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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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26-2025616
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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245 First Street, Suite 1800
Cambridge, MA
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02142
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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Nasdaq Global Market
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Large Accelerated filer
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o
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Accelerated filer
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Non-accelerated filer
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o
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Smaller reporting company
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x
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Emerging growth company
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x
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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our expected future loss and accumulated deficit levels;
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our projected financial position and estimated cash burn rate;
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our estimates regarding expenses, future revenues, capital requirements and needs for, and ability to obtain, additional financing;
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our ability to continue as a going concern;
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our need to raise substantial additional capital to fund our operations;
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the potential impairment of our goodwill and indefinite lived intangible assets;
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the effect of recent changes in our senior management team on our business;
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the success, cost and timing of our pre-clinical studies and clinical trials in the United States, Canada and in other foreign jurisdictions;
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the potential that results of pre-clinical studies and clinical trials indicate our product candidates are unsafe or ineffective;
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our dependence on third parties, including contract research organizations, or CROs, in the conduct of our pre-clinical studies and clinical trials;
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the difficulties and expenses associated with obtaining and maintaining regulatory approval of our product candidates and companion diagnostics, if any, in the United States, Canada and in other foreign jurisdictions, and the labeling under any approval we may obtain;
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our plans and ability to develop and commercialize our product candidates;
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our ability to achieve certain future regulatory, development and commercialization milestones under our license agreement, which we refer to as the License Agreement, with F. Hoffmann-La Roche Ltd and Hoffmann La-Roche Inc., or collectively, Roche;
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the timing and costs associated with our manufacturing process and technology transfer to FUJIFILM Diosynth Biotechnologies U.S.A., Inc., or Fujifilm, and our reliance on Fujifilm to perform under such agreement;
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market acceptance of our product candidates, the size and growth of the potential markets for our product candidates, and our ability to serve those markets;
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obtaining and maintaining intellectual property protection for our product candidates and our proprietary technology;
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the successful development of our commercialization capabilities, including sales and marketing capabilities; and
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the success of competing therapies and products that are or become available.
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Item 1.
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Business.
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Cohort 1 (n=86): CIS patients with or without papillary disease whose cancer was determined to be refractory or recurred within six months of their last course of adequate BCG
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•
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Cohort 2 (n=7): CIS patients with or without papillary disease whose cancer was determined to be refractory or recurred after six months, but less than 12 months, after their last course of adequate BCG
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Cohort 3 (n=40): patients with papillary disease without CIS whose cancer was determined to be refractory or recurred within six months of their last course of adequate BCG
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Time point
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Evaluable Patients
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Complete Response Rate (95% Confidence Interval)
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3-months
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n=86
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37% (27%-48%)
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6-months
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n=85
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25% (16%-35%)
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9-months
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n=84
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18% (10%-28%)
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12-months
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n=81
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14% (7%-23%)
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Time point
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Evaluable Patients
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Complete Response Rate (95% Confidence Interval)
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3-months
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n=7
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57% (18%-90%)
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6-months
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n=7
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57% (18%-90%)
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9-months
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n=7
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43% (10%-82%)
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12-months
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n=7
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14% (0%-58%)
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Time point
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Evaluable Patients
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Complete Response Rate (95% Confidence Interval)
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3-months
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n=93
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39% (29%-49%)
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6-months
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n=92
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27% (18%-37%)
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9-months
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n=91
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20% (12%-29%)
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12-months
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n=88
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14% (7%-23%)
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Time point
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Phase 3 Pooled CRR
(95% Confidence Intervals)
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Phase 2 Pooled CRR
(95% Confidence Interval)
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3-months
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39% (29%-49%)
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40% (26%-56%)
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6-months
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27% (18%-37%)
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27% (15%-42%)
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9-months
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20% (12%-29%)
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18% (8%-32%)
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12-months
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14% (7%-23%)
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16% (7%-30%)
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Time point
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Evaluable Patients
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Recurrence-Free Rate (95% Confidence Interval)
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3-months
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n=40
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68% (51%-81%)
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6-months
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n=40
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56% (40%-72%)
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9-months
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n=39
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42% (26%-59%)
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12-months
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n=38
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36% (21%-54%)
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•
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Duration of Response
: In addition to the complete response rate in Cohort 1, duration of response is a primary endpoint measure. The median duration of complete response for patients in Cohort 1 (n=86) is 227 days (95% CI, 127-516), using the Kaplan-Meier method. Additional adhoc analysis of pooled data for all patients with Carcinoma in situ (Cohorts 1 and 2, n=93) shows that among patients who achieved a complete response at 3 months, 69% had a complete response of 6 months or longer.
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Time to Cystectomy
: Time to cystectomy is a key second endpoint in the VISTA Trial. Across all 133 patients treated with Vicinium, the projected median cystectomy-free time is approximately 519 days (95% CI, 361-523), or 18 months. The median was estimated using a computer-based, intensive, nonparametric approach commonly used in clinical trials to generate estimates and confidence intervals for data sets that are incomplete. Using the variability within a sample to estimate that sampling distribution empirically, 500 samples with replacement were generated to estimate the median.
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Time to Disease Recurrence
: Time to disease recurrence is a key secondary endpoint for patients with high-grade papillary-only (Ta and T1) NMIBC. The median time to disease recurrence for patients in Cohort 3 (n=40) is 270 days (95% CI, 169-452).
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Recurrence-free Rate
: Disease recurrence, a standard criterion to evaluate treatment response for patients with high-grade papillary-only (Ta and T1) NMIBC, showed that for patients in Cohort 3 (n=40), Vicinium treatment resulted in favorable efficacy with 56% (95% CI, 40%-72%) of patients remaining recurrence-free at 6 months, and 36% (95% CI, 21%-54%) of patients remaining recurrence-free at 12 months.
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Deliver insufficient drug to tumors.
Existing ADCs utilize full-length antibodies, which, due to their large size, have a reduced ability to penetrate tumors, thereby potentially reducing their efficacy.
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Inability to kill a broad array of cancer cells within a tumor.
Subsets of cancer cells within tumors may have mechanisms to resist and not be responsive to the cytotoxic payloads, or small molecule chemotherapies, used in existing ADCs.
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Off-target toxicities due to unstable chemical linkage between targeting antibody and cytotoxic payload.
Existing ADCs utilize chemical linkage strategies to join antibodies to small molecule cytotoxic payloads. While in the circulatory system, these chemical linkages can break and release free cytotoxic payloads in the circulation. These free small molecule cytotoxic payloads are not targeted and cannot discriminate between dividing cancer cells and non-cancerous cells, thus resulting in increased off-target toxicities.
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Limited combination therapy potential.
The release of free cytotoxic payloads in the tumor region can result in toxicity to immune cells that attack tumors. This effect on anti-tumor immune cells may limit the potential utility of existing ADCs in combination therapies, including those employing immune checkpoint inhibitors.
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Complex and challenging manufacturing process.
The multi-step manufacturing process of existing ADCs creates a non-homogeneous product that limits efficacy and drives greater costs than our manufacturing process.
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Deliver a greater amount of drug to tumors.
Our TFPTs are designed using smaller targeting proteins that have an increased ability to exit the circulatory system and have binding properties designed to enable deeper penetration into targeted tumors, and we believe this will increase efficacy.
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Ability to kill a broader array of cancer cells within a tumor.
Our novel cytotoxic payloads consist of proteins rather than small molecule cytotoxic payloads. We believe the larger size of our cytotoxic protein payloads helps circumvent multi-drug resistance mechanisms that can make certain cancer cells resistant to small molecule cytotoxic payloads. By contrast to existing ADCs, which employ cytotoxic payloads that inhibit cellular replication and are effective at killing rapidly proliferating cancer cells, our cytotoxic protein payloads inhibit protein synthesis and are designed to kill not only rapidly proliferating, but also slowly growing cancer cells including tumor progenitor cells/cancer stem-like cells.
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Increase safety due to a more stable linkage between targeting protein and cytotoxic payload.
Our single protein molecules are designed to remain intact until they reach the inside of the cancer cell and to not release free cytotoxins into the circulatory system, thereby minimizing off-target toxicity.
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Promote a therapeutic immune response.
We believe that the potent TFPT toxin-mediated killing of cancer cells in this immunologically active setting leads to the efficient presentation of cancer antigens to the immune system, thereby promoting an anti-tumor cellular immune response. Our locally-administered TFPTs utilize an immunogenic cytotoxic payload that we believe promotes a heightened immune response in the local tumor environment.
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Potential combination with checkpoint inhibitors.
We believe that the potential effect of checkpoint inhibitors, which are antibodies that promote the action of anti-tumor T-cells by blocking inhibitory ligand/receptor
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Utilize a simpler and more efficient manufacturing process.
Our proprietary recombinant one-step manufacturing process creates a homogeneous product that we believe will improve efficacy and result in lower manufacturing costs.
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Rapidly advance Vicinium for the treatment of high-risk NMIBC through clinical development and obtain regulatory approval.
Based upon our September 2014 end of Phase 2 meeting with the FDA, in the third quarter of 2015, we, through our subsidiary Viventia, commenced an open-label, non-randomized Phase 3 clinical trial, the VISTA Trial, of Vicinium in patients with high-risk NMIBC in the United States and Canada. In November 2016, the FDA issued draft guidance regarding appropriate clinical trial design for new drugs and biologics for BCG-unresponsive NMIBC, including the use of single-arm studies. The FDA finalized this guidance in February 2018 and retained many of the recommendations from the 2016 draft guidance regarding clinical trial design, including the use of single-arm studies. We believe that the Phase 3 clinical trial VISTA Trial design is consistent with these aspects of the FDA’s guidance. We completed enrollment in the VISTA Trial in March 2018 and reported preliminary topline three-month efficacy and safety data for the VISTA Trial in May 2018. On January 3, 2019, we released preliminary three-month, 6-month, 9-month and 12-month topline efficacy and safety data and further expect to report updated 12-month topline efficacy and safety data in mid-2019. In August 2018, we received Fast Track designation from the FDA for Vicinium for the treatment of high-risk NMIBC. If this Phase 3 clinical trial is successful, we intend to pursue regulatory approval initially in the United States and Canada. Assuming that we receive positive data in our Phase 3 clinical trial, we intend to initiate discussions with the European Medicines Agency, or EMA, regarding a regulatory pathway for European Union, or E.U., approval.
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Explore opportunities in combination therapies.
We plan to continue discussions with potential partners that utilize technologies whose mechanism of action could be complementary to our TFPT platform. These technologies include, but are not limited to, checkpoint inhibitors, immune modulators and other immuno-oncology agents. In June 2017, we entered into a CRADA with the NCI for the development of Vicinium in combination with AstraZeneca’s immune checkpoint inhibitor, durvalumab, for the treatment of NMIBC. Under the terms of the CRADA, the NCI will conduct a Phase 1 clinical trial in patients with high-risk NMIBC to evaluate the safety, efficacy and biological correlates of Vicinium in combination with durvalumab. This Phase 1 trial is open and actively recruiting patients.
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Expand on the value of selected product candidates through strategic partnerships.
We may decide to selectively partner with pharmaceutical and biopharmaceutical companies when we believe that a partner could bring additional resources and expertise to maximize the value of one or more of our product candidates.
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Maximize the commercial value of our product candidates.
We maintain global development, marketing and commercialization rights for all of our TFPT-based product candidates. If we obtain regulatory approval for Vicinium for the treatment of high-risk NMIBC, we may build a North American specialty urology sales force to market the product in the United States and Canada or seek commercialization partners. Outside the United States and Canada, we will seek commercialization partners with urology expertise. If we obtain regulatory approval for our other product candidates, or other indications for Vicinium, we may seek partners with oncology expertise in order to maximize the commercial value of each asset or a portfolio of assets.
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Dose
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30 mg of Vicinium (in 50 mL of saline)
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Estimated total enrollment
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Approximately 134 patients, including 77 CIS patients whose disease is refractory to or relapsed within 6 months of the last dose of adequate BCG treatment
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Primary endpoint
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Complete response rate in patients with CIS (with or without papillary disease) whose disease is refractory or relapsed in six months or less following adequate BCG treatment, which is defined as at least two courses of full dose BCG; and
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DoR will be estimated (Kaplan-Meier Estimate) for those patients with CIS whose disease is refractory to or relapsed within 6 months of the last dose of adequate BCG treatment (with or without papillary disease) who experience a complete response.
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Secondary endpoints
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Complete response rate and DoR in patients with CIS whose disease is refractory to or relapsed within 6 months of the last dose of adequate BCG treatment (with or without papillary disease) whose disease is refractory or relapsed from six months to 11 months following adequate BCG treatment;
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Complete response rate and DoR in all patients with CIS (with or without papillary disease) following adequate BCG treatment;
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Event-free survival, or EFS, in all patients;
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Complete response rate in patients at three, six, nine, 12, 15, 18, 21, and 24 months in patients with CIS whose disease is refractory to or relapsed within 6 months of the last dose of adequate BCG treatment;
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Time to cystectomy in all patients;
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Time to disease recurrence in all patients;
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Progression-free survival, or PFS, in all patients;
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Overall survival, or OS, in all patients; and
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Safety and tolerability of Vicinium therapy in all patients.
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Exploratory endpoint
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To evaluate biomarkers that may be associated with response or disease progression or treatment failure, which may include, for example, EpCAM status, tumor subtype morphology, furin levels in tumor cell endosomes, presence of a glycosaminoglycan coat, and presence of receptors that could impede a host anti-tumor immune response such as PD-L1.
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Cohort 1 (n=86): CIS patients with or without papillary disease whose cancer was determined to be refractory or recurred within six months of their last course of adequate BCG;
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•
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Cohort 2 (n=7): CIS patients with or without papillary disease whose cancer was determined to be refractory or recurred after six months, but less than 12 months, after their last course of adequate BCG; and
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•
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Cohort 3 (n=40): patients with papillary disease without CIS whose cancer was determined to be refractory or recurred within six months of their last course of adequate BCG
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Time point
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Evaluable Patients
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Complete Response Rate (95% Confidence Interval)
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3-months
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n=7
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57% (18%-90%)
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6-months
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n=7
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57% (18%-90%)
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9-months
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n=7
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43% (10%-82%)
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12-months
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n=7
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14% (0%-58%)
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Time point
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Evaluable Patients
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Complete Response Rate (95% Confidence Interval)
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3-months
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n=93
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39% (29%-49%)
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6-months
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n=92
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27% (18%-37%)
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9-months
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n=91
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20% (12%-29%)
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12-months
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n=88
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14% (7%-23%)
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Time point
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Phase 3 Pooled CRR
(95% Confidence Intervals)
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Phase 2 Pooled CRR
(95% Confidence Interval)
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3-months
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39% (29%-49%)
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40% (26%-56%)
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6-months
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27% (18%-37%)
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27% (15%-42%)
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9-months
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20% (12%-29%)
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18% (8%-32%)
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12-months
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14% (7%-23%)
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16% (7%-30%)
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Time point
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Evaluable Patients
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Recurrence-Free Rate (95% Confidence Interval)
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3-months
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n=40
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68% (51%-81%)
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6-months
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n=40
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56% (40%-72%)
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9-months
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n=39
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42% (26%-59%)
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12-months
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n=38
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36% (21%-54%)
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•
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Duration of Response
: In addition to the complete response rate in Cohort 1, duration of response is a primary endpoint measure. The median duration of complete response for patients in Cohort 1 (n=86) is 227 days (95% CI, 127-516), using the Kaplan-Meier method. Additional adhoc analysis of pooled data for all patients with Carcinoma in situ (Cohorts 1 and 2, n=93) shows that among patients who achieved a complete response at 3 months, 69% had a complete response of 6 months or longer.
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•
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Time to Cystectomy
: Time to cystectomy is a key second endpoint in the VISTA Trial. Across all 133 patients treated with Vicinium, the projected median cystectomy-free time is approximately 519 days (95% CI, 361-523), or 18 months. The median was estimated using a computer-based, intensive, nonparametric approach commonly used in clinical trials to generate estimates and confidence intervals for data sets that are incomplete. Using the variability within a sample to estimate that sampling distribution empirically, 500 samples with replacement were generated to estimate the median.
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Time to Disease Recurrence
: Time to disease recurrence is a key secondary endpoint for patients with high-grade papillary-only (Ta and T1) NMIBC. The median time to disease recurrence for patients in Cohort 3 (n=40) is 270 days (95% CI, 169-452).
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Recurrence-free Rate
: Disease recurrence, a standard criterion to evaluate treatment response for patients with high-grade papillary-only (Ta and T1) NMIBC, showed that for patients in Cohort 3 (n=40), Vicinium treatment resulted in favorable efficacy with 56% (95% CI, 40%-72%) of patients remaining recurrence-free at 6 months, and 36% (95% CI, 21%-54%) of patients remaining recurrence-free at 12 months.
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Number of
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Complete
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Stable
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Response of
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evaluable patients
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response
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Response
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response
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progression
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16.................................
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4 of the 16
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6 of the 16
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4 of the 16
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2 of the 16
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(25.0%)
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(37.5%)
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(25.0%)
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(12.5%)
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a United States, a New Zealand, Japan, Taiwan, China and a South Africa composition of matter patent covering isunakinra which expires in 2031;
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composition-of-matter patent applications covering isunakinra in Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel, Korea, Mexico and Russia, which, if granted, are expected to expire in 2031;
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patent applications covering the formulation of isunakinra filed in the United States, Australia, Canada, China, Europe, Hong Kong, Japan, New Zealand, Russia, and Singapore, which, if granted, are expected to expire in 2034;
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a patent application covering the formulation of isunakinra in a blow fill seal container filed in Taiwan, which if granted, is expected to expire in 2035;
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a provisional application directed to compositions and methods for increasing the retention of therapeutic agents in the eye which, if converted and granted, is expected to expire in 2038.
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a provisional application directed to compositions and methods for increasing the retention of anti-VEGF therapeutic agents in the eye which, if converted and granted, is expected to expire in 2038; and
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a provisional application directed to compositions and methods for increasing the retention of RGD therapeutic agents in the eye which, if converted and granted, is expected to expire in 2038
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patent applications covering the IL-6 antagonistic anti-IL6 monoclonal antibodies and active fragments thereof, including IL-6 antibody EBI-029, filed in the United States, Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, Mexico, New Zealand, Russia, Singapore, and South Africa, and, if granted, are expected to expire in 2033;
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patent applications covering IL-6 antagonistic anti-IL6 monoclonal antibodies and active fragments thereof, including the IL-6 antibody EBI-031, having a pending PCT application and applications pending or to be filed in Algeria, Australia, Bahrain, Brazil, Canada, Chile, Colombia, Costa Rica, Egypt, Europe (to be filed), India, Israel, Korea, Malaysia, Mexico, Morocco, New Zealand, Oman, Philippines, Qatar, Russian Federation, Saudi Arabia, Singapore, South Africa, Thailand, Ukraine, United Arab Emirates, and Vietnam, and, if granted are expected to expire in 2035; and
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a PCT Application and an Argentine application each corresponding to a United States provisional application covering the IL-6 antibody EBI-031 formulation, which if granted, are expected to expire in 2036.
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NMIBC: Aadi, LLC (ABI-009), Altor Bioscience Corporation (ALT-801), Cold Genesys, Inc. (CG0070), Merck (Keytruda/pembroluzumab), Endo Pharmaceuticals Inc. (Valstar) (approved drug), FKD Therapies Oy (Instilidrin), Merck and other pharmaceutical companies (BCG) (approved drug), Eli Lilly and Company (Gemcitabine), Telormedix SA (Vesimune) and Anchiano Therapeutics Ltd. (inodiftagene vixteplasmid);
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SCCHN: Bristol-Myers Squibb Company (nivolumab)(approved drug), Eli Lilly and Company, and Merck (Erbitux, pembrolizumab) (approved drugs);
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Multiple types of solid tumors: Amgen Inc. (Panitumumab) (approved drug), Bayer AG and Onyx Pharmaceuticals (Sorafenib) (approved drug), Bristol-Myers Squibb Company, Eli Lilly and Company, and Merck (Erbitux) (approved drug), F. Hoffmann-La Roche AG (Bevacizumab) (approved drug), Genentech, Inc. (Bevacizumab, Erlotinib and Trastuzumab) (approved drugs), Pfizer, Inc. (Sunitinib) and Trion Research GmbH (Removab); and
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In addition to competition from alternative treatments, we may also face competition from products that are biosimilar to, and possibly interchangeable with, our product candidates. Biosimilar products are expected to become available over the coming years. Even if our product candidates achieve marketing approval, they may be priced at a significant premium over competitive biosimilar products if any have been approved by then and insurers or other third party payors may encourage or even require the use of lower priced biosimilar products. Even if our treatments receive market authorization, they may not be listed on the formularies of payors (public or private insurers) or reimbursed. This may impact the uptake of the drug as a treatment option for patients and/or the price at which the drug can be sold at. Further, if the drug is reimbursed it may be at a narrower indication than the full scope of market authorization.
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completion of pre-clinical studies, animal studies and formulation studies, some in compliance with the FDA’s Good Laboratory Practices, or GLP, regulations, and the Animal Welfare Act administered and enforced by the U.S. Department of Agriculture;
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submission to the FDA of an IND to support human clinical testing, which must become effective before human clinical trials may commence;
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approval by an IRB before each trial may be initiated at each clinical site;
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performance of adequate and well-controlled clinical trials under protocols submitted to FDA and reviewed and approved by each IRB, conducted in accordance with federal regulations and current Good Clinical Practices, or GCPs, to establish the safety, purity and potency of the biologic for each targeted indication;
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submission of a BLA to the FDA;
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satisfactory completion of an FDA Advisory Committee review, if applicable;
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satisfactory completion of an FDA inspection of the manufacturing facilities at which the biologic is produced to assess compliance with current Good Manufacturing Practices, or cGMP, and to assure that the facilities, methods and controls are adequate; and
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FDA review and approval of the BLA.
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•
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Phase 1.
Phase 1 involves the initial introduction of a product candidate into humans. Phase 1 clinical trials are typically conducted in healthy human patients, but in some situations are conducted in patients with the target disease or condition. These clinical trials are generally designed to evaluate the safety, metabolism, PK properties and pharmacologic actions of the product candidate in humans, the side effects associated with increasing doses and, if possible, to gain early evidence on effectiveness. During Phase 1 clinical trials, sufficient information about the product candidate’s PK properties and pharmacological effects may be obtained to inform and support the design of Phase 2 clinical trials. The total number of participants included in Phase 1 clinical trials varies, but is generally in the range of 20 to 80;
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Phase 2.
Phase 2 includes the controlled clinical trials conducted to obtain initial evidence of effectiveness of the product candidate for a particular indication(s) in patients with the target disease or condition, to determine dosage tolerance and optimal dosage, gather additional information on possible adverse side effects and safety risks associated with the product candidate. Phase 2 clinical trials are typically well-controlled, closely monitored, and conducted in a limited patient population, usually involving no more than several hundred participants; and
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Phase 3.
Phase 3 clinical trials are controlled clinical trials conducted in an expanded patient population at geographically dispersed clinical trial sites. They are performed after preliminary evidence suggesting effectiveness of the product candidate has been obtained and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the product candidate and to provide an adequate basis for regulatory approval. Phase 3 clinical trials usually involve several hundred to several thousand participants. In most cases, the FDA requires two adequate and well controlled Phase 3 clinical trials to demonstrate the efficacy of the product candidate, although a single Phase 3 clinical trial with other confirmatory evidence may be sufficient in certain instances.
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General IVDs;
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IVDs for self-testing;
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IVDs falling within the scope of Annex II, List A:
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•
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reagents and reagent products, including related calibrators and control materials, for determining the following blood groups: ABO system, rhesus (C, c, D, E, e), or anti-Kell; and
|
•
|
reagents and reagent products, including related calibrators and control materials, for the detection, confirmation and quantification in human specimens of markers of human immunodeficiency virus, or HIV, infection (HIV 1 and 2), human T-lymphotropic virus I and II, and hepatitis B, C and D.
|
•
|
IVDs falling within the scope of Annex II, List B:
|
•
|
reagents and reagent products, including related calibrators and control materials, for determining the following blood groups: anti-Duffy and anti-Kidd;
|
•
|
reagents and reagent products, including related calibrators and control materials, for determining irregular anti-erythrocyte antibodies;
|
•
|
reagents and reagent products, including related calibrators and control materials, for the detection and quantification in human samples of the following congenital infections: rubella, toxoplasmosis;
|
•
|
reagents and reagent products, including related calibrators and control materials, for diagnosing the following hereditary disease: phenylketonuria;
|
•
|
reagents and reagent products, including related calibrators and control materials, for determining the following human infections: cytomegalovirus, chlamydia;
|
•
|
reagents and reagent products, including related calibrators and control materials, for determining the following human leukocyte antigen tissue groups: DR, A, B;
|
•
|
reagents and reagent products, including related calibrators and control materials, for determining the following tumoral marker: prostate-specific antigen;
|
•
|
reagents and reagent products, including related calibrators, control materials and software, designed specifically for evaluating the risk of trisomy 21; and
|
•
|
the following device for self-diagnosis, including its related calibrators and control materials: device for the measurement of blood sugar.
|
•
|
The second applicant can establish in its application that its product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior;
|
•
|
The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or
|
•
|
The holder of the marketing authorization for the original orphan medicinal product cannot supply enough orphan medicinal product.
|
•
|
an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription products and biological products;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% for innovator drugs and 13% for non-innovator drugs of the average manufacturer price;
|
•
|
a new methodology by which average manufacturer price is calculated and reported by manufacturers for products that are inhaled, infused, instilled, implanted or injected and not generally dispensed through retail community pharmacies;
|
•
|
expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers, and enhanced penalties for noncompliance;
|
•
|
a new partial prescription drug benefit for Medicare recipients, or Medicare Part D, coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand products to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’ outpatient products to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability from fee-for-service Medicaid utilization to include the utilization of Medicaid managed care organizations as well;
|
•
|
expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals, thereby potentially increasing manufacturers’ Medicaid rebate liability;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service 340B drug pricing program;
|
•
|
new requirements to report to CMS annually specifying financial arrangements with physicians and teaching hospitals, as defined in the Affordable Care Act and its implementing regulations, including reporting any ‘‘payments or other transfers of value’’ made or distributed to prescribers, teaching hospitals, and other healthcare providers and reporting any ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations during the preceding calendar year;
|
•
|
a new requirement to annually report product samples that manufacturers and distributors provide to physicians;
|
•
|
a mandatory non-deductible payment for employers with 50 or more full-time employees (or equivalents) who fail to provide certain minimum health insurance coverage for such employees and their dependents;
|
•
|
establishment of the Center for Medicare and Medicaid Innovation within CMS to test innovative payments and service delivery models; and
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research
|
Item 1A.
|
Risk Factors
|
•
|
continue our Phase 3 clinical trial for Vicinium for the treatment of high-risk NMIBC;
|
•
|
continue the research and pre-clinical and clinical development of our other product candidates;
|
•
|
seek and conduct combination trials of one or more of our product candidates;
|
•
|
seek to discover and develop additional product candidates;
|
•
|
in-license or acquire the rights to other products, product candidates or technologies;
|
•
|
seek marketing approvals for any product candidates that successfully complete clinical trials;
|
•
|
establish sales, marketing and distribution capabilities and scale up and validate external manufacturing capabilities to commercialize any product candidates for which we may obtain marketing approval;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
add equipment and physical infrastructure to support our research and development;
|
•
|
complete the technology transfer of Vicinium bulk drug substance manufacturing to Fujifilm;
|
•
|
hire additional clinical, quality control, scientific and management personnel;
|
•
|
expand our operational, financial and management systems and personnel; and
|
•
|
develop our internal control environment for the additional compliance level of Section 404(b) of the Sarbanes-Oxley Act.
|
•
|
we are required by the FDA, the EMA or Health Canada to perform studies or clinical trials in addition to those currently expected; or
|
•
|
if there are any delays in enrollment of patients in, or completing our clinical trials or the development of any product candidates that we may develop.
|
•
|
successfully completing development activities, including clinical trial design and enrollment of a sufficient number of patients in our clinical trials and completion of the necessary clinical trials;
|
•
|
completing and submitting BLAs to the FDA and obtaining regulatory approval for indications for which there is a commercial market;
|
•
|
completing and submitting applications to, and obtaining regulatory approval from, foreign regulatory authorities, including Health Canada and the European Commission;
|
•
|
establishing sales, marketing and distribution capabilities, either ourselves or through collaborations or other arrangements with third parties, to effectively market and sell our product candidates;
|
•
|
achieving an adequate level of market acceptance of our product candidates;
|
•
|
successfully commercializing any product candidates, if approved;
|
•
|
protecting our rights to our intellectual property portfolio;
|
•
|
ensuring the manufacture of commercial quantities of our product candidates;
|
•
|
finding suitable partners to help us develop certain of our product candidates and market, sell and/or distribute any of our products that receive regulatory approval in other markets; and
|
•
|
obtaining adequate pricing, coverage and reimbursement from third parties, including government and private payors.
|
•
|
the initiation, progress, timing, costs and results of clinical trials for our product candidates;
|
•
|
the scope, progress, results and costs of pre-clinical development and laboratory testing of our pre-clinical product candidates;
|
•
|
our ability to establish collaborations on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for our product candidates;
|
•
|
the costs and timing associated with our manufacturing process and technology transfer to FujiFilm;
|
•
|
the costs and timing of the implementation of commercial-scale manufacturing activities;
|
•
|
the costs and timing of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval;
|
•
|
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
|
•
|
our obligation to make milestone, royalty and other payments to third party licensors under our licensing agreements;
|
•
|
the extent to which we in-license or acquire rights to other products, product candidates or technologies;
|
•
|
the outcome, timing and cost of regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities, including Health Canada or the EMA, to require that we perform more studies than those that we currently expect;
|
•
|
the effect of competing technological and market developments; and
|
•
|
the revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval.
|
•
|
receipt of marketing approvals from the FDA, Health Canada, the European Commission or comparable foreign regulatory authorities;
|
•
|
performance of our future collaborators, if any;
|
•
|
extent of any required post-marketing approval commitments to applicable regulatory authorities;
|
•
|
obtaining and maintaining patent, trade secret protection and regulatory exclusivity, both in the United States and internationally;
|
•
|
protection of our rights in our intellectual property portfolio;
|
•
|
launch of commercial sales, if and when marketing approval is received;
|
•
|
demonstration of an acceptable safety profile prior to and following any marketing approval;
|
•
|
marketplace acceptance, if and when approved, by patients, the medical community and third-party payors;
|
•
|
establishing and maintaining pricing sufficient to realize a meaningful return on our investment; and
|
•
|
competition with other therapies.
|
•
|
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 or more challenging than we anticipate or patients may drop out of these clinical trials at a higher rate than we anticipate;
|
•
|
our third-party contractors may fail to comply with regulatory requirements, including GCPs or meet their contractual obligations to us in a timely manner, or at all;
|
•
|
inspection of the clinical trial operations, trial sites or manufacturing facility by the FDA or other comparable foreign regulatory authorities such as Health Canada, or the competent authorities of the E.U. Member States, could result in findings of non-compliance and the imposition of a clinical suspension or termination;
|
•
|
regulators or IRBs/Ethics Committees may delay or not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;
|
•
|
we may experience delays or fail to reach agreement with the FDA or a comparable foreign regulatory authority, including Health Canada or the competent authorities of the E.U. Member States, on a trial design that we are able to execute;
|
•
|
we may be unable to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs, including for the same indications as our clinical trials;
|
•
|
we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
|
•
|
trial sites and investigators may deviate from clinical trial protocols or otherwise fail to conduct the trial in accordance with regulatory requirements, and investigators may drop out of the clinical trial;
|
•
|
trial sites may withdraw from our clinical trials, including as a result of changing standards of care or ineligibility of a site to participate in our clinical trials;
|
•
|
we may decide, or regulators or IRBs/Ethics Committees or other reviewing entities, including comparable foreign regulatory authorities such as Health Canada or the competent authorities of the E.U. Member States, may require us to suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements including GCPs or a finding that the patients are being exposed to unacceptable health risks;
|
•
|
the cost of clinical trials of our product candidates may be greater than we anticipate;
|
•
|
we may receive feedback from DSMBs or the FDA, or a comparable foreign regulatory authority, including Health Canada or the competent authorities of the E.U. Member States, that might require modification to the protocol for the clinical trial or performance of additional studies before clinical trials may continue;
|
•
|
as a clinical trial proceeds, or as the results of earlier stage studies or concurrent studies become available, we may determine that we need to modify the protocol and/or other aspects of the clinical trial before it may continue;
|
•
|
the FDA, a comparable foreign regulatory authority, including Health Canada, or the competent authorities of the E.U. Member States, or we may decide to, or a DSMB may recommend to, suspend or terminate clinical trials at any time for safety issues or for any other reason;
|
•
|
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;
|
•
|
our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs/Ethics Committees to suspend or terminate the trials;
|
•
|
lack of adequate funding to continue a clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials or increased expenses associated with the services of our CROs and other third parties; and
|
•
|
changes in applicable laws, governmental regulations or administrative actions.
|
•
|
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 or distribution restrictions or safety warnings, or is subject to a REMS;
|
•
|
be subject to additional post-marketing testing requirements; or
|
•
|
have the product removed from the market after obtaining marketing approval.
|
•
|
the severity of the disease under investigation;
|
•
|
the eligibility criteria for the clinical trial in question;
|
•
|
the size of the patient population for the disease;
|
•
|
the size of the patient population required for statistically significant analysis of the clinical trial’s primary endpoints;
|
•
|
the design of the clinical trial;
|
•
|
the clinicians' and patients' perceived risks and benefits of the product candidate under study, including relative to alternative treatments;
|
•
|
the efforts to facilitate timely enrollment in clinical trials;
|
•
|
the patient referral practices of physicians;
|
•
|
any ongoing clinical trials conducted by competitors for the same indication;
|
•
|
the risk that patients enrolled in clinical trials will drop out of the clinical trials before completion;
|
•
|
the ability to monitor patients adequately during and after treatment; and
|
•
|
the proximity and availability of clinical trial sites for prospective patients.
|
•
|
difficulty in establishing or managing relationships with CROs and physicians;
|
•
|
different or additional standards for the conduct of clinical trials;
|
•
|
absence in some countries of established groups with sufficient regulatory expertise for review of the protocols associated with our product candidates;
|
•
|
ensuring that clinical trial quality is sufficient to meet the standards of the FDA or other regulatory authorities;
|
•
|
our inability to locate qualified local consultants, physicians and partners; and
|
•
|
the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatments.
|
•
|
we may suspend or be forced to suspend marketing of our product candidates;
|
•
|
we may be obliged to conduct a product recall or product withdrawal;
|
•
|
regulatory authorities may suspend, vary, or withdraw their approvals of our product candidates;
|
•
|
regulatory authorities may order the seizure or recall of our product candidates;
|
•
|
regulatory authorities may require additional warnings on the label or a REMS that could diminish the usage or otherwise limit the commercial success of our product candidates;
|
•
|
we may be required to conduct post-marketing studies;
|
•
|
we could be sued and held liable for harm caused to patients;
|
•
|
we could be required to pay fines and face other administrative, civil and criminal penalties; and
|
•
|
our reputation may suffer.
|
•
|
the perceived quality, efficacy and safety of our product candidates;
|
•
|
clinical indications for which our product candidates are approved;
|
•
|
availability of alternative effective treatments for the disease indications of our product candidates are intended to treat and the relative risks, benefits and costs of those treatments;
|
•
|
acceptance by physicians, major operators of cancer clinics and patients of our product candidates as safe and effective treatments;
|
•
|
the success of our physician education programs;
|
•
|
potential and perceived advantages of our product candidates over alternative treatments;
|
•
|
safety of our product candidates seen in a broader patient group, potentially including their use outside the approved indications should physicians choose to prescribe them for such uses;
|
•
|
prevalence and severity of any side effects;
|
•
|
any new or unexpected results from additional clinical trials or further analysis of clinical data of completed clinical trials by us or our competitors;
|
•
|
product labeling or patient information requirements imposed by the FDA or other foreign regulatory authorities, including Health Canada and the EMA;
|
•
|
timing of market introduction of our product candidates as well as competitive products;
|
•
|
the pricing of our treatments, particularly in relation to alternative treatments, and willingness and ability of patients to pay for our product candidates;
|
•
|
availability of coverage and adequate reimbursement and pricing by third-party payors and government authorities;
|
•
|
maintaining compliance with all applicable regulatory requirements;
|
•
|
relative convenience and ease of administration; and
|
•
|
effectiveness of our sales, marketing and distribution efforts and operations.
|
•
|
our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;
|
•
|
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe our 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 develop;
|
•
|
injury to our reputation and significant negative media attention;
|
•
|
withdrawal of clinical trial patients;
|
•
|
significant costs to defend the related litigation;
|
•
|
substantial monetary awards to trial patients;
|
•
|
loss of revenue;
|
•
|
reduced time and attention of our management to pursue our business strategy; and
|
•
|
the inability to commercialize any products that we develop.
|
•
|
collaborators or licensees have significant discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations or licenses;
|
•
|
collaborators or licensees may not perform their obligations as expected;
|
•
|
collaborators or licensees may not pursue development and commercialization of our product candidates that receive marketing approval or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ or licensees' strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities;
|
•
|
collaborators or licensees 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 or licensees could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if the collaborators or licensees believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;
|
•
|
product candidates discovered under the collaboration or license with us may be viewed by our collaborators or licensees as competitive with their own product candidates or products, which may cause collaborators or licensees to cease to devote resources to the commercialization of our product candidates;
|
•
|
a collaborator or licensee with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products;
|
•
|
disagreements with collaborators or licensees, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would divert management attention and resources, be time-consuming and expensive;
|
•
|
collaborators or licensees 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 intellectual property or proprietary information or expose us to potential litigation;
|
•
|
collaborators or licensees may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and
|
•
|
collaborations or licenses may be terminated for the convenience of the collaborator or licensee and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.
|
•
|
The development of commercial-scale manufacturing capabilities may require our third-party manufacturer to invest substantial additional funds and hire and retain technical personnel who have the necessary manufacturing experience. Our third-party manufacturer may fail to devote sufficient time and resources to develop the capabilities to manufacture our product candidates.
|
•
|
Because of the complex nature of our product candidates, our third party manufacturer, or other third parties we rely on, may encounter difficulties in achieving the volume of production needed to satisfy commercial demand, may not be able to achieve such volume at an acceptable cost, may experience technical issues that impact comparability, quality, or compliance with applicable regulations governing the manufacture of biological products, and may experience shortages of qualified personnel to adequately staff production operations.
|
•
|
Our third-party manufacturer could default on its agreement with us to meet our requirements for commercialization of our product candidates, or it may terminate or decide not to renew its agreement with us, based on its own business priorities, at a time that is costly or damaging to us. If our third-party manufacturer were to terminate our arrangement or fail to meet our commercial manufacturing demands, we may be delayed in our ability to obtain and maintain regulatory approval of our product candidates or, if approved, commercialize our product candidates.
|
•
|
It may be difficult or impossible for us to find a replacement manufacturer on acceptable terms quickly, or at all. Identifying alternate manufacturers may be difficult because the number of potential manufacturers that have the necessary expertise to produce biologics is limited. Additionally, the FDA must approve any alternative manufacturer before we may use the alternative manufacturer to produce commercial supply of a product candidate, if approved.
|
•
|
others may be able to make product candidates that are the same as or similar to our product candidates but that are not covered by the claims of the patents that we own or have licensed;
|
•
|
biosimilar product manufacturers may develop, seek approval for, and launch biosimilar versions of our products, which could be significantly less costly to bring to market and priced significantly lower than our products;
|
•
|
we or our licensors might not have been the first inventor to file patent applications covering certain of our inventions;
|
•
|
others may design around our intellectual property rights or independently develop similar or alternative technologies or duplicate any of our technologies without infringing or misappropriating our intellectual property rights;
|
•
|
it is possible that our pending patent applications will not lead to issued patents with claims that cover our products or even issued patents;
|
•
|
issued patents that we own or have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges;
|
•
|
our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;
|
•
|
we may not develop additional proprietary technologies or product candidates that are patentable; and
|
•
|
the intellectual property rights of others may have an adverse effect on our business.
|
•
|
The second applicant can establish in its application that its product, although similar to the orphan medicinal product already authorized, is safer, more effective or otherwise clinically superior;
|
•
|
The holder of the marketing authorization for the original orphan medicinal product consents to a second orphan medicinal product application; or
|
•
|
The holder of the marketing authorization for the original orphan medicinal product cannot supply enough orphan medicinal product.
|
•
|
the United States Congress could amend the BPCIA to significantly shorten this exclusivity period as has been previously proposed; and
|
•
|
a potential competitor could seek and obtain approval of its own BLA during our exclusivity period instead of seeking approval of a biosimilar version.
|
•
|
litigation involving patients taking our products;
|
•
|
restrictions on such products, manufacturers or manufacturing processes;
|
•
|
restrictions on the labeling or marketing of a product;
|
•
|
restrictions on product distribution or use;
|
•
|
requirements to conduct post-marketing studies or clinical trials;
|
•
|
warning letters 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 revenues;
|
•
|
suspension or withdrawal of marketing approvals;
|
•
|
damage to relationships with any potential collaborators;
|
•
|
unfavorable press coverage and damage to our reputation;
|
•
|
refusal to permit the import or export of our products;
|
•
|
product seizure or detention; or
|
•
|
injunctions or the imposition of civil or criminal penalties.
|
•
|
the federal Anti-Kickback Statute, which 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, or in return for, either the referral of an individual for, or the purchase, order or recommendation or arranging of, any good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid;
|
•
|
the federal False Claims Act imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obligation to pay money to the federal government, with potential liability including mandatory treble damages and significant per-claim penalties, set at $10,781 to $21,563 per false claim for violations occurring after November 2, 2015;
|
•
|
HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry relating to the delivery of or payment for healthcare benefits, items or services;
|
•
|
the federal Physician Payments Sunshine Act requires applicable manufacturers of covered products to report payments and other transfers of value to physicians and teaching hospitals;
|
•
|
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which imposes obligations, including mandatory contractual terms, on covered healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, with respect to safeguarding the privacy, security and transmission of individually identifiable health information; and
|
•
|
analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws and transparency statutes, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; state laws that prohibit certain marketing-related activities, including the provision of gifts, meals, or other items to certain health care providers, and restrict the ability of manufacturers to offer co-pay support to patients for certain prescription drugs; state laws that require identification or licensing of sales representatives; and state and foreign laws governing the privacy, security, collection, use and disclosure of health information, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the FTC Act), many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
|
•
|
an annual, non-deductible fee on any entity that manufactures or imports specified branded prescription products and biologic agents;
|
•
|
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
|
•
|
a new methodology by which average manufacturer price is calculated and reported by manufacturers for products that are inhaled, infused, instilled, implanted or injected and not generally dispensed through retail community pharmacies;
|
•
|
expansion of healthcare fraud and abuse laws, including the civil False Claims Act and the federal Anti-Kickback Statute, new government investigative powers and enhanced penalties for noncompliance;
|
•
|
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand products to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient products to be covered under Medicare Part D;
|
•
|
extension of manufacturers’ Medicaid rebate liability from fee-for-service Medicaid utilization to include the utilization of Medicaid managed care organizations as well;
|
•
|
expansion of eligibility criteria for Medicaid programs;
|
•
|
expansion of the entities eligible for discounts under the Public Health Service 340B drug pricing program;
|
•
|
new requirements to report certain financial arrangements with physicians and teaching hospitals;
|
•
|
a new requirement to annually report product samples that manufacturers and distributors provide to physicians;
|
•
|
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research; and
|
•
|
establishment of the Center for Medicare and Medicaid Innovation within CMS to test innovative payment and service delivery models.
|
•
|
managing our clinical trials effectively;
|
•
|
identifying, recruiting, maintaining, motivating and integrating additional employees;
|
•
|
managing our internal development efforts effectively while complying with our contractual obligations to licensors, licensees, contractors and other third parties;
|
•
|
improving our managerial, development, operational and finance systems; and
|
•
|
expanding our facilities.
|
•
|
establish a classified board of directors such that only one of three classes of directors is elected each year;
|
•
|
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 our board of directors;
|
•
|
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 specified provisions of our certificate of incorporation or bylaws.
|
•
|
a limited availability of market quotations for our securities;
|
•
|
a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
|
•
|
a limited amount of news and little or no analyst coverage for us;
|
•
|
we would no longer qualify for exemptions from state securities registration requirements, which may require us to comply with applicable state securities laws; and
|
•
|
a decreased ability to issue additional securities (including pursuant to short-form registration statements on Form S-3) or obtain additional financing in the future.
|
•
|
the success of competitive products or technologies;
|
•
|
results of clinical trials of Vicinium for the treatment of high-risk NMIBC or any other product candidate that we may develop;
|
•
|
results of clinical trials of product candidates of our competitors;
|
•
|
regulatory or legal developments in the United States and other countries;
|
•
|
developments or disputes concerning patent applications, issued patents or other proprietary rights;
|
•
|
the recruitment or departure of key scientific or management 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 products, product candidates or technologies for the treatment of ophthalmic diseases, the costs of commercializing any such products and the costs of development of any such product candidates or technologies;
|
•
|
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;
|
•
|
general economic, industry and market conditions; and
|
•
|
the other factors described in this “Risk Factors” section.
|
•
|
not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;
|
•
|
not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;
|
•
|
reduced disclosure obligations regarding executive compensation; and
|
•
|
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
|
Item 1B.
|
Unresolved Staff Comments.
|
Item 2.
|
Properties.
|
Item 3.
|
Legal Proceedings.
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Item 6.
|
Selected Financial Data.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
•
|
the scope, initiation, progress, timing, costs and results of pre-clinical development and laboratory testing and clinical trials for our product candidates;
|
•
|
our ability to establish collaborations on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for our product candidates;
|
•
|
the costs and timing of the implementation of commercial-scale manufacturing activities, including those associated with the manufacturing process and technology transfer to third party manufacturers to facilitate such commercial-scale manufacturing;
|
•
|
the costs and timing of establishing sales, marketing and distribution capabilities for our product candidates for which we may receive regulatory approval;
|
•
|
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
|
•
|
our obligation to make milestone, royalty and other payments to third-party licensors under our licensing agreements;
|
•
|
the extent to which we in-license or acquire rights to other products, product candidates or technologies;
|
•
|
the outcome, timing and cost of regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities, including Health Canada, to require that we perform more studies or clinical trials than those that we currently expect;
|
•
|
our ability to achieve certain future regulatory, development and commercialization milestones under the License Agreement with Roche;
|
•
|
the effect of competing technological and market developments; and
|
•
|
the revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval.
|
•
|
employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
|
•
|
expenses incurred under agreements with CROs, and investigative sites that conduct our clinical trials;
|
•
|
expenses associated with developing manufacturing capabilities and manufacturing clinical study materials;
|
•
|
facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies; and
|
•
|
expenses associated with pre-clinical and regulatory activities.
|
•
|
the scope, progress, outcome and costs of our clinical trials and other research and development activities;
|
•
|
the efficacy and potential advantages of our product candidates compared to alternative treatments, including any standard of care;
|
•
|
the market acceptance of our product candidates;
|
•
|
the cost and timing of the implementation of commercial-scale manufacturing of our product candidates;
|
•
|
obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
|
•
|
significant and changing government regulation; and
|
•
|
the timing, receipt and terms of any marketing approvals.
|
|
Year ended December 31,
|
|||||||||
|
2018
|
2017
|
|
2016*
|
||||||
|
|
(in thousands)
|
||||||||
Programs:
|
|
|
|
|
||||||
Vicinium for the treatment of high-risk NMIBC (1)
|
$
|
8,942
|
|
$
|
6,974
|
|
|
$
|
1,564
|
|
Vicinium for the treatment of SCCHN (2)
|
$
|
—
|
|
—
|
|
|
—
|
|
||
VB6-845d (2)
|
$
|
—
|
|
—
|
|
|
—
|
|
||
EBI-031 (3)
|
—
|
|
—
|
|
|
2,996
|
|
|||
Isunakinra/EBI-005 (4)
|
—
|
|
—
|
|
|
1,653
|
|
|||
Total direct program expenses
|
8,942
|
|
6,974
|
|
|
6,213
|
|
|||
Personnel and other expenses:
|
|
|
||||||||
Employee and contractor-related expenses
|
3,913
|
|
3,871
|
|
|
5,863
|
|
|||
Platform-related lab expenses
|
250
|
|
455
|
|
|
479
|
|
|||
Facility expenses
|
363
|
|
398
|
|
|
561
|
|
|||
Other expenses
|
609
|
|
812
|
|
|
363
|
|
|||
Total personnel and other expenses
|
5,135
|
|
5,536
|
|
|
7,266
|
|
|||
Total research and development expenses
|
$
|
14,077
|
|
$
|
12,510
|
|
|
$
|
13,479
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Risk-free interest rate
|
2.47 - 2.97%
|
|
1.88 - 2.04%
|
|
1.23 - 2.38%
|
Expected dividend yield
|
—%
|
|
—%
|
|
—%
|
Expected term (in years)
|
5.75 - 6
|
|
5.3 - 6
|
|
5.5 - 6
|
Expected volatility
|
73.61 - 78.28%
|
|
75.4 - 86.66%
|
|
71.44 - 92.09%
|
|
Year ended
December 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
|
(in thousands)
|
||||||||||
Revenue:
|
|
|
|
|
|
||||||
Collaboration revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
License revenue
|
—
|
|
|
425
|
|
|
(425
|
)
|
|||
Total revenue
|
—
|
|
|
425
|
|
|
(425
|
)
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
14,077
|
|
|
12,510
|
|
|
1,567
|
|
|||
General and administrative
|
11,623
|
|
|
8,070
|
|
|
3,553
|
|
|||
Loss from change in fair value of contingent consideration
|
8,800
|
|
|
9,100
|
|
|
(300
|
)
|
|||
Total operating expenses
|
34,500
|
|
|
29,680
|
|
|
4,820
|
|
|||
(Loss) from operations
|
(34,500
|
)
|
|
(29,255
|
)
|
|
(5,245
|
)
|
|||
Other income, net
|
807
|
|
|
226
|
|
|
581
|
|
|||
Net (loss) before income taxes
|
(33,693
|
)
|
|
(29,029
|
)
|
|
(4,664
|
)
|
|||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net (loss) and comprehensive (loss)
|
$
|
(33,693
|
)
|
|
$
|
(29,029
|
)
|
|
$
|
(4,664
|
)
|
|
Year ended
December 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
|
(in thousands)
|
|
|
||||||||
Revenue:
|
|
|
|
|
|
||||||
Collaboration revenue
|
$
|
—
|
|
|
$
|
406
|
|
|
$
|
(406
|
)
|
License revenue
|
425
|
|
|
29,575
|
|
|
$
|
(29,150
|
)
|
||
Total revenue
|
425
|
|
|
29,981
|
|
|
(29,556
|
)
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
12,510
|
|
|
13,479
|
|
|
(969
|
)
|
|||
General and administrative
|
8,070
|
|
|
14,736
|
|
|
(6,666
|
)
|
|||
Loss (gain) from change in fair value of contingent consideration
|
9,100
|
|
|
(1,100
|
)
|
|
10,200
|
|
|||
Total operating expenses
|
29,680
|
|
|
27,115
|
|
|
2,565
|
|
|||
(Loss) income from operations
|
(29,255
|
)
|
|
2,866
|
|
|
(32,121
|
)
|
|||
Other income (expense), net
|
226
|
|
|
(970
|
)
|
|
1,196
|
|
|||
Net (loss) income before income taxes
|
(29,029
|
)
|
|
1,896
|
|
|
(30,925
|
)
|
|||
Provision for income taxes
|
—
|
|
|
5
|
|
|
(5
|
)
|
|||
Net (loss) income and comprehensive (loss) income
|
(29,029
|
)
|
|
$
|
1,891
|
|
|
$
|
(30,920
|
)
|
|
Year ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
(22,829
|
)
|
|
(17,765
|
)
|
|
$
|
2,622
|
|
|
Investing activities
|
(2
|
)
|
|
98
|
|
|
461
|
|
|||
Financing activities
|
58,583
|
|
|
7,005
|
|
|
(13,820
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
35,752
|
|
|
$
|
(10,662
|
)
|
|
$
|
(10,737
|
)
|
•
|
continue our Phase 3 clinical trial for Vicinium for the treatment of high-risk NMIBC;
|
•
|
continue the research and pre-clinical and clinical development of our other product candidates;
|
•
|
seek to discover and develop additional product candidates;
|
•
|
in-license or acquire the rights to other products, product candidates or technologies;
|
•
|
seek marketing approvals for any product candidates that successfully complete clinical trials;
|
•
|
establish sales, marketing and distribution capabilities and scale up and validate external manufacturing capabilities (including initiating and completing the manufacturing process and technology transfer to any third-party manufacturers) to commercialize any products for which we may obtain marketing approval;
|
•
|
maintain, expand and protect our intellectual property portfolio;
|
•
|
add equipment and physical infrastructure to support our research and development;
|
•
|
hire additional clinical, quality control, scientific and management personnel; and
|
•
|
expand our operational, financial and management systems and personnel.
|
•
|
the scope, initiation, progress, timing, costs and results of pre-clinical development and laboratory testing of our pre-clinical product candidates;
|
•
|
our ability to establish collaborations on favorable terms, if at all, particularly manufacturing, marketing and distribution arrangements for our product candidates;
|
•
|
the costs and timing of the implementation of commercial-scale manufacturing activities;
|
•
|
the costs and timing of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval;
|
•
|
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
|
•
|
our obligation to make milestone, royalty and other payments to third party licensors under our licensing agreements;
|
•
|
the extent to which we in-license or acquire rights to other products, product candidates or technologies;
|
•
|
the outcome, timing and cost of regulatory review by the FDA and comparable foreign regulatory authorities, including the potential for the FDA or comparable foreign regulatory authorities, including Health Canada, to require that we perform more studies or clinical trials than those that we currently expect;
|
•
|
our ability to achieve certain future regulatory, development and commercialization milestones under the License Agreement with Roche;
|
•
|
the effect of competing technological and market developments; and
|
•
|
the revenue, if any, received from commercial sales of any product candidates for which we receive regulatory approval.
|
|
Total
|
|
Less than 1 Year (a)
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
More than 5 Years
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Operating lease obligations (1)
|
$
|
402
|
|
|
295
|
|
|
107
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
License maintenance fees (2)
|
1,004
|
|
|
182
|
|
|
547
|
|
|
275
|
|
|
—
|
|
|||||
Total fixed contractual obligations
|
$
|
1,406
|
|
|
$
|
477
|
|
|
$
|
654
|
|
|
$
|
275
|
|
|
$
|
—
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 8.
|
Financial Statements and Supplementary Data.
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Item 9A.
|
Controls and Procedures.
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance.
|
Item 11.
|
Executive Compensation.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Item 14.
|
Principal Accountant Fees and Services.
|
Item 15.
|
Exhibits and Financial Statement Schedules.
|
Exhibit
No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
10.1+
|
|
|
|
|
|
10.2+
|
|
|
|
|
|
10.3+
|
|
|
|
|
|
10.4+
|
|
|
|
|
|
10.5+
|
|
|
|
|
|
10.6+
|
|
|
|
|
|
10.7+
|
|
|
|
|
|
10.8+
|
|
|
|
|
|
10.9
|
|
|
|
|
|
10.10+
|
|
|
|
|
|
10.11+
|
|
|
|
|
|
10.12+
|
|
|
|
|
|
10.13†
|
|
|
|
|
|
10.14†
|
|
|
|
|
|
10.15†
|
|
|
|
|
|
10.16
|
|
|
|
|
|
10.17+
|
|
|
|
|
|
10.18+
|
|
|
|
|
|
10.19+
|
|
|
|
|
|
10.20+
|
|
|
|
|
|
10.21+
|
|
|
|
|
|
10.22+
|
|
|
|
|
|
10.23+
|
|
|
|
|
|
10.24+
|
|
|
|
|
|
10.25
|
|
|
|
|
|
10.26+
|
|
|
|
|
|
10.27+
|
|
|
|
|
|
10.28+
|
|
|
|
|
|
10.29+
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32*
|
|
|
|
|
|
10.33*
|
|
|
|
|
|
10.34*
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1*
|
|
|
|
|
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.
|
+
|
This exhibit is a compensatory plan or arrangement in which our executive officers or directors participate.
|
†
|
Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and Exchange Commission.
|
Item 16.
|
Form 10-K Summary.
|
SESEN BIO, INC.
|
||
|
||
By:
|
|
/s/ Thomas R. Cannell, D.V.M.
|
|
|
Thomas R. Cannell, D.V.M.
|
|
|
President and Chief Executive Officer
|
/s/ Thomas R. Cannell, D.V.M.
|
|
Director, President and Chief Executive Officer (Principal Executive Officer)
|
March 1, 2019
|
Thomas R. Cannell, D.V.M.
|
|
|
|
|
|
|
|
/s/ Richard F. Fitzgerald
|
|
Chief Financial Officer (Principal Financial and Accounting Officer)
|
March 1, 2019
|
Richard F. Fitzgerald
|
|
|
|
|
|
|
|
/s/ Wendy L. Dixon, Ph.D.
|
|
Chair of the Board of Directors
|
March 1, 2019
|
Wendy L. Dixon, Ph.D.
|
|
|
|
|
|
|
|
/s/ Leslie Dan, B.Sc. Phm,. M.B.A., C.M.
|
|
Director
|
March 1, 2019
|
Leslie Dan, B.Sc. Phm,. M.B.A., C.M.
|
|
|
|
|
|
|
|
/s/ Jay S. Duker, M.D.
|
|
Director
|
March 1, 2019
|
Jay S. Duker, M.D.
|
|
|
|
|
|
|
|
/s/ Jane V. Henderson
|
|
Director
|
March 1, 2019
|
Jane V. Henderson
|
|
|
|
|
|
|
|
/s/ Daniel S. Lynch
|
|
Director
|
March 1, 2019
|
Daniel S. Lynch
|
|
|
|
Consolidated Statements of Operations and Comprehensive
(Loss) Income
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
50,422
|
|
|
$
|
14,680
|
|
Prepaid expenses and other current assets
|
1,334
|
|
|
301
|
|
||
Total current assets
|
51,756
|
|
|
14,981
|
|
||
Property and equipment, net
|
321
|
|
|
522
|
|
||
Restricted cash
|
20
|
|
|
10
|
|
||
Intangible assets
|
46,400
|
|
|
46,400
|
|
||
Goodwill
|
13,064
|
|
|
13,064
|
|
||
Other assets
|
—
|
|
|
120
|
|
||
Total assets
|
$
|
111,561
|
|
|
$
|
75,097
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,367
|
|
|
$
|
907
|
|
Accrued expenses
|
4,746
|
|
|
3,813
|
|
||
Total current liabilities
|
6,113
|
|
|
4,720
|
|
||
Other liabilities
|
313
|
|
|
215
|
|
||
Deferred tax liability
|
12,528
|
|
|
12,528
|
|
||
Contingent consideration
|
48,400
|
|
|
39,600
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.001 par value per share; 5,000,000 shares authorized at December 31, 2018 and 2017 and no shares issued and outstanding at December 31, 2018 and 2017
|
—
|
|
|
—
|
|
||
Common stock, $0.001 par value per share; 200,000,000 shares authorized at December 31, 2018 and 2017 and 77,456,180 and 34,702,565 shares issued and outstanding at December 31, 2018 and 2017, respectively
|
77
|
|
|
35
|
|
||
Additional paid-in capital
|
230,154
|
|
|
170,330
|
|
||
Accumulated deficit
|
(186,024
|
)
|
|
(152,331
|
)
|
||
Total stockholders’ equity
|
44,207
|
|
|
18,034
|
|
||
Total liabilities and stockholders’ equity
|
$
|
111,561
|
|
|
$
|
75,097
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Collaboration revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
406
|
|
License revenue
|
—
|
|
|
425
|
|
|
29,575
|
|
|||
Total revenue
|
—
|
|
|
425
|
|
|
29,981
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Research and development
|
14,077
|
|
|
12,510
|
|
|
13,479
|
|
|||
General and administrative
|
11,623
|
|
|
8,070
|
|
|
14,736
|
|
|||
Loss (gain) from change in fair value of contingent consideration
|
8,800
|
|
|
9,100
|
|
|
(1,100
|
)
|
|||
Total operating expenses
|
34,500
|
|
|
29,680
|
|
|
27,115
|
|
|||
(Loss) income from operations
|
(34,500
|
)
|
|
(29,255
|
)
|
|
2,866
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Other income (expense), net
|
807
|
|
|
226
|
|
|
(723
|
)
|
|||
Interest expense
|
—
|
|
|
—
|
|
|
(247
|
)
|
|||
Total other income (expense), net
|
807
|
|
|
226
|
|
|
(970
|
)
|
|||
Net (loss) income before income taxes
|
(33,693
|
)
|
|
(29,029
|
)
|
|
1,896
|
|
|||
Provision for income taxes
|
—
|
|
|
—
|
|
|
5
|
|
|||
Net (loss) income and comprehensive (loss) income
|
$
|
(33,693
|
)
|
|
$
|
(29,029
|
)
|
|
$
|
1,891
|
|
Net (loss) income per share applicable to common stockholders—basic
|
$
|
(0.55
|
)
|
|
$
|
(1.11
|
)
|
|
$
|
0.09
|
|
Weighted-average number of common shares used in net (loss) income per share applicable to common stockholders—basic
|
61,774
|
|
|
26,105
|
|
|
21,083
|
|
|||
Net (loss) income per share applicable to common stockholders-diluted
|
$
|
(0.55
|
)
|
|
$
|
(1.11
|
)
|
|
$
|
0.09
|
|
Weighted-average number of common shares used in net (loss) income per share applicable to common stockholders—diluted
|
61,774
|
|
|
26,105
|
|
|
21,733
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Stockholders’
Equity
|
|||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||
|
(in thousands, except share data)
|
|||||||||||||||||
Balance at December 31, 2015
|
19,619,124
|
|
|
20
|
|
|
144,126
|
|
|
(125,202
|
)
|
|
18,944
|
|
||||
Exercise of stock options and vesting of restricted stock awards
|
810,538
|
|
|
1
|
|
|
268
|
|
|
—
|
|
|
269
|
|
||||
Issuance of common stock pursuant to the ESPP
|
88,871
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Issuance of common stock in connection with the acquisition of Viventia
|
4,013,431
|
|
|
4
|
|
|
13,521
|
|
|
—
|
|
|
13,525
|
|
||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
4,013
|
|
|
—
|
|
|
4,013
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,891
|
|
|
1,891
|
|
||||
Balance at December 31, 2016
|
24,531,964
|
|
|
25
|
|
|
161,963
|
|
|
(123,311
|
)
|
|
38,677
|
|
||||
Cumulative effect of adoption of ASU 2016-09
|
|
|
|
|
(9
|
)
|
|
9
|
|
|
—
|
|
||||||
Exercise of stock options and vesting of restricted stock awards
|
161,453
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
||||
Issuance of common stock pursuant to the ESPP
|
9,148
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Issuance of common stock and common stock warrants, net of issuance costs of $1 million
|
5,525,000
|
|
|
6
|
|
|
6,902
|
|
|
—
|
|
|
6,908
|
|
||||
Exercise of pre-funded common stock warrants
|
4,475,000
|
|
|
4
|
|
|
41
|
|
|
—
|
|
|
45
|
|
||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,381
|
|
|
|
|
|
1,381
|
|
||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,029
|
)
|
|
(29,029
|
)
|
||||
Balance at December 31, 2017
|
34,702,565
|
|
|
35
|
|
|
170,330
|
|
|
(152,331
|
)
|
|
18,034
|
|
||||
Exercise of stock options and vesting of restricted stock awards
|
443,443
|
|
|
—
|
|
|
277
|
|
|
—
|
|
|
277
|
|
||||
Issuance of common stock pursuant to the ESPP
|
20,992
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||
Exercise of common stock warrants
|
8,765,496
|
|
|
9
|
|
|
7,306
|
|
|
—
|
|
|
7,315
|
|
||||
Issuance of common stock and common stock warrants, net of issuance costs of $5.1 million
|
33,523,684
|
|
|
33
|
|
|
50,938
|
|
|
—
|
|
|
50,971
|
|
||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
1,283
|
|
|
|
|
1,283
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,693
|
)
|
|
(33,693
|
)
|
||||
Balance at December 31, 2018
|
77,456,180
|
|
|
$
|
77
|
|
|
$
|
230,154
|
|
|
$
|
(186,024
|
)
|
|
$
|
44,207
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating activities
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(33,693
|
)
|
|
$
|
(29,029
|
)
|
|
$
|
1,891
|
|
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
208
|
|
|
285
|
|
|
178
|
|
|||
Non-cash interest expense
|
—
|
|
|
—
|
|
|
26
|
|
|||
Stock-based compensation expense
|
1,283
|
|
|
1,381
|
|
|
4,013
|
|
|||
Change in fair value of warrant liability
|
—
|
|
|
(5
|
)
|
|
(110
|
)
|
|||
Loss (gain) from change in fair value of contingent consideration
|
8,800
|
|
|
9,100
|
|
|
(1,100
|
)
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
221
|
|
|||
Gain on sale of equipment
|
(5
|
)
|
|
(108
|
)
|
|
(24
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Prepaid expenses and other assets
|
(913
|
)
|
|
164
|
|
|
800
|
|
|||
Accounts payable
|
460
|
|
|
(760
|
)
|
|
(742
|
)
|
|||
Accrued expenses and other liabilities
|
1,031
|
|
|
1,746
|
|
|
(1,936
|
)
|
|||
Deferred revenue
|
—
|
|
|
(425
|
)
|
|
19
|
|
|||
Due to related party
|
—
|
|
|
(114
|
)
|
|
(698
|
)
|
|||
Net cash (used in) provided by operating activities
|
(22,829
|
)
|
|
(17,765
|
)
|
|
2,538
|
|
|||
Investing activities
|
|
|
|
|
|
||||||
Cash acquired in acquisition
|
—
|
|
|
—
|
|
|
136
|
|
|||
Sales (purchases) of property and equipment
|
(2
|
)
|
|
98
|
|
|
325
|
|
|||
Net cash provided by (used in) investing activities
|
(2
|
)
|
|
98
|
|
|
461
|
|
|||
Financing activities
|
|
|
|
|
|
||||||
Payments on equipment financing and notes payable
|
—
|
|
|
—
|
|
|
(14,124
|
)
|
|||
Proceeds from issuance of common stock and common stock warrants, net of issuance costs
|
58,286
|
|
|
6,908
|
|
|
—
|
|
|||
Proceeds from exercise of common stock options and common stock warrants
|
277
|
|
|
85
|
|
|
269
|
|
|||
Proceeds from sale of common stock pursuant to ESPP
|
20
|
|
|
12
|
|
|
35
|
|
|||
Net cash provided by (used in) financing activities
|
58,583
|
|
|
7,005
|
|
|
(13,820
|
)
|
|||
Net decrease in cash, cash equivalents and restricted cash
|
35,752
|
|
|
(10,662
|
)
|
|
(10,821
|
)
|
|||
Cash, cash equivalents and restricted cash at beginning of period
|
14,690
|
|
|
25,352
|
|
|
36,173
|
|
|||
Cash, cash equivalents and restricted cash at end of period
|
$
|
50,442
|
|
|
$
|
14,690
|
|
|
$
|
25,352
|
|
Supplemental non-cash investing and financing activities
|
|
|
|
|
|
||||||
Common stock issued in connection with the acquisition (Note 3)
|
—
|
|
|
—
|
|
|
13,525
|
|
|||
Fair value of assets acquired and liabilities assumed in the acquisition (Note 3):
|
|
|
|
|
|
||||||
Fair value of assets acquired in the acquisition, excluding cash
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
79,366
|
|
Fair value of liabilities assumed in the acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19,777
|
|
Adjustment to fair value of assets acquired and liabilities assumed during provisional period (Note 3)
|
$
|
—
|
|
|
$
|
14,600
|
|
|
$
|
—
|
|
Issuance of warrants to purchase common stock
|
$
|
—
|
|
|
$
|
2,679
|
|
|
$
|
—
|
|
Supplemental cash flow information
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
663
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Research and development expense
|
$
|
505
|
|
|
$
|
404
|
|
|
$
|
1,455
|
|
General and administrative expense
|
778
|
|
|
977
|
|
|
2,558
|
|
|||
|
$
|
1,283
|
|
|
$
|
1,381
|
|
|
$
|
4,013
|
|
Description
|
December 31, 2018
|
|
Active
Markets
(Level 1)
|
|
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
50,422
|
|
|
$
|
50,422
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
20
|
|
|
20
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
50,442
|
|
|
$
|
50,442
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
48,400
|
|
|
—
|
|
|
—
|
|
|
48,400
|
|
||||
Total liabilities
|
$
|
48,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,400
|
|
Description
|
December 31, 2017
|
|
Active
Markets
(Level 1)
|
|
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
14,680
|
|
|
$
|
14,680
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
14,690
|
|
|
$
|
14,690
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
39,600
|
|
|
—
|
|
|
—
|
|
|
39,600
|
|
||||
Total liabilities
|
$
|
39,600
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,600
|
|
Beginning balance, January 1, 2018
|
$
|
39,600
|
|
Loss from change in fair value of contingent consideration
|
8,800
|
|
|
Ending balance, December 31, 2018
|
$
|
48,400
|
|
|
Year ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Stock options
|
—
|
|
|
—
|
|
|
650,109
|
|
|
Year ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Stock options
|
3,941,947
|
|
|
2,695,796
|
|
|
1,374,359
|
|
Unvested restricted stock
|
—
|
|
|
4,430
|
|
|
22,150
|
|
Restricted stock units
|
—
|
|
|
—
|
|
|
3,333
|
|
Common stock warrants
|
9,257,632
|
|
|
10,055,000
|
|
|
926,840
|
|
|
13,199,579
|
|
|
12,755,226
|
|
|
2,326,682
|
|
|
Preliminary Fair Value of Consideration as of December 31, 2016
|
|
Adjustment
|
|
Final Fair Value of Consideration
|
||||||
Shares Issued
|
$
|
13,525
|
|
|
$
|
—
|
|
|
$
|
13,525
|
|
Contingent Consideration
|
46,200
|
|
|
(14,600
|
)
|
|
31,600
|
|
|||
|
$
|
59,725
|
|
|
$
|
(14,600
|
)
|
|
$
|
45,125
|
|
|
Preliminary Allocation as of December 31, 2016
|
|
Adjustment
|
|
Final Allocation
|
||||||
Cash and cash equivalents
|
$
|
136
|
|
|
$
|
—
|
|
|
$
|
136
|
|
Prepaid expenses and other assets
|
1,162
|
|
|
—
|
|
|
1,162
|
|
|||
Property and equipment
|
867
|
|
|
—
|
|
|
867
|
|
|||
In-process research and development assets (all markets)
|
60,500
|
|
|
(14,100
|
)
|
|
46,400
|
|
|||
Goodwill
|
16,864
|
|
|
(3,800
|
)
|
|
13,064
|
|
|||
Accounts payable
|
(1,163
|
)
|
|
—
|
|
|
(1,163
|
)
|
|||
Accrued expenses
|
(1,494
|
)
|
|
(507
|
)
|
|
(2,001
|
)
|
|||
Other liabilities
|
(812
|
)
|
|
—
|
|
|
(812
|
)
|
|||
Deferred tax liability
|
(16,335
|
)
|
|
3,807
|
|
|
(12,528
|
)
|
|||
|
$
|
59,725
|
|
|
$
|
(14,600
|
)
|
|
$
|
45,125
|
|
|
Year Ended December 31,
|
||
|
2016
|
||
Revenue
|
$
|
29,981
|
|
Net loss
|
(3,026
|
)
|
|
Estimated Useful
Life (Years)
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||||
Lab equipment
|
5
|
|
$
|
443
|
|
|
$
|
443
|
|
Furniture and fixtures
|
4
|
|
16
|
|
|
16
|
|
||
Computer equipment
|
3
|
|
80
|
|
|
73
|
|
||
Software
|
3
|
|
28
|
|
|
28
|
|
||
Leasehold improvements
|
Lesser of useful life
or remaining lease term |
|
293
|
|
|
293
|
|
||
|
|
|
860
|
|
|
853
|
|
||
Less accumulated depreciation and amortization
|
|
|
(539
|
)
|
|
(331
|
)
|
||
Total property and equipment, net
|
|
|
$
|
321
|
|
|
$
|
522
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Development costs
|
$
|
2,928
|
|
|
$
|
2,581
|
|
Employee compensation (including reduction in workforce)
|
1,045
|
|
|
735
|
|
||
Severance to former CEO
|
278
|
|
|
—
|
|
||
Professional fees
|
464
|
|
|
463
|
|
||
Other
|
31
|
|
|
34
|
|
||
|
$
|
4,746
|
|
|
$
|
3,813
|
|
2019 (1)
|
$
|
295
|
|
2020
|
107
|
|
|
2021
|
—
|
|
|
|
$
|
402
|
|
|
As of December 31,
|
||||
|
2018
|
|
2017
|
||
Unvested restricted stock
|
—
|
|
|
4,430
|
|
Options to purchase common stock
|
5,942,884
|
|
|
3,879,535
|
|
Warrants to purchase common stock
|
9,257,632
|
|
|
10,055,000
|
|
Employee stock purchase plan
|
38,469
|
|
|
59,461
|
|
|
15,238,985
|
|
|
13,998,426
|
|
|
December 31,
2016
|
|
Risk-free interest rate
|
0.85
|
%
|
Expected dividend yield
|
—
|
%
|
Expected term (in years)
|
0.92
|
|
Expected volatility
|
83.39
|
%
|
|
Shares
|
|
Weighted-Average
Exercise Price
|
|
Remaining
Contractual Life
(in years)
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding at December 31, 2017
|
2,695,796
|
|
|
$
|
3.16
|
|
|
8.55
|
$
|
146
|
|
Granted
|
3,545,900
|
|
|
1.71
|
|
|
|
|
|||
Exercised
|
(439,013
|
)
|
|
0.62
|
|
|
|
|
|||
Cancelled or forfeited
|
(1,860,736
|
)
|
|
3.21
|
|
|
|
|
|||
Outstanding at December 31, 2018
|
3,941,947
|
|
|
$
|
2.12
|
|
|
9.14
|
$
|
57
|
|
Exercisable at December 31, 2018
|
938,968
|
|
|
$
|
3.30
|
|
|
8.04
|
$
|
1
|
|
|
Restricted
Stock
|
|
Weighted-Average
Grant Date
Fair Value
|
|||
Unvested at December 31, 2017
|
4,430
|
|
|
$
|
11.43
|
|
Vested
|
(4,430
|
)
|
|
11.43
|
|
|
Unvested at December 31, 2018
|
—
|
|
|
|
|
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
|
2016
|
Risk-free interest rate
|
2.47-2.97%
|
|
1.88-2.04%
|
|
1.23-2.38%
|
Expected dividend yield
|
—%
|
|
—%
|
|
—%
|
Expected term (in years)
|
5.75-6
|
|
5.3-6
|
|
5.5-6
|
Expected volatility
|
73.61-78.28%
|
|
75.4-86.66%
|
|
71.44-73.42%
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Pre-tax income (loss):
|
|
|
|
|
|
||||||
U.S.
|
(15,977
|
)
|
|
$
|
(9,246
|
)
|
|
$
|
3,981
|
|
|
Canada
|
(17,716
|
)
|
|
(19,783
|
)
|
|
(2,085
|
)
|
|||
Total pre-tax income (loss)
|
$
|
(33,693
|
)
|
|
$
|
(29,029
|
)
|
|
$
|
1,896
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Current tax provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total current provision
|
—
|
|
|
—
|
|
|
2
|
|
|||
Deferred tax provision:
|
|
|
|
|
|
||||||
Federal
|
—
|
|
|
—
|
|
|
3
|
|
|||
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deferred provision
|
|
|
—
|
|
|
3
|
|
||||
Total tax provision
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
Year Ended December 31,
|
|||||||
|
2018
|
|
2017
|
|
2016
|
|||
Income tax benefit computed at federal statutory tax rate
|
21.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
Impact of foreign rate differential
|
1.6
|
|
|
(2.6
|
)
|
|
7.7
|
|
State taxes, net of federal benefit
|
1.3
|
|
|
1.4
|
|
|
18.8
|
|
Net operating loss write off
|
—
|
|
|
—
|
|
|
14.4
|
|
Stock option cancellations
|
(1.2
|
)
|
|
(0.8
|
)
|
|
49.6
|
|
Transaction costs
|
—
|
|
|
—
|
|
|
33.6
|
|
Contingent consideration
|
(5.5
|
)
|
|
(10.7
|
)
|
|
(15.7
|
)
|
General business credits and other credits
|
0.7
|
|
|
0.8
|
|
|
(25.0
|
)
|
Permanent differences
|
(0.3
|
)
|
|
0.3
|
|
|
5.3
|
|
Change in valuation allowance
|
(18.1
|
)
|
|
28.2
|
|
|
(122.4
|
)
|
Other
|
0.5
|
|
|
—
|
|
|
—
|
|
Federal statutory rate change
|
—
|
|
|
(50.6
|
)
|
|
—
|
|
Total
|
—
|
%
|
|
—
|
%
|
|
0.3
|
%
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
43,212
|
|
|
$
|
37,070
|
|
Research and development credit carryforwards
|
3,876
|
|
|
3,690
|
|
||
Accruals and other
|
2,011
|
|
|
2,263
|
|
||
Capitalized start-up costs
|
122
|
|
|
150
|
|
||
Other
|
32
|
|
|
38
|
|
||
Total gross deferred tax asset
|
49,253
|
|
|
43,211
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
IPR&D
|
(12,528
|
)
|
|
(12,528
|
)
|
||
Property and equipment
|
(60
|
)
|
|
(107
|
)
|
||
Total gross deferred tax liabilities
|
(12,588
|
)
|
|
(12,635
|
)
|
||
Valuation allowance
|
(49,193
|
)
|
|
(43,104
|
)
|
||
Net deferred tax liability
|
$
|
(12,528
|
)
|
|
$
|
(12,528
|
)
|
|
|
|||
Balance as of January 1, 2018
|
$
|
111
|
|
|
Charges
|
—
|
|
||
Payments
|
(111
|
)
|
||
Balance as of December 31, 2018
|
$
|
—
|
|
|
As of December 31,
|
|||||
|
2018
|
2017
|
||||
Cash and Cash Equivalents
|
$
|
50,422
|
|
$
|
14,680
|
|
Restricted Cash
|
20
|
|
10
|
|
||
Total Cash, Cash Equivalents and Restricted Cash
|
$
|
50,442
|
|
$
|
14,690
|
|
|
2018
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Total revenue
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total operating expenses
|
4,007
|
|
|
9,030
|
|
|
14,397
|
|
|
$
|
7,066
|
|
|
34,500
|
|
||||
Loss from operations
|
(4,007
|
)
|
|
(9,030
|
)
|
|
(14,397
|
)
|
|
$
|
(7,066
|
)
|
|
(34,500
|
)
|
||||
Net loss
|
(3,963
|
)
|
|
(8,958
|
)
|
|
(14,015
|
)
|
|
$
|
(6,757
|
)
|
|
$
|
(33,693
|
)
|
|||
Net loss per share—basic and diluted
|
$
|
(0.11
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.55
|
)
|
|
2017
|
||||||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Total
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Total revenue
|
$
|
425
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
425
|
|
Total operating expenses
|
6,587
|
|
|
7,350
|
|
|
9,150
|
|
|
$
|
6,593
|
|
|
29,680
|
|
||||
Loss from operations
|
(6,162
|
)
|
|
(7,350
|
)
|
|
(9,150
|
)
|
|
$
|
(6,593
|
)
|
|
(29,255
|
)
|
||||
Net loss
|
(6,061
|
)
|
|
(7,316
|
)
|
|
(9,105
|
)
|
|
$
|
(6,547
|
)
|
|
$
|
(29,029
|
)
|
|||
Net loss per share—basic and diluted
|
$
|
(0.25
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(1.11
|
)
|
1.
|
Grant of Option.
|
2.
|
Vesting Schedule.
|
3.
|
Exercise of Option.
|
4.
|
Agreement in Connection with Public Offering.
|
5.
|
Withholding.
|
6.
|
Transfer Restrictions.
|
7.
|
Adjustments for Changes in Common Stock and Certain Other Events.
|
(a)
|
Changes in Capitalization.
In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the number and class of securities and exercise price per share of this option shall be equitably adjusted by the Company in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to this option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then the Participant, if he exercises this option between the record date and the distribution date for such stock dividend, shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon exercise of this option, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.
|
8.
|
Miscellaneous.
|
(a)
|
No Right To Employment or Other Status.
The grant of this option shall not be construed as giving the Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim hereunder, except as otherwise expressly provided herein or provided for in the Letter Agreement.
|
|
||
|
|
|
|
SESEN BIO, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Wendy L. Dixon
|
|
Name:
|
Wendy L. Dixon, Ph.D.
|
|
Title:
|
Chair of the Board of Directors
|
1.
|
Grant of Option.
|
2.
|
Vesting Schedule.
|
3.
|
Exercise of Option.
|
4.
|
Agreement in Connection with Public Offering.
|
5.
|
Withholding.
|
6.
|
Transfer Restrictions.
|
7.
|
Adjustments for Changes in Common Stock and Certain Other Events.
|
(a)
|
Changes in Capitalization. In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the number and class of securities and exercise price per share of this option shall be equitably adjusted by the Company in the manner determined by the Board. Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise price of and the number of shares subject to this option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then the Participant, if he exercises this option between the record date and the distribution date for such stock dividend, shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon exercise of this option, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.
|
8.
|
Miscellaneous.
|
(a)
|
No Right To Employment or Other Status. The grant of this option shall not be construed as giving the Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim hereunder, except as otherwise expressly provided herein or provided for in the Letter Agreement.
|
|
||
|
|
|
|
SESEN BIO, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Thomas R. Cannell
|
|
Name:
|
Thomas R. Cannell, D.V.M.
|
|
Title:
|
President & Chief Executive Officer
|
a)
|
From time to time, at Sponsor’s request, the Parties will agree on Programs to be undertaken with respect to Product. Each Program will be subject to a separate, numbered Scope (being “Scope of Work #1”, “Scope of Work #2”, etc.). A Program may be subject to a single or multiple Scopes. Each Scope shall be signed by Sponsor and Fujifilm once its terms are agreed and, on signature, the Scope shall be subject to the terms of and incorporated into this Agreement. For clarity, no Scope shall take effect unless and until executed in writing by an authorized representative of each Party, and no changes shall be made to the Scope until execution of a Change Order in accordance with
Section 7
of this Agreement. Fujifilm shall have no obligation to provide services under this Agreement, and Sponsor shall have no obligations to provide any Sponsor Deliverables or make any payments under this Agreement, unless and until the Parties have executed a Scope or Change Order, as applicable
|
a)
|
Fujifilm will diligently perform Programs for Sponsor and provide the Fujifilm Deliverables in accordance with the terms and conditions of this Agreement (which includes the applicable Scope and the Quality Agreement and all Applicable Laws) and shall use commercially reasonable efforts to perform the Programs within the timeline for performance of the applicable Stage in the Program Schedule.
|
b)
|
Unless expressly stated otherwise in the applicable document, terms defined in the terms and conditions of this main Agreement shall have same meaning when used in the Scope or Quality Agreement.
|
c)
|
Each Party:
(a)
shall perform its obligations as set forth in this Agreement;
(b)
shall support and cooperate with the execution of the Program; and
(c)
shall not engage in any negligent act or omission which may reasonably be expected to prevent or delay the successful execution of the Program.
|
d)
|
Fujifilm will: (d) provide Sponsor with written and/or oral reports as set forth in the applicable Scope on the status of the Program; and (e) cooperate with Sponsor’s representatives and third party vendors who are assisting in the development and commercialization of the Product.
|
e)
|
Fujifilm will have the right to subcontract aspects of a Program through third parties as set forth in the Scope, provided further that: (1) Fujifilm remains fully and primarily responsible to Sponsor for the performance of, and acts and omissions of, such third party(ies), as if committed by Fujifilm; and (2) in no event shall Sponsor have any liability to any third party for any failure of Fujifilm to perform under its agreement with such third party, including any failure to pay any amounts due to such third party. Without limiting the foregoing, Fujifilm shall be responsible for the conduct of all suppliers, agents, subcontractors (collectively, “
Subcontractors
”), and employees (of itself or its Affiliates who perform services under this Agreement) (“
Personnel
”) who provide services in support of a Program hereunder, and Fujifilm shall only assign and use qualified and experienced Personnel and Subcontractors to support the Program.
|
f)
|
The Agreement may be amended at a later date to include FDBU's Affiliate(s): FDBK and/or FDBT.
|
a)
|
As further set forth in the applicable Scope, Sponsor will provide Fujifilm with those Sponsor Deliverables described in the applicable Scope and use commercially reasonable efforts to do so in accordance with the timelines set forth therein. Failure by Sponsor to provide Sponsor Deliverables within the timeframe set forth in the Scope for performance of such Stage as reasonably necessary to execute the Program without delay may result in additional charges to Sponsor as further described in
Section 19
of this Agreement and a possible delay in meeting Program objectives. Sponsor shall request and obtain a shipping authorization from Fujifilm prior to shipping any Sponsor Deliverables.
|
b)
|
Title to Sponsor Deliverables shall remain with Sponsor. Fujifilm shall not, in whole or part, sell, pledge, hypothecate, dispose of, or otherwise transfer any interest in or to Sponsor Deliverables except as expressly permitted in the applicable Scope, and Fujifilm shall use Sponsor Deliverables solely for purposes of performing the relevant Program in accordance with the applicable Scope. Fujifilm shall not and shall not permit Sponsor Deliverables to be altered, disassembled, reverse engineered or in any way tampered with, except where necessary to perform the Program and/or as provided in the applicable Scope. Fujifilm shall provide safe and secure storage conditions for Sponsor Deliverables while they are at Fujifilm’s location, including storing such Sponsor Deliverables in accordance with any appropriate conditions, any instructions provided by or on behalf of Sponsor, and all Applicable Laws. Fujifilm will, on Sponsor’s reasonable request and no more than on a quarterly basis, provide Sponsor with updates on the quantity of any remaining Sponsor Deliverables in inventory to permit Sponsor to timely provide any new Sponsor Deliverables required to execute the Program. Subject to [
***
]
of this Agreement, [
***
].
|
c)
|
Fujifilm will procure all Process Consumables (except those to be provided by Sponsor under the applicable Scope) in accordance with the applicable Scope to execute the Program. Title for all such Process Consumables shall remain with Fujifilm unless and until use in a Program. Fujifilm will maintain, store, and test all Process Consumables as required by the specifications in the
|
d)
|
Fujifilm: (f) will not use any Process-Specific Consumables or Process-Specific Equipment other than to perform the Program in accordance with this Agreement; and (g) unless otherwise specified in a Scope or another written agreement, will be responsible for maintaining and repairing any such Process-Specific Equipment at Sponsor’s cost and expense.
|
e)
|
Fujifilm will provide Sponsor with the Fujifilm Deliverables as described in the applicable Scope and using commercially reasonable efforts to meet the timeline for the applicable Stage as described in the Program Schedule. Unless Sponsor requests such delivery, Fujifilm will not deliver any Fujifilm Deliverables that do not meet their applicable specifications.
|
a)
|
Fujifilm shall, at its sole cost and expense, operate a Facility in accordance with Applicable Laws for all aspects of the Program. Fujifilm shall secure and maintain, at its sole cost and expense, any registrations, approvals, permits, authorizations, and licenses as are required by Applicable Laws for Fujifilm to perform its obligations under this Agreement, including, all required licenses, permits, registrations, approvals, and authorizations required in connection with any hazardous materials or waste and shall take reasonably necessary actions to pass any inspections or audits by the applicable Regulatory Authorities. All Product requested by Sponsor under a Scope shall be manufactured solely by Fujifilm at the applicable Facility. In addition, Fujifilm shall perform each Program in compliance in all respects with Applicable Law related to the Product’s clinical and/or commercial phase. Fujifilm shall monitor and maintain reasonable records respecting its compliance with Applicable Laws including cGMPs, including the process of establishing and implementing the operating procedures, equipment files, and the training of Personnel and Subcontractors as are reasonably necessary to assure such compliance.
|
b)
|
Sponsor acknowledges that Fujifilm has consulted with Sponsor in designing each Program in a manner consistent with current Applicable Laws governing the approval of an investigational product for marketing in the U.S. and those governing the grant of a marketing authorization for a medicinal product in Europe and Canada, and the Assumptions. Notwithstanding the foregoing, Fujifilm does not warrant that a Program and/or a Program’s results will satisfy the requirements of any Regulatory Authorities at the time of submission of such Program results to such Regulatory Authorities; provided however, that the foregoing shall not: (h) limit Fujifilm’s diligence obligations or its quality obligations with respect to maintaining a cGMP compliant Facility or otherwise under the Quality Agreement; or (i) apply where failure to satisfy the requirements of the Regulatory Authority relates to any deficiencies with the Facility, Fujifilm’s quality systems, or any other requirements imposed on Fujifilm by a Regulatory Authority or Applicable Law, including Fujifilm’s obligations under
Section 3(a)
of this Agreement.
|
c)
|
Sponsor shall have the right and responsibility for determining regulatory strategy, decisions and actions relating to a Program and the applicable Product and, subject to each Party’s contractual obligations under this Agreement, Fujifilm shall have the right and responsibility for determining regulatory strategy, decisions and actions to the extent relating to: (j) the Facility in which Product is manufactured; (k) Fujifilm’s quality systems; (l) any requirement imposed on Fujifilm by a Regulatory Authority; or (m) any other commitments made by Fujifilm prior to the Effective Date of this Agreement; provided however, that in all cases, (x) such regulatory strategy, decisions and actions are in compliance with Applicable Laws and do not violate this Agreement, and (y) Fujifilm shall not make any change to its regulatory filings and shall not make any changes to its Facility, in either case, which would have a material adverse impact on the Program or Product without Sponsor’s prior consent, not to be unreasonably withheld, delayed or conditioned. Without limiting the foregoing, Fujifilm will not implement any modification, material or otherwise, to the Process,
|
d)
|
Should any Applicable Laws relating to a Program or Product change, Fujifilm will, in a timely manner, use reasonable efforts to satisfy the new requirements. In the event that compliance with such new regulatory requirements necessitates a change in a Scope, Fujifilm will discuss the same with Sponsor and submit to Sponsor a Change Order to the applicable Scope in accordance with
Section 7
of this Agreement.
|
e)
|
Sponsor should provide Fujifilm with all relevant information of which Sponsor is aware is necessary to carry out the Program in accordance with the Applicable Laws, and any marketing authorization for the Product. Sponsor should make Fujifilm aware of any problems or hazards associated with the Product or Sponsor Deliverables including Sponsor’s prior processing of the Product which might pose a hazard to Fujifilm’s premises, equipment, or Personnel, other materials or other products, to the extent that
Sponsor is or becomes aware of any such reasonable possibility (recognizing, however, that Sponsor does not have knowledge of Fujifilm’s premises or Personnel, or other materials or equipment being used, or products being manufactured by Fujifilm)
.
|
f)
|
Subject to this
Section 3
, in the event of a conflict in Applicable Laws, Sponsor and Fujifilm will agree in good faith on which regulations shall be followed by Fujifilm in its performance of the applicable Program to comply with regulatory requirements and Applicable Laws and advance such Program.
|
g)
|
Except for approvals and licenses required with respect to the Facility which will be the responsibility of Fujifilm, Sponsor will be responsible for the preparation and filing of any regulatory filings, if any, and for all contacts and communications with any Regulatory Authorities with respect to matters directly relating to any Product. Without limiting Fujifilm’s obligations under this Agreement, including
Section 4
of this Agreement, if: (n) Fujifilm receives any contact or communication from any Regulatory Authority relating in any way to the Program; or (o) any Regulatory Authority takes any action against Fujifilm for any reason that does or could be reasonably expected to have an adverse effect on the performance of a Program or Product, including any adverse effect on the Program Schedule, Fujifilm will (a) promptly notify Sponsor and provide Sponsor with copies of the relevant portions of any such communication or information related to such regulatory action within [
***
], to the extent such communication or information are related to the Product, of its receipt of such contact and/or communication; (b) consult with Sponsor regarding the response to any inquiry or observation from any Regulatory Authority relating to a Program or Product; (c) with respect to matters directly related to the performance of the Program or on a Product, allow Sponsor, at Sponsor’s discretion, to participate in any further contacts or communications relating to a Program or Product, and Fujifilm shall otherwise comply with all reasonable requests by Sponsor with respect to any actions to be taken or responses to be made to any such Regulatory Authority; (d) provide Sponsor with the relevant portions of any final copies of any contacts or communications promptly after submission; and (e) timely respond to and correct any deficiencies or issues raised by such Regulatory Authority to ensure the continuation of the Program in accordance with the Program
|
a)
|
Fujifilm shall keep Sponsor fully informed of any notification or other information it receives or becomes aware of, including any Product complaints which might affect the marketability, safety or effectiveness of Product and/or which might result in the recall or seizure of Product within [
***
] of receiving such information; provided however that all information concerning suspected or actual product tampering, contamination or Non-Conforming Batches shall be delivered within [
***
] of receiving or becoming aware of such information (whichever occurs first), with such reports made in accordance with requirements set forth in the Quality Agreement. Sponsor retains the authority and responsibility for communicating any responses thereto with any Regulatory Authorities and/or third parties. Fujifilm shall cooperate fully with Sponsor in dealing with such Product quality issues, and shall take reasonable actions and provide any additional assistance and information as Sponsor reasonably requests, including promptly investigating and conducting follow up with regard to such quality issues, and providing any data, information, or other assistance that Sponsor may reasonably require in connection therewith.
|
b)
|
If either Party in good faith determines that a recall or other action involving the Product is warranted, such Party shall, as soon as possible (but in any event within [
***
] following such determination), notify the other Party and shall advise such other Party of the reasons underlying its determination that such recall or other action is warranted in accordance with the Quality Agreement. Sponsor shall retain full authority and responsibility for making recall decisions, implementing any necessary actions, and corresponding with the applicable Regulatory Authorities, and Fujifilm agrees to promptly provide to Sponsor, any data, information, or assistance as reasonably requested by Sponsor in connection therewith. For the avoidance of doubt, any recalls shall be handled in accordance with Sponsor’s policies and procedures. Subject to [
***
]
, to the extent that any recalls or other corrective measures are caused by a [
***
] of the applicable Scope or the Quality Agreement, [
***
]. For clarity, Fujifilm shall not be responsible for the costs of a recall that occurs as a result of a Product’s failure to meet its stability requirement, [
***
] of the applicable Scope or Quality Agreement.
|
c)
|
Fujifilm will cooperate with Sponsor, at Sponsor’s sole cost and expense, and provide reasonable assistance in connection with informal presentations, data and information requests, and administrative hearings with any Regulatory Authorities as related to the Program and applicable Fujifilm Deliverables, including attending meetings as reasonably requested by Sponsor, whether with Regulatory Authorities or with other consultants that Sponsor may engage in connection with a Product as set forth in the applicable Scope, and for the cost and expense to be paid by Sponsor set forth therein; provided however, that Fujifilm will provide one (1) electronic copy of any documents which may be reasonably required by Sponsor in support of its regulatory filing activities without charge.
|
d)
|
Fujifilm shall be responsible, at Fujifilm’s sole cost and expense, for the generation, collection, storage, handling, transport, and release of hazardous materials and waste generated by or on behalf of Fujifilm in connection with a Program under this Agreement other than Special Waste, unless otherwise specified in a Scope.
|
a)
|
Sponsor Audits and Visits
. During the term of this Agreement and for [
***
] following completion of the last cGMP services performed under this Agreement, Sponsor shall be entitled to [
***
] regular audit per [
***
], and during the term of this Agreement and for [
***
], Sponsor shall be entitled to an unlimited number of For Cause Audits if Sponsor has a reasonable, good faith basis to request such For Cause Audit. All audits (both regular audits and For Cause Audits) will be conducted during business hours, and upon reasonable prior notice to Fujifilm. Sponsor will have the option, at Sponsor’s expense, to designate certain independent third parties reasonably acceptable to Fujifilm to verify that the Program is conducted in compliance with the testing and other quality-related requirements of the applicable Scope and the Quality Agreement (including cGMP). Any additional non For Cause Audits will be charged to Sponsor based on a Change Order in the agreed upon amount, which shall be commensurate with the agreed upon scope of such audit. For clarity, Fujifilm will not charge Sponsor for any costs or expenses (whether internal or external) related to the regular audit (up to once per [
***
]) or any For Cause Audits. In addition, Sponsor shall have the right to have up to [
***
] representatives (or more if mutually agreed) be on-site at the Facility to observe performance of the Program in accordance with the Quality Agreement.
|
b)
|
Regulatory Authority Inspections
. Fujifilm shall permit Regulatory Authorities reasonable access to enter those areas of Fujifilm’s premises concerned with the Program for the purpose of observing and inspecting the performance of the Program and ensuring compliance with this Agreement and Applicable Laws, as well as those books, records, agreements, and other documents of Fujifilm related to such Program where such entry is reasonably necessary or mandatory in order for Sponsor to maintain, approve, apply for or amend its regulatory application or approval in respect of the Product or such entry is reasonably necessary or mandatory for either Party to otherwise comply with Applicable Laws. With respect to any inspections that are related to a Program, Fujifilm will: (p) in the case of any unannounced inspections, notify Sponsor within [
***
] of such inspection, and in the case of announced inspections, notify Sponsor within [
***
] of receipt of such notice from a Regulatory Authority; (q) if not prohibited by such Regulatory Authority, permit Sponsor’s representatives to be present on site and participate, as appropriate, in such inspections and any wrap-up sessions; and (r) both (x) (in addition to providing Sponsor with a copy of such documents under
Section 3(g)
), provide Sponsor a copy of any draft responses or other any correspondence or formal communications from Fujifilm to such Regulatory Authority for review and comment at least [
***
] in advance of sending in such response to the applicable Regulatory Authority, and (y) take, in good faith, Sponsor’s comments into account prior to sending in such response. To the extent any such inspection is being conducted by a Regulatory Authority (a) as a pre-condition to granting regulatory approval for a Product or (b) arising from a Regulatory Authority’s concerns with a Product and not due to any actions or omissions of Fujifilm Group or Subcontractors, Sponsor shall pay Fujifilm for such inspection/audit at a mutually agreed upon rate.
|
c)
|
Fujifilm shall fully cooperate in any audit or inspection conducted hereunder, and shall provide reasonable access to any and all employees, agents and other representatives of Fujifilm and to such notebooks, quality records, and other documents necessary to assess Fujifilm’s compliance with the applicable testing and other quality-related requirements of the Scope and Quality Agreement (including cGMP and Applicable Law). Fujifilm will, at its own cost and expense, promptly correct any Facility or quality system deficiencies or breach or violation identified in any audit or inspection conducted by Sponsor or by any Regulatory Authority under this Agreement. Fujifilm will work in good faith with Sponsor to address any deficiencies related to the Process or Product that are not due to a Fujifilm Fault, Execution Factor, or such other identified breach or violation, with such costs and expenses borne by Sponsor as set forth in a Change Order.
|
a)
|
Sponsor shall make the payments in respect of each Program as set forth in the applicable Payment Schedule (unless otherwise agreed in a Change Order). Except as set forth in the specific Scope, the amounts set forth in the applicable Payment Schedule do not cover [
***
]
.
|
b)
|
Additional charges in respect of Process Consumables
.
|
(i)
|
Demonstration Stage and/or Product Manufacturing Stage of Process Consumables
.
|
(1)
|
Prior to commencing materials procurement, Fujifilm shall prepare bills of material estimating in good faith the Process Consumables required for the Product Manufacturing Stage and/or Process Demonstration Run Stage (as identified in the applicable Scope). On approval of each of these estimates by Sponsor, Fujifilm shall issue invoices in amounts equal to such estimates, payable in consideration for technical consultancy in relation to purchase of Process Consumables intended to be used during demonstration or manufacturing activities (each being “
Consumables Advance Payment
”).
|
(2)
|
On completion of a Product Manufacturing Stage and/or Process Demonstration Run Stage, Fujifilm shall calculate the expenditure incurred in respect of Process Consumables actually used during such Stage and any Process Consumables procured for use during such Stage as set forth in the estimate but not actually used, and shall first subtract the costs for any Process Consumables for which Fujifilm may be responsible under
Section 6
, and then shall add a sum equivalent to [
***
] of the expenditure on all such Process Consumables, the aggregate amounts in each case being referred to as “
Actual Expenditure
”. If the Actual Expenditure is greater than the corresponding Consumables Advance Payment, Fujifilm shall issue a further invoice for technical consultancy in relation to purchase of such Process Consumables for a sum equivalent to such difference; provided however, that Fujifilm will not incur any expenses that exceed [
***
] of the Consumable Advance Payment without Sponsor’s prior written consent. In the event the Parties disagree on whether Fujifilm should incur expenses that exceed such [
***
], the Parties will discuss in good faith methods of mitigating such costs, including the availability of alternative suppliers for Process Consumables. In the event the Parties are unable to timely agree on such mutually agreed upon alternatives, and if additional fees for Process Consumables are required to progress the Program and Sponsor fails to approve such additional fees within the necessary time frame to avoid a delay or cancellation in manufacturing, then pursuant to
Section 19
, applicable cancellation fees may apply. If the Actual Expenditure is less than the Consumables Advance Payment, Fujifilm shall issue a credit note against the earlier invoice for a sum equivalent to the difference (plus the [
***
] for the technical consultancy fee, if such fee was included in the Consumables Advance Payment).
|
(ii)
|
Additional Process Consumables for non-manufacturing activities
. Fujifilm shall provide a good faith estimate of Process Consumables that are required for use in non-manufacturing activities (e.g., analytical work) in any Stage in the Scope. Each month, Fujifilm shall issue an invoice to Sponsor for additional technical consultancy in relation to procurement of additional Process Consumables for use during non-manufacturing activities (“
Additional Consumables
”) during the previous month in amounts equivalent to the expenditure on such Additional Consumables during the previous month, less the costs for any Additional Consumables for which Fujifilm is responsible under
Section 6
, plus [
***
]; provided however, that Fujifilm will use commercially reasonable efforts to not incur any expenses that exceed [
***
] of the pre-approved estimated expenditure for Additional Consumables without Sponsor’s prior written consent. In the event the Parties disagree on whether Fujifilm should
|
(iii)
|
Fujifilm will (A) only purchase Process Consumables for Sponsor in such quantities as are reasonably necessary to perform the Program in accordance with the applicable Scope; (B) not engage in Speculative Buying of any Process Consumables for Sponsor on any level, directly or indirectly, through independent third parties, or through any Affiliate; (C) timely rotate inventory of Process Consumables on a first expiry basis; and (D) provide Sponsor with written notice as soon as reasonably practicable in advance of any purchases of Process Consumables that exceed the caps set forth in subsections (i) and (ii) to allow the Parties to timely, mutually and amicably resolve such issue. The term “
Speculative Buying
” means building a larger inventory supply of Process Consumables for Sponsor than is customary in the ordinary course of business to support the normal demand of executing a Program similar in scope to the applicable Scopes executed hereunder. Notwithstanding the foregoing, nothing in this Section shall prohibit Fujifilm from purchasing common stock items that include Process Consumables (to be shared between clients) at amounts greater than necessary for Sponsor’s Program; provided, that, Sponsor shall be invoiced only for the portion of such common stock items purchased for Sponsor’s Program in accordance with this
Section 5(b)
.
|
c)
|
INTENTIONALLY DELETED.
|
d)
|
Additional Charges in Respect of Subcontracted Work, Process-Specific Equipment, Facility or Equipment Modification, and Special Waste
. If a Program requires Subcontracted Work, Process-Specific Equipment, Facility or Equipment Modification, or Special Waste, other than those specified in Scope, Fujifilm and Sponsor shall agree in a Scope (or a Change Order) which expenditures are incurred directly by Sponsor, which expenditures will be borne by Fujifilm, and for which expenditures Sponsor will compensate Fujifilm, when such expenditures are incurred by Fujifilm. Fujifilm shall obtain Sponsor’s approval of the Scope or the Change Order prior to incurring any expenditure on Subcontracted Work, Process-Specific Equipment (including cost of installation and qualification thereof), Facility or Equipment Modification, or disposal of Special Waste as the case may be. The Scope or the Change Order shall also specify any necessary installation and qualification cost for or associated with Process-Specific Equipment or Facility or Equipment Modification, the ownership of and liability for any Process-Specific Equipment, any agreements regarding storage and maintenance or Sponsor-owned Process-Specific Equipment, and cost of Process-Specific Equipment removal from Fujifilm property or its return to the original state after the Program or its relevant part has been completed or terminated, cost of returning Facility to its original stage after the Program or its relevant part has been completed or terminated, and the transfer of ownership of Process-Specific Equipment between Fujifilm and Sponsor if Sponsor exercises its rights under
Section 6(e)
below. Any such pre-approved costs incurred by Fujifilm shall be invoiced to Sponsor in the same amount as the expenditure which Fujifilm incurs in respect of Subcontracted Work, Process-Specific Equipment (including cost of installation and qualification thereof), Facility or Equipment Modification, and/or disposal of Special Waste, plus a sum equivalent to [
***
] of such expenditure. Fujifilm shall issue invoices for such technical consultancy services at the time Fujifilm incurs expenditure in respect of the Subcontracted Work, Process-Specific Equipment, Facility or Equipment Modification, and/or disposal of Special Waste as the case may be, which invoice, for clarity, shall not exceed the amount approved by Sponsor under such Scope or otherwise agreed to by the Parties in writing. If Sponsor does not approve an increase to the estimated cost, Fujifilm shall have no obligation to
|
e)
|
Purchase of Process-Specific Consumables and Process-Specific Equipment
. Sponsor shall have an option to purchase from Fujifilm any such Process-Specific Consumable or Process-Specific Equipment purchased by Fujifilm, for which Sponsor compensated Fujifilm as specified above, as such remain following completion of Program or the earlier termination of the applicable Scope or this Agreement. Such Process-Specific Consumable and Process-Specific Equipment shall be purchased for consideration of [
***
] payable at the time of such sale plus the cost of removal of such Process-Specific Consumable and/or Process-Specific Equipment from Fujifilm’s property. The option shall be exercised within (s) [
***
] following completion of manufacturing for which such Process-Specific Consumable were purchased or (t) [
***
] following termination of this Agreement (unless such termination is by Fujifilm for Sponsor’s insolvency under
Section 21(b)
). Unless otherwise agreed to by the Parties, shipment shall be according to the terms of
Section 13
, and provided in good working order, ordinary wear and tear excepted with respect to any Process-Specific Equipment. Risk in and title thereto shall pass on delivery. Until such time as Sponsor has exercised such option (or such option has otherwise expired), Fujifilm will not sell, transfer or otherwise convey such Process-Specific Equipment or Process-Specific Consumables to any third party, nor shall Fujifilm place or permit to be placed any lien or encumbrance upon such Process-Specific Equipment or Process-Specific Consumables. In case Sponsor does not exercise the aforementioned option within the [
***
] option period, Fujifilm shall be free to use or dispose of any item(s) of Process-Specific Consumable or Process-Specific Equipment in respect of which Sponsor’s option referred to in this
Section 6(e)
is not exercised, and Sponsor agrees to pay the reasonable out-of-pocket costs incurred by Fujifilm to dispose of any such Process-Specific Consumable or Process-Specific Equipment.
|
f)
|
Payments
. Payments are due [
***
] from the date an invoice issued by Fujifilm is received by Sponsor, with such invoices being issued consistent with the applicable Payment Schedule. Late payments on undisputed amounts are subject to an interest charge of [
***
] per month. Unless within [
***
] of the date of Sponsor’s receipt of the applicable invoice Sponsor has advised Fujifilm in good faith and in writing the specific basis for disputing an invoice, Sponsor’s failure to pay an undisputed portion of an invoice within [
***
] of the date of Sponsor’s receipt of the invoice may constitute a material breach of this Agreement. In addition to all other remedies available to Fujifilm in the event of a Sponsor default, if Sponsor fails to make undisputed payments as required hereunder, Fujifilm may refuse to carry out further work and/or suspend deliveries of Product or provision of reports until Sponsor makes payment and/or provides assurance of further or future payment reasonably satisfactory to Fujifilm. Invoices will include a summary of activities completed during the invoice period, including activities completed and an indication of Process Consumables purchased.
|
g)
|
Taxes
. Any payment under this Agreement is exclusive of any value added tax (or other tax) that may apply and shall be paid gross, without deductions or set-offs, whether by way of withholding or other income taxes (but excluding taxes on the income of Fujifilm). If any value added tax shall become due, it shall be for the account of Sponsor.
|
a)
|
Upon completion of a cGMP Batch and the determination by Fujifilm that such Batch conforms to cGMP, Product specifications, and specifications for the testing performed by Fujifilm and listed in the Batch Packet. Fujifilm shall provide Sponsor’s quality assurance department with a Batch Packet and a recommendation for such Batch to be released. Within [
***
] after Sponsor’s receipt of such documentation and recommendation, Sponsor shall review the Batch Packet to
|
b)
|
In the event Sponsor’s review of a Batch Packet indicates that the relevant Batch may be a Non-Conforming Batch, Sponsor shall promptly notify Fujifilm’s quality assurance department in writing according to the complaint procedures in the Quality Agreement, and Fujifilm shall promptly and diligently initiate an investigation. The Parties shall cooperate in good faith in analyzing and investigating the test results. The Parties shall mutually determine if the Batch is a Non-Conforming Batch or if further testing is warranted and the conditions for such testing. [
***
]. If the Parties cannot come to mutual agreement on whether the Batch is a Non-Conforming Batch and/or the cause of such Non-Conforming Batch, then the Parties shall resolve such dispute in accordance with the Quality Agreement, and if the Parties cannot resolve such dispute in accordance with the Quality Agreement, [
***
].
|
c)
|
The following provisions shall apply if during Disposition of the cGMP Batch or as a result of Sponsor’s review of the applicable Batch Packet and followed investigation, it is ascertained that such cGMP Batch is a Non-Conforming Batch:
|
(i)
|
The Non-Conforming Batch shall not be delivered to Sponsor, unless Sponsor requests delivery of such Non-Conforming Batch in writing. If Sponsor requests such delivery, the Parties shall agree in a Change Order on terms and limitations of use of such Non-Conforming Batch and, if the non-conformity was due to a Fujifilm Fault, an applicable reduction in compensation to Fujifilm for such Batch.
|
(ii)
|
Upon Sponsor’s request, Fujifilm shall use commercially reasonable efforts to manufacture and deliver a further cGMP Batch, with costs allocated as provided below.
|
(iii)
|
The following provisions shall apply if the Non-Conforming Batch arose other than as a result of a [
***
]:
|
(1)
|
Sponsor shall be obliged to make payment in respect of such Non-Conforming Batch.
|
(2)
|
If Sponsor wishes Fujifilm to manufacture another Batch, such manufacture shall be carried out at a time to be agreed and subject to agreement of the price payable by Sponsor in respect of such further manufacture (which shall not exceed the price paid for such Non-Conforming Batch), with such agreement to be recorded in a Change Order.
|
(iv)
|
If a Batch that was intended to be a cGMP Batch was not completed or if the Non-Conforming Batch arose as a result of a Fujifilm Fault, Fujifilm shall manufacture a further cGMP Batch at Fujifilm’s cost and expense as soon as reasonably practicable, including the costs for any Process Consumables needed for such further Batch and the costs to destroy the Non-Conforming Batch.
|
(i)
|
If the Non-Conforming Batch arose as a result of an Execution Factor, Fujifilm shall manufacture a further cGMP Batch at Sponsor’s request as soon as reasonably practicable. Sponsor shall be responsible for the cost of Process Consumables needed for such further Batch, and Fujifilm shall invoice Sponsor for technical consultancy fees related to the procurement of such Process Consumables, and Fujifilm shall be liable for the cost of remanufacture, provided however, that [
***
]. “
GMP At-Risk Run
” means the first full scale cGMP Run for the Product, and “
Pre-PPQ Run
” means the run just prior to the PPQ runs,
|
(ii)
|
For clarity, upon Sponsor’s ascertainment that the further cGMP Batch received is not a Non-Conforming Batch under the process set forth in
Section 6(a)
, Sponsor shall be responsible for making final payment for such cGMP Batch. The foregoing obligation does not limit Sponsor’s right to reject Batches previously Accepted for a Latent Defect in accordance with
Section 6(d)
; it being understood that where such rejection is exercised and the fees for the Non-Conforming Batch have been paid in accordance with this Agreement, no further payment will be made by Sponsor upon receipt of the applicable replacement cGMP Batch.
|
(iii)
|
Subject to [
***
]
, Sponsor’s sole and exclusive remedy in relation to any Non-Conforming Batch is limited to those remedies set forth in this
Section 6
.
|
a)
|
For the avoidance of doubt:
(u)
the Parties will follow the quality procedures set forth in the Quality Agreement while accepting or rejecting the disputed Batch; and
(v)
Sponsor shall have the right to reject Batches previously Accepted for a Latent Defect by providing Fujifilm with written notice of such Latent Defect within [
***
] of Sponsor’s discovery of such Latent Defect, but no later than [
***
] following Disposition of the Batch, in which case the provisions in
Section 6(b)
of this Agreement shall govern any dispute between the Parties as to whether the Batch was a Non-Conforming Batch, and the provisions of
Section 6(c)
of this Agreement shall apply with respect to such Non-Conforming Batch; provided further that if such non-conformance arose from a Fujifilm Fault or Execution Factor, then Fujifilm shall also pay for the costs to return or destroy such previously Accepted Batch. Unless otherwise agreed by the Parties in writing, Fujifilm shall dispose of any Non-Conforming Batch not requested to be delivered to Sponsor in accordance with all Applicable Laws with respect to such disposal, [
***
].
|
b)
|
Fujifilm shall conduct all quality control testing of the Sponsor Deliverables and Fujifilm Deliverables to ensure that deliverables delivered to Sponsor conform to the applicable specifications and comply with Applicable Laws. Without limiting the foregoing, Fujifilm shall establish, implement, and maintain preventive and corrective procedures in compliance with Applicable Laws to minimize the amount of Non-Conforming Batches. Fujifilm shall cooperate with Sponsor in determining the cause of any quality problems involving a Batch, identifying corrective actions, and ensuring the implementation and effectiveness thereof. Upon Sponsor’s request and in accordance with any timetables set therein, Fujifilm shall implement such corrective actions, and shall provide Sponsor with written confirmation upon the completion thereof. Fujifilm shall notify Sponsor within [
***
] after the discovery that any lot of shipped Batches, which had previously been Accepted in accordance with procedures set forth herein, but which is later discovered to be a Non-Conforming Batch, including providing Sponsor with all details concerning the nature of any such defect. Fujifilm will make, at its expense, such further internal investigation of any such Non-Conforming Batch(es) that is appropriate under the circumstances and otherwise consistent with its obligations under this Agreement (including the Quality Agreement).
|
a)
|
The total budget for a Program specified in the applicable Payment Schedule, the individual budget components and the anticipated timeline for performance of each Stage of the Program specified in the applicable Scope are subject to a number of general and Program specific assumptions including the accuracy, timeliness and completeness of Sponsor Deliverables. The assumptions relate to the applicable Program design and objectives, manpower requirements, timing, capital expenditure requirements (if any), and other matters relating to the completion of the Program as further set forth in the applicable Scope (collectively, the “
Program
|
b)
|
In the event a Program Modification is identified by Sponsor or by Fujifilm, the identifying Party shall notify the other Party as soon as is reasonably possible. Fujifilm shall provide Sponsor with a change order containing an estimate of the required Program Modifications to the applicable Program budget, activities and/or estimated timeline for performance as specified in the applicable Scope (“
Change
Order
”) within [
***
] of receiving such notice or providing such notice to Sponsor. Sponsor shall respond in writing to such Change Order within [
***
] of receiving such Change Order indicating whether or not it approves the proposed Change Order. If Sponsor does not approve such Change Order, then Sponsor and Fujifilm shall negotiate in good faith to agree on a Change Order that is mutually acceptable. If practicable, Fujifilm shall continue work on the applicable Program during any such negotiations, but shall not commence work with respect to the Change Order unless authorized in writing by Sponsor. If a Program Modification results in a Change Order that is not agreeable to both Parties within [
***
] after issuance of the relevant Change Order and after good faith negotiations in accordance with the procedures set forth in
Section 22
, then Fujifilm shall, if reasonably possible, perform the Scope as modified by previously executed Change Orders, if any, without regard to the unresolved Change Order; provided, however, that the estimated timelines and/or Program Schedule shall be adjusted to reflect any delay during the negotiation period. In the event that in Fujifilm’s reasonable judgment such performance is not possible in accordance with the applicable current Scope and Payment Schedule (subject to the last sentence below), then Fujifilm shall provide written notice to Sponsor of its inability to perform in the absence of an agreed upon Change Order (the “
Impasse Notice
”). Upon issuance of an Impasse Notice, (i) Sponsor shall have the option of terminating the Scope affected by such Change Order within [
***
] following such Impasse Notice; (ii) Fujifilm shall have the option of terminating the Scope affected by such Change Order within [
***
] following such Impasse Notice if continuation of such Scope is technically infeasible without approval of the Change Order; and/or (iii) either Party may initiate the arbitration procedures set forth in
Section 15
to determine financial responsibility for the Impasse Notice. In determining relative financial responsibility and damages, if any, the arbitrator(s) shall consider whether the Impasse Notice was justifiable and, if so, which Party should bear financial responsibility for the circumstances underlying the Impasse Notice based on the reasonableness of each Party in its negotiations with the other Party on such Change Order leading to such Impasse Notice.
|
a)
|
For the duration of this Agreement and for [
***
] thereafter, Fujifilm will not, without Sponsor’s prior written permission: (w) use any Sponsor Confidential Information for any purpose other than to perform a Program in accordance with this Agreement; or (x) disclose any Sponsor Confidential Information to any third party except as permitted under this Agreement. To protect Sponsor Confidential Information, Fujifilm will: (x) limit dissemination of Sponsor Confidential Information to only those of its (A) Affiliates, Subcontractors and Personnel for whom such access and use are required to perform the Program in accordance with this Agreement and/or (B) employees, agents, consultants and advisers for whom such access and use are required to advise Fujifilm on its legal obligations and rights under this Agreement and in each of (A) and (B) who are bound by agreements or law sufficient to enable them to comply with the confidentiality and non-disclosure obligations contained herein; and (y) use reasonable precautions to protect the confidentiality of Sponsor Confidential Information from unauthorized or improper use, loss, destruction, and disclosure, using at a minimum, the same measures and degree of care used to protect its own proprietary information.
|
b)
|
For the duration of this Agreement and for [
***
] thereafter, Sponsor will not, without Fujifilm’s written permission: (y) use any Fujifilm Confidential Information for any purpose other than to perform its obligations under this Agreement or as permitted under this Agreement; or (z) disclose any Fujifilm Confidential Information to any third party except as permitted under this Agreement. Sponsor will limit dissemination of Fujifilm Confidential Information to only those of its Affiliates and each of their respective subcontractors, employees, agents, consultants and advisers for whom such access and use are required to (A) perform the Program in accordance with this Agreement and/or (B) advise Sponsor on its legal obligations and rights under this Agreement and who are bound by agreements or law sufficient to enable them to comply with the confidentiality and non-disclosure obligations contained herein. Sponsor shall use reasonable precautions to protect the confidentiality of Fujifilm Confidential Information from unauthorized or improper use, loss, destruction, and disclosure, using at a minimum, the same measures and degree of care used to protect its own proprietary information.
|
c)
|
Permitted Sponsor Uses
. Notwithstanding anything in this Agreement to the contrary, Sponsor and its Affiliates and their employees, agents, consultants and advisers, licensees and sublicensees and any of their third party contractors may use or disclose Fujifilm Confidential Information to the extent necessary: (aa) in connection with regulatory filings related to Product; or (bb) for the purpose of exercising its rights or licenses granted under
Section 10
, including for the purpose of manufacturing Product, having Product manufactured, or otherwise commercially exploiting any Product (including disclosures to an existing or potential partner, licensee, acquirer, or investor) and in any event, in the case of any disclosures, subject to the imposition of confidentiality no less onerous than those of this Agreement. Notwithstanding the foregoing, Sponsor shall not disclose Fujifilm’s pricing for the services intended to be provided hereunder nor provide the actual proposal provided by Fujifilm to Sponsor to conduct the services intended to be provided hereunder to any third-party contract manufacturing organizations in the biopharmaceutical industry, without in each case, Fujifilm’s prior written consent.
|
d)
|
INTENTIONALLY DELETED.
|
e)
|
In the event a Party is required by law, regulation or court order to disclose any Confidential Information of the other Party (including to a Regulatory Authority, in connection with freedom of information legislation or regulations, or in relation to filings with any recognized stock exchange), such Party will be permitted to disclose such Confidential Information provided such Party promptly notifies the owning Party in writing prior to making any such disclosure in order to allow the owning Party to seek a protective order or other appropriate remedy from the competent authority. If disclosure is required in relation to filings with any recognized stock exchange, such Party shall provide a copy of the disclosure to the owning Party at least [
***
] in advance and
|
f)
|
If, despite the efforts undertaken pursuant to
Section 8(e)
of this Agreement, either Party shall be obliged to provide testimony or records constituting Confidential Information of the other Party in any legal or administrative proceeding, and where such legal or administrative proceeding does not arise due to any Claims for which the owning Party has a right of indemnity under
Section 16
of this Agreement, then the Party to whom the Confidential Information belongs shall reimburse the other Party for its out-of-pocket costs incurred in providing such testimony or records plus any other mutually agreed upon fee.
|
g)
|
For clarity, Confidential Information containing personal data shall be handled in accordance with Applicable Laws governing the protection of personal data.
|
h)
|
“
Confidential Information
” shall mean and include such types of information as: inventions, methods, plans, processes, specifications, characteristics, raw data, analyses, equipment design, trade secrets, costs, marketing, sales, and performance information, including patents and patent applications, grant applications, notes, and memoranda, whether in writing or presented, stored or maintained electronically, magnetically or by other means; provided, however that information that (cc) is or becomes publicly available through no fault of the non-owning Party; (dd) is disclosed by a third party entitled to disclose it without an obligation of confidentiality to the other Party; (ee) is already known to the non-owning Party as shown by its prior written records; or (ff) is developed independently of a Program by the non-owing Party without reference to or use of any of the Confidential Information disclosed by the owning Party as shown by written records is not Confidential Information.
|
i)
|
Return of Confidential Information
. At the written request of the owning Party, the other Party will deliver to the owning Party any tangible Confidential Information of the owning Party, or destroy, as instructed by the owning Party, any such Confidential Information (in any electronic and other copies thereof) in the other Party’s possession or control, and will cease using the owning Party’s Confidential Information, except that: (gg) neither Party will have an obligation to return or to cease to use of any information that such Party has a continuing license to use under this Agreement; (hh) Sponsor will have no obligation to return or destroy any Fujifilm Confidential Information that is incorporated into Fujifilm Deliverables or that is included in any regulatory filing; and (ii) neither Party will be obligated to return or destroy automatically generated copies stored on system back-up media; subject to ongoing compliance with the confidentiality and non-use obligations herein.
|
j)
|
Terms of this Agreement
. The terms of this Agreement shall be deemed the Confidential Information of both Parties, and neither Party shall disclose the existence or terms of this Agreement to any third party without the consent of the other Party, except that the Parties may disclose the existence or terms of this Agreement: (jj) pursuant to a public announcement approved under
Section 20
of this Agreement; or (kk) as otherwise permitted pursuant to the remainder of this
Section 8
.
|
a)
|
All reports specified in each Scope and other cGMP documentation provided in the Quality Agreement, as well as records, accounts, notes, reports, and Batch data pertaining to a Program, the Product(s), and its and any third party subcontractor’s activities under this Agreement
|
b)
|
Sponsor will be supplied with copies of Work Output generated as a result of each Program as set forth in the Quality Agreement or applicable Scope. Fujifilm will maintain complete, accurate, and legible records of all Work Output and all quality retains in a secure area protected from fire, other natural hazards, theft, and destruction, and Fujifilm shall immediately notify Sponsor in writing in the event of any loss or destruction of such records or quality retains. All Work Output documentation will be archived by Fujifilm for a period of [
***
] following completion of the applicable Program unless otherwise required by Applicable Law and quality retains will be archived by Fujifilm for a period of [
***
] following completion of the applicable Program unless otherwise required by Applicable Laws. Upon completion of the applicable retention period: (ll) some or all of the Work Output and quality retains will be sent to Sponsor, and a mutually agreed upon return fee will be charged; or (mm) Sponsor may elect to have some or all of the materials retained in the Fujifilm archives for an additional period of time at a mutually agreed upon additional cost to Sponsor; or (nn) Sponsor may choose to have Fujifilm dispose of some or all of Work Output and quality retains samples at a mutually agreed disposal charge. Notwithstanding the foregoing, Fujifilm will continue to retain such written materials and quality retains as required by Applicable Laws pertaining to such activities as well as for archival purposes; provided that such copy remains subject to the confidentiality obligations contained herein. In no event will Fujifilm dispose of any such materials without first giving Sponsor [
***
] prior written notice of its intent to do so and complying with any directions or written requests provided by Sponsor. If Sponsor does not reply to Fujifilm’s notification within such [
***
] period, Fujifilm may take any of the above actions (return, retain or dispose) at Fujifilm’s sole but reasonable option and at Sponsor’s reasonable expense.
|
a)
|
Background Intellectual Property
. Nothing in this Agreement shall affect the ownership of any Background Intellectual Property of either Party. Without limiting the foregoing, nothing contained in this Agreement, nor the disclosure nor provision to Fujifilm of any Confidential Information shall be deemed to transfer or grant to Fujifilm, or any other person or entity, any right, title, interest, or license in, to or under any Intellectual Property or other right Sponsor, including any rights in or to any Sponsor Materials or any Products, provided however, that Sponsor hereby grants Fujifilm a limited, non-transferable, non-exclusive license to Sponsor’s Background Intellectual Property solely to the extent necessary for Fujifilm to perform each Program in accordance with the applicable Scope, which license shall last for the term of the applicable Scope.
|
b)
|
Sponsor Inventions
. Sponsor Inventions shall be owned solely by Sponsor and shall be Sponsor Confidential Information. Fujifilm will promptly disclose all Sponsor Inventions to Sponsor in writing. Fujifilm hereby assigns: (oo) all right, title and interest throughout the world in and to the Sponsor Inventions to Sponsor, including all Intellectual Property; and (pp) all rights of action and claims for damages and benefits arising due to past and present infringement of said rights to Sponsor. If Sponsor requests and at Sponsor’s expense, Fujifilm will cooperate and execute any and all applications, assignments or other instruments and give testimony which shall be necessary to apply for and obtain Letters of Patent of the U.S. or of any equivalent patent in any other country, and other documents reasonably necessary for Sponsor to secure, perfect, effectuate and preserve its rights in and to Sponsor Inventions, and Sponsor shall compensate Fujifilm for the time devoted to such activities and reimburse it for its reasonable expenses incurred in respect of such cooperation at a mutually agreed upon rate. For Sponsor Inventions assigned pursuant to this section, Sponsor shall provide Fujifilm a limited, non-transferable, non-exclusive, royalty-free license solely to the extent necessary for Fujifilm to perform each Program in accordance with the applicable Scope, which license shall last for the term of the applicable
|
c)
|
Process Inventions
. All Process Inventions shall be owned solely by Fujifilm and shall be Fujifilm Confidential Information. Fujifilm hereby grants to Sponsor a perpetual, world-wide, royalty-free, non-exclusive, sub-licensable license under such Process Inventions for Sponsor to disclose, manufacture, have made, modify, use, perform, and otherwise exploit (a) the Process Invention and (b) any Fujifilm Confidential Information including Background Intellectual Property incorporated into Sponsor Inventions, in each case, in connection with the use, further development, manufacture and commercial exploitation of any such Products (including any products within the Product’s lifecycle). If Fujifilm requests and at Fujifilm’s expense, Sponsor will execute any and all applications, assignments or other instruments and give testimony which shall be necessary to apply for and obtain Letters of Patent of the U.S. or of any equivalent patent in any other country with respect to the Process Invention and Fujifilm shall compensate Sponsor for the time devoted to such activities and reimburse it for its reasonable expenses incurred in respect of such cooperation at a mutually agreed upon rate.
|
d)
|
Data
. Fujifilm reserves the right to use data generated or obtained during the course of a Program to support applications necessary to apply for and obtain Letters of Patent of the U.S. or of any equivalent patent in any other country with respect to Process Inventions so long as: (qq) no Sponsor Confidential Information is disclosed in any such application; and (rr) Fujifilm notifies Sponsor [
***
] in advance of its intent to file such application or other instrument.
|
a)
|
Fujifilm has obtained, or will obtain prior to engaging any Personnel or Subcontractors (including for clarity, any Affiliates), written agreements under which such Personnel or Subcontractors (or Affiliate) (i) assign all of their rights in any Sponsor Invention generated under a Program to Fujifilm to effectively vest in Fujifilm the full right and authority to assign Sponsor Inventions to Sponsor and (ii) grant the necessary rights to Fujifilm to enable Fujifilm to grant the licenses under Process Inventions granted to Sponsor hereunder; and (iii) cooperate to execute any documents to confirm or perfect such assignments.
|
a)
|
Fujifilm shall secure and maintain in full force and effect throughout the performance of each Scope, and for a period of [
***
] thereafter, policies of insurance for: (ss) workmen’s compensation in statutory required amounts; (tt) general liability; (uu) automobile liability; and (vv) product
|
b)
|
Sponsor shall secure and maintain in full force and effect throughout the performance of each Scope and for a period of [
***
] thereafter, policies of insurance for: (ww) general liability; and (xx) product liability, including (if applicable) clinical trial insurance, in each case, having policy limits, deductibles and other terms appropriate to the conduct of Sponsor’s business and sufficient to cover its obligations under this Agreement in Sponsor’s reasonable judgment and in accordance with any limits and requirements provided by Applicable Laws.
|
a)
|
If Fujifilm is in default of its material obligations under this Agreement, Fujifilm shall have a period of [
***
] from the date of receipt of notice of default from Sponsor, within which to cure or, in the case of a default which cannot be cured within [
***
], to commence to diligently cure such default. If Fujifilm fails to so cure or commence to diligently cure, then this Agreement or the applicable Program shall, at Sponsor’s option, immediately terminate.
|
b)
|
If Sponsor is in default of its material obligations under this Agreement, including payment obligations, Sponsor shall have a period of [
***
] from the date of receipt of a notice of default from Fujifilm, within which to cure such default, in the case of default which cannot be cured within [
***
] (other than default of payment obligations), to commence to diligently cure such default; provided that if Sponsor fails to so cure such breach or commence to diligently cure such breach, within the specified cure period, this Agreement may, at Fujifilm’s option, immediately terminate. For clarity, a Delay shall not constitute a material breach by Sponsor.
|
c)
|
Disclaimer of Consequential Damages
.
EXCEPT FOR EACH PARTY’S LIABILITY ARISING OUT OF, RESULTING FROM OR RELATING TO A BREACH OF
SECTION 8
(CONFIDENTIAL INFORMATION) OR
SECTION 10
(INVENTIONS AND PATENTS) OR ANY OTHER UNAUTHORIZED USE OF THE OTHER PARTY’S INTELLECTUAL PROPERTY OR CONFIDENTIAL INFORMATION, UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE ENTITLED TO INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING IN CONNECTION WITH THIS AGREEMENT OR THE DEFAULT OR BREACH OF ANY OBLIGATION OF THE OTHER PARTY UNDER THIS AGREEMENT (INCLUDING A SCOPE OR ANY DOCUMENTS OR APPENDICES RELATED THERETO), A PRODUCT OR PROGRAM, WHETHER IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, BY STATUTE OR OTHERWISE, WHICH LIMITATION SHALL APPLY EVEN IF SUCH PARTY HAS BEEN ADVISED OR IS AWARE OF THE POSSIBILITY OF SUCH DAMAGES.
|
d)
|
Liability Cap
.
EXCEPT FOR: (A) FUJIFILM’S LIABILITY ARISING OUT OF, RESULTING FROM OR RELATING TO A BREACH OF
SECTION 8
(
CONFIDENTIAL INFORMATION
) OR
SECTION 10
(
INVENTIONS AND PATENTS
) OR ANY OTHER UNAUTHORIZED USE OF SPONSOR’S INTELLECTUAL PROPERTY OR CONFIDENTIAL INFORMATION; OR [
***
], FUJIFILM’S MAXIMUM LIABILITY FOR DAMAGES IN CONNECTION WITH A CLAIM RELATED TO THIS AGREEMENT, A PRODUCT, OR PROGRAM, REGARDLESS OF THE CAUSE OF ACTION, WILL NOT EXCEED [
***
].
|
e)
|
Special Liability Cap
.
EXCEPT FOR: (A) FUJIFILM’S LIABILITY ARISING OUT OF, RESULTING FROM OR RELATING TO A BREACH OF
SECTION 8
(CONFIDENTIAL INFORMATION) OR
SECTION 10
(INVENTIONS AND PATENTS) OR ANY OTHER UNAUTHORIZED USE OF SPONSOR’S INTELLECTUAL PROPERTY OR CONFIDENTIAL INFORMATION; OR [
***
], FUJIFILM’S MAXIMUM LIABILITY FOR DAMAGES RELATED TO THIS AGREEMENT, THE PRODUCT OR PROGRAM, REGARDLESS OF THE CAUSE OF ACTION, WILL NOT EXCEED [
***
].
|
a)
|
Warranty Disclaimer
.
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT (i) NEITHER PARTY PROVIDES TO THE OTHER PARTY HERETO ANY WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE MATERIALS, PRODUCT, PROGRAM, AND SERVICES PROVIDED HEREUNDER, AND ALL SUCH WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE ARE WAIVED, AND (ii) FUJIFILM MAKES NO WARRANTIES THAT THE EXECUTION OF THE SCOPE WILL RESULT IN ANY SPECIFIC QUANTITY OR QUALITY OF PRODUCT.
|
b)
|
No claim for liabilities incurred pursuant to the Quality Agreement may be made under the Quality Agreement by any party. Accordingly, performance of the Quality Agreement shall be deemed to be performance under the Scope to which the Quality Agreement relates and as such any breach of the Quality Agreement shall be deemed to be a breach of the relevant Scope and all liabilities shall be construed and limited in accordance with this
Section 14
.
|
a)
|
In the event of any Dispute, the senior executives of Sponsor and Fujifilm shall meet as promptly as practicable after receipt of notice of such Dispute to resolve in good faith such Dispute. If Sponsor and Fujifilm are unable to satisfactorily resolve the Dispute within thirty (30) days following referral to the senior executives, then, subject to each Party’s right to seek injunctive relief to protect its rights or for patent or other Intellectual Property matters pursuant to
Section 15(e)
below, such Dispute shall be finally settled by an arbitrator in accordance with this
Section 15
, which arbitration may be initiated by either Party upon written notice to the other Party.
|
b)
|
The arbitration will be held in New York City, New York. All arbitration proceedings and communications shall be in English.
|
c)
|
The arbitration shall be conducted by the International Chamber of Commerce (“
ICC
”) in accordance with the Rules of Arbitration of the International Chamber of Commerce (“
Rules
”) by a single neutral arbitrator agreeable to both Parties if the Dispute involves an amount of $1,000,000 or less, and by a panel of three (3) neutral arbitrators if greater than $1,000,000. Each arbitrator shall: (yy) be significantly experienced with Delaware law; and (zz) have senior management experience in the biopharmaceutical industry and at least ten (10) years legal/judicial experience. If the Parties do not agree on the arbitrator(s) within thirty (30) days of the initiation of the arbitration as indicated by at least one of the Parties, the ICC shall appoint such arbitrator(s) to hear the case in accordance with the Rules, provided however, that no potential arbitrator shall be appointed unless he or she has agreed in writing to abide and be bound by the provisions in this
Section 15
. The arbitrator(s) shall have no authority to award consequential, punitive or exemplary damages except as provided in this Agreement or to vary from or ignore the terms of this Agreement and shall be bound by controlling law.
|
d)
|
The Parties shall use reasonable efforts to complete any such arbitration (including receiving the final award from such arbitrator(s)) within six (6) months from the issuance of notice of a referral of any such Dispute to arbitration. The arbitrator(s) shall determine what discovery will be permitted, consistent with the goal of limiting the cost and time which the Parties must expend for discovery; provided that the arbitrator(s) shall permit such discovery as he or she deems necessary to permit an equitable resolution of the Dispute.
|
e)
|
Finally, the Parties may seek administrative action or judicial intervention for interim or emergency relief, such as restraining orders and injunctions where appropriate to protect the rights or Intellectual Property of that Party from the applicable administrative body or a court of competent jurisdiction, as applicable, including pending the selection of the arbitrator(s) or pending the arbitrator’s determination of the merits of any Dispute.
|
f)
|
Any decision by the arbitrator(s) shall, unless clearly erroneous or arbitrary and capricious, be binding upon the Parties with respect to the Dispute and may be entered as final judgment in any court having competent jurisdiction. The cost of any arbitration proceeding shall be borne by the Parties, as the arbitrator(s) shall determine if the Parties have not otherwise agreed. The arbitrator(s) shall render their final decision in writing to the Parties.
|
g)
|
Fujifilm may suspend performance of any of its obligations hereunder until all undisputed payments are made in accordance with
Section 5(f)
.
|
a)
|
Subject to and except to the extent of any indemnification from Sponsor pursuant to
Section 16(b)
below, Fujifilm shall defend, indemnify and hold harmless Sponsor and its Affiliates and their respective officers, directors and employees (collectively, “
Sponsor
Group
”) from any loss, cost, damage or expense (“
Loss
”) incurred by a member of the Sponsor Group from any lawsuit, action, claim, demand, assessment or proceeding brought by a third party (“
Claim
”) to the extent arising from or related to: (i) negligence, gross negligence or intentional misconduct or inaction of any member of the Fujifilm Group or any third party subcontractors, including Approved Suppliers (but excluding infringement or misappropriation Claims); (ii) breach of this Agreement by any member of the Fujifilm Group or any third party subcontractors, including Approved Suppliers; (iii) violation of any Applicable Law with respect to this Agreement by any member of the Fujifilm Group or any third party subcontractors, including Approved Suppliers (but excluding infringement or misappropriation Claims); or (iv) claims (A) that Fujifilm Group’s or any third party subcontractors, including Approved Suppliers’ use of Fujifilm’s Background Intellectual Property
|
b)
|
Subject to and except to the extent of any indemnification from Fujifilm pursuant to
Section 16(a)
above, Sponsor shall defend, indemnify and hold harmless Fujifilm and its Affiliates and their respective officers, directors and employees (collectively, the “
Fujifilm
Group
”) from any Loss incurred by a member of the Fujifilm Group as a result of any third party Claim to the extent arising from or related to: (i) the use of Sponsor Materials and the Product (but excluding infringement or misappropriation Claims); (ii) Fujifilm’s proper use of Sponsor designated Process-Specific Consumables (but excluding infringement or misappropriation Claims); (iii) the negligence, gross negligence or intentional misconduct or inaction of a member of the Sponsor Group (but excluding infringement or misappropriation Claims); (iv) violation of any Applicable Law by a member of the Sponsor Group with respect to this Agreement (but excluding infringement or misappropriation Claims); (v) the breach of this Agreement by a member of the Sponsor Group; or (vi) claims that Fujifilm’s use of Sponsor’s Background Intellectual Property, including the Sponsor transferred Product manufacturing process or Sponsor Materials in the performance of a Program infringe or misappropriate the Intellectual Property rights of a third party; provided however that Fujifilm promptly ceases using such allegedly infringing materials upon Sponsor’s request.
|
c)
|
Upon receipt of notice of any Claim which may give rise to a right of indemnity from the other Party hereto, the Party seeking indemnification (the “
Indemnified Party
”) shall give written notice thereof to the other Party (the “
Indemnifying Party
”) with a claim for indemnity. Any delay or failure to give notice shall not discharge the duty of the Indemnifying Party to indemnify except to the extent it is prejudiced by such delay or failure. Such claim for indemnity shall indicate the nature of the Claim and the basis therefore. Promptly after a Claim is made for which the Indemnified Party seeks indemnity, the Indemnified Party shall permit the Indemnifying Party, at the Indemnifying Party’s option and expense, to assume the complete defense of such Claim, provided that: ([[) the Indemnified Party will have the right to participate in the defense of any such Claim at its own cost and expense; (aaa) the Indemnifying Party will conduct the defense of any such Claim in good faith with due regard for the potential related liabilities of the Indemnified Party; (bbb) the Indemnified Party shall reasonably cooperate with the Indemnifying Party, in the defense and settlement of such Claim; and (ccc) the Indemnifying Party will, prior to making any settlement, consult with the Indemnified Party as to the terms of such settlement and receive approval thereof, such approval not to be unreasonably withheld. The Indemnifying Party will not, in defense of any such Claim, except with the consent of the Indemnified Party, not to be unreasonably withheld, consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof, the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect thereof. The Indemnifying Party will not have an indemnification obligation with respect to any Claim settled without its prior written consent. As to those Claims with respect to which the Indemnifying Party does not elect to assume control of the defense, the Indemnified Party will afford the Indemnifying Party an opportunity to participate in such defense at the Indemnifying Party’s own cost and expense, and will not settle or otherwise dispose of any of the same without the consent of the Indemnifying Party, not to be unreasonably withheld. For clarity, only Fujifilm and Sponsor will have the right to claim indemnity under this Agreement (on its own behalf or on behalf of the Fujifilm Group and Sponsor Group, respectively), no member of either group shall have the right to directly claim an indemnity hereunder.
|
a)
|
Each Party represents and warrants to the other Party that: (ddd) such Party is duly organized, validly existing and in good standing under the applicable laws of its jurisdiction of incorporation or organization; (eee) it has received all requisite authorization and authority to, and has the full right and authority to, enter into this Agreement and to perform in accordance with the terms and conditions set forth herein; and (fff) this Agreement has been validly executed and delivered by such Party, and constitutes a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms except as enforceability may be limited by liquidation, bankruptcy, insolvency, reorganization, moratorium, formal restructuring, or other similar laws relating to or affecting creditors’ rights generally or general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
|
b)
|
Each Party represents and warrants to the other Party that it has obtained and will at all times during the term of this Agreement, hold and comply with all licenses, permits and authorizations necessary to perform its obligations under this Agreement as now or hereafter required under any Applicable Laws.
|
c)
|
Each Party represents and warrants to the other Party that neither it nor any of its officers, directors, or employees performing services under this Agreement (including the applicable Scope) have been excluded from participation in any government healthcare program, debarred from or under any federal program, or convicted of a crime defined in 42 U.S.C. Section 1320a-7 (or any equivalent legislation of an individual EU member state or Canada) which could lead to debarment, or otherwise been excluded or deemed ineligible for participation in any healthcare programs (collectively, “
Debarment
”), nor is aware of any pending or potential actions that would give rise to such ineligibility. If at any time the foregoing changes with respect to a Party, such Party shall immediately notify the other Party of the same in writing, and the notified Party shall have the right to terminate the Scope and/or request the removal of the affected individuals from continued performance under the applicable Scope. Fujifilm certifies that it has reviewed applicable U.S. debarment lists (and the equivalent thereof under EU and Canadian laws) with respect to its Subcontractors and has not engaged Subcontractors subject to such Debarment.
|
d)
|
Fujifilm hereby represents and warrants to Sponsor that: (ggg) Fujifilm is skilled and experienced in performing the Program, and will perform each Program in a professional and workman-like manner consistent with the biopharmaceutical manufacturing industry; (hhh) there is no claim, suit, proceeding, or other investigation pending, or to the actual knowledge of Fujifilm, threatened against Fujifilm, which is likely to prevent or interfere with Fujifilm’s performance under this Agreement or adversely affect the rights and interests of Sponsor hereunder; (iii) it is under no contractual or other obligation or restriction that is inconsistent with its execution or performance of this Agreement or the rights granted to Sponsor under this Agreement, and will not enter into any agreement, either written or oral, that would conflict with its obligations under this Agreement; and (jjj) to its knowledge, it has not, nor has any of its, officers, shareholders, managers, employees or agents (including Subcontractors), committed any act, made any statement or failed to make any statement that would reasonably be expected to provide a basis for the FDA to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991), or any other Regulatory Authority to invoke substantially similar policies, including under any applicable anti-bribery/anti-corruption laws, including the U.K. Anti-Bribery Act.
|
e)
|
Fujifilm represents and warrants to Sponsor that: (i) Fujifilm shall not deliver a Non-Conforming Batch; (ii) without limiting the preceding sentence, Fujifilm will not deliver a Batch which has been adulterated or misbranded by the Fujifilm Group or its Subcontractors within the meaning of Applicable Laws, and (iii) Product will be transferred to Sponsor free and clear of any security interests, lien or encumbrances; provided, however, that the warranties set forth in subsection (i) or (ii) shall not apply in the event Sponsor requests delivery of a Non-Conforming Batch or an adulterated or misbranded Batch.
|
f)
|
Sponsor hereby represents and warrants to Fujifilm that: (kkk) there is no claim, suit, proceeding, or other investigation pending, or to the actual knowledge of Sponsor, threatened against Sponsor, which is likely to prevent or interfere with Sponsor’s performance under this Agreement; (lll) it is under no contractual or other obligation or restriction that is inconsistent with its execution or performance of this Agreement or the rights granted to Fujifilm under this Agreement, and will not enter into any agreement, either written or oral, that would conflict with its obligations under this Agreement; and (mmm) to its knowledge, it has not, nor has any of its, officers, shareholders, managers, employees or agents, committed any act, made any statement or failed to make any statement that would reasonably be expected to provide a basis for the FDA to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities” set forth in 56 Fed. Reg. 46191 (September 10, 1991), or any other Regulatory Authority to invoke substantially similar policies, including under any applicable anti-bribery/anti-corruption laws, including the U.K. Anti-Bribery Act.
|
g)
|
Sponsor hereby represents and warrants to Fujifilm that it has legal title and/or a valid license to the Sponsor Deliverables necessary to conduct the Program in accordance with the applicable Scope and that to Sponsor’s knowledge, Fujifilm’s use of Sponsor’s Background Intellectual Property as contemplated under this Agreement will not violate or infringe on the patents, trademarks, trade names, trade secrets, service marks or copyrights of any other party.
|
a)
|
Term
. This Agreement shall take effect on the Effective Date and continue in effect for a period of ten (10) years or completion of all Programs, whichever is later. Each Scope shall take effect upon the date of its execution by both Parties and, unless earlier terminated as provided in this
Section 21
, continue until the completion of the Program under such Scope. A Program will be deemed completed when all Stages defined in the applicable Scope have been completed.
|
b)
|
Termination for Insolvency
. Either Party may immediately terminate this Agreement upon written notice to the other Party if: (nnn) the other Party is declared insolvent or bankrupt by a court of competent jurisdiction; (ooo) a voluntary petition in bankruptcy is filed in any court of competent jurisdiction by the other Party; or (ppp) this Agreement is assigned by the other Party for the benefit of creditors.
|
c)
|
Termination of a Program Due to Technical Issues
. Fujifilm may terminate a Program at any time by giving written notice to Sponsor at least [
***
] in advance of such termination, if Fujifilm reasonably believes that it will be unable to carry out and complete such Program in accordance with the Scope due to discovery of a factor (other than a Fujifilm Fault or Execution Factor) which:
|
(i)
|
Materially and adversely affects the development of the Process; or
|
(ii)
|
Materially and adversely affects, or is likely to materially and adversely affect, production of Product in the Facility; or
|
(iii)
|
Will have an adverse effect on another customer product license or manufacturing license as a result of the Product being introduced into the Facility,
|
d)
|
Termination by Sponsor for Convenience
. In addition to the termination rights otherwise set forth in this Agreement, Sponsor may at any time terminate: (qqq) the entire Agreement; (rrr) individual Program(s), in whole or in part; or (sss) individual Scope, in whole or in part, in each case, by giving [
***
] written notice to Fujifilm.
|
e)
|
Payment Due Upon Termination
.
|
(i)
|
Upon termination of a Scope under this Agreement by Sponsor pursuant to
Section 14(a)
(Fujifilm’s uncured default) or
Section 21(b)
(Fujifilm’s insolvency) or by Fujifilm pursuant to
Section 21(c)
(Technical Issues), Sponsor shall pay Fujifilm in accordance with
Section 5(f)
, the following amounts for the terminated Scope(s): [
***
].
|
(ii)
|
In the event Sponsor elects to terminate a Scope pursuant to
Section 21(d)
(for convenience) or in the event Fujifilm terminates pursuant to
Section 14(b)
(Sponsor’s uncured default) or
Section 21(b)
(Sponsor’s insolvency), then, unless otherwise set forth in the applicable Scope, Sponsor will pay Fujifilm the fees set forth below (with such payment made in accordance with
Section 5(f)
). [
***
].
|
(1)
|
all unpaid costs properly incurred or committed for Process Consumables [
***
]
|
(2)
|
with respect to any unbilled amounts set forth in the applicable Payment schedule of the terminated Scope, for all Stages other than Manufacturing Stages, on a Stage by Stage basis, [
***
]; plus
|
(3)
|
With respect to unbilled activities for Manufacturing Stages:
|
(a)
|
If the effective date of termination is on or before the date that is [
***
] prior to the scheduled commencement date for manufacturing activities, an amount equal to [
***
] of the unbilled activities for Manufacturing Stages (as amended to include any executed Change Orders); or
|
(b)
|
If the effective date of termination is after the date that is [
***
] prior to the scheduled commencement date for manufacturing activities but on or before the date that is [
***
] prior to same, an amount equal to [
***
] of the unbilled activities for Manufacturing Stages (as amended to include any executed Change Orders); or
|
(c)
|
If the effective date of termination is after the date that is [
***
] prior to the scheduled commencement date for manufacturing activities but on or before the date that is [
***
] prior to same, an amount equal to [
***
] of the unbilled activities for Manufacturing Stages (as amended to include any executed Change Orders); or
|
(d)
|
If the effective date of termination is after the date that is [
***
] prior to the scheduled commencement date for manufacturing activities, an amount equal to [
***
] of the unbilled activities for Manufacturing Stages (as amended to include any executed Change Orders).
|
a)
|
Fees for Cancellation of Individual Batches
. In the event of a Delay under
Section 19
for which this
Section 21(f)
is applicable, or in the event of a cancellation for reasons other than pursuant to
Section 7
,
Section 14
,
Section 18
, or
Section 21(b)
, of one (1) or more Batches, but not the entire Scope or a Program (for which
Section 21(e)
above shall apply), Sponsor shall pay Fujifilm, in accordance with
Section 5(e)
, the following amounts in respect to the cancelled Batch(es):
|
(i)
|
All amounts owed for work properly performed under pre-productions Stages but not yet invoiced; plus
|
(ii)
|
All unpaid costs properly incurred or committed for Process Consumables that are not used [
***
]; plus
|
(iii)
|
A cancellation fee calculated, unless otherwise set forth in the Scope, as follows:
|
(1)
|
If the effective date of cancellation is on or before the date that is [
***
] prior to the scheduled commencement date for manufacturing of the cancelled Batch(es), an amount equal to [
***
] of the unbilled cancelled activities under Manufacturing Stages (as amended to include any executed Change Orders); or
|
(1)
|
If the effective date of cancellation is after the date that is [
***
] prior to the scheduled commencement date for manufacturing activities but on or before the date that is four months prior to same, an amount equal to [
***
] of the unbilled cancelled activities to Process such Batch (excluding costs for any Process Consumables); or
|
(2)
|
If the effective date of cancellation is after the date that is [
***
] prior to the scheduled commencement date for manufacturing activities but on or before the date that is [
***
] prior to same, an amount equal to [
***
] of the unbilled cancelled activities to Process such Batch (excluding costs for any Process Consumables); or
|
(1)
|
If the effective date of cancellation is after the date that is [
***
] prior to the scheduled commencement date for manufacturing of the cancelled Batch(es), an amount equal to [
***
] of the cancelled activities to Process such Batch (excluding costs for any Process Consumables).
|
b)
|
For clarity, in the event Sponsor elects to terminate a Scope, individual Batch, or the Agreement, pursuant to
Section 21(d)
(for convenience) or in the event Fujifilm terminates pursuant to
Section 14(b)
(Sponsor’s uncured default) or
Section 21(b)
(Sponsor’s insolvency), then Fujifilm shall have no obligation to refund any pre-paid reservation fees.
|
c)
|
Effects of Termination
. The termination of this Agreement for any reason shall relieve neither Party of its obligation to the other for obligations in respect of:
(ttt)
confidentiality of information;
(uuu)
consents for advertising purposes and publications;
(vvv)
indemnification;
(www)
inventions and patents;
(xxx)
compensation for services performed; and
(yyy)
dispute resolution. Further, termination of this Agreement for any reason shall relieve neither Party of its protections under (x) disclaimer of warranty or (y) limitation of liability.
|
a)
|
Joint Steering Committee
. Upon execution of a Scope under this Agreement, Sponsor and Fujifilm shall establish a Joint Steering Committee (the “
Joint Steering Committee
” or “
JSC
”) comprised of an equal number of representatives of each Party, which will consist of Program Managers and other functional leaders from areas executing the Program with experience in the development, manufacturing, and commercialization of biologic products and be of the seniority and experience appropriate for participation therein, in light of the functions, responsibilities and
|
b)
|
Program Managers
. Each Party shall appoint one person to serve as a “
Program Manager
” under a Scope with responsibility for overseeing day to day program execution and being the primary point of contact between the Parties with respect to the Program.
|
c)
|
Replacement of Joint Steering Committee Representatives and Program Managers
. The Joint Steering Committee may adjust membership as the Program progresses through various Stages. Each Party shall be free to replace its representative members on the Joint Steering Committee or its Program Manager with new appointees who have authority to act on behalf of such Party, on written notice to the other Party.
|
d)
|
Responsibilities of Joint Steering Committee
. The Joint Steering Committee shall be responsible for overseeing and directing the Parties’ interaction and performance of their respective obligations under this Agreement. Without limiting the generality of the foregoing, its duties shall include:
|
(i)
|
monitoring the performance of a Program;
|
(ii)
|
resolving disagreements that arise under this Agreement; and
|
(iii)
|
determining the need for, and terms of, any Change Orders.
|
e)
|
Meetings
. The Joint Steering Committee shall meet at least once per calendar quarter or as more or less often as otherwise agreed to by the Parties. In addition, a Party may call a meeting of the JSC upon reasonable notice to the other Party where such meeting is reasonably necessary to monitor Programs and resolve issues arising hereunder and to perform its responsibilities under this Agreement. Such meetings may be in person or by telephone as agreed by the Joint Steering Committee. Each Party shall bear its own travel and lodging expenses related to participation in and attendance at such meetings by its JSC representatives. As required, the Joint Steering Committee meetings may include additional relevant function leaders from Sponsor and Fujifilm’s respective teams.
|
f)
|
Minutes
. Within [
***
] after each Joint Steering Committee meeting, a Program Manager shall prepare and distribute minutes of the meeting, which shall summarize in reasonable details the discussion points, actions, and decisions made by the Joint Steering Committee. Program Managers from Fujifilm and Sponsor shall alternate preparing meeting minutes, unless the JSC decides otherwise. Minutes shall be approved or disapproved and revised, as necessary, at the next meeting. Final minutes shall be distributed to the members of the Joint Steering Committee.
|
g)
|
Dispute Resolution
. Each Party’s representatives will collectively have one (1) vote. In the event that the Joint Steering Committee cannot reach agreement with respect to any material issue, then the issue shall be resolved in accordance with the dispute resolution provisions in
Section 15
.
|
h)
|
Limitations
. The Joint Steering Committee is not empowered to amend the terms of this Agreement (including any Scope or the Quality Agreement), cause a Party to make financial commitments or take on additional obligations over its objection, or to expand its scope of authority or to determine any issue before the JSC in a manner that would conflict with the express terms and conditions of this Agreement (including any Scope or the Quality Agreement).
|
a)
|
This instrument including the attached Appendices sets forth the entire agreement between the Parties hereto with respect to the performance of the Program by Fujifilm for Sponsor and as such, supersedes all prior and contemporaneous negotiations, agreements, representations, understandings, and commitments with respect thereto and shall take precedence over all terms, conditions and provisions on any purchase order form or form of order acknowledgment or other document purporting to address the same subject matter. In the event of a conflict between the body of this Agreement, the applicable Scope, and the Quality Agreement, the provisions of the Quality Agreement will govern with respect to quality obligations, and the body of this Agreement will control with respect to all other matters unless the Scope specifically acknowledges the conflict and expressly states the conflicting Scope provision controls. For clarity, this Agreement (i) shall supersede in its entirety, that certain General Contract Terms for Non-GMP Services, dated as of May 11, 2018, between Eleven Biotherapeutics, Inc. and FUJIFILM Diosynth Biotechnologies U.S.A., Inc., with all statements of work entered into thereunder (including Statement of Work #1 dated May 11, 2018 and Statement of Work #2 dated September 7, 2018) governed by this Agreement and superseding any conflicting language therein as if originally executed under this Agreement, to the extent not prohibited by law; and (ii) shall not affect the separate Master Services Agreement currently in place between Sponsor and FDBK, which shall remain in effect in accordance with its terms. This Agreement shall not be amended, changed, or modified in any manner except by an instrument signed by the duly authorized representatives of each of the Parties hereto, which instrument shall make specific reference to this Agreement and shall express the plan or intention to modify same.
|
b)
|
This Agreement has been prepared jointly and will not be strictly construed against either Party, and any ambiguities in this Agreement will not be construed against the other Party, irrespective of which Party may be deemed to have authored the ambiguous provision. The headings of each section have been inserted for convenience of reference only and are not intended to limit or expand the meaning of the language contained in any particular section. References to “days” shall mean calendar days unless otherwise specified as a “business day”. The words “include” or “including” will be construed to mean “including without limitation”, and the word “will” will be construed to have the same meaning as the word “shall.”
|
c)
|
This Agreement may be executed in one or more counterparts, and delivered by electronic means, including by pdf and/or facsimile, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
|
SUBSIDIARY
|
|
JURISDICTION OF INCORPORATION
|
Viventia Bio Inc.
|
|
Province of Ontario, Canada
|
Viventia Bio USA Inc.
|
|
Province of Ontario, Canada
|
Viventia Biotech (EU) Limited
|
|
United Kingdom
|
(1)
|
Registration Statement (Form S-8 No. 333-195170) pertaining to the Eleven Biotherapeutics, Inc. Amended and Restated 2009 Stock Incentive Plan, 2014 Stock Incentive Plan and 2014 Employee Stock Purchase Plan,
|
(2)
|
Registration Statement (Post-Effective Amendment No. 1 to Form S-1 on Form S-3 No. 333-201176) of Eleven Biotherapeutics, Inc.,
|
(3)
|
Registration Statement (Form S-8 No. 333-202677) pertaining to the Eleven Biotherapeutics, Inc. 2014 Stock Incentive Plan,
|
(4)
|
Registration Statement (Form S-8 No. 333-210523) pertaining to the Eleven Biotherapeutics, Inc. 2014 Stock Incentive Plan,
|
(5)
|
Registration Statement (Form S-8 No. 333-217686) pertaining to the Eleven Biotherapeutics, Inc. 2014 Stock Incentive Plan,
|
(6)
|
Registration Statement (Form S-8 No. 333-217687) pertaining to the Eleven Biotherapeutics, Inc. Inducement Stock Option Awards,
|
(7)
|
Registration Statement (Amendment No. 3 to Form S-1 No. 333-220809) of Eleven Biotherapeutics, Inc.,
|
(8)
|
Registration Statement (Form S-3 No. 333-224682) of Eleven Biotherapeutics, Inc.,
|
(9)
|
Registration Statement (Pre-Effective Amendment No. 1 to Form S-3 No. 333-223750) of Eleven Biotherapeutics, Inc., and
|
(10)
|
Registration Statement (Post-Effective Amendment No. 1 to Form S-8 No. 333-224959) pertaining to the Sesen Bio, Inc. 2014 Stock Incentive Plan (formerly known as Eleven Bio, Inc. 2014 Stock Incentive Plan);
|
1.
|
I have reviewed this Annual Report on Form 10-K of Sesen Bio, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Thomas R. Cannell
|
Thomas R. Cannell
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Sesen Bio, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Richard F. Fitzgerald
|
Richard F. Fitzgerald
|
Chief Financial Officer
|
(Principal Financial Officer)
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Thomas R. Cannell
|
Thomas R. Cannell
|
President and Chief Executive Officer
|
(Principal Executive Officer)
|
/s/ Richard F. Fitzgerald
|
Richard F. Fitzgerald
|
Chief Financial Officer
|
(Principal Financial Officer)
|