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 SEPTEMBER 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 September 30,
1996 were 2,345,466, 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. Information regarding the aggregate market value of the
Registrant's voting stock is not included because there is currently no public
trading market for the Company's voting stock.
Page 1 of 11
<PAGE>
Lynx Therapeutics, Inc.
INDEX
PART I: FINANCIAL INFORMATION Page
Item 1. Condensed Consolidated Balance Sheets - September 30, 1996
and December 31, 1995 ..................................... 3
Condensed Consolidated Statements of Operations - three and
nine months ended September 30, 1996 and 1995 ............. 4
Condensed Consolidated Statements of Cash Flows - nine
months ended September 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 ............................................. 11
Item 2. Changes in Securities ......................................... 11
Item 3. Defaults Upon Senior Securities................................ 11
Item 4. Submission of Matters to a Vote of Security Holders............ 11
Item 5. Other Information.............................................. 11
Item 6. Exhibits and Reports on Form 8-K............................... 11
Signatures ............................................................... 11
Page 2 of 11
<PAGE>
PART I: FINANCIAL INFORMATION
- ---------------------------------------
Item 1. Financial Statements
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, December 31,
1996 1995*
-----------------------------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,461 $ 13,779
Short-term investments 2,957 --
Accounts receivable 4,040 88
Prepaid expenses and other current assets 158 79
-----------------------------
Total current assets 11,616 13,946
Property and equipment:
Leasehold improvements 3,051 2,501
Laboratory and other equipment 2,904 2,157
-----------------------------
5,955 4,658
Less accumulated depreciation and amortization (2,161) (1,461)
-----------------------------
Net property and equipment 3,794 3,197
Notes receivable from employees 354 542
-----------------------------
$ 15,764 $ 17,685
=============================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 228 $ 693
Accrued compensation 217 206
Accrued professional fees 113 187
Advance from collaborative partner 97 --
Other accrued liabilities 199 130
-----------------------------
Total current liabilities 854 1,216
Deferred revenue from related party 1,500 2,625
Other noncurrent liabilities 145 102
Stockholders' equity:
Preferred stock 27,189 27,189
Common stock 13,441 13,394
Notes receivable from stockholders (660) (660)
Deferred compensation (26) (51)
Unrealized loss on marketable securities (2) (2)
Accumulated deficit (26,677) (26,128)
-----------------------------
Total stockholders' equity 13,265 13,742
-----------------------------
$ 15,764 $ 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>
Page 3 of 11
<PAGE>
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-----------------------------------------------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues:
Revenues from collaborative arrangements with $ 7,875 $ - $ 8,625 $ -
related parties
Other revenues 40 35 244 91
-----------------------------------------------------------------------
Total revenues 7,915 35 8,869 91
Operating costs and expenses:
Costs of other revenues 40 41 244 54
Research and development 2,506 2,856 7,636 8,391
Selling, general and administrative 833 616 2,000 1,349
-----------------------------------------------------------------------
Total operating costs and expenses 3,379 3,513 9,880 9,794
-----------------------------------------------------------------------
Income/(loss) from operations 4,536 (3,478) (1,011) (9,703)
Interest income 132 211 462 534
-----------------------------------------------------------------------
Net income/(loss) $ 4,668 $ (3,267) $ (549) $ (9,169)
=======================================================================
Net income/(loss) per share $ 0.61 $ (1.44) $ (0.23) $ (4.26)
=======================================================================
Shares used in per share computation 7,700 2,264 2,339 2,152
=======================================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
Page 4 of 11
<PAGE>
<TABLE>
Lynx Therapeutics, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
------------------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (549) $ (9,169)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 725 457
Changes in operating assets and liabilities:
Accounts receivable (3,952) 161
Prepaid expenses and other current assets (79) 138
Accounts payable (465) (49)
Accrued liabilities 6 244
Advance from collaborative partner 97 (325)
Deferred revenue from related party (1,125) --
Other noncurrent liabilities 43 32
---------------------------------------
Net cash used in operating activities (5,299) (8,511)
Cash flows from investing activities
Purchases of short-term investments (25,957) --
Maturities of short-term investments 23,000 7,027
Purchase of property and equipment, net of retirements (1,297) (1,116)
Notes receivable from employees 188 (450)
---------------------------------------
Net cash provided by (used in) investing activities (4,066) 5,461
Cash flows from financing activities
Issuance of preferred stock - 6,109
Issuance of common stock 47 6
---------------------------------------
Net cash provided by financing activities 47 6,115
---------------------------------------
Net increase (decrease) in cash and cash equivalents (9,318) 3,065
Cash and cash equivalents at beginning of period 13,779 4,246
---------------------------------------
Cash and cash equivalents at end of period $ 4,461 $ 7,311
=======================================
<FN>
See accompanying notes.
</FN>
</TABLE>
Page 5 of 11
<PAGE>
Lynx Therapeutics, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 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 subsidiary, 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
consolidated 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
quarter ended September 30, 1996 include in revenue the recognition of
two one-time payments from collaborative partners and therefore are not
indicative of the results for the full year.
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 purchase the drug from Lynx, which
retains all manufacturing rights.
Page 6 of 11
<PAGE>
In September 1996, Lynx entered into a collaboration agreement with
Schwarz Pharma AG to develop and market Lynx's LR-3280 drug candidate
for the European and North American markets. The agreement calls for
Schwarz Pharma to pay Lynx $4.0 million and $16.0 million in sign-up
and milestone fees respectively, and for Schwarz Pharma to bear the
costs of development, regulatory approval and sales in the specified
territories. Schwarz Pharma will also purchase the drug from Lynx,
which retains all manufacturing rights.
Lynx recognized both the Tanabe and Schwartz Pharma sign-up payments as
revenue in the third quarter.
3. Per share information
Net income (loss) per share is computed using the weighted average
number of common and dilutive common equivalent shares outstanding
during the period. Common equivalent shares consist of the incremental
common shares issuable upon conversion of the convertible preferred
stock (using the if-converted method) and shares issuable upon the
exercise of stock options (using the treasury stock method) when their
effect is dilutive.
4. Subsequent Events
In October 1996, Lynx entered into two agreements with BASF AG aimed at
exploiting Lynx's proprietary MPSS technology. The first agreement
commits the two companies to form a new biotechnology Joint Venture
("JV") called BASF-LYNX Bioscience AG in Heidelberg, Germany. Initial
ownership of the JV will be split 51%-49% between BASF and Lynx
respectively. Under the sponsorship of BASF and Lynx the JV will seek
to identify novel drug targets in certain central nervous system
diseases; it will attempt to determine whether the safety of chemicals
can be correlated with, and anticipated by, their effects on gene
expression; and, finally, it will seek to optimize microorganisms used
in the fermentation production of chemicals such as vitamins or amino
acids. BASF will provide research funding of up to 50 million DM ($33
million) over the next 5 years, as well as access to certain of its
technologies, and Lynx will provide access to its MPSS technology for
use in the JV's research programs.
The second agreement is a service agreement through which BASF may
exploit the expected power of Lynx's MPSS for its own internal and
proprietary research, independently of the JV's objectives. For access
to this service, which commits Lynx to provide BASF with a certain
number of MPSS analyses per year, BASF will pay Lynx an access fee of
$5.5 million on signature, an access fee of $5.5 million on the
achievement of a certain milestone, and a subscription fee of $8
million for the first two years of the subscription agreement.
On November 1, 1996, David W. Martin, Jr., Chief Executive Officer and
Director left the Company. Sam Eletr, Chairman of the Board has
succeeded Dr. Martin as Chief Executive Officer, a position he had held
from Lynx's inception until Dr. Martin's hire.
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.
Page 7 of 11
<PAGE>
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.
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, and the inability to
market them due to proprietary rights of third parties.
Results of Operations
Revenues
Lynx had total revenues of $7.9 million and $35,000 for the quarters ended
September 30, 1996 and 1995 respectively. The 1996 revenue was comprised of $7.5
million in sign-up fees under the Tanabe and Schwarz Pharma agreements described
above; $375,000 earned under the collaborative agreement with Hoechst AG and
Hoechst Marion Roussel (collectively referred to as "Hoechst") signed in October
1995, and $40,000 from a government grant. The 1995 revenue consisted primarily
of grant revenue.
Lynx had revenues of $8.9 million and $91,000 in the nine months ended September
30, 1996 and 1995 respectively. The 1996 revenue was comprised of the $7.5
million in sign-up fees, $1.1 million earned under the above mentioned corporate
collaborative agreement and $244,000 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
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
Costs of other revenue was $40,000 for the quarter ended September 30, 1996
compared to $41,000 for the quarter ended September 30, 1995. Cost of sales in
both periods relates to activity under the government grant.
Page 8 of 11
<PAGE>
Cost of other revenue for the nine months ended September 30, 1996 and 1995 was
$244,000 and $54,000 respectively. The increase was due to increased spending
under the grant.
Research and Development expenses were $2.5 million for the quarter ended
September 30, 1996, compared to $2.9 million for the quarter ended September 30,
1995. The decrease is attributable to 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 expenses
relating to additional headcount.
General and administrative expenses were $833,000 in the quarter ended September
30, 1996, compared to $616,000 in the quarter ended September 30, 1995. The
increase was due to the costs of corporate development activities associated
with the Tanabe agreement as well as salaries due to higher headcount, offset
somewhat by lower legal expenses.
Research and development expenses were $7.6 million in the nine months ended
September 30, 1996 compared to $8.4 million in the same period of 1995. The
decrease was attributable to reduced funding to various laboratories under
collaborative research agreements as well as to lower license and patent
expense. The lower spending was partially offset by higher salary expenses as
research staff has 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.
General and administrative expenses were $2.0 million for the nine months ended
September 30, 1996 compared to $1.3 million for the same period last year. The
increase in expenses was due to the costs of corporate development activities as
well as 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.
Interest Income
Interest income for the quarter ended September 30, 1996 was $132,000 compared
to $211,000 for the same period in 1995. The decrease was due to a combination
of lower cash, cash equivalent and short-term investment balances and lower
interest rates.
Interest income was $462,000 for the nine months ended September 30, 1996,
compared to $534,000 for the nine months ended September 30, 1995, again, due to
a lower average cash, cash equivalent and short-term investment balances and
lower rates.
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.
Lynx anticipates utilizing its available funds to support the development of its
MPSS technology and synthetic DNA chemistry, 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,
Page 9 of 11
<PAGE>
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. 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. Lynx believes that its current capital resources (including
non-refundable payments to be received from collaborative partners) and interest
income thereon will enable it to maintain its current and planned operations
through 1997.
Page 10 of 11
<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
None
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
------- -----------
10.32 Collaboration Agreement dated as of September 30,
1996, by and among the Company and Schwarz Pharma AG
11.0 Statement re: Computation of Earnings Per Share
(b) No reports on Form 8-K were filed during the quarter
ended September 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.
------------------------------------------------------
By: Sam Eletr, Ph.D.
Chief Executive Officer
Date: November ____, 1996
------------------------------------------------------
By: Craig C. Taylor
Acting Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: November ___, 1996
Page 11 of 11
Exhibit 10.32
Collaboration Agreement dated as of September
30, 1996, by and among the Company and
Schwarz Pharma AG
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXHCHANGE
COMMISSION PURSUANT TO RULE 24D-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934, AS
AMENDED.
<PAGE>
DEVELOPMENT AND SUPPLY AGREEMENT
THIS DEVELOPMENT AND SUPPLY 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 SCHWARZ PHARMA AG, a corporation organized and existing under the
laws of Germany having its principal place of business at Alfred-Nobel-Str. 10,
40789 Monheim, Germany ("Schwarz Pharma"), as of September 30, 1996 (the
"Effective Date"). Lynx and Schwarz Pharma 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 c-myc mRNA, as
a pharmaceutical product for the prevention or treatment of restenosis in a
blood vessel following an angioplasty or similar procedure.
B. Schwarz Pharma has substantial experience in the clinical
development of therapeutic agents and the distribution, marketing and sale of
such agents as pharmaceuticals, including the cardiovascular field.
C. Lynx and Schwarz Pharma desire to enter into a relationship under
which Schwarz Pharma will have the right to develop and commercialize LR-3280
(or another oligonucleotide compound as its replacement) in specific countries
of Europe and North America for the prevention or treatment of arterial or
venous cellular and/or matrix proliferation in cardiovascular disease, including
restenosis in a blood vessel following an angioplasty or similar procedure, and
Lynx will supply Schwarz Pharma, under the terms of this Agreement, quantities
of product containing such compound for clinical trial use and commercial sale.
D. The Parties desire to enter into an agreement establishing the
development and supply terms under which Schwarz Pharma shall develop and
commercialize such compound in such countries.
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, and all terms defined in the
singular shall have the same meanings when used in the plural (and vice versa,
as appropriate), unless otherwise specified):
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.
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, distribute, market and/or sell a
Licensed Compound or Product in a country in the Territory.
1.3 "Asian Partner" means Tanabe Seiyaku Co., Ltd., or such other Third
Party pharmaceutical company that replaces Tanabe and to which Lynx has granted
a license to develop the Licensed Compound and market Products in Japan and
certain other Asian countries for use in the prevention of restenosis.
1.4 "Back-Up Compound" means any oligonucleotide compound, other than
the Licensed Compound, that has phosphorothioate linkages or [REDACTED], that
now or hereafter is owned or Controlled by Lynx or its Affiliates and that
specifically targets the mRNA transcribed from the human c-myc gene.
1.5 "Back-Up Compound Information" means Information owned or
Controlled by Lynx or its Affiliates regarding Back-Up Compounds and/or Related
Compounds that is directly related to the utility and/or development of Back-Up
Compounds and/or Related Compounds for use in the Field; provided, however, that
Back-Up Compound Information shall not include any Information relating to
manufacturing such compounds or their use outside the Field.
1.6 "Clinical Trial Material" means a material, appropriate for use in
clinical trials, containing a Licensed Compound or placebo (as applicable) in
the formulation as determined by the Development Committee, subject to approval
by Lynx on grounds of feasibility, which shall not be unreasonably withheld or
delayed, for use in the clinical trials in the Field in the Territory, and
including such diluents and Delivery Means
CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE>
appropriate for use with such Licensed Compound in the Field as determined by
the Development Committee, subject to approval by Lynx on grounds of
feasibility, which shall not be unreasonably withheld or delayed.
1.7 "Compound Analytical Information" means such Information owned or
Controlled by Lynx relating to methods of chemical analysis and characterization
of the Licensed Compound and/or Product, as applicable, as is necessary for
Schwarz Pharma to be able to perform the chemical analysis of the Licensed
Compound and/or Product in order to make the certification required by the
regulatory authorities in the European Union or other applicable jurisdiction in
the Territory in order to import, package, use or sell the Products.
1.8 "Compound Information" means, with respect to a Party, Information
owned or Controlled by such Party or its Affiliates or, in the case of Schwarz
Pharma, its Sublicensees, regarding the Licensed Compound and Products
(including use with Delivery Means if applicable) that is necessary or useful to
the development of Licensed Compound and the Regulatory Approval and
commercialization of Products for use in the Field; provided, however, that
Compound Information shall not include any Manufacturing Information except for
such Information as is necessary for Schwarz Pharma to conduct the Development
work required herein, which includes the Specifications, analytical methods,
reference standards, dry substance properties and characteristics, and impurity
profiles.
1.9 "Confidential Information" means, with respect to a Party,
Information that is owned or Controlled by such Party or its Affiliates or, in
the case of Schwarz Pharma, its Sublicensees, that is disclosed by such Party to
the other Party pursuant to this Agreement, and that 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;
3.
<PAGE>
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to 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.
1.10 "Control" means, with respect to a compound, material, Information
or intellectual property right, possession by a Party 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.
1.11 "Delivery Means" means a local drug delivery device or other means
that is appropriate for the delivery of the Licensed Compound 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 limitation such catheters as "Transport," "Infusasleeve II,"
and "Dispatch"), together with all diluents and other attachments appropriate
for such use.
1.12 "Development" means conducting in vitro and/or in vivo
pre-clinical and clinical investigations and trials on the Licensed Compound and
preparing, submitting and prosecuting, as set forth in Section 3.6, all Approval
Applications, as necessary to obtain Regulatory Approval of Products for sale in
the Field within the Territory.
1.13 "Development Committee" means the committee formed pursuant to
Section 3.2.
1.14 "Development Plan" means the detailed written work plan prepared
by Schwarz Pharma for Development of the Licensed Compound with the goal of
achieving Regulatory Approval of Products within the Territory as promptly as
practicable. The initial Development Plan prepared by Schwarz Pharma is attached
hereto as Exhibit C, and is subject to amendment from time to time as provided
in Section 3.4.
1.15 "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 in the Territory, 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
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of the Product in the United States or such other country. For purposes of this
Agreement, the Drug Master File shall include the Chemical Manufacturing and
Control file, as defined in the FDA regulations.
1.16 "Failure of Supply" means a failure of Lynx to supply at least
[REDACTED] of Schwarz Pharma's and its Affiliates' binding forecasted
requirements, pursuant to Article 6 hereof, of Products for use in the Field (or
actual orders, if less) for delivery in the immediately preceding calendar
quarter, and at least [REDACTED] of Schwarz Pharma's and its Affiliates' binding
forecasted requirements of Products (or actual orders, if less) that are due for
delivery up to such date during the current calendar quarter, which failure is
caused by an event of force majeure.
1.17 "FDA" means the United States Food and Drug Administration, or the
successor thereto.
1.18 "Field" means the prevention or treatment of human arterial
[REDACTED] involved in cardiovascular disease, but subject to Section 5.3.
1.19 "Fully Burdened Costs" means, with respect to the manufacture of a
particular Licensed Compound, Lynx's fully burdened costs of manufacturing the
particular Licensed Compound or Clinical Trial Material, including without
limitation all raw materials, labor, manufacturing and packaging costs and
expenses, overhead amounts directly allocable to such manufacturing, and all
Third Party royalties owed by Lynx based on its sales of such Licensed Compound
hereunder to the extent not creditable at any time against Third Party running
royalties, calculated in accordance with generally accepted accounting
principles consistently applied.
1.20 "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 in the Territory, for the purpose of obtaining approval or authority to
commence human clinical trials in such country for the purpose of seeking
general marketing approval.
1.21 "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.
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1.22 "ITALICS Trial" means the clinical trial on the Licensed Compound
to be carried out at the Thorax Center in Rotterdam under the direction of Dr.
Patrick Serruys (or his replacement).
1.23 "Joint Invention" means any invention, development, or discovery
made or created jointly by employees or agents of Lynx or its Affiliate and
employees or agents of Schwarz Pharma or its Affiliate during the course of work
done pursuant to this Agreement.
1.24 "Joint Patents" means all Patents in the Territory that claim
Joint Inventions and that are filed by or on behalf of Lynx and/or Schwarz
Pharma or an Affiliate of either.
1.25 "Licensed Compound" means the oligonucleotide compound identified
by Lynx as LR-3280, as more fully described on Exhibit A hereto, or such Back-Up
Compound or Related Compound as Schwarz Pharma substitutes for LR-3280 under
Section 5.2.
1.26 "Lynx Know-How" means Compound Information that is owned or
Controlled by Lynx or an Affiliate of Lynx, but excluding Lynx Patents.
1.27 "Lynx Patents" means all Patents in the Territory owned or
Controlled by Lynx or an Affiliate of Lynx that claim or cover the manufacture,
use or sale of the Licensed Compound or Products. Exhibit B hereto sets forth a
list of Lynx Patents as of the Effective Date.
1.28 "Major Country" means the United States, United Kingdom, France,
Germany or Italy.
1.29 "Manufacturing Information" means the Information contained in the
Drug Master File and all other Information owned or Controlled by Lynx or it
Affiliates, in each case that is maintained as confidential by Lynx or such
Affiliate and that is necessary for or directly related to the manufacture of
the Licensed Compound or a Product.
1.30 "Material Supply Breach" means a failure of Lynx to supply at
least [REDACTED] of Schwarz Pharma's and its Affiliates' binding forecasted
requirements, pursuant to Article 6 hereof, of Products for use in the Field (or
actual orders, if less) for delivery in the immediately preceding calendar
quarter, and at least [REDACTED] of Schwarz Pharma's and its Affiliates' binding
forecasted requirements of Products (or actual orders, if less) that are due for
delivery up to such date during the current calendar quarter; provided, however,
that any such failure shall not constitute a Material Supply Breach if such
failure is caused by an event of force majeure.
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1.31 "Net Sales" means the total amount invoiced or otherwise charged
by Schwarz Pharma or its Affiliates on account of the sale of a Product to a
non-Affiliate, less the following deductions to the extent actually incurred or
allowed based upon the sale of such Product: (a) [REDACTED] incurred in
connection with the exportation or importation of such Product; (e) [REDACTED],
all to the extent consistent with normal practice in the industry; (f)
[REDACTED], to the extent not previously deducted from Net Sales; and (g)
[REDACTED], to the extent consistent with the normal practice in the industry,
and provided that any and all of the foregoing are calculated in accordance with
generally accepted accounting principles applicable to the locality where the
invoices are prepared and consistently applied.
In the event that Schwarz Pharma or its Affiliates sells a Product
packaged with a Delivery Means as a "kit", then the "Net Sales" for the Product
contained in all such kits sold during a particular calendar quarter shall be
deemed to be equal to the average Net Sales for such Product when sold alone
during such quarter. The average Net Sales is calculated by dividing the total
Net Sales for such Product during the quarter by the total number of units of
Product sold during such quarter and included in the calculation of such total
Net Sales.
1.32 "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 without limitation 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.
1.33 "Pivotal Clinical Trials" means that portion of the clinical
development program that provides for the expanded controlled, human clinical
trials, performed after preliminary evidence suggesting dose and effectiveness
of the Licensed Compound 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 the Licensed Compound and to
provide adequate basis for labeling, in accordance with the appropriate
governmental and institutional regulatory authorities.
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1.34 "Product" means a pharmaceutical product containing the Licensed
Compound that has received Regulatory Approval for commercial sale for use in
the Field in a country in the Territory.
1.35 "Qualification Date" means the date on which Lynx or its Affiliate
has qualified a second manufacturing site for Products as required under Section
6.12.
1.36 "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 for use in the
Field.
1.37 "Related Compounds" means all oligonucleotide compounds, other
than the Licensed Compound and the Back-Up Compounds, that now or hereafter are
owned or Controlled by Lynx or its Affiliates (e.g., [REDACTED]) and that
specifically target either (a) the mRNA transcribed from the human c-myc gene,
or (b) the DNA encoding the c-myc gene or promotor or other regulator regions of
DNA associated with the c-myc gene that control its expression.
1.38 "Schwarz Pharma 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 Development or related work on a Licensed
Compound and/or Product by or on behalf of Schwarz Pharma, its Affiliates and/or
its Sublicensees, but excluding Schwarz Pharma Patents.
1.39 "Schwarz Pharma Patents" means all Patents owned by Schwarz Pharma
or an Affiliate of Schwarz Pharma that claim or cover inventions, discoveries or
developments that were conceived by employees or agents or consultants of
Schwarz Pharma or one of its Affiliates in the course of conducting the
Development or related work on a Licensed Compound or Product under this
Agreement and that relate to the manufacture, use, formulation, delivery or sale
of the Licensed Compound or any Product, but excluding Joint Patents.
1.40 "Specifications" means the analytical specifications for the
Licensed Compound and/or the Product as determined by the Development Committee,
subject to the approval of Lynx on grounds of feasibility, which shall not be
unreasonably withheld or delayed.
1.41 "Steering Committee" means the committee formed by the parties
pursuant to Section 3.1.
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1.42 "Sublicensee" means an authorized or permitted Sublicensee of
Schwarz Pharma as provided in Section 2.1(b).
1.43 "Territory" means the countries in the European Union as of the
Effective Date, the United States (including Puerto Rico), Mexico, Canada,
Turkey, Switzerland, the Czech Republic, Norway, Hungary, Poland, Russia,
Belarus, Ukraine, and all other countries belonging to the Commonwealth of
Independent States (known as "CIS") as of the Effective Date.
1.44 "Third Party" means any entity or individual other than Lynx,
Schwarz Pharma, or Affiliates of either.
1.45 "U.S. Multi-Dose Efficacy Study" means that portion of the
clinical development program in the United States that provides for the initial
human testing of the Licensed Compound 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 U.S. Multi-Dose Efficacy Study will be similar in
scope to the protocol of the ITALICS Trial, except that such study shall be a
dose-finding study that will evaluate [REDACTED] doses and the patient sample
size will be increased accordingly.
2. LICENSES AND RELATED RIGHTS.
2.1 Product License Grant.
(a) Lynx hereby grants Schwarz Pharma and Affiliates of
Schwarz Pharma the right and license (the "License"), with no right to
sublicense except as provided in subsection (b) below, under the Lynx Patents
and the Lynx Know-How and Lynx's rights in the Joint Patents, solely to use the
Licensed Compound to conduct Development and to import, use, and sell Products
solely for use in the Field within the Territory, provided that such Licensed
Compound or Products, as applicable, either were purchased from Lynx pursuant to
this Agreement or were manufactured by or on behalf of Schwarz Pharma or its
Affiliates pursuant to the permitted and proper exercise of the license in
Section 2.2(a). The License shall be exclusive within the Territory, except that
Lynx shall have the non-exclusive rights to use and conduct research on Licensed
Compounds and otherwise as needed to perform its obligations hereunder.
(b) If Schwarz Pharma can demonstrate, to Lynx's reasonable
satisfaction, that Schwarz Pharma 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, the Licensed Compound and/or Product
in order for Schwarz Pharma 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,
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Schwarz Pharma to grant such a sublicense to the entity identified by Schwarz
Pharma. With respect to any Major Country, in addition to the foregoing
limitations, Schwarz Pharma may grant a sublicense in such country only subject
to the following: (i) the sublicense may only be granted with respect to the
importation, use or sale of a Product in such country, and not for Development;
(ii) in determining the purchase price of Products purchased by Schwarz Pharma
and sold to a Sublicensee in a Major Country, the "Net Sales" for such Products
shall be the the amount calculated under Section 1.31 based on the total amount
invoiced or otherwise charged by such Sublicensee on sale of such Product to a
Third Party, rather than by Schwarz Pharma or its Affiliate; and (iii) Schwarz
Pharma or its Affiliate shall not enter into an agreement with such Sublicensee
in the Major Country that has the effect of reducing the amount that such
Sublicensee would otherwise charge a Third Party for sale of such Products
(e.g., a bundled sale agreement under which Schwarz Pharma would receive a
higher amount from such Sublicensee on account of Schwarz Pharma's sale of a
separate product, in exchange for Schwarz Pharma charging the Sublicensee less
for the Product).
2.2 Back-Up Manufacturing License. In the event that Lynx commits a
Material Supply Breach or there is a Failure of Supply, Schwarz Pharma shall
give Lynx written notice of such event promptly thereafter. If such Material
Supply Breach or Failure of Supply remains uncured [REDACTED] days after such
written notice to Lynx, Schwarz Pharma may exercise (but without the obligation
to exercise) the back-up manufacturing rights (the "Back-Up Rights") to
manufacture, or compel Lynx to sublicense a Third Party to manufacture for
Schwarz Pharma, the Product as provided below, by giving Lynx written notice
promptly after such opportunity to cure has expired without cure of the breach
or failure to supply. The [REDACTED] day cure period described in the preceeding
sentence shall be reduced (but not below 0) by the number of days, if any, which
on the date [REDACTED] days prior to the Failure of Supply or Material Supply
Breach would have resulted from subtracting from [REDACTED] the number of days
inventory of Schwarz Pharma's requirements for Products which were then
maintained in storage by Lynx pursuant to Section 6.13, provided, however, that
if the date [REDACTED] days prior to the Failure of Supply or Material Supply
Breach was before the Qualification Date, then the [REDACTED] day cure period
described in the preceding sentence shall instead be reduced (but not below 0)
by the number of days, if any, which on the date [REDACTED] days prior to the
Failure of Supply or Material Supply Breach would have resulted from subtracting
from [REDACTED] the number of days inventory of Schwarz Pharma's requirements
for Products which were then maintained in storage by Lynx pursuant to Section
6.13. For purposes of the calculation described in the immediately preceding
sentence, the amount of inventory maintained at the applicable date shall be
based on the most recent forecast supplied by Schwarz Pharma as of the
date[REDACTED] days or [REDACTED] days (whichever is applicable) prior to the
Failure of Supply or Material Supply Breach, regardless of any actual orders
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subsequent to that date which may have reduced such inventory below the levels
expected in the applicable forecast.
(a) Immediately upon Schwarz Pharma providing Lynx proper
notice that it elects to exercise the Back-Up Rights provided in this Section,
Schwarz Pharma and its Affiliates shall have the right to exercise the
non-exclusive right and license, under the Lynx Patents, the Lynx Know-How and
the Manufacturing Information, solely to make the Licensed Compound solely for
incorporation into Products for use in the Field within the Territory (the
"Back-Up Manufacturing License"). [REDACTED]
(b) In the event that Schwarz Pharma, due to Lynx's uncured
Material Supply Breach or an uncured Failure of Supply, exercises the Back-Up
Manufacturing License, Lynx shall provide Schwarz Pharma with the Specifications
for the Licensed Compound or Product and the Manufacturing Information
applicable to the Licensed Compound or such Product, or, at Schwarz Pharma's
election, Schwarz Pharma may obtain such information from the escrow account
established pursuant to Section 6.14. During the period that Schwarz Pharma
exercises the Back-Up Rights, Schwarz Pharma shall pay to Lynx a royalty equal
to [REDACTED] of Net Sales of Product manufactured by Schwarz Pharma or on
behalf of Schwarz Pharma by such Third Party sublicensees, representing a share
of the amount Lynx owes it Third Party licensors based on such manufacture of
Products. For a period [REDACTED] of [REDACTED] months, in the event of an
uncured Failure of Supply, or [REDACTED] months, in the event of an uncured
Material Supply Breach, after the date Schwarz Pharma elects to exercise the
Back-Up Rights, the manufacture of Licensed Compound under the Back-Up
Manufacturing License [REDACTED]. Commencing at the end of the [REDACTED],
Schwarz Pharma shall pay Lynx a royalty, for all Licensed Compound or Product
manufactured [REDACTED] Schwarz Pharma or its Affiliates under the Back-Up
Manufacturing License, equal to [REDACTED] of the Net Sales of the applicable
Licensed Compound or Product, plus the royalty of [REDACTED] of Net Sales as set
forth above.
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(c) Notwithstanding the foregoing, if at any time after the
first anniversary of the date Schwarz Pharma gives notice it elects to exercise
the Back-Up Rights Lynx can demonstrate to Schwarz Pharma's reasonable
satisfaction, to be exercised in good faith, that Lynx has the ability to
manufacture Schwarz Pharma's and its Affiliates' commercial requirements of
Products for use in the Field, Lynx may, by twelve (12) months prior written
notice to Schwarz Pharma, terminate Schwarz Pharma's exercise of the Back-Up
Manufacturing License, and commence supplying the Products to Schwarz Pharma and
its Affiliates under the terms of this Agreement. If Lynx elects to terminate
Schwarz Pharma's exercise of the back-up license rights, Lynx shall immediately
thereafter reimburse Schwarz Pharma for its reasonable unrecovered expenses of
commencing and winding up production of the Product under the Back-Up
Manufacturing License, and/or terminating the supply arrangement with the Third
Party sublicensee under such rights. However, Lynx may exercise only once the
right under this Section 2.2(c) to recommence supplying Product.
2.3 Disclosure of Lynx Compound Information. Within two months
following execution of this Agreement, Lynx shall disclose to Schwarz Pharma all
Compound Information that is then owned or Controlled by Lynx or its Affiliates.
Promptly after development or receipt, but in any event on no less than a
[REDACTED] basis during the Agreement, and subject to the following limitations,
Lynx shall continue to disclose to Schwarz Pharma all additional Compound
Information that thereafter is owned or Controlled by Lynx or its Affiliates.
Schwarz Pharma understands and agrees that Lynx has no obligation to disclose
any clinical trial data or other Information regarding the Licensed Compound or
Products that is developed, generated or acquired in association with the Asian
Partner or other (sub)licensee of Lynx, except as may be provided pursuant to an
agreement with such party. Lynx agrees to use reasonable efforts to facilitate
negotiation with the Asian Partner for Schwarz Pharma to enter into such an
agreement providing for exchange of clinical trial data and other relevant
Information of the respective parties.
2.4 Disclosure of Back-Up Compound Information. At least [REDACTED] per
calendar year, Lynx shall disclose to Schwarz Pharma a summary of relevant
Back-Up Compound Information not previously disclosed to Schwarz Pharma, for the
purpose of keeping Schwarz Pharma informed about the potential utility of the
Back-Up Compounds and Related Compounds in the Field in the event that the
Licensed Compound then in Development proves unsafe or not sufficiently
efficacious. If Schwarz Pharma determines that it has concerns about continuing
to conduct development on the Licensed Compound and is considering exercising
the rights under Section 5.2, Schwarz Pharma may ask for additional Information
regarding particular Back-Up Compounds and/or Related Compounds, and Lynx shall
provide reasonable additional Information within its Control relating to use in
the Field. Notwithstanding the foregoing, Schwarz Pharma understands and agrees
that Lynx has no obligation to identify, seek to discover or
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develop any additional Back-Up Compounds or Related Compounds or any additional
Back-Up Compound Information.
2.5 Covenants Against Unauthorized Use. Schwarz Pharma hereby covenants
that Schwarz Pharma and its Affiliates and Sublicensees: (a) will not utilize or
practice the Lynx Patents or Lynx Know-How except as expressly permitted under
the License, or, if applicable, the Back-Up Manufacturing 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 Schwarz Pharma obtains rights outside the Field
pursuant to Section 5.1. Schwarz Pharma and its Affiliates shall impose on its
non-Affiliate distributors and dealers and other customers the same restrictions
on resale of the Products as are imposed on Schwarz Pharma hereunder, subject to
compliance with any applicable laws or governmental regulations in the
Territory.
2.6 Expansion of Territory. At its discretion during the term of the
Agreement, Lynx may make a written proposal to add to the definition of
"Territory" any one or more other countries (excluding countries licensed to the
Asian Partner), which proposal shall include any fees or milestone payments
required to add such country to the Territory, which proposal Schwarz Pharma may
accept or decline. A Lynx proposal to add a country to the Territory shall be
effective upon written acceptance by Schwarz Pharma.
2.7 License to Joint Inventions and Joint Patents. Schwarz Pharma
hereby grants to Lynx and its Affiliates the non-exclusive, royalty-free,
perpetual right and license within the Territory under Schwarz Pharma's
interests in the Joint Inventions and any Joint Patents that are owned jointly
by the Parties, solely to develop, make, have made, use, import and sell the
Back-Up Compounds and the Related Compounds for all uses and indications outside
the Field.
3. PRODUCT DEVELOPMENT.
3.1 Overall Management of Collaborative Efforts. Promptly after the
Effective Date, the Parties shall form a Steering Committee constituted of two
representatives from each Party. The Steering Committee shall meet regularly, at
least once each six (6) months during the Agreement, at mutually convenient
sites designated on an alternating basis by each Party. The Steering Committee
shall (i) oversee all activities of the Parties under this Agreement, including
the coordination of the overall strategy for development of Products, subjects
to the specific decision-making rules provided in this Agreement; and (ii) shall
be responsible for establishing appropriate goals and development milestones and
criteria. The parties intend that Development activities shall be conducted
under the supervision of the Development Committee
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appointed pursuant to this Article and that the Development Committee shall
report to and be under the supervision of the Steering Committee. In addition,
the Steering Committee shall resolve any disputes or disagreements that are
unresolved by the Development Committee. The Steering Committee shall make a
good faith effort to reach unanimous decisions. Each Party shall have one vote
and in cases of dead-lock, Schwarz Pharma shall have the tie-breaker vote. On a
[REDACTED] basis in connection with a meeting of the Steering Committee, each
Party shall prepare a report for the Steering Committee detailing the progress
of the work, successes, problems, delays, under or overspending in that period
and shall review the commitment under the Development Plan for the remainder of
the year. Such report shall be delivered to the Steering Committee and the other
Party no fewer than [REDACTED] days prior to the applicable Steering Committee
meeting. The general format of this report shall be agreed by the Parties.
3.2 Development Committee. Each Party recognizes that the work
contemplated under the Development Plan requires the cooperation of both
Parties, with the understanding that Schwarz Pharma shall be responsible for
conducting all Development work unless otherwise specified herein. To accomplish
such cooperation, Schwarz Pharma and Lynx agree to establish the Development
Committee to ensure the smooth and orderly progress of work under the
Development Plan and to facilitate communication between the Parties. The
Development Committee shall consist of three representatives of each Party (or
such other number as the Parties agree). The Development Committee (together
with such members of the project team as the Development Committee members deem
appropriate) shall meet no less than once each [REDACTED] during the Agreement,
or more frequently as the Parties shall mutually agree, at places to be
designated alternately by each Party. The Development Committee shall (i)
oversee all preclinical and clinical investigations and efforts undertaken under
the Agreement in conducting Development of the Licensed Compounds in the
Territory for use in the Field; (ii) establish working project teams at Schwarz
Pharma and Lynx, respectively, to conduct work under the Development Plan; and
(iii) be the primary contact point between the Parties regarding the transfer of
Information and the discussion of the Development Plan and Schwarz Pharma's
efforts to conduct Development. Each Party may appoint its representatives to
the Development Committee and other members of its project team at its
discretion. The members of the project teams shall meet and communication as
frequently as appropriate to carry out the objectives of the Development Plan.
It is the intent of the Parties, in working together, to develop and
commercialize the Products as set forth herein, and to assign responsibilities
for the various operational aspects of the collaboration to those portions of
their respective organizations which have the appropriate resources, expertise
and responsibility for such functions, but subject to the overall requirements
of Section 3.3. The Parties intend that their respective organizations will work
together to assure the success of their
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collaboration. Recognizing that the final decisions regarding Development are
within Schwarz Pharma's control (subject to obligations in Section 3.3), the
discussions and deliberations of the Development Committee will be reported to
Schwarz Pharma and the Steering Committee. Schwarz Pharma agree to give due
consideration to any requests or recommendations of the Development Committee,
to benefit the Development of potential Products and allow Lynx to better
provide support in Development.
3.3 Development in the Territory. Schwarz Pharma shall have the
responsibility to conduct the Development, itself or through its Affiliates or
Sublicensees, as applicable, on its behalf, of the Licensed Compound within the
Territory in order to obtain and maintain Regulatory Approval of Products as
promptly as practicable. As provided below, the Parties agree to work closely
together in conducting such Development and to cooperate in attempting to
proceed with Development efforts as quickly as practicable. Schwarz Pharma will
consult regularly with the Development Committee concerning the Development
efforts undertaken by Schwarz Pharma, its Affiliates and Sublicensees in the
Territory. In addition to Lynx's other duties under the Agreement, Lynx agrees
to provide Schwarz Pharma reasonable assistance, at Schwarz Pharma's cost and
expense (other than expenses related to the Drug Master File), in conducting
such Development. Except as provided in the following, Schwarz Pharma, its
Affiliates and Sublicensees shall be solely responsible for all costs and
expenses of Schwarz Pharma, its Affiliates and Sublicensees relating to such
Development efforts and to obtaining such Regulatory Approval of Products. Lynx
agrees to pay for and conduct the ITALICS Trial, according to the protocol as
existing on the Effective Date or as subsequently modified by Lynx at its
discretion, subject to the approval of Schwarz Pharma not to be unreasonably
withheld or delayed. Schwarz Pharma may request changes to such ITALICS Trial
protocol, and is responsible for all additional costs and expenses caused
predominantly by such changes. Lynx also agrees, at Schwarz Pharma's expense, to
prepare and provide to Schwarz Pharma for filing the IND for the U.S. Multi-Dose
Efficacy Trial, which filing shall occur no later than [REDACTED] days after
Lynx provides the complete IND.
3.4 Development Plan. Schwarz Pharma has prepared and Lynx has reviewed
the initial Development Plan. After the end of each calendar year while Schwarz
Pharma is conducting Development on a Licensed Compound, or at such other times
as the Development Committee deems appropriate, the Development Committee shall
modify the Development Plan, to reflect such revised Development activities as
the Development Committee 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 such year and the anticipated regulatory
requirements to achieve such Regulatory Approval. The Development Committee
shall provide such modified Development Plans to Lynx for its prior review. The
Parties shall attach all such modifications to Exhibit C
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hereto. Schwarz Pharma and Lynx will use good faith, commercially reasonable and
diligent efforts to perform their respective obligations under the Development
Plan. Without limiting the foregoing, Schwarz Pharma agrees that it, its
Affiliates and/or Sublicensees will pursue programs of Development of the
Licensed Compound with diligent efforts no less than Schwarz Pharma applies to
the development of its own compounds or products with similar regulatory
requirements and market potential. If Schwarz Pharma 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] days after
written notice thereof, Lynx may, at its election and in its sole discretion,
and upon written notice to Schwarz Pharma, terminate this Agreement or convert
to non-exclusive Schwarz Pharma's rights throughout the Territory. The actual
means by which Schwarz Pharma conducts the Development of the Licensed Compound
are at Schwarz Pharma's discretion, subject to Schwarz Pharma's compliance with
its diligence obligations under this Article 3 and Section 13.4.
3.5 Reports. Schwarz Pharma 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 Schwarz Pharma, its Affiliates
or Sublicensees, as applicable, hereunder. Within [REDACTED] days of the end of
every June and December while Development is being conducted on the Licensed
Compound, Schwarz Pharma shall prepare and submit to the Development Committee a
report summarizing all 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 Schwarz Pharma's proposed actions to address such
significant deviations, but need not restate items specifically reported to the
regular meetings of the Development Committee. Lynx shall have the right to a
copy of all such reports, provided that all such copies are subject to
protection under Article 11.
3.6 Approval Applications. Schwarz Pharma and its Affiliates and
Sublicensees, as applicable, will be solely responsible at Schwarz Pharma's
expense for assembling all Approval Applications needed to obtain Regulatory
Approval in the Territory, provided, however, that if Lynx is the manufacturer
of the Licensed Compound and/or Products, Lynx shall be responsible, at Lynx's
expense, for preparing the Manufacturing Information and Drug Master File (as
applicable) required by such Approval Applications. Such Approval Applications
(excepting the Drug Master File) will be owned by and filed in the name of
Schwarz Pharma (or its Affiliate or Sublicensee, as applicable). Schwarz Pharma
(or its Affiliate or Sublicensee, as applicable) will be responsible for
diligently preparing or causing such Approval Applications (excepting the Drug
Master File) 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 that is prepared by Lynx for
inclusion in
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such Approval Applications. Schwarz Pharma (or its Affiliate or Sublicensee, as
applicable) shall retain ownership and control of all confidential or
proprietary Information of Schwarz Pharma or its Affiliates or Sublicensees
prepared by them for inclusion in such Approval Applications. At Lynx's
discretion, 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
to the extent permitted by applicable laws and regulations in the country.
Ownership of such Drug Master Files and any Manufacturing Information included
in any such Approval Application shall remain with Lynx. Lynx shall be
responsible, at Schwarz Pharma's expense and reasonable assistance, for causing
such Drug Master File to progress through the approval process in the Territory.
Schwarz Pharma may consult with Lynx with respect to Approval Applications, and
may reference the Drug Master File as appropriate. Lynx will cooperate with
Schwarz Pharma in such manner as Schwarz Pharma may reasonably request to assist
in obtaining Regulatory Approvals.
3.7 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 the Licensed Compound or any Product, whether or not determined to be
attributable to the Licensed Compound or any Product. Without limiting the
generality of the foregoing, each Party shall notify the other Party of any
event or incidence regarding the Licensed Compound or any Product, which it is
required to notify or report to any governmental authority of the country in
which it sells the Licensed Compound or such 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. In
addition, to the extent permitted under any third party agreements, each Party
will disclose to the other any negative information relating to clinical
efficacy of the Licensed Compound learned by such Party during the Agreement.
The obligations in this Section 3.7
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pertaining to Licensed Compound and Products shall survive the expiration or
termination of this Agreement.
3.8 Disclosure of Initial U.S. Efficacy Trial Data. Schwarz Pharma
agrees to disclose to Lynx all results and data from the U.S. Multi-Dose
Efficacy Trial. Lynx shall have the right to disclose such results and data to
the Asian Partner. Except as permitted under a separate agreement between the
Asian Partner and Schwarz Pharma, Lynx shall not disclose any other clinical
trial data resulting from Schwarz Pharma's Development efforts hereunder.
3.9 Restrictive Covenants.
(a) Schwarz Pharma Obligations. During the term of the
Agreement, Schwarz Pharma shall not develop, market or sell in the Territory any
[REDACTED] good faith for use in the field unless Schwartz Pharma is
contemporaneously [REDACTED] to conduct Development and/or marketing [REDACTED]
for use in the Field, which Development and/or marketing efforts involve
expenditure of [REDACTED] (as applicable). Schwarz Pharma further covenants and
agrees that neither it nor its Affiliates or Sublicensees shall conduct any
development work on the Licensed Compound for use outside the Field.
(b) Lynx Obligations. During the term of this Agreement, Lynx
shall not market or sell, and shall not license any Third Party under the Lynx
Patents and Lynx Know-How to develop, market or sell within the Territory, the
Licensed Compound for any use, whether in the Field or outside the Field. In
addition, Lynx covenants that it shall not develop or grant any Third Party the
right to develop, market or sell any Back-Up Compound or Related Compound for
use in the Field in the Territory. In addition, Lynx agrees that any agreement
pursuant to which Lynx grants a Third Party the right to sell the Licensed
Compound shall require that such Third Party not sell the Licensed Compound in
the Territory, and that any agreement pursuant to which Lynx grants a Third
Party the right to sell a Back-Up Compound or Related Compound shall require
that such Third Party not sell such compound for use in the Field in the
Territory.
3.10 Lynx Development. Lynx shall retain the right to develop or to
have Third Parties develop, market and sell the Licensed Compound for use in the
Field in all countries outside the Territory. In addition, Lynx retains the
rights to develop, market and sell, or grant a Third Party rights to do so, any
Back-Up Compound or Related
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Compound for use in all indications outside the Field, but subject to Schwarz
Pharma's rights under Section 5.1.
3.11 Analytical Certification Assistance. Lynx shall provide the
Compound Analytical Information to Schwarz Pharma upon Schwarz Pharma's
reasonable request. Upon Schwarz Pharma's reasonable request, Lynx shall also
make its personnel available in Germany (without charge to Schwarz Pharma) for
such reasonable amount of time as is necessary to train Schwarz Pharma personnel
to perform the analytical procedures necessary to meet European certification
requirements.
3.12 Remedies for Lynx Breach of Development Obligations. In the event
that Lynx materially breaches its obligations under this Article 3 with respect
to the conduct of Development, and Lynx fails to cure such breach within
[REDACTED] days of written notice from Schwarz Pharma, then, in addition to any
other remedies that Schwarz Pharma may be entitled to under this Agreement,
Schwarz Pharma shall be entitled to the remedy of specific performance of such
obligations. If such uncured material breach involves failure of Lynx to prepare
the IND, as required under Section 3.3, then Lynx shall be obligated, on written
notice by Schwarz Pharma after the end of the period to cure such breach, to
provide Schwarz Pharma with the Information in Lynx's possession relating to
such IND, and Schwarz Pharma will be entitled to prepare the IND and to submit
the IND as part of Schwarz Pharma's Development efforts. If such uncured
material breach involves failure of Lynx to fund and complete the ITALICS Trial
(other than due to an event of force majeure or decision of the principal
investigators of such trail to terminate the trail), then Schwarz Pharma shall
be permitted to step in and perform Lynx's obligations with respect to funding
and completing such trial, subject to repayment by Lynx of the costs to Schwarz
Pharma for performing such Lynx obligations. If such uncured material breach
involves failure of Lynx to prepare the Drug Master File, to the extent required
under Section 3.6, then Lynx shall be obligated, on written notice by Schwarz
Pharma after the end of the period to cure such breach, to provide Schwarz
Pharma with the Manufacturing Information, and Schwarz Pharma will be entitled
to prepare the DMF and to submit the DMF as part of Schwarz Pharma's Approval
Applications.
4. MARKETING.
4.1 Marketing Efforts. Schwarz Pharma and its Affiliates shall use
diligent efforts to market and sell the Products that have received the
applicable Regulatory Approval in a country in the Territory for use in the
Field in each such country. At least [REDACTED] months prior to the expected
commercial launch of a Product in the Territory, Schwarz Pharma shall provide
Lynx with a copy of the Schwarz Pharma marketing plan for such Product in the
Territory, for Lynx's review and information. Thereafter, on an [REDACTED] basis
after launch, Schwarz Pharma shall provide Lynx with its marketing plan
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for such Product for the following year, for Lynx's review and information.
Schwarz Pharma shall consider in good faith Lynx's reasonable suggestions or
concerns in such Schwarz Pharma marketing plans. Subject to the foregoing, all
decisions regarding marketing, promotion and sales of Products in the Territory
by or on behalf of Schwarz Pharma shall be at Schwarz Pharma's sole discretion.
4.2 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
Patents consistent with marking requirements, and, if applicable, shall identify
Lynx as the manufacturer and supplier of the Product. Subject to the foregoing,
Schwarz Pharma shall in its reasonable discretion determine the packaging and
labeling for the Products.
4.3 Reports. Commencing after a Product is commercially sold in the
Territory, Schwarz Pharma will provide to Lynx a report on a [REDACTED] basis
within [REDACTED] days of the end of such [REDACTED] period summarizing Schwarz
Pharma's, its Affiliates' and Sublicensees' marketing efforts with respect to
Products during such period. Schwarz Pharma shall also provide Lynx with copies
of its internal quarterly marketing updates with respect to Products, if any,
within [REDACTED] days of the end of each quarter.
4.4 Sales of Delivery Means. If Schwarz Pharma determines in its
reasonable discretion exercised in good faith that it is economically beneficial
for Schwarz Pharma (or its Affiliate) to market and sell Delivery Means in
conjunction with and for use with the Products, but as a separate product (i.e.,
not packaged in a kit), in any country in the Territory, then Schwarz Pharma
shall give notice to Lynx. Promptly thereafter, the Parties shall meet and
negotiate in good faith a compensation mechanism to provide Lynx with an equal
share of any profit resulting from such sale of Delivery Means intended for use
with the Product, provided that Schwarz Pharma has exclusive rights or a
dominant market position with respect to sale of such Delivery Means for use
with the Product. Thereafter, Schwarz Pharma shall use commercially reasonable
and diligent efforts to market and sell the Delivery Means in such country in
the Territory.
4.5 Restrictions on Distributors and Dealers. Schwarz Pharma shall use
its commercially reasonable and diligent efforts to provide that any of its
non-Affiliate distributors or dealers to whom Schwarz Pharma or its Affiliates
or Sublicensees 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, subject to compliance with any applicable laws or governmental
regulations in the Territory.
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5. RIGHTS TO OTHER COMPOUNDS AND FIELDS AND TO [REDACTED].
5.1 Right of Negotiation for Other Indications. Lynx hereby grants
Schwarz Pharma a right of negotiation as provided in this Section regarding
other applications or indications outside the Field (excluding certain
indications as provided below). Provided that Schwarz Pharma has diligently
executed or is continuing to diligently execute in a timely manner the
Development Plan with respect to the Licensed Compound for use in the Field in
the Territory, Lynx will give Schwarz Pharma written notice if at any time Lynx
desires to grant a license to a Third Party within the Territory to research,
develop, import, use or sell one or more Back-Up Compounds or Related Compounds
for a particular use, indication or application outside the Field but excluding
all cancer indications. Such notice shall include such Information owned or
Controlled by Lynx or its Affiliates as Lynx in its reasonable discretion
believes would be necessary to enable Schwarz Pharma to evaluate its interest in
obtaining a license outside the Field with respect to the identified Back-Up
Compound or Related Compound and/or the Licensed Compound. If Schwarz Pharma is
interested in obtaining such a license, Schwarz Pharma shall give Lynx written
notice of its desire to negotiate such license within [REDACTED] days of receipt
of such written notice and Information from Lynx. If Schwarz Pharma provides
such notice, the Parties will meet and negotiate in good faith, during the
[REDACTED] day period following Schwarz Pharma's provision of such notice, the
terms and provisions of a license agreement granting Schwarz Pharma such license
rights to commercialize the applicable Back-Up Compound or Related Compound
and/or 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
thereafter enter into a license agreement with a Third Party granting such Third
Party the proposed license rights outside the Field within the Territory with
respect to the applicable Back-Up Compound or Related Compound. It is understood
that, subject to providing notice as above, Lynx may also negotiate with Third
Parties at any time regarding such license.
5.2 Right to Substitute a Back-Up Compound or Related Compound. Lynx
hereby grants Schwarz Pharma the right to substitute, in lieu of the
then-existing Licensed Compound, a specific Back-Up Compound or Related
Compound, subject to the specific provisions in this Section.
(a) During the term of this Agreement, provided that Schwarz
Pharma has diligently executed or is continuing to diligently execute in a
timely manner the Development Plan with respect to the Licensed Compound for use
in the Field in the Territory, if Schwarz Pharma reasonably determines that it
is not commercially or technically feasible, due to safety or efficacy issues,
to obtain Regulatory Approval of the Licensed Compound as a Product for use in
the Field, Schwarz Pharma may give Lynx written notice that it desires to
relinquish all rights to the then-designated Licensed
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Compound and to substitute as the new Licensed Compound under this Agreement one
of the then-available Back-Up Compounds or Related Compounds.
(b) Upon receipt of such written notice from Schwarz Pharma,
Lynx shall prepare and provide to Schwarz Pharma a list of all the Back-Up
Compounds and Related Compounds that are then available for license. Schwarz
Pharma understands and agrees that Lynx may at any time remove particular
Back-Up Compounds or Related Compounds from availability hereunder, if Lynx has
expended or contractually committed to spend at least [REDACTED] in research or
preclinical investigations on any such compound for use in an indication outside
the Field, or has granted a Third Party a license to research, develop and/or
commercialize such Back-Up Compound or Related Compound outside the Field. Any
such compound shall thereafter be unavailable to Schwarz Pharma under this
Agreement, unless Lynx subsequently determines it shall not seek to develop or
partner such compound, or such Third Party loses its rights under such license.
Lynx shall also provide Schwarz Pharma any additional Back-up Compound
Information with respect to such available compounds that may reasonably be
useful in Schwarz Pharma's evaluation of whether to substitute a particular
compound.
(c) Within [REDACTED] days of disclosure of such list and
such additional Information, the Parties will discuss in good faith Schwarz
Pharma's desire to substitute a compound on such list for the then-existing
Licensed Compound, and within [REDACTED] days after commencing such
discussions, Schwarz Pharma will give Lynx notice in writing of the Back-Up
Compound or Related Compound on such list that Schwarz Pharma desires to
designate as the Licensed Compound in the place of the then-designated Licensed
Compound. Schwarz Pharma may substitute any available Back-Up Compound without
any additional economic terms, and upon such substitution the prior Licensed
Compound shall no longer be subject to or covered by, any of the rights granted
Schwarz Pharma under this Agreement, and such designated Back-Up Compound shall
then be identified as the "Licensed Compound" under the Agreement for all time
(unless a further substitution is made as provided hereunder).
(d) If Schwarz Pharma desires to substitute a Related Compound
as the Licensed Compound, it may do so provided that Schwarz Pharma and Lynx
agree on appropriate economic terms for adding such Related Compound to the
terms of the Agreement as the Licensed Compound in place of the then-designated
Licensed Compound. Such additional economic terms may include license fees and
milestone payments for such Related Compound, as appropriate to compensate Lynx
for the research and development costs Lynx expended on discovering and
developing such compounds, and for the risks assumed with respect to such
expenditures. 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" in place of the
then-designated Licensed Compound,
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and such the prior Licensed Compound shall no longer be subject to any terms or
rights under this Agreement.
5.3 Obligation to Develop or Partner the [REDACTED]. As of the
Effective Date, the Parties have included within the definition of the Field
three applications for the Licensed Compound for which Lynx has a current
interest: the use of the Licensed Compound on a [REDACTED] product to be placed
in a [REDACTED] as part of a stenosis-reducing procedure such as angioplasty
(the "[REDACTED] Application"), the use of the Licensed Compound in association
with an [REDACTED] to reduce stenosis of the [REDACTED] (the "[REDACTED]
Application") and the use of the Licensed Compound in association with
[REDACTED] to reduce stenosis at the [REDACTED] (the "[REDACTED] Application")
(the [REDACTED] Application, the [REDACTED] Application and the [REDACTED]
Application are referred to as the "Applications"). Schwarz Pharma understands
and agrees that Schwarz Pharma must make a specific commitment to develop or
have developed each Application in order to maintain such Application included
within the Field. Specifically, with respect to an Application, Schwarz Pharma
must, prior to the end of the [REDACTED] month period directly after the
Effective Date, either (i) commence and continue a development program, under
the oversight and management of the Development Committee, involving expenditure
of at least [REDACTED] million per year on research and development of each such
Application, until commercialization, or (ii) enter into a collaboration or
other strategic alliance with an appropriate Third Party pharmaceutical or
medical device company for the development of each such Application, which
alliance involves the expenditure of at least [REDACTED] million per year on
research and development of each such Application until commercialization is
achieved. However, for purposes of the preceding sentence (a) the [REDACTED]
Application and the [REDACTED] Application shall be combined and treated as one
Application so that a [REDACTED] million commitment is applicable for the two
Applications combined and Schwarz Pharma may allocate the required commitment
between those two Applications as it sees fit; and (b) Schwarz Pharma's first
[REDACTED] months spending commitment for the [REDACTED] Application and the
[REDACTED] Application combined shall be reduced to [REDACTED] by Lynx's
commitment to spend within the same period [REDACTED] on the preclinical
development of the [REDACTED] and [REDACTED] Applications. If Schwarz Pharma
does not achieve the above commitments with respect to an Application by the end
of the period, such Application shall be specifically excluded from the Field.
In addition, if a development program meeting such requirements is commenced for
an Application, but at a later date terminates or fails to meet the required
funding level, other than by achieving commercialization of a Product for use in
such Application, then at such date such Application shall thereafter be
excluded from the Field. With respect to the [REDACTED] Application and the
[REDACTED] Application, the above spending shall also be deemed not to have been
achieved with respect to either one of them which does not receive at least
[REDACTED] of the spending which otherwise meets the spending requirement for
the two Applications combined.
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5.4 Compensation from Partnering of Applications. If Schwarz Pharma or
any of its Affiliates enters into a collaboration or any other strategic
alliance with an appropriate Third Party regarding the development,
distribution, marketing and/or sale of a Product containing the Licensed
Compound for use in an Application, as contemplated in Section 5.3 above, then
Schwarz Pharma shall pay to Lynx a share of any license fees, milestone
payments, and other revenues received from such Third Party as provided below,
but excluding any sponsored research support funding contributed to Schwarz
Pharma or its Affiliate by such Third Party that is specifically used by Schwarz
Pharma or its Affiliate for conducting research on use of the Licensed Compound
for such Application. Such share shall equal [REDACTED] of any such license fees
and milestone or similar payments received by Schwarz Pharma or its Affiliate
from such Third Party Partner based on the agreement to develop, market,
distribute or sell the Licensed Compound for use in the Application. Schwarz
Pharma shall also pay Lynx as provided in Section 6.7 for Schwarz Pharma's or
its Affiliate's purchases of Products that are resold to the Third Party. In
addition, with respect to the [REDACTED] Application, Schwarz Pharma agrees to
pay Lynx [REDACTED] of any other amounts Schwarz Pharma may receive from such
Third Party based on its sale of the [REDACTED] Product. Schwarz Pharma shall
keep Lynx fully informed in a timely manner of any negotiations with potential
Third Party corporate partners or collaborators with respect to an Application,
including summaries of the proposed business terms and updates on the status of
and developments in such negotiations. Schwarz Pharma will provide to Lynx for
its review and comment a copy of any proposed agreement with such a partner or
collaborator at least [REDACTED] days prior to its execution.
6. MANUFACTURING AND SUPPLY.
6.1 Manufacturing Rights. Lynx shall retain all rights to manufacture
or have manufactured the Licensed Compounds and Products, subject to the
provisions of Section 2.2. Lynx agrees to supply Schwarz Pharma's clinical trial
requirements for the Licensed Compounds used in its Development in the Territory
and requirements for Products for commercial sale in the Territory, pursuant to
the supply terms provided below.
6.2 Clinical Supply. Lynx agrees to provide Schwarz Pharma with such
quantities of the particular Licensed Compound on which Schwarz Pharma is
conducting Development as Schwarz Pharma reasonably requires and orders pursuant
to this Agreement and the Supply Agreement. Clinical supplies of the Licensed
Compound under Development shall be in the form of Clinical Trial Materials.
Schwarz Pharma understands that Lynx will meet the clinical supply requirements
herein using its existing inventory of Clinical Trial Materials, until such
inventory is expended. At least [REDACTED] days prior to commencement of
clinical trials of the Licensed Compounds in the Territory, Schwarz Pharma shall
give Lynx a rolling [REDACTED] calendar quarter forecast of its expected
requirements for such Clinical Trial Materials, including quantities,
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dosages and requested delivery dates. Schwarz Pharma shall update such forecast
at the beginning of each calendar quarter thereafter during Development. Lynx
shall supply Schwarz Pharma's requested quantities of the Clinical Trial
Materials for use in clinical trials in the Territory, at the requested delivery
times; provided, however, that such delivery times are not less than [REDACTED]
days after receipt by Lynx of Schwarz Pharma's firm order for a specified
quantity of Clinical Trial Materials. Such order shall not deviate by more than
[REDACTED] from the amount forecasted for such delivery dates in the most recent
forecast. Notwithstanding the foregoing, if unanticipated changes arise with
respect to the quantity requirements of Clinical Trial Materials for the trial
protocol, Lynx will make a good faith effort to fulfill Schwarz Pharma's
quantity requirements, regardless of whether Schwarz Pharma followed the
foregoing forecast procedure. Shipment, delivery and acceptance of Clinical
Trial Materials shall be in accordance with Sections 6.8 and 6.9 of this
Agreement.
6.3 Pricing of Clinical Materials. The Clinical Trial Materials
supplied by Lynx shall be sold to Schwarz Pharma at a per unit transfer price as
follows:
(a) [REDACTED] per dose of Licensed Compound, or of the
placebo, included in the Clinical Trial Material, plus shipping and handling
costs; plus
(b) Lynx's actual purchase prices of the Delivery Means and
shipping and handling costs (if provided by Lynx at Schwarz Pharma's request);
plus
(c) Lynx's (if packaged by Lynx at Schwarz Pharma's request)
actual packaging costs for preparing the final packaged Clinical Trial Material.
6.4 Commercial Product Supply. Lynx agrees to provide Schwarz Pharma
with its commercial requirements of each Product for which Schwarz Pharma has
obtained Regulatory Approval, pursuant to the terms of this Agreement, in final
single dose form.
6.5 Forecasts. At least [REDACTED] months prior to the first expected
Regulatory Approval of a Product in the Territory, Schwarz Pharma shall provide
a good faith estimate of its expected requirements, on a per quarter basis, for
Products for the first [REDACTED] years after Product launch. Commencing at
least [REDACTED] months before the first expected Regulatory Approval of a
Product in the Territory, Schwarz Pharma shall provide Lynx a rolling [REDACTED]
month forecast, for its expected orders for Products for delivery during each
such quarter during such period. An updated forecast will be provided to Lynx
within the first [REDACTED] business days of each calendar quarter. In each such
forecast provided to Lynx as required herein, the forecast for the calendar
quarter in which such forecast is delivered shall constitute a binding
commitment of
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provided to Lynx within the first [REDACTED] business days of each calendar
quarter. In each such forecast provided to Lynx as required herein, the forecast
for the calendar quarter in which such forecast is delivered shall constitute a
binding commitment of Schwarz Pharma and/or its Affiliates to submit purchase
orders for not less than [REDACTED] of the amounts listed in such forecast
during such quarter. Such binding forecast for such quarter may not deviate by
more than [REDACTED] from the amount forecasted for such quarter in the most
recent previous forecast provided to Lynx.
6.6 Orders for Products. Schwarz Pharma or its Affiliates shall place
orders for Product to be supplied under the Agreement on Schwarz Pharma's or its
Affiliates' (as applicable) standard purchase order form specifying the quantity
of Product ordered and the requested delivery date, which shall not in any event
be sooner than [REDACTED] days nor longer than [REDACTED] days from the date of
such purchase order. To the extent any purchase order, invoice or acknowledgment
form used by Lynx, Schwarz Pharma or an Affiliate contains any provisions
additional or contrary to the provisions of this Agreement, such additional or
contrary provision shall have no force or effect and the terms of this Agreement
shall control. The total amount of Product ordered by Schwarz Pharma and its
Affiliates with specified delivery dates in a particular calendar quarter shall
not in any event be less than [REDACTED] of the amount of Product forecasted to
be ordered for such quarter in the most recent forecast, as provided in Section
6.5 above, unless Lynx otherwise agrees in writing. Lynx shall not be obligated
to supply any amounts in such order in excess of [REDACTED] of the amount of
Product forecasted in the most recent binding forecast to be ordered for such
quarter; however, Lynx agrees that it will use reasonable efforts to supply such
additional amounts. Lynx shall deliver the ordered Products following receipt of
the purchase order no later than [REDACTED] days thereafter. Lynx shall
immediately notify Schwarz Pharma in writing if Lynx determines that Lynx will
not be able to supply a material amount of the most recent orders and/or
forecasts of orders for any Product. Shipment, delivery and acceptance of
Products shall be in accordance with Sections 6.8 and 6.9 of this Agreement.
<TABLE>
6.7 Commercial Purchase Price of Product. For purchases of a Product
(in individual dose form not to exceed [REDACTED] mg of Licensed Compound per
dose) from Lynx by Schwarz Pharma or its Affiliates, Schwarz Pharma shall pay
Lynx, subject to limitations as provided below, the purchase price for such
purchase equal to the greater of: (a) the applicable percentage of the Net Sales
of the purchased Product as determined below, or (b) [REDACTED] per individual
dose.
<CAPTION>
Net Sales of Products in Year Purchase Price of Product
- ----------------------------- -------------------------
<S> <C>
For the first [REDACTED] Million of Net Sales [REDACTED] of such Net Sales
For Net Sales between [REDACTED] Million and [REDACTED] Million [REDACTED] of such Net Sales
For Net Sales between [REDACTED] Million and [REDACTED] Million [REDACTED] of such Net Sales
For Net Sales between [REDACTED] Million and [REDACTED] Million [REDACTED] of such Net Sales
For Net Sales above [REDACTED] Million [REDACTED] of such Net Sales
</TABLE>
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The percentage rate in the above schedule applicable to a particular Product
purchased during the calendar year will be determined by the total accumulated
Net Sales of all Products during the then-current calendar year through the date
of such purchase. The above percentages shall be reduced by [REDACTED]
percentage points for sales of a Product in each country where both (a) there is
no Patent of Lynx or Schwarz Pharma covering the manufacture, use or sale of the
Product, and (b) a Third Party (other than a Sublicensee or other Third Party
granted marketing rights as permitted hereunder) either (i) has obtained
regulatory approval in such country to market and sell a product for use in the
Field which product (a "Competitive Product") is covered by the claims of an
issued Lynx Patent in the Territory that covers the Product, or (ii) has
commenced sales of a Competitive Product in such country, in the event no such
regulatory approval is required. The applicable purchase prices for Products
shall be paid as provided in Section 6.17.
In addition, if Lynx delivers a Product more than [REDACTED] days after the
specified delivery date in an order submitted in compliance with Sections 6.5
and 6.6, then Schwarz Pharma shall receive a discount equal to [REDACTED] of the
total purchase price set forth above for the amount of such Product delivered
late.
6.8 Delivery and Risk of Loss. Delivery of Products ordered hereunder
shall be FCA San Francisco International Airport. "FCA" shall be construed in
accordance with INCOTERMS 1990 of the International Chamber of Commerce. Title
to and risk of loss of the Product, shall transfer to Schwarz Pharma upon
delivery to the carrier at San Francisco International Airport. Delivered
Products shall be appropriately packaged by Lynx, at Lynx's expense, for export
shipment. At Schwarz Pharma's request and cost, Lynx shall arrange shipping to
specified Schwarz Pharma locations, provided that Schwarz Pharma shall be
responsible for obtaining all customs clearances required. Schwarz Pharma shall
be responsible for compliance with all exportation and importation laws and
regulations.
6.9 Acceptance. Schwarz Pharma shall have the right to test at its
expense a portion of each shipment of Product to confirm such shipment meets the
Specifications. If Schwarz Pharma rejects in whole or in part any nonconforming
shipment of Products, Schwarz Pharma shall immediately provide Lynx written
notice of such rejection. Lynx shall [REDACTED] to replace the nonconforming
Product, at no additional cost to Schwarz Pharma, as soon as possible; provided,
however, that if Lynx reasonably disputes Schwarz Pharma's conclusion that such
Products do not meet Specification, Lynx need not do more than supply such
amounts as are available in inventory, and shall not be obligated to maintain
such inventory during such dispute. If Lynx disagrees with Schwarz Pharma's
determination that the rejected shipment did not meet the Specifications, a
sample of the rejected shipment shall be submitted to an independent, qualified
third-party laboratory that is mutually acceptable and selected by the parties
promptly in good faith. Such laboratory shall determine whether the rejected
Product
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meets the Specifications, and such laboratory's determination shall be final and
determinative for purposes of this Agreement. The party against whom the
laboratory rules shall bear all costs of the laboratory testing. If the
laboratory rules that the shipment failed to meet Specifications, the
replacement shipment shall be at no charge Schwarz Pharma (provided Schwarz
Pharma paid for the initial shipment). If the laboratory rules the rejected
shipment met the Specifications, then Schwarz Pharma shall accept such batch for
use or shall reimburse Lynx for the replacement shipment. Shipments of Products
not meeting the Specifications may, at Lynx's option, be returned to Lynx or
destroyed by Schwarz Pharma, at Lynx's expense.
6.10 Quality of Manufacturing. Lynx shall manufacture or have
manufactured and supply Products in accordance with the Specifications and with
cGMP regulations and in compliance with all applicable laws. [REDACTED] Lynx may
not make any material changes to the Specifications for a Licensed Compound or
Product without the prior written approval of Schwarz Pharma. Lynx shall be
responsible for the safe handling, storage and transportation of Product, until
delivery to Schwarz Pharma as provided in Section 6.8.
6.11 Manufacturing Facilities, Equipment and Licenses. Lynx shall, at
Lynx's expense, acquire or cause to be acquired all equipment and licenses,
including, without limitation, all necessary plant equipment and facilities
licenses, necessary to enable the manufacture of the Products as required
hereunder. Lynx shall use its commercially reasonable efforts to keep such
equipment properly maintained and to reduce risks of breakdown of critical
machinery. Lynx shall obtain and maintain all necessary United States
manufacturing licenses and approvals including but not limited to FDA approval
for the manufacturing facilities and export approval. Schwarz Pharma, its
Affiliates and its Sublicensees shall obtain any required importation licenses
or approvals for importation of Product for sale in the Territory. Lynx shall
cooperate reasonably with Schwarz Pharma to obtain such licenses or approvals,
provided that Lynx shall cause the Drug Master File to progress through the
approval process at its own expense.
6.12 Second Manufacturing Facility. Commencing no later than the
[REDACTED] for a Product in the Territory, Lynx shall use its diligent efforts
to build or identify and qualify, as promptly as reasonably practicable
thereafter, a second manufacturing facility for the production of Licensed
Compounds and Products, including qualified fill and finish, to ensure a second
source of supply of Products for sale to Schwarz Pharma and its Affiliates as
provided hereunder. Such second qualified manufacturing site may be a Third
Party manufacturer under contract to Lynx, qualified to make the Products under
cGMP. Lynx agrees to have such qualified second manufacturing site in any event
by the [REDACTED] commercial sale of a Product in a Major Country, and Lynx
shall keep qualified for the
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duration of this Agreement such second site (or its replacement). Lynx may
select the location for such second manufacturing site at its discretion, as
long as it is not less than [REDACTED] miles from the primary source of supply.
In the event that Lynx fails to qualify a second manufacturing site by the
[REDACTED] Schwarz Pharma commences commercial sale of a Product in a Major
Country, then thereafter, Schwarz Pharma shall be entitled to exercise the
Back-Up Rights provided in Section 2.2 by giving Lynx written notice of its
election to exercise such right; provided, however, that Schwarz Pharma's right
hereunder to so elect to proceed under Section 2.2 shall terminate at such time
as Lynx qualifies a second manufacturing site for the Products.
6.13 Inventory of Product. Commencing on the date of commercial launch
of the Product, and until the Qualification Date, Lynx shall maintain in storage
an inventory of Products sufficient to meet Schwarz Pharma's forecasted
requirements for the following [REDACTED] months, as reflected in Schwarz
Pharma's most current forecast of expected requirements provided pursuant to
this Agreement. After the Qualification Date, Lynx shall maintain in storage an
inventory of Products sufficient to meet Schwarz Pharma's forecasted
requirements for the following [REDACTED] months, as reflected in Schwarz
Pharma's most current forecast. Lynx shall ensure that such inventories are
safely stored in more than one room or area, and that at least [REDACTED] of
such inventory is maintained at a site at least [REDACTED] miles distant from
the primary manufacturing site.
6.14 Escrow of Manufacturing Information. Within [REDACTED] days after
the [REDACTED] for sale in the Territory, Lynx shall place the proprietary
Manufacturing Information into an escrow pursuant to the terms of an escrow
agreement that is reasonably acceptable to Schwarz Pharma. Thereafter, Lynx
shall place any new proprietary Manufacturing Information into such escrow on a
regular basis promptly after it becomes known to Lynx, and in any event no less
frequently than once per year. Such escrow shall contain the Drug Master File,
and any amendments or other changes thereto within [REDACTED] business days
after their submission to the FDA or to the appropriate governing health
authority in another country in the Territory. The Parties [REDACTED]
establishing and maintaining such escrow. Such escrow shall be pursuant to an
agreement that provides for release of the escrowed materials upon certification
by a senior manager of Schwarz Pharma that it is entitled to such materials
under the requirements of Section 2.2. Schwarz Pharma shall indemnify Lynx for
any and all damages caused by Schwarz Pharma's wrongful release of such escrow.
6.15 Product for Promotional Purposes. Lynx also agrees to provide to
Schwarz Pharma amounts of a Product, at Lynx's Fully Burdened Costs for such
Product, up to [REDACTED] of Schwarz Pharma's annual purchases of Product for
commercial sale, provided that Schwarz Pharma uses such free Product solely for
promotional and
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marketing purposes and does not receive any compensation for distribution of
such Product provided free by Lynx, including any compensation based on Delivery
Means for use with such Product. Schwarz Pharma shall be responsible for paying
for all shipment related expenses for such promotional Product, as provided in
this Article 6.
6.16 Conversion of Net Sales. For purposes of calculating Net Sales,
the Net Sales of Products by Schwarz Pharma or its Affiliates or Sublicensees in
a particular country of the Territory (outside the United States) during a
particular calendar quarter shall be converted from the currency of the sale
into United States Dollars at the average, for the beginning and ending business
days of such quarter, of the conversion rates from such country's currency into
United States Dollars as reported in the Wall Street Journal, and shall be
converted at such average rate at the end of such quarter for calculation of Net
Sales for such quarter. For the estimated purchase price, as discussed in
Section 6.17 below, calculation of the Average Net Sales (as defined therein)
shall be accomplished by converting into U.S. Dollars any Net Sales in foreign
currencies, using the average of the conversion rates as reported in the Wall
Street Journal on the beginning and ending business days of the most recent
calendar quarter.
6.17 Estimated Purchase Price Payment and Reconciliation. The parties
understand and agree that, because the Product purchase price payable to Lynx
hereunder depends on Net Sales, as provided in Section 6.7, Lynx will be
entitled to invoice Schwarz Pharma, at the time Lynx delivers Product ordered
hereunder, for an estimate of the purchase price, and the Parties then will
reconcile such estimated price with the actual purchase price payable for such
Products, as determined under Section 6.7 after such Products are sold by
Schwarz Pharma or its Affiliates. Such estimate and reconciliation shall be
conducted as follows:
(a) Lynx will invoice Schwarz Pharma for an estimate of the total
purchase price for Products purchased hereunder at the time of delivery to
Schwarz Pharma. Such invoiced estimate shall be equal to (i) the total number of
units of Products delivered, times (ii) the Average Net Sales. As used herein,
"Average Net Sales" shall mean the total Net Sales of Product in the most recent
calendar quarter for which Schwarz Pharma has provided a quarter-end report (as
discussed below), divided by the total number of units of Product that were sold
in such quarter and used in calculating such total Net Sales. For supply of
Products during the period of time directly after launch of the Product for
which no such "Average Net Sales" can be calculated, Schwarz Pharma will provide
Lynx a reasonable, good-faith estimate of the Net Sales (in U.S. Dollars) per
unit of Product that Schwarz Pharma expects to realize from sales of such
ordered Product, and Lynx shall invoice Schwarz Pharma for the estimated
purchase price, as determined under Section 6.7, based on such estimate of the
Net Sales. All invoices hereunder are payable net [REDACTED] days for the date
of invoice (except as provided in Section 6.19). All such invoiced estimated
transfer prices will be reconciled with the
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actual Product purchase price payable by Schwarz Pharma with respect to such
purchases, after the end of the quarter during which particular Products are
sold by Schwarz Pharma or its Affiliate, as provided below.
(b) Within [REDACTED] days of the end of the calendar quarter
during which such purchased Products are subsequently resold by Schwarz Pharma
or its Affiliates or Sublicensees, Schwarz Pharma shall perform the calculation,
as provided in Section 6.7, to determine the actual purchase price payable with
respect to such Products. Schwarz Pharma then will compare such actual price,
based on such calculation, with the estimated transfer price paid to Lynx based
on the estimate as set forth in subsection (a) above, and shall calculate the
amount payable to Lynx, or creditable to Schwarz Pharma, as applicable, to
reconcile the payments based on such initial estimated purchase price invoiced
by Lynx and paid by Schwarz Pharma. Schwarz Pharma shall provide Lynx a report,
within [REDACTED] days of the end of such quarter, showing all the calculations
hereunder to determine actual purchase price and the reconciliation amounts, and
shall pay Lynx at that time any amounts showed to be owing Lynx to reconcile the
payments. If such calculation shows that amounts are creditable to Schwarz
Pharma, Schwarz Pharma may credit such amounts against the next invoice
submitted by Lynx hereunder.
6.18 Share of Kit Revenues. If Schwarz Pharma or its Affiliates sell a
Product packaged in a kit form along with a Delivery Means (a "Kit"), Schwarz
Pharma shall also pay Lynx a share of the gross profit derived from such sales
as provided herein. Within [REDACTED] days of the end of each calender quarter
during which Kits are sold by Schwarz Pharma and/or its Affiliates, Schwarz
Pharma shall calculate the total net sales for such Kits (which shall be the
total amounts invoiced or otherwise charged for sale of the Kits, less the
applicable deductions as set forth in Section 1.31). Schwarz Pharma then shall
calculate the "Gross Profits" based on such Kit sales during the quarter, which
amount shall be equal to the total net sales for such Kit sales as calculated,
less the following amounts: (a) the total Net Sales, as determined under the
last paragraph of Section 1.31, for the Products included in such Kits; (b) the
actual cost of purchase of the Delivery Means included in such Kits; (c) the
actual costs of packaging the Kits; and (d) the actual inventory costs directly
attributable to maintaining the Delivery Means included in such Kits in Schwarz
Pharma's inventory, calculated in accordance with generally accepted accounting
principles applicable to the locality where the invoices are prepared and
consistently applied. Schwarz Pharma shall provide Lynx a report, within
[REDACTED] days of the end of such quarter, showing all the calculations
hereunder to determine the total net sales of Kits during the quarter and the
Gross Profit based on such sales, and shall pay Lynx at such time [REDACTED] of
such Gross Profit.
6.19 Schwarz Pharma Excess Inventory. In order to permit Schwarz Pharma
to carry, prior to the Qualification Date, a larger inventory of Product than
Schwarz Pharma usually carries for its products, Lynx hereby agrees that Schwarz
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Pharma shall be entitled to purchase, during such period, a certain amount of
Product at a [REDACTED] purchase price. At any time after Schwarz Pharma has
commenced purchase of Product based on forecasts submitted under Section 6.5,
but prior to the Qualification Date, Schwarz Pharma may submit orders for
Product in order to increase Schwarz Pharma's inventory above its usual level.
Such orders shall be made by purchase orders designated as "excess inventory"
purchases submitted under Section 6.6 separate from other purchases of Products.
The total amount of such excess inventory ordered under this Section may not
exceed, at any time prior to the Qualification Date, an amount equal to the
amount of Product forecasted to be ordered for the [REDACTED] months following
the date of the most recent forecast submitted under Section 6.5. With respect
to such Product supplied by Lynx hereunder in order to provide for excess
inventory at Schwarz Pharma, Lynx agrees that Schwarz Pharma shall be obligated
to pay only [REDACTED] of the estimated purchase price for such Products, as
calculated under Section 6.17(a) and invoiced by Lynx, within the standard
[REDACTED] day period. The remaining [REDACTED] payment owing on such invoices
shall be paid in total within [REDACTED] days of the end of the calendar quarter
during which the Qualification Date occurs. The reconciliation required under
Section 6.17(b) to determine the actual purchase price for Products ordered
under this Section shall take place, as provided in Section 6.17(b), after the
quarter(s) when such Products are actually sold (whether before or after the
Qualification Date).
6.20 Audit Rights. Upon [REDACTED] days' written notice to Schwarz
Pharma, Lynx shall have the right to have a certified accountant acceptable to
Schwarz Pharma or its Affiliate (as applicable) audit Schwarz Pharma's, its
Affiliates' and/or its Sublicensees' records to confirm that all payments made
hereunder are accurate. Any audit performed pursuant to this subsection shall
take place during regular business hours at Schwarz Pharma's principal place of
business or at any other location where Schwarz Pharma may make the applicable
records available; provided, however that access to Schwarz Pharma's, its
Affiliates' and/or its Sublicensees' records shall be provided in such manner so
as not to interfere with the normal conduct of Schwarz Pharma's, its Affiliates'
and/or its Sublicensees' (as applicable) business or operations. Access to
Schwarz Pharma's, its Affiliates' and/or its Sublicensees' records shall be
limited to such records (or the relevant portion thereof) as are reasonably
required to determine that payments made under this Agreement are accurate (or
if such payments are not accurate then to determine the proper payment amount)
and Lynx and/or its certified public accountant shall execute such
confidentiality agreements with respect to such access as Schwarz Pharma, its
Affiliates and/or its Sublicensees may request. Any amounts showed to be owed to
Lynx shall be immediately paid with interest at [REDACTED] per month (or the
maximum amount allowed by law, if less) from the day such amounts were first due
until paid. In addition, if the audit shows underpayment by [REDACTED] or more
of the amounts due during the audited period, Schwarz Pharma shall pay Lynx's
reasonable
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expenses in having such audit conducted. Schwarz Pharma shall have a reciprocal
right to audit Lynx's records, under similar provisions, to determine if the
Fully Burdened Costs used in Section 6.3 are accurate. In the event any such
audit shows that Schwarz Pharma overpaid Lynx hereunder, Lynx shall repay such
amount of overpayment with interest at [REDACTED] per month (or the maximum
amount allowed by law, if less) from the date of such overpayment until the date
it is repaid to Schwarz Pharma.
6.21 Quality Control.
(a) At least once per [REDACTED], Lynx shall provide Schwarz
Pharma with reasonable copies of the material safety data and information
prepare by Lynx to show the safe manufacture, handling, and storage of the
Product.
(b) Lynx shall maintain ongoing stability studies using its
standard methodology. Lynx shall, at Schwarz Pharma's expense, provide Schwarz
Pharma with reasonable samples, specimens and full reports of the results of the
stability studies. In addition to its own routine quality control, Lynx shall
conduct, at Schwarz Pharma's reasonable request and cost, such other tests as
may be required by applicable regulatory authorities of any country in the
Territory.
(c) For each lot of Product produced for Schwarz Pharma
hereunder, Lynx shall furnish to Schwarz Pharma 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 Specifications, showing
release of each such lot.
(d) Schwarz Pharma shall be responsible for the release of
Product for sale by Schwarz Pharma, its Affiliates and/or its Sublicensees 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 Schwarz Pharma from time to time
upon Schwarz Pharma's reasonable request, no more often than once in a
[REDACTED] period. Schwarz Pharma 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 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
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any time upon reasonable advance notice to Lynx, but no more than once per
quarter until the Qualification Date, and thereafter no more than once per
[REDACTED] period. However, notwithstanding the foregoing Lynx shall not be
obligated to disclose any Manufacturing Information.
(f) Once in any [REDACTED] period, Schwarz Pharma 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 Schwarz Pharma, Lynx agrees to notify Schwarz Pharma of the schedules
of production runs of Product and to provide Schwarz Pharma with its monthly
production lot run reports, on a monthly basis until the Qualification Date, and
thereafter on a quarterly basis. Lynx agrees to cooperate with Schwarz Pharma's
authorized representatives conducting such audits. Schwarz Pharma shall from
time to time identify the persons and timetable for such inspections.
(g) If Schwarz Pharma is required by a Regulatory Authority in
any country in the Territory to have inspected or approved the site of
manufacturing or storing Product, Lynx will permit officials of the applicable
regulatory authorities to inspect the Hayward, California facility or such other
facility where Product is manufactured or stored.
6.22 Product Licenses. Schwarz Pharma shall be responsible 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, as
provided in Section 3.6.
6.23 Allocation. If Lynx is unable to supply [REDACTED] of the
forecasted requirements for Products hereunder (or actual orders, if less) to
Schwarz Pharma and the Asian Partner, then, to the extent reasonably
practicable, the quantities of Product supplied to Schwarz Pharma and the Asian
Partner shall be [REDACTED].
6.24 Product Recall Procedures. The parties shall immediately inform
each other in writing of all incidents and/or of 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 that is caused by a manufacturing defect
attributable to Lynx or its sublicensee shall be at the sole expense of Lynx.
Any recalls based on toxicity or other Product safety issues (other than caused
by defective manufacturing) or recalls resulted from defective handling, storage
or other cause by Schwarz Pharma, its Affiliates or its Sublicensees or
distributors shall be at Schwarz Pharma's expense.
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7. MILESTONES.
7.1 Milestone Payments. In part consideration for the rights granted by
Lynx herein, Schwarz Pharma shall pay Lynx the following amounts in United
States currency (adjusted as provided below), within [REDACTED] business days
of Schwarz Pharma's notification of the occurrence of the specified events:
(a) $4.0 million, payable on the execution of the Agreement;
(b) $[REDACTED] million upon Successful Conclusion (as defined
below) of the ITALICS Trial;
(c) $[REDACTED] million, payable on the Successful Conclusion
of the U.S. Multi-Dose Efficacy Trial on a Licensed Compound;
(d) $[REDACTED] million, payable upon the first NDA filing (or
filing of foreign equivalent) on a Licensed Compound in a Major Country;
(e) $[REDACTED] million, payable upon the first receipt of
Regulatory Approval of a Product in a Major Country.
7.2 Definition. As used herein, "Successful Conclusion" means:
(a) with respect to the ITALICS Trial, either that: (i) the
clinical trial has generated results showing, compared to placebo, a [REDACTED]
measured by IVUS at a p value (less than) 0.06; or (ii) there is a Successful
Conclusion to the U.S. Multi-Dose Efficacy trial;
(b) with respect to the U.S. Multi-Dose Efficacy trial, either
that: (i) the clinical trial has generated results meeting success criteria to
be agreed upon by the Parties in good faith, based upon the nature of the
Protocol for such study, which success criteria shall be set forth in writing as
an addendum to this Agreement, or (ii) Schwarz Pharma or any of its Affiliates
or Sublicensees commences a Pivotal Trial on the Licensed Compound.
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, subject only to the
licenses granted to Schwarz Pharma hereunder. Schwarz Pharma shall retain all
right, title and interest in and to the Schwarz Pharma Patents and the Schwarz
Pharma Compound Information, subject only to the rights granted to Lynx
hereunder. All inventions and developments made by employees or agents of one
Party hereto, or its Affiliate, and all Patents claiming such inventions or
developments, shall be owned by such Party. In the event that a Joint
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Invention is made by Lynx and Schwarz Pharma employees or agents, Lynx and
Schwarz Pharma shall jointly own any such Joint Invention and all Joint Patents
claiming such Joint Invention. Inventorship of inventions shall be determined
under U.S. patent law regarding inventorship.
8.2 Prosecution and Maintenance of Lynx Patents; Abandonment. Lynx
shall have the responsibility to file, prosecute and maintain the Lynx Patents
in the Territory and shall bear all expenses associated therewith. To the extent
applicable to the Field, Lynx shall provide Schwarz Pharma with an opportunity
to review and comment on the nature and text of new or pending Lynx Patent
applications in the Territory. Lynx shall reasonably consider any such comments
from Schwarz Pharma, and shall on a reasonable basis conduct discussions with
Schwarz Pharma regarding the patent prosecution strategy of Lynx Patents, to the
extent applicable to the Field. However, all decisions regarding prosecution of
the Lynx Patents will be at Lynx's sole discretion and responsibility. Lynx
agrees to keep Schwarz Pharma informed of the course of patent prosecution or
other proceedings relating to the Lynx Patents. 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 Schwarz
Pharma not less than 2 months before any relevant deadline, and thereafter
Schwarz Pharma 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
Schwarz Pharma. For any Joint Invention, the Parties shall cooperate in good
faith in filing appropriate Patent applications claiming the Joint Invention,
the costs of which shall be shared jointly by each Party.
8.3 Prosecution and Maintenance of Joint Patents; Abandonment. The
Parties agree to discuss in good faith a mutually agreeable Patent strategy with
respect to all Joint Inventions that may be patentable. With respect to all
Joint Inventions for which the Parties agree patent protection should be sought,
Schwarz Pharma and Lynx shall cooperate in good faith to file, prosecute and
maintain the Joint Patents in the Territory covering such Joint Inventions, and
the Parties shall jointly bear all expenses associated therewith. However,
either Party may choose at any time not to continue to pay any such prosecution
and maintenance costs with respect to a particular Joint Patent, and shall
immediately thereafter assign all its rights in such Joint Patent claiming a
Joint Invention to the Party that pays all such costs. In the event that a Party
elects not to cooperate in prosecuting a Patent application on a particular
Joint Invention, the other Party may do so at its sole discretion and expense,
and all rights in such Joint Invention and the Joint Patent claiming such
invention shall be assigned to such Party.
8.4 Defense and Settlement of Third Party Claims. If a Third Party
files a claim, suit or action against Schwarz Pharma claiming that a Patent or
other intellectual property right owned by it is infringed by the development,
use, marketing, distribution or
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sale of any Product, and such claim, suit or action (a "Claim") arises
out of Schwarz Pharma's practice, in the Field and in the Territory, of a Lynx
Patent or Lynx Know-How licensed hereunder, Schwarz Pharma will have the right
to defend against any such Claims. Lynx will assist in the defense of any such
Claim as reasonably requested by Schwarz Pharma and at Schwarz Pharma's expense.
Schwarz Pharma 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. Schwarz
Pharma shall be entitled to deduct [REDACTED] percent [REDACTED] of any expense
incurred by Schwarz Pharma 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 Article 6 above; provided, however, that such deduction shall
not exceed [REDACTED] of the Net Sales of that Product. Lynx further agrees to
indemnify, defend and hold Schwarz Pharma, its Affiliates harmless against any
claim, suit or action by a Third Party that, in manufacturing a Licensed
Compound or Product supplied to Schwarz Pharma or its Affiliates hereunder,
Lynx's manufacturing process infringes such Third Party's Patent or other
intellectual property right; provided, however, that such indemnity shall not
apply to composition of matter claims.
8.5 Third Party Royalties. In the event that Schwarz Pharma 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, Schwarz Pharma shall be
entitled to deduct [REDACTED] percent [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 Article 6 above; provided,
however, that such amount may not exceed [REDACTED] of the Net Sales of the
Product. Notwithstanding the foregoing, the combined deductions resulting from
settlement or defense of Third Party claims under Section 8.4 and for royalties
payable under this Section under a required license to a Third Party Patent
shall not in any event result in a reduction of the commercial purchase price
per unit of Product in excess of [REDACTED] of the Net Sales of such Product.
8.6 Enforcement of Lynx Patent Rights. If any Lynx Patent licensed
hereunder is infringed by a Third Party in any country in the Territory, 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
Schwarz Pharma shall have the right, at its own expense, to be represented in
any such action by counsel of its own choice. If such suspected infringement
involves the manufacture, use or sale in such country of an oligonucleotide
compound that specifically
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targets the mRNA transcribed from the c-myc gene and that is intended for use in
the Field (an "Infringement in the Field"), and Lynx fails to bring an action or
proceeding against such suspected infringer within a period of [REDACTED] days
after having knowledge of such Infringement in the Field, Schwarz Pharma shall
have the right to bring and control an action against such infringer 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 involving an Infringement in the Field 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 in an action against an infringer of a Lynx Patent
based on an Infringement in the Field shall be allocated to the Parties in the
following manner: first, to the reimbursement of Lynx and Schwarz Pharma 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. All rights granted to Schwarz Pharma herein are subject to any and all
limitations on such rights imposed by the terms of the licensed agreements
granting Lynx license rights to certain of the Lynx Patents.
8.7 Enforcement of Joint Patent Rights. If any Joint Patent is
infringed by a Third Party in any country in the Territory, 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. With respect to Joint Patents that are owned solely by one
Party, such Party shall have the sole right, but not the obligation, to
institute, prosecute, and control any action or proceeding with respect to such
infringement. If such suspected infringement involves a jointly owned Joint
Patent, then 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 Schwarz Pharma shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice. If the suspected infringement of a Joint Patent involves an
Infringement in the Field, and Lynx fails to bring an action or proceeding
against such suspected infringer within a period of [REDACTED] days after having
knowledge of such Infringement in the Field, then Schwarz Pharma shall have the
right to bring and control an action against such infringer 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 involving an
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Infringement in the Field 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 with respect to a
jointly-owned Joint Patent, 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. Any damages
or other monetary awards recovered in an action against an infringer of a
jointly-owned Joint Patent based on an Infringement in the Field shall be
allocated to the Parties in the following manner: first, to the reimbursement of
Lynx and Schwarz Pharma 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.
9. INDEMNIFICATION.
9.1 Manufacture of Licensed Compounds and Products. Subject to
compliance with Section 9.2, Lynx agrees to indemnify and defend Schwarz Pharma,
its Affiliates, 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 or its
Affiliates, (other than Schwarz Pharma 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 Schwarz Pharma,
its Affiliates or sublicensees or any of their employees or agents or from the
use of a 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 Schwarz Pharma, at Schwarz
Pharma'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 Indemnity Procedure. In the event Schwarz Pharma is seeking
indemnification under Section 9.1, 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. Schwarz
Pharma shall have the right to retain its own counsel, with the fees and
expenses to be paid by Lynx, if representation of
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Schwarz Pharma by the counsel retained by 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 Schwarz Pharma without the
express written consent of Schwarz Pharma.
10. TRADENAME.
Schwarz Pharma, its Affiliates and/or Sublicensees will select, in
their sole discretion, and use trademarks or tradenames to be owned by Schwarz
Pharma, its Affiliates and/or Sublicensees (as applicable) for each Product.
Schwarz Pharma, its Affiliates and/or Sublicensees shall not adopt, use, or
register any acronym, trademark, tradenames, service mark or other marketing
name of Lynx or any confusingly similar work or symbol as part of Schwarz
Pharma's or its Affiliate's or Sublicensee's own trademark or tradename for the
Products it markets. However, Schwarz Pharma may accurately identify the
manufacturer of the Products as required by law. Lynx shall promptly report to
Schwarz Pharma any infringement of trademarks or tradenames adopted hereunder of
which Lynx becomes aware.
11. CONFIDENTIALITY.
11.1 Confidentiality. Except as otherwise provided in this Article 11,
during the term of this Agreement and for a period of five (5) years 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, permitted Sublicensees,
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, permitted Sublicensees, 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 of the other Party solely 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 shall give
the other Party sufficient opportunity to object to such disclosure or to secure
confidential treatment of such Confidential Information required to be
disclosed. Either
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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 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,
except as may otherwise be required by law in the Territory. 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 Schwarz Pharma in
their respective territories and places of business.
11.4 Publications. Except as required by law, regulation, or court
order, Lynx and Schwarz Pharma agree that neither Party shall 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 the other Party's prior
written approval for such publication or presentation, which shall not be
unreasonably withheld. At least 60 days prior to any such publication or
presentation, the Party proposing to publish shall provide the other Party a
copy of the proposed abstract, manuscript or presentation (including information
to be presented verbally) for its review. The other Party 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. The Party proposing to publish agrees to provide the other Party any
additional Information relating to the proposed disclosure, including full
length English translations, as reasonably requested by the other Party in order
to conduct the foregoing review, in the event that such Party has concerns about
disclosure of Confidential Information. In the event of concern, the Party
proposing to publish agrees not to submit such abstract or manuscript for
publication or to make such presentation until the other Party has had a
reasonable period of time (not to exceed 30 additional days) to seek patent
protection for any material in such publication or presentation which it
believes is patentable or to resolve any other issues. The Party proposing to
publish also agrees to delete from any such abstract or manuscript or
presentation any Confidential Information of the other Party that it reasonably
believes has commercial value based upon the secrecy of such information.
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
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either Party without the written consent of the other, except as otherwise
permitted by the terms of the Agreement.
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 Schwarz Pharma 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. In addition,
Lynx agrees that it shall use reasonable best efforts to obtain a [REDACTED].
(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 Schwarz
Pharma to develop, use, export, seek regulatory approval to sell, and sell
Licensed Compounds or Products as contemplated under this Agreement are licensed
to Schwarz Pharma 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. Lynx shall not terminate,
assign to a Third Party or materially reduce in scope any license agreements
granting Lynx rights that are sublicensed to
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Schwarz Pharma hereunder if such action would materially adversely affect
Schwarz Pharma, unless Lynx obtains Schwarz Pharma's prior written consent. 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, Schwarz Pharma
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.
(g) No Violation. Neither Lynx nor any of its Affiliates is a
party to, subject to, or bound by an agreement or judgment, award, order or
writ, injunction or decree of any court, governmental body or arbitrator which
would conflict with or be breached by the execution, delivery or performance of
this Agreement and there is (a) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or threatened nor
(b) any investigation pending or threatened against or relating to Lynx which,
in each case, could prevent Lynx from carrying out its obligations under this
Agreement.
(h) Lynx Patents. To the best of Lynx's knowledge, the
exercise of the Lynx Patents in connection with this Agreement and/or use of the
Licensed Compounds will not violate the intellectual property rights of any
Third Party, and Lynx has no present knowledge from which it reasonably can be
inferred that Lynx Patents are invalid, except as previously disclosed to
Schwarz Pharma.
12.2 Representations, Warranties, and Covenants of Schwarz Pharma.
(a) Corporate Power. Schwarz Pharma is duly organized and
validly existing under the laws of Germany and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof.
(b) Due Authorization. Schwarz Pharma 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 Schwarz Pharma and enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement by Schwarz
Pharma 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. Schwarz Pharma hereby covenants that
it will not enter any agreement, or understanding, oral or written, or execute
any instrument, which conflicts with Schwarz Pharma's obligations to Lynx under
this Agreement.
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(d) No Violation. Neither Schwarz Pharma nor any of its
Affiliates is a party to, subject to, or bound by an agreement or judgment,
award, order or writ, injunction or decree of any court, governmental body or
arbitrator which would conflict with or be breached by the execution, delivery
or performance of this Agreement and there is (a) no action, suit, dispute or
governmental, administrative, arbitration or regulatory proceeding pending or
threatened nor (b) any investigation pending or threatened against or relating
to Schwarz Pharma which, in each case, could prevent Schwarz Pharma from
carrying out its obligations under this Agreement.
13. TERM OF AGREEMENT AND TERMINATION.
13.1 Term. Unless terminated in accordance with this Article 13 or
Section 3.4, this Agreement shall expire upon the later of (i) [REDACTED] years
after commencement of marketing the Product in a Major Country or (ii)
expiration of the last to expire of the Lynx Patents issued in the Territory.
The Parties agree that at least two (2) years 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 Schwarz Pharma of Product and economic terms for such
supply. Schwarz Pharma shall be obligated to continue to purchase Product from
Lynx under such agreement so long as Lynx is able to supply the Product at
prices comparable to those available on the market and in appropriate quantities
and quality. As used herein, "comparable" means within [REDACTED] of the price
of supply available on the market. If Lynx is unable to meet such requirements,
then under the terms of such agreement Schwarz Pharma may thereafter purchase
the Product from a Third Party or manufacture it itself.
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] days after such written notice.
Notwithstanding the foregoing, Lynx may terminate this Agreement in the event
Schwarz Pharma breaches a payment obligation hereunder and thereafter fails to
make full payment of amounts due Lynx within [REDACTED] days after written
notice from Lynx to Schwarz Pharma, provided, however, that Schwarz Pharma may
withhold a particular payment for so long as Schwarz Pharma 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 a future late payment by Schwarz Pharma.
13.3 Termination without Cause. Schwarz Pharma shall have the right to
terminate the Agreement at any time without the requirement of showing cause,
upon [REDACTED]
CONFIDENTIAL TREATMENT REQUESTED
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days prior written notice if given prior to achieving Regulatory Approval, and
upon [REDACTED] days prior written notice thereafter.
(a) If Schwarz Pharma elects to terminate under this Section
13.3 prior to Regulatory Approval, and such termination is not due to serious
safety or toxicity concerns regarding the Licensed Compound when used in the
Field (as such phrase is defined in subsection (c) below), then Schwarz Pharma
shall pay Lynx the following amounts: (i) if the termination occurs prior to
completion of the Multi-Dose Efficacy Studies, Schwarz Pharma shall pay Lynx all
costs and expenses of completing such studies according to the agreed Protocols
and budgets for such studies; (ii) if the termination occurs during ongoing
Phase III (or foreign equivalent) studies, Schwarz Pharma shall pay Lynx an
amount equivalent to all costs and expenses that Schwarz Pharma would incur in
terminating such studies, and also will loan to Lynx an amount (the "Loan")
equal to the costs and expenses of conducting such studies according to the
agreed Protocols and budgets for such studies for the [REDACTED] period
following termination of the Agreement, but subject to a maximum of $[REDACTED]
million. Such Loan will be interest free for the first [REDACTED] months and
thereafter will bear interest at the Prime Rate as established by Citibank. The
Loan will be repaid within [REDACTED] years of Schwarz Pharma providing the
loan, but may be converted at any time in such period at Schwarz Pharma's
election into the common stock of Lynx at the then current market price, as
established by a national market quotation system, if Lynx stock is so traded,
or if not as determined by Lynx's Board of Directors in good faith.
(b) If termination under this Section is due to serious safety
or toxicity concerns, then Schwarz Pharma shall not be responsible for making
the foregoing payments but will be responsible for all costs and expenses of
terminating any ongoing clinical trials. After any termination under this
Section, Schwarz Pharma covenants that neither it nor its Affiliates or
Sublicensees will make, use or sell Licensed Compounds or Products. It is agreed
that if Lynx, after termination by Schwarz Pharma under this Section, enters
into a license agreement with a Third Party granting such Third Party the right
to develop, market or sell the Licensed Compound as a product for use in the
Field, then Lynx will repay to Schwarz Pharma, out of the revenues received from
such Third Party under such Agreement, any amounts paid to Lynx by Schwarz
Pharma under this Section 13.3 (excluding the Loan if repaid or converted to
equity). Such repayment shall be made at a rate limited to [REDACTED] of any
amounts of such revenues actually received by Lynx. Lynx grants Schwarz Pharma a
security interest in such revenues to secure repayment of the Loan in accordance
with the terms hereof, and consents to the filing of an appropriate financing
statement to perfect the security interest.
(c) As used in this Section, the phrase "serious safety or
toxicity concerns" means that the Safety Monitoring Board for the applicable
clinical trial conducted hereunder has determined that a safety or toxicity
issue with respect to the
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Licensed Compound exists and has halted patient accrual in the applicable trial.
If the Development Committee unanimously agrees, based on the action of the
Safety Monitoring Board, to halt the trial, then subsection (b) above shall
apply. If the Development Committee does not agree to halt the trial, and the
Safety Monitoring Board later permits the trial to proceed to accrue more
patients, then the Parties shall hire an expert, or a panel of three experts,
according to the Parties' agreement at the time, to determine whether Schwarz
Pharma's decision to terminate in such circumstance is justified based on
serious safety or toxicity concerns alone. If Lynx continues the trail after
such termination, Lynx would be responsible for all additional costs and
expenses of the trial, unless such expert determines that Schwarz Pharma's
decision to terminate is not justified based on serious safety or toxicity
concerns alone in the particular trial. In that event, Schwarz Pharma shall pay
Lynx all amounts it may have expended in continuing the trial and any additional
amounts owed as provided in subsection (a) above.
13.4 Failure of Schwarz Pharma to Exercise Diligence. There shall be a
presumption that Schwarz Pharma has failed to use adequate diligence in
conducting Development and/or marketing of the Licensed Compounds and a Product,
as applicable, if any of the following events occur, provided that such events
are not directly caused by either (a) an event of force majeure (but so long as
Schwarz Pharma uses diligent efforts to end the effects of such event of force
majeure), or (b) Lynx's material breach of a material obligation under the
Agreement:
(a) Schwarz Pharma has failed to commence the U.S. Multi-Dose
Efficacy Study on the Licensed Compound by the date that is the later of (i)
[REDACTED], or (ii) [REDACTED] days (subject to extension by the unanimous
agreement of the Development Committee) after the expiration of the period for
objection by the FDA to the IND filed covering the Licensed Compound (or such
later date as the FDA withdraws or deems satisfied any such objections to the
IND); or
(b) Schwarz Pharma has failed to file with the appropriate
regulatory authorities the protocol for a Pivotal Trial on a Licensed Compound
in a Major Country by the date [REDACTED] months after delivery of the final
report on the U. S. Multi-Dose Efficacy Study; or
(c) Schwarz Pharma has failed to accrue the first patient for
a Pivotal Trial on a Licensed Compound in a Major Country by the date [REDACTED]
months after approval of the protocol for such trial; or
(d) for a continuous period of [REDACTED] months at any time
following Regulatory Approval of the Product for commercial distribution in a
Major Country, no sales of the Product are made in such country (excluding a
commercially reasonable period of time directly after Regulatory Approval in a
particular country where
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commercial launch in such country, prior to approval in appropriate Major
Countries, could negatively affect the market).
If any of the foregoing conditions occur and remain after [REDACTED]
days written notice to Schwarz Pharma, Lynx may, at its election, terminate the
Agreement or convert to non-exclusive Schwarz Pharma's rights throughout the
Territory on written notice. The foregoing in no way limits Schwarz Pharma's
diligence obligations under Section 3.4 or Lynx's rights for breach of such
obligations.
13.5 Information Transfer and Option Upon Termination. In the event
this Agreement is terminated by Lynx under Section 3.4, 13.2 or 13.4 or by
Schwarz Pharma under Section 13.3 prior to expiration of the term as set forth
in Section 13.1, (i) Schwarz Pharma shall provide to Lynx forthwith thereafter
copies of all Schwarz Pharma Compound Information and the right to use such
Information to develop, make, use and sell Products in the Field; (ii) Schwarz
Pharma shall destroy and shall not retain any copies of any Confidential
Information provided by Lynx hereunder, except that Schwarz Pharma's legal
department may retain one copy thereof solely for archival purposes; (iii)
Schwarz Pharma shall grant Lynx an irrevocable exclusive, royalty-free license
under the Joint Inventions and Joint Patents to develop, make, use and sell the
Licensed Compound and Products for use in the Field; and (iv) Schwarz Pharma
shall grant Lynx a non-exclusive license under the Schwarz Pharma Patents to
develop, make, use, distribute and sell the Licensed Compound and Products for
use in the Field in the Territory, subject to payment of a commercially
reasonable royalty to be negotiated in good faith.
13.6 Accrued Rights, Surviving Obligations. Termination of this
Agreement shall terminate all licenses granted hereunder (except as provided in
Section 13.5), but shall not affect any rights to payment or other rights that
accrued prior to the date of termination. Additionally, the terms of Section
2.1(a) of this Agreement shall survive expiration of this Agreement pursuant to
Section 13.1. The terms of Sections 8.1, 13.3, 13.5 and 13.6 and Articles 9, 10
and 11 of this Agreement shall survive any termination of this Agreement.
14. MISCELLANEOUS.
14.1 Limitation of Liability. EXCEPT AS SPECIFICALLY 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. For clarification,
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the foregoing sentence shall not be interpretted to limit or to expand the
express rights specifically granted in the sections of this Agreement, including
without limitation Sections 2.2, 6.7, 6.12, 8.4 or 8.5.
14.2 Liability Insurance. Schwarz Pharma will procure and maintain,
through self-insurance or otherwise, at its sole expense, liability insurance,
including products liability coverage, in such amounts as Schwarz Pharma
customarily maintains with respect to its development, use, distribution or sale
of comparable products in the Territory. Schwarz Pharma's insurance shall not be
cancelable without thirty (30) days prior written notice to Lynx. Lynx shall,
upon Schwarz Pharma's reasonable request, provide sufficient information to
Schwarz Pharma to enable Schwarz Pharma 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 Schwarz Pharma as an additional insured on such
insurance policies as Schwarz Pharma may reasonably request. Lynx insurance
shall not be cancelable without thirty (30) days prior written notice to Schwarz
Pharma.
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 herein, supersedes and terminates all prior representations,
agreements and understandings between the Parties regarding the subject matter
hereof. As the Parties are, under this Agreement, parties to a collaborative
venture, the Parties hereby agree that if a Party reasonably believes that an
amendment to the terms of the Agreement is needed in order to achieve the intent
and goals of the Parties herein, then the Parties shall meet and discuss in good
faith such proposed amendment. No 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 that (a) 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; and (b) Schwarz Pharma may contract to Third Parties any of its
marketing and sales rights in countries in the Territory with respect to
Products, and such contracts shall not be considered assignment of rights and
obligations as provided above; provided, however, that for such contracts with
any pharmaceutical company for rights in any Major Country (which shall not be
interpretted to include contracts with HMOs, wholesalers, distributors,
hospitals, government agencies or similar organizations), the following
additional limitations shall apply: (i) in determining the
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purchase price of Products purchased by Schwarz Pharma or its Affiliate and sold
to such a contractor in a Major Country, the "Net Sales" for such Products shall
be the the amount calculated under Section 1.31 based on the total amount
invoiced or otherwise charged by such contractor on sale of such Product to a
Third Party, rather than by Schwarz Pharma or its Affiliate; and (ii) Schwarz
Pharma or its Affiliate shall not enter into an agreement with such contractor
in the Major Country that has the effect of reducing the amount that such
contractor would otherwise charge a Third Party for sale of such Products (e.g.,
a bundled sale agreement under which Schwarz Pharma would receive a higher
amount from such contractor on account of Schwarz Pharma's sale of a separate
product, in exchange for Schwarz Pharma charging the subcontractor less for the
Product).
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 Schwarz Pharma: Schwarz Pharma AG
Alfred-Nobel-Str. 10
40789 Monheim
Germany
Attn: Chairman of the Board
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 Schwarz Pharma 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.
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14.7 Force Majeure. Except as otherwise provided herein, 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 Schwarz Pharma in connection with its obligations under
this Agreement will be borne solely by Schwarz Pharma and all expenses incurred
by Lynx in connection with its obligations under this Agreement will be borne
solely by Lynx. Each Party will be responsible for appointing its own employees,
agents and representatives, who will be compensated by such Party. Each Party
will be responsible for paying any finder's or broker's fee owed to a Third
Party that such Party incurs based directly or indirectly on negotiating and
entering this Agreement, and shall indemnify the other Party against any
obligation to pay such fee.
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 New York 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
50.
<PAGE>
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] days of notice by one Party to the other, and
at least one Party requires such resolution, then the Parties shall proceed as
follows. Any unresolved dispute, controversy, action, claim or proceeding
initiated by 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 New York. 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.
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.
14.16 Acknowledgment. Schwarz Pharma acknowledges that it has reviewed
and understands the reservation of rights in the United States government and
the other obligations required of Lynx and its sublicensees contained in Public
Health Service Exclusive License Number L-150-94 and Public Health Service
License dated 1 September 1988 and amended 19 October 1995. Copies of the Public
Health Service consent to the sublicense by Lynx included in this Agreement, and
the consent by Thomas Jefferson University to the sublicense of the Thomas
Jefferson University [REDACTED] license to Lynx dated 1 June 1993 and amended 4
May 1994 and 1 April 1996, also included in this Agreement, have been supplied
to Schwarz Pharma. Lynx agrees not to terminate any of the foregoing licenses
without Schwarz Pharma's prior written consent.
CONFIDENTIAL TREATMENT REQUESTED
51.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have duly executed this
Agreement as of the date first above written.
LYNX THERAPEUTICS, INC. SCHWARZ PHARMA AG
- ------------------------------------- --------------------------------
Sam Eletr, Ph.D. Patrick Schwarz- Klaus Langer
Chairman Schutte
52.
<PAGE>
EXHIBIT A
LICENSED COMPOUND
LR-3280: [REDACTED]
CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
<TABLE>
Exhibit B
<CAPTION>
Filing
Date Issue
Docket No. Ser. No. (d-m-y) Pat. No. Date Status Comment
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Zalewski I 08/004,799 7-1-93 reference I
-------------------------------------------------------------------------------------------------------------
001-01 (US) 08/481,341 7-7-95 pending Identical to Parent Case 08/004,799
-------------------------------------------------------------------------------------------------------------
001-02 (US) 08/473,014 6-6-95 pending Identical to Parent Case 08/004,799
-------------------------------------------------------------------------------------------------------------
001ca (Canada) 2153158 7-1-94 pending
-------------------------------------------------------------------------------------------------------------
001cz (Czech Rep.) PV 1723-95 pending
-------------------------------------------------------------------------------------------------------------
001ep (Europe) 94906558.5 pending ep designates at, be, dk, fr, de, gb, gr,
ie, it, nl, pt, es, se, & ch
-------------------------------------------------------------------------------------------------------------
001hu (Hungary) P 95 02061 pending
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Stec
-------------------------------------------------------------------------------------------------------------
010(US) 5,151,510 29-9-92 granted reference 2
-------------------------------------------------------------------------------------------------------------
010-02(US) 5,292,875 8-3-94 granted reference 2
-------------------------------------------------------------------------------------------------------------
010ep(Europe) 91904794.4 pending ep designates at, be, ch, dk, es, fr, gb,
de, it, nl, se & gr
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Zalewski II
-------------------------------------------------------------------------------------------------------------
014(US) 08/138,637 15-10-93 aband'd reference 3
-------------------------------------------------------------------------------------------------------------
014-02(US) 08/424,991 19-4-95 pending cip of 08/138,637
-------------------------------------------------------------------------------------------------------------
014-03(US) 08/426,785 19-4-95 pending cip of 08/138,637, reference 4
-------------------------------------------------------------------------------------------------------------
014-05(US) 08/461,366 3-6-95 pending cip of 08/138,637
-------------------------------------------------------------------------------------------------------------
014-06(US) 08/580,791 29-12-95 pending con of 08/138,637
-------------------------------------------------------------------------------------------------------------
014ep(Europe) 94931403.3 17-10-94 pending ep designates gb, fr, de & ch
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Cohen et al
-------------------------------------------------------------------------------------------------------------
US 5,276,019 4-1-94 granted reference 5
-------------------------------------------------------------------------------------------------------------
US 5,286,717 15-2-94 granted reference 5
-------------------------------------------------------------------------------------------------------------
US 5,264,423 23-11-93 granted reference 5
-------------------------------------------------------------------------------------------------------------
Canada 1,322,723 5-10-93 granted reference 5
-------------------------------------------------------------------------------------------------------------
Europe 0 288 163 BI 11-1-95 granted ep designates at, be, ch, de, fr, gb, it,
li, lu, nl & se
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Epstein et al
-------------------------------------------------------------------------------------------------------------
US 07/821,415 14-1-92 aband'd reference 6
-------------------------------------------------------------------------------------------------------------
08/187,785 26-1-94 pending con of 07/821,415
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
<FN>
Reference (Patent Titles)
1) Antisense Inhibition of c-myc to Modulate the Proliferation of Smooth
Muscle Cells.
2) Method of Synthesizing Sulfurized Oligonucleotide Analogs.
3) Inhibition of Extracellular Matrix Synthesis by Antisense Compounds
Directed to Nuclear Protooncogenes.
4) Arteriovenous and Venous Graft Treatments: Methods and Compositions.
5) Inhibitors for Replication of Retroviruses and for the Expression of
Oncogene Products.
6) Inhibiton of Cell Proliferation Using Antisense Oligonucleotides.
</FN>
</TABLE>
Page 1
<PAGE>
EXHIBIT C
Development Plan
[ * ]
[Entire Exhibit Redacted]
CONFIDENTIAL TREATMENT REQUESTED
Exhibit 11
<TABLE>
Lynx Therapeutics, Inc.
COMPUTATION OF NET INCOME (LOSS) PER SHARE
(In thousands, except per share amounts)
<CAPTION>
Three Month Ended Nine Months Ended
Sept. 30, Sept. 30,
----------------------------- --- -----------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common shares outstanding for the
period 2,344 2,264 2,339 2,152
Common equivalent shares assuming conversion of
preferred stock 4,956 - - -
Common equivalent shares assuming exercise of stock
options under treasury stock method
400 - - -
--------------- ------------- ------------- ---------------
Shares used in per share calculation 7,700 2,264 2,339 2,152
=============== ============= ============= ===============
Net income/(loss) $ 4,688 $ (3,267) $ (549) $ (9,169)
=============== ============= ============= ===============
Net income/(loss) per share $ 0.61 $ (1.44) $ (0.23) $ (4.26)
=============== ============= ============= ===============
</TABLE>
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 4,461
<SECURITIES> 2,957
<RECEIVABLES> 4,040
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,616
<PP&E> 5,955
<DEPRECIATION> 2,161
<TOTAL-ASSETS> 15,764
<CURRENT-LIABILITIES> 854
<BONDS> 0
<COMMON> 13,441
0
27,189
<OTHER-SE> 27,365
<TOTAL-LIABILITY-AND-EQUITY> 15,764
<SALES> 0
<TOTAL-REVENUES> 8,869
<CGS> 0
<TOTAL-COSTS> 244
<OTHER-EXPENSES> 9,636
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (549)
<INCOME-TAX> 0
<INCOME-CONTINUING> (549)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (549)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)
</TABLE>
