As filed with the Securities and Exchange Commission on October 5, 2005
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ACORDA THERAPEUTICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware | 2836 | 13-3831168 | ||
(State or Other Jurisdiction of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer Identification Number) |
15 Skyline Drive
Hawthorne, New York 10532
(914) 347-4300
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Ron Cohen
Chief Executive Officer
15 Skyline Drive
Hawthorne, New York 10532
(914) 347-4300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
Copy To:
Ellen B. Corenswet
Covington & Burling 1330 Avenue of the Americas New York, New York 10019 (212) 841-1000 |
Danielle Carbone
Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 (212) 848-4000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. o
CALCULATION OF REGISTRATION FEE
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Title of Each Class of
Securities to Be Registered |
Proposed Maximum
Aggregate Offering Price(1) |
Amount of
Registration Fee |
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Common Stock, par value $0.001 per share | $86,250,000 | $10,152.00 | ||
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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 5, 2005
Prospectus
Shares
Common Stock
Acorda Therapeutics, Inc. is offering shares of common stock. This is our initial public offering, and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $ and $ per share. After the offering, the market price for our shares may be outside this range.
We will apply to list our common stock on the Nasdaq National Market under the symbol "ACOR."
Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 8.
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Per Share
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Total
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Offering price | $ | $ | ||||
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Discounts and commissions to underwriters | $ | $ | ||||
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Offering proceeds to Acorda Therapeutics, Inc., before expenses |
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$ |
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$ |
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Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.
We have granted the underwriters the right to purchase up to additional shares of common stock to cover any over-allotments. The underwriters can exercise this right at any time within 30 days after the offering. The underwriters expect to deliver the shares on or about , 2005.
Banc of America Securities LLC
Lazard Capital Markets |
Piper Jaffray |
SG Cowen & Co. |
, 2005
You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with different information. We are not making offers to sell or seeking offers to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate as of the date on the front of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.
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Page
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Summary | 1 | |
Risk Factors | 8 | |
Forward-Looking Statements | 24 | |
Use of Proceeds | 25 | |
Dividend Policy | 25 | |
Capitalization | 26 | |
Dilution | 28 | |
Selected Consolidated Financial Data | 30 | |
Management's Discussion and Analysis of Financial Condition and Results of Operations | 33 | |
Business | 53 | |
Management | 86 | |
Summary Compensation Table | 92 | |
Certain Relationships and Related Transactions | 96 | |
Principal Stockholders | 99 | |
Description of Capital Stock | 101 | |
Shares Eligible for Future Sale | 105 | |
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders | 107 | |
Underwriting | 110 | |
Legal Matters | 116 | |
Experts | 116 | |
Where You Can Find Additional Information | 116 |
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This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully before making an investment decision.
We are a commercial-stage biopharmaceutical company dedicated to the identification, development and commercialization of novel therapies that improve neurological function in people with multiple sclerosis, or MS, spinal cord injury, or SCI, and other disorders of the central nervous system, or CNS. Our marketed product, Zanaflex Capsules, is FDA-approved for the management of spasticity. Our lead product candidate, Fampridine-SR, is in a Phase 3 clinical trial for the improvement of walking ability in people with MS. Our preclinical programs also target MS and SCI, as well as other CNS disorders, including stroke and traumatic brain injury.
Approximately 650,000 people in the United States suffer from MS or SCI and the combined annual cost of treatment for these conditions exceeds $13 billion. It is estimated that a total of approximately 9 million people live with the long-term consequences of traumatic brain injury and stroke.
Our goal is to continue to grow as a fully-integrated biopharmaceutical company by commercializing pharmaceutical products, developing our product candidates and advancing our preclinical programs for these large and underserved markets. We plan to accomplish this through our sales and marketing infrastructure, our extensive scientific and medical network, our partnerships and our clinical and management experience.
Zanaflex
Our products, Zanaflex Capsules and Zanaflex tablets, are FDA-approved for the management of spasticity, a symptom of conditions such as MS and SCI that is commonly characterized by stiffness and rigidity, restriction of movement and painful muscle spasms. Zanaflex Capsules and Zanaflex tablets contain tizanidine hydrochloride, or tizanidine, one of the two leading treatments currently used for the management of spasticity. We acquired Zanaflex Capsules and Zanaflex tablets from a wholly-owned subsidiary of Elan Corporation, plc, or Elan, in July 2004. This strategic acquisition provided us with the opportunity to build a commercial infrastructure, develop sales and marketing expertise and create a foundation for future product launches, in addition to generating product revenue.
In April 2005, we launched Zanaflex Capsules, a new capsule formulation of tizanidine. This product is protected by an issued U.S. patent. Zanaflex tablets lost compound patent protection in 2002 and now compete with 11 generic versions of tizanidine tablets.
We believe that Zanaflex Capsules offer important benefits over Zanaflex tablets and generic tizanidine tablets. When taken with food, Zanaflex Capsules have a different blood absorption profile, referred to as pharmacokinetic profile, than Zanaflex tablets and generic tizanidine tablets, generally resulting in a lower level and more gradual rise of peak levels of tizanidine in a patient's blood. As a result of this different pharmacokinetic profile, Zanaflex tablets and generic tizanidine tablets are not therapeutically equivalent, or AB-rated, with Zanaflex Capsules. Therefore, under state pharmacy laws, prescriptions written for Zanaflex Capsules may not properly be filled by the pharmacist with Zanaflex tablets or generic tizanidine tablets. Zanaflex Capsules are also available in a higher dose, which gives patients and prescribers an additional choice in dosing and an opportunity to reduce the number of pills a person must take daily. In addition, people who have difficulty swallowing may find Zanaflex Capsules easier to take.
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To support our commercialization of Zanaflex Capsules, we have established a sales and marketing infrastructure consisting of our internal specialty sales force, a contract sales force and a pharmaceutical telesales group. Our internal specialty sales force consists of 14 sales professionals who call on neurologists and other prescribers specializing in treating patients with conditions that involve spasticity. Members of this sales force also call on managed care organizations, pharmacists and wholesale drug distribution customers. Our contract sales force is provided by Cardinal Health PTS, LLC, or Cardinal Health, and consists of approximately 160 sales representatives who market Zanaflex Capsules to primary care physicians. We also have a contract with Access Worldwide Communications to provide a small, dedicated sales force of pharmaceutical telesales professionals to contact primary care physicians, specialty physicians and pharmacists. Our current sales and marketing infrastructure enables us to reach virtually all the potential high-volume prescribers of Zanaflex Capsules. We believe that these prescribers are also potential high-volume prescribers for our lead product candidate, Fampridine-SR, if approved.
Fampridine-SR
Fampridine-SR is currently in a Phase 3 clinical trial for the improvement of walking ability in people with MS. The trial is being conducted pursuant to a Special Protocol Assessment, or SPA, with the FDA. The FDA has agreed that, if successful, this trial could qualify as one of the pivotal efficacy studies required for drug approval. Fampridine-SR is a small molecule drug contained in a sustained release oral tablet form. Laboratory studies have shown that fampridine, the active molecule in Fampridine-SR, improves impulse conduction in nerve fibers in which the insulating outer layer, called the myelin sheath, has been damaged. This damage may be caused by the body's own immune system, in the case of MS, or by physical trauma, in the case of SCI.
More than 800 people have been treated with Fampridine-SR in over 25 clinical trials, including nine clinical trials in MS and 11 clinical trials in SCI. In six Phase 2 clinical trials, treatment with Fampridine-SR has been associated with a variety of neurological benefits in people with MS or SCI. In our most recently completed Phase 2 clinical trial, there was a trend toward improvement in the primary endpoint of walking speed and, when analyzed using the same methodology that the FDA has now agreed to in the SPA for our Phase 3 clinical trial, these results would have been statistically significant. We expect the recruitment period for the current Phase 3 clinical trial, which began in June 2005, to require approximately six to eight months. The treatment period is 14 weeks and the subjects are involved in trial procedures for approximately five months. We expect to be able to evaluate data from this clinical trial in the third quarter of 2006.
We believe Fampridine-SR is the first potential therapy in late-stage clinical development for MS that seeks to improve the function of damaged nerve fibers, rather than only treating the symptoms of MS or slowing the progression of disease. To our knowledge, there are no current drug therapies that improve walking ability in people with MS. We plan to commercialize Fampridine-SR, if approved, ourselves in the United States, and possibly Canada, and with partners in various markets throughout the rest of the world.
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Preclinical programs
We have three preclinical programs focused on novel approaches to repair damaged components of the CNS:
We believe that all of our preclinical programs have the potential to be first-in-class therapies. In addition to applicability in MS, SCI and various other CNS disorders, we believe that our preclinical programs also may have applicability in such fields as orthopedics, cardiology, oncology and ophthalmology.
Our strategy is to continue to grow as a fully-integrated biopharmaceutical company focused on the identification, development and commercialization of a range of nervous system therapeutics. We are using our scientific and clinical expertise in MS and SCI as strategic points of access to additional CNS markets, including stroke and traumatic brain injury. Key aspects of our strategy are to:
We have established an advisory team and network of well-recognized scientists, clinicians and opinion leaders in the fields of MS and SCI. Depending on their expertise, these advisors provide assistance in trial design, conduct clinical trials, keep us apprised of the latest scientific advances and help us identify and evaluate business development opportunities. In addition, we have recruited over 35 MS centers and 80 SCI rehabilitation centers in the United States and Canada to conduct our clinical trials. Our clinical management team has extensive experience in the areas of MS and SCI and works closely with this network.
Risks Associated with our Business
Our business is subject to numerous risks, as more fully described in the section entitled "Risk Factors" immediately following this prospectus summary. We may be unable, for many reasons, including those that are beyond our control, to implement our current business strategy. Those reasons
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could include failure to successfully promote Zanaflex Capsules and any other future marketed products; delays in obtaining, or a failure to obtain, regulatory approval for our product candidates; and failure to maintain and to protect our proprietary intellectual property assets, among others. The information about our preclinical and clinical trials may be useful to you in evaluating our company's current stage of development and our near-term and long-term prospects; however, you should note that of the large number of drugs in development only a small percentage successfully complete the FDA regulatory approval process and are commercialized.
We have a limited operating history and, as of June 30, 2005, had an accumulated deficit of approximately $191.0 million. We expect to incur losses for at least the next several years. We had net losses of $18.5 million and $44.7 million for the six months ended June 30, 2005 and for the year ended December 31, 2004, respectively. We are unable to predict the extent of future losses or when we will become profitable, if at all. Even if we succeed in promoting Zanaflex Capsules and developing and commercializing one or more of our product candidates, we may never generate sufficient sales revenue to achieve and sustain profitability.
We were incorporated in 1995 as a Delaware corporation. Our principal executive offices are located at 15 Skyline Drive, Hawthorne, New York 10532. Our telephone number is (914) 347-4300. Our website is www.acorda.com . The information on our website is not part of this prospectus.
"Acorda Therapeutics" is a registered trademark that we own and "Zanaflex" is a registered trademark that we exclusively license. We have pending U.S. trademark applications for our logo and "Zanaflex Capsules." Other trademarks, trade names and service marks used in this prospectus are the property of their respective owners.
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Common stock offered | shares | |
Common stock outstanding after this offering |
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shares |
Use of proceeds |
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We intend to use the net proceeds of this offering for sales and marketing activities, clinical and preclinical development programs and for general corporate purposes. See "Use of Proceeds." |
Proposed Nasdaq National Market symbol |
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ACOR |
Risk factors |
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See "Risk Factors" and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock. |
The number of shares of common stock to be outstanding after this offering is based on the number of shares outstanding as of June 30, 2005, and reflects or assumes the following:
In the table above, the number of shares of common stock outstanding after this offering excludes, as of June 30, 2005:
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following table presents a summary of our historical financial information. You should read this information in conjunction with our consolidated financial statements and related notes and the information under "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. We changed our fiscal year end from June 30 to December 31, beginning with the six months ended December 31, 2003.
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Six Months Ended June 30,
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2003
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Pro forma net loss per share allocable to common stockholdersbasic & diluted (unaudited) | $ | (9.63 | ) | $ | (1.32 | ) | |||||||||||
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Weighted average shares of common stock outstanding used in computing net loss per share allocable to common stockholdersbasic & diluted | 184 | 190 | 191 | 193 | 198 | 197 | 201 | ||||||||||
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Weighted average shares of common stock outstanding used in computing pro forma net loss per share allocable to common stockholdersbasic & diluted (unaudited) | 13,536 | 13,547 | |||||||||||||||
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The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of June 30, 2005:
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Balance Sheet Data: | |||||||||
Cash and cash equivalents | $ | 3,259 | $ | 3,259 | |||||
Restricted cash | 259 | 259 | |||||||
Short-term investments | 11,446 | 11,446 | |||||||
Working capital | (3,372 | ) | (3,372 | ) | |||||
Total assets | 30,052 | 30,052 | |||||||
Deferred revenue | 16,414 | 16,414 | |||||||
Current portion of notes payable | 2,162 | 2,162 | |||||||
Long-term portion of notes payable | 3,946 | 3,946 | |||||||
Long-term convertible notes payableprincipal amount plus accrued interest, less unamortized debt discountrelated party | 8,622 | 8,622 | |||||||
Mandatorily redeemable preferred stock | 78,788 | | |||||||
Total stockholders' (deficit) | (89,258 | ) | (10,470 | ) |
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An investment in our common stock involves a high degree of risk. You should consider carefully the following risk factors and the other information contained in this prospectus before you decide to purchase our common stock. Additional risks that are not currently known or foreseeable to us may materialize at a future date. The trading price of our common stock could decline if any of these risks or uncertainties occur and you might lose all or part of your investment.
Risks Related To Our Business
We have a history of operating losses and we expect to continue to incur losses and may never be profitable.
As of June 30, 2005, we had an accumulated deficit of approximately $191.0 million. We had net losses of $18.5 million and $44.7 million for the six months ended June 30, 2005, and the year ended December 31, 2004, respectively. We have had operating losses since inception as a result of our significant clinical development, research and development, general and administrative, sales and marketing and business development expenses. We expect to incur losses for at least the next several years as we expand our sales and marketing capabilities and continue our clinical trials and research and development activities.
Our prospects for achieving profitability will depend primarily on how successful we are in executing our business plan to:
If we are not successful in executing our business plan, we may never achieve or may not sustain profitability.
We will be substantially dependent on sales of one product, Zanaflex Capsules, to generate revenue for the foreseeable future.
We currently derive substantially all of our revenue from the sale of Zanaflex Capsules and Zanaflex tablets, which are our only FDA-approved products. Although we currently distribute Zanaflex tablets, our marketing efforts are focused on Zanaflex Capsules and we do not, and do not intend to, actively promote Zanaflex tablets. As a result, prescriptions for Zanaflex tablets have declined and we expect that they will continue to decline. Our goal is to convert sales of Zanaflex tablets and generic tizanidine tablets to sales of Zanaflex Capsules. We believe that sales of Zanaflex Capsules will constitute a significant portion of our total revenue for the foreseeable future. If we are unable to convert tablet sales to capsule sales or are otherwise unable to increase our revenue from the sale of this product, our business, financial condition and results of operations could be adversely affected.
If we are unable to successfully differentiate Zanaflex Capsules from both Zanaflex tablets and generic tizanidine tablets we may not be able to increase sales of Zanaflex Capsules.
There are currently 11 generic versions of tizanidine tablets on the market and they are significantly cheaper than either Zanaflex Capsules or Zanaflex tablets. In 2004, these generic versions of tizanidine tablets constituted 95% of tizanidine sales in the United States. Although Zanaflex Capsules have a different pharmacokinetic profile when taken with food and are available in a higher dose than Zanaflex tablets and their generic equivalents, we may be unsuccessful in convincing
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prescribers, patients and third-party payors that these differences justify the higher price of Zanaflex Capsules. Prescribers may prescribe generic tizanidine tablets instead of Zanaflex Capsules, and third-party payors may establish unfavorable reimbursement policies for Zanaflex Capsules or otherwise seek to encourage patients and prescribers to use generic tizanidine tablets instead of Zanaflex Capsules. In addition, although the FDA has determined that neither Zanaflex tablets nor generic tizanidine tablets are therapeutically equivalent, or "AB-rated," to Zanaflex Capsules, it is possible that pharmacists may improperly fill prescriptions with generic tizanidine tablets or may seek to influence patients or physicians to change prescriptions from Zanaflex Capsules to generic tizanidine tablets. If we are unable to successfully differentiate Zanaflex Capsules from Zanaflex tablets and generic tizanidine tablets in the minds of prescribers, pharmacists, patients and third-party payors, our ability to generate meaningful revenue from this product will be adversely affected.
Our company has limited sales and marketing experience and we may not be successful in building an effective sales and marketing organization to market Zanaflex Capsules to specialty physicians.
As a company, we have limited sales and marketing experience, having only launched Zanaflex Capsules in April 2005. In order to successfully commercialize Zanaflex Capsules or any other products that we may bring to market, we will need to have adequate sales, marketing and distribution capabilities. Our internal specialty sales force of 14 persons may need to be significantly expanded in the future. We may not be able to attract and train skilled sales and marketing personnel, in a timely manner or at all, or integrate and manage a growing sales and marketing organization.
Returns of Zanaflex tablets may adversely affect our results of operations.
Prior to the launch of generic tizanidine tablets in June 2002, wholesalers established larger than normal inventories of Zanaflex tablets. These inventories had expiration dates that extended to June 2005. Our return policy is to accept returns for six months before and 12 months after the product's expiration date. According to our Zanaflex asset purchase agreement with Elan, we are responsible for all returns of Zanaflex tablets after January 17, 2005. Zanaflex tablets sold by Elan can be returned to us through June 2006. In the year ended December 31, 2004, we took a $4.1 million charge to establish a reserve for expected returns of Zanaflex tablets sold by Elan. This charge is an estimate. If returns for products not sold by us are higher than we have estimated, we will have to record additional charges, which will adversely affect our results of operations.
Our product candidates must undergo rigorous clinical testing, the results of which are uncertain and could substantially delay or prevent us from bringing them to market.
Before we can obtain regulatory approval for a product candidate, we must undertake extensive clinical testing in humans to demonstrate safety and efficacy to the satisfaction of the FDA and other regulatory agencies. Clinical trials of new product candidates sufficient to obtain regulatory marketing approval are expensive and take years to complete, and the outcome of such trials is uncertain.
Clinical development of any product candidate that we determine to take into clinical trials may be curtailed, redirected, delayed or eliminated at any time for some or all of the following reasons:
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A delay in or termination of any of our clinical development programs could have an adverse effect on our business.
If our Phase 3 clinical trials of Fampridine-SR are unsuccessful, or if we are unable to obtain regulatory approval for this product candidate or any approval is unduly limited in scope, our business prospects will be adversely affected.
In June 2005, we initiated a Phase 3 clinical trial for Fampridine-SR for the improvement of walking ability in patients with MS. In April 2004, we released results from a Phase 2 clinical trial designed to assess the relative safety and efficacy of varying doses of Fampridine-SR in MS. Our results did not reach statistical significance for the primary endpoint in this trial. Although we have designed the current Phase 3 clinical trial to address the difficulties we encountered in interpreting the patient data from the earlier trial, we cannot be sure that the results from our current clinical trial will be statistically significant.
To achieve the primary endpoint in our current Phase 3 clinical trial for MS, we need to show statistical improvement in the walking speed of the patients in the trial and that this improvement is both sustained and clinically meaningful to these patients. If we fail to achieve the primary endpoint in this clinical trial or the results are ambiguous, we will have to determine whether to re-design our MS trial and protocols and continue with additional testing, or cease development activities in this area. Redesigning the program could be extremely costly and time-consuming. Even if we are able to achieve the primary endpoint, we will need positive results from at least one other clinical trial to support the filing of a new drug application, or NDA, with the FDA. We cannot predict how long the second trial, or any additional trial that might be required by the FDA, will take or what the cost will be.
Our Phase 3 clinical trial for Fampridine-SR in MS is being conducted pursuant to an SPA with the FDA and the FDA has agreed that, if successful, this trial could qualify as one of the pivotal trials needed to support regulatory approval. This agreement with the FDA is not, however, binding upon the FDA if unanticipated circumstances arise. If the FDA determines that a substantial scientific issue essential to determining the safety or efficacy of Fampridine-SR is identified after the trial began, the FDA may alter its conclusion on the adequacy of the protocol. In addition, even if the SPA remains in place and the trial meets its primary endpoint, the FDA could determine that the overall balance of risks and benefits for Fampridine-SR is not adequate to support approval, or only justifies approval for a narrow set of uses or approval with restricted distribution or other burdensome post-approval requirements and limitations. If the FDA denies approval of Fampridine-SR in MS, FDA approval is substantially delayed, approval is granted on a narrow basis or with restricted distribution or other burdensome post-approval requirements, or if the Fampridine-SR program is terminated, our business prospects will be adversely affected.
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In March 2004, we completed two Phase 3 clinical trials of Fampridine-SR in SCI in which our results failed to reach their primary endpoints. We expect to resume development of Fampridine-SR for SCI after we have completed further development of the drug for MS. We cannot predict whether future clinical trials of Fampridine-SR in SCI will achieve their primary endpoints, how long these clinical trials will take or how much they will cost.
Our other drug development programs are in early stages of development and may never be commercialized.
All of our development programs other than Fampridine-SR are in the preclinical phase. Our future success depends, in part, on our ability to select promising product candidates, complete preclinical development of these product candidates and advance them to clinical trials. These product candidates will require significant development, preclinical studies and clinical trials, regulatory clearances and substantial additional investment before they can be commercialized.
Our preclinical programs may not lead to commercially viable products for several reasons. For example, we may fail to identify promising product candidates, our product candidates may fail to be safe and effective in preclinical tests or clinical trials, or we may have inadequate financial or other resources to pursue discovery and development efforts for new product candidates. In addition, because we have limited resources, we are focusing on product candidates that we believe are the most promising. As a result, we may delay or forego pursuit of opportunities with other product candidates. From time to time, we may establish and announce certain development goals for our product candidates and programs; however, given the complex nature of the drug discovery and development process, it is difficult to predict accurately if and when we will achieve these goals. If we are unsuccessful in advancing our preclinical programs into clinical testing or in obtaining regulatory approval, our long-term business prospects will be harmed.
The pharmaceutical industry is subject to stringent regulation and failure to obtain regulatory approval will prevent commercialization of our product candidates.
Our research, development, preclinical and clinical trial activities, as well as the manufacture and marketing of any products that we may successfully develop, are subject to an extensive regulatory approval process by the FDA and other regulatory agencies abroad. The process of obtaining required regulatory approvals for drugs is lengthy, expensive and uncertain, and any regulatory approvals may contain limitations on the indicated usage of a drug, distribution restrictions or may be conditioned on burdensome post-approval study or other requirements, including the requirement that we institute and follow a special risk management plan to monitor and manage potential safety issues, all of which may eliminate or reduce the drug's market potential. Post-market evaluation of a product could result in marketing restrictions or withdrawal from the market.
The results of preclinical and Phase 1 and Phase 2 clinical studies are not necessarily indicative of whether a product will demonstrate safety and efficacy in larger patient populations, as evaluated in Phase 3 clinical trials. Additional adverse events that could impact commercial success, or even continued regulatory approval, might emerge with more extensive post-approval patient use. Of the large number of drugs in development, only a small percentage result in the submission of an NDA to the FDA and even fewer are approved for commercialization.
In order to conduct clinical trials to obtain FDA approval to commercialize any product candidate, an IND application must first be submitted to the FDA and must become effective before clinical trials may begin. Subsequently, an NDA must be submitted to the FDA, including the results of adequate and well-controlled clinical trials demonstrating, among other things, that the product candidate is safe and effective for use in humans for each target indication. In addition, the manufacturing facilities used to produce the products must comply with current good manufacturing practices and must pass a pre-approval FDA inspection. Extensive submissions of preclinical and clinical trial data are required to
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demonstrate the safety, efficacy, potency and purity for each intended use. The FDA may refuse to accept our regulatory submissions for filing if they are incomplete.
Clinical trials are subject to oversight by institutional review boards and the FDA to ensure compliance with the FDA's good clinical practice requirements, as well as other requirements for the protection of clinical trial participants. We depend, in part, on third-party laboratories and medical institutions to conduct preclinical studies and clinical trials for our products and other third-party organizations to perform data collection and analysis, all of which must maintain both good laboratory and good clinical practices required by regulators. If any such standards are not complied with in our clinical trials, the resulting data from the clinical trial may not be usable or we, an institutional review board or the FDA may suspend or terminate such trial, which would severely delay our development and possibly end the development of such product candidate. We also depend upon third party manufacturers of our products to qualify for FDA approval and to comply with good manufacturing practices required by regulators. We cannot be certain that our present or future manufacturers and suppliers will comply with current good manufacturing practices. The failure to comply with good manufacturing practices may result in the termination of clinical studies, restrictions in the sale of, or withdrawal of the products from the market. Compliance by third parties with these standards and practices is outside of our direct control.
In addition, we are subject to regulation under other state and federal laws, including requirements regarding occupational safety, laboratory practices, environmental protection and hazardous substance control, and may be subject to other local, state, federal and foreign regulations. We cannot predict the impact of such regulations on us, although it could impose significant restrictions on our business and additional expenses to comply with these regulations.
Our products and product candidates may not gain market acceptance among physicians, patients and the medical community, thereby limiting our potential to generate revenue.
Market acceptance of our products and product candidates will depend on the benefits of our products in terms of safety, efficacy, convenience, ease of administration and cost effectiveness and our ability to demonstrate these benefits to physicians and patients. We believe market acceptance also depends on the pricing of our products and the reimbursement policies of government and third-party payors, as well as on the effectiveness of our sales and marketing activities. Physicians may not prescribe our products, and patients may determine, for any reason, that our products are not useful to them. The failure of any of our products or product candidates, once approved, to achieve market acceptance would limit our ability to generate revenue and would adversely affect our results of operations.
Our potential products may not be commercially viable if we fail to obtain an adequate level of reimbursement for these products by Medicaid, Medicare or other third-party payors.
Our commercial success will depend in part on third-party payors, such as government health administrative authorities, including Medicaid and Medicare, private health insurers and other such organizations, agreeing to reimburse patients for the cost of our products. Significant uncertainty exists as to the reimbursement status of newly-approved healthcare products. Our business would be materially adversely affected if the Medicaid program, Medicare program or other third-party payors were to deny reimbursement for our products or provide reimbursement only on unfavorable terms. Our business could also be adversely affected if the Medicaid program, Medicare program or other reimbursing bodies or payors limit the indications for which our products will be reimbursed to a smaller set of indications than we believe is appropriate.
Third-party payors frequently require that drug companies negotiate agreements with them that provide discounts or rebates from list prices. At present we do not have any such agreements with
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private third-party payors and only a small number of such agreements with government payors. If sales of Zanaflex Capsules increase we may need to offer larger discounts or discounts to a greater number of third-party payors to maintain acceptable reimbursement levels. If we were required to negotiate such agreements, there is no guarantee that we would be able to negotiate them at price levels that are profitable to us, or at all. If we are unsuccessful in maintaining reimbursement for our products at acceptable levels, our business will be adversely affected. In addition, if our competitors reduce the prices of their products, or otherwise demonstrate that they are more cost effective than our products, this may result in a greater level of reimbursement for their products relative to our products, which would reduce our sales and adversely affect our results of operations.
We may experience pressure to lower prices on our approved products due to new and/or proposed federal legislation.
Federal legislation enacted in December 2003 added an outpatient prescription drug benefit to Medicare, effective January 2006. In the interim, Congress has established a discount drug card program for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers. These negotiations may increase pressure to lower prescription drug prices. While the new law specifically prohibits the U.S. government from interfering in price negotiations between manufacturers and Medicare drug plan sponsors, some members of Congress are pursuing legislation that would permit the U.S. government to use its enormous purchasing power to demand discounts from pharmaceutical companies, thereby creating de facto price controls on prescription drugs. In addition, the new law contains triggers for Congressional consideration of cost containment measures for Medicare in the event Medicare cost increases exceed a certain level. These cost containment measures could include limitations on prescription drug prices. This Medicare prescription drug coverage legislation, as well as additional healthcare legislation that may be enacted at a future date, could reduce our sales and adversely affect our results of operations.
If our competitors develop and market products that are more effective, safer or more convenient than our approved products, or obtain marketing approval before we obtain approval of future products, our commercial opportunity will be reduced or eliminated.
Competition in the pharmaceutical and biotechnology industries is intense and is expected to increase. Composition of matter patents on tizanidine, the active ingredient in Zanaflex Capsules and Zanaflex tablets, expired in 2002. There are currently 11 generic versions of tizanidine tablets on the market. To the extent that we are not able to differentiate Zanaflex Capsules from Zanaflex tablets and generic tizanidine tablets and/or pharmacists improperly substitute generic tizanidine tablets when filling prescriptions for Zanaflex Capsules, we may be unable to convert a meaningful amount of sales of Zanaflex tablets and generic tizanidine tablets to Zanaflex Capsules and our ability to generate revenue from this product will be adversely affected. Although no other FDA-approved capsule formulation of tizanidine exists, another company could develop a capsule or other formulation of tizanidine that competes with Zanaflex Capsules.
Many biotechnology and pharmaceutical companies, as well as academic laboratories, are involved in research and/or product development for various neurological diseases, including MS and SCI. We are aware of a company developing a sodium/potassium channel blocker and a second company developing an immediate release form of fampridine, both of which may compete with Fampridine-SR, if approved. In certain circumstances, pharmacists are not prohibited from formulating certain drug compounds to fill prescriptions on an individual patient basis. We are aware that at present compounded fampridine is used by some people with MS or SCI and it is possible that some people will want to continue to use compounded formulations even if Fampridine-SR is approved. Several companies are engaged in developing products that include novel immune system approaches and cell
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transplant approaches to remyelination for the treatment of people with MS. These programs are in early stages of development and may compete in the future with Fampridine-SR or our preclinical candidates.
Our competitors may succeed in developing products that are more effective, safer or more convenient than our products or the ones we have under development or that render our approved or proposed products or technologies noncompetitive or obsolete. In addition, our competitors may achieve product commercialization before we do. If any of our competitors develops a product that is more effective, safer or more convenient for patients, or is able to obtain FDA approval for commercialization before we do, we may not be able to achieve market acceptance for our products, which would adversely affect our ability to generate revenues and recover the substantial development costs we have incurred and will continue to incur.
Our products may be subject to competition from lower-priced versions of such products and competing products imported into the United States from Canada, Mexico and other countries where there are government price controls or other market dynamics that make the products lower priced.
Our operations could be curtailed if we are unable to obtain any necessary additional financing on favorable terms or at all.
On June 30, 2005, on a pro forma as-adjusted basis after giving effect to this offering, we would have had approximately $ million in cash, cash equivalents and short-term investments. Although we anticipate this will be sufficient to fund our operations for approximately the next 18 months, we have several product candidates in various stages of development, and all will require significant further investment to develop, test and obtain regulatory approval prior to commercialization. We will likely need to seek additional equity or debt financing or strategic collaborations to continue our product development activities, and could require substantial funding to commercialize any products that we successfully develop. We may also require additional financing to support and expand our commercialization of Zanaflex Capsules. We do not currently have any funding commitments or arrangements with third parties to provide funding. We may not be able to raise additional capital on favorable terms or at all.
To the extent that we are able to raise additional capital through the sale of equity securities, the issuance of those securities would result in dilution to our stockholders. Holders of such new equity securities may also have rights, preference or privileges that are senior to yours. If additional capital is raised through the incurrence of indebtedness, we may become subject to various restrictions and covenants that could limit our ability to respond to market conditions, provide for unanticipated capital investments or take advantage of business opportunities. To the extent funding is raised through collaborations or intellectual property-based financings, we may be required to give up some or all of the rights and related intellectual property to one or more of our products, product candidates or preclinical programs. If we are unable to obtain sufficient financing on favorable terms when and if needed, we may be required to reduce, defer or discontinue one or more of our product development programs or devote fewer resources to marketing Zanaflex Capsules.
The loss of our key management and scientific personnel may hinder our ability to execute our business plan.
Our success depends on the continuing contributions of our management team and scientific personnel, and maintaining relationships with our scientific and medical network and the network of centers in the United States and Canada that conducts our clinical trials. We are highly dependent on the services of Dr. Ron Cohen, our President and Chief Executive Officer, as well as the other principal members of our management and scientific staff. Our success depends in large part upon our ability to attract and retain highly qualified personnel. We face intense competition in our hiring efforts with other pharmaceutical and biotechnology companies, as well as universities and nonprofit research
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organizations, and we may have to pay higher salaries to attract and retain qualified personnel. The loss of one or more of our key employees, or our inability to attract additional qualified personnel, could substantially impair our ability to implement our business plan.
We face an inherent risk of liability in the event that the use or misuse of our products results in personal injury or death.
If the use or misuse of Zanaflex Capsules or any other FDA-approved products we may sell in the future harms people, we may be subject to costly and damaging product liability claims brought against us by consumers, healthcare providers, pharmaceutical companies, third-party payors or others. The use of our product candidates in clinical trials could also expose us to product liability claims. We cannot predict all of the possible harms or side effects that may result from the use of our products or the testing of product candidates and, therefore, the amount of insurance coverage we currently have may not be adequate to cover all liabilities or defense costs we might incur. A product liability claim or series of claims brought against us could give rise to a substantial liability that could exceed our resources. Even if claims are not successful, the costs of defending such claims and potential adverse publicity could be harmful to our business.
We are subject to various federal and state laws regulating the marketing of Zanaflex Capsules and, if we do not comply with these regulations, we could face substantial penalties.
Our sales, promotion and other activities related to Zanaflex Capsules, or any of our other products under development following their regulatory approval, are subject to regulatory and law enforcement authorities in addition to the FDA, including the Federal Trade Commission, the Department of Justice, and state and local governments. We are subject to various federal and state laws pertaining to health care "fraud and abuse," including both federal and state anti-kickback laws. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive or pay any remuneration as an inducement for the referral of business, including the use, recommendation, purchase or prescription of a particular drug. The federal government has published regulations that identify "safe harbors" or exemptions for certain payment arrangements that do not violate the anti-kickback statutes. Although we seek to comply with these statutes, it is possible that our practices, or those of our contract sales force, might be challenged under anti-kickback or similar laws. Violations of fraud and abuse laws may be punishable by civil or criminal sanctions, including fines and civil monetary penalties, and future exclusion from participation in government healthcare programs.
We may be subject to penalties if we fail to comply with post-approval legal and regulatory requirements and our products could be subject to restrictions or withdrawal from the market.
Any product for which we currently have or may obtain marketing approval, along with the associated manufacturing processes, any post-approval clinical data that we might be required to collect and the advertising and promotional activities for the product, are subject to continual recordkeeping and reporting requirements, review and periodic inspections by the FDA and other regulatory bodies. Regulatory approval of a product may be subject to limitations on the indicated uses for which the product may be marketed or to other restrictive conditions of approval that limit our ability to promote, sell or distribute a product. Furthermore, any approval may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product.
We have an outstanding commitment with the FDA inherited from Elan to evaluate Zanaflex Capsules for pediatric use by December 2005 in accordance with the requirements of the Pediatric Research Equity Act. We intend to discuss this matter with the FDA and seek a deferral or waiver of the requirement to conduct pediatric studies. Without a waiver, we will be required to conduct a pediatric study of Zanaflex Capsules and incur the related costs of this clinical trial.
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Our advertising and promotion are subject to stringent FDA rules and oversight. In particular, the claims in our promotional materials and activities must be consistent with the FDA approvals for our products, and must be appropriately substantiated and fairly balanced with information on the safety risks and limitations of the products. Any free samples we distribute to physicians must be carefully monitored and controlled, and must otherwise comply with the requirements of the Prescription Drug Marketing Act, as amended, and FDA regulations. We must continually review adverse event information that we receive concerning our drugs and make expedited and periodic adverse event reports to the FDA and other regulatory authorities.
In addition, the research, manufacturing, distribution, sale and promotion of drug and biological products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services, other divisions of the U.S. Department of Health and Human Services, the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing and scientific/educational grant programs must comply with the anti-kickback and fraud and abuse provisions of the Social Security Act, as amended, the False Claims Act, as amended, the privacy provisions of the Health Insurance Portability and Accountability Act and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veterans Health Care Act of 1992, as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.
We may be slow to adapt, or we may not be able to adapt, to changes in existing regulatory requirements or adoption of new legal or regulatory requirements or policies. Later discovery of previously unknown problems with our products, manufacturing processes, or failure to comply with regulatory requirements, may result in:
State pharmaceutical marketing compliance and reporting requirements may expose us to regulatory and legal action by state governments or other government authorities.
In recent years, several states, including California, Vermont, Maine, Minnesota, New Mexico and West Virginia, have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs and file periodic reports with the state on sales, marketing, pricing and other activities. For example, California has enacted a statute requiring pharmaceutical companies to adopt a comprehensive compliance program that is in accordance with the Office of Inspector General of the Department of Health and Human Services Compliance Program Guidance for Pharmaceutical
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Manufacturers . This compliance program must include policies for compliance with the Pharmaceutical Research and Manufacturers of America Code on Interactions with Healthcare Professionals , as well as a specific annual dollar limit on gifts or other items given to individual healthcare professionals in California. The law requires posting policies on a company's public web site along with an annual declaration of compliance.
Vermont, Maine, Minnesota, New Mexico, and West Virginia have also enacted statutes of varying scope that impose reporting and disclosure requirements upon pharmaceutical companies pertaining to drug pricing and payments and costs associated with pharmaceutical marketing, advertising and promotional activities, as well as restrictions upon the types of gifts that may be provided to healthcare practitioners. Similar legislation is being considered in other states. Many of these requirements are new and uncertain and the penalties for failure to comply with these requirements are unclear. We are not aware of any companies against which fines or penalties have been assessed under these state reporting and disclosure laws to date. We are currently in the process of developing a formal compliance infrastructure and standard operating procedures to comply with such laws. Unless we are in full compliance with these laws, we could face enforcement action and fines and other penalties, and could receive adverse publicity.
If we seek to market our products in foreign jurisdictions, we will need to obtain regulatory approval in these jurisdictions.
In order to market our products in the European Union and many other foreign jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. Approval procedures vary among countries and can involve additional clinical testing. The time required to obtain approval may differ from that required to obtain FDA approval. Should we decide to market our products abroad, we may fail to obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. We may not be able to file for, and may not receive, necessary regulatory approvals to commercialize our products in any foreign market, which could adversely affect our business prospects.
If we use biological and hazardous materials in a manner that causes injury, we may be liable for damages.
Our research and development activities involve the controlled use of potentially harmful biological materials, hazardous materials and chemicals that are subject to federal, state and local laws and regulations governing their use, storage, handling and disposal. We cannot completely eliminate the risk of accidental contamination or injury from the use, storage, handling or disposal of these materials. If we fail to comply with environmental regulations, we could be subject to criminal sanctions and/or substantial liability for any damages that result, and any substantial liability could exceed our resources. In addition, the cost of compliance with environmental and health and safety regulations may be substantial.
Risks Related to Our Dependence on Third Parties
We currently have no manufacturing capabilities and are substantially dependent upon Elan, Novartis and other third party suppliers to manufacture Zanaflex Capsules, Zanaflex tablets and Fampridine-SR.
We do not own or operate, and currently do not plan to own or operate, manufacturing facilities for production of Zanaflex Capsules, Zanaflex tablets or Fampridine-SR. We rely and expect to continue to rely on third parties for the production of our products and clinical trial materials.
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We rely on a single manufacturer, Elan, for the supply of Zanaflex Capsules. Zanaflex Capsules are manufactured using Elan's proprietary SODAS (spheroidal oral drug absorption system) multiparticulate drug delivery technology. Elan is obligated, in the event of a failure to supply Zanaflex Capsules, to use commercially reasonable efforts to assist us in either producing Zanaflex Capsules ourselves or in transferring production of Zanaflex Capsules to a third-party manufacturer, provided that such third-party manufacturer is not a technological competitor of Elan. In the event production is transferred to a third party, the FDA may require us to demonstrate through bioequivalence studies and laboratory testing that the product made by the new supplier is equivalent to the current Zanaflex Capsules before we could distribute products from that supplier. The process of transferring the technology and qualifying the new supplier could take a year or more.
Under our supply agreement with Elan, we provide Elan with monthly written 18-month forecasts and with annual written two-year forecasts of our supply requirements for Zanaflex Capsules. In each of the five months following the submission of our written 18-month forecast we are obligated to purchase the quantity specified in the forecast, even if our actual requirements are greater or less. Elan is not obligated to supply us with quantities in excess of our forecasted amounts, although it has agreed to use commercially reasonable efforts to do so. Because we have a limited history of selling Zanaflex Capsules, our forecasts of our supply requirements may be inaccurate. As a result, we may have an excess or insufficient supply of Zanaflex Capsules.
The Elan facility located in Gainesville, Georgia, which is responsible for bottling Zanaflex Capsules, has been operating under a court-ordered consent decree and injunction since 2001, which were imposed following adverse FDA inspections and FDA allegations that the facility was failing to comply with current good manufacturing requirements. These prior issues were not related to the manufacture of our products. If, however, Elan fails to comply with the requirements of the consent decree and injunction, it could be held in contempt and the facility could be shut down and the manufacturing of our products halted or interrupted.
We currently rely on Novartis for our supply of Zanaflex tablets and tizanidine, the active pharmaceutical ingredient, or API, in both Zanaflex Capsules and Zanaflex tablets. Under a supply agreement we assumed from Elan, Novartis is responsible for manufacturing Zanaflex tablets and tizanidine for us through February 2007. This includes the tizanidine that Elan uses to manufacture Zanaflex Capsules for us. Novartis currently produces tizanidine, but has arranged with two other parties to formulate tablets and bottle and package the final product. Novartis has informed us that it intends to discontinue production of tizanidine by the end of 2005. It is our understanding that Novartis is currently in the process of qualifying an alternative tizanidine manufacturer. We have established relationships with the companies that currently formulate, bottle and package the tablets, however, we do not have a relationship with an alternative manufacturer of tizanidine. By the expiration of our contract with Novartis in 2007, we will need to have established a direct relationship with an alternative supplier of tizanidine.
We also rely exclusively on Elan to supply us with our requirements for Fampridine-SR. Elan relies on a third-party manufacturer to supply fampridine, the API in Fampridine-SR. Under our supply agreement with Elan, we are obligated to purchase at least 75% of our yearly supply of Fampridine-SR from Elan, and we are required to make compensatory payments if we do not purchase 100% of our requirements from Elan, subject to certain exceptions. We and Elan have agreed that we may purchase up to 25% of our annual requirements from Patheon, Inc., a mutually agreed-upon and qualified second manufacturing source, without having to make compensatory payments.
Our dependence on others to manufacture our marketed products and clinical trial materials may adversely affect our ability to develop and commercialize our products on a timely and competitive basis.
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If third-party contract research organizations do not perform in an acceptable and timely manner, our preclinical testing or clinical trials could be delayed or unsuccessful.
We do not have the ability to conduct all aspects of our preclinical testing or clinical trials ourselves. We rely and will continue to rely on clinical investigators, third-party contract research organizations and consultants to perform some or all of the functions associated with preclinical testing or clinical trials. The failure of any of these vendors to perform in an acceptable and timely manner in the future, including in accordance with any applicable regulatory requirements, such as good clinical and laboratory practices, or preclinical testing or clinical trial protocols, could cause a delay or otherwise adversely affect on our preclinical testing or clinical trials and ultimately on the timely advancement of our development programs.
We rely on a third party to provide the sales representatives to market Zanaflex Capsules to primary care physicians.
We recently entered into a contract with Cardinal Health pursuant to which it provides us with approximately 160 sales representatives who market Zanaflex Capsules to primary care physicians. These sales representatives are not our employees and we do not have control over their performance or compliance with applicable laws. Their failure to increase prescriptions for Zanaflex Capsules from the targeted primary care physicians would negatively impact our sales growth, and their failure to comply with applicable laws could subject us to liability.
Risks Related to Our Intellectual Property
If we cannot protect our intellectual property, our ability to develop and commercialize our products will be severely limited.
Our success will depend in part on our and our licensors' ability to obtain, maintain and enforce patent protection for the technologies, compounds and products, if any, resulting from our licenses and development programs. Without protection for the intellectual property we use, other companies could offer substantially identical products for sale without incurring the sizable discovery, development and licensing costs that we have incurred. Our ability to recover these expenditures and realize profits upon the sale of products could be diminished.
We have in-licensed or are the assignee of more than 25 U.S. patents, more than 60 foreign patents and over 65 patent applications pending in the United States or abroad for our own technologies and for technologies from our in-licensed programs. The process of obtaining patents can be time consuming and expensive with no certainty of success. Even if we spend the necessary time and money, a patent may not issue or it may not have sufficient scope or strength to protect the technology it was intended to protect or to provide us with any commercial advantage. We may never be certain that we were the first to develop the technology or that we were the first to file a patent application for the particular technology because U.S. patent applications are confidential until they are published, and publications in the scientific or patent literature lag behind actual discoveries. The degree of future protection for our proprietary rights will remain uncertain if our pending patent applications are not approved for any reason or if we are unable to develop additional proprietary technologies that are patentable. Furthermore, third parties may independently develop similar or alternative technologies, duplicate some or all of our technologies, design around our patented technologies or challenge our issued patents or the patents of our licensors.
We may initiate actions to protect our intellectual property and in any litigation in which our patents or our licensors' patents are asserted, a court may determine that the patents are invalid or unenforceable. Even if the validity or enforceability of these patents is upheld by a court, a court may not prevent alleged infringement on the grounds that such activity is not covered by the patent claims. In addition, effective intellectual property enforcement may be unavailable or limited in some foreign countries. Any litigation, whether to enforce our rights to use our or our licensors' patents or to defend
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against allegations that we infringe third party rights, would be costly, time consuming, and may distract management from other important tasks.
As is commonplace in the biotechnology and pharmaceutical industry, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. To the extent our employees are involved in research areas that are similar to those areas in which they were involved at their former employers, we may be subject to claims that such employees and/or we have inadvertently or otherwise used or disclosed the alleged trade secrets or other proprietary information of the former employers. Litigation may be necessary to defend against such claims, which could result in substantial costs and be a distraction to management and which could have an adverse effect on us, even if we are successful in defending such claims.
We also rely in our business on trade secrets, know-how and other proprietary information. We seek to protect this information, in part, through the use of confidentiality agreements with employees, consultants, advisors and others. Nonetheless, those agreements may not provide adequate protection for our trade secrets, know-how or other proprietary information and prevent their unauthorized use or disclosure. To the extent that consultants, key employees or other third parties apply technological information independently developed by them or by others to our proposed products, disputes may arise as to the proprietary rights to such information which may not be resolved in our favor. The risk that other parties may breach confidentiality agreements or that our trade secrets become known or independently discovered by competitors, could adversely affect us by enabling our competitors, who may have greater experience and financial resources, to copy or use our trade secrets and other proprietary information in the advancement of their products, methods or technologies. Policing unauthorized use of our or our licensors' intellectual property is difficult, expensive and time-consuming, and we may be unable to determine the extent of any unauthorized use. Adequate remedies may not exist in the event of unauthorized use or disclosure.
If third parties successfully claim that we infringed their patents or proprietary rights, our ability to continue to develop and successfully commercialize our product candidates could be delayed.
Third parties may claim that we or our licensors or suppliers are infringing their patents or are misappropriating their proprietary information. In the event of a successful claim against us or our licensors or suppliers for infringement of the patents or proprietary rights of others relating to any of our marketed products or product candidates, we may be required to:
A license required under any such patents or proprietary rights may not be available to us, or may not be available on acceptable terms. If we or our licensors or suppliers are sued for infringement we could encounter substantial delays in, or be prohibited from developing, manufacturing and commercializing our product candidates and advancing our preclinical programs.
We are dependent on our license agreements and if we fail to meet our obligations under these license agreements, or our agreements are terminated for any reason, we may lose our rights to our in-licensed patents and technologies.
We are dependent on licenses for intellectual property related to Zanaflex, Fampridine-SR and all of our preclinical programs. Our failure to meet any of our obligations under these license agreements could result in the loss of our rights to this intellectual property. If we lose our rights under any of
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these license agreements, we may be unable to commercialize a product that uses licensed intellectual property.
We could lose our rights to Fampridine-SR under our license agreement with Elan in countries in which we have a license, including the United States, if we fail to file regulatory approvals within a commercially reasonable time after completion and receipt of positive data from all preclinical and clinical studies required for the related NDA, or any NDA-equivalent. We could also lose our rights under our license agreement with Elan if we fail to launch a product in such countries, within 180 days of NDA or equivalent approval. Elan could also terminate our license agreement if we fail to make payments due under the license agreement. If we lose our rights to Fampridine-SR our prospects for generating revenue and recovering our substantial investment in the development of this product would be materially harmed.
Risks Relating To The Offering
There is no existing market for our common stock. An active trading market may not develop and you may not be able to resell your shares at or above the initial offering price.
Prior to this offering, there has been no public market for our common stock. We cannot predict the extent to which trading will lead to the development of an active and liquid trading market in our common stock. The initial public offering price of our common stock was determined by negotiations between the representatives of the underwriters and us and may not be indicative of future market prices. The market price for our common stock may decline below the initial offering price. Our stock price could fluctuate significantly due to a number of factors, including:
Many of these factors are beyond our control. In addition, the stock markets in general, and the Nasdaq National Market and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations recently. These fluctuations often have been unrelated or disproportionate to the operating performance of these companies. These broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance.
As a new investor, you will experience immediate and substantial dilution in the net tangible book value of your investment and may experience further dilution in the future.
Investors purchasing shares of our common stock in this offering will pay more for their shares than the amount paid by existing stockholders who acquired shares prior to this offering. Accordingly, if you purchase common stock in this offering, you will incur immediate dilution in pro forma net tangible book value of approximately $ per share. If the holders of outstanding options or warrants exercise these options or warrants, you will incur further dilution.
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Future sales of our common stock could cause our stock price to decline.
Sales of substantial amounts of our common stock in the public market after this offering, or the possibility of those sales or other distributions, could put downward pressure on the market price of our common stock. After the consummation of this offering, our current stockholders will be subject to a 180-day lock up on the sale of their shares. After the lock-up expires, at least shares of our common stock will become freely tradable, shares of common stock will be tradable subject to Rule 144, and holders of 13,338,356 shares of our common stock will have rights to cause us to file a registration statement on their behalf and to include their shares in registration statements that we may file on our behalf or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares, these holders could cause the price of our common stock to decline.
If our officers, directors and largest stockholders choose to act together, they may be able to control the outcome of a stockholder vote.
After this offering, our officers, directors and holders of 5% or more of our outstanding common stock will beneficially own approximately % of our common stock. Moreover, a majority of our directors are principals or representatives of entities that own substantial amounts of our common stock. As a result, these stockholders, acting together, will be able to significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval or mergers or other business combination transactions. The interests of this group of stockholders may not always coincide with the interests of other stockholders, and they may act in a manner that advances their best interests and not necessarily those of other stockholders.
Certain provisions of Delaware law, our certificate of incorporation and our by-laws may delay or prevent an acquisition of us that stockholders may consider favorable or may prevent efforts by our stockholders to change our directors or our management, which could decrease the value of your shares.
Following this offering, our certificate of incorporation and by-laws will contain provisions that could make it more difficult for a third party to acquire us, and may have the effect of preventing or hindering any attempt by our stockholders to replace our current directors or officers. These provisions include:
As a Delaware corporation, we are also subject to certain anti-takeover provisions of Delaware law. Under Delaware law, a corporation may not engage in a business combination with any holder of
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15% or more of its capital stock unless the holders has held the stock for three years or, among other things, the board of directors has approved the transaction. Our board of directors could rely on Delaware law to prevent or delay an acquisition of us, which could have the effect of reducing your ability to receive a premium on your common stock.
Because we do not intend to pay dividends, you will benefit from an investment in our common stock only if it appreciates in value.
We have not paid cash dividends on any of our classes of capital stock to date, and we currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. The success of your investment in our common stock will depend entirely upon any future appreciation. There is no guarantee that our common stock will appreciate in value after the offering or even maintain the price at which you purchased your shares.
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This prospectus, including the sections entitled "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Business," contains forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," "continue," or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements, since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect actual results, levels of activity, performance or achievements. Factors that may cause actual results to differ materially from current expectations, which we describe in more detail elsewhere in this prospectus under the heading "Risk Factors," include, but are not limited to:
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement you read in this prospectus reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward looking statements if they comply with the requirements of the Act. The Act does not provide this protection for initial public offerings.
24
We estimate that we will receive approximately $ million in net proceeds from the sale of our common stock in this offering, or approximately $ million if the underwriters exercise their over-allotment option in full, based on an assumed initial public offering price of $ per share (the midpoint of the estimated price range shown on the cover of this prospectus) after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use the proceeds of this offering as follows:
The amount and timing of our actual expenditures will depend on numerous factors, including the progress of our research and development activities, the progress of our clinical trials and regulatory approval process, the number and breadth of our product development programs, our success in marketing Zanaflex Capsules, and any in-licensing and acquisition activities. Accordingly, we will retain broad discretion in the allocation and use of the proceeds of this offering. Currently we have no specific plans or commitments related to any acquisitions or licenses.
Pending application of the net proceeds, we intend to invest them in short-term, investment-grade, interest-bearing instruments.
We have never declared or paid any cash dividends on our common stock. We currently intend to retain our future earnings, if any, to finance the further development and expansion of our business and do not intend to pay cash dividends for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions contained in current or future financing instruments and other factors our board of directors deems relevant.
25
The following table sets forth our cash, cash equivalents and short-term investments and capitalization as of June 30, 2005:
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As of June 30, 2005
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Actual
(unaudited) |
Pro Forma
(unaudited) |
Pro Forma
As Adjusted (unaudited) |
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(in thousands)
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Cash, cash equivalents and short-term investments | $ | 14,705 | $ | 14,705 | $ | |||||
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Long-term portion of notes payable | 3,946 | 3,946 | ||||||||
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Long-term convertible notes payableprincipal amount plus accrued interest, less unamortized debt discountRelated party | 8,622 | 8,622 | ||||||||
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Mandatorily Redeemable Convertible Preferred Stock, $.001 par value: 7,472,612 shares of Series E convertible preferred stock authorized, issued and outstanding at June 30, 2005; 10,204,047 shares of Series I convertible preferred stock authorized, issued and outstanding at June 30, 2005; 112,790,246 shares of Series J convertible preferred stock authorized, 112,790,233 shares issued and outstanding at June 30, 2005; 1,533,330 shares of Series K convertible preferred stock authorized, 1,533,327 shares issued and outstanding at June 30, 2005; 0 shares issued and outstanding on a pro forma and pro forma as adjusted basis | 78,788 | | ||||||||
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|
|
||||||||
Stockholders' equity (deficit): | ||||||||||
Non-redeemable Convertible Preferred Stock, $.001 par value: 1,306,068 shares of Series A convertible preferred stock; 900,000 shares of Series B convertible preferred stock; 333,333 shares of Series C convertible preferred stock; 0 shares of Series D preferred stock; 2,300,000 shares of Series F convertible preferred stock; 0 shares of Series G preferred stock; 1,575,229 shares of Series H convertible preferred stock; 0 shares issued and outstanding on a pro forma and pro forma as adjusted basis | 6 | | ||||||||
Common stock, $.001 par value; 260,000,000 shares authorized at June 30, 2005 and 80,000,000 shares authorized on a pro forma and on a pro forma as adjusted basis; 208,766 shares issued and outstanding at June 30, 2005, issued and outstanding on a pro forma basis and on a pro forma as adjusted basis, respectively | 13 | |||||||||
Additional paid-in capital | 101,743 | 180,524 | ||||||||
Accumulated deficit | (190,996 | ) | (190,996 | ) | ||||||
Other comprehensive loss | (11 | ) | (11 | ) | ||||||
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Total stockholders' (deficit) | (89,258 | ) | (10,470 | ) | ||||||
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Total capitalization | $ | 2,098 | $ | 2,098 | ||||||
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The table above excludes, as of June 30, 2005:
27
Our net tangible book deficit attributable to common stockholders as of June 30, 2005, was approximately $ million, or approximately $ per share based on 13,547,122 shares of common stock outstanding as of June 30, 2005, calculated after giving effect to the automatic conversion of all of our outstanding convertible preferred stock and mandatorily redeemable convertible preferred stock into 13,338,356 shares of common stock upon the closing of this offering. Net tangible book deficit per share represents our total tangible assets reduced by our total liabilities, mandatorily redeemable convertible preferred stock, deferred offering costs and the liquidation value of our convertible preferred stock and divided by the number of shares of common stock outstanding. Dilution per share to new investors represents the difference between the amount per share that you pay in this offering and the pro forma as adjusted net tangible book value per share immediately after this offering.
Our pro forma as adjusted net tangible book value as of June 30, 2005, would have been approximately $ million, or approximately $ per share, after giving effect to:
This represents an immediate increase in net tangible book value of $ per share to existing stockholders and an immediate decrease in net tangible book value per share of $ to you. The following table illustrates the dilution.
Assumed initial public offering price per share | $ | ||||||
Net tangible book deficit per share as of June 30, 2005 |
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$ |
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Pro forma increase in net tangible book value per share attributable to conversion of convertible preferred stock and mandatorily redeemable convertible preferred stock |
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Increase in net tangible book value per share attributable to existing stockholders |
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Pro forma as adjusted net tangible book value per share after the offering | |||||||
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Dilution per share to new investors | $ | ||||||
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If the underwriters exercise their over-allotment option in full, the pro forma net tangible book value per share after the offering would be $ per share, the increase in net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors would be $ per share.
The following table sets forth, as of June 30, 2005, on a pro forma basis, the difference between existing stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us, and the average price per share paid.
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Shares Purchased
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Total Consideration
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Average Price Per Share
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Number
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%
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Amount
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%
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Existing stockholders | % | $ | % | $ | ||||||||
New investors(1) | ||||||||||||
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Total | % | $ | % | |||||||||
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The table above assumes no exercise of stock options or warrants outstanding as of June 30, 2005. At June 30, 2005, there were 1,239,257 shares of common stock issuable upon exercise of outstanding stock options and warrants at a weighted average exercise price of $3.71 per share. To the extent that outstanding options or warrants are exercised in the future, there will be further dilution to new investors. To the extent all of such outstanding options and warrants had been exercised as of June 30, 2005, net tangible book value per share after this offering would be $ and total dilution per share to new investors would be $ .
The issuance of additional common stock will result in further dilution to new investors.
If the underwriters' over-allotment option is exercised in full, the number of shares of our common stock held by existing stockholders will be reduced to of the aggregate number of shares of our common stock outstanding after this offering, and the number of shares of common stock held by new investors will be increased to or of the aggregate number of shares of common stock outstanding after this offering.
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SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data for the fiscal years ended June 30, 2001, 2002 and 2003, six month period ended December 31, 2003, and the year ended December 31, 2004 and the selected consolidated balance sheet data presented below as of June 30, 2001, 2002 and 2003, and December 31, 2003 and 2004, set forth below are derived from, and are qualified by reference to, our consolidated financial statements other than the pro forma financial information, which have been audited by KPMG LLP, our Independent Registered Public Accounting Firm, and that are included elsewhere in this prospectus for the years ended June 30, 2002 and 2003, six months ended December 31, 2003 and year ended 2004.
We changed our fiscal year end from June 30 to December 31, effective for the six months ended December 31, 2003. The selected consolidated statement of operations data presented below for the six months ended June 30, 2004 and 2005, and selected consolidated balance sheet data presented below as of June 30, 2005, have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial information include, in the opinion of management, all adjustments, consisting of normal and recurring adjustments, that management considers necessary for a fair presentation, in all material respects, of its consolidated results for those periods. Our historical results are not necessarily indicative of the results to be expected in the future periods and the results for the six-month period ended June 30, 2005, should not be considered indicative of results expected for the full year.
This data should be read in conjunction with our "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and the related notes included elsewhere in this prospectus.
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31
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Six Months Ended June 30,
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Six Months Ended December 31,
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Year Ended June 30,
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Year Ended December 31,
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2004
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2005
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2001
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2002
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2003
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2003
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2004
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(unaudited)
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Pro forma net loss per share allocable to common stockholdersbasic & diluted (unaudited)(1) | $ | (9.63 | ) | $ | (1.32 | ) | |||||||||||
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Weighted average shares of common stock outstanding used in computing net loss per share allocable to common stockholdersbasic & diluted | 184 | 190 | 191 | 193 | 198 | 197 | 201 | ||||||||||
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Weighted average shares of common stock outstanding used in computing pro forma net loss per share allocable to common stockholdersbasic & diluted (unaudited)(1)(2) | 13,536 | 13,547 | |||||||||||||||
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As of June 30,
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As of December 31,
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As of June 30,
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Pro Forma As of June 30,
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2001
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2002
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2003
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2003
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2004
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2005
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2005
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(in thousands)
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(unaudited)
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Consolidated Balance Sheet Data: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 48,083 | $ | 27,012 | $ | 48,319 | $ | 8,965 | $ | 11,729 | $ | 3,259 | $ | 3,259 | ||||||||
Restricted cash | 243 | 250 | 253 | 254 | 257 | 259 | 259 | |||||||||||||||
Short-term investments | | 2,836 | 12,250 | 32,250 | 9,397 | 11,446 | 11,446 | |||||||||||||||
Working capital | 46,115 | 27,097 | 58,975 | 35,375 | 9,067 | (3,372 | ) | (3,372 | ) | |||||||||||||
Total assets | 50,349 | 33,597 | 64,807 | 45,960 | 30,982 | 30,052 | 30,052 | |||||||||||||||
Deferred grant revenue | | | 95 | 48 | | | | |||||||||||||||
Deferred product revenuecapsules | | | | | | 5,386 | 5,386 | |||||||||||||||
Deferred product revenuetablets | | | | | 6,668 | 11,027 | 11,027 | |||||||||||||||
Current portion of notes payable | | | 310 | 324 | 302 | 2,162 | 2,162 | |||||||||||||||
Non-current portion of notes payable | | | 612 | 447 | 145 | 3,946 | 3,946 | |||||||||||||||
Long-term convertible notes payablerelated party | 7,131 | 7,538 | 7,907 | 8,091 | 8,422 | 8,622 | 8,622 | |||||||||||||||
Mandatorily redeemable preferred stock | 59,604 | 59,659 | 18,187 | 30,171 | 66,364 | 78,788 | | |||||||||||||||
Total stockholders' equity (deficit) | (19,041 | ) | (36,910 | ) | 35,328 | (130 | ) | (60,571 | ) | (89,258 | ) | (10,470 | ) |
32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included in this prospectus. This discussion and analysis contains forward-looking statements that are subject to risks, uncertainties and other factors, including, but not limited to, those discussed under "Risk Factors" and elsewhere in this prospectus, that could cause our actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. See "Forward-Looking Statements."
Background
Since we commenced operations in 1995, we have devoted substantially all of our resources to the identification, development and commercialization of novel therapies that improve neurological function in people with MS, SCI and other disorders of the CNS. Our marketed drug, Zanaflex Capsules, is FDA-approved for the management of spasticity. Our lead product candidate, Fampridine-SR, is in a Phase 3 clinical trial for the improvement of walking ability in people with MS. Our preclinical programs also target MS and SCI, as well as other CNS disorders, including stroke and traumatic brain injury.
From 1995 until mid-2004, we were engaged almost exclusively in the in-licensing of compounds and the preclinical and clinical development of these compounds. We licensed the rights to Fampridine-SR from Elan for the treatment of SCI in 1997. In 1998, we formed a joint venture, MS Research & Development Corporation, or MSRD, with Elan International Services, Ltd., or EIS, a subsidiary of Elan, to develop Fampridine-SR for the treatment of MS under an exclusive worldwide license from Elan.
In September 2003, we entered into a termination and assignment agreement with Elan, EIS and MSRD, pursuant to which MSRD assigned to us its assets, including the license from Elan for Fampridine-SR for MS. We paid MSRD approximately $11.5 million for all of the assets and assumed all of the liabilities of MSRD, and MSRD distributed to us approximately $9.5 million as our pro rata portion of the purchase price. From the time of establishment of MSRD until the sale of MSRD's assets to us, Elan was considered to be a related party under generally accepted accounting principles. In conjunction with the termination and assignment, we entered into an amended license agreement with Elan that granted us exclusive worldwide rights to Fampridine-SR in return for the payment of royalties and milestones. In addition, we entered into a supply agreement under which Elan provides Fampridine-SR based upon an agreed upon price schedule.
In September 2003, we entered into a collaboration agreement with Teva Pharmaceutical Industries Ltd., or Teva, to jointly develop and promote in the United States products containing valrocemide, pursuant to which we made an initial payment to Teva of $2.1 million. We and Teva amicably terminated this collaboration agreement in June 2005 and in connection with the termination we paid Teva approximately $3.1 million. We and Teva have no further obligations to each other under this collaboration agreement.
We have expended a significant portion of our funds on a number of clinical trials for Fampridine-SR, our most advanced product candidate, including two Phase 3 clinical trials of Fampridine-SR in SCI and a Phase 2 clinical trial in MS, the results of which were announced in March 2004. An earlier Phase 2 clinical trial in MS was completed in 2001. In mid-2004, we decided to put our clinical trials of Fampridine-SR in SCI on hold, and refocused our efforts on our ongoing Fampridine-SR in MS program, leading to our current Phase 3 clinical trial of Fampridine-SR for
33
improvement of walking ability in people with MS. We may resume our clinical development of Fampridine-SR for SCI following completion of our MS clinical program, or sooner.
In July 2004, we acquired all of Elan's research, development, distribution, sales and marketing rights to Zanaflex Capsules and Zanaflex tablets in the United States. These products are FDA-approved for the management of spasticity. We made an upfront payment to Elan of $2.0 million and are obligated to pay royalties on sales and to make milestone payments upon achievement of specified sales levels. To date, we have achieved one milestone, triggering a payment of $1.5 million, 50% of which was paid in the first quarter of 2005 and 50% of which is due in the first quarter of 2006. As part of our Zanaflex acquisition, we entered into a long-term supply agreement with Elan under which Elan provides us with Zanaflex Capsules. Elan also assigned us its rights under an agreement with Novartis for the supply of tizanidine and Zanaflex tablets.
Our marketing efforts are focused on Zanaflex Capsules, which we launched in April 2005. Zanaflex tablets lost compound patent protection in 2002 and compete with 11 generic tizanidine products. Although we currently distribute Zanaflex tablets, we do not, and do not intend to, actively promote Zanaflex tablets. As a result, prescriptions for Zanaflex tablets have declined and we expect that they will continue to decline. Our goal is to convert as many sales of Zanaflex tablets and generic tizanidine tablets to sales of Zanaflex Capsules as possible. We believe that sales of Zanaflex Capsules will constitute a significant portion of our total revenue for the foreseeable future.
In late 2004, we began establishing our own specialty sales force in the United States, which consisted of 14 sales professionals as of June 30, 2005. This sales force targets neurologists and other prescribers who specialize in treating people with conditions that involve spasticity. Members of this sales force also call on managed care organizations, pharmacists and distribution customers. We have also recently entered into an agreement with Cardinal Health, under which they are providing approximately 160 sales representatives since August 2005 to market Zanaflex Capsules to primary care physicians in the United States. We have retained Access Worldwide Communications to provide a small, dedicated sales force of pharmaceutical telesales professionals to contact primary care, specialty physicians and pharmacists. We expect to expand this sales and marketing infrastructure in the future, as appropriate.
In February 2004, we changed our fiscal year end from June 30 to December 31, effective for the six months ended December 31, 2003.
Product Revenue and Returns
Product revenue consists of sales of Zanaflex Capsules and Zanaflex tablets. We account for sales of these products using a consignment model. Under our consignment model, we do not recognize revenue upon shipment of product to our wholesale drug distributors. Instead, we invoice the wholesaler, record deferred revenue at gross invoice sales price, and classify the inventory held by the wholesaler as "consigned inventory" at our cost of goods for such inventory. We recognize revenue on consigned inventory when prescriptions are filled for the end-user, on a first-in first-out (FIFO) basis. Returns of products sold by us are charged directly against deferred revenue, reducing the amount of deferred revenue that we may recognize.
When we acquired Zanaflex from Elan, we also acquired Elan's inventory of Zanaflex tablets. We have deferred recognition of any revenue from sales of this inventory until the return period for the product expires in June 2006, and will recognize revenue then only to the extent that deferred revenues exceed returns. The Zanaflex tablet inventory we acquired from Elan was labeled with a code identifying the inventory as Elan's. Inventory manufactured after our acquisition of Zanaflex is labeled with a code that enables us to identify the inventory as ours. These codes are contained on end-user prescription data that we use to recognize revenue, enabling us to identify whether the prescription was
34
filled with product originally manufactured for Elan or with product manufactured for us. We cannot use prescription data to recognize revenue associated with inventory acquired from Elan because all of this inventory bears Elan's code and we cannot determine whether the prescription was filled with product that Elan sold prior to our acquisition of Zanaflex or with product we sold. In addition, we are uncertain about the amount of returns that we may receive on these products, for a number of reasons including that we have very little historical returns experience.
We accept returns of products for six months prior to and 12 months after their expiration date. As part of the acquisition of Zanaflex, we agreed to accept any returns of Zanaflex tablets that were returned subsequent to January 17, 2005, including returns of product that was originally sold by Elan. Product returns prior to January 17, 2005, were the responsibility of Elan. We have recorded a charge of $4.1 million in the year ended December 31, 2004, for the estimated returns of Zanaflex tablets sold by Elan.
We began receiving end-user prescription data containing our code, which enabled us to begin recognizing revenue from Zanaflex tablet sales in March 2005. We began marketing Zanaflex Capsules in April 2005 and began recognizing revenue in the same month.
Discounts and Allowances
Discounts and allowances consist of estimated reserves for cash discounts, rebates and chargebacks. At the time product is shipped to wholesalers an allowance is recorded for these discounts and allowances. Allowances are established on a product-by-product basis. These allowances are established by management as its best estimate at the time of sale based on each product's historical experience adjusted to reflect known changes in the factors that impact such reserves. Reserves for chargebacks, rebates and discounts are established based on the contractual terms with customers, analysis of historical levels of discounts, chargebacks and rebates, communications with customers and purchased information about the rate of prescriptions being written and the levels of inventory remaining in the distribution channel as well as expectations about the market for each product and anticipated introduction of competitive products. In the year ended December 31, 2004, we took a $4.1 million charge to establish a reserve for expected returns of Zanaflex tablets sold by Elan.
Grant Revenue
Grant revenue is recognized when the related research expenses are incurred and our performance obligations under the terms of the respective contract are satisfied. To the extent expended, grant revenue related to purchase of equipment is deferred and amortized over the shorter of its useful life or the life of the related contract.
Cost of Sales
Cost of sales consists of cost of inventory, royalty expense, packaging costs, freight and required inventory stability testing costs. Our inventory costs and royalty obligations are set forth in the agreements entered into in connection with our Zanaflex acquisition.
Research and Development Expenses
Research and development expenses consist primarily of salaries and related expenses for personnel, fees paid to professional service providers in conjunction with independently monitoring our clinical trials and acquiring and evaluating data from our clinical trials, costs of contract manufacturing services, costs of materials used in clinical trials and research and development, depreciation of capital resources used to develop our products, costs of facilities and the legal costs of pursuing patent
35
protection of our intellectual property. We expense research and development costs as incurred. We expect our research and development expenses to increase as we continue to develop our product candidates and preclinical programs.
The following table summarizes our research and development expenses for the fiscal years ended June 30, 2001, 2002, 2003, the six months ended December 31, 2003, the year ended December 31, 2004 and the six months ended June 30, 2005. Included in this table are our external research and development costs, consisting largely of clinical trial and research services provided by outside laboratories and vendors recognized in connection with each product candidate currently in clinical development and all preclinical programs as a group. Many of our internal research and development costs, including personnel costs, related benefits and stock-based compensation, are not attributable to any individual project because we use these resources across several development projects. Compensation expense for option grants is classified between clinical development and preclinical research and development based on employee job function.
Research and DevelopmentRelated Party
In cooperation with Elan, we have conducted a series of clinical trials during the past eight years evaluating Fampridine-SR. Elan was considered to be a related party during the period from April, 1998 when MSRD, our jointly-owned venture with Elan to develop Fampridine-SR in MS, was formed until September 2003, when Elan's interest in MSRD was sold to us (see Note 11 to our consolidated financial statements included in this prospectus). Related party research and development or sales and marketing expenses have been included as a separate line item in our financial statements for this period and in the table above. These expenses consisted of the contracted development and supply of
36
our lead product candidate, Fampridine-SR, license fees and expenses associated with our acquisition of Elan's interest in MSRD.
Sales and Marketing Expenses
Sales and marketing expenses includes the costs of salaries for our sales and marketing personnel and the cost of our advertising, promotion and education programs. Sales and marketing expenses include the cost of our contract sales force provided by Cardinal Health and our contract pharmaceutical telesales services provided by Access Worldwide.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and other related costs for personnel serving executive, finance, business development, legal, information technology and human resource functions. Other costs include facility costs not otherwise included in research and development or sales and marketing expense and professional fees for legal and accounting services. We expect that our general and administrative expenses will increase as we add personnel and become subject to the reporting obligations applicable to public companies.
Stock-Based Compensation
We have accounted for options and restricted stock granted to employees and directors in accordance with SFAS No. 123, Accounting for Stock-Based Compensation , and related interpretations. As such, compensation expense is recorded on stock option and restricted stock grants based on the fair value of the restricted stock and options granted, which is estimated on the date of grant using an option-pricing model and it is recognized on a straight-line basis over the vesting period. Compensation expense for options and restricted stock granted to employees amounted to $643,000, $1.3 million, $1.6 million, $13.2 million, $9.0 million, and $2.0 million for the years ended June 30, 2001, 2002 and 2003, the six months ended December 31, 2003, the year ended December 31, 2004 and the six months ended June 30, 2005. Compensation expense for options and restricted stock granted to employees are classified between research and development and general and administrative expense based on employee job function.
We have accounted for stock options granted to non-employees on a fair-value basis in accordance with SFAS No. 123, Accounting for Stock-Based Compensation , Emerging Issues Task Force ("EITF") Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services , and FASB Interpretations No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans an Interpretation of APB Opinion No. 15 and 25 . As a result, the non-cash charge to operations for non-employee options with vesting or other performance criteria is affected each reporting period by changes in the fair value of our common stock. Compensation expense for options granted to non-employees amounted to $94,000, $75,000, ($7,000), $8,000, $15,000 and $172 for the years ended June 30, 2001, 2002 and 2003, the six months ended December 31, 2003, the year ended December 31, 2004 and the six months ended June 30, 2005, respectively. The amount of compensation expense to be recorded in the future for options granted to non-employees is subject to change each reporting period based upon changes in the fair value of our common stock, estimated volatility and risk free interest rate until the non-employee completes performance under the option agreement.
We may record additional deferred stock-based compensation if we grant additional options or change the terms of the options granted to our employees. On August 3, 2005, we made additional stock option grants. As a result, we will record additional stock-based compensation in the third quarter of 2005 (see Note 16 of our consolidated financial statements, included in this prospectus).
37
Beneficial Conversion Feature
In May 2003, we completed a private placement of 112,790,233 shares of Series J convertible preferred stock for an aggregate purchase price of approximately $55.3 million. As a result of this financing, our Series A through Series I preferred stockholders' original conversion prices were reduced due to anti-dilution adjustments, which resulted in a beneficial conversion of $80.7 million in accordance with EITF No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments . The beneficial conversion of $20.9 million was recorded as an immediate charge to additional paid-in capital, relating to our Series A, Series B, Series C, Series F and Series H convertible preferred stock, which are not mandatorily redeemable and may be converted to common stock at any time at the option of the holders. The remaining beneficial conversion of $59.9 million, relating to our Series E and Series I convertible preferred stock, which are mandatorily redeemable at any time on or after June 30, 2008, is being accreted ratably over the mandatory redemption period. Such accretion amounted to $1.7 million, $5.8 million, $11.6 million and $5.8 million for the year ended June 30, 2003, the six months ended December 31, 2003, the year ended December 31, 2004, and the six months ended June 30, 2005, respectively, and is charged to additional paid-in capital.
The issuance of Series J mandatorily redeemable convertible preferred stock resulted in a beneficial conversion amounting to $40.0 million in accordance with EITF No. 98-5. The beneficial conversion is calculated based on the estimated fair value of our common stock price per share at the date of issuance of Series J preferred stock of approximately $10.14 per share of common stock, which was calculated based on the estimated projected midpoint of the range of our initial public offering price per common share, which was planned in the fourth calendar quarter of 2003, and the stock price appreciation in comparable public companies from May 2003 to August 2003. The beneficial conversion feature is being accreted ratably over the mandatory redemption period, with a charge to additional paid-in capital of $1.1 million, $3.9 million, $7.8 million and $3.9 million for the year ended June 30, 2003, the six months ended December 31, 2003, the year ended December 31, 2004, and the six months ended June 30, 2005, respectively.
The unamortized portion of the beneficial conversion at June 30, 2005 was $58.2 million. Upon the closing of this offering, we will recognize a one time non-cash charge to additional paid in capital, reflecting the unamortized portion of the beneficial conversion feature as a result of the automatic conversion of all outstanding convertible preferred stock and mandatorily redeemable convertible preferred stock to common stock upon completion of this offering.
Other Income (Expense)
Interest income consists of interest earned on our cash, cash equivalents and short-term investments. Interest expense consists of interest expense on our GE Capital notes. Interest expense-related party consists of amortization of debt discount and accrued interest on our $7.5 million aggregate principal amount of EIS convertible notes, outstanding as of June 30, 2005. Other income consists primarily of unrealized gains from our investment securities.
Results of Operations
Six Months Ended June 30, 2005 Compared to Six Months Ended June 30, 2004
Product Sales
We recognized revenue from the sale of Zanaflex Capsules and Zanaflex tablets of $478,000 for the six months ended June 30, 2005, as compared to $0 for the six months ended June 30, 2004. We
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recognize product sales using a consignment model meaning that product sales are recorded as deferred revenue when shipped to the wholesaler and only recognized as revenue when end-user prescriptions of the product are filled. Product sales in the six months ended June 30, 2005, consist of Zanaflex tablet sales beginning in March 2005, which is when we began receiving prescription data for tablets containing a code clearly identifying these prescriptions as having been filled with product we sold, and Zanaflex Capsules prescription data beginning after our launch of the product in April 2005.
Deferred revenue from Zanaflex Capsules was $5.4 million as of June 30, 2005, as compared to $0 as of June 30, 2004. The increase in deferred revenue of Zanaflex Capsules was a result of our launch of the product in April 2005. We expect deferred revenue from Zanaflex Capsules to increase in the future as our sales and marketing efforts ramp up, and prescription data continues to lag wholesaler orders made in anticipation of demand.
Deferred revenue from Zanaflex tablets was $11.0 million as of June 30, 2005, an increase of $4.3 million since December 31, 2004, as compared to $0 as of June 30, 2004. The increase in deferred revenue of Zanaflex tablets was a result of continued sales of the product and the fact that we are not recognizing any of the deferred revenue from Zanaflex tablet inventory acquired from Elan until after the return period expires in June 2006. With respect to the $11.0 million of deferred revenue at June 30, 2005, approximately $3.0 million related to product that we acquired from Elan that had an expiration date of less than 12 months at the time we sold it during 2004. We believe there is a high likelihood that this product will be returned, which would result in our inability to recognize revenue related to these sales. We expect deferred revenue from Zanaflex tablets to decline over time as we attempt to convert Zanaflex tablet sales to Zanaflex Capsules sales.
Discounts and Allowances
We recorded discounts and allowances of $844,000 for the six months ended June 30, 2005 as compared to $0 for the six months ended June 30, 2004. Discounts and allowances are recorded when Zanaflex Capsules and Zanaflex tablets are shipped to wholesalers. We only began shipping Zanaflex tablets after our acquisition from Elan in July 2004 and Zanaflex Capsules in April 2005. Discounts and allowances for the six months ended June 30, 2005 consisted of $597,000 in cash discounts and $247,000 in reserves for chargebacks and rebates. As part of our April 2005 launch of Zanaflex Capsules, in April, May and June 2005 we extended a 6% promotional cash discount over and above the standard 2% discount provided to drug wholesalers and a 4% rebate on products resold by the wholesalers to pharmacies, hospitals and other third parties. We expect cash discounts to decrease in future periods.
Grant Revenue
Grant revenue for the six months ended June 30, 2005 was $155,000 compared to $317,000 for the six months ended June 30, 2004. Grant revenue is recognized when the related research expenses are incurred and our performance obligations under the terms of the respective contract are satisfied.
Cost of Sales
We recorded cost of sales of $1.4 million for the six months ended June 30, 2005 as compared to $0 for the six months ended June 30, 2004. Cost of sales for the six months ended June 30, 2005, consisted of $997,000 in royalty fees, $205,000 in inventory costs, and $199,000 in costs related to packaging, freight, and stability testing. For the six months ended June 30, 2004, we had no product sales and, as a result, no cost of sales.
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Research and Development
Research and development expenses for the six months ended June 30, 2005, were $7.1 million as compared to $13.5 million for the six months ended June 30, 2004, a decrease of approximately $6.4 million, or 47.4%. The decrease in research and development expenses was primarily attributable to completion of two Phase 3 clinical trials of Fampridine-SR in SCI, and one Phase 2 clinical trial of Fampridine-SR in MS, during the first quarter of 2004. The SCI clinical development program expense decreased from $4.7 million for the six months ended June 30, 2004 to $26,000 for the six months ended June 30, 2005, due to our decision to put the program on hold. The MS clinical development program expense decreased from $1.3 million for the six months ended June 30, 2004 to $1.0 million for the six months ended June 30, 2005, a decrease of 23.1%. We expect that expenses associated with our MS clinical development program will increase as we continue our Phase 3 clinical trial.
Other contract expenses increased to $3.6 million in the six months ended June 30, 2005, from $3.0 million in the six months ended June 30, 2004, an increase of 20.0%. This increase was a result of expenses of approximately $3.1 million related to the termination of the valrocemide collaboration in the six months ended June 30, 2005, offset by a $2.2 million decrease in expenses for the manufacture and stability testing of clinical supplies from the period ended June 30, 2004.
Operating expenses for clinical development and preclinical research and development decreased to $2.3 million in the six months ended June 30, 2005, from $4.1 million in the six months ended June 30, 2004, a decrease of $1.8 million, or 43.9%. This decrease was a result of approximately $900,000 in administrative support needed for our clinical trials. These expenses also include non-cash stock-based compensation expense of $246,000 for the six months ended June 30, 2005, and $1.1 million for the six months ended June 30, 2004.
Sales and Marketing
Sales and marketing expenses for the six months ended June 30, 2005, were $5.5 million compared to $1.7 million for the six months ended June 30, 2004, an increase of approximately $3.8 million or 223.5%. This increase was primarily attributable to $2.4 million for marketing and distribution and sales administration expense related to the launch of Zanaflex Capsules and the distribution of Zanaflex tablets and $1.2 million in salaries and benefits related to our Zanaflex Capsules specialty sales force.
General and Administrative
General and administrative expenses for the six months ended June 30, 2005, were $3.9 million compared to $8.1 million for the six months ended June 30, 2004, a decrease of approximately $4.2 million, or 51.9%. Total general and administrative expenses include non-cash stock based compensation expense of $1.3 million for the six months ended June 30, 2005, as compared to $4.2 million for the six months ended June 30, 2004, primarily attributable to the repricing in the first quarter of 2004 of options granted prior to 2004. In addition, the six months ended June 30, 2004, included approximately $1.2 million in outside NDA preparation services related to our Phase 3 trials of Fampridine-SR in SCI.
Other Income (Expense)
Other income (expense) decreased to a loss of $261,000 for the six months ended June 30, 2005, from a gain of $31,000 in the six months ended June 30, 2004, a decrease of $292,000. Interest expense increased by $312,000 primarily related to a $6.0 million secured term loan with GE Capital entered into in January 2005. The increase in interest expense was offset by an increase in interest income of $21,000 during the six months ended June 30, 2005.
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Beneficial Conversion Feature, Accretion of Issuance Costs, Preferred Dividends and Fair Value of Warrants Issued to Convertible Preferred Stockholders
Charges related to preferred stock remained relatively flat at $12.2 million for the six months ended June 30, 2005, and $12.3 million for the six months ended June 30, 2004. These charges primarily comprised accretion of issuance costs on Series E, Series I and Series J mandatorily redeemable convertible preferred stock, accrual of preferred dividend of on Series J and Series K mandatorily redeemable convertible preferred stock, accretion of beneficial conversion feature on Series A through Series I preferred stock for reset in conversion price and accretion of beneficial conversion feature on Series J preferred stock (see Notes 3, 8 and 11 to our consolidated financial statements included in this prospectus).
Year Ended December 31, 2004 Compared to Twelve Months Ended December 31, 2003 (1)
|
Twelve Months
Ended December 31, 2003 |
Year Ended
December 31, 2004 |
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(unaudited)
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(in thousands)
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Gross salesZanaflex | $ | | $ | | |||||
Less: discounts and allowances | | (4,417 | ) | ||||||
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Net sales | | (4,417 | ) | ||||||
Grant revenue | 764 | 479 | |||||||
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Total net revenue | 764 | (3,938 | ) | ||||||
Less: cost of sales | | (771 | ) | ||||||
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Gross profit | 764 | (4,709 | ) | ||||||
Operating expenses: | |||||||||
Research and development | 26,228 | 21,999 | |||||||
Research and developmentrelated party | 4,016 | | |||||||
Sales and marketing | | 4,662 | |||||||
General and administrative | 21,220 | 13,397 | |||||||
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Total operating expenses | 51,464 | 40,058 | |||||||
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Operating loss | (50,700 | ) | (44,767 | ) | |||||
Other income (expense): | |||||||||
Interest and amortization of debt discount expense | (82 | ) | (385 | ) | |||||
Interest and amortization of debt discount expenserelated party | (445 | ) | | ||||||
Interest income | 417 | 409 | |||||||
Other income | 30 | 2 | |||||||
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Total other income (expense) | (80 | ) | 26 | ||||||
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Net loss | (50,780 | ) | (44,741 | ) | |||||
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||||||||
Beneficial conversion feature, accretion of issuance costs, preferred dividends, and fair value of warrants issued to convertible preferred stockholders | (36,277 | ) | (24,746 | ) | |||||
Net loss allocable to common stockholders | $ | (87,057 | ) | $ | (69,487 | ) | |||
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Product Sales
We did not record product sales from the sale of either Zanaflex Capsules or Zanaflex tablets in the year ended December 31, 2004, or the twelve months ended December 31, 2003.
We did not record deferred revenue from Zanaflex Capsules in either period, as the product was not launched until April 2005. Deferred revenue from Zanaflex tablets was $6.7 million as of December 31, 2004, as compared to $0 as of December 31, 2003. With respect to the $6.7 million of deferred revenue at December 31, 2004, approximately $3.6 million related to product that we acquired from Elan that had an expiration date of less than 12 months at the time we sold it during 2004. We believe there is a high likelihood that this product will be returned, which would result in our inability to recognize revenue related to these sales.
Discounts and Allowances
We recorded discounts and allowances of $4.4 million for the year ended December 31, 2004, as compared to $0 for the twelve months ended December 31, 2003. Discounts and allowances for the year ended December 31, 2004, consisted of $128,000 in cash discounts and $207,000 for chargebacks and rebates. Additionally, in the year ended December 31, 2004, we took a $4.1 million charge to establish a reserve for expected returns of Zanaflex tablets sold by Elan prior to our acquisition of Zanaflex. As part of the acquisition of Zanaflex, we agreed to accept any returns of Zanaflex tablets that were returned subsequent to January 17, 2005, including returns of product that was originally sold by Elan.
Grant Revenue
Grant revenue for the year ended December 31, 2004, was $479,000 compared to $764,000 for the twelve months ended December 31, 2003. Grant revenue is recognized when the related research expenses are incurred and our performance obligations under the terms of the respective contract are satisfied.
Cost of Sales
We recorded cost of sales of $771,000 for the year ended December 31, 2004 as compared with $0 for the twelve months ended December 31, 2003. Cost of sales for the year ended December 31, 2004, consisted of $519,000 in royalty fees and $252,000 in inventory costs related to the sale of Zanaflex tablets. For the twelve months ended December 31, 2003, we had no product sales and, as a result, no cost of sales.
Research and Development
Research and development expense for the year ended December 31, 2004, was $22.0 million, as compared to $26.2 million for the twelve months ended December 31, 2003, a decrease of approximately $4.2 million, or 16.0%. Contributing to this decrease was completion of two Phase 3 clinical trials of Fampridine-SR in SCI, and one Phase 2 clinical trial of Fampridine-SR in MS, during the first quarter of 2004. The SCI clinical development program expense decreased to $5.9 million for the year ended December 31, 2004, as compared to $7.2 million for the twelve months ended December 31, 2003, a decrease of $1.3 million, or 18.1%. The MS clinical development program expense decreased to $2.9 million for the year ended December 31, 2004, as compared to $3.3 million for the twelve months ended December 31, 2003, a decrease of $400,000, or 12.1%. We expect that expenses associated with our MS clinical development program will increase as we continue our Phase 3 clinical trial. Our licensing expense decreased to $0 for the year ended December 31, 2004, as
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compared to $2.0 million for the twelve months ended December 31, 2003. This expense was attributable to an initial payment to Teva for our collaboration agreement for valrocemide.
Other contract expenses increased to $5.0 million for the year ended December 31, 2004, as compared to $1.9 million for the twelve months ended December 31, 2003, an increase of $3.1 million, or 163.2%. This increase is primarily the result of the inclusion of costs related to the drug development and supply of Fampridine-SR in other contract expenses for the year ended December 31, 2004. Prior to the termination of the joint venture with Elan in September 2003, this cost was included in Research and developmentrelated party expense. Also contributing to this increase was a cost of $914,000 relating to a terminated development program.
Operating expense for clinical development and preclinical research and development decreased to $7.6 million for the year ended December 31, 2004, as compared to $11.2 million for the twelve months ended December 31, 2003, a decrease of $3.6 million, or 32.1%. This decrease was partly attributable to a decline in non-cash stock-based compensation expense to $1.8 million for the year ended December 31, 2004, as compared to $3.0 million for the twelve months ended December 31, 2003. The decrease was also attributable to other expenses in the twelve months ended December 31, 2003, which included $508,000 of NDA expense and a $452,000 bonus accrual. In addition, research and development lab expense for the year ended December 31, 2004 was $277,000, as compared to $557,000 for the twelve months ended December 31, 2003, a decrease of $280,000.
Research and developmentrelated party expenses for the year ended December 31, 2004, were $0, as compared to $4.0 million for the twelve months ended December 31, 2003. This decrease was attributable to the termination of our MSRD joint venture with Elan in September 2003, after which all MSRD-related research and development expenses were included in clinical development expenses. Research and developmentrelated party expenses for the twelve months ended December 31, 2003 also included $2.0 million related to termination of the joint venture and $2.0 million in drug development and supply cost.
Sales and Marketing
Sales and marketing expense was $4.7 million for the year ended December 31, 2004, as compared to $0 for the twelve months ended December 31, 2003. This increase was attributable to the beginning of our commercial efforts after our acquisition of the Zanaflex products in July 2004 and included $2.1 million in expense for marketing, distribution, and sales administration, $1.2 million in salaries and benefits, approximately $765,000 in non-cash stock-based compensation expense, and approximately $600,000 in additional sales and marketing overhead expenses.
General and Administrative
General and administrative expense decreased to $13.4 million for the year ended December 31, 2004, from $21.2 million for the twelve months ended December 31, 2003, a decrease of approximately $7.8 million, or 36.8%. This decrease was partly attributable to a decrease in non-cash stock based compensation expense to $6.5 million for the year ended December 31, 2004, as compared to $11.8 million for the twelve months ended December 31, 2003, a decrease of approximately $5.3 million, or 44.9%. In addition, for the twelve months ended December 31, 2003, we had an additional $1.4 million in financing-related expenses as compared to the year ended December 31, 2004.
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Other income (expense) increased to a gain of $26,000 for the year ended December 31, 2004, compared to a loss of $80,000 for the twelve months ended December 31, 2003, an increase of $106,000. Interest expense decreased by $142,000 due to a decrease in interest expense on our EIS convertible promissory notes, offset by an increase in interest expense from our GE Capital notes, and a decrease of $8,000 in interest income for the year ended December 31, 2004, as compared to the twelve months ended December 31, 2003.
Beneficial Conversion Feature Accretion of Issuance Costs, Preferred Dividends and Fair Value of Warrants Issued to Convertible Preferred Stockholders
Charges related to preferred stock decreased to $24.8 million for the year ended December 31, 2004, from $36.3 million for the twelve months ended December 31, 2003. For the year ended December 31, 2004, charges were primarily comprised of beneficial conversion charges of $19.5 million on Series E, Series I and Series J convertible preferred stock, accretion of issuance costs of $106,000, and preferred dividends of $5.2 million (see Notes 3 and 8 to our consolidated financial statements in this prospectus). For the twelve months ended December 31, 2003, charges were primarily comprised of beneficial conversion charges of $33.9 million on Series A, B, C, F and H convertible preferred stock, and Series E, I and J mandatorily redeemable convertible preferred stock, accretion of issuance costs of $86,000, and preferred dividends of $2.8 million (see Notes 3, 8 and 11 to our consolidated financial statements in this prospectus).
Year Ended June 30, 2003 Compared to Year Ended June 30, 2002
Grant Revenue
Grant revenue for the year ended June 30, 2003, was $474,000 compared to $132,000 for the year ended June 30, 2002. For the year ended June 30, 2003, we deferred approximately $95,000 in grant revenue since it related to funding for the purchase of equipment.
Research and Development
Research and development expense for the year ended June 30, 2003, was $17.5 million, as compared to $11.1 million for the year ended June 30, 2002, an increase of approximately $6.4 million, or 57.7%. The increase was primarily attributable to acceleration in patient enrollment for both the Phase 2 clinical trial of Fampridine-SR in MS, as well as two Phase 3 clinical trials of Fampridine-SR in SCI. The SCI study expenses increased to $5.8 million for the year ended June 30, 2003, as compared to $3.4 million for the year ended June 30, 2002, an increase of $2.4 million, or 70.6%. The MS study expense increased to $1.6 million for the year ended June 30, 2003, as compared to $900,000 for the year ended June 30, 2002.
Operating and other contract expense for clinical development and preclinical research and development increased to $8.4 million for the year ended June 30, 2003, as compared to $6.0 million for the year ended June 30, 2002, an increase of $2.4 million, or 40.0%. These expenses include a non-cash stock-based compensation expense of $478,000 for the year ended June 30, 2003, as compared to $455,000 for the year ended June 30, 2002. This increase is also attributable to increased staffing and support required for the new clinical trials.
Research and development-related party expenses were $2.3 million for the year ended June 30, 2003, as compared to $4.7 million for the year ended June 30, 2002, a decrease of $2.4 million, or 51.1%. This decrease in expense was due to reduced development activities by Elan related to Fampridine-SR during the year ended June 30, 2003.
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General and Administrative
General and administrative expense of $6.4 million remained relatively flat for the year ended June 30, 2003, as compared to $6.6 million for the year ended June 30, 2002. The decrease in general and administrative expense was primarily due to management's decision to defer spending for market research and medical communications during the year ended June 30, 2003. General and administrative expenses also include non-cash stock based compensation expense of $1.1 million for the year ended June 30, 2003, as compared to $950,000 for the year ended June 30, 2002, an increase of approximately $150,000, or 15.8%.
Other Income (Expense)
Other income (expense) decreased to a loss of $28,000 for the year ended June 30, 2003, compared to a gain of $576,000 for the year ended June 30, 2002, a decrease of $604,000. This decrease was primarily attributable to a decrease in interest income of $591,000 due to lower average cash balances and lower interest earned on cash balances during the year ended June 30, 2003.
Minority Interest
Minority interest decreased to $0 for the year ended June 30, 2003, compared to $580,000 for the year ended June 30, 2002. Elan's previous ownership interest in MSRD, a joint venture that was owned approximately 83% by Acorda and approximately 17% by Elan and another minority stockholder, was reflected as minority interest in our consolidated financial statements. In the year ended June 30, 2003, Elan ceased funding its share of the joint venture's expenses, and therefore there is no minority interest for the year ended June 30, 2003. The assets of this joint venture were transferred to us as of September 2003.
Beneficial conversion feature, accretion of issuance costs, preferred dividends and fair value of warrants issued to convertible preferred stockholders
Charges related to preferred stock increased to $24.3 million for the year ended June 30, 2003, as compared to $55,000 for the year ended June 30, 2002. For the year ended June 30, 2003, charges were primarily comprised of accretion of issuance costs of $66,000 on Series E, Series I and Series J mandatorily redeemable convertible preferred stock, accrual of preferred dividend of $630,000 on Series J mandatorily redeemable convertible preferred stock, accretion of beneficial conversion feature of $23.6 million on Series A through Series J preferred stock for reset in conversion price and accretion of beneficial conversion feature of $1.1 million on Series J preferred stock (see Notes 3, 8 and 11 to our consolidated financial statements included in this prospectus). For the year ended June 30, 2002, charges were primarily comprised of accretion of issuance costs on Series E and Series I mandatorily redeemable convertible preferred stock (see Note 3 and 8 to our consolidated financial statements included in this prospectus).
Liquidity and Capital Resources
We have incurred annual operating losses since inception, and, as of June 30, 2005, we had an accumulated deficit of approximately $191.0 million. We have financed our operations primarily through private placements of our securities, and, to a lesser extent, from loans and government grants. From our inception through June 30, 2005, we raised aggregate net proceeds of $147.9 million through private placements of equity securities. In January 1997, EIS loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes to partly fund our research and development activities, all of which was outstanding as of June 30, 2005. In August and September 2002, we financed certain of our fixed assets through two financing agreements with General Electric Capital Corporation, or GE Capital, in the aggregate amount of approximately $1.2 million, of which $273,769 was outstanding as
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of June 30, 2005. In January 2005, we entered into a $6.0 million senior secured term loan, collateralized by all of our personal property and fixtures.
At June 30, 2005, cash and cash equivalents and short-term investments were approximately $14.7 million, as compared to $32.9 million at June 30, 2004. Our cash and cash equivalents consist of highly liquid investments with original maturities of three months or less at date of purchase and consist of time deposits and investments in money market funds with commercial banks and financial institutions and high-quality government and investment grade corporate bonds. Also, we maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. Our short-term investments consist of corporate debt securities with original maturities greater than three months and less than one year. The balance of these investments was $11.4 million as of June 30, 2005, as compared to $24.7 million as of June 30, 2004. As of June 30, 2005, our cash and cash equivalents were $3.3 million, and our short-term investments were $11.4 million, as compared to $8.2 million and $24.7 million respectively, as of June 30, 2004.
Net Cash Used by Operations
Net cash used by operations was $18.1 million, $24.5 million, and $27.2 million for the years ended June 30, 2002 and 2003 and the year ended December 31, 2004, respectively, and $19.3 million and $12.2 million for the six months ended June 30, 2004 and 2005, respectively. Cash used by operations for the six months ended June 30, 2005 was primarily attributable to a net loss of $18.5 million, an increase in accounts receivable of $2.2 million, an increase in return-related liabilities of $1.7 million and an increase in inventory of $3.8 million attributable to the launch of Zanaflex Capsules. Cash used in operations for the six months ended June 30, 2005, was offset by stock compensation expense of $2.0 million, an increase in deferred revenue of $9.7 million from Zanaflex sales, and a $2.3 million increase in accounts payable, accrued expenses and other current liabilities, primarily due to $1.6 million in inventory-related invoices. Amounts classified as royalty payable as of December 31, 2003, are included in accounts payable, accrued expenses and other current liabilities as of June 30, 2004, due to their reclassification as a current liability.
Cash used by operations for the six months ended June 30, 2004, of $19.3 million was primarily due to a net loss of approximately $22.9 million and a decrease in accounts payable of $1.9 million due to timing of our payments. The cash used in operations for the six months ended June 30, 2004, was offset by stock compensation expense of $5.3 million.
Cash used by operations for the year ended December 31, 2004, of $27.2 million was due to a net loss of $44.7 million, a $1.9 million increase in accounts receivable from Zanaflex sales and a $1.9 million decrease in accounts payable; accrued expenses and other current liabilities, primarily due to a $1.1 million decrease in bonus accruals. Cash used by operations for the year ended December 31, 2004, was offset by stock compensation expense of $9.1 million, depreciation and amortization expense of $1.2 million; an increase in deferred product revenue of $6.7 million; an increase in returns liability of $4.1 million; and an increase in royalty payable of $750,000 for Zanaflex sales.
Cash used by operations for the year ended June 30, 2003, of $24.5 million was due to a net loss of $25.7 million; a reduction in amounts due to Elan of $593,000, primarily due to lower drug development charges; an increase in prepaid expenses and other current assets of $402,000; a $154,000 increase in interest receivable on our short term investments and an increase in other receivables and an increase in grant receivable of $214,000. The cash used in operations for the year ended June 30, 2003 was offset by stock compensation expense of $1.6 million, depreciation and amortization expense of $740,000 and amortization of debt discount relating to our $7.5 million aggregate principal amount convertible notes payable to EIS of $219,000.
Cash used by operations for the year ended June 30, 2002, of $18.1 million was due to a net loss of approximately $21.2 million and minority interest of $580,000. The cash used in operations for the
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year ended June 30, 2002, was partially offset by stock compensation expenses of $1.4 million; expensing of warrants and beneficial conversion charge of $618,000 on Series C preferred stock issued to Elan, an increase of $580,000 primarily due to increased drug development charges from Elan, depreciation and amortization expense of $417,000, amortization of debt discount relating to our $7.5 million aggregate principal amount of convertible promissory notes payable to EIS of $258,000, increase in accounts payable and accrued expenses and other current liabilities of $224,000 due to higher expenses incurred as research and development projects progress.
Net Cash Used in/Provided by Investing
Net cash used in investing activities for the six months ended June 30, 2005, was $2.2 million, primarily due to the net reinvestment of $2 million of surplus cash into marketable securities. In addition, we purchased property and equipment of $119,000 in the six months ended June 30, 2005. Net cash provided by investing activities for the six months ended June 30, 2004, was $7.2 million, primarily due to $7.5 million in net proceeds received from maturities of short-term investments. Net cash provided by investing activities for the six months ended June 30, 2004, was offset by $275,000 in purchases of property and equipment. We had no material commitments to purchase property and equipment as of June 30, 2005.
Net cash provided by investing activities for the year ended December 31, 2004, was $18.8 million, primarily due to $22.8 million in net proceeds received from maturities of short-term investments. Net cash provided by investing activities for the year ended December 31, 2004, was offset by $3.5 million in purchases of intangible assets related to the acquisition of Zanaflex and $532,000 in purchases of property and equipment.
Net cash used in investing activities for the year ended June 30, 2003 was $10.2 million, primarily due to the net reinvestment of $9.4 million of surplus cash into marketable securities and purchase of property and equipment of $748,000. Net cash used in investing activities for the year ended June 30, 2002 was $5.1 million and was primarily due to purchase of short-term investment of $2.8 million and purchase of purchased property and equipment of $2.2 million in the year ended June 30, 2002. We incurred significant expenses in acquiring property and equipment in the year ended June 30, 2002 as a result of the expansion of our office and laboratory facilities.
Net Cash Used in/Provided by Financing
Net cash provided by financing activities for the six months ended June 30, 2005, was $5.8 million, primarily due to $5.8 million in proceeds received from the GE Capital senior secured loan and $215,000 in proceeds received from issuance of warrants to GE Capital in conjunction with the issuance of the GE Capital senior secured loan, offset by approximately $173,000 in repayments of notes payable.
Net cash provided by financing activities for the six months ended June 30, 2004, was $11.3 million, primarily due to proceeds from issuance of preferred stock. In March 2004, we completed a private placement of 1,533,327 shares of Series K mandatorily redeemable convertible preferred stock at $7.50 per share for an aggregate purchase price of approximately $11.5 million. Issuance costs of $55,000 related to this financing were netted against proceeds received. Net cash provided by financing activities for the six months ended June 30, 2004, was offset by $158,000 in repayments of notes payable to GE Capital.
Net cash provided by financing activities for the year ended December 31, 2004, was $11.1 million, primarily due to proceeds from issuance of the Series K preferred stock. Net cash provided by financing activities for the year ended December 31, 2004, was offset by $324,000 in repayments of notes payable to GE Capital.
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Net cash provided by financing activities in the years ended June 30, 2003, and 2002 was $55.9 million and $2.1 million, respectively. The cash provided in the year ended June 30, 2003, was primarily due to proceeds of $55.3 million from the issuance of Series J mandatorily redeemable stock. Issuance costs of $334,000 related to this financing were netted against proceeds received. In the year ended June 30, 2003, also we entered into two financing agreements with GE Capital and received aggregate proceeds in the amount of $1.2 million. In the year ended June 30, 2002, we received proceeds from the issuance of preferred stock of approximately $1.3 million. Proceeds from the issuance of preferred stock primarily consisted of the issuance of 150,000 Series B preferred stock for an aggregate purchase price of $300,000 and 333,333 Series C preferred stock for an aggregate purchase price of $1.0 million to Elan as part of our January 1997 License and Supply Agreement.
Future Capital Needs
Our future capital requirements will depend on a number of factors, including the amount of revenue generated from sales of Zanaflex Capsules, the continued progress of our research and development activities, the timing and outcome of regulatory approvals, the amount and timing of milestone or other payments made under collaborative agreements, the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims and other intellectual property rights and the acquisition of licenses to new products or compounds. We expect to incur losses from operations for at least the next several years as we continue to expand our sales and marketing infrastructure and increase our marketing efforts to support the commercialization of Zanaflex Capsules, continue our clinical development of Fampridine-SR and advance our preclinical programs.
We believe our existing cash and cash equivalents and short-term investment, together with the net proceeds from this offering, will be sufficient to fund our operating expenses, debt repayments and capital equipment requirements for approximately the next 18 months from the date of this prospectus. To the extent our capital resources are insufficient to meet future operating requirements, we will need to raise additional capital or incur indebtedness to fund our operations. We may be unable to obtain additional debt or equity financing on acceptable terms, if at all. If adequate funds are not available, we may be required to curtail our sales and marketing efforts, delay, reduce the scope of or eliminate some of our research and development programs or obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain product candidates that we might otherwise seek to develop or commercialize independently.
Contractual Obligations and Commitments
In January 2005, we entered into a $6.0 million senior secured term loan with GE Capital. We are required to pay monthly installments until February 2008, with interest-only payments for the first six months followed by principal and interest payments for the remaining 29 months. Interest is fixed at the rate of 9.93% per annum. The loan is secured by all of our personal property and fixtures.
In 2002, we entered into two financing agreements with GE Capital for an aggregate amount of approximately $1.2 million, to finance the purchase of certain property and equipment. One note is for $766,781 and bears an annual fixed interest rate of 8.88%. The second note is for $386,731 and bears an annual fixed interest rate of 8.57%. These financing arrangements are secured by certain of our property and equipment and do not include any debt covenants. We are required to pay monthly installments until October 2006. The aggregate principal payments required subsequent to June 30, 2005 are $129,115 in 2005, and $144,654 in 2006.
In January 1997, EIS loaned us an aggregate of $7.5 million pursuant to two convertible promissory notes. One promissory note in the principal amount of $5.0 million bears interest at a rate of 3% which began on the first anniversary of the note. The other promissory note in the amount of $2.5 million is non-interest bearing. The unpaid principal of $5.0 million note is convertible into shares
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of our Series D preferred stock at a conversion price of $12.50 per share. The $2.5 million promissory note is convertible after January 22, 1999, into either shares of Series B preferred stock at a conversion price of $2.00 per share or into an undesignated series of preferred stock at a conversion price equal to 80% of the most recently completed equity financing, whichever conversion price is greater. If our preferred stock is no longer outstanding, these notes will be convertible into shares of our common stock. Principal and interest are repayable, if not converted, ratably over a seven-year period, beginning one year after we receive regulatory approval for certain products to be developed, subject to limitations related to gross margin on product sales. If we and Elan determine that regulatory approval will not likely occur, the $5.0 million promissory note will automatically convert into the underlying common stock. If our license and supply agreements with Elan are terminated for any other reason, the principal and interest is repayable ratably over 15 years.
Under our Zanaflex purchase agreement with Elan, we are obligated to make milestone payments to Elan of up to $19.5 million based on cumulative gross sales of Zanaflex tablets and Zanaflex Capsules. As of June 30, 2005, we have made or accrued $1.5 million of these milestone payments in the consolidated financial statements. Under our Zanaflex supply agreement with Elan, we are required to provide to Elan an 18-month rolling forecast at the beginning of each month and a two-year forecast not later than July 1 of each year. We are bound to order one hundred percent of the forecast required quantities for each five month period immediately following each monthly forecast report. At June 30, 2005, the forecast requirement for the five month period following June 30, 2005 amounted to approximately $3.4 million.
Under our Fampridine-SR license agreement with Elan, we are obligated to make milestone payments to Elan of up to $15.0 million over the life of the contract and royalty payments as a percentage of product sales. In addition, under our various other research, license and collaboration agreements we are obligated to make milestone payments of up to an aggregate of approximately $16.9 million over the life of the contracts.
The following table summarizes our contractual obligations as of December 31, 2004. This table should be read in conjunction with the accompanying notes to our consolidated financial statements:
Twelve Month Period Ending December 31,
|
Notes
Payable(1) |
Operating
Leases |
||||
---|---|---|---|---|---|---|
|
(in thousands)
|
|||||
2005 | $ | 1,202 | $ | 642 | ||
2006 | 2,462 | 642 | ||||
2007 | 2,558 | 642 | ||||
2008 | 225 | 53 | ||||
|
|
|||||
Total | $ | 6,447 | $ | 1,979 | ||
|
|
Under the terms of the employment agreement with our chief executive officer, Ron Cohen, we are obligated to pay severance under certain circumstances. If the employment agreement is terminated by us or by our chief executive officer for reasons other than for cause, we must pay (i) an amount equal to the base salary the chief executive officer would have received during the fifteen month period immediately following the date of termination, plus (ii) bonus equal to last annual bonus received by chief executive officer multiplied by a fraction, the numerator of which shall be the number of days in the calendar year elapsed as of the termination date and the denominator of which shall be 365.
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Subsequent Events
For a discussion of material events that have taken place subsequent to June 30, 2005, please refer to Note 16 to our consolidated financial statements included in this prospectus.
Quantitative and Qualitative Disclosures about Market Risk
Our financial instruments consist of cash and cash equivalents, short-term investments, grant receivable, notes payable, convertible notes payable and accounts payable. The estimated fair values of all of our financial instruments, excluding convertible notes payable to EIS, approximate their carrying amounts at June 30, 2005. The terms of these notes are disclosed at Note 11 to the consolidated financial statements.
We have cash equivalents and marketable securities at June 30, 2005, which are exposed to the impact of interest rate changes and our interest income fluctuates as our interest rates change. Due to the short-term nature of our investments in money market funds and corporate debt securities, the carrying value of our cash equivalents and marketable securities approximate their fair value at June 30, 2005.
We maintain an investment portfolio in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. Although our investments are subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer or type of investment. Our investments are also subject to interest rate risk and will decrease in value if market interest rates increase. However, due to the conservative nature of our investments and relatively short duration, interest rate risk is mitigated. We do not own derivative financial instruments. Accordingly, we do not believe that there is any material market risk exposure with respect to derivative or other financial instruments.
Effects of Inflation
Our most liquid assets are cash, cash equivalents and short-term investments. Because of their liquidity, these assets are not directly affected by inflation. Because we intend to retain and continue to use our equipment, furniture and fixtures and leasehold improvements, we believe that the incremental inflation related to replacement costs of such items will not materially affect our operations. However, the rate of inflation affects our expenses, primarily employee compensation and contract services, which could increase our level of expenses.
Critical Accounting Policies and Estimates
The following discussion of critical accounting policies identifies the accounting policies that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. It is not intended to be a comprehensive list of all of our significant accounting policies, which are more fully described in Note 2 of the notes to the consolidated financial statements included in this prospectus. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management's judgment in their application. There are also areas in which the selection of an available alternative policy would not produce a materially different result. We have identified the following as our areas of critical accounting policies: sales revenue recognition, research and development, income taxes, and stock-based compensation.
Revenue Recognition
We defer revenue on product shipments to our wholesalers based upon SFAS No. 48, Revenue Recognition When the Right of Return Exists , which among other criteria requires that future returns can
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be reasonably estimated in order to recognize revenue. The amount of future tablet returns is uncertain due to generic competition and anticipated customer conversion to Zanaflex Capsules. Zanaflex Capsules are a new product with no historical return data. Due to the uncertainty of returns for both products, we are accounting for these product shipments using a consignment model. Under the consignment model, we do not recognize revenue upon product shipment. For these product shipments, we invoice the wholesaler, record deferred revenue at gross invoice sales price, and classify the inventory held by the wholesaler as "consigned inventory". We recognize revenue on consigned inventory when such inventory is prescribed to the end-user, on a first-in first-out (FIFO) basis. The revenue to be recognized is based on (1) the estimated prescription demand based on pharmacy sales for our products, (2) analysis of third-party information, including third-party market research data, (3) internal product sales information and (4) wholesaler inventory levels and re-order information. Our sales and revenue recognition for such consigned inventory reflect our estimates of actual product prescribed to the end-user.
At December 31, 2004, and June 30, 2005, we had deferred revenue from Zanaflex tablets of $6.6 million and $11.0 million, respectively, of which $3.6 million and $3.0 million (unaudited), respectively, was related to product acquired from Elan that had an expiration date of less than 12 months at the time we sold it during 2004. We believe there is a high likelihood that this product will be returned, which would result in our inability to recognize related revenue.
If such product is returned the deferred revenue liability upon a return would offset the associated receivable or any credit we may issue if the wholesaler previously paid the invoice. Our net revenues represent total revenues less allowances for customer credits, including estimated discounts, rebates and chargebacks. Product shipping and handling costs are included in cost of sales. At the time revenue is recognized, an adjustment to revenue is recorded for estimated chargebacks, rebates and discounts. In addition, we record a charge to cost of goods sold for estimated product returns at the time of product shipment to wholesalers adjusted to reflect known changes in the factors that impact such reserves. Reserves for chargebacks, rebates and discounts are established based on contractual terms with customers, analysis of historical levels of discounts, chargebacks and rebates, communications with customers and purchased information about the rate of prescriptions being written and the levels of inventory remaining in the distribution channel as well as expectations about the market for each product and anticipated introduction of competitive products.
As part of the acquisition of Zanaflex, we agreed to accept any returns of Zanaflex tablets that were returned subsequent to January 17, 2005, including returns of product that was originally sold by Elan. Product returns prior to that date were the responsibility of Elan. We have recorded a liability of $4.1 million in 2004 for the remaining estimated returns of Zanaflex tablets sold by Elan. Under our return policy, our obligation to accept returns for product sold by Elan expires in June 2006.
Research and Development
Research and development expenses include the costs associated with our internal research and development activities including, salaries and benefits, occupancy costs, and research and development conducted for us by third parties, such as sponsored university-based research, and clinical trial vendors. In addition, research and development expenses include expenses related to grant revenue and the cost of clinical trial drug supply shipped to our clinical study vendors. We account for our clinical study costs by estimating the total cost to treat a patient in each clinical trial and recognizing this cost as we estimate when the patient receives treatment, beginning when the patient enrolls in the trial. This estimated cost includes payments to the trial site and patient-related costs, including laboratory costs related to the conduct of the trial. Cost per patient varies based on the type of clinical trial, the site of the clinical trial, and the length of the treatment period for each patient. As actual costs become known to us, we adjust our accrual; such changes in estimate may be a material change in our clinical study accrual, which could also materially affect our results of operations.
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Income Taxes
As part of the process of preparing our financial statements we are required to estimate our income taxes in each of the jurisdictions in which we operate. We account for income taxes by the liability method. Under this method, deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end, based on enacted laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We have not recorded any tax provision or benefit for the years ended June 30, 2002 and 2003 and December 31, 2004 and for the six months ended June 30, 2005. We have provided a valuation allowance for the full amount of our net deferred tax assets since realization of any future benefit from deductible temporary differences and net operating loss carry-forwards cannot be sufficiently assured at June 30, 2005.
As of June 30, 2005, we had available net operating loss carry-forwards of approximately $60.6 million for federal and state income tax purposes, which are available to offset future federal and state taxable income, if any, and expire between 2009 and 2024 and research and development tax credit carry-forwards of approximately $1.4 million for federal income tax reporting purposes which are available to reduce federal income taxes, if any, through 2018. Since our inception, we have incurred substantial losses and expect to incur substantial and recurring losses in future periods. The Internal Revenue Code of 1986, as amended, the Code, provides for a limitation of the annual use of net operating loss and research and development tax credit carry forwards (following certain ownership changes, as defined by the Code) that could significantly limit our ability to utilize these carry-forwards. We have experienced various ownership changes, as defined by the Code, as a result of past financings. Accordingly, our ability to utilize the aforementioned carry-forwards may be limited. Additionally, because U.S. tax laws limit the time during which these carry forwards may be applied against future taxes we may not be able to take full advantage of these attributes for federal income tax purposes.
Stock-Based Compensation
We account for options and restricted stock granted to employees and directors in accordance with Statement of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation , and related interpretations. As such, compensation expense is recorded on stock option grants based on the fair value of the options granted, which is estimated on the date of grant using the Black-Scholes option-pricing model and it is recognized on a straight-line basis over the vesting period. Compensation expense for restricted stock granted is based on the fair value of the restricted stock granted and is recognized on a straight-line basis over the vesting period. We account for stock options granted to non-employees on a fair-value basis in accordance with SFAS No. 123, Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services , and FASB Interpretations No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans an Interpretation of APB Opinion No. 15 and 25 . As a result, the non-cash charge to operations for non-employee options with vesting or other performance criteria is affected each reporting period by changes in the estimated fair value of our common stock. The two factors which most affect charges or credits to operations related to stock-based compensation are the fair value of the common stock underlying stock options for which stock-based compensation is recorded and the volatility of such fair value. If our estimates of the fair value of these equity instruments change, it would have the effect of changing compensation expenses. Because shares of our common stock have not been publicly traded, we estimate the fair value of our common stock considering, among other factors, the most recent previous sale of convertible preferred stock (pro forma for the 1-for-1.3 reverse split that we intend to effect on or about the date of this prospectus). We do not discount the issuance price of our preferred stock in estimating the fair value of our common stock.
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Acorda Therapeutics is a commercial-stage biopharmaceutical company dedicated to the identification, development and commercialization of novel therapies that improve neurological function in people with MS, SCI and other disorders of the central nervous system. Our marketed drug, Zanaflex Capsules, is FDA-approved for the management of spasticity. Our lead product candidate, Fampridine-SR, is in a Phase 3 clinical trial for the improvement of walking ability in people with MS. Our preclinical programs also target MS and SCI as well as other CNS disorders, including stroke and traumatic brain injury.
Approximately 650,000 people in the United States suffer from MS or SCI and the combined annual cost of treatment for these conditions exceeds $13 billion. In addition, it is estimated that a total of approximately 9 million people live with the long-term consequences of traumatic brain injury and stroke in the United States. Our goal is to continue to grow as a fully-integrated biopharmaceutical company by commercializing therapeutic products, developing our product candidates and advancing our preclinical programs for these large and underserved markets.
Company Highlights
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pivotal efficacy studies required for drug approval. We believe Fampridine-SR is the first potential therapy in late-stage clinical development for MS that seeks to improve the function of damaged nerve fibers and would be complementary to existing drugs used to treat MS. To our knowledge, there are no current therapies approved or in development that improve walking ability in people with MS.
Background and Market Opportunity
The Challenge of Nervous System Disorders
The spinal cord and brain together comprise the CNS. The billions of nerve cells that make up the CNS, in conjunction with the nerve bundles that run through all parts of the body, which is called the peripheral nervous system, transmit the electrical impulses necessary to sustain, regulate and monitor every aspect of human life. The spinal cord serves as the master link between the brain and the body and carries information that regulates movement, sensation and involuntary functions, such as breathing, blood pressure, temperature control, and bladder, bowel and sexual functions.
Nerve impulses travel within and between the brain and spinal cord via long, thin fibers, or axons, that transmit information to other nerve cells through microscopic junctions called synapses. When axons are damaged or lost, they do not normally regenerate, and there is only very limited adaptability, or plasticity, of the surviving axons that allow them to take over the role of damaged or lost axons. The myelin sheath that surrounds axons in the brain and spinal cord provides insulation that facilitates the transmission of nerve impulses. We refer to the axon and its surrounding myelin sheath as a nerve fiber. The myelin sheath is composed of multiple layers of tightly packed cell membrane and is vulnerable to damage in conditions like MS and SCI. Once damaged, it is often not effectively repaired. Although nerve fibers can survive in a demyelinated state, their ability to conduct nerve impulses may be completely lost or severely compromised.
Our Approach to the Market for CNS Disorders
We are focused on identifying, developing and commercializing novel pharmaceutical products that address large and underserved CNS markets. We view MS and SCI as the primary markets for our
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products as well as strategic points of access to a broad range of additional neurological conditions for the following reasons:
For people with MS, SCI and similar chronic neurological conditions, even relatively small and incremental improvements in CNS function can produce meaningful benefits in their quality of life.
Spasticity
Spasticity refers to the often painful involuntary tensing, stiffening or contracting of muscles. Spasticity is not a disease but a symptom of other conditions, such as MS, SCI, stroke, traumatic brain injury and cerebral palsy, where portions of the nervous system that control voluntary movement have been damaged. This damage results in the nerve cells in the spinal cord becoming disconnected from controlling centers in the brain and, as a result, transmitting unregulated impulses to the muscles. People who have spasticity may not experience it all the timeit may be triggered by a stimulus, such as pain, pressure sores, cold weather or a urinary tract infection. Up to 75% of people with chronic SCI, and the majority of people with MS, experience some form of spasticity. We Move, a non-profit organization dedicated to movement disorders, estimates that spasticity affects approximately 500,000 people in the United States and over 12 million worldwide.
Current treatments for spasticity are focused on reducing spasm frequency, pain or irritating stimuli that can provoke spasticity. Treatment of spasticity often involves a combination of physical therapy and oral medications. Baclofen and tizanidine, the active ingredient in the Zanaflex products, are the two most frequently prescribed oral medications for spasticity. For more intractable spasticity, treatments sometimes include surgical or chemical destruction of nerve roots in the affected area.
Multiple Sclerosis
The National Multiple Sclerosis Society, or NMSS, currently estimates that 400,000 people in the United States have multiple sclerosis. The NMSS estimates that the medical costs associated with treating MS in the United States were approximately $6.2 billion in 2004. Medications accounted for approximately $3.5 billion of these costs. MS is more prevalent in Caucasians and women and is generally diagnosed between the ages of 20 and 50.
MS is a degenerative CNS disorder in which the immune system attacks and damages the insulating myelin sheath. This damage, which can occur at multiple sites in the CNS, blocks or diminishes conduction of electrical impulses. People with MS may suffer impairments in any number of neurological functions. These impairments vary from individual to individual and over the course of time, depending on which parts of the brain and spinal cord are affected, and often include difficulty walking, spasticity, fatigue, lack of stamina and loss or disturbance of vision. They may also include loss of sensation, loss of bowel and bladder control, sexual dysfunction, depression, neuropathic pain,
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muscle paralysis, dizziness, tremors and cognitive difficulties. Individuals vary in the severity of the impairments they suffer on a day-to-day basis, with impairments becoming better or worse depending on the activity of the disease on a given day. An individual with MS may function normally one day and experience one or more symptoms of MS the next.
MS is generally classified by how the disease progresses. The most common classification is relapsing-remitting MS, in which people go through periods during which their disease is relatively stable or in remission, only to experience a recurrence of their disease, known as a relapse, which creates additional damage and loss of function. Approximately 10% of MS cases in the United States. are diagnosed as primary progressive MS, which does not involve distinct attacks but rather a steady worsening of symptoms. Secondary progressive MS involves an initial period of relapsing-remitting disease followed by a steady worsening that is punctuated by more severe flare-ups and partial remissions. Most people with relapsing-remitting disease will eventually convert to secondary progressive disease, though this may not occur for many years.
There are no current treatments that address the weakness and loss of mobility that is a major aspect of the progressive disability experienced by people with MS. Existing treatments are classified as relapse management, disease course management and symptom relief.
Relapse Management. The majority of neurologists treating people with MS use intravenous high-dose corticosteroids for the treatment of sudden and severe relapses. Generally, people experiencing a severe relapse receive a four-day course of steroids on either an in-patient or out-patient basis. This treatment may shorten the time required for recovery from such a relapse.
Disease Course Management. Drugs that modify the immune reactions associated with nerve damage in MS include Avonex, Betaseron, Copaxone and Rebif. These drugs are approved only for the relapsing-remitting form of the disease. Other drugs that suppress the immune system include drugs initially approved to treat cancer, such as Novantrone, which is approved for the treatment of relapsing or secondary progressive MS, and methotrexate. These medications produce a reduction in relapse rate, rather than a halting or reversal of the disease process. They do not restore lost neurological function.
Symptom Relief. Doctors also prescribe a number of drugs to address the secondary disabilities, or symptoms, associated with MS. These include treatments for spasticity, fatigue, bladder and bowel control, depression and pain. Baclofen and tizanidine are the most frequently prescribed drugs for spasticity. Commonly prescribed drugs for other symptoms include Ditropan or Detrol for bladder dysfunction, Provigil for fatigue, fluoxetine for depression, and amitriptyline for pain.
Spinal Cord Injury
According to the National Spinal Cord Injury Statistical Center, approximately 250,000 people in the United States live with the long-term consequences of SCI and approximately 11,000 new spinal cord injuries occur each year, typically in young men. The majority of people with SCI are injured under the age of 30 and live with permanent disability and multiple related medical conditions for more than 40 years after their injury. The National Spinal Cord Injury Database at the University of Alabama estimates that the average lifetime costs directly attributable to SCI for an individual injured at age 25 varies from approximately $600,000 to $2.8 million depending on the severity of the injury.
The spinal cord can be injured by physical trauma that bends the neck or body violently, such as vehicular or diving accidents, or by objects that penetrate or impact the spinal cord, such as a bullet or a knife. The spinal cord can also be injured by loss of blood flow due to damage to major blood vessels or during surgical procedures. When an area of the spinal cord is damaged, motor and sensory function are impaired throughout those parts of the body that are below the level of the injury.
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Until recently, SCI was considered an untreatable and incurable condition. Within the last two decades, researchers have shown that the spinal cord is not severed in most people with SCI. Rather, stretching or compression of the cord causes nerve fibers and blood vessels to tear and unleashes a secondary process of bleeding, loss of blood flow and inflammation that causes more tissue damage. The majority of people with spinal cord injury have some axons that survive within or around the site of injury. Because of these surviving axons, approximately 50% of people with SCI have some motor and/or sensory function remaining below the level of the injury and are said to have incomplete SCI. Those with no detectable function below the injury level are said to have complete SCI. Researchers have also shown that many axons that survive trauma are damaged and permanently lose part of their myelin sheath.
In addition to the impact of paralysis on mobility and independence, chronic SCI is often associated with several life-altering conditions that vary depending on the individual and the extent of injury. These include spasticity, as well as persistent pain, loss of control of bowel and bladder functions, loss of sexual function, compromised breathing, loss of sensation, and unstable control of blood pressure, heart rate and body temperature. There is no cure for SCI and no treatment available that is capable of improving neurological function. Methylprednisolone, a high-dose steroid, is currently the standard of care in the United States. Methylprednisolone is a one-time treatment administered to the patient immediately following an injury to prevent secondary tissue damage. There are several treatments for the symptoms of SCI, many of which are the same treatments used to address the symptoms of MS. We believe that novel therapies that offer even an incremental improvement in these conditions would have a meaningful impact on the quality of life for people with SCI.
Other Disorders of the Central Nervous System
Neurological injuries and degenerative diseases of the CNS, including stroke, traumatic brain injury, Parkinson's disease and Alzheimer's disease, are among the most devastating and costly of human ailments. These conditions are most often chronic and historically have been extremely difficult to treat. These disorders, like MS and SCI, involve damage to nerve cells and nerve fibers and would likely benefit from similar approaches to tissue protection and repair. For example, the inflammation process that occurs naturally after many types of tissue injury may damage both injured and healthy CNS cells. As with MS and SCI, these conditions could be treated with interventions that replace nerve cells, stimulate new nerve fiber growth, or increase the adaptability of connections within the nervous system.
Our Strategy
Our strategy is to continue to grow as a fully-integrated biopharmaceutical company focused on the identification, development and commercialization of a range of nervous system therapeutics. We are using our scientific, clinical and commercial expertise in MS and SCI as strategic points of access to additional CNS markets, including stroke and traumatic brain injury. Key aspects of our strategy are:
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trials necessary for regulatory approval. We may also pursue subsequent approvals of Fampridine-SR in additional CNS disorders, including SCI.
Our Product Pipeline
Name
|
Primary Indication
|
Status
|
Marketing Rights
|
|||
---|---|---|---|---|---|---|
Zanaflex Capsules | Spasticity | FDA-approved | U.S. | |||
Zanaflex (tablets) |
|
Spasticity |
|
FDA-approved |
|
U.S. |
Fampridine-SR |
|
MS |
|
Phase 3 |
|
Worldwide |
Chondroitinase Program |
|
SCI |
|
Preclinical |
|
Worldwide |
Neuregulin Program |
|
MS |
|
Preclinical |
|
Worldwide |
Remyelinating Antibody Program |
|
MS |
|
Preclinical |
|
Worldwide |
Zanaflex Products
Zanaflex Capsules and Zanaflex tablets are short-acting drugs approved by the FDA for the management of spasticity. We acquired all of Elan's U.S. sales, marketing and distribution rights to Zanaflex Capsules and Zanaflex tablets in July 2004. These products contain tizanidine, one of the two leading treatments for the management of spasticity. Zanaflex tablets were approved by the FDA in 1996 and lost compound patent protection in 2002. There are currently 11 generic versions of tizanidine tablets on the market. However, substantial brand loyalty remains in the prescriber community for the Zanaflex brand. Approximately 90% of all prescriptions for tizanidine are written as "Zanaflex," although most are switched automatically at the pharmacy for a generic tizanidine tablet. Zanaflex Capsules were approved by the FDA in 2002, but were never marketed by Elan. We began marketing Zanaflex Capsules in April 2005.
Clinical trials conducted by Elan demonstrated that Zanaflex Capsules, when taken with food, produce average peak levels of tizanidine in a person's blood that are lower and rise more gradually compared to the peak levels following a similar dose of the tablet form. The FDA recognizes these differences and has determined that Zanaflex tablets and generic tizanidine tablets are not
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therapeutically equivalent and are not AB-rated to Zanaflex Capsules. As a result, under state pharmacy laws, prescriptions written for Zanaflex Capsules may not be filled by the pharmacist with Zanaflex tablets or generic tizanidine tablets, although some substitution does take place in practice. Zanaflex Capsules are available in 2 mg, 4 mg and 6 mg doses, while tablet formulations are only available in 2 mg and 4 mg doses. The 6 mg capsule gives patients and physicians an additional dosing choice and an opportunity to reduce the number of pills a patient must take daily. In addition, many patients may find capsules easier to swallow than tablets. In addition, people who have difficulty swallowing may open the capsule and sprinkle it on food. The pharmacokinetic effect of sprinkling contents of the capsule on food, however, is different from when the intact capsule is taken with food.
In 2004, retail sales of Zanaflex tablets and generic equivalents of Zanaflex tablets totaled approximately $300 million in the United States, with Zanaflex tablets accounting for about $15 million of that amount. The vast majority of prescriptions for these products are written by a relatively small group of prescribers. In 2004, over 117,000 physicians wrote one or more prescriptions for generic tizanidine or Zanaflex tablets. However, 78% of all such prescriptions were generated by approximately 9,200 prescribers. We believe that our internal specialty sales force, contract sales force and contract telesales group, will be able to reach virtually all of these high-volume prescribers.
Sales and promotional support for Zanaflex Capsules
To support our commercialization of Zanaflex Capsules, we have established a sales and marketing infrastructure consisting of an internal specialty sales force, a contract sales force and a pharmaceutical telesales group. Our internal specialty sales force consists of 14 sales professionals who call on neurologists and other prescribers specializing in treating patients with conditions that involve spasticity. Members of our internal sales force also call on managed care organizations, pharmacists and distribution customers. In addition, Cardinal Health provides us with a contract sales force of approximately 160 sales representatives to market Zanaflex Capsules to primary care physicians who currently prescribe Zanaflex tablets or generic tizanidine tablets. We use a pharmaceutical telesales group to contact primary care physicians, specialty physicians and pharmacists to provide information regarding Zanaflex Capsules or determine their interest in receiving samples of Zanaflex Capsules or a visit from a sales representative.
After the introduction of generic tizanidine tablets in June 2002, Elan discontinued promotional and educational support for Zanaflex tablets. To our knowledge, none of the distributors of generic tizanidine or baclofen, the other leading spasticity treatment, which is also generic, has engaged in any educational programs on the treatment of spasticity. Concurrent with our launch of Zanaflex Capsules in April 2005, we initiated a sampling program as well as a number of educational, promotional and drug safety monitoring programs for prescribers and patients. In addition to our programs for prescribers and patients, we also have a number of programs in place to educate pharmacists about Zanaflex Capsules and the pharmacokinetic differences between tizanidine tablets, including generic tizanidine tablets and Zanaflex tablets, and Zanaflex Capsules.
Since April 2005, we have seen continued growth in monthly prescriptions of Zanaflex Capsules. We believe that this trend will continue as we extend our reach into the population of high-volume prescribers of tizanidine. We are seeking FDA approval of improvements in labeling and we will also explore the potential for new indications.
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Pharmacokinetic differences between Zanaflex Capsules and tizanidine tablets
Although tizanidine, the active ingredient in Zanaflex Capsules, Zanaflex tablets and generic tizanidine tablets, is the same, there are some important differences between the capsule and tablet formulations. To establish the differences between Zanaflex Capsules and Zanaflex tablets, Elan conducted a single dose clinical trial with 96 healthy volunteers. That trial demonstrated that Zanaflex Capsules, when taken with food, resulted, on average, in a more gradual rise in tizanidine levels in the blood and a lower peak concentration. By contrast, the trial demonstrated that Zanaflex Capsules taken without food resulted in essentially the same pharmacokinetic effect as the tablet formulation of tizanidine. The results of the trial are illustrated in Figure 1 below.
Figure 1. Average Blood Concentration Over Time
Average blood concentrations of tizanidine in subjects following a single dose of 4 mg Zanaflex tablet or a 4 mg dose of Zanaflex Capsules, taken either with or without food.
As a result of this difference in absorption rate and blood level when taken with food, the FDA has determined that neither Zanaflex tablets nor generic tizanidine tablets are therapeutically equivalent or AB-rated, to Zanaflex Capsules. Therefore, under state pharmacy laws, pharmacists cannot fill prescriptions written for Zanaflex Capsules with Zanaflex tablets or generic tizanidine tablets. The FDA-approved package insert for Zanaflex Capsules contains the following language regarding the differences between the products: "Food has complex effects on tizanidine pharmacokinetics, which differ with different formulations. These pharmacokinetic differences may result in clinically significant differences when (1) switching administration of the tablet between the fed or fasted state, (2) switching administration of the capsule between the fed or fasted state, (3) switching between the tablet and capsule in the fed state, or (4) switching between the intact capsule and sprinkling the contents of the capsule on applesauce. These changes may result in increased adverse events or delayed/more rapid onset of activity, depending on the nature of the switch. For this reason, the prescriber should be thoroughly familiar with the changes in kinetics associated with these different conditions."
The most frequent adverse events associated with the use of tizanidine include dry mouth, drowsiness, fatigue and dizziness. These events are generally mild to moderate and are believed to be dose-related. In one single-dose study where patients were not titrated, two-thirds of patients experienced hypotension. Zanaflex Capsules have a short-acting effect, and patients are advised to take it at the times during the day when they most need relief from spasticity.
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Fampridine-SR
Fampridine-SR, our lead product candidate, is currently in a Phase 3 clinical trial for the improvement of walking ability in people with MS pursuant to an SPA issued by the FDA. The FDA has agreed that this trial, if successful, could qualify as one of the pivotal efficacy studies required for drug approval. Fampridine-SR is a small molecule drug contained in a sustained-release tablet form. Laboratory studies have shown that fampridine, the active ingredient in Fampridine-SR, improves impulse conduction in nerve fibers in which the myelin sheath has been damaged. Fampridine is not currently FDA-approved for use in MS or any other indications. We believe that Fampridine-SR could represent a fundamental shift in the treatment of people with MS because it may improve neurological function rather than treating the symptoms or slowing the progression of disease, as current treatments do. We have obtained Orphan Drug designations from the FDA for Fampridine-SR in both MS and incomplete SCI.
In MS, the myelin sheath is damaged by the body's own immune system, causing areas of myelin sheath loss, also known as demyelination. When a nerve fiber is demyelinated after injury, large numbers of the specialized potassium channels on the surface of the axon that are normally hidden or covered by the myelin sheath are exposed and leak potassium ions, causing the nerve fiber to short circuit its electrical impulses. Fampridine blocks these exposed channels, thereby permitting the nerve fiber to transmit impulses again, even in a demyelinated state. Fampridine may also serve to amplify electrical signals at sites of contact or synapses between nerve cells by blocking the same channels in the tips of the nerve fiber, thereby improving the function of surviving tissue in the injured nervous system. Fampridine-SR is a sustained release formulation of fampridine that we believe enables safer and more effective blood levels to be maintained throughout the day, which cannot be easily accomplished with an immediate-release formulation.
We have a worldwide, exclusive license from Elan for all of its rights to, among other things, develop, promote, distribute, use and sell Fampridine-SR in all human clinical indications, and to develop, promote, distribute, use and sell other patented sustained-release formulations of the drug. Elan also manufactures Fampridine-SR for us.
We believe there are compelling reasons to develop Fampridine-SR as a new therapy for improving walking ability in people with MS:
Clinical Trials of Fampridine-SR
We have conducted a series of clinical trials to establish the safety, pharmacokinetics and optimal dosing of Fampridine-SR in MS and SCI, as well as to assess its efficacy. More than 800 people have been treated with Fampridine-SR in over 25 clinical trials, including nine clinical trials in MS and 11 clinical trials in SCI.
Clinical Trials in Multiple Sclerosis
Current Phase 3 Trial. Our current Phase 3 clinical trial, MS-F203, was initiated in June 2005, after we reached agreement with the FDA on the protocol design and received a Special Protocol Assessment from the FDA Division of Neuropharmacological Drug Products. The FDA has agreed that this trial, if successful, could qualify as one of the pivotal efficacy studies required for drug approval.
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MS-F203 is a double-blind clinical trial designed to enroll 240 people at up to 35 MS centers in the United States and Canada. Subjects will complete a Timed 25-Foot Walking Test at each visit during the clinical trial. This test involves timing the subject's completion of a 25-foot walk as fast as he or she can do so safely. Such a test is relevant as a measure of the subject's ability to perform tasks that are required in daily life, such as crossing the street in the time period allotted by a traffic light. In addition, subjects will also be asked to fill out a 12-item questionnaire known as the MS Walking Scale or MSWS-12. The MSWS-12 is a subjective measure of the degree to which walking disability impacts the subject's daily life.
Trial results will be analyzed using our proprietary responder analysis, for which we have applied for a patent. A subject will be deemed to be a responder if his or her score on the 25-foot walk was better during the majority of his or her visits in the treatment phase of the trial, than the best visit during the non-treatment phase. The primary endpoint of the trial will be the comparison of the percentage of responders in the Fampridine-SR group to the percentage of responders in the placebo group. To validate the clinical importance of improvements in the timed walk measurements, the MSWS-12 scores of the responders will be compared against those of non-responders. This analysis is designed to ensure that being deemed a responder is clinically meaningful to the subject. In addition, the trial will also test for significant improvement in walking ability in the Fampridine-SR-treated responder group at the last treatment visit versus the placebo group. This analysis is designed to ensure that the improvements seen by responders are maintained over the duration of the trial. As a secondary endpoint, the trial will also measure lower extremity muscle strength, as assessed by the modified British Medical Research Council manual muscle testing procedures, referred to as the Lower Extremity Manual Muscle Test or LEMMT.
The design of our Phase 3 clinical trial was closely modeled on the design of the preceding Phase 2 clinical trial, MS-F202, and builds on our clinical trial experience in measuring improvements in neurological function against the variability in function that is inherent in people with MS. Individuals who suffer from MS vary in the severity of the impairments they experience on a day-to-day basis, depending on the activity of the disease on a given day. As a result, from one clinical trial visit to the next, a subject's walking ability can vary significantly. This variability makes it difficult to distinguish treatment-related changes in walking ability from disease-related changes in walking ability. Our review of MS-F202 data demonstrated that a responder form of analysis helps overcome the effect of the inherent variability of disease activity that people with MS experience.
We expect the recruitment period for the current trial, which began in June 2005, to require approximately six to eight months. The treatment period is 14 weeks and each subject is involved in trial procedures for approximately five months overall. We currently expect to be able to evaluate data from this clinical trial in the third quarter of 2006, if patient recruitment proceeds as planned.
Phase 2 Clinical Trials. Our most recently completed Phase 2 clinical trial, MS-F202, was designed to compare 10 mg, 15 mg and 20 mg doses of Fampridine-SR taken twice per day and to assess their relative safety and efficacy over a stable treatment period of 12 weeks. The pre-specified primary endpoint of the clinical trial was an improvement in average walking speed using the Timed 25-Foot Walk. The clinical trial was initiated in early 2003 and completed enrollment of 211 subjects in 24 major MS centers in August 2003. The clinical trial was designed to give us a clear indication of optimal dose and the number of subjects that we would need to establish efficacy in a subsequent Phase 3 trial. The overall design of our MS-F202 Phase 2 clinical trial is illustrated in Figure 2 below.
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Figure 2. Design of Fampridine-SR MS-F202 Phase 2 clinical trial.
The efficacy results, based on the prospective analysis plan of MS-F202, indicated a trend for improvement from baseline in walking ability (using the Timed 25-Foot Walk test) in the Fampridine-SR-treated subjects, relative to the placebo-treated subjects. Statistical significance was not reached on the primary efficacy analysis, which was defined as the percentage change from baseline in average walking speed during the 12 weeks of stable double-blind treatment. Statistical significance was obtained for the secondary outcome measure of lower extremity muscle strength, as assessed by LEMMT. All three Fampridine-SR dose groups showed greater mean increases from baseline in LEMMT scores relative to the placebo group and the differences were statistically significant for the 10 mg and 15 mg Fampridine-SR groups (p< 0.05). A p-value is a statistical term that indicates the probability that a difference between treatment groups is random. The smaller the p-value, the lower the likelihood that the difference was random. Generally a p-value of less than 0.05 is considered to represent a statistically significant difference.
Our analysis of the data led us to believe that part of the reason that statistical significance was not achieved on the primary endpoint was related to the disease-related variability of walking ability for a subject from visit to visit, together with the fact that not all subjects are expected to respond to the treatment. We believe this variability in walking ability, much of which is contributed by subjects who do not respond, made it difficult to establish the significance of treatment-related improvements using the average walking speed measure that had been prospectively defined as the endpoint of the trial. In order to try to reduce the effect of this variability, we developed an analysis designed to classify subjects as responders only if they demonstrated consistent improvement during the treatment period, when subjects were taking either Fampridine-SR or placebo. Subjects were deemed to be responders if their Timed 25-Foot Walk test results were better during at least three of the four treatment visits than their best score during the non-treatment period. When examined using this form of analysis, all three of the groups receiving Fampridine-SR had a statistically significant increase in the number of responders compared to placebo, as shown in Figure 3.
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Figure 3. Responder rates for treatment groups in MS-F202.
Since the differences in responder rates among the three doses examined were small, more detailed analyses were performed comparing the pooled Fampridine-SR-treated groups against the placebo-treated group. The difference in responder rate between the pooled Fampridine-SR-treated subjects and the placebo-treated subjects was statistically significant (p-value<0.001), as shown below.
Status
|
Placebo
|
Fampridine-SR Pooled
|
||
---|---|---|---|---|
|
(N=47)
|
(N=158)
|
||
Responders |
|
8.5% |
|
36.7% |
Non-responders |
|
91.5% |
|
63.3% |
The responder analysis allows characteristics of the response to be appreciated in more detail. The improvement in walking in responders appeared to be substantial and sustained. The average increase in walking speed of responders was more than 25%, as compared to approximately 2% for non-responders. This was consistent over the 3-month period of treatment and was statistically significant at every visit, as shown in Figure 4.
Figure 4. The average percent change from baseline in walking speed.
The graph depicts the average change in walking speed during the treatment period for study MS-F202, comparing Fampridine-SR-treated responders to the placebo-treated group. Differences between the groups were statistically significant (p<0.001) at all visits.
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In MS-F202, subjects were required to fill out the MSWS-12 questionnaire. When the results of this questionnaire were analyzed for all evaluable subjects, the average improvement, or reduction in score, during the treatment period was greater for responders than for non-responders, in each case including those subjects on placebo, and the difference was statistically significant. We believe this result demonstrates that being a timed-walk responder is clinically meaningful to patients. These results are shown in Figure 5.
Figure 5. Average change in MS Walking Scale Score.
Histogram to show the average change in score for the MS Walking Scale for responders and non-responders between the baseline and stable treatment periods. A reduction in score represents a subject's perception that there has been improvement in the effect of walking disability on activities of daily life.
This analysis of the MS-F202 clinical trial served as the basis for the design of the Phase 3 MS-F203 clinical trial. The results of MS-F202 using this analysis showed that there was a statistically significant increase in the number of people being treated who experienced a consistent increase in walking ability, compared to placebo, and that this improvement was sustained and clinically meaningful to patients. These data also show that the benefit was maintained for the full 14 weeks of treatment. These results are similar whether the pooled Fampridine-SR-treated subjects or just those subjects receiving the current target dose of 10 mg twice a day are compared with the placebo-treated group.
In 2001, we completed a smaller double-blind Phase 2 clinical trial of Fampridine-SR, MS-F201. This clinical trial was designed to determine the optimal dose range of Fampridine-SR and to evaluate possible ways in which to measure the effect of the drug on symptoms of the disease, including motor strength, timed walking and self-reported fatigue. The clinical trial involved a total of 36 MS subjects in four major academic MS research centers. A total of 25 subjects received Fampridine-SR in doses increasing from 10 mg to 40 mg twice per day during seven weeks of treatment and 11 subjects were given placebo during the same period. This treatment period was preceded by a series of baseline evaluations during the course of four weeks to allow the subjects to become adjusted to the clinic visits and allow the various measurements to stabilize. A one-week blinded treatment with placebo tablets preceded the first drug administration to look for potential placebo effects on the various outcome measures.
The clinical trial demonstrated that doses up to 25 mg twice a day were well tolerated and were associated with statistically significant improvements in walking ability and leg muscle strength. All the improvement in strength and walking ability was apparent within these first four weeks of the
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treatment, at doses from 10 mg to 25 mg twice a day. The placebo-treated subjects showed some tendency to improve or worsen in walking ability, mostly within 20% of their baseline average. However, the Fampridine-SR-treated group showed a marked tendency for improvement in walking speed, with 9 of 25 subjects improving more than 20% from baseline and two with greater than 50% improvement. These findings were consistent with the results of an earlier, small, crossover study sponsored by Elan, using doses of 17.5 mg twice a day for one week, which was published in the journal Neurology in 1997.
We re-examined the data from the MS-F201 clinical trial using an equivalent responder analysis in which we defined a responder as a subject who showed walking ability on the 25-Foot Walk that was faster in a majority of treatment visits than the fastest speed recorded during the non-treatment period. In MS-F201, this meant that four or more of the seven treatment visits had to show faster walking than the visits during the non-treatment period. We found that the responder rates in this trial were 40% (10 of 25) for the Fampridine-SR-treated subjects and 9.1% (1 of 11) for the placebo-treated subjects. Hence, the response rate by this measurement was similar to that seen in the MS-F202 clinical trial. We did not incorporate the MSWS-12 measure in the MS-F201 clinical trial.
Clinical Trials in Spinal Cord Injury
Recent clinical research using imaging and post-mortem studies has shown that the majority of people with SCI do not have severed spinal cords and maintain some nerve fibers that cross the site of injury. However, these surviving nerve fibers are often damaged and lose their myelin sheath. A series of preclinical studies and clinical trials have indicated that fampridine can potentially improve conduction in nerve fibers injured by spinal cord injury and improve function in people with spinal cord injury.
Phase 3 Clinical Trials. In March 2004, we released results from two Phase 3 double-blind clinical trials of Fampridine-SR in people with SCI. The trials did not reach statistical significance in their primary endpoints, which were reduction of spasticity, as measured by the Ashworth scale, and improvement of patients' Subject Global Impression, or SGI. The Ashworth scale is a validated, 5-point clinician assessment of an individual's spasticity. The SGI is a seven-point scale in which trial participants rate how they feel about the overall effect of the trial drug. In one of the SCI trials, the data showed a positive trend (p=0.069) toward improvement on the Ashworth scale when analyzed across all observations during the double-blind trial treatment period, which was the trial's pre-specified plan of analysis. When analyzed based on the subjects' last observation carried forward, a commonly used method of analysis, the improvement in, or reduction of, Ashworth score in that trial was statistically significant (p=0.006). The drug groups in both trials showed a progressive mean improvement on the Ashworth score during the double-blind treatment period. However, the placebo group in one of the trials showed a more pronounced reduction in Ashworth Score than expected.
The design of these Phase 3 clinical trials was based on a series of earlier Phase 2 clinical trials in which the most consistent finding was a greater reduction in spasticity in Fampridine-SR-treated subjects relative to placebo-treated subjects, as measured by the Ashworth Score. Other benefits observed in the Phase 2 trials were improved motor, bowel, bladder and sexual function. Unlike the design of our Phase 3 clinical trials, our Phase 2 clinical trials did not require a minimum spasticity level for enrollment and the treatment period was from one to four weeks rather than 14 weeks. These changes were made in the Phase 3 trials because the FDA required minimum twelve week duration of treatment for approval of a long-term therapy of this kind and because adequate measurement of benefit required a certain degree of spasticity at baseline.
Based on the entire body of data in clinical trials of fampridine in people with SCI and the new approaches to evaluating response to the drug that we have learned in MS trials, we expect to resume
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development of Fampridine-SR for SCI after we have completed further development of the drug for MS.
Safety Profile of Fampridine-SR
To date, Fampridine-SR has been tested in over 800 subjects. The adverse events most commonly experienced in all double blind, placebo-controlled Phase 2 and Phase 3 studies were insomnia, numbness or tingling in the extremities, dizziness and nausea. These events were generally mild to moderate and are believed to have been dose-related. Seizures have also been observed in some prior trials of Fampridine-SR with higher doses of the drug. No seizures have been reported to date in patients with the dose that we have selected for our Phase 3 clinical trial. We are carefully monitoring the potential for seizure as a side effect, including the possibility of interaction with other drugs that are known to lower the threshold for seizure in susceptible subjects. We are also aware that people with MS are reported to have a higher incidence of seizures than the unaffected population. We have excluded from these trials subjects at known risk for seizures because of previous experience or abnormal electroencephalogram indicative of such risk.
As part of our continuing evaluation of safety, we have established extension studies that allow subjects in earlier clinical trials to receive Fampridine-SR on an unblinded, or open-label basis, with their progress followed for at least a year and the potential for continuing treatment until the drug is approved. By their open-label design, these studies will allow us to gain some additional knowledge of the longer term efficacy and safety of the drug, albeit limited by the lack of a placebo control group. These studies are intended primarily to gain sufficient subject experience to satisfy the regulatory guidelines for long-term and overall safety assessments. As of September 2005, approximately 176 subjects from MS-F202 have been enrolled in an extension trial and 37 remain active in the trial, with approximately 42 subjects who have taken the drug for over a year. A new extension study for subjects of the current Phase 3 clinical trial is expected to enroll a majority of the MS-F203 trial subjects, beginning in the fourth quarter of 2005.
Only limited data are yet available from these ongoing safety studies, since no interim analysis of the data is planned, but there have been two incidences of seizures in subjects enrolled in the MS-F202 extension. These seizures occurred in subjects who had been taking the drug at a dose of 15 mg twice a day for six months and five months respectively, before the adverse event. The protocol has now been amended to restrict doses to 10 mg twice a day in order to gather more safety data at the dose that we are examining in the current Phase 3 trial and for which we intend to seek approval. To date, we have had no report of seizure at the 10 mg twice a day dose.
Other Research and Development Programs
Chondroitinase Program
We have developed a program based on the concept of breaking down the matrix of scar tissue that develops as a result of an injury to the CNS. Published research has demonstrated that this scar matrix is partly responsible for limiting the regeneration of nerve fibers in the CNS and restricting their ability to modify existing neural connections, which is the process known as plasticity. This scar matrix may also inhibit repair of the myelin sheath by restricting the movements of the myelinating cells into the area of damage.
Major components of the scar matrix, known as proteoglycans, consist of a combination of protein and sugar molecules. Chondroitin sulfate proteoglycans, or CSPGs, are the specific types of proteoglycans found in the scar matrix. Cell culture studies and a number of animal studies have shown that these CSPGs inhibit the growth of nerve fibers and are likely to be key factors in the failure of the spinal cord or brain to regenerate and repair. Studies also have shown that bacterial enzymes produced
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by the body called chondroitinases break down the CSPG molecules, thereby reducing their inhibitory activity.
Four independent laboratories have published animal studies showing that application of chondroitinase results in recovery of function following injuries to various areas of the brain or spinal cord. These functions have included walking, forelimb grasping, sensation, and visual and bladder function. We have produced a recombinant version of naturally-occurring Chondroitinase ABC-I and successfully tested its ability to improve function in an animal model of spinal cord injury. These studies were recently published in the Journal of Neurotrauma. In these studies, rats that sustained a spinal cord injury were treated with either chondroitinase or an ineffective enzyme control and evaluated over 10 weeks of recovery. Animals treated with chondroitinase showed significant improvements both in motor function of the limbs and in bladder function, compared to those treated with the control enzyme.
We are conducting a research program, which has been funded in part by federal and state grants, to develop second generation approaches to overcoming the proteoglycan matrix. These include novel enzyme molecules and alternative approaches to blocking matrix formation. We are now exploring research grants from the NIH and potential partnerships with other companies for completing our preclinical program in chondroitinase. In 2003, we obtained an exclusive worldwide license to certain patents and technology from Cambridge University Technical Services Limited and King's College London related to our chondroitinase program. We are also building our intellectual property position with respect to this technology with patent applications around uses of the known compound and new chemical structures.
Remyelination Programs
Our remyelination programs include two distinct therapeutic approaches to stimulate repair of the damaged myelin sheath in MS, Glial Growth Factor 2, or GGF-2, and remyelinating antibodies. These two approaches address remyelination by different and potentially complementary routes. Both programs require finalizing production of clinical-grade material and completion of preclinical toxicology tests before moving into clinical development. We believe a therapy that could permanently repair myelin sheaths has the potential to restore substantial neurological function to those affected by demyelinating conditions.
Neuregulins/GGF-2
GGF-2 is a member of the neuregulin family of growth factors related to epidermal growth factor. The neuregulins bind to erbB receptors, which translate the growth factor signal to the cell and cause changes in cell growth, protein production and gene expression. The molecule was shown in published studies to stimulate remyelination in animal models of MS and to have a range of other effects in neural protection and repair. In 2002, we obtained from CeNeS an exclusive worldwide license to its neuregulin patents and related technology, including GGF-2. We initially plan to develop GGF-2 for the treatment of MS.
Neuregulins covered in the portfolio from CeNeS have additional potential applications in treatment of heart disease and cancer. Neuregulins and their erbB receptors are essential for cardiac development and have been shown to protect cardiac muscle cells from stressors that model congestive heart failure and myocardial infarction. Additionally, GGF-2 has been shown to protect the heart and brain from the toxicity of commonly used chemotherapeutic agents, such as cisplatin. The neuregulins may also have the potential, when coupled with toxins, to target erbB receptor positive tumors such as those found in certain types of breast cancers.
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Remyelinating Antibodies Program
Our remyelinating antibodies program is based on more than 15 years of research performed at Mayo Clinic. Under a license agreement entered into with Mayo Clinic in September 2000, we have exclusive worldwide rights to patents and other intellectual property for these antibodies related to use and treatment of CNS disorders. Studies have demonstrated the ability of this family of antibodies to stimulate repair of the myelin sheath in three different animal models of MS. In particular, these antibodies were found to react with molecules on the surface of the cells that make the myelin sheath and stimulate them in a number of ways, leading to increased remyelination activity. First identified in mice, similar antibodies were subsequently identified in human blood samples by the Mayo team and we have been able to produce a recombinant human antibody that may be suitable for clinical development.
We have also supported preclinical studies at Mayo Clinic to learn more about the ways the antibodies act to stimulate the myelin sheath-forming cells. In 2004, Mayo Clinic received a $2 million grant to develop and manufacture clinical-grade material and progress the program towards clinical development.
Sales and Marketing
We have established three sales channels for marketing Zanaflex Capsules: an internal specialty sales force, a contract sales force and a telemarketing group.
We focus our sales and marketing efforts on physicians and other prescribers who treat spasticity in the United States. Approximately 9,200 physicians generated roughly 78% of the prescriptions for Zanaflex and generic tizanidine tablets in the United States in 2004. Most of these physicians are located at major medical centers. We have existing relationships with the majority of these centers through our Fampridine-SR clinical trial process.
We believe that, in general, people with MS and SCI are knowledgeable about their conditions, actively seek new treatments, and directly influence their prescriber's evaluation of treatment options. We have existing relationships with the major advocacy groups that focus on MS and SCI. We provide regular updates regarding our development programs and we sponsor or support several educational initiatives. We have implemented a comprehensive series of educational and promotional programs to support Zanaflex Capsules. These include educational materials, a peer-to-peer speakers' program, samples, medical information and drug safety monitoring services, as well as a patient assistance program. At the request of the FDA, we have also implemented an educational program to inform
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pharmacists, prescribers and patients that Zanaflex tablets or generic tizanidine tablets are not therapeutically equivalent to Zanaflex Capsules and that, as a result, a prescription for Zanaflex Capsules should not be substituted with any tablet formulations at the pharmacy.
We believe that the expertise we are developing through commercializing Zanaflex Capsules will provide a strong foundation for our marketing of Fampridine-SR, if approved, as well as for additional potential treatments in CNS conditions. As a result, we plan to market Fampridine-SR ourselves in the United States and possibly in Canada, if it is approved in both countries. We expect that the sales force for Zanaflex Capsules would also promote Fampridine-SR in the United States since both products would have many of the same prescribers. We do not currently intend to build commercial capabilities outside North America but intend to secure those capabilities through one or more partners.
Similar to other phamaceutical companies, our principal customers are wholesale pharmaceutical distributors. We currently depend on three key customers. For the six months ended June 30, 2005, Cardinal Health, McKesson Corporation and AmerisourceBergen Corporation accounted for approximately 52.6%, 27.3% and 12.1% of our revenues, respectively.
Scientific and Medical Network
We have an established advisory team and network of well-recognized scientists, clinicians and opinion leaders in the fields of MS and SCI. Depending on their expertise, these advisors provide assistance in trial design, conduct clinical trials, keep us apprised of the latest scientific advances and help us identify and evaluate business development opportunities. A number of the members of this network form our Scientific Advisory Board. The members of our Scientific Advisory Board are highlighted below:
Name
|
Affilation
|
|
---|---|---|
Michael S. Beattie, Ph.D. | Brumbaugh Professor and Chair of the Department of Neuroscience, Ohio State University. | |
Jacqueline C. Breshnahan, Ph.D. |
|
Professor of Neuroscience, Ohio State University. |
Mary B. Bunge, Ph.D. |
|
Professer of Cell Biology and Anatomy, Neurological Surgery and Neurology, University of Miami School of Medicine. |
Carl W. Cotman, Ph.D. |
|
Professor of Psychobiology and Neurology, University of California, Irvine. |
James W. Fawcett, Ph.D. |
|
Merck Company Professor of Experimental Neurology, Cambridge University, and Chairman of the MRC Cambridge Centre for Brain Repair. |
Martin Grumet, Ph.D. |
|
Professor of Cell Biology and Neuroscience, Rutgers University Director, W. M. Keck Center for Collaborative Neuroscience. |
Eugene Johnson, Jr., Ph.D. |
|
Norman J. Stupp Professor of Neurology, and Professor of Molecular Biology and Pharmacology at Washington University School of Medicine, St. Louis. |
Mark D. Noble, Ph.D. |
|
Professor of Genetics at the Center for Cancer Biology, University of Rochester Medical Center. |
Melitta Schachner, Ph.D. |
|
Professor and Director of the Institute for Synthesis of Neural Structures, University of Hamburg, Germany. |
Jerry Silver, Ph.D. |
|
Professor of Neurosciences, Case Western Reserve University. |
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Patrick A. Tresco, Ph.D. |
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Professor of Bioengineering, Director Keck Center for Bioengineering, University of Utah. |
Mark H. Tuszynski, M.D., Ph.D. |
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Professor of Neurosciences, Director of the Center for Neural Repair, and Attending Neurologist at the University of California, San Diego. |
Stephen G. Waxman, M.D., Ph.D. |
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Chairman of the Department of Neurology, Yale University School of Medicine. |
Wise Young, Ph.D., M.D. |
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Professor II and Director of the W. M. Keck Center for Collaborative Neuroscience, Rutgers University. |
In addition, we have recruited over 35 MS centers and 80 SCI rehabilitation centers in the United States and Canada to conduct our clinical trials. Our clinical management team has extensive experience in the areas of MS and SCI and works closely with this network.
Collaborations, Alliances and License Agreements
Elan Corporation plc
Zanaflex
In July 2004, we entered into an Asset Purchase Agreement with Elan pursuant to which we acquired all of Elan's research, development, distribution, sales and marketing rights to Zanaflex Capsules and Zanaflex tablets in the United States. The assets acquired include the products' FDA registrations and FDA dossiers, proprietary product know-how, a patent and two related patent applications, certain inventory of Zanaflex tablets and certain product books and records. Elan has granted us a license that allows us to use the Zanaflex trademarks in the United States and has given us the right to buy the Zanaflex trademark for a nominal sum once specified milestone and royalty payments have been made. Elan also granted us an exclusive, perpetual and royalty-free license to certain intellectual property relating to technology contained in Zanaflex Capsules and Zanaflex tablets or used in the manufacture of Zanaflex Capsules, for use in connection with the sale and marketing of Zanaflex Capsules and Zanaflex tablets in the United States. We also acquired the right to develop new indications, formulations, dosage forms, delivery systems and process improvements of Zanaflex. Under the agreement, Elan agreed not to directly or indirectly market, distribute or sell any products containing tizanidine as an active pharmaceutical ingredient in the United States until the later of the end of our obligation to pay royalties to Elan or valid termination of our supply agreement with Elan. In addition, we agreed not to directly or indirectly market, distribute or sell any products containing tizanidine as its active pharmaceutical ingredient in the United Kingdom or Ireland until July 2007.
Our agreement with Elan obligates us to pay a combination of sales-based milestone payments and royalties on future sales of Zanaflex Capsules and Zanaflex tablets. Our obligation to pay royalties to Elan for Zanaflex tablets and Zanaflex Capsules ends on the later of July 2014 or when the last patent included in the acquisition expires. We also agreed to use commercially reasonable efforts to commercialize Zanaflex Capsules.
As part of the acquisition, we assumed certain of Elan's rights and obligations relating to Zanaflex under a license agreement with Novartis, to the extent that these rights and obligations arise subsequent to our acquisition of Zanaflex. Under this agreement we obtained certain rights to market and sell tizanidine products and rights to product improvements developed by Novartis. We are obligated to pay Novartis royalties based on net sales of Zanaflex Capsules and Zanaflex tablets until the agreement expires in February 2007, after which time we will have a fully paid-up license from Novartis to these rights.
Elan and Novartis manufacture Zanaflex Capsules and tablets for us, respectively. See "Manufacturing."
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Fampridine-SR
In January 1997, we licensed from Elan exclusive worldwide rights to Elan's sustained release formulation of fampridine, Fampridine-SR, for the treatment of SCI. In April 1998, we formed MS Research & Development Corporation, or MSRD, with Elan's subsidiary, Elan International Services, Ltd., or EIS, to develop Fampridine-SR for treatment of MS. At that time, MSRD licensed from Elan exclusive worldwide rights to Fampridine-SR for the treatment of MS.
In September 2003, we entered into a termination and assignment agreement with Elan, EIS and MSRD pursuant to which MSRD assigned to us its assets, including the license from Elan for Fampridine-SR for MS. We paid MSRD approximately $11.5 million for all the assets and assumed liabilities of MSRD. MSRD distributed the purchase price to its shareholders according to their equity ownership interest. We received a distribution of approximately $9.5 million as a result of this distribution. We also purchased EIS's shares at par value, and own approximately 88% of MSRD, which now has no assets or liabilities and is inactive.
In September 2003, we entered into an amended and restated license with Elan, which replaced the two prior licenses for Fampridine-SR in oral sustained release dosage form. Under this agreement, Elan granted us exclusive worldwide rights to Fampridine-SR for all indications, including SCI, MS and all other indications. We agreed to pay Elan milestone payments and royalties based on net sales of the product, if approved.
Elan is responsible for completing the chemistry, manufacturing and controls section of our NDA for Fampridine-SR and equivalent regulatory applications outside the United States. Elan is also supplying us with product for our clinical trials under this agreement.
Elan may terminate our license in countries in which we have a license, including the United States, if we fail to file regulatory approvals within a commercially reasonable time after completion and receipt of positive data from all preclinical and clinical studies required for the related NDA or any NDA equivalent. We could also lose our rights under the license agreement if we fail to launch a product in such countries within 180 days of NDA or equivalent approval or if we fail to fulfill our payment obligations under the license agreement. If Elan terminates our license in any applicable country, Elan is entitled to license from us our patent rights and know-how relating to the product and to market the product in the applicable country, subject to royalty payments to us.
Subject to early termination provisions, the Elan license terminates on a country by country basis on the last to occur of fifteen years from the date of the agreement, the expiration of the last to expire Elan patent or the existence of competition in that country.
Cardinal Health PTS, LLC
In August 2005, we entered into a sales force agreement with Cardinal Health. Under this agreement, approximately 160 of Cardinal Health's sales representatives market Zanaflex Capsules to approximately 4,000 high prescribing primary care physicians identified by us throughout the United States. Although these sales representatives do not exclusively represent Acorda, our agreement with Cardinal Health provides that they will not market any other products during their sales calls related to Zanaflex Capsules. We are responsible for providing training to the Cardinal Health sales representatives regarding the medical and technical aspects of Zanaflex Capsules and on our specific sales strategies and policies. We also provide all samples and promotional materials for use by these sales representatives. Cardinal Health is responsible for general supervision and management of the sales force, including ensuring legal and regulatory compliance, including maintaining procedures relating to the handling of drugs by their sales representatives in compliance with applicable laws and prudent management practices.
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We have agreed to pay Cardinal Health service fees based on the achievement of targeted sales levels and to reimburse Cardinal Health for certain costs. The agreement has a term of two years and cannot be terminated without cause prior to December 31, 2005.
Rush-Presbyterian St. Luke's Medical Center
In 1990, Elan licensed from Rush-Presbyterian St. Luke's Medical Center, or Rush, know-how relating to fampridine for the treatment of MS. We subsequently licensed this know-how from Elan. In September 2003, we entered into an agreement with Rush and Elan terminating the Rush license to Elan and providing for mutual releases. We also entered into a license agreement with Rush in which Rush granted us an exclusive worldwide license to its know-how relating to fampridine for the treatment of MS. Rush has also assigned to us its Orphan Drug Designation for fampridine for the relief of symptoms of MS.
We agreed to pay Rush a license fee, milestone payments and royalties based on net sales of the product for neurological indications. We also entered into an agreement with Elan relating to the allocation of payments between us and Elan of certain payments to Rush under the Rush license. Subject to early termination provisions, the Rush license terminates upon expiration of the royalty obligations, which expire fifteen years from the date of the agreement.
Canadian Spinal Research Organization
In August 2003, we entered into an Amended and Restated License Agreement with the Canadian Spinal Research Organization, CSRO. Under this agreement we were granted an exclusive and worldwide license under certain patent assets and know-how of CSRO relating to the use of fampridine in the reduction of chronic pain and spasticity in a spinal cord injured subject.
We are required to pay to CSRO royalties based on a percentage of net sales of any product incorporating the licensed rights, including royalties on the sale of Fampridine-SR for any indication. Subject to early termination provisions, the CSRO agreement will expire upon the termination of all royalty or other payment obligations on a country-by-country basis, which will be no longer than the earlier of the expiration of the last to expire licensed patent in such country or ten years from the date of the first commercial sale of the product in such country.
Cornell Research Foundation, Inc.
In February 2003, we entered into a license agreement with Cornell Research Foundation, Inc., pursuant to which we were granted an exclusive license under a patent for the use of fampridine in the treatment of anterior horn cell diseases. In consideration for the license, we paid Cornell an upfront license fee and are required to make payments to Cornell upon the achievement of certain milestones relating to the successful reissuance or reexamination of the patents licensed to us and, the completion of a clinical trial testing the use of Fampridine-SR in amyotrophic lateral sclerosis. We are also obligated to pay Cornell royalties on net sales of Fampridine-SR in any and all indications.
Under the Cornell agreement, Cornell is responsible for all patent prosecution and maintenance activities relating to the licensed patent, and we are responsible for paying all fees incurred by Cornell in connection therewith. We have the right under this agreement to enforce any patent rights within the licensed patents against infringement by third parties at our own expense. Subject to early termination by either of us, the term of the Cornell agreement will continue until the expiration of the last to expire valid claim under the licensed patent.
Cambridge University Technical Services Limited and King's College London
In December 2003, we entered into a license agreement with Cambridge University Technical Services Limited and King's College London, pursuant to which we were granted an exclusive worldwide license, including the right to sublicense, under a U.S. patent application and its foreign
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counterpart to develop and commercialize products related to enzymatic methods, including chondroitinase, of treating CNS disorders. We were also granted a non-exclusive worldwide license, including the right to sublicense, under the same U.S. and foreign patent applications to develop and commercialize products related to small molecule inhibitors for use in treating CNS disorders.
In consideration for these licenses, we paid an upfront license fee and are required to pay royalties on net sales and on any sublicense royalties that we receive. Subject to early termination provisions, the King's College license agreement will continue until the expiration of the last to expire valid claim under the licensed patent applications, at which time the licenses granted under the license agreement will automatically become non-exclusive, worldwide, fully paid-up and irrevocable.
Mayo Foundation for Medical Education and Research
In September 2000, we entered into a license agreement with Mayo Foundation for Education and Research, or Mayo Clinic, pursuant to which we were granted an exclusive worldwide license to its patents and other intellectual property on remyelinating antibodies. Under this agreement, we have the right to develop, make, use and sell the remyelinating antibody products for the prevention, mitigation and treatment of CNS disorders. We have worked closely with one of Mayo Clinic's research groups on developing and patenting this emerging technology in connection with the therapeutic use of these antibodies, specifically myelination and remyelination in MS and SCI. Mayo Clinic has the right to continue researching the antibodies and, in the event it develops other applications related to the licensed patent, which are outside of the scope of our current license, but are for the treatment of CNS disorders. Mayo Clinic is required to offer rights in these new applications to us before it offers such rights to a third party.
Under the Mayo Clinic agreement, we are obligated to make milestone payments and pay royalties based on net sales. This license agreement will terminate upon the expiration of the last licensed patent in any such licensed product.
We have also supported preclinical studies at Mayo Clinic to learn more about the ways the antibodies act to stimulate the myelin sheath-forming cells. In 2004, Mayo Clinic received a $2 million grant to develop and manufacture clinical-grade material and progress the program towards clinical development. A subsequent letter agreement between Mayo Clinic and us acknowledges that the work under this grant is being performed subject to and pursuant to the Mayo Clinic agreement.
CeNeS Pharmaceuticals plc
In November 2002, we entered into two license agreements with CeNeS Pharmaceuticals plc. The first agreement relates to an exclusive worldwide sublicense under certain patents, patent applications and know-how to make, have made, use, import, offer for sale and sell protein products composed of GGF-2 and non-protein products developed through the use of material covered by a valid claim in the patents. The license to these patents and the right to sub-license these patents were granted to CeNeS by the Ludwig Institute for Cancer Research.
Our payment obligations to CeNeS include payment of an upfront license fee, royalties based on annual net sales of the product, if any, as well as payments upon achieving certain milestones in connection with the development, testing and regulatory approval of any protein products. We are obligated to make minimum royalty payments commencing on the third calendar year following the first commercial sale of any licensed product. If we fail to pay any minimum royalty, CeNeS will have the option to convert our license or any sublicense to a non-exclusive license. This agreement with CeNeS is effective until the later of November 12, 2017 or the expiration of the last-to-expire valid claim in the licensed patents.
The second agreement relates to an exclusive worldwide sublicense to us under certain patents, patent applications and know-how to make and have made, use and have used, sell, offer for sale, have sold and import protein products composed of one or more proteins encoded by the growth factor gene
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nrg-2 and non-protein products developed through the use of material covered by a valid claim of the patents. The license to this patent and the right to sub-license this patent was granted to CeNeS by the President and Fellows of Harvard College.
We have agreed to a timeline to achieve certain milestones relating to the research and development and the clinical testing and filing of regulatory approvals for the products. We are also required to make milestone payments. If we are unable to meet a milestone, CeNeS has agreed to negotiate in good faith with us to agree for a reasonable extension of the time to achieve the milestone up to one year. We are obligated to pay CeNeS a license fee and royalties based on a percentage of net sales of protein products and non-protein products covered under the agreement.
Subject to early termination provisions, this agreement remains effective until the last patent, patent application or claim included in the licensed patents has expired, been abandoned or been held finally rejected or invalid.
Teva Pharmaceuticals Industries Ltd.
In September 2003, we entered into a collaboration agreement with Teva Pharmaceuticals Industries Ltd. ("Teva") under which we were granted a co-exclusive license with Teva to jointly develop and promote in the United States products containing valrocemide.
We made an initial payment to Teva of $2 million that was charged as research and development expenses for the year ended December 31, 2003, upon execution of the collaboration agreement, and were obligated to make payments to Teva relating to the development of valrocemide.
We and Teva amicably terminated the collaboration agreement as of June 27, 2005 and in connection with the termination we paid Teva approximately $3.1 million. We and Teva have no further obligations to each other under the collaboration agreement.
Manufacturing
Zanaflex
We currently rely on Elan, Novartis and other third parties to supply us with Zanaflex Capsules and Zanaflex tablets. Zanaflex Capsules are manufactured using Elan's proprietary SODAS (spheroidal oral drug absorption system) multiparticulate drug delivery technology. We agreed to provide Elan with monthly written 18-month forecasts, and with annual written two-year forecasts, of our supply requirements for Zanaflex Capsules. In each of the five months following the submission of our 18-month forecast we are obligated to purchase the quantity specified in the forecast, even if our actual requirements are greater or less. Elan is not obligated to supply products in excess of our forecast requirements, but will use commercially reasonable efforts to fulfill any such orders. The initial term of the agreement expires in 2009, with two automatic two-year renewal terms. Either party may terminate the agreement by notifying the other party at least 12 months prior to the expiration of the initial term or any renewal term. In addition, either party may terminate the agreement if the other party commits a material breach that remains uncured. If a failure to supply occurs under the agreement, other than a force majeure event, or if we terminate the supply agreement for cause, Elan must use commercially reasonable efforts to assist us in transferring production of Zanaflex Capsules to us or a third-party manufacturer, provided that such third party is not a technological competitor of Elan. If we need to transfer production, Elan has agreed to grant us a royalty-free, fully paid-up license of its manufacturing know-how and other information and rights related to the production of Zanaflex Capsules, including a license to use its SODAS technology for specified purposes. We have the right to sublicense this know-how to a third party manufacturer, provided that this third party is not a technological competitor of Elan. In the event of termination of the supply agreement due to a force majeure event that continues for more than three months, Elan has agreed to enter into negotiations with us to preserve the continuity of supply of products, including the possibility of transferring
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manufacturing of Zanaflex Capsules to us or a third party manufacturer. Elan obtains tizanidine, the active ingredient in Zanaflex Capsules, from Novartis.
We currently rely on Novartis for our supply of Zanaflex tablets and tizanidine, the API in both Zanaflex Capsules and Zanaflex tablets. Under a supply agreement we assumed from Elan, Novartis is responsible for manufacturing Zanaflex tablets and tizanidine for us through February 2007. This includes the tizanidine that Elan uses to manufacture Zanaflex Capsules for us. Novartis currently produces tizanidine, but has arranged with other parties to formulate tablets and bottle and package the final product. Novartis has informed us that it intends to discontinue tizanidine production by the end of 2005. It is our understanding that Novartis is currently in the process of qualifying an alternative tizanidine manufacturer. We have established relationships with the companies that currently formulate, bottle and package the tablets, however, we do not have an agreement with an alternative tizanidine manufacturer. Although it is our understanding that Novartis is currently qualifying an alternative tizanidine manufacturer, after the expiration of our contract with Novartis in 2007, we will need to have a direct relationship with an alternative supplier of tizanidine.
Fampridine-SR
In September 2003, we entered into an agreement with Elan for the supply of Fampridine-SR. Under that agreement, we are required to purchase at least 75% of our annual requirements of Fampridine-SR from Elan unless Elan is unable or unwilling to meet our requirements. In addition, the agreement also obligates us to make compensatory payments if we do not purchase 100% of our requirements from Elan.
As permitted by our agreement with Elan, we have designated Patheon, Inc. as a qualified second manufacturing source of Fampridine-SR. In connection with that designation, Elan assisted us in transferring manufacturing technology to Patheon. We and Elan have agreed that we may purchase up to 25% of our annual requirements from Patheon without making compensatory payments to Elan. In addition, Patheon may supply us with Fampridine-SR if Elan is unable or unwilling to meet our requirements.
Preclinical Products
We have established the internal capability to manufacture research quantities of antibody and protein product candidates and have contracted for testing and manufacturing development activities for GGF-2 to be performed by an outside contractor.
Intellectual Property
We have in-licensed, or are the assignee of, over 25 U.S. patents, over 60 foreign patents and over 65 patent applications pending in the United States or abroad. There are five major families of patents in our portfolio.
Zanaflex
As part of our purchase from Elan of the Zanaflex assets, we acquired one issued U.S. patent and two pending U.S. patent applications. Our issued patent is generally directed to certain methods of reducing somnolence and reducing peak plasma concentrations in patients receiving tizanidine therapy. This issued patent expires in 2021. Our two pending U.S. patent applications are directed to multiparticulate formulations of tizanidine and certain other methods of using tizanidine. The process of seeking patent protection can be time consuming and we cannot assure you that patents will be issued from these pending applications or that, if patents are issued, they will be of sufficient scope to provide meaningful protection of our products.
In addition, we entered into a Supply Agreement with Elan as part of the acquisition, whereby Zanaflex Capsules are manufactured for us by Elan using Elan's proprietary SODAS technology and
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proprietary information. This proprietary technology is owned by Elan and, in the event Elan ceases to manufacture Zanaflex Capsules, Elan has agreed to grant us a royalty-free, fully paid-up license of its manufacturing know-how and other information and rights related to the production of Zanaflex Capsules, including a license to use its SODAS technology for specified purposes. We have the right to sublicense this know-how to a third party manufacturer, so long as this third party is not a technological competitor of Elan.
Elan has granted us a license that allows us to use the Zanaflex trademark in the United States and gave us the right to buy the Zanaflex trademark for a nominal sum once specified milestone and royalty payments have been made.
Fampridine-SR
We hold an exclusive, worldwide license from CSRO for a U.S. patent and its foreign counterparts for the use of fampridine in the treatment of spasticity and neuropathic pain in chronic SCI. The U.S. patent expires in 2013.
We hold an exclusive, worldwide license from Elan to three U.S. patents, with corresponding issued patents and pending applications in a number of foreign countries, relating to timed delivery formulations of a family of aminopyridine compounds, including fampridine, which also claim methods of administration and treatment for relevant neurological conditions. One of the three U.S. patents expires in 2011 and the other two U.S. patents expire in 2013.
We hold an exclusive license from Cornell University for an issued patent that relates to the use of aminopyridine compositions, including fampridine, for the treatment of diseases of anterior horn cells, including amyotrophic lateral sclerosis, which is also known as Lou Gehrig's disease. This patent expires in 2016.
We also have a pending U.S. patent application and its foreign equivalent directed to methods of using aminopyridines and a pending U.S. patent directed to aminopyridine formulations.
Chondroitinase
We have a license to a U.S. application and its foreign counterpart from King's College, University of Cambridge directed to treatment of CNS damage. We have recently filed a number of U.S. patent applications and their foreign counterparts directed to chondroitinase enzymes and methods of use and preparation. In particular, we have filed seven U.S. applications, with foreign equivalents to four of them, directed to fusion proteins of chondroitinase, chimeric proteins including chondroitinase, deletion mutants, and certain methods relating to chondroitinase.
Neuregulins
We are the exclusive licensee under a license agreement with CeNeS Pharmaceuticals, plc, of a worldwide portfolio of patents and patent applications related to products of neuregulin genes, including GGF-2. These patents claim the use of particular neuregulins to treat various pathophysiological conditions, particularly stimulating myelinating cells in order to treat demyelinating conditions of the central and peripheral nervous system. These patents also claim a number of additional potential applications of neuregulins, including stimulation of growth in mammalian muscle cells and treating cardiac failure, peripheral neuropathy and nerve injury.
Remyelinating Antibodies
We are the exclusive licensee of a portfolio of patents and patent applications related to a series of remyelinating antibodies discovered in the laboratory of Dr. Moses Rodriguez at the Mayo Clinic in Rochester, Minnesota for the treatment of CNS disorders. One U.S. patent has been issued and foreign counterparts of this patent have also issued in Australia, Mexico, New Zealand and South Korea, as
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well as in Europe, where patents have been validated in Germany, Spain, France, Great Britain and Italy. Applications are pending elsewhere, including Canada and Japan.
Competition
The market for developing and marketing pharmaceutical products is highly competitive. We are aware of many biotechnology and pharmaceutical companies that are engaged in development and/or marketing of therapeutics for a broad range of CNS conditions. Many of our competitors have substantially greater financial, research and development, human and other resources than we do. Furthermore, many of these companies have significantly more experience than we do in preclinical testing, human clinical trials, regulatory approval procedures and sales and marketing.
Spasticity
Tizanidine, the active pharmaceutical ingredient in Zanaflex Capsules, Zanaflex tablets and generic tizanidine tablets, is one of the two leading FDA-approved treatments for spasticity, a symptom suffered by both MS and SCI patients. Zanaflex tablets were approved by the FDA in 1996 and lost compound patent protection in 2002. Eleven generic manufacturers of tizanidine are distributing their own tablet formulations. Baclofen, which is also available generically, is the other leading drug for the treatment of spasticity. The mechanism of action and associated effects of baclofen are different from those of tizanidine. Due to the different pharmacokinetic profile of Zanaflex Capsules, Zanaflex tablets and generic tizanidine tablets are not AB-rated with Zanaflex Capsules. To our knowledge there are currently no other treatments for spasticity in clinical development.
MS and SCI
Current disease management approaches to MS are classified either as relapse management or disease course management approaches. For relapse management, the majority of neurologists treat sudden and severe relapses with a four-day course of intravenous high-dose corticosteroids. Many of these corticosteroids are available generically. For disease course management, there are a number of FDA-approved MS therapies that seek to modify the immune system. These treatments attempt to reduce the frequency and severity of exacerbations or slow the accumulation of physical disability for people with certain types of MS, though their precise mechanisms of action are not known. These products include Avonex from Biogen-IDEC, Betaseron from Schering AG, Copaxone from Teva and Rebif from Serono.
Several biotechnology and pharmaceutical companies, as well as academic laboratories, are involved in research and/or product development for various neurological diseases, including MS and SCI. We are aware that Aventis is developing a sodium/potassium channel blocker, HP 184, with a potential indication in SCI, MS and other conditions. We believe that HP 184 is in clinical trials for SCI and any resulting product could compete with Fampridine-SR. Neurorecovery Inc. has publicly disclosed that it has an immediate release form of fampridine for peripheral nervous system conditions in Phase 2 trials and any resulting product might compete with Fampridine-SR. In certain circumstances, pharmacists are not prohibited from formulating certain drug compounds to fill prescriptions on an individual patient basis. We are aware that at present compounded fampridine is used by some people with MS or SCI. Although we expect this use to decrease substantially if Fampridine-SR is approved, it is possible that some people will continue to use this formulation of fampridine. Several companies are engaged in developing products that include novel immune system approaches and cell transplant approaches to remyelination for the treatment of people with MS. These programs are in early stages of development and may compete with Fampridine-SR or our preclinical candidates in the future.
Our lead product candidate, Fampridine-SR, is the first product to our knowledge that acts to improve neurological function in subjects with MS. We are not aware of other companies in clinical development with products that specifically address walking ability in subjects with MS. As a result of
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its focus on improving function, we believe that Fampridine-SR may be complementary to both the relapse management and disease course management therapies that are commercially available. Nonetheless, Fampridine-SR will compete for market acceptance with these current treatments because they have been accepted and regularly prescribed to people with MS by physicians.
Government Regulation
FDA Regulation and Product Approval
The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the preclinical testing, clinical development, manufacture, distribution and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, distribution, record keeping, approval, advertising, sale, promotion, import and export of our products and product candidates.
In the United States, Zanaflex tablets, Zanaflex Capsules, and some of our product candidates are regulated by the FDA as drugs. Other of our product candidates are potentially regulated both as drugs and as biological products. Drugs are subject to the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations of the FDA, as well as to other federal, state, and local statutes and regulations. Biologics are also regulated under the Public Health Service Act, as amended. Violations of regulatory requirements at any stage may result in various adverse consequences, including FDA's and other health authorities' delay in approving or refusal to approve a product. Violations of regulatory requirements also may result in enforcement actions, including withdrawal of approval, labeling restrictions, seizure of products, fines, injunctions and/or civil or criminal penalties.
The process required by the FDA under these laws before our product candidates may be marketed in the United States generally involves the following:
The research, development and approval process requires substantial time, effort, and financial resources and we cannot be certain that any approval will be granted on a timely or commercially viable basis, if at all.
Preclinical studies include laboratory evaluation of the product candidate, its chemistry, formulation and stability, as well as animal studies to assess its potential safety and efficacy. We then submit the results of the preclinical studies, together with manufacturing information, analytical data and any available clinical data or literature to the FDA as part of an IND application, which must become effective before we may begin human clinical trials. The IND becomes effective 30 days after the FDA acknowledges that the filing is complete, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the preclinical trials or the design of the proposed clinical trials as outlined in the IND. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin. Further, an independent Institutional Review
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Board charged with protecting the welfare of human subjects involved in research at each medical center proposing to conduct the clinical trials must review and approve any clinical trial and study subjects must provide informed consent for their participation in the research.
Human clinical trials are typically conducted in three sequential phases which may overlap:
In the case of product candidates for severe or life-threatening diseases such as MS, the initial human testing is often conducted in affected subjects rather than in healthy volunteers. Since these subjects already have the target condition, these clinical trials may provide initial evidence of efficacy traditionally obtained in Phase 2 clinical trials and thus these clinical trials are frequently referred to as Phase 1b clinical trials.
Before proceeding with a study, sponsors may seek a written agreement from the FDA regarding the design, size, and conduct of a clinical trial. This is known as a special protocol assessment, or SPA. Three types of studies are eligible for SPAs: (1) animal carcinogenicity studies, (2) final product stability studies, and (3) clinical studies for pivotal trials whose data will form the primary basis to establish a product's efficacy. Where the FDA agrees to an SPA, the agreement may not be changed by either the sponsor or the FDA except if the sponsor and the FDA agree to a change, or an appropriately senior FDA official determines that a substantial scientific issue essential to determining the safety or effectiveness of the product was identified after the testing began. SPAs thus help establish up front agreement with the FDA about the adequacy of the design of a clinical trial to support a regulatory approval, but the agreement is not binding if new circumstances arise. In addition, even if an SPA remains in place and the trial meets its endpoints with statistical significance, the FDA could determine that the overall balance of risks and benefits for the product candidate is not adequate to support approval, or only justifies approval for a narrow set of uses or approval with restricted distribution or other burdensome post-approval requirements or limitations. There is thus no guarantee that a study will ultimately be adequate to support an approval even if the study is subject to an SPA.
U.S. law requires that studies conducted to support approval for product marketing be "adequate and well controlled." In general, this means that either a placebo or a product already approved for the treatment of the disease or condition under study must be used as a reference control. Studies must also be conducted in compliance with good clinical practice, or GCP, requirements.
We cannot be certain that we will successfully complete Phase 1, Phase 2 or Phase 3 testing of our product candidates within any specific time period, if at all. Furthermore, the FDA or the Institutional Review Boards or the sponsor may prevent clinical trials from beginning or may place clinical trials on hold or terminate them at any point in this process if, among other reasons, they conclude that study subjects are being exposed to an unacceptable health risk.
In the U.S., the results of product development, preclinical studies and clinical trials must be submitted to the FDA for review and approval prior to marketing and commercial shipment of the product candidate. If the product is regulated as a drug, a New Drug Application, or NDA, must be submitted and approved before commercial marketing may begin. If the product, such as an antibody, is regulated as a biologic, a Biologic License Application, or BLA, must be submitted and approved
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before commercial marketing may begin. The NDA or BLA must include a substantial amount of data and other information concerning the safety and effectiveness (and, in the case of a biologic, purity and potency) of the compound from laboratory, animal and clinical testing, as well as data and information on manufacturing, product stability, and proposed product labeling.
Each domestic and foreign manufacturing establishment, including any contract manufacturers we may decide to use, must be listed in the NDA or BLA and must be registered with the FDA. The application will generally not be approved until the FDA conducts a manufacturing inspection, approves the applicable manufacturing process for the drug or biological product, and determines that the facility is in compliance with current good manufacturing practice, or cGMP, requirements. If the manufacturing facilities and processes fail to pass the FDA inspection, we will not receive approval to market these products.
Under the Prescription Drug User Fee Act, as amended, the FDA receives fees for reviewing a BLA or NDA and supplements thereto, as well as annual fees for commercial manufacturing establishments and for approved products. These fees can be significant. The NDA or BLA review fee alone can exceed $700,000, although certain limited deferrals, waivers and reductions may be available.
Under applicable laws and FDA regulations, each NDA or BLA submitted for FDA approval is usually reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application. If deemed complete, the FDA will "file" the NDA or BLA, thereby triggering substantive review of the application. The FDA can refuse to file any NDA or BLA that it deems incomplete or not properly reviewable. If the FDA refuses to file an application, the FDA will retain 25% of the user fee as a penalty. The FDA has established performance goals for the review of NDAs and BLAssix months for priority applications and 10 months for regular applications. However, the FDA is not legally required to complete its review within these periods and these performance goals may change over time. Moreover, the outcome of the review, even if generally favorable, typically is not an actual approval but an "action letter" that describes additional work that must be done before the application can be approved. The FDA's review of an application may involve review and recommendations by an independent FDA advisory committee.
The FDA may deny an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical data. Even if such data is submitted, the FDA may ultimately decide that the NDA or BLA does not satisfy the criteria for approval. If the FDA approves a product, it may limit the approved therapeutic uses for the product as described in the product labeling, require that contraindications, warning statements or precautions be included in the product labeling, require that additional studies be conducted following approval as a condition of the approval, impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval or post-approval, or limit labeling. Once issued, the FDA may withdraw product approval if compliance with regulatory standards is not maintained or if problems occur after the product reaches the market. In addition, the FDA may require testing and surveillance programs to monitor the effect of approved products which have been commercialized, and the agency has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.
Satisfaction of the above FDA requirements or similar requirements of state, local and foreign regulatory agencies typically takes several years or more and the actual time required may vary substantially, based upon the type, complexity and novelty of the pharmaceutical product candidate. Government regulation may delay or prevent marketing of potential products for a considerable period of time or permanently and impose costly procedures upon our activities. We cannot be certain that the FDA or any other regulatory agency will grant approval for any of our product candidates on a timely basis, or on a commercially viable basis, if at all. Success in preclinical or early stage clinical trials does not assure success in later stage clinical trials. Data obtained from preclinical and clinical activities is not always conclusive and may be susceptible to varying interpretations which could delay, limit or
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prevent regulatory approval. Even if a product candidate receives regulatory approval, the approval may be significantly limited to specific indications. Further, even after regulatory approval is obtained, later discovery of previously unknown problems with a product may result in restrictions on the product or even complete withdrawal of the product from the market. Delays in obtaining, or failures to obtain regulatory approvals would have a material adverse effect on our business. Marketing our product candidates abroad will require similar regulatory approvals and is subject to similar risks. In addition, we cannot predict what adverse governmental regulations may arise from future U.S. or foreign governmental action.
Any products manufactured or distributed by us pursuant to FDA clearances or approvals are subject to pervasive and continuing regulation by the FDA, including record-keeping requirements, reporting of adverse experiences with the drug, other reporting, advertising and promotion restrictions. The FDA's rules for advertising and promotion require in particular that we not promote our products for unapproved uses, and that our promotion be fairly balanced and adequately substantiated. We must also submit appropriate new and supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Drug manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with current Good Manufacturing Practices, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. We cannot be certain that we or our present or future suppliers will be able to comply with the current Good Manufacturing Practices and other FDA regulatory requirements. The FDA also enforces the requirements of the Prescription Drug Marketing Act, or PDMA, which, among other things, imposes various requirements in connection with the distribution of product samples to physicians.
We and our product candidates are also subject to a variety of state laws and regulations in those states or localities where they are or will be marketed. Any applicable state or local regulations may hinder our ability to market our product candidates in those states or localities.
The FDA's policies may change and additional government regulations may be enacted which could prevent or delay regulatory approval of our potential products. Moreover, increased attention to the containment of health care costs in the United States and in foreign markets could result in new government regulations which could have a material adverse effect on our business. We cannot predict the likelihood, nature or extent of adverse governmental regulation which might arise from future legislative or administrative action, either in the United States or abroad.
Orphan Drugs
Under the Orphan Drug Act, special incentives exist for sponsors to develop products for rare diseases or conditions, which are defined to include those diseases or conditions that affect fewer than 200,000 people in the U.S. Sponsors may request that FDA grant a drug orphan designation prior to approval. We have received Orphan Drug designation for Fampridine-SR for the treatment of both MS and incomplete SCI.
Products designated as orphan drugs are eligible for special grant funding for research and development, FDA assistance with the review of clinical trial protocols, potential tax credits for research, reduced filing fees for marketing applications, and a special seven-year period of market exclusivity after marketing approval. Orphan drug exclusivity prevents FDA approval of applications by others for the same drug and the designated orphan disease or condition. FDA may approve a subsequent application from another person if FDA determines that the application is for a different drug or different use, or if FDA determines that the subsequent product is clinically superior, or that the holder of the initial orphan drug approval cannot assure the availability of sufficient quantities of the drug to meet the public's need. In addition, even when a drug has orphan exclusivity, the FDA may approve a competing drug for the same orphan use. The FDA may also approve someone else's
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application for the same drug that has orphan exclusivity, but for a different use, in which case the competing drug could be prescribed by physicians outside its FDA approval for the orphan use, notwithstanding the existence of orphan exclusivity. A grant of an orphan designation is not a guarantee that a product will be approved. If a sponsor receives orphan drug exclusivity upon approval, there can be no assurance that the exclusivity will prevent another person from receiving approval for the same or a similar drug for the same or other uses.
Generic Drugs, AB Ratings and Pharmacy Substitution
Generic drugs are approved through an abbreviated process, which differs in important ways from the process followed for innovative products. Generally an abbreviated new drug application, or ANDA, is filed with the FDA. The ANDA must seek approval of a drug product that has the same active ingredient(s), dosage form, strength, route of administration, and conditions of use (labeling) as a so-called "reference listed drug" approved under an NDA with full supporting data to establish safety and effectiveness. Only limited exceptions exist to this ANDA sameness requirement, including certain limited variations approved by the FDA through a special suitability petition process. The ANDA also generally contains clinical data to demonstrate that the product covered by the ANDA is absorbed in the body at the same rate and to the same extent as the reference listed drug. This is known as bioequivalence. In addition, the ANDA must contain information regarding the manufacturing processes and facilities that will be used to ensure product quality, and must contain certifications to patents listed with the FDA for the reference listed drug.
Every state has a law permitting or requiring pharmacists to substitute generic equivalents for brand-name prescriptions unless the physician has prohibited substitution. Managed care organizations often urge physicians to prescribe drugs with generic equivalents, and to authorize substitution, as a means of controlling costs. They also may require lower copayments as an incentive to patients to ask for and accept generics.
While the question of substitutability is one of state law, most states look to the FDA to determine whether a generic is substitutable. FDA lists therapeutic equivalence ratings in a publication often referred to as the Orange Book. In general, a generic drug that is listed in the Orange Book as therapeutically equivalent to the branded product will be substitutable under state law and, conversely, a generic drug that is not so listed will not be substitutable. To be considered therapeutically equivalent, a generic drug must first be a pharmaceutical equivalent of the branded drug. This means that the generic has the same active ingredient, dosage form, strength or concentration and route of administration as the brand-name drug. Tablets and capsules are presently considered different dosage forms that are pharmaceutical alternatives and not substitutable pharmaceutical equivalents.
In addition to being pharmaceutical equivalents, therapeutic equivalents must be bioequivalent to their branded counterparts. Bioequivalence for this purpose is defined in the same manner as for ANDA approvals, and usually requires a showing of comparable rate and extent of absorption in a small human study.
Solid oral dosage form drug products generally are rated AB in the Orange Book if they are considered therapeutic equivalents. If bioequivalence has been adequately demonstrated, the products will be rated "AB."
Foreign Regulation and Product Approval
Outside the United States, our ability to market a product candidate is contingent upon receiving a marketing authorization from the appropriate regulatory authorities. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary widely from country to country. At present, foreign marketing authorizations are applied for at a national level, although within the European Community, or EC, registration procedures are available to companies wishing to market a product in more than one EC member state. If the regulatory authority is satisfied that
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adequate evidence of safety, quality and efficacy has been presented, a marketing authorization will be granted. This foreign regulatory approval process involves all of the risks associated with FDA clearance discussed above.
Other Regulations
In the U.S., the research, manufacturing, distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing and scientific/educational grant programs must comply with the anti-kickback and fraud and abuse provisions of the Social Security Act, as amended, the False Claims Act, also as amended, the privacy provisions of the Health Insurance Portability and Accountability Act, or HIPAA, and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veterans Health Care Act of 1992, as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.
We are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control, and disposal of hazardous or potentially hazardous substances. We may incur significant costs to comply with such laws and regulations now or in the future.
Reimbursement and Pricing Controls
In many of the markets where we or our collaborative partners would commercialize a product following regulatory approval, the prices of pharmaceutical products are subject to direct price controls (by law) and to drug reimbursement programs with varying price control mechanisms.
In the United States, there has been an increased focus on drug pricing in recent years. Although there are currently no direct government price controls over private sector purchases in the United States, federal legislation requires pharmaceutical manufacturers to pay prescribed rebates on certain drugs to enable them to be eligible for reimbursement under certain public health care programs such as Medicaid. Various states have adopted further mechanisms under Medicaid and otherwise that seek to control drug prices, including by disfavoring certain higher priced drugs and by seeking supplemental rebates from manufacturers. Managed care has also become a potent force in the market place that increases downward pressure on the prices of pharmaceutical products. Federal legislation, enacted in December 2003, has altered the way in which physician-administered drugs covered by Medicare are reimbursed. Under the new reimbursement methodology, physicians are reimbursed based on a product's "average sales price," or ASP. This new reimbursement methodology has generally led to lower reimbursement levels. The new federal legislation also has added an outpatient prescription drug benefit to Medicare, effective January 2006. In the interim, Congress has established a discount drug card program for Medicare beneficiaries. Both benefits will be provided primarily through private entities, which will attempt to negotiate price concessions from pharmaceutical manufacturers.
Public and private health care payors control costs and influence drug pricing through a variety of mechanisms, including through negotiating discounts with the manufacturers and through the use of tiered formularies and other mechanisms that provide preferential access to certain drugs over others within a therapeutic class. Payors also set other criteria to govern the uses of a drug that will be deemed medically appropriate and therefore reimbursed or otherwise covered. In particular, many public and private health care payors limit reimbursement and coverage to the uses of a drug that are either approved by the FDA or that are supported by other appropriate evidence (for example,
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published medical literature) and appear in a recognized drug compendium. Drug compendia are publications that summarize the available medical evidence for particular drug products and identify which uses of a drug are supported or not supported by the available evidence, whether or not such uses have been approved by the FDA. For example, in the case of Medicare coverage for physician- administered oncology drugs, the Omnibus Budget Reconciliation Act of 1993, or OBRA '93, with certain exceptions, prohibits Medicare carriers from refusing to cover unapproved uses of an FDA-approved drug if the unapproved use is supported by one or more citations in the American Hospital Formulary Service Drug Information, the American Medical Association Drug Evaluations, or the U.S. Pharmacopoeia Drug Information. Another commonly cited compendium, for example under Medicaid, is the DRUGDEX Information System.
Different pricing and reimbursement schemes exist in other countries. For example, in the European Union, governments influence the price of pharmaceutical products through their pricing and reimbursement rules and control of national health care systems that fund a large part of the cost of such products to consumers. The approach taken varies from member state to member state. Some jurisdictions operate positive and/or negative list systems under which products may only be marketed once a reimbursement price has been agreed. Other member states allow companies to fix their own prices for medicines, but monitor and control company profits. The downward pressure on health care costs in general, particularly prescription drugs, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products, as exemplified by the National Institute for Clinical Excellence in the UK which evaluates the data supporting new medicines and passes reimbursement recommendations to the government. In addition, in some countries cross-border imports from low-priced markets (parallel imports) exert a commercial pressure on pricing within a country.
Employees
As of August 31, 2005, we had 61 employees. Of the 61 employees, 21 perform research and development activities, including both preclinical programs and clinical trials, 25 work in sales, marketing and communications and 15 perform general and administrative tasks.
Facilities
Our principal executive offices are located in an approximately 30,000 square foot facility in Hawthorne, NY, which houses offices and laboratory space. The current annual rent for this facility is $642,000. We believe that our facility is currently adequate for our purposes and that it will continue to be so for the foreseeable future. The lease for this facility expires in January 2008.
Legal Proceedings
We are not currently a party to any material legal proceedings.
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Executive Officers and Directors
The following table sets forth, as of October 1, 2005, information about our executive officers and directors.
Name
|
Age
|
Position(s)
|
||
---|---|---|---|---|
Ron Cohen, M.D. | 49 | President, Chief Executive Officer and Director | ||
Andrew R. Blight, Ph.D. | 54 | Chief Scientific Officer | ||
Mary Fisher | 44 | Chief Operating Officer | ||
David Lawrence, M.B.A. | 48 | Chief Financial Officer | ||
Jane Wasman | 49 | Executive Vice President, General Counsel and Secretary | ||
Standish M. Fleming | 58 | Director | ||
John Friedman(1)(2)(3) | 52 | Director | ||
Sandra Panem, Ph.D.(1)(2)(3) | 59 | Director | ||
Barclay A. Phillips | 43 | Director | ||
Mark R.E. Pinney, M.B.A., C.F.A., M.S. | 51 | Director | ||
Steven M. Rauscher | 52 | Director | ||
Michael Steinmetz, Ph.D.(2) | 58 | Director | ||
Wise Young, Ph.D., M.D.(3) | 55 | Director |
Ron Cohen, M.D., has served as our President and Chief Executive Officer since he founded Acorda in 1995. Dr. Cohen previously was a principal in the startup of Advanced Tissue Sciences, Inc., a biotechnology company engaged in the growth of human organ tissues for transplantation uses. Dr. Cohen received his B.A. degree with honors in Psychology from Princeton University, and his M.D. from the Columbia College of Physicians & Surgeons. He completed a residency in Internal Medicine at the University of Virginia Medical Center, and is Board Certified in Internal Medicine. Dr. Cohen serves on the Board of Directors of Zymenex A/S, a Danish pharmaceutical company, and on the Emerging Company Section of the Board of the Biotechnology Industry Organization (BIO). He is Chairman Emeritus and a Director of the Board of the New York Biotechnology Association and also serves as on the Scientific Advisory Board of the Daniel Heumann Fund and as a member of the Columbia-Presbyterian Health Sciences Advisory Council.
Andrew R. Blight, Ph.D., has been our Chief Scientific Officer since January 2004 and previously served as our Executive Vice President, Research and Development from 2000 to 2004, and Vice President from 1998 to 2000. Prior to joining Acorda, Dr. Blight spent approximately six years as Professor and Director of the Neurosurgery Research Laboratory at the University of North Carolina at Chapel Hill. Dr. Blight held prior academic positions at Purdue University and New York University. Dr. Blight is a leader in SCI pathophysiology research and has made several important contributions to the field, particularly on the role of demyelination in SCI. He also pioneered the therapeutic application of 4-AP in SCI animal models and in human clinical trials. Dr. Blight is a member of the editorial board of the Journal of Neurotrauma and has served as a member of the NIH NSDA review committee. He was previously Secretary, Treasurer and Vice President of the National Neurotrauma Society. Dr. Blight received his B.S. in Zoology and his Ph.D. in Zoology/Neurobiology from the University of Bristol, U.K.
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Mary Fisher has been our Chief Operating Officer since January 2005 and previously served as our Vice President, Commercial Operations from 2003 through 2004 and Vice President, Marketing and Strategic Planning from 2000 to 2003. From 1999 to 2000, Ms. Fisher was an independent consultant to various pharmaceutical companies. From 1994 to 1999, Ms. Fisher was Vice President, Strategic Healthcare and Commercial Operations for Cephalon, Inc. In that capacity she was responsible for the company's corporate sales, managed care marketing, pricing, reimbursement, health economics, patient support programs, product planning, commercial manufacturing, distribution and customer service. From 1990 until joining Cephalon, Ms. Fisher was Corporate Communications Manager for Immunex Corporation.
David Lawrence, M.B.A. , has been our Chief Financial Officer since January 2005. He previously served as our Vice President, Finance from January 2001 through 2004, and Director, Finance from 1999 to 2001. From 1991 to 1999, Mr. Lawrence held several positions for Tel-Air Communications, Inc. including Vice President and Controller. Prior to Tel-Air, he held financial management positions of Controller and Finance Manager for Southwestern Bell and Metromedia Telecommunications respectively. Mr. Lawrence received his undergraduate degree in Accounting from Roger Williams College, and an M.B.A in Finance from Iona College. Mr. Lawrence is a founding member and currently serves on the Board of Directors as Treasurer of The Brian Ahearn Children's Fund.
Jane Wasman, J.D. , has been our Executive Vice President, General Counsel and Corporate Secretary since May 2004. From 1995 to 2004, Ms. Wasman held various leadership positions at Schering-Plough Corporation, including Staff Vice President and Associate General Counsel responsible for legal support for U.S. Pharmaceuticals operations, including sales, marketing and compliance; FDA regulatory matters; global research and development; and, corporate licensing and business development. She served as Staff Vice President, International in 2001 and as Staff Vice President, European OperationsLegal from 1998 to 2000. Previously, Ms. Wasman specialized in litigation at Fried, Frank, Harris, Shriver & Jacobson. She also served as Associate General Counsel to the U.S. Senate Committee on Veteran's Affairs. Ms. Wasman graduated Magna Cum Laude from Princeton University and earned her J.D. from Harvard Law School.
Standish M. Fleming has been a member of our Board of Directors since 2004. He is a 19-year veteran of life sciences venture capital investing. Mr. Fleming co-founded Forward Ventures in 1993. Before establishing Forward Ventures II in 1993, Mr. Fleming served as start-up chairman, president and CEO of GeneSys Therapeutics (now part of Cell Genesys). He has served as founding director and acting president of Triangle Pharmaceuticals (now part of Gilead Sciences, Inc.), CombiChem (now part of Bristol-Myers Squibb) and Corixa and GenQuest (now both part of GlaxoSmithKline). Mr. Fleming was a founding board member of Ciphergen Biosystems and Gryphon Sciences. He is a former president of the Biotechnology Venture Investors Group. Mr. Fleming began his venture career with Ventana Growth Funds in San Diego in 1986. Mr. Fleming earned his B.A. from Amherst College and his M.B.A. from the UCLA Graduate School of Management. Mr. Fleming has served on the boards of 19 venture-backed companies and is also currently a director of Ambit and Sanarus Medical, and a founding director of Arizeke Pharmaceuticals and Nereus Pharmaceuticals.
John Friedman has been a member of our Board of Directors since 2003. Mr. Friedman is the Managing Partner of Easton Hunt Capital Partners, L.P., a private investment firm that he founded in 1999. Since 1991, Mr. Friedman has also been the President of Easton Capital Corp., a private investment firm. He also helped manage Atrium Capital Corporation, an investment firm, from 1991 to 1993. From 1989 to 1991, Mr. Friedman was the founder and Managing General Partner of Security Pacific Capital Investors, a private investment firm. Prior to joining Security Pacific, Mr. Friedman was a Managing Director and Partner at E.M. Warburg, Pincus & Co., Inc., where he was employed from 1981 to 1989. From 1978 to 1980, Mr. Friedman was an attorney with Sullivan & Cromwell LLP and during 1980 he was employed at Shearson Loeb Rhoades. Mr. Friedman received a B.A. in History
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from Yale College and a J.D. degree from Yale Law School. Mr. Friedman is a member of the board of directors of Comverse Technology, Inc., a telecommunications equipment company, YM BioSciences, Inc., a biotechnology company, Renovis, a biotechnology company, Conor Medsystems, Inc., a drug delivery technology company, as well as several private companies. Mr. Friedman is also co-chairman of the President's Council of the Cold Spring Harbor Laboratory.
Sandra Panem, Ph.D. , has been a member of our Board of Directors since 1998. She is currently a partner at Cross Atlantic Partners, which she joined in 2000. From 1994 to 1999, Dr. Panem was President of Vector Fund Management, the then asset management affiliate of Vector Securities International. Prior thereto, Dr. Panem served as Vice President and Portfolio Manager for the Oppenheimer Global BioTech Fund, a mutual fund that invested in public and private biotechnology companies. Previously, she was Vice President at Salomon Brothers Venture Capital, a fund focused on early and later-stage life sciences and technology investments. Dr. Panem was also a Science and Public Policy Fellow in economic studies at the Brookings Institution, and an Assistant Professor of Pathology at the University of Chicago. She received a B.S. in biochemistry and Ph.D. in microbiology from the University of Chicago. Dr. Panem currently serves on the boards of directors of Martek Biosciences Corp., Bioject Medical Technologies, Inc., Labcyte, Inc. and Confluent Surgical, Inc.
Barclay A. Phillips has been a member of our Board of Directors since September 2004. Mr. Phillips has been a Managing Director of Vector Fund Management, a venture capital firm focused on investments in the life sciences and healthcare industry, since 1999. From 1991 to 1999, Mr. Phillips served in various roles including Director of Private Placements and Biotechnology Analyst for INVESCO Funds Group, Inc. From 1985 to 1990, Mr. Phillips held positions in sales and trading with Paine Webber, Inc. and Shearson Lehman Hutton, Inc. Over the last twelve years, Mr. Phillips has served on the boards of a number of private companies and currently serves as a Director of CancerVax Corp. Mr. Phillips received a B.A. in economics from the University of Colorado.
Mark R. E. Pinney, M.B.A., C.F.A., M.S. , joined our Board of Directors at our founding. He was also our Chief Financial Officer from 2001 to 2004. Since 2004, he has served as Chief Financial Officer and Chief Privacy Officer of Tacoda Systems, Inc. From 2000 to 2001, Mr. Pinney was Chairman of CanDo, Inc., an Internet company that offered product and service solutions to people with disabilities. In 1998, he co-founded and was Chief Executive Officer of LifeWire, Inc., a company developing community-based destination web sites for the disability population. LifeWire merged with CanDo in 2000. Mr. Pinney also co-founded Real Media, Inc., an Internet advertising software and services firm, in 1996. From 1984 to 1988, he was Vice President, Corporate Finance for Merrill Lynch Capital Markets and from 1988 to 1992, he was Vice President, Private Transactions at Dillon Read & Co., Inc. Mr. Pinney also serves on the Advisory Board of United Spinal Association. He received an undergraduate degree in engineering at the University of Exeter, England, an M.B.A. from the University of Chicago Graduate School of Business and a masters degree in engineering from Columbia University. He is a Chartered Financial Analyst.
Steven M. Rauscher has served on our Board of Directors since 2005. He is President and CEO of Oscient Pharmaceuticals Corporation, a commercial stage biopharmaceutical company. He joined Oscient in 2000 having served as a member of the Board of Directors since 1993. Previously, Mr. Rauscher was CEO of AmericasDoctor, a company providing clinical research services to the pharmaceutical industry. Prior to AmericasDoctor, he held a number of leadership positions at Abbott Laboratories, including Vice President of Corporate Licensing, Vice President of Business Development, International Division and Vice President of Sales, U.S. Pharmaceuticals. Mr. Rauscher received a B.S. from Indiana University and an M.B.A. from the University of Chicago.
Michael Steinmetz, Ph.D. , has been a member of our Board of Directors since 1999. Dr. Steinmetz is a Managing Director at Clarus Ventures LLC, a company he co-founded in 2005. From 1999 to June 2005, he was a General Partner of MPM's BioVentures' Funds. Prior to MPM, he held positions at
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various academic institutions, including the California Institute of Technology and the Basel Institute for Immunology where he was a permanent member. In 1986, he joined Hoffmann-La Roche and held various leadership positions in R&D, initially in Switzerland and subsequently in the United States where, as Vice President of Preclinical Research and Development, he was responsible for Roche's drug discovery activities in the United States and Roche's global biotechnology efforts. Dr. Steinmetz received a degree in chemistry from the University of Hamburg, Germany and holds a Ph.D. from the University of Munich, Germany. He has done academic research in the areas of Biochemistry, Molecular Biology and Immunology and has published over 130 manuscripts in leading scientific journals.
Wise Young, Ph.D., M.D., has been a member of the board of directors and of our scientific advisory board since the founding of the company in 1995. Dr. Young has been at Rutgers University since 1997, where he serves as Professor and Chair of the Department of Cell Biology and Neuroscience, Professor II and Director of the Neuroscience Center and founder of the W.M. Keck Center for Neuroscience. Dr. Young is one of the preeminent scientists in the fields of spinal cord injury and neurotrauma, SCI animal models, and the pharmacological therapy of SCI. He was the Principal Investigator for the Multicenter Animal Spinal Cord Injury Study, funded by the National Institutes of Health; is editor-in-chief of Current Concepts in Critical Care and Trauma ; and serves on numerous editorial boards, including those of Experimental Neurology, Journal of Neurotrauma, Brain Research and Stroke . Dr. Young has received the Wakeman Award for Research in Neurosciences, and a Jacob Javits Neuroscience Award from the National Institute of Neurological Disorder and Stroke. He is also a member of the Scientific Advisory Council of the American Paralysis Association and of the National Acute Spinal Cord Injury Study executive committee. Dr. Young received a B.A. in biology and chemistry from Reed College, a Ph.D. in physiology and biophysics from the University of Iowa and an M.D. from Stanford University.
Board Composition
Our board of directors currently has nine members. Upon completion of this offering, our board of directors will consist of nine directors divided into three classes, with each class serving for a term of three years:
At each annual meeting of stockholders, the successors to directors whose terms will then expire will be elected for three-year terms. This classification of the board of directors may have the effect of delaying or preventing changes in control or management. See "Risk FactorsCertain provisions of Delaware law, our certificate of incorporation and our by-laws may delay or prevent an acquisition of us that stockholders may consider favorable or may prevent efforts by our stockholders to change our directors or our management, which could decrease the value of your shares."
We believe that a majority of the members of our Board of Directors will be independent under the current independence requirements of the Nasdaq National Market and the Securities and Exchange Commission, or the SEC. The authorized number of directors may be changed by resolution adopted by a majority of the board of directors.
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Director Compensation
Our outside directors compensation policy provides that new outside directors on our board receive an initial grant of stock options in the amount of 0.2% of the fully diluted shares of our common stock, or a comparable adjusted number of stock appreciation rights or shares of restricted stock, with a fair market value exercise price and a three-year quarterly vesting schedule commencing on the date of the award, unless they hold at least an equivalent amount of common stock through prior ownership. On an annual basis, at the discretion of the board of directors upon the recommendation of the compensation committee, outside directors can receive stock options in the amount of up to 0.02% of the fully diluted shares of our common stock, or a comparable adjusted number of stock appreciation rights or shares of restricted stock, with a fair market value exercise price and a one-year quarterly vesting schedule. Upon consummation of this offering, this compensation policy will be extended to all of the outside directors on our board of directors. Directors are also reimbursed for reasonable expenses related to their service on our board of directors.
Board Committees
Our board of directors has an audit committee, a compensation committee and a nominations committee.
Audit Committee
Our audit committee consists of Mr. Phillips, Mr. Fleming and Dr. Steinmetz. Mr. Phillips serves as chair of our audit committee. Our board of directors has determined that Mr. Fleming qualifies as an "audit committee financial expert" as that term is defined in Item 401(h) of Regulation S-K of the Securities Act. We believe that the composition of our audit committee meets, and the functioning of our audit committee will comply with, the applicable requirements of the Sarbanes-Oxley Act of 2002, the Nasdaq National Market and SEC rules and regulations.
Our audit committee is responsible for:
We have adopted a written audit committee charter that we will make available on our website.
Compensation Committee
Our compensation committee consists of Dr. Panem, Mr. Rauscher and Dr. Young. Dr. Panem serves as chair of our compensation committee. We believe that the composition of our compensation
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committee meets, and the functioning of our compensation committee will comply with, the applicable requirements of the Nasdaq National Market and SEC rules and regulations. Our compensation committee is responsible for:
We have adopted a written compensation committee charter that we will make available on our website.
Nominations Committee
We have established a nominations committee, to be effective upon the closing of this offering. The nominations committee will be responsible for identifying potential candidates to serve on our board. We have approved a written nominations committee charter that also will be effective upon the closing of this offering and that sets forth procedures for the consideration of director nominees and other related matters.
Compensation Committee Interlocks and Insider Participation
The compensation of our executive officers is currently determined by our compensation committee, as described above. None of our executive officers has served as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.
Dr. Panem is affiliated with Cross Atlantic Partners, which participated in the sale of our Series J preferred stock in a private placement consummated in May 2003. Pursuant to an amended and restated registration rights agreement among us and certain of our stockholders, including entities affiliated with Dr. Panem, the parties to the registration rights agreement have demand and piggy-back registration rights. See "Certain Relationships and Related Transactions."
Executive Compensation
The following summary compensation table sets forth the aggregate compensation awarded to, earned by or paid to the following individuals during the fiscal year ended December 31, 2004:
We refer to these individuals as our "named executive officers."
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Long-Term
Compensation |
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Annual Compensation
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Securities Underlying
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Name and Principal Position
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Year
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Salary
|
Bonus(2)
|
Restricted
Stock Award(3) |
Options
|
All Other
Compensation |
||||||||
Ron Cohen, M.D.
President and Chief Executive Officer |
2004 | $ | 305,000 | $ | 120,000 | 260,385 | | | ||||||
Andrew R. Blight, Ph.D.
Chief Scientific Officer |
2004 | $ | 210,000 | $ | 65,450 | 97,385 | | | ||||||
Mary Fisher
Chief Operating Officer(4) |
2004 | $ | 210,000 | $ | 74,000 | 157,231 | | 109,087 | ||||||
Mitchell Katz, Ph.D(5)
Vice President, Clinical Programs |
2004 | $ | 198,300 | $ | 67,375 | 97,615 | | | ||||||
Mark Pinney, M.B.A., C.F.A.(6)
Chief Financial Officer |
2004 | $ | 180,250 | $ | 75,050 | 81,385 | | | ||||||
Jane Wasman(7)
Executive VP & General Counsel |
2004 | $ | 225,000 | $ | | 77,615 | | 25,000 | ||||||
David Lawrence M.B.A.(8)
Chief Financial Officer |
2004 | $ | 164,800 | $ | 64,000 | 64,231 | | | ||||||
|
||||||||||||||
835,847 | (1) |
Stock Options
Option Grants in Last Year
No stock option grants were made to the named executive officers during the calendar year ended December 31, 2004. No stock appreciation rights were granted to these individuals during such year.
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Aggregate Exercise of Stock Options and Year-end Option Values
The following table contains information regarding the number of shares of common stock subject to both exercisable and unexercisable stock options, as well as the value of unexercisable in-the-money options as of December 31, 2004 for the named executive officers. There was no public market for our common stock as of December 31, 2004. Accordingly, the value of unexercised in-the-money options as of such date has been calculated by determining the difference between the exercise price per share and an assumed offering price of $ per share, which is the midpoint of the estimated price range shown on the cover of this prospectus.
|
|
|
Number of Securities
Underlying Unexercised Options at December 31, 2004 |
Value of Unexercised
In-the-Money Options at December 31, 2004 |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Shares
Acquired on Exercise |
|
||||||||||||
Name
|
Value
Realized ($) |
|||||||||||||
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||
Ron Cohen | 0 | 0 | 637,559 | 15,349 | $ | $ | ||||||||
Andrew Blight | 0 | 0 | 94,642 | 481 | ||||||||||
Mary Fisher | 0 | 0 | 33,296 | 3,592 | ||||||||||
Mitchell Katz | 0 | 0 | 28,858 | 1,644 | ||||||||||
Mark Pinney | 0 | 0 | 144,812 | 34,142 | ||||||||||
Jane Wasman | 0 | 0 | 0 | 0 | ||||||||||
David Lawrence | 0 | 0 | 25,888 | 3,002 |
The following table sets forth the number of shares underlying options that have been issued to each of the named executive officers in calendar year 2005.
Name
|
Number of
Shares Underlying Stock Options Granted in Calendar Year 2005 |
|
---|---|---|
Ron Cohen | 51,265 | |
Andrew Blight | 52,338 | |
Mary Fisher | 132,324 | |
Jane Wasman | 44,769 | |
David Lawrence | 70,109 |
Amended and Restated 1999 Employee Stock Option Plan
In June 1999, our board of directors adopted the 1999 Employee Stock Option Plan. We obtained stockholder approval of the plan in August 1999. The plan allows us to issue awards of stock appreciation rights, incentive stock options or nonstatutory stock options for shares of our common stock. Our compensation committee administers the plan, selects those persons who are to be granted awards under the plan and determines the terms and conditions of those awards. Our directors, key employees, independent contractors, agents and consultants are eligible to receive awards under our plan, but only employees and officers may receive incentive stock options. As of December 31, 2004 we reserved a total of 2,443,282 shares of common stock for issuance and have granted options to purchase 1,244,905 shares under the plan.
In February 2004, the 1999 Employee Stock Option Plan was amended to provide for the issuance of restricted stock in addition to stock options and stock appreciation rights. Any shares of restricted stock granted under the 1999 Stock Option Plan are subject to such restrictions as our compensation committee determines are appropriate. As of December 31, 2004, we have 1,127,808 restricted shares outstanding under the plan.
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In September 2005, our board of directors adopted an amendment to the plan, which has been approved by our stockholders. The amendment to the plan provides for automatic annual increases to the share reserve on the first day of each fiscal year by a number of shares equal to the lesser of:
The exercise price per share of the incentive stock options awarded under the plan must be at least equal to the fair market value of a share of our common stock on the date of grant. The exercise price per share of nonstatutory stock options awarded under the plan must be equal to the fair market value of a share of our common stock on the date of grant, or such other price that the compensation committee may determine is appropriate. The compensation committee determines the exercise period of the stock options, but in no event will the stock options expire later than ten years from the date of grant. Except as the compensation committee may otherwise determine, upon the voluntary termination or involuntary termination without cause of the option holder, the stock options may be exercised for a period of three months after such termination. In the case of termination of the option holder by reason of retirement or due to disability, the stock options may be exercised at any time to the extent that such stock option was vested, but only within one year of termination in the case of incentive stock options. In the case of termination by death, the option holder's estate, or any person who acquires the stock option by reason of the option holder's death, may exercise the stock option within a period of three years after the option holder's death.
The compensation committee has the authority to include with any stock option award a progressive stock option, which allows an option holder to exercise their stock option by surrendering shares of common stock and entitles them to receive additional shares of common stock equal to the number of shares surrendered. The compensation committee also has the authority to grant stock appreciation rights in connection with any stock option award, which may be paid in shares of common stock, cash or both, at the discretion of the compensation committee and subject to the requirements of the plan.
In the event of a tender offer by a person or persons other than us, for all or any part of the outstanding stock, which if upon consummation of the tender offer, the offeror or offerors would, own, beneficially or of record, an aggregate of more than 25% of our outstanding common stock, or in the event of a change of control, the stock options and any outstanding shares of restricted stock will become immediately exercisable to the extent of the total number of shares subject to the stock options. The compensation committee may authorize payment of cash upon exercise of a stock appreciation right in the event of a tender offer as described above, or a change of control.
In September 2003, we repriced 115,578 stock options issued to employees, which had an exercise price per option of more than $7.64, with a new exercise price of $7.64. In March 2004, we repriced 1,227,648 stock options issued to employees, which had an exercise price per option of more than $2.60, with a new exercise price per option of $2.60. We recognized additional compensation charges for these repricings (see Note 9 to our consolidated financial statements included in this prospectus).
401(k) Plan
Effective September 1, 1999, we adopted a defined contribution 401(k) savings plan covering all of our employees. Participants may elect to defer a percentage of their annual pre-tax compensation to the 401(k) plan, subject to defined limitations. Our board of directors has discretion to match contributions made by our employees. We did not make any matching contributions to the plan in fiscal years 2000, 2001, 2002 or in calendar years 2003 and 2004.
Employment Contracts, Termination of Employment and Change-in-Control Arrangements
We are a party to an employment agreement with Dr. Cohen that governs the terms and conditions of his employment as our President and Chief Executive Officer. The employment
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agreement provides for a base annual salary of $280,000, subject to annual increases and bonuses at the discretion of the board of directors. His current salary is $305,000. Dr. Cohen is eligible to receive annual performance-based stock options to purchase common stock in an amount determined by the board of directors based on Dr. Cohen's individual performance and the achievement of our goals and objectives. Dr. Cohen's employment agreement would have expired in January 2004, but is subject to automatic successive one-year renewal periods unless either Dr. Cohen or we give the other written notice at least 60 days prior to the expiration date that Dr. Cohen or we do not intend to renew the contract. Dr. Cohen's employment agreement has been renewed effective January 2005 for a one-year period. In the event we terminate the agreement with Dr. Cohen without cause, or if Dr. Cohen voluntarily terminates the agreement with good reason, we are obligated to make severance payments equal to one year's base annual salary and COBRA premium payments for the severance period plus a bonus equal to his prior year's bonus pro rated for the number of days worked prior to termination. In such event, all of Dr. Cohen's options will become immediately exercisable and will remain exercisable for 48 months following termination. If Dr. Cohen's employment terminates for death or disability, we are obligated to pay his base salary for three months and COBRA premiums for the COBRA coverage period and 65% of his outstanding options will become immediately vested and remain exercisable for 48 months following such termination. In the event of a change in control, the vesting of Dr. Cohen's options will be governed by the terms of our stock option plan and his stock option agreement, but in no event will less than 65% of Dr. Cohen's then unvested stock options become immediately vested and exercisable. If Dr. Cohen voluntarily terminates his employment without good reason following a change in control, he is entitled to receive the same severance and bonus package described above, however, only 65% of his outstanding options will become immediately vested and remain exercisable for 48 months following termination. Following his termination of employment, Dr. Cohen will remain subject to confidentiality, non-competition and non-solicitation covenants for one year in the case of non-competition and non-solicitation and five years in the case of confidentiality.
On September 26, 2004, we entered into an amendment to Dr. Cohen's employment agreement to increase the amount of severance to which he would be entitled in the event of a termination of his employment by us without cause or by Dr. Cohen with good reason from one year to 15 months and to make such severance, together with his prorated bonus, payable in one lump sum within 30 days after such termination.
Indemnification of Directors and Executive Officers and Limitation on Liability
Our certificate of incorporation currently provides and, upon the closing of this offering, our amended and restated certificate of incorporation will provide, that we shall indemnify our directors and officers to the fullest extent permitted by Delaware law. Upon the closing of this offering, our amended and restated certificate of incorporation will also provide that, with respect to proceedings initiated by our officers and directors, we are only required to indemnify these persons if the proceeding was authorized by our board of directors. Our amended bylaws permit us, by action of our board of directors, to indemnify our other employees and agents to the same extent as we are required to indemnify our officers and directors.
In addition, our certificate of incorporation provides, and upon the closing of this offering our amended and restated certificate of incorporation will provide, that our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, except for liability:
There is no pending litigation or proceeding involving any of our directors or officers for which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Sale of Securities
In March 2001, we consummated a private placement of 10,204,047 shares of Series I preferred stock for an aggregate purchase price of approximately $39,694,000. Except for Michael Steinmetz, Standish Fleming and Barclay Phillips, who are affiliated with MPM/BB Bioventure, Forward Ventures and Vector Fund Management, respectively, none of our executive officers or directors purchased any shares of the Series I preferred stock.
The following table sets forth, with respect to the Series I preferred stock transaction, the purchase price per share, the aggregate shares purchased and the total investment for MPM/BB Bioventure Group, Forward Ventures and Vector Fund Management:
Investor
|
Purchase Price
per Share of Series I Preferred |
Aggregate Shares of
Series I Preferred Purchased |
Total Investment in
Series I Preferred |
|||
---|---|---|---|---|---|---|
MPM/BB Bioventure Group | $3.89 | 639,359 | $2,487,107 | |||
Forward Ventures | $3.89 | 1,542,417 | $6,000,002 | |||
Vector Fund Management | $3.89 | 398,547 | $1,550,348 |
In May 2003, we consummated a private placement of 112,790,233 shares of Series J preferred stock for an aggregate purchase price of approximately $55,267,000. Except for Michael Steinmetz, John Friedman, Sandra Panem, Standish Fleming and Barclay Phillips, who are affiliated with MPM/BB Bioventure Group, Easton Hunt Capital Partners, Cross Atlantic Partners, Forward Ventures and Vector Fund Management, respectively, none of our executive officers or directors purchased any shares of the Series J preferred stock.
The following table sets forth, with respect to the Series J preferred stock transaction, the purchase price per share, the aggregate shares purchased and the total investment for each of MPM/BB Bioventure Group, Easton Hunt Capital Partners, Cross Atlantic Partners, Forward Ventures and Vector Fund Management:
Investor
|
Purchase Price
per Share of Series J Preferred |
Aggregate Shares of
Series J Preferred Purchased |
Total Investment in
Series J Preferred |
|||||
---|---|---|---|---|---|---|---|---|
MPM/BB Bioventure group | $ | 0.49 | 15,306,121 | $ | 7,500,000 | |||
Easton Hunt Capital Partners | $ | 0.49 | 11,224,490 | $ | 5,500,000 | |||
Cross Atlantic Partners | $ | 0.49 | 8,506,256 | $ | 4,168,065 | |||
Forward Ventures | $ | 0.49 | 8,163,264 | $ | 4,000,000 | |||
Vector Fund Management | $ | 0.49 | 2,040,816 | $ | 1,000,000 |
In March 2004, we consummated a private placement of 1,533,330 shares of Series K preferred stock for an aggregate purchase price of approximately $11,499,958. Except for John Friedman and Sandra Panem, who are affiliated with Easton Hunt Capital Partners and Cross Atlantic Partners, respectively, none of our executive officers or directors purchased any shares of the Series K preferred stock.
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The following table sets forth, with respect to the Series K preferred stock transaction, the purchase price per share, the aggregate shares purchased and the total investment for each of Easton Hunt Capital Partners, Easton Hunt New York and Cross Atlantic Partners:
Investor
|
Purchase Price
per Share of Series K Preferred |
Aggregate Shares of
Series K Preferred Purchased |
Total Investment in
Series K Preferred |
|||||
---|---|---|---|---|---|---|---|---|
Easton Hunt Capital Partners | $ | 7.50 | 100,000 | $ | 750,000 | |||
Easton Hunt New York | $ | 7.50 | 100,000 | $ | 750,000 | |||
Cross Atlantic Partners | $ | 7.50 | 55,574 | $ | 416,805 |
Board Representation and Registration Rights
Pursuant to an amended and restated registration rights agreement dated as of March 3, 2004, the holders of our Series I Preferred, Series J Preferred and Series K preferred stock have demand and piggy-back registration rights. Pursuant to the terms of this agreement, holders of at least 30% of outstanding "registrable securities" have the right to initiate a demand registration, subject to our ability to delay registration under certain circumstances.
In addition, if we propose to register any of our securities under the Securities Act, including in this offering, certain of our other stockholders are entitled to notice of the registration and to include their registrable shares in the offering. If the managing underwriter determines that marketing factors require a limitation on the number of shares to be underwritten, the managing underwriters may limit or exclude from such underwriting the registrable securities and other securities of these stockholders. If we are so advised by the managing underwriter, then all securities other than registrable securities shall first be excluded from the registration. In no event, however, will the amount of stockholders' securities to be included in the offering be reduced below 30% of the total securities in the offering. We are required to bear substantially all costs incurred in these registrations, other than underwriting discounts and commissions.
Pursuant to the lock-up agreements with the underwriters, holders of greater than 70% of the "registrable securities" under our registration rights agreement have waived their rights to demand registration and participation in this offering under the registration rights agreement until the later of October 30, 2006 or expiration of the lock-up agreements.
Agreements with Former Director
In November, 2004, we entered into an agreement with Mark Pinney, under which we agreed to extend the last date by which Mr. Pinney is entitled to exercise vested stock options previously granted to him to 90 days after he is no longer a director or consultant to us. In addition, he will be entitled to retain certain shares of restricted stock if the vesting requirements for these shares are met within the extended time period. On September 26, 2005, Mr. Pinney was issued 5,000 shares of restricted stock for services rendered as a member of our board of directors from November 1, 2004 through December 31, 2005. Mr. Pinney's shares of restricted stock are otherwise subject to the vesting in the manner described in footnote 3 to the Summary Compensation Table found on page 92.
Agreements with Elan
In September 2003, we entered into the following agreements with Elan, which holds more than 5% of our outstanding common stock:
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Fampridine-SR. We are obligated under the license to make milestone and royalty payments to Elan.
In July 2004, we entered into the following agreements with Elan, which holds more than 5% of our outstanding common stock:
For a more detailed description of these agreements with Elan see "BusinessCollaborations and License Agreements".
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The following table contains information about the beneficial ownership of our common stock before and after the consummation of this offering for:
Unless otherwise indicated, the address for each person or entity named below is c/o Acorda Therapeutics, Inc., 15 Skyline Drive, Hawthorne, New York 10532.
Beneficial ownership is determined on the basis of the rules and regulations of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of the date hereof are deemed outstanding. For the purpose of calculating the amounts set forth in the following table, shares of preferred stock have been deemed to have been converted into shares of common stock. Such shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to the following table or pursuant to applicable community property laws, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder's name. The percentage of beneficial ownership is based on 13,547,122 shares of common stock outstanding on June 30, 2005.
|
|
Percentage of Common Stock Outstanding
|
||||||
---|---|---|---|---|---|---|---|---|
Beneficial Owner
|
Number of
Shares(1) |
Before Offering
|
After Offering(2)
|
|||||
Five Percent Stockholders: | ||||||||
MPM/BB Bioventure group(3) | 1,640,138 | 12.1 | % | % | ||||
Elan group(4) | 997,777 | 7.4 | ||||||
Forward Ventures group(5) | 873,891 | 6.5 | ||||||
Easton Hunt(6) | 873,365 | 6.4 | ||||||
Cross Atlantic Partners(7) | 705,389 | 5.2 | ||||||
TVM Life Sciences(8) | 705,389 | 5.2 | ||||||
MDS/Neuroscience Partners Healthcare(9) | 674,297 | 5.0 | ||||||
Directors and Executive Officers: | ||||||||
Ron Cohen, M.D.(10) | 880,611 | 6.5 | ||||||
Andrew R. Blight, Ph.D.(11) | 149,258 | 1.1 | ||||||
Mary Fisher(12) | 132,678 | 1.0 | ||||||
David Lawrence, M.B.A.(13) | 71,668 | * | ||||||
Jane Wasman, J.D.(14) | 42,601 | * | ||||||
John Friedman(15) | 873,365 | 6.4 | ||||||
Sandra Panem, Ph.D.(16) | 711,053 | 5.2 | ||||||
Michael Steinmetz, Ph.D.(17) | 1,640,138 | 12.1 | ||||||
Wise Young, Ph.D., M.D.(18) | 22,435 | * | ||||||
Standish Fleming(19) | 873,891 | 6.5 | ||||||
Mark Pinney, M.B.A., C.F.A.(20) | 174,500 | 1.3 | ||||||
Barclay Phillips(21) | 543,805 | 4.0 | ||||||
Steven Rauscher(22) | 7,266 | * | ||||||
All directors and executive officers as a group (13 persons)(23) | 6,123,269 | 45.2 | % | % |
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The following is a description of the material terms of our amended and restated certificate of incorporation and bylaws as each is anticipated to be in effect immediately following the closing of this offering and the filing of our amended and restated certificate of incorporation. We refer you to our amended and restated certificate of incorporation and bylaws, copies of which will be filed as exhibits to the registration statement of which this prospectus forms a part.
Authorized Capitalization
On September 18, 2005, our Board of Directors approved a 1-for-1.3 reverse stock split, which will become effective immediately prior to the effective date of this registration statement. All references to common stock, common shares outstanding, average number of common shares outstanding, per share amounts, options and warrants and Elan notes payable in this registration statement have been restated to reflect the 1-for-1.3 common stock reverse split on a retroactive basis.
As of June 30, 2005, our authorized capital stock consisted of (i) 260,000,000 shares of common stock, with a par value of $0.001 per share, of which 208,766 shares were issued and outstanding, and (ii) 141,754,865 shares of preferred stock, with a par value of $0.001 per share, of which 106,472,961 shares are issued and outstanding. Immediately following the closing of this offering and the filing of our amended and restated certificate of incorporation, our authorized capital stock will consist of 80,000,000 shares of common stock, with a par value of $0.001 per share and 20,000,000 shares of preferred stock, with a par value of $0.001 per share. As of the consummation of this offering, all of the outstanding shares of preferred stock will automatically convert into 13,338,356 shares of common stock. After giving effect to this conversion, we expect there to be shares of common stock issued and outstanding (or shares of common stock if the underwriter exercises its over-allotment option in full), and no shares of preferred stock issued and outstanding.
Common Stock
Voting Rights
Holders of common stock are entitled to one vote per share on all matters submitted for action by the stockholders. The holders of common stock do not have cumulative voting rights in the election of directors. Accordingly, the holders of more than 50% of the shares of common stock can, if they choose to do so, elect all the directors. In such event, the holders of the remaining shares of common stock will not be able to elect any directors.
Dividend Rights
Holders of common stock are entitled to receive ratably dividends if, as and when dividends are declared from time to time by our board of directors out of funds legally available for that purpose, after payment of dividends required to be paid on outstanding preferred stock, if any. Our secured term loan imposes restrictions on our ability to declare dividends on our common stock.
Liquidation Rights
Upon our liquidation, dissolution or winding up, any business combination or a sale or disposition of all or substantially all of our assets, the holders of common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and accumulated and unpaid dividends and liquidation preferences on outstanding preferred stock, if any.
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Other Matters
Holders of common stock have no preemptive rights and are not subject to further calls or assessment by us. There are no redemption or sinking fund provisions applicable to our common stock. All outstanding shares of our common stock, including the shares of common stock offered in this offering, are fully paid and non-assessable.
Preferred Stock
Our amended and restated certificate of incorporation authorizes our board of directors to establish one or more series of up to 20,000,000 shares of preferred stock. Unless required by law or by any stock exchange on which our common stock is listed, the authorized shares of preferred stock will be available for issuance without further action by our stockholders. Our board of directors is able to determine, with respect to any series of preferred stock, the terms and rights of that series including:
Restricted Stock
As of June 30, 2005, we had 749,176 shares of restricted stock outstanding.
Warrants
As of June 30, 2005, we had outstanding warrants to purchase 50,202 shares of common stock at a weighted average exercise price of $16.54 per share.
Stock Options
As of June 30, 2005, 1,189,055 shares of common stock are issuable upon the exercise of outstanding stock options to purchase our common stock. After this offering, we intend to file a registration statement on Form S-8 to register the shares of common stock reserved for issuance upon exercise of outstanding options. The registration statement is expected to be filed and become effective approximately six months after the closing of this offering. Accordingly, shares registered under the
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registration statement will be available for sale in the open market without restriction, except with respect to Rule 144 volume limitations that apply to our affiliates.
Convertible Promissory Notes
In January 1997, EIS loaned us an aggregate of $7.5 million pursuant to two promissory notes that are convertible into 278,339 shares of our common stock.
Registration Rights
Pursuant to an amended and restated registration rights agreement between us and certain of our stockholders dated as of March 3, 2004, holders of an aggregate of 13,338,356 shares of our common stock have demand and piggy-back registration rights. The demand rights may be exercised by holders of 30% of the registrable securities at any time after completion of this offering. Additionally, if at any time we propose to register our common stock under the Securities Act for our own account or the account of any of our stockholders or both, the stockholders party to the registration rights agreement are entitled to notice of the registration and to include registrable shares in the offering, provided that the underwriters of that offering do not limit the number of shares included in the registration. In no event, however, will the amount of stockholders' securities to be included in the offering be reduced below 30% of the total securities in the offering. We are required to bear substantially all costs incurred in these registrations, other than underwriting discounts and commissions. The registration rights described above could result in substantial future expenses for us and adversely affect any future equity offering. Pursuant to the lock-up agreements with the underwriters, holders of greater than 70% of the "registrable securities" under our registration rights agreement have waived their rights to demand registration and participation in this offering under the registration rights agreement until the later of October 30, 2006 and expiration of the lock-up agreements. In addition, holders of the requisite amount of registrable securities have waived their rights to registration through the completion of this offering.
Authorized but Unissued Capital Stock
The Delaware General Corporation Law does not require stockholder approval for any issuance of authorized shares. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.
One of the effects of the existence of unissued and unreserved common stock or preferred stock may be to enable our board of directors to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive the stockholders of opportunities to sell their shares of common stock at prices higher than prevailing market prices.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law. Subject to specific exceptions, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:
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"Business combinations" include mergers, asset sales and other transactions resulting in a financial benefit to the "interested stockholder." Subject to various exceptions, an "interested stockholder" is a person who, together with his or her affiliates and associates, owns, or within three years did own, 15% or more of the corporation's outstanding voting stock. These restrictions could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to us and, therefore, may discourage attempts to acquire us.
Transfer Agent and Registrar
is the transfer agent and registrar for our common stock.
Listing
We will apply to list our common stock on The Nasdaq National Market, subject to official notice of issuance, under the symbol "ACOR."
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no market for our common stock. Upon completion of this offering, we will have outstanding an aggregate of million shares of common stock, and if the underwriters exercise their over-allotment option in full, we will have outstanding an aggregate of million shares of common stock. Of these shares, the shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except that any shares purchased in the offering by our affiliates, as that term is defined in Rule 144 of the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 described below. The remaining million shares of our common stock outstanding will be "restricted securities," as that term is defined under Rule 144 under the Securities Act. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or 144(k) under the Securities Act, which are summarized below.
Sales of substantial amounts of our common stock in the public market could put downward pressure on the market price of our common stock. We cannot estimate the number of shares of common stock that may be sold by third parties in the future because such sales will depend on market prices, the circumstances of sellers and other factors.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, including persons who may be deemed to be our "affiliates," would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 144(k)
In addition, under Rule 144(k), a person who is not and has not been our affiliate at any time during the 90 days preceding a sale and at least two years have elapsed since the shares were acquired from us or any affiliate of ours, is entitled to sell those shares immediately after the consummation of this offering without regard to the manner of sale, public information, volume limitation or notice requirements of Rule 144.
Lock-up Agreements
We, our directors and executive officers and substantially all of our stockholders and option holders have entered into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of common stock, and those holders of stock and options may not, directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or otherwise dispose of or hedge any common securities convertible into or exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC, for a period of 180 days from the date of this prospectus related to this offering, subject to a potential extension of up to an additional 34 days under certain circumstances. This consent may be given at any time without public notice. In addition, during this period, we have also agreed not to file any registration statement for any shares of our common stock
105
without the prior written consent of Banc of America Securities LLC. Pursuant to the lock-up agreements holders of greater than 70% of the "registrable securities" under our registration rights agreement have also agreed not to make any demand for, or exercise any right to registration of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock, without the prior written consent of Banc of America Securities LLC.
Registration Rights
Following the completion of this offering, holders of an aggregate of 13,338,356 shares of our common stock will be entitled to certain rights with respect to the registration of their shares under the Securities Act. See "Description of Capital StockRegistration Rights." Registration of their shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration.
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CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following discussion is a summary of certain U.S. federal income and estate tax consequences of the purchase, ownership and disposition of our common stock as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset by a non-U.S. holder.
A "non-U.S. holder" means a beneficial owner of our common stock (other than a partnership) that is not, for U.S. federal income tax purposes, any of the following:
This summary is based upon provisions of the Code and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of U.S. federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, it does not represent a description of the U.S. federal income and estate tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws (including if you are a U.S. expatriate, "controlled foreign corporation," "passive foreign investment company," corporation that accumulates earnings to avoid U.S. federal income tax, a tax exempt organization, a bank, an insurance company, a dealer in securities, a person that holds our common stock as part of a "straddle," "hedge," "conversion transaction," or other integrated transaction, a pass through entity or an investor in a pass-through entity). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary.
If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors. In this summary, "partnership" includes any entity treated as a partnership and "partner" includes any person treated as a partner for U.S. federal income tax purposes.
If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular U.S. federal income and estate tax consequences to you of the ownership of our common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction .
Dividends
We do not currently anticipate paying dividends on our common stock. See "Dividend Policy" above. If we were to pay dividends in the future, dividends paid to a non-U.S. holder of our common stock generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, where a tax treaty applies, are attributable to a U.S. permanent establishment of the non-U.S.
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holder) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to U.S. federal income tax on a net income basis in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code. Any such effectively connected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate for dividends will be required to complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is eligible for benefits under the applicable treaty. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. In addition, Treasury regulations provide special procedures for payments of dividends through certain intermediaries.
A non-U.S. holder of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.
Gain on Disposition of Common Stock
Any gain realized on the disposition of our common stock generally will not be subject to U.S. federal income tax unless:
An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated U.S. federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a U.S. person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.
We believe we are not and do not anticipate becoming a USRPHC for U.S. federal income tax purposes, however no assurances can be provided that we will not be a USRPHC in the future.
U.S. Federal Estate Tax
Common stock owned or treated as owned by an individual who is not a citizen or resident of the United States, as specifically defined for U.S. estate tax purposes, at the time of death will be included in such holder's gross estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.
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Information Reporting and Backup Withholding
We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.
A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code), or such holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our common stock within the United States or conducted through certain U.S.-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person as defined under the Code) or such owner otherwise establishes an exemption. Certain shareholders, including all corporations, are exempt from the backup withholding rules.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax liability provided the required information is furnished to the Internal Revenue Service.
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We are offering the shares of common stock described in this prospectus through a number of underwriters. Banc of America Securities LLC, Lazard Capital Markets LLC, Piper Jaffray & Co. and SG Cowen & Co., LLC, are the representatives of the underwriters. We have entered into a firm commitment underwriting agreement with the representatives. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has agreed to purchase, the number of shares of common stock listed next to its name in the following table:
Underwriter
|
Number of Shares
|
|
---|---|---|
Banc of America Securities LLC | ||
Lazard Capital Markets LLC | ||
Piper Jaffray & Co. | ||
SG Cowen & Co., LLC | ||
|
||
Total | ||
|
The underwriting agreement is subject to a number of terms and conditions and provides that the underwriters must buy all of the shares if they buy any of them. The underwriters will sell the shares to the public when and if the underwriters buy the shares from us.
The underwriters initially will offer the shares to the public at the price specified on the cover page of this prospectus. The underwriters may allow a concession of not more than $ per share to selected dealers. The underwriters may also allow, and those dealers may reallow, a concession of not more than $ per share to some other dealers. If all the shares are not sold at the public offering price, the underwriters may change the public offering price and the other selling terms. Our common stock is offered subject to a number of conditions, including:
Over-Allotment Options. We have granted the underwriters an over-allotment option to buy up to additional shares of our common stock at the same price per share as they are paying for the shares shown in the table below. These additional shares would cover sales of shares by the underwriters that exceed the total number of shares shown in the table above. The underwriters may exercise this option at any time within 30 days after the date of this prospectus. To the extent that the underwriters exercise this option, each underwriter will purchase additional shares from us in approximately the same proportion as it purchased the shares shown in the table above. If purchased, the additional shares will be sold by the underwriters on the same terms as those on which the other shares are sold.
Discount and Commissions. The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by us. These amounts are shown assuming no exercise and full exercise of the underwriters' option to purchase additional shares.
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We estimate that the expenses of the offering to be paid by us, not including the underwriting discounts and commissions, will be approximately $ .
|
Paid by Us
|
|||||
---|---|---|---|---|---|---|
|
No
Exercise |
Full
Exercise |
||||
Per share | $ | $ | ||||
|
|
|||||
Total | $ | $ | ||||
|
|
Listing. We will apply to have our common stock included for quotation on the NASDAQ National Market under the symbol "ACOR."
Stabilization. In connection with this offering, the underwriters may engage in activities that stabilize, maintain or otherwise affect the price of our common stock, including:
Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of our common stock while this offering is in progress. Stabilizing transactions may include making short sales of our common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock from us or in the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' over-allotment option referred to above, or may be "naked" shorts, which are short positions in excess of that amount. Syndicate covering transactions involve purchases of our common stock in the open market after the distribution has been completed in order to cover syndicate short positions.
The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares pursuant to the over-allotment option.
A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market that could adversely affect investors who purchased in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The representatives also may impose a penalty bid on underwriters and dealers participating in the offering. This means that the representatives may reclaim from any syndicate members or other dealers participating in the offering the underwriting discounts on shares sold by them and purchased by the representatives in stabilizing or short covering transactions.
These activities may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common stock. As a result of these activities, the price of our common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any
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time. The underwriters may carry out these transactions on the Nasdaq National Market, in the over-the-counter market or otherwise.
The underwriters have informed us that they do not expect to make sales to accounts over which they exercise discretionary authority in excess of 5% of the shares of common stock being offered.
IPO Pricing. Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between us and the representatives of the underwriters. Among the factors to be considered in these negotiations are:
Lock-up Agreement. We, our executive officers and directors and substantially all of our stockholders have entered into or will, prior to the completion of this offering, enter into lock-up agreements with the underwriters. Under these agreements, subject to exceptions, we may not issue any new shares of common stock, and those holders of stock and options may not, directly or indirectly, sell, offer, contract or grant any option to sell, pledge, transfer or otherwise dispose of or hedge any common securities convertible into or exchangeable for shares of common stock, or publicly announce the intention to do any of the foregoing, without the prior written consent of Banc of America Securities LLC for a period of 180 days from the date of this prospectus related to this offering, subject to a potential extension of up to an additional 34 days under certain circumstances. This consent may be given at any time without public notice. In addition, during this period, we have also agreed not to file any registration statement for any shares of our common stock without the prior written consent of Banc of America Securities LLC. Pursuant to the lock-up agreements holders of greater than 70% of the "registrable securities" under our registration rights agreement have also agreed not to make any demand for, or exercise any right to registration of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock, without the prior written consent of Banc of America Securities LLC.
Directed Share Program. At our request, the underwriters have reserved for sale to our directors, employees, business associates and related parties at the initial public offering price up to 5% of the shares being offered by this prospectus. The sale of the reserved shares to these purchasers will be made by Banc of America Securities LLC. We do not know if our directors, employees, business associates and related parties will choose to purchase all or any portion of the reserved shares, but any purchases they do make will reduce the number of shares available to the general public. If all of these reserved shares are not purchased, the underwriters will offer the remainder to the general public on the same terms as the other shares offered by this prospectus.
Indemnification. We will indemnify the underwriters against some liabilities, including liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments the underwriters may be required to make in respect of those liabilities.
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The underwriters and their affiliates have provided, and may in the future provide, various investment banking, commercial banking and other financial services for us.
Compliance with Non-U.S. Laws and Regulations
Each underwriter intends to comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers shares of our common stock or has in its possession or distributes the prospectus.
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of shares to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
For the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
France
No prospectus (including any amendment, supplement or replacement thereto) has been prepared in connection with the offering of the shares that has been approved by the Autorité des marchés financiers or by the competent authority of another State that is a contracting party to the Agreement on the European Economic Area and notified to the Autorité des marchés financiers ; no shares have been offered or sold and will be offered or sold, directly or indirectly, to the public in France except to permitted investors ("Permitted Investors") consisting of persons licensed to provide the investment service of portfolio management for the account of third parties, qualified investors ( investisseurs qualifiés ) acting for their own account and/or corporate investors meeting one of the four criteria provided in Article 1 of Decree N o 2004-1019 of September 28, 2004 and belonging to a limited circle of investors ( cercle restreint d'investisseurs ) acting for their own account, with "qualified investors" and "limited circle of investors" having the meaning ascribed to them in Article L. 411-2 of the French Code Monétaire et Financier and applicable regulations thereunder; none of the prospectus supplement,
113
the accompanying prospectus, or any other materials related to the offering or information contained therein relating to the shares has been released, issued or distributed to the public in France except to Permitted Investors; and the direct or indirect resale to the public in France of any shares acquired by any Permitted Investors may be made only as provided by articles L. 412-1 and L. 621-8 of the French Code Monétaire et Financier and applicable regulations thereunder.
United Kingdom
Each underwriter acknowledges and agrees that:
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
Italy
Each underwriter acknowledges and agrees that the offering of the shares has not been cleared by the Italian Securities Exchange Commission (Commissione Nazionale per le Società e la Borsa, the "CONSOB") pursuant to Italian securities legislation and, accordingly, acknowledges and agrees that the shares may not and will not be offered, sold or delivered, nor may or will copies of the prospectus or any other documents relating to the shares or the prospectus be distributed in Italy other than to professional investors ( investitori professionali ), as defined in Article 31, paragraph 2 of CONSOB Regulation No. 11522 of July 1, 1998, as amended ("Regulation No. 11522") or pursuant to another exemption from the requirements of Articles 94 and seq. of Legislative Decree No. 58 of February 24, 1998 (the "Italian Finance Law") and CONSOB Regulation No. 11971 of May 14, 1999 ("Regulation No. 11971").
Each underwriter acknowledges and agrees that any offer, sale or delivery of the shares or distribution of copies of the prospectus or any other document relating to the shares or the prospectus
114
in Italy may and will be effected in accordance with all Italian securities, tax, exchange control and other applicable laws and regulations, and, in particular, will be:
Any investor purchasing the shares in this offering is solely responsible for ensuring that any offer or resale of the shares it purchased in this offering occurs in compliance with applicable laws and regulations.
This prospectus and the information contained herein are intended only for the use of its recipient and are not to be distributed to any third party resident or located in Italy for any reason. No person resident or located in Italy other than the original recipients of this document may rely on it or its content.
In addition to the above (which shall continue to apply to the extent not inconsistent with the implementing measures of the Prospectus Directive in Italy), after the implementation of the Prospectus Directive in Italy, the restrictions, acknowledgments and agreements set out under the heading "European Economic Area" above shall apply to Italy.
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The validity of the issuance of the shares of common stock offered hereby will be passed upon for us by Covington & Burling, New York, New York. Shearman & Sterling LLP, New York, New York, will pass upon certain legal matters in connection with this offering for the underwriters.
Our consolidated financial statements as of December 31, 2004 and 2003 and for the year ended December 31, 2004, the six month period ended December 31, 2003, and years ended June 30, 2003 and 2002 have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus, which is a part of the registration statement, does not include all of the information included in the registration statement. For further information with respect to us and our common stock, reference is made to the registration statement.
We are not currently subject to the informational requirements of the Securities Exchange Act of 1934, or the Exchange Act. As a result of this offering, we will become subject to the informational requirements of the Exchange Act, and, in accordance therewith, will file reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC's home page on the Internet ( www.sec.gov ).
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ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
PAGE
|
||
---|---|---|---|
Consolidated Financial Statements: | |||
Report of Independent Registered Public Accounting Firm | F-2 | ||
Consolidated Balance Sheets | F-3 | ||
Consolidated Statements of Operations | F-5 | ||
Consolidated Statements of Stockholders' (Deficit) | F-6 | ||
Consolidated Statements of Cash Flows | F-11 | ||
Notes to Consolidated Financial Statements | F-12 |
F-1
THE ACCOMPANYING FINANCIAL STATEMENTS INCLUDE THE EFFECTS OF A REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK APPROVED BY THE COMPANY'S BOARD OF DIRECTORS WHICH WILL BECOME EFFECTIVE IMMEDIATELY PRIOR TO THE EFFECTIVE DATE OF THE FORM S-1 REGISTRATION STATEMENT FILED IN CONNECTION WITH THE COMPANY'S INITIAL PUBLIC OFFERING. THE ABOVE OPINION IS THE FORM WHICH WILL BE SIGNED BY KPMG LLP UPON CONSUMMATION OF THE REVERSE STOCK SPLIT, WHICH IS DESCRIBED IN NOTE (16) OF THE NOTES TO THE FINANCIAL STATEMENTS, AND ASSUMING THAT, FROM OCTOBER 3, 2005 TO THE DATE OF SUCH REVERSE STOCK SPLIT, NO OTHER EVENTS HAVE OCCURRED THAT WOULD AFFECT THE ACCOMPANYING FINANCIAL STATEMENTS AND NOTES THERETO, EXCEPT AS DISCLOSED IN NOTES TO THE FINANCIAL STATEMENTS.
/s/ KPMG LLP |
October 3, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Board of Directors and Stockholders
Acorda Therapeutics, Inc.:
We have audited the accompanying consolidated balance sheets of Acorda Therapeutics, Inc. and subsidiary (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' (deficit), and cash flows for the year ended December 31, 2004, the six-month period ended December 31, 2003, and years ended June 30, 2003 and 2002. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the year ended December 31, 2004, the six-month period ended December 31, 2003, and years ended June 30, 2003 and 2002, in conformity with U.S. generally accepted accounting principles.
Short
Hills, New Jersey
October 3, 2005, except for note 16
(as to the effects of a reverse stock split
which is as of October , 2005)
F-2
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Balance Sheets
|
December 31,
|
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
|
June 30,
2005 |
|||||||||||
|
2003
|
2004
|
||||||||||
|
|
|
(unaudited)
|
|||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 8,965,173 | $ | 11,729,112 | $ | 3,259,103 | ||||||
Restricted cash | 254,078 | 256,568 | 259,228 | |||||||||
Short-term investments | 32,250,263 | 9,396,677 | 11,445,855 | |||||||||
Trade accounts receivable, net | | 1,922,838 | 4,130,676 | |||||||||
Grant receivable | 171,181 | 141,815 | 78,633 | |||||||||
Prepaid expenses | 920,084 | 827,891 | 455,909 | |||||||||
Finished goods inventory | | 423,200 | 4,198,062 | |||||||||
Other current assets | 194,962 | 241,251 | 755,126 | |||||||||
|
|
|
||||||||||
Total current assets | 42,755,741 | 24,939,352 | 24,582,592 | |||||||||
Property and equipment, net of accumulated depreciation | 3,093,154 | 2,547,014 | 2,140,611 | |||||||||
Intangible Assets, net of accumulated amortization | | 3,386,050 | 3,220,032 | |||||||||
Other assets | 111,516 | 109,234 | 109,234 | |||||||||
|
|
|
||||||||||
Total assets | $ | 45,960,411 | $ | 30,981,650 | $ | 30,052,469 | ||||||
|
|
|
||||||||||
Liabilities, Mandatorily Redeemable Convertible Preferred Stock and Stockholders' (Deficit) | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 2,354,131 | $ | 1,929,394 | 3,197,001 | |||||||
Accounts payable to related party | 305,088 | | | |||||||||
Accrued expenses and other current liabilities | 4,349,828 | 2,890,218 | 3,760,877 | |||||||||
Accrued product returns | | 4,081,910 | 2,420,756 | |||||||||
Deferred grant revenue | 48,043 | | | |||||||||
Deferred product revenuetablets | | 6,668,491 | 11,027,470 | |||||||||
Deferred product revenuecapsules | | | 5,386,472 | |||||||||
Current portion of notes payable | 323,971 | 301,938 | 2,161,865 | |||||||||
|
|
|
||||||||||
Total current liabilities | 7,381,061 | 15,871,951 | 27,954,441 | |||||||||
Long-term portion of notes payable | 446,592 | 144,654 | 3,946,424 | |||||||||
Other long-term liabilities | | 750,000 | | |||||||||
Long-term convertible notes payableprincipal amount, plus accrued interest less unamortized debt discount of $329,374, $175,312 and $109,692 as of December 31, 2003 and 2004 and June 30, 2005 (unaudited) respectively | 8,091,412 | 8,421,996 | 8,621,958 | |||||||||
Mandatorily Redeemable Convertible Preferred Stock: | ||||||||||||
Series E convertible preferred stock$0.001 par value. Authorized, issued, and outstanding 7,472,612 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (Redemption and liquidation value of $20,176,052 as of December 31, 2004) | 2,449,656 | 6,396,021 | 8,363,834 | |||||||||
Series I convertible preferred stock$0.001 par value. Authorized, issued and outstanding, 10,204,047 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (Redemption and liquidation value of $39,693,743 as of December 31, 2004) | 4,897,447 | 12,644,040 | 16,506,774 | |||||||||
Series J convertible preferred stock$0.001 par value. Authorized, 112,790,246 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued, and outstanding 112,790,233 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (Redemption and liquidation value of $64,109,973 as of December 31, 2004) | 22,824,094 | 35,100,482 | 41,228,036 | |||||||||
Series K convertible preferred stock$0.001 par value. Authorized, 1,533,330 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstanding 1,533,327 shares at December 31, 2004 and June 30, 2005 (unaudited) (Redemption and liquidation value of $12,720,513 at December 31, 2004) | | 12,223,211 | 12,689,399 | |||||||||
F-3
Commitments and contingencies | ||||||||||||
Stockholders' (deficit): | ||||||||||||
Series A convertible preferred stock, $0.001 par value. Authorized 1,646,068 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstanding 1,306,068 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (liquidation value of $1,306,068 as of December 31, 2004) | 1,306 | 1,306 | 1,306 | |||||||||
Series B convertible preferred stock, $0.001 par value. Authorized 2,250,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstanding 900,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (liquidation value of $1,800,000 as of December 31, 2004) | 900 | 900 | 900 | |||||||||
Series C convertible preferred stock, $0.001 par value. Authorized, issued, and outstanding 333,333 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (liquidation value of $999,999 as of December 31, 2004) | 333 | 333 | 333 | |||||||||
Series D convertible preferred stock, $0.001 par value. Authorized 400,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstandingnone | | | | |||||||||
Series F convertible preferred stock, $0.001 par value. Authorized, issued, and outstanding 2,300,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (liquidation value of $11,999,100 as of December 31, 2004) | 2,300 | 2,300 | 2,300 | |||||||||
Series G convertible preferred stock, $0.001 par value. Authorized 1,250,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstandingnone | | | | |||||||||
Series H convertible preferred stock, $0.001 par value. Authorized, issued, and outstanding 1,575,229 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited) (liquidation value of $5,119,494 as of December 31, 2004) | 1,575 | 1,575 | 1,575 | |||||||||
Common stock, $0.001 par value. Authorized 260,000,000 shares at December 31, 2003 and 2004 and June 30, 2005 (unaudited); issued and outstanding 195,209, 197,569 and 208,766 shares as of December 31, 2003 and 2004 and June 30, 2005 (unaudited), respectively | 195 | 198 | 209 | |||||||||
Additional paid-in capital | 127,631,942 | 111,957,403 | 101,742,769 | |||||||||
Accumulated deficit | (127,770,920 | ) | (172,511,684 | ) | (190,996,392 | ) | ||||||
Other comprehensive income (loss) | 2,518 | (23,036 | ) | (11,397 | ) | |||||||
|
|
|
||||||||||
Total stockholders' (deficit) | (129,851 | ) | (60,570,705 | ) | (89,258,397 | ) | ||||||
|
|
|
||||||||||
Total liabilities, mandatorily redeemable convertible preferred stock and stockholders' (deficit) | $ | 45,960,411 | $ | 30,981,650 | $ | 30,052,469 | ||||||
|
|
|
See accompanying Notes to Consolidated Financial Statements
F-4
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Operations
|
|
|
|
|
Six-month period ended June 30,
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Year ended June 30,
|
|
|
||||||||||||||||||
|
Six-month period ended
December 31, 2003 |
Year ended December 31,
2004 |
|||||||||||||||||||
|
2002
|
2003
|
2004
|
2005
|
|||||||||||||||||
|
|
|
|
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
Gross salesZanaflex | $ | | $ | | $ | | $ | | $ | | $ | 478,183 | |||||||||
Less: discounts and allowances | | | | (4,416,691 | ) | | (844,436 | ) | |||||||||||||
|
|
|
|
|
|
||||||||||||||||
Net sales | | | | (4,416,691 | ) | | (366,253 | ) | |||||||||||||
Grant revenue | 131,592 | 473,588 | 382,094 | 479,495 | 316,551 | 154,642 | |||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Total net revenue | 131,592 | 473,588 | 382,094 | (3,937,196 | ) | 316,551 | (211,611 | ) | |||||||||||||
Less: cost of sales | | | | (771,499 | ) | | (1,401,126 | ) | |||||||||||||
|
|
|
|
|
|
||||||||||||||||
Gross profit | 131,592 | 473,588 | 382,094 | (4,708,695 | ) | 316,551 | (1,612,737 | ) | |||||||||||||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Research and development | 11,146,415 | 17,526,656 | 16,743,098 | 21,999,091 | 13,502,062 | 7,142,992 | |||||||||||||||
Research and developmentrelated party | 4,686,671 | 2,265,233 | 3,343,681 | | | | |||||||||||||||
Sales and marketing | | | | 4,661,643 | 1,652,094 | 5,534,878 | |||||||||||||||
General and administrative | 6,636,306 | 6,387,999 | 17,068,746 | 13,397,457 | 8,069,555 | 3,933,089 | |||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Total operating expenses | 22,469,392 | 26,179,888 | 37,155,525 | 40,058,191 | 23,223,711 | 16,610,959 | |||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Operating loss | (22,337,800 | ) | (25,706,300 | ) | (36,773,431 | ) | (44,766,886 | ) | (22,907,160 | ) | (18,223,696 | ) | |||||||||
Other income (expense): | | ||||||||||||||||||||
Interest and amortization of debt discount expense | | (77,712 | ) | (37,646 | ) | (385,419 | ) | (207,628 | ) | (519,979 | ) | ||||||||||
Interest and amortization of debt discount expenserelated party | (407,686 | ) | (368,935 | ) | (184,226 | ) | | | | ||||||||||||
Interest income | 983,876 | 392,742 | 276,334 | 409,118 | 236,630 | 257,939 | |||||||||||||||
Other income | | 25,903 | 6,998 | 2,423 | 2,423 | 1,028 | |||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Total other income (expense) | 576,190 | (28,002 | ) | 61,460 | 26,122 | 31,425 | (261,012 | ) | |||||||||||||
Minority interestrelated party | 580,467 | | | | | | |||||||||||||||
|
|
|
|
|
|
||||||||||||||||
Net loss | (21,181,143 | ) | (25,734,302 | ) | (36,711,971 | ) | (44,740,764 | ) | (22,875,735 | ) | (18,484,708 | ) | |||||||||
Beneficial conversion feature, accretion of issuance costs, preferred dividends, and fair value of warrants issued to convertible preferred stockholders | (54,973 | ) | (24,320,031 | ) | (11,984,669 | ) | (24,746,337 | ) | (12,295,470 | ) | (12,209,506 | ) | |||||||||
|
|
|
|
|
|
||||||||||||||||
Net loss allocable to common stockholders | $ | (21,236,116 | ) | $ | (50,054,333 | ) | $ | (48,696,640 | ) | $ | (69,487,101 | ) | $ | (35,171,205 | ) | $ | (30,694,214 | ) | |||
|
|
|
|
|
|
||||||||||||||||
Net loss per share allocable to common stockholdersbasic and diluted | ($111.90 | ) | ($261.38 | ) | ($252.87 | ) | ($351.76 | ) | ($178.17 | ) | ($152.78 | ) | |||||||||
Weighted average common shares outstanding used in computing net loss per share allocable to common stockholdersbasic and diluted | 189,786 | 191,497 | 192,573 | 197,541 | 197,402 | 200,903 |
See accompanying Notes to Consolidated Financial Statements
F-5
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' (Deficit)
|
Stockholders' (deficit)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series A convertible
preferred stock |
Series B convertible
preferred stock |
Series C convertible
preferred stock |
Series F convertible
preferred stock |
Series H convertible
preferred stock |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
|
Accumulated
Comprehensive Income (Loss) |
|
|||||||||||||||||||||||||||||||||||||||
|
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Additional
paid-in capital |
Accumulated
Deficit |
Total
stockholders' (deficit) |
||||||||||||||||||||||||||||
Balance at June 30, 2001 | 1,255,000 | $ | 1,255 | 750,000 | $ | 750 | | $ | | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 188,152 | $ | 188 | $ | 25,096,201 | $ | (44,143,504 | ) | $ | | $ | (19,041,235 | ) | |||||||||||||||
Issuance of Series A convertible preferred stock in May 2002, $1.00 per share | 51,068 | 51 | | | | | | | | | | | 22,749 | | | 22,800 | |||||||||||||||||||||||||||
Issuance of Series B convertible preferred stock in January 2002, $2.00 per share | | | 150,000 | 150 | | | | | | | | | 299,850 | | | 300,000 | |||||||||||||||||||||||||||
Issuance of Series C convertible preferred stock in February 2002, $3.00 per share | | | | | 333,333 | 333 | | | | | | | 999,666 | | | 999,999 | |||||||||||||||||||||||||||
Issuance of common stock in September and October 2001 and February 2002, $4.68 per share | | | | | | | | | | | 3,381 | 4 | 20,615 | | | 20,619 | |||||||||||||||||||||||||||
Research and development expense for issuance of stock options to nonemployees | | | | | | | | | | | | | 74,624 | | | 74,624 | |||||||||||||||||||||||||||
Compensation expense for issuance of stock options to employees | | | | | | | | | | | | | 1,331,911 | | | 1,331,911 | |||||||||||||||||||||||||||
Accretion of issuance costs related to Series F mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (27,337 | ) | | | (27,337 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series I mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (27,636 | ) | | | (27,636 | ) | |||||||||||||||||||||||||
Research and development expense for issuance of warrants and Series C preferred stock on obtaining Phase II clinical trial approval | | | | | | | | | | | | | 617,666 | | | 617,666 | |||||||||||||||||||||||||||
Net loss | | | | | | | | | | | | | | (21,181,143 | ) | | (21,181,143 | ) | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Balance at June 30, 2002 | 1,306,068 | $ | 1,306 | 900,000 | $ | 900 | 333,333 | $ | 333 | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 191,533 | $ | 192 | $ | 28,408,309 | $ | (65,324,647 | ) | $ | - | $ | (36,909,732 | ) |
See accompanying Notes to Consolidated Financial Statements.
F-6
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' (Deficit) (continued)
|
Stockholders' (deficit)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series A convertible
preferred stock |
Series B convertible
preferred stock |
Series C convertible
preferred stock |
Series F convertible
preferred stock |
Series H convertible
preferred stock |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
|
Accumulated
Comprehensive Income (Loss) |
|
|||||||||||||||||||||||||||||||||||||||
|
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Additional
paid-in capital |
Accumulated
Deficit |
Total
stockholders' (deficit) |
||||||||||||||||||||||||||||
Research and development expense for issuance of stock options to nonemployees | | | | | | | | | | | | | (6,539 | ) | | | (6,539 | ) | |||||||||||||||||||||||||
Compensation expense for issuance of stock options to employees | | | | | | | | | | | | | 1,580,054 | | | 1,580,054 | |||||||||||||||||||||||||||
Accretion of issuance costs related to Series E, I and J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (27,337 | ) | | | (27,337 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series I mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (27,636 | ) | | | (27,636 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (10,990 | ) | | | (10,990 | ) | |||||||||||||||||||||||||
Accrual of preferred dividends of Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (629,895 | ) | | | (629,895 | ) | |||||||||||||||||||||||||
Beneficial conversion feature for reduction in conversion price | | | | | | | | | | | | | 80,730,286 | | | 80,730,286 | |||||||||||||||||||||||||||
Deemed dividends on preferred stock for reduction in conversion price, Series A, B, C, F and H | | | | | | | | | | | | | (20,860,491 | ) | | | (20,860,491 | ) | |||||||||||||||||||||||||
Deemed dividends on preferred stock for reduction in conversion price, Series E and I | | | | | | | | | | | | | (1,656,854 | ) | | | (1,656,854 | ) | |||||||||||||||||||||||||
Issuance of preferred stock with beneficial conversion feature, Series J | | | | | | | | | | | | | 39,994,812 | | | 39,994,812 | |||||||||||||||||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature, Series J | | | | | | | | | | | | | (1,106,828 | ) | | | (1,106,828 | ) | |||||||||||||||||||||||||
Comprehensive loss -Unrealized loss on investment securities | | | | | | | | | | | | | | | (6,078 | ) | (6,078 | ) | |||||||||||||||||||||||||
Net loss | | | | | | | | | | | | | | (25,734,302 | ) | | (25,734,302 | ) | |||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive loss | (25,740,380 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Balance at June 30, 2003 | 1,306,068 | $ | 1,306 | 900,000 | $ | 900 | 333,333 | $ | 333 | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 191,533 | $ | 192 | $ | 126,386,891 | $ | (91,058,949 | ) | $ | (6,078 | ) | $ | 35,328,470 |
See accompanying Notes to Consolidated Financial Statements.
F-7
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' (Deficit) (continued)
|
Stockholders' (deficit)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series A convertible
preferred stock |
Series B convertible
preferred stock |
Series C convertible
preferred stock |
Series F convertible
preferred stock |
Series H convertible
preferred stock |
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||
|
|
|
Accumulated
Comprehensive Income (Loss) |
|
||||||||||||||||||||||||||||||||||||||
|
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Additional
paid-in capital |
Accumulated
Deficit |
Total
stockholders' (deficit) |
|||||||||||||||||||||||||||
Research and development expense for issuance of stock options to nonemployees | | | | | | | | | | | | | 8,488 | | | 8,488 | ||||||||||||||||||||||||||
Compensation expense for issuance of stock options to employees | | | | | | | | | | | | | 13,198,080 | | | 13,198,080 | ||||||||||||||||||||||||||
Exercise of stock options | | | | | | | | | | | 3,676 | 3 | 23,232 | | | 23,235 | ||||||||||||||||||||||||||
Accretion of issuance costs related to Series E, I and mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (8,188 | ) | | | (8,188 | ) | ||||||||||||||||||||||||
Accretion of issuance costs related to Series I mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (7,434 | ) | | | (7,434 | ) | ||||||||||||||||||||||||
Accretion of issuance costs related to Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (32,323 | ) | | | (32,323 | ) | ||||||||||||||||||||||||
Deemed dividends on preferred stock for reduction in conversion price, Series E and I | | | | | | | | | | | | | (5,830,852 | ) | | | (5,830,852 | ) | ||||||||||||||||||||||||
Accrual of preferred dividends on Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (2,210,688 | ) | | | (2,210,688 | ) | ||||||||||||||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature, Series J | | | | | | | | | | | | | (3,895,184 | ) | | | (3,895,184 | ) | ||||||||||||||||||||||||
Fractional share reimbursement liability due to reverse stock split | | | | | | | | | | | | | (80 | ) | | | (80 | ) | ||||||||||||||||||||||||
Comprehensive loss | ||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on investment securities | | | | | | | | | | | | | | | 8,596 | 8,596 | ||||||||||||||||||||||||||
Net loss | | | | | | | | | | | | | | (36,711,971 | ) | | (36,711,971 | ) | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive loss | (36,703,375 | ) | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Balance at December 31, 2003 | 1,306,068 | $ | 1,306 | 900,000 | $ | 900 | 333,333 | $ | 333 | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 195,209 | $ | 195 | $ | 127,631,942 | $ | (127,770,920 | ) | $ | 2,518 | $(129,851 | ) |
See accompanying Notes to Consolidated Financial Statements.
F-8
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' (Deficit) (continued)
|
Stockholders' (deficit)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series A convertible
preferred stock |
Series B convertible
preferred stock |
Series C convertible
preferred stock |
Series F convertible
preferred stock |
Series H convertible
preferred stock |
|
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Common Stock
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
|
|
|
Accumulated
Comprehensive Income (Loss) |
Total
stockholders' equity (deficit) |
|||||||||||||||||||||||||||||||||||||||
|
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Additional
paid-in capital |
Accumulated
Deficit |
|||||||||||||||||||||||||||||
Research and development expense for issuance of stock options to nonemployees | | | | | | | | | | | | | 15,458 | | | 15,458 | |||||||||||||||||||||||||||
Compensation expense for issuance of stock options to employees | | | | | | | | | | | | | 6,812,795 | | | 6,812,795 | |||||||||||||||||||||||||||
Compensation expense for issuance of restricted stock to employees | | | | | | | | | | | | | 2,235,263 | | | 2,235,263 | |||||||||||||||||||||||||||
Exercise of stock options | | | | | | | | | | | 2,360 | 3 | 8,282 | | | 8,285 | |||||||||||||||||||||||||||
Accretion of issuance costs related to Series E, I, J and K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (16,376 | ) | | | (16,376 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series I mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (14,869 | ) | | | (14,869 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (64,646 | ) | | | (64,646 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (10,332 | ) | | | (10,332 | ) | |||||||||||||||||||||||||
Accrual of preferred dividends of Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (4,421,377 | ) | | | (4,421,377 | ) | |||||||||||||||||||||||||
Accrual of preferred dividends of Series K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (766,664 | ) | | | (766,664 | ) | |||||||||||||||||||||||||
Deemed dividends on preferred stock for reduction in conversion price, Series E and I | | | | | | | | | | | | | (11,661,705 | ) | | | (11,661,705 | ) | |||||||||||||||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature, Series J | | | | | | | | | | | | | (7,790,368 | ) | | | (7,790,368 | ) | |||||||||||||||||||||||||
Comprehensive loss | |||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on investment securities | | | | | | | | | | | | | | | (25,554 | ) | (25,554 | ) | |||||||||||||||||||||||||
Net loss | | | | | | | | | | | | | | (44,740,764 | ) | | (44,740,764 | ) | |||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||||||
Total Comprehensive loss | (44,766,318 | ) | |||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
Balance at December 31, 2004 | 1,306,068 | $ | 1,306 | 900,000 | $ | 900 | 333,333 | $ | 333 | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 197,569 | $ | 198 | $ | 111,957,403 | $ | (172,511,684 | ) | $ | (23,036 | ) | $ | (60,570,705 | ) |
See accompanying Notes to Consolidated Financial Statements.
F-9
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' (Deficit) (continued)
|
Stockholders' (deficit)
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||
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Series A convertible
preferred stock |
Series B convertible
preferred stock |
Series C convertible
preferred stock |
Series F convertible
preferred stock |
Series H convertible
preferred stock |
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Common Stock
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Accumulated
Comprehensive Income (Loss) |
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(Unaudited)
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Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Number
of shares |
Par
value |
Additional
paid-in capital |
Accumulated
Deficit |
Total
stockholders' (deficit) |
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Research and development expense for issuance of stock options to nonemployees | | | | | | | | | | | | | 172 | | | 172 | |||||||||||||||||||||||||||
Compensation expense for issuance of stock options to employees | | | | | | | | | | | | | 1,074,989 | | | 1,074,989 | |||||||||||||||||||||||||||
Compensation expense for issuance of restricted stock to employees | | | | | | | | | | | | | 899,274 | | | 899,274 | |||||||||||||||||||||||||||
Exercise of stock options | | | | | | 11,195 | 15 | 20,433 | | | 20,448 | ||||||||||||||||||||||||||||||||
One for one point three reverse stock split | | | | | | | | | | | | (4 | ) | 4 | | | | ||||||||||||||||||||||||||
Accretion of issuance costs related to Series E, I, J and K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (8,188 | ) | | | (8,188 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series I mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (7,435 | ) | | | (7,435 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (32,323 | ) | | | (32,323 | ) | |||||||||||||||||||||||||
Accretion of issuance costs related to Series K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (6,200 | ) | | | (6,200 | ) | |||||||||||||||||||||||||
Accrual of preferred dividends of Series J mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (2,210,684 | ) | | | (2,210,684 | ) | |||||||||||||||||||||||||
Accrual of preferred dividends of Series K mandatorily redeemable convertible preferred stock | | | | | | | | | | | | | (459,998 | ) | | | (459,998 | ) | |||||||||||||||||||||||||
Deemed dividends on preferred stock for reduction in conversion price, Series E and I | | | | | | | | | | | | | (5,814,922 | ) | | | (5,814,922 | ) | |||||||||||||||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature, Series J | | | | | | | | | | | | | (3,884,541 | ) | | | (3,884,541 | ) | |||||||||||||||||||||||||
Warrants issued to creditor | | | | | | | | | | | | | 214,785 | | | 214,785 | |||||||||||||||||||||||||||
Comprehensive loss | |||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on investment securities | | | | | | | | | | | | | | | 11,639 | 11,639 | |||||||||||||||||||||||||||
Net loss | | | | | | | | | | | | | | (18,484,708 | ) | | (18,484,708 | ) | |||||||||||||||||||||||||
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Total Comprehensive loss | (18,473,069 | ) | |||||||||||||||||||||||||||||||||||||||||
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Balance at June 30, 2005 (unaudited) | 1,306,068 | $ | 1,306 | 900,000 | $ | 900 | 333,333 | $ | 333 | 2,300,000 | $ | 2,300 | 1,575,229 | $ | 1,575 | 208,766 | $ | 209 | $ | 101,742,769 | $ | (190,996,392 | ) | $ | (11,397 | ) | $ | (89,258,397 | ) | ||||||||||||||
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See accompanying Notes to Consolidated Financial Statements.
F-10
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
|
Year ended June 30,
|
Six months
ended December 31, |
Year ended December 31,
|
Six months ended June 30,
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---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2002
|
2003
|
2003
|
2004
|
2004
|
2005
|
|||||||||||||||||
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|
|
|
|
(unaudited)
|
(unaudited)
|
|||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net loss | $ | (21,181,143 | ) | $ | (25,734,302 | ) | $ | (36,711,971 | ) | $ | (44,740,764 | ) | $ | (22,875,735 | ) | $ | (18,484,708 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||||||||
Stock compensation expense | 1,406,535 | 1,573,514 | 13,206,567 | 9,063,517 | 5,280,400 | 1,974,434 | |||||||||||||||||
Expensing of warrants and beneficial conversion | 617,666 | | | | | | |||||||||||||||||
Amortization of note discount | 257,686 | 218,935 | 88,440 | 154,062 | 88,260 | 65,621 | |||||||||||||||||
Accretion of note payable | | | | | | 49,305 | |||||||||||||||||
Depreciation and amortization expense | 417,479 | 740,201 | 445,260 | 1,191,860 | 530,661 | 691,022 | |||||||||||||||||
Minority interestRelated party | (580,467 | ) | | | | | | ||||||||||||||||
Changes in assets and liabilities: | |||||||||||||||||||||||
Increase in accounts receivable | | | | (1,922,838 | ) | | (2,207,838 | ) | |||||||||||||||
Decrease (increase) in grant receivables | 50,993 | (213,886 | ) | 190,426 | 29,366 | (3,809 | ) | 63,182 | |||||||||||||||
Decrease (increase) in prepaid expenses and other current assets | 84,917 | (401,706 | ) | (551,888 | ) | 45,904 | (171,427 | ) | (141,893 | ) | |||||||||||||
Increase in finished goods inventory | | | | (423,200 | ) | | (3,774,862 | ) | |||||||||||||||
Decrease in other assets | 23,639 | 28,300 | | 2,282 | 2,281 | | |||||||||||||||||
Increase (decrease) in accounts payable, accrued expenses, other current liabilities | 223,984 | (200,072 | ) | 4,624,205 | (1,884,347 | ) | (1,866,640 | ) | 2,272,607 | ||||||||||||||
Increase (decrease) in returns liability | | | | 4,081,910 | | (1,661,154 | ) | ||||||||||||||||
Increase (decrease) in amounts due to related party | 579,983 | (592,901 | ) | 113,946 | (128,566 | ) | (216,645 | ) | | ||||||||||||||
Increase (decrease) in deferred grant revenue | | 95,462 | (47,419 | ) | (48,043 | ) | (48,043 | ) | | ||||||||||||||
Increase in deferred product revenuetablets | | | | 6,668,491 | | (1,282,019 | ) | ||||||||||||||||
Increase in deferred product revenuecapsules | | | | | | 11,027,470 | |||||||||||||||||
Increase (decrease) in royalty payable | | | | 750,000 | | (750,000 | ) | ||||||||||||||||
Restricted cash | (6,015 | ) | (3,495 | ) | (1,081 | ) | (2,490 | ) | (1,071 | ) | (2,660 | ) | |||||||||||
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Net cash used in operating activities | (18,104,743 | ) | (24,489,950 | ) | (18,643,515 | ) | (27,162,856 | ) | (19,281,768 | ) | (12,161,493 | ) | |||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Purchases of property and equipment | (2,230,916 | ) | (747,981 | ) | (590,666 | ) | (531,770 | ) | (274,927 | ) | (118,602 | ) | |||||||||||
Purchases of intangible assets | | | | (3,500,000 | ) | | | ||||||||||||||||
Purchases of short-term investments | (2,835,526 | ) | (18,669,923 | ) | (39,602,946 | ) | (17,455,756 | ) | (17,866,882 | ) | (11,367,539 | ) | |||||||||||
Proceeds from maturities of short-term investments | | 9,248,922 | 19,611,727 | 40,283,788 | 25,367,737 | 9,330,000 | |||||||||||||||||
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|
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Net cash (used in) provided by investing activities | (5,066,442 | ) | (10,168,982 | ) | (20,581,885 | ) | 18,796,262 | 7,225,928 | (2,156,141 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Proceeds from issuance of preferred stock, net of issuance costs | 1,322,799 | 54,933,001 | | 11,446,219 | 11,446,219 | | |||||||||||||||||
Funding received from minority owner | 757,566 | 110,374 | | | | | |||||||||||||||||
Proceeds from issuance of common stock | 20,619 | | 23,235 | 8,285 | 8,285 | 20,448 | |||||||||||||||||
Proceeds from issuance of notes payable | | 1,163,511 | | | | 5,785,215 | |||||||||||||||||
Proceeds from issuance of warrants | | | | | | 214,785 | |||||||||||||||||
Repayments of notes payable | | (241,191 | ) | (151,757 | ) | (323,971 | ) | (158,476 | ) | (172,823 | ) | ||||||||||||
Reverse stock split fractional share liability | | | (80 | ) | | | | ||||||||||||||||
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Net cash provided by (used in) financing activities | 2,100,984 | 55,965,695 | (128,602 | ) | 11,130,533 | 11,296,028 | 5,847,625 | ||||||||||||||||
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Net increase (decrease) in cash and cash equivalents | (21,070,201 | ) | 21,306,763 | (39,354,002 | ) | 2,763,939 | (759,812 | ) | (8,470,009 | ) | |||||||||||||
Cash and cash equivalents at beginning of period |
|
|
48,082,613 |
|
|
27,012,412 |
|
|
48,319,175 |
|
|
8,965,173 |
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|
8,965,173 |
|
|
11,729,112 |
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Cash and cash equivalents at end of period | $ | 27,012,412 | $ | 48,319,175 | $ | 8,965,173 | $ | 11,729,112 | $ | 8,205,361 | $ | 3,259,103 | |||||||||||
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Supplemental disclosure: |
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Cash paid for interest | | 77,293 | 37,646 | 54,835 | 30,925 | 220,145 | |||||||||||||||||
Non-cash charges related to convertible preferred stock: |
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Beneficial conversion feature | | 23,624,173 | 9,726,036 | 19,452,073 | 9,726,037 | 9,699,463 | |||||||||||||||||
Accretion of issuance costs | 54,973 | 65,963 | 47,945 | 106,223 | 52,079 | 54,146 | |||||||||||||||||
Preferred dividend | | 629,895 | 2,210,688 | 5,188,041 | 2,517,354 | 2,670,682 |
See accompanying Notes to Consolidated Financial Statements.
F-11
ACORDA THERAPEUTICS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Organization and Business Activities
Acorda Therapeutics, Inc. ("Acorda" or the "Company") was incorporated in Delaware on March 17, 1995. The Company is a commercial stage biopharmaceutical company dedicated to the identification, development and commercialization of novel therapies that improve neurological function in people with multiple sclerosis, spinal cord injury and other disorders of the central nervous system. Prior to the fiscal year ended December 31, 2004, the Company was a development stage enterprise.
On February 24, 2004, the Board of Directors of Acorda adopted a resolution to change the Company's fiscal year end from June 30 to December 31, effective for the six-month period ended December 31, 2003. For the six-month period ended December 31, 2002 (unaudited) grant revenue and gross profit were $25,494, net loss was $7,215,511, beneficial conversion feature accretion of issuance costs was $27,487 and the net loss applicable to common stockholders was $7,188,024.
The Company acquired all of Elan Corporation plc's ("Elan") U.S. sales, marketing and distribution rights to Zanaflex Capsules and Zanaflex tablets in July 2004. These products are approved for the management of spasticity. Zanaflex tablets were approved by the FDA in 1996 and lost patent protection in 2002. There are currently 11 generic versions of Zanaflex tablets on the market. Zanaflex Capsules were approved by the FDA in 2002, but were never marketed by Elan. The Company began marketing Zanaflex Capsules in April 2005. The Company made an initial payment to Elan of $2 million and is obligated to make royalty payments as well as additional contingent payments upon achieving certain cumulative sales milestones.
The Company is devoting substantially all of its efforts to promoting sales of Zanaflex Capsules, conducting clinical trials, pursuing regulatory approval for products under development, and engaging in preclinical development. The Company has begun to generate product revenues but has not achieved profitable operations or positive cash flows from operations. There is no assurance that profitable operations, if ever achieved, could be sustained on a continuing basis. The Company's accumulated deficit since inception through June 30, 2005 was $191.0 million (unaudited) and the Company expects to continue to incur losses for the foreseeable future. Further, the Company's future operations are dependent on the success of the Company in commercializing Zanaflex Capsules, completing the clinical development of Fampridine-SR in MS and obtaining regulatory approval and market acceptance of this product candidate and advancing its preclinical programs.
The Company plans to finance its operations through a combination of issuance of equity securities, revenues from Zanaflex Capsules, loans and, to a lesser extent, grants. There are no assurances that the Company will be successful in obtaining an adequate level of financing needed to fund its development and commercialization efforts. The Company believes that its current financial resources and sources of liquidity should be adequate to fund operations at least through January 1, 2006 based on the Company's current projected spending levels.
(2) Summary of Significant Accounting Policies
Unaudited Interim Financial Information
The accompanying consolidated balance sheet as of June 30, 2005, the consolidated statements of operations and cash flow for the six months ended June 30, 2004 and 2005, and the statement of Stockholders' (deficit) for the six months ended June 30, 2005 are unaudited. The unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles. In the opinion of the Company's management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments consisting of normal recurring adjustments and accruals necessary for the fair presentation of the
F-12
Company's financial position, results of operations and its cash flows for the six months ended June 30, 2004 and 2005. The results for the six months ended June 30, 2005 are not necessarily indicative of the results to be expected for the year ended December 31, 2005.
Principles of Consolidation
The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include the results of operations of the Company and its majority owned subsidiary (see Notes 7 and 11). All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Significant items subject to such estimates and assumptions include research and development (clinical trial accrual), beneficial conversion charges, stock warrants and option accounting, which are all dependent on the fair value of the Company's equity security. In addition, the Company recognizes revenue based on estimated prescriptions filled. The Company adjusts its inventory value based on an estimate of inventory that may expire. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with original maturities of three months or less to be cash equivalents. All cash and cash equivalents are held in United States financial institutions and money market funds, which are unrestricted as to withdrawal or use. To date, the Company has not experienced any losses on its cash and cash equivalents. The carrying amount of cash and cash equivalents approximates its fair value due to its short-term and liquid nature.
Restricted Cash
Restricted cash represents a certificate of deposit placed by the Company with a bank for issuance of a letter of credit to the Company's lessor for office space.
Short-Term Investments
Short-term investments consist of corporate debt securities with original maturities greater than three months. In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt and Equity Securities , the Company classifies its short-term investments as available-for-sale. Available-for-sale securities are recorded at fair value of the investments based on quoted market prices. The Company considers all of these investments to be available-for-sale.
Unrealized holding gains and losses on available-for-sale securities, which are determined to be temporary, are excluded from earnings and are reported as a separate component of other comprehensive income (loss).
Premiums and discounts on investments are amortized over the life of the related available-for-sale security as an adjustment to yield using the effective- interest method. Dividend and interest income are recognized when earned. Realized gains and losses are determined on the average cost method.
F-13
Amortized premiums and discounts, dividend and interest income and realized gains and losses are included in interest income.
Inventory
Inventory is stated at the lower of cost or market value and includes amounts for both Zanaflex tablet and Zanaflex capsule inventories. All inventories consist of finished goods. Cost is determined using the first-in, first-out method (FIFO) for all inventories. The Company adjusts its inventory value based on an estimate of inventory that may expire.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets, which range from three to seven years. Leasehold improvements are recorded at cost, less accumulated amortization, which is computed on the straight-line basis over the shorter of the useful lives of the asset or the remaining lease term. Expenditures for maintenance and repairs are charged to expense as incurred.
Intangible Assets
The Company has recorded intangible assets related to its Zanaflex acquisition. These intangible assets are amortized on a straight line basis over the period in which the Company expects to receive economic benefit and are reviewed for impairment when facts and circumstances indicate that the carrying value of the asset may not be recoverable. The determination of the expected life will be dependent upon the use and underlying characteristics of the intangible asset. In the Company's evaluation of the intangible assets, it considers the term of the underlying patent life and the expected life of the product line. If the carrying value is not recoverable, impairment is measured as the amount by which the carrying value exceeds its estimated fair value. Fair value is generally estimated based on either appraised value or other valuation techniques.
Impairment of Long-Lived Assets
In accordance with the Financial Accounting Standards Board (FASB) SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets , the Company continually evaluates whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. The Company evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, the Company believes that, as of each of the balance sheet dates presented, none of the Company's long-lived assets was impaired.
Patent Costs
Patent application and maintenance costs are expensed as incurred.
Research and Development
Research and development expenses include the clinical development costs associated with the Company's product candidates and research and development costs associated with the Company's preclinical programs. These expenses include internal research and developments costs and the costs of research and development conducted on behalf of the Company by third parties, including sponsored
F-14
university-based research agreements, and clinical study vendors. All research and development costs are expensed as incurred. Costs incurred in obtaining technology licenses are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future uses.
Accounting for Income Taxes
Income taxes are accounted for under the asset and liability method with deferred tax assets and liabilities recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance for the amounts of any tax benefits which, more likely than not, will not be realized.
Revenue Recognition
The Company defers revenue on product shipments to our wholesalers based upon SFAS No. 48, Revenue Recognition When the Right of Return Exists , which amongst other criteria requires that future returns can be reasonably estimated in order to recognize revenue. The amount of future tablet returns is uncertain due to generic competition and customer conversion to Zanaflex Capsules. Zanaflex Capsules are a new product with no historical return data. Due to the uncertainty of returns for both products, the Company is accounting for these product shipments using a consignment model. Under the consignment model, the Company does not recognize revenue upon product shipment. For these product shipments, the Company invoices the wholesaler, records deferred revenue at gross invoice sales price, and classifies the inventory held by the wholesaler as "consigned inventory". The Company recognizes revenue on consigned inventory when such inventory is prescribed to the end-user, on a first-in first-out (FIFO) basis. The Company's revenue to be recognized is based on (1) the estimated prescription demand-based on pharmacy sales for its products, (2) the Company's analysis of third-party information, including third-party market research data, (3) the Company's internal product sales information and (4) wholesaler inventory levels and re-order information. The Company's estimates are subject to the inherent limitations of estimates that rely on third-party data, as certain third-party information was itself in the form of estimates, and reflect other limitations. The Company's sales and revenue recognition for such consigned inventory reflect the Company's estimates of actual product prescribed to the end-user.
When the Company acquired Zanaflex from Elan, it also acquired Elan's inventory of Zanaflex tablets. The Company has deferred recognition of any revenue from sales of this inventory until the return period for the product expires in June 2006, and will recognize revenue then only to the extent that deferred revenues exceed returns. The Zanaflex tablet inventory the Company acquired from Elan was labeled with a code identifying the inventory as Elan's. The Company cannot use prescription data to recognize revenue associated with inventory acquired from Elan because all of this inventory bears Elan's code and the Company cannot determine whether the prescription was filled with product that Elan sold prior to the Company's acquisition of Zanaflex. Inventory manufactured after the Company's acquisition of Zanaflex is labeled with a code that enables the Company to identify this inventory as its product. These codes are included on end-user prescription data that the Company uses to recognize revenue, enabling it to identify prescriptions filled with product sold by the Company.
F-15
The Company began receiving end-user prescription data containing its code, which enabled it to begin recognizing revenue from Zanaflex tablet sales in March 2005. The Company began marketing Zanaflex Capsules in April 2005 and began recognizing revenue in the same month.
At December 31, 2004 and June 30, 2005 the Company had deferred revenue from Zanaflex tablets of $6.7 million and $11.0 million (unaudited), respectively, of which $3.6 million and $3.0 million (unaudited), respectively, was related to product acquired from Elan that had an expiration date of less than 12 months at the time the Company sold it during 2004. The Company believes there is a high likelihood that this product will be returned which would result in its inability to recognize related revenue. If such product is returned the deferred revenue liability upon a return would offset the associated receivable or any credit we may issue if the wholesaler previously paid the invoice.
The Company's net revenues represent total revenues less allowances for customer credits, including estimated discounts, rebates, and chargebacks. Product shipping and handling costs are included in cost of sales. At the time revenue is recognized, an adjustment to revenue is recorded for estimated chargebacks, rebates, and discounts. In addition, the Company records a charge to cost of goods sold for estimated product returns at the time of product shipment to wholesalers. These revenue reductions are established by management as its best estimate at the time of revenue recognition based on available information and is adjusted to reflect known changes in the factors that impact such reserves. Reserves for chargebacks, rebates and discounts are established based on the contractual terms with customers, analysis of historical levels of discounts, chargebacks and rebates, communications with customers and purchased information about the rate of prescriptions being written and the levels of inventory remaining in the distribution channel as well as expectations about the market for each product and anticipated introduction of competitive products.
As part of the acquisition of Zanaflex, the Company agreed to accept any returns of Zanaflex tablets that were returned subsequent to January 17, 2005, including returns of product that was originally sold by Elan. Product returns prior to that date were the responsibility of Elan. The Company has recorded a liability of $4.1 million in 2004 for the remaining estimated returns of Zanaflex tablets sold by Elan. Under the Company's return policy its obligation to accept returns for product sold by Elan expires in June 2006.
Revenue RecognitionGrants
Revenue related to research and development grants is recognized when the related research expenses are incurred and the Company's specific performance obligations under the terms of the respective contract are satisfied. To the extent expended, grant funding related to purchases of equipment is deferred and amortized over the shorter of the equipment's useful life or the life of the related contract. Revenue recognized in the accompanying consolidated financial statements is not subject to repayment. Payments, if any, received in advance of performance under the contract are deferred and recognized as revenue when earned.
Planned Initial Public Offering Costs
The Company originally deferred the planned initial public offering costs incurred in 2003 in accordance with SEC Staff Accounting Bulletin (SAB) Topic 5A , Expenses of Offering . In December 2003, the Company deferred its plan for an initial public offering. As a result, the related costs of approximately $1.3 million were expensed and included in the Company's consolidated statements of operations for the six month period ended December 31, 2003.
F-16
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments in cash and cash equivalents, restricted cash, accounts receivable and debt securities. The Company maintains cash and cash equivalents, restricted cash and debt securities with approved financial institutions. The Company is exposed to credit risks in the event of default by the financial institutions or issuers of investments in excess of FDIC insured limits. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution.
The Company is substantially dependent upon Elan for several activities related to the development and commercialization of Fampridine-SR. The Company will rely on Elan to complete the chemistry, manufacturing and controls section of the New Drug Application ("NDA") for Fampridine-SR in multiple sclerosis. If Elan fails to provide these parts of the NDA in a complete and timely manner the Company could incur delays in filing of its NDA for Fampridine-SR in multiple sclerosis.
The Company relies on a single manufacturer, Elan, for the supply of Zanaflex Capsules and on another single manufacturer, Novartis, for the supply of tizanadine. If either Elan or Novartis experiences any disruption in their operations, a delay or interruption in the supply of the Company's products could result until the affected supplier cures the problem or the Company locates an alternative source of supply. The Company may not be able to enter into alternative supply arrangements on terms that are commercially favorable, if at all. Any new supplier would also be required to qualify under applicable regulatory requirements. The Company could experience substantial delays before it is able to qualify any new supplier and transfer the required manufacturing technology to that supplier. Novartis has informed us that they intend to discontinue tizanidine production by the end of 2005. We have established relationships with the companies that currently formulate the tablets and bottles and package Zanaflex tablets, however, we do not have an agreement with an alternative manufacturer of tizanidine.
The Company has agreed to purchase at least 75% of its Fampridine-SR product requirements from Elan, and must make compensatory payments if it does not purchase 100% of its requirements from Elan. The Company and Elan have agreed that the Company may purchase up to 25% of its annual Fampridine-SR requirements from Patheon, Inc., a qualified manufacturing source of Fampridine-SR, without making compensatory payments to Elan. In addition, the Company does not have direct contractual relationships with the suppliers of fampridine, the active pharmaceutical ingredient in Fampridine-SR, referred to as API. Currently, the Company is relying on Elan's contracts with third parties to supply API. If Elan or an alternative manufacturer is unable to obtain API from these suppliers for any reason, a new supplier would have to be identified by the Company. Although there are other potential sources of API available, any new supplier would be required to qualify under applicable regulatory requirements. Any delays in obtaining API to manufacture Fampridine-SR could delay the clinical trials of Fampridine-SR.
F-17
Similar to other pharmaceutical companies, the Company's principal customers are wholesale pharmaceutical distributors. The Company periodically assesses the financial strength of these customers and establishes allowances for anticipated losses, if necessary. To date, such losses have been minimal.
|
% of total trade accounts receivable
|
|||||
---|---|---|---|---|---|---|
|
As of December 31, 2004
|
As of June 30, 2005
|
||||
|
|
(unaudited)
|
||||
Major customers: | ||||||
Cardinal | 27 | % | 55 | % | ||
McKesson | 52 | 30 | ||||
Amerisource | 13 | 7 | ||||
|
|
|||||
Total | 92 | % | 92 | % | ||
|
|
Allowance for Doubtful Accounts
A portion of the Company's accounts receivable may not be collected due principally to customer disputes and sales returns. The Company provides reserves for these situations based on the evaluation of the aging of its trade receivable portfolio and an analysis of high-risk customers. The Company's reserves contemplate its historical loss rate on receivables, specific customer situations and the economic environments in which the Company operates.
Fair Value of Financial Instruments
The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. Significant differences can arise between the fair value and carrying amounts of financial instruments that are recognized at historical cost amounts.
The following methods are used to estimate the Company's financial instruments:
It is not practical for the Company to estimate the fair value of the convertible notes payable to Elan due to the specific provisions of these notes including the uncertainty of the timing of repayment which is dependent upon regulatory approval of certain products. The terms of these notes are disclosed at Note 11.
Earnings per Share
Net loss per share is computed in accordance with SFAS No. 128, Earnings Per Share , by dividing the net loss allocable to common stockholders by the weighted average number of shares of common stock outstanding. The Company has certain options, warrants, convertible preferred stock and mandatorily redeemable convertible preferred stock (see Notes 3 and 8), which have not been used in the calculation of diluted net loss per share because to do so would be anti-dilutive. Anti- dilutive shares
F-18
totaled 24,091,289 as of June 30, 2002, 136,881,522 as of June 30, 2003 and December 31, 2003, and 138,414,849 as of December 31, 2004 and June 30, 2005 (unaudited). As such, the numerator and the denominator used in computing both basic and diluted net loss per share allocable to common stockholders for each year are equal. The Company has reflected the beneficial conversion feature for Series E, Series I and Series J, accretion of issuance costs for Series E, Series I, Series J and Series K, and preferred dividend for Series J and Series K in the net loss allocable to common stockholders as set forth below.
|
Beneficial
conversion feature |
Accretion of
issuance costs |
Preferred dividend
|
||||||
---|---|---|---|---|---|---|---|---|---|
For the year ended December 31, 2004 | $ | 19,452,073 | $ | 106,223 | $ | 5,188,041 | |||
For the six month period ended December 31, 2003 | 9,726,036 | 47,945 | 2,210,688 | ||||||
For the year ended June 30, 2003 | 23,624,173 | 65,963 | 629,895 | ||||||
For the year ended June 30, 2002 | | 54,973 | | ||||||
For the six month period ended June 30, 2005 (unaudited) |
|
|
9,699,463 |
|
|
54,146 |
|
|
2,670,682 |
For the six month period ended June 30, 2004 (unaudited) | 9,726,037 | 52,079 | 2,517,354 |
Stock-Based Compensation
The Company has various stock-based employee and non-employee compensation plans, which are described more fully in Note 9. The Company accounts for options and restricted stock granted to employees and directors in accordance with the fair value method of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure an amendment of FASB Statement No. 123 and related interpretations. As such, compensation expense is recorded on stock option and restricted stock grants based on the fair value of the options or restricted stock granted, which is estimated on the date of grant using the Black-Scholes option-pricing model for stock options granted, and is recognized on a straight-line basis over the vesting period. The Company accounts for stock options granted to non-employees on a fair-value basis in accordance with SFAS No. 123, Emerging Issues Task Force Issue ("EITF") No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, and FASB Interpretation No. 28, Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans an Interpretation of APB Opinion No. 15 and 25 . As a result, the non-cash charge to operations for non-employee options with vesting or other performance criteria is affected each reporting period by changes in the estimated fair value of the Company's common stock. The two factors which most affect charges or credits to operations related to stock-based compensation are the fair value of the common stock underlying stock options for which stock-based compensation is recorded and the volatility of such fair value. If the Company's estimates of the fair value of these equity instruments changes, it would have the effect of changing compensation expense. Because shares of the Company's common stock have not been publicly traded, the Company generally estimates the fair value of its common stock based on the most recent previous sale of convertible preferred stock (convertible on a one-for-one basis into common stock). The Company does not discount the issuance price of its preferred stock in estimating the fair value of its common stock.
F-19
Segment Information
The Company is managed and operated as one business. The entire business is managed by a single management team that reports to the chief executive officer. The Company does not operate separate lines of business with respect to any of its product candidates. Accordingly, the Company does not prepare discrete financial information with respect to separate product candidates or by location and does not have separately reportable segments as defined by SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information .
Comprehensive Income (Loss)
SFAS No. 130, Reporting Comprehensive Income ("SFAS No. 130") establishes standards for the reporting and display of comprehensive income (loss) and its components in a full set of financial statements. SFAS No. 130 requires that unrealized gains (losses) from the Company's investment securities be included in other comprehensive income (loss).
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123R. This statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation . This statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees , and its related implementation guidance. This statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. The full impact of adoption of SFAS 123R cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. However, had the Company adopted SFAS 123R in prior periods, management believes the impact of that standard would have approximated the impact of SFAS 123.
In June 2005, the FASB issued FASB Staff Position No. 150-5 ("FSP 150-5") to address whether freestanding warrants and other similar instruments on shares that are either puttable or mandatorily redeemable would be subject to the requirements of FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity , regardless of the timing of the redemption feature or the redemption price. FSP 150-5 concluded that warrants for both puttable and mandatorily redeemable shares are liabilities under SFAS No. 150. FSP 150-5 is required to be adopted in the first reporting period beginning after June 30, 2005. The adoption of FSP 150-5 will effect the classification of the Company's warrants that provide the holder with the right to purchase $300,000 (unaudited) worth of shares of preferred stock in the Company's next qualifying equity round, or 40,000 shares of Series K mandatorily redeemable preferred stock if no such round is issued prior to December 31, 2005 (see Note 8). Upon adoption in July 2005, the Company will reclassify the value ascribed to the warrant of $214,785 (unaudited) from additional paid in capital to a liability and the warrant will be marked to market each reporting period thereafter with the change in fair value recorded to earnings.
F-20
(3) Beneficial Conversion Feature
In May 2003, the Company completed a private placement of 112,790,233 shares of Series J mandatorily redeemable convertible preferred stock at $0.49 per share for an aggregate purchase price of approximately $55,267,000. The terms of the preferred stock are more fully described in Note 8.
As part of this financing, the original conversion price of the Series A through Series I preferred stock was reduced as a result of anti-dilution adjustments, which resulted in a beneficial conversion amounting to $80,730,286 in accordance with EITF No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios and EITF No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments . The beneficial conversion charge of $20,860,491 relating to Series A, Series B, Series C, Series F and Series H convertible preferred stock, which are not mandatorily redeemable and may be converted at any time at the option of the holders to common stock, has been recorded as an immediate charge to additional paid-in capital. The remaining beneficial conversion amount of $59,869,795 related to Series E and Series I convertible preferred stock, which are mandatorily redeemable at any time on or after June 30, 2008, is being accreted ratably over the mandatory redemption period. Such accretion amounted to $1,656,854, $5,830,852, $11,661,705 and $5,814,922 (unaudited) for the year ended June 30, 2003, the six month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005, respectively, and is charged to additional paid-in capital.
In addition, the issuance of Series J mandatorily redeemable convertible preferred stock resulted in a beneficial conversion amounting to $39,994,812 in accordance with EITF No. 98-5. The beneficial conversion is calculated based on the estimated fair value of the Company's common stock price per share at the date of issuance of Series J preferred stock of approximately $10.14 per share of common stock, which was calculated based on the estimated projected midpoint of the range of the Company's initial public offering price per common share, which was planned in the fourth calendar quarter of 2003, and the stock price appreciation in comparable public companies from May 2003 to August 2003. The beneficial conversion feature is being accreted ratably over the mandatory redemption period, with a charge to additional paid-in capital of $1,106,828, $3,895,184, $7,790,368 and $3,884,541 (unaudited) for the year ended June 30, 2003, the six month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005 (unaudited), respectively.
(4) Short-Term Investments
The Company has accounted for its investments in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities , and determined that all of its short-term investments are classified as available-for-sale. Available-for-sale securities are carried at fair value with interest on these securities included in interest income. Available-for-sale securities consisted of the following:
|
Amortized
Cost |
Gross
unrealized gains |
Gross
unrealized losses |
Estimated
fair value |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Corporate debt securities | |||||||||||||
As of December 31, 2003 | $ | 32,247,745 | $ | 25,690 | $ | (23,172 | ) | $ | 32,250,263 | ||||
As of December 31, 2004 | 9,419,713 | (23,036 | ) | 9,396,677 | |||||||||
As of June 30, 2005 (unaudited) | 11,457,252 | | (11,397 | ) | 11,445,855 |
The contractual maturities of available-for-sale debt securities at December 31, 2004 and June 30, 2005 are within one year.
F-21
Investments are considered impaired when a decline in fair value is determined to be other-than-temporary. The Company employs a systematic methodology that considers available evidence in evaluating potential impairment of its investments in accordance with Emerging Issues Task Force Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments (EITF 03-01). In the event that the cost of an investment exceeds its fair value, the Company evaluates, among other factors, the duration and extent to which the fair value is less than cost; the financial health of and business outlook for the investment or investee; and the Company's intent and ability to hold the investment. The Company has determined that there were no other-than-temporary declines in the fair values of its short term investments as of December 31, 2004.
The following table shows the gross unrealized losses and fair value of the Company's available-for-sale securities with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2004 (in thousands):
|
Less than 12 months
|
12 Months or Greater
|
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Description of Securities
|
Fair
value |
Unrealized
loss |
Fair
value |
Unrealized
loss |
|||||||||
Corporate debt securities(1) | $ | 9,397 | $ | (23 | ) | $ | | $ | | ||||
|
|
|
|
||||||||||
Total | $ | 9,397 | $ | (23 | ) | $ | | $ | | ||||
|
|
|
|
Short-term investments with original maturity of three months or less have been classified as cash and cash equivalents, and amounted to $7,551,356, $7,878,024 and $1,187,839 (unaudited) as of December 31, 2003, December 31, 2004 and June 30, 2005, respectively.
F-22
(5) Property and Equipment
Property and equipment consisted of the following:
|
December 31,
2003 |
December 31,
2004 |
June 30,
2005 |
Estimated
useful lives |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|
|
|
|
(unaudited)
|
|
|||||||
Laboratory equipment | $ | 2,068,502 | $ | 2,113,093 | $ | 2,106,393 | 5 years | ||||
Furniture and fixtures | 535,200 | 537,473 | 539,247 | 5 years | |||||||
Computer equipment | 585,244 | 759,949 | 866,509 | 3 years | |||||||
Leasehold improvements | 1,727,813 | 2,023,033 | 2,039,999 | 5 to 7 years | |||||||
|
|
|
|||||||||
4,916,759 | 5,433,548 | 5,552,148 | |||||||||
Less accumulated depreciation | 1,823,605 | 2,886,534 | 3,411,537 | ||||||||
|
|
|
|||||||||
$ | 3,093,154 | $ | 2,547,014 | $ | 2,140,611 | ||||||
|
|
|
Depreciation and amortization expense on property and equipment was $417,479 and $740,201 for the fiscal year ended June 30, 2002 and 2003, $445,260 for the six-month period ended December 31, 2003, $1,077,910 for the year ended December 31, 2004 and $525,004 (unaudited) for the six-month period ended June 30, 2005.
(6) Accrued Expenses and Other Current Liabilities
Accrued expense and other current liabilities consisted of the following:
|
December 31,
2003 |
December 31,
2004 |
June 30,
2005 |
||||||
---|---|---|---|---|---|---|---|---|---|
|
|
|
(unaudited)
|
||||||
Bonus payable | $ | 1,106,698 | $ | | $ | | |||
Milestone payable to Elan | | 750,000 | 750,000 | ||||||
Royalties payable | | 519,531 | 1,348,302 | ||||||
Accrued research and development expenses | 2,649,368 | 825,166 | 521,316 | ||||||
Other accrued expenses | 593,762 | 795,521 | 1,141,259 | ||||||
|
|
|
|||||||
$ | 4,349,828 | $ | 2,890,218 | $ | 3,760,877 | ||||
|
|
|
Accrued research and development expenses include amounts relating to the clinical trials as well as preclinical operating costs. Other accrued expenses include legal and business development accruals, payroll liabilities, vacation and commission accruals and other operating expense accruals.
(7) Notes Payable
In 2003, the Company entered into two financing agreements with General Electric Capital Corporation in the aggregate amount of $1,153,511, bearing annual fixed interest rates of 8.57% and 8.88%, to finance the purchase of certain property and equipment. Borrowings are secured by a security interest in certain property and equipment of the Company and the agreements do not include any debt covenants. The Company is required to pay monthly installments until October 2006. The aggregate principal payments required subsequent to December 31, 2004 are: $301,938 in 2005, and $144,654 in 2006. The related interest payments required subsequent to December 31, 2004 are: $26,001 in 2005, and $5,109 in 2006.
F-23
In 2005 (unaudited), the Company entered into a $6 million senior secured term loan with General Electric Capital Corporation ("GE"), that bears an annual fixed interest rate of 9.93%. The Company is required to pay monthly installments until February 2008, with interest-only payments for the first six months followed by principal and interest payments for the remaining 29 months. The loan is secured by all of the Company's personal property and fixtures owned at closing or subsequently acquired. The aggregate principal payments required subsequent to December 31, 2004 are: $899,887 in 2005, $2,317,217 in 2006, $2,558,084 in 2007 and $224,813 in 2008. The related interest payments required subsequent to December 31, 2004 are: $283,130 in 2005, $402,862 in 2006, $161,995 in 2007 and $1,860 in 2008. See Note 8.
For long-term convertible notes payable to related party see Note 11.
(8) Mandatorily Redeemable Convertible Preferred Stock and Convertible Preferred Stock
The board of directors of the Company has authorized 141,754,865 shares of convertible preferred stock, designated as Series A, B, C, D, E, F, G, H, I, J and K preferred stock (Series A, Series B, Series C, Series D, Series E, Series F, Series G, Series H, Series I, Series J and Series K; collectively, the Preferred Stock). Series E, Series I, Series J and Series K are mandatorily redeemable convertible preferred stock (Redeemable Preferred Stock). Upon an initial public offering, the preferred stock will automatically convert into common stock.
The terms of the Preferred Stock are as follows:
(a) Dividends
The Preferred Stock (except Series J and Series K) is entitled to noncumulative dividends prior to and in preference to dividends declared or paid on the common stock, at the rate of $0.10 per share per annum for Series A through Series H and at the rate of $0.39 per share per annum for Series I when and if declared by the board of directors. Dividends on Series J and Series K are cumulative and accrue on each share of Series J Preferred Stock and Series K Preferred Stock commencing on the date of issuance, whether or not earned or declared at the rate of $0.0392 per share per annum for Series J and at the rate of $0.60 per share per annum for Series K, based on the original issue price of Series J Preferred Stock and Series K Preferred Stock, prior and in preference to any declaration or payment of any dividend on any other Series of Preferred Stock holders (Series A through Series I). Series J and Series K dividends are payable when declared by the Board of Directors or upon liquidation, as defined or upon redemption, provided, however, that the amount of any dividend payable shall not exceed the original issue price of such series of preferred stock. Accrued dividends for Series J and K were $6.6 million and $761,000 as of December 31, 2004 and $8.8 million and $1.2 million (unaudited) as of June 30, 2005, respectively.
(b) Liquidation
The preferred stockholders have liquidation preferences over common stockholders based on the series of Preferred Stock held. In the event of liquidation, dissolution, or winding up of the Company, each holder of shares of Series J Preferred Stock and Series K Preferred Stock is entitled to be paid in preference to common stockholders and any other Series of Preferred Stock holders (Series A through Series I) an amount equal to the original issue price per share of $0.49 for Series J and $7.50 for Series K, plus all accrued or declared but unpaid dividends. After payment has been made to Series J and Series K Preferred Stock, the Series I, Series E-1, Series E-2, Series F and Series H shall be
F-24
entitled to receive out of the available assets, on a pro rata basis, an amount per share of $3.89, $1.31, $1.07, $1.09 and $1.36, respectively, plus all declared but unpaid dividends on each such share issued. After payment of the above mentioned preferential amounts the holders of Series E, Series F and Series H Preferred Stock shall be entitled to be paid out of the remaining available assets an amount per share equal to $0.26, $0.21 and $0.27, respectively, plus all declared but unpaid dividends. After payment of the above mentioned preferential amounts, the holders of Series A through Series H Preferred Stock shall be entitled to be paid out of remaining available assets an amount per share up to and including such amounts paid in accordance with as mentioned above, equal to $1.00, $2.00, $3.00, $12.50, $3.13, $5.22, the greater of $2.00 and 80% of the closing price per share of the Institutional Financing, as defined, most recently completed by the Company prior to the issuance of the Series G Preferred Stock and $3.25, respectively.
(c) Conversion
The Preferred Stock will be automatically converted into common stock upon an initial public offering of the Company's common stock or upon either the approval by written consent of the holders of a majority of the then outstanding shares of Series A, Series B, Series C, Series D, Series E, Series F, Series G, Series H and Series I voting together as a single class and upon approval by written consent of the holders of a majority of the then outstanding shares of Series J and Series K.
Preferred stock
|
Shares outstanding
at December 31, 2004 |
Conversion
Price |
Shares of
Common Stock |
||||
---|---|---|---|---|---|---|---|
Series A | 1,306,068 | $ | 9.06 | 144,085 | |||
Series B | 900,000 | 11.86 | 151,821 | ||||
Series C | 333,333 | 14.64 | 68,339 | ||||
Series D | | 11.86 | | ||||
Series E | 7,472,612 | 13.81 | 1,461,383 | ||||
Series F | 2,300,000 | 13.81 | 449,804 | ||||
Series G | | (1 | ) | | |||
Series H | 1,575,229 | 15.34 | 333,839 | ||||
Series I | 10,204,047 | 17.11 | 2,319,470 | ||||
Series J | 112,790,233 | 7.64 | 7,230,132 | ||||
Series K | 1,533,327 | 9.75 | 1,179,482 |
In the event the convertible promissory notes payable to Elan are converted into common stock, the per share conversion price on the Series I and Series J preferred stock would be adjusted to $16.37 and $7.12, respectively. Other than in an initial public offering or certain other specified instances, in the event the Company issues common stock (or securities convertible into common stock) at an effective common stock issuance price of less than a specified amount the conversion price on all preferred stock will be reduced based on anti-dilution provisions.
F-25
(d) Redemption
Holders of Series E, Series I, Series J and Series K Preferred Stock may at any time on or after June 30, 2008, require the Company to redeem all or any portion of such holders' redeemable preferred stock at a redemption price, as specified below, provided, however, that no holder of redeemable preferred stock may so require such redemption unless and until (i) the holders of not less than a majority of the redeemable preferred stock then issued and outstanding make such election and (ii) the holders of a majority of the Series J and Series K preferred stock then issued and outstanding make such election prior to September 30, 2008 (these terms collectively, the Redemption Date). The redemption price for each share of redeemable preferred stock shall be the original issue price plus accrued but unpaid dividends. One half of such aggregate redemption price for all redeemable preferred stock shall be payable in cash on the Redemption Date, as defined and the second half of such aggregate redemption price shall be payable in cash on the first anniversary of the Redemption Date, as defined.
(e) Voting
Each holder of outstanding Preferred Stock (other than Series F) shall be entitled to the number of votes equal to the number of shares of common stock into which the shares of Preferred Stock so held could be converted. The holders of Series F Preferred Stock shall have no voting rights except as required by Delaware General Corporation Law. The board of directors consists of nine directors: (i) two directors elected by the holders of Series A, Series E and Series H Preferred Stock, voting as a single class; (ii) one director elected by Series I Preferred Stock; (iii) two directors elected by Series J Preferred Stock; (iv) one director elected by holders of common stock; and (v) three directors elected by the holders of common stock and Preferred Stock, voting as a single class. The Company's certificate of incorporation includes provisions which restrict the Company from certain actions without the approval of a defined percentage of the preferred stockholders.
Convertible Preferred Stock
Series A
In May 1995, the Company issued 610,000 shares of Series A, at a per share price of $1.00, for aggregate proceeds of $610,000, and granted each purchaser a warrant to purchase one additional share of Series A for every ten Series A shares purchased, at an exercise price of $1.00 per share. The Company estimated the fair value of warrants at approximately $44,971. The fair value was determined by the Black-Scholes valuation method, using a risk free interest rate of 6.5%, the warrants' contractual life of seven years, an annual volatility of 73% and no expected dividends. Such amount was credited to additional paid-in capital and charged immediately to additional paid-in capital, as the warrants were exercisable at any time at the option of the holder. Each warrant was exercised for one share of Series A. During fiscal 2002, 22,800 of these warrants were exercised on a cash basis and 28,268 were exercised in a cashless exercise resulting in total proceeds of $22,800. The remaining 9,932 of these warrants were not exercised and have expired.
In fiscal 1996 and 1997, the Company issued 450,000 and 195,000 shares of Series A, at a per share price of $1.00, for aggregate proceeds of $450,000 and $195,000, respectively. In August 1996 and January 1997, the Company granted 340,000 warrants to purchase shares of Series A at an exercise price of $1.00. These warrants expired in August 2003 and January 2004, respectively. None of these warrants were exercised. The Company estimated the fair value of warrants at approximately $254,110.
F-26
Such value was determined by the Black-Scholes valuation method, using a risk free interest rate of 6.5%, the warrant's contractual life of seven years, an annual volatility of 75% and no expected dividends. Such amount was credited to additional paid-in capital and charged immediately to additional paid-in capital as the warrants were exercisable at any time at the option of the holder.
Series B
In January 1997, the Company issued 750,000 shares of Series B, at a per share price of $2.00, for aggregate proceeds of $1,500,000. In January 2002, the Company issued 150,000 shares of Series B, at a per share price of $2.00, for aggregate proceeds of $300,000 (see Note 11).
As of June 30, 2005 (unaudited), 100,000 Series B warrants were outstanding with an exercise price per share of $2.00. The warrants to acquire Series B Preferred Stock enable the holder to acquire 21,929 shares of common stock.
Series C
In February 2002, the Company issued to Elan and affiliates 333,333 shares of Series C, at a per share price of $3.00, for aggregate proceeds of $999,999.
Series F
In April 1998, the Company issued to Elan 2,300,000 shares of Series F, at a per share price of approximately $5.22, for aggregate proceeds of approximately $12 million. Also, in April 1998, the Company entered into a joint venture agreement with Elan. The $12 million proceeds from the sale of the shares of Series F was then transferred to MS Research and Development Corp. ("MSRD"), a joint venture company of which the Company owned approximately 80% and Elan owned 20%. To purchase its approximate 20% interest, Elan invested an additional $3 million into MSRD. The combined $15 million was subsequently used to license research and development technology from Elan to develop Elan's proprietary oral sustained release formulation of fampridine for the treatment of multiple sclerosis. For the years ended June 30, 2002 and 2003 and for six-month period ended December 31, 2003, MSRD incurred approximately $2.9 million, $3.2 million and $3.3 million, respectively, in research and development expenses, which is included as research and development expense in the accompanying statements of operations, of which the Company funded 80% and Elan funded 20% until June 30, 2002, in accordance with the terms of the original development agreement. Elan's ownership interest in MSRD is reflected as minority interest in the accompanying statement of operations. The minority interest share of the MSRD losses were being funded by Elan, and through June 30, 2002 the Company received $1,279,361 as a reimbursement of this funding. In fiscal 2003, Elan ceased funding its approximately 20% share of the operating expenses of MSRD and the Company ceased recognizing the related minority interest benefit resulting in an increase in the Company's ownership interest to 83% pursuant to the original agreement (see Note 11 for discussion on license and research agreement.) In September 2003, the Company entered into a termination and assignment agreement with Elan, EIS and MSRD, pursuant to which MSRD assigned to the Company its assets, including the license from Elan for Fampridine-SR for MS. The Company paid MSRD approximately $11.5 million for all of the assets and assumed all of the liabilities of MSRD, and MSRD distributed to the Company approximately $9.5 million as pro rata portion of the purchase price. From the time of establishment of MSRD until the sale of MSRD's assets to the Company, Elan was considered to be a related party under generally accepted accounting principles.
F-27
Series H
In August 1999, the Company completed a private placement of 1,575,229 shares of Series H at $3.25 per share, resulting in net proceeds to the Company of $5,119,494 after payment of legal and certain other fees.
Mandatorily Redeemable Convertible Preferred Stock
The following convertible preferred stock are based on the redemption rights and conversion option as discussed above under terms of the Preferred Stock.
Series E
In July and November 1998, the Company issued 7,472,612 shares of Series E, that are mandatorily redeemable at $2.70 per share for an aggregate purchase price of approximately $20,176,000. The Company incurred issuance costs of $209,270. Such costs are netted against the proceeds of the Series E, and are being amortized over the mandatory redemption period.
Series I
In March 2001, the Company issued 10,204,047 shares of Series I that are mandatorily redeemable at $3.89 per share for an aggregate purchase price of approximately $39,694,000. The Company incurred issuance costs of $138,179. Such costs are netted against the proceeds of the Series I, and are being amortized over the mandatory redemption period.
Series J
In May 2003, the Company issued 112,790,233 shares of Series J that are mandatorily redeemable at $0.49 per share for an aggregate purchase price of approximately $55,267,000. The Company incurred issuance costs of $334,219. Such costs are netted against the proceeds of the Series J, and are being amortized over the mandatory redemption period.
In September 2003, the Company obtained approval by the written consent from the holders of Series J preferred stock voting together as a single class and the holders of the Preferred Stock, voting separately as a single class on an as if converted basis for a reduction in the price per share of common stock offered to the public in an initial public offering which would trigger automatic conversion of the preferred stock into common stock from an offering price of not less than $14.76 per share to an offering price of not less than $12.00 per share.
Series K
In March 2004, the Company issued 1,533,327 shares of Series K which are mandatorily redeemable at $7.50 per share for an aggregate purchase price of $11,499,943. The Company incurred issuance costs of $53,728. Such costs are netted against the proceeds of the Series K, and will be amortized over the mandatory redemption period.
In January 2005, the Company granted warrants to purchase $300,000 (unaudited) worth of shares of Preferred Stock in the Company's next qualifying equity round, or Series K if no such round is issued prior to December 31, 2005. The number of Series K shares to be received upon exercise is 40,000 at the Series K issue price of $7.50 per share, which converts to 30,769 common shares. The Company estimated the fair value of warrants at approximately $214,785. Such value was determined by the Black-Scholes valuation method, using a risk free interest rate of 3.5%, the warrant's contractual
F-28
life of ten years, an annual volatility of 90% and no expected dividends. These warrants were issued to GE in conjunction with the $6 million senior secured term loan (see Note 7). The discount of the note related to the warrants is being accreted over the life of the notes and resulted in a $49,305 (unaudited) charge to interest expense for the six-month period ended June 30, 2005.
The changes in mandatorily redeemable convertible preferred stock are as follows:
|
Mandatorily Redeemable Convertible Preferred Stock
(in thousands) |
|||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series E
|
Series I
|
Series J
|
Series K
|
||||||||||||||
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
||||||||||
Balance at June 30, 2001 | 7,473 | $ | 20,040 | 10,204 | $ | 39,564 | | | | | ||||||||
Accretion of issuance costs | | 27 | | 28 | | | | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2002 | 7,473 | 20,067 | 10,204 | 39,592 | | | | | ||||||||||
Issuance of Series J mandatorily redeemable convertible preferred stock | | | | | 112,790 | 54,933 | | | ||||||||||
Accretion of issuance costs | | 27 | | 28 | | 11 | | | ||||||||||
Accrual of preferred dividend on Series J mandatorily redeemable convertible preferred stock | | | | | | 630 | | | ||||||||||
Beneficial conversion feature for reduction in conversion price | | (20,176 | ) | | (39,694 | ) | | | | | ||||||||
Beneficial conversion feature on issuance | | | | | | (39,995 | ) | | | |||||||||
Deemed dividends on preferred stock for reduction in conversion price | | 558 | | 1,098 | | | | | ||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature | | | | | | 1,107 | | | ||||||||||
|
|
|
|
|
|
|
|
F-29
|
Mandatorily Redeemable Convertible Preferred Stock
(in thousands) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Series E
|
Series I
|
Series J
|
Series K
|
||||||||||||||||
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
Number
of Shares |
Amount
|
||||||||||||
Balance at June 30, 2003 | 7,473 | $ | 476 | 10,204 | $ | 1,024 | 112,790 | $ | 16,686 | | | |||||||||
Accretion of issuance costs | | 8 | | 7 | | 32 | | | ||||||||||||
Accrual of preferred dividend on Series J mandatorily redeemable convertible preferred stock | | | | | | 2,211 | | | ||||||||||||
Deemed dividends on preferred stock for reduction in conversion price | | 1,965 | | 3,866 | | | | | ||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature | | | | | | 3,895 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2003 | 7,473 | $ | 2,450 | 10,204 | $ | 4,897 | 112,790 | $ | 22,824 | | | |||||||||
Issuance of Series K mandatorily redeemable convertible preferred stock | 1,533 | $ | 11,446 | |||||||||||||||||
Accretion of issuance costs | | 16 | | 15 | | 65 | | 10 | ||||||||||||
Accrual of preferred dividend on Series K mandatorily redeemable convertible preferred stock | | | | | | | | 767 | ||||||||||||
Accrual of preferred dividend on Series J mandatorily redeemable convertible preferred stock | | | | | | 4,421 | | | ||||||||||||
Deemed dividends on preferred stock for reduction in conversion price | | 3,930 | | 7,732 | | | | | ||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature | | | | | | 7,790 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
F-30
Balance at December 31, 2004 | 7,473 | $ | 6,396 | 10,204 | $ | 12,644 | 112,790 | $ | 35,100 | 1,533 | $ | 12,223 | ||||||||
Accretion of issuance costs | | 8 | | 8 | | 32 | | 6 | ||||||||||||
Accrual of preferred dividend on Series K mandatorily redeemable convertible preferred stock | | | | | | | | 460 | ||||||||||||
Accrual of preferred dividend on Series J mandatorily redeemable convertible preferred stock | | | | | | 2,211 | | | ||||||||||||
Deemed dividends on preferred stock for reduction in conversion price | | 1,960 | | 3,855 | | | | | ||||||||||||
Deemed dividends on preferred stock for issuance of preferred stock with beneficial conversion feature | | | | | | 3,885 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2005 (unaudited) | 7,473 | $ | 8,364 | 10,204 | $ | 16,507 | 112,790 | $ | 41,228 | 1,533 | $ | 12,689 | ||||||||
|
|
|
|
|
|
|
|
(9) Common Stock Options and Warrants
Upon inception of the Company in March 1995, the founders, directors, and certain employees purchased 166,827 shares of restricted common stock at a per share price of $0.16.
On June 18, 1999, the Company's board of directors approved the adoption of the Acorda Therapeutics, Inc. 1999 Employee Stock Option Plan (the "Plan"). All employees of the Company are eligible to participate in the Plan, including executive officers, as well as directors, independent contractors, and agents of the Company. The Plan is administered by the Compensation Committee of the board of directors, which selects the individuals to be granted options and stock appreciation rights, determines the time or times at which options and stock appreciation rights shall be granted under the Plan, determines the number of shares to be granted subject to any option or stock appreciation right under the Plan and the duration of each option and stock appreciation right, and makes any other determinations necessary, advisable, and/or appropriate to administer the Plan. Under the Plan, each option granted expires no later than the tenth anniversary of the date of its grant. Options vest over a four year period on a quarterly basis commencing with the date of award. Compensation expense is calculated using a Black-Scholes calculation with the expense being recognized over the vesting period. No option may be granted pursuant to the Plan more than ten years after the date on which the Plan was adopted by the board of directors and any option granted under the Plan shall, by its terms, not be exercisable more than ten years after the date of grant. In March 2004, the number of shares authorized for issuance under the Acorda Therapeutics 1999 Employee Stock option plan was increased from 1,275,641 shares to 2,451,088 shares.
F-31
The effects of applying SFAS No. 123 in a particular year, may not be representative of the effects on reported net income or loss for future years. The fair value of each option granted is estimated on the date of grant using an option-pricing model with the following weighted average assumptions:
The Company estimated volatility for purposes of computing compensation expense on its employee and non-employee options using the volatility of public companies that the Company considered comparable. The expected life used to estimate the fair value of non-employee options is equal to the contractual life of the option granted, which is 10 years.
The weighted average fair value per share of options granted to employees for the years ended June 30, 2002 and 2003, the six month period ended December 31, 2003, the year ended December 31, 2004 and the six month period ended June 30, 2005 amounted to approximately $51.95, $52.73, $16.22, $6.95, and $6.57 (unaudited) respectively. The weighted average fair value per share of options granted to non-employees for the six month period ended December 31, 2003 amounted to approximately $7.64. No options were granted to non-employees for the years ended June 30, 2002, and 2003, and December 31, 2004, and the six month period ended June 30, 2005 (unaudited).
F-32
Common stock option and warrant activity from June 30, 2001 to June 30, 2005 is as follows (this table does not include warrants to acquire Series A, Series B and Series K Preferred stock, which are discussed in Note 8):
|
Shares
|
Exercise Price
per share |
||
---|---|---|---|---|
Balance at June 30, 2001 | 147,532 | |||
Granted | 43,631 | $23.40 - $31.20 | ||
Forfeited | (3,050 | ) | 5.46 - 23.40 | |
Exercised | (3,381 | ) | 5.46 - 23.40 | |
|
||||
Balance at June 30, 2002 | 184,732 | |||
Granted | 11,170 | 12.48 - 31.20 | ||
Forfeited | (4,588 | ) | 5.46 - 31.20 | |
|
||||
Balance at June 30, 2003 | 191,314 | |||
Granted (original price $7.64, repriced to $2.60) | 1,112,082 | 2.60 | ||
Forfeited | (14,114 | ) | 7.64 - 31.20 | |
Exercised | (3,687 | ) | 1.56 - 12.48 | |
|
||||
Balance at December 31, 2003 | 1,285,595 | |||
Granted | 84,354 | 2.60 - 9.75 | ||
Forfeited | (61,588 | ) | 2.60 - 7.64 | |
Exercised | (2,360 | ) | 1.56 - 7.64 | |
|
||||
Balance at December 31, 2004 | 1,306,001 | |||
Granted | 35,462 | 8.14 | ||
Forfeited | (106,880 | ) | 5.46 - 60.68 | |
Exercised | (11,195 | ) | .46 - 2.60 | |
|
||||
Balance at June 30, 2005 (unaudited) | 1,222,388 | |||
|
Options available to grant at December 31, 2004 were 70,570.
|
|
Options and Warrants outstanding |
|
|
|
Options and Warrants exercisable |
||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of exercise prices
|
Outstanding
as of December 31, 2004 |
Weighted
average remaining contractual life |
Weighted
average exercise price |
Exercisable
as of December 31, 2004 |
Weighted
average exercise price |
|||||||
|
(unaudited)
|
|
|
(unaudited)
|
|
|||||||
$.16 - $3.12 | 42,628 | 1.67 | $ | 1.52 | 42,628 | $ | 1.52 | |||||
$2.60 | 1,177,815 | 8.40 | 2.60 | 1,102,774 | 2.60 | |||||||
$9.75 - $12.48 | 64,619 | 9.69 | 9.80 | 5,072 | 10.44 | |||||||
$23.40 - $31.20 | 20,939 | 2.99 | 29.68 | 20,319 | 29.88 | |||||||
|
|
|||||||||||
1,306,001 | 8.16 | 3.36 | 1,170,793 | 3.07 | ||||||||
|
|
In September 2003, the Company re-priced 118,142 stock options issued to employees, which had an exercise price per option of more than $7.64, with a new exercise price per share of $7.64. As a
F-33
result of this repricing, the Company has recognized an additional compensation charge based on the estimated fair value of the repriced options of $575,563, of which $449,585, $92,054 and $16,272 (unaudited) was recognized during the six-month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005, respectively, with the balance to be recognized over the remaining respective vesting periods of the repriced options. Such compensation expense was calculated based on the estimated fair value based upon the Black-Scholes model of the repriced options compared to the value of the options immediately prior to the date of the repricing based on the original terms.
In September 2003, the Company granted 1,062,082 stock options, that had been authorized for issuance under the Plan in May 2003, to employees under the Plan at an exercise price of $7.64 per share, which was below the estimated fair value of the Company's common stock at the date of grant. Compensation expense of approximately $11.0 million, attributable to the fair value of the options granted, was recognized for the six-month period ended December 31, 2003 as certain of the options issued to employees vested immediately and the balance of $6.1 million will be recognized over the remaining respective vesting periods of the options. Such compensation expense was calculated based on the estimated projected midpoint of the range of the Company's initial public offering price per common share, which was planned in the fourth calendar quarter of 2003, and the stock price appreciation in comparable public companies from May 2003 to August 2003 (the estimated fair value of the Company's common stock on the date of grant.) In December 2003, the Company deferred its planned for an initial public offering.
In October 2003, the Company granted 38,462 stock options to its chief executive officer and 9,615 stock options to its executive director-marketing and commercialization at exercise prices of $7.64 per share, which was below the estimated fair value of the Company's common stock at the date of grant. Compensation expense of approximately $425,000 attributable to the fair value of the options granted was recognized for the six-month period ended December 31, 2003, as certain of the options issued to employees vested immediately and the balance of $355,000 will be recognized over the remaining respective vesting periods of the options.
In March 2004, the Company repriced 1,250,853 stock options issued to employees, which had an exercise price per share of more than $2.60, with a new exercise price per share of $2.60. Most of these options were originally issued in September 2003. As a result of this repricing, the Company has recognized an additional compensation charge of $2,200,330, of which $1,869,872 and $73,429 was recognized during the year ended December 31, 2004 and the six-month period ended June 30, 2005 (unaudited), respectively, with the balance to be recognized over the remaining respective vesting periods of the repriced options. Such compensation expense was calculated based on the estimated fair value of the repriced options compared to the value of the options immediately prior to the date of the repricing based on the original terms.
F-34
In March 2004, the Company granted 1,134,423 restricted shares and 17,192 stock options to employees under the Plan. The stock options were issued with an exercise price of $9.75 per share which was the fair value of the Company's common stock at the date of grant. The restricted shares were granted for no cash consideration. The option grants are exercisable based on a four-year quarterly vesting schedule, commencing with the date of award March 9, 2004 (or, in one case, May 10, 2005). The restricted stock awards are subject to vesting over a four-year period as follows: the first installment will vest on the last to occur of (a) the expiration of the lock-up period following our initial public offering, and (b) the third day after public announcement of data regarding either the primary outcome measure of our Fampridine-SR Phase 3 trial in MS or suspension or termination of the trial, whichever comes first, and (c) in the case of Ron Cohen, June 30, 2007; except that if the vesting date under (a) or (b) or (c) would occur during a "blackout" period under our insider trading policy, the vesting date will be the first day following termination of the blackout period. The first vested installment under each restricted stock award will be calculated as the total number of shares covered by the award multiplied by a fraction, the numerator of which is the number of months from the vesting commencement date to the date on which the first installment of restricted shares vest, or the "initial vesting date," and the denominator is 48. All remaining restricted shares will vest in equal quarterly installments, measured from the vesting commencement date, except that for any partial quarter in which the initial vesting date occurs, the unvested portion of shares remaining for that quarter will vest at the end of such quarter. As a result of these grants, the total compensation charge is approximately $11,177,540, of which compensation expense of $2,256,103 and $3,642,647 (unaudited) was recognized through December 31, 2004 and June 30, 2005, with the balance to be recognized over the remaining respective vesting periods of the options and restricted shares. The Company recognized compensation expense ratably over four years. As of December 31, 2004, and June 30, 2005, 1,127,808 and 749,176, restricted shares remained outstanding, respectively.
Compensation expense for options and restricted stock granted to employees amounted to $1,331,911, $1,580,054, $13,198,079, $9,049,858 and $1,974,263 (unaudited) for the years ended June 30, 2002 and 2003, the six-month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005, respectively. Compensation expense for options and restricted stock granted to employees are classified between research and development and general and administrative expense based on employee job function.
Options granted to non-employees vest immediately or over a one to four year period based upon future service requirements. Compensation expense for options granted to non-employees amounted to $74,624, ($6,539), $8,488, $15,458 and $172 (unaudited) for the years ended June 30, 2002 and 2003, the six-month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005, respectively. The amount of compensation expense to be recorded in the future for options granted to non-employees is subject to change each reporting period based upon changes in the estimated fair value of the Company's common stock, estimated volatility and risk free interest rate until the non-employee completed performance under the option agreement. As of December 31, 2004 and June 30, 2005, respectively, 1,756 and 1,273 (unaudited) options subject to this treatment remain unvested.
(10) Income Taxes
The Company had available net operating loss carry-forwards ("NOL") of approximately $131,665,000 and $147,723,000 as of December 31, 2004 and June 30, 2005 (unaudited), for federal and
F-35
state income tax purposes, which are available to offset future federal and state taxable income, if any, and expire between 2009 and 2024. The Company also has research and development tax credit carryforwards of approximately $1,254,000 and $1,429,000 as of December 31, 2004 and June 30, 2005 (unaudited), for federal income tax reporting purposes that are available to reduce federal income taxes, if any, and expire in future years through 2018.
The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2003 and 2004 and June 30, 2005, are presented below:
|
December 31, 2003
|
December 31, 2004
|
June 30, 2005
|
|||||||
---|---|---|---|---|---|---|---|---|---|---|
|
|
|
(unaudited)
|
|||||||
Net operating loss carryforwards | $ | 46,146,841 | $ | 39,167,783 | $ | 60,566,460 | ||||
Research and development tax credit | 783,500 | 1,254,426 | 1,428,569 | |||||||
Property and equipment | (298,728 | ) | 110,266 | 182,894 | ||||||
Intellectual property | 5,398,333 | 5,310,070 | 5,083,431 | |||||||
Stock options and warrants | 5,413,596 | 9,130,376 | 9,939,894 | |||||||
Other temporary differences | 43,302 | 124,141 | 139,081 | |||||||
|
|
|
||||||||
57,486,845 | 55,097,062 | 77,340,329 | ||||||||
Less valuation allowance | (54,486,845 | ) | (55,097,062 | ) | (77,340,329 | ) | ||||
|
|
|
||||||||
Net deferred tax assets | $ | | $ | | $ | | ||||
|
|
|
Changes in the valuation allowance for the six-month period ended December 31, 2003, for the year ended December 31, 2004, and for the six-month period ended June 30, 2005 (unaudited) amounted to approximately $8,559,134, $12,425,382 and $7,428,102, respectively. Since inception, the Company has incurred substantial losses and expects to incur substantial losses in future periods. The Tax Reform Act of 1986 (the "Act") provides for a limitation of the annual use of NOL and research and development tax credit carryforwards (following certain ownership changes, as defined by the Act) that could significantly limit the Company's ability to utilize these carryforwards. The Company has experienced various ownership changes, as a result of past financings. Accordingly, the Company's ability to utilize the aforementioned carryforwards may be limited. Additionally, because U.S. tax laws limit the time during which these carryforwards may be applied against future taxes, the Company may not be able to take full advantage of these attributes for federal income tax purposes. Because of the above mentioned factors, the Company has not recognized its net deferred tax assets as of and for all periods presented. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets and no tax benefit has been recognized relative to its pretax losses.
(11) License and Research Agreements
Elan
In January 1997, the Company entered into several agreements with Elan, including a License and Supply Agreement to develop Elan's, sustained-release formulation of Fampridine-SR for treatment of spinal cord injury. In return for this exclusive license granted by Elan, the Company paid a license fee of $5 million which was expensed in fiscal 1997. The term of the agreement is equal to the greater of
F-36
20 years or the duration of relevant Fampridine-SR patent rights. Any mutually agreed to research conducted by Elan will be paid by the Company at cost plus 45%. The Company will be responsible for all clinical trials and regulatory approvals. Elan will have the right to manufacture, subject to certain exceptions, products for the Company upon regulatory approval at specified prices as a percentage of net selling price. In the event Elan does not manufacture the products, it is entitled to a royalty as a stated percentage of the products' net selling price.
Series B and C Preferred Stock Purchase
Concurrent with the License and Supply Agreement, the Company entered into a Preferred Stock, Convertible Note and Warrant Purchase Agreement (the "Agreement") with Elan. Under this Agreement, Elan purchased 750,000 shares of the Company's Series B at a per share price of $2.00 and also agreed to purchase 333,333 shares of the Company's Series C at a per share price of $3.00 within 30 days of the completion of Phase 2 clinical trials relating to products to be developed under the License and Supply Agreement. Concurrent with the purchase of Series B, the Company issued to Elan a warrant to purchase an additional 150,000 shares of Series B at a per share exercise price of $2.00 for a period of five years. The Company estimated the fair value of warrants at approximately $198,031. Such value was determined by the Black-Scholes valuation method, using a risk free interest rate of 6.4%, the warrant's contractual life of five years, an annual volatility of 75% and no expected dividends. Such amount was credited to additional paid-in capital and charged immediately to additional paid-in capital as the Series B was convertible at any time at the option of the holder.
Phase 2 clinical trials relating to products to be developed under the License and Supply Agreement were completed in February 2002 and Elan purchased 333,333 shares of Series C at a per share price of $3.00 resulting in total proceeds of $999,999. Elan also exercised its Series B warrant and the Company issued 150,000 shares of Series B at a per share price of $2.00 resulting in total proceeds of $300,000. The Company also issued an additional five-year warrant to purchase 100,000 shares of Series B at a per share exercise price of $2.00 for a period of five years from the date of issuance on January 4, 2002. The Company estimated the fair value of the five-year warrant to purchase 100,000 shares of Series B at approximately $321,000. Such value was determined by the Black-Scholes valuation method, using a risk free interest rate of 4.3%, the warrant's contractual life of five years, an annual volatility of 102% and no expected dividends. Such amount was credited to additional paid-in capital and charged immediately to research and development expenses as these warrants were issued in connection with the Company completing Phase 2 clinical trials. In addition, the Company recognized $296,666 as a beneficial conversion feature on issuance of Series C convertible preferred stock and charged this amount to research and development expenses as these shares were issued upon the Company completing Phase II clinical trials pursuant to a previous arrangement.
Convertible Note
Under the Agreement, Elan also loaned to the Company an aggregate of $7.5 million pursuant to two convertible promissory notes. One promissory note in the amount of $5.0 million bears interest at a rate of 3% beginning on the first anniversary of the issuance of the note. The unpaid principal is convertible into shares of the Company's Series D at a conversion price of $12.50 per share. Principal and interest are repayable, if not converted, ratably over a seven-year period beginning one year after the Company receives certain regulatory approval for the products to be developed, subject to limitations related to gross margin on product sales. If it is determined by both parties that regulatory
F-37
approval will not likely occur, all principal and interest will not be repayable and the note will be cancellable after a defined notice period, if not earlier converted. If the License and Supply Agreement is otherwise terminated, the principal and interest is repayable ratably over 15 years.
The second promissory note in the amount of $2.5 million is non-interest bearing. This promissory note is convertible after January 22, 1999 into either shares of Series B at a conversion price of $2.00 per share or into an undesignated series (currently authorized as Series D) of Preferred Stock at a conversion price equal to 80% of the-then most recently completed equity financing, whichever conversion price is greater. This promissory note is repayable by the Company, if not converted by Elan, ratably over a seven-year period beginning one year after the Company receives certain regulatory approval for the products to be developed. If it is determined by both parties that regulatory approval will not likely occur or if the License and Supply Agreement is otherwise terminated, the note is repayable ratably over 15 years from the date of determination. Interest on these convertible promissory notes has been imputed using 9% on 50% of the $5 million note and 8% on the $2.5 million note. In case of the $5 million note, the Company did not impute interest on 50% of the $5 million note based on the provision in the License and Supply Agreement that provided for a recovery of up to $2.5 million of the license fee paid, which was dependent upon regulatory approval of the product. If regulatory approval of the product is received, the convertible note would be repayable and the Company would have been entitled to recovery of up to $2.5 million based on the aforementioned provision. If the parties determine that regulatory approval will not likely occur, the note will not be repayable and the Company would not receive recovery of up to $2.5 million of the license fee. The $2,173,127 difference between the $7.5 million principal amount of the notes and the discounted balance is being accreted to interest expense over the estimated term of the notes. Elan was considered to be a related party based on its ownership interest in the Company, significant license agreements entered into and involvement with research and development activities of the Company. In addition, Elan had a right to appoint a representative on the board of directors from January 22, 1997 through May 8, 2003. Elan ceased to be a related party in September 2003 upon termination of the jointly owned corporation as described below. The aggregate amount of the $7.5 million convertible notes payable are convertible into 278,339 shares of common stock.
In April 1998, the Company entered into an agreement with Elan to develop Elan's proprietary oral sustained release formulation of fampridine for the treatment of multiple sclerosis. Upon approval of an NDA for the product by the FDA in the United States, the Company is obligated to pay Elan $2.5 million. In addition, the Company is obligated to pay an additional $2.5 million to Elan, upon the earlier occurrence of the following: (a) first anniversary from the date of approval of NDA approval in the United States, or (b) upon approval of the product by a regulatory authority in Japan, the United Kingdom, Germany, France or Italy. Also, in April 1998, the Company formed MS Research & Development Corporation ("MSRD,") with Elan and one of its affiliates to develop Fampridine-SR for treatment of multiple sclerosis. At that time, MSRD licensed from Elan exclusive worldwide rights to Fampridine-SR for the treatment of multiple sclerosis.
Termination and Assignment Agreement. In September 2003, the Company entered into a termination and assignment agreement with Elan, Elan's affiliate, and MSRD pursuant to which MSRD (83% owned by Acorda immediately prior to entering into the agreement) assigned to the Company its assets, including the license from Elan for Fampridine-SR for treatment of multiple sclerosis. The Company paid MSRD approximately $11.5 million for all the assets and liabilities of MSRD. MSRD
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distributed the purchase price to its shareholders according to their equity ownership interest. The Company has received a distribution of approximately $9.5 million as a result of this distribution and the remaining distribution of $2 million was expensed in September 30, 2003 as acquired in-process research and development and classified under Research and Development-related party. The Company also purchased Elan's affiliate shares at par value and now owns approximately 88% of MSRD, which now has no assets or liabilities and is inactive.
Amended and Restated License. In September 2003, the Company entered into an amended and restated license with Elan, which replaced the two prior licenses for Fampridine-SR. Under this agreement, Elan granted the Company exclusive worldwide rights to Fampridine-SR, as well as Elan's formulation for any other mono- or di-aminopyridines, for all indications, including spinal cord injury and multiple sclerosis. The Company agreed to pay Elan milestone payments and royalties based on net sales of the product if and when approved.
Elan may terminate the Company's license in the United States, the major European markets or Japan if the Company does not file to obtain regulatory approval or launch the product after regulatory approval in the applicable country within specified periods. If Elan terminates the Company's license in any applicable country, Elan is entitled to license from the Company patents rights and know-how relating to the product and to market the product in the applicable country, subject to royalty payments.
Elan is responsible for completing the chemistry, manufacturing and controls section of the NDA for Fampridine-SR and equivalent regulatory applications outside the United States. Elan is also responsible for supplying the product for clinical trials under this agreement.
Subject to early termination provisions, the Elan license terminates on a country by country basis on the latter to occur of fifteen years from the date of the agreement, the expiration of the last to expire Elan patent or the existence of competition in that country.
Supply Agreement. In September 2003, the Company entered into a supply agreement with Elan relating to the manufacture and supply of Fampridine-SR by Elan. The Company agreed to purchase at least 75% of its annual requirements of product from Elan, unless Elan is unable or unwilling to meet its requirements, for a purchase price based on a specified percentage of net sales. In those circumstances, where the Company elects to purchase less than 100% of its requirements from Elan, the Company agreed to make certain compensatory payments to Elan. Elan agreed to assist the Company in qualifying a second manufacturer to manufacture and supply the Company with Fampridine-SR subject to its obligations to Elan.
Securities Amendment Agreement. In September 2003, the Company entered into a securities amendment agreement with Elan to modify certain provisions in some existing agreements between Elan and the Company. These included:
F-39
Teva Collaboration Agreement. In September 2003, the Company entered into a collaboration agreement with Teva Pharmaceuticals Industries Ltd. ("Teva") under which the Company was granted a co-exclusive license with Teva to jointly develop and promote in the United States products containing valrocemide.
The Company made an initial payment to Teva of $2.0 million that was charged as research and development expenses for the year ended December 31, 2003, upon execution of the collaboration agreement, and was obligated to make payments to Teva relating to the development of valrocemide.
The Company and Teva amicably terminated the Collaboration Agreement as of June 27, 2005, and in connection with the termination the Company paid Teva approximately $3.1 million. The Company and Teva have no further obligations to each other under the Collaboration Agreement.
(12) Employee Benefit Plan
Effective September 1, 1999, the Company adopted a defined contribution 401(k) savings plan (the "401(k) plan") covering all employees of the Company. Participants may elect to defer a percentage of their annual pretax compensation to the 401(k) plan, subject to defined limitations. No contributions were made by the Company for the years ended June 30, 2002 and 2003, the six-month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005, respectively.
(13) Commitments and Contingencies
During 1998, the Company entered into a lease agreement for its facility. During November 2000 and May 2001, the Company entered into amendments of the lease for its facility. Under the amendments, the Company increased the total leased space and extended the lease term for its original leased space. Future minimum commitments under all non-cancelable leases required subsequent to December 31, 2004 are as follows:
2005 | $ | 641,808 | |
2006 | 641,808 | ||
2007 | 641,808 | ||
2008 | 53,484 | ||
|
|||
$ | 1,978,908 |
Rent expense under these operating leases during the years ended June 30, 2002 and 2003, the six-month period ended December 31, 2003, the year ended December 31, 2004 and the six-month period ended June 30, 2005 was $468,309, $652,339, $334,348, $670,413 and $335,205 (unaudited) respectively.
F-40
Under the terms of the employment agreement with the Company's chief executive officer, the Company is obligated to pay severance under certain circumstances. If the employment agreement is terminated by the Company or by the Company's chief executive officer for reasons other than for cause, the Company must pay (i) an amount equal to the base salary the chief executive officer would have received during the fifteen month period immediately following the date of termination, plus (ii) bonus equal to last annual bonus received by chief executive officer multiplied by a fraction, the numerator of which shall be the number of days in the calendar year elapsed as of the termination date and the denominator of which shall be 365.
The Company is not a party to any material legal proceedings. It is the Company's policy to accrue for amounts related to legal matters if it is probable that a liability has been incurred and the amount is reasonably estimable.
(14) Product Returns
As part of the terms of the Zanaflex asset purchase agreement, any product returned within six months of acquisition date were the obligation of Elan. Beginning in January 2005, such returns became a liability of the Company. Through June 30, 2005, the Company has accepted $2,997,457 (unaudited) in total product returns, of which $1,661,153 was for product not sold by the Company. As the Company will accept product returned up to twelve months subsequent to its expiration date, the Company expects to continue to receive returns of Zanaflex tablets sold by Elan through June 2006. The Company has recorded an expense of $4,081,910 in the year ending December 31, 2004 to record an estimated liability for these returns, of which $2,420,756 (unaudited) remains as of June 30, 2005.
As part of the Zanaflex acquisition, the Company purchased certain tablet from Elan that expires within one year. The majority of this product was sold by the Company during July 2004 though March 2005. The Company has deferred revenue for this product due to the uncertainty of future returns. Included in deferred product revenue-tablets $3,629,667 and $3,034,043 (unaudited) as of December 31, 2004 and June 30, 2005, respectively related to the sale of short dated product. The Company recorded a charge totaling $177,439 during 2004 to write-off the cost of the short dated product. Consigned inventory was $67,524 and $55,752 (unaudited) as of December 31, 2004 and June 30, 2005, respectively.
(15) Zanaflex Asset Purchase Agreement
The Company acquired all of Elan's U.S. sales, marketing and distribution rights to Zanaflex Capsules and Zanaflex tablets in July 2004 for $2.0 million plus $675,000 for finished goods inventory. The Company is also responsible for up to $19.5 million in future contingent milestone payments based on cumulative gross sales of Zanaflex tablets and Zanaflex Capsules. These products are approved for the management of spasticity. Zanaflex tablets were approved by the FDA in 1996 and lost patent protection in 2002. There are currently 11 generic versions of Zanaflex tablets on the market. Zanaflex Capsules were approved by the FDA in 2002, but were never marketed by Elan. The Company began marketing Zanaflex Capsules in April 2005.
The Company is responsible for royalty payments to Elan and Novartis, based upon Net Sales of Zanaflex Capsules and tablets beginning on the closing date.
F-41
In connection with this transaction, the Company acquired the rights to the tradename "Zanaflex®", one issued U.S. patent and two patent applications related to Zanaflex Capsules, and the remaining tablet inventory on hand with Elan. Additionally, the Company assumed Elan's existing contract with Novartis to manufacture Zanaflex tablets and entered into a separate contract with Elan to manufacture Zanaflex Capsules. The Company separately launched Zanaflex Capsules in April 2005. The Company did not acquire any receivables, employees, facilities or fixed assets. The Company has allocated, on a relative fair value basis, the initial consideration paid to Elan to the assets acquired, principally the Zanaflex tradename $200,000 and the capsulation patent $1.8 million. The Company has allocated $150,000 and $1,350,000 of the first milestone payment owed to the tradename and patent, respectively, upon achievement of that milestone's criteria in October 2004. There is no expected residual value of these intangible assets. As future milestone payments are made to Elan, such amounts will be allocated, on a relative fair value basis, to the assets acquired. The Company will amortize the allocated fair value of the tradename and patent over their estimated economic benefit to be achieved of approximately 2.5 years and 17 years, respectively.
Intangible Assets consisted of the following:
|
December 31, 2004
|
June 30, 2005
|
Estimated
useful lives |
|||||
---|---|---|---|---|---|---|---|---|
|
|
(unaudited)
|
|
|||||
Zanaflex patent | $ | 3,150,000 | $ | 3,150,000 | 17 years | |||
Zanaflex tradename | 350,000 | 350,000 | 2.5 years | |||||
|
|
|||||||
3,500,000 | 3,500,000 | |||||||
Less accumulated amortization | 113,950 | 279,968 | ||||||
|
|
|||||||
$ | 3,386,050 | $ | 3,220,032 | |||||
|
|
The Company recorded $114,000 and $166,000 (unaudited) in amortization expense related to these intangible assets in the year ending December 31, 2004 and the six-month period ending June 30, 2005, respectively.
Estimated future amortization expense for these intangible assets subsequent to December 31, 2004 is as follows:
2005 | $ | 332,036 | |
2006 | 332,036 | ||
2007 | 182,479 | ||
2008 | 182,479 | ||
|
|||
$ | 1,029,030 |
(16) Subsequent Events
Reverse Stock Split
On September 18, 2005, the Company's Board of Directors approved a 1-for-1.3 reverse stock split, which will become effective immediately prior to the effective date of the Form S-1 registration statement filed in connection with the Company's initial public offering. All references to common stock, common shares outstanding, average number of common shares outstanding, per share amounts,
F-42
options and warrants and Elan notes payable in these financial statements and notes to financial statements have been restated to reflect the one-for-one point three common stock reverse split on a retroactive basis.
Stock Option and Restricted Share Grants (Unaudited)
In August 2005, the Company granted 547,638 and 32,698 stock options to employees and non-employees, respectively, under the Plan. The stock options were issued with an exercise price of $8.14 per share. 87,999 and 6,147 of the employee and non-employee grants, respectively, vested immediately upon the grant date of the award. The balance will be vested based on a four-year quarterly vesting schedule for employee grants and a three-year quarterly vesting schedule for non-employee grants. The fair value of the grant was $3,096,210.
In August 2005, the Company granted 7,692 restricted shares to non-employees. 5,795 of these grants vested immediately upon the date of award of August 3, 2005, and the balance will be vested based on a one-year quarterly vesting schedule contingent upon certain restrictions defined in the restricted stock agreement.
Government Grants (Unaudited)
In September 2005, the Company received three grants from the National Institutes of Health totaling $494,030. These grants are expected to result in approximately $82,000 in monthly grant revenue through March 31, 2006.
F-43
Shares
Common Stock
Prospectus
, 2005
Banc of America Securities LLC
Lazard Capital Markets
Piper Jaffray
SG Cowen & Co.
Until , 2005, all dealers that buy, sell or trade the common stock may be required to deliver a prospectus, regardless of whether they are participating in this offering. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth our estimated costs and expenses (other than underwriting discounts) payable in connection with this offering.
SEC Registration Fee | $ | 10,152.00 | ||
NASD Filing Fee | $ | 9,125.00 | ||
Printing and Engraving Expenses | * | |||
Legal Fees and Expenses | * | |||
Accounting Fees and Expenses | * | |||
Nasdaq National Market Listing Application Fee | * | |||
Blue Sky Qualification Fees and Expenses | * | |||
Transfer Agent and Registrar Fees and Expenses | * | |||
Miscellaneous | * | |||
|
||||
Total | $ | * | ||
|
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Acorda Therapeutics, Inc., or the Registrant, is a Delaware corporation. Section 145 of the Delaware General Corporation Law, or the DGCL, grants each corporation organized thereunder the power to "indemnify any person who is or was a director, officer, employee or agent of a corporation or enterprise, against expenses, attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of being or having been in any such capacity if he acted in good faith in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful."
Section 102(b)(7) of the DGCL enables a corporation in its certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for violations or the directors' fiduciary duty of care, except (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section l74 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit.
Article Six of the Registrant's Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1) provides that except as otherwise provided by the DGCL, no director of the Registrant shall be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director.
Article Six of the Registrant's Amended and Restated Certificate of Incorporation and Article Six of the Registrant's Amended Bylaws provide that, to the fullest extent permitted by the DGCL, the Registrant shall indemnify any current or former director or officer of the Registrant and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Registrant against all expenses (including attorneys' fees) judgments, fines and amounts paid in
II-1
settlement actually and reasonably incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or officer of the Registrant, or is or was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.
Article Six of the Registrant's Amended and Restated Certificate of Incorporation also provides that the Registrant shall advance expenses incurred by a director or officer of the Registrant in defending any civil, criminal, administrative or investigative such action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall ultimately be determined that he is not entitled to be indemnified by the Registrant as authorized by the Registrant's By-laws. In addition, upon the closing of this offering, our amended and restated certificate of incorporation (filed as exhibit 3.2) will provide that if a claim under the Registrant's By-laws is not paid in full by the Registrant within thirty days after a written claim has been received by the Registrant, the claimant may at any time thereafter bring suit against the Registrant to recover the unpaid amount of the claim, and if successful in whole or in part on the merits or otherwise in establishing his or her right to indemnification or to the advancement of expenses, the claimant shall be paid also the expense of prosecuting such claim.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Within the past three years, the Registrant has issued securities in the following transactions, each of which was exempt from the registration requirements of the Securities Act of 1933, as amended, as transactions by an issuer not involving any public offering thereunder. All of the below-referenced securities are deemed restricted securities for the purpose of the Securities Act.
In May 2003, we consummated a private placement of 112,790,233 shares of our Series J Convertible Preferred Stock to a group of accredited investors at a purchase price of $0.49 per share for aggregate consideration of approximately $55,267,000.
In March 2004, we consummated a private placement of 1,533,330 shares of our Series K Convertible Preferred Stock to a group of accredited investors at a purchase price of $7.50 per share for aggregate consideration of approximately $11,499,958.
Stock Options
In the fourth quarter of 2002, we issued options to purchase 2,218 shares of our common stock with a fair market value price of $2.60 to a number of our employees.
In the first quarter of 2003, we issued options to purchase 5,465 shares of our common stock with a fair market value price of $2.60 to a number of our employees. We also issued 1,282 options to purchase our common stock with a fair market value price of $2.60 to a non-employee director.
In the second quarter of 2003, we issued options to purchase 288 shares of our common stock with a fair market value price of $2.60 to a number of our employees.
In the third quarter of 2003, we issued options to purchase 1,062,081 shares of our common stock with a fair market value price of $2.60 to a number of our employees.
In the fourth quarter of 2003, we issued options to purchase 48,077 shares of our common stock with a fair market value price of $2.60 to a number of our employees. We also issued 1,924 options to purchase our common stock with a fair market value price of $2.60 to a number of non-employees.
In the first quarter of 2004, we issued options to purchase 19,103 shares of our common stock with a fair market value price of $9.75 to a number of our employees. We also issued 1,924 options to purchase our common stock with a fair market value price of $9.75 to a number of non-employees.
II-2
In the second quarter of 2004, we issued options to purchase 308 shares of our common stock with a fair market value price of $9.75 to a number of our employees.
In the third quarter of 2004, we issued options to purchase 1,538 shares of our common stock with a fair market value price of $9.75 to a number of our employees.
In the fourth quarter of 2004, we issued options to purchase 44,615 shares of our common stock with a fair market value price of $9.75 to a number of our employees.
In the first quarter of 2005, we issued options to purchase 34,615 shares of our common stock with a fair market value price of $8.14 to a number of our employees.
In the second quarter of 2005, we issued options to purchase 846 shares of our common stock with a fair market value price of $8.14 to a number of our employees.
In the third quarter of 2005, we issued options to purchase 590,715 shares of our common stock with a fair market value price of $8.14 to a number of our employees. We also issued 32,698 options to purchase our common stock with a fair market value price of $8.14 to a non-employee director.
Restricted Shares
On March 9, 2004, and August 6, 2004, we issued 1,134,423 and 5,077 restricted shares, respectively, to a number of our employees.
On August 3, 2005, we issued 7,692 restricted shares to two of our non-employee directors.
Warrants
On January 28, 2005, in connection with entering into our senior secured term loan with GE Capital, we issued to GE Capital a warrant to purchase up to $300,000 worth of shares of our preferred stock (or, if we have consummated our initial public offering, shares of our common stock) in an amount and at a price to be determined pursuant to the terms thereof.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibit Index
A list of exhibits filed with this registration statement on Form S-1 is set forth on the Exhibit Index and is incorporated in this Item 16(a) by reference.
(b) Financial Statement Schedules
None
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
II-3
(1) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(2) The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(b) For purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offering therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-4
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on October 5, 2005
By: |
/s/
RON COHEN
Ron Cohen, President and Chief Executive Officer |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ron Cohen and David Lawrence, and each of them (with full power of each to act alone), severally, as his or her true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments, exhibits thereto and other documents in connection therewith) to this Registration Statement and any subsequent registration statement filed by the registrant pursuant to Rule 462(b) of the Securities Act of 1933, as amended, which relates to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature
|
Title
|
Date
|
||||
---|---|---|---|---|---|---|
|
|
|
|
|
|
|
/s/
RON COHEN
Ron Cohen, M.D. |
President, Chief Executive Officer and Director (Principal Executive Officer) | October 5, 2005 | ||||
/s/ DAVID LAWRENCE David Lawrence, M.B.A. |
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
|
October 5, 2005 |
||
/s/ STANDISH M. FLEMING Standish M. Fleming, M.B.A. |
|
Director |
|
October 5, 2005 |
||
/s/ JOHN FRIEDMAN John H. Friedman, J.D. |
|
Director |
|
October 5, 2005 |
||
II-5
/s/ SANDRA PANEM Sandra Panem, Ph.D. |
|
Director |
|
October 5, 2005 |
||
/s/ BARCLAY A. PHILLIPS Barclay A. Phillips |
|
Director |
|
October 5, 2005 |
||
/s/ MARK R.E. PINNEY Mark R.E. Pinney, M.B.A., C.F.A., M.Sc. |
|
Director |
|
October 5, 2005 |
||
/s/ STEVEN M. RAUSCHER Steven M. Rauscher, M.B.A. |
|
Director |
|
October 5, 2005 |
||
/s/ MICHAEL STEINMETZ Michael Steinmetz, Ph.D. |
|
Director |
|
October 5, 2005 |
||
/s/ WISE YOUNG Wise Young, Ph.D., M.D. |
|
Director |
|
October 5, 2005 |
II-6
Exhibit No.
|
Description
|
|
---|---|---|
1.1 |
* |
Form of Underwriting Agreement |
3.1 |
|
Amended and Restated Certificate of Incorporation |
3.2 |
|
Amended Bylaws |
3.3 |
|
Form of Post-IPO Amended and Restated Certificate of Incorporation |
3.4 |
|
Form of Post-IPO Amended Bylaws |
4.1 |
|
Specimen Stock Certificate |
4.2 |
|
Warrant to purchase 100,000 shares of Series B Preferred Stock, $2.00 par value per share, dated February 4, 2002, issued by the Registrant to Elan International Services, Ltd. |
4.3 |
* |
Warrant to purchase 40,000 shares of common stock, $0.10 par value per share, dated May 1, 1996, issued by the Registrant to Mark Noble and Margo Meyer |
4.4 |
* |
Warrant to purchase $300,000 worth of Warrant Shares, dated January 28, 2005, issued by the Registrant to General Electric Capital Corporation |
5.1 |
* |
Opinion of Covington & Burling |
10.1 |
|
Acorda Therapeutics 1999 Employee Stock Option Plan |
10.2 |
|
Amendment to 1999 Employee Stock Option Plan |
10.3 |
|
Amendment No. 2 to 1999 Employee Stock Option Plan |
10.4 |
|
Sixth Amended and Restated Registration Rights Agreement, dated March 3, 2004, by and among the Registrant and certain stockholders named therein |
10.5 |
|
Employment Agreement, dated August 11, 2002, by and between the Registrant and Ron Cohen |
10.6 |
|
Amendment to August 11, 2002 Employment Agreement, dated September 26, 2005, by and between the Registrant and Ron Cohen |
10.7 |
|
Letter Agreement, dated November 30, 2004, by and between the Registrant and Mark Pinney |
10.8 |
** |
Amended and Restated License Agreement, dated September 26, 2003, by and between the Registrant and Elan Corporation, plc. |
10.9 |
** |
Supply Agreement, dated September 26, 2003, by and between the Registrant and Elan Corporation, plc. |
10.10 |
** |
License Agreement, dated September 26, 2003, by and between the Registrant and Rush-Presbyterian-St. Luke's Medical Center |
10.11 |
|
Side Agreement, dated September 26, 2003, by and among the Registrant, Rush-Presbyterian-St. Luke's Medical Center, and Elan Corporation, plc. |
10.12 |
** |
Payment Agreement, dated September 26, 2003, by and among the Registrant, Rush-Presbyterian-St. Luke's Medical Center, and Elan Corporation, plc. |
10.13 |
** |
Amendment No. 1 to the Payment Agreement, dated as of October 27, 2003, by and between the Registrant and Elan Corporation, plc. |
10.14 |
** |
Amended and Restated License Agreement, dated August 1, 2003, by and between the Registrant and Canadian Spinal Research Organization |
10.15 |
** |
License Agreement, dated February 3, 2003, by and between the Registrant and Cornell Research Foundation, Inc. |
10.16 |
** |
License Agreement, dated November 12, 2002, by and between the Registrant and CeNeS Pharmaceuticals, plc |
10.17 |
** |
License Agreement, dated November 12, 2002, by and between the Registrant and CeNeS Pharmaceuticals, plc |
10.18 |
** |
License Agreement, dated September 8, 2000, by and between the Registrant and Mayo Foundation for Medical Education and Research |
10.19 |
** |
Side Letter Agreement, dated June 21, 2005, by and between the Registrant and Mayo Foundation for Medical Education and Research |
10.20 |
** |
Asset Purchase Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.21 |
** |
Zanaflex Supply Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharma International Limited |
10.22 |
** |
Assignment and Assumption Agreement, dated as of July 21, 2004, by and among the Registrant, Elan Pharmaceuticals, Inc., and Novartis Pharma AG |
10.23 |
** |
License Agreement, dated April 17, 1991, by and between Sandoz Pharma, now Novartis Pharma AG and Athena Neurosciences, Inc., now Elan Pharmaceuticals, Inc. |
10.24 |
|
Patent Assignment Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.25 |
|
Trademark License Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.26 |
** |
Agreement Relating to Additional Trademark, dated as of July 2005, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.27 |
|
Domain Name Assignment Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.28 |
|
Bill of Sale and Assignment and Assumption Agreement, dated as of July 21, 2004, by and between the Registrant and Elan Pharmaceuticals, Inc. |
10.29 |
|
Limited Recourse Convertible Promissory Note issued to Elan International Services, Ltd. |
10.30 |
|
Full Recourse Convertible Promissory Note issued to Elan International Services, Ltd. |
10.31 |
|
Securities Amendment Agreement, dated September 26, 2003, by and among the Registrant, Elan Corporation plc and Elan International Services, Ltd. |
10.32 |
** |
Fampridine Tablets Technical Transfer Program Proposal for Commercial Registration, dated February 26, 2003, by and between the Registrant and Patheon, Inc. |
10.33 |
** |
Syndicated Sales Force Agreement, dated as of August 1, 2005, between the Registrant and Cardinal Health PTS, LLC |
10.34 |
** |
License Agreement, dated as of December 19, 2003, by and among the Registrant, Cambridge University Technical Services Limited, and King's College London |
10.35 |
|
Promissory Note issued to General Electric Capital Corporation |
21.1 |
|
List of Subsidiaries of the Registrant |
23.1 |
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm |
23.2 |
* |
Consent of Covington & Burling (included in Exhibit 5.1). |
24.1 |
|
Power of Attorney (included on signature page). |
Exhibit 3.1
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ACORDA THERAPEUTICS, INC.
Acorda Therapeutics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the Corporation), does hereby certify as follows:
1. The name of the Corporation is Acorda Therapeutics, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State was March 17, 1995.
2. The Amended and Restated Certificate of Incorporation of Acorda Therapeutics, Inc., in the form attached hereto as Exhibit A , has been duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware by the directors and stockholders of the Corporation.
3. The Amended and Restated Certificate of Incorporation so adopted reads in its entirety as set forth in Exhibit A attached hereto and is incorporated herein by reference.
4. This Certificate shall be effective on the date of filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed by its President on this 1 st day of March, 2004.
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Acorda Therapeutics, Inc. |
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By |
/s/ Ron Cohen |
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Ron Cohen, M.D., President |
Exhibit A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION OF
ACORDA THERAPEUTICS, INC.
ARTICLE 1
1.1. Name . The name of the corporation is Acorda Therapeutics, Inc. (the Corporation).
ARTICLE 2
2.1. Registered Agent and Office . The address of the Corporations registered office in the State of Delaware is 1209 Orange Street in the City of Wilmington, County of New Castle, Delaware 19808. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE 3
3.1. Purposes . The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware (the DGCL).
ARTICLE 4
4.1. Authorized Capital . The aggregate number of shares of all classes of stock which the Corporation shall have authority to issue is 401,754,865, such shares being designated as follows: (i) 260,000,000 shares of Common Stock, par value $0.001 per share (the Common Stock), and (ii) 141,754,865 shares of Preferred Stock, par value $0.001 per share (the Preferred Stock).
4.2. Preferred Stock .
4.2.1. Designation of Preferred Stock .
(a) The Preferred Stock is divided into eleven series as follows: 1,646,068 shares of Preferred Stock are denominated as Series A Preferred Stock (the Series A Preferred Stock); 2,250,000 shares of Preferred Stock are denominated as Series B Preferred Stock (the Series B Preferred Stock); 333,333 shares of Preferred Stock are denominated as Series C Preferred Stock (the Series C Preferred Stock); 400,000 shares of Preferred Stock are denominated as Series D Preferred Stock (the Series D Preferred Stock); 1,844,289 shares are denominated as Series E 1 Preferred Stock (the Series E 1 Preferred Stock); 5,628,323 shares are denominated as Series E 2 Preferred Stock (the Series E 2 Preferred Stock) (collectively, Series E 1 Preferred Stock and Series E 2 Preferred Stock are referred to as the Series E Preferred Stock); 2,300,000 shares are denominated as Series F Preferred Stock (the Series F Preferred Stock); 1,250,000 shares are denominated as Series G
Preferred Stock (the Series G Preferred Stock); 1,575,229 shares are denominated as Series H Preferred Stock (the Series H Preferred Stock); 10,204,047 shares are denominated as Series I Preferred Stock (the Series I Preferred Stock); 112,790,233 shares are denominated as Series J Preferred Stock (the Series J Preferred Stock) and 1,533,330 shares are denominated as Series K Preferred Stock (the Series K Preferred Stock). The Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and any other series of Preferred Stock hereafter created after the Effective Date (as hereafter defined) which has rights, preferences or privileges junior to those of the Series J Preferred Stock and Series K Preferred Stock with respect to dividends, distributions, liquidation preference or redemption are sometimes referred to collectively herein as the Junior Preferred Stock.
(b) Authorized and unissued shares of Series G Preferred Stock may be issued only upon the exercise of the conversion right provided for in Section 3 of the Corporations Full Recourse Convertible Promissory Note (the Convertible Note) dated January 22,1997 in the principal amount of $2,500,000 made payable to Elan International Services, Ltd., a Bermuda corporation.
4.2.2. Dividends and Distributions .
(a) Holders of shares of Series J Preferred Stock and Series K Preferred Stock shall be entitled to receive a preferential cumulative dividend, out of any assets legally available therefor, at a rate of $.0392 and $.60, respectively, per share per annum (as adjusted for any stock dividends, combinations or splits with respect to such shares) when, as and if declared by the Board of Directors of the Corporation (the Board of Directors), prior and in preference to any declaration or payment of any dividend on any Junior Preferred Stock or the Common Stock. Such dividends shall be deemed to accrue on each share of the Series J Preferred Stock and Series K Preferred Stock commencing on its issuance date, whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends but shall be payable only when such dividends are declared by the Board of Directors or upon a Liquidation or redemption as provided herein. Dividends shall be cumulative but not compound. If such dividends in respect of any prior or current dividend period shall not have been declared and paid or if there shall not have been a sum sufficient for the payment thereof set apart for later payment, the deficiency shall first be fully paid before any dividend or other distribution shall be paid or declared and set apart with respect to any class of the Corporations capital stock, now or hereafter outstanding.
(b) After payment of the dividends required by Section 4.2.2(a), any additional dividends declared shall be distributed among all holders of Common Stock and Preferred Stock in proportion to the number of shares of Common Stock held by each such holder (or with respect to a holder of Preferred Stock the number of shares of Common Stock into which the holders Preferred Stock is convertible). No dividends shall be declared or paid on the Common Stock unless and until the holders of Preferred Stock shall have received all declared or accrued but unpaid dividends to which they are entitled under this Section 4.2.2. If available funds are insufficient to pay the holders Series J Preferred Stock and Series K Preferred
2
Stock the full aforesaid dividend amounts, dividends will be paid to such holders pro rata in accordance with the amount of accrued and unpaid dividends per share.
(c) Notwithstanding anything to the contrary contained herein, in the event the Corporation shall make or issue, or shall fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution with respect to Common Stock payable in (i) securities of the Corporation other than shares of Common Stock or (ii) assets, then, and in each such event, the holders of Series J Preferred Stock and Series K Preferred Stock shall receive prior to and in preference of any such dividend or distribution on the Common Stock securities and assets in amounts equivalent to the cash that would have been required to be distributed pursuant to Section 4.2.2(a), and then the holders of Preferred Stock (including Series J Preferred Stock and Series K Preferred Stock) shall receive, at the same time distribution is made to the holders of Common Stock, the number of securities or other assets which they would have received had their Preferred Stock been converted into Common Stock, immediately prior to the record date for determining holders of Common Stock entitled to receive such distribution.
(d) The Corporation shall not declare or pay any dividends on, or purchase, redeem, retire or otherwise acquire for value, any shares of its capital stock junior to the Preferred Stock (or rights, options or warrants to purchase such shares) now or hereafter outstanding, return any capital or make any distributions of assets to the holders of any capital stock junior to the Preferred Stock; or permit any Subsidiary to do any of the foregoing. Subsidiary or Subsidiaries means any corporation, partnership, or joint venture or other entity of which the Corporation and/or any of its other Subsidiaries (as herein defined) directly or indirectly owns at the time at least fifty percent (50%) of the outstanding voting shares or similar interests. Notwithstanding the foregoing, Subsidiaries may declare and make payment of cash and stock dividends, return capital and make distributions of assets to the Corporation, and nothing contained in the foregoing shall prevent the Corporation from: (i) effecting a stock split or declaring or paying any dividend consisting of shares of any class of capital stock paid to the holders of shares of such class of capital stock subject to the provisions of this Certificate; (ii) complying with any specific provision of the terms of the Preferred Stock in accordance with its terms; (iii) declaring and paying all accrued dividends on the Preferred Stock, or (iv) redeeming or repurchasing any stock of a deceased stockholder out of proceeds of insurance held by the Corporation on that stockholders life or redeeming or repurchasing any stock of any director, officer, employee, advisor, consultant or other person or entity, pursuant to a stock repurchase agreement or stock restriction agreement under which the Corporation has the right or obligation to repurchase such shares in the event of death, termination of employment or of the consulting arrangement, or other similar discontinuation of a business relationship.
4.2.3. Liquidation .
(a) The holders of Preferred Stock shall have preferential rights to the assets of the Corporation upon the occurrence of a Liquidation. For purposes of this Section 4.2.3, a Liquidation means a liquidation, dissolution, or winding up of the Corporation, whether voluntary or involuntary, and shall also be deemed to be occasioned by, and to include (but not be limited to) (i) the Corporations sale, license or other disposition of all or substantially all of its assets, (ii) or the merger, share exchange, consolidation or other
3
reorganization or combination of the Corporation with or into another entity (A) resulting in the exchange of the outstanding shares of the Corporation for securities or consideration issued, or caused to be issued, by the other entity or its subsidiary or (B) whereby the Corporation is the surviving entity, but the Corporations stockholders immediately prior to the consummation of such merger or consolidation own less than fifty one percent (51%) of the voting power of the Corporation or the acquiring entity immediately following the consummation of such merger, share exchange, consolidation or reorganization or combination. An event set forth in clauses (A) and (B) of the preceding sentence shall not be treated as a Liquidation if the holders of a majority of the then outstanding shares of Series J Preferred Stock and Series K Preferred Stock voting together as a separate class on an as if converted to Common Stock basis, and the holders of a majority of the Junior Preferred Stock voting separately as a class voting on an as if converted to Common Stock basis each elect not to treat for event as a Liquidation.
(b) Upon a Liquidation, before any distribution or payment is made to any holders of Junior Preferred Stock or Common Stock, the holders of each share of Series J Preferred Stock and Series K Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to holders of the Corporations capital stock of all classes, whether such assets are capital, surplus or earnings (Available Assets), an amount equal to the greater of:
(i) With respect to (I) the Series J Preferred Stock, the sum of (A) an amount per share of Series J Preferred Stock equal to the Original Issue Price of the Series J Preferred Stock (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Preferred Stock) plus (B) all accrued or declared but unpaid dividends on such share of Series J Preferred Stock, up to and including the date upon which full payment shall be tendered to the holders of Series J Preferred Stock with respect to such Liquidation; provided, however, that the amount payable pursuant to clause (B) shall not exceed the Original Issue Price of the Series J Preferred Stock (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, reclassification or other similar event involving a change in the capital structure of the Series J Preferred Stock) less the aggregate amount of the dividends paid in cash on such share of Series J Preferred Stock prior to such liquidation event and (II) with respect to the Series K Preferred Stock, the sum of (A) an amount per share of Series K Preferred Stock equal to the Original Issue Price of the Series K Preferred Stock (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, recapitalization, reclassification or other similar event involving a change in the capital structure of the Preferred Stock) plus (B) all accrued or declared but unpaid dividends on such share of Series K Preferred Stock, up to and including the date upon which full payment shall be tendered to the holders of Series K Preferred Stock with respect to such Liquidation; provided, however, that the amount payable pursuant to clause (B) shall not exceed the Original Issue Price of the Series K Preferred Stock (subject to equitable adjustment for any stock dividend, stock split, combination, reorganization, reclassification or other similar event involving a change in the capital structure of the Series K Preferred Stock) less the aggregate amount of the dividends paid in cash on such share of Series K Preferred Stock prior to such liquidation event; or
4
(ii) such amount per share as would have been payable had each share of Preferred Stock which is convertible into Common Stock (pursuant to Section 4.2.4) been so converted immediately prior to such Liquidation plus all accrued and unpaid dividends on such share up to and including the date on which payment shall be made to the holder of such share with respect to such Liquidation.
(iii) If upon a Liquidation the Available Assets shall be insufficient to pay the holders of Series J Preferred Stock and Series K Preferred Stock the full aforesaid liquidation amounts to which they are entitled, then Available Assets shall be distributed to such holders in proportion to the product of the above liquidation preference of each such share set forth in this Section 4.2.3(b) and the number of such shares owned by each such holder.
(c) Upon a Liquidation, after payment shall have been made to the holders of Series J Preferred Stock and Series K Preferred Stock of the full amounts to which they shall be entitled under this Section 4.2.3(b) and prior and in preference to any distribution or payment to any holders of Common Stock but subject to the liquidation rights and preferences of any class or series of Preferred Stock designated in the future to be senior to the Junior Preferred Stock with respect to liquidation preference, the holders of Series I Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series H Preferred Stock shall be entitled to receive out of the Available Assets, on a pro rata basis, an amount for each share of Series I Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series H Preferred Stock, respectively, held by such holder equal to the sum of (A) (i) $3.89 for each outstanding share of Series I Preferred Stock, (ii) $1.3069 for each such outstanding share of Series E 1 Preferred Stock, (iii) $1.0707 for each such outstanding share of Series E 2 Preferred Stock, (iv) $1.0907 for each such outstanding share of Series F Preferred Stock and (v) $1.3591 for each such outstanding share of Series H Preferred Stock (in each case as adjusted for any stock dividends, combinations or splits with respect to such shares) and (B) in each case, an amount equal to all declared but unpaid dividends on each such share issued. If upon a Liquidation the remaining Available Assets are insufficient to pay the holders of Series I Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series H Preferred Stock the full aforesaid preferential amounts set forth in this Section 4.2.3(c), then the remaining Available Assets shall be distributed ratably among the holders of the Series I Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series H Preferred Stock in proportion to the product of the above liquidation preference of each such share set forth in this Section 4.2.3(c) and the number of such shares owned by each such holder.
(d) Upon a Liquidation, after payment shall have been made to the holders of Series J Preferred Stock and Series K Preferred Stock of the full amounts to which they shall be entitled under Section 4.2.3(b) and after payment shall have been made to the holders of the Series E Preferred Stock, Series F Preferred Stock, Series H Preferred Stock and Series I Preferred Stock of the full amounts to which they shall be entitled under Section 4.2.3(c), and prior and in preference to any distribution or payment to any holders of Common Stock but subject to the liquidation rights and preferences of any class or series of Preferred Stock designated in the future to be senior to the Junior Preferred Stock with respect to liquidation preference, the holders of each outstanding share of Series E 1 Preferred Stock, Series E 2 Preferred Stock, Series F Preferred Stock and Series H Preferred Stock shall be entitled to be
5
paid out of remaining Available Assets an amount per share equal to $0.2556, $0.2093, $0.21355 and $0.2659, respectively, (in each case as adjusted for any stock dividends, combinations or splits with respect to such shares) plus an amount equal to all declared but unpaid dividends thereon, as applicable. If upon a Liquidation the remaining Available Assets are insufficient to pay the holders Series E Preferred Stock, Series F Preferred Stock and Series H Preferred Stock to the full aforesaid preferential amounts set forth in this Section 4.2.3(d), then the remaining Available Assets shall be distributed ratably among the holders of the Series E Preferred Stack, Series F Preferred Stock and Series H Preferred Stock in proportion to the product of the above liquidation preference of each such share set forth in this Section 4.2.3(d) and the number of such shares owned by each such holder.
(e) Upon a Liquidation, after payment shall have been made to the holders of Series J Preferred Stock and Series K Preferred Stock of the full amounts to which they shall be entitled under Section 4.2.3(b), after payment shall have been made to the holders of the Series E Preferred Stock, Series F Preferred Stock, Series H Preferred Stock and Series I Preferred Stock of the full amounts to which they shall be entitled under Section 4.2.3(c) and after payment shall have been made to the holders of Series E l Preferred Stock, Series E 2 Preferred Stock, Series F Preferred Stock and Series H Preferred Stock of the full amounts to which they are entitled under Section 4,2.3(d), and prior and in preference to any distribution or payment to any holders of Common Stock but subject to the liquidation rights and preferences of any class or series of Preferred Stock designated to be senior to the Junior Preferred Stock with respect to liquidation preference, the holders of each outstanding share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E 1 Preferred Stock, Series E 2 Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock shall be entitled to be paid out of remaining Available Assets an amount per share up to and including such amounts paid in accordance with the provisions of subsections (c) and (d) above, equal to $l.00, $2.00, $3.00, $12.50, $3.125, $2.56, $5.217, the greater of $2.00 and 80% of the closing price per share of the Institutional Financing (as defined below) most recently completed by the Company prior to the issuance of the Series G Preferred Stock (the Series G Issuance Price) and $3.25, respectively (in each case as adjusted for any stock dividends, combinations or splits with respect to such shares) (with respect to each class of Preferred Stock, an Original Price), plus an amount equal to all declared but unpaid dividends thereon, as applicable. If upon a Liquidation the remaining Available Assets are insufficient to pay the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E 1 Preferred Stock, Series E 2 Preferred Stock, Series F Preferred Stock, Series G Preferred Stock and Series H Preferred Stock the full aforesaid preferential amounts set forth in this Section 4.2.3(e), then the remaining Available Assets shall be distributed ratably, in the proportion to the product of the above liquidation preference of each share and the number of such shares owned by each such holder, in the following order of priority: (i) first, pro rata among (1) the holders of the outstanding shares of Series H Preferred Stock in an amount per share equal to fifty (50%) percent of the Original Price for such outstanding shares, plus declared but unpaid dividends, (2) the holders of the outstanding shares of Series F Preferred Stock in an amount per share equal to twenty five (25%) percent of the Original Price for such shares, plus declared but unpaid dividends, and (3) the holders of the outstanding shares of Series E 1 Preferred Stock and Series E 2 Preferred Stock in an amount per share equal to fifty (50%) of the Original Prices for such outstanding shares, plus declared but unpaid dividends; and (ii) second, pro rata among (1) the holders of the outstanding shares of
6
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series G Preferred Stock, in the same relative proportion as the Original Prices of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series G Preferred Stock, plus declared but unpaid dividends, and (2) the holders of the Series F Preferred Stock in an amount per share equal to fifty percent (50%) of the Original Price for such shares, plus declared but unpaid dividends.
(f) Upon conversion of shares of Preferred Stock into Common Stock pursuant to Section 4.2.4, the holders of such Common Stock shall not be entitled to any preferential payment or distribution in case of a Liquidation, but shall share ratably in any distribution of the assets of the Corporation to all holders of Common Stock.
(g) In any Liquidation, if the consideration received by the Corporation is other than cash, its value will be deemed its fair market value, as determined in good faith by the Board of Directors of the Corporation or, if the Board so decides, by a committee of independent directors (in either case, the Board or the committee may retain an independent investment banking firm to advise with respect to fair market value); however, if the non cash consideration is securities, the fair market value shall be determined as follows:
(i) if the securities are traded on a securities exchange or through the Nasdaq Stock Market, Inc. (Nasdaq), the average of the closing prices of the securities on such exchange or Nasdaq during the thirty day period ending three (3) days prior to the closing;
(ii) if the securities are actively traded over the counter but not on Nasdaq, the value shall be deemed to be the average of the closing bid prices over the thirty day period ending three (3) days prior to closing; and
(iii) if there is no active public market for the securities, the fair market value thereof, as mutually determined by the Corporation and the holders of a majority of the Preferred Stock voting as a single class on an as if converted to Common Stock basis.
4.2 4 . Conversion . The holders of the Preferred Stock shall have conversion rights as follows (the Conversion Rights):
(a) Right to Convert . Each holder of record of shares of Preferred Stock may, without the payment of any additional consideration, at any time, upon surrender to the Corporation of the certificates therefor at the principal office of the Corporation or at such other place as the Corporation shall designate, convert all or any part of such holders shares of Preferred Stock into such number of fully paid and non-assessable shares of Common Stock of the Corporation (as such Common Stock shall then be constituted) equal to (i) in the case of the Series A Preferred Stock, the product of (x) the number of shares of Series A Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $1.00 (the Series A Original Issue Price) by the Series A Conversion Price (as hereinafter defined) in effect at the time of conversion; (ii) in the case of the Series B Preferred Stock, the product of (x) the number of shares of Series B Preferred Stock that such
7
holder shall then surrender to the Corporation and (y) the number determined by dividing $2.00 (the Series B Original Issue Price) by the Series B Conversion Price (as hereinafter defined) in effect at the time of conversion; (iii) in the case of the Series C Preferred Stock, the product of (x) the number of shares of Series C Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $3.00 (the Series C Original Issue Price) by the Series C Conversion Price (as hereinafter defined) in effect at the time of conversion; (iv) in the case of the Series D Preferred Stock, the product of (x) the number of shares of Series D Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $2.00 (the Series D Original Issue Price) by the Series D Conversion Price (as hereinafter defined) in effect at the time of the conversion; (v) in the case of the Series E-1 Preferred Stock, the product of (x) the number of shares of Series E-l Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $2.70 (the Series E-l Original Issues Price) by the Series E-l Conversion Price (as hereinafter defined) in effect at the time of the conversion;(vi) in the case of Series E-2 Preferred Stock, the product of (x) the number of shares of Series E-2 Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $2.70 (the Series E-2 Original Issue Price) by the Series E-2 Conversion Price (as hereinafter defined) in effect at the time of the conversion; (vii) in the case of the Series F Preferred Stock, the product of (x) the number of shares of Series F Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $2.70 (the Series F Original Issue Price) by the Series F Conversion Price (as hereinafter defined) in effect at the time of the conversion; (viii) in the case of Series G Preferred Stock, the product of (x) the number of shares of Series G Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing (I) the greater of $2.00 or 80% of the closing price per share of the most recently completed bona fide equity financing of the Corporation with any institutional or venture capital or similar financing source (the Institutional Financing) most recently completed by the Corporation prior to the issuance of the Series G Preferred Stock (the Series G Original Issuance Price) by (II) the Series G Conversion Price (as hereinafter defined) in effect at the time of conversion; (ix) in the case of Series H Preferred Stock, the product of (x) the number of shares of Series H Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $3.25 (the Series H Original Issue Price) by the Series H Conversion Price (as hereinafter defined) in effect at the time of the conversion; (x) in the case of the Series I Preferred Stock, the product of (x) the number of shares of Series I Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $3.89 (the Series I Original Issue Price) by the Series I Conversion Price (as hereinafter defined) in effect the time of the conversion; (xi) in the case of the Series J Preferred Stock, the product of (x) the number of shares of Series J Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $.49 (the Series J Original Issue Price) by the Series J Conversion Price (as hereinafter defined) in effect from time to time; and (xi) in the case of the Series K Preferred Stock, the product of (x) the number of shares of Series K Preferred Stock that such holder shall then surrender to the Corporation and (y) the number determined by dividing $7.50 (the Series K Original Issue Price) by the Series K Conversion Price (as hereinafter defined) in effect from time to time. The resulting conversion rate applicable from time to time to a particular series shall be referred to hereinafter as the Conversion Rate.
8
As of the Effective Date, the Series A Conversion Price shall be $6.972 per share, the Series B Conversion Price shall be $9.12 per share, the Series C Conversion Price shall be $11.256 per share, the Series D Conversion Price shall be $9.12 per share, the Series E-1 Conversion Price and the Series E-2 Conversion Price shall each be $10.62 per share, the Series F Conversion Price shall be $10.62 per share, the Series G Conversion Price shall be the number equal to the Series G Original Issuance Price, the Series H Conversion Price shall be $11.796 per share, the Series I Conversion Price shall be $13.164 per share, the Series J Conversion Price shall be $5.88 per share and the Series K Conversion Price shall be $7.50 per share.
(b) Automatic Conversion . All outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock at the then effective Conversion Rates provided therefor in Section 4.2.4(a) hereof upon the occurrence of the first of the following:
(i) The consummation of the Corporations sale of Common Stock pursuant to a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the Securities Act), in connection with a firm commitment underwritten public offering in the United States by a United States underwriter (a Public Offering); provided that (1) the price to the public is not less than $10.50 per share (such price to be equitably adjusted in the event of any stock dividend, stock split, combination recapitalization or other similar event) and (2) the aggregate gross proceeds thereof are not less than U.S. $40,000,000; or
(ii) Upon the approval of such conversion by the written consent of the holders of a majority of the then outstanding shares of Series J Preferred Stock and Series K Preferred Stock voting together as a single class on an as if converted to Common Stock basis and the holders of a majority of the then outstanding shares of Preferred Stock, voting separately as a single class on an as if converted to Common Stock basis.
(c) Mechanics of Conversion . No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on such conversion date as reasonably determined in good faith by the Board of Directors. Before any holder of Preferred Stock shall be entitled to convert the same pursuant to Section 4.2.4(a) into full shares of Common Stock, the holder shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock, and shall give written notice to the Corporation at such office that the holder elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section 4.2.4(b) above, the outstanding shares of Preferred Stock will be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, provided, further, however, that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless either the certificates evidencing such shares of Preferred Stock are delivered to the Corporation or its transfer agent as provided above, or the holder notifies the Corporation or its transfer agent that such certificates have been lost,
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stolen, or destroyed and executes an agreement, reasonably satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or after such agreement and indemnification, issue and deliver to such holder of Preferred Stock, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock, plus any declared and unpaid dividends on the converted Preferred Stock; however, no holder of Preferred Stock shall be entitled to any payment by reason of any accrued but undeclared dividends on such Preferred Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted in accordance with Section 4.2.4(a) or on the effective date of the approval of the conversion by the holders of the then outstanding shares of Series J Preferred Stock and Series K Preferred Stock and Preferred Stock (in accordance with Section 4.2.4(b)(ii), above), or upon the date of consummation of a Public Offering satisfying the criteria for automatic conversion (in accordance with Section 4.2.4(b)(i)) and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date; provided, however, that if the conversion is in connection with a Public Offering, the conversion shall be conditioned upon the closing of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted such Preferred Stock until immediately prior to the closing of the sale of such securities.
(d) Adjustments to Conversion Price for Diluting Issues .
(i) (A) If the Corporation shall after the Effective Date issue any Additional Stock (as hereinafter defined) without consideration or for a consideration per share less than the Series J Conversion Price in effect immediately prior to the issuance of such Additional Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this Section 4.2.4) be reduced, concurrently with such issuance, to a price determined by multiplying such Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock Outstanding immediately prior to such issuance plus the number of shares of Common Stock that the aggregate consideration received by the Corporation for the Additional Stock so issued would purchase at the Series J Conversion Price as in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock Outstanding immediately prior to such issuance, plus the number of shares of Additional Stock so issued. For purposes of calculating the number of shares of Common Stock Outstanding immediately prior to the issuance of Additional Stock with respect to the adjustment to be made hereunder, there shall be included only (i) the number of outstanding shares of Common Stock theretofore issued upon the conversion of Preferred Stock and (ii) the number of shares of Common Stock issuable upon the conversion of the Preferred Stock outstanding or issuable upon conversion or exercise of outstanding warrants and other securities and obligations convertible or exchangeable into Preferred Stock (but excluding Preferred Stock issuable upon conversion of any notes or evidence of indebtedness) immediately prior to the issuance of such Additional Stock; and there shall be excluded from such calculation all other shares of Common Stock,
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whether then outstanding or issuable upon the exercise of any options or warrants therefor. There shall be no adjustment to the Series C Conversion Price, the Series D Conversion Price and the Series F Conversion Price as a result of the original issuance at any time of Series E-1 Preferred Stock, Series E-2 Preferred Stock, Series H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock or Series K Preferred Stock.
(B) No adjustments of the Conversion Price of any series of Preferred Stock shall be made in an amount less than one cent ($.01) per share, provided that any adjustment that is not required to be made by reason of this sentence shall be carried forward and taken into account in any subsequent adjustment. Except to the limited extent provided for in subsections (d)(i)(E)(3) and (d)(i)(E)(4) of this Section 4.2.4, no adjustment of the Conversion Price of any series of Preferred Stock shall have the effect of increasing such Conversion Price above the respective Conversion Price in effect immediately prior to such adjustment.
(C) In the case of the issuance of Additional Stock for cash, the consideration shall be determined to be the amount of cash paid therefor before deducting any reasonable discounts, commissions, or other expenses allowed, paid, or incurred by the Corporation for any underwriting or otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of Additional Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors in good faith.
(E) In the case of the issuance of options to purchase or rights to subscribe for Common Stock, securities by their terms convertible into or exchangeable for Common Stock, or options to purchase or rights to subscribe for such convertible or exchangeable securities (where the shares of Common Stock issuable upon exercise of such options or rights or upon conversion or exchange of such securities are not excluded from the definition of Additional Stock), the following provisions shall apply:
(1) The aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued and for a consideration equal to the consideration (determined in the manner provided in subsections (d)(i)(C) and (d)(i)(D) of this Section 4.2.4), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby;
(2) The aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for, any such convertible or exchangeable securities or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration, if any, received by the Corporation for any such securities and related options or rights (excluding any cash received on
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account of accrued interest or accrued dividends), plus the additional consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subsections (d)(i)(C) and (d)(i)(D) of this Section 4.2.4);
(3) In the event of any change in the number of shares of Common Stock deliverable upon exercise of such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, including, but not limited to, a change resulting from the antidilution provisions thereof, the Conversion Price of each series of Preferred Stock in effect at the time shall forthwith be readjusted to such Conversion Price as would have been obtained had the adjustment that was made upon the issuance of such options, rights, or securities not converted prior to such change or the options or rights related to such securities not converted prior to such change been made upon the basis of such change (but not in excess of the Conversion Price immediately before the original adjustment for such options or rights), but no further adjustment shall be made for the actual issuance of Common Stock upon the exercise of any such options or rights or the conversion or exchange of such securities; and
(4) Upon the expiration of any such options or rights, the termination of any such rights to convert or exchange, or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of each series of Preferred Stock shall forthwith be readjusted to such Conversion Price as would have been obtained had the adjustment that was made upon the issuance of such options, rights, or securities or options or rights related to such securities been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such option or rights, upon the conversion or exchange of such securities or upon the exercise of the options or rights related to such securities.
(F) In addition to any other adjustments provided for hereunder, the Series I Conversion Price shall be adjusted upon the issuance by the Corporation, after the Effective Date, of any shares of, or warrants or other securities convertible into or exchangeable for, shares of Series B Preferred Stock (not including up to 100,000 shares of Series B Preferred Stock issued upon exercise of warrants issued and outstanding as of the Effective Date) or Series G Preferred Stock (but not upon the conversion of any such shares) (such shares, warrants and other securities, each a Series I Special Dilutive Issuance) such that the Series I Conversion Price shall equal the amount obtained by the following calculations: (1) divide $78,011,386 by the sum of (y) 20,054,341 and (z) the number of shares of Common Stock which would have been issuable upon full exercise and/or conversion of all securities (including shares of Preferred Stock into which such securities are convertible or exercisable) included within such Series I Special Dilutive Issuance, as if such issuance and full exercise and/or conversion had occurred immediately prior to the Effective Date; (2) multiply the result in item (1) by a fraction the numerator of which is the Series I Conversion Price in effect at the time of the Series I Special Dilutive Issuance and the denominator of which is $3.89; (3) subtract the result in item (2) from the Series I Conversion Price in effect at the time of the Series I Special Dilutive Issuance; (4) multiply the result in item (3) by seventy-five percent; and (5) subtract the result in item (4) from the Series I Conversion Price in effect at the time of the Series I Special Dilutive Issuance. The above formula shall be adjusted equitably to account for stock splits, stock dividends, reclassifications, subdivisions, combinations or other such events. This
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adjustment shall be recalculated upon each Series I Special Dilutive Issuance. Notwithstanding anything herein to the contrary, if an adjustment is made under this Section 4.2.4(d)(i)(F) upon the issuance by the Corporation of any warrant or other security convertible into or exchangeable for Preferred Stock of the Corporation, there shall be no subsequent adjustment under this Section 4.2.4(d)(i)(F) upon the exercise, conversion or exchange of such instrument. No adjustment made pursuant to this Section 4.2.4(d)(i)(F) shall adjust the Conversion Price of any series of Preferred Stock other than Series I Preferred Stock and as provided in Section 4.2.4(d)(i)(G) for the Series J Preferred Stock.
(G) In addition to any other adjustments provided for hereunder, the Series J Conversion Price shall be adjusted upon the issuance by the Corporation, after the Effective Date, of any shares of, or warrants or other securities convertible into or exchangeable for, shares of Series B Preferred Stock (not including up to 100,000 shares of Series B Preferred Stock issued upon exercise of warrants issued and outstanding as of the Effective Date), Series D Preferred Stock or Series G Preferred Stock (but not upon the conversion of any such shares) (such shares, warrants and other securities, a Series J Special Dilutive Issuance) such that the Series J Conversion Price shall equal the amount obtained by the following calculations: (l) divide $41,105,131 by the sum of (x) 83,888,023, (y) the number of shares of Common Stock which would have been issuable upon full exercise and/or conversion of all securities (including shares of Preferred Stock into which such securities are convertible or exercisable) included within such Series J Special Dilutive Issuance, as if such issuance and full exercise and/or conversion had occurred immediately following the Effective Date; (z) the difference, if any, between we number of shares of Common Stock issuable upon conversion of Series I Preferred Stock immediately following each adjustment made pursuant to Section 4.2.4(d)(i)(F) (if such Series J Special Dilutive Issuance also constitutes a Series I Special Dilutive Issuance) and the number of shares of Common Stock issuable upon conversion of Series I Preferred Stock immediately prior to any such adjustment; (2) multiply the result in item (l) by a fraction the numerator of which is the Series J Conversion Price in effect at the time of the Series J Special Dilutive Issuance and the denominator of which is $5,88. The above formula shall be adjusted equitably to account for stock splits, stock dividends, reclassifications, subdivisions, combinations or other such events. This adjustment shall be recalculated upon each Series J Special Dilutive Issuance and upon each adjustment to the Series I Conversion Price required by Section 4.2.4(d)(i)(F). Notwithstanding anything herein to the contrary, if an adjustment is made under this Section 4.2.4(d)(i)(G) upon the issuance by the Corporation of any warrant or other security convertible into or exchangeable for Preferred Stock of the Corporation, there shall be no subsequent adjustment under this Section 4.2.4(d)(i)(G) upon the exercise, conversion or exchange of such instrument. No adjustment made pursuant to this Section 4.2.4(d)(i)(G) shall adjust the Conversion Price of any series of Preferred Stock other than Series J Preferred Stock.
(H) Provided no other adjustment is required to be made to the Series K Conversion Price under this Section 4.2.4 as a result of the issuance of Additional Stock, then upon the issuance by the Corporation, after the Effective Date, of any Additional Stock without consideration or for a consideration per share less than the Series K Conversion Price in effect immediately prior to the issuance of such Additional Stock, the Series K Conversion Price in effect immediately prior to each such issuance shall forthwith (except as otherwise provided in this Section 4.2.4) be reduced, concurrently with such issuance, to a price
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determined by multiplying the Series K Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock Outstanding immediately prior to such issuance plus the number of shares of Common Stock that the aggregate consideration received by the Corporation for the Additional Stock so issued would purchase at the Series K Conversion Price as in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock Outstanding immediately prior to such issuance, plus the number of shares of Additional Stock so issued. For purposes of calculating the number of shares of Common Stock Outstanding immediately prior to the issuance of Additional Stock with respect to the adjustment to be made hereunder, there shall be included only (i) the number of outstanding shares of Common Stock theretofore issued upon the conversion of Preferred Stock and (ii) the number of shares of Common Stock issuable upon the conversion of the Preferred Stock outstanding or issuable upon conversion or exercise of outstanding warrants and other securities and obligations convertible or exchangeable into Preferred Stock (but excluding Preferred Stock issuable upon conversion of any notes or evidence of indebtedness) immediately prior to the issuance of such Additional Stock; and there shall be excluded from such calculation all other shares of Common Stock, whether then outstanding or issuable upon the exercise of any options or warrants therefor. No adjustment to the Series K Conversion Price shall be made as a result of any special adjustments required by Section 4.2.4(d)(i)(F) or (G) above.
(ii) Additional Stock shall mean any shares of Common Stock issued (or deemed to have been issued pursuant subsection (d)(i)(E) of this Section 4.2.4) by the Corporation after the date of effectiveness of this Amended and Restated Certificate of Incorporation (the Effective Date) other than:
(A) Common Stock issued pursuant to a transaction described in subparagraph (d)(iii) of this Section 4.2.4;
(B) Common Stock (or options or warrants therefor) issued or issuable to officers, employees, or directors of, or consultants to, the Corporation pursuant to an equity incentive plan or other arrangement approved by the Board of Directors; provided, however, that the number of shares of Common Stock so issued or issuable shall not exceed 3,237,461 shares;
(C) Common Stock issued or issuable upon conversion of any shares of any series of Preferred Stock;
(D) Up to 340,000 shares of Series A Preferred Stock, up to 100,000 shares of Series B Preferred Stock and up to 3,333 shares of Common Stock issuable upon exercise of warrants outstanding as of the Effective Date;
(E) Up to 1,250,000 shares of Series B Preferred Stock and up to 400,000 shares of Series D Preferred Stock issuable upon conversion of any convertible promissory notes outstanding as of the Effective Date;
(F) Series G Preferred Stock issuable upon conversion of the Convertible Note;
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(G) Shares of Common Stock or Preferred Stock issued after the Effective Date, or that becomes issuable pursuant to the exercise of warrants therefor granted after the Effective Date, in connection with any equipment lease, vendor or customer relationship or similar non equity financing transaction approved by the Board of Directors in accordance with reasonable and customary business practices; provided, however, for purposes of making adjustments to the Conversion Prices of Series E-l Preferred Stock, Series E-2 Preferred Stock, Series I Preferred Stock, and Series J Preferred Stock and Series K Preferred Stock, the aggregate number of shares of Common Stock so issued or that are issuable upon the exercise of any such warrants or the conversion of any such Preferred Stock or the exercise of any such warrants to purchase Preferred Stock and the conversion of such Preferred Stock in all such financing transactions shall not exceed at the time of such issuance, and after giving effect thereto and the exercise of any such warrants, one percent (1%) of the Fully Diluted Common Stock;
(H) Series K Preferred Stock; or
(I) Shares of Common Stock issued as consideration in bona fide, arms length transactions approved by the Board of Directors involving acquisitions of other persons or assets, strategic licensing transactions and the like.
For purposes hereof, the term Fully Diluted Common Stock means at any time the sum of (x) all shares of Common Stock outstanding at such time, whether or not vested, (y) all shares of Common Stock issuable upon the exercise of any option or warrant therefor, without regard to vesting, and (z) all shares of Common Stock issuable upon the exercise of any conversion or exchange right or right to purchase contained in any obligation or security (other than Common Stock) convertible into or exchangeable for shares of Common Stock, including, without limitation, upon the conversion of shares of any series of Preferred Stock.
(iii) Adjustments for Subdivisions or Combinations of Common Stock . In the event the outstanding shares of Common Stock shall be subdivided (by stock split or otherwise than a payment of a dividend in Common Stock), into a greater number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such subdivision shall, concurrently with the effectiveness of such subdivision, be proportionately decreased. In the event the outstanding shares of Common Stock shall be combined (by reclassification or otherwise) into a lesser number of shares of Common Stock, the Conversion Price of each series of Preferred Stock in effect immediately prior to such combination shall, concurrently with the effectiveness of such combination, be proportionately increased.
(iv) Adjustments for Stock Dividends . In the event that the Corporation shall at any time or from time to time after the Effective Date declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, then such event shall be considered to be a subdivision and the Conversion Price for each series of Preferred Stock in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased, as appropriate. In the event that the Corporation shall declare or pay, without
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consideration, any dividend on the Common Stock payable in any right to acquire Common Stock for no consideration then the Corporation shall be deemed to have made a dividend payable in Common Stock in an amount equal to the maximum number of shares issuable upon exercise of such rights to acquire Common Stock.
(v) Adjustments for Other Distributions . In the event the Corporation at any time or from time to time makes or fixes a record date for the determination of holders of Common Stock entitled to receive any distribution payable in securities of the Corporation other than shares of Common Stock or property, other than cash and other than as otherwise adjusted in this Section 4.2.4, then and in each such event the holders of each series of Preferred Stock shall receive, concurrent with such distribution, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock on the date of such event.
(vi) Adjustments for Reclassification Exchange and Substitution . If the Common Stock issuable upon conversion of the Preferred Stock shall be changed into the same or a different number of shares of any other class or classes of capital stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares provided for above), the Conversion Price of each series of Preferred Stock then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted such that such Preferred Stock shall be convertible into, in lieu of the number of shares of Common Stock that the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of capital stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of any series of Preferred Stock, as the case maybe, immediately before such change.
(e) No Impairment . The Corporation will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation but will at all times in good faith assist in the carrying out of all the provisions of this Section 4.2.4 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Preferred Stock against impairment.
(f) Certificate as to Adjustments . Upon the occurrence of each adjustment or readjustment of any Conversion Price pursuant to this Section 4.2.4, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms thereof and furnish to each holder of each series of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon the written request at any time of any holder of any series of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments; (ii) the respective Conversion Price at the time in effect; and (iii) the number of shares of Common Stock and the amount, if any, of other property that at the time would be received upon the conversion of the respective series of Preferred Stock.
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(g) Notices of Record Date . In the event that this Corporation shall propose at any time:
(i) to declare any dividend or distribution upon its Common Stock, whether in cash, property, capital stock, or other securities, whether or not a regular cash dividend and whether or not out of earnings or earned surplus;
(ii) to offer for subscription pro rata to the holders of any class or series of its capital stock any additional shares of capital stock of any class or series or other rights;
(iii) to effect any reclassification or recapitalization of its Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge with or into any other corporation, or sell, lease, or convey all or substantially all its property or business, or to liquidate, dissolve, or wind up;
then, in connection with each such event, the Corporation shall send to the holders of the Preferred Stock at least twenty (20) days prior written notice of the date on which a record shall be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote in respect of the matters referred to in (iii) and (iv) above. Each such written notice shall be given by overnight courier, postage prepaid, addressed to the holders of the Preferred Stock at the address for each such holder as shown on the books of the Corporation.
(h) Reservation of Stock Issuable upon Conversion. The Corporation shall at all times reserve and keep available, out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of the Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of each series of Preferred Stock, as applicable, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.
4.2.5. Series E, I, J and K Redemption .
(a) Holders Election . Holders of the issued and outstanding Series E Preferred Stock, Series I Preferred Stock, Series J Preferred Stock and Series K Preferred Stock (the Redeemable Preferred Stock) may at any time on or after June 30, 2008 require the Corporation to redeem all or any portion of such Holders Redeemable Preferred Stock at the redemption price specified in Section 4.2.5(b); provided, however, that no holder of Redeemable Preferred Stock may so require such redemption unless and until (i) the holders of not less than a majority of Redeemable Preferred Stock then issued and outstanding voting together as a single class on an as if converted to Common Stock basis make such election and (ii) the holders of a majority of the Series J Preferred Stock and Series K Preferred Stock then issued and outstanding voting together on an as converted to Common Stock basis make such
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election (together, the Majority Election) prior to September 30,2008. The foregoing election shall be made by such holders of Redeemable Preferred Stock by delivering to the Corporation written notice of election to redeem, setting forth the number of shares of Redeemable Preferred to be redeemed. The date for such redemption (the Redemption Date) shall be thirty (30) days after the Majority Election occurs, but not before June 30, 2008. At least fifteen (15) but no more than thirty (30) days prior to the Redemption Date, the Corporation shall provide written notice to each holder of record (at the close of business on the day preceding the next day on which notice is given) of Redeemable Preferred Stock, at the address last shown on the records of the Corporation for such holder, notifying such holder of the redemption to be effected, specifying the number of shares redeemable by such holder, the Redemption Date, the redemption price for each share of Redeemable Preferred Stock, the place at which payment may be obtained and calling upon such holder to surrender to the Corporation, in the manner and at the place designated, his certificate or certificates representing the shares to be redeemed should such holder elect to redeem all or some of his Redeemable Preferred Stock (the Redemption Notice).
(b) Redemption Price . The redemption price for each share of Redeemable Preferred Stock redeemed pursuant to this Section 4.2.5 shall be the Original Issue Price therefor as set forth in Section 4.2.4 hereof, plus accrued but unpaid dividends thereon up to and including the date upon which payment shall be made to the holder of the Redeemable Preferred Stock with respect to such redemption. One half of such aggregate redemption price for all Redeemable Preferred Stock shall be payable in cash in immediately available funds on the Redemption Date and the second half of such aggregate redemption price for all Redeemable Preferred Stock shall be payable in immediately available funds, without interest, on the first anniversary of the Redemption Date; however, all Series J Preferred Stock and Series K Preferred Stock that have elected to be redeemed shall be redeemed by the Corporation by payment of the full redemption price thereon prior to the Corporation making any redemption payment on any other Redeemable Preferred Stock. Until the full redemption price has been paid in cash for all shares of Redeemable Preferred Stock being redeemed, (A) no dividend whatsoever shall be paid or declared, and no distribution shall be made, on any share of the Corporations capital stock, (B) no shares of capital stock of the Corporation (other than Redeemable Preferred Stock in accordance with this Section 4.2.5) shall be purchased, redeemed or acquired by the Corporation and no monies shall be paid into or set aside or made available for a sinking or other analogous fund for the purchase, redemption or acquisition thereof, provided that the Corporation may, to the extent that it may lawfully do so, redeem at their original cost shares of its outstanding equity securities held by departing employees of the Corporation pursuant to the terms of any stock option or purchase plan or arrangement approved by the Board of Directors (other than those of departing executive officers of the Corporation) notwithstanding that all shares of Redeemable Preferred Stock requested to be redeemed hereunder shall not therefor have been redeemed, and (C) the Corporation will not permit any subsidiary or other affiliate to redeem, purchase or otherwise acquire for value, or set apart for any sinking or other analogous fund for the purchase, redemption or acquisition of any shares of the Corporations capital stock (other than Series J Preferred Stock and Series K Preferred Stock in accordance with this Section 4.2.5).
(c) Redemption Prohibited . If, at a redemption payment date, the Corporation is prohibited under applicable law from redeeming all shares of Redeemable
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Preferred Stock requested to be redeemed hereunder, then the Corporation shall redeem shares of Series J Preferred Stock and Series K Preferred Stock on a pro rata basis among the holders of Series J Preferred Stock and Series K Preferred Stock in proportion to the amount of their respective redemption prices, and shall redeem the remaining shares of Series J Preferred Stock and Series K Preferred Stock that it would have been required to redeem on such payment date but for the legal prohibition as soon as the Corporation is not legally prohibited from redeeming all or some of such shares. Any shares of Redeemable Preferred Stock not redeemed shall remain outstanding and entitled to all of the rights and preferences provided in this Article 4. After all Series J Preferred Stock and Series K Preferred Stock requested to be redeemed has been redeemed by payment in full, then the Corporation shall redeem remaining Redeemable Stock requested to be redeemed; however, if at a redemption payment date the Corporation is prohibited under applicable law from redeeming all such remaining Redeemable Preferred Stock requested to be redeemed hereunder, then the Corporation shall redeem such remaining Redeemable Preferred Stock on a pro rata basis among the holders thereof in proportion to the full respective redemption amounts to which the holders thereof are entitled hereunder to the extent the Corporation is not so legally prohibited from doing so and shall redeem the remaining shares of Redeemable Preferred Stock requested to be redeemed as soon as the Corporation is not legally prohibited from redeeming all or some of such shares. In the event that the Corporation fails to redeem shares for which redemption is required pursuant to this Section 4.2.5 by reason of a legal prohibition or otherwise, then during the period from the applicable Redemption Date through the date on which such shares an redeemed, the applicable redemption price of such shares shall bear interest at the rate of ten percent (10%) per annum, which interest rate shall increase by an additional one half percent (0.5%) per annum at the end of each six (6) month period thereafter until the redemption price (as so increased) is paid in full, subject to a maximum interest rate of fifteen percent (15%) per annum and with such interest to be compounded annually. Without limitation of the foregoing, the Corporation shall take such action as shall be necessary or appropriate to remove promptly any impediments to its ability to redeem the Redeemable Preferred Stock under the circumstances contemplated by this Section 4.2.5. Any successor to the Corporation shall agree, as a condition to such succession, to carry out and observe the obligations of the Corporation hereunder with respect to the Redeemable Preferred Stock.
(d) Surrender of Certificates . Upon receipt of the applicable redemption price therefor, each holder of shares of Redeemable Preferred Stock so redeemed shall surrender the certificate or certificates representing such shares so redeemed to the Corporation, duly assigned or endorsed for transfer (or accompanied by duly executed stock powers relating thereto), or shall deliver an affidavit or agreement reasonably satisfactory to the Corporation to indemnify the Corporation (without the need to post any bond or other security for such obligation) from any loss incurred by it in connection therewith with respect to such certificates at the principal executive office of the Corporation or the office of the transfer agent for the Redeemable Preferred Stock or such office or offices in the continental United States of an agent for redemption as may from time to time be designated by notice to the holders of Redeemable Preferred Stock, and each surrendered certificate shall be canceled and retired.
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4.2.6. Voting Rights: Directors .
(a) General . Each holder of outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock and Series K Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which the shares of Preferred Stock so held could be converted at the record date for determination of the stockholders entitled to vote, or, if no such record date is established, at the date such vote is taken or any written consent of stockholders is solicited. The holders of Series F Preferred Stock shall have no voting rights except as required by the DGCL. Except as required by law or as otherwise set forth herein, all shares of Preferred Stock and all shares of Common Stock shall vote together as a single class on all matters to come before the stockholders of the Corporation. Fractional votes by the holders of Preferred Stock shall not, however, be permitted, and any fractional voting rights shall (after aggregating all shares into which shares of Preferred Stock held by each holder could be converted) be disregarded.
(b) Election of Directors . The Board of Directors shall consist of seven (7) directors elected as follows: (i) two directors shall be elected by the holders of the Series A Preferred Stock, Series E Preferred Stock and Series H Preferred Stock, voting together as a single class; (ii) one director shall be elected by the holders of the Series I Preferred Stock; (iii) two directors shall be elected by the holders of the Series J Preferred Stock; (iv) one director shall be elected by the holders of Common Stock; and (v) one director shall be elected by the holders of the Common Stock and the Preferred Stock, voting together as a single class. Any vacancy in the Board of Directors occurring because of the death, resignation or removal of a director shall be fitted by the vote or written consent of the holders of the class(es) or series entitled to fill such seat as provided in this Section 4.2.74.2.6(b). Any amendment to this Section 4.2.74.2.6(b) shall require the affirmative vote of (i) a majority of the outstanding Preferred Stock and Common Stock voting together as a single class and (ii) a majority of the outstanding Series J Preferred Stock. Any amendment to this Section 4.24.2.6(b) that would eliminate the right of the Series I Preferred Stock to elect one director requires the affirmative vote of the holders of a majority of the outstanding Series I Preferred Stock.
(c) Protective Provisions .
(i) The Corporation shall not, without first obtaining the approval of the holders of at least a majority of the then issued and outstanding shares of Series J Preferred Stock, take any action which (i) changes any of the rights, preferences or privileges of, or adversely affects the rights of, the Series J Preferred Stock including, without limitation, liquidation, redemption, dividend, voting or conversion rights; or (ii) authorizes, creates, reclassifies or issues shares of any class or series of equity securities, including any securities or obligations convertible into or exercisable for such equity securities, ranking senior to or in parity with the Series J Preferred Stock, including without limitation, with respect to any rights, preferences or privileges, including without limitation relating to dividends, liquidation preference, voting and redemption; or (iii) amends or modifies the rights of the holders of any other series of Preferred Stock to confer on the holders of the shares of any such series of Preferred Stock rights, preferences or privileges that are senior to, in parity with or held by the holders of the Series J Preferred Stock, including without limitation, relating to dividends, liquidation preference, voting and redemption.
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(ii) The Corporation shall not, without first obtaining the approval of the holders of at least a majority of the then issued and outstanding shares of Series J Preferred Stock and Series K Preferred Stock, voting together as a single class on an as if converted to Common Stock basis, take any action which (i) changes any of the rights, preferences or privileges of, or adversely affects the rights of, the Series K Preferred Stock including, without limitation, liquidation, redemption, dividend, voting or conversion rights; or (ii) authorizes, creates, reclassifies or issues shares of any class or series of equity securities, including any securities or obligations convertible into or exercisable for such equity securities, ranking senior to or in parity with the Series K Preferred Stock, including without limitation, with respect to any rights, preferences or privileges, including without limitation, relating to dividends, liquidation preference, voting and redemption; or (iii) amends or modifies the rights of the holders of any other series of Preferred Stock to confer on the holders of the shares of any such series of Preferred Stock rights, preferences or privileges that are senior to, in parity with or held by the holders of the Series K Preferred Stock, including without limitation, relating to dividends, liquidation preference, voting and redemption.
(iii) The Corporation shall not, without first obtaining the approval of the holders of not less than a majority of the total number of shares of any remaining series of Preferred Stock (other than Series F Preferred Stock) then outstanding, amend the Corporations Certificate of Incorporation to alter or change any rights, preferences, or privileges of such series of Preferred Stock so as to materially and adversely affect such series of Preferred Stock.
(iv) In addition to the approvals required by clauses (i),(ii) and (iii) of this Section 4.2.6(c), the Corporation shall not, without first obtaining the approval of the holders of at least 51% of the issued and outstanding shares of Preferred Stock, voting together as a single class, or the approval of its Board of Directors, including at least four of the five directors elected solely by the holders of one or more series of Preferred Stock, if the Board of Directors is authorized Under the DGCL to take such action without any stockholder vote, approval or consent, authorize or take any of the following actions:
(A) merge, consolidate, reorganize or enter into a share exchange with any other person or engage in any other transaction in which any person or group of persons shall, immediately after giving effect thereto, become or obtain the right to become the beneficial owner, directly or indirectly, of capital securities of the corporation representing fifty percent (50%) or more of the aggregate voting power represented by all of the Corporations issued and outstanding capital securities;
(B) make any other distributions upon, or redeem, repurchase or otherwise acquire for value, any of the Corporations outstanding equity securities other than (I) conversions of Preferred Stock; (II) purchases at cost from departing employees pursuant to the terms of any stock option or purchase plan or arrangement approved by the Board of Directors (other than those of departing executive officers of the Corporation); (III) redemptions as provided in Section 4.2.5; (IV) distributions upon a Liquidation as provided in Section 4.2.3; and (V) the declaration or payment of dividends (other than cumulative dividends) as contemplated in this Certificate of Incorporation;
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(C) provide for the voluntary liquidation, dissolution, winding up, recapitalization or reorganization of the Company;
(D) amend or waive any provision of the Corporations Certificate of Incorporation or Bylaws;
(E) sell, license, convey or otherwise dispose of or encumber all or substantially all the assets of the Corporation;
(F) materially change the business plan of the Corporation as approved by the Corporations Board of Directors;
(G) change in any material way the nature of the business of the Corporation or the manner in which that business is conducted;
(H) change in any material way the compensation of senior management;
(I) increase expenditures in any year by $1 million or more in the aggregate above the aggregate amount of expenditure set forth in the Corporations annual budget for that year, which budget was approved by the Corporations Board of Directors prior to the beginning of that year;
(J) incur indebtedness for borrowed money in an aggregate amount greater than $500,000; or
(K) amend in any material manner any existing or approves any new joint venture, material license or similar arrangement.
4.2.7. Preemptive Rights . The holders of Preferred Stock shall have preemptive rights as set forth in the Amended and Restated Stockholders Agreement dated as of May 8, 2003, among the Corporation and the Holders identified therein.
4.3. Common Stock .
4.3.1. Dividends . Subject to the rights and preferences applicable to the Preferred Stock outstanding at any time as herein set forth, the holders of shares of Common Stock shall be entitled to receive such dividends, payable in cash or otherwise, as may be declared thereon by the Board of Directors from time to time out of assets of funds of the Corporation legally available therefor; provided, that no dividends shall be declared or paid on any shares of Common Stock until all dividends accrued or declared but unpaid on the Preferred Stock shall have been paid in full; and, provided further, that when and as dividends are declared and paid on shares of Common Stock, the Corporation shall declare and pay at the same time, as provided in Section 4.2.2(b), to each holder of Series F Preferred Stock, Series I Preferred Stock, Series J Preferred Stock and Series K Preferred Stock a dividend equal to the dividend which would have been payable to such holder if the shares of such series of Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.
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4.3.2. Voting . Each holder of Common Stock shall have one vote for each share of Common Stock so held and shall be entitled to vote on all matters submitted to a vote of the stockholders of the Corporation, including, subject to Section 4.2.6(b), the election of directors.
4.3.3. Liquidation . Subject to the rights and preferences applicable to the Preferred Stock outstanding at any time as hereinafter set forth, upon a Liquidation, the holders of shares of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders.
ARTICLE 5
5.1. Notices . All notices to any party required or permitted to be sent pursuant to this Certificate (Notices) shall be contained in a written instrument addressed to such party at such partys address as it appears on the books of the Corporation or such other address as may hereafter be designated in writing by the addressee to the addressor listing all parties and shall be deemed given (a) when delivered in person; (b) on the next business day after receipt confirming good transmission when sent by facsimile transmission; (c) the earlier of (i) the day of delivery or (ii) four (4) business days after being duly sent by first class United States mail, postage prepaid and return receipt requested, or (d) the earlier of (i) the day of delivery or (ii) two (2) business days after being duly sent by United States overnight express mail or recognized express courier service.
ARTICLE 6
6.1. Indemnification . The Corporation shall indemnify and hold harmless each person who at any time is, or shall have been, a director or officer of the Corporation and was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys fees), judgments, fines and amounts paid in settlement incurred in connection with any such action, suit or proceeding, to the maximum extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended. In furtherance of and not in limitation of the foregoing, the Corporation shall advance expenses, including attorneys fees, incurred by a director or officer of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which any such director or officer may be entitled, under any bylaw, agreement, vote of directors or stockholders or otherwise.
6.2. Limitation on Liability . A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (i) for any breach of the Directors duty of loyalty to the
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Corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) under Section 174 of the DGCL; or (iv) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the Effective Date to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
6.3. Modification . Any repeal or modification of this Article 6 by either (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions occurring before such repeal of modification of a person serving as a Director at the time of such repeal or modification.
ARTICLE 7
7.1. Existence . The Corporation is to have perpetual existence.
ARTICLE 8
8.1. Bylaws . Except as otherwise provided by law or this Certificate of Incorporation, the Bylaws of the Corporation may be amended or repealed by the Board of Directors.
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Exhibit 3.2
AMENDED BY LAWS
OF
ACORDA THERAPEUTICS, INC.
a Delaware Corporation
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iii
AMENDED BY LAWS
OF
ACORDA THERAPEUTICS, INC.
The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the Corporation at such location is The Corporation Trust Company.
The board of directors may at any time establish other offices at any place or places where the Corporation is qualified to do business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such designation, stockholders meetings shall be held at the registered office of the Corporation.
The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. At the meeting, directors shall be elected and any other proper business may be transacted.
A special meeting of the stockholders may be called at any time by the (i) board of directors, (ii) the chairman of the board, (iii) the president, (iv) the chief executive officer or (v) one or more stockholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at that meeting.
2.4. NOTICE OF STOCKHOLDERS MEETINGS
All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.6 of these Bylaws not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
2.5. ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER BUSINESS
To be properly brought before an annual meeting or special meeting, nominations for the election of director or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder, such stockholder must have given timely notice and in proper form of his intent to bring such business before such meeting. To be timely, such stockholders notice must be delivered to or mailed and received by the secretary of the Corporation not less than 90 days prior to the meeting; provided, however, that in the event that less than 100 days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper form, a stockholders notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to make the nominations, propose the business, and, as the case may be, the name and address of the person or persons to be nominated or the nature of the business to be proposed;
(ii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice or introduce the business specified in the notice;
(iii) if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder;
(iv) such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the board of directors; and
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(v) if applicable, the consent of each nominee to serve as director of the Corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedure.
2.6. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the Corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting, or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provisions of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question.
2.8. ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Sections 2.12 and 2.14 of these Bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to
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voting rights of fiduciaries, pledgers and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these Bylaws.
2.11. STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of stockholders of a Corporation, or any action that may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the General Corporation Law of Delaware if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written notice and written consent have been given as provided in Section 228 of the General Corporation Law of Delaware.
Notwithstanding the foregoing, effective upon the registration of any class of securities of the Corporation pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the stockholders of the Corporation may not take action by written consent without a meeting but must take any such actions at a duly called annual or special meeting.
2.12. RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to
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corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action.
If the board of directors does not so fix a record date, the fixing of such record date shall be governed by the provisions of Section 213 of the General Corporation Law of Delaware.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the, secretary of the Corporation, but no such proxy shall be voted or acted upon after 3 years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholders name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholders attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware.
2.14. LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least 10 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 the meeting, or, if not so specified, at the place where the meeting is to be held. The stock ledger 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 stockholder who is present. The stock ledger shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list of stockholders or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders and of the number of shares held by each such stockholder.
Meetings of stockholders shall be presided over by the chairman of the board, if any, or in his absence by the president, or in his absence by a vice president, or in the absence of the foregoing persons by a chairman designated by the board of directors, or in the absence of such designation by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as
5
secretary of the meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and conduct of business.
Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.
Unless otherwise provided in the certificate of incorporation, the Board of Directors shall consist of the number thereof to be determined from time to time by resolution of the Board of Directors. No reduction of the authorized number of directors shall have the effect of removing any director before that directors term of office expires.
3.3. ELECTION, QUALIFICATION TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these Bylaws, at each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until the expiration of the term for which they are elected, and until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders meeting called and held in accordance with the Delaware General Corporation Law.
Directors need not be stockholders unless so required by the certificate of incorporation or these Bylaws, wherein other qualifications for directors may be prescribed.
Elections of directors need not be by written ballot.
3.4. RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the Corporation. Subject to Section 3.16 of these Bylaws, Stockholders may remove directors with or without cause. Subject to the following paragraph of this Section 3.4, any vacancy occurring in the board of directors with or without cause may be filled by a majority of the remaining members of the board of directors, although such majority is less than a quorum, or by a plurality of the votes cast at a meeting of stockholders, and each director so elected shall hold office until the expiration of the term of office of the director whom he has replaced.
Unless otherwise provided in the certificate of incorporation or these Bylaws:
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(i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
(ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the Corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable.
3.5. PLACE OF MEETING; MEETINGS BY TELEPHONE
The board of directors of the Corporation may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these Bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be
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held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.
Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.
Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail or telegram, charges prepaid, addressed to each director at that directors address as it is shown on the records of the Corporation. If the notice is mailed, it shall be deposited in the United States mail at least 4 days before the time of the holding of the meeting. If the notice is delivered personally or by telephone or by telegram, it shall be delivered personally or by telephone or to the telegraph company at least 48 hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the Corporation.
At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation.
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these Bylaws.
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3.11. ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
Meetings of the board of directors shall be presided over by the chairman of the board, if any, or in his absence by the chief executive officer, or in their absence by a chairman chosen at the meeting. The secretary shall act as secretary of the meeting, but in his absence the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of any meeting shall determine the order of business and the procedures at the meeting.
3.13. BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these Bylaws, 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 all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.
3.14. FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these Bylaws, the board of directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
3.15. APPROVAL OF LOANS TO OFFICERS
The Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiary, including any officer or employee who is a director of the Corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the Corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in this section contained shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute.
Unless otherwise restricted by statute, by the certificate of incorporation or by these Bylaws, any director or the entire board of directors may be removed, with or without cause, by
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the holders of a majority of the shares then entitled to vote at an election of directors. If at any time a class or series of shares is entitled to elect one or more directors, the provisions of this Article 3.16 shall apply to the vote of that class or series and not to the vote of the outstanding shares as a whole.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such directors term of office.
The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the Corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the Bylaws of the Corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the Corporations property and assets, (iv) recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or (v) amend the Bylaws of the Corporation; and, unless the board resolution establishing the committee, the Bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware.
Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
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4.3. MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these Bylaws, Section 3.5 (place of meetings and meetings by telephone), Section 3.7 (regular meetings), Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11 (adjournment and notice of adjournment), Section 3.12 (conduct of business) and 3.13 (action without a meeting), with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may also be called by resolution of the board of directors and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws.
The officers of the Corporation shall be a chief executive officer, one or more vice presidents, a secretary and a chief financial officer. The Corporation may also have, at the discretion of the board of directors, a chairman of the board, a president, a chief operating officer, one or more executive, senior or assistant vice presidents, assistant secretaries and any such other officers as may be appointed in accordance with the provisions of Section 5.2 of these Bylaws. Any number of offices may be held by the same person.
Except as otherwise provided in this Section 5.2, the officers of the Corporation shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment. The board of directors may appoint, or empower an officer to appoint, such officers and agents of the business as the Corporation may require (whether or not such officer or agent is described in this Article V), each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the board of directors may from time to time determine. Any vacancy occurring in any office of the Corporation shall be filled by the board of directors or may be filled by the officer, if any, who appointed such officer.
5.3. REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors or, in the case of an officer appointed by another officer, by such other officer.
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Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.
The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these Bylaws. If there is no chief executive officer, then the chairman of the board shall also be the chief executive officer of the Corporation and shall have the powers and duties prescribed in Section 5.5 of these Bylaws.
The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and the officers of the Corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a Chairman of the Board at all meetings of the Board of Directors. He or she shall have the general powers and duties of management usually vested in the chief executive officer of a Corporation, including general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.
The Chief Executive Officer shall, without limitation, have the authority to execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.
Subject to such supervisory powers as may be given by these Bylaws or the Board of Directors to the Chairman of the Board or the Chief Executive Officer, if there be such officers, the president shall have general supervision, direction and control of the business and supervision of other officers of the Corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws. In the event a Chief Executive officer shall not be appointed, the President shall have the duties of such office.
In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the chief executive officer and when so acting shall have all the powers of, and be subject to all the restrictions upon, the chief executive officer. The vice presidents shall have such other powers and perform such other duties as from time to time
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may be prescribed for them respectively by the board of directors, these Bylaws, the chief executive officer or the chairman of the board.
The secretary shall keep or cause to be kept, at the principal executive office of the Corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors meetings or committee meetings, the number of shares present or represented at stockholders meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporations transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these Bylaws. He shall keep the seal of the Corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these Bylaws.
The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the Corporation as may be ordered by the board of directors, shall render to the chief executive officer and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these Bylaws.
The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall
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perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe.
5.11. AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the board of directors or the stockholders.
6.1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation. For purposes of this Section 6.1, a director or officer of the Corporation includes any person (i) who is or was a director or officer of the Corporation, (ii) who is or was serving at the request of the Corporation as a director or officer of another Corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a Corporation which was a predecessor Corporation of the Corporation or of another enterprise at the request of such predecessor Corporation.
6.2. INDEMNIFICATION OF OTHERS
The Corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the Corporation. For purposes of this Section 6.2, an employee or agent of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the Corporation, (ii) who is or was serving at the request of the Corporation as an employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a Corporation which was a predecessor Corporation of the Corporation or of another enterprise at the request of such predecessor Corporation.
The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Corporation
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would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1. MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporations stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such persons interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office in Delaware or at its principal place of business.
Any director shall have the right to examine the Corporations stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.
7.3. REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the chief executive officer, any vice president, the chief financial officer, the secretary or assistant secretary of this Corporation, or any other person authorized by the board of directors or the chief executive officer or a vice president, is authorized to vote, represent, and exercise on behalf of this Corporation all rights incident to any and all shares of any other Corporation or Corporations standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
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From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the Corporation, and only the persons so authorized shall sign or endorse those instruments.
8.2. EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these Bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
8.3. STOCK CERTIFICATES; PARTLY PAID-SHARES
The shares of a Corporation shall be represented by certificates, provided that the board of directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
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8.4. SPECIAL DESIGNATION ON CERTIFICATES
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and or rights shall beset forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and or rights.
Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and canceled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
8.6. CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term person includes both a Corporation and a natural person.
The directors of the Corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the Corporations capital stock.
The directors of the Corporation may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
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The fiscal year of the Corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.
The Corporation may adopt a corporate seal, which may be altered at pleasure, and may use the same by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.
Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.
8.11. STOCK TRANSFER AGREEMENTS
The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware.
The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
The original or other Bylaws of the Corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the Corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal Bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal Bylaws.
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If it should be deemed advisable in the judgment of the board of directors of the Corporation that the Corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the Corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the-provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificates becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the Corporation shall be dissolved.
11.1. APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the Corporation is insolvent, to be receivers, of and for the Corporation when:
(i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or
(ii) the business of the Corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the Corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or
(iii) the Corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.
The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the Corporation and not to liquidate its affairs and distribute its assets,
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except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiaries, including any officer or employee who is a Director of the corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing in this Bylaw shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
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Exhibit 3.3
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ACORDA THERAPEUTICS, INC.
The name of the corporation (the Corporation ) is Acorda Therapeutics, Inc. The original certificate of incorporation was filed with the Secretary of State of the State of Delaware on March 17, 1995.
This Amended and Restated Certificate of Incorporation (this Certificate of Incorporation ) was duly adopted by the board of directors and the stockholders of the Corporation in accordance with Sections 141(f), 228, 242 and 245 of the General Corporation Law of the State of Delaware (the DGCL ).
The original Certificate of Incorporation of the Corporation, as amended and restated to date, is hereby further amended and restated to read in full as follows:
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly provided.
Authority hereby is expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by Delaware law. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise provided in this Certificate of Incorporation, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of
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any series of the Preferred Stock authorized by and complying with the conditions of this Certificate of Incorporation, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation.
The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation, which restates, integrates and amends the certificate of incorporation of the Corporation, as amended and restated to date, and which has been duly adopted in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, has been executed by its duly authorized officer this day of , 2005.
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ACORDA THERAPEUTICS, INC. |
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By: |
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Name: Ron Cohen |
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Title: Chief Executive Officer |
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Attest: |
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Jane Wasman |
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Secretary |
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Exhibit 3.4
AMENDED AND RESTATED BYLAWS
OF
ACORDA THERAPEUTICS, INC.
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The stockholders notice to the Secretary shall set forth: (x) as to each proposed nominee (i) such persons name, age, business address and, if known, residence address, (ii) such persons principal occupation or employment, (iii) the class and number of shares of stock of the corporation which are beneficially owned by such person, and (iv) any other information concerning such person that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the Exchange Act ); (y) as to the stockholder giving the notice (i) such stockholders name and address, as they appear on the corporations books, (ii) the class and number of shares of stock of the corporation which are owned, beneficially and of record, by such stockholder, (iii) a description of all arrangements or understandings between such stockholder 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 stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice and (v) a representation whether the stockholder intends or is part of a group which intends (A) to deliver a proxy
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statement and/or form of proxy to holders of at least the percentage of the corporations outstanding capital stock required to elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such nomination; and (z) as to the beneficial owner, if any, on whose behalf the nomination is being made (i) such beneficial owners name and address, (ii) the class and number of shares of stock of the corporation which are beneficially owned by such beneficial owner, (iii) a description of all arrangements or understandings between such beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made and (iv) a representation whether the beneficial owner intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporations outstanding capital stock requirement to elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such nomination. In addition, to be effective, the stockholders notice must be accompanied by the written consent of the proposed nominee to serve as a director if elected. The corporation may require any proposed nominee to furnish such other information as may reasonably be required to determine the eligibility of such proposed nominee to serve as a director of the corporation. A stockholder shall not have complied with this Section 1.10(b) if the stockholder or beneficial owner, if any, on whose behalf the nomination is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholders nominee in compliance with the representations with respect thereto required by this Section 1.10.
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The stockholders notice to the Secretary shall set forth as to each matter the stockholder 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 address, as they appear on the corporations books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of stock of the corporation which are owned, of record and beneficially, by the stockholder and beneficial owner, if any, (iv) a description of all arrangements or understandings between such stockholder or such beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of the stockholder or such beneficial owner, if any, in such business, (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (vi) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the corporations outstanding capital stock required to approve or adopt the proposal and/or (B) otherwise to solicit proxies from stockholders in support of such proposal. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at any annual meeting of stockholders except in accordance with the procedures set forth in this Section 1.11; provided , that any stockholder proposal which complies with Rule 14a-8 of the proxy rules (or any successor provision) promulgated under the Securities Exchange Act of 1934, as amended, and is to be included in the corporations proxy statement for an annual meeting of stockholders shall be deemed to comply with the requirements of this Section 1.11. A stockholder shall not have complied with this Section 1.11(b) if the stockholder
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or beneficial owner, if any, on whose behalf the nomination is made solicited (or is part of a group which solicited) or did not so solicit, as the case may be, proxies in support of such stockholders nominee in compliance with the representations with respect thereto required by this Section 1.11.
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Any officer may be removed at any time, with or without cause, by vote of a majority of the entire number of directors then in office.
Except as the Board of Directors may otherwise determine, no officer who resigns or is removed shall have any right to any compensation as an officer for any period following such officers resignation or removal, or any right to damages on account of such removal, whether such officers compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the corporation.
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Any Assistant Secretary shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Secretary may from time to time prescribe. In the event of the absence, inability or refusal to act of the Secretary, the Assistant Secretary (or if there shall be more than one, the Assistant Secretaries in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Secretary.
In the absence of the Secretary or any Assistant Secretary at any meeting of stockholders or directors, the chairman of the meeting shall designate a temporary secretary to keep a record of the meeting.
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The Assistant Treasurers shall perform such duties and possess such powers as the Board of Directors, the Chief Executive Officer or the Treasurer may from time to time prescribe. In the event of the absence, inability or refusal to act of the Treasurer, the Assistant Treasurer (or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors) shall perform the duties and exercise the powers of the Treasurer.
Each certificate for shares of stock which are subject to any restriction on transfer pursuant to the Certificate of Incorporation, these Bylaws, applicable securities laws or any agreement among any number of stockholders or among such holders and the corporation shall have conspicuously noted on the face or back of the certificate either the full text of the restriction or a statement of the existence of such restriction.
There shall be set forth on the face or back of each certificate representing shares of such class or series of stock of the corporation a statement that the corporation will furnish without charge to each stockholder who so requests a copy of the full text of the powers, designations,
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preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. If no record date is fixed, the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
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These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted by the Board of Directors or by the stockholders as provided in the Certificate of Incorporation.
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Exhibit 4.1
Number
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Shares |
INCORPORATED UNDER THE LAWS |
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CUSIP 00484M 10 6 |
OF THE STATE OF DELAWARE |
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SEE REVERSE FOR CERTAIN DEFINITIONS |
This certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE
COMMON STOCK, PAR VALUE $.001 PER SHARE, OF
Acorda Therapeutics, Inc.
(hereinafter the Corporation), transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:
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[SEAL] |
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PRESIDENT AND CHIEF
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SECRETARY |
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COUNTERSIGNED AND REGISTERED: |
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AMERICAN STOCK TRANSFER & TRUST COMPANY |
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(NEW YORK, NEW YORK) |
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TRANSFER AGENT
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BY |
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AUTHORIZED
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ACORDA THERAPEUTICS, INC.
The Corporation will furnish without charge to each stockholder who so requests a statement of the powers, designations, preferences, and relative, participating, optional or other special rights of each class of stock or series thereof of the Corporation, and the qualifications, limitations or restrictions of such preferences and/or rights.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM |
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as tenants in common |
UNIF GIFT MIN ACT |
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Custodian |
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TEN ENT |
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as tenants by the entireties |
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(Minor) |
JT TEN |
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as joint tenants with right of survivorship and not as tenants in common |
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under Uniform Gifts to Minors Act |
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(State) |
Additional abbreviations may also be used though not in the above list.
Important Notice: When you sign your name to this Assignment Form without filling in the name of your Assignee or Attorney, this stock certificate becomes fully negotiable, similar to a check endorsed in blank. Therefore, to safeguard a signed certificate, it is recommended that you either (i) fill in the name of the new owner in the Assignee blank, or (ii) if you are sending the signed certificate to your bank or broker, fill in the name of the bank or broker in the Attorney blank. Alternatively, instead of using the Assignment Form, you may sign a separate stock power form and then mail the unsigned stock certificate and the signed stock power in separate envelopes. For added protection, use certified or registered mail for a stock certificate.
For value received, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
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Please print or typewrite name
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Shares of the Common Stock |
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represented by the within Certificate, and do hereby irrevocably constitute and appoint |
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Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. |
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Dated |
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NOTICE: The signature to this assignment must correspond with the name as written upon the face of the Certificate, in every particular, without alteration or enlargement, or any change whatever.
Signature(s) Guaranteed:
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THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15
Exhibit 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHTS OF FIRST REFUSAL AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE WARRANTHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
SECOND CLOSING WARRANT
To Purchase Shares of the Series B Preferred Stock of
ACORDA THERAPEUTICS, INC.
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Void after ___________, 20__ |
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[Five years after issuance] |
For value received, Acorda Therapeutics, Inc., a Delaware corporation (the Company) hereby grants to Elan International Services, Ltd., a Bermuda corporation (the Warrantholder), and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase from the Company up to 100,000 fully paid and nonassessable shares of the Companys Series B Preferred Stock (the Series B Preferred). The exercise price will be equal to U.S. $2.00 per share of Series B Preferred (the Exercise Price). The number and Exercise Price of such shares are subject to adjustment as provided in Section 8 hereof.
For purposes of this Warrant, Series B Preferred shall be deemed to include the Common Stock of the Company upon the automatic conversion of all of the outstanding Preferred Stock of the Company in accordance with the provisions of the Companys Certificate of Incorporation.
Except as otherwise provided herein, the term of this Warrant and the right to purchase the Series B Preferred as granted herein will commence on the Second Closing Date, as such term is defined in that certain Preferred Stock, Convertible Note and Warrant Purchase Agreement dated as of January 22, 1997 between the Company and the Warrantholder (the Purchase Agreement), and will expire at 11:59 p.m. on the fifth anniversary of the Second Closing Date.
The purchase rights set forth in this Warrant are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 2 above, by tendering to the Company at its principal office a notice of exercise (the Notice of Exercise), duly completed and executed. Upon receipt of the Notice of Exercise and the payment of the purchase price in accordance with the terms set forth below, the Company will issue to the Warrantholder a certificate for the number of shares of the Series B Preferred purchased and will execute the Notice of Exercise indicating the number of shares that remain subject to future purchases, if any.
The Warrantholder may exercise all or any portion of the outstanding warrants by paying to the Company, by cash or check, an amount equal to the aggregate Exercise Price of the shares being purchased.
During the term of this Warrant, the Company will at all times have authorized and reserved a sufficient number of shares of its Series B Preferred to provide for the exercise of the rights to purchase Series B Preferred as provided for herein and will have authorized and reserved a sufficient number of shares of the Companys Common Stock for issuance upon conversion of the Series B Preferred issuable upon exercise of this Warrant.
No fractional share or scrip representing fractional shares will be issued upon the exercise of the Warrantholders right to purchase the Series B Preferred, but in lieu of such fractional shares, the Company will make a cash payment therefor upon the basis of the Exercise Price then in effect.
This Warrant does not entitle the Warrantholder to any voting right, dividend right or other rights as a stockholder of the Company prior to the exercise of the Warrantholders rights to purchase Series B Preferred as provided for herein.
The Company will maintain a registry showing the name and address of the registered holder of this Warrant. This Warrant may be surrendered for exchange, transfer or exercise, in accordance with its terms, at the principal offices of the Company, and the Company shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.
The Exercise Price and the number of shares of Series B Preferred purchasable hereunder shall be subject to adjustment from time to time in accordance with the following provisions:
Upon any adjustment of the Exercise Price and any increase or decrease in the number of shares of Series B Preferred purchasable upon the exercise of this Warrant, then, and in each such case, the Company, within fifteen (15) days thereafter, shall give written notice thereof to the Warrantholder at the address of the Warrantholder as shown on the books of the Company which notice shall state the Exercise Price as adjusted and the increased or decreased number of shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation of each.
This Warrant may not be transferred or assigned by the Warrantholder without the prior written consent of the Company; provided, however, that no consent of the Company shall
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be required for any transfer or assignment of this Warrant to an affiliate (within the meaning of the Securities Act of 1933, as amended) of the Holder. Any transfer of this Warrant must comply with the requirements of this Section 10, and any assignee or transferee of this Warrant (permitted assignee) shall be required to accept this Warrant subject to all rights and obligations of the Warrantholder as set forth herein. Any securities to be issued upon exercise of this Warrant may not be sold, assigned, transferred, or otherwise disposed of unless the securities are registered under the Act or unless the person seeking to effect such disposition shall have requested and the Company shall have received an opinion of the Companys counsel that the proposed disposition may be effected without registration of such securities under the Act or any applicable state securities laws; provided, however, that any transfers to affiliates of the Warrantholder shall not require such an opinion of the Companys counsel. Unless a registration statement with respect to such shares of Series B Preferred is effective at the time, any shares of Series B Preferred issued upon the exercise of this Warrant shall bear the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
The Warrantholder agrees in connection with a public offering of the Companys securities, upon request of the Company or the underwriters managing any underwritten offering of the Companys securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of this Warrant, of the shares of Series B Preferred issuable upon exercise hereof, or the shares of Common Stock issuable upon conversion thereof, other than to affiliates of the Warrantholder who shall agree to be similarly bound, without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed, in the case of the Companys initial public offering, one hundred eighty (180) days) from the effective date of such registration as may be requested by the underwriters; provided , however , that the officers and directors of the Company who own stock of the Company and a majority-in-interest of the Companys Series A Preferred Stock shall also agree to such restrictions.
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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be executed by its officers thereunto duly authorized.
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Company: |
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ACORDA THERAPEUTICS, INC. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D. |
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President and Chief Executive Officer |
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Warrantholder: |
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ELAN INTERNATIONAL SERVICES, LTD. |
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a Bermuda corporation |
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By: |
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Exhibit 10.1
ACORDA THERAPEUTICS, INC.
1999 EMPLOYEE STOCK OPTION PLAN
The purpose of the Acorda Therapeutics, Inc. 1999 Employee Stock Option Plan (the Plan) is to provide an additional incentive to directors, key employees, independent contractors, agents and consultants of Acorda Therapeutics, Inc. (the Company) and its subsidiaries, to aid in attracting and retaining directors, employees, independent contractors, agents and consultants of outstanding ability, and to align their interests with those of shareholders.
Unless the context clearly indicates otherwise, the following terms, when used in this Plan, shall have the meanings set forth in this Section 2.
otherwise an employee of the Company. For the purposes of any provision of this Plan relating to Incentive Stock Options, the term Employee shall be limited to mean any employee (as that term is defined under Code Section 3401(c)) or officer of the Company or any of its Subsidiaries, but not any person who is merely an independent contractor, agent or consultant of the Company or any of its subsidiaries.
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Subject to adjustment pursuant to Section 9, 17,558,163 shares of Stock shall be reserved for issuance upon the exercise of Stock Options granted pursuant to this Plan. Shares delivered under the Plan may be authorized and unissued shares or issued shares held by the Company in its treasury. If any Stock Options expire or terminate without having been exercised, the shares of Stock covered by such Stock Option shall become available again for the grant of Stock Options hereunder. Similarly, if any Stock Options are surrendered for cash pursuant to the provisions of Section 7, the shares of Stock covered by such Stock Options shall also become available again for the grant of Stock Options hereunder. Shares of Stock covered by Stock Options surrendered for Stock pursuant to Section 7, however, shall not become available again for the grant of Stock Options hereunder.
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par value of the Stock) as the Committee shall determine appropriate to the purposes of the Plan and to the Companys total compensation program.
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on the Granting Date of the Progressive Stock Option, and shall be subject to such other terms and conditions as the Committee may determine.
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or stated in the option agreement; provided, however, that such terms shall conform to requirements contained in any applicable regulations which are issued by any governmental authority.
Except as otherwise provided by the Committee at the time the Stock Option is granted or any amendment thereto, if a Grantee ceases to be an Employee then:
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the expiration date of the Stock Option) (within one year of termination in the case of Incentive Stock Options) to the extent of the number of shares subject to the Stock Option which were purchasable pursuant to its terms at the date of termination;
In the event of any merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure or capitalization affecting the Stock, there shall be an appropriate adjustment made by the Committee in the number and kind of shares that may be granted in the aggregate and to Grantees under the Plan, the number and kind of shares subject to each outstanding Stock Option and Stock Appreciation Right and the option prices.
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The Plan shall become effective as of the date it is approved by the Companys stockholders.
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Exhibit 10.2
AMENDMENT TO
1999 EMPLOYEE STOCK OPTION PLAN
This amendment (this Amendment) dated as of February 24, 2004 amends the 1999 Employee Stock Option Plan (the Stock Option Plan) of Acorda Therapeutics, Inc. (the Company).
W I T N E S S E T H:
WHEREAS , the Company wishes to amend the terms of the Stock Option Plan to provide for the issuance of restricted stock in addition to stock options and stock appreciation rights;
NOW, THEREFORE , the Stock Option Plan is amended as follows:
1. Section 2. Definitions is hereby amended by adding the following definitions:
Award means any Stock Option, Stock Appreciation Right or Restricted Stock.
Participant shall mean a person selected by the Committee to receive an Award under the Plan.
Restricted Period shall mean the period of time selected by the Committee during which shares subject to a Restricted Stock Award may be repurchased by or forfeited to the Company.
Restricted Stock shall mean shares of Common Stock awarded to a Director or Employee under Section 14.
In addition, the definition of Committee is deleted in its entirety and replaced with the following:
Committee shall mean the full Board, Compensation Committee of the Board or such other committee as may be designated by the Board. If and when the Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the Act ), to the extent necessary to comply with Rule 16b-3 under the Act with respect to Option grants to officers and directors, each member of the Committee shall be a non-employee director within the meaning of Rule 16b-3 and, to the extent necessary to exclude Options granted under the Plan from the calculation of the income tax deduction limit under Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code ), each member of the Committee shall be an outside director within the meaning of Code Section 162(m). A majority of the Committee shall constitute a quorum, and acts of the majority of members present at any meeting at which a quorum is present shall be deemed the acts of the Committee. The Committee may also act by instrument signed by all members of the Committee.
2. The following new Section 14 is added:
SECTION 14. RESTRICTED STOCK
(a) The Committee may grant Restricted Stock Awards entitling recipients to acquire shares of Stock, subject to the right of the Company to repurchase all or part of such shares at their purchase price or at another price specified in the Award (or to require forfeiture of such shares if purchased at no cost) from the recipient in the event that conditions specified by the Committee in the applicable Award are not satisfied prior to the end of the applicable Restricted Period or Restricted Periods established by the Committee for such Award. Conditions for repurchase (or forfeiture) may be based on continuing employment or service or achievement of pre-established performance or other goals and objectives.
(b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as permitted by the Committee during the applicable Restricted Period. Shares of Restricted Stock shall be evidenced in such manner as the Committee may determine. Any certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and, unless otherwise determined by the Committee, deposited by the Participant, together with a stock power endorsed in blank, with the Company (or its designee). At the expiration of the Restricted Period, the Company (or such designee) shall deliver such certificates to the Participant or if the Participant has died, to the Participants designated beneficiary.
(c) Restricted Stock shall be issued for no cash consideration or such minimum consideration as may be required by applicable law.
(d) The Committee may at any time accelerate the expiration of the Restricted Period applicable to all, or any particular, outstanding shares of Restricted Stock.
(e) A Restricted Stock Award is subject to adjustment on the same terms set forth under Section 9 of the Plan.
3. Section 4. Administration of the Plan is hereby amended by replacing the reference to Stock Option in subsection (a) with the term Award.
4. Section 11. General Provisions is hereby amended by (i) replacing the reference to Stock Option in subsections (a) and (b) with the term Award and (ii) replacing the reference to Grantee in subsection (b) with the term Participant.
5. Section 12. Amendment and Termination is hereby amended by (i) replacing all references to Stock Option and Stock Options with the term Award and Awards and (ii) replacing all references to Grantee with the term Participant.
6. This Amendment shall be deemed effective immediately upon receipt of stockholder approval of its adoption.
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Exhibit 10.3
AMENDMENT NO. 2 TO
1999 EMPLOYEE STOCK OPTION PLAN
This Amendment No. 2 (this Amendment) dated as of September 18, 2005 amends the 1999 Employee Stock Option Plan, as previously amended as of February 24, 2004 (the Stock Option Plan) of Acorda Therapeutics, Inc. (the Company).
W I T N E S S E T H:
WHEREAS , the Company wishes to amend the terms of the Stock Option Plan to increase the number of shares of common stock, $0.001 par value, of the Company (the Common Stock) subject thereto;
NOW, THEREFORE , the Stock Option Plan is amended as follows:
Subject to adjustment under Section 9 of the Plan, the number of shares of Common Stock reserved for issuance pursuant to Awards made under the Plan shall not exceed 4,136,414 shares of Stock. Shares delivered under the Plan may be authorized and unissued shares or issued shares held by the Company in its treasury. If any Awards expire or terminate without having been exercised, the shares of Stock covered by such Award shall become available again for the grant of Awards hereunder. Similarly, if any Awards are surrendered for cash pursuant to the provisions of Section 7, the shares of Stock covered by such Awards shall also become available again for the grant of Awards hereunder. Shares of Stock covered by Awards surrendered for Stock pursuant to Section 7, however, shall not become available again for the grant of Awards hereunder.
The total number of shares of Stock available for issuance under this Plan, including shares of Stock subject to then outstanding Awards, shall automatically increase on January 1 of each year during the term of this Plan, beginning January 1, 2006, by a number of shares of Stock equal to 4% of the outstanding shares of Stock on that date, unless otherwise determined by the Board.
Exhibit 10.4
SIXTH
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Sixth Amended and Restated Registration Rights Agreement (the Agreement) is made as of March 3,2004, by and among Acorda Therapeutics, Inc., a Delaware corporation (the Company), and each of the persons and entities that are parties to the Prior Agreement (as hereafter defined), each of the Purchasers under the Series K Agreement that becomes a party hereto and each other person or entity that becomes a party hereto pursuant to the terms hereof (all such persons and entities are referred to herein as Purchasers and their names and addresses are set forth on the Schedule of Purchasers attached hereto as it may be amended from time to time).
Recitals
A. In connection with the issuance and sale of shares of its Preferred Stock, the Company has granted, and anticipates that it will continue to grant, registration and other rights to the purchasers of its Preferred Stock or other securities or obligations entitling the holder to acquire directly or indirectly Preferred Stock of the Company on a pari passu basis.
B. The Company desires to amend and restate the Fifth Amended and Restated Registration Rights Agreement dated as of May 8,2003, between the Company and the Purchasers identified therein (the Prior Agreement) to effect certain changes to the rights and obligations of the parties herein in connection with the completion of an equity financing involving the sale of the Companys Series K Preferred Stock pursuant to a Series K Preferred Stock Purchase Agreement dated as of the date hereof among the Company and the Purchasers identified therein (the Series K Agreement).
NOW THEREFORE, in consideration of the foregoing, the parties agree as follows:
1. Certain Definitions . As used in this Agreement, the following terms will have the following respective meanings:
Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Affiliate of a Holder, as used in Section 2(a) and Section 13, includes, but is not limited to (a) a general or limited partner of a Holder, (b) a member of a Holder, (c) an officer, director or manager of a Holder, (d) an equity owner of a Holder, (e) if the Holder is a trust, a successor trust or the beneficiaries of the trust, (f) a company controlling, controlled by or under common control with the Holder, (g) a spouse, child, stepchild, parent, stepparent or sibling of a Holder, by way of gift, (h) a revocable trust for the benefit of the Holder or his immediate family via an inter vivos transfer and assignment.
Commission means the United States Securities and Exchange Commission or any other federal agency at the time administering the Act or the Exchange Act or the Exchange Act.
Conversion Stock means the shares of the Companys Common Stock issuable or issued upon conversion or exercise of Preferred Stock.
Convertible Securities means securities or obligations of the Company entitling the holder to acquire directly or indirectly Preferred Stock pursuant to a stock purchase, warrant, convertible note or related-agreement.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
Holder means the Purchasers holding Registrable Securities or securities convertible, exercisable or exchangeable into Registrable Securities and any person holding such securities to whom the rights under this Agreement have been transferred in accordance with Section 13 hereof.
Initiating Holders means any Holder or Holders who in the aggregate hold at least 60% of the Registrable Securities at the time of the relevant event if an initial public offering of Company securities registered under the Act has not taken place or 30% of the Registrable Securities at any other time.
Notes means any promissory notes issued by the Company that are convertible into or exchangeable for any series of the Preferred Stock or other equity securities of the Company.
Preferred Stock means, collectively, issued and outstanding shares of the Companys Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E-1 Preferred Stock, Series E-2 Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock, Series J Preferred Stock, Series K Preferred Stock and Convertible Securities.
The terms register, registered and registration refer to a registration effected by preparing and filing a registration statement in compliance with the Act, and the declaration or ordering of the effectiveness of such registration statement.
Registrable Securities means (i) the Conversion Stock, (ii) any Common Stock of the Company issued or issuable with respect to the Conversion Stock upon any stock split, stock dividend, recapitalization, or similar event and (iii) any Common Stock delivered to the Holder as full or partial payment in respect of the Notes which are restricted securities within the meaning of Rule 144; provided, however, that shares of Common Stock or other securities shall no longer be treated as Registrable Securities after they have been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, whether in a registered offering, pursuant to Rule 144, or otherwise, if in connection with the sale the restrictive legends required pursuant to Section 2(a) have been removed; and provided, further, that if all Company securities of a Purchaser that would be Registrable Securities but for this provision can be sold without any volume or time restrictions under Rule 144(k) and if the Company removes the restrictive legends required by Section 2(a), then those Company securities shall no longer be Registrable Securities.
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Registration Expenses means all expenses incurred by the Company in complying with Sections 5, 6, and 7 hereof, including, without limitation, all registration, qualification, and filing fees, printing expenses, escrow fees and disbursements of counsel for the Company, blue sky fees and expenses, all accounting fees, including the expense of any special audits incident to or required by such registration, and the reasonable fees and expenses of one counsel for the selling Holders not to exceed $15,000 (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). Registration Expenses will not include expenses of the holders of Registrable Securities to the extent limited or precluded by applicable blue sky laws. Registration Expenses will not include selling commissions, underwriting discounts, other compensation paid to underwriters or other agents or brokers to effect the sale, stock transfer taxes, or special counsel of any Holder or Holders except as provided in the first sentence of this paragraph.
Restricted Securities means the securities of the Company required to bear the legend set forth in Section 2 hereof.
Warrants means any warrants granted by the Company for the purchase of any series of the Preferred Stock.
2. Restrictive Legend. Each certificate representing (i) the Preferred Stock, (ii) the Warrants, (ii) the Conversion Stock, (iv) the Notes, and (v) any other securities issued in respect of the Preferred Stock, the Warrants, or the Conversion Stock or the Notes upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 4 below) be stamped or otherwise imprinted with a legend in substantially the following form (in addition to any legend required under applicable securities laws of any state or foreign jurisdiction), as and if appropriate.
(a) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR, IF REASONABLY REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
(b) THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(c) Each Holder consents to the Companys making a notation on its records and giving instructions to any transfer agent of the Restricted Securities, in order to implement the restrictions on transfer established in this Agreement.
3. Notice of Proposed Transfers .
(a) Each Holder by acceptance of Restricted Securities agrees to comply in all respects with the provisions of this Section 3; provided, however, that the
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restrictions on transfer as set forth herein shall be subject to any superseding agreement that may exist between the Holder and the Company. Prior to any proposed sale, assignment, transfer, or pledge of any Restricted Securities, unless either (i) there is in effect a registration statement under the Act covering the proposed transfer, or (ii) within a reasonable time after sale, assignment, transfer or pledge if made to an Affiliate of a Holder, the Holder thereof gives notice to the Company of such Holders intention to effect such transfer, sale, assignment, or pledge (the Transfer Notice). The Transfer Notice shall describe the manner and circumstances of the proposed transfer, sale, assignment, or pledge in sufficient detail, including (i) the number or amount of the Restricted Securities to be sold or transferred, (ii) the price for which the Holder proposes to sell, transfer, or assign the Restricted Securities, and (iii) the name of the proposed purchaser or transferee. Except for a transfer of Restricted Securities by a Holder to one of its Affiliates, each such notice shall also be accompanied, if requested by the Company and at such Holders expense, by a written opinion of legal counsel reasonably satisfactory to the Company, which opinion shall be addressed to the Company to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Act. The Company agrees that it will not require such opinions of counsel to the Holder for transfers made pursuant to Rule 144, except in unusual circumstances,
(b) Each certificate evidencing the Restricted Securities transferred as provided above (except sales pursuant to a registration statement under the Act) will bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legends set forth in Section 2 above, except that such certificate shall not bear the restrictive legend set forth in Section 2(a) if in the opinion of counsel of such Holder and counsel for the Company such legend is not required in order to establish compliance with any provision of the Act.
4. Removal of Restrictions on Transfer Securities . Any legend referred to in Section 2(a) hereof stamped or imprinted on a certificate evidencing the Restricted Securities, and the stock transfer instructions and record notations with respect to such Restricted Securities will be removed and the Company will issue a certificate without such legend to the Holder of such Restricted Securities if (i) such Restricted Securities are registered under the Act or (ii) such Holder provides the Company with (a) an opinion of counsel (which may be counsel for the Company), reasonably satisfactory to the Company, to the effect that a public sale or transfer of such Restricted Securities may be made without registration under the Act or (b) assurances, which may, at the Companys reasonable discretion, include an opinion of counsel reasonably satisfactory to the Company, that such Restricted Securities can be sold pursuant to an exemption from registration under Section (k) of Rule 144 under the Act.
5. Requested Registration .
(a) Request for Registration . In the event the Company shall receive from Initiating Holders a request that the Company effect any registration, qualification, or compliance under the Act with respect to all or any portion of the Registrable Securities the Company will:
(i) within twenty days of the Companys receipt of such notice, give written notice of the proposed registration, qualification, or compliance to all other Holders; and
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(ii) as soon as practicable, use its best efforts to effect such registration, qualification, or compliance (including without limitation, filing post effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable registrations issued under the Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or such Holders joining in such request as are specified in a written request received by the Company within 20 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification, or compliance pursuant to this Section 5:
(1) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Act; or
(2) if the anticipated aggregate offering price of the Registrable Securities proposed to be registered could not be reasonably determined by the Initiating Holders at the time of their request for registration to be at least $5 million; or
(3) prior to the earlier of (i) [March 1,2005] or (ii) the date six months immediately following the effective date of any registration statement pertaining to the initial public offering of securities of the Company (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan); or
(4) after the Company has effected three such registrations pursuant to this Section 5(a), and such registrations have been declared or ordered effective; or
(5) at any time during which the Company is qualified to use Form S-3 for registration of the Registrable Securities, provided the Company treats the Initiating Holders request as a request for registration pursuant to Section 7 and promptly proceeds to effect such registration; or
(6) if the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, whereby the Companys obligations to use its best efforts to register, qualify or comply under this Section 5(a) shall be deferred for a period of up to 120 days; provided, however, that the Company shall not exercise such right more than once in a twelve month period.
Subject to the foregoing clauses (1) through (6), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as reasonably practicable after receipt of the request or requests of the Initiating Holders.
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(b) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as part of their request made pursuant to Section 5, and the Company shall include such information in the written notice referred to in Section 5(a)(i) above. The right of any Holder to registration pursuant to Section 5 shall be conditioned upon such Holders participation in the underwriting arrangements described by this Section 5(b), and the inclusion of such Holders Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder with respect to such participation and inclusion) to the extent requested shall be limited to the extent provided herein. A Holder may elect to include in such underwriting all or any portion of the Registrable Securities he, she or it holds.
The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with a managing underwriter of recognized national standing selected for such underwriting by the Company and reasonably acceptable to a majority of the Holders proposing to distribute their securities through such underwriting. Notwithstanding any other provision of this Section 5, if the managing underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company will so advise all Holders of Registrable Securities, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all such Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holder; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. No Registrable Securities excluded from the underwriting by reason of the underwriters marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration; provided, however, that if by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company will offer to all other Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used in determining the underwriter limitation in this Section 5(b).
If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company may include securities for its own account if the underwriter so agrees and if the number of Registrable Securities that would otherwise have been included in such registration and underwriting will not thereby be limited.
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6. Company Registration .
(a) Notice of Registration . If at any time or from time to time, the Company shall determine to register any of its securities, either for its own account or the account of any holder of its securities, other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Commission Rule 145 transaction, (iii) a registration pursuant to Section 5 hereof, or (iv) a registration pursuant to Section 7 hereof, the Company will:
(i) Promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder. Such written request may seek the registration of all or any portion of a Holders Registrable Securities.
(b) Underwriting . If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice pursuant to Section 6(a)(i). In such event, the right of any Holder to registration pursuant to this Section 6 shall be conditioned upon such Holders participation in such underwriting and the inclusion of Holders Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 6, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may (subject to the limitation set forth below) limit or exclude from such underwriting the Registrable Securities and other securities of the Holders to be distributed. If the Company is so advised by the managing underwriter, then all securities other than Registrable Securities and the securities proposed to be registered by the Company shall first be excluded from the registration. If additional securities must be eliminated as a consequence of the managing underwriters determination, then the Company shall so advise all Holders distributing their Registrable Securities through such underwriting of such limitation or exclusion and, if applicable, the number of shares of Registrable Securities that the managing underwriter determines may be included in the registration and underwriting shall be allocated among all Holders of Registrable Securities in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders. Notwithstanding the foregoing, in no event shall the amount of securities of the selling Holders included in the offering be reduced below thirty percent (30%) of the total amount of securities included in such offering, unless such offering is the initial public offering of the Companys securities, in which case the selling Holders may be excluded entirely if the underwriters make the determination described above and no other stockholders securities are included in such initial public offering. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or holder to the nearest 100 shares.
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If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. If by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by other Holders may be included in such registration (up to the maximum of any limitation imposed by the underwriters), then the Company will offer to all other Holders who have included Registrable Securities in the registration the right to include additional Registrable Securities in the same proportion used in determining the underwriter limitation in this Section 6(b).
(c) Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration by it under this Section 6 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.
7. Registration on Form S-3 .
(a) Subject to the remainder of this Section 7, and unless Rule 144 is available for effecting a proposed transfer of all of the Registrable Securities of a Holder and such transfer would result in the removal of the restrictive legend required by Section 2(a) hereof, in the event that (i) the Company receives from any Holder or Holders a written request that the Company file a registration statement on Form S-3 (or any successor form to Form S-3), or any similar short form registration statement (collectively, Form S-3), for a public offering of Registrable Securities, the reasonably anticipated aggregate price to the public of which, net of underwriting discounts and commissions, would exceed $2 million and (ii) the Company is a registrant entitled to use Form S-3 to register the Registrable Securities for such an offering, the Company will promptly give written notice of the proposed registration to all other Holders. As soon as reasonably practicable thereafter, the Company will use its diligent best efforts to cause all Registrable Securities to be registered as may be so requested for the offering on such form and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within (20) days after receipt of such written notice from the Company. The provisions of Section 5(b) shall be applicable to each registration initiated under this Section 7.
(b) Notwithstanding the foregoing, the Company will not be obligated to take any action pursuant to this Section 7(a): (i) in any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effectuating such registration, qualification, or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Act; (ii) if the Company has previously effected two registrations pursuant to Section 7(a) whose effective dates were within the twelve month period whose last day is the date the Company receives the request; and (iii) if the Company shall furnish to such Holder a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors, it would be seriously detrimental to the Company or its stockholders for registration statements to be filed in the near future or for any disclosure to be made that, in the opinion of the Board of Directors, duly advised by counsel, is required to be made in connection with the sale of Registrable Securities
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pursuant to such registration, whereby the Companys obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed 120 days from the receipt of the request to file such registration by such Holder; provided however, that the Company shall not exercise such right more than once in any twelve month period.
8. Expenses of Registration . All Registration Expenses incurred in connection with the registrations pursuant to Sections 5, 6 and 7 shall be borne by the Company.
9. Registration Procedures . Whenever required under this Agreement to effect the registration of any Registrable Securities, the Company will:
(a) Prepare and promptly file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become and remain effective for the greater of (i) one hundred twenty (120) days or (ii) until the distribution described in the registration statement has been completed;
(b) Prepare and file with the Commission such amendments and supplements to such registration statements and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement;
(c) At least two business days before filing a registration statement or prospectus including Registrable Securities and at least two business days before filing any amendments or supplements thereto, furnish to the counsel of the Holders copies of all documents proposed to be filed for that counsels review and approval, which approval shall not be unreasonably withheld or delayed;
(d) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such Holders and underwriters may reasonably request in order to facilitate the public offering of such securities;
(e) Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Agreement, on the date that such Registrable Securities are delivered to the underwriters for the sale in connection with a registration pursuant to this Agreement, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent accountants of the Company, in form and substance as is customarily given by independent accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities;
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(f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting and other agreements, in usual and customary form, with the managing underwriter of such offering and take all other actions in connection with those agreements reasonably necessary to effect the offer and sale of the Registrable Securities. Each Holder participating in such underwriting shall also enter into and perform its obligations under such underwriting agreement;
(g) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, or any document included therein by reference includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and prepare a supplement or amendment to the prospectus or any such document incorporated therein by reference so that thereafter the prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(h) Cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any required filings with the National Association of Securities Dealers, Inc.;
(i) Cause such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or each inter dealer quotation system on which similar securities issued by the Company are then listed or quoted;
(j) Provide an institutional transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(k) Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;
(l) Subject to reasonable confidentiality agreements, make available for inspection during business hours on reasonable advance notice by any underwriter participating in any disposition pursuant to a registration statement, and any attorney, accountant or other agent of such underwriter (collectively, the Inspectors), financial records, pertinent corporate documents and properties of the Company (collectively, the Records) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Companys officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such registration statement. Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential
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shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a material misstatement or omission in the registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Holder selling Registrable Securities further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give written notice to the Company, and allow the Company, at the Companys expense, to undertake appropriate action to prevent disclosure of the Records it deemed confidential. Each Holder of such Registrable Securities further agrees that information obtained by it as a result of such inspections which is deemed confidential by the Company shall not be used by it, and it shall cause each of its Inspectors not to use such confidential information as the basis for any market transactions in securities of the Company or for any purpose other than any due diligence review with respect to decisions regarding such Holders investment in the Registrable Shares, unless and until such information is made generally available to the public; and
(m) Notify the Holders and the managing underwriters, if any, promptly, and (if requested by any such Person) confirm such advice in writing, (i) when the registration statement, the prospectus or any prospectus supplement or post effective amendment, has been filed, and, with respect to the registration statement or any post effective amendment, when the same has become effective, (ii) of the issuance by the Commission of any stop order suspending or threatening to suspend the effectiveness of a registration statement or of any order preventing or suspending the use of any preliminary prospectus or the initiation of any proceedings for that purpose and the Company shall promptly use its best efforts to prevent the issuance of any stop order or to obtain a withdrawal of such stop order should the order be issued and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of a registration statement of any of the Registrable Securities for offer or sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose.
10. Indemnification . In the event any Registrable Securities are included in a registration statement filed pursuant to this Agreement.
(a) To the extent permitted by law, the Company will indemnify each Holder, each of its officers, directors, and partners, and each person controlling such Holder within the meaning of Section 15 of the Act, with respect to which registration, qualification, or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Act, against all expenses, claims, losses, damages, or liabilities (whether joint or several and including actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular, or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Act, the Exchange Act or any federal or state securities law or regulation applicable to the Company in connection with any such registration, qualification, or
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compliance, and the Company will reimburse each such Holder, each of its officers, directors, partners, each person controlling such Holder, each such underwriter and each person who controls such underwriter, for any legal and any other expenses reasonably incurred in connection with the investigating, preparing, or defending any such claim, loss, damage, liability, or action; provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based solely on any untrue statement or omission or alleged untrue statement or omission, made solely in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person, or underwriter and stated to be specifically for use therein; and provided further, that the Company will not be liable to any underwriter or any person who controls such underwriter for any claim, loss, damage, liability or expense that arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission made in a preliminary prospectus on file with the Securities and Exchange Commission at the time the Registration Statement becomes effective or in the amended prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) (the Final Prospectus) if a copy of the Final Prospectus was not furnished to the person asserting the claim, loss, damage, liability or expense at or prior to the time such action is required by the Act.
(b) To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification, or compliance is being effected, and each other Company stockholder whose securities are included in the securities as to which such registration, qualification or compliance is being effected (Other Stockholder) indemnify the Company, each of its directors and officers, each underwriter, if any, of the Companys securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Act, and each other such Holder and Other Stockholder, each of its officers, directors, and partners and each person controlling such Holder and Other Stockholder within the meaning of Section 15 of the Act, against all claims, losses, damages and liabilities (whether joint or several and including actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such other Holders, such Other Stockholders, such directors, officers, persons, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular, or other document in reliance upon and conformity with written information furnished to the Company by an instrument duly executed by such Holder or such Other Stockholder and stated to be specifically for use therein; provided, however, that the indemnity agreement contained in this subsection 10(b) shall not apply to amounts paid in settlement of any such claim, loss, damage, liability or action if such settlement is effected without the consent of the Holder or the Other Stockholder, which consent shall not be unreasonably withheld; and provided further, that, in no event shall any indemnity under this subsection 10(b) exceed the net proceeds (after deducting any discounts or commissions received by any underwriter in connection with such registration) from the offering received by such Holder or such Other Stockholder; and provided further, that any such Holder or such Other
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Stockholder will not be liable to any underwriter or any person who controls such underwriter for any claim, loss, damage, liability or expense that arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission made in the Final Prospectus if a copy of the Final Prospectus was not furnished to the person asserting the claim, loss, damage, liability or expense at or prior to the time such action is required by the Act.
(c) Each party entitled to indemnification under this Section 10 (the Indemnified Party) shall give notice to the party required to provide indemnification (the Indemnifying Party) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such partys expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement except to the extent, but only to the extent, that the failure to give such notice is materially prejudicial to an Indemnifying Partys ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or separate and different defenses but shall bear the expense of such defense nevertheless. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 10 is unavailable to or unenforceable by the Indemnified Party in respect of any losses, claims, damages, liabilities or judgments referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities and judgments in such proportions as is appropriate to reflect the relative fault of the Indemnified Party in connection with the actions or inactions which resulted in such losses, claims, damages, liabilities and judgments, as well as any other relevant equitable considerations (including the relative fault and indemnification or contribution obligations of other relevant parties). The relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party, and by such partys relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Indemnified Persons agree that it would not be just and equitable if contribution pursuant to this Section 10(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. In no event shall any Holder or Other Stockholder be liable for contribution pursuant to this Section 10(d) to the extent the aggregate payments made by such Holder or Other Stockholder pursuant to Section 10(b) and this Section 10(d) exceed the
13
net proceeds (after deducting any discounts or commissions received by an underwriter in connection with such registration) from the offering received by such Holder or Other Stockholder.
(e) The obligations of the Company and the Holders under this Section 10 shall survive the completion of any offering of Registrable Securities in a registration statement pursuant to this Agreement.
11. Information by Holder . The Holder or Holders of Registrable Securities included in any registration shall furnish to the Company such information regarding such Holder or Holders, the Registrable Securities held by them, and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification, or compliance referred to in this Agreement.
12. Rule 144 Reporting . With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, after such time as a public market exists for the Common Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are understood and defined Rule 144 under the Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Act or the Exchange Act.
(b) File with the Commission in a timely manner all reports and other documents required of the Company under the Act and the Exchange Act; and
(c) So long as a Holder owns any Restricted Securities, to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.
13. Transfer of Registration Rights . The rights to cause the Company to register securities granted to Holders under Sections 5, 6, and 7 may be assigned to a transferee or assignee in connection with any transfer or assignment of Registrable Securities by a Holder of not less than 100,000 shares of Registrable Securities (subject to the limitations of Section 3), or to any transferee or assignee who is an affiliate or a constituent partner of a Holder or the estate of such constituent partner, provided that such transfer may otherwise be effected in accordance with applicable securities laws, and notice of such transfer is provided promptly to the Company.
14. Market Standoff Agreement . Each Holder agrees in connection with the Companys initial public offering of securities, upon request of the Company or the underwriters managing such offering of the Companys securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other
14
than those Registrable Securities included in the registration and other than transactions with affiliates of the Holder who shall agree to be similarly bound) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed, in any event, one hundred eighty (180) days) from the effective date of such registration as may be requested by the underwriters; provided, however, that the Holders shall have no such obligation under this paragraph 14 unless the officers and directors and all holders of at least one percent (1 %) of the Companys issued and outstanding capital stock shall also agree to such restrictions.
15. Limitations on Registration of Resales of Securities . From and after the date of this Agreement, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder either (i) the right to require the Company to initiate any registration of any securities of the Company or (ii) the right to have its securities included in a registration by the Company, the Holders pursuant to this Agreement or any other person or entity if such right would permit the securities held by such holder or perspective holder to be registered before all Registrable Securities that have been requested to be included are included. The Companys obligations set forth in the preceding sentence shall be for a period of four years (plus the aggregate number of days that the Company has delayed any registrations pursuant to its rights under Section 5(a)(6)) following the effective date of the initial public offering of the Companys Common Stock registered under the Securities Act. This Section 15 shall not limit the right of the Company to enter into any agreements with any holder or prospective holder of any securities of the Company giving such holder or prospective holder the right to require the Company, upon any registration of any of its securities (except on initial public offering), to include, among the securities which the Company is then registering, securities owned by such holder so long as they are subject to all cutback and priority limitations of this Agreement.
16. Notices, etc . All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given upon delivery to the party to be notified in person or by courier service or five (5) days after deposit with the United States mail, by registered or certified mail, postage prepaid, addressed (a) if to a Holder of any Registrable Securities, to its address set forth on the Schedule of Purchasers attached hereto or such address as such holder shall have furnished the Company in writing, or (b) if to the Company, to:
Acorda Therapeutics, Inc.
15 Skyline Drive
Hawthorne, NY 10532
Attn: Chief Financial Officer
or at such other address as the Company shall have furnished to the Holders in writing.
17. Amendment . Any provision of this Agreement may be amended, waived or modified upon the written consent of (i) the Company and (ii) holders of sixty percent or more of the outstanding shares of Registrable Securities. Any Holder may waive any of its rights or the Companys obligations hereunder without obtaining the consent of any other person.
15
18. Suppression of Earlier Agreement . This Agreement shall supersede in its entirety the Prior Agreement. This agreement shall be effective simultaneous with the closing of the initial sale of Series K Preferred Stock by the Company, provided at such time Holders that hold sufficient shares of Preferred Stock and shares of one or more series of Preferred Stock sufficient to amend the Prior Agreement shall have executed and delivered a signed counterpart of this Agreement.
19. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument.
20 . Governing Law . This Agreement shall be governed by the laws of the State of Delaware.
21. Regulated Financial Institutions Compliance Obligations . Nothing in this agreement shall diminish the continuing obligations of any financial institution to comply with applicable requirements of law that it maintain responsibility for the disposition of, and control over its admitted assets, investments and property, including (without limiting the generality of the foregoing) the provisions of Section 1l4l(b) of the New York Insurance Law, as amended, and as hereinafter from time to time in effect.
22. Listing . If the Common Stock is listed for trading on any national securities exchange, that listing shall include all Registrable Securities of the Holders (to the extent permitted by the rules of the exchange).
23. Severability . Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, that provision will be ineffective only to the extent of the prohibition or invalidity, without invalidating the remainder of this Agreement.
24. Specific Performance . Each of the parties agrees that damages for a breach of or default under this Agreement would be inadequate and that in addition to all other remedies available at law or in equity the parties and their successors and assigns shall be entitled to specific performance on injunctive relief, or both, in the event of a breach or threatened breach of this Agreement.
25. Validity of Provisions . Should any part of this Agreement for any reason be declared by any court of competent jurisdiction to be invalid, that decision shall not affect the validity of the remaining portion, which shall continue in full force and effect as if this Agreement had been executed with the invalid portion eliminated, it being the intent of the parties that they would have executed the remaining portion of the Agreement without including any part or portion that may for any reason be declared invalid.
26. Waiver of Breach . Neither any waiver of any breach of, nor any failure to enforce any term or condition of, this Agreement shall operate as a waiver of any other breach of any term or condition, nor constitute nor be deemed a waiver or release of any other rights, in law or at equity, or claims that any party may have against any other party for anything arising
16
out of, connected with, or based upon this Agreement. No waiver shall be enforceable against any party hereto unless set forth in a written instrument or agreement signed by that party. No waiver shall be deemed to occur as a result of the failure of any party to enforce any term or condition of this Agreement.
17
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
/s/ Ron Cohen |
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Ron Cohen, M.D., President and CEO |
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Holders |
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(Signatory) |
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(Print Name of Signatory) |
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(Title of Signatory) |
18
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
/s/ Ron Cohen |
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Ron Cohen, M.D., President and CEO |
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Holders |
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EASTON HUNT CAPITAL PARTNERS, L.P. |
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(Print Name of Holder) |
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/s/ Richard P. Schneider |
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(Signatory) |
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RICHARD P. SCHNEIDER |
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(Print Name of Signatory) |
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VICE PRESIDENT &
SECRETARY,
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(Title of Signatory) |
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IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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EASTON HUNT NEW YORK, LP |
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(Print Name of Holder) |
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/s/ Richard P. Schneider |
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(Signatory) |
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RICHARD P. SCHNEIDER |
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(Print Name of Signatory) |
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VICE PRESIDENT
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(Title of Signatory) |
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out of, connected with, or based upon this Agreement. No waiver shall be enforceable against any party hereto unless set forth in a written instrument or agreement signed by that party. No waiver shall be deemed to occur as a result of the failure of any party to enforce any term or condition of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Cross Atlantic Partners IV |
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/s/ Sandra Panem |
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(Signatory) |
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Sandra Panem |
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Partner |
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(Title of Signatory) |
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out of, connected with, or based upon this Agreement. No waiver shall be enforceable against any party hereto unless set forth in a written instrument or agreement signed by that party. No waiver shall be deemed to occur as a result of the failure of any party to enforce any term or condition of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Cross Atlantic Partners
for
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(Print Name of Holder) |
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/s/ Sandra Panem |
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(Signatory) |
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Sandra Panem |
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(Print Name of Signatory) |
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Investment Officer |
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(Title of Signatory) |
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IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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TVM V Life Science Ventures GmbH & Co. KG |
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(Print Name of Holder) |
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/s/ Gert Gaspritz /s/ Mark G. Cipriano |
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(Signatory) |
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Gert Gaspritz / Mark G. Cipriano |
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MANAGING LIMITED PARTNERS |
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(Title of Signatory) |
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IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Integra Ventures III, L.P., SBIC |
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By |
IV Technologies, LLC General Partner |
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(Print Name of Holder) |
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/s/ Joseph K. Piper |
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(Signatory) |
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Joseph K. Piper |
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Managing Director |
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(Title of Signatory) |
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IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Jennison Health Sciences Fund, a series of the Jennison Sector Funds, Inc. (the Fund) |
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(Print Name of Holder) |
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/s/ David Chan |
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(Signatory) |
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Jennison Associates LLC
(Jennison), as
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(Print Name of Signatory) |
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Executive Vice President of Jennison and portfolio Manager of the Fund |
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(Title of Signatory) |
25
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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NIF Ventures Co., Ltd, |
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(Print Name of Holder) |
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/s/ Nobuo Suzuki |
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(Signatory) |
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Nobuo Suzuki |
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(Print Name of Signatory) |
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Executive Officer |
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(Title of Signatory) |
26
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Investment Enterprise
Partnership
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(Print Name of Holder) |
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/s/ Shinichiro Hakuta |
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(Signatory) |
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Shinichiro Hakuta |
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(Print Name of Signatory) |
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General Manager |
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(Title of Signatory) |
27
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Grand Cathay Venture Capital Co., Ltd. |
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(Print Name of Holder) |
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/s/ Edward Chang |
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(Signatory) |
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Edward Chang |
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(Print Name of Signatory) |
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President |
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(Title of Signatory) |
28
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Prudence Venture Investment Crop. |
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(Print Name of Holder) |
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/s/ Jessica Wu |
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(Signatory) |
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Jessica Wu |
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(Print Name of Signatory) |
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President |
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(Title of Signatory) |
29
IN WITNESS WHEREOF, the undersigned have executed this Sixth Amended and Restated Registration Rights Agreement as of the date first set forth above.
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Company |
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Acorda Therapeutics, Inc. |
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a Delaware corporation |
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By: |
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Ron Cohen, M.D., President and CEO |
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Holders |
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Pan-Pacific Venture Capital Co., Ltd. |
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(Print Name of Holder) |
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/s/ David Y. S. Chao |
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(Signatory) |
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David Y. S. Chao |
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(Print Name of Signatory) |
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President |
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(Title of Signatory) |
30
SCHEDULE OF PURCHASERS
Dated as of March 2, 2004
Name and Address of Purchaser |
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Number of
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Purchase Price |
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Easton Hunt Capital Partners, L.P. |
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641 Lexington Avenue, 21st Floor |
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New York, NY 10022 |
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Attn: John H. Friedman |
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100,000 |
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$ |
750,000.00 |
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Easton Hunt New York, L.P. |
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641 Lexington Avenue, 21 st Floor |
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New York, NY 10022 |
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Attn: John H. Friedman |
|
100,000 |
|
$ |
750,000.00 |
|
|
|
|
|
|
|
|
Cross Atlantic Partners IV, K/S |
|
|
|
|
|
|
c/o Cross Atlantic Partners, Inc. |
|
|
|
|
|
|
55 Madison Avenue, 7 th Floor |
|
|
|
|
|
|
New York, NY 10022 |
|
|
|
|
|
|
Attn: John L. Cassis |
|
55,574 |
|
416,805.00 |
|
|
|
|
|
|
|
|
|
Nordea Bank Danmark A/S |
|
|
|
|
|
|
c/o Cross Atlantic Partners, Inc. |
|
|
|
|
|
|
551 Madison Avenue, 7th Floor |
|
|
|
|
|
|
New York, NY 10022 |
|
11,093 |
|
83,197.50 |
|
|
|
|
|
|
|
|
|
TVM V Life Science Ventures GmbH & Co. KG. |
|
|
|
|
|
|
c/o TVM Techno Venture Management Gmbh & Co. KG |
|
|
|
|
|
|
Maximillanstrasse 35 |
|
|
|
|
|
|
Entrance C |
|
|
|
|
|
|
80539 Munich, Germany |
|
66,666 |
|
$ |
499,995.00 |
|
|
|
|
|
|
|
|
Integra Ventures III, L.P., SBIC |
|
|
|
|
|
|
300 E. Pine |
|
|
|
|
|
|
Seattle, WA 98122 |
|
|
|
|
|
|
Attn: Tim Black |
|
133,333 |
|
$ |
999,997.50 |
|
|
|
|
|
|
|
|
Jennison Health Sciences Fund |
|
|
|
|
|
|
Jennison Sector Funds, Inc. |
|
|
|
|
|
|
c/o Jennison Associates, LLC |
|
|
|
|
|
|
466 Lexington Avenue, 18 th Floor |
|
|
|
|
|
|
New York, NY 10017 |
|
|
|
|
|
|
Attn: David Chan, CFA |
|
533,333 |
|
$ |
3,999,997.50 |
|
31
Name and Address of Purchaser |
|
Number of
|
|
Purchase Price |
|
|
|
|
|
|
|
|
|
NIF Ventures Co, Ltd. |
|
|
|
|
|
|
1-2-1, Kyobashi, Chuo-ku |
|
|
|
|
|
|
Tokyo, 104-0031, Japan |
|
|
|
|
|
|
Attn: Chika Yoshinaga, MD |
|
53,333 |
|
$ |
399,997.50 |
|
|
|
|
|
|
|
|
Investment Enterprise Partnership NIF 21-ONE (1) |
|
|
|
|
|
|
c/o NIF Ventures Co, Ltd. |
|
|
|
|
|
|
1-2-1, Kyobashi, Chuo-ku |
|
|
|
|
|
|
Tokyo, 104-0031, Japan |
|
|
|
|
|
|
Attn: Chika Yoshinaga, MD |
|
213,333 |
|
$ |
1,599,997.50 |
|
|
|
|
|
|
|
|
Grand Cathay Venture Capital Co., Ltd. |
|
|
|
|
|
|
c/o CIDC Consultants, Inc. |
|
|
|
|
|
|
Prudence Capital |
|
|
|
|
|
|
Taipei, Taiwan |
|
|
|
|
|
|
Attn: Ching-chih Lai |
|
93,330 |
|
$ |
699,980.50 |
|
|
|
|
|
|
|
|
Prudence Venture Investment |
|
|
|
|
|
|
c/o CIDC Consultants, Inc. |
|
|
|
|
|
|
Prudence Capital |
|
|
|
|
|
|
Taipei, Taiwan |
|
|
|
|
|
|
Attn: Ching-chih Lai |
|
66,666 |
|
$ |
499,995.00 |
|
|
|
|
|
|
|
|
Pan-Pacific Venture Capital Co., Ltd. |
|
|
|
|
|
|
Uni-Pac Management Company |
|
|
|
|
|
|
PVCC Fund I & II |
|
|
|
|
|
|
6F, No. 21, Lane 120, Sec. 1 Neihu Rd. |
|
|
|
|
|
|
Taipei, 144, Taiwan, R.O.C. |
|
|
|
|
|
|
Attn: David Y.S. Chao |
|
106,666 |
|
$ |
799,995.00 |
|
|
|
|
|
|
|
|
TOTAL |
|
1,533,327 |
|
$ |
11,499,958.00 |
|
32
Exhibit 10.5
ACORDA
Therapeutics
August 11, 2002
Dr. Ron Cohen
145 West 58
th
Street
New York, NY 10019
Dear Ron:
We are delighted to present this letter agreement, setting out the terms of your continued employment with Acorda Therapeutics, Inc. (the Company) as President, Director and Chief Executive Officer. If these terms are acceptable, please sign and date the copy of this letter provided herewith and return it to me at your first convenience. If you accept the terms offered herein, this Agreement shall be deemed to be effective as of January 1, 2002 (the Effective Date).
1. Employment.
You will be employed by the Company, as President and Chief Executive Officer. As President and Chief Executive Officer you will have overall responsibility for all aspects of the Companys business. You will report directly to the Board of the Directors of the Company (the Board). You will also serve as a member of the Board.
2. Base Salary.
In consideration for your services under this Agreement, you shall be paid an annual base salary of Two Hundred and Eighty Thousand Dollars ($280,000), to be paid in accordance with the Companys standard payroll practices. Your base salary shall be reviewed annually by the Board and any increase to your base salary shall be determined by the Board based on your performance and the Companys overall performance.
3. Annual Bonus.
You shall be eligible to receive an annual bonus in an amount determined by the Board in its sole discretion based on your performance.
4. Benefits; Perquisites; Reimbursement of Expenses.
In addition to those payments set forth above, you shall be entitled to the following benefits and payments:
5. Stock Options.
You shall be eligible to receive annual performance-based stock option grants to purchase shares of the Companys common stock. The number of annual options granted shall be determined by the Board, based on the achievement of individual performance objectives and the Companys achievement of its goals and objectives. All such options shall be granted pursuant to and in accordance with the terms of the Acorda Therapeutics, Inc. 1999 Employee Stock Option Plan and/or any additional or replacement plan adopted by the Board (the Plan(s)) except as such terms may be specifically modified herein. Unless otherwise provided for in any option agreement, all options granted to you shall vest in 16 equal quarterly installments, beginning with the first day of the quarter next following the date the option is granted. Unless otherwise limited by IRS rules governing the issuance of incentive options to principal stockholders of the Company, all options shall be exercisable for 10 years following the date of grant. You shall be eligible to exercise all options granted on a cashless basis, and otherwise in accordance with the terms of the Plan(s).
6. Term; Termination.
2
For these purposes, you shall be considered to be Disabled if you are unable to perform the substantial functions of your position for 180 consecutive days or more in a 12 month period, unless a greater period is required by law. A determination of disability shall be made jointly by a physician of your choice and a physician of the Companys choice. If both physicians can not agree on whether you are Disabled, a third physician chosen by the first two shall make the final and binding determination.
3
4
7. Change in Control.
5
8. Confidentiality/Noncompetition.
6
7
9. Miscellaneous Provisions.
8
If the terms of this Agreement are acceptable to you please sign where indicated below. It is understood and acknowledged that a fax signature will be considered to be valid as an original.
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Very truly yours, |
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Acorda Therapeutics, Inc. |
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By: |
/s/ Mark Pinney |
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Its: |
CFO |
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Agreed to and accepted: |
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/s/ Ron Cohen |
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Dr. Ron Cohen |
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Date: |
8/12/02 |
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9
Exhibit 10.6
ACØRDA
THERAPEUTICS
September 26, 2005
Dr. Ron Cohen
246 Harriman Road
Irvington, NY 10533
Re: Amendment to August 11, 2002 Employment Agreement
Dear Ron:
This letter serves as an amendment to your employment letter, dated August 11, 2002, with Acorda Therapeutics, Inc. (the Agreement), in accordance with paragraph 9(b) of the Agreement. Specifically, the Agreement is amended as follows, effective September 26, 2005:
1. Base Salary. Paragraph 2 of the Agreement is amended so that your base salary is Three Hundred Five Thousand Dollars ($305,000) instead of Two Hundred Eighty Thousand Dollars ($280,000).
2. Equity Compensation. Paragraph 5 of the Agreement is amended so that your equity compensation may be awarded in the form of stock options, stock appreciation rights, and/or restricted stock, rather than only in the form of stock options. In addition, paragraphs 6(b)(iii), 6(c)(iv), 6(d), 7(a), and 7(b)(iv) of the Agreement are amended so that all references to the vesting or acceleration of stock options shall include the vesting or acceleration (or the removal of all restrictions on) stock appreciation rights and restricted stock.
3. Termination of Your Employment by the Company Without Cause or Voluntary Termination by You With Good Reason. Paragraph 6(c)(i)-(iii) of the Agreement is amended to read in its entirety as follows:
Sincerely,
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Acorda Therapeutics, Inc. |
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By: |
/s/ David Lawrence |
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Name: |
David Lawrence |
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Title: |
Chief Financial Officer |
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Agreed to and accepted: |
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/s/ Ron Cohen |
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Ron Cohen |
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Date: September 26, 2005 |
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Exhibit 10.7
ACØRDA
THERAPEUTICS
VIA FACSIMILE
November 30, 2004
Mr. Mark R. E. Pinney
42 West 15th Street #7
New York, NY 10011
Dear Mark:
This letter will confirm the terms of your future compensation from Acorda Therapeutics, Inc. (the Company) as recently approved by the Compensation Committee of the Companys Board of Directors and ratified by the Board.
In consideration of your years of service and continuing service to the Company, the Company has agreed to provide to you an extension until 90 days after you cease to be either a Director of or a general advisor to the Company (with such advisor relationship to be incorporated into an advisory agreement with the Company for a period of at least 12 months in the event that you cease to be a Director) of: (1) your right to exercise Employee Stock Options that were granted to you and have vested on or prior to October 31, 2004 and (2) your Employee Restricted Share Awards that were granted to you and have vested on or prior to October 31, 2004. In addition, while you remain a Director or if you enter into an advisory agreement with the Company for specified services, you shall receive the continued vesting of some or all of the Employee Restricted Share Awards that were granted to you prior to October 31, 2004 or other suitable consideration to be agreed upon and approved by the Compensation Committee and Board of Directors.
If you are in agreement, please sign and date the copy of this letter provided herewith and return it to me at you first convenience.
Very truly yours,
Acorda Therapeutics, Inc.:
By: /s/ Ron Cohen |
|
Ron Cohen |
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President and CEO |
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|
|
Agreed to and accepted: |
|
|
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/s/ Mark Pinney |
|
Mark Pinney |
Exhibit 10.8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
EXECUTION COPY
Date: September 2003
ELAN CORPORATION, PLC.
AND
ACORDA THERAPEUTICS, INC.
AMENDED AND RESTATED LICENSE AGREEMENT
INDEX
|
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|
|
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THIS AMENDED AND RESTATED LICENSE AGREEMENT is made as of the day of September 2003
BETWEEN:
(1) Elan Corporation, plc. , a public limited company incorporated under the laws of Ireland, and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland ( Elan ); and
(2) Acorda Therapeutics, Inc. , a corporation organized under the laws of the State of Delaware and having its principal office at 15 Skyline Drive, Hawthorne, New York 10532, United States of America ( Acorda ).
RECITALS:
(A) As of April 21, 1998, Elan and Acorda entered into an amended and restated licence and supply agreement relating to SCI (effective as from January 23, 1997) (the SCI Agreement );
(B) Effective as of April 21, 1998, Elan, Acorda and MS R & D entered into a licence and supply agreement relating to MS (the MS Agreement );
(C) Pursuant to the Assignment Agreement (i) MS R & D assigned all of its rights, title, interest and obligations under the MS Agreement to Acorda, and Acorda assumed all of MS R & Ds obligations thereunder; and (ii) Elan, Acorda and MS R & D terminated the MS R & D Agreements (as defined in the Assignment Agreement)
(D) The Parties desire and agree that certain provisions of the SCI Agreement and the MS Agreement should be amended, clarified and restated to reflect the intentions of the Parties with respect to the development, manufacturing and marketing of the Product in the Territory for the Indications on the terms and conditions set out herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree that each of the MS Agreement and the SCI Agreement, and all of the terms, conditions and provisions of the MS Agreement and the SCI Agreement, are hereby superceded and replaced and restated in their entirety by this Agreement and the Supply Agreement and the terms, conditions and provisions hereof and thereof, as of the Amendment Date, as follows and as set forth in the Supply Agreement:
ARTICLE 1 DEFINITIONS AND INTERPRETATION
1.1. In the present Agreement and any further agreements based thereon between the Parties hereto, the following definitions shall prevail:
1
Acorda Know-How shall mean all knowledge, information, trade secrets, data and expertise relating to the Product which is not generally known to the public that is owned or possessed by Acorda (and/or its Affiliates), or that is developed by Acorda (and/or its Affiliates) during the term of this Agreement relating to the Product, including clinical data, whether or not covered by any patent, copyright, design, trademark or other industrial or intellectual property rights and excluding Elan Intellectual Property. Title to all inventions and other intellectual property made solely by Acorda employees in connection with the Project shall be owned by Acorda.
Acorda Patent Rights shall mean any and all rights under any and all patents and patent applications now existing, currently pending or hereafter filed, owned or acquired or licensed by Acorda (and/or its Affiliates) from a Third Party which would be infringed by the manufacture, use or sale of the Product, the current status of which is set forth in Schedule 1 . Acorda Patent Rights shall also include all continuations, continuations-in-part, divisionals and re-issues of such patents and patent applications and any patents issuing thereon and extensions of any patents licensed hereunder. Acorda Patent Rights shall further include any patents or patent applications covering any improved methods of making or using the Product invented or acquired by Acorda (and/or its Affiliates) from a Third Party during the term of this Agreement, and under which Acorda (and/or its Affiliates) has a right to grant a licence hereunder. Acorda Patent Rights shall exclude Elan Intellectual Property.
Act shall mean the United States Federal Food Drug and Cosmetic Act of 1934, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time.
Affiliate shall mean any corporation or entity controlling, controlled by or under the common control of Elan or Acorda as the case may be. For the purpose of this Agreement, control shall mean the direct or indirect ownership of at least fifty percent (50%) of the outstanding shares or other voting rights of the subject entity to elect directors, or if not meeting the preceding criteria, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists.
Agreement shall mean this amended and restated license agreement (which expression shall be deemed to include the Recitals and Appendices and Schedules hereto).
Alternate Compound shall mean any mono- or di-aminopyridine, other than the Compound, as well as the isomers, and the salts thereof.
Amendment Date shall mean September 2003.
API shall mean any Compound or Alternate Compound, in bulk form, for use as an active ingredient in the manufacture of Product.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
Assignment Agreement shall mean the Termination and Assignment Agreement entered into by and among Acorda, Elan and MS R & D as of the Amendment Date, a copy of which is attached hereto as Schedule 2 .
Cardinal Agreement shall mean the Laboratory Services Agreement by and between Cardinal Health PTS, Inc. (Cardinal) and Acorda dated April 1, 2003 relating to stability testing of oral tablets of Fampridine.
cGCP , cGLP and cGMP shall mean current Good Clinical Practises, current Good Laboratory Practises and current Good Manufacturing Practises, respectively, pursuant to the Act and FDA guidance documents.
CMC Section shall mean the chemistry, manufacturing, and controls section of an NDA as defined in 21 CFR Section 314.50 (1) and its equivalent in other registration applications.
Committee shall mean the committee to be established pursuant to Article 10.
Competition shall mean on a country by country basis the sale or distribution by a Third Party of a sustained release oral pharmaceutical formulation of a mono- or di-aminopyridine active agent for administration on a once or twice daily basis for the treatment or amelioration of any neurological condition(s) (including neurogenic conditions) in humans, where the sales or distribution of such formulation by said Third Party for a calendar year are at least [**] of the total sales of the Product in such country in such calendar year expressed in equivalent units. The determination that Competition exists in any country in any calendar year shall be deemed conclusively if a mutually agreed reputable organization such as IMS has made such determination based on its conduct of a market share study in such country during such year, provided the existence of such level of sales of competing products may also be established by other reasonable evidence. Once a determination is made that Competition exists for a Product in any country, such determination shall be made again by the Parties each calendar year for so long as the Product is marketed in that country; provided that in the event that Competition has ceased prior to the end of a calendar year and has not resumed, the Competition shall be deemed to have terminated for such year.
Compound shall mean the compound known as 4-aminopyridine as well as the isomers, and the salts thereof.
Confidential Information shall mean (i) any proprietary or confidential information or material in tangible form disclosed hereunder that is marked as Confidential at the time it is delivered to the receiving Party, or (ii) proprietary or confidential information disclosed orally hereunder which is identified as confidential or proprietary when disclosed and such disclosure of confidential information is confirmed in writing within thirty (30) days by the disclosing Party.
Designee shall mean a sub-licensee, distributor or any other Third Party authorised by Acorda including those entities or persons appointed by Acorda pursuant to the provisions of Article 2.3.1.
3
Development Plan shall have the meaning set forth in Article 3.1.
DMF shall mean a Drug Master File, as defined in 21 CFR Section 314.420, as the same may be amended or re-promulgated from time to time, or any successor filing or procedure and/or its equivalent in the other countries of the Territory.
Dominating Patent shall mean an unexpired patent that has not been invalidated by a court or governmental agency which is owned by a Third Party, which covers the Product sold by Acorda or its Designees, under circumstances such that Acorda, including on behalf of its Designees, has no commercially reasonable alternative to obtaining a royalty-bearing licence under such patent in order to practise or exploit the Elan Intellectual Property to develop and/or commercialise the Product.
EDDI shall mean Elan Drug Delivery Inc., a wholly-owned subsidiary of Elan, and the successor to Elan Pharmaceutical Research Corp.
Elan Intellectual Property shall mean the Elan Patent Rights and/or the Elan Know-How.
Elan Know-How shall mean all knowledge, information, trade secrets, data and expertise within Elans oral controlled release technology relating to the Product which is not generally known to the public that is owned or possessed by Elan (and/or its Affiliates), or to be developed by Elan (and/or its Affiliates), whether before or during the term of this Agreement, whether or not covered by any patent, copyright, design, trademark or other industrial or intellectual property rights, or developed by or on behalf of Elan (and/or its Affiliates) in connection with the Project, or developed by or on behalf of Elan (and/or its Affiliates) pursuant to the Axogen Agreement. Title to all inventions and other intellectual property made solely by employees of Elan in connection with the Project shall be owned by Elan.
Elan Know-How shall exclude:
(a) any and all know how as of the Amendment Date pertaining to the development or manufacture of transdermal formulations of the Compound and/or other mono- or di-aminopyridines, isomers and salts thereof, other than US patents numbers 5,370,879, 5,540,938 and/or 5,580,580, and any foreign equivalents, divisionals, reissues or continuations and any patents issued thereon, and the know-how described therein; and
(b) nanoformulation technology to the extent specifically licensed by Elan to Merck pursuant to the Merck Agreement for Indications other than MS or SCI.
Elan Patent Rights shall mean any and all rights under any and all patents and patent applications now existing, currently pending or hereafter filed, owned or acquired or licensed by Elan (and/or its Affiliates) which would be infringed by the manufacture, use or sale of the Product, the current status of which as of the Amendment Date is set forth in Schedule 3 . Elan Patent Rights shall also include all continuations, continuations-in-part, divisionals and re-issues of such patents and patent applications and any patents
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
issuing thereon and extensions of any patents licensed hereunder. Elan Patent Rights shall further include any patents or patent applications covering any improved methods of making or using the Product invented or acquired by Elan (and/or its Affiliates) during the term of this Agreement and under which Elan (and/or its Affiliates) has a right to grant a licence hereunder, and Elans (and/or its Affiliates) interest in any intellectual property conceived reduced to practice or otherwise developed in connection with the Project.
EMEA shall mean the European Agency for the Evaluation of Medicinal Products based in London (UK), as established by Council Regulation n° 2309/93 of July 22, 1993, as subsequently amended by Commission Regulation 649/98 of March 23, 1998.
End of Phase 2 Meeting shall mean the first end of Phase 2 meeting with the FDA, as defined in 21 CFR Section 312.47, intended to determine the safety of proceeding to Phase 3, evaluate the Phase 3 plan and protocols and identify any additional information necessary to support an NDA for Product.
EXW and Ex Works shall have the meaning as such term is defined in the ICC Incoterms, 2000, International Rules for the Interpretation of Trade Terms, ICC Publication No. 560.
Fampridine Product shall mean any finished pharmaceutical oral sustained release dosage form containing the Compound, which is in the scope of one or more Valid Claims within the Elan Patent Rights in the country of sale, and/or incorporates Elan Know-How in material part. The use of the pre-clinical, toxicological, pharmacokinetic, metabolic, formulation, methods, clinical protocols and data developed for and on behalf of Elan, which is included in the Elan Know-How shall constitute incorporation of the Elan Know-How in material part.
FDA shall mean the United States Food and Drug Administration or any other successor agency, whose approval is necessary to market the Product in the United States of America.
First Commercial Sale shall mean the first In Market sale of Product in any country by Acorda or an Acorda Designee for end use or consumption, after all required Regulatory Approvals have been granted by the governing health authority of such country.
FTE means Elans full time equivalent charging rate for its appropriate employees or consultants from time to time (based on cost without mark-up) which as of the Amendment Date is US[***] per day.
GAAP shall mean generally accepted accounting principles in the United States consistently applied.
IND shall mean the investigational new drug application and any amendments thereto for the Product filed with the FDA including IND numbers [*****].
5
Indication shall mean any use or indication of Product for treatment of any condition, including SCI and MS.
Initial Period shall have the meaning set forth in Article 12.5.1.1.
In Market shall mean the sale of the Product, whether by Acorda or its Designee, to an unaffiliated Third Party such as a wholesaler, distributor, managed care organisation, hospital or pharmacy and shall exclude the transfer pricing of the Product by Acorda to an Affiliate.
Joint Invention shall mean all inventions and other intellectual property made jointly by employees of Acorda and Elan in connection with the Project, which inventions and intellectual property shall be jointly owned by Elan and Acorda.
Launch Stocks shall have the meaning set forth in the Supply Agreement.
License Revenues shall mean the monetary amount or non cash consideration (exclusive of any taxes or duties that Acorda may be required by law to pay, but not including income, corporation or similar taxes) paid to Acorda for the granting to any Third Party any of the rights granted to Acorda under this Agreement and shall further include any other on going fees paid to Acorda in respect of such rights, but shall exclude bona fide research or development fees and payments received by Acorda and any payments received by Acorda for the sale of the Product from Elan pursuant to the provisions of Article 2.11.3. For the avoidance of doubt, it is understood and agreed that License Revenues shall not include and Elan shall not be entitled to receive any share of payments received from a Third Party for the purchase of equity in Acorda, debt financing, the licence of intellectual property other than the Elan Intellectual Property, rights to products other than the Product or the reimbursement of patent or other expenses incurred by Acorda; provided that License Revenues shall include and Elan shall be entitled to receive any share of payments received from a Third Party for the purchase of equity in Acorda where such payments or a portion thereof are referable to the granting of rights to the Elan Intellectual Property for the Product. The fact that a premium is paid by a Third Party for the purchase of equity in Acorda shall not of itself mean that the premium is referable to the granting of rights to the Elan Intellectual Property for the Product. For the avoidance of doubt, the Parties hereby confirm that the definition of License Revenues does not include royalties calculated as a percentage of NSP or of net In Market sales payable in each case by Designees to Acorda.
Major European Markets shall mean each of the United Kingdom, France, Germany and Italy.
Manufacturing Cost shall have the same meaning as in the Supply Agreement.
Merck Agreement shall mean the Technology Transfer and License Agreement dated 26 July 1999 between Merck & Co. Inc. ( Merck ), Elan, Elan Pharmaceutical Research Corp. (now EDDI) and Elan Pharma International Limited.
MS shall mean multiple sclerosis.
6
MS Field shall mean use as an oral prescription medicine for the treatment of MS in humans.
MS R & D shall mean MS Research and Development Corporation, a Delaware corporation, having an office at 15 Skyline Drive, Hawthorne, New York 10532 USA.
MS Term shall mean shall mean the period beginning on 21 April 1998 and ending upon expiry or termination of this Agreement, howsoever arising.
NDA shall mean the new drug application as defined in the Act and applicable regulations promulgated thereunder including any supplements or amendments thereto, which Acorda may file for the Product with the FDA.
NDA Approval shall mean the final approval to market the Product by the FDA as defined under the Act.
NDA Equivalent shall mean any new registration application or submission including any supplements or amendments thereto, such as a foreign counterpart to the NDA, which Acorda may file for the Product with any regulatory authority in any regulatory jurisdiction in the Territory other than the United States that is required to obtain Regulatory Approval in such jurisdiction.
NDA Timeline shall mean the development and regulatory timeline attached hereto as Schedule 4.
Notional NSP shall mean the estimated NSP of Product at the applicable time, which shall on a country-by-country basis be provided by Acorda to the Committee within ninety (90) days prior to commencement of each calendar year (or, for the Launch Year in any country, within ninety (90) days prior to the estimated date of First Commercial Sale in such country); provided, that:
(a) for (i) the Launch Year and (ii) if no Statement is due to be produced prior to ninety (90) days prior to the estimated date of First Commercial Sale in such country, the Notional NSP shall be estimated in good faith; and
(b) in each subsequent year, Notional NSP shall be calculated by reference to the average NSP in that country as evidenced by the last four Statements (or such lesser number of Statements as have actually been produced in relation to that country).
NSP shall mean that sum determined by deducting from the gross amount billed, however characterized, for the Product, commencing on the date of First Commercial Sale and sold In Market by Acorda or an Acorda Designee, the following:
(a) transportation charges or allowances, including freight pick-up allowances, and packaging costs, if any;
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(b) trade, quantity or cash discounts, service allowances and independent brokers or agents commissions, if any, allowed or paid;
(c) credits or allowances, if any, given or made on account of price adjustments, returns up to ten per cent (10%) of gross sales, off-invoice promotional discounts, rebates, any and all national, federal, state or local government rebates, whether in existence now, or enacted at any time during the term of this Agreement, rejections, recall or Product destruction (voluntarily made or requested or made by an appropriate government agency sub-division or department) for the Product; and
(d) any duty, tariff or tax (other than income or corporation tax), excise or governmental charge upon or measured by the production, import, export, sale, transportation, delivery, or use of the Product.
In the event that Acorda or its Designee shall sell the Product together with other products to third parties in a particular country and the price attributable to the Product is less than the average price of arms length sales of the Product alone in the particular country for the reporting period in which sales occur (such sales to be excluded from the calculation of the average price of arms length sales), NSP for any such sales shall be the average price of arms length sales by Acorda or its Designee of the Product alone and in the country during the reporting period in which such sales occur. If the average price of arms length sale of the Product cannot be determined in any given country, the NSP will be determined by the value of the Product sold to similar customers in countries with similar pricing and reimbursement structures and for similar quantities. Any dispute as to the determination of fair market value that cannot be resolved through discussion between the Parties shall be determined by an independent arbitrator in accordance with the provisions of Article 12.14.
Other Indication Field shall mean use as a prescription medicine for the treatment of any condition in humans, excluding the SCI Field and the MS Field, but for the avoidance of doubt including the treatment of SCI and/or MS otherwise than orally.
Other Indication Term shall mean the period beginning on the Amendment Date and ending upon expiry or termination of this Agreement, howsoever arising.
Party shall mean Acorda or Elan, as the case may be.
Parties shall mean Acorda and Elan.
Patheon Agreement shall mean the Technical Transfer Program Proposal for Commercial Registration entered into by and between Patheon, Inc. (Patheon) and Acorda dated as of February 26, 2003 relating to the manufacturing of Fampridine tablets.
Phase 3 Clinical Study shall mean a clinical trial conducted after an End of Phase 2 Meeting and conducted on a sufficient number of patients that is designed to establish that the Product is safe and efficacious for its intended Indication and is intended to
8
define warnings, precautions and adverse reactions that are associated with Product in the dosage range and formulation to be prescribed, and to support Regulatory Approval of Product for such Indication.
Product shall mean any finished pharmaceutical dosage form containing the Compound or an Alternate Compound, which is in the scope of one or more Valid Claims within the Elan Patent Rights in the country of sale, and/or incorporates Elan Know-How in material part. The use of the pre-clinical, toxicological, pharmacokinetic, metabolic, formulation, methods, clinical protocols and data developed for and on behalf of Elan (except for tests and studies conducted by or on behalf of Acorda as contemplated by this Agreement), which is included in the Elan Know-How shall constitute incorporation of the Elan Know-How in material part.
Project shall mean all activity undertaken by Elan and Acorda in order to develop the Product in accordance with the Development Plan, together with (i) all activity as undertaken by Elan and Acorda to develop the Fampridine Product for SCI prior to the Amendment Date, and (ii) all activity as undertaken by Elan, Acorda and MS R & D to develop the Fampridine Product for MS, prior to the Amendment Date.
Regulatory Approval shall mean (i) NDA approval by the FDA in the United States of America, (ii) in the case of the Major European Markets, approval of the NDA Equivalent by the EMEA in the Major European Markets (and/or the applicable regulatory authorities in such Major European Market not failing to provide or rejecting such approval), or (iii) such approvals as are required in any other country of the Territory to launch the sale of the Product in the normal course of business, as applicable, in each case including any required pricing and reimbursement approvals.
Research and Development Cost shall mean in the case of research and development being conducted by or on behalf of Elan in connection with the Project the costs thereof calculated in accordance with GAAP.
Rush shall mean Rush-Presbyterian-St. Lukes Medical Center.
Rush/Acorda License shall mean the License Agreement entered into as of the Amendment Date by and between Rush and Acorda, and any amendments or supplements thereto, the form of which, including the schedules thereto, is attached hereto as Schedule 5 .
Rush Payments Agreement shall mean the Rush Payments Agreement entered into as of the Amendment Date by and between Elan and Acorda, and any amendments or supplements thereto, in connection with the Rush/Acorda License, a form of which is attached hereto as Schedule 6 .
Rush Side Agreement shall mean the Side Agreement entered into as of the Amendment Date by and between Rush, Acorda, Elan and EDDI, and attached as a schedule to the Rush/Acorda License, and any amendments or supplements thereto.
SCI shall mean spinal cord injury indications.
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SCI Field shall mean use as an oral prescription medicine for the treatment of SCI in humans.
SCI Term shall mean the period beginning on 23 January 1997 and ending upon expiry or termination of this Agreement, howsoever arising.
SEC shall mean the United States Securities and Exchange Commission or any successor agency thereto.
Specifications shall mean the specifications for the Product(s) and API attached as Schedule 7 , as they may be modified from time to time by mutual written agreement of the Parties consistent with the specifications approved by the FDA in the NDA and, outside the United States, any NDA Equivalent.
Supply Agreement shall mean the supply agreement between Elan and Acorda of even date herewith, in the form attached hereto as Schedule 8 .
Technology Transfer Responsibilities shall mean the respective responsibilities of each of Acorda and Elan in connection with the Project relating, as applicable, to the (i) activities being conducted under the Cardinal Agreement; (ii) activities being conducted under the Patheon Agreement, and (iii) procurement of API, as set forth on Schedule 9 hereto, as such responsibilities may be modified from time to time by mutual agreement of the Parties.
Territory shall mean all of the countries of the world.
Third Party(ies) shall mean a person or entity who or which is neither a Party nor an Affiliate of a Party.
Trademark shall mean the trademark(s) as may be selected by Acorda which has been or may be registered by Acorda in one or more countries of the Territory.
Valid Claim(s) shall mean a claim in any patent within the Elan Patents which has not lapsed or become abandoned and which claim has not been declared invalid by an unreversed or an unappealable decision of a court of competent jurisdiction.
$ and US$ shall mean United States Dollars.
1.2. In this Agreement
1.2.1 the singular includes the plural and vice versa, the masculine includes the feminine and vice versa and references to natural persons include corporate bodies, partnerships and vice versa;
1.2.2 any reference to an Article, Exhibit or Schedule shall, unless otherwise specifically provided, be to an Article, Exhibit or Schedule of this Agreement;
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1.2.3 the headings of this Agreement are for ease of reference only and shall not affect its construction or interpretation; and
1.2.4 the expressions include, includes, including, in particular and similar expressions shall be construed without limitation.
2.1. License Grant :
Elan shall remain proprietor of all the Elan Intellectual Property relating to the Product and any trademark licensed by Elan to Acorda, (such as an acronym for the applicable technology applied to the Product), but hereby grants to Acorda an exclusive (even as to Elan) licence under the Elan Intellectual Property in the Territory to package, use, import, export, promote, distribute, offer for sale, sell and otherwise exploit and, solely as permitted in the Supply Agreement, to make and have made:
2.1.1 the Fampridine Product in the SCI Field for the SCI Term;
2.1.2 the Fampridine Product in the MS Field for the MS Term; and
2.1.3 without prejudice to Articles 2.1.1 and 2.1.2, the Product in the SCI Field, MS Field and/or Other Indication Field for the Other Indication Term, subject to any contractual obligations of Elan under the Merck Agreement with respect to a formulation using Nanoformulation technology (as defined in the Merck Agreement) in the Other Indication Field.
in each case under the terms and conditions set out herein.
2.2. Acceptance; Acorda Non-Competition :
Subject to the provisions of the following sentence, Acorda hereby accepts such licence and confirms that Acorda and its Affiliates will not directly or indirectly market as a prescription medicine any other sustained release oral dosage form or transdermal form, containing the Compound or any other mono-or di-aminopyridine active agent, other than Product ( Acorda Competing Product ) during the period Acorda retains a licence under the Agreement and for one year thereafter.
Should Acorda or its Affiliates market an Acorda Competing Product in the countries of the European Economic Area, Elan reserves as its sole remedy the right to terminate the exclusive licences granted to Acorda solely in the applicable country (ies) in which Acorda or its Affiliates market an Acorda Competing Product, which thenceforth for the remainder of the term of this Agreement shall become non-exclusive in nature in such countries of the European Economic Area, and to stop licensing improvements in such countries of the European Economic Area.
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2.3. Sub-licensing :
2.3.1 Acorda may sub-license or otherwise authorise one or more third parties (each a Designee) to use, import, offer for sale, promote, distribute, sell and otherwise exploit the Product in one or more countries of the Territory (but not the rights to manufacture the Product which may only be sub-licensed in accordance with the provisions of the Supply Agreement). In circumstances where the third party is entitled to, or is likely to be able to obtain, access to the CMC Section, the prior written consent of Elan shall be obtained to any sub-licence or other agreement permitted by this Article 2.3.1 which consent shall not be unreasonably withheld or delayed. In the event that the Third Party is entitled to access to Confidential Information disclosed by Elan to Acorda, the agreement between the Third Party and Acorda shall contain obligations of confidentiality no less onerous than those set out in this Agreement. Elan shall be furnished with a copy of the proposed and the executed sub-licence or other agreement contemplated by this Article 2.3.1 Any sub-licence or other agreement permitted by this Article 2.3.1 shall be subject to the terms of this Agreement, but excluding the right to grant a sub-licence. Acorda shall use its reasonable endeavours to ensure that Elan shall have the same rights of audit and inspection vis a vis a Designee, as Elan has pursuant to this Agreement concerning Acorda. A sub-licence may be granted by Acorda without any obligation upon the Designee to pay to Acorda or Elan any amounts other than those set out in this Agreement.
2.3.2 Insofar as the obligations owed by Acorda to Elan are concerned, Acorda shall remain responsible for all acts and omissions of any Designee as if such acts and omissions were by Acorda. Any sub-licence or other agreement permitted by Article 2.3.1 shall automatically and immediately terminate on termination of this Agreement.
2.3.3 For the avoidance of doubt, the Parties hereby confirm that In Market sales of the Product by any Designee shall constitute sales by Acorda for the purposes of Article 5.6.
2.4. Use of Data and Improvements :
Subject to the provisions of Article 12.1 Elan may use the Elan Intellectual Property and all technical and clinical data or improvements generated by Elan pursuant to this Agreement in connection with Elans commercial arrangements for the Product in any country which ceases to be a part of the Territory, or in relation to the Product in the Territory in the event of the termination of this Agreement.
2.5. Rush:
Each of Elan and Acorda hereby acknowledges and agrees that the licences previously granted to Elan by Rush and the licenses granted to Acorda by Rush pursuant to the Rush/Acorda License do not constitute Elan Patent Rights or Elan Know-How for the purposes of this Agreement.
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2.6. Technical Advice:
Without prejudice to Article 5.1.2, Elan shall, if requested, advise Acorda in any technical matters as may become necessary for the proper utilisation of the licence to Acorda pursuant to this Agreement and shall provide reasonable advice and assistance to Acorda with respect thereto without additional charge.
2.7. Combination Products :
In the event that Acorda wishes to develop, market and sell an oral sustained release product for the treatment of SCI which contains the Compound or an Alternate Compound as one of two or more pharmaceutically active ingredients ( Combination Product ), Acorda shall seek the consent of Elan to extend the licences granted by Elan to Acorda pursuant to this Agreement, which consent shall not be unreasonably withheld or delayed. In the event that such consent is furnished, the Parties shall negotiate in good faith the terms of an agreement, including where applicable, such amendments as are appropriate to this Agreement.
2.8. Elan Competing Product :
For the term of the Agreement, Elan shall not itself or through an Affiliate or Third Party commercialise or, develop in the Territory nor license another party in the Territory to commercialise or develop any other sustained release oral dosage form for prescription use in humans which contains the Compound or any Alternate Compound as an active ingredient for:
2.8.1 the indication of SCI; and/or
2.8.2 the indication of MS; and/or
2.8.3 any other Indications, subject, during the term of the Merck Agreement, to any contractual obligations of Elan under the Merck Agreement with respect to a formulation using Nanoformulation technology (as defined in the Merck Agreement).
(each, an Elan Competing Product ).
2.9. Trademark:
2.9.1 Acorda shall market the Product in the Territory under a Trademark, whether during the Initial Period or thereafter, which Trademark will be owned by Acorda.
2.9.2 Elan grants to Acorda a non-exclusive royalty free licence in the Territory solely for use in connection with the sale of the Product, for the term of this Agreement to use any trademark which relates to the Elan technology applicable to the Product ( Elan Trademark ), such as an acronym for the applicable technology applied to the Product, on the following terms:
2.9.2.1 Acorda shall as soon as it becomes aware of any infringement give to Elan in writing full particulars of any use or proposed use by any other person, firm or company of a trade name or trademark or mode
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or promotion or advertising which amounts to or might amount either to infringement of Elans rights in relation to the Elan Trademark or to passing off.
2.9.2.2 If Acorda becomes aware that any other person, firm or company alleges that the Elan Trademark is invalid or that the use of the Elan Trademark infringes any rights of another party or that the Elan Trademark is otherwise attacked or attackable, Acorda shall immediately give to Elan full particulars in writing thereof and shall make no comment or admission to any Third Party in respect thereof.
2.9.2.3 Elan shall have the right to conduct all proceedings relating to the Elan Trademark and shall in its sole discretion decide what action, if any, to take in respect of any infringement or alleged infringement of the Elan Trademark or passing-off or any other claim or counter-claim brought or threatened in respect of the use or registration of the Elan Trademark. Any such proceedings shall be conducted at Elans expense and for its own benefit.
2.9.2.4 At no time during or after the term of this Agreement shall Acorda challenge or assist others to challenge the Elan Trademark, or the registration thereof or attempt to register any trademarks, marks, or trade names confusingly similar to the Elan Trademark.
2.9.3 Acorda shall not be obliged to use the Elan Trademark to identify the Product but at Elans request shall be obliged to use the Elan Trademark to identify the applicable Elan technology embodied in the Product. For the avoidance of doubt, the Parties hereby confirm that Acorda shall not be entitled to a licence to use any trademark owned or controlled by Elan which identifies a product, including Neurelan®.
2.10. When packaged, and to the extent permitted by law, a product label shall include an acknowledgement that the Product is made under licence from or, if applicable, manufactured by Elan. Such acknowledgement shall take into consideration regulatory requirements and Acordas commercial requirements, including any requirement to state that Product is mananufactured by Patheon. Acorda shall wherever possible give due acknowledgement and recognition to Elan in all printed promotional and other material regarding the Product such as stating that the Product is under licence from, or if applicable, manufactured by, Elan. Acorda shall consult with and obtain the approval of Elan as to the format and content of the promotional and other material insofar as it relates to a description of, or other reference to, the application of the Elan Intellectual Property. It shall be presumed that Elan approved of such use unless Elan provides written notice of disapproval of such use to Acorda within thirty (30) days of delivery of such materials to Elan, such approval not to be unreasonably withheld. The further consent of Elan shall not be required where the format and content of such materials is
14
substantively materially similar as the materials previously furnished to and approved by Elan.
2.11. Diligence :
2.11.1 Acorda shall use reasonable efforts consistent with the reasonable standard as would be applied by a bio-pharmaceutical company of similar size, stage of development and assets for a product of the market size and potential of the Product to market and promote the Product throughout the Territory.
2.11.2 Acorda shall effect a national commercial launch of the Product in the United States of America within one hundred and eighty (180) days of NDA Approval, provided that Acorda shall have received the agreed quantities of Launch Stocks ordered pursuant to firm purchase orders at least sixty (60) days in advance of the launch date. It is agreed that with respect to Japan and the Major European Markets, Acorda will effect a national commercial launch of the Product within one hundred and eighty (180) days after the necessary Regulatory Approvals, provided that Acorda shall have received the agreed quantities of Launch Stocks ordered pursuant to firm purchase orders pursuant to the Supply Agreement at least sixty (60) days in advance of the projected launch date. In the event that Acorda shall have received the agreed quantities of Launch Stocks ordered pursuant to firm purchase orders pursuant to the Supply Agreement at least sixty (60) days in advance of the projected launch date and Acorda does not make a national commercial launch in one or more of the countries listed above within the one hundred and eighty (180) day period, or such longer period permitted by the provisions of this Article 2.11.2, the licences granted to Acorda hereunder shall with thirty (30) days notice from Elan terminate in the applicable country and Elan shall be entitled to a licence to the Acorda Patent Rights and the Acorda Know-How in the applicable country on the terms set out in Article 2.11.3 and to the Trademark on the terms set out in Article 2.9. Notwithstanding the above, in the event that the Parties disagree whether or not Acorda has satisfied its obligations under this Agreement in any country listed above, the matter may be submitted to arbitration by either Party, and Acordas rights and licences shall remain in effect until and unless the arbitrator makes a decision that Acordas right and licence in such country should terminate.
2.11.3 Acorda will use commercially reasonable efforts to file and obtain registration approval in the United States of America, the Major European Markets and Japan as soon as practicable. In the event of any failure by Elan to perform its obligations under this Agreement or under the Supply Agreement which results in Acordas failure to obtain such a Regulatory Approval or any delay thereof, the Parties through the Committee shall make reasonable and appropriate adjustments to the period in which Acorda shall have to file to obtain the applicable Regulatory Approval. If (x) Acorda fails to file to obtain a Regulatory Approval to commercialise the Product in the United States of America, Japan or the Major European Markets within a commercially reasonable time after completion and receipt of positive data from all pre-
15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
clinical and clinical studies required for the related NDA or any NDA Equivalent, as determined by the Committee, or (y) Acorda fails to effect a commercial launch of the Product in the United States of America, Japan or the Major European Markets within the period specified in Article 2.11.2 above then, in such event, provided that Elan has terminated Acordas licence as provided in Article 12.5.2.2, Acorda shall, at the option of Elan, license, make available and transfer to Elan all of Acordas data, information, applications, approvals and filings to permit Elan to commercialise the Product in the applicable region, in exchange for an initial payment equal to Acordas costs of developing such data, information, applications, approvals and filings for such region and [*****] of NSP (for which purpose the definition of NSP as set out in Article 1 shall apply mutatis mutandis) of the Product by Elan and/or its designees (for which purpose the definition of Designee as set out in Article 1 shall apply mutatis mutandis) in such region. In such event Elan shall be entitled to a licence to the Acorda Patent Rights and the Acorda Know-How to commercialise the Product on the terms set out in this Article 2.11.3 and to the Trademark on the terms set out in Article 2.9. In the event that Elan is entitled to such licence, the Parties shall enter into a further written licence agreement which shall include customary and reasonable terms relating to, inter alia , the timing of royalty payments to Acorda, reporting obligations regarding net sales, audit rights of Acorda with respect to books and records relating to net sales, sublicense and indemnity provisions, which obligations shall, unless otherwise agreed by the Parties, be substantially similar to those in this Agreement with respect to commercialisation of the Products by Acorda.
2.11.4
2.11.4.1 Acorda will use its commercially reasonable efforts to obtain Regulatory Approval to commercialise the Product in the other countries of the Territory that it selects, having regard to the effort and expenditure required to obtain Regulatory Approval for the Product and the commercial opportunities for the Product in such other countries of the Territory.
2.11.4.2 In the event that the Parties disagree whether Acorda has satisfied its obligations under Article 2.11.4.1, with regard to one or more of such other countries of the Territory, the matter may be submitted to the Committee, and if not resolved by the Committee, by arbitration, by either Party, and Acordas rights and licences shall remain in effect until and unless the arbitrator makes a decision that Acordas right and licence hereunder in such country should terminate.
2.11.4.3 If Acorda (a) indicates to Elan that it does not intend to file to obtain Regulatory Approval and commercialise the Product in a particular country or countries of the Territory, or (b) fails to commence commercialisation in any country in the Territory (other than the United States, the Major European Markets {or, if
16
commercialization has commenced in the Major European Markets, any other country subject to the jurisdiction of the EMEA, provided that Acorda provides to the Committee a marketing plan for such other countries} or Japan), within one hundred and (180) days after receiving the required Regulatory Approval therefor, provided that Acorda shall have ordered and received the agreed quantities of Launch Stocks ordered pursuant to firm purchase orders pursuant to the Supply Agreement at least sixty (60) days in advance of the projected launch date, Elan shall be entitled to a licence to the Acorda Patent Rights and the Acorda Know-How to commercialise the Product in such countries on the terms set out in Article 2.11.3 and to the Trademark on the terms set out in Article 2.9.
ARTICLE 3 DEVELOPMENT OF THE PRODUCT
3.1. Subject to the provisions of this Article 3, Acorda shall use its reasonable efforts, as would be deemed commensurate with the achievement of its own business aims for a similar product of its own to conduct such part of the Project as the Parties mutually agree shall be conducted by Acorda. Subject to the provisions of this Article 3, Elan shall use its reasonable efforts, as would be deemed commensurate with the achievement of its own business aims for a similar product of its own, to conduct such part of the Project as the Parties mutually agree that shall be conducted by Elan. The allocation between the Parties of their respective responsibilities for conducting parts of the Project (i) is set forth in Schedule 9 - Technology Transfer Responsibilities, and (ii) shall be set forth in a development plan (the Development Plan ) to be prepared and updated from time to time by Acorda in consultation with Elan, relating to the development of the Product, the current form of which is attached as Schedule 4 - NDA Timeline , and the Committee shall monitor the progress of such activities. Elan and Acorda each undertake that it shall carry out the respective studies, testing and activities set forth as Technology Transfer Responsibilities, in the Development Plan, and otherwise undertaken and conducted by it in good faith and in accordance with prevailing cGCP and cGLP and FDA standards and guidelines.
3.2. Provided that Elan uses reasonable endeavours to meet its obligations under this Agreement, Elan shall have no liability to Acorda as a result of any failure or delay of the Product to achieve one or more of the milestones set out in the Project and/or to obtain the NDA Approval or the approval of the regulatory authorities in one or more of the other countries of the Territory. Acorda shall have no liability to Elan as a result of any failure or delay of the Product to obtain the NDA Approval or the approval of the appropriate health regulatory authorities in one or more of the countries of the Territory.
3.3. The Parties hereby confirm that each shall undertake its respective part of the Project as a collaborative effort and that the provisions of this Agreement requires that each Party diligently carries out those tasks assigned to it under the Project and as otherwise agreed during the course of the Project. Each Party shall co-operate with the other in good faith particularly with respect to unknown problems or contingencies and shall perform its
17
obligations in good faith and in a commercially reasonable, diligent and workmanlike manner. Each Party will update the other Party on the progress of the Project at meetings of the Committee.
3.4. Elan will supply Acorda with Acordas reasonable requirements of Product including clinical trial supplies to enable Acorda to carry out the Project. The Product shall be supplied by Elan EXW at Manufacturing Cost.
3.5. Acorda agrees to carry out and complete the Phase III programme in the United States of America to a standard and timeframe that a company of comparable size, stage of development and assets would use for a product of similar size and potential as the Product.
3.6. With respect to generating stability data on the oral Product in bulk tablet form, Elan and Acorda acknowledge and agree that (i) under the SCI Agreement and the MS Agreement, Elan had the responsibility for generating such data, (ii) pursuant to the Cardinal Agreement, Cardinal is currently performing such stability testing, (iii) the Technology Transfer Responsibilities shall govern the related responsibilities of the Parties, provided that the data resulting from such stability testing shall be provided to both Acorda and Elan, and Elan shall have the right to and responsibility for providing necessary and appropriate technical assistance and oversight of such stability testing (including having the right at its own expense to arrange for its employees involved in the Project to discuss the stability testing and its results with the technical personnel of Acorda and Cardinal upon reasonable notice and at reasonable times); and (iv) Elan shall incorporate such stability data into the CMC module that it will prepare for delivery to Acorda for inclusion in the NDA or any NDA Equivalent, pursuant to Article 3.8.
3.7. For the avoidance of doubt, the Parties hereby confirm that a primary objective of the Project is to generate the NDA and secure NDA Approval for the oral Product. As of the date of the SCI Agreement, the MS Agreement and the Amendment Date, it is the Parties expectation that the body of data so generated in the Project will also support such applications for Regulatory Approval that Acorda shall make in the other countries of the Territory. In the event however that such expectation proves unfounded or incorrect and further data is required to obtain such other approvals as are pursued by Acorda in the other countries of the Territory, Acorda shall determine the viability of proceeding further with the regulatory application and generation of the further data requirements. In the event that Acorda elects to continue, the Parties shall update the Development Plan to reflect the allocation between the Parties of conducting such additional activities. In such event, subject to and in accordance with the provisions of this Article 3, Elan shall be responsible for conducting such further activities and generating such further data as set forth in the Development Plan to allow Acorda to seek such further Regulatory Approvals in the Territory. Notwithstanding the foregoing, it is intended by the Parties that except as otherwise specifically set forth in a Development Plan agreed to by the Parties and subject to compliance with regulatory requirements, Acorda shall have primary responsibility and decision making authority with respect to development and marketing of Product.
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3.8. Elan shall be responsible for the preparation and delivery to Acorda of the CMC Section in electronic and hard copy form and the latter in format suitable for inclusion in the NDA and any NDA Equivalent in accordance with applicable law and regulatory standards and as the Parties may mutually agree. Acorda shall provide Elan as soon as practicable with a copy of any comments received by Acorda from the FDA or any other regulatory authority relating to the CMC Section and Elan shall provide or, at Acordas request, cooperate with Acorda to provide, a response to such comments as soon as practicable. In the event that there is a deficiency in the CMC Section attributable to negligence by Elan in the activities conducted by Elan, then Elan shall be responsible for correcting such deficiency, at Elans expense, and shall use reasonable efforts to do so as soon as practicable. In the event Elan breaches the foregoing obligation, in addition to any other remedies available to Acorda, Acorda shall have the right to correct such deficiency or arrange to have a Third Party conduct any required activities necessary to correct such deficiency, at Elans expense, the cost of which may be offset against any amounts otherwise due Elan under this Agreement. Acorda shall be responsible for the maintenance of the CMC Section in accordance with applicable law and regulatory standards, at Acordas expense, provided that (i) Elan shall cooperate with and provide reasonable assistance to Acorda in connection with such maintenance; and (ii) any revisions, amendments or supplements to the CMC Section required by or resulting from the negligence of Elan in performing its obligations hereunder or under the Supply Agreement, or from any action taken by Elan on its own initiative, or taken by Acorda or any Acorda Designee on behalf of or at the request of Elan, including any changes made by Elan on its own initiative to its manufacturing processes or facilities, shall be at Elans expense; and (iii) Elan shall not make any changes to its manufacturing processes or facilities that would require an amendment or supplement to the CMC Section without first notifying Acorda of such changes and preparing and delivering to Acorda any required amendments or supplements to the CMC Section before the implementation of such changes.
If Elan is required in any regulatory jurisdiction to file with any regulatory authority a DMF relating to Compound or Product, Elan shall at Acordas cost prepare and file in accordance with applicable regulatory requirements such DMF and Acorda shall have a right of reference thereto to the extent required by the NDA or any NDA Equivalent or in order to exercise its license rights under this Agreement.
Similarly, if Elan is entitled to market, distribute and sell the Product in a particular country, and Acorda is required in any regulatory jurisdiction to file with any regulatory authority a DMF relating to Compound or Product, Acorda shall at Elans cost prepare and file in accordance with applicable regulatory requirements such DMF and Elan shall have a right of reference thereto to the extent required by the NDA or any NDA Equivalent or in order to exercise its rights under this Agreement.
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portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
ARTICLE 5 FINANCIAL PROVISIONS
5.1. Research and Development Activities :
5.1.1 In consideration for the research and development of the Product by Elan under this Agreement, Acorda shall pay to Elan the amounts set out in Article 5.1.2.
5.1.2 Research and Development Cost incurred by Elan after the Amendment Date and before commercial launch of the Product shall be invoiced and payable monthly, at a rate of FTE plus [***].
5.1.3 Elan will keep accurate records consistent with its normal business practices, of the efforts expended by it under the Project for which it is charging Acorda, which will include the time spent by each person working on the Project. Each quarter Elan will send reports to Acorda in order to enable Acorda to monitor Elans level of effort to assure Acorda that the committed level of effort is being applied.
5.1.4 If Elans development efforts require the use of a Third Party, Elan will, prior to appointing such Third Party, discuss with Acorda the activities to be undertaken by such Third Party and the terms and conditions thereof. Elan will not proceed with such Third Party without the prior written approval of Acorda, which approval shall not be unreasonably withheld. Elan shall charge Acorda for the time spent by its employees in administering the work conducted by such Third Parties on the basis set out in Article 5.1.2. Elan shall have the right to charge Acorda for all reasonable out of pocket expenses incurred in the provision of its obligations thereunder.
5.2. License Royalties :
5.2.1 In consideration of the rights and licence granted to Acorda to the Elan Patent Rights by virtue of the SCI Agreement, Acorda has paid to Elan $5,000,000 (five million United States Dollars); and
5.2.2 In consideration of the rights and licence granted to MS R & D to the Elan Patent Rights by virtue of the MS Agreement, MS R & D has paid to Elan $15,000,000 (fifteen million United States Dollars)
receipt of each of which is hereby acknowledged by Elan.
5.3. Milestone Payments :
5.3.1 In further consideration of the rights and license granted to Acorda to the Elan Patent Rights hereunder, Acorda shall pay to Elan the following non-refundable amounts contingent upon occurrence of the specified event, with each milestone payment to be made no more than once with respect to the achievement of such event (but payable the first time such milestone is achieved) for Product:
20
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
5.3.1.1 [****] 90 (ninety) days after written receipt of NDA Approval of the Product for the first Indication;
5.3.1.2 [***] on the earlier of (a) 90 (ninety) days after written receipt of NDA Approval of the Product for a second Indication or (b) the 2 nd (second) anniversary of NDA Approval of the Product for the first Indication;
5.3.1.3 [***] upon the commencement of a Phase III Clinical Study of the Product for a third Indication;
5.3.1.4 [***] upon acceptance by the FDA for filing of the NDA for a third Indication;
5.3.1.5 [***] upon written receipt of NDA Approval of the Product for a third Indication;
5.3.1.6 [***] upon First Commercial Sale of the Product for a third Indication;
5.3.1.7 [***] upon the commencement of a Phase III Clinical Study of the Product for a fourth Indication;
5.3.1.8 [***] upon acceptance by the FDA for filing of the NDA for a fourth Indication;
5.3.1.9 [***] upon written receipt of NDA Approval of the Product for a fourth Indication; and
5.3.1.10 [***] upon First Commercial Sale of the Product for a fourth Indication
the payments described in Articles 5.3.1.1 to 5.3.1.10 being Milestone Payments .
5.3.2 The Milestone Payments referred to in Articles 5.3.1.3 through 5.3.1.10 shall be payable within forty five (45) days after achievement of the applicable milestone event.
5.3.3 For the avoidance of doubt, references in this Article 5.3 to an Indication by number are to the number of Indications for which a particular milestone has been achieved.
By way of example, the Milestone Payment in Article 5.3.1.9 shall become payable upon NDA Approval for a Indication E, where Indications A, B
21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
and C have already received NDA Approval, notwithstanding that commencement of a Phase III Clinical Study of the Product and/or NDA filing for Indication D may have occurred before commencement of such studies for Indication E.
5.3.4 In respect of each of the third and fourth indication of the Product, in the event that Acorda spends in excess of [***] on Phase III Clinical Studies for such indication, Acorda shall be entitled to credit one half of the excess spend in respect of that indication, over and above [***] per indication, against the respective Milestone Payments for that indication, viz. the Milestone Payments referred to in Articles 5.3.1.4 and 5.3.1.5 for the third indication and the Milestone Payments referred to in Articles 5.3.1.8 and 5.3.1.9 for the fourth indication, up to a maximum of [****] for each indication.
5.3.5 The Milestone Payments shall not be subject to future performance obligations of Elan to Acorda and shall not be applicable against future services provided by Elan to Acorda.
5.4. Certain Payments relating to Rush/Acorda License :
Elan shall reimburse Acorda in respect of the milestone payments payable from Acorda to Rush pursuant to Section 5.2 of the Rush/Acorda License and Acorda shall pay Elan an additional royalty, each in accordance with and subject to the terms and conditions of the Rush Payments Agreement.
5.5. License Revenues :
In further consideration of the rights and licence granted to Acorda to the Elan Patent Rights by virtue of this Agreement, Acorda shall pay to Elan [***] of all and any License Revenues.
5.6. Royalty on Sales :
5.6.1 Subject to Article 5.6.2 and in further consideration of the rights and license granted to Acorda to the Elan Patent Rights while there is a Valid Claim thereunder, and in consideration of the rights and license granted to Acorda of the Elan Know-How thereafter, Acorda shall additionally pay to Elan a royalty of [***] of the NSP of the Product (the Elan Royalty ). The Elan Royalty shall be payable as follows:
5.6.1.1 In respect of the Elan Royalty, where Elan manufactures and supplies the Product, Elan shall render an invoice in respect of the quantities of Product delivered to Acorda for a sum calculated by reference to [***] of the Notional NSP and the quantity of Product supplied. For the avoidance of doubt the Parties agree that if for whatever reason the Product supplied by Elan to Acorda which meets the Specifications and the applicable law and regulatory
22
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
requirements is not sold by Acorda, payment to Elan for such Product shall nonetheless be effected and the price of the Product shall be determined by reference to the NSP calculated pursuant to the provisions of Article 5.6.1.2.
5.6.1.2 Within forty five (45) days of the end of each calendar quarter, Acorda shall notify Elan of the prevailing NSP for Product sold in the previous quarter. Acorda shall calculate the total Elan Royalty payable to Elan for the Product supplied by Elan during the previous quarter by reference to [***] of the NSP. The Parties shall adjust their account by Acorda promptly paying to Elan, or by Elan crediting Acorda against the price of Product to be supplied (as the case may be), the difference between the sum paid pursuant to Article 5.6.1.1 and the sum calculated pursuant to this Article 5.6.1.2.
5.6.1.3 In respect of the Elan Royalty, where Elan does not manufacture and supply the Product, within forty five (45) days of the end of each calendar quarter (for the first two years following first commercial sale of the Product in any country of the Territory, within sixty (60) days of the end of each quarter), Acorda shall notify Elan of the prevailing NSP of Product sold in that preceding quarter and of the quantity of Product sourced from third parties. The Elan Royalty in respect of such Product shall each be payable on the date on the date such report is due.
5.6.2 In countries where there are no Valid Claims covering the Product and if there is no Competition, Acorda shall pay to Elan the applicable Elan Royalty set forth in Article 5.6.1 for sales in such countries; provided, if, and only if, (a) Elan is not manufacturing the Product, (b) there are no Valid Claims covering the Product and (c) there is Competition in any such country, the Elan Royalty due under Article 5.6.1 on Product sales in such country shall be reduced to [***] of NSP provided, however, that in the event there is Competition in any country, the Parties agree to discuss, considering market conditions, further reducing the Elan Royalty.
5.6.3 In the event that Elan or its subcontractor does not manufacture and supply the Product and in the event that Acorda enters into a licence agreement with any Third Party with respect to a Dominating Patent, or to avoid or settle a claim by a Third Party for infringement or misappropriation by any Elan Intellectual Property right relating to the manufacture, use or sale of the Product, Acorda may offset any payments made in accordance with such licence agreements against any royalty amounts (and not amounts in respect of manufacturing) owed by Acorda to Elan, up to a maximum of [***] of the royalty amounts due. For the purpose of this Article 5.6.3 the Parties hereby confirm that the minimum Elan Royalty payable by Acorda to Elan shall be [***] of the NSP. Any dispute under this Article 5.6.3 (including one as to
23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
whether Acorda should have entered into such agreement) shall be resolved by referring such matter to an independent patent attorney for arbitration, and in the event of such a dispute the offset above shall only take effect prospectively upon an arbitrators decision in favour of Acorda. In such event the procedure set forth in Article 12.14 shall to the extent practicable apply to the conduct of such arbitration.
5.6.4 No more than one royalty payment shall be due with respect to a sale of a particular Product (except any royalty payable under the Rush Payments Agreement). No multiple payments shall be payable because any Product or its manufacture, sale or use is covered by more than one Valid Claim covering the Product. No royalty payments shall be payable with respect to Products distributed for use in research and/or development, in clinical trials or as promotional samples.
5.6.5 All payments due hereunder shall be made in United States Dollars in accordance with Article 5.9.
5.6.6 For the avoidance of doubt, the Elan Royalty and any royalty payable under the Rush Payments Agreement shall be payable whether or not Elan is manufacturing and supplying the Product.
5.7. Additional Expenses :
Acorda shall pay Elan within thirty (30) days of the date of invoicing for any technical assistance requested by Acorda, including travel and subsistence, provided that Elan is not otherwise obliged to provide such assistance pursuant to the terms of the Agreement. Elans charges for such work shall be Research and Development Cost plus [***], as well as reimbursement for out-of pocket expenses incurred by Elan to Third Parties in performing activities under the Development Plan that are not already included in Research and Development Cost.
5.8. Non-Refundable Payments :
All payments received by Elan from Acorda under Article 5 shall be non-refundable, subject to the provisions of Article 5.9.5.
5.9. Payments, Reports and Records :
5.9.1 Acorda shall keep and shall cause its Affiliates and Designees to keep true and accurate records of gross sales of the Product, the items deducted from the gross amount in calculating the NSP, the NSP and the royalties payable to Elan under Article 5 hereof. Acorda shall deliver to Elan a written statement thereof within forty five (45) days following the end of each calendar quarter (or any part thereof in the first or last calendar quarter of this Agreement) for such calendar quarter. The said written statements shall set forth on a country-by-country basis, the calculation of the NSP from gross revenues during that calendar quarter, the applicable percentage rate, and a computation of the sums due to Elan (the Statement ). The Parties financial officers shall agree upon the
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precise format of the Statement. Acorda shall also provide Elan with preliminary monthly sales reports in a format to be determined by the Committee.
5.9.2 Payments due on NSP of the Product based on sales amounts in a currency other than United States Dollars shall first be calculated in the foreign currency and then converted to United States Dollars on the basis of the exchange rate in effect for the purchase of United States Dollars with such foreign currency quoted in the Wall Street Journal (or comparable publication if not quoted in the Wall Street Journal) with respect to the sale of currency of the country of origin of such payment for the day prior to the date on which the payment by Acorda is being made. In order to facilitate the payments, the Parties may agree that with respect to a certain country or countries the payments due with regard to Product sales in such country or countries will be paid directly by the Acorda Designee(s) responsible for the marketing of the Product in such country or countries to Elan. In remitting such royalty payments such Designees(s) will abide by the terms of this Article 5.9. No such direct payments will be made by any Acorda Designee unless Acorda and Elan have beforehand agreed that such direct royalty payment and such direct payments shall not adversely affect the withholding liability of Elan compared to the payments made by Acorda to Elan.
5.9.3 If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article 5, Elan shall provide Acorda, prior to any such payment, once each calendar year or more frequently if required, with all forms or documentation required by any applicable taxation laws, treaties or agreements to such withholding or as necessary to claim a benefit thereunder (including, but not limited to Form W-8BEN or any successor forms). Any such income or other taxes which Acorda is required by law to pay or withhold on behalf of Elan with respect to royalties and any other monies payable to Elan under this Agreement shall be deducted from the amount of such NSP payments, royalties and other monies due. Acorda shall furnish Elan with proof of such payments. Any such tax required to be paid or withheld shall be an expense of and borne solely by Elan. Acorda shall promptly provide Elan with a certificate or other documentary evidence to enable Elan to support a claim for a refund or a foreign tax credit with respect to any such tax so withheld or deducted by Acorda. Both Parties will reasonably cooperate in completing and filing documents required under the provisions of any applicable tax treaty or under any other applicable law, in order to enable Acorda to make such payments to Elan without any deduction or withholding.
5.9.4 All payments due hereunder shall be made to the designated bank account of Elan in accordance with such timely written instructions as Elan shall from time to time provide.
5.9.5 For the twenty four (24) month period following the close of each calendar year during the term of the Agreement, Elan and Acorda will provide each others independent certified accountants (reasonably acceptable to the other Party) with access, during regular business hours and upon reasonable prior request and
25
subject to the confidentiality provisions as contained in this Agreement, to such Partys books and records relating to the Product, solely for the purpose of verifying the accuracy and reasonable composition of the calculations hereunder for the calendar year then ended, including in the case of Elan the sums payable by Acorda to Elan pursuant to Article 5. If such accounting firm concludes that additional royalties were owed during such period then Acorda shall pay the additional royalties within sixty (60) days after the date of delivery of such accounting firms written report so concluding. In the event such accounting firm concludes that amounts were overpaid by Acorda during such period, Elan shall repay Acorda the amount of such overpayment within sixty (60) days after the date of delivery of such accounting firms written report so concluding.
5.9.6 In addition, for the twenty four (24) month period following the close of each calendar year, Elan will provide Acordas independent certified accountants (reasonably acceptable to Elan) with access, during regular business hours and upon reasonable prior request and subject to the confidentiality provisions as contained in this Agreement, to Elans books and records relating to (i) the Manufacturing Cost of the Product; (ii) any activities undertaken by Elan on behalf of Acorda pursuant to Article 3; and (iii) any activities undertaken by Elan on behalf of Acorda pursuant to Article 6, in each case, for the purpose of verifying the reasonable basis of the payments made by Acorda hereunder with respect thereto.
5.9.7 Notwithstanding any other provision of this Agreement, if at any time legal restrictions prevent the prompt remittance of part or all of the payments due to Elan in any country, payment shall be made through such lawful means or methods as Acorda may determine after consultation with Elan. When in any country the law or regulations prohibit both the transmittal and deposit of royalties on sales in such a country, payments shall be suspended for as long as such prohibition is in effect and promptly after such prohibition ceases to be in effect, all royalties or other payments that Acorda or its Affiliates would have been obligated to transmit or deposit, but for the prohibition, shall be deposited or transmitted, as the case may be, to the extent allowable, less any transactional costs. If the royalty rate specified in this Agreement should exceed the permissible rate established in any country, the royalty rate for sales in such country shall be adjusted to the highest legally permissible or government-approved rate.
ARTICLE 6 REGISTRATION OF THE PRODUCT
6.1. As is stated at Article 3.7, a primary objective of the Project is to generate the NDA and to secure NDA Approval. As of the date of this Agreement, it is the Parties expectation that the body of data so generated during the Project will support such applications for Regulatory Approval that Acorda shall make in the other countries of the Territory.
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6.2. Subject to the review by the Committee pursuant to Article 10 and to Elans preparation and delivery to Acorda of the CMC Section in form and substance acceptable for inclusion in the NDA (as well as any revisions thereto as may be mandated or requested by the FDA), and to the other provisions of this Article 6, Acorda shall have the right and responsibility for filing, shall use its reasonable efforts to prosecute to approval, and shall own the NDA. It is acknowledged that Elan has assigned the IND to Acorda. Within ninety (90) days following the completion of the Project as determined by the Committee, Acorda shall submit the NDA for filing with the FDA.
6.3. Acorda shall not alter the Specifications or any part of the CMC Section unless (a) by agreement with Elan, or (b) mandated by the FDA or other regulatory authority. In either case, Acorda shall promptly notify Elan and for changes made after NDA Approval, shall be responsible for Elans reasonable expenses associated with required changes to its manufacturing license(s ).
6.4. Subject to Elan preparing and delivering to Acorda the CMC Section as set forth in this Agreement, Acorda shall be responsible for obtaining all Regulatory Approvals necessary for Elan to package the Product into final market packaging. Acorda shall be responsible for obtaining all applicable FDA and other state and local regulatory approvals for the distribution of the Product in the United States of America and elsewhere. Elan shall co-operate with Acorda in obtaining such approvals.
6.5. Acorda shall maintain at its own cost the NDA (and shall bear the cost of any amendments or supplements to the CMC Section, other than those requested by Elan, which costs shall be borne by Elan) with the FDA during the period that Acorda and/or its Designees are marketing the Product. Acorda shall continue to maintain the NDA with the FDA, at Elans request and expense, if Elan acquires the right to a licence in the United States or any other country in which the NDA is relied upon as the primary application for Regulatory Approval pursuant to Article 2.11.3 for such term thereafter during which Elan and/or its designees (for which purpose the definition of Designee as set out in Article 1 shall apply mutatis mutandis) is marketing the Product. Acorda hereby agrees to provide to Elan a copy of the NDA within thirty (30) days of the submission thereof to the FDA. Acorda shall also furnish a copy to Elan of all other regulatory filings and other material correspondence with the FDA and other regulatory authorities within thirty (30) days of submission. The NDA and any NDA Equivalent or application for Regulatory Approval filed in Territory for the Product shall remain the property of Acorda, provided that Acorda shall allow Elan access thereto to enable Elan to fulfil its obligations and exercise its rights hereunder.
6.6. During the NDA registration procedure, Acorda shall keep Elan promptly and fully advised of Acordas registration activities, progress and procedures during Committee meetings. Elan and Acorda shall each before proceeding with any FDA filings, meetings or telephone conferences, inform and discuss the participation of the other with respect to any such proposed dealings with the FDA relating to the Product and shall promptly provide to that other copies of all correspondence with, and all documents and applications filed with, or submitted by it to, any regulatory authority with respect to Product; provided, however, that that the Parties acknowledge and agree that Acorda
27
shall be the primary contact with the FDA and any other regulatory authority in the Territory with respect to Product.
6.7. It is hereby acknowledged that there are inherent uncertainties involved in the development and registration of pharmaceutical products with the FDA or any other regulatory body in the United States of America insofar as obtaining approval is concerned and that such uncertainties form part of the business risk involved in undertaking the form of commercial collaboration as set forth in this Agreement. Therefore, save for using its reasonable efforts, neither Party shall have any liability to the other solely as a result of any failure of the Product to achieve the approval of the FDA, or any other regulatory body in the United States of America.
6.8. Acorda shall also be responsible for the filing and prosecution at its own cost of the regulatory applications with the regulatory authorities in Japan, the Major European Markets and in such other countries of the Territory as it elects and Elan shall cooperate fully with Acorda in connection with such activities. The provisions of Articles 6.1 to 6.7 inclusive shall apply, mutatis mutandis, to Acordas and Elans obligations vis a vis Japan, the Major European Markets and such other countries of the Territory.
ARTICLE 8 WARRANTY AND INDEMNITY
8.1. Elan represents and warrants that Elan is the sole and exclusive owner or licensee of, or controls all right, title and interest in the Elan Intellectual Property; Elan has the right to grant the rights and licences granted herein, and the Elan Intellectual Property as it pertains to the Product and the Product is free and clear of any lien, encumbrances, security interest) or restriction on license; Elan will not grant during the term of this Agreement, any right, licence or interest in and to the Elan Intellectual Property or the Product, or any portion thereof, inconsistent with the licence granted to Acorda herein; and there are no pending or, to the knowledge of Elan, threatened, actions, suits, investigations, claims or proceedings in any way related to the Elan Intellectual Property or the Product. Insofar as such patent rights and know-how constitute Elan Patent Rights or Elan Know-How for the purposes of this Agreement, Elan represents and warrants that it is entitled to grant a licence to such patent rights and know-how as are developed by or on behalf of Elan pursuant to the Axogen Agreement, including any patent rights and non-patented know-how or other information which may be conceived, reduced to practice or otherwise developed by or on behalf of Elan pursuant to the Axogen Agreement. Elan agrees to hold Acorda harmless from any and all costs, expenses and damages (including reasonable attorneys fees) incurred or sustained by Acorda as the result of any Third Partys challenges to Elans right to enter into this Agreement and to grant the rights and licences herein granted to Acorda and the Elan Intellectual Property.
8.2. Elan represents and warrants that the execution of this Agreement and the full performance and enjoyment of the rights of Acorda under this Agreement will not breach or in any way
28
be inconsistent with the terms and conditions of any licence, contract, understanding or agreement, whether express, implied, written or oral between Elan and any Third Party.
8.3. Acorda represents and warrants that it has not granted any option, licence, right or interest in or to the Compound or to the Acorda Patent Rights to any Third Party which would conflict with the terms of this Agreement. Acorda agrees to hold Elan harmless from any and all costs, expenses and damages (including reasonable attorneys fees) incurred or sustained by Elan as the result of any Third Partys challenges to Acordas right to enter into this Agreement.
8.4. Acorda represents and warrants that the execution of this Agreement will not breach or in any way be inconsistent with the terms and conditions of any licence, contract, understanding or agreement, whether express, implied, written or oral between Acorda and any Third Party.
8.5. Each Party represents and warrants that with respect to all data and information generated by it to support regulatory filings seeking to obtain approval of the regulatory authorities shall, to the best of that partys knowledge, be free from fraud or material falsity and shall be accurate and reliable for purposes of supporting approval of the submissions. Each Party warrants that all regulatory applications made by that Party have not been and will not be obtained either through bribery or the payment of illegal gratuities, and that no Regulatory Approval shall be obtained with illegal or unethical behaviour of any kind.
8.6. Elan represents and warrants that the Product supplied to Acorda by Elan under this Agreement has been and shall be free of any lien, security, interest or other encumbrance on title, conform to the Specifications and in accordance with all regulations and requirements of the FDA and foreign regulatory authorities including, without limitation, the cGMP regulations which apply to the manufacture, storage, packaging and supply of the Product. Elan represents and warrants that the Product supplied to Acorda under this Agreement has been and shall be free of defects in material and workmanship, shall not be adulterated or mis-branded as defined by the Act (or applicable foreign law) and shall not be a product which would violate any section of such Act if introduced in interstate commerce and shall be fit for use as a pharmaceutical product. Acorda agrees not to assert its right to rescind this Agreement (if any) in the event of a breach of the representations of Elan contained in this Article 8.6.
It is hereby acknowledged for the avoidance of doubt that for the purposes of this Article 8, commercial supplies of Product under the Supply Agreement are not regarded as supplied under this Agreement.
8.7. Elan and Acorda is each fully cognisant of all applicable statutes, ordinances and regulations of the United States of America with respect to the manufacture of the Product including, but not limited to, the Act and regulations thereunder, cGLP, cGCP and cGMP. Elan shall manufacture or procure the manufacture the Product under this Agreement in conformity with the Specifications, the relevant portions of the CMC Section and, if applicable, the DMF and in a manner which fully complies with all United States of America and foreign statutes, ordinances, regulations and practices.
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8.8. Acorda shall indemnify and hold harmless Elan, its agents and employees from and against all claims, damages, losses, liabilities and expenses to which Elan, its agents, and employees may become subject related to or arising out of Acordas bad faith, gross negligence or intentional misconduct in connection with the filing or maintenance of the NDA. Elan shall indemnify and hold harmless Acorda, its agents and employees from and against all claims, damages, losses, liabilities and expenses to which Acorda, its agents, and employees may become subject related to or arising out of Elans bad faith, gross negligence or intentional misconduct in connection with the preparation of the CMC Section.
8.9. Elan shall indemnify, defend and hold harmless Acorda and its officers, directors, employees and agents from all actions, losses, claims, demands, damages, costs and liabilities (including reasonable attorneys fees) due to Third Party claims to which Acorda is or may become subject insofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Elan of any of its obligations under this Agreement, (ii) any breach of a representation or warranty of Elan made in this Agreement, (iii) any activities conducted by Elan in connection with the Project, (iv) any failure of the Product provided under this Agreement to meet the Specifications, or (v) the manufacture or shipment of the Product provided under this Agreement by Elan, except in each case to the extent due to the negligence or wilful misconduct of Acorda.
8.10. Acorda shall indemnify, defend and hold harmless Elan and its officers, directors, employees and agents from all actions, losses, claims, demands, damages, costs and liabilities (including reasonable attorneys fees) due to Third Party claims to which Elan is or may become subject insofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Acorda of any of its obligations under the Agreement, (ii) any breach of any representation or warranty of Acorda made in this Agreement, and (iii) any activities conducted by Acorda in connection with the Project, except to the extent due to the negligence or wilful misconduct of Elan.
8.11. Acorda shall indemnify, defend and hold harmless Elan and its officers, directors, employees and agents from all actions, losses, claims, demands, damages, costs and liabilities (including reasonable attorneys fees) due to Third Party claims to which Elan is or may become subject insofar as they arise out of or are alleged or claimed to arise out of activities conducted by Acorda or its Designee in the manufacture, transport, packaging, storage, handling, distribution, promotion, marketing or sale of the Product, that was caused by the negligence or wrongful acts or omissions on the part of Acorda or its Designees, except in each case, to the extent covered by Article 8.10 or due to the negligence or wilful misconduct of Elan.
8.12. Elan represents and warrants that, the manufacture, sale, distribution or use of the Product in the Territory solely because of the use of the Elan Intellectual Property does not, to Elans actual knowledge, infringe any patent owned by a Third Party, provided, that Elan represents and warrants that it is not aware of any pending or threatened proceeding or claim of any person or entity pertaining to the Product, that asserts the infringement of any patent owned by a Third Party. In the event that (I) a claim or proceedings are brought against Acorda and/or Elan by a Third Party alleging that the
30
manufacture, sale, distribution or use of the Product in the Territory infringes the patent rights of such Third Party, and such alleged infringement results from the use of the Elan Intellectual Property, and (II) Elan was in breach of the foregoing representation and warranty with respect to such Third Party patent rights, Elans liability to Acorda with respect to such infringement pursuant to this Article 8.12 (including without limitation, reasonable attorneys fees and other out of pocket expenses of the litigation, including the fees and expenses incurred by Elan and Acorda) shall be limited to and shall be borne by the Parties in the manner set forth in Article 11.3.1.
For purposes of this Article 8, Elans actual knowledge shall mean the knowledge of representatives of Elan that have been engaged in the Project in a key operational role.
8.13. Elan has no actual knowledge that (a) the issued and unexpired patents included in the Elan Patent Rights are invalid or unenforceable over any references or prior art known to Elan or its agents, taken alone or in combination, nor (b) that the pending patent applications included in the Elan Patent Rights fail to include patentable subject matter, nor (c) that Elan and its agents have failed to comply with any duty of candor imposed on an applicant for patent before a particular national or regional patent office with respect to the patents, applications and patent offices listed in Schedule 3.
8.14. Acorda represents and warrants that as of the date of this Agreement to Acordas actual knowledge, the development and manufacture of the Product by Elan or Acorda, or the manufacture, sale, distribution or use of the Product in the Territory, solely because of the use of the Acorda Patent Rights or Acorda Know-How will not to the best of Acordas belief infringe any patent owned by a Third Party.
For purposes of this Article 8, Acordas actual knowledge shall mean the knowledge of representatives of Acorda that have been engaged in the Project in a key operational role.
8.15. As a condition of obtaining an indemnity in the circumstances set out above, the Party seeking an indemnity shall:
8.15.1 fully and promptly notify the other Party of any claim or proceeding, or threatened claim or proceeding;
8.15.2 permit the indemnifying Party to take full care and control of such claim or proceeding;
8.15.3 assist in the investigation and defence of such claim or proceeding;
8.15.4 not compromise or otherwise settle any such claim or proceeding without the prior written consent of the other Party, which consent shall not be unreasonably withheld; and
8.15.5 take all reasonable steps to mitigate any loss or liability in respect of any such claim or proceeding.
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8.16. TO THE FULLEST EXTENT PERMITTED BY LAW, APART FROM THE FOREGOING REPRESENTATIONS, WARRANTIES AND INDEMNITY, ELAN MAKES NO ADDITIONAL REPRESENTATIONS OR WARRANTIES AND HEREBY DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, AND LIABILITIES, WHETHER EXPRESS OR IMPLIED, ARISING FROM CONTRACT OR TORT (EXCEPT FRAUD), IMPOSED BY STATUTE OR OTHERWISE, RELATING TO THE PRODUCT AND/OR ANY PATENTS OR TECHNOLOGY USED OR INCLUDED IN THE PRODUCT, INCLUDING ANY WARRANTIES AS TO MERCHANTABILITY, FITNESS FOR PURPOSE, CORRESPONDENCE WITH DESCRIPTION, OR NON-INFRINGEMENT.
8.17. EXCEPT IN RESPECT OF EACH PARTYS LIABILITY TO INDEMNIFY THE OTHER AGAINST CLAIMS MADE BY A THIRD PARTY, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND ACORDA SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT THAT THIS LIMITATION SHALL NOT APPLY TO DAMAGES DIRECTLY OR INDIRECTLY ARISING FROM PERSONAL INJURY OR DEATH CAUSED BY THE DEFECTIVE DESIGN AND/OR MANUFACTURE OF THE PRODUCT.
8.18. Elan represents and warrants that Elan Corporation plc will provide Elan Pharma Limited or any other subsidiaries with a licence and the rights to manufacture the Product in accordance with the terms of this Agreement and the Supply Agreement.
10.1. Acorda and Elan shall establish the Committee to provide oversight, review and coordination relating to the development, manufacturing and supply, Regulatory Approval and commercialisation of the Product, and for resolution of disputed issues that may arise between the Parties under this Agreement or the Supply Agreement. Unless otherwise agreed, the Committee shall be comprised of six members, with three members appointed by each of Elan and Acorda. The operation of the Committee shall be as set forth at Article 10.2 to Article 10.5. Acorda and Elan each shall appoint a person (a Primary Contact ) to be the primary contact between the Parties with respect to the Project and to coordinate correspondence and communications between the Parties. Each Party shall notify the other in writing within thirty (30) days after the
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Amendment Date of its representatives on the Committee and of the appointment of its Primary Contact and shall notify the other Party as soon as practicable upon changing its Committee representatives or the Primary Contact appointment in accordance with Article 12.12. The Primary Contact of each Party will be one of its three representatives in the Committee.
10.2. Except as specifically set forth in this Agreement, the Committee shall be responsible for overseeing the Project, including the following:
10.2.1 reviewing and, if deemed necessary or desirable, updating the Development Plan, the Technology Transfer Responsibilities and the Project budget; and accordingly Elan shall advise the Committee if it believes that the budget for items of the Project has been or is likely to be significantly exceeded;
10.2.2 facilitating the transfer of know-how, regulatory correspondence and communications and other data as contemplated by this Agreement and the Supply Agreement;
10.2.3 reviewing and assessing the progress of development of Product and, to the extent contemplated by this Agreement, evaluating and, if determined by the Committee, approving Technology Transfer Responsibilities and authorizing Elan to perform tasks required in connection with development of and regulatory submissions relating to Product;
10.2.4 discussing objectives for and performance of the Product in the Territory, and the promotional activities and materials associated therewith;
10.2.5 resolving any disputes between the Parties relating to the Project, provided, however, that Acorda shall have the final decision as to all clinical trial protocols and the conduct of all clinical trials and marketing and promotional activities by Acorda or its Designee; and
10.2.6 such other activities as are delegated to the Committee under this Agreement.
10.3. The Committee shall use its best efforts to resolve any disputed issues, conflicts or differences of opinion between the Parties under this Agreement. If the Committee is unable to reach a consensus on any issue within thirty (30) days after such issue being presented to the Committee by a Party, notwithstanding the exercise of its best efforts as provided in Article 10, then such issue shall be referred to the chief executive officers of Acorda and Elan Any final decision of the CEOs shall be conclusive and binding on the Parties hereto, and must be reached, if practicable under the circumstances, within thirty (30) days after being referred to the CEO, provided, however, that issues referred to in Article 10.2.5 as being subject to Acordas final decision shall be determined finally and conclusively by Acorda in the event that the Committee and/or the CEOs are unable to reach a consensus; provided further, that any such decision shall comply with applicable governmental regulatory requirements. Any matter as to which the CEOs are unable to reach agreement may be submitted by either Party to binding arbitration for final
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resolution pursuant to Article 12.14, or as otherwise agreed, except with respect to matters for which Acorda has authority to make final decisions.
10.4. The Committee shall consist of the Primary Contact from each Party together with such additional business and development personnel from each Party who are deemed necessary to accomplish the work of the Committee. Unless otherwise agreed, the Committee shall meet at least once each calendar quarter, in person, or by video or telephone conference. In such instance, the next quarterly meeting will be scheduled. Meetings shall be chaired by the chief representative of Acorda and such representative shall be responsible for preparing minutes of such meetings.
10.5. At each meeting, Acorda shall summarize the status of Acordas clinical development, regulatory and, if applicable, marketing and promotional activities with respect to Product. Any disclosures of such progress, results, data or know-how in any meeting shall be deemed Confidential Information of Acorda. At and between meetings of the Committee, each Party shall keep the other fully and regularly informed as to its progress with its respective obligations.
10.6. The Committee shall not be empowered to alter the terms of this Agreement. The continuation of the Committee shall be at the discretion of the Parties as deemed appropriate to further the registration and commercialisation activities in the Territory.
11.1.
11.1.1 Acorda shall have the first right to file, prosecute and maintain the Elan Patent Rights in Elans name, using patent counsel selected by Acorda, and shall be responsible for the payment of all related patent filing, prosecution and maintenance costs, subject to this Article 11.1.1. Upon Acordas request, Elan shall reasonably cooperate in the filing, prosecution or maintenance of any patent application or patent included in the Elan Patent Rights. If Acorda elects not to file, prosecute or maintain a patent application or patent included in the Elan Patent Rights in any particular country, it shall provide Elan with written advance notice sufficient to avoid any loss or forfeiture, or at least 60 days notice, and Elan shall have the right, but not the obligation, at its sole expense, to file, prosecute or maintain such patent application or patent in such country in Elans name. If Elan elects to file, prosecute or maintain a patent or application within the Elan Patent Rights that Acorda has elected not to file, prosecute or maintain, such patent or application in such country shall no longer be deemed an Elan Patent Right for purposes of the license in Article 2 to Acorda.
11.1.2 Acorda shall have the first right to file, prosecute and maintain any patent application(s) or patent(s) arising from Joint Inventions and shall be responsible for the payment of all related patent prosecution and maintenance costs. Upon Acordas request, Elan shall reasonably cooperate in the filing, prosecution or
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
maintenance of any such patent application or patent. If Acorda elects not to file, prosecute or maintain any such patent application or patent in any particular country, it shall provide Elan with written advance notice sufficient to avoid any loss or forfeiture, or at least 60 days notice, and Elan shall have the right, but not the obligation, at its sole expense, to file, prosecute or maintain such patent application or patent in such country. Thereafter, such patent or patent application in such country shall be deemed solely an Elan Patent Right. In any such case, Acorda shall not grant any Third Party a license under its interest in the applicable Joint Invention without the prior written consent of Elan.
11.2. Acorda and Elan shall promptly inform the other in writing of any alleged infringement of which it shall become aware by a Third Party of any patents within the Elan Patent Rights and provide each other with any available evidence of infringement. The Parties will thereafter consult and cooperate to determine a course of action, including, without limitation, the commencement of legal action by either party. However, Acorda shall have the first right to initiate and prosecute such legal action at its own expense and in the name of Elan and Acorda, or to control the defense of any declaratory judgment action relating to Elan Patent Rights and Elan will co-operate with such action at Acordas request and expense. Elan shall receive [*] of any such recovery remaining after the deduction by Acorda of the reasonable expenses (including attorneys fees and expenses) incurred in relation to such an infringement proceeding. In the alternative to the foregoing, the Parties may agree to institute such proceedings in their joint names and shall reach agreement as to the proportion in which they will share the proceeds of any such proceedings, and the expense of any costs not recovered, or the costs or damages payable to the Third Party. Should Acorda decide not to pursue such infringers within six (6) months of acquiring knowledge of such infringement, except with respect to Paragraph IV Certifications, in such case the time of notice shall not exceed 20 days, Elan may do so at its expense provided that Acorda shall receive [*] of any such recovery remaining after the deduction by Elan of the reasonable expenses (including attorneys fees and expenses) incurred in relation to such an infringement proceeding. Acorda will co-operate with such action at Elans request and expense. The Party involved in any such claim, suit or proceeding, shall keep the other Party hereto reasonably informed of the progress of any such claim, suit or proceeding. For any such legal action or defense, in the event that any Party is unable to initiate, prosecute, or defend such action solely in its own name, the other Party will join such action voluntarily and will execute all documents necessary for the Party to prosecute, defend and maintain such action.
11.3.
11.3.1 In the event that (I) a claim or proceedings are brought against Acorda and/or Elan by a Third Party alleging that the manufacture, sale, distribution or use of the Product in the Territory infringes the patent rights of such Third Party, and such alleged infringement results from the use of the Elan Intellectual Property, and (II) as of the date the Specifications for the Product have been agreed, Elan was or should reasonably have been aware of such Third Party patent rights, the following shall apply as regards the Third Party claim, including without
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
limitation, reasonable attorneys fees and other out of pocket expenses of the litigation, including the fees and expenses incurred by Elan and Acorda ( Patent Expenses ):
11.3.1.1 if Elan or its subcontractor is manufacturing the Product, Acorda shall bear the [**] of Patent Expenses; Elan and Acorda shall bear the remaining Patent Expenses equally;
11.3.1.2 if Elan or its subcontractor is not manufacturing the Product, Acorda shall discharge the Patent Expenses. Acorda shall be entitled to credit the Patent Expenses from up to [**] of the royalty otherwise payable to Elan pursuant to Article 5.6 and may carry forward any such uncredited Patent Expenses to be credited against up to [**] of the royalty otherwise payable to Elan pursuant to Article 5.6 until fully expended; Elan and Acorda shall bear the remaining Patent Expenses equally.
During the term of this Agreement, Acorda shall have the first right but not the obligation to defend the proceedings referred to in this paragraph and Elan will co-operate with such action at Acordas request and expense. In such event Acorda shall keep Elan advised of all material developments in the said proceedings and shall not settle or compromise such proceedings without the consent of Elan which shall not be unreasonably withheld or delayed. Should Acorda decide not defend such proceedings, Elan may do so and Acorda will co-operate with such action at Elans request and expense. In such event Elan shall keep Acorda advised of all material developments in the said proceedings and shall not settle or compromise such proceedings without the consent of Acorda which shall not be unreasonably withheld or delayed.
Any sums payable by Elan to Acorda, or by Acorda to Elan pursuant to this Article 11.3.1 shall be discharged by Elan or Acorda, as the case may be, within thirty (30) days of the appropriate invoice and reasonable supporting documentation being furnished.
11.3.2 In the event that a claim or proceedings are brought against Elan and/or Acorda by a Third Party alleging that the manufacture, sale, distribution or use of the Product in the Territory as a result of the use of the Elan Patent Rights or Elan Know-How infringes the patent rights of such a Third Party and Elan should not reasonably have been aware of such Third Party patent rights, Acorda and Elan shall meet to discuss in what manner the said proceedings should be defended and, the manner in which any award for damages, costs and expenses incurred in respect of or arising out of such a claim or proceedings should be borne as between Elan and Acorda.
11.3.3 Acorda shall reasonably consider taking such action as is reasonable, such as, to re-formulate or modify the applicable Product so as to avoid infringing the
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patent rights of a Third Party, or entering into a licence agreement with such Third Party after due consultation with Elan.
11.3.4 Elan shall have no liability to Acorda whatsoever or howsoever arising for any losses incurred by Acorda as a result of having to cease selling Product or having to defer the launch of selling Product, as a result of a court order or settlement entered into pursuant to Article 11.5.
11.4.
11.4.1 In the event that a claim or proceedings are brought against Elan by a Third Party alleging that the manufacture, sale, distribution or use of the Product in the Territory infringes the patent rights of such Third Party, and such alleged infringement results from the use of the Acorda Patent Rights or Acorda Know-How, Elan shall promptly advise Acorda of such threat or suit. Acorda shall indemnify Elan against such a claim, including without limitation, reasonable attorneys fees and other expenses of the litigation, provided however, that as of the date the Specifications have been agreed, Acorda was or should reasonably have been aware of such Third Party patent rights; and further provided that Elan shall not acknowledge to the Third Party or to any other person the validity of the patent rights of such a Third Party and shall not compromise or settle any claim or proceedings relating thereto without the written consent of Acorda. At its option, Acorda may elect to take over the conduct of such proceedings from Elan.
11.4.2 In the event that a claim or proceedings are brought against Elan by a Third Party alleging that the manufacture, sale, distribution or use of the Product in the Territory solely as a result of the use of the Acorda Patent Rights or Acorda Know-How infringes the patent rights of such a Third Party and Acorda should not reasonably have been aware of such Third Party patent rights, Acorda and Elan shall meet to discuss in what manner the said proceedings should be defended and, the manner in which any award for damages, costs and expenses incurred in respect of or arising out of such a claim or proceedings should be borne as between Elan and Acorda.
11.4.3 In the event that a claim or proceedings are brought against Elan by a Third Party alleging that the manufacture, sale, distribution or use of the Product in the Territory infringes any patents held by such Third Party and Acorda or its Designee is manufacturing the Product, and the claim or proceeding results from the use of the patent rights or know-how of Acorda or its Designee (and not the Elan Intellectual Property), Elan shall promptly advise Acorda of such threat or suit. Acorda shall indemnify Elan against such a claim, including without limitation, reasonable attorneys fees and other expenses of the litigation; provided that Elan shall not acknowledge to the Third Party or to any other person the validity of the patent rights of such a Third Party and shall not compromise or settle any claim or proceedings relating thereto without the written consent of Acorda. At its option, Acorda may elect to take over the conduct of such proceedings from Elan.
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11.5. In the event that a claim or proceedings are brought against either Party by a Third Party alleging that the sale, distribution or use of the Product in the Territory as a result of the use of the Joint Inventions infringes the patent rights of such a Third Party, Acorda and Elan shall meet to discuss in what manner the said proceedings should be defended and the manner in which any award for damages, costs and expenses incurred in respect of or arising out of such a claim or proceedings should be borne as between Elan and Acorda, provided, however, that Acorda shall have the first right to control the defense of such action relating to Joint Inventions and Elan will co-operate with such action at Acordas request and expense. Neither Party shall acknowledge to a Third Party or to any other person the validity of the patent rights of such a Third Party, the invalidity of the Elan Patent Rights or the Acorda Patent Rights and shall not compromise or settle any claim or proceedings relating thereto without the written consent of the other Party, such consent not to be unreasonably withheld or delayed. The Parties shall co-operate in relation to all material aspects of such litigation or other proceedings and shall meet to discuss in what manner the said proceedings should be defended. If one Party has control of the litigation or other proceeding pursuant to the terms of this Agreement and the other Party wishes to retain separate representation, the latter Party shall bear the costs of such representation.
11.6. Acorda agrees to mark all Product it sells or distributes pursuant to this Agreement with applicable patent numbers or otherwise in accordance with the applicable statute or regulations in the country or countries of manufacture and sale thereof.
12.1. Secrecy :
12.1.1 Any Confidential Information pertaining to the Product that has been or will be communicated or delivered by Elan to Acorda, and any information from time to time communicated or delivered by Acorda to Elan, including, without limitation, trade secrets, business methods, and cost, supplier, manufacturing and customer information, shall be treated by Acorda and Elan, respectively, as Confidential Information, and shall not be disclosed or revealed to any Third Party whatsoever or used in any manner except as expressly provided for herein; provided, however, that such Confidential Information shall not be subject to the restrictions and prohibitions set forth in this section to the extent that such Confidential Information:
12.1.1.1 is available to the public in public literature or otherwise, or after disclosure by one Party to the other becomes public knowledge through no default of the Party receiving such confidential information; or
12.1.1.2 was known to the Party receiving such confidential information prior to the receipt of such confidential information by such Party, whether received before or after the date of this Agreement; or
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12.1.1.3 is obtained by the Party receiving such confidential information from a Third Party not subject to a requirement of confidentiality with respect to such confidential information; or
12.1.1.4 is required to be disclosed pursuant to: (A) any order of a court having jurisdiction and power to order such information to be released or made public; or (B) any lawful action of a governmental or regulatory agency.
12.1.2 Each Party shall take all such precautions with Confidential Information disclosed to it by the other Party as it normally takes with its own confidential information to prevent any improper disclosure of the Confidential Information disclosed to it by the other Party to any Third Party; provided, however, that such confidential information may be disclosed within the limits required to obtain any authorisation from the FDA or any other United States of America or foreign governmental or regulatory agency or, with the prior written consent of the other Party, which shall not be unreasonably withheld, or as may otherwise be required in connection with the purposes of this Agreement.
12.1.3 Notwithstanding the above, each Party hereto may use or disclose Confidential Information disclosed to it by the other Party to the extent such use or disclosure is reasonably necessary in filing or prosecuting patent applications, prosecuting or defending litigation, complying with applicable governmental regulations or otherwise submitting information to tax or other governmental authorities, conducting clinical trials, or making a permitted sub-licence or otherwise exercising its rights hereunder, provided that if a Party is required to make any such disclosure of the other partys Confidential Information, other than pursuant to a confidentiality agreement, it will given reasonable advance notice to the latter Party of such disclosure and, save to the extent inappropriate in the case of patent applications and regulatory submissions, will use its best efforts to secure confidential treatment of such information prior to its disclosure (whether through protective orders or otherwise).
12.1.4 Each Party agrees that it will not use, directly or indirectly, any Confidential Information disclosed by the other Party pursuant to this Agreement or the Supply Agreement, other than as expressly provided herein or in the Supply Agreement.
12.1.5 Acorda and Elan will not publicise the existence of this Agreement in any way without the consent of the other, which consent shall not be unreasonably withheld or delayed, subject to the disclosure requirements of applicable laws and regulations; provided , however , that it is understood that the Parties or their Affiliates may make disclosure of this Agreement and the terms hereof in any filings required by the SEC, may file this Agreement as an exhibit to any filing with the SEC and may distribute any such filing in the ordinary course of its business, provided , further , that to the maximum extent allowable by SEC rules and regulations, the Parties shall be seek to maintain the confidentiality
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obligations set forth herein and shall redact any confidential information set forth in such filings. In the event that either Party wishes to make an announcement concerning the Agreement, that Party shall seek the consent of the other Party, which consent shall not be unreasonably withheld or delayed and shall not be required to the extent the text of the announcement relating to this Agreement has previously been agreed to by the other Party. The terms of any such announcement shall be agreed in good faith.
12.2. Assignments/ Subcontracting :
12.2.1 Subject to the provisions of this Article 12.2, each party be entitled without the consent of the other:
12.2.1.1 to subcontract or delegate the whole or any part of its duties hereunder to its Affiliate(s) (but shall remain responsible for its obligations under this Agreement); and/or
12.2.1.2 to assign this Agreement to its Affiliate, provided that such assignment has no material adverse tax implications for the other party or parties hereto, and provided further that the assigning Party shall remain liable and responsible with such assignee to the other Party for the performance of any obligations, representations or warranties delegated, contracted, assigned or otherwise transferred to any such assignee.
12.2.2 Elan may, but shall not be obliged to, assign its rights and obligations under this Agreement to a Permitted Assignee (as such term is defined in the Supply Agreement) of the Supply Agreement.
12.2.3 Each Party may assign all (but not a portion) of its rights and obligations under this Agreement to an entity that acquires all or substantially all of its business or assets to which this Agreement pertains, whether by merger, reorganisation, acquisition, sale or otherwise.
12.2.4 Except as provided for in this Article 12.2, this Agreement may not be assigned by a party without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed.
12.2.5 Any permitted assignee of a Party under this Article 12.2 shall assume all related obligations of its assignor under this Agreement.
12.3. Parties bound :
This Agreement shall be binding upon and enure for the benefit of Parties hereto, their successors and permitted assigns.
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12.4. Severability :
If any provision in this Agreement is agreed by the Parties to be, or is deemed to be, or becomes invalid, illegal, void or unenforceable under any law that is applicable hereto, (i) such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable or, if it cannot be so amended without materially altering the intention of the Parties, it will be deleted, with effect from the date of such agreement or such earlier date as the Parties may agree, and (ii) the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.
12.5. Duration and Termination :
12.5.1
12.5.1.1 Subject to the other provisions of Article 12.5, this Agreement shall remain in full force and effect for a period commencing as of the date of this Agreement and shall expire on a country by country basis on the latest of:
(a) fifteen (15) years starting from the Amendment Date;
(b) expiry of the last to expire patent included in the Elan Patent Rights in that country; and
(c) the existence of Competition in that country
(the Initial Period ) .
12.5.1.2 At the end of the Initial Period, the Agreement may be continued for five (5) year terms by the consent of the Parties, which consent shall not be unreasonably withheld or delayed. The Party requiring the extension shall serve two (2) years written notice on the other prior to the end of the Initial Period or any additional five (5) year period.
12.5.2 The Agreement shall be subject to earlier termination in accordance with the following provisions:
12.5.2.1 Acorda may terminate this Agreement in its entirety or with respect to any country with thirty (30) days prior written notice to Elan prior to Regulatory Approval, and with ninety (90) days prior written notice to Elan at any time thereafter;
12.5.2.2 subject to the determination in an arbitration that Acorda has breached the applicable provisions, Elan may terminate the Agreement for the applicable region(s) or country or countries of the Territory if Acorda breaches the provisions of Article 2.11.3, or Acorda indicates to Elan pursuant to Article 2.11.4.3, that it does not intend to obtain Regulatory Approval and commercialise the Product, and Elan does not exercise its option to take a licence to the
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Acorda Patent Rights and the Acorda Know-How in accordance with Article 2.11.3.
12.5.3 In addition to the rights of early or premature termination provided for elsewhere in this Agreement, in the event that any of the terms or provisions hereof are incurably breached by either Party, the non-breaching Party may immediately terminate this Agreement by written notice. An incurable breach shall be committed when either Party is dissolved, liquidated, discontinued, becomes insolvent, or when any proceeding is filed or commenced by either Party under bankruptcy, insolvency or debtor relief laws. In the event of any other breach, the non-breaching Party may terminate this Agreement by the giving of written notice to the breaching Party that this Agreement will terminate on the sixtieth (60th) day from notice unless cure is sooner effected. If the breaching Party has proposed a course of action to rectify the breach and is acting in good faith to rectify same but has not cured the breach by the sixtieth (60th) day, the said period shall be extended by such period as is reasonably necessary to permit the breach to be rectified.
12.5.4 Upon exercise of those rights of termination as specified in Article 12.5.2, or Article 12.5.3, in any country or countries or the entire Agreement as the case may be, this Agreement shall, subject to the other provisions of the Agreement and Article 12.5.5, automatically terminate forthwith in the applicable country or countries or the entire Agreement as the case may be, and be of no further legal force or effect.
12.5.5 Upon termination of the Agreement:
12.5.5.1 any sums that were due from Acorda to Elan prior to the exercise of the right to terminate this Agreement (including but not limited to, Research and Development Costs and such additional expenses pursuant to Article 5.7 in each case incurred prior to the notice of termination, shall be paid in full within sixty (60) days of termination of this Agreement;
12.5.5.2 all confidentiality provisions set out herein shall remain in full force and effect for a period of five (5) years;
12.5.5.3 all representations and warranties shall insofar are appropriate remain in full force and effect;
12.5.5.4 the rights of inspection and audit shall continue in force for the period referred to in the relevant provisions of this Agreement;
12.5.5.5 termination of this Agreement for any reason shall not release any Party hereto from any liability which, at the time of such termination, has already accrued to the other Party or which is attributable to a period prior to such termination nor preclude either
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Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement;
12.5.5.6 save and except as is necessary to enable Elan to exercise the licences granted by Acorda to Elan pursuant to Article 2.9 and Article 2.11.3, upon any termination of this Agreement, Acorda and Elan shall promptly return to the other Party all Confidential Information received from the other Party (except one copy of which may be retained for archival purposes); and
12.5.5.7 in the event this Agreement is terminated for any reason, Acorda and its Designees shall have the right for a period of six (6) months from termination to sell or otherwise dispose of the stock of any Product then on hand, which such sale shall be subject to the terms of the Supply Agreement.
12.5.5.8 Article 1, Article 2.2, Article 8, Article 11.1.1, 11.1.2, 11.2, 11.3, 11.4, 11.5, and Article 12 shall survive the termination or expiration of this Agreement for any reason.
12.5.6
12.5.6.1 In the event of termination of the licences to the Elan Intellectual Property granted by Elan to Acorda pursuant to Article 2.11.3 as to any country or countries or in the event of the termination of this Agreement by Elan pursuant to Article 12.5.3, Acorda shall at the option of Elan grant a licence to the Acorda Patent Rights and the Acorda Know-How, including the data, information, Regulatory Applications, Regulatory Approvals, pricing and reimbursement approvals to enable Elan to commercialise the Products in such country or countries on the terms set out in Article 2.11.3 and to the Trademark on the terms set out in Article 2.9.
12.6. Force Majeure :
Neither Party to this Agreement shall be liable for delay in the performance of any of its obligations hereunder if such delay results from causes beyond its reasonable control, including, without limitation, acts of God, fires, strikes, acts of war, or intervention of a Government Authority, non availability of raw materials, but any such delay or failure shall be remedied by such Party as soon as practicable.
12.7. Relationship of the Parties :
Nothing contained in this Agreement is intended or is to be construed to constitute Elan and Acorda as partners or joint venturers or either Party as an employee of the other. Neither Party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement or undertaking with any Third Party.
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12.8. Amendments :
No amendment, modification or addition hereto shall be effective or binding on either Party unless set forth in writing and executed by a duly authorised representative of both Parties.
12.9. Waiver :
No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the Party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.
12.10. No effect on other agreements :
Except as specifically set forth herein, no provision of this Agreement shall be construed so as to negate, modify or affect in any way the provisions of any other agreement between the Parties unless specifically referred to, and solely to the extent provided, in any such other agreement.
12.11. Applicable Law :
This Agreement is construed under and ruled by the laws of the State of New York, excluding its conflict of laws rules. For the purpose of this Agreement the Parties submit to the jurisdiction of the United States District Court for the State of New York.
12.12. Notice :
12.12.1 Any notice to be given under this Agreement shall be sent in writing in English by registered airmail or faxed to:
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or to such other address (es) and fax numbers as may from time to time be notified by either Party to the other hereunder.
12.12.2 Any notice sent by registered air-mail shall be deemed to have been delivered within seven (7) working days after despatch and any notice sent by fax shall be deemed to have been delivered within twenty four (24) hours of the time of the despatch. Notice of change of address shall be effective upon receipt.
12.13. No Implied Rights :
No rights or licences are granted or deemed granted hereunder or in connection herewith, other than those rights expressly granted in this Agreement.
12.14. Arbitration :
Any dispute under this Agreement which is not settled by the Committee or the CEOs pursuant to Article 10 or otherwise by mutual consent shall be finally settled by binding arbitration, conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association by three (3) arbitrators appointed in accordance with said rules. The arbitration shall be held in New York, New York and at least one of the arbitrators shall be an independent expert in pharmaceutical product development and marketing (including clinical development and regulatory affairs). The arbitrators shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time which the Parties must expend for discovery; provided the arbitrators shall permit such discovery as they deem necessary to permit an equitable resolution of the dispute. Any written evidence originally in a language other than English shall be submitted in English translation accompanied by the original or a true copy thereof. The costs of the arbitration, including administrative and arbitrators fees, shall be shared equally by the Parties and each Party shall bear its own costs and attorneys and witness fees incurred in connection with the arbitration. A disputed performance or suspended performances pending the resolution of the arbitration must be completed within thirty (30) days following the final decision of the arbitrators or such other reasonable period as the arbitrators determine in a written opinion. The parties shall use all reasonable efforts to ensure that any arbitration subject to this Article 12.14 shall be completed within one (1) year from the filing of notice of a request for such arbitration. The arbitration proceedings and the decision shall not be made public without the joint consent of the Parties and each Party shall maintain the confidentiality of such proceedings and decision, subject to any contrary provision of this Agreement or unless otherwise permitted by the other Party. The Parties agree that the decision shall be the sole, exclusive and binding remedy between them regarding any and all disputes, controversies, claims and counterclaims presented to the arbitrators. Application may be made to any court having jurisdiction over the Party (or its assets) against whom the decision is rendered for a judicial recognition of the decision and an order of enforcement .
12.15. Independent Development :
Expect as expressly set forth in Article 2.2, nothing in this Agreement will impair Acordas right to independently acquire, license, develop for itself, or have others develop for it, intellectual
45
property and technology performing similar functions as the Elan Intellectual Property or to market and distribute products based on such other intellectual property and technology.
12.16. Further Assurances :
At any time or from time to time on and after the date of this Agreement, each party shall at the request of the other (i) delivery to the other such records, data or other documents consistent with the provisions of this Agreement, (ii) execute, and delivery or cause to be delivered, all such consents, documents or further instruments of transfer or licence, and (iii) take or cause to be taken all such actions, as such party may reasonably deem necessary or desirable in order for such party to obtain the full benefits of this Agreement and the transactions contemplated hereby.
12.17. Entire Agreement :
This Agreement including its Appendices, Schedules and Exhibits, together set forth the entire agreement and understanding of the Parties with respect to the subject matter hereof, and supersedes all prior discussions, agreements and writings in relating thereto, including the letter of agreement of 31 st December 1996, the SCI Agreement, the MS Agreement (as assigned and assumed) and any term sheets or memoranda of understandings relating to any of the foregoing.
12.18. Counterparts :
This Agreement may be executed in two counterparts, each of which shall be deemed an original and which together shall constitute one instrument.
***
46
IN WITNESS THEREOF the Parties hereto have executed this Agreement in duplicate.
SIGNED |
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for and on behalf of |
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ELAN CORPORATION, PLC. |
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Name: |
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Title: |
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SIGNED |
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/s/ Ron Cohen |
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for and on behalf of |
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ACORDA THERAPEUTICS, INC. |
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Name: |
Ron Cohen |
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Title: |
President & Chief Executive Officer |
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47
SCHEDULE 1 ACORDA PATENT RIGHTS
GRANTED PATENT
Country |
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Patent Number |
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Grant Date |
|
Status |
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Inventors |
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US |
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5,952,357 |
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14-Sept-1999 |
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Issued |
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Blass, J. et al. |
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Title: TREATING DISEASES OF THE ANTERIOR HORN CELLS |
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US |
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5,545,648 |
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13-Aug-1996 |
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Issued |
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Hansebout, R, et al. |
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|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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AU |
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676,251 |
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03-June-1997 |
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Granted |
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Hansebout, R, et al. |
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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CZ |
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28441 |
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20-Dec-1993 |
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Granted |
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Hansebout, R, et al. |
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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EP |
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0626848 |
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04-June-2003 |
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Granted |
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Hansebout, R, et al. |
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|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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HU |
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219583 |
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19-Mar-2001 |
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Granted |
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Hansebout, R, et al. |
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|
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|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
48
KP |
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31250 |
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25-Aug-1997 |
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Granted |
|
Hansebout, R, et al. |
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|
|
|
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|
|
|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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KR |
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301415 |
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25-June-2001 |
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Granted |
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Hansebout, R, et al. |
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|
|
|
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|
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|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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NO |
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308.644 |
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25-June-2001 |
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Granted |
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Hansebout, R, et al. |
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|
|
|
|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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NZ |
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258844 |
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22-Sept-1997 |
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Granted |
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Hansebout, R, et al. |
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|
|
|
|
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|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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RU |
|
2160590 |
|
23-May-2000 |
|
Granted |
|
Hansebout, R, et al. |
|
|
|
|
|
|
|
|
|
|
|
Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
||||||
|
|
|
|
|
|
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SK |
|
280922 |
|
20-Dec-1993 |
|
Granted |
|
Hansebout, R, et al. |
|
|
|
|
|
|
|
|
|
|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
49
PENDING PATENT APPLICATIONS
BG |
|
99047 |
|
20-Dec-1993 |
|
Pending |
|
Hansebout, R, et al. |
|
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|
|
|
|
|
|
|
|
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Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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|
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|
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|
|
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CA |
|
2,085,785 |
|
20-Dec-1993 |
|
Pending |
|
Hansebout, R, et al. |
|
|
|
|
|
|
|
|
|
|
|
Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
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|
|
|
|
|
|
|
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JP |
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6-514637 |
|
20-Dec-1993 |
|
Pending |
|
Hansebout, R, et al. |
|
|
|
|
|
|
|
|
|
|
|
Title: THE USE OF 4-AMINOPYRIDINE IN THE TREATMENT OF A NEUROLOGICAL CONDITION |
50
SCHEDULE 2 ASSIGNMENT AGREEMENT
The remainder of this page is intentionally blank. The pages of this Schedule are numbered out of sequence.
51
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
1806 |
|
Formulations and their use in the treatment of neurological diseases |
|
Pending
:
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|
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Issued
:
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[***] |
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[***] |
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Pending:
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52
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
[*******]
53
SCHEDULE 5 RUSH/ACORDA LICENSE
The remainder of this page is intentionally blank. The pages of this Schedule are numbered out of sequence.
54
SCHEDULE 6 RUSH PAYMENTS AGREEMENT
The remainder of this page is intentionally blank. The pages of this Schedule are numbered out of sequence.
55
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission.
Current
Analytical Methods and Specifications For Finished Product Contained in
the US Drug Master File
[****]
56
The remainder of this page is intentionally blank. The pages of this Schedule are numbered out of sequence.
57
SCHEDULE 9 TECHNOLOGY TRANSFER RESPONSIBILITES
ELAN &
ACORDA RESPONSIBILITIES IN CONNECTION WITH FAMPRIDINE DRUG
PRODUCT TECHNOLOGY TRANSFER TO PATHEON, FAMPRIDINE STABILITY
PROGRAM AT CARDINAL (FORMERLY MAGELLAN) & FOR API
MANUFACTURERS
ELAN RESPONSIBILITIES DURING TECHNOLOGY TRANSFER TO PATHEON
Elan will send to Patheon API, standards and samples of drug product batches required to successfully transfer the drug substance and drug product methods
Elan will test and release API lots for the Patheon technology transfer studies
Elan will send copies to Patheon of methods, specifications, method validation reports, batch formulae, component specifications, tablet tooling drawings, and process information as needed, to initiate method and process technology transfer
Elan will review and approve method and process technology transfer protocols prepared by Patheon
Elan will approve methods and process technology transfer reports
Elan will consult with Patheon on issues as they arise during the method and process technology transfer; if required, an Elan analyst or process chemist will travel to Patheon to provide on-site assistance and training on the methods
Elan will review analytical data and executed batch records generated from Patheons technology transfer work in connection with batch release by Patheon
58
ACORDA RESPONSIBILITIES DURING TECHNOLOGY TRANSFER TO PATHEON
Acorda will manage Patheon project timelines
Acorda will provide project management and technology assessment review support during method and process technology transfer
Acorda will manage and approve the budget for the Patheon technology transfer work
Acorda will consult with Patheon on issues as they arise during the method and process technology transfer; if required, an Acorda representative will travel to Patheon to participate in technical/project team meetings
ELAN RESPONSIBILITIES FOR PATHEON AFTER SUCCESSFUL TECHNOLOGY TRANSFER
Elan will provide technical support and guidance to Patheon if technical issues arise
Elan will perform release testing and regulatory release of API lots for the Patheon process validation studies if validation occurs prior to NDA approval
ACORDA RESPONSIBILITIES FOR PATHEON AFTER SUCCESSFUL TECHNOLOGY TRANSFER
Acorda will review batch record and quality control documentation in connection with regulatory release by Patheon of process validation batches
Acorda will manage the Patheon project
Acorda will be responsible for compliance oversight of Patheon
59
Acorda will review and approve all validation protocols and final reports generated by Patheon, as needed
Acorda will review analytical data and batch records generated by Patheon in connection with regulatory release by Patheon
Acorda will provide project management and technology assessment oversight and review support to Patheon
Acorda will prepare the CTD Quality section for the NDA as it pertains to Patheon
ELAN RESPONSIBILITIES FOR CARDINAL (FORMERLY MAGELLAN) STABILITY PROGRAM
Elan will review and approve Cardinal stability protocols
Elan will review data generated from Cardinals analytical testing as needed
Elan will review stability data tables generated from the Cardinal stability studies
Elan will notify Acorda of any out-of-specification results reported to them by Cardinal or discovered during the Elan review of stability data
Elan will consult with Cardinal on issues as they arise during the stability studies; if required, an Elan analyst will travel to Cardinal to provide on-site assistance and training on the methods
Elan will audit Cardinal and will be responsible for compliance oversight during the Cardinal stability studies
Elan will participate and provide technical support during product-specific PAI activities at Cardinal as needed
60
ACORDA RESPONSIBILITIES FOR CARDINAL (FORMERLY MAGELLAN) STABILITY PROGRAM
Acorda will participate in discussions with Cardinal and Elan on technical and project management issues
Acorda will review stability protocols and final stability reports from the Cardinal studies
Acorda will manage and approve the budget for the Cardinal stability studies
Acorda will consult with Cardinal and Elan on issues as they arise during stability studies; if required, an Acorda representative will travel to Cardinal to participate in technical/project team meetings
Acorda may participate in technical meetings with Cardinal and/or compliance audits that pertain to fampridine stability studies
ELAN RESPONSIBILITIES FOR PROCUREMENT OF FAMPRIDINE API
Elan will provide technical advice to API manufacturers (Regis and Uetikon)
Elan will perform regulatory release testing and will release batches for all incoming lots of API to be used in routine production at Elan and through process validation at Patheon (if validation takes place prior to NDA approval)
Elan will oversee and review process validation activities at the API manufacturers
Elan will participate and provide technical support during product-specific PAI activities at the API manufacturers as needed
Elan will review API manufacturers regulatory documentation in connection with DMF submission by the API manufacturers in connection with NDA submission
Elan will notify Acorda of any out-of-specification results reported to them by API manufacturers
Elan will be responsible for auditing and assuring cGMP compliance at the API API manufacturers
Elan will purchase API and manage supply chain logistics in connection with API to be used in Elan drug product production
61
Elan will purchase and manage supply chain logistics in connection with API to be used in Patheon drug product only prior to NDA approval (in connection with technology transfer work and through process validation if validation occurs before NDA approval)
ACORDA RESPONSIBILITIES FOR PROCUREMENT OF FAMPRIDINE API
Acorda will participate in discussions with API manufacturers on technical and project timeline issues
Acorda will provide technical review support in connection with preparation of technical reports, regulatory documentation and validation documentation in connection with commercial scale-up and process optimization activities at the API manufacturers
Acorda will participate in compliance audits of API manufacturers
Acorda will review and advise Elan on budget matters in connection with API manufacturing and development
Acorda will consult with Elan and API manufacturers on issues as they arise during development; if required, an Acorda representative will travel to the API manufacturers to participate in technical/project team meetings
Acorda will be responsible for purchasing API to be used in commercial production of Patheon drug product
62
Exhibit 10.9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
EXECUTION COPY
Date: September 2003
ELAN CORPORATION, PLC.
AND
ACORDA THERAPEUTICS, INC.
SUPPLY AGREEMENT
Fampridine SR
INDEX
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THIS SUPPLY AGREEMENT is made the September 2003
BETWEEN:
(1) Elan Corporation, plc. , a public limited company incorporated under the laws of Ireland, and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland ( Elan ); and
(2) Acorda Therapeutics, Inc. , a corporation organized under the laws of the State of Delaware and having its principal office at 15 Skyline Drive, Hawthorne, New York 10532, United States of America ( Acorda ).
RECITALS:
(A) Elan and Acorda have entered into a Licence Agreement concerning the Product (as each of those terms are defined below).
(B) Elan is prepared to manufacture and supply the Product to Acorda for onward commercial supply.
(C) Elan and Acorda are desirous of entering into this Agreement to give effect to the arrangements described at Recitals (A) and (B).
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1 PRELIMINARY
1.1. Definitions :
Act shall mean the United States Federal Food Drug and Cosmetic Act of 1934, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time.
Affiliate shall mean any corporation or entity controlling, controlled or under common control with Elan or Acorda, as the case may be. For the purposes of this Agreement, control shall mean the direct or indirect ownership of more than 50% of the issued voting shares or other voting rights of the subject entity to elect directors, or if not meeting the preceding criteria, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists.
Agreement shall mean this supply agreement (which expression shall be deemed to include the Recitals and Schedules hereto).
1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
Batch shall mean a specific quantity of Product that is produced according to a single manufacturing order during the same cycle of manufacture, which quantity shall be agreed in the Technical Agreement.
cGMP shall mean current Good Manufacturing Practice as defined in the Act and FDA guidance documents; or as applicable current Good Manufacturing Practice under applicable regulations in the European Union.
EEA shall mean the countries comprising the European Economic Area, as the same may change from time to time .
Effective Date shall mean the date of this Agreement.
Elans Facility shall mean Monksland, Athlone, Co. Westmeath, Ireland or such other facility as Elan may use to perform its obligations hereunder and is in compliance with the NDA and other regulatory requirements.
Elan Territory shall mean any country or countries in which Elan, or any licensee of Elan other than Acorda, is permitted to commercialise the Product, by virtue of termination of the License Agreement in that country or the grant of a license by Acorda to Elan pursuant to Article 2.11.3 of the License Agreement.
EXW or Ex Works shall have the meaning as such term is defined in the ICC Incoterms, 2000, International Rules for the Interpretation of Trade Terms, ICC Publication No. 560.
Force Majeure shall mean any cause or condition beyond the reasonable control of the party obliged to perform, including acts of God, acts of government (in particular with respect to the refusal to issue necessary import or export licenses), fire, flood, earthquake, war, riots or embargoes, strikes or other labour difficulties affecting a party, or either partys inability to obtain supplies of components of the Product howsoever arising.
FTE means Elans full time equivalent charging rate for its appropriate employees or consultants from time to time (based on cost without mark-up) which as of the Amendment Date is [***] per day.
Governmental Authority shall mean the FDA and /or all other governmental and regulatory bodies, agencies, departments or entities, whether or not located in the Territory, which regulate, direct or control commercial and other related activities in or with the Territory.
Launch Stocks shall mean the quantities of stocks of the Product required by Acorda in relation to the launch of the Product following Regulatory Approval in a Major Market, as more fully described in Clause 4.7.
Launch Year shall mean the period commencing on the date of First Commercial Sale and expiring on the last day of the month that is the twelfth (12 th ) month following the
2
date in which the First Commercial Sale occurs. For example, if the First Commercial Sale occurs on March 15 of any year, the Launch Year shall commence on March 15 of such year and expire on March 31 of the following year.
Licence Agreement shall mean that certain Amended and Restated Licence Agreement between Elan and Acorda of even date herewith.
Major Market(s) shall mean the US, the UK, France, Germany, Italy and Japan.
Manufacturing Cost shall mean the costs described in Schedule 1 as they relate to the Product, PROVIDED THAT if Elan is manufacturing the Product for sale in an Elan Territory, in no event shall Manufacturing Cost exceed Elans own costs for such manufacture, as calculated based on GAAP.
Maximum Capacity shall mean Elans maximum quarterly manufacturing capacity for the Product from time to time, as agreed in, or determined pursuant to, the Technical Agreement.
Minimum Elan Requirements shall mean for any Year, at least seventy five percent (75%) of Acordas total requirements of the Product .
Minor Deficiencies shall mean shortfalls or delays that are not inconsistent with industry accepted standards, which standards applicable to the Product shall be clarified in the Technical Agreement.
Permitted Elan Assignee shall mean any entity that purchases all or substantially all of the assets of Elans Facility and has entered into a written agreement with Elan for the benefit of Acorda whereby (inter alia) it represents to Acorda that it is (i) reasonably experienced in the field of pharmaceutical manufacturing (including the existing management of Elans Facility), (ii) in possession of sufficient financial resources and liquidity to perform the obligations of Elan under this Agreement and (iii) in good standing with the FDA.
A Permitted Elan Assignee shall also include any entity that has been formed for the purpose of acquiring Elans Facility, and shall, following such acquisition, be under the management of individuals reasonably experienced in pharmaceutical manufacturing (including the said existing management), in possession of sufficient financial resources and liquidity to perform the obligations of Elan under this Agreement, and none of which are debarred individuals or entities within the meaning of 21 U.S.C. section 335(a) or (b) and have the capacity of being in good standing with the FDA.
Product shall mean the oral product developed pursuant to the Project, in final packaged and labelled form for commercial sale or for distribution as promotional samples and as defined in the approved NDA or NDA Equivalent.
Recall means a companys removal or correction of a marketed Product that the FDA or equivalent Governmental Authority considers to be in violation of law and against
3
which such agency might reasonably be expected to initiate legal action (e.g., a seizure). A Recall does not include market withdrawal for other reasons, or a stock recovery.
Serious Failure to Supply shall mean that in a period of a Year, for reasons other than Force Majeure or the default of Acorda, Elan fails on at least two occasions to supply Acordas properly forecasted and ordered requirements of the Product in accordance with the terms of this Agreement, except for Minor Deficiencies, and the cumulative shortfall for such Year attributable to such failure(s) is at least 25% of the aggregate amount properly forecasted and ordered from Elan for delivery in such Year.
Term shall mean the term of this Agreement, as set out in Clause 11.
$ and US$ shall mean United States Dollars.
Year means each consecutive four Calendar Quarters.
1.2. Further Definitions :
In addition, the following definitions have the meanings in the Clauses corresponding thereto, as set forth below:
Definition |
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Clause |
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Discount |
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9.4 |
First Approval |
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4.1.1 |
Manufacturer |
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7.1 |
Resumption Quarter |
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7.6.1 |
Second Source |
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7.1 |
Second Source Quantity |
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7.2.1 |
Supply Price |
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9.3.1 |
Technical Agreement |
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5.5 |
1.3. Definitions in Licence Agreement :
Except as otherwise defined in this Agreement, all capitalised terms used in this Agreement shall have the same meaning as in the Licence Agreement.
1.4. Interpretation :
In this Agreement:
1.4.1 the singular includes the plural and vice versa, the masculine includes the feminine and vice versa and references to natural persons include corporate bodies, partnerships and vice versa.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
1.4.2 any reference to a Clause or Schedule, unless otherwise specifically provided, shall be respectively to a Clause or Schedule of this Agreement.
1.4.3 the headings of this Agreement are for ease of reference only and shall not affect its construction or interpretation.
1.4.4 the expressions include, includes, including, in particular and similar expressions shall be construed without limitation.
CLAUSE 2 EXCLUSIVE SUPPLY
2.1. Subject to the terms and conditions of this Agreement, during the Term, Acorda shall purchase its Minimum Elan Requirements of the Product in the Territory from Elan, except as provided in Clause 2.3.
2.2. Subject to the terms and conditions of this Agreement, during the Term, Elan shall not supply the Product to:
2.2.1 any person other than Acorda outside the Elan Territory; or
2.2.2 any person other than Acorda in the Elan Territory who intends, to the actual knowledge of Elan, to sell the Product outside the Elan Territory
except as requested by Acorda, PROVIDED THAT to extent required by applicable law, Elan shall be permitted to:
(a) sell the Product to a person in a country which is both part of the Elan Territory and within the EEA, notwithstanding that such person may re-sell the Product in another part of the EEA which is not part of the Elan Territory; and
(b) if any country of the EEA is part of the Elan Territory, sell the Product to a person in another country of the EEA which is not part of the Elan Territory, provided further that Elan shall not actively solicit any such sales.
2.3. Elan shall not have the obligation to use commercially reasonable efforts to supply the Product where [***] of Manufacturing Cost would exceed the Supply Price, subject to Clauses 2.4 and 2.5
2.4. In the event that either party is of the opinion that the circumstances in Clause 2.3 apply or may shortly apply, it shall promptly notify the other. In such event the parties shall meet to discuss, inter alia , the manner in which Manufacturing Cost is calculated by Elan and Acordas commercialisation plans.
2.5. If after such discussions Elan is of the opinion that if it continues to supply the Product to Acorda, the circumstances in Clause 2.3 will apply, Elan shall promptly formally so notify Acorda. In such event
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
2.5.1 Elan shall use commercially reasonable efforts to supply Acorda with Product the subject of binding orders issued prior to Acordas receipt of such notification, provided that such orders relate to Product scheduled for delivery in the period of three (3) months after the date of the purchase orders, and that such Product shall be invoiced at the applicable price under Clause 9.2 or 9.3; and
2.5.2 After the expiration of the period referred to in Clause 2.5.1, Acorda shall have no further obligation to purchase Product under this Agreement, provide, however, that Acorda may at its option place further purchase orders for delivery during up to a six (6) month period immediately following the period referred to in Clause 2.5.1, subject always to Clause 4 and Clause 5, provided, further, that (i) any such purchase orders are placed not later than three (3) months from the date of Elans notice under this Clause 2.5; and (ii) any such Product ordered shall be invoiced at a price equal to Manufacturing Cost plus [**].
If following the period referred to in Clause 2.5.2, Acorda wishes to continue to purchase the Product from Elan and Elan is prepared to supply the same, the Parties shall negotiate in good faith the terms of any such supply and purchase.
As from the time of Elans notice, Acorda shall be entitled to purchase the Product from the Second Source, but without prejudice to binding purchase orders already placed with Elan and subject to the foregoing paragraph.
CLAUSE 3 REGULATORY MATTERS
3.1. Elan shall be responsible, at Elans expense, for filing for and maintaining all license and permits pertinent to Elans Facility, as distinct from the Regulatory Approvals specific to the Product, without prejudice to Elans responsibilities under the Licence Agreement in respect of preparation and delivery to Acorda for incorporation into the NDA or any NDA Equivalent, of the CMC Section.
3.2. Upon Elans prior written notice, Acorda shall permit Elan or any Affiliate to have access to the NDA and any NDA Equivalent and Regulatory Approvals and to take photocopies of same, as required by Elan to fulfil reporting requirements or as otherwise may reasonably be required by Elan in connection with this Agreement.
3.3. Inspections or Inquiries by Governmental Authorities . With respect to Product supplied by it, Elan shall be responsible for all process and equipment validation and quality control tests and procedures required by any Governmental Authority and shall take all steps necessary to pass inspection by any Governmental Authorities in the Major Markets, but without prejudice to Article 6.3 of the License Agreement. Elan shall:
3.3.1 notify Acorda as soon as possible, but in any event within the time period to be set forth in the Technical Agreement, of any notification received by Elan from a Governmental Authority to conduct an inspection of its manufacturing or other
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facilities used in the development, manufacturing, packaging, storage or handling of the Product;
3.3.2 without delay make available to Acorda a copy of any inspection report received by Elan resulting from any inspection of any of such facilities by such Governmental Authority to the extent such report relates to Product, the formulation, manufacture, testing, storage and delivery of the Product or any premises used by Elan in performing Elans obligations under this Agreement;
3.3.3 provide Acorda with a written copy of any proposed response(s) thereto at least three Business Days prior to submitting such response to any Governmental Authority as well as a copy of the response actually submitted.
Representatives of Acorda or its Designee shall have the right to be present during the inspection and/or during the close-out session with the inspectors. Any Form 483 observations or warning letter related to the Product shall be provided promptly to Acorda, which shall have the right to review and discuss the proposed written response to such 483 observations or warning letter, and a copy of the response actually submitted shall be promptly provided to Acorda. Copies of all other correspondence with any Governmental Authority relating to that any partys activities under this Agreement will be provided to the other party within forty-eight (48) hours.
3.4. Inspection by Acorda / Governmental Authority . Elan shall make (i) any licenses and permits relating to Elans Facility; and (ii) that portion of Elans facility where the Product is manufactured, packaged, tested or stored, including all record and reference samples, available for inspection:
3.4.1 by Acordas duly qualified employee or Designee or, with the consent of Elan, by Acordas agent or contractor; or
3.4.2 by the relevant Governmental Authority.
An inspection under Clause 3.4.1 shall be limited to determining whether there is compliance with cGMP and other requirements of applicable law, including production or quality issues relating to the Product. Any consent required under this Clause 3.4 shall not be unreasonably withheld or delayed.
3.5. Preservation Samples/Retained Samples . Pursuant to all applicable laws, rules and regulations and to the Specifications, Elan shall assign and apply lot numbers and shall take from each lot of (i) the API used to manufacture Product pursuant to this Agreement; (ii) inactive ingredients used in the manufacture of Product pursuant to this Agreement; and (iii) the Product shipped to Acorda or its designee pursuant to this Agreement, preservation samples/retained samples. Elan shall retain and store the particular lot of API, other ingredients or Product, as applicable, in accordance with FDA and other applicable regulations, which currently provide for a period expiring no earlier than two years after the expiration of the shelf life of the particular lot of Product shipped to Acorda or its Designee pursuant to this Agreement. Preservation samples/retained
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samples, as referred to herein, do not include samples retained for purposes of stability testing.
3.6. Elan shall at its option be entitled to change the manufacturing process or site for manufacture of the Product, provided that (a) Elan provides Acorda with all required information in form and substance necessary to file any related amendments or supplements to the NDA or any NDA Equivalent or, if applicable, Elan files with applicable regulatory authorities any required amendments or supplements to any DMF; (b) no such change shall take effect until all requisite regulatory approvals have been obtained, and (c) Elan shall be responsible for the costs associated with such change. Acorda shall reasonably co-operate with Elan in obtaining any such changes requested.
CLAUSE 4 FORECASTS AND ORDERS
4.1. Forecasts . Acorda shall provide Elan with bona fide written forecasts of its estimated Minimum Elan Requirements of the Product as follows:
4.1.1 within eighteen (18) months prior to the anticipated date of first Regulatory Approval in any Major Market ( First Approval ), Acorda shall provide Elan with an eighteen (18) month forecast, broken down on a quarterly basis, for the period beginning with the anticipated date of First Commercial Sale in such Major Market (which date shall be specified in the forecast);
4.1.2 thereafter, every three months until First Approval, Acorda shall provide Elan with an updated forecast on a quarterly basis;
4.1.3 within thirty (30) days of First Approval, and thereafter each calendar month not later than the 23 rd of the month, a rolling 18 month forecast, broken down on a month-by-month and country-by-country basis, for the period commencing at the beginning of the following month; and
4.1.4 not later than 1 August in each year, a five (5) year forecast, broken down on an annual basis.
Except as otherwise provided herein, all forecasts made hereunder shall be made to assist Elan in planning its production and Acorda in planning marketing and sales, shall not be binding purchase orders, and shall be without prejudice to Acordas subsequent firm orders for the Product in accordance with the terms of this agreement. Each forecast provided by Acorda shall supercede any previous forecast and may be expressed in a reasonable range. After receiving Acordas forecasts, Elan shall notify Acorda within five (5) days if Elan becomes aware that it will be unable to supply Acordas forecasted requirements of Product and, in such event, the provisions of Clause 4.6 shall be applicable.
4.2. Purchase Requirements . Subject to the agreement between the Parties relating to Launch Stocks under Clause 4.7, Acorda shall be bound to order one hundred percent
8
(100%) of the forecasted quantities of the Product for each month of the first three (3) months of the most recent rolling forecast referred to in Clause 4.1.3, but otherwise forecasts shall not be binding.
4.3. Forecasts and orders shall not increase or decrease by more than 25% in the aggregate amount of Product required in a calendar quarter compared to the previous calendar quarter, except for Launch Stocks or unless otherwise agreed by Elan. However, Elan shall use reasonable efforts to fulfil Acordas requirements in excess of duly forecasted and ordered amounts.
4.4. Forecasts and orders shall not exceed the Maximum Capacity during the applicable quarterly period.
4.5. Firm Orders . Acorda or its Designee shall provide Elan with purchase orders on the standard purchase order forms of Acorda or its Designee (without prejudice to Clause 5.4) of its Elan Minimum Requirements at least ninety (90) days before it requires each delivery of Product (subject to Clause 4.7 with respect to Launch Stocks), specifying the required delivery date in each purchase order and specifying the quantity of Product requested for commercial use and the quantity of Product for promotional and sample use.
4.6. Shortages . Elan agrees that it will use commercially reasonable efforts to prevent an interruption of supply to Acorda and shall immediately notify Acorda of any problems or unusual production situations which may adversely affect production or quality of Product or its Specifications or its timely delivery to Acorda or its designee. If, at any time during the term of this Agreement, Elan becomes aware that it will not be able to satisfy Acordas forecasts or ordered requirements for Product, then Elan shall: (i) give Acorda prompt notice thereof, (ii) take all commercially reasonable steps to enable Acorda to procure adequate quantities of Product from the Second Source in accordance with the applicable provisions of Clause 7 and (iii) if such inability is partial, Elan shall fulfill firm orders with such quantities of Product as are available. and shall continue to use its commercially reasonable efforts to fulfill orders on a timely basis.
4.7. Launch Stocks . Within six months prior to an anticipated Regulatory Approval in a Major Market, the parties shall discuss and agree upon the manufacture and purchase of specific quantities of Launch Stocks for launch of the Product in the applicable Major Market.
4.7.1 Launch Stocks shall be ordered not later than 20 Business Days from receipt by Acorda of an approval letter, from the FDA or equivalent Governmental Authority in respect of the NDA or an NDA Equivalent in another Major Market.
4.7.2 Acorda may use the validation batches of the Product as Launch Stocks, subject to compliance with applicable laws, the Licence Agreement and other provisions of this Agreement, provided that in such event, any amounts previously paid by
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Acorda to Elan for such validation batches shall be credited against the applicable price for Launch Stocks under Clause 9.1.
CLAUSE 5 SUPPLY OF THE PRODUCT
5.1. Save as otherwise provided in this Agreement, Elan shall use commercially reasonable efforts to produce and supply to Acorda its entire Elan Minimum Requirements of the Product as set forth in and in response to firm purchase orders, within ninety (90) days of the purchase order, or one hundred and fifty (150) days for Launch Stocks or samples (subject to any required extension due to the lead times of specific components of samples).
5.2. Elan shall have no obligation to supply Product:
5.2.1 For any period, in excess of Acordas properly forecast requirements for such period (but Elan will nevertheless use its commercially reasonable efforts to fulfil Acordas requirements in excess of such amounts, having regard to its manufacturing capacity);
5.2.2 for less than a minimum order of one Batch, or such other minimum quantity as may be agreed in the Technical Agreement;
5.2.3 in partial Batches;
5.2.4 where Clause 2.3 applies; or
5.2.5 pursuant to an order which does not conform in all material respects to the provisions of Clause 4 and this Clause 5; provided that if Elan does supply pursuant to such an order in its absolute discretion, that fulfilment shall not affect Elans right to refuse to fulfil any subsequent order which does not comply in all material respects with those provisions.
5.3. The Product supplied by Elan to Acorda shall:
5.3.1 be delivered in finished packaged form in the dosages and configurations as set forth in the Specifications and agreed by the parties and included in the NDA and any NDA Equivalent;
5.3.2 be shipped EXW Elans Facility;
5.3.3 be delivered with a certificate of analysis and certificate of release in respect of the Product, in a form reasonably acceptable to Acorda (and Acorda shall be entitled to rely upon such certificate of analysis without the necessity of performing additional testing), in accordance with the terms of the Technical Agreement, cGMPs and the NDA or any NDA Equivalent; and
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5.3.4 have a shelf life to be determined in the Technical Agreement.
5.4. The terms of this Agreement are hereby incorporated by reference into each order of Product submitted by Acorda and accepted by Elan. In the event of any conflict between an order or other written instructions and this Agreement, the terms of this Agreement shall prevail.
5.5. Not less than eighteen (18) months before the anticipated First Approval, or such later date as may be determined by the Committee, the parties shall negotiate in good faith to conclude a detailed technical agreement (the Technical Agreement ) regulating the parties respective obligations from a technical and quality perspective for the supply of the Product by Elan to Acorda, subject in all cases to compliance with cGMPs, the requirements and commitments of the NDA and any NDA Equivalent and any other applicable laws or regulations governing manufacture and supply of Product. Such agreement will include commercially reasonable terms as to:
5.5.1 the precise procedures regulating the alleged failure of any shipment of the Product to conform to the Specifications as a result of an alleged latent defect and the procedures to be adopted for the return and replacement of such Product;
5.5.2 the inspection and testing for compliance with specifications of API to be conducted by Elan prior to incorporation into Product, the testing and quality analysis of Product to be conducted by Elan prior to shipment of the Product and the format of the certificate of analysis and certificate of release to be furnished by Elan to Acorda as well as any quality analysis to be conducted by Acorda or its Designee;
5.5.3 the batch manufacturing records and other documentation to be prepared and maintained by Elan and delivered with each shipment to Acorda to show compliance with cGMP as well as other applicable United States of America and foreign laws and regulations;
5.5.4 the agreed shelf life of the Product as of the date of shipment;
5.5.5 the quantity of Product constituting a Batch and minimum Batch size of each shipment of the Product;
5.5.6 the manner in which Elan may provide Acorda with assistance in relation to field alerts, recalls, complaints and adverse events;
5.5.7 the notification of change by both parties;
5.5.8 the responsibility to collate and write annual product review and annual reports;
5.5.9 technical agreements with any subcontracted parties;
5.5.10 the stability commitments in NDA or amendments thereto;
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5.5.11 active drug substance, excipient and component supplier agreements, including audits/inspections of related manufacturing facilities;
5.5.12 procedures for determining and monitoring the marginal unit variable element of Manufacturing Cost for purposes of Clause 9.5.1;
5.5.13 such other matters relating to the manufacturing and supply of Product, including any amendments to any of the terms of this Agreement, any matters that this Agreement refers to be included in the Technical Agreement or any other matters that the Parties may mutually agree to or as may be required by the NDA or any NDA Equivalent.
CLAUSE 6 DISPUTES AS TO SPECIFICATION
6.1. All claims for failure of any delivery of the Product to conform to the Specifications must be made by Acorda in writing within sixty (60) days following delivery of Product to Acorda or its Designee except in the case of latent defects. Acorda shall promptly upon Elans request provide reasonable details of the alleged non-conformance and supporting evidence, and shall upon request permit Elan to re-test the Product. If Elan does not agree with Acordas determination of non-conformance, then Elan shall provide Acorda with a written notice of such disagreement within twenty (20) days of receipt of the non-conformance notice (adjusted for any delay in providing appropriate details or permitting re-testing), responding to Acordas claim. The Parties shall use commercially reasonable efforts to resolve such disagreement within ten (10) Business Days of Acordas receipt of Elans notice of disagreement.
6.2. Claims for latent defects, not discovered during the routine testing protocol (to be agreed in the Technical Agreement) shall be made in accordance with the Technical Agreement in writing within thirty (30) days of discovery. Failure to make timely claims in the manner to be prescribed in the Technical Agreement shall constitute acceptance of the delivery.
6.3. In the event that the Product supplied by Elan is not in compliance with the Specifications, or is otherwise adulterated, misbranded or defective, Elan shall, in addition to any other applicable remedies:
6.3.1 be responsible, at the sole cost and expense of Elan, for re-analysis, sampling, processing, return, disposal or destruction, including certification of destruction, of such non-conforming Product; and
6.3.2 at its cost, replace the nonconforming Product with Product meeting the Specifications as soon as reasonably practicable.
6.4. In the event that the nonconformity was due to a fault of Acorda, then, according to Elans orders, the Product shall either be destroyed by Acorda, or returned to Elan for
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destruction by Elan, at Acordas expense. In such an event Acorda will not be entitled to any credit as to the non-conforming Product.
6.5. In the event of an unresolved dispute as to:
6.5.1 conformity of the Product with Specifications; or
6.5.2 whether defects in the Product are attributable to the negligent acts or omissions of Elan,
the parties shall within 30 days after expiration of the ten (10) Business Day period referred to in Clause 6.1 appoint an independent laboratory to undertake the relevant testing and its findings shall be conclusive and binding upon the parties.
All costs relating to this process shall be borne solely by the party whose testing was in error.
If the parties are unable to agree as to the independent laboratory to be used, the matter shall be referred to arbitration in accordance with Article 12.14 of the License Agreement.
CLAUSE 7 SECOND SOURCE
7.1. Process Transfer to Second Source :
Acorda shall be entitled to qualify the facility of Patheon Inc. at 2100 Syntex Court, Mississauga, Ontario as a second source of the Product ( Second Source ), subject to Patheon, Inc. (the Manufacturer ) undertaking to Elan to protect the confidentiality of Elans manufacturing processes related to Product and not use them for any other purpose, in terms reasonably satisfactory to Elan provided that Elan hereby acknowledges that the Manufacturer is in the process of being qualified as a Second Source Manufacturer.
At Acordas request, Elan shall use commercially reasonable efforts to assist in qualifying the Second Source as an alternative site of manufacture of the Product. Pursuant to this obligation, Elan shall:
7.1.1 provide Acorda or the Manufacturer (at Acordas request) with any information necessary to manufacture the Product;
7.1.2 provide to Acorda or the Manufacturer (at Acordas request) the documentation constituting the required material support, more particularly practical performance advice, shop practice, specifications as to materials to be used and control methods;
7.1.3 assist Acorda and/or the Manufacturer (at Acordas request) with the working up and use of the technology and with the training of Manufacturers personnel to
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the extent which may reasonably be necessary in relation to the manufacture of the Product by the Manufacturer. In this regard, Elan will receive the Acordas and/or Manufacturers scientific staff, as applicable, in its premises for certain periods, the term of which will be agreed by the parties; and
7.1.4 comply with the other obligations and responsibilities of Elan relating to technology transfer to Patheon, as set forth in the Technology Transfer Responsibilities Schedule.
Acorda shall comply with its obligations and responsibilities relating to technology transfer to Patheon, as set forth in the Technology Transfer Responsibilities Schedule.
7.2. Supply of Product from Second Source:
Acorda may purchase the following quantities of Product from the Second Source and, accordingly, if so purchased, Acorda shall have no obligation to purchase such quantities from Elan and Elan shall have no obligation to supply such quantities to Acorda:
7.2.1 In any Year, up to twenty five percent (25%) of Acordas total requirements of Product for such Year, subject to Clauses 7.3.2 and 9.5 (the Second Source Quantity );
7.2.2 quantities of the Product which Elan is not obligated to, and declines to, supply pursuant to Clause 2.3;
7.2.3 quantities of Product in addition to the Second Source Quantity required to make up any portion of a valid purchase order which is either (i) not delivered by Elan by its due date for delivery (regardless of the cause of late or short delivery), except for Minor Deficiencies, or (ii) by reason of Force Majeure, to the extent not capable of being delivered by its due date for delivery, for so long as the Force Majeure continues;
7.2.4 where there is a Serious Failure To Supply, its entire requirements of the Product, subject to Clause 7.6.
7.3. Notification of Supply from Second Source; Equitable Purchase of Samples :
7.3.1 If Acorda purchases Product from the Second Source, the amount of the same, together with the quantity so purchased as samples, shall be notified to Elan in the applicable Statement.
7.3.2 Acorda shall purchase from the Second Source at least the same proportion of samples of the Product to commercial supply of Product as the proportion of samples to commercial supply purchased by Acorda from Elan.
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7.4. No Supply Restrictions On Second Source :
Acorda shall not place or attempt to place any restriction on supply from the Second Source to Elan or its licensees for sale in the Elan Territory, except to the extent of the restrictions on supply by Elan under Clause 2.2. In particular, Acorda shall not place or attempt to place any restriction on supplies from the Second Source to Elan for sale in the Elan Territory or its licensees after the end of the Term.
7.5. Responsibility for Second Source :
Assuming compliance by Elan with Clause 7.1, Acorda shall be solely responsible for:
7.5.1 all process and equipment validation in the Second Source required by applicable law or regulations and shall take all steps reasonably necessary to pass inspection by the Governmental Authority;
7.5.2 Product supplied to Acorda or its Designees by the Second Source.
7.6. Resumption of Elan Supply :
7.6.1 In the event that Product is being purchased from a Second Source as a result of Serious Failure To Supply, at such time as Elan has remedied the situation that caused it and is once again able to fulfil its obligations to supply Product pursuant to the terms and conditions of this Agreement, Elan shall so notify Acorda. Commencing on the first calendar quarter beginning after the date of such notice (the Resumption Quarter ), Acorda shall resume purchasing and Elan shall resume its obligations to supply the Minimum Elan Quantities from Elan, subject to the provisions of Clause 7.6.2.
7.6.2 Acorda shall be entitled to:
7.6.2.1 honor its binding purchase commitments from the Second Source, incurred reasonably and consistently with its practice of ordering from Elan and for delivery within three (3) months of the date of such commitments, prior to the notice referred to in Clause 7.6.1; and
7.6.2.2 subsequent to the commencement of the Resumption Quarter, in addition to the Second Source Quantity, purchase from the Second Source up to twenty five percent (25%) of Minimum Elan Requirements, to the exclusion of Elan, for two consecutive calendar quarters in order to be satisfied of Elans ability to fulfil its obligations in respect of the supply of Product pursuant to the terms and conditions of this Agreement.
7.6.3 The Technical Agreement shall contain terms applicable to the resumption of supply where the cessation is by reason of Force Majeure, which shall be not less favourable to Elan than the provisions of Clauses 7.6.1 and 7.6.2 applicable to resumption following Serious Failure to Supply.
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7.7. No Termination Right :
Absent Elans failure to use commercially reasonable efforts to supply Product in accordance with the terms of this Agreement, Acorda shall have no right to terminate this Agreement by reason of failure to supply, except as otherwise expressly provided herein.
7.8. Have Made License :
The Parties acknowledge and confirm that:
(a) to the extent that Acorda is permitted hereunder to purchase the Product from Patheon; and
(b) following termination of this Agreement, and until termination of the License Agreement
Acorda is regarded for the purposes of Article 2.1 of the License Agreement as being permitted to have the Product made by Patheon at the Second Source (subject always to the terms and conditions of this Agreement) and that the license grant under such Article 2.1 to make and have made Product extends accordingly.
CLAUSE 8 ADVERSE EVENTS AND PRODUCT RECALL
8.1. Each party shall give the other prompt notice, which shall be promptly confirmed in writing, of any occurrence that involves:
8.1.1 any material complaint about the safety or effectiveness of a Product, including a claim for death or injury following administration of such Product (that is plausibly related to the administration of such Product); and
8.1.2 any other matter arising out of this Agreement that must be reported to a Governmental Authority.
In the case of Acorda reporting to Elan matters described in Clause 8.1.2, reporting quarterly, or in such other timescale as may be agreed in the Technical Agreement, shall be considered prompt.
For the avoidance of doubt, Acorda shall have overall responsibility for adverse event reporting and medical complaints.
8.2. If a party:
8.2.1 is notified by a Governmental Authority that a Recall of a Product is required, requested or otherwise advisable as being probably needed; or
8.2.2 establishes a need to Recall a Product for non-conformities with the Specifications
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
it shall promptly give to the other party written notice of the same with full details.
8.3. Unless otherwise agreed, after consultation with Elan, Acorda shall take the lead role in any Recall, market withdrawal, stock recovery or any other corrective action related to Product in a commercially reasonable manner and Elan shall afford all reasonable assistance. A final report shall be completed by Acorda and delivered promptly to Elan.
8.4. If the Recall, market withdrawal, stock recovery or other corrective action relating to a Product arises from Elans negligent acts or omissions in manufacturing the Product, or failure of the Product to conform to Specifications, the costs, including the cost of replacement quantities of Products, of such Recall, market withdrawal, stock recovery or other corrective action relating to a Product shall be borne by Elan provided that Acorda could not have discovered the said act(s) or omission(s) prior to the sale of the Product by exercising reasonable diligence. In all other circumstances, such costs shall be borne by Acorda. For purposes of this Agreement, such costs shall include the expenses of notification and destruction or return of the Recalled Product and all other documented out-of-pocket costs incurred in connection with such Recall, market withdrawal, stock recovery or other corrective action relating to a Product, but shall not include lost profits or opportunity costs of either Party.
In the event that Elan should bear the costs of any recall hereunder, Elan shall be entitled but not obliged to take over and perform the recall of the Product and Acorda shall provide Elan at no cost with all such reasonable assistance as may be required by Elan.
CLAUSE 9 FINANCIAL PROVISIONS
9.1. Price of Launch Stocks :
Elan shall invoice Acorda for Launch Stocks at a price equivalent to Manufacturing Cost plus [**], subject to reconciliation pursuant to Clause 9.3.3.
9.2. Price of Samples :
The price to be charged to Acorda for Product intended for distribution as free-of-charge promotional samples in its marketing and promotion of the Product shall be equivalent to Manufacturing Cost plus [***] which price shall apply to Product supplied EXW Elans Facility to Acorda. For the avoidance of doubt, the Parties confirm that if Acorda requires the samples to be supplied in sample packaging, Manufacturing Cost shall include all costs referable to such packaging.
9.3. Price of Product (General) :
9.3.1 Except for Product referred to in Clauses 9.1 and 9.2, the price of the Product manufactured by Elan to be charged to Acorda under this Agreement shall be equivalent to [***] of the NSP as determined by the provisions of Clause 9.3.3 (the Supply Price ), less the Discount to the extent applicable, and
17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
subject to Clause 2.5. The foregoing price shall apply to Product supplied EXW Elans Facility packaged and labelled in final market form and consistent with the NDA.
9.3.2 For the avoidance of doubt the Parties agree that if for whatever reason the Product supplied by Elan to Acorda which meets the Specifications and the applicable law and regulatory requirements is not sold by Acorda, payment to Elan for such Product shall nonetheless be effected and the price of the Product shall be determined by reference to the NSP calculated pursuant to the provisions of Clause 9.3.3.
9.3.3 Upon supply, Elan shall render an invoice in respect of the quantities of Product delivered to Acorda for a sum calculated by reference to [***] of then-applicable Notional NSP. The Parties shall adjust their account as of the end of each calendar quarter during such calendar year by Acorda paying to Elan, or by Elan crediting Acorda (as the case may be), the difference between the sum paid pursuant to the previous sentence and the actual Supply Price calculated each calendar quarter pursuant by reference to actual NSP in such quarter, within the period specified in Clause 9.6.
9.4. Discount :
Where Acorda purchases from Elan for delivery in any Year more than [***] tablets of the Product, Acorda shall be entitled to a discount (the Discount ) in respect of the excess equal to [***] of Elans Manufacturing Cost for such excess tablets.
The Discount is without prejudice to Clause 2.3.
9.5. Compensating Payment :
9.5.1 In respect of all Product purchased from the Second Source pursuant to Clause 7.2.1 and 7.6.2.2 , Acorda shall make a compensating payment to Elan calculated per unit as X Y, where X is the unit price that would have applied if the Product were purchased from Elan, under Clause 9.2 or 9.3 as applicable; and Y is the marginal unit variable element of Elans Manufacturing Cost applicable to such Product.
9.5.2 Such compensating payment shall be made in respect of a particular quarter at the time of provision of the Statement, based on the then Notional NSP and estimated Manufacturing Cost. The Parties shall adjust their account as of the end of each calendar year by Acorda paying to Elan, or by Elan crediting Acorda (as the case may be), the difference between the sum paid pursuant to Clause 9.5.1 and the actual payment calculated on the basis of actual applicable NSP and actual Manufacturing Cost calculated at the end of the calendar year, or such other period as may be specified in the Technical Agreementwithin sixty (60) days after the end of the calendar year.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted
portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the
Commission
9.6. Time For Payment :
For the first two years following First Commercial Sale of the Product in any country of the Territory, payment for the Product supplied to Acorda shall be effected in $ within sixty (60) days of the date of the relevant invoice issued on supply by Elan pursuant to Clause 9.3.3. Thereafter, payment shall be effected by Acorda in $ within thirty (30) days of the date of the relevant invoice issued on supply by Elan pursuant to Clause 9.3.3.
The adjusting payments referred to in Clause 9.3.3 shall be made on provision of the relevant Statement.
For the avoidance of doubt, in respect of Product ordered for a particular country prior to Regulatory Approval in that country, Acorda shall be responsible for the price of such Product as from its readiness for delivery, notwithstanding that applicable law or regulations may prevent such Product from being supplied before Regulatory Approval.
9.7. Process Transfer Costs :
Except as otherwise set forth in this Agreement, in respect of the establishment, qualification and operation of the Second Source, Acorda shall be solely responsible for:
9.7.1 Acordas own costs and expenses;
9.7.2 all third party costs and expenses, including out of pocket expenses incurred by Elan, for products or services previously approved by the Committee; and
9.7.3 work conducted by Elan, its Affiliates, and their employees and consultants, under the Technology Transfer Responsibilities schedule, or as may otherwise be agreed to by the Parties, at the rate of FTE plus [***].
9.8. VAT :
All prices for the Product and other amounts in this Agreement are exclusive of any applicable value added or any other sales tax, for which Acorda will be additionally liable, if payable, subject to Clause 10.
CLAUSE 10 PAYMENTS, REPORTS AND AUDITS
Article 5.9 of the Licence Agreement is hereby incorporated by reference herein as if restated in its entirety herein.
CLAUSE 11 DURATION AND TERMINATION
11.1. This Agreement shall be deemed to have come into force on the Effective Date and will expire upon expiry or termination of the Licence Agreement, howsoever arising.
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11.2. In addition to the rights of termination provided for elsewhere in this Agreement, either party will be entitled forthwith to terminate this Agreement by written notice to the other party if:
11.2.1 that other party commits any breach of any of the provisions of this Agreement or the Licence Agreement, and in the case of a breach capable of cure, fails to cure the same within 60 days after receipt of a written notice giving full particulars of the breach and requiring it to be remedied; provided, that if the breaching party has proposed a course of action to cure the breach and is acting in good faith to cure same but has not cured the breach by the 60th day, such period shall be extended by such period as is reasonably necessary to permit the breach to be cured, provided that such period shall not be extended by more than 90 days, unless otherwise agreed in writing by the parties;
11.2.2 that other party goes into liquidation (except for the purposes of amalgamation or reconstruction and in such manner that the company resulting therefrom effectively agrees to be bound by or assume the obligations imposed on that other party under this Agreement);
11.2.3 an encumbrancer takes possession or a receiver is appointed over any of the property or assets of that other party;
11.2.4 any proceedings are filed or commenced by that other party under bankruptcy, insolvency or debtor relief laws or anything analogous to any of the foregoing under the laws of any jurisdiction occurs in relation to that other party.
11.3. For the purposes of Clause 11.2, a breach will be considered capable of cure if the party in breach can comply with the provision in question in all respects other than as to the time of performance (provided that time of performance is not of the essence).
11.4. Elan may terminate this Agreement by giving twelve (12) months written notice to do so to Acorda.
CLAUSE 12 CONSEQUENCES OF TERMINATION
12.1. Upon exercise of those rights of termination specified in Clause 11 or elsewhere in this Agreement, this Agreement shall, subject to the provisions of the Agreement which survive the termination of the Agreement and Clause 12.2 automatically terminate forthwith and be of no further legal force or effect, provided, however, that if the Agreement is terminated by Elan under Clause 11.4 such termination shall not be effective until the expiration of such twelve (12) month period
12.2. Upon termination of this Agreement by either party, the following shall be the consequences:
20
12.2.1 any sums that were due from Acorda to Elan under the provisions of Clause 9 or otherwise prior to the exercise of the right to terminate this Agreement as set forth herein shall be paid in full forthwith provided , that Elan has delivered Product in accordance with the Specifications and cGMP; and Elan shall not be liable to repay to Acorda any amount of money paid or payable by Acorda to Elan up to the date of the termination of this Agreement;
12.2.2 all confidentiality provisions set out herein shall remain in full force and effect for a period of 7 years from the date of termination of this Agreement;
12.2.3 all representations and warranties shall insofar are appropriate remain in full force and effect;
12.2.4 the rights of inspection and audit shall continue in force for the period referred to in the relevant provisions of this Agreement; and
12.2.5 if Elan terminates the Agreement under Clause 11.4, Acorda shall be entitled to purchase all of Acordas requirements of Product from the Second Source as from termination becoming effective.
CLAUSE 13 REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
13.1. The following clauses of the License Agreement are hereby incorporated by reference herein as if stated herein in their entirety, except that for purposes of this Agreement, all references in such clauses to the Agreement or this Agreement shall be deemed to mean this Supply Agreement: Articles 8.2, 8.3, 8.4, 8.5, and 8.7.
13.2. Elan represents and warrants that the Product supplied to Acorda by Elan under this Agreement shall be free of any lien, security, interest or other encumbrance on title, conform to the Specifications and all applicable laws and regulations and requirements of the FDA and other Governmental Authorities including, without limitation, the cGMP regulations which apply to the manufacture, storage, packaging and supply of the Product. Elan represents and warrants that the Product supplied to Acorda under this Agreement shall be free of defects in material and workmanship, shall not be adulterated or mis-branded as defined by the Act (or applicable foreign law) and shall not be a product which would violate any section of such Act if introduced in interstate commerce and shall be fit for use as a pharmaceutical product. Acorda agrees not to assert its right to rescind this Agreement in the event of a breach of the representations of Elan contained in this Clause 13.2.
13.3. Elan shall indemnify, defend and hold harmless Acorda and its officers, directors, employees and agents from all actions, losses, claims, demands, damages, costs and liabilities (including reasonable attorneys fees) due to Third Party claims to which Acorda is or may become subject insofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Elan of any of its obligations under this Agreement, (ii) any breach of a representation or warranty of Elan made in this Agreement, (iii) any failure of
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the Product provided under this Agreement to meet the Specifications, or (iv) the manufacture or shipment of the Product provided under this Agreement by Elan, except in each case to the extent due to the negligence or wilful misconduct of Acorda.
13.4. Acorda shall indemnify, defend and hold harmless Elan and its officers, directors, employees and agents from all actions, losses, claims, demands, damages, costs and liabilities (including reasonable attorneys fees) due to Third Party claims to which Elan is or may become subject insofar as they arise out of or are alleged or claimed to arise out of (i) any breach by Acorda of any of its obligations under this Agreement, (ii) any breach of any representation or warranty of Acorda made in this Agreement, (iii) damages for personal injury (including death) and/or for costs of medical treatment, caused by or attributed to the Product, or (iv) the acts or omissions of any sub-licensee appointed pursuant to the Licence Agreement, except in each case to the extent due to the negligence or wilful misconduct of Elan or to the relative extent that Elan is obliged to indemnify Acorda pursuant to Clause 13.3.
13.5. The party seeking an indemnity shall:
13.5.1 fully and promptly notify the other party of any claim or proceedings, or threatened claim or proceedings;
13.5.2 permit the indemnifying party to take full control of such claim or proceedings, with counsel of the indemnifying partys choice, provided that the indemnifying party shall reasonably and regularly consult with the indemnified party in relation to the progress and status of such claim or proceedings;
13.5.3 co-operate in the investigation and defence of such claim or proceedings; and
13.5.4 take all reasonable steps to mitigate any loss or liability in respect of any such claim or proceedings.
The indemnifying party may settle a Claim on terms which provide only for monetary relief and do not include any admission of liability. Save as aforesaid, neither the indemnifying party nor the party to be indemnified shall acknowledge the validity of, compromise or otherwise settle any Claim or proceedings without the prior written consent of the other, which shall not be unreasonably withheld.
13.6. TO THE FULLEST EXTENT PERMITTED BY LAW, APART FROM THE FOREGOING REPRESENTATIONS, WARRANTIES, COVENANTS AND INDEMNITIES, AND THOSE SET FORTH IN THE LICENSE AGREEMENT ELAN MAKES NO ADDITIONAL REPRESENTATIONS OR WARRANTIES AND HEREBY DISCLAIMS ALL WARRANTIES, REPRESENTATIONS, AND LIABILITIES, WHETHER EXPRESS OR IMPLIED, ARISING FROM CONTRACT OR TORT (EXCEPT FRAUD), IMPOSED BY STATUTE OR OTHERWISE, RELATING TO THE PRODUCTS AND/OR ANY PATENTS OR TECHNOLOGY USED OR INCLUDED IN THE PRODUCTS, INCLUDING ANY WARRANTIES AS
22
TO MERCHANTABILITY, FITNESS FOR PURPOSE, CORRESPONDENCE WITH DESCRIPTION, OR NON-INFRINGEMENT.
13.7. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, ELAN AND ACORDA SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.
13.8. Elan and Acorda shall each maintain comprehensive general liability insurance, insuring against all liability, including product liability, personal injury, physical injury and property damage in respective amounts deemed reasonable in the industry for companies of their respective size and engaged in their respective activities under this Agreement for the duration of this Agreement and for a period of 5 years thereafter.
Each party shall provide the other party with a certificate from the insurance company verifying the above and shall notify the other party in writing at least 30 days prior to the expiration or termination of such coverage.
CLAUSE 14 MISCELLANEOUS PROVISIONS
14.1. Secrecy and Confidentiality . Article 12.1 of the License Agreement is hereby incorporated by reference herein as if stated herein in its entirety.
14.2. Licence to Elan :
Acorda hereby grants to Elan and Elan hereby accepts for the Term a non-exclusive royalty-free license to use such Acorda Patent Rights and Acorda Know-How as are necessary or useful for the purpose of manufacturing the Product. Such rights shall be sub-licensable by Elan to its Affiliates and sub-contractors, for the sole purpose of manufacturing the Product in accordance with this Agreement.
14.3. Assignment :
14.3.1 Subject to the provisions of this Clause 14.3, each party be entitled without the consent of the other:
14.3.1.1 to subcontract or delegate the whole or any part of its duties hereunder to its Affiliate(s) (but shall remain responsible for its obligations under this Agreement); and/or
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14.3.1.2 to assign this Agreement to its Affiliate, provided that such assignment has no material adverse tax implications for the other Party or Parties hereto, and provided further that the assigning Party shall remain liable and responsible with such assignee to the other Party for the performance of any obligations, representations or warranties delegated, contracted, assigned or otherwise transferred to any such assignee.
14.3.2 In the event that Elan agrees to sell all or substantially all of the assets of Elans Facility, Elan shall so notify Acorda. In such event, Elan may (a) terminate this Agreement by ninety (90) days written notice to Acorda; or (b) assign all (but not, subject to the following sentences, a portion) of its rights and obligations under this Agreement to a Permitted Elan Assignee, provided that such transfer or assignment has no adverse tax implications for Acorda.
14.3.3 Each Party may assign all (but not a portion) of its rights and obligations under this Agreement to an entity that acquires all or substantially all of its business or assets to which this Agreement pertains, whether by merger, reorganisation, acquisition, sale or otherwise, provided, that in the case of an assignment by Elan, the assignee is a Permitted Elan Assignee.
14.3.4 Except as provided for in this Clause 14.3, this Agreement may not be assigned by a party without the prior written consent of the other Party, which shall not be unreasonably withheld or delayed.
14.3.5 Any permitted assignee of a Party under this Clause 14.3 shall assume all related obligations of its assignor under this Agreement.
14.4. Parties bound :
This Agreement shall be binding upon and enure for the benefit of parties hereto, their successors and permitted assigns.
14.5. Severability :
If any provision in this Agreement is deemed to be, or becomes invalid, illegal, void or unenforceable under applicable laws:
14.5.1 such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable; or
14.5.2 if it cannot be so amended without materially altering the intention of the parties, it will be deleted the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.
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14.6. Force Majeure :
14.6.1 Neither party to this Agreement shall be liable for delay or failure in the performance of any of its obligations hereunder if such delay or failure results from Force Majeure.
14.6.2 If Force Majeure prevents or delays the performance by a party of any obligation under this Agreement, then the party claiming Force Majeure shall promptly notify the other party thereof in writing. The parties shall thereafter as soon as practicable discuss how best to continue their operations in accordance with this Agreement and shall thereafter continue such discussions on a regular basis while Force Majeure continues.
14.6.3 Where a party claims Force Majeure, the other partys obligations under this Agreement shall be suspended for the period while Force Majeure continues, but only to the extent reasonably required by the Force Majeure.
14.6.4 The party claiming Force Majeure shall use all reasonable efforts to avoid, minimise or remove the cause of such non-performance and to mitigate its effects and shall continue performance with due dispatch whenever such causes are removed.
14.6.5 Where Force Majeure continues for a period of six (6) months the other party shall have the right to terminate this Agreement, provided that it has complied with its obligations under this Clause 14.6.
14.7. Relationship of the parties :
14.7.1 Nothing contained in this Agreement is intended or is to be construed to constitute any of the parties hereto as partners or members of a joint venture or any party as an employee of another party.
14.7.2 No party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of any other party or to bind another party to any contract, agreement or undertaking with any third party.
14.8. Amendments :
No amendment, modification or addition hereto shall be effective or binding on any party hereto unless set forth in writing and executed by a duly authorised representative of all parties hereto.
14.9. Waiver :
No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.
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14.10. Entire Agreement :
14.10.1 Each of the parties hereto hereby acknowledges that in entering into this Agreement it has not relied on any representation or warranty except as expressly set forth herein or in the License Agreement or in any other document referred to herein.
14.10.2 This Agreement and the Licence Agreement, together with the exhibits and schedules hereto and thereto, together set forth all of the agreements and understandings between the parties with respect to the subject matter hereof, and supersede and terminate all prior agreements and understandings between the parties with respect to the subject matter hereof, including the SCI Agreement and the MS Agreement.
14.10.3 Nothing in this Clause 14.10 shall exclude any liability which any party would otherwise have to the other party or any right which either of them may have to rescind this Agreement for fraud.
14.11. Governing law and jurisdiction :
14.11.1 This Agreement shall be governed by and construed in accordance with the laws of the State of New York , excluding its conflict of laws rules.
14.11.2 Article 12.14 of the License Agreement is hereby incorporated by reference herein as if stated herein in its entirety.
14.12. Notices :
14.12.1 Any notice to be given under this Agreement shall be sent in writing in English by registered or recorded delivery post, reputable overnight courier or fax to:
Elan at |
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c/o Elan Pharma Ltd. |
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Monksland |
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Athlone |
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Co. Westmeath |
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Ireland |
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Attention: |
General Manager |
Fax: |
+353 906 492427 |
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Acorda at |
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15 Skyline Drive |
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Hawthorne, New York 10532 |
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United States of America |
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Attention: |
President |
Fax: |
914.347.4560 |
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or to such other address(es) and fax numbers as may from time to time be notified by either party to the other hereunder.
14.12.2 Any notice sent by mail shall be deemed to have been delivered within 7 working days after despatch or delivery to the relevant courier and any notice sent by fax shall be deemed to have been delivered upon confirmation of receipt. Notice of change of address shall be effective upon receipt.
14.13. Further assurances :
At the request of any of the parties, the other party or parties shall (and shall use reasonable efforts to procure that any other necessary third parties shall) execute and do all such documents, acts and things as may reasonably be required subsequent to the signing of this Agreement for assuring to or vesting in the requesting party the full benefit of the terms hereof.
14.14. Counterparts :
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.
14.15. Set-off :
Each of the parties will be entitled but not obliged to set-off against any amount of money payable to it by the other party hereunder, any amount of money payable by it to the other party hereunder.
IN WITNESS WHEREOF the parties have executed this Agreement on the day and date appearing at the top of page 1.
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SCHEDULE 1 MANUFACTURING COST
Manufacturing Cost shall mean fully absorbed cost of manufacture (including packaging) which shall be determined on the basis of the following elements:
(a) Direct material, labour and overhead cost; and
(b) Such indirect labour, factory, laboratory and other overhead costs properly allocable. Overhead allocations shall include, but not be limited to, expenses of plant maintenance and engineering, plant management, receiving and warehousing, disposal and treatment of waste, building occupancy, quality control, costs of services provided to manufacturing and insurance provided to manufacturing.
Such allocations shall be in a manner consistent with GAAP from time to time and in a manner consistent with expenses and overhead allocated to other products manufactured by Elan or its Affiliates.
Where some part(s) of the manufacture or packaging is/are conducted by unaffiliated third party(ies), Manufacturing Cost shall be the amount paid to such third party(ies) plus any of the aforementioned costs incurred by Elan or its Affiliates in completing the manufacture, packaging or delivery of the Product.
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SIGNED |
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Monksland Holdings BV |
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By: |
/s/ Pieter Bosse |
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By: |
/s/ Klaas van Blanken |
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for and on behalf of |
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ELAN CORPORATION, PLC. |
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Name: |
Monksland Holdings BV |
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Title: |
Proxyholder |
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SIGNED |
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By: |
/s/ Ron Cohen |
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for and on behalf of |
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ACORDA THERAPEUTICS, INC. |
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Name: |
Ron Cohen |
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Title: |
President & Chief Executive Officer |
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29
Exhibit 10.10
LICENSE AGREEMENT
by and between
RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER
and
ACORDA THERAPEUTICS, INC.
1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality.
Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
THIS LICENSE AGREEMENT effective as of September 26, 2003 (Effective Date), by and between RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER, an Illinois not-for-profit corporation and having its principal office at 1725 W. Harrison St. Chicago, Ill. 60612 (RUSH) and ACORDA THERAPEUTICS, INC. , a corporation organized and existing under the laws of the State of Delaware and having its principal office at 15 Skyline Drive, Hawthorne, New York 10532 (ACORDA).
W I T N E S S E T H:
WHEREAS, RUSH has conducted investigations of the compound known as 4-aminopyridine for treatment of the symptoms of multiple sclerosis and has accordingly developed know-how in relation thereto;
WHEREAS, RUSH has received a notice of designation (the Rush Orphan Designation) from the FDA stating that the Licensed Product (as defined herein) qualifies for orphan designation for the relief of symptoms of multiple sclerosis;
WHEREAS, RUSHs right and title to the Rush Orphan Designation for the Licensed Product has been assigned to ACORDA and RUSH has consented to such assignment;
WHEREAS, RUSH has the right to grant licenses in respect of the RUSH Know-How (as defined herein) and has granted no licenses thereto except (i) the option agreement, dated September 7, 1990 (the Option Agreement), between RUSH and Elan Pharmaceutical Research Corp. (EPRC), a predecessor corporation of Elan Drug Delivery Inc., a wholly-owned subsidiary of Elan Corporation plc (ELAN) and (ii) the license agreement dated November 13, 1990 (the Rush/Elan License), between RUSH and EPRC, (the Option Agreement and the Rush/Elan License being collectively referred to herein as the Rush/Elan Agreements);
WHEREAS, pursuant to the Side Agreement, as defined below, RUSH and ELAN and EPRC have, among other things terminated the Rush/Elan Agreements as of the Effective Date;
WHEREAS, ACORDA desires to obtain exclusive license rights, with a right to grant sublicenses, under and to the RUSH Know-How (as defined herein), and RUSH desires to grant such license to ACORDA, upon the terms and conditions set forth herein; and
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows:
2
ARTICLE I
DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms, where used in the singular or plural, shall have the respective meanings set forth below:
1.1. Act shall mean the Federal Food Drug and Cosmetic Act of 1934, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time.
1.2. Affiliate shall mean (i) any corporation or business entity of which more than fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a Party; (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds more than fifty percent (50%) (or the maximum ownership interest permitted by law) of the securities or other ownership interests representing the equity, voting stock or general partnership interest of a Party or (iii) any corporation or business entity of which a Party has the right to acquire, directly or indirectly, at least fifty percent (50%) of the securities or other ownership interests representing the equity, voting stock or general partnership interest thereof.
1.3. Base Royalty Term shall mean, in any country in the Territory, the period beginning with the date of the First Commercial Sale in such country and continuing until the earlier of (i) expiration of the last to expire Elan Patent in such country; or (ii) ten (10) years from the date of First Commercial Sale in such country; provided however, that, in the event that ACORDA receives Regulatory Approval in the United States for Licensed Product with an Orphan Designation for the treatment of multiple sclerosis, then the Base Royalty Term in the United States shall not be less than seven years from the date of First Commercial Sale in the United States. In the event that RUSHs further development of the RUSH Know-How results in the issuance to RUSH of a patent in any country or additional Orphan Drug Designation following the effective date of this Agreement that provides for a greater period of market exclusivity of the Product in such country, the Base Royalty Term in such country will continue for that period of market exclusivity provided by such patent or Orphan Drug Designation.
1.4. Business Day(s) shall mean any day that is not a Saturday or a Sunday or a day on which the New York Stock Exchange is closed.
1.5. Calendar Quarter shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.
1.6. Calendar Year shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31.
1.7. Compound shall mean the chemical compound known as 4-aminopyridine, as diagrammed on Schedule 1.7 hereto.
1.8. CFR shall mean the United States Code of Federal Regulations.
1.9. Effective Date shall mean the date first above written.
3
1.10. Elan/Acorda License shall mean the Amended and Restated License Agreement effective as the Effective Date by and between ACORDA and ELAN.
1.11. Elan Patent shall mean any patent included in the Elan Patent Rights as set forth on Schedule 1.11 hereto
1.12. End of Phase 2 Meeting shall mean the first end of Phase 2 meeting with the FDA, as defined in 21 CFR Section 312.47, intended to determine the safety of proceeding to a Phase 3 Clinical Trial, evaluate the Phase 3 plan and protocols and identify any additional information necessary to support the NDA.
1.13. FDA shall mean the United States Food and Drug Administration and any successor agency having substantially the same functions.
1.14. First Commercial Sale shall mean the first commercial sale of Product by ACORDA, its Affiliate or its sublicensees in a country, for end use or consumption, after all required Regulatory Approvals have been granted by the governing health authority of such country. Sales for test marketing, clinical trial purposes, research and development, or compassionate or similar use where Acorda does not receive revenue from the sale other than cost recovery, shall not be deemed to constitute a commercial sale.
1.15. GAAP shall mean generally accepted accounting principles in the United States, consistently applied.
1.16. Improvement shall mean any and all improvements and enhancements, patentable or otherwise, related to the Compound or Product including, without limitation, in the manufacture, formulation, ingredients, preparation, presentation, means of delivery or administration, dosage, indication, use or packaging of Compound or Product.
1.17. Licensed Product shall mean any Product that utilizes or exploits the RUSH Know-How in the treatment of multiple sclerosis.
1.18. NDA shall mean a new drug application as defined in the Act and applicable regulations promulgated thereunder that is filed with the FDA to obtain Regulatory Approval of Licensed Product in the United States.
1.19. Neurological Indications shall mean indications concerning disorders and conditions of the neuromuscular system, central, peripheral and autonomic nervous systems, the neuromuscular junction and/or muscle. Such indications shall include, but not be limited to, multiple sclerosis and spinal cord injury.
1.20. Net Sales shall mean the gross amount invoiced for commercial sales of Product in the Territory by ACORDA or its Affiliates to Third Parties commencing upon the date of First Commercial Sale in any country in the Territory, after deducting the following:
(i) trade, cash and quantity discounts;
4
(ii) credits and allowances on account of returned or rejected Product, including allowance for breakage or spoilage, recalls or Product destruction (whether voluntarily made or requested or made by a Regulatory Authority)
(iii) chargebacks, rebates or similar payments granted to customers, including, but not limited to, managed health care organizations, wholesalers, distributors, buying groups, retailers, health care insurance carriers, pharmacy benefit management companies, health maintenance organizations or other institutions or health care organizations or to federal, state/provincial, local and other governments, their agencies and purchasers and reimbursers;
(iv) sales or excise taxes, VAT or other taxes, and transportation, freight, postage, shipping and insurance charges and additional special transportation, custom duties, and other governmental charges;
(v) retroactive price reductions; and
(vi) write-offs or allowances for bad debts, to the extent permitted by GAAP.
Sales or other transfers between ACORDA and its Affiliates shall be excluded from the computation of Net Sales and no payments will be payable on such sales or transfers except where such Affiliates are end users, but Net Sales shall include the subsequent sales to Third Parties by such Affiliates.
1.21. Orphan Designation shall mean the designation of a drug as a drug for a rare disease or condition pursuant to Section 526 of the Act.
1.22. Party shall mean RUSH or ACORDA.
1.23. Phase 3 Clinical Trial shall mean a clinical trial in patients with multiple sclerosis conducted after an End of Phase 2 Meeting and conducted on a sufficient number of patients that is designed to establish that Licensed Product is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with Licensed Product in the dosage range to be prescribed, and supporting Regulatory Approval of Licensed Product in the treatment of multiple sclerosis.
1.24. Product shall mean any finished pharmaceutical formulation for prescription use for the treatment of any human Neurological Indications which contains Compound as the therapeutically active ingredient.
1.25. Proprietary Information shall mean any and all scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or by any other means, which is owned and under the protection of one
5
Party and is being provided by that Party to the other Party in connection with this Agreement.
1.26. Reduced Royalty Term shall mean, in any country in the Territory, the period of time beginning with the date following the expiration of the Base Royalty Term in such country and continuing until the fifteenth anniversary of the Effective Date.
1.27. Regulatory Authority shall mean the FDA in the U.S., the EMEA or any agency in the European Union and any health regulatory authority(ies) in any country(ies) in the Territory that holds responsibility for granting Regulatory Approval for a Product in such country(ies), and any successor(s) agency thereto having substantially the same functions.
1.28. Regulatory Approval shall mean all approvals (including pricing and reimbursement approvals required for marketing authorization), product and/or establishment licenses, registrations or authorizations of all regional, federal, state or local regulatory agencies, departments, bureaus or other governmental entities, necessary for the manufacture, use, storage, import, export, transport and sale of Product in a regulatory jurisdiction.
1.29. Royalty Year shall mean, (i) for the year in which the First Commercial Sale occurs (the First Royalty Year), the period commencing with the first day of the Calendar Quarter in which the First Commercial Sale occurs and expiring on the last day of the Calendar Year in which the First Commercial Sale occurs; and (ii) for each subsequent year commencing after the end of the First Royalty Year, each successive Calendar Year.
1.30. RUSH Know-How shall mean all information and materials, including but not limited to, discoveries, information, Improvements, processes, formulas, data, inventions, know-how and trade secrets, patentable or otherwise, which as of the Effective Date or at any time during the term of this Agreement:
(a) relate to Compound or Product; and
(b) were developed by or on behalf of RUSH, are owned by RUSH or are in RUSHs possession or control.
Such know-how shall include, without limitation, all chemical, pharmaceutical, toxicological, preclinical, clinical, assay control, regulatory submissions, designations and approvals, and any other information used or useful for the development, manufacturing and/or regulatory approval of Compound or Product, including such rights which RUSH may have to information developed by Third Parties.
1.31. Side Agreement shall mean the Side Agreement by and among RUSH, ACORDA and ELAN executed as of the Effective Date, a copy of which is attached hereto as Exhibit 1.31 .
1.32. Territory shall mean all of the countries in the world.
1.33. Third Party(ies) shall mean a person or entity who or which is neither a Party nor an Affiliate of a Party.
6
ARTICLE II
LICENSE; SUBLICENSES
2.1. License Grant . RUSH hereby grants to ACORDA an exclusive (even as to RUSH) license, including the right to grant sublicenses, under the RUSH Know-How, to develop, make, have made, use, import, offer for sale, market, commercialize, distribute and sell and otherwise dispose of Product in the Territory and to use and practice the RUSH Know-How. Notwithstanding the foregoing grant, Rush is expressly permitted to use its 4-AP know how for internal development and research efforts; provided, however, that (i) such use is for non-commercial academic purposes only, and (ii) that RUSH shall promptly notify ACORDA of any intellectual property, discovery or invention, once conceived and/or reduced to practice by RUSH in the course of conducting or performing such non-commercial activity, which shall be deemed RUSH Know-How for purposes of this Agreement.
2.2. Improvements by ACORDA . All rights and title to and interest in any Improvement developed or discovered by ACORDA in connection with the license granted under Section 2.1 above or ACORDAs activities hereunder shall be vested solely in ACORDA. Notwithstanding the provisions of 2.2, Acorda will continue to have royalty obligations set forth in Article V, to the extent applicable, with respect to any Product that contains an Improvement and which includes the Compound as the primary therapeutically active ingredient.
2.3. Sublicenses. ACORDA shall have the right to grant sublicenses of the licenses granted to it under Section 2.1 of this Agreement to Affiliates or any Third Party. ACORDA shall provide written notice to RUSH of any such sublicenses.
ARTICLE III
DEVELOPMENT AND COMMERCIALIZATION
3.1. Exchange of Information . Following execution of this Agreement, RUSH shall utilize good faith reasonable efforts to disclose to ACORDA in English and in writing, all Rush Know-How not previously available or made available to ACORDA, in electronic format, where available, and hard copies (or, upon ACORDAs request, originals), with the intention to make such information available to ACORDA as soon as reasonably practicable Throughout the term of this Agreement, and in addition to the other communications required under this Agreement, RUSH shall also promptly disclose to ACORDA in English and in writing on an ongoing basis all Rush Know-How, and any and all additions or revisions thereto. To the extent not previously assigned to ACORDA, RUSH hereby conveys, assigns and transfers to ACORDA, free and clear of all claims, liens and encumbrances and contractually imposed restrictions, all right, title and interest in and to the Rush Orphan Designation. RUSH shall assist and cooperate with ACORDA in the submission of any letters or other documents to the FDA required or requested in connection with the change in ownership of the Rush Orphan Designation from RUSH to ACORDA. RUSH shall notify ACORDA promptly of any request for, or
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any expression of interest in using, Compound for research or any other purpose and shall refer any such requests or expressions of interest directly to ACORDA. RUSH shall also promptly notify ACORDA of any intellectual property, discovery or invention, once conceived and/or reduced to practice by RUSH or any employee or agent of RUSH, in the course of conducting or performing any activity relating to Compound or Product.
3.2. Development and Commercialization . ACORDA shall use commercially reasonable efforts to develop and commercialize Licensed Product. As used herein, commercially reasonable efforts shall mean efforts and resources normally used by ACORDA for a product owned by it or to which it has exclusive rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory and reimbursement structure involved, the profitability of the applicable products, and other relevant factors. ACORDA shall provide RUSH with an annual written report summarizing the status of ACORDAS clinical development and regulatory activities with respect to Licensed Product, with the delivery to RUSH of the summary of the annual report to an IND submitted by ACORDA to the FDA in connection with the periodic reporting requirements of the IND to be in satisfaction of the foregoing requirement. The obligations set forth in this Section 3.2 are expressly conditioned upon the absence of any serious adverse conditions or event relating to the safety or efficacy of Compound or Product including the absence of any action by any regulatory authority limiting the development or commercialization of Compound or Product.
3.3. Regulatory Matters .
(a) ACORDA shall own, control and retain primary legal responsibility for the preparation, filing and prosecution of all filings and regulatory applications required to obtain Regulatory Approvals. ACORDA shall notify RUSH upon the receipt of Regulatory Approvals and of the date of First Commercial Sale.
(b) Upon ACORDAS request, RUSH shall consult and cooperate with ACORDA in connection with obtaining Regulatory Approval of Product.
3.4. Trademark. ACORDA shall select, own and maintain trademarks for Product in the Territory.
ARTICLE IV
CONFIDENTIALITY AND PUBLICITY
4.1. Non-Disclosure and Non-Use Obligations . All Proprietary Information disclosed by one Party to the other Party hereunder shall be maintained in confidence and shall not be disclosed to any Third Party or used for any purpose except as expressly permitted herein without the prior written consent of the Party that disclosed the Proprietary Information to the other Party during the term of this Agreement. The foregoing non-disclosure and non-use obligations shall not apply to the extent that such Proprietary Information:
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(a) is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by business records;
(b) is or becomes properly in the public domain or knowledge;
(c) is subsequently disclosed to a receiving Party by a Third Party who may lawfully do so and is not under an obligation of confidentiality to the disclosing Party; or
(d) is developed by the receiving Party independently of Proprietary Information received from the other Party, as documented by research and development records.
4.2. Permitted Disclosure of Proprietary Information . Notwithstanding Section 4.1, a Party receiving Proprietary Information of another Party may disclose such Proprietary Information:
(a) by ACORDA to governmental or other regulatory agencies in order to obtain patents or to gain approval to conduct clinical trials or to market Product;
(b) by ACORDA or its agents, consultants, Affiliates, sublicensees and/or other Third Parties for the research and development, manufacturing and/or marketing of the Compound and/or Product (or for such parties to determine their interests in performing such activities) on the condition that such Third Parties agree to be bound by the confidentiality obligations consistent with this Agreement; or
(c) if required to be disclosed by law or court order, provided that notice is promptly delivered to the non-disclosing Party in order to provide an opportunity to challenge or limit the disclosure obligations; provided, however, without limiting any of the foregoing, it is understood that ACORDA or its Affiliates may make disclosure of this Agreement and the terms hereof in any filings required by the Securities and Exchange Commission (SEC) or any other governmental agency, may file this Agreement as an exhibit to any filing with the SEC or such agency and may distribute any such filing in the ordinary course of its business.
4.3. Publication Neither RUSH nor any Affiliate or employee of or consultant to RUSH shall make any publication relating to Compound or Product without the prior consent of ACORDA. If RUSH proposes to submit for written or oral publication any manuscript, abstract or the like relating to Compound or Product, it shall first deliver the proposed publication to ACORDA at least thirty (30) Business Days prior to planned submission. At the request of ACORDA, the submission of such publication may be delayed for up to fourteen (14) days in addition to the said thirty Business Days, including for issues of patent protection or other matters relating to the development of Compound or Product. If ACORDA requests modifications to the publication, RUSH shall edit such publication as
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality.
Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
reasonably necessary to prevent disclosure of trade secret or proprietary business information prior to submission of the publication or presentation.
ARTICLE V
PAYMENTS; ROYALTIES AND REPORTS
5.1. Up-front License Fee . In consideration of the rights granted by RUSH hereunder, ACORDA shall pay RUSH an up-front license fee of $200,000 within five (5) Business Days after the Effective Date.
5.2. Milestone Payments . In further consideration of the rights granted by RUSH hereunder, ACORDA or its designees shall pay RUSH the following milestone payments, contingent upon occurrence of the specified event, with each milestone payment to be made no more than once with respect to the achievement of such milestone (but payable the first time such milestone is achieved) for Licensed Product:
(a) US $[* *] upon the commencement (first dosing of the first patient) of the first Phase 3 Clinical Trial;
(b) US $[* *] upon the completion of the first Phase 3 Clinical Trial;
(c) US $[* *] upon the FDAs acceptance for filing of the NDA; and
(d) US $[* *] upon receipt of first written Regulatory Approval of the NDA for marketing in the United States by the FDA.
ACORDA shall notify RUSH in writing within thirty (30) Business Days after the achievement of each milestone and such notice shall be accompanied by the appropriate milestone payment. The milestone payments described in this Section 5.2 shall be payable only upon the initial achievement of each milestone, and no amounts shall be due hereunder for any subsequent or repeated achievement of such milestones, regardless of the number of Licensed Products for which such milestone may be achieved.
5.3. Royalties and Other Payments.
5.3.1. Royalties
(a) Subject to the terms and conditions of this Agreement, and in further consideration of the rights granted by RUSH hereunder, ACORDA or its designees shall pay to RUSH royalties during the Base Royalty Term in an amount equal to (i) [* *] of Net Sales in each Royalty Year in the United States; and (ii) [* *] of Net Sales in each Royalty Year in each country in the Territory other than the United States. Royalties on Net Sales at the rates set forth in this Section 5.3.1(a) shall accrue as of the date of First Commercial Sale of Product in the applicable country and shall continue and accrue on Net Sales on a country-by-country basis until the expiration of the Base Royalty Term in such country. Thereafter, ACORDA shall be relieved of any royalty payment under this Section 5.3.1(a).
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality.
Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
(b) Subject to the terms and conditions of this Agreement, and in further consideration of the rights granted by RUSH hereunder, ACORDA or its designees shall pay to RUSH royalties during the Reduced Royalty Term in an amount equal to (i) [* *] of Net Sales in each Royalty Year in the United States; and (ii) [* *] of Net Sales in each Royalty Year in each country in the Territory other than the United States. Royalties on Net Sales at the rates set forth in this Section 5.3.1(b) shall accrue as of the commencement of the Reduced Royalty Term in the applicable country and shall continue and accrue on Net Sales on a country-by-country basis until the expiration of the Reduced Royalty Term in such country. Thereafter, ACORDA shall be relieved of any royalty payment under this Agreement.
(c) The payment of royalties set forth above shall be subject to the following conditions:
(A) only one payment shall be due with respect to the same unit of Product;
(B) no royalties shall accrue on the disposition of Product by ACORDA, Affiliates or sublicensees as samples (promotion or otherwise) or as donations (for example, to non-profit institutions or government agencies) or to clinical trials or for research and and/or development or for compassionate or similar use where ACORDA does not receive revenue other than cost recovery; and
(C) RUSH shall be responsible for payment of any royalties or other obligations owed by RUSH to any Third Party.
5.3.2. Affiliate and Sublicensee Sales . In the event that ACORDA transfers Compound or Product to one of its Affiliates or sublicensees, there shall be no royalty due at the time of transfer. Subsequent sales of Product by the Affiliates or sublicensees to Third Parties such as patients, hospitals, medical institutions, health plans or funds, wholesalers (which are not sublicensees), pharmacies or other retailers, shall be reported as Net Sales hereunder.
5.3.3. Third Party Licenses . If one or more licenses from a Third Party or Third Parties are obtained by ACORDA in order to develop, make, have made, use, sell or import Compound or Product in a particular country, [* *] of any royalties or other payments paid under such Third Party patent licenses by ACORDA in such country for such Calendar Quarter shall be creditable against the royalty or other payments payable to RUSH by ACORDA in such country; provided, however, that the amount credited in any Calendar Quarter shall not exceed [* *] of the royalties that would have otherwise been payable to RUSH for such Calendar Quarter.
5.3.4. Combination Product . Notwithstanding the provisions of Section 5.3.1, in the event a Product is sold as a combination product with other biologically active components, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination product by the
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fraction A/B, where A is the gross selling price of the Product sold separately and B is the gross selling price of the combination product. If no such separate sales are made, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination product by the fraction C/(C+D), where C (excluding the fully allocated cost of the other biologically active component in question) is the fully allocated cost of the Compound and D is the fully allocated cost of such other biologically active components.
5.4. Reports; Payment of Royalty . During the term of the Agreement for so long as royalty payments are due, ACORDA shall furnish to RUSH a written report for each Calendar Quarter showing the Net Sales of all Products subject to royalty payments during the reporting period and the calculation of the royalties payable to RUSH under this Agreement, including deductions from Net Sales. Reports shall be due on the forty-fifth (45 th ) day following the close of each Calendar Quarter. Royalties shown to have accrued by each royalty report, if any, shall be due and payable on the date such report is due. ACORDA shall keep complete and accurate records in sufficient detail to enable the royalties hereunder to be determined. ACORDA shall retain such records for twenty-four (24) months after submission of the corresponding report.
5.5. Audits . Upon the written request of RUSH and not more than once during the twelve (12) month period next following the expiration of each Royalty Year during the term of the Agreement, ACORDA shall, at RUSHs expense, permit an independent certified public accounting firm selected by RUSH and reasonably acceptable to ACORDA to have access during normal business hours, upon thirty (30) days prior notice to ACORDA, to such of the records of ACORDA as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Royalty Year ending not more than twenty-four (24) months prior to the date of such request. The accounting firm shall provide a written report as soon as practicable, which shall disclose only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. This Section 5.5 shall survive the expiration or termination of this Agreement for a period of two years.
5.5.1. If such accounting firm concludes that additional royalties were owed during such period, ACORDA shall pay the additional royalties within sixty (60) days of the date RUSH delivers to ACORDA such accounting firms written report so concluding; provided however, that, in the event that ACORDA shall not be in agreement with the conclusion of such report (a) ACORDA shall not be required to pay such additional royalties and (b) such matter shall be resolved pursuant to the provisions of Section 9.6 herein. In the event such accounting firm concludes that amounts were overpaid by ACORDA during such period, such over payment will be credited against future royalties; provided, however, that, in the event that RUSH shall not be in agreement with the conclusion of such report (x) such matter shall be resolved pursuant to the provisions of Section 9.6 herein and (y) in the event that the overpayment to RUSH exceeds royalties due and owing to Rush over the term of the agreement, RUSH shall reimburse ACORDA within 60 days for any remaining overpayment. The fees charged by such accounting firm shall be paid by RUSH; provided, however, that if an error in favor of RUSH of more than five percent (5%) of the royalties due hereunder for the period being reviewed is discovered, then
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ACORDA shall pay the reasonable fees and expenses charged by such accounting firm.
5.5.2. Upon the expiration of twenty-four (24) months following the end of any Royalty Year (subject to tolling of such period during the pendency of an audit relating to such period under Section 5.5.1 above) the calculation of royalties payable with respect to such year shall be binding and conclusive upon RUSH, and ACORDA shall be released from any liability or accountability with respect to royalties for such year.
5.5.3. RUSH shall treat all financial information subject to review under this Section 5.5 in accordance with the confidentiality provisions of this Agreement.
5.6. Payment Exchange Rate . All payments to RUSH under this Agreement shall be made in United States dollars. In the case of sales outside the United States, the rate of exchange to be used in computing Net Sales shall be calculated monthly in accordance with the conversion rates published in the Wall Street Journal, Eastern edition (if available).
5.7. Tax Withholding . If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article V, RUSH shall provide ACORDA, prior to any such payment, annually or more frequently if required, with all forms or documentation required by any applicable taxation laws, treaties or agreements to such withholding or as necessary to claim a benefit thereunder (including, but not limited to Form W-8BEN or any successor forms) and ACORDA shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Article V. ACORDA will use commercially reasonable efforts consistent with its usual business practices and cooperate with RUSH to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of the current or any future taxation treaties or agreements between foreign countries.
5.8. Exchange Controls . Notwithstanding any other provision of this Agreement, if at any time legal restrictions prevent the prompt remittance of part or all of the royalties with respect to Net Sales in any country, payment shall be made through such lawful means or methods as ACORDA may determine. When in any country the law or regulations prohibit both the transmittal and deposit of royalties on sales in such a country, royalty payments shall be suspended for as long as such prohibition is in effect (and such suspended payments shall not accrue interest), and promptly after such prohibition ceases to be in effect, all royalties or other payments that ACORDA or its Affiliates would have been obligated to transmit or deposit, but for the prohibition, shall be deposited or transmitted, as the case may be, to the extent allowable (with any interest earned on such suspended royalties which were placed in an interest-bearing bank account in that country, less any transactional costs). If the royalty rate specified in this Agreement should exceed the permissible rate established in any country, the royalty rate for sales in such country shall be adjusted to the highest legally permissible or government-approved rate.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. RUSH Representations and Warranties . RUSH represents and warrants to ACORDA that as of the Effective Date:
(a) Each of this Agreement and the Side Agreement has been duly executed and delivered by RUSH and constitutes legal, valid, and binding obligations enforceable against RUSH in accordance with their respective terms;
(b) no approval, authorization, consent, or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by RUSH of this Agreement or the Side Agreement or the consummation by RUSH of the transactions contemplated hereby or thereby except such consents or filings as are contemplated by this Agreement;
(c) RUSH has the full corporate power and authority to enter into and deliver this Agreement and the Side Agreement, to perform and to grant the licenses granted under Article II hereof and to consummate the transactions contemplated hereby and by the Side Agreement; all corporate acts and other proceedings required to be taken to authorize such execution, delivery, and consummation have been duly and properly taken and obtained;
(d) With the exception of the Rush/Elan Agreements, which have terminated in their entirety pursuant to the Side Agreement, RUSH has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Compound or Product or the RUSH Know-How or entered into any agreement with any Third Party which is in conflict with the rights granted to ACORDA pursuant to this Agreement;
(e) RUSH is the sole and exclusive owner of the RUSH Know-How, all of which are free and clear of any security interests, liens, charges, encumbrances or restrictions on license, and no Third Party has any claim of ownership or other rights with respect to the RUSH Know-How, whatsoever, except that RUSH agrees and acknowledges that the Orphan Designation has been assigned to ACORDA;
(f) RUSH has the sole and exclusive authority to grant the rights and licenses granted under Article II and, with the exception of the Rush/Elan Agreements, which have terminated in their entirety pursuant to the Side Agreement, RUSH has not previously granted, and will not grant, or engage in any discussions to grant, during the term of this Agreement, any right, license or interest in and to the Compound or Product or the RUSH
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Know-How, or any portion thereof, inconsistent with the license granted to ACORDA herein;
(g) there are no claims, judgments or settlements against or owed by RUSH or pending or, to the best of its knowledge, threatened claims or litigation relating to the Compound or the Rush Know-How;
(h) RUSH will use reasonable efforts to disclose to ACORDA all relevant information known by it regarding the Rush Know-How reasonably related to the activities contemplated under this Agreement to the extent such Rush know-how has not previously been disclosed;
(i) in connection with development of the Rush Know-How, RUSH has complied in all material respects with applicable U.S. laws and regulations;
(j) RUSH has not filed and is not the owner in any country in the Territory of any patents or patent applications or of any certificates of invention or applications for certificates of invention, relating to Compound or Product; and
(k) With the exception of the Rush/Elan Agreements, which have terminated in their entirety pursuant to the Side Agreement, there are no contracts, agreements or any other arrangements between RUSH and any Third Party relating to the research, development or commercialization of the Compound or Product.
6.2. ACORDA Representations and Warranties . ACORDA represents and warrants to RUSH that as of the Effective Date:
(a) Each of this Agreement and the Side Agreement have been duly executed and delivered by it and constitutes legal, valid, and binding obligations enforceable against ACORDA in accordance with their respective terms;
(b) it has full corporate power and authority to execute and deliver this Agreement and the Side Agreement and to consummate the transactions contemplated hereby and thereby. All corporate acts and other proceedings required to be taken to authorize such execution, delivery, and consummation have been duly and properly taken and obtained;
(c) no approval, authorization, consent, or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by it of this Agreement or the Side Agreement or the consummation by it of the transactions contemplated hereby or thereby.
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ARTICLE VII
7.1. Indemnification . ACORDA shall defend, indemnify and hold harmless RUSH from and against any and all loss, cost and liability, including RUSHs reasonable attorneys fees and costs (Losses), arising in connection with claims made by Third Parties respecting the manufacture, sale or use of any Product by such Third Party (Claims). RUSH shall give ACORDA prompt notice of any such Loss or claim, shall cooperate in its defense, and shall give ACORDA full authority to defend and settle such claim on RUSHs behalf.
7.2. The indemnity obligation set forth in Section 7.1 above shall not apply in the case of Losses or Claims caused by or based on (i) RUSHs gross negligence or willful misconduct; (ii) any breach of this Agreement by RUSH; or (iii) any violation of RUSHs representations or warranties hereunder.
ARTICLE VIII
TERM AND TERMINATION
8.1. Term and Expiration . This Agreement shall be effective as of the Effective Date and unless terminated earlier pursuant to Section 8.2 below, the term of this Agreement shall continue in effect until expiration of all royalty or other payment obligations hereunder.
8.2. Termination .
8.2.1 Termination for Cause . Either Party may terminate this Agreement by notice to the other Party at any time during the term of this Agreement as follows:
(a) if the other Party is in breach of any material obligation hereunder by causes and reasons within its control, or has breached, in any material respect, any representations or warranties set forth in Article VI, and has not cured such breach within ninety (90) days after notice requesting cure of the breach, provided, however, that if the breach is not capable of being cured within ninety (90) days of such written notice, the Agreement may not be terminated so long as the breaching Party commences and is taking commercially reasonable actions to cure such breach as promptly as practicable; or
(b) upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however , in the case of any involuntary bankruptcy, reorganization, liquidation, receivership or assignment proceeding such right to terminate shall only become effective if the Party consents to the involuntary proceeding or such proceeding is not dismissed within ninety (90) days after the filing thereof.
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8.2.2 Licensee Rights Not Affected.
8.3. Effect of Expiration or Termination . Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. ACORDA and its Affiliates and sublicensees shall have the right to sell or otherwise dispose of the stock of any Product subject to this Agreement then on hand or in process of manufacture and ACORDA will continue to pay Rush royalties pursuant to Article V after the expiration or termination of this Agreement for any such Product sold. In addition to any other provisions of this Agreement which by their terms continue after the expiration of this Agreement, the provision of Article IV shall survive the expiration or termination of this Agreement and shall continue in effect for five (5) years from the date of expiration or termination and the provisions of Article IX shall survive the expiration or termination of this Agreement. Upon any termination of this Agreement, each party shall promptly return to the other party all Proprietary Information received from the other party (except one copy of which may be retained for archival purposes). In addition, any other provision required to interpret and enforce the Parties rights and obligations under this Agreement shall also survive, but only to the extent required for the full observation and performance of this Agreement. Any expiration or early termination of this Agreement shall be without prejudice to the rights of any Party against the other
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accrued or accruing under this Agreement prior to termination. In the event ACORDA breaches any of the financial provisions contained in this Agreement, in lieu of any other remedy that may be available, RUSH shall be entitled to pursue its remedies at law, but shall not be entitled to injunctive relief.
ARTICLE IX
MISCELLANEOUS
9.1. Right to Develop Independently . Nothing in this Agreement will impair ACORDAs right to independently acquire, license, develop, or have others develop for it, products similar to or performing functions similar to Product, or similar technology performing similar functions to the Products or to market and distribute products based on other technology.
9.2. Force Majeure . Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement during the period of time when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, but not limited to, fire, flood, embargo, war, acts of war (whether war be declared or not), insurrection, riot, civil commotion, strike, lockout or other labor disturbance, act of God or act, omission or delay in acting by any governmental authority or the other Party. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practicable.
9.3. Assignment . The Agreement may not be assigned or otherwise transferred without the prior written consent of the other Party; provided, however, that ACORDA may assign this Agreement to an Affiliate or in connection with the transfer or sale of its business or all or substantially all of its assets related to Compound or Product or in the event of a merger, consolidation, change in control or similar corporate transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement.
9.4. Severability . In the event that any of the provisions contained in this Agreement are held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affect the substantive rights of the Parties. In such event, the Parties shall replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.
9.5. Notices . All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
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if to ACORDA to:
ACORDA THERAPEUTICS, INC.
15 Skyline Drive
Hawthorne, New York 10532
Attention: : President
Fax No.: 914.347.4560
if to RUSH to:
RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER
1725 W.
Harrison Street
Chicago, Illinois 60612
Attention: Intellectual Property Office/General Counsels Office
Fax No.: 312-942-2055
or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by facsimile on a Business Day, upon confirmed delivery by nationally-recognized overnight courier if so delivered and on the third Business Day following the date of mailing if sent by registered or certified mail.
9.6. Applicable Law and Dispute Resolution . The Agreement shall be governed by and construed in accordance with the laws of the United States of America and State of New York without reference to any rules of conflict of laws.
(a) The Parties agree to attempt initially to solve all claims, disputes, or controversies arising under, out of, or in connection with this Agreement (a Dispute) by conducting good faith negotiations. Any Disputes which cannot be resolved by good faith negotiation within twenty (20) Business Days, shall be referred, by written notice from either Party to the other, to the Chief Executive Officer of each Party. Such Chief Executive Officers shall negotiate in good faith to achieve a resolution of the Dispute referred to them within twenty (20) Business Days after such notice is received by the Party to whom the notice was sent. If the Chief Executive Officers are unable to settle the Dispute between themselves within twenty (20) Business Days, they shall so report to the Parties in writing. The Dispute shall then be referred to mediation as set forth in the following subsection (b).
(b) Upon the Parties receiving the Chief Executive Officers report that the Dispute referred to them pursuant to subsection (a) has not been resolved, the Dispute shall be referred to mediation by written notice from either Party to the other. The mediation shall be conducted pursuant to the American Arbitration Association (AAA) procedures. The place of the mediation shall be Chicago, Illinois. If the Parties have not reached a settlement within twenty (20) Business Days of the date of the notice of mediation, the Dispute shall be referred to arbitration pursuant to subsection (c) below.
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(c) If after the procedures set forth in subsections (a) and (b) above, the Dispute has not been resolved, a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. The Parties shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During such period, the Parties shall continue to make good faith efforts to amicably resolve the dispute without arbitration. If the Parties have not reached a settlement during that period the arbitration proceedings shall go forward and be governed by the AAA rules then in force. Each such arbitration shall be conducted by a panel of three arbitrators: one arbitrator shall be appointed by each of RUSH and ACORDA and the third arbitrator, who shall be the Chairman of the tribunal, shall be appointed by the two-Party appointed arbitrators. Any such arbitration shall be held in Chicago, Illinois, USA.
The arbitrators shall have the authority to direct the Parties as to the manner in which the Parties shall resolve the disputed issues, to render a final decision with respect to such disputed issues, or to grant specific performance with respect to any such disputed issue. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. Nothing in this Section shall be construed to preclude either Party from seeking provisional remedies, including but not limited to, temporary restraining orders and preliminary injunctions, from any court of competent jurisdiction, in order to protect its rights pending arbitration, but such preliminary relief shall not be sought as a means of avoiding arbitration. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. Each Party shall bear its own costs and expenses incurred in connection with any arbitration proceeding and the Parties shall equally share the cost of the mediation and arbitration levied by the AAA.
Any mediation or arbitration proceeding entered into pursuant to this Section 9.6 shall be conducted in the English language. Subject to the foregoing, for purposes of this Agreement, each Party consents, for itself and its Affiliates, to the jurisdiction of the courts of the State of New York, county of New York and the U.S. District Court for the Southern District of New York.
9.7. Entire Agreement . This Agreement, together with the exhibits and schedules hereto, contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes all previous writings and understandings between the Parties. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by all Parties hereto.
9.8. Independent Contractors . It is expressly agreed that the Parties shall be independent contractors and that the relationship between the Parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior consent of such other Party.
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9.9 Waiver . The waiver by a Party hereto of any right hereunder or the failure to perform or of a breach by another Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.
9.10. Further Assurances . At any time or from time to time on and after the Effective Date, RUSH shall at the request of ACORDA (i) deliver to ACORDA such records, data or other documents consistent with the provisions of this Agreement, (ii) execute, and deliver or cause to be delivered, all such consents, documents or further instruments of transfer or license, and (iii) take or cause to be taken all such actions as ACORDA may reasonably deem necessary or desirable in order for ACORDA to obtain the full benefits of this Agreement and the transactions contemplated hereby.
9.11. Headings . The captions to the several Articles and Sections hereof are not a part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.
9.12. Counterparts . The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
9.13. Use of Names . Except as otherwise provided in this Agreement, neither Party shall not use the name of the other Party in relation to this transaction in any public announcement, press release or other public document without the consent of the other Party (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law.
9.14. LIMITATION OF LIABILITY . NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY INDIRECT CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY.
21
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.
RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER
By: |
/s/ James T. Frankenbach |
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Name: James T. Frankenbach |
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Title: Senior Vice President |
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ACORDA THERAPEUTICS, INC. |
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By: |
/s/ Ron Cohen |
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Name: Ron Cohen |
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Title: President and Chief Executive Officer |
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22
SCHEDULE 1.7
DIAGRAM OF COMPOUND
23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality.
Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
SCHEDULE 1.11
ELAN PATENT RIGHTS
For purposes of this Agreement, Elan Patent Rights shall mean any and all rights under any and all patents and patent applications now existing, currently pending or hereafter filed, owned or acquired or licensed by Elan (and/or its Affiliates) which would be infringed by the manufacture, use or sale of the Product, the current status of which is set forth below. Elan Patent Rights shall also include all continuations, continuations-in-part, divisionals and re-issues of such patents and patent applications and any patents issuing thereon and extensions of any patents licensed hereunder. Elan Patent Rights shall further include any patents or patent applications covering any improved methods of making or using the Product invented or acquired by Elan (and/or its Affiliates) during the term of the Elan/Acorda Agreement and under which Elan (and/or its Affiliates) has a right to grant a licence under the Elan/Acorda Agreement, and Elans (and/or its Affiliates) interest in any intellectual property conceived reduced to practice or otherwise developed in connection with the Project (as defined in the Elan/Acorda Agreement).
1806 |
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Formulations and their use in the treatment of neurological diseases |
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Pending
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[* *]
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Issued : |
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Australia
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657706
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24
EXHIBIT 1.31
SIDE AGREEMENT
25
Exhibit 10.11
SIDE AGREEMENT
REFERENCE IS MADE to (i) the License Agreement effective as of September 26, 2003, by and between RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER, an Illinois not-for-profit corporation and having its principal office at 1725 W. Harrison St. Chicago, Ill. 60612 (Rush), and ACORDA THERAPEUTICS, INC., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 15 Skyline Drive, Hawthorne, New York 10532 (Acorda) (the Rush/Acorda License), and (ii) the Amended and Restated License and Supply Agreement effective as of September 26, 2003 by and between Acorda and ELAN CORPORATION, PLC., a public limited company incorporated under the laws of Ireland and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland (Elan) (the Elan/Acorda License). The Rush/Acorda License and the Elan/Acorda License are sometimes collectively referred to herein as the Novation Agreements.
REFERENCE IS FURTHER MADE to (i) the option agreement, dated September 7, 1990 (the Option Agreement), between RUSH and ELAN PHARMACEUTICAL RESEARCH CORPORATION (EPRC), a predecessor of Elan Drug Delivery Inc., a wholly-owned subsidiary of Elan, and (ii) the license agreement dated November 13, 1990 (the Rush/Elan License), between RUSH and EPRC. The Option Agreement and the Rush/Elan License are sometimes collectively referred to as the Rush/Elan Agreements.
WHEREAS, in connection with the respective parties desire to enter into and in consideration of the Novation Agreements, Rush, Acorda and Elan have agreed to enter into this Side Agreement with the intention to set forth (i) the termination of the Rush/Elan Agreements; and (ii) the relative rights of the parties hereto related to certain matters under the Novation Agreements.
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter recited and set forth in the Novation Agreements and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
1. Effective on the Effective Date, the Rush/Elan Agreements are hereby cancelled and terminated in their entirety. Notwithstanding any provision contained in the Rush/Elan Agreements, neither Rush nor Elan shall have any obligation or liability to the other Party under the Rush/Elan Agreements or in connection with the termination thereof except as set forth in this Side Agreement.
2. In the event that Acorda has breached any financial or other curable obligation under the Rush/Acorda License which breach would give Rush the right, pursuant to the Section 8.3.1 of the Rush/Acorda License, to terminate the Rush/Acorda License, Rush shall send Elan a copy of any notice sent to Acorda of such breach, including a description of such breached obligation, and of any failure to remedy such breach within the specified time period. If Acorda fails to remedy such breach within the specified period, Elan shall have the right, but not the obligation, after consultation with Acorda, to remedy such breach on Acordas behalf within sixty (60) days after receiving notice of Acordas failure to remedy such breach provided,
however, that Elan shall not have the right to cure such breach in the event that such breach is due to the fault of Elan. In the event Elan remedies such breach, Rush shall not have the right to terminate the Rush/Acorda License and Acorda shall cooperate with Elan to the extent necessary and reasonable for Elan to enforce its rights with respect to Rush under this Side Agreement.
3. In the event that Acorda has committed a non-curable breach of the Rush/Acorda License which breach would give Rush the right, pursuant to Section 8.3.1 of the Rush/Acorda License, to terminate the Rush/Acorda License, then Rush shall copy Elan on its written notice to Acorda of and describing such breach and describing any Acorda obligations under the Rush/Acorda License, and Elan shall have the right, but not the obligation, after consultation with Acorda, to assume all of Acordas obligations under the Rush/Acorda License, provided, , that Elan shall have a good faith expectation that it has the intention and capability to perform such obligations and, provided further that Elan shall not have the right to assume all of Acordas rights and obligations under the Rush/Acorda License in the event that such breach is due to the fault of Elan. In the event Elan assumes all of Acordas obligations under the Rush/Acorda License pursuant to this Paragraph 3, Acorda shall assign to Elan all of Acordas rights and remedies under the Rush/Acorda License and shall cooperate with Elan to the extent necessary and reasonable for Elan to enforce Elans rights and remedies vis a vis Rush under the Rush/Acorda License and this Side Agreement. In the event that Elan does not assume Acordas obligations under the Rush/Acorda License under this Paragraph 3, Rush shall have the right to terminate the Rush/Acorda License.
4. Rush agrees that in the event that Rush terminates the Rush/Acorda License pursuant to Section 8.3.1 thereof, Rush shall promptly provide Elan with written notice of such termination, together with a description of the basis for such termination, and Rush shall offer to Elan the right to assume all rights and obligations of Acorda under the Rush/Acorda License. Should Elan within thirty (30) days following receipt of such notice from Rush, provide to Rush written notice of its desire to assume such rights, remedies and obligations of Acorda and accept the grant of such rights from Rush, then Rush shall not terminate the Rush/Acorda License until expiration of such thirty (30) day period and, thereafter, all rights of Acorda under the Rush/Acorda License shall be immediately granted to Elan, such licenses from Rush shall be immediately granted, and Elan shall concurrently assume all obligations of Acorda under the Rush/Acorda License provided that Elan shall have a good faith expectation that it has the intention and capability to perform such obligations. In the event that Elan shall assume and perform Acordas rights and obligations under the Rush/Acorda License, Acorda shall have no further obligations to Rush with respect to the Rush/Acorda License. In the event that Elan does not assume Acordas obligations under the Rush/Acorda License under this Paragraph 4, Rush shall have the right to terminate the Rush/Acorda License.
5. In the event that the Elan/Acorda Agreement is terminated by Elan in accordance with the terms thereof, Elan shall promptly provide Rush with written notice of such termination, together with a description of the basis for such termination, and Rush shall offer to Elan the right to assume all rights and obligations of Acorda under the Rush/Acorda License. Should Elan within thirty (30) days following receipt of such notice from Rush, provide to Rush written notice of its desire to assume such rights and obligations of Acorda and accept the grant of such rights from Rush, then all rights of Acorda under the Rush/Acorda License shall be granted to
2
Elan and Elan shall concurrently assume all obligations of Acorda under the Rush/Acorda License, provided that Elan shall have a good faith expectation that it has the intention and capability to perform such obligations. In the event that Elan shall assume and perform Acordas rights and obligations under the Rush/ Acorda License, Acorda shall have no further obligations to Rush with respect to the Rush/Acorda License.
6. Rush, on behalf of itself and its respective heirs, executors, successors and assigns hereby fully and forever releases and discharges Elan, Acorda, EPRC, and their respective affiliates, heirs, executors, successors, agents, licensees, officers and directors, from and agrees not to sue any of such released parties concerning, any and all claims, actions, obligations, duties, causes of action, whether now known or unknown, suspected or unsuspected, that either of them may possess based upon or arising out of any matter, cause, fact, thing, act, or omission whatsoever occurring or existing at any time prior to and including the Effective Date (collectively, the Released Matters), including without limitation, any and all claims relating to 4-aminopyridine. For the avoidance of this doubt, this release does not extend to matters that may arise after the Effective Date under this Side Agreement or under the Rush/Acorda License. Each of Elan, EPRC, and Acorda on behalf of itself and its respective heirs, executors, successors and assigns hereby fully and forever releases and discharges Rush and its affiliates, heirs, executors, successors, agents, licensees, officers and directors, from and agrees not to sue any of such released parties concerning, any Released Matters, including without limitation, any and all claims relating to 4-aminopyridine. For the avoidance of this doubt, this release does not extend to matters that may arise after the Effective Date under this Side Agreement or under the Rush/Acorda License.
7. Each party to this release acknowledges that they have been advised by legal counsel and are familiar with Section 1542 of the Civil Code of the State of California, which states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
The parties each expressly waive any right or benefit which they have or may have under Section 1542 of the California Civil Code or any similar provision of the statutory or non-statutory law of any other jurisdiction, including Delaware. The parties acknowledge that in the future they may discover claims or facts in addition to or different from those that they now know or believe to exist with respect to the subject matter of this Release, and that each of Rush, Acorda, and Elan, as applicable, intends to fully, finally, and forever settle all of the Released Matters in exchange for good and valuable consideration. This release will remain in effect as a full and complete release notwithstanding the discovery or existence of any additional claims or facts.
The release provided for by this Paragraph 7 is executed voluntarily and without any duress or undue influence on the part or behalf of the parties hereto, with the full intent of releasing all claims. The parties represent and warrant that:
3
(a) they have read the release provided for herein;
(b) they have been represented in the preparation, negotiation, and execution of the release by legal counsel of their own choice; and
(c) that, other than claims asserted by Rush (which claims are expressly included in the Released Matters), it has no knowledge of any claims asserted or assertable by any person or entity relating to the subject matter of this Agreement, which are not released by this release provided for by this Paragraph.
8. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
if to Acorda to: |
ACORDA THERAPEUTICS, INC.. |
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15 Skyline Drive |
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Hawthorne, New York 10532 |
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United States of America |
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Attention: President |
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Fax No.: 914.347.4560 |
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if to Elan to: |
ELAN CORPORATION, PLC. |
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c/o Elan International Services Ltd. |
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102 St. James Court |
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Flatts, |
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Smiths FL04 |
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Bermuda |
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Attention: Secretary |
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Fax: +1 441 292 2224 |
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if to EPRC to: |
Elan Drug Delivery Inc |
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c/o Elan Pharmaceuticals Inc |
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South San Francisco, |
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800 Gateway Boulevard, |
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South San Francisco, |
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CA 94080, U.S.A. |
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Fax 650 553 7165 |
4
if to Rush to: |
RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER |
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1725 W. Harrison St. |
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Chicago, Ill. 60612 |
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United States of America |
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Attention: Intellectual Property Office/General |
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Counsels Office |
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Fax No.: 312. 942. 2055 |
9. This Side Agreement shall be effective as of September 26, 2003 (Effective Date), and shall be governed by the laws of the State of New York without reference to any rules of conflict of laws.
10. This Side Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Side Agreement as of the Effective Date.
ACORDA THERAPEUTICS, INC. |
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By: |
/s/ Ron Cohen |
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Name: |
R on C ohen |
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Title: |
President and Chief Executive Officer |
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ELAN CORPORATION, PLC. |
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By: |
/s/ Kevin Insley |
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Name: |
Kevin Insley |
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Title: |
Authorized Signatory |
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ELAN DRUG DELIVERY INC. |
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By: |
/s/ Jean M . Duvall |
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Name: |
Jean M. Duvall |
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Title: |
Vice President and Secretary |
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RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER |
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By: |
/s/ James T . Frankenbach |
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Name: |
James T. Frankenbach |
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Title: |
Senior Vice President |
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5
Exhibit 10.12
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
RUSH PAYMENTS AGREEMENT
REFERENCE IS MADE to (i) the License Agreement effective as of September 26, 2003, by and between RUSH-PRESBYTERIAN-ST. LUKES MEDICAL CENTER , an Illinois not-for-profit corporation and having its principal office at 1725 W. Harrison St. Chicago, Ill. 60612 (Rush), and ACORDA THERAPEUTICS, INC. , a corporation organized and existing under the laws of the State of Delaware and having its principal office at 15 Skyline Drive, Hawthorne, New York 10532 (Acorda), including the Side Agreement attached thereto as Exhibit 1.31 by and among Rush, Acorda and Elan (as defined below) (the Side Agreement ), a copy of which is attached as Exhibit A hereto (the Rush/Acorda License ); and (ii) the Amended and Restated License Agreement effective as of September 26, 2003 by and between Acorda and ELAN CORPORATION, PLC. , a public limited company incorporated under the laws of Ireland and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland (Elan) (the Elan/Acorda License ). The Rush/Acorda License and the Elan/Acorda License are sometimes collectively referred to herein as the Novation Agreements and Elan and Acorda are sometimes referred to herein as the Parties.
WHEREAS, in connection with and in consideration of the Novation Agreements, Acorda and Elan have agreed to enter into this Rush Payments Agreement with the intention to set forth the respective allocation between the Parties of certain amounts payable under the Rush/Acorda License and certain other rights and obligations of the Parties.
NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter recited and set forth in the Novation Agreements and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
1. With respect to the US $[**] license fee set forth in Section 5.1 of the Rush/Acorda License, each of Acorda and Elan shall be responsible for [**] of such license fee. Accordingly, on the Effective Date, Elan shall pay Acorda US$[**] as Elans [**] share of such payment.
2. With respect to milestone payments that become payable under Section 5.2 of the Rush/Acorda License, the following shall be applicable:
(a) Each of Acorda and Elan shall be responsible for [**] of any milestone payments payable to Rush under Section 5.2 (a) or 5.2 (b) of the Rush/Acorda License. Accordingly, if the milestone events set forth in either Section 5.2 (a) or Section 5.2 (b) of the Rush/Acorda License are achieved, (x) Acorda shall so advise Elan in writing upon achievement of the applicable milestone event, and (y) Elan shall pay Acorda an amount equal to [**] of the applicable milestone payment upon receipt of such notice as Elans share of such payment; and
(b) Elan shall be responsible for [**] of any milestone payments payable to Rush under Section 5.2 (c) of the Rush/Acorda License. Accordingly, if the milestone event set forth in Section 5.2 (c) of the Rush/Acorda License is achieved, Acorda shall so advise Elan in writing upon achievement of the applicable milestone event and Elan shall pay Acorda an amount equal to [**] of the applicable milestone payment upon receipt of such notice.
1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
3. In addition, Acorda shall pay to Elan an additional royalty of:
(i) [**] of NSP of the Product sold outside the US during the Base Royalty Term (as such term is defined in the Rush/Acorda License);
(ii) [**] of NSP of the Product sold outside the US during the Reduced Royalty Term (as such term is defined in the Rush/Acorda License);
(iii) during the Reduced Royalty Term, [**] of the difference between (a) the royalty that would have been payable by Acorda to Rush during the Base Royalty Term and (b) the royalty payable by Acorda to Rush during the Reduced Royalty Term under Section 5.3.1 of the Rush/Acorda License on such sales of Product in the applicable country; and/or
(iv) after termination or expiration of Acordas royalty obligations to Rush under the Rush/Acorda License in any country, [**] of NSP of the Product in such country; (with the amounts payable under the foregoing subparagraphs (i), (ii) (iii) and/or (iv), as applicable, referred to as the Additional Royalty);
provided, however, that in the event the provisions of Clause 5.6.2 or Clause 5.6.3 of the Elan/Acorda License are applicable, any Additional Royalty payable shall be limited to [**] of NSP of Product. All payments of the Additional Royalty shall be made in accordance with the provisions of Clauses 5.6.4, 5.6.5 and 5.6.6 of the Elan/Acorda License, and Article 5.9 of the Elan/Acorda License, to the extent applicable.
4. In the event that Elan breaches any of its financial obligations and undertakings under Paragraph 2 of this Rush Payments Agreement, Acorda may offset and credit the amount of the unpaid financial obligation, together with accrued interest thereon, against any amounts payable from Acorda to Elan under the Elan/Acorda License including, without limitation, amounts payable under Section 3.4 of the Elan/Acorda License. In the event that it is determined that Acorda has incorrectly offset or credited any amounts pursuant to this Paragraph 4, Acorda shall promptly pay the incorrectly offset or credited amount, together with accrued interest thereon, to Elan.
5. In the event that Acorda has breached any financial or other curable obligation under the Rush/Acorda License which breach would give Rush the right, pursuant to the Section 8.2.1 of the Rush/Acorda License, to terminate the Rush/Acorda License and, pursuant to the terms of the Side Agreement, Elan has the right to and remedies such breach (provided, however, that Elan shall not have the right to remedy such breach if such breach has been consented to by Elan or is primarily due to the fault of Elan or if Elan is in breach of the terms of this Rush Payments Agreement or the Elan/Acorda License), Elan may charge Acorda an amount equal to the amount so paid by Elan to Rush to remedy such breach on behalf of Acorda. In the event that it is determined that Elan has incorrectly charged any amounts to Acorda pursuant to this
2
Paragraph 5 and Acorda has paid such amounts, Elan shall promptly repay to Acorda the incorrectly charged and paid amount, together with accrued interest thereon.
6. In the event that Rush terminates the Rush/Acorda License pursuant to Section 8.2.1 thereof as a result of a breach by Acorda and, pursuant to the terms of the Side Agreement, Elan has the right to and elects to assume the rights and obligations of Acorda under the Rush/Acorda License (provided, however, that Elan shall not have the right to assume such rights and obligations if such breach has been consented to by Elan, is primarily due to the fault of Elan or if Elan is in breach of the terms of this Rush Payments Agreement or the Elan/Acorda License), Elan may charge Acorda an amount equal to any amounts or financial obligations so paid or incurred by Elan to Rush pursuant to Elans assumption of Acordas obligations under the Rush/Acorda License.
7. Acorda agrees to indemnify Elan from and against any losses and liability arising from any claims made by Rush against Elan after the Effective Date resulting primarily from any acts or omissions of Acorda under the Rush/Acorda License. Elan shall give Acorda prompt notice of any such loss or liability, shall cooperate in its defense, and shall give Acorda full authority to defend and settle such claim on Elans behalf. This indemnity obligation shall not apply in the case of losses primarily caused by or based on (i) Elans acts or omissions; or (ii) any breach of this Rush Payments Agreement, the Side Agreement or the Elan/Acorda License by Elan.
In the event Elan has the right to and elects to cure any Acorda breach of, or assumes the rights and obligations of Acorda under the, Rush/Acorda License in accordance with the terms of the Side Agreement and this Rush Payments Agreement, Elan agrees to indemnify Acorda from and against any losses and liability arising from any claims made by Rush against Acorda resulting from any acts of Elan after the date that Elan cures such breach or assumes Acordas obligations under the Rush/Acorda License. Acorda shall give Elan prompt notice of any such loss or liability, shall cooperate in its defense, and shall give Elan full authority to defend and settle such claim on Acordas behalf. This indemnity obligation shall not apply in the case of losses primarily caused by or based on (i) Acordas acts or omissions; or (ii) any breach of this Rush Payments Agreement, the Side Agreement or the Elan/Acorda License by Acorda.
8. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
if to Acorda to: |
ACORDA THERAPEUTICS, INC.. |
|
15 Skyline Drive |
|
Hawthorne, New York 10532 |
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Attention: President |
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Fax No.: 914.347.4560 |
3
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if to Elan to: |
ELAN CORPORATION, PLC. |
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c/o Elan International Services Ltd. |
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102 St. James Court |
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Flatts, |
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Smiths FL04 Bermuda |
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Attention: Secretary |
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Fax No: +1 441 292 2224 |
9. This Rush Payments Agreement shall be effective as of the date set forth below (Effective Date), and shall be governed by the laws of the State of New York without reference to any rules of conflict of laws. Any disputes under this Agreement shall be governed by the dispute resolution provisions of Article 12.14 of the Elan/Acorda License.
10. This Rush Payments Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have executed this Rush Payments Agreement as of September____, 2003.
ACORDA THERAPEUTICS, INC. |
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By: |
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Name: |
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Title: |
President and Chief Executive Officer |
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ELAN CORPORATION, PLC. |
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By: |
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Name: |
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Title: |
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4
EXHIBIT A
RUSH/ACORDA LICENSE
5
Exhibit 10.13
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk *, have been separately filed with the Commission.
AMENDMENT No. 1 TO
RUSH PAYMENTS AGREEMENT
THIS AMENDMENT, dated as of October 27, 2003, by and between Acorda Therapeutics, Inc. (Acorda) and Elan Corporation, plc. (Elan) amends the Rush Payments Agreement effective as of September 26, 2003 (the Payments Agreement) by and between Acorda and Elan.
W I T N E S S E T H:
WHEREAS, Acorda and Elan desire to amend certain provisions relating to the timing of payments under the Payments Agreement upon the terms and conditions set forth herein;
NOW, THEREFORE , in consideration of the premises contained herein, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree as follows:
1. Paragraph 2 (a) of the Payments Agreement is hereby amended and restated in its entirety to read as follows:
(a) Each of Acorda and Elan shall be responsible for [**] of any milestone payments payable to Rush under Section 5.2 (a) or 5.2 (b) of the Rush/Acorda License. Accordingly, if the milestone events set forth in either Section 5.2 (a) or Section 5.2 (b) of the Rush/Acorda License are achieved, (x) Acorda shall so advise Elan in writing upon achievement of the applicable milestone event, and (y) Elan shall pay Acorda an amount equal to [**] of the applicable milestone payment within twenty-five (25) days after receipt of such notice as Elans share of such payment.
2. Paragraph 2 (b) of the Payments Agreement is hereby amended and restated in its entirety to read as follows:
(b) Elan shall be responsible for [**] of any milestone payments payable to Rush under Section 5.2 (c) of the Rush/Acorda License. Accordingly, if the milestone event set forth in Section 5.2 (c) of the Rush/Acorda License is achieved, Acorda shall so advise Elan in writing upon achievement of the applicable milestone event and Elan shall pay Acorda an amount equal to [**] of the applicable milestone payment within twenty-five (25) days after receipt of such notice.
3. Except as expressly amended by this Amendment, all of the provisions of the Payments Agreement shall remain in full force and effect. All references to the Payments Agreement, from and after the date hereof, shall be to the Payments Agreement as amended by this Amendment.
4. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF , the Parties have executed this Amendment as of the date first set forth above.
Acorda Therapeutics, Inc.
By: |
/s/ Ron Cohen |
Name: |
Ron Cohen |
Title: |
President and CEO |
Elan Corporation, plc .
By: |
/s/ |
Name: |
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Title: |
|
2
Exhibit 10.14
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
AMENDED AND RESTATED LICENSE AGREEMENT
by and between
CANADIAN SPINAL RESEARCH ORGANIZATION
and
ACORDA THERAPEUTICS, INC.
THIS AMENDED AND RESTATED LICENSE AGREEMENT made as of August 1, 2003 (the Restatement Date), by and between CANADIAN SPINAL RESEARCH ORGANIZATION, a not-for-profit corporation organized and existing under the laws of Ontario and having its principal office at 120 Newkirk Road, Unit 2, Richmond Hill, Ontario, L4C 9S7 (CSRO) and ACORDA THERAPEUTICS, INC. , a corporation organized and existing under the laws of the State of Delaware and having its principal office at 16 Skyline Drive, Hawthorne, New York 10532 (ACORDA).
W I T N E S S E T H:
WHEREAS, CSRO owns or has rights to certain Patent Assets and Know How (each as defined herein) relating to the use of 4-aminopyridine (4-AP) in the reduction of chronic pain and spasticity in a spinal cord injured patient;
WHEREAS, CSRO, Purdue and McMaster have entered into that certain Inter-Institutional Agreement, effective as of October 18, 1993 (the Inter-Institutional Agreement), pursuant to which CSRO acquired the sole authority to license rights to any patents included in the Patent Assets;
WHEREAS, pursuant to the Assignments, CSRO obtained an Assignment from the Inventors of the Patent Assets (all as defined herein);
WHEREAS, pursuant to a License Agreement (the 1995 Agreement), effective August 9, 1995 (the 1995 Agreement Effective Date), between CSRO and ACORDA, CSRO granted ACORDA an exclusive license under the Patent Assets; and
WHEREAS, the Parties agree that the 1995 Agreement should be amended and restated to reflect the intentions of the Parties, effective as of the 1995 Agreement Effective Date, except where indicated to be effective as of the Restatement Date;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree that the 1995 Agreement, and all of the terms, conditions and provisions of the 1995 Agreement, are hereby superceded and replaced in their entirety by this Agreement and the terms, conditions and provisions hereof, effective as of the 1995 Agreement Effective Date, as follows:
Unless specifically set forth to the contrary herein, the following terms, where used in the singular or plural, shall have the respective meanings set forth below:
2
Such know-how shall include, without limitation, all chemical, pharmaceutical, toxicological, preclinical, clinical, assay control, regulatory, and any other data or information used or useful for the development, manufacturing and/or regulatory approval of Compound or Product, including such rights which CSRO may have to data or information developed by Third Parties.
1.10. First Commercial Sale shall mean the first sale of Product by ACORDA, its Affiliate or its sublicensees in a country, for end use or consumption, after all required Regulatory Approvals have been granted by the governing health authority of such country. Sales for
3
Sales or other transfers between ACORDA and its Affiliates or sublicensees shall be excluded from the computation of Net Sales and no payments will be payable on such sales or transfers except where such Affiliates are end users, but Net Sales shall include the subsequent sales to Third Parties by such Affiliates or sublicensees.
4
5
6
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(i) Subject to the terms and conditions of this Agreement, and in consideration of the rights granted by CSRO hereunder, ACORDA shall pay to CSRO royalties in an amount equal to [**] of Net Sales in each country in the Territory where the manufacture, use or sale of Product would, absent the license granted hereunder, infringe one or more Valid Claims in such country.
(ii) Royalties on Net Sales at the rate set forth in (i) above shall accrue as of the date of First Commercial Sale of Product in the applicable country and shall continue and accrue on Net Sales on a country-by-country basis until the earlier of (A) the expiration of the last to expire Patent Asset in such country or (B) ten (10) years following the date of First Commercial Sale of Product in such country. Thereafter, ACORDA shall be relieved of any royalty payment under this Agreement.
(iii) The payment of royalties set forth above shall be subject to the following conditions:
8
(A) only one payment shall be due with respect to the same unit of Product;
(B) no multiple royalties shall be payable because any Product, or its manufacture, sale or use is covered by more than one Valid Claim;
(C) no royalties shall accrue on the disposition of Product by ACORDA, Affiliates or sublicensees as samples (promotion or otherwise) or as donations (for example, to non-profit institutions or government agencies) or to clinical trials or for research and and/or development; and
(D) CSRO shall be responsible for payment of any royalties or other obligations owed by CSRO to any Third Party, including without limitation, pursuant to the Inter-Institutional Agreement.
9
10
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
11
12
13
14
15
16
17
18
19
if to ACORDA to:
ACORDA THERAPEUTICS, INC.
16 Skyline Drive
Hawthorne, New York 10532
Attention: Ron Cohen
Fax No.: (914) 347-4560
if to CSRO to:
CANADIAN SPINAL RESEARCH ORGANIZATION
120 Newkirk Road, Unit 2
Richmond Hill, Ontario L4C 9S7
Attention: Barry Munro
Fax No.: (905) 508-4002
or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by facsimile on a Business Day, upon confirmed delivery by nationally-recognized overnight courier if so
20
delivered and on the third Business Day following the date of mailing if sent by registered or certified mail.
21
Any mediation or arbitration proceeding entered into pursuant to this Section 10.6 shall be conducted in the English language. Subject to the foregoing, for purposes of this Agreement, each Party consents, for itself and its Affiliates, to the jurisdiction of the courts of the State of New York, county of New York and the U.S. District Court for the Southern District of New York.
22
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.
CANADIAN SPINAL RESEARCH ORGANIZATION |
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By: |
/s/ Barry Munro |
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Name: |
Barry Munro |
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Title: |
President |
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A CORDA THERAPEUTICS, INC. |
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By: |
/s/ Harold Safferstein |
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Name: |
Harold Safferstein |
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Title: |
VP of Business Development |
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23
EXHIBIT 1.2
ASSIGNMENTS
24
SCHEDULE 1.6
DIAGRAM OF 4-AP
4-aminopyridine (4-AP), C5H6N2, MW 94
25
SCHEDULE
1.16
PATENT ASSETS
Case Number: A01
Title: |
USE OF 4-AMINOPYRIDINE
IN THE REDUCTION OF CHRONIC
|
Inventor(s): |
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Hansebout, Robert R.
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Client: |
Acorda Therapeutics Inc. |
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Owner: |
Canadian Spinal Research Organization |
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Disclosure Status: |
Filed |
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Disclosure Date: |
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Attorney(s): |
MF |
|
Country |
|
Sub Case |
|
Case Type |
|
Status |
|
Application Number |
|
Filing Date |
|
Patent Number |
|
Issue Date |
|
Expiration Date |
|
Australia |
|
|
|
PCT |
|
Granted |
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56911/94 |
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20-Dec-1993 |
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676251 |
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06-Mar-1997 |
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18-Dec-2012 |
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Austria |
|
|
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PCT |
|
Granted |
|
1993094902578 |
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20-Dec-1993 |
|
0241981 |
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15-Jun-2003 |
|
20-Dec-2013 |
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Bulgaria |
|
|
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PCT |
|
Granted |
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99047 |
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20-Dec-1993 |
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62272 |
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12-Nov-1998 |
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20-Dec-2013 |
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Canada |
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|
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PCT |
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Pending |
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2085785 |
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20-Dec-1993 |
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|
|
|
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18-Dec-2012 |
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Czech Republic |
|
|
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ORD |
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Granted |
|
PV2254-94 |
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20-Dec-1993 |
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284441 |
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11-Nov-1998 |
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20-Dec-2013 |
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European Patent Convention |
|
|
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PCT |
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Granted |
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94902578.7 |
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20-Dec-1993 |
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0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
France |
|
|
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EPC |
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Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Germany, Federal Republic of |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
69333014 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Hungary |
|
|
|
PCT |
|
Granted |
|
P94-02647 |
|
20-Dec-1993 |
|
219583 |
|
02-Aug-2001 |
|
20-Dec-2013 |
|
Ireland |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Italy |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Japan |
|
|
|
PCT |
|
Granted |
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6-514637 |
|
20-Dec-1993 |
|
8504772 |
|
21-May-1996 |
|
20-Dec-2013 |
|
Korea, Democratic Peoples Republic of |
|
|
|
PCT |
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Granted |
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P-94-354 |
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20-Dec-1993 |
|
31250 |
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30-Aug-1997 |
|
20-Dec-2013 |
|
Korea, Republic of |
|
|
|
PCT |
|
Granted |
|
94-702838 |
|
20-Dec-1993 |
|
10-301415 |
|
25-Jun-2001 |
|
20-Dec-2013 |
|
Liechtenstein |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Netherlands |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
New Zealand |
|
|
|
PCT |
|
Granted |
|
258844 |
|
20-Dec-1993 |
|
258844 |
|
09-Oct-2000 |
|
20-Dec-2013 |
|
Norway |
|
|
|
PCT |
|
Granted |
|
1994 3049 |
|
20-Dec-1993 |
|
308.644 |
|
09-Oct-2000 |
|
20-Dec-2013 |
|
Russian Federation |
|
|
|
PCT |
|
Granted |
|
94041207.00 |
|
20-Dec-1993 |
|
2160590 |
|
20-Oct-2000 |
|
20-Dec-2013 |
|
Singapore |
|
|
|
PCT |
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Granted |
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9705418-3 |
|
19-Apr-1996 |
|
48615 |
|
20-Jul-1999 |
|
19-Apr-2016 |
|
Slovakia |
|
|
|
PCT |
|
Granted |
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PV-0969-94 |
|
20-Dec-1993 |
|
280922 |
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24-May-2000 |
|
20-Dec-2013 |
|
Spain |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
Sweden |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
United Kingdom |
|
|
|
EPC |
|
Granted |
|
94902578.7 |
|
20-Dec-1993 |
|
0626848 |
|
04-Jun-2003 |
|
20-Dec-2013 |
|
United States of America |
|
|
|
ORD |
|
Granted |
|
08/290757 |
|
13-Sep-1994 |
|
5545648 |
|
13-Aug-1996 |
|
13-Sep-2014 |
|
Abstract: A method of reducing chronic pain and spasticity in a spinal cord injured patient in need of such treatment comprising administering an effective amount of 4-aminopyridine to said patient.
26
EXHIBIT 6.1(o)
INTER-INSTITUTIONAL AGREEMENT
i
Exhibit 10.15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the Agreement ) is made and entered into as of this 3rd day of February, 2003 (the Effective Date ) by and between ACORDA THERAPEUTICS, INC. , a corporation organized and existing under the laws of the state of Delaware having a principal place of business at 15 Skyline Drive, Hawthorne, New York 10532 ( Acorda ) and CORNELL RESEARCH FOUNDATION, INC. , a non-profit corporation organized and existing under the laws of the state of New York having an office at 20 Thornwood Drive, Suite 105, Ithaca, NY 14850 ( Foundation ). Each of Acorda and Foundation may be referred to herein individually as a Party and collectively, as Parties .
RECITALS
WHEREAS , Foundation owns all right, title and interest in U.S. Patent No. 5,952,357; and
WHEREAS, Foundation is a wholly owned subsidiary of Cornell University (Cornell) and holds the ownership interests of patents, know-how, and biological materials made by Cornells employees and administers licenses in a manner consistent with the policies of Cornell; and
WHEREAS, Acorda desires to obtain and Foundation wishes to grant to Acorda, an exclusive license to U.S. Patent No. 5,952,357, including all intellectual property rights therein, for the development and commercialization of pharmaceutical products for all purposes; and
WHEREAS, the work leading to the Licensed Patents was supported in part by an agency of the U.S. Government, and Foundation is obligated to comply with U.S. OMB Circular A-124 and 37 CFR Part 401; and as such, this license is subject to the applicable terms of U.S. Government regulations concerning Government funded inventions.
NOW, THEREFORE , for and in consideration of the mutual covenants and the premises herein contained, the Parties, intending to be legally bound, hereby agree as follows:
The following terms as used herein shall have the following meanings:
2
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Event |
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Milestone Payment |
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(i) The effective date of a successful reissuance or reexamination of the Licensed Patents ( Milestone 1 ). |
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$ |
[**] |
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(ii) The date of completion of a Clinical Trial testing the use of Fampridine-SR in Amyotrophic Lateral Sclerosis (ALS), provided that such Clinical Trial shall be initiated at Acordas discretion and a negative or non-statistically significant trial would not trigger this milestone ( Milestone 2 ). |
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$ |
[**] |
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No milestone payment shall be paid more than once to Foundation pursuant to this Section 3.4. Milestone 1 and Milestone 2 are independent of each other and Milestone 2 may occur prior to Milestone 1. In any event, Acorda shall pay the specified milestone payment only upon the occurrence of the corresponding milestone event, regardless of the order of occurrence of the milestone events.
5
6
7
8
9
10
11
Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other, except a Party may make such an assignment without the other Partys written consent to an Affiliate or to a successor to all, or substantially all, of the business to which this Agreement relates of such Party, whether in a merger, sale of stock, sale of assets or other transaction. Any permitted successor or assignee of rights and/or obligations hereunder shall, in writing to the other Party, expressly assume
12
performance of such rights and/or obligations. Any permitted assignment shall be binding on the successors of the assigning Party. Any assignment or attempted assignment by either Party in violation of the terms of this Article 11 shall be null and void and of no legal effect.
13
14
15
IN WITNESS WHEREOF, Acorda and Foundation have caused this Agreement to be signed, under seal, by their duly authorized representatives below.
ACORDA THERAPEUTICS, INC. |
CORNELL RESEARCH FOUNDATION, INC. |
||||||||
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||||||||
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||||||||
By: |
/s/ Harold T. Safferstein |
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By: |
/s/ Brian Kelly |
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||||
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||||||||
Name: |
Harold T. Safferstein |
|
Name: |
Brian Kelly |
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||||
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||||||||
Title: |
Vice President, Business Development |
|
Title: |
Vice President |
|
||||
16
TABLE OF CONTENTS
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i
APPENDIX A - ROYALTY REPORT
Report royalty payment information to the Cornell Research Foundation, Inc (CRF) using the report format or facsimile attached to these instructions. This minimal information must be provided in order to correctly record royalty related events required by your license agreement with CRF.
Use a separate report to record royalty information for each license agreement. For each licensee agreement, report royalty sales by CRF docket number, which identifies the technology. List each contributing technology if more than one technology is used to produce a royalty generating process/product. This level of detail permits evaluation of the use of each technology under license with your company.
Submit this information along with appropriate payment to:
Cornell Research
Foundation, Inc.
ATTN: Finance and Accounting
20 Thornwood Drive, Suite 105
Ithaca, NY 14850
(607) 257-1081
www.crf.cornell.edu
For your convenience,
payments may be made by FEDWIRE or ACH to:
Tompkins Trust Company
The Commons
Ithaca, NY 14851
(607) 273-3210
www.tompkinstrust.com
Account: 01-101-007353, ABA: 021302648
ROYALTY REPORT [licensee NAME]
LICENSEE NAME: |
CRF LICENSE NUMBER: |
REPORTING PERIOD:
Individual to contact concerning this information:
Name: |
Phone # or email ID: |
For each product/item subject to a royalty payment provision, provide the following information as applicable.
PRODUCT/ITEM:
CRF Docket Number |
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Country |
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Number of
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Gross Sales By
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Net Sales By
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Royalty Rate |
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Less Minimum Royalty
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Net Royalty
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Total Payment |
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3
Exhibit 10.16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the Agreement) is made and entered into as of November 12, 2002 (the Effective Date), by and between Acorda Therapeutics, Inc., a corporation organized and existing under the laws of the State of Delaware and having a principal place of business at 15 Skyline Drive, Hawthorn, New York, USA 10532 (Acorda), and CeNeS Pharmaceuticals, PLC, a corporation organized and existing under the laws of the United Kingdom and having a principal place of business at Compass House, Vision Park, Chivers Way, Histon, Cambridge CB4 9ZR, England (CeNeS).
WHEREAS, CeNeS is the exclusive licensee of certain intellectual property rights pursuant to that certain agreement, as amended, entered into by and between the Ludwig Institute for Cancer Research (Ludwig) and Cambridge Neuroscience Research, Inc. dated October 26, 1989 (the Ludwig Agreement);
WHEREAS, CeNeS and Acorda are parties to that certain License Option Agreement dated as of April 3, 2002, as amended, (the License Option Agreement), pursuant to which CeNeS granted Acorda the option to take a sublicense of certain rights licensed to CeNeS under the Ludwig Agreement; and
WHEREAS, Acorda desires to exercise such option and to take a sublicense of such rights as set forth herein,
NOW, THEREFORE, intending to be legally bound and upon the terms, conditions and mutual covenants hereinafter set forth, the parties agree as follows:
Part 1 - Definitions
2
Net Sales also includes the fair market value of any non-cash consideration received by Acorda or Sublicensees for the Sale, lease, or transfer of Licensed Products. The fair market value will be no less than the standard selling price for the applicable Licensed Products, each unit multiplied by the quantity of such Licensed Products delivered in exchange for such non-cash consideration.
3
4
Part 2 - License Grant
2.1 CeNeS hereby grants to Acorda, and Acorda accepts, an exclusive license under the Patent Rights and Licensed Know-How to practice the same and to make, have made, use, import, offer for sale and sell Licensed Products throughout the Territory during the term of this Agreement.
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2.2 Acorda hereby acknowledges that CeNeS is obligated to pay Ludwig certain royalties with respect to Sales by Acorda and Acorda hereby agrees to be amenable to suit by Ludwig in the event of non-payment of royalties due CeNeS hereunder by Acorda. If Ludwig is required to bring suit against Acorda for any material breach of this Agreement that remains uncured pursuant to Section 9.3(a), Acorda will pay all reasonable out-of-pocket costs incurred by Ludwig in connection therewith, including without limitation, reasonable attorneys fees and costs.
Part 3 - Royalties
Annual Net Sales in USD |
|
Royalty Rate |
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[**] |
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[**] |
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[**] |
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[**] |
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[**] |
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[**] |
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[**] |
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[**] |
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6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(b) If Acorda is required to pay a running royalty to a third party for a license to make, use, offer for sale, sell or import any Protein Product, then Acorda shall have the right to offset up to [**] of such royalties actually paid to such third party against royalties otherwise due under the foregoing Paragraph 3.2(a); provided, however, that such right of offset shall be limited such that - the royalty due under Paragraph 3:2(b) shall not be less than [**] of annual Net Sales of Protein Products and provided further that the amount of the offset which is not available due to such [**] cap cannot be carried-forward for application against future royalties due under Paragraph 3.2(a).
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Milestone Event |
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Milestone Payment |
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Satisfactory completion of animal toxicology studies necessary to enter into Phase I clinical studies in accordance with the International Conference of Harmonization (ICH) guidelines provided by the US Food and Drug Administration* |
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$ |
[**] |
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Issuance of an Investigational New Drug Application (or foreign equivalent**) |
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$ |
[**] |
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Enrollment of the first subject in a Phase II clinical trial (or foreign equivalent**) |
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$ |
[**] |
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Enrollment of the first subject in a Phase III clinical trial (or foreign equivalent**) |
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$ |
[**] |
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Filing of a New Drug Application (or foreign equivalent**) |
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$ |
[**] |
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Approval of a New Drug Application (or foreign equivalent**) |
|
$ |
[**] |
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* Completion of animal toxicology studies shall mean the completion of all analysis of data generated in such study and delivery of the final report thereon.
** Foreign equivalent shall mean the completion of the milestones in a foreign major market country such as the United Kingdom, Japan, Germany, Canada, etc.
9
10
11
Part 4 - Patent Matters
12
Part 5 - Patent Infringement
13
Part 6 - Diligence
Part 7 - Indemnification and Insurance
14
15
Part 8 - Representations and Warranties
16
Part 9 - Term and Early Termination
17
Part 10 - Confidentiality
For purposes of this Agreement, all such information and data which a party is obligated to retain in confidence shall be called Information . Any written information, materials or data relating to GGF-2 disclosed by one party to the other party pursuant to the License Option Agreement and the Confidentiality Agreement entered into as of July 23, 2001 shall be deemed Information under this Agreement.
18
Each party, its Affiliates or sublicensees may disclose Information to regulatory authorities to the extent that such disclosure is necessary for the prosecution and enforcement of patents, authorizations to conduct clinical trials or commercialization of Licensed Products, provided that such party is otherwise entitled to engage in such activities under this Agreement. Each party, its Affiliates or sublicensees may disclose Information to the government or a court of competent jurisdiction, provided that such disclosing party (a) provides the other party with adequate notice of the required disclosure, (b) cooperates with the other partys efforts to protect its Information with respect to such disclosure and (c) takes all reasonable measures requested by the other party to challenge or to modify the scope of such required disclosure. CeNeS may disclose Information to Ludwig to the extent such disclosure is required pursuant to CeNeS obligations under the Ludwig Agreement.
19
Part 11 - General Provisions
20
21
If to Acorda: |
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Acorda Therapeutics, Inc, |
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15 Skyline Drive |
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Hawthorne, NY 10532 |
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Attn: President and Chief Executive Officer |
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with a copy to: |
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Acorda Therapeutics, Inc. |
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15 Skyline Drive |
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Hawthorne, NY 10532 |
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Attn: Harold Safferstein, Vice President, Business Development |
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If to CeNeS: |
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CeNeS Pharmaceuticals plc |
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Compass House |
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Vision Park |
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Clovers Way |
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Histon, Cambridge CI4 9ZR |
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England |
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Attn: Neil Clark, Chief Operating Officer and Finance Director |
By such notice either party may change their address for future notices. Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given two (2) days after the date postmarked on the envelope.
22
23
IN WITNESS WHEREOF, CeNeS and Acorda have caused this Agreement to be executed in duplicate by their respective duty authorized officers.
CeNeS PHARMACEUTICALS, PLC |
ACORDA THERAPEUTICS, INC. |
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By: |
/s/ Neil Clark |
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By: |
/s/ Harold T. Safferstein |
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Print Name: |
Neil Clark |
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Print Name: |
Harold T. Safferstein |
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Title: |
Finance Director |
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Title: |
VP Business Development |
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24
SCHEDULE A
PATENT RIGHTS
Granted Patent List
Matter
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Country |
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Patent
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Grant
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Filing
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Status |
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Inventors |
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04585-002AU5 |
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Australia |
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688270 |
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02-Jul-1998 |
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29-Jun-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002AU6 |
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Australia |
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709968 |
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23-Dec-1999 |
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25-May-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002AUX |
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Australia |
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703772 |
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15-Jul-1999 |
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09-Oct-1996 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002EP1 |
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Europe |
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0579640 |
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24-Jul-2002 |
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03-Apr-1992 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002KR1 |
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Korea |
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274305 |
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08-Sep-2000 |
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03-Apr-1992 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002KR5 |
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Korea |
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307943 |
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25-Aug-2001 |
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29-Jun-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002KR6 |
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Korea |
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265928 |
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09-Jun-2000 |
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25-May-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002KR7 |
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Korea |
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297680 |
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24-May-2001 |
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25-May-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002KR8 |
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Korea |
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344006 |
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28-Jun-2002 |
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29-Jun-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002PT1 |
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Portugal |
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100344 |
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02-May-1999 |
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03-Apr-1992 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002PT5 |
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Portugal |
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101297 |
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07-Jul-1999 |
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30-Jun-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002005 |
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United States |
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5,530,109 |
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25-Jun-1996 |
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24-Mar-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002006 |
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United States |
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5,716,930 |
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10-Feb-1998 |
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26-May-1994 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002007 |
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United States |
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5,621,081 |
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15-Apr-1997 |
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06-Jun-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Matter
|
|
Country |
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Patent
|
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Grant
|
|
Filing
|
|
Status |
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Inventors |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002009 |
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United States |
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5,606,032 |
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25-Feb-1997 |
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06-Jun-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200A |
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United States |
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5,792,849 |
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11-Aug-1998 |
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06-Jun-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200G |
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United States |
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5,602,096 |
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11-Feb-1997 |
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06-Jun-1995 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200J |
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United States |
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6,204,241 |
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20-Mar-2001 |
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22-Oct-1996 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200L |
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United States |
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6,194,377 |
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27-Feb-2001 |
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22-Oct-1996 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200P |
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United States |
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5,854,220 |
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29-Dec-1998 |
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22-Oct-1996 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002ZA1 |
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South Africa |
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92/2001 |
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25-Nov-1992 |
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01-Apr-1992 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002ZA5 |
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South Africa |
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93/4711 |
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31-Aug-1994 |
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30-Jun-1993 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-039AU1 |
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Australia |
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713384 |
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16-Mar-2000 |
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27-Mar-1996 |
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Granted |
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Thomas A. Reh et al. |
Title: METHODS OF TREATING DISORDERS OF THE EYE |
Matter
|
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Patent
|
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Grant
|
|
Grant
|
|
Filing
|
|
Status |
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Inventors |
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04585-04AU1 |
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Australia |
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707599 |
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28-Oct-1999 |
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16-Nov-1995 |
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Granted |
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David I. Gwynne et al. |
Title: USE OF NEUREGULIN AS MODULATORS OF CELLULAR COMMUNICATION |
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04585-041001 |
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United States |
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6,087,323 |
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11-Jul-2000 |
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17-Nov-1994 |
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Granted |
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David I. Gwynne et al. |
Title: USE OF NEUREGULIN AS MODULATORS OF CELLULAR COMMUNICATION |
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04585-043AU2 |
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Australia |
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727037 |
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15-Mar-2001 |
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12-Nov-1996 |
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Granted |
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Mark Marchionni et al. |
Title: METHODS OF TREATING DISORDERS OF NON-VISUAL SENSORY EPITHELIA |
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04585-048AU2 |
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Australia |
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745324 |
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21-Mar-2002 |
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08-Oct-1998 |
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Natl Phase |
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R. McBurney et al. |
Title: THERAPEUTIC METHODS COMPRISING USE OF A NEUREGULIN |
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04585-051001 |
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United States |
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5,594,114 |
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14-Jan-1997 |
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17-Aug-1992 |
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Granted |
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Andrew D.J. Goodearl et al. |
Title: SCHWANN CELL MITOGENIC FACTOR, ITS PREPARATION AND USE |
2
Pending Patent Application List
Matter
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Country |
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Application
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Filing
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Status |
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Inventors |
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04585-002CA1 |
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Canada |
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2,108,199 |
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03-Apr-1992 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002CA5 |
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Canada |
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2,139,136 |
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29-Jun-1993 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002CA6 |
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Canada |
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2,191,085 |
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25-May-1995 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002CN6 |
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China |
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95 1 9320X |
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25-May-1995 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002EP5 |
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Europe |
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93 918139.2 |
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29-Jun-1993 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002EP6 |
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Europe |
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95922145.8 |
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25-May-1995 |
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Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002IE1 |
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Ireland |
|
921062 |
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03-Apr-1992 |
|
Pending |
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Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-002MX6 |
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Mexico |
|
965812 |
|
25-May-1995 |
|
Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
||||||||||
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04585-002PH5 |
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Philippines |
|
44157 |
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03-Apr-1992 |
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Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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|
04585-002008 |
|
United States |
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08/470,339 |
|
06-Jun-1995 |
|
Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200E |
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United States |
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08/469,549 |
|
06-Jun-1995 |
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Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200F |
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United States |
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08/471,833 |
|
06-Jun-1995 |
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Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
||||||||||
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|
04585-00200H |
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United States |
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08/472,065 |
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06-Jun-1995 |
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Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200I |
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United States |
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08/734,665 |
|
22-Oct-1996 |
|
Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
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04585-00200M |
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United States |
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08/735,010 |
|
13-May-1999 |
|
Pending |
|
Andrew D.J. Goodearl et al. |
Title: GLIAL MITOGENIC FACTORS, THEIR PREPARATION AND USE |
3
4
5
6
Exhibit 10.17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
LICENSE AGREEMENT
This License Agreement (the AGREEMENT) is entered into this 12th day of November, 2002 (the EFFECTIVE DATE), by and between CeNes Pharmaceuticals, plc, a corporation organized and existing under the laws of the United Kingdom and having a principal place of business at Compass House, Vision Park, Chivers Way, Histon, Cambridge CB4 9ZR, England (hereinafter CeNeS) and Acorda Therapeutics, Inc., a corporation organized and existing under the laws of the State of Delaware and having a principal place of business at 15 Skyline Drive, Hawthorne, NY 10532 (hereinafter Acorda or LICENSEE).
WHEREAS, CeNeS, by its acquisition of Cambridge NeuroScience, Inc., has exclusive rights under that certain license agreement, as amended, (the Harvard License) by and between Cambridge NeuroScience, Inc. and President and Fellows of Harvard College (Harvard), acting on its behalf and, pursuant to an inter-institutional agreement (the Inter-Institutional Agreement), acting on behalf of the Leland Stanford Junior College (STANFORD) pursuant to which Harvard licensed certain rights to Cambridge NeuroScience, Inc.;
WHEREAS, CeNeS and Acorda are parties to that certain license option agreement, as amended, pursuant to which CeNeS granted an option to Acorda to, among other things, obtain a sublicense of the rights granted by Harvard to Cambridge NeuroScience, Inc. pursuant and subject to the Harvard License (the LICENSE OPTION AGREEMENT)
WHEREAS, Acorda desires to exercise such option and to acquire a sublicense of such rights as set forth herein; and
WHEREAS, CeNeS desires to grant a sublicense of such rights as set forth herein.
NOW THEREFORE, in consideration of the foregoing premises and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
As used in this AGREEMENT, the terms below shall have the following meanings:
NET SALES also includes the fair market value of any non-cash consideration received by LICENSEE or SUBLICENSEES for the SALE, lease, or transfer of LICENSED PRODUCTS.
2
3
4
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
January 1, 2003 |
|
$ |
[**] |
|
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|
January 1, 2004 |
|
$ |
[**] |
|
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January 1, 2005 |
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$ |
[**] |
|
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|
|
|
January 1 of each additional year prior to the first to occur of (i) the termination date of this AGREEMENT; or (ii) expiration of the PATENT RIGHTS |
|
$ |
[**] |
|
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
For clarity, should a PROTEIN PRODUCT be abandoned by LICENSEE, its AFFILIATE or SUBLICENSEE for any reason following completion of any of milestones (b) through (e) but prior to completion of milestone (f), and LICENSEE commences development of a subsequent PROTEIN PRODUCT, then LICENSEE shall resume the milestone payments for such subsequent PROTEIN PRODUCT starting at the event subsequent to the event for which a milestone payment had already been paid. Each milestone payment shall be paid only once by LICENSEE.
8
Each such Royalty Report shall be certified as correct by an officer of LICENSEE to the best of such officers knowledge, and shall include a detailed listing of all deductions from royalties.
9
10
11
12
13
For purposes of this AGREEMENT, all such information and data which a party is obligated to retain in confidence shall be called Information. Any written information, materials or data relating to NRG-2 disclosed by one party to the other party pursuant to the LICENSE OPTION AGREEMENT and the Confidentiality Agreement entered into as of July 23, 2001 shall be deemed Information under this AGREEMENT.
Each party, its AFFILIATES or SUBLICENSEES may disclose Information to regulatory authorities to the extent that such disclosure is necessary for the prosecution and enforcement of patents, authorizations to conduct clinical trials or commercialization of LICENSED PRODUCTS, provided that such party is
14
otherwise entitled to engage in such activities under this AGREEMENT. Each party, its AFFILIATES or SUBLICENSEES may disclose Information to the government or a court of competent jurisdiction, provided that such disclosing party (a) provides the other party with adequate notice of the required disclosure, (b) cooperates with the other party s efforts to protect its Information with respect to such disclosure and (c) takes all reasonable measures requested by the other party to challenge or to modify the scope of such required disclosure. CeNeS may disclose Information to Harvard and Stanford to the extent such disclosure is required pursuant to CeNeS s obligations under the Harvard License.
15
16
17
18
If to Acorda:
Acorda Therapeutics, Inc.
15 Skyline Drive
Hawthorne, NY 10532
Attn: President and Chief Executive Officer
with a copy to:
Acorda Therapeutics, Inc.
15 Skyline Drive
Hawthorne, NY 10532
Attn. Harold Safferstein, Vice President, Business Development
If to CeNeS:
CeNeS Pharmaceuticals plc
Compass House
Vision Park
Chivers Way
Histon, Cambridge CB4 9ZR
England
Attn: Neil Clark, Chief Operating Officer and Finance Director
By such notice either party may change their address for future notices. Notices delivered in person shall be deemed given on the date delivered. Notices sent by fax shall be deemed given on the date faxed. Notices mailed shall be deemed given on the date postmarked on the envelope.
19
IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed by their duly authorized representatives.
CeNeS Pharmaceuticals PLC |
Acordia Therapeutics, Inc. |
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By: |
/s/ Neil Clark |
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By: |
/s/ Harold T. Safferstein |
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Print Name: |
Neil Clark |
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Print Name: |
Harold T. Safferstein |
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Title: |
Finance Director |
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Title: |
VP Business Development |
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20
APPENDIX A
LAHIVE AND, COCKFIELD CASES
US Patent Application serial number 08/525,864 filed September 8,1995 entitled Cerebellum-Derived Growth Factors and Uses Related Thereto
PCT Patent Application serial number PCT/US96/14484 filed September 9,1996 entitled Cerebellum-Derived Growth Factors, and Uses Related Thereto,. designating Australia, Canada, EPO, Japan and South Korea
U.S. Patent Number 5,912,326
Cerebellum-Derived Growth Factors
Inventor: Han Chang
Filed September 8, 1995
Issued June 15, 1999
European Patent Application Number 96 93 2981.2
Cerebellum-Derived Growth Factors. and Uses Related Thereto
Filed September 9,1996
Canadian Patent Application Number 2,228,590
Cerebellum-Derived Growth Factors and Uses Related Thereto
Filed September 9,1996
Australian Patent Application Number 71563/96
Cerebellum-Derived Growth Factors and Uses Related Thereto
Filed September 9, 1996
Japanese Patent Application Serial Number
9-511448
Cerebellum-Derived Growth Factors and Uses Related Thereto
Filed September 9, 1996
South Korean Patent Application Serial Number
701775/98
Cerebellum-Derived Growth Factors and Uses. Related Thereto
Filed September 9,1996
CLARK & ELBING CASES
United States. Patent Application Serial Number
60/206,495
nrg-Z nucleic acid Molecules, polypeptides, and diagnostic and therapeutic
methods
Filed 23-May-2000
United States Patent Application Serial Number
09/864,675
nrg-2 nucleic acid molecules, polypeptides, and diagnostic and therapeutic
methods
Filed May 23.2001.
PCT Patent Application Serial Number US01/16896
nrg-2 nucleic add molecules, polypeptides, and diagnostic and therapeutic
methods
Filed May 23 2001.
21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
APPENDIX B
The following. comprise BIOLOGICAL MATERIALS supplied by Stanford:
[**]
22
Exhibit 10.18
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
LICENSE AGREEMENT
BETWEEN
ACORDA THERAPEUTICS, INC.
AND
THE MAYO FOUNDATION FOR
EDUCATION AND RESEARCH
Dated: September 8, 2000
TABLE OF CONTENTS
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OWNERSHIP; PATENTS; MARKETING EXCLUSIVITY; PATENT TERM EXTENSIONS |
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iii
LIST OF EXHIBITS
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EXHIBIT A |
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EXHIBIT B |
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EXHIBIT C |
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EXHIBIT D |
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EXHIBIT E |
iv
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this Agreement) is entered into as of September 8, 2000 (the Effective Date), by and between Acorda Therapeutics, Inc., a Delaware corporation, having offices at 15 Skyline Drive, Hawthorne, New York 10532, (ACORDA) and The Mayo Foundation for Medical Education and Research, a Minnesota charitable corporation located at 200 First Street SW, Rochester, Minnesota 55905 (MAYO).
PRELIMINARY STATEMENTS
A. ACORDA has sponsored two research programs under the direction of Dr. Moses Rodriguez and Dr. Larry Pease, entitled (1) Preclinical Studies of a Monoclonal Antibody Designed to Promote Central Nervous Repair, and (2) Molecular Characterization of Antibody-Induced Remyelination and Isolation of Human Counterparts, (each a Program and collectively, the Programs), pursuant to two Sponsored Research Agreements between MAYO and ACORDA, dated as of October 1, 1995 and March 15, 1998, respectively, (the Sponsored Research Agreements) which are attached hereto as Exhibit A . These Programs have related to, among other things, the therapeutic use of humanized and non-humanized antibodies for treatment of central nervous system conditions and disorders, including myelination or remyelination in conditions such as spinal cord injuries and multiple sclerosis.
B. MAYO is the owner of certain right, title and interest to technology made or otherwise developed in performance of the Programs including certain inventions, discoveries and patents described in the Sponsored Research Agreements.
C. MAYO has the right to grant licenses to this technology so that such technology may be utilized in the public interest, and is willing to grant a license thereunder to ACORDA.
D. ACORDA has options, pursuant to ACORDA\MAYO Option Agreements dated as of October 1, 1995 and March 15, 1998 (the Option Agreements), which are attached hereto as Exhibit B, to acquire an exclusive, worldwide license to such technology and is desirous of obtaining certain rights and licenses from MAYO relating to the aforementioned technology.
E. ACORDA wishes to exercise the options under both Option Agreements and ACORDA and MAYO now desire to provide for the license of all technology in all fields contemplated by the exercise of the options granted under both of the Option Agreements under one unified set of terms conditions, and for revised consideration, as provided under this Agreement, which shall be deemed to amend and supercede the provisions of the Option Agreements.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants contained in this Agreement, the Parties hereto agree to the provisions of the Preliminary Statements and as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms will have the meanings set forth in this Section 1 unless the context dictates otherwise.
2
3
4
5
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
[**] of the first [**] of annual Net Sales; and
[**] of all annual Net Sales in excess of [**].
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
[**] of the first [**] of annual Net Sales;
[**] of annual Net Sales between [**] and [**];
[**] of annual Net Sales between [**] and [**]; and
[**] of annual Net Sales in excess of [**].
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
10
11
12
6. OWNERSHIP; PATENTS; MARKETING EXCLUSIVI TY; PATENT TERM EXTENSIONS
13
14
15
7. PUBLICATION; CONFIDENTIALITY.
16
17
ACORDA shall, during the term of this Agreement, carry occurrence-based liability insurance with policy limits of at least THREE MILLION DOLLARS ($3,000,000). In addition, such policy shall name MAYO as an additional-named insured.
18
19
20
21
(a) |
If to ACORDA, to: |
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ACORDA THERAPEUTICS, INC. |
|
15 Skyline Drive |
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Hawthorne, New York 10532 |
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Attention: President |
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Facsimile No.: (914)347-4560 |
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(b) |
If to MAYO, to: |
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MAYO FOUNDATION FOR MEDICAL EDUCATION AND RESEARCH |
|
200 First Street, SW |
|
Rochester, Minnesota 55905 |
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Attention: Office of Technology Commercialization, Mayo Medical Ventures |
|
Facsimile No.: 507-284-5410 |
If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by registered or certified mail, the date of delivery shall be deemed to be the third business day after such notice or request was deposited with the U.S. Postal Service.
22
* * *
23
IN WITNESS WHEREOF, each of the Parties has caused this License Agreement to be signed by its duly authorized representative as of the date first written above.
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ACORDA THERAPEUTICS |
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By: |
/s/ Ron Cohen |
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Name: Ron Cohen |
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Title: President and CEO |
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MAYO FOUNDATION FOR
MEDICAL
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By: |
/s/ Rick F. Colvin |
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Name: Rick F. Colvin |
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Title: Assistant Treasurer |
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24
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Exhibit C
Remvelination Monoclonal Antibody Cases
PCT/U.S. Serial No. |
|
Title of Application |
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Date of Filing |
US#5,591,629 |
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Monoclonal Antibodies Which Promote Central Nervous System Remyelination |
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4/29/94 |
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[*] |
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[*] |
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4/27/95 |
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[*] |
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[*] |
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8/8/96 |
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[*] |
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[*] |
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1/7/97 |
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[*] |
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[*] |
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5/28/99 |
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[*] |
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[*] |
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5/30/00 |
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[*] |
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[*] |
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5/10/00 |
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[*] |
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5/30/00 |
EXHIBIT D
MANDATORY MEDIATION AND BINDING ARBITRATION
1. NOTICE OF DISPUTE . Except to the extent otherwise expressly provided in Sections 5.3 and 5.4 of this Agreement, any dispute related to this Agreement between the Parties, including its formation, performance, or Termination, which cannot be resolved by the Parties themselves within thirty (30) clays of written notice by one Party to the other of the existence of a dispute, may be referred by either of the parties to mandatory mediation and binding arbitration under the terms of this Exhibit. The Parties intend the mediation/arbitration procedure described in this Exhibit to substitute in all cases for litigation related to any such dispute, subject only to part 7, below, and this agreement to submit all such disputes to mandatory mediation and binding arbitration is irrevocable.
2. LIMITATION PERIOD . No demand for mediation/arbitration may be made regarding any claim more than one hundred eighty (180) days after written notice by one Party to the other of the existence of a dispute, regardless of any otherwise applicable statute of limitations.
3. MEDIATOR/ARBITRATOR . If the Parties cannot agree upon a single mediator/arbitrator within fourteen (14) days after written demand by either of them for mediation/arbitration, then a single mediator/arbitrator shall be chosen by the American Arbitration Association office in New York City, New York, within thirty (30) additional days after the fourteen (14) day period. The mediator/arbitrator shall be generally experienced in the legal and technical matters related to the dispute.
4. MEDIATION . Within thirty (30) days of the appointment of the mediator/arbitrator, the Parties must attend a mediation session at which the mediator/arbitrator personally shall attempt to guide the Parties to a settlement. Each Party may be represented by counsel at the mediation, but each Party must attend through an officer having authority to agree to a settlement at the mediation. The mediation session shall occur in New York City, New York, and shall extend no longer than a single day. Statements or offers made at the mediation session shall not be admissible in any later arbitration hearing.
5. ARBITRATION . If such mediation has not resulted in a mutually-executed settlement agreement (or withdrawal of claim) within five (5) business days after the date of mediation, then the Parties shall proceed to arbitration as described below. Such arbitration, which the Parties intend to be final and to substitute for litigation, shall occur in New York City, New York, and the arbitration results maybe entered as a final judgment in any court with jurisdiction. The decision of the arbitrator shall be final and binding upon the Parties both as to law and fact.
(a) Initial Disclosures. Within twenty-one (21) days after the date of mediation, the Parties shall exchange written disclosures listing with reasonable specificity: (i) all exhibits expected to be used by the Party at arbitration, and complete copies of such exhibits, (ii) all witnesses expected to be called by the Party at arbitration, and (iii) the substance of the testimony of each witness. Copies of such disclosures shall be sent to the arbitrator. No exhibit or witness may be called if the same does not appear on such disclosure, and
no witness may testify as to matters not described in such disclosure, except for rebuttal testimony as may be permitted by the arbitrator.
(b) Discovery Period. Within fourteen (14) days after exchange of the disclosure notices, the Parties shall make specific discovery requests to the arbitrator, and within an additional fourteen (14) days the arbitrator shall issue to both parties a joint discovery order. The discovery period preceding the arbitration hearing shall not exceed sixty (60) days from the issuance of the discovery order by the arbitrator.
(c) Scope of Discovery. Discovery shall be limited to that ordered by the arbitrator as being reasonable and necessary, and in no case shall exceed the deposition of two (2) witnesses for each Party, and/or the exchange of more than a total of twenty-five (25) specific and non-compound interrogatories by each party, and/or two specific requests by each Party for the production of documents considered by the arbitrator to be reasonably relevant and not unduly burdensome.
(d) Hearing. The arbitration hearing, which shall be confidential to the parties and not open to the public, shall not exceed two (2) separate days, and shall be completed within thirty (30) days of the close of discovery. The arbitrator may admit any testimony or other evidence which the arbitrator decides is reasonably relevant to the issues of the arbitration, but excluding statements or offers made by either Party at the mediation session.
(e) Final Decision. The arbitrator shall issue a final written decision no later than sixty (60) days following the end of the arbitration hearing, stating findings as to law and fact. The decision shall be confidential to the Parties. The arbitrator shall be limited to determining and ordering the payment of actual and direct damages if any, and may order the payment of indirect, special, incidental, or consequential damages only where bad faith has been shown and/or to the extent required to fulfill any obligations under Article 8 of the Agreement. The arbitrator shall not order the payment of punitive or exemplary damages in any case.
6. COSTS AND FEES . Both Parties shall be responsible for their own costs and fees (including attorneys fees), and shall divide common costs and fees equally; however, if the arbitrator specifically finds bad faith on the Part of either Party, then the arbitrator may order a different division of costs and fees.
7. EQUITABLE RELIEF . Nothing in this Exhibit prohibits either Party from seeking equitable relief to protect its rights to the extent that irreparable harm may occur and damages would not be a sufficient remedy, except that neither Party shall seek to enjoin mediation/arbitration as described in this Exhibit.
( a) Specific Performance. Among the equitable remedies that a Party may seek under this part 7, either Party may petition a court for specific performance of the terms of this Exhibit, including following the failure of either Party without good cause to adhere to the time limits set out in this Exhibit. A Party securing an order for specific performance
2
under this part 7(a) is entitled to recover costs and reasonable attorneys fees in connection with such petition for specific performance and any related hearings.
8. SURVIVAL . The rights and obligations of the Parties described in this Exhibit survive the Termination, expiration, non-renewal, or rescission of this Agreement.
9. GOVERNING RULES AND LAW . To the extent not inconsistent with the terms of this Exhibit, the mediation and arbitration are governed by the rules of the American Arbitration Association, the Minnesota Arbitration Act, and the Federal Arbitration Act (9 U.S.C s. 1 et seq.).
3
Exhibit 10.19
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
June 1, 2005
RE: September 8, 2000 License Agreement between Acorda Therapeutics, Inc. and The Mayo Foundation for Medical Education and Research (the License Agreement)
This Letter of Agreement (the Letter Agreement) constitutes the agreement contemplated by Acorda Therapeutics, Inc. (Acorda) and Mayo Foundation for Medical Education and Research (Mayo) (collectively, the Parties) in the September 30, 2004 letter signed by Rick Colvin and Jane Wasman with respect to Mayos and Dr. Moses Rodriguez grant application to the [***].
Mayo proposes to enter into an agreement with the University of Minnesota (the University) under which the University may provide services for various research programs at Mayo, which agreement is attached hereto as Exhibit A. This Letter Agreement relates solely to the work plans (present and future) under the agreement for the development of [***] (the Antibody) within the Field (hereinafter, Antibody Services Agreement). The work to be performed pursuant to the Antibody Services Agreement shall be funded largely by a [***] received by Mayo and Dr. Rodriguez pursuant to the grant application referenced above.
The parties hereby agree as follows:
1. Grant : Acorda hereby grants to Mayo (to the extent Mayo has not already retained a right to use), the University, and any other third parties conducting work under the Antibody Services Agreement a non-exclusive license to use the Antibody for development within the Field for noncommercial purposes pursuant to the [***] during the term of the [***].
2. Project Steering Committee : Acorda shall be allowed to attend and participate in the two in-person meetings of the Project Steering Committee held each year as established in the Antibody Services Agreement. In addition, Mayo agrees that the Mayo co-chair shall provide Acorda with quarterly updates regarding the work being planned or performed pursuant to the Antibody Services Agreement and shall timely seek Acordas input related to such work. Mayo also shall provide Acorda with the timely opportunity to review and comment on all future workplans that are contemplated pursuant to the Antibody Services Agreement.
3. Indemnification : The parties agree that, to the extent not already provided for by Section 8.2(a) of the September 8, 2000 License Agreement between Mayo and Acorda, Mayo shall defend, indemnify and hold Acorda and its affiliates and Sublicensees and their respective directors, officers and employees, harmless from and against any and all third party Claims arising out of or resulting from the administration of a product to a human subject(s) and/or other clinical activities (including activities preparatory to such clinical activities or the use of the results therefrom) arising out of or relating to the Antibody Services Agreement.
4. Publication : Mayo shall provide Acorda with the same rights to review, comment on and consent or object to any manuscripts, abstracts, posters, presentations or other potential publications (Publications) arising out of or relating to the Antibody Services Agreement or the work performed thereunder as are provided to Mayo in the Antibody Services
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Agreement, including the same amount of time for such review. Mayo shall forward to Acorda for Acordas review, comment and consent all potential Publications as soon as Mayo either drafts a Publication or receives one for review from the University.
5. Intellectual Property and Confirmation of License Agreement : The parties acknowledge that the work performed by Mayo under the [***] is being performed subject to and pursuant to Sections 2.1 and 2.2 of the License Agreement and any rights granted are solely for the Antibody in the Field. Mayo hereby grants Acorda a non-exclusive, worldwide, royalty-free license, limited to the Antibody in the Field, to any Inventions (as defined in the Antibody Services Agreement) developed by the University or any third party and owned by Mayo pursuant to the Antibody Services Agreement. To the extent Acorda does not have a license under the License Agreement for the work performed by Mayo under the [***], including the Antibody Services Agreement, Mayo grants a non-exclusive, royalty-free license to Licensed Technology for the Antibody in the Field. Mayo and Acorda acknowledge that the License Agreement is in full force and effect.
6. Public Announcements : The Parties confirm that all public announcements relating to the Antibody Services Agreement, the [***] and/or the work performed thereunder shall be subject to the provisions of Section 10.6 of the License Agreement.
7. [***]
8. [***]
9. Miscellaneous : All capitalized terms used in this Letter Agreement and not otherwise defined herein shall have the same meaning as assigned to them in the License Agreement. In the event of a conflict between the terms of the Letter Agreement and the License Agreement, unless otherwise expressly stated herein, the terms of the License Agreement shall govern.
Agreed by on behalf of Mayo Foundation for
|
Agreed by on behalf of Acorda
|
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|||||
By: |
/s/ Rick F. Colvin |
|
By: |
/s/ Ron Cohen |
|
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Name: |
Rick F. Colvin |
|
Name: |
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Title: |
Assistant Treasurer |
|
Title: |
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
UNIVERSITY OF MINNESOTA
SERVICES AGREEMENT
THIS SERVICES AGREEMENT (the Agreement) is entered into effective as of June 20, 2005 (Effective Date), by and between the Regents of the University of Minnesota (the University), a Minnesota constitutional corporation, and Mayo Foundation for Medical Education and Research (Mayo), a Minnesota charitable corporation., each a Party and collectively Parties. This Agreement is entered into by the University through its University of Minnesota, Minnesota Molecular and Cellular Therapeutics Facility.
NOW, THEREFORE, the parties agree as follows:
The term of this Agreement shall expire five years from the Effective Date, unless terminated earlier as provided in section 4 or extended as may be mutually agreed upon in writing.
1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
If to the University:
University
of Minnesota
Attn: Randall Tlachac
Program Director
Molecular and Cellular Therapeutics
1900 Fitch Avenue
St. Paul, MN 55108
Phone No.: 612-624-0765
Facsimile No.: 612-624-1777
E-mail: rtlachac@unm.edu
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
With a copy to:
University
of Minnesota
Office of the General Counsel
Attn: Transactional Law Services Group
360 McNamara Alumni Center
200 Oak Street S.E.
Minneapolis, MN 55455-2006
Facsimile No.: (612) 626-9624
E-mail: contracts@mail.ogc.umn.edu
If to Mayo:
Mayo
Foundation or Medical Education and Research
200 First Street SW
Rochester, MN 55905-0001
Attn: Office of Technology
Commercialization
Phone No.: 507-284-8878
Facsimile No.: 507-284-5410
IN WITNESS WHEREOF, the parties have entered into the Agreement as of the Effective Date.
Regents of the University of Minnesota |
Mayo Foundation for Medical
|
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By: |
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By: |
/s/ Rick F. Colvin |
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Name: |
Name: |
Rick F. Colvin |
||||||
Title: |
Title: |
Assistant Treasurer |
||||||
Date: |
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Date: |
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6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Workplan A
[***]
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties have entered into this Workplan A under the Agreement as of the latter of the Effective Date or the date first written below.
Regents of the University of Minnesota |
Mayo Foundation for Medical Education |
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and Research |
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By: |
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/s/ Mark S. Paller |
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By: |
|
/s/ Rick F. Colvin |
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Name: |
Mark S. Paller |
Name: |
Rick F. Colvin |
||||
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Title: |
Assistant VP for Research |
Title: |
Assistant Treasurer |
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Date: |
June 28, 2005 |
Date: |
June 16, 2005 |
||||
1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties have entered into the Agreement as of the Effective Date.
Regents of the University of Minnesota |
Mayo Foundation for Medical Education |
||||||
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and Research |
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By: |
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/s/ Mark S. Paller |
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By: |
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/s/ Rick F. Colvin |
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Name: |
Mark S. Paller |
Name: |
Rick F. Colvin |
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Title: |
Assistant VP for Research |
Title: |
Assistant Treasurer |
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Date: |
June 28, 2005 |
Date: |
June 16, 2005 |
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2
Exhibit 10.20
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ASSET PURCHASE AGREEMENT
by and between
ELAN PHARMACEUTICALS, INC.
and
ACORDA THERAPEUTICS, INC.
dated as of July 21, 2004
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this Agreement ) is made and entered into as of July 21, 2004, by and between Acorda Therapeutics, Inc., a Delaware corporation (the Acquiror ), and Elan Pharmaceuticals, Inc., a Delaware-corporation (EPI).
RECITALS
This Agreement sets forth the terms and conditions upon which the Acquiror is agreeing to purchase the Purchased Assets (as defined below) and assume the Assumed Liabilities (as defined below) from EPI, and EPI is agreeing to sell the Purchased Assets and transfer the Assumed Liabilities to the Acquiror.
AGREEMENT
In consideration of the premises and the mutual covenants and promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties agree as follows:
Accountants means an accounting firm of national reputation (excluding each of the Acquirors and EPIs respective regular outside accounting firms) as may be mutually acceptable to the Acquiror and EPI; provided , however , that in the event that the Acquiror and EPI are unable to agree on such an accounting firm within ten (10) days, then the accounting firm shall be selected by lot.
Accounts Receivable means all trade accounts and notes receivable and other miscellaneous receivables, including those that are not evidenced by instruments or invoices, existing as of the Closing Date.
Acquiror has the meaning set forth in the preamble hereto.
Acquiror 2004 Gross Sales has the meaning set forth in Section 4.03(a)(i).
Acquiror Adverse Effect means an effect or condition that individually or when taken together with all other effects or conditions has had or would reasonably be expected to have more than an immaterial adverse effect (i) on the business, assets, Liabilities, results of operations or financial condition of the Acquiror, taken as a whole, other than any effect or condition relating (x) to the economy in general, or (y) in general to the pharmaceutical industry in which the Acquiror operates and not specifically relating to the Acquiror; provided , that such event, circumstance, effect or condition does not have a materially disproportionate effect on the business, assets, Liabilities, results of operations or financial condition of Acquiror, taken as a
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
whole; or (ii) on the ability of the Acquiror to perform its obligations under this Agreement and the Related Agreements or on the ability of the Acquiror to consummate the transactions contemplated hereby and thereby; provided , however , that the entry into the marketplace of a generic equivalent to any of the Products shall not be an Acquiror Adverse Effect.
Acquiror Disclosure Schedule has the meaning set forth in the preamble to Article VII.
Acquiror Governmental Consents has the meaning set forth in Section 7.03(a).
Acquiror Indemnitees has the meaning set forth-in Section 11.02(a).
Acquiror Insurance Policies has the meaning set forth in Section 7.08.
Acquiror Third Party Consents has the meaning set forth in Section 7.03(b).
Action or Proceeding means any action, suit, proceeding, arbitration, Order, inquiry, hearing, assessment with respect to fines or penalties or litigation (whether civil, criminal, administrative or investigative) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental or Regulatory Authority.
Activity Date has the meaning set forth in Section 8.05(d).
Administrative Fee means any administrative service fee paid to managed care organizations, pharmacy benefit managers, health maintenance organizations or other customers (including for the avoidance of doubt governmental organizations).
Affliate means, with respect to any Person, any other Person which Controls, is Controlled by or is under common Control with such Person.
Agreement has the meaning set forth in the preamble hereto.
Assignment and Assumption Agreement shall mean the Assignment and Assumption Agreement by and among EPI, the Acquiror and Novartis Pharma AG, dated as of the Closing Date, in substantially the form attached hereto as Exhibit G .
Assumed Contracts has the meaning set forth in Section 2.01(a).
Assumed Liabilities has the meaning set forth in Section 3.01(a).
Audit Termination Date has the meaning set forth in Section 4.02(c).
Bill of Sale means the Bill of Sale and Assignment and Assumption Agreement to be dated the Closing Date conveying the Purchased Assets from EPI to the Acquiror and providing for the assignment to and assumption of the Assumed Liabilities by the Acquiror, substantially in the form attached hereto as Exhibit A .
Books and Records means all books, records, files and documents (including financial, sales, pricing, promotional, regulatory, pharmacovigilance, research and development
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
and expense records, customer lists, customer (including government) Product utilization and rebate or chargeback records (including invoices from customers), best price (as defined under the Social Security Act, 42 U.S.C. § 1396r-8(c)(1)(C)) and average manufacturer price (as defined under the Social Security Act, 42 U.S.C. § 1396r-8(k)(1)) data, credit and collection records and miscellaneous records with respect to customers and supply sources correspondence and, to the extent not originals, true and complete copies of all files relating to the filing, prosecution, issuance, maintenance, enforcement or defense of any Patents, Patent applications, Trademarks, Copyrights or other intellectual property rights, including written third party correspondence, records and documents related to research and pre-clinical and clinical testing and studies for the Product conducted by or on behalf of EPI or its Affiliates) in all forms, including electronic, in which they are stored or maintained, and all data and information included therein, in each case that are licensed, owned or controlled by or otherwise in the possession of EPI or any of its Affiliates.
Business means the research, development, exploitation, licensing, distribution, marketing, sale, promotion, importation and use of the Products in the Territory.
Business Day means a day other than Saturday, Sunday or any day on which commercial banks located in New York are authorized or obligated by Law to close.
Charter Documents means, with respect to a Person, the certificate of incorporation, bylaws or other similar governing instruments and organizational documents of such Person.
Closing has the meaning set forth in Section 5.01.
Closing Consideration has the meaning set forth in Section 4.01(a).
Closing Date has the meaning set forth in Section 5.01.
Closing Date Inventory Value means the value of all Inventory as of the Closing Date, such value determined pursuant to the methods described on Schedule 1.01(a) of the Elan Disclosure Schedule.
Closing Date Inventory Value Adjustment means the Closing Date Inventory Value minus the Estimated Closing Date Inventory Value.
Closing Date Inventory Value Statement has the meaning set forth in Section 4.08(a).
Code means the Internal Revenue Code of 1986, as amended.
Confidential Information has the meaning set forth in Section 8.04(b).
Confidentiality Agreement has the meaning set forth in Section 8.04(f).
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Contracts means any and all binding commitments, contracts, purchase orders, leases, licenses, easements, commitments, arrangements, undertakings or other agreements, whether written or oral.
Control means:
(a) ownership (directly or indirectly) of at least fifty percent (50%) of the shares of stock entitled to vote for the election of directors in the case of a company or corporation;
(b) the ability (directly or indirectly) otherwise to direct and control the actions of a Person.
Copyrights means (a) all copyrights in the Territory (including copyrights in any content, package inserts, marketing or promotional material, labeling information or other text provided to consumers), whether registered or unregistered; (b) any registrations, and applications therefor; (c) all rights and priorities to copyrights in the Territory afforded under any international treaty or convention; (d) all copyright extensions and renewals in the Territory; (e) any rights similar to the foregoing in the Territory, including moral rights; (f) all proceeds of the foregoing, including licenses, royalties, income and payments; and (g) the right to sue for past, present and future infringements of any of the foregoing and all proceeds of such suits, provided that any such proceeds of suit shall be proportionately divided among EPI and the Acquiror based on the duration of infringing activity prior to and following the Closing if EPI agrees prior to the commencement of such suit to bear its pro rata share of the costs of prosecuting the claim relating to such activity calculated on the same basis.
Corporate Names has the meaning set forth in Section 8.09(b).
Damages has the meaning set forth in Section 11.02(a).
Default means (a) a breach, default or violation, (b) the occurrence of an event that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or cause an Encumbrance to arise; or (c) with respect to any Contract, the occurrence of an event that with or without the passage of time or the giving of notice, or both, would give rise to a right of termination, renegotiation or acceleration or a right to receive Damages or a payment of penalties.
Domain Name Assignment Agreement means the Domain Name Assignment Agreement to be dated as of the Closing Date by and between the Acquiror and EPI, substantially in the form attached hereto as Exhibit B .
Domain Names means the domain names set forth on Schedule 1.01(b) of the Elan Disclosure Schedule, and all associated portals and websites solely associated with the Products.
Due Date has the meaning set forth in Section 4.02(b).
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Elan Companies Proceeding means any Action or Proceeding commenced by or against any of EPI or any of its Affiliates or officers or directors prior to the date of this Agreement.
Elan Disclosure Schedule has the meaning set forth in the preamble to Article VI.
Elan Governmental Consents has the meaning set forth in Section 6.03(a).
Elan Third Party Consents has the meaning set forth in Section 6.03(b).
Eligible Claim has the meaning set forth in Section 11.03(a).
Encumbrance means any mortgage, pledge, assessment, security interest, deed of trust, lease, lien, levy, license, restriction on transferability, defect in title, charge or other encumbrance of any kind, or any conditional sale or title retention agreement or other agreement to give any of the foregoing in the future.
EPI has the meaning set forth in the preamble.
EPI Contract means any Contract to which EPI or any of its Affiliates is a party or by which EPI or any of its Affiliates is bound or benefited, or under which EPI or any of its Affiliates has any rights.
EPI Indemnitees has the meaning set forth in Section 11.02(b).
EPI Royalty Term has the meaning set forth in Section 4.02(a)(i).
Estimated Closing Date Inventory Value means the value of all Inventory as of the Closing Date, valued in accordance with the definition of Closing Date Inventory Value in EPIs reasonable and good faith estimation.
Excluded Assets has the meaning set forth in Section 2.02.
Excluded Books and Records means all Books and Records related to (i) human resources and any other employee-related files and records, (ii) financial and accounting records, (iii) any items set forth on Schedule 1.01(c) of the Elan Disclosure Schedule, (iv) any tax files, documents, instruments, papers, books or records, and (v) the filing, prosecution, issuance, maintenance, enforcement or defense of any Patents, Patent applications, Trademarks, Copyrights or other intellectual property rights comprising Excluded intellectual Property.
Excluded Intellectual Property means any intellectual property rights, including any patent, copyright, trademark, trade secret or other proprietary rights, that are owned or controlled by EPI or any of its Affiliates, relating to technology that is (a) contained in the Products and other pharmaceutical products owned or controlled by EPI or any of its Affiliates, including SODAS technology used in Zanaflex Capsules, or (b) used in the manufacture of Zanaflex Capsules, but in no event shall the Excluded Intellectual Property include any of the Purchased Intellectual Property or Product Trademarks.
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Excluded Liabilities has the meaning set forth in Section 3.01(b).
Expiration Date has the meaning set forth in Section 11.01(a).
Final Milestone Payment Date has the meaning set forth in Section 4.03(b).
FDA means the United States Food and Drug Administration or any successor thereto.
FDA Act means the U.S. Federal Food, Drug and Cosmetic Act of 1938, as it may be superseded or amended from time to time, and the related rules, regulations, guidelines, guidances and requirements of the FDA as may be in effect from time to time.
Final Milestone Payment Date has the meaning set forth in Section 4.03(b).
FSS has the meaning set forth in Section 8.05(d).
Governmental or Regulatory Authority means the United States, Canada, any Member State of the European Union, any other country, any supranational organization, any state, province, county, city or other political subdivision of any of the foregoing or any court, tribunal, arbitrator, authority, agency, commission, ministry, official or other instrumentality of any of the foregoing.
Governmental Permits means all permits, licenses, registrations, certificates of occupancy, approvals and other authorizations of any Governmental or Regulatory Authority, including INDs, NDAs and other approvals of or registrations with any Governmental or Regulatory Authority for the investigation, sale, distribution and/or marketing of products.
Gross Sales means the gross amount invoiced on sales by the Acquiror, its Affiliates and marketing, promotion and distribution partners to independent, third party customers in bona fide, arms-length transactions.
Improvement means any present and future invention, improvement, discovery, modification or other development relating to a Product, including any new uses or formulations for a Product, and all intellectual property rights in any of the foregoing, that are owned by EPI or any Affiliate at any time after the Closing; provided , that the parties acknowledge and agree that, subject to the obligations set forth in the Supply Agreement, neither EPI nor any of its Affiliates shall have any obligation after the Closing to conduct any research or development relating to the Products.
IND means (a) an Investigational New Drug Application, as defined in the FDA Act, as amended, and the regulations promulgated thereunder (C.F.R. Parts 312-312.38), which is required to be filed (except under circumstances as described in such regulations promulgated thereunder) with the FDA before beginning clinical testing of a product in human subjects, or any successor application or procedure, and (b) all supplements and amendments that may be filed with respect to he foregoing.
Indemnification Claim Notice has the meaning set forth in Section 11.02(c).
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Indemnified Party has the meaning set forth in Section 11.02(c).
Indemnitees has the meaning set forth in Section 11.02(c).
Interim Services Agreement shall mean the Interim Services Agreement by and between EPI and the Acquiror, dated as of the Closing Date, in substantially the form attached hereto as Exhibit C .
Inventory means all inventory of finished Products (including samples) having a shelf life of greater than 12 months from the Closing Date, together with the inventory of finished Products having a shelf life of less than 12 months from the Closing Date described on Schedule 1.01(a) of the Elan Disclosure Schedule.
Know-How means any proprietary or nonproprietary information directly related to the manufacture, preparation, development (including research, both pre-clinical and clinical), promotion, exploitation, marketing, use, sale or other commercialization of a product, including related to regulatory matters.
Knowledge of a particular fact or other matter means: (i) with respect to any individual: (A) the actual knowledge of such individual concerning such fact or other matter; and (B) the knowledge that a prudent individual would be expected to discover or otherwise become aware of in the course of conducting a reasonable investigation concerning the existence of such fact or other matter, and (ii) with respect to EPI or the Acquiror, the Knowledge concerning such fact or other matter of (1) the officers of such Person, (2) the directors of such Person, and (3) the senior managers of such Person with responsibility for, or supervision of, the relevant matters; provided that under no circumstances shall Knowledge of EPI include any knowledge not actually known to such persons but imputed to such persons or EPI due to its relationship with Novartis or its representatives; and provided, further, that none of such persons shall have any obligation as a result of entering into (or any provision of) this Agreement, the Supply Agreement or any Related Agreement to make any inquiries of Novartis or its representatives regarding any matter.
Labeling has the meaning set forth in Section 201(m) of the FDA Act, 21 U.S.C. § 321(m) and any related rule, regulation, guideline or guidance of the FDA, and shall include the applicable Products label, packaging and package inserts accompanying such Products, and any other written, printed, or graphic materials accompanying such Products, including patient instructions or patient indication guides and the NDC numbers relating to the Products.
Law means any federal, state, local or foreign law, statute or ordinance, or any rule, regulation or regulatory requirement promulgated by any Governmental or Regulatory Authority.
Liability means any direct or indirect liability, obligation, claim, guarantee or commitment of any kind or nature (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated or due or to become due), including any liability for Taxes.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Material Adverse Effect means an event, circumstance, effect or condition that individually of when taken together with all other events, circumstances, effects or conditions has bad or would reasonably be expected to have more than an immaterial adverse effect (i) on the business, assets, Liabilities, results of operations or financial condition of the Business, other than any event, circumstance, effect or condition relating primarily (x) to the economy in general, provided , that such event, circumstance, effect or condition does not have a materially disproportionate effect on the business, assets, Liabilities, results of operations or financial condition of the Business, or (y) in general to the pharmaceutical industry in which the Business operates and not specifically relating to the Products or the Business, provided, that such event, circumstance, effect or condition does not have a materially disproportionate effect on the business, assets, Liabilities, results of operations or financial condition of the Business; (ii) on any of the Products or the Purchased Assets; or (iii) on the ability of EPI to perform its obligations under this Agreement, the Supply Agreement or any Related Agreement or on the ability of EPI to consummate the transactions contemplated hereby and thereby; provided , however , that the entry into the marketplace of a generic equivalent to any of the Products shall not be a Material Adverse Effect.
Milestone Audit Termination Date has the meaning set forth in Section 4.03(b).
Milestone Payments has the meaning set forth in Section 4.03(a)(v).
Multi-Product Contract has the meaning set forth in Section 8.06.
NDA means a New Drug Application for any product, as appropriate, requesting permission to place a drug on the market in accordance with 21 U.S.C. § 355 and 21 C.F.R. Part 314, and all supplements or amendments filed pursuant to the requirements of the FDA, including all documents, data and other information concerning a product which are reasonably necessary for FDA approval to market a product in the United States, and all correspondence with the FDA relating to the foregoing.
Net Sales shall mean Gross Sales less customs duties or other taxes (excluding income or corporation tax), returns (including returns in connection with rejections and recalls), Administrative Fees, rebates, chargebacks, allowances for bad debt and discounts, in each case related to such sales.
Non-Assignable Contract has the meaning set forth in Section 2.04(a).
Notice means any notice given in accordance with the terms of Section 13.01 of this Agreement.
Notice of Objection has the meaning set forth in Section 4.08(b).
Novartis License Agreement means that certain license agreement dated as of April 17th, 1991, as amended, by and between Novartis Pharma AG (together with its Affiliates, Novartis ), as successor to Sandoz Pharma Ltd., and EPI, as successor to Athena Neurosciences, Inc.
Novartis Royalty Term has the meaning set forth in Section 4.02(a)(i).
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Order means any writ, judgment, decree, injunction or similar order, including consent orders, of any Governmental or Regulatory Authority (in each such case whether temporary, preliminary or final).
Ordinary Course of Business means an action that is in compliance with applicable Laws and is consistent in nature, scope and magnitude with the past practices of EPI and its Affiliates with respect to the Business as conducted by EPI including any action necessary or desirable for EPI or its Affiliates to enforce its rights and perform its obligations under the Novartis License Agreement.
Patent Assignment Agreement means the Patent Assignment Agreement to be dated as of the Closing Date by and between the Acquiror and EPI, substantially in the form attached hereto as Exhibit D .
Patent Rights means solely in the Territory and relating to any Product, the rights conferred or represented by a Patent.
Patents means: (a) all patents and patent applications, including provisional patent applications; (b) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, substitutions, provisionals, converted provisionals, and continued prosecution applications; (c) any and all patents that have issued or in the future issue from the foregoing patent applications described in clauses (a) and (b), including utility models, petty patents and design Patents and certificates of invention; (d) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidation, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications described in clauses (a), (b) and (c); (e) all proceeds of the foregoing, including licenses, royalties, income and payments; and (f) the right to sue for past, present and future infringements of any of the foregoing and all proceeds of such suits, provided that any such proceeds of suit shall be proportionately divided among EPI and the Acquiror based on the duration of infringing activity prior to and following the Closing if EPI agrees prior to the commencement of such suit to bear its pro rata share of the costs of prosecuting the claim relating to such activity calculated on the same basis.
Permitted Encumbrance means, collectively, (a) liens for Taxes or assessments that are not delinquent and that do not individually or in the aggregate materially detract from the value or impair the use or operation of the property or asset affected thereby as currently used or operated, (b) mechanics, carriers, workmens, landlords or other like statutory liens arising or incurred in the ordinary course of business which are not yet delinquent and that do not individually or in the aggregate materially detract from the value or impair the use or operation of the property or asset affected thereby as currently used or operated, and (c) restrictions under zoning, building, fire, health, environmental and pollution control Laws that do not individually or in the aggregate materially detract from the value or impair the use or operation of the property or asset affected thereby as currently used or operated.
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Person means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, joint venture, other business organization, trust, entity, union, association or Governmental or Regulatory Authority.
Pre-Closing Tax Period means all taxable periods ending on or before the Closing Date and the portion ending on the Closing Date of any taxable period that includes (but does not end on) the Closing Date.
Product Books and Records shall mean all of the Books and Records relating exclusively to the Products or that are necessary for the conduct of the Business in the Territory, Including the Product Marketing Materials but excluding the Excluded Books and Records.
Product Copyrights means all Copyrights, set forth on Schedule 1.01(d) of the Elan Disclosure Schedule.
Product Know-How means all Know-How set forth on Schedule 1.01(e) of the Elan Disclosure Schedule, but in no event shall this definition of Product Know How include any Excluded Intellectual Property or any information properly in the public domain as of the Closing Date.
Product Marketing Materials means all of the advertising, promotional and training materials solely relating to the Products in the possession of EPI or its Affiliates as of the Closing Date.
Product Patent Rights means the Patents in the Territory set forth on Schedule 1.01(f) of the Elan Disclosure Schedule, and all Patent Rights associated with such Patents. Notwithstanding the foregoing, Product Patient Rights shall not include any inchoate inventions not yet reduced to practice, all of which, subject to the license granted pursuant to Section 2.02, shall remain the exclusive property of EPI.
Product Registrations means (i) the approvals or registrations which have been received by EPI before the Closing Date, for the investigation, sale, distribution and/or marketing of the Products in the Territory (including any NDAs or INDs), and (ii) all dossiers, reports, data and other written materials filed as part of such approvals or registrations, or maintained by EPI and relating to such approvals or registrations.
Products means Zanaflex Tablets and Zanaflex Capsules, along with any other pharmaceutical products containing the compound tizanidine as their active pharmaceutical ingredients to which EPI has ownership rights.
Product Trademark means the Trademarks in the Territory set forth on Schedule 1.01(g) of the Elan Disclosure Schedule.
Purchased Assets has the meaning set forth in Section 2.01.
Purchased Governmental Permits means all Governmental Permits necessary for the operation of the Business by EPI that are held in the name of EPI or any of its Affiliates.
10
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Purchased Intellectual Properly means the Product Copyrights, the Product Patent Rights, the Product Know-How and the Domain Names; provided that, notwithstanding anything to the contrary contained herein, in no event shall Purchased Intellectual Property include any Excluded Intellectual Property.
Rebates and Chargebacks Termination Date means the date that is ninety (90) days after the Closing Date.
Related Agreements means the Bill of Sale, the Assignment and Assumption Agreement, the Interim Services Agreement, the Patent Assignment Agreement, the Trademark License Agreement and the Domain Name Assignment Agreement.
Returns Termination Date means the date that is one hundred and eighty (180) days after the Closing Date.
Royalty Payments has the meaning set forth in Section 4.02(a).
Royalty Term has the meaning set forth in Section 4.02(a).
Subsidiary of a Person means any entity Controlled by that Person.
Supply Agreement means the Supply Agreement to be dated as of the Closing Date by and between the Acquiror and EPI or one or more of its Affiliates, substantially in the form at attached hereto as Exhibit E .
Taxes means all of the following in connection with the operation of the Business or the transactions contemplated hereby: (i) any net income, withholding, deduction, alternative or add-on minimum tax, gross income, gross receipts, sales, use, value added ad valorem, transfer, franchise, profits, license, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, capital tax, customs duty or other tax, governmental fee or other like assessment, together with any interest, penalty or additional amount due, imposed by any governmental, regulatory or administrative entity or agency responsible for the imposition of any such tax (domestic or foreign); (ii) any Liability for the payment of any amounts of the type described in (i) as a result of being a member of any affiliated, consolidated, combined, unitary or other group for any taxable period; and (iii) any Liability for the payment of any amounts of the type described in (i)or (ii) as a result of any express or implied obligation to indemnify any other Person.
Termination Date has the meaning set forth in Section 12.01(b).
Territory means the United States of America, its territories and possessions and the Commonwealth of Puerto Rico.
Third Party Intellectual Property means any intellectual property rights, including any patent, copyright, trademark, trade secret or other proprietary rights, that are owned or controlled by any Person other than a party to this Agreement.
Third Party Claim has the meaning set forth in Section 11.02(d).
11
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Trademark License Agreement means the Trademark License Agreement to be dated as of the Closing Date by and between the Acquiror and EPI, substantially in the form attached hereto as Exhibit F .
Trademarks means: (a) all trademarks, trade names, trade dress, service marks, logos and designs, whether registered or unregistered; (b) all registrations and applications for any of the foregoing; (c) all extensions or renewals of any of the foregoing; (d) all of the goodwill connected with the use of and symbolized by the foregoing; (e) all proceeds of the foregoing, including licenses, royalties, income and payments; and (f) the right to sue for past, present and future infringements of any of the foregoing and all proceeds of such suits, provided that any such proceeds of suit shall be proportionately divided among EPI and the Acquiror based on the duration of infringing activity prior to and following the Closing if EPI agrees, prior to the commencement of such suit to bear its pro rata share of the costs of prosecuting the claim relating to such activity calculated on the same basis.
Trademark Purchase has the meaning set forth in Section 4.04.
Transfer Taxes has the meaning set forth in Section 4.06.
Zanaflex Capsules means pharmaceutical products containing tizanidine as their active pharmaceutical ingredients currently approved by the FDA pursuant to NDA No. 21-447 to be marketed in the Territory under the trademark Zanaflex.
Zanaflex Tablets means pharmaceutical products containing tizanidine as their active pharmaceutical ingredients currently approved by the FDA pursuant to NDA No. 20-397 and marketed in the Territory under the trademark Zanaflex.
12
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
provided , however , that notwithstanding anything to the contrary contained herein, EPI shall not be required to transfer physical possession of any Purchased Assets to the Acquiror to the extent any of such Purchased Assets are necessary for EPI to perform its obligations under the Interim Services Agreement (it being understood that (i) EPI will transfer physical possession of such Purchased Assets to the Acquiror as soon as is practicable after such obligations aim fully performed, and (ii) as long as EPI retains physical possession of any Purchased Assets, EPI shall, upon request of the Acquiror, provide the Acquiror with immediate access to and copies of such Purchased Assets (at Acquirors expense and provided that such access does not unreasonably interfere with the business or operations of EPI or its Affiliates).
13
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
EPI hereby grants to the Acquiror an exclusive, perpetual, royalty-free license, with the right to sublicense, to use (i) the Excluded Intellectual Property (including any inchoate inventions not yet reduced to practice), (ii) any other intellectual property owned by EPI or any of its Affiliates that is necessary to conduct the Business, and (iii) any Improvements to the intellectual property described in clauses, (i) and (ii) of this sentence solely for the purposes of importing Products into the Territory and using, modifying, exploiting, researching, distributing, developing, marketing, selling, offering for sale and otherwise commercializing Products in the Territory. In addition, at the Closing, EPI and the Acquiror will enter into the Trademark License Agreement.
14
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
For greater clarity, the parties acknowledge and agree that, notwithstanding anything to the contrary contained in this Section 3.01(a), if any Liabilities that arise from any event, circumstance or condition occurring after the Closing relate to or in any way involve any Products that have been sold, the Acquiror shall only assume those Liabilities arising from those Products sold directly at any time after the Closing by the Acquiror (or its Affiliates, sublicensees and marketing, promotion or distribution partners), and EPI shall retain all Liabilities arising from those Products sold directly at any time prior to he Closing by EPI (or its Affiliates, sublicensees and marketing, promotion or distribution partners).
15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
The Closing Consideration shall be exclusive of any value added tax which, if urged, shall be payable by Acquirer.
17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
18
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
19
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
20
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
EPI represents and warrants to the Acquiror that each statement set forth in each of the sections and subsections of this Article VI (each such statement being a representation and warranty of the Company) is accurate and complete as of the date hereof (except as to certain representations and warranties which expressly speak as of a different date certain, which shall be accurate and complete as of such date), except as set forth in any disclosure schedule delivered to the Acquiror by EPI on the date of this Agreement corresponding to the particular section of subsection of this Article VI in which such representation and warranty appears (it being understood, however, that a disclosure in a particular disclosure schedule will also be deemed to qualify a representation and warranty that does not appear in the corresponding section or subsection of this, Article VI if such disclosure reasonably relates to such representation and warranty) (All disclosure schedules delivered to the Acquiror by EPI on the date of this Agreement being collectively referred to as the Elan Disclosure Schedule ).
22
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
24
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
25
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
26
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
27
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
The Acquiror represents and warrants to EPI as of the date hereof (except as to certain presentations and warranties which expressly speak as of a different date certain, which shall be accurate and complete as of such date), subject to such exceptions as are disclosed in the disclosure schedule supplied by the Acquiror to EPI and dated as of the date hereof (the Acquiror Disclosure Schedule ), as follows:
28
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(b) Schedule 7.03(b) of the Acquiror Disclosure Schedule sets forth a complete and accurate list (the Acquiror Third Party Consents ) of all consents, waivers, approvals, or authorizations of, or notices to, any Person (other than a Governmental or Regulatory Authority) that are required by or with respect to the Acquiror in connection with the execution and delivery of this Agreement, the Supply Agreement and the Related Agreements by the Acquirer, the consummation of the transactions contemplated hereby and thereby or the performance of its obligations hereunder and thereunder, except for those consents, waivers, approvals, authorizations or notices which a failure to obtain or make would not have an Acquiror Adverse Effect.
Section 7.04. Non-Contravention . The execution and delivery by the Acquiror of This Agreement, the Supply Agreement and the Related Agreements to which it is a party, does not, and the performance by it of its obligations under this Agreement, the Supply Agreement and such related Agreements and the consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the terms, conditions or provisions of the Charter Documents of the Acquirer;
(b) assuming the receipt of all Acquiror Governmental Consents, conflict with or result in a violation or breach of any term or provision of any Law applicable to the Acquiror; or
(c) conflict with or result in a Default under any Contract to which the Acquiror is a party or by which the Acquirer or any of its assets are bound, except as would not have an Acquiror Adverse Effect.
Section 7.05. Litigation . There are no Orders, Actions or Proceedings pending, or the Knowledge of the Acquiror, threatened, against the Acquiror in connection with or relating to (i) this Agreement, the Supply Agreement or any Related Agreement, or (ii) the transactions contemplated by this Agreement, the Supply Agreement or any Related Agreement.
Section 7.06. Financial Capability . As of the date of this Agreement, the Acquiror and its Subsidiaries have at least [***] of cash, cash equivalents and marketable securities with maturity of less than one year. Prior to the Closing, the Acquiror shall not permit such assets to fall below [***] unless otherwise agreed to in writing by EPI.
Section 7.07. Insurance . The Acquiror and each of its Affiliates that will be involved in the conduct of the Business maintain insurance policies covering their respective assets, business, equipment, properties, operations, employees, officers and directors, including product liability insurance (collectively, the Acquiror Insurance Policies ), which are of the type and amounts customarily carried by Persons conducting businesses similar to those of the Acquiror and its, Affiliates, and each of the Acquiror and its Affiliates, as the case may be, will maintain such Acquiror Insurance Policies for at least three (3) years following the Closing. As
29
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
of the date of this Agreement, the Acquirer does not know of any threatened termination of, or material premium increase with respect to, any Acquiror Insurance Policies.
Section 7.08. No Other Warranties . EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH THIS AGREEMENT (INCLUDING THE ACQUIROR DISCLOSURE SCHEDULE), THE ACQUIROR DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THE SUBJECT MATTER OF THIS AGREEMENT.
Section 8.01. [SECTION INTENTIONALLY LEFT BLANK]
Section 8.02. Commercially Reasonable Efforts . Following the date hereof, each of the parties hereto shall use its commercially reasonable efforts to take, or cause to be taken, all action, or to do, or cause to be done, all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, the Supply Agreement td the Related Agreements and to cause the conditions to the obligations of the other party hereto to consummate the transactions contemplated hereby and thereby to be satisfied at the Closing, including obtaining all Elan Third Party Consents, Elan Governmental Consents, Acquirer Governmental Consents and Acquiror Third Party Consents and removing any injunctions or other Encumbrances, other than Permitted Encumbrances, on the Purchased Assets and any impairments or delays the obtaining removal of which are necessary, proper or advisable to the consummation of the transactions contemplated by this Agreement, the Supply Agreement and the Related Agreements.
Section 8.03. Access . (a) In order to facilitate the resolution of any claims made by against or incurred by EPI or any of its Affiliates or any of their respective officers or directors in any Elan Companies Proceeding, upon reasonable notice, the Acquiror shall: (i) afford the officers, employees and authorized agents and representatives of EPI or any of its Affiliates reasonable access (including the right to make copies at their own expense), during normal business hours, to the Product Books and Records; (ii) furnish to the officers, employees and authorized agents and representatives of EPI or any of its Affiliates such additional financial and other information regarding the Business as conducted by EPI relating to the period prior to the Closing as EPI or any of its Affiliates may from time to time reasonably request; (iii) make available to the officers, employees and authorized agents and representatives of EPI or any of its Affiliates the employees of the Acquirer whose assistance, testimony or presence is necessary to assist EPI or any of its Affiliates in evaluating any such claims and/or in prosecuting or defending against such claims, including the presence of such persons as witnesses in hearings or trials for such purposes; and (iv) to the extent that EPI or any of its Affiliates or and of their respective officers of directors is legally required to produce original documents included among the Purchased Assets for inspection in any legal Action or Proceeding, cooperate with EPI or any of its Affiliates or any of their respective officers or directors in making such original documents available for inspection by parties to such Action or Proceeding; provided, however , that the foregoing shall not unreasonably interfere with the business or operations of the Acquiror or any
30
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
of its Affiliates and that all Books and Records to which EPI and its representatives are given such access shall be deemed to be Confidential Information of the Acquiror.
(b) In order to facilitate the resolution of any claims made by or against or incurred by Acquiror or any of its Affiliates or any of their respective officers or directors in any future Action or Proceeding, or the resolution of any written demands relating to alleged Liabilities of Acquiror, EPI shall ensure that EPI, its Affiliates and their respective representatives provide the Acquiror and its representatives with reasonable access during normal business hours to the representatives of EPI and its Affiliates, personnel and assets and to all Books and Records relating to the Business and the Purchased Assets (including the Excluded Books and Records) as the Acquiror may reasonably request; provided that the personnel and operations of EPI, its Affiliates and their respective representatives shall not be unreasonably disrupted by the Acquiror or its Representatives and that all books and Records to which the Acquiror and its representatives are given such access shall be deemed to be Confidential Information of EPI.
(c) Each party agrees to make its respective personnel and those of its Affiliates reasonably available to the other party or its respective representatives to the extent such access is reasonably related to any Excluded Assets, in the case of EPI, or Purchased Assets, in the case of the Acquiror, or is otherwise reasonably necessary to comply with the terms of this Agreement or to comply with any applicable Law, it being understood that the party requesting access shall reimburse the other party promptly for their reasonable and necessary out-of-pocket expenses incurred in complying with my such request.
(d) The Acquiror agrees to maintain all of the Product Books and Records, and EPI agrees to maintain the Excluded Books and Records, for a period of three (3) years after the Closing Date. After such three (3) year period, before either party shall dispose of any such Books and Records, it shall provide to the other party at least ninety (90) calendar days prior written notice to such effect, and such party shall be given an opportunity, at its sole cost and expense, to remove and retain all or any part of such Product Books and Records (other than the Excluded Books and Records).
Section 8.04. Public Announcements: Confidentiality . (a) [SECTION INTENTIONALLY LEFT BLANK]
(b) Each party shall not, and shall require that its Affiliates and its and their advisors and distributors do not, use or reveal or disclose to third parties any Confidential Information of the other party after the Closing without first obtaining the written consent of the other party, except as lay be reasonably necessary in performing such partys obligations or exercising such partys rights under this Agreement (it being understood that any Confidential Information included in the Purchased Assets shall become Confidential Information of the Acquiror following the Closing). Not withstanding the foregoing, each party may disclose any Confidential Information of the other party to its Affiliates and its and their advisors, accountants, attorneys, consultants and agents on a need-to-know basis only, and such party shall be responsible for such Persons compliance with the provisions of this paragraph with respect thereto. Each party shall take, and shall require its Affiliates and its and their advisors, accountants, attorneys, consultants and agents to take, reasonable steps to prevent any
31
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
unauthorized use or disclosure of any Confidential Information of the other party. The foregoing obligations in this Section 8.04(b) shall not apply to. information which (i) is or becomes a matter of public knowledge through no fault of the receiving party or any Person to whom the receiving party provided such information, (ii) the receiving party can demonstrate to have had lawfully in its possession without any obligation of confidentiality prior to disclosure of such information by or on behalf of the disclosing party, (iii) is independently developed by the receiving party without the use of any Confidential Information of the disclosing party as evidenced by written documentation, (iv) is reasonably required to be disclosed in connection with obtaining or maintaining Product Patent Rights or regulatory approvals for the Products, or (v) is required by Law or any Governmental or Regulatory Authority to be disclosed, provided that for disclosures under subclauses (iv) and (v) the disclosing party uses reasonable efforts to give the other party advance written Notice of such required disclosure in sufficient time to enable the other party to seek confidential treatment for such information; and provided , further , that such disclosing party limits the disclosure to that information which is required to be disclosed. As used herein, Confidential Information means all Product Know-How and any proprietary or trade secret information or data relating to the Products or such other information that either party identifies to the other in writing as confidential or the nature of which or the circumstances of the disclosure of which would reasonably indicate that such information is confidential.
(c) The Acquiror acknowledges that it has been informed that information regarding EPI has been requested by the Securities and Exchange Commission and by private litigants in connection with the Elan Companies Proceedings, and waives notice and the opportunity to seek a protective order with respect to the information that has been requested in connection with such Elan Companies Proceedings.
(d) Notwithstanding the confidentiality covenants contained herein, the disclosure of any information governed by the confidentiality covenants contained in this Section 8.04 may be made by EPI or any of its Affiliates without liability hereunder to any of their Affiliates and to any employee, agent, attorney, accountant, consultant or representative who is assisting EPI in prosecuting or defending against any Elan Companies Proceeding.
(e) Notwithstanding the confidentiality covenants contained herein, EPI and any of its Affiliates shall be permitted to use any Confidential Information that EPI or any of its Affiliates in good faith believes to be necessary for purposes of prosecuting or defending an Elan Companies Proceeding, provided, however , that EPI or any of its Affiliates will use its best efforts to obtain an order protecting the confidentiality of such information.
(f) Following the Closing, the confidentiality agreement dated as of April 14, 2004 between EPI and the Acquiror (the Confidentiality Agreement ) will terminate in its entirety with no further obligation on the part of any party thereto, except for paragraphs 1.2, 1.4, 4, 7, 8, 9 and 12 thereof. In addition, the transactions contemplated by this Agreement, the Supply Agreement and the Related Agreements shall not constitute a breach or violation of the terms of the Confidentiality Agreement.
Section 8.05. Returns, Rebates and Chargebacks . (a) (i) Prior to the Returns Termination Date, EPI will, at its sole cost and expense, process and issue credits (or render
32
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
payment in such other form as EPI may determine) for all returned Products. EPI will not bill the Acquiror for the processing of claims for returned Products. Such handling of returned Products by EPI, and the issuance of any credits or other form of reimbursement in connection therewith, shall be in accordance with EPIs current returned goods policy. Subject to Section 8.05(iii), as of the Returns Termination Date, the Acquiror will, at its sole cost and expense, process and issue credits (or render payment in such other form as the Acquiror may determine) for all returned Products. The Acquiror will not bill EPI for the processing of claims for returned Products. Such handling of returned Products by the Acquiror, and the issuance of any credits of other form of reimbursement in connection therewith, shall be in accordance with the Acquirors current returned goods policy.
(ii) EPI and the Acquirer will use reasonable efforts in requesting that customers direct an Product returns prior to the Returns Termination Date to EPI, and after the Returns Termination Date to the Acquiror. All returned Products received by the Acquiror or EPI after the Closing Date will be destroyed by such party at its respective returns handling facility. After such destruction, each party will forward to the other party any necessary accompanying documentation to determine he appropriate credit. If the Acquiror or EPI destroys Products for which the other was financially responsible as set forth in Section 8.05(a)(iii) and (iv), that party shall bill the other party for the cost of the destruction. Each such invoice shall set forth the number of units processed, together with such other information as shall be necessary to support the invoice. Each party shall, within thirty (30) days of its receipt of invoice, pay the other party for the full invoiced amount.
(iii) The parties hereto agree and acknowledge that EPI shall be financially responsible only for returned Products bearing NDC numbers of EPI or any of its Affiliates, evidenced is being sold by EPI (or its Affiliates, sublicensees and marketing, promotion or distribution partners) prior to the Closing and evidenced as being received at either partys returns handling facility on or before the Returns Termination Date. For purposes of this Section 8.05(a)(iii), the dollar value of returned Products paid or credited for by EPI shall be determined in accordance EPIs then current returned goods policy.
(iv) The parties hereto agree and acknowledge that the Acquiror shall be financially responsible for returned Product bearing the Acquirors NDC number, evidenced as being sold after the Closing or evidenced as being received at either partys returns handling facility after the Returns Termination Date. For purposes of this Section 8.05(a)(iv), the dollar value of returned Products raid or credited for by the Acquiror shall be determined in accordance with the Acquirors then current returned goods policy.
(b) (i) EPI shall be financially responsible for all rebates pursuant to any government rebate programs with respect to government claims far the Products indicating NDC numbers EPI or any of its Affiliates and dispensed prior to the Rebates and Chargebacks Termination Date. Any such rebates for Products dispensed subsequent to the Rebates and Chargebacks Termination Date will be the liability of the Acquiror. The Acquiror shall reimburse EPI for all rebates that EPI is obligated to pay with respect to government claims for the Products dispensed after such date (it being understood and agreed that the dispense date contained in any report from a state rebate program shall be used for purposes of determining such date). All payments due EPI under this Section 8.05(b) shall be made within thirty (30) days
33
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
of submission to the Acquiror of invoices that describe the requested payments in reasonable detail.
(ii) The Acquiror acknowledges that EPI will require certain information from the Acquiror in order to calculate the Medicaid rebate for Products bearing NDC numbers of EPI or any of its Affiliates. Accordingly, the Acquiror agrees that, from and after the Closing Date until the date which is one year after the expiration date of the last lot of Products produced with any NDC number of EPI or any of its Affiliates, the Acquiror will provide to EPI, within five (5) days following the delivery of related information to the Centers for Medicare and Medicaid Services (or any successor agency), the following information: (a) the best price (as defined under the Social Security Act, 42 U.S.C. § 1396r-8(c)(1)(C)) for each Product identified by NDC number, (b) the average manufacturer price (as defined under the Social Security Act, 42 U.S.C. § 1396r-8(k)(1)) for each Product identified by the NDC number, and (c) any additional data or other information related to such Medicaid issues reasonably requested by EPI. EPI will provide the same information to Acquiror on the same basis with respect to Products sold by EPI prior to the Closing to the extent that such information is not included in the Product Books and Records.
(c) EPI shall be responsible for all commercial rebates with respect to the Products dispensed prior to the Rebates and Chargebacks Termination Date. Notwithstanding the foregoing, the Acquiror and EPI agree that (a) EPIs financial liability for the commercial rebates prior to such date shall be limited to those commercial customers with which EPI has a rebate obligation as of the Closing and (b) any such payments by EPI shall be made on the terms and conditions comparable to EPIs rebate obligations as of the Closing with respect to each such commercial customer and shall be based on the terms of EPIs agreement with such customer as of the Closing. Any rebates for Products dispensed subsequent to the Rebates and Chargebacks Termination Date will be the liability of the Acquiror. To the extent that EPI processes such claims, the Acquiror shall reimburse EPI within thirty (30) days of receipt of (i) invoices that describe the requested payments in reasonable detail together with copies of the original underlying invoices submitted to EPI
(d) EPI shall be financially responsible for all chargeback claims and related Administrative Fees for the Products with a chargeback invoice dated ( i.e. , the date of sale from the wholesaler to the wholesaler customer, subsequently referred to as the Activity Date ) prior to the Chargebacks Termination Date. The Acquiror shall process and be financially liable for all chargeback claims and related Administrative Fees with an Activity Date subsequent to such date. Notwithstanding the foregoing, the parties acknowledge that the VA National Acquisition Center must approve the removal of the Products from EPFs Federal Supply Schedule (FSS) before the responsibility of processing such chargebacks is transferred from EPI to the Acquirer. Accordingly, in the event such approval is not obtained prior to the Closing Date, EPI shall continue to be responsible for processing the FSS chargebacks and related Administrative Fees on the Acquirers behalf, and the Acquiror shall reimburse EPI for same within thirty (30) days of receipt of invoices that describe the requested payments in reasonable detail together with copies of the original underlying invoices submitted to EPI. The Acquiror and EPI agree that (a) EPIs financial liability for such transition chargebacks and related Administrative Fees shall be limited to those commercial customers with which EPI has chargeback obligations as of the Closing, and (b) any such chargebacks and related Administrative Fees issued by EPI shall be
34
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
made on the terms and conditions comparable to EPIs chargeback obligations as of the Closing with respect to each such commercial customer and shall be based on the terms of EPIs agreement with such customer as of the Closing.
(e) Notwithstanding the requirements of Section 8.05(b), the Acquiror and EPI agree that EPIs financial liability for governmental rebates shall terminate on the date that is one hundred eighty (180) days after the Closing Date, except with respect to governmental rebates relating to utilization data submitted to EPI prior to the Rebates add Chargebacks Termination Date (for which EPIs responsibility and financial liability shall not terminate). Notwithstanding the requirements of Section 8.05(c) or (d), the Acquiror and EPI agree that EPIs financial liability for commercial rebates and chargeback claims and related Administrative Fees shall terminate on the date that is one hundred twenty (120) days after the Closing Date.
(f) The Acquiror agrees that it shall not increase the wholesale acquisition cost of the Products prior to the date that is one hundred eighty (180) days after the Closing Date.
(g) EPI shall promptly provide the Acquiror with all information required to permit the Acquiror to comply with its obligations to sell-the Products under the Public Health Services Act after the Closing ( i.e., the AMP and Rebates Per Unit ( RPU ) for the Products for the two full calendar quarters, and any partial calendar quarter, immediately preceding the Closing Date). The parties promptly after Closing shall make all filings with Health Resources Services Administration and the Veterans Administration necessary to transfer the obligation to sell Products under the Public Health Services Act after the Closing from EPI to the Acquiror.
Section 8.06. Multi-Product Contracts . Schedule 8.06 of the Elan Disclosure Schedule sets forth a complete and correct list of each Contract to which EPI is a party and pursuant to which EPI sells any of the Products, together with other pharmaceutical products of EPI or its Affiliates, to a third party (the Multi Product Contracts ). Except as specified in Schedule 8.06 of the Elan Disclosure Schedule, within ten (10) Business Days following the Closing, EPI shall (a) take all actions necessary to terminate such Multi-Product Contracts to the extent that they pertain to the Products in the shortest period of time permitted thereunder, and (b) inform the other parties to such Multi-Product Contracts of the acquisition of the Purchased Assets by the Acquiror and notify them that they must submit all utilization within the timeframe required by such Contract in order to be paid thereunder. From and after the sixth day following the Closing, the Acquiror may contact any Person who is a party to a Multi-Product Contract for the purposes of (i) negotiating an agreement relating to the Products with such Person, and (ii) informing such Person of the acquisition of the Purchased Assets by the Acquiror and notifying them that any utilization must be submitted within the timeframe required by the relevant Multi-Product Contract.
Section 8.07. Bulk Transfer Laws . The Acquiror and EPI hereby waive compliance with the provisions of any so-called bulk transfer law of any jurisdiction in connection with the sale of the Purchased Assets to the Acquiror.
Section 8.08. Further Assurances . (a) On and after the Closing Date, EPI shall, from time to time, at the request of the Acquiror, execute and deliver, or cause to be executed
35
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
and delivered, such other instruments of conveyance and transfer and take such other actions as the Acquiror may reasonably request, in order to (i) more effectively consummate the transactions contemplated hereby, in the Supply Agreement and in the Related Agreements and to vest in the Acquirer good and marketable title to the Purchased Assets (including assistance in the collection or reduction to possession of any of the Purchased Assets), and (ii) transfer to the Acquiror those assets that are necessary for the conduct of the Business that were not included in the Purchased Assets.
(b) On and after the Closing Date, the Acquiror shall, from time to time, at the request of EPI, take such actions as EPI may reasonably request, in order to more effectively consummate the transactions contemplated hereby, in the Supply Agreement and in the Related Agreements, including the Acquirors assumption of the Assumed Liabilities.
Section 8.09 Corporate Names . (a) The Acquirer shall be entitled to continue to use the Corporate Names and the NDC number of EPI or its Affiliates for the Products on the existing Labeling and-packaging for the Products until such time as the Acquiror has prepared and filed with the appropriate Governmental or Regulatory Authorities, and such authorities approve, if required, new Labeling that does not contain references to the Corporate Names or such NDC numbers; provided however , that, if the Acquiror does not prepare within ninety (90) days of the Closing Date final specifications for such revised Labeling and packaging of the Products, including new NDC numbers for the Products and all necessary photo-ready art (or its substantial equivalent) reflecting such modifications, the right of the Acquiror described in this sentence shall terminate ninety (90) days after the Closing Date. Notwithstanding the foregoing, the Acquiror shall be entitled to continue to use the Corporate Names that consist of trademarks of EPI or its Affiliates debossed or otherwise included on Zanaflex Tablets as of the Closing on Zanaflex Tablets until the date that is one hundred eighty (180) days after the Closing Date. Subject to the terms and conditions herein, EPI hereby grants a non-exclusive, non-transferable license to the Acquiror and its Subsidiaries to use the Corporate Names on the Labeling and packaging of the Products and on Zanaflex Tablets themselves, in each case to the extent specified herein.
(b) Corporate Names means the trademark and service mark ELAN, the Corporate logos and trade names of EPI and its Affiliates, including the word ELAN together with any variations and derivatives thereof and any other logos, symbols or trademarks, trade names or service marks of EPI and its Affiliates (including for the avoidance of doubt any trademarks of EPI or is Affiliates debossed or otherwise included on Zanaflex Tablets themselves), but excluding the Product Trademarks.
(e) EPI and/or its Affiliates, as applicable, retain and shall retain all right, title and interest in and to the Corporate Names. The Acquiror expressly acknowledges that EPI and/or its Affiliates own the Corporate Names, and agrees that it will not attack, dispute or contest the validity of or ownership of the Corporate Names, or any registrations issued or issuing with respect thereto. The Acquirer further agrees that all use of the Corporate Names by the Acquiror or its Affiliates shall be for the benefit of EPI and/or its Affiliates and the goodwill accrued in connection with its use of the Corporate Names shall accrue to EPI and/or its Affiliates. In the event the Acquirer acquires any rights relating to the Corporate Names for any reason, the Acquiror agrees to assign, at no cost, all such rights, together with any related
36
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
goodwill, to EPI. The Acquiror shall use best efforts not to do any act which endangers, destroys or similarly affects the value of the goodwill pertaining to the Corporate Names and further agrees that it will ensure that all Products comply with the quality standards and specifications of Elan in existence as of the Closing Date and at all times with at least the same standards as Elan employs for its other products taking into account the nature of the Products and the quality of their manufacture and distribution, including but not limited to the applicable laws, rules or regulations of any Governmental or Regulatory Authority having jurisdiction over the manufacture and distribution of the Products. Except as provided in this Section 8.09, the Acquiror farther agrees that it will not alter, change, deface or obliterate the Corporate Names on Labeling for the Product. The Acquirer will at anytime execute any documents reasonably required by EPI to confirm all ownership interests of EPI and/or its Affiliates in the Corporate Names. The Acquirer shall not use in connection with the Product, or allow any of its Affiliates to use in connection with the Product, any other trademark or trade name which is similar to or substantially similar, to or so nearly resembles the Corporate Names as to be likely to cause deception or confusion.
Section 8.10. Protective Covenant . (a) During the period beginning at the Closing and ending on the third (3 rd ) anniversary of the Closing Date, the Acquiror shall not, directly or indirectly, market, distribute or sell in the United Kingdom or Ireland any pharmaceutical product containing tizanidine or any chiral isomer of tizanidine as its active pharmaceutical ingredient.
(b) During the period beginning at the Closing and ending on the later of (i) the date that the Supply Agreement (or any superceding agreement between the parties with respect to the supply of Zanaflex Capsules by EPI to the Acquiror) is validly terminated, or (ii) the date the EPI Royalty Term ends, EPI shall not, directly or indirectly, market, distribute or sell in the Territory any pharmaceutical product containing tizanidine or any chiral isomer of tizanidine as its active pharmaceutical ingredient.
Section 8.11. Commercialization of Zanaflex Capsules . Subject to EPIs and its Affiliates continuing performance of their obligations under this Agreement, the Supply Agreement and the Related Agreements, the Acquiror hereby covenants and agrees that it will use commercially reasonable efforts after the Closing Date to commercialize Zanaflex Capsules.
Section 8.12. Zanaflex Tablet Business . From and after the Closing during calendar year 2004, the Acquirer will conduct the Business relating to Zanaflex Tablets using the same commercially reasonable efforts that would be used by a pharmaceutical company similarly situated, including but not limited to filling orders as they are received for Zanaflex Tablets.
37
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Section 11.01. Survival of Representations, Warranties, Covenants, Etc. (a) The representations and warranties and covenants and agreements to be performed at the Closing of EPI or the Acquiror contained in this Agreement shall survive the Closing and terminate 12 months following the Closing Date (the Expiration Date ). Notwithstanding the preceding sentence, so long as an Indemnified Party gives an Indemnification Claim Notice for any claim for indemnification on or before the Expiration Date, such Indemnified Party shall be entitled to pursue its rights to indemnification for such claim.
(b) The representations, Warranties, covenants and agreements of EPI and the Acquiror, and the rights and remedies that may be exercised by the Acquiror Indemnitees and the EPI indemnitees, shall not be limited or otherwise affected by or as a result of any information furnished to, or any investigation made by or any knowledge of, any of the Acquiror Indemnitees or EPI Indemnitees or m y of their respective Representatives.
(c) For purposes of this Agreement, each statement or other item of information set forth in the Elan Disclosure Schedule shall be deemed to be a representation and warranty made by EPI in this Agreement; and each statement or other item of information set forth in the Acquiror Disclosure Schedule shall be deemed to be a representation and warranty made by the Acquiror in this agreement.
(d) Nothing contained in this Section 11.01 or elsewhere in this Agreement shall limit any rights or remedy of any indemnified party for claims based on fraudulent or intentional misrepresentation.
Section 11.02. Indemnification .
(a) By EPI. Subject to Sections 11.01 and 11.03, from and after the Closing, EPI shall indemnify, reimburse, compensate, defend and hold harmless the Acquiror, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (the Acquiror Indemnitees ) from and against any and all costs, losses, damages, including natural resource damages, fines, penalties, judgments, lawsuits, deficiencies, claims and expenses (including reasonable fees and disbursements of attorneys and other professionals, including third-party consultants and, to the extent allowable at Law, medical monitoring costs and expenses) of every kind and nature (collectively, Damages ) incurred in connection. with, arising out of, resulting from or incident to (regardless of whether or not such Damages relate to any third-party claim): (i) any inaccuracy in or breach of a representation or warranty of EPI made in this Agreement or any Related Agreement, (ii) any inaccuracy in or breach of a representation or warranty of EPI made in this Agreement or any Related Agreement as of the Closing Date as if made on the Closing Date (or, in the case of each representation and warranty
38
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
which expressly speaks as of an earlier date, as of the earlier date as of which such representation and warranty speaks), (iii) any breach of any covenant or agreement of EPI in this Agreement or any Related Agreement, (iv) any Excluded Liabilities and (v) any Action or Proceeding relating directly or indirectly to any inaccuracy, breach, alleged inaccuracy or breach, Liability or matter of the type referred to in clauses (i), (ii), (iii), or (iv) above (including any Action or Proceeding commenced by any Acquiror Indemnitee for the purpose of enforcing any of its rights under this Article XI).
(b) By the Acquiror . Subject to Sections 11.01 and 11.03, from and after the Closing, the Acquiror shall indemnify, reimburse, compensate, defend and hold harmless EPI, its Affiliates and their respective officers, directors, employees, agents, successors and assigns (the EPI Indemnitees ) from and against any and all Damages incurred in connection with, arising out of, resulting from or incident to (regardless of whether or not such Damages relate to any third-party claim): (i) any inaccuracy in or breach of a representation or warranty of the Acquiror made in this Agreement or any Related Agreement, (ii) any inaccuracy in or breach of a representation or warranty of the Acquiror made in this Agreement or any Related Agreement as of the Closing Date as if made on the Closing Date (or, in the case of each representation and warranty which expressly speaks as of an earlier date, as of the earlier date as of which such representation and warranty speaks), (iii) any breach of any covenant or agreement of the Acquiror in this Agreement or any Related Agreement, (iv) any Assured Liabilities and (v) any Action or Proceeding relating directly or indirectly to any inaccuracy, breach, alleged inaccuracy or breach, liability or matter of the type referred to in clauses (i), (ii), (iii), or (iv) above (including any Action or Proceeding commenced by any EPI Indemnitee for the purpose of enforcing any of its rights under this Article XI).
(c) Procedure for Claims . If any indemnified party has or claims to have incurred or suffered Damages for which it is or may be entitled to indemnification, compensation or reimbursement under this Article XI, and the indemnified party wishes to make a claim for the recovery of such Damages from an indemnifying party, such indemnified party shall deliver a Notice (an Indemnification Claim Notice ) to the indemnifying party. Each Indemnification Claim Notice shall (i) state that such indemnified party believes that that there is or has been a breach of a representation, warranty or covenant contained in the Agreement or that such indemnified party is otherwise entitled to indemnification, compensation or reimbursement under this Article XI, (ii) contain a brief description of the circumstances supporting such indemnified, partys belief that there is or has been such a possible breach or that such indemnified party is so entitled to indemnification, compensation or reimbursement, and (iii) if practicable contain a good faith, non-binding, preliminary estimate of the aggregate dollar amount of actual and potential damages that have, arisen and may arise as a result of such breach or other matter as set forth in such Indemnification Claim Notice. For the avoidance of doubt, the parties agree that if an indemnified party is entitled to make an indemnification claim under more than one clause of either Section 11.02(a) or 11.02(b), as applicable, the indemnified party may make such claim under any or all of the applicable provisions.
(d) Third Party Claims . The obligations of an indemnifying party under this Section 11.02 with respect to Damages arising from claims or legal proceedings of any third party that are subject to indemnification as provided for in Section 11.02(a) or Section 11.02(b)
39
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(a Third Party Claim ) shall be governed by and be contingent upon the following additional terms and conditions:
(i) If (A) the indemnified party receives written notice of the commencement of any Third Party Claim against any indemnified party, and (B) a claim for indemnification is to be made against the indemnifying party under this Agreement with respect to such Third Party Claim, then the indemnified party shall promptly notify the indemnifying party of the commencement of such Third Party Claim; provided, however , that any failure to notify the indemnifying party of the commencement of such Third Party Claim shall not limit or otherwise affect any rights of the indemnified party or any liability that the indemnifying party may have to any indemnified party (except to the-extent that the defense of such Third Party Claim has been materially prejudiced by the indemnified partys failure to notify the indemnifying party of the commencement of such Third Party Claim). If, within thirty (30) days after receiving notification of the commencement of any Third Party Claim, the indemnifying party delivers to the indemnified party a written notice setting forth the election of the indemnifying party to assume the defense of such Third Party Claim, then, subject to subsections (ii) and (iii) below:
(A) the indemnifying party shall be entitled to assume the defense of such Third Party Claim, at the sole expense of the indemnifying party, with counsel reasonably satisfactory to the indemnified party; and
(B) as long as the indemnifying party conducts such defense, the indemnifying party shall not be required to reimburse the indemnified party for any fees paid to any other counsel representing such indemnified party in such Third Party Claim for legal services rendered while the indemnifying party is conducting such defense (it being understood that the indemnifying party shall be required to reimburse the indemnified party for any fees paid to counsel representing the indemnified party in such Third Party Claim for legal services rendered prior to the time the indemnified party receives notice of the election of the indemnifying party to assume such defense).
(ii) If the indemnifying party assumes the defense of a Third Party Claim in accordance with subsection (i) above, then:
(A) it will be deemed conclusively established for purposes of this Agreement that such Third Party Claim is within the scope of and are subject to the indemnification provisions set forth in Section 11.02, and the indemnifying party shall not be permitted to contest the applicability of Section 11.02 to such Third Party Claim or to contest the indemnifying partys obligation to provide indemnification to the indemnified party with respect thereto;
(B) the indemnified party shall promptly deliver to the indemnifying party all original notices and documents (including court papers) received by any indemnified party in connection with the Third Party Claim.
40
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(C) the indemnifying party shall keep the indemnified party informed of all material developments relating to such Third Party Claim;
(D) the indemnified party shall be entitled to participate (at its own expense) in the defense of such Third Party Claim; and
(E) the indemnifying party shall not be permitted to effect any settlement, adjustment or compromise of such Third Party Claim or any of the claims made in connection therewith without the prior written consent of the indemnified party (which consent shall not be unreasonably withheld or delayed) unless (I) such settlement, adjustment or compromise involves no finding or admission of any breach by any indemnified party of any obligation to any other Person or any violation by any indemnified party of any Law, (II) such settlement, adjustment or compromise has no effect on any other claim that may be made against any indemnified party, (III) the sole relief provided in connection with such settlement, adjustment or compromise is monetary damages that are paid in full by the indemnifying party, and (IV) the indemnified party receives a full release with respect to such claim.
If the indemnifying party does not elect (within the 30-day lime period specified in subsection (i) above) to assume the defense of a Third Party Claim in accordance with subsection (i) above, then (I) the indemnified party shall have the exclusive right, at its election, to control the defense of such Third Party Claim with counsel selected by the indemnified party and reasonably satisfactory to the indemnifying party, (II) provided that the indemnifying party is adjudged to be obligated to indemnify he indemnified party hereunder, the indemnifying party shall not be entitled to challenge the manner in which the Third Party Claim was litigated by the indemnified party and its counsel or the judgment or other outcome of the Third Party Claim, and (iii) the indemnifying party will not be bound by any settlement, adjustment or compromise effected by the indemnified party with respect to such Third Party Claim or of any of the claims made in connection therewith that is of effected without the prior written consent of the indemnifying party (which consent shall not be unreasonably withheld or delayed).
(iii) Notwithstanding anything to the contrary contained in this Section 11.02(d), and notwithstanding any election made by the indemnifying party to assume the defense of any Third Party Claim in accordance with subsection (i) above, if any indemnifying party or any affiliate of any indemnifying party is also a party to such Third Party Claim, and counsel to the indemnified party determines in good faith that joint representation would give rise to a conflict of interest in such Third Party Claim, then the indemnified party may retain its own legal counsel at the expense of the indemnifying party, and the indemnifying party and its counsel shall cooperate with the Indemnified Party and its counsel as may be reasonably requested.
(iv) Regardless of whether the indemnifying party or the indemnified party defends or prosecutes any Third Party Claim, each non-defending party shall, and shall cause each Affiliate of any such non-defending party to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and
41
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
attend such conferences, discovery proceedings, hearings, trials and appeals as maybe reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the defending party to, and reasonable retention by each non-defending party of, records and information that are reasonably relevant to such Third Party Claim, and making each non-defending party and other employees and agents thereof available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying party shall reimburse each such Person for all its reasonable out-of-pocket expenses in connection therewith.
Section 11.03. Limitations .
(a) With the exception of claims based upon fraudulent misrepresentation, in no event shall an indemnifying party be liable for any Damages pursuant to a claim based upon a representation, warranty or covenant pursuant to (i) Sections 11.02(a)(i),11.02(a)(ii) or 11.02(a)(iii) (other than claims for breach of the covenant set forth in Section 8.10(b)) or (ii) Sections 11.02(b)(i),11.02(b)(ii) or 11.02(b)(iii) (other than claims for breach of the covenant set forth in Section 8.10(a)), as applicable (each of the claims set forth in clauses (i) and (ii) above is referred to as an Eligible Claim ), unless and until the aggregate amount of all such Damages for all Eligible Claims payable by such indemnifying party exceeds [***] in which case the indemnifying party shall be liable for all such Damages, and not only those Damages in excess of such amount. With the exception of claims based upon fraudulent misrepresentation or claims for breach of the covenants set forth in Sections 8.10(a) or 8.10(b), the maximum aggregate amount payable by an indemnifying party pursuant to all Eligible Claims payable by such indemnifying party shall in no event exceed [***]. Further, with the exception of claims based upon fraudulent misrepresentation, each party hereto agrees that the indemnification rights provided by Section 11.02 are the sole and exclusive remedy for monetary damages for claims by such party or any Acquiror Indemnitee or EPI Indemnitee for breach by the other party of any representation, warranty or covenant contained in this Agreement.
(c) Any indemnifying party shall also be liable to the indemnified party for interest on the amount of any Damages that such indemnified party is entitled to recover from the indemnifying party (for the period commencing as of the date on which the indemnified party delivered the applicable Notice of Indemnification Claim to the indemnifying party and ending on the date on which the liability of such indemnifying party to such indemnified party is fully satisfied by such indemnifying party) at a floating rate equal to the prime rate publicly announced by Morgan Guaranty Trust Company of New York at its principal office from time to time plus [***] (or, if less, the maximum rate allowed to be charged under applicable laws), such interest to be compounded monthly.
(d) In the event of a dispute regarding the amount of Damages recoverable in connection with an indemnification claim, the indemnifying party and the indemnified party may bring evidence regarding the quantification of such Damages, including evidence relating to insurance proceeds recovered by the indemnified party in connection with the events underlying such indemnification claim and any related increases in insurance premiums payable by the indemnified party, and the amount of any tax benefit gained or any tax increase or disadvantage suffered in connection with such indemnification claim.
42
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(e) THE INDEMNIFICATION OBLIGATIONS OF THE PARTIES HERETO SHALL NOT EXTEND TO SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, OR PUNITIVE DAMAGES, UNLESS SUCH DAMAGES ARE AWARDED IN CONNECTION WITH, OR INCLUDED IN A SETTLEMENT, ADJUSTMENT OR COMPROMISE OF, A THIRD PARTY CLAIM.
Section 13.01. Notices . All Notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given (a) if delivered personally, upon receipt, (b) if delivered by facsimile transmission, upon receipt by the sender of the answer back confirmation, (c) if mailed, postage prepaid by certified or registered mail, return receipt requested, upon receipt, or (d) if delivered by nationally recognized overnight courier that maintains records of delivery, upon receipt (in each case regardless of whether such Notice, request or other communication is received by any other Person to whom a copy of such Notice, request or other communication is to be delivered pursuant to this Section 13.01), in each case to the patties at the following addresses or facsimile numbers:
If to the Acquiror to:
Acorda Therapeutics
15 Skyline Drive
Hawthorne, NY 10532
Facsimile: (914) 347-4560
Attention: General Counsel
If to EPI to:
Elan Pharmaceuticals, Inc.
800 Gateway Boulevard
South San Francisco, CA 94080
Facsimile: (650) 553-7165
Attention: Vice President, Legal Affairs.
Either party from time to time may change its address, facsimile number or other information for the purpose of Notices to that party by giving Notice specifying such change to the other party hereto in accordance with the terms of this Section 13.01.
Section 13.02. Entire Agreement . This Agreement (and all Exhibits and Schedules attached hereto and all other documents delivered in connection herewith) supersedes all prior discussions and agreements among the parties with respect to the subject matter hereof
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
and contains the sole and entire agreement among the parties hereto with respect to the subject matter hereof (except as otherwise set forth in Section 8.04(f)).
Section 13.03. Waiver . Any term or condition of this Agreement may be waived at any time by the party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the party waiving such term or condition. No waiver by any party hereto of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or otherwise afforded, will be cumulative and not in the alternative.
Section 13.04. Amendment . This Agreement may be amended, supplemented or codified only by a written instrument duly executed by each party hereto.
Section 13.05. Third Party Beneficiaries . The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns and it is not the intention of the parties to confer third party beneficiary rights upon any other Person, except as achieved through the indemnification clause set forth in Section 11.02.
Section 13.06 Assignment: Binding Effect . Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party hereto and any attempt to do so will be void, except that an Indemnified Party under article XI may assign any of its rights, benefits or obligations hereunder, by operation of law or otherwise, (a) to any of its Affiliates, provided such Indemnified Party continues to be responsible for all of its obligations hereunder, (b) to a Person that (i) purchases all or substantially all of the assets being conveyed hereunder or (ii), merges with the Acquiror or the Indemnified Party or (c) to the lenders of the Acquiror and its successors or assigns; provided, however , such assignment does not create adverse consequences for the indemnifying party. This Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and their respective successors and permitted assigns.
Section 13.07. Headings . The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.
Section 13.08. Elan Patenting . Subject to Section 2.02, nothing in this Agreement shall be deemed to prevent or prohibit EPI or its Affiliates from filing, maintaining, licensing, prosecuting or enforcing any rights arising out of intellectual property purchased or licensed after the Closing or relating to inventions reduced to practice after the Closing.
Section 13.09. Severability . If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, and if the rights or obligations of any party hereto under this Agreement will not be materially and adversely affected thereby, (i) such provision will be fully severable, (ii) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement will remain in full force and effect and will not be
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (iv) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and unenforceable provision as similar to the terms of such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the parties herein.
Section 13.10. Governing Law: Jurisdiction . THIS AGREEMENT AND THE RELATED AGREEMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES. EACH PARTY HERETO HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THIS AGREEMENT OR ANY RELATED AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY OR THEREBY. SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY REGISTERED MAIL ADDRESSED TO ANY PARTY HERETO AT THE ADDRESS SET FORTH FOR SUCH PARTY HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS AGAINST SUCH PARTY FOR ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT MAY BE ENFORCED IN ANY OTHER COURTS TO WHOSE JURISDICTION SUCH PARTY IS OR MAY BE SUBJECT, BY SUIT UPON JUDGMENT
Section 13.11 Expenses . Except as otherwise provided in this Agreement, the Supply Agreement or the Related Agreements, each party hereto shall pay its own expenses and costs incidental to the preparation of this Agreement, the Supply Agreement and the Related Agreements and to the consummation of the transactions contemplated hereby and thereby.
Section 13.12 Counterparts . This Agreement may be executed in any number of counterparts and by facsimile, each of which will be deemed an original, but all of which together will constitute one and the same instrument. A facsimile copy shall be a sufficient proof of signature, without it being necessary to produce the original copy.
[SIGNATURES ON FOLLOWING PAGE]
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto all as of the date first above written.
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Global Core Services |
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S-1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto all as of the date first above written.
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S-1
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ELAN DISCLOSURE SCHEDULE
The following matters are disclosures made in connection with the representations and warranties of Elan Pharmaceuticals, Inc., a Delaware corporation (EPI), set forth in the Asset Purchase Agreement (the Agreement) by and between EPI and Acorda Therapeutics, Inc., a Delaware corporation (Acquiror) and delivered in connection with the execution and delivery of the Agreement by EPI. Section numbers used herein correspond to the section numbers in the Agreement; provided, however, that any information disclosed herein under a particular section number shall be deemed to be disclosed and incorporated into another section number contained herein if such information reasonably relates to the representation and warranty m the Agreement that corresponds to such other section number. Except as otherwise stated or the where the context indicates-otherwise, all capitalized terms used herein shall have the meanings given them in the Agreement.
Nothing herein constitutes an admission against Ms interests. The inclusion of any item herein should not be interpreted as. indicating that EPI has determined that such item or other matter is necessarily material to Acquiror. Acquiror acknowledges that certain information contained in this Elan Disclosure Schedule may constitute confidential information relating to EPI and/or its Affiliates, and therefore may be subject to the confidentiality provisions contained in the Agreement. Where the terms of disclosure items may have been summarized, disclosed or otherwise described in this Elan Disclosure Schedule, such summary, disclosure or description does not purport to be a complete statement of the material terms of such item. For the avoidance of doubt, and notwithstanding anything in the Agreement or herein to the contrary, the contents of each document made available to Acquiror in the dataroom by M for due diligence purposes shall be deemed to be disclosed and incorporated into each section number contained herein if such contents reasonably relate to the representation and warranty in the Agreement that corresponds to such section number.
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 1.01 (a) - Closing Date Inventory Value -valuation methodology
Lot Number |
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Strength |
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Units per lot |
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Unit price |
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37584 |
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4 mg |
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[***] |
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[*** |
] |
37583 |
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4 mg |
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[***] |
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[*** |
] |
23934(a) |
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4 mg |
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[***] |
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N/A |
(b) |
23934(a) |
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4 mg |
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[***] |
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N/A |
(b) |
33535(a) |
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2 mg |
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[***] |
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N/A |
(b) |
37329(a) |
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2 mg |
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[***] |
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N/A |
(b) |
37329(a) |
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2 mg |
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[***] |
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N/A |
(b) |
(a) Denotes Inventory having a shelf life of less than 12 months from the Closing Date.
(b) Each such batch will be included for an aggregate purchase price (for all such batches) of [***] .
Schedule 1.01(b) Domain Names
ZANAFLEX.BIZ
ZANAFLEX.COM
ZANAFLEX.INFO
ZANAFLEX.NET
ZANAFLEX.ORG
ZANAFLEX.US
Schedule 1.01(c) Excluded Books and Records
1. All information provided to EPI or its Affiliates by or pursuant to contracts with IMS Health, Verispan, L.L.C. (formerly, Scott Levin) and NDC Health Information Services.
2. EPI shall not be providing to Acquiror any Books and Records or Know-How embodying any calculation methods or policies, processes or procedures relating to government or commercial rebates and chargeback claims.
Schedule 1.01(d) Product Copyrights
1. No Copyrights have been registered with the U.S. Copyright Office.
2. All Copyrights in the Product Books and Records (including for the avoidance of doubt the Product Marketing Materials) and the Labeling.
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 1.01(e) Product Know-How
All Know-How contained in, and in the data underlying, the following clinical study reports:
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Title |
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AN021-301 |
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A Placebo-Controlled, Double-blind, Randomized, parallel Groups, Single Dose Study to Assess Efficacy and Safety of Tizanidine Hydrochloride Modified Release in Patients with Spasticity due to Multiple Sclerosis or Spinal Cord Impairment Treated with 24 or 48 mg |
AN021-302 |
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A Placebo-Controlled, Double-Blind, Randomized, parallel Groups Study to Assess Efficacy and Safety of Tizanidine Hydrochloride Modified Release at Stable Dose in Patients with Spasticity due to Multiple Sclerosis or Spinal Cord Impairment |
AN021-351 |
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Open-Label Study of Tizanidine Hydrochloride Modified Release in Patients with Spasticity Due to Multiple Sclerosis of Spinal Cord Impairment |
AN021-002 |
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A Multicenter, Open-Label, Long Term Study to Evaluate the Safety of Tizanidine Tablets in Patients Suffering from Spasticity due to Multiple Sclerosis |
AN021-004 |
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A Multicenter, Open-Label, Long-Term Study to Evaluate the Safety of Tizanidine Tablets in Patients Suffering from Spasticity Resulting from Spinal Cord Injury |
AN021-103 |
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A Pharmacokinetic Study to Evalute the Bioequivalence of Zanaflex (Tizanidine Hydrochloride) 2 x 2 mg Tablets, with Varying Storage Times, Administered to Healthy subjects |
AN021-401 |
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An Open-Label Study to Assess the Long-Term Safety of Zanaflex (tizanidine HCI) in Patients Treated with 28 to 36 mg/day. |
AN021-456 |
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Open Label Dose Titration Study of the Safety and Efficacy of Zanaflex (tizanidine HCI) in Chronic Daily Headache Prophylaxis. |
Notwithstanding the foregoing or anything in the Agreement or herein to the contrary, neither EPI nor any of its Affiliates makes any representations or warranties of any nature regarding such study reports or the underlying data.
Schedule 1.01(f) Product Patent Rights
1. U.S. Patent No. 6,455,557 dated September 24, 2002.
2. U.S. Patent Application No. 10/645,840, filed August 22, 2003.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 1.01(g) Product Trademarks
1. The Trademark Zanaflex is used in the United States (registration number 1906277).
2. The Trademark Zana flex is used in the United States (registration number 2383531).
Schedule 2.01 (a) Assumed Contracts
The Novartis License Agreement (including the amendment to such agreement dated May 3, 1991 and the Addendum to such agreement dated February 24, 1995, which documents constitute all of the amendments to the Novartis License Agreement).
Schedule 2.01(g) Other Purchased Assets
None.
Schedule 6.03(a) Elan Governmental Consents
1. EPI will be required to notify the FDA in writing of the transfer of the Product Registrations to Acquiror. EPI will so notify the FDA within five (5) Business Days after the date hereof.
2. In order for EPIs Affiliate Elan Pharma International Limited to perform its obligations under the Supply Agreement, each of IND 63-884 and NDA 21-447 will have to be in effect and are now and will be immediately after the Closing in full force and effect.
Schedule 6.03(b) Elan Third Party Consents
The Novartis License Agreement requires Novartis consent to assignment.
Schedule 6.05 Material Contracts
1. The Novartis License Agreement.
2. Rebate Agreement by and between Argus Health Systems, Inc. and EPI dated as of January 2, 2002 (the Argus Agreement).
3. Rebate Agreement by and between Coventry Health Care, Inc. and EPI dated as of January 1, 2001, as amended (the Coventry Agreement).
4. Rebate Agreement by and between Horizon Healthcare of New Jersey, Inc. and EPI dated as of January 1, 2001, as amended (the Horizon Agreement).
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
5. Rebate Agreement by and between Intermountain Health Care Health Plans, Inc. and EPI dated as of January 1, 2001, as amended (the Intermountain Agreement).
6. Agreement by and between Merck-Medco Managed Care, L.L.C. (as successor-in-interest to Merck-Medco Managed Care, Inc. and Managed Care LLC) and EPI (as successor-in-interest to Athena Neurosciences, Inc.) dated as of July 1, 1996, as amended (the Merck-Medco Agreement).
7. Rebate Agreement by and between Medimpact Healthcare Systems, Inc. and EPI dated as of April 1, 2002 (the Medimpact Agreement).
8. Rebate Agreement by and between Pharmacare Management Services, Inc. and EPI dated as of July 1, 2000 (the Pharmacare Agreement).
9. Rebate Agreement by and between Security Health Plan (Security Health) and EPI dated as of January 1, 2002 (the Security Health Agreement).
10. Safety Data Exchange Agreement between EPI and Novartis Pharma AG dated as of February 13, 2002.
11. Safety Data Exchange Agreement between EPI and Medeus Pharma Limited dated as of March 16, 2004.
12. Agreement by and among Glaxo Group Limited (Glaxo) and EPIs Affiliates Elan Corporation, plc (Elan) and Athena Neurosciences, Inc. (Athena) dated as of August 6, 1997 (the Glaxo Agreement).
13. Agreement between Pharmacia & Upjohn Company (Pharmacia) and Athena dated as of October 30, 1998 (the Pharmacia Agreement).
Schedule 6.07(a)(i) and (ii) Certain Contracts Relating to Product Intellectual Property
1. The Novartis License Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property. In addition, such agreements contain indemnification obligations of Novartis that include claims relating to Purchased Intellectual Property and that provide that Novartis shall have certain rights to control the defense of such claims.
2. The Argus Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
3. The Coventry Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4. The Horizon Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
5. The Intermountain Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
6. The Medimpact Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
7. The Pharmacare Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
8. The Security Health Agreement contains indemnification obligations of EPI that include claims relating to infringement of Purchased Intellectual Property.
Schedule 6A7(a)(iv) Covenant Not to Sue Relating to Purchased Intellectual Property
In the Glaxo Agreement, Elan and Athena agreed not to object to Glaxos use or registration of the mark ZANTAC in certain circumstances.
Schedule 6.07(h) Certain Proceedings Relating to Product Intellectual Property
1. Petition for Cancellation of Registration No. 1,906,277 filed by Glaxo Group Limited, which was settled pursuant to the Glaxo Agreement.
2. Petition for Cancellation of Registration No. 1,906,277 and Notice of Opposition No. 108,684, each filed by Pharmacia and settled pursuant to the Pharmacia Agreement.
Schedule 6.08 Litigation
The events described in the MedWatch reports submitted to Acquiror in the dataroom for due diligence present bases for Actions or Proceedings relating to the Purchased Assets or the Business.
Schedule 6.09 Compliance with Law
1. Neither EPI nor any of its Affiliates makes any representations or warranties of any nature relating to promotional, marketing or training materials relating to the Products.
2. On February 23, 2004, EPI was notified by Novartis that Novartis failed to provide EPI adverse event reports from the period from July 1, 1999 through March 9, 2004. On April 7, 2004, EPI submitted to the FDA 139
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
MedWatch reports as prepared by Novartis, together with EPIs adjudication of each adverse event. These materials were submitted within the statutorily-required time period, but were not prepared by EPI. EPI did not submit, and has not been requested by the FDA to submit, a corrective action plan relating to these adverse events.
3. The annual report for NDA 20-397 was due on January 26, 2004 and has not yet been submitted.
4. As a result of the following article: Granfors MT. Backman JT. Neuvonen M. Ahonen J. Neuvonen PJ. Fluvoxamine drastically increases concentrations and effects of tizanidine: a potentially hazardous interaction. [Clinical Trial. Clinical Trial, Phase II. Journal Article. Randomized Controlled Trial] Clinical Pharmacology & Therapeutics. 75(4):331-41, 2004 Apr. (the Clinical Article), EPI has undertaken to amend EPIs Labeling for Zanaflex Tablets to include an additional precaution. EPI has also undertaken to update such Labeling to include certain information that was included in the combined Labeling that was approved for Zanaflex Tablets and Zanaflex Capsules. EPI shall not be obligated to continue such undertakings after the Closing, but the foregoing shall not reduce or otherwise affect EPIs retention of Excluded Liabilities or other covenants in the Agreement.
Schedule 6.11 Customers and Suppliers
Top 10 wholesale customers for the fiscal year ended December 31, 2003 for Zanaflex Tablets 2mg:
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Top 10 wholesale customers for the fiscal year ended December 31, 2003 for Zanaflex Tablets 4mg:
[***]
[***]
[***]
[***]
[***]
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
[***]
[***]
[***]
[***]
[***]
Supplier of active pharmaceutical ingredient:
Novartis
Schedule 6.12 Certain Governmental Permits
1. EPI is required to have wholesaler/distribution licenses in each state where the Products are sold. Such licenses have not been delivered to Acquiror.
2. NDA 20-397.
3. NDA 21-447.
4 IND 37-891.
5. IND 63-884.
6. IND 59-464.
7. On February 23, 2004, EPI was notified by Novartis that Novartis failed to provide EPI adverse event reports from the period from July 1, 1999 through March 9, 2004. On April 7, 2004, EPI submitted to the FDA 139 MedWatch reports as prepared by Novartis, together with EPIs ajudication of each adverse event. These materials were submitted within the statutorily-required time period, but were not prepared by EPI. EPI did not submit, and has not been requested by the FDA to submit, a corrective action plan relating to these adverse events.
8. The annual report for NDA 20-397 was due on January 26, 2004 and has not yet been submitted.
9. As a result of the Clinical Article, EPI has undertaken to amend EPIs Labeling for Zanaflex Tablets to include an additional precaution. EPI has also undertaken to update such Labeling to include certain information that was included in the combined Labeling that was approved for Zanaflex Tablets and Zanaflex Capsules. EPI shall not be obligated to continue such undertakings after the Closing, but the foregoing shall not reduce or otherwise affect EPIs retention of Excluded Liabilities or other covenants in the Agreement.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 8.06 Multi-Product Contracts
1. The Argus Agreement.
2. The Coventry Agreement.
3. The Horizon Agreement.
4. The Intermountain Agreement.
5. The Merck-Medco Agreement.
6. The Medimpact Agreement.
7. The Pharmacare Agreement.
8. The Security Health Agreement.
9. EPIs contract with the Veterans Administration is also a Multi-Product Contract, but notwithstanding anything to the contrary contained in the Agreement or herein, such contract will not be terminated.
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Exhibit 6.13
[***]
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ACQUIROR DISCLOSURE SCHEDULE
The following matters are disclosures made in connection with the representations and warranties of Acorda Therapeutics, Inc., a Delaware corporation (Acquiror), set forth in the Asset Purchase Agreement (the Agreement) by and between Elan Pharmaceuticals, Inc. (EPI) and Acquiror and delivered in connection with the execution and delivery of the Agreement by Acquiror. Section numbers used herein correspond to the section numbers in the Agreement; provided, however, that any information disclosed herein under a particular section number shall be deemed to be disclosed and incorporated into another section number contained herein if such information reasonably relates to the representation and warranty in the Agreement that corresponds to such other section number. Except as otherwise stated or the where the context indicates otherwise, all capitalized terms used herein shall have the meanings given them in the Agreement.
Nothing herein constitutes an admission against Acquirors interests. The inclusion of any item herein should not be interpreted as indicating that Acquiror has determined that such item or other matter is necessarily material to EPI. EPI acknowledges that certain information contained in this Acquiror Disclosure Schedule may constitute confidential information relating to Acquiror and/or its Affiliates, and therefore may be subject to the confidentiality provisions contained in the Agreement. Where the terms of disclosure items may have been summarized, disclosed or otherwise described in this Acquiror Disclosure Schedule, such summary, disclosure or description does not purport to be a complete statement of the material terms of such item.
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 7.03(a) Acquiror Governmental Consents
[***]
Schedule 7.03(b) Acquiror Third Party Consents
None.
2
Exhibit 10.21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ELAN PHARMA INTERNATIONAL LIMITED
AND
ACORDA THERAPEUTICS, INC,
ZANAFLEX SUPPLY AGREEMENT
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
THIS SUPPLY AGREEMENT (this Agreement ) is made on July 21, 2004 (the Effective Date )
BETWEEN:
(1) ELAN PHARMA INTERNATIONAL LIMITED, a company incorporated in Ireland (registered no. 222276) ( Elan ); and
(2) ACORDA THERAPEUTICS, INC. , a Delaware corporation whose registered office is at 15 Skyline Drive, Hawthorne, NY 10532 ( Buyer ).
RECITALS:
(A) Pursuant to that certain Asset Purchase Agreement between Buyer and Elan Pharmaceuticals, Inc. ( EPI ), dated July 21, 2004 (the Purchase Agreement ), Buyer acquired (among other assets) the rights and authorisations necessary to market and sell the Products (as defined below) in the Territory (as defined in the Asset Purchase Agreement).
(B) Elan has agreed to manufacture and supply the Products to Buyer, and Buyer has agreed to purchase the Products for onward commercial supply on the terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:
Affected Item shall have the meaning given to such term in Clause 10.3;
Affected Obligation shall have the meaning given to such term in Clause 20.1;
Affected Party shall have the meaning given to such term in Clause 20.1;
Affiliate shall mean, with respect to any person or entity, any other person or entity which Controls, is Controlled by or is under common Control with such person or entity;
Alternate Manufacturer shall have the meaning given to such term in Clause 11.4;
Beneficiary shall have the meaning given to such term in Clause 13.8.2;
Business Day shall mean a day other than a Saturday or Sunday or public holiday in England and Wales, and Ireland;
cGMP shall mean current Good Manufacturing Practice under the applicable laws and regulations in the United States, Ireland and the European Union;
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Confidential Information shall have the meaning given to such term in Clause 15.1;
Control means (a) ownership (directly or indirectly) of at least fifty percent (50%) of the shares of stock entitled to vote for the election of directors in the case of a company or corporation; or (b) the ability (directly or indirectly) otherwise to direct and control the actions of a person or entity.
Covenantor shall have the meaning given to such term in Clause 13.8.2;
Disclosing Party shall have the meaning given to such term in Clause 17.1;
Due Date shall have the meaning given to such term in Clause 9.4;
Elans Facility shall mean Elans manufacturing facility located at Monksland, Athlone, Co. Westmeath, Ireland or Elans Affiliates manufacturing facility located at Gainesville, Georgia, U.S.A., or such other manufacturing facility as Elan may from time to time specify (provided that any facility so specified has received all required Facility Licences and Elan has provided Buyer with advance notice sufficient to amend its NDA to include such facility if Elan intends to use a facility other than the one located at Monksland, Athlone, described above);
Ex Works and EXW shall have the meaning as such term is defined in the ICC Incoterms, 2000, International Rules for the Interpretation of Trade Terms, ICC Publication No. 560;
Facility Licences means all required licenses, approvals, permits and authorizations required by any Governmental Authority or law or regulation to manufacture, package or store Products, or, to the extent required for Elan to perform under this Agreement, to ship or export Products;
Force Majeure Event means an event beyond the control of the Affected Party which makes the Affected Partys performance of an obligation impossible (or such an event that makes such performance so impractical as to be reasonably to be considered impossible) including, without limitation, strike, lock-out, labour dispute, act of God, war, armed conflict, terrorism, riot, civil commotion, malicious damage, explosion, earthquake, fire, flood, storm or other extraordinary adverse weather conditions.
Governmental Authority shall mean each governmental and regulatory body, agency, department or entity, whether or not located in the Territory, which regulates, directs or controls commerce in or with any territory or location;
Index shall mean the Irish consumer price index or such other index as may replace it from time to time; or if there is no replacement, such published Irish index as Elan in its discretion considers to be the closest comparator to the same;
Initial Term shall have the meaning given to such term in Clause 11.1;
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Knowledge of a particular fact or other matter means: (i) with respect to any individual; (A) the actual knowledge of such individual concerning such fact or other matter; and (B) the knowledge that a prudent individual would be expected to discover or otherwise become aware of in the course of conducting a reasonable investigation concerning the existence of such fact or other matter; and (ii) with respect to Elan or Buyer, the Knowledge concerning such fact or other matter of (1) the officers of such party, (2) the directors of such party, and (3) the senior managers of such party with responsibility for, or supervision of, the relevant matters; provided that under no circumstances shall Knowledge of Elan include any knowledge not actually known to such persons but imputed to such persons or Elan due to its or its Affiliates relationship with Novartis Pharma AG ( Novartis ) or its representatives; and provided, further, that none of such persons shall have any obligation as a result of entering into (or any provision of) this Agreement, the Purchase Agreement or any related Agreement to make any inquiries of Novartis or its representatives regarding any matter.
Loss shall mean any loss, liability, or cost (including reasonable attorneys fees and expenses) which is incurred by a party;
Medical Claim shall have the meaning given to such term in Clause 13.7;
Minor Deficiencies and Delays shall mean (i) shortfalls that are consistent with industry accepted standards, but not to exceed 10% of the amount ordered (ii) delays in delivery of the Products not exceeding 30 days from the delivery date or such other period of delay as may be agreed between the Parties;
Monthly Forecast Report shall have the meaning given to such term in Clause 4.1.1;
Production Licence shall have the meaning given to such term in Clause 11.4;
Products means pharmaceutical products containing tizanidine as their active pharmaceutical ingredients and having a multi-particulate capsule formulation currently approved by the FDA pursuant to NDA No. 21-447 to be marketed in the Territory.
Product Specifications shall mean the specifications for the Products contained in the relevant Regulatory Approvals issued by the authorities in the Territory, and such additional or amended specifications for such Products as may be effected under the terms of this Agreement;
Regulatory Application shall mean any application for a Regulatory Approval, which is filed in the Territory following the Effective Date, including any supplements or amendments thereto;
Regulatory Approval shall mean the final approval required from a governmental regulatory authority to market a Product in the Territory, and any other approval which is required to market or sell such Product or otherwise necessary for Buyer to perform under this Agreement or otherwise handle the Products;
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Relevant Claim shall have the meaning given to such term in Clause 13.8;
Renewal Term shall have the meaning given to such term in Clause 11.1;
Serious Failure to Supply shall mean that in a period of a calendar year, for reasons other than Force Majeure, a shortage of tizanidine caused by events or third parties not under the control of Elan, or the default of Buyer, Elan fails on at least two consecutive occasions to supply Buyers properly forecasted and ordered requirements of the Products in accordance with the terms of this Agreement, except for Minor Deficiencies and Delays, and the cumulative shortfall for such calendar year attributable to such failure(s) is at least 35% of the aggregate amount properly forecasted and ordered from Elan for delivery in such calendar year; provided that, for purposes of this definition the timely supply of Products that breach the representations and warranties made in Clause 13.2 (excluding such Products with nonlatent defects) will be deemed not to be a failure to supply Buyers properly forecasted and ordered requirements of the Products in accordance with the terms of this Agreement;
Specified Delivery Date shall have the meaning given to such term in Clause 4.3;
Technical Agreement shall have the meaning given to such term in Clause 3.9;
Technological Competitors shall mean those entities, including any entities that are subsidiaries or successors in interest to such entities, set out in Schedule 3;
Term shall mean the Initial Term plus any applicable Renewal Term;
Territory means the United States of America, its territories and possessions and the Commonwealth of Puerto Rico;
VAT means; (a) any tax imposed in compliance with the Sixth Directive of the Council of the European Economic Communities (77/388/EEC); and (b) any other tax of a similar fiscal nature, whether imposed in a member state of the European Union in substitution for or in addition to such tax, or imposed elsewhere;
VAT Amount shall have the meaning given to such term in Clause 10.2; and
$ and US$ shall mean United States Dollars.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
An inspection under Clause 3.7.1 shall be limited to determining whether there is compliance with cGMP and other requirements of applicable law.
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Elan shall promptly implement any such changes at Buyers sole cost (such cost to include but not be limited to Elans internal and external costs relating to changes to artwork and labeling and changes to raw materials, intermediary products and components, in each case whether such costs are out-of-pocket costs or write-off charges (to the extent such write-off charges are actually incurred by Elan and Elan has attempted in good faith to avoid such write-off charges by making other use of the applicable materials, products or components); provided, that Elan shall provide Buyer with advance notice of such changes and the estimated costs thereof and Buyer shall have the opportunity to discuss with Elan any of such changes or costs prior to such changes being implemented for up to two (2) weeks after Buyer receives such notice; and, provided, further, that with respect to then-outstanding purchase orders submitted by Buyer pursuant to Clause 4.3, to the extent that applicable law or any Governmental or Regulatory Authority does not allow Elan to manufacture and deliver to Buyer, or Buyer to sell, Products ordered under such purchase orders, Elan shall be permitted to delay delivery of Products ordered thereunder for an amount of time equal to the actual delay in making the changes required by changes in Product Specifications caused by compliance with this Clause 6.1 (it being understood and agreed by Buyer that it shall accept Products ordered under such purchase orders despite such Products being manufactured to Product Specifications that do not reflect the changes required by this Clause 6.1, to the extent that applicable law or any Governmental or Regulatory Authority allows Elan to manufacture and deliver to Buyer, and Buyer to sell, such Products). Otherwise, changes shall only be made to the Product Specifications by agreement between the parties.
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Notwithstanding Clause 11.2.1, no cure period shall apply with respect to Products described in Clause 7.2 other than that set forth in Clause 7.2.1. Other than as expressly set forth elsewhere in this Agreement in Clause 13.6, and with respect to Serious Failures to Supply and Product recalls, Buyer shall have no remedies in respect of Elan having supplied Products that breach the representations and warranties made in Clause 13.2 other than as set out in this Clause 7.2.
the parties shall appoint an independent first-class laboratory or other appropriate, independent expert to undertake the relevant testing, and its findings shall be conclusive and binding upon the parties. If the parties fail to agree on the appointment of an independent first-class laboratory or expert, as appropriate, within thirty (30) days after the parties first discuss such appointment, the parties agree that an independent party designated by Elan and an independent party designated by Buyer shall together select a mutually-acceptable, appropriate, independent expert. Such independent expert shall undertake the relevant analysis and/or testing and report its findings within a reasonable time of
10
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
appointment, which findings shall be conclusive and binding upon the parties. All costs relating to this process shall be borne solely by the unsuccessful party.
it shall promptly give to the other party notice of the same with full details. Notwithstanding any dispute between the parties as to whether the Product complies with the Product Specifications, the recall shall commence but such dispute shall be resolved in accordance with Clause 7.3.
11
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
12
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Elan may increase the price of the Products by such amount as is necessary to recover the additional costs of supplying the Products. Elan shall ensure that, where the costs of active ingredients or other raw materials used to produce the Products increase by a percentage in excess of the percentage increase in the Index (as compared to the Effective Date), Elan and Buyer will meet to discuss potential alternative suppliers of such materials.
13
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
14
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
18
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
19
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
and in each case on the basis that the Covenantor shall indemnify the Beneficiary, and keep the Beneficiary indemnified, on demand against all reasonable costs incurred as a result of a request or nomination by the Covenantor;
20
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
To the extent that such information is Confidential Information, the disclosing party shall so inform the recipients and use reasonable endeavours to ensure that they are bound by appropriate restrictions as to confidentiality.
21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
22
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
provided that if the Disclosing Party becomes legally required to make such announcement, public statement or disclosure hereunder, the Disclosing Party shall, to the extent practicable, give the other party prompt notice of such fact so as to enable the other party to seek a protective order or other appropriate remedy concerning any such announcement, public statement or disclosure. Notwithstanding the foregoing sentence, the Disclosing Party shall be entitled to make such announcement, public statement or disclosure regardless of whether the other party is in the process of seeking a protective order or other remedy, if the Disclosing Party believes it is required to do so pursuant to subclauses 17.1.1 or 17.1.2.
23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
24
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
25
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
No amendment, modification or addition hereto shall be effective or binding on any party hereto unless set forth in writing and executed by a duly authorised representative of each party.
No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.
26
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Address:
Elan
Pharma International Limited
WIL House, Shannon Business Park
Shannon
County Clare
Attention: Counsel
Fax: +353 902 92427
with a courtesy copy (receipt of which shall not constitute, notice) to each of:
Address:
Elan
Pharma International Limited
WIL House, Shannon Business Park
Shannon
County Clare
Attention: Company Secretary
Fax: +353 902 92427
and
Address:
Elan
Pharmaceuticals, Inc.
800 Gateway Boulevard
South San Francisco, CA 94080
Attention: Vice President, Legal Affairs
Fax: (650) 553-7165
Address:
Acorda
Therapeutics
Attention: General Counsel
Fax: (914) 347-4560
or to such other address(es) and fax numbers as may from time to time be notified by either party to the other in conformity herewith.
27
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
At the request of either party, the other party shall (and shall use reasonable efforts to procure that any necessary third parties shall) execute such documents, and do all acts and things as may reasonably be required subsequent to the signing of this Agreement for assuring to or vesting in the requesting party the full benefit of the terms hereof.
This Agreement may be executed by facsimile and in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.
Any payment due hereunder from either party may be set off against any payment owed hereunder to such party.
28
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF the parties have executed this Agreement on the Effective Date.
SIGNED |
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for and on behalf of |
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ELAN PHARMA INTERNATIONAL LIMITED |
|
Name: William F. Daniel |
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Position: Director |
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SIGNED |
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for and on behalf of |
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ACORDA THERAPEUTICS, INC. |
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Name: Ron Cohen |
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Position: President and CEO |
29
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
SCHEDULE 1
PRODUCTS
Product |
|
Strength
|
|
Bottle Size
|
|
Price (per
|
|
Minimum Batch Size
|
|
Zanaflex capsules (finished) |
|
2 |
|
150 |
|
[***] |
|
[***] |
|
Zanaflex capsules (finished) |
|
4 |
|
150 |
|
[***] |
|
[***] |
|
Zanaflex capsules (finished) |
|
6 |
|
150 |
|
[***] |
|
[***] |
|
Product |
|
Strength
|
|
Unit Size
|
|
Price (per unit) |
|
Minimum Batch Size
|
|
Zanaflex capsules (bulk) |
|
|
|
|
|
[***] |
|
[***] |
|
30
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
SCHEDULE 2
TERMS OF THE PRODUCTION LICENCE
31
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
32
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
33
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
SCHEDULE 3
TECHNOLOGICAL COMPETITORS
[***]
34
Exhibit 10.22
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this Agreement) is entered into this 21st day of July 2004, by and among Acorda Therapeutics, Inc. (Buyer), Elan Pharmaceuticals, Inc. (together with its affiliates, Elan), on behalf of itself and its affiliates, and Novartis Pharma AG (together with its affiliates, Novartis), on behalf of itself and its affiliates.
WHEREAS, Buyer and Elan have entered into that certain Asset Purchase Agreement dated as of July 21, 2004 (the Asset Purchase Agreement) for the sale by Elan to Buyer of certain assets, including certain rights of Elan under that certain License Agreement (the License Agreement) dated April 17, as amended, between Athena Neurosciences, Inc., the predecessor to the interest of Elan in the License Agreement, and Sandoz Pharma Ltd., the predecessor to the interest of Novartis in the License Agreement;
WHEREAS, under the terms of the Asset Purchase Agreement, Elan has agreed to assign to Buyer certain rights of Elan, and Buyer has agreed to assume certain liabilities and obligations of Elan, under or pursuant to the License Agreement, and the parties desire to effect other arrangements regarding the terms of the License Agreement;
WHEREAS, Elan has previously assigned to Medeus UK Limited (Medeus) certain rights under or pursuant to the License Agreement, and Medeus agreed to assume certain liabilities and obligations of Elan under or pursuant to the License Agreement (collectively, the Medeus Assignment); and
WHEREAS, Novartis desires to consent to such assignment and assumption, and the parties hereto desire to effect such other arrangements, in each case on the terms and conditions described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
1.11 Territory means the United States of America, its territories and possessions and the Commonwealth of Puerto Rico.
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
7.6 Prior to the execution of the Supply Agreements, Novartis shall supply Zanaflex Tablets to Buyer and Compound to Elan at the following prices (the Interim Supply Prices):
Product |
|
Price (US$) |
|
2 mg Zanaflex Tablet |
|
[***] |
|
4 mg Zanaflex Tablet |
|
[***] |
|
Compound |
|
[***] |
|
These Interim Supply Prices may be adjusted by Novartis before the Supply Agreements have been executed; provided that such adjusted Interim Supply Prices shall not be effective until Buyer (with respect to Zanaflex Tablets) or Elan (with respect to Compound) have been notified of such adjustments in writing; and, provided, further, that increases to such Interim Supply Prices shall be limited to the percentage increase in the Swiss consumer price index, as compared to the most recent price adjustment. The Supply Agreements shall stipulate price and price changes, if any, for the terms of the Supply Agreements.
8.3 The provisions of Sections 8.1 and 8.2 shall not apply to any materials previously approved by Novartis that are changed solely to add the name of a sublicensee and/or delete the name of Licensee.
Acorda Therapeutics
15 Skyline Drive
Hawthorne, NY 10532
Facsimile: 914-347-4560
Attention: General Counsel; and
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
any notices to be sent to Novartis pursuant to the notice provisions of the License Agreement shall be sent to Novartis as follows:
Novartis Pharma AG
Lichtstrasse 35
4002 Basel
Swizerland
Attention: Manager, BD&L Mature Products
Facsimile: 41 61 324 2322.
[SIGNATURE PAGE TO FOLLOW]
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
ACORDA THERAPEUTICS, INC. (on behalf of itself and its affiliates) |
|||||
By: |
|||||
Name: |
|||||
Title: |
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|
|||||
|
|||||
ELAN PHARMACEUTICALS, INC. (on behalf of itself and its affiliates) |
|||||
By: |
|||||
Name: |
|||||
Title: |
|||||
|
|||||
|
|||||
NOVARTIS PHARMA AG (on behalf of itself and its affiliates) |
|||||
By: |
/s/ |
|
|
|
|
Name: |
|
Peter B. Hewes |
|||
Title: |
Mature Products BU |
||||
|
WSJ-210.211 |
||||
|
Tel. 47225 |
||||
|
|
|
|
|
|
By: |
/s/ |
|
|
|
|
Name: |
Sheyenne Scriven-Jin |
||||
Title: |
Senior Legal Counsel |
||||
|
Transplantation and |
||||
|
Mature Products |
||||
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.
ACORDA THERAPEUTICS, INC. (on behalf of itself and its affiliates) |
|||||
By: |
|||||
Name: |
|||||
Title: |
|||||
|
|||||
|
|||||
ELAN PHARMACEUTICALS, INC. (on behalf of itself and its affiliates) |
|||||
By: |
/s/ |
|
|
|
|
Name: |
Jack Laflin |
||||
Title: |
Executive Vice President, |
||||
|
Global Core Services |
||||
|
|||||
|
|||||
NOVARTIS PHARMA AG (on behalf of itself and its affiliates) |
|||||
By: |
|
||||
Name: |
|
||||
Title: |
|
||||
Exhibit 10.23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
CONFIDENTIAL
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this Agreement), made the 17th day of April , 1991 by and between SANDOZ PHARMA LTD., a Swiss corporation having its principal place of business at Lichtstrasse 35, CH-4002 Basle, Switzerland (Sandoz Pharma) and ATHENA NEUROSCIENCES, INC. a Delaware corporation having its principal place of business at 800F Gateway Boulevard, South San Francisco, California (Licensee),
WITNESSETH:
Whereas Sandoz Pharma has developed a substance called Tizanidine, useful in the treatment of spasticity and/or spastic diseases and owns and/or controls certain Know-How (as hereinafter defined) and patent rights relating to Tizanidine;
Whereas Sandoz Pharma has certain processes, skills and techniques for galenical formulations containing Tizanidine;
Whereas Licensee desires to acquire from Sandoz Pharma a license to sell Tizanidine and certain other rights on the terms and conditions herein set forth;
Whereas Licensee desires to purchase from Sandoz Pharma finished pharmaceutical formulations containing Tizanidine for sale in the Territory; and
Whereas Licensee desires to clinically develop and market in the Territory finished pharmaceutical formulations containing Tizanidine as the sole active ingredient,
Now, Therefore , In consideration of the premises and the mutual covenants herein contained, it is mutually agreed as follows:
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Unless otherwise directed by Sandoz Pharma, the reference under license from Sandoz Pharma Ltd. or a similar reference mutually agreed upon shall be included on Product labels and promotional materials.
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
10
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Neither party shall be responsible to the other for any failure or delay in performing any of its obligations under this Agreement or for other non-performance hereof provided that such delay or non-performance is occasioned by a cause beyond the reasonable control and without fault or negligence of such party, including, but not limited to fire, flood, explosion, discontinuity in the supply of power, court order or governmental interference or act of God, and provided that such party will immediately inform the other party and that it will entirely perform its obligations immediately after the relevant cause has ceased its effect.
11
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
12
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
13
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Should one or several provisions of the Agreement be or become invalid, then the parties hereto shall substitute such invalid provisions by valid ones, which in their economic effect come so close to the invalid provisions that it can be reasonably assumed that the parties would have
14
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
contracted this Agreement with those new provisions. In case such provisions cannot be found, the invalidity of one or several provisions of the Agreement shall not affect the validity of the Agreement as a whole, unless the invalid provisions are of such essential importance for this Agreement that it is to be reasonably assumed that the parties would not have contracted this Agreement without the invalid provisions.
This Agreement shall be construed in accordance with the substantive laws of New Jersey.
This Agreement and the licenses granted herein shall not be assignable by either party hereto, except to a successor of all or substantially all of its pharmaceutical business, without the
15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
consent in writing first obtained from the other party. Such non-authorized assignment shall be null and void. A merger, acquisition or sale of all or substantially all of the assets of a party to this agreement shall not be deemed to be an assignment requiring the consent of the other party hereto.
16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
ATHENA NEUROSCIENCES |
|
|
|||||
|
|
|
|||||
By: |
/s/ |
|
|
||||
|
|
|
|
||||
Title: |
Executive Vice President, Research |
|
|
||||
|
|
|
|
||||
|
|
|
|||||
SANDOZ PHARMA LTD. |
|
|
|||||
|
|
|
|||||
|
|
|
|||||
By: |
/s/ |
/s/ |
|
|
|||
|
Dr. P. Wäger |
Dr. R. Tschannen |
|
|
|||
|
|
|
|||||
Title: |
Head of Manager of Licensing |
|
|
||||
|
Product Policy |
|
|
||||
17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule I
to the Agreement by and between SANDOZ PHARMA and LICENSEE of
Description of Substance
[***]
Basel, |
April 12, 1991 |
|
South San Francisco, |
April 17, 1991 |
|
|
|
|
|
|
|||
SANDOZ PHARMA LTD. |
ATHENA NEUROSCIENCES, INC. |
|||||
|
|
|||||
/s/ |
|
/s/ |
|
|||
18
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
A d d e n d u m
to the License Agreement, dated April 7th, 1991
between
Sandoz Pharma Ltd. , a Swiss corporation having its principal place of business at Lichtstrasse 35, CH-4002 Basel, Switzerland (hereinafter called Sandoz Pharma)
and
Athena Neurosciences, Inc. , a Delaware corporation having its principal business at 800F Gateway Boulevard, South San Francisco, California, U.S.A. (hereinafter called Athena).
The above mentioned Parties agree to amend Art. 1.11 and Art. 6.2 as follows:
1.11. Territory means the United States of America, its territories and possessions (including Puerto Rico) and Canada, as well as the United Kingdom and Ireland.
6.2. Athena, its Affiliates and its sublicensees shall pay Sandoz Pharma Supply Price (as defined in Section 7.7 of the above-mentioned Agreement) ninety (90) days from date of invoice and on such other reasonable terms and conditions as Sandoz Pharma ordinarily requires. However, for the initial two (2) pre-launch orders totaling [***], a credit period of one hundred and eighty (180) days instead of ninety (90) days from data of invoice is granted by Sandoz.
Basel, |
South San Francisco, |
||||
|
|
||||
February 17, 1995 |
|
February 24, 1995 |
|
||
(date) |
(date) |
||||
|
|
||||
SANDOZ PHARMA LTD. |
ATHENA NEUROSCIENCES, INC. |
||||
|
|
||||
|
|
|
|
||
/s/ |
/s/ |
|
/s/ |
|
|
Dr. P. Dufner |
Dr. R. Tschanen |
|
Lisabeth F.
Murphy
|
||
19
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
April 12, 1991
SANDOZ
PHARMA
LTD.
Lichtstr 35
CH-4002 Basel SWITZERLAND
Gentlemen:
I am happy that we have now concluded the terms and conditions for Athena to acquire U.S. and Canadian Marketing rights to tizanidine.
As we discussed, there are a few points that are not practical to fully resolve at this time, and we agree to negotiate in good faith a final resolution of the following matters when required for marketing of the product:
(1) Sample Supply
Sandoz agrees to review Athenas sample needs to introduce and subsequently market tizanidine. Sandoz will use its good faith efforts to supply Athenas reasonable needs consistent with its own sampling policies.
(2) Final Form Packaging
Sandoz and Athena will discuss Athenas needs for final packaging forms and Sandoz agrees use its good faith efforts to supply these as close to the desired form as possible, providing Athena is prepared to accept final form packaging materials routinely used by Sandoz for tizanidine or other similar presentations.
(3) Patent Review
Sandoz and Athena agree to cooperate to permit Athena and its patent counsel to review any intellectual property protection that might be available for tizanidine prior to and during the period of Athenas marketing of this compound. Sandoz further agrees to use its good faith efforts to provide Athena license rights within the terms of the marketing agreement for any such protection which in Athenas judgment has commercial value.
Please acknowledge receipt of this letter by signing the enclosed copy and returning it to me.
Yours sincerely, |
|
|
||||||||
|
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||||||||
/s/ |
|
|
|
|||||||
John Groom
|
|
Acknowledged and
received by:
|
||||||||
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|||||||
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By: |
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/s/ |
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/s/ |
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Printed Name: |
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Dr. S. Strub |
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Dr. R. Tschannen |
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Title: |
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Manager Licensing |
|
Manager Licensing |
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||||
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Date: |
|
May 3, 1991 |
|
May 3, 1991 |
|
||||
20
Exhibit 10.24
PATENT ASSIGNMENT AGREEMENT
This Patent Assignment Agreement (this Assignment) dated as of July 21 , 2004 (the Effective Date), is made by and between Elan Pharmaceuticals, Inc., a Delaware corporation (Assignor), and Acorda Therapeutics, Inc., a Delaware corporation (Assignee). Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Asset Purchase Agreement (the Asset Purchase Agreement) dated as of July 21 , 2004 by and between Assignor and Assignee.
Assignor is the owner of the Product Patent Rights, which relate to the following patent and patent application (the Assigned Patents), and of the inventions claimed in the Assigned Patents (the Inventions):
Patent |
|
Patent No./
|
|
Country |
|
Date |
|
Method of Reducing Somnolence in Patients Treated with Tizanidine |
|
6,455,557 B1 |
|
United States |
|
September 24, 2002 |
|
Method Of Increasing the Extent of Absorption of Tizanidine. |
|
10/645,840 |
|
United States |
|
Filed August 22, 2003 |
|
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor assigns and transfers to the Assignee, and the Assignees successors and assigns, and the Assignee accepts such assignment and transfer of, the entire, undivided right, title and interest in and to: (a) such Product Patent Rights and the Assigned Patents, (b) the right to file applications for patent of the United States on the Inventions, (c) any application(s) for patent of the United States claiming priority to any Assigned Patent, including any division(s), continuation(s), and continuation(s)-in-part, and (d) any patent(s) of the United States that may be granted for or on any application for patent identified in the preceding paragraphs (a) - (c), including any reissue(s) and extension(s) of said patent(s), all of the foregoing to be held and enjoyed by the above-named Assignee, for Assignees own use and benefit; and for the benefit of Assignees successors and assigns, to the full end of the term or terms relating to such Product Patent Rights.
The Assignor hereby covenants and agrees to and with the Assignee, its successors, legal representatives, and assigns, that the Assignor will sign all papers and documents, take all lawful oaths, and do all acts necessary or required to be done in connection with any and all proceedings for the procurement, maintenance, enforcement and defense of the Invention(s), said applications, and said patents, including interference proceedings, without charge to the Assignee, its successors, legal representatives, and assigns, but at the cost and expense of the Assignee, its successors, legal representatives, and assigns.
Assignor authorizes and requests the Commissioner of the United States Patent and Trademark Office, or any other party whose duty is to issue patents or other evidence or forms of industrial property protection on applications as aforesaid, to issue the same to the Assignee and the Assignees successors and assigns, in accordance with the terms of this Assignment.
|
ELAN PHARMACEUTICALS, INC. |
||
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By: |
/s/ Jack Laflin |
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Name: |
Jack Laflin |
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Title: |
Executive Vice President |
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Global Core Services |
STATE OF |
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: |
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: ss. |
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COUNT OF |
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: |
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Before me, a notary public in and for the State and County aforesaid, on this _______ day of ______________________, 2004, personally appeared _________________, who acknowledged to me that he/she is the ____________________________________, who executed the within Assignment on behalf of said corporation and acknowledged to me that he/she executed the same or the purposes therein stated.
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Notary Public |
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My Commission Expires: |
2
State of California |
) |
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) ss: |
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County of San Diego |
) |
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On |
July 16, 2004 |
before me, |
Kellee Clinton, Notary Public |
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Date |
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Name and Title of Officer (e.g., Jane Doe, Notary Public |
personally appeared |
John Calvin Laflin - AKA Jack Laflin |
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name(s) of Signer(s) |
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o personally known to me o proved to me on the basis of satisfactory |
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o to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. |
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KELLEE CLINTON Commission # 138445 Notary Public - California San Diego County My Comm. Expires Jul 12, 2006 |
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WITNESS my hand and official seal, /s/ Signature of Notary Public |
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OPTIONAL |
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Though the
Information below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent
removal and reattachment of this form to another document.
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Title or Type of Document: |
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Document Date: |
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Number of Pages: |
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Signer(s) Other Than Named Above: |
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Number of Pages: |
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Capacity(ies) Claimed by Signer |
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Signers Name: |
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o Individual |
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RIGHT THUMBPRINT OF SIGNER Top of thumb here |
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o Corporate Officer - Title(s): |
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o Partner - o Limited o General |
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o Attorney-in-Fact |
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o Trustee |
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o Guardian or Conservator |
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o Other |
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Signer Is Representing: |
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||||
Exhibit 10.25
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement (Agreement) is made this 21 st day of July 2004 (the Effective Date) by and between Elan Pharmaceuticals, Inc., a Delaware corporation (hereinafter Licensor), and Acorda Therapeutics, Inc., a Delaware corporation (hereinafter Licensee).
WHEREAS, Licensor is the owner of the Product Trademarks;
WHEREAS, the Parties hereto desire that Licensee use the Product Trademarks on the terms and conditions hereinafter set forth; and
WHEREAS, capitalized terms used and not defined herein shall have the meanings assigned to those terms in the Asset Purchase Agreement dated as of July 21, 2004 by and between Licensor and Licensee (the Asset Purchase Agreement).
NOW, THEREFORE, in consideration of the promises and covenants contained herein and for good and valuable consideration, the Parties agree as follows:
2
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
3
IN WITNESS WHEREOF, the parties hereto execute this Agreement by their duly authorized representative on the date set forth above.
ELAN PHARMACEUTICALS, INC. |
|
ACORDA THERAPEUTICS, INC. |
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||
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|
||
/s/ Jack Laflin |
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/s/ Ron Cohen |
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Signature |
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Signature |
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Jack Laflin |
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Ron Cohen |
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Print Name |
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Print Name |
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Executive Vice President, Global |
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President and CEO |
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Position Core Services |
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Position |
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Date |
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Date |
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4
Exhibit 10.26
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
AGREEMENT RELATING TO ADDITIONAL TRADEMARK
This Agreement Relating to Additional Trademark (this Agreement) is made as of July ___, 2005 (the Effective Date) by and between Elan Pharmaceuticals, Inc. (EPI) and Acorda Therapeutics, Inc. (Acorda). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in that certain Asset Purchase Agreement by and between EPI and Acorda dated as of July 21, 2004 (the Asset Purchase Agreement).
RECITALS
A. Acorda desires to utilize the trademark Zanaflex Capsules (the Mark) in connection with Zanaflex Capsules; and
B. The parties desire set forth rights and obligations relating to the Mark as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows:
The Mark shall be and shall be deemed to be a Product Trademark for all purposes under the Asset Purchase Agreement, the Elan Disclosure Schedule and the Trademark License Agreement, and shall be subject to all of the rights and obligations of the parties relating to the Product Trademarks contained in such documents; provided that, notwithstanding the foregoing or anything to the contrary contained in such documents, none of the representations and warranties of EPI contained in Article VI of the Asset Purchase Agreement shall apply to the Mark.
Acorda hereby represents and warrants to EPI that any use by Acorda of the Mark will comply with all applicable Laws. Acorda agrees that for purposes of its indemnification obligations relating to Assumed Liabilities contained within Section 11.02(b)(iv) of the Asset Purchase Agreement, the use by Acorda or its Affiliates of the Mark in connection with the Products shall be deemed to be included within the operation of the Business by Acorda or its Affiliates after the Closing.
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
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ELAN PHARMACEUTICALS, INC. |
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ACORDA THERAPEUTICS, INC. |
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Ron Cohen |
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President & CEO |
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Exhibit 10.27
DOMAIN NAME ASSIGNMENT AGREEMENT
This Domain Name Assignment Agreement (this Agreement ), dated as of July 21, 2004, is made by and between Elan Pharmaceuticals, Inc., a Delaware corporation ( Assignor ), and Acorda Therapeutics, Inc., a Delaware corporation ( Assignee ).
RECITALS
WHEREAS, Assignor and Assignee are parties to that certain Asset Purchase Agreement dated as of July 21, 2004 (the Asset Purchase Agreement );
WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings given to such terms in the Asset Purchase Agreement;
WHEREAS, Assignor has registered and adopted the Internet domain names set forth on Schedule A attached hereto and incorporated herein by reference (the Domain Names ) with Network Solutions (together with any affiliated or other entity that is responsible for the registration of domain names in the United States, NSI ); and
WHEREAS, Assignee is acquiring all right, title and interest in and to the Domain Names from Assignor pursuant to the terms of the Asset Purchase Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
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ACORDA THERAPEUTICS, INC. |
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[SIGNATURE PAGE TO DOMAIN NAME ASSIGNMENT AGREEMENT]
SCHEDULE A
DOMAIN NAMES
1. ZANAFLEX.COM
2. ZANAFLEX.ORG
3. ZANAFLEX.NET
4. ZANAFLEX BIZ
5. ZANAFLEX.US
6. ZANAFLEX.INFO
Exhibit 10.28
BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
KNOW ALL MEN BY THESE PRESENTS, on this 21st day of July, 2004, pursuant to the terms of that certain Asset Purchase Agreement dated as of July 21, 2004 (the Asset Purchase Agreement ) by and between Elan Pharmaceuticals, Inc., a Delaware corporation ( Seller ), and Acorda Therapeutics, Inc., a Delaware corporation ( Buyer ), this Bill of Sale and Assignment and Assumption Agreement (this Bill of Sale ) is being executed and delivered by Seller and Buyer. The execution and delivery of this Bill of Sale is a closing delivery requirement pursuant to Section 5.02(a)(i) of the Asset Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:
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IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale to be executed and delivered as of the date and year first above written.
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[SIGNATURE PAGE TO BILL OF SALE]
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IN WITNESS WHEREOF, the parties hereto have caused this Bill of Sale to be executed and delivered as of the date and year first above written.
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ACORDA THERAPEUTICS, INC. |
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[SIGNATURE PAGE TO BILL OF SALE]
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Exhibit 10.29
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, OTHER THAN TO AFFILIATES, IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH CONVERTIBLE PROMISSORY NOTE OR SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL WHO SHALL BE AND WHOSE OPINION SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION STATING THAT SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND APPLICABLE STATE SECURITIES LAWS.
ACORDA THERAPEUTICS, INC.
LIMITED
RECOURSE CONVERTIBLE PROMISSORY NOTE
$5,000,000.00 |
New York, New York |
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January 22, 1997 |
FOR VALUE RECEIVED, Acorda Therapeutics, Inc., a Delaware corporation (the Company), hereby promises to pay to Elan International Services, Ltd., a Bermuda corporation (the Holder), the principal sum of Five Million Dollars ($5,000,000.00), plus interest compounded annually on the unpaid balance commencing to accrue from and after the first anniversary of the date hereof at a rate of three percent (3%) per annum payable upon the earlier of the prepayment in accordance with Section 2 hereof or on the Maturity Date (as defined below).
This Promissory Note is issued in connection with that certain Series B and Series C Preferred Stock, Convertible Note and Warrant Purchase Agreement, dated as of January 22, 1997 (the Purchase Agreement) between the Company and the Holder, and that certain License and Supply Agreement, dated as of January 22, 1997 (the License Agreement), between the Company and Elan Corporation, plc.
All payments of principal and accrued interest made in accordance with this Promissory Note are to be made at the address of the Holder as indicated on the signature page hereto, or at such other address as the Holder may designate from time to time by written notice to the Company. Such payments may be made (i) by check or wire transfer in next day United States funds, (ii) by delivery of certificates evidencing shares of the Companys Common Stock, if the Company is then a reporting issuer registered under Section 12 of the Securities Exchange Act of 1934, as amended, or (iii) any combination thereof. Where payment is made in shares of the Companys Common Stock, such stock will be valued for purposes hereof at 100% of its Market Value if such shares have been registered under the Securities Act of 1933, as amended (the 1933 Act), and freely tradeable by the Holder without restriction under applicable federal or state securities laws, and will be valued for purposes hereof at 80% of its Market Value if such shares are restricted securities within the meaning of Rule 144 under the 1933 Act. Market Value shall mean the average of the closing sales prices of the Companys Common Stock as reported by Nasdaq (or other principal securities exchange on which the Companys Common Stock may then be traded) for the fifteen (15) trading days ending on the third day preceding the date of payment.
The Holder expressly acknowledges that all payments of principal and accrued interest under this Promissory Note shall be derived from the sales of the Products as described below in this paragraph. In the event that in any fiscal year of the Company, the Companys Gross Margin (as defined below) is less than $5 million, then, in such event, notwithstanding the other provisions of this Promissory Note, the Company shall be obligated to pay to the Holder in respect of payment of principal and accrued interest next due and payable following the end of such fiscal year an amount equal to the lesser of (x) the amount of principal and accrued interest otherwise payable hereunder for each year or (y) an amount equal to 50% of such Gross Margin; provided, that in the event that clause (y) above is applicable, the difference between the amount described in clause (x) above and the amount described in clause (y) above in respect of such fiscal year shall be deferred and carried forward until such succeeding fiscal year or fiscal years
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of the Company in respect of which there is any excess of the amount of the Gross Margin over the amount otherwise payable under this Promissory Note (i.e., without regard to this paragraph), in which case, such excess amount described in this proviso shall be applied to pay such deferred and carried forward amount; provided, further, that the maximum number of fiscal years during which any amount of principal and interest may be deferred hereunder shall not exceed two, after which period the Companys obligation to pay such deferred principal and interest shall resume. Gross Margin for each fiscal year of the Company shall be determined by an audit in accordance with generally accepted accounting principles consistently applied and shall mean the difference between the net revenues derived from the Products and the cost of sales in respect thereof (including, without limitation, all direct costs such as materials, insurance, freight, discounts and similar costs) and an appropriate allocation of corporate overhead (but excluding research and development expenses) as reasonably determined by the Company.
If action is instituted to collect on this Promissory Note, the Company promises to pay all costs and expenses, including reasonable attorneys fees, incurred in connection with such action. The Company also agrees to pay on demand all costs and expenses of the Holder, including reasonable attorneys fees, in connection with the enforcement or attempted enforcement of, and preservation of any rights under, this Promissory Note.
Interest payable under this Promissory Note shall be calculated on the basis of actual number of days elapsed over a year of 365 days. All payments received by the Holder hereunder will be applied first to costs of collection and other costs and expenses owing hereunder or in connection herewith, if any, then to interest and the balance to principal.
No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or any other right of the Holder, nor shall any delay, omission or waiver of any one occasion be deemed a bar to or waiver of the same or any other right or any other occasion. The Company and every endorser and guarantor of this Promissory Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person or entity primarily or secondarily liable.
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(x) the principal amount of this Promissory Note to be converted, by
(y) $12.50.
The right and option of the Holder to convert the unpaid principal amount of this Promissory Note into Series D Preferred shall terminate upon the first to occur of: (i) the termination of this Promissory Note as a result of a Committee Termination; or (ii) the payment (or prepayment) by the Company of all amounts owing under this Promissory Note (subject to the notice requirements of Section 2 hereof). For purposes of this Note, Series D Preferred shall be deemed to include the Common Stock of the Company upon the automatic conversion of all of the outstanding Preferred of the Company in accordance with the provision of the Companys Certificate of Incorporation.
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IN WITNESS WHEREOF , this Limited Recourse Convertible Promissory Note has been duly executed and delivered as of the date first above written.
ACORDA
THERAPEUTICS, INC.
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Exhibit 10.30
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH THE SALE OR DISTRIBUTION THEREOF. NEITHER THIS CONVERTIBLE PROMISSORY NOTE NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, OTHER THAN TO AFFILIATES, IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH CONVERTIBLE PROMISSORY NOTE OR SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL WHO SHALL BE AND WHOSE OPINION SHALL BE REASONABLY SATISFACTORY TO THE CORPORATION STATING THAT SUCH OFFER, SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT AND APPLICABLE STATE SECURITIES LAWS.
ACORDA THERAPEUTICS, INC.
FULL RECOURSE CONVERTIBLE PROMISSORY NOTE
$ 2,500,000.00 |
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New York, New York |
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January 22, 1997 |
FOR VALUE RECEIVED, Acorda Therapeutics, Inc., a Delaware corporation (the Company), hereby promises to pay to Elan International Services, Ltd., a Bermuda corporation (the Holder) the principal sum of Two Million Five Hundred Thousand Dollars ($2,500,000.00), without interest, until paid or converted in accordance with the terms hereof, payable on the Maturity Date (as defined below).
This Promissory Note is issued in connection with that certain Series B and Series C Preferred Stock, Convertible Note and Warrant Purchase Agreement, dated as of January 22, 1997 (the Purchase Agreement) between the Company and the Holder, and that certain License and Supply Agreement, dated as of January 22, 1997 (the License Agreement), between the Company and Elan Corporation, plc.
Section 1. Payment . If the Holder has not converted the outstanding principal hereunder into Preferred Stock in accordance with Section 3 hereof by the date which is the first anniversary after the first Regulatory Approval (as defined below)(the Maturity Date), the Company shall be obligated to pay the outstanding principal sum remaining on this Promissory Note to Holder in seven (7) equal installments, the first of which shall be paid on the Maturity Date, and the balance of which shall be paid on the six (6) successive anniversaries of the Maturity Date; provided, however, that if (i) the Committee (as defined in the License Agreement) reasonably determines that such Regulatory Approval is unlikely to be obtained or shall not be obtained in a timely manner and provides written notice (the Notice) thereof to the Company and the Holder (a Committee Termination), or (ii) the Company otherwise determines to terminate the License Agreement as a result of its reasonable and good faith belief
that the market for the Products (as defined in the License Agreement) is not economically significant and there is not at such time a material default by the Company thereunder, which termination complies with the provisions of the License Agreement (a Company Termination), then, subject to earlier termination, the Company shall be obligated to pay the outstanding principal sum remaining on this Promissory Note to Holder in fifteen (15) equal installments, the first of which shall be paid on the first anniversary after the date of the Notice, and the balance of which shall be paid on the fourteen (14) successive anniversaries of the date of the Notice. Regulatory Approval shall mean (x) approval for the sale and marketing of one or more of the Products by the United States Food and Drug Administration or (y) approval for the sale and marketing of one or more of the Products by the CPMP in the European Union and/or not more than one of the applicable regulatory authorities in the United Kingdom, France or Germany denying such approval.
All payments of principal made in accordance with this Promissory Note are to be made at the address of the Holder as indicated on the signature page hereto, or at such other address as the Holder may designate from time to time by written notice to the Company. Such payments may be made (i) by check or wire transfer in next day United States funds, (ii) by delivery. of certificates evidencing shares of the Companys Common Stock, if the Company is then a reporting issuer registered under Section 12 of the Securities Exchange Act of 1934, as amended, or (iii) any combination thereof. Where payment is made in shares of the Companys Common Stock, such stock will be valued for purposes hereof at 100% of its Market Value if such shares have been registered under the Securities Act of 1933, as amended (the 1933 Act), and freely tradeable by the Holder without restriction under applicable federal or state securities laws, and will be valued for purposes hereof at 80% of its Market Value if such shares are restricted securities within the meaning of Rule 144 under the 1933 Act. Market Value shall mean the average of the closing sales prices of the Companys Common Stock as reported by Nasdaq (or other principal securities exchange on which the Companys Common Stock may then be traded) for the fifteen (15) trading days ending on the third day preceding the date of payment.
If action is instituted to collect on this Promissory Note, the Company promises to pay all costs and expenses, including reasonable attorneys fees, incurred in connection with such action. The Company also agrees to pay on demand all costs and expenses of the Holder, including reasonable attorneys fees, in connection with the enforcement or attempted enforcement of, and preservation of any rights under, this Promissory Note.
No delay or omission on the part of the Holder in exercising any right hereunder shall operate as a waiver of such right or any other right of the Holder, nor shall any delay, omission or waiver of any one occasion be deemed a bar to or waiver of the same or any other right or any other occasion. The Company and every endorser and guarantor of this Promissory Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person or entity primarily or secondarily liable.
Section 2. Prepayment . Subject to section 3.1, the Company, at its option, may at any time on or after the date hereof prepay in whole or in part, without penalty, the principal
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balance of this Promissory Note by giving written notice to the Holder at least thirty (30) days prior to the date of such prepayment; provided, however, that during such thirty (30) day period, the holder shall be entitled to convert the principal balance of this Promissory Note in accordance with the provisions of Section 3 hereof .
Section 3. Conversion .
(x) the principal amount of this Promissory Note to be converted, by
(y) the greater of:
Provided, however, that the Company shall be obligated to provide prompt notice to the Holder of its intent to negotiate terms with respect to any Institutional Financing, and thereafter, the Holders right of conversion (and the Companys right to prepay under Section 2) may not be exercised during the thirty (30) day period that precedes the closing date of any Institutional Financing.
In the event that the denominator of the above formula shall be determined by reference to (y)(a), then Preferred shall mean the Series B Preferred Stock of the Company. In the event that the denominator of the above formula shall be determined by reference to (y)(b), then Preferred shall mean shares of a series of Preferred Stock of the Company which shall be convertible initially into one fully paid and nonassessable share of the Common Stock of the Company, in accordance with the same terms and conditions and having the rights, preferences and privileges substantially on parity with those of the Companys Series B Preferred Stock as set forth in the Companys Amended and Restated Certificate of Incorporation (the Certificate).
For the purposes of this Section 3.1, an Institutional Financing shall mean a bona fide equity financing of the Company occurring after the date hereof which is completed with any institutional and/or venture capital or similar financing sources.
The right and option of the Holder to convert the unpaid principal amount of this Promissory Note into Preferred shall terminate upon the payment (or prepayment) by the Company of all amounts owing under this Promissory Note (subject to the notice requirements of Section 2 hereof). For purposes of this Section 3.1, Preferred shall be deemed to include the
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Common Stock of the Company upon the automatic conversion of all of the outstanding Preferred of the Company in accordance with the provisions of the Certificate.
Section 4. Senior Indebtedness . The Company agrees that it shall not, after the date hereof, incur any senior indebtedness to this Promissory Note and the indebtedness evidenced hereby. Senior Indebtedness shall mean the principal of and unpaid interest on any secured or other indebtedness of the Company which purports to provide for a preference or priority in payment to this Promissory Note and the indebtedness evidenced hereby; provided, however, that this term shall exclude (i) the principal off and unpaid interest on any amounts borrowed or to be borrowed from, or owing to, a bank, trust company, insurance company or other financial institution regularly engaged in the business of lending money, whether secured or unsecured, (ii) amounts owed or to be owed to equipment lessors pursuant to equipment lease lines (so long as recourse is limited to the specific item of equipment); and (iii) amounts owed or to be owed to trade creditors in the ordinary course of business, in accordance with reasonable and customary business practices.
Section 5. Miscellaneous .
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IN WITNESS WHEREOF , this Full Recourse Convertible Promissory Note has been duly executed and delivered as of the date first above written.
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Exhibit 10.31
SECURITIES AMENDMENT AGREEMENT
AMONG
ELAN CORPORATION, PLC,
ELAN INTERNATIONAL SERVICES, LTD.
AND
ACORDA THERAPEUTICS, INC.
THIS SECURITIES AMENDMENT AGREEMENT made this 26th day of September, 2003 (this Agreement )
AMONG:-
(1) ELAN CORPORATION, PLC , a public limited company incorporated under the laws of Ireland and having its registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland ( Elan Corp );
(2) ELAN INTERNATIONAL SERVICES, LTD., an exempted limited liability company incorporated under the laws of Bermuda, and having its registered office at Clarendon House, 2 Church St., Hamilton, Bermuda, a wholly-owned subsidiary of Elan Corp ( EIS ); and
(3) ACORDA THERAPEUTICS, INC. , a Delaware corporation having its principal place of business at 15 Skyline Drive, Hawthorne, NY 10532, United States of America ( Acorda ).
RECITALS
A. Acorda and EIS have entered into agreements whereby Acorda sold and EIS purchased certain securities of Acorda and such parties agreed to certain matters related to the ownership of such securities. Specifically:
(i) EIS and Acorda entered into a Preferred Stock, Convertible Note and Warrant Purchase Agreement dated as of January 22, 1997 (the 1997 Securities Purchase Agreement );
(ii) EIS and Acorda entered into a Securities Purchase Agreement dated April 21, 1998 (the 1998 Securities Purchase Agreement );
(iii) EIS and Acorda entered into a Subscription Agreement dated as of August 6, 1999 (the 1999 Securities Purchase Agreement );
(iv) Acorda and certain stockholders of Acorda including EIS entered into an Amended and Restated Registration Rights Agreement with respect to the capital stock of Acorda dated January 22, 1997, as amended and restated July 7, 1998, August 6, 1999, December 20, 2000 and May 8, 2003, as a result of which, inter alia , additional purchasers were added as parties to such agreement (as amended and restated, the Acorda Registration Rights Agreement ); and
(v) Elan Corp, Acorda and certain other stockholders entered into an Amended and Restated Stockholders Agreement dated December 20,
2000, as amended and restated as of May 8, 2003 (the Stockholders Agreement ).
B. The Parties have entered into a Termination Agreement of even date herewith (the Termination Agreement ).
C. Simultaneously with the execution of the Termination Agreement, Elan Corp and Acorda are entering into a Amended and Restated License and Supply Agreement, pursuant to which, among other things, certain of the parties thereto are amending and restating that certain License Agreement (the Restated Elan License Agreement ) by and among Acorda, Elan Corp and MS Research and Development Corporation ( MS R&D ).
D. The Parties desire to enter into this Agreement to set forth their agreements relating to certain matters relating to: (i) the securities of Acorda held by Elan, (ii) amendments to the 1997 Securities Purchase Agreement, the Limited Recourse Note (as defined below), the Full Recourse Note (as defined below), the Acorda Registration Rights Agreement, the Second Closing Warrant and the SSDA (collectively, the Amended Finance Documents ); and (iii) Board observation rights in favor of EIS.
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS
Capitalized terms used in this Agreement shall have the same meanings assigned to them in the Termination Agreement , unless such terms are expressly defined to the contrary in this Agreement.
Affiliate shall mean any corporation or entity controlling, controlled or under the common control of any other corporation or entity. For the purpose of this definition, (i) control shall mean direct or indirect ownership of fifty (50%) percent or more of the stock or shares entitled to vote for the election of directors and (ii) MS R&D shall not be an Affiliate of Elan Corp, EPIL II or EIS.
Effective Date shall mean the date of this Agreement.
Elan shall mean Elan Corp and its Affiliates.
EPIL II shall mean Elan Pharmaceuticals Investment II, Ltd. an exempted limited liability company incorporated under the laws of Bermuda.
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Force Majeure shall mean causes beyond a Partys reasonable control, including, without limitation, acts of God, fires, strikes, acts or war or terrorism, or intervention of a governmental authority.
Full Recourse Note shall mean the Full Recourse Convertible Promissory Note dated January 22, 1997 in the principal amount of $2,500,000 issued by Acorda to EIS.
Limited Recourse Note shall mean the Limited Recourse Convertible Promissory Note dated January 22, 1997 in the principal amount of $5,000,000 issued by Acorda to EIS.
Party shall mean Elan Corp, EIS, Acorda or MS R&D, as the case may be, and Parties shall mean all such parties together.
Second Closing Warrant shall mean the Second Closing Warrant to up to 100,000 Shares of the Series B Preferred Stock of Acorda dated February 4, 2007 having an exercise price of $2.00 per share issued to EIS.
2. Milestone Purchases . The Parties hereto acknowledge and agree that none of Elan Corp, EIS, EPIL II or their respective affiliates, subsidiaries, successors or assigns are obligated to purchase additional securities of or from Acorda, or their respective affiliates or subsidiaries, successors or assigns.
3. Transfer Restrictions . The Parties hereby agreed to amend the Amended Finance Agreements as set forth hereinbelow:
3.1 1997 Securities Purchase Agreement
(a) Section 8.1 of the 1997 Securities Purchase Agreement is hereby amended by changing all references to 50,000 of the Shares to 2,200,000 of the Shares. The references to 2,200,000 shares shall be subject to adjustment for stock splits, combinations, reclassifications, and other similar events.
(b) Section 8.2 of the 1997 Securities Purchase Agreement is hereby deleted and replaced with the following:
Assignment of Rights to Financial Information . The rights granted pursuant to Section 8.1 may not be assigned or conveyed by the Purchaser or by any subsequent transferee of such rights without the prior written consent of the Company; provided , however , that the Purchaser and any transferee, after giving notice to the Company, may assign such rights to any transferee that acquires no fewer than 2,200,000 shares of Common Stock (subject to adjustment for stock splits, combinations, reclassifications, and other similar events) (including for purposes of determining the number of shares of Common Stock, any shares of
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Common Stock issued or issuable upon conversion or exercise of other securities), other than a transferee that is a Competitor. For purposes of this Agreement, Competitor shall mean any party engaged, directly or indirectly, in drug development for therapies for spinal cord injuries or multiple sclerosis.
(c) Section 10 of the 1997 Securities Purchase Agreement is hereby deleted in its entirety and replaced with the following:
The Purchaser shall not sell, assign or otherwise transfer any of the Securities to a Competitor without the prior written consent of the Company. In addition and in any event, the Purchaser shall be obligated to comply with all applicable restrictions on transfer under applicable federal and state securities laws.
3.2 Limited Recourse Note
(a) The first proviso of Section 1 of the Limited Recourse Note shall be amended and restated in its entirety to read as follows:
; provided, however, that if the Board of Directors of the Company reasonably determines that such Regulatory Approval is unlikely to be obtained or shall not be obtained in a timely manner and provides written notice (the Notice) thereof to the Holder (a Board Termination), then, on the thirtieth day following receipt of the Notice by the Holder (the Board Termination Date), the outstanding principal sum remaining on this Promissory Note, together with all accrued and unpaid interest thereon, shall be automatically converted into shares of the Series D Preferred Stock of the Company (the Series D Preferred) in accordance with Section 3.2 below effective as of the Board Termination Date, unless the Holder shall have delivered a written notice to the Company prior to the Board Termination Date of its desire to have such amount canceled (the Cancellation Right), in which event, such amount shall be canceled as of the Board Termination Date;
(b) Section 3.1 of the Limited Recourse Note shall be amended to:
(i) replace the reference to the Series D Preferred Stock of the Company (the Series D Preferred) with Series D Preferred;
(ii) insert the following parenthetical after reference to $12.50: (subject to adjustment for stock splits, combinations, reclassifications, and other similar events); and
(iii) amend and restate the first line of the second paragraph of Section 3.1 of the Limited Recourse Note to read in its entirety as follows: The right and option of the Holder to convert the unpaid principal amount of this Promissory Note into Series D Preferred shall terminate upon the first to occur of: (i) the automatic conversion thereof on the Board Termination Date; and (ii) the payment (or repayment) by the Company of all amounts owing under this
4
Promissory Note (subject to the notice requirements of Section 2 hereof).
(c) Section 3.2 shall be renumbered Section 3.3, and all references in the Limited Recourse Note to Section 3.2 (other than as set forth in this Agreement) shall become references to Section 3.3.
(d) A new Section 3.2 shall be inserted into the Limited Recourse Note to read in its entirety as follows:
Automatic Conversion into Series D Preferred Sock . Subject to the Holder exercising the Cancellation Right in accordance with Section 1 above, immediately prior to the Board Termination Date, the full unpaid principal balance and accrued interest outstanding under this Promissory Note at such time shall be automatically converted into fully paid and nonassessable shares of Series D Preferred at a rate which shall be equal to the quotient obtained by dividing:
(x) the principal amount of this Promissory Note plus all accrued and unpaid interest thereon, by
(y) $12.50 (subject to adjustment for stock splits, combinations, reclassifications, and other similar events).
(e) Section 5.7 of the Limited Recourse Note is hereby deleted and replaced in its entirety to read as follows:
Transfer Restrictions . The Holder shall not sell, assign or otherwise transfer all or any portion of this Promissory Note to a Competitor (as defined below) without the prior written consent of the Company. In addition and in any event, the Holder shall be obligated to comply with all applicable restrictions on transfer under applicable federal and state securities laws. For purposes of this Note, Competitor shall mean any party engaged, directly or indirectly, in drug development for therapies for spinal cord injuries or multiple sclerosis.
(f) All references to Committee Termination and Committee Termination Date shall become references to Board Termination and Board Termination Date.
3.3 Full Recourse Note
(a) The first clause of Section 1 of the Full Recourse Note shall be amended and restated in its entirety to read as follows:
If the Holder has not converted the outstanding principal hereunder into Preferred Stock in accordance with Section 3 hereof by the date which is the earlier of (i) the first anniversary after the first Regulatory Approval (as defined below) and (ii) September 30, 2008 (the Maturity Date),
5
(b) The first proviso of Section 1 of the Full Recourse Note shall be amended to replace the reference to the Committee (as defined in the License Agreement) with the Board of Directors of the Company.
(c) The following proviso shall be inserted at the end of the first sentence of Section 1 of the Full Promissory Note, immediately prior to the definition of Regulatory Approval:
; provided further, however, if no Regulatory Approval has been received on or prior to the Maturity Date, the Company shall have the right to extend the Maturity Date by six month periods (each, an Extension Period) by delivery of a written notice to the Holder certifying that it is the reasonable, good faith belief, after due diligence and inquiry by the Companys Board of Directors, of the Company that such Regulatory Approval is likely to be obtained in a timely manner (each, an Extension Notice), at least 30 days prior to the Maturity Date or the then current Extension Period, as the case may be.
(d) Section 5.6 of the Full Recourse Note is hereby deleted and replaced in its entirety to read as follows:
Transfer Restrictions . The Holder shall not sell, assign or otherwise transfer all or any portion of this Promissory Note to a Competitor (as defined below) without the prior written consent of the Company. In addition and in any event, the Holder shall be obligated to comply with all applicable restrictions on transfer under applicable federal and state securities laws. For purposes of this Note, Competitor shall mean any party engaged, directly or indirectly, in drug development for therapies for spinal cord injuries or multiple sclerosis.
(e) All references to Committee Termination shall become references to Board Termination and all references to Committee shall become references to the Board of Directors of the Company).
3.4 Acorda Registration Rights Agreement
(a) Acorda hereby agrees that the amendments to the Acorda Registration Rights Agreement set forth in this Clause 3.4 constitute a superseding agreement between Acorda and Elan that does not require the consent of the other parties to the Acorda Registration Rights Agreement.
(b) Acorda agrees that the legend set forth in Section 2(b) of the Acorda Registration Rights Agreement shall be amended and restated to read in its entirety as follows:
THESE SECURITIES ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN AN AGREEMENT BETWEEN THE
6
COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(c) Acorda agrees that the restrictions set forth in Section 3 of the Acorda Registration Rights Agreement shall not apply to Elan or its transferees of any Restricted Securities (as defined in the Acorda Registration Rights Agreement); provided, however, Elan agrees to provide written notice to Acorda of any transfer of Restricted Securities to a third party which notice shall set forth the name of the relevant transferee, the date of such transfer and the Restricted Securities transferred and which such notice shall also be accompanied by, if requested by Acorda, at Elans expense, an unqualified written opinion of legal counsel who shall and whose legal opinion shall be satisfactory to Acorda, which opinion shall be addressed to Acorda to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act of 1933, as amended.
(d) Acorda agrees that the reference to 100,000 shares in Section 13 of the Acorda Registration Rights Agreement shall be subject to adjustment for stock splits, combinations, reclassifications and other similar events.
3.5 Second Closing Warrant . The first two sentences of Section 10 (Transfers) of the Second Closing Warrant are hereby deleted and replaced in their entirety with the following:
This Warrant may be transferred or assigned by the Warrantholder, in whole or in part, subject to compliance by the Warrantholder with all applicable federal and state securities laws, without the prior written consent of the Company; provided, however, any assignee or transferee of this Warrant (permitted assignee) shall be required to accept this Warrant subject to all rights and obligations of the Warrantholder as set forth herein.
4. Board Observation Right . Subject to earlier termination as provided herein, as long as Elan holds not less than 2,200,000 shares of Acordas outstanding common stock on a fully-diluted basis (subject to stock splits, combinations, reclassifications and other similar events), Elan shall have the right to have an observer (the Elan Observer) present at two meetings each year of Acordas board of directors, the determination of which meetings to be at Acordas sole discretion. The Elan Observer may be excused from any meeting or discussion by the Board of Directors to the extent that the Board may deem it to be inappropriate, in the judgment of the Board, for the Elan Observer to be present during any such meeting or discussion. The out-of-pocket expenses of the Elan Observer with respect to attending such meetings will be reimbursed by Acorda to the same extent that Acorda reimburses such expenses of its Directors. Elan may transfer its right to the Elan Observer to any third party to which it sells, transfers or assigns not less than 2,200,000 shares of Acordas outstanding common stock on a fully-diluted basis (subject to stock splits, combinations, reclassifications and other similar events). The observer right provided for herein shall terminate upon the earlier to occur of (i) the closing of an initial public offering of Acordas securities or (ii) the date upon which Elan
7
or its transferee ceases to own five percent (5%) or more of Acordas outstanding common stock on a fully-diluted basis.
5. General
5.1 Governing law and jurisdiction :
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law principles under the laws of the State of New York.
(b) For the purposes of this Agreement, the Parties submit to the nonexclusive jurisdiction of the State and Federal Courts of New York.
5.2 Assignment :
(a) Subject to Clause 5.2(b), this Agreement shall not be assigned by any Party without the prior written consent of the others, save that any Party:
(i) may assign this Agreement in whole or in part and delegate its duties hereunder to its Affiliate or Affiliates without such consent; and
(ii) may assign its rights and obligations to a successor (whether by merger, consolidation, reorganization or other similar event) or purchaser of all or substantially all of its assets relating to such Partys technology related to this Agreement, provided that such successor or purchaser has agreed in writing to assume all of such Partys rights and obligations hereunder and a copy of such assumption is provided to the other Parties.
(b) For the avoidance of doubt, nothing in this Clause 5.2 shall affect the provisions governing assignment of securities set forth elsewhere in this Agreement.
5.3 Notices :
(a) Any notice to be given under this Agreement shall be sent in writing in English by registered airmail, internationally recognized courier or telefaxed to the following addresses:
If to Acorda at: |
|
Acorda Therapeutics, Inc. |
15 Skyline Drive |
Hawthorne, NY 10532 |
8
or to such other address(es) and telefax numbers as may from time to time be notified by any Party to the others hereunder.
(c) Any notice sent by mail shall be deemed to have been delivered within seven (7) working days after dispatch or delivery to the relevant courier and notice sent by fax shall be deemed to have been delivered upon confirmation receipt. Notice of change of address shall be effective upon receipt.
5.4 Waiver . No waiver of any right under this Agreement shall be deemed effective unless contained in a written document signed by the Party charged with such waiver, and no waiver of any breach or failure to perform shall be deemed to be a waiver of any future breach or failure to perform or of any other right arising under this Agreement.
5.5 Severability . If any provision in this Agreement is agreed by the Parties to be, or is deemed to be, or becomes invalid, illegal, void or unenforceable under any law that is applicable hereto:
(a) such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable; or
9
(b) if it cannot be so amended without materially altering the intention of the Parties, it will be deleted, with effect from the date of this Agreement or such earlier date as the Parties may agree, and the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.
5.6 Further Assurances . At the request of any of the Parties, the other Party or Parties shall (and shall use reasonable efforts to procure that any other necessary parties shall) execute and perform all such documents, acts and things as may reasonably be required subsequent to the signing of this Agreement for assuring to or vesting in the requesting Party the full benefit of the terms hereof.
5.7 Successors . This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
5.8 Amendments . No amendment, modification or addition hereto shall be effective or binding on any Party unless set forth in writing and executed by a duly authorized representative of each Party.
5.8 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.
5.9 Costs . Each Party shall bear its own costs and expenses in connection with the transactions contemplated by this Agreement.
5.10 Force Majeure . No Party to this Agreement shall be liable for failure or delay in the performance of any of its obligations hereunder if such failure or delay results from Force Majeure, but any such failure or delay shall be remedied by such Party as soon as practicable.
5.11 Relationship of the Parties . The Parties are independent contractors under this Agreement. Nothing herein contained shall be deemed to create or establish an employment, agency, joint venture, or partnership relationship between the Parties or any of their agents or employees, or any other legal arrangement that would impose liability upon one Party for the act or failure to act of another Party. No Party shall have any express or implied power to enter into any contracts, commitments or negotiations or to incur any liabilities in the name of, or on behalf of, another Party, or to bind another Party in any respect whatsoever.
5.11 Entire Agreement .
(a) T his Agreement, the Amended Finance Documents, the 1998 Securities Purchase Agreement, the Termination Agreement and the Restated Elan License set forth all of the agreements and understandings between the
10
Parties with respect to the subject matter hereof. There are no agreements or understandings with respect to the subject matter hereof, either oral or written, between the Parties other than as set forth in such agreements and documents.
(b) No provision of this Agreement shall be construed so as to negate, modify or affect in any way the provisions of any other agreement between the Parties unless specifically provided herein and only to the extent so specified.
(c) Other than as expressly set forth herein, the Amended Finance Documents remain in full force and effect and all future references to them shall be deemed to give effect to the amendments set forth herein.
THE REMAINDER OF THIS PAGE
HAS BEEN INTENTIONALLY LEFT BLANK.
11
IN WITNESS WHEREOF the Parties have executed this Agreement.
SIGNED |
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Elan Corporation, plc |
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Monksland Holdings BV |
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BY: |
/s/ Klaas van Blanken |
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BY: |
/s/ Pieter Bos |
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Name: Monksland Holdings BV |
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Title: Proxyholder |
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SIGNED |
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Elan International Services, Ltd |
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BY: |
/s/ Debra Buryj |
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Name: Debra Buryj |
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Title: Vice President |
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SIGNED |
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Acorda Therapeutics, Inc. |
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BY: |
/s/ Ron Cohen |
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Name: Ron Cohen |
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Title: President & Chief Executive Officer |
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12
Exhibit 10.32
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Fampridine
Tablets (10mg, 15mg, 20mg, 25mg)
Technical Transfer Program Proposal for
Commercial Registration
For
Acorda Therapeutics
Proposal No. ELN-FQ-0001-1002-R4
Dated: February 26, 2003
Confidential
TABLE OF CONTENTS
2
Patheon Proposal #
ELN-FQ-0001-1002-R4
29-Feb-03
1.0 Project Scope
Patheon Inc. (Patheon) will perform manufacturing and analytical services in order to manufacture Fampridine Tablets (10mg, 15mg, 20mg, 25mg) for Acorda Therapeutics (Client). Analytical methods will be assessed to support the manufacturing program.
The Budget Summary for this proposal is presented in Appendix A.
Patheon will commence the activities described in this proposal following the execution of the Contract by both parties.
Reference standards for Fampridine and impurities and tablet samples will be provided by the Client. Source technical documents (e.g., current Elan methods, validation reports, and master batch records, etc) and an HPLC column for initiation of method familiarization activities will be provided by the Client. Patheon will be responsible for the generation of documentation and protocols required to support methods familiarization, methods transfer, manufacturing studies, and process transfer activities to be performed as part of this proposal. The Client will review and approve all protocols generated by Patheon prior to execution of studies with the exception of the Clean Residuals Assay method. Patheon will provide final reports at key stages in the project, as indicated in this proposal. The Client will review and approve final reports.
2.0 Environmental , Health and Safety
Prior to the commencement of analytical method development, formulation development and manufacturing activities, a thorough review by Patheon of the Environmental, Health and Safety (EH&S) requirements for Fampridine will be completed. The fee assumes the EH&S review will determine that Fampridine can be safely handled at Patheon. A summary report for this evaluation will be provided to the Client.
Patheon will perform the required method familiarization, method transfer, method development and/or method validation work required to support the manufacture of Fampridine Tablets. Patheon is responsible for preparing all protocols. The Client will review and approve all protocols prior to execution of the work. Upon completion of individual studies, Patheon will prepare final reports to document results of all studies with the exception of the Clean Residuals Assay method. The Client will review and approve all reports before moving forward with activities that rely on results of the activities that are the subject of a report.
3
3.1 Cleaning Residuals Assay (Method Development and Validation)
Patheon will develop and validate the test methods required for testing cleaning residuals and swab samples in order to support the manufacturing program. Analytical protocols and report will be prepared by Patheon. The development and validation will challenge the following parameters:
System Suitability
Linearity
LOD
LOQ
Recovery / Accuracy
Repeatability
Intermediate Precision
Robustness
Specificity
Stability
3.2 Drug Substance Potency and Related Substance Assay (Method Transfer)
Patheon will transfer the test method required for drug substance testing in order to support the manufacturing program. The Client will supply Patheon in advance with the relevant Validation data to allow Patheon to set acceptance criteria for the protocol. Method Transfer protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the methods transfer results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing. The method transfer will challenge the following parameters:
System Suitability
LOD and LOQ
Specificity
Repeatability
Reproducibility
Robustness
3.3 Drug Substance Particle Size (Method Transfer)
Patheon will transfer the test method required for drug substance particle size testing in order to support the manufacturing program. The Client will supply Patheon in advance with the relevant Validation data to allow Patheon to set acceptance criteria for the protocol. Method Transfer protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the methods transfer results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing. The method transfer will challenge the following parameters:
Reproducibility
Robustness
Repeatability
4
3.4 Drug Substance Residual Solvent Assay (Method Verification)
Patheon will verify the test method required for drug substance residual solvent testing in order to support the manufacturing program. Analytical protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the method verification results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing. The method verification will evaluate the following parameters:
System Suitability
LOD and LOQ
Specificity
Repeatability
Reproducibility
3.5 Drug Substance Moisture by KF (Verification)
Patheon will verify the test method (up to 6 samples) required for drug substance moisture testing to ensure the method is precise and accurate in order to support the manufacturing program. Analytical protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the method verification results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing.
3.6 Drug Product Potency & Related Substance Assay, Two Methods (Method Transfer)
Patheon will perform method familiarization for the methods in advance of methods transfer. A report documenting the method familiarization results will be prepared by Patheon and submitted to the Client for approval prior to commencement of method transfer studies. The client will supply Patheon with the relevant validation data to allow Patheon to set acceptance criteria for the protocol
Patheon will transfer the test methods required for drug product potency and related substances testing in order to support the manufacturing program. It is noted that in addition to testing the coated finished product using Methods 1 and Method 2, a separate HPLC method will be used for the following:
content uniformity testing,
assay of the uncoated tablets
blend homogeneity testing.
Unit dose testing
Method Transfer protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. Final reports documenting the method transfer results will be prepared by
5
Patheon and submitted to the Client for approval prior to use of the methods for testing. The transfer will challenge the following parameters:
System Suitability
LOD and LOQ
Specificity
Repeatability
Reproducibility
Robustness
3.7 Dissolution Assay (Method Validation)
Patheon will perform full validation of the method required for testing dissolution of the drug product in order to support the manufacturing program. Analytical protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the method validation results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing. The validation will be performed according to ICH guideline requirements typically:
System Suitability
Linearity & Range
Accuracy
Precision (Reproducibility)
Robustness of dissolution parameters & HPLC Methodology
Specificity
Solution Stability
3.8 Drug Product Moisture by KF (Verification)
Patheon will verify the test method (up to 6 samples) required for drug product moisture testing to ensure that the method is precise and accurate in order to support the manufacturing program. Analytical protocols will be prepared by Patheon and submitted to the Client for approval prior to execution. A final report documenting the method verification results will be prepared by Patheon and submitted to the Client for approval prior to use of the method for release testing.
3.9 Release Testing of the Drug Substance , per Lot
Patheon will test drug substance for receiving and releasing for manufacture as per Clients CoA or as specified by Client instruction.
Note
:
Release testing of the excipients and drug product has been included as
Analytical Support under each section of the manufacturing.
6
Patheon will manufacture up to three feasibility batches of Fampridine Tablets at the 10mg strength. These batches will be approximately 50 kilograms each and will not be manufactured back-to-back. A protocol to evaluate blend times, tablet press parameters and coating parameters will be prepared by Patheon and submitted to the Client for approval prior to execution of the feasibility study. The protocol will specify a detailed sampling plan and acceptance criteria.
All excipients will undergo complete analytical release testing in compliance with USP/NF (if the Client requires additional testing on the excipients, this will be addressed and costed separately as an amendment to this proposal). Patheon will prepare a master batch record(s), which will be provided to the Client for approval prior to manufacturing and specifies manufacturing procedures and acceptance criteria.
The feasibility batches will not be GMP batches and will not undergo a full QA review; the batches will be bulk packaged. A report documenting the results of the feasibility studies will be prepared by Patheon and submitted to the Client for approval prior to proceeding to the registration batch production phase of this proposal.
Feasibility Manufacturing Process Train (50 kilograms):
325L Gallay
Beta Press
Vector Lab Coater
Comil
The following in-process and finished product testing is based upon the described tests.
Blend Analysis
Blend Homogeneity / uniformity of dosage (total of 10 samples)
Composite sample Assay
Flow Properties
Bulk and Tap Densities (Including one sieve analysis)
Coated Tablet Analysis:
Appearance
Weight Variation
Potency & Related Substances
Identification
Dissolution Profile
Physical Parameters (hardness and friability)
Moisture (KF)
7
Uncoated Tablet Analysis:
Content Uniformity (As per USP)
Physical Parameters (Note Weight thickness and hardness will be evaluated as part of in-process monitoring these are performed as part of the process) hardness and friability
Appearance
Moisture (KF)
5.0 Registration Manufacturing
Patheon will manufacture twelve registration batches of Fampridine Tablets (three of each tablet strength) that are colored and debossed tablets. These batches will be approximately 50 kilograms each and may be manufactured back-to-back. Processing parameters will be based on recommendations from the feasibility study. All excipients will undergo complete analytical release testing in compliance with USP/NF (if the Client requires addition testing on the excipients, this will be addressed and costed separately as an amendment to this proposal). Patheon will prepare a protocol and provide the protocol to the Client for approval prior to execution of the registration batch production work. The protocol will specify a detailed sampling plan and acceptance criteria. Patheon will prepare master batch records, which will be provided to the Client for approval prior to manufacturing; the batch records will specify manufacturing procedures and acceptance criteria.
The registration batches will be manufactured in accordance with cGMPs and will undergo a full QA review by Patheon. The batches will be packaged as follows by Patheon (packaging configuration split to be determined by Client):
10mg Tablets |
|
HDPE Bottles of 14s and 60s |
15mg Tablets |
|
HDPE Bottles of 14s and 60s |
20mg Tablets |
|
HDPE Bottles of 14s, 60s and 180s |
25mg Tablets |
|
HDPE Bottles of 14s, 60s and 180s |
(all packaging configurations will include desiccant, filler and induction seal)
Registration Manufacturing Process Train (50 kilograms):
325L Gallay
Beta Press
Vector Lab Coater
Comil
8
The following in-process and finished product testing will be conducted.
Blend Analysis:
Blend Homogeneity/uniformity of dosage (total of 10 samples)
Composite sample assay, appearance, and ID
Flow Properties
Bulk and Tap Densities (Including one sieve analysis)
Coated Tablet Analysis:
Appearance
Potency & Related Substances
Identification
Dissolution Profile
Physical Parameters (hardness and friability)
Moisture (KF)
Uniformity of dosage
Uncoated Tablet Analysis:
Weight Variation
Physical Parameters (hardness, and friability)
Appearance ID
Moisture (KF)
Assay
Patheon will provide copies of executed batch records to the Client with the associated completed sampling protocol and summary of results. The Client will review the batch records prior to initiation of registration stability studies by Patheon.
For quoting purposes a non-matrix approach has been suggested to monitor the 30 lots (12 Registration batches, two packaging formats for the 10 and 15mg strengths, and three packaging formats for 20 and 25mg strengths of Fampridine Tablets) as per ICH guidelines.
Additional samples will be stored as contingency samples if required to generate data for long-term stability of the product.
The following storage conditions and test-points are suggested for testing:
1, 2, 3 and 6 months for 40 ° C ± 2 ° C / 75% ± 5% RH
1, 2, 3, 6, 9, and 12 months for 30 ° C ± 2 ° C / 60% ± 5% RH*
3, 6, 9, 12, 18, 24 and 36 months for 25 ° C ± 2 ° C / 60% ± 5% RH
Contingency samples at 5 ° C, Ambient RH*
(* Tested only if required due to significant changes in the next level condition)
9
The analytical data used for the release of each lot manufactured at Patheon will be considered as initial (T=0) data if samples are placed on stability within 30 days of batch release.
Cost efficiencies for analytical testing have been built into the stability program based upon the number of samples pulled in a given month. The fee for this stability program assumes that all lots will be placed on stability at the same time. If these lots are not placed on stability at the same time, the fee will be adjusted accordingly through an Amendment to Proposal. The number of Pulls and costing is based on the assumption that no testing is required at 30 ° C/60%RH.
Pullpoint Month |
|
1 |
|
2 |
|
3 |
|
6 |
|
9 |
|
12 |
|
18 |
|
24 |
|
36 |
Number of Samples Pulled |
|
30 |
|
30 |
|
60 |
|
60 |
|
30 |
|
30 |
|
30 |
|
30 |
|
30 |
Therefore, the stability sample breakdown is:
0 Single Sample Pullpoints (0 Samples)
0 Double Sample Pullpoints (0 Samples)
0 More Than Two Sample Pullpoints (0 Samples)
0 More Than Five Sample Pullpoints (330 Samples)
9 More Than Ten Sample Pullpoints (330 Samples)
The following standard tests are usually performed as part of the Stability Program:
Potency &Related Substances
Dissolution Profile
Physical Appearance
Moisture
Hardness
Friability
This estimate is based on a full ICH program. Patheon will prepare the ICH stability protocol. The protocol will be approved by the Client prior to initiation of the stability studies. Patheon will provide results to the Client for each test interval that has been reviewed by Patheon quality assurance. Patheon will prepare a report at the 3 and 6 month test stations and will prepare reports at every subsequent 6 month test station thereafter (or at each 12 month test interval, as appropriate, based upon the protocol).
There is the possibility to reduce the fees for this work based on the mutual agreement between Patheon and the Client to matrix the testing design. The final cost is to be determined.
Patheon will provide project management support to monitor the progress of the project against established timelines and will update the Client of changes in events. The project manager will coordinate regular biweekly teleconference meetings and quarterly face-to-face meetings. The fee for project management is incorporated in the breakdown of each activity.
10
8.0 Assumptions , Terms and Conditions
1. Development Activities : Patheon shall undertake and perform the product development work described in this Proposal (the Development Activities) which when accepted by CLIENT shall become a contract binding on Patheon and CLIENT (the Contract). Notwithstanding the foregoing, CLIENT and Patheon acknowledge that certain changes are contemplated in the scope of the Development Activities the details and costs of which will be negotiated at a later date. No changes, deletions or additions to the Development Activities will be considered valid without prior written agreement between CLIENT and Patheon. Patheon shall notify Client, in advance of incurring any costs, when additional development activities by Patheon, beyond the Development Activities set forth in this Proposal, become necessary due to unforeseen events. Patheon shall not perform any additional development activities without CLIENT approval of such related costs.
It is assumed that, based on the information available to Patheon at this time, Patheon can safely perform the Development Activities at its Toronto Region Operations facility. If it is determined by Patheons Environmental Health and Safety personnel that any of the active ingredients are a Category III or Category IV compound, an occupational exposure level, then an air sampling method will be required at CLIENTs expense prior to commercialization. Patheon reserves the right, in its sole and absolute discretion, to conduct an air sampling method on Category I and II compounds, at such price and upon such terms as may be mutually agreed to between the parties prior to commercialization.
1.1 Intellectual Property: includes, without limitation, rights in patents, patent applications, trade-marks, trade-mark applications, trade-names, confidential information, trade secrets, inventions, copyrights, industrial designs.
1.2 Grant of Non-Exclusive License to Patheon : The CLIENT hereby grants to Patheon, for the term of the Contract, a royalty-free, non-exclusive license to use Clients Intellectual Property for the performance of the Development Activities. The nonexclusive license granted herein shall be limited to Intellectual Property of the CLIENT that is necessary for the performance of the Development Activities and Patheon shall not use such Intellectual Property for any other purpose than performance of the Development Activities. The non-exclusive license shall not include any right not expressly stated hereunder. CLIENT represents and warrants that as of the date of the Contract to the best of its knowledge, without conducting any inquiry, that the Development Activities performed by Patheon will not, to the best of CLIENTs belief, infringe any Intellectual Property held by any third party.
2. Supply of Products :
(a) CLIENT shall supply Patheon with sufficient bulk quantities of the active ingredients and certain excipients for Patheons use in conducting the Development Activities under this Proposal. Such ingredients and excipients shall by supplied by CLIENT at its expense.
11
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(b) Patheon shall purchase all other materials required to conduct the Development Activities. CLIENT shall pay Patheons direct cost thereof plus an additional [**] as a handling charge upon receipt of an invoice detailing such costs. Prior to making any such purchases in excess of [**], Patheon shall obtain CLIENT approval. In addition, Patheon shall obtain prior client approval for each and every purchase of other materials once the total amount invoiced to CLIENT during performance of the Development Activities exceeds [**].
3. Payment for Service :
(a) CLIENT shall pay Patheon for the services to be provided during the term of this Proposal in such amounts and in such manner as set forth in this Proposal. All amounts quoted are in USD funds and are valid for sixty (60) days from the date of this Proposal. All amounts quoted are subject to review by Patheon of all product specifications, development reports and, Environmental, Health and Safety assessment. One review with changes is included in the fee for final reports. Any additional changes shall be invoiced separately at the then prevailing hourly rates.
(b) Project specific items, which include but are not limited to special equipment, change parts, excipients, laboratory columns and reagents, tooling etc., obtained by Patheon from third party suppliers as well as services to be provided by any third party suppliers are subject to prior CLIENT approval, and will be billed back to CLIENT upon Patheons receipt of invoice from any supplier of Patheon. The purchase of project specific items and services are subject to the same prior approval requirements in Section 2 (b) of the Contract.
(c) Each Patheon invoice shall be due and payable within thirty (30) days of the date of such invoice.
4. Deposit : Prior to the commencement of any Development Activities by Patheon pursuant to this Proposal, Patheon shall have received from CLIENT a deposit in the amount set out in the Project Summary. This deposit amount will be held by Patheon as a deposit until the Development Activities, as modified from time to time, are fully completed or until this Contract expires or is terminated for whatever reason. The deposit amount shall be credited towards the final invoice for the Project. Patheon may apply this deposit amount against any accounts overdue in excess of 60 days of the date of the invoice. In addition, Patheon may, at its option, suspend all Development Activities until such time the outstanding amounts have been paid in full and the original deposit amount has been replenished.
5. Term and Termination : This Contract will take effect on the date of execution and shall continue until completion by Patheon of the Development Activities. Either party may terminate this Contract if the other party is in material breach of any provisions thereof and the breaching party fails to remedy any such breach within thirty (30) days of the notice of such breach by the non-breaching party. Additionally, CLIENT shall have the right to terminate this Contract immediately for any business reason.
In either such case, Patheon shall cease performance of the Development Activities upon termination and CLIENT shall pay to Patheon: (i) any fees and expenses due to Patheon for the
12
services rendered up to the date of termination; (ii) all actual costs incurred by Patheon to complete activities associated with the termination and close of the Project; and (iii) any additional costs incurred by Patheon in connection with the Project that are required to fulfill applicable regulatory and contractual requirements. Any re-scheduling of the Development Activities requested by CLIENT beyond one hundred twenty (120) days, notwithstanding a request made pursuant to Section 8.8, shall be deemed to be a termination.
All materials and supplies shall be picked up within five (5) business days of termination otherwise, a $20.00 per square foot per month surcharge will be assessed for storage.
6. Confidential Information : All proprietary or confidential information of either party that is disclosed or otherwise made known to the other party as a result of the Development Activities performed under this Contract shall be considered confidential property of the disclosing party (the Confidential Information). The Confidential Information shall be used by the receiving party, its employees and external advisors only for the purpose of performing the receiving partys obligations hereunder. For purposes of this paragraph, Confidential Information shall not be deemed to include any information that is (i) known to the receiving party at the time of the disclosure, as evidenced by its written records prior to disclosure by the disclosing party; (ii) is or becomes available publicly other than as a result of a breach of this Contract by the receiving party, (iii) obtained from a third party lawfully in possession of such information and under no obligation to maintain such information confidential or (iv) independently developed by the receiving party without use of the Confidential Information.
Each party agrees that it will not reveal, publish or otherwise disclose the Confidential Information of the other party to any third party without prior written consent of the disclosing party. However, disclosure of Confidential Information may be made if required by law or by any regulatory or governmental authority to which the receiving party or any of its respective affiliates may be subject, in each case, on prior written notice to the disclosing party, so that the disclosing party may determine whether to seek a protective order or other appropriate remedy. This obligation of confidentiality and non-disclosure shall remain in effect for a period of ten (10) years after the effective date of termination of this Contract.
7. Inventions, Etc. : All data, information and Intellectual Property generated or derived by Patheon as a result of Development Activities performed by Patheon under this Contract, to the extent it is specific to the development, manufacture, use and sale of the CLIENTs product the subject of the Development Activities (CLIENTs Product) shall be and remain the exclusive property of CLIENT. In addition, any data, information and Intellectual Property generated or derived by Patheon through the use of CLIENTs Intellectual Property that is not a result of the Development Activities performed by Patheon shall be the exclusive property of CLIENT. On the other hand, all data information and Intellectual Property generated or derived by Patheon as a result of Development Activities performed by Patheon under this Contract, which is not specific to the development the development, manufacture, use and sale of the CLIENTS product and has application beyond the CLIENTs Product shall be and remain the exclusive property of Patheon. Notwithstanding the foregoing, CLIENT acknowledges that Patheon possesses certain inventions, processes, know-how, trade secrets, other intellectual properties and other assets, including but not limited to, analytical methods, computer technical expertise and
13
software which have been independently developed by Patheon (collectively Patheon Property). CLIENT and Patheon agree that any Patheon Property or improvement thereto which are used, improved, modified or developed by Patheon under or during the term of this Contract, is the product of Patheons technical expertise possessed and developed by Patheon prior to or during performance of this Contract and are the sole and exclusive property of Patheon.
8. Errors and Omissions : In the event of a material error by Patheon in the performance of the Development Activities, CLIENT shall have the option to request Patheon to (1) repeat the service at Patheons own costs provided that CLIENT provides the active ingredient, or (2) reimburse CLIENT for the price for that particular service, excluding the cost of the active ingredient. In any event, Patheon shall not reimburse the amount of the active ingredient.
9. Indemnification :
(a) CLIENT shall defend, indemnify and hold harmless Patheon and its affiliates and their respective directors, officers, employees and agents (together with Patheon, the Patheon Indemnitees) from and against any and all claims, actions, causes of action, damages, liabilities, expenses including reasonable attorneys fees and expenses (collectively, Losses) to and in favour of third parties (other than affiliates) resulting from, relating to, or arising from: (i) any breach by CLIENT of any of its obligations under this Contract; and (ii) the Intellectual Property rights of third parties except to the extent such Losses are: (I) determined to have resulted from the negligence or willful misconduct of Patheon; or (2) for which Patheon is obligated to indemnify the CLIENT Indemnitees pursuant to Section 9(b).
(b) Patheon shall defend, indemnify and hold harmless CLIENT and its affiliates and their respective directors, officers, employees and agents (together with CLIENT, the CLIENT Indemnitees) from and against any and all Losses resulting from, relating to, or arising from any breach by Patheon of any of its obligations under this Contract except to the extent such Losses are: (i) determined to have resulted from negligence or willful misconduct of CLIENT; or (ii) for which CLIENT is obligated to indemnify the Patheon Indemnitees pursuant to Section 9(a).
(c) Under no circumstances whatsoever shall either party be liable to the other in contract, tort, negligence, or breach of statutory duty for any otherwise for any indirect or consequential damages.
10. Indemnification Procedures : In the event that either party seeks indemnification, it shall inform the other party of the claim as soon as reasonably practicable after it receives notice thereof and, shall permit the other party, at that partys cost, to assume direction and control of the defense of the claim, and shall cooperate as reasonably requested (at the expense of the other party), in defense of the claim. Neither party shall settle or otherwise compromise any claim or suit in any manner that adversely affects that other party hereunder or imposes obligations on the other party in addition to those set forth in this Contract, without prior written consent of the other party, which consent shall not be unreasonably withheld or delayed.
14
11. Miscellaneous : This Contract contains the entire understanding of the parties with respect to the subject matter herein and supersedes all previous agreements (oral and written), negotiations and discussions. The parties may modify or amend the provisions hereof only by an instrument in writing duly executed by both of the parties. Neither this Contract, nor any of either partys rights hereunder, may be assigned or otherwise transferred by either party without the prior written consent of the other party. Any attempt to assign the rights or obligations under this Contract shall be void. This Contract shall be deemed to be made in the State of New York and shall be interpreted and enforced in accordance with the laws of the State of New York, without regard to conflict of law principles. The parties hereby submit to the jurisdiction of the state and federal courts located within the State of New York. The obligation of the parties contained in Sections 6, 7, 8, 9 and 10 shall survive the expiration or earlier termination of this Contract.
Patheon and CLIENT have executed this Contract in duplicate by the duly authorized officers of each party.
Acorda Therapeutics |
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Patheon Inc. |
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By: |
/s/ Mitchell Katz |
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By: |
/s/ Nick A. DiPietro |
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Name: |
Mitchell Katz, PhD |
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Name: |
Nick A. DiPietro |
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Title: |
Vice President, Clinical Programs |
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Title: |
President & COO |
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Date: |
3/28/03 |
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Date: |
4/7/03 |
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15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
THE FOLLOWING COSTS ARE ALL QUOTED IN: USD
16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
5.0 REGISTRATION MANUFACTURING |
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ACTIVITY |
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SHIFTS |
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HOURS |
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PRICE |
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SHIFTS |
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HOURS |
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PRICE |
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Per Batch: |
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Manufacturing |
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[**] |
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[**] |
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[**] |
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Packaging |
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[**] |
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[**] |
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[**] |
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Analytical Support |
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[**] |
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[**] |
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Project Support |
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[**] |
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[**] |
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First Batch |
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[**] |
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11 |
Additional Batches Manufactured Back-to-Back from First Batch |
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Cost Savings Per Additional Batch: |
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3.5 |
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Shifts/ |
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Cost Per Additional Batch: |
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OPTIONAL: For 4 Registration Batches Manufacture Back-to-Back the Cost will be $249,820 |
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Bulk Hold Time Study (per Strength - one Timepoint) |
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TOTAL (Registration Manufacturing) |
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6.0 STABILITY - REGISTRATION |
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ACTIVITY |
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HOURS |
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PRICE |
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Number of Lots |
24 |
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Total Samples |
264 |
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Cost per Sample |
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# of Samples |
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Subtotal |
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Analytical Support (1 sample per pullpoint) |
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$ |
[**] |
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0 |
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$ |
0 |
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Analytical Support (2 samples per pullpoint) |
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$ |
[**] |
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0 |
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$ |
0 |
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Analytical Support (2+ samples per pullpoint) |
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$ |
[**] |
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0 |
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$ |
0 |
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Analytical Support (5+ samples per pullpoint) |
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$ |
[**] |
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0 |
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$ |
0 |
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Analytical Support (10+ samples per pullpoint) |
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$ |
[**] |
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TOTAL (Stability - Validation) |
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BUDGET TOTAL * |
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USD |
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[**] |
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Deposit |
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$ |
[**] |
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* The manufacturing cost given in this proposal is based upon the assumption that the drug substance is classified as a high potency material in accordance with Patheons Categorization System. If it is determined through Patheons Environmental Health and Safety Review that the drug substance is not categorized as a high potency material, the manufacturing cost will be revised through a Change of Scope to reflect handling charges for a low potency product.
17
Appendix
B: High Level Timeline
(2 pages)
The attached High Level Timeline is presented at this stage as a projected estimate of the duration and achievable milestones, based upon Patheons experience and history. The High Level Timeline should not be taken as part of an agreed legal deliverable of this proposal.
Once the project has been awarded to Patheon and the relevant legal documentation is in place, a revised Timeline detailing set milestones and duration of deliverables will be agreed upon between Patheon and the Client. The revised Timeline would likely have a similar duration and would be based upon resources and the availability of manufacturing time at the initiation of the project.
18
Exhibit 10.33
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
SYNDICATED SALES FORCE AGREEMENT
This SYNDICATED SALES FORCE AGREEMENT (Agreement) is dated as of August 1, 2005 (Effective Date) by and between Cardinal Health PTS, LLC (Cardinal Health) with a place of business at 7000 Cardinal Place, Dublin, Ohio, and Acorda Therapeutics, Inc. (Acorda), having a principal place of business at 15 Skyline Drive, Hawthorne, NY 10532.
Background Information
Acorda develops, distributes and sells pharmaceutical products, and Cardinal Health provides pharmaceutical representatives who Detail (as hereinafter defined) pharmaceutical products for third parties. Acorda desires Cardinal Health to provide representatives to Detail certain products as determined and directed by Acorda in the geographical territory hereinafter specified, pursuant to the terms and conditions of this Agreement, and Cardinal Health desires to provide the Representatives and perform such services pursuant to the terms and conditions set forth in this Agreement.
The parties hereby agree as follows:
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
3
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
5
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
6
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
7
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
8
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
9
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
10
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
11
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
12
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
The Product(s) shall be Detailed by Cardinal Healths Representatives under trademarks and logos owned by or licensed to Acorda or an Affiliate of Acorda. This Agreement does not constitute a grant to Cardinal Health of any license, property right or interest in the Product(s) or any materials comprising part of the Acorda Training Program, or any trademarks or other intellectual property right which Acorda or an Affiliate of Acorda owns or uses with respect to
13
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
the Product(s), the Acorda Training Program, or to the name or business style of Acorda. Cardinal Health and the Representatives shall use the Acorda Training Program materials and the Product Promotional Materials only for the purposes of this Agreement, and all copyright and other intellectual property rights in the Acorda Training Program materials and the Product Promotional Materials shall remain with Acorda.
14
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
All of the foregoing insurance policies shall cover claims on an occurrence basis and not on a claims made basis in order to assure that incidents occurring during the Term of this Agreement are covered under the policies even though the resulting claim is not brought until after this Agreement has expired or has been terminated.
15
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
16
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
17
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
18
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
19
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
20
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
21
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
22
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
23
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
24
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
25
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
26
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
All notices shall be addressed to:
[***]
[***]
[***]
[***]
27
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
* * * * *
Signature Page Follows
28
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers.
CARDINAL HEALTH PTS, LLC |
ACORDA THERAPEUTICS, INC. |
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By: |
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By: |
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Name: |
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Name: |
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Title: |
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Title: |
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Date: |
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Date: |
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29
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 1.1(n)
List of Products
Zanaflex® Capsules
30
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 2.7
Form of Management Report
[***]
31
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 3.1
Detail and Payment Schedule
[***]
[***]
[***]
Section 4. Summary of Services to be Provided by Cardinal Health . Set forth below is a summary of the services to be provided by Cardinal Health hereunder (collectively, the Services):
Detailing of the Product(s)
Recruitment for any turnover during Program for both sales Representatives and Managers
Payment of salary, bonus, payroll taxes, benefits, and fleet cars for sales Representatives and Managers.
Territory travel expenses for sales Representatives and Managers
Project management team that includes the following shared resources: national sales director, account executive, operations manager, human resources coordinator, Acorda services manager, information services manager, financial services manager, sales trainer and a help desk
Assist in Acorda Program Training and joint responsibility for POA meetings (including meeting planning & logistics, Program agenda and strategy)
Sole responsibility for Cardinal Health Training Requirements (including but not limited to selling skills training)
On-going Representative training (does not include Acorda Training Program T&E)
Call reporting
Data management & reporting services
Monthly reporting package and quarterly reviews
Project administration (supplies, postage and printing) & operational support
Sample storage, handling, management and distribution responsibilities
Collective sample requisition reports on behalf of all Representatives
Section 5. Direct Pass-Through Expenses of Acorda . The following are the sole expenses for which Acorda shall reimburse Cardinal Health under this Agreement. Such expenses shall be reimbursed whether or not Acorda owes Cardinal Health any Service Fees in accordance with the Agreement and this Schedule 3.1.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Actual travel and meeting expenses for all required participation in any Acorda Training Program and subsequent POA meetings, including the Program launch meeting.
Cost of Additional Promotional Activities. To the extent Acorda hereafter approves additional Representative promotional activities for the Program, the parties will agree first in writing upon and manage a budget based upon promotional programs, per Section 2.3(i) of the Agreement.
Actual costs of sample storage, handling and distribution responsibilities
33
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Schedule 1
Interim Advance Payment Table
[to be attached]
34
Exhibit 10.34
Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the Agreement ) is made and entered into as of this 19th day of December, 2003 (the Effective Date ) among ACORDA THERAPEUTICS, INC., a corporation organized and existing under the laws of the state of Delaware having a principal place of business at 15 Skyline Drive, Hawthorne, New York 10532, USA ( Acorda ), CAMBRIDGE UNIVERSITY TECHNICAL SERVICES LIMITED, an entity organized and existing under the laws of England having a registered address at The Old Schools, Trinity Lane, Cambridge CB2 1TS, UK. ( CUTS ), and KINGS COLLEGE LONDON, an Institution incorporated by Royal Charter, of Strand, London, WC2R 2LS, UK ( KCL ; CUTS and KCL may be collectively referred to as the Institutions ). Each of Acorda, CUTS and KCL may be referred to herein individually as a Party and collectively as the Parties.
RECITALS
WHEREAS, CUTS is a wholly owned trading subsidiary of The Chancellor, Masters and Scholars of the University of Cambridge ( Cambridge ) and administers the granting of licenses on behalf of Cambridge;
WHEREAS, Professor James Fawcett of Cambridge, together with Professor Stephen McMahon and Dr. Elizabeth Bradbury of KCL, have developed technology described and claimed in the Patent Application (as defined in Section 1.17), and both Professor Fawcett and Cambridge have assigned to CUTS all of their intellectual property rights in the Patent Application, and all intellectual property rights in Professor McMahons and Dr. Bradburys inventions claimed in the Patent Application are owned by KCL;
WHEREAS, Institutions jointly own all right, title and interest in the international patent application entitled Materials and Methods for the Treatment of CNS Damage;
WHEREAS, Acorda desires to obtain and Institutions wish to grant to Acorda, an exclusive (except as otherwise provided in this Agreement), worldwide development and commercialization license under such international patent application and any patents owned or controlled by the Institutions that arise or derive from such international patent application, including all intellectual property rights therein, for the development and commercialization of pharmaceutical products for all purposes; and
WHEREAS, Acorda also wishes to collaborate with Cambridge and KCL to undertake a research project on the terms set out in a sponsored research agreement of even date.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants set forth below, and for other good and valuable consideration, receipt of which is hereby acknowledged, the Parties hereby agree as follows:
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ARTICLE 1
DEFINITIONS
The following terms as used herein shall have the following meanings:
1.1 Active Ingredient means any compound or molecule, whether chemical or biological, that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect any structure or any function of the body of man or of animals. For the avoidance of doubt, this term includes those compounds or molecules that may undergo chemical change in the manufacture of a drug product and be present in such drug product in a modified form intended to furnish the specified activity or effect.
1.2 Affiliate means any corporation or non-corporate business entity which controls, is controlled by, or is under common control with Acorda. A corporation or non-corporate business entity shall be regarded as in control of another corporation if it owns, or directly or indirectly controls, at least fifty percent (50%) of the voting stock of the other corporation, or alternatively in either (a) the absence of the ownership of at least fifty percent (50%) of the voting stock of a corporation or (b) the case of a non-corporate business entity, or non-profit corporation, if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation or non-corporate business entity, as applicable.
1.3 Clinical Trial means any experiment in which a drug containing an Active Ingredient is administered or dispensed to, or used involving, one or more human subjects, except for the use of a marketed drug in the course of normal medical practice.
1.4 CNS means the central nervous system.
1.5 Control or Controlled means, with respect to a particular item of information or intellectual property right, that the particular Party (a) owns and has the ability to grant to another Party the licenses to such item as provided for herein, without violating the terms of an agreement with any Third Party, and/or (b) has a license to such item and has the ability to grant to another Party the licenses to such item provided for herein, without violating the terms of an agreement with any Third Party.
1.6 Dollars means United States dollars.
1.7 Earned Royalties means the royalties payable to Institutions by Acorda on Net Sales of Licensed Products by Acorda and/or its Affiliates as provided in Article 3.
1.8 FDA means the United States Food and Drug Administration or any successor entity.
1.9 IND means an investigational new drug application submitted to the FDA, which requests authorization from the FDA to administer an investigational drug or biological product to humans in the United States.
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1.10 Inventors means Professor James Fawcett, Professor Steve McMahon and Dr. Elizabeth Bradbury.
1.11 Licensed Enzyme Product means any pharmaceutical product containing or directly activating an enzyme, including but not limited to chondroitinase, to treat CNS disorders, diseases or injuries using the method covered by a Valid Claim in the Licensed Patents.
1.12 Licensed Patents means any or all of: (a) the Patent Application; (b) the substitutions, extensions, divisionals, continuations, or continuations-in-part of such Patent Application; (c) the patents issuing on any of the foregoing, including all re-examined or re-issued patents and extensions thereof; and (d) the foreign counterparts of any of the foregoing.
1.13 Licensed Product means either a Licensed Enzyme Product or a Licensed Small Molecule Inhibitor Product.
1.14 Licensed Small Molecule Inhibitor Product means any pharmaceutical product incorporating a small molecule inhibitor which is used to treat CNS disorders, diseases or injuries that is covered by a Valid Claim in the Licensed Patents.
1.15 Licensed Territory means the world.
1.16 Net Sales means the actual amounts invoiced by Acorda and/or its Affiliates for the Sale of Licensed Products to a Third Party purchaser without deduction of any commission paid to a Third Party purchaser but less the following deductions to the extent that such amounts are actually allowed or incurred with respect to such Sales: (a) freight, packaging and insurance costs incurred in transporting the Licensed Product to such customers; (b) quantity, cash and other trade discounts or rebates actually allowed and taken, including without limitation, discounts or rebates granted to managed health care organizations, or as mandated by any governmental agency or branch thereof in the Licensed Territory; (c) customs, duty, sales and other similar taxes; (d) governmental charges incurred in connection with the exportation or importation of such Licensed Products; (e) amounts repaid or credited by reason of rejections, return of goods, recalls or retroactive price reductions and (f) amounts written off in accordance with GAAP as uncollectable debts from the purchasers, not to exceed 4% of Net Sales in any particular royalty period, and provided, however that if such amounts so written off are later collected by Acorda and/or its Affiliates, then such amounts shall be deemed Net Sales and Acorda shall pay Institutions the applicable royalty on Net Sales in accordance with Sections 3.2 and 3.3. In any event, Acorda will use reasonable efforts to collect debts from its purchasers of Licensed Products. Sales of Licensed Products or granting of sublicenses by Acorda and its Affiliates to Third Parties shall be on an arms length basis and on a bona fide basis for the purpose of maximizing revenue.
1.17 Patent Application means the international patent application entitled Materials and Methods for the Treatment of CNS Damage, disclosing inventions by the Inventors, filed on the 4 th March 2003 having serial number PCT/GB2003/000901.
1.18 Payment Period means a semi-annual period ending 30 th June or 31 st December of each calendar year.
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1.19 Phase I Clinical Trial means a Clinical Trial on sufficient numbers of normal volunteers and subjects that is designed to establish that a pharmaceutical product is safe for its intended use, and to support its continued testing in Phase II Clinical Trials.
1.20 Phase II Clinical Trial means a Clinical Trial on sufficient numbers of subjects that is designed to establish the safety and biological activity of a pharmaceutical product for its intended use, and to define warnings, precautions, and adverse reactions that are associated with such pharmaceutical product in the dosage range to be prescribed.
1.21 Phase III Clinical Trial means a Clinical Trial on sufficient numbers of subjects that is designed to establish that a pharmaceutical product is safe and efficacious for its intended use, and to define warnings, precautions, and adverse reactions that are associated with such pharmaceutical product in the dosage range to be prescribed, and to support Regulatory Approval of such pharmaceutical product or label expansion of such pharmaceutical product.
1.22 Regulatory Approval means the approvals, registrations or authorizations of the Food and Drug Administration (FDA), or the equivalent regulatory agency in a foreign country or jurisdiction necessary for the manufacture, distribution, marketing and sale of a pharmaceutical or diagnostic product in the United States, or such foreign country or jurisdiction, as applicable.
1.23 Sale or Sold means the sale or other commercial disposition of a Licensed Product by Acorda, its Affiliates or sublicensees. In case of doubt, Sales of Licensed Products shall be deemed consummated no later than invoicing of payment to a Third Party for the applicable transaction involving such Licensed Product.
1.24 Sublicense Royalties means any royalty payments (which for clarity excludes any upfront payments, milestone payments, or any equity investments made in Acorda at fair market value (and provided further that if any equity investment is made at a premium to fair market value, the amount of such premium would be deemed Sublicense Royalties)) received by Acorda and/or its Affiliates from a Third Party sublicensee based on the Sublicense of Acordas and/or its Affiliates rights in the Licensed Patents.
1.25 Third Party means any entity or individual other than Acorda, Cambridge, CUTS or KCL, or an Affiliate.
1.26 Valid Claim means (a) a claim of any issued, unexpired patent included among the Licensed Patents, which patent claim has not been (i) held unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, which decision is not further appealable, or (ii) rendered unenforceable through reexamination, reissue, disclaimer or otherwise, or (iii) lost through an interference proceeding, or (iv) abandoned; or (b) a pending claim of an international patent application filed under the Patent Cooperation Treaty (the PCT ) included within the Licensed Patents, which claim (i) has been pending under examination for less than seven (7) years from date of filing of such claim, and (ii) has been asserted in good faith, and (iii) has not been abandoned or finally rejected without the possibility of appeal or re-filing.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
ARTICLE 2
GRANT OF LICENSE
2.1 Licenses to Acorda.
(a) Subject to Section 2.2(a), Institutions hereby grant to Acorda and its Affiliates an exclusive (even as to the Institutions), royalty-bearing license, including (subject to the provisions of Section 2.3) the right to grant sublicenses, under the Licensed Patents to use and practice the inventions and information claimed or disclosed therein that relate to enzymatic methods of treating CNS disorder, disease or injury, and to research, develop, make, have made, use, sell, offer for sale, have sold, import, export, lease and otherwise exploit Licensed Enzyme Products for all purposes in the Licensed Territory during the term of this Agreement.
(b) Subject to Section 2.2(b), Institutions hereby grant to Acorda and its Affiliates a non-exclusive, royalty-bearing license, including (subject to the provisions of Sections 2.3 and 2.4) the right to grant sublicenses, under the Licensed Patents to use and practice the inventions and information claimed or disclosed therein that relate to small molecule inhibitors for use in treating CNS disorder, disease or injury, and to research, develop, make, have made, use, sell, offer for sale, have sold, import, export, lease and otherwise exploit Licensed Small Molecule Inhibitor Products for all purposes in the Licensed Territory during the term of this Agreement.
2.2 Retained Rights.
(a) The license granted in Section 2.l(a) above is subject to a right retained by the Institutions for their selves (and also grants to Cambridge and any wholly owned subsidiary of Cambridge and/or KCL) to use and practice the portions of the Licensed Patents relating to enzymatic methods of treating CNS disorders, diseases or injuries for non-commercial, academic research and educational purposes only. Such retained right shall be transferable to other academic institutions in the event that the Inventors become employed by such institutions, provided, however, that such other institutions right to use and practice such Licensed Patents shall be subject to the same limitations as those on the Institutions right to use and practice hereunder.
(b) The license granted in Section 2.1(b) above is subject to a right retained by the Institutions for their selves (and also grants to Cambridge and any wholly owned subsidiary of Cambridge and/or KCL) to use and practice the portions of the Licensed Patents relating to small molecule inhibitors for use in treating CNS disorders, diseases or injuries for all commercial and/or non-commercial purposes. Such retained right shall be transferable to other academic institutions in the event that the Inventors become employed by such institutions, provided, however, that such other institutions right to use and practice such Licensed Patents shall be subject to the same limitations as those on the Institutions right to use and practice hereunder.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
2.3 Sublicenses. Acorda and its Affiliates shall have the right to grant sublicenses to Third Parties under any or all of their license rights in the Licensed Patents granted in Section 2.1, provided that:
(a) the pricing of all Licensed Products that may be sold by Acorda or its Affiliate to any such sublicensee shall be determined on an arms length basis and on a bona fide basis for the purpose of maximizing the revenue;
(b) each such sublicense shall include obligations on the sublicensee that are consistent with the obligations made on Acorda and its Affiliates and agents and sub-contractors under this Agreement (e.g., each such sublicense will include an obligation on the sublicensee to indemnify Acorda and its Affiliates for any losses resulting from claims brought by a third party arising in connection with any personal injury and property damage caused by the manufacture, testing, design, use, Sale or labeling of any Licensed Products by such sublicensee);
(c) each such sublicense shall be memorialized in a written agreement with the sublicensee, a copy of which agreement shall be delivered to each of the Institutions within sixty (60) days of said sublicense becoming effective;
(d) each such sublicense shall terminate automatically on the termination of this Agreement for any reason whatsoever and in such circumstances the Institutions shall grant the sublicensee a direct license to the same extent wherein the financial terms shall be substantially equivalent to those of the sublicense, with all payments due under such direct license being payable directly to the Institutions;
(e) each such sublicense shall provide that Acorda may terminate the sublicense if the sublicensee commences legal proceedings to challenge the validity of any of the Licensed Patents; and
(f) Acorda and its Affiliates shall use best endeavors to enforce all payment obligations contained in each such sublicense.
2.4 Acorda and its Affiliates (or its sublicensee, as applicable) may grant only one (1) sublicense under the Licensed Patents relating to small molecule inhibitors for use in treating CNS disorders, diseases or injuries in any given jurisdiction. For clarity, the one (1) sublicense in a given jurisdiction may be a sublicense granted by another sublicensee hereunder.
2.5 No Implied License. The licenses and rights granted in this Agreement shall not be construed to confer any rights upon Acorda and its Affiliates by implication, estoppel, or otherwise as to any technology not specifically identified in this Agreement as Licensed Patents.
ARTICLE 3
COMPENSATION
3.1 Upfront Payment. Within ten (10) days of the Effective Date, Acorda shall pay Institutions an upfront license fee in the amount of [***].
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
3.2 Royalties on Licensed Enzyme Products. Subject to Sections 3.2(a) and 3.4, Acorda shall pay the Institutions royalties in the amount of [***] of the aggregate Net Sales of Licensed Enzyme Products made by Acorda and/or its Affiliates in countries in the Licensed Territory where such sales are covered by a Valid Claim in an issued patent in the Licensed Patents.
(a) Royalty Rate Adjustment. If licenses to dominant Third Party patents (that is, patents that claim the Licensed Enzyme Product or its manufacture or use) are required for Acorda or its Affiliates to research, develop, make, have made, use, sell, offer for sale, have sold, import, export, lease and otherwise exploit Licensed Enzyme Products in the Licensed Territory, Acorda may deduct, from the royalty amount payable by Acorda to Institutions, up to [***] of the royalty amounts owed the Third Party under such licenses, provided that in no event shall Institutions receive less than [***] of the aggregate Net Sales of Licensed Enzyme Products Sold by Acorda and/or its Affiliates in the Licensed Territory.
(b) Royalties on Sublicenses. Subject to Section 3.5, if Acorda and/or its Affiliates grants a sublicense under any or all of its rights in the Licensed Patents to a Third Party to research, develop, make, have made, use, sell, offer for sale, have sold, import, export, lease and otherwise exploit Licensed Enzyme Products, then Acorda will pay Institutions a percentage of all Sublicense Royalties received by Acorda and/or its Affiliates from such Third Party sublicensee based on such sublicense, according to the following schedule:
[***]
For purposes of this Section 3.2(b) and Section 3.3(a), commencing a Clinical Trial shall mean administration of the first dose of a Licensed Product to a subject.
3.3 Royalties on Licensed Small Molecule Inhibitor Products. Subject to Section 3.4, Acorda shall pay Institutions royalties in the amount of one-half percent (0.5%) of the
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aggregate Net Sales of Licensed Small Molecule Products by Acorda and/or its Affiliates in countries in the Licensed Territory where such sales are covered by a Valid Claim in an issued patent in the Licensed Patents.
(a) Royalties on Sublicenses. Subject to Section 3.5, if Acorda and/or its Affiliates grants a sublicense under any or all of their rights in the Licensed Patents to a Third Party to research, develop, make, have made, use, sell, offer for sale, have sold, import, export, lease and otherwise exploit Licensed Small Molecule Inhibitor Products, then Acorda will pay Institutions a percentage of all Sublicense Royalties received by Acorda and/or its Affiliates from such Third Party sublicensee based on such sublicense, according to the following schedule:
[***]
3.4 Royalties on Combination Licensed Products. In the event a Licensed Product is sold in the form of a combination product containing one or more Active Ingredients in addition to the Licensed Product Active Ingredient (hereinafter Combination Licensed Product ) in countries in the Licensed Territory where such sales are covered by a Valid Claim in an issued patent in the Licensed Patents, then Net Sales for such Combination Licensed Product, for purposes of calculating Earned Royalties due hereunder on Net Sales of Licensed Enzyme Products and Licensed Small Molecule Inhibitor Products (as applicable) by Acorda, will be adjusted by multiplying actual Net Sales of such Combination Licensed Product by the applicable fraction, which will be negotiated in good faith by the Parties with the intention of agreeing upon a fair and equitable formula that reasonably reflects the relative value contributed by the Licensed Product to the total value of the combination in the Combination Licensed Product, as compared to the other Active Ingredients therein. Each Party shall share with the
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other Parties any information in its possession that is relevant for determining such relative value.
3.5 [***]
3.6 [***]
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ARTICLE 4
REPORTS, PAYMENTS AND ACCOUNTING
4.1 Royalties Reports and Records. During the term of this Agreement, Acorda shall furnish, or cause to be furnished to the Institutions, written reports for each of Acorda and its Affiliates showing, for each fiscal quarter during the applicable Payment Period, the applicable information as follows:
(a) the gross sales of all Licensed Products Sold by Acorda and its Affiliates in the Licensed Territory during the reporting period, together with the calculations of Net Sales in accordance with Section 1.16;
(b) the Earned Royalties payable in Dollars, together with the calculations thereof, which shall have accrued hereunder in respect to such Net Sales;
(c) the Sublicense Royalties received by Acorda and the portion of such Sublicense Royalties payable to the Institutions in accordance with Sections 3.2(b) and 3.3(a), as applicable;
(d) the exchange rates, if any, in determining the amount of Dollars payable to the Institutions; and
(e) the occurrence of any event triggering a milestone payment obligation in accordance with Section 3.6.
Such reports shall be substantially in the form of the template as given in Schedule 1 Part A and shall be due to Institutions within thirty (30) days after the close of the second Acorda fiscal quarter in the applicable Payment Period. Each such report shall: (a) contain a statement in substantially the form I hereby represent and warrant that this report is true and correct to the best of my knowledge and belief and; (b) be signed by an officer of Acorda. Acorda shall keep accurate records in sufficient detail to enable Earned Royalties, Sublicense Royalties and other payments payable hereunder to be determined, such records to include without limitation the amounts and source of any deductions made pursuant to Section 3.2(a). Acorda shall be responsible for all Earned Royalties, Sublicense Royalties and other payments that are due
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
Institutions from Acordas Affiliates and have not been paid by such Affiliates. If a report required pursuant to this Section 4.1 is not submitted to the Institutions by the applicable due date, Institutions may give Acorda notice of such failure, and if Acorda does not provide such report within thirty (30) days of such notice, then Acorda shall pay to the Institutions the amount of [***] for each calendar month after such notice that such report remains undelivered.
4.2 Payee Designation. All payments made pursuant to Article 3 of this Agreement to be made to Institutions by Acorda (and/or its Affiliates) under this Agreement shall be paid by telegraphic transfer to the account of Cambridge University Technical Services Ltd at Barclays Bank of Benet Street, Business Centre, PO Box No 2, Cambridge CB2 3PZ, sort code 20-17-19 account number 90532215. The Parties agree that payments made by Acorda and/or its Affiliates and received by CUTS shall satisfy Acordas payment obligations to the Institutions hereunder.
4.3 Payment Terms. All payments made pursuant to Article 3 of this Agreement shall be made in accordance with Schedule 1 Part B. Each report pursuant to Section 4.1 shall be accompanied by payment to CUTS of the Earned Royalties, Sublicense Royalties or other payments due hereunder (as applicable) shown by said report to be due to the Institutions.
4.4 Non-Payment Terms. All payments made pursuant to Article 3 of this Agreement shall be made within thirty (30) days after the close of the second Acorda fiscal quarter in the applicable Payment Period, failing which the Institutions may charge interest on any outstanding amount on a daily basis at [***] then in force. All payments due pursuant to Article 3 of this Agreement shall be made without deduction of income tax or other taxes charges or duties. Payments due between the end of the final Payment Period and termination or expiry of this Agreement shall be paid within thirty (30) days of said termination or expiry.
4.5 Right to Audit. Upon prior written notice to Acorda and not more than once in each Acorda fiscal year, the Institutions shall have the right to engage an independent, nationally-certified auditing firm selected by the Institutions and acceptable to Acorda, which acceptance shall not be unreasonably withheld, to have access during normal business hours of Acorda and on reasonable advance notice, to the applicable books and records of Acorda, as may be reasonably necessary to verify the accuracy of the royalty reports required to be furnished by Acorda pursuant to Section 4.1 of this Agreement. If such audit shows any underpayment of Earned Royalties or Sublicense Royalties by Acorda, then, within thirty (30) days after Acordas receipt of such report, Acorda shall remit or shall cause its Affiliates to remit to the Institutions:
(a) the amount of such underpayment; and
(b) if such underpayment exceeds [***] of the total Earned Royalties and/or Sublicense Royalties owed for the fiscal year then being reviewed, the reasonably necessary fees and expenses of such auditing firm performing the audit. Otherwise, such fees and expenses shall be borne solely by Institutions. Any overpayment of Earned Royalties and/or Sublicense Royalties shall be fully creditable against future Earned Royalties and/or Sublicense Royalties payable in any subsequent Payment Period.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
4.6 Confidentiality of Records. All information provided by Acorda, or subject to review under this Article 4, shall be deemed Acordas Confidential Information (as defined in Section 9.1). The independent, nationally-certified auditing firm shall not disclose to the Institutions or to any Third Party any such Confidential Information, except for any information showing a discrepancy in amount owed to the Institutions, and the Institutions shall not use or disclose any such Confidential Information for any purpose other than determining and enforcing its rights under this Agreement.
4.7 Currency Restrictions. Except as otherwise provided hereinafter in this Section 4.7, all Earned Royalties and Sublicense Royalties shall be paid in Dollars. If, at any time, legal or other restrictions imposed by a government or governmental agency or established by a court of competent jurisdiction in a particular country, prevent the prompt remittance and conversion into Dollars of part of or all Earned Royalties and/or Sublicense Royalties with respect to Sales of Licensed Products in such country, Acorda and/or its Affiliates shall have the right and option to make such payments by depositing the amount thereof in local currency to the Institutions account in a bank or depository in such country.
ARTICLE 5
DEVELOPMENT RESPONSIBILITIES; DILIGENCE
5.1 Institutions Responsibilities: During the term of this Agreement, each of CUTS and KCL (or their designates) shall:
(a) transfer to Acorda all relevant and material information and data (except grant applications) in its possession and generated by the Inventors directly relating to the inventions claimed in the Licensed Patents, except to the extent such transfer is prevented by confidentiality obligations or other limitations pursuant to agreements or understandings between each of CUTS and KCL, respectively, and a Third Party, and Acorda shall have the right to use such information and data for the protection and exploitation of the Licensed Patents, including but not limited to the development and commercialization of products covered by the Licensed Patents, in accordance with its rights under the Agreement; and
(b) have the right to review and comment on the design and implementation of any Clinical Trial to be performed by Acorda and/or its Affiliates relating to any Licensed Enzyme Product or Licensed Small Molecule Inhibitor Product, provided that Institutions shall be bound by typical confidentiality restrictions with respect to any information disclosed by Acorda relating thereto.
5.2 Acorda Responsibilities. During the term of this Agreement, Acorda and/or its Affiliates shall:
(a) subject to 12.7, give credit to the Institutions (or their designees) for co-authorship of any publications by Acorda and/or its Affiliates relating to the Licensed Patents and acknowledge the efforts of each of Cambridge, CUTS and KCL in creating the Licensed Patents; and
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(b) be solely responsible for their own expenses incurred in connection with their research and development efforts relating to the Licensed Patents.
5.3 General Diligence Obligations.
(a) Licensed Patents. Acorda shall use commercially reasonable efforts to conduct further research relating to Licensed Patents from time to time to evaluate their scientific and commercial utility.
(b) Licensed Products. Acorda shall, either through its own efforts and/or those of its Affiliates, use commercially reasonable efforts to develop and commercialize, and/or sublicense for development and commercialization, Licensed Enzyme Products and Licensed Small Molecule Inhibitor Products (subject to the limitation on sublicensing in Section 2.4 with respect to Small Molecule Inhibitor Products) as it deems appropriate, in the exercise of its business judgment.
(c) Share of Information. Acorda and/or its Affiliates shall share with the Institutions and Cambridge information developed through the research efforts of Acorda and/or its Affiliates relating to the Licensed Patents, except to the extent disclosure is prevented by confidentiality obligations of an agreement between Acorda and/or its Affiliates and a Third Party.
5.4 [***]
5.5 [***]
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ARTICLE 6
PATENTS AND PATENT COSTS
6.1 Prosecution and Maintenance of Licensed Patents. The Institutions and Acorda shall work collaboratively to effect and conduct the ongoing patent prosecution and maintenance activities relating to the Licensed Patents. CUTS shall be primarily responsible for overseeing such ongoing patent prosecution and shall pursue such patent prosecution to further Acordas reasonable commercial interest in the Licensed Patents. CUTS shall provide Acorda with copies of all material documents relating to the filing, prosecution and maintenance of Licensed Patents, including filings and correspondence with patent authorities, in a timely manner, so as to give Acorda an opportunity to comment thereon. Acorda may provide comments to the Institutions regarding such patent prosecution (including but not limited to guidance in the drafting of claims for the Patent Application and other Licensed Patents) and the Institutions will pay due and reasonable consideration to such comments regarding claims relating directly to Licensed Enzyme Products. Acorda agrees to keep any documentation received under this Section 6.1 confidential in accordance with Article 9 herein.
6.2 Patent Costs.
(a) Enzyme Method Patent Costs. Acorda shall pay for all reasonable costs for prosecution and maintenance of patent filings of the Licensed Patents, to the extent of claims therein relating to enzymatic methods of treating CNS disorders, diseases or injuries ( Enzyme Method Patent Costs ), incurred by CUTS after the Effective Date of this Agreement.
(b) Small Molecule Inhibitor Method Patent Costs. Acorda shall pay a percentage, calculated in accordance with Section 6.2(b)(i), of all reasonable costs for prosecution and maintenance of patent filings of the Licensed Patents, to the extent of claims therein relating to small molecule inhibitors for use in treating CNS disorders, diseases or injuries ( Small Molecule Inhibitor Method Patent Costs ), incurred by CUTS after the Effective Date of this Agreement.
(i) Allocation and Reimbursement of Small Molecule Inhibitor Method Patent Costs. Acorda shall pay the percentage of Small Molecule Inhibitor Method Patents Costs calculated on the basis of the total number of non-exclusive licenses granted by
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CUTS and/or KCL under the claims in the Licensed Patents relating to small molecule inhibitors for the treatment of CNS disorders, diseases or injuries in accordance with the following formula:
[***] CUTS shall promptly notify Acorda in writing of any grant of a non-exclusive license under the claims in the Licensed Patents relating to small molecule inhibitors for the treatment of CNS disorders, diseases or injuries.
(c) Calculation of Patent Costs. The Parties acknowledge and agree that it may be difficult to determine patent costs relating to either the use of enzymes, or small molecule inhibitors, for the treatment of CNS disorders, diseases or injuries, given that both methods are included in a single patent application. If any Party disagrees with the allocation of patent costs calculated in accordance with Sections 6.2(a) and 6.2(b), then Institutions and Acorda shall use their good faith efforts to negotiate and determine a reasonable allocation of any patent costs such that Enzyme Method Patent Costs will reasonably reflect prosecution and maintenance costs relating to such enzyme method and the Small Molecule Inhibitor Patent Costs will reasonably reflect prosecution and maintenance costs relating to such small molecule inhibitor method. For the avoidance of doubt, as of the Effective Date, the Small Molecule Inhibitor Patent Costs and the Enzyme Method Patent Costs each constitute [***] since they are combined in one patent application, provided, however, that such percentage may change during the term of this Agreement if, for example, the Patent Application is separated into multiple patent applications.
6.3 Acordas Payment Terms. CUTS shall seek Acorda written approval prior to commitment of Enzyme Method Patent Costs and Small Molecule Inhibitor Method Patent Costs where practical and Acorda shall give or withhold approval within ten (10) calendar days. Where impractical to seek Acorda approval in the time available, CUTS shall have discretion to assume Acorda approval and commit but limit any such commitment of Enzyme Method Patent Costs and Small Molecule Inhibitor Method Patent Costs to [***].
6.4 Non-Payment Terms. In the event that payment is not received by CUTS within thirty (30) days of receipt by Acorda of an invoice for Enzyme Method Patent Costs and/or Small Molecule Inhibitor Method Patent Costs pursuant to Article 6 of this Agreement, the Institutions may charge interest on any outstanding amount on a daily basis at [***] then in force. All payments due pursuant to Article 6 of this Agreement shall be made without deduction of income tax or other taxes charges or duties. Payments due between the end of the final Payment Period and termination or expiry of this Agreement shall be paid within thirty (30) days of said termination or expiry.
6.5 [***]
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ARTICLE 7
INFRINGEMENT
7.1 Enforcement of Licensed Patents Relating to Enzymes. If either Acorda and/or its Affiliates or the Institutions become aware of a product made, used or sold in the Licensed Territory, which it believes infringes a Valid Claim relating to any pharmaceutical product containing or directly activating an enzyme, including but not limited to chondroitinase, to treat CNS disorders, diseases or injuries (the Enzyme Method ), the Party obtaining such knowledge shall promptly advise the other Parties of all relevant facts and circumstances pertaining to the potential infringement. Acorda shall have the first right, but not the obligation, to enforce any patent rights within the Licensed Patents against such infringement, at its own expense. The Institutions shall agree to be joined with Acorda in any such legal action subject to being indemnified and secured in a reasonable manner as to any costs, damages, expenses or other liability and shall have the right to be separately represented by their own counsel at their own expense. Before starting legal action in accordance with this Section 7.1 or agreeing to any settlement, Acorda shall consult the Institutions and consider their views about the advisability of the action or settlement, its effect on the public interest and how the action should be conducted.
(a) Recovery. Any damages or costs recovered in connection with any action filed by Acorda under this Section 7.1 which exceed Acordas out-of-pocket costs and expenses of litigation, shall be deemed to be Net Sales of Licensed Enzyme Products in the fiscal quarter received by Acorda. Earned Royalties on such Net Sales shall be payable by Acorda to Institutions in accordance with the terms of this Agreement.
(b) Backup Enforcement Right of Institutions. If Acorda does not, within one hundred twenty (120) days after receiving notice from Institutions of a potential infringement, or providing Institutions with notice of such infringement, either (i) effect the
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termination of such infringement, or (ii) institute an action to prevent continuation thereof and, thereafter prosecute such action diligently, or if Acorda notifies Institutions that it does not plan to terminate the infringement or institute such action, then Institutions shall have the right but not the obligation to do so at their own expense; provided however, that Institutions shall first consult with Acorda and give due consideration to Acordas reasons for not instituting actions to terminate or otherwise prevent continuation of such infringement. If Institutions decide to pursue such infringement, Acorda shall cooperate with Institutions in such effort, at Institutions expense, including being joined as a party to such action if necessary. Institutions shall be entitled to retain all damages or costs awarded to Institutions in such action.
7.2 Enforcement of Licensed Patents Relating to Small Molecule Inhibitors. If either Acorda and/or its Affiliates or Institutions become aware of a product made, used or sold in the Licensed Territory, which it believes infringes a Valid Claim relating to small molecule inhibitors for use in treating CNS disorders, diseases or injuries (the Small Molecule Inhibitor Method ), the Party obtaining such knowledge shall promptly advise the other Parties of all relevant facts and circumstances pertaining to the potential infringement. Institutions shall have the first right, but not the obligation, to enforce any patent rights within the Licensed Patents against such infringement, at its own expense. Acorda shall agree to be joined with the Institutions in any such legal action subject to being indemnified and secured in a reasonable manner as to any costs, damages, expenses or other liability and shall have the right to be separately represented by their own counsel at their own expense. Before starting legal action in accordance with this Section 7.2 or agreeing to any settlement, the Institutions shall consult Acorda and consider their views about the advisability of the action or settlement, its effect on the public interest and how the action should be conducted.
(a) Recovery. Any damages or costs recovered in connection with any action filed by Institutions under this Section 7.2 which exceed Institutions out-of-pocket costs and expenses of litigation, shall be divided equally among Institutions, Acorda and any Third Party(ies) holding a non-exclusive license under Institutions rights in Licensed Patents relating to small molecule inhibitors for use in treating CNS disorders, diseases or injuries during the term of such infringement.
(b) Backup Enforcement Right of Acorda. If Institutions do not, within one hundred eighty (180) days after receiving notice from Acorda of a potential infringement, or providing Acorda with notice of such infringement, either (i) effect the termination of such infringement, or (ii) institute an action to prevent continuation thereof and, thereafter prosecute such action diligently, or if Institutions notify Acorda that it does not plan to terminate the infringement or institute such action, then Acorda shall have the right but not the obligation to do so at its own expense; provided however, that Acorda shall first consult with Institutions and give due consideration to Institutions reasons for not instituting actions to terminate or otherwise prevent continuation of such infringement. If Acorda decides to pursue such infringement, Institutions shall cooperate with Acorda in such effort, at Acordas expense, including being joined as a party to such action if necessary. Acorda shall be entitled to retain all damages or costs awarded to Acorda in such action.
7.3 Enforcement of Licensed Patents Generally. If either Acorda or Institutions become aware of a product made, used or sold in the Licensed Territory, which it believes
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infringes a Valid Claim that does not relate specifically to either the Enzyme Method or the Small Molecule Inhibitor Method, the Party obtaining such knowledge shall promptly advise the other Parties of all relevant facts and circumstances pertaining to the potential infringement. Acorda shall have the first right, but not the obligation, to enforce any patent rights within the Licensed Patents against such infringement, at its own expense. The Institutions shall agree to be joined with Acorda in any such legal action subject to being indemnified and secured in a reasonable manner as to any costs, damages, expenses or other liability and shall have the right to be separately represented by their own counsel at their own expense. Before starting legal action in accordance with this Section 7.3 or agreeing to any settlement, Acorda shall consult the Institutions and consider their views about the advisability of the action or settlement, its effect on the public interest and how the action should be conducted.
(a) Recovery. Any damages or costs recovered in connection with any action filed by Acorda under this Section 7.3 which exceed Acordas out-of-pocket costs and expenses of litigation, shall be deemed to be Net Sales of Licensed Small Molecule Inhibitor Products in the fiscal quarter received by Acorda. Earned Royalties on such Net Sales shall be payable by Acorda to Institutions in accordance with the terms of this Agreement.
(b) Backup Enforcement Right of Institutions. If Acorda does not, within one hundred eighty (180) days after receiving notice from Institutions of a potential infringement, or providing Institutions with notice of such infringement, either (i) effect the termination of such infringement, or (ii) institute an action to prevent continuation thereof and, thereafter, prosecute such action diligently, or if Acorda notifies Institutions that it does not plan to terminate the infringement or institute such action, then Institutions shall have the right but not the obligation to do so at their own expense; provided however, that Institutions shall first consult with Acorda and give due consideration to Acordas reasons for not instituting actions to terminate or otherwise prevent continuation of such infringement If Institutions decide to pursue such infringement, Acorda shall cooperate with Institutions in such effort, at Institutions expense. including being joined as a party to such action if necessary. Institutions shall be entitled to retain all damages or costs awarded to Institutions in such action.
7.4 Invalidity or Unenforceability Defenses or Actions.
(a) If a Third Party asserts, as a defense or as a counterclaim in any infringement action under Sections 7.1, 7.2 or 7.3, that any Licensed Patent is invalid or unenforceable, or that an interference should be declared with respect to a Licensed Patent, then the Parties shall promptly meet (which meeting may at any Partys request be by telephone conference or videoconference) to discuss the response to such defense or defense of such counterclaim or action (as applicable) and shall cooperate with one another in such response or defense. The Party or Parties that are the plaintiffs in the underlying suit or action against such Third Party shall have the initial right to respond to such defense or defend against such counterclaim (as applicable), provided that such response or defense shall be conducted in collaboration with the other Parties, to the extent that the other Parties intellectual property rights or rights under this Agreement are the subject of such invalidity or unenforceability defense or counterclaim. The Party plaintiff shall involve such other Party(ies) in all decisions as to such response or defense, and in any event such Party plaintiff shall not settle or otherwise compromise such defense or counterclaim in any way that adversely affects such other Partys
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intellectual property rights or rights under this Agreement without such other Partys written consent, not to be unreasonably withheld or delayed.
(b) Similarly, if a Third Party asserts, in a declaratory judgment action or similar action or claim filed by such Third Party that any Licensed Patent is invalid or unenforceable or that an interference should be declared with respect to a Licensed Patent, then the Parties shall promptly meet (which meeting may at any Partys request be by telephone conference or videoconference) to discuss the defense of such action or claim and shall cooperate with one another in such defense. The Party that is the defendant in such claim, suit or action shall have the initial right to defend against same, provided that such defense shall be conducted in collaboration with the other Parties and a process under which each Party shall have a reasonable opportunity to participate in such defense shall be established, and in any event Acorda shall at all times be permitted to intervene in such defense, at its expense, and provided further that to the extent that any other Partys intellectual property rights or interests under this Agreement are the subject of, or materially impacted by, such invalidity or unenforceability claim, suit or action, the defending Party shall involve such other Party in all decisions as to such defense, and in any event such defending Party shall not settle or otherwise compromise such defense in any way that adversely affects such other Partys intellectual property rights or its rights under this Agreement without such other Partys written consent, not to be unreasonably withheld or delayed.
(c) The Party defending any claim or action under this Section 7.4 shall be responsible for [***] of the out-of-pocket and reasonable costs and expenses of any such defenses, provided that if Acorda is defending, Acorda may credit such defense costs and expenses against royalties owed to Institutions under Sections 3.2 and 3.3.
7.5 Third Party Litigation. If a Third Party institutes an infringement suit or action against Acorda and/or its Affiliate and/or sublicensee alleging that the manufacture, use or sale of any Licensed Product by Acorda and/or an Affiliate and/or sublicensee, in a country in the Licensed Territory infringes one or more patent or other intellectual property right held by such Third Party (an Infringement Suit ), Acorda (or such Affiliate or sublicensee) shall have the right to defend and settle such Infringement Suit at its sole expense. In such event, the Parties shall meet (which meeting may at any Partys request be by telephone conference or videoconference) and discuss in good faith the best defenses to such Infringement Suit, and Institutions shall, subject to being indemnified against any liability and having the right to be separately represented by their own counsel at their own expense, provide Acorda with reasonable assistance and cooperation in defending such Infringement Suit at Acordas sole expense. Acorda shall have the right to credit against royalties owed to the Institutions under Sections 3.2 and 3.3 [***] of any costs and expenses of such defense and settlement, but solely to the extent such costs and expenses relate directly to the defense and settlement (if any) of any claims or allegations relating directly to infringement by the Licensed Product. If, however, such Third Party makes a payment to reimburse Acorda (and/or its Affiliate and/or sublicensee) for such costs and expenses of defending such infringement suit or action, then Acorda will pay to Institutions, out of such Third Party payment, a pro rata amount (i.e., the ratio of the amount of the Third Party payment compared to the total defense costs and expenses), but not to exceed the total amount that Acorda credited against royalties owed under the previous sentence. Notwithstanding the foregoing, Acorda (or such Affiliate or sublicensee)
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shall not settle any such Infringement Suit in a manner that materially adversely impacts the Licensed Patents without Institutions prior written consent, such consent not to be unreasonably withheld or delayed. For clarity, any costs and expenses of enforcing Licensed Patents, including those costs relating to the assertion of a counterclaim alleging infringement of Licensed Patents by a Third Party in response to an Infringement Suit, shall not be included in the calculation and allocation of costs and expenses under this Section 7.5, but instead shall be included in the calculation and allocation of costs and expenses under Section 7.1, 7.2 or 7.3, as applicable.
ARTICLE 8
INDEMNIFICATION AND LIMITATION OF LIABILITY
8.1 Limitation of Liability. NO PARTY SHALL BE LIABLE TO ANOTHER PARTY, ITS AFFILIATES, CUSTOMERS OR SUBLICENSEES FOR ANY COMPENSATORY, SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT OR THE MANUFACTURE, TESTING, LABELING, USE OR SALE OF LICENSED PRODUCTS. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 8.1 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTIONS 8.2, 8.3 OR 8.4, OR DAMAGES AVAILABLE FOR BREACHES OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE 9.
8.2 Indemnification by Acorda.
(a) Indemnification of CUTS. Acorda and/or its Affiliate shall defend, indemnify and hold harmless CUTS and the University of Cambridge, and their respective directors, students and employees (the CUTS Indemnitees ), from and against any and all losses, liabilities, expenses or damages (including reasonable attorneys fees) (collectively, the Losses ) resulting from claims made or legal proceedings instituted, made or brought against any CUTS Indemnitee by a Third Party arising or alleged to arise by reason of, or in connection with, any and all personal injury (including death) and property damage caused by the manufacture, testing, design, use, Sale or labeling of any Licensed Products by Acorda or its Affiliates, contractors, agents or sublicensees, except to the extent of any Losses that arise from the negligence or intentional misconduct of any CUTS Indemnitee.
(b) Indemnification of KCL. Acorda shall defend, indemnify and hold harmless KCL and its directors, students and employees (the KCL Indemnitees ), from and against any and all Losses resulting from claims or legal proceedings instituted, made or brought against any KCL Indemnitee by a Third Party arising or alleged to arise by reason of, or in connection with, any and all personal injury (including death) and property damage caused by the manufacture, testing, design, use, Sale or labeling of any Licensed Products by Acorda or its Affiliates, contractors, agents or sublicensees, except to the extent of any Losses that arise from the negligence or intentional misconduct of any KCL Indemnitee.
8.3 Indemnification by CUTS. CUTS shall defend, indemnify and hold harmless Acorda and its Affiliates, directors, officers, agents, contractors, sublicensees and employees (the
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Acorda Indemnitees ) from and against any and all Losses resulting from claims or legal proceedings instituted, made or brought against any Acorda Indemnitee by a Third Party arising or alleged to arise by reason of, or in connection with, any breach of Section 12.2 by CUTS, except to the extent of any Losses that arise from the gross negligence or intentional misconduct of any Acorda Indemnitee, and in any such event, CUTS liability to the Acorda Indemnitees shall not exceed the total amount of the portion of all payments paid by Acorda to CUTS under this Agreement that CUTS retains and is not subsequently paid by CUTS to KCL; provided however, and CUTS hereby agrees, that such limitation shall not exclude or restrict CUTS liability for any fraud or other intentional misrepresentation, or death and personal injury caused by gross negligence or wilful misconduct of any CUTS Indemnitee.
8.4 Indemnification by KCL. KCL shall defend, indemnify and hold harmless Acorda Indemnitees from and against any and all Losses resulting from claims or legal proceedings instituted, made or brought against any Acorda Indemnitee by a Third Party arising or alleged to arise by reason of, or in connection with, any breach of Section 12.1 by KCL, except to the extent of any Losses that arise from the gross negligence or intentional misconduct of any Acorda Indemnitee, and in any such event, KCL liability to the Acorda Indemnitees shall not exceed the total amount of the portion of all payments paid by Acorda to KCL under this Agreement; provided however, and KCL hereby agrees, that such limitation shall not exclude or restrict KCL liability for any fraud or other intentional misrepresentation, or death and personal injury caused by gross negligence or wilful misconduct of any KCL Indemnitee.
8.5 General Conditions of Indemnification. To be eligible to be indemnified hereunder, the indemnified Party shall provide the indemnifying Party with prompt notice of the claim giving rise to the indemnification obligation pursuant to this Article 8 and the exclusive ability to defend (with the reasonable cooperation of the indemnified Party) or settle any such claim; provided, however, that the indemnifying Party shall not enter into any settlement for damages other than monetary damages without the indemnified Partys prior written consent, such consent not to be unreasonably withheld or delayed. The indemnified Party shall have the right to participate, at its own expense and with counsel of its choice, in the defense of any claim or suit that has been assumed by the indemnifying Party.
8.6 Insurance. Each Party shall maintain reasonable levels of insurance or other adequate forms of protection to satisfy its respective indemnification obligations under this Agreement.
ARTICLE 9
CONFIDENTIALITY
9.1 Nondisclosure of Confidential Information. Except as otherwise provided hereunder, during the term of this Agreement and for a period of five (5) years thereafter, each Party (the Receiving Party ) agrees to retain in strict confidence, use only for the purposes of this Agreement, and not disclose any written information or data supplied by or on behalf of another Party to such Receiving Party under this Agreement and marked as proprietary or confidential ( Confidential Information ). Any written information, materials or data disclosed by one Party to another Party pursuant to the Confidential Disclosure Agreement
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among the Parties dated July 3, 2002 shall be deemed the disclosing Partys Confidential Information under this Agreement and shall be subject to the provisions of this Article 9.
9.2 Permitted Disclosure. It shall not be a breach of this Article 9 if the Receiving Party is required to disclose another Partys Confidential Information pursuant to an order of the government or a court of competent jurisdiction, provided that the Receiving Party (a) provides such other Party with adequate notice of the required disclosure, (b) cooperates with such other Partys efforts to protect its Confidential Information with respect to such disclosure and (c) takes all reasonable measures requested by such other Party to challenge or to modify the scope of such required disclosure. To the extent that it is reasonably necessary to fulfill its obligations or exercise its rights under this Agreement, or any rights which survive termination or expiration hereof, the Receiving Party may disclose Confidential Information of such other Party to its Affiliates, sublicensees, consultants, outside contractors and clinical investigators provided that such entities or persons are bound by obligations of confidentiality and non-use no less restrictive than the obligations in this Agreement and agree to use the Confidential Information only for such purposes as the Receiving Party is authorized to use the Confidential Information hereunder.
9.3 Exceptions. The obligation of a Party under Section 9.1 not to use or disclose another Partys Confidential Information shall not apply to any part of such Confidential Information that the Receiving Party can establish by competent written proof:
(a) at the time of disclosure is in the public domain or after disclosure comes into the public domain other than by unauthorized acts of the Receiving Party obligated not to disclose such Confidential Information and/or its Affiliates and/or sublicensees in contravention of this Agreement;
(b) is disclosed to the Receiving Party, its Affiliates or sublicensees by a Third Party having the right to disclose it;
(c) can be shown by written proof to already have been in the possession of the Receiving Party, its Affiliates or sublicensees prior to disclosure under this Agreement; or
(d) results from the research and development by the Receiving Party, its Affiliates or sublicensees, independent of disclosures from the disclosing Party of this Agreement, provided that the persons developing such information have not had exposure to the Confidential Information received from the disclosing Party.
9.4 Confidential Nature of Terms of Agreement. Except as expressly provided herein, each Party agrees not to disclose any terms of this Agreement to any Third Party without the consent of the other Parties; provided, however, that disclosures may be made as required by securities or other applicable laws, or to actual or prospective investors, sublicensees, corporate or merger partners or acquirers, or to a Partys accountants, attorneys, and other professional advisors, and, in the case of the Institutions, to The Wellcome Trust and in the case of KCL to IP2IPO Limited, provided that such individuals or entities expressly agree to keep the terms of the Agreement confidential.
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ARTICLE 10
TERM AND TERMINATION
10.1 Term. Unless sooner terminated as otherwise provided in this Agreement, the term of this Agreement shall commence on the Effective Date hereof and shall continue in full force and effect until the expiration of the last to expire Valid Claim and on such date this Agreement and the licenses granted hereunder shall automatically become non-exclusive, worldwide, fully paid-up, irrevocable licenses upon such expiry.
10.2 Termination by Acorda. Acorda may terminate this Agreement at any time upon ninety (90) days prior written notice to each of CUTS and KCL.
10.3 Termination by Institutions. The Institutions may terminate this Agreement forthwith by giving written notice to Acorda if Acorda and/or its Affiliates and/or agents and/or sub-contractors and/or sublicensees commence(s) legal proceedings to challenge the validity or ownership of any of the Licensed Patents.
10.4 Termination by any Party
(a) Material Breach. CUTS and KCL may terminate this Agreement if Acorda materially breaches its material obligations under this Agreement (e.g., material failure to pay CUTS and KCL pursuant to the terms of this Agreement) and Acorda fails to cure the breach within sixty (60) days after receipt of written notice from the non-breaching Party, such notice specifying in detail the nature of the alleged breach. Acorda may terminate this Agreement if one or both of the other Parties materially breaches its material obligations under this Agreement and such breaching Party(ies) fails to cure the breach within sixty (60) days after receipt of written notice from Acorda, such notice specifying in detail the nature of the alleged breach
(b) Cease of Business. Without prejudice to any other right or remedy, any Party may terminate this Agreement at any time by notice in writing to the other Parties, if any Party ceases to carry on business, is declared by a court of competent jurisdiction to be bankrupt, or an order made or a resolution passed for the winding up of any Party or upon the appointment of a liquidator of that Party.
10.5 Consequences of Termination. No termination of this Agreement shall relieve Acorda of the liability for payment of any Earned Royalties due for Licensed Products sold prior to the effective date of such termination or for Sublicense Royalties paid or payable prior to the effective date of such termination. Notwithstanding anything herein to the contrary, upon any termination or expiration of this Agreement, Acorda shall have the right to use or sell Licensed Products on hand on the date of such termination or expiration and to complete Licensed Products in the process of manufacture at the time of such termination or expiration and use or sell the same, provided that Acorda shall submit the applicable royalty reports described in Section 4.1, along with Earned Royalty and/or Sublicense Royalty payments in accordance with Sections 3.2, 3.3 and 3.4 for Sale of such Licensed Products. For clarity, upon termination of
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this Agreement under Section 10.2 or 10.3, Institutions are free to enter into a commercial license or similar agreement with any Third Party with respect to such Licensed Patents, or otherwise exploit such Licensed Patents. Further, upon the Institutions written request, the Parties shall negotiate in good faith the terms of an agreement between them on reasonable commercial terms to enable the Institutions to arrange for further exploitation of the Licensed Products as they exist at the date of termination, including to provide the Institutions with all improvements, information and results created or developed by Acorda and/or its Affiliates and/or their agents.
ARTICLE 11
ASSIGNMENT
No Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other Parties, except Acorda may make such an assignment without Institutions written consent to an Affiliate or to a successor to all, or substantially all, of the business of Acorda, whether in a merger, sale of stock, sale of assets or other transaction, provided, however, that Acorda may not assign or transfer this Agreement or any rights or obligations hereunder without Institutions written consent to such a successor entity where a significant portion of such entitys commercial business activity constitutes: (a) the manufacture and/or sale of military arms or weapons, or (b) the manufacture and/or sale of tobacco containing products. Any permitted successor or assignee of rights and/or obligations hereunder shall, in a writing to the other Parties, expressly assume performance of such rights and/or obligations. Any assignment or attempted assignment by any Party in violation of the terms of this Article 11 shall be null and void and of no legal effect.
ARTICLE 12
MISCELLANEOUS
12.1 KCL confirms to Acorda that with respect to the Patent Application and/or the Licensed Patents:
(a) as far as KCL is aware, having neither commissioned nor performed any searches or investigations into the existence of any third party rights, KCL owns its interests in the Patent Application free and clear of all licenses and encumbrances and the like of any nature whatsoever;
(b) KCL is not currently involved in any litigation, and is unaware of any pending litigation proceedings, relating to Institutions ownership of the Patent Application;
(c) this Agreement is a legal and valid obligation of, binding upon, and enforceable against KCL in accordance with the terms of this Agreement;
(d) the execution, delivery and performance of this Agreement does not as of the Effective Date conflict with, constitute a breach of, or violate any arrangement, understanding or agreement to which KCL is a party or by which KCL is bound;
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(e) KCL has not granted to a Third Party any right or interest in any of the Licensed Patents that is inconsistent with the rights granted to Acorda herein and shall not grant a Third Party any such right during the term of this Agreement;
(f) KCL has the right to enter into this Agreement, grant the rights granted herein and perform the obligations set forth in this Agreement; and
(g) KCL is the legal owner of its right, title and interest in the inventions developed by its respective Inventors giving rise to the Licensed Patents.
12.2 CUTS confirms to Acorda that with respect to the Patent Application and/or the Licensed Patents:
(a) as far as CUTS is aware, having performed no searches or investigations into the existence of any third party rights, CUTS owns its interests in the Patent Application free and clear of all licenses and encumbrances and the like of any nature whatsoever;
(b) CUTS is not currently involved in any litigation, and is unaware of any pending litigation proceedings, relating to Institutions ownership of the Patent Application;
(c) this Agreement is a legal and valid obligation of, binding upon, and enforceable against CUTS in accordance with the terms of this Agreement;
(d) the execution, delivery and performance of this Agreement does not as of the Effective Date conflict with, constitute a breach of, or violate any arrangement, understanding or agreement to which CUTS is a party or by which CUTS is bound;
(e) CUTS has not granted to a Third Party any right or interest in any of the Licensed Patents that is inconsistent with the rights granted to Acorda herein and shall not grant a Third Party any such right during the term of this Agreement;
(f) CUTS has the right to enter into this Agreement, grant the rights granted herein and perform the obligations set forth in this Agreement; and
(g) CUTS is the legal owner of its right, title and interest in inventions developed by Professor James Fawcett giving rise to the Licensed Patents.
12.3 Acorda confirms to Institutions that:
(a) this Agreement is a legal and valid obligation of, binding upon, and enforceable against Acorda in accordance with the terms of this Agreement;
(b) Acorda has the right to enter into this Agreement and perform the obligations set forth in this Agreement;
(c) the execution, delivery and performance of this Agreement does not conflict with, constitute a breach of, or violate any arrangement, understanding or agreement to which Acorda is a party or by which Acorda is bound; and
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
(d) Acorda shall be responsible for the performance by its Affiliates in accordance with the terms of this Agreement.
12.4 Disclaimer of Warranties. CUTS AND KCL MAKE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ASSUMES NO RESPONSIBILITIES WHATSOEVER WITH RESPECT TO THE USE, SALE, OR OTHER DISPOSITION BY ACORDA AND/OR ITS AFFILIATES AND/OR ITS SUBLICENSEES OF LICENSED PRODUCT(S).
12.5 Independent Contractor. Acordas relationship to Institutions shall be that of a licensee only. None of the Parties shall be considered to be an employee or agent of another, nor shall this Agreement constitute, create or in any way be interpreted as a joint venture, partnership or formal business organization of any kind. In that respect, no Party shall have the authority to execute any agreement on behalf of another Party, nor shall any Party have any authority to negotiate any agreement, except as such other Party may expressly direct in writing.
12.6 Patent Marking. Acorda agrees to mark the appropriate patent number or numbers on all Licensed Products made or Sold in the Licensed Territory in accordance with all applicable governmental laws, rules and regulations, and to require its sublicensees to do the same.
12.7 Use of Names. Acorda shall obtain the prior written approval of KCL or CUTS (as applicable), such approval not to be unreasonably withheld, prior to making use of the name, trademarks, logos or symbols of KCL, the University of Cambridge, CUTS (an authorized designee of the University of Cambridge for purposes of this Agreement), or their respective employees, students and faculty members for any commercial purpose, except as required to comply with law, regulation or court order. Institutions shall obtain the prior written approval of Acorda, such approval not to be unreasonably withheld, prior to making use of the name, trademarks, logos or symbols of Acorda for any commercial purpose, except as required to comply with law, regulation or court order.
12.8 Governing Law. This Agreement and all amendments, modifications, alterations, or supplements hereto, and the rights of the Parties hereunder, shall be construed under and governed by the laws of England and shall be subject to the exclusive jurisdiction of the English courts to which the Parties hereby submit, except that a Party may seek interim injunction in any court of competent jurisdiction.
12.9 Entire Agreement. This Agreement, the Sponsored Research Agreement and the Material Transfer Agreements of even date constitutes the entire, final and exclusive agreement among the Parties hereto, and supercedes and terminates all prior agreements and understandings between the Parties, with respect to the subject matter hereof and thereof, whether written or oral, including the Confidential Disclosure Agreement among the Parties dated July 3, 2002. No subsequent alteration, amendment, change or addition to this Agreement shall be binding upon the Parties unless reduced to writing and signed by an authorized officer of each Party.
12.10 Survival. Articles 1, 8, 9, and 12, and Sections 4.5, 4.6, 5.2 and 10.5 shall survive termination of this Agreement for any reason.
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
12.11 Severability. All rights and restrictions contained herein may be exercised and shall be applicable and binding only to the extent that they do not violate any applicable national laws and are intended to be limited to the extent necessary so that they will not render this Agreement illegal, invalid or unenforceable. If any provision or portion of any provision of this Agreement, not essential to the commercial purpose of this Agreement, shall be held to be illegal, invalid or unenforceable by a court of competent jurisdiction, it is the intention of the Parties that the remaining provisions or portions thereof shall constitute their agreement with respect to the subject matter hereof, and all such remaining provisions, or portions thereof, shall remain in full force and effect. To the extent legally permissible, the Parties shall use good faith efforts to agree to replace any illegal, invalid or unenforceable provision of this Agreement with a valid provision that shall implement as much as permitted the commercial intent of the illegal, invalid, or unenforceable provision. If any provision essential to the commercial purpose of this Agreement is held to be illegal, invalid or unenforceable and cannot be replaced by a valid provision which will implement the commercial intent of this Agreement, the Party(ies) who is the beneficiary of such illegal, invalid or unenforceable provision has the right to terminate this Agreement upon written notice, effective upon receipt, to the other Parties.
12.12 Notices. Any notice required or permitted to be given under this Agreement shall be in writing, shall specifically refer to this Agreement and shall be deemed to have been sufficiently given and received for all purposes (a) upon personal delivery to the appropriate address, (b) five (5) days after the date of mailing when sent first class certified or registered mail, postage prepaid, (c) three (3) business days after sending by internationally recognized express delivery service, or (d) one (1) business day after facsimile transmission to the appropriate number(s) below, with transmission confirmed by the recipient. Unless otherwise specified in writing in accordance with this Section 12.12, the mailing addresses and facsimile numbers of the Parties shall be as set forth below.
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For Acorda: |
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Acorda Therapeutics, Inc. |
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15 Skyline Drive |
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Hawthorne, New York 10532 USA |
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Attention: |
Harold Safferstein, Vice President, |
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Business Development |
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Fax Number: |
(914) 347-4560 |
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For CUTS: |
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Cambridge University Technical Services Limited |
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c/o Research Services Division |
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University of Cambridge |
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16 Mill Lane |
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Cambridge CB2 1SB, UK |
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Attention: Director |
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Fax Number: +44 (0)12 2333 2988 |
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For KCL: |
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Kings College London |
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KCL Enterprises Ltd |
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James Clerk Maxwell Building |
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57 Waterloo Road |
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London, SEI 8WA, UK |
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
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Attention: Director of Technology Transfer |
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Fax Number: +44 (0)20 7848 3320 |
12.13 Force Majeure. Any delays in, or failure of performance of any Party to this Agreement, shall not constitute a default hereunder, or give rise to any claim for damages, if and to the extent caused by occurrences beyond the control of the Party affected; including, but not limited to, acts of God, acts of terrorism, strikes or other concerted acts of workmen, civil disturbances, fires, floods, earthquakes, explosions, riots, war, rebellion, sabotage, acts of governmental authority or failure of governmental authority to issue licenses or approvals which may be required. The Party suffering such occurrence shall immediately notify the other Parties as soon as practicable and any time for performance hereunder shall be extended by the actual time of delay caused by the occurrence, provided that the Party affected by such occurrence uses reasonable efforts to overcome or avoid such delay.
12.14 Farther Assurances. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.
12.15 Headings. The headings appearing in this Agreement have been inserted for convenience of reference only and shall not affect the construction, meaning or interpretation of this Agreement or any of its terms and conditions.
12.16 No Waiver. The failure by any Party, at any time, or for any period of time, to enforce any of the provisions of this Agreement, shall not be construed as a waiver of such provisions or as a waiver of any Partys rights thereafter to enforce each and every such provision of this Agreement.
12.17 Construction. This Agreement has been prepared jointly by all Parties and shall not be strictly construed against any Party.
12.18 Counterparts. This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) and the same instrument.
[ Signature Page Follows ]
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Certain portions of this Exhibit have been omitted pursuant to a request for confidentiality. Such omitted portions, which are marked with brackets [ ] and an asterisk*, have been separately filed with the Commission.
IN WITNESS WHEREOF , Acorda, CUTS and KCL have caused this Agreement to be executed as of the Effective Date by their duly authorized representatives below.
ACORDA THERAPEUTICS, INC. |
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CAMBRIDGE UNIVERSITY TECHNICAL |
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SERVICES LIMITED |
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By: |
/s/ Hank Safferstein |
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By: |
/s/ R. C. Jennings |
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Print Name: |
Hank Safferstein |
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Print Name: |
DR. R. C. Jennings |
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Title: |
V.P. Business Dev. |
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Title: |
DIRECTOR |
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KINGS COLLEGE LONDON
By: |
/s/ SUSAN SMITH |
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Print Name: |
SUSAN SMITH |
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Title: |
DIRECTOR OF TECHNOLOGY TRANSFER |
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29
Exhibit 10.35
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PROMISSORY NOTE |
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1-28-04 |
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(Date) |
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FOR VALUE RECEIVED, Acorda Therapeutics, Inc. an other located at the address stated below ( Maker ) promises, jointly and severally if more than one, to pay to the order of General Electric Capital Corporation or any subsequent holder hereof (each, a Payee ) at its office located at 83 Wooster Heights Road, 5th Fl. Danbury, CT 06810 or at such other place as Payee or the holder hereof may designate, the principal sum of Six Million and 00/100 Dollars ($6,000,000.00), with interest on the unpaid principal balance, from the date hereof through and including the dates of payment, at a fixed interest rate of Nine and Ninety Three Hundredths percent (9.93%) per annum, to be paid in lawful money of the United States, in Thirty Six (36) consecutive monthly installments of principal and interest as follows:
Periodic |
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Installment |
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Amount |
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Six (6) |
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$49,650.03 |
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Twenty Nine (29) |
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$226,673.20 |
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each (Periodic Installment) and a final installment which shall be in the amount of the total outstanding principal and interest. The first Periodic Installment shall be due and payable on 3-1-05 and the following Periodic Installments and the final installment shall be due and payable on the same day of each succeeding month (each, a Payment Date). Such installments have been calculated on the basis of a 360 day year of twelve 30-day months. Each payment may, at the option of the Payee, be calculated and applied on an assumption that such payment would be made on its due date.
The acceptance by Payee of any payment which is less than payment in full of all amounts due and owing at such time shall not constitute a waiver of Payees right to receive payment in full at such time or at any prior or subsequent time.
The Maker hereby expressly authorizes the Payee to insert the date value is actually given in the blank space on the face hereof and on all related documents pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge agreement or like instrument (each of which is hereinafter called a Security Agreement ).
Time is of the essence hereof. If any installment or any other sum due under this Note or any Security Agreement is not received within ten (10) days after its due date, the Maker agrees to pay, in addition to the amount of each such installment or other sum, a late payment charge of five percent (5%) of the amount of said installment or other sum, but not exceeding any lawful maximum. If (i) Maker fails to make payment of any amount due hereunder within ten (10) days after the same becomes due and payable; or (ii) Maker is in default under, or fails to perform under any term or condition contained in any Security Agreement, then the entire principal sum remaining unpaid, together with all accrued interest thereon and any other sum payable under this Note or any Security Agreement, at the election of Payee, shall immediately become due and payable, with interest thereon at the lesser of eighteen percent (18%) per annum or the highest rate not prohibited by applicable law from the date of such accelerated maturity until paid (both before and after any judgment).
Maker may prepay in full, but not in part, its entire indebtedness hereunder upon payment of the entire indebtedness plus an additional sum as a premium equal to the following percentages of the remaining principal balance for the indicated period:
Prior to the first annual anniversary date of this note: Not Allowed.
Thereafter and prior to the second annual anniversary date of this note: Six percent (6%)
Thereafter and prior to the third annual anniversary date of this note: Five percent (5%)
Plus all other sums due hereunder or under any Security Agreement
It is the intention of the parties hereto to comply with the applicable usury laws; accordingly, it is agreed that, notwithstanding any provision to the contrary in this Note or any Security Agreement, in no event shall this Note or any Security Agreement require the payment or permit the collection of interest in excess of the maximum amount permitted by applicable law. If any such excess interest is contracted for, charged or received under this Note or any Security Agreement, or if all of the principal balance shall be prepaid, so that under any of such circumstances the amount of interest contracted for, charged or received under this Note or any Security Agreement on the principal balance shall exceed the maximum amount of interest permitted by applicable law, then in such event (a) the provisions of this paragraph shall govern and control, (b) neither Maker nor any other person or entity now or hereafter liable for the payment hereof shall be obligated to pay the amount of such interest to the extent that it is in excess of the maximum amount of interest permitted by applicable law, (c) any such excess which may have been collected shall be either applied as a credit against the then unpaid principal balance or refunded to Maker, at the option of the Payee, and (d) the effective rate of interest shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction thereof. It is further agreed that without limitation of the foregoing, all calculations of the rate of interest contracted for, charged or received under this Note or any Security Agreement which are made for the purpose of determining whether such rate exceeds the maximum lawful contract rate, shall be made, to the extent permitted by applicable law, by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or received from Maker or otherwise by Payee in connection with such indebtedness; provided, however, that if any applicable state law is amended or the law of the United States of America preempts any applicable state law, so that it becomes lawful for the Payee to receive a greater interest per annum rate than is presently allowed, the Maker agrees that, on the effective date of such amendment or preemption, as the case may be, the lawful maximum hereunder shall be increased to the maximum interest per annum rate allowed by the amended state law or the law of the United States of America.
The Maker and all sureties, endorsers, guarantors or any others (each such person, other than the Maker, an Obligor ) who may at any time become liable for the payment hereof jointly and severally consent hereby to any and all extensions of time, renewals, waivers or modifications of, and all substitutions or releases of, security or of any party primarily or secondarily liable on this Note or any Security Agreement or any term and provision of either, which may be made, granted or consented to by Payee, and agree that suit may be brought and maintained against any one or more of them, at the election of Payee without joinder of any other as a party thereto, and that Payee shall not be required first to foreclose, proceed against, or exhaust any security hereof in order to enforce payment of this Note. The Maker and each Obligor hereby waives presentment, demand for payment, notice of nonpayment, protest, notice of protest, notice of dishonor, and all other notices in connection herewith, as well as filing of suit (if permitted by law) and diligence in collecting this Note or enforcing any of the security hereof, and agrees to pay (if permitted by law) all expenses incurred in collection, including Payees actual attorneys fees.
THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
This Note and any Security Agreement constitute the entire agreement of the Maker and Payee with respect to the subject matter hereof and supersedes all prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its provisions or conditions, shall be valid unless in writing and signed by an authorized representative of Maker and Payee. Any such waiver, consent, modification or change shall be effective only in the specific instance and for the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with any statute, law or applicable rule shall be deemed omitted, modified or altered to conform thereto.
Exhibit 21.1
MS Research and Development Corp.
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Acorda Therapeutics, Inc:
We consent to the use of our report dated October 3, 2005, except for Note (16) (as to the effects of a reverse stock split) which is as of October , 2005 with respect to the consolidated balance sheets of Acorda Therapeutics, Inc. and subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders (deficit), and cash flows for the year ended December 31, 2004, the six-month period ended December 31, 2003, and years ended June 30, 2003 and 2002, included in the registration statement on Form S-1 of Acorda Therapeutics, Inc. filed on October 4, 2005 and to the reference to our firm under the headings Experts and Selected Consolidated Financial Data in the prospectus.
/s/ KPMG LLP |
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Short Hills, New Jersey |
October 3, 2005 |