-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CV9K/r9oqD/6Rr9eIDtfMyR6K19XXOUaXonql0+DIjJMAWskDnn9Y/EVOg6m1rxz gmt7NJ6p5F5U2inKEbpXqQ== 0000950123-04-009365.txt : 20040806 0000950123-04-009365.hdr.sgml : 20040806 20040806145247 ACCESSION NUMBER: 0000950123-04-009365 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20040806 GROUP MEMBERS: NOVARTIS AG GROUP MEMBERS: NOVARTIS PHARMA AG SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: IDENIX PHARMACEUTICALS INC CENTRAL INDEX KEY: 0001093649 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 450478605 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-79969 FILM NUMBER: 04957627 BUSINESS ADDRESS: STREET 1: 60 HAMPSHIRE STREET STREET 2: . CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: (617) 250-3100 MAIL ADDRESS: STREET 1: 60 HAMPSHIRE STREET CITY: CAMBRIDGE STATE: MA ZIP: 02139 FORMER COMPANY: FORMER CONFORMED NAME: NOVIRIO PHARMACEUTICALS LTD DATE OF NAME CHANGE: 19990820 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Novartis Bioventures Ltd CENTRAL INDEX KEY: 0001297709 IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O NOVARTIS INTERNATIONAL AG STREET 2: WSJ-200.220 CITY: CH-4002 BASEL STATE: V8 ZIP: 0000000000 BUSINESS PHONE: 41-61-324-6210 MAIL ADDRESS: STREET 1: C/O NOVARTIS INTERNATIONAL AG STREET 2: WSJ-200.220 CITY: CH-4002 BASEL STATE: V8 ZIP: 0000000000 SC 13D 1 y99929sc13d.txt SCHEDULE 13D UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___)* Idenix Pharmaceuticals, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock - -------------------------------------------------------------------------------- (Title of Class of Securities) 45166R 20 4 - -------------------------------------------------------------------------------- (CUSIP Number) Robert E. Pelzer, Esq. Morton A. Pierce, Esq. Novartis Pharma AG Dewey Ballantine LLP Lichtstrasse 35 1301 Avenue of the Americas CH-4002, Basel Switzerland New York, New York 10019 41-61-324-1111 (212) 259-8000 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) - -------------------------------------------------------------------------------- July 27, 2004 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. The information required on this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). Page 1 of 25 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (entities only)* NOVARTIS AG - --------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - --------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - --------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION SWITZERLAND - --------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ----------------------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 27,356,739 REPORTING ----------------------------------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 27,356,739 - --------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 27,356,739 - -------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - --------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 57.1% - --------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS Page 2 of 25 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (entities only)* NOVARTIS PHARMA AG - --------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - --------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - --------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION SWITZERLAND - --------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ----------------------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 26,169,646 REPORTING ----------------------------------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 26,169,646 - --------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 26,169,646 - -------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - --------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 54.6% - --------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS Page 3 of 25 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON (entities only)* NOVARTIS BIOVENTURES LTD. - --------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - --------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - --------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - --------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION BERMUDA - --------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 0 SHARES ----------------------------------------------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 1,187,093 REPORTING ----------------------------------------------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 0 ----------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,187,093 - --------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,187,093 - -------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - --------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.5% - --------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS Page 4 of 25 ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D relates to Common Stock (the "Common Stock"), par value $0.001 per share of Idenix Pharmaceuticals, Inc., a Delaware corporation (the "Company"). The address of the Company's principal executive offices is 60 Hampshire Street, Cambridge, Massachusetts 02139. ITEM 2. IDENTITY AND BACKGROUND (a) - (c) and (f) Novartis AG ("Novartis") is a corporation organized under the laws of Switzerland and is the publicly owned parent of a multinational group of companies specializing in the research, development, manufacture, sale and distribution of innovative healthcare products. Novartis is a holding company whose principal businesses, which are conducted by its various operating subsidiaries, are pharmaceuticals and consumer health, which includes generics, over-the-counter self-medication, animal health, medical nutrition, infant and baby foods and products, and eye care products. Novartis's principal office is located at Lichtstrasse 35, 4002, Basel, Switzerland. Novartis Pharma AG ("Novartis Pharma") is a corporation organized under the laws of Switzerland and is a direct wholly-owned subsidiary of Novartis. Novartis Pharma's principal business is the research, development, manufacture and marketing of prescription drugs used to treat a number of diseases and conditions. Novartis Pharma's principal office is located at Lichtstrasse 35, 4002, Basel, Switzerland. Novartis BioVentures Ltd. ("Novartis BioVentures") is a corporation organized under the laws of Bermuda and is an indirect wholly-owned subsidiary of Novartis. Novartis BioVentures is a venture capital fund whose objective is to generate long-term capital gains for both entrepreneurs and investors. Novartis BioVentures's principal business is investing in product- and platform-focused biotech, pharmaceutical and healthcare companies at all stages with an emphasis on the United States. Novartis BioVentures's principal office is located at c/o Appleby Corporate Services, Canon's Court, 22 Victoria Street, Hamilton HM A2, Bermuda. Novartis, Novartis Pharma and Novartis BioVentures are collectively referred to herein as the "Reporting Persons." The name, business address, present principal occupation or employment and citizenship of the executive officers and members of the Board of Directors of each of the Reporting Persons is set forth on Schedule I hereto and is incorporated herein by reference. (d) and (e) Neither the Reporting Persons nor, to the best knowledge of each of them, any of the persons listed on Schedule I hereto with respect to each such Reporting Person during the last five years, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Page 5 of 25 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION On July 27, 2004 Novartis Pharma acquired from the Company 5,400,000 shares of Common Stock for $14.00 per share or an aggregate of $75,6000,000.00 pursuant to a stock purchase agreement by and between Novartis Pharma and the Company dated July 21, 2004 (the "Concurrent Private Placement Stock Purchase Agreement") and in a concurrent transaction acquired from the Company 1,100,000 shares of Common Stock for $0.001 per share or an aggregate of $1,100.00 and its agreement to terminate certain stock subscription rights, pursuant to a stock purchase agreement by and between Novartis Pharma and the Company dated July 21, 2004 (the "Par Value Stock Purchase Agreement"). The subscription rights, which were terminated, provided for Novartis Pharma to maintain its pro rata equity ownership in connection with the Company's issuance of up to 1,399,106 shares of Common Stock pursuant to the Company's 1998 equity incentive plan. The description of each of the Concurrent Private Placement Stock Purchase Agreement and the Par Value Stock Purchase Agreement is qualified by reference to the full text thereof, which is included as an exhibit hereto and incorporated herein by reference. Pursuant to a stock purchase agreement (the "Stock Purchase Agreement") dated March 21, 2003, by and among Novartis Pharma, the Company and certain stockholders identified therein, Novartis Pharma purchased 19,669,538 shares of Common Stock on May 8, 2003 from certain of the Company's stockholders for $255 million in cash, with an additional aggregate amount of up to $357 million contingently payable to these stockholders if the Company achieves predetermined development milestones with respect to a hepatitis C virus ("HCV") drug candidate. The description of the Stock Purchase Agreement is qualified by reference to the full text thereof, which is included as an exhibit hereto and incorporated herein by reference. On May 15, 2004, the Company issued an aggregate of 50 shares of common stock at a per share purchase price of $0.001 to Novartis Pharma pursuant to stock subscription rights of Novartis Pharma. On July 13, 2004, the Company issued an aggregate of 58 shares of common stock at a per share purchase price of $0.001 to Novartis Pharma pursuant to stock subscription rights of Novartis Pharma. The source of funds for each of these acquisitions was Novartis Pharma's working capital. On April 24, 2001, Novartis BioVentures acquired from the Company 1,010,101 shares of Series C Convertible Preferred Stock and warrants to purchase 606,061 shares of Common Stock for an aggregate purchase price of $5,000,000.00. On May 8, 2003 each outstanding share of Series C Convertible Preferred Stock was converted into one share of Common Stock and all outstanding warrants to purchase Common Stock were terminated. Upon conversion of the Series C Convertible Preferred Stock the holders of such stock received from the Company an annual 8% cumulative dividend, compounded quarterly, which dividend was paid in shares of Common Stock. Novartis BioVentures received a dividend of 176,992 shares. The source of funds for this acquisition was Novartis BioVentures's working capital. Page 6 of 25 ITEM 4. PURPOSE OF TRANSACTION The purpose of the reported transactions by Novartis Pharma was for Novartis Pharma to acquire and retain a majority interest in the Company and to acquire and retain certain rights relating to the broad collaborative relationship between the Novartis Pharma and the Company, including Novartis Pharma's rights to representation on the Company's board of directors and to influence the business of the Company pursuant to the terms of a stockholders agreement (the "Stockholders Agreement"), which was amended and restated on July 27, 2004 between the Company, Novartis Pharma and certain other stockholders identified therein and a letter agreement (the "Letter Agreement") dated March 21, 2003 between Novartis Pharma and the Company. The description of each of the Stockholders Agreement and Letter Agreement is qualified by reference to the full text thereof, which is included as an exhibit hereto and incorporated herein by reference. Under the Stockholders Agreement, the Letter Agreement and the Development Agreement (as defined below) and as used herein, "Voting Stock" means the Company's securities entitled to vote in the election of directors, but does not include (a) Common Stock issued in connection with the Company's acquisition of all of the capital stock or all or substantially all of the assets of another entity; and (b) shares of Common Stock issued upon exercise of stock options or upon grants of restricted stock awards or other stock-based awards pursuant to the Company's compensation and equity incentive plans. Notwithstanding the foregoing, Voting Stock will include up to 1,399,106 shares that were reserved as of May 8, 2003 under the Company's option pool. The terms of the collaboration between Novartis Pharma and the Company are set forth in a Development, License and Commercialization Agreement dated as of May 8, 2003 and amended as of April 30, 2004, by and among the Company, Idenix (Cayman) Limited and Novartis Pharma (the "Development Agreement"). Under the Development Agreement, Novartis Pharma obtained, among other things, exclusive options to obtain rights to NM 283, the initial drug candidate being developed by the Company for the treatment of HCV infection, and certain other drug candidates. The terms of these options, including license fees, milestone payments and payments in reimbursement for development expenses, vary according to the disease which the drug candidate treats, the stage of development of the drug candidate and Novartis Pharma's ownership interest in the Company. The description of the Development Agreement is qualified by reference to the full text thereof, which is included as an exhibit hereto and incorporated herein by reference. Novartis Pharma has the following rights pursuant to the terms of the Stockholders Agreement: Stock Purchase Rights Novartis Pharma has the right to purchase, at par value of $0.001 per share, such number of shares of Common Stock required to maintain its percentage ownership of the Company's Voting Stock if the Company issues shares of Common Stock in connection with the acquisition or in-licensing of technology through the issuance of up to 5% of the Company's stock in any 24-month period. This purchase right remains in effect until the earlier of (i) the date that Novartis Pharma and its affiliates own less than 19.4% of the Company's Voting Stock; or (ii) Page 7 of 25 the date that Novartis Pharma becomes obligated under the Stock Purchase Agreement to make the additional contingent payments of $357 million to the stockholders party to that agreement. In addition to the right to purchase shares of Common Stock at par value as described above, Novartis Pharma has the right, subject to limited exceptions noted below, to purchase a pro rata portion of shares of capital stock issued by the Company. The price that Novartis Pharma will pay for these securities is the price at which such securities are offered to third parties. Novartis Pharma's right to purchase a pro rata portion would not include: (i) securities issued in connection with any stock split, reverse stock split, stock dividend or recapitalization that the Company undertakes that affects all holders of the Company's Common Stock proportionately; (ii) shares that Novartis Pharma has the right to purchase at par value, as described above; (iii) up to 1,976,588 shares of Common Stock issued upon exercise of stock options outstanding as of May 8, 2003; (iv) up to 1,399,106 shares of Common Stock issuable upon exercise of stock options and other awards granted pursuant to the Company's 1998 equity incentive plan; or (v) securities issued in connection with the Company's acquisition of all the capital stock or all or substantially all of the assets of another entity. Novartis Pharma's right to purchase shares includes a right to purchase securities that are convertible into, or exchangeable for, the Company's Common Stock, provided that Novartis Pharma's right to purchase any stock options or other convertible securities issued to any of the Company's directors, officers, employees or consultants pursuant to any stock compensation or equity incentive plan will not be exercisable until the equity security into which it is exercisable has been issued. In connection with its stock purchase rights, Novartis Pharma has the right to receive a report from the Company within ten days after the end of each calendar quarter indicating the number of securities issued by the Company during the calendar quarter in connection with the exercise, conversion or exchange of securities exercisable for, convertible into or exchangeable for Common Stock issued to any of the Company's directors, officers, employees, or consultants pursuant to any stock compensation or equity incentive plan. Registration Rights Beginning January 18, 2005, subject to certain limitations, Novartis Pharma and certain other holders of Common Stock, collectively referred to as the preference holders, may, in each case acting by majority vote and subject to specified limitations, demand that the Company register all or a portion of their Common Stock, including any shares acquired pursuant to their rights under the Stockholders Agreement, for sale under the Securities Act, so long as the aggregate value of the Common Stock so requested to be registered is equal to or greater than $10,000,000. Subject to several exceptions, both Novartis Pharma and the preference holders have the right to demand that the Company file up to three registrations on their behalf. Once the Company is Page 8 of 25 entitled to register the Common Stock on Form S-3, Novartis Pharma and the preference holders may, subject to certain exceptions, including a requirement that the aggregate value of the Common Stock so requested to be registered is equal to or greater than $5,000,000, make unlimited demands for registration of their securities. Novartis Pharma's right to demand or include shares in a registration is subject to the right of the underwriters to limit the number of shares included in the offering. The Company will pay all fees, costs and expenses of any demand registrations and registrations on Form S-3, and the holders of the securities being registered will pay all selling expenses. Novartis Pharma's registration rights terminate upon the later to occur of May 8, 2013 and such time as Novartis Pharma ceases to be an affiliate of the Company. If the Company registers any shares of Common Stock, either for its own account or for the account of other security holders, Novaritis Pharma will be entitled to notice of the registration and to include all or a portion of its Common Stock in the registration. Board of Directors The Company must use its reasonable best efforts to nominate for election as a director at least two designees of Novartis Pharma for so long as Novartis Pharma and its affiliates own at least 35% of the Company's Voting Stock and at least one designee of Novartis Pharma for so long as Novartis Pharma and its affiliates own at least 19.4% of the Company's Voting Stock. In addition, the Stockholders' Agreement further provides that for so long as any board designee of Novartis Pharma continues to serve on the Company's board of directors, a Novartis Pharma director designee is entitled to be a member of each committee of the Company's board of directors. If such membership is barred by applicable law, rule or regulation, Novartis Pharma shall be entitled to designate one non-voting observer to any such committee. Approval Rights As long as Novartis Pharma and its affiliates continue to own at least 19.4% of the Company's Voting Stock, Novartis Pharma will have approval rights over a number of corporate actions that the Company or its subsidiaries may take, including: (i) the authorization or issuance of additional shares of the Company's capital stock or the capital stock of its subsidiaries, except for a limited number of specified issuances; (ii) any change or modification to the structure of the Company's board of directors or a similar governing body of any of its subsidiaries; (iii) any amendment or modification to any of the Company's organizational documents or those of its subsidiaries; (iv) the adoption by the Company of a three-year strategic plan; (v) the adoption by the Company of an annual operating plan and budget, if there is no approved strategic plan; Page 9 of 25 (vi) any decision that would result in a variance of total annual expenditures, capital or expense, in excess of 20% from the approved three-year strategic plan; (vii) any decision that would result in a variance in excess of the greater of $10 million or 20% of the Company's profit or loss target in the strategic plan or operating plan; (viii) the acquisition of stock or assets of another entity that exceeds 10% of the Company's consolidated net revenue, net income or net assets; (ix) the sale, lease, license or other disposition of any assets or business which exceeds 10% of the Company's net revenue, net income or net assets; (x) the incurrence of any indebtedness by the Company or its subsidiaries for borrowed money in excess of $2 million, other than in limited circumstances; (xi) any material change in the nature of the Company's business or that of any of its subsidiaries; (xii) any change in control of the Company or any subsidiary of the Company; and (xiii) any dissolution or liquidation of the Company or any subsidiary of the Company, or the commencement by the Company or any subsidiary of the Company of any action under applicable bankruptcy, insolvency, reorganization or liquidation laws. Standstill Novartis Pharma and its affiliates have agreed not to acquire additional shares of the Company's stock unless a majority of the Company's independent board members approves or requests the acquisition, other than acquisitions of the Company's stock by exercise of Novartis Pharma's stock purchase rights under the Stockholders' Agreement or acquisitions of stock to maintain a 51% ownership interest in the Company's fully diluted Common Stock, exclusive of any shares held by Novartis BioVentures. These restrictions will terminate upon the earliest to occur of: (i) the termination of the Stockholders Agreement; (ii) the termination, other than due to a material breach by Novartis Pharma, of the development, license and commercialization agreement between Novartis and the Company, dated May 8, 2003; (iii) written agreement of Novartis Pharma, a majority of the Company's independent directors and the Company; (iv) Novartis Pharma and its affiliates owning more than 90% of the Company's Voting Stock, provided that Novartis Pharma and its affiliates have not acquired the Company's Voting Stock in violation of the terms and conditions of the Stockholders Agreement; Page 10 of 25 (v) within any two-year period, individuals who constituted the Company's board of directors at the beginning of such period ceasing to constitute a majority of the members of the Company's board of directors, other than as a result of changes approved by a majority of the directors in office at the beginning of such period; (vi) the Company's receipt of, or the announcement by a third party of, an unsolicited acquisition proposal; (vii) the acquisition by certain third parties of at least 20% of the Company's voting stock; and (viii) May 8, 2008. Amendments and Waivers The rights and obligations of the parties to the Stockholders Agreement may not be waived, modified, supplemented or amended without the written consent of: (i) the Company; (ii) the holders of a majority of the voting stock held by Novartis Pharma and its affiliates; (iii) the holders of two-thirds of the voting stock held by the Company's former holders of preferred stock, excluding Novartis Pharma and its affiliates; and (iv) the holders of a majority of the voting stock held by the other parties to the Stockholders' Agreement. Pursuant to the terms of the Letter Agreement, until such time as Novartis Pharma and its affiliates own less than 50% of the Company's Voting Stock Novartis Pharma's consent is required for the selection and appointment of the Company's chief financial officer. If in Novartis Pharma's reasonable judgment the Company's chief financial officer is not satisfactorily performing his duties, the Company is required to terminate the chief financial officer's employment. Novartis Pharma presently intends to acquire from the Company from time to time additional shares of Common Stock by exercising the stock purchase rights described above. Notwithstanding the foregoing, each of the Reporting Persons expects to evaluate their investments in the Company on an ongoing basis and they may determine to change their investment intent with respect to the Company at any time in the future. In determining from time to time whether to increase, retain or sell their holdings of securities of the Company, each of the Reporting Persons will take into consideration such factors as they deem relevant, including the market price of the Common Stock, conditions in the securities markets generally, the Company's financial condition, business and prospects and general economic conditions. Each of the Reporting Persons reserves the right to purchase additional shares or dispose of all or a portion of their holdings of securities of the Company in the open market or in private transactions and/or to enter into privately negotiated derivative transactions with institutional Page 11 of 25 counterparties to hedge the market risk of some or all of their positions in the securities of the Company. Any such transaction may be effected at any time or from time to time subject to (i) restrictions contained in the Stockholders Agreement, (ii) restrictions contained in the Lock-Up Agreements described in Item 6 below and (iii) any applicable limitations imposed by applicable law. Other than as described in this Item 4, neither the Reporting Persons nor, to the best knowledge of each of them, any of the persons listed on Schedule I hereto with respect to each such Reporting Person currently has any plans or proposals which relate to or would result in any of the actions or transactions described in clauses (a) through (j) of Item 4 of Schedule 13D (although each of the Reporting Persons reserves the right to develop such plans). The responses set forth in Item 3 and Item 6 of this Statement are incorporated by reference in response to Item 4 of this Statement. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) and (b) Novartis is the beneficial owner of 27,356,739 shares of Common Stock representing 57.1% of the outstanding shares of Common Stock, of which shares, 26,169,646 shares are owned directly by Novartis Pharma and 1,187,093 shares are owned directly by Novartis BioVentures. Novartis has shared power to vote or direct the vote and shared power to dispose or to direct the disposition of all shares of Common Stock beneficially owned by it. Novartis Pharma is the record and beneficial owner of 26,169,646 shares of Common Stock, representing 54.6% of the outstanding shares of Common Stock. Novartis Pharma has shared power to vote or direct the vote and shared power to dispose or to direct the disposition of all shares of Common Stock beneficially owned by it. Novartis BioVentures is the record and beneficial owner of 1,187,093 shares of Common Stock, representing 2.5% of the outstanding shares of Common Stock. Novartis BioVentures has shared power to vote or direct the vote and shared power to dispose or to direct the disposition of all shares of Common Stock beneficially owned by it. To the best knowledge of each of the Reporting Persons, none of the persons listed on Schedule I hereto with respect to such Reporting Person is the beneficial owner of any shares of Common Stock. (c) Except for the transactions described in Item 3 neither the Reporting Persons nor, to the best knowledge of each of the Reporting Persons, any of the persons listed on Schedule I has engaged in any transaction in the Common Stock in the past 60 days. (d) Not applicable. (e) Not applicable. Page 12 of 25 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Lock-Up Agreements Each of Novartis Pharma and Novartis BioVentures have agreed in lock-up agreements (the "Lock-Up Agreements") entered into on June 11, 2004 with Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and Bear, Stearns & Co. Inc., as representatives of the underwriters of the Company's initial public offering, not to dispose of or hedge, directly or indirectly, any shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock during a 180-day period ending on January 18, 2005. Transfers or dispositions by Novartis Pharma or Novartis BioVentures can be made sooner in the following circumstances: (i) with the prior written consent of Goldman, Sachs & Co.; (ii) as a bona fide gift provided the donee agrees to be bound by the lock-up restrictions; (iii) to a trust, the beneficiary of which is the transferor, provided the trustee agrees to be bound by the lock-up restrictions and the transfer does not involve a disposition for value; (iv) to affiliates of the transferor provided that such affiliate agrees to be bound by the lock-up restrictions; or (v) with respect to certain shares of common stock acquired in the public market pursuant to brokers' transactions. The description of each of the Lock-Up Agreements is qualified by reference to the full text thereof, which is included as an exhibit hereto and incorporated herein by reference. Other than as described in this Item 6 and in Items 3, 4 and 5 and the agreements incorporated herein by reference and set forth as exhibits hereto, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons or, to the best knowledge of each of the Reporting Persons, any of the persons listed on Schedule I hereto with respect to each such Reporting Person, with respect to any securities of the Company, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1 Joint Filing Agreement by and among Novartis, Novartis Pharma and Novartis BioVentures dated as of August 6, 2004. Exhibit 2 Development, License and Commercialization Agreement, dated as of May 8, 2003, by and among the Company, Idenix (Cayman) Limited and Novartis Pharma, as amended on April 30, 2004, incorporated by reference from Exhibit 10.24 to Amendment No. 3 to the Registration Statement on Form S-1 filed by the Company on July 6, 2004 (file #333-111157). Page 13 of 25 Exhibit 3 Amended and Restated Stockholders' Agreement by and among the Company, Novartis Pharma and the stockholders identified on the signature pages thereto incorporated by reference from Exhibit 10.26 to Amendment No. 2 to the Registration Statement on Form S-1 filed by the Company on June 1, 2004 (file #333- 111157). Exhibit 4 Stock Purchase Agreement, dated as of March 21, 2003, by and among the Company, Novartis Pharma and the stockholders identified on the signature pages thereto, incorporated by reference from Exhibit 10.27 to Amendment No. 3 to the Registration Statement on Form S-1 filed by the Company on July 6, 2004 (file #333-111157). Exhibit 5 Letter Agreement, dated as of March 21, 2003, by and between the Company and Novartis Pharma, incorporated by reference from Exhibit 10.28 to the Registration Statement on Form S-1 filed by the Company on December 15, 2003 (file #333-111157). Exhibit 6 Concurrent Private Placement Stock Purchase Agreement, by and between the Company and Novartis Pharma, incorporated by reference from Exhibit 10.30 to Amendment No. 2 to the Registration Statement on Form S-1 filed by the Company on June 1, 2004 (file #333-111157). Exhibit 7 Par Value Stock Purchase Agreement by and between the Company and Novartis Pharma, incorporated by reference from Exhibit 10.33 to Amendment No. 2 to the Registration Statement on Form S-1 filed by the Company on June 1, 2004 (file #333-111157). Exhibit 8 Lock-up Agreement by and among Novartis Pharma and Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and Bear, Stearns & Co. Inc., as representatives of the underwriters identified therein. Exhibit 9 Lock-up Agreement by and among Novartis BioVentures and Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and Bear, Stearns & Co. Inc., as representatives of the underwriters identified therein. Page 14 of 25 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: August 6, 2004 NOVARTIS AG By: /s/ Peter Rupprecht --------------------------------- Name: Peter Rupprecht Title: Authorized Signatory By: /s/ Jorg Walther --------------------------------- Name: Jorg Walther Title: Authorized Signatory NOVARTIS PHARMA AG By: /s/ Robert E. Pelzer --------------------------------- Name: Robert E. Pelzer Title: General Counsel By: /s/ Joseph E. Mamie --------------------------------- Name: Joseph E. Mamie Title: Head Operational Treasury NOVARTIS BIOVENTURES LTD. By: /s/ Emil Bock --------------------------------- Name: Emil Bock Title: Member of the Board of Directors Page 15 of 25 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF NOVARTIS, NOVARTIS PHARMA AND NOVARTIS BIOVENTURES DIRECTORS AND EXECUTIVE OFFICERS OF NOVARTIS The name, address, citizenship and present principal occupation or employment of each of the directors and executive officers of Novartis are set forth below. Unless otherwise indicated below, each occupation set forth opposite an individual's name refers to employment with Novartis.
Name, Function and Business Address Citizenship Principal Occupation - ------------------------------------------ ----------- --------------------------------------- Daniel Vasella Switzerland Chairman of the Board of Directors, Chairman of the Board of Directors, Chief Executive Officer Chief Executive Officer c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Prof. Dr. Helmut Sihler Austria Retired Vice Chairman of the Board of Directors c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Hans-Jorg Rudloff Germany Chairman of the Executive Vice Chairman of the Board Committee of Barclays Capital c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Birgit Breuel Germany Consultant Director c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Prof. Dr. Peter Burckhardt Switzerland Head of Medical Service at the Director University Hospital of Lausanne c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Prof. Dr. Srikant Datar India Senior Associate Dean for Executive Director Education at Harvard Business c/o Novartis AG School Lichtstrasse 35 CH-4002 Basel, Switzerland
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Name, Function and Business Address Citizenship Principal Occupation - ------------------------------------------ ----------- --------------------------------------- William W. George USA Senior Lecturer at Harvard Business Director School c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Alexandre F. Jetzer Switzerland Consultant Director c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Pierre Landoldt Switzerland President of the Sandoz family Director foundation c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Dr. Ulrich Lehner Germany President and Chief Executive Officer Director of Henkel KGaA c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Dr. Wendelin Wiedeking Germany Chairman and Chief Executive Officer Director of Porsche AG c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Prof. Dr. Rolf M. Zinkernagel Switzerland Professor and Director of the Institute Director of Experimental Immunology at the c/o Novartis AG University of Zurich Lichtstrasse 35 CH-4002 Basel, Switzerland Dr. Raymund Breu Switzerland Chief Financial Officer c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Dr. Urs Barlocher Switzerland Head of Legal and General Affairs c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland
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Name, Function and Business Address Citizenship Principal Occupation - ------------------------------------------ ----------- --------------------------------------- Juergen Brokatzky-Geiger Germany Head of Human Resources c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Paul Choffat Switzerland Head of Novartis Consumer Health c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Thomas Ebeling Germany Head of Novartis Pharma c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Prof. Marc C. Fishman, Md. USA Head of Pharmaceuticals Research c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Steven Kelmar USA Head of Public Affairs and c/o Novartis AG Communications Lichtstrasse 35 CH-4002 Basel, Switzerland
DIRECTORS AND EXECUTIVE OFFICERS OF NOVARTIS PHARMA The name, address, citizenship and present principal occupation or employment of each of the directors and executive officers of Novartis Pharma are set forth below. Unless otherwise indicated below, each occupation set forth opposite an individual's name refers to employment with Novartis Pharma.
Name, Function and Business Address Citizenship Principal Occupation - ----------------------------------- ----------- ----------------------------------- Daniel Vasella Switzerland Chairman of the Board of Directors Chairman of the Board of Directors and Chief Executive Officer of Chief Executive Officer Novartis AG c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland Dr. Raymund Breu Switzerland Member of the Board of Directors Director c/o Novartis AG Lichstrasse 35 CH-4002 Basel, Switzerland
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Name, Function and Business Address Citizenship Principal Occupation - ----------------------------------- ----------- ----------------------------------- Thomas Ebeling Germany Member of the Board of Directors, Director Head of Management Head of Management c/o Novartis AG Lichtstrasse 35 CH-4002 Basel, Switzerland
DIRECTORS AND EXECUTIVE OFFICERS OF NOVARTIS BIOVENTURES The name, address, citizenship and present principal occupation or employment of each of the directors and executive officers of Novartis BioVentures are set forth below. Unless otherwise indicated below, each occupation set forth opposite an individual's name refers to employment with Novartis BioVentures.
Name, Function and Business Address Citizenship Principal Occupation - ----------------------------------- ----------- -------------------- Dr. Francois L'Eplattenier Switzerland Chairman Chairman c/o Novartis International AG Building WSJ-200 CH-4002, Basel, Switzerland. Dr. Jurg Meier Switzerland Executive Director Executive Director c/o Novartis International AG Building WSJ-200 CH-4002, Basel, Switzerland. Dr. Rudolf Gygax Switzerland Managing Director Managing Director c/o Novartis International AG Building WSJ-200 CH-4002, Basel, Switzerland. Dr. Peter Hans Bissinger Switzerland Managing Director Managing Director c/o Novartis International AG Building WSJ-200 CH-4002, Basel, Switzerland Dr. Frances Wildhaber Switzerland Managing Director Managing Director c/o Novartis International AG Building WSJ-200 CH-4002, Basel, Switzerland Emil Bock Germany General Manager Director
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Name, Function and Business Address Citizenship Principal Occupation - ----------------------------------- ----------- -------------------- General Manager c/o Novartis International Pharmaceutical Ltd. Hurst Holme 12 Trott Road Hamilton HM AA Bermuda
Page 20 of 25 EX-99.1 2 y99929exv99w1.txt JOINT FILING AGREEMENT EXHIBIT 1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, each of the persons named below agrees to the joint filing of a Statement on Schedule 13D (including amendments thereto) with respect to the common stock, par value $0.001 per share, of Idenix Pharmaceuticals, Inc., a Delaware corporation. Date: August 6, 2004 NOVARTIS AG By: /s/ Peter Rupprecht ----------------------------------- Name: Peter Rupprecht Title: Authorized Signatory By: /s/ Jorg Walther ------------------------------------ Name: Jorg Walther Title: Authorized Signatory NOVARTIS PHARMA AG By: /s/ Robert E. Pelzer ------------------------------------ Name: Robert E. Pelzer Title: General Counsel By: /s/ Joseph E. Mamie ------------------------------------ Name: Joseph E. Mamie Title: Head Operational Treasury NOVARTIS BIOVENTURES LTD. By: /s/ Emil Bock ------------------------------------ Name: Emil Bock Title: Member of the Board of Directors Page 21 of 25 EX-99.8 3 y99929exv99w8.txt LOCK-UP AGREEMENT EXHIBIT 8 IDENIX PHARMACEUTICALS, INC. LOCK-UP AGREEMENT June 11, 2004 Goldman, Sachs & Co. Morgan Stanley & Co. Incorporated Bear, Stearns & Co. Inc. c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Re: Idenix Pharmaceuticals, Inc. - Lock-Up Agreement Ladies and Gentlemen: The undersigned understands that you, as representatives (the "Representatives"), propose to enter into an Underwriting Agreement on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the "Underwriters"), with Idenix Pharmaceuticals, Inc., a Delaware corporation (referred to herein as the "Company"), providing for a public offering (the "Offering") of common stock of the Company (the "Shares") pursuant to a Registration Statement on Form S-1 (the "Registration Statement") to be filed with the Securities and Exchange Commission (the "SEC"). In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period beginning from the date of the final Prospectus (the "Final Prospectus") covering the public offering of the Shares and continuing to and including the date that is 180 days after the date of such Final Prospectus, the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of (collectively, "Transfer") any shares of common stock of the Company, or any options or warrants to purchase any shares of common stock of the Company (other than Shares sold in the Offering), or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock of the Company, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the "Undersigned's Shares"), except for any of the Undersigned's Shares that are acquired in the public market pursuant to brokers' transactions; provided, however, that this exception shall not apply to any transactions in which a public filing is required or made, including, without limitation, the filing of a Schedule 13D, a Schedule 13G and/or a Form 4, each in accordance with the Securities Exchange Act of 1934 or otherwise. The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction during the applicable period which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned's Shares even if such Undersigned's Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned's Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such Undersigned's Shares. Notwithstanding the foregoing, the undersigned may Transfer the Undersigned's Shares (i) as a bona fide gift or gifts, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, (iii) by will or intestate succession, (iv) to any affiliate (as defined in Regulation C under the Securities Act of 1933, as amended) of the undersigned, (v) if the undersigned is a partnership, limited liability company or similar entity, to any partners or members of such partnership, limited liability company or similar entity or (vi) with the prior written consent of Goldman, Sachs & Co. on behalf of the Underwriters; provided, however, that in the case of Transfers pursuant to clauses (i), (ii), (iv), and (v) above, it shall be a condition to such Page 22 of 25 Transfer that the transferee (or trustee in the case of clause (ii) above) execute an agreement stating that such transferee (or trustee) is receiving and holding such capital stock subject to the provisions of this Agreement and there shall be no further Transfer of such capital stock except in accordance with this Agreement, and provided further that any such Transfer shall not involve a disposition for value. For purposes of this Lock-Up Agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. To the extent you release any of the Company's stockholders from such stockholder's obligations under any lock-up agreement executed in connection with the Offering in full or in part, the undersigned shall be similarly released from its obligations under this Lock-up Agreement. In addition, if Goldman, Sachs & Co. consents to the Transfer in the aggregate of greater than 1 percent (1%) of the outstanding Shares of the Company (calculated immediately following completion of the Offering) pursuant to clause (vi) of the preceding paragraph, then the undersigned shall thereafter be entitled to Transfer a number of the Undersigned's Shares up to the aggregate number of Shares previously transferred by all other stockholders pursuant to clause (vi) of the preceding paragraph. The undersigned agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the Undersigned's Shares except in compliance with the foregoing restrictions. The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors, and assigns. This Lock-up Agreement shall supercede in all respects any Lock-up Agreements relating to the Shares executed by the undersigned prior to the date hereof. This Lock-Up Agreement shall automatically terminate and be of no further effect if (i) the Registration Statement is not declared effective by the SEC by October 31, 2004 or (ii) the Underwriting Agreement is terminated pursuant to its terms. NOVARTIS PHARMA AG By:/s/ Robert E. Pelzer ----------------------------- Title: General Counsel By:/s/ Joseph E. Mamie ----------------------------- Title: Head of Operational Treasury Page 23 of 25 EX-99.9 4 y99929exv99w9.txt LOCK-UP AGREEMENT EXHIBIT 9 IDENIX PHARMACEUTICALS, INC. LOCK-UP AGREEMENT June 11, 2004 Goldman, Sachs & Co. Morgan Stanley & Co. Incorporated Bear, Stearns & Co. Inc. c/o Goldman, Sachs & Co. 85 Broad Street New York, NY 10004 Re: Idenix Pharmaceuticals, Inc. - Lock-Up Agreement Ladies and Gentlemen: The undersigned understands that you, as representatives (the "Representatives"), propose to enter into an Underwriting Agreement on behalf of the several Underwriters named in Schedule I to such agreement (collectively, the "Underwriters"), with Idenix Pharmaceuticals, Inc., a Delaware corporation (referred to herein as the "Company"), providing for a public offering (the "Offering") of common stock of the Company (the "Shares") pursuant to a Registration Statement on Form S-1 (the "Registration Statement") to be filed with the Securities and Exchange Commission (the "SEC"). In consideration of the agreement by the Underwriters to offer and sell the Shares, and of other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the undersigned agrees that, during the period beginning from the date of the final Prospectus (the "Final Prospectus") covering the public offering of the Shares and continuing to and including the date that is 180 days after the date of such Final Prospectus, the undersigned will not offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of (collectively, "Transfer") any shares of common stock of the Company, or any options or warrants to purchase any shares of common stock of the Company (other than Shares sold in the Offering), or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock of the Company, whether now owned or hereinafter acquired, owned directly by the undersigned (including holding as a custodian) or with respect to which the undersigned has beneficial ownership within the rules and regulations of the SEC (collectively the "Undersigned's Shares"), except for any of the Undersigned's Shares that are acquired in the public market pursuant to brokers' transactions; provided, however, that this exception shall not apply to any transactions in which a public filing is required or made, including, without limitation, the filing of a Schedule 13D, a Schedule 13G and/or a Form 4, each in accordance with the Securities Exchange Act of 1934 or otherwise. The foregoing restriction is expressly agreed to preclude the undersigned from engaging in any hedging or other transaction during the applicable period which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the Undersigned's Shares even if such Undersigned's Shares would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include without limitation any short sale or any purchase, sale or grant of any right (including without limitation any put or call option) with respect to any of the Undersigned's Shares or with respect to any security that includes, relates to, or derives any significant part of its value from such Undersigned's Shares. Notwithstanding the foregoing, the undersigned may Transfer the Undersigned's Shares (i) as a bona fide gift or gifts, (ii) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, (iii) by will or intestate succession, (iv) to any affiliate (as defined in Regulation C under the Securities Act of 1933, as amended) of the undersigned, (v) if the undersigned is a partnership, limited liability company or similar entity, to any partners or members of such partnership, limited liability company or similar entity or (vi) with the prior written consent of Goldman, Sachs & Co. on behalf of the Underwriters; provided, however, that in the case of Transfers pursuant to clauses (i), (ii), (iv), and (v) above, it shall be a condition to such Page 24 of 25 Transfer that the transferee (or trustee in the case of clause (ii) above) execute an agreement stating that such transferee (or trustee) is receiving and holding such capital stock subject to the provisions of this Agreement and there shall be no further Transfer of such capital stock except in accordance with this Agreement, and provided further that any such Transfer shall not involve a disposition for value. For purposes of this Lock-Up Agreement, "immediate family" shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. To the extent you release any of the Company's stockholders from such stockholder's obligations under any lock-up agreement executed in connection with the Offering in full or in part, the undersigned shall be similarly released from its obligations under this Lock-up Agreement. In addition, if Goldman, Sachs & Co. consents to the Transfer in the aggregate of greater than 1 percent (1%) of the outstanding Shares of the Company (calculated immediately following completion of the Offering) pursuant to clause (vi) of the preceding paragraph, then the undersigned shall thereafter be entitled to Transfer a number of the Undersigned's Shares up to the aggregate number of Shares previously transferred by all other stockholders pursuant to clause (vi) of the preceding paragraph. The undersigned agrees and consents to the entry of stop transfer instructions with the Company's transfer agent and registrar against the transfer of the Undersigned's Shares except in compliance with the foregoing restrictions. The undersigned understands that the Company and the Underwriters are relying upon this Lock-Up Agreement in proceeding toward consummation of the Offering. The undersigned further understands that this Lock-Up Agreement is irrevocable and shall be binding upon the undersigned's heirs, legal representatives, successors, and assigns. This Lock-up Agreement shall supercede in all respects any Lock-up Agreements relating to the Shares executed by the undersigned prior to the date hereof. This Lock-Up Agreement shall automatically terminate and be of no further effect if (i) the Registration Statement is not declared effective by the SEC by October 31, 2004 or (ii) the Underwriting Agreement is terminated pursuant to its terms. NOVARTIS BIOVENTURES LTD. By:/s/ Emil Bock ---------------------------------------- Title: Member of the Board of Directors Page 25 of 25 -----END PRIVACY-ENHANCED MESSAGE-----