-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, L3xZaj0UCbaR87eB6OFgOPx3uBgUTOIS10XBohf6safByrVR2Ah+QW1yjDSY7prs la88FpFtYrEY4q68ay0R+Q== 0000873591-98-000029.txt : 19980331 0000873591-98-000029.hdr.sgml : 19980331 ACCESSION NUMBER: 0000873591-98-000029 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980327 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIMMUNE INC /DE CENTRAL INDEX KEY: 0000873591 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 521555759 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-19131 FILM NUMBER: 98577105 BUSINESS ADDRESS: STREET 1: 35 W WATKINS MILL RD CITY: GAITHERSBURG STATE: MD ZIP: 20878 BUSINESS PHONE: 3014170770 MAIL ADDRESS: STREET 1: 35 W WATKINS MILL ROAD CITY: GAITHERSBURG STATE: MD ZIP: 20878 10-K 1 SECURITIES AND EXCHANGE COMMISSION 2/17/98 WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1997 Commission File Number: 0-19131 MEDIMMUNE, INC. (Exact name of registrant as specified in its charter) Delaware 52-1555759 State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) 35 West Watkins Mill Road Gaithersburg, Maryland 20878 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code: (301) 417-0770 Securities Registered pursuant to Section 12(b) of the Act: None Securities Registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: X No: Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]. Aggregate market value of the 25,914,575 shares of voting stock held by non- affiliates of the registrant based on the closing price on February 28, 1998 was $1,344,318,578 . Common Stock outstanding as of February 28, 1998: 26,325,172 shares. Documents Incorporated by Reference: Document Part of Form 10-K Proxy Statement for the Annual Meeting Part III of Stockholders to be held May 15, 1998. MEDIMMUNE, INC. FORM 10-K TABLE OF CONTENTS PART I PAGE Item 1. Business 1 Item 2. Properties 34 Item 3. Legal Proceedings 35 Item 4. Submission of Matters to a Vote of Security Holders 35 PART II Item 5. Market for MedImmune, Inc.'s Common Stock and Related Shareholder Matters 35 Item 6. Selected Financial Data 36 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 36 Item 8. Financial Statements and Supplementary Data 47 Report of Independent Accountants 79 Report of Management 81 Item 9. Changes in and Disagreements with Accountants on Accounting Financial Disclosure 82 PART III Item 10. Directors and Executive Officers of MedImmune, Inc. 82 Item 11. Executive Compensation 83 Item 12. Security Ownership of Certain Beneficial Owners and Management 83 Item 13. Certain Relationships and Related Transactions 83 PART IV ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K 84 SIGNATURES 86 Schedule I S-1 Exhibit Index E1-E6 Exhibits (Attached to this Report on Form 10-K) CytoGam and RespiGam are registered trademarks and Synagis is a trademark of the Company. ____________________ THE STATEMENTS IN THIS ANNUAL REPORT THAT ARE NOT DESCRIPTIONS OF HISTORICAL FACTS MAY BE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON CERTAIN ASSUMPTIONS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING, BUT NOT LIMITED TO, REGULATORY APPROVAL TIMING, PRODUCT DEMAND AND MARKET ACCEPTANCE RISKS, PATENT AND INTELLECTUAL PROPERTY RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT, AND RELIANCE ON THIRD-PARTY MANUFACTURERS INCLUDING BUT NOT LIMITED TO CAPACITY AND SUPPLY CONSTRAINTS, PRODUCTIONS YIELDS, REGULATORY APPROVAL TIMING AND FOREIGN EXCHANGE RISKS, AS WELL AS OTHER RISKS DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AS A RESULT OF THE FOREGOING OR OTHER FACTORS. ____________________ PART I Item 1. Business MedImmune ("the Company") is a biotechnology company focused on developing and marketing products for the prevention and treatment of infectious disease and for use in transplantation medicine. Since commencing operations in 1988, the Company has pursued a strategy of establishing an initial commercial base using proven technologies and targeting well-understood diseases to support longer-term product development. The Company is currently marketing two products, CytoGam (Cytomegalovirus Immune Globulin Intravenous (Human), CMV-IGIV) and RespiGam (Respiratory Syncytial Virus Immune Globulin Intravenous (Human), RSV-IGIV). The Company has filed a Biologic License Application ("BLA") requesting marketing clearance in the United States for a third product, Synagis (palivizumab, formerly known as MEDI-493). Additionally, the Company has five products undergoing clinical trials and a number of product candidates and technologies in the pipeline. Products on the Market. RespiGam RespiGam was cleared by the United States Food and Drug Administration ("FDA") for marketing in the United States in January 1996. RespiGam is indicated for the prevention of serious respiratory syncytial virus ("RSV") disease in children under 24 months of age with a chronic lung condition called bronchopulmonary dysplasia ("BPD") or a history of premature birth (i.e., born at 35 weeks or less gestation). RespiGam is the only product demonstrated to be safe and effective in reducing the incidence and duration of RSV hospitalization and the severity of RSV illness in these high risk infants. RespiGam is an intravenous specialty immune globulin purified from donor plasma screened for high levels of neutralizing antibodies against RSV. RSV is the leading cause of pneumonia and bronchiolitis in children and results in an estimated 90,000 hospitalizations and 4,500 deaths annually in the United States. RSV outbreaks occur worldwide, usually during the late fall, winter and early spring in the Northern Hemisphere. Certain populations of infants, children and adults are at increased risk for developing severe RSV disease. Of the more than 300,000 infants at risk, there are approximately 100,000 at extreme risk who are the most common end-users of RespiGam. These include severely premature infants (i.e., less than or equal to 32 weeks gestation) and infants with BPD. The Company directly markets RespiGam to the leading 420 neonatal and pediatric hospitals in the United States. These hospitals comprise approximately 70% of the total potential business for RespiGam. The Company received marketing clearance for RespiGam in Canada during 1997., however as of December 31 the Canadian Blood Agency has not yet notified the Company as to whether RespiGam will be reimbursed by the agency. During 1997, RespiGam sales were $45.0 million. The majority of these sales occurred in fourth quarter 1997 because of inherent seasonality of demand. Sales in 1997 were limited by supply. The Company is aware of one potential direct competitor to RespiGam, the Company's own product candidate, Synagis. Sales of Synagis, if and when cleared for marketing by the FDA, would largely replace RespiGam sales. Consequently, if and when Synagis is cleared for marketing, the Company may be compelled to record a reserve against RespiGam inventory. The magnitude of this inventory reserve, if any, would be determined by a number of factors, including but not limited to, the anticipated timing of Synagis marketing clearance, the extent of RespiGam inventory on hand at that time, the assessed market potential of Synagis and the assessed market potential of RespiGam. CytoGam CytoGam is an intravenous specialty immune globulin product enriched in antibodies against CMV and is marketed for the attenuation of primary cytomegalovirus ("CMV") disease associated with kidney transplantation. Approximately 75% of untreated donor-positive/recipient-negative kidney transplant recipients are expected to develop CMV disease. Infection of a transplant recipient with CMV by a donor organ is associated with increased mortality and substantial morbidity including pneumonia, hepatitis, opportunistic infections and possibly graft rejection. CytoGam has been shown to reduce the incidence of severe CMV disease and opportunistic infections associated with kidney transplantation. CytoGam was cleared for marketing by the FDA in 1991 and was initially sold through an exclusive distribution agreement with Connaught Laboratories. The Company began marketing CytoGam through its own hospital-based sales force in 1993. Sales of CytoGam have grown at a compounded annual rate of approximately 25% since 1993 to $20.3 million in 1997. The Company continues to expand the opportunities for CytoGam outside the United States. During 1997, the Company received marketing clearance for CytoGam in Canada, Mexico and Poland and product was sold by distributors in Turkey, the Czech Republic, Poland and Canada and on a named-patient basis in Japan, Australia, Trinidad and Bolivia. The Company expects to submit over the next 12 to 18 months new applications requesting marketing clearance in certain European, Latin American and Middle Eastern countries. The Company's orphan drug status expired in 1997 and there can be no assurance that additional CMV intravenous specialty immune globulin products will not be successfully commercialized by other companies. The Company is aware of one other CMV immune globulin in development by NABI, Inc. Products In Development Synagis Synagis (palivizumab; formerly known as MEDI-493) is a humanized monoclonal antibody which has been evaluated by the Company in a number of clinical trials and currently is being reviewed by the FDA for the prevention of serious RSV disease in certain high-risk infants (for description of RSV disease, see "RespiGam" above). Synagis is administered by intramuscular injection, while RespiGam is administered by the more complex and time- consuming process of intravenous infusion. Consequently, the Company believes that Synagis has the potential to enhance patient care, reduce costs associated with drug administration and improve convenience for parents, physicians and nurses, as compared with RespiGam. Taken together, the Company believes these benefits may provide the potential for Synagis to reach a broader population of children than RespiGam. While RespiGam is primarily a hospital-based drug, the Company believes a significant portion of expanded Synagis use will occur in pediatricians' offices. During 1997, the Company announced the preliminary results of a double-blind placebo-controlled Phase 3 clinical trial ("IMpact-RSV") conducted at 139 medical centers in 1,502 high-risk infants and children in the United States, Canada and the United Kingdom. Initial analysis of these results suggested that Synagis reduced the incidence of RSV-associated hospitalizations by 55 percent (p=0.00004; Fisher's exact test). The study included infants and children who were either less than six months of age with a history of prematurity (i.e., less than or equal to 35 weeks gestation) or less than twenty-four months of age with BPD. Patients received a dose of either 15 mg/kg of Synagis (n = 1002) or placebo (n = 500) by intramuscular injection each month for up to five doses during the RSV season, November 1996 through April 1997. Patients were followed for one month after their last dose for safety and efficacy endpoints. Analyses were conducted using the all- randomized patient population. In the Company's preliminary analysis, certain of the secondary endpoints also reached statistical significance, including RSV hospital days, RSV ICU admissions and RSV hospital days with increased supplemental oxygen. The profile of adverse events and serious adverse events was similar between the Synagis and placebo groups. Likewise, fatalities were balanced between the treatment and placebo groups (0.4 percent (4/1002) in the group that received Synagis and 1.0 percent (5/500) in the group that received placebo). The fatality rates observed were consistent with those expected in these children as a result of their severe underlying disease, and none of the fatalities was attributed by the investigators to Synagis. Based on these results and earlier pre-clinical and clinical studies, the Company submitted in fourth quarter 1997 a BLA to the FDA requesting marketing clearance of Synagis. This application was submitted with required product manufacturing data from the Company's Gaithersburg, Maryland pilot plant. The pilot plant is subject to FDA inspection and approval. The Company cannot market Synagis in the United States unless and until licensed to do so by the FDA. There can be no assurance that the FDA will grant such clearance. During fourth quarter 1997, the Company executed strategic agreements with Abbott Laboratories ("Abbott") and Boehringer Ingelheim Pharma KG ("BI"), related to the potential commercialization of Synagis. In December, the Company and Abbott formed an exclusive worldwide marketing alliance consisting of two separate agreements: a distribution agreement outside the United States and a threshold-based co-promotion agreement within the United States. Abbott is a global, diversified health care company with $11 billion in sales in 130 countries and a strong presence in pediatrics. Outside the United States, Abbott's international division will have the exclusive right to market and distribute Synagis if and when cleared for marketing by regulatory authorities. The Company and Abbott expect to submit regulatory applications to Canadian and European authorities during 1998. Under terms of the agreement, MedImmune received a $15 million payment in December 1997, would receive an additional $30 million if and when Synagis receives United States and European marketing approvals and would receive an additional $15 million upon the achievement of certain sales levels by Abbott. For sales outside the United States, MedImmune would manufacture and sell Synagis to Abbott at a price based on end-user sales. Within the United States, Abbott's Ross Products division will co-promote Synagis with the Company. The Company will be credited with all U.S. sales and Abbott will receive a commission on sales above pre-determined thresholds. Each company is responsible for its own selling expenses. Additionally in December, the Company and BI, a world-leading manufacturer of biopharmaceutical products for therapeutic use, signed an agreement to supplement MedImmune's own production capacity for Synagis. During 1998, the Company and BI expect to file a supplement to the Company's BLA for additional manufacturing capacity utilizing the BI facility in Biberach, Germany. Product manufactured at the BI facility will be required to launch Synagis, if it is approved by regulatory authorities. While the Company believes it has established a comprehensive development program for Synagis and an extensive commercialization plan if cleared for marketing, substantial risk remains: 1) no assurances can be given that the FDA will grant Synagis marketing clearance based on the data supplied, 2) no assurances can be given that such marketing clearance, if forthcoming, would be granted in a timely manner, 3) no assurances can be given that BI will successfully be able to manufacture Synagis with adequate production yields, appropriate timeliness and lasting economic feasibility, 4) no assurances can be given that the Company's pilot plant will be licensed by the FDA for the manufacture of Synagis in a timely manner, 5) no assurances can be given that the quantity of such product, if successfully manufactured, would be appropriately matched to its demand if and when cleared for marketing, and 6) no assurances can be given that Synagis, if cleared for marketing, would be successfully sold in the markets targeted by the Company and Abbott. Human Papillomavirus Vaccine Human papillomaviruses ("HPVs") are responsible for the development of genital warts and cervical cancer. There are currently no vaccines to prevent these common sexually transmitted diseases that affect 24 to 40 million men and women in the United States. There are over 75 different types of HPV associated with a variety of clinical disorders ranging from benign lesions to potentially lethal cancers. Four types of HPV cause the majority of genital warts and cervical cancer cases: HPV-6, HPV-11, HPV-16 and HPV-18. The Company's first three HPV vaccine candidates, MEDI-501 (HPV-11), MEDI-503 (HPV-16) and MEDI-504 (HPV-18), each are composed of the HPV L1 capsid protein which self assembles into virus-like particles (VLPs). The VLPs, which are produced in vitro using recombinant DNA technology, imitate the structure of natural papillomavirus, but are not infectious. When presented to the immune system, VLPs may be able to elicit a similar immune response to that seen with naturally occurring HPV. Scientists at the Company in collaboration with a team at Georgetown University first demonstrated the effectiveness of a VLP vaccine candidate using a dog model for papillomavirus infection. These data, first published in "The Proceedings of the National Academy of Sciences" in December 1995, provided the scientific rationale for developing an analogous vaccine for humans. The Company began a Phase 1 clinical trial with MEDI-501 in January 1997 to evaluate its safety, tolerance, and immunogenicity. Initial data from the trial suggested that MEDI-501 was safe and immunogenic. The Company also expects to file Investigational New Drug (IND) applications during 1998 to request clearance to begin clinical trials with MEDI-504 and MEDI-503. The Company believes two or more HPV types would be necessary for a vaccine capable of broadly preventing HPV disease of the genital tract. In December 1997, the Company announced a strategic alliance with SmithKline Beecham ("SB") to develop and commercialize the Company's HPV vaccines. Under terms of the agreement, SB receives exclusive worldwide rights to the Company's HPV vaccine technology and both companies will collaborate on research and development activities. In January 1998, the Company received an up-front payment of $15 million and an equity investment of $5.0 million. Pursuant to the agreement, the Company will also receive research funding beginning in 1998, potential developmental and sales milestones, as well as royalties on any product sales. Total funding and payments to the Company could total over $85 million. Under terms of the agreement, the Company will conduct Phase 1 and Phase 2 clinical trials, manufacture clinical material for those studies and receive funding from SB for these activities. SB is responsible for the final development of the product, as well as regulatory, manufacturing, and marketing activities. MEDI-507 MEDI-507 is a humanized monoclonal antibody being developed by the Company in collaboration with BioTransplant, Incorporated. The companies believe this molecule has unique properties which may make it useful in one or more applications where modulating an immune response may be desirable. These applications may include treatment of graft-versus-host disease("GvHD"), prevention of organ transplant rejection or in treating autoimmune diseases such as psoriasis. MEDI-507 was derived from a rat monoclonal antibody called BTI-322. Both MEDI-507 and BTI-322 bind specifically to the CD2 antigen receptor found on T cells and natural killer (NK) cells. Laboratory studies have suggested that BTI-322 and MEDI-507 primarily inhibit the response of T cells directed at transplant antigens while subsequently allowing immune cells to respond normally to other antigens. The selectivity and long lasting effects of this inhibition suggest that these molecules may have potential utility in applications such as transplantation and autoimmune diseases. During 1997, the companies began the first human MEDI-507 clinical trial, a Phase 1 open-label, dose-escalating, transplantation induction trial to evaluate the safety and tolerance of MEDI-507 in patients receiving kidney transplants. Also during late 1997, the Company submitted to the FDA two INDs requesting clearance to begin a Phase 1/2 study evaluating MEDI-507 in GvHD and to begin a Phase 1 study in psoriasis patients. BTI-322 has been evaluated in over 60 patients in the United States and Europe for its potential to prevent and treat organ graft rejection and GvHD. BTI-322 was evaluated in a multi-center Phase 2 trial for treatment of acute GvHD. Initial analysis of data from this trial suggested that BTI-322 was well-tolerated. The average grade of GvHD improved during treatment with BTI- 322 (p=0.0005), however many patients relapsed after treatment was stopped. In addition, preliminary analyses of data from two Phase 1/2 clinical studies were presented in August 1996 at the XVI International Congress of the Transplantation Society in Barcelona, Spain. BTI-322 in these studies also appeared well-tolerated and showed initial promise in preventing and treating kidney transplant rejection. A Phase 1/2 clinical trial evaluating BTI-322 in the treatment of acute kidney rejection is underway at the Massachusetts General Hospital under an IND application submitted to the FDA by BioTransplant. In initial studies, both MEDI-507 and BTI-322 appear to possess similar biological properties. The companies expect to replace development of BTI-322 with that of MEDI- 507 because of the potentially improved immunogenicity of a humanized antibody such as MEDI-507 compared with a murine antibody such as BTI-322. There are approximately 19,000 solid organ transplants and 11,000 bone marrow transplantation procedures annually in the United States. Despite significant improvements in the transplantation arena, life-threatening complications such as GvHD and organ rejection remain serious medical problems. GvHD is the most common complication of bone marrow or stem cell transplantation. Approximately 50 percent of bone marrow transplants result in GvHD which occurs when immune cells of the foreign graft, i.e., the donor bone marrow, initiate an inflammatory reaction against the tissues of the recipient. Typically, the disease is treated with steroids although approximately 50 percent of patients fail to respond to steroid therapy. Patients who develop moderate or severe GvHD have over a 70 percent chance of death despite diverse treatments. Lack of understanding of the physiologic mechanism of disease has been a major impediment to the development of more effective treatments. Both T cells and natural killer (NK) cells may play a role in development of GvHD. MEDI-507 which specifically inhibits both types of cells may provide certain advantages over current therapies. The Company is aware of a number of companies developing products to prevent and treat GvHD. Autoimmune diseases are of major medical importance worldwide and include common afflictions like rheumatoid arthritis, multiple sclerosis, Crohn's disease and psoriasis. The Company is aware of a number of companies developing products to treat psoriasis and other autoimmune diseases. Lyme Disease Vaccine Lyme disease is the most common insect-borne disease in the United States. Virtually every state within the United States has reported cases of Lyme disease, with an annual nationwide reported incidence of 16,455 new cases in 1996, a 41 percent increase over 1995. Lyme disease is also reported in Europe, Japan, China, Russia and Australia. The disease is caused by a bacterium know as Borrelia burgdorferi ("B. burgdorferi") and is transmitted through a tick, Ixodes scapularis, which is most commonly found on the white- footed mouse or deer. The Company is developing a B. burgdorferi protein called decorin binding protein ("DbpA") which initial animal studies suggest may provide protection against B. burgdorferi infection. Unlike antibodies to vaccines in development by other companies, DbpA antibodies can be given to mice four days after infections and still clear the bacterium from animals. This may allow a significantly greater window of opportunity for a protective immune response to clear infection. The Company believes that DbpA is the only protein identified form B. burgdorferi to date for which this effect has been demonstrated. In addition, antibodies from animals immunized with DbpA inhibited growth of many strains of the Lyme disease-causing bacteria not inhibited by antibodies to another vaccine candidate in development by the Company, including some species of Lyme bacteria commonly found outside the United States. These results suggest that DbpA may provide an improved Lyme disease vaccine candidate or, alternately, a supplement to the vaccine candidates currently in development. The Company is aware of two companies, SmithKline Beecham and Pasteur Merieux Connaught, that have submitted BLAs to the FDA for Lyme disease vaccines based on a protein known as OspA. The Company is also aware of at least one other company developing a Lyme disease vaccine based on a protein known as OspC. The Company believes that given the clinical success of OspA, it is likely that DbpA would need to be combined with OspA to result in a vaccine that is acceptable to the marketplace. Urinary Tract Infection Vaccine UTIs are a significant medical problem and one of the most common disorders prompting medical attention in otherwise healthy women and children. UTIs, caused by the bacterium Escherichia coli (E. coli), result in 7-8 million physician and hospital visits per year at a cost of greater than $1 billion. It is estimated that by age 30, roughly 50 percent of women have had at least one infection and 2-10 percent are affected by recurrent infections. Females are generally more prone to UTIs simply because of their anatomy. Recent studies have shown that, on average, women who are 18-40 years old get 1-2 infections over a two year period. Older adults are also at risk with the incidence as high as 33 out of 100 people. Currently, there are no vaccines to prevent UTIs. Most infections can be treated with antibiotics, however, recurrence is common and emerging antibiotic resistant bacteria create an additional threat. Earlier attempts to use pili, the hair-like protein appendages on the surface of bacteria, as vaccine targets were not successful in protecting against a broad range of pathogenic bacteria, including E. coli, because of the variation in the major component of the pili. The identification of specific proteins, or "adhesins", at the end of pili which facilitate the attachment of E. coli to human tissue, provided a novel target for vaccine development. The Company's vaccine strategy is based on blocking these adhesins, preventing the disease- causing bacteria from binding and accumulating in the bladder. The novel target of the Company's vaccine candidate is the FimH adhesin. FimH does not vary widely among the different strains of E. coli which cause UTIs. The Company believes this is a requisite quality for development of a broadly effective UTI vaccine. During 1997, the Company published in the journal "Science" the results of experiments which suggested that a FimH-based vaccine was able to prevent UTIs in mice. In these studies, mice vaccinated with the Company's FimH vaccine showed a greater than 99 percent reduction of bladder bacteria compared to control animals. The effect persisted for 29 weeks, the entire length of the study. Additionally, FimH antibodies were able to block the ability of a broad range (94 percent) of E. coli strains to bind to bladder cells in vitro. The Company and its collaborators are currently conducting animal and primate vaccination studies and designing clinical production and purification protocols for its first UTI vaccine candidate. Adhesin-based vaccines may also be an effective strategy for other diseases caused by bacteria. Streptococcus pneumoniae Vaccine Streptococcus pneumoniae is a major cause of pneumonia, middle-ear infections and meningitis worldwide, especially in the very young or elderly. Pneumonia causes more than one million deaths per year and is the most common cause of childhood death in developing countries. In industrialized countries, pneumococcal pneumonia is a serious problem among the elderly. Middle-ear infections affect almost every child at least once during the first two years of life. Vaccination against pneumococcal infections has become more urgent in recent years due to the emergence of antibiotic-resistant strains throughout the world. The Company has established a research collaboration with St. Jude Children's Research Hospital("St. Jude") to develop products for the prevention and treatment of Streptococcus pneumoniae infection. The Company has been granted a worldwide exclusive license from the Rockefeller University to commercialize product candidates developed from a novel set of genes discovered by scientists at St. Jude, formerly at Rockefeller University. In addition, research efforts are underway by scientists at the Company and St. Jude to identify novel conserved surface proteins for potential vaccine applications. During 1998, promising candidate proteins are expected to be characterized further in a number of in vitro and in vivo models to determine their potential as vaccine candidates. MEDI-491, B19 Parvovirus Vaccine Discovered in 1975, B19 parvovirus has been linked to a number of serious conditions including certain types of miscarriages in pregnant women, life- threatening sudden reduction of red blood cells in sickle cell anemia patients, chronic anemia in AIDS and chemotherapy patients, and persistent arthritis in some adults. MEDI-491 is a vaccine intended to prevent human B19 parvovirus infection. MEDI-491 utilizes virus-like-particle ("VLP") technology. By producing two natural B19 parvovirus proteins in the correct proportions in an insect cell recombinant protein production system, the Company and collaborators at the National Heart, Lung, and Blood Institute ("NHLBI") are able to generate VLPs which resemble the natural B19 parvovirus particles, but are not infectious. The Company has completed a Phase 1 clinical trial to evaluate the safety of MEDI-491. The Company believes that a successful B19 parvovirus vaccine could be used to immunize women entering their child-bearing years to protect them from experiencing risk of B19 parvovirus-induced miscarriages. Alternately, a successful B19 parvovirus vaccine could be incorporated into routine childhood immunization programs to reduce the prevalence of this virus. Products and Product Development Programs The following table summarizes the indications and current status of the Company's products and product development programs. Product Indication Status(1) - --------------------------------------------------------------------------- Infectious Disease Products RespiGam Prevention of serious RSV disease Marketed RSV Immune in infants with prematurity or lung Globulin (IV) disease Synagis RSV Prevention of RSV disease in BLA Monoclonal high-risk infants Submitted Antibody (IM) MEDI-501 HPV-11 Prevention of genital warts Phase 1 Vaccine(2) MEDI-491 B19 Prevention of B19 parvovirus Phase 1 Parvovirus infection Vaccine MEDI-504 HPV-18 Prevention of cervical cancer Pre- clinical Vaccine(2) development MEDI-503 HPV-16 Prevention of cervical cancer Pre-clinical Vaccine(2) development Second Generation Prevention of Lyme disease Pre-clinical Lyme Disease development Vaccine E. coli Vaccine Prevention of urinary tract Pre-clinical (FimH Adhesin) infections development S. pneumoniae Prevention and treatment of Research Vaccine streptococcus pneumoniae infection Transplantation Products CytoGam Attenuation of primary CMV disease Marketed in donor positive/recipient negative kidney transplant patients CytoGam Prevention of CMV disease in all Product solid organ transplant patients license appl'n amendment submitted Synagis RSV Treatment of RSV disease in bone Phase 1 Monoclonal marrow transplant recipients Antibody MEDI-507 Prevention of kidney rejection Phase 1 Monoclonal Antibody MEDI-507 Treatment of graft-versus-host Phase 1/2 Monoclonal disease Antibody MEDI-507 Treatment of psoriasis Phase 1 Monoclonal Antibody _______________ (1) "Phase 1" and "Phase 2" clinical trials generally involve administration of a product to a limited number of patients to evaluate safety, dosage and, to some extent, efficacy. "Phase 3" clinical trials generally examine the efficacy and safety of a product in an expanded patient population at multiple clinical sites. (2) These products are being co-developed by the Company and SmithKline Beecham. The Company is entitled to certain milestone payments and royalties on any sales, if and when cleared for marketing by the FDA. Marketing, Research, Development and Collaborative Agreements The Company's internal research programs are augmented by collaborative projects with its scientific partners. As part of its strategy, the Company has established alliances with pharmaceutical and other biotechnology companies, academic scientists and government laboratories. Currently, its principal strategic alliances are the following: Abbott Laboratories In December 1997, the Company entered into two agreements with Abbott Laboratories ("Abbott"). The first agreement calls for Abbott to co-promote Synagis in the United States, if and when licensed for marketing by the FDA. The second agreement allows Abbott to distribute Synagis outside the United States, if and when licensed for marketing by the appropriate regulatory authorities. Outside the U.S., the Company would manufacture and sell Synagis to Abbott at a price based on end user sales and could receive additional milestone payments based on meeting certain milestones and sales thresholds. In the U.S., Abbott would receive a percentage of net sales in excess of annual sales thresholds. Each company is responsible for its own selling expenses. American Home Products Corporation The Company's strategic alliance with American Home Products ("AHP") calls for the two companies to co-develop and co-promote RespiGam. The agreement provided for AHP to fund a portion of the cost of the development of RespiGam and potentially co-promote the product in the United States. AHP shares in the profits and losses of RespiGam in the U.S. The alliance provides for the Company to receive royalties on any sales of AHP's RSV vaccine product, currently in Phase 2 clinical development and for AHP to receive royalties on any sales of Synagis. Baxter Healthcare Corporation In June 1995, the Company entered into an exclusive, royalty-bearing license agreement with Baxter Healthcare Corporation ("Baxter") to commercialize RespiGam outside North America. Concurrent with the execution of the license agreement, Baxter also purchased 826,536 shares of Common Stock for $9.5 million. Following the results from the Company's Phase 3 clinical trial of Synagis, sales of which, if cleared for marketing, are expected to substantially replace RespiGam, Baxter terminated this agreement and returned to the Company all rights to commercialize RespiGam outside North America. Baxter has no rights to Synagis. BioTransplant, Incorporated In October 1995, the Company and BioTransplant, Incorporated ("BTI") formed a strategic alliance for the development of products to treat and prevent organ transplant rejection. The alliance is based upon the development of products derived from BTI's anti-CD2 antibody, BTI-322, the Company's anti-T cell receptor antibody, MEDI-500, and future generations of products derived from these two molecules (such as MEDI-507, or humanized BTI-322). Pursuant to the alliance, the Company received an exclusive worldwide license to develop and commercialize BTI-322 and any products based on BTI-322, with the exception of the use of BTI-322 in kits for xenotransplantation or allotransplantation. The Company has paid BTI $4.5 million in license fees and research support through December 31, 1997. The Company has assumed responsibility for clinical testing and commercialization of any resulting products. BTI maywill receive research support and milestone payments which could total up to an additional $11.0 million, as well as royalties on any sales of BTI-322, MEDI-500, MEDI-507 and future generations of these products, if any. Human Genome Sciences, Inc. In July 1995, the Company entered into a collaborative research and development relationship with Human Genome Sciences, Inc. ("HGS") to create antibacterial vaccines and immunotherapeutic products based upon the genomic sequences of bacteria. The Company and HGS have collaborative research efforts underway to develop vaccines for non-typeable Haemophilus influenzae and Streptococcus pneumoniae. Rights to another genomic sequence for vaccine development, Helicobacter pylori, were out-licensed to Oravax, Inc. and Pasteur Merieux Connaught in November 1996 for license payments as well as milestone and royalty obligations. Pursuant to a collaboration and license agreement between the Company and HGS, the Company will be solely responsible for the commercialization of any products developed through the collaboration, and HGS will be entitled to royalties based upon the extent to which any products jointly developed are covered by patents or license rights held by HGS. Massachusetts Health Research Institute and Massachusetts Biologics Laboratories In August 1989 and April 1990, the Company entered into a series of research, supply and license agreements with Massachusetts Health Research Institute ("MHRI") and Massachusetts Public Health Biologics Laboratories, then a division of the Massachusetts Department of Public Health ("The State Lab"), covering products intended for the prevention or treatment of CMV and RSV infection and other respiratory virus infections by immune globulins or monoclonal antibodies. The Company has agreed to pay royalties on all sales using the licensed technology. Pursuant to the agreements, the Company paid $13.3 million in 1997, $11.8 million in 1996 and $5.8 million in 1995, for royalties, process development and manufacturing. MHRI has rights to receive royalties on any future sales of Synagis, if and when approved by the FDA. See Note 13 of Notes to Financial Statements. SmithKline Beecham In December 1997, the Company entered into a strategic alliance with SmithKline Beecham PLC ("SB") to research, develop, manufacture and commercialize therapeutic and prophylactic HPV vaccines. In exchange for exclusive worldwide rights to the Company's HPV technology, SB has agreed to provide the Company with an up-front payment of $15 million, future funding and potential developmental and sales milestones which together could total over $85 million, as well as royalties on any product sales. Under the terms of the agreement, the companies will collaborate on research and development activities. MedImmune will conduct Phase 1 and Phase 2 clinical trials and manufacture clinical material for those studies. SB is responsible for the final development of the product, as well as regulatory, manufacturing, and marketing activities. In January 1998, the Company received the $15 million payment from SB and completed the sale of 83,410 shares of common stock to SB resulting in net proceeds to the Company of $5.0 million. Other Agreements. The Company has a number of other collaborative and business agreements with academic institutions and business corporations, including agreements with 1) Washington University in St. Louis covering development of pilus-based anti-bacterial vaccines, 2) Georgetown University, the German Cancer Research Center and the University of Rochester covering development of vaccines for human papillomaviruses and 3) Scientists at St. JudeRockefeller University for the discovery and commercialization of products to treat and prevent Streptococcus pneumoniae. In addition, the Company has license agreements with third parties foron CytoGam, RespiGam, Synagis and substantially all of its other potential products. Under such license agreements the Company is obligated to pay royalties on any sales of these products. Marketing and Sales The Company has developed a sales and marketing organization which it believes is responsive to the increased importance of managed care and the need of the healthcare industry to provide lower costs and higher quality care. The Company's first product, CytoGam, was originally marketed by a third party as the Company's exclusive distributor. In December 1992, the Company reacquired marketing rights to CytoGam and in January 1993, the Company commenced marketing of CytoGam in the United States through its own sales force (then consisting of 14 people) focused on 250 leading transplantation hospitals. Sales outside the United States are made through regional distributors. The Company now has approximately 75 people devoted to sales and marketing of the Company's two approved products. Approximately 48 sales and managed care representatives cover approximately 500 hospitals and clinics in the United States, which specialize in transplantation and/or pediatric/neonatal care, for the promotion of CytoGam and RespiGam, respectively. Each sales representative is responsible for selling both CytoGam and RespiGam. The Company has established a collaboration with Abbott, through its Ross Pediatrics Division, to co-promote Synagis in the U.S., if and when Synagis is cleared for marketing by the FDA. In addition, Abbott has been selected as the Company's exclusive distributor of Synagis outside of the U.S., if and when Synagis is cleared for marketing by the appropriate regulatory authorities. There can be no assurance that such approvals will be granted, or, if granted, that approvals will occur in a timely manner. See Footnote 10 in the Notes to Financial Statements for additional information related to the agreements with Abbott. Manufacturing and Supply The Company has agreements with the State Lab and MHRI pursuant to which the Company agreed to license certain technology from the Commonwealth of Massachusetts and to collaborate on the development of the technology. The technology relates to the two products currently being marketed by the Company, RespiGam and CytoGam. At the end of 1996, the Inspector General of the Commonwealth of Massachusetts publicly issued a report alleging, among other things, that certain present and former employees of the State Lab or MHRI were personally receiving from MHRI, in violation of state law, a portion of the royalties the Company was paying to MHRI on sales of RespiGam. The report also alleged that the terms of the agreements were unfair to the Commonwealth and, accordingly, the Commonwealth now has the right to rescind the agreements notwithstanding the fact that the parties had operated under those agreements for over seven years. The Inspector General has no enforcement powers. The Company regards the allegations of the Inspector General, as they relate to the Company, to be without merit. The Company has denied those allegations and in early 1997 provided the Commonwealth with a detailed rebuttal of the claims of the Inspector General pertaining to the Company. The Company has been engaged with representatives of the Commonwealth in negotiations to settle the matter on a mutually satisfactory basis. While the Company believes that substantial progress has been made toward resolving this matter in a manner generally acceptable to the Company (with no loss of the Company's rights to technology and no interruption of operations under the agreements, but with increased royalties), there can be no assurance that a final resolution will, in fact, be achieved. If no settlement is reached, the Company may be forced to litigate with the Commonwealth, and there can be no assurance that the outcome of such a litigation would be favorable to the Company. An unfavorable outcome could have a material adverse effect on the Company. The Company has entered into manufacturing, supply and purchase agreements in order to provide a supply of human plasma and production capability for CytoGam and RespiGam. CytoGam and RespiGam are produced from human plasma collected from donors who have been screened to have higher concentrations of antibodies against CMV and RSV, respectively. Human plasma for CytoGam and RespiGam is converted to an intermediate raw material (Fraction II+III paste) under a supply agreement with Baxter. The Company entered into an agreement with V.I. Technologies, Inc. in 1997 to supply additional Fraction II+III paste. The State Lab processes the Fraction II+III paste into bulk product. The Company has an informal arrangement with the State Lab for planned production of bulk product for CytoGam and RespiGam. The State Lab holds the sole product and establishment licenses for CytoGam and RespiGam. The Company also has an agreement with Connaught Laboratories, Inc. ("Connaught") to fill and package CytoGam and RespiGam. If the State Lab, the suppliers of the Fraction II+III paste, or Connaught is unable to satisfy the Company's product requirements on a timely basis or is prevented for any reason from manufacturing CytoGam or RespiGam, the Company may be unable to secure an alternative supplier or manufacturer without undue and materially adverse operational disruption and increased cost. Recently, the Company has experienced product shortages which have limited product sales without reducing sales and marketing costs. See Footnote 13 in the Notes to Financial Statements for additional information related to the agreements with the State Lab. In 1997, the Company entered into a manufacturing and supply agreement with BI to provide supplemental production capability for Synagis, a humanized monoclonal antibody product for which a BLA was submitted to the FDA in December 1997. BI must scale up production to a level not previously attempted. No assurance can be given that BI will successfully be able to manufacture Synagis at these levels, nor that it can achieve adequate production yield, produce product with appropriate timeliness, or at an acceptable cost. Product manufactured at the BI facility will be required to launch Synagis, if and when it is licensed for marketing by regulatory authorities. During 1998, the Company is expected to file a supplemental amendment to its BLA for Synagis for additional manufacturing capacity utilizing the BI facility. Should BI be unable to supply Synagis to the Company for any reason, there can be no assurance that the Company would be able to secure an alternate manufacturer in a timely basis or without increased cost. Nor can there be any assurances that the Company or BI will be licensed by the appropriate regulatory authorities to manufacture or market the product. The Company entered into an agreement with Chiron Corporation ("Chiron") in 1997, in which Chiron will fill and package Synagis produced at the Gaithersburg pilot plant and Frederick manufacturing plant. The term of the agreement is for three years or until such earlier time as the Company is able to fulfill all of its own requirements. Filling and packaging of Synagis at Chiron is subject to FDA approval. In July 1996, the Company entered into an engineering, procurement, construction and validation services agreement with Fluor Daniel, Inc. ("Fluor") to design and construct a manufacturing facility located on a 27 acre site in Frederick, Maryland. The Company has spent $49.0 million through December 31, 1997 on construction of the facility. The facility, construction of which is substantially complete, is a multi-use biologics facility intended to provide production capability for the manufacture of immune globulins and by-products from human plasma. In addition, the facility contains a cell culture production area for the manufacture of protein-based products, such as Synagis, MEDI-501 and MEDI-507, if and when they are cleared for marketing by the FDA. There can be no assurance that the facility will receive regulatory approval for its intended purposes. This facility is subject to inspection and approval by the FDA and any resulting sales of product from this facility would not commence for at least the next 18 months. The Company has no experience in commercial manufacturing. Accordingly, even if the necessary approvals were obtained, the Company would encounter new risks associated with commercial manufacturing, including potential scale-up issues, cost overruns, product defects and environmental problems. Furthermore, there can be no assurance that the Company will be able to manufacture products at a cost that is competitive with third party manufacturing operations. The Company produces materials for clinical trials in its pilot plant facility in Gaithersburg, Maryland. Materials currently being used in clinical trials for MEDI-501, MEDI-507, and MEDI-491 have been produced at the Company's pilot plant. The Company completed an expansion of the pilot plant facility in 1997 to support the production of materials for Phase 3 clinical trials and market entry production requirements, principally for Synagis. There can be no assurance that appropriate regulatory approvals will be obtained to use the facility for market entry manufacturing. Patents, Licenses and Proprietary Rights Products currently being developed or considered for development by the Company are in the area of biotechnology, an area in which there are extensive patent filings. The patent position of biotechnology firms generally is highly uncertain and involves complex legal and factual questions. To date, no consistent policy has emerged regarding the breadth of claims allowed in biotechnology patents. Accordingly, there can be no assurance that patent applications owned or licensed by the Company will result in patents being issued or that, if issued, such patents will afford protection against competitors with similar technology. The Company believes that there are other patents issued to third parties and/or patent applications filed by third parties which could have applicability to each of the Company's products and product candidates and could adversely affect the Company's freedom to make, have made, use or sell such products or use certain processes for their manufacture. The Company is unable to predict whether it will ultimately be necessary to seek a license from such third parties or, if such a license were necessary, whether such a license would be available on terms acceptable to the Company. The necessity for such a license could have a material adverse effect on the Company's business. There has been substantial litigation regarding patent and other intellectual property rights in the biotechnology industry. Litigation may be necessary to enforce certain intellectual property rights of the Company. Any such litigation could result in substantial cost to and diversion of effort by the Company. Government Regulation The production and marketing of the Company's products and research and development activities are subject to regulation for safety and efficacy by numerous governmental authorities in the United States and other countries. In the United States, vaccines, biologics, drugs and certain diagnostic products are subject to FDA review and licensure. The federal Food, Drug and Cosmetics Act, the Public Health Service Act and other federal statutes and regulations govern or influence the testing, manufacture, safety, labeling, storage, record keeping, licensure, advertising and promotion of such products. No assurances can be given that any products under development will be licensed for marketing by the FDA or, if approved, that the product would be successfully commercialized or maintained in the marketplace. Non-compliance with applicable requirements could result in fines, recall or seizure of products, total or partial suspension of production, refusal of the government to approve product license applications, restrictions on the Company's ability to enter into supply contracts and criminal prosecution. The FDA also has the authority to revoke product licenses and establishment licenses previously granted. The FDA may designate a drug as an Orphan Drug for a particular use, in which event the developer of the drug may be entitled to a seven year marketing exclusivity period. CytoGam and RespiGam have been designated as Orphan Drugs for certain indications by the FDA. Accordingly, RespiGam has market exclusivity for its currently licensed indication through January 17, 2003. Marketing exclusivity for CytoGam's currently licensed indication expired in 1997. The Company is also subject to regulation by the Occupational Safety and Health Administration ("OSHA") and the Environmental Protection Agency ("EPA") and to regulation under the Toxic Substances Control Act, the Resources Conservation and Recovery Act and other regulatory statutes, and may in the future be subject to other federal, state or local regulations. OSHA and/or the EPA may promulgate regulations concerning biotechnology that may affect the Company's research and development programs. The Company is unable to predict whether any agency will adopt any regulation which would have a material adverse effect on the Company's operations. The Company voluntarily attempts to comply with guidelines of the National Institutes of Health regarding research involving recombinant DNA molecules. Such guidelines, among other things, restrict or prohibit certain recombinant DNA experiments and establish levels of biological and physical containment that must be met for various types of research. Sales of pharmaceutical and biopharmaceutical products outside the United States are subject to foreign regulatory requirements that vary widely from country to country. Whether or not FDA licensure has been obtained, licensure of a product by comparable regulatory authorities of foreign countries must be obtained prior to the commencement of marketing the product in those countries. The time required to obtain such licensure may be longer or shorter than that required for FDA approval, and no assurances can be given that such approval will be obtained. Competition The biotechnology and pharmaceutical industries are characterized by rapidly evolving technology and intense competition. The Company's competitors include pharmaceutical, chemical and biotechnology companies, many of which have financial, technical and marketing resources significantly greater than those of the Company. In addition, many specialized biotechnology companies have formed collaborations with large, established companies to support research, development and commercialization of products that may be competitive with those of the Company. Academic institutions, governmental agencies and other public and private research organizations are also conducting research activities and seeking patent protection and may commercialize products on their own or through joint ventures. The Company is aware of certain products manufactured by competitors that are used for the prevention or treatment of certain diseases the Company has targeted for product development, including CMV, RSV, Lyme disease, HPV infections and organ graft rejection. In the prevention of CMV disease, the Company's CytoGam competes with several other products including other antiviral drugs, standard immune globulin preparations and intravenous and oral ganciclovir, marketed by Hoffmann-La Roche Inc. The Company is aware that a number of physicians have prescribed CytoGam in combination with ganciclovir for the prevention of CMV disease in certain patients. The Company believes that for the prevention of RSV disease, the Company's RespiGam does not compete directly with any product; however, the Company is aware of one product in the U. S., ribivirin, which is indicated for the treatment of RSV disease. Additionally, the Company's Synagis is currently under review by the FDA. Synagis has been evaluated in a Phase 3 clinical trial for its ability to prevent RSV disease in a population of infants and children similar to that for which RespiGam is indicated. If Synagis were to be cleared for marketing in the United States, the Company believes sales of RespiGam would be substantially adversely affected. The existence of these products, or other products or treatments of which the Company is not aware, or products or treatments that may be developed in the future, may adversely affect the marketability of products developed by the Company. The Company expects its products to compete primarily on the basis of product efficacy, safety, patient convenience, reliability, price and patent position. In addition, the first product to reach the market in a therapeutic or preventive area is often at a significant competitive advantage relative to later entrants to the market. The Company's competitive position will also depend on its ability to attract and retain qualified scientific and other personnel, develop effective proprietary products, implement product and marketing plans, obtain patent protection and secure adequate capital resources. EXECUTIVE OFFICERS OF THE COMPANY Officer Name Age Position Since - ----------------------------------------------------------------------- Wayne T. Hockmeyer, Ph.D. 53 Chairman and Chief Executive 1988 Officer David M. Mott 32 President and Chief Operating 1992 Officer Franklin H. Top, Jr., 62 Executive Vice President and 1988 M.D. Medical Director David P. Wright 50 Executive Vice President- 1990 Sales and Marketing Bogdan Dziurzynski 49 Senior Vice President 1994 Regulatory Affairs and Quality Assurance James F. Young, Ph.D. 45 Senior Vice President 1989 Research and Development
Dr. Hockmeyer founded the Company in April 1988 as President and Chief Executive Officer and was elected to the Board of Directors in May 1988. He became Chairman of the Board of Directors in May 1993. From 1986 to 1988, Dr. Hockmeyer served as Vice President, Research and Development, of Praxis Biologics, Inc. ("Praxis"). From 1980 to 1986, Dr. Hockmeyer served as Chairman, Department of Immunology, Walter Reed Army Institute of Research. Dr. Hockmeyer is a member of the Board of Directors of Digene Corporation and serves on the Advisory Board of the University of Maryland Biotechnology Institute. He is also a member of the Board of Directors of the High Technology Council of Maryland and Chairman of the Maryland BioScience Alliance. Dr. Hockmeyer received a Bachelor of Science degree from Purdue University and a doctorate from the University of Florida. Mr. Mott joined the Company in April 1992 as Vice President, with responsibility for business development, strategic planning and investor relations. In 1994, Mr. Mott assumed additional responsibility for the medical and regulatory groups, and in 1995 was promoted to Executive Vice President and Chief Financial Officer. In November 1995, Mr. Mott was promoted to the position of President and Chief Operating Officer and was elected to the Board of Directors. Prior to joining the Company, he was a Vice President in the Health Care Investment Banking Group at Smith Barney, Harris Upham & Co., Inc. At Smith Barney, where he was employed from July 1986 to April 1992, Mr. Mott's activities included public and private equity and debt financings as well as merger and acquisition work for biotechnology, medical services, and medical product and device companies. He holds a bachelor of arts degree in economics and government from Dartmouth College. Dr. Top joined the Company in June 1988 as Executive Vice President. He was elected to the Board of Directors in July 1988 and became the Company's Medical Director in 1990. From 1987 to 1988, Dr. Top served as Senior Vice President for Clinical and Regulatory Affairs at Praxis. Prior to 1987, Dr. Top served for 22 years in the U.S. Army Medical Research and Development Command, where he was appointed Director, Walter Reed Army Institute of Research in 1983. Mr. Wright, prior to joining the Company in 1990, was President of Pediatric Pharmaceuticals, Inc. (1989-1990) and Vice President of the Gastrointestinal Business Group at Smith, Kline and French Laboratories. Mr. Dziurzynski, prior to joining the Company in 1994, was Vice President of Regulatory Affairs and Quality Assurance at Immunex Corporation. Dr. Young, prior to joining the Company in 1989, was Director, Department of Molecular Genetics at Smith, Kline and French Laboratories. EMPLOYEES As of February 15, 1998, the Company had 344 full time employees. These include 76 marketing and sales personnel, 37 clinical and regulatory affairs personnel, 67 manufacturing facility personnel, and 103 research and development personnel. The Company considers relations with its employees to be good. ITEM 2. PROPERTIES The Company occupies, under a lease expiring in 2006, a facility in Gaithersburg, Maryland, that contains approximately 81,000 square feet of research, development and administrative space. In 1996, the Company acquired a 27 acre parcel of land in Frederick, Maryland. The Company has substantially completed construction of a 91,000 square foot multi-use biologics facility on this site to provide for the manufacture of immune globulins and by-products from human plasma. In addition, the facility is designed to contain a cell culture production area for manufacture of products such as Synagis, if and when it is licensed by the FDA. ITEM 3. LEGAL PROCEEDINGS The Company is not a party to any material legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ITEM 5. MARKET FOR MEDIMMUNE, INC.'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS The Company's common stock trades on The Nasdaq Stock Market under the symbol "MEDI". At February 28, 1998, the Company had 315 common stockholders of record. This figure does not represent the actual number of beneficial owners of common stock because shares are generally held in "street name" by securities dealers and others for the benefit of individual owners who may vote the shares. The number of beneficial shareholders as of February 28, 1998 was over 10,000. The following table shows the range of high and low closing prices and year end closing prices for the common stock for the two most recent fiscal years.
1997 1996 ---- ---- High Low High Low ---- ---- ---- ---- First Quarter $ 17 1/2 $ 13 3/8 $ 20 1/8 $14 Second Quarter 19 3/4 11 3/8 20 15 1/2 Third Quarter 37 1/4 16 1/2 17 1/2 11 3/8 Fourth Quarter 43 1/2 31 17 3/4 14 Year End Close $ 42 7/8 $ 17
ITEM 6. SELECTED FINANCIAL DATA (in thousands, except per share data) RESULTS FOR THE YEAR 1997 1996 1995 1994 1993 ----- ----- ---- ---- ---- Product sales $65,271 $35,782 $16,173 $12,054 $8,446 Other 15,693 5,317 11,263 6,804 6,633 ------- ------- -------- ------- ------- Total revenues 80,964 41,099 27,436 18,858 15,079 Research and develop- ment expenses 40,669 32,192 26,417 21,939 14,936 Net loss (36,895) (29,544) (22,671) (18,828) (13,217) Basic and Diluted Loss Per Common Share (1.59) (1.41) (1.41) (1.29) (0.96) YEAR END POSITION Cash and marketable securities Total assets $50,326 $114,765 $38,039 $22,527 $44,424 Long term debt 170,336 163,971 57,332 44,724 61,195 Shareholders' 85,363 70,874 1,984 2,090 2,186 equity 40,536 72,865 43,779 34,194 53,021
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This review contains management's discussion of the Company's operational results and financial condition and should be read in conjunction with the accompanying financial statements. OVERVIEW MedImmune commenced operations in April 1988 and, through 1990, revenue was generated solely from research and development agreements and research grants. In 1991, contract revenues rose substantially and the Company began selling its first product, CytoGam, to an exclusive distributor. In December 1992, the Company reacquired the CytoGam marketing rights from its distributor and launched an expanded marketing program for this product through its own sales force. On January 18, 1996, the Company's second product, RespiGam, was licensed for marketing by the U.S. Food and Drug Administration ("FDA") for the prevention of serious lower respiratory tract infection caused by RSV in children under 24 months of age with BPD or a history of prematurity. Because of the seasonal nature of RSV, limited sales, if any, are expected during the second and third quarters, causing results to vary significantly from quarter to quarter. RESULTS OF OPERATIONS 1997 Compared to 1996 Product sales increased 82% for the year ended December 31, 1997, over the year ended December 31, 1996, due to increased demand for RespiGam in the first half of the product's second full season of sales, as well as a 10% increase in CytoGam sales. RespiGam sales were $45.0 million in 1997 versus $17.3 million in 1996, a 159% increase, reflecting an increase in vials sold. Supply constraints limited 1997 and 1996 sales. CytoGam product sales increased to $20.3 million from $18.4 million in 1996 due primarily to a 4% increase in units sold, and two price increases that took effect in mid-1996 and mid-1997. In 1996 CytoGam product sales were reduced by a $0.7 million reserve for trade receivables due from a pharmaceutical wholesaler that filed Chapter 11 bankruptcy in August 1996; $0.1 million was recovered against this loss in 1997 as a result of a sale of the receivables to a third party. Although the Company markets directly to hospitals and physicians, the Company sells its products through a limited number of pharmaceutical wholesalers. A similar event with another wholesaler could adversely affect operating income. The level of future product sales will be dependent on several factors, including, but not limited to, the timing and extent of future regulatory approvals of the Company's products and product candidates, availability of finished product inventory, approval and commercialization of competitive products and the degree of acceptance of the Company's products in the marketplace. The Company submitted a Biologic License Application to the FDA in December 1997 requesting marketing clearance for its second generation RSV product, Synagis. Marketing clearance has not yet been obtained and there can be no assurance that such approval will be obtained. The Company believes that if Synagis were licensed for marketing, it would significantly adversely affect sales of RespiGam. Other revenues increased to $15.7 million in 1997 from $5.3 million in 1996. Other revenues in 1997 reflect primarily fees paid by Abbott Laboratories for the right to market and distribute the Company's second generation RSV drug, Synagis, outside the U.S. The Company is also entitled to receive an additional $30.0 million from Abbott upon receipt of a marketing approval in the U.S. and other major markets. Sales of Synagis are dependent upon marketing clearance from the FDA and other regulatory authorities and there can be no assurance that such clearance will be obtained. Other revenues in 1996 reflect the completion of milestone and research funding payments under the Company's strategic alliance with AHP, formerly American Cyanamid Company. Under the terms of the alliance, the Company and AHP share in the profits or losses of RespiGam; reimbursements or payments under this arrangement are deducted from or added to operating expenses and are included in selling, administrative and general expenses. Subsequent to December 31, 1997, the Company received $15 million from SmithKline Beecham pursuant to an agreement signed in December 1997 to develop and commercialize human papillomavirus vaccines for prevention of cervical cancer and genital warts. This payment will be included in 1998 other revenues along with research funding that will be due the Company under the terms of the alliance. The level of contract revenues in future periods will depend primarily upon the extent to which the Company enters into other collaborative contractual arrangements, if any. Cost of sales increased 75% to $34.4 million in 1997 from $19.7 million in 1996, due to a 68% increase in vials sold. Gross margins in 1997 improved to 47% versus 45% in 1996, reflecting the increased sales of RespiGam in the product mix, which has a lower royalty rate than CytoGam. 1997 margins were adversely impacted by a charge for an estimate of additional royalties due to Massachusetts Health Research Institute as part of a possible settlement of an ongoing inquiry by the Inspector General of the Commonwealth of Massachusetts. (See Note 13 of Notes to Financial Statements.) If settled as presently contemplated, the increased royalty rate would continue to apply to future sales of RespiGam. The Company's products are manufactured by third parties and future per-unit cost of sales could increase if the Company is unable to negotiate favorable pricing. The Company has substantially completed construction of its own manufacturing facility intended for some portion of the production of its two approved products as well as other product candidates, including Synagis. This facility is subject to inspection and approval by the FDA and any resulting sales of product from this facility would not commence for at least the next 18 months. If Synagis is licensed for marketing by the FDA, the Company may book a reserve against RespiGam inventory. The magnitude of this reserve, if any, would be determined by factors including, but not limited to, the timing of Synagis approval, the extent of RespiGam inventory on hand at the time, the assessed market potential of Synagis and the assessed market potential of RespiGam. Additionally, if Synagis is licensed for marketing by the FDA, its margin may differ significantly from those of the Company's existing products; however, because Synagis has never been produced in commercial quantities, the impact, if any, on margins is not known. Research, development and clinical costs of $40.7 million were incurred in 1997 compared to $32.2 million in 1996, an increase of 26%. Expenditures in 1997 and 1996 include approximately $14.5 million and $10 million, respectively, for the clinical studies performed for Synagis, including a 1,502-patient Phase 3 clinical trial that began in the fourth quarter of 1996 and was substantially completed by the end of the 1997 second quarter. 1997 expenses also include $1.3 million in license fees relating to Synagis and MEDI-507, a monoclonal antibody that inhibits T cell responses. The level of the Company's total research and development expenses in future periods will fluctuate depending on the extent of clinical trial spending. The Company expects clinical trial expenses to be significantly lower in 1998 than 1997. Selling, administrative and general expenses increased to $31.7 million in 1997 from $22.2 million in 1996. The increase in 1997 reflects primarily AHP's share of RespiGam's profits, which resulted in a charge of $3.0 million to selling expenses as calculated under the terms of the strategic alliance. This compared to $4.3 million in reimbursement from AHP in 1996 for its share of RespiGam product line loss, as calculated under the terms of the strategic alliance. Other selling and marketing expenses increased by $1.7 million, reflecting increased commission and product distribution costs resulting from the increased product sales. This was offset by a $1.1 million decrease in sales detailing costs to AHP as a result of the Company's decision to not use AHP's sales force to detail RespiGam in the 1997/1998 RSV season. General and administrative expenses increased by $0.6 million reflecting increased headcount, legal and other costs. Selling, administrative and general expenses are expected to increase in 1998 as the Company prepares for the potential market launch of Synagis, if and when licensed by the FDA. Expenses in 1997 include $11.5 million of other operating expenses, which include the costs of start-up of the Frederick manufacturing facility and scale-up of production of Synagis at the Gaithersburg pilot plant and at a third-party manufacturer, Boehringer Ingelheim Pharma KG ("BI") in Biberach, Germany. The Company expects to incur significant start-up and scale-up costs throughout 1998 and into 1999. Interest income decreased to $4.0 million in 1997 compared to $5.7 million in 1996. The decrease reflects lower cash balances available for investment, partially offset by an increase in interest rates that increased the overall portfolio yield. Interest expense increased to $3.5 million in 1997 from $2.3 million in 1996, reflecting primarily interest on the convertible subordinated notes of the Company issued in July 1996 (net of amounts capitalized) and interest on equipment financing, primarily in the second half of 1997. Interest expense in 1997 and 1996 is net of $2.2 and $0.3 million, respectively, of interest capitalized against the manufacturing facility and the pilot plant expansion. The 1997 net loss of $36.9 million, or $1.59 basic and diluted per common share, compared to a 1996 net loss of $29.5 million, or $1.41 basic and diluted per common share. Shares used in computing basic and diluted loss per share were 23.1 million and 21.0 million, respectively, in 1997 and 1996. The Company does not believe that inflation had a material effect on its financial statements. These results were consistent with the Company's objectives for the year and with the continued development of its immunotherapeutic and vaccine products. The factors that affected 1997 results may continue to affect near- term future financial results. 1996 Compared to 1995 The increase in product sales for the year ended December 31, 1996, as compared to the year ended December 31, 1995, was due to the commencement of sales of RespiGam in 1996 and a 14% increase in CytoGam sales. RespiGam sales were $17.3 million in 1996, of which $13.9 million were generated in the fourth quarter. CytoGam product sales increased to $18.4 million from $16.2 million in 1995 due primarily to increased units sold. CytoGam product sales were reduced by a $0.7 million reserve in the 1996 third quarter for trade receivables due from a pharmaceutical wholesaler that filed Chapter 11 bankruptcy in August 1996. Other revenue decreased to $5.3 million in 1996 from $11.3 million in 1995, reflecting the completion of milestone and research funding payments under the Company's strategic alliance with AHP. Cost of sales increased to $19.7 million in 1996 from $10.7 million in 1995, due to the initiation of sales of RespiGam in 1996. The gross margins for 1996 of 45% improved over 1995's margins of 34%, reflecting the addition of RespiGam as well as a reduction in the royalty rate due to Connaught for CytoGam, effective for the fourth quarter of 1995. Research, development and clinical spending was $32.2 million in 1996 compared to $26.4 million in 1995, reflecting increased expenditures of over $10 million for Synagis clinical studies, including the start of a 1,502- patient Phase 3 clinical trial in the fourth quarter of 1996. This increase was offset by a decrease in clinical spending for RespiGam, for which two Phase 3 trials were completed in mid-1995 and licensing was received from the FDA in January 1996. Selling, administrative and general expenses increased to $22.2 million in 1996 from $11.7 million in 1995, reflecting primarily the launch of RespiGam in 1996. Approximately 45 additional sales and marketing personnel were hired between September 1995 and March 1996 to staff for the launch of RespiGam, resulting in an increase of over $5 million in salaries, commissions, recruiting, travel and related costs. An additional $5.2 million was spent on marketing and selling programs for the launch of RespiGam in 1996. Sales detailing costs to the Company's corporate partner for RespiGam, AHP, approximated $1.8 million in 1996 and none in 1995. Offsetting the increased costs in 1996 was a $4.3 million reimbursement from AHP of its share of product line loss on RespiGam for the year, calculated under the terms of the strategic alliance. General and administrative expenses increased by $0.7 million, reflecting increased headcount and legal and other costs associated with the new manufacturing facility. In December 1995, the Company and Connaught entered into an amendment to the agreement signed in 1992 in which the Company reacquired the rights to market CytoGam. In connection with this amendment, the Company made a lump sum payment of $2.7 million to Connaught in the first half of 1996 upon completion of certain modifications to Connaught's filling and packaging facility. The $2.7 million charge was expensed as other operating expenses in 1995. Interest income increased to $5.7 million in 1996 compared to $1.7 million in 1995. The increase reflects the proceeds from the Company's equity and convertible debt offerings in 1996, resulting in higher cash balances available for investment, partially offset by a decrease in interest rates, which lowered the overall portfolio yield. Interest expense increased to $2.3 million in 1996 from $0.3 million in 1995, reflecting interest on the convertible subordinated notes of the Company issued in July 1996. Interest expense in 1996 is net of $0.3 million of interest capitalized against the new manufacturing facility and the pilot plant expansion. The 1996 net loss of $29.5 million, or $1.41 basic and diluted per common share, compared to a 1995 net loss of $22.7 million, or $1.41 basic and diluted per common share. Shares used in computing basic and diluted loss per share were 21.0 million and 16.1 million, respectively, for 1996 and 1995. LIQUIDITY AND CAPITAL RESOURCES Cash and marketable securities were $50.3 million at 1997 year end compared to $114.8 million at 1996 year end. Working capital was $56.6 million at 1997 year end versus $113.3 million at 1996 year end. Net cash used in 1997 operating activities was $47.745.5 million compared to $25.85 million used in 1996 and $15.9 million used in 1995. The cash outflow from operations in 1997 reflected the net loss of $36.9 million adjusted for depreciation and amortization and working capital changes. Working capital changes included: 1) a $25.2 million increase in inventory reflecting build-up of CytoGam and RespiGam to support increased sales; 2) a $6.5 million increase in trade receivables as a result of the increased fourth quarter sales, primarily RespiGam; and 3) a $17.4 million increase in accounts payable and accrued expenses reflecting primarily accruals for plasma inventories, contract manufacturing activities, amounts due to AHP for its share of RespiGam product line profit and increased sales commission accruals. Most of the working capital increase in 1997 resulted from growth in accounts receivable, reflecting a 117% increase in product sales in the fourth quarter 1997 versus the fourth quarter 1996 and growth in inventory in anticipation of increased first quarter 1998 sales compared to first quarter 1997. Inventory growth was also impacted by an increase in plasma collections in 1997 as more plasmapheresis centers were added to increase the volume of collections. If Synagis is licensed for marketing by the FDA, the Company may book a reserve against RespiGam inventory for obsolescence as Synagis is expected to substantially replace RespiGam in the market. The amount and timing of such a reserve, if any, would depend on factors including, but not limited to, the anticipated timing of Synagis marketing clearance, the extent of RespiGam inventory on hand at that time, the assessed market potential of Synagis and the assessed market potential of RespiGam. AAdditionally, inventory is expected to increase significantly in 1998 as the Company purchases Synagis inventory from BI and collects materials for use in its new manufacturing facility to begin producing inventory for the potential launch of Synagis. The cash outflow from operations in 1996 reflected the net loss adjusted for depreciation and amortization and working capital changes. Working capital changes included: 1) a $7.1 million increase in trade and contract receivables due to significant fourth quarter 1996 sales of RespiGam; 2) a $5.6 million increase in accounts payable and accrued expenses, reflecting accrued costs associated with the Synagis Phase 3 clinical trial, accrued manufacturing costs for production of the Company's two products, and accrued marketing and selling costs, including commissions; and 3) a $2.1 million increase in accrued interest reflecting interest due on the convertible subordinated notes, paid January 1997. Cash flows from financing activities were $20.9 million in 1997 compared to $125.4 million in 1996. In 1997, the Company drew down $14.4 million of $15.0 million of available equipment financing. In addition, the Company received the remaining $2.8 million of financing available from the state and local government to fund the construction of the manufacturing plant. In February 1996, the Company completed a public offering of 3.45 million shares of common stock resulting in net proceeds of $58 million and in July 1996, the Company completed a private placement of $60 million aggregate principal amount of 7% convertible subordinated notes due 2003 for net proceeds of $58 million. Additionally in 1996, the Company received $9 million of proceeds from state and local government loans in connection with the financing of its manufacturing facility. Capital expenditures in 1997 were $36.738.9 million compared to $22.47 million in 1996 excluding capitalized interest of $2.2 million and $0.3 million, respectively. The 1997 expenditures include $33.237.5 million (net of capitalized interest) for the construction, equipment and validation of the Company's manufacturing facility and the completion of its pilot plant expansion at the Gaithersburg headquarters. Additional expenditures were for laboratory and office equipment. The 1996 expenditures included $16.95 million (net of capitalized interest) for the design and construction of the Company's manufacturing facility and the expansion of the pilot plant. Additional expenditures were for land, laboratory equipment and administrative expansion. Capital expenditures in 1998 are expected to approximate $7.0 million, due mostly to expansion of the administrative area at the Gaithersburg headquarters and the Frederick manufacturing facility to provide additional capacity for the Company's cell culture product candidates. Construction of the manufacturing facility is substantially completed and initial process qualification will commence during 1998. There can be no assurance that appropriate regulatory approvals will be obtained to enable the use of the facility for production of the Company's products or product candidates. Any resulting sales of product from this facility would not commence for at least the next 18 months, subject to regulatory approvals. Further production capacity may be required to support future sales of MedImmune's product candidates. The Company is evaluating its alternatives, including, but not limited to, significant expansion of its existing facilities. At this time, the Company is unable to determine the potential cost or likelihood of this project. Subsequent to December 31, 1997, the Company received $15 million from SmithKline Beecham ("SB") pursuant to an agreement signed with them in December 1997 to develop and commercialize human papillomavirus vaccines for prevention of cervical cancer and genital warts. This payment will be included in 1998 other revenues along with research funding of approximately $5 million that will be due the Company under the terms of the alliance. In addition, in January 1998, the Company completed the sale of 83,410 shares of common stock to SB for net proceeds to the Company of $5.0 million. Also Iin January 1998, the Company completed a private placement of 1.7 million shares of common stock to three institutional investors for net proceeds to the Company of $66.3 million. The Company is obligated in 1998 to provide $2.5 million in funding for various clinical trials, research and development and license agreements with certain institutions. The Company's existing funds, together with funds contemplated to be generated from product sales and investment income, are expected to provide sufficient liquidity to meet the anticipated needs of the business for at least the next 18 months, absent the occurrence of any unforeseen events. Year 2000 Compliance The Company has conducted a review of its internal and external systems for year 2000 compliance and believes that the cost of completing any necessary modifications will not be material. There can be no assurances: 1)that the Company will be able to identify all aspects of its business that are subject to Year 2000 problems, including issues of its customers or suppliers, 2)that the Company's software vendors are correct in their assertions that the software is Year 2000 compliant, 3)that the Company's estimate of the cost of systems preparation for Year 2000 compliance will prove ultimately to be accurate. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BALANCE SHEETS (in thousands, except share data) December 31, December 31, 1997 1996 ---------- ---------- ASSETS Cash and cash equivalents $29,984 $12,629 Marketable securities 20,342 102,136 Trade receivables, net 15,236 8,123 Contract receivables, net 3,064 2,164 Inventory, net 28,857 6,060 Other current assets 2,740 1,713 ---------- ---------- Total Current Assets 100,223 132,825 Property and equipment, net 65,254 29,087 Other assets 4,859 2,059 ---------- ---------- Total Assets $170,336 $163,971 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable, trade $4,535 $3,942 Accrued expenses 27,682 10,509 Accrued interest 2,583 2,057 Product royalties payable 6,227 2,559 Other liabilities 2,633 469 ---------- ---------- Total Current Liabilities 43,660 19,536 Long term debt 85,363 70,874 Other liabilities 777 696 ---------- ---------- Total Liabilities 129,800 91,106 ---------- ---------- Commitments and Contingencies SHAREHOLDERS' EQUITY Preferred stock, $.01 par value; -- -- authorized 5,524,525 shares; none issued or outstanding Common stock, $.01 par value; 244 218 authorized 60,000,000 shares; issued and outstanding 24,444,745 shares and 21,836,763 shares at December 31, 1997 and 1996, respectively Paid-in capital 176,564 172,024 Accumulated deficit (136,272) (99,377) ---------- ---------- Total Shareholders' Equity 40,536 72,865 ---------- ---------- Total Liabilities and $170,336 $163,971 Shareholders' Equity ========== ========== The accompanying notes are an integral part of these financial statements.
Statements of Operations (in thousands, except per share data) For the year ended December 31, --------------------------------- 1997 1996 1995 -------- -------- -------- REVENUES Product sales $65,271 $35,782 $16,173 Other 15,693 5,317 11,263 -------- -------- -------- Total Revenues 80,964 41,099 27,436 -------- -------- -------- COSTS AND EXPENSES Cost of sales 34,433 19,678 10,678 Research and development 40,669 32,192 26,417 Selling, administrative 31,735 22,165 11,719 and general Other operating expenses 11,543 -- 2,700 -------- -------- -------- Total Expenses 118,380 74,035 51,514 -------- -------- -------- Operating Loss (37,416) (32,936) (24,078) Interest income 4,004 5,655 1,657 Interest expense (3,483) (2,263) (250) -------- -------- -------- Net Loss $(36,895) $(29,544) $(22,671) ======== ======== ======== Net Loss Per Share, Basic and Diluted $(1.59) $(1.41) $(1.41) ======== ======== ======== Shares Used in Calculation of Basic and Diluted Net Loss Per Share 23,132 21,019 16,061 ======== ======== ======== The accompanying notes are an integral part of these financial statements.
Statements of Cash Flows (in thousands) For the year ended December 31, -------------------------------- 1997 1996 1995 -------- -------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(36,895) $(29,544) $(22,671) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,749 1,843 1,554 Capitalized interest (2,188) (273) -- Amortization of premium (discount) on marketable securities 937 447 (418) Bad debt expense (641) 724 5 Inventory reserve (8) (409) 417 Amortization of debt issue costs 330 155 -- Other 325 96 119 Increase(decrease) in cash due to changes in assets and liabilities: Trade receivables (6,472) (6,160) (987) Contract receivables (1,144) (954) 2,865 Inventory (25,235) 376 (945) Other assets (990) (641) 1,111 Accounts payable and accrued expenses 17,351 5,595 2,154 Product royalties payable 3,668 783 818 Accrued interest 526 2,057 -- Other liabilities (4) 119 35 -------- -------- -------- Net cash used in operating (47,691) (25,786) (15,943) activities -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Investments in securities available -- (131,908) (38,587) for sale Maturities of securities available 80,857 53,199 31,308 for sale Capital expenditures (36,728) (22,402) (1,116) -------- -------- -------- Net cash provided by (used in) 44,129 (101,111) (8,395) investing activities -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common 4,566 58,630 32,256 stock Proceeds from issuance of long 17,187 69,000 -- term debt Deferred costs from debt (306) (2,172) -- issuance Decrease in long term debt obligations (530) (97) (103) --------- -------- -------- Net cash provided by 20,917 125,361 32,153 financing activities --------- -------- -------- Net increase (decrease) in cash and cash 17,355 (1,536) 7,815 equivalents Cash and cash equivalents at beginning 12,629 14,165 6,350 of year -------- -------- -------- Cash and cash equivalents at end of year $29,984 $12,629 $14,165 ========= ======== ======== The accompanying notes are an integral part of these financial statements.
Statements of Shareholders' Equity (in thousands, except share data) Common Stock, $.01 par --------------- Paid-in Accumulated Shares Amount Capital Deficit Total --------- ------ ------- --------- ------- Balance, December 31, 1994 14,618,042 $146 $81,210 $(47,162) $34,194 Common stock options exercised 43,817 -- 92 -- 92 Private placement of common stock, May 1995,at $6.85 per share, net of under- writing commissions and expenses of $825 1,250,000 13 7,728 -- 7,741 Private placement of common stock, June 1995,at $11.49 per share, net of fees and expenses of $40 826,536 8 9,452 -- 9,460 Private placement of common stock, October 1995, at $15.50 per share, net of fees and expenses of $37 967,742 10 14,953 -- 14,963 Net loss -- -- -- (22,671) (22,671) -------- ------ -------- -------- ------- Balance, December 31, 1995 17,706,137 177 113,435 (69,833) 43,779 Common stock options exercised 288,484 3 700 -- 703 Sale of common stock, February 1996, public offering at $18.00 per share, net of under- writing commissions and expenses of $4,173 3,450,000 34 57,893 -- 57,927 Conversion of Series A Convertible Preferred Stock 392,142 4 (4) -- -- Net loss -- -- -- (29,544) (29,544) -------- ----- -------- -------- -------- Balance, December 31, 1996 21,836,763 218 172,024 (99,377) 72,865 Common stock options exercised 614,629 6 4,560 -- 4,566 Conversion of Series A Convertible Preferred Stock 1,993,353 20 (20) -- -- Net Loss -- -- -- (36,895) (36,895) ---------- ----- -------- --------- -------- Balance, December 31, 1997 24,444,745 $244 $176,564 $(136,272) $40,536 ========== ===== ======== ========== ======== The accompanying notes are an integral part of these financial statements.
NOTES TO FINANCIAL STATEMENTS (in thousands, except share and per share data) 1. ORGANIZATION MedImmune, Inc. (the Company), a Delaware corporation, is a biotechnology company focused on the development and marketing of products for the prevention and treatment of infectious diseases and for use in transplantation medicine. The Company was originally incorporated on June 29, 1987, and commenced operations on April 22, 1988. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies applied in the preparation of these financial statements are as follows: Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Marketable Securities Marketable securities include investments with original maturities of greater than three months having a remaining maturity of less than 24 months. The Company's securities are held for an unspecified period of time and may be sold to meet liquidity needs. The securities included as marketable securities are considered available-for-sale as defined by Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Amortized cost of marketable securities approximates market; therefore, no adjustment has been made to shareholders' equity as a result of changes in market value to these securities. Interest income is accrued as earned. Concentration of Credit Risk The Company has invested its excess cash generally in securities of the U.S. Treasury, U.S. government agencies, corporate debt securities, commercial paper and money market funds with strong credit ratings and deposits with a major bank. The Company has not experienced any significant losses on its investments. The Company sells its products primarily to a limited number of pharmaceutical wholesalers without requiring collateral. The Company periodically assesses the financial strength of these wholesalers and establishes allowances for anticipated losses when necessary. Inventory Inventory is stated at the lower of cost or market. Cost is determined using a weighted-average approach that approximates the first-in, first-out method. Where the Company has a firm contract for their puchase, by-products that result from production of the Company's principal products are accounted for as a reduction of the cost of the principal products. Product Sales Product sales are recognized upon shipment of the product to wholesalers. Product sales are recorded net of reserves for estimated chargebacks, returns, discounts, and Medicaid rebates. The Company maintains reserves at a level that management believes is sufficient to cover estimated future requirements. Allowances for discounts, returns, bad debts, chargebacks and Medicaid rebates, which are netted against accounts receivable, totaled $3,037 and $2,053 at December 31, 1997 and 1996, respectively. Product royalty expense is recognized concurrently with the recognition of product revenue. Royalty expense, included in cost of sales, was $8,504, $4,282 and $3,056 for the years ended December 31, 1997, 1996 and 1995, respectively. Contract Revenues Contract revenues are recognized over the fixed term of the contract or, where appropriate, as the related expenses are incurred. Non-refundable fees or milestone payments in connection with research and development or commercialization agreements are recognized when they are earned in accordance with the applicable performance requirements and contractual terms. Payments received that are related to future performance are deferred and recorded as revenues as they are earned over specified future performance periods. Property and Equipment Property and equipment are stated at cost. Interest cost incurred during the period of construction of plant and equipment is capitalized. Depreciation of laboratory and computer equipment is computed on the straight- line method based upon estimated useful lives ranging from 3 to 7 years. Amortization of leasehold improvements is computed on the straight-line method based on the shorter of the estimated useful life of the improvement or the term of the lease. Upon the disposition of assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of operations. Repairs and maintenance costs are expensed as incurred and were $1,002, $537 and $540 for the years ended December 31, 1997, 1996 and 1995, respectively. Long-Lived Assets The Company evaluates the recoverability of the carrying value of property and equipment and intangible assets in accordance with the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed Of." The Company considers historical performance and anticipated future results in its evaluation of the potential impairment. Accordingly, when the indicators of impairment are present, the Company evaluates the carrying value of these assets in relation to the operating performance of the business and future and undiscounted cash flows expected to result from the use of these assets. Impairment losses are recognized when the sum of the expected future cash flows are less than the assets' carrying value. Forward Exchange Contracts The Company is obligated to make certain payments to a foreign supplier in its local currency. To hedge the effect of fluctuating foreign currencies in its financial statements, the Company may enter into foreign forward exchange contracts. Gains or losses associated with the forward contracts are computed as the difference between the foreign currency contract amount at the spot rate on the balance sheet date and the forward rate on the contract date. Unrealized gains or losses are deferred until the obligation date and are then offset against the gains or losses on the foreign currency transaction. See Note 12 for information regarding the fair value of the Company's foreign forward exchange contracts. Fair Value of Financial Instruments The carrying amount of financial instruments including cash and cash equivalents, trade accounts and contracts receivable, other current assets, accounts payable, and accrued expenses approximate fair value as of December 31, 1997 and 1996 due to the short maturities of these instruments. See Note 7 for information regarding the fair value of the Company's long-term debt and notes payable and Note 12 for information regarding the fair value of the Company's foreign forward exchange contracts. Income Taxes Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable for the period and the change during the period in deferred tax assets and liabilities. Earnings (Loss) Per Common Share In 1997, the Company adopted SFAS No. 128, Earnings per Share. Basic earnings per share is computed by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net earnings available to common shareholders by the weighted average number of common shares outstanding after giving effect to all dilutive potential common shares that were outstanding during the period. Potential common shares are not included in the computation of diluted earnings per share if they are antidilutive. Net loss per share as reported was not adjusted for potential common shares as they are antidilutive. Net loss available to common shareholders as reported was not adjusted. Earnings per share for all other periods presented conform to SFAS No. 128. New Accounting Standards The Financial Accounting Standards Board has issued two new standards which become effective for reporting periods beginning after December 15, 1997. SFAS No. 130, Reporting Comprehensive Income, requires additional reporting with respect to certain changes in assets and liabilities that previously were included in shareholders' equity. The Company will begin complying with the reporting required by SFAS No. 130 in the first quarter of 1998. SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, requires financial and descriptive information with respect to "operating segments" of an entity based on the way management disaggregates the entity for making internal operating decisions. The Company will begin making the disclosures required by SFAS No. 131 with financial statements for the period ending December 31, 1998. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the financial statement date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. INVENTORY Inventory at December 31, is comprised of the following: 1997 1996 ------ ------ Raw materials $14,503 $2,073 Work in process 12,990 2,758 Finished goods 3,810 1,229 ------ ------ 31,303 6,060 Less non-current (2,446) -- ------ ------ $28,857 $6,060 ========= ===== At December 31, 1997, raw materials for one of the Company's existing products being collected for production at the Company's manufacturing plant which has not been licensed by the FDA, are classified as non-current as they are not expected to be consumed within the next year. In addition, finished goods at December 31, 1997 include by-products that result from the production of the Company's principal products at one of its contract manufacturers and are held for resale. As of December 31, 1997To date, no sales of these by-products have occurred. The Company submitted a Biologic License Application to the FDA in December 1997 requesting marketing clearance for its second generation RSV product, Synagis. The Company believes that if Synagis were licensed for marketing, it would largely replace sales of RespiGam. Consequently, if and when Synagis is cleared for marketing, the Company may be compelled to record a reserve against RespiGam inventory. The magnitude of this inventory reserve, if any, would be determined by a number of factors, including but not limited to, the anticipated timing of Synagis marketing clearance, the extent of RespiGam inventory on hand at the time, the assessed market potential of Synagis and the assessed market potential of RespiGam. 4. PROPERTY AND EQUIPMENT Property and equipment, stated at cost at December 31, is comprised of the following: 1997 1996 ----- ----- Land $ 1,521 $ 1,521 Leasehold improvements 11,042 6,860 Laboratory equipment 9,355 7,427 Office furniture, computers and equipment 4,377 3,235 Construction in progress 49,040 17,376 ------- ------- 75,335 36,419 Less accumulated depreciation and amortization (10,081) (7,332) ------- ------- $65,254 $29,087 ======= =======
Construction in progress consists primarily of costs incurred in connection with the design and construction of the Company's manufacturing facility and includes capitalized interest costs of $2,423 and $273300 at December 31, 1997 and 1996, respectively. 5. ACCRUED EXPENSES Accrued expenses at December 31, is comprised of the following: 1997 1996 ------- ------- Accrued contracts $14,959 $5,737 Accrued manufacturing 8,792 1,804 Accrued sales and marketing 2,299 2,085 Accrued other 1,632 883 ------- ------- $27,682 $10,509 ======= ======= 65. FACILITIES LEASES The Company entered into a 15-year lease beginning in November 1991, as amended in 1993, 1996 and 1997, for administrative and laboratory facilities in Gaithersburg, Maryland. Under the lease, the Company is obligated to pay a basic monthly rent which will increase 3% each lease year and in 1997 totaled $1,010. The lease also requires the Company to pay for utilities and its proportionate share of taxes, assessments, insurance and maintenance costs. Rent expense for the years ended December 31, 1997, 1996 and 1995 was $1,328, $1,113 and $946, respectively. The 1995 expense is net of sublease rental receipts of approximately $140 from an affiliated company. The sublease agreement was terminated in October 1995. The Company's future minimum lease payments under the facility operating lease are as follows: Year ending December 31, ------------------------ 1998 $ 1,158 1999 1,192 2000 1,228 2001 1,265 2002 1,304 thereafter 5,504 -------- $ 11,651 ======== 76. LONG TERM DEBT Long term debt at December 31, is comprised of the following: 1997 1996 ----- ----- 7% convertible subordinated notes, due 2003 $60,000 $60,000 Notes payable to Transamerica Business Credit Corporation due through 2004, interest 10.13%-10.6% 13,975 -- 7.53% note due to Maryland Industrial Development Finance Authority, due 2007 5,000 5,000 4% notes due to Maryland Department of Business and Economic Development, due 2016 6,800 4,000 Notes payable to landlord, due through 2006, interest 11.5%-13% 1,874 1,992 ------- ------- 87,649 70,992 Less current portion included in other current liabilities (2,286) (118) ------- ------- $85,363 $70,874 ======= =======
The convertible subordinated notes were issued in July 1996 and are convertible at the option of the holder into 3,048,780 shares of the Company's common stock at a conversion price of $19.68 per share, subject to adjustments in certain events. The notes are not redeemable by the Company prior to July 7, 1999. After that date, the notes are redeemable with 30 days notice at a declining premium until the due date, plus accrued interest. The notes are subordinated to all senior debts of the Company including the state and local loans, the Transamerica loans, and the loan from the landlord. The Company may be required to redeem the notes at amounts up to 107% of the principal amount in the event of a change in control of the Company. Principal and interest payments on the state and local notes begin in 1998. Pursuant to the terms of the agreements, the Company is required to meet certain financial and non-financial covenants including maintaining minimum cash balances and net worth ratios. The Company maintains a $400 compensating balance related to the notes which is included in the accompanying balance sheets as of December 31, 1997 and 1996. The notes are collateralized by the land, buildings and building fixtures of the manufacturing facility. The agreements include a provision for early retirement of the notes by the Company. Loans from Transamerica Business Credit Corporation issued in 1997 are repayable over 6 years at rates ranging from 10.13% to 10.6%. The loans are collateralized by manufacturing, laboratory, and office equipment of the Company. The Company may borrow up to an additional $0.6 million under this facility. The agreements include a provision for early retirement of the loans by the Company. Maturities of long term debt for the next five years are as follows: 1998, $2,286; 1999, $2,625; 2000, $2,878; 2001, $3,164; and 2002, $3,476. Interest paid was $4,817, $304 and $250, for the years ended December 31, 1997, 1996 and 1995, respectively. The fair value of the Company's long term debt at December 31, 1997, based on quoted market prices or discounted cash flows based on currently available borrowing rates, was $153,253 compared to its carrying value of $87,649. 87. SHAREHOLDERS' EQUITY In August 1996, the shareholders of the Company approved an increase in the authorized number of shares of common stock from 30 million shares to 60 million shares. In connection with the closing of the Company's initial public offering in 1991, the holders of the Series A Convertible Preferred Stock warrants agreed that if such warrants were exercised, the holders thereof would simultaneously exercise their right to convert the Series A Convertible Preferred Stock received upon exercise of the warrants into 2,524,525 shares of common stock. Pursuant to an amendment to the warrant agreement in which the holders could elect a cashless exercise of the warrants for a reduced number of common shares based on a calculation of the fair market value of the common stock on the exercise date, 2,108,652 and 415,873 of the Series A Convertible Preferred Stock warrants were exercised and converted through a cashless exercise into 1,993,353 and 392,142 shares of common stock in 1997 and 1996, respectively. As of December 31, 1997, all warrants were exercised and converted. In July 1997, the Company's Board of Directors adopted a Stockholder Rights Plan. Pursuant to the terms of the Plan, common stock purchase Rights were distributed as a dividend at the rate of one Right for each share of common stock of the Company held by stockholders of record as of the close of business on July 21, 1997. The Rights will be exercisable only if a person or group acquires beneficial ownership of 20 percent or more of the Company's common stock or commences a tender or exchange offer upon consummation of which such a person or group would beneficially own 20 percent or more of the Company's stock. The Rights will expire on July 9, 2007. In January 1998, the Company closed the private placement of 1.7 million1,700,000 new shares of common stock to institutional investors for net proceeds of $66.3 million., and sold 83,410 shares of common stock to SmithKline Beecham for net proceeds of $5.0 million. 98. COMMON STOCK OPTIONS In April 1991, the Board of Directors adopted the 1991 Plan, amended in March 1992, March 1995 and February 1997, under which 5,500,000 shares of common stock were reserved for issuance upon exercise of options granted to employees, consultants and advisors of the Company. In May 1993, a Non-Employee Directors Stock Option Plan was approved by the shareholders under which 250,000 shares of common stock were reserved for issuance upon exercise of options granted to non-employee directors. The 1991 Plan provides for the grant of incentive and nonqualified stock options and the Non-Employee Directors Plan provides for the grant of nonqualified stock options. The maximum term of each option granted is 10 years. The option prices under the 1991 Plan and the Non-Employee Directors Plan are equal to the closing market price on the day prior to the date of grant. Prior to the establishment of these plans, the Board of Directors granted options and periodically set option prices. The Board of Directors established option prices, prior to the Company's initial public offering on May 8, 1991, based upon an evaluation of the fair market value of the Company's stock. Options normally vest on the anniversary date of the grant over a three to five year period. The Company has reserved a total of 5,623,101 shares of common stock for issuance under these plans as of December 31, 1997. Related stock option activity is as follows:
Options Granted Prior to Establishment of Non-Employee the 1991 Plan 1991 Plan Directors Plan ------------------ ------------------ ----------------- Wtd. Wtd. Wtd. Avg. Avg. Avg. Exercise Exercise Exercise Price Price Price Shares Per Per Per Share Shares Share Shares Share Balance, Dec 31, 1994 822,165 1,453,982 40,000 Granted - $ - 1,175,600 $8.13 30,000 $12.58 Exercised (31,800) 6.90 (11,017) 7.60 - - Cancelled (200) .80 (325,819) 11.46 - - -------- --------- ------- Balance, Dec 31, 1995 790,165 3.10 2,292,746 11.26 70,000 10.75 Granted - - 814,400 17.02 15,000 17.00 Exercised (232,804) .64 (55,680) 9.96 - - Cancelled (2,000) 51.00 (109,407) 13.07 - - -------- --------- ------- Balance, Dec 31,1996 555,361 3.96 2,942,059 12.81 85,000 11.85 Granted - - 796,650 17.86 20,000 18.63 Exercised (167,359) 2.92 (434,770) 8.96 (12,500) 14.53 Cancelled - - (110,103) 16.76 - - -------- -------- ------- Balance, Dec 31, 1997 388,002 $4.40 3,193,836 $14.41 92,500 $12.96 ======== ========= ======
Additional information related to the plans as of December 31, 1997 is as follows: Options Outstanding Options Exercisable ---------------------- -------------------- Wtd Avg Range of remaining Wtd Avg Wtd Avg exercise Options contractual Exercise Options Exercise prices outstanding life (yrs) Price Exercisable Price $0.01- $7.00 731,286 7.7 $4.49 467,527 $3.29 $7.01-$13.50 1,060,918 6.8 $11.04 698,230 $11.04 $13.51-$20.00 1,616,218 8.3 $15.67 360,140 $15.35 $20.01-$43.75 265,916 7.0 $32.42 127,217 $33.82 ----------- --------- $0.01-$43.75 3,674,338 7.7 $13.32 1,653,114 $11.54
There were 1,803,763 and 145,000 shares available for future option grants at December 31, 1997 under the 1991 Plan and the Non-Employee Directors Plan, respectively. The Company has adopted the disclosure-only provisions of SFAS No. 123 as they pertain to financial statement recognition of compensation expense attributable to option grants. As such, no compensation cost has been recognized for the Company's option plans. If the Company had elected to recognize compensation cost for the 1991 Plan and the Non-Employee Directors Plan consistent with SFAS No. 123, the Company's net loss and basic and diluted loss per share on a pro forma basis would be: 1997 1996 1995 ----- ----- ----- Net loss - as reported $36,895 $29,544 $22,671 Net loss - pro forma $45,208 $36,556 $25,192 Basic and diluted loss per share - as $1.59 $1.41 $1.41 reported Basic and diluted loss per share - pro $1.95 $1.74 $1.57 forma The pro forma expense related to the stock options is recognized over the vesting period, generally five years. The fair value of each option grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions for each year: 1997 1996 1995 ----- ----- ----- Risk-free interest rate 6.21% 6.09% 6.76% Expected life of options - years 7 7 7 Expected stock price volatility 75% 75% 75% Expected dividend yield N/A N/A N/A The weighted average fair value of options granted during 1997, 1996 and 19965 was $12.94and , $12.63 and $6.02, respectively. 10. COLLABORATIVE ARRANGEMENTS American Home Products On November 8, 1993, the Company signed definitive agreements with American Cyanamid Company to form an alliance in the United States for the development and marketing of three generations of products to prevent and treat respiratory syncytial virus (RSV) and for the marketing of a new anti-infective product, ZOSYN, developed by American Cyanamid. The parties agreed to co-promote and share profits or losses on the Company's RSV product, RespiGam, which was licensed for marketing by the United States Food and Drug Administration on January 18, 1996. In 1994, AHP acquired American Cyanamid and in October 1995, AHP invested $15 million in the Company through the purchase of 967,742 shares of common stock. In connection with this investment, the Company and AHP agreed to amend certain terms of agreements entered into concurrently with the formation of their 1993 alliance. Pursuant to these amendments, AHP's funding obligations and co-promotion rights with respect to the second generation RSV monoclonal product developed by the Company were terminated, the Company returned its right to co-promote ZOSYN to AHP and AHP received a right to receive a royalty on any sales of the RSV monoclonal product. In addition, the Company's right to co-fund and to co-promote an RSV vaccine being developed by AHP was converted into the right to receive royalties on any sales of the vaccine. Revenue of $4,791 and $10,744 in 1996 and 1995, respectively, associated with these agreements is included as other revenue in the accompanying statements of operations. Additionally, $2,967 of expense and $4,299 of reimbursement for co-promotion activity have been added to and netted against selling, general and administrative expense for the years ended December 31, 1997 and 1996, respectively. Abbott Laboratories In December 1997, the Company signed two agreements with Abbott Laboratories ("Abbott"). The first agreement calls for Abbott to co-promote Synagis in the U.S., if and when cleared for marketing by the FDA. The second agreement allows Abbott to exclusively distribute Synagis outside the U.S., if and when cleared for marketing by the appropriate regulatory authorities. Under the terms of the U.S. co- promotion agreement, Abbott will receive a percentage of net U.S. sales based on defined annual sales thresholds. Each company is responsible for its own selling expenses. Under the terms of the distribution agreement, the Company will manufacture and sell Synagis to Abbott at a price based on end user sales. The Company received a $15 million milestone payment as part of this agreement in 1997, which is included in other revenue. The Company could receive up to an additional $45 million based on the achievement of certain milestones, including U.S. and European marketing clearance of Synagis. BioTransplant Incorporated In October 1995, the Company and BioTransplant, Incorporated ("BTI") formed a strategic alliance for the development of products to treat and prevent organ transplant rejection. The alliance is based upon the development of products derived from BTI's anti-CD2 antibody BTI-322, the Company's anti-T cell receptor antibody MEDI-500 and future generations of products derived from these two molecules, including, but not limited to, MEDI-507. Pursuant to the alliance, the Company received an exclusive worldwide license to develop and commercialize BTI-322 and any products based on BTI-322, with the exception of the use of BTI-322 in kits for xenotransplantation or allotransplantation. The Company has paid BTI $4.5 million in license fees and research support through December 31, 1997. The Company has assumed responsibility for clinical testing and commercialization of any resulting products. BTI may receive additional research support and milestone payments that could total up to an additional $11.0 million, as well as royalties on any sales of BTI-322, MEDI-500, MEDI-507 and future generations of these products, if any. Connaught Agreement In December 1995, the Company and Connaught amended the agreement originally signed in 1992 under which the Company reacquired the rights to market CytoGam. The amendment provides for a reduction in the royalty rate to be paid by the Company on sales of CytoGam after September 30, 1995, and an agreement pursuant to which Connaught will fill and package the Company's immune globulin products through 1998. In connection with this amendment, the Company made a lump sum payment of $2.7 million in 1996 to Connaught upon completion of certain modifications to Connaught's filling and packaging facility. The $2.7 million charge is included as other operating expense in the accompanying statements of operations for the year ended December 31, 1995. SmithKline Beecham In December 1997, the Company and SmithKline Beecham ("SB") entered into a strategic alliance to develop and commercialize human papillomavirus (HPV) vaccines for prevention of cervical cancer and genital warts. In exchange for exclusive worldwide rights to the Company's HPV technology, SB has agreed to provide the Company with an up-front payment, future funding and potential developmental and sales milestones which together could total over $85 million, as well as royalties on any product sales. Under the terms of the agreement, the companies will collaborate on research and development activities. MedImmune will conduct Phase 1 and Phase 2 clinical trials and manufacture clinical material for those studies. SB is responsible for the final development of the product, as well as regulatory, manufacturing, and marketing activities. In January 1998, the Company received a $15 million payment from SB and completed the sale of 83,410 shares of common stock to SB resulting in net proceeds to the Company of $5.0 million. Other Agreements The Company has entered into research, development and license agreements with various federal and academic laboratories and other institutions to further develop its products and technology and to perform clinical trials. Under these agreements, the Company is obligated to provide funding of approximately $2.5 million and $0.8 million in 1998 and 1999, respectively. The Company has also agreed to make milestone payments in the aggregate amount of $11.5 million on the occurrence of certain events such as the granting by the FDA of a license for product marketing in the U.S. for some of the product candidates covered by these agreements. In exchange for the licensing rights for commercial development of proprietary technology, the Company has agreed to pay royalties on sales using such licensed technologies. 1110. INCOME TAXES The tax effects of the temporary differences giving rise to the Company's deferred tax assets at December 31, are as follows: 1997 1996 ------ ----- Net operating loss carryforwards $ 46,820 $ 35,562 Other 8,426 4,377 ------- ------ 55,246 39,939 Valuation allowance (55,246) (39,939) ------- ------ Net deferred taxes $ -- $ -- ======== ======== Realization of net deferred tax assets at the balance sheet date is dependent on future earnings, which are uncertain. Accordingly, a full valuation allowance was recorded against the assets. A reversal of the valuation allowance will be considered when it is more likely than not that the Company's deferred tax assets (comprised mostly of net operating loss carryforwards and research credits) will be realized. As of December 31, 1997, the Company had net operating loss carryforwards available for federal income tax reporting expiring in years 2003 through 2012, amounting to $158.6 million. In addition, the Company has $3.2 million of general business credit carryforwards expiring through 2012. The total regular tax net operating loss available of $158.6 million includes $37.3 million that, when realized, will not affect financial statement income but will be recorded directly to shareholders' equity. The realization of net operating losses may be limited by Internal Revenue Code, Section 382. 121. FORWARD EXCHANGE CONTRACTS Beginning in 1997, the Company entered into foreign forward exchange contracts to hedge against foreign exchange rate fluctuations that may occur on the Company's foreign currency denominated obligations. During 1997, the Company entered into forward deutsche mark contracts in the amount of $21,535 , all expiring within one year. Through December 31, 1997, $2,495 of these contracts have been paid, resulting in a remaining contract balance of $19,040. Fair value of the remaining balance at December 31, 1997 was $18,625, resulting in an unrealized loss of $415. Unrealized gains and losses on foreign forward exchange forward contracts that are designated and effective as hedges are deferred and recognized in the same period that the hedged obligation is recognized. The notional principal amounts for off-balance sheet instruments provide one measure of the transaction volume outstanding as of year end, and does not represent the amount of the Company's exposure to credit or market loss. The Company's exposure to credit loss and market risk will vary over time as a function of interest rates and currency rates. 132. COMMITMENTS AND CONTINGENCIES Construction Agreements The Company entered into an engineering, procurement, construction and validation services agreement with Fluor Daniel, Inc. ("Fluor") in July 1996 to design and construct the Company's manufacturing facility located on a 27 acre site in Frederick, Maryland. As of December 31, 1997, $42.4 million of the $42.5 million contract has been paid. In addition, the Company is in negotiations with Fluor to make payments in 1998 for additional expenditures needed to complete the facility. The facility will provide capacity for the production of immune globulin products; cell culture for other product candidates, including Synagis; filling and packaging; warehousing; laboratories and administration. Manufacturing, Supply and Purchase Agreements In 1989 and 1990, the Company entered into a series of contracts with the Massachusetts Public Health Biologic Laboratory, then a division of the Massachusetts Department of Public Health (the "State Lab"), and the Massachusetts Health Research Institute, Inc. ("MHRI") pursuant to which the Company agreed to license certain technology from the Commonwealth of Massachusetts and to collaborate on the development of the technology. The technology relates to the two products, RespiGam and CytoGam, currently being marketed by the Company. At the end of 1996, the Inspector General of the Commonwealth of Massachusetts publicly issued a report alleging, among other things, that certain present and former employees of the State Lab or MHRI were personally receiving from MHRI, in violation of state law, a portion of the royalties the Company was paying to MHRI on sales of RespiGam. The report also alleged that the terms of the agreements were unfair to the Commonwealth and, accordingly, the Commonwealth now has the right to rescind the agreements notwithstanding the fact that the parties had operated under those agreements for over seven years. The Inspector General has no enforcement powers. The Company regards the allegations of the Inspector General, as they relate to the Company, to be without merit. The Company has denied those allegations and in early 1997 provided the Commonwealth with a detailed rebuttal of the claims of the Inspector General pertaining to the Company. The Company has been engaged with representatives of the Commonwealth in negotiations to settle the matter on a mutually satisfactory basis. While the Company believes that substantial progress has been made toward resolving this matter in a manner generally acceptable to the Company (with no loss of the Company's rights to technology and no interruption of operations under the agreements, but with increased royalties), there can be no assurance that a final resolution will, in fact, be achieved. If no settlement is reached, the Company may be forced to litigate with the Commonwealth, and there can be no assurance that the outcome of such a litigation would be favorable to the Company. An unfavorable outcome could have a material adverse effect on the Company. The Company has entered into manufacturing, supply and purchase agreements in order to provide production capability for CytoGam and RespiGam, and to provide a supply of human plasma for production of both products. No assurances can be given that an adequate supply of plasma will be available from the Company's suppliers. Human plasma for CytoGam and RespiGam is converted to an intermediate raw material (Fraction II+III paste) under two supply agreements with two vendors. This intermediate material is then supplied to the manufacturer of the bulk product, the State Lab. Pursuant to the agreements with the State Lab, the Company paid $10.2 million in 1997, $9.7 million in 1996, and $5.2 million in 1995 for production and process development. The Company has an informal arrangement with the State Lab for planned production through June 1998 for $7,820, subject to production level adjustments. If the State Lab, which holds the sole product and establishment licenses from the FDA for the manufacture of CytoGam and RespiGam, is unable to satisfy the Company's requirements for both products on a timely basis or is prevented for any reason from manufacturing CytoGam and RespiGam, the Company may be unable to secure an alternative manufacturer without undue and materially adverse operational disruption and increased cost. The Company also has an agreement with Connaught to fill and package the Company's immune globulin products through 1998. In December 1997, the Company entered into an agreement with Boehringer Ingelheim Pharma KG, to provide supplemental manufacturing of the Company's second generation RSV product, Synagis, for which a BLA was submitted to the FDA in December 1997. The Company expensed as other operating expenses $5,403 in 1997 related to scale-up of production as part of this agreement. The Company is obligated to pay approximately 34.2 million deutsche marks, or about $19.4 million in 1998 for scale-up and market entry quantities of Synagis. There can be no assurances that should the manufacturer be unable to supply Synagis to the Company for any reason, that the Company will be able to secure an alternate manufacturer in a timely basis or without increased cost. Nor can there be any assurances that the Company or the supplemental manufacturer will be licensed by the appropriate regulatory authorities to manufacture or market the product. 14. OTHER OPERATING EXPENSES Other operating expenses in 1997 include the costs of start-up of the Frederick manufacturing facility and scale-up of production of Synagis at the Gaithersburg pilot plant and at a third-party manufacturer, Boehringer Ingelheim Pharma KG ("BI") in Biberach, Germany. The Company expects to incur significant start-up and scale-up costs throughout 1998 and into 1999. Other operating expenses in 1995 include charges to Connaught in connection with an agreement to fill and package the Company's immune globulin products. 135. PENSION PLAN The Company has a defined contribution 401(k) pension plan available to all full time employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal tax regulations. Participants are always fully vested in their contributions. The Company began employer contributions as of April 1, 1997. During 1997, the Company contributed $122 in cash to the plan. Report of Independent Accountants To the Board of Directors and Shareholders of MedImmune, Inc. We have audited the accompanying balance sheets of MedImmune, Inc. (the Company) as of December 31, 1997 and 1996, and the related statements of operations, shareholders' equity and cash flows and financial statement schedule for each of the three years in the period ended December 31, 1997. These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 1997 and 1996, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. In addition, in our opinion the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. /S/COOPERS & LYBRAND L.L.P. McLean, Virginia February 4, 1998 Report of Management The management of the Company is responsible for the preparation of the financial statements and related financial information included in this annual report. The statements were prepared in conformity with generally accepted accounting principles, and accordingly, include amounts that are based on informed estimates and judgments. Management maintains a system of internal controls to provide reasonable assurance that assets are safeguarded and that transactions are properly authorized and accurately recorded. The concept of reasonable assurance is based on the recognition that there are inherent limitations in all systems of internal accounting control and that the costs of such systems should not exceed the benefits expected to be derived. The Company continually reviews and modifies these systems, where appropriate, to maintain such assurance. The system of internal controls includes careful selection, training and development of operating and financial personnel, well-defined organizational responsibilities and communication of Company policies and procedures throughout the organization. The selection of the Company's independent accountants, Coopers & Lybrand L.L.P., has been approved by the Board of Directors and ratified by the shareholders. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with the Company's independent accountants and management to review the financial statements and related information and to confirm that they are properly discharging their responsibilities. In addition, the independent accountants and the Company's legal counsel meet with the Audit Committee, without the presence of management, to discuss their findings and their observations on other relevant matters. Recommendations made by Coopers & Lybrand L.L.P. are considered and appropriate action is taken to respond to these recommendations. /s/Wayne T. Hockmeyer, Ph.D. /s/David M. Mott Chairman and Chief Executive President and Chief Operating Officer Officer /s/Lawrence C. Hoff Chairman of the Audit Committee ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF MEDIMMUNE, INC. Information with respect to directors is included in the Company's Proxy Statement to be filed pursuant to Regulation 14A (the "Proxy Statement") under the caption "Election of Directors," and such information is incorporated herein by reference. Set forth in Part I, Item 1, are the names and ages (as of February 6, 1998), the positions and offices held by, and a brief account of the business experience during the past five years of each executive officer. All directors hold office until the next annual meeting of shareholders and until their successors are elected and qualified. Officers are elected to serve, subject to the discretion of the Board of Directors, until their successors are appointed. ITEM 11. EXECUTIVE COMPENSATION The section entitled "Executive Compensation" and the information set forth under the caption "Election of Directors-Director Compensation" included in the Proxy Statement are incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The common stock information in the section entitled "Principal Shareholders" of the Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The section entitled "Certain Transactions" of the Proxy Statement is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K The following documents or the portions thereof indicated are filed as a part of this report. a) Documents filed as part of the Report 1. Financial Statements and Supplemental Data a. Balance Sheets at December 31, 1997 and 1996 b. Statements of Operations for the years ended December 31, 1997, 1996 and 1995 c. Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 d. Statements of Shareholders' Equity for the years ended December 31, 1997, 1996 and 1995 e. Notes to Financial Statement f. Report of Independent Accountants g. Report of Management 2. Supplemental Financial Statement Schedule Schedule I - Valuation and Qualifying Accounts Page S-1 b) Reports on Form 8-K Date Filed Event Reported 10/24/97 MedImmune Reports Product Sales Increase 128 Percent in Third Quarter 11/05/97 Letter to Shareholders for 2nd Quarter 11/26/97 MedImmune and BioTransplant Announce Plans To Test New Drug For Psoriasis 12/03/97 MedImmune Enters Agreement With Boehringer Ingelheim to Supplement Manufacturing Capacity for MEDI-493. 12/03/97 MedImmune and Abbott Laboratories Sign Global Alliance to Market MEDI-493 12/15/97 MedImmune and SmithKline Beecham Form Worldwide Human Papillomavirus Vaccine Alliance 12/22/97 MedImmune Requests Marketing Clearance for MEDI-493 12/29/97 MedImmune and BioTransplant Announce Plans to Test MEDI-507 for Treatment of Graft- Versus-Host Disease; IND Submitted C) ITEM 601 EXHIBITS Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits filed herewith and such listing is incorporated by reference. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MEDIMMUNE, INC. /s/ Wayne T. Hockmeyer Date: March 27, 1998 By: Wayne T. Hockmeyer Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated. /s/ Wayne T. Hockmeyer Date: March 27, 1998 Wayne T. Hockmeyer Chairman and Chief Executive Officer (Principal executive officer) /s/ David M. Mott Date: March 27, 1998 David M. Mott President and Chief Operating Officer (Principal financial and accounting officer) /s/ M. James Barrett Date: March 27, 1998 M. James Barrett, Director /s/ James H. Cavanaugh Date: March 27, 1998 James H. Cavanaugh, Director /s/ Lawrence C. Hoff Date: March 27, 1998 Lawrence C. Hoff, Director /s/ Gordon S. Macklin Date: March 27, 1998 Gordon S. Macklin , Director /s/ Franklin H. Top, Jr. Date: March 27, 1998 Franklin H. Top, Jr., Director /s/ Barbara Hackman Franklin Date: March 27, 1998 Barbara Hackman Franklin, Director Schedule I MedImmune, Inc. Valuation and Qualifying Accounts (in thousands) Balance at Balance beginning at end of of Description period Additions Deductions period - -------------------------- --------- ---------- ---------- ------- For the year ended December 31, 1997 Trade and Contract Receivables Allowance $1,425 $4,036 ($2,167) $3,294 Trade Receivables Bad Debt Reserve 745 -- (641) 104 Inventory Reserve 8 -- (8) -- ------ ------ ------- ------ $2,178 $4,036 ($2,816) $3,398 ====== ====== ======= ====== For the year ended December 31, 1996 Trade and Contract Receivables Allowance $309 $2,136 ($1,020) $1,425 Trade Receivables Bad Debt Reserve 21 724 -- 745 Inventory Reserve 417 249 (658) 8 ------ ------ ------ ------ $747 $3,109 ($1,678) $2,178 ====== ====== ====== ====== For the year ended December 31, 1995 Trade and Contract Receivables Allowance $272 $498 ($461) $309 Trade Receivables Bad Debt Reserve 16 5 -- 21 Inventory Reserve -- 500 (83) 417 ------ ------ ------ ------ $288 $1,003 ($544) $747 ====== ====== ====== ======
S-1 c) Item 601 Exhibits 3.1(4) Restated Certificate of Incorporation, dated May 14, 1991 3.2(3) By-Laws, as amended 10.1(1)(3) License Agreement dated November 15, 1990 between the Company and Merck & Co., Inc. ("Merck") 10.2(3) Plasma Supply Agreement dated May 31, 1990 between the Company and Plasma Alliance, Inc. 10.3(3) Termination Agreement dated June 29, 1990 between the Company and Pediatric Pharmaceuticals, Inc. ("PPI") (formerly MedImmune, Inc.) 10.4(3) RSV Research Agreement dated August 1, 1989 between the Company, PPI and the Massachusetts Health Research Institute, Inc. ("MHRI") 10.5(3) RSV License Agreement dated August 1, 1989 between the Company, PPI and MHRI 10.6(3) RSV Supply Agreement dated August 1, 1989 between the Company, PPI, MHRI and the Massachusetts Public Health Biologic Laboratory ("MPHBL") 10.7(3) CMV License Agreement dated April 23, 1990 between the Company and MHRI 10.8(3) First Amendment to CMV License Agreement dated May 3, 1991 between the Company and MHRI 10.9(3) CMV Research Agreement dated April 23, 1990 between the Company, MHRI and MPHBL 10.10(3) License Agreement dated November 8, 1989 between the Company, PPI, and the Henry M. Jackson Foundation for the Advancement of Military Medicine ("HMJ") 10.11(3) Research Agreement dated November 8, 1989 between the Company, PPI and HMJ 10.12(1)(3) Research and License Agreement dated April 1, 1990 between the Company and New York University 10.13(1)(3) Research and License Agreement dated January 2, 1991 between the Company and the University of Pittsburgh 10.14(3) Patent License Agreement between the Company and the National Institutes of Health regarding parvovirus 10.15(3) License Agreement dated September 1, 1988 between the Company and Albany Medical College of Union College 10.16(3) License Agreement dated July 5, 1989 between the Company, Albert Einstein College of Medicine of Yeshiva University, The Whitehead Institute and Stanford University 10.17(3) License Agreement dated July 1, 1989 between the Company and the National Technical Information Service ("NTIS") 10.18(3) License Agreement dated September 1, 1989 between the Company and NTIS 10.19(5) Form of Stock Option Agreement, as amended E-1 10.20(3) Convertible Preferred Stock and Warrant Purchase Agreement between HCV, Everest Trust and the Company dated January 12, 1990 with form of Warrant 10.21(3) Restated Stockholders' Agreement dated May 15, 1991 10.22(3) Lease Agreement between Clopper Road Associates and the Company dated February 14, 1991 10.23(7) 1991 Stock Option Plan 10.24(3) Sublease between the Company and Pharmavene, Inc. 10.25(4) Agreement between New England Deaconess Hospital Corporation and the Company, dated as of August 1, 1991 10.26(1)(4) Research Collaboration Agreement between Merck and the Company effective as of November 27, 1991 10.27(1)(4) Co-promotion Agreement between Merck and the Company effective as of November 27, 1991 10.28(1)(4) License Agreement between Merck and the Company effective as of November 27, 1991 10.29(1)(5) Letter Agreement between Merck and the Company, dated January 26, 1993 10.30(1)(5) Termination, Purchase and Royalty Agreement between CLI and the Company, dated December 24, 1992 10.30.1(1)(12) Amendment to Termination, Purchase and Royalty Agreement between Connaught Technology Corporation and MedImmune, Inc. dated December 31, 1995 10.31(1)(5) Research and License Agreement between Cell Genesys, Inc. and the Company, dated April 29, 1992 10.31(a)(5) Unredacted pages 2-5 of Exhibit 10.31 10.32(5) Form of 1993 Non-Employee Director Stock Option Plan 10.33(1)(8) Sponsored Research and License Agreement between Georgetown University and the Company dated February 25, 1993 10.34(1)(8) License Agreement between Roche Diagnostic Systems, Inc. and the Company dated March 8, 1993 10.35(1)(8) Pip/Tazo Co-Promotion Agreement between American Cyanamid Company and the Company dated November 8, 1993 10.35.1(12) Agreement dated October 26, 1995 between American Cyanamid Company and the Company 10.36(1)(8) RSVIG Co-Development and Co-Promotion Agreement between American Cyanamid Company and the Company dated November 8, 1993 10.36.1(12) Agreement dated October 26, 1995 between American Cyanamid Company and the Company 10.37(1)(8) RSV MAB Co-Development and Co-Promotion Agreement between American Cyanamid Company and the Company dated November 8, 1993 10.37.1(12) Agreement dated October 26, 1995 between American E-2 Cyanamid Company and the Company 10.38(1)(8) RSV Vaccine Co-Development and Co-Promotion Agreement between American Cyanamid Company and the Company dated November 8, 1993 10.38.1(12) Agreement dated October 26, 1995 between American Cyanamid Company and the Company 10.39(1)(10) Fraction II + III Paste Supply Agreement between Baxter Healthcare Corporation and the Company dated September 1, 1994 10.40(11) Employment Agreement between David P. Wright and the Company dated January 2, 1995 10.41(11) Employment Agreement between Bogdan Dziurzynski and the Company dated February 1, 1995 10.42(11) Employment Agreement between Wayne T. Hockmeyer and the Company dated February 1, 1995 10.43(11) Employment Agreement between David M. Mott and the Company dated February 1, 1995 10.44(11) Employment Agreement between Franklin H. Top, Jr. and the Company dated February 1, 1995 10.45(11) Employment Agreement between James F. Young and the Company dated February 1, 1995 10.46(1)(11) License Agreement between Symbicom AB and the Company dated May 20, 1994 10.47(1)(11) License Agreement between the University of Kentucky Research Foundation and the Company effective June 10, 1994 10.48(1)(11) Research and Development Agreement between the University of Kentucky Research Foundation and the Company effective June 10, 1994 10.49(1)(11) Research and License Agreement between Washington University and the Company effective July 1, 1994 10.50(1)(11) Research and License Agreement between Washington University and the Company effective March 1, 1995 10.51(1)(9) License Agreement between Baxter Healthcare Corporation and MedImmune, Inc. effective June 2, 1995 10.52(1)(9) Stock Purchase Agreement between Baxter Healthcare Corporation and MedImmune, Inc. dated June 22, 1995 10.53(2)(10) Alliance Agreement between BioTransplant, Inc. and MedImmune, Inc. dated October 2, 1995 10.54(12) Stock Purchase Agreement dated October 25, 1995 between MedImmune, Inc. And American Home Products 10.55(2)(12) Collaboration and License Agreement dated as of July 27, 1995 between MedImmune, Inc. And Human Genome Sciences, Inc. 10.56(12) Stipulation of Settlement in reference to MedImmune, E-3 Inc. Securities Litigation, Civil Action No. PJM93-3980 10.57(2)(13) Plasma Supply Agreement dated effective as of February 8, 1996, by and between DCI Management Group, Inc. and MedImmune, Inc. 10.58(2)(13) License and Research Support Agreement dated as of April 16, 1996, between The Rockefeller University and MedImmune, Inc. 10.59(14) First Amendment of Lease Between Clopper Road Associates and MedImmune, Inc. dated June 8, 1993. 10.60(14) Second Amendment of Lease Between Clopper Road Associates and MedImmune, Inc. dated June 30, 1993. 10.61(14) Third Amendment of Lease between Clopper Road Associates and MedImmune, Inc. effective as of January 1, 1995. 10.62(14) Fourth Amendment of Lease between Clopper Road Associates and MedImmune, Inc. dated October 3, 1996. 10.63(14) Fifth Amendment of Lease between Clopper Road Associates and MedImmune, Inc. dated October 3, 1996. 10.64(1)(14) Engineering, Procurement, Construction and Validation Services Agreement between MedImmune, Inc. and Fluor Daniel, Inc. effective as of July 31, 1996. 10.65(2)(14) Research and License Agreement between OraVax Merieux Co. and MedImmune, Inc. effective as of November 1, 1996. 10.66 (15) Employment Agreement between Wayne T. Hockmeyer and MedImmune, Inc. effective April 1, 1997. 10.67 (15) Employment Agreement between David M. Mott and MedImmune, Inc. effective April 1, 1997. 10.68 (15) Employment Agreement between Franklin H. Top and MedImmune, Inc. effective April 1, 1997. 10.69 (15) Employment Agreement between David P. Wright and MedImmune, Inc. effective April 1, 1997. 10.70 (15) Employment Agreement between James F. Young and MedImmune, Inc. effective April 1, 1997. 10.71 (15) Employment Agreement between Bogdan Dziurzynski and MedImmune, Inc. effective April 1, 1997. 10.72 (16) Master Loan & Security Agreement, dated June 16, 1997 by and between Transamerica and MedImmune, Inc. 10.73(2)(16)Patent License Agreement, (MEDI-493) dated July 17, 1997 by and between Protein Design Labs and MedImmune, Inc. 10.74(2)(16)Patent License Agreement, (MEDI-507) dated July 17, 1997 by and between Protein Design Labs and MedImmune, Inc. 10.75 Sixth Amendment of Lease between ARE-QRS Corp. and MedImmune, Inc. dated September 10, 1997. 10.76(2) Co-Promotion Agreement between Abbott Laboratories and E-4 MedImmune, Inc. dated November 26, 1997 10.77(2) Contract Research and Development Agreement between MedImmune, Inc. and Dr. Karl Thomae GmbH dated November 27, 1997. 10.78(2) Manufacturing Agreement between MedImmune, Inc. and Dr. Karl Thomae GmbH dated November 27, 1997. 10.79(2) Distribution Agreement between MedImmune, Inc. and Abbott International, Ltd. dated November 26, 1997. 10.80(2) License Agreement between Loyola University of Chicago and MedImmune, Inc. dated December 3, 1997. 10.81(2) Research Collaboration and License Agreement between SmithKline Beecham and MedImmune, Inc. dated December 10, 1997. 23.1 Consent of Independent Accountants ______________ (1) Confidential treatment has been granted by the SEC. The copy filed as an exhibit omits the information subject to the confidentiality grant. (2) Confidential treatment has been requested. The copy filed as an exhibit omits the information subject to the confidentiality request. (3) Incorporated by reference to exhibit filed in connection with the Company's Registration Statement No. 33-39579. (4) Incorporated by reference to exhibit filed in connection with the Company's Registration Statement No. 33-43816. (5) Incorporated by reference to exhibit filed in connection with the Company's Annual Report on Form 10-K for the year ended December 31, 1992. (6) Incorporated by reference to exhibit filed in connection with the Company's Annual Report on Form 10-K for the year ended December 31, 1991. (7) Incorporated by reference to exhibit filed in connection with the Company's Registration Statement No. 33-46165. (8) Incorporated by reference to exhibit filed in connection with the Company's Annual Report on Form 10-K for the year ended December 31, 1993. (9) Incorporated by reference to exhibit filed in connection with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995. (10) Incorporated by reference to exhibit filed in connection September 30, 1995. (11) Incorporated by reference to exhibit filed with the Company's Annual Report on Form 10-K for December 31, 1994. (12) Incorporated by reference to exhibit filed with the E-5 Company's Annual Report on Form 10-K for December 31, 1995. (13) Incorporated by reference to exhibit filed with the Company's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1996. (14) Incorporated by reference to exhibit filed with the Company's Annual Report on Form 10-K for December 31, 1996. (15) Incorporated by reference to exhibit filed with the Company's Quarterly Report on Form 10-Q for the Quarter ended March 31, 1997. (16) Incorporated by reference to exhibit filed with the Company's Quarterly Report on Form 10-Q for the Quarter ended September 30, 1997. E-6 EX-10.75 2 EXHIBIT 10.75 SIXTH AMENDMENT OF LEASE THIS SIXTH AMENDMENT OF LEASE (this "Amendment") is made as of September 10, 1997 (the "Effective Date,,) by and between ARE-QRS CORP., a Maryland corporation ("Landlord"), and MEDIMMUNE, INC., a Delaware corpo ration ("Tenant"). EXPLANATORY STATEMENT A. Clopper Road Associates ("Original Landlord") and Tenant entered into a Lease Agreement dated February 14, 1991 (the "Original Lease"), whereby Tenant agreed to lease from Landlord forty thousand eight hundred forty-three (40,843) square feet (the "Original Leased Premises") in the building (the "Building") known as Building D located at 35 West Watkins Mill Road, in the Bennington Corporate Center in Gaithersburg, Maryland. B. Original Landlord and Tenant entered into a First Amendment of Lease dated June 8, 1993 (the "First Amendment"), pursuant to which Building D was expanded and the square footage of the original Leased Premises was increased by the amount of such expansion (the "Expansion Space") (collectively, the Original Leased Premises and the Expansion Space shall be hereinafter referred to as the "Expanded Leased Premises"). Certain other changes were also made to the Original Lease as a result of the First Amendment. C. Original Landlord and Tenant entered into a Second Amendment of Lease dated June 30, 1993 (the "Second Amendment"), pursuant to which the square footage of the Expanded Leased Premises was increased by adding space (the "Second Expansion Space") in Building 3 located at 25 West Watkins Mill Road (collectively, the original Leased Premises, the Expansion Space and the Second Expansion Space are hereinafter referred to as the "Second Expanded Leased Premises'); the Rent payable was adjusted, and certain other changes were made to the original Lease, as amended. D. Original Landlord and Tenant entered into a Third Amendment of Lease dated April 15, 1996, but effective as of January 1, 1995 (the "Third Amendment") to adjust percentages and addresses set forth in the Original Lease as amended. E. Original Landlord and Tenant entered into a Fourth Amendment of Lease dated October 3, 1996 (the "Fourth Amendment") pursuant to which the portion of the Second Expanded Leased Premises in Building B was expanded by adding space adjacent thereto (the "VAD Space") (the Second Expanded Leased Premises, as expanded by the VAD Space is hereinafter referred to as the 'Third Expanded Leased Premises,,); the Rent was adjusted, and certain other changes were made to the Original lease, as amended. F. Original Landlord and Tenant entered into a Fifth Amendment of Lease dated October 3, 1996 (the "Fifth Amendment") pursuant to which the portion of the Third Expanded Leased Premises in Building D was expanded by adding space adjacent thereof (the "Building D Expansion Space") (the Third Expanded Leased Premises, as expanded by the Building D Expansion Space, is hereinafter referred to as the "Fourth Expanded Leased Premises"; the Rent was adjusted, and certain other changes were made to the Original Lease, as amended. G. The Original Lease, the First, Second, Third, Fourth and Fifth Amendments are hereinafter collectively referred to as the "Lease". H. Landlord purchased the Project from original Landlord. I. Landlord now desires to lease to Tenant and Tenant desires to lease from Landlord additional space in Building B located at 25 West Watkins Mill Road; J. Landlord and Tenant also desire to adjust the Rent payable under the Lease and make certain other changes to the Lease, all as more specifically set forth below. NOW, THEREFORE, in consideration of the Explanatory Statement, which shall be deemed a substantive part of this Sixth Amendment, the covenants of the parties herein and in the Lease, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant hereby agree as follows: 1. Effective Date of Sixth Amendment. From and after the date of this Sixth Amendment, the Lease shall be amended as set forth below. 2. Capitalized Terms. ALL capitalized terms in this Sixth Amendment shall have the same meanings as those in the Lease, unless specifically set forth otherwise herein. 3. 1997 Additional Space. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, in addition to the Fourth Expanded Leased Premises, Ten Thousand Seventy Three (10,073) rentable square feet of space in Building 3 located at 25 West Watkins Mill Road (the 111997 Additional Space") (collectively, the Fourth Expanded Leased Premises and the 1997 Additional Space shall be deemed the "Leased Premises"). The 1997 Additional Space is shown more particularly on Exhibit A attached hereto and made a part hereof. On or before the 1997 Additional Space Commencement Date (as defined in Section 4(a) below), Landlord's architect and Tenant's architect shall jointly measure the rentable square footage of the 1997 Additional Space in accordance with the Building Owners and Managers Association method of measurement (ANSI 265.11996) and shall jointly certify to Landlord and Tenant the rentable square footage of the 1997 Additional Space. If necessary, appropriate rental and other adjustments shall be made by way of an amendment to the Lease. Landlord hereby agrees that the Second Expansion Space, the VAD Space and the 1997 Additional Space need not be separate and distinct premises and, subject to compliance by Tenant with the provisions of the Lease governing alterations, may be altered, reconfigured or redesigned to comprise a single integrated premises. 4. Construction of-1997 Additional Space (a) Landlord shall deliver the 1997 Additional Space to Tenant on the day following the date of delivery by Landlord to Tenant of a fully executed copy of this Amendment (the 111997 Additional Space Commencement Date"). Tenant hereby acknowledges that it has inspected the 1997 Additional Space and that it is in an unfinished state and Tenant hereby agrees to accept the 1997 Additional Space in "as is" condition on the date hereof reasonable wear and tear excepted between the date hereof and the date of delivery to Tenant. (b) Tenant shall cause the improvements for the 1997 Additional Space (the 111997 Additional Space Construction") to be constructed in accordance with the plans and specifications for the 1997 Additional Space (the 111997 Additional Space Plans"). The 1997 Additional Space Plans shall be approved and initialed by the parties before construction begins. Landlord shall not unreasonably withhold or delay its approval of the 1997 Additional Space Plans. Tenant shall provide Landlord one copy of all the 1997 Additional Space Plans at Tenant's expense, before construction begins. Tenant shall have received a building permit from the City of Gaithersburg for the 1997 Additional Space, and shall have provided a copy to Landlord, before Tenant shall be authorized to begin construction under this Sixth Amendment. Before construction begins Tenant shall have furnished to Landlord insurance certificates evidencing the existence of all insurance policies required to be carried by Tenant pursuant to the Lease. (c) (i) Subject to Landlord's approval, which approval shall not be unreasonably withheld or delayed, Tenant shall select a contractor (the "Third Party Contractor") to construct the 1997 Additional Space improve ments. Tenant will not change the Third Party Contractor to another party without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. The Third Party Contractor shall provide all work, labor and materials in support of the 1997 Additional Space Construction in accordance with the 1997 Additional Space Plans. The Third Party Contractor shall also perform its work in strict compliance with all laws, rules, regulations, orders, codes and other requirements of all governmental and quasi-governmental authorities having jurisdiction with respect to the 1997 Additional Space and/or the performance of the 1997 Additional Space Construction, and shall comply with all of Landlord's reasonable rules and regulations provided to the Third Party Contractor. (ii) In addition, Tenant shall cause the Third Party Contractor to obtain Builder's Risk insurance naming Landlord and Tenant as additional insureds and public liability insurance with limits of $1,000,000/ $2,000,000 for the 1997 Additional Space Construction. No later than the date of commencement of the 1997 Space Construction, Tenant shall cause the Third Party Contractor to provide to Landlord original insurance certif icates evidencing all such insurance policies and proof that the Third Party Contractor maintains a policy of Worker's Compensation Insurance in accordance with applicable law. (iii) Landlord, without charge to Tenant, shall have the right to observe the Third Party Contractor's work on the 1997 Additional Space Construction. (d) Landlord shall contribute $75,000.oo (the "Allowance") toward the costs and expenses incurred in connection with the performance of the 1997 Additional Space Construction. The Allowance shall be paid by Landlord to Tenant upon the completion of the 1997 Additional Space Construction. The 1997 Additional Space Construction shall be completed at such time as Tenant,. at its sole cost and expense and without cost to Landlord (except for the Allowance) shall (1) furnish evidence satisfactory to Landlord that all of the 1997 Additional Space Construction has been completed and paid for in full (which may be evidenced by the architect's certificate of completion and final waiver and release of liens from all contractors, subcontractors and materialmen (and such work has been accepted by Landlord); that any and all liens therefor that have been or might be filed have been discharged of record (by payment, bond, order of a court of competent jurisdiction or otherwise) or waived, and that no security interests relating thereto are outstanding; (2) furnish to Landlord all certifications and approvals with respect to the 1997 Additional Space Construction that may be required from any governmental authority and any board of fire underwriters or similar body for the use and occupancy of the 1997 Additional Space; and (3) furnish an affidavit from Tenant's architect certifying that all work performed in the 1997 Additional Space is in substantial accordance with the 1997 Additional Space Plans approved by Landlord. 5. Certain Constructions Provisions Not Applicable to 1997 Additional Space. Article I.B of the Original Lease, Paragraphs 4 through 7 of the First Amendment and Paragraph 5 of the Second Amendment shall not apply to the 1997 Additional Space, except as may be specifically set forth in this Sixth Amendment. 6. Term of 1997 Additional Space Lease. The 1997 Additional Space Lease Term will commence on the 1997 Additional Space Commencement Date, and will end on November 30, 2006, subject to Paragraph 7 below. From and after the date of this Sixth Amendment, the term "Lease Term" will include the 1997 Additional Space Lease Term. 7. Cancellation Option (a) Paragraph II.B of the Original Lease, as amended by the First Amendment, and as amended by the Second Amendment (with respect only to the Expanded Leased Premises (as defined in the Second Amendment)) shall not apply to the 1997 Additional Space. (b) Provided that no event of default shall have occurred and be continuing, Tenant shall have the right to terminate the Lease with respect to the 1997 Additional Space at any time from and after November 30, 2001 upon at least 180 days prior written notice to Landlord, which notice shall be accompanied by a termination fee in an amount equal to $38,256.00 plus an amount equal to three (3) months Basic Annual Rent payable hereunder on the date of Tenant's notice in respect of the 1997 Additional Space, if the termination date is November 30, 2001. The termination fee payable by Tenant to Landlord shall be reduced by $620.88 per month after December 1, 2001. So long as Tenant pays the Basic Annual Rent and Additional Rent payable under the Lease through the termination date set forth in Tenant's notice, the Lease as it relates to the 1997 Additional Space shall expire and come to an end on such termination date as if such date were the end of the Lease Term. 8. Basic - Annual Rent for the 1997 Additional Space. Basic Annual Rent for the 1997 Additional Space shall equal One Hundred Thirty-five Thousand Nine Hundred Eighty Five and 56/100 Dollars ($135,985.56) per annum, payable in equal monthly installments of Eleven Thousand Three Hundred Thirty Two and 13/100 Dollars ($11,332.13). Payment of Basic Annual Rent shall commence on November 10, 1997. 9 . Rent. (a) The Basic Annual Rent shall be increased each year by an amount equal to three percent (3%) of the Basic Annual Rent then in effect. The first such adjustment shall become effective December 1, 1998, and subsequent adjustments shall become effective on December 1 of every calendar year thereafter for so long as the Lease continues in effect. (b) The above amounts of Basic Annual Rent for the 1997 Additional Space shall be paid at the same time and in addition to the payment of Basic Annual Rent for the balance of the Leased Premises, and otherwise in the manner set forth in Article III.B of the Lease. (c) There shall be no Security Deposit required hereunder for the 1997 Additional Space. 10. Adjustments to Square Footages and Percentages. (a) Paragraph III.C(l)(c) of the Lease shall be amended so that the term "Rentable Area of the Leased Premises,' shall be deemed to be 81,298 square feet (being Fifty Eight and Fifty One One Hundredths Percent (58-51%) of the Buildings) so that the term includes the 1997 Additional Space. This amended square footage number shall apply throughout the Lease to all references to the square footage of the Leased Premises. (b) Notwithstanding anything to the contrary continued in the Lease, including this Amendment, for the purpose of calculating Additional Rent payments in respect of Common Area Expenses, Taxes and Insurance Tenant's Portion shall be Fifty One and Twenty Six one Hundredths Percent (51.26%) and the term Tenant's Portion shall not include the 1997 Additional Space. The term "Tenant's 1997 Additional Space Portion" shall mean Seven and Twenty Five One Hundredths Percent (7.25%). Tenant shall pay to landlord, as Additional Rent in respect of the 1997 Additional Space, Tenant's 1997 Additional Space Portion of Common Area Expenses, Taxes and Insurance. Payments by Tenant of Additional Rent in respect of the 1997 Additional Space shall be made monthly commencing on the date upon which Basic Annual Rent in respect of the 1997 Additional Space commences and shall be payable on the first day of each calendar month thereafter, each such payment to be in an amount equal to one-twelth (1/12th) of the amount of such expenses for the applicable calendar year as estimated by Landlord. Payments of Tenant's 1997 Additional Space Portion in respect of Common Area Expenses shall not increase in any one year by more than eight percent (8%). 11. Use Restrictions and Rules. Paragraph IV.A of the Original Lease shall apply to the 1997 Additional Space. 12. Improvements-by Tenant. Subsection (i) of the second paragraph of Paragraph IV.B of the Lease shall be stricken in its entirety and replaced with the following: "(i) the aggregate cost of the same does not exceed One Hundred Thousand Dollars ($100,000) with respect to the Expanded Leased Premises, Fifty Thousand Dollars ($50,000) with respect to the Second Expansion Space, Fifty Thousand Dollars ($50,000) with respect to the VAD Space, Fifty Thousand Dollars ($50,000) with respect to the Building D Expansion Space, or Fifty Thousand Dollars ($50,000) with respect to the 1997 Additional Space .... 13. Insurance. Paragraph IV.E of the original Lease shall apply to the 1997 Additional Space. 14. Damage and Destruction. The last two paragraphs of Article VI of the Lease shall be amended to read as follows: "Notwithstanding the preceding three (3) paragraphs of this Article VI, if Landlord or Tenant has the right to terminate the Lease pursuant to this Article VI due to damage or destruction to the Expanded Leased Premises and Building D Expansion Space only (excluding the Second Expansion Space, the VAD Space and the 1997 Additional Space) by fire, other casualty, or any other cause (except condemnation), then Landlord or Tenant automatically shall have the right pursuant to this Article VI to terminate the Lease with respect to the Second Expansion Space, the VAD Space and the 1997 Additional Space regardless of whether the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space has suffered any damage or destruction. However, if Landlord or Tenant has the right to terminate the Lease pursuant to this Article VI due to damage or destruction to the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space only, (excluding the Expanded Leased Premises and Building D Expansion Space), Landlord or Tenant shall not have any right to terminate the Lease with respect to the Expanded Leased Premises and Building D Expansion Space. If Landlord or Tenant duly terminates the Lease under Article VI with respect to the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space, the Lease shall remain in full force and effect with respect to the Expanded Leased Premises and Building D Expansion Space, and the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space shall be stricken from the definition of "Leased Premises" under the Lease. Upon such damage or destruction to the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space, the parties agree to enter into an amendment to the Lease setting forth the reduced Leased Premises and other related changes to the Lease, including, without limitation, reduction of Basic Annual Rent and Tenant's Portion of Common Area Expenses, Taxes and Insurance. Notwithstanding anything set forth above in this Article VI, if Landlord or Tenant has the right to terminate the Lease pursuant to this Article VI due to damage or destruction to one of the Second Expansion Space or the VAD Space or the 1997 Additional Space, then Landlord or Tenant shall not have the right to terminate the Lease under this provision with respect to the nondamaged Space in Building B, or with respect to the Expanded Leased Premises.,, 15. Condemnation. The last sentence of the second paragraph of Article VII of the Lease shall only apply to the Expanded Leased Premises and Building D Expansion Space and shall not apply to the Second Expansion Space, or the VAD Space or the 1997 Additional Space. In addition, the last two paragraphs of Article VII of the Lease shall be amended to read as follows: "Notwithstanding the preceding two (2) paragraphs of this Article VII, if Landlord or Tenant has the right to terminate the Lease pursuant to this Article VII due to taking or condemnation of the Expanded Leased Premises and Building D Expansion Space only (excluding the Second Expansion Space, the VAD Space and the 1997 Additional Space), then Landlord or Tenant automatically shall have the right pursuant to this Article VII to terminate the Lease with respect to the Second Expansion Space, VAD Space, and the 1997 Additional Space, regardless of whether the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space has been condemned in whole or in part. However, if Landlord or Tenant has any right to terminate the Lease pursuant to this Article VII due to condemnation or taking of the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space only (excluding the Expanded Leased Premises and Building D Expansion Space), Landlord or Tenant shall not have the right to terminate the Lease with respect to the Expanded Leased Premises and Building D Expansion Space. If Landlord or Tenant duly terminates the Lease under Article VII with respect to the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space the Lease shall remain in full force and effect with respect to the Expanded Leased Premises and Building D Expansion Space and the Second Expansion Space and/or VAD Space and/or the 1997 Additional Space shall be stricken from the definition of "Leased Premises" under the Lease. Upon such condemnation of the Second Expansion Space and/or the VAD Space and/or the 1997 Additional Space the parties agree to enter into an amendment to the Lease setting forth the reduced Leased Premises and other related changes to the Lease, including, without limitation, a reduction of Basic Annual Rent and Tenant's Portion of Common Area Expenses, Taxes and Insurance. Notwithstanding anything set forth above in this Article VII, if Landlord or Tenant has the right to terminate the Lease pursuant to this Article VII due to taking or condemnation of one of the Second Expansion Space or the VAD Space or the 1997 Additional Space, then Landlord or Tenant shall not have the right to terminate the Lease under this provision with respect to the noncondemned Space in Building B, or with respect to the Expanded Leased Premises. 16. Parkincr. Parking under the Lease shall not be modified pursuant to this Sixth Amendment. 17. Renewal Option. Rider No. 1 to the Lease shall apply to the 1997 Additional Space. 18. Tenant Authorization. Tenant represents and warrants to Landlord that this Sixth Amendment has been validly authorized and is executed by an authorized officer of Tenant and that its terms are binding upon and enforceable against Tenant in accordance herewith. 19. Brokers. Landlord and Tenant represent and warrant that there is no real estate broker or agent representing Tenant in connection with this Sixth Amendment. 20. Lease as Amended. From and after the full execution of this Sixth Amendment, the Lease shall be amended and in full force and effect in such respects as are set forth in this Sixth Amendment, and all other provisions, terms, conditions and riders of and to the Lease shall in all respects remain as set forth in the Lease, in full force and effect and applicable to the 1997 Additional Space, except as specifically set forth in this Sixth Amendment. 21. Reaffirmation of Lease. Each of Tenant and Landlord hereby reaffirms and restates, and agrees to be bound by, the covenants, promises, representations and agreements set forth in the Lease (except to the extent that they are expressly superseded by this Sixth Amendment) as if made herein. LANDLORD: ARE-QRS CORP. By:/s/Allan D. Gold Name: Allan D. Gold Title: President MEDIMMUNE, INC., a Delaware corporation By:/s/David M. Mott Name: David M. Mott Title: President EX-10.76 3 EXHIBIT 10.76 CO-PROMOTION AGREEMENT This CO-PROMOTION AGREEMENT effective as of the 26th day of November, 1997 between ABBOTT LABORATORIES, through its ROSS PRODUCTS DIVISION, a corporation organized and existing under the laws of the State of Illinois and having its principal office at 100 Abbott Park Road, Abbott Park, Illinois 60064 (hereinafter individually and collectively referred to as "ABBOTT") and MEDIMMUNE, INC., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 35 West Watkins Mill Road, Gaithersburg, Maryland 20878 ("MEDIMMUNE"). W I T N E S S E T H: WHEREAS, the parties hereto desire to enter into a Co-Promotion Agreement with respect to PRODUCT (as hereinafter defined) in the TERRITORY (as hereinafter defined). NOW, THEREFORE, the PARTIES agree that the following terms and conditions shall apply with respect to the Co-Promotion of PRODUCT in the TERRITORY: 1. GENERAL (a) "AFFILIATE" shall mean any corporation or other business entity that directly or indirectly controls, is controlled by, or is under common control with a PARTY. Control means ownership or other beneficial interest in fifty percent (50%) or more of the voting stock or other voting interest of a corporation or other business entity. (b) "COMMITTEE" shall mean the advisory marketing committee as set forth in Section 2.3(a). (c) "FIRST COMMERCIAL SALE" of PRODUCT shall mean the first sale to a THIRD PARTY of PRODUCT in the TERRITORY after approval of the PRODUCT has been granted by the U.S. Food & Drug Administration ("FDA"). (d) "GAAP" shall mean, as of any applicable date of determination, Generally Accepted Accounting Principles consistently applied. (e) "MARKETING PLAN" shall mean a plan for marketing and detailing of PRODUCT, including monthly PRODUCT sales forecasts for the TERRITORY and a marketing budget. (f) "NET SALES" shall mean with respect to PRODUCT that sum determined by deducting from the gross amount invoiced for PRODUCT by MEDIMMUNE in the TERRITORY in an arms length transaction to customers who are not AFFILIATES of MEDIMMUNE: (i) transportation charges to the extent included in the billing; (ii) trade, quantity or cash discounts, to the extent allowed; (iii) credits or allowances, if any, (PAGE 1) given or made on account of price adjustments, or returns, to the extent made; (iv) any and all Federal, state or local government rebates, whether in existence now, or enacted at any time during the term of this Agreement, to the extent made; (v) any tax, excise or other governmental charge upon or measured by the production, sale, transportation, delivery or use of the PRODUCT to the extent separately billed; (vi) a reasonable allowance for bad debt; in each case determined in accordance with MEDIMMUNE's normal internal accounting practices and GAAP. (g) "PARTY(IES)" shall mean ABBOTT and/or MEDIMMUNE, as the case may be. (h) "PRODUCT" shall mean the humanized antibody directed against respiratory syncytial virus ("RSV") and known as MEDI-493 (palivizumab). (i) "TERRITORY" shall mean the United States of America, including its territories and possessions, Puerto Rico and excluding the State of Maine and the Commonwealth of Massachusetts; provided that if MEDIMMUNE reacquires rights to the PRODUCT in Maine and Massachusetts the TERRITORY shall from that point forward include the State of Maine and the Commonwealth of Massachusetts. (j) "THIRD PARTY" shall mean a party other than ABBOTT, MEDIMMUNE or their AFFILIATES. (k) "YEAR" shall mean the 12-month period beginning on July 1, 1998 and ending June 30, 1999 and each 12 month-period thereafter. 2. CO-PROMOTION 2.1 (a) MEDIMMUNE hereby appoints ABBOTT as the co-promoter of PRODUCT in the TERRITORY. ABBOTT accepts such appointment and agrees to co-promote the PRODUCT with MEDIMMUNE in a manner consistent with this Agreement and the directions of MEDIMMUNE for the PRODUCT. Neither PARTY shall authorize any third party to sell or co-promote the PRODUCT in the TERRITORY other than authorized distributors that resell the PRODUCT. ABBOTT shall have the exclusive right to co-promote PRODUCT in the TERRITORY. (b) At ABBOTT's cost and expense, ABBOTT agrees to maintain at least (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) sales representatives whose primary call responsibility includes pediatricians (office and hospital based), neonatologists, pediatric infectious disease specialists and other pediatric support personnel, to train such sales force with respect to selling of PRODUCT and to use such sales force to actively promote PRODUCT each YEAR with special emphasis on such promotion during the months of September through March of each YEAR, (PAGE 2) with such promotion including but not limited to sales presentations to the target audience, and participation in conventions, and symposia. (c) At MEDIMMUNE's cost and expense, MEDIMMUNE agrees to maintain at least (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) sales representatives whose primary call responsibility includes hospital based physicians, neonatologists, pediatric infectious disease specialists and other pediatric support personnel, to train such sales force with respect to selling of PRODUCT and to use such sales force to actively promote PRODUCT each YEAR with special emphasis on such promotion during the months of September through March of each YEAR, with such promotion including but not limited to sales presentations to the target audience, and participation in conventions, and symposia. (d) ABBOTT and MEDIMMUNE shall be responsible for causing their respective sales forces to co-promote PRODUCT in accordance with the MARKETING PLAN only with promotional materials provided or approved by MEDIMMUNE and in accordance with all applicable laws, rules and regulations. 2.2 Sale and Manufacture of the PRODUCT. (a) During the term of this Agreement, MEDIMMUNE shall be responsible for: (i) Manufacturing (or having manufactured), packaging, labeling, warehousing and distributing PRODUCT in the TERRITORY. (ii) Accepting of orders, invoicing customers and collecting receivables. (iii)Training materials, territory sales reports and promotional materials for both PARTIES field sales forces. (iv) Providing customer service activities, medical information services and regulatory filings and activities. (v) Preparation of a MARKETING PLAN for the PRODUCT for each YEAR which may be amended by MEDIMMUNE during the YEAR, after prior consultation with the COMMITTEE. (b) All sales of the PRODUCT in the TERRITORY shall be invoiced by MEDIMMUNE. (c) All terms of sale including, without limitation, policies concerning pricing, credit terms, cash discounts and returns and (PAGE 3) allowances shall be set by MEDIMMUNE consistent with MEDIMMUNE's normal internal selling practices and in accordance with GAAP, consistently applied. (d) All customer orders for the PRODUCT shall be received and executed by MEDIMMUNE or its designee. If ABBOTT receives any orders it shall refer such to MEDIMMUNE. MEDIMMUNE, or its designee, shall use reasonable efforts to fill PRODUCT orders. (e) PRODUCT shall be marketed by the PARTIES hereto under a single trademark selected, registered and maintained by MEDIMMUNE and owned by MEDIMMUNE. (f) ABBOTT shall give MEDIMMUNE notice of any PRODUCT complaint, including but not limited to any adverse drug experience (as defined in 21 CFR 314.80 or any successor provision thereto) which ABBOTT obtains information in accordance with the following procedure: (i) information concerning any adverse drug experience associated with the PRODUCT shall be reported to MEDIMMUNE's designated medical liaison by telefax within twenty-four (24) hours and by hard copy in writing within three (3) days after initial receipt of such information; (ii) ABBOTT's report to MEDIMMUNE shall contain (a) the date the report was received by ABBOTT; (b) the name of the reporter; (c) the address and telephone number of the reporter; and (d) an indication of the adverse drug experience; and (iii) all other PRODUCT complaints not covered by (i) above shall be reported to MEDIMMUNE in writing at least once each month. MEDIMMUNE shall investigate all adverse drug experiences and non-clinical complaints associated with the PRODUCT, including those reported to MEDIMMUNE by ABBOTT, and as appropriate report such information to the FDA. In addition, so long as ABBOTT is a co-promoter of PRODUCT, MEDIMMUNE shall provide ABBOTT with a summary of all adverse drug experiences and clinical complaints received by MEDIMMUNE, during each calendar quarter and all material comments of the FDA with respect thereto within thirty (30) days after the end of such calendar quarter; provided, however, MEDIMMUNE shall provide ABBOTT prompt written notice of any adverse side effect experienced in response to the use of PRODUCT. (g) MEDIMMUNE warrants that the PRODUCT (i) shall be manufactured in conformance with all applicable federal, state and local statutes, ordinances and regulations, (including, without limitation, the Federal Food Drug and Cosmetic Act (FD&C) and the regulations (PAGE 4) thereunder such as current Good Manufacturing Practices), as the same may be amended from time to time, (ii) at the time of shipment by MEDIMMUNE shall not be adulterated or misbranded within the meaning of the FD&C, and (iii) at the time of shipment by MEDIMMUNE shall not be a product which would violate any section of the FD&C if introduced into interstate commerce. (h) MEDIMMUNE agrees that MEDIMMUNE will not without ABBOTT's written consent discount the selling price of PRODUCT in order to promote the sales of other products of MEDIMMUNE and that it will conduct all price negotiations in good faith on an arms length basis. (i) In addition to MEDIMMUNE's obligations set forth in Section 2.3(h) above, MEDIMMUNE shall, after the first YEAR, advise and consult with ABBOTT prior to any reduction of the price at which the PRODUCT shall be marketed, promoted and sold in the TERRITORY to the extent such proposed reduced price is less than the average selling price per unit of PRODUCT achieved during the first YEAR; provided, however, MEDIMMUNE shall make the final decision regarding such price reduction. (j) If there is a change in market conditions which affects the economics of this Agreement, both PARTIES will discuss modifications to this Agreement to address such changed market conditions. However, neither party shall be obligated to agree to such modifications to the terms of this Agreement. 2.3 Advisory Marketing Committee. (a) So long as ABBOTT continues as a co-promoter of PRODUCT, there shall be a joint committee to advise MEDIMMUNE with respect to the marketing and selling of PRODUCT in the TERRITORY (the "COMMITTEE"). The COMMITTEE shall be composed of three members appointed by ABBOTT and three members appointed by MEDIMMUNE, with one of the members appointed by MEDIMMUNE being Chairman of the COMMITTEE. The COMMITTEE shall consider PRODUCT supply issues. (b) The COMMITTEE shall meet at the call of the Chairman, but not less than once each calendar quarter, at the offices of MEDIMMUNE or such other place in the TERRITORY designated by the Chairman to advise as to the coordination and implementation of a MARKETING PLAN for the PRODUCT. A quorum for the conduct of business at any meeting of the COMMITTEE shall consist of at least two representatives of ABBOTT and at least two MEDIMMUNE representatives. If the COMMITTEE fails to agree on a matter, the matter shall be referred to the President of MEDIMMUNE and the President of the Ross Products Division. MEDIMMUNE will consider ABBOTT's input, but shall have the final authority with respect to any recommendations of the COMMITTEE. (PAGE 5) (c) The COMMITTEE shall assist and advise MEDIMMUNE in the development of a MARKETING PLAN for each YEAR PRODUCT will be sold in the TERRITORY. (d) In the event a decision is made by ABBOTT to sample the PRODUCT, ABBOTT shall pay for its samples at MEDIMMUNE's fully allocated cost therefor. (e) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (f) MEDIMMUNE shall prepare or approve all promotional materials for PRODUCT. Such promotional material will identify both PARTIES. MEDIMMUNE shall be responsible for all costs associated with developing promotional materials. (g) MEDIMMUNE shall supply ABBOTT with such promotional materials at MEDIMMUNE's fully allocated direct cost. Each PARTY shall be responsible for the costs and expenses of its sales force and for all of its selling expenses, including but not limited to sales training and sales meetings. The PARTIES agree to cooperate with each other with respect to such sales training. 2.4 Reporting and Payment. (a) In each YEAR, in which ABBOTT is co-promoting PRODUCT, in lieu of any other compensation, ABBOTT shall receive the following payment on NET SALES of PRODUCT sold for use in the TERRITORY by MEDIMMUNE or its AFFILIATES as follows: (x) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (y) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (z) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (c) All sums due under this Agreement shall be payable in U.S. Dollars by federal funds wire transfer or by check as instructed in writing by the party to receive such payment from time to time. All amounts due under Section 2.4 shall be paid on a calendar quarter basis, within forty-five (45) days after the end of the quarter. With each quarterly payment, MEDIMMUNE shall deliver to ABBOTT a full and accurate accounting to include at least the following information: (i) Quantity of PRODUCT sold by MEDIMMUNE, (ii) Total amount invoiced for PRODUCT, (PAGE 6) (iii)Calculation of NET SALES, (iv) Total compensation payable to ABBOTT. (e) Each PARTY shall keep complete and accurate records as are required to verify compliance with this Agreement. Such records shall be retained and made available for reasonable review by an independent public accounting firm acceptable to both PARTIES upon reasonable notice, during normal business hours and no more than once each YEAR, and at the reviewing PARTY's expense, for the purposes of verifying the accuracy of the accounting. Each document from which the reports and statements are prepared pursuant to this Agreement shall be retained for two (2) years, and the right of inspection and the right of audit hereunder shall terminate with respect thereto at the end of such two (2) year period. In the event that such inspection shall indicate that in any calendar year that the payments which should have been paid by MEDIMMUNE are at least five percent (5%) greater than those which were actually paid by MEDIMMUNE, then MEDIMMUNE shall pay the cost of such inspection. All underpayments are immediately due and payable. 2.6 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 2.7 Each PARTY shall promptly notify the other PARTY in writing of any facts relating to the advisability of the recall, destruction or withholding from the market of the PRODUCT anywhere in the world (collectively, "Recall"). If at any time (a) any governmental or regulatory authority in the TERRITORY issues a request, directive or order for a Recall; (b) a court of competent jurisdiction orders a Recall in the TERRITORY; or (c) MEDIMMUNE determines, following consultation with ABBOTT (except in emergency situations in which there is insufficient time for such consultation), that a Recall in the TERRITORY is necessary or advisable, MEDIMMUNE shall take all appropriate corrective actions, at MEDIMMUNE's expense, to effect the Recall and ABBOTT shall provide MEDIMMUNE with such cooperation in connection with the Recall as MEDIMMUNE may reasonably request. 3. INDEMNITY 3.1 (a) MEDIMMUNE shall defend, indemnify and hold harmless ABBOTT, AFFILIATES of ABBOTT and their respective directors, officers, agents and employees, from and against any and all liability, loss, damages and expenses (including attorneys' fees) as the result of THIRD PARTY claims, demands, costs or judgments which may be made or instituted against any of them arising out of (i) any negligent act or omission or willful misconduct of MEDIMMUNE, AFFILIATES of MEDIMMUNE or any of their respective officers, directors, agents or employees with respect to PRODUCT, (ii) any violation of approved labeling or any applicable statute or regulation with respect to PRODUCT, or breach of (PAGE 7) this Agreement or any representation or warranty hereunder, by MEDIMMUNE, AFFILIATES of MEDIMMUNE or any of their respective officers, directors, agents or employees, (iii) the manufacture, possession, packaging, distribution (except for the distribution of PRODUCT samples by ABBOTT representatives), use, testing, sale or other disposition of the PRODUCT, or (iv) any claim against ABBOTT for patent or trademark infringement in connection with the manufacture, use or sale of the PRODUCT. MEDIMMUNE shall not be obligated to indemnify an indemnified party to the extent that any claims against an indemnified party result from (i) any negligent act or omission or willful misconduct of ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents, or employees with respect to the PRODUCT, or (ii) any violation of approved labeling or any applicable statute or regulation with respect to PRODUCT (provided that ABBOTT shall not be deemed to be in violation of this provision by using promotional materials provided by MEDIMMUNE), or breach of this Agreement or any representation or warranty hereunder, by ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents, or employees with respect to the PRODUCT, or (iii) marketing of the PRODUCT or any other action with respect to PRODUCT by ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents or employees, in each case which is not in compliance with applicable law, rules or regulation, (ABBOTT shall not be deemed to be in violation of this provision for using promotional materials provided by MEDIMMUNE) or (iv) any claim warranty or representation by ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents or employees with respect to PRODUCT which has not been approved in advance by MEDIMMUNE. MEDIMMUNE shall have the exclusive right to control the defense of any action which is to be indemnified in whole by MEDIMMUNE hereunder, including the right to select counsel reasonably acceptable to ABBOTT to defend ABBOTT, and to settle any claim, provided that, without the written consent of ABBOTT (which shall not be unreasonably withheld or delayed), MEDIMMUNE shall not agree to settle any claim against ABBOTT. The provisions of this paragraph shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement and MEDIMMUNE'S obligation hereunder shall apply whether or not such claims are rightfully brought. (b) ABBOTT shall defend, indemnify and hold harmless MEDIMMUNE, AFFILIATES of MEDIMMUNE, and their respective directors, officers, agents and employees, from and against any and all liability, loss, damages and expenses (including attorneys' fees) as the result of THIRD PARTY claims, demands, costs or judgments which may be made or instituted against any of them arising out of (i) any negligent act or omission or willful misconduct of ABBOTT, AFFILIATES or ABBOTT or any of their respective officers, directors, agents or employees, with respect to the Product or (ii) any violation of approved labeling or any applicable statute or regulation with respect to PRODUCT (ABBOTT (PAGE 8) shall not be deemed to be in violation of this provision by using promotional material provided by MEDIMMUNE), or breach of this Agreement or any representation or warranty hereunder, by ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents or employees, or (iii) the marketing of the PRODUCT, or any other action of ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents or employees, with respect to PRODUCT in each case which is not in compliance with applicable law, rules or regulation (provided that ABBOTT shall not be deemed to be in violation of this provision by using promotional materials provided by MEDIMMUNE), or (iv) from any claim, warranty or representation of ABBOTT, AFFILIATES of ABBOTT or any of their respective officers, directors, agents or employees, with respect to PRODUCT which has not been approved in advance by MEDIMMUNE. ABBOTT shall not be obligated to indemnify an indemnified party to the extent that any claims against an indemnified party result from (i) any negligent act or omission or willful misconduct of MEDIMMUNE, or Affiliates of MEDIMMUNE or any of their respective officers, directors, agents or employees with respect to the PRODUCT, (ii) any violation of approved labeling or any applicable statute or regulation with respect to PRODUCT, or breach of this Agreement or any representation or warranty hereunder, by MEDIMMUNE, AFFILIATES of MEDIMMUNE or any of their respective officers, directors, agents or employees, (iii) the manufacture, possession, packaging, distribution (except for the distribution of PRODUCT samples by ABBOTT representatives), use, testing, sale or other disposition of the PRODUCT, or (iv) any claim against ABBOTT for patent or trademark infringement in connection with the manufacture, use or sale of the PRODUCT. ABBOTT shall have the exclusive right to control the defense of any action which is to be indemnified in whole by ABBOTT hereunder, including the right to select counsel reasonably acceptable to MEDIMMUNE to defend MEDIMMUNE, and to settle any claim, provided that, without the written consent of MEDIMMUNE (which shall not be unreasonably withheld or delayed), ABBOTT shall not agree to settle any claim against MEDIMMUNE. The provisions of this paragraph shall survive and remain in full force and effect after any termination, expiration or cancellation of this Agreement and ABBOTT'S obligation hereunder shall apply whether or not such claims are rightfully brought. 3.2 A person or entity that intends to claim indemnification under this Article 6 (the "Indemnitee") shall promptly notify the other PARTY (the "Indemnitor") of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor, after it determines that indemnification is required of it, shall assume the defense thereof with counsel mutually satisfactory to the PARTIES; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume the defense, or if representation of such Indemnitee by the counsel (PAGE 9) retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other person represented by such counsel in such proceedings. The indemnity agreement in this Article shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article. The Indemnitee under this Article, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigations of any action, claim or liability covered by this indemnification. In the event that each PARTY claims indemnity from the other and one PARTY is finally held liable to indemnify the other, the Indemnitor shall additionally be liable to pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing its claim for indemnity. 4. TERM AND TERMINATION 4.1 Except if sooner terminated as provided herein, this Agreement shall be effective as of the date hereof and shall continue for so long as MEDIMMUNE or its AFFILIATE is selling PRODUCT in the TERRITORY. 4.2 Expiration or termination of this Agreement shall not relieve the PARTIES of any obligation accruing prior to such expiration or termination nor preclude either PARTY from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement nor prejudice either PARTY's right to obtain performance of any obligation provided for in this Agreement which expressly survives expiration or termination. The provisions of Article 3 and Sections 4.2, 4.5, 5.7, 5.11, 5.12, and 5.15 shall survive the expiration or termination of this Agreement as well as any other provision which by its intent is meant to survive expiration or termination of this Agreement. 4.3 Notwithstanding any other provision of this Agreement, either PARTY may terminate this Agreement by notice in writing to the other upon or at any time after the occurrence of any of the following events: (i) if the other commits a material breach of this Agreement which (a) in the case of a breach capable of a remedy, shall not have been remedied within sixty (60) days of the receipt by the other of written notice identifying the breach and requiring its remedy and (b) continues to exist at the time of notice of (PAGE 10) termination; or (ii) if the other is unable to pay its debts, becomes bankrupt or insolvent, or enters into liquidation whether compulsorily or voluntarily, or compound with or convenes a meeting of its creditors, or has a receiver appointed over all or part of its assets, or takes or suffers any similar action in consequence of a debt, or ceases for any reason to carry on business. 4.4 If the THRESHOLD set forth in Section 2.4 has not been or is not going to be achieved in a YEAR, after the first YEAR, either PARTY shall have the right to terminate this Agreement by written notice to the other PARTY no earlier than April 1 and no later than April 30th of the applicable YEAR effective at the end of such YEAR, provided, however, that by written notice to MEDIMMUNE given within twenty (20) days following ABBOTT's receipt of MEDIMMUNE's termination notice, ABBOTT may elect to pay MEDIMMUNE (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the difference between the THRESHOLD for the applicable YEAR and the NET SALES of PRODUCT for the applicable YEAR, in which case the Agreement shall not be terminated. Such amount shall be paid within (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) days after the end of the subject YEAR. The provisions of this Section 4.4 shall not be applicable if the failure by ABBOTT to reach the THRESHOLD results from an inability of MEDIMMUNE to timely deliver PRODUCT. 4.5 Upon termination of this Agreement, ABBOTT shall have no further rights whatsoever in the PRODUCT in the TERRITORY, including but not limited to any rights to co-promote the PRODUCT or to the payment set forth hereunder. 4.6 Notwithstanding any other provision of this Agreement, MEDIMMUNE may suspend or terminate sale of PRODUCT if the FDA takes any action the result of which is to prohibit or restrict the manufacture or sale or introduction into interstate commerce of the PRODUCT. Such termination or suspension shall not be deemed a termination of this Agreement. MEDIMMUNE shall promptly notify ABBOTT of any such action by the FDA. 4.7 Notwithstanding any other provision of this Agreement, upon six (6) months prior written notice to ABBOTT, MEDIMMUNE may terminate, manufacture, and/or use, and/or sale of PRODUCT in the TERRITORY, within its sole discretion and thereby terminate this Agreement. Such termination shall not be deemed a breach of this Agreement. 5. MISCELLANEOUS 5.1 Independent Contractor. The relationship between MEDIMMUNE and ABBOTT is that of independent contractors. MEDIMMUNE and ABBOTT are not joint venturers, partners, principal and agent, master and servant, (PAGE 11) employer or employee, and have no relationship other than as independent contracting parties. MEDIMMUNE shall have no power to bind or obligate ABBOTT in any manner. Likewise, ABBOTT shall have no power to bind or obligate MEDIMMUNE in any manner. Except as permitted in Section 2.3(e), neither PARTY shall have any responsibility for the hiring, firing, compensation or employee's benefits of the other PARTY'S employees. 5.2 Nonassignability. This Agreement may not be assigned or otherwise transferred by either PARTY without the consent of the other PARTY; provided, however, that either PARTY may, without such consent, assign this Agreement and its rights and obligations hereunder to its AFFILIATES or in connection with the transfer or sale of all or substantially all of its business to which this Agreement relates, or in the event of its merger or consolidation or change in control or similar transaction. Any purported assignment in violation of the preceding sentences shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement, provided that such assigning party shall remain primarily liable hereunder in the case of an assignment to an AFFILIATE. 5.3 Modification. This Agreement constitutes the entire agreement among the PARTIES with respect to the subject matter hereof and supersedes all prior agreements, understandings, and discussions, whether oral or written of the PARTIES with respect to the subject matter hereof. Any modification of this Agreement shall be effective only when in writing and signed by the PARTIES and specifically states that it is an amendment to this Agreement. 5.4 Notices. Any notices expressly provided for under this Agreement shall be in writing, shall be given either manually or by mail, facsimile message, telegram, telex or other written means, and shall be deemed sufficiently given if and when received by the PARTY to be notified at its address set forth below, or if and when mailed by certified or registered mail, postage prepaid, addressed to the PARTY at such address stated below. Either PARTY may, by notice to the other PARTY, change its address for receiving such notices.
To MEDIMMUNE: MedImmune, Inc. 35 West Watkins Mill Road Gaithersburg, MD 20878 Attn: CEO Telephone No.: 301-417-0770 Fax No.: 301-527-4201 (PAGE 12) To ABBOTT: Ross Products Division 625 Cleveland Avenue Columbus, OH 43215 Attn: President Telephone No.: 614-624-7677 Fax No.: 614-624-7030 with copy to: Abbott Laboratories D-364, AP6D 100 Abbott Park Road Abbott Park, IL 60064 Attn: General Counsel Telephone No.: 847-937-5210 Fax No.: 847-938-1342
5.5 Severability. If any provision(s) of this Agreement are or become invalid, are ruled illegal by any court of competent jurisdiction or are deemed unenforceable under then current applicable law from time to time in effect during the term hereof, it is the intention of the PARTIES that the remainder of this Agreement shall not be affected thereby provided that a PARTY's rights under this Agreement are not materially affected. It is further the intention of the PARTIES that in lieu of each such provision which is invalid, illegal, or unenforceable, there be substituted or added as part of this Agreement a provision which shall be as similar as possible in economic and business objectives as intended by the PARTIES to such invalid, illegal or unenforceable provision, but shall be valid, legal and enforceable. In the event a party's rights are materially affected as a result of a change in this Agreement under this Section, such PARTY may terminate this Agreement. 5.6 Public Announcements. MEDIMMUNE and ABBOTT each agrees not to disclose any terms or conditions of this Agreement to any third party or to make any public statement about this Agreement or wherein the name of the other PARTY is used without the prior written consent of the other PARTY (which shall not be unreasonably withheld or delayed), except as is required by applicable law, rule or regulation; provided (i) that if this Agreement is required to be filed as part of any public document the filing PARTY shall, to the fullest extent permitted under such law, rule or regulation, request that confidential treatment be afforded to this Agreement; or (ii) that either PARTY may allow a third party to review this Agreement as part of an overall due diligence examination of such PARTY in connection with any potential financing, acquisition, disposition or other business combination; provided that such third party is under obligation of confidentiality. In the event of a disclosure permitted (PAGE 13) under this Section, the disclosing PARTY shall nonetheless provide the non-disclosing PARTY with notice of such disclosure prior to disclosure, and will, to the extent reasonably possible, provide the non-disclosing PARTY with an opportunity to correct same. A PARTY shall not be required to provide the other PARTY with a disclosure which has been previously provided to a PARTY. 5.7 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland with regard to choice of law principles. 5.8 Force Majeure. Neither PARTY shall be held liable or responsible to the other PARTY nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement other than a payment provision when such failure or delay is caused by or results from causes beyond the reasonable control of the affected PARTY including but not limited to fire, floods, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other PARTY. Upon the occurrence of such event, the affected PARTY shall give prompt written notice of such event to the other PARTY. 5.9 Waiver. Any delay in enforcing a PARTY's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a PARTY's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 5.10 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 5.11 Nondisclosure Obligations. (a) During the term of this Agreement, it is contemplated that a PARTY will disclose to the other PARTY proprietary and confidential technology, specifications, technical information and the like which are owned or controlled by a PARTY ("Confidential Information"). The receiving PARTY agrees to retain the disclosing PARTY's Confidential Information in confidence and not to disclose any such Confidential Information to a THIRD PARTY without the prior written consent of the disclosing PARTY and to use the disclosing PARTY's Confidential Information only for the purposes of this Agreement. The obligations of confidentiality will not apply to Confidential Information which: (PAGE 14) (i) was known to the receiving PARTY or generally known to the public prior to its disclosure hereunder; (ii) subsequently becomes known to the public by some means other than a breach of this Agreement; (iii)is subsequently disclosed to the receiving PARTY by a third party having a lawful right to make such disclosure; (iv) is required by law or bona fide legal process to be disclosed provided that the receiving PARTY takes all reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable prior notice to the disclosing PARTY; or (v) is approved for release by the PARTIES. (b) Upon termination or expiration of this Agreement, each PARTY shall return to the other PARTY all tangible forms of confidential information furnished by the other PARTY, including all copies thereof and all memoranda of oral disclosure, except that each PARTY may retain one copy in its files to ensure compliance with any legal obligations. (c) This Section shall survive until the tenth anniversary of the termination or expiration of this Agreement. 5.12 Non-Compete. (a) During the period that ABBOTT is co-promoting PRODUCT under this Agreement and for (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), ABBOTT agrees that neither ABBOTT nor an AFFILIATE of ABBOTT shall promote, market or sell directly or indirectly or assist another PARTY in marketing or selling in the TERRITORY any biological and/or pharmaceutical product for prevention and/or treatment of respiratory syncytial virus disease that competes with the PRODUCT. (b) During the first (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), MEDIMMUNE agrees that neither MEDIMMUNE nor an AFFILIATE of MEDIMMUNE shall promote, market or sell directly or indirectly or assist another PARTY in marketing or selling in the TERRITORY any biological and/or pharmaceutical product for prevention and/or treatment of respiratory syncytial virus disease that competes with the PRODUCT, except RESPIGAM and any product of which RESPIGAM is a component. 5.13 Authority. The PARTIES warrant and represent to each other that each has the full right and authority to enter into this Agreement, that each is not aware of any impediment which would inhibit its ability to (PAGE 15) perform the terms and conditions imposed on it by this Agreement, and that there are no and will be no outstanding agreements, licenses, assignments or encumbrances inconsistent with the provisions of and the rights granted under this Agreement, or which are inconsistent with or would prevent a PARTY from performing all of its obligations under this Agreement. 5.14 No Grant of License. Nothing contained herein shall be deemed to grant ABBOTT either expressly or impliedly, a license or other right or interest in any patent, trademark, trade name or logo or other similar property of MEDIMMUNE, except as may be necessary for ABBOTT to co-promote the PRODUCT as provided hereunder. 5.15 No Consequential Damages. Except for a PARTY's obligations under Section 3.1, neither PARTY shall be liable to the other for any consequential, special, incidental or indirect charges. 5.16 Representations and Warranties. MEDIMMUNE represents and warrants to ABBOTT, as of the date hereof, that to the best of its knowledge, the manufacture, use, sale or offer to sell of PRODUCT in the TERRITORY does not infringe or violate any granted patent. In no event shall MEDIMMUNE's liability for a breach of this representation and warranty exceed $250,000. IN WITNESS WHEREOF, this Agreement has been duly executed effective on the date first above written.
By:/s/Thomas M. McNally By:/s/David M. Mott Thomas M. McNally David M. Mott Senior Vice President President
(PAGE 16) EX-10.77 4 EXHIBIT 10.77 CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT (MEDI-493) THIS CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT ("Agreement") is made effective as of November 27, 1997 ("Effective Date"), by and among MedImmune, Inc. ("MEDIMMUNE"), a corporation having a place of business at 35 West Watkins Mill Road, Gaithersburg, Maryland 20878 U.S.A., and Dr. Karl THOMAE GmbH ("THOMAE") a German corporation having its principal place of business at Birkendorfer Strabe 65, 88397 Biberach an der Riss, Federal Republic of Germany. BACKGROUND MEDIMMUNE has developed proprietary protein production technologies, and has developed a proprietary cell line capable of expressing a humanized monoclonal antibody against Respiratory Syncyital Virus (RSV) and designated as MEDI-493. THOMAE owns specialized cell culture, processing, protein purification and lyophilization facilities that may be suitable for production of MEDI-493, and employs personnel who have experience in production of proteins by cell culture and purification processes as well as in registration and marketing of biopharmaceuticals. MEDIMMUNE desires to have THOMAE personnel evaluate the performance of the MEDIMMUNE MEDI-493 production process, formulation and lyophilization of the resulting product in THOMAE's facilities. MEDIMMUNE and THOMAE have previously entered into an evaluation agreement dated April 16, 1997 to evaluate the potential production and supply of MEDI-493 (the "Evaluation Agreement"), and THOMAE has already started the development work under an interim agreement dated August 15/21, 1997 with MEDIMMUNE covering all expenditures by THOMAE for the interim period from May to December 1997 the "Interim Agreement"), which shall be replaced by signing of this Agreement. AGREEMENT IN CONSIDERATION OF the mutual covenants set forth in this Agreement, THOMAE, and MEDIMMUNE hereby agree as follows: 1. DEFINITIIONS. 1.1 "MEDIMMUNE" shall mean MEDIMMUNE Inc. as laid down first above. (PAGE 1) 1.2 "MEDIMMUNE Confidential Information" shall mean the Cell Line, Process, Product and all technical and other information relating thereto that is disclosed or supplied to THOMAE by MEDIMMUNE pursuant to this Agreement or the Evaluation Agreement whether patented or unpatented, including, without limitation, trade secrets, know-how, processes, concepts, experimental methods and results and business and scientific plans. 1.3 "MEDI-493" shall mean the humanized IgG1 monoclonal antibody specifically directed against RSV. 1.4 "Cell Line" shall mean the novel and proprietary cell line (Id.-No. RSV-1129 a-6H3) developed by MEDIMMUNE and provided to THOMAE pur suant to the terms of this Agreement or the Evaluation Agreement including, without limitation, all modifications and derivatives of such cell line. 1.5 "Certificate of Analysis" shall mean a document describing testing methods and results, the accuracy of which has been certified by the issuing party. 1.6 "Effective Date" shall mean the date first above written, which shall be the effective date of this Agreement. 1.7 "GMP" shall mean the current regulatory requirements for good manufacturing practices promulgated by the FDA under the Federal Food, Drug and Cosmetic Act, as amended, 21 C.F.R. 210, 211 et seq and 21 C.F.R. 600-610, as applicable. 1.8 "Master Cell Bank" shall mean MEDIMMUNE's reference deposit or collection of vials of the Cell Line, from which the Working Cell Bank is derived. 1.9 "Phase I" shall mean the activities and work to be performed as laid down in the respective chapter of the Master Project plan attached hereto as APPENDIX 1. 1.10 "Phase II" shall mean the activities and work to be performed as laid down in the respective chapter of the Master Project plan attached hereto as APPENDIX 1. 1.11 "Phase III" shall mean the activities and work to be performed as laid down in the respective chapter of the Master Project plan attached hereto as APPENDIX 1. 1.12 "Bulk Product" shall mean the Product which has been purified to a concentrated form and can be stored in a liquid or frozen form under appropriate conditions. (PAGE 2) 1.13 "Final Product" shall mean unlabelled final container containing lyophilized Product. 1.14 "Finished Product" shall mean Final Product and also labelled and packaged. 1.15 "Process" shall refer to a proprietary MEDIMMUNE process for using the Cell Line, including defined procedures, equipment and analytical methodologies for in-process control, release testing and Product characterization, that has been used by MEDIMMUNE to produce the Product at the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) fermentation scale which has already partly been and shall fully be disclosed by MEDIMMUNE to THOMAE to enable THOMAE to carry out the Project or if and when applicable the modified process after scale up by THOMAE to the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) fermentation scale. The current format of MedImmune Process and of Thomae Process are set forth in APPENDIX 13. 1.16 "Product" shall mean the MEDI-493 produced by the Cell Line in accordance with the Process. 1.17 "Project" shall mean the Phase I - III program described herein, in which MEDIMMUNE shall transfer the Process to THOMAE to be implemented upscaled and evaluated at the respective fermentation scale in THOMAE's facility and equipment. The primary objectives of the Project will be to establish or adapt and scale up the Process in the THOMAE facility, successfully demonstrate that equivalent Product can be reproducibly manufactured in THOMAE's facilities, and generate a report compiling all relevant data generated in the Project. A proposed timeline for the Project is included in APPENDIX 1. 1.18 "Project Fee" shall have the meaning specified in Section 6 hereof. 1.19 "Project Manager" shall have the meaning specified in Section 2.1 hereof. 1.20 "Project Team" shall have the meaning specified in Section 2.2 hereof. 1.21 "Start Date" shall mean May 12, 1997. 1.22 "THOMAE Confidential Information" shall mean all technical and other information relating to THOMAE's facilities and associated technologies that is disclosed or supplied to, or used on behalf of, MEDIMMUNE by THOMAE pursuant to this Agreement, whether patented or unpatented, including, without limitation, trade secrets, know-how, processes, concepts, experimental methods and results and business and scientific plans. (PAGE 3) 1.23 "Working Cell Bank" shall mean MEDIMMUNE's vialed collection serially subcultivated cells that is derived from the Master Cell Bank. The Working Cell Bank is used to establish seed cultures of the Cell Line to initiate the Process. 1.24 "Specifications" shall mean the specifications for the Product and the respective test methods attached hereto as APPENDIX 5 on the basis of the specifications provided by MEDIMMUNE and as such specifications may be amended from time to time by mutual agreement of MEDIMMUNE and THOMAE according to further development of the Process and Product. 1.25 "Product Characterization" shall mean the analytical characterization of the Product performed at MEDIMMUNE as specified in APPENDIX 10. 2. COOPERATION BETWEEN THE PARTIES IN THE COURSE OF THE PROJECT. 2.1 Designation of Project Manager. THOMAE and MEDIMMUNE shall each identify a Project Manager who will be responsible for communicating all instructions and information concerning the Project to the other party. Each Project Manager will be available on an agreed upon monthly basis for consultation at prearranged times during the course of the Project. In the absence of the Project Manager, a substitute shall be appointed. Additional modes or methods of communication and decision making may be implemented with the mutual consent of each party. 2.2 Project Team. THOMAE and MEDIMMUNE shall each name representatives to a Project Team, which shall consist of knowledgeable specialists in appropriate disciplines who shall be responsible for planning and executing the Project and any subsequent interactions between the parties. At regular intervals, the Project Managers shall schedule meetings between each company's representatives for the purpose of communicating Project updates and providing a forum for strategic decision making and rapid resolution of issues. Joint Project meetings shall be conducted by telephone conference, video conference and face to face meetings. Meeting minutes shall be prepared jointly by the Project Managers to record all issues discussed and decisions made. The present list of the members of the Project Team is attached hereto as APPENDIX 6. 2.3 Cooperation. In the course of the Project, THOMAE will at all times take into consideration and implement the recommendations of MEDIMMUNE as long as they do not adversely affect other THOMAE biotech (PAGE 4) operations and are agreed upon by the Project Team; in the absence of explicit instructions from MEDIMMUNE, THOMAE shall be entitled to employ its reasonable judgment in carrying out the Project. THOMAE shall be entitled to rely upon any instructions or directives provided by any MEDIMMUNE representative and shall not be responsible for failure to achieve any objective or the inability to adhere to any guideline due to technical failures, incomplete direction or documentation of Process variables, or other causes beyond the control of THOMAE. MEDIMMUNE must be informed of any changes that are expected to change the Process or Product Specifications. Process format and Process changes for Project Phase I, II and III will be mutually agreed upon by the Project Team. If THOMAE proposes a change of the Process, such a change must be approved by MEDIMMUNE according to the procedure in APPENDIX 8 or the change shall not be implemented. If MEDIMMUNE proposes a change of the Process, see first paragraph of this Section 2.3 above. The parties will inform each other within an appropriate time and participate in all regulatory contacts and regulatory inspections regarding MEDI-493 and each party may take part therein at its sole discretion. MEDIMMUNE will be provided an opportunity to review and comment on all documents used for the registration of Product (CMC-Part of BLA). However, this shall not include any and all ELA-documents of THOMAE with respect to MEDI-493 and/or the Product. Basically MEDIMMUNE will be provided with copies of all regulatory submissions, submitted for MEDI-493. For those documents/submissions not to be provided according to the exception above, MEDIMMUNE will have the right to reference such documents/submissions for regulatory purposes. 3. MEDIMMUNE'S TASKS AND RESPONSIBILITIES. 3.1 Use of MEDIMMUNE Cell Line and Intellectual Property. MEDIMMUNE and THOMAE hereby acknowledge and agree that MEDIMMUNE is providing Cell Line, Process and MEDIMMUNE Confidential Information to THOMAE for use by THOMAE on behalf of and for the benefit of MEDIMMUNE for the purposes of this Agreement, that THOMAE will make use therof solely for such purposes and that MEDIMMUNE hereby consents to such use. 3.2 Materials and Information to be Provided. To enable THOMAE to begin and continue the Project, MEDIMMUNE shall use commercially reasonable efforts to perform the work and tasks (PAGE 5) as set forth and detailed in APPENDIX 7 hereto and shall provide all materials and information as set forth in APPENDIX 7 and defined therein. In case MEDIMMUNE is not able to fulfill the requirements mentioned above the parties shall discuss and negotiate an alternative (including but not limited to timeline and cost). 4. THOMAE'S TASKS AND RESPONSIBILITIES (PHASES I-III). 4.1 THOMAE's work and tasks In the course of this Agreement THOMAE shall perform the work and tasks as laid down and detailed in APPENDIX 8 hereto. 4.2 Documentation. As soon as available THOMAE shall provide MEDIMMUNE with the CMC- part of the BLA (all other parts of registration and the registration itself being the task and responsibility of MEDIMMUNE), in formats to be mutually agreed upon. Such CMC-part shall be in English and shall contain all required portions of the respective filing as laid down in APPENDIX 2 hereto. 4.3 Stability Program. Notwithstanding its work described in Section 4.1 above, MEDIMMUNE and THOMAE shall perform a stability program as laid down in APPENDIX 4 hereto. The timeline for this work is laid down in the Master Project plan including Project Timeline (APPENDIX 1). It is planned that THOMAE will perform release testing for lots post approval. 4.4 Additional Work On request of MEDIMMUNE THOMAE shall perform additional work to sustain the progress of the Project on conditions in terms of money, time and scope to be subject to mutual agreement of the parties hereto and defined in an amendment to the Master Project plan (APPENDIX 1). 4.5 Exclusivity/Competition During the term of this Agreement, THOMAE agrees that it will not supply Product to a third party nor shall THOMAE assist any third party with respect to development or manufacture of a monoclonal antibody against RSV except where THOMAE is granted marketing rights to such monoclonal antibody. 4.6 Project is experimental in Nature MEDIMMUNE acknowledges that the Project is experimental in nature and that no favorable or useful result can be assured by THOMAE. Accordingly, THOMAE shall not be responsible to MEDIMMUNE for any failure of fermentations or inability to obtain useful yields of Product or keeping the intended timeline. (PAGE 6) 4.7 GMP THOMAE will perform the manufacturing operations at its facility in accordance with GMP and compliance with all applicable local laws and regulations. THOMAE will deliver Product based on the Specifications defined in APPENDIX 5. If a run does not meet the Specifications due to a THOMAE operation error or an equipment failure, THOMAE will repeat the run at no cost to MEDIMMUNE as the sole remedy. 4.8 Special Problems (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 5. PHASES I-III TO BE CONDUCTED ON FIXED-FEE BASIS. The Project shall be conducted by THOMAE for MEDIMMUNE on fixed fee basis to be paid by MEDIMMUNE to THOMAE as set forth in Article 6 hereof (the "Project Fee"). The estimated duration of the Project shall be 19 (nineteen) months from the Start Date as outlined in APPENDIX 1 hereto. As the Project is experimental in nature, the Project Fee shall be payable in full when due regardless of result unless the Project is terminated prior to its scheduled completion pursuant to Article 12 hereof. 6. PHASES I-III PAYMENTS 6.1 Fixed Project Fee MEDIMMUNE shall pay THOMAE a Project Fee based on actual costs of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) for the services provided in carrying out the Project. This Project Fee includes the actual costs of THOMAE's work ac cording to Article 4 hereof (for additional work if any see Section 4.4 hereof), and insofar is all inclusive. Disposal of organic and hazardous waste is included in the Project Fee. The Project Fee shall be payable in installments, each non- refundable when paid, (except for a breach of this Agreement by THOMAE as provided herein), as provided for in the Master Project plan (APPENDIX 1). THOMAE shall receive installments according to the progress of the Project pursuant to the agreed schedule set forth in APPENDIX 1. Each invoice shall be payable within 30 days following receipt thereof. 6.2 Success Fee As a means to secure deliverables according to Specifications and timelines, which would enable MEDIMMUNE to file a BLA amendment and launch in the U.S. in 1998, MEDIMMUNE will make incentive payments of up to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) to THOMAE as follows: (PAGE 7) (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 7. ORDERING INITIAL START-UP MATERIAL FOR (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCALE MEDIMMUNE and THOMAE expect that a raw material purchase for Phase III will be necessary prior to the completion of Phase II (February 1998).The purchase of such materials at the respective date laid down in APPENDIX 1 hereto is covered by this Agreement and is at the sole risk of MEDIMMUNE. The present cost estimate for initial start-up material is outlined in APPENDIX 3 hereto. 8. OWNERSHIP OF PROJECT DATA / FUTURE ACTIVITIES / COMMERCIAL PRODUCTION. 8.1 Ownership of Project Data. In consideration of the Project Fee, THOMAE shall carry out the Project and transfer all relevant information concerning the process, and materials related to the Product and obtained in the course of the Project to MEDIMMUNE. However, this shall not apply to information regarding THOMAE's facility and technical equipment. All transferred information - with the exception of THOMAE Confidential Information - shall be the sole and exclusive property of MEDIMMUNE and MEDIMMUNE shall have the right to use such information for any purpose without further obligation to THOMAE. After transfer of the information, THOMAE shall not be obliged to provide technical assistance to MEDIMMUNE or a third party with re spect to use of such information at a facility other than THOMAE's facility. After termination of the intended supply agreement or as provided in the supply agreement between the parties, MEDIMMUNE shall have the right to transfer the modified and scaled-up Process to third parties. Further such information and materials to be transferred to MEDIMMUNE shall be MEDIMMUNE Confidential Information subject to the provisions of Article 11. THOMAE shall cooperate with MEDIMMUNE in taking all reasonable steps, including execution of documents, which are commercially necessary to enable MEDIMMUNE to protect its ownership interest. 8.2 Further Future Activities regarding Research and Development. If the results of the Project are favorable, THOMAE and MEDIMMUNE may confer to determine if additional work should be undertaken pursuant to subsequent agreement between THOMAE and MEDIMMUNE. Neither party shall be obligated to conduct any further undertakings on behalf of the other except as provided for herein or as may be mutually agreed and set forth in a subsequent written agreement. (PAGE 8) Other then as provided in the manufacturing agreement, MEDIMMUNE shall not assert any right to use THOMAE facilities at any future date as a result of its use of THOMAE facilities pursuant to this Agreement. 8.3 Thomae's Right and Obligation for Commercial Manufacture The parties acknowledge and agree that, in case MEDIMMUNE decides to commercialize the Product, THOMAE has the right and obligation to produce commercial quantities of Product (Bulk Product, Final Product and/or Finished Product form) for MEDIMMUNE within its respective capacity which shall be exclusive but for MEDIMMUNE's right to manufacture Bulk Product and/or Final Product and/or Finished Product and/or to have a third party to produce Final Product and or Finished Product from Bulk Product produced by MEDIMMUNE and MEDIMMUNE will have the right and obligation to have such commercial quantities of MEDI-493 manufactured by THOMAE and the parties shall negotiate in good faith and consummate a manufacturing agreement (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) at the earliest opportunity for the manufacturing by THOMAE of commercial quantities of the respective Product, any prolongation to be subject to separate agreement of the parties. Such agreement shall contain terms and conditions customary for such a manufacturing agreement. During the term of the manufacturing agreement, if THOMAE cannot produce sufficient commercial quantities of Product as outlined in APPENDIX 9 for whatever reason, MEDIMMUNE will have the right to have the missing quantities manufactured by a third party. 8.4 Terms and Conditions of Manufacturing Agreement Such manufacturing agreement shall contain terms and conditions customary for such a manufacturing agreement. In particular, the parties hereby agree that the pricing from THOMAE for the manufactured Product under such manufacturing agreement shall be in accordance with a volume discount pricing matrix and basic production assumptions, both set forth in APPENDIX 11 attached hereto, which pricing matrix will establish an absolute initial price ceiling for Product under the manufacturing agreement and will provide a framework to establish Product costs for variable length production campaigns. Moreover, such manufacturing agreement shall contain a "Rolling Forecast Planning System for Product (Commercial Manufacture)" attached hereto as APPENDIX 12. In APPENDIX 9 MEDIMMUNE has set forth its present forecast estimation of its latest requirements of the Product. This forecast is non-binding; however, THOMAE's capacity planning for commercial manufacture is based on and limited by MEDIMMUNE's forecast. (PAGE 9) 9. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION. 9.1 MEDIMMUNE. MEDIMMUNE hereby represents, warrants and agrees that: (a) MEDIMMUNE is free to supply the Cell Line and MEDIMMUNE Con fidential Information to THOMAE; (b) MEDIMMUNE is not aware of any special or unusual hazards in volved in handling the Cell Line or Product; (c) MEDIMMUNE has full corporate authority to enter into this Agreement and this Agreement is binding upon MEDIMMUNE in accordance with its terms; and (d)MEDIMMUNE shall indemnify, defend and hold THOMAE, its affiliates, and their respective officers, employees and agents harmless from and against all third pary losses, damages, costs and expenses (including, without limitatiion, reasonable attorneys' fees), including injury to persons or damage to property resulting from any breach of the representations and warranties made by MEDIMMUNE under this Section, or as a result of any third party claim of infringement of the intellectual property rights of a third party based upon THOMAE's activities in implementing the Process or producing the Product in accordance with the instructions and documentation provided by MEDIMMUNE or developed in the course of the Project, except those which result from the gross negligence or willful misconduct of an indemnified person or entity. 9.2 THOMAE. THOMAE hereby represents, warrants and agrees that: (a) THOMAE is the owner of the facilities and THOMAE Confidential Information to be used for purposes set forth in this Agreement; (b) THOMAE is not aware of any special or unusual hazards that would arise as a result of its carrying out of the Project as planned; (c) THOMAE has full corporate authority to enter into this Agreement and this Agreement is binding upon THOMAE in accordance with its terms; and (d)THOMAE shall indemnify, defend and hold MEDIMMUNE and its officers, employees and agents harmless from and against all third party losses, damages, costs and expenses (including, (PAGE 10) (e)without limitation, reasonable attorneys' fees), including injury to persons or damage to property, resulting from any breach of the representations and warranties made by THOMAE under this Section, or as a result of any claim that THOMAE has violated any applicable local law, regulation or ordinance in carrying out its biotechnical manufacturing responsibilities under this Agreement or as a result of willful breach or misconduct of THOMAE or its officers, employees or agents, except those which result from gross negligence or willful misconduct of an indemnified person or entity. 9.3 Information With respect to the indemnification mentioned above in this section, each indemnified party will notify the indemnifying party promptly of any claim or loss and the indemnifying party shall be entitled to control the defense, settlement or compromise of any such claim or loss. 10. LIABILITY. 10.1 No Warranty of Merchantability or Fitness. THOMAE shall provide the results of the Project to MEDIMMUNE without any warranty of any kind, express or implied, including, without limitation, any warranties of merchantability or fitness for a particular purpose. THOMAE warrants solely that the Project shall be conducted as laid down in APPENDIX 1 of this Agreement, and that any documentation of Project results or procedures provided to MEDIMMUNE by THOMAE shall be accurate in all material respects. 10.2 Limitation of Liability. THOMAE has no knowledge or awareness of or control over the manner in which MEDIMMUNE intends to use any Product or results obtained in the Project. THOMAE shall not be liable to MEDIMMUNE for any losses, damages, costs or expenses of any nature incurred or suffered by MEDIMMUNE or by a third party, arising out of any dispute or other claims or proceedings made by or brought against MEDIMMUNE with respect to use of the results of the Project, or the use of any Product by MEDIMMUNE or by a third party (including, without limitation, product liability claims and claims by a third party alleging infringement of its intellectual property rights) except as to those under Section 9.2 (d) above, nor shall THOMAE be responsible in any way for dealing with any such disputes, claims or pro ceedings. (PAGE 11) THOMAE will provide reasonable cooperation, if requested by MEDIMMUNE, on matters relating to the Project in the event of such claims. MEDIMMUNE shall indemnify, defend and hold THOMAE, its affiliates and their respective officers, employees and agents harmless from and against all such third party losses, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and infringement of the intellectual property rights of a third party). This indemnification shall also be subject to the provisions of Section 9.3 above. 10.3 Maximum Amount. THOMAE undertakes to use its best efforts to perform the Project under the Master Project plan and to meet the target dates set forth in APPENDIX 1 hereto. However, due to the biological nature of the work to be performed hereunder THOMAE's liability under this Agreement and its indemnification and holdharmless obligations shall in no event amount to more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the Project Fee. This limitation does not apply in cases of willful breach or misconduct of THOMAE or its officers, employees or agents. 11. CONFIDENTIALITY. 11.1 THOMAE shall not disclose MEDIMMUNE Confidential Information to any person other than its employees or employees of affiliated companies of the Boehringer Ingelheim group who have a need to know such information in order to perform their duties in carrying out the Project hereunder and who have an obligation to maintain the confidentiality thereof as provided herein. 11.2 MEDIMMUNE shall not disclose any THOMAE Confidential Information to any person other than (a) its employees or consultants who are bound by similar obligations of confidentiality and who have a need to know such information in order to provide direction to THOMAE or evaluate the results of the Project, or (b)regulatory authorities, for example, the FDA, that require such infor mation in order to review an IND, BLA or other regulatory filing. THOMAE will be informed and must agree prior to filing of any THOMAE confidential Information to regulatory authorities. In these case where THOMAE restricts MEDIMMUNE's ability to file (PAGE 12) THOMAE Confidential Information, THOMAE agrees to provide the Confidential Information directly to the regulatory authorities and will provide a letter of authorization for cross-reference to MEDIMMUNE. (c) persons or entities that manufacture Product for MEDIMMUNE after termination of the manufacturing agreement or during the manufacturing agreement as permitted therein. 11.3 The obligations of confidentiality applicable to MEDIMMUNE Confidential Information and THOMAE Confidential Information shall not apply to any information that is: (a) known publicly or becomes known publicly through no fault of the recipient; (b) learned by the recipient from a third party entitled to disclose it; (c) developed by the recipient independently of information obtained from the disclosing party; (d) already known to the recipient before receipt from the disclosing party, as shown by its prior written records; (e) required to be disclosed by law, regulation or the order of a judicial or administrative authority; or (f) released with the prior written consent of the disclosing party. 11.4 Except as granted under this Agreement, no right or license, either express or implied, under any patent or proprietary right is granted hereunder by virtue of the disclosure of MEDIMMUNE Confidential Information or THOMAE Confidential Information. 11.5 Either party shall be entitled to injunctive relief in the event of a breach of this Agreement by the other party. The obligations of both parties under this Article 11 shall survive the expiration or termination of this Agreement. Both MEDIMMUNE and THOMAE shall use reasonable and customary precautions to safeguard MEDIMMUNE Confidential Information and THOMAE Confidential Information, including ensuring that all employees or consultants who are pro vided access to such information are informed of the confidential and proprietary nature of such information and understand that all such information is required to be maintained confidential. (PAGE 13) 12. TERM AND TERMINATION. 12.1 Term. This Agreement shall, unless terminated earlier, take effect as of the Effective Date retroactive as of the Start Date and shall terminate upon the date of payment of the last sum due hereunder, or upon the date when the last services required to be performed hereunder are performed, whichever date shall last occur. 12.2 Right to Terminate. If it becomes apparent to either party at any stage of the Project that it will not be possible to carry out the Project for scientific or technical reasons or as a result of Force Majeure, the parties shall permit 10 (ten) business days for discussion to make a proposal to resolve, if possible, the scientific or technical issue giving rise to the problem. If the parties fail to resolve the problem within further 20 business days, either party shall have the right to terminate this Agreement, effective upon written notice to the other. MEDIMMUNE shall also have the right to terminate this Agreement on ninety (90) days written notice in the event, MEDIMMUNE determines to cease development and marketing of the Product. In the event of termination as set forth within Section 12.2, the amount due to THOMAE hereunder shall include all expenses reasonably incurred by THOMAE prior to such termination in respect of the purchase of supplies or raw materials, and an allocation of the balance of the Project Fee for the period prior to receipt of such termination and for a period of 8 (eight) weeks thereafter. Either party may terminate this Agreement effective upon written notice if either of the following events occurs (a) the other party commits a breach of this Agreement and the breach is not remedied within 30 days after the receipt of notice identifying the breach and requiring its remedy; or (b) the other party (I) becomes unable to pay its debts as they become due, (II) suspends payment of its debts, (III) enters into or becomes subject to corporate rehabilitation or bankruptcy proceedings or liquidation or dissolution, (IV) makes an assignment for the benefit of its creditors or (V) seeks relief under any similar laws for debtor's relief. 12.3 Effect of Termination. Upon the expiration or termination of this Agreement: (a)at the request of MEDIMMUNE, THOMAE shall destroy the Cell Line as well as the material derived from its culture or deliver the same at MEDIMMUNE's request to MEDIMMUNE or a (PAGE 14) (b)party nominated by MEDIMMUNE at MEDIMMUNE's cost and shall promptly return all MEDIMMUNE Confidential Information to MEDIMMUNE; except for a single copy and/or sample of each material for documentation purposes only and except as required to meet THOMAE's obligations under the manufacturing agreement. THOMAE's responsibility to keep and store the Cell line and any other materials shall terminate 6 six months after expiration or termination of this Agreement, and (b) MEDIMMUNE shall promptly return all THOMAE Confidential Information to THOMAE, except for a single copy and/or sample for documentation purposes only. (c) The respective rights of THOMAE and MEDIMMUNE to indemnifi cation as set forth in Article 9 and 10 hereof shall survive termination of this Agreement with respect to any claims that relate to or derive from the Project, or any acts or failures to act, of either THOMAE or MEDIMMUNE in connection with the Project that occur prior to termination. (d) The rights and obligations of Sections 8.1 and 12.3 shall also survive termination of this Agreement. This also applies to Section 9 (d) as far as a breach occurs prior to termination of this Agreement. 13. MISCELLANEOUS 13.1 Force Majeure. Neither party shall be in breach of this Agreement if there is any failure of performance under this Agreement (except for payment of any amounts due hereunder) occasioned by any act of God, fire, act of government or state, war, civil commotion, insurrection, embargo, prevention from or hindrance in obtaining energy or other utilities, labor disputes of whatever nature or any other reason beyond the control of either party. 13.2 Publicity. No press release or other form of publicity regarding the Project or this Agreement shall be permitted by either party to be published unless both parties have indicated their consent to the form of the release in writing. Nothing in this Article 13.2 shall prevent the parties from disclosing this Agreement as required by applicable laws, rules or regulations. 13.3 Notices. Any notice required or permitted to be given hereunder by either (PAGE 15) party shall be in writing and shall be (i) delivered personally, (ii) sent by registered mail, return receipt requested, postage prepaid or (iii) delivered by facsimile with immediate telephonic confirmation of receipt, to the addresses or facsimile numbers set forth below: If to THOMAE: Dr. Karl THOMAE GmbH Birkendorfer Strabe 65 88397 Biberach an der Riss Federal Republic of Germany Attention: Prof. Dr. Rolf G. Werner Fax: 0 73 51/54-51 31 Phone: 0 73 51/54-48 00 If to MEDIMMUNE: MEDIMMUNE Inc. 35 West Watkins Mill Road Gaithersburg, Maryland 20878 U.S.A., Attention: President Fax: 301/527-4201 Phone: 301/ 417-0770
Each notice shall be deemed given (i) on the date it is received if it is delivered personally, (ii) 3 days after the date it is sent by Federal Express, UPS, DHL, MSAS, World Courier or similar service if receipt is immediately confirmed in writing or (iii) on the date it is received if it is sent by facsimile with immediate telephonic confirmation of receipt. 13.4 Applicable Law/Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of Germany without regard to its choice of law principles. The courts of the place of domicile of THOMAE shall have exclusive jurisdiction over all legal matters and proceedings hereunder. 13.5 Compliance with Laws. THOMAE shall perform the work hereunder in conformance with GMP, as applicable, and all German and/or EEC laws, ordinances and govern mental rules or regulations pertaining thereto. 13.6 Relationship THOMAE shall not incur any liabilities on behalf of MEDIMMUNE nor pledge the credit of MEDIMMUNE nor make any representations, or war ranties on behalf of MEDIMMUNE nor hold itself out to third parties as having any such rights. MEDIMMUNE shall not incur any liabilities on behalf of THOMAE nor (PAGE 16) pledge the credit of THOMAE nor make any representations, or warranties on behalf of THOMAE nor hold itself out to third parties as having any such rights. 13.7 Waiver. No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement. 13.8 Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction all other provisions shall continue in full force and effect. The parties hereby agree to attempt to substitute for any invalid or unenforceable provision a valid or enforceable provision which achieves to the greatest extent possible the economic legal and commercial objectives of the invalid or unenforceable provision. 13.9 Entirety. This Agreement, including any exhibits and appendices attached hereto and referenced herein and the Evaluation Agreement and the Interim Agreement, constitutes the full understanding of the parties and a complete and exclusive statement of the terms of their agreement, and no terms, conditions, understandings or agreements purporting to modify or vary the terms thereof shall be binding unless they are hereafter made in writing and signed by both parties. 13.10 Assignment. This Agreement shall be binding upon the successors and assigns of the parties and the name of a party appearing herein shall be deemed to include the names of its successors and assigns provided always that nothing herein shall permit any assignment by either party. However, THOMAE may assign this Agreement to an affiliated company taking over the operative biotech business of THOMAE and MEDIMMUNE may assign this Agreement in the case of a merger or acqusition or transfer of its assets related to this Agreement to a third party without the prior written consent of THOMAE. (PAGE 17) IN WITNESS WHEREOF, the parties have caused this Agreement to be exe cuted as of the Effective Date. MEDIMMUNE Inc. DR. KARL THOMAE GMBH ppa. BY:/S/David M. Mott /s/Dr. Jacob /s/ Dr. Michelberger Title: President Member of the Board Head of Legal Department Date: November 27, 1997
Appendices: Appendix 1 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 2 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 3 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 4 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 5 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 6 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 7 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 8 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 9 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 10 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 11 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 12 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 13 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 18) EX-10.78 5 EXHIBIT 10.78 MANUFACTURING - AGREEMENT This Agreement is made as of November 27, 1997, by and between MEDIMMUNE INC., whose registered office is at 35 West Watkins Mill Road, Gaithersburg, Maryland 20878 U.S.A. (hereinafter referred to as "MEDIMMUNE") and DR. KARL THOMAE GMBH, whose registered office is at Birkendorfer Strabe 65, 88397 Biberach an der Riss, Federal Republic of Germany (hereinafter referred to as "THOMAE"). WITNESSETH WHEREAS the parties have - among others - concluded a Contract Research and Development Agreement regarding the research and development of a method to produce MEDI-493 in a commercial scale; and WHEREAS MEDIMMUNE has all rights to the Product and is the owner of the Process and WHEREAS MEDIMMUNE wishes THOMAE to act as its agent to manufacture Product for MEDIMMUNE, and THOMAE accepts, to manufacture Product as agent for MEDIMMUNE for commercial use, manufactured in accordance with the Process. NOW THEREFORE, the parties hereto agree as follows: 1. DEFINITIONS In this Agreement the following terms shall have the meanings indicated: 1.1 "MEDIMMUNE" means MedImmune Inc. as laid down first above. 1.2 "Contract Research and Development Agreement" means the agreement on MEDI-493 (the humanized IgG 1 monoclonal antibody specifically directed against Respiratory Syncytical Virus (RSV)) between the parties to this Agreement dated November 27, 1997regarding the development of the Process. (PAGE 1) 1.3 "Product-price" means THOMAE's prices for manufacturing Product, Bulk Product, Final Product and/or Finished Product (as the case may be) to be calculated on the basis of the assumptions set forth in Appendix 1. 1.4 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 1.5 "Product" means any product containing MEDI-493 in Bulk Product or as Final Product or as Finished Product its sole or combined active ingredient and produced according to the Process. 1.6 "Bulk Product" means Product which has been purified to a concentrated form and can be stored in a liquid or frozen form under appropriate conditions. 1.7 "Final Product" means unlabelled final container containing lyophilized Product. 1.8 "Finished Product" means Final Product and also labelled and packaged. 1.9 "Specifications" mean the specifications to be enclosed hereto as Appendices 3 for Product, Final Product and Finished Product produced and supplied hereunder by THOMAE. These Appendices will be agreed upon by the parties after the finalization of the Process. 1.10 "Process" shall be the final Process for manufacturing Product developed and agreed by the parties according to the Contract Research and Development Agreement. 1.11 All other terms used herein shall have the same meaning as defined in the Contract Research and Development Agreement. 2. MANUFACTURING 2.1 (a) Subject to MEDIMMUNE's right to manufacture set forth in Section 2.1 (b), MEDIMMUNE hereby appoints THOMAE as MEDIMMUNE's exclusive agent to manufacture Product for MEDIMMUNE and THOMAE hereby accepts such agreement (b) Subject to MEDIMMUNE's right to manufacture Bulk Product and/or Final Product and/or to have a third party to produce Final Product and/or Finished Product from Bulk Product produced by MEDIMMUNE, THOMAE will manufacture Product for MEDIMMUNE exclusively throughout the world during the full term of this Agreement and according to the provisions of this Agreement (incl. Rolling Forecasts and Minimum quantities) and MEDIMMUNE (PAGE 2) will have and cause its licensees to have Product manufactured by THOMAE throughout the world for the period of this Agreement. 2.2 Subject to Section 3 below THOMAE undertakes to manufacture for MEDIMMUNE the quantities of Product ordered by MEDIMMUNE within its Capacity. All manufacture of Product hereunder will be made in accordance with the Process and will be delivered in agreed form suitably packed as specified in the Specifications. 2.3 All quantities of Product will be produced in a production facility designated by THOMAE which is approved by the FDA and all of the European Community regulatory authorities for commercial scale production and deliveries. To the extent that MEDIMMUNE requests that THOMAE secure regulatory approval of the manufactured Product in other countries, then THOMAE shall seek such regulatory approval of its production facility unless such approval would require change in the production facility. MEDIMMUNE shall pay any additional costs for such approval. If changes are required by the respective authority and if THOMAE does not agree to make such changes at MEDIMMUNE's expense, then MEDIMMUNE shall have the right to seek a third party manufacturer for the respective country(ies). THOMAE shall take reasonable efforts to secure approval of THOMAE's manufacturing facility by the FDA and the respective European regulatory authority and THOMAE's obligations under Section 2.1 above are subject to such approval as the case may be. 2.4 Rolling Forecasts Beginning as of March 10th, 1998 and by the 10th of the last month of each quarter MEDIMMUNE will provide THOMAE with a 3 (three) years Product forecast planning horizon for Final Product and Finished Product or an update thereof . The planning horizon shall start the first day of the fourth month after the first forecast which shall be July 1st 1998 or an update thereof. The rolling forecasts are to be broken down to single months. The forecast for the first year (months 1-12) are firm orders and cannot be changed. The forecast for the second year (months 13-24) is a partly binding forecast which means that the forecast can fully be changed within this period as follows: the forecast be increased within the Capacity, but is limited to the following restrictions when decreased: months 13-15 the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) months 16-18 the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 3) months 19-21 the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) months 21-24 the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) The forecast for the third year (months 25-36) is a non-binding forecast. The rolling forecasts (including firm orders) for Final Product and Finished Product are laid down in Appendix 2. 2.5 THOMAE shall use reasonable efforts to manufacture and deliver to MEDIMMUNE all quantities of the Product beyond the binding forecasts at MEDIMMUNE's request within its Capacity. 2.6 THOMAE shall make deliveries by the 10th day of the month for which a firm order is made. 2.7 Minimum quantities Provided that the Product is approved in the USA, beginning January 1st 1999, the minimum quantity of Product to be ordered for manufacture on behalf of MEDIMMUNE each calendar year is (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). If the quantity falls below the minimum quantity of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) annually, THOMAE will charge MEDIMMUNE an annual surcharge according to Article 5.2. 2.8 Exclusivity/Competition During the term of this Agreement, THOMAE agrees that it will not manufacture Product for a third party nor shall THOMAE assist any third party with respect to development or manufacture of a monoclonal antibody against RSV, except where THOMAE is granted marketing rights to such a monoclonal antibody. 3. QUALITY / WARRANTY / LIABILITY / INDEMNIFICATION 3.1 Warranty/Limitation THOMAE warrants that the Product to be manufactured by THOMAE here under corresponds to the Specifications and shall be produced according to current GMP standard and in accordance with all applicable laws, rules and regulations in the country where produced. The Product shall be delivered free and clear of liens and claims which affect title. THOMAE makes no other warranty of any kind, express or implied. (PAGE 4) 3.2 Tests of the Product and agreed upon Audits MEDIMMUNE shall have the right to carry out agreed upon customary tests of the Product and agreed upon audits at reasonable times, of the premises and facilities where THOMAE performs work under this Agreement, and of the premises where it stores raw materials, auxiliary materials, intermediates, packing materials for the Product and the Product itself. The agreed upon tests of the Product shall be included in Appendix 3 hereto. 3.3 Defective Product (including loss and inaccurate quantity) Claims on account of quantity, quality, loss or damages to the Product shall be made by MEDIMMUNE in writing within 90 (ninety) days following receipt thereof, and THOMAE's liability for damages for such claims shall in no event exceed the manufacturing price or replacement of goods for the particular shipment with respect to which such claims are made. No Product will be returned to THOMAE without THOMAE's written permission. (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 3.4 Indemnification by MEDIMMUNE In accordance with all applicable law MEDIMMUNE shall be responsible for, and hold THOMAE harmless from any damage, loss, cost or expense relating to third party claims or suits arising from the packaging, use, marketing or sale of the Product by MEDIMMUNE, or its licensees or other authorized persons or entities, other than those which arise out of a breach of warranty by THOMAE and those which arise out of gross negligence or willful misconduct of THOMAE or its officers, employees or agents, and provided that upon receipt of notice by THOMAE of any claims or suits relating to such use or sale of the Product, THOMAE shall notify MEDIMMUNE thereof without delay and shall permit MEDIMMUNE to handle such claims or suits at the cost and discretion of MEDIMMUNE including but not limited to defense, settlement and compromise thereof. 3.5 Infringement of intellectual property rights With respect to the Process MEDIMMUNE shall be responsible for and hold THOMAE harmless from any third party claim of infringement of its intellectual property rights from a third party based upon THOMAE's contractual activities hereunder. 3.6 Limitation of Warranty / Liability Except as provided in Article 3.1 above THOMAE makes no warranty of any kind, express or implied. Except for willful misconduct THOMAE shall not be liable for any lost profits or any special, incidental or consequential damages. (PAGE 5) 3.7 Delivery/Risk of Loss THOMAE shall deliver or arrange for the delivery of the Product manufactured for MEDIMMUNE to a carrier designated by MEDIMMUNE on the basis of EXW THOMAE's plant in Biberach, in accordance with Incoterms 1990 as published by the International Chamber of Commerce. Title to Product manufactured hereunder shall remain with MEDIMMUNE and risk of loss of Product shall remain with THOMAE until delivery to the carrier as set forth in the next sentence. THOMAE's liability as to risk of loss or damage during transportation thereof shall cease upon delivery of the Product in good condition to the carrier at THOMAE's plant in Biberach designated by MEDIMMUNE. 3.8 Indemnification by THOMAE THOMAE shall indemnify, defend and hold MEDIMMUNE and its officers, employees and agents harmless from and against all third party losses, damages, costs and expenses (including, without limitation, reasonable attorneys` fees), including injury to persons or damage to property, resulting from any breach of the warranties made by THOMAE under this Agreement or which arise out of and are proved to be directly associated with the gross negligence or willful misconduct of THOMAE or its officers, employees or agents in carrying the obligations under this Agreement and provided that upon receipt of notice by MEDIMMUNE of any claims or suits relating to such use or sale of the Product, MEDIMMUNE shall notify THOMAE thereof without delay and shall permit THOMAE to handle such claims or suits at the cost and discretion of THOMAE including but not limited to defense, settlement and compromise thereof. 3.9 Superiority No provision which may purport to impose different conditions upon MEDIMMUNE or THOMAE, nor any other modification of this Agreement, will be of any force and effect, unless in writing and signed by both parties claimed to be bound thereby. In the event of any inconsistencies the terms of this Agreement shall govern. 4. SUPPORT REGARDING POST LICENSING ISSUES THOMAE is willing to support MEDIMMUNE with regard to post licensing issues (e. g. possible registration-issues in the various countries) on commercial conditions to be agreed upon. 5. PRICE AND PAYMENT (PAGE 6) 5.1 Product-price The Product-price for manufacturing the Product shall be calculated according to the scheme laid down in Appendix 1. The basic assumptions of that scheme as titer, yield, and production scale will be reassessed after scale-up of the Process to the commercial scale and then be valid for this Agreement. 5.2 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 5.3 Payment Conditions The Product-price for Product delivered to MEDIMMUNE or according to MEDIMMUNE's instructions shall be payable by MEDIMMUNE within 30 (thirty) days after receipt of Product by the respective party in DEM (Deutsche Mark) by wire transfer to an account to be nominated by THOMAE. (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 5.4 Currency "Deutsche Mark" or "DEM" means the lawful currency for the time being of Germany or, in case of the implementation of the European Monetary Union, the Euro on the basis of the official conversion rate. 5.5 Prices Adjustments (a)The Product-price mentioned in Article 5.1 above (basis 01.09.1997) may be increased by THOMAE effective at the beginning of a calendar year (for the first time effective January 1st 2000) by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) per year for increasing costs of labour and raw material. (b) In case any cost (in terms of cost of labour, material and/or regulatory requirements for producing Bulk Product, Final Product and/or Finished Product increases by more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) in a given calendar year, which THOMAE must demonstrate, the parties shall agree upon the direct amount of such increase based on good faith negotiations to be effective on January 1st of the calendar year following the more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) increase and the price for Product in such calendar year shall be increased for such amount, provided that the price increase taken by THOMAE under Article 5.5 (a) shall be credited toward any corresponding increase under this Article 5.5 (b). (c)In case of a change of the Process which influences the basic assumptions the price shall be recalculated according to Appendix 1. (PAGE 7) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 6. CONFIDENTIALITY 6.1 THOMAE shall not disclose MEDIMMUNE Confidential Information to any person other than its employees or employees of affiliated companies of the Boehringer Ingelheim group who have a need to know such information in order to perform their duties in carrying out the work hereunder and who have an obligation to maintain the confidentiality thereof as provided herein. 6.2 MEDIMMUNE shall not disclose any THOMAE Confidential Information to any person other than (a)its employees or consultants who are bound by similar obligations of confidentiality and who have a need to know such information in order to provide direction to THOMAE or evaluate the results of the work, or (b)regulatory authorities, for example, the FDA, that require such information in order to review an IND, BLA or other regulatory filing. THOMAE will be informed and must agree prior to filing of any THOMAE Confidential Information to regulatory authorities. In these cases where THOMAE restricts MEDIMMUNE's ability to file THOMAE Confidential Information, THOMAE agrees to provide the Confidential Information directly to the regulatory authorities and will provide a letter of authorization for cross-reference to MEDIMMUNE. (c)persons or entities that manufacture Product for MEDIMMUNE after termination of this Agreement or during this Agreement as permitted herein. 6.3 The obligations of confidentiality applicable to MEDIMMUNE Confidential Information and THOMAE Confidential lnformation shall not apply to any information that is: (a)known publicly or becomes known publicly through no fault of the recipient; (b) learned by the recipient from a third party entitled to disclose it; (c)developed by the recipient independently of information obtained from the disclosing party; (d)already known to the recipient before receipt from the disclosing party, as shown by its prior written records; (PAGE 8) (e)required to be disclosed by law, regulation or the order of a judicial or administrative authority; or (f)released with the prior written consent of the disclosing party. 7. LICENSE 7.1 Use of MEDIMMUNE Cell Line and Intellectual Property (a) MEDIMMUNE and THOMAE hereby acknowledge and agree that MEDIMMUNE is providing Cell Line, Process and MEDIMMUNE Confidential Information to THOMAE for use by THOMAE on behalf of and for the benefit of MEDIMMUNE for the purposes of this Agreement, that THOMAE will make use therof solely for such purposes and that MEDIMMUNE hereby consents to such use. (b) MEDIMMUNE hereby delegates to THOMAE as agent for MEDIMMUNE the authority to manufacture Product solely on behalf of and for the benefit of MEDIMMUNE. 7.2 Except as granted under this Agreement, no right or license, either express or implied, under any patent or proprietary right is granted hereunder by virtue of the disclosure of MEDIMMUNE Confidential Information or THOMAE Confidential Information. 8. TERM AND TERMINATION 8.1 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 8.2 To the extent permitted by law, if either party shall become insolvent or shall make assignment for the benefit of creditors, or proceedings in voluntary bankruptcy shall be instituted on behalf of or against a party or a receiver or trustee of all, or substantially all of the property of a party shall be appointed, the other party shall be entitled to terminate this Agreement by giving written notice to this effect to the first party whereupon this Agreement shall so terminate, unless such situation is rectified within a period of 60 (sixty) days. 8.3 Either party may terminate this Agreement for any material breach of this Agreement, if such breach is not cured within 90 (ninety) days following receipt by the party committing the breach of written notice of the intent to terminate. Such termination shall become effective immediately upon further notice to the defaulting party. (PAGE 9) 8.4 Premature Termination 8.4.1 This Agreement may be terminated by MEDIMMUNE at any time if MEDIMMUNE shall withdraw the Product from all relevant markets. 8.4.2 In this case MEDIMMUNE will pay to THOMAE the Product-price for the firm ordered quantities (see Article 2.4 above) of the Product. 8.4.3 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 8.4.4 These payments shall be due within 1 (one) month after receipt by THOMAE of the notice of premature termination from MEDIMMUNE and receipt by MEDIMMUNE of the respective invoice of THOMAE. 8.5 Introduction of the Euro The introduction of the Euro as the legal currency or legal tender in Germany (see Article 5.4 above) shall in no way affect the validity of this Agreement and shall not entitle any party hereto to terminate, or to require any amendment to, this Agreement. 9. MISCELLANEOUS 9.1 Force Majeure. Neither party shall be in breach of this Agreement if there is any failure of performance under this Agreement (except for payment of any amounts due hereunder) occasioned by any act of God, fire, act of government or state, war, civil commotion, insurrection, embargo, prevention from or hindrance in obtaining energy or other utilities, labor disputes of whatever nature or any other reason beyond the control of either party; provided, however, that if a party is not able to perform becomes of a force majeure pursuant to this Article 8.1 for a period of 6 (six) months, the other party may terminate this Agreement with immediate effect. 9.2 Publicity. No press release or other form of publicity regarding the work performed hereunder or this Agreement shall be permitted by either party to be published unless both parties have indicated their consent to the form of the release in writing. Nothing in this Article 9.2 shall prevent the parties from disclosing this Agreement as required by applicable laws, rules or regulations. (PAGE 10) 9.3 Notices. Any notice required or permitted to be given hereunder by either party shall be in writing and shall be (i) delivered personally, (ii) sent by registered mail, return receipt requested, postage prepaid or (iii) delivered by facsimile with immediate telephonic confirmation of receipt, to the addresses or facsimile numbers set forth below: If to THOMAE: Dr. Karl THOMAE GmbH Birkendorfer Strabe 65 88397 Biberach an der Riss Federal Republic of Germany Attention: Prof. Dr. Rolf G. Werner Fax: 0 73 51/54-51 31 Phone: 0 73 51/54-48 00 If to MEDIMMUNE: MEDIMMUNE Inc. 35 West Watkins Mill Road Gaithersburg, Maryland 20878 U.S.A., Attention: President Fax: 301/527-4201 Phone: 301/417-0770
Each notice shall be deemed given (i) on the date it is received if it is delivered personally, (ii) 3 days after the date it is sent by Federal Express, UPS,DHL, MSAS, World Courier or similar service if receipt is immediately confirmed in writing (iii) on the date it is received if it is sent by facsimile with immediate telephonic confirmation of receipt. 9.4 Applicable Law/Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of Germany without regard to its choice of law principles. The courts of the place of domicile of THOMAE shall have exclusive jurisdiction over all legal matters and proceedings hereunder. 9.5 Compliance with Laws. THOMAE shall perform the work hereunder in conformance with current GMP, as applicable, and all German and/or EEC laws, ordinances and governmental rules or regulations pertaining thereto. (PAGE 11) 9.6 Relationship THOMAE shall not incur any liabilities on behalf of MEDIMMUNE nor pledge the credit of MEDIMMUNE nor make any representations or warranties on behalf of MEDIMMUNE nor hold itself out to third parties as having any such rights. MEDIMMUNE shall not incur any liabilities on behalf of THOMAE nor pledge the credit of THOMAE nor make any representations, or warranties on behalf of THOMAE nor hold itself out to third parties as having any such rights. 9.7 Waiver. No waiver of any term, provision or condition of this Agreement whether by conduct or otherwise in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement. 9.8 Severability. If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction all other provisions shall continue in full force and effect. The parties hereby agree to attempt to substitute for any invalid or unenforceable provision a valid or enforceable provision which achieves to the greatest extent possible the economic legal and commercial objectives of the invalid or unenforceable provision. 9.9 Entirety. This Agreement, including any exhibits and appendices attached hereto and referenced herein , constitutes the full understanding of the parties and a complete and exclusive statement of the terms of their agreement, and no terms, conditions, understandings or agreements purporting to modify or vary the terms thereof shall be binding unless they are hereafter made in writing and signed by both parties. 9.10 Assignment. This Agreement shall be binding upon the successors and assigns of the parties and the name of a party appearing herein shall be deemed to include the names of its successors and assigns provided always that nothing herein shall permit any assignment by either party. However, THOMAE may assign this Agreement to an affiliated company taking over the operative biotech business of THOMAE and MEDIMMUNE may assign this Agreement in the case of a merger or acqusition or transfer of its assets related to this Agreement to a third party without the prior written consent of THOMAE. (PAGE 12) IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives on the day and year first above written. Gaithersburg, Biberach, MEDIMMUNE, INC. DR. KARL THOMAE GMBH ppa. /s/David M. Mott /s/Dr. Jacob /s/Dr. H. Michelberger David M. Mott Dr. Jacob Dr. H. Michelberger (Member of Board) (Head of Legal Department)
Appendix 1: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 2: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Appendix 3: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 13) EX-10.79 6 EXHIBIT 10.79 DISTRIBUTION AGREEMENT This Distribution Agreement ("AGREEMENT") is entered into as of November 26, 1997 (the "Effective Date") by and between MedImmune, Inc., a Delaware corporation, having its principal place of business at 35 West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE") and Abbott International, Ltd., a Delaware corporation, having its principal place of business at 200 Abbott Park Road, Abbott Park, IL 60064. WITNESSETH WHEREAS, the parties hereto desire that ABBOTT engage in the distribution in the TERRITORY (as hereinafter defined) of the PRODUCT (as hereinafter defined); and WHEREAS, MEDIMMUNE and ABBOTT desire to set forth in this AGREEMENT the terms and conditions of such distribution. NOW, THEREFORE, the parties hereto agree as follow: 1. DEFINITIONS 1.1 "ABBOTT" shall mean Abbott International, Ltd., and its AFFILIATES. 1.2 "AFFILIATE" shall mean any corporation or other business entity that directly or indirectly controls, is controlled by, or is under common control with a PARTY. Control means ownership or other beneficial interest in fifty percent (50%) or more of the voting stock or other voting interest of a corporation or other business entity. In addition, the following entities are AFFILIATES of ABBOTT: ABBOTT Laboratories (India) Ltd., and ABBOTT Laboratories Nigeria Limited. 1.3 "AGENCY" shall mean any governmental or regulatory authority in the TERRITORY responsible for granting any health or pricing approvals or registrations necessary before any PRODUCT may be marketed in the TERRITORY. 1.4 "CALENDAR QUARTER" shall mean the period of three consecutive calendar months ending on March 31, June 30, September 30 or December 31, as the case may be. 1.5 "CONTRACT YEAR" shall mean July 1 of a calendar year through June 30 of the following calendar year. (PAGE 1) 1.6 "COST OF GOODS" shall mean the fully allocated cost to manufacture PRODUCT determined in a reasonable manner consistent with MEDIMMUNE's normal internal accounting practices and in accordance with generally accepted accounting principles ("GAAP") which includes but is not limited to: (i) direct labor (salaries, wages and employee benefits); (ii) direct materials; (iii) operating costs of building and equipment used in connection with the manufacture of PRODUCT, (iv) allocated depreciation and repairs and maintenance; (v) quality and in-process control; (vi) an allocation of overhead costs incurred in connection with the manufacturing of PRODUCT, including: raw material supply and manufacturing administration and management; materials management, storage and handling; and manufacturing and employee training; (vii) any charges for obsolescence, out of date product, spoilage, scrap or rework costs; and (viii) the cost of packaging and labeling, if applicable. To the extent that the manufacturing of PRODUCT or any component thereof is performed for MEDIMMUNE by a THIRD PARTY, amounts paid to such THIRD PARTY shall be included in COST OF GOODS. 1.7 "FIRM ORDER" shall have the meaning set forth in Section 5.1 1.8 "MAJOR MARKET" shall mean each of the following countries: United Kingdom, France, Germany, Italy, Spain, Canada and Japan. 1.9 "MARKETING APPROVAL" shall mean all governmental approvals required to market and sell the PRODUCT in any given country of the TERRITORY. 1.10 "NET SALES" shall mean with respect to PRODUCT that sum determined by deducting from the gross amount invoiced for PRODUCT sold for use in the TERRITORY in an arms length transaction to customers who are not AFFILIATES of ABBOTT: (i) transportation charges to the extent included in the billing; (ii) trade, quantity or cash discounts, to the extent allowed; (iii) credits or allowances, if any, given or made on account of price adjustments, or returns, to the extent made; (iv) any and all Federal, state or local government rebates, whether in existence now, or enacted at any time during the term of this AGREEMENT, to the extent made; (v) any tax, excise or other governmental charge upon or measured by the production, sale, transportation, delivery or use of the PRODUCT to the extent separately billed; (vi) a reasonable allowance for bad debt; in each case determined in accordance with ABBOTT's normal internal accounting practices and GAAP. 1.11 "PARTY(IES) shall mean ABBOTT and/or MEDIMMUNE, as the case may be. 1.12 "PRODUCT" shall mean the humanized antibody directed against respiratory syncytial virus ("RSV") and known as MEDI-493 (palivizumab). (PAGE 2) 1.13 "SPECIFICATIONS" shall mean, with respect to the PRODUCT, the specifications, test procedures, process descriptions, and other information relating to such PRODUCT. The current SPECIFICATIONS are attached as Schedule A. 1.14 "TERRITORY" shall mean all countries of the world except the United States of America and its territories, possessions and commonwealths. 1.15 "THIRD PARTY" shall mean a party other than ABBOTT, MEDIMMUNE or their AFFILIATES. 1.16 "TRADEMARK" shall mean the trademark(s) for the PRODUCT, owned by ABBOTT, all in accordance with Section 8. 1.17 "UNIT SALE PRICE" shall mean total NET SALES of PRODUCT for a defined period divided by the number of units of PRODUCT included in NET SALES for the defined period. The UNIT SALE PRICE shall be expressed in U.S. Dollars for each type of vial sold. 2. APPOINTMENT 2.1 (a) MEDIMMUNE hereby appoints ABBOTT as the exclusive distributor of the PRODUCT in the TERRITORY and ABBOTT accepts such appointment. (b) ABBOTT agrees that ABBOTT (i) will only sell and distribute PRODUCT in countries of the TERRITORY as to which ABBOTT maintains distribution rights under this AGREEMENT ; (ii) will only sell in the TERRITORY PRODUCT which is purchased from MEDIMMUNE; and (iii) will only sell PRODUCT in the TERRITORY under the TRADEMARK. 2.2 ABBOTT agrees that ABBOTT will not without MEDIMMUNE'S written consent discount the selling price of PRODUCT in order to promote the sales of other products of ABBOTT and that it will conduct all price negotiations in good faith on an arms length basis. 2.3 ABBOTT shall prepare all labeling and packaging for PRODUCT in conformance with regulatory guidelines in each country of the TERRITORY and which shall be satisfactory in form and substance to MEDIMMUNE, which labeling shall clearly indicate that the PRODUCT is being distributed by ABBOTT. ABBOTT shall submit such labeling and packaging for MAJOR MARKET countries to MEDIMMUNE for approval, which approval shall not unreasonably be withheld. MEDIMMUNE shall be deemed to have approved such submitted labeling and packaging unless MEDIMMUNE provides ABBOTT written objection thereto within twenty (20) days after receipt thereof. Upon MEDIMMUNE's reasonable request or if the proposed PRODUCT labeling and packaging for a non-MAJOR MARKET country differs materially from the labeling and packaging previously (PAGE 3) approved by MEDIMMUNE pursuant to this Section 2.3, ABBOTT shall submit the labeling and packaging for such non-MAJOR MARKET country to MEDIMMUNE for approval, which approval shall not unreasonably be withheld. MEDIMMUNE shall be deemed to have approved such submitted labeling and packaging unless MEDIMMUNE provides ABBOTT written objection thereto within twenty (20) days after receipt thereof. 2.4 ABBOTT agrees not to sell PRODUCT through subdistributors without the written consent of MEDIMMUNE, which consent shall not be unreasonably withheld. If such consent is granted, ABBOTT shall remain fully liable and responsible to MEDIMMUNE for the activities of a subdistributor appointed by ABBOTT. 3. PURCHASE OF PRODUCTS 3.1 (a) Subject to Section 3.4 hereof, MEDIMMUNE shall sell and ABBOTT shall purchase an amount of PRODUCT equal to ABBOTT's requirements in the TERRITORY. ABBOTT shall pay the price for such PRODUCT as set forth in Section 3.2 according to the volume purchased. (b) Subject to availability of PRODUCT from MEDIMMUNE, ABBOTT shall maintain sufficient inventories of PRODUCT to enable ABBOTT to effectively satisfy demand for PRODUCT in the TERRITORY. 3.2 (a) The price of PRODUCT shall be the following percentages of NET SALES of PRODUCT sold by ABBOTT or its AFFILIATES: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 3.3 (a) MEDIMMUNE will invoice ABBOTT for PRODUCT shipped and ABBOTT shall pay as follows: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (A) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (B) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (C) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) The price set forth in Section 3.2 shall be calculated and paid quarterly within forty-five (45) days following the end of each CALENDAR QUARTER with the amount paid under Section 3.3(a)(i) for PRODUCT sold in a CALENDAR QUARTER (on a first in (PAGE 4) first out basis) being credited against the actual amount due under this Section 3.3 (a)(ii) for such CALENDAR QUARTER. In the event that the credit exceeds the amount due for a CALENDAR QUARTER, then such excess amount shall be credited until exhausted against amounts due under this Section 3.3(a)(ii) for subsequent CALENDAR QUARTERS, but only if such excess results from payments which are made based on UNIT SALE PRICE. If at the end of a CONTRACT YEAR a carry over credit exists, then MEDIMMUNE shall promptly pay to ABBOTT an amount equal to such carry over credit. Each such quarterly payment shall be supported by the accounting prescribed in Section 3.3(b). Whenever for the purpose of calculating payment, conversion from any foreign currency shall be required, such conversion shall be completed for each month of the CALENDAR QUARTER as follows: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), using central bank fixing rates in countries where available and open market rates otherwise. (iii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iv) An example using the formulas set forth in this Section 3.3(a) is attached hereto as Schedule B. (b) With each quarterly payment, ABBOTT shall deliver to MEDIMMUNE a full and accurate accounting to include at least the following information: (i) Quantity of each PRODUCT sold and/or withdrawn by transaction type (by country) by ABBOTT, and its AFFILIATES and if applicable, it's subdistributors. (ii) Total amount invoiced for each PRODUCT (by country) in local currency. (iii)Calculation of NET SALES (by country) in local currency. (iv) Exchange rates for converting each local currency into U.S. Dollars for each month of the CALENDAR QUARTER. (v) NET SALES in U.S. dollars in each country. (vi) Total compensation payable to MEDIMMUNE. (vii)Credits taken by ABBOTT pursuant to Section 3.3(a)(ii). (c) Within forty five (45) days following each CONTRACT YEAR, ABBOTT shall provide MEDIMMUNE an inventory reconciliation for such CONTRACT (PAGE 5) YEAR. (d) ABBOTT shall keep, and shall cause each of its AFFILIATES to keep, and if applicable, its subdistributors, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all payments payable to MEDIMMUNE. Such books of account shall be kept at their principal place of business and, with all necessary supporting data shall, for the two (2) years next following the end of the calendar year to which each shall pertain be open for inspection by an independent certified accountant selected by MEDIMMUNE and reasonably acceptable to ABBOTT upon reasonable notice during normal business hours at MEDIMMUNE's expense for the sole purpose of verifying payments or compliance with this AGREEMENT, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying payments. In the event that such inspection shall indicate that in any calendar year that the payments which should have been paid by ABBOTT are at least five percent (5%) greater than those which were actually paid by ABBOTT, then ABBOTT shall pay the cost of such inspection. All underpayments are immediately due and payable. (e) MEDIMMUNE shall forward all invoices for PRODUCT ordered hereunder to a U.S. location as designated by ABBOTT. 3.4 MEDIMMUNE shall use commercially reasonable efforts to satisfy ABBOTT's requirements for PRODUCT. All PRODUCT shipped to ABBOTT shall be manufactured in accordance with the SPECIFICATIONS. MEDIMMUNE shall promptly advise ABBOTT of any proposed or required changes to the SPECIFICATIONS. To the extent such changes require a new or amended Product Registration, as defined herein, MEDIMMUNE and ABBOTT shall cooperate and coordinate the adoption of such changes to the SPECIFICATIONS so as to minimize any disruption of the marketing, promotion and sale of PRODUCT in any country within the TERRITORY. However, MEDIMMUNE's obligation to supply PRODUCT under Section 3.1 hereof shall at all times be subject to the condition that MEDIMMUNE is able to obtain or make a sufficient supply of such PRODUCT for sale both inside and outside of the TERRITORY. In the event that PRODUCT available to MEDIMMUNE is in short supply, MEDIMMUNE shall notify ABBOTT of such shortage as soon as possible. In the event there is a short supply of PRODUCT and MEDIMMUNE cannot supply PRODUCT to ABBOTT in an amount equal to ABBOTT's FIRM ORDER, then MEDIMMUNE shall allocate available PRODUCT to ABBOTT in each month that such a shortfall exists (and in each month thereafter until the shortfall to ABBOTT is remedied) in an amount equal to the product of (i) the amount of available PRODUCT for that month and (ii) a fraction the numerator of which is the aggregate quantity of FIRM ORDERS made by ABBOTT over the subsequent twelve (12) month period including the (PAGE 6) shortfall month and the denominator of which is the sum of (x) the aggregate quantity of FIRM ORDERS made by ABBOTT over the subsequent twelve (12) month period including the shortfall months and (y) the aggregate quantity of PRODUCT over the same twelve (12) month period required by MEDIMMUNE outside the TERRITORY by reference to FIRM ORDERS placed with THIRD PARTY manufacturers for MEDIMMUNE's requirements and the amount to be produced at a MEDIMMUNE facility for MEDIMMUNE's requirements, in each case outside the TERRITORY. 3.5 ABBOTT agrees to use and distribute the PRODUCT only in accordance with the terms, conditions and purposes of this AGREEMENT. 4. DELIVERY, PAYMENT AND RISK OF LOSS 4.1 (a) All payments under this AGREEMENT shall be remitted in immediately available funds. Unless otherwise agreed between the parties all payments shall be in U.S. Dollars. (b) In the event that any payment due hereunder is not made when due, the payment shall accrue interest beginning on the first day of the month following the date when such payment was due, calculated at the annual rate of the sum of (i) two percent (2%) plus (ii) the prime interest rate quoted by Citibank, N.A., New York, New York, on the date such payment is due, or on the date payment is made, whichever is higher, the interest being compounded on the last day of each calendar month; provided that in no event shall said annual rate exceed the maximum legal interest rate for corporations. Such payment when made shall be accompanied by all interest accrued. Said interest and the payment and acceptance thereof shall not negate or waive the right of MEDIMMUNE to any other remedy, legal or equitable, to which MEDIMMUNE may be entitled because of the delinquency of the payment. 4.2 Title to PRODUCT sold hereunder, and risk of loss with respect to such PRODUCT, shall pass to ABBOTT upon delivery of the PRODUCT to a carrier designated by ABBOTT at the place at which PRODUCT is manufactured. ABBOTT shall be responsible for the cost of freight and insurance. Upon the passage of title, MEDIMMUNE's liability with respect to risk of loss shall cease, and ABBOTT shall be the owner of such PRODUCT for all purposes, including, without limitation, the marketing, sale and setting of prices for the PRODUCT sold by ABBOTT to its customers. 4.3 No provision on ABBOTT's purchase order forms which may purport to impose different conditions upon the parties hereto shall modify the terms of this AGREEMENT. (PAGE 7) 4.4 After the sale of PRODUCT to ABBOTT, ABBOTT shall ship such PRODUCT outside the country in which ABBOTT takes title. 5. FORECASTS AND ORDERS 5.1 (a) ABBOTT shall provide MEDIMMUNE on the tenth of the last month of each quarter with a three-year product forecast planning horizon. The rolling forecasts are to be broken down to single months. The forecasts within the first year (month 1 through 12) are firm orders and cannot be changed. The forecast for the second year (month 13 through 24) is a partly binding forecast which means that the forecast can be changed within this period. The forecast can be increased, but is limited to the following restrictions when decreased. Month 13 - 15 -- the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Month 16 - 18 -- the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Month 19 - 21 -- the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Month 21 - 24 -- the forecast can be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) The forecast for the third year (month 25 - 36) is a non-binding forecast. Notwithstanding the foregoing, MEDIMMUNE shall make every reasonable effort to comply with unplanned changes in FIRM ORDERS, but shall not be held liable for its inability to do so. In each FIRM ORDER for any month, ABBOTT shall state, after consultation with MEDIMMUNE, a reasonable delivery schedule for PRODUCTS to be delivered in that month. With respect to calendar year 1998, the parties shall agree on or before February 15, 1998, upon a FIRM ORDER for that calendar year and the partly binding and non-binding estimates for the following twenty four (24) months. (b) Notwithstanding the foregoing, MEDIMMUNE reserves the right to spread the supply of PRODUCT throughout a CONTRACT YEAR (c) PRODUCT shall be provided to ABBOTT by MEDIMMUNE and shall be ordered by ABBOTT in 50 mg or 100 mg vials; without labeling or packaging. ABBOTT shall be responsible for the labeling and packaging of PRODUCT, at ABBOTT's sole cost and expense. (d) In any month for which ABBOTT places an order, the order shall be no less than 1000 vials of PRODUCT, and MEDIMMUNE shall only be required to deliver PRODUCT to ABBOTT once in each month. (PAGE 8) 5.2 ABBOTT shall have sixty (60) days from receipt of any delivery of PRODUCT to examine such PRODUCT. ABBOTT shall promptly notify MEDIMMUNE of any defective PRODUCT and shall return to or otherwise dispose of any defective shipments in accordance with MEDIMMUNE'S instructions at MEDIMMUNE'S cost and expense. Subject to Section 3.4 MEDIMMUNE shall provide for replacement delivery within one (1) month from existing production stock of the THIRD PARTY manufacturer, if available, and if not available, within twelve (12) months therefrom. Such replacement shall be ABBOTT's sole and exclusive remedy with respect to defective PRODUCT delivered by MEDIMMUNE hereunder. 6. DILIGENCE 6.1 MEDIMMUNE shall, as soon as practical after execution of this AGREEMENT provide ABBOTT with all data and information which MEDIMMUNE has in its possession with respect to PRODUCT which is necessary for ABBOTT to obtain appropriate PRODUCT approvals in the TERRITORY, which data and information includes, but is not limited to, the PRODUCT BLA filing with the United States Food and Drug Administration. MEDIMMUNE shall provide ABBOTT reasonable technical assistance and cooperation in connection with ABBOTT's efforts in obtaining regulatory approval of PRODUCT in each MAJOR MARKET. 6.2 At its sole cost and expense, ABBOTT shall exert best efforts to obtain in each MAJOR MARKET all approvals which are required to enable ABBOTT to sell and distribute PRODUCT in each MAJOR MARKET including but not limited to regulatory and pricing approvals. In the event that clinical trial(s) is required to obtain or maintain such approvals in a country(ies) of the TERRITORY, then ABBOTT shall have the right to terminate this AGREEMENT in such country(ies) by written notice to MEDIMMUNE within the following time periods after ABBOTT is notified that clinical trial(s) for PRODUCT is required in such country: (i) within thirty (30 ) days if ABBOTT's good faith estimate of the cost to complete such clinical trial is less than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (ii) within sixty (60 ) days if ABBOTT's good faith estimate of the cost to complete such clinical trial is greater than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (iii)within ninety (90 ) days if ABBOTT's good faith estimate of the cost to complete such clinical trial is greater than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (PAGE 9) (iv) within one hundred twenty (120 ) days if ABBOTT's good faith estimate of the cost to complete such clinical trial is greater than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); With respect to a country(ies) in the TERRITORY in which this AGREEMENT is terminated pursuant to this Section 6.2, ABBOTT hereby grants to MEDIMMUNE a royalty free license to use any and all technical, clinical and regulatory information, filings and licenses of ABBOTT with respect to such PRODUCT in such country(ies) and ABBOTT shall effect prompt transfer thereof to MEDIMMUNE. 6.3 ABBOTT shall take any and all necessary steps to maintain regulatory and pricing approval for PRODUCT in each country of the TERRITORY in which it is obtained. 6.4 Prior to initiating a clinical trial with respect to PRODUCT, the PARTY who is to conduct such clinical trial shall provide the other PARTY with an opportunity to review the clinical trial proposal and such PARTY shall consider any advice and suggestions of the other PARTY with respect to such clinical trial. In the case of a clinical trial to be conducted by or on behalf of ABBOTT with respect to PRODUCT, such clinical trial shall not be initiated without the written consent of MEDIMMUNE, which consent shall not be unreasonably withheld. 6.5 In the event that, notwithstanding ABBOTT's best efforts, ABBOTT does not achieve the following milestones in the TERRITORY, MEDIMMUNE may, in its sole discretion, convert the exclusive rights granted herein to non-exclusive rights: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 6.6 In the event that ABBOTT does not have a significant interest in obtaining regulatory approval of and marketing PRODUCT in any country of the TERRITORY, ABBOTT shall notify MEDIMMUNE. If MEDIMMUNE requests in writing that ABBOTT indicate whether or not ABBOTT has an interest in marketing PRODUCT in a country(ies) of the TERRITORY, within thirty (30) days thereafter ABBOTT shall notify MEDIMMUNE as to whether or not ABBOTT has such an interest. In the event that ABBOTT notifies MEDIMMUNE that it does not have a significant interest in marketing PRODUCT in any country(ies) of the TERRITORY, MEDIMMUNE may terminate ABBOTT's rights in such country(ies) of the TERRITORY, provided that the marketing in such country(ies) does not adversely affect marketing of PRODUCT in a country in which ABBOTT is seeking or has obtained regulatory approval. (PAGE 10) 6.7 (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED): (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED): (x) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (y) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (z) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). 6.8 During the term of this AGREEMENT, ABBOTT shall exercise its best efforts to promote the use and sale of PRODUCT in the MAJOR MARKETS of the TERRITORY and in each country of the TERRITORY in which PRODUCT is approved for sale and shall maintain, at its own cost and expense, an adequate sales organization for this purpose. ABBOTT shall keep MEDIMMUNE advised of general market, economic and regulatory developments that may affect the sale of PRODUCT. 7. PAYMENTS In consideration for the clinical and other data provided by MEDIMMUNE in support of regulatory approvals in the TERRITORY, ABBOTT will make the following payments to MEDIMMUNE: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); and (v) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). 8. OTHER RESPONSIBILITIES OF ABBOTT 8.1 In distributing the PRODUCT in the TERRITORY, ABBOTT will comply with all provisions of the laws, rules and regulations applicable in the TERRITORY. ABBOTT shall promptly notify MEDIMMUNE of any changes in such provisions. (PAGE 11) 8.2 ABBOTT agrees not to export PRODUCT outside the TERRITORY without the express permission of MEDIMMUNE. 8.3 ABBOTT shall supply MEDIMMUNE with a market progress report each CALENDAR QUARTER indicating the quantities of the PRODUCT in inventory and sales of the PRODUCT in each country of the TERRITORY. 8.4 The appointment of ABBOTT hereunder shall not create a joint venture, or any employer-employee relationship or principal-agency relationship, and nothing under this AGREEMENT shall be deemed to authorize ABBOTT to act for, represent, or bind MEDIMMUNE or any of its AFFILIATES. 8.5 (a) During the term of this AGREEMENT, it is contemplated that a PARTY will disclose to the other PARTY proprietary and confidential technology, specifications, technical information and the like which are owned or controlled by a PARTY ("Confidential Information"). The receiving PARTY agrees to retain the disclosing PARTY's Confidential Information in confidence and not to disclose any such Confidential Information to a THIRD PARTY without the prior written consent of the disclosing PARTY and to use the disclosing PARTY's Confidential Information only for the purposes of this AGREEMENT. The obligations of confidentiality will not apply to Confidential Information which: (i) was known to the receiving PARTY or generally known to the public prior to its disclosure hereunder; (ii) subsequently becomes known to the public by some means other than a breach of this AGREEMENT; (iii)is subsequently disclosed to the receiving PARTY by a third party having a lawful right to make such disclosure; (iv) is required by law or bona fide legal process to be disclosed provided that the receiving PARTY takes all reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable prior notice to the disclosing PARTY; or (v) is approved for release by the PARTIES. (b) Upon termination or expiration of this AGREEMENT, each PARTY shall return to the other PARTY all tangible forms of confidential information furnished by the other PARTY, including all copies thereof and all memoranda of oral disclosure, except that each PARTY may retain one copy in its files to ensure compliance with any legal obligations. (PAGE 12) (c) This Section shall survive until the tenth anniversary of the termination or expiration of this AGREEMENT. 8.6 During the term of this AGREEMENT and for one year thereafter, ABBOTT agrees that neither ABBOTT nor an AFFILIATE of ABBOTT shall research, clinically develop, promote, market or sell directly or indirectly or assist another party in marketing or selling in the TERRITORY any immunoglobulin or antibody product (or antibody derivative) for prevention and/or treatment of respiratory syncytial virus disease. 8.7 ABBOTT agrees to provide MEDIMMUNE with ABBOTT's annual U.S. Dollar sales forecast for PRODUCT to be sold in the TERRITORY for the sole purpose of assisting MEDIMMUNE in its financial planning. 9. TRADEMARKS, LOGOS AND PATENTS 9.1 ABBOTT shall propose to MEDIMMUNE trademarks for use with the PRODUCT in the TERRITORY, and with the written consent of MEDIMMUNE a proposed trademark(s) shall become the TRADEMARK for the PRODUCT in the TERRITORY. 9.2 The TRADEMARK shall be owned by ABBOTT. 9.3 In the event that ABBOTT's rights to PRODUCT under this AGREEMENT are terminated in any country(ies) of the TERRITORY or this AGREEMENT is terminated for reasons other than MEDIMMUNE's breach of the terms of this AGREEMENT, ABBOTT shall grant to MEDIMMUNE a non-cancellable royalty free exclusive license to use the TRADEMARK with respect to PRODUCT in such country(ies) or to all countries of the TERRITORY, respectively, and shall perform all acts and sign and execute any and all papers required to effect such licensing all at no cost or expense to MEDIMMUNE. 9.4 ABBOTT agrees to use the TRADEMARK only with respect to PRODUCT purchased from MEDIMMUNE and only in those countries of the TERRITORY in which ABBOTT retains the right to distribute PRODUCT. 9.5 At its cost and expense, ABBOTT undertakes to comply with all legal requirements pertaining to the TRADEMARK to maintain the TRADEMARK in force at all times, in the TERRITORY in which ABBOTT retains the right to distribute PRODUCT. 9.6 If ABBOTT becomes aware of any infringement of the TRADEMARK within the TERRITORY, ABBOTT shall, at its expense, take such steps as ABBOTT may reasonably determine for the protection of its rights in the TRADEMARK. The commencement, strategies, termination and settlement of any action relating to the validity and/or infringement of such (PAGE 13) TRADEMARK shall be finally decided by ABBOTT. 9.7 (a) The patents in the TERRITORY relating to PRODUCT owned by or licensed to MEDIMMUNE are set forth in attached Schedule C. (b) In the event that ABBOTT notifies MEDIMMUNE that ABBOTT believes that a THIRD PARTY is selling a monoclonal antibody against RSV in the TERRITORY which infringes a patent owned by or licensed to MEDIMMUNE and MEDIMMUNE has the right to bring suit under such patent then: (i) MEDIMMUNE shall have the first right to bring an infringement action against such THIRD PARTY at its cost and expense and MEDIMMUNE shall retain all amounts recovered in such action; or (ii) if MEDIMMUNE does not initiate such action within thirty (30) days of written notice of such infringement from ABBOTT, at the request of ABBOTT, to the extent that MEDIMMUNE has the right to do so, MEDIMMUNE shall initiate an infringement action against such THIRD PARTY at the cost and expense of ABBOTT and ABBOTT shall retain all amounts recovered in such action. (c) In any infringement suit instituted by MEDIMMUNE to enforce the patent rights pursuant to this AGREEMENT, ABBOTT shall cooperate fully with MEDIMMUNE. 10. INDEMNITY 10.1 ABBOTT shall defend, indemnify and hold harmless MEDIMMUNE and its AFFILIATES and their licensors related to the PRODUCT and their respective employees, agents, officers, shareholders and directors and each of them (a "MEDIMMUNE Indemnified Party") from and against any and all THIRD PARTY claims, causes of action, losses, damages and costs (including reasonable attorney's fees) of any nature made or asserted against a MEDIMMUNE Indemnified Party or lawsuits or other proceedings filed or otherwise instituted against a MEDIMMUNE Indemnified Party, in each case by a THIRD PARTY (hereinafter individually and collectively a "Loss(es)") to the extent that such Loss results or arises from clinical trials, testing, sale or use of any PRODUCT which is used or sold by or on behalf of ABBOTT, provided, however, that the foregoing indemnification shall not be applicable to any Loss to a MEDIMMUNE Indemnified Party to the extent that such Loss arises or results from the negligence or willful misconduct of such MEDIMMUNE Indemnified Party or infringement of a patent of a THIRD PARTY as a result of manufacture, use or sale of PRODUCT in the TERRITORY. (PAGE 14) 10.2 Indemnification by MEDIMMUNE. MEDIMMUNE shall defend, indemnify and hold harmless ABBOTT and its AFFILIATES and their respective employees, agents, officers, shareholders and directors and each of them (a "ABBOTT Indemnified Party(ies)") from and against any and all THIRD PARTY claims, causes of action, losses, damages and costs (including reasonable attorney's fees) of any nature made or asserted against a ABBOTT Indemnified Party or lawsuits or other proceedings filed or otherwise instituted against a ABBOTT Indemnified Party, in each case by a THIRD PARTY (hereinafter individually or collectively a "Loss(es)") to the extent that such Loss results or arises from the negligence or willful misconduct of MEDIMMUNE or the infringement of a patent of a THIRD PARTY as a result of ABBOTT's use or sale of PRODUCT in the TERRITORY, except to the extent that such Loss arises from the negligence or willful misconduct of such ABBOTT Indemnified Party. 10.3 Conditions to Indemnification. A person or entity that intends to claim indemnification under this Section 10 (the "Indemnitee") shall promptly notify the other party (the "Indemnitor") of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the Indemnitee whether or not such claim is rightfully brought; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume the defense, or if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other person represented by such counsel in such proceedings. The indemnity agreement in this Section 10 shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, only if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section 10, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Section 10. The Indemnitee under this Section 10, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigations of any action, claim or liability covered by this indemnification. (PAGE 15) 11. CLINICAL TRIALS AND ADVERSE REACTION REPORTING 11.1 Each party hereto shall be responsible for the conduct of clinical trials, including drug monitoring with PRODUCT in its territory and the parties will keep each other informed and share data resulting from such clinical trials. 11.2 In order to guarantee that all applicable regulatory requirements as well as the PARTIES' interests regarding pharmacovigilance of the medicinal products concerned can be met, the PARTIES shall exchange appropriate information. The PARTIES shall make sufficient efforts to promptly establish and adopt sufficient procedures concerning this exchange. These procedures shall be documented in writing as Schedule D to this AGREEMENT. 11.3 Each PARTY agrees to notify the other PARTY as soon as possible of any information it may receive regarding any threatened or pending action by an AGENCY which may affect the safety or efficacy claims of PRODUCT or the continued marketing of such PRODUCT. 11.4 Each PARTY shall promptly notify the other PARTY in writing of any facts relating to the advisability of the recall, destruction or withholding from the market of the PRODUCT anywhere in the world (collectively, "Recall"). If at any time (a) any governmental or regulatory authority in the TERRITORY issues a request, directive or order for a Recall; (b) a court of competent jurisdiction orders a Recall in the TERRITORY; or (c) ABBOTT determines, following consultation with MEDIMMUNE (except in emergency situations in which there is insufficient time for such consultation), that a Recall in the TERRITORY is necessary or advisable, ABBOTT shall take all appropriate corrective actions, at ABBOTT's expense, to effect the Recall and MEDIMMUNE shall provide ABBOTT with such cooperation in connection with the Recall as ABBOTT may reasonably request. 12. WARRANTIES 12.1 Each party warrants and represents that it has the full right and authority to enter into this AGREEMENT and that it is not aware of any impediment which would inhibit its ability to perform the terms and conditions imposed on it. 12.2 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS SECTION 12, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF ANY PATENTS ISSUED OR PENDING. (PAGE 16) 13. TERM AND TERMINATION 13.1 This AGREEMENT is effective as of the date first above written and, unless sooner terminated as provided herein, shall continue for as long as ABBOTT is distributing the PRODUCT in the TERRITORY. 13.2 This AGREEMENT may be terminated by either party if: (a) (i) the other party fails to observe, perform or otherwise breaches any of its material covenants, agreements or obligations under this AGREEMENT in any material respect and (ii) such failure continues for a period of thirty (30) days after receipt by the other party of notice thereof from the electing party specifying such failure. Following such period, the electing party has ninety (90) days to give notice to the other party of its election to terminate this AGREEMENT; or (b) (i) the other party files or institutes bankruptcy, reorganization, liquidation, receivership or similar proceedings under any debt relief laws or fails for more than sixty (60) days to take steps to oppose the initiation of such actions against it. 13.3 Upon the termination of this AGREEMENT for any reason other than for breach of this AGREEMENT by ABBOTT, ABBOTT shall have the right to sell all PRODUCT in inventory at the time of termination. All such sales of PRODUCT shall be subject to the terms of this AGREEMENT, as in effect immediately prior to termination. If this AGREEMENT terminates for any breach by ABBOTT, then MEDIMMUNE may at its discretion buy back all or part of the PRODUCT that remain in the possession of ABBOTT and are in good condition with a reasonable remaining shelf life. All PRODUCT which is not repurchased by MEDIMMUNE within four (4) weeks after termination shall be immediately destroyed by ABBOTT at ABBOTT's expense. Upon termination, ABBOTT shall discontinue use of the TRADEMARK, except in connection with any sale of inventory as provided in this Section. 13.4 The termination of this AGREEMENT shall not affect any outstanding obligations of ABBOTT or MEDIMMUNE hereunder, including but not limited to any payments owed under the provisions of this AGREEMENT while it was in effect and payment for binding and partially binding orders under Section 5.1(a). Any such amount owed to a party shall be paid within thirty (30) days of the termination of this AGREEMENT. The provisions of Sections 3.3, 4.1, 5.1(a), 8.5, 8.6, 9.2, 9.3, 9.4, Section 10, 13.3, 13.4 and 14.1 shall survive the termination of this AGREEMENT for the longest period permitted by applicable law. (PAGE 17) 13.5 ABBOTT may obtain PRODUCT registrations, licenses, permits, consents and other approvals required from time to time to distribute and sell the PRODUCTS in a country within the TERRITORY (the "Product Registrations"). Upon termination of this AGREEMENT and at the request of MEDIMMUNE, ABBOTT shall take all necessary or appropriate actions to transfer to MEDIMMUNE or its designee the Product Registrations which ABBOTT obtained in order to import, distribute or sell PRODUCT in a country(ies) within the TERRITORY, to the extent permitted by applicable law and regulation. 14. MISCELLANEOUS PROVISIONS 14.1 This AGREEMENT shall be governed by and construed in accordance with the laws of State of Maryland without giving effect to its conflict of law rules and regulations. 14.2 The United Nations Convention on the International Sale of Goods shall not apply to this AGREEMENT, nor to any sale of PRODUCT made pursuant to this AGREEMENT. 14.3 This AGREEMENT sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this AGREEMENT, except by a written document which is signed by both parties. 14.4 The headings in this AGREEMENT have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 14.5 Any delay in enforcing a party's rights under this AGREEMENT or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this AGREEMENT, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 14.6 In the event any provision of this AGREEMENT should be held invalid, illegal or unenforceable, the remaining provisions shall not be affected or impaired and the parties will use all reasonable efforts to replace the applicable provision within a valid, legal and enforceable provision which insofar as practical implements the purposes hereof. 14.7 Unless agreed upon in writing in advance by the PARTIES, the PARTIES shall not discuss with THIRD PARTIES or originate any publicity, news (PAGE 18) release or other public announcement, written or oral, whether to the public press, stockholders or otherwise, any matters relating to the terms of this AGREEMENT without the prior written consent of the other PARTY except as may be required to obtain the Product Registrations. However, the PARTIES acknowledge and agree that MEDIMMUNE and ABBOTT shall be entitled to comply with the information obligations to the public as set out in the company laws or security laws of the U.S. 14.8 If a dispute or claim arising out of or in connection with this AGREEMENT develops between the PARTIES, the respective appropriate officers of the PARTIES shall negotiate in good faith in an effort to resolve the dispute for a period of thirty (30) days; provided, however, nothing in this Section 14.8 shall prevent either PARTY from seeking equitable relief. The PARTIES may, but are not obligated to, agree to use the alternate dispute resolution procedure set forth in Schedule D. 15. FORCE MAJEURE Neither party shall be liable to the other for any default hereunder, which is not a payment default, which is due to cause beyond the control of the party in default, including but not limited to the actions or inactions of any government agency or instrumentality; breakdown of plant or machinery or shortages of labor, fuel, transportation of materials, fires, floods, earthquakes, war, riots or insurrections. If either party shall seek to rely on Force Majeure it shall give written notice to the other indicating the details of the act which it claims has put due performance of its obligations beyond its control. In addition, the affected party shall exert all reasonable efforts to eliminate or cure any Force Majeure event and to resume performance with all possible speed. In the event this cannot be done within six (6) months, the parties shall either resolve the matter by mutual agreement or terminate this AGREEMENT. 16. SUCCESSORS Subject to Section 17, the rights and obligations included in this AGREEMENT shall be binding upon the parties hereto and their successors and assigns. 17. ASSIGNMENT This AGREEMENT may not be assigned by either party without the consent of the other except MEDIMMUNE may assign this AGREEMENT without consent in the event of a merger, acquisition or transfer of all or substantially all of its business or assets relating to this AGREEMENT. (PAGE 19) 18. NOTICES Any notice to be given under this AGREEMENT shall be deemed to have been sufficiently given and delivered upon the earlier of (i) when received at the address set forth below or (ii) three (3) business days after being mailed by registered or certified mail, postage prepaid with return receipt requested, addressed to the party to be notified at its address stated below or at such other address as may hereafter be furnished in writing to the notifying party or (iii) on the day when sent by facsimile as confirmed by registered or certified mail. Notices shall be delivered to the respective parties at the addresses set forth below:
To MEDIMMUNE: MEDIMMUNE, Inc. Copy to: Carella, Byrne, Bain, 35 West Watkins Mill Road Gilfillan, Cecchi, Stewart Gaithersburg, MD 20878 & Olstein ATTN: CEO 6 Becker Farm Road Roseland, New Jersey 07068 Fax: (201) 994-1744 ATTN: Elliot M. Olstein, Esq. To ABBOTT: ABBOTT International, Ltd. Copy to: Abbott Laborities D-6WP, AP30 D-364, AP6D 200 Abbott Park Road 100 Abbott Park Road Abbott Park, IL 60064 Abbott Park, IL 60064 Phone: (847) 937-1760 Phone: (847) 937-8906 Fax: (847) 938-8325 Fax: (847) 938-6277 ATTN: President ATTN: General Counsel
19. PAYMENTS TO BE PAID IN FULL To the extent any payments due to MEDIMMUNE under in this AGREEMENT shall be subject to withholding tax, ABBOTT shall be responsible for the payment of and pay such tax without recourse to MEDIMMUNE. ABBOTT shall have the right to reduce payments to MEDIMMUNE by the tax paid on behalf of MEDIMMUNE. To the extent that MEDIMMUNE is unable to recover VAT or a similar tax accrued in a country in connection with its supply of PRODUCT to ABBOTT hereunder, ABBOTT shall assist MEDIMMUNE in recovering such tax. (PAGE 20) 20. CURRENCY CALCULATION In all cases where calculations or amounts are made or stated in U.S. Dollars, conversion from local currency to U.S. Dollars shall be made as set forth in Section 3.3(B)(ii). IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be executed by their respective representatives hereunto duly authorized as of the day and year first above-written.
ABBOTT INTERNATIONAL, LTD. MEDIMMUNE, INC. By:/s/Robert L. Parkinson, Jr. By:/s/David M. Mott Robert L. Parkinson, Jr. David M. Mott President President
JOINDER The undersigned, Abbott Laboratories, an Illinois corporation, hereby joins in the execution of this Distribution Agreement (the "Agreement") for the purpose of obligating itself to the obligations and undertakings of Abbott International, Ltd., as set forth in the Agreement. ABBOTT LABORATORIES By:/s/Robert L. Parkinson, Jr. Robert L. Parkinson, Jr. Senior Vice President Dated: December 1, 1997 (PAGE 21) SCHEDULE A SPECIFICATIONS (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE B PRIOR TO FIRST COMMERCIAL SALES AND COMPLETION OF FIRST CONTRACT YEAR (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE C MEDI-493 PATENTS (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE D ADVERSE DRUG REPORTING Post-marketed Events ABBOTT Pharmacovigilance to MEDIMMUNE All serious adverse events originating in the TERRITORY will be faxed by ABBOTT to MEDIMMUNE on an ABBOTT Adverse Event Data Collection form to MEDIMMUNE within five (5) calendar days of ABBOTT awareness. No ABBOTT International Pharmacovigilance assessment of expectedness or causality will be made on these faxed reports. MEDIMMUNE to ABBOTT Pharmacovigilance All serious adverse events originating outside the TERRITORY will be faxed on a MEDIMMUNE Adverse Event Data Collection form to ABBOTT Pharmacovigilance within five (5) calendar days' of MEDIMMUNE awareness. No MEDIMMUNE assessment of expectedness or causality will be made on these faxed reports. Clinical Study Events (both directions) To be handled according to the process with spontaneous reports with the following exceptions: (PAGE 22) Serious clinical study adverse events that involve a death or are life-threatening must be faxed by ABBOTT Pharmacovigilance to MEDIMMUNE within one (1) working day of the ABBOTT awareness date. A summary of any individual 3-Day IND telephone Adverse Event report discussed to the FDA must be faxed to ABBOTT Pharmacovigilance the same day as discussed with the FDA. TO ABBOTT: Abbott Laboratories Abbott International Attn: Manager Pharmacovigilance Dept. 6RH, Bldg. AP34 200 Abbott Park Road Abbott Park, IL USA 60064-3500 Telephone: (847) 938-8351 Facsimile: (847) 938-4886 TO MEDIMMUNE: MEDIMMUNE, Inc. 35 West Watkins Mill Road Gaithersburg, MD 20878 ATTN: CEO
EXHIBIT E ALTRNATIVE DISPUTE RESOLUTION The parties recognize that a bona fide dispute as to certain matters may arise from time to time during the term of this AGREEMENT which relates to either party's rights and/or obligations. To have such a dispute resolved by this Alternative Dispute Resolution ("ADR") provision, a party first must send written notice of the dispute to the other party for attempted resolution by good faith negotiations between their respective presidents (or their equivalents) of the affected subsidiaries, divisions, or business units within twenty-eight (28) days after such notice is received (all references to "days" in this ADR provision are to calendar days). If the matter has not been resolved within twenty-eight (28) days of the notice of dispute, or if the parties fail to meet within such twenty-eight (28) days, either party may initiate an ADR proceeding as provided herein. The parties shall have the right to be represented by (PAGE 23) counsel in such a proceeding. 1. To begin an ADR proceeding, a party shall provide written notice to the other party of the issues to be resolved by ADR. Within fourteen (14) days after its receipt of such notice, the other party may, by written notice to the party initiating the ADR, add additional issues to be resolved within the same ADR. 2. Within twenty-one (21) days following receipt of the original ADR notice, the parties shall select a mutually acceptable neutral to preside in the resolution of any disputes in this ADR proceeding. If the parties are unable to agree on a mutually acceptable neutral within such period, either party may request the President of the CPR Institute for Dispute Resolution ("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a neutral pursuant to the following procedures: (a) The CPR shall submit to the parties a list of not less than five (5) candidates within fourteen (14) days after receipt of the request, along with a Curriculum Vitae for each candidate. No candidate shall be an employee, director, or shareholder of either party or any of their subsidiaries or affiliates. (b) Such list shall include a statement of disclosure by each candidate of any circumstances likely to affect his or her impartiality. (c) Each party shall number the candidates in order of preference (with the number one (1) signifying the greatest preference) and shall deliver the list to the CPR within seven (7) days following receipt of the list of candidates. If a party believes a conflict of interest exists regarding any of the candidates, that party shall provide a written explanation of the conflict to the CPR along with its list showing its order of preference for the candidates. Any party failing to return a list of preferences on time shall be deemed to have no order of preference. (d) If the parties collectively have identified fewer than three (3) candidates deemed to have conflicts, the CPR immediately shall designate as the neutral the candidate for whom the parties collectively have indicated the greatest preference. If a tie should result between two candidates, the CPR may designate either candidate. If the parties collectively have identified three (3) or more candidates deemed to have conflicts, the CPR shall review the explanations regarding conflicts and, in its sole discretion, may either (i) immediately designate as the neutral the candidate for whom the parties collectively have indicated the greatest (PAGE 24) preference, or (ii) issue a new list of not less than five (5) candidates, in which case the procedures set forth in subparagraphs 2(a) - 2(d) shall be repeated. 3. No earlier than twenty-eight (28) days or later than fifty-six (56) days after selection, the neutral shall hold a hearing to resolve each of the issues identified by the parties. The ADR proceeding shall take place at a location agreed upon by the parties. If the parties cannot agree, the neutral shall designate a location other than the principal place of business of either party or any of their subsidiaries or affiliates. 4. At least seven (7) days prior to the hearing, each party shall submit the following to the other party and the neutral: (a) a copy of all exhibits on which such party intends to rely in any oral or written presentation to the neutral; (b) a list of any witnesses such party intends to call at the hearing, and a short summary of the anticipated testimony of each witness; (c) a proposed ruling on each issue to be resolved, together with a request for a specific damage award or other remedy for each issue. The proposed rulings and remedies shall not contain any recitation of the facts or any legal arguments and shall not exceed one (1) page per issue. (d) a brief in support of such party's proposed rulings and remedies, provided that the brief shall not exceed twenty (20) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall be required or permitted by any means, including depositions, interrogatories, requests for admissions, or production of documents. 5. The hearing shall be conducted on two (2) consecutive days and shall be governed by the following rules: (a) Each party shall be entitled to five (5) hours of hearing time to present its case. The neutral shall determine whether each party has had the five (5) hours to which it is entitled. (b) Each party shall be entitled, but not required, to make an opening statement, to present regular and rebuttal testimony, documents or other evidence, to cross-examine witnesses, and to make a closing (PAGE 25) argument. Cross-examination of witnesses shall occur immediately after their direct testimony, and cross-examination time shall be charged against the party conducting the cross-examination. (c) The party initiating the ADR shall begin the hearing and, if it chooses to make an opening statement, shall address not only issues it raised but also any issues raised by the responding party. The responding party, if it chooses to make an opening statement, also shall address all issues raised in the ADR. Thereafter, the presentation of regular and rebuttal testimony and documents, other evidence, and closing arguments shall proceed in the same sequence. (d) Except when testifying, witnesses shall be excluded from the hearing until closing arguments. (e) Settlement negotiations, including any statements made therein, shall not be admissible under any circumstances. Affidavits prepared for purposes of the ADR hearing also shall not be admissible. As to all other matters, the neutral shall have sole discretion regarding the admissibility of any evidence. 6. Within seven (7) days following completion of the hearing, each party may submit to the other party and the neutral a post-hearing brief in support of its proposed rulings and remedies, provided that such brief shall not contain or discuss any new evidence and shall not exceed ten (10) pages. This page limitation shall apply regardless of the number of issues raised in the ADR proceeding. 7. The neutral shall rule on each disputed issue within fourteen (14) days following completion of the hearing. Such ruling shall adopt in its entirety the proposed ruling and remedy of one of the parties on each disputed issue but may adopt one party's proposed rulings and remedies on some issues and the other party's proposed rulings and remedies on other issues. The neutral shall not issue any written opinion or otherwise explain the basis of the ruling. 8. The neutral shall be paid a reasonable fee plus expenses. These fees and expenses, along with the reasonable legal fees and expenses of the prevailing party (including all expert witness fees and expenses), the fees and expenses of a court reporter, and any expenses for a hearing room, shall be paid as follows: (a) If the neutral rules in favor of one party on all disputed issues in the ADR, the losing party shall pay 100% of such fees and expenses. (PAGE 26) (b) If the neutral rules in favor of one party on some issues and the other party on other issues, the neutral shall issue with the rulings a written determination as to how such fees and expenses shall be allocated between the parties. The neutral shall allocate fees and expenses in a way that bears a reasonable relationship to the outcome of the ADR, with the party prevailing on more issues, or on issues of greater value or gravity, recovering a relatively larger share of its legal fees and expenses. 9. The rulings of the neutral and the allocation of fees and expenses shall be binding, non-reviewable, and non-appealable, and may be entered as a final judgment in any court having jurisdiction. 10. Except as provided in paragraph 9 or as required by law, the existence of the dispute, any settlement negotiations, the ADR hearing, any submissions (including exhibits, testimony, proposed rulings, and briefs), and the rulings shall be deemed Confidential Information. The neutral shall have the authority to impose sanctions for unauthorized disclosure of Confidential Information. (PAGE 27) EX-10.80 7 EXHIBIT 10.80 LICENSE AGREEMENT This Agreement is effective December 3, 1997 ("the EFFECTIVE DATE") by and between LOYOLA UNIVERSITY OF CHICAGO, an Illinois not for profit corporation, with offices at 820 North Michigan Avenue, Chicago, IL 60611 ("UNIVERSITY"), and MEDIMMUNE, INC., a Delaware Corporation having offices at 35 West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE"). WHEREAS, MEDIMMUNE desires to obtain an exclusive license in and to certain patents owned by UNIVERSITY; WHEREAS, UNIVERSITY is willing to grant the exclusive license desired by MEDIMMUNE. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1 - DEFINITIONS. The terms used in this Agreement have the following meaning: 1.1 The term "AFFILIATE" as applied to MEDIMMUNE shall mean a related company of MEDIMMUNE, the voting stock of which is directly or indirectly at least fifty percent (50%) owned or controlled by MEDIMMUNE, or an organization which directly or indirectly controls at least fifty percent (50%) of the voting stock or ownership of MEDIMMUNE, and an organization, a majority ownership of which is directly or indirectly common to the ownership of MEDIMMUNE. 1.2 The term "FIELD" shall mean products and processes directed to the treatment, prevention or diagnosis of human diseases or infections related to human papilloma virus ("HPV"). 1.3 The term "FIRST COMMERCIAL SALE" shall mean in each country the first sale of any PRODUCT by MEDIMMUNE, its AFFILIATES or SUBLICENSEES, following approval of its marketing by the appropriate governmental agency for the country in which the sale is to be made and when governmental approval is not required, the first sale in that country. 1.4 The term "INVENTIONS" shall mean new and useful improvements in the construction of Papillomavius hybrid particles conceived and reduced to practice by Lutz Grissman, Jian Zhou, Martin Muller, and Jeanette Painstill, all employees of UNIVERSITY, and disclosed to UNIVERSITY in Loyola University Invention Disclosure dated September 28, 1994, and December 16, 1996, and as amended from time to time. 1.5 The term "NET SALES" means the total amount received by MEDIMMUNE or its AFFILIATES from sales of PRODUCT, less transportation charges and insurance, sales taxes, use taxes, excise taxes, value added taxes, customs duties or other imposts, normal and customary quantity and cash discounts, rebates (to the extent actually granted) and disallowed reimbursements and allowances and credit on account of rejection or return of PRODUCT. (PAGE 1) 1.6 The term "PATENT RIGHTS" shall mean the following: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 1.7 The term "PRODUCT" shall mean any article, composition, apparatus, substance, chemical, material, method or service, the manufacture, use or sale of which, but for the license granted hereunder, would infringe a VALID CLAIM of PATENT RIGHTS. 1.8 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party licensed by MEDIMMUNE to make, have made, import, use or sell any PRODUCT under PATENT RIGHTS. 1.9 The term "TERRITORY" shall mean all countries of the world. 1.10 The term "VALID CLAIM" shall mean a claim of an issued patent which has not lapsed or become abandoned or been declared invalid or unenforceable by a court of competent jurisdiction or an administrative agency from which no appeal can be or is taken. 1.11 The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine. SECTION 2 - GRANT. 2.1 (a)UNIVERSITY hereby grants to MEDIMMUNE and MEDIMMUNE hereby accepts from UNIVERSITY a sole and exclusive, royalty-bearing right and license for the TERRITORY under PATENT RIGHTS to make, have made, use, import, offer to sell, sell or have sold on its behalf PRODUCT in the FIELD, including the right to sublicense third parties. MEDIMMUNE shall have the right to extend such license to its AFFILIATES. (b) MEDIMMUNE, at UNIVERSITY's request, shall grant to a third party a royalty bearing, sublicense under PATENT RIGHTS in the field defined by MEDIMMUNE and the third party. MEDIMMUNE shall be required to grant only one sublicense under this Par 2.1(b). 2.2 MEDIMMUNE agrees to forward to UNIVERSITY a copy of all fully executed sublicense agreements (with financial terms redacted) within thirty (30) days of signing thereof. 2.3 The above licenses to sell any PRODUCT includes the right of MEDIMMUNE, its AFFILIATES and SUBLICENSEES to grant to the purchaser of a PRODUCT for which a royalty has been paid under this Agreement the right to use and/or resell such purchased PRODUCT without payment of an additional royalty, provided that such purchaser does not combine PRODUCT with other products or otherwise add significant value to the PRODUCT. If so, such transactions should be sublicenses rather than sales transactions. (PAGE 2) 2.4 (a) Taking into account the complexity, and stage of development of the PRODUCT and the science related thereto, MEDIMMUNE shall select and use reasonable best efforts under the circumstances to research, develop and then commercialize a selected PRODUCT. The efforts of a SUBLICENSEE, collaborator and/or an AFFILIATE shall be considered as efforts of MEDIMMUNE. (b) MEDIMMUNE and UNIVERSITY agree that the following commercialization milestones are reasonable, taking into account the complexity and stage of development of the PATENT RIGHTS and the science related thereto and that the achievement of such milestones shall conclusively establish reasonable best efforts under Par. 2.4(a). 1. Phase I clinical trials on any Product initiated by MEDIMMUNE an AFFILIATE or a SUBLICENSEE anywhere in the World by the beginning of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). 2. Phase II clinical trials on any Product initiated by MEDIMMUNE an AFFILIATE, or a SUBLICENSEE anywhere in the World by the beginning of the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), or two years after Milestone 1, whichever is later. 3. Phase III clinical trials on any Product initiated by MEDIMMUNE an AFFILIATE, or a SUBLICENSEE anywhere in the World by the beginning of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), or two years after Milestone 2, whichever is later. 4. A product license application submitted by MEDIMMUNE an AFFILIATE, or a SUBLICENSEE in any territory of the world by beginning of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), or two years after Milestone 3, whichever is later. 5. Granting an approval for sale by MEDIMMUNE an AFFILIATE, or a SUBLICENSEE of any PRODUCT in any territory of the world by the beginning of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), or one year after Milestone 4, whichever is later. (c) If MEDIMMUNE an AFFILIATE, or a SUBLICENSEE fails to achieve a Milestone by the Milestone date, then MEDIMMUNE may request a meeting with UNIVERSITY within ten (10) days of the Milestone date to discuss the reasons for the failure to meet the Milestone, and to propose corrective actions and a revised schedule for future milestones. Within thirty (30) days of the Milestone date if the Milestone has not been achieved, as its sole and exclusive remedy, UNIVERSITY may give notice that the license granted hereunder is no longer exclusive (but only if the failure to achieve the milestone was within the control of MEDIMMUNE) or agree to a revised schedule of future milestones. (PAGE 3) 2.5 UNIVERSITY acknowledges that MEDIMMUNE is in the business of developing, manufacturing and selling of medical processes and products and nothing in this Agreement shall be construed as restricting such business or imposing on MEDIMMUNE the duty to market, and/or sell and exploit PRODUCT for which royalties are due hereunder to the exclusion of or in preference to any other product or process. 2.6 Subject to Section 2.4, MEDIMMUNE shall have sole discretion for making all decisions relating to the commercialization and marketing of PRODUCT, and will bear the cost of preparing such PRODUCT for market and for obtaining governmental approvals (except with respect to PATENT RIGHTS) where required. SECTION 3. CONFIDENTIALITY. 3.1 Subject to the exceptions set forth in Sections 3.2 and 3.3, during the term of this Agreement, UNIVERSITY may disclose to MEDIMMUNE proprietary and confidential technology, inventions, technical information, material, reagents, biological materials and the like which are owned or controlled by UNIVERSITY and which is designated by UNIVERSITY as confidential ("Confidential Information"). MEDIMMUNE agrees to retain such Confidential Information in confidence and not to disclose any such Confidential Information to a third party without the prior written consent of UNIVERSITY and to use such Confidential Information only for the purposes of this Agreement. 3.2 The obligations of confidentiality and non-use will not apply to Confidential Information which: (i) was known to MEDIMMUNE or generally known to the public prior to its disclosure hereunder; or (ii)subsequently becomes known to the public by some means other than a breach of this Agreement; (iii) is subsequently disclosed to MEDIMMUNE by a third party having a lawful right to make such disclosure; (iv)is disclosed to obtain regulatory approval for PRODUCT or for the purpose of making, using, selling or licensing of PRODUCT, provided that MEDIMMUNE takes all reasonable steps to restrict and maintain the confidentiality of the disclosure; (v) is required by law, rule, regulation or bona fide legal process to be disclosed, provided that MEDIMMUNE takes all reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable notice to UNIVERSITY; or (vi)is approved for release by the parties. (PAGE 4) 3.3 Notwithstanding anything to the contrary, MEDIMMUNE shall have the right to transfer Confidential Information to a third party including MEDIMMUNE'S AFFILIATES and SUBLICENSEES for the purpose of researching, developing and making PRODUCT, provided that such third party agrees to be bound by obligations of confidentiality and non-use similar to those set forth in this Agreement. SECTION 4. PATENT PROSECUTION. 4.1 UNIVERSITY shall take responsibility for the preparation, filing, prosecution and maintenance of any and all PATENT RIGHTS PATENT APPLICATIONS and PATENTS RIGHTS PATENTS, included in PATENT RIGHTS, provided however that UNIVERSITY shall first consult with MEDIMMUNE as to the preparation, filing prosecution and maintenance of such PATENT RIGHTS PATENT APPLICATIONS and PATENT RIGHTS PATENTS and shall furnish to MEDIMMUNE copies of office actions, cited prior art, responses to office actions, requests for terminal disclaiming, and requests for reissue or reexamination, other documents relevant to any such preparation, filing, prosecution or maintenance. UNIVERSITY and MEDIMMUNE shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all PATENT RIGHTS PATENTS and PATENT RIGHTS PATENT APPLICATIONS licensed to MEDIMMUNE hereunder, executing all papers and instruments so as to enable UNIVERSITY to apply for, to prosecute and to maintain PATENT RIGHTS PATENT APPLICATIONS and PATENTS RIGHTS PATENTS in its name in any country. Each party shall provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such PATENT RIGHTS PATENT APPLICATIONS or PATENT RIGHTS PATENTS. Patent attorneys chosen by UNIVERSITY shall handle patent filings and prosecutions on behalf of UNIVERSITY, provided, however, MEDIMMUNE shall be entitled to review and comment upon all actions undertaken in the prosecution of all PATENT RIGHTS PATENTS and PATENT RIGHTS PATENT APPLICATIONS. 4.2 MEDIMMUNE shall reimburse UNIVERSITY for patent fees and application costs incurred with respect to PATENT RIGHTS prior to the EFFECTIVE DATE, provided such reimbursement shall not exceed (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). 4.3 After the EFFECTIVE DATE, MEDIMMUNE shall reimburse UNIVERSITY for all reasonable expenses incurred by UNIVERSITY for the preparation, filing, prosecution and maintenance of PATENT RIGHTS upon receipt of invoices from UNIVERSITY. 4.4 In the event UNIVERSITY decides not to apply for, prosecute or maintain any such PATENT RIGHTS PATENT APPLICATIONS and PATENT RIGHTS PATENTS, UNIVERSITY shall give sufficient and timely notice to MEDIMMUNE so as to permit MEDIMMUNE to apply for, prosecute and maintain such PATENT RIGHTS PATENT APPLICATIONS and PATENT RIGHTS PATENTS. MEDIMMUNE shall have the right to pursue same in UNIVERSITY's name and at MEDIMMUNE's expense, and MEDIMMUNE shall not pay royalties on sales of PRODUCTS in such territories. (PAGE 5) 4.5 In the event MEDIMMUNE elects to no longer pay the expenses of a PATENT RIGHT PATENT APPLICATION or PATENT RIGHT PATENT included within PATENT RIGHTS, MEDIMMUNE shall notify UNIVERSITY not less than sixty (60) days prior to such action and shall thereby surrender its rights under such patent or patent application. SECTION 5. ROYALTIES AND OTHER COMPENSATION 5.1 (A) MEDIMMUNE shall pay to UNIVERSITY: a royalty of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the NET SALES of PRODUCTS which are sold by MEDIMMUNE or its AFFILIATES and which are covered by a VALID CLAIM of any PATENT RIGHT licensed to LICENSEE hereunder in the country where sold; or (ii) a royalty of the lesser of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the running royalty received by LICENSEE from its SUBLICENSEES for the sale of PRODUCTS or (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the NET SALES of PRODUCT sold by the SUBLICENSEE. (B) In the event that MEDIMMUNE'S license is converted to a non- exclusive license pursuant to Section 2.4(c), the royalties under Paragraph 5.1 (A) shall be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (C) In the event that a PRODUCT includes both component(s) covered by a VALID CLAIM of a PATENT RIGHT ("Patented Component(s)") and a component which is therapeutically active and such component is not covered by a VALID CLAIM of a PATENT RIGHT ("Unpatented Component(s) (s)") (such PRODUCT being a "Combined Product"), then NET SALES shall be the amount which is normally received by MEDIMMUNE or its AFFILIATES from the sale of the Patented Component(s) in an arm's length transaction with an unaffiliated third party. If the Patented Component (s) are not sold separately, then NET SALES upon which a royalty is paid shall be the NET SALES of the Combined Product multiplied by a fraction, the numerator of which is the number of Patented Components in the Combined Product and the denominator of which is the total number of therapeutically active Components (Patented) Components plus Unpatented Components) in the Combined Product. (D) In the event that royalties are to be paid by MEDIMMUNE to a party who is not an AFFILIATE of MEDIMMUNE for PRODUCT for which royalties are also due to UNIVERSITY pursuant to Paragraph 5.1 (such royalties to such party are hereinafter "Other Royalties"), then the royalties to be paid to UNIVERSITY by MEDIMMUNE pursuant to Paragraph 5.1 (A) or (B) shall be reduced by (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) of the amount of such Other Royalties, but in no event shall any royalities payable under Paragraph 5.1 be reduced by more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (PAGE 6) 5.2 (a) Upon execution of this Agreement, MEDIMMUNE shall pay UNIVERSITY a license fee of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (b) MEDIMMUNE shall also pay the following amounts within thirty (30) days of achieving the milestones set forth herein. (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) on initiation of Phase II clinical trials on any PRODUCT initiated by MEDIMMUNE an AFFILIATE, or a SUBLICENSEE in the United States or Europe. (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) on initiation of Phase III clinical trials on any PRODUCT initiated by MEDIMMUNE, an AFFILIATE, or a SUBLICENSEE in the United States or Europe. (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) on submission of a product license application by MEDIMMUNE, an AFFILIATE or a SUBLICENSEE in the United States or Europe. (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) on approval of the first Biologics License Application for a PRODUCT with the U.S. Food and Drug Administration. 5.3 MEDIMMUNE shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable to UNIVERSITY. Such books of account shall be kept at their principal place of business and, with all necessary supporting data shall, for the three (3) years next following the end of the calendar year to which each shall pertain be open for inspection by its designee upon reasonable notice during normal business hours at UNIVERSITY's expense for the sole purpose of verifying royalty statements or compliance with this Agreement, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying royalties and shall be treated as MEDIMMUNE Confidential Information subject to the obligations of this Agreement. 5.4 In each year the amount of royalty due shall be calculated semi-annually as of June 30 and December 31 (each as being the last day of an "Accounting Period") and shall be paid semi-annually within the sixty (60) days next following such date, every such payment shall be supported by the accounting prescribed in Paragraph 5.5 and shall be made in United States currency. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the rate of exchange thereafter published in the Wall Street Journal for the last business day of the applicable Accounting Period. 5.5 With each semi-annual payment, MEDIMMUNE shall deliver to UNIVERSITY a full and accurate accounting to include at least the following information: (PAGE 7) (a) Quantity of each PRODUCT subject to royalty sold (by country) by MEDIMMUNE and its AFFILIATES and SUBLICENSEES; (b) Total receipts for each PRODUCT subject to royalty (by country); (c) Taxes paid (by country) (d) Royalties due to third parties (identifying the party and the royalty rate) (e) Total royalties payable to UNIVERSITY (f) Royalties received from SUBLICENSEES (g) Actual exchange rates applied to foreign funds 5.6 Any tax required to be withheld by MEDIMMUNE under the laws of any foreign country for the account of UNIVERSITY, shall be promptly paid by MEDIMMUNE for and on behalf of UNIVERSITY to the appropriate governmental authority, and MEDIMMUNE shall furnish UNIVERSITY with proof of payment of such tax. Any such tax actually paid on UNIVERSITY's behalf shall be deducted from royalty payments due UNIVERSITY. 5.7 If the transfer of or the conversion into United States Dollar Equivalent of any remittance due hereunder is not lawful or possible in any country, such remittance shall be made by the deposit thereof in the currency of the country to the credit and account of UNIVERSITY or its nominee in any commercial bank or trust company located in that country, prompt notice of which shall be given to UNIVERSITY. UNIVERSITY shall be advised in writing in advance by MEDIMMUNE and provide to MEDIMMUNE a nominee, if so desired. 5.8 Only one royalty shall be due and payable for the manufacture, use and sale of a PRODUCT irrespective of the number of patents or claims thereof which cover the manufacture, use and sale of such PRODUCT. SECTION 6 - INFRINGEMENT 6.1 Infringement of UNIVERSITY'S PATENT RIGHTS by third parties: 6.1.1 MEDIMMUNE shall inform UNIVERSITY promptly in writing of any alleged infringement and of any available evidence of infringement by a third party of any patents within the PATENT RIGHTS, and UNIVERISITY shall inform MEDIMMUNE promptly in writing of any alleged infringement and of any available evidence of infringement by a third party of any patents within the PATENT RIGHTS. 6.1.2 During the term of this Agreement, UNIVERSITY shall have the right, but shall not be obligated, to prosecute at its own expense any such infringements of the PATENT RIGHTS and, in furtherance of such right, UNIVERSITY hereby agrees that MEDIMMUNE may join UNIVERSITY as a party plaintiff in any such suit without expense to UNIVERSITY. The total cost of any such (PAGE 8) 6.1.3 infringement action commenced or defended solely by UNIVERSITY shall be borne by UNIVERSITY. Any recovery of damages by UNIVERSITY for any infringement shall be applied first in satisfaction of any unreimbursed expenses and attorneys' fees of UNIVERSITY relating to the suit, and second toward reimbursement of MEDIMMUNE's reasonable expenses, including reasonable attorneys' fees, relating to the suit. The balance remaining from any such recovery shall be distributed to UNIVERSITY. 6.1.3. If within three (3) months after having been notified of any alleged infringement, UNIVERSITY shall have been unsuccessful in persuading the alleged infringer to desist and shall not have brought and shall not be diligently prosecuting an infringement action; or if UNIVERSITY shall notify MEDIMMUNE at any time prior thereto of its intention not to bring suit against any alleged infringer, then MEDIMMUNE in its sole discretion shall have the right, but shall not be obligated, to either: (a) settle the infringement dispute by sublicensing the alleged infringer or by other means; or (b) prosecute at its own expense any infringement of the PATENT RIGHTS. In the event MEDIMMUNE prosecutes such infringement, MEDIMMUNE may, for such purposes, request to use the name of UNIVERSITY as party plaintiff. Subject to the approval of the Board of Trustees of Loyola University of Chicago, the UNIVERSITY may agree to become a party plaintiff. 6.1.4 In the event that MEDIMMUNE shall undertake the enforcement and/or defense of the PATENT RIGHTS by litigation, including any declaratory judgment action, MEDIMMUNE may withhold an amount equal to up to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) from future royalties due under Section 5 of this Agreement for legal expenses, including reasonable attorneys' fees, in connection with such litigation. Any recovery of damages by MEDIMMUNE for any such suit shall be applied first to reimburse UNIVERSITY for any royalties due but withheld under this paragraph 6.1.4 and any unreimbursed legal expenses of UNIVERSITY, and second in satisfaction of any unreimbursed expense and attorney's fees of MEDIMMUNE relating to the suit. The balance remaining from any such recovery shall be distributed to MEDIMMUNE, provided that MEDIMMUNE shall pay to UNIVERSITY such royalties as would otherwise be applicable under Section 5 hereof for that portion of MEDIMMUNE's recovery attributable to lost sales. MEDIMMUNE shall be entitled to settle any such litigation by agreement, consent, judgment, voluntary dismissal, or otherwise. 6.1.5 MEDIMMUNE shall have the right in accordance with the terms and conditions herein to sublicense any alleged infringer under (PAGE 9) 6.1.6 the PATENT RIGHTS for future infringements. 6.1.6 In any infringement suit either party may institute to enforce the PATENT RIGHTS pursuant to this Agreement, the other party hereto shall, at the request of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out- of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the party requesting cooperation. 6.1.7 Any of the foregoing notwithstanding, if at any time during the term of this Agreement any of the PATENT RIGHTS are declared invalid or unenforceable, by a court of competent jurisdiction or an administrative agency from which no appeal can be or is taken, MEDIMMUNE, shall have no further obligation to UNIVERSITY with respect to its future use or sale of any product or process covered by such PATENT RIGHTS, including the obligation of paying royalties. Nevertheless, MEDIMMUNE shall not have a damage claim or a claim for refund or reimbursement against the UNIVERSITY. 6.2 Alleged infringement of a third party's patent rights. 6.2.1 In the event that litigation against MEDIMMUNE is initiated by a third-party charging MEDIMMUNE with infringement of a patent of the third party as a result of the manufacture, use or sale by MEDIMMUNE of PRODUCT covered by a PATENT RIGHT, MEDIMMUNE shall promptly notify UNIVERSITY in writing thereof. MEDIMMUNE's costs as to any such defense shall be creditable against any and all payments due and payable to UNIVERSITY under Section 5 of this Agreement but, no royalty payment after taking into consideration any such credit under this Section 6.2.1 shall be reduced by more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) provided, however, that if said claim of infringement does not pertain to a PATENT RIGHT of UNIVERSITY, but to other patent rights used in the manufacture or sale of the PRODUCT, then this credit shall not be made against royalities due and payable to UNIVERSITY. 6.2.2 In the event of a judgment in any suit in which a court of competent jurisdiction rules that the manufacture, use or sale by MEDIMMUNE of PRODUCT covered by a PATENT RIGHT has infringed on a third-party's patent requiring MEDIMMUNE to pay damages or a royalty to said third party, or in the event of a settlement of such suit requiring damages or royalty payments to be made, payments due to UNIVERSITY under Section 5 of this Agreement arising from the applicable PRODUCT shall be correspondingly reduced by the amounts due under the requirement of such judgment or under the terms of such settlement. However, subject to Section 5.1(c), the royalty payment after taking into consideration any such reduction under this Section 6.2.2 shall not be reduced by more than (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED); (PAGE 10) 6.2.3 provided, however that if said judgment does not pertain to a PATENT RIGHT of UNIVERSITY, but to other patent rights used in the manufacture or sale of the PRODUCT, then this credit shall not be made against royalties due and payable to the UNIVERSITY. 6.2.3 UNIVERSITY shall give MEDIMMUNE assistance in the defense of any such infringement charge or lawsuit, as may be reasonably required. SECTION 7 - WARRANTIES. 7.1 UNIVERSITY and MEDIMMUNE warrant and represent to the other that it has the full right and authority to enter into this Agreement, and that it is not aware of any impediment which would inhibit its ability to perform the terms and conditions imposed on it by this Agreement. 7.2 UNIVERSITY warrants and represents that the named inventors of PATENT RIGHTS and any assignees thereof have assigned all right, title and interest to the PATENT RIGHTS to UNIVERSITY, that UNIVERSITY has not licensed or assigned any right or interest in or to PATENT RIGHTS to any third party; and that it has the right to grant the rights granted hereunder. 7.3 UNIVERSITY covenants, warrants and represents that (i) UNIVERSITY has not received any information with respect to any challenge by another as to the validity of the PATENT RIGHTS (ii) UNIVERSITY has not received any information that any of the PATENT RIGHTS is involved in an interference action; (iii) except with respect to the filing by Medigene, Inc. for foreign protection in States, including Germany, UNIVERSITY has not received any information with respect to any challenge by another to UNIVERSITY's rights of sole ownership; and (iv) UNIVERSITY represents that it is taking all steps necessary to secure its exclusive title to the properties in all countries. 7.4 Except as otherwise expressly set forth in this Section 7, LOYOLA MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND VALIDITY OF PATENT RIGHTS CLAIMS ISSUED OR PENDING. SECTION 8 - INDEMNIFICATION. 8.1 MEDIMMUNE, its AFFILIATES and SUBLICENSEES shall at all times during the term of this Agreement indemnify, defend and hold UNIVERSITY its affiliates and subsidiaries and their Trustees, Officers, Faculty, Medical and Professional Staff, Employees, Agents and their representatives, successors, assignees and heirs harmless against all third party claims and expenses, including legal expenses and reasonable attorneys' fees, arising out of the death of or injury to any person or persons or out of any damage to property and against any other claim, proceeding, demand, expense and liability of any kind whatsoever resulting from utilization of the PATENT RIGHTS in the research, development, evaluations, production, manufacture, (PAGE 11) sale, use, lease, consumption or advertisement of the PRODUCTS by MEDIMMUNE, its AFFILIATES and SUBLICENSEES except for any claims or expenses arising out of the negligence or willful misconduct of UNIVERSITY or its affiliates and subsidiaries and their Trustees, Officers, Faculty, Medical and Professional Staff, Employees, Agents and their representatives, successors, assignees and heirs. 8.2 MEDIMMUNE and its SUBLICENSEES shall maintain reasonable levels of product liability insurance available at commercially reasonable rates, at its expense, to comply with its obligations to UNIVERSITY under this section as soon as it has commercialized PRODUCT(s). UNIVERSITY shall have the right to require such insurance policies to be made available for the UNIVERSITY's inspection. SECTION 9 - ASSIGNMENT; SUCCESSORS. 9.1 This Agreement shall not be assignable by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld), except that MEDIMMUNE without the consent of UNIVERSITY may assign this Agreement to an AFFILIATE or to a successor in interest or transferee of all or substantially all of its human papilloma virus business. Any other assignment by MEDIMMUNE without UNIVERSITY'S approval will be null and void. 9.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of MEDIMMUNE and UNIVERSITY. Any such successor or assignee of a party's interest shall expressly assume in writing the performance of all the terms and conditions of this Agreement to be performed by said party and such Assignment shall not relieve the Assignor of any of its obligations under this Agreement. SECTION 10 - TERMINATION. 10.1 Except as otherwise specifically provided herein and unless sooner terminated pursuant to Paragraph 10.2 or 10.3 of this Agreement, this Agreement and the licenses and rights granted thereunder shall remain in full force and effect until the expiration of the last to expire PATENT RIGHT at which time MEDIMMUNE shall have a fully paid-up noncancellable license. 10.2 Except as qualified by Paragraph 10.7, MEDIMMUNE shall have the right to terminate this Agreement or terminate its license under this Agreement, in one or more countries, upon sixty (60) days prior written notice. 10.3 Upon material breach of any material provisions of this Agreement by either party to this Agreement, in the event the breach is not cured within sixty (60) days after written notice to the breaching party by the other party, in addition to any other remedy it may have, the other party at its sole option may terminate this Agreement, provided that such other party is not then in breach of this Agreement. (PAGE 12) 10.4 If MEDIMMUNE shall cease to carry on its business, this Agreement shall terminate upon notice by UNIVERSITY. or: In the event that MEDIMMUNE shall become insolvent, shall make an assignment for the benefit of creditors, or shall have a petition in bankruptcy filed for or against it, UNIVERSITY shall have the right to terminate this entire Agreement immediately upon giving MEDIMMUNE written notice of such termination. 10.5 Except as provided in Section 10.4, in the event there is a disagreement between the parties as to whether or not a material breach has occurred, this Agreement shall not terminate until such disagreement has been finally determined by arbitration as provided in Section 11.2 herein. 10.6 Upon any termination of this Agreement MEDIMMUNE shall be entitled to but not be obligated to finish any work-in-progress which is completed within six (6) months of termination of this Agreement and to sell any completed inventory of a PRODUCT covered by this Agreement which remains on hand as of the date of the termination, so long as MEDIMMUNE pays to UNIVERSITY the royalties applicable to said subsequent sales in accordance with the same terms and conditions as set forth in this Agreement. 10.7 In the event that this Agreement is terminated, any sublicense granted by MEDIMMUNE under this Agreement shall remain in full force and effect between the SUBLICENSEE and UNIVERSITY, except that UNIVERSITY's obligations thereunder shall be no greater than UNIVERSITY's obligations under this Agreement. At the request of MEDIMMUNE, UNIVERSITY shall acknowledge to a SUBLICENSEE UNIVERSITY's obligations to the SUBLICENSEE under this paragraph 10.6. 10.8 The obligations of Sections 3 and 8, as well as Paragraphs 2.4, 10.5, 10.6, 10.7, 10.8 and 11.4 shall survive any termination of this Agreement. 10.9 Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination. SECTION 11 - GENERAL PROVISIONS. 11.1 The relationship between UNIVERSITY and MEDIMMUNE is that of independent contractors. UNIVERSITY and MEDIMMUNE are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. UNIVERSITY shall have no power to bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE shall have no power to bind or obligate UNIVERSITY in any manner. 11.2 Any matter or disagreement under this Agreement, which cannot be resolved by the parties shall be submitted to a mutually selected single arbitrator to so decide any such matter or disagreement. The arbitrator shall conduct the arbitration in English in accordance with the Rules of the American Arbitration Association ("AAA"). If the parties are unable to mutually select an arbitrator, the arbitrator shall be selected in accordance with the procedures of the AAA. The arbitrator shall have no power to add to, subtract from or modify the terms of this Agreement. The (PAGE 13) decision and award rendered by the arbitrator shall be final and binding. Judgment upon the award may be entered in any court having jurisdiction thereof. Any arbitration pursuant to this section shall be held in Washington, D.C. or such other place as may be mutually agreed upon in writing by the parties. 11.3 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 11.4 This Agreement shall be construed and enforced in accordance with the laws of the State of Illinois, U.S.A. without reference to its choice of law principles. 11.5 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 11.6 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 11.7 Notices. Any notices given pursuant to this Agreement shall be in writing and shall be deemed delivered upon the earlier of (i) when received at the address set forth below, or (ii) three (3) business days after mailed by certified or registered mail postage prepaid and properly addressed, with return receipt requested, or (iii) when sent, if sent, by facsimile, as confirmed by certified or registered mail. Notices shall be delivered to the respective parties as indicated:
To MEDIMMUNE: MEDIMMUNE, Inc. 35 West Watkins Mill Road Gaithersburg, MD 20878 Attn: Office of Business Development Copy to: Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein 6 Becker Farm Road Roseland, New Jersey 07068 Fax No.: (201) 994-1744 Attn: Elliot M. Olstein, Esq. To UNIVERSITY: Office of University Research Services Loyola University of Chicago 820 North Michigan Avenue Chicago, IL 60611
(PAGE 14) 11.8 MEDIMMUNE shall not use the name of Loyola University of Chicago, or of any of their employees in conjunction with such employee's positions with UNIVERSITY, or any adaptation thereof, in any advertising, promotional, or sales literature without prior written consent obtained from an authorized officer of the UNIVERSITY in each case, except that MEDIMMUNE may state that it has received from UNIVERSITY one or more of the patents and/or applications comprising the PATENT RIGHTS. Failure by MEDIMMUNE to comply with this restriction shall be deemed a material breach of this Agreement. Such material breach shall be deemed cured if the offending use is terminated within ninety (90) days of MEDIMMUNE'S receipt of a written notice from UNIVERSITY. 11.9 All terms and conditions of this Agreement regarding business matters, including but not limited to payments and royalty rates shall be held in confidence by each party to the extent permitted by law unless authorized in writing by the other party, except as may be required by law, rule or regulation or in connection with a governmental filing or financing. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.
MEDIMMUNE, INC. LOYOLA UNIVERSITY OF CHICAGO By:/s/David M. Mott By:/s/John J. Piderit, S.J. Name: David M. Mott Name: John J. Piderit, S.J. Title: President Title: President
(PAGE 15) EX-10.81 8 EXHIBIT 10.81 RESEARCH COLLABORATION AND LICENSE AGREEMENT This Agreement, dated December 10, 1997, is by and between SMITHKLINE BEECHAM PLC (hereinafter referred to as "SB"), a company whose registered office is at New Horizons Court, Brentford, Middlesex, TW89EP, United Kingdom, and MEDIMMUNE, INC., a Delaware Corporation, located at 35 West Watkins Mill Road, Gaithersburg, Maryland 20878 ("MEDIMMUNE"). WHEREAS, MEDIMMUNE is the owner or licensee of certain technology, including, but not limited to patents and proprietary know-how, relating to vaccines for the human papilloma virus (AHPV@); and WHEREAS, SB desires to obtain, and MEDIMMUNE desires to grant to SB, a worldwide, exclusive right and license in and to such technology, on the terms and conditions set forth in this Agreement; and WHEREAS, SB will collaborate with MEDIMMUNE in a research and development program relating to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) HPV Vaccines to support ongoing development thereof and to obtain intangible rights thereto, and WHEREAS SB will contribute certain adjuvant technology and certain HPV technology to the research program. NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION I.. - DEFINITIONS. The terms used in this Agreement have the following meaning: 1.1 "Affiliate", with respect to any Party, shall mean any Person whether de jure or de facto, controlling, controlled by, or under common control with, such Party. For these purposes, "control" shall refer to (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise or (b) the ownership, directly or indirectly, of at least 50% (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction of the voting securities or other ownership interest of a Person. 1.2 "Annual Research Plan" shall mean the research plan prepared annually during the term of the Research Program as provided in Section 4.2. 1.3 "Antigen" shall mean (i) HPV antigens and/or (ii) HPV proteins and/or (iii) other physical forms based on such antigens, such as peptides and/or nucleic acid(s) (DNA, RNA) delivered in any form including recombinant vectors. 1.4 "Budget" shall have the meaning assigned to such term in Section 4.2. 1.5 "Confidential Information" shall have the meaning assigned to such term in Section 11.2. (PAGE 1) 1.6 "Effective Date" shall mean the date set forth in Section 2.1 of this Agreement. 1.7 "EMEA" shall mean the European Agency for the Evaluation of Medicinal Products. 1.8 "FDA" shall mean the United States Food and Drug Administration, or the successor thereto. 1.9 "First Commercial Sale" shall mean, with respect to any Vaccine Product in a country of the Territory, the first sale by SB, its Affiliates, distributors or sublicensees to a Third Party of such Vaccine Product, in such country anywhere in the Territory after all required marketing and pricing approvals have been granted, or otherwise permitted, by the governing health authority of such country. "First Commercial Sale" shall not include the sale of any Vaccine Product for use in clinical trials or for compassionate use prior to the grant of regulatory approval. 1.10 "HPV Vaccine" shall mean a vaccine for the prevention, control or treatment of human papilloma virus infection in humans in any formulation, configuration or delivery system or a product or process for the diagnosis of HPV infection in humans. 1.11 "IND" shall mean an investigational new drug application filed with the FDA for approval to commence human clinical trials, or the equivalent application in other countries or regulatory jurisdictions. 1.12 "Invention" shall mean any new or useful process, manufacture, compound or composition of matter, patentable or unpatentable, or any improvement thereof, conceived or first reduced to practice, by either Party during the conduct of the Research Program (i) which relate to or are derived from the Research Program, or (ii) which are necessary or useful to make, use, develop or sell HPV Vaccine. 1.13 "Major Markets" shall have the meaning assigned thereto in Section 6.3. 1.14 "Joint Invention" shall mean any Invention for which it is determined, in accordance with applicable United States patent law, that both: (i) one or more employees or agents of MEDIMMUNE or any other persons obliged to assign such Invention to MEDIMMUNE, and (ii) one or more employees or agents of SB or any other persons obliged to assign such Invention to SB, are joint inventors of such Invention. 1.15 "MEDIMMUNE Patents" shall mean any and all patents or patent applications anywhere in the world, including but not limited to any division, continuation, continuation-in-part or reissue, re-examination, patent extension, or Supplementary Protection Certificate in each case which is owned by or licensed to MEDIMMUNE and in and to which MEDIMMUNE has a transferable interest on the Effective Date or at any time during the term of this Agreement (including those arising from the Research Program) insofar as it contains one or more claims to MEDIMMUNE Technology or to a Joint Invention. Schedule A contains the list of MEDIMMUNE patents licensed to and/or owned by MEDIMMUNE on the Effective Date. (PAGE 2) 1.16 The term "MEDIMMUNE Technology" shall mean information, know-how and materials, including, but not limited to, pharmaceutical, chemical and biological products, technical and non-technical data and information (i) owned by MEDIMMUNE and/or to which MEDIMMUNE has a transferable interest on the Effective Date and/or at any time during the term of this Agreement and (ii) which relate to the field of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) HPV Vaccines and/or which arise from the Research Program, and in each case which are necessary or useful for the development, manufacture, use or sale of an HPV Vaccine. 1.17 "Net Sales" (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 1.18 "Party" shall mean MEDIMMUNE or SB and, when used in the plural, shall mean MEDIMMUNE and SB. 1.19 "Patent" shall mean individually and collectively SB Patents and MEDIMMUNE Patents. 1.20 "Person" shall mean any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or any agency or political subdivision thereof. 1.21 "Process" shall mean any process or method for the production, manufacture or use of any HPV Vaccine. 1.22 "Product Registrations" shall mean the approvals or registrations of Vaccine Products in any country in the Territory that are received by SB during the term of this Agreement. 1.23 "Research Program" shall mean the research program directed to the research, development, and manufacture of a therapeutic and/or prophylactic (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Vaccine Product up to and including Phase II clinical trials to be conducted by MEDIMMUNE in collaboration with SB pursuant to Section 4.2 of this Agreement.. 1.24 "Research Term" shall have the meaning assigned to such term in Section 4.7. 1.25 "Royalty Term" shall mean, (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 1.26 The term "SB Patents" shall mean any patent or patent application anywhere in the world, including but not limited to any division, continuation, or continuation-in-part reissue, re-examination, patent extension, or Supplementary Protection Certificate which is owned by or licensed to SB or its Affiliates and in and to which SB or its Affiliates has a transferable interest on the Effective Date or at any time during the term of this Agreement insofar as it contains one or more claims to SB Special Technology or to a Joint Invention. SB or its Affiliates shall have the right but not the obligation to file a Supplementary Protection Certificate pertaining to SB Patents. (PAGE 3) 1.27 The term "SB Technology" shall mean information and materials, including, but not limited to, pharmaceutical, chemical and biological products, technical and non-technical data and information owned by SB or its Affiliates or to which SB or its Affiliates has a transferable interest on the Effective Date and/or during the term of this Agreement which relates to the field of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) HPV Vaccines and which are necessary or useful in the execution of the Research Program, as defined by the Steering Committee. 1.28 "SB Special Technology" shall mean information and materials, including, but not limited to, pharmaceutical, chemical and biological products, technical and non-technical data and information owned by SB or its Affiliates or to which SB or its Affiliates has a transferable interest on the Effective Date and/or prior to termination of this Agreement which is derived from use of MEDIMMUNE Technology provided to SB or its Affiliates or which comes out of the Research Program. 1.29 "Steering Committee" shall mean the entity organized and acting pursuant to Section 3. 1.30 "Sublicensee" shall mean a Third Party to which SB has granted sublicense and/or sub-sublicense rights under the licenses and/or sublicenses granted to SB hereunder. 1.31 "Supplementary Protection Certificate" shall mean the supplementary protection certificate for Medicinal products and their equivalents provided under Control Regulation (EEC) No. 1768/92 of June 18, 1992. 1.32 "Territory" shall mean the entire world. 1.33 "Third Party" shall mean any Person who or which is neither a Party nor an Affiliate of a Party. 1.34 "Vaccine Product" shall mean an HPV Vaccine (x)covered in whole or in part by a MEDIMMUNE Patent or an SB Patent which covers SB Special Technology and/or (y) which incorporates or is derived from the use of MEDIMMUNE Technology and/or SB Special Technology. (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). 1.35 "Interpretative Rules" For the purpose of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires : (a) defined terms include the plural as well as the singular and the use of any gender shall be deemed to include the other gender. (b) references to "Articles", "Sections" and other subdivisions and to "Schedules" and "Exhibits" without reference to a document, are to designated Articles. Sections and other subdivisions of and to Schedules and Exhibits to this Agreement; (c) the use of the term 'including' means 'including but not limited to'; and (d) the words 'herein', 'hereof', 'hereunder' and other words of similar import refer to this Agreement in whole and not to any particular provision. (PAGE 4) 2. GRANT OF LICENSES AND EFFECTIVE DATE. 2.1 (a) The obligations of each of SB and MEDIMMUNE to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment of the condition that the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder applicable to the transaction contemplated hereby shall have expired or shall have been terminated and that no action shall have been instituted, or shall be threatened or pending, by the United States Justice Department or the Federal Trade Commission challenging or seeking to enjoin the consummation of the transactions contemplated by this Agreement, which action shall not have been withdrawn or terminated. The date which is the later of January 2, 1998 or the date on which the aforesaid condition has been satisfied is referred to herein as the "Effective Date". (b) The Parties agree to promptly complete any filings with respect to the contingencies of Section 2.1(a) and to exert reasonable efforts to fulfill the conditions contemplated by Section 2.1(a). (c) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 2.2 License. (a) MEDIMMUNE hereby grants to SB and its Affiliates an exclusive, royalty-bearing license throughout the Territory, with the right to grant sublicenses in accordance with the terms of this Agreement, under MEDIMMUNE's interest in the MEDIMMUNE Patents, MEDIMMUNE Technology and Joint Inventions, to develop, register, use, make, have made, import, export, offer to sell, sell and have sold HPV Vaccines and/or Antigens and/or Process. (b) SB agrees that it will use MEDIMMUNE Technology and MEDIMMUNE Patents only as licensed under this Agreement. (c) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 2.3 Sublicensing by SB. (a) SB shall have the right to grant sublicenses to a Third Party under the license granted pursuant to Section 2.2 provided that: (i) SB shall guarantee and be responsible for the making of all payments due, and the making of reports under this Agreement, by reason of milestones achieved with respect to any Vaccine Product and sales of any Vaccine Products by its Sublicensees and their compliance with all applicable licensing terms of this Agreement to the extent that they are applicable to a Sublicensee; and (ii) each Sublicensee agrees in writing to comply withSections 8.3, 8.4, 10, 11.2 and 11.3 of this Agreement. It is understood that SB shall not grant a sublicense to a single Third Party of all of its rights in the Major Markets under Section 2.2 without the written consent of MEDIMMUNE. (b) SB hereby unconditionally guarantees the performance of any of its Affiliates and its Sublicensees hereunder as if they were signatories to this Agreement to the extent the performance or lack of performance is a breach of this Agreement. (PAGE 5) (c) Any sublicense granted by SB to a Third Party shall include a provision prohibiting further sublicenses and a provision terminating the sublicense when the license to SB terminates. 2.4 Third Party Agreements (a) To the extent MEDIMMUNE Technology and MEDIMMUNE Patents licensed by SB under this Agreement are rights which MEDIMMUNE has licensed from a Third Party, under an agreement with such Third Party listed in Schedule B ("Third Party Agreement(s)"), SB understands and agrees as follows: (i) The rights licensed to SB by MEDIMMUNE are subject to the terms, limitations, restrictions and obligations of the Third Party Agreement(s). (ii) SB will comply with all of the terms, obligations, limitations and restrictions of the Third Party Agreement(s) which are applicable to a sublicensee under such Third Party Agreements. In the case of the sublicense granted by this Agreement to SB under the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Agreement (as defined below), the sublicense granted by SB shall terminate or be converted to a license directly between SB and (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) at the option of SB upon termination of this Agreement provided that such conversion is subject to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) approval and contingent upon acceptance by SB of the provisions of the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) License Agreement. (iii) SB will cooperate with MEDIMMUNE in furnishing all information and data which are reasonably required to enable MEDIMMUNE to meet its reporting requirements under the Third Party Agreements. (iv) To the extent the MEDIMMUNE Technology and MEDIMMUNE Patents licensed by SB under this Agreement are rights that MEDIMMUNE has licensed under the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) License Agreement, SB acknowledges and agrees that the obligations to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) set forth in Paragraphs 4.01, 6.01, 8.01, 8.02, 10.05, 11.06-11.08 and 12.08 of the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) License Agreement, the text of which Paragraphs are attached as Exhibit A shall be binding upon SB as if it were a party thereto. (v) The Parties acknowledge the rights of a sublicensee under Section 10.5 of the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Agreement and Section 13.7 of the (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Agreement as referred to in Schedule B. (b) The Third Party Agreements which exist on the Effective Date are listed in Exhibit B and SB acknowledges receipt of such Third Party Agreements. MEDIMMUNE warrants that the Third Party Agreements listed in Exhibit B are all the agreements entered into by MEDIMMUNE with respect to HPV Vaccines and no further modifications to said agreements have been made up to the Effective Date and said agreements are in full force and effect. As of the date of this Agreement, to the knowledge of MEDIMMUNE, MEDIMMUNE is not in breach of any such Third Party Agreements, provided, however, that (PAGE 6) a breach of this warranty shall only occur if a Third Party Agreement is terminated as a result of such breach. (c) Upon mutual agreement of the Parties, MEDIMMUNE may terminate any or all Third Party Agreements and the licenses granted to SB thereunder. After First Commercial Sale of a Vaccine Product in any of the following countries: United States, United Kingdom, France, Germany, Italy or Spain, SB may terminate its sublicense under the following agreements and its payment obligations and other obligations hereunder with respect to such agreements: (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED)and the payment obligations thereunder. Upon termination of any such sublicense, SB shall return to MEDIMMUNE all information and materials which were provided to SB pursuant to such sublicense. 3 STEERING COMMITTEE. 3.1 Members. The Parties shall establish the Steering Committee (the "Steering Committee"), which shall be comprised of six members, three representatives designated by each Party. The members of the Steering Committee may be represented at any meeting by a designee appointed by such member for such meeting. The chairperson of the Steering Committee shall be designated annually on an alternating basis between the Parties. The initial chairperson shall be selected by SB. The Party not designating the chairperson shall designate one of its representative members as secretary to the Steering Committee for such year. Each Party shall be free to change its representative members on notice to the other Party. 3.2 Responsibilities. The Steering Committee shall be responsible for overseeing the Research Program in a manner which is consistent with the terms and conditions of this Agreement, including, without limitation: (a) to evaluate and determine scientific criteria to be implemented under the Research Program; (b) to review, approve and modify any Annual Research Plan, and any Budget included therein; (c) to review and evaluate progress under the Research Program; (d) to provide for the exchange of information and materials relating to the Research Program; and (e) to coordinate and monitor publication of research results arising from the Research Program. 3.3 Meetings. The Steering Committee shall meet at least four times every calendar year, and more frequently as the Parties deem appropriate, on such dates and at such times as the Parties shall agree. Meetings may also be called by either Party, on 10 days written notice to the other, unless such notice is waived by the Parties. The meetings shall alternate between the offices of the Parties unless the Parties otherwise agree. The chairperson shall be responsible for sending notices of meetings to all members. The Steering Committee may also convene or be polled or consulted (PAGE 7) from time to time by means of telecommunications, video conferences or correspondence, as deemed necessary or appropriate. Two weeks prior to each of the four Steering Committee meetings, a summary of progress under the Research Program shall be provided by MEDIMMUNE to the members of the Steering Committee. 3.4 Decisions. (a) All decisions of the Steering Committee shall be made by unanimous agreement of the members present in person or by telephone at any meeting, with the MEDIMMUNE members cumulatively having one vote and the SB members cumulatively having one vote. A quorum for a meeting shall require at least one representative from MEDIMMUNE and at least one representative from SB. (b) In the event that unanimity cannot be reached by the Steering Committee with respect to a matter that is subject to its decision- making authority, then the matter shall be referred for further review and resolution to the Senior Vice President of SmithKline Beecham Biologicals SA, rue de l'Institut 89, 1330 Rixensart, or such other similar position designated by SB from time to time, and the President at MEDIMMUNE, or such other similar position designated by MEDIMMUNE from time to time. The designated officers of each Party shall use reasonable efforts to resolve the matter within 30 days after the matter is referred to them. (c) In the event the designated officers fail to resolve the matter in accordance with paragraph (b) above, the decision of SB's Senior Vice President shall prevail in all cases, provided that in each case such decision of the officer of SB is consistent with the terms and conditions of this Agreement. (d) Notwithstanding the foregoing, neither Party shall be required to conduct any clinical trials where such Party has significant safety or ethical objections thereto. 3.5 Minutes. Within 15 days after each Steering Committee meeting, the secretary of the Steering Committee shall prepare and distribute minutes of the meeting, which shall provide a description in reasonable detail of the discussions had at the meeting and a list of any actions, decisions or determinations approved by the Steering Committee. The secretary shall be responsible for circulation of all draft and final minutes. Draft minutes shall be first circulated to the chairperson, edited by the chairperson and then circulated in final draft form to all members of the Steering Committee sufficiently in advance of the next meeting to allow adequate review and comment prior to the meeting. Minutes shall be approved or disapproved, and revised as necessary, at the next meeting. Final minutes shall be distributed to the members of the Steering Committee. 3.6 Term. The Steering Committee shall exist until the termination or expiration of the Research Program or for such longer period as necessary to perform the responsibilities assigned to it under this Agreement. 3.7 Expenses. Each Party shall be responsible for all travel and related costs for its representatives to attend meetings of, and otherwise participate on, the Steering Committee. (PAGE 8) 4. COLLABORATIVE RESEARCH PROGRAM. 4.1 Exchange of Data and Know-How. Within forty-five (45) days after the first meeting of the Steering Committee, MEDIMMUNE and SB shall deliver to each other copies of all MEDIMMUNE Technology and SB Technology respectively in their possession available as of such date which in each case is necessary for the conduct of the Research Program. During the term of this Agreement, each party shall provide promptly to the other any subsequently acquired MEDIMMUNE Technology, SB Special Technology and SB Technology as such is developed or acquired provided that the transfer of SB Technology shall be subject to the determination of the Steering Committee. SB will agree to use its adjuvant and formulation technology in the Research Program but will not be obligated to disclose such adjuvant or formulation technology to MEDIMMUNE, except as may be required by applicable regulatory, laws, rules or regulations. 4.2 Scope of Research Program. (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) Within sixty (60) days of the signing of this Agreement with respect to the first year of the Research Term, and thereafter on each anniversary of the date of this Agreement during the Research Term, the Steering Committee shall prepare and provide to each Party, in the form and substance mutually acceptable to each Party, a detailed description of the specific Research Program to be undertaken during the upcoming year, which shall include a reasonably detailed description of the goals and scope of such research, a research plan and a budget (the "Budget"), which shall be equal to the amount reinvested by MEDIMMUNE pursuant to the provisions contained in Section 4.3, that details the equipment, materials, and personnel to be provided by MEDIMMUNE at its fully allocated cost as well as Third Party contractors to support the research described in such proposal (an "Annual Research Plan"). Once agreed upon, each such Annual Research Plan shall be signed and dated by both Parties. The Annual Research Plan for the first year of the Research Term shall be signed by the Parties simultaneously within sixty (60) days of execution of this Agreement. The Steering Committee shall commence preparing each Annual Research Plan (other than the first Annual Research Plan) not later three months prior to each anniversary of this Agreement during such term. Exhibit C is a preliminary outline of the Annual Research Plan for 1998. (c) If the Steering Committee fails to agree in accordance with the provisions of Section 3.4 on an Annual Research Plan: (i) SB shall nevertheless continue to provide payment to MEDIMMUNE in accordance with Section 6.1 (b), (ii) MEDIMMUNE shall nevertheless continue to conduct the Research Program in accordance with the goals and scope of such research as reasonably determined by SB, and in accordance with the Research Program as described in Schedule C provided that such goals and scope shall be with respect to Vaccine Products within the scope of the level of reinvestment committed by MEDIMMUNE pursuant to Section 4.3 and within the scope of the Research Program conducted to date, and (iii) MEDIMMUNE shall continue to reinvest the amounts set forth in Section 4.3. 4.3 MEDIMMUNE shall reinvest the payments received from SB pursuant to Section 6.1(b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), with a (PAGE 9) minimum reinvestment of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). If mutually agreed upon by the Parties in the Steering Committee and assuming SB can perform the work in a cost effective and timely manner, up to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). MEDIMMUNE shall use said reinvestment for the execution of the Research Program. 4.4 Conduct of Research Program. During the Research Term, MEDIMMUNE shall: (a) undertake Research Program with SB as set forth in Schedule C as further completed in any Annual Research Plan, and such other activities which, from time to time, the Steering Committee decides as being necessary for the success of the Research Program, provided that such decision is consistent with the Research Program and the terms and conditions of this Agreement, including, but not limited to: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED), (v) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (vi) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) use all reasonable best efforts and proceed diligently to perform the work set out for MEDIMMUNE to perform in the Annual Research Plan. It is the intention of the parties to proceed in a cost-effective manner and to achieve in a timely manner the objectives of the Research Program. (c) conduct the Research Program in accordance with the Annual Research Plan in a good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations; (d) promptly provide an invention disclosure report to SB with respect to any Invention or Joint Invention; (e) allow representatives of SB, upon reasonable notice and during normal business hours, to visit the facilities of MEDIMMUNE where the Research Program is being conducted, to facilitate transfer of MEDIMMUNE Technology and to consult informally, during such visits and by telephone, with MEDIMMUNE's personnel performing work on the Research Program. (f) apply the reinvestments detailed under Section 4.3 to conduct the Research Program, carry out its obligations in connection with the Research Program and accomplish the goals and objectives for the Research Program ; (g) It is expressly understood and agreed that MEDIMMUNE shall not be required to perform research under the Research Program in any year (PAGE 10) beyond the total amount of reinvestments committed by MEDIMMUNE pursuant to Section 4.3 for that year; and (h) SB understands and acknowledges and agrees that the Research Program is experimental and research under the Research Program may not achieve the overall goals in any year or the overall goals of the Research Program and that MEDIMMUNE has no liability with respect to any failure of the Research Program to develop a Vaccine Product. 4.5 Records. (a) MEDIMMUNE shall maintain records, in sufficient detail and in good scientific manner, which shall be complete and accurate in all material respects and shall fully and properly reflect all work done and results achieved in the performance of the Research Program (including all data in the form required under all applicable laws and regulations). MEDIMMUNE shall provide a quarterly report. (b) SB shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of MEDIMMUNE relating to the Research Program to the extent reasonably required for the performance of its obligations under this Agreement. SB shall maintain such records and the information contained therein in confidence in accordance with Section 11.2 and shall not use such records or information except to the extent otherwise permitted by this Agreement. 4.6 Inventions. Joint Inventions shall be jointly owned by both parties. Inventions which arise from the Research Program and which are made by an employee or agent of MEDIMMUNE, solely or jointly, other than with an employee or agent of SB shall be owned by MEDIMMUNE; Inventions which arise from the Research Program and which are made by an employee or agent of SB, solely or jointly other than with an employee or agent of MEDIMMUNE shall be owned by SB. Except as provided otherwise herein, SB and MEDIMMUNE shall retain their respective unrestricted rights to make, have made, use and sell such Inventions which are owned by them solely. 4.7 Term of Research Program. The term of the Research Program shall commence on January 1, 1998, and, subject to Section 4.8 shall continue, except as otherwise provided in this Agreement, for a period of five years thereafter (the "Research Term"). 4.8 Termination of Research Program. (a) In the event that MEDIMMUNE fails to use reasonable best efforts to perform its research under the Research Program and such failure materially affects the Research Program, such failure shall entitle SB to give notice to MEDIMMUNE specifying the nature of the default and requiring it to cure such default. If such default is not cured within 60 days after the receipt of such notice (or, if such default cannot be cured within such 60-day period, if MEDIMMUNE does not commence and diligently continue actions to cure such default), SB shall be entitled to terminate this Agreement under Section 12.2 or the Research Program by giving written notice to take effect immediately upon delivery of such notice. SB's right (PAGE 11) to terminate the Research Program or this Agreement, as hereinabove provided, shall not be affected in any way by its waiver or failure to take action with respect to any previous default. The termination of the Research Program or this Agreement is the sole and exclusive remedy for any such default. The termination of the Research Program or this Agreement shall terminate SB's payment obligation under Section 6.1(b) except for the portion thereof which has been committed to the funding of Third Parties under the Research Program. To the extent MEDIMMUNE has received payments under Section 6.1(b) which have been allocated to the Research Program pursuant to Section 4.3 but which are not committed to Third Parties and which have not been spent on the date of termination, such funds shall be refunded to SB. (b) Upon termination of the Research Program pursuant to Section 4.8 (a) without termination of the Agreement, MEDIMMUNE shall and shall cause its agents and Affiliates to promptly transfer to SB copies of all data, reports, records and materials in MEDIMMUNE's possession or control which relate to the scientific aspects of the Research Program. Thereafter, SB shall have no further obligation to make payments under Section 6.1(b). (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (c) Termination of the Research Program pursuant to this Section 4.8 shall not affect SB's obligations to pay royalties, milestones and other fees and payments as provided hereafter. (d) For the avoidance of doubt, termination of the Research Program shall not terminate any rights or obligations of the Parties under this Agreement other than those set forth in this Section 4.8. 5. DEVELOPMENT AND COMMERCIALIZATION. 5.1 Development Efforts by SB. Upon the completion of the earlier of the end of the Research Term or Phase II clinical trials with respect to each Vaccine Product by MEDIMMUNE pursuant to the Research Program, SB shall use reasonable best efforts (including, but not limited to, the conduct of clinical trials, filing for Product Registrations and for other regulatory approvals, diligently pursuing such approvals and, upon the grant of regulatory approval, marketing the Vaccine Products) to develop and commercialize such Vaccine Products throughout the Territory and (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). SB shall make all determinations regarding any development and commercialization activities under this Section 5.1 in the sole and absolute discretion and control of SB, provided that such activities are consistent with the efforts required under this Section. (i) During the term of the Agreement, MEDIMMUNE shall supply MEDIMMUNE Technology and shall provide to SB technical assistance within its area of expertise concerning the development, production and commercialization of HPV Vaccine. Provision of such technical assistance shall include but not be limited to visits by MEDIMMUNE personnel or agents to SB at SB's expense and visits by SB personnel to MEDIMMUNE at SB's expense. (PAGE 12) 5.2 Responsibilities of SB SB will be responsible for the following activities without limitation at SB's cost and expense: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (v) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (vi) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (vii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 5.3 Liability by SB. Except by reason of force majeure as provided in Section 13.1, in the event that SB fails materially to satisfy its development and/or marketing obligations under Sections 5.1 and 5.2 with respect to Vaccine Product in any country of the Major Markets, MEDIMMUNE shall have at its sole remedy the right and option to terminate this Agreement for the concerned country of the Major Markets in its sole discretion in accordance with Section 12.2(a). 5.4 Reporting. SB shall provide to MEDIMMUNE an annual project status report (including the status of regulatory approvals) of the development, and registration of each Vaccine Product. All such reports by SB shall be treated as Confidential Information of SB and shall be subject to the restrictions imposed under Section 11.2. 5.5 MEDIMMUNE shall have the right to terminate this Agreement in its entirety if (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 6. FEE; MILESTONE PAYMENTS AND ROYALTIES. 6.1 (a) Fee by SB. In partial consideration of MEDIMMUNE Patents and MEDIMMUNE Technology resulting from the use of the research performed by MEDIMMUNE prior to this Agreement and the right to use pre-clinical and clinical information developed by MEDIMMUNE, SB shall pay MEDIMMUNE a fee of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) on the Effective Date. In addition, SB shall purchase MEDIMMUNE Common Stock from MEDIMMUNE for a purchase price of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) according to the terms of the Stock Purchase Agreement attached hereto as Schedule D. (PAGE 13) (b) In further consideration of MEDIMMUNE Patents and MEDIMMUNE Technology resulting from the use of the research performed by MEDIMMUNE prior to this Agreement and the right to use preclinical and clinical information developed by MEDIMMUNE prior to the Agreement and rights to future developments of the Vaccine Product undertaken by MEDIMMUNE during the term of the Agreement, SB agrees to provide a Technology Access Fee to MEDIMMUNE. Such Technology Access Fee shall be (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED). Upon mutual agreement of both parties, the above-mentioned payment schedule of the Technology Access Fee may be accelerated. In each calendar year, the fee for the year shall be paid in equal quarterly installments in advance on the first day of January, April, July and October of each calendar year except the first payment shall be made on the Effective Date. All payments shall be sent via wire transfer to a bank account designated by MEDIMMUNE from time to time. In the event that SB has paid (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) under this Section 6.1(b), SB will have met its payment obligation under this Section 6.1(b). In the event any portion of this Technology Access Fee is not timely made, all of the remaining fee shall become due and payable immediately. 6.2 Development Milestone Payments by SB. In partial consideration of the research performed by MEDIMMUNE prior to this Agreement and the right to use pre-clinical and clinical information developed by MEDIMMUNE, SB shall pay MEDIMMUNE the following milestone payments upon the first occurrence of each event set forth below with respect to the first Vaccine Product, whether achieved by SB or its Affiliates or its Sublicensees: (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (c) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (d) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (e) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (f) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (g) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (v) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 14) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 6.3 Royalties. In partial consideration of the rights and licenses granted by MEDIMMUNE to SB under this Agreement, during the Royalty Term, on a country-by-country and Vaccine Product-by Vaccine Product basis, SB shall pay to MEDIMMUNE a royalty on Net Sales of Vaccine Products in an amount equal to the following percentages of the specified portions of the aggregate annual Net Sales of all Vaccine Products sold by SB, its Affiliates, distributors and its Sublicensees throughout the Territory: (i) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (ii) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iii)(CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (iv) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) In calculating the royalty due under this Section with respect to Net Sales of Vaccine Products during any period of less than a calendar year, the foregoing thresholds for a calendar year Net Sales shall be pro rated in accordance with the duration of such period. 6.4 Third Party Compensation. (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) With respect to any possible future license Agreements between SB and a Third Party with respect to (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) HPV Vaccines, MEDIMMUNE shall notify SB, and SB shall negotiate such Agreements and decide solely whether such technology is required. SB shall pay all royalties and other compensation under any such Agreement and MEDIMMUNE will not enter into such an Agreement without the consent of SB. (c) For the avoidance of doubt, SB shall not pay any compensation or royalty for any Third Party Agreement pertaining to an HPV Vaccine which (1) MEDIMMUNE enters during the Research Term without the consent of the Steering Committee or (2) which MEDIMMUNE would enter into after the Research Term. (d) In the event that a dispute arises with a Third Party with respect to the compensation owed to a Third Party under a Third Party Agreement which is to be paid by SB pursuant to this Section 6.4, the parties agree to cooperate with each other to reach a fair and equitable resolution to such dispute. 6.5 Royalty Reduction. The royalties payable to MEDIMMUNE by SB can be reduced only as follows: If a Vaccine Product incorporates "Another Vaccine", which is not covered by a MEDIMMUNE Patent to form a combination product, then an adjusted royalty will be calculated based on multiplying the Net Sales of the combination Vaccine Product by the quotient 1/1+A, where A equals the total number of "Another Vaccine" (PAGE 15) included in the combined product. In no event shall this adjustment cause the royalty to be applied to less than 50% of the Net Sales of the combined Vaccine Product. "Another Vaccine" means a distinct proprietary product and does not include HPV antigens or adjuvants. (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 6.6 Obligation to Pay Royalties. The obligation to pay royalties to MEDIMMUNE under this Section 6 is imposed only once with respect to the same unit of Vaccine Product regardless of the number of Patents pertaining thereto. SB shall only be entitled to a credit against royalties or a reduction of the royalty rate once with respect to any Vaccine Product in any country pursuant to any provision in this Agreement. There shall be no obligation to pay royalties to MEDIMMUNE under this Section 6 on sales of Vaccine Products among SB and its Affiliates and its Sublicensees, but in such instances the obligation to pay royalties shall arise upon the sale by SB, its Affiliates or its Sublicensees to unrelated Third Parties. 6.7 In addition to all other compensation payable to MEDIMMUNE under this Section 6, SB shall make a non-creditable minimum annual payment to MEDIMMUNE of (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) due and payable on January 1st of each year after termination of the Research Program and until filing for regulatory approval for a Vaccine Product at the FDA or its equivalent in the EU. 7. REPRESENTATIONS, WARRANTIES AND COVENANTS. 7.1 Representations and Warranties of Both Parties. Each Party represents and warrants to the other Party that, as of the date of this Agreement: (a) Such Party is duly organized and validly existing under the laws of the state of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof. (b) The Third Party Agreements represent all rights and licenses granted to MEDIMMUNE relating to HPV Vaccine which exist on the Effective Date and MEDIMMUNE has provided SB with a true and complete copy of such Third Party Agreements; (c) MEDIMMUNE has not granted rights under MEDIMMUNE Technology and/or MEDIMMUNE Patents to any Third Party which is in conflict with the rights granted to SB pursuant to this Agreement. (d) MEDIMMUNE acknowledges that in entering into this Agreement, SB may have relied upon the technical or clinical information provided to SB by MEDIMMUNE with respect to an (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Vaccine Product. MEDIMMUNE has no present knowledge that any of the technical or clinical information provided to SB by MEDIMMUNE with respect to an (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) Vaccine Product is inaccurate in any material respect. (PAGE 16) 7.2 EXCEPT WITH RESPECT TO SECTION 2.4(b), MEDIMMUNE MAKES NO OTHER REPRESENTATION OR WARRANTY HEREUNDER, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR USE OR WITH RESPECT TO THE VALIDITY, ENFORCEABILITY, NON-INFRINGEMENT OF MEDIMMUNE PATENTS. 8. PAYMENTS AND REPORTS. 8.1 Royalty Payments. All royalty payments due hereunder shall be paid quarterly within thirty (30) days of the end of each calendar quarter. Each such payment shall be accompanied by a statement, Product-by-Product and country-by-country, of the amount of Gross Sales, the calculation of Net Sales and the units of Vaccine Product during such quarter, the amount of royalties due on such Net Sales, the conversion rates used in converting to United States Dollars and any other information reasonably requested by MEDIMMUNE to enable MEDIMMUNE to determine amounts it is owed hereunder. SB shall also provide MEDIMMUNE with a calculation and a report with respect to royalties paid on behalf of MEDIMMUNE pursuant to Section 6.4. 8.2 Mode of Payment. All invoices and statements submitted by MEDIMMUNE shall be stated in U.S. Dollars. SB shall make all payments required under this Agreement as directed by MEDIMMUNE from time to time in United States Dollars. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the average rate of exchange for the applicable calendar quarter based on the daily rate of exchange published in the Wall Street Journal, New York edition, for the applicable calendar quarter. 8.3 Records Retention. SB and its Affiliates and its Sublicensees shall keep complete and accurate records pertaining to the sale of Vaccine Products in the Territory and covering all transactions from which Net Sales are derived for a period of three calendar years after the year in which such sales occurred, and in sufficient detail to permit MEDIMMUNE to confirm the accuracy of royalty payments due hereunder. 8.4 Audit Request. At the request and expense (except as provided below) of MEDIMMUNE, SB and its Affiliates and its Sublicensees shall permit an independent, certified public accountant appointed by MEDIMMUNE and reasonably acceptable to SB, at reasonable times and upon reasonable notice, to examine those records and all other material documents relating to or relevant to Net Sales in the possession or control of SB or its Affiliates or its Sublicensees, for a period of three years after such royalties have accrued. Said accountant shall not disclose to MEDIMMUNE any information other than information relating to said reports, royalties, and payments. Results of any such examination shall be made available to both Parties. If, as a result of any inspection of the books and records of SB or its Affiliates or its Sublicensees, it is shown that SB's royalty payments under this Agreement were less than the amount which should have been paid, then SB shall make all payments required to be made to eliminate any discrepancy revealed by said inspection within 45 days after MEDIMMUNE's demand therefor. Furthermore, if the royalty payments were less than the amount which should have been paid by an amount in excess of 5% of the royalty payments actually made during the period in question, SB shall also reimburse MEDIMMUNE for the cost of such inspection. (PAGE 17) 8.5 Taxes. It is understood that all payments required to be made to MEDIMMUNE under this Agreement shall be paid by SB from the United Kingdom and pursuant to the tax treaty, no taxes shall be withheld from any such payment. In the event of a change in the treaty or law and in the event that SB is thereafter required to withhold any tax to the tax or revenue authorities in any country in the Territory regarding any payment to MEDIMMUNE due to the laws of such country, such amount shall be deducted from the royalty or other payment to be made by SB, and SB shall notify MEDIMMUNE and promptly furnish MEDIMMUNE with copies of any tax certificate or other documentation evidencing such withholding. Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect. 9. PATENT PROSECUTION; ENFORCEMENT; INFRINGEMENT. 9.1 Patent Filing, Maintenance and Prosecution. (a) Representatives of MEDIMMUNE and SB shall discuss in which countries Patents should be filed, prosecuted and/or maintained. The Parties acknowledge and agree that they intend to file, prosecute and maintain Patents in all major commercial markets where viable patent protection is available (such countries shall be referred to as "Patent Countries"). If the laws affecting patent protection or maintenance costs change in any Patent Country, the Parties shall reassess the need to continue to file, prosecute and maintain Patents in such country. If the Parties determine to discontinue such filing, prosecution and maintenance in any such country, such country shall no longer be deemed a Patent Country. (b) MEDIMMUNE or MEDIMMUNE licensors, in the case of MEDIMMUNE Patents licensed to MEDIMMUNE, shall file, prosecute and maintain MEDIMMUNE Patents in the Territory through patent counsel selected by MEDIMMUNE and MEDIMMUNE, shall consult with and keep SB advised with respect thereto. MEDIMMUNE shall disclose to SB the complete texts of all such patents and patent applications filed by MEDIMMUNE or its licensor, as well as all information received concerning the institution or possible institution of any interference, opposition, re-examination, reissue, revocation, nullification or any official proceeding involving any patent licensed herein anywhere in the Territory. SB shall have the right to review such pending applications and other proceedings and make recommendations to MEDIMMUNE concerning them and their conduct. MEDIMMUNE agrees to keep SB promptly and fully informed of the course of patent prosecution or other proceedings including by providing SB with copies of substantive communications, search reports and Third Party observations submitted to or received from patent offices throughout the Territory. MEDIMMUNE shall provide such patent consultation to SB at no cost to SB. In the event MEDIMMUNE intends to finally abandon any MEDIMMUNE Patents licensed to SB under this Agreement, it shall notify SB and SB shall have the right at its own expense to assume responsibility for any such patent or part of patent. At SB's request, MEDIMMUNE and/or its licensors, as the case may be, shall file an application for a Supplementary Protection Certificate for MEDIMMUNE Patents. SB shall provide relevant marketing authorizations as appropriate. (PAGE 18) (c) Notwithstanding anything in this Section 9.1, SB may, at its discretion, elect to discontinue financial support of any MEDIMMUNE Patent in any Patent Country, provided, however, that prior to taking such action, SB will notify MEDIMMUNE of its intention at least 60 days prior to the date on which any payment or action is due. In any Patent Country in which SB has elected to discontinue its support of any MEDIMMUNE Patent, MEDIMMUNE, upon receiving notice, may elect at its own expense to assume all financial responsibility for the prosecution or maintenance of such MEDIMMUNE Patent in such Patent Country. In such event, all SB's rights to the MEDIMMUNE Patent will be deemed to have expired with respect to such Patent Country upon MEDIMMUNE's receiving notice of SB's decision. (d) Absent an election not to support the filing, prosecution and/or maintenance of a Patent in any Patent Country, all costs and expenses incurred under this Section 11.1 with respect to the filing, prosecution and/or maintenance of Patents will be paid by SB. Included in such costs and expenses are all reasonable costs for the prosecution, issuance, and maintenance of such patent applications and patents issuing thereon, and any divisional, continuation-in-part, reissue applications or patents, patents-in-addition, patents-of-revalidation or the registrations of any patent or the like. 9.2 Review of Patent Office Communications. With respect to any Patents, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination of any patent issuing from any patent application made by either Party shall be provided to the other Party sufficiently prior to the filing of such application, response or request to allow for review and comment by such other Party. Each Party shall have the right to take any action that in its judgment is necessary to preserve such Patents. 9.3 Patent Enforcement. (a) Each Party shall notify the other promptly after such Party becomes aware of any alleged infringement of any Patent in any country in the Territory. If any of the Patents under which SB holds a license hereunder is infringed by a Third Party, SB shall have the right and option, but not the obligation, to bring an action for infringement, at its sole expense, against such Third Party in the name of MEDIMMUNE and/or in the name of SB, and to join MEDIMMUNE as a party plaintiff if required. SB shall promptly notify MEDIMMUNE of any such infringement and shall keep MEDIMMUNE informed as to the prosecution of any action for such infringement. SB shall have the full control over the conduct of the litigation including settlement thereof provided, however, that SB shall make no decision, including, but not limited to, settlement which adversely affects the validity or enforceability of the MEDIMMUNE Patents without the written consent of MEDIMMUNE. It is understood that in the case of MEDIMMUNE Patents sublicensed to SB, the rights of this Section 9.3(a) are subject to the terms and restrictions of the Agreement(s) between MEDIMMUNE and its licensors. (b) In the event that SB does not institute an infringement proceeding against an offending Third Party within 90 days after becoming aware or receiving notice of any alleged infringement, then MEDIMMUNE shall have the right and option, but not the obligation, to institute such an (PAGE 19) action and to retain any recovered damages. (c) In any infringement suit either Party may institute to enforce any Patents pursuant to this Agreement, the other Party hereto shall, at the request of the Party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the Party requesting cooperation. (d) The costs and expenses of any action instituted pursuant to this Section 9.3 (including reasonable fees of attorneys and other professionals) shall be borne by the Party instituting the action, or, if the Parties elect to cooperate in instituting and maintaining such action, such costs and expenses shall be borne by the Parties in such proportions as they may agree in writing. Each Party shall execute all necessary and proper documents and take such actions as shall be appropriate to allow the other Party to institute and prosecute such infringement actions (if such other Party has the right to institute and prosecute such infringement actions pursuant to this Section 9.3). (e) In the event that either Party shall undertake the enforcement and/or defense of any Patent, any award or compensation (including the fair market value of non-monetary compensation) paid by Third Parties as a result of such an infringement action (whether by way of settlement or otherwise) shall be applied as follows: (i) first, to reimbursement of each Party for all expenses incurred by each in connection with such action, on a pro rata basis, and (ii) second, any remaining balance shall be allocated to the Party undertaking the action, except that such amount shall be deemed to be Net Sales hereunder, for which MEDIMMUNE shall be entitled to receive a royalty as provided in this Agreement. (f) SB shall not have the right to settle or compromise any such action in a manner which adversely affects MEDIMMUNE Patents without the written consent of MEDIMMUNE. (g) SB at its sole discretion may decide to enter into a license agreement with any Third Party pertaining to HPV Vaccines in order to avoid an (alleged) infringement of Third Party patents. In case both parties deem it necessary to acquire additional technology, the Steering Committee will decide on entering into license agreements with Third Parties. 9.4 Infringement Actions by Third Parties. In the event of the institution of any suit by a Third Party against SB, its Affiliates or its Sublicensees for patent infringement involving the use, sale, distribution or marketing of any Vaccine Product in the Territory and such infringement claim is a result of the use of the MEDIMMUNE Patents or MEDIMMUNE Technology SB shall promptly notify MEDIMMUNE in writing of such suit. In the event of all such actions SB shall defend such action at its own expense, and MEDIMMUNE hereby agrees to assist and cooperate with SB, at its own expense, to the extent necessary in the defense of such suit. SB shall have the right to settle the suit or consent to an adverse judgment thereto, in its sole discretion. During the pendency of such action, all royalties (PAGE 20) due hereunder shall continue to be paid by SB. SB shall assume full responsibility for the payment of any award for damages, or any amount due pursuant to any settlement entered into by SB with such Third Party, subject to the provisions of this Agreement with respect to the reduction of royalties. Any and all damages and awards received by SB as a result thereof (i.e., as a result of a counterclaim) shall be allocated between the Parties in the same manner as provided in Section 9.3. 10. INDEMNIFICATION. 10.1 By MEDIMMUNE. MEDIMMUNE shall indemnify and hold SB, its Affiliates and its Sublicensees, and each of their respective directors, officers, employees, shareholders and agents, harmless from and against any and all Third Party claims, suits or demands for liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) arising out of or resulting from: any breach of a representation or warranty made by MEDIMMUNE or negligence, recklessness or wrongful intentional acts or omissions of MEDIMMUNE, or its Affiliates and their respective directors, officers, employees and agents, in connection with the work performed by MEDIMMUNE under the Research Program. 10.2 By SB. SB shall indemnify and hold MEDIMMUNE and licensors of MEDIMMUNE to the extent that SB is sublicensed hereunder and its directors, officers, employees, shareholders and agents, harmless from and against any and all Third Party claims, suits or demands for liabilities, damages, losses, costs and expenses (including the reasonable fees of attorneys and other professionals) arising out of or resulting from: the development manufacture, use, distribution or sale of any Vaccine Product by SB, its Affiliates, distributors or Sublicensees except those losses which arise out of the negligence or intentional misconduct of MEDIMMUNE. 10.3 Costs of Enforcement. As the parties intend complete indemnification, all costs and expenses of enforcing any provision of this Section 10 shall also be reimbursed by the indemnifying Party. 10.4 Conditions to Indemnification. A person or entity that intends to claim indemnification under this Section (the "Indemnitee") shall promptly notify the other Party (the "Indemnitor") of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the Indemnitee whether or not such claim is rightfully brought; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume the defense, or if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other person represented by such counsel in such proceedings. The indemnity agreement in this Section shall not apply to amounts paid in settlement of any loss, claim, damage, liability or action if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld or delayed unreasonably. (PAGE 21) The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, only if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Section, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Section. The Indemnitee under this Section, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigations of any action, claim or liability covered by this indemnification. 10.5 Any and all Sublicensees of SB shall agree to the same indemnity as in Section 10.2 of this Agreement and MEDIMMUNE shall be made a Third Party beneficiary therein. 11. PUBLICATION; CONFIDENTIALITY. 11.1 Publication. (a) Both Parties recognize that each may wish to publish the results of their work relating to the Research Program. However, both Parties also recognize the importance of acquiring patent protection on inventions prior to publication. Consequently, neither Party shall publish or present the results of the Research Program with respect to any Vaccine Product or of development studies without the permission of the Steering Committee. If the Steering Committee is not in existence, the Parties shall appoint appropriate representatives for this function. This Section 11.1(a) shall cease to apply with respect to any Vaccine Product upon the commercial launch of such Vaccine Product. (b) Each Party also agrees to delete from any such proposed publication any technical or scientific Confidential Information of the other Party upon such other Party's reasonable request. (c) In any publication permitted under this Section 11.1, each Party shall acknowledge its collaboration with the other Party under this Agreement. (d) Nothing in Section 11.1 shall prevent MEDIMMUNE: (i) in connection with efforts to secure financing at any time during the term of this Agreement, from issuing statements as to achievements made, and the status of the work being done by the Parties, under this Agreement, so long as such statements do not jeopardize the ability to obtain patent protection on Inventions or disclose non-public technical or scientific Confidential Information of SB; or (ii) from issuing statements that MEDIMMUNE determines to be necessary, in the opinion of its external counsel, to comply with applicable law (including the disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange on which securities issued by MEDIMMUNE are traded); provided that MEDIMMUNE shall provide SB with a copy of the proposed text of such statements sufficiently in advance of the scheduled release thereof to afford SB a reasonable opportunity to review and comment upon the proposed text. 11.2 Confidentiality; Exceptions. (PAGE 22) Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, the receiving Party, its Affiliates and its Sublicensees, if any, shall use reasonable efforts to keep, and to ensure that their officers and directors keep, completely confidential and shall not publish or otherwise disclose and shall not use for any purpose any information furnished to it by the other Party, its Affiliates or its Sublicensees, if any, or developed under or in connection with the Research Program pursuant to this Agreement, except to the extent that it can be established by the receiving Party by competent proof that such information: (i) is or hereafter becomes generally available to the public other than by reason of any default by the receiving Party with respect to its confidentiality obligations hereunder; (ii) was already known to the recipient as evidenced by prior written documents in its possession; (iii) is disclosed to the recipient by a Third Party who is not in default of any confidentiality obligation to the disclosing Party; or (iv) is independently developed by or for the receiving Party without reference to or reliance upon the information furnished by the other Party ("Confidential Information"). Information disclosed by one Party to the other shall remain the property of the disclosing Party. 11.3 Exclusions to Confidentiality. The restrictions contained in Section 11.2 shall not apply to Confidential Information that (i) is submitted by the recipient to governmental authorities to facilitate the issuance of marketing approvals for a Vaccine Product, provided that reasonable measures shall be taken to assure confidential treatment of such information, if practicable; (ii) is provided by the recipient to Third Parties under appropriate terms and conditions, including confidentiality provisions equivalent to those in this Agreement, for consulting, manufacturing, development, manufacturing, external testing, marketing trials and sublicensing or potential sublicensing of Vaccine Product in accordance with this Agreement; or (iii) is otherwise required to be disclosed in compliance with applicable laws or regulations (including, without limitation, to comply with SEC, Nasdaq or stock exchange disclosure requirements) or order by a court or other regulatory body having competent jurisdiction; provided that if a Party is required to make any such disclosure of the other Party's Confidential Information it will, except where impracticable for necessary disclosures, for example to physicians conducting studies or to health authorities, give reasonable advance notice to the other Party of such disclosure requirement and, except to the extent inappropriate in the case of patent applications or otherwise, will use its reasonable best efforts to secure confidential treatment of such Confidential Information required to be disclosed. 11.4 Injunctive Relief. The Parties acknowledge that money damages alone would not adequately compensate the disclosing Party in the event of a breach by the receiving Party of this Section 11, and that, in addition to all other remedies available to the disclosing Party at law or in equity, it shall be entitled to seek injunctive relief for the enforcement of its rights under this Section 11. 11.5 The obligations of this Article 11 shall terminate (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) years after the termination of this Agreement. 12. TERM; TERMINATION. (PAGE 23) 12.1 Term. This Agreement shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall expire as follows: (a) As to each Vaccine Product in each country in the Territory, this Agreement shall expire upon the expiration of the Royalty Term with respect to such Vaccine Product in such country. (b) This Agreement shall expire in its entirety upon the termination of the Royalty Term with respect to all Vaccine Products in all countries in the Territory. 12.2 Breach. (a) Failure by either Party to comply with any of its material obligations contained in this Agreement shall entitle the other Party to give to the Party in default notice specifying the nature of the default and requiring it to cure such default. If such default is not cured within 60 days (30 days in the event of a default with respect to an obligation to pay money) after the receipt of such notice (or, if such default cannot be cured within such 60-day period, if the Party in default does not commence and diligently continue actions to cure such default, the Parties agreeing that all defaults with respect to obligations to pay money shall be curable within the 30-day period provided above), subject to the provisions of Sections 4.8 and 5.3, the notifying Party shall be entitled, without prejudice to any of its other rights conferred on it by this Agreement, and in addition to any other remedies available to it by law or in equity, to terminate this Agreement in its entirety, by giving written notice to take effect immediately upon delivery of such notice. The right of either Party to terminate this Agreement, as provided in this Section 12.2, shall not be affected in any way by its waiver or failure to take action with respect to any previous default. (b) An election of remedy by a Party for a material breach of this Agreement under this Section 12.2 on one occasion shall not constitute a waiver as to any other remedy that may be available to such Party under this Section 12.2 as to any material breach on another occasion. (c) After Phase II is completed, , SB may terminate this Agreement by giving sixty (60) days' written notice to MEDIMMUNE but only if (i) further development and commercialization of Vaccine Product is not economically feasible or (ii) the technical and clinical information indicates that there are material concerns about the safety or efficacy of the Vaccine Product. (d) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (e) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 12.3 Effect of Expiration or Termination. (a) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (b) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 24) (c) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (d) (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 12.4 Either party may terminate this Agreement, if, at any time, the other party shall file in any court or agency pursuant to any statute or regulation of a country in the Territory a petition of bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver of trustee of the party or of its assets or if the other party proposes a written agreement of composition or extension of its debts or if the other party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within 60 days after filing thereof, or if the other party shall make an assignment for the benefit of its creditors. Notwithstanding the bankruptcy of MEDIMMUNE or the impairment of performance of MEDIMMUNE of its obligations under this section, SB shall be entitled to retain the licenses granted herein, provided it continues to comply with its obligations to MEDIMMUNE hereunder. 12.5 Right to Sell Stock on Hand. Upon the termination of any rights granted hereunder, in whole or in part as to any Vaccine Product in any country in the Territory, for any reason other than a failure to cure a material breach of this Agreement by SB, SB shall have the right to dispose of all Vaccine Product then on hand to which such termination applies, and the royalties shall be paid to MEDIMMUNE with respect to such Vaccine Product as though such rights had not terminated. 12.6 Accrued Rights, Surviving Obligations. (a) Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement. (b) Termination, relinquishment or expiration of this Agreement shall not terminate SB's obligation to pay all royalties and milestone payments that shall have accrued prior to such termination. All of the Parties' rights and obligations under Sections 2.2(b), 8.4 10, 11, 12.3 12.4, 12.5, 12.6, 14.11 and 14.17 shall survive termination, relinquishment or expiration hereof. 12.7 Termination for Failure of Condition. Either Party may terminate this Agreement by providing written notice to the other in the event that Effective Date has not occurred by June 30, 1998. 13. FORCE MAJEURE. 13.1 Events of Force Majeure. Except for payments due under this Agreement, neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under or in breach of any provision of this Agreement for failure or delay in fulfilling or performing any obligation of this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or (PAGE 25) delaying. For purposes of this Agreement, force majeure is defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of pubic utilities or common carriers. In such event SB or MEDIMMUNE, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and the 30 days thereafter. To the extent possible, each Party shall use reasonable efforts to minimize the duration of any force majeure. 14. MISCELLANEOUS. 14.1 Relationship of Parties. Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employer-employee or joint venture relationship between the Parties. No Party shall incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein. 14.2 Assignment. (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 14.3 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement. 14.4 Notice. Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: (a) In the case of SB, to: SmithKline Beecham, PLC c/o SmithKline Beecham Biologicals Manufacturing S.A. Rue de l'Institut 89 B-1330 Rixensart, Belgium Attention: Senior Vice President (b) In the case of MEDIMMUNE, to: MEDIMMUNE, Inc. 35 West Watkins Mill Road Gaithersburg, Maryland 20878 Attention: President Facsimile No.: (301) 527-4200 or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon receipt thereof. If delivered personally or by (PAGE 26) facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next business day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the third business day after such notice or request was deposited with the U.S. Postal Service. 14.5 Use of Name. Except as otherwise provided herein, neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party for any purpose in connection with the performance of this Agreement. 14.6 Public Announcements. Except as required by law (including, without limitation, disclosure requirements of the U.S. Securities and Exchange Commission, Nasdaq or any other stock exchange on which securities issued by MEDIMMUNE are traded), neither Party shall make any public announcement concerning this Agreement or the subject matter hereof without the prior written consent of the other, which shall not be unreasonably withheld. It shall not be unreasonable for a Party to withhold consent with respect to any public announcement containing any of such Party's Confidential Information. In the event of a required public announcement, to the extent practicable under the circumstances, the Party making such announcement shall provide the other Party with a copy of the proposed text prior to such announcement sufficiently in advance of the scheduled release of such announcement to afford such other Party a reasonable opportunity to review and comment upon the proposed text. 14.7 Waiver. A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party. 14.8 Compliance with Law. Nothing in this Agreement shall be deemed to permit a Party to export, reexport or otherwise transfer any Vaccine Product sold under this Agreement without compliance with applicable laws. 14.9 Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement and the parties shall negotiate, in good faith, a new provision which will, as closely as possible, carry out the intentions of the parties provided for in the invalidated provision. 14.10 Amendment. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party. (PAGE 27) 14.11 Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Maryland without regard to its choice of law principles. In the event that either Party desires to initiate litigation with respect to this Agreement, such litigation shall be conducted in an appropriate court in the State of Maryland and each Party hereby submits to the jurisdiction of such court(s) and agrees that venue is proper in such court(s). 14.12 Entire Agreement. This Agreement, together with the Exhibits hereto and every Annual Research Plan approved by the Steering Committee, sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the date hereof in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. 14.13 Parties in Interest. All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns. 14.14 Descriptive Headings. The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement. 14.15 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together shall constitute one and the same agreement. 14.16 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) 14.17 (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 28) IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written. SMITHKLINE BEECHAM , PLC By: /s/J. Stephenne Name: J. Stephenne Title: Senior Vice President and General Manager MEDIMMUNE, INC. By: /s/Wayne T. Hockmeyer Name: Wayne T. Hockmeyer Title: CEO SCHEDULE A (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE B (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE C (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE D (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE A (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE B (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE C (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) SCHEDULE D (CONFIDENTIAL TREATMENT HAS BEEN REQUESTED) (PAGE 29) EX-23 9 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of MedImmune, Inc. on Form S-8 (File Nos. 333-28481 and 333-28527) and Form S-3 (File Nos. 333-44195 and 333-13373), of our report, dated February 4, 1998, on our audits of the financial statements of MedImmune, Inc. as of December 31, 1996 and 1997, and for each of the three years in the period ended December 31, 1997, which report is included in this Annual Report on Form 10-K. Coopers & Lybrand L. L. P. McLean, Virginia March 27, 1998 EX-27 10
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIMMUNE, INC.'S YEARLY REPORT ON FORM 10-K FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FILING. 1,000 12-MOS DEC-31-1997 JAN-01-1997 DEC-31-1997 29,984 20,342 18,300 0 28,857 2,740 65,254 0 170,336 43,660 85,363 0 0 244 40,292 170,336 65,271 80,964 34,433 118,380 0 0 3,483 (36,895) 0 (36,895) 0 0 0 (36,895) (1.59) (1.59)
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