-----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, MzU7kvOmHhKKjmsKuaes32o2VpH7fBjf4ejtAVooV2snyBrgIXz1M5Bi6C0u1TIM gChpS4bvGBk/O4J7lJIHaA== 0000893220-95-000896.txt : 19951221 0000893220-95-000896.hdr.sgml : 19951221 ACCESSION NUMBER: 0000893220-95-000896 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951220 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONCOGENE SCIENCE INC CENTRAL INDEX KEY: 0000729922 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 133159796 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15190 FILM NUMBER: 95603148 BUSINESS ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553 BUSINESS PHONE: 5162220023 MAIL ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553-3649 10-K 1 FORM 10-K FOR THE PERIOD ENDING SEPTEMBER 30, 1995 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) /X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Fee Required) For fiscal year ended September 30, 1995 or ------------------ / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (No Fee Required) For the transition period from to Commission file number 0-15190 ----------------------------- ONCOGENE SCIENCE, INC. - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 13-3159796 - ------------------------------- ------------------------ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 106 Charles Lindbergh Blvd., Uniondale, N.Y. 11553 - -------------------------------------------- ------------------------ (Address of Principal Executive Offices) (Zip Code) 516-222-0023 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered NONE NONE - ------------------- -------------------- Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value - -------------------------------------------------------------------------------- (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 --------- --------- 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 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. / / As of November 30, 1995, the aggregate market value of the Registrant's voting stock held by non-affiliates was $108,209,294. For purposes of this calculation, shares of Common Stock held by directors, officers and stockholders whose ownership exceeds five percent of the Common Stock outstanding at November 30, 1995 were excluded. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant. As of November 30, 1995 there were 17,689,042 shares of the Registrant's $.01 par value common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's Proxy Statement to be filed not later than 120 days after September 30, 1995 in connection with the Registrant's 1996 Annual Meeting of stockholders are incorporated by reference into Part III of this report. Total Number of Pages: Exhibit Index at Page: 2 PART I ITEM 1. BUSINESS GENERAL Oncogene Science, Inc.(the "Company") is a biopharmaceutical company engaged in the discovery and development of drugs for the treatment of cancer, cardiovascular disease, and other human diseases associated with abnormalities of cell growth and control. By virtue of its development and automation of human cell-based, high throughput drug screens and its novel approach to identifying lead compounds as clinical development candidates through cell-based gene transcription screens, the Company is recognized as a world leader in drug discovery technology. The Company's objective is to be a leading fully-integrated drug discovery company whose collaborative partners and pipeline of novel pharmaceutical products provides a high probability of achieving long-term, profitable growth. The Company's principal approach to the development of therapeutics is the identification of compounds that act at the level of gene transcription. Gene transcription is the process by which genes signal cells to produce or stop producing particular cellular proteins such as enzymes. The Company believes that its proprietary gene transcription technology will lead to the development of novel, orally-active small molecular weight pharmaceuticals. These drugs act upon target genes to modulate up or down, on or off, the expression of proteins that are therapeutically relevant to specific diseases. The Company pursues its drug discovery and development objectives through collaborations with pharmaceutical companies and through independent, proprietary programs. Currently the Company is conducting collaborative programs with four major pharmaceutical companies, Pfizer Inc. ("Pfizer"), Ciba-Geigy Limited ("Ciba"), Wyeth-Ayerst Research, a division of American Home Products Corporation ("Wyeth"), and Hoechst Marion Roussel Inc. (together with its predecessors, "HMRI"). The Company's cancer therapeutics program is focused on the development of novel pharmaceuticals for the treatment of cancer in humans by either inhibiting oncogenes or restoring the activity of tumor suppressor genes. Oncogenes are a class of genes that, upon activation, play a key role in the conversion of otherwise normal cells to a cancerous state. The inactivation through mutation or deletion of tumor suppressor genes is associated with the creation or spread of cancerous tumors. Additionally, the Company is engaged in the clinical development of pharmaceuticals that decrease the toxic effects of existing chemotherapeutic agents on non-cancerous cells. The Company also has a research program in 2 3 cancer diagnostics focused upon the development of tests for the detection of cancer in serum and tissue. The Company is collaborating with Pfizer in the development of cancer therapeutic products. This program currently focuses on inhibitors for various oncogenes that have been implicated in breast, lung, colon and ovarian cancers, and compounds that enhance tumor suppressor genes, including p53, the inactivation of which has been implicated in lung, breast and colon cancers. Additionally, the Company is working with Ciba in the clinical development of the protein-based drug TGF-Beta3 for the treatment of oral mucositis, a toxic side effect of chemotherapy. The Company's collaboration with Ciba also involves the development of TGF-Beta3 products for certain other indications, such as wound healing. The Company is involved in a collaborative program with Wyeth to develop transcription-based drugs for diabetes, asthma, osteoporosis and immune modulation. Further, the Company is engaged in various joint programs with HMRI. The first of these involves the development of gene-transcription based drugs to treat certain indications in the areas of inflammation, arthritis and metabolic diseases. An additional HMRI program focuses on the development of gene transcription-based drugs to treat Alzheimer's disease. Finally, the Company commenced a collaborative program with Marion Merrell Dow Inc. ("Marion") to develop drugs for a variety of cardiovascular indications prior to HMRI's acquisition of Marion in July, 1995. Based on discussions with HMRI, the Company believes that its collaborative programs with HMRI and Marion will be consolidated and continued. The Company also is working with Becton Dickinson and Co., Inc. ("Becton") to develop cancer diagnostic products. See "--Pharmaceuticals--Gene Transcription-Based Drugs" and "--Cancer Diagnostics." In addition to its collaborative programs, the Company is engaged in various proprietary drug discovery and development programs. The main thrust of the Company's proprietary efforts currently is the identification and clinical development of compounds that induce the cellular production of Erythropoietin ("Epo") for the treatment of anemias. Secondarily, the Company also is pursuing gene transcription-based therapeutics in the areas of sickle cell disease (and other hematological disorders), muscular dystrophy and certain other indications. The Company believes certain of its proprietary discovery and development programs present opportunities to participate in niche markets not typically addressed by the mainstream pharmaceutical industry and also to advance novel therapies into clinical arenas where disease needs are largely unmet. The Company's research activities since inception have resulted in the development of extensive know-how and proprietary technologies in the areas in which the Company has operated. To date, the Company has filed more than 102 U.S. patent applications and over 132 foreign patent applications. The Company has not 3 4 obtained FDA approval for any of its human therapeutic products, and does not expect any of such products to be commercially available for at least four years. The Company has obtained FDA approval for one of its cancer diagnostic products, but does not expect any of its other diagnostic products to be commercially available for two to three years. The Company was incorporated in Delaware in March 1983. In October 1991 the Company acquired the assets of Applied bioTechnology, Inc. (a private company) related to the research and development of cancer diagnostic and therapeutic products based on oncogenes and tumor suppressor genes. Until August 1995, the Company was engaged in the development, manufacture and marketing of products for the basic and clinical research markets. In August 1995 the Company sold certain of the assets, and all of the business, of its Research Products Business. PHARMACEUTICALS CANCER Anti-Cancer Drugs - Collaboration with Pfizer The Company is actively involved in the development of drugs that specifically inhibit functional activities associated with certain oncogene-encoded proteins. For example, studies have implicated ras encoded proteins in cancers of the lung, colon and pancreas, three of the most common fatal cancers in the Western World. The neu/erb B2 oncogene has been implicated in breast and ovarian cancers, and studies have indicated that a high level of expression of neu/erb B2 encoded protein in a tumor correlates with poor patient prognosis. The Company's approach to the discovery of drugs which inhibit oncogene-encoded proteins involves a screening methodology that utilizes proprietary live cell assays to identify compounds that inactivate oncogene-encoded proteins. Several compounds already have been identified, and the Company now is investigating their mechanism of action. A second family of cellular genes involved in the development of cancer has also been defined. These genes, designated as tumor suppressor genes, or anti-oncogenes, encode proteins that generally function to block the proliferative growth of particular cell types. A loss of function of certain tumor suppressor genes can result in uncontrolled cell growth and thus contribute to the neoplastic state of a cancer cell. One such tumor suppressor gene is the p53 tumor suppressor gene. Research has shown that deletions or mutations in this gene are among the most common genetic aberrations in human cancer. In addition, such research has shown that the re-introduction of the normal p53 gene into cancer cells results in an inhibition of cell growth. The p53 anti-oncogene has been implicated in a significant percentage of breast, colon, gastric and lung tumors, as well as melanomas. The 4 5 Company has developed novel assays and rapid biochemical screening procedures for the identification of potential drugs which may restore the functional balance of the p53 and other tumor suppressor genes. Pursuant to a Collaborative Research Agreement effective as of April 1, 1991 (which renewed and extended the original collaborative research programs), the Company and Pfizer are jointly pursuing the discovery and development of cancer therapeutic products that target oncogenes and anti-oncogenes. The Company expects this agreement to be renewed under substantially the same terms effective April 1, 1996. Currently, the Company's work with Pfizer focuses on eight target proteins. Additional target proteins are being worked on under the program at Pfizer. In 1995, the Company's screening program resulted in the identification of a proprietary inhibitor of the epidermal growth factor receptor ("EGFR"), a protein associated with head, neck, breast and bladder cancers. Under this collaboration, this compound was nominated for and accepted as a candidate for clinical development. Pfizer is currently conducting pre-Introductory New Drug Application ("IND") safety and toxicity studies on this compound. The Company has recently initiated a new very high throughput screening ("VHTS") technique for the assays focussing on the Pfizer targets. VHTS will allow the company to perform assay screens on more than 360,000 test compounds per robotic system per eight-week period. TGF-Beta3 - Collaboration with Ciba The Company entered into an agreement with Ciba on April 19, 1995 expanding the scope of the two companies' collaborative efforts with respect to TGF-Beta3. This agreement grants to Ciba, in exchange for royalty payments and certain other cash payments described below, an exclusive license to manufacture, use and sell TGF-Beta3 products for oral mucositis and certain other indications, including wound healing and psoriasis, throughout the world. Under this agreement, the Company will fund oral mucositis Phase I clinical trials and Ciba will fund Phase II and III clinical trials. The Company hopes to file an IND in early 1996, leading to clinical trials for oral mucositis in 1996, although there can be no assurance that this schedule will be met. In connection with the agreement, Ciba purchased 909,091 shares of the Company's common stock at $5.50 per share for an aggregate purchase price of $5,000,000. In addition, Ciba will pay the Company $10,000,000 if, and at the time, it decides to initiate Phase IIb or III clinical trials for oral mucositis. In exchange for such payment, Ciba's license will be expanded to cover all other indications for TGF-Beta3. Alternatively, Ciba may exercise an option within four years to expand its license under the agreement to cover all indications for 5 6 TGF-Beta3 by making the $10,000,000 payment. Under the agreement, Ciba will supply the Company will all of its developmental and commercial requirements for TGF-Beta3. Oral Mucositis. Oral mucositis is a painful, often debilitating condition characterized by mouth and throat lesions that frequently occur as side effects of chemotherapy. Most chemotherapeutic agents exert their lethal effects primarily against cancerous cells undergoing active growth. Chemotherapeutic agents also attack normal cells that are subject to rapid division, such as the epithelial cells lining the mouth and gastrointestinal tract. TGF-Beta3, a growth regulatory protein discovered by researchers at the Company, selectively inhibits the growth of specific cell types. The Company has developed formulations based on TGF-Beta3 as a chemoprotectant to inhibit temporarily the high proliferative growth rate of certain cells in the mouth and gastrointestinal tract. The objective for using TGF-Beta3 is to reduce the toxicity associated with the use of chemotherapeutic agents. If successful, this strategy may ultimately permit the use of more aggressive chemotherapy dose regimens. Wound Healing. In addition to its program for the development of TGF-Beta3 to treat oral mucositis, the Company is collaborating with Ciba in the development of TGF-Beta3 in an application to promote wound healing. In September 1994, Ciba initiated and successfully completed a Phase I safety trial in Europe using a topical form of TGF-Beta3 in healthy volunteers. Ciba has completed a Phase I clinical trial in the United States and expects to initiate Phase II trials in the United States and Europe in early 1996 (as to which there can be no assurance). Other Indications. Ciba is currently evaluating additional therapeutic indications for TGF-Beta3. All of these programs are currently in the research/feasibility stage. GENE TRANSCRIPTION-BASED DRUGS Through the Company's work in oncogenes and anti-oncogenes, it became apparent that a novel class of pharmaceuticals based on orally active small molecular weight compounds could be developed for a wide range of diseases, by modulating the expression of specific cellular proteins through gene transcription. Gene transcription is the process by which genes produce cellular proteins. The mechanism whereby an extracellular stimulus affects gene transcription is termed signal transduction. Pharmacological intervention during the steps of signal transduction can cause cells to either increase or decrease the production of specific cellular proteins. To exploit gene transcription as a method of drug discovery, the Company has developed proprietary screening methods (assays), which employ live, genetically engineered cells and unique robotic 6 7 systems to determine whether the test compounds will modulate the expression of the targeted genes. The Company's high throughput robotic facility is now able to screen in excess of 3 million compounds per year, and the Company is currently working with approximately 29 different drug screens. As an important component of its overall strategy, the Company has established additional collaborative programs in drug discovery and development, analogous to its cancer therapeutics program with Pfizer, but targeted to different therapeutic applications. Collaboration with Wyeth During the first quarter of 1992, the Company entered into a collaborative research agreement with Wyeth, which was extended and expanded in January 1994. This collaboration utilizes the Company's gene transcription technology in an effort to develop drugs for the treatment of diabetes, immune system modulation, asthma and osteoporosis. Under the terms of this agreement, Wyeth is funding the development program. Royalties will be paid to the Company on sales of resultant products, if any. The Wyeth collaboration has been successful in generating transcriptionally active lead compounds on all four targets. In addition to this, in-vivo active compounds have been identified for the diabetes and immune system modulation targets. Wyeth has committed medicinal chemistry resources to these programs. Collaboration with HMRI The Company is pursuing various areas jointly with HMRI. On July 18, 1995 HMRI acquired Marion as part of a transaction in which the pharmaceutical operations of Marion, Hoechst AG and Hoechst Roussel Pharmaceuticals, Inc. were combined. The Company had collaborative agreements with all three of these companies prior to this combination. Based on discussions with HMRI, the Company believes that all of these agreements will be consolidated. The Company believes that this consolidation will result in a stronger, more flexible collaborative program, although it expects the total level of funding from HMRI will be reduced as compared to the aggregate funding from the three previously separate entities. In 1992, prior to the acquisition of Marion by HMRI, the Company entered into a collaborative agreement with Marion to discover and develop gene transcription-based drugs to treat certain indications of the area of cardiovascular disease, including primarily atherosclerosis. In July 1994 the Company successfully completed the first phase under this collaborative agreement with the development of gene transcription-based assays. This resulted in a $1.5 million milestone payment and initiation of the compound screening phase of the collaboration, which has 7 8 recently been completed. The transcription screens have resulted in the identification of in-vivo active lead compounds for two targets. These lead series are currently being evaluated by HMRI. This collaboration has pioneered the use of primary cell cultures in high throughput screening assays. The Company commenced a collaborative program with HMRI in January 1993, focussing on inflammation, arthritis and metabolic diseases. In April 1994, the Company and HMRI commenced a collaborative arrangement to discover and develop gene transcription-based drugs to treat Alzheimer's disease. Each of these programs is in a research phase. The Company's two original HMRI collaborations (i.e., other than the Marion program) have progressed to the completion of screening of HMRI's medicinal libraries for all four of the original targets (in the areas of metabolism, Alzheimer's disease, and rheumatoid arthritis). The lead compounds identified in these screens are undergoing further analysis. In particular, certain promising compounds are being pursued in-vivo and through medicinal chemistry for the first rheumatoid arthritis target. Proprietary Drug Discovery and Development In addition to its collaborative programs, the Company has undertaken independent efforts to discover and develop gene transcription-based therapeutics in various areas. The Company initiated compound screening in its proprietary programs in 1994 and is currently screening compounds against multiple target proteins associated with chronic anemia, sickle cell disease and other hematological disorders and muscular dystrophy. The goal of these programs is to identify small molecule, orally-active compounds that will regulate the expression of key proteins associated with these diseases. Generally, the Company's objective with respect to its proprietary programs will be to identify lead compounds, transition them into clinical development and manage this clinical development through early-stage clinical trials. The Company anticipates partnering with a large pharmaceutical firm at or before this stage for clinical and commercial development of each potential proprietary product. Chronic Anemia Currently, the Company's proprietary discovery and development efforts are focused primarily on the protein erythropoietin ("Epo"). Injectable recombinant Epo is now the therapy of choice for the treatment of anemia due to chronic renal failure. The recombinant drug is currently generating worldwide sales revenues of over $1.0 billion annually. Epo is also being tested for use in anemia that develops as a consequence of chemotherapy and for autologous blood donation. However, the high cost of the recombinant protein and the requirement that it be administered by injection may place some limitations on its more widespread use. 8 9 The Company believes that there exists a significant market opportunity for an effective, small molecular weight compound that induces the cellular production of Epo and can be administered orally. The Company's gene transcription screens have resulted in the identification of several lead compounds that regulate the expression of Epo. The company is undertaking early preclinical evaluation of these lead compounds. Other Proprietary Targets In addition to its efforts with respect to Epo, the Company is seeking to discover and develop orally active gene transcription-based inducers of certain proteins for the treatment of sickle cell disease, muscular dystrophy, chronic myelogenous leukemia and certain viral infections. Sickle Cell Disease. The marked manifestations of sickle cell disease can be functionally ameliorated by the presence in blood cells of fetal hemoglobin ("HbF"). Currently, there are no approved drugs for the treatment of sickle cell disease. The Company has developed an assay to determine the ability of test compounds to induce the production of HbF. The most advanced compound in clinical testing for this indication is hydroxyurea, which induces the expression of HbF. The Company's screening assays have resulted in the identification of several compounds that are more potent than hydroxyurea. The Company's goal is to establish, through additional screening and evaluation, a lead compound that induces expression of HbF as a candidate for clinical development in this area. Muscular Dystrophy. The functional impairment of the protein dystrophin causes muscular dystrophy. Utrophin is a closely related protein, elevated levels of which in muscle cells may effectively reverse this disease. Based on initial screening work, the Company has received funding from a private foundation, which will enable the Company to commence the design and validation of an appropriate utrophin gene transcription assay. Immediately upon completion of this assay, the Company will commence screening compounds for induction of utrophin production. Others. The Company has designed assays to screen compounds against drug targets for the treatment of chronic myelogenous leukemia ("CML") and the human immunodeficiency virus ("HIV"). These screens have identified certain active molecules. Further evaluation of the compounds identified in the CML screens is being conducted in the laboratories of certain of the Company's collaborators in a consortium funded under a federal grant. The Company anticipates that the clinical development of any lead compounds derived from these evaluations will be conducted pursuant to a collaborative arrangement with one or more pharmaceutical firms. The Company is seeking a partner in order to proceed jointly on further development of its anti-viral program, which 9 10 includes established screens for HIV. The following table summarizes the Company's drug discovery and development programs:
===================================================================== PROGRAM FIELD NUMBER OF DRUG TARGETS - --------------------------------------------------------------------- Proprietary Chronic Anemias 1 Sickle Cell Disease 1 Muscular Dystrophy 1 Chronic Myelogenous Leukemia 1 Human Immunodeficiency Virus 3 - --------------------------------------------------------------------- Ciba Chemoprotection 1 Wound Healing 1 - --------------------------------------------------------------------- HMRI Inflammation 1 Arthritis 1 Metabolic Disease 1 Alzheimer's Disease 1 Cardiovascular Disease 4 - --------------------------------------------------------------------- Pfizer Cancer 8 - --------------------------------------------------------------------- Wyeth Diabetes 1 Asthma 1 Immune-System Modulation 1 Osteoporosis 1 - --------------------------------------------------------------------- TOTAL 29 =====================================================================
10 11 CANCER DIAGNOSTICS The Company is engaged in the development of a series of cancer diagnostic tests based upon oncogenes and tumor suppressor genes as cancer markers. One line of these tests utilizes immunoassays and monoclonal antibodies to detect the cancer markers in readily accessible physiological fluids, such as blood serum. The other line of diagnostic tests utilizes a series of monoclonal antibodies capable of measuring the cancer markers in tissue sections using immunohistochemistry techniques. These tests are designed to aid oncologists in the confirmation, monitoring, staging, screening and prognosis of human cancer. These tests may enable reference labs and physicians to diagnose cancer at an earlier stage, select more effective types of treatment, and more easily monitor patients during therapy. The current focus of the Company's diagnostic development program is on breast and colon cancer, but the Company believes that many of the cancer markers in its program will have clinical utility for other human tumors, such as lung, prostate, ovarian and stomach cancer. The Company has been pursuing serum and tissue based cancer diagnostic products in collaboration with Becton under a collaborative program started in October 1991 (after an earlier collaboration from 1984 to 1989). However, during 1995, Becton decided to focus exclusively on tissue-based diagnostic tests including immunohistochemistry, i.e., manual pathology diagnostic tests and image analysis. Becton has reduced funding under this program in fiscal 1996 and the Company is uncertain as to the funding of this program thereafter. Management believes that the Company or Becton will seek FDA approval for one or more immunohistochemistry tests for the manual pathology market. Since October 1995, the Company has independently supported its development program in serum-based cancer diagnostics. The Company is actively seeking to form a collaboration with one or more major health care firms for the clinical and commercial development of its serum-based diagnostic products. INTELLECTUAL PROPERTY The Company believes that patents and other proprietary rights are vital to its business. It is the Company's policy to protect its intellectual property rights in technology developed by its scientific staff by a variety of means, including applying for patents in the United States and other major industrialized countries. The Company also relies upon trade secrets and improvements, unpatented proprietary know-how and continuing technological innovations to develop and maintain its competitive position. In this regard, the Company places restrictions in its agreements with third parties, including research institutions, with respect to the use and disclosure of the Company's proprietary technology. The Company also has internal nondisclosure 11 12 safeguards, including confidentiality agreements, with its employees, consultants and scientific advisors. To date, more than 102 U.S. patent applications and over 132 foreign patent applications have been filed or acquired by the Company. The Company currently owns 21 issued U.S. patents and 47 granted foreign patents. In addition, other institutions have granted exclusive rights under their United States and foreign patents and patent applications to the Company. The Company has been granted registration for the trademarks "OSI"(R) and "TransProbe-1(R)" by the United States Patent and Trademark Office. There can be no assurance that patents will be issued for the Company's pending patent applications or any applications which it may file in the future, that any patent issued will cover a commercially marketable product or process, or that any patent issued will not be circumvented or invalidated. Moreover, there can be no assurance that others may not independently develop the same or similar technology or obtain access to the Company's proprietary technology. The Company is aware of patent applications filed by, or patents, issued to, other entities, with respect to technology potentially useful to the Company and, in some cases, related to products and processes being used or developed by the Company. The Company currently cannot assess the effect, if any, that these patents may have on its future operations. The extent to which efforts by other researchers resulted or will result in patents and the extent to which the issuance of patents to others would have a material adverse effect on the Company or would force the Company to obtain licenses from others, if available, currently is unknown. The Company is aware of several patents and patent applications owned by others who may allege infringement by products, including TGF-Beta3, which the Company is seeking to develop. The Company does not believe it is infringing any valid claim of a patent owned by any third party and is taking such actions, consistent with its beliefs, as it deems prudent to minimize the possibility of any charge of patent infringement being validly raised against the Company. MARKETING AND DISTRIBUTION Those therapeutic products subject to the Company's collaborative agreements with Pfizer, Ciba, Wyeth and HMRI will be marketed by those companies and the Company is to receive royalties ranging up to 10% on net sales of products, depending upon the nature of the product and the ownership of the underlying technology. The Company expects that products resulting from future collaborations in gene transcription will be marketed under arrangements which are similar to these agreements. 12 13 COMPETITION The biotechnology industry is highly competitive, and the Company expects competition to intensify as technological advances in the field are made and become widely known. There are many domestic and foreign biotechnology companies which are engaged in the same or similar areas of research as those in which the Company is engaged, many of which have substantially greater financial, research, human, marketing and distribution resources than the Company. In addition, there are many large, integrated and established pharmaceutical, chemical and medical diagnostic companies which have greater capacity than the Company to develop and to commercialize the technologies upon which the Company's research and development programs are based. The Company expects technological development to occur at a rapid rate in the biotechnology industry. Even if the Company is successful in establishing itself in the industry, it will be necessary for the Company to maintain a competitive position with respect to the evolving technology. Universities, colleges, and various other non-profit organizations are responsible for much of the cancer research currently being performed. These entities are increasingly becoming aware of the commercial applications of their research and are seeking patent protection and license revenues in certain product areas that are competitive with the Company. Competition in the biotechnology field currently is focused primarily on research and technological capability. The Company believes that, as the field develops, manufacturing, regulatory, distribution and marketing expertise increasingly will be important competitive factors. In this regard, the Company believes that arrangements with major health care corporations will be important factors in the commercialization of many of the products which it is currently developing. GOVERNMENT REGULATION Regulation by governmental authorities in the United States and other countries is a significant factor in the manufacturing and marketing of the Company's products. The Company is, and the products which the Company intends to develop are and will be, subject to certain government regulations. Products that may be developed and sold by the Company in the United States may require approval from federal regulatory agencies, such as the FDA, as well as state regulatory agencies. Products that may be developed and sold by the Company outside the United States may require approval from foreign regulatory agencies. The clinical diagnostic products being developed by the Company will be subject to regulation by the Office of Medical Services of the FDA, and will require some form of pre-market notification. Therapeutic products will require clinical evaluation under INDs and, in certain instances, clearance under the auspices of the Office of Biologics in conjunction with other appropriate FDA divisions. 13 14 In all cases, the Company will be required to comply with all pertinent Good Manufacturing Practices of the FDA for medical devices, biologics, and drugs. Accordingly, the regulations to which the Company and certain of its products may be subject, and any changes with respect thereto, may materially adversely affect the Company's ability to produce and market new products developed by the Company. A product normally must go through several phases in order to obtain FDA and other governmental approvals. The research phase involves work up to and including discovery, research and initial production. The research phase is followed by the pre-clinical phase, which involves studies in animal models necessary to support an application to the FDA and foreign health registration authorities to commence clinical testing in humans. Clinical trials for pharmaceutical products are conducted in three phases. In Phase I, studies are conducted to determine safety and dosage limits. In Phase II, studies are conducted to gain preliminary evidence as to the efficacy of the product. In Phase III, studies are conducted to provide sufficient data for the statistical proof as to safety and efficacy, including dose regimen. Phase III is the final stage of such clinical studies prior to the submission of an application for approval of a New Drug Application and marketing approval. The amount of time necessary to complete any of these phases cannot be predicted with any certainty. The Company's present and future activities are, and will likely continue to be, subject to varying degrees of additional regulation under the Atomic Energy Act, Occupational Safety and Health Act, Environmental Protection Act, national restrictions on technology transfer, import, export and customs regulations, and other present and possible future foreign, federal, state and local regulations. SCIENTIFIC AND OTHER PERSONNEL The Company believes that its success will be largely dependent upon its ability to attract and retain qualified personnel in scientific and technical fields. As of September 30, 1995, the Company employed 109 persons, of whom 80 were primarily involved in research and development activities, with the remainder engaged in executive and administrative capacities. All but one of the Company's 31 scientists have Ph.D. degrees specializing in areas related to the Company's various technologies. Although the Company believes that it has been successful to date in attracting skilled and experienced scientific personnel, competition for such personnel is intense and there can be no assurance that the Company will continue to be able to attract and retain personnel of high scientific caliber. The Company considers its employee relations to be good. 14 15 ITEM 2. PROPERTIES The Company leases a 30,000 square foot facility located at 106 Charles Lindbergh Boulevard, Uniondale, New York. The lease is for a period of fifteen years with a five-year renewal option. The annual base rent starts at $360,000 commencing July 1, 1991, increases by 10% after the first two years, and thereafter increases by 10% every three years. The Company is also responsible for all taxes and utilities and the costs of general maintenance and repair of the facility during the term of the lease. As of October 4, 1991, the Company entered into a lease for the executive offices, laboratories and other facilities utilized in the Diagnostic Division at 80 Rogers Street/129 Binney Street, Cambridge, Massachusetts. The 11,000 square foot facility contains approximately 6,400 square feet of laboratory space for immunology, molecular biology, tissue culture and protein chemistry, a small animal testing facility, a process scale-up laboratory and approximately 4,600 square feet of office space. As of April 2, 1993, this lease was amended to cover an additional 8,000 square feet at 84 Rogers Street for additional office and distribution space. The lease for both 80 and 84 Rogers Street expires December 31, 2003. The combined annual base rent is $180,500. Assuming the Company is successful in its attempt to secure a collaborative partner in its serum-based diagnostics program, the Company intends to continue to operate the Diagnostic Division at this facility. In August 1995, the Company entered into a sublease agreement for approximately 50% of the Cambridge facility with the purchaser of the Research Products Business for a term of three years, at an annual payment equal to 50% of the Company's fixed lease payment and related facility costs, plus certain operating costs. The Company believes that its facilities will be adequate to meet current requirements for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS There are no material legal proceedings pending against the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 1995. 15 16 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The Company's common stock is traded in the over-the-counter market and is included for quotation on the Nasdaq National Market under the symbol ONCS. The following is the range of high and low sales prices by quarter for the Company's common stock from the first quarter of fiscal 1994 through September 30, 1995 as reported on the Nasdaq National Market:
HIGH LOW ---- --- 1995 FISCAL YEAR - ---------------- First Quarter $3 3/8 $2 3/8 Second Quarter 3 3/8 2 3/8 Third Quarter 4 5/8 2 15/16 Fourth Quarter 7 1/8 3 1/2
HIGH LOW ---- --- 1994 FISCAL YEAR - ---------------- First Quarter $4 3/4 $3 1/2 Second Quarter 4 1/8 3 1/8 Third Quarter 3 7/8 2 7/8 Fourth Quarter 3 5/8 2 1/4
As of November 30, 1995, there were approximately 771 holders of record of the Company's common stock. The Company has not paid any dividends since its inception and does not intend to pay any dividends in the foreseeable future. Declaration of dividends will depend, among other things, upon future earnings, the operating and financial condition of the Company, its capital requirements and general business conditions. 16 17 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial data with respect to the Company for each of the years in the five year period ended September 30, 1995. The information set forth below should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere herein.
Years ended September 30 --------------------------------------------------------------- 1995(a) 1994(b) 1993(c) 1992(d) 1991 ------- ---- ---- ---- ---- Statement of Operations Data: Revenues $15,864,999 $16,299,489 $16,088,021 $11,094,175 $ 7,823,883 Expenses: Research and development 13,523,043 12,125,210 10,659,806 8,127,466 4,860,226 Production 1,252,990 1,427,981 1,443,649 1,420,686 748,927 Selling, general and administrative 7,140,208 7,487,090 6,429,701 5,219,606 4,130,777 Amortization of intangibles 1,696,561 1,745,163 1,745,713 1,745,694 - Loss from operations (7,747,803) (6,485,955) (4,190,848) (5,419,277) (1,916,047) Other income, net 768,744 762,031 884,806 882,630 724,450 Relocation related expenses - - - - (342,653) Gain on sale of Research Products 2,720,389 - - - - Net loss (4,258,670) (5,723,924) (3,306,042) (4,536,647) (1,534,250) Net loss per share (0.25) (0.35) (0.21) (0.31) (0.17) Weighted average number of shares of common stock outstanding 16,757,370 16,335,000 16,080,000 14,801,000 9,184,000 Balance Sheet Data: Cash and short-term investments $26,786,566 $18,157,891 $22,390,454 $18,897,238 $10,110,352 Accounts Receivable 1,320,015 3,032,839 3,146,990 2,094,464 666,054 Working capital 26,127,781 21,208,145 25,914,827 22,363,383 10,301,199 Total assets 44,057,421 42,040,900 47,614,538 43,930,705 18,079,405 Stockholders' equity 40,549,636 38,656,314 45,044,603 41,960,868 15,867,252
(a) During fiscal 1995, the Company sold its Research Products Business and also sold shares of its common stock to Ciba-Geigy, Ltd. (See Notes 3 and 8(c) to the Consolidated Financial Statements.) (b) During fiscal 1994, the Company changed its method of accounting for marketable securities to adopt the provisions of the Statement of Financial Accounting Standards No.115, "Accounting for Certain Investments in Debt and Equity Securities". (c)During fiscal 1993, the Company entered into collaborative agreements with Marion Merrell Dow and Hoechst AG and also sold shares of its common stock to Marion Merrell Dow (See Notes 4 and 8(c) of Notes to Consolidated Financial Statements.) (d)During fiscal 1992, the Company acquired the cancer business of Applied bioTechnology and completed an offering of its common stock (see Notes 3 and 8(d) of Notes to Consolidated Financial Statements). 17 18 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Revenues Total revenues decreased approximately $434,000, or 3% in fiscal year 1995 compared to fiscal year 1994 and increased approximately $211,000 or 1%, in fiscal year 1994 compared to fiscal year 1993. Collaborative program revenues increased by approximately $597,000 or 7% in fiscal 1995 due to the commencement of an additional research program with HMRI in April 1994, the expansion and extension of the collaborative research agreement with Wyeth in March 1994 and increases in revenues under the Pfizer agreement with respect to anti-cancer drugs. These increases were offset by decreased funding from Pfizer associated with Pfizer's decreased participation in the TGF-Beta3 oral mucositis program in order to focus exclusively on its collaborative programs with the Company related to the research and development of anti-cancer drugs. Previously Pfizer had funded the Company's TGF-Beta3 oral mucositis program as a supplement to its anti-cancer collaborative program. Under a collaborative agreement with Ciba, entered into on April 19, 1995, the Company will fund the development of TGF-Beta3 for oral mucositis through the end of Phase I clinical trials and Ciba will fund its subsequent clinical development. The increase in collaborative revenues in fiscal 1995 was also offset by decreases in sales and other research revenues. The Company sold its Research Products Business to Calbiochem-Novabiochem International, Inc. on August 2, 1995, and accordingly, there were no significant sales of the Research Products Business recorded after this date, nor will these sales contribute to overall revenues in the future. Sales decreased approximately $651,000 or 13% in fiscal 1995. Other research revenues decreased approximately $380,000 or 17% in fiscal 1995, which is largely the result of decreased funding related to a National Cooperative Drug Discovery Group Grant. The increase in total revenues in fiscal year 1994 is attributable to increases of $1,606,000 in collaborative research revenues relating to the commencement of the additional HMRI collaborative program and a milestone payment from Marion, grant revenues and sales of research products offset by a $1,395,000 decrease in the payments from Pfizer. As discussed above, previously Pfizer had funded the development of TGF-Beta3 as a supplement to the collaborative program. Sales of research products increased approximately $110,000 or 2% in fiscal 1994, due primarily to a change in the mix of products sold. Other research revenues in fiscal 1994 increased by approximately $408,000 or 22%, compared to the prior fiscal year. The increase in fiscal 1994 is due to an increase in the number and size of grants awarded to the Company. 18 19 Expenses Research and development expenses increased by approximately $1,398,000, or 12% in fiscal year 1995 compared to fiscal year 1994 and increased by approximately $1,465,000, or 14%, in fiscal year 1994 compared to fiscal year 1993. The increase in fiscal 1995 was due principally to the start during 1994 of the additional research program with HMRI, the expansion and extension of the Wyeth agreement and the increase in activities related to the Company's proprietary programs in the area of medicinal and natural products chemistry and clinical development of TGF-Beta3 for oral mucositis. The increase in 1994 was due to an increase in expenditures in the collaborative programs with Marion and the commencement of the additional program with HMRI, and increased expenses incurred in connection with the Company's proprietary and grant programs. Research and development expenses reimbursed by collaborative partners and government research grants aggregated approximately $12,445,000 $11,075,000, and $10,305,000, for fiscal years 1995, 1994, and 1993, respectively. Production expenses decreased approximately $175,000, or 12% for fiscal year 1995 as compared with fiscal year 1994, reflecting the sale of the Research Products Business. Production expenses remained approximately constant in fiscal 1994 compared to fiscal 1993. Selling, general and administrative expenses decreased approximately $347,000 or 5% in fiscal 1995 compared to fiscal 1994. This decrease reflects the reduction in sales and marketing expenses due to the sale of the Research Products Business, offset by increases in professional fees related to corporate development activities. Selling, general and administrative expenses increased approximately $1,057,000 or 16% in fiscal 1994 compared to fiscal 1993. This increase is principally attributable to expenses incurred in the operations of the Company's French subsidiary and increased payroll and consulting expenses. In connection with the sale of the Research Products Business, the Company elected to close down the operations of its French subsidiary. Costs associated with the close down have been offset against the gain on the sale of the Research Products Business. Amortization of intangibles in 1995, 1994, and 1993 represents amortization of patents and goodwill that resulted from the acquisition of the cancer diagnostics business of Applied bioTechnology. The decrease in amortization expense in fiscal 1995 is due to the write-off of a portion of goodwill in connection with the sale of the Research Products Business. 19 20 Other Income and Expense Net investment income decreased approximately $24,000, or 3% for fiscal 1995 compared to fiscal 1994. Interest income earned in fiscal 1995 was higher than in fiscal 1994 despite a lower average principal balance in the more recent year due to increased interest rates. However, this was offset in part by a net realized loss on the sale of certain investments. Net investment income decreased approximately $72,000 or 8% for fiscal 1994 compared to fiscal 1993. This decrease was a result of declining interest rates and decreased principal balance invested. The Company sold its Research Products Business to Calbiochem-Novabiochem International, Inc. on August 2, 1995 for $6 million in cash and and other considerations. The net gain on the sale was approximately $2.7 million. New Accounting Pronouncements In March 1995, Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was issued which establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain intangibles to be disposed of. SFAS No. 121 requires that long-lived assets and certain intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. SFAS No. 121 must be implemented no later than fiscal 1997. The adoption of SFAS No. 121 is not expected to have material impact on the Company's consolidated financial position or operating results. In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation", was issued which establishes financial accounting and reporting standards for stock-based employee compensation plans. SFAS No. 123 defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, SFAS No. 123 would permit the Company to continue to measure compensation costs for its stock option plans using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to Employees". If the Company elected to remain with its current accounting, the Company must make pro forma disclosures of net income and earnings (loss) per share as if the fair value based method of accounting had been applied. SFAS No. 123 must be implemented no later than fiscal 1997. The Company has not yet determined the valuation method it 20 21 will employ or the effect on operating results of implementing SFAS No. 123. Liquidity and Capital Resources At September 30, 1995, working capital (representing primarily cash, cash equivalents and short-term investments) aggregated approximately $26,128,000. The Company has been, and will continue to be, dependent upon collaborative research revenues, government research grants, interest income and cash balances until products developed from its technology are commercially marketed. On April 19, 1995, Ciba purchased 909,091 shares of the Company's common stock for an aggregate purchase price of $5,000,000. During 1995, Marion was acquired by HMRI as part of a transaction in which the pharmaceutical operations of Hoechst AG, Hoechst Roussel Pharmaceuticals, Inc. and Marion were consolidated. The Company is aware that HMRI is conducting a review of all its research and development programs. However, based on discussions with HMRI, the Company expects its programs with HMRI to continue under one overall agreement in the future. The Company anticipates that the annual funding under the consolidated agreement will be somewhat lower than the aggregate level of the annual funding under the three previously separate agreements. Since its commencement in 1991 and until the second quarter of fiscal 1995, the cancer diagnostics collaborative program with Becton has focused on both serum-based and histochemical immunoassays. During the second quarter of fiscal 1995, Becton decided to focus exclusively on cellular cancer diagnostics including histochemical immunoassays and reduce its funding under this program in fiscal 1996. The Company is uncertain as to the funding of this program thereafter. The Company is continuing the development of serum-based cancer diagnostic products and is in discussions with possible new collaborative partners in this area, but cannot predict the outcome. The Company believes that with the funding from its collaborative research programs, government research grants, interest income, and cash balances, the Company's financial resources are adequate for its current needs. However, the Company's capital requirements may vary as a result of a number of factors, including, competitive and technological developments, and the time and expense required to obtain governmental approval of products, some of which factors are beyond the Company's control. There can be no assurance that scheduled payments will be made by third parties, that current agreements will not be cancelled, that government research grants will continue to be received at current levels or that unanticipated events requiring the expenditure of funds will not occur. Further, there can be no assurance that the 21 22 Company will be able to obtain any additional required funds, or, if such funds are available, that such funds will be available on favorable terms. The Company expects to commence a new technology development program during fiscal year 1996. This program is intended to expand the Company's technological capabilities in the drug discovery area and is anticipated to involve an expenditure of $7-10 million over a 3-year period. The Company has not determined definitively the method or methods by which it will fund this program. The scope of this program and the total amount invested may be affected by the ability of the Company to obtain financing from external sources on terms the Company deems acceptable. 22 23 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Financial Statements:
Page Number ------ Independent Auditors' Report F-1 Consolidated Balance Sheets September 30, 1995 and 1994 F-2 Consolidated Statements of Operations - Years ended September 30, 1995, 1994 and 1993 F-3 Consolidated Statements of Stockholders' Equity - Years ended September 30, 1995, 1994 and 1993 F-4 Consolidated Statements of Cash Flows - Years ended September 30, 1995, 1994 and 1993 F-5 Notes to Consolidated Financial Statements F-7
23 24 INDEPENDENT AUDITORS' REPORT The Stockholders and Board of Directors Oncogene Science, Inc.: We have audited the accompanying consolidated balance sheets of Oncogene Science, Inc. and subsidiaries as of September 30, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended September 30, 1995. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated 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. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Oncogene Science, Inc. and subsidiaries at September 30, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended September 30, 1995 in conformity with generally accepted accounting principles. During fiscal 1994, the Company changed its method of accounting for income taxes and marketable securities to adopt the provisions of the Statements of Financial Accounting Standards No.109, "Accounting for Income Taxes", and No.115, "Accounting for Certain Investments in Debt and Equity Securities", respectively. KPMG PEAT MARWICK LLP Jericho, New York December 1, 1995 F-1 25 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1995 AND 1994
1995 1994 ---- ---- ASSETS - ------ Current assets: Cash and cash equivalents $17,919,609 $ 322,308 Short-term investments 8,866,957 17,835,583 Receivables, including trade receivables of $163,132 and $956,747 at September 30, 1995 and 1994, respectively 1,320,015 3,032,839 Inventory - 1,744,663 Interest receivable 45,263 147,222 Grants receivable 433,530 659,621 Prepaid expenses 518,150 445,464 ---------- ----------- Total current assets 29,103,524 24,187,700 ---------- ---------- Property, equipment and leasehold improvements - net 5,709,515 6,554,237 Other receivable 262,703 425,520 Loans to officers and employees 25,516 85,516 Other assets 325,582 118,068 Intangible assets - net 8,630,581 10,669,859 ----------- ----------- $44,057,421 $42,040,900 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable and accrued expenses $2,825,702 $2,522,171 Current portion of unearned revenue 150,041 457,384 --------- ---------- Total current liabilities 2,975,743 2,979,555 --------- ---------- Other liabilities: Long-term portion of unearned revenue 165,839 216,588 Accrued postretirement benefit cost 366,203 188,443 --------- ---------- Total liabilities 3,507,785 3,384,586 --------- ---------- Stockholders' equity: Common stock, $.01 par value; 50,000,000 shares authorized, 17,683,047 shares issued at September 30, 1995 and 16,564,715 shares issued at September 30, 1993 176,830 165,647 Additional paid-in capital 66,735,375 61,199,670 Accumulated deficit (26,129,341) (21,870,671) Cumulative foreign currency translation adjustment (55,669) (41,773) Unrealized holding loss on short-term investments (35,000) (654,000) ----------- ------------ 40,692,195 38,798,873 Less: treasury stock, at cost; 222,521 shares at September 30, 1995 and 1994 (142,559) (142,559) ----------- ------------ Total stockholders' equity 40,549,636 38,656,314 ---------- ----------- Commitments and contingencies $44,057,421 $42,040,900 =========== ===========
See accompanying notes to consolidated financial statements. F-2 26 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, ------------------------------------ 1995 1994 1993 ---- ---- ---- Revenues: Collaborative program revenues, principally from related parties $9,685,856 $ 9,089,295 $ 9,396,609 Sales 4,286,540 4,937,917 4,827,185 Other research revenue 1,892,603 2,272,277 1,864,227 ---------- ---------- ----------- 15,864,999 16,299,489 16,088,021 ---------- ---------- ----------- Expenses: Research and development 13,523,043 12,125,210 10,659,806 Production 1,252,990 1,427,981 1,443,649 Selling, general and administrative 7,140,208 7,487,090 6,429,701 Amortization of intangibles 1,696,561 1,745,163 1,745,713 ---------- ---------- ----------- 23,612,802 22,785,444 20,278,869 ---------- ---------- ----------- Loss from operations (7,747,803) (6,485,955) (4,190,848) ----------- ----------- ----------- Other income (expense): Net investment income 834,830 858,904 930,428 Other expense (66,086) (96,873) (45,622) Gain on sale of Research Products Business 2,720,389 - - ----------- ----------- ----------- Net loss $(4,258,670) $(5,723,924) $(3,306,042) ------------ ------------ ------------ Weighted average number of shares of common stock outstanding 16,757,370 16,335,000 16,080,000 =========== =========== =========== Net loss per weighted average share of common stock outstanding $ (.25) $ (.35) $ (.21) ============ ============ ===========
See accompanying notes to consolidated financial statements. F-3 27 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
Unrealized Foreign Holding Total Common stock Additional Currency Loss on Stock- ------------------- Paid-in Accumulated Translation Short-term Treasury holders' Shares Amount Capital Deficit Adjustment Investments Stock Equity ------ ------ ----------- ------------ ------------ ----------- -------- -------- Balance at September 30, 1992 15,285,092 $152,851 $54,791,281 $(12,840,705) $ - $ - $(142,559) $41,960,868 Options exercised 175,729 1,758 386,272 - - - - 388,030 Issuance of common stock for employee purchase plan 211 2 974 - - - - 976 Sale of common stock and warrants to Marion Merrell Dow 1,090,909 10,909 5,989,091 - - - - 6,000,000 Foreign currency translation adjustment - - - - 771 - - 771 Net loss - - - (3,306,042) - - - (3,306,042) ---------- -------- ----------- ----------- --------- -------- --------- ----------- Balance at September 30, 1993 16,551,941 165,520 61,167,618 (16,146,747) 771 - (142,559) 45,044,603 Options exercised 10,700 107 25,724 - - - - 25,831 Issuance of common stock for employee purchase plan and other 2,074 20 6,328 - - - - 6,348 Unrealized holding loss on short term investments - - - - - (654,000) - (654,000) Foreign currency translation adjustment - - - - (42,544) - - (42,544) Net loss - - - (5,723,924) - - - (5,723,924) ---------- -------- ----------- ------------ --------- -------- --------- ------------ Balance at September 30, 1994 16,564,715 165,647 61,199,670 (21,870,671) (41,773) (654,000) (142,559) 38,656,314 Options exercised 206,025 2,060 571,408 - - - - 573,468 Issuance of common stock for employee purchase plan and other 3,216 32 10,523 - - - - 10,555 Unrealized holding gain on short term investments - - - - - 619,000 - 619,000 Sale of common stock to Ciba-Geigy 909,091 9,091 4,953,774 - - - 4,962,865 Foreign currency translation adjustment - - - - (13,896) - - (13,896) Net loss - - - (4,258,670) - - - (4,258,670) ---------- -------- ----------- ------------ --------- -------- --------- ------------ Balance at September 30, 1995 17,683,047 $176,830 $66,735,375 $(26,129,341) $ (55,669) $(35,000) $(142,559) $40,549,636 ========== ======== =========== ============= ========== ========= ========= ===========
See accompanying notes to consolidated financial statements. F-4 28 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended September 30, ------------------------------------ 1995 1994 1993 ---- ---- ---- Cash flow from operating activities: Net loss $(4,258,670) $(5,723,924) $(3,306,042) Adjustments to reconcile net loss to net cash used by operating activities: Gain on sale of Research Products Business (2,720,389) - - Loss on sale of investments 118,141 - - Depreciation and amortization 1,037,044 1,165,809 955,952 Amortization of intangibles 1,696,561 1,745,163 1,745,713 Foreign exchange loss (13,896) (26,649) 5,319 Changes in assets and liabilities, net of the effects of the sale of the Research Products Business: Receivables 1,605,217 114,152 (1,052,526) Inventory 216,405 (197,570) (132,236) Interest receivable 101,959 (107,890) 171,643 Grants receivable 226,091 105,895 (497,240) Prepaid expenses (196,491) (98,068) 27,674 Other receivable 162,817 92,090 (517,610) Other assets (234,378) 23,863 (115,851) Accounts payable and accrued expenses (586,276) 232,439 468,673 Unearned revenue (358,092) 415,972 (209,500) Accrued postretirement benefit cost 177,760 78,568 109,875 ------- --------- ---------- Net cash used by operating activities $(3,026,197) $(2,180,150) $(2,346,156) ------------ ------------ ------------
Continued See accompanying notes to consolidated financial statements. F-5 29 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Years ended September 30, ------------------------------------ 1995 1994 1993 ---- ---- ---- Cash flows from investing activities: Additions to short-term investments (3,723,180) (5,918,880) (29,092,688) Maturities and sales of short-term investments 13,192,665 9,135,823 25,827,272 Additions to property, equipment and leasehold improvements (403,275) (1,512,543) (1,486,646) Disposition of equipment - - 12,028 Net change in loans to officers and employees 10,400 (40,258) (4,702) Proceeds from sale of Research Products Business 6,000,000 - - Foreign currency transaction - (15,897) (4,548) --------- ---------- ---------- Net cash provided by (used in) investing activities 15,076,610 1,648,245 (4,749,284) ---------- ---------- ----------- Cash flows from financing activities: Proceeds from issuance of common stock, net 4,962,865 - 6,000,000 Proceeds from exercise of stock options and employee stock purchase plan 584,023 32,180 389,006 Repayment of loan to stockholders - - 1,000,000 ---------- ---------- ---------- Net cash provided by financing activities 5,546,888 32,180 7,389,006 ---------- ---------- ---------- Net increase (decrease) in cash and cash equivalents 17,597,301 (499,725) 293,566 Cash and cash equivalents at beginning of year 322,308 822,033 528,467 ---------- ---------- ---------- Cash and cash equivalents at end of year $17,919,609 $ 322,308 $ 822,033 =========== ========== ==========
F-6 30 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Consolidation The consolidated financial statements of the Company include the accounts of Oncogene Science, Inc. and its wholly owned subsidiaries Applied bioTechnology, Inc. and Oncogene Science S.A., a foreign subsidiary. All intercompany balances and transactions have been eliminated. The Company is engaged in the research and development of biopharmaceutical products for the treatment and diagnosis of cancer, cardiovascular and other human diseases associated with abnormalities of cell growth and control. (b) Revenue Recognition Collaborative research revenues represent funding arrangements for the conduct of research and development ("R&D") in the field of biotechnology and are recognized when earned in accordance with the terms of the contracts and the related development activities undertaken. Other research revenues are recognized pursuant to the terms of grants which provide reimbursement of certain expenses related to the Company's other R&D activities. Collaborative and other research revenues are accrued for expenses incurred in advance of the reimbursement and deferred for cash payments received in advance of expenditures. Such deferred revenues are recorded as revenue when earned. (See Note 3) Revenue from the sale of diagnostic and research reagent products is recognized at time of shipment. (c) Patents and Goodwill As a result of the Company's research and development programs, including programs funded pursuant to the research and development funding agreements (See Note 4), the Company has applied for a number of patents in the United States and abroad. Such patent rights are of significant importance to the Company to protect products and processes developed. Costs incurred in connection with patent applications for the Company's research and development programs have been expensed as incurred. Patents and goodwill acquired in connection with the acquisition of Applied bioTechnology's cancer business in October 1991, have been capitalized and are being amortized on a straight-line basis over the remaining lives of the respective patents, and over five years for goodwill. The Company continually evaluates the recoverability of its intangible assets by assessing whether the amortized value can be recovered through expected future results. F-7 31 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (d) Research and Development Costs Research and development costs are charged to operations as incurred and include direct costs of research scientists and equipment and an allocation of laboratory facility and central service. In fiscal years 1995, 1994, and 1993 R&D activities include approximately $5,695,740, $3,516,000, and $3,012,000, of independent R&D, respectively. Independent R&D represents those research and development activities, including research and development activities funded by government research grants, substantially all the rights to which the Company will retain. The balance of research and development represents expenses under the collaborative agreements funded by Pfizer Inc. (Pfizer), Becton Dickinson and Co.(Becton), Wyeth-Ayerst, a division of American Home Products (Wyeth), Marion Merrell Dow Inc. (Marion), Hoechst AG and Hoechst-Roussel. On July 18, 1995, Marion, Hoechst AG and Hoechst-Roussel merged forming a new company named Hoechst Marion Roussel Inc. (HMRI). The Company believes all of the Hoechst collaborative agreements will continue under HMRI. (e) Inventories Inventories represent principally diagnostics and research reagent products and are stated at the lower of standard costs (approximating average costs) or market. During fiscal 1995, the Company sold the business and certain assets, including inventory, of the Research Products Business. (See Note 3) (f) Depreciation and Amortization Depreciation of equipment is provided over the estimated useful lives of the respective asset groups on a straight-line basis. Leasehold improvements are amortized on a straight-line basis over the lesser of the estimated useful lives or the remaining term of their lease. (g) Income Taxes Effective October 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). SFAS No. 109 requires that the Company recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under SFAS No. 109, deferred tax liabilities and assets are determined on the basis of the difference between the tax basis of assets and liabilities and their respective financial reporting amounts ("temporary differences") at enacted tax rates in effect for the years in which the differences are expected to reverse. F-8 32 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) The adoption of SFAS No. 109 did not have any impact on the financial position or results of operations of the Company. The Company, in years prior to fiscal 1994, accounted for income taxes in accordance with Accounting Principles Board Opinion No. 11, "Accounting for Income Taxes." (h) Loss Per Share Loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Common share equivalents (stock options) are not included in the computation since their inclusion would be anti-dilutive. (i) Cash and Cash Equivalents The Company includes as cash equivalents reverse repurchase agreements, treasury bills, and other time deposits with original maturities of three months or less. (2) Investments The Company invests its excess cash in U.S. Government securities and debt instruments of financial institutions and corporations with strong credit ratings. The Company has established guidelines relative to diversification of its cash investments and their maturities that should maintain safety and liquidity. These guidelines are periodically reviewed and modified to take advantage of trends in yields and interest rates. The Company uses the specific identification method to determine the cost of securities sold. The Company adopted SFAS No. 115, "Accounting for Investments in Certain Debt and Equity Securities," (SFAS No. 115) as of October 1, 1993. SFAS No. 115 requires securities classified as available for sale to be recorded at estimated fair value. The Company's short-term investments, which include United States Treasury obligations and corporate debt securities with original maturities in excess of one year, are classified as securities available for sale based upon management's current investment policy. Such investments, prior to the adoption of SFAS No. 115, were recorded at the lower of cost or estimated market value with aggregate declines in market value below amortized cost charged against earnings. Under SFAS No. 115, changes in the net unrealized gains or losses of available for sale securities are reported as a separate component in stockholder's equity. The adoption of SFAS No. 115 had no material impact on the Company's financial position. F-9 33 The following is a summary of available-for-sale securities as of September 30, 1995 and 1994:
GROSS UNREALIZED FAIR 1995 COST LOSSES VALUE ---- ---- (GAINS) ----- ------- US Treasury Securities and obligations of US Government agencies $6,232,027 $ (85,942) $6,146,085 Corporate debt securities 2,669,930 50,942 2,720,872 --------- --------- --------- TOTAL $8,901,967 $(35,000) $8,866,957 =========== ========= ==========
GROSS UNREALIZED FAIR 1994 COST LOSSES VALUE ---- ---- ------ ----- US Treasury Securities and obligations of US Government agencies $16,753,928 $ (458,000) $16,295,928 Corporate debt securities 1,735,655 (196,000) 1,539,655 ----------- ----------- ----------- TOTAL $18,489,583 $ (654,000) $17,835,583 =========== =========== ===========
Realized losses on sales of investments during fiscal 1995 were approximately $149,000. The Company has not realized any significant gains or losses on the sale of its short-term investments during fiscal years 1994 and 1993. (3) SALE OF RESEARCH PRODUCTS BUSINESS On August 2, 1995, the Company sold certain assets and the business of the Research Products Business (Business) to Calbiochem-Novabiochem International, Inc. (Calbiochem) for $6.0 million in cash. The assets sold included the Business' line of research products sold or intended for sale to the academic, industrial and clinical research markets, existing inventory, property and equipment and certain other assets. The Company retained the trade accounts receivable and accounts payable outstanding on the date of sale. In connection with the sale, the Company wrote off the unamortized goodwill related to the Business of approximately $343,000. The sale resulted in a net gain of approximately $2.7 million. The Company also signed a sublease agreement with Calbiochem relating to the Cambridge facility for a term of three years, at an annual payment equal to 50% of the Company's fixed lease payment F-10 34 and related facility costs, plus certain operating costs or approximately $448,000 per annum. (4) PRODUCT DEVELOPMENT CONTRACTS Effective April 1, 1986, the Company entered into a collaborative research agreement (the "Agreement") with Pfizer. On December 14, 1990, the Company and Pfizer entered into an agreement to extend the Agreement ("Extension Agreement") for up to an additional five years effective April 1, 1991. Pursuant to the Extension Agreement, Pfizer agreed to provide the Company with up to $16,225,000 in research funding, essentially on a ratable basis, over the five-year period ending April 1, 1996. In consideration for the funding commitments by Pfizer, the Company has granted to Pfizer certain rights to human cancer therapeutic products developed by the Company. On October 4, 1991, the Company and Becton established a collaborative research program to develop cancer diagnostic products. The Company and Becton share equally the cost of discovery phase and pre-clinical research and development. If Food and Drug Administration ("FDA") approval is obtained, these products will be sold to the clinical markets by Becton. The Company will retain some manufacturing rights. Unless terminated by either party, the collaborative research program will continue for an initial five-year term through September 30, 1996. Effective December 31, 1991, the Company entered into a collaborative research agreement with Wyeth. This agreement was extended and expanded in January 1994 for an additional 3 years to provide for additional funding of approximately $4,300,000. Effective January 1, 1993, the Company and Marion entered into a collaborative research and license agreement to identify and develop transcription-based drugs to treat certain indications in the area of cardiovascular disease. The agreement provided for payments to the Company of $11,000,000 in research funding and license fees over a five year period through December 31, 1997. Marion invested $6,000,000 in common stock (See Note 8(b)). The payments with respect to 1996 and 1997 are being consolidated into a proposed new research agreement. On January 4, 1993, the Company and Hoechst AG entered into a collaborative research agreement to jointly develop gene transcription-based drugs to treat certain indications in the areas of inflammation, viral infection and metabolic diseases. In April 1994, the Company and Hoechst-Roussel, a unit of Hoechst AG, entered into a collaborative agreement to discover and develop gene transcription-based drugs to treat Alzheimer's disease. On July 18, 1995 Marion was acquired by an affiliate of Hoechst AG. The new company was named HMRI. All of the Company's collaborative agreements with Marion, Hoechst AG and Hoechst-Roussel have continued under HMRI. The Company expects the related programs to continue under one overall agreement in the future. F-11 35 In April 1995, the Company entered into an agreement with Ciba-Geigy Ltd. ("Ciba") to expand the scope of the two companies' collaborative efforts with respect to the development of TGF-Beta3 for the treatment of oral mucositis and other indications. Under the agreement, the Company will fund development through Phase I clinical trials and Ciba will fund Phase II and III clinical trials. Ciba will pay the Company $10 million if, and at the time, it decides to initiate Phase IIB. or III clinical trials or, at the option of Ciba, within four years of the agreement date. The payment will be characterized, at Ciba's option, as a milestone payment or a purchase of the Company's common stock at the higher of $5.50 per share or the then current market price. In exchange for such payment, Ciba's license will be expanded to include all other indications for TGF-Beta3. Under the terms of aformentioned collaborative research agreements, the collaborative partners will pay the Company royalties ranging from 2% to 10% of net sales of products resulting from these research programs. To date, the Company has not received any royalties pursuant to these agreements. The Company or its collaborative partners may terminate each of the collaborative research programs upon the occurrence of certain events. Total collaborative research revenues under the aforementioned agreements are as follows:
YEARS ENDED SEPTEMBER 30, ------------------------- 1995 1994 1993 ---- ---- ---- Related Parties: Pfizer $3,505,427 $3,373,573 $4,768,606 Becton 1,400,094 1,392,314 1,334,534 HMRI 3,405,335 3,026,532 2,211,936 ---------- ---------- ---------- $8,310,856 $7,792,419 $8,315,076 Other 1,375,000 1,296,876 1,081,533 ---------- ---------- ---------- Total $9,685,856 $9,089,295 $9,396,609 ========== ========== ==========
F-12 36 (5) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS Property, equipment and leasehold improvements are recorded at cost and consist of the following:
SEPTEMBER 30, ESTIMATED ----------------- LIFE (YEARS) 1995 1994 ------------ ---- ---- Laboratory equipment 5-15 $6,765,012 $6,376,997 Office furniture and equipment 5-10 1,622,524 1,708,534 Automobile equipment 3 12,697 12,697 Leasehold improvements Life of lease 4,176,290 4,214,228 --------- --------- 12,576,523 12,312,456 Less: accumulated depreciation and amortization 6,867,008 5,758,219 --------- --------- Net property, equipment and leasehold improvements $5,709,515 $6,554,237 ========== ==========
(6) INTANGIBLE ASSETS The components of intangible assets are as follows:
SEPTEMBER 30, ---------------------------- 1995 1994 ---- ---- Patents $7,945,038 $ 8,712,250 Goodwill 685,543 1,957,609 ---------- ----------- $8,630,581 $10,669,859 ========== ===========
The above amounts reflect accumulated amortization of $5,808,119 and $5,236,407 at September 30, 1995 and 1994, respectively. (7) ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at September 30, 1995 and 1994 are comprised of:
SEPTEMBER 30, ------------------ 1995 1994 ---- ---- Accounts payable $1,497,601 $1,326,744 Accrued future lease escalations 355,516 282,718 Accrued payroll and employee benefits 243,073 155,039 Accrued incentive compensation 424,705 426,189 Accrued expenses 304,807 331,481 ------- ---------- $2,825,702 $2,522,171 ========== ==========
F-13 37 (8) STOCKHOLDERS' EQUITY (a) Stock Option Plans The Company has established three stock option plans for its employees, officers, directors and consultants. The Plans are administered by the Compensation Committee of the Board of Directors, which may grant either non-qualified or incentive stock options. The Committee determines the exercise price and vesting schedule at the time the option is granted. Options vest over various periods and may expire no later than 10 years from date of grant. The total authorized shares under these plans is 3,400,000. The following table summarizes changes in the number of common shares subject to options in the stock option plans during the years ended September 30, 1995, 1994 and 1993:
1995 1994 1993 ---- ---- ---- Beginning of year 2,048,325 1,644,945 1,278,045 Granted-$3.50 to $4.13 per share in 1995; $4.00 to $4.75 per share in 1994; $4.38 to $5.25 per share in 1993; 803,000 475,500 498,000 Exercised (206,025) (10,700) (109,729) Cancelled (624,021) (61,420) (21,371) --------- ---------- ---------- End of year-$1.75 to $5.63 per share 2,021,279 2,048,325 1,644,945 ========= ========== ========== Exercisable 952,883 1,081,874 790,899 ======= ========== ==========
At September 30, 1995, the Company has reserved 2,021,079 shares of its authorized common stock for all shares issuable under option. On March 22, 1995, the Company granted the right to current option holders to surrender their current options in exchange for replacement options on the basis of three replacement options for four options surrendered. The exercise price of the replacement options was $3.50 per share, which was greater than the market price on the date of exchange. The replacement options vested 25% upon grant with the remaining 75% vesting pro rata on a monthly basis over the following three years. Option holders surrendered 606,000 options in exchange for 454,500 replacement options. F-14 38 (b) Sale of Stock to Marion Merrell Dow In December 1992, the Company entered into the common stock purchase and common stock warrant purchase agreements with Marion. The company issued 1,090,909 shares of common stock at $5.50 per share and a warrant to purchase up to 500,000 additional shares at $5.50 per share which are exercisable during the period December 1994 to December 1999. The proceeds to the Company were $6,000,000. (c) Sale of Stock to Ciba-Geigy On April 19, 1995, Ciba-Geigy purchased 909,091 shares of the Company's common stock at $5.50 per share for an aggregate purchase price of $5,000,000. (d) Stock Purchase Plan On May 1, 1993, the Company adopted an Employee Stock Purchase Plan under which eligible employees may contribute up to 10% of their base earnings toward the quarterly purchase of the Company's Common Stock. The employees purchase price is derived from a formula based on the fair market value of the common stock. No compensation expense is recorded in connection with the plan. During fiscal 1995, 1994 and 1993, 3,216, 2,074 and 211 shares were issued with 18, 13 and 10 employees participating in the plan, respectively. (9) INCOME TAXES There is no provision (benefit) for federal or state income taxes, since the Company has incurred operating losses since inception and has established a valuation allowance equal to the total deferred tax asset. The tax effect of temporary differences, net operating loss carry-forwards and research and development tax credit carry-forwards as of September 30, 1994 and 1995 are as follows:
1995 1994 ---------- ----------- Deferred tax assets: Net operating loss carryforward $8,122,444 $6,421,863 Research & development credits 554,838 373,500 Inventory - 838,361 Intangible assets 1,274,336 863,220 Other 469,396 227,958 --------- -------- $10,421,014 $8,724,902 Valuation allowance (10,421,014) (8,724,902) ----------- ---------- $ - $ - ========== ==========
F-15 39 As of September 30, 1995, the Company has available federal net operating loss carry forwards of approximately $24 million which will expire in various years from 1999 to 2010, and may be subject to certain annual limitations. The Company's research and development tax credit carry forwards noted above expire in various years through from 1999 to 2010. (10) COMMITMENTS AND CONTINGENCIES (a) Lease Commitments The Company leases office, operating and laboratory space under various lease agreements. Rent expense was approximately $750,000, $743,000, and $656,000 for the fiscal years ended September 30, 1995, 1994, and 1993, respectively. The following is a schedule by fiscal years of future minimum rental payments required as of September 30, 1995, assuming expiration of the lease for the Uniondale facility on June 30, 2006 and the Cambridge facility on December 31, 2003. 1996 $ 587,800 1997 619,375 1998 627,163 1999 644,288 2000 and thereafter 4,319,474 ---------- $6,798,100 ==========
(b) Contingencies The Company has received several letters from other companies and universities advising the Company that various products being marketed and research being conducted by the Company may be infringing on existing patents of such entities. These matters are presently under review by management and outside counsel for the Company. Where valid patents of other parties are found by the Company to be in place, management will consider entering into licensing arrangements with the universities and/or other companies or discontinuing the sale or use of any infringing products. Management believes that the ultimate outcome of these matters will not have a material adverse effect on the financial position of the Company. (11) RELATED PARTY TRANSACTIONS Effective January 1, 1993, the Company compensates its independent outside directors on a $1,000 retainer per month. This amount increased to $1,500 effective January 1, 1995. For the years ended September 30, 1995, 1994 and 1993 such fees amounted to $99,000, $66,000 and $45,000, respectively. The Company also has compensated four directors for consulting services performed. Two F-16 40 directors have consulting agreements, the other two were paid on a per diem basis. For the years ended September 30, 1995, 1994 and 1993, consulting services in the amounts of $90,000, $85,000 and $56,000 respectively, were paid by the Company pursuant to these arrangements. One director is a partner in a law firm which represents the Company on its patent and license matters. Fees paid to this firm for the year ended September 30, 1995 are estimated to be approximately $260,000. Fees paid for this firm for the years ended September 30, 1994 and 1993 amounted to approximately $372,000 and $538,000, respectively. (12) EMPLOYEE SAVINGS AND INVESTMENT PLAN The Company sponsors an Employee Savings and Investment Plan under Section 401(k) of the Internal Revenue Code. The plan allows employees to defer from 2% to 10% of their income on a pre-tax basis through contributions into designated investment funds. For each dollar the employee invests up to 6% of his or her earnings, the Company will contribute an additional 50 cents into the funds. For the years ended September 30, 1995, 1994, and 1993, the Company's expenses related to the plan were approximately $180,000, $168,000 and $131,000, respectively. (13) EMPLOYEE RETIREMENT PLAN On November 10, 1992, the Company adopted a plan which provides postretirement medical and life insurance benefits to eligible employees, board members and qualified dependents. Eligibility is determined based on age and service requirements. These benefits are subject to deductibles, co-payment provisions and other limitations. The Company utilizes SFAS No. 106, "Employer's Accounting for Post Retirement Benefits Other Than Pensions" to account for the benefits to be provided by the plan. Under SFAS No. 106 the cost of post retirement medical and life insurance benefits is accrued over the active service periods of employees to the date they attain full eligibility for such benefits. As permitted by SFAS No. 106, the Company elected to amortize over a 20 year period the accumulated post retirement benefit obligation related to prior service costs. F-17 41 Net postretirement benefit cost includes the following components:
1995 1994 1993 ---- ---- ---- Service cost for benefits earned during the period $107,175 $ 65,830 $ 70,867 Interest cost on accumulated postretirement benefit obligation 47,181 15,591 19,742 Amortization of unrecognized net loss (gain) 5,855 (20,402) - Amortization of initial benefits attributable to past service 17,549 17,549 19,266 -------- -------- -------- Net postretirement benefit cost $177,760 $ 78,568 $109,875 ======== ======== ========
The accrued postretirement benefit cost at September 30, 1995 and 1994 were as follows:
1995 1994 ---- ---- Accumulated post retirement benefit obligation- fully eligible active plan participants $790,437 $285,582 Unrecognized cumulative net gain (loss) (121,517) 223,127 Unrecognized transition obligation (302,717) (320,266) --------- -------- Accrued postretirement benefit cost $366,203 $188,443 ========= ========
The accumulated postretirement benefit obligation was determined using a discount rate of 7.5 percent and a health care cost trend rate of approximately 12 percent decreasing to 6 percent in year 1999 and thereafter for 1995 and 1994. Increasing the assumed health care cost trend rates by one percentage point in each year and holding all other assumptions constant would increase the accumulated post-retirement benefit obligation as of September 30, 1995 and 1994 by approximately $106,000 and $94,000 respectively. F-18 42 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 24 43 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT The information required by this item is incorporated by reference to the similarly named section of the Registrant's Proxy Statement for its 1996 Annual Meeting to be filed with the Securities and Exchange Commission not later than 120 days after September 30, 1995. (The "1996 Proxy") ITEM 11. EXECUTIVE COMPENSATION The information required by this item is incorporated by reference to the similarly named section of the Registrant's 1996 Proxy. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated by reference to the similarly named section of the Registrant's 1996 Proxy. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated by reference to the similarly named section of the Registrant's 1996 Proxy. 25 44 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The following consolidated financial statements are included in Part II, Item 8: Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements (2) Financial statement schedules: All schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. (3) Exhibits - The list of all exhibits appears on pages 26, 27, 28, and 29. (b) Reports on Form 8-K None. 26 45 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ONCOGENE SCIENCE, INC. By /s/ GARY E. FRASHIER ----------------------------- Gary E. Frashier Chief Executive Officer Date: December 20, 1995 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 Company and in the capacities and on the dates indicated.
Signature Title Date --------- ----- ---- /s/ GARY E. FRASHIER Chief Executive Officer December 13, 1995 - ----------------------------- and Director Gary E. Frashier /s/ STEVE M. PELTZMAN President, Chief Operating December 13, 1995 - ----------------------------- Officer and Director Steve M. Peltzman /s/ J. GORDON FOULKES Vice President, Chief Scientific December 13, 1995 - ----------------------------- Officer and Director J. Gordon Foulkes, Ph.D. /s/ ROBERT L. VAN NOSTRAND Vice President, Finance and December 13, 1995 - ----------------------------- Administration (Principal Financial Robert L. Van Nostrand Officer) /s/ EDWIN A. GEE Director December 13, 1995 - ----------------------------- Edwin A. Gee, Ph.D. /s/ GARY TAKATA Director December 13, 1995 - ----------------------------- Gary Takata /s/ G. MORGAN BROWNE Director December 13, 1995 - ----------------------------- G. Morgan Browne /s/ WALTER MILLER Director December 13, 1995 - ----------------------------- Walter Miller /s/ JOHN P. WHITE Director December 13, 1995 - ----------------------------- John P. White, Esq. /s/ JOHN H. FRENCH, II Director December 13, 1995 - ----------------------------- John H. French, II /s/ WALTER M. LOVENBERG Director December 13, 1995 - ----------------------------- Walter M. Lovenberg, Ph.D. 27
46 INDEX TO EXHIBITS
Exhibits Page No. -------- -------- 3.1* Certificate of Incorporation, as amended 3.2* By-Laws 10.1 1985 Stock Option Plan (1) 10.2 1989 Incentive and Non-Qualified Stock Option Plan (3) 10.3 1993 Incentive and Non-Qualified Stock Option Plan (filed as an exhibit to the Company's Registration Statement on Form S-8 (File No. 33-64713), and incorporated herein by reference) 10.4 1993 Employee Stock Purchase Plan (filed as an exhibit to the Company's Registration Statement on Form S-8 (File No. 33-60182), and incorporated herein by reference) 10.5 Employment Agreement dated as of February 9, 1990 between the Company and Gary E. Frashier (3) 10.6 Employment Agreement dated as of August 27, 1991 between the Company and Steven M. Peltzman (4) 10.7 Employment Agreement dated December 30, 1986 between the Company and Gordon Foulkes (3) 10.8 Consulting Agreement between the Company and Dr. Edwin A. Gee (1) 10.9 Lease dated as of October 12, 1990 between the Company and Charles Bergwell (3) 10.10 First Amendment Lease dated April 2, 1993 between the Company and the Trustees of the Cambridge East Trust (filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1993, and incorporated herein by reference) 10.11 Form of Warrant Purchase Agreement (1) 10.12 Agreement dated as of February 18, 1987 between The University of Massachusetts and Applied bioTechnology, Inc. (2)
28 47 10.13 Letter Agreement dated October 1, 1991 among AbT Acquisition Corp., the Company and E.I. DuPont de Nemours and Company (2) 10.14 Agreement dated as of September 16, 1991 between Applied bioTechnology, Inc. and Becton Dickinson and Company (2) 10.15 Amendment and Consent to Assignment dated as of October 4, 1991 between the Company and Becton Dickinson and Company (2) 10.16 Collaborative Research Agreement dated as of October 4, 1991 between the Company and Becton Dickinson and Company (2) 10.17 License Agreement between the Company and Becton Dickinson and Company (2) 10.18 Amendment dated December 5, 1991 to License Agreement between the Company and Becton Dickinson and Company (4) 10.19* OSI Royalty Free License Agreement dated April 1, 1986 between the Company and Pfizer Inc. 10.20* Pfizer Royalty Free License Agreement dated April 1, 1986 between the Company and Pfizer Inc. 10.21* Royalty Agreement dated April 1, 1986 between the Company and Pfizer Inc. 10.22 License Agreement dated December 14, 1990 between the Company and Pfizer Inc. (3) 10.23 Collaborative Research Agreement dated April 1, 1991 between the Company and Pfizer Inc. (3) 10.24 Collaborative Research Agreement dated as of December 31, 1991 between the Company and American Home Products Corporation (5) 10.25 Common Stock Purchase Warrant granted to Marion Merrell Dow, Inc. dated December 11, 1992 (5) 10.26 Collaborative Research and License Agreement dated December 11, 1992 between the Company and Marion Merrell Dow, Inc. (5) 10.27* Collaborative Agreement dated as of April 19, 1995 between the Company and Ciba-Geigy Limited 10.28* Letter Agreement dated as of April 19, 1995 between the Company and Ciba-Geigy Limited
29 48 10.29* Registration Rights Agreement dated as of April 19, 1995 between the Company and Ciba-Geigy Limited 10.30 Asset Purchase Agreement dated June 26, 1995 among the Company, Calbiochem-Novabiochem International, Inc. and Calbiochem-Novabiochem Corporation (6) 10.31 Sublease dated August 2, 1995 between the Company and Calbiochem-Novabiochem Corporation (6) 10.32 New Product License Right of First Refusal Agreement dated August 2, 1995 between the Company and Calbiochem-Novabiochem Corporation (6) 21* Subsidiaries of the Company 23* Consent of KPMG Peat Marwick, LLP, independent public accountants 27* Financial Data Schedule
- ------------------------ * Filed herewith. (1) Filed as an exhibit to the Company's registration statement on Form S-1 (File No. 33-3148), and incorporated herein by reference. (2) Filed as an exhibit to the Registrant's registration statement on Form S-2, as amended (File No. 33-42369), and incorporated herein by reference. (3) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1990, and incorporated herein by reference. (4) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1991, and incorporated herein by reference. (5) Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1992, as amended, and incorporated herein by reference. (6) Filed as an exhibit to the Company's Current Report on Form 8-K dated August 2, 1995, and incorporated herein by reference. 30 EX-3.1 2 CERTIFICATE OF INCORPORATION, AS AMENDED 1 EXHIBIT 3.1 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. I, the President of Oncogene Science, Inc., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), do hereby certify that (i) Article Fourth of the Corporation's Certificate of Incorporation has been amended in its entirety to read as set forth below, and (ii) such amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of stock that the Corporation shall have authority to issue is 50,000,000 shares of common stock, having a par value of $.01 per share, all of the same class. IN WITNESS WHEREOF, I have hereunto set my hand and seal as of the 31st day of March, 1993. (Corporate Seal) Attest: /s/ Theresa R. Dragone /s/ Gary E. Frashier (SEAL) - ----------------------------- ----------------------- Theresa R. Dragone Gary E. Frashier, President Secretary 2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. ----------------------------------------- Adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware ----------------------------------------- We, the President and Secretary of ONCOGENE SCIENCE, INC., a corporation existing under the laws of the State of Delaware, do hereby certify as follows: FIRST: That Article IX of the Certificate of Incorporation of said corporation has been amended in its entirety to read as follows: ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative ("Proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was the director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (out, in the case of -1- 3 any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that the Corporation shall indemnify any such person seeking indemnity in connection with a Proceeding (or part thereof) initiated by such person only if the proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 1 shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such Proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director of officer is not entitled to be indemnified under this Section or otherwise. SECTION 2. Non-Exclusivity of Rights. The rights conferred on any person by Section 1 shall not be exclusive of any other right which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-laws, agreement, vote of stockholders or disinterested directors, or otherwise. SECTION 3. Limitation of Liability of Directors. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General -2- 4 Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. SECTION 4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. SECOND: That such amendment has been duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware by the affirmative vote of the holders of not less than a majority of the outstanding stock entitled to vote thereon. IN WITNESS WHEREOF, we have signed this certificate this 9th day of April, 1987. /s/ Robert E. Ivy ---------------------------- Robert E. Ivy, President ATTEST: /s/ Gary Takata ---------------------------- Gary Takata, Secretary -3- 5 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. ----------------------------------------- Adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware ----------------------------------------- We, the President and Secretary of ONCOGENE SCIENCE, INC., a corporation existing under the laws of the State of Delaware, do hereby certify as follows: FIRST: That Article FOURTH of the Certificate of Incorporation of said corporation has been amended in its entirety to read as follows: "FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is 20,000,000 shares of common stock, of the par value of $.01 per share, all of the same class." SECOND: That such amendment has been duly adopted in accordance with the provisions of the General Corporation Law of the State of Delaware by the written consent of the holders of not less than a majority of the outstanding stock entitled to vote thereon and that written notice of the corporation action has been given to those stockholders who have not consented in writing, all in accordance with the provisions of Section 228 of the General Corporation Law. 6 IN WITNESS WHEREOF, we have signed this certificate this 18th day of January, 1986. /s/ Robert E. Ivy ---------------------------- Robert E. Ivy, President ATTEST: /s/ Gary Takata ---------------------------- Gary Takata, Secretary -2- 7 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. -------------------------------- (a Delaware corporation) -------------------------------- Adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware -------------------------------- THE UNDERSIGNED, Steven Gelles, sole incorporator of ONCOGENE SCIENCE, INC., does hereby certify: FIRST: That the Certificate of Incorporation of ONCOGENE SCIENCE, INC. (the "Corporation") was filed in the office of the Secretary of State of Delaware on March 6, 1983 and a certified copy thereof was recorded in the office of the Recorder of Kent County, Delaware on March 16, 1983. SECOND: That the Corporation has not received payment for its stock. THIRD: That the Certificate of Incorporation of the Corporation is amended as follows: (i) By striking out paragraph FIRST thereof as it now exists and inserting in lieu thereof ARTICLE I, reading as follows: ARTICLE I NAME The name of the corporation is ONCOGENE SCIENCE, INC. (ii) By striking out paragraph SECOND thereof as it now exists and inserting in lieu thereof ARTICLE II, reading as follows: 8 ARTICLE II REGISTERED OFFICE AND REGISTERED AGENT The registered office of the Corporation in the State of Delaware is located at 229 South State Street, City of Dover, County of Kent. The name and the address of the registered agent of the Corporation in the State of Delaware is The Prentice-Hall Corporation System, Inc., 229 South State Street, Dover, Delaware. (iii) By striking out paragraph THIRD thereof as it now exists and inserting in lieu thereof ARTICLE III, reading as follows: ARTICLE III CORPORATE PURPOSES AND POWERS The nature of the business of the Corporation, or the objects or purposes to be transacted, promoted or carried on by the Corporation are any and all lawful acts or activities for which corporations may be organized under the General Corporation Law of Delaware, including but not limited to research and development, manufacture, production, purchase or acquisition, and sale, licensing, leasing, or disposition of materials, supplies, substances, chemicals or equipment used or useful in the field of biotechnology or in any other field in which such materials, supplies, substances, chemicals or equipment may profitably be used. (iv) By striking out paragraph FOURTH thereof as it now exists and inserting in lieu thereof ARTICLE IV, reading as follows: ARTICLE IV CAPITAL STOCK The amount of the total authorized capital stock of this Corporation is One Hundred Thousand Dollars ($100,000) consisting of Ten Million (10,000,000) common shares, with a par value of one cent ($.01) each. (v) By striking out paragraph FIFTH thereof as it now exists and inserting in lieu thereof ARTICLE V, reading as follows: ARTICLE V INCORPORATOR The name and mailing address of the sole incorporator of the Corporation is: -2- 9 Name Address ---- ------- Steven Gelles 122 East 42nd Street Suite 606 New York, New York 10168 (vi) By adding thereto additional ARTICLES VI - XI, reading as follows: ARTICLE VI POWERS OF BOARD OF DIRECTORS In addition to and not in limitation of the powers conferred by statute, the board of directors of the Corporation expressly is authorized: (a) To make, adopt, alter, amend or repeal the by-laws, except as otherwise expressly provided in any by-law adopted by the holders of Capital Stock of the Corporation entitled to vote thereon. Any by-law may be altered, amended or repealed by the holders of Capital Stock of the Corporation entitled to vote thereon at any annual meeting or at any special meeting called for that purpose; (b) To authorize and cause to be executed mortgages, liens, and other security interests upon the real and personal property of the Corporation; (c) To determine the use and disposition of any surplus and net profits of the Corporation including, without limitation by specification, the determination of the amount of working capital required by the Corporation, to set apart out of any of the funds of the Corporation, whether or not available for dividends, a reserve or reserves for any proper purpose and to abolish any such reserve in the manner in which it was created; (d) To designate, by resolution passed by a majority of the members of the board of directors, one or more committees, each consisting of two or more directors of the Corporation which, to the extent provided in the resolution designating the committee or provided in the by-laws of the Corporation, have and may exercise, subject to the provisions of the General Corporation Law of Delaware, all the powers and authority of the board of directors in the management of the business and affairs of the Corporation. Such committee or committees may authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be provided in the by-laws of the Corporation or as may be determined from time to time by resolution adopted by the board of directors; -3- 10 (e) To grant rights or options entitling the holders thereof to purchase from the Corporation shares of its Capital Stock evidenced by or in such instrument or instruments as shall be approved by the board of directors. The terms upon which, the time or times at or within which, the persons to whom, and the price or prices at which any such rights or options may be issued and any shares of Capital Stock may be purchased from the Corporation upon the exercise of any such right or option shall be such as shall be fixed in a resolution or resolutions adopted by the board of directors providing for the creation and issuance of such rights or options. In the absence of actual fraud in the transaction, the judgment of the board of directors as to the consideration for the issuance of such rights or options and the sufficiency thereof shall be conclusive. No such rights or options shall be invalidated or in any way affected by the fact that any director shall be a grantee thereof or shall vote for the issuance of such rights or options to himself or for any plan pursuant to which he may receive any such rights or options; (f) To adopt such plans as from time to time may be approved by the board of directors for the purchase by officers or employees of the Corporation and of any corporation either affiliated with or a subsidiary of the Corporation of shares of Capital Stock of the Corporation. The terms upon which, the time or times at or within which and the price or prices at which shares of Capital Stock may be purchased from the Corporation pursuant to such plan shall be fixed in the plan by the board of directors. No such plan which is not at the time of adoption unreasonable or unfair shall be invalid or in any way affected because any director shall be entitled to purchase shares of Capital Stock of the Corporation thereunder and shall vote for such plan; (g) To adopt or assume and carry out such plans as from time to time may be approved by the board of directors for the distribution among the officers or employees of the Corporation and of any corporation which is affiliated with or a subsidiary of the Corporation, or any of them, in addition to their regular salaries, of part of the earnings of the Corporation, in consideration for or in recognition of services rendered by such officers or employees or as an inducement to future efforts. No such plan which is not at the time of adoption or assumption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan under which he may benefit or for any distribution thereunder in which he may participate; (h) To adopt such pension, profit sharing, retirement, deferred compensation or other employee benefit plans or provisions as may, from time to time, be approved by the board of directors, providing for pensions, profit sharing, retirement income, deferred compensation or other benefits for officers or employees of the Corporation and of any corporation which is affiliated with or a subsidiary of the Corporation, or any of them, in consideration for or in recognition of the services rendered by such officers or employees or as an inducement to future efforts. No -4- 11 such plan or provision, which is not at the time of adoption unreasonable or unfair shall be invalidated or in any way affected because any director shall be a beneficiary thereunder or shall vote for any plan or provision under which he may benefit; and (i) To exercise, in addition to the powers and authorities herein or by law conferred upon the board of directors, any such powers and authorities and do all such acts and things as may be exercised or done by the Corporation subject, nevertheless, to the provisions of the General Corporation Law of Delaware, this certificate of incorporation and any by-laws from time to time adopted by the holders of Capital Stock of the Corporation entitled to vote thereon. ARTICLE VII MEETINGS AND CONSENTS OF STOCKHOLDERS AND DIRECTORS; CORPORATION BOOKS; ELECTIONS OF DIRECTORS; AND NOTICES Meetings of holders of Capital Stock of the Corporation and of the board of directors and of any committee thereof may be held outside the State of Delaware if the by-laws so provide. Except as otherwise provided by law or by this certificate of incorporation, any action required to be taken at any annual, or special meeting of stockholders of the Corporation or any action which may be taken at any annual or special meeting of such stockholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding Capital Stock having not less than the minimum number of votes that would be necessary to authorize or to take such action at a meeting at which all shares of Capital Stock entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. Any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting as provided by statute if the by-laws of the Corporation so provide. Except as otherwise provided by law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the board of directors or in the by-laws of the Corporation. The elections of directors need not be by ballot unless the by-laws of the Corporation so provide. Any notice permitted or required by this certificate of incorporation shall be written, signed by the sender and mailed, postage prepaid, in the United States by certified or registered mail. ARTICLE VIII TRANSACTIONS WITH DIRECTORS AND OFFICERS No contract or transaction between the Corporation and one or more of its directors or officers or between the Corporation and any other corporation, partnership, -5- 12 association or other organization, in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for such reason or solely because the director or officer is present at or participates in the meeting of the board of directors or committee thereof which authorizes the contract or transaction or solely because his or their votes are counted for such purpose if: (a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee and the board of directors or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors even though the disinterested directors may be less than a quorum; or (b) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the stockholders or the board of directors or of a committee which authorizes the contract or transaction. ARTICLE IX INDEMNIFICATION AND INSURANCE SECTION 1. Indemnification by Corporation. (a) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than action by or in the right of the Corporation) by reason of the fact that he is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall be indemnified by the Corporation, unless similar indemnification is provided by such other corporation or organization which may be involved (any funds received by any person as a result of the provisions of this Article shall be deemed an advance against his receipt of any such other indemnification from any such other corporation or organization), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Any such person who could be indemnified pursuant to the preceding sentence except for the fact that the subject action or suit is or was by or in the right of the Corporation shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by him, in connection with the defense or settlement of such -6- 13 action or suit except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duties to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper; (b) To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in paragraph (a) of this Section 1 or in defense of any claim, issue or matter therein, he shall be indemnified by the Corporation against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith without the necessity of any action being taken by the Corporation other than the determination, in good faith, that such defense has been successful. In all other cases wherein indemnification is provided by this Article, unless ordered by a court, indemnification shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct specified in this Article. Such determination shall be made: (1) By the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding; or (2) if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion; or (3) by the holders of a majority of the Capital Stock outstanding; (c) The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not create, of itself, a presumption that the person seeking indemnification did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Entry of a judgment by consent as part of a settlement shall not be deemed final adjudication of liability for negligence or misconduct in the performance of duty or of any other issue or matter; (d) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by the director, officer, employee or agent involved to repay such amount unless it ultimately shall be determined that he is entitled to be indemnified by the Corporation; and -7- 14 (e) The indemnification provided in this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. SECTION 2. Insurance. By action of the board of directors, notwithstanding any interest of the directors in the action, the Corporation may purchase and maintain insurance, in such amounts as the board of directors deems appropriate, on behalf of any person who is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation shall have the power to indemnify him against such liability under the provisions of this Article. ARTICLE X COMPROMISE OR ARRANGEMENT BETWEEN CORPORATION AND ITS CREDITORS OR STOCKHOLDERS Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation. -8- 15 ARTICLE XI RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION The Corporation reserves the right to amend, alter, change or repeal any provisions contained in this certificate of incorporation in the manner now or hereafter prescribed by law and by this certificate of incorporation. All the provisions of this certificate of incorporation and all rights and powers conferred in this certificate of incorporation on stockholders, directors and officers are subject to such reserved power. FOURTH: That such amendment has been duly adopted in accordance with the provision of Section 241 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, I have signed this certificate this 15th day of April, 1983. /s/ Steven Gelles -------------------------- STEVEN GELLES -9- 16 CERTIFICATE OF INCORPORATION OF ONCOGENE SCIENCE, INC. FIRST: The name of this Corporation is ONCOGENE SCIENCE, INC. SECOND: Its Registered Office in the State of Delaware is to be located at 600 Bay Road, in the City of Dover, Zip Code 19901. The Registered Agent in charge thereof is Ms. Pam Goldsborough. THIRD: The purpose of the Corporation is to perform research and to develop, manufacture, produce, purchase or otherwise acquire, and to sell, license, lease or otherwise dispose of materials, supplies, substances, chemicals or equipment used or useful in the field of Biotechnology or in any other field in which such materials, supplies, substances, chemicals or equipment may be profitably used and to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The amount of the total authorized capital stock of this Corporation is One Hundred Thousand Dollars ($100,000) divided into Ten Million (10,000,000) shares, of One Cent ($.01) each. FIFTH: The name and mailing address of the incorporator are as follows: Name: Steven Gelles Mailing Address: 122 East 42nd Street, Suite 606 Zip Code: New York, New York 10168 I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws of the State of Delaware, do make, file and record this Certificate, and do certify that the facts herein stated are true, and I have accordingly hereto set my hand this Tenth day of March, 1983. /s/ Steven Gelles - ---------------------------- ------------------------------ - ---------------------------- EX-3.2 3 BY-LAWS 1 EXHIBIT 3.2 ONCOGENE SCIENCE, INC. A Delaware corporation BY-LAWS ------------------------ ARTICLE I STOCKHOLDERS Section 1.1 Annual Meeting An annual meeting of stockholders for the purpose of electing directors and of transacting such other business as may come before it shall be held each year at such date, time, and place, either within or without the State of Delaware, as may be specified by the Board of Directors. Section 1.2 Special Meetings Special meetings of stockholders for any purpose or purposes may be held at any time upon call of the Chairman or the Board, if any, the President or a majority of the Board of Directors, at such time and place either within or without the State of Delaware as may be stated in the notice. A special meeting of stockholders shall be called by the President upon the written request, stating time, place, and the purpose or purposes of the meeting, of stockholders who together own of record a majority of the outstanding stock of all classes entitled to vote at such meeting. Section 1.3 Notice of Meetings Written notice of stockholders meetings, stating the place, date, and hour thereof, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the Chairman of the Board, if any, the President, any Vice 2 President, the Secretary, or an Assistant Secretary, to each stockholder entitled to vote thereat at least ten days but not more than sixty days before the date of the meeting, unless a different period is prescribed by law. Section 1.4 Quorum Except as otherwise provided by law or in the Certificate of Incorporation or these By-Laws, at any meeting of stockholders, the holders of a majority of the outstanding shares of each class of stock entitled to vote at the meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business. In the absence of a quorum, a majority in interest of the stockholders present or the chairman of the meeting may adjourn the meeting from time to time in the manner provided in Section 1.5 of these By-Laws until a quorum shall attend. Section 1.5 Adjournment Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.6 Organization The Chairman of the Board, if any, or in his absence the President, or in their 2 3 absence any Vice President, shall call to order meetings of stockholders and shall act as chairman of such meetings. The Board of Directors or, if the Board fails to act, the stockholders may appoint any stockholder, director, or officer of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board, the President, and all Vice Presidents. The Secretary of the Corporation shall act as secretary of all meetings of stockholders, but, in the absence of the Secretary, the chairman of the meeting may appoint any other person to act as secretary of the meeting. Section 1.7 Voting Except as otherwise provided by law or in the Certificate of Incorporation or these By-Laws and except for the election of directors, at any meeting duly called and held at which a quorum is present, a majority of the votes cast at such meeting upon a given question by the holders of outstanding shares of stock of all classes of stock of the Corporation entitled to vote thereon who are present in person or by proxy shall decide such question. At any meeting duly called and held for the election of directors at which a quorum is present, directors shall be elected by a plurality of the votes cast by the holders (acting as such) of shares of stock of the Corporation entitled to elect such directors. ARTICLE II BOARD OF DIRECTORS Section 2.1 Number and Term of Office The business, property, and affairs of the Corporation shall be managed by or under the direction of a Board of seven directors provided, however, that the Board, by 3 4 resolution adopted by vote of a majority of the then authorized number of directors, may increase or decrease the number of directors. The directors shall be elected at the annual meeting of stockholders, and each shall serve (subject to the provisions of Article IV) until the next succeeding annual meeting of the stockholders and until his respective successor has been elected and qualified. Section 2.2 Chairman of the Board The directors may elect one of their members to be Chairman of the Board of Directors. The Chairman shall be subject to the control of and may be removed by the Board of Directors. He shall perform such duties as may from time to time be assigned to him by the Board. Section 2.3 Meetings The annual meeting of the Board of Directors, for the election of officers and the transaction of such other business as may come before the meeting, shall be held without notice at the same place as, and immediately following, the annual meeting of the stockholders. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Special meetings of the Board of Directors shall be held at such time and place as shall be designated in the notice of the meeting whenever called by the Chairman of the Board, if any, the President, or by a majority of the directors then in office. Section 2.4 Notice of Special Meetings The secretary, or in his absence any other officer of the Corporation, shall 4 5 give each director notice of the time and place of holding of special meetings of the Board of Directors by mail at least three days before the meeting, or by telegram, cable, radiogram, or personal service at least one day before the meeting. Unless otherwise stated in the notice thereof, any and all business may be transacted at any meeting without specification of such business in the notice. Section 2.5 Quorum and Organization of Meetings A majority of the total number of members of the Board of Directors as constituted from time to time shall constitute a quorum for the transaction of business, but, if at any meeting of the Board of Directors (whether or not adjourned from a previous meeting) there shall be less than a quorum present, a majority of those present may adjourn the meeting to another time and place, and the meeting may be held as adjourned without further notice or waiver. Except as otherwise provided by law or in the Certificate of Incorporation or these By-Laws, a majority of the entire Board of Directors may decide any question brought before such meetings. Meetings shall be presided over by the Chairman of the Board, if any, or in his absence by the President, or in the absence of both such other person as the directors may select. The Secretary of the Corporation shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.6 Committees The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate 5 6 members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all powers and authority of the Board of Directors in the management of the business, property, and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have power or authority in reference to amending the Certificate of Incorporation of the Corporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of dissolution, or amending these By-Laws; and, unless the resolution expressly so provided, no such committee shall have power or authority to declare a dividend or to authorize the issuance of stock. Each committee which may be established by the Board of Directors or these By-Laws may fix its own rules and procedures. Notice of meetings of committees, other than of regular meetings provided for by the rules, shall be given to committee members. All action taken by the committees shall be recorded in minutes of the meetings. Section 2.7 Action Without Meeting Nothing contained in these By-Laws shall be deemed to restrict the power of 6 7 the directors or members of any committee to take any action, required or permitted to be taken by them, without meeting. Section 2.8 Telephone Meetings Nothing contained in these By-Laws shall be deemed to restrict the power of members of the Board of Directors, or any committee designated by the Board, to participate in a meeting of the Board, or committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. ARTICLE III OFFICERS Section 3.1 Executive Officers The executive officers of the Corporation shall be a President, a Scientific Director, one or more Vice Presidents, a Treasurer, and a Secretary, each of whom shall be elected by the Board of Directors. The Board of Directors may elect or appoint such other officers (including a Chairman of the Board, Chief Financial Officer, a Controller and one or more Assistant Treasurers and Assistant Secretaries) as it may deem necessary or desirable. Each officer shall hold office for such term as may be prescribed by the Board of Directors from time to time. Any person may hold at one time two or more offices. Section 3.2 Powers and Duties The Chairman of the Board, if any, or, in his absence, the President, shall preside at all meetings of the stockholders and of the Board of Directors. The President shall be the chief executive officer of the Corporation. In the absence of the President, a Vice 7 8 President appointed by the President or, if the President fails to make such appointment, by the Board, shall perform all the duties of the President. The officers and agents of the Corporation shall each have such powers and authority and shall perform such duties in the management of the business, property, and affairs of the Corporation as generally pertain to their respective offices, as well as such powers and authorities and such duties as from time to time may be prescribed by the Board of Directors. ARTICLE IV RESIGNATIONS, REMOVALS AND VACANCIES Section 4.1 Resignations Any director or officer of the Corporation, or any member of any committee, may resign at any time by giving written notice to the Board of Directors, the President, or the Secretary of the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified therein, then upon receipt thereof. The acceptance of such resignation shall not be necessary to make it effective. Section 4.2 Removals The Board of Directors, by a vote of not less than a majority of the entire Board, at any meeting thereof, or by written consent, at any time, may, to the extent permitted by law, remove with or without cause from office or terminate the employment of any officer or member of any committee and may, with or without cause, disband any committee. 8 9 Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares entitled at the time to vote at an election of directors. Section 4.3 Vacancies Any vacancy in the office of any director or officer through death, resignation, removal, disqualification, or other cause, and any additional directorship resulting from increase in the number of directors, may be filled at any time by a majority of the directors then in office (even though less than a quorum remains) or, in the case of any vacancy in the office of any director, by the stockholders, and, subject to the provisions of this Article IV, the person so chosen shall hold office until his successor shall have been elected and qualified; or, if the person so chosen is a director elected to fill a vacancy, he shall (subject to the provisions of this Article IV) hold office for the unexpired term of his predecessor. ARTICLE V CAPITAL STOCK Section 5.1 Stock Certificates The certificates for share of the capital stock of the Corporation shall be in such form as shall be prescribed by law and approved, from time to time, by the Board of Directors. Section 5.2 Transfer of Shares Shares of the capital stock of the Corporation may be transferred on the books of the Corporation only by the holder of such shares or by his duly authorized attorney, upon 9 10 the surrender to the Corporation or its transfer agent of the certificate representing such stock properly endorsed. Section 5.3 Fixing Record Date In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which, unless otherwise provided by law, shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. Section 5.4 Lost Certificates The Board of Directors or any transfer agent of the Corporation may direct a new share certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen, or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen, or destroyed certificate or certificates, or his legal representative, to give the Corporation bond in such sum as the Board of Directors shall direct to indemnify the Corporation against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed or 10 11 the issuance of such new certificates, and such requirement may be general or confined to specific instances. Section 5.5 Regulations The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancellation, and replacement of certificates representing stock of the Corporation. ARTICLE VI MISCELLANEOUS Section 6.1 Corporate Seal The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization, and the words "Corporate Seal" and "Delaware", and shall be in such form as may be approved from time to time by the Board of Directors. Section 6.2 Fiscal Year The fiscal year of the Corporation shall be determined by resolution of the Board of Directors. Section 6.3 Notices and Waivers Thereof Whenever any notice is required by law, the Certificate of Incorporation, or these By-Laws to by given to any stockholder, director, or officer, such notice, except as otherwise provided by law, may be given personally, or by mail, or in the case of directors or officers, by telegram, cable, or radiogram, addressed to such address as appears on the books or the Corporation. Any notice given by telegram, cable, or radiogram shall be deemed to have been given when it shall have been delivered for transmission and any notice 11 12 given by mail shall be deemed to have been given when it shall have been deposited in the United States mail with postage thereon prepaid. Whenever any notice is required to be given by law, the Certificate of Incorporation, or these By-Laws, a written waiver thereof, signed by the person entitled to such notice, whether before or after the meeting or the time stated therein, shall be deemed equivalent in all respects to such notice to the full extent permitted by law. Section 6.4 Stock of Other Corporations Other Interests Unless otherwise ordered by the Board of Directors, the President, the Secretary, and such attorneys or agents of the Corporation as may be from time to time authorized by the Board of Directors or the President, shall have full power and authority on behalf of this Corporation to attend and to act and vote in person or by proxy at any meeting of the holders of securities of any corporation or other entity in which this Corporation may own or hold shares or other securities, and at such meetings shall possess and may exercise all the rights and powers incident to the ownership of such shares or other securities which this Corporation, as the owner or holder thereof, might have possessed and exercised if present. The President, the Secretary or such attorneys or agents, may also execute and deliver on behalf of the Corporation powers of attorney, proxies, consents, waivers and other instruments relating to the shares or securities owned or held by this Corporation. ARTICLE VII AMENDMENTS The holders of shares entitled at the time to vote for the election of directors shall have power to adopt, amend, or repeal the By-Laws of the Corporation by vote of not 12 13 less than a majority of such shares, and except as otherwise provided by law, the Board of Directors shall have power equal in all respects to that of the stockholders to adopt, amend, or repeal the By-Laws by vote of not less than a majority of the entire Board. However, any By-Law adopted by the board may be amended or repealed by vote of the holders of a majority of the shares entitled at the time to vote for the election or directors. 13 EX-10.19 4 OSI ROYALTY FREE LICENSE AGREEMENT 1 EXHIBIT 10.19 OSI ROYALTY FREE LICENSE This AGREEMENT is entered into as of April 1, 1986 by and between PFIZER INC. ("PFIZER"), a Delaware corporation having an office at 235 East 42nd Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation having an office at 222 Station Plaza North, Suite 330, Mineola, New York, 11501. The parties agree as follows: 1. DEFINITIONS The capitalized terms used herein have the meanings specified in Exhibits I, II, III and IV of the Collaborative Research Agreement dated as of April 1, 1986 between PFIZER and OSI. 2. GRANT 2.1. PFIZER grants to OSI an exclusive, irrevocable, worldwide, royalty-free, perpetual right and license, including the right to grant sublicenses, under Joint Patent Rights and Joint Technology to make, have made, use and sell products in the following fields of use: (a) in vitro and in vivo diagnostics, including in vivo imaging; and (b) Monoclonal Antibody Technology; and (c) products sold exclusively for research use. 2 2.2. PFIZER grants to OSI a nonexclusive, irrevocable, worldwide, royalty-free, perpetual right and license, including the right to grant sublicenses, under Joint Patent Rights and Joint Technology to make, have made, use and sell products in all fields of use other than those listed in Section 2.1. 3. INFRINGEMENT 3.1. OSI shall have the right, at its expense, to institute actions under Joint Patent Rights and Joint Technology for infringement or misappropriation in the fields of use in which PFIZER has granted rights to OSI. 4. MISCELLANEOUS 4.1. This Agreement is made and delivered in New York and shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York. -2- 3 4.2. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. ONCOGENE SCIENCE, INC. By: /s/ John R. Stephens --------------------------------------- Title: Scientific Director PFIZER INC. By: /s/ Barry M. Bloom --------------------------------------- Title: Vice President -3- EX-10.20 5 PFIZER ROYALTY FREE LICENSE AGREEMENT 1 EXHIBIT 10.20 PFIZER ROYALTY FREE LICENSE This AGREEMENT is entered into as of April 1, 1986 by and between PFIZER INC. ("PFIZER"), a Delaware corporation having an office at 235 East 42nd Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation having an office at 222 Station Plaza North, Suite 330, Mineola, New York, 11501. The parties agree as follows: 1. DEFINITIONS The capitalized terms used herein have the meanings specified in Exhibits I, II, III and IV of the Collaborative Research Agreement dated as of April 1, 1986 between PFIZER and OSI. 2. GRANT 2.1. OSI grants to PFIZER a nonexclusive, irrevocable, worldwide, royalty-free, perpetual right and license, including the right to grant sublicenses, under Joint Patent Rights and Joint Technology to make, have made, use and sell products in all fields of use except the following: (a) in vitro and in vivo diagnostics, including in vivo imaging; and (b) Monoclonal Antibody Technology; and (c) products sold exclusively for research use. 2 3. INFRINGEMENT 3.1. PFIZER shall have the right, at its expense, to institute actions under Joint Patent Rights and Joint Technology for infringement or misappropriation in the fields of use in which OSI has granted rights to PFIZER. 4. MISCELLANEOUS 4.1. This Agreement is made and delivered in New York and shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York. 4.2. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. ONCOGENE SCIENCE, INC. By: /s/ John R. Stephens --------------------------------- Title: Scientific Director PFIZER INC. By: /s/ Barry M. Bloom --------------------------------- Title: Vice President -2- EX-10.21 6 ROYALTY AGREEMENT BETWEEN THE COMPANY AND PFIZER 1 EXHIBIT 10.21 ROYALTY AGREEMENT This ROYALTY AGREEMENT is entered into as of April 1, 1986 by and between PFIZER INC. ("PFIZER"), a Delaware corporation having an office at 235 East 42nd Street, New York, New York 10017, and ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation having an office at 222 Station Plaza North, Suite 330, Mineola, New York, 11501. WHEREAS, PFIZER and OSI have entered into a Collaborative Research Agreement dated April 1, 1986, pursuant to which, among other things, PFIZER has committed to fund certain cancer therapeutant research projects of OSI, WHEREAS, certain results and materials arising from that Collaborative Research Agreement will be useful and will be used by PFIZER in its own research directed to the discovery of novel agents for the therapy of cancer, and WHEREAS, PFIZER recognizes the contribution of OSI in assisting PFIZER in this process, ACCORDINGLY, in consideration of the foregoing and of the mutual covenants and promises hereinafter contained, the parties hereto agree as follows: 1. DEFINITIONS. Whenever used in this Royalty Agreement, the capitalized terms defined in Exhibits A, B, C and D shall have the meanings specified therein. 2 2. ROYALTIES. PFIZER shall pay to OSI a royalty of between one percent (1%) and six percent (6%) of the Net Sales of each Cancer Therapeutant Product sold by PFIZER; provided, that such Cancer Therapeutant Product is in existence, as evidenced by the filing with the U.S. Food and Drug Administration of an Investigational New Drug Application (or the filing of a foreign equivalent) for such Cancer Therapeutant Product, during or within five years after the termination or expiration of, the Collaborative Research Agreement; and provided, that such Cancer Therapeutant Product (a) was not developed as a result of an existing PFIZER internal research project concerning inhibitors of tissue plasminogen activators; or (b) does not involve Monoclonal Antibody Technology; or (c) is not an acquired product to which PFIZER has excluded from the Collaborative Research Agreement pursuant to Section 8.1.2(c) of the Collaborative Research Agreement; or (d) is not a product resulting from research which PFIZER has excluded from the Collaborative Research Agreement pursuant to Section 8.1.2 (c) of the Collaborative Research Agreement. PFIZER and OSI shall negotiate in good faith the precise royalty rate to be paid with respect to each such Cancer Therapeutant Product. If PFIZER and OSI are unable to agree, the royalty rate shall be determined by arbitration in accordance with Paragraph 7. Royalty rates in excess of one percent shall be based upon the extent to which OSI contributes to the development of each such Cancer Therapeutant Product. If PFIZER shall owe to OSI a royalty pursuant to this Royalty Agreement and a royalty pursuant to an Exclusive Cancer Therapeutant License Agreement, PFIZER shall pay to OSI only the higher such royalty. -2- 3 3. ROYALTY PERIOD. Royalties shall be paid for 10 years from the date of first commercial sale by PFIZER of each such Cancer Therapeutant Product in each country of the world, on a country by country basis. 4. PAYMENT OF ROYALTIES, ACCOUNTING FOR ROYALTIES, RECORDS, ETC. 4.1. Payment Dates. Royalties shall be paid by PFIZER during the royalty period on all sales of each Cancer Therapeutant Product within 60 days after the end of each calendar quarter in which such sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Cancer Therapeutant Product by PFIZER and each Affiliate or sublicensee of PFIZER in each country, the applicable royalty rate for the Cancer Therapeutant Product, and a calculation of the amount of royalty due. 4.2. Accounting; Blocked Currency; Devaluation. The Net Sales used for computing the royalties payable to OSI by PFIZER pursuant to Paragraph 2 hereof shall be computed in U.S. Dollars; and all payments of such royalties shall be made in U.S. Dollars. For the purpose of determining the amount of royalties due, the amount of Net Sales in any foreign currency shall be computed by (a) converting such amount into U.S. Dollars at the prevailing commercial rate of exchange for purchasing U.S. Dollars with the foreign currency in question as quoted by Citibank in New York, New York, one business day before the date on which the relevant royalty -3- 4 payment is to be made by PFIZER and (b) deducting therefrom the amount of any tax, duty, charge, commission, discount or other fee payable in respect of such conversion into, and remittance of, U.S. Dollars; provided, that in the event any foreign currency shall, at the time that a royalty payment in respect of Net Sales in such foreign currency is due, not be convertible into U.S. Dollars and freely transferable by reason of moratorium, embargo, banking restriction or other restriction, PFIZER shall, upon notice thereof to OSI, have no obligation to make payment of such royalties until such time as such foreign currency shall be convertible into U.S. Dollars and freely transferable to the United States, except that, in such event, OSI may, by notice to PFIZER, request that such royalties be paid by PFIZER in such foreign currency (calculated on the basis of Net Sales in such foreign currency) and deposited in a local bank account in the relevant country specified by OSI, in the name of OSI. During any period of non-payment of royalties hereunder, the royalties that are due and payable by PFIZER shall accrue in the foreign currency in which they were earned. PFIZER shall pay to OSI the amount of any such accrued royalties within 20 business days after the date on which the relevant foreign currency shall become convertible into U.S. Dollars and freely transferable to the United States. PFIZER shall provide to OSI such documentation with respect to any of the above situations as OSI shall reasonably request. 4.3. Records. PFIZER shall keep for three years from the date of payment of royalties hereunder complete and accurate records of sales by PFIZER of each Cancer Therapeutant Product, in sufficient detail to allow the royalties accruing hereunder to be accurately -4- 5 determined. OSI shall have the right for a period of three years after receiving any report or statement with respect to royalties due and payable hereunder to appoint an independent certified public accountant reasonably acceptable to PFIZER to inspect the relevant records of PFIZER to verify such report or statement. PFIZER shall make its records available for inspection by such independent certified public accountant during regular business hours at such place or places where such records are customarily kept, upon reasonable notice from OSI, to the extent reasonably necessary to verify the accuracy of the reports and payments required hereunder. Such inspection right shall not be exercised more than once in any calendar year. OSI agrees to hold strictly confidential all information concerning royalty payments and reports, other than the total amounts thereof, and all information learned in the course of any audit or inspection hereunder, except to the extent that it is necessary for OSI to reveal such information in order to enforce its rights under this Royalty Agreement or that disclosure is required by law. The failure of OSI to request verification of any report or statement during said three-year period shall be considered acceptance of the accuracy of such report, and PFIZER shall have no obligation to maintain any records pertaining to such report or statement beyond said three-year period. 5. TERM AND TERMINATION. 5.1. Term. This Royalty Agreement shall commence as of the Effective Date hereof and shall continue in effect until the expiration of PFIZER's last obligation to pay royalties hereunder. -5- 6 6. ARBITRATION. In the event PFIZER and OSI cannot agree pursuant to Paragraph 2 on a royalty rate for any Cancer Therapeutant Product, the royalty rate shall be determined for such Cancer Therapeutant Product by arbitration to be held in New York, New York, in accordance with the then prevailing rules for commercial arbitration of the American Arbitration Association, and the determination resulting from such arbitration shall be final and binding upon both PFIZER and OSI. 7. NOTICES. 7.1. Notices. All notices, statements, or other documents required to be given hereunder shall be in writing and shall be given either personally, or by mailing the same in a sealed envelope, postage prepaid, certified or registered mail, return receipt requested, or by telegraph, telex or cable confirmed by letter mailed as provided above, addressed as follows, or to such other address as may be designated from time to time by notice given in the manner provided in this Section 7: If to PFIZER to: Pfizer Inc. 235 East 42nd Street New York, New York 10017 Attention: President, Central Research with copy to: Office of the General Counsel -6- 7 If to OSI to: Oncogene Science, Inc. 222 Station Plaza North Mineola, N.Y. 11501 Attention : President Notices given personally shall be deemed given as of the date delivered. Notices given by telegraph, telex or cable shall be deemed given as of the date received; provided, that the letter confirming such notices shall have been mailed on the same date and shall have been received. Mailed notices shall be deemed given as of the date of receipt by the party to whom such notices are directed. 8. GOVERNING LAW. 8.1. New York State Law. This Royalty Agreement is made and delivered in New York and shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed entirely within the State of New York. 9. MISCELLANEOUS. 9.1. Binding Effect. This Royalty Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. -7- 8 9.2. Headings. Paragraph headings are inserted herein for convenience of reference only and do not form a part of this Royalty Agreement, and no construction or inference shall be derived therefrom. 9.3. Counterparts. This Royalty Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.4. Amendment; Waiver; etc. This Royalty Agreement may be amended, modified, superseded or cancelled, and any of the terms hereof may be waived, only by a written instrument executed by each party hereto or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provision hereof shall in no manner effect the rights at a later time to enforce the same or any other provision. No waiver by any party of any condition, or of the breach of any term, contained in this Royalty Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Royalty Agreement. -8- 9 9.5. No Third Party Beneficiaries. No person not a party to this Royalty Agreement, including any employee of any party to this Royalty Agreement, shall have or acquire any rights by reason of this Royalty Agreement, nor shall any party hereto have any obligations or liabilities to such other Person by reason of this Royalty Agreement. 9.6. Assignment and Successors. This Royalty Agreement may not be assigned by either party hereto except that either party may assign this Royalty Agreement to any of its Affiliates, to any purchaser of all or substantially all of its assets or to any successor corporation resulting from any merger or consolidation with or into such corporation. In the event of any such assignment by PFIZER, its successor shall expressly assume in writing the performance of all the terms and conditions of this Royalty Agreement to be performed by PFIZER. -9- 10 IN WITNESS WHEREOF, the parties hereto have caused this Royalty Agreement to be executed by their duly authorized representatives as of the date first written above. PFIZER INC. By:/s/ Barry M. Bloom ----------------------------- Title: Vice President ONCOGENE SCIENCE, INC. By:/s/ John R. Stephens ----------------------------- Title: Scientific Director -10- 11 EXHIBIT A DEFINITIONS 1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, fifty percent or more of the voting capital shares or similar voting rights of PFIZER or OSI; any corporation or other legal entity fifty percent or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by PFIZER or OSI; or any corporation or other legal entity fifty percent or more of the voting capital shares or similar voting rights of which is owned, directly or indirectly, by a corporation or other legal entity which owns, directly or indirectly, fifty percent or more of the voting capital shares or similar voting rights of PFIZER or OSI. 2. "Cancer Therapeutant Product" means any product that is useful in the therapy of human cancer. 3. "Collaborative Research Agreement" means the Collaborative Research Agreement dated April 1, 1986 between PFIZER and OSI. 4. "Dollars" mean lawful currency of the United States of America. 5. "Effective Date" means April 1, 1986. 6. "Net Sales" means the gross amount invoiced by PFIZER or any Affiliate or sublicensee of PFIZER (PFIZER, Affiliates of PFIZER and sublicensees of PFIZER are sometimes referred to collectively in this Royalty Agreement as "PFIZER") for arm's-length sales to a third party or parties of Cancer Therapeutant Products, after deducting, if not already deducted in the actual amount invoiced the following: normal and customary trade discounts actually allowed; returns; credits; taxes the legal incidence of which is on the purchaser and separately shown on PFIZER's invoices; and transportation, insurance and postage charges, if prepaid by PFIZER and billed on PFIZER's invoices as a separate item. 7. "Patent Rights" (a) The term "OSI Patent Rights" means and includes: (i) all patentable inventions pertaining to OSI Technology (a) which were in existence on the Effective Date of this Agreement or which were made at any time during the term of the Collaborative Research Agreement by any employee of, or consultant to, OSI, or both; and (b) which are legally or beneficially owned, or both, by OSI; and -11- 12 (ii) all applications for letters patent, whether domestic or foreign, claiming such patentable inventions, including all continuations, continuations-in-part, divisions, renewals and patent of addition thereof, all letters patent granted thereon, and all reissues and extensions thereof. (b) The term "PFIZER Patent Rights" means and includes: (i) all patentable inventions pertaining to PFIZER Technology (a) which were in existence on the Effective Date of this Agreement or which were made at any time during the term of the Collaborative Research Agreement by any employee of, or consultant to, PFIZER, or both; and (b) which are legally or beneficially owned, or both, by PFIZER; and (ii) all applications for letters patent, whether domestic or foreign, claiming such patentable inventions including all continuations, continuations-in-part, divisions, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues and extensions thereof. (c) The term "Joint Patent Rights" means and includes: (i) all patentable inventions pertaining to Joint Technology (a) which were in existence on the Effective Date of this Agreement or which were made at any time during the term of the Collaborative Research Agreement jointly by employees of, or consultants to, OSI and PFIZER; and (b) which are legally or beneficially owned by OSI and PFIZER, each of OSI and PFIZER having made an inventive contribution to such invention and owning an undivided interest therein as determined by the laws of inventorship; and (ii) all applications for letters patent, whether domestic or foreign, claiming such patentable inventions including all continuations, continuations-in-part, divisions, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues and extensions thereof. 8. "Technology". The terms "OSI Technology", "PFIZER Technology" and "Joint Technology" have the meanings defined in Exhibits A, B, C and D, respectively; or such amended meanings as shall be agreed upon by the parties pursuant to the Collaborative Research Agreement. -12- 13 EXHIBIT B OSI TECHNOLOGY The term "OSI Technology" means and includes all technology and technical information, including all inventions, cultures, strains, vectors, genes, gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments and their sequences, non-protein chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know-how, experience and trade secrets: (a) which have been developed by employees of, or consultants to, OSI prior to, or during the term of, the Collaborative Research Agreement; and (b) which pertain to: (i) any of a family of genes designed oncogenes, including those of viral, normal or tumor cell origin and all mutants whether obtained from natural sources or artificial constructions, and the proteins, syntheses of which are directed by the oncogenes, whether obtained from virus, normal or tumor cells, or by molecular cloning and expression of such genes in a prokaryotic or eukaryotic cell system, and to the regulation of these oncogenes and their products, or both, as expressed in the transformed phenotype ("Oncogene Technology"), including, but not limited to, the oncogenes designated ras oncogenes ("ras Technology"); or (ii) any of a family of polypeptides capable of regulating tumor growth, their sources, methods of isolation and purification, biochemical or biophysical structures, or both, biological activities, the biochemical structures of the genes or DNA sequences coding for the polypeptides, methods for cloning and expressing the polypeptides in prokaryotic and eukaryotic cell systems, and methods for purifying the polypeptides so expressed ("Tumor Growth Regulating Protein Technology"), including but not limited to, the proteins designated Tumor Inhibitory Factors ("TIFs") and Tumor Growth Inhibitors ("TGIs") (collectively, "TIF and TGI Technology") ; or (iii) both (i) and (ii). -13- 14 EXHIBIT C PFIZER TECHNOLOGY The term "PFIZER Technology" means and includes all technology and technical information, including all inventions, cultures, strains, vectors, genes, gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments and their sequences, non-protein chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know-how, experience and trade secrets: (a) which have been developed by employees of, or consultants to, PFIZER prior to, or during the term of, the Collaborative Research Agreement; and (b) which pertain to: (i) Oncogene Technology, including, but not limited to, ras Technology, both terms being as defined in Exhibit B; or (ii) Tumor Growth Regulating Protein Technology, including, but not limited to, TIF and TGI Technology, both terms being as defined in Exhibit B; or (iii) both (i) and (ii). -14- 15 EXHIBIT D JOINT TECHNOLOGY The term "Joint Technology" means and includes all technology and technical information, including all inventions, cultures, strains, vectors, genes, gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments and their sequences, non-protein chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know-how, experience and trade secrets: (a) which have been developed jointly by employees of, or consultants to, PFIZER and OSI during the term of the Interim Research Agreement dated November 7, 1985 between PFIZER and OSI or of the Collaborative Research Agreement, such that each of PFIZER and OSI having contributed to the development of such technology and technical information owns an undivided interest therein; and (b) which pertain to: (i) Oncogene Technology, including but not limited to, ras Technology, both terms being as defined in Exhibit B; or (ii) Tumor Growth Regulating Protein Technology, including, but not limited to TIG and TGI Technology, both terms being as defined in Exhibit B; or (iii) both (i) and (ii). -15- EX-10.27 7 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT 1 EXHIBIT 10.27 April, 1995 ONCOGENE SCIENCE, INC. and CIBA-GEIGY Limited COLLABORATIVE AGREEMENT relating to TGF-Beta3 2 THIS AGREEMENT is made as of the 19th day of April, 1995. BETWEEN CIBA-GEIGY LIMITED of Klybeckstrasse 141, 4002 Basel, Switzerland (hereinafter referred to as "CIBA-GEIGY") AND ONCOGENE SCIENCE, INC. of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (hereinafter referred to as "ONCOGENE SCIENCE") WHEREAS: (A) ONCOGENE SCIENCE has know-how and rights to TGF-Betas and has applied for patent rights to certain novel proteins, including TGF-Beta3. (B) By a License Agreement dated the 1st April, 1991 (the "1991 Agreement") made between ONCOGENE SCIENCE and PFIZER INC. ("PFIZER"), ONCOGENE SCIENCE granted to PFIZER the exclusive right to manufacture, have manufactured, use and sell products containing TGF-Beta3 for a range of indications including the Licensed Indications as hereinafter defined. (C) By an Addendum to the 1991 Agreement made between ONCOGENE SCIENCE and PFIZER on the 17th April, 1995, PFIZER surrendered to ONCOGENE SCIENCE all the rights relating to TGF-Beta3 granted to PFIZER pursuant to the 1993 Agreement subject only to the reservation in favour of CIBA-GEIGY of those rights granted to CIBA-GEIGY under the Agreement dated the 11th August, 1993, between ONCOGENE SCIENCE, CIBA-GEIGY and PFIZER ("the 1993 Agreement"). (D) CIBA-GEIGY wishes to take an exclusive license direct from ONCOGENE SCIENCE to manufacture, have manufactured, use and sell products containing the Compound (as defined in Clause 1.3) for the Licensed Indications (as defined in Clause 1.5) and ONCOGENE SCIENCE is willing to grant such a license to CIBA-GEIGY in substitution for the license granted to it under the 1993 Agreement on the terms and conditions hereinafter appearing. (E) The parties have agreed that the 1993 Agreement shall be terminated and replaced by this Agreement as from the date of its execution and delivery by both parties. 3 (F) CIBA-GEIGY also wishes to have the opportunity to acquire from ONCOGENE SCIENCE a license to manufacture, use and sell products containing TGF-Beta3 and other TGF-Betas for all other indications not now included in the Licensed Indications. (G) CIBA-GEIGY has developed a process for the manufacture of certain TGF-Betas. (H) ONCOGENE SCIENCE wishes to have the right to buy such TGF-Betas from CIBA-GEIGY and, subject as hereinafter mentioned, CIBA-GEIGY is willing to supply TGF-Betas to ONCOGENE SCIENCE on the terms hereinafter appearing. NOW IT IS HEREBY AGREED as follows: 1. DEFINITIONS The following terms where used in this Agreement shall, unless the context clearly indicates to the contrary, have the meanings set out below: 1.1 "Affiliate" shall mean with respect to each party or a licensee or sub-licensee, any legal entity that directly or indirectly controls, is controlled by or is under common control with, such party, licensee or sub-licensee, but only for so long as such control shall continue. One entity shall be deemed to control another entity if such entity has the power to direct or cause the direction of the management or policies of the other entity. 1.2 "Combination Product" shall mean a Product containing the Compound in combination with one or more therapeutically active ingredients. 1.3 "Compound" shall mean transforming growth factor Betas ("TGF-Betas") as described in the OSI Patents. 1.4 "Know-How" shall mean all information and material, technical data and other know-how invented, developed or acquired by, or under the control of any party hereto and which directly relates to the Compound or the Product, or to the development, manufacture or use of the same, including but not limited to chemical data, toxicological and other pre-clinical data, product forms and formulations, control assays and specifications and methods of preparation and stability data, all such data belonging to one party constituting that party's confidential information. "CG Know-How" and "OSI Know-How" shall mean that Know-How belonging respectively to CIBA-GEIGY and ONCOGENE SCIENCE. For the avoidance of doubt, the OSI Know-How shall be deemed to include the PFIZER Know-How as defined in the 1993 Agreement. 1.5 "Licensed Indications" shall mean (1) oral mucositis arising from the use of chemotherapy or radiation therapy in the treatment or prevention of cancer, and (2) topical or local (as opposed to systemic) application of the Products including, but not limited to, the healing of soft tissue wounds however caused, and the treatment of ophthalmic conditions and psoriasis, but excluding topical application in the -2- 4 gastrointestinal tract in the treatment or prevention of cancer or the management of side effects or adverse reactions arising from the use in the treatment or prevention of cancer of chemotherapy or radiation therapy; and also (3) all other indications deemed to be included in the Licensed Indications pursuant to Clause 5.8. 1.6 "Major Country" shall mean any one of the following countries: the United States of America, France, Germany, Italy, the United Kingdom. 1.7 "Net Sales" shall mean the invoice price billed to Third Parties on the sale of the Products, less: (i) trade and/or quantity discounts; (ii) sales, value added or other excise taxes paid on the sale of the Products; (iii) amounts repaid or credited by reason of purchase chargebacks, rebates, rejections or returns; (iv) charges for freight, handling and transportation separately billed; and (v) rebates (including, but not limited to, all governmental and managed health care rebates and hospital performance incentive programme chargebacks). all to the extent actually allowed, accrued or taken, and as determined in accordance with CIBA-GEIGY's standard accounting procedures. In the case of Products which are Combination Products the parties will negotiate in good faith and agree on an equitable method of calculating the Net Sales having regard to the Net Sales of Products which are not Combination Products and the value of the active ingredient or ingredients other than the Compound. 1.8 "OSI Patents" shall mean all of ONCOGENE SCIENCE's right, title and interest in and to the patents relating to TGF-Betas set out in Schedule 1 hereto and corresponding foreign patents or applications therefor, together with any patents issuing on the said applications, or any addition, continuation, continuation-in-part, division, reissue, renewal or extension based thereon (including any supplementary protection certificate ("SPC") based on the said patents). 1.9 "CG Patents" shall mean all of CIBA-GEIGY's right, title and interest in and to patents relating to processes for the manufacture of TGF-Betas including the Patents set out in Schedule 2 hereto and corresponding foreign patents or applications therefor, together with any patents issuing on the said applications, or any addition, continuation, continuation-in-part, division, reissue, renewal or extension based thereon (including any SPC based on the said patents). 1.10 "Third Party Patents" shall mean the patents set out in Schedule 3 hereto and corresponding foreign patents or applications therefor, together with any patents issuing on the said applications, or any addition, continuation, continuation-in-part, division, reissue, renewal or extension based thereon (including any SPC based on the said patents). 1.11 "Products" shall mean pharmaceutical preparations containing the Compound designed for administration to human beings which fall within the scope of the claims of the OSI Patents. -3- 5 1.12 "Territory" shall mean all countries of the world. 1.13 "Third Party" shall mean any person or legal entity, whether or not incorporated, other than any of the parties hereto or their respective Affiliates or CIBA-GEIGY's sub-licensees. 1.14 "Year" shall mean a period of 12 calendar months commencing on the 1st January. 1.15 "Half Year" shall mean a period of six calendar months commencing on the 1st January or the 1st July in any Year. 2. GRANT 2.1 In consideration of the covenants on the part of CIBA-GEIGY hereinafter contained, ONCOGENE SCIENCE hereby grants to CIBA-GEIGY an exclusive license, with the right to grant sub-licenses, under the OSI Patents and OSI Know-How, the right to manufacture, use and sell the Products for the Licensed Indications within the Territory. 2.2 ONCOGENE SCIENCE warrants that it is free to enter into this Agreement and to carry out all the obligations on its part contained herein. 2.3 Within 30 days from the date hereof, ONCOGENE SCIENCE will deliver to CIBA-GEIGY such of the OSI Know-How as is in written form and is relevant to the Compound and Licensed Indications. 2.4 ONCOGENE SCIENCE will pursue applications for the OSI Patents with reasonable diligence and will notify CIBA-GEIGY as and when patents are granted on the said applications. 2.5 If ONCOGENE SCIENCE should decide to abandon any of the OSI Patents it shall notify CIBA-GEIGY, and CIBA-GEIGY shall have the right to take an assignment of the OSI Patent or Patents in question. 3. SUPPLY OF TGF-Betas 3.1 CIBA-GEIGY warrants that it owns or has rights to the CG Patents and that it is free to enter into this Agreement and to carry out the obligations on its part contained herein. 3.2 CIBA-GEIGY warrants that it is the licensee under the Third Party Patents which entitles it to manufacture TGF-Betas without infringing such patents. 3.3 (a) CIBA-GEIGY agrees to establish processes for the manufacture of TGF-Beta3 and of such other TGF-ps as shall be agreed from time to time between itself and ONCOGENE SCIENCE, and, subject as hereinafter mentioned, agrees to supply to ONCOGENE SCIENCE, and ONCOGENE SCIENCE agrees to purchase from -4- 6 CIBA-GEIGY the quantities of TGF-Betas required by it for research and development purposes. (b) ONCOGENE SCIENCE acknowledges that it is its present intention to purchase, and, subject as hereinafter mentioned, shall purchase from CIBA-GEIGY, and CIBA-GEIGY shall supply, the quantities of TGF-Betas required by ONCOGENE SCIENCE for commercial purposes. If ONCOGENE SCIENCE should decide not to purchase its commercial requirements of TGF-Betas from CIBA-GEIGY as from or at any time subsequent to the date of commercial launch of the Products, it shall give CIBA-GEIGY not less than 36 months' prior notice in writing of that decision. Upon expiry of such notice ONCOGENE SCIENCE shall be relieved of its obligation to purchase, and CIBA-GEIGY shall be relieved of its obligation to supply, such commercial requirements. (c) For the avoidance of doubt, it is agreed by the parties that CIBA-GEIGY shall not be required to manufacture or supply TGF-Betas pursuant to this Agreement if by so doing it would be liable to suit for infringement or contributory infringement of the intellectual property rights of a Third Party. (d) The processes to be developed by CIBA-GEIGY pursuant to this Clause shall initially be adequate to meet the requirements of itself and its sub-licensees, of ONCOGENE SCIENCE, and the licensees of ONCOGENE SCIENCE, for research and development purposes and clinical trials as foreseen at the date of this Agreement. It is the intention of CIBA-GEIGY to scale up such processes to meet the estimated future requirements of itself and ONCOGENE SCIENCE for commercial quantities of the Compound. Should it fail to do so, or if processing capacity should prove to be inadequate to meet all ONCOGENE SCIENCE actual requirements and CIBA-GEIGY should be unwilling to invest in additional capacity, it agrees if so requested to grant a license to ONCOGENE SCIENCE under the CG Patents and CG Know-How to produce the Compound on terms to be negotiated in good faith, the financial terms to be reasonable having regard to the cost of supplies of the Compound as at the date of the license negotiations, the cost to ONCOGENE SCIENCE of procuring the grant of licenses for any parts of the process covered by Third Party Patents, and the estimated production costs of ONCOGENE SCIENCE. CIBA-GEIGY will also provide reasonable assistance to ONCOGENE SCIENCE with plant design and operations so far as its resources permit. (e) CIBA-GEIGY will notify ONCOGENE SCIENCE promptly should it decide not to scale up manufacture of the Compound or to discontinue manufacture thereof. For a period of 36 months following such notification, unless a shorter period should be agreed in writing by the parties hereto, CIBA-GEIGY shall continue to supply the Compound to ONCOGENE SCIENCE in accordance with the arrangements hereinafter set out, it being understood, however, that CIBA-GEIGY shall not be obliged to produce quantities of the Compound for its own consumption and for supply to ONCOGENE SCIENCE in excess of the production capacity available to it at the time of such notification. -5- 7 (f) Upon the request of ONCOGENE SCIENCE to be made in writing not less than one year in advance of the date when such supplies are required, CIBA-GEIGY will manufacture and store for ONCOGENE SCIENCE, and ONCOGENE SCIENCE will purchase and pay storage for up to a one-year supply of Compound as projected in the ordinary course of business. In the event that CIBA-GEIGY is unable to supply the Compound to ONCOGENE SCIENCE for a period of 90 days by reason of force majeure or otherwise, it will use all commercially reasonable endeavours to have an alternative plant for the production of the Compound validated within one year from the date of cessation of supply. 3.4 The ex-works price at which CIBA-GEIGY shall supply the Compound to ONCOGENE SCIENCE for use for pre-clinical and clinical purposes shall be equal to CIBA-GEIGY's cost of manufacture, including overheads, calculated in accordance with its standard accounting practices ("Manufacturing Cost"), freight, transport and insurance charges incurred in delivering the material to the purchasing party, and royalties to third parties for bulk material, but shall exclude any profit element. 3.5 (a) The ex-works price at which and all other terms and conditions on which CIBA-GEIGY shall supply the Compound for the manufacture of products for subsequent sale shall be negotiated by the parties in good faith prior to the date of commencement of supply. However, if the parties should be unable to reach agreement on price during such negotiations then the price shall be equal to the Manufacturing Cost, plus any freight, transport and insurance charges incurred by CIBA-GEIGY in shipping the Compound to ONCOGENE SCIENCE plus an amount equal to eight per cent (8%) of ONCOGENE SCIENCES' and its licensees' Net Sales. In the latter case, payments shall be calculated and paid as mentioned in Clause 3.5(c). (b) Payment for the said supplies shall be made by ONCOGENE SCIENCE in two installments, as follows: (i) the first installment, being an amount equal to the Manufacturing Cost, plus freight, transport and insurance charges, shall be paid within thirty (30) days of the end of the month in which the supplies are delivered; (ii) the second installment, being an amount equal to eight per cent (8%) of ONCOGENE SCIENCE's and its licensees' Net Sales of the Products and/or of the Compound during each Half Year, shall be paid within sixty (60) days of the end of such Half Year. (c) Notwithstanding the provisions hereinbefore contained, if CIBA- GEIGY's weighted average Manufacturing Cost per gram of Compound supplied to ONCOGENE SCIENCE in any Year, expressed as a percentage (the "Actual Percentage") of ONCOGENE SCIENCE's weighted average Net Sales Value per active gram of Product sold by ONCOGENE SCIENCE and its licensees in the same Year should be less than four per cent (4%), then, in addition to the amounts mentioned in Clause 3.5(b), ONCOGENE SCIENCE shall pay to CIBA-GEIGY a percentage of its and its licensees Net Sales equal to one half of the difference between four per cent (4%) and the Actual Percentage. For the purposes of this calculation, -6- 8 the Net Sales Value per active gram shall be determined by dividing the Net Sales of ONCOGENE SCIENCE and its licensees by the number of grams and/or parts of a gram of the Compound contained in the quantities of the Product sold. (An example of a calculation using hypothetical figures is set out in Schedule 4 hereto.) Such payment shall be made at the same time as the second payment due under Clause 3.5(b)(ii) in respect of the Half Year ending on the 31st December of that Year. (d) ONCOGENE SCIENCE shall be entitled to have CIBA-GEIGY's cost of manufacture and overhead confirmed by an independent firm of accountants to which CIBA-GEIGY has no reasonable objection, but not more than once in any Year PROVIDED HOWEVER that such firm of accountants shall only report to ONCOGENE SCIENCE the amount of such costs, including overheads, and shall keep confidential all other information acquired in the course of the examination. (e) ONCOGENE SCIENCE shall supply to CIBA-GEIGY within 60 days of the end of each Half Year a statement showing the Net Sales during such Half Year of Products produced from the Compound. (f) ONCOGENE SCIENCE shall keep accurate records in sufficient detail to enable the price of the Compound to be calculated and shall maintain such records for a period of two Years after the end of the period to which they relate. CIBA-GEIGY shall be entitled to have such records examined during normal working hours by an independent firm of accountants to which ONCOGENE SCIENCE has no reasonable objection (but not more than once in any one Year) so as to verify the correctness of any royalty payment PROVIDED HOWEVER that such firm of accountants shall only report to CIBA-GEIGY the correct amount of net sales, and shall keep confidential all other information acquired in the course of such examination. (g) Not later than the end of each Year ONCOGENE SCIENCE will supply to CIBA-GEIGY an estimate of its requirement of the Compound during the ensuing three Years, and will update this estimate at six-monthly intervals. CIBA-GEIGY will notify ONCOGENE SCIENCE within 30 days of receipt of such estimate if it will be unable to supply the whole or any part of the requirements mentioned in such estimate. (h) Together with the three-year estimate, ONCOGENE SCIENCE will deliver to CIBA-GEIGY firm orders for its requirements of the Compound not less than twelve (12) months in advance of the required date of delivery. CIBA-GEIGY shall fulfill such orders provided that the quantifies specified therein do not exceed those quantities contained in the previous estimate for the same period and provided that CIBA-GEIGY has not previously advised ONCOGENE SCIENCE that it will be unable to supply all or part of such quantities. All other terms of supply and purchase shall be negotiated by the parties in good faith. 3.6 Apart from material supplied for research purposes and for the Licensed Indications, CIBA-GEIGY will not during the life of the OSI Patents supply the Compound to any -7- 9 Third Party without the prior consent of ONCOGENE SCIENCE, provided that such consent shall not be unreasonably withheld or delayed. 3.7 It is a condition precedent to the performance by the parties hereto of their respective obligations under this Agreement that CIBA-GEIGY shall have delivered copies of the License Agreements under the Third Party Patents to ONCOGENE SCIENCE. 4. DEVELOPMENT 4.1 Subject as herein mentioned, CIBA-GEIGY will pursue the development of the Products for the Licensed Indications wound healing, psoriasis and oral mucositis with reasonable diligence. ONCOGENE SCIENCE will cooperate fully and accept certain responsibilities as set forth below. 4.1.1 ONCOGENE SCIENCE will be responsible for developing the Compound through Phase I clinical trials for Oral Mucositis, in consultation with CIBA-GEIGY based on a protocol approved by CIBA-GEIGY, and ONCOGENE SCIENCE will pay for all Phase I Oral Mucositis expenses from its funds, except those studies done directly by CIBA-GEIGY or under the direction or control of CIBA-GEIGY. 4.1.2 ONCOGENE SCIENCE agrees that if so requested by CIBA-GEIGY it is willing to assume responsibility for Phase II trials for Oral Mucositis in accordance with CIBA-GEIGY's standard operating procedures for clinical trials and based on a protocol approved by CIBA-GEIGY in consultation with CIBA-GEIGY, with the expense of the Phase II trials to be paid by CIBA-GEIGY in accordance with a budget to be mutually agreed by the parties in advance. 4.1.3 CIBA-GEIGY will be responsible for Phase III trials for Oral Mucositis and will pay the expense of the trials, in consultation with ONCOGENE SCIENCE. ONCOGENE SCIENCE is willing to assume responsibility for Phase III trials in any respect requested by CIBA-GEIGY, with expenses to be paid by CIBA-GEIGY. 4.1.4 CIBA-GEIGY will be responsible for the development of the Compound for Licensed Indications, other than Oral Mucositis, in consultation with ONCOGENE SCIENCE, and will pay all expenses. 4.2 CIBA-GEIGY shall have the right to discontinue development of the Products at any time. 4.3 If CIBA-GEIGY should decide to discontinue the development of the Products it shall promptly notify ONCOGENE SCIENCE and thereupon: (a) all licenses granted hereunder to CIBA-GEIGY will automatically terminate. -8- 10 (b) CIBA-GEIGY will make available to ONCOGENE SCIENCE for use by ONCOGENE SCIENCE or its sub-licensees the results of all development work carried out up to the date of discontinuance (including rights under any patents or CG Know-How developed by CIBA-GEIGY so far as they relate exclusively to the Products) on terms to be negotiated in good faith. (c) the provisions with regard to supply of the Compound and the licensing of the process for the manufacture of the Compound set out in Clause 3 shall remain binding on CIBA-GEIGY for a period of three years from the date of such notification. CIBA-GEIGY may at its discretion opt to continue the supply of the Compound, in which event the parties will enter into an Agreement for the supply of the Compound on the same terms as to price and ordering as set out herein and on such other terms as shall be mutually agreed. (d) CIBA-GEIGY will return to ONCOGENE SCIENCE all documents received from ONCOGENE SCIENCE containing OSI Know-How. 4.4 The parties will cooperate with one another, and ONCOGENE SCIENCE shall ensure that its licensees cooperate with CIBA-GEIGY, with a view to facilitating the regulatory approval and commercialization of products containing the Compound, and in particular will share Know-How relating to such products. 4.5 During the term of this Agreement and to the extent necessary to give effect to the purposes of this Agreement each of the parties will disclose to the other any new Know-How coming to its attention, including, but not limited to, information which would modify or supplement to a material degree information disclosed to the other party pursuant to the preceding provisions of this Agreement, or which in the reasonable opinion of that party could have a material bearing on the other party's testing, registration or marketing of products produced from the Compound. 4.6 For the purpose of limiting infringing or off-label use of a product produced from the Compound each of the parties agrees to use all commercially reasonable efforts to develop products formulated or presented in such a manner as to make them difficult to use in the other party's licensed indications. 5. PAYMENT OF ROYALTIES AND FOR RIGHTS GRANTED 5.1 In consideration of the license and rights hereby granted, CIBA-GEIGY agrees to pay ONCOGENE SCIENCE the royalties herein set forth and to purchase ONCOGENE SCIENCE common stock as set forth in clauses 5.7 and 5.8, or alternatively, at CIBA-GEIGY's option to pay the respective milestone fees in lieu of purchasing stock as set forth in clauses 5.7 and 5.8. 5.2 CIBA-GEIGY agrees to pay ONCOGENE SCIENCE a royalty of 8% of Net Sales of the Products made by CIBA-GEIGY or its sub-licensees during the royalty period. The royalty period shall be calculated on a country-by-country basis and shall commence on the date of commercial launch of any of the Products in each country and shall end on the date of expiry of the Patents in the country. -9- 11 5.3 If ONCOGENE SCIENCE shall not have applied for any Patent in a particular country or if patent protection for the Products should be refused or revoked, the rate of royalty payable on Net Sales in that country shall be reduced by half. Royalties under this Clause 5.3 shall be payable for a period of ten years from the date of commercial launch in the country in question. 5.4 No later than 60 days after the end of each Half Year CIBA-GEIGY shall deliver to ONCOGENE SCIENCE a statement showing its and its sub-licensees Net Sales of the Products invoiced during such Half Year, and shall pay to ONCOGENE SCIENCE the amount of royalty due on such Net Sales. 5.5 CIBA-GEIGY shall keep accurate records in sufficient detail to enable the amount of the royalties due hereunder to be calculated and shall maintain such records for a period of two Years after the end of the period to which they relate. ONCOGENE SCIENCE shall be entitled to have such records examined during normal working hours by an independent firm of accountants to which CIBA-GEIGY has no reasonable objection so as to verify the correctness of any royalty payment PROVIDED HOWEVER that such firm of accountants shall only report to ONCOGENE SCIENCE the correct amount of Net Sales and the amount of royalty due to ONCOGENE SCIENCE and shall keep confidential all other information acquired in the course of such examination. 5.6 (a) Royalties shall be paid in US dollars into such accounts as shall be nominated by ONCOGENE SCIENCE for that purpose. Net Sales in currencies other than US dollars shall be converted into US dollars at the rate of exchange prevailing on the last day of the Half Year to which they relate. (b) If CIBA-GEIGY is obliged to deduct withholding tax on royalties, the royalties shall be paid net of withholding tax. CIBA-GEIGY will deliver to ONCOGENE SCIENCE receipts or other evidence of payment issue any the relevant tax authorities to enable it to claim any available double-taxation relief. 5.7 CIBA-GEIGY agrees to pay ONCOGENE SCIENCE $5 million in cash at the time this Agreement is signed, or to purchase ONCOGENE SCIENCE common stock to the value of $5,000,000.50 at a price of $5.50 per share in accordance with the terms of the Stock Subscription and Purchase Agreement ("the Stock Purchase Agreement") contained in Schedule 5. In recognition of this payment or investment, CIBA-GEIGY is hereby granted an option to include all other indications for the Compound in the Licensed Indications, upon making the milestone payment or stock purchase set forth in Clause 5.8, such option to be exercised, if at all, within 60 days of the decision by CIBA-GEIGY to initiate full development of the Product (i.e. Phase IIb or Phase III clinical trials for Oral Mucositis (which decision shall be communicated promptly to ONCOGENE SCIENCE in writing) or within four years from the date hereof whichever is the earlier. For the avoidance of doubt, it is agreed that unless CIBA-GEIGY advises ONCOGENE SCIENCE to the contrary, the option shall be deemed to have been automatically exercised by CIBA-GEIGY upon making the said milestone payment or the said stock purchase in accordance with Clause 5.8 without -10- 12 the need for further notification to ONCOGENE SCIENCE. The option shall automatically lapse if it is not exercised within the time limits hereinbefore prescribed. 5.8 Within 60 days after the earlier of: (a) the date of the decision by CIBA-GEIGY to initiate full development (as defined in Clause 5.7) of the Product for Oral Mucositis, or (b) the exercise of the option set out in Clause 5.7, CIBA-GEIGY agrees either to make a milestone payment of $10 million in cash to ONCOGENE SCIENCE or to purchase ONCOGENE SCIENCE common stock to the value of $10 million at the higher of EITHER the average closing price for the 30-day period ending on the date of purchase or $5.50 per share. Upon making this milestone payment or completion of the stock purchase, all other indications for the Compound not already licensed to CIBA-GEIGY shall be deemed to be included in the Licensed Indications. The retention of the rights to such other indications shall be subject to the provisions of the Stock Purchase Agreement. 6. DEFENSE OF PATENTS, INFRINGEMENTS, ETC. 6.1 Each of the parties hereto agrees to notify the other party if it should become aware of any infringement or threatened infringement of the Patents. 6.2 ONCOGENE SCIENCE shall have the prior right, but not the obligation, to bring legal proceedings against an infringer of the OSI Patents or to take such other action against such infringer as it thinks fit PROVIDED HOWEVER that it shall not settle or compromise any such action where the infringing act involved the sale of products for one of the Licensed Indications without obtaining the prior written agreement of CIBA-GEIGY, such agreement not to be unreasonably withheld or delayed. If so requested, CIBA-GEIGY will provide reasonable assistance in connection with any such proceedings or other action. 6.3 With respect to Licensed Indications, if ONCOGENE SCIENCE should fail to institute proceedings against an infringer of the OSI Patents within 60 days of the receipt of information of such infringement or threatened infringement CIBA-GEIGY shall have the night to institute proceedings in its own name where practicable, or otherwise in the name of ONCOGENE SCIENCE, to prevent or put an end to the infringement, including, at its option, the filing of a claim for damages. In this event ONCOGENE SCIENCE shall do all such things as are reasonably necessary to enable CIBA-GEIGY to institute such proceedings and shall cooperate with CIBA-GEIGY in the conduct of such proceedings. 6.4 Any damages and costs recovered from the infringer in proceedings brought or other action taken against the infringer pursuant to Clause 6.2 or 6.3 shall be applied firstly in defraying the legal costs and expenses of the proceedings. Any surplus remaining shall be used to compensate whichever of ONCOGENE SCIENCE or CIBA-GEIGY has incurred losses as the result of the infringement, and if both of them shall have incurred losses, the surplus shall be divided between them in proportion to their respective losses. If the net amount of damages and costs recovered exceeds the legal costs and expenses and their respective losses, the surplus remaining shall be paid to ONCOGENE SCIENCE. -11- 13 6.5 If CIBA-GEIGY shall be unable to exploit the license hereby granted without infringing the patent rights of a Third Party, ONCOGENE SCIENCE will use all reasonable endeavours to obtain an unblocking license. If they shall fail to do so, CIBA-GEIGY shall be entitled to negotiate the terms of a license for itself and its sub-licensees directly with the Third Party. If under such a license CIBA-GEIGY is obliged to pay a lump sum or royalty to the Third Party, it shall be entitled to deduct the amount of such lump sum or royalty from the royalties due to ONCOGENE SCIENCE hereunder, provided, however that the deduction in any one Year shall not cause the royalty to be paid by CIBA-GEIGY to ONCOGENE SCIENCE in that year to be reduced below 5 percent. 7. CONFIDENTIALITY 7.1 For the purposes of this Clause 7, "Confidential Information" shall mean all information, whether technical, commercial, or otherwise (including, but not limited to, Know-How, technical and non-technical materials and specifications) disclosed by any of the parties hereto, or its Affiliates, licensees or sub-licensees (the "Discloser") to the other party or any of its Affiliates, licensees or sub-licensees (the "Receiver") which the Discloser deems to be confidential and proprietary to the Discloser, other than information which the Receiver can show to the reasonable satisfaction of the Discloser: (i) was already in the possession or control of the Receiver prior to the time of disclosure; (ii) is at the time of disclosure or thereafter becomes available to the public otherwise than as the result of any fault or omission by the Receiver or any employee of the Receiver contrary to the terms of this Agreement; (iii) is disclosed to the Receiver by a third party who did not acquire it directly or indirectly from the Discloser in confidence; (iv) is approved for release by the Discloser. 7.2 Each of the parties hereto agrees that it will not use any Confidential Information disclosed to it by the other party except for the purposes of the development, registration, manufacture, use and sale of Products produced from the Compound pursuant to the terms of this Agreement and that, except as required by law it will not disclose the Confidential Information to any Third Party without the consent of the Discloser PROVIDED HOWEVER that such consent shall be deemed to have been given to disclosure of the Confidential Information to those of its Affiliates, or sub-licensees or to those of its officers or employees, or officers or employees of such Affiliates, licensees or sub-licensees who require to have the Confidential Information in connection with the development, registration, manufacture, use or sale of the Products produced from the Compound, but only if such Affiliates, licensees, sub-licensees, officers or employees are bound by obligations of confidentiality no less strict than those set out herein. -12- 14 7.3 Each of the parties agrees to notify the Discloser forthwith in the event that it should become aware of the disclosure or use of the Discloser's Confidential Information contrary to the terms hereof. 7.4 All proprietary rights (including, but not limited to, patent rights and trade secrets) in and to the Confidential Information shall remain the property of the Discloser. 7.5 The obligations set out in this Clause 7 shall remain binding on the parties hereto either for the term of this Agreement and for a period of five (5) years thereafter or for a term of ten (10) years from the date hereof, whichever is the longer. 8. PUBLIC ANNOUNCEMENTS Except as required by law, neither the existence nor the terms of this Agreement nor the arrangements contemplated herein shall be disclosed by any party to any Third Party or made public without the prior written agreement of the other party, such agreement not to be unreasonably withheld or delayed. 9. TERM AND TERMINATION 9.1 This Agreement shall come into operation on the date hereof, and, subject to the provisions for earlier termination set out herein, shall remain in force until the expiry of the last to expire of the OSI Patents in the Territory. 9.2 The 1993 Agreement is hereby terminated. 9.3 Each of the parties shall be entitled to terminate this Agreement with immediate effect by notice in writing to the other in either of the following events: (i) If the other party owes an obligation hereunder, and should commit or permit a material breach of such obligation and shall fail or be unable to cure such breach within 60 days of receipt of notice specifying the breach; (ii) If the other party should go into liquidation otherwise than for the purpose of reconstruction or amalgamation; or if a petition should be presented for its dissolution or winding up and such petition should not be withdrawn or dismissed within 60 days of its presentation; or if a receiver or manager should be appointed of its assets; or if it should enter into any composition with its creditors. 9.4 Termination or expiry of this Agreement shall not affect the rights of any party against the other party in respect of any antecedent breach of the terms hereof, nor the rights or obligations of any party pursuant to the provisions of Clause 5 with regard to royalty payments in respect of Net Sales of the Products up to the date of termination or expiry, Clause 7 in respect of confidentiality and Clause 10 in respect of indemnities. -13- 15 9.5 The expiration or termination of this Agreement, if brought about as referred to in Clause 9.2 by the expiry of the Patents or if CIBA-GEIGY should terminate this Agreement pursuant to Clause 9.2, shall not terminate the night of CIBA-GEIGY to continue to use OSI Know-How or to manufacture, have manufactured, use and sell the Products in the Territory. 9.6 Notwithstanding expiry of this Agreement by effluxion of time or termination pursuant to Clause 4.3 hereof, if at the relevant time CIBA-GEIGY is supplying ONCOGENE SCIENCE with its requirements of the Compound, it will continue to do so on the same terms as to supply as are then in force. In such case and if so requested by CIBA-GEIGY, ONCOGENE SCIENCE will enter into a formal Supply Agreement incorporating such terms. 10. INDEMNITIES 10.1 Each of the parties hereto shall hold harmless and indemnify the other party hereto from and against any claim for damages for human bodily injury or death resulting from the ingestion or use of any products produced from the Compound and sold by the indemnifying party or its Affiliates or sub-licensees except to the extent that such injury or death is attributable to the negligence or intentional misconduct of the party seeking indemnity. 10.2 The party seeking indemnity shall promptly notify the indemnifying party of any such claim, and shall allow the indemnifying party and/or its insurers the opportunity to assume the direction and control of the defense of such claim, including, without limitation, the settlement thereof at the sole discretion of the indemnifying party or its insurers, except to the extent that the indemnifying party alleges that there has been negligence or intentional misconduct on the part of the party seeking indemnity. The party seeking indemnity shall cooperate with the indemnifying party and/or its insurers in the defense and disposition of any such claim. 11. ASSIGNMENT 11.1 Each party hereto may assign the whole or any part of its rights and obligations under this Agreement to any of its Affiliates or to any successor to the whole of its pharmaceutical business. Save as mentioned in this Clause 11.1, none of the parties hereto may assign its rights and obligations hereunder to any Third Party without first obtaining the written consent of the other party hereto. 11.2 If so requested by the other party, the party assigning its rights and obligations hereunder shall procure that the assignee will undertake directly with the other party to perform the obligations assigned to it. Pending the giving of such undertaking, the assigning party shall remain responsible for the performance of such obligations by the assignee. 11.3 Written notice of any assignment permitted under Clause 11.1 hereof shall be given by the assigning party to the other within seven (7) days after the date of such assignment. -14- 16 11.4 CIBA-GEIGY shall be entitled to grant sub-licenses to any of its Affiliates and to Third Parties to manufacture or have manufactured, use and sell the Products in any country of the Territory. CIBA-GEIGY will ensure that the terms of any such sub-license impose on the sub-licensee obligations no less onerous than those accepted by it hereunder, including, but not limited to, obligations relating to the keeping of records, provision and verification of sales returns, payment of royalties, indemnities and confidentiality. 12. MISCELLANEOUS 12.1 APPLICABLE LAW, ETC. This Agreement shall be construed and applied in accordance with the laws of the State of New York. Venue shall be New York. 12.2 NOTICES. Any notices required or authorized to be served hereunder shall be deemed to have been properly served if delivered by hand, or sent by registered or certified mail, or sent by facsimile transmission confirmed by registered or certified mail, to the party to be served at the address specified by such party for that purpose, or, if no such address is specified, at the address given at the head of this Agreement. 12.3 ENTIRE AGREEMENT. This Agreement represents the entire agreement and understanding between the parties relating to the subject matter hereof, and supersedes all documents or verbal consents or understandings (if any) given or made between the parties prior to the date hereof. None of the terms hereof may be amended or modified except by an instrument in writing signed by authorized representatives of the parties hereto. 12.4 WAIVERS. Any delay or omission on the part of any party in the exercise of its strict rights hereunder will not impair those rights nor will it constitute a renunciation or waiver of those rights. Any waiver by any party of any term or condition of this Agreement in any one instance shall not be deemed or construed to be a waiver of such term or condition for any other instance in the future (whether similar or dissimilar) or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative, and none of them shall be a limitation of any other right, remedy, undertaking, obligation, or agreement of any of the parties. 12.5 FORCE MAJEURE. None of the parties hereto shall be liable to the other party for any failure to perform any obligation on its part hereunder to the extent that such failure is due to circumstances beyond its reasonable control, including in particular war, act of God, strike, lock-out, Government intervention, riot or civil commotion, plant breakdown and scarcity or nonavailability of raw materials. It shall however notify the other party as soon as practicable of the occurrence of any such circumstance, and the parties shall meet to consider what steps, if any, can be taken to overcome any difficulties thereby occasioned. 12.6 HEADINGS. Headings in this Agreement are included for ease of reference only and have no legal effect. -15- 17 AS WITNESS the signatures of the representatives of the parties hereto the day and year first above written. ONCOGENE SCIENCE, INC. By: ------------------------------ Name: ---------------------------- Title: --------------------------- CIBA-GEIGY Limited By: Names: M. Sundman R.E. Walker Titles: Head of Business Development Division Counsel -16- 18 SCHEDULE 1 List of OSI Patents
COUNTRY APPLICATION/PATENT NO. FILING DATE EXPIRY DATE Australia 600230 21.04.1986 21.04.2002 Australia 620795 19.10.1987 19.10.2003 Australia 57293/90 17.05.1990 17.05.2006 Australia 81828/91 25.06.1991 25.06.2007 Australia 83958/91 25.06.1991 25.06.2007 Austria 200090 (E) 15.04.1986 15.04.2006 Austria 384494 (E) 20.10.1987 20.10.2007 Austria 508883 (E) 17.04.1990 17.04.2010 Austria 536275 (E) 25.06.1991 25.06.2011 Austria 538395 (E) 25.06.1991 25.06.2011 Belgium 200090 (E) 15.04.1986 15.04.2006 Belgium 384494 (E) 20.10.1987 20.10.2007 Belgium 508983 (E) 17.04.1990 17.04.2010 Belgium 536275 (E) 25.06.1991 25.06.2011 Belgium 538395 (E) 25.06.1991 25.06.2011 Canada 1274471 18.04.1986 18.04.2006 Canada 549582-2 20.10.1987 20.10.2007 Canada 2056981-6 17.05.1990 17.05.2010 Canada 2084992 25.06.1991 25.06.2011 Canada 2084510 25.06.1991 25.06.2011 Denmark 536275 (E) 25.06.1991 25.06.2011 Denmark 538395 (E) 25.06.1991 25.06.2011 EPO 200090 (E) 15.04.1986 15.04.2006 EPO 384494 (E) 20.10.1987 20.10.2007 EPO 508983 (E) 17.04.1990 17.04.2010 EPO 536275 (E) 25.06.1991 25.06.2011 EPO 538395 (E) 25.06.1991 25.06.2011 France 200090 (E) 15.04.1986 15.04.2006 France 384494 (E) 20.10.1987 20.10.2007 France 508983 (E) 17.04.1990 17.04.2010 France 536275 (E) 25.06.1991 25.06.2011 France 538395 (E) 25.06.1991 25.06.2011 Germany 36 87 241 15.04.1986 15.04.2006 Germany 384494 (E) 20.10.1987 20.10.2007 Germany 508983 (E) 17.04.1990 17.04.2010 Germany 536275 (E) 25.06.1991 25.06.2011 Germany 538395 (E) 25.06.1991 25.06.2011 Great Britain 200090 (E) 15.04.1986 15.04.2006 Great Britain 384494 (E) 20.10.1987 20.10.2007 Great Britain 508983 (E) 17.04.1990 17.04.2010 Great Britain 536275 (E) 25.06.1991 25.06.2011
-17- 19 Schedule 1 (continued) List of OSI Patents Great Britain 538395 (E) 25.06.1991 25.06.2011 Greece 384494 (E) 20.10.1987 20.10.2007 Greece 536275 (E) 25.06.1991 25.06.2011 Greece 538395 (E) 25.06.1991 25.06.2011 Ireland 971/86 14.04.1986 14.04.2006 Ireland 2809/87 19.10.1987 19.10.2007 Israel (Div.) 103617 20.04.1986 20.04.2006 Israel 78546 20.04.1986 20.04.2006 Israel 84211 19.10.1987 19.10.2007 Italy 20732BE/93 15.04.1986 15.04.2006 Italy 384494 (E) 20.10.1987 20.10.2007 Italy 509983 (E) 17.04.1990 17.04.2010 Italy 536275 (E) 25.06.1991 25.06.2011 Italy 538395 (E) 25.06.1991 25.06.2011 Japan 089844/86 18.04.1986 Japan 265201/87 20.10.1987 Japan 514242/91 25.06.1991 Japan 513051/91 25.06.1991 Japan 508246/90 17.05.1990 Liechtenstein 200090 (E) 15.04.1986 15.04.2006 Liechtenstei n384494 (E) 20.10.1987 20.10.2007 Liechtenstein 509983 (E) 17.04.1990 17.04.2010 Liechtenstein 536275 (E) 25.06.1991 25.06.2011 Liechtenstein 538395 (E) 25.06.1991 25.06.2011 Luxembourg 200090 (E) 15.04.1986 15.04.2006 Luxembourg 384494 (E) 20.10.1987 20.10.2007 Luxembourg 508983 (E) 17.04.1990 17.04.2010 Luxembourg 538395 (E) 25.06.1991 25.06.2011 Luxembourg 536275 (E) 25.06.1991 25.06.2011 Netherlands 200090 (E) 15.04.1986 15.04.2006 Netherlands 384494 (E) 20.10.1987 20.10.2007 Netherlands 508983 (E) 17.04.1990 17.04.2010 Netherlands 536275 (E) 25.06.1991 25.06.2011 Netherlands 538395 (E) 25.06.1991 25.06.2011 New Zealand 215887 18.04.1986 18.04.2002 New Zealand 222168 14.10.1987 14.10.2003 Spain 554177 18.04.1986 18.04.2006 Spain 8702981 19.10.1987 19.10.2007 Spain 508983 (E) 17.04.1990 17.04.2010 Spain 536275 (E) 25.06.1991 25.06.2011 Spain 538395 (E) 25.06.1991 25.06.2011 Sweden 384494 (E) 20.10.1987 20.10.2007 Sweden 508983 (E) 17.04.1990 17.04.2010 Sweden 536275 (E) 25.06.1991 25.06.2011
-18- 20 Schedule 1 (continued) List of OSI Patents Sweden 538395 (E) 25.06.1991 25.06.2011 Switzerland 200090 (E) 15.04.1986 15.04.2006 Switzerland 384494 (E) 20.10.1987 20.10.2007 Switzerland 508983 (E) 17.04.1990 17.04.2010 Switzerland 536275 (E) 25.06.1991 25.06.2011 Switzerland 538395 (E) 25.06.1991 25.06.2011 USA 08/344519 19.04.1986* USA 08/317283 19.04.1985* USA 07/960925 20.04.1988* USA 5262319 25.06.1990 16.11.2010 USA 08/071223 25.06.1990* USA 07/992479 21.09.1992* USA 08/210232 21.09.1992* USA 08/115519 21.09.1992* USA 08/118197 19.04.1985* USA 08/294061 19.04.1985*
* Effective filing date -19- 21 SCHEDULE 2 LIST OF CG PATENTS
COUNTRY APPLICATION/PATENT NO. FILING DATE EXPIRY DATE Australia 67018/90 27.11.1990 27.11.2006 Austria 433225 (E) 27.11.1990 27.11.2010 Belgium 433225 (E) 27.11.1990 27.11.2010 Canada 2031430 04.12.1990 04.12.2010 Denmark 433225 (E) 27.11.1990 27.11.2010 Finland 905956 03.12.1990 03.12.2010 France 433225 (E) 27.11.1990 27.11.2010 Germany 433225 (E) 27.11.1990 27.11.2010 Great Britain 433225 (E) 27.11.1990 27.11.2010 Greece 433225 (E) 27.11.1990 27.11.2010 Hungary 8084/1990 05.12.1990 05.12.2010 Ireland 4386/90 05.12.1990 05.12.2010 Israel 96549 05.12.1990 05.12.2010 Italy 433225 (E) 27.11.1990 27.11.2010 Japan 330871/90 30.11.1990 Korea 19881/90 05.12.1990 Luxembourg 433225 (E) 27.11.1990 27.11.2010 Mexico 23579 04.12.1990 04.12.2010 Netherlands 433225 (E) 27.11.1990 27.11.2010 New Zealand 236333 04.12.1990 04.12.1990 Norway P905264 05.12.1990 05.12.2010 Pakistan 132484 10.11.1990 06.12.2005 Philippines 41681 05.12.1990 Philippines 47025 05.12.1991 Philippines 48001 05.12.1990 Portugal 96068 04.12.1990 South Africa 9762/90 05.12.1990 05.12.2010 Spain 433225 (E) 27.11.1990 27.11.2010 Sweden 433225 (E) 27.11.1990 27.11.2010 Switzerland 433225 (E) 27.11.1990 27.11.2010 Taiwan 56999NI 13.11.1990 11.06.2007 USA 621502/07 03.12.1990 USA 960309/07 (Cont.) 13.10.1992 USA 201703/08 25.02.1994
-20- 22 SCHEDULE 3 LIST OF THIRD PARTY PATENTS LICENSOR (1) The Board of Trustees of the Leland Stanford Junior University PATENT NO. DATE OF ISSUE/FILING US Patent No. 4,237,224 2nd December, 1980 US Patent No. 4,468,464 28th August, 1984 US Patent Application No. 602,294 20th April, 1984 (2) Brookhaven National Laboratory PATENT NO. DATE OF ISSUE/FILING US Patent No. 4,952,496 28th August, 1990 -21- 23 SCHEDULE 4 Example of calculation for the purposes of Clause 3.5(c) (N.B.: All figures used are hypothetical) CIBA-GEIGY supplies three batches of Compound to ONCOGENE SCIENCE in 1996. The Manufacturing Cost ("MC") of the first batch of 10 grams is SFr. 125/mg (total cost SFr. 1,250,000); the MC of the second batch of 12 grams is SFr. 75/mg (total cost SFr. 900,000); the MC of the third batch of 16 grams is also SFr. 75/mg (cost SFr. 1,200,000). The average MC per gram of Compound is SFr. 3,350,000 divided by 38 = SFr. 88,157.9. ONCOGENE SCIENCE's Net Sales of Product during 1996 total SFr. 60,000,000. The total amount of Compound contained in the Product sold in 1996 is 24 grams and therefore the average Net Sales Value per active gram of Product is SFr. 2,500,000. The MC is only 3.526316% of the Net Sales Value of Product, i.e. less than 4% by 0.473684. Therefore ONCOGENE SCIENCE pays to CIBA-GEIGY one half of 0.473684% of SFr. 60,000,000 = SFr. 142,105.2. -22- 24 SCHEDULE 5 STOCK SUBSCRIPTION AND PURCHASE AGREEMENT 19th April, 1995 The Board of Directors of Oncogene Science, Inc. Dear Sirs: The undersigned, Ciba-Geigy Limited ("the Purchaser") hereby subscribes for and purchases 909,091 shares ("the Shares") of Common Stock, $.01 par value per share, of Oncogene Science, Inc., a Delaware corporation ("the Company"), for a total consideration of U.S. $5,000,000.50 in cash, such consideration to be paid and the Shares to be issued to the Purchaser within 10 business days of the date hereof. Certain of the capitalised terms used herein are defined in the Collaborative Agreement between the Purchaser and the Company dated as of the 19th April, 1995. The Purchaser hereby agrees, represents, and warrants to the Company that. (1) The Purchaser is acquiring the Shares for its own account (and not for the account of others) for investment and not with a view to the distribution or resale thereof, (2) By virtue of its position, the Purchaser has access to the same kind of information which would be available in a registration statement filed under the Securities Act of 1933; (3) The Purchaser is a sophisticated investor; (4) The Purchaser shall have the registration rights set forth in the Registration Rights Agreement between the Purchaser and the Company dated as of the 19th April, 1995. The Purchaser agrees that if any of the Shares are sold prior to the 19th April, 1999 without the written consent of the Company, the option set forth in Section 5.8 of the Collaborative Agreement to include all other indications for the Compound in the Licensed Indications shall lapse. If at the time of the sale of the Shares such option has already been exercised, then such other indications shall thereupon be removed from the Licensed Indications. -23- 25 (5) The Purchaser understands that it may not sell or otherwise dispose of such shares in the absence of either a registration statement under the Securities Act of 1933 or an exemption from the registration provisions of the Securities Act of 1933; and (6) The certificates representing the Shares may contain a legend to the effect of (5) above, and the Company may place stop-transfer orders with the transfer agent of the Company's securities with respect to the Shares in the event of any sale or disposal, or purported sale or disposal, of the Shares contrary to (5) above . This Stock Subscription and Purchase Agreement shall be binding upon the successors and assigns of the undersigned, and may not be amended or modified except by any agreement in writing signed by the parties hereto. This Stock Subscription and Purchase Agreement shall be governed by the laws of the State of New York, without regard to principles of conflicts of laws. Yours faithfully, CIBA-GEIGY Limited Accepted: ONCOGENE SCIENCE, INC. By: ---------------------------- Name: Title: -24- EX-10.28 8 LETTER AGREEMENT 1 EXHIBIT 10.28 CIBA-GEIGY LIMITED BASLE, SWITZERLAND The Board of Directors of Oncogene Science, Inc. 106 Charles Lindbergh Blvd. Uniondale, NY 11553-3649 USA April 19, 1995 Dear Sirs: The undersigned, Ciba-Geigy Limited ("the Purchaser") hereby subscribes for and purchases 909,091 shares ("the Shares") of Common Stock, $.01 par value per share, of Oncogene Science, Inc., a Delaware corporation ("the Company"), for a total consideration of U.S. $5,000,000.50 in cash, such consideration to be paid and the Shares to be issued to the Purchaser within 10 business days of the date hereof. Certain of the capitalized terms used herein are defined in the Collaborative Agreement between the Purchaser and the Company dated as of the 19th April, 1995. The Purchaser hereby agrees, represents and warrants to the Company that: (1) The Purchaser is acquiring the Shares for its own account (and not for the account of others) for investment and not with a view to the distribution or resale thereof; (2) By virtue of its position, the Purchaser has access to the same kind of information which would be available in a registration statement filed under the Securities Act of 1933; (3) The Purchaser is a sophisticated investor; (4) The Purchaser shall have the registration rights set forth in the Registration Rights Agreement between the Purchaser and the Company dated as of the 19th April, 1995. The Purchaser agrees that if any of the Shares are sold prior to the 19th April, 1999 without the written consent of the Company, the option set forth in Section 5.8 of the Collaborative Agreement to include all other indications for the Compound in the Licensed Indications shall lapse. If at the time of the sale of the Shares such option has already been exercised, then such other indications shall thereupon be removed from the Licensed Indications. (5) The Purchaser understands that it may not sell or otherwise dispose of such shares in the absence of either a registration statement under the Securities Act of 1933 or an exemption from the registration provisions of the Securities Act of 1933; and 2 The Board of Directors of Oncogene Science, Inc. April 19, 1995 Page 2 (6) The certificates representing the Shares may contain a legend to the effect of (5) above, and the Company may place stop-transfer orders with the transfer agent of the Company's securities with respect to the Shares in the event of any sale or disposal, or purported sale or disposal, of the Shares contrary to (5) above. This Stock Subscription and Purchase Agreement shall be binding upon the successors and assigns of the undersigned, and may not be amended or modified except by any agreement in writing signed by the parties hereto. This Stock Subscription and Purchase Agreement shall be governed by the laws of the State of New York, without regard to principles of conflicts of laws. Yours faithfully, CIBA-GEIGY Limited /s/ M. Sundman /s/ R.E. Walker Head of Business Development Division Counsel Accepted: ONCOGENE SCIENCE, INC. By: /s/ Gary E. Frashier ------------------------------- Name: Gary E. Frashier Title: Chief Executive Officer -2- EX-10.29 9 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 10.29 REGISTRATION RIGHTS AGREEMENT Agreement dated as of April 19, 1995, between CIBA-GEIGY LIMITED of Klybeckstrasse 141, 4002 Basel Switzerland (the "Holder") and ONCOGENE SCIENCE, INC. of 106 Charles Lindbergh Boulevard, Uniondale, New York 11553-3649, USA (the "Company") WHEREAS, Holder is a holder of the common stock, par value $.01 per share, of the Company ("Common Stock"); WHEREAS, Holder desires to have certain registration rights under the securities laws, and the Company desires that Holder have such registration rights; NOW, THEREFORE, in consideration of the mutual agreements contained herein and other good and valuable consideration, the parties hereby agree as follows: 1. At such time as the Company shall determine to file any registration statement, or any post-effective amendment to a registration statement, under the Securities Act of 1933 (the "Act"), covering equity securities of the Company (other than registration statements on Form S-8 or S-4 or any other form not generally available for the registration of securities for sale to the public) for its own account or for the account of others, the Company shall advise Holder, by written notice at least 14 business days prior to any filing, and shall, upon the request of the Holder, and at the expense of the Company, include in any such 2 registration statement, or any such post-effective amendment to a registration statement, all of the Registrable Securities (as hereinafter defined) that Holder has requested in writing to be registered, provided that such written request is delivered to the Company within 10 business days of the Holder's receipt of notice from the Company. As used in this Agreement, Registrable Securities shall mean (i) the Common Stock purchased or owned by the Holder, and (ii) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any convertible security, options, warrant right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of such Common Stock. All costs and expenses of such registration statement shall be borne by the Company, except underwriting discounts or commissions applicable to any of the Registrable Securities sold by the Holder. The Company shall not be required to register securities of the Holder on more than two occasions; provided that if the Holder has been prevented from selling all of the Common Stock it wished to sell because of limitations imposed under paragraph (c) of this Section 1, then the Holder shall be entitled to include such Common Stock in one or more additional registration statements under the terms of this Section 1 until the Holder has been able to sell all of the Common Stock it wished to sell. (a) The Company shall supply prospectuses and such other documents as Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities, use its best efforts to register and qualify any of the Registrable Securities for sale in such reasonable number of states as Holder designates and do any and all other acts and things which may be necessary or desirable to enable Holder to -2- 3 consummate the public sale or other disposition of the Registrable Securities subject to the rights of others with similar rights. The Company agrees to maintain such registration statement or post-effective amendment with respect to the Registrable Securities current under the Act as to the Registrable Securities for a period of at least six months, and an additional three months upon written request of Holder. (b) The Company shall also furnish indemnification in the manner provided in Section 2 hereof, except that the maximum amount of such indemnification shall be limited to the net amount of proceeds received by Holder from the sale of the Registrable Securities. Holder shall furnish information and indemnification as set forth in Section 2 hereof, except that the maximum amount which may be recovered from Holder shall be limited to the net amount of proceeds received by Holder from the sale of the Registrable Securities. (c) In connection with any offering involving an underwriting of shares of the Company's Common Stock, the Company shall not be required under Section 1 hereof to include any of the Holder's securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible -3- 4 with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata, subject to prior existing rights, among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders). 2. (a) Whenever pursuant to Section 1, a registration statement relating to any of the Registrable Securities is filed under the Act, amended or supplemented, the Company shall, to the extent permitted by law, indemnify and hold harmless Holder, and each person, if any, who controls (within the meaning of the Act) Holder, and each underwriter (within the meaning of the Act) of such securities and each person, if any, who controls (within the meaning of the Act) any such underwriter, against such losses, claims, damages, liabilities or actions, joint or several, to which Holder, any such controlling person or any such underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages, liabilities or actions in respect thereof, arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement or any preliminary prospectus or final prospectus constituting a part thereof or any amendment or supplement thereto, or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse Holder and each such controlling person and -4- 5 underwriter for any legal or other expenses reasonably incurred by Holder or such controlling person or underwriter in connection with investigating or defending any such losses, claims, damages, liabilities or actions; provided, however, that the Company will not be liable in any such case to the extent that any such losses, claims, damages, liabilities or actions arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, said preliminary prospectus, said final prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished by Holder or any other underwriter, for use in the preparation thereof. (b) Holder shall indemnify and hold harmless the Company, each of its directors, each of its officers and each person, if any, who controls the Company within the meaning of the Act against any losses, claims, damages, liabilities or actions, to which the Company or any such director, officer or controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue or alleged untrue statement of any preliminary prospectus, said final prospectus, or said amendment or supplement, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statement therein not misleading in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in said registration statement, said preliminary prospectus, said final prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished by Holder for use in the preparation thereof; and shall reimburse the -5- 6 Company or any such director, officer or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such losses, claims, damages, liabilities or actions. (c) Promptly after receipt by an indemnified party under this Section 2 of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party, give the indemnifying party notice of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Section 2. (d) In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party, the indemnifying party shall not be liable to such indemnified party under this Section 2 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation. (e) To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum -6- 7 contribution with respect to any amounts for which it would otherwise be liable under this Section 2 to the extent permitted by law, provided that (i) no contribution shall be made under circumstances where the indemnifying party would not have been liable for indemnification under the fault standards set forth in this Section 2, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation and (iii) contribution by Holder shall be limited in amount to the net amount of proceeds received by him from the sale of the Registrable Securities. 3. The provisions of Section 12. of the Agreement between the Company and the Holder dated the date hereof shall be applicable to this agreement as if fully set forth herein. -7- 8 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. ONCOGENE SCIENCE, INC. By: ------------------------------- Title: ---------------------------- CIBA-GEIGY LIMITED By: ------------------------------- ----------------------------- Title: ---------------------------- ----------------------------- -8- EX-21 10 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 Subsidiaries of the Company Applied bioTechnology, Inc. Oncogene Science S.A. EX-23 11 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23 Independent Auditors' Consent The Board of Directors Oncogene Science, Inc.: We consent to incorporation by reference in the registration statements on Forms S-8 (No. 33-60182, No. 2-03148 and No. 33-64713) of Oncogene Science, Inc. of our reports dated December 1, 1995, relating to the consolidated balance sheets of Oncogene Science, Inc. and subsidiaries as of September 30, 1995 and 1994, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended September 30, 1995, which reports appear in the September 30, 1995 annual report on Form 10-K of Oncogene Science, Inc. KPMG PEAT MARWICK LLP Jericho, New York December 12, 1995 EX-27 12 FINANCIAL DATA SCHEDULE
5 12-MOS SEP-30-1995 OCT-01-1994 SEP-30-1995 17,919,609 8,866,957 1,320,015 (37,974) 0 29,103,524 12,576,523 (6,867,008) 44,057,421 2,975,743 0 0 0 176,830 40,549,636 44,057,421 4,286,540 15,864,999 1,252,990 23,612,802 66,086 24,112 0 (4,258,670) 0 0 0 0 0 (4,258,670) (0.25) (0.25)
-----END PRIVACY-ENHANCED MESSAGE-----