8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 7, 2005

FAVRILLE, INC.

(Exact Name of Registrant as Specified in Charter)

DELAWARE	000-51134	33-0892797
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
	10421 PACIFIC CENTER COURT, SUITE 150 SAN DIEGO, CALIFORNIA	92121
	(Address of Principal Executive Offices)	(Zip Code)
(858) 526-8000
(Registrants telephone number, including area code)
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.13e-4(c))

Item 1.01.   Entry into a Material Definitive Agreement.

On November 4, 2005, Favrille, Inc. (“Favrille” or the “Company”) entered into an amended lease agreement (the “Lease Agreement”) with its landlord, Kilroy Realty Corporation, to expand its existing facility to support commercial-scale manufacturing of FavId^®.  This 80,000-square foot facility (the “Existing Facility”) will be devoted to manufacturing and is intended to give Favrille the capacity to produce FavId to meet commercial needs while continuing to support additional clinical trials.  In addition, the Company has committed to lease an adjacent 48,000-square foot facility (the “New Facility”) to house Favrille’s corporate headquarters and research and warehousing operations.

The current estimated cost of the expansion for both the Existing Facility and the New Facility, including equipment, is $24 million, of which up to an aggregate of $11.2 million for both facilities will be provided by the landlord in the form of a tenant improvement allowance.  The Company expects to finance the additional capital expenditures of approximately $13 million through debt financing.

Existing Facility.  Under the Lease Agreement, monthly base rent for the Existing Facility will increase from the amounts set forth in the original lease agreement to $3.60 per square foot commencing in February 2007, which will increase by 3.5% annually commencing in February 2008.  The Lease Agreement further requires Favrille to increase the security deposit provided to the landlord from $152,518 to approximately $355,000 and to deliver to the landlord an amendment to the existing letter of credit to increase the amount from approximately $1.5 million to approximately $3.5 million, which amount will be subject to increases, reductions and reinstatements under specified circumstances.  The landlord will provide tenant with a tenant improvement allowance of $10 million for the Existing Facility.  Favrille is responsible for all operating costs and real estate taxes incurred with respect to the Existing Facility and is required to maintain insurance at specified minimum levels during the term of the Lease Agreement.  In addition, Favrille is obligated to pay the landlord monthly management fees equal to 2.25% of the applicable base rent during the term of the Lease Agreement and an additional fee equal to 1% of the construction costs incurred in connection with tenant improvements.  Unless earlier terminated, the Lease Agreement will expire June 30, 2025, but the Company has the option to extend the term of the Lease Agreement for two additional five-year periods.

New Facility.  Upon termination of an existing lease between the landlord and a third party with respect to the New Facility, Favrille and the landlord will execute an amendment to the Lease Agreement (the “Amendment”) pursuant to which Favrille would lease the New Facility.  The landlord has agreed to use commercially reasonable efforts to terminate the third party lease and deliver the New Facility to the Company by March 1, 2006.  If the landlord is unable to negotiate such early termination, then the third party lease will expire on November 30, 2006 and the landlord has agreed to deliver the New Facility to the Company at that time.    The Amendment (the form of which has been agreed to by the parties and is an exhibit to the Lease Agreement) would provide for Favrille’s lease of the New Facility to commence on the earlier of the 91^st day after the landlord tenders possession of the New Facility to Favrille for purposes of making tenant improvements (but in no event earlier than February 28, 2006) or March 1, 2007.  The base rent for the New Facility would initially be $1.40 per square foot and would increase by

2

3.5% annually commencing on the first anniversary of the commencement of the lease for the New Facility.  However, during the first 12 months of the lease, the Company would be obligated to pay only 50% of the base rent and operating expenses.  The landlord will provide tenant with a tenant improvement allowance of $1.2 million for the New Facility.  The provisions of the Lease Agreement regarding operating costs, real estate taxes, insurance, monthly management fees and tenant improvement fees for the Existing Facility would also apply to the New Facility.  Unless earlier terminated, Favrille’s lease of the New Facility would expire on June 30, 2025.  Favrille would have a one-time right to terminate its lease of the New Facility effective as of June 1, 2017, upon six months’ prior notice to the landlord.

The foregoing is a summary description of the terms and conditions of the Lease Agreement and by its nature is incomplete. It is qualified in the entirety by the text of the Lease Agreement, a copy of which will be filed with the Securities and Exchange Commission as an exhibit to Favrille’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

Item 2.03.   Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

See the information set forth under Item 1.01 above.  Favrille plans to initiate the expansion build-out of the Existing Facility and the New Facility in mid-2006.

Item 7.01.   Regulation FD Disclosure.

On November 7, 2005, Favrille issued a press release announcing the signing of the Lease Agreement.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01.  Financial Statements and Exhibits.

(c)       Exhibits

Exhibit No.	Description
99.1	Press Release dated November 7, 2005.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FAVRILLE, INC.
	By:	/s/ Tamara A. Seymour
Date: November 7, 2005		Tamara A. Seymour
		Chief Financial Officer

4

INDEX TO EXHIBITS

99.1         Press Release dated November 7, 2005.

5

EX-99.1

EXHIBIT 99.1

Company Contacts:
Tamara A. Seymour	Pete De Spain
CFO and Vice President,	Associate Director,
Finance & Administration	Investor Relations & Corporate Communications
Favrille, Inc.	Favrille, Inc.
(858) 526-8035	(858) 526-2426
tseymour@favrille.com	pdespain@favrille.com

Favrille to Expand Existing Facility to Support Commercial Manufacturing of FavId

San Diego – Nov. 7, 2005 – Favrille, Inc. (Nasdaq: FVRL) today announced that it has signed an  amended lease agreement to expand its existing facility to support commercial-scale manufacturing of FavId^®, the Company’s lead product candidate currently in a Phase 3 clinical trial for the treatment of follicular B-cell non-Hodgkin’s lymphoma (NHL).  This 80,000-square foot facility will be devoted to manufacturing and is intended to give Favrille the capacity to produce FavId to meet commercial needs while continuing to support additional clinical trials.  In addition, the Company has committed to lease an adjacent 48,000-square foot facility to house Favrille’s corporate headquarters and research and warehousing operations.

“We anticipate that the capacity of our expanded facility will be sufficient to supply FavId for up to 4,000 patients per year,” said John P. Longenecker, Ph.D., President and Chief Executive Officer of Favrille. “This expansion represents a significant milestone in our transition from a clinical development company to a commercial franchise. We expect to finance our facility expansion through landlord improvement allowances and traditional debt without the need to use equity to finance this project.”

The current estimated cost of the expansion for both facilities, including equipment, is $24 million, of which up to an aggregate of $11.2 million will be provided by the landlord in the form of a tenant improvement allowance.  The Company expects to finance the additional capital expenditures of approximately $13 million through debt financing.  Commencing in February 2007, lease expenses for the existing facility will increase from the amounts set forth in the original lease agreement.  The lease expenses for the headquarters facility will be phased in during 2006 and 2007.  In mid-2006, the existing letter of credit between Favrille and the landlord will be increased by approximately $2 million.  Unless earlier terminated, the lease will expire on June 30, 2025.

Favrille continues to manufacture FavId in its existing facility to support its ongoing Phase 3 clinical trial. The Company expects to complete patient enrollment in this pivotal Phase 3 trial by year-end or soon thereafter.

About Favrille, Inc.

Favrille, Inc. is a biopharmaceutical company focused on the research, development and commercialization of targeted immunotherapies for the treatment of cancer and diseases of the immune system. The Company’s lead product candidate, FavId, is based upon unique genetic information extracted from a patient’s tumor. FavId is currently under investigation in a pivotal Phase 3 clinical trial for patients with follicular B-cell NHL and Phase 2 clinical trials in other B-cell NHL indications. The Company is developing additional applications based on its immunotherapy expertise and proprietary manufacturing technology, including a second product candidate, FAV-201, for the treatment of T-cell lymphoma.

# # #

Statements in this press release that are not strictly historical in nature constitute “forward-looking statements.” Such statements include, but are not limited to, references to the manufacturing capacity of the expanded facility, the expected cost of the facility expansion and financing of such costs, the extension of the amended lease agreement to include the Company’s proposed new headquarters facility, and Favrille’s product candidates, proprietary technologies and research programs.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Favrille’s actual results to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors include, but are not limited to, risks and uncertainties related to the Company’s ability to obtain debt financing for the facility expansion in sufficient amounts and on acceptable terms, if at all; the ability of the expanded facility to supply FavId for up to 4,000 patients per year; progress and timing of clinical trials for FavId, including potential delays in patient enrollment; difficulties or delays in development, testing, manufacturing and marketing FavId or Favrille’s other product candidates; Favrille’s ability to obtain marketing approval for FavId or Favrille’s other product candidates and the timing of any such approvals; risks associated with achieving projected operating metrics and financial performance or the anticipated number of patients using FavId; Favrille’s ability to obtain additional financing to support its operations; and additional risks discussed in Favrille’s filings with the Securities and Exchange Commission. In addition, conclusions regarding the safety and efficacy of Favrille’s product candidates cannot be made until the results of future clinical trials of longer duration in more patients are known. All forward-looking statements are qualified in their entirety by this cautionary statement. Favrille is providing this information as of the date of this release and, except as required by law, does not undertake any obligation to update any forward-looking statements contained in this release as a result of new information, future events or otherwise.