x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
56-2110007
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
4233 Technology Drive
Durham, North Carolina
|
27704
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
x
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
PART I. FINANCIAL INFORMATION
|
||
PART II. OTHER INFORMATION
|
||
December 31,
2013
|
September 30,
2014
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
33,297,970
|
$
|
50,254,355
|
||||
Short-term investments
|
13,659,812
|
19,267,602
|
||||||
Prepaid expenses and interest receivable
|
629,935
|
860,927
|
||||||
Deferred financing costs
|
1,516,424
|
379,235
|
||||||
Other receivables
|
424,501
|
163,184
|
||||||
Total current assets
|
49,528,642
|
70,925,303
|
||||||
Property and equipment, net
|
1,602,103
|
4,533,095
|
||||||
Long-term investment |
—
|
1,325,000 | ||||||
Other assets
|
550
|
11,020
|
||||||
Total assets
|
$
|
51,131,295
|
$
|
76,794,418
|
||||
Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ (Deficit) Equity
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
1,317,072
|
$
|
3,115,904
|
||||
Accrued bonuses
|
—
|
589,014
|
||||||
Other accrued expenses
|
1,800,794
|
1,130,054
|
||||||
Current portion of notes payable
|
45,447
|
38,636
|
||||||
Total current liabilities
|
3,163,313
|
4,873,608
|
||||||
Long-term portion of notes payable
|
7,014,106
|
19,603,454
|
||||||
Long-term portion of facility lease obligation
|
—
|
2,563,320
|
||||||
Deferred liability
|
3,066,000
|
3,066,000
|
||||||
Commitments
|
||||||||
Redeemable convertible preferred stock
|
113,664,469
|
—
|
||||||
Stockholders’ (deficit) equity
|
||||||||
Preferred stock $0.001 par value; 0 and 5,000,000 shares authorized as of December 31, 2013 and September 30, 2014; 0 shares issued and outstanding as of December 31, 2013 and September 30, 2014
|
—
|
—
|
||||||
Common stock $0.001 par value; 120,000,000 and 200,000,000 shares authorized as of December 31, 2013 and September 30, 2014; 235,707 and 19,655,650 shares issued and outstanding as of December 31, 2013 and September 30, 2014
|
236
|
19,656
|
||||||
Accumulated other comprehensive loss
|
(102,531
|
)
|
(114,894
|
)
|
||||
Additional paid-in capital
|
75,189,950
|
234,733,048
|
||||||
Accumulated deficit
|
(150,864,248
|
)
|
(187,949,774
|
)
|
||||
Total stockholders’ (deficit) equity
|
(75,776,593
|
)
|
46,688,036
|
|||||
Total liabilities, redeemable convertible preferred stock and stockholders’ (deficit) equity
|
$
|
51,131,295
|
$
|
76,794,418
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Revenue
|
$
|
981,247
|
$
|
398,615
|
$
|
3,705,942
|
$
|
1,670,566
|
||||||||
Operating expenses
|
||||||||||||||||
Research and development
|
5,630,219
|
12,998,409
|
16,922,000
|
32,039,738
|
||||||||||||
General and administrative
|
1,024,167
|
2,320,036
|
3,042,249
|
6,119,334
|
||||||||||||
Total operating expenses
|
6,654,386
|
15,318,445
|
19,964,249
|
38,159,072
|
||||||||||||
Operating loss
|
(5,673,139
|
)
|
(14,919,830
|
)
|
(16,258,307
|
)
|
(36,488,506
|
)
|
||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
693
|
14,285
|
2,827
|
51,955
|
||||||||||||
Interest expense
|
(152
|
)
|
(179,808
|
)
|
(513
|
)
|
(526,244
|
)
|
||||||||
Change in fair value of warrant liability
|
—
|
—
|
355,352
|
—
|
||||||||||||
Investment tax credits
|
—
|
—
|
—
|
140,556
|
||||||||||||
Other expense
|
—
|
(15,664
|
)
|
—
|
(263,289
|
)
|
||||||||||
Other income (expense), net
|
541
|
(181,187
|
)
|
357,666
|
(597,022
|
)
|
||||||||||
Net loss
|
(5,672,598
|
)
|
(15,101,017
|
)
|
(15,900,641
|
)
|
(37,085,528
|
)
|
||||||||
Accretion of redeemable convertible preferred stock
|
5,325,406
|
—
|
5,250,020
|
(863,226
|
)
|
|||||||||||
Less: Preferred stock dividend due to exchanges of preferred shares
|
(14,726,088
|
)
|
—
|
(14,726,088
|
)
|
—
|
||||||||||
Net loss attributable to common stockholders
|
$
|
(15,073,280
|
)
|
$
|
(15,101,017
|
)
|
$
|
(25,376,709
|
)
|
$
|
(37,948,754
|
)
|
||||
Net loss attributable to common stockholders per share, basic and diluted
|
$
|
(65.23
|
)
|
$
|
(0.77
|
)
|
$
|
(111.19
|
)
|
$
|
(2.29
|
)
|
||||
Weighted average shares outstanding, basic and diluted
|
231,084
|
19,655,605
|
228,224
|
16,596,437
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Net loss
|
$
|
(5,672,598
|
)
|
$
|
(15,101,017
|
)
|
$
|
(15,900,641
|
)
|
$
|
(37,085,528
|
)
|
||||
Other comprehensive gain (loss)
|
||||||||||||||||
Foreign currency translation gain (loss)
|
2,180
|
(8,069
|
)
|
(5,036
|
)
|
(3,558
|
)
|
|||||||||
Unrealized (loss) on short-term investments
|
—
|
(4,505
|
)
|
—
|
(8,805
|
)
|
||||||||||
Total comprehensive loss
|
$
|
(5,670,418
|
)
|
$
|
(15,113,591
|
)
|
$
|
(15,905,677
|
)
|
$
|
(37,097,891
|
)
|
Nine Months Ended
September 30,
|
||||||||
2013
|
2014
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(15,900,641
|
)
|
$
|
(37,085,528
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Depreciation and amortization
|
472,666
|
412,537
|
||||||
Compensation expense related to stock options
|
586,676
|
2,126,557
|
||||||
Decrease in fair value of warrant liability
|
(355,352
|
)
|
—
|
|||||
Issuance of restricted stock recorded as consulting expense
|
16,500
|
—
|
||||||
Gain on disposal of equipment
|
(50,835
|
)
|
(1,710
|
)
|
||||
Interest accrued on long-term debt
|
—
|
519,820
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Prepaid expenses and other receivables
|
270,005
|
30,325
|
||||||
Deferred financing costs
|
—
|
(139,796
|
)
|
|||||
Other assets
|
—
|
(10,471
|
)
|
|||||
Accounts payable
|
(590,193
|
)
|
1,798,832
|
|||||
Accrued expenses
|
305,042
|
(81,726
|
)
|
|||||
Net cash used in operating activities
|
(15,246,132
|
)
|
(32,431,160
|
)
|
||||
Cash flows from investing activities
|
||||||||
Purchase of property and equipment
|
(414,958
|
)
|
(780,582
|
)
|
||||
Payment to restricted cash account securing letter of credit
|
—
|
(1,325,000
|
) | |||||
Proceeds from sale of fixed assets
|
50,835
|
2,000
|
||||||
Purchases of short-term investments
|
—
|
(20,192,499
|
)
|
|||||
Sales of short-term investments
|
4,148,871
|
—
|
||||||
Proceeds from maturity of short-term investments
|
—
|
14,575,905
|
||||||
Net cash provided by (used in) investing activities
|
3,784,748
|
(7,720,176
|
)
|
|||||
Cash flows from financing activities
|
||||||||
Proceeds from sale of redeemable convertible preferred stock
|
21,417,272
|
—
|
||||||
Proceeds from issuance of common stock warrants
|
590,132
|
—
|
||||||
Proceeds from sale of common stock
|
—
|
49,829,800
|
||||||
Stock issuance costs
|
(507,877
|
)
|
(4,875,404
|
)
|
||||
Proceeds from issuance of notes payable and warrants
|
—
|
12,500,000
|
||||||
Payment of debt issuance costs
|
—
|
(310,000
|
)
|
|||||
Payments on notes payable
|
(23,790
|
)
|
(38,610
|
)
|
||||
Proceeds from exercise of common stock options
|
—
|
5,410
|
||||||
Net cash provided by financing activities
|
21,475,737
|
57,111,196
|
||||||
Effect of exchange rates changes on cash
|
(4,966
|
)
|
(3,475
|
)
|
||||
Net increase in cash and cash equivalents
|
10,009,387
|
16,956,385
|
||||||
Cash and cash equivalents
|
||||||||
Beginning of period
|
8,214,865
|
33,297,970
|
||||||
End of period
|
$
|
18,224,252
|
$
|
50,254,355
|
||||
Supplemental disclosure of cash flow information
|
||||||||
Cash paid for interest
|
$
|
512
|
$
|
4,659
|
||||
Supplemental disclosure of noncash investing and financing activities
|
||||||||
Conversion of preferred stock into common stock
|
$
|
—
|
$
|
114,527,695
|
||||
Preferred stock accretion
|
$
|
5,250,020
|
$
|
(863,226
|
) | |||
Interest accrued on long-term debt
|
$
|
—
|
$
|
519,820
|
||||
Recognition of asset and facility lease obligation related to construction of new property
|
$
|
—
|
$
|
2,563,320
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Balance as of
December 31,
2013
|
|||||||||||||
Assets
|
||||||||||||||||
Money-market funds
|
$
|
22,891,418
|
$
|
—
|
$
|
—
|
$
|
22,891,418
|
||||||||
Short-term investments
|
—
|
13,659,812
|
—
|
13,659,812
|
||||||||||||
Total assets at fair value
|
$
|
22,891,418
|
$
|
13,659,812
|
$
|
—
|
$
|
36,551,230
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
Balance as of
September 30,
2014
|
|||||||||||||
Assets
|
||||||||||||||||
Money-market funds
|
$
|
37,029,293
|
$
|
—
|
$
|
—
|
$
|
37,029,293
|
||||||||
Short-term investments
|
—
|
19,267,602
|
—
|
19,267,602
|
||||||||||||
Total assets at fair value
|
$
|
37,029,293
|
$
|
19,267,602
|
$
|
—
|
$
|
56,296,895
|
December 31,
2013
|
September 30,
2014
|
|||||||
Office furniture and equipment
|
$
|
528,732
|
$
|
452,819
|
||||
Computer equipment
|
712,609
|
755,549
|
||||||
Computer software
|
540,809
|
549,118
|
||||||
Laboratory equipment
|
5,264,952
|
5,351,515
|
||||||
Leasehold improvements
|
2,643,023
|
2,642,281
|
||||||
Asset related to facility lease obligation
|
—
|
2,563,320
|
||||||
Construction of manufacturing facility in progress
|
76,010
|
329,680
|
||||||
9,766,135
|
12,644,282
|
|||||||
Less: Accumulated depreciation and amortization
|
(8,164,032
|
)
|
(8,111,187
|
)
|
||||
Property and equipment, net
|
$
|
1,602,103
|
$
|
4,533,095
|
Three months ended September 30, 2013
|
$
|
143,068
|
||
Three months ended September 30, 2014
|
$
|
146,388
|
||
Nine months ended September 30, 2013
|
$
|
472,666
|
||
Nine months ended September 30, 2014
|
$
|
412,537
|
December 31,
2013
|
September 30,
2014
|
|||||||
Notes payable under the venture loan and security agreement
|
$
|
—
|
$
|
12,500,000
|
||||
Less related debt discount
|
—
|
(398,673
|
)
|
|||||
Notes payable under the venture loan and security agreement, net of debt discount
|
—
|
12,101,327
|
||||||
Promissory note payable to Medinet including accrued interest
|
6,936,466
|
7,451,627
|
||||||
Other notes payable
|
123,087
|
89,136
|
||||||
Total notes payable
|
7,059,553
|
19,642,090
|
||||||
Less current portion
|
(45,447
|
)
|
(38,636
|
)
|
||||
Long-term portion of notes payable
|
$
|
7,014,106
|
$
|
19,603,454
|
Year ending December 31:
|
||||
2015
|
$
|
375,333
|
||
2016
|
571,445
|
|||
2017
|
584,303
|
|||
2018
|
597,449
|
|||
2019
|
610,892
|
|||
Thereafter
|
3,496,201
|
|||
Total future minimum lease payments
|
$
|
6,235,623
|
Series A Preferred
|
Series B Preferred
|
Series C Preferred
|
Series D Preferred
|
Series E Preferred
|
Total Preferred Stock
|
|||||||||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2013
|
1,040,216
|
$
|
332,869
|
9,803,688
|
$
|
5,521,437
|
28,716,679
|
$
|
2,655,884
|
21,040,817
|
$
|
33,262,492
|
56,011,258
|
$
|
71,891,787
|
116,612,658
|
$
|
113,664,469
|
||||||||||||||||||||||||||||||
Accretion
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
336,350
|
—
|
526,876
|
—
|
863,226
|
||||||||||||||||||||||||||||||||||||
Shares converted to common stock
|
(1,040,216
|
)
|
(332,869
|
)
|
(9,803,688
|
)
|
(5,521,437
|
)
|
(28,716,679
|
)
|
(2,655,884
|
)
|
(21,040,817
|
)
|
(33,598,842
|
)
|
(56,011,258
|
)
|
(72,418,423
|
)
|
(116,612,658
|
)
|
(114,527,455
|
)
|
||||||||||||||||||||||||
Stock issuance costs
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(240
|
)
|
—
|
(240
|
)
|
||||||||||||||||||||||||||||||||||
Balance as of September 30, 2014
|
—
|
$
|
—
|
—
|
$
|
—
|
—
|
$
|
—
|
—
|
$
|
—
|
—
|
$
|
—
|
—
|
$
|
—
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Research and development
|
$
|
95,191
|
$
|
497,524
|
$
|
281,726
|
$
|
1,114,917
|
||||||||
General and administrative
|
117,939
|
417,524
|
316,950
|
1,011,640
|
||||||||||||
Total stock-based compensation expense
|
$
|
213,130
|
$
|
915,048
|
$
|
598,676
|
$
|
2,126,557
|
Number of
Shares
|
Weighted
Average Exercise
Price
|
Weighted
Average
Contractual
Term
(in years)
|
||||||||||
Outstanding as of December 31, 2013
|
1,957,069
|
$
|
5.48
|
|||||||||
Granted
|
924,703
|
$
|
6.74
|
|||||||||
Exercised
|
(1,288
|
)
|
$
|
4.20
|
||||||||
Cancelled
|
(32,998
|
)
|
$
|
4.92
|
||||||||
Outstanding as of September 30, 2014
|
2,847,486
|
$
|
5.83
|
8.89
|
||||||||
Exercisable as of September 30, 2014
|
549,163
|
$
|
4.46
|
7.01
|
||||||||
Vested and expected to vest as of September 30, 2014
|
2,676,992
|
$
|
5.80
|
8.84
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Risk-free interest rate
|
1.85
|
%
|
2.22
|
%
|
1.85
|
%
|
2.28
|
%
|
||||||||
Dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||||
Expected option term (in years)
|
7
|
7
|
7
|
7
|
||||||||||||
Volatility
|
94
|
%
|
98
|
%
|
94
|
%
|
96
|
%
|
Type of Warrant
|
Number of Warrants
|
Exercise Price
|
Expiration
Date(s)
|
||||
Common stock
|
1
|
$
|
23,894.34
|
7/13/16
|
|||
Common stock
|
82,780
|
$
|
9.06
|
9/29/21
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Net loss
|
$
|
(5,672,598
|
)
|
$
|
(15,101,017
|
)
|
$
|
(15,900,641
|
)
|
$
|
(37,085,528
|
)
|
||||
Accretion of redeemable convertible preferred stock
|
(332,232
|
)
|
—
|
(407,618
|
)
|
(863,226
|
)
|
|||||||||
Reverse prior accretion on redeemable preferred stock due to reduction in liquidation value of Series A, B, and C
|
5,657,638
|
—
|
5,657,638
|
—
|
||||||||||||
Preferred stock dividend due to exchanges of preferred shares
|
(14,726,088
|
)
|
—
|
(14,726,088
|
)
|
—
|
||||||||||
Net loss attributable to common stockholders
|
$
|
(15,073,280
|
)
|
$
|
(15,101,017
|
)
|
$
|
(25,376,709
|
)
|
$
|
(37,948,754
|
)
|
||||
Weighted average common shares outstanding, basic and diluted
|
231,084
|
19,655,605
|
228,224
|
16,596,437
|
||||||||||||
Net loss per share attributable to common stockholders, basic and diluted
|
$
|
(65.23
|
)
|
$
|
(0.77
|
)
|
$
|
(111.19
|
)
|
$
|
(2.29
|
)
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
Redeemable convertible preferred stock
|
7,282,052
|
—
|
4,515,971
|
2,077,270
|
||||||||||||
Stock options outstanding
|
581,831
|
2,769,043
|
568,701
|
2,252,817
|
||||||||||||
Warrants outstanding
|
390,421
|
911
|
439,614
|
1,816
|
•
|
$215.3 million from the sale of our common stock, convertible debt, warrants and preferred stock;
|
•
|
$32.9 million from the licensing of our technology;
|
•
|
$103.8 million from government contracts, grants and license and collaboration agreements; and
|
•
|
$12.5 million from our venture loan and security agreement with Horizon Technology Finance Corporation and Fortress Credit Co LLC.
|
•
|
continue our ongoing phase 3 clinical trial of AGS-003 for the treatment of mRCC and initiate additional clinical trials of AGS-003 for the treatment of other cancers;
|
•
|
initiate and conduct additional clinical trials of AGS-004 for the treatment of HIV;
|
•
|
seek regulatory approvals for our product candidates that successfully complete clinical trials;
|
•
|
build out and equip a new commercial facility for the manufacture of our Arcelis-based products;
|
•
|
establish a sales, marketing and distribution infrastructure to commercialize products for which we may obtain regulatory approval;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
continue our other research and development efforts;
|
•
|
hire additional clinical, quality control, scientific and management personnel; and
|
•
|
add operational, financial and management information systems and personnel, including personnel to support our product development and planned commercialization efforts.
|
Product Candidate
|
Primary Indication
|
Status
|
|||||
AGS-003
|
mRCC (clear cell)
|
•
|
Ongoing pivotal phase 3 clinical trial; completion of enrollment by the end of first quarter of 2015; overall survival data expected in mid-2016
|
||||
mRCC (non-clear cell)
|
•
|
Phase 2 clinical trial expected to be initiated in early 2015
|
|||||
Early stage RCC (neoadjuvant)
|
•
|
Investigator-initiated phase 2 clinical trial initiated in the fourth quarter of 2014
|
|||||
Early stage RCC (adjuvant)
|
•
|
Investigator-initiated phase 2 clinical trial to be initiated in early 2015 | |||||
Other solid tumors
|
•
|
Two phase 2 clinical trials expected to be initiated in late 2014 or early 2015
|
|||||
AGS-004
|
HIV
|
•
|
Enrollment in phase 2b clinical trial complete; data expected in the fourth quarter of 2014
|
||||
•
|
First stage of investigator-initiated clinical trial for HIV eradication began in May 2014
|
||||||
•
|
Clinical trial for long-term viral control in pediatric patients expected to be initiated in early 2015
|
Three Months Ended
September 30,
|
$
|
%
|
Nine Months Ended
September 30,
|
$
|
%
|
|||||||||||||||||||||||||||
2013
|
2014
|
Change
|
Change
|
2013
|
2014
|
Change
|
Change
|
|||||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||||||||||||
Revenue
|
$
|
981
|
$
|
399
|
$
|
(582
|
)
|
(59.3
|
)%
|
$
|
3,706
|
$
|
1,671
|
$
|
(2,035
|
)
|
(54.9
|
)%
|
||||||||||||||
Operating expenses
|
||||||||||||||||||||||||||||||||
Research and development
|
5,630
|
12,999
|
7,369
|
130.9
|
%
|
16,922
|
32,040
|
15,118
|
89.3
|
%
|
||||||||||||||||||||||
General and administrative
|
1,024
|
2,320
|
1,296
|
126.6
|
%
|
3,042
|
6,120
|
3,078
|
101.2
|
%
|
||||||||||||||||||||||
Total operating expenses
|
6,654
|
15,319
|
8,665
|
130.2
|
%
|
19,964
|
38,160
|
18,196
|
91.1
|
%
|
||||||||||||||||||||||
Loss from operations
|
(5,673
|
)
|
(14,920
|
)
|
(9,247
|
)
|
163.0
|
%
|
(16,258
|
)
|
(36,489
|
)
|
(20,231
|
)
|
124.4
|
%
|
||||||||||||||||
Interest income
|
—
|
14
|
14
|
*
|
2
|
51
|
49
|
*
|
||||||||||||||||||||||||
Interest expense
|
—
|
(180
|
)
|
(180
|
)
|
*
|
—
|
(526
|
)
|
(526
|
)
|
*
|
||||||||||||||||||||
Change in fair value of warrant liability
|
—
|
—
|
—
|
*
|
355
|
—
|
(355
|
)
|
*
|
|||||||||||||||||||||||
Investment tax credits
|
—
|
—
|
—
|
*
|
—
|
141
|
141
|
*
|
||||||||||||||||||||||||
Other expense
|
—
|
(15
|
)
|
(15
|
)
|
*
|
—
|
(263
|
)
|
(263
|
)
|
*
|
||||||||||||||||||||
Net loss
|
$
|
(5,673
|
)
|
$
|
(15,101
|
)
|
$
|
(9,428
|
)
|
166.2
|
%
|
$
|
(15,901
|
)
|
$
|
(37,086
|
)
|
$
|
(21,185
|
)
|
133.2
|
%
|
*
|
Not meaningful
|
•
|
salaries and related expenses for personnel in research and development functions;
|
•
|
fees paid to consultants and clinical research organizations, or CROs, including in connection with our clinical trials, and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work and statistical compilation and analysis;
|
•
|
allocation of facility lease and maintenance costs;
|
•
|
depreciation of leasehold improvements, laboratory equipment and computers;
|
•
|
costs related to production of product candidates for clinical trials;
|
•
|
costs related to compliance with regulatory requirements;
|
•
|
consulting fees paid to third parties related to non-clinical research and development;
|
•
|
costs related to stock options or other stock-based compensation granted to personnel in research and development functions; and
|
•
|
acquisition fees, license fees and milestone payments related to acquired and in-licensed technologies.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2013
|
2014
|
2013
|
2014
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Direct research and development expense by program:
|
||||||||||||||||
AGS-003
|
$
|
2,413
|
$
|
4,912
|
$
|
7,920
|
$
|
11,788
|
||||||||
AGS-004
|
303
|
153
|
1,385
|
809
|
||||||||||||
Commercial manufacturing development
|
—
|
3,600
|
—
|
7,843
|
||||||||||||
Other
|
16
|
49
|
38
|
113
|
||||||||||||
Total direct research and development program expense
|
2,732
|
8,714
|
9,343
|
20,553
|
||||||||||||
Indirect research and development expense
|
2,898
|
4,285
|
7,579
|
11,487
|
||||||||||||
Total research and development expense
|
$
|
5,630
|
$
|
12,999
|
$
|
16,922
|
$
|
32,040
|
•
|
Direct research and development expense for AGS-003 increased from $2.4 million for the three months ended September 30, 2013 to $4.9 million in the three months ended September 30, 2014. This increase primarily reflects increased patient enrollment in the ongoing pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib in the three months ended September 30, 2014 as compared with the three months ended September 30, 2013; and
|
•
|
Direct research and development expense with respect to AGS-004 decreased from $0.3 million in the three months ended September 30, 2013 to $0.2 million in the three months ended September 30, 2014 primarily due to the decreased activity in our phase 2b clinical trial of AGS-004 as the number of patients receiving treatment in the trial declined.
|
•
|
We also incurred $3.6 million of direct research and development expense related to the initiation of our commercial manufacturing development efforts during the three months ended September 30, 2014.
|
•
|
Direct research and development expense for AGS-003 increased from $7.9 million for the nine months ended September 30, 2013 to $11.8 million in the nine months ended September 30, 2014. This increase primarily reflects increased patient enrollment in the ongoing pivotal phase 3 clinical trial of AGS-003 in combination with sunitinib in the nine months ended September 30, 2014 as compared with the nine months ended September 30, 2013; and
|
•
|
Direct research and development expense with respect to AGS-004 decreased from $1.4 million in the nine months ended September 30, 2013 to $0.8 million in the nine months ended September 30, 2014 primarily due to the decreased activity in our phase 2b clinical trial of AGS-004 as the number of patients receiving treatment in the trial declined, partially offset by $0.2 million costs to support stage 1 of an investigator-initiated phase 2 clinical trial of AGS-004 in adult HIV patients aimed at eradication of the virus that began in May 2014..
|
•
|
We also incurred $7.8 million of direct research and development expense related to the initiation of our commercial manufacturing development efforts during the nine months ended September 30, 2014.
|
•
|
the scope, rate of progress, expense and results of our ongoing clinical trials;
|
•
|
the scope, rate of progress, expense and results of additional clinical trials that we may conduct;
|
•
|
other research and development activities; and
|
•
|
the timing of regulatory approvals.
|
Issue
|
Year
|
Gross
Proceeds
|
||||
(in thousands)
|
||||||
Series A Preferred
|
2000
|
$
|
1,594
|
|||
Series B Preferred
|
2001
|
$
|
39,382
|
|||
Series B-1 Preferred
|
2004
|
$
|
5,000
|
|||
Series C Preferred
|
2008
|
$
|
33,462
|
|||
Series D Preferred
|
2012
|
$
|
9,022
|
|||
Series D-1 Preferred
|
2012
|
$
|
15,978
|
|||
Series E Preferred
|
2013
|
$
|
48,000
|
Nine Months Ended
September 30,
|
||||||||
2013
|
2014
|
|||||||
(in thousands)
|
||||||||
Net cash provided by (used in):
|
||||||||
Operating activities
|
$
|
(15,247
|
)
|
$
|
(32,431
|
)
|
||
Investing activities
|
3,785
|
(7,720
|
)
|
|||||
Financing activities
|
21,476
|
57,111
|
||||||
Effect of exchange rate changes on cash
|
(5
|
)
|
(4
|
)
|
||||
Net (decrease) increase in cash and cash equivalents
|
$
|
10,009
|
$
|
16,956
|
•
|
the progress and results of our ongoing pivotal phase 3 clinical trial of AGS-003 and other clinical trials of AGS-003 that we may conduct;
|
•
|
the progress and results of our ongoing phase 2b clinical trial, our ongoing phase 2 clinical trial for HIV eradication and other clinical trials of AGS-004 that we may conduct and our ability to obtain additional funding under our NIH contract for our AGS-004 program;
|
•
|
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates;
|
•
|
the costs and timing of our planned build-out and equipping of a new commercial manufacturing facility;
|
•
|
the potential need to repay the $9.0 million loan under our license agreement with Medinet;
|
•
|
the costs, timing and outcome of regulatory review of our product candidates;
|
•
|
the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive regulatory approval;
|
•
|
revenue, if any, received from sales of our product candidates, should any of our product candidates be approved by the FDA or a similar regulatory authority outside the United States;
|
•
|
the costs of preparing, filing and prosecuting patent applications, maintaining, enforcing our intellectual property rights and defending intellectual property-related claims;
|
•
|
the extent to which we acquire or invest in businesses, products and technologies;
|
•
|
our ability to obtain government or other third party funding for the development of our product candidates; and
|
•
|
our ability to establish collaborations on favorable terms, if at all, particularly arrangements to develop, market and distribute AGS-003 outside North America and arrangements for the development and commercialization of our non-oncology product candidates, including AGS-004.
|
•
|
successful completion of clinical trials, including clinical results that are statistically significant as well as clinically meaningful in the context of the indications for which we are developing our product candidates;
|
•
|
receipt of marketing approvals from the FDA and similar regulatory authorities outside the United States;
|
•
|
establishing commercial manufacturing capabilities by building out and equipping a commercial manufacturing facility for our Arcelis-based product candidates;
|
•
|
maintaining patent and trade secret protection and regulatory exclusivity for our product candidates, both in the United States and internationally;
|
•
|
launching commercial sales of the products, if and when approved, whether alone or in collaboration with others;
|
•
|
commercial acceptance of our products, if and when approved, by patients, the medical community and third party payors;
|
•
|
obtaining and maintaining healthcare coverage and adequate reimbursement;
|
•
|
effectively competing with other therapies; and
|
•
|
a continued acceptable safety profile of the products following any marketing approval.
|
•
|
be delayed in obtaining marketing approval for our product candidates;
|
•
|
not obtain marketing approval at all;
|
•
|
obtain approval for indications or patient populations that are not as broad as intended or desired;
|
•
|
obtain approval with labeling that includes significant use restrictions or safety warnings, including boxed warnings;
|
•
|
be subject to additional post-marketing testing requirements;
|
•
|
be subject to restrictions on how the product is distributed or used; or
|
•
|
have the product removed from the market after obtaining marketing approval.
|
•
|
regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
|
•
|
we may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
|
•
|
clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;
|
•
|
the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials at a higher rate than we anticipate; for example, in our phase 2b clinical trial of AGS-004, we experienced a higher dropout rate than we anticipated due to the higher than expected number of patients who did not complete the full 12 week antiretroviral treatment interruption required by the protocol for the trial;
|
•
|
our third party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
|
•
|
we may decide, or regulators or institutional review boards may require us or our investigators to, suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
|
•
|
the cost of clinical trials of our product candidates may be greater than we anticipate; and
|
•
|
the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate.
|
•
|
severity of the disease under investigation;
|
•
|
eligibility criteria for the trial in question;
|
•
|
perceived risks and benefits of the product candidate under study;
|
•
|
efforts to facilitate timely enrollment in clinical trials;
|
•
|
patient referral practices of physicians;
|
•
|
the ability to monitor patients adequately during and after treatment; and
|
•
|
proximity and availability of clinical trial sites for prospective patients.
|
•
|
continue our ongoing phase 3 clinical trial of AGS-003 for the treatment of mRCC and initiate additional clinical trials of AGS-003 for the treatment of cancers;
|
•
|
initiate and conduct additional clinical trials of AGS-004 for the treatment of HIV;
|
•
|
seek regulatory approvals for our product candidates that successfully complete clinical trials;
|
•
|
build out and equip a new commercial facility for the manufacture of our Arcelis-based products;
|
•
|
establish a sales, marketing and distribution infrastructure to commercialize products for which we may obtain regulatory approval;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
continue our other research and development efforts;
|
•
|
hire additional clinical, quality control, scientific and management personnel; and
|
•
|
add operational, financial and management information systems and personnel, including personnel to support our product development and planned commercialization efforts.
|
•
|
the progress and results of our ongoing pivotal phase 3 clinical trial of AGS-003 and other clinical trials of AGS-003 that we may conduct;
|
•
|
the progress and results of our ongoing phase 2b clinical trial, our ongoing phase 2 clinical trial for HIV eradication and other clinical trials of AGS-004 that we may conduct and our ability to obtain additional funding under our NIH contract for our AGS-004 program;
|
•
|
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates;
|
•
|
the costs and timing of our planned leasing, build-out and equipping of a new commercial manufacturing facility;
|
•
|
the costs, timing and outcome of regulatory review of our product candidates;
|
•
|
the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive regulatory approval;
|
•
|
the potential need to repay the $9.0 million loan under our license agreement with Medinet;
|
•
|
revenue, if any, received from commercial sales of our product candidates, should any of our product candidates be approved by the FDA or a similar regulatory authority outside the United States;
|
•
|
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
|
•
|
the extent to which we acquire or invest in other businesses, products and technologies;
|
•
|
our ability to obtain government or other third party funding for the development of our product candidates; and
|
•
|
our ability to establish collaborations on favorable terms, if at all, particularly arrangements to develop, market and distribute AGS-003 outside North America and arrangements for the development and commercialization of our non-oncology product candidates, including AGS-004.
|
•
|
efficacy and potential advantages compared to alternative treatments;
|
•
|
the ability to offer our product candidates for sale at competitive prices;
|
|
•
|
convenience and ease of administration compared to alternative treatments;
|
•
|
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
|
•
|
the strength of sales, marketing and distribution support;
|
•
|
the approval of other new products for the same indications;
|
•
|
availability and amount of reimbursement from government payors, managed care plans and other third party payors;
|
•
|
adverse publicity about the product or favorable publicity about competitive products;
|
•
|
clinical indications for which the product is approved; and
|
•
|
the prevalence and severity of any side effects.
|
•
|
regulatory authorities may withdraw their approval of the product or seize the product;
|
•
|
we may be required to recall the product or change the way the product is administered;
|
•
|
additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular product;
|
•
|
regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;
|
•
|
we may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;
|
•
|
additional restrictions may be imposed on the distribution or use of the product via a risk evaluation and mitigation strategy, or REMS;
|
•
|
we could be sued and held liable for harm caused to patients;
|
•
|
the product may become less competitive; and
|
•
|
our reputation may suffer.
|
•
|
our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
|
•
|
the inability of sales personnel to obtain access to or persuade adequate numbers of physicians to prescribe any future products;
|
•
|
the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and
|
•
|
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
|
•
|
decreased demand for any product candidates or products that we may develop;
|
•
|
injury to our reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial participants;
|
•
|
significant costs to defend the related litigation;
|
•
|
substantial monetary awards to trial participants or patients;
|
•
|
loss of revenue; and
|
•
|
the inability to commercialize any products that we may develop.
|
•
|
terminate agreements, in whole or in part, for any reason or no reason;
|
•
|
reduce or modify the government’s obligations under such agreements without the consent of the other party;
|
•
|
claim rights, including intellectual property rights, in products and data developed under such agreements;
|
•
|
impose U.S. manufacturing requirements for products that embody inventions conceived or first reduced to practice under such agreements;
|
•
|
suspend or debar the contractor or grantee from doing future business with the government or a specific government agency;
|
•
|
pursue criminal or civil remedies under the False Claims Act, False Statements Act and similar remedy provisions specific to government agreements; and
|
•
|
limit the government’s financial liability to amounts appropriated by the U.S. Congress on a fiscal-year basis, thereby leaving some uncertainty about the future availability of funding for a program even after it has been funded for an initial period.
|
•
|
specialized accounting systems unique to government contracts and grants;
|
•
|
mandatory financial audits and potential liability for price adjustments or recoupment of government funds after such funds have been spent;
|
•
|
public disclosures of certain contract and grant information, which may enable competitors to gain insights into our research program; and
|
•
|
mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs and environmental compliance requirements.
|
•
|
collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
|
•
|
collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;
|
•
|
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or, require a new formulation of a product candidate for clinical testing;
|
•
|
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;
|
•
|
a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;
|
•
|
collaborators may have the right to conduct clinical trials of our product candidates without our consent and could conduct trials with flawed designs that result in data that adversely affect our clinical trials, our ability to obtain marketing approval for our product candidates or market acceptance of our product candidates. Pharmstandard, Green Cross and Medinet each have this right under our license agreements with them;
|
•
|
collaborators may hold rights that could preclude us from commercializing our products in certain territories. For example, we have granted Medinet an exclusive license to manufacture in Japan AGS-003 for the treatment of mRCC and an option to acquire a non-exclusive license to sell in Japan AGS-003 for the treatment of mRCC. Even if Medinet does not exercise the option to acquire the license to sell, we will not have the right to manufacture AGS-003 in Japan for the purposes of development and commercialization of AGS-003 for the treatment of mRCC. If we and Medinet are unable to agree to the terms of a supply agreement under these circumstances, we will not be able to sell AGS-003 in Japan unless we repurchase these rights from Medinet;
|
•
|
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;
|
•
|
disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and
|
•
|
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates. For example, our collaboration with Kyowa Hakko Kirin Co., Ltd. with respect to AGS-003 and AGS-004 was terminated by our collaborator.
|
•
|
demonstrate that the disposable components and sterilization and packaging methods used in the manufacturing process are suitable for use in manufacturing in accordance with current good manufacturing practice, or cGMP, and current Good Tissue Practices, or cGTP;
|
•
|
build and validate processing equipment that complies with cGMP and cGTP;
|
•
|
build out and equip a suitable manufacturing facility to accommodate the automated manufacturing process;
|
•
|
perform process testing with final equipment, disposable components and reagents to demonstrate that the methods are suitable for use in cGMP and cGTP manufacturing;
|
•
|
demonstrate consistency and repeatability of the automated manufacturing processes in the production of AGS-003 in our new facility to fully validate the manufacturing and control process using the actual automated cGMP processing equipment; and
|
•
|
demonstrate comparability between AGS-003 that we produce using existing processes in our current facility and AGS-003 produced using the automated processes in our new facility.
|
•
|
failure to obtain a sufficient supply of key raw materials of suitable quality;
|
•
|
difficulties in manufacturing our product candidates for multiple patients simultaneously;
|
•
|
difficulties in obtaining adequate patient-specific material, such as tumor samples, virus samples or leukapheresis product, from physicians;
|
•
|
difficulties in completing the development and validation of the specialized assays required to ensure the consistency of our product candidates;
|
•
|
failure to ensure adequate quality control and assurances in the manufacturing process as we increase production quantities;
|
•
|
difficulties in the timely shipping of patient-specific materials to us or in the shipping of our product candidates to the treating physicians due to errors by third party carriers, transportation restrictions or other reasons;
|
•
|
destruction of, or damage to, patient-specific materials or our product candidates during the shipping process due to improper handling by third party carriers, hospitals, physicians or us;
|
•
|
destruction of, or damage to, patient-specific materials or our product candidates during storage at our facilities; and
|
•
|
destruction of, or damage to, patient-specific materials or our product candidates stored at clinical and future commercial sites due to improper handling or holding by clinicians, hospitals or physicians.
|
•
|
restrictions on such products, manufacturers or manufacturing processes;
|
•
|
restrictions on the marketing of a product;
|
•
|
restrictions on product distribution;
|
•
|
requirements to conduct post-marketing clinical trials;
|
•
|
warning or untitled letters;
|
•
|
withdrawal of the products from the market;
|
•
|
refusal to approve pending applications or supplements to approved applications that we submit;
|
•
|
recall of products;
|
•
|
fines, restitution or disgorgement of profits or revenue;
|
•
|
suspension or withdrawal of regulatory approvals;
|
•
|
refusal to permit the import or export of our products;
|
•
|
product seizure; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
the federal healthcare anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;
|
•
|
the federal False Claims Act imposes civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
|
•
|
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
|
•
|
the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;
|
•
|
the federal transparency requirements under the Health Care Reform Law will require manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests; and
|
•
|
analogous state laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
|
•
|
establish a classified board of directors such that not all members of the board are elected at one time;
|
•
|
allow the authorized number of our directors to be changed only by resolution of our board of directors;
|
•
|
limit the manner in which stockholders can remove directors from the board;
|
•
|
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;
|
•
|
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;
|
•
|
limit who may call stockholder meetings;
|
•
|
authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and
|
•
|
require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
|
•
|
results of clinical trials of our product candidates or those of our competitors;
|
•
|
the success of competitive products or technologies;
|
•
|
potential approvals of our product candidates for marketing by the FDA or equivalent foreign regulatory authorities or our failure to obtain such approvals;
|
•
|
regulatory or legal developments in the United States and other countries;
|
•
|
the results of our efforts to commercialize our product candidates;
|
•
|
developments or disputes concerning patents or other proprietary rights;
|
•
|
the recruitment or departure of key personnel;
|
•
|
the level of expenses related to any of our product candidates or clinical development programs;
|
•
|
the results of our efforts to discover, develop, acquire or in-license additional product candidates or products;
|
•
|
actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;
|
•
|
variations in our financial results or those of companies that are perceived to be similar to us;
|
•
|
changes in the structure of healthcare payment systems;
|
•
|
market conditions in the pharmaceutical and biotechnology sectors and issuance of new or changed securities analysts’ reports or recommendations;
|
•
|
general economic, industry and market conditions; and
|
•
|
the other factors described in this “Risk Factors” section.
|
ARGOS THERAPEUTICS, INC.
|
||
By:
|
/s/ Jeffrey D. Abbey
|
|
Name: Jeffrey D. Abbey
|
||
Title: President and Chief Executive Officer
|
Exhibit
Number
|
Description of Exhibit
|
|
10.1
|
Lease Agreement, dated August 18, 2014, between Argos Therapeutics, Inc. and TKC LXXII, LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on August 22, 2014)
|
|
10.2
|
Venture Loan and Security Agreement, dated September 29, 2014, by and among Argos Therapeutics, Inc., Horizon Technology Finance Corporation and Fortress Credit Co LLC (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 30, 2014)
|
|
10.3
|
Warrant issued to Horizon Technology Finance Corporation dated September 29, 2014 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on September 30, 2014)
|
|
10.4
|
Warrant issued to Fortress Credit Co LLC dated September 29, 2014 (Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on September 30, 2014)
|
|
10.5*+
|
Development Agreement, dated October 29, 2014, between Argos Therapeutics, Inc. and Invetech Pty Ltd. | |
10.6*
|
First Amendment to Lease Agreement, dated September 10, 2014, between Argos Therapeutics, Inc. and TKC LXXII, LLC | |
10.7*
|
Second Amendment to Lease Agreement, dated September 17, 2014, between Argos Therapeutics, Inc. and TKC LXXII, LLC | |
31.1*
|
Certification of principal executive officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
31.2*
|
Certification of principal financial officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
32.1*
|
Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, by the Registrant’s principal executive officer and principal financial officer
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
+ |
Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
|
Development Agreement
|
|||
Argos Therapeutics, Inc. (
Argos
)
Invetech Pty Ltd (
Invetech
)
|
|||
|
Details
|
4
|
|
Agreed terms
|
5
|
|
1.
|
Defined terms & interpretation
|
5
|
2.
|
Development of the Production System
|
11
|
3.
|
Prototypes and acceptance procedures
|
15
|
4.
|
Terms of Payment
|
16
|
5.
|
Deferred Fees
|
17
|
6.
|
GST
|
20
|
7.
|
Replication Arrangement
|
21
|
8.
|
Intellectual property rights
|
21
|
9.
|
Confidential Information
|
25
|
10.
|
Inspection of Records
|
27
|
11.
|
Reliance on information, results, Products, etc
|
27
|
12.
|
Compliance and regulatory
|
27
|
13.
|
Representations and warranties
|
28
|
14.
|
Exclusion of warranties and limited liability
|
29
|
15.
|
Indemnity
|
31
|
16.
|
Insurance
|
32
|
17.
|
Term and termination
|
32
|
18.
|
Dispute resolution
|
35
|
19.
|
Good faith and Non-Solicitation
|
36
|
20.
|
Notices and other communications
|
36
|
21.
|
Miscellaneous
|
36
|
Schedule 1 – Key Details
|
39
|
|
Schedule 2 – Program Milestones
|
40
|
|
Schedule 3 – Generic Program IP
|
41
|
|
Schedule 4 – Invetech Key Personnel
|
43
|
|
Schedule 5 – Specialist Program IP
|
44
|
Schedule 6 – Invetech Intellectual Property
|
45
|
|
Signing page
|
46
|
|
Annexure A – Production System Requirements Specification
|
47
|
|
Annexure B – Program Management Plan
|
48
|
|
Annexure C – Proposals
|
49
|
Date
|
Name
|
Argos Therapeutics, Inc.
|
Short form name
|
Argos
|
Notice details
|
4233 Technology Drive, Durham, NC 27704, USA
|
Attention:
Chief Executive Officer
|
Name
|
Invetech Pty Ltd
|
ABN
|
45 004 301 839
|
Short form name
|
Invetech
|
Notice details
|
495 Blackburn Road, Mt Waverley, Victoria 3149, Australia
Facsimile: +61 3 9211 7702
|
Attention:
Chief Executive Officer
|
A
|
Invetech develops biomedical, scientific instruments and production equipment.
|
B
|
Argos develops, manufactures and plans to market dendritic cell based therapies for a range of disease indications.
|
C
|
The Parties previously entered into that certain Development Agreement with an effective date of March 20, 2005 (the “Prior Agreement”) under which Invetech began development of the Production Systems.
|
D
|
The Parties have agreed that Invetech will further develop the Production Systems for Argos subject to the terms and conditions set out in this Agreement.
|
1.
|
Defined terms & interpretation
|
1.1
|
Defined terms
|
(a)
|
Intellectual Property developed pursuant to the Prior Agreement that is owned by Argos pursuant to the terms of the Prior Agreement; and
|
(b)
|
the Argos Marks; and
|
(c)
|
the Intellectual Property identified as Argos Intellectual Property in a Proposal and any improvements to such Intellectual Property; and
|
(d)
|
any Intellectual Property owned by or licensed to Argos existing before the Effective Date.
|
(a)
|
for receiving a notice under clause 17.2(c), a day that is not a Saturday, Sunday, public holiday or bank holiday in the place where the notice is sent; and
|
(b)
|
for all other purposes, a day that is not a Saturday, Sunday, bank holiday or public holiday in Victoria, Australia.
|
(a)
|
all Intellectual Property of such Party (including all samples or component parts of the Production System and any Prototypes);
|
(b)
|
all other information designated as confidential at the time of disclosure or otherwise treated by that Party as confidential;
|
(c)
|
that part of all notes and other records prepared by that Party based on or incorporating information referred to in paragraphs (a) or (b);
|
(d)
|
all copies of information, and those parts of notes and records referred to in any of paragraphs (a), (b) and (c); and
|
(e)
|
this Agreement, its attachments, schedule and annexures, as well as any other document mentioned or referenced therein;
|
(f)
|
the other Party creates (whether alone or jointly with any third person) independently of that Party and with no direct or indirect link with the Program; or
|
(g)
|
that is public knowledge (otherwise than as a result of a breach of confidentiality by the other Party or any of its permitted disclosees).
|
(a)
|
any international standards applicable from time to time to Production Systems;
|
(b)
|
any standard from time to time set by the regulatory authority of a country in which it is proposed to seek approval for the sale of Production Systems including, but not limited to the U.S., Australia, Russian Federation, Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan and Ukraine South Korea, Japan, China and European countries; or
|
(c)
|
where a standard is set in a country or internationally by a code of practice including a voluntary code then that standard.
|
(a)
|
any invention or discovery, manner, method or process of manufacture, method or principle of construction, computer program, database, algorithm, integrated circuit, circuit layout or semiconductor chip layout or design, plan, drawing or design, or scientific, technical or engineering information or document;
|
(b)
|
any improvement, modification or development of any of the foregoing;
|
(c)
|
any patent, patent application, or similar rights for or in respect of any intellectual property referred to in paragraphs (a) or (b) together with the existing rights in and associated with the patents and patent applications (including but not limited to any listed in any Proposal) and rights in any related or associated patent or patent application based on or in relation to similar subject matter;
|
(d)
|
any confidential information (including trade secrets and know-how) or right of confidentiality in respect of any information or document or other intellectual property referred to in paragraphs (a) or (b);
|
(e)
|
any copyright or other rights in the nature of copyright subsisting in any works or other subject matter referred to in paragraphs (a) or (b);
|
(f)
|
any eligible electronic layout rights or other rights in any integrated circuit, circuit layout or semiconductor chip layout or design referred to in paragraphs (a) or (b);
|
(g)
|
any unregistered or registered trademarks, application for registration of a trademark, or similar rights (including without limitation the Invetech Marks and the Argos Marks);
|
(h)
|
any registered design, application for registration of a design, rights to a design, right to apply for registration of a design or similar rights for or in respect of any work referred to in paragraphs (a) or (b); and
|
(i)
|
all other rights resulting from intellectual activity in the industrial, commercial, scientific, literary or artistic fields,
|
(a)
|
the Invetech Marks;
|
(b)
|
the Intellectual Property identified as Invetech Intellectual Property in a Proposal and any improvements to such Intellectual Property;
|
(c)
|
any Intellectual Property owned by or licensed to Invetech existing before the Effective Date, including without limitation, the Intellectual Property listed in
Schedule 6
; and
|
(d)
|
all Intellectual Property rights in Invetech's ideas, concepts, tools, methodologies and know-how (whether or not used or provided by Invetech in the performance of Invetech's obligations under this Agreement) and any improvements or developments to them.
|
(a)
|
If, upon interim review at 50% of events or at 75% of events, the DSMB recommends closing the Trial early based upon superiority indicating a positive efficacy outcome in favour of the active treatment arm that contains AGS-003: 30 June 2016; or;
|
(b)
|
If the Trial is not closed early at one of the interim analyses based upon review by the DSMB and proceeds to 100% of events or final data: 31 December 2016; or
|
(c)
|
31 December 2016.
|
1.2
|
Interpretation
|
(a)
|
the singular includes the plural and vice versa, and a gender includes other genders;
|
(b)
|
another grammatical form of a defined word or expression has a corresponding meaning;
|
(c)
|
a reference to a clause, paragraph, schedule or annexure is to a clause or paragraph of, or schedule or annexure to, this Agreement, and a reference to this Agreement includes any schedule or annexure;
|
(d)
|
a reference to a document or instrument includes the document or instrument as novated, altered, supplemented or replaced from time to time;
|
(e)
|
a reference to
AUD
,
A$
,
$A
,
dollar
or
$
is to Australian currency and a reference to
USD
, $US, US$ is to the currency of the United States of America;
|
(f)
|
a reference to time is to Victoria, Australia time;
|
(g)
|
a reference to a person includes a natural person, partnership, body corporate, association, governmental or local authority or agency or other entity;
|
(h)
|
a reference to a statute, ordinance, code or other law includes regulations and other instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
|
(i)
|
the meaning of general words is not limited by specific examples introduced by
including
,
for example
or similar expressions;
|
(j)
|
a rule of construction does not apply to the disadvantage of a Party because the Party was responsible for the preparation of this Agreement or any part of it; and
|
(k)
|
if a day on or by which an obligation must be performed or an event must occur is not a Business Day, the obligation must be performed or the event must occur on or by the next Business Day.
|
1.3
|
Headings
|
2.
|
Development of the Production System
|
2.1
|
Proposals
|
(a)
|
Each Development Stage of the Program Works including but not limited to estimated and/or agreed fees, expenses and costs will be agreed in writing between the Parties in a Proposal, which will form part of this Agreement upon execution by both Parties (it being acknowledged that there may be multiple Proposals and Development Stages active under this Agreement at any one time).
|
(b)
|
Invetech will prepare Proposals jointly with Argos for all aspects of the Program and the Parties agree that each Proposal will detail:
|
(i)
|
the Development Stage or Development Stages to be addressed by the Proposal;
|
(ii)
|
relevant development activities, outputs and Milestones (where applicable);
|
(iii)
|
an estimated schedule for each Development Stage;
|
(iv)
|
estimated and/or agreed costings (time, Equipment and expenses) and the payment schedule applicable to each Development Stage;
|
(v)
|
the extent (if any) to which the Proposal supersedes, modifies or replaces any previous Proposal or other provision in the Agreement;
|
(vi)
|
the Program Inputs to be provided with regard to the Development Stage;
|
(vii)
|
a non-exhaustive description if applicable of each Party's Intellectual Property used or likely to be used for the Development Stage.
|
2.2
|
Invetech's development obligations
|
(a)
|
Invetech must use reasonably diligent endeavours to achieve Completion of each Development Stage in accordance with the applicable Milestones and the terms of this Agreement (including Proposals).
|
(b)
|
Invetech shall use its reasonable diligent endeavours to set forth in each Proposal all Program Inputs. In the event that a Proposal fails to identify a Program Input which Invetech ought reasonably to know would be required as part of the Proposal, Invetech shall be responsible for providing such Program Input at no further charge to Argos, unless otherwise agreed in writing between the Parties. Otherwise, if any item, information (including Argos Intellectual Property and Invetech Intellectual Property), assistance or hardware reasonably required to complete a Development Stage is not specified in the relevant Proposal, then the Parties will agree in writing (such agreement not to be unreasonably withheld) on a variation to the relevant Proposal specifying whether such item, information, assistance or hardware is to be considered an Argos Program Input or an Invetech Program Input and specifying an agreed variation to the fees, expenses and costs, which variation will form part of this Agreement upon execution by both Parties.
|
(c)
|
Invetech will keep Argos regularly and periodically informed of the progress of the Program Work under this Agreement by:
|
(i)
|
Regularly updating the Joint Action List (JAL) following project teleconferences (weekly), other reporting and project communications as detailed in each Proposal; and
|
(ii)
|
regular telephone conferences, videoconferences or visits. For the avoidance of doubt, these may include meetings of the Coordination Committee,
|
(d)
|
Invetech will provide Invetech Program Inputs as required under Section (b), as provided for in Proposals or as otherwise agreed between the Parties from time to time.
|
(e)
|
Both Parties agree that, due to the evolution of Industry Standards or legal, regulatory or commercial considerations, changes in Proposals and the Specification may be required and that neither Party will unreasonably withhold consent to any change in this regard. Invetech may, however, withhold consent to any change in a Proposal or Specification if Argos will not accept consequential reasonable changes to Invetech's fees, costs and timing under Proposals. Any change agreed to the Specification or any Proposal must be in writing signed by both Parties or their authorised representatives as specified in Proposals from time to time unless otherwise nominated in writing.
|
(f)
|
The Program Work shall not be performed outside of Invetech's facilities, except in the normal course of Invetech's activities or unless otherwise agreed in writing between the Parties, provided that Invetech may use vendors of custom materials and similar qualified sub-contractors whether or not operating on Invetech premises, in the ordinary course of business so long as the use of such third parties does not result in the unauthorised disclosure of Confidential Information or prevent Invetech from assigning any intellectual property rights to Argos that would otherwise be assigned under this Agreement.
|
(g)
|
Invetech will use reasonable efforts to identify in each Proposal any material portion of its obligations thereunder that will be performed by sub-contractors, not operating routinely on Invetech premises.
|
(h)
|
The Program Management Plan may identify one or more named employees of Invetech to work on the Program in key positions (the
Key Positions
). Replacement of employees in Key Positions will be managed by the Coordination Committee. Invetech will replace any personnel who leave Key Positions with equivalently qualified persons as soon as reasonably possible.
|
2.3
|
Argos Development Obligations
|
(a)
|
Argos must use reasonably diligent endeavours to execute Proposals and supply Invetech with all requisite Argos Program Inputs to complete the Program Works:
|
(i)
|
in a timely manner;
|
(ii)
|
in sufficient quantities and of adequate quality (including having regard to fundamental performance and/or capacity requirements as specified in writing between the Parties) to enable Invetech to meet its obligations under this Agreement;
|
(iii)
|
at Argos' cost; and
|
(iv)
|
at Argos' risk.
|
(b)
|
Argos acknowledges and agrees that
|
(i)
|
any material delay in its supply of the requisite Argos Program Inputs, its execution of a Proposal, or the Parties' execution of an agreed variation under clause 2.2(b) may require consequential changes to Invetech's fees, costs and timing under Proposals and that Argos will not unreasonably withhold its consent to any such reasonable changes; and
|
(ii)
|
Invetech will not be liable for any failure or delay in the performance of its obligations under this Agreement if that failure or delay is due to a failure or delay of Argos to provide requisite Argos Program Inputs or to execute a Proposal, or a failure or delay of the Parties to execute an agreed variation under clause 2.2(b), so long as Invetech provides timely written notice to Argos regarding such failure or delay.
|
(c)
|
The cost of the development or acquisition of the Equipment, and its reasonable use and maintenance, is included in the payments made by Argos for the Program Works.
|
(d)
|
Argos shall ensure that access to its premises is available on reasonable notice to Invetech and/or its nominated representatives for the purpose of Invetech's performing under this Agreement.
|
2.4
|
Responsibilities of the Coordination Committee
|
(a)
|
During all the term of this Agreement, the Parties will use their reasonable commercial efforts in order to properly coordinate the Program. Each of the Parties shall appoint for that purpose two (2) individuals who will constitute the Coordination Committee. The initial members of such Coordination Committee shall be:
|
(i)
|
for Argos: [**]
|
(ii)
|
for Invetech: [**]
|
(b)
|
Members of the Coordination Committee from each of the Parties shall hold conferences in person, by teleconference or by videoconference on a regular basis during the term of this Agreement. The site, date and proposed agenda of any meeting shall be determined by mutual agreement between the members of the Coordination Committee in a timely manner. All items discussed during such meetings shall be summarised in written minutes.
|
(c)
|
Decisions of the Coordination Committee shall be valid only if made (i) in the presence of at least one representative of each Party and (ii) unanimously. Where such unanimous agreement cannot be reached after thirty days the provisions of clause 18 (other than 18.1(b)) hereof shall subsequently apply.
|
(d)
|
The Coordination Committee will oversee the Program Works, including:
|
(i)
|
monitoring the overall schedule and progress of the Program Works, including achievement of Milestones and Completion of Development Stages and Prototypes;
|
(ii)
|
supervising and recording the exchange of Confidential Information between the Parties;
|
(iii)
|
in concert with patent counsel, discussing and dealing with Intellectual Property-related issues that arise from time to time;
|
(iv)
|
reviewing End of Stage Acceptance Plans;
|
(v)
|
in concert with patent counsel, reviewing and determining in good faith whether any Intellectual Property used in relation with the Program Works qualifies as Argos Intellectual Property, Invetech Intellectual Property or Program Intellectual Property;
|
(vi)
|
determining whether some external circumstances, including without limitation changes in the regulatory constraints, evolutions in marketing requirements or changes in the Industry Standards require a modification of the Program Works or an amendment to this Agreement;
|
(vii)
|
if a Technical Failure occurs, designing promptly any modified Proposal likely to enable the Parties to circumvent such Technical Failure and, in the absence of any solution, monitoring the subsequent termination of this Agreement in compliance with the provisions of clause 17 hereof;
|
(viii)
|
using its reasonable commercial efforts to settle any Dispute arising out of the performance or interpretation of this Agreement; and
|
(ix)
|
managing the removal, involvement and replacement of personnel in Key Positions.
|
3.
|
Prototypes and acceptance procedures
|
3.1
|
Prototypes
|
(a)
|
Prototypes will be developed and provided by Invetech in accordance with the terms of this Agreement (including Proposals).
|
(b)
|
Argos and Invetech recognise that neither Party will have any liability in relation to the testing of Prototypes other than as is specified in the relevant Proposals and relevant End-of-stage Acceptance Plan.
|
3.2
|
Acceptance and Completion Procedures
|
(a)
|
Acceptance by Argos of Prototypes and Completion of a Development Stage will be governed by the relevant End-of-stage Acceptance Plan and Proposals.
|
(b)
|
Acceptance by Argos of the Production System will be governed by the End-of-stage Acceptance Plan for the final Development Stage mutually agreed to or developed by Invetech and Argos in writing.
|
3.3
|
Title and Risk in Equipment; Prototypes and Production Systems
|
(a)
|
Title in Equipment, Prototypes and other deliverables will only pass to Argos on payment being made in full by Argos for all Program Works, including payment of all Deferred Fees, together with all interest accrued in accordance with clause 5.2. Risk in Equipment and Prototypes will pass to Argos on delivery to Argos. Title and risk of loss to Production Systems will pass to Argos upon delivery to Argos, subject, however, to Invetech’s security interest granted pursuant to clause 5.7. Delivery will be ExWorks, Invetech's facility as defined in Incoterms 2010.
|
(b)
|
Argos shall pay any Taxes payable in relation to the supply of Equipment and Prototypes (other than income Tax payable by Invetech), except to the extent such Taxes are collected by Invetech for payment on Argos’ behalf.
|
4.
|
Terms of Payment
|
4.1
|
Currency
|
4.2
|
Invoicing and Payment
|
(a)
|
Invetech will submit invoices to Argos in accordance with the invoicing schedule in the Proposal or as otherwise specified in this Agreement. The amount specified in each invoice will be calculated by reference to the amount specified in the applicable Proposal.
|
(b)
|
Each invoice issued by Invetech will identify
|
(i)
|
the amount that is immediately payable in accordance with clause (c); and
|
(ii)
|
the amount for which payment is to be deferred in accordance with clause 5.1 Fees to be deferred.
|
(c)
|
Payment of invoices for development of the Production System and otherwise in connection with the Program Works must be made to Invetech by Argos within [**] days of the date each invoice is received by Argos.
|
(d)
|
All invoices are payable to Invetech by electronic funds transfer to the bank account set out in Schedule 1 (or as otherwise advised in writing by Invetech from time to time).
|
(e)
|
If any Prototype, Production System or other deliverables fail to comply in all material respects with requirements set forth in this Agreement and applicable Proposal, including Specifications and End-of-stage Acceptance Plans (
Defective Deliverable
), Argos may withhold payment thereof until Invetech has:
|
(i)
|
made reasonable endeavours to correct the Defective Deliverable; or
|
(ii)
|
replace the Defective Deliverable,
|
(f)
|
If Argos has paid for a Defective Deliverable, Invetech shall, promptly after receiving written notice from Argos and at Argos’ option, either repair the Defective Deliverable at no cost to Argos, replace the Deliverable at no cost to Argos, or accept return of and reimburse Argos for the price of the Defective Deliverable (and forgive any portion of the Deferred Fees attributable to the Defective Product).
|
4.3
|
[Reserved]
|
4.4
|
Delivery and shipping of materials to Invetech
|
4.5
|
Bonus payment
|
(a)
|
Argos acknowledges that the fees set out in Proposals are calculated by Invetech by applying a discounted rate of [**]% of Invetech's usual rates for comparable services. The difference between the fees set out in Proposals and the fees that would have been payable if Invetech had applied its usual rates for comparable services is referred to as the
Discount
. For the avoidance of doubt Invetech is applying a [**]% discount to its’ usual fee rates for the Argos Program which amounts to the
Discount
.
|
(b)
|
If (A) the Trial is stopped early by the DSMB at one of the interim analyses for superiority associated with the AGS-003 containing arm or if the study meets the primary endpoint of overall survival at the 100% of events analysis with either result indicating a positive study, and (B) Invetech has timely completed all activities scheduled to be completed as of the date the Trial is stopped, then Invetech may invoice Argos for an amount equal to the Discount. For the avoidance of doubt, any amount payable under clause 4.5 shall not be secured by the security interest granted pursuant to clause 5.7.
|
5.
|
Deferred Fees
|
5.1
|
Fees to be deferred
|
(a)
|
Invetech agrees to defer the payment of a portion of its fees (
Deferred Fees
) in accordance with the following principles:
|
(i)
|
subject to paragraph (ii), the amount to be deferred in a calendar year will be 30% of the fees accrued in that calendar year, with the deferral of fees to be applied in the last calendar quarter of that calendar year; provided, however, that to the extent the amounts otherwise payable during the last calendar quarter are not 30% of the fees accrued in such calendar year, such shortfall shall be a credit against invoices payable in the next calendar year;
|
(ii)
|
the total amount of the fees to be deferred is not to exceed $US5,000,000; and
|
(iii)
|
subject to paragraphs (i) and (ii), the amount of Invetech's fees that are to be deferred will be set out in individual Proposals from time to time in accordance with the terms of this Agreement.
|
(b)
|
The amount of Deferred Fees will be set out in invoices issued by Invetech to Argos in accordance with clause 4.2. The date of any invoice that sets out Deferred Fees will be the "Deferral Date" for those Deferred Fees.
|
5.2
|
Interest
|
5.3
|
Sunset Date Trigger Event
|
(a)
|
in accordance with the Deferred Fees Instalment Plan; or
|
(b)
|
if no Deferred Fees Instalment Plan has been selected, within 90 days of that Sunset Date Trigger Event.
|
5.4
|
Deferred Fees Instalment Plan
|
(a)
|
a single payment to be made within [**] days of the occurrence of the Sunset Date Trigger Event;
|
(b)
|
4 equal payments of the then current amount of Deferred Fees (plus interest) on the following dates:
|
(i)
|
Payment 1: within [**] days of the occurrence of the Sunset Date Trigger Event;
|
(ii)
|
Payment 2: [**] days after on the occurrence of the Sunset Date Trigger Event;
|
(iii)
|
Payment 3: [**] days after on the occurrence of the Sunset Date Trigger Event; and
|
(iv)
|
Payment 4: [**] days after on the occurrence of the Sunset Date Trigger Event;
|
(c)
|
8 equal payments of the then current amount of Deferred Fees (plus interest) on the following dates:
|
(i)
|
Payment 1: within [**] days of the occurrence of the Sunset Date Trigger Event;
|
(ii)
|
Payment 2: [**] days after on the occurrence of the Sunset Date Trigger Event;
|
(iii)
|
Payment 3: [**] days after on the occurrence of the Sunset Date Trigger Event;
|
(iv)
|
Payment 4: [**] days after on the occurrence of the Sunset Date Trigger Event;
|
(v)
|
Payment 5: [**] days after on the occurrence of the Sunset Date Trigger Event
|
(vi)
|
Payment 6: [**]days after on the occurrence of the Sunset Date Trigger Event;
|
(vii)
|
Payment 7: [**] days after on the occurrence of the Sunset Date Trigger Event; and
|
(viii)
|
Payment 8: [**] days after on the occurrence of the Sunset Date Trigger Event.
|
5.5
|
Immediate payment of Deferred Fees
|
5.6
|
Immediate Payment Trigger Events
|
(a)
|
termination of this Agreement for any reason other than by Argos pursuant to Clause 17.2(d);
|
(b)
|
Argos commences a voluntary Insolvency Proceeding or an involuntary Insolvency Proceeding is commenced against Argos and not dismissed or stayed within sixty (60) days. The term
Insolvency Proceeding
means any proceeding by or against Argos under the United States Bankruptcy Code, or any comparable state bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. Argos covenants to not grant any third party a security interest in any Collateral until such time as all Deferred Fees have been paid;
|
(c)
|
if the Trial is cancelled or discontinued for any reason other than the Trial closing early at one of the interim analyses due to recommendation by the DSMB for superior efficacy associated with the active treatment arm with AGS-003;
|
(d)
|
if Argos elects not to proceed with the Replication Arrangement;
|
(e)
|
if Argos defaults on any payment under clause 5.3 and does not remedy such default within [**] days of receipt of written notice of default; or
|
(f)
|
if Argos defaults on two or more payments under clause 5.3, whether or not those defaults are subsequently remedied.
|
5.7
|
Security for payment
|
(a)
|
a continuing purchase money security interest to the extent that it secures the payment of the Deferred Fees; and
|
(b)
|
is not a purchase money security interest to the extent that it secures more than the purchase price of the Collateral,
|
(c)
|
Argos has granted a security interest in the Collateral to its senior lenders (and their respective successors and assigns) that is expressly subordinate to Invetech's security interest; and
|
(d)
|
Argos may from time to time grant a security interest in and to the Collateral to a third party, provided that such security interest is made subordinate to Invetech's security interest.
|
6.
|
GST
|
6.1
|
Interpretation
|
6.2
|
Argos GST warranties
|
(a)
|
it is not incorporated in Australia;
|
(b)
|
it is not registered in Australia as a foreign corporation or body;
|
(c)
|
it is not present in Australia in relation to the supplies to be made under or in connection with this Agreement;
|
(d)
|
it is not registered or required to be registered for GST purposes;
|
(e)
|
it is not an Australian resident for income tax purposes;
|
(f)
|
the services supplied by Invetech under this Agreement are exports or are for consumption outside Australia; and
|
(g)
|
any goods supplied by Invetech pursuant to this Agreement will not be imported into Australia following their export.
|
6.3
|
Understanding of the Parties
|
6.4
|
Gross up of consideration
|
(a)
|
the consideration payable or to be provided for that supply under this Agreement but for the application of this clause (
GST exclusive consideration
) is increased by, and Argos must also pay to Invetech an amount equal to the GST exclusive consideration multiplied by the prevailing rate of GST at the time the supply is made; and
|
(b)
|
subject to clause 6.6, the amount by which the GST exclusive consideration is increased must be paid to Invetech by Argos without set off, deduction or requirement for demand, at the same time as the GST exclusive consideration is payable or to be provided.
|
6.5
|
Reimbursements (net down)
|
6.6
|
Argos Warranty
|
7.
|
Replication Arrangement
|
(a)
|
Argos will exclusively acquire, and Invetech will supply, Production Systems, components, subsystems and spare parts to the value of USD25 million. For clarification, under this Development Agreement, Argos will purchase for comparability testing and possible commercial manufacturing, one Production System consisting of one each of the following seven pieces of equipment: i) Pebbles, ii) Rocky II, iii) Plasma, iv) Monocyte Isolation and Culture, v) TIP, vi) Electroporation and vii) Formulation. The total cost of any subsequent purchases of the foregoing equipment or components thereof will be applied towards the USD25 million that Argos must spend under the Replication Arrangement.
|
(b)
|
After Argos has acquired from Invetech, under the Replication Arrangement, Production Systems, components, subsystems and spare parts to the value of USD25 million, Argos will have the right to approach alternate automation providers for a competitive quote for the supply of Production Systems. Should this quoting process deliver a quoted price less than Invetech’s supply price on substantially the same or better terms, Invetech will have a right of first refusal to match the reduced price and terms. If Invetech is unwilling to match this reduced price and terms, then Argos will have the right to source Production Systems from the competitive supplier.
|
8.
|
Intellectual property rights
|
(a)
|
Argos shall retain ownership of any Argos Intellectual Property. Invetech shall retain ownership of any Invetech Intellectual Property.
|
(b)
|
Invetech shall promptly notify Argos in writing upon Invetech’s conception of any Intellectual Property that is created as a direct result of undertaking the Program (such rights being referred to as the
Program Intellectual Property
). Subject to clause (a) and provided that Argos has paid to Invetech all outstanding fees and charges due to Invetech in connection with the Services attributable to the conception of such Program Intellectual Property other than the Deferred Fees, Invetech agrees to and does hereby assign to Argos all of Invetech’s right, title and interest in and to the Program Intellectual Property and Invetech will (at Argos' request and cost) do those things reasonably necessary to effect the registration of such assignment.
|
(c)
|
Argos grants to Invetech a worldwide, royalty-free licence to use the Argos Intellectual Property only to the extent necessary to allow Invetech to perform its obligations under this Agreement (
Argos IP Licence
).
|
(d)
|
Invetech grants to Argos an irrevocable, worldwide, transferable, non-exclusive, royalty-free licence with the right to sublicense to use such of the Invetech Intellectual Property as is embodied in the Production Systems (or Prototype, components, Module, Subsystem, improvement or derivation of any of the foregoing) or included within any documentation or other deliverable delivered under this Agreement, in each case only to the extent necessary to enable Argos (independently or through one or more affiliates or third parties) to make, have made, use, commercialise, improve and sell Production Systems (and any Prototype, components, Module, Subsystem, improvement or derivation of any of the foregoing) (
Invetech IP Licence
).
|
(e)
|
Subject to paragraphs (f), (g) and (i), Argos grants to Invetech a perpetual, irrevocable, royalty-free, worldwide licence to use and improve (including the right to sublicense) the Program Intellectual Property created by Invetech for any purpose
that does not involve cell-based immunotherapy or the use of dendritic cells
(
Program IP Licence
); provided, however that the restriction on cell-based immunotherapy or the use of dendritic cells shall not apply to Program Intellectual Property conceived after the Effective Date to the extent Invetech terminates this Agreement pursuant to Section 17.2(d)(i) for Argos’ failure to make payments required pursuant to this Agreement. Notwithstanding the foregoing, the Program IP License does not include a license under Program Intellectual Property that Argos maintains as a trade secret under applicable law.
|
(f)
|
Invetech's right to use any Specialist Program Intellectual Property (other than for the purposes of this Agreement) is subject to mutual written agreement of the parties, such agreement not to be unreasonably withheld. For clarification but without limitation, Argos may require advance review of any proposed use and may reasonably withhold its consent from (A) any use that relates to the discovery, development or production of drugs, vaccines or other products for the treatment of diseases, disorders or transplantation rejection, or (B) any use that would cause Argos to violate a third party agreement.
|
(g)
|
Nothing in clause 8(f) shall be deemed to authorize Invetech to, and Invetech hereby agrees that it will not:
|
(i)
|
provide to any Affiliate or third party (A) any Prototype or Production System or (B) any Module or Subsystem or (C) any improvement or derivation of any of the foregoing;
|
(ii)
|
grant any Affiliate or third party any license or other rights with respect to (A) any Prototype or Production System or (B) any Module or Subsystem or (C) or any improvement or derivation of any of the foregoing; or
|
(iii)
|
utilize for the benefit of any Affiliate or third party (A) any Prototype or Production System or (B) any Module or Subsystem or (C) any improvement or derivation of any of the foregoing.
|
(h)
|
Notwithstanding clauses 8(f) and 8(g) above but subject to clause 8(i) below, Argos grants Invetech a perpetual, irrevocable, royalty-free, worldwide license to use and improve (including the right to sublicense) the following Specialist Program Intellectual Property solely for diagnostic purposes:
|
(i)
|
means of detecting fluid presence by ultra-sonic or optical detection using refraction and reflection techniques to measure the volume removed from a cuvette by detecting when it is empty for nucleic acid processing.
|
(i)
|
With respect to any sublicense or other arrangement whereby Invetech makes available to any Affiliate or third party any Module or Subsystem that includes Specialist Program Intellectual Property or any Specialist Program Intellectual Property whether pursuant to clause 8(h) or otherwise, Invetech shall (1) provide Argos with a copy of any agreement granting such rights or making such Module, Subsystem and/or Specialist Program Intellectual Property available; and (2) include in any such agreement express use limitations consistent with this agreement and provisions that grant Argos the unrestricted right to enforce such limitations directly against the Affiliate or third party.
|
(j)
|
The parties acknowledge that they have a shared community of legal interest in the development of a Production System that can be manufactured, used, sold and otherwise commercialized without infringing the intellectual property rights of any third party. The parties may exchange confidential attorney-client communications to advance certain common legal interests in accordance with this Agreement, and shall not disclose such communications to a third party, nor to employees of either party who do not have a need to know the content of such communication. In furtherance of the foregoing, at Argos' discretion, the following process may take place in connection with any Development Stage:
|
(i)
|
Argos manages the Intellectual Property strategy and initial patent search, in its discretion and at its expense;
|
(ii)
|
Argos engages U.S. patent counsel skilled in the appropriate areas to execute the search;
|
(iii)
|
Argos reviews the search results;
|
(iv)
|
Invetech uses its reasonable endeavours to incorporate into the designs (at Argos' expense and subject to agreement by the parties as to changes to Invetech's fees, costs and timing under the Proposals, such agreement not to be unreasonably withheld by Argos) such patent search feedback as is required in writing by Argos;
|
(v)
|
Argos, in its discretion and at its expense, may obtain a noninfringement opinion from the patent law firm on preliminary designs;
|
(vi)
|
the Parties review the noninfringement opinion and agree on mitigation strategies for any identified risks;
|
(vii)
|
Invetech uses its reasonable endeavours to incorporate into the designs (at Argos' expense and subject to agreement by the parties as to changes to Invetech's fees, costs and timing under the Proposals, such agreement not to be unreasonably withheld by Argos) such technical risk mitigation measures as are required in writing by Argos; and
|
(viii)
|
Argos, in its discretion and at its expense, addresses any commercial risk mitigation (including without limitation procuring licenses).
|
(k)
|
For the duration of the Program and for [**] years after expiration or earlier termination of this Agreement, Invetech will ensure that Invetech's project team members do not work on a competitive program wherein any of the following processes, 1) RNA extraction and amplification, 2) cell enrichment and maturation or 3) antigen loading and vaccine dispensing, are used in the production of cell therapies. For the purposes of this clause (k):
|
(i)
|
Invetech's project team members means then current employees of Invetech or Invetech Inc. who have done more than [**] weeks work on the Program;
|
(ii)
|
a competitive program is one that develops production systems that produce products for use in cell therapy to treat cancer or HIV, wherein the therapeutic product is living cells that present antigen to immune cells and is not a T cell product.
|
(l)
|
Where Invetech proprietary software is embodied in a Production System or Prototype, Invetech grants to Argos a non-exclusive, worldwide, free licence to use the executable code of the Invetech proprietary software on the following terms:
|
(i)
|
the Invetech proprietary software must be used only as part of the Production System or Prototype;
|
(ii)
|
Argos must not reverse engineer, decompile, reproduce or use the Invetech proprietary software other than as part of the Production System or Prototype; and
|
(iii)
|
Invetech is under no obligation to make available to Argos the source code for the Invetech proprietary software. If Argos requires the source code for the Invetech proprietary software, the parties may agree a separate Proposal setting out the basis on which that source code is provided.
|
9.
|
Confidential Information
|
9.1
|
Obligation of Confidentiality
|
9.2
|
Permitted disclosure
|
(a)
|
have a need to know for the purposes of this Agreement (and only to the extent that each has a need to know); and
|
(b)
|
before disclosure:
|
(i)
|
in the case of that Party's officers and employees, have been directed by that Party to keep confidential all Confidential Information of the other Party; and
|
(ii)
|
in the case of other persons (including subcontractors appointed under clause 2.2), have agreed in writing with that Party to comply with or are otherwise bound by substantially the same obligations in respect of Confidential Information of the other Party as those imposed on that Party under this Agreement,
|
(c)
|
For clarification, it is expressly understood that Argos is authorized to disclose Confidential Information associated with the Program and Production Systems with Argos' sublicensees and commercial collaborators as may be necessary or useful in connection with the development and commercialization of Production Systems, components thereof or products produced with the use of such system or components thereof. Any such disclosure must be in accordance with and subject to clause 9.
|
9.3
|
Duties of Parties
|
(a)
|
Non-Disclosure and Use
|
(i)
|
disclose all or any of the Confidential Information of the other Party to any other person without the prior written consent of the other Party except:
|
(A)
|
as permitted under clause 9.2; and
|
(B)
|
to the extent (if any) that Party is required by law to disclose any Confidential Information;
|
(ii)
|
use all or any of the Confidential Information of the other Party otherwise than for the purposes of this Agreement; or
|
(iii)
|
copy the Confidential Information of the other Party otherwise than for the purposes of this Agreement.
|
(b)
|
Uncertainty
|
(c)
|
Precautions
|
(d)
|
Unauthorised Disclosure or Use
|
(i)
|
use reasonable commercial efforts to ensure that each person to whom it discloses Confidential Information of the other Party under clause 9.2 complies with its Direction; and
|
(ii)
|
immediately notify the other Party of any actual or suspected breach of a Direction or other unauthorised disclosure or use of the Confidential Information of the other Party of which that Party becomes aware and will take all steps which the other Party may reasonably require in relation to such unauthorised disclosure or use.
|
9.4
|
Disclosure required by law
|
(a)
|
before doing so use its best efforts to:
|
(i)
|
notify the other Party; and
|
(ii)
|
give the other Party a reasonable opportunity to take any steps that the other Party considers necessary to protect the confidentiality of that information; and
|
(b)
|
notify the third person that the information is Confidential Information of the other Party.
|
9.5
|
Publicity
|
(a)
|
Invetech shall be entitled to use any publicity material, including without limitation, electronically stored and transmitted material, images of the Production System and references to the Agreement and Invetech's role in it, provided that the use of such images and references do not breach Invetech's obligations under clause 9 or disclose Confidential Information of Argos generated in the course of the Program that is not otherwise in the public domain and provided that Argos provides advance written consent which shall not be unreasonably withheld.
|
(b)
|
Prior to Completion of the Development, Invetech shall be entitled to make limited public disclosures of the Program and Invetech's relationship with Argos, including but not limited to approaching Argos to provide trade references to prospective Invetech clients, provided that:
|
(i)
|
the use of publicity materials and related actions do not breach Invetech's obligations under clause 9 or disclose Confidential Information of Argos; and
|
(ii)
|
provided that Argos provides prior written consent which shall not be unreasonably withheld.
|
10.
|
Inspection of Records
|
11.
|
Reliance on information, results, Products, etc.
|
(a)
|
Invetech is under no obligation to obtain any independent verification of any information whether provided by or on behalf of Argos or obtained from any other source whatsoever, nor to obtain any searches of any intellectual property registrations or other matters of public record unless it is specifically required to do so in any Proposal;
|
(b)
|
prior to implementing any recommendations or results of the provision of Invetech's services or using any Production System or Prototype, Argos is responsible for verifying the suitability and safety for implementation or use of those recommendations, results, Production Systems or Prototypes;
|
(c)
|
the accuracy of surveys and the achievement of results forecast will depend upon matters outside Invetech's control, and Invetech does not warrant or represent that any forecasts made by Invetech in relation to this Agreement are accurate or will be realised; and
|
(d)
|
for the avoidance of doubt, no statement of fact made by Invetech whether in the Proposal or in any report or letter to Argos or whether made orally, is to be construed as a representation, undertaking or warranty unless identified as such.
|
12.
|
Compliance and regulatory
|
(a)
|
The Parties must each fully comply at all times with all applicable legislation, laws, codes, regulations, ordinances, governmental policies, directions, practices, orders and rules with respect to the performance of their respective obligations under this Agreement but the Parties agree that unless otherwise agreed in any Proposal or in this Agreement, Argos will bear the cost of and be responsible for identifying, obtaining, maintaining and complying with any and all regulatory and compliance requirements and directions in respect of or affecting any Production System and any Prototypes (including but not limited to all legislation, Acts, regulations, rules and by-laws for the time being in force and all orders or directions which may be made or given by any statutory or any other competent authority in respect of or affecting any Production System or any Prototypes in any jurisdiction in which they may be manufactured, used or sold).
|
(b)
|
Argos will seek information promptly regarding required registrations, approvals and applicable regulations as noted in paragraph (a) and which may affect any Production System (whether relating to importation, manufacture, use, sale or distribution of any Production System) and will provide this information to Invetech promptly for appropriate consideration in the context of Proposals.
|
13.
|
Representations and warranties
|
13.1
|
Invetech Representations and Warranties
|
(a)
|
Invetech is properly incorporated and validly existing;
|
(b)
|
Invetech is empowered to enter into this Agreement and to carry out any transaction or obligation contemplated by this Agreement and all necessary actions have been taken to render this Agreement valid and binding on Invetech and to enable Invetech to carry out any transaction or obligation contemplated by this Agreement;
|
(c)
|
to the best of its knowledge and belief, at the time of submitting each Proposal, Invetech has sufficient resources (including technical, qualified, trained staff and financial resources) to undertake Program Works;
|
(d)
|
Invetech will use reasonable endeavours to ensure that all software provided by Invetech or its subcontractors is and will be free of viruses, worms, Trojan horses and other malicious code, and that any Invetech developed code provided by Invetech, or by a subcontractor to Invetech acting under Invetech's direction or control, will be free of code designed to disable the software because of the passage of time, alleged failure to make payments due, or otherwise (except for documented security measures such as password expiration functions);
|
(e)
|
all work performed by Invetech and/or its subcontractors pursuant to this Agreement shall meet industry standards, specifically
GAMP5, 2008 - A Risk Based Approach to Compliant GxP Computerized Systems
and shall be performed in a professional and workmanlike manner by staff with the necessary skills, experience and knowledge;
|
(f)
|
the Production System shall be delivered free and clear of all liens and encumbrances;
|
(g)
|
for a period of [**] months after acceptance by Argos of the Production System under clause 3.2(b) (the
Warranty Period
), the Production System will be free from defects in material and workmanship and comply in all material respects with the Specification, providing that the equipment has been used in accordance with the operating manuals, cleaned in the specified manner with the specified cleaning materials and maintained in accordance with the procedures specified in the maintenance manuals; and
|
(h)
|
all documentation for the Production System will, to the extent set out in applicable Proposals, be in all reasonable respects complete and accurate, and will enable data processing professionals and other Argos employees with ordinary skills and experience to utilize the Production System for the expressed purpose for which it is being developed.
|
13.2
|
Argos Representations and Warranties
|
(a)
|
Argos is properly incorporated and validly existing;
|
(b)
|
Argos is empowered to enter into this Agreement and to carry out any transaction or obligation contemplated by this Agreement and all necessary actions have been taken to render this Agreement valid and binding on Argos and to enable Argos to carry out any transaction or obligation contemplated by this Agreement;
|
(c)
|
Argos has or will obtain and provide Invetech with effective reasonable access (as required by Argos Program or Proposal requirements) to technology comprising part of the Argos Program Inputs and necessary for the Program; and
|
(d)
|
Argos will use reasonable endeavours to ensure that any software forming part of any Argos Program Inputs or otherwise provided by Argos, or by a subcontractor to Argos acting under Argos' direction or control, to Invetech is and will be free of viruses, worms and Trojan horses and other malicious code, and any code designed to disable the software because of the passage of time, alleged failure to make payments due, or otherwise (except for documented security measures such as password expiration functions).
|
14.
|
Exclusion of warranties and limited liability
|
14.1
|
Production System Warranties
|
(a)
|
Invetech makes no warranties in respect of the Production System or any Prototype other than as expressly set out in this Agreement.
|
(b)
|
Argos will be responsible for reviewing:
|
(i)
|
Specifications;
|
(ii)
|
Performance Test Results for each Prototype; and
|
(iii)
|
End-of-Stage Acceptance Plans,
|
14.2
|
Exclusions of Implied Warranties
|
(a)
|
In this clause 14.2, Australian Consumer Law means the Australian Consumer Law set out in Schedule 2 to the Competition and Consumer Act 2010 (Cth) as amended or replaced from time to time.
|
(b)
|
To the extent that Argos acquires goods or services from Invetech as a consumer within the meaning of the Australian Consumer Law, Argos may have certain rights and remedies (including, without limitation, consumer guarantee rights) that cannot be excluded, restricted or modified by agreement.
|
(c)
|
Nothing in this clause 14.2 operates to exclude, restrict or modify the application of any implied condition or warranty, provision, the exercise of any right or remedy, or the imposition of any liability under the Australian Consumer Law or any other statute where to do so would:
|
(i)
|
contravene that statute; or
|
(ii)
|
cause any term of this agreement to be void,
|
(d)
|
Except in relation to Non-excludable Obligations, all conditions, warranties, guarantees, rights, remedies, liabilities or other terms that may be implied by custom, under the general law or by statute are expressly excluded under this Agreement.
|
(e)
|
In relation to Non-excludable Obligations (other than a guarantee as to title, encumbrances or quiet possession conferred by the Australian Consumer Law), except for goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption (in respect of which Invetech's liability is not limited under this Agreement), Invetech's liability to Argos for a failure to comply with any Non excludable Obligation is limited to:
|
(i)
|
in the case of services, the cost of supplying the services again or payment of the cost of having the services supplied again; and
|
(ii)
|
in the case of goods, the cost of replacing the goods, supplying equivalent goods or having the goods repaired, or payment of the cost of replacing the goods, supplying equivalent goods or having the goods repaired.
|
14.3
|
Limited Liability
|
(a)
|
With the exception of claims of infringement of any Invetech Intellectual Property rights made by a third party, or Invetech’s breach of its obligations under Section 9, and without limiting the warranties given by Invetech in clause 13.1 and Argos’ remedies for breaches thereof, the Parties agree that Invetech has no liability regarding any Production System or any Prototype (including but not limited to manufacture, use or operation of any Production System or any Prototype), except to the extent caused by Invetech's negligence or deliberate wrongful acts and omissions. For the avoidance of doubt and without limiting the foregoing in this clause (a), Invetech has no liability:
|
(i)
|
in relation to a design defect, where Invetech has, prior to Completion of the Development, identified and notified in writing to Argos, the existence and nature of that design defect;
|
(ii)
|
in relation to a design defect or operating conditions which were not the subject of a specific test program which formed part of the Program Works, except where Invetech was aware of the existence of that design defect; or
|
(iii)
|
in relation to a design defect that was not detectable or likely to be detected within the scope or duration of testing undertaken as part of the Program Works.
|
(b)
|
Notwithstanding any other provision of this Agreement but subject to clause 14.3(e), absent fraud or intentional misconduct, each Party's total cumulative liability to the other Party under or in any way connected with this Agreement (including liability for negligence) is limited to the lesser of:
|
(i)
|
the total of the fees, expenses and costs paid or payable by Argos under this Agreement under Argos' authorised Proposals; or
|
(ii)
|
USD10,000,000.
|
(c)
|
Argos' obligation to make payments to Invetech under clause 4 (Terms of payment) or clause 5 (Deferred Fees) is not to be accounted towards Argos' total cumulative liability for the purpose of clause 14.3(b).
|
(d)
|
No Party will be liable for any loss of profits, loss of business, loss of goodwill or any indirect or consequential damages however arising.
|
(e)
|
This Clause 14.3 does not apply to Argos' obligation to indemnify Invetech under clause 15(a)(i), 15(a)(ii) and 15(a)(iii)
or
Invetech’s obligation to indemnify Argos pursuant to Section 15(b)(iii) for claims brought by third parties.
|
15.
|
Indemnity
|
(a)
|
Argos indemnifies Invetech against all losses, claims, proceedings, damages, costs and expenses (
Losses
) in respect of or arising directly from:
|
(i)
|
any Production System, any Prototypes or their use or operation by Argos or any person other than Invetech that is authorized by Argos to use or operate such Production System or Prototype;
|
(ii)
|
the use by any person other than Invetech of any system, design, process or procedure recommended, developed or devised by Invetech for or on behalf of Argos;
|
(iii)
|
any defect or deficiency in, or hazardous aspect of, any Argos Program Input; or
|
(iv)
|
any breach by Argos of any of its obligations under this Agreement;
|
(v)
|
the negligence of Argos, its Affiliates and their respective employees, agents or contractors.
|
(b)
|
Invetech indemnifies Argos against all Losses to the extent arising directly from:
|
(i)
|
a breach of this Agreement by Invetech;
|
(ii)
|
the negligence of Invetech, its Affiliates and their respective employees, agents or contractors in the course of work on this Program;
|
(iii)
|
the Gross Negligence or wilful misconduct of Invetech, its Affiliates and their respective employees, agents or contractors;
|
(iv)
|
any third party claim alleging that the Production System or Invetech's services hereunder involve the misuse by Invetech of such third party's confidential information (except to the extent that such claim is based on information provided by Argos) or that the exercise by Argos of the Invetech IP License infringes the intellectual property rights of a third party.
|
(c)
|
Notwithstanding the foregoing, neither party shall have any obligation to indemnify the other party for any Losses to the extent those Losses are attributable to the other party's Gross Negligence or wilful misconduct.
|
(d)
|
Each party must take reasonable steps to mitigate any Losses for which it seeks to be indemnified under this clause 15.
|
16.
|
Insurance
|
17.
|
Term and termination
|
17.1
|
Term
|
17.2
|
Grounds for Termination
|
(a)
|
at any time with immediate effect by mutual written agreement of the Parties;
|
(b)
|
by deemed mutual agreement of the Parties:
|
(i)
|
upon the occurrence of Technical Failure; or
|
(ii)
|
where, in spite of both Parties' reasonable commercial efforts, sixty (60) days has elapsed since submission of a Proposal for the next Development Stage with no authorisation of that or any further Proposal for additional Program Works being received (except that this 60 day period may be extended by written agreement between the Parties until Completion of the last Development Stage outstanding under a Proposal which remains current and incomplete at expiration of any such 60 day period); or
|
(iii)
|
if either Party forms the view (and notifies the other Party in writing) that intellectual property or regulatory constraints or commercial considerations prevent the viable commercialization of the Production Systems, notwithstanding the achievement of technical feasibility. The Party claiming that such circumstances apply must provide to the other Party a detailed description of such circumstances and the potential reasons why they cannot be overcome.
|
(c)
|
by Argos at any time without cause by giving notice in writing to Invetech (
Termination for Convenience
)
|
(d)
|
by notice in writing from the non defaulting Party:
|
(i)
|
if a material breach of any material provision of this Agreement, being capable of remedy, is not remedied to the reasonable satisfaction of the non defaulting Party within [**] days of receipt by the defaulting Party of a notice from the non defaulting Party setting out the nature of the breach and requiring the breach to be remedied and a subsequent good faith discussion (or attempt to hold same on the part of the non defaulting Party) between the parties has failed to otherwise resolve the matter;
|
(ii)
|
if an application (including any voluntary application) is made to any court for an order or an order is made that the other Party be wound up or liquidated or that a liquidator or provisional liquidator be appointed and that application is not withdrawn or dismissed within one hundred and twenty (120) days;
|
(iii)
|
if a trustee in bankruptcy, liquidator or provisional liquidator is appointed in respect of the other Party;
|
(iv)
|
if a trustee in bankruptcy, receiver or receiver and manager (or similar insolvency administrator) is appointed to any of the assets or undertaking of the other Party and that appointment is not terminated within sixty (60) days;
|
(v)
|
if the other Party enters into a scheme of arrangement, plan of reorganisation or composition with all or a significant class of its creditors, or;
|
(vi)
|
if the other Party ceases carrying on business or admits in writing that:
|
(A)
|
it is unable to pay its debts as and when they fall due; or
|
(B)
|
it intends to cease carrying on its business for any reason,
|
17.3
|
Consequences of Termination
|
(a)
|
On termination of this Agreement for any reason:
|
(i)
|
both Parties, acting through the Coordination Committee, shall discuss in good faith whatever measures are reasonably necessary (i) to complete the Development Stage then being conducted and (ii) to mitigate the cost to each Party of the Termination;
|
(ii)
|
both Parties agree, as soon as possible, to return, destroy and certify in writing the destruction of, or destroy and permit the other Party to witness the destruction of all Confidential Information of the other Party in the possession or control of that Party and its employees and any person to whom that Party has disclosed all or any of the Confidential Information of the other Party (whether or not with the consent of the other Party) (with the exception of archival copies held on back-up media and one (1) copy if needed to be retained for insurance or record purposes and retention of such Confidential Information as is contemplated by and for the period of any licences that are conferred and will continue under this Agreement despite termination);
|
(iii)
|
both Parties agree, as soon as possible, to pay all amounts due and payable to the other Party under this Agreement. In the case of Argos, this includes payment by Argos of all outstanding invoices and payment for all work performed and expenses incurred up to the date of termination and payment of all Deferred Fees, together with all interest accrued in accordance with clause 5.2;
|
(iv)
|
the Invetech IP Licence shall remain in force on the same conditions as provided under clause 8(d) hereof, unless Argos otherwise notifies Invetech in writing; and
|
(v)
|
subject to payment by Argos of:
|
(A)
|
all outstanding invoices and payment for all work properly performed and expenses properly incurred up to the date of termination;
|
(B)
|
all Deferred Fees, together with all interest accrued in accordance with clause 5.2, if applicable; and
|
(C)
|
any other payments that have become payable under this Agreement prior to the effective date of termination,
|
(b)
|
On termination of this Agreement for any reason other than Default Termination caused by Invetech, Argos will pay to Invetech an amount calculated as:
|
(i)
|
the average of monthly invoice amounts for the then current Development Stage(s); or
|
(ii)
|
if, at the time of termination, there is no current Development Stage or there have been no monthly invoices under the current Development Stage(s), the average of monthly invoice amounts during the immediately preceding six month period.
|
17.4
|
Survival
|
18.
|
Dispute resolution
|
18.1
|
Discussion and Arbitration
|
(a)
|
neither Party may commence court proceedings (except proceedings seeking interlocutory relief), in respect of any dispute arising out of this Agreement (Dispute) unless it has complied with this clause 18;
|
(b)
|
if any Dispute remains unresolved after [**] days after it has been the subject matter of a formal notice by a Party to the other Party it will immediately be submitted to the Coordination Committee;
|
(c)
|
if, despite this, any dispute remains unresolved for a further [**] days it will immediately be submitted to the Chief Executive Officer of Invetech and the Chief Executive Officer of Argos (or their nominees) for resolution;
|
(d)
|
if, despite this, any such Dispute remains unresolved after a further [**] days (or such longer period agreed by the Parties in writing), either party may by written notice refer the matter to arbitration in which case it will be resolved by an arbitrator agreed by the Parties or, failing agreement within [**] days, by an arbitrator appointed for this purpose by the Institute of Arbitrators and Mediators, Australia in Melbourne, Australia if the arbitration is initiated by Argos or by an arbitrator appointed by the American Arbitration Association in North Carolina if the arbitration is initiated by Invetech.
|
(e)
|
any arbitration under this clause shall be finally settled in Melbourne, Australia under the Rules of Arbitration of the International Chamber of Commerce by one arbitrator appointed in accordance with those Rules if the arbitration is initiated by Argos or in Raleigh, North Carolina under the rules of the American Arbitration Association if the arbitration is initiated by Invetech.
|
(f)
|
the appointment will require the arbitrator to use his or her best endeavours to certify in writing to Argos and Invetech the determination that has been made within [**] days of the appointment and any costs associated with any such referral and determination will be paid by Invetech and Argos in equal shares unless the expert considers one party to have been vexatious or frivolous in which case that party shall pay all of those costs.
|
18.2
|
Continued Performance
|
19.
|
Good faith and Non-Solicitation
|
19.1
|
Dealing in Good Faith
|
20.
|
Notices and other communications
|
20.1
|
Service of notices
|
(a)
|
in writing, in English and signed by a person duly authorised by the sender; and
|
(b)
|
hand delivered or sent by prepaid post or facsimile to the recipient's address for Notices specified in the Details, set forth in Schedule 1, as varied by any Notice given by the recipient to the sender.
|
20.2
|
Effective on receipt
|
(a)
|
if hand delivered, on delivery;
|
(b)
|
if sent by prepaid post, on the second Business Day after the date of posting (or on the seventh Business Day after the date of posting if posted to or from a place outside Australia) or;
|
(c)
|
if sent by facsimile, when the sender's facsimile system generates a message confirming successful transmission of the entire Notice unless, within eight Business Hours after the transmission, the recipient informs the sender that it has not received the entire Notice,
|
21.
|
Miscellaneous
|
21.1
|
Alterations
|
21.2
|
Approvals and consents
|
21.3
|
Assignment and Third Party Benefit
|
(a)
|
Invetech may transfer any of its rights under this Agreement to any Affiliate of Invetech with the prior written consent of Argos, such consent not to be unreasonably withheld. Argos may assign or transfer any of its rights under this Agreement to an Affiliate of Argos without the prior consent of Invetech.
|
(b)
|
Subject to paragraph (a) above, a Party may only assign this Agreement or a right under this Agreement with the prior written consent of the other Party, such consent not to be unreasonably withheld.
|
(c)
|
Notwithstanding the foregoing, this Agreement may be assigned by either party without the consent of the other party in connection with a merger, consolidation or sale or other transfer of substantially all of such party's assets (or substantially all of its assets relating to this Agreement); provided, however, that the assigning Party's rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement.
|
21.4
|
Costs
|
21.5
|
Duties and Taxes
|
21.6
|
Survival
|
21.7
|
Counterparts
|
21.8
|
No merger
|
21.9
|
Entire agreement
|
21.10
|
Force majeure
|
21.11
|
Further action
|
21.12
|
Severability
|
21.13
|
Waiver
|
21.14
|
Relationship
|
21.15
|
Announcements
|
21.16
|
Governing law and jurisdiction
|
21.17
|
Precedence of documents
|
(a)
|
clauses 1 to 21 of this Agreement;
|
(b)
|
the Specifications;
|
(c)
|
the applicable Proposal;
|
(d)
|
the applicable End-of-stage Acceptance Plan;
|
(e)
|
the Program Management Plan;
|
(f)
|
other schedules and attachments to this Agreement.
|
Stage
|
Key output
|
Target Completion
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
[**]
|
Signed
for
Invetech Pty Ltd
by an authorised officer in the presence of
|
/s/ Colin White
|
¬
|
|
Signature of officer
|
|||
/s/ Richard Grant
|
¬
|
Colin White
|
|
Signature of witness
|
Name of officer (print)
|
||
Richard Grant
|
Chief Executive Officer
|
||
Name of witness (print)
|
Office held
|
Signed
for
Argos
by an authorised officer in the presence of
|
/s/ Fred Miesowicz
|
¬
|
|
Signature of officer
|
|||
/s/ Alida M. Clark
|
¬
|
Frederick Miesowicz
|
|
Signature of witness
|
Name of officer (print)
|
||
Alida M. Clark
|
COO
|
||
Name of witness (print)
|
Office held
|
||
/s/ Lori Harrelson
Lori Harrelson
VP Finance
|
Date: November 14, 2014
|
||
By:
|
/s/ JEFFREY D. ABBEY
|
|
Jeffrey D. Abbey
|
||
President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
Date: November 14, 2014
|
||
By:
|
/s/ LORI R. HARRELSON
|
|
Lori R. Harrelson
|
||
Vice President of Finance
|
||
(Principal Financial Officer)
|
By:
|
/ S / JEFFREY D. ABBEY
|
|
Jeffrey D. Abbey
Chief Executive Officer
November 14, 2014
|
By:
|
/ S / LORI R. HARRELSON
|
|
Lori R. Harrelson
Vice President of Finance
(principal financial officer)
November 14, 2014
|