<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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-22890
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SANGSTAT MEDICAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 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: 650-328-0300
None
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(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, 1997.
CLASS NUMBER OF SHARES
----- ----------------
Common Stock 15,901,455
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SANGSTAT MEDICAL CORPORATION
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS PAGE
----
<S> <C>
CONDENSED CONSOLIDATED BALANCE SHEETS......................................3
June 30, 1997 and December 31, 1996
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS............................4
Three and Six Months Ended June 30, 1997 and 1996
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS............................5
Six Months Ended June 30, 1997 and 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.......................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...................................................8-11
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................................12
SIGNATURES...........................................................................12
</TABLE>
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<PAGE> 3
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
(unaudited) (1)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 74,207,331 $ 19,818,940
Short-term investments 33,460,638 21,501,961
Accounts receivable 508,921 399,437
Other receivables 1,063,770 483,252
Inventories 1,510,363 802,137
Prepaid expenses 355,490 413,181
------------- -------------
Total current assets 111,106,513 43,418,908
PROPERTY AND EQUIPMENT -- Net 1,385,620 993,995
OTHER ASSETS 514,989 337,213
------------- -------------
TOTAL $ 113,007,122 $ 44,750,116
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,858,286 $ 1,094,104
Accrued liabilities 772,573 875,602
Capital lease obligations -- current portion 252,932 262,339
Notes payable -- current portion 194,097 462,743
------------- -------------
Total current liabilities 4,077,888 2,694,788
------------- -------------
CAPITAL LEASE OBLIGATIONS 532,947 296,715
------------- -------------
NOTES PAYABLE 767,174 803,631
------------- -------------
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.001 par value, 5,000,000 shares
authorized; none outstanding -- --
Common stock, $.001 par value, 25,000,000 shares authorized;
outstanding: 1997, 15,901,455 shares; 1996, 13,129,560 share 158,453,274 81,657,314
Accumulated deficit (50,802,565) (40,825,827)
Accumulated translation adjustment (10,317) 20,634
Unrealized gain (loss) on short-term investments (11,279) 102,861
------------- -------------
Total stockholders' equity 107,629,113 40,954,982
------------- -------------
TOTAL $ 113,007,122 $ 44,750,116
============= =============
</TABLE>
(1) Derived from the Company's audited consolidated financial statements.
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SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Total Revenues $ 711,550 $ 381,243 $ 1,402,049 $ 1,092,588
------------ ------------ ------------ ------------
Operating Expenses
Cost of Sales and Manufacturing 790,508 593,501 1,492,856 1,288,639
Research and Development 4,285,923 1,825,795 7,669,430 4,055,231
Selling, General & Administrative 2,646,359 1,337,947 4,472,136 2,340,650
------------ ------------ ------------ ------------
Total Operating Expenses 7,722,790 3,757,243 13,634,422 7,684,520
------------ ------------ ------------ ------------
Loss from Operations (7,011,240) (3,376,000) (12,232,373) (6,591,932)
Other Income (Expense)
Interest Income 1,609,345 734,626 2,331,174 937,926
Interest & Other Expense (42,514) (36,341) (75,539) (66,694)
------------ ------------ ------------ ------------
Other Income, Net 1,566,831 698,285 2,255,635 871,232
------------ ------------ ------------ ------------
Net Loss ($ 5,444,409) ($ 2,677,715) ($ 9,976,738) ($ 5,720,700)
============ ============ ============ ============
Net Loss per Common Share ($ 0.34) ($ 0.20) ($ 0.67) ($ 0.49)
============ ============ ============ ============
Weighted Average Shares 15,882,305 13,064,643 14,788,078 11,695,412
============ ============ ============ ============
</TABLE>
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<PAGE> 5
SANGSTAT MEDICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 9,976,738) ($ 5,720,700)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 247,956 169,012
Changes in assets and liabilities:
Accounts receivable (118,657) 188,764
Other receivables (587,934) (370,169)
Inventories (711,725) (169,943)
Prepaid expenses 55,140 (144,094)
Accounts payable 1,789,865 150,141
Accrued liabilites (76,569) (209,037)
------------ ------------
Net cash used in operating activities (9,378,662) (6,106,026)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 76,795,960 45,081,648
Note payable borrowings 0 134,277
Note payable repayments (275,955) (243,612)
Repayment of capital lease obligations (176,116) (141,818)
------------ ------------
Net cash provided by financing activities 76,343,889 44,830,495
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (244,490) (25,835)
Maturities of short-term investments 6,397,316 7,799,722
Purchase of short-term investments (18,470,133) (27,054,975)
Other assets (230,367) (13,165)
------------ ------------
Net cash used in investing activities (12,547,674) (19,294,253)
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (29,162) (26,562)
------------ ------------
NET INCREASE IN CASH AND EQUIVALENTS 54,388,391 19,403,654
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 19,818,940 4,609,186
------------ ------------
CASH AND EQUIVALENTS, END OF PERIOD $ 74,207,331 $ 24,012,840
============ ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property acquired under capital leases $ 402,941 $ 278,415
============ ============
Unrealized gain (loss) on investments ($ 114,140) $ 128,745
============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION - -
Cash paid during the year for interest $ 91,076 $ 87,529
============ ============
</TABLE>
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<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 1996 Annual Report to Shareholders.
Per Share Information
Net loss per common share is computed using the weighted average number of
common shares outstanding during the period. Common equivalent shares, including
stock options granted by the Company, have been excluded in the calculation of
common 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,
1997 1996
---------- ---------
<S> <C> <C>
Raw materials $1,025,310 $265,537
Work-in-progress 235,887 275,503
Finished goods 249,166 261,097
---------- ---------
Total $1,510,363 $802,137
========== =========
</TABLE>
Public Offering
In April 1997, the Company completed a public offering, including the
underwriters' over-allotment, of a total of 2.73 million shares at $30.00 per
share with net proceeds of $76,635,000.
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<PAGE> 7
Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The
Company is required to adopt SFAS 128 in the fourth quarter of 1997. SFAS 128
establishes the accounting standards for computing and presenting earnings per
share. The Company expects that this adoption will not have a material effect on
reported earnings (loss) per share.
In June 1997, the Financial Accounting Standards Board adopted Statements of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income", which
requires that an enterprise report by major components and as a single total,
the change in its net assets during the period from nonowner sources; and No.
131 "Disclosures about Segments of an Enterprise and Related Information" which
establishes annual and interim reporting standards for an enterprise's business
segments and related disclosures about its products, services, geographic areas,
and major customers. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows. Both
statements are effective for fiscal years beginning after December 15, 1997,
with earlier application permitted.
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<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS -- THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Total revenues. Net product sales in the second quarter of 1997 increased to
$712,000 from $381,000 in the same quarter of 1996. This increase of $331,000 or
87% reflects an increase of 195% in sales of monitoring products, including
PRA-STAT(R) and CROSS-STAT(R), sales of THE TRANSPLANT PHARMACY (which began in
third quarter 1996), partially offset by a decrease of 30% in revenues from
compassionate use of THYMOGLOBULIN(R). Net product sales in the first half of
1997 increased to $1,402,000 from $1,093,000 in the first half of 1996. This in
crease of $309,000 or 28% similarly reflects an increase of 49% in sales of
monitoring products, including PRA-STAT and CROSS-STAT, continuing sales of THE
TRANSPLANT PHARMACY, partially offset by a 33% decline in revenues from
compassionate use of THYMOGLOBULIN. The changes in sales of THYMOGLOBULIN in
Canada under that country's Emergency Drug Release (EDR) Program reflect
variable need for compassionate use.
Cost of sales and manufacturing. Cost of sales and manufacturing expenses
increased to $791,000 in the second quarter of 1997 from $594,000 in the
corresponding quarter of 1996. This increase of $197,000 or 33% was
substantially due to additional costs associated with increased sales of
monitoring products and the commencement of THE TRANSPLANT PHARMACY sales and
partially offset by a 21% decline in costs of sales in Canada. Cost of sales and
manufacturing expenses increased to $1,493,000 in the first half of 1997 from
$1,289,000 in the first half of 1996. This increase of $204,000 or 16% reflects
a 4% increase in costs of monitoring products, costs of sales for THE TRANSPLANT
PHARMACY and a 26% decrease in costs of sales in Canada. The Company's
monitoring products business does not currently generate a profit, because the
Company has not achieved a scale of production which allows it to cover fixed
manufacturing costs.
Research and development. Research and development expenses increased to
$4,286,000 in the second quarter of 1997 from $1,826,000 in the same period in
1996. This increase of $2,460,000 or 135% primarily reflects the initiation of
several clinical trials in transplant patients for CYCLOSPORINE and
THYMOGLOBULIN and continuing product development of AZATHIOPRINE, ALLOTRAP(R)
peptides and XENOJECT(TM). In April 1997 the Company announced its expansion of
clinical trials with CYCLOSPORINE and THYMOGLOBULIN and has since received
Institutional Review Board (IRB) approval for several clinical trials
for converting renal, heart and liver transplant recipients currently on
Novartis' Neoral to SangStat's CYCLOSPORINE. These trials are designed to
provide valuable information on the pharmacokinetics, safety and efficacy of
conversion from Neoral to SangStat's CYCLOSPORINE. In April, a key goal in
preparing for potential commercialization of SangStat's finished CYCLOSPORINE
drug product was achieved. SangStat and Gensia Sicor announced a definitive
supply agreement for commercial scale production of cyclosporine bulk material
for SangStat's proprietary CYCLOSPORINE drug candidate for the anticipated
worldwide market. On July 2, 1997, the FDA approved Gensia Sicor's application
for the manufacture of bulk cyclosporine drug substance. This approval
represents an important step forward in the regulatory process for approval of
SangStat's finished CYCLOSPORINE drug product. Research and development expenses
increased to $7,669,000 in the first half of 1997 from $4,055,000 in the first
half of 1996. This increase of $3,614,000 or 89% reflects, in addition to the
key events described above for the second quarter 1997, support of an on going
trial utilizing THYMOGLOBULIN for induction therapy to prevent acute rejection
in kidney transplant recipients. This is not a registration study but may
provide useful data to help assess the potential of this indication of
THYMOGLOBULIN. The FDA accepted the Company's applications for market clearance
of its
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<PAGE> 9
proprietary CYCLOSPORINE for prevention of organ transplant rejection, and
THYMOGLOBULIN, for treatment of rejection, in first quarter 1997 and both drugs
are now under active review by the FDA. The Company announced in April 1997 that
it is planning to expand its clinical trial programs and in accordance with
these and the Company's marketing plans, the Company expects research and
development expenses to increase in the next few quarters.
Selling, general and administrative. Selling, general and administrative
expenses increased to $2,646,000 in the second quarter of 1997 from $1,338,000
in the same quarter of the previous year. This increase of $1,308,000 or 98%
reflects in part that the Company established its own sales staffs in the United
States and Europe and expanded its sales and marketing group in Canada in third
quarter 1996 in connection with the Company's reacquisition of marketing rights
to PRA-STAT and CROSS-STAT from Baxter Healthcare Corporation in July 1996.
Also, in May 1997, R. J. Tesi, M.D., joined the Company as Senior Vice President
of Marketing, in accordance with the Company's announcement in April 1997 of its
plans to expand its sales and marketing staff to further its near term
commercialization strategies. As a result of these events, sales and
marketing expenses for monitoring and therapeutic products increased by $608,000
from the second quarter of 1996 to the same quarter in 1997. Selling, general
and administrative expenses further increased by $700,000 in the second quarter
of 1997 as compared to the second quarter of 1996 as the result of the continued
expansion of the pilot program for THE TRANSPLANT PHARMACY, as well as expanded
patent and other general and administrative activities. Selling, general and
administrative expenses increased to $4,472,000 in the first half of 1997 from
$2,341,000 in the first half of 1996. This increase of $2,131,000 or 91% is
attributable to an increase of $1,090,000 in sales and marketing for monitoring
and therapeutic products and an increase of $1,041,000 in general administrative
expenses, including THE TRANSPLANT PHARMACY. The Company is currently building
its sales and marketing team in anticipation of potential approvals for market
clearance for THYMOGLOBULIN and CYCLOSPORINE. In the next several quarters, the
Company expects to hire its acute care sales force so that, in the event of
market clearances, the Company will be ready to launch its products.
Accordingly, the Company expects selling, general and administrative expenses to
increase in the next several quarters.
Other income and expenses. Interest income increased by $874,000 or 119% to
$1,609,000 in the first quarter of 1997 from $735,000 in the second quarter 1996
and also increased by $1,393,000 or 149% to $2,331,000 in the first half of 1997
from $938,000 in the first half of 1996. These increases are due to the increase
in the average cash balance available for investment as a result of the
Company's sale of equity securities in a public offering in March 1997 and the
overallotment completed in April 1997. Interest and other expense for capital
lease obligations and long term notes increased by $9,000 or 13% to $76,000 in
the first half of 1997 from $67,000 in the first half of 1996.
Net loss. The Company's net loss was $5,444,000 or $0.34 per share in the second
quarter of 1997, compared with a net loss of $2,678,000 or $0.20 per share in
the second quarter of 1996. For the first half of 1997, the Company's net loss
was $9,977,000 or $0.67 per share compared with a net loss of $5,721,000 or
$0.49 per share in the first half of 1996.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 1997 and 1996, the net cash used in operating
activities was approximately $9,379,000 and $6,106,000, respectively. The
increase in net cash used in operating activities in these periods is due
substantially to the increased amount of net loss incurred in each of these
periods. As of June 30, 1997, the Company had cash, cash equivalents and
short-term investments of $107,668,000 and total assets of $113,007,000.
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<PAGE> 10
Net cash provided by financing activities totaled $76,344,000 and $44,830,000
for the six months ended June 30, 1997 and 1996, respectively. Such amounts were
substantially comprised of proceeds received from the sale of Common Stock in
the Company's public offerings in March 1997 and March 1996, respectively,
offset in part by net repayments of notes payable and capital lease obligations.
Net cash used in investing activities totaled $12,548,000 and $19,294,000 in the
six months ended June 30, 1997 and 1996, respectively, and resulted
substantially from the Company's net purchases of short-term investments.
The Company expects to incur significant costs related to, among other things,
continued clinical and preclinical testing, regulatory approval activities and
research and development programs in the future and the build-up of sales
staffs in the United States and Europe. If and when the Company receives
FDA approval of its therapeutic drug candidates, the Company expects to have
additional working capital requirements for expansion of sales, increased
inventory levels and payment of certain license obligations. If the Company
receives FDA approval for THYMOGLOBULIN, it would be obligated to make a final
milestone payment under a related license agreement totaling $1.5 million. 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 1998. Although the Company has no current
contractual obligations relating to capital expenditures, it anticipates that
capital expenditures, primarily for its United States operations, will aggregate
approximately $1 million during 1997. The Company's future capital requirements
will depend on many factors, including its research and development programs,
the scope and results of clinical trials, the time and costs involved in
obtaining regulatory approvals, the costs involved in obtaining and enforcing
patents or any litigation by third parties regarding intellectual property, the
status of competitive products, the establishment of sales and marketing
capacity or third-party manufacturing arrangements, the establishment of
collaborative relationships with other parties, and the costs of manufacturing
scale-up and working capital requirements for inventory and financing of
accounts receivable. If adequate funds are not available, the Company may be
required to delay, scale back or eliminate one or more of its development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain
technologies, product candidates or products that the Company would not
otherwise relinquish.
This document contains forward-looking statements that involve risks and
uncertainties. Forward-looking statements reflect SangStat's current views with
respect to future events. Actual results may vary materially and adversely from
those anticipated, believed, estimated, or otherwise indicated. Important
factors common to the FDA drug review and approval process could cause actual
results to differ materially with regard to the approvability of SangStat's
THYMOGLOBULIN or CYCLOSPORINE. These factors include, without limitation: (1)
that data obtained from clinical trials are subject to varying interpretations,
and there can be no assurance that the FDA (or an FDA panel of experts) will
agree with SangStat's assessment of clinical trial results; (2) that there can
be no assurance that the agency will not issue new guidelines, guidance
documents, policies, or regulations or otherwise have new, different or
previously unknown requirements that may materially affect the approvability of
either product; and (3) that there can be no assurance of FDA approval of either
product. Other factors that could cause actual results to differ materially
include, without limitation, uncertainty related to the competition
manufacturing of commercial quantities of product on commercially favorable
terms, market acceptance, competition and potential litigation. For a discussion
of other factors that might result in different outcomes, see SangStat's 1996
Annual Report, in particular "Risks Associated With CYCLOSPORINE" set forth
therein, and the Company's filings on Form 10-K and 10-Q with the Securities and
Exchange Commission.
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<PAGE> 11
RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). The
Company is required to adopt SFAS 128 in the fourth quarter of 1997. SFAS 128
establishes the accounting standards for computing and presenting earnings per
share. The Company expects that this adoption will not have a material effect on
reported earnings (loss) per share.
In June 1997, the Financial Accounting Standards Board adopted Statements of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income", which
requires that an enterprise report by major components and as a single total,
the change in its net assets during the period from nonowner sources; and No.
131 "Disclosures about Segments of an Enterprise and Related Information" which
establishes annual and interim reporting standards for an enterprise's business
segments and related disclosures about its products, services, geographic areas,
and major customers. Adoption of these statements will not impact the Company's
consolidated financial position, results of operations or cash flows. Both
statements are effective for fiscal years beginning after December 15, 1997,
with earlier application permitted.
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 27, 1997 to each stockholder of record as of May
9, 1997, for its Annual Meeting of Stockholders held June 19, 1997. At the
Company's Annual Meeting, the stockholders were asked to consider four
proposals.
The first proposal involved the election of directors. The existing Board of
Directors selected seven 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 12,481,729 139,065
Fredric Feldman 12,481,729 139,065
Elizabeth Greetham 12,481,729 139,065
Richard Murdock 12,481,629 139,165
Andrew Perlman 12,481,629 139,165
Gordon Russell 12,481,729 135,065
Vincent Worms 12,481,629 139,165
</TABLE>
The second proposal was a series of amendments to the Company's 1993 Stock
Option Plan, including an increase in the number of shares of Common Stock
reserved for issuance thereunder by 750,000 shares. The number of shares cast
for, against and abstentions were 6,032,915; 4,514,111; 9,345, respectively. The
percent of shares voted in favor of this proposal was 57%.
The third proposal was the Company's 1996 Non-Employee Directors Stock Plan,
including 250,000 shares of Common Stock reserved for issuance thereunder. The
number of shares cast
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<PAGE> 12
for, against and abstentions were 9,091,401; 1,450,000 and 14,895, respectively.
The percent of shares voted in favor of this proposal was 86%.
The fourth and final proposal was the ratification of the Company's independent
auditors, Deloitte & Touche LLP, for the fiscal year ending December 31, 1997.
The number of shares cast for, against, and the number of abstentions were
12,614,589; 3,340 and 2,865, respectively. The percent of shares voted in favor
of this proposal was over 99%.
In that a plurality of shares voted for each proposal is necessary for
stockholder approval, all the proposals above were approved by the stockholders
at the Company's Annual Meeting of Stockholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EDGAR Financial Data Schedule 27.1
(b) Exhibit 10.24 Cyclosporine Amended and Restated Supply and License
Agreement.
(c) There were no reports on Form 8-K filed during the period covered by
this report.
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 12, 1997 BY: /S/ PHILIPPE POULETTY, M.D.
------------------------------------
PHILIPPE POULETTY, M.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DATE: August 12, 1997 BY: /S/ HENRY N. EDMUNDS, PH.D.
------------------------------------
HENRY N. EDMUNDS, PH.D.
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
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<PAGE> 13
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- ------- --------
<S> <C>
27.1 Financial Data Schedule
10.24 Cyclosporine Amended and Restated Supply and License
Agreement
</TABLE>
<PAGE> 1
EXHIBIT 10.24
CYCLOSPORINE
AMENDED AND RESTATED
SUPPLY AND LICENSE AGREEMENT
THIS AMENDED AND RESTATED SUPPLY AND LICENSE AGREEMENT (the
"Restated Agreement") is entered into as of March 31, 1997 (the "Restatement
Date"), by GENSIA SICOR INC., a company existing and organized under the laws of
the state of Delaware, with offices at 9360 Towne Centre Drive, San Diego,
California ("GENSIA SICOR"), and the assignee of ALCO CHEMICALS LTD., a company
existing and organized under the laws of Guernsey, Channel Islands, having
offices at Via San Salvatore 7, CH-6902, Lugano, Switzerland (hereinafter
referred to as "ALCO"), VINCHEM, INC., a corporation organized and existing
under the laws of New York, with offices at 301 Main Street, Chatham, New Jersey
07928 ("VINCHEM"), SICOR S.p.A., an Italian corporation with offices at via
Senato 19 20121 Milan, ITALY and SANGSTAT MEDICAL CORPORATION, a corporation
existing and organized under the laws of the State of Delaware and having its
principal place of business at 1505-B Adams Drive, Menlo Park, California 94025,
United States of America (hereinafter referred to as the "PURCHASER").
WITNESSETH
WHEREAS, SICOR S.p.A., a company existing and organized under the
laws of Italy, having its registered head office at Via Senato 19, 20121 Milan,
Italy (hereinafter referred to as "SICOR"), a wholly-owned subsidiary of GENSIA
SICOR is the manufacturer of Cyclosporine (the "Product," as hereinafter
defined.
WHEREAS, for the purposes of this Agreement, VINCHEM is the
exclusive agent in the United States for Cyclosporine sold by SICOR through
GENSIA SICOR;
WHEREAS, GENSIA SICOR intends to * * * hereof;
WHEREAS, for the purpose of developing, registering, testing,
manufacturing, marketing and selling one or more products formulated and derived
from the Product, the PURCHASER desires to purchase the Product from GENSIA
SICOR in its own name and for its own account, and GENSIA SICOR (through SICOR)
desires to supply such Product to the PURCHASER on the terms and conditions set
forth herein;
WHEREAS, the parties, having first entered into the License and
Supply Agreement as of November 23, 1994 (the "Effective Date"), now desire to
amend and restate the Agreement to reflect certain agreements reached among
them;
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
<PAGE> 2
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Affiliate shall mean (i) any person, corporation or other
entity which directly owns, is owned by or is under common ownership with any
party hereto to the extent of at least thirty percent (30%) (or such lesser
percentage as is the maximum allowed to be owned by a foreign corporation in a
particular jurisdiction) of the equity having power to the vote on or to direct
the affairs of the entity, and (ii) any person, corporation or other entity
actually controlled by, controlling or under common control with any party
hereto.
1.2 Cyclosporine Formulations shall mean drug products that are
formulated or otherwise derived from the Product, but shall not mean the Product
itself.
1.3 Effective Date shall mean the date referred to in the
Recitals set forth above; "Restatement Date" shall mean the date referred to in
the first paragraph above.
1.4 Regulatory Authorities shall mean (A), with respect to the
United States, the United States Food and Drug Administration or such other
agency or instrumentality of the United States to which the responsibilities and
authority of the FDA are given or delegated from time to time, and (B) with
respect to each other country in the Territories, the agencies or
instrumentalities that have substantially the same responsibilities and
authorities as the FDA.
1.5 Product shall mean the Cyclosporine product produced * * *
and more particularly described in Exhibit 1 hereto.
1.6 Proprietary Rights shall mean, with respect to the Product,
the patent rights, copyrights, trade secret rights and similar industrial and
intellectual property rights.
1.7 Q/C Specifications shall mean the quality control performance
specifications and product release criteria specifications set forth in Exhibit
2 hereto.
1.8 Technical Information shall mean all trade secrets, know-how,
technology, technical assistance, computer software, means, materials,
documentation, methods, processes, practices, formulas, techniques, procedures,
designs, drawings, apparatus and any other information or data of whatever
nature, whether or not confidential or proprietary, which is relevant to use or
exploitation of Product pursuant to the terms of this Agreement, but which
information shall not include information about third party Cyclosporine
Formulations.
1.9 Exclusive Territory shall mean * * * (including
* * * ) and * * * identified on Exhibit 6 hereto.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
2.
<PAGE> 3
1.10 Nonexclusive Territory shall mean * * * except the * * *.
1.12 Territories shall mean the Exclusive Territory and the
Nonexclusive Territory.
1.13 Net Sales shall mean the amount actually received by
PURCHASER (excluding sales to affiliates) on sales of product including the
Product to third parties including its distributors, less deductions for (i) * *
* (ii) * * * (iii) * * * and (iv) * * * provided such costs are separately
indicated on the customer invoice. * * * and * * * (if any) shall be excluded
from the computation of Net Sales.
ARTICLE 2
LICENSE
2.1 Grant of License.
2.1.1 Subject to the terms of this Agreement, GENSIA SICOR (for
itself and through SICOR) hereby grants to PURCHASER and its Affiliates (i) a *
* * license under the * * * and to the * * * to directly and indirectly * * * in
the * * * Territory; and (ii) an * * * license under the * * * and to the * * *
to directly and indirectly * * * in the * * * Territory; provided, however, that
the * * * licenses granted pursuant to clause (ii) herein shall be * * * in
which GENSIA SICOR (or, ALCO or SICOR, as the case may be) has * * * or * * *
that will lead to * * * to * * * on the Restatement Date (which is limited to
only those * * * and the * * * with whom * * * has * * * that are in existence
on the Restatement Date), but only with respect to such * * * and only until the
earlier of * * *; and provided, further that * * * shall use all diligent
efforts (without any obligation to violate or alter the terms of such agreements
existing on the Restatement Date) to provide PURCHASER with * * * in the * * *
as soon as possible.
2.1.2 Subject to the terms of this Agreement, GENSIA SICOR shall
(and GENSIA SICOR shall cause SICOR to) promptly deliver to PURCHASER, from time
to time upon the reasonable request of PURCHASER, all materials, technology,
documentation and other information comprising the Technical Information,
provided, however, that GENSIA SICOR (and/or SICOR) shall provide such Technical
Information only to the extent that such information is reasonably necessary to
permit PURCHASER to exercise its rights under Section 2.1.1 above.
2.1.3 PURCHASER may, from time to time, request specific
additional technical assistance from GENSIA SICOR, and GENSIA SICOR shall cause
SICOR and/or SICOR's personnel (and/or agents), and SICOR shall, if requested,
provide such technical assistance to PURCHASER, including, but not limited to,
assistance to enable PURCHASER to make and complete all required regulatory
agency submissions (including, without limitation, FDA AADA, NDA and Canadian
NDS, as well as regulatory submissions for the European Union and throughout the
world). For the purposes of this Section 2.1.3,
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
3.
<PAGE> 4
technical assistance shall include cooperating with PURCHASER in preparing
PURCHASER's filings, applications and submissions, with Regulatory Authorities,
being available to answer questions from representatives of PURCHASER and
Regulatory Authorities relating to such filings, applications and submissions,
and such other matters as the parties may mutually agree. Technical assistance
that is provided by fax, telephone, courier, mail or personal interview at SICOR
or GENSIA SICOR's facilities shall be at no charge to PURCHASER. All other
technical assistance shall be subject to mutual agreement of the parties as to
both the scope of such assistance and the compensation therefor.
2.1.4 Notwithstanding anything to the contrary, PURCHASER may
sublicense the rights under Section 2.1.1 above to its Affiliates, authorized
distributors and agents in the Territories provided that each sublicensee agrees
to be bound by the terms and conditions of this Agreement relating to such
rights.
2.1.5 Subject to Article 14 below, GENSIA SICOR (through SICOR)
shall retain at all times all manufacturing rights to Product for the
Territories and shall deliver such Product under the terms and conditions as
provided for in the following clauses of this Agreement.
2.2 Each of PURCHASER and GENSIA SICOR agrees (and GENSIA SICOR
shall cause SICOR to do the same) to advise and keep the other party informed
(and GENSIA SICOR shall cause SICOR to do the same) of any adverse events
associated with clinical trials with the Cyclosporine Formulations in which said
adverse events are attributed to the Product, but which shall not include
information relating to the Cyclosporine Formulations.
2.3 GENSIA SICOR (for itself and SICOR) represents and warrants
that:
(i) it has and will, at all times during the
term of this Agreement, have the right to manufacture and sell Product;
(ii) neither the processes used in production of
the Product, nor the use of the fungus strain used in those processes (A)
infringe any proprietary industrial or intellectual property rights of any third
party (including, but not limited to, U.S. Letters Patent 4,215,199, 4,177,118
and the foreign patents corresponding thereto), or (B) use any misappropriated
trade secrets of any third party (including, but not limited to, CibaGeigy AG,
Sandoz AG, and their respective Affiliates);
(iii) it will all reasonably diligent efforts to
continuously improve the Product strain and Product manufacturing process;
(iv) to the best of its knowledge, no other
licenses or permissions are required to exploit the Product; and
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
4.
<PAGE> 5
(v) during the term of this Agreement, it will
not directly or indirectly develop, license, supply, distribute or sell any
Cyclosporine Formulations; provided, however, that this Section 2.3(v) shall not
apply in any of the circumstances set forth in Exhibit 11.
ARTICLE 3
SUPPLY OF PRODUCT
3.1 In accordance with the terms of this Agreement, GENSIA SICOR
(through SICOR) shall supply all of PURCHASER's ordered requirements for Product
in bulk form for use by PURCHASER in the Territories in accordance with the
provisions of this Agreement. The right and license of PURCHASER to obtain, use
and distribute Product (including, without limitation, the right to make or have
made Product) from GENSIA SICOR and SICOR shall be (i) * * *, and (ii) * * *;
provided, however, that the rights and licenses set forth in clause (ii) above
shall be * * * GENSIA SICOR (or ALCO or SICOR, as the case may be) has * * *, or
* * * that will lead to * * *, to * * * on the Restatement Date (which is
limited to only those * * * and * * * with whom * * * has * * * that are in
existence on the Restatement Date), but only with respect to such * * * and only
until the earlier of * * *; and provided, further that * * * shall use all
diligent efforts (without any obligation to violate or alter the terms of such
agreements existing on the Restatement Date) to provide PURCHASER with * * * in
the Territory as soon as possible. All Product hereunder shall be manufactured
at SICOR's GMP facilities at * * *, the facility identified in Exhibit 9 hereto,
the * * * and additional (as necessary and as provided in Section 6 below) GMP
qualified facilities that are approved in advance by PURCHASER (which approval
will not be unreasonably withheld). In addition, all Product shall be
manufactured (A) in accordance with drug substance manufacturing and quality
control procedures existing on the Effective Date, which drug substance
manufacturing and quality control procedures have been included in
manufacturer's Abbreviated Antibiotic Drug Application ("AADA") submitted to the
FDA in 1996, and that will be submitted to other Regulatory Authorities in the
Territory (which AADA shall include at least the elements set forth in the Drug
Master File) in accordance with U.S. FDA current Good Manufacturing Practices,
and (B) to the Q/C Specifications. GENSIA SICOR shall cause SICOR to use its
diligent efforts to * * * in order to produce and supply all Product ordered by
Purchaser hereunder and to meet the Product * * * that will be set forth in
Schedule 1 hereto within * * * days after the Restatement Date. In addition,
GENSIA SICOR agrees to the following (and GENSIA SICOR agrees to cause SICOR to
undertake):
(i) Within * * * after PURCHASER submits
an * * * (i.e., * * * ) for its Cyclosporine Formulation, GENSIA SICOR shall
submit a * * * for the Product to * * * for the * * * ;
(ii) Within * * * days of notice from
PURCHASER that PURCHASER intends to file a registration for a Cyclosporine
Formulation with a Regulatory Authority or Regulatory Authorities, it shall file
in each * * * , a * * *
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
5.
<PAGE> 6
or * * * with the appropriate Regulatory Authorities in order to permit
PURCHASER to obtain approval to * * * as soon as possible; and
(iii) GENSIA SICOR shall maintain * * *
identified on Exhibit 9, or such other * * * as PURCHASER approves in its
reasonable discretion, (and provide PURCHASER with evidence that is reasonably
satisfactory to PURCHASER of such designation) to * * * pursuant to this
Agreement.
3.2 GENSIA SICOR (through SICOR) shall deliver the Product in
quantities comprised of single, Q/C-released lots in accordance with Firm Orders
established pursuant to Article 4 hereof; provided, however, that PURCHASER may,
prior to any shipment, waive the requirement that such shipment be comprised of
a single, Q/C-released lot. In addition, in the event that a Firm Order for
Product is not in a multiple of * * * or * * * PURCHASER acknowledges that any
quantity of a Q/C-released lot (within a Firm Order) greater and additional to
the minimum batch size then in effect may be delivered as a separate lot under
such Firm Order. The packaging specifications will be established by the parties
based on results of stability testing of the Product, which testing shall be
completed by no later than December 31, 1995, and shall be set forth in Exhibit
3 hereto; the parties may revise and update such specifications by separate
agreement between the parties hereto.
3.3 GENSIA SICOR (through SICOR) shall satisfy all of PURCHASER's
requirements for Product. GENSIA SICOR (through SICOR) shall make all Product
produced and sold to PURCHASER as per validated processes and procedures. GENSIA
SICOR (through SICOR) shall not change, deviate from or otherwise modify any
aspect of the procedures or processes employed in manufacturing the Product
using a process or procedure different from the procedures and processes filed
with the Regulatory Authorities (including, without limitation, the FDA) or as
otherwise specified herein without the prior written consent of PURCHASER and
PURCHASER agrees to promptly respond to any request for consent from GENSIA
SICOR (through SICOR).
3.4 In the event that GENSIA SICOR (through SICOR) is unable to
supply the full amount of Product which shall be the subject of any Firm Order
(as defined in Article 4 below) in accordance with any delivery schedule
provided for in Article 4 below, GENSIA SICOR (through SICOR) shall notify the
PURCHASER of such situation as soon as possible and shall supply to PURCHASER an
allocation of Product at least equal to the ratio of (i) the amount supplied
from the * * * during the * * * of * * * to such inability, to (ii) the * * * .
In no event shall PURCHASER * * * with respect to the * * * and * * * of Product
than * * * .
ARTICLE 4
FORECASTS AND ORDERS
4.1 In order that GENSIA SICOR may properly and economically
forecast procurement planning with respect to the Product, PURCHASER shall,
commencing with
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
6.
<PAGE> 7
the * * * immediately following approval of a Cyclosporine Formulation of
PURCHASER, submit to GENSIA SICOR within * * * business days after the beginning
of such * * * and each * * * thereafter during the term of this Agreement,
rolling forecasts of its good faith, non-binding estimates of its requirements
of Product for the forthcoming * * * period. PURCHASER shall within * * * days
after the Restatement Date provide its initial non-binding forecast. In
addition, at the time of delivery of each forecast, PURCHASER shall place a firm
order in writing for Product to be delivered to it during the * * * after
receipt of such order by GENSIA SICOR ("Firm Order").
4.1.1 A Firm Order may not be canceled, and, following
performance by GENSIA SICOR (for itself and through SICOR, as appropriate) of
its obligations hereunder with respect to such order, PURCHASER shall be
obligated to pay the price for said order as provided in Article 5 hereof. The
total amount of each Product ordered by PURCHASER for delivery in any * * * for
which an order is required may not be less than * * * percent ( * * * %) of
PURCHASER's * * *. In addition, GENSIA SICOR's supply obligation will not extend
to more than * * * percent ( * * * %) of PURCHASER's * * * of its * * *. If a
PURCHASER Product requirement for any quarter exceeds * * * % of PURCHASER's * *
*, GENSIA SICOR and PURCHASER will discuss in good faith the additional amount,
if any, that GENSIA SICOR is willing to supply consistent with its other
obligations and PURCHASER will adjust its order accordingly.
4.2 The parties shall meet from time to time to review the
estimated quantities in each forecast and any Firm Order then outstanding and to
consult on matters relating to the scheduling of manufacture, import and
delivery of the Product but without prejudice and subject to the obligations of
the parties set forth in this Agreement.
4.3 Concurrent with execution of this Restated Agreement,
Purchaser hereby places Firm Orders (and GENSIA SICOR hereby acknowledges
receipt and acceptance of the same on its behalf and by SICOR) for the
quantities of the Product set forth in Exhibit 7 hereto. Notwithstanding the
foregoing, the parties acknowledge that those Firm Orders set forth in Exhibit 7
with a scheduled delivery date after * * * are conditioned upon earlier receipt
of AADA approval by GENSIA SICOR from the FDA to manufacture Product at its * *
* facility.
ARTICLE 5
CERTAIN OBLIGATIONS OF PURCHASER
5.1 Commencing on the * * * of commercial launch of PURCHASER's
Cyclosporine Formulation in * * *, and provided that GENSIA SICOR is in good
standing hereunder, PURCHASER agrees to purchase * * * from GENSIA SICOR the
minimum quantities of Product set forth on Exhibit 10 hereto.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
7.
<PAGE> 8
5.2 PURCHASER shall use commercially reasonable efforts to obtain
approval to market its Cyclosporine Formulations in * * * (including * * * ). In
addition, PURCHASER agrees that if it has not commenced marketing of its
Cyclosporine Formulation in * * * and in * * * within * * * after obtaining such
approval in each such jurisdiction, then the * * * but only with respect to the
* * *. PURCHASER also agrees to dedicate * * * in the * * * and * * *.
ARTICLE 6
PRICE AND PAYMENT
6.1 Transfer Price. The prices for the Product supplied hereunder
is set forth in Exhibit 4 hereto, F.C.A. SICOR's facility in * * *. Such prices
shall apply to any commercial and pre-commercial batches of Product (each
determined on a jurisdiction by jurisdiction basis).
6.2 Payment Terms. Neither VINCHEM nor GENSIA SICOR (through
SICOR) shall invoice for any stock of Product prior to the shipment date for
such stock. The PURCHASER shall pay to VINCHEM the price of each shipment of
Product within (a) * * * days after the invoice date, with respect to commercial
quantities, and (b)
* * * days after the invoice date, with respect to quantities used in
development and clinical trials, in each case if such quantity is accepted (and,
if not initially accepted, then in accordance with Section 12.1). All payments
and prices shall be in United States dollars. Payment shall be remitted by wire
transfer in the invoice currency to a bank account to be designated in writing
from time to time by VINCHEM. No invoices shall be submitted to PURCHASER until
the date the subject Product is released for shipment from VINCHEM's facilities.
6.3 * * * .
(a) Within thirty (30) days after the Restatement Date, GENSIA
SICOR shall * * * (and shall use all diligent effort to * * *) of its * * * (the
"* * *") to * * * to * * * additional * * *.
(b) PURCHASER shall provide GENSIA SICOR * * *, which shall be
used solely for the purpose of * * *. PURCHASER shall provide (i) * * * promptly
following (a) * * * that is reasonably acceptable to the parties, and (b) proof
reasonably satisfactory to PURCHASER that GENSIA SICOR has * * * on Exhibit 9
hereto as * * *, and (ii) the * * * promptly after * * * that the * * * has * *
* and * * * to * * * provided that * * *.
(c) At PURCHASER's option (the " * * * "), GENSIA SICOR shall * *
* to * * * to * * *. If (and only if) PURCHASER exercises the * * * *
* *, PURCHASER shall * * *, which shall be * * *, in the same manner and during
the same time period as set forth in subparagraphs (a) and (b) above. GENSIA
SICOR shall use all diligent effort to * * * and * * * by no later than * * *.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
8.
<PAGE> 9
(d) SICOR shall * * * that are reasonably acceptable to
PURCHASER, but in each instance, only for sale to PURCHASER, its agents and
Affiliates.
(e) Except for the * * * described in subsection (b) and, at
PURCHASER's option, subsection (c) above, GENSIA SICOR shall be solely
responsible for * * * required to * * *.
ARTICLE 7
DELIVERY AND RISK OF LOSS
7.1 With respect to Product to be delivered to the United States,
VINCHEM shall deliver or arrange for the delivery of the Product to a carrier or
agent designated by PURCHASER, F.C.A. (1990 ICC INCOTERMS) SICOR facility at * *
* and as otherwise mutually agreed.
7.2 With respect to Product to be delivered to outside the United
States, GENSIA SICOR shall deliver or arrange (by itself or through an agent or
subagent that is reasonably acceptable to PURCHASER) for the delivery of the
Product to a carrier or agent designated by PURCHASER, F.C.A. (1990 ICC
INCOTERMS) SICOR facility at * * * and as otherwise mutually agreed.
7.3 Title to the Product sold hereunder shall pass to PURCHASER
upon delivery to the carrier or agent designated by PURCHASER, provided that
with respect to Product to be delivered to the United States under Section 7.1,
VINCHEM shall be the importer of record, and PURCHASER agrees to promptly
reimburse VINCHEM for * * * incurred in * * * to PURCHASER upon submission of *
* *.
7.4 Product shall be tendered for shipment only after such
Product has cleared the Q/C Specifications and quality assurance procedures set
forth in Exhibit 2 and in accordance with the lot size set forth in the Firm
Order.
ARTICLE 8
SUPERIORITY
8.1 Except for the purchase orders referred to in Section 4.3
above, no provision on PURCHASER's purchase order form or on GENSIA SICOR's (or
SICOR's) general conditions of sale or invoice which may purport to impose
different conditions upon PURCHASER or GENSIA SICOR (or SICOR) or VINCHEM shall
modify or otherwise alter the terms of this Agreement.
8.2 The United Nations Convention on the International Sale of
Goods (1980) shall not apply to this Agreement, nor to any sale of Product made
pursuant to this Agreement.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
9.
<PAGE> 10
ARTICLE 9
CONFIDENTIALITY
9.1 Except as otherwise provided herein, during the term of this
Agreement and for a period of * * * years following expiration or termination of
this Agreement, each party shall maintain in confidence all confidential or
proprietary information and materials disclosed or provided by the other party
hereto or the other party's Affiliate, which such party knows or has reason to
know are or contain trade secrets or other proprietary or confidential
information relating to the business or properties of the other party, or the
business plans of the other party hereto prior to the date hereof, and shall not
use such trade secrets or proprietary or confidential information for any
purpose, including, without limitation, for the purpose of developing products
except as permitted by this Agreement or disclose the same to anyone other than
those of its Affiliates, employees, consultants, agents or subcontractors as are
necessary in connection with such party's activities as contemplated in this
Agreement. Each party shall obtain a written agreement from any such employees,
consultants, agents and subcontractors, prior to disclosure, to hold in
confidence and not make use of such trade secrets or proprietary or confidential
information for any purpose other than those permitted by this Agreement.
Notwithstanding the foregoing sentence, with respect to employees
or consultants of a party or such party's Affiliates who have signed a
confidentiality agreement in favor of such party or Affiliate as employer, if
such confidentiality agreement binds the employee or consultant to protect
proprietary information disclosed hereunder to the same extent (or greater) as
required by this Article, then it shall be sufficient for the employing party to
(i) notify such employees or consultants of the fact that information disclosed
hereunder is governed by such confidentiality agreements and (ii) identify to
such employees the information which is so governed. Each party shall be
responsible for ensuring compliance with these obligations by such party's
Affiliates, employees, consultants, agents and subcontractors. Each party shall
use a similar effort to that which it uses to protect its own most valuable
trade secrets or proprietary information to ensure that its Affiliates,
employees, consultants, agents and subcontractors do not disclose or make any
unauthorized use of trade secrets or proprietary information of the other party
hereto. Each party shall notify the other promptly upon discovery of any
unauthorized use or disclosure of the other's trade secrets or proprietary
information. Each party agrees that upon termination of this Agreement, each
party shall return and/or destroy (and certify such destruction to the other
party) all confidential and proprietary information of the other to such other
party, except as may be required by law or regulation and except that each party
may retain one (1) copy for archival purposes and resolution of disputes.
9.2 The obligation of confidentiality and non-use contained in
this Agreement shall not apply to the extent that (a) the party who has received
information (the "Recipient") is required to disclose information by order or
regulation of a governmental agency or a court of competent jurisdiction or (b)
the Recipient can demonstrate that (i) the disclosed information was at the time
of such disclosure by the Recipient already in the public domain or later
entered the public domain other than as a result of actions of the
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
10.
<PAGE> 11
Recipient, its Affiliates, employees, agents or subcontractors in violation
hereof; (ii) the disclosed information was rightfully known by the Recipient or
its Affiliates (as shown by its written records) prior to the date of disclosure
to the Recipient in connection with the negotiation, execution or performance of
this Agreement; (iii) the disclosed information was received by the Recipient or
its Affiliates from a source unrelated to any party to this Agreement and not
under a duty of confidentiality to the other party; or (iv) the information can
be shown to have been independently developed by the Recipient, its Affiliates,
employees, agents or subcontractors, without the aid, application or use of any
disclosed information hereunder, or (c) disclosure is made to the appropriate
Regulatory Authorities (including, but not limited to, the FDA) as part of such
Regulatory Authorities' product license review or approval process, or (d)
disclosure is made to Affiliates, employees, consultants, agents or
subcontractors or purchasers in connection with the transactions contemplated by
this Agreement, provided such disclosures are made subject to restrictions
identical in substance to those contained in Section 9.1 above, or with respect
to information provided to purchasers of Product hereunder, information that is
necessary (in the reasonable discretion of GENSIA SICOR) for use of the Product,
provided that in each instance Recipient takes advantage of any available
protective provisions regarding such disclosures of confidential information. In
addition, each of the parties hereto agrees to keep confidential the existence
of this Agreement, unless such existence otherwise becomes known pursuant to
this paragraph, and except to the extent that disclosure is required by law or,
in the case of PURCHASER, to actual or potential investors of PURCHASER, or, in
the case of GENSIA SICOR, to the second source referred to in Section 3.1 above.
9.3 From the Effective Date, PURCHASER shall be entitled to
receive from GENSIA SICOR (and SICOR, and GENSIA SICOR shall cause SICOR to
provide) all confidential and proprietary information necessary in PURCHASER's
reasonable judgment for PURCHASER to comply with its obligations set forth
herein and to determine GENSIA SICOR's (and SICOR's) ability to comply with its
obligations set forth herein and the accuracy of GENSIA SICOR's (and SICOR's)
prior representations regarding Product.
9.4 The parties acknowledge and agree that all information,
technology, materials, know how, regulatory filings and permissions (except
where prohibited by law or regulation) developed or prepared by or on behalf of
PURCHASER in connection with this Agreement shall be and remain the confidential
and proprietary information of PURCHASER.
ARTICLE 10
TRADEMARKS
This Agreement does not constitute a grant to either party of any
property right or interest in or license, whether express or implied, to any
party's trademarks.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
11.
<PAGE> 12
ARTICLE 11
ADVERSE REACTION REPORTING
11.1 Subject to Section 2.2 above, each party agrees that
throughout the duration of this Agreement it will notify the other party (and
GENSIA SICOR shall cause SICOR to do the same) (i) immediately with respect to
any information concerning any serious or unexpected complaint anywhere
involving the possible failure of the Product to meet any specifications, and
any serious or unexpected side effect, injury, toxicity or sensitivity reaction
or any unexpected incidents and the severity thereof associated with the
distribution of the Product, whether or not determined to be attributable to the
Product, and (ii) within a reasonable period of time that is at least consistent
with applicable regulatory guidelines with respect to any other complaints.
11.2 Subject to Section 2.2, PURCHASER and GENSIA SICOR shall
(and GENSIA SICOR shall cause SICOR to) immediately notify the other party (and
GENSIA SICOR shall cause SICOR to do the same) of any information it receives
regarding any threatened or pending action, inspection or communication by or
from a concerned regulatory agency which may affect the safety or efficacy
claims of the Product or the continued marketing of the Product. Upon receipt of
such information, the parties shall consult in an effort to arrive at a mutually
acceptable procedure for taking appropriate action.
11.3 If at any time or from time to time any regulatory agency
having jurisdiction in the Territory requests either party to recall the Product
or a Cyclosporine Formulation due to a defect in the manufacture, formulation,
processing, packaging or labeling of the Product or a Cyclosporine Formulation
or for any reason whatsoever, the party to whom such request is made shall
immediately notify the other party. The recall shall be carried out by PURCHASER
in as expeditious a manner as reasonably possible.
ARTICLE 12
WARRANTY AND LIMITATIONS
12.1 EXCEPT AS EXPRESSLY PROVIDED HEREIN, GENSIA SICOR MAKES NO
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTS OF
MERCHANTABILITY. Subject to the following provisions of this Article 12, GENSIA
SICOR shall cause SICOR to warrant that all Product at the time title to such
Product passes to the PURCHASER (A) is of good and merchantable quality,
conforms to the Q/C Specifications, and has been manufactured in accordance with
all applicable regulatory requirements (including, without limitation all
current Good Manufacturing Practices), as provided by the Regulatory Authorities
of the Territory and the jurisdiction in which it is manufactured, (B) shall
have, at least, minimum shelf life initially to be * * *, and (C) that Product
performance/potency/efficacy throughout the shelf life period shall be within
the Q/C Specifications so long as Product is properly stored as per
specifications set forth in Exhibit 2. In that regard, GENSIA SICOR acknowledges
(and SICOR through GENSIA SICOR acknowledges) that any
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
12.
<PAGE> 13
change, deviation from or other modification to the manufacturing process,
facilities or materials reviewed and, where required, approved by the
appropriate Regulatory Authorities, may require additional approval and/or
review from such authority, and that the manufacturing process, facilities and
materials that are the subject of such review and/or approval, constitute a
material part of the Q/C Specifications and other applicable regulatory
requirements covered by this warranty. Except with respect to claims relating to
the performance/potency/efficacy of the Product throughout the shelf-life
specified above, claims that any given shipment of Product does not meet such
Q/C Specifications or otherwise fails the requirements set forth in this Article
12 shall be made by PURCHASER to GENSIA SICOR in writing within * * * after
discovery by PURCHASER that such Q/C Specifications or other requirements have
not been met.
12.2 If PURCHASER claims that any shipment of Product did not
conform to the warranties set forth in Section 12.1, conform to the Q/C
Specifications or other requirements hereunder, GENSIA SICOR (through SICOR)
shall conduct or have conducted an assay of its retained samples from such
shipment. If GENSIA SICOR agrees with PURCHASER's claim, GENSIA SICOR (through
SICOR) at its option shall either replace such shipment of Product or give
credit for payment if such payment has already been made by PURCHASER for such
shipment including any related reasonable expenses to PURCHASER. If the parties
do not agree on PURCHASER's claim, then the parties shall designate by mutual
agreement a third party laboratory to make such determination from samples
obtained from the batch or other quantity shipped. The decision of the third
party laboratory shall be binding. Should such laboratory confirm PURCHASER's
claim, GENSIA SICOR (through SICOR) may exercise the option described above in
this Section 12.2 should such laboratory find no basis for PURCHASER's claim,
then PURCHASER shall bear the costs of the third party laboratory and reasonable
costs incurred by GENSIA SICOR (through SICOR) for conducting an assay of
retained samples. If PURCHASER identifies Product that it believes does not
conform to the warranty set forth in this Article 12, PURCHASER may withhold
payment to GENSIA SICOR (and SICOR), or in the case of Product supplied
hereunder into the United States, to VINCHEM of any amount due in respect of
such Product and deposit such withheld payment in a * * * certificate of deposit
account with Silicon Valley Bank, until such time as the parties have determined
whether such Product conforms to the warranty described in this Article 11, or
PURCHASER receives replacement Product that conforms to such warranty. In the
event that the subject Product is determined to be conforming, GENSIA SICOR
shall receive all amounts in such certificate of deposit account.
12.3 Subject to Section 12.5 below, GENSIA SICOR shall (and
GENSIA SICOR shall cause SICOR to) indemnify PURCHASER, and VINCHEM in the case
of Product supplied hereunder into the United States, from and against all or
any actions, proceedings, costs, claims, demands, liabilities and/or third party
expenses (including but not limited to reasonable attorneys' fees and expenses)
arising out of any breach of the warranties made in this Article 12 or the
representations and warranties set forth in Section 2.3.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
13.
<PAGE> 14
12.4 Subject to Sections 12.3 and 12.5 hereof, PURCHASER shall
indemnify GENSIA SICOR (and SICOR), and VINCHEM in the case of Product supplied
hereunder into the United States, from and against all or any actions,
proceedings, costs, claims, demands, liabilities and/or third party expenses
(including but not limited to reasonable attorneys' fees and expenses) arising
out of the development, manufacture, use or sale of the Cyclosporine
Formulations by PURCHASER.
12.5 In the event of any claim being made against a party hereto
("the Indemnified Party") for which the other party (the "Indemnifying Party")
has agreed to indemnify the Indemnified Party pursuant to this Article 12, the
Indemnifying Party shall be promptly notified thereof and may, in its discretion
and at any time, assume and control all negotiations for the settlement of the
same and any litigation (including, but not limited to, the defense of any
claim) that may arise therefrom. The Indemnified Party shall provide such
assistance with respect to any settlement or litigation efforts by the
Indemnifying Party as the Indemnifying Party may reasonably request. Subject to
the other provisions of this Section 12.5, the Indemnifying Party may, at its
sole expense, participate in the defense of any claim hereunder with counsel of
its own choice.
12.6 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY
OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY.
ARTICLE 13
TERM AND TERMINATION
13.1 This Agreement shall take effect for the Territory as of the
Effective Date and shall continue in effect for a period of * * * years
following * * * by a * * * (the " * * * ") and shall automatically renew for an
additional * * * year period, subject to notice from one of the parties hereto
to the contrary given no later than the * * * anniversary of the * * * unless
terminated earlier according to Sections 13.2 or 13.3 hereinafter; provided,
however, that, if, at the * * * anniversary of the * * *, GENSIA SICOR
demonstrates to the reasonable satisfaction of PURCHASER, that SICOR and GENSIA
SICOR cannot, taken together, as a result of substantially changed market
conditions, * * *, the parties shall meet and confer in good faith as to how to
address such situation, which may allow for, if the disposition of Proprietary
Rights at such time so permits, * * * or * * * from * * * and * * * of the * *
*. In addition, notwithstanding anything to the contrary, PURCHASER's * * * and
* * * described in Articles 2 and 3, shall * * * on the * * * anniversary of the
* * *.
13.2 This Agreement may be terminated by either party, in the
event the other substantially fails to perform or otherwise substantially
breaches any of its material obligations under this Agreement, by giving notice
of its intent to terminate and stating the grounds therefor. The party receiving
the notice shall have * * * days from the date
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
14.
<PAGE> 15
of receipt thereof to commence good faith efforts to cure the failure or breach,
which failure or breach shall in any event be cured within * * * days of notice
thereof. In the event such breach is not cured within the time period set forth
herein, then this Agreement shall, without any further action, terminate at the
end of the applicable period.
13.3 This Agreement may be terminated by GENSIA SICOR or
PURCHASER upon * * * days notice upon the filing of a petition in bankruptcy,
insolvency or reorganization against or by the other party, or such other party
going into receivership, and such petition is not dismissed within * * * days
thereafter.
13.4 In addition, anything herein to the contrary
notwithstanding, the following provisions of this Agreement shall survive
termination of this Agreement with respect to Product delivered or Technical
Information and business plans disclosed prior to termination: (Articles 6, 8,
9, 11-15 and Sections 2.1) and for Product ordered pursuant to Section 14.5, in
addition to the foregoing Articles and Sections: (Section 6.1 and 6.2).
13.5 Upon termination of this Agreement, PURCHASER shall be
permitted to use the Product which has been ordered by it in good faith from
GENSIA SICOR in accordance with the terms of this Agreement prior to
termination; provided that PURCHASER shall be obliged to make all payments to
GENSIA SICOR required under this Agreement for the Product so delivered, in
accordance with the pricing and payment provisions of this Agreement which shall
be deemed to continue in force following termination of this Agreement to the
extent necessary for the purposes of this Section 13.5. In the event that this
Agreement is terminated by GENSIA SICOR for a breach by PURCHASER, GENSIA SICOR
shall be permitted to deliver any Firm Order given prior to such termination,
and if such Product is otherwise made in conformance with this Agreement,
PURCHASER agrees to accept such Product.
ARTICLE 14
OPTION
14.1 Option. In the event (i) that SICOR is unable to supply all
ordered quantities of Product to PURCHASER as a result of a Force Majeure, or
(ii) that SICOR for any reason refuses or is otherwise unable to supply Product
in accordance with the terms of this Agreement, or (iii) of the direct or
indirect acquisition of substantially all of SICOR or GENSIA SICOR's assets or
of a controlling interest in SICOR or GENSIA SICOR by any of the parties
identified on Exhibit 8 hereto, or any of their Affiliates (each of the
foregoing, a "Transfer Event"), and, if the Transfer Event falls under (and only
under) clause (ii) above, and SICOR does not cure such failure within * * * days
from the date such Transfer Event commences and, if the Transfer Event falls
under (and only under) clause (i) above, SICOR is not diligently pursuing such a
cure within * * * days from the date such Transfer Event commences, PURCHASER
shall have the option, in its sole discretion (the "Option") to (A) * * *
(subject to reversion as set forth in Section 14.4 hereof) to * * * (including,
but not limited to, all * * * in and to the * * *) * * * and * * * necessary or
useful to * * *, the * * *, and as it is then
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
15.
<PAGE> 16
being manufactured, (B) receive * * * reasonably required by PURCHASER, to * * *
and * * *, (C) * * *, and (D) acquire from * * * and * * * the * * * to * * *
the * * *.
In connection with the foregoing, upon the occurrence of a Transfer Event (i)
PURCHASER shall be permitted to * * * upon reasonable notice, (ii) SICOR will *
* * and * * * for reasonable consultation * * * and (iii) PURCHASER shall be
permitted to * * * of all * * * and other * * * related to the * * *. In that
regard, (i) GENSIA SICOR and SICOR each hereby authorizes (and shall advise the
appropriate * * * in the * * * and * * *) PURCHASER to have access to (including
the right to make copies thereof) the * * * upon notice to such * * * by
PURCHASER that a Transfer Event has occurred, (ii) GENSIA SICOR and SICOR shall,
upon the occurrence of a Transfer Event, promptly provide to PURCHASER * * * of
the * * * and all other * * *, and (iii) upon the occurrence of a Transfer
Event, GENSIA SICOR, SICOR and PURCHASER shall * * * providing that * * * and *
* * identified on Exhibit 9 hereto are * * * effective upon exercise of the
Option by PURCHASER.
14.2 Option Period. Unless otherwise agreed, PURCHASER shall have
the irrevocable right to exercise the Option * * * upon the occurrence of a
Transfer Event, or upon termination of this Agreement by PURCHASER pursuant to
Section 13.2 hereof.
14.3 Financial Terms. Unless otherwise agreed, financial terms
for the licenses, leases and assets transferred pursuant to Section 14.1 shall
be as follows:
(i) PURCHASER shall pay GENSIA SICOR * * *
percent ( * * * %) of * * *, subject to reduction until PURCHASER has recovered
its costs of * * * (including, but not limited to, * * * ), and has reduced its
manufacturing costs with respect to the Product for a period of * * * continuous
months, to the level of SICOR's * * * as measured over the * * * month period
prior to the date of the Transfer Event.
(ii) PURCHASER shall receive, free of charge, the
* * * of the equivalent of * * * of SICOR directly involved in the manufacture,
purification and quality control of Product for a period of * * * months for the
purpose of * * *. During the same * * * month period, at no additional cost to
PURCHASER, such * * * shall be * * *. Thereafter, PURCHASER shall * * * not to
exceed * * * for any additional * * *.
(iii) Purchaser may purchase the * * * and
* * * from GENSIA SICOR and its suppliers at * * *.
(iv) Purchaser shall have the option to acquire
* * * at * * *.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
16.
<PAGE> 17
14.4 Reversion. In the event PURCHASER exercised the Option due
to a Force Majeure event, and GENSIA SICOR is able to cure such Force Majeure
event, on the date GENSIA SICOR demonstrates such capability to PURCHASER (the
"Reversion Date"), the license granted under Section 14.1 hereof shall * * * and
GENSIA SICOR shall have the right to * * * in accordance with the terms of the
Agreement; provided, however, that the purchase price for the Product * * *
during the time period during which the Option has been exercised, which * * *
following the Reversion Date. On the Reversion Date, the parties shall meet,
confer and negotiate in good faith whether such * * *.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 No Assignment.
Neither party shall transfer or assign this Agreement, in whole
or in part, without the prior written consent of the other; except that either
party may, without such consent, assign and delegate this Agreement to any
Affiliate or upon a merger, reorganization or sale of substantially all of its
assets; provided, however, that in the event of a merger, reorganization or sale
of substantially all of the assets of GENSIA SICOR or SICOR, any * * *, and any
amounts paid to GENSIA SICOR pursuant to Section 6.3 as advances on Firm Orders
shall be repaid to PURCHASER immediately. Subject to the foregoing restrictions
on assignment, this Agreement shall inure to the benefit of and bind the
successors and assigns of each of the parties.
15.2 Notices.
Notices and other communications required or called for under
this Agreement shall be in writing, shall be transmitted by certified mail,
postage prepaid, and shall be deemed delivered upon receipt by the party to whom
it is addressed.
In the case of PURCHASER such communications shall be addressed
to:
SANGSTAT MEDICAL CORPORATION
1505-B Adams Drive
Menlo Park, California 94025
USA
Attention: Chief Executive Officer
In the case of GENSIA SICOR, such communications shall be
addressed to:
GENSIA SICOR INC.
9360 Towne Centre Drive
San Diego, California 92121
Attention: Executive Vice President
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
17.
<PAGE> 18
with a copy to:
General Counsel
In the case of SICOR, such communications shall be addressed to:
SICOR S.p.A.
via Senato 19
20121 Milan
ITALY
Attention: Managing Director
In the case of VINCHEM, such communications shall be addressed
to:
VINCHEM, INC.
301 Main Street
P.O. Box 639
Chatham, New Jersey 07928
U.S.A.
Attention: Vincent Ursino
or to the attention of such other individual or to such other
address as either party may give to the other in writing.
15.3 Entire Agreement.
This Agreement, as amended and restated, constitutes the entire
agreement and understanding between the parties regarding the subject matter
hereof and no promises, representations, conditions, provisions or terms other
than those set forth in this Agreement exist. However, the Agreement, as in
effect on the Effective Date, shall remain effective with respect to the rights
and obligations of the parties until the Restatement Date, and shall thereafter
be superseded by this Restated Agreement. Any other previous understandings,
agreements and representations between the parties, written or oral with respect
to its subject matter are superseded. This Agreement may not be changed,
modified, or amended except by a writing signed by parties.
15.4 No Waiver.
The failure of either party to enforce at any time for any period
the provisions hereof shall not be construed to be a waiver of such provisions
or of the right of such party thereafter to enforce each such provision.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
18.
<PAGE> 19
15.5 Severance.
If any provision of this Agreement should be or become fully or
partly invalid or unenforceable for any reason whatsoever or violate any
applicable law, this Agreement is to be considered divisible as to such
provision and such provision is to be deleted from this Agreement, and the
remainder of this Agreement shall be deemed valid and binding as if such
provision were not included. A suitable provision which, as far as legally
possible, comes nearest to what the parties desired according to the sense and
purpose of this Agreement had this point been considered when concluding this
Agreement shall be substituted for any such provision deemed to be deleted.
15.6 Arbitration.
Any and all disputes between the parties relating in any way to
the entering into of this Agreement, the validity, construction, meaning,
enforceability, or performance of this Agreement or any of its provisions, or
the intent of the parties in entering into this Agreement, or any of its
provisions, or any dispute relating to patent validity or infringement arising
under this Agreement shall be settled by arbitration. Such arbitration shall be
conducted in San Francisco, California, in English, and in accordance with the
commercial rules of the American Arbitration Association, with one (1)
arbitrator. If the parties cannot agree on a arbitrator within thirty (30) days
of the date of receipt by a party hereto of a notice of intention to arbitrate,
then the presiding judge of the Superior Court of the County of San Francisco
shall select the arbitrator. Reasonable discovery as determined by the
arbitrator shall apply to the arbitration proceeding.
The law of the State of California shall apply to the arbitration
proceedings without regard to the conflict of laws provisions thereof. Judgment
upon the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. The successful party in such arbitration, in addition to
all other relief provided, shall be entitled to an award of all its reasonable
costs and expenses including attorney costs.
Notwithstanding the foregoing, either party may seek interim
injunctive or other equitable relief from a court of competent jurisdiction
pending completion of arbitration proceedings.
15.7 Governing Law.
All matters affecting the interpretation, validity and
performance under this Agreement shall be governed by the internal laws of the
State of California without regard for its conflict of laws principles.
15.8 Headings.
The Articles and article headings included in this Agreement are
for reference purpose and shall not affect the meaning or interpretation of this
Agreement.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
19.
<PAGE> 20
15.9 Force Majeure.
If and to the extent that either party hereto is prevented, by
circumstances not now reasonably foreseeable and not within its reasonable
ability to control which shall include (but not by way of limitation) delays in
the review process (but not through a fault of either party) occasioned by a
Regulatory Authority or any other government agency having authority over the
subject matter of this Agreement (but which shall not include compliance with
any directives or requests by such agencies), performing any of its obligations
under this Agreement and promptly so notifies the other party full particulars
of the circumstances in question, then the party affected shall be relieved of
its obligations to the other for failure to perform such obligations, but shall
nevertheless use its best efforts to complete full performance thereof without
avoidable delay, and pending such resumption shall consult the other party and
shall permit and shall use its best efforts to facilitate any efforts the other
party make to effect the performance of such obligations by other means.
15.10 Insurance. GENSIA SICOR maintain a comprehensive general
liability insurance policy providing sufficient extensive coverage for personal
injury, bodily injury, property damages, or such coverage as is usual and
customary in the pharmaceutical industry. GENSIA SICOR shall also provide
adequate coverage for product liability insurance for a minimum of * * * (U.S.),
and that said policy includes human in vivo use of said Product approval by the
applicable Regulatory Authorities in all locations, including but not limited to
the * * *. A certificate of said product liability insurance shall be attached
hereto as Exhibit 5.
15.11 * * * . PURCHASER agrees to notify GENSIA SICOR (on behalf
of GENSIA SICOR, VINCHEM and SICOR) as soon as the Cyclosporine Formulation is
set forth by PURCHASER and in no event later than * * * days after the
Restatement Date. Within such * * * day period, the PURCHASER and GENSIA SICOR
(on behalf of GENSIA SICOR, VINCHEM and SICOR) shall each cause its respective *
* * or in the case of GENSIA SICOR if so desired by GENSIA SICOR, * * * (each of
which * * * is reasonably acceptable to the other party) to * * * (i.e., the
subject Cyclosporine Formulation, in the case of PURCHASER, and the Product, in
the case of GENSIA SICOR) under conditions of strict confidentiality with regard
to * * *, and to complete such * * * and * * * * * * within such * * * day
period. In the event that either * * * (or * * *) that there are * * * to * * *
will * * *, then PURCHASER and GENSIA SICOR shall jointly * * *. If (and only
if) * * * with respect to * * *, then each party shall have thirty (30) days to
* * *). In the event * * * pursuant to this Section * * *, all * * * pursuant to
Section * * * shall be * * * within * * * business days and, at PURCHASER's
option, * * * in Exhibit * * * shall be canceled.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
20.
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused these presents
to be signed by their respective corporate officers, duly authorized as of the
day and year first above written.
SANGSTAT MEDICAL CORPORATION GENSIA SICOR INC.
By: /s/ Philippe Poulelty By: /s/ David P. Hatt
--------------------------------------- -----------------------------
Name: Name:
Title: Chairman and Chief Executive Officer Title: President and CEO
Date: Date: April 2, 1997
VINCHEM, INC. SICOR S.p.A.
By: By:
--------------------------------------- -----------------------------
Name: Vincent Ursino Name:
-----------------------------
Title: President Title:
-----------------------------
Date:
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
21.
<PAGE> 22
EXHIBIT 1
PRODUCT
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-1
<PAGE> 23
EXHIBIT 2
QUALITY CONTROL SPECIFICATIONS
1. ALCO (through SICOR) shall manufacture the Product in full
compliance with all applicable cGMPs in each country in which Cyclosporine
Formulations of Product are intended to be sold or are sold. In addition,
PURCHASER will be informed immediately by telephone of any process exceptions
(whether or not authorized in advance by PURCHASER) and all regulatory agency
inspections or notices concerning or affecting any Product tendered hereunder or
the Product manufacturing process following tender of Product to PURCHASER. With
respect to any process exception not authorized in advance to PURCHASER, ALCO
(through SICOR) agrees to diligently and completely investigate and analyze the
cause of such exception and complete such investigation and analysis with
respect to such exception within * * * days of the first reported occurrence of
such exception. In addition, ALCO (through SICOR) agrees to provide PURCHASER
with copies of all reports prepared in connection with each investigation,
notice or process exception.
2. Attached hereto and incorporated herein are External
Specifications with which the Product tendered hereunder shall comply, except
for the following items: * * * specifications which the parties shall establish
by no later than * * * and with which the Product tendered hereunder shall
comply thereafter. In addition, the parties shall mutually agree on Internal
Specifications by no later than * * *, which shall be based on the manufacturing
experience for the Product through that date; the Internal Specifications
attached hereto shall serve as guidelines that ALCO (through SICOR) shall use
its commercially reasonable efforts to achieve, and which shall serve as a basis
for establishing the Internal Specifications, but which shall not otherwise have
any effect.
3. Records for each batch of Product tendered hereunder shall be
completed and audited in a manner reasonably satisfactory to PURCHASER, and
according to cGMPs, within * * * business days from the completion date of such
batch. Such batch records shall include * * *. Such batch records shall be
deemed to be confidential information. Promptly following completion of such
audit, ALCO (and SICOR) shall certify in writing to PURCHASER that such records
have been completed and audited with cGMPs.
4. With each batch of Product ordered hereunder, ALCO (through
SICOR) shall submit to PURCHASER a certificate of analysis in form and content
reasonably acceptable to PURCHASER listing test results and audit confirmation
for each such batch in the manner more particularly described below. All
quantities of Product shipped to PURCHASER shall be properly labelled according
to cGMPs and as reasonably instructed by PURCHASER. With respect to each batch
delivered
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2
<PAGE> 24
hereunder, PURCHASER shall perform confirmatory testing and review all records
within * * * days of receipt of such Product at PURCHASER's processing facility
to determine whether or not it complies with the Q/C Specifications. PURCHASER
may reject all Product that fails to meet the Q/C Specifications by giving ALCO
(and/or SICOR) written notice within such * * * day period. If PURCHASER fails
to notify ALCO (and/or SICOR) of any nonconformity within such * * * day period,
PURCHASER shall be deemed to have accepted the Product. No payment for a batch
of a Product shall be due or owing unless PURCHASER has accepted such Product.
5. If PURCHASER claims that any batch of Product tendered
hereunder fails to meet the Q/C Specifications, and the parties do not otherwise
mutually agree, the parties shall refer to the procedure set forth in Article 11
of the Agreement.
6. PURCHASER shall have the right, but not the obligation, to
consult with respect to the development of SICOR's quality control procedures
and records pertaining to the Product tendered hereunder.
7. PURCHASER reserves the right to, from time to time audit and
inspect SICOR's facilities upon reasonable notification to ensure adherence to
cGMP. PURCHASER shall have the right to audit all Production and Quality Control
areas and related departmental and Product documentation.
8. ALCO (through SICOR) agrees to promptly provide PURCHASER with
copies of any reports, citations or other materials relating to such
investigations that are provided to ALCO (and/or SICOR) by Regulatory
Authorities or other purchasers of Product including, all but not limited to,
responses to Regulatory Authorities of notices, inspections, reports or
citations thereto, said items to be considered to be confidential information
for the purposes of this Agreement. PURCHASER shall have an opportunity to
review such reports and conclusions and provide in such instances
recommendations with respect to manufacture of the Product to be tendered
hereunder.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2
<PAGE> 25
SPECIFICATIONS
Internal - for us and the manufacturer only
External - for the regulatory agencies
<TABLE>
<CAPTION>
Test Unit Internal Spec. External Spec.
(for QC Release) (Regulatory Agency)
<S> <C> <C> <C>
Appearance * * * * * *
Identification
* * * * * * * * *
* * * % * * * * * *
* * * %
* * * % * * * * * *
* * * % * * * * * *
* * *
* * * % * * * * * *
* * * % * * * * * *
* * *
* * * ppm * * * * * *
* * * ppm * * * * * *
* * * ppm * * * * * *
* * * ppm * * * * * *
* * * ppm * * * * * *
* * * ppm * * * * * *
* * * (greek mu) * * * * * *
* * * g/mL * * * * * *
* * * * * * * * *
* * * *
** * * *
*** * * *
**** * * *
***** * * *
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2
<PAGE> 26
<TABLE>
<CAPTION>
CERTIFICATE OF ANALYSIS
Certificate n.: * * * Page 1/
==========================================================================================================
<S> <C>
Product: CYCLOSPORINE Batch: 6694E
- ----------------------------------------------------------------------------------------------------------
Conforms to: * * *
Code: * * * Spec.: * * * Ref.: * * *
Manufacturing date: * * * Expiration date: __/__/__
- ----------------------------------------------------------------------------------------------------------
DESCRIPTION
* * *
- ----------------------------------------------------------------------------------------------------------
LIMITS
TESTS: UNIT RESULTS MIN. MAX.
- ----------------------------------------------------------------------------------------------------------
APPEARANCE * * *
IDENTIFICATION
* * * * * * * * *
* * * % * * * * * *
* * * % * * *
* * * ppm * * * * * *
* * * ug/mg * * * * * * * * *
* * * % * * * * * *
* * *
* * * ppm * * *
* * * ppm * * *
* * * ppm * * * * * *
* * * ppm * * *
* * * ppm * * *
* * * (greek mu) * * *
* * * g/mL * * *
- ----------------------------------------------------------------------------------------------------------
* Calculated on the * * *.
Notes:
- ----------------------------------------------------------------------------------------------------------
APPROVED Date: * * * Q.C. Manager * * *
==========================================================================================================
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2
<PAGE> 27
EXHIBIT 2-A
VALIDATE SCALED-UP PROCESS
(to be provided by ALCO i.e. table of contents)
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2A
<PAGE> 28
Table of Contents
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-2A
<PAGE> 29
EXHIBIT 3
PRELIMINARY PACKAGING SPECIFICATIONS
[IN BULK]
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-3
<PAGE> 30
EXHIBIT 4
1. Price to PURCHASER for commercial Product to be * * * $* * * per * * *
2. Price to PURCHASER for commercial Product to be * * * $* * * per * * *
Notwithstanding the foregoing, the parties hereby agree that in the event that
PURCHASER deems it necessary (whether by * * * or otherwise) to establish (or
thereafter reduce) the * * * of a * * * in a * * * for a * * * to a price that
is at least * * * in the calendar quarter immediately preceding * * *, the
transfer price for the Product shall be * * * in the following manner:
<TABLE>
<CAPTION>
Percentage * * *
from the * * * Transfer Price
- ------------------- --------------
<S> <C>
* * * $ * * *
* * * * * *
* * * * * *
</TABLE>
In the event that * * * at more than * * *, PURCHASER and GENSIA SICOR agrees in
good faith to negotiate the prices for the Product sold to PURCHASER to take
into account such * * * and in any event GENSIA SICOR agrees to sell Product to
PURCHASER at * * *. For the purposes of this Exhibit 4, "ASP" shall mean * * *.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-4
<PAGE> 31
EXHIBIT 5
CERTIFICATE OF INSURANCE
[TO BE ATTACHED FOLLOWING ISSUANCE OF THE MODIFIED POLICY]
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-5
<PAGE> 32
EXHIBIT 6
EXCLUSIVE TERRITORY
* * *
* * *
* * *
* * *
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-6
<PAGE> 33
EXHIBIT 7
FIRM ORDERS
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-7
<PAGE> 34
EXHIBIT 8
* * *
* * *
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-8
<PAGE> 35
EXHIBIT 9
* * *
* * *
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-9
<PAGE> 36
EXHIBIT 10
MINIMUM PURCHASE REQUIREMENTS
<TABLE>
<CAPTION>
Year* Quantity
- ----- --------
<S> <C>
* * * * * *
* * * * * *
* * * and thereafter during such period
of time as * * * * * *
</TABLE>
*commencing on the * * * of the date * * *. Notwithstanding the foregoing, in
the event that * * *, PURCHASER's * * * shall * * *.
**provided, however, if * * *, then, at PURCHASER's option and upon notice to
GENSIA SICOR, (i) * * * specified in * * * shall be * * * of the Restatement
Date, or (ii) PURCHASER's * * *.
If * * *, the * * * set forth in * * * shall be re-negotiated
in good faith.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-10
<PAGE> 37
EXHIBIT 11
Clause (v) of Section 2.3 shall not apply to the following * * *:
(i) a * * * that * * *, but only to the extent that such * * *
already * * *, and only in the * * *;
(ii) a * * * whose principle place of business (on the Restatement
Date) is * * *, that * * *;
(iii) * * *, but only in * * * and only the currently approved * * *,
and the parties shall negotiate in good faith to explore entering
into * * *.
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-11
<PAGE> 38
SCHEDULE 1
MANUFACTURING (INCLUDING PURIFICATION) * * *
*CONFIDENTIAL TREATMENT REQUESTED, CONFIDENTIAL PORTION HAS
BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
E-12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONDENSED CONSOLIDATED BALANCE SHEET OF JUNE 30 1997/1996 AND THE CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS, JUNE 30, 1997/1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 74,207,331
<SECURITIES> 33,460,638
<RECEIVABLES> 1,572,691
<ALLOWANCES> 0
<INVENTORY> 1,510,363
<CURRENT-ASSETS> 111,106,513
<PP&E> 3,286,149
<DEPRECIATION> 1,900,529
<TOTAL-ASSETS> 113,007,122
<CURRENT-LIABILITIES> 4,077,888
<BONDS> 0
0
0
<COMMON> 158,453,274
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 113,007,122
<SALES> 711,550
<TOTAL-REVENUES> 711,550
<CGS> 790,508
<TOTAL-COSTS> 7,722,790
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,514
<INCOME-PRETAX> (5,444,409)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,444,409)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,444,409)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> 0
</TABLE>
