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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K/A
(AMENDMENT NO. 1)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
COMMISSION FILE NO. 0-23930
TARGETED GENETICS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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WASHINGTON 91-1549568
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
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1100 OLIVE WAY, SUITE 100
SEATTLE, WA 98101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (206) 623-7612
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
WARRANTS FOR THE PURCHASE OF SHARES OF COMMON STOCK, $.01 PAR VALUE
PREFERRED STOCK PURCHASE RIGHTS, $.01 PAR VALUE
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation SK is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate the aggregate market value of voting stock held by nonaffiliates
of the Registrant as of March 3, 1997: $69,785,575.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of March 3, 1997:
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TITLE OF CLASS NUMBER OF SHARES
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Common Stock, $.01 par value 20,161,434
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DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Proxy Statement for the Annual Meeting of
Shareholders held on May 7, 1997, are incorporated by reference into Part III
of the Form 10-K that is amended by this Form 10-K/A.
The Form 10-K for the fiscal year ended December 31, 1996 for Targeted
Genetics Corporation is hereby amended to file certain exhibits as more fully
set forth in Part IV, Item 14 below.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS. The following Financial Statements are included
in Part II, Item 8 of the Form 10-K.
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PAGE(S) IN
10-K
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Consolidated Balance Sheets at December 31, 1996 and 1995................. 24
Consolidated Statements of Operations for the years ended December 31,
1996, 1995, and 1994 and for the period from March 9, 1989 (date of
inception) through December 31, 1996.................................... 25
Consolidated Statements of Shareholders' Equity for the period from March
9, 1989 (date of inception) through December 31, 1996................... 26 - 27
Consolidated Statements of Cash Flows for the years ended December 31,
1996, 1995, and 1994 and for the period from March 9, 1989 (date of
inception) through December 31, 1996.................................... 28
Notes to Consolidated Financial Statements................................ 29 - 36
Report of Ernst and Young LLP, Independent Auditors....................... 37
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2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted because the required
information is either included in the financial statements or the notes thereto
or is not applicable.
3. EXHIBITS
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2.1 Agreement and Plan of Merger dated as of April 16, 1996, by and among
Targeted Genetics Corporation, TGC Acquisition Corporation and RGene
Therapeutics, Inc. (Exhibit 2.1) (E)
3.1 Amended and Restated Articles of Incorporation (Exhibit 3.1) (I)
3.2 Amended and Restated Bylaws (Exhibit 3.2) (I)
4.1 Warrant to Purchase 11,000 shares of the Common Stock of Targeted
Genetics Corporation, issued to MMC/GATX Partnership No. 1 on December
27, 1993, as amended (D)
4.2 Warrant to Purchase 11,000 shares of the Common Stock of Targeted
Genetics Corporation, issued to LINC Capital Management, Ltd. on
December 27, 1993 (Exhibit 4.3) (A)
4.3 Warrant to Purchase 18,701 shares of the Common Stock of Targeted
Genetics Corporation, issued to MMC/GATX Partnership No. 1 on November
30, 1994 (Exhibit 4.3) (B)
4.4 Warrant Agreement between Targeted Genetics Corporation and First
Interstate Bank of Washington, N.A., as Warrant Agent (D)
4.5 Specimen Warrant Certificate (Exhibit 4.5) (C)
4.6 Warrant to Purchase 21,315 shares of the common stock of Targeted
Genetics Corporation, issued to Financing for Science International,
Inc. on November 30, 1995 (D)
4.7 Rights Agreement, dated as of October 17, 1996, between Targeted
Genetics Corporation and ChaseMellon Shareholder Services (H)
10.1 Form of Indemnification Agreement between the registrant and its
officers and directors (Exhibit 10.6) (A)
10.2 Form of Senior Management Employment Agreement between the registrant
and its executive officers (Exhibit 10.2) (I)
10.3 Non-exclusive License Agreement, dated as of November 19, 1991, between
the Fred Hutchinson Cancer Research Center and Immunex Corporation*
(Exhibit 10.7) (A)
10.4 Gene Transfer Technology License Agreement, dates as of February 18,
1992, between Immunex Corporation and Targeted Genetics Corporation*
(Exhibit 10.8) (A)
10.5 License Agreement, dated as of June 1, 1992, between Wisconsin Alumni
Research Foundation and Targeted Genetics Corporation* (Exhibit 10.9) (A)
10.6 License Agreement, dated as of August 14, 1992, between Leland Stanford
Junior University and Targeted Genetics Corporation* (Exhibit 10.10) (A)
10.7 PHS Patent License Agreement -- Non-exclusive, dated as of July 13,
1993, between National Institutes of Health Centers for Disease Control
and Targeted Genetics Corporation* (Exhibit 10.13) (A)
10.8 Non-exclusive Patent License Agreement, dated as of December 25, 1993,
between The University of Florida Research Foundation, Inc. and
Targeted Genetics Corporation* (Exhibit 10.14) (A)
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10.9 Research and Exclusive License Agreement, dated as of January 1, 1994,
between Targeted Genetics Corporation and the Fred Hutchinson Cancer
Research Center* (Exhibit 10.19) (A)
10.10 PHS Patent License Agreement -- Exclusive, dated as of March 10, 1994,
between National Institutes of Health Centers for Disease Control and
Targeted Genetics Corporation* (Exhibit 10.15) (A)
10.11 Exclusive License Agreement, dated as of March 14, 1994, between
Medical College of Ohio and Targeted Genetics Corporation* (Exhibit
10.16) (A)
10.12 License Agreement, dated as of March 16, 1994, between the Johns
Hopkins University and Targeted Genetics Corporation* (Exhibit 10.17) (A)
10.13 License Agreement, dated as of March 28, 1994, between Targeted
Genetics Corporation and the University of Michigan* (Exhibit 10.18) (A)
10.14 Exclusive License Agreement dated as of March 28, 1994, between the
Fred Hutchinson Cancer Research Center and Targeted Genetics
Corporation* (Exhibit 10.20) (A)
10.15 Exclusive License Agreement, dated as of August 25, 1994, between
Targeted Genetics Corporation and the Fred Hutchinson Cancer Research
Center* (Exhibit 10.20) (B)
10.16 Development Agreement dated April 6, 1994, by and between Argus
Pharmaceuticals, Inc. and RGene Therapeutics, Inc.* (Exhibit 10.28) (F)
10.17 Patent and Technology License Agreement effective as of March 1, 1994,
by and among the Board of Regents of the University of Texas M.D.
Anderson Cancer Center and RGene Therapeutics, Inc.* (Exhibit 10.29) (F)
10.18 First Amended and Restated License Agreement effective October 12, 1995
between The University of Tennessee Research Corporation and RGene
Therapeutics, Inc.* (Exhibit 10.30) (F)
10.19 Amendment to the First Amended and Restated License Agreement, between
The University of Tennessee Research Corporation and RGene
Therapeutics, Inc., dated as of June 19, 1996* (Exhibit 10.1) (G)
10.20 Exclusive Sublicense Agreement effective July 23, 1996 by and between
Alkermes, Inc. and Targeted Genetics Corporation*
10.21 Revised License Agreement effective October 1, 1996, by and between the
University of Pittsburgh -- of the Commonwealth System of Higher
Education and Targeted Genetics Corporation*
10.22 Agreement dated as of May 28, 1996 by and between RGene Therapeutics,
Inc. and Laboratoires Fournier S.C.A.* (Exhibit 10.32) (F)
10.23 Olive Way Building Lease, dated as of November 20, 1993, between
Metropolitan Federal Savings and Loan Association and Targeted Genetics
Corporation (Exhibit 10.21) (A)
10.24 First Amendment to Olive Way Building Lease, dated as of December 10,
1994, between Targeted Genetics Corporation and Metropolitan Federal
Savings and Loan Association (Exhibit 10.22) (B)
10.25 Second Amendment to Olive Way Building Lease, dated as of June 12,
1996, between Targeted Genetics Corporation and Ironwood Apartments,
Inc. (successor in interest to Metropolitan Federal Savings and Loan
Association) (Exhibit 10.25) (I)
10.26 Office Lease, dated as of October 7, 1996, by and between Benaroya
Capital Company, LLC and Targeted Genetics Corporation (Exhibit 10.26) (I)
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10.27 MMC/GATX Partnership No. 1 Equipment Lease Agreement, dated as of
December 27, 1993 (Exhibit 10.22) (A)
10.28 LINC Capital Management, Ltd. Equipment Lease Agreement, dated as of
December 27, 1993 (Exhibit 10.23) (A)
10.29 Loan and Security Agreement, dated as of November 30, 1994, between
MMC/GATX Partnership No. 1 and Targeted Genetics Corporation (Exhibit
10.25) (B)
10.30 Master Equipment Lease Agreement, dated as of October 17, 1995, between
Financing for Science International, Inc. and Targeted Genetics
Corporation (D)
10.31 Registration Rights Agreement dated as of April 27, 1992, among
Targeted Genetics Corporation and the holders of Series A and Series B
Convertible Preferred Stock (Exhibit 10.26) (A)
10.32 1992 Restated Stock Option Plan (Exhibit 10.32) (I)
10.33 Stock Option Plan for Nonemployee Directors (Exhibit 10.33) (I)
11.1 Computation of net loss per share (Exhibit 11.1) (I)
23.1 Consent of Ernst & Young LLP (Exhibit 23.1) (I)
27.1 Financial Data Schedule (Exhibit 27.1) (I)
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* Confidential treatment has been granted by or requested from the Securities
and Exchange Commission for portions of these exhibits.
(A) Incorporated by reference to the designated exhibit included with the
Company's Form S-1 Registration Statement (No. 33-77054) filed on March 30,
1994, as amended.
(B) Incorporated by reference to the designated exhibit included with the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.
(C) Incorporated by reference to the designated exhibit included with the
Company's Form S-1 Registration Statement (No. 33-91500) filed on April 24,
1995, as amended.
(D) Incorporated by reference to the designated exhibit included with the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
(E) Incorporated by reference to the designated exhibit included with the
Company's Form 8-K filed April 16, 1996.
(F) Incorporated by reference to the designated exhibit included with the
Company's Form S-1 Registration Statement (No. 333-03592) filed on April 16,
1996, as amended.
(G) Incorporated by reference to the designated exhibit included with the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 1996.
(H) Incorporated by reference to the designated exhibit included with the
Company's Form 8-A filed October 22, 1996.
(I) Incorporated by reference to the designated exhibit included with the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
(b) REPORTS ON FORM 8-K
A Current Report on Form 8-K dated October 18, 1996 was filed with the
Securities and Exchange Commission reporting that Targeted Genetics Corporation
had adopted a Shareholder Rights Agreement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
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TARGETED GENETICS CORPORATION
By: /s/ JAMES A. JOHNSON Date: June 13, 1997
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James A. Johnson,
Vice President, Finance,
Chief Financial Officer,
Treasurer and Secretary
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REDACTED VERSION
===========================
EXHIBIT 10.20
To
Targeted Genetics Corporation's
Form 10-K
For the Year Ended
December 31, 1996
"[ * ]" = omitted, confidential material, which material has been
separately filed with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
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EXHIBIT 10.20
EXCLUSIVE SUBLICENSE AGREEMENT
THIS AGREEMENT is made and entered into this 23rd day of July 1996
("Effective Date") by and between: Alkermes, Inc., 64 Sidney Street, Cambridge,
MA 02139, (hereinafter referred to together with its subsidiaries and affiliated
companies as "LICENSOR" ) and Targeted Genetics Corporation, 1100 Olive Way,
Suite 100, Seattle, Washington 98101, (hereinafter referred to together with its
subsidiaries and affiliated companies as "LICENSEE").
WHEREAS, LICENSOR is the exclusive licensee from the Children's Hospital
Research Foundation/Children's Hospital, Inc. of certain "Licensed Patent
Rights" and "Licensed Materials" relating to Adeno-Associated Virus (AAV)
packaging cell lines invented by Dr. Philip R. Johnson and has the right to
grant sublicenses under Licensed Patent Rights and to Licensed Materials.
WHEREAS, LICENSEE desires to obtain certain sublicensing rights under the
Licensed Patent Rights and to the Licensed Materials upon the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 "LICENSEE" shall include the following:
(a) a related company of LICENSEE, the voting stock of which is directly
or indirectly at least fifty percent (50%) owned or controlled by
LICENSEE;
(b) an organization which directly or indirectly owns or controls more
than fifty percent (50%) of the voting stock of LICENSEE;
(c) an organization, the majority ownership of which is directly or
indirectly common to the majority ownership of LICENSEE.
1.2 "Licensed Patent Rights", as used herein, shall mean all of the following:
(a) U.S. Patent Application Serial No. 08/254,358, filed June 6, 1994, and
Serial No. 08/475,391, filed June 7, 1995, "Adeno-Associated Virus
Materials", invented by Philip R. Johnson.
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(b) to the extent that the following contain one or more claims to the
invention or inventions claimed in (a) above: divisions, continuations
and continuations-in-part of (a) above, all divisions and
continuations of these continuations-in-part, divisions and
continuations, and any reissues, extensions or reexaminations of the
foregoing patents;
(c) to the extent that the following contain one or more claims to the
invention or inventions claimed in (a) above: all counterpart foreign
applications and patents to (a) and (b) above;
(d) any other patent applications, including divisions, continuations,
continuations-in-part, reissues, extensions, reexaminations and
counterpart foreign applications thereof, that contain one or more
claims to the invention or inventions claimed in (a) above or any
improvements to such invention or inventions; and
(e) any patents issuing in respect of any of the applications, divisions,
continuations, continuations-in-part, reissues, extensions,
reexaminations and counterpart foreign applications referenced in
clauses (a), (b), (c) and (d) above.
1.3 "Licensed Materials", as used herein, shall mean the C12 adeno-associated
virus packaging cell line developed by the Children's Hospital Research
Foundation/Children's Hospital, Inc. and any improvements thereto.
1.4 "Licensed Product(s)", as used herein, shall mean any product which cannot
be manufactured, used or sold without utilizing Licensed Materials or
which, in the course of manufacture, use or sale would, in the absence of
this Agreement, infringe one or more issued claims of the Licensed Patent
Rights that have not been held invalid or unenforceable by an unappealed or
unappealable judgement of a court of competent jurisdiction or expired.
1.5 "Net Sales" shall mean revenue received by LICENSEE from sales of Licensed
Products by LICENSEE, its sublicensee(s) or agent(s) less the sum of the
following:
(a) discounts allowed in amounts customary in the trade,
(b) sales taxes, tariff duties, and/or use taxes which are directly
imposed and are with reference to particular sales;
(c) outbound transportation prepaid or allowed;
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(d) amounts allowed or credited on returns; and
(e) charges deemed uncollectible under generally accepted accounting
principles.
1.6 "Field of Use" shall mean the following:
Treatment and prevention of pulmonary diseases.
1.7 "Optioned Field(s) of Use" shall mean the following:
Optioned Field 1. Treatment and prevention of infectious diseases.
Optioned Field 2. Treatment of benign or malignant tumors.
Optioned Field 3. Treatment and prevention of cardiovascular disorders.
Optioned Field 4. Treatment and prevention of metabolic/endocrinology
disorders (e.g., Gaucher disease).
Optioned Field 5. Treatment and prevention of hematopoietic/immune
disorders.
Optioned Field 6. Systemic and mucosal delivery of secreted proteins.
Optioned Field 7. Treatment and prevention of gastrointestinal diseases.
ARTICLE II
GRANT
2.1 LICENSOR hereby grants to LICENSEE a worldwide exclusive sublicense under
Licensed Patent Rights and to Licensed Materials to make, have made, use, lease,
have sold and sell Licensed Products in the Field of Use.
2.2 LICENSOR hereby grants to LICENSEE under Licensed Patent Rights and to
Licensed Materials the exclusive right to grant one or more sublicenses to its
rights to make, have made, use, lease, have sold and sell Licensed Products in
the Field of Use.
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* Confidential Treatment Requested
2.3 LICENSOR reserves unto itself the personal, non-transferable right to make,
have made, and use Licensed Product(s) and Licensed Material in the Field of Use
for internal research purposes only, and for no other purpose in the Field of
Use.
2.4 LICENSEE hereby agrees grants to LICENSOR an exclusive, worldwide
royalty-free license to make, have made, use and sell products under any patent
rights owned by LICENSEE for improvements on the C12 cell line in the field of
nervous system diseases including, without limitation, brain cancers.
ARTICLE III
COMPENSATION-ROYALTIES
3.1 For the rights, privileges and license granted hereunder, LICENSEE shall
pay royalties to LICENSOR in the manner hereinafter provided to the end of the
term of the Licensed Patent Rights on a country-by-country basis or until this
Agreement shall be terminated as hereinafter provided, whichever occurs first.
LICENSEE agrees to pay to LICENSOR a royalty of [ * ] on the amount of annual
Net Sales of Licensed Products that are less than or equal to [ * ] and a
royalty of [ * ] on the amount of annual Net Sales of Licensed Products that
exceed [ * ]. For sales in any country in which no Licensed Patent Rights exist,
such royalty shall be reduced [ * ] on the amount of annual Net Sales of
Licensed Products incorporating, based upon or made by employing the Licensed
Material or the technology described in the Licensed Patent Rights.
3.2 Notwithstanding the foregoing, if LICENSEE is required to pay royalties to
an unaffiliated third party(ies) for sales of Licensed Products for which
payments are also due to LICENSOR ("Third Party Royalties"), then the royalties
to be paid by LICENSEE to LICENSOR shall be reduced by the amount that the sum
of the LICENSOR's royalty percentage and Third Party royalty percentage are in
excess of [ * ] of Net Sales of Licensed Products, but in no event shall the
LICENSOR'S royalty percentage be reduced to less than [ * ].
3.3 No multiple royalties shall be payable because any Licensed Product, its
manufacture, use, lease or sale are or shall be covered by multiple claims or
more than one Licensed Patent Right licensed under this Agreement.
* Confidential Treatment Requested
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* Confidential Treatment Requested
3.4 In addition to royalties, LICENSEE agrees to pay LICENSOR the following
sums within thirty (30) days of the time that each of the milestones listed
below:
(a) The sum of [ * ] upon execution of this Agreement and [ * ] payable
one (1) year from the Effective Date;
(b) The sum of [ * ] for the first Phase I clinical trial, or equivalent
in a foreign country, initiated by LICENSEE or one of its sublicensees
for a Licensed Product;
(c) The sum of [ * ] for the first Phase II clinical trial, or equivalent
in a foreign country, initiated by LICENSEE or one of its sublicensees
for a Licensed Product (Phase I/II or equivalent in a foreign country
will be considered a Phase I trial);
(d) The sum of [ * ] for the first Phase III clinical trial, or equivalent
in a foreign country, initiated by LICENSEE or one of its sublicensees
for a Licensed Product for which a Phase II clinical trial was
initiated and, consequently, a milestone payment was made to LICENSOR
pursuant to paragraph 3.4(c);
(e) The sum of [ * ] for the first Phase III clinical trial, or equivalent
in a foreign country, initiated by LICENSEE or one of its sublicensees
for a Licensed Product for which no Phase II clinical trial was
initiated and, consequently, no milestone payment was made to LICENSOR
pursuant to paragraph 3.4(c); and
(f) The sum of [ * ] for the first Product Licensing Application, or
equivalent in a foreign country, approved for LICENSEE's or one of its
sublicensee's Licensed Product.
3.5 Royalty payments made pursuant to Paragraph 3.1, supra, shall be made
quarterly for the three (3) month periods ending March 31, June 30, September 30
and December 31 of each calendar year and shall be due and payable within 45
days of the termination of each calendar half year--i.e., such payments shall be
due or payable on or before May 15, August 14, November 15 and February 14 in
each calendar year.
* Confidential Treatment Requested
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*Confidential Treatment Requested
3.6 All monies due to LICENSOR hereunder shall be paid in United States
dollars. LICENSEE shall be responsible for making the payment to the LICENSOR.
The rate of exchange to be used in computing the amount of currency equivalent
to United States dollars due to LICENSOR shall be made at the rate of exchange
at Chase Manhattan Bank for the three (3) month trailing average for the
calendar quarter for which payment is due.
3.7 If LICENSEE grants a sublicense to the Licensed Patent Rights or the
Licensed Materials to a third party, for value other than royalties based on
sales of Licensed Products, LICENSEE shall pay LICENSOR [ * ] of all proceeds
paid to LICENSEE in consideration for such grant of a sublicense, including any
premium paid over the market value of the LICENSEE's common stock by a
sublicensee in connection with an equity purchase, but excluding such royalties
paid to LICENSEE in connection therewith, up to a maximum of [ * ] per year in
the year that such proceeds are paid to LICENSEE ("Non-Royalty Fees"). Any such
payment shall be made within thirty (30) days after receipt of such Non-Royalty
Fees by LICENSEE. Notwithstanding the foregoing, in no event shall LICENSEE: a)
be obligated to pay LICENSOR a share of any proceeds that LICENSEE receives from
a third party as research and development funding, milestone payments, or equity
purchase, other than any premium paid on an equity purchase; or b) enter into a
paid-up sublicense to Licensed Patent Rights or Licensed Materials with a third
party without the written consent of LICENSOR.
3.8 In the event that LICENSEE transfers or otherwise sublicenses Licensed
Patent Rights or Licensed Materials to a third party in combination with
patent(s) and/or other right(s) of a third party(ies) and LICENSEE is due and
receives Non-Royalty Fees, then LICENSEE shall pay LICENSOR an equitable portion
of such Non-Royalty Fees as determined by the good faith negotiations of
LICENSEE and LICENSOR.
ARTICLE IV
LICENSE OPTION
4.1 LICENSOR hereby grants to LICENSEE an exclusive right of first negotiation
to sublicense on an exclusive basis the Licensed Patent Rights and the Licensed
Materials for one or more of the Optioned Fields of Use ("License Option"). Upon
written notification by LICENSEE to LICENSOR of an intent to acquire exclusive
rights to an Optioned Field(s)
* Confidential Treatment Requested
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* Confidential Treatment Requested
of Use, LICENSOR shall negotiate with LICENSEE in good faith to reach agreement
on commercially reasonable terms for a sublicense to such Optioned Field(s) of
Use. Upon notification to LICENSOR by a third party of an intent to acquire
license rights to an optioned Field of Use, LICENSOR shall provide LICENSEE
written notification of such notice, and LICENSEE, at its own discretion, shall
have the option to negotiate with LICENSOR in good faith for a period of at
least sixty (60) days from the date of such notification ("Option Period") to
reach agreement on commercially reasonable terms for a sublicense to LICENSEE to
such Optioned Field(s) of Use. If LICENSEE elects not to negotiate, or if the
parties do not reach agreement during the Option Period, then LICENSOR may grant
a sublicense in respect of such Optioned Field(s) of Use to the Third Party on
terms that are no more favorable than those that were last offered by LICENSOR
to LICENSEE during the Option Period. The License Option shall expire one (1)
year from the Effective Date and may be renewed at LICENSEE's sole discretion
for subsequent one (1) year periods at the rate of [ * ] per year, reduced pro
rata in proportion to the number of Optioned Fields of Use which have previously
been sublicensed either to LICENSEE or to third parties.
ARTICLE V
RECORD KEEPING AND REPORTS
5.1 LICENSEE agrees to keep accurate records in sufficient detail to enable the
royalties payable by LICENSEE to LICENSOR hereunder to be determined, and agrees
to permit said records to be examined from time to time during the life of this
Agreement, and for one (1) year after the expiration and termination of this
Agreement, at reasonable intervals (but not more than once per calendar year) by
an independent auditor mutually agreeable to the parties, during normal business
hours, and to the extent necessary to verify the reports and payments required
hereunder. Such auditor shall only disclose to LICENSOR whether or not royalties
payable hereunder have been accurately computed and paid, and no other
information. In the event any such audit reveals an underpayment, LICENSEE shall
promptly remit the deficiency to LICENSOR. In the event any such audit reveals
an overpayment, the excess shall be credited against any future payments due to
LICENSOR hereunder.
5.2 LICENSEE agrees to furnish LICENSOR with written Reports within two (2)
months of the termination of each calendar quarter (i.e., such written Reports
shall be due as in Paragraph 3.3 supra) setting forth separately by model number
or other identifying
* Confidential Treatment Requested
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designation, the total number of Licensed Products theretofore made and sold
hereunder during the preceding calendar quarter and the royalties due thereon.
Each such Report shall be accompanied by a copy of any sub-sublicensee's Report
received subsequent to LlCENSEE's prior Report and prior to LlCENSEE's current
Report.
5.3 LICENSOR shall maintain in confidence, and shall not disclose to any third
party or use for any purpose not expressly authorized by this Agreement, all
information provided to LICENSOR and/or its auditor pursuant to this Article V
and to Article VII. LICENSOR shall obtain written agreement from LICENSOR's
auditor who shall inspect LICENSEE's records pursuant to Article 5.1, for
LICENSEE's benefit, to be bound by the foregoing confidentiality obligation.
Such confidentiality obligation shall survive any termination or expiration of
this Agreement. Notwithstanding the foregoing, the confidentiality obligation
shall not extend to the disclosure of data, documents or information to
judicial, governmental or other official agencies, or in accordance with common
practice, to the extent that such disclosure is required by any applicable
securities laws or self regulatory agencies.
ARTICLE VI
PATENT RIGHTS
6.1 LICENSOR shall, in the first instance, have the sole and exclusive right to
file any and all patent applications, both foreign and domestic, falling within
the scope of this Agreement; and LICENSOR shall be responsible for all costs,
fees and expenses incurred in connection with the filing, prosecution and
maintenance of any such patent application and the maintenance of any patent
issuing thereon. Any such patent shall be included within this Agreement as part
of the Licensed Patent Rights.
6.2 LICENSOR shall notify LICENSEE of the issuance of any Licensed Patent
Rights, and any expiration, lapse, revocation, surrender, invalidation or
abandonment of any Licensed Patent Rights.
6.3 If, at any time during the term of this Agreement, LICENSOR elects not to
file a patent application or to abandon any pending patent application or any
patent issued thereon, either foreign or domestic, it shall notify LICENSEE of
that decision at least two (2) months prior to any deadline for filing any
response or taking any other action necessary to file or maintain any such
application and/or patent in existence; and, thereafter, LICENSEE shall have the
right and option to participate, together with other licensees to such patent
application or issued patent, in the filing or prosecution of any such patent
application and/or the maintenance of any such patent, at LICENSEE's expense;
and, any patent issuing therefrom shall be exclusively licensed to LICENSEE in
the Field of Use and any Optioned Fields of Use as to which LICENSEE has
exercised its option pursuant to Article IV on a royalty-free basis.
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ARTICLE VII
DUE DILIGENCE
7.1 LICENSEE, during the entire term of this Agreement, shall utilize
commercially reasonable efforts in proceeding with the development, manufacture,
sale and commercial exploitation of Licensed Product(s), and in creating a
supply and demand for same; provided, however, that LICENSEE shall be entitled
to exercise prudent business judgment in meeting its reasonable diligence
obligations hereunder.
7.2 LICENSEE agrees to keep LICENSOR informed of its progress on the commercial
exploitation of Licensed Product(s) hereunder by annual reports due within sixty
(60) days following the end of each calendar year.
ARTICLE VIII
PATENT MARKING
8.1 LICENSEE shall mark, and shall require its sub-licensee(s) to mark, each
Licensed Product made and sold by it or by them with an appropriate patent
marking identifying the pendency of any U.S. application and/or any issued U.S.
or foreign patent forming any part of Licensed Patent Rights.
ARTICLE IX
TERM AND TERMINATION
9.1 This Agreement, and the rights, privileges and license granted herein,
shall be in force from the Effective Date hereof and shall remain in full force
and effect thereafter until the last to expire of Licensed Patent Rights unless
sooner terminated in accordance with the provision set forth herein below. It
is, however, understood by the parties hereto that LlCENSEE's obligation to pay
royalties to LICENSOR under this Agreement shall terminate in the event of a
judicial determination that no portion of such Licensed Patent Rights are valid,
infringed and/or enforceable by a decision of a tribunal of competent authority
where such decision is final or by lapse of time becomes final and unappealable.
9.2 LICENSEE may terminate this Agreement and concomitant future obligations
upon thirty (30) days written notice to LICENSOR.
9.3 If LICENSEE shall cease to carry on its business, this Agreement shall
terminate upon notice by LICENSOR.
9.4 Should LICENSEE fail to make any payment whatsoever due and payable to
LICENSOR hereunder, LICENSOR shall have the right to terminate this Agreement
effective on thirty (30) days notice, unless LICENSEE shall make all such
payments to LICENSOR within said thirty (30) day period. Upon the expiration of
the thirty (30) day
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period, if LICENSEE shall not have made all such payments to LICENSOR, the
rights, privileges and license granted hereunder shall automatically terminate.
9.5 Upon any material breach or default of this Agreement by LICENSEE other
than those occurrences set out in Articles 9.3 and 9.4 hereinabove, LICENSOR
shall have the right to terminate this Agreement and the rights, privileges and
license granted hereunder effective on sixty (60) days notice to LICENSEE. Such
termination shall become automatically effective unless LICENSEE shall have
cured any such material breach or default prior to the expiration of the sixty
(60) day period. In the event that LICENSOR asserts a breach of this Agreement
under Article 7.1, this Agreement shall remain in full force and effect until
the matter is resolved by the parties themselves or under arbitration as
provided for under Article 18.
ARTICLE X
DISPOSITION OF LICENSED PRODUCTS
ON HAND UPON TERMINATION
10.1 In the event of any termination of this Agreement, LICENSEE and its
sub-licensees shall have the right to use or sell all the Licensed Products on
hand at the time of such termination, provided that LICENSEE shall be obligated
to pay to the LICENSOR a royalty on such sales as set forth in this Agreement
if, at that time, there remains in existence any of Licensed Patent Rights
covering the manufacture, use or sale of such Licensed Product(s).
ARTICLE XI
PATENT ENFORCEMENT
11.1 If LICENSEE shall have supplied LICENSOR with written evidence
demonstrating infringement of the Licensed Patent Rights by a third party,
LICENSEE may, by written notice, request LICENSOR to take steps to assert such
Licensed Patent Rights against such infringing product. LICENSOR shall within
six (6) months of the receipt of such notice either (a) cause such infringement
to terminate or (b) initiate and continue legal proceedings against the
infringer, or pursue other equivalent legal or patent remedies. If LICENSOR
fails to take either of the actions specified in clause (a) or (b) above,
LICENSEE may, upon notice to LICENSOR, discontinue making royalty payments to
LICENSOR that are due hereunder, and have further royalty payments waived by
LICENSOR until LICENSOR in good faith takes and continues such action, at which
time only future royalties shall be due. Notwithstanding the foregoing, if the
infringement ceases at any time, TGC's obligations shall continue at full force
from the time that infringement ceases.
11.2 In the event LICENSOR fails to terminate the infringement within the six
(6) months of written notification from LICENSEE informing LICENSOR of an
alleged infringement, and does not institute litigation against the infringer
for that purpose within such period, then LICENSEE shall have the right to bring
an action against the infringer for
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that purpose. LICENSOR shall cooperate fully with LICENSEE, at LICENSEE's
expense, in connection with any such action. Such cooperation shall include
(without limitation) LICENSOR's permitting LICENSEE to bring the action in
LICENSOR's name and LICENSOR's executing any consents or assignments necessary
or useful to permit LICENSEE to enforce the Licensed Patent Rights against the
infringer. LICENSEE shall be entitled to deduct all expenses incurred by it in
connection with any such action from the royalties and other amounts that would
otherwise be payable to LICENSOR hereunder; provided that to the extent any
amounts are finally awarded to LICENSEE in such action or are paid to LICENSEE
in settlement thereof, such amounts shall be paid over to LICENSOR until all
amounts so withheld have been repaid. Any amounts so awarded or paid in
settlement in excess of the amounts so withheld shall be retained by LICENSEE.
ARTICLE XII
PUBLICITY
12.1 The parties agree that neither party will use the name of the other party,
or any abbreviation thereof, expressly or by implication, or disclose the
existence or nature of this Agreement, in any news, publicity release,
advertisement or other public disclosure, without the express prior written
approval of the other party. Notwithstanding the foregoing, each party hereby
consent to references to it (1) in such reports or documents sent to
stockholders or filed with or submitted to any governmental regulatory agencies
or bodies or stock exchanges or as may be required to obtain investment capital,
or (2) pursuant to any requirements of applicable law or governmental
regulations, provided that, in the event of any such disclosure, the party
making such disclosure shall afford the other party the prior opportunity to
review the text of such disclosure, the other party shall promptly respond to
the disclosing party, and the disclosing party shall use its best efforts to
comply with any reasonable requests by the other party regarding changes.
ARTICLE XIII
WAIVER
13.1 No omission or delay of either party hereto in requiring due and punctual
fulfillment of the obligations of the other party hereto shall be deemed to
constitute a waiver by such party of its rights to require such due and punctual
fulfillment, or of any other of its remedies hereunder.
ARTICLE XIV
WARRANTIES
14.1 LICENSOR warrants that it has the lawful right to grant the sublicense set
forth herein. LICENSOR furthers represents and warrants to LICENSEE that, to the
best of its knowledge, it is the exclusive licensee of the Children's Hospital
Research Foundation/Children's Hospital, Inc. in respect of the Licensed Patent
Rights and the Licensed Materials in all fields and that neither LICENSOR nor to
the best of LICENSOR's knowledge, the Children's Hospital Research
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Foundation/Children's Hospital, Inc. has granted any licenses, sublicenses, or
other rights in respect of the Licensed Patent Rights or the Licensed Materials
in the Field of Use or any Optioned Field of Use.
14.2 LICENSOR makes no express or implied warranties of merchantability or
fitness of the Licensed Products for any particular purpose.
14.3 Nothing in this Agreement shall be construed as:
i) a warranty or representation by the LICENSOR as to the patentability,
validity or scope of any of the Licensed Patent Rights;
ii) except as provided in Section 14.1, a warranty or representation that
anything made, used, sold or otherwise disposed of under any license granted in
this Agreement is or will be free from infringement of patents or proprietary
rights of third parties; or,
iii) an obligation to bring or prosecute actions or suits against third
parties for infringement.
ARTICLE XV
SUCCESSION AND ASSIGNABILITY
15.1 This Agreement and the rights and benefits conferred upon LICENSEE
hereunder may not be assigned nor transferred by LICENSEE without the prior
written consent of LICENSOR, except in the event of sale of all or a portion of
the business of LICENSEE, in which event LICENSEE, upon written notification to
LICENSOR, may assign this Agreement to a wholly owned subsidiary or to a
purchaser of substantially all of its assets relating to the subject matter of
the Agreement.
15.2 This Agreement shall be binding upon and inure to the benefit of the
successors, representatives and assigns of the parties hereto.
ARTICLE XVI
INDEMNITY
16.1 LICENSEE agrees to indemnify, hold harmless and defend LICENSOR, its
officers, employees and agents, against any and all claims, suits, losses,
damages, costs, fees and expenses, including reasonable attorney's fees,
resulting from or arising out of LICENSEE's
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exercise of its rights granted under this Agreement including, but not limited
to, product liability, any damages, losses or liabilities whatsoever with
respect to death or injury to any person and damage to any property arising from
the production, manufacture, sale, lease, consumption, advertisement,
possession, use or operation of Licensed Products by LICENSEE or its
sub-licensees or their customers in any manner whatsoever.
16.2 LICENSOR agrees to indemnify, hold harmless and defend LICENSEE and its
officers, employees and agents against any and all claims, suits, losses,
damages, costs, fees and expenses (including attorneys' fees) resulting from or
arising out of LICENSOR's grant of the sublicense granted under this Agreement
including, but not limited to, any amounts payable by LICENSOR to its
licensor(s) of the Licensed Patent Rights or the Licensed Materials or other
persons or entities having rights in respect of the Licensed Patent Rights or
the Licensed Materials.
16.3 In the event of any claim for which indemnification will be sought pursuant
to Section 16.1 or 16.2, the indemnified party will give the indemnifying party
prompt written notice of such claim. The indemnifying party shall have the sole
right to control the defense and settlement of any such claim and shall not be
liable for any settlement that the indemnifying party does not approve in
writing in advance. The indemnified party will cooperate fully with the
indemnifying party, at the indemnifying party's expense, in connection with the
defense and settlement of any such claim.
16.4 Prior to entering clinical trials, LICENSEE further agrees to obtain and
maintain in force a comprehensive or commercial form general liability insurance
policy supporting its obligations under Article 16.1. This insurance shall
provide LICENSOR with insurance coverage that is commensurate with the insurance
coverage that LICENSOR would have otherwise been provided had the LICENSOR been
named as additional insured on the LICENSEE's comprehensive general liability
insurance, and provide for prior notice to LICENSOR before cancellation. The
limits of such insurance shall be commercially reasonable amounts for personal
injury or death, and for property damage. Upon request, LICENSEE shall provide
LICENSOR with Certificates of Insurance evidencing the same.
ARTICLE XVII
NOTICES
17.1 Any payment, notice or other communication required or permitted to be
given by either party hereto shall be deemed to have been properly given and be
effective on the date of delivery if delivered, in writing, in person, by
facsimile, by overnight mail or by first class certified mail with postage
prepaid and return receipt requested to the respective addresses set forth
below, or to such other address as either party shall designate by written
notice given to the other party:
In the case of LICENSOR:
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Alkermes, Inc.
Chief Financial Officer
64 Sidney Street
Cambridge, MA 02139
In the case of LICENSEE:
President, Targeted Genetics Corporation
1100 Olive Way, Suite 100
Seattle, WA 98101
ARTICLE XVIII
ARBITRATION; APPLICABLE LAW
18.1 All disputes that may arise, including, but not limited to, disputes
arising under Article 7.1, in connection with this agreement and that are not
resolved by the parties themselves shall be submitted to binding arbitration
under the commercial rules and regulations then obtaining of the American
Arbitration Association relating to voluntary arbitrations. All costs of
arbitration shall be divided equally between the parties. The award shall be
binding and conclusive on each of the parties, and it may be enforced by the
party in whose favor it runs in any court of competent jurisdiction at the
option of the successful party.
18.2 In the event of any arbitration as provided in Section 18.1, (i) venue for
the arbitration shall lie exclusively in the state and county of the principal
executive offices of the party against whom the arbitration is initiated, and
(ii) the law governing this Agreement for purposes of the arbitration shall be
the law of the state of the principal executive offices of the party against
whom the arbitration is initiated.
ARTICLE XIX
MISCELLANEOUS
19.1 The headings of the several sections of this Agreement are inserted for
convenience and reference only; and, are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
19.2 This Agreement will not be binding upon the parties until it has been
signed by, or on behalf of, each party, in which event it shall be effective as
of the Effective Date.
19.3 No amendment or modification hereof shall be valid or binding upon the
parties unless made in writing and signed as aforesaid.
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19.4 This Agreement embodies the entire understanding of the parties and
supersedes all previous communications, representations or understandings,
either oral or written, between the parties relating to the subject matter
hereof.
19.5 If any provision, or provisions, of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
19.6 In witness whereof, both the LICENSOR and LICENSEE have executed this
Agreement, in duplicate originals but collectively evidencing only a single
contract, by their respective officers hereunto duly authorized, on the day and
year hereinafter written.
IN WITNESS WHEREOF, the parties have executed this Agreement through duly
authorized representatives as of the date first above written.
ALKERMES, INC.
By: /s/ Michael Landine
---------------------------------------------------
Title: Sr. Vice President and Chief Financial Officer
TARGETED GENETICS CORPORATION
By: /s/ H. Stewart Parker
---------------------------------------------------
Title: President and CEO
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===========================
REDACTED VERSION
===========================
EXHIBIT 10.21
To
Targeted Genetics Corporation's
Form 10-K
For the Year Ended
December 31, 1996
"[ * ]" = omitted, confidential material, which material has been
separately filed with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
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EXHIBIT 10.21
REVISED LICENSE AGREEMENT
This Agreement is made and entered into this 1st day of October, 1996,
(Effective Date) by and between the UNIVERSITY OF PITTSBURGH - OF THE
COMMONWEALTH SYSTEM OF HIGHER EDUCATION, a non-profit corporation, organized and
existing under the laws of the Commonwealth of Pennsylvania, having its
principal office at 4200 Fifth Avenue, Pittsburgh, PA 15260 (UNIVERSITY) and
TARGETED GENETICS CORPORATION, 1100 Olive Way, Suite 100, Seattle, Washington
98101 (LICENSEE).
WHEREAS, UNIVERSITY and RGene Therapeutics, Inc. entered into a License
Agreement dated October 12, 1994 (1994 LICENSE AGREEMENT) for certain
intellectual property rights;
WHEREAS, RGene Therapeutics, Inc. is now merged into a wholly owned
subsidiary of LICENSEE;
WHEREAS, UNIVERSITY and LICENSEE are desirous of revising the 1994 LICENSE
AGREEMENT;
WHEREAS, UNIVERSITY is the owner of certain intellectual property relating
to therapeutic drug delivery technology developed by Leaf Huang, Ph.D. (Dr.
Huang) a member of the faculty at UNIVERSITY, and has the right as specified
herein to grant licenses to such intellectual property;
WHEREAS, UNIVERSITY desires to have the LICENSED TECHNOLOGY utilized in the
public interest;
WHEREAS, LICENSEE has represented to UNIVERSITY, to induce UNIVERSITY to
enter into this Agreement, that LICENSEE is experienced in the development,
production, manufacture, marketing and sale of products and/or the use of
similar products to the LICENSED TECHNOLOGY (as defined below) and that LICENSEE
shall commit itself to a thorough, vigorous and diligent program of exploiting
the LICENSED TECHNOLOGY so that public utilization results therefrom;
WHEREAS, the LICENSED TECHNOLOGY is the subject matter of a Sponsored
Research Agreement between UNIVERSITY and LICENSEE; and
WHEREAS, LICENSEE desires to obtain a license under the PATENT RIGHTS
and/or LICENSED TECHNOLOGY upon the terms and conditions hereinafter set forth.
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* Confidential Treatment Requested
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
For purposes of this Agreement, the following words and phrases shall have
the following meanings:
1.1 AFFILIATE shall mean, with respect to UNIVERSITY, any clinical or
research entity in Pittsburgh which is operated or managed as a facility under
the University of Pittsburgh Medical Center, whether or not owned by UNIVERSITY.
1.2 LICENSEE shall mean Targeted Genetics Corporation and all entities at
least fifty percent (50%) owned or controlled by Targeted Genetics Corporation,
an entity which directly or indirectly owns or controls more than fifty percent
(50%) of the voting stock of Targeted Genetics Corporation and any entity, the
majority ownership of which is directly or indirectly common to the ownership of
Targeted Genetics Corporation.
1.3 LICENSED TECHNOLOGY shall mean any product or part thereof or process
which is within the FIELD OF USE and is:
(a) covered in whole or in part by an issued, unexpired or pending claim
contained in the PATENT RIGHTS in the country in which any such
product or part thereof is made, used or sold or in which any such
process is used or sold;
(b) manufactured by using a process or is employed to practice a process
which is covered in whole or in part by an issued, unexpired claim or
a pending claim contained in the PATENT RIGHTS in the country in which
any process that is included in LICENSED TECHNOLOGY is used or in
which such product or part thereof is used or sold;
(c) developed, manufactured or employing any part of the TECHNOLOGY or the
NEW TECHNOLOGY.
Notwithstanding the foregoing, LICENSED TECHNOLOGY shall not include any
discovery or invention in the field of HIV transfection to the extent (and only
to the extent) such discovery or invention (i) resulted from the use of
materials provided under, and (ii) is subject to the right of first refusal in
favor of [ * ] pursuant to that certain
Statement of Investigator and Material Transfer Agreement for In Vitro or
Laboratory Animal Tests, dated October 19, 1993, between [ * ] and
UNIVERSITY.
* Confidential Treatment Requested
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1.4 NET SALES shall mean LICENSEE's and its sublicensees' gross sales
revenue for products or processes included in LICENSED TECHNOLOGY and produced
hereunder less the sum of the following:
(a) actual cost of freight charges or freight absorption, separately stated in
such invoice;
(b) actual trade, quantity or cash discounts allowed, if any;
(c) sales, tariff duties and/or use taxes separately stated on each
invoice.
1.5 PATENT RIGHTS shall mean all UNIVERSITY United States and foreign
patents, patent applications and any patents filed or issued with respect to the
LICENSED TECHNOLOGY from time to time during the term of this Agreement, and any
and all divisions, reissues, re-examinations, renewals, continuations,
continuations-in-part, extensions and patents issued thereon.
1.6 TECHNOLOGY shall mean any and all know-how, information, processes,
formulae, patterns, compilations, programs, devices, method, techniques,
compounds, products, data, preparations and usage information or materials and
sources thereof, whether patentable or unpatentable, in each case that relates
to the PATENT RIGHTS and which have been developed in a laboratory at UNIVERSITY
under the direct supervision of Dr. Huang as of the date hereof or during the
term of the Sponsored Research Agreement referenced below, including that
described in the patent applications listed on Exhibit A hereto.
1.7 NEW TECHNOLOGY shall mean any technology within the Field of Use, that
is developed after the Effective Date and prior to the expiration of the
Sponsored Research Agreement in a laboratory at UNIVERSITY under supervision of
Dr. Huang or any such technology developed under the Sponsored Research
Agreement between UNIVERSITY and RGene Therapeutics, Inc. dated October 12,
1994.
1.8 SPONSORED RESEARCH AGREEMENT shall mean that certain Sponsored Research
Agreement dated the date hereof and attached hereto as Exhibit B by and between
LICENSEE and UNIVERSITY and the Sponsored Research Agreement between UNIVERSITY
and RGene Therapeutics, Inc. dated October 12, 1994 relating to certain research
to be conducted under the supervision of Dr. Huang.
1.9 FIELD OF USE shall mean all therapeutic applications related to the
delivery of proteins/pepides or oligonucleotides/nucleic acids, including but
not limited to genes.
ARTICLE 2 - GRANT
2.1 UNIVERSITY hereby grants, to the extent it may lawfully do so, the
right to practice under the PATENT RIGHTS, within the FIELD OF USE only, the
right and exclusive license throughout the entire world to make, have made, use
and sell the
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LICENSED TECHNOLOGY to the end of the term for which the PATENT RIGHTS are
issued, or, if no PATENT RIGHTS are issued, for ten (10) years from the date
hereof, unless this Agreement is terminated sooner as provided herein. The
license granted hereby is subject to the rights of the United States government,
if any, as set forth in 35 U.S.C. Article 200, et seq.
2.2 UNIVERSITY reserves the royalty-free, nonexclusive right to practice
under the PATENT RIGHTS to use the LICENSED TECHNOLOGY for its own noncommercial
education and research purposes.
2.3 At the end of the exclusive period hereof, the license granted
hereunder shall become nonexclusive.
2.4 LICENSEE shall have the right to enter into sublicensing arrangements
for the rights, privileges and licenses granted hereunder only during the
exclusive period of this Agreement upon prior written notice to UNIVERSITY. Such
sublicenses may extend past the expiration date of the exclusive period of this
Agreement, but any exclusivity of such sublicenses shall expire upon the
expiration of LICENSEE's exclusivity.
2.5 LICENSEE agrees that any sublicense granted by it shall provide that
the obligations to UNIVERSITY of Articles 2, 7, 8, 9, 10, 11 and 15 of this
Agreement shall be binding upon the sublicensee as if it were party to this
Agreement.
2.6 LICENSEE agrees to forward to UNIVERSITY a copy of any and all
sublicense agreements promptly upon execution thereof. LICENSEE further agrees
to attach copies of the Articles set forth in 2.5, above, to each sublicense
agreement.
2.7 The license granted hereunder shall not be construed to confer any
rights upon LICENSEE by implication, estoppel or otherwise as to any technology
not specifically set forth herein.
ARTICLE 3 - DUE DILIGENCE
3.1 LICENSEE shall use its best efforts to bring the LICENSED TECHNOLOGY to
market through a thorough, diligent program for the exploitation of LICENSED
TECHNOLOGY and PATENT RIGHTS and to continue active, diligent marketing efforts
for the LICENSED TECHNOLOGY throughout the life of this Agreement.
3.2 LICENSEE shall be deemed to have met the requirements contained in
Article 3.1 so long as LICENSEE is conducting sales of the LICENSED TECHNOLOGY
or is conducting an active clinical development program of the LICENSED
TECHNOLOGY and at all times during the duration of the Sponsored Research
Agreement of even date herewith by and between UNIVERSITY and LICENSEE,
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* Confidential Treatment Requested
provided, however, that prior to the expiration of the Sponsored Research
Agreement, LICENSEE and UNIVERSITY shall agree upon specific performance
milestones relating to the clinical development of the LICENSED TECHNOLOGY in
accordance with a proposed development schedule submitted by LICENSEE.
3.3 LICENSEE's failure to perform in accordance with 3.1 and 3.2 hereof
shall be grounds for UNIVERSITY to terminate this Agreement pursuant to the
terms of Article 11.1 (a) hereof, and, upon termination, all rights to and
interest in the LICENSED TECHNOLOGY and PATENT RIGHTS shall revert to
UNIVERSITY. Notwithstanding the foregoing, if UNIVERSITY asserts such failure of
performance by LICENSEE, the parties shall enter into negotiations to resolve
the matter and, if unable to do so within sixty (60) days, the parties agree to
proceed to arbitration in accordance with Article 10 hereof.
ARTICLE 4 - ROYALTIES AND OTHER LICENSE CONSIDERATION
4.1 In consideration of the rights, privileges and license granted by
UNIVERSITY hereunder, LICENSEE shall pay royalties and other monetary
consideration as follows:
(a) Initial license fee, nonrefundable and not credited against royalties,
of $[ * ] payable as follows:
(i) $[ * ] immediately upon execution of this Agreement;
and
(ii) $[ * ] immediately upon filing of the first patent
application with respect to the LICENSED TECHNOLOGY; and
(iii) $[ * ] immediately upon filing of the second patent
application with respect to the LICENSED TECHNOLOGY.
(b) Royalties in an amount equal to [ * ]% of NET SALES of the
LICENSED TECHNOLOGY in any country for which PATENT RIGHTS have
issued, per calendar quarter; or royalties in an amount equal to
[ * ]% of NET SALES in any country where no patent issues;
(c) Minimum royalty in the amount of $[ * ] per calendar year, payable
beginning in 1997, at the end of each calendar year, if such minimum
royalty is greater than the aggregate annual royalty computed in
accordance with Article 4.1(b) above, provided that all royalty
payments made under Article 4.1(b) shall be credited against such
minimum royalty
* Confidential Treatment Requested
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* Confidential Treatment Requested
amount. However, to the extent that the LICENSEE is commercially
pursuing multiple products or processes incorporating the LICENSED
TECHNOLOGY, then the minimum royalty specified above shall be $[ * ]
per product or process incorporating the LICENSED TECHNOLOGY which are
being commercially pursued by LICENSEE, on the same terms as above.
(d) [ * ]% of any upfront fees received by LICENSEE pursuant to any
sublicense under Article 2.4 hereof.
(e) 32,111 shares of LICENSEE unregistered common stock, fully paid and
non-assessable, issued under the name of the UNIVERSITY as
shareholder. Of these shares, 3,211 shall be held in escrow by
LICENSEE until June 19, 1997 pursuant to the Agreement and Plan of
Merger among LICENSEE, TGC Acquisition Corporation and RGene
Therapeutics, Inc. dated April 16, 1996, and 16,056 shares of which
shall be registered by LICENSEE on or before June 19, 1997.
4.2 Royalty payments, pursuant to Article 4.1(b) above, shall be paid to
UNIVERSITY in United States dollars and directed to the address set forth in
Article 12 hereof within sixty (60) days after the end of each March 31, June
30, September 30 and December 31. The minimum royalty, pursuant to Article 4.1
(c) above, shall be paid to UNIVERSITY in like manner by December 15 of the
calendar year in which the minimum royalty is due.
4.3 Royalty payments which are overdue shall bear interest at the rate of
8% per annum.
4.4 To the extent permissible under then applicable laws and regulations,
LICENSEE shall sell products and/or processes resulting from LICENSED TECHNOLOGY
to UNIVERSITY and its AFFILIATES upon request at such price(s) and on such terms
and conditions as such products and/or processes are made available to
LICENSEE's most favored customer. LICENSEE agrees that it will provide
UNIVERSITY and its AFFILIATES the opportunity to purchase such products or
processes at the same time as any other United States clinical institution.
Notwithstanding the above, the parties agree that a failure by LICENSEE to
comply with the terms of this Section 4.4 shall not be deemed to be a default
for purposes of Section 11.1 hereof.
4.5 Sublicense upfront payments under Article 4.1(d) shall be reduced by
any amount of the sublicense upfront payments that LICENSEE is required to make
to the
* Confidential Treatment Requested
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University of Tennessee pursuant to the Amendment to the First Amended and
Restated License Agreement between the University of Tennessee Research
Corporation and RGene Therapeutics, Inc., effective October 12, 1995.
Furthermore, if such sublicense also sublicenses rights under the License
Agreement between UNIVERSITY and LICENSEE of even date, sublicense upfront
payments under Article 4.1(d) after reduction for payments to the University of
Tennessee shall be further reduced by 50% to reflect payments to UNIVERSITY
under such License Agreement.
4.6 The License Fee in Article 4.1(a) and shares of LICENSEE stock in
Article 4.1(e) are new considerations solely for this Restated License Agreement
and are not applicable to the 1994 LICENSE AGREEMENT.
ARTICLE 5 - REPORTS
5.1 Within thirty (30) days after each March 31, June 30, September 30 and
December 31 of each year during the term of this Agreement, beginning after the
first commercial sale of LICENSED TECHNOLOGY, LICENSEE shall deliver to
UNIVERSITY true and accurate reports of the following information in a form
acceptable to UNIVERSITY:
(a) number of LICENSED TECHNOLOGY products manufactured and sold by
LICENSEE and all sublicensees;
(b) total billings for such products;
(c) accounting for all LICENSED TECHNOLOGY processes used or sold by
LICENSEE and all sublicensees;
(d) deductions set forth in Article 1.4;
(e) total royalties due; and
(f) name and addresses of sublicensees.
5.2 If no royalties shall be due hereunder, LICENSEE shall so advise
UNIVERSITY in writing within thirty (30) days after the end of any calendar
quarter for which no royalties are due.
5.3 LICENSEE shall keep full, true and accurate books of account, in
accordance with generally accepted accounting principles, containing all
information that may be necessary for the purpose of showing the amounts payable
to UNIVERSITY hereunder. Said books of account shall be kept at LICENSEE's
principal place of business. Said books and the supporting data shall be open at
all reasonable times for three (3) years following the end of the calendar year
to which they pertain, to the inspection of UNIVERSITY or its agents for the
purpose of verifying LICENSEE's royalty statement or compliance in other
respects with this Agreement.
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ARTICLE 6 - PATENT PROSECUTION
6.1 UNIVERSITY has or shall apply for, seek prompt issuance of and maintain
during the term of this Agreement the PATENT RIGHTS in the United States and in
such foreign countries as may be designated by LICENSEE within a reasonable time
in advance of the required foreign filing dates. LICENSEE shall have the
opportunity to advise and cooperate with UNIVERSITY in the prosecution, filing
and maintenance of such patents.
6.2 All fees and costs, including attorneys' fees, relating to the filing,
prosecution and maintenance of the PATENT RIGHTS shall be the responsibility of
LICENSEE, whether incurred prior to or after the date of this Agreement and
payments by LICENSEE therefore shall not be creditable against royalties. Such
fees and costs incurred by UNIVERSITY prior to the date hereof will be payable
by LICENSEE to UNIVERSITY within fifteen (15) business days of the invoicing by
UNIVERSITY to LICENSEE.
ARTICLE 7 - INFRINGEMENT ACTIONS
7.1 Each party shall inform the other promptly in writing of any alleged
infringement of the PATENT RIGHTS by a third party and of any available evidence
thereof.
7.2 During the term of this Agreement, LICENSEE shall have the right, but
shall not be obligated, to prosecute at its own expense all infringements of the
PATENT RIGHTS and, in furtherance of such right, UNIVERSITY hereby agrees that
LICENSEE may include UNIVERSITY as a party plaintiff in any such suit, without
expense to UNIVERSITY. The total cost of any such infringement action commenced
or defended solely by LICENSEE shall be borne by LICENSEE and LICENSEE shall
keep any recovery or damages for past infringement derived therefrom subject to
payment of royalties thereon at the rate established in Article 4.1(b), after
application of the costs incurred by LICENSEE in prosecuting such infringement
actions, including legal fees. LICENSEE may, for such purposes, use the name of
UNIVERSITY as party plaintiff. Notwithstanding the above, LICENSEE's right to
bring such an infringement action shall remain in effect only for so long as the
license granted herein remains exclusive.
7.3 If within six (6) months after having been notified of any alleged
infringement, LICENSEE shall have been unsuccessful in persuading the alleged
infringer to desist and shall not have brought and shall not be diligently
prosecuting an infringement action, or if LICENSEE shall notify UNIVERSITY at
any time prior thereto of its intention not to bring suit against any alleged
infringer, then, and in those events only, UNIVERSITY shall have the right, but
shall not be obligated, to prosecute at its own expense any infringement of the
PATENT RIGHTS, and UNIVERSITY may, for such purposes, use the name of LICENSEE
as party plaintiff. No settlement, consent judgment or other voluntary final
disposition of the suit may be entered into by either party without the
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consent of the other, which consent shall not unreasonably be withheld. In any
settlement or other conclusion, by litigation or otherwise, UNIVERSITY shall be
entitled to share in the monetary award therefrom in at least an amount
proportional to the royalty rate established in Article 4.1(b) above, and
LICENSEE shall be entitled to offset against royalties due hereunder all costs
incurred by LICENSEE in prosecution of any such infringement, including legal
fees. LICENSEE shall indemnify UNIVERSITY against any order for costs that may
be made against UNIVERSITY in such proceedings.
7.4 In the event that a declaratory judgment action alleging invalidity or
noninfringement of any of the PATENT RIGHTS shall be brought against UNIVERSITY,
LICENSEE, at its option, shall have the right, within thirty (30) days after
commencement of such action, to intervene and take over the sole defense of the
action at its own expense.
7.5 In any infringement suit either party may institute to enforce the
PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the
request and expense of the party initiating such suit, cooperate in all respects
and, to the extent possible, have its employees testify when requested and make
available relevant records, papers, information, samples, specimens, and the
like.
ARTICLE 8 - INDEMNIFICATION/INSURANCE/LIMITATION OF LIABILITY
8.1 LICENSEE shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UNIVERSITY, its trustees, officers,
employees and affiliates, harmless against all claims and expenses, including
legal expenses and reasonable attorneys' fees, arising out of the death of or
injury to any person or persons or out of any damage to property or the
environment, and against any other claim, proceeding, demand, expense and
liability of any kind whatsoever resulting from the production, manufacture,
sale, use, lease, consumption or advertisement of the LICENSED TECHNOLOGY by
LICENSEE, its affiliates or sublicensees or arising from any obligation of
LICENSEE hereunder, except to the extent caused by the negligence, recklessness
or willful misconduct of UNIVERSITY or its personnel and agents, for which
UNIVERSITY shall similarly hold harmless and indemnify LICENSEE, its officers,
employees, agents or representatives.
8.2 Prior to such time as LICENSEE or its sublicensees commence human
clinical trials for LICENSED TECHNOLOGY or otherwise commence marketing such
LICENSED TECHNOLOGY, LICENSEE shall maintain in force such liability insurance
policies and coverages as are required under applicable laws and regulations. At
such time as LICENSEE commences marketing the LICENSED TECHNOLOGY, LICENSEE
shall maintain in force such liability insurance in such amounts and for such
coverages as is customarily taken by similar companies in its industry, to the
extent such coverages are reasonably available. LICENSEE shall use its best
efforts to have such policies provide that the insurer will give UNIVERSITY not
less than 30 days' advance notice of any material changes in or cancellation of
coverage, and to provide UNIVERSITY with
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commensurate coverage as would be provided if UNIVERSITY were named as an
additional insured thereunder.
ARTICLE 9 - ASSIGNMENT
9.1 Except as provided in Article 2.4, this Agreement is not assignable and
any attempt to do so shall be null and void, except in the event of sale of all
or substantially all of the assets of LICENSEE. LICENSEE shall provide
UNIVERSITY with prior written notice of such sale.
ARTICLE 10 - ARBITRATION
10.1 Except as to issues relating to the validity, enforceability or
final determination of infringement of any patent contained in the PATENT RIGHTS
licensed hereunder, any and all claims, disputes or controversies arising under,
out of, or in connection with this License Agreement which has not been resolved
in good faith negotiations between the parties, shall be resolved by a board of
three (3) arbitrators in accordance with the rules, then in effect, of the
American Arbitration Association. Such independent board shall be composed of
three panelists, of sufficient education, scientific experience and national
reputation to address such issues. The board shall be composed of an individual
selected by UNIVERSITY, an individual selected by LICENSEE and an individual
selected by LICENSEE and UNIVERSITY. The decision of such panel shall be final
and binding upon the parties and enforceable in any court of competent
jurisdiction.
ARTICLE 11 - TERMINATION
11.1 UNIVERSITY shall have the right to terminate this Agreement if:
(a) LICENSEE shall default in the performance of any of the
obligations herein contained and such default has not been cured
within thirty (30) days after receiving written notice thereof
from UNIVERSITY; or
(b) LICENSEE shall cease to carry out its business, become bankrupt
or insolvent, apply for or consent to the appointment of a
trustee, receiver or liquidator of its assets or seek relief
under any law for the aid of debtors.
(c) LICENSEE shall terminate the Sponsored Research Agreement with
UNIVERSITY for further work on the LICENSED TECHNOLOGY for any
reason, except breach thereof by UNIVERSITY, termination by
mutual consent, termination for Dr. Huang's departure from
UNIVERSITY as described in Section 2.03 of the Sponsored Research
Agreement, or expiration of the term of Sponsored Research
Agreement.
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11.2 LICENSEE may terminate this Agreement upon six (6) months' prior
written notice to UNIVERSITY and upon payment of all amounts due UNIVERSITY
through the effective date of the termination.
11.3 Upon termination of this Agreement neither party shall be released
from any obligation that matured prior to the effective date of such
termination. LICENSEE and any sublicensee may, however, after the effective date
of such termination, sell all products under the LICENSED TECHNOLOGY, provided
that LICENSEE shall pay to UNIVERSITY the royalties thereon as required by
Article 4 hereof and submit the reports required by Article 5 hereof.
ARTICLE 12 - NOTICES
12.1 Any notice or communication pursuant to this Agreement shall be
sufficiently made or given if sent by certified, first-class mail, postage
prepaid, addressed to the address below or as either party shall designate by
written notice to the other party.
In the case of UNIVERSITY:
Office of Technology Transfer
and Intellectual Property
911 William Pitt Union
University of Pittsburgh
Pittsburgh, PA 15260
In the case of LICENSEE:
Targeted Genetics Corporation
Suite 100
1100 Olive Way
Seattle, WA 98101
ARTICLE 13 - AMENDMENT, MODIFICATION
13.1 This Agreement may not be amended or modified except by the execution
of a written instrument signed by the parties hereto.
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ARTICLE 14 - REPRESENTATIONS, WARRANTIES AND LIMITATIONS OF
LIABILITY
14.1 University
(a) UNIVERSITY is a non-profit corporation, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania.
(b) The execution, delivery and authority to execute and deliver this
Agreement have been duly authorized by all necessary action on
the part of the UNIVERSITY.
(c) UNIVERSITY has the power and authority to execute and deliver
this Agreement and to perform its obligations under this
Agreement.
(d) UNIVERSITY hereby represents and warrants that, other than the
grant set forth herein, including, without limitations, any
non-exclusive license that UNIVERSITY may be required by law to
grant to the United States of America or to a foreign state
pursuant to an existing or future treaty with the United States
of America, it has not encumbered, restricted, transferred or
otherwise burdened the TECHNOLOGY.
(e) UNIVERSITY hereby represents and warrants that on the date
hereof, it is not aware of any infringement of or by the PATENT
RIGHTS or any claims by any other party in and to the TECHNOLOGY.
(f) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH 1N THIS AGREEMENT,
UNIVERSITY MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF
ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
AND VALIDITY OF TECHNOLOGY CLAIMS, ISSUED OR PENDING. NOTHING 1N
THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR
WARRANTY GIVEN BY UNIVERSITY THAT THE PRACTICE BY LICENSEE OF THE
LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE TECHNOLOGY OF
ANY THIRD PARTY.
14.2 Licensee. LICENSEE represents and warrants that:
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(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the State of Washington.
(b) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate action on the part of
LICENSEE.
(c) It has the corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement.
ARTICLE 15-MISCELLANEOUS
15.1 This Agreement shall be construed and interpreted in accordance with
the laws of the Commonwealth of Pennsylvania.
15.2 The parties acknowledge that this Agreement together with the
Sponsored Research Agreement, sets forth the entire understanding and agreement
of the parties hereto as to the subject matter hereof and supersedes all
previous understandings between the parties, written or oral, regarding such
subject matter.
15.3 Nothing contained in this Agreement shall be construed as conferring
any right to use in advertising, publicity or other promotional activities any
name, trade name, trademark, or other designation (including any contraction,
abbreviation, or simulation of any of the foregoing). Without the express
written approval of the other party, neither party shall use any designation of
the other party in any promotional activity associated with this Agreement or
the LICENSED TECHNOLOGY. Neither party shall issue any press release or make any
similar written public statement in regard to this Agreement without the prior
written approval of the other party which approval shall not be unreasonably
withheld.
15.4 If one or more of the provisions of this Agreement shall be held
invalid, illegal or unenforceable, the remaining provisions shall not in any way
be affected or impaired thereby. In the event any provision is held, illegal or
unenforceable, the parties shall use reasonable efforts to substitute a valid,
legal and enforceable provision which, insofar as is practical, implements
purposes of the section held invalid, illegal and unenforceable.
15.5 Failure at any time to require performance of any of the provisions
herein shall not waive or diminish a party's right thereafter to demand
compliance therewith or with any other provision. Waiver of any default shall
not waive any other default. A party shall not be deemed to have waived any
rights hereunder unless such waiver is in writing and signed by a duly
authorized officer of the party making such waiver.
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ARTICLE 16 - CLINICAL TRIALS
16.1 LICENSEE recognizes the desire of UNIVERSITY and its AFFILIATES to
perform Phase I clinical trials for products which incorporate the LICENSED
TECHNOLOGY. LICENSEE further recognizes UNIVERSITY and its AFFILIATES wish to be
granted preferential consideration in conducting Phase II and III clinical
trials for such products. UNIVERSITY recognizes that products which incorporate
LICENSED TECHNOLOGY will generally also incorporate technology licensed from
other institutions and that LICENSEE may be obligated or deem it advisable to
conduct clinical trials at such other institutions or their AFFILIATES.
UNIVERSITY also recognizes that additional medical centers may be involved in
Phase II and III clinical trial, as may be necessary. LICENSEE agrees to give
due consideration to conducting clinical trials at UNIVERSITY and its
AFFILIATES, to the extent permitted by its obligations to others.
IN WITNESS WHEREOF, the parties have set their hands and seals.
UNIVERSITY OF PITTSBURGH - OF THE
COMMONWEALTH SYSTEM OF HIGHER
WITNESS: EDUCATION
/s/ Beth Dudley By /s/ Jerome Cochran
- ------------------------------- -------------------------------
Jerome Cochran
Interim Vice Chancellor for Business
WITNESS: TARGETED GENETICS CORPORATION
/s/ Tiffany D. Dolmseth By H. Stewart Parker
- ------------------------------- -------------------------------
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* Confidential Treatment Requested
Exhibit A
to Revised License Agreement
between University of Pittsburgh and Targeted Genetics Corporation
"Stable Lipid-Comprising Drug Delivery Complexes and Methods for Their
Production"
U.S. Patent Application Serial No. 08/376,701
Filed January 23, 1995
PCT Application 2710-4000
Filed January 23, 1996 designating all countries
"Novel Cationic Cholesteryl Derivatives Containing Derivatives Containing
Cyclic Polar Groups"
U.S. Patent Application Serial No. [ * ]
Filed [ * ]
"A Cytoplasmic Gene Expression System Which Utilizes a Prokaryotic RNA
Polymerase Autogene"
U.S. Patent Application Serial No. [ * ]
Filed [ * ]
"Emulsion Formulations and Their Use as Vehicles for the Delivery of
Hydrophilic Biologically Active Molecules to Cells"
U.S. Patent Application Serial No. [ * ]
Filed [ * ]
* Confidential Treatment Requested
131
