<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-22890
SANGSTAT MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
California 94-3076-069
(State of incorporation) (IRS Employer Identification No.)
1505 Adams Drive
Menlo Park, CA 94025
(Address of principal executive office, Zip Code)
Registrant's telephone number, including area code: 415-328-0300
None
(Former name, former address and former fiscal year, if changed since
last report)
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.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of June 30, 1996.
CLASS NUMBER OF SHARES
----- ----------------
Common Stock 13,078,983
Exhibit Index is located on page 12
-1-
<PAGE> 2
SANGSTAT MEDICAL CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS........................... 3
June 30, 1996 and December 31, 1995
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS................. 4
Three and Six Months Ended June 30, 1996 and 1995
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS................. 5
Six Months Ended June 30, 1996 and 1995
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS............ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................... 7-9
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............. 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................ 10
SIGNATURES................................................................. 11
EXHIBIT INDEX.............................................................. 12
EXHIBIT 10.24...................................................13-15
-2-
<PAGE> 3
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 24,012,840 $ 4,609,186
Short-term Investments 23,990,656 4,612,565
Accounts Receivable 217,406 406,153
Other Receivables 538,258 170,118
Inventories 936,338 766,124
Prepaid Expenses 217,328 73,531
------------ ------------
Total Current Assets 49,912,826 10,637,677
PROPERTY AND EQUIPMENT -- NET 662,472 528,962
OTHER ASSETS 383,138 393,238
------------ ------------
TOTAL $ 50,958,436 $ 11,559,877
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 1,183,052 $ 1,041,389
Accrued Liabilities 435,661 652,742
Capital Lease Obligations -- Current 191,057 238,651
Notes Payable -- Current 254,105 254,249
------------ ------------
Total Current Liabilities 2,063,875 2,187,031
------------ ------------
CAPITAL LEASE OBLIGATIONS 470,749 286,558
------------ ------------
NOTES PAYABLE 679,662 804,811
------------ ------------
Common Stock 81,357,413 36,275,765
Accumulated Deficit (33,772,691) (28,051,991)
Accumulated Translation Adjustment 19,791 46,811
Unrealized Gain on Investment 139,637 10,892
------------ ------------
Total Shareholders' Equity 47,744,150 8,281,477
------------ ------------
TOTAL $ 50,958,436 $ 11,559,877
============ ============
</TABLE>
-3-
<PAGE> 4
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net Product Sales $ 381,243 $ 572,302 $ 1,092,588 $ 1,274,206
Collaborative Agreement 0 375,000 0 1,125,000
----------- ----------- ----------- -----------
Total Revenues 381,243 947,302 1,092,588 2,399,206
----------- ----------- ----------- -----------
Operating Expenses
Cost of Sales and Manufacturing 593,501 638,170 1,288,639 1,315,149
Research and Development 1,825,795 1,590,077 4,055,231 2,924,365
Selling, General & Administrative 1,337,947 1,010,689 2,340,650 1,781,415
----------- ----------- ----------- -----------
Total Operating Expenses 3,757,243 3,238,936 7,684,520 6,020,929
----------- ----------- ----------- -----------
Loss from Operations (3,376,000) (2,291,634) (6,591,932) (3,621,723)
Other Income (Expense)
Interest Income 734,626 250,730 937,926 461,934
Interest & Other Expense (36,341) (37,898) (66,694) (68,221)
----------- ----------- ----------- -----------
Other Income, Net 698,285 212,832 871,232 393,713
----------- ----------- ----------- -----------
Net Loss $(2,677,715) $(2,078,802) $(5,720,700) $(3,228,010)
=========== =========== =========== ===========
Net Loss per Common and Equivalent Share $ (0.20) $ (0.22) $ (0.49) $ (0.35)
=========== =========== =========== ===========
Common and Equivalent Shares used in
Computing per Share Amounts 13,064,643 9,486,408 11,695,412 9,187,844
=========== =========== =========== ===========
</TABLE>
-4-
<PAGE> 5
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1996 1995
------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,720,700) $(3,228,010)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 169,012 190,750
Changes in assets and liabilities
Accounts receivable 188,764 (216,281)
Other receivables (370,169) (154,354)
Inventories (169,943) (243,399)
Prepaid expenses (144,094) (98,115)
Accounts payable 150,141 41,014
Accrued liabilites (209,037) (254,928)
------------ -----------
Net cash used in operating activities (6,106,026) (3,963,323)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common stock and warrants 45,081,648 5,256,727
Note payable borrowings 134,277 269,700
Note payable repayments (243,612) (262,651)
Repayment of capital lease obligations (141,818) (120,595)
------------ -----------
Net cash provided by financing activities 44,830,495 5,143,181
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (25,835) (15,364)
Maturities of short-term cash investments 7,799,722 6,000,000
Purchase of short-term cash investments (27,054,975) (9,191,686)
Deposits and other assets (13,165) 148,781
------------ -----------
Net cash used in investing activities (19,294,253) (3,058,269)
------------ -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (26,562) 23,291
------------ -----------
NET INCREASE (DECREASE)
IN CASH AND EQUIVALENTS 19,403,654 (1,855,120)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 4,609,186 9,828,928
------------ -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 24,012,840 $ 7,973,808
============ ===========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property acquired under capital leases $ 278,415 $ 188,758
============ ===========
Unrealized gain on investments $ 128,745 $ 79,211
============ ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION--
Cash paid during the year for interest $ 87,529 $ 70,597
============ ===========
</TABLE>
-5-
<PAGE> 6
SANGSTAT MEDICAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The consolidated financial statements include the accounts of SangStat Medical
Corporation and its wholly owned subsidiaries. Intercompany accounts and
transactions have been eliminated.
While the quarterly financial information in this filing is unaudited, the
financial statements presented reflect all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and of
the financial condition of the Company at the dates of the interim balance
sheets. These results for interim periods are not necessarily indicative of the
results for the entire year. The information included in this report should be
read in conjunction with the Company's audited financial statements and notes
thereto included in the Company's 1995 Annual Report to Shareholders.
Per Share Information
Net loss per common and equivalent share is computed using the weighted average
number of common shares outstanding during the period. Options and warrants
granted by the Company have been excluded in the calculation of common and
common equivalent shares outstanding since they would serve to reduce the net
loss per share.
Inventories
Inventories, valued at the lower of cost (first-in, first-out) or market consist
of:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Raw materials $514,193 $432,549
Work-in-progress 239,468 213,863
Finished goods 182,677 119,712
-------- --------
Total $936,338 $766,124
======== ========
</TABLE>
-6-
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS -- THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Net product sales were $1,093,000 in the first half of 1996 compared
with $1,274,000 in the first half of 1995. This primarily reflects continued
demand for THYMOGLOBULIN(R) under Canada's Emergency Drug Release (EDR) Program
as reflected in an increase in SangStat Canada's therapeutic sales in the first
half of 1996 compared with the same period in 1995 and offset by a decrease in
revenues for certain contract manufacturing, OEM and other products for
research use. In May,1996 SangStat announced that it would buy back the
exclusive commercial rights for its monitoring products PRA-STAT(R) and
CROSS-STAT(R) from Baxter Healthcare Corporation effective July 1, 1996. Net
product sales decreased to $381,000 in the second quarter 1996 from $572,000 in
the corresponding quarter in 1995, reflecting a return of inventory from Baxter
and a temporary effect on sales while sales and marketing responsibilities were
being transferred between the two companies. As expected, no collaborative
agreement milestone payments were received in 1996, reflecting completion of
the final milestones for PRA-STAT and CROSS-STAT in 1995. These final payments
of $1,125,000 in the first six months of 1995 represented the completion of
$10.0 million received by SangStat for milestones, license fees and equity in
1993 through 1995 under its collaborative agreement with Baxter.
Cost of sales and manufacturing expenses decreased to $594,000 for the second
quarter 1996 from $638,000 in the corresponding quarter of 1995. Cost of sales
and manufacturing expenses decreased to $1,289,000 in the first half of 1996
from $1,315,000 in the first half of 1995. These decreases are primarily
attributable to lower costs of goods sold of the Company's first therapeutic
product, THYMOGLOBULIN. The Company's monitoring products business does not
currently generate a profit, because certain sales are made on a cost recovery
basis and the Company has not yet achieved a scale of production which allows it
to cover fixed manufacturing costs. Sales of these monitoring products however,
partially offset fixed costs and serve as a prototype for manufacture for
further products as well as to further the Company's reputation and presence in
the industry. Notwithstanding these losses, the Company's strategy is to obtain
regulatory approval for certain of these and other monitoring products and to
produce and sell these products on a commercially profitable basis. The Company
accordingly obtained FDA 510(k) approval for its PRA-STAT product in September
1994 and obtained FDA 510(k) approval for CROSS-STAT in May 1995.
Research and development expenses increased to $1,826,000 in the second quarter
of 1996 from $1,590,000 in the same period in 1995 and also increased to
$4,055,000 in the first half of 1996 from $2,924,000 in the first half of 1995.
This increase reflects several significant clinical development achievements. In
May the Company completed patient enrollment in its pivotal Phase III clinical
trial for THYMOGLOBULIN(R). The last patient will complete this trial in late
August and trial results are currently expected to be presented in the autumn
of 1996. SangStat also expects to submit the PLA regulatory submission for
-7-
<PAGE> 8
THYMOGLOBULIN to the FDA by the end of 1996. The Company also initiated pivotal
bioequivalence trials for CYCLOSPORINE and bioequivalence trials for
AZATHIOPRINE. SangStat also initiated a second Phase II dose-finding safety and
surrogate end-point trial for its proprietary peptide ALLOTRAP(R) 2702 and
increased expenditures for the three and six month periods ended June 1996 for
XENOJECT research as compared to respective periods in 1995.
Selling, general and administrative expenses increased to $1,338,000 in the
second quarter of 1996 from $1,011,000 from the same quarter of the previous
year and also increased to $2,341,000 in the first six months of 1996 from
$1,781,000 in the first six months in 1995. These increases primarily reflect
planned increases in expenses for distribution of THYMOGLOBULIN(R) and other
increases in expenses for sales and marketing activities for the Company's
monitoring products, investor relations, business development activities and
patents.
Interest income increased in the second quarter of 1996 to $735,000 from
$251,000 in the second quarter of the previous year and increased to $938,000
from $462,000 for the first six months of 1996 and 1995, respectively. This
reflects interest earned from investment of the cash proceeds from the Company's
public offering in March 1996. Interest and other expense for capital lease
obligations and long term notes remained essentially unchanged at $36,000 in the
second quarter of 1996 compared with $38,000 in the same quarter of the previous
year and $67,000 in the first half of 1996 compared with $68,000 in the first
half of 1995.
The Company's net loss was $2,678,000 or $0.20 per share in the second quarter
of 1996, compared with a net loss of $2,079,000 or $0.22 per share in the second
quarter of 1995. The net loss was $5,721,000 for the first half of 1996 compared
to a net loss of $3,228,000 for the first half of 1995. These changes are
primarily the combined result of completion of milestone revenue payments in
1995 from the collaborative agreement with Baxter in combination with higher
operating expenses in the three and six month periods ended June 30, 1996
compared with the same periods in 1995.
FINANCIAL CONDITION
Total assets as of June 30, 1996 were $50,958,000, an increase of $39,399,000
from December 31, 1995. This increase is primarily due to an increase of cash
and investments of $38,782,000, an increase of accounts receivable and other
receivables of $179,000 and an increase in inventory of $170,000 for monitoring
products and THYMOGLOBULIN.
-8-
<PAGE> 9
Total liabilities were $3,214,000 as of June 30, 1996, compared to
$3,278,000 as of December 31, 1995. This decline of $64,000 was a result of
declines in current liabilities of $123,000 and notes payable of $125,000,
offset in part by an increase of capital lease obligations of $184,000.
Stockholders' equity increased by $39,463,000 from year end 1995. This increase
consisted primarily of $45,061,000 in net proceeds from the Company's public
offering in March 1996, offset partially by the net loss of $5,721,000 for the
first six months of 1996.
LIQUIDITY
The Company has cash, cash equivalents and investments of $48,003,000 as of June
30, 1996. The Company expects to incur significant costs related to continued
research and development programs, preclinical and clinical testing and
regulatory approval activities in the years ahead. In addition, in the event the
Company receives regulatory approval for any of its therapeutic products, the
Company may then need to raise additional funds through additional financings,
including private or public equity offerings and collaborative research and
development arrangements with corporate partners. There can be no assurance that
funds will be raised on favorable terms, if at all, or that discussions with
potential collaborative partners will result in any agreements. The Company
believes that its existing capital resources, together with product sales and
interest income will be sufficient to meet the Company's operating and capital
requirements through at least 1997. The Company's future capital requirements
will depend on many factors, including: continued scientific progress in its
research and development programs; progress in clinical trials; the time and
costs involved in obtaining regulatory approvals; the costs involved in
obtaining and enforcing patents; the ability of the Company to establish
development and commercialization relationships; and the costs of manufacturing
scale-up.
This document contains forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements. For a discussion of
factors that might result in different outcomes, see the Company's Registration
Statement on Form S-3 filed with the Securities and Exchange Commission on
March 7, 1996, in particular "Risk Factors" set forth therein, and the
Company's Form 10-K and Annual Report for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
-9-
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Company distributed its Definitive Proxy Statement, Proxy and Annual Report
to Shareholders on or about May 13, 1996 to each shareholder of record as of
April 26, 1996, for its Annual Meeting of Shareholders held June 18, 1996. At
the Company's Annual Meeting, the shareholders were asked to consider three
proposals.
The first proposal involved the election of directors. The existing Board of
Directors selected six nominees, all of whom ran unopposed and all of whom were
then serving as directors of the Company. The nominees of the Board, and the
voting results with respect thereto, were:
<TABLE>
<CAPTION>
Name Votes For Against
---- --------- -------
<S> <C> <C>
Philippe Pouletty 10,628,302 0
Gordon Russell 10,628,302 0
Fredric Feldman 10,628,302 0
Richard Murdock 10,628,302 0
Vincent Worms 10,628,302 0
Andrew Perlman 10,628,302 0
</TABLE>
The second proposal concerned an amendment to the Company's 1993 Stock Option
Plan which increased the number of shares of Common Stock reserved for issuance
thereunder by 500,000 shares. The number of votes cast for, against, abstentions
and broker non-votes were 8,283,273; 1,673,466; 3,163 and 668,400 respectively.
The third and final proposal concerned the ratification of the Company's
independent auditors, Deloitte & Touche LLP, for the fiscal year ending December
31, 1996. The number of votes cast for, against, and the number of abstentions
were 10,624,889; 2,300 and 1,113, respectively.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.24 Amended and Restated Collaborative Agreement.
(b) There were no reports on Form 8-K filed during the period covered
by this report.
-10-
<PAGE> 11
SIGNATURES
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.
SANGSTAT MEDICAL CORPORATION
(REGISTRANT)
DATE: August 13, 1996 BY:
-------------------------------------------
DAVID L. WINTER, M.D.
PRESIDENT AND CHIEF OPERATING OFFICER
DATE: August 13, 1996 BY:
-------------------------------------------
HENRY N. EDMUNDS, PH.D.
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
-11-
<PAGE> 12
EXHIBIT INDEX
10.24 Amended and Restated Collaborative Agreement
27 Financial Data Schedule
-12-
<PAGE> 1
Exhibit 10.24
April 4, 1996
AMENDED AND RESTATED COLLABORATIVE AGREEMENT
This Amended and Restated Collaborative Agreement (the "Restated
Agreement"), dated April 3, 1996, amends and restates that certain
Collaborative Agreement dated as of April 19, 1993 (the "Collaborative
Agreement") by and between Baxter Healthcare Corporation, including its Nextran
business unit ("Baxter") and SangStat Medical Corporation ("SangStat"). Terms
not otherwise defined herein shall have the meaning set forth in the
Collaborative Agreement.
The parties agree as follows:
1. Effective as of July 1, 1996 (the "Transfer Date"), the Collaborative
Agreement shall be amended and restated in its entirety and from such
date the rights and obligations of the parties to the Collaborative
Agreement shall be governed entirely by this Restated Agreement. The
parties agree to release each other from any and all existing
obligations relating to the Collaborative Agreement and performance by
the parties thereunder as of the Transfer Date, except as specifically
set forth herein.
2. a. In consideration for the release of SangStat from any and all
obligations under the Collaborative Agreement, including but not
limited to the repayment of amounts that are or may otherwise
become due and owing, SangStat agrees to pay to Baxter [ * ] (or
until Baxter receives [ * ] from SangStat in respect to paragraph
2, whichever occurs first) [ * ] of any Licensed Product or
Licensed Product Improvement (collectively "SangStat Products") by
SangStat and its Affiliates. Notwithstanding the foregoing, the
[ * ] for Clinical Trial Sales shall be equal to [ * ] of Clinical
Trial Sales by SangStat and its Affiliates. "Clinical Trial
Sales" shall mean sales made for use in a study conducted in
accordance with Good Clinical Practices where the product is to be
used under a pre-defined trial protocol; provided that sales will
not be considered Clinical Trial Sales if the price for such
SangStat Product [ * ] in the most recent preceding calendar
quarter for non-Clinical Trial Sales in the geographic area.
*CONFIDENTIAL TREATMENT REQUESTED FOR DELETED PORTION. CONFIDENTIAL MATERIAL
HAS BEEN FILED SEPARATELY WITH THE SEC.
<PAGE> 2
b. For the first five (5) years after the date of this Restated
Agreement, should SangStat develop and subsequently market a
product that would be defined as a "New Soluble HLA Product", such
Product shall be deemed a SangStat product hereunder, [ * ] of
this Restated Agreement. However, should Baxter market a product
that competes with a SangStat Product during [ * ], then the
obligation of [ * ] with respect to such SangStat product will
terminate. The definition of [ * ] shall have the meaning set
forth in [ * ] except that the term "Baxter" shall be replaced by
the term "SangStat", the term "Baxter Affiliate" shall be replaced
by the term "SangStat Affiliate", and the term "Licensed Product"
shall be replaced by the term "SangStat Product".
c. In the event that SangStat sublicenses substantially all of its
rights in a geographic area to make, use, or sell the SangStat
Products to a third party, the parties will use all diligent
efforts [ * ] so that Baxter and SangStat will receive,
relatively, the same economic benefit as contemplated by this
Paragraph 2. In the event that the parties cannot agree on the [
* ], the parties will submit the dispute to mutually agreeable
third party Certified Public Accountant who is a member of a "Big
Six" public accounting firm.
3. SangStat agrees that it will offer employment to [ * ] employees on
terms comparable to those provided to other similarly situated
employees of SangStat. The parties will cooperate for the smooth
transfer of those employees to SangStat with an effort to minimize
costs to the parties consistent with the parties' business interests.
The transfer will be effective as soon as reasonably practicable, but
in no event later than the Transfer Date. Other than those employees
made offers as contemplated herein, SangStat agrees that it will not
solicit or hire any Nextran employees or an employee of Baxter assigned
to the Nextran business unit, whether as a SangStat employee or
consultant, for a period of one year from the date of this Restated
Agreement without the prior written consent of Baxter; provided that
this obligation shall cease if Baxter announces its intent to sell
products competitive with the SangStat Products.
4. SangStat shall purchase Baxter's saleable inventory of SangStat
products existing on the Transfer Date for the same amount paid by
Baxter for such products plus any shipping, taxes, duties, levies, or
third-party fees imposed to transfer the inventory to SangStat's
facilities. Payment shall be made within thirty (30) days of the
shipment of the inventory to SangStat. SangStat shall also purchase
the [ * ] owned by Baxter and used in connection with the marketing and
sales of SangStat Products ("Equipment") for their net book value. [ *
] Baxter shall pay for any shipping, taxes, duties, levies, or
third-party
*CONFIDENTIAL TREATMENT REQUESTED FOR DELETED PORTION. CONFIDENTIAL MATERIAL
HAS BEEN FILED SEPARATELY WITH THE SEC.
2.
<PAGE> 3
fees imposed on the sale of the Equipment to SangStat. The purchase
price for the Equipment, plus imputed interest on any outstanding
amount [ * ] (as published in the Wall Street Journal on the Transfer
Date) will be paid [ * ] in equal quarterly payments, with quarterly
payments beginning on the Transfer Date. Baxter will deliver the
SangStat Products and the Equipment, other than Equipment in the
possession of customers, to SangStat at its principal distribution
center located at 1505 Adams Drive, Menlo Park, California.
5. Baxter agrees to cooperate for the purpose of providing a smooth
transition to SangStat by providing reasonably detailed information
concerning its marketing and sales effort, including but not limited to
customer lists, a detailed accounting and inventory report with respect
to the Equipment and SangStat Product inventory, sales information,
ongoing beta site and clinical studies information, product complaint
files, consulting agreement lists, and compensation packages for the
sales and marketing force dedicated to selling the SangStat Products in
the United States and Europe. This information relating to employees
and consultants' payments shall be subject to the confidentiality
provisions of the Collaborative Agreement. Use of all other
information shall not be subject to such confidentiality provisions.
6. [ * ] shall be paid quarterly during each calendar year based upon
SangStat's and its Affiliates [ * ] at the end of each calendar
quarter. Such quarterly payments shall be made within sixty (60) days
after the end of each calendar quarter. The payment terms shall be
made in accordance with [ * ] except that all references to "Baxter"
shall mean "SangStat" and all references to "SangStat" shall mean
"Baxter" for purposes of that Section 5.6.
7. The parties agree to execute such other agreements and to make such
other arrangements as may be necessary in order to effectuate the terms
and conditions of this Restated Agreement, including the execution of
mutual releases.
8. In order to facilitate the smooth and orderly transition of the reasons
relating to their respective business plans and interests, the parties
agree that on or before June 10, 1996 they will issue a mutually
agreeable press release describing the restructure business
relationship under the Collaborative Agreement. Until such joint press
release is issued by both parties, neither party will publicly disclose
the existence or terms of this Restated Agreement, and both parties
will use all reasonable efforts to prevent their respective employees
and agents from making any such disclosure, provided that nothing shall
prevent either party from making such disclosures as required by
applicable laws, including securities laws.
*CONFIDENTIAL TREATMENT REQUESTED FOR DELETED PORTION. CONFIDENTIAL MATERIAL
HAS BEEN FILED SEPARATELY WITH THE SEC.
3.
<PAGE> 4
9. In addition to the provisions specifically discussed above, the
provisions of Sections 5.5, 7.1, 7.3, 7.5 (however, with respect to
subsection 7.5(g), the restriction set forth therein shall not be
construed after the Transfer Date in a manner that could limit
SangStat's marketing of the Products), 7.8, 7.9, 7.10 and 7.11 of the
Collaborative Agreement shall remain in full force and effect.
BAXTER HEALTHCARE CORPORATION
By:/s/ Donald W. Joseph
Name: Donald W. Joseph
Title: Group Vice President, Renal
SANGSTAT MEDICAL CORPORATION
By:/s/ Philippe Pouletty
Name: Philippe Pouletty, M.D.
Title: Chairman and CEO
4.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEETS OF JUNE 30, 1996/95 (UNAUDITED) AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS OF JUNE 30, 1996/95.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 24012840
<SECURITIES> 23990656
<RECEIVABLES> 755664
<ALLOWANCES> 16000
<INVENTORY> 936338
<CURRENT-ASSETS> 49912826
<PP&E> 2092658
<DEPRECIATION> 1430186
<TOTAL-ASSETS> 50958436
<CURRENT-LIABILITIES> 2063875
<BONDS> 0
0
0
<COMMON> 81357413
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 50958436
<SALES> 381243
<TOTAL-REVENUES> 381243
<CGS> 593501
<TOTAL-COSTS> 3757243
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36341
<INCOME-PRETAX> (2677715)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2677715)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.19)
</TABLE>
