(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2004 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
New York | 13-3444607 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer Identification No) | |
777 Old Saw Mill River Road, Tarrytown, New York | 10591-6707 | |
(Address of principal executive offices) | (Zip code) |
Class of Common Stock | Number of Shares | |
Class A Stock, $.001 par value | 2,358,373 | |
Common Stock, $.001 par value | 53,763,234 |
Item 1. | Business |
| VEGF TRAP Oncology: Protein-based product candidate designed to bind Vascular Endothelial Growth Factor (called VEGF, also known as Vascular Permeability Factor or VPF) and the related Placental Growth Factor (called PlGF), and prevent their interaction with cell surface receptors. VEGF (and to a less validated degree, PlGF) is required for the growth of new blood vessels that are needed for tumors to grow and is a potent regulator of vascular permeability and leakage. In 2001, we initiated a dose-escalation phase 1 clinical trial designed to assess the safety and tolerability of the VEGF Trap in subjects with advanced solid tumor malignancies. The preliminary results of this study were announced at the annual meeting of the American Society of Clinical Oncology (ASCO) in June 2004 and we updated these results in a poster session at the 16th Annual EORTC-NCI-AACR Symposium on Molecular Targets and Cancer Therapeutics in September 2004. The phase 1 trial was an open label, dose-escalation study conducted at three sites in the United States. The study enrolled and treated 38 patients with incurable, relapsed, or refractory solid tumors with subcutaneous injections of VEGF Trap. In total, the trial enrolled patients with 15 different types of cancer. Preliminary results of this study indicated that: |
| the VEGF Trap was generally well-tolerated at the dose levels studied, and | |
| circulating levels of the VEGF Trap at the highest dose (1.6 milligrams per kilogram of body weight (mg/kg) per week) were consistent with levels observed to be effective in preclinical models. |
1
Detailed results of the trial are expected to be submitted for publication in a peer-reviewed journal once all patients complete the extended treatment phase available to patients who maintained stable disease after the initial 10-week treatment period and the full results of the extension phase have been analyzed. | ||
A second phase 1 trial, which commenced in April 2004, is studying higher VEGF Trap exposures through intravenous administration. This study is also designed to evaluate the safety, tolerability, and pharmacokinetics of intravenous VEGF Trap in advanced cancer patients. | ||
We and the sanofi-aventis Group plan to initiate multiple clinical studies in 2005 to evaluate the VEGF Trap as a single-agent and in combination with other therapies in various cancer indications. During the third quarter of 2004, the U.S. Food and Drug Administration (FDA) granted Fast Track designation to the VEGF Trap for a specific niche cancer indication. As a result of the FDAs decision, we and sanofiaventis plan to initiate a clinical trial in that indication in 2005. | ||
In September 2003, we entered into a collaboration agreement with Aventis Pharmaceuticals, Inc. (now part of the sanofi-aventis Group) to jointly develop and commercialize the VEGF Trap throughout the world with the exception of Japan, where product rights remain with us. Under the collaboration agreement, as amended in January 2005, we and sanofi-aventis will share co-promotion rights and profits on sales, if any, of the VEGF Trap for disease indications included in our collaboration. In December 2004, we earned a $25.0 million payment from sanofi-aventis, which was received in January 2005, upon the achievement of an early-stage clinical milestone. We may also receive up to $360.0 million in additional milestone payments upon receipt of specified marketing approvals for up to eight VEGF Trap indications in Europe or the United States. | ||
Under the collaboration agreement, agreed upon development expenses incurred by both companies during the term of the agreement will be funded by sanofi-aventis. If the collaboration becomes profitable, we will reimburse sanofi-aventis for 50% of the VEGF Trap development expenses in accordance with a formula based on the amount of development expenses and our share of the collaboration profits, or at a faster rate at our option. |
| VEGF TRAP Eye Diseases: VEGF both stimulates angiogenesis and increases vascular permeability. It has been shown in preclinical studies to be a major pathogenic factor in diabetic retinopathy, diabetic macular edema, and age-related macular degeneration, and is believed to be involved in other medical problems affecting the eyes. In January 2005, we and sanofi-aventis amended our collaboration agreement to exclude rights to develop and commercialize the VEGF Trap for eye diseases through local delivery systems. We now have the exclusive right to develop and commercialize the VEGF Trap for eye diseases through local administration to the eye and plan to initiate a clinical trial of the VEGF Trap delivered through intravitreal injection in mid-2005. While use of the VEGF Trap for eye diseases using systemic delivery remains part of our collaboration with sanofi-aventis, we and sanofi-aventis do not currently intend to pursue further clinical development using systemic delivery of VEGF Trap for eye diseases. Two phase 1 clinical trials of the VEGF Trap delivered systemically for the potential treatment of eye diseases were completed in 2004. We expect to discuss the results from these trials at scientific conferences in 2005. | |
| INTERLEUKIN-1 TRAP (IL-1 Trap): Protein-based product candidate designed to bind the interleukin-1 (called IL-1) cytokine and prevent its interaction with cell surface receptors. IL-1 may play an important role in a number of rheumatological and other diseases and disorders, including diseases associated with inflammation in blood vessels. |
In October 2003, we announced that the IL-1 Trap demonstrated evidence of clinical activity and safety in patients with rheumatoid arthritis in a phase 2 dose-ranging study in approximately 200 patients. Patients treated with the highest dose, 100 milligrams of the IL-1 Trap, exhibited non-statistically significant improvements in the proportion of American College of Rheumatology (ACR) 20 responses versus placebo, the primary endpoint of the trial. Patients treated with the IL-1 Trap also exhibited improvements in secondary endpoints of the trial. Patients in this trial experienced |
2
statistically significant reductions in c-reactive protein (CRP) levels, and the improvements in CRP levels demonstrated a clear dose response to the IL-1 Trap. The IL-1 Trap was generally well tolerated and no serious drug-related adverse events were reported. | ||
In mid-2005, we plan to further evaluate the safety and efficacy of the IL-1 Trap in rheumatoid arthritis in a double-blind, placebo-controlled, multi-center trial. This trial will be conducted in a larger patient population, testing higher doses of IL-1 Trap for a longer period of time than the phase 2 trial completed in 2003. We expect to evaluate doses of 160 milligrams and 320 milligrams of IL-1 Trap delivered subcutaneously once a week. Additional trials of the IL-1 Trap will be required to support an application seeking approval to market the IL-1 Trap in rheumatoid arthritis. | ||
In the fourth quarter of 2004, we initiated a pilot study of the IL-1 Trap in patients with CIAS1 -Associated Periodic Syndrome (CAPS), a spectrum of rare diseases associated with mutations in the CIAS1 gene. IL-1 appears to play a significant role in these diseases. In December 2004, the FDA granted orphan drug status to the IL-1 Trap for the treatment of these diseases. We expect to commence an additional trial for this indication in 2005. | ||
We believe blocking IL-1 could be useful in many potential indications where inflammation plays a role. Examples include such indications as osteoarthritis, certain rare genetic diseases, Stills disease, cardiovascular diseases, and many others. In 2005, we plan to initiate several proof-of-concept studies to identify where the IL-1 Trap demonstrates evidence of efficacy and safety. |
| INTERLEUKIN-4/INTERLEUKIN-13 TRAP (IL-4/13 Trap): Protein-based product candidate designed to bind both the interleukin-4 and interleukin-13 (called IL-4 and IL-13) cytokines and prevent their interaction with cell surface receptors. Based on preclinical data, IL-4 and IL-13 are thought to play a major role in diseases such as asthma, allergic disorders, and other inflammatory diseases. At a scientific conference during the second quarter of 2004, we presented the results of a placebo-controlled, double-blind, dose escalation phase 1 trial of the IL-4/13 Trap using subcutaneous injections in adult subjects with mild to moderate asthma. The IL-4/13 Trap was generally safe and well tolerated at the doses tested. We plan to initiate a phase 2 trial in 2005 to evaluate the safety and potential efficacy of the IL-4/13 Trap in asthma or allergy indications. |
Anti-Angiogenesis/Angiogenesis in Cancer, Eye Disease, and Other Settings: VEGF Trap and the Angiopoietins |
3
Trap Technology and Additional Traps |
4
Clinical Development. |
5
Obesity and Metabolic Diseases |
Muscle Atrophy and Related Disorders |
Cartilage Growth Factor System and Osteoarthritis |
Fibrosis |
G-Protein Coupled Receptors |
6
7
8
9
10
11
12
Item 2. | Properties |
13
Current Monthly | ||||||||||||
Square | Base Rental | Renewal Option | ||||||||||
Location | Footage | Expiration | Charges(1) | Available | ||||||||
Tarrytown
|
146,000 | December 31, 2007 | $ | 188,000 | none | |||||||
Tarrytown
|
16,000 | December 31, 2007 | $ | 25,000 | none | |||||||
Tarrytown
|
74,000 | December 31, 2009 | $ | 145,000 | one 5-year term | |||||||
Rensselaer
|
75,000 | July 11, 2007 | $ | 25,000 | two 5-year terms |
(1) | Excludes additional rental charges for utilities, taxes, and operating expenses, as defined. |
Item 3. | Legal Proceedings |
Item 4. | Submission of Matters to a Vote of Security Holders |
For | Against | Abstain | ||||||||||
Approval of Amendment to the 2000 Long-Term Incentive Plan to
Authorize the Option Exchange Program
|
46,029,856 | 16,697,527 | 53,532 |
14
Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
High | Low | ||||||||
2003
|
|||||||||
First Quarter
|
$ | 21.49 | $ | 7.40 | |||||
Second Quarter
|
18.78 | 5.77 | |||||||
Third Quarter
|
22.35 | 12.22 | |||||||
Fourth Quarter
|
18.72 | 11.80 | |||||||
2004
|
|||||||||
First Quarter
|
$ | 17.00 | $ | 12.80 | |||||
Second Quarter
|
15.85 | 8.53 | |||||||
Third Quarter
|
10.80 | 6.76 | |||||||
Fourth Quarter
|
9.49 | 6.75 |
15
Item 6. | Selected Financial Data |
Year Ended December 31, | |||||||||||||||||||||
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Statement of Operations Data
|
|||||||||||||||||||||
Revenues
|
|||||||||||||||||||||
Contract research and development
|
$ | 113,157 | $ | 47,366 | $ | 10,924 | $ | 12,071 | $ | 36,478 | |||||||||||
Research progress payments
|
42,770 | 6,200 | |||||||||||||||||||
Contract manufacturing
|
18,090 | 10,131 | 11,064 | 9,902 | 16,598 | ||||||||||||||||
174,017 | 57,497 | 21,988 | 21,973 | 59,276 | |||||||||||||||||
Expenses
|
|||||||||||||||||||||
Research and development(1)
|
136,095 | 136,024 | 124,953 | 92,542 | 65,134 | ||||||||||||||||
Contract manufacturing
|
15,214 | 6,676 | 6,483 | 6,509 | 15,566 | ||||||||||||||||
General and administrative
|
17,062 | 14,785 | 12,532 | 9,607 | 8,427 | ||||||||||||||||
168,371 | 157,485 | 143,968 | 108,658 | 89,127 | |||||||||||||||||
Income (loss) from operations
|
5,646 | (99,988 | ) | (121,980 | ) | (86,685 | ) | (29,851 | ) | ||||||||||||
Other income (expense)
|
|||||||||||||||||||||
Other contract income
|
42,750 | ||||||||||||||||||||
Investment income
|
5,478 | 4,462 | 9,462 | 13,162 | 8,480 | ||||||||||||||||
Interest expense
|
(12,175 | ) | (11,932 | ) | (11,859 | ) | (2,657 | ) | (281 | ) | |||||||||||
36,053 | (7,470 | ) | (2,397 | ) | 10,505 | 8,199 | |||||||||||||||
Net income (loss) before cumulative effect of a change in
accounting principle
|
41,699 | (107,458 | ) | (124,377 | ) | (76,180 | ) | (21,652 | ) | ||||||||||||
Cumulative effect of adopting Staff Accounting Bulletin 101
(SAB 101)(2)
|
(1,563 | ) | |||||||||||||||||||
Net income (loss)
|
$ | 41,699 | $ | (107,458 | ) | $ | (124,377 | ) | $ | (76,180 | ) | $ | (23,215 | ) | |||||||
Net income (loss) per share, basic:
|
|||||||||||||||||||||
Before cumulative effect of a change in accounting principle
|
$ | 0.75 | $ | (2.13 | ) | $ | (2.83 | ) | $ | (1.81 | ) | $ | (0.62 | ) | |||||||
Cumulative effect of adopting SAB 101
|
(0.04 | ) | |||||||||||||||||||
Net income (loss) per share
|
$ | 0.75 | $ | (2.13 | ) | $ | (2.83 | ) | $ | (1.81 | ) | $ | (0.66 | ) | |||||||
Net income (loss) per share, diluted
|
$ | 0.74 | $ | (2.13 | ) | $ | (2.83 | ) | $ | (1.81 | ) | $ | (0.66 | ) | |||||||
(1) | Includes Income (Loss) in Amgen-Regeneron Partners of $134, ($63), ($27), ($1,002), and ($4,575) for the years ended December 31, 2004, 2003, 2002, 2001, and 2000, respectively. |
(2) | See Note 2 to our audited financial statements. |
16
At December 31,
2004
2003
2002
2001
2000
(In thousands)
$
348,912
$
366,566
$
295,246
$
438,383
$
154,370
473,108
479,555
391,574
495,397
208,274
200,000
200,000
200,000
200,150
2,069
182,543
137,643
145,981
266,355
182,130
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
17
Product Candidate | 2004 Events | 2005 Plans | ||
VEGF Trap Oncology
|
Completed phase 1 subcutaneous single-agent trial in cancer | Commence additional single-agent and combination trials in cancer | ||
Commenced phase 1 intravenous single-agent trial in cancer | ||||
Received Fast Track designation for VEGF Trap for specific niche cancer indication | ||||
VEGF Trap Eye Diseases
|
Completed treatment portion of phase 1 intravenous single-agent trial in neovascular age-related macular degeneration | Commence studies in eye diseases utilizing local delivery systems, such as intraocular injections | ||
Completed treatment portion of phase 1 intravenous single-agent trial in diabetic macular edema | ||||
IL-1 Trap
|
Planned for future trials in rheumatoid arthritis
Completed treatment phase of single-dose patient tolerability studies to evaluate new formulations Commenced proof-of-concept study in CIAS1 -Associated Periodic Syndrome (CAPS) Received FDA Orphan designation for the IL-1 Trap in treatment of CAPS |
Commence clinical trial in rheumatoid arthritis
Commence clinical trial in osteoarthritis Commence exploratory proof of concept trials in other indications Complete CAPS proof-of-concept study and commence additional trial in this indication Evaluate IL-1 Trap in other inflammatory conditions |
||
IL-4/13 Trap
|
Completed phase 1 trial in asthma | Commence clinical trial in asthma or allergy indication | ||
18
Years Ended December 31, 2004 and 2003 |
Revenues: |
2004 | 2003 | |||||||||
(In millions) | ||||||||||
Contract research & development revenue
|
||||||||||
Sanofi-aventis
|
$ | 78.3 | $ | 14.3 | ||||||
Novartis
|
22.1 | 21.4 | ||||||||
Procter & Gamble
|
10.5 | 10.6 | ||||||||
Other
|
2.2 | 1.1 | ||||||||
Total contract research & development revenue
|
113.1 | 47.4 | ||||||||
Research progress payments
|
||||||||||
Sanofi-aventis
|
25.0 | | ||||||||
Novartis
|
17.8 | | ||||||||
Total research progress payments
|
42.8 | | ||||||||
Contract manufacturing revenue
|
18.1 | 10.1 | ||||||||
Total revenue
|
$ | 174.0 | $ | 57.5 | ||||||
19
Up-front Payment to Regeneron | |||||||||||||||||||||
2004 Regeneron | Amount | Deferred Revenue | Total Revenue | ||||||||||||||||||
Expense | Total | Recognized | at December 31, | Recognized | |||||||||||||||||
Reimbursement | Payment | in 2004 | 2004 | in 2004 | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Sanofi-aventis
|
$ | 67.8 | $ | 80.0 | $ | 10.5 | $ | 65.8 | $ | 78.3 | |||||||||||
Novartis
|
| 27.0 | 22.1 | | 22.1 | ||||||||||||||||
Total
|
$ | 67.8 | $ | 107.0 | $ | 32.6 | $ | 65.8 | $ | 100.4 | |||||||||||
Up-front Payment to Regeneron | |||||||||||||||||||||
2003 Regeneron | Amount | Deferred Revenue | Total Revenue | ||||||||||||||||||
Expense | Total | Recognized | at December 31, | Recognized | |||||||||||||||||
Reimbursement | Payment | in 2004 | 2004 | in 2004 | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Sanofi-aventis
|
$ | 10.7 | $ | 80.0 | $ | 3.6 | $ | 76.4 | $ | 14.3 | |||||||||||
Novartis
|
16.5 | 27.0 | 4.9 | 22.1 | 21.4 | ||||||||||||||||
Total
|
$ | 27.2 | $ | 107.0 | $ | 8.5 | $ | 98.5 | $ | 35.7 | |||||||||||
20
Research and Development Expenses: |
2004 | 2003 | ||||||||
(In millions) | |||||||||
Research and development expenses:
|
|||||||||
Payroll and benefits
|
$ | 43.6 | $ | 38.5 | |||||
Clinical trial expenses
|
10.3 | 25.0 | |||||||
Clinical manufacturing costs(1)
|
36.4 | 29.8 | |||||||
Research and preclinical development costs
|
23.1 | 19.6 | |||||||
Occupancy and other operating costs
|
22.7 | 23.1 | |||||||
Total research and development
|
$ | 136.1 | $ | 136.0 | |||||
(1) | Represents the full cost of manufacturing drug for use in research, preclinical development and clinical trials, including related payroll and benefits, manufacturing materials and supplies, depreciation, and occupancy costs of our Rensselaer manufacturing facility. |
Contract Manufacturing Expenses: |
General and Administrative Expenses: |
Other Income and Expense: |
21
Years Ended December 31, 2003 and 2002 |
Revenues: |
2003 | 2002 | |||||||||
(In millions) | ||||||||||
Contract research & development revenue
|
||||||||||
Novartis
|
$ | 21.4 | $ | | ||||||
Sanofi-aventis
|
14.3 | | ||||||||
Procter & Gamble
|
10.6 | 10.5 | ||||||||
Other
|
1.1 | 0.4 | ||||||||
Total contract research & development revenue
|
47.4 | 10.9 | ||||||||
Contract manufacturing revenue
|
10.1 | 11.1 | ||||||||
Total revenue
|
$ | 57.5 | $ | 22.0 | ||||||
Up-front Payment to Regeneron | |||||||||||||||||||||
2003 Regeneron | Amount | Deferred Revenue | Total Revenue | ||||||||||||||||||
Expense | Total | Recognized | at December 31, | Recognized in | |||||||||||||||||
Reimbursement | Payment | in 2003 | 2003 | 2003 | |||||||||||||||||
(In millions) | |||||||||||||||||||||
Novartis
|
$ | 16.5 | $ | 27.0 | $ | 4.9 | $ | 22.1 | $ | 21.4 | |||||||||||
Sanofi-aventis
|
10.7 | 80.0 | 3.6 | 76.4 | 14.3 | ||||||||||||||||
Total
|
$ | 27.2 | $ | 107.0 | $ | 8.5 | $ | 98.5 | $ | 35.7 | |||||||||||
22
Research and Development Expenses: |
2003 | 2002 | ||||||||
(In millions) | |||||||||
Research and development expenses:
|
|||||||||
Payroll and benefits
|
$ | 38.5 | $ | 35.9 | |||||
Clinical trial expenses
|
25.0 | 33.9 | |||||||
Clinical manufacturing costs(1)
|
29.8 | 17.3 | |||||||
Research and preclinical development costs
|
19.6 | 18.4 | |||||||
Occupancy and other operating costs
|
23.1 | 19.5 | |||||||
Total research and development
|
$ | 136.0 | $ | 125.0 | |||||
(1) | Represents the full cost of manufacturing drug for use in research, preclinical development and clinical trials, including related payroll and benefits, manufacturing materials and supplies, depreciation, and occupancy costs of our Rensselaer manufacturing facility. |
Contract Manufacturing Expenses: |
General and Administrative Expenses: |
Other Income and Expense: |
23
Years Ended December 31, 2004 and 2003 |
Cash Used in Operations: |
24
Cash Used in Investing Activities: |
Cash Provided by Financing Activities: |
Sanofi-aventis Agreement: |
25
Merck License Agreement: |
Convertible Debt: |
Capital Expenditures: |
Funding Requirements: |
26
Payments Due by Period | ||||||||||||||||
Less than | 1 to 3 | 4 to 5 | ||||||||||||||
Total | one year | years | years | |||||||||||||
(In millions) | ||||||||||||||||
Convertible Senior Subordinated Notes Payable(1)
|
$ | 244.0 | $ | 11.0 | $ | 22.0 | $ | 211.0 | ||||||||
Operating Leases(2)
|
17.7 | 4.9 | 9.2 | 3.6 |
(1) | Includes amounts representing interest. |
(2) | Excludes future contingent rental costs for utilities, real estate taxes, and operating expenses. In 2004, these costs were $6.0 million. |
27
Revenue Recognition: |
28
Recognition of Deferred Revenue Related to Contract Manufacturing Agreement: |
Clinical Trial Accrual Estimates: |
Depreciation of Property, Plant and Equipment: |
Building and improvements
|
6-30 years | |
Leasehold improvements
|
Life of lease | |
Laboratory and computer equipment
|
3-5 years | |
Furniture and fixtures
|
5 years |
29
We have had a history of operating losses and we may never achieve profitability. If we continue to incur operating losses, we may be unable to continue our operations. |
30
We will need additional funding in the future, which may not be available to us, and which may force us to delay, reduce or eliminate our product development programs or commercialization efforts. |
We have a significant amount of debt and may have insufficient cash to satisfy our debt service and repayment obligations. In addition, the amount of our debt could impede our operations and flexibility. |
We intend to adopt, effective January 1, 2005, the fair market value based method of accounting for stock-based employee compensation. This is expected to materially increase our non-cash compensation expenses in our Statement of Operations commencing in 2005, primarily due to compensation costs related to stock options. |
31
Successful development of any of our product candidates is highly uncertain. |
Clinical trials required for our product candidates are expensive and time-consuming, and their outcome is highly uncertain. If any of our drug trials are delayed or achieve unfavorable results, we will have to delay or may be unable to obtain regulatory approval for our product candidates. |
32
The development of serious or life-threatening side effects with any of our product candidates would lead to delay or discontinuation of development, which could severely harm our business. |
Our product candidates in development are recombinant proteins that could cause an immune response, resulting in the creation of harmful or neutralizing antibodies against the therapeutic protein. |
33
A previous phase 3 study evaluating AXOKINE demonstrated modest average weight loss over a 12-month period. In addition, a completed phase 2 study evaluating the IL-1 Trap in patients with rheumatoid arthritis failed to achieve its primary endpoint. |
If we do not obtain regulatory approval for our product candidates, we will not be able to market or sell them. |
If the testing or use of our products harms people, we could be subject to costly and damaging product liability claims. We could also face costly and damaging claims arising from employment law, securities law, environmental law or other applicable laws governing our operations. |
34
Our operations may involve hazardous materials and are subject to environmental, health, and safety laws and regulations. We may incur substantial liability arising from our activities involving the use of hazardous materials. |
On February 27, 2004, Novartis Pharma AG provided notice to us that they would not participate in the continued development and commercialization of the IL-1 Trap under our collaboration agreement. This may harm our ability to develop and commercialize the IL-1 Trap. |
If our collaboration with sanofi-aventis for the VEGF Trap is terminated, our business operations and our ability to develop, manufacture, and commercialize the VEGF Trap in the time expected, or at all, would be harmed. |
35
Our collaborators and service providers may fail to perform adequately in their efforts to support the development, manufacture, and commercialization of our drug candidates. |
We have limited manufacturing capacity, which could inhibit our ability to successfully develop or commercialize our drugs. |
36
If any of our clinical programs are discontinued, we may face costs related to the unused capacity at our manufacturing facilities. |
Certain of our raw materials are single-sourced from third parties; third-party supply failures could adversely affect our ability to supply our products. |
If we are unable to establish sales, marketing, and distribution capabilities, or enter into agreements with third parties to do so, we will be unable to successfully market and sell future products. |
We may be unable to formulate or manufacture our product candidates in a way that is suitable for clinical or commercial use. |
37
Even if our product candidates are ever approved, their commercial success is highly uncertain because our competitors may get to the marketplace before we do with better or lower cost drugs or the market for our product candidates may be too small to support commercialization or sufficient profitability. |
38
The successful commercialization of our product candidates will depend on obtaining coverage and reimbursement for use of these products from third-party payors. |
We are dependent on our key personnel and if we cannot recruit and retain leaders in our research, development, manufacturing, and commercial organizations, our business will be harmed. |
If we cannot protect the confidentiality of our trade secrets or our patents are insufficient to protect our proprietary rights, our business and competitive position will be harmed. |
39
We may be restricted in our development and/or commercialization activities by third party patents. |
Our stock price is extremely volatile. |
| progress, delays or adverse results in clinical trials; | |
| announcement of technological innovations or product candidates by us or competitors; | |
| fluctuations in our operating results; | |
| public concern as to the safety or effectiveness of our product candidates; | |
| developments in our relationship with collaborative partners; | |
| developments in the biotechnology industry or in government regulation of healthcare; | |
| large sales of our common stock by our executive officers, directors or significant shareholders; | |
| arrivals and departures of key personnel; and | |
| general market conditions. |
40
Future sales of our common stock by our significant shareholders or us may depress our stock price and impair our ability to raise funds in new share offerings. |
Our existing shareholders may be able to exert significant influence over matters requiring shareholder approval. |
| our current officers and directors beneficially owned 13.3% of our outstanding shares of Common Stock and Class A stock and 33.4% of the combined voting power of our shares of Common Stock and Class A stock, assuming the exercise of all options held by such persons which are exercisable within 60 days of February 22, 2005; and | |
| our seven largest shareholders beneficially owned 54.5% of our outstanding shares of Common Stock and Class A stock and 60.1% of the combined voting power of our shares of Common Stock and Class A stock, assuming, in the case of Leonard S. Schleifer, M.D., Ph.D, our chief executive officer, the exercise of all options held by him which are exercisable within 60 days of February 22, 2005. |
41
| authorization to issue blank check preferred stock, which is preferred stock that can be created and issued by the board of directors without prior shareholder approval, with rights senior to those of our common shareholders; | |
| a staggered board of directors, so that it would take three successive annual meetings to replace all of our directors; | |
| a requirement that removal of directors may only be effected for cause and only upon the affirmative vote of at least eighty percent (80%) of the outstanding shares entitled to vote for directors, as well as a requirement that any vacancy on the board of directors may be filled only by the remaining directors; | |
| any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting, only if, prior to such action, all of our shareholders consent, the effect of which is to require that shareholder action may only be taken at a duly convened meeting; | |
| any shareholder seeking to bring business before an annual meeting of shareholders must provide timely notice of this intention in writing and meet various other requirements; and | |
| under the New York Business Corporation Law, a plan of merger or consolidation of the Company must be approved by 2 / 3 of the votes of all outstanding shares entitled to vote thereon. See the risk factor immediately above captioned Our existing shareholders may be able to exert significant influence over matters requiring shareholder approval. |
Item 7A. | Quantitative and Qualitative Disclosure About Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures |
42
Managements Report on Internal Control over Financial Reporting |
Changes in Internal Control over Financial Reporting |
Item 9B. | Other Information |
Item 10. | Directors and Officers of the Registrant |
Item 11. | Executive Compensation |
43
Item 12. | Security Ownership of Certain Beneficial Owners and Management |
Item 13. | Certain Relationships and Related Transactions |
Item 14. | Principal Accountant Fees and Services |
Item 15. | Exhibits and Financial Statement Schedules |
Exhibit | ||||||||
Number | Description | |||||||
3 | .1 | (a) | | Restated Certificate of Incorporation of Regeneron Pharmaceuticals, Inc. as of June 21, 1991. | ||||
3 | .1.1 | (b) | | Certificate of Amendment of the Restated Certificate of Incorporation of Regeneron Pharmaceuticals, Inc., as of October 18, 1996. | ||||
3 | .1.2 | (c) | | Certificate of Amendment of the Certificate of Incorporation of Regeneron Pharmaceuticals, Inc., as of December 17, 2001. | ||||
3 | .2 | | By-Laws of the Company, currently in effect (amended through November 12, 2004). | |||||
10 | .1 | (d) | | 1990 Amended and Restated Long-Term Incentive Plan. | ||||
10 | .2 | (e) | | 2000 Long-Term Incentive Plan. | ||||
10 | .3.1 | (f) | | Amendment No. 1 to 2000 Long-Term Incentive Plan, effective as of June 14, 2002. | ||||
10 | .3.2 | (f) | | Amendment No. 2 to 2000 Long-Term Incentive Plan, effective as of December 20, 2002. | ||||
10 | .3.3 | (g) | | Amendment No. 3 to 2000 Long-term Incentive Plan, effective as of June 14, 2004. | ||||
10 | .3.4 | (h) | | Amendment No. 4 to 2000 Long-term Incentive Plan, effective as of November 15, 2004. | ||||
10 | .3.5 | (i) | | Form of option agreement and related notice of grant for use in connection with the grant of options to the Registrants non-employee directors and named executive officers. | ||||
10 | .3.6 | (i) | | Form of option agreement and related notice of grant for use in connection with the grant of options to the Registrants executive officers other than the named executive officers. |
44
Exhibit
Number
Description
10
.3.7
(i)
Form of restricted stock award agreement and related notice of
grant for use in connection with the grant of restricted stock
awards to the Registrants executive officers.
10
.4
(j)*
Manufacturing Agreement dated as of September 18, 1995,
between the Company and Merck & Co., Inc.
10
.4.1*
Amendment No. 1 to the Manufacturing Agreement between the
Company and Merck & Co., Inc., effective as of
September 18, 1995.
10
.4.2*
Amendment No. 2 to the Manufacturing Agreement between the
Company and Merck & Co. Inc,, effective as of
October 24, 1996.
10
.4.3*
Amendment No. 3 to the Manufacturing Agreement between the
Company and Merck & Co., Inc., effective as of
December 9, 1999.
10
.4.4*
Amendment No. 4 to the Manufacturing Agreement between the
Company and Merck & Co., Inc., effective as of
July 18, 2002.
10
.4.5*
Amendment No. 5 to the Manufacturing Agreement between the
Company and Merck & Co., Inc., effective as of
January 1, 2005.
10
.5
(k)
Rights Agreement, dated as of September 20, 1996, between
Regeneron Pharmaceuticals, Inc. and Chase Mellon Shareholder
Services LLC, as Rights Agent, including the form of Rights
Certificate as Exhibit B thereto.
10
.6
(f)
Employment Agreement, dated as of December 20, 2002,
between the Company and Leonard S.
Schleifer, M.D., Ph.D.
10
.7*
Employment Agreement, dated as of December 31, 1998,
between the Company and P. Roy Vagelos, M.D.
10
.8
(l)
Indenture, dated as of October 17, 2001, between Regeneron
Pharmaceuticals, Inc. and American Stock Transfer &
Trust Company, as trustee.
10
.9
(l)
Registration Rights Agreement, dated as of October 17,
2001, among Regeneron Pharmaceuticals, Inc., Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, and Robertson Stephens, Inc.
10
.10
(m)*
Focused Collaboration Agreement, dated as of December 31,
2000, by and between the Company and The Procter &
Gamble Company.
10
.11
(m)*
IL-1 License Agreement, dated June 26, 2002, by and among
the Company, Immunex Corporation, and Amgen Inc.
10
.12
(n)*
Collaboration, License and Option Agreement, dated as of
March 28, 2003, by and between Novartis Pharma AG,
Novartis Pharmaceuticals Corporation, and the Company.
10
.13
(n)*
Stock Purchase Agreement, dates as of March 28, 2003, by
and between Novartis Pharma AG and the Company.
10
.14
(n)
Registration Rights Agreement, dates as of March 28, 2003,
by and between Novartis Pharma AG and the Company.
10
.15
(o)*
Collaboration Agreement, dates as of September 5, 2003, by
and between Aventis Pharmaceuticals Inc. and Regeneron
Pharmaceuticals, Inc.
10
.15.1*
Amendment No. 1 to Collaboration Agreement, by and between
Aventis Pharmaceuticals, Inc. and Regeneron Pharmaceuticals,
Inc., effective as of December 31, 2004.
10
.15.2
(p)
Amendment No. 2 to Collaboration Agreement, by and between
Aventis Pharmaceuticals, Inc. and Regeneron Pharmaceuticals,
Inc., effective as of January 7, 2005.
10
.16
(o)
Stock Purchase Agreement, dates as of September 5, 2003, by
and between Aventis Pharmaceuticals Inc. and Regeneron
Pharmaceuticals, Inc.
10
.17
(o)*
Non-Exclusive Patent License Agreement, effective as of
August 18, 2003, by and between Merck & Co., Inc.
and Regeneron Pharmaceuticals, Inc.
12
.1
Statement re: computation of ratio of earnings to combined
fixed charges of Regeneron Pharmaceuticals, Inc.
45
Exhibit
Number
Description
18
.1
(o)
Independent Accountants Preferability Letter Regarding a
Change in Accounting Principle.
23
.1
Consent of PricewaterhouseCoopers LLP, Independent
Registered Public Accounting Firm.
31
.1
Certification of CEO pursuant to Rule 13a-14(a) under the
Securities and Exchange Act of 1934.
31
.2
Certification of CFO pursuant to Rule 13a-14(a) under the
Securities and Exchange Act of 1934.
32
Certification of CEO and CFO pursuant to 18 U.S.C.
Section 1350.
(a) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended June 30, 1991, filed August 13, 1991. | |
(b) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended September 30, 1996, filed November 5, 1996. | |
(c) | Incorporated by reference from the Form 10-K for Regeneron Pharmaceuticals, Inc. for the fiscal year ended December 31, 2001, filed March 22, 2002. | |
(d) | Incorporated by reference from the Companys registration statement on Form S-1 (file number 33-39043). | |
(e) | Incorporated by reference from the Form 10-K for Regeneron Pharmaceuticals, Inc. for the quarter ended December 31, 2001, filed March 22, 2002. | |
(f) | Incorporated by reference from the Form 10-K for Regeneron Pharmaceuticals, Inc. for the fiscal year ended December 31, 2002, filed March 31, 2003. | |
(g) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended June 30, 2004, filed August 5, 2004. | |
(h) | Incorporated by reference from the Form 8-K for Regeneron Pharmaceuticals, Inc. filed November 17, 2004. | |
(i) | Incorporated by reference from the Form 8-K for Regeneron Pharmaceuticals, Inc. filed December 13, 2004. | |
(j) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended September 30, 1995, filed November 14, 1995. | |
(k) | Incorporated by reference from the Form 8-A for Regeneron Pharmaceuticals, Inc. filed October 15, 1996. | |
(l) | Incorporated by reference from the Companys registration statement on Form S-3 (file number 333-74464). | |
(m) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended June 30, 2002, filed August 13, 2002. | |
(n) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended March 31, 2003, filed May 15, 2003. | |
(o) | Incorporated by reference from the Form 10-Q for Regeneron Pharmaceuticals, Inc. for the quarter ended September 30, 2003, filed November 11, 2003. |
46
(p) | Incorporated by reference from the Form 8-K for Regeneron Pharmaceuticals, Inc. filed January 11, 2005. |
* | Portions of this document have been omitted and filed separately with the Commission pursuant to requests for confidential treatment pursuant to Rule 24b-2. |
47
Regeneron Pharmaceuticals, Inc. |
By: | /s/ Leonard S. Schleifer |
|
|
Leonard S. Schleifer, M.D., Ph.D. | |
President and Chief Executive Officer |
Dated: |
New York, New York
March 11, 2005 |
Signature | Title | |||
/s/
Leonard S. Shleifer
|
President, Chief Executive Officer, and Director
(Principal Executive Officer) |
|||
/s/
Murray A. Goldberg
|
Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer, and Assistant Secretary (Principal Financial Officer) | |||
/s/
Douglas S. McCorkle
|
Controller and Assistant Treasurer
(Principal Accounting Officer) |
|||
/s/
George D.
Yancopoulos
|
Executive Vice President, Chief Scientific Officer,
President, Regeneron Research Laboratories, and Director |
|||
/s/
P. Roy Vagelos
|
Chairman of the Board | |||
/s/
Charles A. Baker
|
Director | |||
/s/
Michael S. Brown
|
Director |
48
Signature | Title | |||
/s/
Alfred G. Gilman
|
Director | |||
/s/
Joseph L. Goldstein
|
Director | |||
/s/
Arthur F. Ryan
|
Director | |||
/s/
Eric M. Shooter
|
Director | |||
/s/
George L. Sing
|
Director |
49
Page | |||
Numbers | |||
REGENERON PHARMACEUTICALS, INC.
|
|||
Report of Independent Registered Public Accounting Firm
|
F-2 to F-3 | ||
Balance Sheets at December 31, 2004 and 2003
|
F-4 | ||
Statements of Operations for the years ended December 31,
2004, 2003, and 2002
|
F-5 | ||
Statements of Stockholders Equity for the years ended
December 31, 2004, 2003, and 2002
|
F-6 to F-7 | ||
Statements of Cash Flows for the years ended December 31,
2004, 2003, and 2002
|
F-8 | ||
Notes to Financial Statements
|
F-9 to F-35 |
F-1
F-2
PricewaterhouseCoopers LLP |
F-3
2004 | 2003 | |||||||||
(In thousands, | ||||||||||
except share data) | ||||||||||
ASSETS
|
||||||||||
Current assets
|
||||||||||
Cash and cash equivalents
|
$ | 101,234 | $ | 118,285 | ||||||
Marketable securities
|
194,748 | 164,576 | ||||||||
Restricted marketable securities
|
10,913 | |||||||||
Accounts receivable
|
43,102 | 15,529 | ||||||||
Prepaid expenses and other current assets
|
1,642 | 1,898 | ||||||||
Inventory
|
3,229 | 9,006 | ||||||||
Total current assets
|
343,955 | 320,207 | ||||||||
Marketable securities
|
52,930 | 72,792 | ||||||||
Property, plant, and equipment, at cost, net of accumulated
depreciation and amortization
|
71,239 | 80,723 | ||||||||
Other assets
|
4,984 | 5,833 | ||||||||
Total assets
|
$ | 473,108 | $ | 479,555 | ||||||
LIABILITIES and STOCKHOLDERS EQUITY
|
||||||||||
Current liabilities
|
||||||||||
Accounts payable and accrued expenses
|
$ | 18,872 | $ | 18,933 | ||||||
Deferred revenue, current portion
|
15,267 | 40,173 | ||||||||
Loan payable to Novartis Pharma AG
|
13,817 | |||||||||
Total current liabilities
|
34,139 | 72,923 | ||||||||
Deferred revenue
|
56,426 | 68,830 | ||||||||
Notes payable
|
200,000 | 200,000 | ||||||||
Other long-term liabilities
|
159 | |||||||||
Total liabilities
|
290,565 | 341,912 | ||||||||
Commitments and contingencies
|
||||||||||
Stockholders equity
|
||||||||||
Preferred stock, $.01 par value; 30,000,000 shares
authorized; issued and outstanding none
|
||||||||||
Class A Stock, convertible, $.001 par value;
40,000,000 shares authorized; 2,358,373 shares issued
and outstanding in 2004 2,365,873 shares issued and
outstanding in 2003
|
2 | 2 | ||||||||
Common Stock, $.001 par value; 160,000,000 shares
authorized; 53,502,004 shares issued and outstanding in
2004 53,165,635 shares issued and outstanding in 2003
|
54 | 53 | ||||||||
Additional paid-in capital
|
675,389 | 673,118 | ||||||||
Unearned compensation
|
(2,299 | ) | (4,101 | ) | ||||||
Accumulated deficit
|
(489,834 | ) | (531,533 | ) | ||||||
Accumulated other comprehensive (loss) income
|
(769 | ) | 104 | |||||||
Total stockholders equity
|
182,543 | 137,643 | ||||||||
Total liabilities and stockholders equity
|
$ | 473,108 | $ | 479,555 | ||||||
F-4
2004 | 2003 | 2002 | |||||||||||
(In thousands, except per share data) | |||||||||||||
Revenues
|
|||||||||||||
Contract research and development
|
$ | 113,157 | $ | 47,366 | $ | 10,924 | |||||||
Research progress payments
|
42,770 | ||||||||||||
Contract manufacturing
|
18,090 | 10,131 | 11,064 | ||||||||||
174,017 | 57,497 | 21,988 | |||||||||||
Expenses
|
|||||||||||||
Research and development
|
136,095 | 136,024 | 124,953 | ||||||||||
Contract manufacturing
|
15,214 | 6,676 | 6,483 | ||||||||||
General and administrative
|
17,062 | 14,785 | 12,532 | ||||||||||
168,371 | 157,485 | 143,968 | |||||||||||
Income (loss) from operations
|
5,646 | (99,988 | ) | (121,980 | ) | ||||||||
Other income (expense)
|
|||||||||||||
Other contract income
|
42,750 | ||||||||||||
Investment income
|
5,478 | 4,462 | 9,462 | ||||||||||
Interest expense
|
(12,175 | ) | (11,932 | ) | (11,859 | ) | |||||||
36,053 | (7,470 | ) | (2,397 | ) | |||||||||
Net income (loss)
|
$ | 41,699 | $ | (107,458 | ) | $ | (124,377 | ) | |||||
Net income (loss) per share:
|
|||||||||||||
Basic
|
$ | 0.75 | $ | (2.13 | ) | $ | (2.83 | ) | |||||
Diluted
|
$ | 0.74 | $ | (2.13 | ) | $ | (2.83 | ) |
F-5
Accumulated | ||||||||||||||||||||||||||||||||||||||||
Class A Stock | Common Stock | Additional | Other | Total | ||||||||||||||||||||||||||||||||||||
Paid-In | Unearned | Accumulated | Comprehensive | Stockholders | Comprehensive | |||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Compensation | Deficit | Income (Loss) | Equity | Loss | |||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2001
|
2,563 | $ | 3 | 41,264 | $ | 41 | $ | 567,624 | $ | (2,789 | ) | $ | (299,698 | ) | $ | 1,174 | $ | 266,355 | ||||||||||||||||||||||
Issuance of Common Stock in connection with exercise of stock
options, net of shares tendered
|
251 | 2,149 | 2,149 | |||||||||||||||||||||||||||||||||||||
Issuance of Common Stock in connection with Company 401(k)
Savings Plan contribution
|
22 | 764 | 764 | |||||||||||||||||||||||||||||||||||||
Conversion of Class A Stock to Common Stock
|
(72 | ) | (1 | ) | 72 | 1 | ||||||||||||||||||||||||||||||||||
Issuance of restricted Common Stock under Long-Term Incentive
Plan, net of forfeitures
|
137 | 2,644 | (2,644 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of unearned compensation
|
1,790 | 1,790 | ||||||||||||||||||||||||||||||||||||||
Issuance of stock options in consideration for consulting
services
|
3 | 3 | ||||||||||||||||||||||||||||||||||||||
Net loss, 2002
|
(124,377 | ) | (124,377 | ) | $ | (124,377 | ) | |||||||||||||||||||||||||||||||||
Change in net unrealized gain (loss) on marketable securities
|
(703 | ) | (703 | ) | (703 | ) | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2002
|
2,491 | 2 | 41,746 | 42 | 573,184 | (3,643 | ) | (424,075 | ) | 471 | 145,981 | $ | (125,080 | ) | ||||||||||||||||||||||||||
Issuance of Common Stock in connection with exercise of stock
options, net of shares tendered
|
601 | 1,941 | 1,941 | |||||||||||||||||||||||||||||||||||||
Issuance of Common Stock to Novartis Pharma AG
|
7,527 | 8 | 47,992 | 48,000 | ||||||||||||||||||||||||||||||||||||
Issuance of Common Stock to the sanofi-aventis Group
|
2,800 | 3 | 44,997 | 45,000 | ||||||||||||||||||||||||||||||||||||
Issuance of Common Stock to Merck & Co. Inc.
|
109 | 1,500 | 1,500 | |||||||||||||||||||||||||||||||||||||
Issuance of Common Stock in connection with Company 401(k)
Savings Plan contribution
|
43 | 747 | 747 | |||||||||||||||||||||||||||||||||||||
Conversion of Class A Stock to Common Stock
|
(125 | ) | 125 | |||||||||||||||||||||||||||||||||||||
Issuance of restricted Common Stock under Long-Term Incentive
Plan, net of forfeitures
|
215 | 2,757 | (2,757 | ) | ||||||||||||||||||||||||||||||||||||
Amortization of unearned compensation
|
2,299 | 2,299 | ||||||||||||||||||||||||||||||||||||||
Net loss, 2003
|
(107,458 | ) | (107,458 | ) | $ | (107,458 | ) | |||||||||||||||||||||||||||||||||
Change in net unrealized gain (loss) on marketable securities
|
(367 | ) | (367 | ) | (367 | ) | ||||||||||||||||||||||||||||||||||
Balance, December 31, 2003
|
2,366 | 2 | 53,166 | 53 | 673,118 | (4,101 | ) | (531,533 | ) | 104 | 137,643 | $ | (107,825 | ) | ||||||||||||||||||||||||||
F-6
Accumulated
Class A Stock
Common Stock
Additional
Other
Total
Paid-in
Unearned
Accumulated
Comprehensive
Stockholders
Comprehensive
Shares
Amount
Shares
Amount
Capital
Compensation
Deficit
Income (Loss)
Equity
Loss
(In thousands, except per share data)
286
1
1,501
1,502
(109
)
(888
)
(888
)
64
917
917
(8
)
8
87
741
(741
)
2,543
2,543
41,699
41,699
$
41,699
(873
)
(873
)
(873
)
2,358
$
2
53,502
$
54
$
675,389
$
(2,299
)
$
(489,834
)
$
(769
)
$
182,543
$
40,826
F-7
2004 | 2003 | 2002 | ||||||||||||||
(In thousands) | ||||||||||||||||
Cash flows from operating activities
|
||||||||||||||||
Net income (loss)
|
$ | 41,699 | $ | (107,458 | ) | $ | (124,377 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash used in
operating activities
|
||||||||||||||||
Depreciation and amortization
|
15,362 | 12,937 | 8,454 | |||||||||||||
Non-cash compensation expense
|
2,543 | 2,562 | 1,793 | |||||||||||||
Non-cash expense related to a license agreement
|
1,500 | |||||||||||||||
Forgiveness of loan payable to Novartis Pharma AG, inclusive of
accrued interest
|
(17,770 | ) | ||||||||||||||
Changes in assets and liabilities
|
||||||||||||||||
Increase in accounts receivable
|
(27,573 | ) | (11,512 | ) | (1,042 | ) | ||||||||||
(Increase) decrease in prepaid expenses and other assets
|
(1,799 | ) | 589 | 184 | ||||||||||||
Decrease (increase) in inventory
|
6,914 | (1,049 | ) | (1,732 | ) | |||||||||||
(Decrease) increase in deferred revenue
|
(37,310 | ) | 93,869 | 1,498 | ||||||||||||
Increase in accounts payable, accrued expenses, and other
liabilities
|
1,025 | 2,429 | 4,699 | |||||||||||||
Total adjustments
|
(58,608 | ) | 101,325 | 13,854 | ||||||||||||
Net cash used in operating activities
|
(16,909 | ) | (6,133 | ) | (110,523 | ) | ||||||||||
Cash flows from investing activities
|
||||||||||||||||
Purchases of marketable securities
|
(265,243 | ) | (276,447 | ) | (234,463 | ) | ||||||||||
Purchases of restricted marketable securities
|
(11,075 | ) | (11,055 | ) | (5,514 | ) | ||||||||||
Sales or maturities of marketable securities
|
255,783 | 231,261 | 199,317 | |||||||||||||
Maturities of restricted marketable securities
|
22,126 | 22,054 | 16,514 | |||||||||||||
Capital expenditures
|
(6,174 | ) | (29,656 | ) | (34,370 | ) | ||||||||||
Net cash used in investing activities
|
(4,583 | ) | (63,843 | ) | (58,516 | ) | ||||||||||
Cash flows from financing activities
|
||||||||||||||||
Net proceeds from issuances of Common Stock
|
1,502 | 94,678 | 2,149 | |||||||||||||
Repurchase of Common Stock
|
(888 | ) | ||||||||||||||
Borrowings under loan payable
|
3,827 | 13,656 | ||||||||||||||
Capital lease payments
|
(150 | ) | (426 | ) | ||||||||||||
Net cash provided by financing activities
|
4,441 | 108,184 | 1,723 | |||||||||||||
Net (decrease) increase in cash and cash equivalents
|
(17,051 | ) | 38,208 | (167,316 | ) | |||||||||||
Cash and cash equivalents at beginning of period
|
118,285 | 80,077 | 247,393 | |||||||||||||
Cash and cash equivalents at end of period
|
$ | 101,234 | $ | 118,285 | $ | 80,077 | ||||||||||
Supplemental disclosure of cash flow information
|
||||||||||||||||
Cash paid for interest
|
$ | 11,007 | $ | 11,003 | $ | 11,038 | ||||||||||
F-8
Property, Plant, and Equipment |
Building and improvements
|
6-30 years | |
Leasehold improvements
|
Life of lease | |
Laboratory and computer equipment
|
3-5 years | |
Furniture and fixtures
|
5 years |
Cash and Cash Equivalents |
Inventories |
Revenue Recognition and Change in Accounting Principle |
a. | Contract Research and Development and Research Progress Payments |
F-9
b. | Contract Manufacturing |
Investment Income |
Accounting for the Impairment of Long-Lived Assets |
Patents |
F-10
Research and Development Expenses |
Per Share Data |
Income Taxes |
Comprehensive Income (Loss) |
F-11
Concentrations of Credit Risk |
Risks and Uncertainties |
Use of Estimates |
F-12
Stock-based Employee Compensation |
2004 | 2003 | 2002 | |||||||||||
Net income (loss), as reported
|
$ | 41,699 | $ | (107,458 | ) | $ | (124,377 | ) | |||||
Add: Stock-based employee compensation expense included in
reported net income (loss)
|
2,543 | 2,562 | 1,790 | ||||||||||
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards
|
(36,093 | ) | (45,048 | ) | (45,676 | ) | |||||||
Pro forma net income (loss), basic
|
$ | 8,149 | $ | (149,944 | ) | $ | (168,263 | ) | |||||
Basic net income (loss) per share amounts:
|
|||||||||||||
As reported
|
$ | 0.75 | $ | (2.13 | ) | $ | (2.83 | ) | |||||
Pro forma
|
$ | 0.15 | $ | (2.97 | ) | $ | (3.83 | ) | |||||
Diluted net income (loss) per share amounts:
|
|||||||||||||
As reported
|
$ | 0.74 | $ | (2.13 | ) | $ | (2.83 | ) | |||||
Pro forma
|
$ | 0.15 | $ | (2.97 | ) | $ | (3.83 | ) | |||||
F-13
Statement of Cash Flows |
Future Impact of Recently Issued Accounting Standards |
F-14
3. | Marketable Securities |
F-15
Unrealized Holding
Amortized
Cost Basis
Fair Value
Gains
(Losses)
Net
$
58,077
$
57,971
$
8
$
(114
)
$
(106
)
137,105
136,777
(328
)
(328
)
195,182
194,748
8
(442
)
(434
)
53,265
52,930
(335
)
(335
)
$
248,447
$
247,678
$
8
$
(777
)
$
(769
)
$
40,586
$
40,578
$
6
$
(14
)
$
(8
)
123,893
123,998
107
(2
)
105
164,479
164,576
113
(16
)
97
28,928
28,931
18
(15
)
3
40,749
40,803
54
54
3,108
3,058
(50
)
(50
)
72,785
72,792
72
(65
)
7
$
237,264
$
237,368
$
185
$
(81
)
$
104
Less than 12 Months | 12 Months or Greater | Total | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Description of Security | Fair Value | Loss | Fair Value | Loss | Fair Value | Loss | ||||||||||||||||||
Corporate debt securities
|
$ | 29,267 | $ | 93 | $ | 7,353 | $ | 21 | $ | 36,620 | $ | 114 | ||||||||||||
U.S. government securities
|
189,707 | 663 | 0 | 0 | $ | 189,707 | 663 | |||||||||||||||||
$ | 218,974 | $ | 756 | $ | 7,353 | $ | 21 | $ | 226,327 | $ | 777 | |||||||||||||
F-16
4. | Accounts Receivable |
2004 | 2003 | |||||||
Receivable from the sanofi-aventis Group (see Note 11a)
|
$ | 39,362 | $ | 8,917 | ||||
Receivable from Novartis Pharma AG (see Note 11b)
|
| 3,177 | ||||||
Receivable from The Procter & Gamble Company (see
Note 11e)
|
2,345 | 2,670 | ||||||
Receivable from Merck & Co. Inc. (see Note 12)
|
1,315 | 765 | ||||||
Other
|
80 | | ||||||
$ | 43,102 | $ | 15,529 | |||||
5. | Inventories |
2004 | 2003 | |||||||
Raw materials
|
$ | 310 | $ | 388 | ||||
Work-in process
|
692 | (1) | | (2) | ||||
Finished products
|
2,227 | 8,618 | ||||||
$ | 3,229 | $ | 9,006 | |||||
(1) | Net of reserves of $0.3 million. |
(2) | Net of reserves of $0.2 million. |
F-17
6.
Property, Plant, and Equipment
2004
2003
$
475
$
475
56,750
56,054
30,451
29,108
172
1,443
55,174
51,536
5,498
5,092
148,520
143,708
(77,281
)
(62,985
)
$
71,239
$
80,723
7. | Accounts Payable and Accrued Expenses |
2004 | 2003 | |||||||
Accounts payable
|
$ | 4,407 | $ | 3,878 | ||||
Accrued payroll and related costs
|
7,972 | 5,125 | ||||||
Accrued clinical trial expense
|
2,083 | 3,876 | ||||||
Accrued expenses, other
|
2,118 | 3,762 | ||||||
Interest payable on convertible notes
|
2,292 | 2,292 | ||||||
$ | 18,872 | $ | 18,933 | |||||
F-18
8.
Deferred Revenue
2004
2003
$
9,405
$
10,909
22,100
4,407
6,262
1,455
902
$
15,267
$
40,173
$
56,426
$
65,455
3,375
$
56,426
$
68,830
9. | Stockholders Equity |
F-19
10. | Commitments and Contingencies |
a. Operating Leases |
F-20
December 31,
Facilities
Equipment
Total
$
4,627
$
228
$
4,855
4,539
130
4,669
4,537
22
4,559
1,800
1,800
1,800
1,800
$
17,303
$
380
$
17,683
Year Ending December 31, | Facilities | Equipment | Total | |||||||||
2004
|
$ | 5,351 | $ | 303 | $ | 5,654 | ||||||
2003
|
5,394 | 305 | 5,699 | |||||||||
2002
|
4,556 | 257 | 4,813 |
b. Capital Leases |
c. Loan Payable |
d. Convertible Debt |
F-21
e. Research Collaboration and Licensing Agreements |
11. | Research and Development Agreements |
F-22
a. The sanofi-aventis Group |
F-23
b. Novartis Pharma AG |
c. Amgen Inc. |
F-24
d. Sumitomo Chemical Company, Ltd. |
e. The Procter & Gamble Company |
F-25
f. Serono, S.A. |
12. | Manufacturing Agreement |
F-26
13. | Incentive and Stock Purchase Plans |
a. Long-Term Incentive Plans |
F-27
Weighted-Average | |||||||||
Number of Shares | Exercise Price | ||||||||
Stock options outstanding at December 31, 2001
|
9,328,039 | $ | 21.10 | ||||||
2002:
|
|||||||||
Stock options granted
|
2,693,010 | $ | 19.97 | ||||||
Stock options canceled
|
(183,031 | ) | $ | 22.63 | |||||
Stock options exercised
|
(274,068 | ) | $ | 9.96 | |||||
Stock options outstanding at December 31, 2002
|
11,563,950 | $ | 21.08 | ||||||
2003:
|
|||||||||
Stock options granted
|
2,634,570 | $ | 13.45 | ||||||
Stock options canceled
|
(265,107 | ) | $ | 22.62 | |||||
Stock options exercised
|
(795,114 | ) | $ | 7.07 | |||||
Stock options outstanding at December 31, 2003
|
13,138,299 | $ | 20.36 | ||||||
2004:
|
|||||||||
Stock options granted
|
2,828,484 | $ | 9.90 | ||||||
Stock options canceled
|
(514,947 | ) | $ | 21.10 | |||||
Stock options exercised
|
(311,268 | ) | $ | 5.98 | |||||
Stock options outstanding at December 31, 2004
|
15,140,568 | $ | 18.68 | ||||||
F-28
Options Outstanding
Options Exercisable
Weighted Average
Weighted
Weighted
Range of
Number
Remaining
Average
Number
Average
Exercise Prices
Outstanding
Contractual Life
Exercise Price
Exercisable
Exercise Price
4,572,718
7.22
$
8.78
2,070,420
$
8.00
3,282,599
7.07
$
12.36
1,693,510
$
11.88
2,624,114
7.97
$
18.86
1,338,769
$
19.30
2,551,117
6.67
$
27.30
1,725,554
$
27.61
2,049,520
5.86
$
38.94
1,740,220
$
39.30
60,500
5.16
$
51.56
60,400
$
51.56
15,140,568
7.03
$
18.68
8,628,873
$
21.05
2004 | 2003 | 2002 | ||||||||||
Expected volatility
|
80% | 80% | 70% | |||||||||
Expected lives from vest date
|
5 years | 5 years | 5 years | |||||||||
Dividend yield
|
0% | 0% | 0% | |||||||||
Risk-free interest rate
|
4.03% | 3.75% | 4.34% |
F-29
Exchange Ratio
(Number of Eligible
Options to be
Surrendered and
Cancelled for Each
Exercise Price of Eligible Options
Replacement Option)
1.50
2.00
3.00
F-30
b. | Executive Stock Purchase Plan |
14. | Employee Savings Plan |
15. | Income Taxes |
2004 | 2003 | ||||||||
Deferred tax assets
|
|||||||||
Net operating loss carry-forward
|
$ | 135,099 | $ | 135,357 | |||||
Fixed assets
|
9,772 | 7,177 | |||||||
Deferred revenue
|
28,527 | 43,372 | |||||||
Research and experimental tax credit carry-forward
|
20,772 | 18,233 | |||||||
Capitalized research and development costs
|
28,559 | 33,102 | |||||||
Other
|
4,168 | 3,832 | |||||||
Valuation allowance
|
(226,897 | ) | (241,073 | ) | |||||
| | ||||||||
F-31
16. | Legal Matters |
17. | Net Income (Loss) Per Share |
F-32
December 31,
2004
2003
2002
$
41,699
$
(107,458
)
$
(124,377
)
55,419
50,490
43,918
711
42
56,172
50,490
43,918
$
0.75
$
(2.13
)
$
(2.83
)
$
0.74
$
(2.13
)
$
(2.83
)
December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Options and Warrants:
|
|||||||||||||
Weighted average number, in thousands
|
10,110 | 11,299 | 9,533 | ||||||||||
Weighted average exercise price
|
$ | 23.82 | $ | 22.07 | $ | 19.43 | |||||||
Restricted Stock:
|
|||||||||||||
Weighted average number, in thousands
|
6 | 159 | 88 | ||||||||||
Convertible Debt:
|
|||||||||||||
Weighted average number, in thousands
|
6,611 | 6,611 | 6,611 | ||||||||||
Conversion price
|
$ | 30.25 | $ | 30.25 | $ | 30.25 |
18. | Segment Information |
F-33
Research &
Contract
Reconciling
Development
Manufacturing
Items
Total
$
155,927
$
18,090
$
174,017
14,319
(1)
$
1,043
15,362
126
12,049
12,175
42,750
42,750
45,395
2,876
(6,572
)(2)
41,699
5,972
5,972
111,038
6,532
355,538
(3)
473,108
$
47,366
$
10,131
$
57,497
11,894
(1)
$
1,043
12,937
161
11,771
11,932
(103,604
)
3,455
(7,309
)(2)
(107,458
)
16,944
16,944
92,369
12,889
374,297
(3)
479,555
$
10,924
$
11,064
$
21,988
7,411
(1)
$
1,043
8,454
36
2
11,821
11,859
(126,597
)
4,579
(2,359
)(2)
(124,377
)
45,878
36
45,914
75,589
12,479
303,506
(3)
391,574
(1) | Depreciation and amortization related to contract manufacturing is capitalized into inventory and included in contract manufacturing expense when the product is shipped. |
(2) | Represents investment income net of interest expense related to convertible notes issued in October 2001 (see Note 10d). |
(3) | Includes cash and cash equivalents, marketable securities, restricted marketable securities (where applicable), prepaid expenses and other current assets, and other assets. |
F-34
19.
Unaudited Quarterly Results
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Ended
Ended
Ended
Ended
March 31,
June 30,
September 30,
December 31,
2004
2004
2004
2004
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
$
61,990
$
28,418
$
36,519
$
47,090
64,532
(14,549
)
(11,076
)
2,792
$
1.17
$
(0.26
)
$
(0.20
)
$
0.05
$
1.06
$
(0.26
)
$
(0.20
)
$
0.05
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Ended
Ended
Ended
Ended
March 31,
June 30,
September 30,
December 31,
2003
2003
2003
2003
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
$
9,925
$
8,908
$
17,392
$
21,272
(30,321
)
(30,360
)
(27,400
)
(19,377
)
$
(0.68
)
$
(0.61
)
$
(0.52
)
$
(0.35
)
F-35
Exhibit 3.2
BY-LAWS
OF
REGENERON PHARMACEUTICALS, INC.
(Amended Through November 12, 2004)
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the Corporation shall be held either within or without the State of New York, at such place and at such time as the Board of Directors may designate and set forth in the call or in a waiver of notice thereof, for the purpose of electing directors and for the transaction of such other business as may properly be brought before the meeting, provided that until changed by the Board of Directors, the annual meeting of the shareholders shall be held on the first Monday in June in each year, if not a legal holiday, and if a legal holiday, then on the next business day following, at 10:00 a.m., at which meeting the shareholders shall elect a Board of Directors for the ensuing year and transact such other business as may properly be brought before the meeting.
Section 2. Proposed Business at Annual Meeting. No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), which shall include shareholder proposals contained in the Corporation's proxy statement made in accordance with Rule 14a-8 of the Securities and Exchange Act of 1934, as amended, or any successor thereto, (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any shareholder of the Company (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 2 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the
Company not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the
Secretary must set forth as to each matter such shareholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of such shareholder,
(iii) the class or series and number of shares of capital stock of the Company
which are owned beneficially or of record by such shareholder, (iv) a
description of all arrangements or understandings between such shareholder and
any other person or persons (including their names) in connection with the
proposal of such business by such shareholder and any material interest of such
shareholder in such business and (v) a representation that such shareholder
intends to appear in person or by proxy at the annual meeting to bring such
business before the meeting.
No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 2, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 2 shall be deemed to preclude discussion by any shareholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
Section 3. Special Meetings. Special Meetings of the shareholders, for any purpose or purposes, may be called at any time by resolution of the Board of Directors or by the President, and shall be called by the President or by the Secretary upon the written request of the holders of record of shares, issued and outstanding the entitled to cast at least twenty-five percent (25%) of the total number of votes entitled to be cast by shareholders at such meeting, at such times and at such place either within or without the State of New York as may be stated in the call or in a waiver of notice thereof.
Section 4. Notice of Meetings. Notice of the time, place and purpose of every meeting of shareholders shall be delivered personally or by first class mail, not less than ten days nor more than fifty days previous thereto, or by
third class mail, not less than twenty four nor more than fifty days before the meeting, to each shareholder of record entitled to vote, at his post office address appearing upon the records of the Corporation or at such other address as shall be furnished in writing by him to the Corporation for such purpose. Such further notice shall be given as may be required by law or by these By-Laws. Any meeting may be held without notice if all shareholders entitled to vote are present in person or by proxy, or if notice is waived in writing, either before or after the meeting, by those not present.
Section 5. Quorum. The holders of record of at least a majority of the votes of shares of the stock of the Corporation, issued and outstanding and entitled to vote, present in person or by proxy, shall, except as otherwise provided by law, the Certificate of Incorporation or by these By-Laws, constitute a quorum at all meetings of the shareholders; if there be no such quorum, the holders of a majority of the votes of such shares so present or represented may adjourn the meeting from time to time until a quorum shall have been obtained.
Section 6. Organization of Meetings. Meetings of the shareholders shall be presided over by the Chairman of the Board, if there be one, or if he is not present by the President, or if he is not present by a chairman to be chosen at the meeting. The Secretary of the Corporation, or in his absence an Assistant Secretary, shall act as Secretary of the meeting, if present.
Section 7. Voting. At each meeting of shareholders, except as otherwise provided by statute, every holder of record of stock entitled to vote shall be entitled to cast the number of votes to which shares of such class or series are entitled as set forth in the Certificate of Incorporation or any Certificate of Designation with respect to any preferred stock, in person or by proxy for each share of such stock standing in his name on the records of the Corporation. Elections of directors shall be determined by a plurality of the votes cast thereat and, except as otherwise provided by statute, the Certificate of Incorporation, or these By-Laws, all other action shall be determined by a majority of the votes cast at such meeting. Each proxy to vote shall be in writing and signed by the shareholder or by his duly authorized attorney.
At all elections of directors, the voting shall be by ballot or in such other manner as may be determined by the shareholders present in person or by proxy entitled to vote at such election. With respect to any other matter presented to the shareholders for their consideration at a meeting, any shareholder entitled to vote may, on any question, demand a vote by ballot.
A complete list of the shareholders entitled to vote at each such meeting, arranged in alphabetical order, with the address of each shareholder, the number of shares registered in the name of each shareholder, the class or series of such shares and the number of votes which such shares are entitled, shall be prepared by the Secretary and shall be open to the examination of any
shareholder, for any purpose, germane to the meeting, during ordinary business hours, for a period of time of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present.
Section 8. Action by Consent. Any action required or permitted to be taken at any meeting of shareholders may be taken without a meeting, if, prior to such action, a written consent or consents thereto setting forth such action, is signed by the holders of record of all of the shares of the stock of the Corporation, issued and outstanding and entitled to vote.
ARTICLE II
DIRECTORS
Section 1. Number, Quorum, Term, Vacancies, Removal. The number of directors of the Corporation shall be fixed in the manner provided in the Certificate of Incorporation.
A majority of the members of the Board of Directors then holding office shall constitute a quorum for the transaction of business, but if at any meeting of the Board there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum shall have been obtained.
Except as otherwise provided in the Certificate of Incorporation, Directors shall hold office until the next annual election at which the class to which a director shall have been elected is scheduled to stand for reelection and until their successors shall have been elected and shall have qualified, unless sooner displaced.
Except as otherwise required by the Certificate of Incorporation, whenever any vacancy shall have occurred in the Board of Directors, by reason of death, resignation, or otherwise, other than removal of a director with cause by a vote of the shareholders as provided in the Certificate of Incorporation, it shall be filled by a majority of the remaining directors, though less than a quorum (except as otherwise provided by law), and the person so chosen shall serve for a term that coincides with the term of the class to which such director shall have been elected and until his successor is duly elected and has qualified.
Any one or more of the directors of the Corporation may be removed with cause at any time by a vote of the shareholders as provided in the
Certificate of Incorporation and thereupon the term of the director or directors who shall have been so removed shall forthwith terminate and there shall be a vacancy or vacancies in the Board of Directors, to be filled by a vote of the directors as provided in these By-Laws.
Section 2. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors of the Company, except as may be otherwise provided in the Certificate
of Incorporation of the Company with respect to the right of holders of certain
specified classes of preferred stock of the Company to nominate and elect a
specified number of directors in certain circumstances. Nominations of persons
for election to the Board of Directors may be made at any annual meeting of
shareholders, or at any special meeting of shareholders called for the purpose
of electing directors, (a) by or at the direction of the Board of Directors (or
any duly authorized committee thereof) or (b) by any shareholder of the Company
(i) who is a shareholder of record on the date of the giving of the notice
provided for in this Section 2 and on the record date for the determination of
shareholders entitled to vote at such meeting and (ii) who complies with the
notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Company.
To be timely, a shareholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting; provided, however, that in the event that less than seventy (70) days' notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary must set forth (a) as to each person whom the shareholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a
proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (b) as to the shareholder giving the notice (i) the name and record address of such shareholder, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such shareholder, (iii) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
No person shall be eligible for election as a director of the
Company unless nominated in accordance with the procedures set forth in this
Section 2. If the Chairman of the meeting determines that a nomination was not
made in accordance with the foregoing procedures, the Chairman shall declare to
the meeting that the nomination was defective and such defective nomination
shall be disregarded.
Section 3. Meetings, Notice. Meetings of the Board of Directors shall be held at such place either within or without the State of New York, as may from time to time be fixed by resolution of the Board, or as may be specified in the call or in a waiver of notice thereof. Regular meetings of the Board of Directors shall be held at such times as may from time to time be fixed by resolution of the Board, and special meetings may be held at any time upon the call of one director, the Chairman of the Board, if one be elected, or the President, by oral, telegraphic or written notice, duly served on or sent or mailed to each director not less than two days before such meeting. A meeting of the Board may be held without notice immediately after the annual meeting of shareholders at the same place at which such meeting was held. Notice need not be given of regular meetings of the Board. Any meeting may be held without notice, if all directors are present, or if notice is waived in writing, either before or after the meeting, by those not present.
Section 4. Committees. The Board of Directors may, in its discretion, by resolution passed by a majority of the whole Board, designate from among its members one or more committees which shall consist of one or more directors. The Board may designate one or more directors as alternate members of any such committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committees shall have and may exercise such powers as shall be conferred or authorized by the resolution appointing them. A majority of any such committee may determine its action and fix the time and place of its meetings, unless the Board of Directors shall otherwise provide. The Board shall have power at any time to change the membership of any such committee, to fill vacancies in it, or to dissolve it.
Section 5. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting, if prior to such action a written consent or consents thereto is signed by all members of the Board, or of such committee as the case may be, and such written consent or consents is filed with the minutes of proceedings of the Board or committee.
Section 6. Compensation. The Board of Directors may determine, from time to time, the amount of compensation which shall be paid to its members. The Board of Directors shall also have power, in its discretion, to allow a fixed sum and expenses for attendance at each regular or special meeting of the Board, or of any committee of the Board; in addition the Board of Directors shall also have power, in its discretion, to provide for and pay to directors rendering services to the Corporation not ordinarily rendered by directors, as such, special compensation appropriate to the value of such services, as determined by the Board from time to time.
Section 7. The Board of Directors from time to time may elect a Chairman of the Board. The Chairman of the Board, if one is elected, shall preside at all meetings of the Board of Directors and of the shareholders, and he shall have and perform such other duties as from time to time may be assigned to him by the Board of Directors.
ARTICLE III
OFFICERS
Section 1. Titles and Election. The officers of the Corporation, who shall be chosen by the Board of Directors at its first meeting after each annual meeting of shareholders, shall be a President, a Treasurer and a Secretary. The Board of Directors from time to time may elect one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and such other officers and agents as it shall deem necessary, and may define their powers and duties. Any number of offices may be held by the same person, except that office of President and Secretary may not be held by the same person.
Section 2. Terms of office. The officers shall hold office until their successors are chosen and qualify.
Section 3. Removal. Any officer may be removed, either with or without cause, at any time, by the affirmative vote of a majority of the Board of Directors.
Section 4. Resignations. Any officer may resign at any time giving written notice to the Board of Directors or to the Secretary. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies. If the office of any officer or agent becomes vacant by reason of death, resignation, retirement, disqualification, removal from office or otherwise, the directors may choose a successor, who shall hold office for the unexpired term in respect of which such vacancy occurred.
Section 6. President. The President shall be the chief executive officer of the Corporation and, in the absence of the Chairman, shall preside at all meetings of the Board of Directors, and of the shareholders. He shall exercise the powers and perform the duties usual to the chief executive officer and, subject to the control of the Board of Directors, shall have general management and control of the affairs and business of the Corporation; he shall appoint and discharge employees and agents of the Corporation (other than officers elected by the Board of Directors) and fix their compensation; and he shall see that all orders and resolutions of the Board of Directors are carried into effect. He shall have the power to execute bonds, mortgages and other contracts, agreements and instruments of the Corporation, and shall do and perform such other duties as from time to time may be assigned to him by the Board of Directors.
Section 7. Vice Presidents. If chosen, the Vice Presidents, in the order of their seniority, shall, in the absence or disability of the President, exercise all of the powers and duties of the President. Such Vice Presidents shall have the power to execute bonds, notes, mortgages and other contracts, agreements and instruments of the Corporation, and shall do and perform such other duties incident to the office of Vice President and as the Board of Directors or the President shall direct.
Section 8. Secretary. The Secretary shall attend all sessions of the Board and all meetings of the shareholders and record all votes and the minutes of the proceedings in a book to be kept for that purpose. He shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors. The Secretary shall affix the seal of the Corporation to any instrument requiring it, and when so affixed, it shall be attested by the signature of the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer who may affix the seal to any such instrument in the event of the absence or disability of the Secretary. The Secretary shall have and be the
custodian of the stock records and all other books, records and papers of the Corporation (other than financial) and shall see that all books, reports, statements, certificates and other documents and records required by law are properly kept and filed.
Section 9. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys, and other valuable effects in the name and to the credit of the Corporation, in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board, taking proper vouchers for such disbursements, and shall render to the directors whenever they may require it, and account of all his transactions as Treasurer and of the financial condition of the Corporation.
Section 10. Duties of Officers may be Delegated. In case of the absence of disability of an officer of the Corporation, or for any other reason that the Board may deem sufficient, the Board may delegate, for the time being, the powers or duties, or any of them, of such officer to any other officer, or to any director.
ARTICLE IV
INDEMNIFICATION
Section 1. Indemnification of Directors, Officers, Employees and Agents in Actions by or in the Right of the Corporation.
(a) Subject to Section 3, the Corporation shall indemnify any person made or threatened to be made a party to an action by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he, his testator or intestate, is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of any other corporation of any type or kind, domestic or foreign, of any partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid in settlement and reasonable expenses, including attorneys' fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein, if such director, officer, employee or agent acted in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation, except that no indemnification under this paragraph shall be made in respect of (1) a threatened action, or a pending action which is settled or otherwise disposed of,
or (2) any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation, unless and only to the extent that the court in which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such portion of the settlement amount and expenses as the court deems proper.
Section 2. Indemnification of Directors, Officer, Employees and Agents in Other Actions or Proceedings.
(a) Subject to Section 3, the Corporation shall indemnify any person made or threatened to be made a party to an action or proceeding other than one by or in the right of the Corporation to procure a judgment in its favor, whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director, officer, employee or agent of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that he, his testator or intestate, was a director, officer, employee or agent of the Corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorneys' fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director, officer, employee or agent of the Corporation acted in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the Corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such director, officer, employee or agent of the Corporation did not act, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the Corporation or that he had reasonable cause to believe that his conduct was unlawful.
(c) For the purpose of this Section, the Corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the Corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with
respect to an employee benefit plan pursuant to applicable law shall be considered fines; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person's duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Corporation.
Section 3. Payment of Indemnification Other Than by Court Award.
(a) A person who has been wholly successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in Section 1 or 2 shall be entitled to indemnification as authorized in such sections.
(b) Except as provided in paragraph (a), any indemnification under Section 1 or 2, unless ordered by a court under Section 724 of the Business Corporation Law of New York, shall be made by the Corporation, only if authorized in the specific case:
(1) by the Board acting by a quorum consisting of directors who are
not parties to such action or proceeding upon a finding that the director,
officer, employee or agent has met the standard of conduct set forth in
Section 1 or 2, as the case may be, or,
(2) if a quorum under subparagraph (1) is not obtainable or even if obtainable, a quorum of disinterested directors so directs:
(A) by the Board upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in such sections has been met by such director, officer, employee or agent, or
(B) by the shareholders upon a finding that the director, officer, employee or agent has met the applicable standard of conduct set forth in such sections.
It is the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 shall be made to the fullest extent permitted by law.
(c) Expenses incurred in defending a civil or criminal action or proceeding may be paid by the Corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such director, officer, employee or agent to repay such amount as, and to the extent, required by Section 4(a).
Section 4. Other Provisions Affecting Indemnification of Directors, Officers, Employees and Agents.
(a) All expenses incurred in defending a civil or criminal action or proceeding which are advanced by the Corporation under paragraph (c) of Section 3 or allowed by a court shall be repaid in case the person receiving such advancement or allowance is ultimately found, under the procedure set forth in this Article IV or in Section 725 of the New York Business Corporation Law, not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advance by the Corporation or allowed by the court exceed the indemnification to which he is entitled.
(b) No indemnification, advancement or allowance shall be made under this Article IV in any circumstance where it appears:
(1) that the indemnification would be inconsistent with a provision of the Certificate of Incorporation, a By-Law, a resolution of the Board of Directors or of the shareholders, an agreement or other proper corporation action, in effect at the time of the accrual of the alleged cause of action asserted in the threatened or pending action or proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or
(2) if there has been a settlement approved by the court, that the indemnification would be inconsistent with any condition with respect to indemnification expressly imposed by the court in approving the settlement.
(c) If, under this Article IV, any expenses or other amounts are paid by way of indemnification, otherwise than by court order or action by the shareholders, the Corporation shall, not later than the next annual meeting of shareholders unless such meeting is held within three months from the date of such payment, and, in any event, within fifteen months from the date of such payment, mail to its shareholders of record at the time entitled to vote for the election of directors, a statement specifying the persons paid, the amounts paid and the nature and status at the time of such payment of the litigation or threatened litigation.
Section 5. Non-Exclusivity and Survival of Indemnification. The provisions of this Article IV shall not be deemed to preclude the indemnification of any person who is not specified in Section 1 or 2 but whom the Corporation has the power or obligation to indemnify under the provisions of the Business Corporation Law of New York, or otherwise. The indemnification provided by this Article IV
shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. The indemnification provided by this Article IV shall not be deemed exclusive of any other rights to which directors, officers, employees or agents of the Corporation seeing indemnification or advancement of expenses may be entitled under any By-Law, agreement, contract, vote of shareholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to actions in their official capacity and as to actions in another capacity while serving the Corporation provided that no indemnification may be made to or on behalf of any director, officer, employee or agent if a judgment or other final adjudication adverse to the officer, director, employee or agent establishes that his acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of the action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled.
Section 6. Insurance for Indemnification of Directors, Officers, Employees and Agents.
(a) Subject to paragraph (b) below, the Corporation shall have the power to purchase and maintain insurance:
(1) to indemnify the Corporation for any obligation which it incurs as a result of the indemnification of directors, officers, employees and agents under the provisions of this Article IV, and
(2) to indemnify directors, officers, employees and agents in instances in which they may be indemnified by the Corporation under the provisions of this Article IV, and
(3) to indemnify directors, officers, employees and agents in instances in which they may not otherwise be indemnified by the Corporation under the provisions of this Article IV provided the contract of insurance covering such directors, officers, employees and agents provides, in a manner acceptable to the superintendent of insurance, for a retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any payment, other than cost of defense, to or on behalf of any director, officer, employee or agent:
(1) if a judgment or other final adjudication adverse to the insured director, officer, employee or agent establishes that his acts of active and deliberate dishonesty were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is prohibited under the insurance law of the State of New York.
(c) Insurance under any or all subparagraphs of paragraph (a) may be included in a single contract or supplement thereto. Retrospective rated contracts are prohibited.
(d) The Corporation shall, within the time and to the persons provided in paragraph (c) of Section 4, mail a statement in respect of any insurance it has purchased or renewed under this Section, specifying the insurance carrier, date of the contract, cost of the insurance, corporate positions insured, and a statement explaining all sums, not previously reported in a statement to shareholders, paid under any indemnification insurance contract.
Section 7. Meaning of "Corporation" for Purposes of Article IV.
For purposes of this Article IV, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation of any type or kind, domestic or foreign, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article IV with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates. The interest of each shareholder of the Corporation shall be evidenced by certificates for shares of stock in such form as the Board of Directors may from time to time prescribe. The certificates of stock shall be signed by the President or a Vice President and by the Secretary, or the Treasurer, or an Assistant Secretary, or an Assistant Treasurer, sealed with the seal of the Corporation or a facsimile thereof, and countersigned and registered in such manner, if any, as the Board of Directors may by resolution prescribe. Where any such certificate is countersigned by a transfer agent other than the Corporation or its employee, or registered by a registrar other than the Corporation or its employee, the signature of any such officer may be a facsimile signature. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether
because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Corporation.
Section 2. Transfer. Subject to any restrictions or transfer of shares of stock of the Corporation of any class, series or designation contained in the Certificate of Incorporation, the shares of stock of the Corporation shall be transferred only upon the books of the Corporation by the holder thereof in person or by his attorney, upon surrender for cancellation of certificates for the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require.
Section 3. Record Dates. The Board of Directors may fix in advance a date, not less than ten nor more than sixty days preceding the date of any meeting of shareholders, or the date for the payment of any dividend, or the date for the distribution or allotment of any rights, or the date when any change, conversion or exchange of capital stock shall go into effect, as a record date for the determination of the shareholders entitled to notice of, and to vote at, any such meeting or entitled to receive payment of any such dividend, or to receive any distribution or allotment of such rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such shareholders as shall be shareholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such distribution or allotment of rights or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.
Section 4. Lost Certificates. In the event that any certificate of stock is lost, stolen, destroyed or mutilated, the Board of Directors may authorize the issuance of a new certificate of the same tenor and for the same number of shares in lieu thereof. The Board may in its discretion, before the issuance of such new certificate, require the owner of the lost, stolen, destroyed or mutilated certificate, or the legal representative of the owner to make an affidavit or affirmation setting forth such facts as to the loss, destruction or mutilation as it deems necessary, and to give the Corporation a bond in such reasonable sum as it directs to indemnify the Corporation.
ARTICLE VI
CHECKS, NOTES, ETC.
Section 1. Checks, Notes, Etc. All checks and drafts on the Corporation's bank accounts, and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, may be signed by the President or any Vice President and may also be signed by such other officer or officers, agent or agents, as shall be thereunto authorized from time to time by the Board of Directors.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Offices. The registered office of the Corporation shall be located at 777 Old Saw Mill River Road, in the City of Tarrytown, in the county of Westchester, in the State of New York, and the Corporate Secretary. The Corporation may have other offices either within or without the State of New York at such places as shall be determined from time to time by the Board of Directors or the business of the Corporation may require.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors.
Section 3. Corporate Seal. The seal of the Corporation shall be circular in form and contain the name of the Corporation, and the year and state of its incorporation. Such seal may be altered from time to time at the discretion of the Board of Directors.
Section 4. Books. There shall be kept at such office of the Corporation as the Board of Directors shall determine, within or without the State of New York, correct books and records of account of all its business and transactions, minutes of the proceedings of its shareholders, Board of Directors and committees, and the stock book, containing the names and addresses of the shareholders, the number of shares held by them and the class or series thereof, respectively, and the dates when they respectively became the owners of record thereof, and in which the transfer of stock shall be registered, and such other books and records as the Board of Directors may from time to time determine.
Section 5. Voting of Stock. Unless otherwise specifically authorized by the Board of Directors, all stock owned by the Corporation, other
than stock of the Corporation, shall be voted, in person or by proxy, by the President or any Vice President of the Corporation on behalf of the Corporation.
Section 6. Business Advisory Board. The Corporation shall establish a Business Advisory Board which shall consist of the President of the Corporation and such other members, who may or may not be Directors, officers, or employees of the Corporation as shall be chosen by the President or the Board of Directors. The Business Advisory Board will have advisory status, and will not have the power to establish policy or procedure for the Corporation. It shall meet at least quarterly.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. These By-Laws may be amended or repealed, or new By-Laws may be adopted, by the majority of the votes cast at the meeting of shareholders by the holders of shares entitled to vote thereon. The vote of the holders of at least a majority of the voting power of the Corporation, of the shares that are issued and outstanding and entitled to vote, shall be necessary at any meeting of shareholders to amend or repeal these By-Laws or to adopt new by-laws. The By-Laws may also be amended or repealed, or new by-laws adopted, at any meeting of the Board of Directors by the vote of at least a majority of the entire Board; provided that any by-law adopted by the Board may be amended or repealed by the shareholders in the manner set forth below.
Any proposal to amend or repeal these By-Laws or to adopt new by-laws shall be stated in the notice of the meeting of the Board of Directors or the shareholders, or in the waiver of notice thereof, as the case may be, unless all of the directors or the holders of record of all of the shares of stock of the Corporation, issued and outstanding and entitled to vote, are present at such meeting.
Exhibit 10.4.1
[Merck & Co., Inc. Letterhead]
September 18, 1995
Mr. Murray Goldberg
Regeneron Pharmaceuticals, Inc.
777 Old Saw Mill River Road
Tarrytown, New York 10591
Dear Murray:
This shall serve to reflect our total understanding of the status of batches of INTERMEDIATE manufactured by Regeneron during a period of time following the actual manufacture of [**] batches during the CONSISTENCY and VALIDATION period but prior to the determination that such [**] batches do conform to all applicable specifications and may be released.
"All batches manufactured during the CONSISTENCY and VALIDATION period, but prior to such determination of conformity of the prior [**] batches shall be determined to have been manufactured during the first contract year notwithstanding the fact that the contract year may not commence for some period of time following their actual manufacture."
If the foregoing adequately expresses our mutual understanding, would you kindly so indicate by signing, dating and returning to us the enclosed copy of this letter agreement.
Very truly yours,
MERCK & CO., INC.
By: /s/John Pashko THE FOREGOING IS ACCEPTED AND REPRESENTS OUR MUTUAL UNDERSTANDING OF THE AGREEMENT: |
REGENERON PHARMACEUTICALS, INC.
By: /s/Murray Goldberg ----------------------------------------------- Title: Vice President-Finance & Administration |
Exhibit 10.4.2
[Merck & Co., Inc. Letterhead]
October 24, 1996
Mr. Murray Goldberg
Regeneron Pharmaceutical, Inc.
777 Old Saw Mill River road
Tarrytown, NY 10591
Dear Mr. Goldberg:
This shall serve as a memorandum of our agreement to amend Schedule A of the Manufacturing Agreement between Merck & Co., Inc. ("Merck") and Regeneron Pharmaceuticals, Inc. (Regeneron") dated September 18, 1995, so as to permit Merck to use Room [***], as depicted on the diagram annexed to Schedule A of the Manufacturing Agreement, in conjunction with Regeneron, for [***] purposes in support of the manufacture of Product pursuant to said agreement. Room [***] is indicated in red outline on the diagram attached hereto. Regeneron shall designate said area as a "[***] area" on the diagram attached to Schedule A of the Agreement.
In consideration for the [***] use of Room [***] for the term of the Agreement, Merck, within 60 days of the execution of this letter agreement by Regeneron , shall remit to Regeneron a one-time payment of [***].
If the foregoing is agreeable, would you please so indicate by signing, dating and returning to us the enclosed copy of this letter.
Very truly yours,
Merck & Co., Inc.
/s/John M. Pashko ------------------------------- John M. Pashko Date: 11/25/96 |
The foregoing is agreed to:
Regeneron Pharmaceuticals, Inc.
/s/Murray Goldberg ------------------ Murray Goldberg Date: 11/06/96 |
Exhibit 10.4.3
AMENDMENT NO. 3 TO THE MERCK-REGENERON
AGREEMENT
WHEREAS, Merck & Co., Inc. and Regeneron Pharmaceuticals, Inc. entered into a Manufacturing Agreement for the INTERMEDIATE, as defined therein, effective as of September 18, 1995 (the "MANUFACTURING AGREEMENT"); and
WHEREAS, the parties amended the MANUFACTURING AGREEMENT by Letter Agreements dated September 18, 1995 and October 24, 1996; and
WHEREAS, the parties wish to further amend the MANUFACTURING AGREEMENT.
NOW, THEREFORE, the parties to the MANUFACTURING AGREEMENT do hereby agree as follows in this Amendment No. 3, entered into as of the 9th of December, 1999:
1. Section 1.7 of the MANUFACTURING AGREEMENT shall be amended by replacing
Section 1.7 in its entirety with the following text which shall be
incorporated into the MANUFACTURING AGREEMENT:
"1.7 The term "CONSISTENCY AND VALIDATION PERIOD" shall mean that period of time commencing with the date of initial MANUFACTURE OF INTERMEDIATE in the FACILITY and terminating with the commencement of the first CONTRACT YEAR on November 1, 1999."
2. Section 1.8 of the MANUFACTURING AGREEMENT shall be amended by replacing
Section 1.8 in its entirety with the following text which shall be
incorporated into the MANUFACTURING AGREEMENT:
"1.8 The term "CONTRACT YEAR" shall mean the period of twelve (12) consecutive calendar months commencing on the 1st day of November, 1999 and ending on the 31st day of October, 2000 and each five (5) consecutive twelve (12) month periods from November 1 through October 31 thereafter such that the second CONTRACT YEAR shall be the period from November 1, 2000 through October 31,
2001, the third CONTRACT YEAR shall be the period from November 1, 2001 through October 31, 2002, the fourth CONTRACT YEAR shall be the period from November 1, 2002 through October 31, 2003, the fifth CONTRACT YEAR shall be the period from November 1, 2003 through October 31, 2004 and the sixth CONTRACT YEAR shall be the period from November 1, 2004 through October 31, 2005.
3. Section 13.2 (ii) shall be amended by replacing Section 13.2(ii) in its entirety with the following text which shall be incorporated into the MANUFACTURING AGREEMENT:
"13.2(ii) A fee for each BATCH (the "BATCH FEE") of INTERMEDIATE RELEASED hereunder, as follows:
Number of CONTRACT CONTRACT CONTRACT BATCHES YEAR 1 YEARS 2-4 YEARS 5-6 ------- ---------- --------- --------- BATCHES [****] [********] [*******] [********] BATCHES [****] [********] [*******] [********] BATHCES [****] [********] [*******] [********] BATCH [**] and Over [********] [*******] [********] |
No fee shall be due under this Section 13.2(ii) regarding any BATCH which is not RELEASED."
4. Section 13.2 shall be amended by adding the following text as Subsection
(iii) which shall be incorporated into the MANUFACTURING AGREEMENT:
"13.2(iii) No BATCH FEES or any other compensation will be paid by MERCK to REGENERON for any BATCH listed in Schedule X. However, if following November 1, 1999 MERCK requests REGENERON to perform any rework of any BATCH listed in Schedule X, the parties will agree in writing on the compensation to be paid to REGENERON for the rework before it is performed."
A copy of Schedule X is attached hereto and incorporated into the
MANUFACTURING AGREEMENT.
5. Section 3 of Schedule H shall be amended by replacing Section 3 in its entirety with the following text which shall be incorporated into the MANUFACTURING AGREEMENT:
"3. SHORTFALL FEE
If at the end of any CONTRACT YEAR, there are any SHORTFALL BATCHES, MERCK shall pay to REGENERON an amount ("the SHORTFALL FEE") equal To the number of SHORTFALL BATCHES in the CONTRACT YEAR multiplied by the sum of the STANDARD LABOR COST plus the BATCH FEE for that CONTRACT YEAR plus any costs, the amount of which the parties will agree to in writing on a case-by-case basis, for electricity, waste hauling, supplies and water for injection which are directly related to the fact that there are SHORTFALL BATCHES."
6. REGENERON has submitted invoices to MERCK dated December 29, 1998 ([***]) with a balance in the amount of $[***] and dated August 31, 1999 ([***]) in the amount of $[***] for activities in connection with [***] resolution. MERCK hereby agrees to pay those invoices on a non-precedent basis, making no admission that payment for activities covered by those invoices is required under the MANUFACTURING AGREEMENT. Payment of those invoices shall be made within five (5) business days of the execution date of this Amendment No. 3. MERCK's decision to make the payment is based solely on its desire to facilitate future relations between the parties. REGENRON hereby releases and forever waives any claim that it has or may have against MERCK for any and all work and activities covered by those invoices.
7. The parties have engaged in ongoing discussions concerning various issues raised by REGENERON. To resolve those discussions, MERCK hereby agrees to make the following payments to REGENERON: (a) MERCK will pay REGENERON the amount of $[***] within five (5) business days of the execution date of this Amendment No. 3 and (b) MERCK will pay REGENERON the amount of $[***] on May 1, 2000 and $[***] on each November 1 and May 1 of the second through sixth CONTRACT YEARS. However, the payment of $[***] shall only be made on such specified dates if the MANUFACTURING AGREEMENT remains in effect on the date in question, as MERCK's obligation to make any such payment ceases with the Termination of the MANUFACTURING AGREEMENT.
MERCK's decision to make the payments described in this Paragraph 7 is based solely on its desire to facilitate future Relations between the parties and is not an admission that any
such payments are required under the MANUFACTURING AGREEMENT and does not establish any precedent to that effect. In consideration of the payments and compromises set forth herein and with the intent of facilitating future relations between the parties, the sufficiency of which both parties acknowledge, MERCK and REGENERON hereby release and forever waive any claim each has or may have against the other for increases or decreases in (a) FACILITY FEE, (b) BATCH FEES or (c) any other compensation required under the MANUFACTURING AGREEMENT, except as is expressly set forth within the specific terms of the MANUFACTURING AGREEMENT, as amended, or as may otherwise be agreed to in writing by the parties.
8. Sections 1.9, 1.18 and 1.22 of the MANUFACTURING AGREEMENT shall be amended by replacing the reference in each to "Schedule A" with "Schedule A-1". Schedule A-1 is attached hereto and shall be incorporated into the MANUFACTURING AGREEMENT. However, Schedule A shall remain part of the MANUFACTURING AGREEMENT for the comparative purposes described below. MERCK understands that Schedule A-1 reflects a different and lesser space configuration then does Schedule A. However, should the amount and type of space identified in Schedule A as [***] and [***] become necessary to MANUFACTURE INTERMEDIATE and store SUBSTANCE, MATERIAL, SUPPLIES and INTERMEDIATE, then REGENERON shall make such amount and type of space available for MERCK, as the change from Schedule A to Schedule A-1 does not in any way change or otherwise relieve REGENERON of its obligation to MERCK under Section 4.2 of the MANUFACTURING AGREEMENT.
9. Capitalized terms used in this Amendment No. 3 but not defined herein shall have the meanings as set forth in the MANUFACTURING AGREEMENT. Also, for clarity, paragraph 6 herein shall be subject to Sections 3, 24 and 25 of the MANUFACTURING AGREEMENT, paragraph 8 shall be subject to Section 4.2 of the MANUFACTURING AGREEMENT and Paragraphs 7 and 8 herein shall be subject to Sections 3, 21, 22, 24, 25, 28, 29 and 32 of the MANUFACTURING AGREEMENT.
10. This Amendment No. 3 constitutes the entire agreement among the parties on the subject matter hereof and supersedes all other prior agreements and understandings, both written or oral among the parties with respect to the subject matter of this Amendment No. 3. No modifications, changes, alterations or additions to this Amendment No. 3 shall be effective unless in writing, properly
executed by authorized representatives of both parties and identified as an amendment to this Amendment No. 3.
11. This Amendment No. 3 may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 3 as of the 9th of December 1999.
MERCK & CO., INC. REGENERON PHARMACEUTICALS, INC. By: /s/Bernard J. Kelley By: /s/Murray A. Goldberg -------------------- --------------------- Title: President, MMD Title: Vice President |
SCHEDULE A-1
[*****]
SCHEDULE X
[*****]
Exhibit 10.4.4
AMENDMENT NO. 4 TO THE MANUFACTURING AGREEMENT
This AMENDMENT No. 4 dated as of July 18, 2002 (the "Amendment") to the Manufacturing Agreement dated as of September 18, 1995, as amended (the "Manufacturing Agreement"), by and between Merck & Co., Inc. ("MERCK") and Regeneron Pharmaceuticals, Inc. ("REGENERON"). Capitalized terms used in this Amendment but not defined herein shall have the meaning set forth in the Manufacturing Agreement.
WHEREAS, MERCK and REGENERON have been in discussions regarding certain matters relating to the Manufacturing Agreement;
WHEREAS, both parties wish to amicably settle their differences in order to facilitate future relations between the parties;
WHEREAS, based upon the foregoing discussions, MERCK and REGENERON with to amend the Manufacturing Agreement pursuant to the terms and conditions of this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties agree to the following:
1. Over the past few months, REGENERON has raised an issue that the Manufacturing Agreement does not provide the bargained-for compensation, including profitability of the Manufacturing Agreement. MERCK disagrees with REGENERON's position and believes that REGENERON has received the bargained-for compensation. Notwithstanding the foregoing, and without agreeing upon nor acknowledging the validity of REGENERON's position, in order to resolve fully and finally the issue relating to bargained-for compensation, including, profitability of the Manufacturing Agreement, MERCK shall pay to REGENERON the amount of One Million U.S. Dollars ($1 Million) no later than thirty (30) days after the execution of this Amendment. MERCK's decision to make the payment described in this Paragraph 1 is based solely on its desire to facilitate future relations between the parties and is not an admission that any such payment is required under the Manufacturing Agreement and does not establish any precedent to that effect.
2. In consideration of the payments and compromises set forth herein and with the intent of facilitating future relations between the parties, the sufficiency of which is hereby acknowledged, REGENERON hereby releases and forever waives any claim it has or may have against MERCK relating to the bargained-for compensation, including, without limitation, the profitability of the Manufacturing Agreement or any other compensation required under the Manufacturing Agreement, except for payment of compensation as expressly set forth in Paragraph 7 or Amendment No. 3 and Article 13 and Article 19 of the Manufacturing Agreement, or as may otherwise be agreed to in writing by the parties.
3. REGENERON expressly agrees that it will abide by the terms of the Manufacturing Agreement, including, without limitation, to deliver INTERMEDIATE in accordance
with MERCK's delivery schedule, subject to the terms and conditions set forth in the Manufacturing Agreement.
4. Section 7.1 of the Manufacturing Agreement is hereby amended to add the following sentence at the end of the existing Section 7.1
"Notwithstanding anything in this Agreement to the contrary, no quarterly delivery schedule provided by MERCK in any PURCHASE ORDER shall require the delivery of more than [**] BATCHES, unless otherwise agreed in writing by the parties."
5. Section 12.3 of the Manufacturing Agreement is hereby amended to add the following sentences at the end of the existing Section 12.3;
"For purposes of determining if REGENERON has met its quarterly delivery obligation and the BATCH FEES payable to REGENERON only, REGENERON shall be deemed to have delivered INTERMEDIATE to MERCK as of the date of receipt of the conditional release package by MERCK plus thirty (30) days (the "Deemed Delivery Date").
Notwithstanding the foregoing paragraph, in the event that MERCK has not
been able to deliver MATERIALS and/or SUBSTANCE to REGENERON by the
agreed-up delivery dates for such MATERIALS and/or SUBSTANCE (as agreed
from time to time by MERCK and REEGENERON) or MERCK has delivered to
REGENERON MATERIALS and/or SUBSTANCE which fail to meet the agreed-upon
specifications then with respect to any such affected BATCHES of
INTERMEDIATE, REGENERON shall not be obligated to meet MERCK's delivery
schedule, but rather, shall make all reasonable effort to deliver
INTERMEDIATE to MERCK as soon as possible; provided, however, that, in an
such case, REGERNON shall deliver such affected BATCHES of INTERMEDIATE to
MERCK no later than the CALENDAR QUARTER immediately following REGENERON's
receipt of such delayed MATERIALS and/or SUBSTANCE unless the parties
agree in writing to an alternate delivery schedule; provided, further,
that, REGENERON shall not be obligated to deliver in any CALENDAR QUARTER
more than [*****] BATCHES of INTERMEDIATE. If such affected BATCHES cannot
be made up in full in the first CALENDAR QUARTER immediately following
REGENERON's receipt of such delayed MATERIALS and/or SUBSTANCE due to the
[*****] BATCH limitation set forth in the previous sentence, then such
remaining BATCHES shall be made up in the next CALENDAR QUARTER or
QUARTERS, subject to the [*****] BATCH limitation set forth in the
previous sentence.
6. Section 16.2 of the Manufacturing Agreement is hereby amended to add the following sentence at the end of the existing Section 16.2;
"Notwithstanding the foregoing, in the event that MERCK gives REGENERON at least three hundred sixty five (365) days' notice of termination, then MERCK shall not be obligated to, and shall not, pay to REGENERON the aforementioned sum of [*****].
A termination notice delivered by MERCK to REGENERON pursuant to this
Section 16.2 shall be non-revocable."
7. Section 13.1 of the Manufacturing Agreement shall be amended by adding an "(a)" immediately prior to the existing language and adding the following paragraphs (b), (c) and (d) immediately after the existing Section 13.1;
"(b) Notwithstanding paragraph (a) above and Section 13.2 herein, with
respect to all BATCHES of INTERMEDIATE for which a [***] release package
has been delivered to MERCK prior to a Resumption Date (as such term is
defined in the last sentence of this paragraph (b)), REGENERON shall
invoice MERCK for such BATCHES once the [***] release package has been
delivered to MERCK and MERCK shall pre-pay to REGENERON [***] of the
invoiced amount within forty five (45) days after the later of (i) receipt
of REGENERON's invoice or (ii) the Deemed Delivery Date. The remaining
[***] of the invoiced amount shall be paid by MERCK to REGERNON within
thirty (30) days after the later of actual receipt by MERCK of (a)
INTERMIATE or (b) REGENERON's invoice for such remaining amount. In the
event that any BATCH is subsequently not RELEASED by MERCK, upon notice to
REGENERON of such rejection, REGENERON shall, within thirty (30) days,
either issue a credit or a check, at MERCK's option, to MERCK in the full
amount pre-paid by MERCK for the rejected BATCH. No late than thirty (30)
days after the start of a Prepayment Period (as such term is defined in
the last sentence of this paragraph (b)), MERCK shall pay REGENERON all
amounts due under this paragraph (b) relating to the BATCHES which have
triggered the start of a Prepayment Period. For purposes of this
Agreement, (x) "Prepayment Period" shall mean each period in which MERCK
is making a prepayment pursuant to this paragraph (b) and (y) "Resumption
Date" shall mean the day after the date in which MERCK has RELEASED and
paid REGENERON for [***] consecutive BATCHES of INTERMEDIATE within [***]
days of receipt by MERCK of the [***] release package.
(c) From and after any Resumption Date, Merck shall have no further obligation to pre-pay any amount, as provided in paragraph (b) above, and paragraph (a) above shall govern all deliveries until such time that MERCK fails to RELEASE and pay for [***] consecutive BATCHES of INTERMEDIATE within [***] days of receipt by MERCK of the applicable [***] release packages for such BATCHES, at which time a new Prepayment Period shall commence and the terms of paragraph (b) shall again become in full force and effect until the ensuing Resumption Date.
(d) For the avoidance of any doubt, the initial Prepayment Period shall commence as of the date hereof. No later than thirty (30) days after the receipt by Merck of REGENERON's invoice, MERCK shall prepay all amounts due under paragraph (b) above for the following BATCHES: [***].
8. Schedule F shall be amended by deleting the existing Schedule F and in its place by inserting a new Schedule F, attached hereto as Attachment 1.
9. Except as specifically set forth above, all other terms and conditions of the Manufacturing Agreement shall remain unchanged and in full force and effect.
10. Each and every referenced to the Manufacturing Agreement shall hereinafter refer to the Manufacturing Agreement as amended by this Amendment.
11. This Amendment, together with the Manufacturing Agreement, are the only, entire and complete agreement of the parties relating to the subject matter hereof. All prior discussions, negotiations and agreements have been and are merged, cancelled and integrated into, and are superseded by, the Manufacturing Agreement, as amended by this Amendment. None of the parties hereto shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein.
12. The parties acknowledge agreement to the terms of this Amendment by having an authorized representative sign one copy in the space provided below. Each party represents and warrants that the authorized representative has actual power and authority to execute this Amendment on behalf of the respective company, and that this Amendment shall be binding upon the respective company, its successors and assigns.
13. This Amendment shall be interpreted by the construed according to the substantive laws of the State of New York without reference to any rules of conflict of laws or renvoi.
14. This Amendment may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute one of the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
MERCK & CO., INC. REGENERON PHARMACEUTICALS, INC. By: /s/Bernard J. Kelley By: /s/Murray A. Goldberg ----------------------------- --------------------------------------- Name: Bernard J. Kelley Name: Murray A. Goldberg Title: President, MMD Title: SVP, Finance & Administration and CFO |
ATTACHMENT 1 |
SCHEDULE F
[*****]
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
Exhibit 10.4.5
AMENDMENT NO. 5 TO THE MANUFACTURING AGREEMENT
This AMENDMENT No. 5, dated as of January 1, 2005 (this "Amendment"), to the Manufacturing Agreement dated as of September 18, 1995, as amended, (the "Manufacturing Agreement"), by and between Merck & Co., Inc. ("MERCK") and Regeneron Pharmaceuticals, Inc. ("REGENERON"). Capitalized terms used in this Amendment but not defined herein shall have the meanings set forth in the Manufacturing Agreement.
WHEREAS, MERCK and REGENERON, have been in discussions regarding certain matters relating to the extension of the term of the Manufacturing Agreement;
WHEREAS, both parties wish to extend the term of the Manufacturing Agreement and make such other changes to the Manufacturing Agreement as are set forth in this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties agree to the following:
1. Section 1.3 of the Manufacturing Agreement shall be amended by replacing Section 1.3 in its entirety with the following text:
"1.3 The term "BATCH" shall mean one production run of INTERMEDIATE using a [******] fermenter and related purification equipment with a purification run starting with no less than [***] grams and no more than [**************]."
2. Section 1.8 of the Manufacturing Agreement shall be amended by replacing Section 1.8 in its entirety with the following text:
"The term `CONTRACT YEAR' shall mean the period of twelve (12) consecutive calendar months commencing on the 1st day of November, 1999 and ending on the 31st day of October 2000, and each seven consecutive twelve (12) month periods from November 1 through October 31 thereafter, such that the seventh CONTRACT YEAR shall end on October 31, 2006."
3. Section 4.2 of the Manufacturing Agreement shall be amended by replacing the reference to "[******]" BATCHES of INTERMEDIATE per CONTRACT YEAR therein with a reference to "[********] BATCHES of INTERMEDIATE per CONTRACT YEAR."
4. Section 5.4 of the Manufacturing Agreement shall be amended by replacing the phrase "Upon the termination of this Agreement," in the first sentence
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
therein with the sentence "Within thirty (30) days after the effective date of the termination of this Agreement, MERCK shall notify REGENERON in writing of its intent to remove any articles or components of the machinery and equipment identified in Schedule E and the parties shall agree on an appropriate schedule for such removal; provided, that, (i) such schedule affords MERCK a reasonable time during normal business hours to remove such articles or components and (ii) such schedule does not unnecessarily interfere with REGENERON's use of the FACILITY."
5. Section 6.1 of the Manufacturing Agreement shall be amended by replacing the third sentence therein with the following sentence:
"The SUBSTANCE at REGENERON's FACILITY shall be stored by REGENERON in accordance with the KNOW-HOW."
6. Section 7.1 of the Manufacturing Agreement shall be amended by adding the following sentence to the end thereof:
"Notwithstanding anything in this Agreement to the contrary for CONTRACT YEAR 6, CONTRACT YEAR 7 and CONTRACT YEAR 8 (if applicable) only, no quarterly delivery schedule provided by MERCK in any PURCHASE ORDER shall require delivery of more than [******] BATCHES, and, for any full CONTRACT YEAR, the sum of the four quarterly delivery schedules provided by MERCK in the four respective PURCHASE ORDERS for that CONTRACT YEAR shall not require the delivery of more than [******] BATCHES, unless otherwise agreed in writing by the parties."
7. Section 7.2 of the Manufacturing Agreement shall be amended by replacing paragraph (a) therein in its entirety with the following text:
"(a) If both the original and revised PURCHASE ORDERS include the delivery of no more than [**] BATCHES per CONTRACT YEAR and no more than [**] BATCHES per CONTRACT QUARTER, REGENERON shall MANUFACTURE INTERMEDIATE for the balance of the CONTRACT YEAR in accordance with the revised PURCHASE ORDER."
8. Article 8 of the Manufacturing Agreement shall be amended by adding a new Section 8.12 with the following text:
"8.12 Subsequent to the execution of this Amendment, the parties shall enter into that certain Quality Agreement (the "QUALITY AGREEMENT") within three (3) months of the execution of this Amendment, which shall supplement the terms of this Article 8."
9. Section 8.3 of the Manufacturing Agreement shall be amended by replacing Section 8.3 in its entirety with the following text:
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
"8.3 REGENERON hereby agrees that MERCK or an AFFILIATE shall have the right to have reasonable access to the FACILITY during normal business hours in order to ascertain compliance by REGENERON with the terms of this Agreement, including but not limited to, inspection of MANUFACTURE of INTERMEDIATE, storage facilities for SUBSTANCE, MATERIALS, and SUPPLIES, all equipment and machinery used in the MANUFACTURING of INTERMEDIATE, and all records relating to such MANUFACTURE, storage facilities, equipment, and machinery. Observations and conclusions of any audit by MERCK or an Affiliate will be discussed with and then issued to REGENERON, and a written response to this audit shall be submitted to MERCK or an AFFILIATE by REGENERON within thirty (30) days after MERCK or an AFFILIATE delivers its audit report to REGENERON. Corrective action shall be agreed upon by MERCK or an AFFILIATE and REGENERON and such corrective action shall be implemented by REGENERON and MERCK within the time period agreed upon by the parties. MERCK shall have the right to request copies of all necessary documents, reports, test results, etc. evidencing completion of any such corrective action.
10. Section 8.7 of the Manufacturing Agreement shall be amended by replacing Section 8.7 in its entirety with the following text:
"8.7 Should any BATCH (i) suffer an atypical process event, as such term is described in the KNOW-HOW, (ii) be exposed to conditions which exceed environmental action limits agreed upon by MERCK and REGENERON, or (iii) otherwise fail to meet the quality control specifications, as defined in the KNOW-HOW, MERCK shall be IMMEDIATELY notified of any such circumstances upon REGENERON's discovery thereof. MERCK and REGENERON shall agree in each case on the nature and scope of any investigations to be conducted regarding such occurrence or circumstance and actions to be taken to correct any problem discovered and suitability for use relating to any BATCH involved. The final disposition, RELEASE and use of any BATCH for the generation of PRODUCT shall be at MERCK's sole discretion."
11. Section 12.3 of the Manufacturing Agreement shall be amended by replacing Section 12.3 in its entirety with the following text:
"12.3 REGENERON shall deliver the RELEASED INTERMEDIATE, which has been packed in accordance with the KNOW-HOW, to a carrier designated by MERCK so as to allow delivery to [***], at MERCK's cost, in accordance with the mutually agreed upon delivery schedule provided by MERCK unless otherwise agreed to by the parties.
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
The parties agree that the delivery schedule is dependent upon multiple factors including but not limited to the supply of MATERIALS and SUBSTANCE by MERCK to REGENERON, the performance of equipment [***] to the production of INTERMEDIATE and the communication and processing of PROCESS CHANGE REQUESTS and other routine documentation; therefore the parties shall meet on a quarterly basis to review, revise and mutually agree upon the production and delivery schedules.
For purposes of determining if REGENERON has met its quarterly delivery obligation and the BATCH FEES payable to REGENERON only, REGENERON shall be deemed to have delivered INTERMEDIATE to MERCK as of the date of the receipt of the [***] plus thirty (30) days (the "Deemed Delivery Date")."
12. Section 13.1.b of the Manufacturing Agreement shall be amended by replacing the last sentence therein with the following sentence:
"For the purposes of this Agreement, (x) "Prepayment Period" shall
mean each period in which MERCK is making a prepayment pursuant to
this paragraph (b) and (y) "Resumption Date" shall mean the day
after the date in which MERCK has RELEASED and paid REGENERON for
[**] consecutive BATCHES of INTERMEDIATE within ninety (90) days of
receipt by MERCK of the [***] release package."
13. Section 13.2 of the Manufacturing Agreement shall be amended by adding a new table in clause (ii) thereof following the existing table, as follows:
"Number of BATCHES CONTRACT YEAR 7 ------------------ --------------- BATCHES [***] [$********] BATCHES [*****] [$********] |
14. Section 13.3 of the Manufacturing Agreement shall be amended by adding clauses (iv) and (v), as follows:
(iv) The DIRECT STANDARD COST of any additional [***] run(s) required to be conducted by REGENERON (above the single run set forth in the KNOW-HOW) in order to have at least [*****] of INTERMEDIATE available to MANUFACTURE a BATCH.
(v) The cost of REGENERON's FTEs (calculated using the UNIT LABOR COST) and any out-of-pocket costs associated with AGENCY inspections of the FACILITY related to the INTERMEDIATE or its MANUFACTURE, except for costs associated with any "for cause" inspections to the extent and only to the extent arising as a result of an act or omission of REGENERON. REGENERON will invoice MERCK for such FTE costs up to a maximum of [*******] per Inspection Day (as hereinafter defined) or
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
up to a maximum of [*****] for each such AGENCY inspection.
For the avoidance of doubt, the costs referred to in this
Section 13.3(v) shall include the FTE and out-of-pocket costs
required to prepare for such inspections, to respond to AGENCY
observations, and related follow-up activities. As used in
this Section 13.3(v), the term "Inspection Day" shall mean any
calendar day on which AGENCY inspectors are present at the
FACILITY related to the INTERMEDIATE or its MANUFACTURE. If
extenuating circumstances arise resulting in a prolonged
AGENCY inspection of the FACILITY, the parties shall negotiate
in good faith to agree on the funding of such inspection,
provided, however, that nothing herein shall obligate MERCK to
pay any additional costs of REGENERON relating to any such
inspection.
15. Section 15.1 of the Manufacturing Agreement shall be amended by replacing Section 15.1 in its entirety with the following text:
"The initial term of this Agreement shall begin on the date first appearing above and shall continue through the termination of the seventh (7th) CONTRACT YEAR as defined herein. MERCK shall have an option to renew this AGREEMENT for one (1) additional CONTRACT YEAR exercisable with written notice to REGENERON twelve (12) months prior to the end of the seventh (7th) CONTRACT YEAR. Such renewal shall be on the same terms and conditions as set forth herein."
16. Section 16.2 of the Manufacturing Agreement shall be amended by replacing Section 16.2 in its entirety with the following text:
"MERCK shall have the right to terminate this Agreement at any time
on ninety (90) days' notice prior to the date such termination shall
be effective. Upon the effective date of such termination by MERCK
without cause, MERCK shall pay to REGENERON the sum of
[************] as liquidated damages in total satisfaction of all
amounts which would otherwise thereafter become due under this
Agreement. MERCK's obligation to compensate REGENERON under this
Section shall not apply to the natural expiration of this Agreement
or to termination of this Agreement pursuant to any other Section
hereof. MERCK shall have no right to terminate this Agreement
pursuant to this Section if REGENERON has properly notified MERCK
under Section 16.1 that MERCK is in breach of a material provision
of this Agreement, which breach remains uncured as of the date MERCK
seeks to invoke the termination provisions of this Section 16.2."
17. Schedule A-1 of the Manufacturing Agreement shall be replaced with the revised and updated Schedule A-1 attached hereto.
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
18. Schedule C shall be amended by replacing the reference to "[*****************]" therein with a reference to "[****************]."
19. Schedule E shall be replaced with the revised and updated Schedule E attached hereto.
20. Schedule H shall be amended by (i) replacing the reference to "CONTRACT YEARS 5 and 6." in section 1(c) therein with a reference to "CONTRACT YEARS 5 through 7." and (ii) replacing section 2 therein in its entirety with the following text:
"2. CALCULATION OF DIRECT STANDARD COST
2(a). DIRECT STANDARD COST per BATCH shall equal the sum of
STANDARD LABOR COST, STANDARD UTILITIES COST, STANDARD SUPPLIES COST
and STANDARD WASTE HAULING COST, as those terms are defined in this
Section, and shall be agreed to by MERCK and REGENERON at the
beginning of each CONTRACT YEAR.
2(b). Components of STANDARD LABOR COST are as follows:
(i) BASE UNIT LABOR COST shall equal [**************] Dollars ($[*******]) per full time equivalent ("FTE") person.
(ii) UNIT LABOR COST in any CONTRACT YEAR shall equal BASE LABOR COST multiplied by the COST ADJUSTMENT FACTOR for that CONTRACT YEAR.
2(c). STANDARD LABOR COST shall be calculated as follows:
REGENERON and MERCK shall agree on the STANDARD LABOR COST at the
beginning of each CONTRACT YEAR based on (i) the FTEs required to
MANUFACTURE the number of BATCHES in the BATCH ORDER for that
CONTRACT YEAR in accordance with the KNOW-HOW, (b) the UNIT LABOR
COST for that CONTRACT YEAR, and (c) any adjustment needed for
overtime or premium labor.
2(d). STANDARD UTILITIES COST shall equal the sum of STANDARD
ELECTRICITY COST and STANDARD WFI COST.
(i) STANDARD ELECTRICITY COST in any CONTRACT YEAR shall equal BASE ELECTRICITY USAGE multiplied by UNIT ELECTRICITY COST for that CONTRACT YEAR. BASE ELECTRICITY USAGE per BATCH in kilowatt-hours shall be agreed to
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
by MERCK and REGENERON within thirty (30) days following the end of the CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION PERIOD. BASE ELECTRICITY USAGE shall be subject to adjustment based on actual electricity usage as measured by electricity meters in subsequent CONTRACT YEARS. UNIT ELECTRICITY COST in any CONTRACT YEAR shall equal $[***] per kilowatt-hour multiplied by the WHOLE LOT LOSS FACTOR multiplied by the COST ADJUSTMENT FACTOR for that CONTRACT YEAR.
(ii) STANDARD WFI COST in any CONTRACT YEAR shall equal BASE WFI USAGE multiplied by UNIT WFI COST for that CONTARCT YEAR. BASE WFI USAGE per BATCH in gallons shall be agreed to by MERCK and REGENERON within thirty (30) days following the end of the CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION PERIOD. UNIT WFI COST in any CONTRACT YEAR shall equal [***********] per thousand gallons multiplied by the WHOLE LOT LOSS FACTOR multiplied by the COST ADJUSTMENT FACTOR for that CONTRACT YEAR.
2(e). BASE SUPPLIES COST shall be agreed to by MERCK and REGENERON within thirty (30) days following the end of the CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION PERIOD. BASE SUPPLIES COST shall be subject to adjustment based on actual usage of SUPPLIES in subsequent CONTRACT YEARS. STANDARD SUPPLIES COST in any CONTRACT YEAR shall equal BASE SUPPLIES COSTS multiplied by the WHOLE LOT LOSS FACTOR multiplied by the COST ADJUSTMENT FACTOR for that CONTRACT YEAR.
2(f). BASE WASTE HAULING COST shall be agreed to by MERCK and REGENERON within thirty (30) days following the end of the CONSISTENCY AND VALIDATION PERIOD based on REGENERON's experience in MANUFACTURING INTERMEDIATE during the CONSISTENCY AND VALIDATION PERIOD. BASE WASTE HAULING COST shall be subject to adjustment based on actual waste quantities and associated disposal cost in subsequent CONTRACT YEARS. STANDARD WASTE HAULING COST in any CONTRACT YEAR shall equal BASE WASTE HAULING COST for that CONTRACT YEAR multiplied by the WHOLE LOT LOSS FACTOR.
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
2(g). BASE LABOR UNITS, BASE ELECTRICITY USAGE, BASE WFI USAGE, BASE SUPPLIES COST, BASE WASTE HAULING COST, and the WHOLE LOT LOSS FACTOR shall all be subject to adjustment, without maximum or minimum, at any time that the KNOW-HOW or MANUFACTURING process is changed in response to MERCK's instructions or to comply with AGENCY regulations, guidelines, or directions.
2(h). At any time that a revision is made to the PURCHASE ORDER pursuant to Section 7.2 of the Agreement:
(i) If the revision is made pursuant to Section 7.2(a), the DIRECT STANDARD COST per BATCH for the CONTRACT YEAR shall be recalculated based on the revised BATCH ORDER. The revised DIRECT STANDARD COST shall be applied to BATCHES RELEASED thereafter. With respect to BATCHES RELEASED previously, either, as appropriate, MERCK shall PROMPTLY make an additional payment to REGENERON reflecting the increase in DIRECT STANDARD COST or REGENERON shall issue a credit to MERCK to be applied against BATCHES to be RELEASED subsequently.
(ii) If the revision is made pursuant to Section 7.2(b), REGENERON and MERCK shall agree on the STANDARD LABOR COST and DIRECT STANDARD COST to be applied to BATCHES MANUFACTURED and RELEASED in the balance of the CONTRACT YEAR in accordance with the revised PURCHASE ORDER."
2(i). DIRECT STANDARD COST to manufacture an extra [***] run (as per Section 13.3 (iv)) shall be calculated analogous to DIRECT STANDARD COST per BATCH, but shall only take into account the incremental FTE cost, UTILITIES COST, SUPPLIES COST, and WASTE HAULING COST required to manufacture such extra [***] run.
21. In consideration of Regeneron's agreement to extend the term of the Manufacturing Agreement as set forth in this Amendment, Merck hereby agrees to make payments to Regeneron in an amount equal to the EXTENSION PAYMENT on each November 1 and May 1 of the seventh and eighth CONTRACT YEARS. As used above, the term "EXTENSION PAYMENT" shall equal the product of (i) [**********] and (ii) the sum of one plus the percentage increase in the annual CPI from (a) December 31, 1999 to December 31, 2004 for the seventh CONTRACT YEAR or (b) December 31, 1999 to December 31, 2005 for the eighth CONTRACT YEAR if such CONTRACT YEAR is entered into as defined in Section 15.1. It is agreed that the EXTENSION PAYMENTS shall only be made on the dates specified in this Section 20 if the Manufacturing Agreement remains in effect
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
on the date in question, as Merck's obligation to make any such payment ceases with the termination of the Manufacturing Agreement. A breach of this Section 20 shall be deemed a breach of a material provision of the Manufacturing Agreement.
22. Except as specifically set forth above, all other terms and conditions of the Manufacturing Agreement shall remain unchanged and in full force and effect.
23. Each and every reference to the Manufacturing Agreement shall hereinafter refer to the Manufacturing Agreement as amended by this Amendment.
24. This Amendment, together with the Manufacturing Agreement, are the only, entire and complete agreement of the parties relating to the subject matter hereof. All prior discussions, negotiations, and agreements have been and are merged, canceled, and integrated into, and are superseded by, the Manufacturing Agreement, as amended by this Amendment. None of the parties hereto shall be bound by any conditions, definitions, warranties, understandings, or representations with respect to such subject matter other than as expressly provided herein.
25. The parties acknowledge agreement to the terms of this Amendment by having an authorized representative sign one copy in the space provided below. Each party represents and warrants that the authorized representative has actual power and authority to execute this Amendment on behalf of the respective company, and that this Amendment shall be binding upon the respective company, its successors and assigns.
26. This Amendment shall be interpreted by and construed according to the substantive laws of the State of New York without reference to any rules of conflict of laws or renvoi.
27. This Amendment may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute one and the same agreement.
[RESTRICTED CONFIDENTIAL LIMITED ACCESS LOGO]
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first above written.
MERCK & CO., INC. REGENERON PHARMACEUTICALS, INC. By: /s/ Robert E. Dolan By: /s/ Murray Goldberg ---------------------- --------------------- Name: Roberg E. Dolan Name: Murray Goldberg Title: VP, Vaccine & Sterile Title: VP, Finance & Operations Administration and CFO |
SCHEDULE A-1
[****************]
SCHEDULE E
[****************]
Exhibit 10.7
[Letterhead of Regeneron Pharmaceuticals, Inc.]
December 31, 1998
P. Roy Vagelos, M.D.
[* * *]
[* * *]
Dear Roy:
I am pleased to confirm Regeneron Pharmaceuticals, Inc.'s offer to employ you as a part-time employee. This letter sets forth the terms of your employment which, if acceptable, will commence effective January 1, 1999.
1. Duties. Consistent with your election by the Board of Directors of Regeneron Pharmaceuticals, Inc. (the "Company"), you will continue to serve as Chairman of the Board of Directors of the Company in accordance with our By-Laws. In addition, however, you will also provide services considerably beyond those set forth in the By-Laws that describe the duties of the Chairman of the Board. As an employee, you will attend and participate in meetings with senior management and other employees and, when appropriate, third parties, to review the operations and potential operations of the Company; assist senior management in developing operational and research strategies and plans for the Company and provide advice about implementing such strategies and plans; assist and advise in hiring and retaining senior personnel of the Company; and such other and further activities as may be reasonably required by the Company. Your activities may take place in the facilities of the Company or elsewhere, as required and reasonable. The level of effort required for these activities will approximate 30 to 50 hours per month.
2. Compensation. As an employee, you will receive an initial annual salary of $100,000. Your salary will be paid in accordance with the Company's customary payroll practices. Subject to any legal requirements or approvals, as an additional incentive, the Company will recommend to the Compensation Committee that you will be granted an option under the terms of the Company's Amended and Restated 1990 Long-Term Incentive Plan giving you the right to purchase up to 162,500 shares of the Company's Common Stock at an exercise price of the fair market value on the date of grant, with a five-year vesting schedule. In addition, the Company will annually recommend to the Compensation Committee that you be granted additional grants ("Additional Grants") on or about the first, second, third, and fourth anniversaries of the
date of grant of the option award described in the second sentence of this paragraph (the "Dates of Grant") in the amount of the greater of (a) 125,000 additional options (adjusted, as necessary, for recapitalizations or similar changes in the Company's equity structure) or (b) 125% of the highest annual grant made to an officer of the Company at the time of each respective year's annual grant to officers. Such Additional Grants are subject to compliance with legal requirements, your continued employment by the Company pursuant to this Agreement (or an amendment or amendments thereto) on the respective Date of Grant, and the existence of an appropriate option plan pursuant to which options and other awards are broadly available to employees and pursuant to which shares underlying such options or other awards have been duly authorized and are actually available for grant. You agree that the determination of the number of shares underlying the Additional Grants shall not consider extraordinary grants made to any officers (for example, as an inducement to join the Company or in connection with a promotion) and will be based on the actual grants made during the year of grant.
The Company will further recommend that the Additional Grants vest on the following schedule:
Year of Grant Vesting ------------- ------- 2000 4 Years 2001 3 Years 2002 2 Years 2003 1 Year |
In the event of your death or disability while you are an employee of the Company, all options granted to you by the Company, whether exercisable or nonexercisable at the time of your death or disability, shall immediately become exercisable and shall immediately be subject to the terms and conditions of the appropriate option plan that govern the exercise of options by employees who die while employed by the Company (unless otherwise agreed by you and the Company).
Our Human Resources group will review with you other employment benefits for which you may be eligible.
As an employee, you will no longer be eligible to receive compensation as a member of the Board of Directors or Scientific Advisory Board, nor will you be eligible, under the current terms of Section 21 of the Company's Long-Term Incentive Plan, to receive automatic stock option grants made to nonemployee directors.
3. Proprietary Information and Confidentiality.
You understand that the Company will possess information created, discovered, or developed by, or otherwise becomes known to, the Company or in which property rights have been or may be assigned or otherwise conveyed to the Company (whether or not the information has commercial value in the business in which the
Company is or proposes to be engaged) and is treated by the Company as confidential. All such information is hereinafter called "Proprietary Information" and includes, but is not limited to, systems, processes, formulae, data, functional specifications, computer software, programs and displays, know how, improvements, discoveries, developments, designs, inventions, techniques, marketing plans, strategies, forecasts, new products, unpublished financial statements, budgets, projection, licenses, prices, costs, and customer and supplier lists, and any and all other intellectual property.
You agree that you will treat all Proprietary Information as confidential and will not, without the prior written consent of the Company, disclose or use the same other than in the course of employment. This obligation shall continue until such Proprietary Information becomes public knowledge through no fault on your part regardless of whether you continue to be employed by the Company.
4. Disclosure and Ownership of Inventions. You agree that you will promptly disclose to the Company all discoveries and inventions, whether or not patentable or registrable under copyright or similar statues, made or conceived or reduced to practice or learned by you, either alone or jointly with others, during the term of and arising out of your employment by the Company. All such discoveries and inventions are hereinafter called "Inventions". You agree that you will, at all times during the term of employment by the Company, use diligent, best efforts to avoid conflicts of interest involving potential rights and claims of the Company and of third parties to Inventions and to maximize the likelihood that any Inventions made, conceived, or developed or reduced to practice by you during the term of and arising out of your employment by the Company, will be and become the sole, unencumbered property of the Company and no other third party will have any rights thereto and that any such conflicts of interest be resolved in favor of the Company.
All Inventions shall be the sole property of the Company and its assigns, and the Company and its assigns shall be the sole owner of all patents, copyrights, trademarks, and other rights in connection therewith. You hereby assign to the Company any rights you may have or acquire in such Inventions. If the Company is unable, after reasonable effort, to secure your signature on any document or documents needed to apply for or prosecute any patent, copyright, or other right or protection relating to an Invention, for any other reason, you hereby irrevocably designate and appoint the Company and its duty authorized officers and agents as your agent and attorney-in-fact, to act for and on your behalf to execute and file any such application or applications, and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyrights, or similar protections thereon with the same legal force and effect as if executed by you, and you hereby ratify, affirm, and approve all such lawfully permitted acts accordingly.
5. Other Agreements. You represent and warrant that, to the best of your knowledge, your performance of all the terms of this Agreement does not and will not breach any agreement to keep in confidence Proprietary Information acquired by you in confidence or in trust, or any other agreement. To the best of your knowledge, you have
not entered into and shall not enter into any agreement, either written or oral, in material conflict with this Agreement.
The Company acknowledges that you serve as Chairman of the Board of Advanced Medicine Inc. and agrees that, subject to your obligations under this Agreement and as a director of the Company, you may consult for others in the future.
6. Remedies. Your covenants under this Agreement will survive termination of employment by the Company. You acknowledge that a remedy at law for any breach or threatened breach of the provisions of this Agreement would be inadequate and therefore agrees that the Company shall be entitled to injunctive relief in addition to any other available rights and remedies in case of any such breach; provided, however, that nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available for any such breach or threatened breach.
7. EMPLOYMENT DEEMED "AT WILL". NEITHER THE EXECUTION OF THIS AGREEMENT NOR ANY TERM CONTAINED HEREIN OR IN ANY OTHER DOCUMENT, PAMPHLET, OR OTHER WRITING OR ORAL COMMUNICATION OF OR ON BEHALF OF THE COMPANY OR ANY OFFICER OR REPRESENTATIVE THEREOF SHALL BE CONSTRUED AS GIVING YOU THE RIGHT TO ANY TERM OF EMPLOYMENT WITH THE COMPANY AND THE COMPANY AND YOU AGREE THAT YOUR EMPLOYMENT MAY BE TERMINATED AT ANY TIME, WITH OR WITHOUT CAUSE, BY EITHER THE COMPANY OR YOU.
8. Governing Laws. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York.
REGENERON PHARMACEUTICALS, INC.
By: /s/Paul Lubetkin ---------------- Paul Lubetkin Vice President, General Counsel and Secretary |
AGREED AND ACCEPTED
/s/Roy Vagelos -------------- P. Roy Vagelos, M.D. |
EXHIBIT 10.15.1
FIRST AMENDMENT TO COLLABORATION AGREEMENT
This First Amendment to Collaboration Agreement (this "First Amendment") dated as of December 31, 2004, is by and between Regeneron Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of New York and having its principal office at 777 Old Saw Mill River Road, Tarrytown, New York 10591 ("Regeneron ") and Aventis Pharmaceuticals Inc., a corporation organized and existing under the laws of the State of Delaware and having a principal place of business at 200 Crossing Blvd., Bridgewater, New Jersey 08807 ("Aventis").
INTRODUCTION
WHEREAS, Regeneron and Aventis are Parties to a Collaboration Agreement, having an Effective Date of September 5, 2003 (the "Collaboration Agreement"); and
WHEREAS, Regeneron and Aventis have determined that it is desirable to amend and restate certain provisions of the Collaboration Agreement and document further agreements between them as set forth herein.
NOW, THEREFORE, in consideration of the following mutual promises and obligations and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
Capitalized terms used in this First Amendment and not defined herein shall have the meanings ascribed to them in the Collaboration Agreement.
1. MILESTONE 1. Milestone 1 of Schedule 2 of the Collaboration Agreement is hereby amended and restated to read in its entirety as follows:
1 US $25,000,000 [******************************].
2. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. The Collaboration Agreement, this First Amendment, and any written agreements executed by both Parties pertaining to the subject matter therein, constitute the entire agreement between the Parties hereto with respect to subject matter hereof and thereof. Said documents supersede all other agreements and understandings between the Parties with respect to the subject matter hereof and thereof, whether written or oral. This
First Amendment shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, administrators, executors, Affiliates, successors and permitted assigns. Except as specifically modified by this First Amendment, all of the provisions of the Collaboration Agreement are hereby ratified and confirmed to be in full force and effect, and shall remain in full force and effect.
3. HEADINGS. The section headings contained in this First Amendment are for reference purposes only and shall not affect in any way the meaning or interpretation of the First Amendment.
4. COUNTERPARTS. This First Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each Party and delivered to the other Party.
5. MISCELLANEOUS. This First Amendment shall be governed by the laws of the State of New York, without regard to its principles of conflicts of laws. Each Party hereby irrevocably and unconditionally consents to the exclusive jurisdiction of the courts of the State of New York, and the United States District Court for the Southern District of New York for any action, suit or proceeding arising out of or relating to this First Amendment, waives any objections to such jurisdiction and venue and agrees not to commence any action, suit or proceeding relating to this First Amendment except in such courts. This First Amendment supersedes all prior understandings and agreements, whether written or oral, among the Parties hereto relating to the essence of this First Amendment. If there is a direct conflict between the provisions of the Collaboration Agreement and this First Amendment, this First Amendment shall govern. This First Amendment may be amended only by a written instrument executed by each of the Parties.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
IN WITNESS WHEREOF, each of the Parties has caused this First Amendment to be executed as of the date hereof by a duly authorized corporate officer.
AVENTIS PHARMACEUTICALS INC.
By: /s/ Juergen Lasowski --------------------------------------- Name: Juergen Lasowski Title: Vice President, Business Development & Strategy Date: December 23, 2004 |
REGENERON PHARMACEUTICALS, INC.
By: /s/ Murray Goldberg -------------------------------------- Name: Murray Goldberg Title: SVP, Finance & Administration and CFO Date: December 31, 2004 |
EXHIBIT 12.1
REGENERON PHARMACEUTICALS, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
(Dollars in thousands)
Years ended December 31, ------------------------------------------------------------- 2000 2001 2002 2003 2004 --------- --------- --------- --------- --------- Earnings: Income (loss) from continuing operations before income (loss) from equity investee ($ 17,077) ($ 75,178) ($124,350) ($107,395) $ 41,565 Fixed charges 1,309 3,888 13,685 14,108 14,060 Amortization of capitalized interest -- -- -- 33 78 Interest capitalized -- -- (222) (276) -- --------- --------- --------- --------- --------- Adjusted earnings ($ 15,768) ($ 71,290) ($110,887) ($ 93,530) $ 55,703 ========= ========= ========= ========= ========= Fixed charges: Interest expense $ 281 $ 2,657 $ 11,859 $ 11,932 $ 12,175 Interest capitalized -- -- 222 276 -- Assumed interest component of rental charges 1,028 1,231 1,604 1,900 1,885 --------- --------- --------- --------- --------- Total fixed charges $ 1,309 $ 3,888 $ 13,685 $ 14,108 $ 14,060 ========= ========= ========= ========= ========= Ratio of earnings to fixed charges (A) (A) (A) (A) 3.96 |
(A) Due to the registrant's losses for the years ended December 31, 2000, 2001, 2002, and 2003, the ratio coverage was less than 1:1. To achieve a coverage ratio of 1:1, the registrant must generate additional earnings of the amounts shown in the table below. |
Years ended December 31, ------------------------------------------------ 2000 2001 2002 2003 --------- --------- --------- --------- Coverage deficiency $ 17,077 $ 75,178 $ 124,572 $ 107,638 |
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 33-50480, 33-85330, 33-97176, 333-33891, 333-80663, 333-61132, 333-97375, and 333-119257) and on Form S-3 (File Nos. 333-74464 and 333-121225) of Regeneron Pharmaceuticals, Inc. of our report dated March 7, 2005 relating to the financial statements, management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
PRICEWATERHOUSECOOPERS LLP
New York, New York
March 11, 2005
Exhibit 31.1
CERTIFICATION OF CEO PURSUANT TO
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Leonard S. Schleifer, certify that:
1. I have reviewed this annual report on Form 10-K of Regeneron Pharmaceuticals, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within the registrant, particularly during the period in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 11, 2005 By: /s/ LEONARD S. SCHLEIFER ------------------------------------- Leonard S. Schleifer, M.D., Ph.D. President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF CFO PURSUANT TO
RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Murray A. Goldberg, certify that:
1. I have reviewed this annual report on Form 10-K of Regeneron Pharmaceuticals, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within the registrant, particularly during the period in which this annual report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principals;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this annual report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 11, 2005 By: /s/ MURRAY A. GOLDBERG ------------------------------------- Murray A. Goldberg Senior Vice President, Finance & Administration, Chief Financial Officer, Treasurer, and Assistant Secretary |
EXHIBIT 32
CERTIFICATION OF CEO AND CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Regeneron Pharmaceuticals, Inc. (the "Company") on Form 10-K for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Leonard S. Schleifer, M.D., Ph.D., as Chief Executive Officer of the Company, and Murray A. Goldberg, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Leonard S. Schleifer ---------------------------------------- Leonard S. Schleifer, M.D., Ph.D. Chief Executive Officer March 11, 2005 /s/ Murray A. Goldberg ---------------------------------------- Murray A. Goldberg Chief Financial Officer March 11, 2005 |