============================================
<FN>
* The Balance Sheet amounts at December 31, 1995 have been derived from audited
financial statements at that date but do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See accompanying notes.
</FN>
</TABLE>
3.
<PAGE>
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------------- ------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Revenues from collaborative arrangements with
related parties $ 375 $ - $ 750 $ -
Product sales and other revenue 87 13 204 56
-----------------------------------------------------------------------
Total revenues 462 13 954 56
Operating costs and expenses:
Cost of revenue 87 13 204 13
Research and development 2,842 3,394 5,130 5,535
Selling, general and administrative 628 340 1,167 733
-----------------------------------------------------------------------
Total operating costs and expenses 3,557 3,747 6,501 6,281
-----------------------------------------------------------------------
Loss from operations (3,095) (3,734) (5,547) (6,225)
Interest income 143 173 330 323
-----------------------------------------------------------------------
Net loss $ (2,952) $ (3,561) $ (5,217) $ (5,902)
=======================================================================
Net loss per share $ (1.26) $ (1.63) $ (2.23) $ (2.82)
=======================================================================
Shares used in per share computation 2,338,815 2,179,464 2,336,820 2,095,287
=======================================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
4.
<PAGE>
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
------------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (5,217) $ (5,902)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 457 278
Changes in operating assets and liabilities:
Accounts receivable and receivables from employees (12) 191
Prepaid expenses and other current assets (145) 82
Accounts payable (65) 30
Accrued compensation, professional fees, and other liabilities 246 (304)
Deferred revenue from related party (750) --
Noncurrent liabilities 29 19
------------------------------------
Net cash used in operating activities (5,457) (5,606)
Cash flows from investing activities
Purchases of short-term investments (995) --
Maturities of short-term investments 994 4,846
Purchase of property and equipment, net of retirements (1,006) (870)
Notes receivable from employees (230) (450)
------------------------------------
Net cash provided by (used in) investing activities (1,237) 3,526
Cash flows from financing activities
Issuance of preferred stock - 6,109
Issuance of common stock 13 4
------------------------------------
Net cash provided by financing activities 13 6,113
------------------------------------
Net increase (decrease) in cash and cash equivalents (6,681) 4,033
Cash and cash equivalents at beginning of period 13,779 4,246
------------------------------------
Cash and cash equivalents at end of period $ 7,098 $ 8,279
====================================
<FN>
See accompanying notes.
</FN>
</TABLE>
5.
<PAGE>
Lynx Therapeutics, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
1. Ownership and nature of business
Lynx Therapeutics, Inc. ("Lynx" or the "Company") was incorporated in
February 1992 under the laws of the State of Delaware. Lynx was
capitalized in June 1992 and, effective July 1, 1992, began operations.
Lynx is focused on exploiting novel, proprietary DNA cloning,
sequencing and synthesis technologies to identify targets for drug
discovery. Foremost among the Company's proprietary assets is a set of
novel cDNA cloning and sequencing technologies, collectively dubbed
"massively parallel signature sequencing" ("MPSS") which is being
developed to be used to identify and quantify, in a single analysis, a
complete representative sampling of all the mRNA molecules present in a
tissue sample. The rapidity (days, instead of months or years) of this
new analytical approach, if successful, should allow for the first time
the analysis of the changes in gene expression that occur during the
progression of a disease. Lynx's second set of proprietary technologies
is an outgrowth of the expertise on which Lynx was originally founded.
This expertise relates to synthetic DNA ("oligodeoxynucleotide" or
"ODN") chemistry and the manufacturing and use of synthetic ODN
analogues for the pursuit of their therapeutic applications. Diseases
that have been targeted for the application of these potential
therapeutic agents include cardiovascular diseases, cancers and
leukemias, and neurovascular diseases.
2. Basis of presentation
The unaudited condensed consolidated financial statements include the
accounts of the Company and its majority owned subsidiaries
LYNXNebraska, Inc. and Spectragen, Inc. All significant intercompany
balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements included
herein have been prepared by the Company without audit, pursuant to the
rules and regulations promulgated by the Securities and Exchange
Commission (the "Commission"). Certain information and footnote
disclosures, normally included in financial statements prepared in
accordance with generally accepted accounting principles, have been
omitted pursuant to Commission rules and regulations; nevertheless, the
Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, the
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial
position, results of operations and cash flows of the Company for the
interim periods presented. The results of operations for the three and
six months ended June 30, 1996 are not necessarily indicative of the
results for the full year.
These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the
Company's year ended December 31, 1995.
In July 1996, Lynx entered into a collaboration agreement with Tanabe
Seiyaku Co., Ltd. to develop and market Lynx's LR-3280 drug candidate
for the Japanese and certain other Asian markets. The agreement calls
for Tanabe to pay Lynx $3.5 million and $8.0 million in sign up and
milestone fees respectively, and for Tanabe to bear the costs of
development, regulatory approval and sales in the specified
territories. Tanabe will also
6.
<PAGE>
purchase the drug from Lynx, which retains all manufacturing rights. In
July 1996, Lynx received a payment of $3.5 million, which was due upon
execution of the agreement.
3. Per share information
Net loss per share is calculated based on the weighted average number
of common shares outstanding during the period. Common equivalent
shares from stock options, warrants and convertible Preferred Stock are
excluded from the computation as their effect is antidilutive.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Except for the historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties. The
Company's actual results could differ materially from those discussed here.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed in this section, as well as in the Company's annual
report (Form 10-K) filed with the Securities and Exchange Commission for the
fiscal year ended December 31, 1995.
Overview
Since its inception in July 1989 (as a division of Applied Biosystems, Inc. or
"ABI"), Lynx has devoted its efforts toward research, drug discovery and
development programs. Lynx has been unprofitable since its inception and expects
to incur substantial and increasing losses for the next several years, due
primarily to the expansion of its research and development programs, including
development of its MPSS technology, preclinical studies and clinical trials. As
of June 30, 1996, the Company's accumulated deficit was approximately $31.3
million (the accumulated deficit including Lynx's operations as a division of
ABI as of June 30, 1996 was approximately $35.4 million). Lynx does not
anticipate that it will generate profits and significant revenues, if any, from
the commercial sale of its products for several years at least. In addition,
there can be no assurance that Lynx will ever successfully develop and market
any of its proposed products or that it will ever be able to achieve or sustain
profitability.
Lynx's business is subject to significant risks, including the risks inherent in
its research and development efforts, uncertainties associated with obtaining
and enforcing patents, the lengthy and expensive regulatory approval process and
possible competition from other companies and research organizations. The MPSS
program is in the development stage and is dependent upon the successful
integration of independent technologies, each of which has its own development
risks. In addition, Lynx's MPSS technology could face competition from the
development of similarly efficient, or better, combinations of novel cloning and
sequencing techniques. Further, even if Lynx's therapeutic products appear
promising at an early stage of development, they may not reach the market for a
number of reasons. Such reasons include, but are not limited to, the
possibilities that the drugs are found to be toxic or ineffective during
clinical trials, the failure to receive necessary regulatory approvals, the
difficulty of manufacturing the drugs on a large scale, or the inability to
market them due to proprietary rights of third parties.
Results of Operations
Revenues
Lynx had total revenues of $462,000 and $13,000 for the quarters ended June 30,
1996 and 1995 respectively. The 1996 revenue was comprised of $375,000 earned
under the collaborative agreement with Hoechst AG and Hoechst Marion Roussel
(collectively referred to
7.
<PAGE>
as "Hoechst") signed in October 1995, and $87,000 earned from a government
grant. The 1995 revenue consisted primarily of grant revenue.
Lynx had revenues of $954,000 and $56,000 in the six months ended June 30, 1996
and 1995 respectively. The 1996 revenue was comprised of $750,000 earned under
the above mentioned agreement with Hoechst and $204,000 earned from the
government grant. The 1995 revenue consisted of grant and royalty revenue.
The collaborative revenue referenced above is a portion of the $8.0 million
received from Hoechst, $3.0 million of which is being recognized ratably as
revenue over eight quarters, beginning in the fourth quarter of 1995. The
balance of $5.0 million was for the sale of 40,000 shares of the Company's
Series D preferred stock. The receipt of the grant revenue referenced above is
dependent on expenditures by Lynx on the projects sponsored by the grant. It is
unknown how much additional revenue, if any, will be earned under the grant.
Operating Expenses
Cost of revenue was $87,000 for the quarter ended June 30, 1996 compared to
$13,000 for the quarter ended June 30, 1995. The increase is due to increased
activity under the government grant.
Cost of revenue for the six months ended June 30, 1996 and 1995 was $204,000 and
$13,000 respectively. Again, the increase was due to increased activity under
the government grant.
Research and development expenses were $2.8 million for the quarter ended June
30, 1996, compared to $3.4 million for the quarter ended June 30, 1995. The
decrease was attributable to lower patent and license expenses, lower purchases
of supplies and materials, and reduced funding to various laboratories under
collaborative research agreements. The lower spending was partially offset by
higher salary expense relating to higher headcount.
Research and development expenses were $5.1 million in the six months ended June
30, 1996 compared to $5.5 million in the same period of 1995. Again, the
decrease was attributable to lower patent and license expenses as well as
reduced funding to various laboratories under collaborative research agreements.
The lower spending was partially offset by higher salary expenses as research
staff have been added to support various in-house projects, particularly MPSS.
Lynx expects its research and development expenses to increase due to planned
spending for ongoing research and new applications.
Selling, general and administrative expenses were $628,000 in the quarter ended
June 30, 1996, compared to $340,000 in the quarter ended June 30, 1995. The
increase in selling, general and administrative expenses was due to the costs
associated with additional administrative personnel, including the addition of
the Company's President and Chief Executive Officer and the Vice President,
Intellectual Property. Additionally, there was an increase in costs of legal
services for corporate general matters.
Selling, general and administrative expenses were $1.2 million for the six
months ended June 30, 1996 compared to $733,000 for the same period of 1995. The
increase in such expenses was due to the addition of administrative personnel
mentioned above and to the costs associated with increased corporate development
activities.
Interest Income
Interest income for the quarter ended June 30, 1996 was $143,000 compared to
$173,000 for the same period in 1995. The decrease was due to a combination of
slightly lower average cash equivalent and short term investment balances and
lower interest rates.
8.
<PAGE>
Interest income was $330,000 for the six months ended June 30, 1996, slightly
higher than interest income of $323,000 for the six months ended June 30, 1995.
The increase was due to higher average cash equivalent and short term investment
balances for the six months ended June 30, 1996 despite higher average interest
rates during the six months ended June 30, 1995.
Liquidity and Capital Resources
Since inception, Lynx has funded its operations through advances from its
predecessor (ABI), sales of preferred and common stock, revenue from
collaborative research and development arrangements, product sales, government
grants and interest income. At June 30, 1996, Lynx's current sources of
liquidity consisted of cash and cash equivalents of $7.1 million.
Net cash used in operating activities of $5.5 million in the six months ended
June 30, 1996 was primarily for employee salaries, payments under sponsored
research and consulting agreements, and research material purchases. Net cash
used in investing activities of $1.2 million in the six months ended June 30,
1996 was comprised primarily of spending for leasehold improvements for
laboratory and office facilities and the purchase of capital equipment.
Lynx anticipates utilizing its available funds to support the development of its
MPSS technology and synthetic DNA chemistry, to fund preclinical research and
clinical trials, for patent and technology license fees and planned growth in
Lynx's internal efforts toward research, drug discovery and development
programs. Pending such uses as described above, Lynx intends to invest its
excess cash in short-term, investment grade, interest-bearing securities or
certificates of deposit.
The cost, timing and amount of funds required for specific uses by Lynx cannot
be precisely determined at this time and will be based upon Lynx's progress in
its research and development programs, the scope and results of preclinical
research and clinical trials, the cost and timing of regulatory approvals,
administrative and legal costs, the establishment of corporate partnerships and
the availability of alternate methods of financing.
Lynx expects to incur substantial and increasing research and development
expenses and intends to seek additional financing as needed through debt or
equity offerings and from collaborative research and development agreements with
corporate partners. The Company is seeking additional partners for its MPSS
technology and its oligonucleotide compound, LR-3280. There can be no assurance
that any additional financing required by Lynx will be available or, if
available, will be on terms favorable to Lynx. If the financing arrangements
contemplated by management are not consummated, the Company may have to seek
other sources of capital or reevaluate its operating plans. Lynx believes that
its current capital resources and interest income thereon will enable it to
maintain its current and planned operations through the first quarter of 1997.
9.
<PAGE>
PART II: OTHER INFORMATION
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 annual meeting of shareholders held May 9, 1996, shareholders
voted on the following:
(1) Election of Directors:
Nominee For Withheld
------- --- --------
Sam Eletr 5,960,470 20,972
William K. Bowes, Jr. 5,960,356 21,086
Sydney Brenner 5,960,199 21,243
James C. Kitch 5,960,285 21,157
Kathleen D. LaPorte 5,960,074 21,368
David W. Martin, Jr. 5,960,256 21,286
Craig C. Taylor 5,960,470 20,972
(2) Approval of Amendment to 1992 Stock Option Plan:
For: 5,678,708 Against: 122,913 Withheld: 15,602
(3) Ratification of the selection of Ernst & Young LLP as
independent auditors of the Company for its fiscal year ending
December 31, 1996.
For: 5,978,032 Against: 1,402 Withheld: 2,008
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as Exhibits to this
report:
Exhibit
Number Description
------ -----------
10.31 Collaboration Agreement dated as of July 9, 1996, by and
among the Company and Tanabe Seiyaku Co., Ltd.
27. Financial Data Schedule
10.
<PAGE>
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
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.
LYNX THERAPEUTICS, INC.
/s/ David W. Martin, Jr., M.D.
-------------------------------------------------
By: David W. Martin, Jr., M.D.
President and Chief Executive Officer
Date: August 13, 1996
/s/ Craig C. Taylor
-------------------------------------------------
By: Craig C. Taylor
Acting Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: August 14, 1996
11.
<PAGE>
Exhibit Index
The Exhibits below are numbered according to Item 601 of Regulation S-K.
Exhibit
Number
- - ------
10.31 Collaboration Agreement dated as of July 9, 1996, by and among the
Company and Tanabe Seiyaku Co., Ltd.
27. Financial Data Schedule
12.
Exhibit 10.31
Collaboration Agreement dated as of July 9, 1996, by and among
the Company and Tanabe Seiyaku Co., Ltd.
13.
<PAGE>
COLLABORATION AGREEMENT
LYNX THERAPEUTICS, INC.
AND
TANABE SEIYAKU CO., LTD.
<PAGE>
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT (the "Agreement") is entered into by and
between LYNX THERAPEUTICS, INC., a Delaware corporation having its principal
place of business at 3832 Bay Center Place, Hayward, California 94545 ("Lynx"),
and TANABE SEIYAKU CO., LTD., a corporation organized and existing under the
laws of Japan having its principal place of business at 2-10 Dosho-machi
3-chome, Chuo-ku, Osaka 541, Japan ("Tanabe"), as of July 9, 1996 (the
"Effective Date"). Lynx and Tanabe may be referred to herein as a "Party" or,
collectively, as "Parties."
BACKGROUND
A. Lynx is engaged in research and development of, among other things,
oligonucleotides and oligonucleotide analogs that may be useful for therapeutic
treatment of disease conditions. Lynx is presently developing one such
oligonucleotide compound, identified as LR-3280 targeted to [*Redacted], as a
pharmaceutical product for the prevention or treatment of restenosis in any
blood vessel following an angioplasty or similar procedure.
B. Tanabe has substantial experience in the clinical development of
therapeutic agents and the distribution, marketing and sale of such agents as
pharmaceuticals, particularly in the cardiovascular field.
C. Lynx and Tanabe desire to enter into a relationship under which
Tanabe will have the right to develop and commercialize LR-3280 and certain
related oligonucleotide compounds in Japan and certain other countries in Asia
for the prevention or treatment of restenosis in any blood vessel following an
angioplasty or similar procedure, and Lynx will supply Tanabe, under the terms
of this Agreement and a supply agreement, quantities of product containing such
compounds for clinical use and commercial sale.
D. The Parties have earlier executed a non-binding Memorandum of
Understanding dated March 27, 1996 (the "Memorandum of Understanding"), that set
forth the major terms and conditions of such proposed relationship. The Parties
now desire to enter into an agreement establishing the development and supply
terms under which Tanabe shall develop and commercialize such compounds.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises contained in this Agreement, the parties agree as follows:
1.
<PAGE>
1. DEFINITIONS.
As used herein, the following capitalized terms shall have the
following meanings when used in this Agreement:
1.1 "Affiliate" means a corporation, partnership, entity, person, firm,
company, or joint venture that controls, is controlled by or is under the common
control with the referenced Party. For the purposes of this definition the word
"control" (including, with correlative meaning, the terms "controlled by" or "is
under the common control with") means the power to direct or cause the direction
of the management and policies of such entity, or the ownership of at least
fifty percent (50%) of the voting stock of such entity; provided, however, that
if the applicable law of the jurisdiction of organization of such entity
prohibits ownership by a Party of fifty percent (50%) or more, then "control"
shall mean the ownership of the maximum percentage of the voting stock of such
entity allowed by such applicable law.
1.2 "Approval Application" means the appropriate application(s),
together with all documents, data and information concerning a Licensed Compound
or Product required to be included with such application, that is necessary to
obtain Regulatory Approval to use, import, market and/or sell a Licensed
Compound or Product in a country in the Territory.
1.3 "Back-Up Manufacturing Information" means Information owned or
Controlled by Lynx or its Affiliates, in sufficient detail, that is necessary to
permit a competent manufacturer to manufacture Licensed Compounds and Products
as per the Compound/Product Specifications.
1.4 "Cost of Delivery Means" means, with respect to a Delivery Means
sold by Tanabe, its Affiliates or permitted sublicensees hereunder, the actual
cost of purchase of such Delivery Means either (a) when purchased originally by
Lynx if sold to Tanabe for resale, or (b) when purchased by Tanabe, its
Affiliates or permitted sublicensees directly from the supplier, as applicable.
1.5 "Clinical Trial Product" means a product, appropriate for use in
clinical trials, containing a Licensed Compound or placebo (as applicable) in
the formulation as determined by Tanabe but subject to reasonable prior approval
by Lynx, for use in the clinical trials in the Field in the Territory, and
including, if so elected by Tanabe at its reasonable discretion after good faith
consultation with Lynx, such diluents and Delivery Means appropriate for such
Licensed Compound for use in the Field as determined by Tanabe but subject to
prior approval by Lynx, which approval shall not be unreasonably withheld, and
provided further that such diluents and Delivery Means are available from Lynx.
2.
<PAGE>
1.6 "Compound/Product Information" means, with respect to a Party,
Information owned or Controlled by such Party or its Affiliates regarding
Licensed Compounds and Products (including their use with Delivery Means if
applicable) that is necessary or useful to the development of Licensed Compounds
and the regulatory approval and commercialization of Products for use in the
Field; provided, however, that Compound/Product Information shall not include
any Manufacturing Information.
1.7 "Confidential Information" means, with respect to a Party,
Information that is owned or Controlled by such Party or its Affiliates, is
disclosed by such Party to the other Party pursuant to this Agreement, and is
identified or acknowledged in writing to be confidential at the time of
disclosure if disclosed in tangible form or within thirty (30) days after
disclosure if disclosed orally; provided, however, that Confidential Information
shall not include any Information that:
(a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party by the
other Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure to the receiving Party by the other
Party, other than through any act or omission of the receiving Party in breach
of this Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation the other
Party not to disclose such information to others; or
(e) was subsequently and independently developed by employees
or others on behalf of the receiving Party without use of any Confidential
Information disclosed to the receiving Party or such others by the other Party.
1.8 "Control" means, with respect to a compound, material, Information
or intellectual property right, possession of the ability to grant access to or
a license or sublicense as provided for herein under such compound, material,
Information or right without violating the terms of any agreement or other
arrangements with any Third Party existing at the time such Party would be first
required hereunder to grant the other Party such access or license or
sublicense.
1.9 "Delivery Means" means a [*Redacted] for use in the Field, and that
is currently or hereafter developed and approved by the governing health
authority of any country in the Territory for use in the Field, including
without
3.
<PAGE>
limitation such [*Redacted,"] together with all diluents and other attachments
appropriate for such use.
1.10 "Development" means conducting in vitro and/or in vivo
pre-clinical and clinical investigations and trials on Licensed Compounds and
preparing, submitting and prosecuting all Approval Applications, as necessary to
obtain Regulatory Approval for Products for sale in the Field within the
Territory.
1.11 "Development Plan" means the detailed written work plan prepared
by Tanabe for Development of the Licensed Compounds and attempting to achieve
Regulatory Approval of Products within the Territory. The initial Development
Plan prepared by Tanabe is attached hereto as Exhibit D, and is subject to
amendment from time to time as provided in Section 3.2.
1.12 "Drug Master File" means the submission (or the applicable part
thereof), together with all Information contained therein, submitted to the FDA
in the United States, or to the appropriate governing health authority in
another country, providing information on the manufacturing facilities and
manufacturing processes for making a Product, including without limitation
activities relating to manufacturing, processing, formulating, packaging and
storage to be conducted by or under the direction of Lynx or its Affiliates,
which Information may be used to support Regulatory Approval of the Product in
the United States or such other country.
1.13 "Efficacy Study" means that portion of the clinical development
program in the U.S. or Europe that provides for the initial human testing of a
Product at several dosages on a limited number of patients conducted in
accordance with the appropriate governmental and institutional regulatory
authorities, the intent of which is to demonstrate the presence or absence of
pharmacological activity. The initial U.S. Efficacy Study will be similar in
scope to the [*Redacted] to be carried out at the [*Redacted,] except that such
study shall evaluate [*Redacted] so that the patient sample size will be
[*Redacted]. Except as set forth in the immediate preceding sentence, the
protocol for the initial U.S. Efficacy Study shall be substantially similar to
the latest draft of the [*Redacted] provided to Tanabe prior to the Effective
Date, and Lynx shall make no substantial modifications thereto that reduce the
scope or substantially change the endpoints without the prior express written
consent of Tanabe, which shall not be unreasonably withheld nor require more
than [*Redacted] review.
1.14 "Exclusive Territory" means Japan, Taiwan (as an autonomous state)
and Indonesia.
4.
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1.15 "FDA" means the United States Food and Drug Administration, or the
successor thereto.
1.16 "Field" means the prevention or treatment of restenosis in humans
in any blood vessel by use of a Licensed Compound delivered to the affected
blood vessel via a Delivery Means following any [*Redacted].
1.17 "Gross Wholesale Price" means, with respect to a product, the
[*Redacted] on account of the sale of such product to a non-Affiliate,
[*Redacted]. In calculating the Gross Wholesale Price of a product, [*Redacted].
1.18 "IND" means the appropriate application, together with all
documents, data and other information concerning a Licensed Compound that are
required to be included in such application, filed or submitted with the FDA in
the United States or the appropriate governing health authority of any other
country, for the purpose of obtaining approval or authority to commence human
clinical trials in such country for the purpose of seeking general marketing
approval.
1.19 "Information" means information and data of any type whatsoever,
in any tangible or intangible form whatsoever, including without limitation
inventions, practices methods, techniques, specifications, formulations,
formulae, knowledge, know-how, skill, experience, test data including
pharmacological, biological, chemical, biochemical, toxicological and clinical
test data, analytical and quality control data, stability data, studies and
procedures, and patent and other legal information or descriptions.
1.20 "Kit" means a package ready for sale to the end user hospital or
other customer, containing the Product and the Delivery Means packaged and
labeled in final form.
5.
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1.21 "Licensed Compounds" means the oligonucleotide compound identified
by Lynx as LR-3280, as more fully described on Exhibit A hereto, and any other
[*Redacted] [compounds that now or hereafter are owned or Controlled by Lynx or
its Affiliates and that [*Redacted] and are developed by Lynx, its Affiliate or
a Third Party (sub)licensee of Lynx (including the Western Partner) for use in
the Field.
1.22 "Lynx Know-How" means Compound/Product Information that is owned
or Controlled by Lynx or an Affiliate of Lynx, but excluding Lynx Patents.
1.23 "Lynx Patents" means all Patents owned or Controlled by Lynx or an
Affiliate of Lynx that claim or cover the manufacture, use or sale of Licensed
Compounds or Products. Exhibit B hereto sets forth a list of Lynx Patents as of
the Effective Date.
1.24 "Manufacturing Information" means the Information contained in the
Drug Master File and all other Information owned or Controlled by Lynx, it
Affiliates or (sub)licensees (other than Tanabe), in each case that is
maintained as confidential by Lynx, such Affiliate or (sub)licensee and that is
necessary for or directly related to the manufacture of a Licensed Compound or
Product.
1.25 "NHI" means the National Health Insurance Agency in Japan (or the
successor thereto), or the equivalent regulatory authority empowered to
establish government reimbursement prices and rates in any other country in the
Territory.
1.26 "NHI Price" means, with respect to any product in any country, the
government reimbursement price or rate established by the NHI for such product
in such country.
1.27 "NSP" means, with respect to sale of a product (other than the
Delivery Means sold alone), the [*Redacted] for sale of such product to a
non-Affiliate of Tanabe by Tanabe or its Affiliate [*Redacted].
1.28 "Patent" means (a) all patent applications heretofore or hereafter
filed or having legal force in any country; (b) all patents that have issued or
in the future issue therefrom, including utility, model and design patents and
certificates of invention; and (c) all divisionals, continuations,
continuations-in-part, reissues, renewals, extensions (including supplemental
protection certificates), additions, registrations or confirmations to or of any
such patent applications and patents.
6.
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1.29 "Product" means a pharmaceutical product containing a Licensed
Compound that has received Regulatory Approval for commercial sale in a country.
1.30 "Compound/Product Specifications" means the specifications for the
Licensed Compound and/or the Product as determined by Tanabe, after due
consideration of the specifications therefor established by Lynx in the United
States (to the extent disclosable) and in consultation with Lynx, and subject to
the prior approval of Lynx, which shall not be unreasonably withheld or delayed.
1.31 "Pivotal Clinical Trials" means that portion of the clinical
development program that provides for the expanded controlled, pivotal Phase III
(or foreign equivalent) human clinical trials, performed after preliminary
evidence suggesting effectiveness of a Product has been obtained, which are
intended to gather the additional information about the effectiveness and safety
that is needed to evaluate the overall benefit-risk relationship of such Product
and to provide adequate basis for labeling, in accordance with the appropriate
governmental and institutional regulatory authorities.
1.32 "Regulatory Approval" means, with respect to a country, all
approvals (including price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, state or local regulatory
agency, department, bureau or other government entity, necessary for the use,
storage, import, transport and sale of a Product in such country.
1.33 "Related Compounds" means all [*Redacted] compounds, other than
Licensed Compounds, that now or hereafter are owned or Controlled by Lynx or its
Affiliates and that [*Redacted] and are developed by Lynx, its Affiliate or a
Third Party (sub)licensee of Lynx (including the Western Partner) for use in the
Field.
1.34 "Related Kit Costs" means Lynx's actual Cost of Delivery Means for
the Delivery Means included in a Kit that is sold by Lynx to Tanabe hereunder
and Lynx's actual cost of packaging (or having packaged) the Kit, but excluding
the cost of the Product included in the Kit.
1.35 "Supply Agreement" means the supply agreement with respect to
supply of Products to be negotiated and entered into by the parties as
contemplated in Section 6.1.
1.36 "Tanabe Compound Information" means the data and results generated
from the in vitro and/or in vivo preclinical and clinical investigation and
testing of Licensed Compounds and/or Products during the term of this Agreement
in the course of
7.
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Development or related work on a Licensed Compound and/or Product by or on
behalf of Tanabe or its Affiliates, but excluding Tanabe Patents.
1.37 "Tanabe Patents" means all Patents owned by Tanabe or an Affiliate
of Tanabe that claim or cover inventions regarding the manufacture, use or sale
of Licensed Compounds or Products that were conceived in the course of
conducting the Development or related work on a Licensed Compound or Product
under this Agreement.
1.38 "Territory" means Korea, Thailand and the countries in the
Exclusive Territory. Pursuant to Section 2.3, Lynx may, in its discretion, add
to the definition of "Territory" Hong Kong, Singapore or China.
1.39 "Third Party" means any entity or individual other than Lynx,
Tanabe, or Affiliates of either.
1.40 "Transient" means of a duration of not more than [*Redacted]
total.
1.41 "Western Partner" means the Third Party pharmaceutical company to
which Lynx grants a license to develop Licensed Compounds and/or market Products
outside the Exclusive Territory for use in the Field.
2. LICENSES.
2.1 License Grant.
(a) Lynx hereby grants Tanabe and Affiliates of Tanabe the
right and license (the "License"), with no right to sublicense except as
provided in subsection (c) below, under the Lynx Patents and the Lynx Know-How,
solely to use the Licensed Compounds to conduct Development and to import, use,
and sell Products solely for use in the Field within the Territory, provided
that such Licensed Compounds or Products, as applicable, either were purchased
from Lynx pursuant to this Agreement and the Supply Agreement or were
manufactured by or on behalf of Tanabe or its Affiliates pursuant to the
permitted and proper exercise of the license in Section 2.1(b). The License
shall be exclusive within the Exclusive Territory and non-exclusive in all other
countries in the Territory.
(b) If Lynx is materially unable to supply Tanabe's and/or its
Affiliates' requirements of a Licensed Compound and/or Product for use in the
Field (Development and marketing), Lynx agrees that it shall [use reasonable
commercial efforts to secure the assistance of a competant Third Party
manufacturer to assist Lynx or undertake the manufacture of such Licensed
Compound or Product in order to meet such requirements]. In the event Lynx
commits a material breach of Lynx's obligations (under this Agreement and the
Supply Agreement) to supply Tanabe's and/or its Affiliates' requirements of a
8.
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Licensed Compound and/or Product for use in the Field (Development and
marketing), which breach remains uncured [*Redacted] after written notice of
such breach by Tanabe, then Tanabe and its Affiliates shall have a right to be
granted (but without the obligation to take such license), by written notice to
Lynx and without further action by Lynx, the non-exclusive right and license,
without the right to sublicense, under the Lynx Patents and the Lynx Know-How
(but not under the Manufacturing Information) solely to make or have made
Licensed Compounds and/or Products for use in the Field within the Territory,
provided, however, that Lynx's failure to supply Tanabe's or its Affiliates
requirements shall not constitute a material breach if (i) such failure is the
result of force majeure, or (ii) at the time of such failure, Lynx has supplied
at least [*Redacted] of Tanabe's and its Affiliates' binding forecasted
requirements (or orders, if less) for the [*Redacted], and at least [*Redacted]
of Tanabe's and its Affiliates' binding forecasted requirements (or orders,
less) for the [*Redacted]. In the event that Tanabe, due to Lynx's uncured
material breach of its supply obligation, exercises the license granted under
this Section 2.1(b), Tanabe shall pay Lynx a royalty, for each dose of Licensed
Compound or Product manufactured by or on behalf of Tanabe for use in the Field,
equal to [*Redacted] of the Gross Wholesale Price of the applicable Licensed
Compound or Product. In addition to all other conditions, the foregoing license
in this Section 2.1(b) shall not be effective and shall not be exercisable
unless and until the Supply Agreement is entered into by the Parties.
(c) If Tanabe can demonstrate, to Lynx's reasonable
satisfaction, that Tanabe is required to sublicense to a particular entity the
right, in a certain country in the Territory, to conduct Development on, import,
use and/or sell, as applicable, a Licensed Compound and/or Product in order for
Tanabe to achieve the Development, promotion, marketing and sale of the Product
in such country, then Lynx agrees at that time to permit, by written amendment
to this Agreement, Tanabe to grant such a sublicense to the entity identified by
Tanabe.
2.2 Disclosure of Lynx Compound/Product Information. Within [*Redacted]
following execution of this Agreement, Lynx shall disclose to Tanabe all
Compound/Product Information that is then owned or Controlled by Lynx or its
Affiliates. On a [*Redacted] basis during the Agreement, but subject to the
following limitations, Lynx shall continue to disclose to Tanabe all additional
Compound/Product Information that thereafter is owned or Controlled by Lynx or
its Affiliates and summary information regarding all Related Compounds not
previously disclosed to Tanabe. Tanabe shall have the right to ask for
additional information regarding such compounds, and Lynx shall provide
reasonable additional information within its Control. Notwithstanding the
foregoing, Tanabe understands and agrees that Lynx has no obligation to
identify, seek to discover or develop any additional Licensed Compounds or
Related Compounds. Tanabe further understands and agrees that Lynx has no
obligation to disclose any clinical trial data or other Information regarding
Licensed Compounds or
9.
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Products that is developed, generated or acquired in association with the
Western Partner or other (sub)licensee of Lynx, except such clinical trial data
or other Information arising from the European and United States clinical
Efficacy Studies, or as provided under Section 3.4, 3.5(b), 3.6 and 4.2 hereof.
Tanabe, its Affiliates and permitted sublicensees may use the Information
disclosed by Lynx under this Section 2.2 solely for the purposes of this
Agreement, and subject to all the terms and conditions of the Agreement.
2.3 Covenants Against Unauthorized Use. Tanabe hereby covenants that
Tanabe and its Affiliates and permitted sublicensees (a) will not utilize or
practice the Lynx Patents or Lynx Know-How except as expressly permitted under
the License, (b) will not sell any Licensed Compound or Product outside the
Territory, and (c) will not market, promote, or advertise any use of any
Licensed Compound outside the Field, except to the extent that Tanabe obtains
rights outside the Field pursuant to Section 5.1. Tanabe and its Affiliates and
permitted sublicensees shall use best efforts (which shall not require knowingly
violating applicable anti-trust laws) to impose on its non-Affiliate
distributors and dealers and to customers the same restrictions on resale of the
Products as are imposed on Tanabe hereunder.
2.4 Expansion of Territory. At its discretion and upon written notice
to Tanabe, Lynx during the term of the Agreement may decide to add to the
definition of "Territory" any one or more of the countries of Hong Kong,
Singapore or China, which shall be effective upon written acceptance by Tanabe.
Such decision may be premised on, among other things, Lynx's determination that
Tanabe's competitive position in such country or countries would not be unduly
restricted and that expanding the defined Territory would not jeopardize Lynx's
ability to execute other license agreements covering Licensed Compounds
elsewhere in the world. In the event Lynx agrees to add any such country to the
Territory, Tanabe also may request to add any such country to the definition of
"Exclusive Territory". If Lynx in its discretion is willing to make such country
exclusive under this Agreement, Lynx will in that case make a proposal to Tanabe
regarding any fees or milestone payments required to convert such country to
exclusivity, which proposal Tanabe may accept or decline.
3. PRODUCT DEVELOPMENT.
3.1 Development in the Territory. Tanabe shall have sole responsibility
to conduct the Development, itself or through its Affiliates on its behalf, of
one or more Licensed Compounds within the Territory in order to obtain and
maintain Regulatory Approval of Products. Tanabe and its Affiliates shall be
solely responsible for all costs and expenses of Tanabe and its Affiliates
relating to such Development efforts and to obtaining such Regulatory Approval
of Products.
10.
<PAGE>
3.2 Development Plan. Tanabe has prepared and Lynx has reviewed and
approved the initial Development Plan. After the end of each [*Redacted] while
Tanabe is conducting Development on a Licensed Compound, Tanabe shall modify the
Development Plan, to reflect such revised Development activities as Tanabe
reasonably determines to be necessary or useful to attempt to achieve Regulatory
Approval of Products within the Territory as soon as commercially practicable,
after considering the results of the Development of such Licensed Compound
during [*Redacted] and the anticipated regulatory requirements to achieve such
Regulatory Approval. The Parties shall attach such amendments to Exhibit D
hereto. Tanabe may otherwise amend the Development Plan from time to time, and
shall attach such amendments to Exhibit D hereto. In such cases, Lynx may
provide Tanabe with its comments as to such modifications or amendments, and
Tanabe shall take Lynx's comments into due consideration. Tanabe will use good
faith, commercially reasonable and diligent efforts to perform the Development
Plan. In addition to, and without limitation by, the foregoing, Tanabe agrees
that it and/or its Affiliates will pursue programs of Development of Licensed
Compounds with diligent efforts no less than Tanabe and its Affiliates apply to
the development of their own compounds or products with similar regulatory
requirements and market potential. If Tanabe commits a material breach of such
diligence obligations (provided that such breach shall not be as a result of
force majeure), and such breach remains uncured [*Redacted] after written notice
thereof, Lynx may, at its election and in its sole discretion, and upon written
notice to Tanabe, terminate this Agreement or convert to non-exclusive Tanabe's
rights throughout the Territory. It is understood that [*Redacted] shall not be
considered a material breach of Tanabe's diligence obligations hereunder, so
long as Tanabe continues to use diligent efforts [*Redacted]. The actual
activities conducted in Development of Licensed Compounds by Tanabe are at
Tanabe's sole discretion, subject to Tanabe's compliance with its diligence
obligations under this Article 3 and Section 13.3. Promptly after the Effective
Date, each Party shall appoint one of its employees to be the primary contact
point between the Parties regarding the transfer of Information, the discussion
of the Development Plan and Tanabe's efforts to conduct Development, and other
issues relating to each Party's development and marketing of Products in their
respective territories. Such primary contacts shall meet, either directly or by
telephone, on a regular basis, at least once every six months, to discuss such
issues hereunder.
3.3 Reports. Tanabe shall maintain accurate and complete records of all
Development activities and all results of any trials, studies and other
investigations conducted by or on behalf of Tanabe hereunder. Within [*Redacted]
while Tanabe is conducting Development on a Licensed Compound,
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Tanabe shall prepare and submit to Lynx a report summarizing such Development
activities, and identifying significant results or developments during such
period. Such reports shall include, without limitation, discussions related to
any significant deviations from the Development Plan and Tanabe's proposed
actions to address such significant deviations.
3.4 Tanabe Compound/Product Information. Provided that Tanabe, Lynx and
the Western Partner have entered into a mutually acceptable written agreement
pursuant to which the parties thereto agree to exchange Information regarding
Licensed Compounds and Products that is useful for Development, Approval
Applications or the sale of Licensed Compounds and/or Products for use in the
Field in their respective territories, and provided further that such agreement
is in effect and that neither Lynx nor the Western Partner are in breach
thereof, Tanabe, Lynx and the Western Partner shall provide each other with
Compound/Product Information in accordance with, and subject to, the terms and
conditions of such agreement.
3.5 Approval Applications.
(a) Tanabe and its Affiliates and permitted sublicensees will
be solely responsible for assembling its Approval Applications to obtain
Regulatory Approval in the Territory, provided, however, that if Lynx is the
manufacturer of the Licensed Compounds and/or Products Lynx shall be
responsible, [*Redacted], for preparing the Manufacturing Information required
by such Approval Applications. Such Approval Applications (excepting the Drug
Master File, if it is filed) will be filed in the name of Tanabe (or its
Affiliate or permitted sublicensee, as applicable), and Tanabe (or its Affiliate
or permitted sublicensee, as applicable) will be responsible for diligently
causing such applications (excepting the Drug Master File, if it is filed) to
progress through the approval process in the Territory. Lynx shall retain
ownership and control of all confidential or proprietary Information of Lynx or
its Affiliates or licensors prepared by Lynx for inclusion in such Approval
Applications. At Lynx's discretion, to the extent permitted by applicable law,
Lynx may require that any Manufacturing Information submitted by Lynx as part of
such Approval Applications shall be maintained in a separate Drug Master File
that is submitted to the appropriate regulatory authorities separate from the
rest of the Approval Application and maintained confidential. Ownership of such
Drug Master Files and any Manufacturing Information included in any such
Approval Application shall remain with Lynx. Lynx shall be responsible,
[*Redacted] and reasonable assistance, for causing such Drug Master File to
progress through the approval process in the Territory. Tanabe may consult with
Lynx with respect to Approval Applications. Lynx will cooperate with Tanabe in
such manner as Tanabe may reasonably request to assist in obtaining Regulatory
Approvals.
12.
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(b) Provided that Tanabe, Lynx and the Western Partner have
entered into a mutually acceptable written agreement pursuant to which the
parties agree to exchange Approval Applications regarding the use or sale of
Licensed Compounds and/or Products for use in the Field in their respective
territories, and provided further that such agreement is in effect and that
neither Lynx nor the Western Partner are in breach thereof, Tanabe shall provide
Lynx and the Western Partner with copies of its Approval Applications in
accordance with, and subject to, the terms and conditions of such agreement.
3.6 Adverse Events. During the term of the Agreement, each Party shall
notify the other immediately of any Information of which such Party becomes
aware concerning any material adverse side effect, injury, toxicity or
sensitivity reaction, whether or not serious or unexpected (collectively, any
"adverse event"), or any unexpected incidence, and the severity thereof,
associated with the clinical uses, studies, investigations, tests and marketing
of any Licensed Compound or Product, whether or not determined to be
attributable to such Licensed Compound or Product. Without limiting the
generality of the foregoing, each Party shall notify the other Party of any
event or incidence regarding any Licensed Compound or Product, which it is
required to notify or report to any governmental authority of the country in
which it sells such Licensed Compound or Product, prior to the date when it is
required to give such notice or to make such report. Each Party further shall
immediately notify the other of any Information received regarding any
threatened or pending action by a governmental agency or any other Third Party
arising out of or relating to an alleged adverse event or unexpected incidence
regarding any Licensed Compound or Product. Upon receipt of any such
Information, the Parties shall consult with each other in an effort to arrive at
a mutually acceptable procedure for taking appropriate action; provided,
however, that nothing contained herein shall be construed as restricting either
Party's right to make a timely report of such matter to any government agency or
take other action that it deems to be appropriate or required by applicable law
or regulation, including the right of a Party to recall or withdraw such
Licensed Compound or Product from development, marketing and selling. Lynx shall
use reasonable efforts to obtain the agreement of the Western Partner to be
bound by provisions similar to this Section 3.6. Tanabe, Lynx and the Western
Partner may enter into a mutually acceptable agreement to mutually exchange
adverse event information consistent with the provisions of this Section 3.6.
The obligations in this Section 3.6 pertaining to Licensed Compounds or Products
shall survive the expiration or termination of this Agreement.
3.7 Exclusivity.
(a) Tanabe Obligations. During the term of the Agreement,
Tanabe shall not develop, market or sell in the Exclusive Territory any
[*Redacted], for use in the prevention or treatment of [*Redacted
13.
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]. In addition, Tanabe shall not, during the term of this Agreement, develop,
market or sell in the Exclusive Territory any compound, other than an [*Redacted
], for use in the prevention or treatment of restenosis in humans in any blood
vessel following any stenosis-reducing medical procedure that is Transient in
nature and that is intended to reduce the obstruction of the blood flow in the
stenosed vessel (including without limitation percutaneous transluminal
angioplasty, percutaneous transluminal coronary angioplasty and angioplasty
involving placement of an intravascular stent), unless Tanabe is
contemporaneously continuing in good faith to conduct Development and/or
marketing of at least one Licensed Compound for use in the Field, which
Development and/or marketing efforts involve expenditure of [*Redacted].
(b) Lynx Obligations. During the term of this Agreement, Lynx
shall not develop, market or sell, and shall not license any Lynx Affiliate or
Third Party under the Lynx Patents and Lynx Know-How to develop, market or sell
within the Exclusive Territory any [*Redacted] compound that [*Redacted], for
use in the prevention or treatment of restenosis in humans [*Redacted] by use of
such compound delivered to the affected blood vessel by a [*Redacted].
3.8 Lynx Development. Lynx shall retain the right to develop or to have
Third Parties develop, market and sell the Licensed Compounds for use in the
Field in all countries outside the Exclusive Territory.
4. MARKETING.
4.1 Marketing Efforts. Tanabe and its Affiliates and permitted
sublicensees will use commercially reasonable and diligent efforts to market and
sell the Products that
14.
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have received the applicable Regulatory Approval in any country in the Territory
for use in the Field in each such country. Subject to the foregoing, all
decisions regarding marketing, promotion and sales of Products in the Territory
by or on behalf of Tanabe shall be at Tanabe's sole discretion.
4.2 Marketing Support. Provided that Tanabe, Lynx and the Western
Partner have entered into a mutually acceptable written agreement pursuant to
which the parties agree to exchange marketing and commercial information,
Tanabe, Lynx and the Western Partners each will cooperate in providing to each
other commercial information (including, but not limited to copies of
promotional items, medical article reprints, medical educational strategies and
related materials) regarding the marketing of the Product worldwide in
accordance with, and subject to the terms and conditions of, such agreement.
4.3 Packaging and Labeling. The Product for commercial sale under this
Agreement shall be packaged and labeled consistent with the requirements of the
regulatory authorities in the Territory, shall identify any applicable Lynx
Patent consistent with marking requirements, and, if applicable, shall identify
Lynx as the manufacturer of the Product. Subject to the foregoing, Tanabe shall
in its reasonable discretion determine the packaging and labeling for the
Products.
4.4 Reports. Commencing after a Product is commercially sold in the
Territory, Tanabe will provide to Lynx a report on a [*Redacted] basis within
[*Redacted] of the end of such [*Redacted] period summarizing Tanabe's and its
Affiliates' marketing efforts with respect to Products during such period and
summarizing any Third Party activity actually known to Tanabe or its Affiliates
(without any duty of investigation) regarding marketing or sale of competitive
products in the Exclusive Territory.
4.5 Sales of Kits and/or Delivery Means. If Tanabe determines in its
reasonable discretion exercised in good faith that it is commercially and
economically beneficial for Tanabe to market Products in any country in the
Territory in Kit form, or to market Delivery Means in conjunction with the
Products as a separate product in any country in the Territory, then Tanabe
shall use commercially reasonable and diligent efforts to market and sell the
Kits or Delivery Means, as applicable, in such country in the Territory.
4.6 Restrictions on Distributors and Dealers. Tanabe shall use its
commercially reasonable and diligent efforts to provide that any of its
non-Affiliate distributors or dealers to whom Tanabe sells the Products for
resale shall not sell any Products to any customer located outside the Territory
and shall not market, promote or advertise use of a Product or Licensed Compound
for any use other than use in the Field, except to the extent Tanabe obtains
rights outside the Field pursuant to Section 5.1.
15.
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5. RIGHTS TO OTHER COMPOUNDS AND FIELDS.
5.1 Other Indications for Licensed Compounds. Lynx hereby grants Tanabe
a right of first refusal as provided in this Section, to obtain licenses to use
Licensed Compounds for other applications or indications outside the Field.
Provided that Tanabe has diligently executed or is continuing to diligently
execute in a timely manner the Development Plan with respect to at least one
Licensed Compound for use in the Field in the Territory (excluding failures to
execute the Development Plan as a result of force majeure or other cause not
attributable to Tanabe's responsibility or control), Lynx will give Tanabe
written notice if at any time Lynx desires to grant a license to a Third Party
within the Territory to import, develop, use and sell one or more Licensed
Compounds for a particular use, indication or application outside the Field.
Such notice shall include such Information owned or Controlled by Lynx or its
Affiliates as Lynx in its good faith and reasonable discretion believes would be
useful to enable Tanabe to evaluate its interest in obtaining such a license. If
Tanabe is interested in obtaining such a license, Tanabe shall give Lynx written
notice of its desire to negotiate such license within [*Redacted] of receipt of
such written notice and Information from Lynx. If Tanabe provides such notice,
the Parties will meet and negotiate in good faith, during the [*Redacted] period
following Tanabe's provision of such notice, the terms and provisions of a
license agreement granting Tanabe such license rights to commercialize the
Licensed Compound for such use, application or indication outside the Field
within the Territory. If, at the end of such [*Redacted] period, the Parties
cannot reach agreement on the terms of such license agreement, Lynx may during
the [*Redacted] period thereafter enter into a license agreement with a Third
Party granting such Third Party license rights to commercialize such Licensed
Compound for such use, application or indication outside the Field within the
Territory as was offered to Tanabe, provided that such license agreement is no
more favorable to such Third Party than the terms last proposed by Lynx to
Tanabe during such [*Redacted] negotiation period.
5.2 Rights to Related Compounds. Lynx hereby grants Tanabe the right to
include within the license rights granted under the License in Section 2.1(a)
specific Related Compounds, as provided in this Section. During the term of this
Agreement, provided that Tanabe has diligently executed or is continuing to
diligently execute in a timely manner the Development Plan with respect to at
least one Licensed Compound for use in the Field in the Territory (excluding
failures to execute the Development Plan as a result of force majeure or other
cause not attributable to Tanabe's responsibility or control), Lynx promptly
will disclose to Tanabe every Related Compound, together with such Information
owned or Controlled by Lynx or its Affiliates as Lynx in its good faith and
reasonable discretion believes would be useful to enable Tanabe to evaluate its
interest in obtaining such license to such Related Compound. If Tanabe is
interested in obtaining license rights to develop and commercialize any such
Related Compound for use in the Field, Tanabe shall give Lynx written notice of
such desire within [*Redacted] of
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disclosure of such Related Compound and Information by Lynx. Thereafter, the
parties will negotiate in good faith appropriate economic terms for adding such
Related Compound to the terms of the Agreement as an additional Licensed
Compound, including appropriate license fees and milestone payments for such
Related Compound and appropriate supply terms. Upon the Parties reaching
agreement on such financial terms, the Parties will execute an appropriate
amendment to the Agreement, adding such Related Compound to the definition of
"Licensed Compound" and providing such additional modifications to the
Agreement, including development obligations, as are appropriate. If, after the
initial disclosure of a Related Compound to Tanabe under this Section, Lynx or
its Affiliate develops additional material Information regarding such Related
Compound, that Lynx in its good faith and reasonable discretion believes would
be useful to Tanabe in its decision whether to seek such license, Lynx shall
present such additional Information to Tanabe and the opportunity to add such
Related Compound to the License under this Section. Such disclosures shall occur
at least [*Redacted] (unless Lynx has licensed such Related Compound to a Third
Party subject to the following provisions). If Lynx desires to license such
Related Compound to an Affiliate or Third Party, Lynx may not do so unless Lynx
first has offered such Related Compound to Tanabe and provided Tanabe with such
Information pursuant to this Section. If Lynx makes such an offer, and Tanabe
declines to negotiate such license, or the Parties are unable to conclude an
agreement on the terms within [*Redacted] after such negotiations commence, then
Lynx may for a period of [*Redacted] thereafter grant to any Affiliate or Third
Party a license regarding such Related Compound, provided that such license is
on terms no more favorable to such Affiliate or Third Party than the terms last
proposed by Lynx to Tanabe therefor.
5.3 World-Wide Rights. In the event Lynx grants a Third Party license
rights, as contemplated under Section 5.1 or 5.2, that are world-wide, the
financial terms of such license rights shall be compared with the terms last
proposed by Lynx to Tanabe on the basis that the Territory represents
[*Redacted] of the world-wide market.
6. MANUFACTURING AND SUPPLY.
6.1 Manufacturing Rights; Supply. Lynx shall retain all rights to
manufacture or have manufactured the Licensed Compounds and Products, subject to
the provisions of Section 2.1(b). Lynx agrees to supply Tanabe's clinical trial
requirements for the Licensed Compounds used in its Development and requirements
for Products for commercial sale in the Territory, pursuant to this Agreement
and a separate Supply Agreement to be negotiated between the Parties in good
faith and entered into within one year of the Effective Date, which Supply
Agreement shall be consistent with the terms of this Article 6, the additional
summary supply terms attached hereto as Exhibit C, the other applicable terms
and conditions of this Agreement (including without limitation Articles 9 and
11), and such other terms and conditions as are necessary or appropriate to
comply
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with all applicable laws and regulations in the Territory or are otherwise
agreed to by the Parties.
6.2 Clinical Supply. Lynx agrees to provide Tanabe with such quantities
of the particular Licensed Compound on which Tanabe is conducting Development as
Tanabe may order pursuant to this Agreement and the Supply Agreement. Clinical
supplies of the Licensed Compound under Development shall be in the form of
Clinical Trial Products. At least [*Redacted] prior to commencement of clinical
trials of the Licensed Compounds in the Territory, Tanabe shall give Lynx a
[*Redacted] forecast of its expected requirements for such Clinical Trial
Products, including quantities, dosages and requested delivery dates. Tanabe
shall update such forecast at the beginning of [*Redacted] thereafter during
Development. Lynx shall supply Tanabe's requested quantities of the Clinical
Trial Products for use in clinical trials in the Territory, at the requested
delivery times; provided, however, that such delivery times are not less than
[*Redacted] after receipt by Lynx of Tanabe's firm order for a specified
quantity of Clinical Trial Products. Such order shall not deviate by more than
[*Redacted] from the amount forecasted for such delivery dates in the most
recent forecast.
6.3 Pricing of Clinical Supplies. The Clinical Trial Products supplied
by Lynx shall be sold to Tanabe at a per unit transfer price as follows:
(a) [*Redacted] of Licensed Compound, or, with respect to
placebo, [*Redacted,] included in the Clinical Trial Product; plus
(b) [*Redacted] of the Delivery Means (if provided by Lynx and
if applicable); plus
(c) [*Redacted] for preparing the final packaged Clinical
Trial Product.
At a maximum dose of [*Redacted] of the Licensed Compound, Lynx estimates that
the cost per unit of Clinical Trial Product (including the Delivery Means) shall
not be greater than [*Redacted]. In the event of any unanticipated and severe
changes in market conditions or other circumstances affecting the costs per unit
of the Clinical Trial Product (including the Delivery Means), the Parties agree
to [*Redacted] them.
6.4 Commercial Product Supply. Lynx agrees to provide Tanabe with its
commercial requirements of each Product for which Tanabe has obtained Regulatory
Approval, pursuant to the terms of this Agreement and the Supply Agreement, in
bulk form, single dose form and/or packaged in a Kit, as Tanabe determines in
its sole discretion. If Tanabe elects to purchase Product in bulk form, Tanabe
understands and
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agrees that Lynx may provide the Product in bulk liquid form, and that Tanabe
shall be solely responsible for any [*Redacted] issues. If Tanabe or its
Affiliate (as provided in Section 4.5) determines to market Products in any
country in the Territory in Kit form including a Delivery Means, or to market
such Delivery Means in conjunction with the Product but as a separate product in
any country in the Territory, then Tanabe and/or its Affiliate, as applicable,
agrees to purchase the Delivery Means from Lynx, and Lynx agrees to sell such
Delivery Means to Tanabe and/or its Affiliate, as applicable (provided that Lynx
can obtain such Delivery Means from its suppliers, and subject to Section 9.2),
and Tanabe and its Affiliates agree to resell the Product either in Kit form or
to market and sell the Product and the Delivery Means together but as separate
products, as applicable, in such country in the Territory, for so long as Tanabe
determines in its reasonable, good faith discretion that it is commercially and
economically beneficial for Tanabe to do so.
6.5 Purchase Prices for Product and Delivery Means. The determination
of the amounts Tanabe shall pay Lynx for Tanabe's purchase of Product and
Delivery Means for commercial sale hereunder shall depend on the method of
resale of such Product. If Tanabe resells Product alone or in conjunction with
resale of the Delivery Means but as separate products, with separate sale prices
for each such product, Tanabe shall pay Lynx the purchase price for such Product
as determined in Section 6.6, and Tanabe shall pay Lynx for the associated
Delivery Means as provided in Section 6.7. If Tanabe resells the Product bundled
with the Delivery Means in a Kit, then Tanabe shall pay Lynx for such Product
and Delivery Means as provided in Section 6.8. Notwithstanding anything to the
contrary in this Agreement, at such time as, in a particular country in the
Territory, all the Lynx Patents have expired (or, as of the date one year after
commencement of commercial sale of a Product in such country, no Lynx Patents
have issued in such country) and a generic drug product competitive with a
Product is being sold in such country, Tanabe and Lynx shall [*Redacted] for
such Product for sale in such country (including the minimum purchase prices) to
reflect such changed market conditions.
6.6 Commercial Purchase Price of Product. In part consideration for the
rights granted by Lynx herein and for the supply of the Product, Tanabe shall
pay Lynx the amount set forth herein for purchases of any Product for resale in
any country in the Territory in single dose vials (i.e., not in Kit form).
(a) If the NHI has established an NHI Price for such Product
for sales in such country, the purchase price for such Product payable to Lynx,
on a per dose basis, for Tanabe's purchases of such Product for resale in such
country shall be equal to [*Redacted] of the established NHI Price for such
Product in such country.
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(b) If the NHI has not established an NHI Price for such
Product for sales in such country, the purchase price for such Product payable
to Lynx, on a per dose basis, for Tanabe's purchases of such Product for resale
in such country shall be equal to [*Redacted] of the Gross Wholesale Price for
sales of such Product by Tanabe or its Affiliates to non-Affiliates in such
country.
(c) The purchase price payable to Lynx per dose of a Product
purchased by Tanabe for commercial sale in any country in the Territory, whether
determined under subsection (a) or (b) of this Section 6.6, shall not in any
event be less than [*Redacted] per dose of such Product. In the event that such
purchase price of [*Redacted] per dose of such Product is greater than
[*Redacted] of the NHI Price established for such Product in such country, or,
in the absence of such NHI Price, is greater than [*Redacted] of the average
Gross Wholesale Price (on a per dose basis) charged by Tanabe (or its Affiliates
as appropriate) during the preceding [*Redacted] for sales of such Product to
non-Affiliates in such country, then Tanabe shall give Lynx written notice of
such event, including all relevant details, and the Parties shall promptly
thereafter meet and negotiate in good faith appropriate modifications to the
pricing structure for such Product hereunder in such country, taking into
account each Party's respective concerns and interests.
(d) If Lynx supplies such Product in bulk form, the purchase
price for such Product under subsection (a), (b) or (c) of this Section 6.6
shall be reduced by the [*Redacted] such Product in final single dose form;
provided, however, that the amount of such reduction shall not be greater than
[*Redacted] such Product in final single dose form by or on behalf of Lynx.
Tanabe shall be fully responsible for [*Redacted]; provided, however, that, at
Tanabe's reasonable request and expense, Lynx shall provide Tanabe with
reasonable technical assistance regarding the quality control and related
procedures relating to the [*Redacted].
6.7 Purchase and Sale of Delivery Means. For purchase by Tanabe or its
Affiliates from Lynx of Delivery Means hereunder, Tanabe shall pay Lynx
[*Redacted] of the actual Cost of Delivery Means that Lynx paid its suppliers
for Lynx's purchase of such Delivery Means, plus, for commercial resale in the
Territory, an additional amount based on resale of such Delivery Means. For
sales by Tanabe and its Affiliates and permitted sublicensees of Delivery Means
(whether purchased from Lynx or a Third Party) as an independent product sold in
any country in the Territory for use with the Product (i.e., not in a Kit),
Tanabe shall pay Lynx an amount based on such sales. The Parties agree to
negotiate in good faith, and include in the Supply Agreement, the mechanism for
determining the payment amount for Tanabe's or its Affiliates' sales of such
Delivery Means. The Parties agree that such payment mechanism shall be agreed by
the Parties in
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good faith to provide Lynx with [*Redacted] from such sales of Delivery Means,
provided that such amount payable to Lynx shall not in any event be less than
[*Redacted] of the Gross Wholesale Price of such Delivery Means when sold by
Tanabe or its Affiliates.
If Tanabe (or its Affiliates) purchases the Delivery Means from a party other
than Lynx for resale in association with the Product, Tanabe shall use
commercially reasonable efforts to minimize the Cost of Delivery Means of such
purchases by Tanabe (or its Affiliates).
6.8 Product Pricing Based on NHI Kit Price. For Tanabe sales of the
Product in Kit form, Tanabe shall pay Lynx for its purchases of a Product and
Delivery Means (if purchased from Lynx) included in the Kit, as set forth in
this Section 6.8. If Tanabe purchases such Product already packaged in Kit form
by Lynx under the Supply Agreement, Tanabe shall pay Lynx a per Kit purchase
price equal to the sum of (i) [*Redacted] for the Kit, plus (ii) [*Redacted]
calculated as set forth below. If Tanabe purchases the Product separately and
packages the Product and Delivery Means itself, Tanabe shall pay Lynx for
purchase of such Product and resale in Kit form [*Redacted] as calculated below,
plus [*Redacted] of the Cost of Delivery Means for the Delivery Means if
purchased from Lynx.
(a) Purchase Price Calculation. Subject to subsection (b)
below, the Kit Purchase Price for such Product purchased by Tanabe and resold in
Kits commercially in any country in the Territory shall be calculated as set
forth in Exhibit E attached hereto.
(b) Minimum Product Purchase Price. The Product Purchase Price
for Tanabe's purchase of a Product resold in Kit form in any country in the
Territory, as determined in this Section 6.8, shall not in any event be less
than [*Redacted] of such Product. In the event that such Product Purchase Price
of [*Redacted] of such Product is greater than [*Redacted] of the NHI Price
established for the Product in such country, or, in the absence of such NHI
Price for the Product in such country, is greater than [*Redacted] of the sum of
the NHI Prices for the Product and the Delivery Means sold alone in such
country, or in the absence of such NHI Prices in such country is greater than
[*Redacted] of the average Gross Wholesale Price (on a per Kit basis) charged by
Tanabe (or its Affiliates as appropriate) during [*Redacted] for sales of such
Kit to non-Affiliates in such country, then Tanabe shall give Lynx written
notice of such event, including all relevant details, and the Parties shall
promptly thereafter [*Redacted] taking into account each Party's respective
concerns and interests.
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(c) If Lynx supplies such Product in bulk form, the Product
Purchase Price for such Product under subsection (a) or (b) of this Section 6.8
shall be reduced by [*Redacted] such Product in final single dose form;
provided, however, that the amount of such reduction shall not be greater than
[*Redacted] such Product in final single dose form by or on behalf of Lynx.
Tanabe shall be fully responsible for [*Redacted] relating to the [*Redacted];
provided, however, that, at Tanabe's reasonable request and expense, Lynx shall
provide Tanabe with reasonable technical assistance regarding the quality
control and related procedures relating to the [*Redacted].
6.9 Compound/Product Specifications. Lynx agrees that, in the event
Lynx commits a material, uncured breach of Lynx's obligations to supply Tanabe's
or its Affiliates' requirements for Licensed Compound or Product which breach
remains uncured [*Redacted] after written notice thereof by Tanabe, Lynx shall
provide Tanabe with the Compound/Product Specifications for such Licensed
Compound or Product and the Back-up Manufacturing Information applicable to such
Licensed Compound or Product, provided, however, that Lynx's failure to supply
Tanabe's or its Affiliates' requirements shall not constitute a material breach
if (i) such failure is the result of force majeure, or (ii) at the time of such
failure, Lynx has supplied [*Redacted] of Tanabe's and its Affiliates' binding
forecasted requirements (or orders, if less) for the [*Redacted], and at least
[*Redacted] of Tanabe's and its Affiliates' binding forecasted requirements (or
orders, if less) hereunder for the current calendar quarter. However, nothing in
the foregoing shall obligate Lynx to disclose to Tanabe all of the Manufacturing
Information.
7. MILESTONES.
7.1 Milestone Payments. In part consideration for the rights granted by
Lynx herein, Tanabe shall pay Lynx the following amounts in United States
currency, within [*Redacted] of the occurrence of the specified events:
(a) $3.5 million, payable on the execution of the Agreement;
(b) [*Redacted], payable on the later to occur of [*Redacted];
(c) [*Redacted], payable on the commencement of [*Redacted];
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(d) [*Redacted], payable upon commencement by Tanabe or its
Affiliate of [*Redacted];
(e) [*Redacted], payable upon [*Redacted].
7.2 Gross-Up of Certain Withholding. With respect to any milestone
payment owed to Lynx above, Tanabe agrees to pay Lynx an additional amount equal
to any amount of withholding tax required to be withheld by Japan government or
regulatory agencies based on such milestone payment, but shall not be
responsible for any taxes owed to the U.S. or any other government or regulatory
authority (other than Japan) by Lynx. Lynx agrees reasonably to cooperate with
Tanabe in its seeking to minimize or recapture any such withholding costs or
expenses, at no cost to Lynx other than reasonable administrative expenses. Lynx
shall not be required to take any actions that in Lynx's reasonable judgment
create a material risk of any civil, criminal or other governmental sanction or
penalty. If any such tax, which is paid by Tanabe for the benefit of Lynx to any
taxing authority pursuant to this Section 7.2, is reimbursed, refunded or
credited by any taxing authority to Lynx, then Lynx shall pay to Tanabe the
amount so reimbursed, refunded or credited.
8. PATENT AND OTHER INTELLECTUAL PROPERTY IN TERRITORY.
8.1 Ownership of Technology. Lynx shall retain all right, title and
interest in and to the Lynx Patents and Lynx Know-How licensed to Tanabe
hereunder.
8.2 Patent Prosecution and Maintenance; Abandonment. Lynx shall remain
responsible for patent prosecution and maintenance of Lynx Patents and shall
bear all expenses associated therewith. In the event Lynx elects not to
prosecute a Lynx Patent application filed or to abandon an issued Lynx Patent in
a country in the Territory and licensed hereunder, Lynx shall notify Tanabe not
less than [*Redacted] before any relevant deadline and Tanabe shall have the
right to pursue, at its expense and in its sole discretion, prosecution of such
Patent application or maintenance of such issued Lynx Patent. In such event,
Lynx shall promptly assign its rights therein to Tanabe.
8.3 Defense and Settlement of Third Party Claims. If a Third Party
files a claim, suit or action against Tanabe claiming that a Patent or other
intellectual property right owned by it is infringed by the development, use,
marketing, distribution or sale of any Product, and such claim, suit or action
(a "Claim") arises out of Tanabe's practice, in the Field and in the Territory,
of a Lynx Patent or Lynx Know-How licensed hereunder, Tanabe will have the right
to defend against or to settle any such Claims. Lynx will assist
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in the defense of any such Claim as reasonably requested by Tanabe. Tanabe shall
not settle any such Claim without the prior express written consent of Lynx,
which consent shall not be unreasonably withheld or delayed, if such settlement
would impose on Lynx the obligation to pay any damages or would adversely affect
Lynx's rights in the Lynx Patents or Lynx Know-How. Tanabe shall be entitled to
deduct [*Redacted] of any expense incurred by Tanabe as a result of its defense
or settlement of such Claim, including, without limitation, damages, settlement
amounts, and attorneys' fees and costs, from amounts owing to Lynx for its
purchases of Product pursuant Sections 6.6 and 6.8 above; provided, however,
that such deduction shall apply only to that portion of such commercial purchase
price in excess of [*Redacted]. Such deduction shall not result in a reduction
of such commercial purchase price to an amount less than [*Redacted].
Additionally, in the event that Tanabe is required to obtain a license under a
Third Party Patent that covers or claims the manufacture, use or sale of
Licensed Compounds in order to practice a Lynx Patent to sell a Product as
permitted under the License, Tanabe shall be entitled to deduct [*Redacted] of
any royalties owing to such Third Party based on sale of such Product under such
license from amounts owing to Lynx for its purchase of such Product pursuant to
Section 6.6, or 6.8 above; provided, however, that if such deduction would
result in a reduction of the commercial purchase price per unit for Product
under Sections 6.6 and 6.8 to less than [*Redacted], then Lynx shall give Tanabe
written notice of such event, and the Parties shall promptly thereafter meet and
negotiate in good faith appropriate modifications to the pricing structure for
such Product hereunder in such country, taking into account each Party's
respective concerns and interests. The combined deductions resulting from
settlement or defense of Third Party claims and acquiring a license under a
Third Party Patent in order to practice a Lynx Patent permitted under the
License shall not in any event result in a reduction of the commercial purchase
price [*Redacted] to an amount less than [*Redacted]. Lynx further agrees to
indemnify, defend and hold Tanabe, its Affiliates or permitted sublicensees
harmless against any claim, suit or action by a Third Party that, in
manufacturing a Licensed Compound or Product supplied to Tanabe or its
Affiliates hereunder, Lynx's manufacturing process infringes such Third Party's
Patent or other intellectual property right. In addition to the foregoing, in
the event that either Lynx or Tanabe reasonable believes that it is likely that
the Development, use, importation, marketing, distribution or sale of a Product
within the Field and in the Territory would infringe a Third Party Patent in the
Territory, then Tanabe and Lynx shall consult and cooperate reasonably with each
other to determine what actions, if any, should be taken, including the
possibility of obtaining a license under such Patent if required. However,
neither Party will be obligated, as a result of such consultation, to take any
particular action except by agreement.
8.4 Enforcement of Patent Rights. If any Lynx Patent licensed hereunder
is infringed by a Third Party in any country in the Territory in connection with
the
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manufacture, use or sale in such country of an oligonucleotide compound that
[*Redacted] for use in the prevention or treatment of restenosis in humans in
any blood vessel following any stenosis-reducing medical procedure that is
Transient in nature and that is intended to reduce the obstruction of the blood
flow in the stenosed vessel (including without limitation percutaneous
transluminal angioplasty, percutaneous transluminal coronary angioplasty and
angioplasty involving placement of an intravascular stent), by use of such
compound delivered to the affected blood vessel by [*Redacted], the Party to
this Agreement first having knowledge of such infringement shall promptly notify
the other in writing. The notice shall set forth the facts of that infringement
in reasonable detail. Lynx shall have the primary right, but not the obligation,
to institute, prosecute, and control any action or proceeding with respect to
such infringement, by counsel of its own choice, and Tanabe shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice. If Lynx fails to bring an action or proceeding within a period
of [*Redacted] after having knowledge of infringement of a Lynx Patent licensed
hereunder, Tanabe shall have the right to bring and control any such action by
counsel of its own choice, and Lynx shall have the right to be represented in
any such action by counsel of its own choice at its own expense. The Party
controlling any such action shall consider in good faith the interests of the
other Party in so doing, and shall not settle or consent to an adverse judgment
in any such action which would have a material adverse effect on the rights or
interests of the other Party without the prior express written consent of the
other Party. If one Party brings any such action or proceeding, the other Party
agrees to be joined as a Party plaintiff if necessary to prosecute the action
and to give the first Party reasonable assistance and authority to file and
prosecute the suit. Lynx retains all other rights with respect to enforcement of
Lynx Patents. Any damages or other monetary awards recovered shall be allocated
to the Parties in the following manner: first, to the reimbursement of Lynx and
Tanabe for their respective out-of-pocket expenses (including reasonable
attorneys' fees and costs) incurred in prosecuting such infringement action, on
a pro rata basis based upon their respective out-of-pocket expenses; and second,
the balance to be allocated [*Redacted] to the Party bringing suit and
[*Redacted] to the other Party.
8.5 Registration of License. Tanabe shall have the rights, in its sole
discretion and at its sole expense, to register the License granted under this
Agreement in any country of the Territory where the import, use and sale of
Licensed Compounds or Products in such country would be covered by a valid claim
in a Lynx Patent. Upon request by Tanabe, if reasonably required by applicable
laws or regulations in order to sell a Product under the License, Lynx shall
promptly execute a mutually-acceptable short form license, and such other
reasonably necessary documents or instruments acceptable to
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Lynx, and to provide, at Tanabe's sole expense, such additional assistance as
Tanabe reasonably requests in order to effect the foregoing registration in such
country.
9. INDEMNIFICATION.
9.1 Licensed Compounds and Products. Subject to compliance with Section
9.3, Lynx agrees to indemnify and defend Tanabe, its Affiliates and permitted
sublicensees, and their respective agents and employees, from and against any
and all losses, liabilities, damages, costs, fees and expenses, including
reasonable legal costs and attorneys' fees ("Losses") resulting from a Third
Party claim, suit or action based upon death or injury to any person or damage
to any property to the extent caused by the defective or negligent manufacture
of Licensed Compound or Product manufactured by or on behalf of Lynx, its
Affiliates, agents or sublicensees (other than Tanabe or its Affiliates or
sublicensees) (the "Defective Manufacturing Claims"), but excluding any Losses
resulting from the gross negligence or intentionally wrongful act or omission of
Tanabe, its Affiliates or sublicensees or any of their employees or agents or
from the use of the Delivery Means. With respect to any Third Party claim, suit
or action based upon death or injury to any person or damage to any property
based on use of a Licensed Compound or a Product, which claim, suit or action is
not a Defective Manufacturing Claim, Lynx agrees to provide Tanabe, at Tanabe's
expense, with reasonable assistance in its defense of such claim, suit or action
(e.g., a strict liability claim or a claim that the product is inherently
defective).
9.2 Delivery Means. Lynx agrees to indemnify and defend Tanabe, its
Affiliates, and permitted sublicensees, and their respective agents and
employees from and against any and all Losses with respect to death or injury to
any person or damage to any property that directly result from the use in the
Field by a Third Party of a Delivery Means purchased by Tanabe from Lynx, except
to the extent such Losses result from the negligence or intentionally wrongful
act or omission of Tanabe, its Affiliates or sublicensees or any of their
employees or agents or of the user of the Product or the Delivery Means.
However, Lynx shall not be obligated to supply Delivery Means to Tanabe if Lynx
cannot obtain a commitment by Lynx's supplier to indemnify and defend Lynx to
the same extent as Tanabe is indemnified by Lynx herein for use of such Delivery
Means.
9.3 Indemnity Procedure. In the event Tanabe is seeking indemnification
under Section 9.1 or 9.2 it shall inform Lynx of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit Lynx to assume
direction and control of the defense of the claim (including the right to settle
the claim solely for monetary consideration), and, at Lynx's expense, shall
cooperate as reasonably requested in the defense of the claim. Tanabe shall have
the right to retain its own counsel, with the fees and expenses to be paid by
Lynx, if representation of Tanabe by the counsel retained by
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Lynx would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by such counsel in such
proceedings. Lynx may not settle such action or claim, or otherwise consent to
an adverse judgment in such action or claim, that diminishes the rights or
interests of Tanabe without the express written consent of Tanabe.
10. TRADENAME.
Tanabe and/or its Affiliates will select, in their sole discretion, and
use a tradename to be owned by Tanabe and/or its Affiliates (as applicable) for
each Product. Tanabe and/or its Affiliates shall not adopt, use, or register any
acronym, trademark, trade names, service mark or other marketing name of Lynx or
any confusingly similar work or symbol as part of Tanabe's own trademark or
trade name for the Product or the name of any of its Affiliates for the Products
it markets.
11. CONFIDENTIALITY.
11.1 Confidentiality. Except as otherwise provided in this Article 11,
during the term of this Agreement and for a period of [*Redacted] thereafter,
each Party shall maintain in confidence and shall use only for purposes of this
Agreement all Confidential Information disclosed by the other Party under the
Agreement. Notwithstanding the foregoing, a Party may disclose the other Party's
Confidential Information to those of its Affiliates, directors, officers,
employees, agents, consultants and clinical investigators that have a need to
know such Information in order to achieve the purposes of this Agreement,
provided that such Party will obtain prior agreement from its Affiliates,
directors, officers, employees, agents, consultants or clinical investigators to
whom disclosure is to be made to hold in confidence and not make use of such
Confidential Information for any purpose other than those permitted by this
Agreement. Each Party will promptly notify the other upon discovery of any
unauthorized use or disclosure of the Confidential Information.
11.2 Authorized Disclosure. Each Party may disclose Confidential
Information to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation or
complying with applicable laws, governmental regulations or court orders,
provided that such Party will give reasonable advance notice to the other Party
of such disclosure requirement and, except to the extent inappropriate in the
case of patent applications, shall give the other Party sufficient opportunity
to object to such disclosure or to secure confidential treatment of such
Information required to be disclosed. Either Party may disclose (subject to the
confidentiality restrictions contained herein) Confidential Information to Third
Parties to the extent necessary to perform its obligations under this Agreement,
provided such Third
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Parties execute confidentiality agreements containing terms no less strict than
those contained herein.
11.3 Press Releases. Upon signing the Agreement, the Parties will
consult with each other prior to the issuance of any press releases that discuss
aspects of this Agreement and no press release or other public disclosure of the
Agreement shall be made without the mutual written consent of the Parties. The
principles to be observed by the Parties in public disclosures with respect to
this Agreement shall be: accuracy, the requirements of confidentiality under
this Article 11 and the normal business practice in the biotechnology and
pharmaceutical industries for disclosure by companies comparable to Lynx and
Tanabe in their respective territories and places of business.
11.4 Publications. Except as required by law, regulation, or court
order, Tanabe agrees that it shall not publish any confidential or proprietary
Information relating to any Licensed Compound, any Product or their use or
present the results of any studies or investigations carried out under the
Agreement without obtaining Lynx's prior written approval for such publication
or presentation. At least [*Redacted] prior to any such publication or
presentation, Tanabe shall provide Lynx a copy of the proposed abstract,
manuscript or presentation (including information to be presented verbally) for
its review (subject to Section 14.15). Lynx shall respond in writing within such
time period with either approval of the proposed material or a specific
statement of concern, based upon either the need to seek patent protection or
concern regarding competitive disadvantage arising from the proposal. Tanabe
agrees to provide Lynx any additional Information relating to the proposed
disclosure, including full length English translations, as reasonably requested
by Lynx in order to conduct the foregoing review, in the event that Lynx has
concerns about disclosure of Confidential Information. In the event of concern,
Tanabe agrees not to submit such abstract or manuscript for publication or to
make such presentation until Lynx has had a reasonable period of time (not to
exceed [*Redacted]) to seek patent protection for any material in such
publication or presentation which it believes is patentable or to resolve any
other issues. Tanabe also agrees to delete from any such abstract or manuscript
or presentation any Confidential Information that Lynx reasonably believes has
commercial value based upon the secrecy of such information. In addition, Lynx
agrees not to publish any Confidential Information disclosed to Lynx by Tanabe
or its Affiliates or permitted sublicensees relating to Licensed Compounds or
Products without the prior approval of Tanabe, not to be unreasonably withheld,
except as required by law, regulation, or court order.
11.5 Agreement Confidential. The parties agree that the contents of
this Agreement shall constitute Confidential Information, and as such, will not
be disclosed by either Party without the written consent of the other, except as
permitted by Sections 11.1, 11.2 and 11.3.
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12. REPRESENTATIONS & WARRANTIES
12.1 Representations, Warranties, and Covenants of Lynx.
(a) Corporate Power. Lynx is duly organized and validly
existing and in good standing under the laws of Delaware and has full corporate
power and authority to enter into this Agreement and to carry out the provisions
hereof.
(b) Due Authorization. Lynx is duly authorized to execute and
deliver this Agreement and to perform its obligations hereunder.
(c) Binding Agreement. This Agreement is a legal and valid
obligation binding upon Lynx and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Lynx does not conflict
with any agreement, instrument or understanding, oral or written, to which it is
a party or by which it may be bound, nor violate any material law or regulation
of any court, governmental body or administrative or other agency having
jurisdiction over it. Lynx hereby covenants that it will not enter any agreement
or understanding, oral or written, or execute any instrument, which conflicts
with Lynx' obligations to Tanabe under this Agreement.
(d) Third Party Consents. To the best of its knowledge, as of
the Effective Date, Lynx has obtained all necessary consents, approvals and
authorizations of all governmental authorities and other entities and persons
required to be obtained by Lynx in connection with this Agreement.
(e) Lynx Patents and Know-How. To the best of its knowledge,
as of the Effective Date, all Patents or material Information in Lynx or its
Affiliates' possession that would be reasonably necessary to enable Tanabe to
develop, use, export, seek regulatory approval to sell, and sell Licensed
Compounds or Products as contemplated under this Agreement are licensed to
Tanabe under the License.
(f) Third Party Rights and Licenses. Lynx shall use best
efforts to maintain in force all license agreements granting Lynx rights under
the Lynx Patents or Lynx Know-How and shall timely obtain any consents of Third
Parties necessary to grant the License hereunder. To the extent permitted by any
license agreement between Lynx and a Third Party granting Lynx rights under any
Lynx Patent or Lynx Know-How, Tanabe shall be entitled to assume Lynx's role as
licensee under such license agreement, but solely to the extent of the License
granted hereunder, in the event that any such license agreement between Lynx and
such Third Party terminates due to uncured breach by or bankruptcy of Lynx.
29.
<PAGE>
12.2 Representations, Warranties, and Covenants of Tanabe.
(a) Corporate Power. Tanabe is duly organized and validly
existing under the laws of Japan and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof.
(b) Due Authorization. Tanabe is duly authorized to execute
and deliver this Agreement and to perform its obligations hereunder.
(c) Binding Agreement. This Agreement is a legal and valid
obligation binding upon Tanabe and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Tanabe does not
conflict with any agreement, instrument or understanding, oral or written, to
which it is a party or by which it may be bound, nor violate any material law or
regulation of any court, governmental body or administrative or other agency
having jurisdiction over it. Tanabe hereby covenants that it will not enter any
agreement, or understanding, oral or written, or execute any instrument, which
conflicts with Tanabe's obligations to Lynx under this Agreement.
13. TERM OF AGREEMENT AND TERMINATION.
13.1 Term. Unless terminated in accordance with this Article 13 or
Section 3.2, this Agreement shall expire upon the later of (i) [*Redacted]. The
Parties agree that at least [*Redacted] prior to the expiration of this
Agreement under this Section 13.1 the Parties will meet, discuss in good faith
and attempt to reach mutually acceptable agreement to provide for Lynx's
continuing supply to Tanabe of Product and economic terms for such supply.
13.2 Termination For Material Breach. Each Party shall have the right
to terminate this Agreement after written notice to the other that the other is
in material breach of this Agreement, unless the other Party cures the breach
before the expiration of [*Redacted] after such written notice. Notwithstanding
the foregoing, Lynx may terminate this Agreement in the event Tanabe breaches a
payment obligation hereunder and thereafter fails to make full payment of
amounts due Lynx within [*Redacted] after written notice from Lynx to Tanabe,
provided however, that Tanabe may withhold a particular payment for so long as
Tanabe is pursuing in good faith a claim that Lynx has not performed the
specific tasks necessary to earn such payment. Any failure by Lynx to terminate
this Agreement for late payments shall not be deemed a waiver of its right to
terminate this Agreement in the future for late payment by Tanabe.
30.
<PAGE>
13.3 Failure of Tanabe to Exercise Diligence. There shall be a
presumption that Tanabe has failed to use adequate diligence in conducting
Development and/or marketing of the Licensed Compounds and a Product, as
applicable, if:
(a) Tanabe has failed to commence pharmacology and toxicology
studies on a Licensed Compound in Japan sufficient to enable application for an
IND in Japan to commence an Efficacy Study on such Licensed Compound within
[*Redacted] after Lynx delivers to Tanabe the final written report regarding the
analyzed results of the first Efficacy Study on a Licensed Compound in each of
the United States and Europe;
(b) Tanabe has failed to commence an Efficacy Study on a
Licensed Compound in Japan as soon as Tanabe in good faith using diligence
determines it is commercially reasonable to commence the same based upon
regulatory and related reasons; or
(c) Tanabe has failed to commence a Pivotal Trial on a
Licensed Compound in Japan as soon as Tanabe in good faith using diligence
determines it is commercially reasonable to commence the same based upon
regulatory and related reasons; or
(d) for a continuous period of [*Redacted] at any time
following Regulatory Approval of the Product for commercial distribution in a
particular country of the Exclusive Territory, no sales of the Product are made
in such country.
If any of the foregoing conditions occur and remain after [*Redacted]
written notice to Tanabe, Lynx may, at its election, terminate the Agreement or
convert to non-exclusive Tanabe's rights throughout the Territory on written
notice. The foregoing in no way limits Tanabe's diligence obligations under
Section 3.2 or Lynx's rights for breach of such obligations.
13.4 Termination by Tanabe. Commencing on [*Redacted], Tanabe shall
have the right at its option and in its sole discretion to terminate the
Agreement at any time thereafter upon [*Redacted] days prior written notice to
Lynx.
13.5 Information Transfer and Option Upon Termination. In the event
this Agreement is terminated by Lynx under Section 13.2 or 13.3 or by Tanabe
under Section 13.4 prior to expiration of the term as set forth in Section 13.1,
(i) Tanabe shall provide to Lynx forthwith thereafter copies of all Tanabe
Compound Information and the right to use such Information to develop, make, use
and sell Products in the Field; (ii) Tanabe shall destroy and shall not retain
any copies of any Confidential Information provided by Lynx hereunder, except
that Tanabe's legal department may retain one copy thereof solely for archival
purposes; and (iii) Lynx shall retain an option to obtain an irrevocable
31.
<PAGE>
license under the Tanabe Patents to market, distribute and sell Products for use
in the Field in the Territory. In the event Lynx elects to exercise its option
to acquire such license under clause (iii) above by written notice to Tanabe
within [*Redacted] after such termination, the parties shall in good faith
negotiate and enter into a license agreement for a commercially reasonable
royalty within [*Redacted] of such written notice. If Tanabe terminates under
Section 13.4, then within [*Redacted] after such termination, the Parties shall
in good faith negotiate and enter into a mutually-acceptable agreement for
commercially reasonable compensation to Tanabe for providing Tanabe Compound
Information to Lynx.
13.6 Accrued Rights, Surviving Obligations. Termination of this
Agreement shall not affect any accrued rights of either party. Additionally, the
terms of Section 2.1(a) of this Agreement shall survive expiration of this
Agreement pursuant to Section 13.1 or termination of this Agreement by Tanabe
pursuant to Section 13.2. The terms of Articles 9, 10 and 11 of this Agreement
shall survive any termination of this Agreement.
14. MISCELLANEOUS.
14.1 Limitation of Liability. EXCEPT AS PROVIDED IN SECTION 9.1, IN NO
EVENT SHALL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
AFFILIATES BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES, WHETHER BASED UPON A CLAIM OR ACTION OF
CONTRACT, WARRANTY, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT, OR OTHERWISE,
ARISING OUT OF THIS AGREEMENT.
14.2 Liability Insurance. Tanabe will procure and maintain, through
self-insurance or otherwise, at its sole expense, liability insurance, including
products liability coverage, in such amounts as Tanabe customarily maintains
with respect to its development, use, distribution or sale of comparable
products in the Territory. Tanabe's insurance shall not be cancelable without
[*Redacted ] prior written notice to Lynx. Lynx shall, upon Tanabe's reasonable
request, provide sufficient information to Tanabe to enable Tanabe to obtain
product liability insurance with respect to Licensed Compounds and Products.
Lynx shall procure and maintain, at its sole expense, liability insurance,
including products liability coverage, in such amounts as Lynx customarily
maintains with respect to its development, manufacture, storage, use,
distribution or sale of its comparable products. Lynx shall name Tanabe as an
additional insured on such insurance policies as Tanabe may reasonably request.
Lynx insurance shall not be cancelable without [*Redacted] prior written notice
to Tanabe.
14.3 Entire Agreement; Amendment. This Agreement sets forth the terms
of the collaboration agreement between the Parties hereto and, except as
otherwise set forth
32.
<PAGE>
herein, supersedes and terminates all prior representations, agreements and
understandings between the Parties regarding the subject matter hereof,
including without limitation the Memorandum of Understanding. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized officer
of each Party.
14.4 Assignment. Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other, except either party may make such an assignment without the other party's
consent to Affiliates or to a successor to all or substantially all of the
related business assets of such party relating to this Agreement, whether by way
of a merger, sale of stock, sale of assets or other similar transaction.
14.5 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement and
shall be effective on receipt, when given by registered airmail or overnight
courier and addressed, unless otherwise specified in writing, to the addresses
of the Parties described below.
For Lynx: Lynx Therapeutics, Inc.
3832 Bay Center Place
Hayward, California 94545
Attention: Chief Executive Officer
With a Copy to: Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square, 4th Floor
Palo Alto, CA 94306
Attention: James C. Kitch, Esq.
For Tanabe: Tanabe Seiyaku Co., Ltd.
2-10 Dosho-machi 3-chome
Chuo-ku, Osaka 541, Japan
Attn: President
14.6 Severability. If any Article or part thereof of this Agreement is
declared invalid by any court of competent jurisdiction, or any government or
other agency having jurisdiction over either Lynx or Tanabe deems any Article or
part thereof to be contrary to any anti-trust or competition laws then such
declaration shall not affect the remainder of the Article or other Articles. To
the extent possible the Parties shall revise such invalidated Article or part
thereof in a manner that will render such provision valid without impairing the
Parties' original intent.
33.
<PAGE>
14.7 Force Majeure. No Party shall be in breach of this Agreement, or
liable to the other Party, for any delay or failure of performance to the extent
such delay or failure is caused by circumstances beyond its reasonable control
and that by the exercise of due diligence it is unable to prevent, provided that
the party claiming excuse uses its commercially reasonable efforts to overcome
the same.
14.8 Expenses. Except as otherwise provided in the Agreement, all
expenses incurred by Tanabe in connection with its obligations under this
Agreement will be borne solely by Tanabe and all expenses incurred by Lynx in
connection with its obligations under this Agreement will be borne solely by
Lynx. Tanabe will be responsible for appointing its own employees, agents and
representatives, who will be compensated by Tanabe.
14.9 Non-Waiver. The failure of a Party in any one or more instances to
insist upon strict performance of any of the terms and conditions of this
Agreement shall not be construed as a waiver or relinquishment, to any extent,
of the right to assert or rely upon any such terms or conditions on any future
occasion.
14.10 Disclaimer of Agency. This Agreement shall not constitute any
Party the legal representative or agent of another, nor shall any party have the
right or authority to assume, create, or incur any Third Party liability or
obligation of any kind, express or implied, against or in the name of or on
behalf of another except as expressly set forth in this Agreement.
14.11 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of the
Agreement.
14.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
14.13 Governing Law. This Agreement will be governed by and interpreted
in accordance with the laws of the State of California without regard to
conflicts of laws principles.
14.14 Dispute Resolution; Arbitration. If a dispute or controversy
regarding any right or obligation under this Agreement arises between the
Parties, the Parties will seek to resolve such dispute or controversy by good
faith negotiation between senior management representatives of the Parties, to
be commenced promptly after such dispute or controversy arises. If such dispute
or controversy is not resolved by such negotiation within [*Redacted] if notice
by one Party to the other, then the Parties shall proceed as follows. Any
unresolved dispute, controversy, action, claim or proceeding initiated by
34.
<PAGE>
either party (other than a third party action, claim or other proceeding in a
bona fide action, claim or other proceeding initiated by a Third Party against a
Party) relating to, arising out of or resulting from this Agreement, or the
performance by either Party of its obligations hereunder, whether before or
after termination of this Agreement, shall be finally resolved by binding
arbitration. Whenever a Party shall decide to institute arbitration proceedings,
it shall give written notice to that effect to the other Party. Any arbitration
hereunder shall be conducted under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce. Each such arbitration shall be conducted
in the English language by a panel of three arbitrators appointed in accordance
with such rules, and shall be held in San Francisco, California. The arbitrators
shall have the authority to grant specific performance, and to allocate between
the Parties the costs of arbitration in such equitable manner as they determine.
Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance of
any award and an order of enforcement, as the case may be. In no event shall a
demand for arbitration be made after the date when institution of a legal or
equitable proceeding based upon such claim, dispute or other matter in question
would be barred by the applicable statute of limitations
14.15 Official Language. The official text of this Agreement and any
appendices, exhibits and schedules hereto, shall be made, written and
interpreted in English. Any notices, accounts, reports, documents, disclosures
of information or statements required by or made under this Agreement, whether
during its term or upon expiration or termination thereof, shall be in English,
provided that for foreign language, publications, abstracts and reports made or
submitted to scientific journals or conferences or the like, an English summary
will be sufficient. In the event of any dispute concerning the construction or
meaning of this Agreement, reference shall be made only to this Agreement as
written in English and not to any other translation into any other language.
35.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the date first above written.
LYNX THERAPEUTICS, INC. TANABE SEIYAKU CO., LTD.
./s/ Sam Eletr /s/ Ichiro Chibata
- - ---------------------------------- --------------------------------------
Sam Eletr, Ph.D. Ichiro Chibata, Ph.D.
Chairman President and Chief Executive Officer,
Representative Director
36.
<PAGE>
EXHIBIT A
LICENSED COMPOUNDS
LR-3280: [*Redacted]
<PAGE>
<TABLE>
EXHIBIT B
LYNX PATENTS
LYNX Vascular IP
<CAPTION>
Lynx Case Application No. Filed (Grant Countries Designated in PCT
Title Subject Matter No. Country or Patent No. Date Status Application
- - ---------- ----------------- ----------- ---------- ----------------- -------------- -------- -----------------------------
<S> <C>
[Entire exhibit deleted.]
</TABLE>
<PAGE>
EXHIBIT C
SUMMARY OF MANUFACTURE AND SUPPLY TERMS
A. MANUFACTURE
(a) Lynx shall manufacture or have manufactured and supply
Products in accordance with the Compound/Product Specifications and with cGMP
regulations and in compliance with all applicable laws. Such Products shall have
a shelf-life reasonably acceptable to Tanabe under the circumstances.
(b) Lynx will acquire or cause to be acquired all necessary
plant equipment and facilities licenses to enable manufacture of the Product.
(c) Lynx shall use reasonable efforts to keep all plant and
equipment properly maintained to reduce risks of breakdown of critical machinery
as far as reasonably practical.
(d) Lynx shall provide or cause to be permitted suitable and
secure storage facilities for the Product and shall ensure that Product is
safely stored in more than one room or area.
(e) Lynx shall maintain ongoing stability studies using its
methodology. Lynx shall provide Tanabe free of charge with reasonable samples,
specimens and full reports of the results of the stability studies.
(f) Lynx will be responsible for obtaining and maintaining all
necessary United States manufacturing licenses and approvals including but not
limited to FDA approval for the manufacturing facility and export approval;
Tanabe, its Affiliates and permitted sublicensees will be responsible for
obtaining any required importation licenses or approvals for importation of
Product for sale in the Territory, and Lynx will cooperate reasonably with
Tanabe to obtain such licenses or approvals, provided that Lynx shall be
responsible for causing the Drug Master File to progress through the approval
process [*Redacted].
(g) Lynx will be responsible for the safe handling, storage
and transportation of Product.
(h) Lynx will provide for back-up contingent manufacturing
plan and capabilities and inventory requirements to provide reasonable assurance
that Lynx will be able to provide supply of the Products to Tanabe even if the
primary manufacturing facilities are out of commission.
i.
<PAGE>
B. SUPPLY
(a) Tanabe shall provide Lynx a [*Redacted] forecast, updated
each [*Redacted] with the forecast for the closest [*Redacted] in each such
forecast constituting a binding commitment to submit purchase orders for the
amounts listed in such forecast during such [*Redacted]. In addition, at least
[*Redacted] prior to the first expected Regulatory Approval of a Product in the
Territory, Tanabe shall provide a good faith estimate of its expected
requirements for Products for the first [*Redacted] after Product launch.
(b) Lynx shall achieve timely delivery of the amounts ordered,
provided that Tanabe has given Lynx good faith forecasts reasonably anticipating
such amounts of requested orders.
(c) The prices of such amounts ordered shall be as set forth
in Section 6 of the Agreement. Payments shall be made net [*Redacted] after
delivery. If the product transfer price is determined by the Gross Wholesale
Price of the product, payments as referenced in the preceding sentence shall be
made based on the most recent Gross Wholesale Price for such product or, in the
absence of any Gross Wholesale Price, Tanabe's good faith estimate of the Gross
Wholesale Price to be realized from its sales of such product, and, if
necessary, a reconciliation will be made at the end of each [*Redacted] for the
actual Gross Wholesale Price of such products sold by Tanabe.
(d) Lynx shall have the right to have a certified accountant
audit Tanabe's and its affiliates' records to confirm that all payments made are
accurate.
C. DELIVERY
(a) Delivery shall be F.O.B. San Francisco International
Airport. At Tanabe's request and cost, Lynx shall arrange shipping and insurance
to specified Tanabe locations, provided that Tanabe is responsible for obtaining
all customs clearances required. Tanabe is responsible for compliance with all
exportation and importation laws and regulations.
(b) Title to and risk of loss of the Product, Delivery Means
and Kits, as applicable, shall transfer to Tanabe upon delivery to the carrier
at San Francisco International Airport.
(c) Tanabe shall have a reasonable time period of [*Redacted]
to inspect and accept or reject shipments of Product, Delivery Means and Kits,
as applicable. If Tanabe rejects in whole or in part any nonconforming shipment
of Products, Delivery Means or Kits, Lynx shall promptly replace the
nonconforming Product, Delivery Means or Kits, [*Redacted], as soon as possible.
ii
<PAGE>
D. QUALITY CONTROL
(a) At least once per [*Redacted], Lynx shall provide Tanabe
with reasonable copies of the material safety data and information concerning
the safe manufacture, handling, and storage of the Product.
(b) In addition to its own routine quality control, Lynx shall
conduct, at Tanabe's request, such other tests required by applicable regulatory
authorities of any country in the Territory. The Parties will negotiate in good
faith the appropriate allocation of the expense of conducting any such requested
tests.
(c) For each lot of Product produced for Tanabe hereunder,
Lynx shall furnish to Tanabe a certificate that the lot was manufactured, tested
and delivered in full compliance with cGMP and a copy of Lynx's certificate of
analysis that all Product included in such shipment complies in all respects
with the applicable agreed Compound/Product Specification, showing release of
each such lot.
(d) Tanabe shall be responsible for the release of Product for sale by
Tanabe or its Affiliates in each country in the Territory for which Regulatory
Approval has been obtained.
(e) Lynx shall maintain proper and accurate records of all
manufacturing steps processes, quality assurance and quality control procedures
and will provide reasonable access thereto to Tanabe from time to time upon
Tanabe's reasonable request with the exception of the Drug Master File and the
Manufacturing Information.
(f) Tanabe shall have the right to send authorized
representatives to any facilities where Product is manufactured by or on behalf
of Lynx, to audit any manufacturing records (exclusive of the Manufacturing
Information) and formulation and testing operations and documentation as is
necessary to confirm that production of each batch of Product is in compliance
with the cGMP regulations, and to confirm that Lynx is taking reasonable
measures to protect the manufacturing facility and their premises, and at any
time upon reasonable advance notice to Lynx, but no more than [*Redacted].
(g) Tanabe shall have the right to send authorized
representatives to any facilities where Product is stored to inspect the stock
and confirm the method and adequacy of storage. Upon request of Tanabe, Lynx
agrees to notify Tanabe of the next production run of Product. Lynx agrees to
cooperate with Tanabe's authorized representatives conducting such audits Tanabe
shall from time to time identify the persons and timetable for such inspections.
iii
<PAGE>
(h) If Tanabe is required by a Regulatory Authority or in any
country of the Territory to have inspected or approved the site of manufacturing
Product, Lynx will permit officials of the applicable regulatory authorities to
inspect the Hayward, California facility or such other facility where Product is
manufactured.
E. PRODUCT LICENSES
Tanabe shall be responsible, subject to appropriate Lynx assistance as
to Manufacturing Information, for obtaining all Regulatory Approvals and
maintaining in its own name all relevant product licenses for the Product for
import and sale in the Territory.
F. PRODUCT RECALL PROCEDURES
The parties shall immediately inform each other of all incidents and/or
if any lot of Product which is alleged or proved to be the subject of recall
market withdrawal or correction and shall cooperate with each other in such
recall market withdrawal or correction. Any such recall shall be at the sole
expense of Lynx, unless the effect resulted from defective handling, storage or
other cause by Tanabe or its Affiliates or distributors.
The parties shall mutually agree procedures for Product recall,
including disclosure of all necessary information to prevent a recurrence of the
event or circumstance.
iv
<PAGE>
EXHIBIT E
CALCULATION OF KIT PURCHASE PRICE
The Kit Purchase Price will be calculated as set forth below based on two
components, a Product purchase price component and a Delivery Means compensation
component.
As used in this Exhibit E, the following acronyms and defined terms shall have
the following means:
PP = Purchase Price for the Kit sold in a particular country
NK = NHI Price for the Kit in the country
NP = NHI Price for the Product in the country
NDM = NHI Price for the Delivery Means in the country
CDM = Cost of Delivery Means
KGP = Gross Wholesale Price of the Kit sold in the country
Delivery Means Compensation = with respect to a Kit sold in a
particular country, the greater of:
[*Redacted]
[*Redacted]
The Kit purchase price is determined under the applicable formula in the
following:
A. If the NHI has established an NHI Price for the Kit for sales in such
country, and:
(i) the NHI has established an NHI Price for the Product sold alone,
then the purchase price for the Kit is calculated as follows:
[*Redacted]
(ii) the NHI has established an NHI Price for the Delivery Means but
has not established an NHI Price for the Product sold alone, then the purchase
price for the Kit is calculated as follows:
[*Redacted]
i.
<PAGE>
(iii) the NHI has not established an NHI Price for either the Product
or the Delivery Means sold alone, then the purchase price for the Kit is
calculated as follows:
[*Redacted]
B. If the NHI has not established an NHI Price for the Kit for sales in such
country, and:
(i) the NHI has established an NHI Price for the Product sold alone,
then the purchase price for the Kit is calculated as follows:
[*Redacted]
(ii) the NHI has established an NHI Price for the Delivery Means but
has not established an NHI Price for the Product sold alone, then the purchase
price for the Kit is calculated as follows:
[*Redacted]
(iii) the NHI has not established an NHI Price for either the Product
or the Delivery Means sold alone, then the purchase price for the Kit is
calculated as follows:
[*Redacted]
ii
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 1996
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 7,098
<SECURITIES> 0
<RECEIVABLES> 92
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,422
<PP&E> 5,664
<DEPRECIATION> (1,901)
<TOTAL-ASSETS> 11,957
<CURRENT-LIABILITIES> 1,397
<BONDS> 0
<COMMON> 13407
0
27189
<OTHER-SE> (32,042)
<TOTAL-LIABILITY-AND-EQUITY> 11,957
<SALES> 0
<TOTAL-REVENUES> 954
<CGS> 0
<TOTAL-COSTS> 204
<OTHER-EXPENSES> 6,297
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,217)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,217)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,217)
<EPS-PRIMARY> (2.23)
<EPS-DILUTED> (2.23)
</TABLE>
