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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-22769
LEUKOSITE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3173859
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
215 FIRST STREET 02142
CAMBRIDGE, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (617) 621-9350
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--------- -----
The number of shares outstanding of each of the registrant's classes of
common stock as of:
Date Class Outstanding Shares
November 3, 1998 Common Stock, $.01 par value 11,900,842
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LEUKOSITE, INC.
( A Development Stage Company)
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
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Page
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PART I FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as
December 31, 1997 and September 30, 1998 3
Condensed Consolidated Statements of Operation
for the three and nine months ended September 30, 1997 and
1998, and for the Period from Inception
(May 1, 1992) to September 30, 1998 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1998, and for the Period
from Inception (May 1, 1992) to September 30, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
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PART I FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
LeukoSite, Inc. and Subsidiary
(A Development Stage Company)
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, 1997 September 30,1998
--------------------- ---------------------
(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 10,587,873 $ 7,164,249
Marketable securities 14,569,100 19,298,829
Other current assets 408,811 874,723
------------ ------------
Total current assets 25,565,784 27,337,801
------------ ------------
Property and equipment, net of accumulated
depreciation and amortization 2,439,289 3,032,194
------------ ------------
Other assets 27,090 25,873
------------ ------------
Total assets $ 28,032,163 $ 30,395,868
------------ ------------
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 2,063,410 $ 3,654,706
Obligation to fund L&I Joint Venture (Note 4) 1,770,310 1,520,498
Deferred revenue 1,161,250 2,601,231
Deferred rent, current portion 243,171 243,171
Current portion of capital lease obligations 866,835 633,471
------------ ------------
Total current liabilities 6,104,976 8,653,077
------------ ------------
Deferred rent, net of current portion 222,907 40,529
------------ ------------
Capital lease obligations, net of current portion 896,578 724,434
------------ ------------
Stockholders' equity:
Preferred stock $.01 par value-
Authorized-5,000,000 share
Issued and outstanding-no shares -- --
Common stock, $.01 par value-
Authorized-25,000,000 shares
Issued and outstanding-9,875,741 shares at
December 31, 1997 and 11,898,174
shares at September 30, 1998 98,758 118,983
Additional paid-in capital 53,294,367 65,239,791
Deficit accumulated during the development stage (32,585,423) (44,380,946)
------------ ------------
Total stockholders' equity 20,807,702 20,977,828
------------ ------------
Total liabilities and stockholders' equity $ 28,032,163 $ 30,395,868
------------ ------------
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3
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LeukoSite, Inc. and Subsidiary
(A Development Stage Company)
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Inception
(May 1, 1992)
Three Months Ended September 30, Nine Months Ended September 30, Through
1997 1998 1997 1998 September 30, 1998
---- ---- ---- ---- ------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Corporate collaborations $ 1,558,750 $ 2,201,920 $ 3,628,774 $ 6,479,586 $ 15,669,037
Government grants 50,948 175,233 256,370 590,577 1,250,806
------------- ------------- ------------- ------------- --------------
Total revenue 1,609,698 2,377,153 3,885,144 7,070,163 16,919,843
------------- ------------- ------------- ------------- --------------
OPERATING EXPENSES:
Research and development 3,053,638 6,057,468 8,505,075 14,997,469 49,167,589
General and administrative 371,879 555,454 1,107,441 1,872,147 7,184,229
------------- ------------- ------------- ------------- --------------
Total operating expenses 3,425,517 6,612,922 9,612,516 16,869,616 56,351,818
------------- ------------- ------------- ------------- --------------
LOSS FROM OPERATIONS ( 1,815,819) (4,235,769) ( 5,727,372) (9,799,453) (39,431,975)
OTHER INCOME (EXPENSE):
Equity in operations of joint ( 1,649,400) (937,351) ( 1,649,400) (2,922,256) ( 6,280,172)
venture
Interest income 235,031 392,941 529,825 1,039,935 2,709,944
Interest expense ( 39,027) ( 34,241) ( 122,384) ( 113,749) ( 768,743)
------------- ------------- ------------- ------------- --------------
NET LOSS $ (3,269,215) $ (4,814,420) $ (6,969,331) $ (11,795,523) $ (43,770,946)
------------- ------------- ------------- ------------- --------------
------------- ------------- ------------- ------------- --------------
NET LOSS PER COMMON SHARE
Basic and diluted $(2.32) $(.41) $(6.23) $(1.12)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Pro forma $ (.48) $(1.12)
------------- -------------
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SHARES USED IN COMPUTING NET LOSS
PER COMMON SHARE
Basic and diluted 1,460,104 11,862,108 1,216,761 10,554,312
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Pro forma 6,995,725 6,752,382
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</TABLE>
4
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LeukoSite, Inc. and Subsidiary
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Inception
Nine Months Ended (May 1, 1992)
September 30, through September 30,
---------------------------------- ----------------------
1997 1998 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (6,969,331) $ (11,795,523) $ (43,770,946)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock compensation expense -- -- 89,339
Depreciation and amortization 884,999 863,304 3,834,620
Equity in operations of joint venture 1,649,400 2,922,256 6,280,172
Change in operating assets and liabilities:
Other current assets (143,470) (465,912) (874,723)
Accounts payable and accrued expenses 1,220,762 1,591,296 4,221,408
Deferred revenue 1,575,000 1,439,981 2,601,231
Deferred rent (48,314) (182,378) 283,700
--------------- --------------- ---------------
Net cash used in operating activities (1,830,954) (5,626,976) (27,335,199)
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in marketable securities (10,923,111) (17,234,631) (55,298,712)
Proceeds from maturities of marketable securities 7,851,382 12,504,902 35,991,438
Investment in joint venture (652,500) (3,172,068) (4,759,674)
Purchases of property and equipment (432,388) (1,109,437) (2,944,225)
Decrease in other assets 436 1,217 (25,873)
--------------- --------------- ---------------
Net cash used in investing activities (4,156,181) (9,010,017) (27,037,046)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital leases (621,682) (752,280) (3,032,441)
Net proceeds from notes payable -- -- 2,086,312
Proceeds from redeemable convertible preferred stock,
net of issuance costs 3,819,506 -- 23,256,599
Proceeds from initial public offering, net of issuance
costs 15,297,036 -- 15,297,020
Issuance of common stock -- 11,731,366 15,701,366
Exercise of stock options 37,015 234,283 315,763
Issuance of convertible preferred stock,
net of issuance costs -- -- 7,911,875
--------------- --------------- ---------------
Net cash provided by financing activities 18,531,875 11,213,369 61,536,494
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH AND
EQUIVALENTS 12,544,740 (3,423,624) 7,164,249
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 4,430,507 10,587,873 --
--------------- --------------- ---------------
CASH AND EQUIVALENTS, END OF PERIOD $ 16,975,247 $ 7,164,249 $ 7,164,249
--------------- --------------- ---------------
--------------- --------------- ---------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest $ 122,384 $ 113,749 $ 982,356
--------------- --------------- ---------------
--------------- --------------- ---------------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Property and equipment purchased under capital
lease obligations $ 298,545 $ 346,771 $ 4,164,145
--------------- --------------- ---------------
--------------- --------------- ---------------
</TABLE>
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Operations and Basis of Presentation
LeukoSite, Inc. (the "Company") was incorporated on May 1, 1992. The Company
is engaged in the development of immunomodulatory therapeutics with
potential applications in inflammatory, autoimmune, and viral diseases and
cancer.
The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and include, in the opinion of
management, all adjustments, consisting of normal, recurring adjustments,
necessary for a fair presentation of interim period results. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that its disclosures are
adequate to make the information presented not misleading. The results for
the interim periods presented are not necessarily indicative of results to
be expected for the full fiscal year. These condensed financial statements
should be read in conjunction with the audited consolidated financial
statements and notes related thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997 filed with the Securities
and Exchange Commission.
2. Summary of Significant Accounting Policies
(a) Cash Equivalents and Marketable Securities
Cash equivalents are highly liquid investments with original maturities of
less than three months. Marketable securities consist of securities with
original maturities of greater than three months. The Company accounts for
cash equivalents and marketable securities in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115 "Accounting for Certain
Investments in Debt and Equity Securities." In accordance with SFAS No. 115,
the Company has classified its investments as held-to-maturity as the
Company has the positive intent and ability to hold such investments to
maturity. Accordingly, marketable securities are reported at amortized
cost, which approximates fair market value.
As of September 30, 1998 there were no material unrealized gains or losses
on any investments. Cash and cash equivalents and marketable securities
consisted of the following:
<TABLE>
<CAPTION>
December 31, 1997 September 30, 1998
<S> <C> <C>
Cash and cash equivalents:
Cash $ 1,373,786 $ 296,491
Money market funds 6,609,783 5,562,820
Corporate notes -- 500,054
Taxable auction securities 2,604,304 804,884
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$ 10,587,873 $ 7,164,249
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Marketable securities:
U.S. government agency obligations
(average maturity of 5 months) $ 6,094,401 $ --
Corporate bonds and notes (average
maturity of 5 and 7 months 8,474,699 19,298,829
respectively) ------------ -------------
$ 14,569,100 $ 19,298,829
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6
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(b) Net Loss per Common Share
In March 1997 the Financial Accounting Standards Board issued SFAS No. 128,
Earnings per Share. The Company adopted SFAS No. 128 effective December 15,
1997. Basic net loss per common share is computed on the weighted average
number of common shares outstanding. Diluted net loss per common share is
the same as basic net loss per common share as the inclusion of stock
options and warrants would be antidilutive. Pro forma net loss per common
share assumes the automatic conversion of all outstanding shares of
redeemable convertible preferred stock and convertible preferred stock into
common stock using the as-converted method, which occurred upon the closing
of the Company's initial public offering on August 15, 1997. In addition,
the net loss available to common stockholders for the three months and the
nine months ended September 30, 1997 has been adjusted to include $122,000
and $610,000, respectively, of dividends attributable to redeemable
convertible preferred stock.
3. Private Placement
In July 1998, the Company completed a private placement of 1,967,169 shares
of its common stock at $6 per share, for net proceeds of $11.7 million
after expenses of the offering.
4. Ilex Agreement
In May 1997 the Company and Ilex Oncology, Inc. (Ilex) entered into a joint
venture agreement that established a limited partnership for the purpose of
developing LDP-03 (CAMPATH-1H). Under the terms of the partnership, the
Company is required to fund 50% of the partnership's working capital
requirements. The joint venture expires in 2017, but provides for either
partner under certain circumstances to purchase the other partner's
ownership position of the joint venture after October 2000. Should either
party fail to fulfill its funding obligations, control of the joint
venture may change.
The Company accounts for its investment in the joint venture under the
equity method of accounting and records its share of the income or loss in
other income (expense). The Company is reimbursed by the joint venture for
certain costs incurred on behalf of the joint venture. For the nine months
ended September 30, 1998 the Company's share of the joint venture's recorded
loss was $2,922,256 and the Company had a funding liability of $1,520,498 to
the joint venture as of September 30, 1998. The Company charged the joint
venture $820,503 for costs incurred by the Company on behalf of the joint
venture.
The joint venture has entered into an agreement with a third party to
manufacture LDP-03. In connection with this agreement, the Company and Ilex
have guaranteed the payment of the obligations of the joint venture due
under the manufacturing agreement. As of September 30, 1998 the remaining
obligation was approximately $1.6 million.
5. MorphoSys
The Company entered into a two-year collaboration agreement with MorphoSys
AG (MorphoSys) in August 1998 to discover and develop therapeutic monoclonal
antibodies for inflammatory and autoimmune disorders. Under the terms of the
agreement, the Company received exclusive worldwide rights to develop and
commercialize antibody therapeutics resulting from the collaboration. The
Company made a technology access fee payment in August 1998 of $750,000.
The agreement calls for payments to be made to MorphoSys upon the
achievement of certain milestones as well as future royalties based upon
commercial sales of products developed under the collaboration.
7
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations and this Quarterly Report on Form 10-Q contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities and Exchange Act of 1934,
including but not limited, (i) statements about the adequacy of the Company's
capital resources, interest income and revenues from its collaboration
agreements to fund its operating expenses and capital requirements into 2000,
(ii) statements about the amount of capital expenditures that the Company
expects to incur in 1998 and (iii) certain statements identified or qualified by
words such as "anticipate," "plan," "believe," "estimate," "expect" and similar
expressions. Investors are cautioned that forward-looking statements are
inherently uncertain and that the Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Factors that could cause or contribute to
such differences include those discussed under the caption "Risk Factors" in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
OVERVIEW
The Company is a leader in the discovery and development of products based
upon the biology of leukocytes. Therapeutics developed using the Company's
technology may be used to treat inflammatory, autoimmune, and viral diseases
and cancer. The Company has been funded to date primarily through proceeds
from the sale of equity securities and funding from collaboration agreements.
To date, the Company has not received any revenue from the sale of products.
The Company has experienced operating losses since its inception and expects
that the activities required to develop and commercialize its products will
result in further operating losses for the next several years. As of
September 30, 1998 the Company had an accumulated deficit of approximately
$44.4 million.
In 1994, 1995 and 1996 the Company signed agreements with Warner-Lambert
Company for the discovery and development of small molecule antagonists to
the MCP-1, IL-8, CCR5 and CXCR4 receptors found on certain classes of
leukocytes. In January 1998 Warner-Lambert Company made a $1 million payment
related to the achievement of certain milestones associated with the
Company's CCR5 program. In July 1996 the Company signed an agreement with
Roche Bioscience for the discovery and development of monoclonal antibodies
and small molecule antagonists to the CCR3 receptor found on a certain class
of leukocytes. In April 1997 the Company signed an agreement with Kyowa Hakko
Kogyo Co., Ltd., for the discovery and development of small molecule
antagonists to the CXCR3 and CCR1 receptors found on certain classes of
leukocytes. In May 1997 the Company entered into a joint venture with Ilex
Oncology, Inc. for the development of LDP-03 (CAMPATH-1H) for the treatment
of chronic lymphocytic leukemia. In October 1997 the Company, Warner-Lambert
and Kyowa agreed to jointly pursue research and development of antagonists
that target MCP-1, IL-8, CCR1 and CXCR3. In December 1997 the Company entered
into a collaboration agreement with Genentech, Inc. for the development of a
monoclonal antibody therapeutic intended to be used in the treatment of
inflammatory bowel disease. In August 1998 the Company entered into a
collaboration agreement with MorphoSys AG for the discovery and development
of therapeutic monoclonal antibodies for inflammatory and autoimmune
disorders.
8
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RESULTS OF OPERATIONS
Revenues for the three and nine month periods ended September 30, 1998 and 1997.
For the three months ended September 30, 1998 revenues were $2,377,000
compared to $1,610,000 for the same period in 1997. The increase of $767,000
was primarily due to reimbursement by L&I Partners, L.P. for costs incurred
by the Company on behalf of the joint venture to develop CAMPATH-1H. To a
lesser extent the increase was a result of greater research funding from the
corporate collaboration with Warner-Lambert and from Small Business
Innovation Research ("SBIR") grants.
For the nine months ended September 30, 1998 revenues were $7,070,000
compared to $3,885,000 for the same period in 1997. The increase of
$3,185,000 was primarily due to greater research funding from corporate
collaborations with Kyowa Hakko, reimbursement by L&I Partners, L.P. for
costs incurred by the Company on behalf of the joint venture to develop
CAMPATH-1H and the achievement of a milestone payment associated with the
Company's CCR5 program with Warner-Lambert. To a lesser extent, the increase
was a result of greater research funding from the corporate collaboration
with Roche Bioscience and SBIR grants.
Research and development expenses for the three and nine month periods ended
September 30, 1998 and 1997.
For the three months ended September 30, 1998 research and development
expenses were $6,057,000 compared to $3,054,000 for the same period in 1997.
The increase of $3,003,000 was primarily due to the manufacture of clinical
trial material and ongoing clinical trials for the Company's LDP-01 and
LDP-02 programs and the technology access fee paid to MorphoSys AG, a
combinatorial biology company based in Munich, Germany. To a lesser extent,
the increase was the result of increased staffing and consumption of supplies
associated with the Company's drug discovery programs. The Company expects
that research and development expenses will increase over the next several
years as the Company further expands its discovery and development programs.
For the nine months ended September 30, 1998 research and development
expenses were $14,997,000 compared to $8,505,000 for the same period in 1997.
The increase of $6,492,000 was primarily due to the manufacture of clinical
trial material and ongoing clinical trials for the Company's LDP-01 and
LDP-02 programs, the technology access fee paid to MorphoSys and chemical
library purchases. To a lesser extent, the increase was the result of
increased staffing and consumption of supplies associated with the Company's
drug discovery programs. The Company expects that research and development
expenses will increase over the next several years as the Company further
expands its discovery and development programs.
General and administrative expenses for the three and nine month periods ended
September 30, 1998 and 1997.
For the three months ended September 30, 1998 general and administrative
expenses were $555,000 compared to $372,000 for the same period in 1997. The
increase of $183,000 was primarily due to an increase in expenses associated
with operating as a public company. General and administrative expenses will
likely increase in future periods to support the projected growth of the
Company.
For the nine months ended September 30, 1998 general and administrative
expenses were $1,872,000 compared to $1,107,000 for the same period in 1997.
The increase of $765,000 was primarily due to an increase in expenses
associated with operating as a public company. General and administrative
expenses will likely increase in future periods to support the projected
growth of the Company.
Equity in Operations of Joint Venture for the three and nine month periods ended
September 30, 1998 and 1997.
For the three months ended September 30, 1998 equity in operations of joint
venture was a loss of $937,000 compared to a loss of $1,649,000 for the same
period in 1997. The decrease of $712,000 was primarily due to the substantial
completion of the manufacture of clinical trial material for the Company's
ongoing pivotal trial of CAMPATH-1H in the second quarter which resulted in a
corresponding reduction in manufacturing related expenses in the third
quarter of 1998 when compared to the same period last year. Joint venture
expenses were primarily related to data analysis, regulatory submissions and
activities related to an ongoing pivotal clinical trial of CAMPATH-1H.
9
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For the nine months ended September 30, 1998 equity in operations of joint
venture was a loss of $2,922,000 compared to a loss of $1,649,000 for the
same period in 1997. The increase of $1,273,000 was primarily due to increased
joint venture activity in 1998 including manufacturing, data analysis,
regulatory submissions and the conduct of a pivotal clinical study of
CAMPATH-1H.
Interest income (expense), net for the three and nine month periods ended
September 30, 1998 and 1997.
For the three months ended September 30, 1998 net interest income was
$359,000 compared to $196,000 for the same period in 1997. This increase of
approximately $163,000 was primarily due to an increase in interest income
resulting from higher average cash balances due to proceeds received from the
sale of common stock to Genentech completed in December 1997 and from the
private placement in July 1998.
For the nine months ended September 30, 1998 net interest income was $926,000
compared to $407,000 for the same period in 1997. This increase of
approximately $519,000 was primarily due to an increase in interest income
resulting from higher average cash balances due to proceeds received from
LeukoSite's initial public offering completed in August 1997, from the sale
of common stock to Genentech completed in December 1997 and from the private
placement in July 1998.
Net Loss for the three and nine month periods ended September 30, 1998 and 1997.
For the three months ended September 30, 1998 net loss was $4,814,000
compared to $3,269,000 for the same period in 1997. The increase in the net
loss of $1,545,000 and was primarily due to the manufacture of clinical trial
material and clinical research related to the Company's LDP-01 and LDP-02
programs. Higher overall expenses were offset in part by increased revenues
from research collaborations and interest income.
For the nine months ended September 30, 1998 net loss was $11,796,000
compared to $6,969,000 for the same period in 1997. The increase in the net
loss of $4,827,000 and was primarily due to the manufacture of clinical trial
material and clinical research related to the Company's LDP-01 and LDP-02
programs and CAMPATH-1H development expenses recorded by the joint venture.
Higher overall expenses were offset in part by increased revenues generated
from research collaborations and interest income.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's operations have been funded primarily
through proceeds from the sale of equity securities, which have raised
approximately $64.6 million, and to a lesser extent license fees and
sponsored research, which have generated approximately $16.5 million, and
capital lease obligations, which have generated approximately $4.2 million.
The Company has used cash to fund operating losses of approximately $43.8
million, the investment of approximately $2.9 million in equipment and
leasehold improvements and the repayment of approximately $3.0 million of
capital lease obligations. The Company had no significant commitments as of
September 30, 1998 for capital expenditures. At September 30, 1998 the
Company had on hand cash, cash equivalents and marketable securities of
approximately $26.5 million. In July 1998, the Company completed a private
placement of 1,967,169 shares of its common stock at $6 per share, for net
proceeds of $11.7 million after expenses of the offering.
In May 1997 the Company and Ilex entered into a joint venture whereby the
parties formed a limited partnership to develop CAMPATH-1H for the treatment
of chronic lymphocytic leukemia and other diseases. The Company and Ilex are
required to make contributions when the joint venture requires working
capital. LeukoSite and Ilex will generally share equally in profits from the
sales of CAMPATH-1H and in research, development, and clinical expenses. The
capital requirements of the joint venture consist of clinical development
expenses. For the nine months ended September 30, 1998 the Company provided
the joint venture with approximately $2.4 million in funding and the Company
had a funding liability of $1,520,498 to the joint venture as of September
30, 1998. The Company charged the joint venture $820,503 for costs incurred
by the Company on behalf of the joint venture.
10
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The Company has entered into sponsored research and consulting agreements with
certain hospitals, academic institutions and consultants, requiring periodic
payments by the Company. As of September 30, 1998 aggregate minimum funding
obligations under these agreements, which include certain cancellation
provisions, total approximately $1,451,000, of which approximately $414,000 will
be paid in 1998. The Company also has a remaining total commitment of $750,000
to the Therapeutic Antibody Centre at the University of Oxford in England to
provide funding in semi-annual installments through the year 1999.
The Company believes that its existing capital resources, interest income and
revenue from the collaboration agreements will be sufficient to fund its planned
operating expenses and capital requirements into 2000. However, there can be no
assurance that such funds will be sufficient to meet the Company's operating
expenses and capital requirements during such period. The Company's actual cash
requirements may vary materially from those now planned and will depend upon
numerous factors, including the results of the Company's research and
development and collaboration programs, the timing and results of preclinical
and clinical trials, the timing and costs of obtaining regulatory approvals, the
progress of the milestone and royalty producing activities of the Company's
collaborative partners, the level of resources that the Company commits to the
development of manufacturing, marketing, and sales capabilities, the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the ability of the Company to maintain existing
and establish new collaboration agreements with other companies, the
technological advances and activities of competitors and other factors.
The Company expects to incur substantial additional expenses, including expenses
related to ongoing research and development activities, expenditures for
preclinical and clinical trials and the expansion of its laboratory and
administrative activities. Therefore, the Company will need to raise substantial
additional capital. The Company intends to seek such additional funding through
public or private financing or collaboration or other arrangements with
collaborative partners. There can be no assurance, however, that additional
financing will be available from any sources or, if available, will be available
on acceptable terms.
Year 2000 Issues
The Company is reviewing its information systems to assess what steps, if
any, are required to achieve full Year 2000 compliance. The Company relies
upon microprocessor-based personal computers and commercially available
applications software. The Company is currently discussing Year 2000
readiness with its supply and service vendors. The Company intends to
continue to assess its exposure to Year 2000 noncompliance on the part of any
of its vendors and there can be no assurance that their systems will be Year
2000 compliant. The Company does not anticipate that it will incur material
expenses to make its internal computer software and operating systems Year
2000 compliant. The Company believes that the Year 2000 issue will not pose
significant operational problems for the Company's systems. The Company
currently does not have any contingency plan in the event Year 2000
compliance cannot be achieved in a timely manner.
11
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) On July 1, 1998, the Company completed a private placement
raising an aggregate of $11,803,014 by issuing 1,967,169
shares of Common Stock at a purchase price of $6.00 per
share. The issuance and sale of the shares of Common Stock
was made in reliance upon Rule 506 of Regulation D
promulgated under the Securities Act of 1933, as amended
(the "Securities Act") and upon Section 4(2) of the
Securities Act.
(d) The Company's Registration Statement on Form S-1 (Reg. No.
333-30213) in connection with the Company's initial public
offering of Common Stock was declared effective by the
Securities and Exchange Commission (the "SEC") on August 14,
1997. Such Registration Statement (the "IPO Registration
Statement") provided for the registration under the
Securities Act of 2,875,000 shares of the Company's
Common Stock (including underwriters overallotment).
The aggregate initial public offering price for all
2,875,000 shares of Common Stock registered under the
Securities Act pursuant to the IPO Registration Statement
was $17,250,000. The net proceeds to the Company from such
issuance and distribution, after deducting the aggregate
amount of expenses (including underwriting discounts and
commissions) paid by the Company in connection therewith,
were $15,297,000.
Of such net proceeds, an aggregate of $10,598,000 has been
spent through September 30, 1998 for the following uses
and in the following amounts per use: $4,760,000 for the
clinical development of CAMPATH-1H through the Company's
joint venture with Ilex Oncology; $5,838,000 for working
capital. All amounts spent by the Company for such uses,
other than payment of salaries to directors and officers
of the Company, consisted of direct payments to persons or
entities, none of which was a director or officer of the
Company, holder of 10 percent or more of any class of equity
securities of the Company or other affiliate of the Company.
The remaining cash balance of such net proceeds, consisting
of $4,699,000, is held in cash, cash equivalents, and
marketable securities.
12
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Stock Purchase Agreement dated July 1,
1998 among the Registrant and the
purchasers listed on Exhibit A attached
thereto
10.2 Registration Rights Agreement dated
July 1, 1998 among the Registrant and the
investors listed on Exhibit A attached
thereto
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company
during the quarter for which this report is filed.
13
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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.
LeukoSite, Inc.
(Registrant)
Dated: November 9, 1998 /s/ Augustine Lawlor
--------------------
Augustine Lawlor
Vice President, Corporate
Development and Chief Financial Officer
(principal finance and accounting officer)
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Exhibit 10.1
LEUKOSITE, INC.
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of the 1st day of July, 1998
by and between LEUKOSITE, INC., a Delaware corporation with its principal office
at 215 First Street, Cambridge, Massachusetts 02142 (the "Company"), and the
several purchasers named in the attached Exhibit A (individually, a "Purchaser"
and collectively, the "Purchasers").
WHEREAS, the Company desires to issue and sell to the Purchasers, and
the Purchasers, severally, desire to purchase from the Company, an aggregate of
1,967,169 shares (the "Shares") of the authorized but unissued shares of common
stock, $.01 par value per share, of the Company (the "Common Stock"), all upon
the terms and subject to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual agreements,
representations, warranties and covenants herein contained, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the following
terms shall have the following
respective meanings:
(a) "Affiliate" of a party means any corporation or other
business entity controlled by, controlling or under common control with, such
party. For this purpose "control" shall include direct or indirect beneficial
ownership of more than fifty percent (50%) of the voting power or economic
interest in such corporation or other business entity.
(b) "Closing" shall have the meaning set forth in Section 2.2
of this Agreement.
(c) "Closing Date" means the date of the Closing.
(d) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and all of the rules and regulations promulgated thereunder.
(e) "Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated as of the date hereof, among the Company
and the Purchasers.
<PAGE>
(f) "SEC" shall mean the Securities and Exchange Commission.
(g) "Securities Act" shall mean the Securities Act of 1933, as
amended, and all of the rules and regulations promulgated thereunder.
2. Purchase and Sale of Shares.
2.1 Purchase and Sale. Subject to and upon the terms and
conditions set forth in this Agreement, the Company agrees to issue and sell to
each Purchaser, and each Purchaser, severally, hereby agrees to purchase from
the Company, at the Closing, the number of shares of Common Stock set forth
opposite the name of such Purchaser under the heading "Number of Shares to be
Purchased" on Exhibit A hereto, at a purchase price of $6.00 per share. The
aggregate purchase price payable by each Purchaser for the number of shares of
Common Stock that such Purchaser is hereby agreeing to purchase is set forth
opposite the name of such Purchaser under the heading "Purchase Price" on
Exhibit A hereto. The aggregate purchase price payable by the Purchasers to the
Company for all of the Shares shall be $11,803,014.
2.2 Closing. The closing of the transactions contemplated
under this Agreement (the "Closing") shall take place at the Boston offices of
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110 at 10:00 a.m.
on July 1, 1998 or at such other location, date and time as may be agreed upon
between the Purchasers and the Company. At the Closing, the Company shall
deliver to each Purchaser a single stock certificate, registered in the name of
the Purchaser, representing the number of shares of Common Stock purchased by
such Purchaser, against payment of the purchase price therefor by wire transfer
of immediately available funds to such account or accounts as the Company shall
designate in writing.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:
3.1 Incorporation. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is qualified to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect upon the Company. The Company has all requisite corporate power
and authority to carry on its business as now conducted and to carry out the
transactions contemplated hereby.
2
<PAGE>
3.2 Capitalization. The authorized capital stock of the
Company consists of (i) 25,000,000 shares of Common Stock, of which 9,901,998
shares are outstanding on the date hereof and (ii) 5,000,000 shares of preferred
stock, of which no shares are outstanding on the date hereof. Except as set
forth in Schedule 3.2 hereto, there are no existing options, warrants, calls,
preemptive (or similar) rights, subscriptions or other rights, agreements,
arrangements or commitments of any character obligating the Company to issue,
transfer or sell, or cause to be issued, transferred or sold, any shares of the
capital stock of the Company or other equity interests in the Company or any
securities convertible into or exchangeable for such shares of capital stock or
other equity interests, and there are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any shares of its capital
stock or other equity interests.
3.3 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement and the
Registration Rights Agreement and the consummation of the transactions
contemplated herein and therein has been taken. When executed and delivered by
the Company, each of this Agreement and the Registration Rights Agreement shall
constitute the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such may be limited
by bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally and by general equitable principles. The Company has all
requisite corporate power to enter into this Agreement and the Registration
Rights Agreement and to carry out and perform its obligations under the terms of
this Agreement and the Registration Rights Agreement.
3.4 Valid Issuance of the Shares. The Shares being purchased
by the Purchasers hereunder will, upon issuance pursuant to the terms hereof, be
duly authorized and validly issued, fully paid and nonassessable and not subject
to any encumbrances, preemptive rights or any other similar contractual rights
of the stockholders of the Company or others.
3.5 Financial Statements. The Company has furnished to each
Purchaser its audited Statements of Income, Stockholders' Equity and Cash Flows
for each of the fiscal years ended December 31, 1996 and 1997, its audited
Consolidated Balance Sheet as of December 31, 1997, its unaudited Statements of
Income, Stockholders' Equity and Cash Flows for the period from January 1, 1998
to March 31, 1998, and its unaudited Balance Sheet as of March 31, 1998. All
such financial statements are hereinafter referred to collectively as the
"Financial Statements". The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved, and fairly present, in all material respects,
3
<PAGE>
the financial position of the Company and the results of its operations as of
the date and for the periods indicated thereon, except that the unaudited
financial statements may not be in accordance with generally accepted accounting
principles because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments which, individually and in the
aggregate, will not be material. Since March 31, 1998, there has been no
material adverse change (actual or threatened) in the assets, liabilities
(contingent or other), affairs, operations, prospects or condition (financial or
other) of the Company.
3.6 SEC Documents. The Company has furnished to each
Purchaser, a true and complete copy of the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1998, and any other statement, report,
registration statement (other than registration statements on Form S-8) or
definitive proxy statement filed by the Company with the SEC during the period
commencing March 31, 1998 and ending on the date hereof. The Company will,
promptly upon the filing thereof, also furnish to each Purchaser all statements,
reports (including, without limitation, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K), registration statements and definitive proxy
statements filed by the Company with the SEC during the period commencing on the
date hereof and ending on the Closing Date (all such materials required to be
furnished to each Purchaser pursuant to this sentence or pursuant to the next
preceding sentence of this Section 3.6 being called, collectively, the "SEC
Documents"). As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Exchange Act or the
Securities Act, as applicable, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, as of
their respective filing dates.
3.7 Consents. Except for (i) the filing and effectiveness of
any registration required to be filed by the Company under the Securities Act in
connection with the exercise by one or more Purchasers of their rights under the
Registration Rights Agreement and (ii) any required state "blue sky" law filings
in connection with the transactions contemplated under such registration
statement, all consents, approvals, orders and authorizations required on the
part of the Company in connection with the execution, delivery or performance of
this Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein have been obtained and will be
effective as of the Closing Date.
4
<PAGE>
3.8 No Conflict. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or result in
any violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under (i) any provision of the
Certificate of Incorporation or By-laws of the Company or (ii) any agreement or
instrument, permit, franchise, license, judgment, order, statute, law,
ordinance, rule or regulations, applicable to the Company or its respective
properties or assets.
3.9 Brokers or Finders. The Company has not dealt with any
broker or finder in connection with the transactions contemplated by this
Agreement, and the Company has not incurred, and shall not incur, directly or
indirectly, any liability for any brokerage or finders' fees or agents
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
3.10 Nasdaq National Market. The Common Stock is listed on the
Nasdaq National Market System, and there are no proceedings to revoke or suspend
such listing.
3.11 Absence of Litigation. There is no pending (or to the
best of the Company's knowledge, threatened) action, suit, proceeding or
investigation against the Company or any of its direct or indirect subsidiaries.
3.12 No Undisclosed Liabilities. Since March 31, 1998, the
Company has incurred no liabilities or obligations, fixed or contingent, matured
or unmatured or otherwise, except for liabilities or obligations that,
individually or in the aggregate, do not or would not have a material adverse
effect on the financial condition or business of the Company and its direct or
indirect subsidiaries.
4. Representations and Warranties of the Purchasers. Each Purchaser
severally for itself, and not jointly with the other Purchasers, represents and
warrants to the Company as follows:
4.1 Authorization. All action on the part of such Purchaser
and, if applicable, its officers, directors, managers, shareholders and/or
partners necessary for the authorization, execution, delivery and performance of
this Agreement and the Registration Rights Agreement and the consummation of the
transactions contemplated herein and therein has been taken. When executed and
delivered, each of this Agreement and the Registration Rights Agreement will
constitute the legal, valid and binding obligation of such Purchaser,
5
<PAGE>
enforceable against such Purchaser in accordance with its terms, except as such
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and by general equitable principles. Such Purchaser
has all requisite power and authority to enter into each of this Agreement and
the Registration Rights Agreement and to carry out and perform its obligations
under the terms of this Agreement and the Registration Rights Agreement.
4.2 Purchase Entirely for Own Account. Such Purchaser is
acquiring the Shares being purchased by it hereunder for its own account for
investment and not for resale or with a view to distribution thereof in
violation of the Securities Act.
4.3 Investor Status; Etc. Such Purchaser certifies and
represents to the Company that it is an "Accredited Investor" as defined in Rule
501 of Regulation D promulgated under the Securities Act and was not organized
for the purpose of acquiring any of the Shares. Such Purchaser's financial
condition is such that it is able to bear the risk of holding the Shares for an
indefinite period of time and the risk of loss of its entire investment. Such
Purchaser has been afforded the opportunity to ask questions of and receive
answers from the management of the Company concerning this investment and has
sufficient knowledge and experience in investing in companies similar to the
Company in terms of the Company's stage of development so as to be able to
evaluate the risks and merits of its investment in the Company.
4.4 Shares Not Registered. Such Purchaser understands that the
Shares have not been registered under the Securities Act, by reason of their
issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that the Shares must continue to be held
by such Purchaser unless a subsequent disposition thereof is registered under
the Securities Act or is exempt from such registration. The Purchaser
understands that the exemptions from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Securities Act depend
on the satisfaction of various conditions, and that, if applicable, Rule 144 may
afford the basis for sales only in limited amounts.
4.5 No Conflict. The execution and delivery of this Agreement
and the Registration Rights Agreement by such Purchaser and the consummation of
the transactions contemplated hereby and thereby will not conflict with or
result in any violation of or default by such Purchaser (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to a loss of a material
benefit under (i) any provision of the organizational documents of such
Purchaser or (ii) any agreement or instrument, permit, franchise, license,
6
<PAGE>
judgment, order, statute, law, ordinance, rule or regulations, applicable to
such Purchaser or its respective properties or assets.
4.6 Brokers. Such Purchaser has not retained, utilized or been
represented by any broker or finder in connection with the transactions
contemplated by this Agreement.
4.7 Consents. All consents, approvals, orders and
authorizations required on the part of such Purchaser in connection with the
execution, delivery or performance of this Agreement and the consummation of the
transactions contemplated herein have been obtained and are effective as of the
Closing Date.
4.8 Investment Representations.
(a) HealthCare Ventures V, L.P., as to itself, represents and
warrants to the Company that: (i) it is a Delaware limited partnership, (ii) it
was not formed for the specific purpose of acquiring any of the Shares, (iii) it
has assets in excess of $5,000,000, (iv) its principal office is located in New
Jersey and (v) the principal office of its general partner, HealthCare Partners
V, L.P., is located in New Jersey.
(b) Schroder Ventures International Life Sciences Fund L.P. 1,
as to itself, represents and warrants to the Company that: (i) it is a Delaware
limited partnership, (ii) it was not formed for the specific purpose of
acquiring any of the Shares, (iii) it has assets in excess of $5,000,000, (iv)
its principal office is located in New York, and (v) the principal office of its
general partner, Schroder Venture Managers, Inc., is located in New York.
(c) Schroder Ventures International Life Sciences Fund L.P. 2,
as to itself, represents and warrants to the Company that: (i) it is a Delaware
limited partnership, (ii) it was not formed for the specific purpose of
acquiring any of the Shares, (iii) it has assets in excess of $5,000,000, (iv)
its principal office is located in New York, and (v) the principal office of its
general partner, Schroder Venture Managers, Inc., is located in New York.
(d) Schroder Ventures International Life Sciences Trust, as to
itself, represents and warrants to the Company that: (i) it is a Bermudan unit
trust, (ii) it was not formed for the specific purpose of acquiring any of the
Shares, (iii) its purchase of the Shares is being directed by a person who has
such knowledge and experience in financial and business matters that she, he or
it is capable of evaluating the merits and risks of the prospective investment,
(iv) it has assets in excess of $5,000,000, (v) its principal office is located
in
7
<PAGE>
Bermuda, and (v) the principal office of its trustee, Codan Trust Company
Limited, is located in Bermuda.
(e) Rho Management Trust II, as to itself, represents and
warrants to the Company that: (i) it is a New York trust, (ii) it was not formed
for the specific purpose of acquiring any of the Shares, (iii) its purchase of
the Shares is being directed by a person who has such knowledge and experience
in financial and business matters that she, he or it is capable of evaluating
the merits and risks of the prospective investment, (iv) it has assets in excess
of $5,000,000, (v) its principal office is located in New York, and (vi) the
principal office of its trustee is located in New York.
(f) Perseus Capital, LLC, as to itself, represents and
warrants to the Company that: (i) it is a Delaware limited liability company,
(ii) each of its constituent members is an "accredited investor" as such term is
defined in Rule 501(a) promulgated under the Securities Act, (iii) its principal
office is located in Washington, DC, and (iv) the principal office of its
manager is located in Washington, DC.
(g) Goldman, Sachs & Co., as to itself, represents and
warrants to the Company that: (i) it is a New York limited partnership, (ii) it
was not formed for the specific purpose of acquiring any of the Share, (iii) it
has assets in excess of $5,000,000, (iv) its principal office is located in New
York and (v) the principal office of its general partner is located in New York.
(h) Schroder Venture Managers Limited ("SVML"), as to itself,
represents and warrants to the Company as follows:
(i) It is a Bermudan corporation; it was not formed
for the specific purpose of acquiring any of the Shares; it
has assets in excess of $5,000,000; it is not a "U.S. Person",
as such term is defined in Regulation S promulgated under the
Securities Act; and its principal office is located in
Bermuda.
(ii) It is acquiring the Shares being purchased by it
pursuant to this Agreement in its capacity as investment
manager of the Schroder Ventures International Life Sciences
Fund Co-Investment Scheme (the "Schroder Ventures
Co-Investment Scheme").
(iii) The Schroder Ventures Co-Investment Scheme is
composed of 14 individuals, all of whom (i) are knowledgeable
and experienced in financial and business matters, and (ii)
are
8
<PAGE>
experienced and have the capability of evaluating the merits
and risks of high risk, illiquid investments.
(iv) Of the 14 individuals who constitute the
Schroder Ventures Co-Investment Scheme, 13 are not "U. S.
Persons", as such term is defined in Regulation S promulgated
under the Securities Act, and 1 individual is a resident of
the United States that is an "accredited investor", as such
term is defined in Regulation D promulgated under the
Securities Act.
(v) The decision to purchase the Shares being
purchased by it pursuant to this Agreement is being made by it
and not at the direction of any member of the Schroder
Ventures Co-Investment Scheme. The members of the Schroder
Ventures Co-Investment Scheme do not control SVML, and the
members of the Schroder Ventures Co-Investment Scheme have no
investment decision-making authority or other investment
discretion as to what investments SVML or any other person
makes on behalf of the Schroder Ventures Co-Investment Scheme.
In particular and without limitation, the members of the
Schroder Ventures Co-Investment Scheme do not have any
investment decision-making authority or discretion as to
purchase of the Shares being purchased by SVML pursuant to
this Agreement.
(vi) The members of the Schroder Ventures
Co-Investment Scheme do not have any power or authority to
vote any of the Shares purchased by SVML pursuant to this
Agreement, nor to direct the disposition of any of such
shares.
(i) Peretz Family Investment, as to itself, represents and
warrants to the Company that: (i) it is a New York limited partnership, (ii) it
was not formed for the specific purpose of acquiring any of the Shares, (iii) it
has assets in excess of $5,000,000, (iv) its principal office is located in New
York, and (v) the principal office of Martin Peretz, its general partner, is
located in Massachusetts.
(j) Four Partners, as to itself, represents and warrants to
the Company that: (i) it is a New York partnership, (ii) it was not formed for
the specific purpose of acquiring any of the Shares, (iii) its purchase of the
Shares is being directed by a person who has such knowledge and experience in
financial and business matters that she, he or it is capable of evaluating the
merits and risks of the prospective investment, (iv) it has assets in excess of
$5,000,000 and (v) its principal office is located in New York.
9
<PAGE>
(k) YK Capital L.P., as to itself, represents and warrants to
the Company that: (i) it is a California limited partnership, (ii) it was not
formed for the specific purpose of acquiring any of the Shares, (iii) either (x)
it has assets in excess of $5,000,000 or (y) each of its constituent partners is
an "accredited investor" as such term is defined in Rule 501(a) promulgated
under the Securities Act, (iv) its principal office is located in California and
(v) the principal office of its general partner is located in California.
(l) Todd Noonan, as to himself, represents and warrants to the
Company that he is a resident of the State of New York, and further represents
and warrants to the Corporation that (i) his individual net worth, or joint net
worth with his spouse, exceeds $1,000,000, (ii) his individual income in each of
the two most recent years exceeded $200,000 and he has a reasonable expectation
of reaching the same income level in the current year, and/or (iii) his joint
income with his spouse in each of the two most recent years exceeded $300,000
and he has a reasonable expectation of reaching the same joint income level in
the current year.
5. Conditions Precedent.
5.1. Conditions to the Obligation of the Purchasers to
Consummate the Closing. The obligation of each Purchaser to consummate the
Closing and to purchase and pay for those Shares being purchased by it pursuant
to this Agreement is subject to the satisfaction of the following conditions
precedent:
(a) The representations and warranties contained herein of the
Company shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Registration Rights Agreement shall have
been executed and delivered by the Company.
(c) There shall have been no material adverse change (actual
or threatened) in the assets, liabilities (contingent or other), affairs,
operations, prospects or condition (financial or other) of the Company prior to
the Closing Date; and the Company shall have performed all obligations and
conditions herein required to be performed or observed by the Company on or
prior to the Closing Date.
(d) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay
10
<PAGE>
the Closing, shall have been instituted before any court, arbitrator or
governmental body, agency or official and shall be pending.
(e) The purchase of and payment for the Shares by the
Purchasers shall not be prohibited by any law or governmental order or
regulation. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or of any other person with respect to any
of the transactions contemplated hereby shall have been duly obtained or made
and shall be in full force and effect.
(f) All instruments and corporate proceedings of the Company
in connection with the transactions contemplated by this Agreement to be
consummated at the Closing shall be satisfactory in form and substance to such
Purchaser, and such Purchaser shall have received copies (executed or certified,
as may be appropriate) of all documents which such Purchaser may have reasonably
requested in connection with such transactions.
(g) The Purchasers shall have received from Bingham Dana LLP,
counsel to the Company, an opinion addressed to it, dated the Closing Date and
substantially in the form of Exhibit B hereto.
5.2. Conditions to the Obligation of the Company to Consummate
the Closing. The obligation of the Company to consummate the Closing and to
issue and sell to each of the Purchasers the Shares to be purchased by it at the
Closing is subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties contained herein of
such Purchaser shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Registration Rights Agreement shall have been executed
and delivered by each Purchaser.
(c) The Purchasers shall have performed all obligations and
conditions herein required to be performed or observed by the Purchasers on or
prior to the Closing Date.
(d) No proceeding challenging this Agreement or the
transactions contemplated hereby, or seeking to prohibit, alter, prevent or
materially delay the Closing, shall have been instituted before any court,
arbitrator or governmental body, agency or official and shall be pending.
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(e) The sale of the Shares by the Company shall not be
prohibited by any law or governmental order or regulation. All necessary
consents, approvals, licenses, permits, orders and authorizations of, or
registrations, declarations and filings with, any governmental or administrative
agency or of any other person with respect to any of the transactions
contemplated hereby shall have been duly obtained or made and shall be in full
force and effect.
(f) All instruments and corporate proceedings in connection
with the transactions contemplated by this Agreement to be consummated at the
Closing shall be satisfactory in form and substance to the Company, and the
Company shall have received counterpart originals, or certified or other copies
of all documents, including without limitation records of corporate or other
proceedings, which it may have reasonably requested in connection therewith.
6. Transfer, Legends.
6.1. Transfer of Securities. No Purchaser shall sell, assign,
pledge, transfer or otherwise dispose or encumber any of those Shares being
purchased by it hereunder, except (i) pursuant to an effective registration
statement under the Securities Act or (ii) pursuant to an available exemption
from registration under the Securities Act and applicable state securities laws
and, if requested by the Company, upon delivery by such Purchaser of either an
opinion of counsel of such Purchaser reasonably satisfactory to the Company to
the effect that the proposed transfer is exempt from registration under the
Securities Act and applicable state securities laws or a representation letter
of such Purchaser reasonably satisfactory to the Company setting forth a factual
basis for concluding that such proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws. Any transfer or
purported transfer of the Shares in violation of this Section 6.1 shall be void.
The Company shall not register any transfer of the Shares in violation of this
Section 6.1. The Company may, and may instruct any transfer agent for the
Company, to place such stop transfer orders as may be required on the transfer
books of the Company in order to ensure compliance with the provisions of this
Section 6.1.
6.2. Legends. To the extent applicable, each certificate or
other document evidencing any of the Shares shall be endorsed with the legend
set forth below, and each Purchaser covenants that, except to the extent such
restrictions are waived by the Company, it shall not transfer the shares
represented by any such certificate without complying with the restrictions on
transfer described in this Agreement and the legends endorsed on such
certificate:
12
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED,
SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISED DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SAID ACT
AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF EITHER AN OPINION OF
COUNSEL REASONABLE SATISFACTORY TO THE COMPANY THAT THE PROPOSED
TRANSFER IS EXEMPT FROM SAID ACT OR OF A REPRESENTATION LETTER SETTING
FORTH A FACTUAL BASIS FOR CONCLUDING THAT THE PROPOSED TRANSFER IS
EXEMPT FROM SAID ACT."
7. Miscellaneous Provisions.
7.1 Rights Cumulative. Each and all of the various rights,
powers and remedies of the parties shall be considered to be cumulative with and
in addition to any other rights, powers and remedies which such parties may have
at law or in equity in the event of the breach of any of the terms of this
Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other
right, power or remedy available to such party.
7.2 Pronouns. All pronouns or any variation thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
7.3 Notices.
(a) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by postage prepaid first class mail, courier or telecopy
or delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder. The date of giving any notice shall be the date
of its actual receipt.
(b) All correspondence to the Company shall be addressed
as follows:
13
<PAGE>
LeukoSite, Inc.
215 First Street
Cambridge, MA 02142
Attention: Christopher K. Mirabelli,
President and Chief Executive Officer
Telecopier: (617) 278-3399
with a copy to:
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Attention: Julio E. Vega, Esq.
Telecopier: (617) 951-8736
(c) All correspondence to any Purchaser shall
be sent to such Purchaser at the address set forth in Exhibit A.
(d) Any entity may change the address to which correspondence
to it is to be addressed by notification as provided for herein.
7.4 Captions. The captions and paragraph headings of this
Agreement are solely for the convenience of reference and shall not affect its
interpretation.
7.5 Severability. Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or provisions
shall be replaced with a provision which accomplishes, to the extent possible,
the original business purpose of such part or provision in a valid and
enforceable manner, and the remainder of this Agreement shall remain binding
upon the parties hereto.
7.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal and substantive laws of the
Commonwealth of Massachusetts and without regard to any conflicts of laws
concepts which would apply the substantive law of some other jurisdiction.
7.7 Waiver. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or be construed as, a further or continuing waiver of any
such term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
14
<PAGE>
7.8 Expenses. The Company agrees to pay, in connection with
the preparation, execution and delivery of this Agreement and the Registration
Rights Agreement, the reasonable fees and expenses of one counsel to the
Purchasers.
7.9 Assignment. The rights and obligations of any party hereto
shall inure to the benefit of and shall be binding upon the authorized
successors and permitted assigns of such party. This Agreement and the rights
and duties of each Purchaser set forth herein may be freely assigned or
delegated, as the case may be, in whole or in part, by such Purchaser to any
person to whom such Purchaser may transfer any of the Shares purchased or
acquired by such Purchaser; provided that the transfer complies with the terms
of Section 6 of this Agreement and the assigning party shall promptly notify the
Company in writing of such assignment and shall remain liable (both directly and
as guarantor) with respect to all obligations so assigned. In the event of any
assignment, the assignee shall specifically assume and be bound by the
provisions of the Agreement by executing and agreeing to an assumption agreement
reasonably acceptable to the Company.
7.10 Survival. The respective representations and warranties
given by the parties hereto, and the other covenants and agreements contained
herein, shall survive the Closing Date and the consummation of the transactions
contemplated herein for a period of one year, without regard to any
investigation made by any party.
7.11 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto respecting the subject matter hereof and
supersedes all prior agreements, negotiations, understandings, representations
and statements respecting the subject matter hereof, whether written or oral. No
modification, alteration, waiver or change in any of the terms of this Agreement
shall be valid or binding upon the parties hereto unless made in writing and
duly executed by the parties hereto.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the day and year first above written.
LEUKOSITE, INC.
By:
--------------------------------------------
Name: Christopher K. Mirabelli
Title: President and Chief Executive Officer
PURCHASERS:
HEALTHCARE VENTURES V, L.P.
By: HealthCare Partners V, L.P.
as General Partner
By:
----------------------------------------
Title: General Partner
RHO MANAGEMENT TRUST II
By:
--------------------------------------------
Name:
Title:
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 1
By: Schroder Venture Managers Inc.,
General Partner
By:
---------------------------------------
Peter Everson, Vice President
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 2
By: Schroder Venture Managers Inc.,
General Partner
By:
-------------------------------------
Peter Everson, Vice President
16
<PAGE>
SCHRODER VENTURES
INTERNATIONAL
LIFE SCIENCES TRUST
By: Codan Trust Company Limited, as
Trustee
By:
------------------------------------
Title:
SCHRODER VENTURE MANAGERS
LIMITED,
as Investment Manager for the
Schroder
Ventures International Life Sciences
Fund
Co-Investment Scheme
By:
------------------------------------------
Peter Everson
Its:
PERETZ FAMILY INVESTMENT
By:
------------------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By:
------------------------------------------
Name:
Title:
PERSEUS CAPITAL, LLC
By:
-------------------------------------------
Name:
Title:
YK CAPITAL L.P.
Name:
-----------------------------------------
Title:
TODD NOONAN
FOUR PARTNERS
By:
-------------------------------------------
Name:
Title:
<PAGE>
Exhibit A
PURCHASERS
<TABLE>
<CAPTION>
Number of Shares
Purchaser to be Purchased Purchase Price
--------- --------------- --------------
<S> <C> <C>
HealthCare Ventures V, L.P. 479,167 $2,875,002
44 Nassau Street
Princeton, NJ 08542
Rho Management Trust II 479,167 $2,875,002
767 Fifth Avenue, 43rd Floor
New York, NY 10153
Schroder Ventures International Life Sciences Fund 184,350 $1,106,100
L.P. 1
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures International Life Sciences Fund 40,967 $245,802
L.P. 2
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures International Life Sciences Trust 64,892 $389,352
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures Managers Limited, as investment 1,458 $8,748
manager for the International Life Sciences Fund
Co-Investment Scheme
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
<PAGE>
Peretz Family Investment 50,000 $300,000
c/o Martin Peretz
20 Larchwood Drive
Cambridge, MA 02138
Goldman, Sachs & Co. 166,667 $1,000,002
Attn: Robert Granovsky
One New York Plaza
New York, NY 10004
Four Partners 33,334 $200,004
Attn: Felix Baker
667 Madison Avenue, 7th Floor
New York, NY 10021
Perseus Capital, LLC 416,667 $2,500,002
The Army and Navy Club Building
1627 I Street N.W., Suite 610
Washington, D.C. 20006
YK Capital L.P. 50,000 $300,000
c/o Yasunori Kaneko
509 Rochampton Road
Hillsborough, CA 94010
Todd Noonan 500 $3,000
c/o ICM
40 West 57th Street, 18th Floor
New York, NY 10019
Total 1,967,169 $11,803,014
- ----- --------- -----------
</TABLE>
<PAGE>
Exhibit 10.2
LEUKOSITE, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
July 1, 1998 by and among (i) LeukoSite, Inc., a Delaware corporation (the
"Company"), and (ii) each person listed on Exhibit A attached hereto
(collectively, the "Investors" and each individually, an "Investor").
WHEREAS, the Company has agreed to issue and sell to the Investors, and
the Investors have agreed to purchase from the Company, 1,967,169 shares (the
"Shares") of the Company's common stock, $0.01 par value per share (the "Common
Stock"), all upon the terms and conditions set forth in that certain Stock
Purchase Agreement, dated of even date herewith, between the Company and the
Investors (the "Stock Purchase Agreement"); and
WHEREAS, the terms of the Stock Purchase Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder,
for the Company and the Investors to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. DEFINITIONS. The following terms shall have the meanings
provided therefor below or elsewhere in this Agreement as described below:
"Board" shall mean the board of directors of the Company.
"Closing" shall have the meaning ascribed to such term in the Stock
Purchase Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Majority Investors" shall mean, at the relevant time of reference
thereto, those Investors holding and/or having the right to acquire, as the case
may be, more than fifty percent (50%) of the Registrable Shares.
"Qualifying Investor" shall have the meaning ascribed thereto in
Section 10 hereof.
"Registrable Shares" shall mean, at the relevant time of reference
thereto, the Shares then held by the Investors (including any shares of capital
stock that
<PAGE>
were issued in respect thereof pursuant to a stock split, stock dividend,
recombination, reclassification or the like).
"Rule 144" shall mean Rule 144 promulgated under the Securities Act and
any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. MANDATORY REGISTRATION.
(a) On or prior to October 15, 1998, the Company will prepare and file
with the SEC a registration statement on Form S-3 for the purpose of registering
under the Securities Act all of the Registrable Shares for resale by, and for
the account of, the Investors as selling stockholders thereunder (the "Mandatory
S-3 Registration Statement"). The Mandatory S-3 Registration Statement shall
permit the Investors to offer and sell, on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act, any or all of the Registrable
Shares. The Company agrees to use its best efforts to cause the Mandatory S-3
Registration Statement to become effective as soon as practicable after filing.
The Company shall only be required to keep the Mandatory S-3 Registration
Statement effective until the earlier of (i) the date when all of the
Registrable Shares registered thereunder shall have been sold or (ii) the second
anniversary of the Closing. Thereafter, the Company shall be entitled to
withdraw the Mandatory S-3 Registration Statement and the Investors shall have
no further right to offer or sell any of the Registrable Shares pursuant to the
Mandatory S-3 Registration Statement (or any prospectus relating thereto).
(b) The shares subject to the Mandatory S-3 Registration Statement
shall not be underwritten unless the Company shall otherwise consent in its sole
and absolute discretion.
(c) Notwithstanding anything in this Section 2 to the contrary, if the
Company shall furnish to the Investors a certificate signed by the President or
Chief Executive Officer of the Company stating that the Board of Directors of
the Company has made the good faith determination (i) that continued use by the
Investors of the registration statement filed by the Company pursuant to Section
2 hereof for purposes of effecting offers or sales of Registrable Shares
pursuant thereto would require, under the Securities Act and the rules and
regulations promulgated thereunder, premature disclosure in the registration
statement (or the prospectus relating thereto) of material, nonpublic
information concerning the Company, its business or prospects or any proposed
material transaction involving the Company, (ii) that such premature disclosure
would be materially adverse to the Company, its business or prospects or any
2
<PAGE>
such proposed material transaction or would make the successful consummation by
the Company of any such material transaction significantly less likely and (iii)
that it is therefore essential to suspend the use by the Investors of such
registration statement (and the prospectus relating thereto) for purposes of
effecting offers or sales of Registrable Shares pursuant thereto, then the right
of the Investors to use such registration statement (and the prospectus relating
thereto) for purposes of effecting offers or sales of Registrable Shares
pursuant thereto shall be suspended for a period (the "Suspension Period") of
not more than 90 days after delivery by the Company of the certificate referred
to above in this Section 2(c). During the Suspension Period, none of the
Investors shall offer or sell any Registrable Shares pursuant to or in reliance
upon such registration statement (or the prospectus relating thereto). The
Company agrees that, as promptly as practicable after the consummation,
abandonment or public disclosure of the event or transaction that caused the
Company to suspend the use of the registration statement (and the prospectus
relating thereto) pursuant to this Section 2(c), the Company will provide the
Investors with revised prospectuses, if required, and will notify the Investors
of their ability to effect offers or sales of Registrable Shares pursuant to or
in reliance upon such registration statement.
(d) Notwithstanding anything to the contrary expressed or implied in
this Agreement, if Form S-3 or any substitute form is not then available or
becomes unavailable for the registration of such Registrable Shares that would
otherwise have been registered by the Investors pursuant to this Section 2, the
Company shall be obligated to as promptly as practicable thereafter prepare and
file a registration statement on Form S-1 and the provisions of this Section 2
shall govern and apply to such registration on Form S-1.
3. "PIGGYBACK REGISTRATION".
(a) If, at any time after the date hereof, the Company
proposes to register any of its Common Stock under the Securities Act, whether
as a result of a primary or secondary offering of Common Stock or pursuant to
registration rights granted to holders of other securities of the Company (but
excluding in all cases any registration pursuant to Section 2 hereof or any
registrations to be effected on Forms S-4 or S-8 or other applicable successor
Forms), the Company shall, each such time, give to the Investors written notice
of its intent to do so. Upon the written request of any Investor given within 30
days after the giving of any such notice by the Company, the Company shall use
its best efforts to cause to be included in such registration the Registrable
Shares of such selling Investor, to the extent requested to be registered;
provided that (i) the number of Registrable Shares proposed to be sold by such
selling Investor is equal to at least twenty-five percent (25%) of the total
number of Registrable Shares then held by such selling Investor, (ii) such
selling Investor agrees to sell those of its Registrable Shares to be included
in such registration in the same manner and
3
<PAGE>
on the same terms and conditions as the other shares of Common Stock which the
Company proposes to register, and (iii) if the registration is to include shares
of Common Stock to be sold for the account of the Company or any party
exercising demand registration rights pursuant to any other agreement with the
Company, the proposed managing underwriter does not advise the Company that in
its opinion the inclusion of such selling Investor's Registrable Shares (without
any reduction in the number of shares to be sold for the account of the Company
or such party exercising demand registration rights) is likely to affect
materially and adversely the success of the offering or the price that would be
received for any shares of Common Stock offered, in which case the rights of
such selling Investor shall be as provided in Section 3(b) hereof.
(b) If a registration pursuant to Section 3 hereof involves an
underwritten offering and the managing underwriter shall advise the Company in
writing that, in its opinion, the number of shares of Common Stock requested by
the Investors to be included in such registration is likely to affect materially
and adversely the success of the offering or the price that would be received
for any shares of Common Stock offered in such offering, then, notwithstanding
anything in Section 3 to the contrary, the Company shall only be required to
include in such registration, to the extent of the number of shares of Common
Stock which the Company is so advised can be sold in such offering, (i) first,
the number of shares of Common Stock proposed to be included in such
registration for the account of the Company and/or any stockholders of the
Company (other than the Investors) that have exercised demand registration
rights, in accordance with the priorities, if any, then existing among the
Company and/or such stockholders of the Company with registration rights (other
than the Investors), and (ii) second, the shares of Common Stock requested to be
included in such registration by all other stockholders of the Company
(including, without limitation, the Investors), pro rata among such other
stockholders (including, without limitation, the Investors) on the basis of the
number of shares of Common Stock that each of them requested to be included in
such registration.
(c) In connection with any offering involving an underwriting of
shares, the Company shall not be required under Section 3 hereof or otherwise to
include the Registrable Shares of any Investor therein unless such Investor
accepts and agrees to the terms of the underwriting, which shall be reasonable
and customary, as agreed upon between the Company and the underwriters selected
by the Company.
4. OBLIGATIONS OF THE COMPANY. Whenever the Company is required under
Section 2 or 3 hereof to use its best efforts to effect the registration of any
of the Registrable Shares of the Investors, the Company shall, as expeditiously
as practicable:
4
<PAGE>
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Shares and use its best efforts to cause such
registration statement to become and remain effective;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Shares covered by such
registration statement;
(c) Notify the Investors promptly and, if requested by any
Investor, confirm such advice in writing (i) when a registration statement has
become effective and when any post-effective amendments and supplements thereto
become effective, and (ii) of the issuance by the SEC or any state securities
commission of any stop order suspending the effectiveness of a registration
statement.
(d) Furnish to the selling Investors such number of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents (including, without
limitation, prospectus amendments and supplements as are prepared by the Company
in accordance with Section 4(e) below) as the selling Investors may reasonably
request in order to facilitate the disposition of such Registrable Shares;
(e) Notify the Investors, at any time when a prospectus
relating to such registration statement is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in or relating to such registration statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading; and, thereafter, the Company will, subject to
the provisions of Section 2(c), promptly prepare (and, when completed, give
notice to each Investor) a supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of such Registrable Shares, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided
that upon such notification by the Company, the Investors will not offer or sell
Registrable Shares until the Company has notified the Investors that it has
prepared a supplement or amendment to such prospectus and delivered copies of
such supplement or amendment to the Investors (it being understood and agreed by
the Company that the foregoing proviso shall in no way diminish or otherwise
impair the Company's obligation, subject to the provisions of Section 2(c), to
promptly prepare a prospectus amendment or supplement as above provided in this
Section 4(e) and deliver copies of same as above provided in Section 4(d)
hereof);
5
<PAGE>
(f) Use its best efforts to register and qualify such
Registrable Shares under such other securities or Blue Sky laws of such
jurisdictions as each selling Investor shall be reasonably request and do any
and all other acts or things which may be reasonably necessary or advisable to
enable each selling Investor to consummate the public sale or other disposition
in such jurisdiction of Registrable Shares, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions where it is not then qualified or subject to process; and
(g) Use its best efforts to cause all Registrable Shares to be
listed on the Nasdaq National Stock Market.
5. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the Shares held by them as the Company shall reasonably request and as
shall be required in order to effect any registration by the Company pursuant to
this Agreement.
6. EXPENSES OF REGISTRATION. All expenses incurred in connection with a
registration pursuant to this Agreement (excluding underwriting commissions and
discounts of the selling Investors), including without limitation all
registration and qualification fees, printing expenses, and fees and
disbursements of counsel for the Company and one counsel for the selling
Investors, shall be borne by the Company.
7. DELAY OF REGISTRATION. The Investors and the Company (other than
with respect to Sections 2(c) and 4(e)) shall not take any action to restrain,
enjoin or otherwise delay any registration as the result of any controversy
which might arise with respect to the interpretation or implementation of this
Agreement.
8. INDEMNIFICATION. In the event that any Registrable Shares of the
Investors are included in a registration statement pursuant to this Agreement:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each selling Investor, any underwriter (as defined
in the Securities Act) for the Company, and each officer, director, fiduciary,
employee, member, general partner and limited partner (and affiliates thereof)
of such selling Investor or such underwriter, each broker or other person acting
on behalf of such selling Investor and each person, if any, who controls such
selling Investor or such underwriter within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to which
they
6
<PAGE>
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or state securities or blue sky laws applicable to the Company
and leading to action or inaction required of the Company in connection with
such registration or qualification under such Securities Act or state securities
or blue sky laws; and will reimburse on demand such selling Investor, such
underwriter, such broker or other person acting on behalf of such selling
Investor or such officer, director, fiduciary, employee, member, general
partner, limited partner, affiliate or controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action, subject to the
provisions of Section 8(c); provided, however, that the indemnity agreement
contained in this Section 8(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
damage, liability or action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission made in connection
with such registration statement, preliminary prospectus, final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by the selling Investors, any underwriter for them or controlling
person with respect to them.
(b) To the fullest extent permitted by law, each selling
Investor will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed such registration statement, each person,
if any, who controls the Company within the meaning of the Securities Act, any
underwriter for the Company (within the meaning of the Securities Act), and all
other selling Investors against any losses, claims, damages or liabilities to
which the Company or any such director, officer, controlling person, or
underwriter may become subject to, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in such registration statement, including any
preliminary prospectus contained therein or any amendments or supplements
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent that such
untrue statement or alleged
7
<PAGE>
untrue statement or omission or alleged omission was made in such registration
statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with such
registration; and such selling Investor will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other selling Investor in connection with
investigating or defending any such loss, claim, damage, liability or action,
subject to the provisions of Section 8(c), provided, however, that the maximum
amount of liability of each selling Investor hereunder shall be limited to the
proceeds (net of underwriting discounts and commissions, if any) actually
received by such selling Investor from the sale of Registrable Shares covered by
such registration statement, and provided, further, however, that the indemnity
agreement contained in this Section 8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that, if any indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to such indemnified party
which are different from or additional to those available to the indemnifying
party, or that such claim or litigation involves or could have an effect upon
matters beyond the scope of the indemnity agreement provided in this Section 8,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party, and such indemnifying party shall
reimburse such indemnified party and any person controlling such indemnified
party for the fees and expenses of counsel retained by the indemnified party
which are reasonably related to the matters covered by the indemnity agreement
provided in this Section 8. Subject to the foregoing, an indemnified party shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel shall not be at
the expense of the Company. The failure to notify an indemnifying party promptly
of the commencement of any such action, if materially prejudicial to his ability
to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 8, but the omission so to notify the
8
<PAGE>
indemnifying party will not relieve him of any liability which he may have to
any indemnified party otherwise other than under this Section 8.
(d) Notwithstanding anything in this Section 8 to the
contrary, if, in connection with an underwritten public offering, the Company,
the Investors and the underwriters enter into an underwriting or purchase
agreement relating to such offering which contains provisions covering
indemnification among the parties, then the indemnification provision of this
Section 8 shall be deemed inoperative for purposes of such offering.
9. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Investors the use of Section 2 hereof and the benefits of Rule 144 and any
other rule or regulation of the SEC that may at any time permit the Investors to
sell the Shares to the public without registration, the Company agrees: (i) to
make and keep public information available, as those terms are understood and
defined in the General Instructions to Form S-3, or any successor or substitute
form, and in Rule 144, (ii) to file with the SEC in a timely manner all reports
and other documents required to be filed by an issuer of securities registered
under the Securities Act or the Exchange Act, (iii) as long as any Investor owns
any Shares, to furnish in writing upon such Investor's request a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, and to furnish to such
Investor a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents so filed by the Company as may be
reasonably requested in availing such Investor of any rule or regulation of the
SEC permitting the selling of any such Shares without registration and (iv)
undertake any additional actions reasonably necessary to maintain the
availability of a registration statement on Form S-3, including any successor or
substitute forms, or the use of Rule 144.
10. TRANSFER OF REGISTRATION RIGHTS. None of the rights of any Investor
under this Agreement shall be transferred or assigned to any person unless (i)
such person is a Qualifying Investor (as defined below), and (ii) such person
agrees to become a party to, and bound by, all of the terms and conditions of,
this Agreement. For purposes of this Section 10, the term "Qualifying Investor"
shall mean, with respect to any Investor, (i) any partner, member or shareholder
thereof, (ii) any person, corporation or partnership controlling, controlled by,
or under common control with, such Investor or any partner thereof, or (iii) any
other direct transferee from such Investor of at least 16,667 shares of Common
Stock (subject to adjustment in the event of stock splits, stock dividends,
recombinations, recapitalizations and the like). None of the rights of any
Investor under this Agreement shall be transferred or assigned to any transferee
of Shares pursuant to a "brokers transaction" within the meaning of Rule 144
under the Securities Act or an effective registration statement under the
Securities Act. Upon transfer of Shares and rights in
9
<PAGE>
accordance with this Section 10, such Qualified Investor shall be deemed an
"Investor" hereunder.
11. ENTIRE AGREEMENT. This Agreement constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof, and it also supersedes any and all prior negotiations,
correspondence, agreements or understandings with respect to the subject matter
hereof.
12. MISCELLANEOUS.
(a) This Agreement may not be amended, modified or terminated,
and no rights or provisions may be waived, except with the written consent of
the Majority Holders and the Company.
(b) This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts, and
shall be binding upon the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns and transferees, provided that
the terms and conditions of Section 10 hereof are satisfied. Notwithstanding
anything in this Agreement to the contrary, if at any time any Investor shall
cease to own any Shares, all of such Investor's rights under this Agreement
shall immediately terminate.
(c) Any notices to be given pursuant to this Agreement shall
be in writing and shall be given by certified or registered mail, return receipt
request. Notices shall be deemed given when personally delivered or when mailed
to the addresses of the respective parties as set forth on Exhibit A hereto, or
to such changed address of which any party may notify the others pursuant
hereto, except that a notice of change of address shall be deemed given when
received.
(d) The parties acknowledge and agree that in the event of any
breach of this Agreement, remedies at law will be inadequate, and each of the
parties hereto shall be entitled to specific performance of the obligations of
the other parties hereto and to such appropriate injunctive relief as may be
granted by a court of competent jurisdiction.
(e) This Agreement may be executed in a number of
counterparts, an of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
LEUKOSITE, INC.
By:
-------------------------------------------
Name: Christopher K. Mirabelli
Title: President
INVESTORS:
HEALTHCARE VENTURES V, L.P.
By: HealthCare Partners V, L.P.
as General Partner
By:
-------------------------------------
Title: General Partner
RHO MANAGEMENT TRUST II
By:
------------------------------------------
Name:
Title:
SCHRODER VENTURES INTERNATIONAL
LIFE SCIENCES FUND L.P. 1
By: Schroder Venture Managers Inc.,
General Partner
By:
-------------------------------------
Peter Everson, Vice President
<PAGE>
SCHRODER VENTURES
INTERNATIONAL
LIFE SCIENCES FUND L.P. 2
By: Schroder Venture Managers Inc.,
General Partner
By:
---------------------------------------
Peter Everson, Vice President
SCHRODER VENTURES
INTERNATIONAL
LIFE SCIENCES TRUST
By: Codan Trust Company Limited, as
Trustee
By:
---------------------------------------
Title:
SCHRODER VENTURE MANAGERS
LIMITED,
as Investment Manager for the
Schroder
Ventures International Life Sciences
Fund
Co-Investment Scheme
By:
------------------------------------------
Peter Everson
Its:
PERETZ FAMILY INVESTMENT
By:
------------------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By:
------------------------------------------
Name:
Title:
11
<PAGE>
PERSEUS CAPITAL, LLC
By:
------------------------------------------
Name:
Title:
YK CAPITAL L.P.
---------------------------------------------
Name:
Title:
TODD NOONAN
---------------------------------------------
FOUR PARTNERS
By:
------------------------------------------
Name:
Title:
<PAGE>
Exhibit A
INVESTORS
HealthCare Ventures V, L.P.
44 Nassau Street
Princeton, NJ 08542
Rho Management Trust II
767 Fifth Avenue, 43rd Floor
New York, NY 10153
Schroder Ventures International Life
Sciences Fund L.P. 1
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures International Life
Sciences Fund L.P. 2
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures International Life
Sciences Trust c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Schroder Ventures Managers
Limited, as investment manager for
the International Life Sciences Fund
Co-Investment Scheme
c/o Nicola Lawson
22 Church Street
Hamilton HM 11, Bermuda
Peretz Family Investment
c/o Martin Peretz
20 Larchwood Drive
Cambridge, MA 02138
<PAGE>
Goldman, Sachs & Co.
Attn: Robert Granovsky
One New York Plaza
New York, NY 10004
Four Partners
Attn: Felix Baker
667 Madison Avenue, 7th Floor
New York, NY 10021
Perseus Capital, LLC
The Army and Navy Club Building
1627 I Street N.W., Suite 610
Washington, D.C. 20006
YK Capital L.P.
c/o Yasunori Kaneko
509 Rochampton Road
Hillsborough, CA 94010
Todd Noonan
c/o ICM
40 West 57th Street, 18th Floor
New York, NY 10019
<TABLE> <S> <C>
<PAGE>
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<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
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0
0
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