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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996, or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
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COMMISSION FILE NO.: 0-25978
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THERAPEUTIC ANTIBODIES INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 62-1212485
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1207 17TH AVENUE SOUTH, SUITE 103
NASHVILLE, TENNESSEE 37212
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (615) 327-1027
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
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None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK; PAR VALUE $.001 PER SHARE
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(TITLE OF CLASS)
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
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the 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. [ ]
The aggregate market value of the shares of Common Stock of
the registrant held by nonaffiliates on March 14, 1997 ($6.17 per share), was
$108,795. As of March 14, 1997, the registrant's had outstanding 22,371,692
shares of Common Stock.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of Part III hereof are incorporated by reference from
the Registrant's Proxy Statement for the Annual Meeting of Shareholders to be
held on April 28, 1997. Certain exhibits listed in Part IV hereof are
incorporated by reference to the following documents previously filed by the
Registrant with the Commission: Registration Statement on Form 10, filed on May
1, 1995; Quarterly Report on Form 10-Q for the period ended September 30, 1995;
Quarterly Report on Form 10-Q for the period ended March 31, 1996; Quarterly
Report on Form 10-Q for the period ended June 30, 1996; Quarterly Report on Form
10-Q for the period ended September 30, 1996; Proxy Statement relating to the
Special Meeting of Shareholders held on July 5, 1996.
TABLE OF CONTENTS
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PAGE
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PART I
ITEM
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1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 21
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . 22
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7. Management's Discussions and Analysis of Financial Condition and Results of Operations . 24
8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . 29
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . . 50
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . 50
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . . 50
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K . . . . . . . . . . . . 51
15. Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
EXHIBITS
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PART I
ITEM 1. BUSINESS
GENERAL
Therapeutic Antibodies Inc. ("TAb" or the "Company"), is a
development stage biopharmaceutical company specializing in the preparation of
polyclonal antibodies for the treatment of disease. Headquartered in
Nashville, Tennessee, with operations in the United States, the United Kingdom,
Australia and New Zealand, TAb is developing and producing a line of antibody
products designed primarily to treat life-threatening medical conditions for
which there currently are no satisfactory therapies.
The Company was incorporated in Delaware in 1984. The Company
was co-founded in 1984 by Professors John Landon and Tim Chard and Dr. Harry
Browne. Both Professors Landon and Chard have been active in the development
of antibodies for diagnostic purposes and the development of immunoassays.
Each formerly chaired a department at St. Bartholomew's and the Royal London
School of Medicine and Dentistry in London, and both have published numerous
articles relating to antibody/antigen interaction and detection. Since 1984,
the Company has affiliated itself with scientists at academic institutions in
the United States, Europe, Australia, New Zealand and Africa, to assist in the
research, testing and development of new antibody products. See "Item 1 -
Principal Licensing and Other Collaborative Arrangements."
TAb has developed systems for the production and purification
of a new generation of polyclonal antibodies that management believes can
produce suitable therapies for neutralizing a variety of toxins, including
certain venoms, cytokines and drugs. Some of TAb's innovations include the
preparation of unique immunogens, the purification of specific antibodies and
the digestion of antibodies into fragments. Management believes that these
capabilities enable TAb to produce a broad range of specific antibodies that
are safer and more effective than the antibody products currently available.
The Company's antibody products are in various stages of development, ranging
from preclinical testing to manufacturing and distribution.
TAb's executive offices are located in Nashville, Tennessee,
in the vicinity of the Vanderbilt University Medical Center. Research,
production and testing operations are conducted through the Company's
subsidiaries. The Company operates its research and development laboratories
through TAb London Ltd. ("TAb London"), one of its United Kingdom subsidiaries,
including pilot production facilities at St. Bartholomew's and the Royal London
School of Medicine and Dentistry in London, England. The Company's antibody
production operations are situated in both Dyfed, Wales and Adelaide,
Australia. These operations are conducted through TAb Wales Ltd.("TAb Wales"),
Polyclonal Antibodies Ltd. ("PAL"), which the Company acquired in 1992, and TAb
Australia Pty. Ltd. See "Item 2 - Properties."
THE INDUSTRY
The biotechnology/biopharmaceutical industry is considered a
segment of the pharmaceutical industry. Management believes that advances in
biotechnology research will contribute to the development of new pharmaceutical
products. In the past decade medicine has benefited from advances in
immunology through the use of antibodies for diagnostic purposes, to detect the
presence of a variety of substances in the body. Antibodies are used for
diagnostic purposes to measure various hormones, cancer markers, drugs and
other materials in patient blood samples. An example of a commercial
application of diagnostic antibody technology is the home pregnancy test kit,
which uses antibodies to detect a pregnancy-associated hormone in samples of
urine.
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In addition to diagnostic applications, research has begun to
focus on the therapeutic applications of antibodies, which can be used for the
treatment of numerous toxic conditions including envenomation, drug overdose
and infectious disease. Although one of the Company's subsidiaries produces and
sells small amounts of animal antisera that is used for diagnostic purposes,
TAb's primary focus is on the production of antibodies for therapeutic
purposes.
TECHNOLOGY AND PRODUCTION
The human immune system is part of the body's protection
against invasion by infectious agents such as viruses, bacteria and parasites.
It acts in two main ways. One involves the direct action of certain white
cells in blood and lymph glands; the other results in the production by a
distinct class of white blood cells of polyclonal antibodies. Antibodies,
which are a class of protein, act by binding to part of the target molecule
referred to as the antigen or epitope. The reaction is usually highly specific
to a particular combination of epitope and antibody, often likened to a lock
and key. When the target molecule is large, it may have a number of different
epitopes. Each different epitope may bind to a different population of
antibodies and binding of an antibody to one or more epitopes can neutralize
the biological activities of that molecule, including its toxic activities.
Manipulation of the immune system for therapeutic purposes has
been practiced for more than two centuries, for example vaccines against
smallpox, diphtheria and tetanus. The traditional method is active
immunization, where the person is vaccinated with all or part of the target
molecule. The person's immune system then produces antibodies against the
target molecule. Alternatively, in passive immunization, an animal is injected
with the target molecule and the resulting antibodies are then extracted,
purified and modified for injection into humans.
There are two types of antibodies. The first, at the heart of
TAb's technology, is polyclonal antibodies, which contain a variety of
antibodies directed to different epitopes on the target molecule. The second
type is monoclonal antibodies consisting of a population of identical
antibodies all directed to a single epitope.
Management believes that the combination of the following
factors differentiates TAb from its competitors, whether conventional
pharmaceutical companies or others developing antibody therapies:
- the use of polyclonal antibodies;
- the use of sheep to produce polyclonal antibodies;
- the production of fragments of polyclonal antibodies;
and
- production systems common to TAb's existing and
proposed products.
These factors are described in more detail in the following
sections.
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POLYCLONAL ANTIBODIES. TAb's management has focused the
Company's development resources on polyclonal antibodies. The Directors
believe that these are effective for many therapeutic applications in humans,
where many clinically significant target molecules have multiple epitopes and
are therefore more effectively neutralized by polyclonal antibodies.
Management believes that, unlike TAb, most immunotherapy
companies in recent years have focused on monoclonal antibodies. The
characteristics of monoclonal antibodies provide certain advantages in
laboratory testing or immunoassays, in that they are very selective and offer
specificity to a particular epitope. However, to date, Management is aware of
only a limited number of monoclonal products that have been approved by any
regulatory authorities for commercial therapeutic purposes and there is growing
awareness among researchers and clinicians of the need for a more broader
acting preparation for many therapeutic clinical uses. The directors believe
that processed and purified polyclonal antibodies currently have several
advantages over monoclonals in that polyclonals:
- bind multiple sites, resulting in greater
neutralization of toxic molecules;
- usually bind more strongly;
- are often more robust and can therefore better
withstand the fragmentation and purification process;
and
- can generally be developed at less expense.
PRODUCTION OF ANTIBODIES FROM SHEEP. TAb uses sheep for the
production of its polyclonal antibodies. The Directors have selected sheep
because of the substantial amounts of high affinity, specific antibodies which
they can produce. Sheep antibody based products also have a proven safety
record when used therapeutically in patients because side effects resulting
from immunogenicity and allergenicity are relatively limited. Sheep are also
easy to handle, inexpensive to purchase and maintain and are available in large
numbers worldwide.
Until recently, horses have been the most widely used source
of such antibodies, but the levels of specific polyclonal antibodies attained
in equine antisera are usually low, because they have been affinity purified.
They have also been less than satisfactory for human treatment because their
use is associated with a high incidence of side effects.
TAb supplies all of the antisera required for the production
of its antibody products from its own flocks of sheep from two widely separated
geographical areas (Wales and Australia). Currently, Polyclonal Antibodies,
Ltd. ("PAL"), TAb's subsidiary based in Wales, farms approximately 250 acres of
pasture land with approximately 2,000 sheep. In addition, TAb has a flock of
approximately 3,850 sheep at the Turretfield Research Centre near Adelaide in
Australia, where TAb's facility is located and in adjacent properties. All
animal handling procedures are subject to stringent regulations with which TAb
complies, including the Animals (Scientific Procedures) Act 1986 in the United
Kingdom and those stipulated by Ethics Committees in the Southern Hemisphere.
The Directors' decision to expand TAb's activities into the
Southern Hemisphere has two key advantages: it affords TAb a second and
geographically remote source of antisera for all TAb's products in the event of
disruption to production in Wales; and it provides access to less expensive and
larger numbers of sheep.
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In addition, due to the European Commission ban on the trade
in British beef, public attention has focused on transmissible
neurodegenerative diseases associated with British livestock. A similar
disease has existed for many centuries in sheep. All TAb products are
manufactured from sheep serum. However, serum, the raw material for
manufacture, has been classified as containing "no detectable infectivity" by
the Working Party on Immunological Medicinal Products set up by the Commission
of the European Communities. Additionally, TAb sheep have always been sourced
from closed flocks, certified to be free of scrapie by an independent
veterinary surgeon.
ANTIBODY FRAGMENTS. An antibody can be divided into two
identical components known as the antibody binding Fab fragments and an
additional Fc fragment. Each Fab fragment has a binding site which attaches to
a specific epitope on the target molecule in order to neutralize its toxic
effects. The Fc is potentially harmful and can cause hypersensitivity and
other side effects.
TAb separates and discards the potentially harmful Fc fragment
and obtains the two beneficial Fab fragments, unimpaired in their ability to
bind and neutralize the target molecule. Most other immunotherapy companies
applying similar technology have used intact antibodies, or have used the
enzyme pepsin which yields the larger F(ab')2 fragment. The latter comprises
two Fab fragments joined together, but without the harmful Fc fragment. Fab
fragment products are less likely to cause hypersensitivity and other side
effects than intact antibodies or F(ab')2 fragment products. Furthermore,
their small size ensures that the Fab fragment products are rapidly and evenly
distributed throughout the body. This means that, following injection, they
are expected to quickly reach the various tissues where a target molecule may
be causing toxic effects. In addition, their small size allows excess unbound
antibody and antibodies bound to small toxic molecules to be excreted more
efficiently by the kidneys.
Any foreign protein, including an antibody of animal origin,
will induce an immune response if injected into a patient. Severe side-effects
such as anaphalatic death were common when passive immunization was first
introduced at the end of the last century for the treatment of diphtheria and
tetanus. This was due to the fact that unprocessed and unpurified equine serum
containing highly allergic proteins were injected. Furthermore, large volumes
of such sera were administered, giving rise to a serious delayed complication
known as serum sickness. The incidence and severity of side-effects were
reduced significantly by separating antibodies from most of the contaminating
proteins. The incidence of harmful effects was further reduced by the use of
enzymatic cleavage to prepare the larger F(ab')2 based products. Removal of
the Fc fragment prevented the binding and activation of various blood cells.
TAb uses the more advanced papain enzyme technology to produce Fab fragments
which are less likely to cause side-effects than either intact antibodies or
F(ab')2. Being smaller, the Fab is less immunogenic and only has a single
binding site. Therefore, it cannot form potentially harmful large, cross
linked, immune complexes.
COMMON PRODUCTION PROCESS. All TAb products are prepared
using a very similar series of manufacturing steps. The common technology has
enabled TAb to develop a number of new products in a relatively short time.
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Products for pre-clinical and clinical trials have been
prepared primarily in TAb's pilot production site at St. Bartholomew's and the
Royal London School of Medicine and Dentistry in London. Once a new product
has completed its trials, a product transfer and development group is
responsible for moving manufacture to Wales and preparing for commercial
production. TAb completed construction of a new, custom built 20,000 sq. ft.
manufacturing plant at its facility in Wales in 1995. Internal validation by
the Company is nearly complete and the plant awaits inspection and approval by
the FDA and MCA for commercial use. Management believes that the production
facilities will meet regulatory requirements. TAb's Australian facility has
serum processing capability with Therapeutic Goods Administration approval and
currently provides antisera to the manufacturing plant in Wales. It is
expected that, in the longer term, further production capacity will be needed.
Management currently believes that such facilities are likely to be established
in Australia, although this matter will be reviewed in the future.
TAb's production process can be separated into three stages:
- First, immunogens, which in some cases are
patentable, are created. These, together with the
immunization techniques developed by TAb, are
produced in order to generate high yields of
antibodies from sheep. Once suitable levels of high
affinity antibodies have been obtained, collection of
antisera commences on a monthly basis.
- Secondly, contaminating serum proteins are removed
and the remaining proteins are then subjected to
controlled enzymatic cleavage with papain to produce
Fab fragments.
- Thirdly, chromatography is used to purify Fab
fragments specific to the target molecule, thus
reducing the amounts of foreign protein to a minimum.
PRODUCTS
TAb is concentrating on a portfolio of products in three
development programs with a view to balancing development risk and market
potential. The three programs are the Antivenom Program, the Anti-Drug Program
and the Anti-Cytokine Program.
ANTIVENOM PROGRAM. It is estimated that close to 1,000,000
people worldwide are bitten each year by poisonous snakes, resulting in as many
as 100,000 deaths. In addition, there are large numbers of scorpion and spider
envenomations in North America and many other countries each year. It is one of
TAb's objectives to become the leading producer of antivenoms worldwide. TAb
has developed its first antivenoms to treat snakebites in North America,
Europe, Western Africa, Southeast Asia and Australia. Management believes that
there is an unsatisfied demand for safe and effective antivenom products.
ViperaTAb(TM). TAb has developed ViperaTAb(TM) for treating
poisonous bites by the European common adder, Vipera berus, and has entered
into an agreement with Swedish Orphan, a pharmaceutical marketing company, to
market this product in Scandinavia. In 1991, preclinical testing conducted on
behalf of TAb at the Liverpool School of Tropical Medicine indicated that
ViperaTAb(TM) was nearly 10 times more effective on a weight for weight basis
than an equine derived antivenom available in Northern Europe. Clinical trials
were completed in 1994. ViperaTAb(TM) was approved by the regulatory
authorities in Sweden and Norway in 1994, and Finland in 1995, for use in those
countries on a named patient basis. The Company commenced commercial
distribution of ViperaTAb(TM) in Scandinavia in 1995.
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TAb's patent attorneys are currently advising TAb on a
European antivenom patent application that, if granted, may have an impact
on TAb's activities. TAb's Management believes that this European patent
application will not affect the commercial exploitation of ViperaTAb(TM).
CroTAb(R). TAb's Crotalid ("rattlesnake") antivenom project
was carried out in collaboration with scientists at the University of Arizona,
USA. Preclinical tests performed on behalf of TAb at the University of Arizona
indicated that the antivenom tested was demonstrated on average, to be 5 times
more effective than the then existing equine derived antivenom. The Company
filed an IND application with the FDA in 1992 and in 1993 was awarded an FDA
grant to assist in the funding of clinical studies of CroTAb(R), which began in
1993. CroTAb(R) has been granted orphan drug status by the FDA which provides
certain development, registration and marketing incentives. See "Business -
Government Regulation." Phase II/III clinical studies with this product were
completed in 1996.
EchiTAb(TM). TAb has developed EchiTAb as an antivenom against
the West African carpet viper, Echis ocellatus. TAb has entered into an
agreement with the Federal Ministry of Health on behalf of the Nigerian
Government under which the Nigerian Government has contributed to the costs of
development and clinical trials of EchiTAb(TM).
PulchellaTAb(TM) and BrownTAb(TM). TAb has also completed
initial clinical testing on PulchellaTAb(TM), an antivenom for the Sri Lankan
Daboia russelli pulchella snake ("Russell's viper"). TAb has also entered into
an agreement with FH Faulding to market PulchellaTAb(TM) in certain countries
after completion of clinical trials, if it receives the necessary marketing
approvals from regulatory authorities. TAb is currently preparing an
application to conduct clinical testing of BrownTAb, an antivenom for the Brown
snake species, which is expected to be marketed by CSL.
Other Antivenoms. TAb has several other snake, spider and
scorpion products under development.
ANTI-DRUG PROGRAM. DigiTAb(TM) TAb has developed
DigiTAb(TM) for treating digoxin intoxication. Digoxin is a prescription drug
which is used to treat certain cardiac conditions on a long-term support basis.
It is the most commonly prescribed form of digitalis which has been in use
worldwide for many years. However, digoxin has a narrow therapeutic range and
can cause life-threatening toxicity when taken in excess. It is estimated that
12,000 cases of severe digoxin toxicity occur annually, with the majority of
these in the United States.
In 1986, a major multi-national pharmaceutical company
introduced a specific sheep derived polyclonal antibody product (using papain
cleavage) to treat life-threatening digoxin intoxication. DigiTAb(TM) will
therefore be competing directly with an established product in this market.
TAb has completed research and development and preclinical
testing of DigiTAb(TM). The Federal Food and Drug Administration ("FDA") has
accepted TAb's application for IND status and TAb is initiating Phase II/III
clinical testing of DigiTAb(TM) in both Europe and the United States.
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TriTAb(TM) TAb is developing TriTAb(TM) to treat tricyclic
antidepressant ("TCA") toxicity. This class of drugs is one of the main causes
of poisoning by drug overdose in Europe and the United States. TCAs are a
family of structurally related compounds used in the treatment of severe
clinical depression. Despite the recent introduction of safer non-TCA
antidepressant drugs, TCAs as a group, continue to hold a large share of the
antidepressant market. Typically these drugs are generic and their patents
have expired. Consequently, TCAs are much less expensive than the newer
non-TCA antidepressants. For this reason, Management believes that TCA therapy
is likely to remain in clinical use for some time. In addition, they may exert
a better clinical response in some severe forms of depression.
Toxic side effects of TCA drugs are relatively common and the
incidence of toxicity has been estimated to run as high as 5 percent. The most
severe side effects of TCA affect the heart, necessitating prolonged intensive
care treatment, and can ultimately be fatal. At present, no specific antidote
for TCA poisoning is available. However, TAb has developed an antibody
treatment for TCA toxicity which the Company's preclinical tests demonstrated
to be effective in reversing TCA toxicity.
TAb is targeting the treatment of TCA toxicity victims
admitted to hospital emergency rooms with symptoms of serious toxicity. It is
estimated that such cases total 60,000 per year in Europe and the United
States.
The Company has satisfactorily completed all preclinical
testing of TriTAb(TM) and intends to file an application to initiate clinical
studies in 1997. The Directors are not aware of any other competitive
commercial efforts in this field.
ANTI-CYTOKINE PROGRAM. CytoTAb(TM) - Sepsis. Sepsis
Syndrome is a name given to a spectrum of disorders caused by the body's
exaggerated response to infection or injury and is triggered by a wide variety
of bacterial, viral and fungal organisms. The three defining conditions for
sepsis are a site or source of inflammation, abnormal vital signs and a failure
of one or more major organ systems, typically the respiratory system (lungs),
central nervous system, cardiovascular system or the excretory system
(kidneys). Immune suppression, invasive procedures, trauma or surgery are the
usual factors that allow bacteria or their toxic products to enter the
bloodstream.
An estimated 800,000 to 900,000 patients suffer with Sepsis
Syndrome each year in Europe and the United States alone and there is a
fatality rate ranging from 20 to 60 percent, depending on severity. The
current clinical management of Sepsis Syndrome is expensive, often involving
intensive care measures, mechanical ventilation, hemodialysis, nutritional
support and a variety of antibiotics. Furthermore, none of these interventions
has significantly decreased mortality rates, despite over 15 years of intensive
research.
A number of companies have been actively pursuing the
commercial development of antibody products to treat Sepsis Syndrome. TAb's
Management believes that all have adopted monoclonal technology, some with a
view to neutralizing endotoxins which often initiate the body's inflammatory
response to infection, while others have introduced antibodies to target
cytokines such as tumor necrosis factor (TNF), which act as mediators of Sepsis
Syndrome. Management is aware of monoclonal antibody products intended to
treat Sepsis Syndrome that have encountered problems in the testing stage and
some that have been withdrawn from clinical trials.
Through its sepsis program TAb has developed a line of
polyclonal antibody products to target the inflammatory cytokines that act as
mediators to Sepsis Syndrome. Management is not aware of any other company
which has used or is using polyclonal antibodies for Sepsis Syndrome.
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TAb has completed a number of preclinical tests with its first
product in this program, CytoTAb(TM), which is directed against TNF. The
results of the Company's preclinical tests indicated statistically significant
neutralization of the TNF. The FDA has accepted the Company's IND application
for this product.
In 1993, an opportunity arose to test TAb's anti-TNF antibody
in a model of human sepsis using a study designed by scientists from the
University of Oxford. This model involved Louse-Borne Relapsing Fever
("LBRF"), which is a serious medical problem in Ethiopia; mortality in
untreated patients has exceeded 50 percent in some epidemics. The current
treatment for LBRF, while effective, is associated with a predictable pattern
of side-effects, some of which are life-threatening and appear closely to
resemble classic Sepsis Syndrome. TAb's first study consisted of a randomized,
double blind, placebo controlled trial of TAb's anti-TNF antibody carried out
in 49 patients with LBRF in Ethiopia. Subsequent studies have taken place in
Ethiopia on over 90 patients. The results provide evidence that TAb's antibody
product suppresses cytokine activity as seen in LBRF patients and were
published in The New England Journal of Medicine in August of 1996. To the
best of Management's' knowledge, this is the first time a human study of an
anti-cytokine antibody has provided such successful results.
In 1995, the Company entered into an agreement with scientists
at Vanderbilt University Medical Center ("Vanderbilt") to coordinate initial
United States clinical trials of the CytoTAb(TM) product. These trials
commenced in April 1995. Vanderbilt has extensive experience in testing the
impact of interventions on endotoxemia, and has studied a variety of proposed
antibody products in both in vivo and in vitro models. In a Phase I study a
total of 25 patients meeting criteria for severe sepsis have been treated with
one of several doses of CytoTAb(TM). The results indicated that the antibody
binds to its target (TNF) with high affinity. The various doses were well
tolerated with no significant hypersensitivity reactions or episodes of immune
complex disease. The antibody was rapidly distributed. The Company has
recently concluded a Phase II clinical study in several United States centers
and has published the results. The Phase II study provided data on safety and
dose ranging to be used in designing further trials.
The mechanisms of inflammation in sepsis are common to many
immune and infectious diseases, and the Directors anticipate that these
anti-cytokine antibodies may also have applications in other diseases.
CytoTAb(TM) - Jarisch-Herxheimer Reaction (JHR). The
Jarisch-Herxheimer Reaction occurs in some patients who have received
antibiotics to treat an infection and can be fatal. The antibiotic kills the
infecting organism which breaks up. The fragments of the organism cause a
massive response involving a cascade of cytokine release which leads to a high
temperature and rapid pulse.
JHR is a model system for sepsis, but it is also an indication
in its own right. Variations of JHR occur throughout the world including
Europe and the United States. Four such examples are Louse-Borne Relapsing
Fever in Ethiopia, Tick-Borne Relapsing Fever, Secondary Syphilis, and Lyme
Disease in the United States.
TAb plans to carry out Phase III trials in JHR under full Good
Clinical Practice (GCP) with a view to submitting a product license application
in the United States and possibly Europe for CytoTAb(TM) for JHR.
CytoTAb(TM) - Transplantation. Many kidney transplant
patients suffer acute rejection episodes which are sometimes treated with a
monoclonal antibody. This treatment may itself be associated with side effects
which are believed to be connected with the release of TNF. TAb is
investigating the use of CytoTAb(TM) to prevent and treat such side effects.
It is expected that trials will commence at general medical centers in the
United States later in 1997.
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CytoTAb(TM) - Cerebral Malaria. Severe cerebral malaria is
associated with elevated concentrations of TNF. The recurring exacerbations of
fever and other severe symptoms and signs of cerebral malaria represent a form
of sepsis. TAb is investigating the use of CytoTAb(TM) in mitigating the
morbidity and mortality of severe cerebral malaria, and the possible
complications of cerebral malaria treatment. The Company's Pilot study for
this indication finished in Thailand during the first quarter of 1997.
TAb's position in relation to CytoTAb(TM) may be affected by
two European patents. Opposition to these patents has been filed by TAb and
others on various general and specific grounds including lack of patentability.
If valid as granted, these European patents could be used to attempt to limit
TAb's freedom to use anti-TNF antibodies, and therefore TAb's ability to market
CytoTAb(TM) in certain European countries. TAb's Management does not believe
that the existence of these European patents will prevent TAb from achieving
the successful commercial exploitation of CytoTAb(TM). TAb has itself applied
for specific patents covering the use of Fab fragments of anti-TNF antibodies,
and the techniques for its preparation.
PRINCIPAL LICENSING AND OTHER COLLABORATIVE ARRANGEMENTS
For certain product candidates, the Company has secured, or
will in the future pursue, some form of collaborative agreement as the
preferred arrangement for bringing its products to market. Abundant precedents
exist within the industry for such alliances. Typically, the biotechnology
company handles development while a collaborator provides funding and
regulatory assistance, and takes responsibility for marketing and distribution
of the product.
COLLABORATIVE ARRANGEMENTS
The following is a summary of TAb's current agreements:
Swedish Orphan. In January 1990 the Company entered into an
agreement with Swedish Orphan AB, a Swedish company, appointing them as
exclusive sales representative to market ViperaTAb(TM) in certain territories.
The agreement was subsequently amended to include certain other antivenoms
identified by the Company, and DigiTAb(TM) and TriTAb(TM). The territories are
currently Sweden, Norway, Denmark and Finland. Swedish Orphan specializes in
the development, regulatory handling, marketing and distribution of niche
pharmaceuticals and has arranged for the Karolinska Institute to conduct
clinical trials of the products which are a pre-requisite to their registration
in Scandinavia. Swedish Orphan receives a commission on sales of the products
in the territories. The agreement will continue until December 31, 2002 and
thereafter unless terminated by 120 days' notice by either party.
Helena Laboratories and Immuno Gen. In April 1993 the
Company, TAb Wales and PAL entered into an agreement with Helena Laboratories
(UK) Limited ("Helena") and Immuno Gen International Limited ("Immuno Gen"),
appointing Helena and Immuno Gen as worldwide distributor for certain antisera
products (other than those developed with a third party) for use solely in
diagnostic or research diagnostic purposes.
FH Faulding. In September 1995 the Company entered into an
exclusive distribution agreement with FH Faulding & Co. Limited, an Australian
company, appointing FH Faulding to obtain registration and marketing approvals
for certain products and to be exclusive distributor of such products in
Australia, New Zealand and such other countries as the Company may agree. The
products are PulchellaTAb, DigiTAb(TM) and TriTAb(TM).
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In October 1996 the Company signed a Clinical Trials and
Registration Agreement with FH Faulding, to provide financial support for
clinical trials and to seek registration and marketing approvals for
CytoTAb(TM) for treatment of cerebral malaria for Thailand and other countries
in South East Asia where malaria is a problem.
CSL. In February 1997 the Company signed a Clinical Trials,
Registration, Manufacturing, and Distribution Agreement with CSL, an Australian
company. This agreement makes CSL the exclusive distributor for Brown TAb(TM)
in Australia and Papua New Guinea.
Federal Ministry of Health of Nigeria. In August 1995 the
Company entered into an agreement with the Federal Ministry of Health on behalf
of the Nigerian Government under which the Nigerian Government has contributed
to the costs of development and clinical trials of EchiTAb(TM), and undertakes
to purchase a minimum of 10,000 vials of antivenom. A royalty is payable to
the Nigerian Government on sales of EchiTAb(TM) outside Nigeria.
ACADEMIC AND CLINICAL AFFILIATIONS
A proportion of the Company's research and development and
product testing activities are carried out through affiliations and consulting
arrangements with clinical research organizations and scientists at academic
institutions in the United Kingdom, Scandinavia and North America, including
St. Bartholomew's and the Royal London School of Medicine and Dentistry, the
Karolinska Institute, the University of Arizona and Vanderbilt University
Medical Center. These include arrangements in respect of preclinical and
clinical research, consultancy, patents, royalties and facility leases.
PROPRIETARY POSITION
COMPETITION
ANTIVENOMS. A number of organizations and companies
manufacture snake antivenom throughout the world. However, Management believes
most are using equine derived products based on older technology. Based on
clinical results, Management believes that TAb's antivenom products are, in
general, safer and have greater efficacy.
There are two main European competitors to TAb's Vipera
product. The European Viper Antivenom is an equine derived product made in
Croatia by the Zagreb Institute for Immunology. Institut Pasteur, part of
Pasteur Merieux Serums & Vaccins, also has an equine derived Vipera antivenom
product. Management believes that TAb's product is superior, although both
competing products are considerably cheaper. Notwithstanding the price
differential, TAb has successfully competed with Institut Pasteur and the
Zagreb Institute for Immunology in Sweden where ViperaTAb(TM) currently
commands at least 80% of the market.
Only one Crotalid antivenom product is currently approved in
the United States. There are frequent toxicity problems associated with that
product.
Equine derived antivenom products with which EchiTAb(TM),
PulchellaTAb(TM) and BrownTAb(TM) will compete are produced by, among others,
Institut Pasteur and Haffkine BioPharmaceuticals.
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DIGOXIN ANTIDOTE. TAb has two competitors, one of which is
well-established in Europe and the other in the United States. Glaxo Wellcome
plc's Digibind(R) is available in the United Kingdom and the United States and
Boehringer Mannheim GmbH's Digitalis - Antidot BM(R) is available in Europe.
Both of these products are Fab based and derived from sheep polyclonal
antibodies. However, Management believes that DigiTAb(TM) could achieve an
attractive niche position in this area.
TRICYCLIC ANTIDEPRESSANT ANTIDOTE. No specific tricyclic
antidepressant antidote exists and TAb's Management does not know of any company
conducting research in this area. TAb intends to apply for orphan drug
status in the United States which, if granted, will provide seven years of
marketing exclusivity. Furthermore, TAb has been granted a United States
patent for the key immunogens, the production process, the resultant product
and the use of the product to treat tricyclic antidepressant toxicity.
SEPSIS SYNDROME TREATMENT. Management expects to encounter
significant competition from rival products for Sepsis Syndrome treatment.
Many potential competitors are working on a variety of approaches. For
example, Xoma Corp. and Centocor, Inc. have both had anti-endotoxin monoclonal
antibody preparations to treat septic shock in Phase III clinical trials.
However, the results indicated that both these products were of limited value
as a treatment for life-threatening septic shock.
Celltech Group plc, Chiron Corp., Knoll AG and Centocor, Inc.,
have developed monoclonal anti-TNF antibodies; Immunex Corp. has developed a
TNF receptor; Roche Bioscience has generated a modified TNF receptor product
which is in clinical trials. Synergen Inc. has developed IL-1 receptor
antagonists; and Cortech, Inc. has tested a bradykinin antagonist.
Two monoclonal antibodies to TNF are known to be in advanced
clinical development (Phase III) but some clinicians have been disappointed
with published results regarding these products and are skeptical about their
ultimate success. Management knows of no other polyclonal antibody in
development for the treatment of Sepsis Syndrome.
Management believes that CytoTAb(TM) has a notable advantage
over other products in clinical development in having been the only product so
far to have been tested and demonstrated efficacy in a condition similar to
Sepsis Syndrome: the Jarisch-Herxheimer Reaction.
While potential competitors are abundant in this field of
therapy, Management believes that TAb's approach offers greater promise of
broad-range efficacy than any other product known to be under development.
INTELLECTUAL PROPERTY
TAb's policy is to protect and defend the intellectual
property associated with its technology and products. TAb seeks patents
whenever appropriate. Management also believes that sufficient steps have been
taken to ensure that trade secrets such as animal husbandry techniques and
processes unique to large-scale production of polyclonal antibodies are
protected.
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TAb has optimized the production and purification of
polyclonal antibodies and has developed extensive proprietary knowledge in this
area, combining scientific, veterinary and large-volume processing skills. TAb
has applied for patents (United States, Europe and elsewhere) which include
several key aspects of the relevant techniques; each application is now under
review by the relevant patent offices. However, some parts of the process are
non-patentable, and TAb has implemented policies and procedures designed to
protect proprietary information concerning manufacturing techniques.
TAb is pursuing a multinational patent strategy for the
protection of intellectual property associated with its technology and
products. TAb holds the following patents:
- - A United States patent encompassing a broad set of claims in
respect of the antidote to poisoning with tricyclic
antidepressants.
- - A United Kingdom patent on the use of Fab fragments of
anti-TNF for the treatment of septic shock.
- - A United Kingdom patent on the use of mixed monospecific
antivenoms.
- - A United States patent on the isolation and purification of
antivenoms.
TAb is pursuing the following patent applications:
- - Various steps in the production and purification of polyclonal
antibodies.
- - The superiority of Fab fragments to TNF relative to other
antibody fragments or intact antibodies.
- - The superiority of Fab fragments to antivenoms relative to
other antibody fragments or intact antibodies.
There can be no assurance that the Company will receive the
requested approval of these pending patent applications.
MARKETING AND RESEARCH AND DEVELOPMENT STRATEGIES
MARKETING STRATEGY. Collaboration agreements between large
pharmaceutical companies and biotechnology companies are common. The large
pharmaceutical companies seek to in-license products which are at an advanced
stage of development, providing the pharmaceutical companies with lower risk
investments in the development of new pharmaceuticals and access to products
outside their core area of research and development expertise. This provides a
biotechnology or biopharmaceutical company, such as TAb, with a source of
revenue prior to the launch of a product together with access to marketing
skills and to an experienced sales force. These agreements typically include
an upfront payment on signing the agreement, milestone payments on reaching
pre-defined stages in the development program, and royalties payable on sales
by the marketing collaborator together with a margin on the supply of product.
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Management intends to enter into such arrangements for TAb's
products. The stage at which TAb will out-license will depend on balancing the
market potential of the product with the costs and risks associated with the
continuing development program. Except in certain limited circumstances, the
Directors do not intend that TAb will establish its own sales force but expect
to market its products through alliances with collaborators.
Management groups TAb's products in two general categories:
Niche Products. These products include the antivenoms and
DigiTAb(TM). Niche products serve an acute medical need in a low volume
market. Generally, the products have a lower commercial risk as they tend to
have lower development costs, shorter lead times and potentially accelerated
regulatory review. Management believes that TAb's niche products will be able
to show improved safety or efficacy compared with existing products or that
they will be able to present a market opportunity in an established market
place.
Major Market Products. These products include the
anti-cytokine products and certain of the anti-drug products. Major market
products are being developed to meet medical needs for life threatening
conditions, which Management considers have significant market potential. For
products requiring sizable later stage trials, Management intends to
out-license these products at the end of Phase II clinical trials in order to
optimize return.
RESEARCH AND DEVELOPMENT STRATEGY. The nature of TAb's
technology affords flexibility in its development of a variety of products. By
varying the initial target molecule and using consistent production techniques,
TAb has already demonstrated that it can create products for different
therapeutic uses.
Management intends to take advantage of opportunities for
which United States orphan drug status might be granted given the development,
registration and marketing incentives which are available from such status
being granted.
TAb has already established and will continue to seek new
collaborative arrangements with academic institutions either sponsoring their
work directly or acquiring the intellectual property rights (or rights to use
the same) to complementary novel developments. This provides the Company with
another source of new technology to develop further its new products.
GOVERNMENT REGULATION
GENERAL
Regulation by government authorities in the United States,
Europe and other countries in which the Company operates is a significant
consideration in the development, production, marketing, labeling and
reimbursement of the Company's products and in its continuing research and
development activities.
In the United States, Europe and most other countries there is
a requirement to obtain and to maintain an approval for a product from the
appropriate regulatory authority ("marketing authorization"). The Company is
also subject to various laws, regulations, policies, guidelines and
recommendations relating to such matters as safe working conditions, laboratory
and manufacturing practices, the experimental use of animals and the protection
of the environment. The general trend has been towards greater regulation of
the pharmaceutical industry and its products.
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The submission of an application to a regulatory authority
does not guarantee that an authorization will be granted. Regulatory
authorities require substantial data in connection with marketing authorization
applications, resulting in a lengthy approval process. The time taken to
obtain such approval varies, but can take from a few months to several years
and can involve substantial expenditure. This may be due to the lack of the
necessary results required by regulatory authorities or changing or additional
regulation during the product development process. Furthermore, regulatory
authorities of different countries may impose differing requirements and may
refuse to grant, or may require additional data before granting an approval,
even though the product may have been approved by the regulatory authority of
another country. Even if approval is obtained, failure to comply with present
or future regulatory requirements, or new information reflecting on the safety
or effectiveness of the approved drug, can lead the regulator to withdraw its
approval to market the product.
In the United States, the principal regulatory agency is the
U.S. Food and Drug Administration ("FDA"). Nearly all other countries have
national regulatory authorities. The Company may have to satisfy different
requirements from the FDA, European authorities and other national regulatory
authorities. There is an ongoing initiative, the International Conference on
Harmonization, between representatives from Japan, the United States and the
European Union, to limit differences where possible, but it may be many years
before its objective is achieved, if at all. In Europe, the Company must take
into consideration (a) the regulatory climate within the European Union,
including the stance of the International Commission for Harmonization, the
European Agency for the Evaluation of Medicinal Products ("EMEA") and the
European Committee for Proprietary Medicinal Products ("CPMP"), as well as (b)
the position of the national regulatory authorities of other European
countries. New licensing procedures were introduced in the European Union in
1995 aimed at progressively limiting the differences in requirements between
the regulatory authorities of European member states in respect of the same
products. However, it is too early to assess fully the impact of these new
procedures.
Wherever practical, the Company intends to design preclinical
and clinical protocols which should generate sufficient data to be acceptable
to support applications for the same product in each country where it is
intended to be marketed.
PRICE REGULATION
In some countries it is necessary to obtain approval for the
price to be charged. This is true in a number of European member states. In
the United Kingdom the launch price is set by the company (subject to the
constraints of the pharmaceutical price regulation system, which controls the
profitability of a company's business with the United Kingdom's National Health
Service).
Governments may also influence the price through the control
of national healthcare systems and also organizations which may bear the cost
of supply of such products. In the United States, government-funded or private
medical care plans can influence prices, and there are a variety of indirect
controls.
U.S. REGULATION
REGULATORY AUTHORITIES. The development and marketing of
medicinal products for human use in the United States is regulated at the
federal and state levels. The principal federal regulatory agency is the FDA
within the Department of Health and Human Services. Although most states
maintain one or more agencies with power to regulate medicines, they commonly
defer to the FDA in matters relating to product development and approval.
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Due to the requirements imposed by the FDA, the development
process for new pharmaceuticals in the United States is lengthy, expensive and
commercially risky. The great majority of compounds screened for possible
development are ultimately rejected at some stage in the pre-market testing
process; total development time for successful compounds often exceeds 10
years. However, under the provisions of recent legislation the FDA has
committed to reduce the review time for applications. Although the agency has
achieved some reductions, especially for high-priority medicines, the review
process remains lengthy and complex. There has been little or no reduction in
the testing required before applications are submitted, which consumes most of
the time spent in developing new medicines for the U.S. market.
GOOD PRACTICE STANDARDS. Various standards are applied either
by law or custom to the activities of pharmaceutical companies. These include
principally Good Laboratory Practice ("GLP"), applied to studies performed
during preclinical developments to identify the compound's behavior and
toxicity in animals, Good Clinical Practice ("GCP"), intended to ensure the
quality and integrity of clinical data and to protect the rights and safety of
human subjects in clinical trials, and Good Manufacturing Practice ("GMP")
which ensures the quality of drugs by setting minimum standards for all drug
manufacturing facilities. Such standards have been developed by the FDA and by
the United States National Committee for Clinical Laboratory Standards.
Violation of these regulations can lead to invalidation of the relevant
studies. In Europe they are embodied in law (GMP and GLP) or guidelines (GCP).
The Company has used consulting firms in the United Kingdom
and in the United States for advice on compliance with existing regulations and
guidelines.
CLINICAL TRIALS. All clinical trials of investigational
medicines in the United States must be carried out under investigational new
drug ("IND") submissions to the FDA. FDA regulations impose requirements for
documenting the safety of proposed clinical trials, provide for submissions to
FDA before clinical trials can commence and authorize the FDA to suspend or
withdraw permission to continue clinical trials.
If the drug is considered by the FDA and by prospective users
to provide an important benefit in the treatment of a serious disease, the
applicant may be faced with demands from patient groups, sometimes endorsed by
the FDA, for release of the drug for treatment during the investigative stage.
The supply of such treatment is termed treatment use. Supplying drugs on this
basis can involve significant expense and resource demands for the sponsor of
the drug, which must administer the pre-approval release program. This may, in
some situations, interfere with the ability to complete controlled clinical
trials of the drug.
APPROVAL PROCEDURES AND CRITERIA. The FDA applies essentially
the same requirements for approval of all products: proof of safety and
efficacy, demonstration of adequate controls in the manufacturing process and
conformity with requirements for labeling. Efficacy must usually be
demonstrated by two well-controlled clinical trials carried out in accordance
with FDA regulations.
The FDA has discretion to determine whether the data submitted
are adequate for approval. The time taken for this approval process is related
to the quality of the submission, the potential contribution of the compound in
improving the treatment of the target disease and the workload at the FDA.
There can be no assurance that any new drug will successfully proceed through
this approval process or that it will be approved in any specific period of
time.
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During its review, the FDA may ask for additional test data.
If the FDA approves the product, it may require post-marketing testing,
including potentially expensive Phase IV studies. This phase assesses further
the product's therapeutic value and provides additional information about the
safety and efficacy of the product across a broader patient base. In addition,
the FDA can impose restrictions on the use of the drug that may be difficult
and expensive to administer.
ORPHAN DRUG STATUS. The Orphan Drug Act encourages
manufacturers to seek approval of products intended to treat diseases with a
prevalence of under 200,000 patients per annum in the United States. This Act
provides tax incentives, FDA assistance with protocol design, and a period of
seven years of marketing exclusivity for the product. The Company expects some
of its proposed products to be designated as orphan drugs by the FDA. TAb's
Crotalid antivenom CroTAb(R) has already been designated by the FDA as an
orphan drug.
ACCELERATED APPROVAL. The FDA may accelerate approval of
medicines that offer a significant improvement in the treatment of fatal or
life-threatening conditions, or conditions for which there is no alternative
therapy. In certain cases, the FDA may permit Phase II and Phase III studies
to be compressed into a single study. It is unusual for the FDA to base an
approval on such compressed studies and, although many of the Company's
products would be included in this category, there can be no assurance that
such combined testing would be considered acceptable for any of the Company's
products.
ACCEPTANCE OF FOREIGN CLINICAL DATA. The FDA will accept
reports of foreign clinical trials if they meet requirements for GCP and are
relevant to U.S. medical practice. It is, however, uncommon for the agency to
approve a product without some evidence from clinical trials conducted in the
United States, and most sponsors carry out at least one pivotal trial there.
Studies conducted outside the United States are subject to special audits by
FDA inspectors and may be rejected if U.S. requirements for record-keeping,
protection of human subjects and other matters relating to GCP are not met.
NON-PATENT MARKET EXCLUSIVITY. In U.S. medicines law there
are two forms of non-patent market exclusivity. First, the law prohibits
approval of abbreviated new drug applications or literature-based applications
for copies of innovative products for a period of five years after the approval
of a new chemical entity, and three years after the approval of a new
indication or dosage form for which substantial clinical trials were required.
These provisions do not preclude approval of competitive applications based on
original data, and they apply only to new drugs, rather than antibodies or
biological products.
Second, the law provides for a seven-year period of protection
for orphan drugs (see above). During this period, the FDA is precluded (subject
to complex exceptions) from approving any application for the same drug, even
if it is based on original data. These provisions apply to all drugs,
including antibiotics and biological products.
MANUFACTURING CONTROLS. The FDA inspects pharmaceutical
manufacturing establishments for compliance with current GMP and conformity
with specifications in marketing approvals. Biological manufacturing
establishments must be licensed by the FDA. The agency inspects foreign
manufacturing facilities that supply bulk or finished products for the United
States market. If companies cannot meet FDA requirements, their products may be
excluded from the United States.
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ADVERTISING AND PROMOTION. The FDA regulates advertising and
promotion of prescription medicines. Promotion for unapproved uses is
prohibited, and sponsorship of medical symposia and publications is restricted.
Financial incentives to prescribers are regulated under federal and state
criminal laws as well as codes of practice for the medical professions.
ENFORCEMENT POWERS. The federal government has extensive
powers to compel compliance with medicines laws. Volative products are subject
to seizure, and imported products may be detained. Companies and individuals
that violate the law are subject to injunctions and criminal penalties with no
requirement for proof of negligence or intent. Persons and companies convicted
of certain offenses can be barred from involvement in the medicines approval
process. The federal government can suspend or withdraw approval of products
if questions arise concerning safety or effectiveness.
PRODUCT LIABILITY. Companies that market medicines in the
United States are subject to suit in state and federal courts for personal
injuries caused by their products. The risk of product liability litigation is
significantly greater in the United States than in most European jurisdictions,
and damage awards can be substantial. FDA approval is not a defense to
liability, and failure to comply with FDA requirements may constitute evidence
of negligence.
EUROPEAN REGULATION
The Company's activities in Europe are regulated by national
and local laws and European Union law. There are European Directives governing
the development, manufacture and marketing (including wholesale) of medicinal
products which member states are required to implement into local law and which
must be interpreted in line with the European provisions. However, failure to
implement them properly by national governments may allow companies to rely
upon provisions of pre-existing local laws. Certain areas of regulation
continue to be regulated by national law, for example, the regulation of
clinical research.
CLINICAL TRIALS. Clinical trials of new product candidates
are designed to establish their safety and efficacy in treating a specific
disease and are usually conducted in three phases, although there are not
always distinct divisions between the objectives and activities undertaken in
each phase. The clinical trial process may take from two to six years or more
to complete.
Phase I trials are normally conducted in a small number of
healthy human subjects or patients with the specific condition targeted. Their
purpose is to provide a preliminary evaluation of the product candidate's
safety, toxicity and behavior when administered to humans.
In Phase II trials, the product candidate is assessed for its
short-term safety and preliminary efficacy in a limited number of patients with
the targeted disease or disorder. The appropriate dose ranges and regimens for
Phase III are also determined during this Phase.
Phase III trials involve a comprehensive evaluation of safety,
efficacy and toxicity that might not have been seen in smaller studies. The
trials are carried out, typically on a multi-center basis, on a sufficient
number of patients to obtain statistically significant results. All adverse
reactions are investigated in detail and special features of the product
candidate are explored.
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When adequate preclinical data are available, application will
usually be made to the regulatory authority in the country where the trial is
to be conducted. In most developed countries, clinical trials may only be
commenced after notification to and/or approval by the competent regulatory
authority and an independent ethics committee. In European Union member
states, marketing authorizations must be supported by clinical trial data as
set out in European Directives and guidelines, but the approval process and
criteria for commencement of clinical trials are not yet harmonized by European
Union law. The International Commission for Harmonization is developing
proposals for new legislation harmonizing national laws and practices.
MARKETING AUTHORIZATIONS. When clinical trial data supporting
safety and efficacy and the necessary manufacturing and formulation data are
available, an application for a marketing authorization may be submitted. If a
regulatory authority is satisfied that the criteria of safety, quality and
efficacy are met, a marketing authorization will be granted although European
Union law does allow member states, exceptionally, to prohibit product use on
grounds connected with public order or morality. Marketing authorizations are
granted subject to certain generally applicable conditions and may also be
subject to product-specific restrictions determined by the regulatory
authorities.
From January 1, 1995, two new procedures for the registration
of medicinal products in the European Union came into effect; the "centralized"
and "mutual recognition" systems. Until January 1, 1998, national applications
may also be made in several member states either in parallel, or in sequence if
the product is not subject to compulsory licensing under the centralized
system.
The centralized system is compulsory for certain biotechnology
products, and optional for certain other products, including new active
substances not previously authorized in the European Union, products
administered by innovative and novel delivery systems and significant new
indications for existing products. The EMEA coordinates the registration
process, but the CPMP, a body of scientific experts drawn from each member
state, undertakes the scientific assessment of the product dossier and gives an
opinion as to whether the product meets the criteria for authorization. Time
periods are laid down for various stages in the approval process, including
allowances for questions and appeals. The decision to grant or refuse a
marketing authorization is taken by the Commission and, when granted, the
single authorization obtained is valid throughout all member states and the
European Free Trade Association.
The mutual recognition system is based upon a marketing
authorization granted by one national regulatory authority, the "Reference
Member State" or "RMS". Having obtained a marketing authorization from the
RMS, the authorization holder may apply to the regulatory authorities of other
member states to "recognize" that prior authorization and to issue national
authorizations on the same terms. Such applications can be made sequentially.
There are procedures and time limits according to which objections by member
states can be raised and appeals may be heard, although these may significantly
lengthen the time from initial application to approval. Arbitrations are
handled by the CPMP whose decision, when adopted by the Commission, is binding
on all member states. Consequently, arbitration may adversely affect prior
authorizations.
The passage of a product through the approval system can
therefore be long and drawn out. Although the procedures impose time limits
upon the authorities, these limits do not run if the applicant delays in
providing additional data or responses to queries raised. In addition, the
regulatory authorities can suspend, vary or revoke a marketing authorization at
any time after it has been granted if they are no longer satisfied as to the
product's safety, quality or efficacy. Increasing harmonization of
decision-making in the European Union through the CPMP means that, in the
future, concerns raised by any one member state are likely to be examined at
CPMP level and the outcome of its deliberations will affect the product in all
member states.
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Marketing authorizations are generally granted for a period of
five years and require renewal. During that period, should new developments
occur, the holder of the authorization is required to update the product
dossier. There is an obligation on the holder of the authorization to report
adverse events to the regulatory authorities and to keep product safety under
review.
MANUFACTURING AUTHORIZATIONS AND FACILITIES LICENSES.
European Union law requires that companies manufacturing medicinal products
must hold a manufacturer's authorization and must comply with the requirements
of GMP. These standards are enforced by inspection. Failure to comply may
result in the suspension or revocation of the manufacturer's authorization and
may lead to suspension of product marketing.
In the United Kingdom facilities licenses are issued after an
application to, and inspection by, the Medicines Control Agency (MCA), and
similarly in Australia by the Therapeutic Goods Administration.
REGULATION IN OTHER COUNTRIES
In general, regulation is similar in countries outside the
United States and Europe, with the approval system regulated by specific
agencies in each geographic area. However, approval by one agency does not
ensure approval in other countries.
In Australia successful marketing of a therapeutic substance
may be dependent on receiving marketing approval from the Therapeutic Goods
Administration and also on obtaining Commonwealth Government subsidy for use of
the product via either the Pharmaceutical Benefit Scheme or the Special Access
Scheme. Applications for listing on either of these Schemes requires additional
information, in particular economic analysis data, and approval for this second
step may lag behind obtaining marketing approval. The Australian Government is
able to exercise considerable power over price control through this process.
EMPLOYEES
As of December 31, 1996, the Company had 150 full-time
employees, including 34 scientists and 60 technicians engaged in research and
development, 4 regulatory personnel, and 27 management and 25 administrative
personnel. In addition, the Company employed 24 part-time employees at year
end 1996. The Company believes that its future success will depend, in part,
on its ability to attract and retain highly skilled technical, marketing,
support, and management personnel.
None of the Company's employees in the United States is
subject to a collective bargaining agreement, and the Company has never
experienced a work stoppage. Management believes that its employee relations
are good.
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ITEM 2. PROPERTIES
The Company's physical properties are primarily owned or
leased through its subsidiaries. TAb London Ltd. operates the Company's
research and development laboratories and its pilot manufacturing facility at
St. Bartholomew's and the Royal London School of Medicine and Dentistry in
London. TAb London leases 3,400 square feet of laboratory space from St.
Bartholomew's. The lease has an expiration date of September 30, 1997, but
permits TAb to renew the lease for an additional six year term. This option
has been exercised and the landlord's response is awaited. TAb London also
leases 4,000 square feet of office space at 14-15 Newbury Street in Central
London, which lease expires in 1999.
TAb Wales Ltd. owns and operates production offices, quality
control laboratories and a new manufacturing facility in Dyfed, Wales. In
1992, TAb acquired Polyclonal Antibodies Ltd. ("PAL"), which owned the initial
Welsh facilities, including approximately 250 acres of pasture land, animal
stock, and production and ancillary facilities. The Welsh facilities were
established with financial support of the Welsh government in the form of
grants and investments. In 1995, TAb Wales completed construction of a new
20,000 square foot manufacturing plant within its existing Welsh facilities.
In 1994, TAb organized a production subsidiary, TAb Australia
Pty. Ltd., in Adelaide, Australia, which produces additional antisera. In
1995, TAb Australia leased offices and laboratories and acquired grazing
rights over 250 hectares of land at the Turretfield Research Center. The
flocks of sheep were moved to this location and a bleeding shed constructed.
In the fourth quarter of 1996, TAb Australia Pty. Ltd. completed construction
of new facilities on the property. The new facilities include offices, a
cleanroom and a manufacturing plant, located adjacent to the Company's existing
facilities. The lease of the Turretfield Research Center property will expire
in 2015.
The Company's corporate headquarters is located in 7,941
square feet of leased office space in the vicinity of Vanderbilt University
Medical Center in Nashville, Tennessee. The lease expires on January 31, 2001.
All of the Company's laboratories, production facilities and
farms are suitably equipped for their intended purposes.
20
<PAGE> 23
ITEM 3. LEGAL PROCEEDINGS
There are no pending legal proceedings involving the Company
or any of its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
21
<PAGE> 24
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock began trading publicly on the
London Stock Exchange (under the symbol TAb) effective July 23, 1996. Prior to
that date there was no public market for the Company's Common Stock. There is
no public trading market for the Company's Common Stock within the United
States.
The following table presents quarterly information on the price range of the
Company's Common Stock. This information indicates the high and low sale
prices reported by the London Stock Exchange.
<TABLE>
<CAPTION>
QUARTER ENDING HIGH LOW
- -------------- ---- ---
<S> <C> <C> <C> <C>
September 30, 1996 (commencing July 23, 1996) L.5.30 ($8.27) L.4.45 ($6.94)
December 31, 1996 L.5.23 ($8.18) L.3.55 ($6.08)
</TABLE>
As of March 14, 1997, there were approximately 900 holders of
record of the Company's Common Stock. On March 14, 1997, the last sale prices
reported on the London Stock Exchange for the Company's Common Stock was
L.3.85 ($6.17).
The Company to date has paid no dividends on its Common Stock.
The declaration and payment of future dividends will be determined by the Board
of Directors in light of conditions existing in the future and are expected to
depend upon earnings, financial condition, capital requirements, and other
relevant factors not presently determinable. The Company does not expect to
pay dividends in the foreseeable future.
- --------------------
(1) Currency translations were calculated based upon the currency exchange
rates in effect on the date the price disclosed was reported on the London
Stock Exchange.
22
<PAGE> 25
ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data at and for
each of the five years in the period ended December 31, 1996 have been derived
from the Company's consolidated financial statements. The data set forth below
should be read in conjunction with the consolidated financial statements and
notes thereto included elsewhere herein and also with "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
Years Ended December 31, 8/10/84
------------------------------------------------------------------ (Inception)
through
12/31/96
--------
1996 1995 1994 1993 1992
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total Revenues . . . . . . . . . . . . . . (1) $ 3,268,368 $ 750,490 $ 1,130,323 $ 290,315 $ 163,011 $ 6,708,814
Expenses:
Research and development . . . . . . . . . . 9,682,263 6,449,494 5,107,894 3,597,555 2,404,560 31,205,062
General, administrative, marketing . . . . . 2,586,014 2,119,652 1,619,824 1,055,971 763,139 10,118,624
Depreciation and amortization . . . . . . . 1,387,916 856,756 864,288 533,244 99,875 3,867,748
Interest expense and debt conversions . . . 2,002,932 388,258 137,018 781,097 182,621 3,530,221
Other . . . . . . . . . . . . . . . . . . . 355,360 36,368 119,052 25,873 1,914 551,824
------------ ----------- ---------- ----------- ----------- -------------
Total expenses . . . . . . . . . . . . . 16,014,485 9,850,528 7,848,076 5,993,740 3,452,109 49,273,479
Net loss . . . . . . . . . . . . . . . . . . . $(12,746,117) $(9,100,038) $(6,717,753) $(5,703,425) $(3,289,098) $ (42,564,665)
============ =========== =========== =========== =========== ============
Net loss per share . . . . . . . . . . . . . . $ (0.68) $ (0.57) $ (0.47) $ (0.48) $ (0.33) $ (4.79)
============ =========== =========== =========== =========== ============
BALANCE SHEET DATA:
Cash and cash equivalents . . . . . (1) (3) $ 20,502,536 $ 3,397,082 $ 593,154 $ 103,842 $ 434,963
Total assets . . . . . . . . . . . . . (2) 37,179,990 15,157,099 12,103,994 4,978,617 4,931,993
Long term debt, net of current portion . (2) 8,592,755 9,595,420 2,917,251 282,555 2,563,125
Deficit accumulated during
development stage . . . . . . . . . . . . (42,564,665) (29,818,548) (20,718,510) (14,000,757) (8,297,332)
Stockholders' equity . . . . . . . . . . (3) 25,215,530 894,479 4,862,404 1,917,332 1,621,629
</TABLE>
Notes:
(1) At December 31, 1996, the Company had cash and cash
equivalents totaling $20,503,000 of which approximately
$17,300,000 was denominated in British pounds. As a result of
improvement in the exchange rate between the British pound and
the U.S. dollar, the Company experienced a foreign currency
transaction gain of $1,730,000 for the year ended December 31,
1996.
(2) In 1994 and 1995, the Company constructed a pilot production
facility in London and a manufacturing facility in Wales.
These facilities were funded through financing arrangements
provided by Aberlyn Capital Management Company, Inc. and the
Welsh Development Agency. See Note 4 to the consolidated
financial statements for further information.
(3) On July 23, 1996, the Company completed an initial public
offering of 4,190,477 shares of its common stock on the London
Stock Exchange at L.5.25 ($8.14) per share. See Note 1 to the
consolidated financial statements for further information.
23
<PAGE> 26
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements and notes thereto. Statements made in this Annual Report
on Form 10-K which are not historical fact are forward-looking statements. In
addition, the Company, through its senior management, from time to time makes
forward looking public statements concerning its expected future operations and
performance and other developments. Such forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are necessarily estimates reflecting the Company's best
judgment based on current information and involve a number of risks and
uncertainties, and there can be no assurance that other factors will not affect
the accuracy of such forward-looking statements. While it is impossible to
identify all such factors, factors which could cause actual results to differ
materially from those estimated by the Company include but are not limited to,
changes on the regulation of the pharmaceutical industry, both in the United
States and internationally, changes in pharmaceutical product testing or
approval standards, both in the United States and internationally, competitive
pressures on the pharmaceutical industry and the Company's response thereto,
general conditions in the economy and capital markets, and other factors which
may be identified from time to time in the Company's Securities and Exchange
Commission filings and other public announcements.
GENERAL
Since its inception, Therapeutic Antibodies Inc. ("TAb" or the
"Company") has been in the development stage, devoting its efforts and
resources to drug discovery and development programs relating to the
development of highly purified, polyclonal antibodies for the treatment of
disease. Since inception the Company's revenues have been from contract
agreements with corporate partners, product sales, grant income, interest
income, and insurance and value added tax recoveries. Net losses have been
incurred each year since its inception and the Company expects to continue to
incur operating losses during at least the next year due to continued spending
on research, product development and increasing requirements for process
development, preclinical and clinical testing, regulatory affairs, initial
manufacturing activities and administration. To fund these activities, the
Company conducted additional financings in the first nine months of 1996. See
"Liquidity and Capital Resources".
The Company conducts its operations from its headquarters in the
United States and through subsidiaries located in the United Kingdom, Australia
and New Zealand. For a discussion of the Company's international operations
for the past three fiscal years, see Note 9 to the Company's financial
statements.
RESULTS OF OPERATIONS
Year ended December 31, 1996 Compared to Year ended December 31, 1995
TAb's revenues for 1996 increased by 335% to $3,268,000 from $750,000
for 1995. During the year ended December 31, 1996, the Company received
approximately $97,000 more in contract revenue over the amount received in the
year ended December 31, 1995, which was attributable primarily to the Company's
Nigerian EchiTAb(TM) contract. Grant revenue increased $79,000 due to a grant
received from the Economic Development Authority of the Government of South
Australia for expansion of the Company's Australian operations. Interest income
in the year ended December 31, 1996, increased 527% to $607,000 from $97,000
due to additional cash and short term investment holdings from the proceeds of
the UK Placement (defined below). See "Liquidity and Capital Resources". As a
result of improvement in the
24
<PAGE> 27
exchange rate between the British pound and the U.S. dollar, the Company
experienced a foreign currency transaction gain of $1,730,000 for the year
ended December 31, 1996. See Note 2b to the Company's financial statements
included as Item 8.
The Company conducts research, development, manufacturing and/or
distributes its products in the United States, the United Kingdom, New Zealand
and Australia. In 1996 and 1995 the New Zealand and Australian operations did
not have a material impact on the results of operations. Trade revenues from
international operations increased 23% to $350,000 in 1996 from $283,000 in
1995.
Expenses for the year ended December 31, 1996 increased by 63% to
$16,014,000 from $9,851,000 for the same period in 1995. Research and
development expenses during the same periods increased by 50% to $9,682,000
from $6,449,000 as a result of increased clinical trial activities for
DigiTAb(TM) and CytoTAb(TM) for malaria as well as the progression through the
more advanced trial phases for CytoTAb(TM) for Sepsis and CroTAb(TM). These
costs are related to manufacturing TAb's products for clinical trials,
conducting clinical trials and ensuring that the necessary quality control and
assurance procedures are in place. The cost of regulatory compliance has also
increased as the Company's products advance through the development stages.
Additionally, the Australian facility has increased the number of sheep in its
flock during 1996 to meet the need for increased serum requirements for the
clinical trials. The Company expects 1997 research and development expenses to
increase at a smaller rate of growth as compared to 1996.
General and administrative expenses for the year ended December 31,
1996 increased by 39% to $2,225,000 from $1,601,000 for the year ended December
31, 1995. This increase relates primarily to expanded staffing and related
overhead expenses.
Marketing and distribution expenses decreased for the year ended
December 31, 1996 by 30% to $361,000 from $518,000 in the year ended December
31, 1995 due to a temporary reduction in marketing personnel. It is expected
that the marketing department will hire additional personnel during 1997.
Depreciation and amortization expense for the year ended December 31,
1996, increased by 62% to $1,388,000 from $857,000 compared to the year ended
December 31, 1995. This increase is the result of the depreciation of the
$4,000,000 capital expenditure for the Welsh production facility, which was
placed in service in December 1995.
Interest expense for the year ended December 31, 1996 increased by
209% to $1,201,000 from $388,000 in the year ended December 31, 1995 due to
increased borrowings by the Company including the issuance of the Company's 6%
and 15% Notes. See "Liquidity and Capital Resources". The Company repaid
approximately $4,750,000 of its debt obligations in 1996 and, absent additional
borrowings by the Company, therefore, expects interest expense to decrease
during 1997.
In the first quarter of 1996, the Company recorded a one-time debt
conversion expense of $801,597, relating to the conversion of an aggregate of
$2,565,000 of principal and interest on the Company's 6% Notes into shares of
Common Stock, which represents the difference between the stated conversion
price on the debt of $8.00 per share and the actual conversion price of $5.50.
The Company's net loss for the year ended December 31, 1996, was
$12,746,000 compared to a net loss of $9,100,000 for the year ended December
31, 1995. This increase was due to the one-time debt conversion expense and
the other factors described above.
25
<PAGE> 28
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Revenues for the year ended December 31, 1995 decreased by 34% to
$750,000 from $1,130,000 for the year ending December 31, 1994. In 1994, the
Company recognized a one-time value added tax (VAT) recovery of $476,000
relating to taxes paid to the United Kingdom in prior years. The decrease in
revenues is also attributed to a reduction in grant income from $321,000 in
1994 to $40,000 in 1995. In 1994, TAb recognized the full amount of a $269,000
job creation grant from the Welsh Government. TAb received a $405,000
construction grant from the Welsh Government in 1995 for its Welsh
manufacturing facility. The Company is recognizing income from the
construction grant over the depreciable life of the facility, approximately ten
years.
Contract revenues and sales of the Company's products grew by 71% in
1995 to $488,000 from $286,000 in 1994 primarily due to increased sales of
ViperaTAb(TM) (formerly called BeriTAb(TM)), the Company's European antivenom.
Sales of ViperaTAb(TM) increased to $243,000, from the initial sales of
ViperaTAb(TM) of $14,000 in 1994. 1995 represented the first full year of
sales of ViperaTAb(TM), which was sold in three Scandinavian countries (Sweden,
Finland and Norway). In 1995, the Company also earned $70,000 in contract
revenue under its Basic Cooperation Agreement with the Nigerian government,
providing for clinical trial collaboration on EchiTAb(TM), the Company's West
African antivenom. TAb earned $90,000 from this same contract in 1994.
The Company recorded as "Other Income" in 1995 a one-time $100,000
registration and distribution fee from F.H. Faulding & Co. Limited, a
multinational pharmaceutical company headquartered in Australia, with whom the
Company entered into an agreement on August 31, 1995 to develop, register and
distribute certain of the Company's antivenoms and drug antidote products in
Australia and Southeast Asia.
Trade revenues from international operations decreased 69% to $283,000
in 1995 from $920,000 in 1994 due to the one-time $476,000 VAT recovery from
the United Kingdom recorded in 1994 and less grant income in 1995. Of the 1994
amount, $269,000 consisted of the Welsh Government job creation grant. Domestic
trade revenue as a percentage of total trade revenue increased from 18% in 1994
to 62% in 1995. This shift is attributable to the Company earning more
domestic contract and sale revenue in 1995, particularly on sales of
ViperaTAb(TM) and EchiTAb(TM), and less international VAT recovery and grant
income.
Expenses increased by 26% in 1995 to $9,851,000 from $7,848,000 in
1994. Research and development expenses, the largest component of TAb's
expenses, increased by 26% to $6,450,000 from $5,108,000 in 1994 as a result of
increased domestic and foreign clinical trial activity, including production of
clinical trial materials.
General and administrative expenses increased by 14% in 1995 to
$1,601,000 from $1,409,000 in 1994 as a result of an increase in the number of
personnel and related expenses.
Marketing expenses in 1995 increased by 146% to $518,000 compared to
$211,000 in 1994 due to a major expansion of TAb's marketing and business
development departments resulting in an aggregate increase in salary, travel
and sales expenses.
26
<PAGE> 29
Interest expenses in 1995 increased by 183% to $388,000 from $137,000
in 1994 due to increased borrowing by the Company to finance the plant
expansions in London and Wales and to fund working capital. See "Liquidity and
Capital Resources."
The net loss for 1995 increased to $9.1 million from a net loss of
$6.7 million in 1994. This increase was due to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, TAb has been in the development stage, devoting
its efforts and resources to drug discovery and development programs. Capital
resources have been used for the establishment and expansion of production
facilities, research and development, clinical testing and to meet TAb's
increased working capital needs in connection with such activities. Management
does not expect revenues from product sales to be a significant source of
funding until additional products receive regulatory approval. Future capital
requirements will depend on numerous factors, including the progress of its
research programs and clinical trials, the development of regulatory
submissions, the commercial viability of the Company's products, the
development of sales, distribution and marketing capabilities, and the terms of
any new licensing arrangements. Financing for the Company's operating and
capital requirements historically has been provided by the sale of equity,
convertible debt and through other financings.
At December 31, 1996, the Company had cash and cash equivalents
totaling $20,503,000, of which approximately $17,300,000 was denominated in
British pounds, and short term investments of $2,002,000. The Company's net
cash used in operating activities during the year ended December 31, 1996,
totaled $12,667,000, an increase of 168% from the year ended December 31, 1995.
Capital expenditures of $2,760,000 in 1996 related to the expansion of the
Company's production facilities in Australia and Wales. TAb has accelerated the
expansion of its initial production facility in Australia and expects total
capital expenditures at such facility to be $1,590,000. These capital
expenditures are funded through a loan from the South Australian Minister for
Primary Industries (discussed below).
On July 23, 1996, the Company completed an initial public offering of
4,190,477 shares of its Common Stock on the London Stock Exchange at L.5.25
($8.14) per share raising total gross and net proceeds of approximately
$34,100,000 and $30,360,000, respectively. Approximately $4,750,000 was used
to repay the Company's 15% Notes and certain other indebtedness. The remainder
of the net proceeds will be utilized to fund working capital, operations and
capital expenditures in 1997.
During the year ended December 31, 1996, TAb Australia Pty. Ltd., the
Company's Australian operating subsidiary ("TAb Australia"), made a $1,282,000
draw on its collateralized loan from the South Australian Minister for Primary
Industries. Under this loan agreement, TAb Australia may draw up to $1,590,000
to assist with construction and equipping of buildings at its Turretfield
location in South Australia. The loan bears interest at an annual rate of 11%,
payable annually. Principal is to be repaid in ten equal annual installments.
As of December 31, 1996, the Company had outstanding draws of $1,576,000 on
this loan.
In June 1996, the Company completed a private placement of $5,000,000
principal amount of the Company's 15% Subordinated Promissory Notes due May 1,
1997 (the "15% Notes"), of which $4,250,000 were purchased for cash and
$750,000 were issued upon conversion of indebtedness. Each $250,000 unit of
the 15% Notes was accompanied by a Stock Purchase Warrant to purchase 18,000
shares of Common Stock
27
<PAGE> 30
at $8.00 per share. Warrants to purchase 360,000 shares of Common Stock were
issued in connection with the 15% Notes. On August 24, 1996, the Company
redeemed, for cash, $4,250,000 principal amount of the 15% Notes and accrued
interest thereon.
In April 1996, an officer of the Company made a short-term unsecured
loan to the Company of $1,000,000. Interest was charged at 12%. In May, the
officer converted $750,000 principal of the 12% Note into an equal amount of
the Company's 15% Notes. The $250,000 principal balance on the 12% Note is
payable in full together with accrued interest on December 1998.
In September 1996, the Company repaid in full the outstanding $500,000
principal amount of a promissory note due to Lakewood Partners along with
$3,400 accrued interest thereon.
In October 1996, the Company's indebtedness to the Welsh Development
Authority of L.300,000 British pounds was paid in full by converting L.250,000
principal of the note into TAb Inc. common stock and repaying L.50,000 and
accrued interest thereon of L.12,000.
TAb uses sheep for the production of its polyclonal antibodies and
supplies all the antisera required from its own flocks. Currently, TAb's
subsidiaries have approximately 6,000 sheep and TAb expects to substantially
increase the size of its flocks over several years to meet full scale
production requirements once additional products are approved for sale.
TAb's subsidiary, TAb London, Ltd., leases 3,400 square feet of
laboratory space from the Medical College of St. Bartholomew's Hospital in
London. The lease has an expiration date of September 30, 1997, but permits
TAb to renew the lease for an additional six year term. The Company expects to
exercise the option to renew this lease.
NET OPERATING LOSS CARRYFORWARDS
As of December 31, 1996, the Company had approximately $39.3 million
of net operating loss carryforwards for income tax purposes, of which $28.2
million are available for U.S. Federal taxes and expire from 1999 through 2011.
In addition, the Company has approximately $207,000 of research and development
tax credits available to offset future federal income tax, subject to
limitations for alternative minimum tax. The Internal Revenue Code of 1986, as
amended, contains certain provisions that limit the net operating loss
carryforward available to be used in any given year if certain events occur,
including significant changes in ownership. At present the Company's net
operating loss carryforward is not subject to these limitations. No assets
have been recognized in the Company's financial statements for these net
operating loss carryforwards because management believes the generally accepted
accounting principle criteria for recognition have not been met.
28
<PAGE> 31
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
the years ended December 31, 1996, 1995 and 1994
and the cumulative development stage from
August 10, 1984 (inception) through December 31, 1996
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Consolidated Financial Statements:
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Statements of Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . 33
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
29
<PAGE> 32
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Therapeutic Antibodies Inc.
We have audited the accompanying consolidated balance sheets of Therapeutic
Antibodies Inc. and Subsidiaries (A Development Stage Company) as of December
31, 1996 and 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996 and for the period from August 10, 1984 (inception)
through December 31, 1996. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
As discussed in Note 1, the Company has been in the development stage with its
primary activities being research and development and has not yet commenced
planned principal operations.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Therapeutic
Antibodies Inc. and Subsidiaries as of December 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 and for the period from
August 10, 1984 (inception) through December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand, L.L.P.
Louisville, Kentucky
March 7, 1997
30
<PAGE> 33
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 20,502,536 $ 3,397,082
Short-term investments 2,002,266 -
Trade receivables 101,281 109,435
Value-added tax receivable 251,186 162,655
Inventories 400,167 393,094
Other current assets 474,412 338,760
------------ ------------
Total current assets 23,731,848 4,401,026
Property and equipment, net 12,682,680 10,119,160
Patent costs, net 529,228 342,246
Other assets, net 236,234 294,667
------------ ------------
$ 37,179,990 $ 15,157,099
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 936,591 $ 1,506,124
Accrued interest 161,367 177,493
Current portion of notes payable 1,446,327 2,478,858
------------ ------------
Total current liabilities 2,544,285 4,162,475
Notes payable, net of current portion 8,592,755 9,595,420
Deferred revenue 656,170 349,425
Other liabilities 171,250 155,300
------------ ------------
Total liabilities 11,964,460 14,262,620
Commitments
Stockholders' equity:
Common stock - par value $.001 per share; 30,000,000 shares authorized; 22,353,692 and
16,556,603 outstanding in 1996 and 1995, respectively 22,354 16,557
Additional paid-in capital 67,082,048 30,879,879
Deficit accumulated during development stage (1984-1996) (42,564,665) (29,818,548)
Cumulative translation adjustment 675,793 (183,409)
------------ ------------
Total stockholders' equity 25,215,530 894,479
------------ ------------
$ 37,179,990 $ 15,157,099
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 34
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Cumulative
For the Years Ended Development Stage
December 31, From August 10, 1984
----------------------------------------------- (Inception) Through
1996 1995 1994 December 31, 1996
------------- ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Revenues:
Sales and contract revenue $ 600,607 $ 488,347 $ 285,654 $ 2,398,229
Interest income 607,479 96,917 37,692 1,036,175
Grant income 118,535 39,509 320,906 526,950
Value-added tax and insurance recoveries - - 475,760 577,170
Foreign currency gains 1,733,357 3,054 509 1,785,984
Other 208,390 122,663 9,802 384,306
------------- ------------ ------------ ---------------
3,268,368 750,490 1,130,323 6,708,814
------------- ------------ ------------ ---------------
Expenses:
Cost of sales and contract revenue 334,989 31,360 48,041 434,417
Research and development 9,682,263 6,449,494 5,107,894 31,205,062
General and administrative 2,224,752 1,601,442 1,408,800 8,756,669
Marketing and distribution 361,262 518,210 211,024 1,361,955
Depreciation and amortization 1,387,916 856,756 864,288 3,867,748
Interest expense 1,201,335 388,258 137,018 2,728,624
Debt conversion expense 801,597 - - 801,597
Other 20,371 5,008 71,011 117,407
------------- ------------ ------------ ---------------
16,014,485 9,850,528 7,848,076 49,273,479
------------- ------------ ------------ ---------------
Net loss $ (12,746,117) $ (9,100,038) $ (6,717,753) $ (42,564,665)
============= ============ ============ ===============
Net loss per share $ (0.68) $ (0.57) $ (0.47) $ (4.79)
============= ============ ============ ===============
Weighted average shares used in computing
net loss per share 18,821,524 15,938,219 14,377,456 8,894,667
============= ============ ============ ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
32
<PAGE> 35
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended December 31, 1996, 1995 and 1994 and for the Cumulative
Development Stage from August 10, 1984 (inception) through December 31, 1996
<TABLE>
<CAPTION>
Common Stock Additional Stock
------------------------- Common Stock Paid-In Subscriptions
Shares Par Value Subscribed Capital Receivable
---------- ------------ ----------- -------------- ----------
<C> <C> <C> <C> <C> <C>
Sale of common stock 1985 - 1993 6,869,290 $ 6,869 1,949 $ 13,684,730 (2,838,499)
One thousand-for-one stock split 1985 2,797,200 2,797 (2,797)
Exercise of stock warrants
at $.75 per share 1989 66,667 67 49,933
Issuance of shares 1990 and 1992 1,673,998 1,674 (1,674) (13,677) 1,736,999
Issuance of shares for acquisition
of PAL 1992 1,415,875 1,416 3,155,984
Issuance of warrants 1992 and 1993 212,000
Translation adjustment 1992 and 1993
Net loss from August 10, 1984 (inception)
to December 31, 1993
---------- ------------ ------ -------------- ----------
Balance, December 31, 1993 12,823,030 12,823 275 17,086,173 (1,101,500)
Issuance of shares 275,375 275 (275) 1,101,500
Sale of common stock 2,164,329 2,165 173 8,936,740 (690,038)
Net loss 1994
Translation adjustment
---------- ------------ ------ -------------- ----------
Balance, December 31, 1994 15,262,734 15,263 173 26,022,913 (690,038)
Issuance of shares 172,510 173 (173) 690,038
Exercise of stock warrants
at $.50-$.75 per share 99,735 100 60,201
Sale of common stock 1,021,624 1,021 4,796,765
Net 1oss 1995
Translation adjustment
---------- ------------ ------ -------------- ----------
Balance, December 31, 1995 16,556,603 16,557 - 30,879,879 -
Issuance of shares
upon debt conversion 466,383 466 2,564,639
Debt conversion charge 801,597
Sale of common stock, net 164,332 165 933,384
Initial public offering, net 4,190,477 4,190 30,370,518
Exercise of stock warrants 942,897 943 1,332,989
at $.75-$4.50 per share
Exercise of stock options 33,000 33 89,667
Issuance of warrants 46,944
Compensation expense 62,431
Net loss 1996
Translation adjustment
---------- ------------ ------ -------------- ----------
Balance, December 31, 1996 22,353,692 $ 22,354 - $ 67,082,048 -
========== ============ ====== ============== ==========
<CAPTION>
Deficit
Accumulated During Cumulative
Development Translation
Stage Adjustment Total
------------------ ------------ -------------
<C> <C> <C> <C>
Sale of common stock 1985 - 1993 - - $ 10,855,049
One thousand-for-one stock split 1985
Exercise of stock warrants
at $.75 per share 1989 50,000
Issuance of shares 1990 and 1992 1,723,322
Issuance of shares for acquisition
of PAL 1992 3,157,400
Issuance of warrants 1992 and 1993 212,000
Translation adjustment 1992 and 1993 $ (79,682) (79,682)
Net loss from August 10, 1984 (inception)
to December 31, 1993 $ (14,000,757) (14,000,757)
------------- ------------ -------------
Balance, December 31, 1993 (14,000,757) (79,682) 1,917,332
Issuance of shares 1,101,500
Sale of common stock 8,249,040
Net loss 1994 (6,717,753) (6,717,753)
Translation adjustment 312,285 312,285
------------- ------------ -------------
Balance, December 31, 1994 (20,718,510) 232,603 4,862,404
Issuance of shares 690,038
Exercise of stock warrants -
at $.50-$.75 per share 60,301
Sale of common stock 4,797,786
Net 1oss 1995 (9,100,038) (9,100,038)
Translation adjustment (416,012) (416,012)
------------- ------------ -------------
Balance, December 31, 1995 (29,818,548) (183,409) 894,479
Issuance of shares
upon debt conversion 2,565,105
Debt conversion charge 801,597
Sale of common stock, net 933,549
Initial public offering, net 30,374,708
Exercise of stock warrants 1,333,932
at $.75-$4.50 per share
Exercise of stock options 89,700
Issuance of warrants 46,944
Compensation expense 62,431
Net loss 1996 (12,746,117) (12,746,117)
Translation adjustment 859,202 859,202
------------- ------------ -------------
Balance, December 31, 1996 $ (42,564,665) $ 675,793 $ 25,215,530
============= ============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
33
<PAGE> 36
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Cumulative
For the Years Ended Development Stage
December 31, From August 10, 1984
------------------------------------------- (Inception) Through
1996 1995 1994 December 31, 1996
------------ ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net loss $(12,746,117) $ (9,100,038) $ (6,717,753) $ (42,564,665)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,387,916 856,756 864,288 3,867,748
Foreign Currency Gain (1,733,357) (3,054) (509) (1,785,984)
Warrant expense 46,944 - - 193,994
Compensation expense 62,431 - - 62,431
Debt conversion expense 801,597 - - 801,597
Changes in:
Trade receivable (52,373) 1,106,727 (1,104,753) (75,092)
Inventories (7,073) (332,559) 54,290 (285,993)
Other current assets (128,813) (334,980) 22,035 (468,723)
Accounts payable and accrued expenses (340,411) (84,553) 905,514 906,832
Accrued interest (37,512) 154,858 (101,129) 777,002
Deferred revenue 313,670 - - 313,670
Other (234,301) 236,139 5,573 (43,489)
------------ ------------ ------------- --------------
Net cash used in operating activities (12,667,399) (7,500,704) (6,072,444) (38,300,672)
------------ ------------ ------------- --------------
Cash flows from investing activities:
(Increase) decrease in restricted cash - 1,126,000 (1,126,000) -
Purchase of property and equipment (2,760,397) (2,379,405) (4,682,869) (11,986,443)
Patent costs (198,502) (127,042) (78,368) (551,288)
Purchase of short term investments (2,002,266) - - (2,002,266)
Other - - (94,365) 69,750
------------ ------------ ------------- --------------
Net cash used in investing activities (4,961,165) (1,380,447) (5,981,602) (14,470,247)
------------ ------------ ------------- --------------
Cash flows from financing activities:
Proceeds from notes payable 2,518,239 4,989,452 3,252,139 15,791,400
Payments on notes payable (1,969,138) (2,144,704) (574,418) (4,878,260)
Proceeds from line of credit 123,371 1,311,053 1,311,848 3,309,381
Payments on line of credit (1,018,738) (1,741,540) (448,659) (3,208,937)
Proceeds from convertible debt, net 5,432,500 4,222,500 - 9,655,000
Payments on convertible debt (4,320,325) - - (4,320,325)
Proceeds from issuance of stock, net 32,326,264 5,548,125 8,999,848 55,653,494
Proceeds from issuance of warrants - - - 65,000
Other (5,628) (151,032) (30,122) (186,782)
------------ ------------ ------------- --------------
Net cash provided by financing activities 33,086,545 12,033,854 12,510,636 71,879,971
------------ ------------ ------------- --------------
Effect of exhange rate changes on cash and cash equivalents 1,647,473 (348,775) 32,722 1,393,484
------------ ------------ ------------- --------------
Net increase in cash and cash equivalents 17,105,454 2,803,928 489,312 20,502,536
Cash and cash equivalents, beginning of period 3,397,082 593,154 103,842 -
------------ ------------ ------------- --------------
Cash and cash equivalents, end of period $ 20,502,536 $ 3,397,082 $ 593,154 $ 20,502,536
============ ============ ============= ==============
Supplemental cash flow disclosures:
Cash payments for interest (net of amount capitalized) $ 1,142,738 $ 250,616 $ 263,897 $ 1,738,516
============ ============ ============= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
34
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND OPERATIONS OF THE COMPANY:
Therapeutic Antibodies Inc. (the Company) was incorporated on August
10, 1984 for the purpose of engaging in the research, development,
production and marketing of therapeutic antibodies that provide
protection against venoms, drugs, toxins and infectious diseases. The
Company is a development stage company as defined in Statement of
Financial Accounting Standards (SFAS) No. 7, Accounting and Reporting
by Development Stage Enterprises, and is devoting substantially all of
its present efforts to research and development, including
pre-production activities. Certain of the Company's research and
development and product testing activities are carried out through
affiliations with scientists at academic institutions around the
world. These affiliations include preclinical and clinical research
agreements, consulting agreements, patent and royalty agreements and
facility leases. Inherent in the development stage is a range of
risks including the need for, and uncertainty of, future financing.
The Company also faces risks stemming from the nature of the
biopharmaceutical industry, such as the risk of competition, the risk
of regulatory change, including potential changes in health care
coverage, uncertainties associated with obtaining and enforcing
patents and proprietary technology, uncertainty of the approval of
products by governmental agencies and risks related to fluctuations in
interest rates and foreign currencies.
Net losses have been incurred each year since its inception and the
Company expects to incur operating losses during at least the next
year due to continued spending on research, product development and
increasing requirements for process development, preclinical and
clinical testing, regulatory affairs, initial manufacturing
activities, and administration. The Company will require additional
financing until product sales or licensing fees are sufficient to
generate positive cash flows from operations.
On July 23, 1996, the Company completed an initial public offering of
4,190,477 shares of its Common Stock on the London Stock Exchange at
L.5.25 ($8.14) per share raising total gross and net proceeds of
approximately $34,100,000 and $30,400,000, respectively.
Approximately $4,750,000 was used to repay the Company's 15% Notes and
certain other indebtedness. The remainder of the net proceeds is
being utilized to fund working capital, operations and capital
expenditures.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. PRINCIPLES OF CONSOLIDATION: The consolidated financial
statements of the Company include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany accounts and
transactions have been eliminated.
35
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
b. FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign
subsidiaries denominated in foreign currencies are translated to
U.S. dollars at period-end exchange rates. Revenues and expenses
denominated in foreign currencies are translated at average
exchange rates for the period. Translation adjustments are
reported as a separate component of stockholders' equity. The
effects of translation of intercompany loans to international
subsidiaries which have been designated as long-term investments
are also included in the separate component of stockholders'
equity. The Company's initial public offering on the London
Stock Exchange raised total proceeds of L.22,000,000 of which
L.8,000,000 was converted to U.S. dollars and the balance was
left in sterling. At December 31, 1996, the Company had
approximately L.10,000,000 which were translated to U.S. dollars
at the year end currency rate of 1.71, therefore, significantly
increasing foreign currency gains for 1996. At March 7, 1997,
the exchange rate had fallen to 1.60. Foreign currency
transaction gains for the years ended December 31, 1996, 1995 and
1994 were $1,733,357, $3,054, and $509, respectively.
c. CASH EQUIVALENTS AND SHORT TERM INVESTMENTS: All highly-liquid
investments with an original maturity of three months or less
when purchased are classified as cash equivalents.
Financial instruments which potentially subject the Company to
concentrations of credit risk consists principally of cash and
temporary cash investments. The Company places substantially all
of its cash and temporary cash investments with one major
financial institution. As of December 31, 1996, and at times
throughout the period, cash balances were in excess of Federal
Deposit Insurance Corporation (FDIC) insurance limits. The
Company has not experienced any losses in such accounts and
believes no significant exposure from this concentration exists
with respect to cash and temporary cash investments. The Company
also maintains balances at a U.S. institution denominated in
British sterling pounds.
Short term investments consists of debt instruments. The
carrying values of these short term investments approximates fair
value at December 31, 1996.
d. INVENTORIES: Inventories are stated at the lower of cost
(first-in, first-out) or market.
e. PROPERTY AND EQUIPMENT: Property and equipment is stated at cost
and is depreciated using the straight-line method over the
estimated useful life of the asset ranging from 5 to 20 years.
Leasehold improvements are amortized over the shorter of their
estimated life or the period of the related leases, including
anticipated renewals for which the Company has an option.
36
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
f. CARRYING VALUE OF LONG LIVED ASSETS: The carrying value of long
lived assets is reviewed if the facts and circumstances suggest
that they may be impaired. If this review indicates that the
carrying value will not be recoverable, the carrying value is
reduced to fair value.
g. PATENT COSTS: Patent costs consist of legal fees associated with
patent applications and filings. Once a patent is granted, costs
are amortized using the straight-line method over 17 years from
the patent grant date. Accumulated amortization was $22,059,
$10,539 and $1,987 as of December 31, 1996, 1995 and 1994,
respectively.
h. REVENUE RECOGNITION: Revenues from sales of products are
recognized at the time of shipment.
The Company has received grants from the United Kingdom and
Australia as a result of reaching certain employment levels and
constructing production facilities. Grants related to employment
levels and conducting clinical trials are recognized as income at
the point in time that the conditions of the grant are satisfied.
Grants related to construction of production facilities are
recognized over the life of the facility.
i. RESEARCH AND DEVELOPMENT COSTS: Research and development costs,
costs for developing and improving manufacturing processes, pilot
plant operations and inventories of products not yet approved for
sale by governmental regulatory authorities are expensed when
incurred.
j. NET LOSS PER SHARE: The Company's net loss per share
calculations for the years ended December 31, 1996, 1995 and
1994, and from inception through December 31, 1996, are based
upon the weighted average number of shares of common stock
outstanding during each period. Common equivalent shares from
stock options, warrants and other dilutive securities are
excluded from the computations as their effect is antidilutive.
k. VALUE-ADDED TAX RECEIVABLE: The Company's operations in the
United Kingdom (U.K.) are subject to value-added tax (VAT)
whereby the Company pays tax at a rate of 17.5% on most goods and
services purchased. These VAT taxes are subject to refund based
on returns which are filed quarterly with U.K. taxing
authorities. In 1994, the Company determined it could file
refunds for VAT paid in prior years in the amount of $475,760
which was recorded as revenue in 1994.
37
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
l. FINANCIAL STATEMENTS ESTIMATES: The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could
differ from those estimates.
3. PROPERTY AND EQUIPMENT:
Property and equipment at December 31 consists of the following:
<TABLE>
<CAPTION>
1996 1995
--------------- --------------
<S> <C> <C>
Land $ 639,266 $ 584,074
Buildings and improvements 6,420,062 5,443,978
Construction in progress 1,420,018 0
Furniture, fixtures and
equipment 7,078,837 5,721,990
Livestock 861,286 366,126
--------------- --------------
16,419,469 12,116,168
Accumulated depreciation 3,736,789 1,997,008
--------------- --------------
$ 12,682,680 $ 10,119,160
=============== ==============
</TABLE>
Buildings and improvements includes $38,288 of capitalized interest
associated with the construction of a building in Australia in 1996
and $491,408 with the construction of buildings in the United Kingdom
in 1995.
38
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. NOTES PAYABLE:
Notes payable at December 31 consist of:
<TABLE>
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
6% convertible notes payable, principal due October 1, 2000, interest due semi-annually
on April 1 and October 1 $ 2,905,000 $ 4,222,500
Capital lease payable to Aberlyn Capital Management Limited Partnership, interest at 14.5%-18%,
collateralized by equipment in the United Kingdom with a net book value of $3.3 million with
monthly payments of $113,000 required through January 2000 2,714,413 3,591,895
8.5% note payable to Sun Trust Bank, collateralized by personal guarantees of certain of
the Company's directors; principal and accrued interest was repaid in April 1996 - 950,000
11.5% note payable to Equitas, LP, principal due July 2000, interest due quarterly
in November, February, May, and August, collateralized by various assets of the
Company's subsidiaries and common shares of the Company's subsidiary, Polyclonal
Antibodies, Ltd. 800,000 800,000
13% note payable to Lakewood Partners, principal due December 1997, interest due monthly; - 500,000
outstanding principal and accrued interest paid in September 1996
9% to 12% unsecured notes payable to officers of the Company, principal and interest due
December 1998 250,000 375,000
Notes payable to Welsh Development Agency, interest at 1% over Barclays Bank base
lending rate, repayable by conversion of 150,000 warrants to purchase the Company's common
stock ; on October 21, 1996 outstanding debt and accrued interest was repaid by conversion
to 150,000 shares of the Company's stock - 465,900
Note payable to Bank of Wales PLC, collateralized by certain real property in the United
Kingdom, interest at 2.5% over Bank of Wales lending rate (effective rate of 8.5% at
December 31, 1996), principal and interest due monthly over 10 years beginning
February 1995 450,239 443,527
11% note payable to South Australian Minister for Primary Industries, collateralized
by building and equipment, principal repayable in annual installments over ten years
beginning in 1996 1,576,193 259,526
15% unsecured promissory notes payable to an officer of the Company, interest due quarterly,
principal due December 1998 750,000 -
Capital equipment leases, interest rates from 13.2% to 19.5%, principal and interest payable
monthly through 2001 266,682 190,330
8% unsecured note payable to Avantec, Inc., interest due monthly, principal due October 1998 100,000 100,000
6% note payable to CATO, Inc., interest due semi-annually, principal due December 31, 2000 100,000 -
Other 126,555 175,600
------------- -----------
10,039,082 12,074,278
Less current portion 1,446,327 2,478,858
------------- -----------
$ 8,592,755 $ 9,595,420
============= ===========
</TABLE>
39
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. NOTES PAYABLE, CONTINUED:
In August 1995, the Company initiated a private placement of its 6%
Convertible Notes due October 1, 2000 (the "6% Notes"). Interest on
the 6% Notes is payable semi-annually and the notes are convertible
into shares of the Company's common stock at $8.00 per share at any
time prior to maturity upon the election of the holder. The 6% Notes
are not collateralized. In January 1996, the Company offered each
holder of the 6% Notes the opportunity to exchange all or a portion of
their 6% Notes for shares of the Company's common stock at the rate of
$5.50 per share until February 9, 1996. Pursuant to this offer, the
holders of $2,565,105 aggregate amount of principal and accrued
interest on the 6% Notes elected to tender their 6% Notes to the
Company in exchange for 466,383 shares of common stock. This exchange
conversion resulted in a non-cash debt conversion expense of $801,597.
The Company has entered into capital lease agreements with Aberlyn
Capital Management Limited Partnership under which it has financed
$1,000,000 at 18% and $3,203,573 at 14.5%. Principal amounts mature
from October 1998 through January 2000. Payments of $113,000 are due
monthly. In connection with the agreement, the Company issued
warrants in 1995 and 1994 to purchase a total of 102,514 shares of the
Company's common stock at $5.00 per share. In addition, if the
Company chooses to retire early any of the $1,000,000 financed under
the agreements, the Company is required to issue warrants to Aberlyn
to purchase up to 12,500 shares at $8.00 per share.
In 1995, the Company obtained the proceeds of an $800,000 loan from
Equitas LP. The loan agreement provides for interest at an annual
rate of 11.5% to be paid quarterly. Principal is due in full at
maturity on July 24, 2000. The lender received warrants to purchase
22,198 shares of the Company's common stock at $8.00 per share. The
loan is collateralized by accounts receivable, antisera inventory, and
livestock from certain of the Company's subsidiaries as well as
limited guarantees from those subsidiaries. This loan is additionally
collateralized by the common shares of the Company's subsidiary,
Polyclonal Antibodies, Limited (PAL).
In 1995 the Company executed a $500,000 promissory note with Lakewood
Partners, a Tennessee general partnership. In connection with the
financing, the Company issued warrants to purchase a total of 25,000
shares of the Company's common stock at $8.00 per share. On September
3, 1996, the Company repaid the $500,000 principal amount along with
accrued interest to date.
40
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. NOTES PAYABLE, CONTINUED:
The Company had a 150,000 British pounds sterling note payable to
Welsh Development Agency. The Welsh Development Agency had the right
to convert 90,000 warrants into the Company's common stock at 1.11
British pounds sterling per share in lieu of repayment of L.100,000 of
the outstanding balance. In October 1996, the Company repaid L.50,000
and accrued interest thereon and issued 90,000 shares of the Company's
common stock as payment in full for the outstanding loan.
During 1995, TAb Wales, Ltd. obtained additional funds of 150,000
British pounds sterling from the Welsh Development Agency in the form
of a note payable which was repayable by conversion of warrants to
purchase 60,000 shares of the Company's common stock at 2.50 British
pounds sterling per share. In October 1996, the Company issued 60,000
shares of its common stock as repayment in full for the note.
In January 1995, financing of $465,900 was obtained from Bank of Wales
PLC collateralized by certain property in the United Kingdom. The
note is repayable over 10 years beginning in February 1995. Interest
is paid at 2.5% over Bank of Wales base lending rate (effective rate
of 8.5% at December 31, 1996).
The Company's subsidiary, TAb Australia Pty. Ltd., has a loan
agreement with the South Australian Minister for Primary Industries.
The agreement allows TAb Australia Pty. Ltd. to draw up to $2,000,000
Australian dollars ($1,589,400 U.S. dollars) to assist with
construction and equipment of buildings at its Turretfield location in
South Australia. The loan is to be repaid over ten years in equal
annual installments of principal. Interest is due annually at 11% per
annum. The loan is collateralized by a mortgage on the building and
equipment purchased. As of December 31, 1996, the Company had drawn
approximately $1,576,000 U.S. dollars on this loan.
In June 1996, the Company completed a private placement of $5,000,000
principal amount of the Company's 15% Subordinated Promissory Notes
due May 1, 1997, of which $4,250,000 were issued for cash and $750,000
were issued upon conversion of existing indebtedness. Each $250,000
unit of the 15% Notes was accompanied by a Stock Purchase Warrant to
purchase 18,000 shares of Common Stock at $8.00 per share. Warrants
to purchase 360,000 shares of Common Stock were issued in connection
with the 15% Notes. On August 24, 1996, the Company redeemed, for
cash, $4,250,000 principal amount of the 15% Notes and accrued
interest thereon.
In April 1996, an officer of the Company made a short-term unsecured
loan to the Company of $1,000,000. Interest was charged at 12%. In
May, the officer converted $750,000 principal amount of the 12% Note
into an equal amount of the Company's 15% Notes. The $250,000
principal balance on the 12% Note is payable in full together with
accrued interest in December 1998.
41
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. NOTES PAYABLE, CONTINUED:
The Company has available lines of credit at December 31, 1996
totaling 100,000 British pounds sterling with the Bank of Scotland and
its subsidiary, Bank of Wales PLC, in the United Kingdom. These lines
of credit are collateralized by the guarantee of the Company and are
due on demand. Interest is paid at 2.5% over the relevant bank's base
lending rate (effective rate of 8.5% at December 31, 1996). At
December 31, 1996, there were no outstanding borrowings on these lines
of credit.
The weighted average interest rate on all short-term borrowings
outstanding at December 31, 1996 and 1995 was 11.6% and 9.7%,
respectively.
Aggregate maturities of fixed payment on notes payable for the next
five years follow:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31:
------------
<S> <C>
1997 $ 1,446,327
1998 2,477,890
1999 826,833
2000 4,049,496
2001 201,420
Thereafter 1,037,116
-----------------
$ 10,039,082
=================
</TABLE>
At December 31, 1996 and 1995, $2,250,896 and $1,345,408,
respectively, of the Company's debt obligations were denominated in
British pounds sterling or Australian dollars and were translated to
U.S. dollars at year-end exchange rates. The Company is subject to
foreign currency risk to the extent that exchange rates between the
U.S. dollar and the foreign currencies change. For accounting
purposes, changes in exchange rates for the debt obligations result in
translation adjustments which are reported as part of the separate
component of stockholders' equity. At December 31, 1996 and 1995, the
amount included in the cumulative translation adjustment related to
the Company's debt obligations was $97,019 of loss and $16,547 of
gain, respectively. The Company does not hedge its exposure to
foreign currency risks. The Company estimates that the fair value of
its long-term debt is not substantially different from its book value.
42
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. INCOME TAXES:
Under SFAS No. 109, Accounting for Income Taxes, deferred income taxes
are recognized for future tax consequences of differences between the
tax bases of assets and liabilities and their financial reporting
amounts based on enacted laws and statutory rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. The
Company determined that at December 31, 1996 and 1995 its ability to
realize future benefits of deferred tax assets did not meet the "more
likely than not" criteria in SFAS No. 109. The components of the net
deferred tax liability recognized in the accompanying consolidated
balance sheet are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1996 1995
---------------- --------------
<S> <C> <C>
Deferred tax liability $ (409,636) $ (398,541)
Deferred tax asset 13,587,078 9,542,970
Valuation allowance (13,177,442) (9,144,429)
---------------- --------------
$ - $ -
================ ==============
</TABLE>
The deferred tax liability arose due to tax differences in the bases
of assets and liabilities relative to the acquisition of Polyclonal
Antibodies, Ltd. The deferred tax asset arises primarily from the
Company's net operating loss carryforwards of approximately
$39,315,000. The Company has approximately $207,000 of research and
development tax credits available to offset future federal income tax.
United States net operating losses carryforwards (NOLs) and research
and development tax credits (R&D credits) expire as follows:
<TABLE>
<CAPTION>
R&D
YEARS ENDING DECEMBER 31, NOL CREDITS
------------------------- ----------------- ----------------
<S> <C> <C>
1999 $ 74,000
2000 148,000
2001 52,000
2002 225,000
2003 572,000 $ 1,000
2004 683,000 13,000
2005 1,290,000 39,000
2006 1,987,000 19,000
2007 2,372,000 25,000
2008 3,763,000 23,000
2009 3,441,000 36,000
2010 5,683,000 25,000
2011 7,899,000 26,000
----------------- ----------------
$ 28,189,000 $ 207,000
================= ================
</TABLE>
43
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. INCOME TAXES, CONTINUED:
United Kingdom NOLs of $10,467,000, Australian NOLs of $562,000 and
New Zealand NOLs of $97,000, which are not included in the table
above, may be carried forward indefinitely.
6. STOCK WARRANTS AND STOCK OPTIONS:
At December 31, 1996 there were warrants outstanding to purchase
1,726,738 shares of the Company's common stock at prices ranging from
$.60 to $8.00 (average price of $3.59) per share. All outstanding
warrants expire from 1997 to 2000.
Activity in stock warrants is as follows:
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF
PER SHARE WARRANTS
------------- ----------
<S> <C> <C>
Outstanding at December 31, 1993 $ .50-$3.50 2,100,333
Granted $ 4.50-$5.00 61,250
Forfeited - -
Exercised - -
---------
Outstanding at December 31, 1994 $ .50-$5.00 2,161,583
Granted $ 4.00-$8.00 241,287
Forfeited - -
Exercised $ .50-$ .75 (99,735)
---------
Outstanding at December 31, 1995 $ .60-$8.00 2,303,135
Granted $8.00 366,500
Forfeited - -
Exercised $ .75-$4.50 (942,897)
---------
Outstanding at December 31, 1996 $ .60-$8.00 1,726,738
=========
</TABLE>
On April 26, 1996, the Board of Directors of the Company amended the
Therapeutic Antibodies Inc. 1990 Stock Incentive Plan (the Plan). Up
to 1,650,000 shares of the Company's common stock may be subject to
incentives under the Plan. The Plan provides for the grant to key
employees, advisors, officers and directors of the Company of stock
options complying with Section 422A of the Internal Revenue Code
(qualified options) or options not qualifying under such provision
(nonqualified options) as well as stock appreciation rights (SARs).
The Plan provides for adjustment of the number of shares available
44
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. STOCK WARRANTS AND STOCK OPTIONS, CONTINUED:
under the Plan in the event of stock splits, stock dividends and
certain other events. The Plan also provides that if the Company
shall not be the surviving corporation in a business combination, the
holder of an outstanding option will be entitled to purchase stock in
the surviving corporation on the same terms and conditions as the
options. Options are nontransferable, and options and SARs are
subject to any restrictions contained in the grant and applicable
securities laws. Options to purchase 1,612,376 shares of the
Company's common stock were outstanding at December 31, 1996 at prices
ranging from $1.25 to $8.18 under the Plan (average price of $4.12).
All options granted since 1992 have a five year contractual life. The
average contractual life of all the options at December 31, 1996 is
approximately 3.9 years. Generally, the Company grants options with a
graded vesting requirement which typically vests ratably over one to
five years. The options are issued at or above the fair value of the
underlying stock at date of grant. At December 31, 1996, 927,426
options were exercisable at a weighted average price of $2.81. All
options expire from 1997 to 2002.
Activity in stock options is as follows:
<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER OF WEIGHTED
PER SHARE OPTIONS AVERAGE PRICE
--------------------------------------------------
<S> <C> <C> <C>
Outstanding at December 31, 1993 $1.25-$3.50 799,647
Granted $4.50 136,000
Forfeited - -
Exercised - -
---------
Outstanding at December 31, 1994 $1.25-$4.50 935,647
Granted $4.50-$6.00 245,550
Forfeited $2.40-$4.50 (72,571)
Exercised - -
---------
Outstanding at December 31, 1995 $1.25-$6.00 1,108,626 $3.10
Granted $6.00-$8.18 538,050 $6.12
Forfeited $6.00 (1,300) $6.00
Exercised $2.40-$3.00 (33,000) $2.49
---------
Outstanding at December 31, 1996 $1.25-$8.18 1,612,376 $4.12
=========
</TABLE>
As permitted by SFAS No. 123, Accounting for Stock Based Compensation,
the Company follows the provisions of APB Opinion 25 and related
interpretations in accounting for its stock option grants.
Compensation cost has not been recognized for options issued under the
plan. If compensation cost had been determined based on the fair
value of the awards at the grant date consistent with the provisions
of SFAS No. 123 there would not have been a material impact on the
reported amount of the Company's net income and net income per share.
45
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. COMMITMENTS:
ROYALTY COMMITMENT: In 1992, the Company entered into a patent sale
and royalty agreement with scientists who at the time worked at the
University of Arizona. Under the agreement, the Company purchased the
scientists' rights under their U.S. patent and certain U.S. patent
applications. The Company agreed to pay royalties to the sellers with
respect to products developed and sold under the patents. Currently,
no royalty payments have yet been required under this agreement.
LEASES: The Company leases laboratory and office space under
operating leases. Aggregate rent expense incurred under these leases
was approximately $190,248 in 1996, $126,000 in 1995 and $62,000 in
1994. Future minimum rental commitments under noncancelable operating
leases as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1997 $ 283,173
1998 251,143
1999 233,956
2000 145,904
Thereafter 11,421
------------
$ 925,596
============
</TABLE>
8. RELATED PARTY TRANSACTIONS:
The Company incurred interest expense and loan guarantee fees of
$115,241, $17,380 and $50,695 in the years ended December 31, 1996,
1995 and 1994, respectively, on notes payable to certain directors of
the Company and loan guarantees made by certain directors on behalf of
the Company in order to obtain short-term loan financing.
46
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. INTERNATIONAL OPERATIONS:
The Company conducts its activities in the U.S., the United Kingdom, New
Zealand and Australia. International operations are primarily located in
the United Kingdom. Intercompany sales between regions are made at cost
plus markup. Summarized financial data by region are as follows:
<TABLE>
<CAPTION>
1996 U.S. INTERNATIONAL ELIMINATIONS NET
---- ------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Revenues:
Trade $ 1,184,619 $ 350,392 $ - $ 1,535,011
Foreign Currency Gain 1,733,357 - - 1,733,357
Intercompany (a) 1,301,702 5,318,319 (6,620,021) -
------------- --------------- ----------- ---------------
$ 4,219,678 $ 5,668,711 $(6,620,021) $ 3,268,368
============= =============== =========== ===============
R & D expense (a) $ 5,279,302 $ 7,357,849 $(2,954,888) $ 9,682,263
============= =============== =========== ===============
Net loss $ (5,468,662) $ (5,223,305) $(2,054,150) $ (12,746,117)
============= =============== =========== ===============
Capital expenditures $ 97,011 $ 2,663,386 $ - $ 2,760,397
============= =============== =========== ===============
Identifiable assets $ 24,048,275 $ 13,143,715 $ (12,000) $ 37,179,990
============= =============== =========== ===============
</TABLE>
<TABLE>
<CAPTION>
1995 U.S. INTERNATIONAL ELIMINATIONS NET
---- ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Trade $ 466,945 $ 283,545 $ - $ 750,490
Intercompany (a) 1,017,517 3,415,826 (4,433,343) -
------------ -------------- ------------ -------------
$ 1,484,462 $ 3,699,371 $ (4,433,343) $ 750,490
============ ============== ============ =============
R & D expense (a) $ 4,455,668 $ 5,436,117 $ (3,442,291) $ 6,449,494
============ ============== ============ =============
Net loss $ (5,039,977) $ (4,108,795) $ 48,734 $ (9,100,038)
============ ============== ============ =============
Capital expenditures $ 213,894 $ 2,165,511 $ - $ 2,379,405
============ ============== ============ =============
Identifiable assets $ 5,049,705 $ 10,385,116 $ (277,722) $ 15,157,099
============ ============== ============ =============
</TABLE>
47
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. INTERNATIONAL OPERATIONS, CONTINUED:
<TABLE>
<CAPTION>
1994 U.S. INTERNATIONAL ELIMINATIONS NET
---- ------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
Revenues:
Trade $ 210,543 $ 919,780 $ - $ 1,130,323
Intercompany (a) 404,614 2,805,289 (3,209,903) -
------------- --------------- ------------ --------------
$ 615,157 $ 3,725,069 $ (3,209,903) $ 1,130,323
============= =============== ============ ==============
R & D expense (a) $ 2,752,658 $ 4,912,720 $ (2,557,484) $ 5,107,894
============= =============== ============ ==============
Net loss $ (3,728,193) $ (2,741,268) $ (248,292) $ (6,717,753)
============= =============== ============ ==============
Capital expenditures $ 20,664 $ 4,662,205 $ - $ 4,682,869
============= =============== ============ ==============
Identifiable assets $ 1,787,953 $ 10,595,179 $ (279,138) $ 12,103,994
============= =============== ============ ==============
</TABLE>
(a) Intercompany revenues include interest income earned by the U.S.
parent company on loans made to international subsidiaries and
sales of product to, and the performance of contract research and
development for, the U.S. parent company by international
subsidiaries on a cost plus markup basis. The intercompany account
associated with this activity is eliminated in consolidation.
10. NONCASH INVESTING AND FINANCING ACTIVITIES:
During 1994, the Company issued 95,901 shares of the Company's common
stock in settlement of notes payable by the Company in the amounts of
$383,604.
On February 9, 1996, the Company issued 466,383 shares of common stock in
exchange for $2,500,000 of principal and $65,105 of accrued interest on
the 6% Notes.
In May, 1996 an officer of the Company converted $750,000 principal of
the 12% Note into an equal principal amount of the Company's 15% Notes.
On October 21, 1996 the Company issued 150,000 shares of common stock in
exchange for L.250,000 of principal on the two notes payable to the Welsh
Development Agency.
48
<PAGE> 51
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
49
<PAGE> 52
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to the executive officers and
directors of the Company is incorporated by reference from the Company's Proxy
Statement relating to the Annual Meeting of Shareholders to be held on April
28, 1997.
ITEM 11. EXECUTIVE COMPENSATION
Information with respect to the compensation of the Company's
executive officers is incorporated by reference from the Company's Proxy
Statement relating to the Annual Meeting of Shareholders to be held on April
28, 1997, except that the Comparative Performance Graph and the Compensation
Committee Report on Executive Compensation included in the Proxy Statement are
expressly not incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to the security ownership of certain
beneficial owners of the Company's common stock and management is incorporated
by reference from the Company's Proxy Statement relating to the Annual Meeting
of Shareholders to be held on April 28, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the Company's
Proxy Statement relating to the Annual Meeting of Shareholders to be held on
April 28, 1997.
50
<PAGE> 53
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
(a). The following documents are being filed as part of this
Report.
1. Financial Statements.
See Item 8 herein.
2. Financial Statement Schedules
Independent Auditors Report (see Item 8 herein).
All schedules are omitted, because they are not applicable or
not required, or because the required information is included in the
consolidated financial statements or notes thereto.
3. Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- -------- -----------------------
<S> <C> <C>
3.1 - Amended and Restated Articles of Incorporation of Therapeutic Antibodies Inc. (6)
3.2 - Amended and Restated Bylaws of Therapeutic Antibodies Inc. (6)
4.1 - Form of Note Purchase Agreement with respect to the Company's 15% Promissory Note due May 1,
1997. (4)
4.2 - Specimen of 15% Promissory Note due May 1, 1997. (4)
10.1 - Marketing Agreement, as amended, dated January 1, 1990, between Swedish Orphan AB and the
Company. (1)
10.2 - Contract for the Production of Sheep Anti-Human IgG, dated October 5, 1992, between Baxter
Germany and the Company. (1)
10.3 - Distribution Agreement, as amended, dated April 1, 1993, among Helena Laboratories and the
Company. (1)
10.4 - Contract Services Agreement, dated December 16, 1991, between Ministry of Agriculture and
Fisheries and the Company. (1)
10.5 - Agreement, dated December 16, 1991, between Ministry of Fisheries (now AgResearch) and the
Company. (1)
10.6 - Office Lease Agreement. as amended, dated August 28, 1990, between Summit Place Limited and the
Company. (1)
</TABLE>
51
<PAGE> 54
<TABLE>
<S> <C> <C>
10.7 - Lease, dated January 9, 1992, between The Medical College of St. Bartholomew's Hospital in the
City of London and the Company. (1)
10.8 - Office Lease Agreement, dated January 29, 1997, between Vanderbilt University and the Company.
(filed herewith)
10.9 - Sublease, dated January 29, 1997, between Platinum Entertainment, Inc., as Sublessor, and the
Company, as Sublessee. (filed herewith)
10.10 - Assignment of 14/15 Newbury Street London EC1A 7HU, dated February 1, 1996, between Immunogen
International Limited, as Assignor, and TAb London Limited, as Assignee. (filed herewith)
10.11 - 1990 Stock Incentive Plan, as amended. (6)
10.12 - Basic Cooperation/Joint Program Agreement, dated August 30, 1995, between Nigerian Federal
Ministry of Health and Therapeutic Antibodies Inc. (2)
10.13 - Memorandum of Lease, dated August 1, 1995, between Minister for Primary Industries, as Lessor,
and TAb Australia Pty. Limited, as Lessee (Turretfield lease). (2)
10.14 - Registration and Distribution Agreement, dated August 31, 1995, between Therapeutic Antibodies
Inc. and F.H. Faulding & Co. Limited. (2)
10.15 - Loan Agreement, dated July 10, 1995, between Minister for Primary Industries and TAb Australia
Pty. Ltd. and Deed of Charge, dated July 10, 1995, between Minister for Primary Industries and
TAb Australia Pty. Ltd. (2)
10.16 - Lease Assignment, dated February 1, 1996, between Immunogen International Limited and TAb
London Limited (3)
10.17 - Assignment, dated April 29, 1996, between Minister for Industry, Manufacturing, Small Business
and Regional Development and TAb Australia, Pty. Ltd. (4)
10.18 - Agistment Agreement, dated August 29, 1996, between Martindale Holdings Pty Ltd. and TAb.
Australia Pty Ltd. (5)
10.19 - Clinical Trials and Registration Agreement, dated October 4, 1996, between Therapeutic
Antibodies Inc. and F.H. Faulding & Co. Limited. (filed herewith)
10.20 - Service Agreement, dated July 5, 1996, between Professor John Landon and the Company. (filed herewith)
10.21 - Service Agreement, dated July 5, 1996, between Professor Tim Chard and the Company. (filed herewith)
11.1 - Statement re: computation of per share earnings.
21.1 - List of subsidiaries of the Registrant. (1)
27 - Financial Data Schedule (for SEC use only)
</TABLE>
52
<PAGE> 55
(1) Incorporated by reference to exhibits filed with the Company's Registration
Statement on Form 10, filed on May 1, 1995, File No. 0-25978.
(2) Incorporated by reference to exhibits filed with the Company's Quarterly
Report on From 10-Q for the quarterly period ended September 30, 1995, File
No. 0-25978.
(3) Incorporated by reference to exhibits filed with the Company's Quarterly
Report on From 10-Q for the quarterly period ended March 31, 1996, File No.
0-25978.
(4) Incorporated by reference to exhibits filed with the Company's Quarterly
Report on From 10-Q for the quarterly period ended June 30, 1996, File No.
0-25978.
(5) Incorporated by reference to exhibits filed with the Company's Quarterly
Report on From 10-Q for the quarterly period ended September 30, 1996, File
No. 0-25978.
(6) Incorporated by reference to appendices filed with the Company's Proxy
Statement relating to the Special Meeting of Shareholders held on July 5,
1996. File No. 0-25978.
53
<PAGE> 56
(b). Reports on Form 8-K.
None.
(c). Compensatory Plans or Arrangements.
The following is a list of all executive compensation plans and arrangements
filed as exhibits to this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
Exhibit Number Exhibit
-------------- -------
<S> <C>
10.11 1990 Stock Incentive Plan, as amended. (6)
10.20 Service Agreement, dated July 5, 1996, between Professor
John Landon and the Company
10.21 Service Agreement, between July 5, 1996, between Professor
Tim Chard and the Company
</TABLE>
(6) Incorporated by reference to appendices filed with the
Company's Proxy Statement relating to the Special
Meeting of Shareholders held on July 5, 1996.
File No. 0-25978.
(d). Financial Statement Schedules Excluded from Annual Report to
Shareholders.
None.
54
<PAGE> 57
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.
THERAPEUTIC ANTIBODIES INC.
By: /s/ Martin S. Brown
-----------------------------------
Martin S. Brown
Chairman of the Board and
Chief Executive Officer
Date: MARCH 27, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ---- ----- ----
<S> <C> <C>
/s/ Martin S. Brown Chairman of the Board and March 27, 1997
- ----------------------------------------------- Chief Executive Officer
Martin S. Brown
/s/ Robert D. Brown Vice President and Controller March 27, 1997
- ----------------------------------------------- (Principal financial and accounting officer)
Robert D. Brown
/s/ A. J. Kazimi President and Director March 27, 1997
- -----------------------------------------------
A.J. Kazimi
/s/ Harry G. Browne, M.D. Vice Chairman, Director, Secretary and March 27, 1997
- ----------------------------------------------- Senior Vice President-Scientific Affairs
Harry G. Browne, M.D.
/s/ John Landon, M.D. Executive Vice President-Research March 27, 1997
- ----------------------------------------------- and Development and Director
John Landon, M.D.
/s/ Tim Chard, M.D. Senior Vice President-Research and March 27, 1997
- ----------------------------------------------- Development Administration and Director
Tim Chard, M.D.
/s/ Thomas G. Andrews Director March 27, 1997
- -----------------------------------------------
Thomas G. Andrews
/s/ Robin Baillie Director March 27, 1997
- -----------------------------------------------
Robin Baillie
/s/ Robert C. Hilton Director March 27, 1997
- -----------------------------------------------
Robert C. Hilton
/s/ John W. Robb Director March 27, 1997
- -----------------------------------------------
John W. Robb
/s/ Steven L. Stroup, M.D. Director March 27, 1997
- -----------------------------------------------
Steven L. Stroup, M.D.
/s/ Joseph D. Williams Director March 27, 1997
- -----------------------------------------------
Joseph D. Williams
</TABLE>
55
<PAGE> 1
EXHIBIT 10.8
Standard Office Lease Agreement Therapeutic Antibodies, Inc.
Memphis, TN, June 1985 1207 17th Avenue South
Suite 103
Nashville, Tennessee 37212
O F F I C E
L E A S E A G R E E M E N T
STATE OF: TENNESSEE
COUNTY OF: DAVIDSON
THIS AGREEMENT, made in multiple copies and entered into between The
Vanderbilt University, herein designated as Landlord, and Therapeutic
Antibodies, Inc., a Delaware corporation, herein designated as Tenant.
WITNESSETH: That Landlord in consideration of the covenants and
agreements to be performed by Tenant and upon the terms and conditions
hereinafter stated does hereby lease, demise and let unto Tenant the following
described space IN SPECIAL PROVISIONS, PARAGRAPH 33, (hereinafter known as the
"demised premises") in the building known as 1207 17th Avenue, located at 1207
17th Avenue South, Nashville, Tennessee 37212 (hereinafter referred to as the
"Building").
TO HAVE AND TO HOLD the same for a term of forty eight (48) months
commencing on February 1, 1997 and ending on January 31, 2001.
By occupying the demised premises Tenant shall be deemed to have
accepted the same as suitable for the purpose herein intended and to have
acknowledged that the same comply fully with Landlord's covenants and
obligations hereunder. If this lease is executed before the demised premises
become vacant, or if any present tenant or occupant of the premises holds over,
and Landlord cannot acquire possession of the demised premises prior to the
date above recited as the commencement date of this lease, Landlord shall not
be deemed to be in default hereunder, and Tenant agrees to accept possession of
the demised premises at such time as Landlord is able to tender the same.
Landlord hereby waives payment of rent covering any period prior to the
tendering of possession to Tenant hereunder.
1. RENT. In consideration of this lease, Tenant agrees to pay to
Landlord rent for the demised premises, in advance, without demand, deduction
or set off at the rate described in SPECIAL PROVISIONS, PARAGRAPH 34. One such
monthly installment shall be payable by Tenant to Landlord in advance, without
demand, upon Tenant's execution of this lease, and a like monthly installment
shall be due and payable on or before the first day of each succeeding calendar
month during the term hereof. Rent for any fractional month at the beginning or
end of the lease term shall be prorated.
In the event Tenant fails to pay any installment of rent or other incurred
expense hereunder as and when such installment is due, to help defray the
additional cost to Landlord for processing such late payments Tenant shall pay
to Landlord on demand a late charge in an amount equal to ten percent (10%) of
such installment and the failure to pay such amount within ten (10) days after
demand thereof shall be an event of default hereunder. The provision for such
late charge shall be in addition to all of Landlord's other rights and remedies
hereunder and shall not be construed as liquidated damages or as limiting
Landlord's remedies in any manner.
2. USE. The demised premises shall be used and occupied by Tenant as
general office space. Tenant shall not use, or permit to be used, the demised
premises for any other purpose. Tenant will not occupy or use, nor permit to be
occupied or used any portion of the demised premises for any business or
purpose which is unlawful in part or in whole or deemed to be disreputable in
any manner, or hazardous on account of fire, nor permit anything to be done
which will in any way increase the rate of fire insurance on the Building or
its contents. In the event that there shall be any increase in the rate of
insurance on the Building or contents created by Tenant's acts or conduct of
business, then such acts shall be deemed to be an event of default hereunder
and Tenant hereby agrees to pay the amount of such increase on demand, and
acceptance of such payment shall not constitute a waiver of any of Landlord's
rights hereunder. Tenant shall comply with all laws, orders, rules and
regulations relating to the use, condition and occupancy of the Premises.
3. LANDLORD'S OBLIGATIONS. Landlord agrees to furnish Tenant while
occupying the demised premises water, hot and cold, at those points of supply
provided for general use of tenants of the Building; heated and refrigerated
air conditioning in season, at such times as Landlord normally furnishes these
services to all tenants of the Building; (which hours are: Mon.-Fri. from
1
<PAGE> 2
approx. 7:30 a.m. - 6 p.m. and Sat. from approx. 8 a.m. - 12 p.m.) and at such
temperatures and in such amounts as are considered by Landlord to be standard,
such service on Sundays and holidays to be optional on the part of Landlord;
janitor service on weekdays other than holidays; elevator service; and electric
service in the manner and to the extent deemed by Landlord to be standard; but
failure to any extent to furnish or any stoppage of these defined services,
resulting from causes beyond control of Landlord or from any cause, shall not
render Landlord liable in any respect for damages to person, property or
business, nor be construed as an eviction of Tenant nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery furnished by Landlord break down, or for any cause cease to function
properly, Landlord shall use reasonable diligence to repair same promptly, but
Tenant shall have no claim for rebate of rent or damages on account of any
interruptions in service occasioned thereby or resulting therefrom. Tenant
shall pay to Landlord on demand such charges as Landlord may reasonably
prescribe for any electric service required by Tenant for computers if Tenant
consumes more than the average use by Tenants in the Building, after hours or
additional air conditioning and heating and other electrical equipment or other
electric service deemed by Landlord not to be standard.
4. TENANT'S REPAIRS AND ALTERATIONS. Tenant will not in any manner
deface, damage or injure the Building, and will pay the cost of repairing any
damage or injury done to the Building or any part thereof by Tenant or Tenant's
agents, employees or invitees. Tenant shall throughout the term of this lease
take good care of the demised premises and keep them free from waste and
nuisance of any kind. Tenant agrees to keep the demised premises, including all
fixtures installed by Tenant and any plate glass, in good condition and make
all necessary repairs. At the end or other termination of this lease, Tenant
shall deliver the demised premises with all improvements located thereon,
except as provided in this paragraph, in good repair and condition, reasonable
wear and tear excepted. Tenant shall not make or allow to be made any
alterations or physical additions in or to the demised premises without the
prior written consent of Landlord. At the termination of this lease Tenant
shall, if Landlord so elects, remove all alterations, physical additions or
improvements erected by Tenant and restore the demised premises to their
original condition, otherwise such improvements shall be delivered to Landlord
with the demised premises. All furniture and moveable trade fixtures installed
by Tenant may be removed by Tenant at the termination of this lease if Tenant
so elects, and shall be removed if Landlord so elects. All such removals and
restoration shall be accomplished in a good workmanlike manner so as not to
damage the primary structure or structural qualities of the Building.
5. ASSIGNMENT OR SUBLEASE. Landlord shall have the right to transfer
and assign, in whole or in part, its rights and obligations in the Building and
property that are the subject of this lease. Tenant shall not assign this lease
or sublet all or any part of the demised premises without the prior written
consent of Landlord, which shall not be unreasonably withheld or delayed.
Landlord shall have the option, upon receipt from Tenant of written request for
Landlord's consent to subletting or assignment, to cancel this lease as of the
date the requested subletting or assignment is to be effective and to enter
into a new lease agreement directly with the proposed sublessee or assignee.
The option shall be exercised if at all, within fifteen (15) days following
Landlord's receipt of written notice by delivery to Tenant of written notice of
Landlord's intention to exercise the option. In the event of any assignment or
subletting, Tenant shall nevertheless at all times, remain fully responsible
and liable for the payment of the rent specified and for compliance with all of
its other obligations under the terms, provisions and covenants of this lease.
Upon the occurrence of an "event of default" if all or any part of the demised
premises are then assigned or sublet, Landlord, in addition to any other
remedies provided by this lease or provided by law, may at its option collect
directly from the assignee or subtenant all rents becoming due to Tenant by
reason of the assignment or sublease, and Landlord shall have a security
interest in all properties on the demised premises to secure payment of such
sums.
6. MAINTENANCE. Tenant will maintain the demised premises in a clean
and healthful condition, and comply with all laws, ordinances, orders, rules
and regulations (state, federal, municipal and other agencies or bodies having
any jurisdiction thereof) with reference to use, condition, or occupancy of the
demised premises.
7. INDEMNITY. Landlord shall not be liable for and Tenant will
indemnify and save harmless Landlord from any and all fines, suits, claims,
demands, and actions of any kind (including attorney's fees) by reason of any
negligence, misconduct, or any breach, violation, or non-performance of any
covenant hereof on the part of Tenant or Tenant's agents, employees, or
invitees. Tenant shall not be liable for and Landlord will indemnify and save
harmless Tenant from any and all fines assessed against Landlord or Landlord's
agents because of the acts or ommissions of the Landlord or Landlord's agents.
Landlord shall not be liable or responsible for any loss or damage to any
property or person occasioned by theft, fire, act of God, public enemy,
injunction, riot, strike, insurrection, war, court order, requisition or order
of governmental body or authority or other matter beyond the reasonable control
of Landlord, or for any damage or inconvenience which may arise through repair
or alteration of any part of the Building, or failure to make repairs, or from
any cause whatsoever except Landlord's negligence.
8. RULES AND REGULATIONS. Tenant and Tenant's agents, employees and
invitees, will comply fully with all requirements of the rules of the Building
which are attached hereto and are made a part as though fully set out herein.
Landlord shall
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at all times have the right to change such rules and regulations or to amend
them in such reasonable manner as may be deemed advisable for safety, care, and
cleanliness of the Building and for preservation of good order therein, all of
which rules and regulations, changes, and amendments, will be forwarded to
Tenant in writing and shall be carried out and observed by Tenant. Tenant shall
further be responsible for the compliance with such rules and regulations by
the employees, servants, agents, visitors and invitees of Tenant. The rules
shall be uniformly applied to all tenants in the Building.
9. INSPECTION. Landlord, or its officers, agents, and representatives,
shall have the right to enter into and upon any and all parts of the demised
premises, (a) at all reasonable hours to inspect same or clean or make repairs
or alterations or additions as Landlord may deem necessary, or (b) during
business hours to show the demised premises to prospective tenants, purchasers
or lenders, and Tenant shall not be entitled to any abatement or reduction of
rent by reason thereof.
10. CONDUCT OF BUSINESS. Tenant will conduct his business, and control
his agents, employees, and invitees in such a manner as not to create any
nuisance or interfere with, annoy or disturb other tenants or Landlord in the
management of the Building.
11. CONDEMNATION. If the demised premises shall be taken or condemned
in whole or part for public purposes, then the term of this lease shall at the
option of Landlord forthwith cease and terminate.
12. FIRE & OTHER CASUALTY. In the event that the Building should be
totally destroyed by fire, tornado or other casualty, or should be so damaged
that rebuilding or repairs cannot be completed within two hundred forty (240)
days after the date of such damage, Landlord may at its option terminate this
lease in which event the rent shall be abated during the unexpired portion of
this lease effective with the date of such damage, or Landlord may proceed to
rebuild and repair the Building and the demised premises. In the event the
Building should be damaged by fire, tornado or other casualty, but only to such
extent that rebuilding or repairs can be completed within two hundred forty
(240) days after the date of such damage, or if the damage should be more
serious but Landlord does not elect to terminate this lease, in either such
event Landlord shall within thirty (30) days after the date of such damage
commence to rebuild or repair the Building and shall proceed with reasonable
diligence to restore the Building to substantially the same condition in which
it was immediately prior to the happening of the casualty, except that Landlord
shall not be required to rebuild, repair or replace any part of the partitions,
fixtures, and other improvements which may have been placed by Tenant or other
tenants within the Building. If the fire or other casualty was not due to the
fault of Tenant, it's agents or employees, payment of rent and operating
expenses shall abate during the time the demised premises are unfit for
occupancy. In the event any mortgagee under a deed of trust, security agreement
or mortgage on the Building should require that the insurance proceeds be used
to retire the mortgage debt, Landlord shall have no obligation to rebuild and
this lease shall terminate upon notice to Tenant. Any insurance which may be
carried by Landlord or Tenant against loss or damage to the Building or to the
demised premises shall be for the sole benefit of the party carrying such
insurance and under its sole control.
13. HOLDING OVER. Should Tenant, or any of its successors in interest,
hold over the demised premises, or any part thereof, after the expiration of
the term of this lease, unless otherwise agreed to in writing, such holding
over shall constitute and be construed as a tenancy from month to month only,
at a rental equal to the rent paid for the last month of the term of this lease
plus fifty percent (50%) of such amount. The inclusion of the preceding
sentence shall not be construed as the Landlord's consent for the Tenant to
hold over.
14. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for all taxes
levied or assessed against personal property, furniture or fixtures placed by
Tenant in the demised premises. If any such taxes for which Tenant is liable
are levied or assessed against Landlord or Landlord's property and if Landlord
elects to pay the same or if the assessed value of Landlord's property is
increased by inclusion of personal property, furniture or fixtures placed by
Tenant in the demised premises, and Landlord elects to pay the taxes based on
such increase, Tenant shall pay to Landlord upon demand that part of such taxes
for which Tenant is primarily liable hereunder. Upon request by Tenant,
Landlord shall furnish within a reasonable period of time, all relevant
documents related to the increased tax assessment.
15. RENT ADJUSTMENT - OPERATING EXPENSES. In the event that operating
expenses for the Building for any calendar year during the term of this lease
(including without limitation the calendar year in which the lease term
commences) exceed the amount described in SPECIAL PROVISIONS, PARAGRAPH 35 per
square foot, Tenant agrees to pay the Landlord, as additional rental, a
prorated share of such increased expenses for the entire Building, based on the
ratio that the Tenant's area bears to the total area of the Building determined
by a consistent method of measurement.
Within one hundred fifty (150) days after the close of the calendar
year, Landlord shall give Tenant a statement of the operating expenses for the
Building for such calendar year. If such operating expenses exceed the amount
described in SPECIAL
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PROVISIONS, PARAGRAPH 35 per square foot of area within the demised premises,
Tenant will pay Landlord, within thirty (30) days of statement receipt,
Tenant's proportionate share of such increased expenses for the entire year
immediately preceding issuance of said statement and for the previous months in
the then current year. Thereafter, Tenant will pay an adjusted monthly rental
which reflects the most recent year's operating expense increases, subject to
further increases as aforesaid.
If at lease commencement or termination a partial calendar year is
involved, operating expenses shall be computed as though a full calendar year
was involved and prorated for such partial year. If the lease terminates other
than at the end of a calendar year, an estimate of current annual operating
expenses shall be computed for the year of termination and any increased rental
based on such estimate shall be billed to the Tenant at termination. Landlord
will furnish Tenant an itemized statement of the actual operating expenses at
the end of the calendar year as outlined in the preceding paragraph. In the
event the Tenant payments exceed Tenant's proportionate share of the operating
expenses Landlord will refund the excess amount. If the proportionate share has
been understated the Tenant agrees to reimburse Landlord the additional cost as
outlined in the preceding paragraph.
For the purposes of this lease, operating expenses shall include those
expenses paid or incurred by the Landlord for maintaining, operating and
repairing the real property of which the demised premises are a part, the
Building and other improvements thereon and the personal property used in
conjunction therewith (hereafter collectively referred to as "Project")
including but not limited to the cost of ad valorem taxes, any value added or
similar tax, electricity, natural gas, ventilation, heating and air
conditioning, water, window cleaning, janitorial service, insurance, including
but not limited to fire, extended coverage, liability, worker's compensation,
elevator or any other insurance carried in good faith by the Landlord and
applicable to the Project, painting, uniforms, customary property management
fees, supplies, sundries, sales or use taxes on supplies or services, cost of
wages and salaries of all persons engaged in the operation, maintenance and
repair of the Project and so-called fringe benefits, or any other cost or
expenses which the Landlord pays or incurs to provide benefits for employees so
engaged in the operation, maintenance and repair of the Project, the charges of
any independent contractor who under contract with the Landlord or its
representatives does any of the work of operating, maintaining or repairing the
Project, legal and accounting expenses, including but not limited to such
expenses as relate to seeking or obtaining reductions in and refunds of real
estate taxes, or any other expense or charge, whether or not hereinbefore
mentioned, which in accordance with generally accepted accounting and
management principles would be considered as an expense of maintaining,
operating or repairing the Project. If any Project expense, though paid in one
year, relates to more than one calendar year, at the option of the Landlord
such expense may be proportionately allocated among such related calendar
years.
Tenant at its expense shall have the right at all reasonable times to
review Landlord's books and records relating to this lease for any year or
years for which additional rental payments become due.
16. EVENTS OF DEFAULT. The following events shall be deemed to be
events of default by Tenant under this lease:
(a) Tenant shall fail to pay any installment of the rent hereby
reserved and such failure shall continue for a period of ten (10) days
following receipt of written notice of the same.
(b) Tenant shall fail to comply with any term, provision or covenant
of this lease, other than the payment of rent, and shall not cure such failure
within thirty (30) days after written notice thereof to Tenant, provided if
such term or provision is not capable of being complied with in said thirty
(30) day period, and Tenant is being reasonable diligent then there shall be no
event of default.
(c) Tenant shall make an assignment for the benefit of creditors.
(d) Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of the
United States or any State thereof; or Tenant shall be adjudged bankrupt or
insolvent in proceedings filed against Tenant thereunder and such adjudication
shall not be vacated or set aside or stayed within the time permitted by law.
(e) A receiver or Trustee shall be appointed for all or substantially
all of the assets of Tenant and such receivership shall not be terminated or
stayed within the time permitted by law.
(f) Tenant shall desert or vacate any substantial portion of the
demised premises for a period of fifteen (15) days or more.
17. REMEDIES. Upon the occurrence of any event of default specified in
Paragraph 16 hereof, Landlord shall have the option to pursue any one or more
of the following remedies without any notice or demand whatsoever:
(a) Terminate this lease in which event Tenant shall immediately
surrender the demised premises to Landlord, and if Tenant
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fails to do so, Landlord may, without prejudice to any other remedy which it
may have for possession or arrearages in rent, enter upon and take possession
and expel or remove Tenant and any other person who may be occupying the
demised premises or any part thereof, by force if necessary, without being
liable for prosecution or any claim of damages therefor; and Tenant agrees to
pay to Landlord on demand the amount of all loss and damage which Landlord may
suffer by reason of such termination, whether through inability to relet the
demised premises on satisfactory terms or otherwise.
(b) Enter upon and take possession of the demised premises and expel
or remove Tenant and any other person who may be occupying the demised premises
or any part thereof by force, if necessary, without being liable for
prosecution or any claim for damages, and if Landlord elects to relet the
demised premises and receive the rent therefore, then Tenant agrees to pay
Landlord on demand any deficiency that may arise by reason of such reletting.
(c) Enter upon the demised premises by force if necessary without
being liable for prosecution or any claim for damages therefor, and do whatever
the Tenant is obligated to do under the terms of this lease; and Tenant agrees
to reimburse Landlord on demand any expenses which Landlord may incur in thus
effecting compliance with Tenant's obligations under this lease, and Tenant
further agrees that Landlord shall not be liable for any damages resulting to
the Tenant from such action.
Pursuit of any of the foregoing remedies shall not preclude pursuit of
any of the other remedies herein provided or any other remedies provided by
law, nor shall pursuit of any remedy herein provided constitute a forfeiture or
waiver of any rent due to Landlord hereunder or any other damages occurring to
Landlord by reason of the violation of any of the terms, provisions and
covenants herein contained. Landlord's acceptance of rent following an event of
default hereunder shall not be construed as Landlord's waiver of such event of
default. No waiver by Landlord of any violation or breach of any of the terms,
provisions and covenants herein shall be deemed or construed to constitute a
waiver of any other violation or breach of any of the terms, provisions and
covenants herein contained. Forbearance by Landlord to enforce one or more of
the remedies herein provided upon an event of default shall not be deemed or
construed to constitute a waiver of such default.
18. SURRENDER OF PREMISES. No action of the Landlord or its agents
during the term hereby granted shall be deemed an acceptance of a surrender of
the demised premises, and no agreement to accept a surrender of the demised
premises shall be valid unless the same be made in writing and subscribed to by
the Landlord.
19. ATTORNEY'S FEES. In case it should be necessary or proper for
either Landlord or Tenant to bring any action under this lease or to consult or
place said lease, or any amount payable by Landlord or Tenant hereunder, with
an attorney concerning or for the enforcement of any of Landlord's or Tenant's
rights hereunder, then Landlord and Tenant each agree in each and any such case
to pay to the other a reasonable attorney's fee.
20. RECEIPTS FROM ASSIGNEE OR SUBTENANT. The receipt by the Landlord
of rent from any assignee, subtenant or occupant of the demised premises shall
not be deemed a waiver of the covenant contained in this lease against
assignment and subletting or an acceptance of the assignee, subtenant or
occupant as tenant or a release of the Tenant from the further observance or
performance by the Tenant of the covenants in this lease contained, on the part
of the Tenant to be observed and performed. No provision of this lease shall be
deemed to have been waived by the Landlord unless such waiver be in writing
signed by the Landlord.
21. LANDLORD'S LIEN. In addition to any statutory Landlord's lien,
Landlord shall have, at all times, a valid security interest to secure payment
of all rentals and other sums of money becoming due hereunder from Tenant, and
to secure payment of any damages or loss which Landlord may suffer by reason of
the breach by Tenant of any covenant, agreement, or condition contained herein,
upon all goods, wares, equipment, fixtures, furniture, improvements and other
personal property of Tenant presently, or which may hereafter be situated on
the demised premises, and all proceeds therefrom, and such property shall not
be removed therefrom without the consent of Landlord until all arrearages in
rent as well as any and all other sums of money then due to Landlord hereunder
shall first have been paid and discharged and all of the covenants, agreements
and conditions hereof have been fully complied with and performed by Tenant.
Upon the occurrence of an event of default by Tenant, Landlord may, in addition
to any other remedies provided herein, enter upon the demised premises and take
possession of any and all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant situated on the premises,
without liability for trespass or conversion, and sell the same at public or
private sale, with or without having such property at the sale, after giving
Tenant reasonable notice of the time and place of any public sale or of the
time after which any private sale is to be made, at which sale the Landlord or
its assigns may purchase unless otherwise prohibited by law. Unless otherwise
provided by law, and without intending to exclude any other manner of giving
Tenant reasonable notice, the requirement of reasonable notice shall be met if
such notice is given in the manner prescribed in Paragraph 26 of this lease at
least ten (10) days before the time of sale. Any sale made pursuant to the
provision of this Paragraph 21 shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held in the demised premises
or
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where the property is located after the time, place and method of sale and a
general description of the types of property to be sold have been advertised in
a local daily newspaper for five (5) consecutive days before the date of the
sale. The proceeds from any such disposition, less any and all expenses
connected with the taking of possession, holding and selling of the property
(including reasonable attorney's fees and legal expenses), shall be applied as
a credit against the indebtedness secured by the security interest granted in
this paragraph. Any surplus shall be paid to Tenant or as otherwise required by
law; the Tenant shall pay any deficiencies forthwith. Upon request by Landlord,
Tenant agrees to execute and deliver to Landlord a financing statement in form
sufficient to perfect the security interest of Landlord in the aforementioned
property and proceeds thereof under the provisions of the Uniform Commercial
Code in force in this state. Any statutory lien for rent is not hereby waived,
the security interest herein granted being in addition and supplementary
thereto.
22. SUBORDINATION. At the option of Landlord's mortgagee, the Tenant
agrees to subordinate this lease to any mortgage or encumbrance which Landlord
may have placed, or may hereafter place, on the premises. Tenant agrees to
execute on demand any instrument which may be deemed necessary or desirable to
render such mortgage or encumbrance, whenever made, superior and prior to this
lease.
23. ESTOPPEL CERTIFICATE. Tenant shall promptly furnish Landlord on
Landlord's request after delivery of the demised premises an estoppel agreement
addressed to Landlord and Landlord's mortgagee in such form as said mortgagee
shall reasonably request:
(a) That the demised premises have been satisfactorily completed, (a
list of any incomplete items may be attached) and that Tenant has accepted the
premises.
(b) The commencement date of the lease and the date rent commenced.
(c) That the lease is in full force and effect and that Landlord is
not in default thereunder.
(d) That there are no offsets or other conditions precedent for the
effectiveness of the lease.
This condition is a covenant of this lease agreement and a failure to comply
with same shall constitute a default hereunder.
24. INSURANCE. Tenant at its expense is required to carry for the
protection of the Tenant, Landlord and Landlord's agents as their interests may
appear, general public liability and vandalism insurance with limitations of
not less than $300,000.00 for any one person injured in any one accident and
not less than $500,000.00 for more than one person injured in any one accident
and not less than $50,000.00 for property damage per accident covering any
accidents for which Tenant is legally liable, with a responsible insurance
company, qualified to do business in the State of Tennessee, copy of
certificates of insurance to be furnished to Landlord.
25. QUIET ENJOYMENT. Landlord represents and covenants that it has
full right, power, and authority to make this lease and that Tenant, upon
payment of the rentals and performing the covenants on Tenant's part to be
performed hereunder, shall and may peaceably and quietly have, hold and enjoy
the demised premises during the term hereof and any extensions thereof, free
from interference or disturbance from Landlord, but subject to the terms and
conditions of this lease. Landlord agrees to make reasonable efforts to enforce
building rules and regulations so as to protect Tenant from interference or
disturbance by other tenants or third persons; however, Landlord shall not be
liable for any such interference or disturbance, nor shall Tenant be released
from any of the obligations of this lease because of such interference or
disturbance.
26. NOTICES. Each provision of this lease, or of any applicable
governmental laws, ordinances, regulations, and other requirements with
reference to the sending, mailing or delivery of any notice, or with reference
to the making of any payment by Tenant to Landlord, shall be deemed to be
complied with when and if the following steps are taken:
(a) All rent and other payments required to be made by Tenant to
Landlord hereunder, shall be payable to Landlord at the address hereinbelow set
forth, or at such other address as Landlord may specify from time to time by
written notice delivered in accordance herewith;
(b) Any notice or document required to be delivered hereunder shall be
deemed to be delivered, whether actually received or not, when deposited in the
United States mail, postage prepaid, certified or registered mail, (with or
without return receipt requested), addressed to the parties hereto at the
respective addresses set out opposite their names below, or at such other
address as they have theretofore specified by written notice delivered in
accordance herewith:
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Tenant: Therapeutic Antibodies, Inc. Landlord: The Vanderbilt University
1207 17th Avenue South c/o Trammell Crow SE, Inc.
Suite 103 110 21st Avenue South,
Nashville, TN 3721 Suite 704
Nashville, Tennessee 37203
27. FORCE MAJEURE. Whenever a period of time is herein prescribed for
action to be taken by Landlord, Landlord shall not be liable or responsible
for, and there shall be excluded from the computation for any such period of
time, any delays due to strikes, riots, acts of God, shortages of labor
materials, war, governmental laws, regulations, or restrictions, or any other
causes of any kind whatsoever which are beyond the control of Landlord.
28. SEPARABILITY. If any clause or provision of this lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this lease, then and in that event, it is the intention of the parties
hereto that the remainder of this lease shall not be affected thereby, and it
is also the intention of the parties to this lease that in lieu of each clause
or provision of this lease that is illegal, invalid or unenforceable, there be
added as a part of this lease a clause or provision as similar in terms to such
illegal, invalid, or unenforceable clause or provision as may be possible and
be legal, valid and enforceable.
29. AMENDMENTS; BINDING EFFECT. This lease may not be altered,
changed, or amended, except by instrument in writing signed by both parties
hereto. The terms, provisions, covenants, and conditions contained in this
lease shall apply to, insure to the benefit of, and be binding upon the parties
hereto, and upon their respective successors in interest and legal
representatives, except as otherwise herein expressly provided.
30. GENDER. Words of any gender used in this lease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, unless the context otherwise requires.
31. CAPTIONS. The captions contained in this lease are for convenience
of reference only, and in no way limit or enlarge the terms and conditions of
this lease.
32. ADDITIONAL PROVISIONS.
See Special Provisions, Exhibits "A & B" and Rules and Regulations
attached hereto and by reference made a part hereof.
WITNESS, the signature of the parties hereto in multiple copies, this
the _______ day of ______________________ A.D. 19_____.
TENANT: THERAPEUTIC ANTIBODIES, INC. LANDLORD: VANDERBILT UNIVERSITY
1207 17th Avenue South, Suite 103 c/o Trammell Crow Company
Nashville, Tennessee 37212 110 21st Avenue South,
Suite 704
Nashville, TN 37203
By: /s/ Martin Brown By: /s/ [Illegible]
---------------------- -----------------------
WITNESS AS TO TENANT: WITNESS AS TO LANDLORD:
/s/ Jean Marstiller /s/ [Illegible]
- --------------------------------- ------------------------------------
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RULES AND AGREED REGULATIONS
1. Tenant agrees to make deposit, in amount fixed by Landlord from
time to time, for each key issued by Landlord to Tenant for his offices, and
upon termination of the lease, to return all keys to Landlord. Landlord will
refund amount deposited on each key returned. Tenant shall not alter any lock
or install a new or additional lock or bolt on any door of the demised premises
without the prior written consent of Landlord.
2. Landlord will provide and maintain an alphabetical directory board
in the Building.
3. Tenant will refer all contractors, contractor's representatives and
installation technicians rendering any service to Tenant, to Landlord for
Landlord's supervision, approval, and control before performance of any
contractual service. This provision shall apply to all work performed in the
Building including installations of telephones, telegraph equipment, electrical
devices and attachments, and installments of any nature affecting floors,
walls, woodwork, trim, windows, ceilings, equipment or any other physical
portion of the Building.
4. Movement in or out of the Building of furniture or office
equipment, or dispatch or receipt by Tenant of any merchandise or materials
which requires use of elevators or stairways or movement through Building
entrances or lobby shall be restricted to hours designated by Landlord. All
such movement shall be under supervision of Landlord and in the manner agreed
between Tenant and Landlord by prearrangement before performance. Such
prearrangement initiated by Tenant will include determination by Landlord and
subject to his decision and control, of the time, method and routing of
movement, and limitations imposed by safety or other concerns which may
prohibit any article, equipment or any other item from being brought into the
Building. Tenant is to assume all risk as to the damage of articles moved and
injury to persons or public engaged or not engaged in such movement, including
equipment, property and personnel of Landlord, if damaged or injured as a
result of acts in connection with carrying out this service for Tenant from
time of entering the tract on which the Building stands to completion of work,
and Landlord shall not be liable for acts of any person engaged in, or any
damage or loss to any of said property or persons resulting from any act in
connection with such service performed for Tenant.
5. No signs will be allowed in any form on exterior of Building or
windows inside or out, and no signs except in uniform location and uniform
styles fixed by Landlord will be permitted in the public corridors or on
corridor doors or entrances to Tenant's space. All signs will be contracted for
by Landlord for Tenant at the rate fixed by Landlord from time to time, and
Tenant will be billed and pay for such service accordingly.
6. No draperies, shutters or other window covering shall be installed
on exterior windows or walls and doors facing public corridors without
Landlord's prior written approval.
7. No portion of the demised premises or any other part of Building
shall at any time be used or occupied as sleeping or lodging quarters.
8. Tenant shall not place, install or operate on the demised premises
or in any part of the Building, any engine, stove, or machinery, or conduct
mechanical operations or cook thereon or therein, or place or use in or about
premises any explosive, gasoline, kerosene, oil, acids, caustics or any other
flammable, explosive, or hazardous materials without written consent of
Landlord.
9. Landlord will not be responsible for lost or stolen personal
property, equipment, money or jewelry from the demised public rooms regardless
of whether such loss occurs when area is locked against entry or not.
10. No birds or animals shall be brought into or kept in or about the
Building.
11. Employees of Landlord shall not receive or carry messages for or
to Tenant or other person, nor contract with or render fee or paid services to
Tenant or Tenant's agents, employees, or invitees.
12. Landlord will not permit entrance to the demised premises by use
of pass keys controlled by Landlord, to any person at any time without written
permission by Tenant, except employees, contractors or service personnel
directly supervised by Landlord.
13. None of the entries, passages, doors, elevators, elevator doors,
hallways or stairways shall be blocked or obstructed, or any rubbish, litter,
trash or material of any nature placed, emptied or thrown into these areas, or
such areas be used at any time except
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for ingress by Tenant, Tenant's agents, employees or invitees.
14. Tenant and its employees, agents, and invitees, shall observe and
comply with the driving and parking signs and markers on the premises
surrounding the Building.
15. Landlord shall have the right to prescribe the weight and position
of safes, computers, and other heavy equipment which shall, in all cases, in
order to distribute their weight, stand on supporting devices approved by
Landlord. All damage done to the Building by placing in or taking out any
property of Tenant while in the Building shall be repaired promptly at the
expense of Tenant.
16. To insure orderly operation of the Building, no ice, mineral water
or other beverages, food, towels, newspapers, etc., shall be delivered to the
demised premises except by persons and at times approved by Landlord.
17. Should Tenant require telegraphic, telephonic, annunciator, or
other communication services, Landlord shall direct where and how wires are to
be introduced and placed and none shall be introduced or placed except as
Landlord shall direct.
18. Without Landlord's prior approval, Tenant shall not install any
radio or television antenna, loudspeaker, music system or other device on the
roof or exterior walls of the Building or on common walls with adjacent
tenants.
19. No hand trucks or other vehicles of any kind shall be used in or
brought into the Building of the demised premises by Tenant or others unless
such vehicle shall have been inspected and approved in writing by Landlord.
20. Tenant shall store all of its trash and garbage within its demised
premises. No material shall be placed in the trash boxes or receptacles if such
material is of such natures that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage and without
being in violation of any law or ordinance governing such disposal. All garbage
and refuse disposal shall be made only through entryways and elevators provided
for such purposes and at such times as Landlord shall designate.
21. The Rules and Regulations are in addition to, and shall not be
construed to in any way modify, alter or amend, in whole or in part, the terms,
covenants, agreements and conditions of any lease covering premises in the
Building.
22. Landlord reserves the right to make such other reasonable rules
and regulations as in its judgment may from time to time be needed for the
safety, care and cleanliness of the Building, and for the preservation of good
order therein.
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THERAPEUTIC ANTIBODIES, INC
SPECIAL PROVISIONS
7,941 R.S.F.
33. Demised Premises. Effective February 1, 1997, the demised
premises will be, suite 305 containing 1,799 rentable square
feet (herein known as "initial space"). Effective November 15,
1997, the demised premises will also include suite 103
containing 6,142 rentable square feet on floors 1 and 2 of
named building (herein referred to as "Expansion Space"). See
"Exhibits A & B" for description of demised premises.
34. Rent. Base monthly rental amount shall be as follows:
<TABLE>
<CAPTION>
Year Initial Space Expansion Space Total monthly rental
---- ------------- --------------- --------------------
<S> <C> <C> <C>
February 1, 1997 - February 28,1997 -0- -0- -0-
March 1, 1997 - November 14, 1997 $2,398.67 -0- $ 2,398.67
November 15, 1997 - January 31, 1998 $2,398.67 $8,189.33 $10,588.00
February 1, 1998 - January 31, 1999 $2,436.15 $8,317.29 $10,753.44
February 1, 1999 - January 31, 2000 $2,473.63 $8,445.25 $10,918.88
February 1, 2000 - January 31, 2001 $2,511.10 $8,573.21 $11,084.31
</TABLE>
35. Operating Expense Stop. The Operating Expense Stop applicable
in Paragraph 15 of the Lease, shall be determined as the
actual operating expenses for the calendar year 1996.
Operating expenses shall not include (a) expenses for repairs
for which Landlord is reimbursed by insurance, (b) expenses
incurred in leasing or procuring new tenants, (c) tenant space
preparation or alteration costs, (c) interest or amortization
payments on any mortgage or mortgages, (e) cost of any capital
improvement determined in accordance of generally accepted
accounting principles except such costs as reasonably
amortized by Landlord of any capital improvement completed
after the commencement date which is intended to reduce other
operating expenses (f) leasing commissions, attorney's fees,
space planning costs and other costs and expenses incurred in
connection with new or existing space leases in the Building
or with negotiations or disputes with present or prospective
Tenants or other occupants other than Tenant of the Building;
and (g) interest, principal, points or fees on any mortgage
encumbering the Building.
36. Tenant Improvement Allowance. Landlord understands that
Tenant shall require certain construction and renovation work
to the Demised Premises in order for the Demised Premises to
be suitable as office space for Tenant's business purposes
(the "Tenant Work"). Landlord shall provide to Tenant an
allowance for the Tenant Work of Twenty-Three Thousand Eight
Hundred Twenty-Three Dollars ($23,823.00) ($3.00 per rentable
square foot for the Demised Premises) (the "Tenant Improvement
Allowance"). The Tenant Improvement Allowance shall be
available for use by Tenant throughout the Term of the
Agreement and for any space currently leased by Tenant. Tenant
shall have the right to select any contractor or
subcontractors to perform the Tenant Work, so long as Tenant
provides Landlord advance notice of the name of the contractor
or subcontractors to perform the Tenant Work and Landlord
approves the contractor and the contractor provides Landlord
with a liability insurance certificate indicating a minimum of
$1,000,000.00 in liability insurance protection. Prior to
commencement of the Tenant Work, Tenant shall submit to
Landlord a description of the Tenant Work in reasonable
detail, including building plans and specifications for the
Demised Premises (if any) (the "Plans") for approval by
Landlord, which approval shall not be unreasonably withheld or
delayed. The Tenant Improvement Allowance or any portion
thereof shall be paid by Landlord within thirty (30) days
following submittal by Tenant to Landlord of invoices or other
reasonable documentation evidencing the cost for the Tenant
Work or any portion thereof. If the Tenant Improvement
Allowance is not paid by Landlord within the time provided for
in this Section/but only if Tenant is not in default as to
any of the terms, provisions and covenants of this Agreement,
Tenant shall have the right to offset the monthly payment of
Rent as provided for in this Agreement up to the amount of the
Tenant Improvement Allowance. Any costs incurred in performing
the
10
<PAGE> 11
Tenant Work in excess of the Tenant Improvement Allowance
shall be paid for by Tenant. Tenant agrees to provide to
Landlord upon request reasonable documentation evidencing
payment to all contractors or subcontractors in connection
with the Tenant's carrying out of the Tenant Work.
37. First Right of Refusal Space. Landlord will provide a First
Right of Refusal on any contiguous space on the 1st or 2nd
floor. This is a one time option to be exercised within 10
days of written notification of availability. The exact square
footage, rental rate and tenant improvements associated with
this space will be specified by Landlord in its Notice of
Availability and shall be based on the amount offered to any
prospective tenants of such space.
38. Termination Option. Landlord shall allow a one time option to
terminate the initial space, suite 305, if, and only if, the
Tenant exercises it's First Right of Refusal on an amount of
square footage to be mutually agreed upon. Such termination
must occur simultaneously with the execution of a lease for
the new space.
39. Visitor Parking. Landlord shall provide 3 designated visitor
spaces located adjacent to the exterior entrance to suite 103.
40. Renewal Option. Landlord shall provide one renewal option to
extend the lease term for a 3 year period. The rental rate for
the extension to be mutually agreed upon but in no event will
be less than the rental rate charged during the last year of
the initial lease.
41. Brokers. Landlord and Tenant each warrant to the other that
there are not brokers involved in the Lease Agreement except
RCM Realty and Trammell Crow Company. Landlord agrees to pay a
cash-out commission of six percent (6%) of the aggregate Base
Rent payable pursuant to the Lease Agreements initial term.
The commission shall be payable within 30 days of execution of
the Lease Agreement and shall be payable one half (3%) to RCM
Realty and one half (3%) to Trammell Crow Company.
42. Hazardous Wastes. Tenant shall not cause or permit the use,
generation, storage or disposal in or about the demised
premises of any substance, materials or wastes subject to
regulation under any federal, state or local law from time to
time in effect concerning hazardous, toxic or radioactive
materials (hereinafter "Hazardous Materials") unless Tenant
shall have received Landlord's prior written consent, which
consent Landlord may withhold or at any time revoke at its
sole discretion. If Tenant uses, generates, stores or disposes
of an Hazardous Materials in or about the demised premises,
Tenant shall obtain all necessary permits and comply with all
statutes, regulations and rules applicable to such activity.
Upon termination of this Lease, Tenant shall remove all
Hazardous Materials, along with all storage and disposal
facilities, from the demised premises, such removal to be in
accordance with procedures approved by the proper governmental
authority. Tenant shall indemnify and hold Landlord harmless
from and against all liability, cost, claim, penalty, expense
and fees (including court costs and attorneys' fees) arising
from Tenant's use, generation, storage, or disposal of
Hazardous Materials in or about the demised premises. Landlord
shall indemnify and hold Tenant harmless from and against all
liability, costs and expenses relating to Hazardous Materials
which were existing in the Demised Premises or Building as of
the Commencement Date of this Lease other than Hazardous
Materials encountered by Tenant in the course of Tenant's Work
(as defined above). This section shall survive the expiration
or earlier termination of this Lease.
43. Compliance with Public Accommodation Laws. Intentionally
Ommitted
44. Landlord's Liability. The liability of Landlord to Tenant
for any default by Landlord under the terms of this Lease
shall be limited to Tenant's actual direct, but not
consequential, damages therefor and shall be recoverable from
the interest of Landlord in the Building and the Land, and
Landlord shall not be personally liable for any deficiency.
This section shall not be deemed to limit or deny any remedies
which Tenant may have in the event of default by Landlord
hereunder which do not involve the personal liability of
Landlord.
45. No Offer. The submission of this Lease to Tenant shall
not be construed as an offer, nor shall Tenant have any rights
under this Lease unless Landlord executes a copy of this Lease
and delivers it to Tenant.
46. Financial Statements. This Lease is contingent upon the
Landlord's receipt of satisfactory financial statements for
Therapeutic Antibodies, Inc.. If, in the Landlord's sole
determination at the date of execution, the financial
statements do not indicate ability to pay rent, then their
Lease document will be null and void.
11
<PAGE> 12
47. Condemnation. The entire award of damages or compensation
for a taking of the Premises, whether such taking would be in
hole or in part, shall belong to and be the property of
Landlord, except for such compensation as maybe made for
Tenant's moving or relocation expenses, Tenant's business
interruption losses, and for the taking of Tenant's trade
fixtures, which compensation shall belong to and be the
property of Tenant.
12
<PAGE> 13
THERAPEUTIC ANTIBODIES, INC
EXHIBIT A
INITIAL SPACE
1,799 R.S.F.
13
<PAGE> 14
THERAPEUTIC ANTIBODIES, INC
EXHIBIT B
EXPANSION SPACE
6,142 R.S.F.
14
<PAGE> 1
EXHIBIT 10.9
SUBLEASE
THIS AGREEMENT made the 29th day of January, 1997, between Platinum
Entertainment, Inc., a Delaware Corporation, having an office at 2001
Butterfield Rd, Suite 1400, Downers Grove, IL 60515, hereinafter referred to as
"Sublessor",
- and -
Therapeutic Antibodies, Inc., a Delaware Corporation, having an office at 1207
17th Avenue South, Suite 103, Nashville, TN 37212, hereinafter referred to as
"Sublessee",
WITNESSETH:
WHEREAS, Sublessor, as Lessee, entered into a lease with Vanderbilt
University, as Lessor, dated September 28, 1994, with such term commencing
November 15, 1994 and expiring November 14, 1997, leasing certain space,
consisting of 6,142 rentable square feet on the first and second floors of the
building located at 1207 17th Avenue, Nashville, TN 37212 (the "Subleased
Premises"), which Lease Agreement is attached hereto as Exhibit A and
incorporated herein by reference (said lease agreement is hereinafter referred
to as the "Prime Lease"), and
WHEREAS, the parties hereto have agreed that Sublessor shall sublet
all of such space to Sublessee;
NOW, THEREFORE, the parties hereto hereby covenant and agree as
follows:
1. TERM; RENT - Sublessor hereby leases to Sublessee the 6,142
rentable square feet, more or less, of the space on the 1st and 2nd floors of
said building, leased by Sublessor, shown on Exhibit A attached hereto and made
a part hereof, for a term of 10 months beginning on January 15, 1997, and
ending on November 14, 1997, unless sooner terminated in accordance herewith,
yielding and paying to Sublessor a rent at the rate of
<PAGE> 2
Ninety-Eight Thousand Two Hundred Seventy Two and 00/100 Dollars ($98,272.00)
per annum, plus the additional rent outlined in paragraph 5 of the Prime Lease.
Sublessee shall pay the rent and additional rent provided for
hereunder in equal monthly installments of Eight Thousand, One Hundred
Eighty-Nine and 33/100 Dollars ($8,189.33) in advance and without demand on the
first day of each and every month during the term. Rent and additional rent
will be prorated for any partial month of the term. The payment of rent shall
be made directly to: Vanderbilt University, 110 21st Avenue South, Suite 704,
Nashville, TN 37203.
2. USE OF SUBLEASED PREMISES - The demised premises shall be used
for offices and for no other purpose.
3. ASSIGNMENT, SUBLETTING - Sublessee shall not assign this lease
nor sublet the demised premises in whole or in part and shall not permit
Sublessee's interest in this lease to be vested in any third party by operation
of law or otherwise.
4. ADDITIONAL RENT - If Sublessor shall be charged for additional
rent or other sums pursuant to the provisions of the Prime Lease, including
without limitation Article 5 thereof (rent escalation), Sublessee shall be
liable for 100% of such additional rent or sums. If any such rent or sums shall
be due to additional use by Sublessee of electrical current in excess of
Sublessee's proportionate part of additional use in the premises demised under
the Prime Lease, such excess shall be paid in entirety by Sublessee. If
Sublessee shall procure any additional services from the building, such as
alterations or after-hour air conditioning, Sublessee shall pay for same at the
rates charged therefor by the Lessor and shall make such payment to the
Sublessor or Lessor, as Sublessor shall direct. Any rent or other sums payable
by Sublessee under this Article 5 shall be additional rent and collectable as
such. If Sublessor
<PAGE> 3
shall receive any refund under said Article 5 of the Prime Lease concerning
payment of Additional Rent, Sublessee shall be entitled to a credit for the
overpayment of so much thereof as shall be attriibutable to prior payments by
Sublessee.
5. SUBORDINATION - This lease is subject to and subordinate to
the Prime Lease. Except as may be inconsistent with the terms hereof, all the
terms, covenants, and conditions contained in the Prime Lease shall be
applicable to this Agreement with the same force and effect as if Sublessor
were the lessor under the Prime Lease and Sublessee were the lessee thereunder,
and in case of any breach hereof by Sublessee, Sublessor shall have all the
rights against Sublessee as would be available to the lessor against the lessee
under the Prime Lease if such breach were by the lessee thereunder.
6. PRIME LEASE - Notwithstanding anything herein contained, the
only services or rights to which Sublessee is entitled to hereunder are those
to which Sublessor is entitled under the Prime Lease and that for all such
services and rights Sublessee will look solely to the Lessor under the Prime
Lease. Sublessor will have no liability for Lessor's failure to provide any
such services or for the cost of such services.
7. COVENANT AS TO TERMINATION OF PRIME LEASE - Sublessee shall
neither do nor permit anything to be done which would cause the Prime Lease to
be terminated or forfeited by reason of any right of termination or forfeiture
reserved or vested in the Lessor under the Prime Lease, and Sublessee shall
indemnify and hold Sublessor harmless from and against all claims of any kind
whatsoever by reason of any breach or default on the part of Sublessee by
reason of which the Prime Lease may be terminated or forfeited.
8. SECURITY DEPOSIT - Sublessee has paid Sublessor on the
execution and delivery of the lease the sum of Eight Thousand, One Hundred
Eighty Nine and 33/100 Dollars
<PAGE> 4
($8,189.33) as security for the full and faithful performance of the terms,
covenants, and conditions of this lease on Sublessee's part to be performed or
observed, including but not limited to payment of rent and additional rent or
for any other sum which Sublessor may expend or be required to expend by reason
of Sublessee's default, including any damages or deficiency in reletting the
Subleased Premises, in whole or in part, whether such damages shall accrue
before or after summary proceedings or other re-entry by Sublessor. If
Sublessee shall fully and faithfully comply with all the terms, covenants, and
conditions of this lease on Sublessee's part to be performed or observed, the
security, or any unapplied balance thereof, shall be returned to Sublessee
after the time fixed as the expiration of the Term.
9. TENANT'S RIGHT TO CANCEL - If actual possession of the
Subleased Premises shall not be available by January 15, 1997, Sublessee may
elect, within thirty (30) days thereafter, to cancel this lease. If this lease
shall be so canceled, Sublessor shall refund to Sublessee any rent or security
deposit theretofore paid or delivered to Sublessor hereunder, and upon such
refund this lease shall be of no further force and effect.
10. KNOWLEDGE OF LEASE TERMS; REPRESENTATION OF PRIME LEASE -
Sublessee represents that is has read and is familiar with the terms of the
Prime Lease. Sublessor represents that there are no other agreements with
respect to the Prime Lease (whether written or oral) other than as shown on the
copy of the Prime Lease attached hereto and incorporated herein by reference as
Exhibit A.
11. FULL AGREEMENT - All prior understandings and agreements
between the parties are merged within this Agreement, which alone fully and
completely sets forth the understanding of the parties and this lease may not
be changed or terminated orally or in any manner other than by an agreement in
writing and signed by the party against whom
<PAGE> 5
enforcement of the change or termination is sought.
12. NOTICES - Any notice or demand which either party may or must
give to the other hereunder shall be in writing and delivered personally or
sent by registered mail addressed if to Sublessor, as
follows:
Platinum Entertainment, Inc.
c/o Douglas Laux
2001 Butterfield Road, Suite 1400
Downers Grove, IL 60515
and if to Sublessee, as follows:
Therapeutic Antibodies, Inc.
1207 17th Avenue South, Suite 103
Nashville, TN 37212
Either party may, by notice in writing, direct that future notices or demands
be sent to a different address.
13. CONTINGENCY FOR SUBLESSOR'S CONSENT - The obligations of
Sublessor and Sublessee under this Sublease are conditioned upon the Lessor
under the Prime Lease giving its consent to this Sublease in form and substance
acceptable to Sublessor and Sublessee.
14. ACCEPTANCE OF THE PREMISES - Sublessee will accept the
Subleased Premises in their condition on the date of Sublessee's occupancy of
the Subleased Premises. Sublessor disclaims any representation or warranty,
express or implied, about the demised premises, their suitability for
Sublessee, fitness or Sublesseeability without limitation. Sublessee will be
solely responsible for the cost and arrangement of its signage and the cost of
locks and keys for the Subleased Premises.
15. BROKERS - Sublessor warrants to Sublessee that it has not
dealt with any broker
<PAGE> 6
in connection with this Sublease other than Trammell Crow Company, and Sublessee
warrants to Sublessor that it has not dealt with any broker in connection with
this Sublease other than The Mathews Company; Sublessor will be responsible for
the payment of commissions to Trammell Crow Company and The Mathews Company.
Sublessor and Sublessee will indemnify each other and hold each other harmless
from any other claims for commissions on account of this Sublease.
16. QUIET ENJOYMENT - So long as the Sublessee is not in default
in the performance of its covenants and agreement in this Sublease, Sublessee's
quiet enjoyment of the Subleased Premises will be not disturbed or interfered
with by Sublessor or by any person claiming by, through or under Sublessor.
17. SUCCESSORS AND ASSIGNS - The covenants and agreements herein
contained shall bind and inure to the benefit of Sublessor, the Sublessee, and
their respective executors, administrators, successors, and assigns.
18. CONSENT TO SUBLEASE AGREEMENT. (a) Vanderbilt University, as
Lessor under the Prime Lease, hereby consents to and approves the subletting of
the Sublease Premises to Sublessee pursuant to Section 17 of the Prime Lease.
Lessor further consents to and approves herewith the form of the Sublease
Agreement.
(b) REPRESENTATIONS AND WARRANTIES OF LANDLORD. Lessor and
Sublessor hereby warrant to Sublessee that the Prime Lease, and all amendments
and addenda thereto, as attached hereto as Exhibit A, is a complete, true and
accurate description of the terms and conditions of the rental of the Subleased
Premises which is the subject of the Sublease Agreement. Lessor and Sublessor
further warrant and represent to Sublessee, and its
<PAGE> 7
successors and assigns, that the Prime Lease is in full force and effect, and
as of the date hereof Lessor and Sublessor are not aware of any default on the
part of Lessor or Sublessor under the Prime Lease, and are not aware of any
default which, with the passage of time or the giving of notice or both, would
constitute a default by Lessor or Sublessor under the Sublease Agreement.
(c) NOTICE OF DEFAULT TO TENANT; RIGHT TO CURE.
Notwithstanding any provision in the Sublease Agreement herein to the contrary,
no default in the performance of any of the Sublessor's obligations under the
Prime Lease that is of such a nature as to give Lessor a right to terminate the
Prime Lease, whether on the occurrence of an event of default or otherwise,
shall entitle Lessor to exercise any such right, power or remedy unless and
until notice of such default is given to Sublessee specifying the act or
omission which constitutes such default and the action required of Sublessee to
cure the same and thirty (30) days shall have elapsed following Sublessor's
receipt of such notice of default, during which period Sublessee shall have the
right, but not the obligation, to remedy or cure such default. If such default
cannot reasonably be cured within said thirty (30) days, the Tenant shall have
such longer period of time as may be reasonably necessary to cure such default
so long as Tenant commits action to cure the default within such thirty (30)
days and thereafter diligently pursues the cure of the default.
(d) WAIVER OF SUBLESSOR'S OPTION TO RENEW PRIME LEASE.
Sublessor understands and acknowledges that Lessor and Sublessee are executing
simultaneously herewith a lease agreement for the lease by Tenant of the
Subleased Premises for a term beginning immediately following the expiration of
this Sublease (November 15, 1997). Sublessor by execution of this Sublease
herewith specifically waives any right or option it
<PAGE> 8
may have to renew the term of the Prime Lease as provided for in Sections 3 and
4 of the Prime Lease.
IN WITNESS WHEREOF, the parties hereto have caused those present to be
executed the day and year first above written.
SUBLESSOR: PLATINUM ENTERTAINMENT, INC.
BY: /s/ [Illegible]
---------------------------
TITLE: C.F.O.
---------------------------
WITNESS: BY: /s/ [Illegible]
---------------------------
SUBLESSEE: THERAPEUTIC ANTIBODIES, INC.
BY: /s/ Martin S. Brown
---------------------------
TITLE: Chairman
---------------------------
WITNESS: BY: /s/ Jeannie Marstiller
---------------------------
LESSOR: VANDERBILT UNIVERSITY
BY: /s/ [Illegible]
---------------------------
TITLE:
---------------------------
WITNESS: BY: /s/ [Illegible]
---------------------------
<PAGE> 9
EXHIBIT "A"
[Image Omitted]
<PAGE> 1
Exhibit 10.10
Dated: 1st February 1996
- --------------------------------------------------------------------------------
IMMUNOGEN INTERNATIONAL LIMITED (1)
-AND-
TAB LONDON LIMITED (2)
- --------------------------------------------------------------------------------
ASSIGNMENT
OF 14/15 NEWBURY STREET LONDON EC1A 7HU
- --------------------------------------------------------------------------------
MAXWELL BATLEY
SOLICITORS
27 Chancery Lane London WC2A 1PA
<PAGE> 2
THIS ASSIGNMENT is made the 1st day of February One Thousand Nine Hundred
and Ninety-six BETWEEN IMMUNOGEN INTERNATIONAL LIMITED whose registered office
is at Seventh Avenue Team Valley Trading Estate Gateshead Tyne & Wear NE11 OLH
Company Number 1231945 (hereinafter called "the Assignor") of the one part and
TAb LONDON LIMITED whose registered office is at Blaenwaun Farm Ffostrasol
Llyandysul Dyfed SA44 5JT (hereinafter called "the Assignee") of the other part
WHEREAS:-
(1) By a Lease (hereinafter called "the Lease") short particulars whereof are
set out in the First Schedule hereto the property described in the Second
Schedule hereto (hereinafter called "the property") was demised for a term of
twenty-one years from 25th December 1978 at an initial annual rent of
L.1.00 subject to review and subject to the performance and observance of
the covenants on the part of the Tenant and the Surety and the conditions
provisos agreements and declarations therein contained
(2) The Property is now vested in the Assignor for all the residue now unexpired
on the said term free from encumbrances
(3) The Assignor has agreed with the Assignee to assign the property to the
Assignee for all the residue now unexpired of the term created by the Lease and
in consideration of the covenants by the Assignee contained in this assignment
<PAGE> 3
(4) The consent of the Landlord to this Assignment has been duly obtained as
required by the Lease
NOW THIS DEED WITNESSETH as follows:-
1. IN consideration of the covenants by the Assignee contained in Clause 2 the
Assignor as beneficial owner HEREBY ASSIGNS unto the Assignee all the property
as the same is comprised in and demised by the Lease TO HOLD unto the Assignee
for all the residue now unexpired of the term created by the Lease subject to
the payment of the rent reserved by and the performance and observance of the
covenants on the part of the Tenant and the conditions provisos agreements and
declarations contained in the Lease
2. THE Assignee HEREBY COVENANTS with the Assignor with the object and intention
of affording to the Assignor a full and sufficient indemnity but not further or
otherwise the Assignee will duly pay all rent becoming due under the Lease and
perform and observe the covenants and conditions provisos agreements and
declarations therein contained and henceforth on the part of the Tenant to be
performed and observed and will save harmless and keep indemnified the Assignor
from and against all proceedings costs claims demands damages liabilities and
expenses whatsoever in respect of any future non-payment of the said rent or
breach non-observance or non-performance of the said covenants and conditions
provisos agreements and declarations or any of them or in anywise relating
thereto
2
<PAGE> 4
3. IT is agreed that the covenants which are implied by section 4(i)(b) Law of
Property (Miscellaneous Provisions) Act 1994 are excluded from this assignment
4. IT is hereby certified that the transaction hereby effected does not form
part of a larger transaction or a series of transactions in respect of which the
amount or value or the aggregate amount or value of the consideration exceeds
L.60,000
IN WITNESS whereof this Deed has been duly executed the day and year first
before written
THE FIRST SCHEDULE before referred to
Date of Lease:- 23rd October 1978
Parties to Lease:- Andrew Sturgis and Antoinette Imbert Harland (1)
I.L.S. Limited (2) Timothy Chard and John Landon (3)
Current Rental: - L.40,000 per annum
THE SECOND SCHEDULE before referred to
ALL THAT building and premises situate and being numbered 14 and 15 Newbury
Street Aldersgate in the City of London as the same is more specifically
described in the Lease
3
<PAGE> 5
EXECUTED as a DEED under )
COMMON SEAL of IMMUNOGEN )
INTERNATIONAL LIMITED )
in the presence of:- )
Director /s/ [ILLEGIBLE]
Director/Secretary /s/ [ILLEGIBLE]
EXECUTED by TAb LONDON )
LIMITED as a Deed acting by ) /s/ J. Landon
John Landon )
and )
Michael Haublon ) /s/ Michael Haublon
)
4
<PAGE> 6
FIRST SCHEDULE
DATED 23rd OCTOBER 1978
ANDREW STURGIS
and
ANTOINETTE IMBERT HARLAND
- to -
I.L.S. LIMITED
L E A S E
- of -
14 and 15 Newbury Street,
Aldersgate in the City of
London.
<PAGE> 7
THIS LEASE is made the twenty-third day of October One thousand nine hundred and
seventy-eight BETWEEN ANDREW STURGIS of 1 Bedford Row London W.C.l. Solicitor
and ANTOINETTE IMBERT HARLAND of 123 Putnoe Lane Bedford (hereinafter called
"the Landlords") which expression where the context so admits shall include the
reversioner for the time being immediately expectant on the term hereby created
of the first part I.L.S. LIMITED whose registered office is at Collingwood House
99 New Cavendish Street London WlM 7FQ (hereinafter called "the Tenant") which
expression where the context so admits shall include the successors in title and
assigns of the Tenant of the second part and TIMOTHY CHARD of "Little Ames"
Bushey Avenue South Woodford London E.18 Professor of Reproductive Physiology
and JOHN LANDON of "Mannin" Mount Park Road Harrow on the Hill in the London
Borough of Harrow Professor of Clinical Pathology (hereinafter called "the
Sureties") which expression shall include their Executors and Administrators of
the third part.
WITNESSETH as follows:-
1. (1) THE Landlords hereby demise unto the Tenant ALL THAT building and
premises situate and being numbered 14 and 15 Newbury Street Aldersgate in the
City of London together with the Landlords' fittings and fixtures on the
premises except and reserved and subject to the rights of the owners of
adjoining and neighbouring premises in respect of party walls and lights
including in particular (and without limiting the generality hereof) the rights
referred to in the documents listed in the Schedule hereto and also excepting
and reserving to the Landlords
<PAGE> 8
and to any other person or persons entitled thereto the free passage and running
of gas and electricity water and soil through and along the pipes wires channels
drains and water courses already or hereafter to be built or placed in through
over or under the said premises to and from all or any of the adjoining premises
TO HOLD the same unto the Tenant for a term of twenty-one years commencing on
the twenty fifth day of March One thousand nine hundred and seventy-eight paying
therefor during the first two years of the term the yearly rent of One Pound
(L.1.00) (if demanded) and thereafter paying yearly during the said term
and so in proportion for any less time than a year the respective rents
following (that is to say):-
(a) Until the twenty-fifth day of March one thousand nine hundred and
eighty-four the yearly rent of Two thousand five hundred pounds
(L.2,500-00) and
(b) From the twenty fifth day of March One thousand nine hundred and
eighty-four and until the twenty-fifth day of March One thousand nine
hundred and eighty-nine a yearly rent of Two thousand five hundred
pounds (L.2,500-00) or such amount (whichever be the greater) as
may be agreed between the Landlords and the Tenant before the first
day of January One thousand nine hundred and eight-four or in the
absence of such agreement as may be determined by an expert valuer
such valuer to be a Fellow of the Royal Institution of Chartered
2
<PAGE> 9
Surveyors and to be agreed between the Landlords and the Tenant or in
default of agreement nominated by the President for the time being of
that Institution on the application of the Landlords made before the
twenty-fifth day of March One thousand nine hundred and eighty-four
but not before the first day of January One thousand nine hundred and
eighty-four and
(c) From the twenty fifty day of March One thousand nine hundred and
eighty-nine and until the twenty- fifth day of march One thousand nine
hundred and ninety-four the yearly rent equal to the sum payable under
Sub-Clause (b) above or such amount (whichever be the greater) as may
be agreed between the Landlords and the Tenant before the first day of
January One thousand nine hundred and eighty- nine or in the absence
of such agreement as may be determined by an expert valuer such valuer
to be a Fellow of the Royal Institution of Chartered Surveyors and to
be agreed between the Landlords and the Tenant or in default of
agreement nominated by the President for the time being of that
Institution on the application of the Landlord made before the
twenty-fifth day of March One thousand nine hundred and eighty-nine
but not before the
3
<PAGE> 10
first day of January One thousand nine hundred and eighty-nine
(d) During the residue of the said term a yearly rent equal to the highest
rent payable during the period from the twenty-fifth day of March One
thousand nine hundred and seventy-eight to the twenty-fifth day of
March One thousand nine hundred and ninety-four or such amount
(whichever be the greater) as may be agreed between the Landlords and
the Tenant before the first day of January One thousand nine hundred
and ninety four or in the absence of such agreement as may be
determined by an expert valuer such valuer to be a Fellow of the Royal
Institution of Chartered Surveyors and to be agreed between the
Landlords and the Tenant or in default of agreement to be nominated by
the President for the time being of that Institution on the
application of the Landlords made before the twenty-fifth day of March
One thousand nine hundred and ninety-four but not before the first day
of January One thousand nine hundred and ninety-four
AND SO THAT in case of any such valuation the amount to be determined by
the valuer shall be the amount which shall in his opinion represent a fair
yearly rent for the demised premises having regard to the rental values then
current for property of a similar nature in the same area let without a premium
with vacant
4
<PAGE> 11
possession and to the provisions of this Lease (other than the rent hereby
reserved) PROVIDED THAT in determining the fair yearly rent there shall be
disregarded (i) the matters mentioned in paragraphs (a) (b) and (c) of Section
34 (1) of the Landlord and Tenant Act 1954 and (ii) any works of alteration or
adaption of or to the demised premises or any part thereof carried out by the
Tenant in connection with the initial conversion of the demised premises into
laboratories with offices ancillary thereto PROVIDED FURTHER that in the case of
a reference to an expert valuer the parties shall bear equally between them the
fees and expenses of such valuer but shall be responsible for their own costs
and so that the said respective rents shall be paid without any deduction
(except such as may be authorised by statute) by equal quarterly payments in
advance to be made on the usual quarter days.
(2) The right of re-entry hereby reserved shall be exercisable by the
Landlords as well in the case of non-payment of any increased rent payable under
the provisions of this Clause as in the case of non-payment of the rent
originally reserved by the Lease.
2. THE Tenant hereby covenants with the Landlords as follows:-
(i) To pay the reserved rents at the times and in the manner aforesaid
(ii) To pay for all gas and electricity consumed on the demised premises
and the standing and meter charges therefor and all other charges in
respect thereof
5
<PAGE> 12
(iii) To pay all existing and future rates taxes assessments duties charges
and outgoings imposed or charged in respect of the demised premises or
any part thereof
(iv) To repair and keep the demised premises and every part thereof
including the whole of the drains sanitary and water apparatus both
interior and exterior and all additions thereto and the Landlords'
fixtures thereon in good and substantial repair and condition and to
forthwith replace all glass broken in the doors and windows and to
yield up the demised premises with the fixtures and additions thereto
but not such trade or other tenant's fixtures as shall belong to the
Tenant at the determination of the said term in good and substantial
repair and condition in accordance with the covenants hereinbefore
contained
(v) To paint with two coats of good oil paint in a workmanlike manner all
the wood iron and other parts of the demised premises heretofore or
usually painted as to the external work once in every three years of
the term and as to the internal work once in every seven years and in
each case the painting be done in the last year of the term as well
and after every internal painting to grain varnish
6
<PAGE> 13
distemper wash stop whiten and colour all such parts as have
previously been so dealt with
(vi) To permit the Landlords and their duly authorised agents surveyors and
others with or without workmen at all reasonable times in the daytime
to enter upon the demised premises and to view the condition thereof
and upon notice being given by the Landlords to repair in accordance
with the covenants on the part of the Tenant herein contained PROVIDED
THAT if the Tenant shall at any time make default in the performance
of any of the covenants hereinbefore contained for or relating to the
repair of the demised premises it shall be lawful for the Landlords
(but without prejudice to the right of re-entry under the clause
hereinafter contained) to enter upon the said premises and repair the
same at the expense of the Tenant in accordance with the covenants and
provisions of these presents and the proper expenses of such repairs
shall be repaid by the Tenant to the Landlords on demand
(vii) To permit the Landlords and their agents at all reasonable times upon
prior written notice being given to enter upon the demised premises to
take inventories of the fixtures therein
7
<PAGE> 14
(viii) To pay a fair proportion (to be conclusively determined by the
Surveyor for the time being of the Landlords) of the expenses incurred
in respect of making supporting repairing and cleansing all party
walls fences sewers drains channels and passageways the use of which
is common to the demised premises and to other premises and to pay the
reasonable charges of the Surveyor in respect of the determination of
such expenses as aforesaid
(ix) To insure forthwith and keep insured the demised premises and fixtures
against loss or damage by fire aircraft and tempest and other normal
comprehensive risks to the full insurable value thereof such insurance
to be effected in the joint names of the Landlords and the Tenant in
the Norwich Union Fire Insurance Society Limited or in some insurance
office or offices or with underwriters to be approved by the Landlords
and to pay all premiums necessary for the above purpose within seven
days after the same shall respectively have become due whenever
required to produce to the Landlords or their Agents the Policy or
Policies of such insurance and the receipt for the current year's
premium and in the case of destruction or damage to any part of the
demised premises from any cause covered by any such insurance
immediately it
8
<PAGE> 15
is lawful so to do to expend all monies received by virtue of such
insurance in rebuilding or reinstating the same as nearly as may be
possible in accordance with the then existing regulations by laws and
planning schemes and to make up any deficiency out of its own monies
PROVIDED ALWAYS that if the Tenant shall fail to make and maintain any
such insurances as aforesaid the Landlords may from time to time at
their own discretion effect and keep on foot such insurance and the
Tenant will on demand repair to the Landlords all money expended by
them for that purpose
(x) Not without the written consent of the Landlords (which shall not be
unreasonably withheld or delayed) to erect any other building on the
demised premises nor to alter the plan height elevation or appearance
of the demised premises nor to make or permit or suffer to be made any
alteration or any addition to the same or cut maim or injure or permit
or suffer to be cut maimed or injured any of the walls or main timbers
thereof without the written consent of the Landlords PROVIDED that no
such consent shall be required for any works (a) carried out by the
Lessee in order to comply with its obligations under this Lease or (b)
of alteration adaption or improvement of or to the
9
<PAGE> 16
demised premises or any part thereof in connection with the initial
conversion of the demised premises into laboratories with offices
ancillary thereto in accordance with the specification dated July One
thousand nine hundred and seventy-eight prepared by Messrs. John
Shreeves and Partners a copy of which has been supplied to the
Landlords
(xi) Not to do or permit or suffer anything in or upon the demised premises
or any part thereof which may be or become a nuisance annoyance or
damage to the Landlords or the tenants or occupiers of the property in
the neighbourhood
(xii) (a) Not to use or permit the demised premises or any part thereof to
be used otherwise than as:
(aa) laboratories either with or without ancillary uses
(bb) light industrial or
(cc) such other use or uses as shall be previously approved in
writing by the Landlords (such approval not to be
unreasonably withheld or delayed)
(b) Not to hold or permit or suffer to be held any sale by auction on
the demised premises
10
<PAGE> 17
(xiii) Not to allow permit or suffer any part of the premises to be let or
used for residential purposes so that a regulated tenancy under the
provisions of the Rent Act 1968 or any statutory re-enactment or
modification thereof is created
(xiv) Not to place or exhibit or suffer to be placed or exhibited on any
part of the exterior of the exterior walls of the demised premises on
of the rails or fences thereof any placard poster signboard or other
advertisement except such as shall be approved in writing by the
Landlords or their Surveyor for the time being such consent not to be
unreasonably withheld
(xv) To comply with all obligations imposed by and do and execute or cause
to be done or executed all such works acts deeds matters and things as
under or by virtue of any Act or Acts of Parliament for the time being
in force and Bye-laws rules and regulations thereunder are or shall be
properly directed or necessary to be done or executed upon or in
respect of the demised premises or any part thereof by the lessee
tenant or occupier and in particular but without prejudice to the
generality of this clause to comply with all obligations imposed on
the owner lessee tenant or occupier under or by virtue of the Offices
Shops and Railway
11
<PAGE> 18
Premises Act 1963 the Factories Act 1961 and the Town and Country
Planning Acts 1962/71 and to obtain all necessary planning and other
permissions for the proposed use of the demised premises hereby
authorised and any other use from time to time authorised by the
Landlords before commencing such use and at all times to keep the
Landlords indemnified against all claims demands and liability in
respect thereof and to pay all costs charges and expenses incurred by
the Landlords in abating a nuisance or for remedying any other matter
in connection with the demised premises in obedience to a Notice
served by a Local Authority
(xvi) Not to assign underlet or part with the possession of any lesser part
of the demised premises than two whole floors thereof
(xvii)(a) Not to assign underlet or part with or share the possession of
the whole of the demised premises or two whole floors thereof without
the licence in writing of the Landlords which shall not be
unreasonably withheld or delayed PROVIDED THAT the Landlords may as a
condition of giving their licence as aforesaid for an assignment or
underletting of the whole aforementioned premises require the Tenant
to procure the intended assignee or underlessee to execute and deliver
to the
12
<PAGE> 19
Landlords a deed to be prepared at the cost of the Tenant containing a
covenant by the intended assignee or underlessee directly with the
Landlords to perform and observe during the term assigned or granted
to the assignee or underlessee the covenants (including this present
covenant) by the Tenant and conditions contained in this Lease (and in
the case of an assignment to pay the rents hereby reserved) in the
same manner as if such covenants and conditions were repeated in
extenso in such deed with the substitution of the name of the intended
assignee or underlessee for the name of the Tenant and with such other
alterations as the deaths of parties or as other circumstances shall
render necessary PROVIDED ALSO that in respect of an assignment of the
whole of the demised premises when
(a) the said Licence (if required) has been obtained
(b) the said Deed of Covenant has been delivered to the Landlords or
their solicitors and
(c) the relevant assignment has been completed the Tenant (meaning
the party who made such assignment) and (in respect of the first
of such assignments) the Sureties shall as
13
<PAGE> 20
from the date of the relevant assignment and without any further
act or deed on the part of the Landlords be released from all
liability hereunder
AND PROVIDED FURTHER THAT no more than two underleases of part only of
the demised premises shall be permitted in accordance with the
provisions of this sub-clause
(b) Provided further that if such intended assignee as aforesaid shall be
a limited liability company then upon the Landlords' demand in that
behalf at least two of its directors or two other persons of
satisfactory standing shall join in such deed as sureties for such
company in order jointly and severally to covenant with the Landlords
as sureties that such company will pay the said rents and perform and
observe the said covenants and to indemnify and save harmless the
Landlords against all loss damages costs and expenses arising by
reason of any default by the company and such covenant shall further
provide in the usual form that any neglect or forbearance of the
Landlords shall not release or exonerate the sureties and shall
further provide for the sureties to accept a new lease of the demised
premises upon disclaimer of these presents by the Company or on its
behalf
14
<PAGE> 21
if so required by the Landlords within three months of such disclaimer
such new lease to be for the residue then unexpired of the term hereby
granted and at the rents payable and subject to the same Tenant's
covenants and to the same provisos and conditions as those in force
immediately before such disclaimer and to be granted at the cost of
the sureties in exchange for a counterpart duly executed by the
sureties
(c) On the grant of any permitted underlease to obtain therein and at all
times thereafter to enforce performance and observance of covenants on
the part of the underlessee as follows:-
(i) an absolute covenant not to assign demise underlet or otherwise
part with possession of any part of the sub-demised premises
(here meaning a portion only and not the whole thereof) or to
share occupation of the whole or any part thereof for all or any
part of the sub-term
(ii) a qualified covenant not to assign demise underlet or otherwise
part with possession of the whole of the sub-demised premises
without the licence in writing of the Landlords (the grant of
which shall be
15
<PAGE> 22
subject to the same provisos as hereinbefore set forth in this
clause).
(iii) a covenant that the underlessees will cause to be inserted in
every sub-underlease whether immediate or derivative covenants on
the part of the relevant sub-underlessee corresponding to the
covenants numbered (i) and (ii) above and that the underlessee
will at all times thereafter enforce the same
(d) Notwithstanding anything herein contained the Tenant shall not create
or permit the creation of any interest derived out of the term hereby
granted howsoever remote or inferior upon the payment of a fine or
premium or at a rent less than the full market rent (obtainable
without taking a fine or premium) of the demised premises and shall
not create or permit the creation of any such derivative interest as
aforesaid save by instrument in writing containing such absolute
prohibition as aforesaid on the part of the underlessee and those that
may derive title under such underlessee
(xviii) Within twenty-one days next after any transfer of assignment or
underlease of the demised premises or any part thereof or the
assignment of an underlease or after any devolution by Will or
otherwise or
16
<PAGE> 23
mortgage affecting the demised premises or any part thereof to produce
to the Landlords the deed or instrument affecting the same and to pay
to them the fee of Ten Pounds together with Value Added Tax thereon
for the registration thereof
(xix) Upon receipt of any notice order or direction or other communication
whatsoever from any competent authority likely to affect the demised
premises forthwith to deliver to the Landlords a copy of such notice
direction order or other communication
(xx) To permit the Landlords during the last three months immediately
preceding the determination of the term hereby granted to affix and
retain without interference upon some suitable part of the demised
premises a notice for re-letting the same and to permit persons with
written authority from the Landlords or their agents at reasonable
times of the day to view the demised premises
(xxi) To pay all expenses (including solicitors' and surveyors' fees)
incurred by the Landlords in or in contemplation of any proceedings in
respect of this Lease under Section 146 and 147 of the Law of Property
Act 1925 or any re-enactment or modification thereof notwithstanding
that forfeiture is avoided otherwise than by relief granted by the
Court
17
<PAGE> 24
(xxii) To permit the Landlords at any time during the term hereby granted
to affix and retain without interference upon some suitable part of
the demised premises a Notice for the sale of the freehold of the
demised premises and to permit persons with written authority from the
Landlords or their Agents at reasonable times of the day to view the
demised premises
3. THE Landlords hereby covenant with the Tenant that the Tenant paying the rent
hereby reserved and performing and observing the several covenants on the
Tenants part herein contained shall peaceably hold and enjoy the demised
premises during the said term without any interruption by the Landlords or any
person rightfully claiming under or in trust for them
4. PROVIDED ALWAYS and it is hereby agreed as follows: -
(i) If the rent hereby reserved or any part thereof shall at any time be
unpaid for twenty-one days after becoming payable (whether formally
demanded or not) or if any of the covenants on the Tenant's part
herein contained shall not be or if any tenant for the time being
shall become bankrupt performed or observed or being a Company shall
enter into liquidation whether compulsory or voluntary (save for the
purpose of reconstruction or amalgamation) or if any tenant for the
time being shall enter into any arrangement or composition for the
benefit
18
<PAGE> 25
of the tenants creditors or shall suffer any distress or execution to
be levied on the tenant's goods then and in any such case it shall be
lawful for the Landlords at any time thereafter to re-enter upon the
demised premises or any part thereof in the name of the whole and
thereupon this demise shall absolutely determine but without prejudice
to the right of action of the Landlords in respect of any antecedent
breach of the tenants covenants herein contained
(ii) The provisions of Section 196 of the Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 shall apply to any
notice under this Lease
5. THE Tenant shall pay the reasonable costs of the Landlords' solicitors in
respect of deducing title and the preparation settling and execution of this
Lease and the counterpart thereof and also the Landlord's reasonable
disbursements incurred in connection therewith
6. THE Sureties in consideration of the demised hereinbefore contained having
been made at their request hereby jointly and severally covenant with the
Landlords that the Tenant shall pay the rents hereby reserved on the days and in
manner aforesaid and shall duly perform and observe all the covenants
hereinbefore on the Tenant's part contained and that in case of default in such
payment of rent or performance or observance of any of the covenants as
19
<PAGE> 26
aforesaid during the currency of the said term and also thereafter during such
period as the Tenant remains in occupation of the demised premises the sureties
will pay and make good to the Landlords on demand all loss damages costs and
expenses thereby arising or incurred by the Landlords PROVIDED ALWAYS and it is
hereby agreed that any neglect or forbearance of the Landlords in endeavouring
to obtain payment of the said several rents when the same become payable or to
enforce performance or observance of the several stipulations herein on the
Tenant's part contained and any time which may be given by the Landlords to the
Tenant shall not release or exonerate or in any way affect the liability of the
Sureties under this covenant and PROVIDED FURTHER and it is hereby further
agreed that in the event of this Lease being disclaimed by the Tenant or on
behalf of the Tenant under any statutory or other power the Sureties will take
from the Landlords but only if so required by the Landlords by written notice to
the Sureties within three months after such disclaimer a grant of another Lease
of the demised premises for the residue of the said term unexpired at the date
of such disclaimer at the same several rents hereinbefore reserved and subject
to the like covenants and provisos as are herein contained and at the expense of
the Sureties and on the execution of such further Lease the Sureties shall
execute and deliver to the Landlords a counterpart thereof
20
<PAGE> 27
IN WITNESS whereof the Landlords and the Sureties have set their respective
hands and seals and the Tenant has caused its Common Seal to be hereunto affixed
the day and year first before written
SCHEDULE
1. 6th March 1936 Party Wall Award
relating to 15 and
16 Newbury Street
2. 30th March 1936 Party Wall Agreement M.L. Collingridge
re. 15 Newbury Ltd. (1) H.I.P.
Street Hallett (2)
3. 5th June 1936 Party Wall Award
Relating to 13 and
14 Newbury Street
4. 5th June 1936 Duplicate Wall Award
relating to 13 and
14 Newbury Street
5. 12th June 1936 Party Wall Agreement H.I.P. Hallett (1)
re. 13 and 14 H.W. Wagstaff (2)
Newbury Street
6. 30th August 1937 Agreement as to Ellerman Property
Light and Air - 15 Trust (1) H.I.P.
and 16 Newbury Hallett (2)
Street
SIGNED SEALED AND DELIVERED by ) /s/ Andrew Sturgis
the said ANDREW STURGIS in the )
presence of :- )
/s/ [ILLEGIBLE]
1 Bedford Row
London WC1
Solicitor
SIGNED SEALED AND DELIVERED by ) /s/ Antoinette I. Harland
the said ANTOINETTE IMBERT )
HARLAND in the presence of :- )
/s/ D. Sharp
121 Putnoe Lane
Bedford
Housewife
21
<PAGE> 1
EXHIBIT 10.19
THERAPEUTIC ANTIBODIES INC.
F.H. FAULDING & CO. LIMITED
CLINICAL TRIALS AND REGISTRATION AGREEMENT
OCTOBER 4, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Clinical Trials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Registration and Marketing Approvals In the New Territories . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Exclusive Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Compliance and Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Initial Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
8. Confidentiality, Trademarks, and Proprietary Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
9. Duration and Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Disclaimer of Warranties Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
CLINICAL TRIALS AND REGISTRATION AGREEMENT
This Clinical Trials and Registration Agreement ("Agreement") is
entered into and effective as of ______________ 1996, by and between F.H.
Faulding & Co. Limited (ACN 007 870 984), a company incorporated and carrying
on business in South Australia ("FHF"), and Therapeutic Antibodies Inc., a
Delaware corporation, located in Nashville, Tennessee, USA ("TAb").
1. Recitals.
1.1 TAb has developed and is the sole owner of all
worldwide right, title, and interest in and to an anti-tumor necrosis factor
product which may be used for, among other applications, treatment of cerebral
malaria, more particularly described in Schedule 1.1 (the "Product").
1.2 TAb is attempting to obtain registration and
marketing approval for the Product for various uses in the territories referred
to in Schedule 1.2 (the "Registration Territories").
1.3 TAb has requested that (a) FHF or its nominee
provide financial support for clinical trials to be conducted by TAb in
connection with registrations and marketing approvals in the territories
referred to in Schedule 1.3 (the "New Territories"), and that (b) FHF or its
nominee obtain registrations and marketing approvals for the Product for
treatment of cerebral malaria from the relevant health authorities in the New
Territories.
2. Definitions.
2.1 "Clinical Trials" shall mean any and all
investigations, evaluations, or experiments relating to the potential use of
the Product, that are conducted on human beings.
2.2 "Confidential Information of TAb" means all
information obtained or developed by FHF or any third party which relates to
TAb's business or the Product, regardless of the form in which such information
is transmitted, including, without limitation, all such information previously
obtained by FHF pursuant to a Confidentiality Agreement dated July l, 1992,
between TAb and FHF (the "Confidentiality Agreement"), all information provided
to FHF pursuant to a Registration and Distribution Agreement dated August 31,
1995, between TAb and FHF, all information furnished to FHF or any
Subcontractor pursuant to Section 4 below, all Results, and all Trade Secrets.
The following shall not be considered Confidential Information of TAb for
purposes hereof:
(a) Information that is already in the possession of
FHF or the Subcontractor at the time it is received from TAb or developed on
TAb's behalf, and the receiving party promptly notifies TAb of its belief that
the information is excepted under the terms of this subsection;
(b) Information received by FHF or a Subcontractor
from a Person which has the right to disclose the same, and the receiving party
promptly notifies TAb of its belief that the information is excepted under the
terms of this subsection; or
(c) Information that is or becomes published, or is or
becomes otherwise publicly available without the fault of FHF or a
Subcontractor.
<PAGE> 4
In the event of a dispute regarding the applicability of the above exceptions
to the definition of Confidential Information of TAb, FHF shall have the burden
of producing clear and convincing proof that the information should be excepted
from the definition of Confidential Information of TAb.
2.3 "Confidential Information of FHF" means all
information obtained by TAb which relates to FHF's business; provided, however,
that this definition does not include or apply to either the Confidential
Information of TAb or:
(a) Information that is already in the possession of
TAb at the time it is received from FHF, and the receiving party promptly
notifies FHF of its belief that the information is excepted under the terms of
this subsection;
(b) Information received by TAb from a Person which
has the right to disclose the same, and the receiving party promptly notifies
FHF of its belief that the information is excepted under the terms of this
subsection; or
(c) Information that is or becomes published, or is or
becomes otherwise publicly available without the fault of TAb.
In the event of a dispute regarding the applicability of the above exceptions
to the definition of Confidential Information of FHF, TAb shall have the burden
of producing clear and convincing proof that the information should be excepted
from the definition of Confidential Information of FHF.
2.4 "Confidential Information" means collectively
Confidential Information of TAb and Confidential Information of FHF.
2.5 "Documentation" means any and all labels,
instructions, manuals, specifications, warnings and similar documentation
regarding the Product prepared by or for TAb.
2.6 "Person" means an individual, corporation,
company, partnership, trust, association, entity, governmental authority or
other entity.
2.7 "Product" means the Product listed on Schedule 1.1.
2.8 "Proprietary Rights" means the rights and
properties described in Section 8.6.
2.9 "Regulatory Filing" shall mean any filing outside
of the United States that is equivalent to Notice of Claimed Investigational
Exemption for a New Drug ("IND"), Product License Application ("PLA"),
Establishment License Application ("ELA"), or New Drug Application ("NDA") in
the United States pursuant to the regulations and procedures required by any
regulatory authority for any country for the testing, manufacture,
distribution, sale, or specific use of a Product.
2.10 "Results" means all technology, ideas (whether or
not copyrightable), know-how, data, improvements, modifications, innovations,
inventions, methodology, processes, techniques, and results, tangible and
intangible, developed or discovered by TAb, FHF or any Subcontractor in
connection with the clinical trials, registrations, and approvals contemplated
by Sections 3 and 4, or otherwise in connection with the Product or this
Agreement.
2
<PAGE> 5
2.11 "Subcontractor" means a Person approved by TAb
pursuant to Section 6 below, to whom FHF has delegated responsibilities
regarding registration and approval.
2.12 "Trademarks" means all trademarks, trade names,
and other designations of origin used on or in connection with the Product,
including, without limitation, CytoTAb(TM).
2.13 "Trade Secrets" means all techniques, technology,
processes, and know-how related to production and purification of polyclonal
antibodies developed by or on behalf of TAb, including (a) the design and
syntheses of immunogens which can produce high affinity antibodies in large
quantities, (b) the selection, immunization, and handling of animals to produce
therapeutic polyclonal antibodies (including breed comparison studies), (c) the
aseptic collection and handling of antisera, and (d) closed systems for fully
processing and purifying antibodies; types and configuration of processing
equipment; lists of suppliers; development plans; methods of operation and
management; cost control methods; methods of setting prices; reporting methods;
quality assurance programs; information systems; training manuals; databases;
production solutions; financial information; customer and prospective customer
lists; and all other trade secrets of TAb.
2.14 "TAb" includes any related corporation of TAb
where that corporation controls, is controlled by, or is under common ownership
with TAb.
3. Clinical Trials.
3.1 TAb shall submit a budget and clinical protocol to
FHF for written approval by FHF before TAb begins to conduct clinical trials or
to incur any clinical trial expenses in any country in the New Territories.
Variations in the budget or clinical protocol must be approved by FHF in
writing before they are undertaken or incurred for FHF to be liable to
reimburse TAb for them, but such consent shall not be unreasonably withheld.
3.2 TAb shall be solely responsible for the conduct of
the clinical trials in any country in the New Territories; provided, however,
TAb agrees to comply with the protocol (the "Protocol") attached hereto as
Schedule 3.2, consult in good faith with FHF and to provide reports to FHF upon
FHF's reasonable request regarding the conduct of each clinical trial. TAb
shall not subcontract the performance of any clinical trials without FHF's
prior written consent (not to be unreasonably withheld). TAb shall conduct all
clinical trials accounted for in the budget approved by FHF as necessary to
enable registration to be obtained in the New Territories. In such clinical
trials, TAb shall use its best efforts to develop all clinical information and
data which it is reasonably able to obtain as may be necessary in connection
with any registration and marketing approvals in the New Territories. TAb shall
provide for the clinical trials all necessary quantities of Product, which
shall be manufactured in accordance with current Good Manufacturing Practices
as set forth in the United States Food and Drug Administration regulations and
any applicable laws in appropriate facilities. Products used in clinical trials
shall be supplied by TAb at no cost to FHF. TAb shall maintain books of account
and other records relating to the clinical trials during the term of this
Agreement that TAb reasonably believes will be sufficient for FHF to ascertain
upon inspection thereof an accurate and detailed knowledge of the allocation of
its funds and the status of the trials. Upon reasonable notice and during TAb's
normal business hours, FHF may inspect all of TAb's books of account and other
records relating to the subject matter of this Agreement for the purpose of
ascertaining or confirming their accuracy. TAb shall request that any third
parties performing any clinical trials permit FHF to inspect the locations of
the clinical trials upon reasonable notice.
3
<PAGE> 6
3.3 FHF agrees to reimburse TAb for the costs of
clinical trials for the Product in any country in the New Territories. TAb
shall prepare and send to FHF an invoice of actual costs incurred by TAb each
month. FHF shall make full payment of the stated amount within thirty (30) days
of receipt of TAb's invoice. FHF shall not be liable for any expenses in excess
of the budgeted amount in any clinical trial budget approved by FHF or any
expenditures not included in such an approved budget.
3.4 TAb shall promptly disclose to FHF any information
that it has regarding an adverse drug experience and shall also make any
reports regarding such adverse experiences as are required by law. FHF shall
not be liable for any claims, actions, or demands arising out of any adverse
drug experiences or injuries occurring to any person as a result of his or her
involvement in clinical trials for the Product in any country in the New
Territories.
4. Registration and Marketing Approvals In the New Territories.
4.1 FHF shall exercise all commercially reasonable
efforts, on a continuous basis, to obtain all necessary registration and
marketing approvals for the Product and with the least possible delay from all
relevant governmental authorities in each country within the New Territories,
at FHF's sole cost and expense. FHF shall prepare and submit all necessary
Regulatory Filings for the Product in the New Territories. TAb shall promptly
supply FHF with all information and data in its possession or which it is
reasonably able to obtain as may be necessary or useful in connection with any
registrations and approvals, including relevant information prepared for
treatment of cerebral malaria in other countries. TAb shall permit the release
by FHF to government officials with TAb's prior written consent of such of its
Confidential Information as is necessary to obtain registration of the Product.
FHF shall provide TAb with written certification that the Product has obtained
all registrations and approvals necessary in order for distribution and sale of
the Product in a given country to commence, promptly upon receipt of the
requisite registrations and/or approvals. FHF agrees that neither it nor any
Subcontractor shall modify or alter the Product in any respect, whether in
relation to design, content, manufacture, use or otherwise, without the prior
written consent of TAb. If FHF reasonably forms a view that registration cannot
be obtained in a particular country within the Territory, FHF may cease its
efforts to seek registration as set forth in this Section 4 provided that FHF
consults with TAb prior to ceasing such registration efforts in the particular
country at issue. In the event of such a cessation, the rights and obligations
set forth in Section 9.2 hereof shall apply to the parties' activities in that
particular country.
4.2 All registrations and approvals obtained by FHF
hereunder shall be the sole and exclusive property of TAb. All registrations
and approvals shall be held in the name of TAb or, if required by applicable
law or regulatory authorities, in the name of FHF or a third party on TAb's
behalf. All Results shall be the sole and exclusive property of TAb, and FHF
hereby assigns to TAb any and all right, title, and interest it may now or in
the future have in the Results.
4.3 As FHF receives any information relating to the
status of applications for registration and marketing approval and requests for
the Product, it shall promptly provide such information to TAb.
4.4 FHF may delegate its responsibilities under this
Section 4 to any Subcontractor, with TAb's prior written approval pursuant to
Section 6.
4
<PAGE> 7
4.5 Set forth as Schedule 4.5 hereto is the time and
events schedule for the registration and approval activities contemplated by
this Section 4. The schedule will be reviewed and revised, if necessary, as the
parties shall mutually agree. The time and events schedule is intended to be a
guideline only and is not a binding legal obligation.
5. Exclusive Distribution.
5.1 As soon as FHF certifies to TAb that the Product
has obtained all necessary registration and approval rights for distribution
and sale in a particular country in the New Territories, FHF shall have an
exclusive option, which FHF may exercise or refuse to exercise at its sole
discretion during the period set forth in Section 5.2 hereof, to enter into an
exclusive ten-year agreement (the "Distribution and Profit Sharing Agreement")
based upon the key commercial terms set forth in Schedule 5.1 and pursuant to
which FHF or its nominee would distribute a form of the Product intended solely
for treatment of cerebral malaria in such country, and TAb and FHF would share
in the profits arising from the exploitation of the Product. The reimbursements
by FHF of approved clinical trial expenses as set forth in Section 3 are not
refundable to FHF for any reason; however, if the parties enter into a
Distribution and Profit Sharing Agreement, the reimbursements by FHF to TAb of
clinical trial expenses, and the US[$ * ] fee referred to in Section 7, are
jointly creditable against a maximum, when combined, of [ * ]% of earned
royalties per year under the Distribution and Profit Sharing Agreement during
the first [ * ] years following the date on which total sales of the Product
in the New Territories exceed US$[ * ]. The parties acknowledge that the
Product has other applications, and the Distribution and Profit Sharing
Agreement shall grant no rights to FHF and impose no restrictions on TAb with
regard to such additional applications.
5.2 In the event that the parties have not executed a
Distribution and Profit Sharing Agreement within ninety (90) days after the
date on which FHF certifies receipt of all necessary registration and marketing
approvals for the applicable country in the New Territories, TAb or one of its
affiliates may market the Product in the respective country within the New
Territories or TAb may enter into similar arrangements with one or more third
parties, provided such arrangements are on no more favorable terms than those
offered to FHF.
6. Compliance and Subcontractors.
6.1 FHF shall insure that its conduct in performing
its obligations under this Agreement complies with all applicable laws and
regulations of the countries within the New Territories, and of the United
States to the extent that FHF, as a foreign corporation located outside the
United States, seeking registration solely outside the United States, for a
Product that is manufactured by a U.S. registered corporation, would be subject
to U.S. jurisdiction and statutes, including, without limitation, laws and
regulations governing bribery of foreign officials, labels for pharmaceutical
products, applicable export controls, and antitrust and unfair competition. If
any approval shall be required at any time during the term of this Agreement
with respect to compliance with exchange regulations or other requirements so
as to assure the right of remittance abroad of U.S. dollars, FHF shall
immediately take whatever steps may be necessary in this respect, and any
charges incurred in connection therewith shall be borne by FHF.
6.2 TAb shall insure that its conduct in performing
its obligations under this Agreement complies with all applicable laws and
regulations of the countries within the New Territories and of the United
States.
- -------------
* Confidential treatment requested. Omitted material filed separately.
5
<PAGE> 8
6.3 FHF agrees that during the term of this Agreement,
it may make such arrangements with third parties which it, in its reasonable
judgment, believes necessary to maximize its ability to obtain registration and
approval of all Product in all countries within the New Territories, and TAb
agrees that it will provide FHF with such assistance as FHF may reasonably
require. Any such arrangements made with third parties shall be made only with
third parties which, after due inquiry, FHF knows to be reputable and
competent. Any such third parties selected by FHF for registration and approval
work shall be referred to as "Subcontractors." FHF shall be responsible for
ensuring that each Subcontractor complies with all applicable provisions of
this Agreement and all applicable laws and regulations of the U.S., and of
foreign governments (and political subdivisions thereof). In addition, FHF
agrees that it will not enter into any agreements, understandings, or other
arrangements, with any Subcontractor, without the prior written approval of
TAb, which approval shall not be unreasonably withheld if:
(a) TAb shall have received from FHF reasonable and satisfactory
information concerning the business activities and qualifications of the
Subcontractor, the reputation of the Subcontractor, and the number of years FHF
has done business with the Subcontractor; and
(b) FHF shall have furnished TAb with (i) an undertaking of the
Subcontractor, in form reasonably satisfactory to TAb, to respect the rights of
TAb in and to the Product and the Proprietary Rights (defined herein), and to
treat confidentially the Confidential Information of TAb; and (ii) an
acknowledgement by the Subcontractor that TAb shall have the rights of an
express third party beneficiary of any agreement, understanding, or other
arrangement between FHF and such Subcontractor.
7. Initial Payment.
In consideration for the rights granted to FHF hereunder, FHF shall
pay TAb a US$[ * ] licensing fee on signing the Agreement. The foregoing
payment is fully earned on the date hereof and is not refundable; however, if
the parties subsequently enter into a Distribution and Profit Sharing
Agreement, this payment and the creditable reimbursements by FHF to TAb of the
clinical trials expenses referred to in Section 5.1 are jointly creditable
against a maximum, when combined, of [ * ]% of earned royalties
per year under the Distribution and Profit Sharing Agreement during the first
[ * ] years following the date on which total sales of the Product in the
New Territories exceed US$[ * ].
8. Confidentiality, Trademarks, and Proprietary Rights.
8.1 Neither party shall use or permit the use of the
other party's Confidential Information by any Person other than for the limited
purposes expressly permitted by this Agreement.
8.2 Neither party shall disclose or disseminate the
other party's Confidential Information to any Person or entity other than to
employees, officers, and directors of that party or an affiliate (as defined in
the regulations promulgated under the Securities Exchange Act of 1934) of that
party and to Subcontractors who require access thereto in order to perform that
party's obligations hereunder ("Recipients"). Recipients shall be granted
access to the Confidential Information strictly on a "need to know" basis. Each
party shall take all reasonable steps to ensure that Recipients comply with the
terms of this Agreement, including all restrictions on use, disclosure, and
dissemination of Confidential Information. Such steps shall include, without
limitation, measures to insure that each Recipient has read, understands, and
agrees to the provisions hereof. Each party shall notify the other immediately
upon becoming aware of any breach hereof and shall take reasonable steps to
prevent any further disclosure or unauthorized use.
- ------------
* Confidential treatment requested. Omitted material filed separately.
6
<PAGE> 9
8.3 Upon termination or expiration of this Agreement,
each party shall deliver to the other party (a) all of the other party's
Confidential Information, all copies thereof, and all documents or data storage
media containing such Confidential Information, (b) the names and addresses of
all Recipients, and (c) a written certification that the party has complied
with its obligations under this Section 8.
8.4 During the term of this Agreement and for a period
of ten (10) years after the termination date of this Agreement, each Recipient
shall keep confidential and not use, except as provided herein, all
Confidential Information.
8.5 FHF agrees that it shall not adopt or use for any
purpose the Trademarks or any variation of the Trademarks until and unless the
parties execute a Distribution and Profit Sharing Agreement and then only on
the terms set forth in such Agreement.
8.6 FHF acknowledges that all Trademarks and all
rights and goodwill pertaining thereto are the exclusive property of TAb. FHF
further acknowledges that TAb is the sole and exclusive owner of all present
and future right, title, and interest in and to (a) all worldwide patent
rights, registrations and registration rights, copyrights, and related rights,
in or related to the Product and any present and future renewals thereof, (b)
all rights (including copyrights) in the appearance, packaging, design, trade
dress, and other identifying features of the Product and the promotional and
packaging materials, (c) the Trade Secrets and the Results, (d) any
adaptations, additions, derivatives, translations, and/or improvements to any
of the foregoing, and (e) all other intangible rights in the Product. The
Trademarks and other rights and properties described in this Section 8.6 are
referred to collectively as the "Proprietary Rights."
8.7 FHF agrees it will not challenge, oppose or
cancel, or permit any act or thing that would endanger any right of TAb in the
Product or the Proprietary Rights, nor will FHF claim any proprietary interest
in the Product or the Proprietary Rights.
8.8 FHF acknowledges that no Trademarks are presently
registered in the New Territories.
8.9 TAb shall exercise its best efforts to both pursue
and, if obtained, maintain necessary and appropriate intellectual property
protection for the Product to be distributed in the New Territories without
infringement of any third party's intellectual property rights.
9. Duration and Termination of Agreement
9.1 The effective date of this Agreement is as set
forth above and, unless earlier terminated in accordance with the provisions
hereof, this Agreement shall terminate five (5) years from the effective date
of this Agreement.
9.2 FHF may terminate this Agreement, with TAb's prior
consent which may not be unreasonably withheld, with respect to a country
within the New Territories by sixty (60) days' prior written notice to TAb in
the event that (i) FHF reasonably forms an opinion that all relevant
governmental authorities in such country within the New Territories will refuse
to issue all necessary registration and marketing approvals for the Product, or
(ii) FHF determines that to continue the clinical trials and registration
process for the Product in the New Territories is no longer commercially
viable. Upon any such
7
<PAGE> 10
termination, FHF shall only be responsible for the costs of ongoing clinical
trials incurred by TAb during the sixty (60) day period following the date of
notice of termination as well as reasonable termination costs incurred by TAb
(including reasonable severance payments and reasonable buy-outs of
pre-existing contracts reasonably entered into); provided, however, TAb shall
use its best efforts to mitigate and control such termination costs, and FHF
must approve in writing any expenditures for obligations that are entered into
after TAb receives notice of termination. If the termination notice applies to
all countries within the New Territories, then FHF will immediately return to
TAb all Confidential Information upon providing notice of termination, and TAb
or one of its affiliates may seek registration and marketing approvals for the
Product or may enter into agreements with one or more third parties to seek
such approvals, immediately upon receipt of notice of termination. As of the
termination date, FHF will have no rights, and TAb will have no obligations
with respect to the Distribution and Profit Sharing Agreement.
9.3 If either party breaches any of its obligations
under this Agreement, the other party may give notice of such breach in
accordance with the provisions of Section 14.2 hereof. If the breaching party
does not cure the breach to the satisfaction of the notifying party within
thirty (30) days from the date of receipt of the notice, then the notifying
party may terminate this Agreement.
9.4 Either party hereto shall have the right to
terminate this Agreement immediately and without prior notice in the event that
the other party files a petition for voluntary bankruptcy, has a petition for
involuntary bankruptcy filed against it (which petition is not withdrawn within
sixty (60) days of such filing), is adjudicated to be or becomes bankrupt,
places any of its property in liquidation for the purpose of meeting claims of
its creditors, is otherwise unable to pay its debts as such debts become due
(including, but not limited to, payments due hereunder), or ceases to function
as a going concern.
9.5 If the parties fail to enter into a Distribution
and Profit Sharing Agreement, TAb shall be free to enter into similar
arrangements with one or more third parties.
9.6 The obligations of FHF under Sections 6, 8, 9.2,
10, and 13 hereof shall survive the expiration or termination of this
Agreement. The obligations of TAb under Sections 6 and 13 hereof shall survive
the expiration or termination of this Agreement.
9.7 Upon termination or expiration of this Agreement
for any reason, TAb shall have no liability for actual or alleged loss of
goodwill, prospective profits or anticipated orders, or on account of any
expenditures, investments, leases, or commitments made by FHF. Upon termination
or expiration of this Agreement for any reason, FHF shall have no liability for
actual or alleged loss of goodwill, prospective profits or anticipated orders,
or on account of any expenditures, investments, leases, or commitments made by
TAb.
9.8 Upon FHF's issuing notice of termination or upon
termination by TAb or expiration of this Agreement for any reason, FHF shall
immediately return all Documentation and Confidential Information to TAb.
9.9 Except in the event of intellectual property
infringement, neither party shall be liable to the other for any incidental,
consequential, or special damages of any nature whatsoever, including, without
limitation, lost profits. As of the date of termination of this Agreement for
any reason, neither party will have any rights or obligations with respect to
the Distribution and Profit Sharing Agreement.
8
<PAGE> 11
10. Indemnification.
10.1 FHF shall indemnify and hold harmless TAb and its
subsidiaries, affiliates, officers, and directors, notwithstanding termination
of this Agreement, against any liability, damage, loss, cost, or expense
(including reasonable attorneys' fees) relating to any third party claims
arising from:
(a) default under any provision of the Agreement by
FHF or any Subcontractor; or
(b) any negligence, gross negligence, or intentional
misconduct of FHF,
provided that upon receipt of notice by TAb of any such
claims, TAb shall immediately notify FHF. TAb shall permit FHF to handle such
claims at FHF's sole cost, and TAb shall give FHF all reasonable assistance
(except financial assistance) in the conduct of any such claims. In no event is
FHF authorized to settle or compromise any claim, or to consent to the entry of
any order or judgment, without the prior written consent of TAb.
10.2 TAb shall indemnify and hold harmless FHF, its
subsidiaries and affiliates, officers, and directors, notwithstanding
termination of this Agreement, against any liability, damage, loss, cost, or
expense (including reasonable attorneys' fees) relating to any third party
claims arising from:
(a) any supply or use of Product in the New
Territories by FHF consequent upon any act or omission in the manufacture,
storage, or shipment of Product by TAb;
(b) default under any provision of the Agreement by
TAb;
(c) any suit against FHF arguing that the Product as
provided to FHF by TAb infringes the intellectual property rights of any third
party as enforceable in the New Territories; and
(d) any negligence, gross negligence, or intentional
misconduct of TAb;
provided that upon receipt of notice by FHF of any such claims, FHF shall
immediately notify TAb. FHF shall permit TAb to handle such claims at TAb's
sole cost and discretion and shall give TAb all assistance (except financial
assistance) it can in the conduct of any such claims. In no event is TAb
authorized to settle or compromise any claim, or to consent to the entry of any
order or judgment, without the prior written consent of FHF.
11. Representations and Warranties.
11.1 FHF represents and warrants that (a) it is a
company duly organized and validly existing under the laws of Australia; (b)
the execution and delivery by FHF of this Agreement, the performance by FHF of
all the terms and conditions thereof to be performed by it and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary action, and no other act or approval of any person or entity is
required to authorize such execution, delivery, and performance, other than the
registrations and approvals referred to in Section 4 of this Agreement; (c) the
Agreement constitutes a valid and binding obligation of FHF, enforceable in
accordance with its terms; (d) this Agreement and the execution and delivery
thereof by FHF, does not, and the fulfillment and compliance with the terms and
9
<PAGE> 12
conditions hereof and the consummation of the transactions contemplated hereby
will not, (i) conflict with any of, or require the consent of any person or
entity under, the terms, conditions, or provisions of the memorandum and
articles of association of FHF or its company charter, (ii) violate any
provision of, or require any consent, authorization, or approval under, any law
or administrative regulation or any judicial, administrative, or arbitration
order, award, judgment, writ, injunction, or decree applicable to FHF other
than the registrations and approvals referred to in Section 4 of this
Agreement, or (iii) conflict with, result in a breach of, or constitute a
default under, any material agreement or obligation to which FHF is a party.
11.2 TAb represents and warrants that (a) it is a
corporation duly organized and validly existing under the laws of the State of
Delaware; (b) the execution and delivery by TAb of this Agreement, the
performance by TAb of all the terms and conditions thereof to be performed by
it and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action, and no other act or approval of any person
or entity is required to authorize such execution, delivery, and performance;
(c) the Agreement constitutes a valid and binding obligation by TAb,
enforceable in accordance with its terms; (d) this Agreement and the execution
and delivery thereof by TAb, does not, and the fulfillment and compliance with
the terms and conditions hereof and the consummation of the transactions
contemplated hereby will not (i) conflict with any of, or require the consent
of any person or entity under, the terms, conditions, or provisions of the
organizational documents of TAb, (ii) violate any provision of, or require any
consent, authorization, or approval under, any law or administrative regulation
or any judicial, administrative, or arbitration order, award, judgment, writ,
injunction, or decree applicable to TAb, or (iii) conflict with, result in a
breach of, or constitute a default under, any material agreement or obligation
to which TAb is a party; and (e) as of the date of this Agreement, TAb has no
knowledge of any third party proprietary rights that would prevent the sale of
the Product in the New Territories.
12. Disclaimer of Warranties Limited Liability.
Under no circumstances shall either party be liable to the other party
on account of any claim (whether based upon principles of contract, warranty,
negligence or other tort, breach of any statutory duty, principles of
indemnity, the failure of any limited remedy to achieve its essential purpose,
or otherwise) for any special, consequential, incidental or exemplary damages,
including but not limited to lost profits, or for any damages or sums paid by a
party to third parties, even if the other party has been advised of the
possibility of such damages.
13. Enforcement.
Each party agrees that (a) the restrictions contained in Section 8 of
this Agreement represent reasonable and necessary protection of the legitimate
interests of the other party, and that the first party's failure to observe and
comply with the covenants and agreements in that section will cause irreparable
harm to the other party and its affiliates; (b) it is and will continue to be
difficult to ascertain the nature, scope, and extent of the harm; and (c) a
remedy at law for such failure will be inadequate. Accordingly, it is the
intention of the parties that, in addition to any other rights and remedies
which either party may have in the event of any breach or threatened breach of
such Section, each party shall be entitled, and is expressly and irrevocably
authorized by the party in breach, to demand and obtain specific performance,
including, without limitation, temporary and permanent injunctive relief and
all other appropriate equitable relief against the party in breach in order to
enforce against the party in breach the covenants and agreements contained in
such Section. Such right to obtain injunctive relief may be exercised
concurrently with, prior to, after, or in lieu of, any other rights resulting
from any such breach or threatened breach. The party in breach shall
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<PAGE> 13
account for and pay over to the other party all compensation, profits, and
other benefits, after taxes enuring to the benefit of the party in breach,
which are derived from or received by the party in breach or any person or
business entity controlled by it resulting from any action or transaction
constituting breach of such Section.
14. General.
14.1 No waiver or modification of the Agreement shall
be effective unless in writing and signed by the party against whom such waiver
or modification is asserted. Waiver by either party in any instance of any
breach of any term or condition of this Agreement shall not be construed as a
waiver of any subsequent breach of the same or of any other term or condition
hereof. None of the terms or conditions of this Agreement shall be deemed to
have been waived by course of dealing or trade usage.
14.2 All notices and demands hereunder shall be in
writing and shall be served by personal delivery, by registered mail, by
recognized international courier, or by facsimile transmission at the address
of the receiving party set forth below (or at such different address as may be
designated by such party by written notice to the other party).
<TABLE>
<CAPTION>
TAb: FHF:
<S> <C>
Therapeutic Antibodies Inc. F.H. Faulding & Co. Limited
1500 21st Avenue South G.P.O. Box 1618
Nashville, Tennessee 37212 USA Adelaide, SA 5001 Australia
Attention: President Attention: Company Secretary
Fax: 1-615-320-1212 Fax: 61-8-373-3120
</TABLE>
All notices or demands shall be deemed received on the earlier of actual
receipt or seven (7) days after posting if sent by mail, three days after
delivery to international courier, or upon receipt of fax-back confirmation if
sent by facsimile.
14.3 In the event any litigation is brought by either
party in connection with this Agreement, the prevailing party in such
litigation shall be entitled to recover from the other party all the costs,
attorneys fees and other expenses incurred by such prevailing party in the
litigation.
14.4 This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, United States of America.
The parties agree that any claim asserted in any legal proceeding by one party
against the other shall be commenced and maintained in any state or federal
court in Nashville, Tennessee, having subject matter jurisdiction with respect
to the dispute between the parties. Both parties hereby submit to the
jurisdiction of such courts over each of them personally in connection with
such litigation, and waive any objection to venue in such courts and any claim
that such forum is an inconvenient forum.
14.5 In the event that any provision of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
unenforceable, such provision will be enforced to the maximum extent
permissible and the remaining portions of this Agreement shall remain in full
force and effect.
14.6 Neither party shall be responsible for any failure
to perform due to unforeseen circumstances or to cause beyond such party's
control, including but not limited to acts of God, war, riot,
11
<PAGE> 14
embargoes, acts of civil or military authorities, fire, floods, accidents,
strikes, or shortages reasonably beyond the control of such party with regard
to transportation facilities, fuel, energy, labor or materials, and where no
reasonable alternative means of obtaining these are available.
14.7 This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof, and supersedes in
their entirety any and all written or oral agreements previously existing
between the parties with respect to such subject matter.
14.8 The terms of this Agreement are intended solely
for the benefit of the parties hereto. They are not intended to confer upon any
Subcontractor the status of a third party beneficiary. Except as otherwise
provided for by this Agreement, the terms hereto shall inure to the benefit of,
and be binding upon, the respective successors and assigns of the parties
hereto.
14.9 The parties expressly acknowledge and agree that
FHF shall act only as an independent contractor of TAb and that this Agreement
shall not be deemed to create an agency, partnership, employment, or joint
venture relationship between TAb and FHF. Nothing in this Agreement shall be
construed as a grant of authority to either party to accept any order, waive
any right, incur any obligation or liability, enter into any agreement, grant
any release or otherwise purport to act in the name of the other party. Except
as expressly set forth herein, the parties agree that TAb shall neither
exercise control over FHF's method of operations nor provide assistance to FHF.
The operations, policies and procedures of FHF, including those related to
FHF's performance of this Agreement, are subject to the sole management and
control of FHF.
14.10 This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
14.11 Nothing contained herein shall be construed as
conferring by implication, estoppel, or otherwise any license or right under
any patent, whether or not the exercise of any right herein granted necessarily
employs an invention or any existing or later issued patent.
14.12 In the event that performance of any obligation
pursuant to this Agreement would cause either party to contravene applicable
laws or regulations, failure to take such action shall not constitute default
hereunder.
14.13 The terms of this Agreement can be modified only
by a writing which is signed by both parties.
14.14 No party to this Agreement may assign its
obligations hereunder without the prior written consent of the other parties.
12
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
F.H. FAULDING & CO. LIMITED
By: /s/ [ILLEGIBLE]
-----------------------------------
Title: Chief Operations Executive
-------------------------------
Date: 17th October, 1996
--------------------------------
THERAPEUTIC ANTIBODIES INC.
By: /s/ Martin S. Brown
---------------------------------
Title: Chairman
--------------------------------
Date: October 22, 1996
--------------------------------
13
<PAGE> 16
SCHEDULE 1.1
THE PRODUCT
Purified ovine anti-tumor necrosis factor alpha, Fab, (lyophilized) which TAb
has identified as CytoTAb(TM) and which is being tested for treatment of
cerebral malaria in human beings
<PAGE> 17
SCHEDULE 1.2
REGISTRATION TERRITORIES
United States of America
Certain European Countries
<PAGE> 18
SCHEDULE 1.3
NEW TERRITORIES
Thailand
(other Southeast Asian countries where malaria is a problem)
[list of such countries to be supplied by FHF]
<PAGE> 19
SCHEDULE 3.2
PROTOCOL
<PAGE> 20
SCHEDULE 4.5
REGISTRATIONS AND APPROVALS
1. [Schedule will include (a) time for start of trials required
for registration, (b) time for completion of trials, and (c) time for receiving
registrations. The Schedule will be designed on a country-by-country basis.]
<PAGE> 21
SCHEDULE 5.1
KEY COMMERCIAL TERMS
Key Terms for Inclusion into Distribution Agreement in addition to those
contained in the Clinical Trials Registration Agreement.
1. Term of Agreement: Exclusive distribution rights for ten
years in each country in which the product is distributed, with automatic
rights of renewal for successive two-year periods.
2. TAb to supply fully finished pharmaceutical product.
3. Each party shall receive [ * ]% of FHF's gross profit.
TAb's portion shall be derived from FHF's purchase price and payment of
royalties.
4. Territory: Thailand plus the ability to add countries
approved by TAb as per the digitalis agreement.
5. Price: to be denominated in U.S. dollars.
6. Terms of delivery - FOB TAb's production facility.
7. Out of pocket registration expenses to be set off against a
maximum of [ * ]% of earned royalties per year.
8. FHF to promote the Product in the Territory diligently and
in a commercially appropriate manner aimed at maximizing the benefits for both
FHF and TAb.
9. FHF to provide annual forecasts of its requirements for the
Product. TAb to be required to supply orders that fit within the forecasts. TAb
to use best efforts to supply the Product for orders that exceed the forecasts
by more than 30%.
10. TAb to manufacture the Product in compliance with agreed
manufacturing specifications which:
(a) comply with and reflect all applicable regulatory
requirements and conditions of approval agreed or imposed by the relevant
regulatory authorities;
(b) specify that the Product will have an adequate
shelf life at the time of delivery to FHF so as to enable it to readily be sold
in the ordinary course of business; and
(c) ensure that the external presentation and
appearance of the Product, including its packaging, is such as to enable it to
be sold by FHF in the ordinary course of business.
11. TAb to provide assurances of both continuity of supply of
Product and quality of Product, subject to events genuinely and entirely
outside of its control.
- ------------
* Confidential treatment requested. Omitted material filed separately.
<PAGE> 22
12. Mutual indemnification for defaults and for acts or
omissions in each party's obligations under the Agreement.
13. FHF to pay one-half the purchase price in advance for its
first order in order to provide TAb with working capital.
14. Limits on reducing FHF's ability to reduce purchase orders a
certain percentage below sales forecasts.
15. FHF to meet annual minimum sales as agreed by the parties.
16. The terms set forth in this Schedule 5.1 shall be developed
more fully, and other terms must be negotiated for inclusion within such
agreement.
<PAGE> 1
EXHIBIT 10.20
From: TAb Wales Limited
To: Professor John Landon
Dear Professor Landon
This letter sets out particulars of your employment with TAb Wales Limited
(the "Company") which are issued in accordance with Section 1 of the Employment
Protection (Consolidation) Act of 1978 as amended.
1. Commencement of Employment
Your employment commenced on 1 October 1995 and prior to that you were
employed the Group Companies, on a part-time basis, from June 1989.
2. Remuneration
Your remuneration is L.82,000 per annum, payable monthly in arrears by
direct transfer to your bank, not later than the last day of the month.
Your salary will be reviewed in or about January of each year based on
performance as judged in part by your supervisor.
3. Job Title
4. You will be employed as a Director with particular responsibility for
research and development of the TAb Inc Group (as defined below) either at
the research facility of TAb London Ltd in London or at TAb Wales Ltd in
Wales and in such capacity you shall give to the Company and to the TAb Inc
Group the full benefit of your knowledge, expertise, technical skill and
ingenuity at all times. The Company reserves the right to employ you in any
reasonable capacity within your place of employment and you shall undertake
such duties in relation to the business of the Company as the management of
the Company shall from time to time reasonably assign to or vest in you
(being duties reasonably appropriate to your seniority and expertise). The
Company may require you to undertake additional or other duties at any time
to meet the needs of the Company's business.
5. You may not without the prior written consent of the Company (which
will not be unreasonably withheld) engage, whether directly or indirectly,
in any business or employment which is similar
<PAGE> 2
or in any way connected to or competitive with the business of the Company
in which you work or which could or might reasonably be considered by
others to impair your ability to act at all times in the best interest of
the Company.
6. You represent to the Company that you have the requisite skill,
knowledge and experience of the work for which you have been employed to
carry out to enable you to perform your duties under your employment with
the Company and you represent that by virtue of entering into employment
with the Company you will not be in breach of any express or implied terms
of any contract with, or of any other obligation to, any third party
binding upon you.
7. Reporting and location
You will report to the President of Therapeutic Antibodies Inc, the
Company's parent company. Your usual place of work is at the Company's
facility in Wales but you may also be required to work at any other
locations of the Company or any other member of the TAb Inc Group (namely
Therapeutic Antibodies Inc and any Subsidiary Company (within the meaning
of Section 736 of the Companies Act 1985) of Therapeutic Antibodies Inc)
anywhere in the World for temporary periods up to three month(s).
8. Hours of Work
Your normal working week will consist of thirty-seven and a half hours and
is from Monday to Friday inclusive. Your hours of work shall be established
by your supervisor. You will be expected to devote additional time on
occasions when it is necessary to meet the demands of the business of the
Company; however, you may take time off to compensate for extra hours
worked the scheduling of which shall be subject to your supervisor's
approval. Up to an hour can be taken during the day for breaks.
9. Holidays
10. Your holiday entitlement is 22 working days per year plus the
normal public holidays.
11. The holiday year runs from 1 January to 31 December.
2
<PAGE> 3
12. Subject to the need to ensure the efficient operation of the
Company, holidays may normally be taken at any time with prior
approval from your appropriate Manager.
13. No more than ten working days holidays may be taken at any one
time unless permission is given to you by your appropriate Manager.
14. Staff joining the Company during the year will be entitled to
holidays on a pro rata basis for complete months that will be worked
during that holiday year.
15. When holiday entitlement is not taken during the relevant year,
the balance may be taken the following year, up to 30 March, but not
joined to that year's holiday entitlement to provide an extended
holiday.
16. When staff leave the Company, holiday entitlement will be on a pro
rata basis for complete months worked during the prevailing holiday
year.
17. If actual holiday exceed entitlement at the time of leaving, a
deduction amounting to the unqualified holiday pay will be made from
the final salary.
18. Sickness or Injury.
19. When you are absent from work due to sickness/injury, you or
someone on your behalf should ring the office as soon as possible, to
inform the Company of the reason for absence and in any event no later
than the end of the working day on which absence first occurs. You
will be advised of the administrative procedures necessary to ensure
your eligibility for Sick Pay.
20. In respect of absence lasting 7 or fewer calendar days, you need
not produce a medical certificate unless you are specifically
requested to do so. You must, however, complete the Company's
self-certification form immediately you return to work after such
absence.
21. In respect of absence lasting more than 7 calendar days, you must
on the 8th calendar day of absence provide a medical certificate
stating the reason for absence and thereafter provide a
3
<PAGE> 4
like certificate each week to cover any subsequent period of absence.
22. The Company reserves the right to ask you at any stage of absence
to produce a medical certificate and/or to undergo a medical
examination.
23. You will be paid your normal basic remuneration less the amount of
any Statutory Sick Pay or social security sickness benefit to which
you may be entitled for 14 working days in total in any one sick pay
year which runs from 1 January to 31 December. Any payment of salary
in respect of absence in excess of 14 days is at the discretion of the
Company.
24. Entitlement to payment is subject to notification of absence and
production of self-certification forms or medical certificates as
referred to above.
25. The Company operates the Statutory Sick Pay scheme and you are
required to cooperate in the maintenance of necessary records. For the
purposes of calculating your entitlement to Statutory Sick Pay
"qualifying days" are those days on which you are normally required to
work. Payments made to you by the Company under its sick pay
provisions in satisfaction of any other contractual entitlement will
go towards discharging the Company liability to make payment to you
under the Statutory Sick Pay scheme.
26. The Company will be entitled to terminate your employment by
written notice to you if you are unable or prevented through illness,
injury or other incapacity from carrying out the duties of your
employment with the Company for any period or periods exceeding
sixteen weeks (consecutive or in aggregate) in any consecutive period
of 12 months.
27. Pension Arrangements
The Company does not operate its own Staff Pension Scheme. It administers
personal pension plans for employees but does not make any contribution to
them. A contracting out certificate under the Social Security Pensions Act
1975 is not in force in respect of this employment.
4
<PAGE> 5
28. Grievance Procedure
If you have a grievance relating to your employment, you should discuss
this with your immediate Manager. If you remain dissatisfied, you may take
up your grievance with your Manager's superior, whose decision will be
final.
29. Disciplinary Procedures
30. Whilst it is the policy of the Company to keep its rules to a
minimum, it is necessary to have a disciplinary procedure available
should satisfactory standards of performance not be reached or should
cases of misconduct occur. The disciplinary procedure adopted by the
Company has been designed to:
31. Take disciplinary action in as uniform and consistent a manner as
possible.
32. Take disciplinary action with a view to improving the
performance/behaviour, rather than just punishing the person.
33. Take all relevant circumstances into consideration and act in a
fair and unbiased manner.
34. The Procedure is:
35. In the case of minor Verbal warning by
breaches of discipline or immediate Manager
failure to reach standards
36. If verbal warning has not A written warning by the
brought improvement or a immediate Manager
separate complaint of a
similar nature is made
OR
37. In the case of more serious The member of staff
matters where no previous renders himself/herself
verbal warning has been liable to dismissal by
given the Managing
Director]/Company]
without notice.
5
<PAGE> 6
38. If the same complaints or The member of staff
complaints of a similar renders himself/herself
nature continue after a liable to dismissal by
written warning, or a the [Managing
separate complaint of a Director]/Company]
similar nature is made. without notice.
OR
39. If gross misconduct occurs The member of staff
where no warning has renders himself/herself
been given. liable to dismissal by
the [Managing
Director]/Company]
without notice.
40. For the purposes of this Agreement the following will be treated as gross
misconduct, although the list is not exhaustive: (i) falsification of records
(ii) drunkenness on duty (iii) refusal to obey reasonable instructions (iv)
theft or other criminal offence (v) a serious or persistent breach of the
provisions herein contained or (vi wilful neglect in the discharge of your
duties.
41. Staff have the right to appeal in the same manner as outlined under the
Grievance Procedure.
42. All cases of disciplinary action under these procedures will be recorded and
placed in the Company's records.
43. Notwithstanding anything herein contained, your employment shall be subject
to termination by the Company by summary notice of dismissal if you:
44. become bankrupt or make any composition or deed of arrangement
with your creditors, or
45. are convicted of any offence, other than any offence which in the
opinion of the Board of Directors does not materially affect the business
or goodwill of the Company and the performance of your duties hereunder, or
46. persistently or wilfully neglect or become incapable of
efficiently performing your duties hereunder, or
47. become of unsound mind, or
6
<PAGE> 7
48. refuse to carry out the instructions of your manager provided that
the instructions which you refuse to carry out are lawful and are such as
you may reasonably and properly be expected to perform, or
49. commit any serious breach or repeat or continue (after warning)
any material breach of your obligations hereunder or be guilty of conduct
which in the reasonable opinion of the Board of Directors tends to bring
you or the Company into disrepute, or
50. cease to be a Director of the Company.
And the Company shall not be liable in damages/compensation or otherwise to
you by reason of any such termination for the reasons specified in this
paragraph.
PROVIDED ALWAYS that if any such act of misconduct or breach or
non-observance is capable of being remedied you shall first be offered
in writing a reasonable opportunity to remedy the same prior to
termination as aforesaid and if and when so remedied your employment
hereunder shall continue without interruption.
With the exception of cases entitling the Company to dismiss you
summarily, as stated above, the Company will implement the
Disciplinary Procedures when you contravene any of the Company's
rules, any of the provisions of these Terms and Conditions, you are
guilty of misconduct or you fall short of the performance required of
you.
The Company also reserves the right to suspend an employee without pay
while cases of misconduct are being investigated.
51. Confidentiality
52. You acknowledge that certain information not generally known, and
proprietary to the Company, about the Company or the Company's
products, processes, machines and services, including but not limited
to, information relating to research, development, manufacturing,
engineering and marketing (together "Confidential Information" which
shall include reference to any such Confidential Information the
property of any other member of TAb Inc Group as if reference to the
Company referred to such member of the TAb Inc Group) may be made
available to you during your term of employment with the Company. You
will treat as trade secrets all Confidential Information acquired by
you during the course of your
7
<PAGE> 8
employment with the Company, and will not use any such trade secrets
for your own benefit nor disclose them to any other third party during
the period of your employment with the Company or thereafter, except
as authorised in writing by the Company or as required by law or by
any court of competent jurisdiction.
53. You must not remove any documents, or tangible items which belong
to the Company or which obtain any confidential information from the
Company's premises at any time without proper advance authorisation.
54. You must return to the Company upon request and, in any event,
upon termination of your employment, all documents and tangible items
which belong to the Company or which contain or refer to any
confidential information and which are in your possession or under
your control.
55. You must, if requested by the Company, delete all confidential
information from any re-usable material and destroy all other
documents and tangible items which contain or refer to any
confidential information and which are in your possession or under
your control.
56. Inventions
57. It shall be part of your normal duties at all times to consider in
what manner and by what new methods or devices the products, services,
processes, equipment or systems of the Company might be improved and
promptly to give your immediate manager full details of any invention
or improvement which you may from time to time make or discover in the
course of your duties, and to further the interests of the Company's
undertaking with regard thereto.
58. Any invention developed by you, individually or jointly:
59. during the period of your employment with the Company or
60. which is based (in whole or in part) on Confidential
Information.
shall be promptly and fully disclosed to the Company and, whether
or not so disclosed, shall (subject to any contrary provisions
8
<PAGE> 9
of the Patents Act of 1977 or any other statutes where applicable)
become the property of the Company.
61. The rights of the Company stated above shall apply only to
inventions that
62. relate (a) to the business of the Company or (b) to the
Company's actual or demonstrably anticipated research or
development or
63. result from any work performed by you for the company,
or
64. are developed by using any equipment, supplies,
facilities, personnel or Confidential Information (in whole or in
part).
65. In addition, you will upon request assign all intellectual
property rights of whatever nature and however arising in any such
invention to the Company (without charge to the Company but at the
Company's expense).
66. Except with the prior written approval of the Company, you will
refrain (during the term of your employment with the Company and
thereafter) from submitting for publication or publishing any
information with respect to any invention.
67. Subject as aforesaid, you shall forthwith on request from time to
time both during your employment hereunder and thereafter at the
request and cost of the Company apply for and execute and do all such
documents, acts and things as may in the opinion of the management of
the Company be necessary or conducive to obtain letters patent or
other protection for any such invention or improvement in any part of
the world, and to vest such letters patent or other protection in the
Company or its nominees.
68. You hereby irrevocably authorise the Company for the purposes
aforesaid to make use of your name and to sign and execute any
documents or to do anything on your behalf (or where permissible to
obtain the patent or other protection in its own name or in that of
its nominees). You shall not knowingly do anything to imperil the
validity of any such patent or protection or any application therefor,
but on the contrary shall at the cost and request of the Company
render all reasonable assistance to the Company
9
<PAGE> 10
both in obtaining and in maintaining such patents or other protection.
You shall not either during the continuance of your employment
hereunder or thereafter at any time exploit or assist others to
exploit any such invention or improvement or give any information in
respect thereof except to the Company or as it may direct.
69. You hereby waive all "Moral Rights" as defined in the Copyright,
Designs & Patents Act 1988 in respect of any acts of the Company or
any acts of third parties done with the Company's authority in
relation to any property which is the property of the Company by
virtue of this paragraph 12.
70. Rights and obligations under this paragraph shall continue in
force after termination of your employment in respect of any
inventions or intellectual property made during your employment and
shall be binding upon your personal representatives.
71. If the Company applies for a patent on an invention made by you as
described in the preceding paragraph, you will be eligible for a
(pound)500 incentive bonus, the granting of which will be at
management's discretion.
72. Non-Solicitation and Non-Competition
73. You hereby covenant with the Company that you will not (without
the prior consent of the Company in writing under the hand of a
Director) within one year after the termination (howsoever caused or
arising) of your Employment in connection with the carrying on of any
business similar to the business of the Company as carried on during
the period of twelve months prior to the date on which such
termination of your employment took effect on your own behalf or on
behalf of any person, firm or company and whether directly or
indirectly:
74. seek to procure orders from or to do business with any
person, firm or company who has at any time during the twelve
months immediately preceding such termination done business with
the Company and with whom in the course of your employment you
shall have had dealings; or
75. offer employment to or procure employment for any person
who has at any time during the twelve months immediately
preceding such termination been employed by
10
<PAGE> 11
the Company or any Member of the TAb Inc Group (whether or not
such person would commit any breach of his contract of employment
with the Company or such Member of the TAb Inc Group by reason of
his leaving service)
Provided always that nothing contained in this paragraph
13.1 shall prohibit the seeking or procuring of orders or
the doing of business not relating or similar to the
business or businesses aforesaid or any of them
76. You hereby further covenant with the Company in identical terms to
paragraph 13.1 hereof save that the reference to a client or customer
shall refer only to a person who is or was during the period specified
therein a client or customer of any other Member of the TAb Inc Group
and with whom in the course of your employment you shall have had
dealings.
77. You hereby covenant with the Company that you will not in the
Restricted Area within one year after termination of your employment
(save where such termination shall be by the Company in breach of
contract or in circumstances constituting constructive dismissal in
breach of contract by the Company of you) without such consent as is
specified in paragraph 13.1 hereof either alone or jointly with or as
manager or agent consultant or employee for any person firm or company
and whether directly or indirectly carry on or be engaged in any
business similar to the business or businesses carried on by the
Company (or (as a separate and independent covenant) any other Member
of the TAb Inc Group to whom you have provided services hereunder at
any time within the period of twelve months prior to such date of
termination) at the date of termination of the employment.
78. The "Restricted Area" means the area described within a radius of
25 miles from the location of the Company's facility described in
paragraph 4.
79. The restrictions contained in subparagraphs 13.1 to 13.4 are
considered reasonable by the parties but in the event that any such
restriction shall be found to be void but would be valid if some part
thereof were deleted or the period or an area of application reduced
such restriction shall apply with such modifications as may be
necessary to make it valid and effective.
11
<PAGE> 12
80. Future Employer
The Company may notify any future or prospective future employer of yours
as to the provisions of these terms and conditions and as to the Company's
intention to enforce its rights hereunder.
81. Termination of Employment
Your employment is terminable by not less than twelve months prior written
notice given by the Company to you or given by you to the Company.
The Company reserves the right to make payments of salary in lieu of
notice.
82. Sole Agreement
This Agreement supersedes all prior agreements between the Company and you
with respect to the matters addressed herein and can only be modified by a
written amendment.
83. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of England and Wales.
Please acknowledge receipt of this statement by signing the acknowledgement on
the duplicate of this letter and returning it to me.
Yours sincerely,
/s/ T. Chard
Director - for and on behalf of the Company
I, John Landon, acknowledge that I have received a statement of the particulars
of my employment as required by the Employment Protection (Consolidation) Act
1978 Section 1 and confirm my agreement that these constitute my contract of
employment with TAb Wales Limited.
Dated: 5th July 1996
Signed: /s/ J. Landon
--------------------------------------
John Landon
12
<PAGE> 1
EXHIBIT 10.21
From: TAb London Limited
To: Professor Tim Chard
Dear Professor Chard
This letter sets out particulars of your employment with TAb London Limited
(the "Company") which are issued in accordance with Section 1 of the Employment
Protection (Consolidation) Act of 1978 as amended.
1. Commencement of Employment
Your employment commenced on 1st April 1989 and no employment with a
previous employer counts as part of a period of continuous employment.
2. Remuneration
Your remuneration is L.25,700 per annum, payable monthly in arrears by
direct transfer to your bank, not later than the last day of the month.
Your salary will be reviewed in or about January of each year based on
performance as judged in part by your supervisor.
3. Job Title
4. You will be employed as a Director with particular responsibility
for the administration and patient affairs of the research and
development work of the TAb Inc Group (as defined below). In such
capacity you shall give to the Company and to the TAb Inc Group the
full benefit of your knowledge, expertise, technical skill and
ingenuity at all times. The Company reserves the right to employ you
in any reasonable capacity within your place of employment and you
shall undertake such duties in relation to the business of the Company
as the management of the Company shall from time to time reasonably
assign to or vest in you (being duties reasonably appropriate to your
seniority and expertise). The Company may require you to undertake
additional or other duties at any time to meet the needs of the
Company's business.
5. You may not without prior written consent of the Company
(which will not be unreasonably withheld) engage, whether directly or
indirectly, in any business or employment which is similar or in any
way connected to or competitive with the business of the Company in
which you work or which could or might reasonably be
<PAGE> 2
considered by others to impair your ability to act at all times in the
best interest of the Company.
6. You represent to the Company that you have the requisite
skill, knowledge and experience of the work for which you have been
employed to carry out to enable you to perform your duties under your
employment with the Company and you represent that by virtue of
entering into employment with the Company you will not be in breach of
any express or implied terms of any contract with, or of any other
obligation to, any third party binding upon you.
7. Reporting and location
You will report to the President of Therapeutic Antibodies Inc, the
Company's parent company. Your usual place of work is at the Company's
facility in London England but you may also be required to work at any
other locations of the Company or any other member of the TAb Inc Group
(namely Therapeutic Antibodies Inc and any Subsidiary Company (within the
meaning of Section 736 of the Companies Act 1985) of Therapeutic Antibodies
Inc) anywhere in the World for temporary periods up to three month(s).
8. Hours of Work
Your normal working week will consist of the provision to us of your
services for an average period of nine and a half hours during each week.
Clearly in some weeks you will be providing your services for periods for
in excess of that, and in other weeks for periods of less than nine and a
half hours in aggregate. The timing of provision by you of your services
will be agreed from time to time between the Board of Directors and you.
9. Holidays
10. Your holiday entitlement is 20 working days per year plus the normal
public holidays.
11. The holiday year runs from 1 January to 31 December.
12. Subject to the need to ensure the efficient operation of the Company,
holidays may normally be taken at any time with prior approval from your
appropriate Manager.
2
<PAGE> 3
13. No more than ten working days holidays may be taken at any one time
unless permission is given to you by your appropriate Manager.
14. Staff joining the Company during the year will be entitled to holidays
on a pro rata basis for complete months that will be worked during that
holiday year.
15. When holiday entitlement is not taken during the relevant year, the
balance may be taken the following year, up to 30 March, but not joined to
that year's holiday entitlement to provide an extended holiday.
16. When staff leave the Company, holiday entitlement will be on a pro rata
basis for complete months worked during the prevailing holiday year.
17. If actual holiday exceed entitlement at the time of leaving, a
deduction amounting to the unqualified holiday pay will be made from the
final salary.
18. Sickness or Injury.
19. When you are absent from work due to sickness/injury, you or someone on
your behalf should ring the office as soon as possible, to inform the
Company of the reason for absence and in any event no later than the end of
the working day on which absence first occurs. You will be advised of the
administrative procedures necessary to ensure your eligibility for Sick
Pay.
20. In respect of absence lasting 7 or fewer calendar days, you need not
produce a medical certificate unless you are specifically requested to do
so. You must, however, complete the Company's self-certification form
immediately you return to work after such absence.
21. In respect of absence lasting more than 7 calendar days, you must on
the 8th calendar day of absence provide a medical certificate stating the
reason for absence and thereafter provide a like certificate each week to
cover any subsequent period of absence.
3
<PAGE> 4
22. The Company reserves the right to ask you at any stage of absence to
produce a medical certificate and/or to undergo a medical examination.
23. You will be paid your normal basic remuneration less the amount of any
Statutory Sick Pay or social security sickness benefit to which you may be
entitled for 14 working days in total in any one sick pay year which runs
from 1 January to 31 December. Any payment of salary in respect of absence
in excess of 14 days is at the discretion of the Company.
24. Entitlement to payment is subject to notification of absence and
production of self-certification forms or medical certificates as referred
to above.
25. The Company operates the Statutory Sick Pay scheme and you are required
to cooperate in the maintenance of necessary records. For the purposes of
calculating your entitlement to Statutory Sick Pay "qualifying days" are
those days on which you are normally required to work. Payments made to you
by the Company under its sick pay provisions in satisfaction of any other
contractual entitlement will go towards discharging the Company liability
to make payment to you under the Statutory Sick Pay scheme.
26. The Company will be entitled to terminate your employment by written
notice to you if you are unable or prevented through illness, injury or
other incapacity from carrying out the duties of your employment with the
Company for any period or periods exceeding sixteen weeks (consecutive or
in aggregate) in any consecutive period of 12 months.
27. Pension Arrangements
The Company does not operate its own Staff Pension Scheme. It administers
personal pension plans for employees but does not make any contribution to
them. A contracting out certificate under the Social Security Pensions Act
1975 is not in force in respect of this employment.
28. Grievance Procedure
If you have a grievance relating to your employment, you should discuss
this with your immediate Manager. If you remain dissatisfied, you may
4
<PAGE> 5
take up your grievance with your Manager's superior, whose decision will be
final.
29. Disciplinary Procedures
30. Whilst it is the policy of the Company to keep its rules to a
minimum, it is necessary to have a disciplinary procedure available
should satisfactory standards of performance not be reached or should
cases of misconduct occur. The disciplinary procedure adopted by the
Company has been designed to:
31. Take disciplinary action in as uniform and consistent a manner as
possible.
32. Take disciplinary action with a view to improving the
performance/behaviour, rather than just punishing the person.
33. Take all relevant circumstances into consideration and act in a
fair and unbiased manner.
34. The Procedure is:
35. In the case of minor Verbal warning by
breaches of discipline or immediate Manager
failure to reach standards
36. If verbal warning has not A written warning by the
brought improvement or a immediate Manager
separate complaint of a
similar nature is made
OR
37. In the case of more serious The member of staff
matters where no previous renders himself/herself
verbal warning has been liable to dismissal by
given the Managing
Director]/Company]
without notice.
38. If the same complaints or The member of staff
complaints of a similar renders himself/herself
nature continue after a liable to dismissal by
written warning, or a the [Managing
separate complaint of a Director]/Company]
similar nature is made. without notice.
5
<PAGE> 6
OR
39. If gross misconduct occurs The member of staff
where no warning has renders himself/herself
been given. liable to dismissal by
the [Managing
Director]/Company]
without notice.
40. For the purposes of this Agreement the following will be treated as gross
misconduct, although the list is not exhaustive: (i) falsification of records
(ii) drunkenness on duty (iii) refusal to obey reasonable instructions (iv)
theft or other criminal offence (v) a serious or persistent breach of the
provisions herein contained or (vi) wilful neglect in the discharge of your
duties.
41. Staff have the right to appeal in the same manner as outlined under the
Grievance Procedure.
42. All cases of disciplinary action under these procedures will be recorded and
placed in the Company's records.
43. Notwithstanding anything herein contained, your employment shall be subject
to termination by the Company by summary notice of dismissal if you:
44. become bankrupt or make any composition or deed of arrangement
with your creditors, or
45. are convicted of any offence, other than any offence which in the
opinion of the Board of Directors does not materially affect the business
or goodwill of the Company and the performance of your duties hereunder, or
46. persistently or wilfully neglect or become incapable of
efficiently performing your duties hereunder, or
47. become of unsound mind, or
48. refuse to carry out the instructions of your manager provided that
the instructions which you refuse to carry out are lawful and are such as
you may reasonably and properly be expected to perform, or
49. commit any serious breach or repeat or continue (after warning)
any material breach of your obligations hereunder or be guilty of
6
<PAGE> 7
conduct which in the reasonable opinion of the Board of Directors tends to
bring you or the Company into disrepute, or
50. cease to be a Director of the Company.
And the Company shall not be liable in damages/compensation or otherwise to
you by reason of any such termination for the reasons specified in this
paragraph.
PROVIDED ALWAYS that if any such act of misconduct or breach or
non-observance is capable of being remedied you shall first be offered
in writing a reasonable opportunity to remedy the same prior to
termination as aforesaid and if and when so remedied your employment
hereunder shall continue without interruption.
With the exception of cases entitling the Company to dismiss you
summarily, as stated above, the Company will implement the
Disciplinary Procedures when you contravene any of the Company's
rules, any of the provisions of these Terms and Conditions, you are
guilty of misconduct or you fall short of the performance required of
you.
The Company also reserves the right to suspend an employee without pay
while cases of misconduct are being investigated.
51. Confidentiality
52. You acknowledge that certain information not generally known, and
proprietary to the Company, about the Company or the Company's
products, processes, machines and services, including but not limited
to, information relating to research, development, manufacturing,
engineering and marketing (together "Confidential Information" which
shall include reference to any such Confidential Information the
property of any other member of TAb Inc Group as if reference to the
Company referred to such member of the TAb Inc Group) may be made
available to you during your term of employment with the Company. You
will treat as trade secrets all Confidential Information acquired by
you during the course of your employment with the Company, and will
not use any such trade secrets for your own benefit nor disclose them
to any other third party during the period of your employment with the
Company or thereafter, except as authorised in writing by the Company
or as required by law or by any court of competent jurisdiction.
7
<PAGE> 8
53. You must not remove any documents, or tangible items which belong
to the Company or which obtain any confidential information from the
Company's premises at any time without proper advance authorisation.
54. You must return to the Company upon request and, in any event,
upon termination of your employment, all documents and tangible items
which belong to the Company or which contain or refer to any
confidential information and which are in your possession or under
your control.
55. You must, if requested by the Company, delete all confidential
information from any re-usable material and destroy all other
documents and tangible items which contain or refer to any
confidential information and which are in your possession or under
your control.
56. Inventions
57. It shall be part of your normal duties at all times to consider in
what manner and by what new methods or devices the products, services,
processes, equipment or systems of the Company might be improved and
promptly to give your immediate manager full details of any invention
or improvement which you may from time to time make or discover in the
course of your duties, and to further the interests of the Company's
undertaking with regard thereto.
58. Any invention developed by you, individually or jointly:
59. during the period of your employment with the Company or
60. which is based (in whole or in part) on Confidential
Information.
shall be promptly and fully disclosed to the Company and, whether
or not so disclosed, shall (subject to any contrary provisions of the
Patents Act of 1977 or any other statutes where applicable) become the
property of the Company.
61. The rights of the Company stated above shall apply only to
inventions that
8
<PAGE> 9
62. relate (a) to the business of the Company or (b) to the
Company's actual or demonstrably anticipated research or
development or
63. result from any work performed by you for the company,
or
64. are developed by using any equipment, supplies,
facilities, personnel or Confidential Information (in whole or in
part).
65. In addition, you will upon request assign all intellectual
property rights of whatever nature and however arising in any such
invention to the Company (without charge to the Company but at the
Company's expense).
66. Except with the prior written approval of the Company, you will
refrain (during the term of your employment with the Company and
thereafter) from submitting for publication or publishing any
information with respect to any invention.
67. Subject as aforesaid, you shall forthwith on request from time to
time both during your employment hereunder and thereafter at the
request and cost of the Company apply for and execute and do all such
documents, acts and things as may in the opinion of the management of
the Company be necessary or conducive to obtain letters patent or
other protection for any such invention or improvement in any part of
the world, and to vest such letters patent or other protection in the
Company or its nominees.
68. You hereby irrevocably authorise the Company for the purposes
aforesaid to make use of your name and to sign and execute any
documents or to do anything on your behalf (or where permissible to
obtain the patent or other protection in its own name or in that of
its nominees). You shall not knowingly do anything to imperil the
validity of any such patent or protection or any application therefor,
but on the contrary shall at the cost and request of the Company
render all reasonable assistance to the Company both in obtaining and
in maintaining such patents or other protection. You shall not either
during the continuance of your employment hereunder or thereafter at
any time exploit or assist others to exploit any such invention or
improvement or give any information in respect thereof except to the
Company or as it may direct.
9
<PAGE> 10
69. You hereby waive all "Moral Rights" as defined in the Copyright,
Designs & Patents Act 1988 in respect of any acts of the Company or
any acts of third parties done with the Company's authority in
relation to any property which is the property of the Company by
virtue of this paragraph 12.
70. Rights and obligations under this paragraph shall continue in
force after termination of your employment in respect of any
inventions or intellectual property made during your employment and
shall be binding upon your personal representatives.
71. If the Company applies for a patent on an invention made by you as
described in the preceding paragraph, you will be eligible for a
(pound)500 incentive bonus, the granting of which will be at
management's discretion.
72. Non-Solicitation and Non-Competition
73. You hereby covenant with the Company that you will not (without
the prior consent of the Company in writing under the hand of a
Director) within one year after the termination (howsoever caused or
arising) of your Employment in connection with the carrying on of any
business similar to the business of the Company as carried on during
the period of twelve months prior to the date on which such
termination of your employment took effect on your own behalf or on
behalf of any person, firm or company and whether directly or
indirectly:
74. seek to procure orders from or to do business with any
person, firm or company who has at any time during the twelve
months immediately preceding such termination done business with
the Company and with whom in the course of your employment you
shall have had dealings; or
75. offer employment to or procure employment for any person
who has at any time during the twelve months immediately
preceding such termination been employed by the Company or any
Member of the TAb Inc Group (whether or not such person would
commit any breach of his contract of employment with the Company
or such Member of the TAb Inc Group by reason of his leaving
service)
Provided always that nothing contained in this paragraph
13.1 shall prohibit the seeking or procuring
10
<PAGE> 11
of orders or the doing of business not relating or similar
to the business or businesses aforesaid or any of them
76. You hereby further covenant with the Company in identical terms to
paragraph 13.1 hereof save that the reference to a client or customer
shall refer only to a person who is or was during the period specified
therein a client or customer of any other Member of the TAb Inc Group
and with whom in the course of your employment you shall have had
dealings.
77. You hereby covenant with the Company that you will not in the
Restricted Area within one year after termination of your employment
(save where such termination shall be by the Company in breach of
contract or in circumstances constituting constructive dismissal in
breach of contract by the Company of you) without such consent as is
specified in paragraph 13.1 hereof either alone or jointly with or as
manager or agent consultant or employee for any person firm or company
and whether directly or indirectly carry on or be engaged in any
business similar to the business or businesses carried on by the
Company (or (as a separate and independent covenant) any other Member
of the TAb Inc Group to whom you have provided services hereunder at
any time within the period of twelve months prior to such date of
termination) at the date of termination of the employment.
78. The "Restricted Area" means the area described within a radius of
25 miles from the location of the Company's facility described in
paragraph 4.
79. The restrictions contained in subparagraphs 13.1 to 13.4 are
considered reasonable by the parties but in the event that any such
restriction shall be found to be void but would be valid if some part
thereof were deleted or the period or an area of application reduced
such restriction shall apply with such modifications as may be
necessary to make it valid and effective.
80. Future Employer
The Company may notify any future or prospective future employer of yours
as to the provisions of these terms and conditions and as to the Company's
intention to enforce its rights hereunder.
11
<PAGE> 12
81. Termination of Employment
Your employment is terminable by not less than twelve months prior written
notice given by the Company to you or given by you to the Company.
82. Sole Agreement
This Agreement supersedes all prior agreements between the Company and you
with respect to the matters addressed herein and can only be modified by a
written amendment.
83. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of England and Wales.
Please acknowledge receipt of this statement by signing the acknowledgement on
the duplicate of this letter and returning it to me.
Yours sincerely,
Director - for and on behalf of the Company
12
<PAGE> 13
16. Sole Agreement
This Agreement supersedes all prior agreements between the Company and you
with respect to the matters addressed herein and can only be modified by a
written amendment.
17. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of England and Wales.
Please acknowledge receipt of this statement by signing the acknowledgement on
the duplicate of this letter and returning it to me.
Yours sincerely,
Director - for and on behalf of the Company
I Timothy Chard, acknowledge that I have received a statement of the particulars
of my employment as required by the Employment Protection (Consolidation) Act
1978 Section 1 and confirm my agreement that these constitute my contract of
employment with TAb London Limited.
Dated: 5.7 1996
Signed: /s/ T. Chard
-----------------------------------
T. Chard
13
<PAGE> 1
EXHIBIT 11.1
THERAPEUTIC ANTIBODIES INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
For the Cumulative
Development Stage
For the Years Ended December 31, From August 10, 1984
------------------------------------------- (Inception)Through
1996 1995 1994 December 31, 1996
------------ ----------- ----------- -----------------
<S> <C> <C> <C> <C>
ACTUAL
Weighted average shares outstanding 18,821,524 15,938,219 14,377,456 8,894,667
============ =========== =========== ============
Net loss $(12,746,117) $(9,100,038) $(6,717,753) $(42,564,665)
============ =========== =========== ============
Net loss per share $ (0.68) $ (0.57) $ (0.47) $ (4.79)
============ =========== =========== ============
PRIMARY
Weighted average shares outstanding 18,821,524 15,938,219 14,377,456 8,894,667
Dilutive effect of stock options and warrants 1,463,483 1,775,392 1,674,178 1,463,483
------------ ----------- ----------- ------------
20,285,007 17,713,611 16,051,634 10,358,150
============ =========== =========== ============
Net loss $(12,746,117) $(9,100,038) $(6,717,753) $(42,564,665)
============ =========== =========== ============
Net loss per share $ (0.63) $ (0.51) $ (0.42) $ (4.11)
============ =========== =========== ============
FULLY DILUTED
Weighted average shares outstanding 18,821,524 15,938,219 14,377,456 8,894,667
Dilutive effect of stock options and warrants 1,463,483 1,974,990 1,674,178 1,463,483
------------ ----------- ----------- ------------
20,285,007 17,913,209 16,051,634 10,358,150
============ =========== =========== ============
Net loss $(12,746,117) $(9,100,038) $(6,717,753) $(42,564,665)
============ =========== =========== ============
Net loss per share $ (0.63) $ (0.51) $ (0.42) $ (4.11)
============ =========== =========== ============
</TABLE>
The dilutive effect of stock options and warrants is determined under the
treasury stock method utilizing fair values per share of $6.51 in 1996 for
primary and fully diluted earnings per share; $4.75 for primary earnings per
share and $5.50 for fully diluted earnings per share in 1995; and $4.00 for
both primary and fully diluted earnings per share in 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 20,502,536
<SECURITIES> 2,002,266
<RECEIVABLES> 101,281
<ALLOWANCES> 0
<INVENTORY> 400,167
<CURRENT-ASSETS> 23,731,848
<PP&E> 16,139,606
<DEPRECIATION> 3,456,926
<TOTAL-ASSETS> 37,179,990
<CURRENT-LIABILITIES> 2,544,285
<BONDS> 8,592,755
0
0
<COMMON> 22,354
<OTHER-SE> 25,193,176
<TOTAL-LIABILITY-AND-EQUITY> 37,179,990
<SALES> 600,607
<TOTAL-REVENUES> 3,268,368
<CGS> 334,989
<TOTAL-COSTS> 696,251
<OTHER-EXPENSES> 15,318,234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,201,335
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,746,117
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,746,117
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
