-----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, NUctI8gLEaB5wcf7thHNj6kC3caBvJfjrGQ1xd9I9S53M4MITPnEbPE/KD+55Itx NZ/tXikM+RnzeIAENCl02Q== 0000950123-96-000643.txt : 19960216 0000950123-96-000643.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950123-96-000643 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15190 FILM NUMBER: 96520272 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-Q 1 FORM 10-Q 1 WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1995 ------------------------------------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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, New York 11553 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) 516-222-0023 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: At January 31, 1996 the registrant had outstanding 17,541,034 shares of common stock .$01 par value. Total Pages: 10 2 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES INDEX
Page No. -------- PART I - FINANCIAL INFORMATION - UNAUDITED Consolidated Balance Sheets - December 31, 1995 and September 30, 1995 3 Consolidated Statements of Operations - Three months ended December 31, 1995 and 1994 4 Consolidated Statements of Cash Flows - Three months ended December 31, 1995 and 1994 5 Note to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial 7 Condition and Results of Operations PART II - OTHER INFORMATION 9 SIGNATURES 10
* * * * 3 ITEM 1. FINANCIAL STATEMENTS ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, September 30, Assets 1995 1995 ----------- ----------- Current assets: Cash and cash equivalents $ 1,787,990 $17,919,609 Short-term investments 22,296,727 8,866,957 Receivables, including trade receivables of $88,371 and $163,132 at December 31 and September 30, 1995, respectively 2,253,533 1,320,015 Interest receivable 67,769 45,263 Grants receivable 209,748 433,530 Prepaid expenses and other 652,024 518,150 ----------- ----------- Total current assets 27,267,791 29,103,524 ----------- ----------- Property, equipment and leasehold improvements - net 5,445,005 5,709,515 Other receivable 408,659 262,703 Loans to officers and employees 25,464 25,516 Other assets 324,500 325,582 Intangible assets - net 8,267,392 8,630,581 ----------- ----------- $41,738,811 $44,057,421 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Account payable and accrued expenses $ 1,806,902 $ 2,825,702 Current portion of unearned revenue 193,166 150,041 ----------- ----------- Total current liabilities 2,000,068 2,975,743 ----------- ----------- Other Liabilities: Long-term portion of unearned revenue 151,509 165,839 Accrued postretirement benefits cost 399,329 366,203 ----------- ----------- Total liabilities 2,550,906 3,507,785 ----------- ----------- Stockholders' equity: Common stock, $.01 par value; 50,000,000 shares authorized, 17,750,310 and 17,683,047 issued at December 31 and September 30, 1995, respectively 177,503 176,830 Additional paid-in capital 66,998,116 66,735,375 Accumulated deficit (27,899,935) (26,129,341) Cumulative foreign currency translation adjustment (40,220) (55,669) Unrealized holding gain (loss) on short-term investments 95,000 (35,000) ----------- ----------- 39,330,454 40,692,195 Less: treasury stock, at cost 222,521 shares at December 31 and September 30, 1995 (142,559) (142,559) ----------- ----------- Total stockholders' equity 39,187,905 40,549,636 ----------- ----------- Commitments and contingencies $41,738,811 $44,057,421 =========== ===========
See accompanying notes to consolidated financial statements. 4 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended December 31, --------------------------------------- 1995 1994 ------------ ----------- Revenues: Collaborative program revenues, principally from related parties $ 1,987,458 $ 2,318,374 Sales 29,042 1,313,689 Other research revenue 259,748 575,918 ------------ ----------- 2,276,248 4,207,981 ------------ ----------- Expenses: Research and development 2,683,262 3,076,965 Production 21,863 405,278 Selling, general and administrative 1,331,539 1,874,429 Amortization of intangibles 363,189 436,334 ------------ ----------- 4,399,853 5,793,006 Loss from operations (2,123,605) (1,585,025) ------------ ----------- Other income (expense): Net investment income 364,524 220,672 Other expense (11,513) (26,634) ------------ ----------- Net loss (1,770,594) (1,390,987) ============ =========== Weighted average number of shares of common stock outstanding 17,476,343 16,342,604 ============ =========== Net loss per weighted average share of common stock outstanding $ (.10) $ (.09) ============ ===========
See accompanying notes to consolidated financial statements. 5 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended December 31, -------------------------------- 1995 1994 ---- ---- Cash flow from operating activities: Net loss $(1,770,594) $(1,390,987) Adjustments to reconcile net loss to net cash used by operating activities: Gain on sale of investments (27,608) - Depreciation and amortization 341,240 323,233 Amortization of intangibles 363,189 436,334 Foreign exchange loss 15,449 11,474 Changes in assets and liabilities: Receivables (933,518) 460,588 Inventory - 111,282 Interest receivable (22,506) (117,109) Grants receivable 223,782 134,997 Prepaid expenses and other (133,874) 46,322 Other receivable (145,956) (279,584) Other assets 1,082 4,392 Accounts payable and accrued expenses (1,018,800) (375,977) Unearned revenue 28,795 459,676 Accrued postretirement benefit cost 33,126 34,689 ----------- ----------- Net cash used by operating activities $(3,046,193) $(140,670) ----------- -----------
Continued 6 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Three Months Ended December 31, ------------------------------- 1995 1994 ---- ---- Cash flows from investing activities: Additions to short-term investments (15,772,162) (499,687) Maturities and sales of short-term investments 2,500,000 1,756,725 Additions to property, equipment and leasehold improvements (76,730) (428,460) Net change in loans to officers and employees 52 - Other - (7,900) ------------ ----------- Net cash provided by (used in) investing activities (13,348,840) 820,678 ------------ ----------- Cash flows from financing activities: Proceeds from exercise of stock options, employee stock purchase plan and other 263,414 1,956 ------------ ----------- Net cash provided by financing activities 263,414 1,956 ------------ ----------- Net increase (decrease) in cash and cash equivalents (16,131,619) 681,964 Cash and cash equivalents at beginning of year 17,919,609 322,308 ------------ ----------- Cash and cash equivalents at end of year $ 1,787,990 $ 1,004,272 ============ ===========
See accompanying notes to consolidated financial statements. 7 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Opinion of Management In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of December 31, 1995 and September 30, 1995, its results of operations and its cash flows for the three months ended December 31, 1995 and 1994. Certain reclassifications have been made to the prior financial statements to conform them to the current presentation. It is recommended that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1995 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of results for the entire year. Net loss per share of common stock outstanding is based on the weighted average number of shares outstanding. Common share equivalents (stock options) are not included in the computation for the three months ended December 31, 1995 and 1994 since their inclusion would be anti-dilutive. (2) Use of Estimates Management of the Company has made a number of estimates and assumptions relative to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. (3) Dependence on Collaborative Relationships The Company does not intend to conduct late-stage clinical trials, manufacturing or marketing activities with respect to any of its product candidates in the foreseeable future. The Company has collaborations with Ciba-Geigy, Ltd., Pfizer Inc., Hoechst Marion Roussel, Inc. and Wyeth-Ayerst Laboratories for the development of potential drug candidates, and with Becton Dickinson and Co. for the development of cancer diagnostics. The Company is dependent on the companies with which it collaborates for the preclinical testing, clinical development, regulatory approval, manufacturing and marketing of potential products developed under its collaborative research programs. The Company's collaborative agreements allow its collaborative partners significant discretion in electing to pursue or not to pursue any of these activities. The Company cannot control the amount and timing of resources its collaborative partners devote to the Company's programs or potential products. If any of the Company's collaborative partners were to breach or terminate its agreements with the Company or otherwise fail to conduct its collaborative activities successfully in a timely manner, the preclinical or clinical development or commercialization of product candidates or research programs could be delayed or terminated. Any such delay or termination could have a material adverse effect on the Company's business, financial condition and results of operations. 8 ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1994. Revenues Revenues for the quarter ended December 31, 1995 were approximately $2.3 million, a decrease of $1.9 million, or 46% when compared to revenues of $4.2 million reported for the quarter ended December 31, 1994. The decrease was due to lower sales of research products which accounted for approximately $1.3 million of the decrease in revenues. The Company sold its Research Products Business for $6.0 million in cash plus other considerations on August 2, 1995, and accordingly there were no significant sales of research products recorded after this date. In the purchase agreement, the Company agreed to indemnify the purchaser for a period of two years for certain breaches of the agreement. Collaborative program revenue decreased approximately $331,000 or 14%. This was largely due to a reduction in collaborative revenue under the collaborative arrangement with Hoechst Marion Roussel, Inc. ("HMRI") as compared to the total revenue in the prior year's quarter from Marion Merrell Dow Inc. ("MMDI"), Hoechst Roussel Pharmaceuticals, Inc. and Hoechst AG. Other research revenues representing primarily government grants have decreased approximately $316,000 in the quarter ended December 31, 1995 compared to the quarter ended December 31, 1994 due in part to the expiration of a U.S. government grant. The balance of the decrease represents changes in the timing and amount of grant awards. The Company expects that grant revenue will be somewhat lower in the current fiscal year. Expenses The Company's operating expenses decreased by approximately $1.4 million or 24% for the quarter ended December 31, 1995 compared to the quarter ended December 31, 1994. Research and development expenses decreased approximately $394,000, or 13% due to reductions in expenses in the HMRI and Becton Dickinson and Co. ("Becton") collaborations commensurate with the reduced funding in these programs. This was offset in part by increased expenditures in the Company's proprietary research programs. Production expenses and selling, general and administrative expenses decreased approximately $926,000. These reductions were directly related to expenses which were associated with the Company's Research Products Business in the quarter ended December 31, 1994. The reduction of approximately $73,000 of amortization of intangibles is due to a portion of goodwill relating to the Research Products Business which was expensed when the business was sold in August 1995. Other Income and Expense Investment income increased approximately $144,000, or 65% for the quarter ended December 31, 1995 as compared to the quarter ended December 31, 1994. This increase was largely due to the increase in funds invested as a result of the 9 THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1994. proceeds from the sale of the Research Products Business and the sale of stock to Ciba-Geigy, Ltd. ("Ciba") in April 1995. 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 will employ or the effect on operating results of implementing SFAS No. 123. Liquidity and Capital Resources At December 31, 1995, working capital (representing primarily cash, cash equivalents and short-term investments) aggregated approximately $25.3 million. 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 $5.0 million. 10 THREE MONTHS ENDED DECEMBER 31, 1995 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1994. During 1995, MMDI was acquired by HMRI as part of a transaction in which the pharmaceutical operations of Hoechst AG, Hoechst Roussel Pharmaceuticals, Inc. and MMDI were consolidated. The Company is aware that HMRI is conducting a review of all its research and development programs. Based on discussions with HMRI, the Company expects its programs with HMRI to continue under one overall agreement in the future, although there can be no assurance that the Company and HMRI will enter into such an overall agreement, or if such an agreement is entered into, that it will not be on terms less favorable than the existing agreements. The Company anticipates that the total funding under the consolidated agreement will be somewhat lower than the aggregate level of 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. Becton has reduced its funding under this program in fiscal 1996, and the Company is uncertain as to Becton's ongoing support for 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. However, there can be no assurance that the development of these tests will not be terminated. 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 operations through fiscal 1999. However, the Company's capital requirements may vary as a result of a number of factors, including, competitive and technological developments, funds required for expansion of the Company's technology platform, including possible joint ventures, collaborations, and acquisitions, the time and expense required to obtain governmental approval of products, and any potential indemnification payments to the purchaser of the Research Products Business, some of which factors are beyond the Company's control. The Company intends to increase substantially its expenditures and capital investment over the next several years in enhancing its drug discovery technologies and pursuing proprietary drug discovery programs. 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 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. Failure to obtain additional funds when required would have a material adverse effect on the Company's business, financial condition and results of operations. 11 ITEM 6. EXHIBITS The following is a list of exhibits filed as part of this Report: 10.1* Amendatory Agreement dated as of December 31, 1993 between the Company and American Home Products Corporation 10.2* Collaborative Research Agreement dated as of December 31, 1991 between the Company and American Home Products Corporation 10.3* Collaborative Research Agreement dated as of January 4, 1993 between the Company and Hoechst AG 10.4* Collaborative Research Agreement dated as of October 1, 1993 between the Company and Hoechst Roussel Pharmaceuticals, Inc. 27 Financial Data Schedule - ------------- * Portions of this exhibit have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to rule 24b-2 under the Securities Exchange Act of 1934, as amended. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ONCOGENE SCIENCE, INC. ---------------------------- (Registrant) Date 2 / 14 / 96 /s/ Gary E. Frashier ------------------ ---------------------------- Gary E.Frashier Chief Executive Officer Date 2 / 14 / 96 /s/ Robert L. Van Nostrand ------------------ ---------------------------- Robert L. Van Nostrand Vice President Finance & Administration 13 INDEX TO EXHIBITS
Exhibits Page No. - -------- -------- 10.1* Amendatory Agreement dated as of December 31, 1993 between the Company and American Home Products Corporation 10.2* Collaborative Research Agreement dated as of December 31, 1991 between the Company and American Home Products Corporation 10.3* Collaborative Research Agreement dated as of January 4, 1993 between the Company and Hoechst AG 10.4* Collaborative Research Agreement dated as of October 1, 1993 between the Company and Hoechst Roussel Pharmaceuticals, Inc. 27 Financial Data Schedule
- -------------- * Portions of this exhibit have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to rule 24b-2 under the Securities Exchange Act of 1934, as amended. EX-10.1 2 AMENDATORY AGREEMENT 1 EXHIBIT 10.1 - -------------------------------------------------------------------------------- Portions of this Exhibit 10.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission. - -------------------------------------------------------------------------------- 2 Exhibit 10.1 AMENDATORY AGREEMENT This AMENDATORY AGREEMENT is entered into as of December 31, 1993 by and between AMERICAN HOME PRODUCTS CORPORATION, a corporation of the State of Delaware, U.S.A., having its principal place of business at Five Giralda Farms, Madison, New Jersey 07940-0874, U.S.A., as represented by its agent, WYETH-AYERST LABORATORIES DIVISION (hereinafter collectively referred to as "Wyeth") and ONCOGENE SCIENCE, INC. (hereinafter referred to as "OSI"), a corporation of the State of Delaware, having its principal place of business at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553, U.S.A. WHEREAS, Wyeth and OSI entered into a Collaborative Research Agreement as of December 31, 1991 (the "Collaborative Research Agreement") pursuant to which, among other things, OSI is currently screening chemical compounds included within the Wyeth Technology against the Targets which are the subject of the Research Program. WHEREAS, Wyeth and OSI wish to amend the Collaborative Research Agreement to extend its term, to provide additional funding commitments on the part of Wyeth and to make the additional changes hereinafter provided for. NOW, THEREFORE, the parties agree as follows: 1. Defined terms used but not defined herein shall have the meanings specified in Section 1 of the Collaborative Research Agreement. 2. Effective December 31, 1993, the Collaborative Research Agreement shall be extended and amended as more fully provided in this Amendatory Agreement. 3. From and after January 1, 1994, the OSI Appointees referred to in Section 2.2.2 of the Collaborative Research Agreement shall be as follows: *** *** *** and Wyeth-Ayerst appointees: *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. 3 4. The following shall be added at the end of Section 3.1 of the Collaborative Research Agreement: "The Annual Commitment from the Commitment Year beginning January 1, 1994 is ***. The Annual Commitment for the Commitment Year beginning January 1, 1995 is *** and the Annual Commitment for the Commitment Year beginning January 1, 1996 is ***." 5. The second sentence of Section 3.2 of the Collaborative Research Agreement is amended to read in its entirety as follows: "Each Annual Commitment is subject to modification by mutual agreement if an unusually large number of lead compounds are identified or if additional genetic constructs are required by OSI to facilitate lead development as specified in the applicable Annual Sponsored Research Plan." 6. Section 9.1 of the Collaborative Research Agreement is amended to read in its entirety as follows: "9.1 Term. Unless sooner terminated or extended, this Agreement shall expire on December 31, 1996, subject to the early termination provisions of Section 9.5 and subject further to the ability of the parties to extend the term of this Agreement if they so agree." 7. Section 9.5 of the Collaborative Research Agreement is amended to read in its entirety as follows: "9.5 Termination by Wyeth. After this Agreement has been in effect for a period of thirty-two (32) months, Wyeth may terminate this Agreement, with or without cause, by giving OSI four (4) months notice at any time after the expiration of said thirty-two (32) month period. If Wyeth terminates this Agreement pursuant to this section, it will make the Funding Payments which would otherwise have been due for such four-month period and will retain all rights set forth in any License Agreements then in effect subject to the requirements of those Agreements." 8. The forms of License Agreements annexed as Exhibit 2 and Exhibit 3 to the Collaborative Research Agreement are amended by adding words ", as amended by an Amendatory Agreement dated as of December 31, 1993" at the end of the definition of *** These portions deleted pursuant to a request for confidential treatment. -2- 4 "Collaborative Research Agreement" set forth in Section 1.1 of each such forms of License Agreement. 9. The parties hereto acknowledge that except as hereby modified the Collaborative Research Agreement remains in full force and effect and sets forth the entire agreement and understanding of such parties as to the subject matter thereof. 10. The Amendatory Agreement shall be construed in accordance with the laws of the State of New Jersey. 11. This Amendatory Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties have hereunto set their hands and duly executed this Amendment as of the day and year set forth below. AMERICAN HOME PRODUCTS CORPORATION By: _____________________________ Title: _____________________________ ONCOGENE SCIENCE, INC. By: _____________________________ Title: _____________________________ -3- EX-10.2 3 COLLABORATIVE RESEARCH AGREEMENT W/AHP 1 EXHIBIT 10.2 - ------------------------------------------------------------------------------- Portions of this Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission - ------------------------------------------------------------------------------- 2 Exhibit 10.2 COLLABORATIVE RESEARCH AGREEMENT This COLLABORATIVE RESEARCH AGREEMENT is entered into as of December 31, 1991 by and between AMERICAN HOME PRODUCTS CORPORATION, a corporation of the State of Delaware, U.S.A. , having its principal place of business at 685 Third Avenue, New York, New York 10017, U.S.A. , as represented by its agent, Wyeth-Ayerst Laboratories Division (hereinafter collectively referred to as "Wyeth") and ONCOGENE SCIENCE, INC. (hereinafter referred to as "OSI"), a corporation of the State of Delaware, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, U.S.A. WHEREAS, OSI was organized to develop, produce and market therapeutic and diagnostic products for the treatment and early detection and monitoring of human disease; and WHEREAS, OSI has developed proprietary gene transcription and gene expression modulation technology and high throughput screening systems which may be used to identify and develop novel transcription-based drugs; and WHEREAS, Wyeth has the capability to undertake research for the discovery and evaluation of agents for the treatment of disease and also the capability for clinical evaluation, manufacturing and marketing of such agents; and WHEREAS, WYETH and OSI wish to enter into a collaborative research agreement to identify and develop transcription-based drugs; NOW, THEREFORE, the parties agree as follows: 1. Definitions. Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified. 1.1. "Affiliate" means any corporation or other legal entity owning, directly or indirectly, fifty percent or more of the voting capital shares or similar voting securities of Wyeth 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 Wyeth or OSI. 3 1.2. "Annual Commitment" means the amount to be paid to OSI by Wyeth to fund the Sponsored Research Program for any Commitment Year. 1.3. "Allocated Overhead" means the amount of overhead, including general and administrative costs, determined in accordance with generally accepted accounting principles, incurred by OSI and allocated to the Sponsored Research Program in the same proportion that the total man-hours of work performed in the Sponsored Research Program bears to the total man-hours of work performed in all OSI research programs, or such other customary allocation basis that may be agreed in writing between the parties. 1.4. "Annual Research Plan" means the written plan describing the annual research concerning the Targets (including budgets) to be carried out during each Commitment Year by OSI and Wyeth pursuant to this Agreement, including both the Annual Sponsored Research Plan to be carried out by OSI and the specific projects, timetables and technical goals to be pursued by Wyeth and OSI. 1.5. "Annual Sponsored Research Plan" means the written plan describing the research concerning the Targets to be carried out during each Commitment Year by OSI pursuant to this Agreement, including the specific projects, timetables and technical goals to be pursued by OSI. The Annual Sponsored Research Plan for Commitment Years 1 and 2 is appended hereto as Exhibit 1. 1.6. "Research Program" is the collaborative research program concerning the Targets that is to be conducted by Wyeth and OSI. 1.7. "Sponsored Research Program" is that part of the Research Program that is to be carried out by OSI. 1.8. "Effective Date" is _________________________, 19__. 1.9. "Target(s)" means each of those proteins identified as a drug development target in the Annual Sponsored Research Plan appended to this Agreement as Exhibit 1 concerning which proteins research projects will be conducted to identify lead compounds from which transcription-based drugs may be developed or derived, including all therapeutic indications identified in the course of such research projects. 1.10. "Contract Period" means the period beginning on the Effective Date and ending on the date on which this Agreement terminates. -2- 4 1.11. "Commitment Year" means a twelve-month period terminating on each anniversary of the Effective Date. 1.12. "Technology" means and includes all technology and technical information concerning a Target that pertains to the development of human therapeutic products, including all laboratory notebooks, research plans, inventions, cultures, strains, vectors, genes and gene fragments and their sequences, cell lines, hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein fragments, non-protein chemical structures and methods for synthesis, structure-activity relationships, computer models of chemical structures, computer software, assay methodology, processes, materials and methods for production, recovery and purification of natural products, formulas, plans, specifications, characteristics, equipment and equipment designs, marketing surveys and plans, business plans, know-how, experience and trade secrets. 1.13. "OSI Technology" means all Technology that pertains to a Target and relates to transcriptional modulation of gene expression of the gene encoding the Target, including all improvements thereto and the use of such Technology to develop transcription-based drugs, that is or was: (a) developed by employees of, or consultants to, OSI alone or jointly with third parties including Wyeth; or (b) acquired by purchase, license, assignment or other means from third parties by OSI. OSI Technology shall include all such Technology other than Wyeth Technology. 1.14. "Wyeth Technology" means all Technology developed through the use of OSI Technology that pertains to a Target and relates to specific chemical compounds or drugs or the therapeutic use(s) of such compounds or drugs, that is or was: (a) developed by employees of, or consultants to, Wyeth alone or jointly with third parties including OSI; or (b) acquired by purchase, license, assignment or other means from third parties by Wyeth. 1.15. "OSI Confidential Information" means all information about any element of OSI Technology which is disclosed by OSI to Wyeth, orally or in writing, and -3- 5 designated "Confidential" in writing by OSI no later than thirty (30) days after the time of disclosure to Wyeth to the extent that such information as of the date of disclosure to Wyeth is not (i) known to Wyeth other than by virtue of a prior confidential disclosure to Wyeth by OSI or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by Wyeth from a third party free from any obligation of secrecy to OSI; provided, however, that such third party has no obligation of confidentiality to Wyeth. 1.16. "Wyeth Confidential Information" means all information about any element of Wyeth Technology which is disclosed by Wyeth to OSI, orally or in writing, and designated "Confidential" in writing by Wyeth no later than thirty (30) days after the time of disclosure to OSI to the extent that such information as of the date of disclosure to OSI is not (i) known to OSI other than by virtue of a prior confidential disclosure to OSI by Wyeth or (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained by OSI from a third party free from any obligation of secrecy to Wyeth; provided, however, that such third party has no obligation of confidentiality to OSI. 1.17. "OSI Patent Rights" means all applications for letters patent, whether domestic or foreign, which are encompassed within OSI Technology, including all continuations, continuations-in-part, divisions, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.18. "Wyeth Patent Rights" means all applications for letters patent, whether domestic or foreign, which are encompassed within Wyeth Technology, including all continuations, continuations-in-part, divisions, renewals and patents of addition thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.19. "Valid Claim" means a claim within OSI Patent Rights or Wyeth Patent Rights so long as such claim shall not have been disclaimed by Wyeth or OSI, whichever is appropriate, or shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 1.20. "Human Therapeutic Product" means any product for the treatment or management of any disease state in a human patient or any other human therapeutic indication derived from the Research Program in the course of research concerning a Target. -4- 6 1.21. "Licensed Human Therapeutic Product" means a Human Therapeutic Product that employs Wyeth Patent Rights, OSI Patent Rights, Wyeth Technology or OSI Technology in its manufacture, use or sale. 1.22. "Event of Termination" has the meaning set forth in Section 9.3. 1.23. "Funding Payments" has the meaning set forth in Section 3. 1.24. "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company, or other entity. 1.25. "Research Committee" has the meaning specified in Section 2.2. 2. Collaborative Research Program. 2.1.1. Purpose. OSI and Wyeth shall conduct a collaborative research program concerning the Targets (the "Research Program") throughout the Contract Period. The Research Program shall include, as a component, a research program that shall be pursued by OSI and that shall be funded by Wyeth throughout the Contract Period (the "Sponsored Research Program") . The objective of the Research Program is to discover and develop Human Therapeutic Products. 2.1.2. Annual Research Plan. The Annual Research Plan for the first and second Commitment Years is described in Exhibit 1. Wyeth shall have the option to extend the Annual Research Plan beyond the second Commitment Year, which extension shall be on the basis of mutual agreement of the parties. For each Commitment Year after the first Commitment Year, an Annual Research Plan shall be prepared by the Research Committee for submission to, and approval by, Wyeth and OSI no later than sixty (60) days before the end of the prior Commitment Year. The Annual Research Plan and the Annual Sponsored Research Plan for each Commitment Year shall be appended to and made part of this Agreement. 2.1.3. Exclusivity. OSI agrees that during the Contract Period neither OSI nor any of its Affiliates shall conduct research itself, or sponsor any research, or engage in any research sponsored by any Person not a party to this Agreement, if the objective of such research is to use any Target in the discovery and development of Human Therapeutic Products. 2.2. Research Committee. -5- 7 2.2.1. Purpose. A Research Committee shall be established by Wyeth and OSI to: (a) review, coordinate and evaluate progress under the Annual Research Plan; (b) prepare the Annual Research Plan including the budget for each Commitment Year; and (c) coordinate the OSI and Wyeth programs and the exchange of information and materials that relate to the Research Program. 2.2.2. Membership. Wyeth and OSI each shall appoint, in its sole discretion, an equal number of members to the Research Committee. Substitutes may be appointed at any time. The members initially shall be: OSI Appointees: *** *** *** Wyeth Appointees: *** *** *** 2.2.3. Chair. The Research Committee shall be chaired by two co-chairpersons, one appointed by Wyeth and the other appointed by OSI. 2.2.4. Meetings. The Research Committee shall meet at least quarterly, at places and on dates selected by each party in turn. Representatives of Wyeth or OSI, or both, in addition to members of the Research Committee, may attend such meetings at the invitation of both parties. 2.2.5 Minutes. The Research Committee shall keep accurate minutes of its deliberations which record all proposed decisions and all actions recommended or taken. The minutes shall be delivered to all Research Committee members within five working days after each meeting. The party hosting the meeting shall be responsible for the preparation of the minutes. Draft minutes shall be edited by the co-chairpersons and shall be issued in final form only with their approval and agreement. ***These portions deleted pursuant to a request for confidential treatment. -6- 8 2.2.6. Decisions. Subject to the provisions of Section 2.1.2, all technical decisions of the Research Committee shall be made by majority vote of.the members. Business decisions shall be made by the managements of Wyeth and OSI, in consultation with each other. If the parties are unable to agree, Wyeth shall have the final say in all technical and business decisions. 2.2.7. Expenses. Wyeth and OSI shall each bear all expenses of their respective members related to participation on the Research Committee. 3. Funding Payments. 3.1 The Annual Commitment for the first Commitment Year is ***. The Annual Commitment for the second Commitment Year is ***. 3.2 Payments by Wyeth to cover OSI's total, actual research costs, plus Allocated Overhead, (the "Funding Payments") shall not exceed the Annual Commitment in any Commitment Year, unless mutually agreed upon by both parties. The Annual Commitment for the second Commitment Year is based on *** man-years per Target which is the expected average requirement, and is subject to modification by mutual agreement if an unusually large number of lead compounds are identified or if additional genetic constructs are required to be constructed by OSI to facilitate lead development as specified in Exhibit 1. 3.2.1. All Funding Payments shall be made quarterly in advance for work scheduled to be performed by OSI during any three (3) month period, against OSI's invoice for such three (3) month period. Adjustments as necessary to reflect the work actually performed by OSI shall be made at the end of each three (3) month period and shall be reflected in OSI's invoice for the next three (3) month period. 3.2.2. The amount of the Funding Payment for each quarter shall be based on the work in progress pursuant to the applicable Annual Sponsored Research Plan and the associated annual budget; provided, however, that the aggregate amount of Funding Payments made in any Commitment Year shall not exceed the Annual Commitment for such Commitment Year, unless approved in advance by Wyeth. 3.2.3. Each Funding Payment shall be paid on the first day of the quarter or ten (10) days after receipt of the applicable invoice, whichever is later. *** These portions deleted pursuant to a request for confidential treatment. -7- 9 4. Wyeth Rights and Obligations. 4.1. Diligent Efforts. Wyeth and OSI each shall use reasonably diligent efforts to achieve the objectives of the Research Program. OSI will use reasonably diligent efforts to pursue the research objectives described in Exhibit 1 and Wyeth will use reasonably diligent efforts to assist OSI in the pursuit of those objectives. To achieve the objectives of the Research Program, Wyeth will specifically use reasonably diligent efforts: (a) to advance the pharmacological assessment of compounds identified by OSI in order to select those worthy of further investigation; (b) to determine the chemical structure of the selected compounds and to make related compounds to determine the relationship between structure and activity and to identify potential development candidates; (c) to select development candidates; (d) to assess safety and efficacy of the selected development candidates in animals and in human patients under conditions designed to yield date suitable for inclusion in approval applications to be submitted to the U.S. Food and Drug Administration; and (e) to develop manufacturing methods and pharmaceutical formulations for those selected candidates. 5. Treatment of Confidential Information. 5.1. Confidentiality. 5.1.1. Wyeth and OSI each recognize that the other's Confidential Information constitutes highly valuable proprietary, confidential information. Wyeth and OSI each agree that during the term of this Agreement and for five (5) years thereafter, they will keep confidential all Confidential Information that is disclosed to them or to any of their Affiliates pursuant to this Agreement. Neither Wyeth nor OSI nor any of their Affiliates shall use such Confidential Information except as expressly permitted in this Agreement. 5.1.2. Wyeth and OSI acknowledge that the Wyeth and OSI Confidential Information is highly valuable, proprietary, confidential information, and agree that any disclosure of Confidential Information to any officer, employee or agent of the other or of any of its Affiliates shall be made only if, and to the extent, necessary to carry out its -8- 10 responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. Each party agrees not to disclose the other's Confidential Information to any third party under any circumstance without written permission. Each party shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of the other's Confidential Information as it would customarily take to preserve the confidentiality of its own confidential information. Each party, upon the other's request, will return all the Confidential Information disclosed to it pursuant to this Agreement, including all copies and extracts of documents within sixty (60) days of the request after the termination of this Agreement. 5.1.3. OSI represents that all of its employees participating in the Research Program who shall have access to Wyeth Confidential Information are bound by agreements to maintain such information in confidence. Consultants will be similarly bound. 5.2. Publication. Except as required to pursue patent protection, the parties agree not to publish the results obtained in the course of the Research Program unless mutually agreed, in which case the results may be submitted for publication following scientific review by the Research Committee and subsequent approval by OSI's and Wyeth's managements. 5.3. Disclosure of Inventions. Each party shall promptly inform the other about all inventions that concern the Targets which are conceived, made or developed in the course of carrying out the Research Program by employees of, or consultants to, either of them solely, or jointly with employees of, or consultants to, the other. This Agreement shall not be construed to obligate either party to disclose to the other any invention which does not concern the Targets. 5.4. Restrictions on Transferring Materials. Wyeth and OSI recognize that the biological, biochemical and chemical compounds and materials which are part of OSI Technology or Wyeth Technology represent valuable commercial assets. Therefore, throughout the Contract Period and for five (5) years thereafter, OSI and Wyeth each agree not to transfer to any third party any such compound or material which constitutes Technology owned solely by the other party. Additionally, throughout the Contract Period and for six (6) months thereafter, OSI and Wyeth each agree not to transfer to any third party -9- 11 any such compound or material which constitutes Technology owned solely by it unless prior consent for any such transfer is obtained from the other, which consent shall not be unreasonably withheld, and unless such third party agrees as a condition of any such transfer not to transfer the material further and to use the material only for research purposes not directed toward the development of Human Therapeutic Products. 6. Intellectual Property Rights. 6.1. Ownership. All OSI Technology and OSI Patent Rights shall be owned solely by OSI regardless of whether such Technology or Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, OSI solely or jointly with employees or, or consultants to, Wyeth. All Wyeth Technology and Wyeth Patent Rights shall be owned solely by Wyeth regardless of whether such Technology or Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, Wyeth solely or jointly with employees of, or consultants to, OSI. 6.2. Filing, Prosecution and Maintenance of Patent Rights. OSI shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce, and maintain OSI Patent Rights. Wyeth shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce and maintain Wyeth Patent Rights. 6.3. Consultation Concerning Patent Rights. OSI and Wyeth shall each provide to the other copies of all patent applications within OSI Patent Rights or Wyeth Patent Rights, respectively, which relate to the Targets prior to filing such applications for the purpose of obtaining substantive comments of the other's patent counsel. Each party shall provide to the other copies of all documents relating to prosecution of such patent applications in a timely manner. Each party shall provide to the other every six (6) months a reporting detailing the status of all such patent applications. 7. Acquisition of Rights from Third Parties. During the Contract Period, OSI and Wyeth shall promptly notify each other in writing of any and all opportunities to acquire in any manner from third parties, technology or patents which may be useful in, or may relate to, the Research Program. OSI and Wyeth shall decide if such rights shall be acquired and, if so, whether by OSI or Wyeth. If acquired, such rights shall become OSI Technology or Wyeth Technology, whichever is appropriate. -10- 12 8. Option to Receive Exclusive Licenses: Other Agreements. 8.3.1. OSI hereby grants to Wyeth an exclusive option to obtain exclusive licenses on a Target by Target basis under the terms and conditions set forth in the domestic and international License Agreements appended hereto as Exhibits 2 and 3, respectively, with respect to any product or products which may derive from the Collaborative Research Program in a Target area. Wyeth may exercise its option to obtain an exclusive license at any time during the term of this Agreement as soon as a potential Human Therapeutic Product in a Target area is identified through the Collaborative Research Program and upon the giving of written notice to OSI of its exercise of the option provided by this section 8. It is further provided that Wyeth shall have the right to identify a licensable Human Therapeutic Product in a specific Target area for a period of up to one (1) year after the expiration of the Collaborative Research Agreement. 8.3.2. Wyeth agrees that it will not develop, manufacture, use or sell any compound identified as a potential Human Therapeutic Product through the Collaborative Research Program other than pursuant to the terms and conditions of the License Agreements appended hereto. 8.3.3. Other than the License Agreements appended hereto as Exhibits 2 and 3, this Agreement is the sole agreement with respect to the subject matter hereof. 9. Term, Extension, Termination and Disengagement. 9.1. Term. Unless sooner terminated or extended, this Agreement shall expire on September 30, 1995, subject to the early termination provisions in Section 9.5. 9.2. Extension. Wyeth, at least four months prior to the end of the term, shall notify OSI in writing if it desires to extend the Sponsored Research Program. If OSI is willing to extend the Sponsored Research Program on mutually acceptable terms, OSI must so notify Wyeth within forty-five (45) days after receipt of Wyeth's notice. Wyeth and OSI shall thereafter promptly negotiate in good faith terms of any extension to this Agreement. 9.3. Events of Termination. The following events shall constitute events of termination ("Events of Termination"): -11- 13 (a) any representation or warranty by OSI or Wyeth, or any of its officers, under or in connection with this Agreement shall prove to have been incorrect in any material respect when made; (b) OSI or Wyeth shall fail in any material respect to perform or observe any term, convent or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for thirty (30) days after written notice to the failing party. 9.4. Termination. 9.4.1. Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 9.4.2. If Wyeth terminates this Agreement pursuant to Section 9.4.1, the License Agreements shall continue according to their terms. If OSI terminates this Agreement pursuant to Section 9.4.1, the License Agreements shall also terminate. 9.5. Termination by Wyeth. After this Agreement has been in effect for a period of twenty (20) months, Wyeth may terminate this Agreement, with or without cause, by giving OSI four (4) months notice at any time after the expiration of said 20 month period. If Wyeth terminates this Agreement pursuant to this section, it will make the Funding Payments which would otherwise have been due for such four-month period and will retain all rights set forth in any License Agreements then in effect subject to the requirements of those Agreements. 10. Representations and Warranties. OSI and Wyeth each represents and warrants as follows: 10.1. It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and of New York, respectively, and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. -12- 14 10.2. The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or by-laws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. 10.3. This Agreement is a legal, valid and binding obligation of it and is enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditor's rights generally. 10.4. It is not under any obligation to any Person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations. 10.5. It has good and marketable title to or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities and the Research Program, subject to no claim of any third party other than the relevant lessors or licensors. 11. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time: If to Wyeth: To Wyeth at its address as set forth at the beginning of this Agreement Attention: Executive Vice President, Wyeth-Ayerst Research with copy to: Office of the General Counsel If to OSI: To OSI at its address as set forth at the beginning of this Agreement Attention: President -13- 15 Notices shall be deemed given as of the date of receipt. 12. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. 13. Miscellaneous. 13.1. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 13.2. Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 13.3. Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 13.4. Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any part at any time or times to require performance of any provision shall in no manner affect its rights at a later time to enforce the same. 13.5. No Third Party Beneficiaries. No Person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any Person. 13.6. Assignment and Successors. This Agreement may not be assigned by either party, in whole or in part, except to an Affiliate, to a 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. -14- 16 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. AMERICAN HOME PRODUCTS CORPORATION By:_________________________________ Title:______________________________ ONCOGENE SCIENCE, INC. By:_________________________________ Title:______________________________ -15- 17 EXHIBIT 1 ANNUAL SPONSORED RESEARCH PLAN FOR COMMITMENT YEARS 1 AND 2 OF THE WYETH-AYERST/ONCOGENE SCIENCE COLLABORATIVE RESEARCH AGREEMENT 18 1. Executive Summary Oncogene Science has developed a proprietary gene transcription-based technology to identify new drug leads. A summary reviewing the advantages of gene transcription as an approach to drug discovery is attached in Appendix 1. A collaboration with Wyeth-Ayerst Research is proposed to exploit this technology in order to develop drugs in four therapeutic areas: non-insulin dependent diabetes, immunomodulation, asthma, and osteoporosis. The immediate goal is to identify small molecular weight compounds which specifically modulate the transcription of four target genes *** thereby either increasing or decreasing the concentration of the corresponding protein product. ***. *** *** *** These portions deleted pursuant to a request for confidential treatment. -2- 19 2. Program Overview Oncogene Science has developed a unique drug discovery technology specifically designed to identify compounds which affect the transcription of target genes. Once a particular gene has been chosen as a target, the next step of the process is to clone the regions of DNA which regulate expression of that gene. These sequences are then fused to a highly sensitive reporter gene (the firefly luciferase gene) which generates a readily measurable signal in response to changes in transcription of the target gene. This genetically engineered DNA construct is then introduced into an appropriate cell type and stable lines isolated. Such cell lines will generate a signal which reflects a change in gene expression when an appropriate compound is added to the tissue culture media. Lead identification is based upon very highthroughput drug screening, ie., screening up to 100,000 compounds or fermentation broths against each target in a single year. To achieve this, a fully automated screening system has been developed using state-of-the-art robotics developed at Oncogene Science. Complete automation not only allows the primary screen to be cost effective, but has proved essential to obtain highly quantitative and reproducible data from a transcription based screen of this type. Each robotic system can analyze several thousand samples per week against multiple target genes. By using multiple targets in the primary screen, activity, cytotoxicity, and initial gene specificity can be evaluated rapidly. ***. Compounds which are active in the primary screen are immediately retested to establish an EC(50)/cytotoxicity index. Automated on-line data reduction and statistical analysis allows rapid quantitative determination to identify the initial lead compounds. Complete data sets and lists of lead compounds can be provided in a format compatible with Wyeth Ayerst's existing data analysis system. ***. Appropriate tertiary assays and animal models can then be employed for the later stages of lead development, and typically would be conducted at Wyeth-Ayerst. *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -3- 20 *** *** *** These portions deleted pursuant to a request for confidential treatment. -4- 21 3. Specific Targets *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -5- 22 *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -6- 23 *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -7- 24 *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -8- 25 *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -9- 26 *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -10- 27 *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -11- 28 *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -12- 29 *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -13- 30 *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -14- 31 *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -15- 32 *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -16- 33 Appendix A
Payment Schedule *** *** *** *** *** *** *** ***
*Subject to approved work plan. *** These portions deleted pursuant to a request for confidential treatment. -17- 34 Appendix B Development/Screening Collaborative Program *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -18- 35 EXHIBIT 2 LICENSE AGREEMENT This LICENSE AGREEMENT is entered into as of ___________, 1991 (the "Effective Date") by and between AMERICAN HOME PRODUCTS CORPORATION, a corporation of the State of Delaware, U.S.A., having its principal place of business at 685 Third Avenue, New York, New York 10017, U.S.A., as represented by its agent, Wyeth-Ayerst Laboratories Division (hereinafter collectively referred to as "Wyeth") and ONCOGENE SCIENCE, INC. (hereinafter referred to as "OSI"), a corporation of the State of Delaware, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, U.S.A. In consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows: 1. Definitions. The capitalized terms used in this Agreement shall have the meanings specified for such terms in this Section 1 and in Section 1 of the Collaborative Research Agreement to which this License Agreement is appended. 1.1 "Collaborative Research Agreement" means the Collaborative Research Agreement between Wyeth and OSI effective ___________, 1991. 1.2 "Net Sales" means the gross sales by Wyeth or any sublicensee of Wyeth for arm's-length sales to a third party or parties of Licensed Human Therapeutic Products, less transportation, normal returns and allowance (actually paid or allowed by Wyeth), customary discounts (whether cash or trade) and sales or other taxes based on the sales prices whether -19- 36 or not absorbed by Wyeth, but not including taxes assessed against income derived from such sales. 1.3 "Licensed Human Therapeutic Product" means a Human Therapeutic Product that employs Wyeth Patents Rights, OSI Patent Rights, Wyeth Technology or OSI Technology in its manufacture, use or sale. 1.4 "Territory" means the United States of America, its territories and possessions and the Commonwealth of Puerto Rico. 2. Grant of Licenses. 2.1 License Granted to Wyeth under OSI Patent Rights. OSI grants to Wyeth the exclusive license, including the right to grant sublicenses, to develop, make, use and sell Human Therapeutic Products in the Territory under all OSI's right, title and interest in OSI Patent Rights. 2.2 License Granted to Wyeth under OSI Technology. OSI grants to Wyeth the exclusive license, including the right to grant sublicenses, to develop, make, use and sell Human Therapeutic Products in the Territory under all OSI's right, title and interest in OSI Technology. 2.3 Term of License Grants. 2.3.1 The term of the grant set forth in Section 2.1 shall commence on the Effective Date and shall terminate on the date of the last to expire of OSI Patent Rights. 2.3.2 The term of the grant set forth in Section 2.2 shall commence on the Effective Date and shall run perpetually. 2.3.3 Wyeth shall have a royalty-free license to manufacture, use and sell -20- 37 each Licensed Human Therapeutic Product in the Territory after the expiration of Wyeth's last obligation to pay royalties on Net Sales of such Licensed Human Therapeutic Product. 2.4 Wyeth Obligations. 2.4.1 Wyeth shall use reasonably diligent efforts to commercially develop Licensed Human Therapeutic Products. This requirement shall be deemed satisfied with respect to any specific Target area if Wyeth is developing any Human Therapeutic Product in that Target area. Such development will be shown by semi-annual progress reports which demonstrate that the Human Therapeutic Product remains an active candidate for filing in an Investigational New Drug Application with the U.S. Food and Drug Administration. Wyeth shall have an exclusive license to all Human Therapeutic Products arising from the Collaborative Research Program in a Target Area so long as it satisfies its development obligation with respect to any specific Target area as provided for in this Section 2.4.1. 2.4.2 In the event that, in the course of its development of a Human Therapeutic Product as provided for in Section 2.5.1, it becomes apparent, in Wyeth's determination, that a Product or Products will not be commercially viable, the parties agree to the following disposition of such Product or Products: a) if the determination arises during or after the term of the Collaborative Research Agreement, and the Product or Products are not the sole development candidates in a specific Target area, the Product or Products shall remain exclusively licensed to Wyeth; b) if the determination arises after expiration of the Collaborative Research Agreement and if the Products are the sole development candidate or candidates in a specific Target area, OSI shall have the option to an exclusive license thereto, including the right to -21- 38 grant sublicenses, under Wyeth Patent Rights and Wyeth Technology on terms to be negotiated mutually by the parties. 2.5 Technical Assistance. OSI shall provide to Wyeth or any sublicensee of Wyeth, at Wyeth's request and expense, any assistance reasonably necessary to enable Wyeth or such sublicensee to manufacture, use or sell each Licensed Human Therapeutic Product and to enjoy fully all the rights granted to Wyeth pursuant to this Agreement. 3. Royalties, Payments of Royalties, Accounting for Royalties Records. 3.1 Patent and Tgchnology Rights. Wyeth shall pay OSI a royalty based on the Net Sales of each Licensed Human Therapeutic Product, the manufacture, use or sale of which would infringe a Valid Claim within OSI Patent Rights or Wyeth Patent Rights if such manufacture, use or sale were by an unlicensed third party or which employs OSI Technology or Wyeth Technology. Such royalty shall be paid from the date of first commercial sale of each such Licensed Human Therapeutic Product until the expiration of the last applicable patent to expire or ten (10) years from the date of such first commercial sale, whichever is later. 3.2 Royalty Rates - Patent Rights and Technology. Wyeth shall pay OSI a royalty of *** percent *** of Net Sales of each Human Therapeutic Product licensed under Section 2.1 or 2.2. Only one royalty will be due on Net Sales of any such Human Therapeutic Product. 3.3 Payment Dates. Royalties shall be paid by Wyeth on Net Sales within sixty (60) days after the *** These portions deleted pursuant to a request for confidential treatment. -22- 39 end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Licensed Human Therapeutic Product by Wyeth or any sublicensee of Wyeth and a calculation of the amount of royalty due. 3.4 Accounting. No royalties on Net Sales shall be payable on sales transactions between or among Wyeth and its Affiliates; the final vendee sale to a third party alone shall be used for the purpose of determining the royalty payments due hereunder. The Licensed Human Therapeutic Product subject to royalty payment shall be deemed sold when invoiced, or if not invoiced, when the same shall be shipped or delivered to the third party. All taxes, assessments and fees of any nature levied or incurred on account of any payments accruing under this Agreement, by national, state or local governments, will be assumed and paid by Wyeth except taxes levied thereon as income to OSI and if such taxes are required to be withheld by Wyeth, they will be deducted from such payments due to OSI and will be paid by Wyeth for the account of OSI, and a receipt therefor secured and sent to OSI. 3.5 Records. Wyeth shall keep for three (3) years from the date of each payment of royalties complete and accurate records of sales by Wyeth of each Licensed Human Therapeutic Product in sufficient detail to allow the accruing royalties to be determined accurately. OSI shall have the right for a period of three (3) years after receiving any report or statement with respect to royalties due and payable to appoint at its expense an independent certified public accountant reasonably acceptable to Wyeth to inspect the relevant records of Wyeth to verify -23- 40 such report or statement. Wyeth 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. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. OSI agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any audit or inspection, except to the extent it is necessary for OSI to reveal such information in order to enforce its rights under this Agreement or if 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 Wyeth shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of the inspection shall be binding on both parties. 4. Legal Action. 4.1.1 Actual or Threatened Disclosure or Infringement of Wyeth Patent Rights or Technology When information comes to the attention of Wyeth to the effect that any Wyeth Patent Rights or Technology relating specifically to a Licensed Human Therapeutic Product have been, or are threatened to be, unlawfully disclosed or that any of the exclusive rights granted by this Agreement has been or is threatened to be unlawfully infringed, Wyeth shall have the right at its expense to take such action as it may deem necessary to prosecute or prevent such unlawful disclosure or infringement, including the right to bring or defend any -24- 41 suit, action or proceeding involving any such disclosure or infringement. Wyeth shall notify OSI promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If Wyeth determines that it is necessary or desirable for OSI to join any such suit, action or proceeding, OSI shall execute all papers and perform such other acts as may be reasonably required to permit Wyeth to act in OSI's name. In the event that Wyeth brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or insist settlement for all reasonable costs and expenses of every kind and character, including reasonable attorney's fees, involved in the prosecution of any suit, and *** percent *** of any funds that shall remain from said recovery shall be distributed to OSI and the balance of such funds shall be retained by Wyeth. If Wyeth does not, within one hundred twenty (120) days after giving notice to OSI of the above-described information, notify OSI of Wyeth's intent to bring suit against any infringer, OSI shall have the right to bring suit for such alleged infringement, but it shall not be obligated to so do, and may join Wyeth as party plaintiff, if appropriate, in which event OSI shall hold Wyeth free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to OSI. However, *** percent *** of any such sums received by OSI, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be paid to Wyeth. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement, under the terms of this Section 4.1.1. If Wyeth lacks standing to bring any such suit, action or proceeding, then OSI shall do so at the request of Wyeth and at Wyeth's expense. *** These portions deleted pursuant to a request for confidential treatment. -25- 42 4.1.2 Actual or Threatened Disclosure or Infringement of OSI Patent Rights or Technology When information comes to the attention of OSI to the effect that any OSI Patent Rights or Technology relating specifically to a Licensed Human Therapeutic Product have been, or are threatened to be, unlawfully disclosed or that any of the exclusive rights granted by this Agreement has been, or is threatened to be, unlawfully infringed, OSI shall have the right at its expense to take such action as it may deem necessary to prosecute or prevent such unlawful disclosure or infringement, including the right to bring or defend any suit, action or proceeding involving any such disclosure or infringement. OSI shall notify Wyeth promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If Wyeth determines that it is necessary or desirable for Wyeth to join any such suit, action or proceeding, Wyeth shall execute all papers and perform such other acts as may be reasonably required to permit OSI to act in Wyeth's name. In the event that OSI brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or in its settlement for all reasonable costs and expenses of every kind and character, including reasonable attorney's fees, involved in the prosection of any suit, and *** percent *** of any funds that shall remain from said recovery shall be distributed to Wyeth and the balance of such funds shall be retained by OSI. If OSI does not, within one hundred twenty (120) days after giving notice to Wyeth of the above-described information, notify Wyeth of OSI's intention to bring suit against any infringer, Wyeth shall have the right to bring suit for such alleged infringement, but it shall not be obligated to do so, and may join OSI as party plaintiff, if appropriate, in which event Wyeth shall hold OSI *** These portions deleted pursuant to a request for confidential treatment. -26- 43 free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to Wyeth. However, *** percent *** of any such sums received by Wyeth, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be paid to OSI. Each party shall always have the right to be presented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement, under the terms of this Section 4.1.2. If OSI lacks standing to bring any such suit, action or proceeding, then Wyeth shall do so at the request of OSI and at OSI's expense. 4.2 Defense of Infringement Claims. OSI will cooperate with Wyeth at Wyeth's expense in the defense of any suit, action or proceeding against Wyeth or any sublicensee of Wyeth alleging the infringement of the intellectual property rights of a third party by reason of the use of Patent Rights or Technology in the manufacture, use or sale of any Licensed Human Therapeutic Product. Wyeth shall give OSI prompt written notice of the commencement of any such suit, action or proceeding or claim of infringement and will furnish OSI a copy of each communication relating to the alleged infringement. OSI shall give to Wyeth all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), information and assistance necessary to defend or settle any such suit, action or proceeding. If the parties agree that OSI should institute or join any suit, action or proceeding pursuant to this Section 4.2, Wyeth may join OSI as a defendant if necessary or desirable, and OSI at Wyeth's expense shall executive all documents and take all other *** These portions deleted pursuant to a request for confidential treatment. -27- 44 actions, including giving testimony, which may reasonably be required in connection with the prosecution of such suit, action or proceeding. 4.3 Hold Harmless. OSI agrees to defend, protect, indemnify and hold harmless Wyeth and any sublicensee of Wyeth, from and against any loss or expense arising from any proven claim of a third party that it has been granted rights by OSI that Wyeth or any sublicensee of Wyeth in exercising the rights granted to Wyeth by OSI pursuant to this Agreement, has infringed upon such rights granted to such third party by OSI. Wyeth agrees to defend, protect, indemnify and hold harmless OSI from and against any liability, claim, loss, cost or expense arising from any claim for liability based upon Wyeth's manufacture, use or sale of any Licensed Human Therapeutic Product. 4.4 Third Party License. If the manufacture, use or sale by Wyeth of a Licensed Human Therapeutic Product would, in the opinion of both Wyeth and OSI, infringe a patent owned by a third party, Wyeth and OSI shall attempt to obtain a license under such patent. If Wyeth obtains a license under such patent, (fifty) percent (50%) of any payments made by Wyeth to such third party shall be deductible from royalty payments due from Wyeth to OSI pursuant to this Agreement; provided, however, that in no event shall royalties payable to OSI be reduced by more than twenty-five percent (25%) as a result of all such deductions. All such computations, payments, and adjustments shall be on a patent by patent basis. If OSI is of the opinion that such manufacture, use or sale would not infringe such patent owned by a third party, OSI may, at its election, bring suit against such third party seeking a declaration -28- 45 that such patent is invalid or not infringed by Wyeth's manufacture, use or sale of the Licensed Human Therapeutic Product involved, or may bring opposition, nullity or other proceedings against such patent, as appropriate. If OSI is successful in such suit, Wyeth shall continue to pay royalties in such country as provided in Section 3. If OSI is unsuccessful in such suit, it shall join Wyeth in an attempt to obtain a license under such patent, and fifty percent (50%) of any payments made by Wyeth to such third party for such license shall be deductible from royalty payments due from Wyeth to OSI as to that patent pursuant to this Agreement. 5. Termination by Wyeth Wyeth may terminate this Agreement at any time without cause by giving OSI at least six (6) months notice prior to the termination date. Such termination will not affect the rights and obligations of the parties accrued prior to the termination, including the right of OSI to receive royalties on subsequent sales of Licensed Human Therapeutic Products, and OSI shall be entitled to an exclusive license under Wyeth Patent Rights and Wyeth Technology in the Target area(s) on the same terms under which Wyeth is exclusively licensed under OSI Patent Rights and OSI Technology as provided for in this Agreement. 6. Representation and Warranty. OSI and Wyeth represent and warrant to each other that they have the right to grant to each other the licenses granted to them pursuant to this Agreement, and that the licenses so granted do not conflict with or violate the terms of any agreement between either of them and any third party. 7. Notices. All notices shall be mailed via certified mail, return receipt requested, or -29- 46 courier, addressed as follows, or to such other address as may be designated from time to time: If to Wyeth: To Wyeth at its address as set forth at the beginning of this Agreement Attention: President, Wyeth-Ayerst Laboratories with copy to: Office of the General Counsel If to OSI: To OSI at its address as set forth at the beginning of this Agreement Attention: President Notices shall be deemed given as of the date of receipt. 8. Additional Terms. The following terms of the Collaborative Research Agreement are incorporated into this Agreement as if set forth verbatim: (a) Sections 9.3 and 9.4; (b) Sections 5.1 and 5.2; (c) Sections 6.1 through 6.3, inclusive; (d) Section 12; and (e) Section 13. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. AMERICAN HOME PRODUCTS CORPORATION By_____________________________ -30- 47 Title____________________________ ONCOGENE SCIENCE, INC. By_____________________________ Title___________________________ -31- 48 EXHIBIT 3 LICENSE AGREEMENT This LICENSE AGREEMENT is entered into as of ___________, 1991 (the "Effective Date") by and between AMERICAN HOME PRODUCTS CORPORATION, a corporation of the State of Delaware, U.S.A., having its principal place of business at 685 Third Avenue, New York, New York 10017, U.S.A., as represented by its agent, Wyeth-Ayerst Laboratories Division (hereinafter collectively referred to as "Wyeth") and ONCOGENE SCIENCE, INC. (hereinafter referred to as "OSI"), a corporation of the State of Delaware, having its principal place of business at 106 Charles Lindbergh Blvd., Uniondale, New York 11553, U.S.A. In consideration of the mutual covenants and promises set forth in this Agreement, the parties agree as follows: 1. Definitions. The capitalized terms used in this Agreement shall have the meanings specified for such terms in this Section 1 and in Section 1 of the Collaborative Research Agreement to which this License Agreement is appended. 1.1 "Collaborative Research Agreement" means the Collaborative Research Agreement between Wyeth and OSI effective ___________, 1991. 1.2 "Net Sales" means the gross sales by Wyeth or any sublicensee of Wyeth for arm's length sales to a third party or parties of Licensed Human Therapeutic Products, less transportation, normal returns and allowance (actually paid or allowed by Wyeth), customary discounts (whether cash or trade) and sales or other taxes based on the sales prices whether -32- 49 or not absorbed by Wyeth, but not including taxes assessed against income derived from such sales. 1.3 "Licensed Human Therapeutic Product" means a Human Therapeutic Product that employs Wyeth Patent Rights, OSI Patent Rights, Wyeth Technology, or OSI Technology in its manufacture, use or sale. 1.4 "Territory" means all countries of the world, except the United States of America, its territories and possessions and the Commonwealth of Puerto Rico. 2. Grant of Licenses. 2.1 License Granted to Wyeth under OSI Patent Rights. OSI grants to Wyeth the exclusive license, including the right to grant sublicenses, to develop, make, use and sell Human Therapeutic Products in the Territory under all OSI's right, title and interest in OSI Patent Rights. 2.2 License Granted to Wyeth under OSI Technology. OSI grants to Wyeth the exclusive license, including the right to grant sublicenses, to develop, make, use and sell Human Therapeutic Products in the Territory under all OSI's right, title and interest in OSI Technology. 2.3 Term of License Grants. 2.3.1 The term of the grant set forth in Section 2.1 shall commence on the Effective Date and shall terminate on the date of the last to expire of OSI Patent Rights. 2.3.2 The term of the grant set forth in Section 2.2 shall commence on the Effective Date and shall run perpetually, except in those countries of the Territory in which such term is limited by law. -33- 50 2.3.3 Wyeth shall have a royalty-free license to manufacture, use and sell each Licensed Human Therapeutic Product in each country of the Territory after the expiration of Wyeth's last obligation to pay royalties on Net Sales of each such Licensed Human Therapeutic Product in each such country. 2.4 Wyeth Obligations. 2.4.1 Wyeth shall use reasonably diligent efforts to commercially develop Licensed Human Therapeutic Products. This requirement shall be deemed satisfied with respect to any specific Target area if Wyeth is developing any Human Therapeutic Product in that Target area. Such development will be shown by semi-annual progress reports which demonstrate that the Human Therapeutic Product remains an active candidate for the filing of a foreign equivalent of an Investigational New Drug Application. Wyeth shall have an exclusive license to all Human Therapeutic Products arising from the Collaborative Research Program in a Target Area so long as it satisfies its development obligation with respect to any specific Target area as provided for in this Section 2.4.1. 2.4.2 In the event that, in the course of its development of a Human Therapeutic Product as provided for in Section 2.4.1, it becomes apparent, in Wyeth's determination, that a Product or Products will not be commercially viable, the parties agree to the following disposition of such Product or Products: a) if the determination arises during or after the term of the Collaborative Research Agreement, and the Product or Products are not the sole development candidates in a specific Target area, the Product or Products shall remain exclusively licensed to Wyeth; b) if the determination arises after expiration of the Collaborative Research -34- 51 Agreement and if the Products are the sole development candidate or candidates in a specific Target area, OSI shall have the option to an exclusive license thereto, including the right to grant sublicenses, under Wyeth Patent Rights and Wyeth Technology on terms to be negotiated mutually by the parties. 2.5 Technical Assistance. OSI shall provide to Wyeth or any sublicensee or Direct Licensee of Wyeth at Wyeth's request and expense, any assistance reasonably necessary to enable Wyeth or such sublicensee or Direct Licensee to manufacture, use or sell each Licensed Human Therapeutic Product and to enjoy fully all the rights granted to Wyeth pursuant to this Agreement. 3. Royalties, Payments of Royalties, Accounting for Royalties, Records. 3.1 Patent and Technology Rights. Wyeth shall pay OSI a royalty based on the Net Sales in each country of each Licensed Human Therapeutic Product, the manufacture, use or sale of which would infringe a Valid Claim within OSI Patent Rights or Wyeth Patent Rights if such manufacture, use or sale were by an unlicensed third party or which employs OSI Technology of Wyeth Technology. Such royalty shall be paid in each country of the Territory from the date of first commercial sale of each such Licensed Human Therapeutic Product in each such country until the expiration of the last applicable patent to expire with respect to each such country or ten (10) years from the date of such first commercial sale in each such country, whichever is later. 3.2 Royalty Rates - Patent Rights and Technology. Wyeth shall pay OSI a royalty of *** percent *** of Net Sales of each ***These portions deleted pursuant to a request for confidential treatment. -35- 52 Human Therapeutic Product licensed under Section 2.1 or 2.2. Only one royalty will be due on Net Sales of any such Human Therapeutic Product. 3.3 Direct Licensees. Wyeth may, at any time, request from OSI and OSI agrees to grant directly to any party ("Direct Licensee(s)") in any country of the Territory exclusive license rights consistent with those granted to Wyeth herein. Accordingly, upon receipt of Wyeth's request, OSI shall enter into and sign a separate direct license agreement or agreements with the companies designated by Wyeth in the request. All direct agreements shall be prepared by Wyeth. In the event that the laws and regulations of the country(ies) require modification of the royalty rate, duration and/or terms and conditions, the direct licenses to Direct Licensees shall be so modified. In the absence or upon the expiration of such laws and regulations, the terms and conditions of any such direct license shall not be less favorable to OSI than those contained in this Agreement. In those countries in which the validity of such direct license requires prior governmental approval or registration, such direct license shall not be binding or have any force or effect until the required governmental approval or registration has been granted. 3.4 Payment Dates. Royalties shall be paid by Wyeth on Net Sales within sixty (60) days after the end of each calendar quarter in which such Net Sales are made. Such payments shall be accompanied by a statement showing the Net Sales of each Licensed Human Therapeutic Product by Wyeth or any sublicensee of Wyeth in each country of the Territory and a calculation of the amount of royalty due. -36- 53 3.5 Accounting. (a) The royalties provided for herein shall accrue and be payable in the national currency of the country where the sale on which payment is based was made, provided that: (i) if law or regulation permits the conversion of such currency into U.S. currency, the same shall be converted into the equivalent value in U.S. currency at the applicable rate of exchange existing at the time of conversion and paid in U.S. currency to OSI at the place of payment; (ii) if the conversion into and/or remittance of U.S. currency is subject to administrative authorization, appropriate action will be taken with the competent authorities to apply diligent efforts to obtain such authorization so as to pay the royalty in U.S. currency within the time stipulated for payment of the royalty; (iii) if by law, regulations or fiscal policy of a country conversion into or transfer of U.S. currency is restricted or forbidden, notice thereof in writing will be given to OSI and payment of the royalty shall be made through such lawful means or method as OSI may designate and at OSI's expense. Failing the designation by OSI of such lawful means or method as aforesaid within a period of sixty (60) days after the aforementioned notice is given to OSI, the payment of such royalty by Wyeth shall be made by the deposit thereof in local currency to the credit of OSI in a recognized banking institution designated by OSI or if none be designated by it within the period of sixty (60) days as aforesaid then in a recognized banking institution notified to OSI; and (b) Except for those instances provided for by subsections (i), (ii) and (iii) -37- 54 above, Wyeth shall guarantee the determination and payment of royalties on all sales made by Wyeth, and its sublicensees and Direct Licensees. (c) All taxes, assessments and fees of any nature levied or incurred on account of any payments accruing under this Agreement, by national, state or local governments, will be assumed and paid by Wyeth except taxes levied thereon as income to OSI and if such taxes are required to be withheld by Wyeth, they will be deducted from such payments due to OSI and will be paid by Wyeth for the account of OSI, and a receipt therefor secured and sent to OSI. 3.6 Records. Wyeth shall keep for three (3) years from the date of each payment of royalties complete and accurate records of sales by Wyeth of each Licensed Human Therapeutic Product in sufficient detail to allow the accruing royalties to be determined accurately. OSI shall have the right for a period of three (3) years after receiving any report or statement with respect to royalties due and payable to appoint at its expense an independent certified public accountant reasonably acceptable to Wyeth to inspect the relevant records of Wyeth to verify such report or statement. Wyeth 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. Such inspection right shall not be exercised more than once in any calendar year nor more than once with respect to sales in any given period. OSI agrees to hold in strict confidence all information concerning royalty payments and reports, and all information learned in the course of any -38- 55 audit or inspection, except to the extent it is necessary for OSI to reveal such information in order to enforce its rights under this Agreement or if 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 Wyeth shall have no obligation to maintain records pertaining to such report or statement beyond said three-year period. The results of the inspection shall be binding on both parties. 4. Legal Action. 4.1.1 Actual or Threatened Disclosure or Infringement of Wyeth Patent Rights or Technology When information comes to the attention of Wyeth to the effect that any Wyeth Patent Rights or Technology relating specifically to a Licensed Human Therapeutic Product have been, or are threatened to be, unlawfully disclosed or that any of the exclusive rights granted by this Agreement has been or is threatened to be unlawfully infringed, Wyeth shall have the right at its expense to take such action as it may deem necessary to prosecute or prevent such unlawful disclosure or infringement, including the right to bring or defend any suit, action or proceeding involving any such disclosure or infringement. Wyeth shall notify OSI promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If Wyeth determines that it is necessary or desirable for OSI to join any such suit, action or proceeding, OSI shall execute all papers and perform such other acts as may be reasonably required to permit Wyeth to act in OSI's name. In the event that Wyeth brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or insist settlement for all reasonable costs and expenses of every kind and -39- 56 character, including reasonable attorney's fees, involved in the prosecution of any suit, and *** percent *** of any funds that shall remain from said recovery shall be distributed to OSI and the balance of such funds shall be retained by Wyeth. If Wyeth does not, within one hundred twenty (120) days after giving notice to OSI of the above-described information, notify OSI of Wyeth's intent to bring suit against any infringer, OSI shall have the right to bring suit for such alleged infringement, but it shall not be obligated to so do, and may join Wyeth as party plaintiff, if appropriate, in which event OSI shall hold Wyeth free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to OSI. However, *** percent *** of any such sums received by OSI, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be paid to Wyeth. Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement, under the terms of this Section 4.1.1. If Wyeth lacks standing to bring any such suit, action or proceeding, then OSI shall do so at the request of Wyeth and at Wyeth's expense. 4.1.2 Actual or Threatened Disclosure or Infringement of OSI Patent Rights or Technology When information comes to the attention of OSI to the effect that any OSI Patent Rights or Technology relating specifically to a Licensed Human Therapeutic Product have been, or are threatened to be, unlawfully disclosed or that any of the exclusive rights granted by this Agreement has been, or is threatened to be, unlawfully infringed, OSI shall have the right at its expense to take such action as it may deem necessary to prosecute or *** These portions deleted pursuant to a request for confidential treatment. -40- 57 prevent such unlawful disclosure or infringement, including the right to bring or defend any suit, action or proceeding involving any such disclosure or, infringement. OSI shall notify Wyeth promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If Wyeth determines that it is necessary or desirable for Wyeth to join any such suit, action or proceeding, Wyeth shall execute all papers and perform such other acts as may be reasonably required to permit OSI to act in Wyeth's name. In the event that OSI brings a suit, it shall have the right first to reimburse itself out of any sums recovered in such suit or in its settlement for all reasonable costs and expenses of every kind and character, including reasonable attorneys fees, involved in the prosection of any suit, and *** percent *** of any funds that shall remain from said recovery shall be distributed to Wyeth and the balance of such funds shall be retained by OSI. If OSI does not, within one hundred twenty (120) days after giving notice to Wyeth of the above-described information, notify Wyeth of OSI's intention to bring suit against any infringer, Wyeth shall have the right to bring suit for such alleged infringement, but it shall not be obligated to do so, and may join OSI as party plaintiff, if appropriate, in which event Wyeth shall hold OSI free, clear and harmless from any and all costs and expenses of such litigation, including attorney's fees, and any sums recovered in any such suit or in its settlement shall belong to Wyeth. However, *** percent *** of any such sums received by Wyeth, after deduction of the costs and expenses of litigation, including attorney's fees paid, shall be paid to OSI. Each party shall always have the right to be presented by counsel of its own selection and at its own expense in any suit instituted by the other for infringement, under the terms of this Section 4.1.2. If OSI lacks standing to bring any such suit, action or proceeding, then Wyeth *** These portions deleted pursuant to a request for confidential treatment. -41- 58 shall do so at the request of OSI and at OSI's expense. 4.2 Defense of Infringement Claims. OSI will cooperate with Wyeth at Wyeth's expense in the defense of any suit, action or proceeding against Wyeth or any sublicensee of Wyeth alleging the infringement of the intellectual property rights of a third party by reason of the use of Patent Rights or Technology in the manufacture, use or sale of any Licensed Human Therapeutic Product. Wyeth shall give OSI prompt written notice of the commencement of any such suit, action or proceeding or claim of infringement and will furnish OSI a copy of each communication relating to the alleged infringement. OSI shall give to Wyeth all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), information and assistance necessary to defend or settle any such suit, action or proceeding pursuant to this Section 4.2. Wyeth may join OSI as a defendant if necessary or desirable, and OSI at Wyeth's expense shall executive all documents and take all other actions, including giving testimony, which may reasonably be required in connection with the prosecution of such suit, action or proceeding. 4.3 Hold Harmless. OSI agrees to defend, protect, indemnify and hold harmless Wyeth and any sublicensee of Wyeth, from and against any loss or expense arising from any proven claim of a third party that it has been granted rights by OSI that Wyeth or any sublicensee of Wyeth in exercising the rights granted to Wyeth by OSI pursuant to this Agreement, has infringed upon such rights granted to such third party by OSI. Wyeth agrees to defend, protect, -42- 59 indemnify and hold harmless OSI from and against any liability, claim, loss, cost or expense arising from any claim for liability based upon Wyeth's manufacture, use or sale of any Licensed Human Therapeutic Product. 4.4 Third Party License. If the manufacture, use or sale by Wyeth of a Licensed Human Therapeutic Product in any country would, in the opinion of both Wyeth and OSI, infringe a patent owned by a third party, Wyeth and OSI shall attempt to obtain a license under such patent. If Wyeth obtains a license under such patent, fifty percent (50%) of any payments made by Wyeth to such third party shall be deductible from royalty payments due from Wyeth to OSI pursuant to this Agreement; provided, however, that in no event shall royalties payable to OSI be reduced by more than twenty-five percent (25%) as a result of all such deductions. All such computations, payments, and adjustments shall be on a country by country and patent by patent basis. If OSI is of the opinion that such manufacture, use or sale would not infringe such patent owned by a third party, OSI may, at its election, bring suit against such third party seeking a declaration that such patent is invalid or not infringed by Wyeth's manufacture, use or sale of the Licensed Human Therapeutic Product involved, or may bring opposition, nullity or other proceedings against such patent, as appropriate. If OSI is successful in such suit, Wyeth shall continue to pay royalties in such country as provided in Section 3. If OSI is unsuccessful in such suit, it shall join Wyeth in an attempt to obtain a license under such patent, and fifty percent (50%) of any payments made by Wyeth to such third party for such license shall be deductible from royalty payments due from Wyeth to OSI as to the patent and that country pursuant to this Agreement. -43- 60 5. Treatment of Confidential Information. 5.1 Confidentiality. 5.1.1 Wyeth and OSI each recognize that the other's Confidential Information constitutes highly valuable proprietary, confidential information. Wyeth and OSI each agree that during the term of this Agreement and for five (5) years thereafter, they will keep confidential all Confidential Information that is disclosed to them or to any of their Affiliates pursuant to this Agreement. Neither Wyeth nor OSI nor any of their Affiliates shall use such Confidential Information except as expressly permitted in this Agreement. 5.1.2 Wyeth and OSI acknowledge that the Wyeth and OSI confidential Information is highly valuable, proprietary, confidential information, and agree that any disclosure of Confidential Information to any officer, employee or agent of the other or of any of its Affiliates shall be made only if, and to the extent, necessary to carry out its responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. Each party agrees not to disclose the other's Confidential Information to any third party under any circumstance without written permission. Each party shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of the other's Confidential Information as it would customarily take to preserve the confidentiality of its own confidential information. Each party, upon the other's request, will return all the Confidential Information disclosed to it pursuant to this Agreement, including all copies and extracts of documents within sixty (60) days of the request after the termination of this Agreement. 5.1.3 OSI represents that all of its employees participating in the Research -44- 61 Program who shall have access to Wyeth Confidential Information are bound by agreements to maintain such information in confidence. Consultants will be similarly bound. 5.2 Publication. Except as required to pursue patent protection, the parties agree not to publish the results obtained in the course of the Research Program unless mutually agreed in which case the results may be submitted for publication following scientific review by the Research Committee and subsequent approval by OSI's and Wyeth's managements. 6. Intellectual Property Rights. 6.1 Ownership. All OSI Technology and OSI Patent Rights shall be owned solely by OSI regardless of whether such Technology or Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, OSI solely or jointly with employees or, or consultants to, Wyeth. All Wyeth Technology and Wyeth Patent Rights shall be owned solely by Wyeth regardless of whether such Technology or Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, Wyeth solely or jointly with employees of, or consultants to, OSI. 6.2 Filing, Prosecution and Maintenance of Patent Rights. OSI shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce, and maintain OSI Patent Rights. Wyeth shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce and maintain Wyeth Patent Rights. 6.3 Consultation Concerning Patent Rights. OSI and Wyeth shall each provide to the other copies of all patent applications within OSI Patent Rights or Wyeth Patent Rights, respectively, which relate to the Targets prior to filing such applications for the purpose of obtaining substantive comments of the other's patent counsel. Each party shall provide to the -45- 62 other copies of all documents relating to prosecution of such patent applications in a timely manner. Each party shall provide to the other every six (6) months a reporting detailing the status of all such patent applications. 7. Termination by Wyeth 7.1 Wyeth may terminate this Agreement at any time without cause by giving OSI at least six (6) months notice prior to the termination date. Such termination will not affect the rights and obligations of the parties accrued prior to the termination, including the right of OSI to receive royalties on subsequent sales of Licensed Human Therapeutic Products, and OSI shall be entitled to an exclusive license under Wyeth Patent Rights and Wyeth Technology in the Target area(s) on the same terms under which Wyeth is exclusively licensed under OSI Patent Rights and OSI Technology as provided for in this Agreement. 7.2 Events of Termination. The following events shall constitute events of termination ("Events of Termination"): (a) any representation or warranty by OSI or Wyeth, or any of its officers, under or in connection with this Agreement shall prove to have been incorrect in any material respect when made; (b) OSI or Wyeth shall fail in any material respect to perform or observe any term, convent or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for thirty (30) days after written notice to the failing party. 7.3 Termination. -46- 63 7.3.1 Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 7.3.2 If Wyeth terminates this Agreement pursuant to Section 9.4.1, the License Agreements shall continue according to their terms. If OSI terminates this Agreement pursuant to Section 9.4.1, the License Agreements shall also terminate. 8. Representation and Warranty. OSI and Wyeth represent and warrant to each other that they have the right to grant to each other the licenses granted to then pursuant to this Agreement, and that the licenses so granted do not conflict with or violate the terms of any agreement between either of them and any third party. 9. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time: If to Wyeth: To Wyeth at its address as set forth at the beginning of this Agreement Attention: President, Wyeth-Ayerst International, Inc. with copy to: Office of the General Counsel If to OSI: To OSI at its address as set forth at the beginning of this Agreement Attention: President Notices shall be deemed given as of the date of receipt. 10. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. 11. Miscellaneous. -47- 64 11.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 11.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 11.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 11.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any part at any time or times to require performance of any provision shall in no manner affect its rights at a later time to enforce the same. 11.5 No Third Party Beneficiaries. No Person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any Person. 11.6 Assignment and Successors. This Agreement may not be assigned by either part, in whole or in part, except to an Affiliate, to a 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. 12. Wyeth-Ayerst International, Inc., as an Agent of American Home Products Corporation American Home Products Corporation hereby appoints Wyeth-Ayerst International, -48- 65 Inc., as its sole and exclusive agent during the term of this Agreement for the purpose of administrating on its behalf the rights and obligations under this Agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. AMERICAN HOME PRODUCTS CORPORATION By_______________________________ Title_____________________________ ONCOGENE SCIENCE, INC. By_____________________________ Title____________________________ -49- EX-10.3 4 COLLABORATIVE RESEARCH AGREEMENT W/ HOECHST AKT. 1 EXHIBIT 10.3 - ------------------------------------------------------------------------------- Portions of this Exhibit 10.3 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission. - ------------------------------------------------------------------------------- 2 Exhibit 10.3 Conformed Copy As Executed on March 5, 1993 COLLABORATIVE RESEARCH AGREEMENT This COLLABORATIVE RESEARCH AGREEMENT is entered into as of January 4, 1993 by and between HOECHST AKTIENGESELLSCHAFT ("HOECHST"), a German company with the address of Bruningstrasse 50, Postfach 80 03 20, D-6230 Frankfurt am Main 80, Germany and ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation having an office at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553. WHEREAS, OSI was organized to develop, produce and market therapeutic and diagnostic products for, among other things, the early detection, monitoring and treatment of human disease; and WHEREAS, HOECHST has the capability to undertake research for the discovery and evaluation of agents for treatment of disease and also the capability for clinical analysis, manufacturing and marketing of such agents; and WHEREAS, HOECHST and OSI wish to pursue the research described in this Agreement; NOW, THEREFORE, the parties agree as follows: 1. Definitions Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified. 1.1 "Affiliate" means any entity of which the party in question, directly or indirectly, owns thirty percent or more of the equity capital. Unless the context otherwise 3 requires, the rights granted under the Agreement shall extend to any Affiliate, provided, however, that the other party hereto is notified in writing of the identity and participation of such Affiliate and further provided that such Affiliate shall observe the relevant provisions of this Agreement. 1.2 "Allocated Overhead" means the amount of overhead, including general and administrative costs, determined in accordance with generally accepted accounting principles, incurred by OSI and allocated to the Sponsored Research Program in the same proportion that the total man-hours of work performed in the Sponsored Research Program bears to the total man-hours of work performed in all OSI research programs, or such other customary allocation basis that may be agreed in writing between the parties. 1.3 "Annual Research Plan" means the written plan describing the annual research and budgets concerning the Target Proteins to be carried out during each Commitment Year by HOECHST and OSI pursuant to this Agreement, including both the Annual Sponsored Research Plan to be carried out by OSI and the specific Projects, timetables and technical goals to be pursued by HOECHST and OSI. 1.4 "Annual Sponsored Research Plan" means the written plan describing the research concerning the Target Proteins to be carried out during each Commitment Year by OSI pursuant to this Agreement, including the specific Projects, timetables and technical goals to be pursued by OSI. 1.5 "Base Program" means the Research Program as described in the Annual Research Plan. -2- 4 1.6 "HOECHST Confidential Information" means all information about any element of HOECHST Technology which is disclosed by HOECHST to OSI and designated "Confidential" in writing by HOECHST at the time of disclosure to OSI to the extent that such information as of the date of disclosure to OSI is not (i) known to OSI other than by virtue of a prior confidential disclosure to OSI by HOECHST, (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained from a third party free from any obligation of secrecy; provided, however, that such third party has no obligation of confidentiality to OSI. 1.7 "OSI Confidential Information" means all information about any element of OSI Technology which is disclosed by OSI to HOECHST and designated "Confidential" in writing by OSI at the time of disclosure to HOECHST to the extent that such information as of the date of disclosure to HOECHST is not (i) known to HOECHST other than by virtue of a prior confidential disclosure to HOECHST by OSI, (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained from a third party free from any obligation of secrecy; provided, however, that such third party has no obligation or confidentiality to HOECHST. 1.8 "Commitment Year" means a twelve-month period terminating on each anniversary of the Effective Date. 1.9 "Contract Period" means the period beginning on the Effective Date and ending on the date on which this Agreement terminates. 1.10 "Effective Date" is January 4, 1993. 1.11 "Event of Termination" has the meaning set forth in Section 8.3. -3- 5 1.12 "Funding Payments" has the meaning set forth in Section 3. 1.13 "Human Therapeutic Product" means any product for the treatment or management of any disease state in a human patient or any other human therapeutic indication derived from the Research Program in the course of research concerning a Target Protein. 1.14 "Diagnostic Product" means any product useful for the identification or quantification of the propensity toward or actual existence of any disease state in a human patient or any other human diagnostic utility identified in the course of the Research Program. 1.15 "Licensed Human Therapeutic Product" means a Human Therapeutic Product that employs OSI Patent Rights, HOECHST Patent Rights, OSI Technology or HOECHST Technology in its manufacture, use or sale. 1.16 "HOECHST Patent Rights" shall mean all applications for letters patent, whether domestic or foreign, which are encompassed within HOECHST Technology, including all continuations, continuations-in-part, divisions, renewals and patents and additions thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.17 "OSI Patent Rights" shall mean all applications for letters patent, whether domestic or foreign, which are encompassed within OSI Technology, including all continuations, continuations-in-part, divisions, renewals and patents and additions thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.18 "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company, or other entity. -4- 6 1.19 "Project" means each of those projects set forth in the table of contents of an Annual Research Plan adopted pursuant to this Agreement. 1.20 "Target Protein(s)" means each of those proteins identified as a drug development target in the Annual Sponsored Research Plan towards which research projects will be conducted to identify lead compounds from which transcription based drugs may be developed or derived, including all therapeutic indications identified in the course of such research projects. 1.21 "Technology" means and includes all technology and technical information that pertains to the development of Human Therapeutic Products and Diagnostic Products derived from the Research Program. 1.22 "HOECHST Technology" means Technology developed through the use of OSI Technology that pertains to a Target Protein and relates to specific chemical compounds or drugs or the therapeutic use(s) of such compounds or drugs, that is or was: (a) developed by employees of, or consultants to, HOECHST alone or jointly with third parties including OSI; or (b) acquired by purchase, license, assignment or other means from third parties by HOECHST. 1.23 "OSI Technology" means all Technology that pertains to a Target Protein and relates to transcriptional modulation of gene expression of the gene encoding the Target Protein, including all improvements thereto and the use of such Technology to develop transcription-based drugs, that is or was: -5- 7 (c) developed by employees of, or consultants to, OSI alone or jointly with third parties including HOECHST; or (d) acquired by purchase, license, assignment or other means from third parties by OSI. OSI Technology shall include all such Technology other than HOECHST Technology. 1.24 "Research Committee" has the meaning specified in Section 2.2. 1.25 "Research Program" is the collaborative research program concerning the Target Proteins conducted by HOECHST and OSI. 1.26 "Sponsored Research Program" is that part of the Research Program that is to be carried out by OSI. 1.27 "Valid Claim" means a claim within OSI Patent Rights or HOECHST Patent Rights so long as such claim shall not have been disclaimed by HOECHST or OSI, whichever is appropriate, or shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 1.28 "OSI Human Therapeutic Product" means any product for the treatment or management of any disease state in a human patient developed as a proprietary drug by OSI and derived from a HOECHST compound, in accordance with Section 2.3.2(b). 2. Collaborative Research Program 2.1.1 Purpose. OSI and HOECHST shall conduct a collaborative Research Program concerning the Target Proteins throughout the Contract Period. The objectives of the Research Program are to discover Human Therapeutic Products. -6- 8 2.1.2 Annual Research Plan. The Annual Research Plan for the first Commitment Year is described in Appendix I hereto. For each Commitment Year after the first Commitment Year, the Annual Research Plan shall be prepared by the Research Committee for submission to, and approval by, HOECHST and OSI no later than ninety (90) days before the end of the prior Commitment Year. If HOECHST and OSI cannot agree on the Annual Research Plan or Annual Sponsored Research Plan, OSI shall determine its content. The Annual Research Plan and the Annual Sponsored Research Plan for each Commitment Year shall be appended to and made part of this Agreement. 2.1.3 Exclusivity. (a) OSI agrees that during the Contract Period neither OSI nor any of its Affiliates shall conduct research itself or sponsor any other research, or engage in any research sponsored by any Person not a party to this Agreement, if the objectives of such research are the discovery and development of novel Human Therapeutic Products against the Target Proteins unless agreed to by the Research Committee. If OSI becomes aware during the Contract Period of an opportunity to sponsor other research having any of the objectives of the Research Program or to engage in such research sponsored by a Person that is not a party to this Agreement, it shall promptly notify HOECHST of such opportunity. HOECHST and OSI shall then negotiate in good faith for a period of one hundred twenty (120) days an agreement by which such opportunity can be incorporated into the Research Program or otherwise used to further the purposes of the Research Program to their mutual advantage. If at the end of the one hundred twenty (120) day period, the parties have not reached -7- 9 agreement, OSI shall be free to pursue such opportunity with a third party without further obligation to HOECHST. (b) HOECHST agrees that during the Contract Period neither HOECHST nor any of its Affiliates shall sponsor any other research, or engage in any research sponsored by any Person not a Party to this Agreement using the gene transcription methods described in the Research Plan, if the objectives of such research are the discovery of novel Human Therapeutic Products; provided, however, that, if HOECHST becomes aware during the Contract Period of an opportunity to sponsor other research having any of the objectives of the Research Program or to engage in such research sponsored by a Person that is not a party to this Agreement, it shall promptly notify OSI of such opportunity. HOECHST and OSI shall then negotiate in good faith for period of one hundred twenty (120) days an agreement by which such opportunity can be incorporated into the Research Program or otherwise used to further the purposes of the Research Program to their mutual advantage. If at the end of the one hundred twenty (120) day period, the parties have not reached agreement, HOECHST shall be free to pursue such opportunity with a third party without further obligation to OSI. 2.2 Research Committee 2.2.1 Purpose. A research committee shall be established (the "Research Committee") by HOECHST and OSI for the following purposes: (a) to review and evaluate progress under each Annual Research Plan; (b) to prepare the Annual Research Plan for each Commitment Year; and -8- 10 (c) to coordinate and monitor publication of research results obtained from the exchange of information and materials that relate to the Research Program. (d) to make priority and program decisions. 2.2.2 Membership. HOECHST and OSI each shall appoint, in its sole discretion, four members to the Research Committee. Substitutes may be appointed at any time. The initial members shall be: OSI Appointees: *** *** *** HOECHST Appointees: *** *** 2.2.3 Chair. The Research Committee shall be chaired by two co-chairpersons, one appointed by HOECHST and the other appointed by OSI. 2.2.4 Meetings. The Research Committee shall meet at least three times a year, at places and on dates selected by each party in turn. Other representatives of HOECHST or OSI or both, in addition to the members of the Research Committee, may attend such meetings at the invitation of both parties. *** These portions deleted pursuant to a request for confidential treatment. -9- 11 2.2.5 Minutes. The Research Committee shall keep accurate minutes of its deliberations which record all proposed decisions and all actions recommended or taken. The minutes shall be delivered to all Research Committee members within five working days after each meeting. The party hosting the meeting shall be responsible for the preparation of the minutes. Draft minutes shall be edited by the co-chairpersons and shall be issued in final form only with their approval and agreement. 2.2.6 Decisions. Subject to the provisions of 2.1.2, all technical decisions of the Research Committee shall be made by a majority of its members. 2.2.7 Expenses. HOECHST and OSI shall each bear all expenses of their respective members related to their participation on the Research Committee. 2.3 Reports and Materials 2.3.1 Reports. During the Contract Period, HOECHST and OSI each shall furnish to the Research Committee: (a) summary reports within fifteen (15) days after the end of each three-month period, commencing on the Effective Date, describing its progress under the Annual Research Plan; and (b) comprehensive written reports within thirty (30) days after the end of each Commitment Year, describing in detail the work accomplished by it under the Annual Research Plan during the Commitment Year and discussing and evaluating the results of such work. -10- 12 2.3.2 Materials. (a) OSI and HOECHST shall, during the Contract Period as a matter of course as described in the Annual Research Plan or upon each other's oral or written request, furnish to each other samples of biochemical, biological or synthetic chemical materials which are part of either OSI or HOECHST Technology and which are necessary for each party to carry out its responsibilities under the Annual Research Plan. To the extent that the quantities of materials requested by either party exceed the quantities set forth in the Annual Research Plan, the requesting party shall reimburse the other party for the reasonable costs of such materials if they are furnished. (b) HOECHST agrees that OSI may test the compounds furnished by HOECHST for screening in the Research Program against OSI's proprietary drug assays, provided that OSI identifies such proprietary assays to HOECHST and HOECHST gives its consent in writing which consent shall not unreasonably be withheld, and OSI agrees to pay royalties or extend other rights to HOECHST as hereinafter provided. (c) OSI shall not analyze the test compounds provided by HOECHST with respect to composition or structure without prior written consent of HOECHST. 2.4 Laboratory Facilities and Personnel. OSI shall provide suitable laboratory facilities, equipment and personnel for the work to be done by OSI in carrying out the Annual Sponsored Research Plan. 2.5 Diligent Efforts. HOECHST and OSI each shall use reasonably diligent efforts to achieve the objectives of the Research Program. OSI will use reasonably diligent -11- 13 efforts to achieve the objectives listed in the Annual Research Plan (Appendix I) and HOECHST will use reasonably diligent efforts to assist OSI in the pursuit of those objectives. To achieve the objectives of the Research Program, HOECHST will specifically use diligent efforts: (a) to advance the pharmacological assessment of compounds identified by OSI or HOECHST in order to select those worthy of further investigation; (b) to determine the chemical structure of the selected compounds and to make related compounds to determine the relationship between structure and activity and to identify potential development candidates; (c) to select development candidates; and (d) to develop manufacturing methods and pharmaceutical formulations for those selected candidates. Furthermore, HOECHST will try to assess safety and efficacy of the selected development candidates in animals and in human patients under conditions designed to yield data suitable for inclusion in approval applications to be submitted to the U.S. Food and Drug Administration and other appropriate authorities. 3. Funding of the Sponsored Research Program. 3.1 Base Funding Payments. The funding obligations of OSI and HOECHST for each Commitment Year (the "Base Funding Payments") shall be as follows: (a) OSI agrees to pay for the fully-weighted costs of the Base Program tasks assigned to it, which are expected to cost a total of *** over the *** ***These portions deleted pursuant to a request for confidential treatment. -12- 14 *** of the program, plus any supplementary program or additional costs which may be mutually agreed upon by HOECHST and OSI, including the extra costs of screening more than *** assumed in the Base Program, in accordance with Section 3.2 below. Additional HOECHST compounds will be screened by OSI at a cost of ***. (b) HOECHST agrees to make Base Funding Payments to reimburse OSI for the Base Program in accordance with the following commitment schedule (the "Funding Schedule"):
HOECHST TOTAL HOECHST OSI HOECHST R&D REIMBURSEMENT PAYMENT ($millions) CONTRIBUTION SUPPORT TO OSI TO OSI - ----------- ------------ ------- ------ ------ Year 1 *** *** *** *** Year 2 *** *** *** *** Year 3 *** $ *** $ *** $ *** Year 4 *** *** *** *** Year 5 *** *** *** *** Year 6 *** *** *** *** ------- ------ -------- --------- Total $ *** $ *** $ *** $ ***
- ------------------------------ * includes cost of screening *** 3.2 Supplementary Funding Payments. In addition to the Base Funding Payments, HOECHST agrees to reimburse OSI for any supplementary program or other additional amounts which may be mutually agreed upon in advance as follows ("Supplementary Funding Payments"): ***These portions deleted pursuant to a request for confidential treatment. -13- 15 (a) HOECHST agrees to reimburse OSI for the fully-weighted costs of screening compounds provided by HOECHST in excess of *** compounds; and (b) HOECHST agrees to reimburse OSI for the cost of work performed on any additional Target Proteins or cell-lines (all of which must be approved by OSI and HOECHST in advance) or other additional tasks as contemplated by this Agreement or which may be recommended by the Research Committee. 3.3 Timing of Payments. 3.3.1 Timing: Base Payments. All Base Funding Payments by HOECHST for the Base Program shall be made in accordance with the Funding Schedule shown in Section 3.1(b) at the beginning of the year set forth. 3.3.2 Timing: Supplementary Payments. (a) All Supplementary Funding Payments by HOECHST for supplementary programs or approved additional costs shall be made quarterly in advance for work scheduled to be performed by OSI during the upcoming three (3) month period, against OSI's invoice for such three (3) month period. Adjustments as necessary to reflect the work actually performed by OSI shall be made at the end of each three (3) month period and shall be reflected in OSI's invoice for the next three (3) month period. (b) The amount of any Supplementary Funding Payment for each quarter shall be based on the work in progress pursuant to any applicable supplementary research agreement and the annual budget associated therewith. (c) Each Supplementary Funding Payment shall be paid on the first day of the quarter or thirty (30) days after receipt of invoice, whichever is later. *** These portions deleted pursuant to a request for confidential treatment. -14- 16 3.4 Books and Records. OSI shall keep for three (3) years from the expiration of this Agreement complete and accurate records of its expenditures of Funding Payments received by it. The records shall conform to good accounting principles as applied to a similar company similarly situated. HOECHST shall have the right at its own expense during the term of this Agreement and during the subsequent three-year period to appoint an independent certified public accountant reasonably acceptable to OSI to inspect said records to verify the accuracy of such expenditures, pursuant to each Annual Sponsored Research Plan. OSI shall make its records available for inspection by the independent certified public accountant during regular business hours at the place or places where such records are customarily kept, upon reasonable notice from HOECHST to the extent reasonably necessary to verify the accuracy of the expenditures and required reports. This right of inspection shall not be exercised more than once in any calendar year and not more than once with respect to records covering any specific period of time. HOECHST agrees to hold in strict confidence all information concerning such expenditures, other than their total amounts, and all information learned in the course of any audit or inspection, except to the extent that it is necessary for HOECHST to reveal the information in order to enforce any rights it may have pursuant to this Agreement or if disclosure is required by law. The failure of HOECHST to request verification of any expenditures before or during the three-year period shall be considered acceptance of the accuracy of such expenditures, and OSI shall have no obligation to maintain any records pertaining to such report or statement beyond the three-year period. -15- 17 4. Treatment of Confidential Information. 4.1.1 Confidentiality. HOECHST and OSI recognize that the OSI and HOECHST Confidential Information constitutes highly valuable, proprietary, confidential information. Subject to the terms and conditions of the Secrecy Agreement dated June 28, 1991, the Supplementary Secrecy Agreement dated May 19, 1992, the disclosure obligations set forth in Section 4.3 and 4.4 hereof and the publication rights set forth in Section 4.2 hereof, HOECHST and OSI each agree that during the term of this Agreement and for five (5) years thereafter, they will keep confidential, and will cause their Affiliates to keep confidential, all Confidential Information that is disclosed to them or to any of their Affiliates pursuant to this Agreement. Neither HOECHST nor OSI nor any of their Affiliates shall use such Confidential Information except as expressly permitted in this Agreement. 4.1.2 Disclosure of Confidential Information. HOECHST and OSI acknowledge that the HOECHST and OSI Confidential Information is highly valuable, proprietary, confidential information, and agree that any disclosure of Confidential Information to any officer, employee or agent of the other or of any of its Affiliates shall be made only if and to the extent necessary to carry out its responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. They agree not to disclose the other's Confidential Information to any third parties under any circumstance without written permission. Both parties shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of each other's Confidential Information as they would customarily take to preserve the confidentiality of their own Confidential Information. Each party, upon the other's request, will return all the -16- 18 Confidential Information disclosed pursuant to this Agreement including all copies, and extracts, of documents within 60 days of the request after the termination of this Agreement. 4.1.3 Employees and Consultants. OSI represents that all of its employees participating in the Research Program who shall have access to HOECHST Technology and HOECHST Confidential Information are bound by agreement to maintain such information in confidence. Consultants will be similarly bound. 4.2 Publication. Section 4.1 to the contrary notwithstanding, the results obtained in the course of the Research Program may be submitted for publication following scientific review by the Research Comittee and subsequent approval by the management of OSI and HOECHST, respectively. After receipt of the proposed publication by both HOECHST's and OSI's managements, written approval or disapproval shall be provided within 30 days for a manuscript, an abstract for presentation at, or inclusion in the proceedings of, a scientific meeting, or a transcript of an oral presentation to be given at a scientific meeting. 4.3 Publicity. Except as required by law, neither party may disclose the existence of this Agreement or the research described in it without the written consent of the other party, which consent shall not be unreasonably withheld. 4.4 Disclosure of Inventions. Each party hereto shall promptly inform the other about all inventions concerning the Target Proteins that are conceived, made or developed in the course of carrying out the Research Program by employees of, or consultants to, either of them, whether such inventions were conceived, made or developed solely or jointly with employees of, or consultants to, the other. This Agreement shall not be -17- 19 construed to obligate either party to disclose to the other any invention which does not concern the Target Proteins. 4.5 Restrictions on Transferring Materials. HOECHST and OSI recognize that the biological and biochemical materials which are part of OSI Technology and HOECHST Technology represent valuable commercial assets. Therefore, throughout the Contract Period and for five (5) years thereafter, OSI and HOECHST each agree not to transfer to any third party any such compound or material which constitutes Technology owned solely by the other party unless agreed to by the Research Committee. Additionally, throughout the Contract Period and for six (6) months thereafter, OSI and HOECHST each agree not to transfer to any third party any such compound or material which constitutes Technology owned solely by it, unless prior consent for any such transfer is obtained from the other, which consent shall not be unreasonably withheld, and unless such third party agrees as a condition of any such transfer not to transfer the material further. 5. Intellectual Property Rights. 5.1 Ownership. All OSI Technology and OSI Patent Rights shall be owned solely by OSI regardless of whether such OSI Technology or OSI Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, OSI solely or jointly with employees of, or consultants to, HOECHST. All HOECHST Technology and HOECHST Patent Rights shall be owned solely by HOECHST regardless of whether such HOECHST Technology or HOECHST Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, HOECHST solely or jointly with employees of, or consultants to, OSI. -18- 20 5.2 Filing, Prosecution and Maintenance of Patent Rights. Subject to Sections 5.3, 5.4 and 5.5 below, OSI shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce, and maintain OSI Patent Rights. HOECHST shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce and maintain HOECHST Patent Rights. 5.3 Filing, Prosection and Maintenance of Patents Resulting from the Research Program. OSI and HOECHST will discuss and decide jointly, which party will have the right and obligation to file patent applications on behalf of OSI or HOECHST, as applicable, on any patentable invention developed by either OSI or HOECHST during the Contract Period relating to the Target Proteins. Both parties will consult with each other regarding countries in which such patent applications should be filed. The filing party will file patent applications in those countries where the other party requests to file patent applications. The filing party will have to prosecute all patent applications relating to Contract Period Inventions and to respond to oppositions filed by third parties. The filing party will have to maintain in force any letters patent relating to Contract Period Inventions. The filing party will notify the other party in a timely manner of any decision to abandon a pending patent application relating to a Contract Period Invention or an issued patent relating to a Contract Period Invention. Thereafter the other party shall have the option, at its expense, of continuing to prosecute any such pending patent application or of keeping the issued patent in force. 5.4 Status Reports. The filing party shall provide to the other party copies of all patent applications relating to Contract Period Inventions immediately after filing. The -19- 21 filing party shall also provide to the other party copies of important documents relating to prosecution of all such patent applications in a timely manner. 5.5 Reimbursement of Costs for Filing, Prosecuting and Maintaining Certain Patents. The filing party will be reimbursed for the costs of filing, prosecuting and maintaining all patent applications and all patents which relate to Contract Period Inventions in countries where the other party requests that such patent applications be filed, prosecuted and maintained, upon receipt of invoices from the filing party. Such reimbursement shall be in addition to Funding Payments and Supplementary Funding Payments pursuant to Section 3 hereof. However, the other party may, upon 90 days advance written notice, discontinue reimbursing the filing party for the cost of filing, prosecuting or maintaining any patent application or any patent in any country. The filing party shall pay all costs in those countries in which the other party does not request that the filing party file, prosecute or maintain patent applications and patents which relate to Contract Period Inventions, but in which the filing party, at its option, elects to do so. 6. Other Rights of the Parties. During the Contract Period, OSI and HOECHST shall promptly notify each other in writing of any and all opportunities to acquire in any manner from third parties, technology or patents which may be useful in, or may relate to, the Research Program. OSI and HOECHST shall decide if such rights should be acquired and, if so, whether by OSI or HOECHST. If acquired, such rights shall become OSI Technology or HOECHST Technology, as appropriate. 7. Option for License. Upon request of either party to this Agreement, OSI and HOECHST will enter into negotiations with respect to a license agreement pursuant to which -20- 22 HOECHST would acquire an exclusive, worldwide license, including the right to grant sublicenses, to make, use and sell Licensed Human Therapeutic Products, and OSI would acquire the exclusive, worldwide, perpetual license, including the right to grant sublicenses, to make, use and sell Diagnostic Products, products sold exclusively for research purposes and OSI Human Therapeutic Products (derived from HOECHST compounds) under all HOECHST'S right, title and interest in HOECHST Technology. The option hereinabove provided for will commence with the Effective Date and expire four (4) years after the end of the Contract Period unless such option is earlier terminated pursuant to Section 8.4.2 of this Agreement. Such license agreement shall among other things provide for: a) payments by HOECHST to OSI of a royalty of *** of Net Sales (as defined therein) for each Human Therapeutic Product employing OSI Patent Rights or HOECHST Patent Rights and *** on Net Sales for each Human Therapeutic Product employing only OSI Technology, or HOECHST Technology; b) payments by OSI of *** on Net Sales for any Diagnostic Product using OSI Patent Rights, OSI Technology, HOECHST Patent Rights or HOECHST Technology; c) OSI shall pay a royalty of *** on Net Sales for any OSI Human Therapeutic Product derived from a HOECHST compound if OSI decides to market the OSI Human Therapeutic Product itself. If OSI decides not to market the OSI Human Therapeutic Product itself, it shall give HOECHST the first right to negotiate for marketing rights; d) if Patent Rights are involved, payments of the applicable royalty will be made until the last valid patent claim expires; *** These portions deleted pursuant to a request for confidential treatment. -21- 23 e) if Technology is involved and there are no valid patent claims, payments of the applicable royalty will be made with respect to sales in a Designated Country (as hereinafter defined) until ten (10) years after the first commercial sale is made in such Designated Country. The Designated Countries are USA, Canada, Germany, United Kingdom, France, Spain, Italy and Japan; and (f) such other customary and other terms as are negotiated between the parties. 8. Term, Extension, Termination and Disengagement. 8.1 Term. Unless sooner terminated or extended, this Agreement shall expire six years after the Effective Date. 8.2 Extension. HOECHST, at least six months prior to the end of the term, shall notify OSI in writing if it desires to extend the Sponsored Research Program. If OSI is willing to extend the Sponsored Research Program, OSI must so notify HOECHST within three (3) months after receipt of HOECHST's notice. HOECHST and OSI shall thereafter promptly negotiate in good faith mutually acceptable terms for any extension to this Agreement. 8.3 Events of Termination. The following events shall constitute events of termination ("Events of Termination"): (a) Any representation or warranty by OSI or HOECHST, or any of its officers, under or in connection with this Agreement shall prove to have been incorrect in any material respect when made. (b) OSI or HOECHST shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the -22- 24 other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for 30 days after written notice to the failing party. (c) Either party shall be entitled to terminate this Agreement by written notice to the other having immediate effect, if the other party is acquired by or merged with or transfers all of its assets or an essential part of such assets to, or if fifty percent or more of its voting stock is acquired by, or otherwise comes under the control of, a person or an organization which is a competitor of the terminating party, or if any such person or organization obtains an option or preemption right to acquire fifty percent or more of the voting stock or otherwise control of the other party, such party shall without delay inform the party which is entitled to terminate, of such acquisition, transfer, control, option or preemption right. 8.4 Termination. 8.4.1 Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 8.4.2 If HOECHST terminates this Agreement pursuant to Section 8.4.1, the option of HOECHST to negotiate a license provided for in Section 7 shall continue according to such Section. If OSI terminates this Agreement pursuant to Section 8.4.1, the option of HOECHST to negotiate a license provided for in Section 7 shall also terminate. 8.4.3 Upon termination of this Agreement, HOECHST will reimburse OSI for any additional work done, or pending, within a six month period following such termination. -23- 25 9. Representations and Warranties. OSI and HOECHST each respectively represents and warrants as follows: 9.1 It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and Germany, respectively, and, is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and has all requisite power and authority, corporate or otherwise, to conduct it's business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. 9.2 The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or by-laws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. 9.3 This Agreement is a legal, valid and binding obligation of it, enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditor's rights generally. -24- 26 9.4 It is not under any obligation to any person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations. 9.5 It has good and marketable title to, or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities in the Research Program, subject to no claim of any third party other than the relevant lessors or licensors. 10. Covenants of OSI. 10.1 Affirmative Covenants of OSI Other Than Reporting Requirements. Throughout the Contract Period, OSI shall: 10.1.1 maintain and preserve its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in good standing in each jurisdiction in which such qualification is from time to time necessary or desirable in view of its business and operations or the ownership of its properties. 10.1.2 comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any government authority to the extent necessary to conduct the Sponsored Research Program. 11. Dispute Resolution. 11.1 Any dispute which cannot be resolved by discussion between the parties under this Agreement shall be resolved by binding arbitration in accordance with the rules then obtaining of the American Arbitration Association. The arbitrators shall have the power -25- 27 to award specific performance or injunctive relief and reasonable attorney's fees and expenses to any party in such arbitration, except that the arbitrators shall not have the power to reform this Agreement. Such arbitration shall be held in the main office of the American Arbitration Association in the City of New York. 11.2 The arbitration award rendered shall be final and binding upon the parties and judgement thereon may be entered in any court of competent jurisdiction. 12. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time: If to HOECHST: at its address set forth at the beginning of this Agreement Attention: Dr. Jessen HOECHST AG General Pharma Research Postfach 80 03 20, D-6230 Frankfurt am Main 80, Germany If to OSI: at its address set forth at the beginning of this Agreement Attention: Chief Executive Officer Notices shall be deemed given as of the date of receipt. 13. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. 14. Miscellaneous. 14.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. -26- 28 14.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 14.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 14.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or cancelled, and any of the terms may be waived, only by a written instrument executed by each party 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 shall in no manner affect the rights at a later time to enforce the same. 14.5 No Third Party Beneficiaries. No Person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any Person. 14.6 Assignment and Successors. This Agreement may not be assigned by either party, except that each party may assign this Agreement and its rights and interests hereunder, in whole or in part, to any of its Affiliates, any purchaser of all or substantially -27- 29 all of its assets or to any successor corporation resulting from any merger or consolidation with or into such corporation. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. HOECHST AKTIENGESELLSCHAFT ONCOGENE SCIENCE, INC. By /s/ DR. GERT CASPRITZ By /s/ GARY E. FRASHIER ----------------------------- --------------------------- Title: Manager Title: President and Cooperation and Licensing Chief Executive Officer By /s/ JORGEN REDEN, PH.D. ----------------------------- Title: Member of Management Board Pharma Head of Research -28- 30 THE RESEARCH PLAN INCORPORATING THE ANNUAL SPONSORED RESEARCH PLAN FOR THE COLLABORATION BETWEEN ONCOGENE SCIENCE INC AND HOECHST AG APPENDIX 1 Revised 12/11/92 31 Executive Summary Oncogene Science has developed a proprietary drug discovery technology designed to identify compounds which affect the transcription of specific target genes. A review on the development of this technology at Oncogene and the advantages of transcription as an approach to drug discovery can be found in Supplement 1. The immediate goal of the proposed collaboration with Hoechst AG is to exploit this technology ***. The primary screening system employs live, genetically engineered transcription-reporter cells and state-of-the-art robotics which will enable screening of ***. Compounds of interest identified by the primary screen will be evaluated in secondary screens ***. Thus, the later stages of the drug development pathway and clinical trial strategies are not discussed in this document. The collaboration between Hoechst AG and Oncogene Science can be divided into three phases: *** *** *** These portions deleted pursuant to a request for confidential treatment. -1- 32 *** *** A team of *** plus a Program Manager will be assembled during the initiation of the collaboration, and will be associated with the program for the duration of the collaboration. During the screening phase additional manning *** will be allocated from the core screening group at Oncogene. -2- 33 MOLECULAR TARGETS *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -3- 34 *** *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -4- 35 *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -5- 36 *** *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -6- 37 *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -7- 38 *** *** *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -8- 39 *** *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -9- 40 *** *** *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -10- 41 *** *** *** *** *** ***These portions deleted pursuant to a request for confidential treatment. -11- 42 SUPPLEMENT 1 TRANSCRIPTION AND DRUG DISCOVERY ONCOGENE SCIENCE'S GENE EXPRESSION TECHNOLOGY Introduction Over the last five years Oncogene Science has carried out a major research effort focused on gene transcription as a novel approach to drug discovery. Extensive patents have been filed covering both the method of drug discovery and the resulting drugs identified by this technology. The goal is to identify small molecular weight compounds which specifically modulate the expression of a target gene of interest, thereby either increasing or decreasing the concentration of the corresponding protein product. The unique screening system employs live genetically engineered cells and state-of-the-art robotics, which enables up to 100,000 compounds to be screened in a single year against multiple target genes simultaneously. This approach can be used to identify lead compounds in almost every therapeutic area. Transcriptional modulation not only provides a potential means to replace recombinant protein based drugs, but also provides a novel approach to manipulate key therapeutic targets in the body. Traditional Drug Discovery Approaches Until recently, a major focus of the pharmaceutical industry had remained centered around improving either the efficacy or safety of existing drugs, agents whose detailed mechanism of action was often unknown. The chemistry effort to support this approach during this century has been prolific, and more than 3 million unique chemical structures have now been cataloged. Within the last decade, however, molecular biologists have begun to unravel the detailed molecular aspects of normal cellular physiology and the abnormalities associated with various disease processes. To date, the application of molecular biology to drug discovery has taken three basic directions; (i) the discovery of protein factors which act directly as pharmaceutical agents; (ii) the combination of X-ray crystallography and computer modelling to design organic compounds based upon a detailed understanding of protein structure; or (iii) the use of recombinant proteins in in vitro assays, in order to screen several thousand natural products extracts or synthetic organic compounds. Each of these approaches, however, suffers from significant limitations. The development of protein-based pharmaceuticals is perhaps the best known application of molecular biology to the drug industry. Major successes have included growth hormone for the treatment of pituitary dwarfism, tissue plasminogen activator to treat myocardial infarction, insulin for diabetes, and erythropoietin and G-CSF for the treatment of anemia and neutropenia, respectively. All of these agents, however, possess a number of major limitations characteristic of protein-based therapeutants. These include the route of administration, cost of manufacture, -12- 43 formulation, stability and the relative complexity of patenting recombinant biologicals. Furthermore, the use of proteins as drugs is restricted to diseases or physiological states that can be influenced by serum borne factors. These problems, as well as a number of other major limitations, also apply to therapeutic approaches based upon the use of monoclonal antibodies. The second approach to drug discovery is contingent upon a detailed knowledge of specific protein structure. Interactive computing theoretically allows the design of small molecular weight compounds that are predicted to bind to specific sites on the target protein. This approach requires that the three dimensional structure of the target protein be known at very high resolution, while modelling of the detailed interactions with compounds often necessitates the use of modern supercomputers. An additional complication is that the structure of the protein as determined by crystallography, may not reflect the native conformation of the protein within the cell. As more protein structures are solved, and as modelling programs become more powerful, rational drug design may begin to make an important contribution to the drug discovery. To date, however, there are no drugs on the market which have been developed de novo using this technology. The third traditional method has involved the screening of several thousand fermentation broths, natural product extracts or synthetic organic compounds, for their ability to influence the function of a purified or partially purified protein, typically a hormone receptor or an enzyme. In many instances, however, it can prove to be technically difficult to isolate a complex protein with retention of its activity. In addition, the critical biochemical activity of many disease targets may be unknown, thereby preventing the design of an appropriate screen. In other cases, the key target may be a member of a gene family where the corresponding polypeptides are almost identical, and an effective drug must be able to selectively target one specific member. Another major limitation of in vitro screening is that following a considerable effort to generate interesting compounds, many leads ultimately fail to be developed due to metabolism, cytotoxicity or lack of cell permeability. Finally, it is becoming increasingly apparent that many diseases, such as atherosclerosis, cancer and many neurological disorders, are multifactorial in origin, and may ultimately require the simultaneous modulation of multiple targets to achieve an effective control. Oncogene Science believes that gene transcription provides a unique approach to drug discovery, which has the potential to overcome many of the limitations of conventional drugs and could lead to the development of novel pharmaceuticals targeting most of the major therapeutic markets. Gene Transcription As A Novel Target For Drug Discovery At Oncogene Science, a proprietary drug discovery approach has been developed which is designed specifically to identify compounds which affect the transcription of target genes. The screen utilizes genetically engineered live cells lines. Thus, once a particular gene has been chosen as a target, the first step of the process is to clone the regions of DNA which regulate expression of that gene. These sequences are then fused to a highly sensitive reporter gene -13- 44 which generates a readily measurable signal in response to changes in transcription of the target gene. This genetically engineered DNA construct is then introduced into an appropriate human cell type and stable lines isolated. Such cell lines will then generate a signal which reflects a change in gene expression when an appropriate compound is added to the tissue culture media. Oncogene's approach is based upon a philosophy of very high-throughput drug screening, ie., screening up to 100,000 compounds or fermentation broths against each gene target in a single year. To achieve this, a proprietary screening technology has been developed, which has been fully automated using state-of-the-art robotics. Complete automation not only allows the primary screen to be cost effective, but has proved essential to obtain highly quantitative, reproducible data from high-throughput cell based screens. Each robotic system can analyze several thousand samples per week against multiple target genes simultaneously. By using multiple targets in the primary screen, efficacy, cytotoxicity, and initial specificity are rapidly evaluated. For example, the presence of a chemical which activates transcription of the human growth hormone gene would be readily detected by an increase in the reporter signal only in the cell target which employed a growth hormone fusion construct. This technology is not only highly quantitative but is of sufficient sensitivity to allow the detection of fewer than twenty five molecules of the reporter per cell. This provides both a number of major technical advantages while enabling the screen to detect initial lead compounds with apparent limited activity, eg. potent compounds present at low concentrations in fermentation broths. Automated on-line data reduction and statistical analysis allows rapid quantitative determination to identify the initial lead compounds. Compounds of interest identified by the primary screen are then further evaluated in secondary screens (eg. by quantitative PCR, protein based assays, etc.) for their ability to regulate the native endogenous gene in a similar fashion. A variety of appropriate tertiary assays and animal models can then be employed for the final stages of lead development. Modulating gene transcription using drugs Over the last few years it has become apparent that many of the body's normal physiological pathways, as well as the response to disease states, involve changes in gene transcription. For example, the amount of growth hormone produced by the pituitary, or the levels of blood cell growth factors, such as G-CSF and erythropoietin (Epo), are tightly controlled at the level of gene transcription. The Epo gene is specifically activated in response to anoxia (low oxygen). The growth hormone gene is transcriptionally activated by the binding of a second hormone (termed GHRF) to a receptor on the plasma membrane. The goal of Oncogene Science's transcription technology is to use small molecular weight drugs to maximize such physiological responses to produce the desired pharmacological endpoint. In addition to the physiological evidence which clearly demonstrates highly specific regulation at the level of gene transcription, there are already a number of genes which are known to be subject to pharmaceutical intervention by small molecular weight compounds. Steroid hormone receptors are themselves transcription factors. Nolvadex (Tamoxifen), for example, regulates the expression of estrogen responsive genes to control breast cancer, while -14- 45 Eulexin (flutamide) demonstrates dramatic palliative efficacy in the treatment of prostate cancer by blocking the action of the testosterone receptor. Similarly, steroid receptors are the target of drugs used as anti-inflammatory agents, contraceptives, etc. It has also become apparent that a number of drugs, whose mechanism was previously unknown, act by specifically modulating the expression of various target genes. One recent example of note is aspirin, which has been shown to mediate its anti-inflammatory effects by inhibiting transcriptional activation of prostaglandin synthesis by interleukin-1. Other examples include the immunosuppressive agents cyclosporin A and FK506, which inhibit the transcription of several genes involved in T cell activation, particularly interleukin 2 (IL-2) and its receptor. Cyclosporin A and FK506, both bind to proteins which regulate the activity of a transcription factor, which in turn inhibits the expression of IL-2. Similarly, lovastatin indirectly up-regulates the hepatic LDL receptor by lowering serum cholesterol. Such examples of indirect regulatory effects stress the utility of a cell-based promoter-reporter technology as a means to identify lead compounds with the potential to modulate transcription at a variety of levels. Thus, compounds identified by the primary screen do not have to bind directly to a transcription factor. Advantages of targeting gene transcription - Replacement of recombinant proteins as therapeutic agents, e.g., replace erythropoietin or growth hormone with a small molecular weight pharmaceutical to increase the expression of the endogenous gene. This could potentially overcome the major limitations associated with the use of biologicals, eg. patents, costs of production, formulation, route of administration, etc. - Transcriptional modulation can act to affect either intracellular or extracellular targets. In contrast, both recombinant biologicals and monoclonal antibodies require a target to be either present in the circulation or on the surface of cells. - The ability to modulate the level of a protein which cannot be readily targeted by other means, e.g. intrinsic membrane proteins such as the glucose transport proteins in diabetes, or the macrophage scavenger receptor and the LDL receptor in the treatment of atherosclerosis. - Most traditional drugs have acted as either receptor antagonists or enzyme inhibitors. Transcription-based pharmaceuticals allow the absolute concentration of a target protein to be either increased or decreased. This also represents a significant advantage compared to antisense based approaches. Antisense molecules are also inactive orally, expensive, and act only to decrease protein levels. - The biochemical activity of the protein encoded by a target gene may be unknown, thereby preventing an effective in vitro screening approach to be implemented. This technology employs a cell-based transcription screen to target -15- 46 the gene and not its product, therefore a detailed knowledge of protein function is not essential. - Oncogene's primary screens are cell-based. This provides screens which are considerably more physiological than using purified in vitro assays, yet avoids the technical complexity and ethical issues associated with animal based screens. The cell-based approach also provides multiple target sites within the cell for pharmacological intervention. In addition, compounds which either fail to interact with the cell in a functional manner, or are highly cytotoxic, are readily excluded. - Targeting the specific expression of a gene in a multigene family, rather than the corresponding polypeptide, provides a means to facilitate specific intervention. Modulating the activity of an entire family of structurally related proteins could be deleterious to the organism, while modulation of a specific member of a group of highly homologous proteins can be difficult to achieve pharmacologically. One example would be the specific transcriptional modulation of a CNS receptor where although the family of polypeptides may exhibit a high degree of homology, the regulatory regions (and the corresponding transcription factors of the gene families which bind to these regions) are typically distinct to allow cell type specific expression. - The possibility of tissue specific regulation of a target gene. It is becoming increasingly apparent that the mechanisms regulate any one gene at the transcriptional level vary between different tissues. Thus, this approach has the potential to identify drugs which modulate the expression of a target gene in a tissue-specific manner. Again, this is not possible with antisense approaches. - It is now well documented that coordinated changes in gene expression regulate a large number of metabolic processes in the body. Thus, it may be possible to use a single drug to regulate the transcription of small groups of genes simultaneously, rather than using a conventional pharmaceutical to simply target one specific enzyme or receptor. Given that many major diseases are multifactorial in origin, such as atherosclerosis, Alzheimers, and cancer, this approach may ultimately prove essential to develop truly effective drugs in these areas. - Oncogene Science's technology is unique. Gene transcription has not been previously exploited. It is also apparent that very few pharmaceutical companies have had the technology in place to enable the screening over 100,000 compounds against a single target, ie. typically most previous drug screens have evaluated between 1,000-10,000 compounds. Thus, it can be anticipated that a high-throughput screening approach based upon gene transcription will result in the identification of novel drug structures. -16- 47 - Over the last five years, Oncogene Science has established the leading position in the field of gene transcription as an approach to drug discovery. The original reason for focusing in this area was that in unraveling the normal function of oncogenes and anti-oncogenes, it had become apparent that the primary function of many such genes is to modulate gene transcription, either directly by binding to regulatory sequences on the DNA, or indirectly by controlling key steps in the signal transduction machinery. - Oncogene Science has filed broad patent applications on transcription based approaches, including claims on the methods of discovery, the robotic technology, and the use of compounds which specifically modulate gene transcription. ONCOGENE SCIENCE'S SCREENING TECHNOLOGY In order to facilitate the screening of large numbers of test samples, Oncogene Science has invested extensively on the development of proprietary robotics systems. In addition to carrying out cell-based transcription assays, these systems are now able to run virtually any cell based or in-vitro screening assays in a microplate format. The robotic systems handle every step in the assay procedure. This includes on-line cell incubation facilities, liquid handling systems for dilutions and additions of test samples, and an array of units for manipulations in an assay loop. Two robotic arm assemblies are employed to shuttle microplates and microplate trays through the assay cycles. The transcription assays culminate with a read-out from a 96 well luminometer. Data are captured automatically into a processing network which performs quality controls on each individual microplate assay well and carries out a rapid data reduction and analysis. Each of the robotic systems has a capacity in excess of 100,000 assays per week. This translates to approximately 100,000 compounds per year, with follow-up, against multiple target genes. Automation on this scale has proven to be essential for producing high quality data from cell based screens, however it also provides a number of additional advantages over other approaches to screening: (i) Cost Effectiveness : Support for each robotic system requires only a three person team. This includes the manning for all tissue culture, robotic maintenance, robotic operation, data analysis, database searching and report preparation, as well as initial potency and cytotoxicity follow-up studies on high-throughput screen leads. (ii) High-Throughput : Each system has a capacity for up to 125,000 reporter assays per week. A practical, routine weekly throughput is approximately 75% of this capacity. These assays can be divided amongst replicate assays of individual samples, positive and negative controls, and multiple test cell lines, as is appropriate for a particular screening program. For example, in the first 12 -17- 48 month period employing the original system, over 125,000 compounds were screened against 3 cell lines with triplicate determinations on each compound, and multiple controls on each microplate assayed. (iii) Accuracy : Automation has proven to be very effective in terms of removing protocol errors and in more accurately controlling and synchronizing procedures. This has resulted in running multiple cellbased screens with a typical coefficient of variation across each plate being less than 15%. The systems have been designed with flexibility as a key consideration. Thus, by interchanging the measurement device in place of a luminometer and conversion of these instruments to a robot compatible format, it is possible to utilize multiple read-outs suitable for various assay formats. For example, Oncogene Science has now also developed microplate readers for the determination of UV absorbance, fluorescence, and radioactivity, enabling almost any assay configuration to be employed. All the software for running the robots, the liquid sampling processor, data capture, and data processing has been developed at Oncogene Science and is readily converted to suit alternate assay needs. This technology is currently employed in both transcriptional reporter assays and cell-based immunoassays. Preparation of Compounds and Samples for High-throughput Screening Oncogene Science has now incorporated into the robotic system the capacity to operate in a mode which enables the rapid preparation of large compound libraries (50-200,000 samples) in a 96-well format suitable for screening. This approach also offers the possibility of archiving sets of master compound plates for future screening needs. This procedure also makes maximum use of the original compound allocation, with 1 mg of compound potentially serving for 50-100 high-throughput screens against individual target assays. -18- 49 *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -19- 50 *** *** *** *** *** *** *** *** *** *** *** *** These portions deleted pursuant to a request for confidential treatment. -20- EX-10.4 5 COLLABORATIVE RESEARCH AGREEMENT W/HOECHST ROUSSEL 1 EXHIBIT 10.4 - -------------------------------------------------------------------------------- Portions of this Exhibit 10.4 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission. - -------------------------------------------------------------------------------- 2 Exhibit 10.4 COLLABORATIVE RESEARCH AGREEMENT This COLLABORATIVE RESEARCH AGREEMENT is entered into as of October 1, 1993 by and between HOECHST-ROUSSEL PHARMACEUTICALS INC. ("HRPI"), a Delaware corporation with the address of Route 202-206 Somerville, New Jersey 08876-1258 and ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation having an office at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553. WHEREAS, OSI was organized to develop, produce and market therapeutic and diagnostic products for, among other things, the early detection, monitoring and treatment of human disease; and WHEREAS, OSI is a party to an agreement dated as of January 7, 1993 with HOECHST AKTIENGESELLSCHAFT, an Affiliate of HRPI ("HOECHST"), pursuant to which HOECHST is providing similar services to OSI as those contemplated to be provided by HRPI hereby; and WHEREAS, HRPI has the capability to undertake research for the discovery and evaluation of agents for treatment of disease and also the capability for clinical analysis, manufacturing and marketing of such agents; and WHEREAS, HRPI and OSI wish to pursue the research described in this Agreement; NOW, THEREFORE, the parties agree as follows: 1. Definitions Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified. 1.1 "Affiliate" means any company, corporation or business organization 3 which the party in question directly or indirectly controls or any company, corporation or business organization by which the party in question is directly or indirectly controlled. For purposes of this Agreement, the term "control" and "controlled" shall mean the holding of 50% or more of the voting stock or other ownership rights of the company, corporation, or business organization involved. 1.2 "Allocated Overhead" means the amount of overhead, including general and administrative costs, determined in accordance with generally accepted accounting principles, incurred by OSI and allocated to the Sponsored Research Program in the same proportion that the total man-hours of work performed in the Sponsored Research Program bears to the total man-hours of work performed in all OSI research programs, or such other customary allocation basis that may be agreed in writing between the parties. 1.3 "Annual Research Plan" means the written plan describing the annual research and budgets concerning the Target Proteins to be carried out during each Commitment Year by HRPI and OSI pursuant to this Agreement, including both the Annual Sponsored Research Plan to be carried out by OSI and the specific Projects, timetables and technical goals to be pursued by HRPI and OSI. 1.4 "Annual Sponsored Research Plan" means the written plan describing the research concerning the Target Proteins to be carried out during each Commitment Year by OSI pursuant to this Agreement, including the specific Projects, timetables and technical goals to be pursued by OSI. 1.5 "Base Program" means the Research Program as described in the Annual Research Plan. -2- 4 1.6 "HRPI Confidential Information" means all information about any element of HRPI Technology which is disclosed by HRPI to OSI and designated "Confidential" in writing by HRPI at the time of disclosure to OSI to the extent that such information as of the date of disclosure to OSI is not (i) known to OSI other than by virtue of a prior confidential disclosure to OSI by HRPI, (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained from a third party free from any obligation of secrecy; provided, however, that such third party has no obligation of confidentiality to OSI. 1.7 "OSI Confidential Information" means all information about any element of OSI Technology which is disclosed by OSI to HRPI and designated "Confidential" in writing by OSI at the time of disclosure to HRPI to the extent that such information as of the date of disclosure to HRPI is not (i) known to HRPI other than by virtue of a prior confidential disclosure to HRPI by OSI, (ii) disclosed in the published literature, or otherwise generally known to the public, or (iii) obtained from a third party free from any obligation of secrecy; provided, however, that such third party has no obligation of confidentiality to HRPI. 1.8 "Commitment Year" means a twelve-month period terminating on each anniversary of the Effective Date. 1.9 "Contract Period" means the period beginning on the Effective Date and ending on the date on which this Agreement terminates. 1.10 "Effective Date" is October 1, 1993. 1.11 "Event of Termination" has the meaning set forth in Section 8.3. -3- 5 1.12 "Funding Payments" has the meaning set forth in Section 3. 1.13 "Human Therapeutic Product" means any product for the treatment or management of any disease state in a human patient or any other human therapeutic indication derived from the Research Program in the course of research concerning a Target Protein. 1.14 "Diagnostic Product" means any product useful for the identification or quantification of the propensity toward or actual existence of any disease state in a human patient or any other human diagnostic utility identified in the course of the Research Program. 1.15 "Licensed Human Therapeutic Product" means a Human Therapeutic Product that employs OSI Patent Rights, HRPI Patent Rights, OSI Technology or HRPI Technology in its manufacture, use or sale. 1.16 "HRPI Patent Rights" shall mean all applications for letters patent, whether domestic or foreign, which are encompassed within HRPI Technology, including all continuations, continuations-in-part, divisions, renewals and patents and additions thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.17 "OSI Patent Rights" shall mean all applications for letters patent, whether domestic or foreign, which are encompassed within OSI Technology, including all continuations, continuations-in-part, divisions, renewals and patents and additions thereof, all letters patent granted thereon, and all reissues and extensions thereof. 1.18 "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company, or other entity. -4- 6 1.19 "Project" means each of those projects set forth in the table of contents of an Annual Research Plan adopted pursuant to this Agreement. 1.20 "Target Protein(s)" means each of those proteins identified as a drug development target in the Annual Sponsored Research Plan towards which research projects will be conducted to identify lead compounds from which transcription based drugs may be developed or derived, including all therapeutic indications identified in the course of such research projects. 1.21 "Technology" means and includes all technology and technical information that pertains to the development of Human Therapeutic Products and Diagnostic Products derived from the Research Program. 1.22 "HRPI Technology" means Technology developed through the use of OSI Technology that pertains to a Target Protein and relates to specific chemical compounds or drugs or the therapeutic use(s) of such compounds or drugs, that is or was: (a) developed by employees of, or consultants to, HRPI alone or jointly with third parties including Affiliates and OSI, or (b) acquired by purchase, license, assignment or other means from third parties, including Affiliates, by HRPI. 1.23 "OSI Technology" means all Technology that pertains to a Target Protein and relates to transcriptional modulation of gene expression of the gene encoding the Target Protein, including all improvements thereto and the use of such Technology to develop transcription-based drugs, that is or was: (a) developed by employees of, or consultants to, OSI alone or -5- 7 jointly with third parties including HRPI; or (b) acquired by purchase, license, assignment or other means from third parties by OSI. OSI Technology shall include all such Technology other than HRPI Technology. 1.24 "Research Committee" has the meaning specified in Section 2.2. 1.25 "Research Program" is the collaborative research program concerning the Target Proteins conducted by HRPI and OSI. 1.26 "Sponsored Research Program" is that part of the Research Program that is to be carried out by OSI. 1.27 "Valid Claim" means a claim within OSI Patent Rights or HRPI Patent Rights so long as such claim shall not have been disclaimed by HRPI or OSI, whichever is appropriate, or shall not have been held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 1.28 "OSI Human Therapeutic Product" means any product for the treatment or management of any disease state in a human patient developed as a proprietary drug by OSI and derived from a HRPI compound, in accordance with Section 2.3.2(d). 1.29 "Contract Period Inventions" has the meaning set forth in Section 4.4. 2. Collaborative Research Program 2.1.1 Purpose. OSI and HRPI shall conduct a collaborative Research Program concerning the Target Proteins throughout the Contract Period. The objectives of the Research Program are to discover Human Therapeutic Products. -6- 8 2.1.2 Annual Research Plan. The Annual Research Plan for the first Commitment Year is described in Appendix I hereto. For each Commitment Year after the first Commitment Year, the Annual Research Plan shall be prepared by the Research Committee for submission to, and approval by, HRPI and OSI no later than ninety (90) days before the end of the prior Commitment Year. If HRPI and OSI cannot agree on the Annual Research Plan or Annual Sponsored Research Plan, OSI shall determine its content. The Annual Research Plan and the Annual Sponsored Research Plan for each Commitment Year shall be appended to and made part of this Agreement. 2.1.3 Exclusivity. (a) OSI agrees that during the Contract Period neither OSI nor any of its Affiliates shall conduct research itself or sponsor any other research, or engage in any research sponsored by any Person not a party to this Agreement, if the objectives of such research are the discovery and development of novel Human Therapeutic Products against the Target Proteins unless agreed to by the Research Committee. If OSI becomes aware during the Contract Period of an opportunity to sponsor other research having any of the objectives of the Research Program or to engage in such research sponsored by a Person that is not a party to this Agreement, it shall promptly notify HRPI of such opportunity. HRPI and OSI shall then negotiate in good faith for a period of one hundred twenty (120) days an agreement by which such opportunity can be incorporated into the Research Program or otherwise used to further the purposes of the Research Program to their mutual advantage. If at the end of the one hundred twenty (120) day period, the parties have not reached agreement, OSI shall be free to pursue such opportunity with a third party without further -7- 9 obligation to HRPI. (b) HRPI agrees that during the Contract Period neither HRPI nor any of its Affiliates shall sponsor any other research, or engage in any research sponsored by any Person not a Party to this Agreement using the gene transcription method for the target protein (APP) or other proteins described in the Research Plan, if the objectives of such research are the discovery of novel Human Therapeutic Products; provided, however, that, if HRPI becomes aware during the Contract Period of an opportunity to sponsor other research having any of the objectives of the Research Program or to engage in such research sponsored by a Person that is not a party to this Agreement, it shall promptly notify OSI of such opportunity. HRPI and OSI shall then negotiate in good faith for a period of one hundred twenty (120) days an agreement by which such opportunity can be incorporated into the Research Program or otherwise used to further the purposes of the Research Program to their mutual advantage. If at the end of the one hundred twenty (120) day period, the parties have not reached agreement, HRPI shall be free to pursue such opportunity with a third party without further obligation to OSI. 2.2 Research Committee 2.2.1 Purpose. A research committee shall be established (the "Research Committee") by HRPI and OSI for the following purposes: (a) to review and evaluate progress under each Annual Research Plan; (b) to prepare the Annual Research Plan for each Commitment Year; and -8- 10 (c) to coordinate and monitor publication of research results obtained from the exchange of information and materials that relate to the Research Program. (d) to make priority and program decisions including reasonable assessment of the Target Proteins in the light of the current state of the art. 2.2.2 Membership. HRPI and OSI each shall appoint, in its sole discretion, four members to the Research Committee. Substitutes may be appointed at any time. The initial members shall be: OSI Appointees: *** *** *** *** HRPI Appointees: *** *** *** *** 2.2.3 Chair. The Research Committee shall be chaired by two co-chairpersons, one appointed by HRPI and the other appointed by OSI. 2.2.4 Meetings. The Research Committee shall meet at least twice a year, at places and on dates selected by each party in turn. Other representatives of HRPI or OSI or both, in addition to the members of the Research Committee, may attend such meetings at the invitation of both parties. In addition, the parties shall confer at mutually *** These portions deleted pursuant to a request for confidential treatment. -9- 11 agreed times and places, or by telephone or video conferencing. 2.2.5 Minutes. The Research Committee shall keep accurate minutes of its deliberations which record all proposed decisions and all actions recommended or taken. The minutes shall be delivered to all Research Committee members within five working days after each meeting. The party hosting the meeting shall be responsible for the preparation of the minutes. Draft minutes shall be edited by the co-chairpersons and shall be issued in final form only with their approval and agreement. 2.2.6 Decisions. Subject to the provisions of 2.1.2, all technical decisions of the Research Committee shall be made by a majority of its members. 2.2.7 Expenses. HRPI and OSI shall each bear all expenses of their respective members related to their participation on the Research Committee. 2.2.8 Participation with HOECHST-OSI Research Committee. The Research Committee shall attempt to communicate and coordinate with the HOECHST-OSI Research Committee created pursuant to the agreement dated January 7, 1993, between HOECHST and OSI, through the participation of the HRPI Co-Chairperson (see Section 2.2.2) in the HOECHST-OSI Research Committee. 2.3 Reports and Materials 2.3.1 Reports. During the Contract Period, HRPI and OSI each shall furnish to the Research Committee: (a) summary reports within fifteen (15) days after the end of each three-month period, commencing on the Effective Date, describing its progress under the Annual Research Plan; and -10- 12 (b) comprehensive written reports within thirty (30) days after the end of each Commitment Year, describing in detail the work accomplished by it under the Annual Research Plan during the Commitment Year and discussing and evaluating the results of such work. 2.3.2 Materials. (a) OSI and HRPI shall, during the Contract Period as a matter of course as described in the Annual Research Plan or upon each other's oral or written request, furnish to each other samples of biochemical, biological or synthetic chemical materials which are part of either OSI or HRPI Technology and which are necessary for each party to carry out its responsibilities under the Annual Research Plan. To the extent that the quantities of materials requested by either party exceed the quantities set forth in the Annual Research Plan, the requesting party shall reimburse the other party for the reasonable costs of such materials if they are furnished. (b) OSI agrees that it will also test HOECHST compounds against Target Proteins as defined in the HRPI Research Plan and HOECHST has given its consent to this according to the separate agreement between HOECHST and HRPI (Attachment I). (c) OSI agrees that it will also test HRPI compounds against HOECHST's Target Proteins as defined in the HOECHST Research Plan, and HRPI has given its consent to this according to the separate agreement between HOECHST and HRPI (Attachment I). (d) HRPI agrees that OSI may test the compounds furnished -11- 13 by HRPI for screening in the Research Program against OSI's proprietary drug assays, provided that OSI identifies such proprietary assays to HRPI and HRPI gives its consent in writing which consent shall not unreasonably be withheld, and OSI agrees to pay royalties or extend other rights to HRPI as hereinafter provided. (e) OSI shall not analyze the test compounds provided by HRPI with respect to composition or structure without prior written consent of HRPI. 2.4 Laboratory Facilities and Personnel. OSI shall provide suitable laboratory facilities, equipment and personnel for the work to be done by OSI in carrying out the Annual Sponsored Research Plan. 2.5 Diligent Efforts. HRPI and OSI each shall use reasonably diligent efforts to achieve the objectives of the Research Program. OSI will use reasonably diligent efforts to achieve the objectives listed in the Annual Research Plan (Appendix I) and HRPI will use reasonably diligent efforts to assist OSI in the pursuit of those objectives. To achieve the objectives of the Research Program, HRPI will specifically use diligent efforts: (a) to advance the pharmacological assessment of compounds identified by OSI or HRPI in order for HRPI to select those worthy of further investigation; (b) to determine the chemical structure of the selected compounds and to make related compounds to determine the relationship between structure and activity and to identify potential development candidates; (c) to select development candidates; and (d) to develop manufacturing methods and pharmaceutical formulations for those selected candidates. -12- 14 Furthermore, HRPI will try to assess safety and efficacy of the selected development candidates in animals and in human patients under conditions designed to yield data suitable for inclusion in approval applications to be submitted to the U.S. Food and Drug Administration and other appropriate authorities. 3. Funding of the Sponsored Research Program. 3.1 Base Funding Payments. The funding obligations of OSI and HRPI for each Commitment Year (the "Base Funding Payments") shall be as follows: (a) OSI agrees to pay for ***, in accordance with Section 3.2 below. Additional HRPI compounds will be screened by OSI at a cost of *** compounds per Target Protein. (b) HRPI agrees to make Base Funding Payments to reimburse OSI for the Base Program in accordance with the following commitment schedule (the "Funding Schedule"): ***These portions deleted pursuant to a request for confidential treatment. -13- 15
HRPI TOTAL HRPI OSI HRPI R&D REIMBURSEMENT PAYMENT CONTRIBUTION SUPPORT TO OSI TO OSI ------------ ------- ------ ------ ***
3.2 Supplementary Funding Payments. In addition to the Base Funding Payments, HRPI agrees to reimburse OSI for any supplementary program or other additional amounts which may be mutually agreed upon in advance as follows ("Supplementary Funding Payments"): (a) HRPI agrees to reimburse OSI for the fully-weighted costs of screening compounds provided by HRPI in excess of *** compounds; and (b) HRPI agrees to reimburse OSI for the cost of work performed on any additional Target Proteins or cell-lines (all of which must be approved by OSI and HRPI in advance) or other additional tasks as contemplated by this Agreement or which may be recommended by the Research Committee. 3.3 Timing of Payments. 3.3.1 Timing: Base Payments. All Base Funding Payments by HRPI for the Base Program shall be made in accordance with the Funding Schedule shown in Section 3.1(b) at the beginning of the year set forth. ***These portions deleted pursuant to a request for confidential treatment. -14- 16 3.3.2 Timing: Supplementary Payments. (a) All Supplementary Funding Payments by HRPI for supplementary programs or approved additional costs shall be made quarterly in advance for work scheduled to be performed by OSI during the upcoming three (3) month period, against OSI's invoice for such three (3) month period. Adjustments as necessary to reflect the work actually performed by OSI shall be made at the end of each three (3) month period and shall be reflected in OSI's invoice for the next three (3) month period. (b) The amount of any Supplementary Funding Payment for each quarter shall be based on the work in progress pursuant to any applicable supplementary research agreement and the annual budget associated therewith. (c) Each Supplementary Funding Payment shall be paid on the first day of the quarter or thirty (30) days after receipt of invoice, whichever is later. 3.5 Books and Records. OSI shall keep for three (3) years from the expiration of this Agreement complete and accurate records of its expenditures of Funding Payments received by it. The records shall conform to good accounting principles as applied to a similar company similarly situated. HRPI shall have the right at its own expense during the term of this Agreement and during the subsequent three-year period to appoint an independent certified public accountant reasonably acceptable to OSI to inspect said records to verify the accuracy of such expenditures, pursuant to each Annual Sponsored Research Plan. OSI shall make its records available for inspection by the independent certified public accountant during regular business hours at the place or places where such records are customarily kept, upon reasonable notice from HRPI to the extent reasonably necessary to -15- 17 verify the accuracy of the expenditures and required reports. This right of inspection shall not be exercised more than once in any calendar year and not more than once with respect to records covering any specific period of time. HRPI agrees to hold in strict confidence all information concerning such expenditures, other than their total amounts, and all information learned in the course of any audit or inspection, except to the extent that it is necessary for HRPI to reveal the information in order to enforce any rights it may have pursuant to this Agreement or if disclosure is required by law. The failure of HRPI to request verification of any expenditures before or during the three-year period shall be considered acceptance of the accuracy of such expenditures, and OSI shall have no obligation to maintain any records pertaining to such report or statement beyond the three-year period. 4. Treatment of Confidential Information. 4.1.1 Confidentiality. HRPI and OSI recognize that the OSI and HRPI Confidential Information constitutes highly valuable, proprietary, confidential information. Subject to the terms and conditions of the Secrecy Agreement dated June 28, 1991, the disclosure obligations set forth in Section 4.3 and 4.4 hereof and the publication rights set forth in Section 4.2 hereof, HRPI and OSI each agree that during the term of this Agreement and for five (5) years thereafter, they will keep confidential, and will cause their Affiliates to keep confidential, all Confidential Information that is disclosed to them or to any of their Affiliates pursuant to this Agreement. Neither HRPI nor OSI nor any of their Affiliates shall use such Confidential Information except as expressly permitted in this Agreement. 4.1.2 Disclosure of Confidential Information. HRPI and OSI acknowledge that the HRPI and OSI Confidential Information is highly valuable, proprietary, -16- 18 confidential information, and agree that any disclosure of Confidential Information to any officer, employee or agent of the other or of any of its Affiliates shall be made only if and to the extent necessary to carry out its responsibilities under this Agreement and shall be limited to the maximum extent possible consistent with such responsibilities. They agree not to disclose the other's Confidential Information to any third parties under any circumstance without written permission. Both parties shall take such action, and shall cause its Affiliates to take such action, to preserve the confidentiality of each other's Confidential Information as they would customarily take to preserve the confidentiality of their own Confidential Information. Each party, upon the other's request, will return all the Confidential Information disclosed pursuant to this Agreement including all copies, and extracts, of documents within 60 days of the request after the termination of this Agreement. 4.1.3 Employees and Consultants. OSI represents that all of its employees participating in the Research Program who shall have access to HRPI Technology and HRPI Confidential Information are bound by agreement to maintain such information in confidence. Consultants will be similarly bound. 4.2 Publication. Section 4.1 to the contrary notwithstanding, the results obtained in the course of the Research Program may be submitted for publication following scientific review by the Research Committee and subsequent approval by the management of OSI and HRPI, respectively. After receipt of the proposed publication by both HRPI's and OSI's managements, written approval or disapproval shall be provided within 30 days for a manuscript, an abstract for presentation at, or inclusion in the proceedings of, a scientific meeting, or a transcript of an oral presentation to be given at a scientific meeting. -17- 19 4.3 Publicity. Except as required by law, neither party may disclose the existence of this Agreement or the research described in it without the written consent of the other party, which consent shall not be unreasonably withheld. 4.4 Disclosure of Inventions. Each party hereto shall promptly inform the other about all inventions ("Contract Period Inventions") concerning the Target Proteins that are conceived, made or developed in the course of carrying out the Research Program by employees of, or consultants to, either of them, whether such inventions were conceived, made or developed solely or jointly with employees of, or consultants to, the other. This Agreement shall not be construed to obligate either party to disclose to the other any invention which does not concern the Target Proteins. 4.5 Restrictions on Transferring Materials. HRPI and OSI recognize that the biological and biochemical materials which are part of OSI Technology and HRPI Technology represent valuable commercial assets. Therefore, throughout the Contract Period and for five (5) years thereafter, OSI and HRPI each agree not to transfer to any third party except Affiliates any such compound or material which constitutes Technology owned solely by the other party unless agreed to by the Research Committee. Additionally, throughout the Contract Period and for six (6) months thereafter, OSI and HRPI each agree not to transfer to any third party any such compound or material which constitutes Technology owned solely by it, unless prior consent for any such transfer is obtained from the other, which consent shall not be unreasonably withheld, and unless such third party agrees as a condition of any such transfer not to transfer the material further. -18- 20 5. Intellectual Property Rights. 5.1 Ownership. All OSI Technology and OSI Patent Rights shall be owned solely by OSI regardless of whether such OSI Technology or OSI Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, OSI solely or jointly with employees of, or consultants to, HRPI. All HRPI Technology and HRPI Patent Rights shall be owned solely by HRPI regardless of whether such HRPI Technology or HRPI Patent Rights are developed, conceived, discovered, or invented by employees of, or consultants to, HRPI solely or jointly with employees of, or consultants to, OSI. 5.2 Filing, Prosecution and Maintenance of Patent Rights. Subject to Sections 5.3, 5.4 and 5.5 below, OSI shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce, and maintain OSI Patent Rights. HRPI shall have the exclusive right, at its expense and in its sole discretion to file, prosecute, defend, enforce and maintain HRPI Patent Rights. 5.3 Filing, Prosecution and Maintenance of Patents Resulting from the Research Program. OSI and HRPI will discuss and decide jointly, which party will have the right and obligation to file patent applications on behalf of OSI or HRPI, as applicable, on any patentable invention developed by either OSI or HRPI during the Contract Period relating to the Target Proteins. Both parties will consult with each other regarding countries in which such patent applications should be filed. The filing party will file patent applications in those countries where the other party requests to file patent applications. The filing party will have to prosecute all patent applications relating to Contract Period Inventions and to respond to oppositions filed by third parties. The filing party will have to maintain in force any letters -19- 21 patent relating to Contract Period Inventions. The filing party will notify the other party in a timely manner of any decision to abandon a pending patent application relating to a Contract Period Invention or an issued patent relating to a Contract Period Invention. Thereafter the other party shall have the option, at its expense, of continuing to prosecute any such pending patent application or of keeping the issued patent in force. 5.4 Status Reports. The filing party shall provide to the other party copies of all patent applications relating to Contract Period Inventions immediately after filing. The filing party shall also provide to the other party copies of important documents relating to prosecution of all such patent applications in a timely manner. 5.5 Reimbursement of Costs for Filing, Prosecuting and Maintaining Certain Patents. The filing party will be reimbursed for the costs of filing, prosecuting and maintaining all patent applications and all patents which relate to Contract Period Inventions in countries where the other party requests that such patent applications be filed, prosecuted and maintained, upon receipt of invoices from the filing party. Such reimbursement shall be in addition to Funding Payments and Supplementary Funding Payments pursuant to Section 3 hereof. However, the other party may, upon 90 days advance written notice, discontinue reimbursing the filing party for the cost of filing, prosecuting or maintaining any patent application or any patent in any country. The filing party shall pay all costs in those countries in which the other party does not request that the filing party file, prosecute or maintain patent applications and patents which relate to Contract Period Inventions, but in which the filing party, at its option, elects to do so. 6. Other Rights of the Parties. During the Contract Period, OSI and HRPI shall -20- 22 promptly notify each other in writing of asny and all opportunities to acquire in any manner from third parties, technology or patents which may be useful in, or may relate to, the Research Program. OSI and HRPI shall decide if such rights should be acquired and, if so, whether by OSI or HRPI. If acquired, such rights shall become OSI Technology or HRPI Technology, as appropriate. 7. Option for License. Upon request of either party to this Agreement, OSI and HRPI will enter into negotiations with respect to a license agreement pursuant to which HRPI would acquire an exclusive, worldwide license, including the right to grant sublicenses, to make, use and sell Licensed Human Therapeutic Products, and OSI would acquire the exclusive, worldwide license, including the right to grant sublicenses, to make, use and sell Diagnostic Products, products sold exclusively for research purposes and OSI Human Therapeutic Products (derived from HRPI compounds) under all HRPI'S right, title and interest in HRPI Technology. The option hereinabove provided for will commence with the Effective Date and expire four (4) years after the end of the Contract Period unless such option is earlier terminated pursuant to Section 8.4.2 of this Agreement. Such license agreement shall among other things provide for: (a) payments by HRPI to OSI of a royalty of *** of Net Sales (as defined therein) for each Human Therapeutic Product employing OSI Patent Rights or HRPI Patent Rights and *** on Net Sales for each Human Therapeutic Product employing only OSI Technology, or HRPI Technology; (b) payments by OSI to HRPI of *** on Net Sales for any Diagnostic Product using OSI Patent Rights, OSI Technology, HRPI Patent Rights or HRPI Technology; *** These portions deleted pursuant to a request for confidential treatment. -21- 23 (c) OSI shall pay a royalty of *** on Net Sales for any OSI Human Therapeutic Product derived from a HRPI compound if OSI decides to market the OSI Human Therapeutic Product itself. If OSI decides not to market the OSI Human Therapeutic Product itself, it shall give HRPI the first right to negotiate for marketing rights; (d) if Patent Rights are involved, payments of the applicable royalty will be made until the last valid patent claim expires; (e) if Technology is involved and there are no valid patent claims, payments of the applicable royalty will be made with respect to sales in a Designated Country (as hereinafter defined) until ten (10) years after the first commercial sale is made in such Designated Country. The Designated Countries are USA, Canada, Germany, United Kingdom, France, Spain, Italy and Japan; and (f) such other customary and other terms as are negotiated between the parties. 8. Term, Extension, Termination and Disengagement. 8.1 Term. Unless sooner terminated or extended, this Agreement shall expire six years after the Effective Date. 8.2 Extension. HRPI, at least six months prior to the end of the term, shall notify OSI in writing if it desires to extend the Sponsored Research Program. If OSI is willing to extend the Sponsored Research Program, OSI must so notify HRPI within three (3) months after receipt of HRPI's notice. HRPI and OSI shall thereafter promptly negotiate in good faith mutually acceptable terms for any extension to this Agreement. 8.3 Events of Termination. The following events shall constitute events of *** These portions deleted pursuant to a request for confidential treatment. -22- 24 termination ("Events of Termination"): (a) Any representation or warranty by OSI or HRPI, or any of its officers, under or in connection with this Agreement shall prove to have been incorrect in any material respect when made. (b) OSI or HRPI shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for 30 days after written notice to the failing party. (c) Either party shall be entitled to terminate this Agreement by written notice to the other having immediate effect, if the other party is acquired by or merged with or transfers all of its assets or an essential part of such assets to, or if fifty percent or more of its voting stock is acquired by, or otherwise comes under the control of, a person or an organization which is a competitor of the terminating party, or if any such person or organization obtains an option or preemption right to acquire fifty percent or more of the voting stock or otherwise control of the other party, such party shall without delay inform the party which is entitled to terminate, of such acquisition, transfer, control, option or preemption right. 8.4 Termination. 8.4.1 Upon the occurrence of any Event of Termination, the party not responsible may, by notice to the other party, terminate this Agreement. 8.4.2 If HRPI terminates this Agreement pursuant to Section 8.4.1, -23- 25 the option of HRPI to negotiate a license provided for in Section 7 shall continue according to such Section. If OSI terminates this Agreement pursuant to Section 8.4.1, the option of HRPI to negotiate a license provided for in Section 7 shall also terminate. 8.4.3 Upon termination of this Agreement, HRPI will reimburse OSI for any additional work done, or pending, within a six-month period following such termination. 9. Representations and Warranties. OSI and HRPI each respectively represents and warrants as follows: 9.1 It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification and has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. 9.2 The execution, delivery and performance by it of this Agreement have been duly authorized by all necessary corporate action and do not and will not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or by-laws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. -24- 26 9.3 This Agreement is a legal, valid and binding obligation of it, enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditor's rights generally. 9.4 It is not under any obligation to any person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations. 9.5 It has good and marketable title to, or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities in the Research Program, subject to no claim of any third party other than the relevant lessors or licensors. 10. Covenants of OSI. 10.1 Affirmative Covenants of OSI Other Than Reporting Requirements. Throughout the Contract Period, OSI shall: 10.1.1 maintain and preserve its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in good standing in each jurisdiction in which such qualification is from time to time necessary or desirable in view of its business and operations or the ownership of its properties. 10.1.2 comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any government authority to the extent -25- 27 necessary to conduct the Sponsored Research Program. 11. Dispute Resolution. 11.1 Any dispute which cannot be resolved by discussion between the parties under this Agreement shall be resolved by binding arbitration in accordance with the rules then obtaining of the American Arbitration Association. The arbitrators shall have the power to award specific performance or injunctive relief and reasonable attorney's fees and expenses to any party in such arbitration, except that the arbitrators shall not have the power to reform this Agreement. Such arbitration shall be held in the main office of the American Arbitration Association in the City of New York. 11.2 The arbitration award rendered shall be final and binding upon the parties and judgement thereon may be entered in any court of competent jurisdiction. 12. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time: If to HRPI: at its address set forth at the beginning of this Agreement Attention: Director of Licensing HOECHST-ROUSSEL Pharmaceuticals, Inc. If to OSI: at its address set forth at the beginning of this Agreement Attention: Chief Executive Officer Notices shall be deemed given as of the date of receipt. 13. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. 14. Miscellaneous. -26- 28 14.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 14.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 14.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 14.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or cancelled, and any of the terms may be waived, only by a written instrument executed by each party 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 shall in no manner affect the rights at a later time to enforce the same. 14.5 No Third Party Beneficiaries. No Person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any Person. 14.6 Assignment and Successors. This Agreement may not be assigned by either party, except that each party may assign this Agreement and its rights and interests hereunder, in whole or in part, to any of its Affiliates, 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. -27- 29 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. HOECHST-ROUSSEL PHARMACEUTICALS, INC. ONCOGENE SCIENCE, INC. By: By: --------------------------------- --------------------------------- Title: President Title: Chief Executive Officer -28- EX-27 6 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 1 1,787,990 22,296,727 2,341,507 (87,974) 0 27,267,791 12,653,252 7,208,247 41,738,811 2,000,068 0 0 0 177,503 39,010,402 41,738,811 29,042 2,276,248 21,863 4,399,853 11,513 0 0 (1,770,594) 0 0 0 0 0 (1,770,594) (0.10) (0.10)
-----END PRIVACY-ENHANCED MESSAGE-----