-----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, JfauhNRQ4yIePSE2/VD3J6u4ghPCu+RFdOC8mzCPqWYE9Qi2DGyRBM//oSV15CjU Li6oE1AEcn4dNJSW/eHVUg== 0001206774-04-000763.txt : 20040805 0001206774-04-000763.hdr.sgml : 20040805 20040805165007 ACCESSION NUMBER: 0001206774-04-000763 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEOSE TECHNOLOGIES INC CENTRAL INDEX KEY: 0000877902 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] IRS NUMBER: 133549286 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27718 FILM NUMBER: 04955247 BUSINESS ADDRESS: STREET 1: 102 WITMER RD CITY: HORSHAM STATE: PA ZIP: 19044 BUSINESS PHONE: 2154415890 MAIL ADDRESS: STREET 1: 102 WITMER ROAD CITY: HORSHAM STATE: PA ZIP: 19044 FORMER COMPANY: FORMER CONFORMED NAME: NEOSE PHARMACEUTICALS INC DATE OF NAME CHANGE: 19950817 10-Q 1 ne90787510q.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

		For the quarterly period ended June 30, 2004.

		OR

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

		For the transition period from __________ to __________

Commission file number: 0-27718

NEOSE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		13-3549286

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

102 Witmer Road
Horsham, Pennsylvania		19044

(Address of principal executive offices)		(Zip Code)

(215) 315-9000

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x

No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 24,701,913 shares of common stock, $.01 par value, were outstanding as of July 23, 2004.

NEOSE TECHNOLOGIES, INC.
(a development-stage company)

INDEX

			Page

PART I.		FINANCIAL INFORMATION:

Item 1.		Financial Statements (unaudited)

	Balance Sheets as of December 31, 2003 and June 30, 2004		3

	Statements of Operations for the three and six months ended June 30, 2003 and 2004, and for the period from inception through June 30, 2004		4

	Statements of Cash Flows for the six months ended June 30, 2003 and 2004, and for the period from inception through June 30, 2004		5

	Notes to Financial Statements		6

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	10

Item 3.		Quantitative and Qualitative Disclosure About Market Risk	22

Item 4.		Controls and Procedures	22

PART II.		OTHER INFORMATION:

Item 4.		Submission of Matters to a Vote of Security Holders	24

Item 6.		Exhibits and Reports on Form 8-K	25

SIGNATURES			27

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NEOSE TECHNOLOGIES, INC.
(a development-stage company)

BALANCE SHEETS
(unaudited)
(in thousands, except per share amounts)

	December 31, 2003			June 30, 2004

Assets

Current assets:
Cash and cash equivalents	$	48,101		$	59,896
Marketable securities		4,959			4,988
Restricted funds		901			—
Prepaid expenses and other current assets		917			1,693

Total current assets		54,878			66,577
Property and equipment, net		37,192			42,132
Acquired intellectual property, net		1,910			1,611
Other assets		865			715

Total assets	$	94,845		$	111,035

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt and capital lease obligations	$	2,231		$	3,358
Accounts payable		2,342			1,731
Accrued compensation		2,510			1,602
Accrued expenses		2,433			2,470
Deferred revenue		4,333			5,178

Total current liabilities		13,849			14,339
Long-term debt and capital lease obligations		8,370			13,817
Other liabilities		413			325

Total liabilities		22,632			28,481

Stockholders’ equity:
Preferred stock, $.01 par value, 5,000 shares authorized, none issued		—			—
Common stock, $.01 par value, 30,000 and 50,000 shares authorized; 19,935 and 24,702 shares issued and outstanding		199			247
Additional paid-in capital		217,849			247,942
Deferred compensation		(96	)		(67	)
Deficit accumulated during the development-stage		(145,739	)		(165,568	)

Total stockholders’ equity		72,213			82,554

Total liabilities and stockholders’ equity	$	94,845		$	111,035

The accompanying notes are an integral part of these financial statements.

NEOSE TECHNOLOGIES, INC.
(a development-stage company)

STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)

													Period from inception (January 17, 1989) to June 30, 2004
	Three months ended June 30,						Six months ended June 30,

	2003			2004			2003			2004

Revenue from collaborative agreements	$	651		$	891		$	721		$	2,141		$	21,022

Operating expenses:
Research and development		6,664			7,788			12,284			15,666			142,165
Marketing, general and administrative		3,197			3,324			6,201			6,186			66,406

Total operating expenses		9,861			11,112			18,485			21,852			208,571

Operating loss		(9,210	)		(10,221	)		(17,764	)		(19,711	)		(187,549	)
Other income		—			—			—			—			7,773
Impairment of equity securities		—			—			—			—			(1,250	)
Interest income		147			131			317			236			19,578
Interest expense		(163	)		(236	)		(200	)		(354	)		(4,120	)

Net loss	$	(9,226	)	$	(10,326	)	$	(17,647	)	$	(19,829	)	$	(165,568	)

Basic and diluted net loss per share	$	(0.54	)	$	(0.47	)	$	(1.07	)	$	(0.94	)

Weighted-average shares outstanding used in computing basic and diluted net loss per share		17,229			22,146			16,519			21,050

The accompanying notes are an integral part of these financial statements.

NEOSE TECHNOLOGIES, INC.
(a development-stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

							Period from inception (January 17, 1989) to June 30, 2004
	Six months ended June 30,

	2003			2004

Cash flows from operating activities:
Net loss	$	(17,647	)	$	(19,829	)	$	(165,568	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		2,234			2,840			20,767
Loss on disposition of property and equipment		12			1			265
Non-cash compensation		110			83			5,000
Common stock issued for non-cash and other charges		—			—			35
Changes in operating assets and liabilities:
Prepaid expenses and other current and non-current assets		(834	)		(856	)		(2,087	)
Accounts payable		50			(611	)		1,731
Accrued compensation		(199	)		(908	)		1,183
Accrued expenses		(139	)		631			2,209
Deferred revenue		(250	)		845			5,178
Other liabilities		(108	)		(88	)		(94	)

Net cash used in operating activities		(16,771	)		(17,892	)		(131,381	)

Cash flows from investing activities:
Purchases of property and equipment		(734	)		(7,691	)		(58,254	)
Proceeds from sale-leaseback of equipment		—			—			1,382
Purchases of marketable securities		(23,735	)		—			(423,307	)
Proceeds from sales of marketable securities		8,328			—			29,686
Proceeds from maturities of and other changes in marketable securities		15,000			—			389,360
Purchase of acquired technology		—			—			(4,550	)
Investment in equity securities		—			—			(1,250	)
Impairment of equity securities		—			—			1,250

Net cash used in investing activities		(1,141	)		(7,691	)		(65,683	)

Cash flows from financing activities:
Proceeds from issuance of debt		2,954			11,441			30,715
Repayment of debt		(1,657	)		(5,051	)		(15,787	)
Restricted cash related to debt		598			901			—
Proceeds from issuance of preferred stock, net		—			—			29,497
Proceeds from issuance of common stock, net		16,435			30,014			206,131
Proceeds from exercise of stock options and warrants		78			73			6,651
Acquisition of treasury stock		—			—			(175	)
Dividends paid		—			—			(72	)

Net cash provided by financing activities		18,408			37,378			256,960

Net increase in cash and cash equivalents		496			11,795			59,896
Cash and cash equivalents, beginning of period		31,088			48,101			—

Cash and cash equivalents, end of period	$	31,584		$	59,896		$	59,896

The accompanying notes are an integral part of these financial statements.

NEOSE TECHNOLOGIES, INC.
(a development-stage company)

NOTES TO FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for presentation of interim financial statements. Accordingly, the unaudited financial statements do not include all the information and footnotes necessary for a comprehensive presentation of the financial position, results of operations, and cash flows for the periods presented. In our opinion, however, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented. You should not base your estimate of our results of operations for 2004 solely on our results of operations for the six months ended June 30, 2004. You should read these unaudited financial statements in combination with:

	•	The other Notes in this section;
	•	“Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing in the following section; and
	•	The Financial Statements, including the Notes to the Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2003.

Certain prior year amounts have been reclassified to conform to our current year presentation.

2. Revenue Recognition

Revenue from collaborative agreements consists of upfront fees, research and development funding, and milestone payments. Non-refundable upfront fees are deferred and amortized to revenue over the related estimated performance period. Periodic payments for research and development activities are recognized over the period in which we perform those activities under the terms of each agreement. Revenue resulting from the achievement of milestone events stipulated in the agreements is recognized when the milestone is achieved.

In April 2004, we entered into an agreement with BioGeneriX AG, a company of the ratiopharm Group, to use our proprietary GlycoPEGylation technology to develop a long-acting, next-generation version of granulocyte colony stimulating factor (G-CSF). Under the agreement, we and BioGeneriX will pursue development and commercialization of a next-generation G-CSF. The parties will share equally preclinical expenses. Because we do not know which party will incur greater preclinical expenses during any given quarter, we cannot estimate whether BioGeneriX will be reimbursing us or whether we will be reimbursing BioGeneriX during each quarter of the preclinical phase. BioGeneriX will fund the entire clinical development program. If we and BioGeneriX proceed to commercialization, we will have commercial rights in the U.S., Canada, Mexico and Japan. BioGeneriX will have commercial rights in Europe and the rest of the world. Each company will receive royalties on product sales in the other company’s territory.

In connection with the agreement, we received from BioGeneriX a non-refundable, upfront fee, which is being amortized to revenue over the expected performance period.

3. Significant Customer Concentration

During the three and six months ended June 30, 2004, one customer accounted for 99% of total revenues. The same customer accounted for zero percent and 10% of total revenues during the three and six months ended June 30, 2003, respectively.

During the three and six months ended June 30, 2003, another customer accounted for 62% and 55%, respectively, of total revenues. A third customer accounted for 38% and 35% of total revenues during the three and six months ended June 30, 2003, respectively.

4. Long-term Debt and Capital Lease Obligations

In May 2004, we borrowed $1,500,000 from the landlord of our leased facility in Horsham, Pennsylvania. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 13%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008 we will be required to make principal repayments totaling $309,000, $352,000, $400,000, and $415,000, respectively, under this agreement.

In March 2004, we borrowed $941,000 to finance the purchase of equipment and facility improvements, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 8.09%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008 we will be required to make principal repayments totaling $226,000, $245,000, $255,000, $179,000, respectively, under this agreement.

In February 2004, we entered into a capital lease obligation for equipment with a book value of $184,000, which was calculated using an assumed incremental annual borrowing rate of 8.66%. The terms of the lease require us to make monthly payments through February 2009. Under this agreement, we will be required to make principal repayments totaling $32,000, $35,000, $38,000, $41,000, and $29,000 during the 12 months ending June 30, 2005, 2006, 2007, 2008, and 2009, respectively.

During the three months ended March 31, 2004, we and a bank entered into agreements under which the bank acquired and reissued the $1,000,000 outstanding of our tax-exempt Industrial Development Authority bonds. In addition, we borrowed $8,000,000 from the bank, of which $1,800,000 was combined with $1,100,000 of our restricted cash for the purpose of paying in full the $2,900,000 outstanding of our taxable Industrial Development Authority bonds. The remaining $6,200,000 borrowed funded improvements to our leased facility, which we occupied in April 2004, in Horsham, Pennsylvania.

The interest rate on the bond and bank debt will vary quarterly, depending on changes in the 90-day LIBOR. We will have the option each quarter to incur interest on the outstanding principal at the LIBOR-based variable interest rate or a fixed rate offered by our bank.

For the $8,000,000 term loan, we will make quarterly, interest-only payments through March 31, 2005. Commencing on March 31, 2005, we will make quarterly principal payments of $222,000 plus interest over the remaining nine years of the ten-year loan period. The bank debt bears interest at a rate equal to the 90-day LIBOR plus 3.0%.

For the $1,000,000 Industrial Development Authority Bond, we will make quarterly, interest-only payments for ten years followed by a single repayment of principal at the end of the ten-year loan period. If the 90-day LIBOR at the beginning of any calendar quarter is less than 4.0%, as it is currently, the bond will bear interest at a rate equal to the 90-day LIBOR plus 1.5%. If the 90-day LIBOR at the beginning of any calendar quarter is between 4.0% and 6.0%, the bond will bear interest at a rate equal to the 90-day LIBOR plus 1.25%. If the 90-day LIBOR at the beginning of any calendar quarter exceeds 6.0%, the bond will bear interest at a rate equal to the 90-day LIBOR plus 1.0%.

To provide credit support for these borrowings, we granted a mortgage to our bank on the land and building where our present headquarters are located, as well as on improvements, certain equipment, and other tangible personal property. Under our agreements with the bank, if the bank determines a material adverse change has occurred in our business, financial condition, results of operations, or business prospects, the bank in its sole discretion may declare at any time an event of default, of which one potential outcome could be the accelerated repayment of the loan balance. Under our agreements with the bank, we agreed to limit our total outstanding debt to $22,000,000. As of June 30, 2004, our total outstanding debt was $17,175,000. At any time after the fourth year of the loan period, or if we fail to maintain a minimum required cash and short-term investments balance of at least $22,000,000, our bank has the option to require additional collateral from us in the form of a security interest in certain cash and short-term investments, or in the form of a letter of credit, which may have the effect of requiring us to repay the outstanding loan balance to the bank. The agreements with our bank also contain covenants that, among other things, require us to obtain consent from the bank prior to paying dividends, making certain investments, changing the nature of our business, assuming or guaranteeing the indebtedness of another entity or individual, selling or otherwise disposing of a substantial portion of our assets, and merging or consolidating with another entity.

5. Stockholders’ Equity

In May 2004, we sold 4,733,476 shares of common stock in a registered direct offering to a number of institutional and individual investors, including 812,408 shares sold to officers and an investment fund affiliated with a director, at a price of $6.77 per share, generating net proceeds of $29,928,000.

During the six months ended June 30, 2004, participating employees purchased 8,456 shares of common stock pursuant to our employee stock purchase plan, resulting in net proceeds of $86,000. In addition, during the six months ended June 30, 2004, we received proceeds of $72,500 upon the exercise of options to purchase 24,766 shares of common stock.

6. Non-competition Agreement

In March 2003, our former Chief Executive Officer, Stephen A. Roth, exercised the right under his separation agreement to enter into a non-competition agreement with us. Under the non-competition agreement, we are required to pay him $39,622 per month for 24 months and, should he leave our board of directors during such two-year period, continue his stock option vesting and exercisability. Upon entering into the non-competition agreement, we recorded a liability of $882,000, which represented the present value of the future payments, and a corresponding asset for the value of the non-competition commitment. The asset is being amortized using the straight-line method to marketing, general and administrative expense on our statements of operations over the two-year term of the agreement. As of June 30, 2004, the present value of remaining minimum payments under the non-competition agreement was $308,000.

7. Stock-based Compensation

We apply the intrinsic value method of accounting for all stock-based employee compensation in accordance with APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. We record deferred compensation for option grants to employees for the amount, if any, by which the market price per share exceeds the exercise price per share.

We have elected to adopt only the disclosure provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended by Statement of Financial Accounting Standards No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” The following table illustrates the effect on our net loss and basic and diluted net loss per share if we had recorded compensation expense for the estimated fair value of our stock-based employee compensation, consistent with SFAS No. 123 (in thousands, except per share data):

	Three months ended June 30,						Six months ended June 30,

	2003			2004			2003			2004

Net loss – as reported	$	(9,226	)	$	(10,326	)	$	(17,647	)	$	(19,829	)
Add: Stock-based employee compensation expense included in reported net loss		21			67			32			78
Deduct: Total stock-based employee compensation expense determined under fair value-based method for all awards		(2,380	)		(2,818	)		(6,250	)		(5,098	)

Net loss – pro forma	$	(11,585	)	$	(13,077	)	$	(23,865	)	$	(24,849	)

Basic and diluted net loss per share – as reported	$	(0.54	)	$	(0.47	)	$	(1.07	)	$	(0.94	)
Basic and diluted net loss per share – pro forma	$	(0.67	)	$	(0.59	)	$	(1.44	)	$	(1.18	)

8. Net Loss Per Share

Basic and diluted net loss per share are presented in conformity with Statement of Financial Accounting Standards No. 128, “Earnings Per Share.” Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share reflects the potential dilution from the exercise or conversion of securities into common stock. For the three and six months ended June 30, 2003 and 2004, the effects of the exercise of outstanding stock options and warrants to purchase 4,697,235 and 5,147,739 shares, respectively, were antidilutive; accordingly, they were excluded from the calculation of diluted net loss per share.

9. Supplemental Disclosure of Cash Flow Information

The following table contains additional cash flow information for the periods reported (in thousands).

	Six months ended June 30,						Period from inception (January 17, 1989) to June 30, 2004

	2003			2004

Supplemental disclosure of cash flow information:
Cash paid for interest	$	214		$	480		$	4,390

Non-compete agreement	$	882		$	—		$	882

Non-cash investing activities:
Increase (decrease) in accrued property and equipment	$	(102	)	$	(594	)	$	261

Assets acquired under capital leases and tenant improvement loan	$	—		$	184		$	1,525

Non-cash financing activities:
Conversion of debt into common stock	$	—		$	—		$	660

Issuance of common stock for dividends	$	—		$	—		$	90

Issuance of common stock to employees in lieu of cash compensation	$	—		$	—		$	44

10. Comprehensive Loss

Our comprehensive loss for the three and six months ended June 30, 2004 was comprised only of our net loss, and was $10,326,000 and $19,829,000, respectively. Our comprehensive loss for the three and six months ended June 30, 2003 was comprised only of our net loss, and was $9,226,000 and $17,647,000, respectively. Our cumulative comprehensive loss from inception (January 17, 1989) through June 30, 2004 was comprised only of our net loss, and was $165,568,000.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION ACT OF 1995:

This report and the documents incorporated by reference herein contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this report and the documents incorporated herein by reference, the words “anticipate,” “believe,” “estimate,” “may,” “expect,” “intend,” and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements include, among others, the statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations about our:

	•	estimate of the length of time that our existing cash, cash equivalents and marketable securities, expected revenue, and interest income will be adequate to finance our operating and capital requirements;
	•	expected losses;
	•	expectations for future capital requirements;
	•	expectations for increases in operating expenses;
	•	expectations for increases in research and development, and marketing, general and administrative expenses in order to develop products, manufacture commercial quantities of reagents and products, and commercialize our technology;
	•	expectations for the development of an improved EPO, G-CSF, and subsequent proprietary drug candidates;
	•	expectations for incurring additional capital expenditures for renovations of our facilities;
	•	expectations for generating revenue; and
	•	expectations regarding new or expanded collaborations and for the performance of our existing collaboration partners regarding the development and commercialization of products incorporating our technologies.

Our actual results could differ materially from the results expressed in, or implied by, these forward-looking statements. Potential risks and uncertainties that could affect our actual results include the following:

	•	our ability to obtain the funds necessary for our operations;
	•	our ability to meet forecasted project timelines;
	•	our ability to develop commercial-scale manufacturing processes;
	•	our ability to enter into and maintain collaborative arrangements;
	•	our ability to obtain adequate sources of proteins and reagents;
	•	our ability to expand and protect our intellectual property and to operate without infringing the rights of others;
	•	our ability to develop and commercialize therapeutic proteins and to commercialize our technologies;
	•	our ability to compete successfully in an intensely competitive field;
	•	our ability to renovate our facilities as required for our operations;
	•	our ability to attract and retain key personnel; and
	•	general economic conditions.

These and other risks and uncertainties that could affect our actual results are discussed in this report and in our other filings with the Securities and Exchange Commission, particularly the section entitled “Factors Affecting The Company’s Prospects” of our Annual Report on Form 10-K filed February 17, 2004. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance, or achievements. We do not assume responsibility for the accuracy and completeness of the forward-looking statements other than as required by applicable law.

We do not undertake any duty to update after the date of this report any of the forward-looking statements in this report to conform them to actual results.

You should read this section in combination with the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2003, included in our Annual Report on Form 10-K and in our 2003 Annual Report to Stockholders.

Overview

We are a biopharmaceutical company focused on improving protein therapeutics using our proprietary technologies. Our core technologies, GlycoAdvance™ and GlycoPEGylation™, enable us to manipulate, enzymatically, the carbohydrate structures of glycoproteins, and thereby pursue the objective of improving the therapeutic profiles of proteins that have already been marketed or substantially developed. Our business strategy is to use our technologies to improve proteins for which there exists a substantial body of data demonstrating safety and efficacy. We intend to apply this strategy to next-generation products that we are developing on our own or in collaboration with others. We also expect to use our technologies, through strategic partners, to improve products of other parties.

We have incurred operating losses each year since our inception. As of June 30, 2004, we had an accumulated deficit of approximately $165.6 million. We expect additional losses in 2004 and over the next several years as we expand product research and development efforts, increase manufacturing scale-up activities and expand our intellectual property portfolio. We have financed our operations through private and public offerings of equity securities, proceeds from debt financings, and revenues from our collaborative agreements.

We believe that our existing cash, cash equivalents, and marketable securities, expected revenue from collaborations and license arrangements, and interest income should be sufficient to meet our operating and capital requirements through 2005, although changes in our collaborative relationships or our business, whether or not initiated by us, may cause us to deplete our cash, cash equivalents, and marketable securities sooner than the above estimate.

Under agreements we entered into with a bank during the three months ended March 31, 2004, we have agreed to limit our total outstanding debt to $22.0 million. As of June 30, 2004, our total outstanding debt was approximately $17.2 million. At any time after the fourth year of the ten-year loan period, or if we fail to maintain a minimum required cash and short-term investments balance of at least $22.0 million, the bank has the option to require additional collateral from us in the form of a security interest in certain cash and short-term investments, or in the form of a letter of credit, which may have the effect of requiring us to repay the outstanding loan balance to the bank. See “Financing Activities – Debt Financing Activities – Credit Agreement” in the Liquidity and Capital Resources section of this Form 10-Q for a description of the material features of this borrowing.

Liquidity and Capital Resources

Overview

We had $64,884,000 in cash, cash equivalents, and marketable securities as of June 30, 2004, compared to $53,060,000 as of December 31, 2003. The increase for 2004 was primarily attributable to net proceeds from our May 2004 equity financing, proceeds from debt financings, and cash inflows from our collaborative agreements. These sources of cash were partially offset by the use of cash to fund our operating activities, capital expenditures, and debt repayments.

The development of next-generation proprietary protein therapeutics, which we are pursuing both independently and in collaboration with selected partners, will require substantial expenditures by us and our collaborators. To finance those expenditures, we plan to continue financing our operations through private and public offerings of equity securities, proceeds from debt financings, and revenues from existing and future collaborative agreements. Because our 2004 revenues could be substantially affected by entering into new collaborations and on the financial terms of any new collaborations, we cannot estimate our 2004 revenues. Other than revenues from our existing collaborations, and any future collaborations with others, we do not expect to generate significant revenues until such time as products incorporating our technologies are commercialized, which is not expected during the next several years. We expect an additional several years to elapse before we can expect to generate sufficient cash flow from operations to fund our operating and investing requirements. Accordingly, we will need to raise substantial additional funds to continue our business activities and fund our operations beyond 2005.

Operating Activities

Cash used in operating activities was $17,892,000 and $16,771,000 for the six months ending June 30, 2004 and 2003, respectively. The net cash used in operating activities is substantially the result of our operating loss. The increase in depreciation and amortization expense over the prior year resulted primarily from the commencement of amortization of leasehold improvements that were placed in service in April 2004. During the six months ended June 30, 2004, we used cash of $987,000 to fund changes in operating assets and liabilities, primarily decreases in accrued compensation and accounts payable and an increase in prepaid expenses and other current assets. The reduction in accrued compensation during the six months ended June 30, 2004 resulted from the payment of bonuses attributable to employee service in 2003. During the six months ended June 30, 2004, prepaid expenses and other current and non-current assets increased by $856,000. This increase resulted from the annual payment of insurance premiums and maintenance agreements. Prepaid expenses fluctuate period to period depending on the timing of payment of significant annual expenditures, such as insurance premiums and maintenance contracts. In addition, we are often required to prepay contract research organizations for services prior to the initiation of work performed. These uses of cash were offset in part by an increase of $845,000 in deferred revenue. This increase was primarily due to the receipt from BioGeneriX of an upfront fee under our collaborative agreement with them. Fluctuations in operating items vary period-to-period due to, among other factors, the timing of research and development activities, such as the preparation and initiation of preclinical trials.

Investing Activities

During the six months ended June 30, 2004, we invested $7,691,000 in property, equipment, and building improvements. Of this amount, $4,935,000 was invested in leasehold improvements that are described below. In addition, we entered into capital lease obligations for equipment with an aggregate book value of $184,000, and we had accrued property and equipment of $261,000 as of June 30, 2004. We anticipate additional capital expenditures during the second half of 2004 of approximately $3.0 million. We may finance some or all of our capital expenditures through the issuance of new debt or equity. The terms of new debt could require us to maintain a minimum cash and investments balance, or to transfer cash into an escrow account to collateralize some portion of the debt, or both.

In April 2004, we occupied our leased facility in Horsham, Pennsylvania and began amortizing the costs of constructing 25,000 square feet of laboratory and office space within the facility, which totals 40,000 square feet. As of June 30, 2004, we expended $9,692,000 and accrued $174,000 of costs related to improving the facility. During the first quarter of 2004, we entered into agreements with a bank for the purpose of funding these improvements. See “Financing Activities – Debt Financing Activities – Credit Agreement” in the Liquidity and Capital Resources section of this Form 10-Q for a description of the material features of this borrowing.

Financing Activities

Equity Financing Activities

Debt Financing Activities

Our total debt increased by $6,574,000 to $17,175,000 at June 30, 2004, compared to $10,601,000 at December 31, 2003. This increase primarily resulted from $11,441,000 in proceeds from the issuance of debt during the six months ended June 30, 2004. Partially offsetting the debt proceeds were $5,051,000 of debt principal repayments during the six months ended June 30, 2004. In addition, we entered into a capital lease obligation during the six months ended June 30, 2004 for equipment with an aggregate book value of $184,000.

Term Loan

In May 2004, we borrowed $1,500,000 from the landlord of our leased facility in Horsham, Pennsylvania. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 13%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008 we will be required to make principal and interest payments totaling $483,000, $483,000, $483,000, and $443,000, respectively, under this agreement.

Credit Agreement

Equipment Loans

In March 2004, we borrowed $941,000 to finance the purchase of equipment and facility improvements, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 8.09%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008, we will be required to make principal and interest payments totaling $291,000, $291,000, $280,000, and $186,000, respectively, under this agreement.

In December 2003, we borrowed $1,201,000 to finance the purchase of equipment and facility improvements, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 8.66%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008, we will be required to make principal and interest payments totaling $366,000, $366,000, $348,000, and $189,000, respectively, under this agreement.

In September 2003, we borrowed $831,000 to finance the purchase of equipment and facility improvements, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 48 months at an interest rate of 8.35%. During the 12 months ending June 30, 2005, 2006, 2007, and 2008, we will be required to make principal and interest payments totaling $269,000, $269,000, $196,000, and $53,000, respectively, under this agreement.

In March 2003, we borrowed $2,954,000 to finance the purchase of equipment, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 42 months at an interest rate of 8.35%. During the 12 months ending June 30, 2005, 2006, and 2007, we will be required to make principal and interest payments totaling $976,000, $976,000, and $325,000, respectively, under this agreement.

In December 2002, we borrowed $2,261,000 to finance the purchase of equipment, which collateralize the amount borrowed. The terms of the financing require us to pay monthly principal and interest payments over 36 months at an interest rate of 8.0%. During the 12 months ending June 30, 2005 and 2006, we will be required to make principal and interest payments totaling $850,000 and $496,000, respectively, under this agreement.

Capital Lease Obligations

In February 2004, we entered into a capital lease obligation for equipment with a book value of $184,000, which was calculated using an assumed incremental annual borrowing rate of 8.66%. The terms of the lease require us to make monthly payments through February 2009. Under this agreement, we will be required to make lease payments totaling $46,000, $46,000, $46,000, $46,000, and $30,000 during the 12 months ending June 30, 2005, 2006, 2007, 2008, and 2009, respectively.

In September 2003, we entered into a capital lease for $354,000 of equipment. The terms of the lease required us to make an initial payment of $90,000 followed by monthly payments through September 2006. Under this agreement, we will be required to make lease payments totaling $99,000, $99,000, and $25,000 during the 12 months ending June 30, 2005, 2006,

and 2007, respectively. We also entered into a capital lease obligation during September 2003 for $60,000 of software. The terms of the lease require us to make monthly payments through September 2008. Under this agreement, we will be required to make lease payments totaling $15,000, $15,000, $15,000, $15,000, and $2,500 during the 12 months ending June 30, 2005, 2006, 2007, 2008, and 2009, respectively.

In June 2003, we entered into a capital lease for $119,000 of equipment. The terms of the lease required us to make an initial payment of $31,000 followed by monthly payments through June 2006. Under this agreement, we will be required to make lease payments totaling $37,000 and $37,000, during the 12 months ending June 30, 2005 and 2006, respectively.

In April and May 2003, we entered into capital leases for $254,000 of equipment. The terms of the leases require us to make monthly payments through April 2006. Under these agreements, we will be required to make lease payments totaling $96,000 and $76,000 during the 12 months ending June 30, 2005 and 2006, respectively.

In November 2002, we entered into a capital lease for $50,000 of equipment. The terms of the lease require us to make monthly payments over 36 months. Under this agreement, we will be required to make lease payments totaling $19,000 and $9,000 during the 12 months ending June 30, 2005 and 2006, respectively.

Summary of Contractual Obligations

A summary of our obligations to make future payments under contracts existing as of December 31, 2003 is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2003. The Liquidity and Capital Resources section of this Form 10-Q describes additional obligations from contracts entered into during the six months ended June 30, 2004.

Off-Balance Sheet Arrangements

We are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Critical Accounting Policies and Estimates

A discussion of our critical accounting policies and estimates is included in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2003. There have not been any changes or additions to our critical accounting policies during the six months ended June 30, 2004.

Results of Operations

Our net loss for the three and six months ended June 30, 2004 was $10,326,000 and $19,829,000, respectively, compared to $9,226,000 and $17,647,000 for the corresponding periods in 2003. The following section explains the changes between the reporting periods in each component of net loss.

Revenue from Collaborative Agreements

Our revenues from collaborative agreements have historically been derived from a few major collaborators. Our collaborative agreements have had some or all of the following elements: upfront fees, research and development funding, milestone revenues, and royalties on product sales. Revenues from collaborative agreements for the three and six months ended June 30, 2004 were $891,000 and $2,141,000, respectively, compared to $651,000 and $721,000 for the corresponding periods in 2003. These increases were primarily due to research and development funding under our collaboration with Novo Nordisk A/S.

We are working in collaboration with Novo Nordisk to incorporate our technology in three next-generation versions of marketed proteins, one of which is currently marketed by Novo Nordisk. Under our agreements with Novo Nordisk, we received a $4,300,000 upfront fee, and Novo Nordisk is funding our research and development activities for these three proteins.

In April 2004, we entered into an agreement with BioGeneriX AG, a company of the ratiopharm Group, to use our proprietary GlycoPEGylation technology to develop a long-acting, next-generation version of G-CSF. Under the agreement, we will pursue with BioGeneriX the development and commercialization of a next-generation G-CSF. The parties will share equally all preclinical expenses. Because we do not know which party will incur greater preclinical expenses during any given quarter, we cannot estimate whether BioGeneriX will be reimbursing us or whether we will be reimbursing BioGeneriX during each quarter of the preclinical phase. BioGeneriX will fund the entire clinical development program. If we and BioGeneriX proceed to commercialization, we will have commercial rights in the U.S., Canada, Mexico and Japan. BioGeneriX will have commercial rights in Europe and the rest of the world. Each company will receive royalties on product sales in the other company’s territory. In connection with the agreement, we received from BioGeneriX a non-refundable, upfront fee, which is being amortized to revenue over the expected performance period.

Because our 2004 revenues could be substantially affected by entering into new collaborations and on the financial terms of any new collaborations, we cannot estimate our 2004 revenues. Material cash inflows from proprietary drug development projects are highly uncertain, and we cannot reasonably estimate the period in which we will begin to receive material net cash inflows from our major research and development projects. Cash inflows from development-

stage products are dependent on several factors, including entering into collaborative agreements, the achievement of certain milestones, and regulatory approvals. We may not receive milestone payments from any existing or future collaborations if a development-stage product fails to meet technical or performance targets or fails to obtain the required regulatory approvals. Further, our revenues from collaborations will be affected by the levels of effort committed and made by our collaborative partners. Even if we achieve technical success in developing drug candidates, our collaborative partners may discontinue development, may not devote the resources necessary to complete development and commence marketing of these products, or they may not successfully market potential products.

Research and Development Expense

In January 2003, we announced the selection of an improved erythropoietin (EPO) as the target for our first proprietary drug development project. EPO is prescribed to stimulate production of red blood cells, and is approved for sale in major markets around the world for the treatment of anemia associated with oncology chemotherapy, end stage renal disease, and chronic renal insufficiency. Based on proof-of-concept data, we believe it is feasible to develop a long- acting EPO through GlycoPEGylation. During 2004, we are planning to continue various preclinical development activities.

In October 2003, we announced the selection of an improved granulocyte colony stimulating factor (G-CSF) as the target for our second proprietary drug development project. G-CSF is prescribed to stimulate production of neutrophils (a type of white blood cell), and is approved for sale in major markets around the world for treatment of neutropenia associated with oncology chemotherapy. Based on proof-of-concept data, we believe it is feasible to develop a long-acting G-CSF through GlycoPEGylation. During 2004, we are planning to continue various preclinical development activities with our partner, BioGeneriX.

We are also conducting exploratory research, both independently and with collaborators, to identify proteins that are likely candidates for development using our technologies, which may be advanced for development through our own proprietary drug program or through our partnering and licensing program. We are continuing some work on the development of our other programs, including new applications of our GlycoPEGylation and GlycoConjugation technologies.

Our current research and development projects are divided between two categories: (i) GlycoAdvance and GlycoPEGylation and (ii) Other Glycotechnology Programs, which includes projects investigating other applications of our intellectual property. We are exploring the most cost-effective means of continuing some of the projects classified as Other Glycotechnology Programs. The following chart sets forth our projects in each of these categories and the stage to which each has been developed:

	Development Stage	*Status*

GlycoAdvance and GlycoPEGylation
Improved erythropoietin	Preclinical	Active
Improved granulocyte colony stimulating factor	Preclinical	Active
Other protein projects	Research	Active
Other Glycotechnology Programs
Non-protein therapeutic applications	Research	Active
Nutritional applications	N/A	Evaluating outlicensing opportunities

The process of bringing drugs from the preclinical research and development stage through Phase I, Phase II, and Phase III clinical trials to FDA approval is time consuming and expensive. Because our announced product candidates are currently in the preclinical stage and there are a variety of potential intermediate clinical and non-clinical outcomes that are inherent in drug development, we cannot reasonably estimate either the timing or costs we will incur to complete these research and development projects. In addition, the timing and costs to complete our research and development projects will be affected by the timing and nature of any collaboration agreements we may enter into with a third party, neither of which we can currently estimate.

For each of our research and development projects, we incur both direct and indirect expenses. Direct expenses include salaries and other costs of personnel, raw materials, and supplies for each project. We may also incur third-party costs related to these projects, such as contract research and manufacturing, consulting, and preclinical development costs. Indirect expenses include depreciation expense and the costs of operating and maintaining our facilities, property, and equipment, to the extent used for our research and development projects, as well as the costs of general management of our research and development projects.

Our research and development expenses were $7,788,000 and $15,666,000 for the three and six months ended June 30, 2004, respectively, and $6,664,000 and $12,284,000 for the comparable 2003 periods. We expect our research and development expenses to be significantly greater in 2004 than they were in 2003 primarily due to development and preclinical activities we plan to conduct during the year, including process development and pilot plant activities associated with our proprietary drug development programs. The following table illustrates research and development expenses incurred during 2003 and 2004 in each period for our significant groups of research and development projects (in thousands).

	Three months ended June 30,				Six months ended June 30,

	2003		2004		2003		2004

GlycoAdvance, GlycoPEGylation and GlycoConjugation	$	2,483	$	3,326	$	4,319	$	6,868
Other Glycotechnology Programs		250		56		384		122
Indirect expenses		3,931		4,406		7,581		8,676

	$	6,664	$	7,788	$	12,284	$	15,666

GlycoAdvance, GlycoPEGylation, and GlycoConjugation

Our GlycoAdvance, GlycoPEGylation and GlycoConjugation expenses result primarily from the development and preclinical activities, including process development and pilot plant activities, associated with our proprietary drug development programs. These expenses increased during the 2004 periods, compared to 2003, primarily due to hiring of additional employees and increased purchases of outside services, including preclinical studies, associated with our proprietary drug development programs.

Other Glycotechnology Programs

Research and development expenses related to our Other Glycotechnology Programs decreased during the 2004 periods, compared to 2003, consistent with our decision to focus our resources on our GlycoAdvance, GlycoPEGylation, and GlycoConjugation programs.

Indirect expenses

Our indirect research and development expenses increased during the 2004 periods, compared to 2003, primarily due to increases related to additional personnel, depreciation of capital expenditures, and operating an additional facility.

Marketing, General and Administrative Expense

Marketing, general and administrative expenses for the three and six months ended June 30, 2004 were $3,324,000 and $6,186,000, respectively, compared to $3,197,000 and $6,201,000 for the corresponding periods in 2003. The increase for the three months ended June 30, 2004 was primarily due to higher patent legal expenses. These costs were partially offset by savings in salary and other personnel-related costs as well as lower marketing costs. The decrease for the six months ended June 30, 2004 compared to the corresponding period in 2003 was primarily due to savings in salary and other personnel-related costs, as well as lower marketing costs. These savings were partially offset by higher patent filing fees during the 2004 period. During 2004, we expect our marketing, general and administrative expenses to increase by less than 10% over 2003.

Interest Income and Expense

Interest income for the three and six months ended June 30, 2004 was $131,000 and $236,000, respectively, compared to $147,000 and $317,000 for the corresponding periods in 2003. The decreases during the 2004 periods primarily resulted from lower interest rates.

Interest expense for the three and six months ended June 30, 2004 was $236,000 and $354,000, respectively, compared to $163,000 and $200,000 for the corresponding periods in 2003. The increases in the 2004 periods were due to higher average debt balances. Partially offsetting the increases during the three and six months ended June 30, 2004 was $91,000 and $131,000, respectively, of interest that was capitalized during the construction of improvements to our leased facility in Horsham, Pennsylvania. See “Investing Activities” in the Liquidity and Capital Resources section of this Form 10-Q for a description of those improvements. During the three and six months ended June 30, 2003, we capitalized interest of $15,000 and $0, respectively. We expect our interest expense during 2004 to increase compared to 2003 primarily due to the issuance of new debt. See “Financing Activities – Debt Financing Activities” in the Liquidity and Capital Resources section of this Form 10-Q for a description of the material features of our debt financings.

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

Our holdings of financial instruments are comprised primarily of money market securities and one government agency security, which is classified as a held-to-maturity security. Our market risk exposure consists principally of exposure to changes in interest rates. Our holdings are also exposed to the risks of changes in the credit quality of issuers. We typically invest in the shorter-end of the maturity spectrum. As of June 30, 2004, we held $5.0million in an obligation of a U.S. government agency with an original maturity of 347 days. The balance of our investment portfolio was held in money market securities. The approximate principal amount of our investment portfolio as of June 30, 2004 was $64.9 million. The annualized weighted-average interest rate earned on our portfolio during the six months ended June 30, 2004 was approximately 0.9%.

We have exposure to changing interest rates on our tax-exempt bonds and variable rate bank debt, and we are currently not engaged in hedging activities. Interest on approximately $9.0 million of outstanding indebtedness is at an interest rate that varies quarterly, depending on changes in the 90-day LIBOR. During the six months ended June 30, 2004, the annualized weighted-average, interest rate on this debt was approximately 4.0%.

Item 4.

Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for financial reporting as of June 30, 2004. Based on that evaluation, our principal executive officer and principal financial officer concluded that these

controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported as specified in Securities and Exchange Commission rules and forms. There were no changes in these controls or procedures identified in connection with the evaluation of such controls or procedures that occurred during our last fiscal quarter, or in other factors that have materially affected, or are reasonably likely to materially affect, these controls or procedures.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. These disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Our internal controls and procedures for financial reporting are designed to provide reasonable assurance, and management believes that they provide such reasonable assurance, that our transactions are properly authorized, our assets are safeguarded against unauthorized or improper use, and our transactions are properly recorded and reported, in order to permit the preparation of our financial statements in conformity with generally accepted accounting principles.

Our management group, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and internal controls and related procedures will prevent all error and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable assurance that the objectives of the control system are met. In addition, the design and implementation of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered in relation to their costs. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events, which may prove to be incorrect. Due to the limitations of all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within an organization have been detected or prevented.

PART II.	OTHER INFORMATION

Item 4.	Submission of Matters to a Vote of Security Holders

A.	Our Annual Meeting of Stockholders was held on May 6, 2004.

B.	The motions before stockholders were:

	1.	To elect nine Directors.

Name of Director	Votes For		Votes Against		Votes Withheld		Abstentions		Broker Nonvotes

C. Boyd Clarke		17,663,654		—		447,905		—		—
Brian H. Dovey		17,619,987		—		491,572		—		—
L. Patrick Gage, Ph.D.		17,640,099		—		471,460		—		—
William F. Hamilton, Ph.D.		17,626,754		—		484,805		—		—
Douglas J. MacMaster, Jr.		17,640,499		—		471,060		—		—
Mark H. Rachesky, M.D.		16,185,548		—		1,926,011		—		—
Stephen A. Roth, Ph.D.		17,659,440		—		452,119		—		—
Lowell E. Sears		17,626,654		—		484,905		—		—
Elizabeth H. S. Wyatt		17,639,999		—		471,560		—		—

To ratify the appointment of KPMG LLP as our independent auditors for fiscal 2004.

	Votes For			17,992,842
	Votes Against			64,715
	Votes Withheld			—
	Abstentions			54,002
	Broker Nonvotes			—

To approve an amendment to our certificate of incorporation to increase the number of shares of common stock authorized to be issued by Neose from 30 million to 50 million.

	Votes For			17,231,117
	Votes Against			867,822
	Votes Withheld			—
	Abstentions			12,620
	Broker Nonvotes			—

To adopt our 2004 Equity Incentive Plan.

	Votes For			11,150,619
	Votes Against			2,310,133
	Votes Withheld			—
	Abstentions			16,015
	Broker Nonvotes			—

Item 6.	Exhibits and Reports on Form 8-K.

	(a)	List of Exhibits:

		3.1 Third Amended and Restated Certificate of Incorporation of the Company.(1)

		10.5 Research, Co-Development and Commercialization Agreement between BioGeneriX AG and the Company dated April 20, 2004.*#

		10.6 Research, Development and License Agreement between the Company and MacroGenics, Inc. dated April 26, 2004.*#

		10.7 First Amendment to Agreement of Lease between Liberty Property Limited Partnership and the Company dated May 18, 2004.*

		10.8 Promissory Note of the Company to Liberty Property Limited Partnership dated May 7, 2004.*

		10.9 Neose Technologies, Inc. 2004 Equity Incentive Plan.(2)

		31.1 Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

		31.2 Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

		32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

		32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*


	*	Filed herewith.
	#	Portions of this Exhibit were omitted and filed separately with the Secretary of the SEC pursuant to a request for confidential treatment that has been filed with the SEC.
	(1)	Filed as Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on May 14, 2004 and incorporated herein by reference.
	(2)	Filed as an Appendix C to our Proxy Statement filed with the SEC on April 2, 2004 and incorporated herein by reference.

(b)	Reports on Form 8-K:

	On April 20, 2004, we filed a Current Report on Form 8-K announcing an agreement to develop a next-generation G-CSF.

		On April 20, 2004, we filed a Current Report on Form 8-K announcing updated timing for our GlycoPEG-EPO IND filing.

		On April 26, 2004, we filed a Current Report on Form 8-K announcing an agreement with MacroGenics, Inc.

		On April 28, 2004, we furnished a Current Report on Form 8-K announcing that we had issued a press release reporting our financial results for the first quarter of 2004.

		On May 14, 2004, we filed a Current Report on Form 8-K announcing our Third Amended and Restated Certificate of Incorporation and providing a current description of our capital stock.

		On May 19, 2004, we filed a Current Report on Form 8-K announcing that we had entered into subscription agreements to sell shares of common stock in a registered direct offering.

		On May 21, 2004, we filed a Current Report on Form 8-K announcing the closing of our registered direct offering.

SIGNATURES

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

	NEOSE TECHNOLOGIES, INC.


Date: August 5, 2004	By:	/s/ ROBERT I. KRIEBEL

		Robert I. Kriebel Senior Vice President and Chief Financial Officer (Principal Financial Officer and Duly Authorized Signatory)

EX-99 3 ne907875ex105.htm EXHIBIT 105

EXHIBIT 10.5

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION

RESEARCH, CO-DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT

between

BIOGENERIX AG

and

NEOSE TECHNOLOGIES, INC.

April 20, 2004

Table of Contents

			Page

1.	Definitions		1

	1.1.	“Affiliate”	1
	1.2.	“Allowable Costs”	1
	1.3.	“BioGeneriX”	2
	1.4.	“BioGeneriX Decision Date”	2
	1.5.	“BioGeneriX Technology”	2
	1.6.	“BioGeneriX Territory”	2
	1.7.	“BLA”	2
	1.8.	“Calendar Quarter”	2
	1.9.	“Clinical Development”	2
	1.10.	“CMO”	2
	1.11.	“Collaboration”	2
	1.12.	“Collaboration Leader”	2
	1.13.	“Commercialization”	3
	1.14.	“Commercial Product”	3
	1.15.	“Confidential Information”	3
	1.16.	“Continuing Licensee”	3
	1.17.	“Continuing Licensee Effective Date”	3
	1.18.	“Continuing Licensor”	3
	1.19.	“Development Product”	3
	1.20.	“Effective Date”	3
	1.21.	“EMEA”	3
	1.22.	“Exchange Act”	3
	1.23.	“FDA”	3
	1.24.	“Field”	3
	1.25.	“G-CSF”	3
	1.26.	“GMP”	4
	1.27.	“GMP Grade”	4
	1.28.	“HSR Act”	4
	1.29.	“IND”	4
	1.30.	“Joint Project Team”	4
	1.31.	“Joint Technology”	4
	1.32.	“Manufacturing Information”	4
	1.33.	“****”	4
	1.34.	“Neose”	4
	1.35.	“Neose **** Development Program”	4
	1.36.	“Neose Technology”	4
	1.37.	“Neose Territory”	5
	1.38.	“Net Sales”	5
	1.39.	“Next Generation G-CSF”	5
	1.40.	“Preclinical Development”	5
	1.41.	“Pricing Approval”	5
	1.42.	“Product”	5
	1.43.	“Reasonable Commercial Efforts”	5
	1.44.	“Regulatory Approval”	5
	1.45.	“Regulatory Standards”	5
	1.46.	“Specifications”	6
	1.47.	“Territory”	6

**** Material has been omitted and filed separately with the Commission.

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	1.48.	“Third Party Licenses”	6
	1.49.	“Trademark”	6

2.	Purpose and Structure of the Collaboration		6

	2.1.	Purpose	6
	2.2.	Exclusivity	6
	2.3.	Collaboration Structure	7

3.	Management of the Collaboration		7

	3.1.	Collaboration Leaders	7
	3.2.	Collaboration Communications and Records	7
	3.3.	Establishment and Responsibilities of Joint Project Team	8
	3.4.	Action by Joint Project Team	8
	3.5.	Changes to Joint Project Team	8
	3.6.	Meetings	8
	3.7.	No Waiver	9

4.	Initial Payment		9

5.	Preclinical Development		9

	5.1.	Project Planning	9
	5.2.	Preclinical Development	9
	5.3.	Third Party Licenses	10
	5.4.	Funding of Preclinical Development	10

6.	Clinical Development		11

	6.1.	Planning and Initiation	11
	6.2.	Responsibilities	11
	6.3.	Additional Clinical Studies Conducted in Neose Territory.	12
	6.4.	Ownership of Clinical Trial Data and Regulatory Dossiers	13
	6.5.	Third Party Licenses	13
	6.6.	Funding of Clinical Development	13

7.	Commercialization		13

	7.1.	Planning and Oversight	13
	7.2.	Co-Marketing.	14
	7.3.	BioGeneriX Territory	15
	7.4.	Neose Territory	16

8.	Regulatory Compliance		18

	8.1.	Establishment Licenses	18
	8.2.	Regulatory and Pricing Approvals	18
	8.3.	Diligence	18
	8.4.	Territory Adjustments	18

9.	Manufacturing of Products		19

	9.1.	Facilities	19
	9.2.	Warranties and Limitations	19
	9.3.	Quality Assurance	20
	9.4.	Process Modifications	20
	9.5.	Facility Audit and Inspections	20
	9.6.	Supply Shortages	20
	9.7.	Default in Supply Obligation	20
	9.8.	Manufacturing Licenses	21
.	9.9	Deposit of Biological Materials	21

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10.	Trademarks		21

	10.1.	Approval and Maintenance	21
	10.2.	Ownership and Use	21
	10.3.	No Adverse Actions	22

11.	Labeling		22

12.	Certain Regulatory Matters		22

	12.1.	Meetings with Government Agencies	22
	12.2.	Governmental Inspection	22
	12.3.	Government Inquiries	22
	12.4.	Adverse Reactions	23
	12.5.	Recalls and Market Withdrawals	23
	12.6.	Compliance with Law	23

13.	Licenses and Intellectual Property Matters		23

	13.1.	Cross Licenses During Development	23
	13.2.	Licenses During Commercialization	23
	13.3.	Retained Rights	24
	13.4.	Inventions	24
	13.5.	Intellectual Property Protections	24

14.	Intellectual Property Claims		25

	14.1.	Defense Proceedings	25
	14.2.	Third Party Infringements	25
	14.3.	Settlement of Claims	25
	14.4.	Allocation of Awards	25
	14.5.	Cooperation	25

15.	Payments		26

	15.1.	Place of Payment	26
	15.2.	Currency Conversion	26
	15.3.	Late Payments	26

16.	Books, Records and Accounting		26

	16.1.	Maintenance of Records	26
	16.2.	Access and Inspection	26

17.	Confidentiality.		26

	17.1.	Obligations of Receiving Party	26
	17.2.	Injunctive Relief	27

18.	Certain Representations, Warranties and Covenants		27

19.	No Inconsistent Agreements		28

20.	Disclaimer, Indemnification and Insurance		28

	20.1.	No Warranty	28
	20.2.	Defense of Claims	28
	20.3.	Indemnity	29
	20.4.	Procedures for Indemnification	29
	20.5.	Settlements	29
	20.6.	Limitation of Liability	29
	20.7.	Insurance	29

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21.	Publications		30

	21.1.	Public Announcement of Agreement	30
	21.2.	Other Publicity	30

22.	Standstill		30

23.	Dispute Resolution		31

	23.1.	By Senior Officers	31
	23.2.	Arbitration	31

24.	Term and Termination		31

	24.1.	Term	31
	24.2.	Termination Upon ****	32
	24.3.	Termination for ****	32
	24.4.	Termination for ****	32
	24.5.	Termination Upon Breach	33
	24.6.	Partial Termination	33
	24.7.	Effective Date of Termination	33
	24.8.	Rights and Obligations on Termination	34
	24.9.	****.	35
	24.10.	Termination Fee	35
	24.11.	Survival	35
	24.12.	Remedies Not Exclusive	36

25.	Certain Taxes		36

	25.1.	Withholding Taxes and VAT	36
	25.2.	Evidence of Payment and Assistance	36

26.	Governmental Approval		36

	26.1.	HSR Filing	36
	26.2.	Obligations	36
	26.3.	Additional Approvals	37
	26.4.	Termination	37

27.	Miscellaneous		37

	27.1.	Entire Agreement	37
	27.2.	Headings; Definitions	37
	27.3.	Force Majeure	37
	27.4.	No Interference with Existing Businesses	38
	27.5.	Waiver	38
	27.6.	No Assignment	38
	27.7.	Severability	38
	27.8.	Notices	38
	27.9.	Choice of Law	39
	27.10.	Counterparts	39

_______________________

**** Material has been omitted and filed separately with the Commission.

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RESEARCH, CO-DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

This RESEARCH, CO-DEVELOPMENT AND COMMERCIALIZA-TION AGREEMENT, dated as of April 20, 2004 (“Agreement”), is made by and between BIOGENERIX AG, a corporation organized under the laws of the Federal Republic of Germany (“BioGeneriX”), and NEOSE TECHNOLOGIES, INC., a Delaware corporation (“Neose”). BioGeneriX and Neose are sometimes referred to herein, individually, as a “party” and, collectively, as the “parties.”

BACKGROUND

A. Each of BioGeneriX and Neose possesses certain intellectual property rights relating to the development of a Next Generation G-CSF.

B. BioGeneriX and Neose have development programs relating to a Next Generation G-CSF.

C. Neose and BioGeneriX believe that a joint development program that optimizes the contributions of each of Neose and BioGeneriX will accelerate the beneficial application of a Next Generation G-CSF to address important unmet needs for improved therapeutic products and will be in their mutual and individual best interests.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound hereby, the parties agree as follows:

1. Definitions. As used in this Agreement, the following capitalized terms shall have the meanings set forth below.

1.1. “Affiliate” means any individual or entity directly or indirectly controlling, controlled by or under common control with, a party to this Agreement. Without limiting the foregoing, the direct or indirect ownership of over 50% of the outstanding voting securities of an entity, or the right to receive over 50% of the profits or earnings of an entity, shall be deemed to constitute control.

1.2. “Allowable Costs” means: (i) with respect to all activities other than those covered by clause (ii) or (iii) of this Section 1.2, the costs that are incurred in accordance with and limited by a budget approved by the Joint Project Team; (ii) with respect to supply of Products or chemicals and enzymes purchased by a party from a third party, the invoice price of such Products or chemicals and enzymes to the purchasing party; and (iii) with respect to the supply of Products or chemicals and enzymes manufactured by a party, the fully burdened, fairly allocated internal costs of the supplying party in connection with the manufacture, testing and storage of such reagents or Products, including reasonable and customary allocations of overhead expense and charges in the nature of depreciation and amortization of capitalized cost, and out-of-pocket expenses, to the extent any of the foregoing shall have been incurred by the respective party in accordance with United States generally accepted accounting principles, consistently applied by such party.

1.3. “BioGeneriX” means BioGeneriX.

1.4. “BioGeneriX Decision Date” means the first date on which **** shall have been completed, as reasonably determined and formally stated by the Collaboration Leaders.

1.5. “BioGeneriX Technology” means any existing or future (i) patent application or issued patent owned or controlled by BioGeneriX in the Territory relating to the development or manufacture of G-CSF, including any addition, continuation, continuation-in-part, division, extension or renewal thereof, (ii) know-how, trade secrets, technical information, formulae, processes and data owned or controlled by BioGeneriX that relate to the composition, design, remodeling, development, manufacture or use of a Product, including, without limitation, preclinical and clinical results, (iii) the rights of BioGeneriX in and to any Trademark, and (iv) all rights of BioGeneriX in and to Joint Technology related to the Product; in each case, to the extent BioGeneriX has the right to license or sublicense any such right to Neose.

1.6. “BioGeneriX Territory” means all countries of the world except the United States, Canada, Mexico and Japan.

1.7. “BLA” means a Biologics License Application (or any successor application) filed with the FDA with respect to a Development Product, or any comparable filing made with a regulatory authority outside the United States.

1.8. “Calendar Quarter” means each three-month period beginning on January 1, April 1, July 1 and October 1 of each year.

1.9. “Clinical Development” means the clinical development activities described in Section 6.

1.10. “CMO” means a third-party contractor mutually agreed upon by the parties to **** the **** for the Collaboration under a contract between such third-party contractor and BioGeneriX.

1.11. “Collaboration” means the business of developing and commercializing a Product within the Territory, whether conducted directly by Neose or BioGeneriX or jointly by Neose and BioGeneriX.

1.12. “Collaboration Leader” means the person designated from time to time by BioGeneriX or Neose, as the case may be, to manage its participation in the Collaboration and to facilitate the efficient operation of the Collaboration, as provided in Section 3.1.

**** Material has been omitted and filed separately with the Commission.

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1.13. “Commercialization” means the activities conducted following Regulatory Approval in any country in the Territory, as described in Section 7.

1.14. “Commercial Product” means any Development Product that has received all Regulatory Approvals and any Pricing Approvals required to be obtained prior to marketing and selling such product in any country in the Territory.

1.15. “Confidential Information” has the meaning set forth in Section 17.

1.16. “Continuing Licensee” means a party that has duly elected such status under any provision of this Agreement and thereby has the rights and obligations of a Continuing Licensee under Section 24.

1.17. “Continuing Licensee Effective Date” means the later of (i) the date a party duly elects to become a Continuing Licensee under this Agreement, or (ii) if notification is required to be made under the HSR Act with respect to the rights to be granted to a Continuing Licensee, the expiration or earlier termination of any notice and waiting period under the HSR Act.

1.18. “Continuing Licensor” means the party that becomes a Continuing Licensor as a result of the other party duly electing the status of Continuing Licensee, each having the rights and obligations provided under Section 24.

1.19. “Development Product” means a Next Generation G-CSF, whether alone or in combination with another active ingredient, in development under this Agreement.

1.20. “Effective Date” means the date of execution of this Agreement by both parties.

1.21. “EMEA” means the European Agency for the Evaluation of Medicinal Products.

1.22. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

1.23. “FDA” means the U.S. Food and Drug Administration.

1.24. “Field” means the development of Development Products and commercialization of Commercial Products.

1.25. “G-CSF” means a molecule having an **** to the first generation G-CSF products.

**** Material has been omitted and filed separately with the Commission.

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1.26. “GMP” means the applicable and required Good Manufacturing Practice regulations of the FDA and EMEA.

1.27. “GMP Grade” means production of a Product in accordance with the Regulatory Standards and the process and procedures described in the Manufacturing Information.

1.28. “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

1.29. “IND” means an application for an Investigational Exemption for a New Drug filed with the FDA, or any comparable filing made with a regulatory authority outside the United States.

1.30. “Joint Project Team” means the team established pursuant to Section 3.3, or any successor group appointed by the parties.

1.31. “Joint Technology” means any invention or discovery, whether or not patentable that (i) during the Collaboration is made jointly by one or more employees of Neose and one or more employees of BioGeneriX, or (ii) would be deemed jointly owned by Neose and BioGeneriX in accordance with the U.S. patent laws.

1.32. “Manufacturing Information” means all chemistry, formulation, manufacturing, quality control and other information required to be included in an IND or BLA.

1.33. “****” means a molecule having ****.

1.34. “Neose” means Neose and any Affiliate thereof.

1.35. “Neose ****” means the research program of Neose that is conducted **** and directed toward the development and commercialization of a ****.

1.36. “Neose Technology” means any existing or future (i) patent application or issued patent owned or controlled by Neose in the Territory relating to glycosylation design or remodeling of recombinant proteins and products made using any of Neose’s GlycoAdvance™, GlycoPEGylation™ and GlycoConjugation™ technologies, including any addition, continuation, continuation-in-part, division, extension or renewal thereof, (ii) know-how, trade secrets, technical information, formulae, processes and data owned or controlled by Neose which relate to the composition, design, remodeling, development, manufacture or use of the Product, including, without limitation, preclinical and clinical results, (iii) the rights of Neose in and to GlycoAdvance™,

**** Material has been omitted and filed separately with the Commission.

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GlycoPEGylation™ and GlycoConjugation™ and any other Trademark, and (iv) all rights of Neose in and to Joint Technology related to a Product; in each case, to the extent Neose has the right to license or sublicense any such right to BioGeneriX.

1.37. “Neose Territory” means the United States, Canada, Mexico and Japan.

1.38. “Net Sales” means the invoiced price of a Commercial Product charged to an unaffiliated end user in the Territory (i.e., a third party whose use is intended to result in the consumption or destruction of the Commercial Product), net of returns and rejections, and after deducting, to the extent charged or credited to the purchaser and identified on the invoice or other documentation related to the sale, any sales or similar taxes, packaging charges, freight, insurance, trade and quantity discounts and allowances, rebates and commissions.

1.39. “Next Generation G-CSF” means a molecule developed by the parties under this Agreement using G-CSF and the Neose Technology, which molecule has one or more improved or altered pharmacodynamic/pharmacokinetic characteristics compared to G-CSF.

1.40. “Preclinical Development” means the preclinical development activities of the Collaboration described in Section 5.

1.41. “Pricing Approval” means any pricing or third party reimbursement approval required for the marketing of a Commercial Product in any country in the Territory.

1.42. “Product” means a Development Product or Commercial Product.

1.43. “Reasonable Commercial Efforts” with respect to a party’s obligation under this Agreement will be deemed satisfied if the party exercises at least the same level of effort to perform such obligation as is customarily exercised by similarly situated parties developing or commercializing their own pharmaceutical products of like potential, with the party having such contractual obligation also having the burden of proof in the event of a dispute over its performance.

1.44. “Regulatory Approval” means any marketing authorization (including authorizations approving a BLA) required for a Development Product in the Territory, exclusive of Pricing Approvals.

1.45. “Regulatory Standards” means (i) the applicable facility license requirements and the GMP regulations of the FDA and EMEA applicable to the manufacturing facility for, or the production, storage or handling of, Products, and (ii) any standards of any governmental authority, whether within or outside the United States (including, without limitation, the Environmental Protection Agency, OSHA and state and local authorities), that apply to the manufacturing facility for, or the production, storage or handling of, Products.

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1.46. “Specifications” means the manufacturing, quality control, packaging, labeling, shipping and storage specifications for each Product, to be agreed to by the parties in writing and made a part of this Agreement as Exhibit A, as amended from time to time by agreement of the parties. All Commercial Products shall be supplied under this Agreement in final, finished and packaged form suitable for end use.

1.47. “Territory” means the world.

1.48. “Third Party Licenses” means the licenses of third-party intellectual property rights a party deems necessary or desirable for the performance of its obligations under this Agreement.

1.49. “Trademark” means any trademark, tradename or trade dress designated in writing by the parties for use with a Product anywhere in the Territory, whether pending, allowed or registered.

2. Purpose and Structure of the Collaboration

2.1. Purpose. The purpose of the Collaboration is to conduct development, manufacturing and commercialization activities related to Products, and to seek Regulatory Approval of Development Products in the Territory.

2.2. Exclusivity

2.2.1. Exclusive Relationship. The parties shall work exclusively with each other, under this Agreement, on the development, manufacturing and commercialization of a Next Generation G-CSF, whether alone or in combination with any other active ingredient; provided, however, that at all times during the term of this Agreement, ****, shall be entitled to pursue work ****. Except as provided in the preceding sentence, the parties will not, directly or indirectly, pursue the development, manufacturing or commercialization of any products containing any improved G-CSF, whether alone or in combination with any other active ingredient, except through the Collaboration under this Agreement.

2.2.2. Right of First Offer.. If BioGeneriX or Neose develops any drug delivery technologies which may be used with various drug substances, including Products, to the extent that BioGeneriX or Neose, as the case may be, is entitled to do so, it shall offer to the other party such drug delivery technologies for use with Products by the Collaboration upon commercially reasonable terms.

2.2.3. Compensation in Case of Commercialization of **** in Neose Territory. Prior to any commercial sale of a **** in the Neose Territory, the

**** Material has been omitted and filed separately with the Commission.

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parties shall have agreed upon commercially reasonable terms under which Neose shall be obligated to compensate BioGeneriX for the loss of royalties on Net Sales in the Neose Territory that is reasonably projected by the parties to occur as a result of the commercialization of the **** in the Neose Territory during the remaining term of this Agreement.

2.2.4. BioGeneriX Option. BioGeneriX shall have an exclusive option to market and distribute in the BioGeneriX Territory any **** during the Term, upon reasonable terms and conditions mutually agreed upon by the parties. BioGeneriX may exercise such option by notice to Neose. Promptly following such exercise, the parties shall negotiate, in good faith, an agreement setting forth the terms and conditions of their ****. If the parties cannot reach agreement on such terms and conditions within one hundred and twenty (120) days following the exercise of such option by BioGeneriX, the option shall expire.

2.3. Collaboration Structure. The Collaboration will consist of three parts, to be conducted in series, as follows:

2.3.1. Preclinical Development conducted by the parties, as described in Section 5;

2.3.2. Clinical Development conducted by the parties, as described in Section 6; and

2.3.3. Commercialization conducted by the parties, as described in Section 7.

3. Management of the Collaboration

3.1. Collaboration Leaders. The Collaboration shall be conducted directly by BioGeneriX and Neose. Each party shall appoint a Collaboration Leader to oversee the management of the Collaboration, maintain communication with the Collaboration Leader for the other party, and facilitate the efficient operation of the Collaboration. The initial Collaboration Leaders are: (i) for BioGeneriX, ****; and (ii) for Neose, ****. A party may designate a new Collaboration Leader at any time, and from time to time, by notice to the other party.

3.2. Collaboration Communications and Records. It is anticipated that there will be multiple levels of communication relating to the Collaboration among employees of BioGeneriX and employees of Neose. Each Collaboration Leader will be responsible for maintaining appropriate records of the deliberations and decisions relating to the Collaboration. A Collaboration Leader may sign any notice or approval on behalf

**** Material has been omitted and filed separately with the Commission.

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of the party that appointed the Collaboration Leader, subject to any other signing requirements of such party and in conformity with this Agreement. Until further notice, a party may rely on any notice or approval signed by the Collaboration Leader for the other party.

3.3. Establishment and Responsibilities of Joint Project Team. Promptly following the Effective Date, the parties will establish a Joint Project Team to plan and monitor the activities of Preclinical Development, Clinical Development and Commercialization, to carry out all other obligations assigned to it under this Agreement or by the Collaboration Leaders, and to make recommendations to the Collaboration Leaders with respect to its activities. In particular, from and after the Effective Date, the Joint Project Team shall be responsible for (i) preparing, reviewing and approving budgets for Preclinical Development and Clinical Development, which shall specify, among other things, the responsibilities of and Allowable Costs for each party, (ii) planning and monitoring Preclinical Development, (iii) establishing success criteria for the Development Product, (iv) coordinating and monitoring the planning and execution of Clinical Development to ensure that clinical trial data is of the form and quality appropriate for submission to European, United States and Japanese regulatory authorities, (v) planning and coordinating post-marketing approval studies, and (vi) such other activities as may be assigned to it by the Collaboration Leaders. If the Joint Project Team does not reach a decision, the matter will be resolved in accordance with Section 23.1.

3.4. Action by Joint Project Team. The Joint Project Team shall consist of such number of members and alternate members as the parties may determine from time to time. Each party shall appoint 50% of the permanent and alternate members of the Joint Project Team. The members of the Joint Project Team shall include members of senior management of each party. The members of the Joint Project Team representing a party and present at a meeting shall have one vote, collectively. No action may be taken at a meeting of the Joint Project Team unless each party is represented by at least one member.

3.5. Changes to Joint Project Team. Each party may remove and replace its representatives on the Joint Project Team at any time, without cause, upon written notice to the other party. An alternate member designated by a party shall be entitled to participate in the absence of a permanent member designated by such party. All references to “members” in this Agreement refer to the then permanent members of the Joint Project Team and any alternate member acting in the place of a permanent member.

3.6. Meetings. Regular meetings of the Joint Project Team shall be scheduled by the Collaboration Leaders. Special meetings of the Joint Project Team may be called by the Collaboration Leaders or by any two or more members, at least one of whom represents each party. Meetings may be in person or by teleconference or videoconference, and notice of meetings may be by email. Each party will bear its own costs in connection with the coordination of the Collaboration and the Joint Project Team.

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3.7. No Waiver. No action nor any failure to act by the Joint Project Team shall alter, amend, waive or otherwise affect the obligations of the parties under this Agreement.

4. Initial Payment. Upon the execution and delivery of this Agreement, BioGeneriX shall pay to Neose a nonrefundable fee of ****, to compensate Neose for a portion of the research and development activities performed by Neose prior to the execution date.

5. Preclinical Development

5.1. Project Planning. Promptly after the Effective Date, the Joint Project Team will coordinate the planning and execution of the plan and schedule for Preclinical Development, and shall approve the budget for Preclinical Development. The Joint Project Team shall endeavor to ensure that the data from the preclinical studies of the Development Product will be suitable for use in applications for Regulatory Approvals in Europe and the United States (and, to the extent practicable, in the rest of the world), and shall perform its duties under the Agreement throughout the remainder of the Collaboration.

5.2. Preclinical Development. The responsibilities of the parties during the period of Preclinical Development shall include, among other things, the following:

5.2.1. BioGeneriX shall be responsible for developing the manufacturing process for the protein drug substance for the Development Product, **** and BioGeneriX shall use Reasonable Commercial Efforts to supply to Neose sufficient quantities of the Development Product drug substance, for remodeling by Neose using the Neose Technology, to produce the Development Product for preclinical studies, in each case, at the sole cost and expense of BioGeneriX.

5.2.2. Neose shall use Reasonable Commercial Efforts to develop processes for the large-scale production under GMP of the chemicals and enzymes covered by the Neose Technology.

5.2.3. BioGeneriX and Neose shall undertake the process development activities required for the GMP manufacturing of the Development Product, including, without limitation, analytical methods and formulation development activities required for the development of the Development Product.

5.2.4. Neose shall use Reasonable Commercial Efforts to produce the Development Product in sufficient quantities for preclinical studies pursuant to any INDs.

**** Material has been omitted and filed separately with the Commission.

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5.2.5. The parties shall work together with a view to ensuring that the entire process for the development, manufacturing and formulating of the Development Product, and the use of the Product, **** BioGeneriX from commercializing the Commercial Product in the BioGeneriX Territory or Neose from commercializing the Commercial Product in the Neose Territory.

5.2.6. BioGeneriX and Neose shall cooperate, as determined by the Joint Project Team, in the planning and conduct of the preclinical studies.

5.2.7. BioGeneriX shall prepare any INDs relating to a Development Product in the BioGeneriX Territory, and, upon the request of BioGeneriX, Neose will prepare appropriate sections of such INDs.

5.3. Third Party Licenses. Each party shall use Reasonable Commercial Efforts to obtain and maintain any and all additional Third Party Licenses required for the performance of its Preclinical Development obligations, at its sole cost and expense, provided, however, that if the parties agree to pursue any Third Party Licenses under this Section 5.3 jointly, the cost and expense of such licenses shall be Allowable Costs. Each party shall use Reasonable Commercial Efforts to ensure that any such licenses that are not jointly held shall include any sublicense rights that may be required to enable the parties to perform their obligations under this Agreement; and, with respect to any new licenses acquired after the Effective Date, each party shall use Reasonable Commercial Efforts to ensure that the licensor agrees that any sublicense granted thereunder to the other party shall survive the termination of such license.

5.4. Funding of Preclinical Development. Except as provided in Section 5.2.1, the Allowable Costs of each party incurred in connection with Preclinical Development shall be shared equally by the parties and shall be reconciled quarterly; provided, however, that BioGeneriX shall not be required to pay more than **** for its share of process development activities conducted under Section 5.2.2. Within 30 days after the end of each Calendar Quarter during Preclinical Development, each party shall provide to the Collaboration Leader for the other party a statement setting forth in reasonable detail its Allowable Costs incurred in connection with its Preclinical Development responsibilities during such Calendar Quarter. Each party shall cooperate by providing supplemental information reasonably requested by the other party to confirm the accuracy of any such statement. Any undisputed imbalance between the parties’ Allowable Costs incurred in connection with Preclinical Development during a Calendar Quarter shall be corrected within 45 days after the end of such Calendar Quarter, within which period the party whose Allowable Costs were lower shall pay to the other party one-half of the difference between their Allowable Costs incurred in connection with Preclinical Development for the Calendar Quarter.

**** Material has been omitted and filed separately with the Commission.

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6. Clinical Development

6.1. Planning and Initiation. Commencing promptly after the ****, the Joint Project Team will coordinate the planning and execution of the plan, budget and schedule for Clinical Development and Commercial Development. The Joint Project Team shall endeavor to ensure that the data from the clinical trials of the Development Product will be suitable for use in applications for Regulatory Approvals in Europe and the United States and, to the extent practicable, in the rest of the world.

6.2. Responsibilities. BioGeneriX shall have the primary responsibility for Clinical Development, provided that Neose shall be entitled to conduct certain clinical studies pursuant to Section 6.3. The responsibilities of the parties in connection with the activities of Clinical Development shall include, among other things, the following.

6.2.1. Supply of Development Product. BioGeneriX shall use Reasonable Commercial Efforts to ensure the manufacturing and supply of the Development Product required for Clinical Development, through to the completion of Phase III clinical trials anywhere in the Territory, at the sole cost and expense of BioGeneriX. BioGeneriX shall use Reasonable Commercial Efforts to ensure that the Development Product is acceptable for purposes of obtaining Regulatory Approvals in a timely manner. BioGeneriX shall use Reasonable Commercial Efforts to ensure compliance with all establishment registration requirements, and to obtain all other applicable approvals required, for the production of Products under this Agreement. The final selection of any **** shall be made only with the prior written approval of the Collaboration Leader for Neose, and no change in the **** shall be made without the written approval of the Collaboration Leader of Neose, which shall not be unreasonably withheld or delayed.

6.2.2. Clinical Trials. BioGeneriX shall be responsible for the conduct of all clinical trials of the Development Product that the Joint Project Team deems necessary for Regulatory Approvals in the BioGeneriX Territory and the United States, through to the completion of Phase III clinical trials, at the sole cost and expense of BioGeneriX. In addition, BioGeneriX shall be responsible for any further clinical studies required as a condition to granting any Regulatory Approvals in the BioGeneriX Territory or the United States. Neose shall have the right to conduct certain additional clinical trials in accordance with Section 6.3.

6.2.3. Limited Transfer by Neose. Neose shall transfer limited rights in the Neose Technology to BioGeneriX ****, as required, solely for GMP Grade manufacturing of the Development Product by BioGeneriX, ****. BioGeneriX shall ensure that **** is bound to BioGeneriX by like obligations of confidentiality and

**** Material has been omitted and filed separately with the Commission.

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restrictions on use applicable to such information, the Development Product, and ****. BioGeneriX shall be responsible for **** of such agreement.

6.2.4. Process Reagents. Neose shall supply reasonable quantities of GMP Grade chemicals and enzymes covered by the Neose Technology, solely for GMP manufacturing of the Development Product in accordance with this Agreement, at the sole cost and expense of Neose.

6.2.5. Other Clinical Supplies. BioGeneriX shall supply all clinical supplies required for Clinical Development, at the sole cost and expense of BioGeneriX, except the chemicals and enzymes provided by Neose under Section 6.2.4.

6.2.6. Regulatory Submissions for Neose Territory. Neose shall be responsible for the preparation and submission of all applications for Regulatory Approvals and Pricing Approvals required in the Neose Territory, at the sole cost and expense of Neose.

6.2.7. Regulatory Submissions for BioGeneriX Territory. BioGeneriX shall be responsible for the preparation and submission of all applications for Regulatory Approvals and Pricing Approvals required in the BioGeneriX Territory, at the sole cost and expense of BioGeneriX.

6.2.8. Cooperation Regarding Regulatory Submissions. Each party promptly shall supply information, as reasonably requested by the other party, for use in the regulatory applications to be prepared by such party in accordance with Section 6.2.6 or 6.2.7, without cost to the requesting party.

6.2.9. Diligence. Each party shall use Reasonable Commercial Efforts to obtain the approvals it is responsible for under this Agreement. Notwithstanding the foregoing, each party acknowledges that there can be no assurance that any such approvals will be obtained for a Development Product anywhere in the Territory.

6.3. Additional Clinical Studies Conducted in Neose Territory.

6.3.1. Neose Territory Excluding Japan. If Neose deems it desirable to supplement the clinical trials conducted pursuant to Section 6.2.2 to expedite or facilitate Regulatory Approvals in any country in the Neose Territory other than Japan, Neose shall have the right to perform such studies, at its sole cost and expense. If Neose performs any such additional regulatory studies, it shall be entitled to recover 75% of its Allowable Costs for such studies by setting off such Allowable Costs against the royalties due to BioGeneriX under Section 7.4.6, provided that Neose shall not be entitled to set

**** Material has been omitted and filed separately with the Commission.

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off more than 75% of the royalties due under Section 7.4.6 in any calendar year. If Neose conducts any post-marketing clinical studies that are not directed to obtaining Regulatory Approvals in any country in the Neose Territory, Neose shall be responsible for the cost and expense of such studies, and no recovery of its Allowable Costs for such studies shall be permitted against royalties due to BioGeneriX.

6.3.2. Japan. Any and all clinical studies specifically conducted for Regulatory Approvals in Japan and any post-marketing clinical studies conducted in Japan shall be at the cost and expense of Neose, and no recovery of its Allowable Costs for such studies shall be permitted against royalties due to BioGeneriX.

6.4. Ownership of Clinical Trial Data and Regulatory Dossiers

6.4.1. Clinical Trial Data. The data from all clinical trials of the Development Product conducted by either party shall be jointly owned by BioGeneriX and Neose.

6.4.2. Regulatory Dossiers. BioGeneriX (and the respective marketing authority license holders in the BioGeneriX Territory) shall own all regulatory dossiers submitted in the BioGeneriX Territory with respect to the Development Product, and Neose (and the respective marketing authority license holders in the Neose Territory) shall own all regulatory dossiers submitted in the Neose Territory with respect to the Development Product. Each party will share with the other party the contents of its regulatory dossiers with respect to the Development Product for the purpose of submitting applications for Regulatory Approvals in their respective portions of the Territory.

6.5. Third Party Licenses. Each party shall use Reasonable Commercial Efforts to obtain and maintain any and all Third Party Licenses required for the performance of its Clinical Development obligations, at its sole cost and expense, provided, however, that if the parties agree to pursue any Third Party Licenses under this Section 6.5 jointly, the cost and expense of such licenses shall be Allowable Costs. Each party shall use Reasonable Commercial Efforts to ensure that any such licenses that are not jointly held shall include any sublicense rights that may be required to enable the parties to perform their obligations under this Agreement; and, with respect to any new licenses acquired after the Effective Date, each party shall use Reasonable Commercial Efforts to ensure that the licensor agrees that any sublicense granted thereunder to the other party shall survive the termination of such license.

6.6. Funding of Clinical Development. The responsibilities of the parties for funding Clinical Development are set forth in Sections 6.2 through 6.5.

7. Commercialization

7.1. Planning and Oversight. In an effort to ensure that the activities of either party do not adversely affect the activities of the other party in its portion of the Territory, the parties shall cooperate in the planning and oversight of their commercialization activities. Upon the mutual agreement of the parties, which shall be

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communicated by each Collaboration Leader, the Joint Project Team shall coordinate and oversee the marketing strategy for the Commercial Product on a country-by-country basis in the Territory under this Agreement, and shall plan and coordinate any post marketing studies of the Commercial Product. The prior approval of the Collaboration Leaders shall be required in respect of each party’s:

7.1.1. selection of any form of label, package insert and packaging for the Products;

7.1.2. selection of any Trademark for the Products;

7.1.3. pricing and reimbursement strategy for the Commercial Product;

7.1.4. conduct of pre-marketing efforts for the Commercial Product, including symposia and other marketing efforts; and

7.1.5. establishment of any schedule for Commercial Product launch.

7.2. Co-Marketing.

7.2.1. ****. Promptly after the execution of this Agreement, the parties shall meet to discuss whether a **** would be in their best interests. Upon mutual agreement of the parties to move forward with a ****, the parties shall diligently seek to identify a **** and negotiate a mutually acceptable **** agreement for Commercial Product. If, prior to the completion of Preclinical Development: (i) the parties have identified ****, (ii) the identified ****; and (iii) based upon the identified ****.

7.2.2. By a Party. At any time after the completion of Preclinical Development, if the parties have ****, BioGeneriX shall have the right to select one or more co-marketing or co-promotion partners to assist with commercialization of the Commercial Product in the BioGeneriX Territory, and Neose shall have the right to select one or more co-marketing or co-promotion partners to assist with commercialization of the Commercial Product in the Neose Territory, in each case, subject to the reasonable approval of the other party. Each party shall inform its co-marketing or co-promotion partners of its obligations under this Agreement and shall require its co-marketing or co-promotion partners to comply with all of such obligations, as applicable. Each party shall be responsible for any breach of this Agreement resulting from the action or inaction of any of its co-marketing or co-promotion partners.

**** Material has been omitted and filed separately with the Commission.

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7.3. BioGeneriX Territory

7.3.1. Marketing and Distribution. BioGeneriX shall have the exclusive right to market and distribute the Commercial Product in the BioGeneriX Territory.

7.3.2. Process Reagents. Subject to reasonable supply terms mutually agreed upon by the parties, Neose shall use Reasonable Commercial Efforts to supply all chemicals and enzymes covered by the Neose Technology, solely for GMP Grade manufacturing of any Product by or for BioGeneriX, in contemplation of sale under a BLA (commencing with the first validation batch), in accordance with this Agreement, and BioGeneriX shall reimburse Neose’s Allowable Costs for such reagents.

7.3.3. Supply of Commercial Products. BioGeneriX shall be responsible for the manufacture and supply of the Commercial Products in accordance with the Specifications for marketing and distribution in the BioGeneriX Territory, at the sole cost and expense of BioGeneriX.

7.3.4. Royalties. BioGeneriX shall pay royalties to Neose on Net Sales by BioGeneriX in each calendar year during the term of this Agreement, as follows, subject to adjustment in accordance with Sections 7.3.5 and 7.3.6:

7.3.4.1. In respect of the first **** (or equivalent) of Net Sales in the BioGeneriX Territory in the calendar year, **** of such Net Sales; and

7.3.4.2. In respect of all Net Sales in the BioGeneriX Territory in excess of **** (or equivalent) in the calendar year, **** of such Net Sales.

7.3.5. BioGeneriX Stacking Protection. If BioGeneriX becomes obligated to pay royalties for technology under Third Party Licenses and the aggregate royalty rate owed by BioGeneriX to all parties (including Neose) to manufacture and sell Commercial Products exceeds **** with respect to royalties payable under Section 7.3.4.1 or **** with respect to royalties payable under Section 7.3.4.2, then each of the royalty rates payable to Neose under Section 7.3.4 shall be reduced to the greater of the stacked royalty rate calculated by the following formula or **** of the rate set forth in the applicable section:

SR = A([insert applicable stacking trigger*]/(A+B))

Where:

SR = Stacked royalty payable to Neose

**** Material has been omitted and filed separately with the Commission.

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A = royalty rate payable to Neose before reduction

B = sum of royalty rates owed by BioGeneriX, before stacking, to all third parties

* = ****, as the case may be

7.3.6. Additional Adjustment for Neose Stacking. If, at any time, Neose is entitled to reduce the royalties payable to BioGeneriX as a result of the stacking provisions of Section 7.4.6 and at such time BioGeneriX is not entitled to reduce the royalties payable to Neose as a result of the stacking provisions of Section 7.3.5, then for so long as that condition exists, BioGeneriX shall be entitled to reduce the royalties payable to Neose as follows: (i) the royalty rate payable under Section 7.3.4.1 shall be reduced by **** of the reduction in royalty rate that Neose is entitled to take under Section 7.4.5.1, and (ii) the royalty rate payable under Section 7.3.4.2 shall be reduced by **** of the reduction in royalty rate that Neose is entitled to take under Section 7.4.5.2, in each case as a result of the application of Section 7.4.6. The foregoing provisions of this Section 7.3.6 shall not apply at any time when (i) Neose is not entitled to reduce royalties pursuant to Section 7.4.6 or (ii) BioGeneriX is entitled to reduce royalties pursuant to Section 7.3.5.

7.4. Neose Territory

7.4.1. Marketing and Distribution. Neose shall have the exclusive right to market and distribute the Commercial Product in the Neose Territory.

7.4.2. License. If Neose elects to file for Regulatory Approval for a Commercial Product in any countries in the Neose Territory, Neose shall grant BioGeneriX a license, under the Neose Technology, to make and sell the Commercial Product to Neose.

7.4.3. Purchase and Supply of Products. Neose shall purchase its requirements of Products, in contemplation of sale under a BLA (commencing with the first validation batch), exclusively from BioGeneriX, and BioGeneriX shall supply Neose with such requirements of Products in accordance with the Specifications, and Neose shall reimburse BioGeneriX’s Allowable Costs for such Products.

7.4.4. Milestone Payment. Neose shall pay to BioGeneriX a nonrefundable, one-time milestone payment in the amount of **** upon the commercial launch of the Commercial Product in the United States.

**** Material has been omitted and filed separately with the Commission.

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7.4.5. Royalties. Neose shall pay royalties to BioGeneriX on Net Sales by Neose in each calendar year during the term of this Agreement, as follows, subject to adjustment in accordance with Sections 7.4.7 and 7.4.8:

7.4.5.1. In respect of the first **** (or equivalent) Net Sales in any country in the Neose Territory other than Japan in the calendar year, **** of such Net Sales;

7.4.5.2. In respect of all Net Sales in any country in the Neose Territory other than Japan in excess of **** (or equivalent) in the calendar year, **** of such Net Sales;

7.4.5.3. In respect of the first **** (or equivalent) Net Sales in Japan in the calendar year, **** of such Net Sales; and

7.4.5.4. In respect of all Net Sales in Japan in excess of **** (or equivalent) in the calendar year, **** of such Net Sales;

7.4.6. Neose Stacking Protection. If Neose becomes obligated to pay royalties for technology under Third Party Licenses and the aggregate royalty rate owed by Neose to all parties (including BioGeneriX) to sell Commercial Products exceeds **** with respect to royalties payable under Section 7.4.5.1, **** with respect to royalties payable under Section 7.4.5.2, **** with respect to royalties payable under Section 7.4.5.3, or **** with respect to royalties payable under Section 7.4.5.4, then in each applicable case, the royalty rates payable to BioGeneriX under Section 7.4.5 shall be reduced to the greater of the stacked royalty rate calculated by the following formula or **** of the rate set forth in the applicable section:

SR = A([insert applicable stacking trigger*]/(A+B))

Where:

SR = Stacked royalty payable to BioGeneriX

A = royalty rate payable to BioGeneriX before reduction

B = sum of royalty rates owed by Neose, before stacking, to all third parties

* = ****, as the case may be

7.4.7. Additional Adjustment for BioGeneriX Stacking. If, at any time, BioGeneriX is entitled to reduce the royalties payable to Neose as a result of the

**** Material has been omitted and filed separately with the Commission.

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stacking provisions of Section 7.3.5 and at such time Neose is not entitled to reduce the royalties payable to BioGeneriX as a result of the stacking provisions of Section 7.4.6, then for so long as that condition exists, Neose shall be entitled to reduce the royalties payable to BioGeneriX as follows: (i) the royalty rates payable under Sections 7.4.5.1 and 7.4.5.3 shall be reduced by **** of the reduction in royalty rate that BioGeneriX is entitled to take under Section 7.3.4.1, and (ii) the royalty rates payable under Sections 7.4.5.2 and 7.4.5.4 shall be reduced by **** of the reduction in royalty rate that BioGeneriX is entitled to take under Section 7.3.4.2, in each case as a result of the application of Section 7.3.5. The foregoing provisions of this Section 7.4.7 shall not apply at any time when (i) BioGeneriX is not entitled to reduce royalties pursuant to Section 7.3.5 or (ii) Neose is entitled to reduce royalties pursuant to Section 7.4.6.

8. Regulatory Compliance

8.1. Establishment Licenses. Each of BioGeneriX and Neose will be responsible for complying with all establishment registration requirements and obtaining all other applicable approvals required for its activities in respect of the production of Products under this Agreement.

8.2. Regulatory and Pricing Approvals. It is intended that all Regulatory Approvals and Pricing Approvals relating to Products in the BioGeneriX Territory will be owned by, and registered in the name of, BioGeneriX, and that all Regulatory Approvals and Pricing Approvals relating to Products in the Neose Territory will be owned by, and registered in the name of, Neose. To the extent that local law in any country requires any other ownership or registration, each party will take such actions as are permitted by law to assign or transfer its rights in any Regulatory Approvals and Pricing Approvals, and otherwise will exercise its rights thereunder, in a manner consistent with this Agreement.

8.3. Diligence. Each party shall use Reasonable Commercial Efforts to obtain the approvals it is responsible for under this Agreement. Notwithstanding the foregoing, each party acknowledges that there can be no assurance that any Regulatory Approval or Pricing Approval will be obtained for a Product in the Territory.

8.4. Territory Adjustments. If at any time BioGeneriX or Neose determines that it is not possible, practicable or desirable to seek or maintain the Regulatory Approvals or Pricing Approvals required to develop and commercialize a Product in any country or countries in its portion of the Territory, the party making such determination promptly shall inform the other party and offer the other party the right to include such country or countries in its portion of the Territory, on reasonable terms, as mutually agreed by the parties by amendment of this Agreement.

**** Material has been omitted and filed separately with the Commission.

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9. Manufacturing of Products

9.1. Facilities. Each of BioGeneriX and Neose will use Reasonable Commercial Efforts, including capital investments, to produce, or have produced, GMP Grade Products (in the case of BioGeneriX) and chemicals and enzymes covered by the Neose Technology (in the case of Neose), in each case, in quantities sufficient for the purposes of the Collaboration. The schedule for meeting commercial scale capacity will be determined by the Joint Project Team, taking into account the quantities of Products required by the Collaboration, the probable regulatory schedule and additional capital requirements. Except as otherwise provided in this Agreement, the costs incurred by each party in meeting its obligations under this Section 9.1 shall be at its sole cost and expense.

9.2. Warranties and Limitations

9.2.1. Warranties

9.2.1.1. BioGeneriX warrants that each shipment of Products will conform to the Specifications and will be made, stored, packaged, labeled and controlled by BioGeneriX in accordance with all applicable laws and regulations and in accordance with the process and procedures contained in the applicable Regulatory Standards.

9.2.1.2. Neose warrants that each shipment of chemicals and enzymes to BioGeneriX will conform to the specifications therefor then agreed to by the Joint Project Team and will be made in accordance with all applicable laws.

9.2.2. No Warranty of Effect. Neither party warrants either a good effect, or against an ill effect, following the use of the Product.

9.2.3. Notice of Known Breach Upon Receipt, Dispute Procedure and Replacement Obligation. If Neose becomes aware that any Products do not meet the warranties set forth in Section 9.2.1 upon receipt by Neose, Neose shall promptly provide notice to BioGeneriX that such Products are nonconforming, together with any available documentation establishing the claim. BioGeneriX shall be entitled to dispute any such claim by providing Neose access to documentation describing BioGeneriX’s (i) methodologies for testing the Product and (ii) test results indicating that the Product did not fail to conform with the applicable warranties when shipped. In the case the nonconformance of the Products is proved, BioGeneriX shall promptly replace any nonconforming Products at the sole cost and expense of BioGeneriX.

9.2.4. Limitations. EXCEPT AS EXPRESSLY SET FORTH IN SECTION 9.2.1, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE PRODUCTS, CHEMICALS OR ENZYMES. SPECIFICALLY, BUT WITHOUT LIMITING THE FOREGOING, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANGABILITY, FITNESS FOR A PARTICULAR

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PURPOSE, QUALITY OR USEFULNESS OF THE PRODUCTS, CHEMICALS OR ENZYMES.

9.3. Quality Assurance. BioGeneriX will provide to Neose concurrently with each shipment of Products a Certificate of Analysis stating that the Products conform to the Specifications and have been made in accordance with the process and procedures contained in the Manufacturing Information and applicable Regulatory Standards. All quality control testing of the Products, whether conducted by BioGeneriX or through third party laboratories, shall be performed in accordance with GMP and comparable requirements of other applicable regulatory authorities. Neose shall release any Products for use in the Neose Territory in accordance with all applicable laws. No testing by Neose of any Products or their manufacturing facilities shall release BioGeneriX from the warranties provided under Section 9.2.

9.4. Process Modifications. BioGeneriX will not modify any process or procedure used in the manufacture of a Product without obtaining the prior consent of Neose, which shall not be unreasonably withheld or delayed.

9.5. Facility Audit and Inspections. BioGeneriX shall, upon reasonable advance notice, permit Neose or any authorized representative to audit the manufacturing process and the manufacturing, production and control records for the Products. Any such inspection shall be conducted subject to Neose’s confidentiality obligations under this Agreement. BioGeneriX shall take appropriate actions to adopt reasonable suggestions of Neose to correct any deficiencies identified by such inspection or audit.

9.6. Supply Shortages. In the event of a Commercial Product shortage, BioGeneriX shall allocate its available supplies and inventory to satisfy the requirements of the Collaboration, before allocating supplies and inventory to other uses. As between the parties, BioGeneriX shall allocate its available supplies of Commercial Product equitably between the orders placed by Neose for the Neose Territory and the requirements of BioGeneriX for the BioGeneriX Territory, so that each party receives the same proportion of its requirements during the shortage, unless another allocation is mutually agreed upon.

9.7. Default in Supply Obligation

9.7.1. Supply of Products. BioGeneriX shall take all reasonable steps to ensure continuing production of an adequate supply of Products for the Collaboration. If BioGeneriX cannot satisfy its obligations to make a Product under this Agreement for a period of sixty (60) consecutive days, including any failure caused by a force majeure event under Section 27.3, Neose shall be entitled to make the Product itself or to have the Product made by a qualified third party until BioGeneriX demonstrates that it is able to resume supply under the terms of this Agreement. For the duration of such supply shortage, Neose shall be entitled, upon request, to have the rights of a “Continuing Licensee” under Section 24.

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9.7.2. Supply of Chemicals and Enzymes. Neose shall take all reasonable steps to ensure continuing production of an adequate supply of the chemicals and enzymes covered by the Neose Technology required for the Collaboration. If Neose cannot satisfy its obligations to supply any such chemicals or enzymes under this Agreement for a period of sixty (60) consecutive days, including any failure caused by a force majeure event under Section 27.3, BioGeneriX is entitled to ask Neose for remedies for direct damages and for a penalty in an amount equal to the share of process development activities funded by BioGeneriX pursuant to Section 5.4, not to exceed US$3 million. In addition. BioGeneriX shall be entitled to make such chemicals or enzymes itself or to have them made by a qualified third party until Neose demonstrates that it is able to resume supply under the terms of this Agreement. For the duration of such short supply, BioGeneriX shall be entitled, upon request, to have the rights of a “Continuing Licensee” under Section 24.

9.8. Manufacturing Licenses

9.8.1. License by BioGeneriX. To the extent required to enable Neose to assume the manufacturing of Product under Section 9.7.1 or 24.8, BioGeneriX hereby grants, and agrees to grant, to Neose a royalty-bearing license, with the right to sublicense, in and to the BioGeneriX Technology in the Field, as required to permit Neose or a third party sublicensee to manufacture the Product in an efficient manner. Such license shall contain the terms and provisions established in accordance with Section 24.8.1.

9.8.2. License by Neose. To the extent required to enable BioGeneriX to make any chemicals or enzymes covered by the Neose Technology under Section 9.7.2 or 24.8, Neose hereby grants, and agrees to grant, to BioGeneriX a royalty-bearing license, with the right to sublicense, in and to the Neose Technology in the Field, as required to permit BioGeneriX or a third party sublicensee to manufacture such chemicals or enzymes in an efficient manner. Such license shall contain the terms and provisions established in accordance with Section 24.8.1.

9.9. Deposit of Biological Materials. Each party shall deposit with a mutually agreeable depository, upon terms customary in the industry, all biological materials used in its manufacturing process, and shall provide all manufacturing information required to enable the other party to manufacture the Product in accordance with this Agreement.

10. Trademarks

10.1. Approval and Maintenance. Unless otherwise agreed in writing by the parties, the Joint Project Team shall approve the Trademarks to be used for the Products and shall establish procedures to be used by the parties to ensure maintenance of the Trademarks in accordance with good trademark practice.

10.2. Ownership and Use. A Trademark created by the parties after the Effective Date shall be deemed Joint Technology and may not be used by a party with

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any product outside the Field anywhere in the Territory. Neither party shall use a Trademark associated with a Product in connection with another product in such a manner as would be likely to cause confusion in the mind of the public.

10.3. No Adverse Actions. Neither party shall, during the term of this Agreement, contest the other party’s ownership of the Trademarks that are deemed Joint Technology under this Agreement or take any action adverse to the ownership of such Trademarks by the other party or its successors or assigns.

11. Labeling. The label, package insert, packaging, advertising and promotional materials for each Product shall be approved by the Joint Project Team. All such materials shall identify the names of both parties, unless prohibited by applicable law.

12. Certain Regulatory Matters

12.1. Meetings with Government Agencies. Each party shall promptly advise the other party, through its Collaboration Leader, of any planned meeting with the FDA, EMEA or other government agency to which an IND is submitted or a Regulatory Approval is sought, and shall allow the other party to send a representative to observe the proceedings of such meeting. In addition, each party shall promptly furnish to the Collaboration Leader for the other party copies of all correspondence with any such government agency that is sent or received prior to receipt of Regulatory Approval from such agency.

12.2. Governmental Inspection. Each party shall advise the other party, through its Collaboration Leader, of any governmental visits to, or written or oral inquiries about, any facilities or procedures for the manufacture, storage or handling of a Product, promptly (but in no event later than seven calendar days) after such visit or inquiry. Each party shall furnish to the Joint Project Team, within seven days after receipt, a copy of any report or correspondence issued by the governmental authority in connection with such visit or inquiry, purged only of confidential or proprietary information that is unrelated to the Products and the activities under this Agreement. In addition, each party shall furnish to the Collaboration Leader for the other party, at least five working days prior to sending, a copy of any correspondence proposed to be sent to any governmental authority that is related to the Products or the activities under this Agreement, and shall revise such correspondence to take into account the reasonable suggestions of the Collaboration Leader for the other party made during the five-working-day period.

12.3. Government Inquiries. Each party shall advise the other party, through its Collaboration Leader, of any inquiry, notice or investigation initiated or made by any governmental authority relating to the clinical development, promotion, advertisement, marketing or sale of the Products or any of its other activities under this Agreement. The parties shall cooperate and consult with each other in responding to the governmental authority.

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12.4. Adverse Reactions. The Joint Project Team shall establish procedures by which each party will receive notice from the other party, and will report to the other party, any adverse drug reactions related to a Product. The procedures shall be established by the Joint Project Team in the Territory prior to the filing of any IND for a Development Product, and shall be consistent with the strictest requirements in any jurisdiction.

12.5. Recalls and Market Withdrawals. If at any time (i) any governmental or regulatory authority in the Territory issues a request, directive, or order that a Product be recalled or withdrawn, or (ii) a court of competent jurisdiction orders such a recall or withdrawal in the Territory, or (iii) a party determines that a Product should be recalled, the parties shall take all appropriate corrective actions to effect the recall or withdrawal. If a dispute about the necessity of a recall cannot be resolved in accordance with Section 23.1, either party may order a recall (without proceeding to arbitration under Section 23.2) if in its reasonable judgment it is required to do so by law. The costs and expenses of notification and destruction or return of the recalled or withdrawn Product in the Neose Territory shall be borne by Neose, and in the BioGeneriX Territory shall be borne by BioGeneriX, subject to each party’s right to indemnification under Section 20.3.

12.6. Compliance with Law. Each party shall comply with all applicable laws, rules and regulations that are material to the conduct of its activities under this Agreement.

13. Licenses and Intellectual Property Matters

13.1. Cross Licenses During Development

13.1.1. Research License by Neose. Neose hereby grants to BioGeneriX a royalty-free, nonexclusive license, with no right to sublicense, in and to the Neose Technology in the Field to develop and use Products in the Territory in accordance with this Agreement. Neose hereby also grants to BioGeneriX a perpetual, royalty-free license with no accounting of all know-how included in the Neose Technology in the Field for any use by BioGeneriX.

13.1.2. Research License by BioGeneriX. BioGeneriX hereby grants to Neose a royalty-free, nonexclusive license, with no right to sublicense, in and to the BioGeneriX Technology in the Field to develop and use Products in the Territory in accordance with this Agreement. BioGeneriX hereby also grants to Neose a perpetual, royalty-free license with no accounting of all know-how included in the BioGeneriX Technology in the Field for any use by Neose.

13.2. Licenses During Commercialization

13.2.1. Commercial License by Neose. Upon commencement of Commercialization, Neose will grant to BioGeneriX a nonexclusive, royalty-free license, with no right to sublicense, in and to the Neose Technology in the Field, to the extent required for BioGeneriX to conduct its responsibilities under this Agreement.

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13.2.2. Commercial License by BioGeneriX. Upon commencement of Commercialization, BioGeneriX will grant to Neose a nonexclusive, royalty-free license, with no right to sublicense, in and to the BioGeneriX Technology in the Field, to the extent required for Neose to conduct its responsibilities under this Agreement.

13.3. Retained Rights. BioGeneriX reserves the right to use the BioGeneriX Technology in the Field (subject to Section 24) and for any purpose whatsoever outside the Field, without liability to Neose. Neose reserves the right to use the Neose Technology in the Field (subject to Section 24) and for any purpose whatsoever outside the Field, without liability to BioGeneriX.

13.4. Inventions. In the case of any invention made by employees of one or both of the parties arising under the Collaboration, the parties and the relevant employees of the parties shall agree upon (i) who shall apply for patent or other registration required for the protection of the invention, (ii) by which party or persons the costs of such application or registration shall be borne, and which party or persons shall be the owner of the related intellectual property rights. Subject to the foregoing, the parties agree to take all appropriate actions that are necessary or desirable to assign the intellectual property rights arising under the Collaboration as follows: (i) any and all rights relating to the Neose Technology shall be assigned to Neose, (ii) except as provided in clause (i) above, any and all rights relating to the BioGeneriX Technology shall be assigned to BioGeneriX (iii) any and all rights in and to the Product anywhere in the BioGeneriX Territory shall be assigned to BioGeneriX, and (iv) any and all rights in and to the Product anywhere in the Neose Territory shall be assigned to Neose, subject in each case, to the licenses granted in this Agreement.

13.5. Intellectual Property Protections

13.5.1. Control. Each party shall be responsible for and shall have the right to control the prosecution, maintenance, reissue, reexamination, renewal and extension of the patent applications, issued patents and Trademarks included in the intellectual property licensed by it to the other party pursuant to this Section 13, except Joint Technology, for which the parties shall share equally the responsibility and control. Each party, on a regular basis and at any time upon reasonable request, shall report to the Joint Project Team the status of any such activities and shall furnish copies of any correspondence, file wrappers, office action and such other documents as the Joint Project Team shall reasonably require to monitor these activities. If a party elects not to continue the prosecution of any such application, reissue, reexamination, renewal or extension, or to pay any such maintenance fee, it shall notify the Joint Project Team of its decision at least 30 days in advance of the due date for such action or payment, and the other party shall have the right, but not the obligation, to assume responsibility therefor.

13.5.2. Cooperation. Each party shall cooperate with the other party to facilitate the activities under Section 13.5.1, including, without limitation, executing all lawful papers and instruments and making all rightful oaths and declarations as may be necessary in the preparation and prosecution of the patent applications, issued

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patents, Trademarks and other rights included in the Joint Technology or in the transfer of any obligations under Section 13.5.1.

14. Intellectual Property Claims

14.1. Defense Proceedings. If a claim is asserted against a party by a third party alleging infringement of the third party’s intellectual property rights resulting from the development, manufacture, use or sale of a Product, such party shall promptly notify the other party of the claim. The party against whom the claim has been made shall control the defense of any such claim at its sole cost. If a claim is asserted against both parties, then the parties shall cooperate with respect to the defense of such claim and shall share the costs thereof equally, or in such other proportions as they may mutually agree.

14.2. Third Party Infringements. If, in the opinion of the Joint Project Team, any patent, Trademark or other right included in the Neose Technology, the BioGeneriX Technology or any other Joint Technology has been infringed by a process and/or product of a third party in the Territory, the Joint Project Team shall give notice of such infringement to the Collaboration Leaders. The party owning the infringed right may, at its discretion and expense, take such steps as it deems necessary or desirable to prosecute such infringement. If the party owning the right does not bring suit or take other appropriate action within 90 days after receiving notice from the Joint Project Team, the other party shall have the right, but not the obligation, to bring suit or take other appropriate action with respect to the infringed right, at its own expense and risk. The party owning the infringed right shall duly cooperate with the party bringing suit or taking action in order to enable the latter to do so. If the right consists of Joint Technology not owned solely by a party, the Joint Project Team shall determine the appropriate procedures for handling the alleged infringement.

14.3. Settlement of Claims. Neither party may settle a claim described in this Section 14 without the consent of the other party, if such settlement would impose any monetary obligation on the other party or require the other party to submit to an injunction or otherwise limit the other party’s rights under this Agreement.

14.4. Allocation of Awards. All monetary damages awarded to the parties in any action against a third party under this Section 14 shall be used first to reimburse the costs incurred by the party or parties prosecuting or defending such action, and any excess shall be allocated as follows: (i) any amount that is attributable to a Product within the Territory shall be treated as Net Sales of the party receiving the award and (ii) any amount that is explicitly attributable to a subject matter other than the Products shall be remitted to the party who owns the intellectual property at issue.

14.5. Cooperation. In conducting the defense or prosecution of any claim described in this Section 14, Neose and BioGeneriX shall consult with and keep the Joint Project Team informed of the status of the action. Upon reasonable request, the Joint Project Team shall assist the persons controlling the defense or prosecution of an infringement claim, at the cost of the requesting party.

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15. Payments

15.1. Place of Payment. All payments to a party under this Agreement shall be made by wire transfer in immediately available funds in US dollars if paid to Neose and in Euros if paid to BioGeneriX, to the account designated in writing by party, as applicable, from time to time.

15.2. Currency Conversion. If Net Sales are received in a currency other than U.S. dollars, Net Sales shall be computed using the average of the conversion rates of the non-U.S. currency into U.S. dollars published in The Wall Street Journal during the Calendar Quarter for which Net Sales are reported.

15.3. Late Payments. Payments hereunder shall be deemed paid as of the day on which they are received at the account designated pursuant to Section 15.1. Any payment which is not paid within 30 days after it becomes due shall accrue interest thereon from such date until the date of its payment in full at three (3) percentage points over the per annum interest rate published as the “Prime Rate” in The Wall Street Journal, but in no event shall such rate exceed the maximum rate permitted by applicable law.

16. Books, Records and Accounting

16.1. Maintenance of Records. The parties shall maintain complete and accurate books of account in accordance with generally accepted accounting principles, in sufficient detail to allow Net Sales and Allowable Costs to be verified. The parties shall retain such records for at least five years.

16.2. Access and Inspection. Each party shall have reasonable access to the books and records of the other party relating to the Collaboration, and each party, at its own expense and upon reasonable prior notice, shall have the right to have such books and records examined and audited by outside auditors reasonably acceptable to the other party. Each party shall make its relevant books and records available for inspection by the independent auditors of the other party, at the expense of the inspecting party, not more than once each calendar year, upon reasonable prior notice and during normal business hours. The independent auditors shall report to the auditing party only whether or not the reports submitted by the audited party are accurate for the period covered and the details concerning any identified discrepancies. If any such audit reveals an underpayment, the party responsible for the underpayment shall promptly pay to the other party the amount of such underpayment. If any such underpayment exceeds 10% of the amount due, the party responsible for the underpayment shall pay the entire expense of such audit within 20 days after invoice. Any inspection of a party’s books and records shall be conducted subject to the confidentiality obligations under Section 17.

17. Confidentiality.

17.1. Obligations of Receiving Party. Each party and its representatives will maintain in confidence any information received from, or owned by, the other party that is confidential or proprietary (the “Confidential Information”) and will use the

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Confidential Information only for purposes of this Agreement and the Collaboration. Except as expressly provided in this Agreement, the parties shall not at any time during their access to the Confidential Information or at any time thereafter, use or permit others to use any of the Confidential Information for any purpose, except as may be necessary to perform their obligations under this Agreement. The foregoing obligations shall not apply to, and the definition of “Confidential Information” does not include any information that:

17.1.1. is now, or in the future becomes, public knowledge other than through any acts or omissions of the receiving party;

17.1.2. is required to be disclosed pursuant to applicable laws, rules, regulations, government requirement or court order (provided, however, that the receiving party shall promptly advise the furnishing party of its notice of any such requirement or order and shall cooperate with the furnishing party’s reasonable efforts to limit such disclosure);

17.1.3. the receiving party can demonstrate by written records was known by it before receipt from the furnishing party; or

17.1.4. is received by the receiving party from another person or entity that is under no obligation of confidentiality to the furnishing party to keep the same confidential.

17.2. Injunctive Relief. Both parties agree that it would be impossible or inadequate to measure and calculate the other party’s damages from any breach of the covenants made in Section 17.1. Accordingly, the receiving party agrees that if it breaches any of such covenants, the furnishing party will have available, in addition to any other right or remedy available, the right to seek an injunction from a court of competent jurisdiction restraining such breach or threatened breach and to seek specific performance of any such provision of this Agreement. Both parties further agree that no bond or other security shall be required in obtaining such equitable relief.

18. Certain Representations, Warranties and Covenants. Each party represents and warrants to the other that:

18.1. it is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation;

18.2. it has the corporate power and authority to execute, deliver and perform this Agreement;

18.3. the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate action and this Agreement is binding and enforceable against such party in accordance with its terms;

18.4. the execution, delivery and performance of this Agreement by it (i) do not conflict with, or constitute a breach or default under its organizational documents

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or any law, order, judgment or governmental rule or regulation applicable to it, and (ii) do not and will not conflict with, or constitute a breach or default under or require any consent or approval not obtained under, any provision of any material agreement, contract, commitment or instrument to which it is a party;

18.5. it owns all patents, know-how and other intellectual property rights included as of the Effective Date in its license to the other party under Section 13, except for those rights listed on Exhibit B, which are licensed from the third parties specified therein, and it shall use Reasonable Commercial Efforts to maintain such third party rights in full force and effect and shall notify the other party promptly if it receives a notice of default or termination of any such rights;

18.6. subject to Section 26, to its knowledge, it is not required to obtain the consent or approval of any third party to perform its obligations under this Agreement; and

18.7. in the case of BioGeneriX, to its knowledge, it owns all patents, know-how and other intellectual property rights required for use in the manufacture of the Products, except for the rights specified on Exhibit C, which are licensed by BioGeneriX from the third parties specified therein, and it has not received any notice from a third party indicating that the manufacture of Products by BioGeneriX would infringe any intellectual property rights of any third party and knows of no reasonable basis for believing that the manufacture of any Product as contemplated by this Agreement infringes any intellectual property rights of any third party known to BioGeneriX.

19. No Inconsistent Agreements. Neither party shall enter into any oral or written agreement after the Effective Date that would be inconsistent with its obligations under this Agreement or deprive the other party of the benefits of the Collaboration in any substantial respect.

20. Disclaimer, Indemnification and Insurance

20.1. No Warranty. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE PRODUCTS OR THE TECHNOLOGY LICENSED BY IT TO THE OTHER PARTY. WITHOUT LIMITING THE FOREGOING, NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, QUALITY OR USEFULNESS OF THE TECHNOLOGY OR THE PRODUCTS.

20.2. Defense of Claims. Except as provided in Sections 14 or 20.3, each party shall be responsible for defending itself against any liabilities, losses, costs, damages and expenses (including reasonable attorneys’ fees and costs) (each a “Liability” and, collectively, “Liabilities”) resulting from a claim asserted by a third party arising out of the manufacture, marketing, sale or use of a Product in the Territory,

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including, without limitation, any claim in the nature of product liability (whether under theories of strict liability, negligence, breach of warranty or otherwise). If any such claim is asserted against both parties, then the parties shall cooperate with respect to the defense of the claim.

20.3. Indemnity. Each party (as such, an “Indemnifying Party”) shall indemnify, defend and hold harmless the other party and its employees, officers, directors and agents (each, as such, an “Indemnified Party”) from and against any Liabilities which the Indemnified Party may incur, suffer or be required to pay resulting from or arising in connection with (i) a breach by the Indemnifying Party of any covenant, representation or warranty contained in this Agreement, (ii) any act or omission constituting gross negligence or willful misconduct by the Indemnifying Party in the development, manufacturing, promotion, marketing or sale of a Product or any other activity conducted by it under this Agreement, or (iii) the successful enforcement by an Indemnified Party of any of the foregoing.

20.4. Procedures for Indemnification. The obligations of the Indemnifying Party under Section 20.3 are conditioned upon the delivery of written notice to the Indemnifying Party of any potential Liability promptly after the Indemnified Party becomes aware of such potential Liability. The Indemnifying Party shall have the right to assume the defense of any suit or claim related to the Liability if it has assumed responsibility for the Liability in writing. If the Indemnifying Party defends the suit or claim, the Indemnified Party may participate in (but not control) the defense thereof, at its sole cost and expense.

20.5. Settlements. Neither party may settle a claim or action related to a Liability under Section 20.3 without the consent of the other party, if such settlement would impose any monetary obligation on the other party or require the other party to submit to an injunction or otherwise limit the other party’s rights under this Agreement. Any payment made by a party to settle any such claim or action shall be at its own cost and expense.

20.6. Limitation of Liability. With respect to any claim by one party against the other arising out of the performance or failure of performance of the other party under this Agreement, the liability of one party to the other party for such breach shall be limited under this Agreement or otherwise at law or equity to direct damages only; in no event shall a party be liable to the other party for indirect, incidental or consequential damages suffered by the other party, including, without limitation, lost profits.

20.7. Insurance

20.7.1. Coverage and Responsibility. The Joint Project Team shall determine from time to time the types and amounts of insurance coverage, if any, to be maintained by each party to insure against the activities of the Collaboration. The costs and expenses of such insurance, whether held in the name of BioGeneriX or Neose or in the names of both parties, shall be borne equally by the parties. Each party shall be

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entitled to deduct from any royalties payable by it under this Agreement, all amounts paid by it for such insurance.

20.7.2. Dispute Regarding Coverage. If, at any time, the Joint Project Team cannot agree on the type or amount of insurance coverage to be maintained under Section 20.7.1, or if a party does not promptly take all action required to obtain such coverage, the party desiring and willing to purchase the higher amount of coverage shall have the right to terminate this Agreement under Section 24.5, and to become a Continuing Licensee as provided therein.

21. Publications

21.1. Public Announcement of Agreement. Each party shall be entitled to announce the signing of this Agreement in substantially the form attached as Exhibit D, and, otherwise, with the prior written consent of the other party, which shall not be unreasonably withheld.

21.2. Other Publicity

21.2.1. Certain Neose Publications. Neose shall have the right to use the results of Preclinical Development for scientific and promotional publication purposes, with the prior written consent of BioGeneriX, which may be withheld only as reasonably necessary to protect confidentiality and patent rights.

21.2.2. Procedures. Except as otherwise provided in Section 21.1, the parties shall consult with each other and coordinate all publicity concerning the existence and terms of this Agreement and the activities and progress of the Collaboration. A party shall not disclose the confidential terms of this Agreement to any third parties without the prior written consent of the other party. The foregoing prohibition shall not apply to the extent that any disclosure is (i) of information in the public domain other than through the fault of the disclosing party or its employees, licensees, agents or subcontractors, in violation of this Agreement, (ii) believed in good faith to be required to comply with any applicable law, regulation or order of a government authority of court of competent jurisdiction (including any securities laws applicable to a party), in which event the disclosing party shall use all reasonable efforts to advise the other party in advance of the need for such disclosure, or (iii) made, under confidentiality, to a recipient who is a licensor, licensee or potential licensor or licensee and to whom such disclosure is reasonably required to define the scope of rights which could be granted to the recipient without violating the terms of this Agreement.

22. Standstill. BioGeneriX agrees that, until the later of the ****, except with the written consent of the Board of Directors of Neose, BioGeneriX shall not: (i) increase its beneficial ownership of Common Stock of Neose to a number of shares representing **** or more of the outstanding shares of Common Stock of Neose at any

**** Material has been omitted and filed separately with the Commission.

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time without the prior written consent of Neose; (ii) make, or in any way participate in, any “solicitation” of “proxies” (as such terms are defined under Regulation 14A of the Exchange Act) to vote or seek to advise or influence in any manner whatsoever any person or entity with respect to the voting of any securities of Neose or any of its subsidiaries; (iii) form, join or in any way participate in a “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any securities of Neose or any of its subsidiaries; or (iv) otherwise act, whether alone or in concert with others, to seek to propose to Neose, any subsidiary of Neose or any of their stockholders any merger, business combination, restructuring, recapitalization or similar transaction to or with Neose or any of its subsidiaries or otherwise seek or propose to influence or control the management or policies of Neose.

23. Dispute Resolution

23.1. By Senior Officers. If any dispute arises under this Agreement which cannot be resolved expeditiously by the Joint Project Team after due consideration, the matter shall be submitted to the Chief Executive Officer of BioGeneriX and the Chief Executive Officer of Neose for resolution. If the two executives can not resolve the dispute to their mutual satisfaction within 30 days, the dispute shall be referred to arbitration under Section 23.2 below.

23.2. Arbitration

23.2.1. Except as otherwise provided, all disputes arising between Neose and BioGeneriX under this Agreement that have not been resolved in accordance with Section 23.1 shall be settled by arbitration conducted in accordance with the procedures of the International Chamber of Commerce (“ICC”). The version of the arbitration rules which are in force when the dispute occurs shall be decisive. The arbitration tribunal shall have one arbitrator, who shall be selected from the panels of the ICC by agreement of the parties, provided, however that if the parties cannot agree on the arbitrator, the arbitration tribunal shall consist of three arbitrators, one selected by Neose, one selected by BioGeneriX, and the third selected by the other two arbitrators. The arbitration tribunal may also decide on the validity of the arbitration agreement. The place of the arbitration tribunal shall be London, United Kingdom. The arbitration proceedings, orders and writs shall be in the English language.

23.2.2. Any award rendered by the arbitrators shall be binding upon the parties hereto and shall be final. Judgment upon the award may be entered in any court of record of competent jurisdiction.

23.2.3. Each party shall pay its own expenses of arbitration and the expenses of the arbitrators shall be equally shared unless otherwise ordered by the arbitrators.

24. Term and Termination

24.1. Term. The Agreement shall commence as of the Effective Date and, unless earlier terminated in accordance with this Section 24, shall continue in

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accordance with its terms until five years after the Commercial Product has been launched in both the BioGeneriX Territory and the Neose Territory. Six months before the expiry of the term of this Agreement, the parties shall negotiate the extension of the term for a further period of five years under substantially the same terms and conditions set forth in this Agreement.

24.2. Termination Upon ****. This Agreement may be terminated by BioGeneriX at the ****, provided that Neose receives written notice of such termination within 20 days after the ****. If this Agreement is terminated by BioGeneriX under this Section 24.2, Neose shall, at its election and upon written notice to BioGeneriX, be a “Continuing Licensee” for purposes of Section 24, with the rights and obligations set forth therein.

24.3. Termination for ****. This Agreement may be terminated by either party (i) upon 30 days written notice if the parties fail to reach mutual agreement upon the initiation of Clinical Development or commencement of Commercialization, as contemplated in Section 6.1 or 7.2, as the case may be, or (ii) upon 180 days written notice if in the good faith conclusion of the terminating party, there is ****. If this Agreement is terminated pursuant to clause (ii) of the preceding sentence, the non-terminating party shall, at its election and upon written notice to the terminating party, be a “Continuing Licensee” for purposes of Section 24, with the rights and obligations set forth therein.

24.4. Termination for ****. This Agreement may be terminated by a party upon 90 days written notice to the other party for **** based upon the occurrence of any of the situations described in Sections 24.4.1 through 24.4.7 if the situation has not been remedied within the 90-day period. If the situation causing the termination has not been caused by the terminating party, the terminating party shall, at its election and upon written notice to the other party, be a “Continuing Licensee” for purposes of Section 24, with the rights and obligations set forth therein.

24.4.1. ****

24.4.2. ****

24.4.3. ****

24.4.4. ****

24.4.5. ****

24.4.6. ****

**** Material has been omitted and filed separately with the Commission.

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24.4.7. ****

24.5. Termination Upon Breach. This Agreement may be terminated by a party upon breach by the other party of any **** party in this Agreement if, as a result, the non-breaching party is denied in **** and the breach is not substantially cured within 60 calendar days after the non-breaching party gives the breaching party written notice of such breach. The terminating party shall, at its election, be a “Continuing Licensee” for purposes of Section 24, with the rights and obligations set forth therein.

24.6. Partial Termination

24.6.1. Discontinued Projects. If the Joint Project Team for any reason does not approve the commencement or the continuation of research related to an indication of a Product in the Field, each party will have the right to purchase or license the rights to the project in the Field for a purchase price sufficient to reimburse the other party for the total Allowable Costs, if any, incurred by it with respect to such project, plus a reasonable royalty to the other party on sales of products resulting from such project, in an amount to be approved by the Joint Project Team. The acquiring party shall, upon request, be a “Continuing Licensee” with respect to such project for purposes of Section 24, with the rights and obligations set forth therein. If both parties offer to purchase or license a discontinued project, the project shall not be sold or licensed to either party, but shall remain in the Collaboration for development.

24.6.2. Mandatory Termination. This Agreement shall be terminated by either party as to any Product or indication if a court or governmental authority of competent jurisdiction in a final order or decree restrains or enjoins the development, manufacture or sale of the Product or indication under this Agreement in any material respect. If any such order or decree affects the development, manufacture or sale of any Product only in a particular country within the Territory, the termination of this Agreement shall apply only to that country.

24.6.3. EU. This Agreement shall terminate as provided in Section 24.1 or on a country-by-country basis in any country within the EU upon the expiration of the last to expire of the patents included in the Neose Technology. Six months before the expiry of the term of this Agreement as set forth in Section 24.1, the parties, however shall negotiate the extension of the term for a further period of five years under substantially the same terms and conditions set forth in this Agreement.

24.7. Effective Date of Termination. Unless otherwise provided in this Agreement, termination by either party pursuant to this Section 24 shall be effective on the date of delivery of written notice of termination to the other party hereto.

**** Material has been omitted and filed separately with the Commission.

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24.8. Rights and Obligations on Termination

24.8.1. Rights and Obligations of the Parties Upon One Party Becoming a Continuing Licensee. On the Continuing Licensee Effective Date, the parties shall have the ongoing rights and obligations set forth in Sections 9.8 and 24, which shall survive the termination of this Agreement until the Continuing Licensee ceases to develop or commercialize Products.

24.8.1.1. The Continuing Licensee shall have the exclusive right to develop and commercialize Products, worldwide, subject to the terms and conditions set forth in this Section 24.8.1. The other party (hereinafter referred to in this Section 24.8, individually, as the “Continuing Licensor”) promptly shall take any and all actions necessary or desirable to effect the grant to the Continuing Licensee of the manufacturing license provided in Section 9.8.1 (if the Continuing Licensee is Neose) or 9.8.2 (if the Continuing Licensee is BioGeneriX), and to grant to the Continuing Licensee any and all other rights that are reasonably required to permit the Continuing Licensee to develop and commercialize Products throughout the world, subject to the payment of ****, as determined in accordance with Section 24.8.1.2.

24.8.1.2. The licenses granted to the Continuing Licensee in accordance with Sections 9.8 and 24.8.1.1 shall be subject to payment to the Continuing Licensor of **** in each country or territory, at commercially reasonable rates, to be determined by the parties in good faith, at the time of the grant, taking into account: (i) benchmark **** in the industry for products (a) at a similar stage of development, (b) being developed for similar indications, and (c) having similar market potential; **** and (iv) any other significant factors mutually agreed upon by the parties. During the 45-day period following a party’s election to be a Continuing Licensee, the parties shall negotiate in good faith the royalties of the license required to be granted under Section 24.8.1.1 and any supply arrangements to be entered into under Section 24.8.1.3. If such royalties and supply arrangements shall not have been established, or such licenses shall not have been effectively granted during such 45-day period, the royalties shall be determined by the dispute resolution procedures set forth in Section 23.

24.8.1.3. Promptly after a party’s election to be a Continuing Licensee, the Continuing Licensor shall transfer to the Continuing Licensee, upon request, all Confidential Information in its possession that is necessary for the manufacture, use or sale of the applicable Product, except for one copy that may be retained in its confidential archives. In addition, if the Continuing Licensee is not the party supplying Products, or chemicals and enzymes required to make Products, under this Agreement, the Continuing Licensee may cause the Continuing Licensor to supply the Products, or any such chemicals and enzymes supplied by the Continuing Licensor, or to transfer to the Continuing Licensee the technology required to manufacture the

**** Material has been omitted and filed separately with the Commission.

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Products or required chemicals and enzymes, in each case upon commercially reasonable terms. The Continuing Licensee shall use Reasonable Commercial Efforts to identify a replacement manufacturer or establish a manufacturing facility for the Products, or required chemicals and enzymes, in a timely manner. The Continuing Licensor shall take such steps as are reasonably required to enable the Continuing Licensee to assume the business of producing the Products, including, without limitation: (i) providing all approvals, consents, documents and information that are necessary or desirable to permit the Continuing Licensee to enter into a development or supply agreement with each **** on substantially the same business terms as those in then in effect between the Continuing Licensor and the ****; (ii) providing all manufacturing information and descriptions of the applicable technology and processes used by the Continuing Licensor to manufacture Products, in sufficient detail to permit the Continuing Licensee to manufacture (or have manufactured) such Products in commercial quantities in an efficient manner; (iii) providing samples of all organisms or other materials and processes used in producing the Products, or required chemicals and enzymes; and (iv) providing such training of personnel as may be necessary to permit the Continuing Licensee to manufacture (or have manufactured) the Products. If for any reason the supplying party is not legally permitted to transfer the necessary technology or rights to the Continuing Licensee for these purposes, the supplying party will continue to provide the applicable Products, enzymes or chemicals under this Agreement or to otherwise make available to the Continuing Licensee the benefits of this Section 24.8.

24.9. ****.

24.10. Termination Fee. If either party terminates this Agreement pursuant to **** and the other party duly elects to become a Continuing Licensee, the terminating party shall pay a termination fee to the other party in an amount equal to ****. If either party terminates this Agreement pursuant to **** and duly elects to become a Continuing Licensee, the party terminated for breach shall pay a termination fee to the other party in an amount equal to ****. In either case, such termination fee shall be payable within ten days after the effective date of the termination.

24.11. Survival. Neither party shall be relieved of its obligations to pay any sums of money due or payable or accrued under this Agreement as of the date of its termination. Sections regarding confidentiality, royalty payments, access and inspection, warranties, indemnification, insurance, standstill, and rights and obligations on termination (including, without limitation, provisions relating to the rights and obligations of the Continuing Licensee and Continuing Licensor), and non-competition shall survive the termination of this Agreement. In addition, any provision required to interpret and enforce the parties’ rights and obligations under this Agreement also shall survive to the extent required for the full observation and performance of this Agreement in accordance with their respective terms.

**** Material has been omitted and filed separately with the Commission.

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24.12. Remedies Not Exclusive. The termination by either party pursuant to this Section 24 shall not prejudice any other remedy that a party might have in law or equity with the exception, however, of claiming compensation for consequential loss or indirect damages resulting from such termination. The termination fees provided in this Section 24 shall not be deemed exclusive remedies.

25. Certain Taxes

25.1. Withholding Taxes and VAT. In the event that any withholding tax is applicable to the payment of royalties or any other payment due by one party to the other party under this Agreement, the party obligated to pay such tax shall be responsible for payment of the tax and shall be entitled to reduce the amount of the respective royalties or other payment due by the amount of such tax paid. If any such withholding tax is payable by a party in respect of royalties or payments already paid, the other party shall refund the amount of the tax due. With respect to any VAT, Neose shall pay any VAT imposed by the U.S. tax authorities, and BioGeneriX shall pay any VAT imposed by the German tax authorities.

25.2. Evidence of Payment and Assistance. Each party shall promptly provide the other party such official receipts and other evidence of payment of taxes as the other party may reasonably request. Each party shall render reasonable assistance in order to allow the other party the benefit of any present or future treaty against double taxation applicable to the activities of the Collaboration.

26. Governmental Approval

26.1. HSR Filing. If a party duly elects to become a Continuing Licensee under this Agreement, each party shall make the determination as to whether filing under the HSR Act is required. If any HSR filing is required, to the extent necessary, each party shall file, as soon as practicable after the date this Agreement is executed, with the Federal Trade Commission (the “FTC”) and the Antitrust Division of the United States Department of Justice (the “Antitrust Division”) the notification and report form (the “Report”) required under the HSR Act with respect to the transactions as contemplated hereby and shall reasonably cooperate with the other party to the extent necessary to assist the other party in the preparation of its Report and to proceed to obtain necessary approvals under the HSR Act, including but not limited to the expiration or earlier termination of any and all applicable waiting periods required by the HSR Act. Each party shall bear its own expenses, including, without limitation, legal fees, incurred in connection with preparing such filings.

26.2. Obligations. Each party shall use its good faith efforts to eliminate any concern on the part of any court or government authority regarding the legality of the proposed transaction, including, if required by federal or state antitrust authorities, promptly taking all steps to secure government antitrust clearance, including, without limitation, cooperating in good faith with any government investigation including the prompt production of documents and information demanded by a second request for documents and of witnesses if requested.

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26.3. Additional Approvals. Each party will cooperate and use respectively all reasonable efforts to make all other registrations, filings and applications, to give all notices and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications authorizations, permits and waivers, if any, and to do all other things necessary or desirable for the consummation of the transactions as contemplated hereby. Neither party shall be required, however, to divest or out-license products or assets or materially change its business if doing so is a condition of obtaining approval under the HSR Act or other governmental approvals of the transactions contemplated by this Agreement.

26.4. Termination. If a Report is required to be filed under the HSR Act, either party hereto may terminate this Agreement by written notice to the other party, if, within one hundred twenty (120) days after a party duly elects to become a Continuing Licensee under this Agreement, approval of the provisions of this Agreement relating to the Continuing Licensee and Continuing Licensor under the HSR Act has not been obtained or the notice and waiting period, as may be extended by the FTC, under the HSR Act has not expired without adverse action regarding this Agreement or the transactions contemplated hereby. If this Agreement is terminated pursuant to this Section 26.4, then, notwithstanding any provision in this Agreement to the contrary, neither party hereto shall have any further obligation to the other party with respect to the subject matter of this Agreement.

27. Miscellaneous

27.1. Entire Agreement. This Agreement and the Exhibits, Schedules and Appendices hereto contain the entire understanding of the parties with respect to the subject matter hereof and supersede all previous verbal and written agreements, representations and warranties with respect thereto. This Agreement may be released, waived, modified or amended only by written agreement signed by the party against whom enforcement of any release, waiver, modification, amendment or other change is sought.

27.2. Headings; Definitions. The section headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. All references to any Section, Exhibit, Schedule or Appendix contained in this Agreement means a Section, Exhibit, Schedule or Appendix to this Agreement unless otherwise stated. All capitalized terms defined in this Agreement are equally applicable to both the singular and plural forms of such terms.

27.3. Force Majeure. Failure of any party to perform its obligations under this Agreement (except the obligation to make payments) shall not subject such party to any liability or place it in breach of any term or condition of this Agreement if such failure is caused by any cause beyond the reasonable control of the nonperforming party, including without limitation acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo, strikes or other labor trouble, failure in whole or in part of suppliers to deliver on schedule materials, equipment or machinery, interruption of or delay in transportation, a national health emergency or compliance with any order or regulation of

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any government entity acting with color of right, provided that the nonperforming party uses all reasonable efforts to limit the effects of the force majeure event.

27.4. No Interference with Existing Businesses. Each of BioGeneriX and Neose acknowledges that the other party is engaged in the business of developing, manufacturing, marketing and selling products and services outside the Field. Nothing in this Agreement shall prevent either party from continuing to carry on its business or from entering into agreements with third parties outside the Field.

27.5. Waiver. The failure of a party to enforce any breach or provision of this Agreement shall not constitute a continuing waiver of such breach or provision and such party may at any time thereafter act upon or enforce such breach or provision of this Agreement. Any waiver of breach executed by either party shall affect only the specific breach and shall not operate as a waiver of any subsequent or preceding breach.

27.6. No Assignment. No party may sell, assign, pledge or otherwise dispose of all or any portion of its interest in the Collaboration or right thereto without the prior written consent of the other party, except that no such consent is required for any such transfer to an Affiliate or to a successor to substantially all of the party’s business. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.

27.7. Severability. If any clause or provisions of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, such provision shall be severed and the remaining provisions of the Agreement shall continue in full force and effect. The parties shall use their best efforts to agree upon a valid and enforceable provision as a substitute for the severed provision, taking into account the intent of this Agreement.

27.8. Notices. Any notice, request or other communication required to be given pursuant to the provisions of this Agreement shall be in writing and shall be deemed to be given when delivered in person or three business days after being delivered to a recognized international courier service (e.g., Federal Express, DHL, UPS), charges prepaid, to the other party, addressed as follows:

If to BioGeneriX:	BioGeneriX AG
	High-Tech-Park Neckarau
	Janderstrasse 3
	D-68199 Mannheim
	Germany
	Attention: Chief Financial Officer

If to Neose:	Neose Technologies, Inc.
	102 Witmer Road
	Horsham, PA 19044
	USA
	Attention: General Counsel

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27.9. Choice of Law. This Agreement shall be governed by the laws of the Federal Republic of Germany without regard to provisions for conflicts of law. The UN Convention for International Sale of Goods shall be explicitly excluded.

27.10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which, together, shall constitute the same document.

IN WITNESS WHEREOF, each party has caused this Agreement to be signed by its duly authorized representative(s) as of the date first above written.

BIOGENERIX GMBH		NEOSE TECHNOLOGIES, INC.

By:	/s/ ELMAR SCHÄFER	By:	/s/ C. BOYD CLARKE

Name:	Elmar Schäfer	Name:	C. Boyd Clarke

Title:	Chief Executive Officer	Title:	President and CEO

By:	/s/ KLAUS MALECK, Ph.D.

Name:	Klaus Maleck, Ph.D.

Title:	Chief Financial Officer

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Exhibit A

Specifications

[to be completed during Preclinical Development – intentionally left blank]

A-1

Exhibit B

Licensed Intellectual Property Rights

Party	Licensed Right	Licensor
****	****	****

**** Material has been omitted and filed separately with the Commission.

B-1

Exhibit C

Licensed Manufacturing Rights

Party	Licensed Right	Licensee
****	****

**** Material has been omitted and filed separately with the Commission.

C-1

Exhibit D

Form of Press Release

Neose and BioGeneriX Announce Research, Co-Development and Marketing Agreement for GlycoPEGylated™ Next Generation Protein

________ __, 2004, Horsham, PA and Mannheim, Germany. Neose Technologies, Inc. (Nasdaq NM: NTEC) and BioGeneriX AG, a company of the ratiopharm Group, today announced that they have signed an agreement to use Neose’s proprietary GlycoPEGylation™ technology to develop a long-acting, next-generation version of granulocyte colony stimulating factor (G-CSF). G-CSF is a protein used to promote the production of infection-fighting white blood cells.

Under the agreement, Neose and BioGeneriX, will pursue development and commercialization of a next-generation G-CSF. The parties will share preclinical expenses, and BioGeneriX will fund the entire clinical development program. If Neose and BioGeneriX proceed to commercialization, Neose will have commercial rights in the U.S., Canada, Mexico and Japan. BioGeneriX will have commercial rights in Europe and rest of world. Each company will receive royalties on product sales in the other company’s territory.

“We are pleased to be working with Neose on this project to develop a long-acting, next-generation product,” said Elmar Schäfer, BioGeneriX’s chief executive officer. Neose is committed to the development of next-generation proteins, and their GlycoPEGylation technology offers a unique approach to accessing this opportunity.”

“This is an important collaboration for Neose,” said Boyd Clarke, Neose’s chairman and chief executive officer. “It is our first co-development partnership for one of our proprietary protein candidates. BioGeneriX has emerged as a leader in the field of ‘follow-on’ biologics, and is now undertaking an investment in the development of clinically improved, next-generation proteins. This agreement allows Neose to access a supply of G-CSF, share the risks of development and yet retain commercial rights in key territories.”

About BioGeneriX

[to be provided by BioGeneriX]

About the ratiopharm Group

[to be provided by BioGeneriX]

About Neose

Neose is a biopharmaceutical company focused on the improvement of protein therapeutics using its proprietary technologies. By applying its GlycoAdvance™ and GlycoPEGylation™ technologies, Neose is developing improved versions of currently marketed therapeutics with proven efficacy. These next-generation proteins are expected

D-1

to offer significant advantages over first-generation drugs that are now on the market, such as less frequent dosing and improved safety and efficacy. In addition to developing its own products or co-developing products with others, Neose expects to enter into strategic partnerships for the inclusion of its technologies into products being developed by other biotechnology and pharmaceutical companies.

About GlycoPEGylation™

Neose’s GlycoPEGylation technology can extend and customize protein half-life by uniquely linking various size PEG (polyethylene glycol) polymers to glycans that are remote from the protein’s active site, thereby preserving activity. Proteins that have not benefited from traditional chemical pegylation may benefit from GlycoPEGylatIon.

CONTACTS:

Neose Technologies, Inc.	BioGeneriX AG

Robert I. Kriebel	Federico Pollano

Sr. Vice President	Head of Business Development

and Chief Financial Officer	49-621-875 56 17

Barbara Krauter

Manager, Investor Relations

(215) 315-9000

E-mail: info@neose.com

For more information, please visit www.neose.com.

Neose “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of these risks and uncertainties, any of which could cause our actual results to differ from those contained in the forward-looking statement, see the section of Neose’s Annual Report on Form 10-K for the year ended December 31, 2003, entitled “Factors Affecting the Company’s Prospects” and discussions of potential risks and uncertainties in Neose’s subsequent filings with the SEC.

D-2

EX-99 4 ne907875ex106.htm EXHIBIT 106

Exhibit 10.6

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND
SEPARATELY FILED WITH THE COMMISSION

RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

NEOSE TECHNOLOGIES, INC.

AND

MACROGENICS, INC.

DATED April 26, 2004

Table of Contents

		Page

1.	DEFINITIONS.	1
2.	CONDUCT OF THE PROJECT AND DEVELOPMENT EFFORTS	8
3.	OPTION AND INTELLECTUAL PROPERTY GRANTS	10
4.	OWNERSHIP OF INTELLECTUAL PROPERTY	13
5.	FEES AND MILESTONES	16
6.	DILIGENCE IN COMMERCIAL DEVELOPMENT	19
7.	CONFIDENTIALITY	20
8.	REPRESENTATIONS AND WARRANTIES	22
9.	INDEMNIFICATIONS AND LIMITED LIABILITY	24
10.	TERM AND TERMINATION	25
11.	DISPUTE RESOLUTION	27
12.	GOVERNMENT APPROVAL	28
13.	MISCELLANEOUS	29

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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT

This RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT (“Agreement”), is dated April 26, 2004, between Neose Technologies, Inc., a Delaware corporation (“Neose”), and MacroGenics, Inc., a Delaware corporation (“MacroGenics”).

BACKGROUND

Neose has developed and continues to develop proprietary technologies and related know-how for the glycosylation, design and remodeling of proteins, peptides and antibodies. MacroGenics has developed and continues to develop proprietary technologies and related know-how for developing, manufacturing and commercializing biotechnology products, including immunotherapeutics, for cancer, infectious diseases, and autoimmune disorders.

Neose and MacroGenics wish to conduct collaborative research and development activities to evaluate the effects of glycosylation and pegylation on antibodies **** using their respective technologies and materials, and, further, to provide MacroGenics certain rights and options to use Neose’s proprietary technologies.

TERMS

NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained in this Agreement, and intending to be legally bound hereby, MacroGenics and Neose agree as follows:

1. DEFINITIONS. Capitalized terms not otherwise defined shall have the meaning set forth in this Section 1.

1.1. “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. Without limiting the foregoing, a Person shall be regarded as in control of another Person if it owns, or directly or indirectly controls, more than 50% of the voting stock or other ownership interest of the other Person.

1.2. “Antibody” means (i) a ****, (ii) a **** described in clause (i) above, and/or (iii) a **** described in clause (i) above or **** described in clause (ii) above.

1.3. “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31 for so long as this Agreement is in effect.

1.4. “Categories” means the categories of Potential Products on which work may be conducted under the Research Plan, as determined from time to time after taking into account the substitutions made in accordance with this Agreement and excluding all Deleted Categories. As of the Effective Date, the Categories include:

1.4.1. ****

**** Material has been omitted and filed separately with the Commission.

1.4.2. ****

1.4.3. ****

1.4.4. ****; and

1.4.5. ****

1.5. “Category” means any of the Categories, as determined from time to time.

1.6. “Collaboration” means the work conducted by either or both of the Parties during the Research Period in furtherance of the Research Plan.

1.7. “Collaboration Products” means any and all Potential Products that have been modified, to any extent, in the Collaboration or by MacroGenics by use of the Neose Technology under any license granted hereunder, excluding Deleted Products.

1.8. “Collaboration Technology” means the Patent Rights, Know-How and Improvements created by either or both Parties, in the Collaboration.

1.9. “Commercially Reasonable Efforts” shall mean efforts and resources normally used by a Party in similar undertakings, taking into account the proprietary position of the product or technology involved, the regulatory structure involved, the profitability of such undertaking, the competitiveness of the relevant marketplace, and other relevant factors.

1.10. “Commercial Sale” means any sale of a Licensed Product by MacroGenics, its Affiliates, or Sublicensees to a Person other than their respective Affiliates or Neose.

1.11. “Confidential Information” means any information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, service plans, services, customer lists and customers, markets, software, developments, inventions, processes, formulas, technology, processes, designs, drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures, finances and other business information which a Party treats as its confidential and/or proprietary information.

1.12. “Control” or “Controlled” means possession of the ability to grant a license or sublicense as provided for herein without violating the terms of an agreement or other arrangement with a Third Party existing before or after the Effective Date.

1.13. “Deleted Category” means a Category that is deleted from the Research Plan and this Agreement as a result of the permitted substitution of another Category or the failure to satisfy applicable commercial diligence milestones under Section 6.

**** Material has been omitted and filed separately with the Commission.

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1.14. “Deleted Product” means a Collaboration Product in a Deleted Category which Collaboration Product is not covered by a ****.

1.15. “Designated Representative” means, in the case of Neose, its Executive Vice President, Commercial and Clinical Development, or such other person designated by Neose in writing from time to time to MacroGenics, and, in the case of MacroGenics, its Chief Operating Officer, or other such other person designated by MacroGenics in writing from time to time to Neose.

1.16. “Designation Period” means the period beginning on the Effective Date and ending on the fifth anniversary of the Effective Date.

1.17. “Effective Date” means the date of execution of this Agreement by both parties, as first set forth above.

1.18. “FDA” means the United States Food and Drug Administration and any successor agency.

1.19. “Field of Use” means the treatment and/or prevention of a disease or disorder in humans.

1.20. “First Licensed Products” means each of the first two Collaboration Products in a Licensed Category with respect to which an IND is filed, or any Collaboration Product in a Licensed Category thereafter substituted for a First Licensed Product by MacroGenics, provided that there shall be no more than two First Licensed Products at any time during the Term.

1.21. “GMPs” shall mean current good manufacturing practices for the methods to be used in, and the facilities and controls to be used for, the manufacture, processing, packing and holding of biological products, all as set forth from time to time by the FDA, including all amendments and supplements thereto throughout the term of this Agreement.

1.22. “HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

1.23. “Joint Improvements” means Improvements owned jointly by the Parties, as described in Section 4.2.3.

1.24. “Improvements” means any and all developments, discoveries, inventions, additions, amendments, modifications, ideas, processes, methods, compositions, formulae, techniques, information and data, whether or not patentable, conceived, developed or reduced to practice, that improve or beneficially change, or enhance the economic and technical attributes of, any Know-How or Patent Rights or any process, device or composition.

**** Material has been omitted and filed separately with the Commission.

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1.25. “IND” means an application for an Investigational Exemption for a New Drug filed with the FDA, or any comparable filing made with a regulatory authority outside the United States.

1.26. “Know-How” means any and all formulae, procedures, processes, methods, designs, know-how, show-how, trade secrets, discoveries, inventions (whether or not patentable), patent applications, licenses, software and source code, programs, prototypes, designs, discoveries, techniques, methods, ideas, concepts, data, engineering and manufacturing information, electronic control circuits, specifications, diagrams, drawings, schematics, blueprints and parts lists and other proprietary information, rights and works of authorship, whether or not reduced to writing.

1.27. “License Effective Date” shall mean, with respect to a license to be granted hereunder with respect to a Category, the later of (i) the first date on which MacroGenics designates the Category as a Licensed Category under Section 3.2 or (ii) if notification is required to be made under the HSR Act in respect of such grant, the expiration or earlier termination of any notice and waiting period under the HSR Act.

1.28. “Licensed Categories” means each of the Categories designated as such in MacroGenics’ exercise of the Option in accordance with Section 3.2, as determined from time to time after taking into account the substitutions made in accordance with this Agreement and excluding all Deleted Categories.

1.29. “Licensed Products” means each and every First Licensed Product, Second Licensed Product and Subsequent Licensed Product, with respect to which a license has been granted by Neose hereunder and remains in effect at the time of such determination.

1.30. “MacroGenics Improvements” means any and all Collaboration Technology (i) constituting or claiming the composition of any Potential Product in a Licensed Category or any Collaboration Product; (ii) constituting Improvements to MacroGenics ****; and/or (iii) constituting Improvements to Know-How owned or Controlled by MacroGenics on the Effective Date, except, in each case, Collaboration Technology constituting or claiming the composition of any Deleted Product.

1.31. “MacroGenics Patents” means (i) all Patent Rights owned or Controlled by MacroGenics on the Effective Date, (ii) all Patent Rights relating to the Collaboration that are acquired by MacroGenics after the Effective Date and owned or Controlled by MacroGenics during the Research Term; (iii) all Patent Rights in the MacroGenics Improvements; and (iv) MacroGenics’ interest in and to any Patent Rights in Joint Improvements.

1.32. “MacroGenics Technology” means MacroGenics Patents and MacroGenics Improvements and MacroGenics undivided interest in any and all Joint Improvements.

**** Material has been omitted and filed separately with the Commission.

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1.33. “Material” means any and all of the materials transferred by one Party to the other for the purposes of this Agreement, as contemplated in Section 2.9.

1.34. “Mutual Confidentiality Agreement” means the Mutual Confidentiality Agreement between the Parties dated June 20, 2003.

1.35. “Neose Improvements” means any and all Collaboration Technology (i) constituting Improvements to the Neose Patents owned or Controlled by Neose on the Effective Date; (ii) constituting Improvements to the Patent Rights acquired by Neose after the Effective Date and owned or Controlled by Neose during the Research Term; (iii) constituting or claiming the composition of any Deleted Product; and/or (iv) constituting Improvements to Know-How owned or Controlled by Neose on the Effective Date, except, in each case, any Collaboration Technology constituting or claiming the composition of any Potential Product in a Licensed Category or any Collaboration Product.

1.36. “Neose Patents” means (i) all Patent Rights owned or Controlled by Neose on the Effective Date and all Patent Rights acquired by Neose after the Effective Date and owned or Controlled by Neose during the Term, which Patent Rights relate to methods and processes for glycosylation, pegylation, design and remodeling of proteins, peptides or Antibodies (including, without limitation, Neose’s GlycoAdvance™, GlycoPEGylation™ and GlycoConjugation™ technologies), and other carbohydrate synthesis processes and resulting products; (ii) all Patent Rights in the Neose Improvements; and (iii) Neose’s interest in and to any Patent Rights in Joint Improvements.

1.37. “Neose Technology” means the Neose Patents, Know-How Controlled by Neose on the Effective Date, Know-How resulting from work conducted by Neose under the Research Plan, Neose Improvements, Neose’s undivided interest in any and all Joint Improvements; and Neose’s rights under the license agreements listed on Exhibit 1.37.

1.38. “Net Sales” means proceeds received from Commercial Sales of Licensed Products by MacroGenics, its Affiliates or Sublicensees to Third Parties, after deducting (to the extent actually incurred or reasonably estimated and accrued in accordance with Generally Accepted Accounting Principles in the United States and to the extent not already deducted in the amount invoiced): (i) reasonable trade, cash and quantity discounts or rebates (other than price discounts granted at the time of sale), reasonable service allowances and reasonable required agent’s commissions, if any, allowed or paid, (ii) credits or allowances actually given or made for rejection or return of previously sold products or for retroactive price reductions (including Medicare, Medicaid, and/or discounts and similar types or rebates and/or discounts), (iii) taxes, duties or other governmental charges levied on or measured by the billing amount (excluding income and franchise taxes), as adjusted for rebates and refunds, and (iv) charges actually incurred for freight and insurance directly related to the distribution of Licensed Products (excluding amounts reimbursed by Third Party customers). A Commercial Sale of a Licensed Product is deemed to occur when the invoice is issued, or if no invoice is issued, upon the earlier of shipment or transfer of title in the Licensed Product to a Third Party.

1.39. “Option” means the option granted to MacroGenics in Section 3.1.

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1.40. “Ownership Rights” means any and all right, title and interest under patent, copyright, trade secret and trademark law, or any other intellectual property or other law, in and to any Know-How, Patent Rights, or Improvements.

1.41. “Parties” means MacroGenics and Neose, collectively.

1.42.“Party” means MacroGenics or Neose, as the context requires, or each of MacroGenics and Neose, individually.

1.43. “Patent Rights” means any patents or patent applications, including all corresponding foreign patents and patent applications, all divisions, continuations, continuations-in-part, reissues, renewals, extensions or additions to any such patents and patent applications.

1.44. “Permit” means any governmental or regulatory filing, submission, approval, permit or license that is required by applicable law in any jurisdiction worldwide for clinical trials, Commercial Sales or other use of any of the Licensed Products.

1.45. “Person” means an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, government, governmental agency, authority or instrumentality, or any other form of entity not specifically listed in this Agreement.

1.46. “Potential Products” means each and every potential product or product within any of the Categories, as determined from time to time, excluding Deleted Products.

1.47. “Project Manager” means the project managers described in Section 2.5.

1.48. “Reagents” means the enzymes and sugar nucleotides required for the use of the Neose Technology in the manufacture of Licensed Products.

1.49. “Regulated Market” means any jurisdiction worldwide that requires a Permit for clinical trials, Commercial Sales or any other use of a Licensed Product.

1.50. “Regulatory Approval” means any marketing authorization (including authorizations approving a Biologics License Application) required for a Licensed Product, exclusive of any pricing or third-party reimbursement approval.

1.51. “Required Agreement” means the form of agreement with a Sublicensee required under Section 3.4.

1.52. “Research Period” means the **** during which the Parties conduct activities under the Research Plan, which may be extended by amendment of this Agreement.

1.53. “Research Plan” means the Research Plan attached as Exhibit 2.1, as amended from time to time in accordance with this Agreement.

**** Material has been omitted and filed separately with the Commission.

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1.54. “Royalty Period” means, with respect to a Licensed Product in a country, the period beginning on Commercial Sale of the Licensed Product in the country and ending ****, provided however, that the period shall continue thereafter for a Licensed Product sold in a country for as long as the Licensed Product in such country infringes a Valid Claim of a Neose Patent in such country.

1.55. “Second Licensed Products” means each of the third and fourth Collaboration Products in a Licensed Category with respect to which an IND is filed, or any Collaboration Product in a Licensed Category substituted for a Second Licensed Product by MacroGenics, provided that there shall be no more than two Second Licensed Products at any time during the Term.

1.56. “Sublicense” means a sublicense of any or all of MacroGenics’ rights under the Neose Technology granted in accordance with Section 3.

1.57. “Sublicensee” means a sublicensee under a Sublicense.

1.58. “Subsequent Licensed Products” means each of the fifth and any subsequent Collaboration Products in a Licensed Category with respect to which an IND is filed.

1.59. “Territory” means the world.

1.60. “Term” means the term of this Agreement, which shall commence on the Effective Date and shall expire or terminate as described in Section 10.

1.61. “Third Party” means any Person other than MacroGenics, Neose, or their respective Affiliates.

1.62. “Valid Patent Claim” means a claim of an issued and unexpired patent forming part of the Neose Patents that has not been held revoked, unenforceable or invalid by a decision of a court or other government agency of competent jurisdiction, or that is unappealable or unappealed within the time allowed for appeal, or which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise. For the purposes of determining royalties due and payment obligations under this Agreement, any claim being prosecuted in a pending patent application included in the Licensed Patents shall be deemed a Valid Patent Claim for a period ending six (6) years after the earliest priority date to which the pending patent application is entitled.

**** Material has been omitted and filed separately with the Commission.

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2. CONDUCT OF THE PROJECT AND DEVELOPMENT EFFORTS

2.1. Conduct and Goal. Commencing promptly after the Effective Date, Neose and MacroGenics will use Commercially Reasonable Efforts to carry out their respective obligations under the Research Plan attached as Exhibit 2.1. The goal of the Research Plan is to achieve proof of concept. The Research Plan sets forth a **** summary and timetable for the research and development activities to be conducted by the Parties under this Agreement. The Research Plan may be amended or modified from time to time, but only in a writing signed by each Party’s Designated Representative.

2.2. Selection and Substitution of Potential Products during Research Period. The Research Plan sets forth the Potential Products contemplated by the Parties to be included in the Collaboration on the Effective Date. MacroGenics shall have the right, from time to time, and on one or more occasions during the Research Period, to substitute for any Potential Product included in the Research Plan another Potential Product within the same Category. Any such substitution shall be made by an amendment of this Agreement, which shall include, without limitation, the funding of any additional work to be conducted by Neose beyond the scope of the original Research Plan, as provided in Section 2.4.

2.3. Substitution of Categories. At any time during the Designation Period, MacroGenics shall have the right, in up to two instances, to request the substitution of a new category for a Category or a Licensed Category. MacroGenics shall request any such substitution by providing notice to Neose of the proposed new category and the Category proposed to be deleted. Such a request by MacroGenics shall be granted by Neose unless Neose:

2.3.1. is developing or contemplating development of a protein in the proposed category;

2.3.2. has granted a Third Party a license to develop a protein or product in the proposed category; or

2.3.3. is in discussions with a Third Party to develop or to license rights to develop a protein in the proposed category.

Neose shall provide notice to MacroGenics responding to such request within thirty (30) days after receipt of MacroGenics’ notice. Upon notice from Neose accepting the proposed substitution or the failure by Neose to give the required notice within thirty (30) days: (i) the proposed category, thereafter, shall be deemed one of the Categories (as defined in Section 1.4) or a Licensed Category , as the case may be, and the Category proposed to be deleted, thereafter, shall be deemed a Deleted Category. Notwithstanding any other provision of this Section 2.3, the new Category shall not be included in the Research Plan unless Neose shall have received notice thereof during the Research Term prior to the commencement of work by Neose on the Category proposed to be deleted.

**** Material has been omitted and filed separately with the Commission.

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2.4. Funding. Each Party shall be responsible for funding its own activities under the Research Plan. If the Research Plan is amended to increase the work of Neose thereunder or if MacroGenics undertakes the further development of any Licensed Product beyond the scope of the Research Plan, MacroGenics shall be solely responsible for such activities and the costs thereof. By mutual agreement, with each Party acting in its sole discretion with respect thereto, Neose may provide additional research and development services to MacroGenics (e.g., to support the supply and scale-up of Reagents for such further development), and MacroGenics would reimburse Neose for its fully allocated costs associated with any such services.

2.5. Coordination of the Collaboration by Project Managers. Within 30 days after the Effective Date, each of the Parties shall appoint a Project Manager, who will be its primary contact regarding the Collaboration. The Project Managers shall keep each other reasonably informed of the progress under the Research Plan. The Project Managers shall have appropriate authority and decision-making power to carry out their respective responsibilities hereunder. The Project Managers shall be responsible for overseeing and directing the research under and in accordance with the Research Plan. A Party may change its Project Manager at any time, and from time to time, effective upon notice to the other Party of such change.

2.6. Cooperation. Throughout the Collaboration, the Parties shall work together in fulfilling their roles and responsibilities under the Research Plan, including the generation, exchange, and sharing of all resulting data and technical reports.

2.7. Dispute Resolution. If the Project Managers are unable to resolve, after 30 days, a dispute regarding any issue presented to them or arising in connection with the Collaboration, such dispute shall be referred to the Designated Representatives for good faith resolution pursuant to Section 11.1.

2.8. Permits. With respect to any clinical trials, Commercial Sales or other use of any Licensed Product in a Regulated Market, MacroGenics shall be responsible at its expense for obtaining all Permits required for such activity in the applicable jurisdictions. MacroGenics shall be responsible for the submission of all applications for Permits for the Licensed Products, which shall be obtained and held in the name of MacroGenics or its Affiliate(s) or Sublicensee(s), as appropriate. Neose, at MacroGenics’ expense, shall provide reasonable assistance and technical support to MacroGenics in obtaining the Permits for the Licensed Products. MacroGenics shall pay all expenses with respect to obtaining the Permits for the Licensed Products including, without limitation, the cost of clinical trials and preparation and prosecution of permit applications. MacroGenics shall be solely responsible for renewing any Permits at its expense.

2.9. Transfer of Materials. From time to time during the Term, each Party may transfer to the other Party certain materials for use in performing its obligations under the Research Plan. It is contemplated that Neose will provide to MacroGenics one or more of the following materials: ****. It is also contemplated that MacroGenics will provide to Neose one

**** Material has been omitted and filed separately with the Commission.

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or more of the following materials: ****. All Materials shall be transferred and received by the Parties subject to following terms and conditions.

2.9.1. The Party receiving Material (“Recipient”) agrees to defend, indemnify, and hold harmless the Party providing such Material (“Provider”) from any Third Party loss, claim, damage, or liability of any kind whatsoever, which may arise from Recipient’s use, storage, or disposal of the Material, and Recipient assumes liability for claims or damages which may arise from its use, storage or disposal of such Material, except to the extent that such liability may arise from gross negligence or malfeasance on the part of the Provider.

2.9.2. The Recipient shall use the Material received hereunder solely for the purpose of performing its obligations under this Agreement and subject to its terms. The Recipient shall not transfer any of the Material received hereunder, or any progeny, derivatives, or modifications thereof, to any Person other than its employees who require such access for the purpose of performing its obligations under this Agreement, except with the prior written consent of the Provider. In no event shall the Recipient use any Material received hereunder in human beings (including for diagnostic purposes).

2.9.3. Any research involving the Material received hereunder (including but not limited to research involving the use of animals and recombinant DNA) shall be conducted in accordance with all federal, state, local, and other laws, regulations and ordinances governing such research including applicable NIH guidelines.

2.9.4. Upon expiration or termination of this Agreement, each Recipient will immediately discontinue its use of the Material received hereunder and will, upon direction of the Provider, return or destroy such Material.

2.10. Additional Development Activities. Except as set forth in the Research Plan, Neose shall not have any obligation to perform any further research, development, scale-up services, technology transfer, technical support, improvements, modifications, or any other activities under this Agreement. If MacroGenics undertakes the development of any Collaboration Product after the expiration or termination of the Research Plan, MacroGenics will assume the full responsibility and costs thereof. MacroGenics acknowledges that it does not have, and shall not acquire hereunder, any rights under the Neose Technology to develop any Collaboration Product other than a Collaboration Product in a Licensed Category.

2.11. Additional ****.****. Except for the licenses to be granted by Neose under Section 3, **** that may be **** in connection with the development and/or commercialization of Licensed Products.

3. OPTION AND INTELLECTUAL PROPERTY GRANTS

3.1. Option. Neose hereby grants to MacroGenics a sole and exclusive right and option to obtain an exclusive license under the Neose Technology to develop and commercialize Collaboration Products in each of two Categories. The Option may be exercised

**** Material has been omitted and filed separately with the Commission.

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as set forth in Section 3.2. Neose covenants and agrees that during the Designation Period: (i) Neose will not grant any rights or licenses to any Third Party with respect to any Potential Product in any Category, and (ii) except for the Collaboration, Neose will not perform any work or research with any Potential Product in any Category.

3.2. Option Exercise. On one or two occasions during the Designation Period, by notice from MacroGenics to Neose, MacroGenics shall have the right to designate up to two Categories as Licensed Categories, and, in each instance, upon the License Effective Date, Neose shall grant a license with respect to the Licensed Category as provided in Section 3.3.

3.3. Exclusive License With Respect to Two Categories. Subject to the terms and conditions of this Agreement, Neose hereby agrees to grant to MacroGenics, with respect to each of two Licensed Categories, as of the respective License Effective Date, an exclusive, royalty-bearing license (or sublicense) under the Neose Technology ****, (i) to make, have made, use, sell, offer to sell and import Potential Products in the Licensed Category in the Field of Use in the Territory, and (ii) to make, have made and use Reagents in the Territory solely for the purpose of making and having made Potential Products in the Licensed Category. The licenses granted pursuant to this Section 3.3 shall include a right to grant Sublicenses in accordance with Section 3.4.

3.4. Sublicense Rights. Prior to the earlier of entering into a Sublicense or providing a proposed Sublicensee with Confidential Information of Neose, MacroGenics shall give notice to Neose identifying, and seeking Neose’s approval of, the proposed Sublicensee. Neose shall have the right to deny such approval, by notice to MacroGenics within twenty (20) days after receipt of MacroGenics’ notice, if Neose demonstrates that the proposed Sublicensee: (i)****. If Neose approves a proposed Sublicensee or does not respond to MacroGenics’ notice regarding a proposed Sublicensee within the twenty (20)-day period, MacroGenics shall be entitled: (x) to provide Confidential Information of Neose to the proposed Sublicensee after delivering to Neose an original non-disclosure and non-use agreement substantially in the form attached hereto as Exhibit 3.4 which has been duly executed by the proposed Sublicensee; and/or (y) to enter into a Sublicense with the proposed Sublicensee, which Sublicense shall contain provisions requiring the Sublicensee to comply with the provisions of this Agreement relating to Confidential Information and the ownership of intellectual property (including, without limitation, the provisions of Section 4 of this Agreement applicable to MacroGenics), which provisions shall be provided to Neose by MacroGenics at least five (5) business days before the execution of the Sublicense. If Neose duly denies approval of a proposed Sublicensee, MacroGenics shall not provide the proposed Sublicensee any Confidential Information of Neose and shall not enter into a Sublicense with the proposed Sublicensee.

3.5. Liability. MacroGenics shall remain primarily liable to Neose for the performance by each Affiliate and Sublicensee in accordance with the terms and conditions of this Agreement that are applicable to an Affiliate or Sublicensee, as the case may be.

3.6. Reservation of Rights. Neose hereby reserves to itself all right, title and interest in and to the Neose Technology not expressly granted in any license that may be granted

**** Material has been omitted and filed separately with the Commission.

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pursuant to Section 3.3. Without limiting the foregoing, in no event shall this Agreement be construed to prohibit Neose from engaging in any of the following activities: (a) practicing the processes, methods and Know-How of the Neose Technology outside of the Categories at any time, or outside of the Licensed Categories at any time following the Designation Period, in each case, within the Field of Use or otherwise and including, without limitation, with potential products or products that may be considered competitive with any of the Licensed Products; (b) developing, making, using or selling proteins or Reagents, whether in conjunction with the Neose Technology or otherwise, for any use except in connection with the development or commercialization of Potential Products in any Category during the Designation Period, or in any Licensed Category at any time following the Designation Period; or (c) entering into and performing agreements with Third Parties regarding any of the foregoing including, without limitation, research agreements, development agreements and licensing agreements.

3.7. MacroGenics Technology. Subject to the terms and conditions of this Agreement, and solely to the extent necessary to enable Neose to carry out its obligations under the Research Plan, MacroGenics hereby grants to Neose, for the Research Period, a non-exclusive, royalty-free, license under the MacroGenics Technology to use such MacroGenics Technology for the sole purpose of carrying out its obligations under the Research Plan. MacroGenics shall retain at all times all of its rights, title and interest to the MacroGenics Technology.

3.8. No Other Right or Licenses. Except for the rights and licenses expressly granted in this Agreement or granted upon the exercise of the Option, nothing in this Agreement shall be deemed to grant to any Party or Person any other rights or licenses, including, without limitation, any implied licenses.

3.9. Restriction on Exercise of License Rights. Under the licenses granted to MacroGenics pursuant to Section 3.3, MacroGenics shall not, and shall not grant to any Third Party the right to, make, have made, use, sell, offer to sell, or import any Potential Product in any Licensed Category that would result in there being more than two First Licensed Products and two Second Licensed Products at any time during the Term, unless and until the Parties shall have negotiated the fees, milestones, royalties, and any other special terms applicable to the exercise of any such rights with respect to Subsequent Licensed Products, with each Party acting in its sole discretion with respect to such negotiations.

3.10. Compliance with Sublicenses. From and after the License Effective Date of a license granted in accordance with Section 3.3, except for the payment provisions, MacroGenics shall comply with the terms and conditions of each license under which Neose is the licensee, which license is included in the Neose Technology licensed to MacroGenics with respect to Potential Products in the Licensed Category in the Field of Use. ****

3.11. Technology Transfer. Promptly following the License Effective Date of a license granted in accordance with Section 3.3, Neose shall use Commercially Reasonable Efforts to transfer to MacroGenics the Know-How owned or Controlled by Neose that is useful

**** Material has been omitted and filed separately with the Commission.

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in connection with the exercise by MacroGenics of its rights under such license with respect to Potential Products in the Licensed Category in the Field of Use.

4. OWNERSHIP OF INTELLECTUAL PROPERTY

4.1. Intellectual Property Rights. All Ownership Rights in and to the Neose Technology shall remain at all times with Neose. All Ownership Rights in and to the MacroGenics Technology shall remain at all times with MacroGenics, subject to the Parties’ obligations to assign certain Ownership Rights to the other Party under Sections 4.3 and 4.4.

4.2. Improvements

4.2.1. Neose Improvements. Any and all Neose Improvements shall be owned solely by Neose and shall be deemed to be part of the Neose Technology for all purposes, including, without limitation, the licenses to be granted under Section 3.3. Except as provided in Section 4.4, any and all Collaboration Technology constituting Improvements made, conceived, or reduced to practice solely by Neose shall be owned by Neose.

4.2.2. MacroGenics Improvements. Any and all Collaboration Technology constituting MacroGenics Improvements shall be owned solely by MacroGenics for all purposes, including, without limitation, the license granted under Section 3.7. Except as set forth in Section 4.3, any and all Improvements made, conceived, or reduced to practice, solely by MacroGenics shall be owned by MacroGenics.

4.2.3. Joint Improvements. Except as otherwise provided in this Section 4.2.1 or 4.2.2, each of Neose and MacroGenics shall own a one-half undivided interest in any Collaboration Technology constituting Improvements made, conceived, or reduced to practice jointly by Neose and MacroGenics, whether patentable or not, provided, however, that a Party shall lose its one-half undivided interest in any Patent Rights included in Joint Improvement with respect to which it does not fund patent prosecution and maintenance costs, as provided in Section 4.5.

4.3. Assignment by MacroGenics. To the extent that MacroGenics may obtain or retain any Ownership Rights in any Neose Improvements, MacroGenics hereby irrevocably assigns and transfers, and agrees to assign and transfer, to Neose any and all such Ownership Rights, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration, and Neose shall be entitled to receive and hold in its own name all such Ownership Rights. With respect to any Ownership Rights that MacroGenics is required to assign and transfer to Neose under this Section 4.3, at the request of Neose and at Neose’s expense, either before or after termination of the Term, MacroGenics shall assist Neose in acquiring and maintaining patent, copyright, trade secret and trademark protection upon, and confirming Neose’s title in and to, any such respective Ownership Rights, and MacroGenics shall provide Neose appropriate documentation evidencing Ownership Rights to which Neose is entitled. MacroGenics’ assistance shall include, but shall not be limited to, signing all applications, and any other documents and instruments for patent, copyright and any other proprietary rights, providing executed license documents, cooperating in legal proceedings, and taking any other actions considered necessary or desirable by Neose. For the purpose of

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facilitating the above assignments, MacroGenics agrees that any and all employees and contractors employed or engaged by MacroGenics and providing any service in connection with the Collaboration, prior to providing such service, shall have agreed in writing to covenants consistent with MacroGenics’ covenants set forth in this Section 4.3.

4.4. Assignment by Neose. To the extent that Neose may obtain or retain any Ownership Rights in any MacroGenics Improvements, Neose hereby irrevocably assigns and transfers to MacroGenics any and all such Ownership Rights, in perpetuity or for the longest period otherwise permitted by law, without the necessity of further consideration, and MacroGenics shall be entitled to receive and hold in its own name all such Ownership Rights. With respect to any Ownership Rights that Neose may assign and transfer to MacroGenics under this Section 4.4, at the request of MacroGenics, and at MacroGenics’ expense, either before or after termination of this Agreement, Neose shall assist MacroGenics in acquiring and maintaining patent, copyright, trade secret and trademark protection upon, and confirming MacroGenics’ title in and to, any such respective Ownership Rights. Neose’s assistance shall include, but shall not be limited to, signing all applications, and any other documents and instruments for patent, copyright and any other proprietary rights, cooperating in legal proceedings, and taking any other actions considered necessary or desirable by MacroGenics. For the purpose of facilitating the above assignments, Neose agrees that any and all employees and contractors employed or engaged by Neose and providing any service in connection with the Collaboration, prior to providing such service, shall have agreed in writing to covenants consistent with Neose’s covenants set forth in this Section 4.4.

4.5. Prosecution and Maintenance of Patent Rights in Collaboration Technology. Each Party shall have the right, in its sole discretion and at its sole expense, to prepare, file, prosecute and maintain all Patent Rights covering Collaboration Technology that the Party solely owns, as determined in accordance with Section 4. With respect to Joint Improvements, the Parties shall meet to determine whether patent protection is appropriate and, if so, in which countries, if any, patent applications claiming such joint inventions and discoveries should be filed. The Parties shall jointly file, prosecute, and maintain, such patent applications, with each Party funding one-half of the costs thereof. Either Party may at any time, in its sole discretion, discontinue funding the preparation, prosecution or maintenance of any Patent Rights covering Joint Improvements, in which case the Party discontinuing such support shall provide notice thereof to the other Party. The Parties shall retain undivided equal interests in and to all Patent Rights covering Joint Improvements for as long as they are sharing the costs of prosecuting and maintaining such Patent Rights. If a Party discontinues funding the preparation, prosecution or maintenance of any Patent Rights covering Joint Improvements, the other Party shall, thereafter, have sole rights in and to such Patent Rights.

4.6. Use and Sublicensing of Joint Improvements. Subject to the exclusive rights granted to MacroGenics under this Agreement, the exclusive Ownership Rights of the Parties under this Section 4, and the funding obligations of the Parties under Section 4.5, each Party shall be entitled to use its rights to Joint Improvements (including joint Patent Rights and joint Know-How) to develop, use, make, have made, import, offer to sell and sell products. Except for a Sublicense granted by MacroGenics in accordance with Section 3, if either Party wishes to sublicense any of its rights in and to Joint Improvements, it shall provide notice thereof to the other Party requesting its consent to grant the proposed sublicense, which consent shall not

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be unreasonably withheld. The notice shall identify the proposed sublicensee, field of use, territory and other relevant factors. Except for a Sublicense granted by MacroGenics in accordance with Section 3, if a proposed sublicense would permit a Third Party to develop a Potential Product, then a Party shall be entitled to withhold consent and the sublicense shall not be granted. If a Party consents to the grant of any such proposed sublicense, the sublicensor Party shall pay the other Party a royalty of 1.5% of (i) net sales under the sublicense and (ii) any other revenues received by the sublicensor Party from the sublicensee.

4.7. Enforcement of Ownership Rights

4.7.1. Reports of Infringement. MacroGenics shall promptly report in writing to Neose during the Term any infringement or misappropriation or suspected infringement or misappropriation of any Neose Technology of which MacroGenics becomes aware and shall provide Neose with its full cooperation in the protection and enforcement of the Neose Technology and all available evidence supporting said infringement, misappropriation, suspected infringement or unauthorized use or misappropriation. Neose shall reimburse MacroGenics for its reasonable, documented costs of such cooperation, unless such infringement or misappropriation is caused by an Affiliate or Sublicensee of MacroGenics.

4.7.2. Right to Institute Suit. Except as set forth in Sections 4.8 and 4.9, Neose shall have the first right to initiate an infringement or other appropriate suit against any Third Party who at any time has infringed or is suspected of infringing or misappropriating, the Neose Technology with respect to a Potential Product in a Licensed Category in the Field of Use. MacroGenics shall have the right to participate in and be represented by counsel in any such suit at MacroGenics’ expense, and Neose shall control any such suit initiated by Neose. Neose shall not enter into any settlement, consent judgment or other voluntary final disposition of such suit that would adversely affect MacroGenics’ rights under this Agreement or that would adversely affect the scope, validity or enforceability of any Neose Patent licensed to MacroGenics without MacroGenics’ prior written consent, which consent shall not be unreasonably withheld. In the event that Neose recovers any sums in such suit by way of damages or in settlement thereof, such amount shall be used first to reimburse the costs and expenses of Neose incurred in connection with the suit, next to reimburse the costs and expenses of MacroGenics’ incurred in connection with the suit, if any, and Neose shall retain any remaining damages awarded to Neose therein, and MacroGenics shall retain any remaining damages awarded to MacroGenics therein.

4.8. Continued Infringement. If Neose fails to initiate suit under Section 4.7 within sixty (60) days after notice of any such infringement, and if MacroGenics is of the opinion that the alleged infringement or misappropriation of Neose Technology is occurring with respect to a Potential Product in a Licensed Category in the Field of Use then, upon MacroGenics’ written request, the Parties shall seek the opinion of patent counsel acceptable to both Parties as to whether there has been or continues to be such a misappropriation or infringement. If such patent counsel concurs with MacroGenics’ opinion, MacroGenics shall have the right, but not the obligation, to bring suit against such Third Party under the Neose Technology and to join Neose as a party plaintiff with respect to the manufacture, use, sale, offer to sell or import of Potential Products in a Licensed Category in the Field of Use. Neose will cooperate with MacroGenics in any such suit brought against a Third Party and shall have the right to participate in and be represented by counsel in such suit at its own expense.

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MacroGenics shall control any such suit, provided, however, that MacroGenics shall consult with Neose and its representatives with respect thereto. MacroGenics shall not enter into any settlement, consent judgment or other final voluntary disposition of such suit that would adversely affect the scope, validity or enforceability of any Neose Patent. In the event that MacroGenics recovers any sums in such suit by way of damages or in settlement thereof, such amount shall be used first to reimburse the costs and expenses of MacroGenics incurred in connection with the suit, next to reimburse the costs and expenses of Neose incurred in connection with the suit, if any, and MacroGenics shall retain any remaining damages awarded to MacroGenics therein, and Neose shall retain any remaining damages awarded to Neose therein.

4.9. MacroGenics Trademarks. MacroGenics shall select and own the trademarks for marketing the Licensed Products in the Territory. All expenses for (i) registration of such trademarks, and (ii) bringing, maintaining and prosecuting any action to protect or defend such trademarks, shall be borne by MacroGenics, and MacroGenics shall retain all recoveries therefrom.

5. FEES AND MILESTONES

5.1. Licenses Granted Upon Exercise of Option. In consideration of the licenses to be granted to MacroGenics by Neose with respect to each Second Licensed Product, MacroGenics shall pay the following fees, milestones and royalties to Neose:

5.1.1. A fee of **** for each Second Licensed Product, payable upon the License Effective Date therefor; and

5.1.2. Milestones with respect to each Second Licensed Product, payable as set forth below:

5.1.2.1. **** upon the filing of the first IND for such Second Licensed Product;

5.1.2.2. **** upon initiation of the first Phase III clinical trial of such Second Licensed Product;

5.1.2.3. **** upon the first filing for Regulatory Approval for such Second Licensed Product;

5.1.2.4. **** upon the first Regulatory Approval of such Second Licensed Product;

5.1.2.5. **** when the aggregate Net Sales of such Second Licensed Product in any four successive Calendar Quarters first equal or exceed ****; and

5.1.2.6. **** when the aggregate Net Sales of such Second Licensed Product in any four successive Calendar Quarters first equal or exceed ****.

**** Material has been omitted and filed separately with the Commission.

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5.2. Certain Substitutions; Restriction on Multiple Milestone Payments. The Parties acknowledge that MacroGenics may discontinue the development of a First Licensed Product or Second Licensed Product after the filing of an IND. In such event MacroGenics shall be entitled to substitute another Collaboration Product in a Licensed Category for such discontinued Licensed Product, provided, that there shall be no more than two Licensed Categories, two First Licensed Products and two Second Licensed Products at any time during the Term, unless and until this Agreement is amended with respect to Subsequent Licensed Products as contemplated in Section 3.9. In the event that MacroGenics makes such a substitution of a Licensed Product during the Research Term, this Agreement shall be amended to reflect, among other things the resulting changes to the Research Plan and funding of any additional work to be conducted by Neose, as contemplated in Section 2.4. MacroGenics shall not be required to pay in respect of any such substituted Second Licensed Product any upfront fee or milestone payments that MacroGenics previously shall have paid as provided in Section 5.1 in respect of the Second Licensed Product that was discontinued and for which the substitution was made.

5.3. Royalties. MacroGenics shall pay to Neose royalties, during the Term, as a percentage of annual Net Sales of First Licensed Products and Second Licensed Products, at the applicable rates set forth in this Section 5.3:

5.3.1. *** Net Sales of First Licensed Products;

5.3.2. ***Net Sales of each Second Licensed Product in a calendar year up to ****;

5.3.3. **** Net Sales of each Second Licensed Product in a calendar year greater than **** and up to ****;

5.3.4. **** Net Sales of each Second Licensed Product in a calendar year greater than **** and up to ****; and

5.3.5. **** Net Sales of each Second Licensed Product in a calendar year greater than ****.

Royalties shall be due and payable for a First Licensed Product or Second Licensed Product only during the respective Royalty Period.

5.4. MacroGenics Stacking Protection. MacroGenics shall be entitled to reduce the royalties with respect to each Second Licensed Product based on the level of Net Sales for such Second Licensed Product and the royalties payable by MacroGenics to Third Parties in respect of such Net Sales, as set forth below.

5.4.1. For the portion of Net Sales of a Second Licensed Product in a calendar year up to ****, MacroGenics shall be entitled to deduct from the annual royalties due to Neose, **** of the royalties paid by MacroGenics to Third Parties in respect of such Net

**** Material has been omitted and filed separately with the Commission.

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Sales, provided that no royalty rate due to Neose under Section 5.3 shall be less than **** Net Sales as a result of any such reduction; and

5.4.2. For the portion of Net Sales of a Second Licensed Product in a calendar year over ****, MacroGenics shall be entitled to deduct from the annual royalties due to Neose, **** of the royalties paid by MacroGenics to Third Parties in respect of such Net Sales, provided that no royalty rate payable to Neose under Section 5.3 shall be less than **** Net Sales as a result of any such reduction.

5.5. Royalty Payments. MacroGenics shall make royalty payments to Neose on a quarterly basis, within forty-five (45) days after the end of each Calendar Quarter during the Term. Royalty payments shall commence, with respect to each Licensed Product in each country, on the date of first Commercial Sale in such country.

5.6. Currency Conversion. If any currency conversion from a foreign currency into United States Dollars shall be required in connection with the calculation of Net Sales, such conversion shall be made using the average exchange rate for the applicable Calendar Quarter, as reported by The Wall Street Journal.

5.7. Payment Reports. Within 45 days after the close of each Calendar Quarter during the Term, MacroGenics shall furnish to Neose a written report showing in reasonably specific detail, on a country-by-country basis for each Licensed Product:

5.7.1. All Net Sales of the Licensed Product during such quarter expressed in United States Dollars.

5.7.2. The exchange rates used in determining Net Sales of the Licensed Product in United States Dollars in accordance with Section 5.6.

5.7.3. Royalties payable in United States Dollars based upon such Net Sales of the Licensed Product during such Calendar Quarter.

5.8. Payment Method. MacroGenics shall make all payments under this Agreement in United States Dollars by bank wire transfer in immediately available funds to **** Bank, ABA # **** Acct ****, or to such other account as Neose shall designate to MacroGenics in writing before such payment is due.

5.9. Records; Audits. MacroGenics shall, and shall cause its Affiliates and Sublicensees, if any, to, keep complete, true, and accurate books of account and records in connection with the production and Commercial Sales of Licensed Products in sufficient detail to permit accurate determination of all figures necessary for verification of payments required to be made by MacroGenics under this Agreement. MacroGenics shall, and shall cause its Affiliates and Sublicensees, if any, to, maintain such records for at least two years following the end of the quarter to which such books and records pertain. Neose shall have the right, at its expense, through a certified public accounting firm reasonably acceptable to MacroGenics, to examine the records required to be maintained by MacroGenics, its Affiliates and Sublicensees under this

**** Material has been omitted and filed separately with the Commission.

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Section 5.9 upon reasonable notice and during regular business hours prior to the termination or expiration of this Agreement and for two years thereafter for the purpose of verifying the reports delivered pursuant to Section 5.7, provided that such examination shall not take place more often than once a year. MacroGenics may require such certified public accounting firm to sign a confidential disclosure agreement prior to permitting such certified public accounting firm to have access to its books, records or facilities. Such accounting firm shall report to Neose only whether or not the reports submitted by MacroGenics are accurate for the period covered and the details concerning any identified discrepancies. If any such audit uncovers an underpayment, MacroGenics shall promptly pay to Neose the amount of such underpayment. If any such underpayment exceeds 5% of the amount due, MacroGenics shall pay the entire expense of such audit within 20 days after invoice.

5.10. Taxes. MacroGenics may deduct the amount of any taxes imposed on Neose which are required to be withheld or collected by MacroGenics or its Sublicensees under the laws of any country from amounts owing to Neose hereunder to the extent MacroGenics, its Affiliates or Sublicensees pay such withholding taxes to the appropriate governmental authority on behalf of Neose and promptly deliver to Neose a receipt or other proof of payment of such taxes.

6. DILIGENCE IN COMMERCIAL DEVELOPMENT

6.1. Commercial Development. MacroGenics shall use Commercially Reasonable Efforts to obtain Regulatory Approvals for a Licensed Product in each Licensed Category. The sole and exclusive remedy for the breach of MacroGenics’ obligations under this Section 6.1 with respect to a Licensed Category shall be termination of MacroGenics’ license with respect to such Licensed Category pursuant to Section 10.2.4.1.

6.2. Certain Diligence Milestones; Deleted Categories. If any of the diligence milestone events set forth in Section 6.2.1, 6.2.2 or 6.2.3 has not been achieved in respect of a Licensed Category by the applicable date specified below, then, as the sole and exclusive remedy therefor, Neose shall have the right to terminate the license granted to MacroGenics for such Licensed Category in accordance with the provisions of this Section 6.2. Neose’s right to terminate the license for a Licensed Category shall be continuing unless MacroGenics provides written notice to Neose stating that a diligence milestone event has not been achieved and Neose does not provide notice of termination of the respective license to MacroGenics within ninety (90) days after receipt of MacroGenics’ notice. Thirty (30) days after Neose provides a notice of termination of a license in accordance with this Section 6.2, the license shall automatically terminate and the Licensed Category shall become a Deleted Category. The diligence milestone events are:

6.2.1. the first dose of a First Licensed Product or Second Licensed Product in the Licensed Category is administered to a human subject within **** after the initiation of work under the Research Plan on the first Potential Product within the Licensed Category;

**** Material has been omitted and filed separately with the Commission.

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6.2.2. the first Regulatory Approval for a First Licensed Product or Second Licensed Product in the Licensed Category is obtained in the U.S. or E.U. within **** after the initiation of work under the Research Plan on the first Potential Product within the Licensed Category; and

6.2.3. the first Commercial Sale of a First Licensed Product or Second Licensed Product in the Licensed Category is made within **** after the initiation of work under the Research Plan on the first Potential Product within the Licensed Category.

6.3. Commercialization of Deleted Categories. Neose shall be free to develop and commercialize any and all potential products in a Deleted Category free and clear of any right or license that may have been granted under this Agreement, except for its obligations of confidentiality under Section 7.

7. CONFIDENTIALITY

7.1. Confidential Information. Any and all Confidential Information received by one Party from the other Party, at any time and from time to time prior to the Effective Date or during the Term shall be protected by the receiving Party under this Section 7. In addition, any and all Collaboration Technology shall be treated as Confidential Information of the Party or Parties having Ownership Rights therein and protected under this Section 7.

7.2. Protection of Confidential Information. Each Party for a period of five years from the expiration or earlier termination of this Agreement: (a) shall maintain the secrecy of, and hold in strict confidence, the Confidential Information of the other Party except as permitted by this Agreement; (b) shall not use such Confidential Information for any other purpose other than in furtherance of this Agreement; and (c) except as permitted by this Agreement or with the express written authorization of the Disclosing Party, use, disclose or grant the use of such Confidential Information to any other Persons except to those of the its directors, officers, employees, and advisors, each of whom is otherwise bound by contract or legal or fiduciary obligation at the time of such disclosure to maintain the secrecy of, and hold in confidence, such Confidential Information. A Party shall notify the other Party promptly upon discovery of any unauthorized use or disclosure of the other Party’s Confidential Information.

7.3. Permitted Disclosures. The obligations set forth in Section 7.2 shall not apply to the extent that a Party: (a) is required to disclose information by law, order or regulation of a governmental agency or a court of competent jurisdiction, provided that the Party required to make the disclosure shall provide written notice thereof and sufficient opportunity to the other Party to object to any such disclosure or to request confidential treatment thereof; or (b) can demonstrate that: (i) the information was public knowledge or generally known at the time it became known hereunder or thereafter became public knowledge or generally known other than as a result of acts directly or indirectly attributable to such Party in violation hereof; (ii) the information is not Collaboration Technology owned by the other Party and was rightfully known by the receiving Party (as shown by its written records) prior to the date of disclosure by the disclosing Party under this Agreement; (iii) the information was disclosed to the receiving Party

**** Material has been omitted and filed separately with the Commission.

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on an unrestricted basis by a Third Party not under a duty of confidentiality to the other Party, or (iv) the information is not Collaboration Technology owned by the other Party and was independently developed by receiving Party (as shown by its written records) without any use of or access to information of the disclosing Party. If a Party is required to make any disclosure of the other Party’s Confidential Information under any circumstances described in Section 7.3(a), the Party subject to such requirement will, except under extraordinary circumstances, give reasonable advance notice thereof to the other Party to allow such other Party the right to object to and defend against the required disclosure and will use Commercially Reasonable Efforts to secure confidential treatment of the Confidential Information required to be disclosed.

7.4. Additional Disclosures Permitted by MacroGenics. The non-disclosure restrictions contained in this Section 7 shall not apply to Confidential Information that: (a) is submitted by MacroGenics to governmental authorities to facilitate the issuance of Regulatory Approvals for a Licensed Product, provided that MacroGenics shall take reasonable measures to assure the confidential treatment of such information, to the extent practicable; or (b) in exercising the rights and licenses granted under this Agreement, is provided by MacroGenics to Third Parties under appropriate terms and conditions, including confidentiality provisions at least as protective of Neose as those in this Agreement, provided that with respect to sublicensing the provision of Confidential Information is subject to Section 3.4.

7.5. Disclosures of Data in Patent Applications and For Promotional Purposes. Each Party shall have the right to use data generated under the Research Plan to support its patent applications and for promotional purposes, provided that the Party wishing to make such a disclosure shall notify the other Party of the proposed disclosure at least 30 days in advance of the proposed disclosure and, unless otherwise agreed, shall maintain the confidentiality of the other Party’s name, Confidential Information, and the specific identity of any Collaboration Product. In addition, if the other Party reasonably determines that it is necessary to protect the confidentiality of the Collaboration Product in any such proposed disclosure, the disclosing Party shall maintain the confidentiality of the applicable Category.

7.6. Certain Disclosures Regarding Deleted Categories. All data generated under the Research Plan with respect to any Deleted Categories shall be deemed the Confidential Information of both Parties. Notwithstanding the foregoing, Neose shall be entitled to use all results (including, without limitation, Confidential Information) generated from work conducted under the Research Plan on any Deleted Category to pursue the development and commercialization of potential products and products (including, without limitation, Collaboration Products) in any of the Deleted Categories, outside of this Agreement, provided, however, that Neose shall not be entitled to use such results for pursuing the development, outside of this Agreement, of any Collaboration Product that was **** The rights of Neose under this Section 7.6 shall not include the right to use any Confidential Information of MacroGenics other than Collaboration Technology and data generated under the Research Plan with respect to a Category prior to the time it was deemed a Deleted Category hereunder. No right or license is granted under any patents or patent application owned by or licensed to MacroGenics, except as provided in Section 3.7.

**** Material has been omitted and filed separately with the Commission.

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7.7. Enforcement. Both Parties agree that it would be impossible or inadequate to measure and calculate the other Party’s damages from any breach of the covenants of confidentiality and non-use in this Section 7. Accordingly, each Party agrees that if it breaches any of such covenants, the other Party will have available, in addition to any other right or remedy available, the right to seek an injunction from a court of competent jurisdiction restraining such breach or threatened breach and to specific performance of any such provision of this Section 7. Both Parties further agree that no bond or other security shall be required in obtaining such equitable relief.

7.8. Publicity. Except as required by law, all publicity, press releases and other announcements relating to this Agreement or the transactions contemplated hereby, shall be reviewed in advance by, and shall be subject to the reasonable approval of, both Parties. Attached hereto as Exhibit 7.8 is an approved form of a press release to be issued by the Parties upon the execution and delivery of this Agreement.

7.9. Confidential Terms. The Parties acknowledge and agree that a Party may be required to file a copy of this Agreement as an exhibit to its filings with the Securities and Exchange Commission (“SEC”), and that any such filing will be made with a request for confidential treatment of certain terms and provisions. The Parties shall cooperate in the preparation of any such filing and request. To the extent that confidential treatment is granted by the SEC, each Party agrees not to disclose any confidential terms or provisions to any Third Party without the prior consent of the other Party, except that such consent shall not be required for disclosure required by applicable law, rule or regulation or for disclosure to a Third Party with whom the disclosing Party has entered into or proposes to enter into a business relationship related to the subject matter of this Agreement, provided that such Third Party is subject to an appropriate confidentiality agreement with the disclosing Party which is applicable to this Agreement and protects its confidential terms and provisions. It is expressly agreed that MacroGenics may disclose this Agreement and its confidential terms and provisions to any Third Party that has executed a Required Agreement with Neose. It is further agreed that either Party may disclose this Agreement to its attorneys, accountants and financial consultants or in connection with a proposed financing or proposed merger, consolidation or sale of all or a portion of its business or a permitted assignment of this Agreement, provided that the disclosing Party obtains an appropriate confidentiality agreement or assurances of confidentiality from each such Third Party.

8. REPRESENTATIONS AND WARRANTIES

8.1. Mutual Representations and Warranties. Each Party hereby represents and warrants to the other that:

8.1.1. The execution, delivery and performance of this Agreement by it have been duly authorized by all requisite corporate action, and this Agreement has been duly executed and delivered by and on behalf of such Party.

8.1.2. The execution, delivery and performance by such Party of this Agreement does not (i) conflict with or violate any applicable statute, law, rule or regulation,

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(ii) conflict with or violate its charter, bylaws or other organizational document, or (iii) conflict with or constitute a default under any contract or agreement of such Party.

8.2. Representations and Warranties of Neose. Neose warrants to MacroGenics, as of the Effective Date, that:

8.2.1. It is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with the power and authority to sign, deliver and perform all of its obligations under this Agreement.

8.2.2. It is the sole and exclusive owner of the Neose Patents, or otherwise Controls the Neose Patents, and has the full corporate power and authority to grant the Option and the licenses to be granted hereunder.

8.2.3. ****

8.2.4. It has not granted and will not grant to any Person any rights or licenses in or to the Neose Technology that are or would be inconsistent with the rights granted to MacroGenics under this Agreement.

8.2.5. ****

8.2.6. ****

8.3. Representations and Warranties of MacroGenics. MacroGenics warrants to Neose, as of the Effective Date, that:

8.3.1. It is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, with the power and authority to sign, deliver and perform all of its obligations under this Agreement.

8.3.2. It is the sole and exclusive owner of the MacroGenics Patents, or otherwise Controls the MacroGenics Patents licensed to Neose under Section 3.2, and has the full corporate power and authority to grant such licenses granted hereunder.

8.3.3. ****

8.4. Disclaimer of Warranties. EXCEPT FOR THE WARRANTIES SET FORTH IN SECTION 8.1 to 8.3, EACH PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT.

8.5. Acknowledgment by MacroGenics. MacroGenics acknowledges and hereby agrees that Neose makes no representations or warranties as to the outcome of the

**** Material has been omitted and filed separately with the Commission.

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Collaboration, including without limitation whether the application of the Neose Technology will improve Potential Products or Antibodies.

9. INDEMNIFICATIONS AND LIMITED LIABILITY

9.1. Indemnification by Neose. Neose shall indemnify, defend and hold harmless MacroGenics and its Affiliates, and each of their respective employees, officers, directors and agents (each, a “MacroGenics Indemnified Party”) from and against any and all Third Party claims, suits, losses, obligations, damages, deficiencies, costs, penalties, liabilities (including strict liabilities), assessments, judgments, amounts paid in settlement, fines, and expenses (including court costs and reasonable fees of attorneys and other professionals) (individually and collectively, “Losses”) resulting from or arising in connection with (i) the breach by Neose of any of its representations or warranties contained in Section 8, and (ii) any claim by a Third Party alleging that the use of the Neose Technology infringes upon the Patent Rights of such Third Party. Notwithstanding the foregoing, Neose shall have no obligation to indemnify, defend or hold harmless a MacroGenics Indemnified Party for any Losses to the extent that such Losses were caused by (i) the negligence, unlawful act or willful misconduct of any of the MacroGenics Indemnified Parties, or (ii) a breach by MacroGenics of any of its representations and warranties set forth in Section 8.

9.2. Indemnification by MacroGenics. MacroGenics shall indemnify, defend and hold harmless Neose and its Affiliates, and each of their respective employees, officers, directors and agents (each, a “Neose Indemnified Party”) from and against any and all Losses resulting from or arising in connection with (i) the breach by MacroGenics of any of its representations and warranties set forth in Section 8, (ii) the failure of any Affiliate to comply with any obligation of MacroGenics applicable to the Affiliate under this Agreement, (iii) the failure of any Sublicensee to comply with any obligation under its Required Agreement with Neose or any Sublicense granted by MacroGenics hereunder, (iv) the promotion, distribution, use, testing, marketing, sale, or other disposition of any Licensed Product by any of MacroGenics, its Affiliates or Sublicensees, and (v) any claim by a Third Party alleging that the use of the MacroGenics Technology in the Collaboration, or the manufacture, sale or use of Licensed Products by any of MacroGenics, its Affiliates or Sublicensees, infringes upon the Patent Rights of such Third Party, except to the extent such claims arise solely as a result of the use of Neose Technology in accordance with a license granted under Section 3.3. Notwithstanding the foregoing, MacroGenics shall have no obligation to indemnify, defend or hold harmless a Neose Indemnified Party for any Losses to the extent that such Losses were caused by (i) the negligence or willful misconduct of any of the Neose Indemnified Parties, or (ii) a breach by Neose of any of its representations and warranties set forth in Section 8.

9.3. Indemnification Procedure. Each Party shall provide prompt written notice to the other of any actual or threatened Loss or claim therefor of which the other becomes aware; provided that the failure to provide prompt written notice shall only be a bar to recovering Losses to the extent that a Party was prejudiced by such failure. In the event of any such actual or threatened Loss or claim therefor, each Party shall provide the other information and assistance as the other shall reasonably request for purposes of defense and each Party shall receive from the other all necessary and reasonable cooperation in such defense including, but not limited to, the services of employees of the other Party who are familiar with the transactions

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or occurrences out of which any such Loss may have arisen. The indemnifying Party shall keep the indemnified Party reasonably informed of the progress of any claim, suit or action under this Section 9.3 and the indemnified Party shall have the right to participate in any such claim, suit or proceeding with counsel of its choosing at its own expense, but the indemnifying Party shall have the sole right to control the defense of settlement thereof. Notwithstanding the foregoing, the indemnifying party shall not be liable for any amounts due as a result of settlement or compromise or admission of liability by the indemnified party except as otherwise agreed in advance in writing by the indemnifying Party.

9.4. Consequential Damages. EXCEPT FOR DAMAGES PAYABLE IN CONNECTION WITH A PARTY’S INDEMNIFICATION OBLIGATIONS (WHICH MAY INCLUDE LIABLITY FOR CONSEQUENTIAL DAMAGES OWNED BY THE INDEMNIFIED PARTY TO A THIRD PARTY), NEITHER PARTY SHALL HAVE ANY LIABILITY TO THE OTHER PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR INCIDENTAL DAMAGES SUFFERED BY SUCH OTHER PARTY AND ARISING OUT OF OR RELATED TO THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), INCLUDING, WITHOUT LIMITATION, LOST PROFITS, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

9.5. Insurance. MacroGenics agrees to maintain during the Term commercial general liability insurance with limits of not less than $1,000,000 per occurrence and $5,000,000 in the aggregate to cover its indemnification obligations under Section 9.2. In addition, MacroGenics agrees to maintain during the Term clinical trials insurance and product liability insurance with limits reasonable to cover its indemnification obligations under Section 9.2. All insurance shall be procured with carriers having an AM Best Rating of A-VII or better.

10. TERM AND TERMINATION

10.1. Term. The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless sooner terminated in accordance with -Section 10.2, shall terminate on the earlier of (i) fifty (50) years after the Effective Date or (ii) when MacroGenics has no further royalty obligations under this Agreement and, in each case, is no longer developing any Licensed Products.

10.2. Termination

10.2.1. Termination of Collaboration. If the Collaboration is terminated by mutual agreement, this Agreement will automatically terminate.

10.2.2. Termination by MacroGenics. MacroGenics may terminate this Agreement, in its entirety, or with respect to any Licensed Category, at any time, effective upon 30 days notice to Neose.

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10.2.3. No Commercial Sale. If there is no Commercial Sale of a First Licensed Product or Second Licensed Product within **** after the Effective Date, either Party may terminate this Agreement upon 30 days written notice to the other.

10.2.4. Termination for Cause.

10.2.4.1. Breach. Neose shall have the right to terminate (i) this Agreement in its entirety at any time for material breach by MacroGenics of any of its obligations under this Agreement, other than a breach of Section 6.1 or 6.2, or (ii) MacroGenics’ license with respect to a Licensed Category for any breach of MacroGenics’ obligations under Section 5 with respect to such Licensed Category or in accordance with Section 6.1 or 6.2, in each case, upon written notice by Neose to MacroGenics describing such breach in reasonable detail and stating Neose’s intention to terminate this Agreement, provided that MacroGenics shall have a period of sixty (60) days from the date of such notice to cure the breach, or, if such breach is not susceptible of being cured within such sixty (60) day period, and MacroGenics utilizes diligent good faith efforts to cure such breach, then such period shall be extended to one hundred and twenty (120) days. If such breach is cured within the applicable period, the termination notice shall become ineffective. Otherwise, the termination shall become effective upon the expiration without cure of the applicable period.

10.2.4.2. Bankruptcy. A Party shall have the right to terminate this Agreement at any time upon the filing or institution of a liquidating bankruptcy proceeding by the other Party, provided, however, that in the case of any involuntary liquidating bankruptcy proceeding, such right to terminate shall only become effective if the proceeding is not dismissed within sixty (60) days after the filing thereof.

10.3. Effect of Termination or Expiration

10.3.1. Prior Obligations. Termination or expiration of this Agreement shall not relieve the Parties of any obligation arising prior to the effective date of such termination or expiration and shall not constitute a waiver of any right of the Parties under this Agreement as a result of breach or default.

10.3.2. Confidential Information. Upon the termination or expiration of this Agreement, each Recipient shall, as the Disclosing Party may direct, destroy or return to the Disclosing Party promptly all tangible materials provided to Recipient by the Disclosing Party that embody the Disclosing Party’s Confidential Information and shall erase or delete all of the Disclosing Party’s Confidential Information embodied in any magnetic, optical or intangible medium or stored or maintained on any information storage and/or retrieval device, and deliver to the Disclosing Party a certification of such destruction, return, erasure or deletion signed by an officer of the Disclosing Party.

10.3.3. Survival. No termination under this Agreement shall constitute a waiver of any rights or causes of action that either Party may have for any acts or omissions or breach under this Agreement by the other Party prior to the termination date. The following

**** Material has been omitted and filed separately with the Commission.

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Sections of this Agreement shall survive the expiration or any termination of this Agreement in accordance with their respective meanings: Sections 3.5, 4, 7, 9, 10.3, 11 and any other provision required to interpret this Agreement.

10.3.4. Effect on Licenses. Any licenses granted to MacroGenics under this Agreement, unless earlier terminated, shall automatically terminate at the same time this Agreement terminates.

10.3.5. Survival of Certain Sublicenses In the event that a Sublicense has been granted by MacroGenics pursuant to this Agreement and such Sublicense is in effect at the time of termination of this Agreement or at the time of termination of MacroGenics’ license to a Licensed Category, Neose agrees to grant to such Sublicensee a license under the Neose Technology of the same scope granted to such Sublicensee by MacroGenics under the terms and conditions of this Agreement, provided, that: (i) ****. The foregoing provisions of this Section 10.3.4 shall apply only with respect to **** Licensed Product, which Sublicense may be designated by MacroGenics, and any **** granted with respect to **** shall terminate automatically at the same time this Agreement terminates. At the request of MacroGenics, Neose agrees to acknowledge to a Sublicensee in writing Neose’s obligations under this Section 10.3.5.

11. DISPUTE RESOLUTION

11.1. By Senior Officers. Except as otherwise provided in Section 7.7 or where a Party otherwise seeks injunctive or equitable relief, all disputes arising under this Agreement will first be submitted in writing for dispute resolution to the Designated Representative of each Party. If the dispute is not resolved within 45 days, the dispute shall be referred to arbitration in accordance with Section 11.2.

11.2. Arbitration

11.2.1. Rules and Location. Except with respect to disputes arising under Section 7 or where a Party otherwise seeks injunctive or equitable relief, all disputes arising between the Parties under this Agreement that have not been resolved in accordance with Section 11.1 shall be settled by arbitration conducted in accordance with the procedures of the American Arbitration Association (“AAA”). The version of the arbitration rules which are in force when the dispute occurs shall be decisive. The arbitration tribunal shall have one arbitrator, who shall be selected from the panels of the AAA by agreement of the Parties, provided, however that if the parties cannot agree on the arbitrator, the arbitration tribunal shall consist of three arbitrators, one selected by Neose, one selected by MacroGenics, and the third selected by the other two arbitrators. The arbitration tribunal may also decide on the validity of the arbitration agreement. In such arbitration, the arbitrators shall not have the right to change the rights and obligations of the Parties under this Agreement. The place of the arbitration tribunal shall be Philadelphia, Pennsylvania. The arbitration proceedings, orders and writs shall be in the English language.

**** Material has been omitted and filed separately with the Commission.

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11.2.2. Judgments. Any award rendered by the arbitrators shall be binding upon the Parties hereto and shall be final. Judgment upon the award may be entered in any court of record of competent jurisdiction.

11.2.3. Expenses. Each Party shall pay its own expenses of arbitration and the expenses of the arbitrators shall be equally shared unless otherwise ordered by the arbitrators.

12. GOVERNMENT APPROVAL

12.1. HSR Filing. MacroGenics, in consultation with Neose, shall make the determination as to whether filing under the HSR Act is required with respect to any licenses granted hereunder. If any HSR filing is required, to the extent necessary, each Party shall file, as soon as practicable after the date this Agreement is executed, with the Federal Trade Commission (the “FTC”) and the Antitrust Division of the United States Department of Justice (the “Antitrust Division”) the notification and report form (the “Report”) required under the HSR Act with respect to the transactions as contemplated hereby and shall reasonably cooperate with the other Party to the extent necessary to assist the other Party in the preparation of its Report and to proceed to obtain necessary approvals under the HSR Act, including but not limited to the expiration or earlier termination of any and all applicable waiting periods required by the HSR Act. Each Party shall bear its own expenses, including, without limitation, legal fees, incurred in connection with preparing such filings.

12.2. Obligations. Each Party shall use its good faith efforts to eliminate any concern on the part of any court or government authority regarding the legality of the proposed transaction, including, if required by federal or state antitrust authorities, promptly taking all steps to secure government antitrust clearance, including, without limitation, cooperating in good faith with any government investigation including the prompt production of documents and information demanded by a second request for documents and of witnesses if requested.

12.3. Additional Approvals. Each Party will cooperate and use respectively all reasonable efforts to make all other registrations, filings and applications, to give all notices and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications authorizations, permits and waivers, if any, and to do all other things necessary or desirable for the consummation of the transactions as contemplated hereby. Neither Party shall be required, however, to divest or out-license products or assets or materially change its business if doing so is a condition of obtaining approval under the HSR Act or other governmental approvals of the transactions contemplated by this Agreement.

12.4. Termination. If a Report is required to be filed under the HSR Act, either Party hereto may terminate this Agreement by written notice to the other Party, if, within one hundred twenty (120) days after this Agreement is signed by the Parties, approval of the transactions contemplated by this Agreement under the HSR Act has not been obtained or the notice and waiting period, as may be extended by the FTC, under the HSR Act has not expired without adverse action regarding this Agreement or the transactions contemplated hereby. If this Agreement is terminated pursuant to this Section 12.4, then, notwithstanding any provision in

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this Agreement to the contrary, neither Party hereto shall have any further obligation to the other Party with respect to the subject matter of this Agreement.

13. MISCELLANEOUS

13.1. Force Majeure. Any delays in or failures of performance by either Party under this Agreement (other than failure to pay amounts due) shall not be considered a breach of this Agreement if and to the extent caused by occurrences beyond the reasonable control of the Party affected, including but not limited to: acts of God, earthquake, new regulations or laws of any government, strikes or other concerted acts of workers; fire, floods, explosions; riots; wars; rebellion; and, sabotage, and any time for performances under this Agreement shall be extended by the time of delay reasonably occasioned by such occurrence. Each Party agrees to notify the other promptly of any factor, occurrence or event coming to its attention that may affect its ability to meet its obligations under this Agreement.

13.2. Notices. Any notice, consent or report (each, a “Notice”) required or permitted to be given by either Party under this Agreement shall be in writing and shall be either personally delivered or sent by facsimile (confirmed by internationally-recognized express courier), or by internationally-recognized express courier (such as Federal Express or DHL), to the other Party at its address set forth below, or such new address as may from time to time be supplied under this Agreement by a Party. Except as otherwise set forth in this Agreement, any Notice shall be effective upon receipt by the addressee. Provided that all postage or delivery charges are prepaid in full by the sender and the Notice has been addressed as set forth in this Agreement:

13.2.1. if such Notice is sent by facsimile (confirmed by internationally recognized express courier which includes a copy of the report showing the date and time of transmission), then the Notice shall be deemed to be received upon transmission (if transmitted on a business day) or the next business day following transmission; and

13.2.2. if such Notice is sent by internationally-recognized express courier, then the Notice shall be deemed to be received two (2) business days after deposit with the courier service.

If to Neose:

                   Neose Technologies, Inc.
                   102 Witmer Road
                   Horsham, PA 19044
                   Attention: General Counsel
                   Fax: 215-315-9100

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If to MacroGenics:

                   MacroGenics, Inc.
                   1500 East Gude Drive
                   Rockville, MD 20850
                   Attention: Chief Executive Officer
                   Fax: 301-251-5321

13.3. Governing Law. This Agreement and any controversy, claim or dispute arising under this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the conflicts of law principles of any jurisdiction.

13.4. U.S. Export Laws and Regulations. The Parties hereby acknowledge that their rights and obligations under this Agreement may be subject to the laws and regulations of the United States of America relating to the export of products and technical information. Without limitation, each Party shall comply, and assist the other Party in complying, with all such laws and regulations.

13.5. Assignment. Any assignment by Neose of its rights in or to any of the Neose Technology licensed to MacroGenics shall be expressly made subject to MacroGenics’ licenses granted under this Agreement. Neither Party shall assign any of its rights or obligations under the Agreement, in whole or in part, by operation of law or otherwise, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, provided that either Party may assign (i) any of its rights or obligations under this Agreement in any country to any of its Affiliates, for so long as they remain Affiliates, and (ii) all of its rights or obligations under this Agreement in connection with the merger or similar reorganization or sale of all or substantially all of its assets or a sale of that part of its business relating to the subject matter of the Agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement. A Party shall notify the other Party in writing upon making any such assignment. Any purported assignment in violation of this Section shall be null and void. This Agreement shall bind and inure to the benefit of each Party and its respective permitted successors and assigns.

13.6. Amendments. No change, modification, extension, termination or waiver of the Agreement (including, without limitation, the Research Plan), or any of the provisions in this Agreement contained, shall be valid unless made in writing and signed by duly authorized representatives of the Parties to this Agreement.

13.7. Independent Contractors. The Parties to this Agreement are acting as independent contractors and shall not be considered partners, joint venturers or agents of the other. Neither Party shall have the right to act on behalf of, or to bind, the other.

13.8. Severability. The provisions of this Agreement are intended to be severable. If any one or more of the provisions of this Agreement is or becomes invalid, is ruled illegal by a court of competent jurisdiction or is deemed unenforceable under the current applicable law from time to time in effect during the Term, it is the intention of the Parties that the remainder of the Agreement shall not be affected thereby and shall continue to be construed

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to the maximum extent permitted by law at such time. It is further the intention of the Parties that in lieu of each such provision which is invalid, illegal, or unenforceable, there shall be substituted or added as part of this Agreement by such court of competent jurisdiction or any arbitrator(s) appointed pursuant to Section 11.2, 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.

13.9. Waiver. The waiver by either Party to this Agreement of any right under this Agreement or the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right under this Agreement or of any other breach or failure by said other Party whether of a similar nature or otherwise.

13.10. No Third Party Beneficiaries. Each of Neose and MacroGenics intend that only Neose and MacroGenics will benefit from, and are entitled to enforce the provisions of, this Agreement and that no Third Party beneficiary is intended under this Agreement.

13.11. Descriptive Headings; Section and Exhibit References. The headings of the several sections of this Agreement are intended for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. All references in this Agreement to a Section or Exhibit shall be interpreted as references to the respective Section or Exhibit of this Agreement unless the context requires otherwise.

13.12. Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or pursuant to any section of this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the Bankruptcy Code. The Parties shall retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) and such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement.

13.13. 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.

13.14. Entire Agreement. This Agreement, including all exhibits to this Agreement (the “Attachments”), embodies the entire understanding between the Parties and supersedes any prior understanding and agreements between and among them respecting the subject matter of this Agreement, including, without limitation, the Mutual Confidentiality Agreement. There are no representations, agreements, arrangements or understandings, oral or written, between the Parties to this Agreement relating to the subject matter of the Agreement, which are not fully expressed in this Agreement. If any provisions of any such Attachment conflict with any provisions set forth in this Agreement, the provisions of this Agreement shall take precedence.

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IN WITNESS WHEREOF, the undersigned Parties, acting through their duly authorized representatives, have executed this Agreement in multiple counterparts.

NEOSE TECHNOLOGIES, INC.

By:	/s/ C. BOYD CLARKE

Name:	C. Boyd Clarke
Title:	CEO

MACROGENICS, INC.

By:	/s/ SCOTT KOENIG

Name:	Scott Koenig
Title:	CEO

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Exhibits Index

	Exhibit 1.37	License Agreements

	Exhibit 2.1	Research Plan

	Exhibit 3.4	Required Agreement for Proposed Sublicensees

	Exhibit 7.8	Press Release

EXHIBIT 1.37

LICENSE AGREEMENTS

****

Exhibit 1.37 - 1

**** Material has been omitted and filed separately with the Commission.

EXHIBIT 2.1

RESEARCH PLAN

Activity

Site

FTE

Time

****

Exhibit 2.1 - 1

**** Material has been omitted and filed separately with the Commission.

EXHIBIT 3.4

NEOSE TECHNOLOGIES, INC.

FORM OF REQUIRED AGREEMENT FOR PROPOSED SUBLICENSEES

This CONFIDENTIALITY AGREEMENT (this “Agreement”) is made as of this ___ day of ________, 200_, by and between Neose Technologies, Inc., a Delaware corporation (“Neose”), and ____________________ , a __________ corporation (“Recipient”).

BACKGROUND

Neose has developed and continues to develop proprietary technologies and related know-how for the glycosylation, design and remodeling of proteins, peptides and antibodies, including, but not limited to its GlycoAdvance^TM, GlycoPEGylation™ and GlycoConjugation™ technologies (collectively, the “Technology”). Pursuant to a Research, Development and License Agreement dated _____ __, 2004 (the “License Agreement”), Neose has granted MacroGenics, Inc., a Delaware corporation (“MacroGenics”), certain exclusive worldwide rights under the Technology throughout the world, including certain rights to sublicense. MacroGenics desires to sublicense to Recipient certain rights granted to MacroGenics under the License Agreement. MacroGenics, therefore, desires to disclose to Recipient confidential and proprietary information, which is a part of the Technology and is considered valuable by Neose. As a condition to MacroGenics disclosing such confidential and valuable proprietary information to Recipient, Recipient is entering into this Agreement for Neose’s benefit.

NOW, THEREFORE, in consideration of the foregoing premises and in consideration of MacroGenics disclosing Neose’s confidential and proprietary information to Recipient, and intending to be legally bound hereby, Recipient agrees as follows:

1. Definitions

1.1. “Confidential Information” means any and all proprietary or confidential information of Neose disclosed to Recipient, including, without limitation, all technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, service plans, services, customer lists and customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, marketing, distribution and sales methods and systems, sales and profit figures, finances and other business information disclosed to Recipient related to Neose, either directly or indirectly, in writing, orally or by drawings or inspection of documents or other tangible property. The fact that a given piece of information is marked or identified as confidential or proprietary shall conclusively indicate that such information is considered Confidential Information, but the

Exhibit 3.4 - 1

failure to so mark information shall not conclusively determine that such information was or was not considered Confidential Information.

1.2. “Neose Know-How” means any and all formulae, procedures, processes, methods, designs, know-how, show-how, trade secrets, discoveries, inventions (whether or not patentable), patent applications, licenses, software and source code, programs, prototypes, designs, discoveries, techniques, methods, ideas, concepts, data, engineering and manufacturing information, electronic control circuits, specifications, diagrams, drawings, schematics, blueprints and parts lists and other proprietary information, rights and works of authorship, whether or not reduced to writing, controlled by Neose and relating to the Technology licensed by Neose to MacroGenics under the License Agreement.

1.3. “Neose Patents” means all patents and patent applications (including all corresponding foreign patents and patent applications, all divisions, continuations, continuations-in-part, reissues, renewals, extensions and additions to any such patents or patent applications) relating to the Technology licensed by Neose to MacroGenics under the License Agreement.

1.4. “Neose Technology” means the Neose Know-How and Neose Patents.

1.5. “Person” means an individual, corporation, partnership, trust, business trust, association, joint stock company, joint venture, syndicate, sole proprietorship, unincorporated organization, government, governmental agency, authority or instrumentality, or any other form of entity not specifically listed in this Agreement.

1.6. “Product” means any of the “Potential Products” (as defined in the License Agreement) modified using the Neose Technology.

1.7. “Recipient Patent Rights” means any claim of a patent application or granted patent owned by Recipient that covers an invention that is an improvement to the Neose Technology, which invention results, in whole or in part, from Recipient’s use of Confidential Information.

1.8. “Sublicense Agreement” means an agreement, which is presently contemplated, under which MacroGenics sublicenses to Recipient certain rights granted by Neose to MacroGenics under the License Agreement.

1.9. “Third Party” means any Person other than Recipient, Neose or MacroGenics.

2. Non-Disclosure; Non-Use; Reasonable Care. The obligations of this Section 2 are subject to Section 6 and shall be superseded by the confidentiality provisions of the Sublicense Agreement provided that such confidentiality provisions are identical to the confidentiality provisions of the License Agreement or are approved in writing by Neose.

2.1. Non-Disclosure. Recipient shall not, directly or indirectly, disclose to any Third Party any Confidential Information or Neose Know-How.

2.2. Non-Use. Recipient shall not, directly or indirectly, use any of the Confidential Information or Neose Know-How for its own benefit or for the benefit of any Third Party.

Exhibit 3.4 - 2

2.3. Reasonable Care. Recipient shall take all reasonable measures to protect the secrecy of, and avoid the unauthorized disclosure or use of, the Confidential Information and Neose Know-How, including, without limitation, the following: (i) Recipient shall exercise the highest degree of care that Recipient uses to protect Recipient’s own confidential and proprietary information of a similar nature; (ii) Recipient shall disclose Confidential Information and/or Neose Know-How only to its employees and contractors who have a need to know; and (iii) Recipient shall require anyone who has access to any of the Confidential Information and/or Neose Know-How to sign or be a party to an effective agreement with Recipient, applicable to the Confidential Information and Neose Know-How, containing provisions that are substantially similar to the terms of this Agreement. Recipient shall notify Neose in writing of any disclosure, misuse or misappropriation of any Confidential Information or Neose Technology that may come to Recipient’s attention.

3. Acknowledgements. Recipient acknowledges and agrees that: (i) this Agreement is necessary for the protection of the legitimate business interests of Neose; (ii) the execution of this Agreement by an authorized representative of Recipient and delivery of this Agreement to Neose is a mandatory condition precedent to MacroGenics disclosing any Confidential Information and any information concerning the Neose Know-How to Recipient, without which Neose would not permit MacroGenics to disclose such information; (iii) neither Neose nor MacroGenics has granted to Recipient any rights under the Neose Technology in any manner; and (iv) because of the unique nature of the Confidential Information and Neose Technology and its broad applicability to the manufacture and remodeling of glycoproteins, Neose will not have an adequate remedy at law if Recipient breaches any term of this Agreement.

4. Return of Materials. Upon the earlier of termination of MacroGenics’ license to the Neose Technology under the License Agreement or termination of the Sublicense Agreement, Recipient shall: (i) discontinue all use of the Confidential Information and Neose Know-How; (ii) destroy any and all items in its possession containing any Confidential Information or Neose Know-How; and (iii) certify in writing to Neose, within ten (10) days after Neose’s request therefor, that Recipient has taken all actions described in this Section 4.

5. Intellectual Property

5.1. Ownership Rights. All right, title and interest under patent, copyright, trade secret and trademark law and any other intellectual property or other law (collectively, “Ownership Rights”), in and to the Confidential Information and Neose Technology shall remain at all times with Neose.

5.2. Non-Exclusive License. Except as expressly provided in any provision of the Sublicense Agreement approved in writing by Neose, Recipient hereby irrevocably grants and agrees to grant to Neose a non-exclusive, perpetual license, with the right to grant sublicenses, under any and all of Recipient Patent Rights to make, have made, use, sell, offer to sell, and import products that are modified using the Neose Technology, other than products that are licensed to Recipient under the Sublicense Agreement. With respect to any license granted to Neose hereunder, Recipient shall, at the request and expense of Neose, either before or after termination of this Agreement, assist Neose in confirming Neose’s rights under such license.

Exhibit 3.4 - 3

Recipient’s assistance shall include, but shall not be limited to, signing all documents and taking any other actions considered necessary or desirable by Neose.

6. Exceptions. The non-disclosure, non-use and reasonable care obligations with respect to Confidential Information and Neose Know-How set forth in Section 2 shall not apply to any information that: (i) at the time of disclosure by or on behalf of MacroGenics or Neose to Recipient is in, or after disclosure by or on behalf of MacroGenics or Neose becomes part of, was public knowledge or generally known through no improper act on the part of Recipient or on the part of any of Recipient’s employees, independent contractors, advisors or consultants; (ii) is disclosed, published or disseminated by Neose without any confidentiality constraints; (iii) was in Recipient’s possession free of any obligation of non-disclosure or non-use at the time of disclosure to Recipient by MacroGenics or Neose, as shown by written evidence; (iv) Recipient receives from a Third Party free of any obligation of non-disclosure or non-use, but only if such Third Party had no direct or indirect obligation to Neose not to disclose such information; (v) was developed by Recipient independent of information received hereunder, as shown by its written records; (vi) subject to Section 7, is required to be disclosed by law or pursuant to legal, judicial or administrative process; or (vii) is disclosed with the express written approval of an authorized officer of Neose..

7. Notice of Required Disclosure. If Recipient is required by judicial or administrative process to disclose any Confidential Information or Neose Know-How, then Recipient shall promptly notify Neose and, before disclosing such Confidential Information or Neose Know-How, allow Neose a reasonable time to oppose such process.

8. Successors; Assignment. This Agreement shall be binding upon Recipient and Recipient’s successors and assigns and inure to the benefit of Neose and its successors and assigns. Recipient may not assign its rights or delegate its obligations under this Agreement, in whole or in part, except with the prior written consent of Neose, which consent shall not be unreasonably withheld. Neose may assign this Agreement without seeking or obtaining Recipient’s consent.

9. Governing Law. This Agreement and any controversy, claim or dispute arising under this Agreement shall be governed by, and construed in accordance with the laws of the Commonwealth of Pennsylvania, United States of America, without regard to the conflicts of law principles of any jurisdiction.

10. Remedies. In addition to any other remedies that may be available, at law, in equity or otherwise, Neose shall be entitled to obtain injunctive relief to enforce the provisions of this Agreement without necessity of posting bond.

11. Entire Agreement. This Agreement contains the entire agreement and understanding relating to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings. This Agreement may not be changed or modified, except in a writing signed by both Neose and Recipient. The failure or delay of Neose to exercise any right under this Agreement shall not be deemed a waiver of any rights under this Agreement.

Exhibit 3.4 - 4

IN WITNESS WHEREOF, each party has caused its authorized representative to execute this Agreement as of the date first written above.

NEOSE TECHNOLOGIES, INC.			[INSERT NAME OF RECIPIENT]

By:			By:

Name:			Name:

Title:			Title:

Exhibit 3.4 - 5

EXHIBIT 7.8

Neose Technologies and MacroGenics Sign Research Collaboration and
License Agreement

Horsham, PA, and Rockville, MD, April 26, 2004. Neose Technologies, Inc. (Nasdaq NM: NTEC) and MacroGenics, Inc. announced today that the companies have entered into a research collaboration and license agreement on multiple monoclonal antibodies. Neose will apply its GlycoAdvance™ and GlycoPEGylation™ technologies to development-stage MacroGenics compounds with the goal of improving the therapeutic properties of these proteins.

MacroGenics has the right to take a limited number of remodeled compounds into development. Following the initial research phase, MacroGenics will be responsible for funding the further development of these licensed compounds under an exclusive license from Neose. In exchange, Neose will be entitled to receive various option fee, milestone, and royalty payments as products are developed and commercialized under the agreement.

“We are impressed with MacroGenics’ expertise in the antibody field and look forward to working with them. They have important new technology for the development and modification of monoclonal antibodies, particularly in the Fc region, and we believe that combining our technologies may yield more effective new treatments for chronic diseases,” said C. Boyd Clarke, Neose president, chief executive officer and chairman.

“We are excited by the potential therapeutic improvements that can be made to our monoclonal antibodies utilizing Neose’s GlycoAdvance and GlycoPEGylation technologies,” said Scott Koenig, M.D., Ph.D., president and chief executive officer of MacroGenics.

Neose is a biopharmaceutical company focused on the improvement of protein therapeutics through the application of its proprietary technologies. By applying its GlycoAdvance and GlycoPEGylation technologies, Neose is developing proprietary protein drugs that are improved versions of currently marketed therapeutics with proven efficacy. These second generation proteins are expected to offer significant advantages, such as less frequent dosing and improved safety and efficacy. In addition to developing its own products or co-developing products with others, Neose is entering into strategic partnerships for the inclusion of its technologies into products being developed by other biotechnology and pharmaceutical companies.

MacroGenics is a privately funded company focused on the development, manufacture and commercialization of biotechnology products including immunotherapeutics for cancer, infectious diseases, and autoimmune disorders. MacroGenics’ core platform involves antibody receptor-related technologies which are employed to improve the ways cytotoxic antibodies mediate cell killing for the treatment of cancers and to prevent autoantibodies from triggering disease in autoimmunity.

CONTACTS:

                       Neose Technologies, Inc.
                                 Robert I. Kriebel
                                 Sr. Vice President and Chief Financial Officer

Exhibit 7.8 - 1

NEOSE TECHNOLOGIES, INC.

PAGE 2

                                 Barbara Krauter
                                 Manager, Investor Relations
                                 (215) 315-9000

For more information, please visit www.neose.com.

                       MacroGenics Inc.
                                 Michael Richman
                                 Exec. Vice President and Chief Operating Officer
                                 (301) 251-5172

For more information, please visit www.macrogenics.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding our business that are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of these risks and uncertainties, any of which could cause our actual results to differ from those contained in the forward-looking statement, see the section of Neose’s Annual Report on Form 10-K for the year ended December 31, 2002, entitled “Factors Affecting the Company’s Prospects” and discussions of potential risks and uncertainties in Neose’s subsequent filings with the SEC.

EX-99 5 ne907875ex107.htm EXHIBIT 107

EXHIBIT 10.7

FIRST AMENDMENT TO AGREEMENT OF LEASE

This First Amendment is made this 18th day of May, 2004, by and between LIBERTY PROPERTY LIMITED PARTNERSHIP (hereinafter “Landlord”) and NEOSE TECHNOLOGIES, INC., a Delaware corporation (hereinafter “Tenant”).

WHEREAS, Landlord and Tenant are parties to a certain Agreement of Lease dated February 15, 2002 (the “Lease”) relating to the building containing approximately 40,472 rentable square feet (the “Building”) and known and identified as 102 Rock Road, Horsham Township, Montgomery County, Pennsylvania; and

WHEREAS, the Lease called for certain plans to be attached thereto as Exhibit “E” and certain specifications to be attached thereto as Exhibit “F,” neither of which were able to be attached at the time of Lease execution; and

WHEREAS, the parties desire to provide for and incorporate by reference a certain set of plans as Exhibit “E” to the Lease and a certain set of specifications as Exhibit “F” to the Lease; and

WHEREAS, the parties desire to agree to certain special provisions relating to certain aspects of the improvements to the Building being made by Tenant; and

WHEREAS, it is the desire of the parties hereto to modify their understanding with regard to the “Allowance” (as such term is defined in subsection 30(d)(ii) of the Lease; and

WHEREAS, by mistake, the Lease refers to Tenant as being a Pennsylvania corporation when, in fact, it is and always has been a Delaware corporation, and the parties hereto desire to correct such error;

NOW THEREFORE, the parties hereto agree as follows:

1. The Lease is hereby corrected to reflect the true status of Tenant as being a Delaware corporation, which Tenant is and always has been.

2. Each of the parties has in its possession a set of plans (the “Plans”) and a set of specifications (the “Specifications”) for the alteration and improvement work to the Building that Tenant is performing and has substantially completed. A schedule of the Plans is attached hereto as Exhibit “A” and a schedule of the Specifications is attached hereto as Exhibit “B.” It is agreed that the Plans are hereby made Exhibit “E” to the Lease and that the Specifications are hereby made Exhibit “F” to the Lease.

3. The work which is being performed by Tenant to the Building is extensive and includes the furnishing, installation and/or replacement of a number of components which, by their nature, are important to the functioning of the Building as a building which may be reasonably and lawfully occupied for the conducting of business. It is the intention of the parties hereto that certain components of the Building, as altered and improved by Tenant, be considered “Special Property.” Special Property shall include any item of property which is attached to, incorporated into or reasonably necessary for the use and occupancy of (as opposed to the conducting of Tenant’s business within) the Building, including, but not limited to, HVAC systems, electrical wiring and facilities, and bathroom fixtures. All items of that type, which shall expressly include, but not be limited to, those items listed on Exhibit “C” attached hereto shall be Special Property. With regard to Special Property, it is agreed that the following terms and provisions shall apply:

a. Special Property shall be maintained, repaired and replaced (when necessary) by Tenant at Tenant’s sole expense. Any replacement of an item of Special Property must be made utilizing a component of similar type and quality.

b. All items of Special Property shall remain on the Property and shall remain part of the Building at the expiration or sooner termination of the Term of the Lease, and shall, at such time, become the sole and exclusive property of Landlord without Landlord having the obligation to make any payment on account thereof.

c. No item of Special Property may be removed by Tenant from the Building, except in connection with its replacement in accordance with the foregoing provisions.

d. Tenant may not sell, encumber, create a security interest in or otherwise transfer any interest in any of the Special Property to anyone other than Landlord, except with Landlord’s prior written approval, which Landlord may grant or withhold in its sole and absolute discretion.

4. Except as expressly modified hereby, the Lease shall remain in full force and effect in accordance with its terms. Specifically, without limitation, in the event of any default by Tenant of any of its obligations under the Lease, as hereby amended, Landlord shall be entitled to pursue all remedies against Tenant available under the terms of the Lease, as hereby amended, or otherwise at law or in equity. Accordingly, Tenant agrees to the following:

a. When the Lease, as hereby amended, and the Term or any extension thereof shall have been terminated on account of any default by Tenant which has continued beyond applicable notice and/or cure periods contained in this Lease, or

when the Term or any extension thereof shall have expired, Tenant hereby authorizes any attorney of any court of record of the Commonwealth of Pennsylvania, upon an additional five (5) days’ prior written notice to Tenant, to appear for Tenant and for anyone claiming by, through, or under Tenant and to confess judgment against all such parties, and in favor of Landlord, in ejectment and for the recovery of possession of the Premises, for which the Lease, as hereby amended, or true and correct copies thereof shall be good and sufficient warrant. AFTER THE ENTRY OF ANY SUCH JUDGMENT, A WRIT OF POSSESSION MAY BE ISSUED THEREON WITHOUT FURTHER NOTICE TO TENANT AND WITHOUT A HEARING. If for any reason after such action shall have been commenced, it shall be determined and possession of the Premises remain in or be restored to Tenant, Landlord shall have the right for the same default and upon any subsequent default(s) or upon the termination of the Lease or Tenant’s right of possession as herein set forth, to again confess judgment as herein provided, for which the Lease, as hereby amended, or a true and correct copy thereof shall be good and sufficient warrant.

b. The warrant of attorney to confess judgment set forth above shall continue in full force and effect and be unaffected by amendments of the Lease, as hereby amended, or other agreements between Landlord and Tenant even if any such amendments or other agreements increase Tenant’s obligations or expand the size of the Premises. Tenant waives any procedural errors in connection with the entry of any such judgment or in the issuance of any one or more writs of possession or execution or garnishment thereon.

c. TENANT KNOWINGLY AND EXPRESSLY WAIVES ANY RIGHT, INCLUDING, WITHOUT LIMITATION, UNDER ANY APPLICABLE STATUTE, WHICH TENANT MAY HAVE TO RECEIVE A NOTICE TO QUIT PRIOR TO LANDLORD COMMENCING AN ACTION FOR REPOSSESSION OF THE PREMISES.

IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby have caused this First Amendment to Agreement of Lease to be duly executed the day and year first above written.

		LIBERTY PROPERTY LIMITED PARTNERSHIP, by its Sole General Partner, LIBERTY PROPERTY TRUST

	By:	/s/ WARD J. FITZGERALD

		Ward J. Fitzgerald Senior Vice President and Regional Director

		NEOSE TECHNOLOGIES, INC.

	By:	/s/ C. BOYD CLARKE

		Name: C. Boyd Clarke Title: President & CEO

EX-99 6 ne907875ex108.htm EXHIBIT-108

EXHIBIT 10.8

PROMISSORY NOTE

Dated: May 7, 2004

Amount: $1,500,000.00

NEOSE TECHNOLOGIES, INC. (hereinafter “Debtor”) hereby promises to pay to the order of Liberty Property Limited Partnership (hereinafter “Creditor”) the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00) with interest accruing on the outstanding balance of such indebtedness at the rate of thirteen percent (13%) per year, by making forty-eight (48) equal blended payments of interest and principal, monthly, on the first day of each calendar month, commencing July 1, 2004, and ending June 1, 2008, of $40,241.24 each, under and subject to the following terms, provisions and conditions:

1. If the date hereof is other than May 1, 2004, in addition to the forty-eight (48) equal blended payments of interest and principal provided for above, on the date hereof Debtor shall pay to creditor prepaid interest at the aforesaid interest rate for the time period beginning on the date hereof and ending on May 31, 2004.

2. All previously unpaid principal, interest and other sums due hereunder will be due and payable in full on June 1, 2008.

3. A late charge of five percent (5%) shall automatically become due on any amount due hereunder which is not paid on or before five (5) days after it is first due.

4. If Debtor fails to perform any of its obligations hereunder and such failure is not completely cured within five (5) days after Debtor receives a written notice thereof a “Default” hereunder shall exist, and, thereafter, Creditor shall be entitled to:

a. accelerate the full amount of the indebtedness and declare such to be immediately due and payable; and

b. commence the accrual of interest on the outstanding principal balance at the default rate of seventeen percent (17%) per year.

5. Debtor, as the tenant therein, and Creditor, as the landlord therein, are the parties to a certain Agreement of Lease (the “Lease”) dated February 15, 2002, relating to Premises known and identified as 102 Rock Road, Horsham Township, Montgomery County, Pennsylvania (the “Premises”). Landlord, at Landlord’s sole option, may elect to treat any Default under this Note as a default under the Lease, and may elect to treat any default under the Lease as a Default under this Note, except that, for the purposes of this paragraph, a default shall not be deemed to have occurred under the Lease unless and until Debtor (as the Tenant under the Lease) has received such notice of the default as may be required pursuant to the provisions of the Lease and the applicable grace period pursuant to the Lease, if any, shall have expired without such default having been

completed cured. If a Default occurs under this Note that Landlord elects to treat as a default under the Lease, Landlord shall not be obligated to give a separate notice to Tenant under the Lease on account of such default, notwithstanding any provision of the Lease to the contrary. If a default occurs under the Lease that Landlord elects to treat as a Default under this Note, Landlord shall not be obligated to give a separate notice to Debtor under this Note on account of such Default, notwithstanding any provision of this Note to the contrary.

6. Debtor acknowledges that Landlord has fully disbursed the initial principal amount of $1,500,000.00 to Debtor and that Debtor is obligated to use such funds to pay for the costs of installing improvements to the Premises.

7. IN THE EVENT OF DEFAULT BY DEBTOR IN THE PAYMENT OF ANY OF ITS OBLIGATIONS HEREUNDER, TENANT HEREBY AUTHORIZES ANY ATTORNEY OF ANY COURT OF RECORD IN AND FOR THE COMMONWEALTH OF PENNSYLVANIA TO APPEAR FOR DEBTOR AND TO CONFESS JUDGMENT AGAINST DEBTOR AND IN FAVOR OF CREDITOR IN THE FULL AMOUNT OF ALL SUMS DUE HEREUNDER, TOGETHER WITH COSTS OF SUIT AND AN ATTORNEY’S COLLECTION COMMISSION IN THE AMOUNT OF THE GREATER OF TEN PERCENT (10%) OF ALL SUCH SUMS OR $25,000.00, FOR WHICH THIS PROMISSORY NOTE OR A TRUE AND CORRECT COPY HEREOF SHALL BE SUFFICIENT WARRANT AND AUTHORITY. DEBTOR WAIVES ANY PROCEDURAL ERRORS IN CONNECTION WITH THE ENTRY OF ANY SUCH JUDGMENT OR THE ISSUANCE OF ANY ONE OR MORE WRITS OF EXECUTION OF GARNISHMENT THEREON.

DEBTOR UNDERSTANDS THAT THE FOREGOING PERMITS CREDITOR TO ENTER A JUDGMENT AGAINST DEBTOR WITHOUT PRIOR NOTICE OR HEARING. ONCE SUCH A JUDGMENT HAS BEEN ENTERED AGAINST DEBTOR, ONE OR MORE WRITS OF EXECUTION OR WRITS OF GARNISHMENT MAY BE ISSUED THEREON WITHOUT FURTHER NOTICE TO DEBTOR AND WITHOUT A HEARING, AND, PURSUANT TO SUCH WRITS, CREDITOR MAY CAUSE THE SHERIFF OF THE COUNTY IN WHICH ANY PROPERTY OF DEBTOR IS LOCATED TO SEIZE DEBTOR’S PROPERTY BY LEVY OR ATTACHMENT. IF THE JUDGMENT AGAINST DEBTOR REMAINS UNPAID AFTER SUCH LEVY OR ATTACHMENT, CREDITOR CAN CAUSE SUCH PROPERTY TO BE SOLD BY THE SHERIFF EXECUTING THE WRITS, OR, IF SUCH PROPERTY CONSISTS OF A DEBT OWED TO DEBTOR BY ANOTHER ENTITY, CREDITOR CAN CAUSE SUCH DEBT TO BE PAID DIRECTLY TO CREDITOR IN AN AMOUNT UP TO BUT NOT TO EXCEED THE AMOUNT OF THE JUDGMENT OBTAINED BY CREDITOR AGAINST DEBTOR, PLUS THE COSTS OF THE EXECUTION.

DEBTOR KNOWINGLY AND EXPRESSLY WAIVES ANY RIGHT WHICH DEBTOR MAY HAVE TO NOTICE AND TO HEARING PRIOR TO A

LEVY UPON OR ATTACHMENT OF DEBTOR’S PROPERTY, OR THEREAFTER.

IN WITNESS WHEREOF, Debtor, intending to be legally bound hereby, have caused this Promissory Note to be duly signed the day and year first above written.

		NEOSE TECHNOLOGIES, INC., a Delaware corporation

	By:	/s/ C. BOYD CLARKE

[SEAL]		Name: C. Boyd Clarke Title: President & CEO

EX-99 7 ne907875ex311.htm EXHIBIT 311

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, C. Boyd Clarke, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Neose Technologies, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to

adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	August 5, 2004		/s/ C. BOYD CLARKE

	Date		C. Boyd Clarke President and Chief Executive Officer

EX-99 8 ne907875ex312.htm EXHIBIT 312

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Robert I. Kriebel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Neose Technologies, Inc.

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	August 5, 2004		/s/ ROBERT I. KRIEBEL

	Date		Robert I. Kriebel Senior Vice President and Chief Financial Officer

EX-99 9 ne907875ex321.htm EXHIBIT 321

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Neose Technologies, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, C. Boyd Clarke, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ C. BOYD CLARKE

C. Boyd Clarke President and Chief Executive Officer

August 5, 2004

EX-99 10 ne907875ex322.htm EXHIBIT 322

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Neose Technologies, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert I. Kriebel, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROBERT I. KRIEBEL

Robert I. Kriebel Principal Financial Officer

August 5, 2004

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