-----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, FYtcyNFq2AEhnwyRDuK2B8uEHuUKxMJZGAsjFWWM+uitkvK3qLhSjlreQmWLukXb NXIqSIEibvvENyHauUkKwQ== 0000927016-00-001881.txt : 20000516 0000927016-00-001881.hdr.sgml : 20000516 ACCESSION NUMBER: 0000927016-00-001881 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOIMMUNE INC CENTRAL INDEX KEY: 0000879106 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 133489062 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-20948 FILM NUMBER: 634812 BUSINESS ADDRESS: STREET 1: 128 SPRING ST CITY: LEXINGTON STATE: MA ZIP: 02173 BUSINESS PHONE: 6178600710 MAIL ADDRESS: STREET 1: 128 SPRING STREET CITY: LEXINGTON STATE: MA ZIP: 02173 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 FOR THE QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NO. 0-20948 ------- AUTOIMMUNE INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 13-348-9062 (State of Incorporation) (I.R.S. Employer Identification No.) 128 SPRING STREET, LEXINGTON, MA 02421 (Address of Principal Executive Offices) (781) 860-0710 (Registrant's Telephone No., 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 ---------------- --------------- Number of shares outstanding of the registrant's Common Stock as of April 30, 2000: Common Stock, par value $.01 16,759,623 shares outstanding AUTOIMMUNE INC. QUARTER ENDED MARCH 31, 2000 TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Number Item 1 - Financial Statements Balance Sheet December 31, 1999 and March 31, 2000................... 2 Statement of Operations for the three months ended March 31, 1999 and 2000 and for the period from inception (September 9, 1988) through March 31, 2000................................. 3 Statement of Cash Flows for the three months ended March 31, 1999 and 2000 and for the period from inception (September 9, 1988) through March 31, 2000................................. 4 Notes to the Unaudited Financial Statements................. 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 7 Item 3 - Quantitative and Qualitative Disclosures about Market Risk............................................ 8 PART II - OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K................... 9 Signatures.................................................. 10
1 AUTOIMMUNE INC. (A development stage company) BALANCE SHEET (Unaudited)
December 31, March 31, 1999 2000 ------------------- ------------------- ASSETS Current assets: Cash and cash equivalents $ 6,973,000 $ 3,478,000 Marketable securities - 6,783,000 Interest receivable - - Prepaid expenses and other current assets 109,000 4,000 ------------------- ------------------- Total current assets 7,082,000 10,265,000 Fixed assets, net - - ------------------- ------------------- $ 7,082,000 $ 10,265,000 =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 64,000 $ 21,000 Accrued expenses 607,000 108,000 ------------------- ------------------- Total current liabilities 671,000 129,000 ------------------- ------------------- Commitments and contingencies ------------------- ------------------- Stockholders' equity: Common stock, $.01 par value; 25,000,000 shares authorized; 16,657,872 and 16,759,623 shares issued and outstanding at December 31, 1999 and March 31, 2000, respectively 167,000 167,000 Additional paid-in capital 117,714,000 117,907,000 Deficit accumulated during the development stage (111,470,000) (107,938,000) Valuation allowance for marketable securities - - ------------------- ------------------- Total stockholders' equity 6,411,000 10,136,000 ------------------- ------------------- $ 7,082,000 $ 10,265,000 =================== ===================
2 AUTOIMMUNE INC. (A development stage company) STATEMENT OF OPERATIONS (Unaudited)
Period from inception Three months ended (September 9, 1988) March 31, March 31, through 1999 2000 March 31, 2000 ---------------- --------------- ----------------------- Revenue: License rights $ - $ 4,000,000 $ 4,000,000 Option fees - - 2,200,000 Research and development revenue under collaborative agreements - - 955,000 ---------------- --------------- ----------------- Total revenues - 4,000,000 7,155,000 ---------------- --------------- ----------------- Costs and expenses: Research and development: Related party 384,000 220,000 19,552,000 All other 2,790,000 125,000 90,880,000 General and administrative 491,000 256,000 15,911,000 ---------------- --------------- ----------------- Total costs and expenses 3,665,000 601,000 126,343,000 ---------------- --------------- ----------------- Interest income 209,000 133,000 11,557,000 Interest expense (1,000) - (303,000) ---------------- --------------- ----------------- 208,000 133,000 11,254,000 ---------------- --------------- ----------------- Net income (loss) $ (3,457,000) $ 3,532,000 $ (107,934,000) ================ =============== ================= Net income (loss) per share-basic and diluted $ (0.21) $ 0.21 ================ =============== Weighted average common shares outstanding-basic and diluted 16,555,640 16,694,166 ================ ===============
3 AUTOIMMUNE INC. (A development stage company) STATEMENT OF CASH FLOWS Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
Period from inception (September 9, 1988) Three months ended through March 31, March 31, March 31, 1999 2000 2000 --------------------- --------------------- ---------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (3,457,000) $ 3,532,000 $ (107,934,000) Adjustment to reconcile net loss to net cash used by operating activities: Interest expense related to demand notes converted into Series A mandatorily redeemable covertible preferred stock - - 48,000 Patent costs paid with junior convertible preferred and common stock - - 3,000 Depreciation and amortization 132,000 - 4,464,000 Loss on sale/disposal of fixed assets (5,000) - 642,000 Decrease in capitalized patent costs - - 563,000 Decrease in interest receivable 7,000 - - (Increase) decrease in prepaid expenses (31,000) 105,000 (4,000) Increase (decrease) in accounts payable 298,000 (43,000) 21,000 Increase (decrease) in accrued expenses (91,000) (499,000) 108,000 --------------------- --------------------- ---------------------- Net cash provided (used) by operating activities (3,147,000) 3,095,000 (102,089,000) --------------------- --------------------- ---------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of available-for-sale marketable securities (3,303,000) (6,783,000) (268,503,000) Proceeds from sale/maturity of available-for-sale marketable 7,488,000 - - 250,709,000 securities Proceeds from maturity of held-to-maturity marketable - - 11,011,000 securities Proceeds from sale of equipment 5,000 - 306,000 Purchase of fixed assets (51,000) - (5,288,000) Increase in patent costs - - (563,000) Increase in other assets - - (125,000) --------------------- --------------------- ---------------------- Net cash provided (used) by investing activities 4,139,000 (6,783,000) (12,453,000) --------------------- --------------------- ---------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from sale-leaseback of fixed assets - - 2,872,000 Payments on obligations under capital leases (72,000) - (2,872,000) Net proceeds from issuance of mandatorily redeemable convertible preferred stock - - 10,011,000 Proceeds from bridge notes - - 300,000 Proceeds from issuance of common stock 13,000 193,000 105,509,000 Proceeds from issuance of convertible notes payable - - 2,200,000 --------------------- --------------------- ---------------------- Net cash provided (used) by financing activities (59,000) 193,000 118,020,000 --------------------- --------------------- ---------------------- Net increase (decrease) in cash and cash equivalents 933,000 (3,495,000) 3,478,000 Cash and cash equivalents, beginning of period 4,801,000 6,973,000 - --------------------- --------------------- ---------------------- Cash and cash equivalents, end of period $ 5,734,000 $ 3,478,000 $ 3,478,000 ===================== ===================== ======================
4 AUTOIMMUNE INC. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 1. INTERIM FINANCIAL DATA The interim financial data as of March 31, 2000, for the three month periods ended March 31, 1999 and 2000 and for the period from inception (September 9, 1988) through March 31, 2000 are unaudited; however, in the opinion of the Company, these interim data include all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation of the results for these interim periods. These financial statements should be read in conjunction with the financial statements and the notes thereto for the period ended December 31, 1999 included in the Company's Form 10-K. Results for interim periods are not necessarily indicative of results for the entire year. 2. CASH EQUIVALENTS AND MARKETABLE SECURITIES The following is a summary of cash equivalents held by the Company. Cash equivalents are carried at fair market value, which approximated amortized cost at December 31, 1999 and March 31, 2000:
DECEMBER 31, MARCH 31, 1999 2000 ------------------- ----------------- Money market $ 659,000 $ 405,000 U.S. Government debt securities 6,270,000 2,871,000 ------------------- ----------------- $6,929,000 $3,276,000 =================== =================
The following is a summary of available-for-sale marketable securities held by the Company at March 31, 2000 which are carried at fair market value:
MATURITY FAIR UNREALIZED UNREALIZED AMORTIZED COST TERM VALUE GAINS LOSSES ---------------------------------------------------------------------------- MARCH 31, 2000 U.S. Government debt securities within 1 year $6,783,000 $ - $ - $6,783,000 =============================================================
There were no marketable securities at December 31, 1999. All of the Company's marketable securities are classified as current at December 31, 1999 and March 31, 2000 as these funds are highly liquid and are available to meet working capital needs and to fund current operations. Gross realized gains and losses on sales of marketable securities for the three month periods ended March 31, 1999 and 2000 were not significant. Marketable securities which were purchased and sold in periods prior to adoption of Statement of Financial Accounting Standards (SFAS) No. 115 on January 1, 1994, other than held-to-maturity marketable securities, are included in the category available-for-sale marketable securities in the "period from inception" column of the statement of cash flows. 5 AUTOIMMUNE INC. NOTES TO THE UNAUDITED FINANCIAL STATEMENTS 3. FIXED ASSETS Fixed assets consist of the following:
ESTIMATED USEFUL LIFE DECEMBER 31, MARCH 31, (YEARS) 1999 2000 ------------------- ---------------------- ---------------------- Laboratory equipment 2 - 5 $160,000 $160,000 ---------------------- ---------------------- 160,000 160,000 Less - accumulated depreciation and amortization 160,000 160,000 ---------------------- ---------------------- $ - $ - ====================== ======================
4. ACCRUED EXPENSES
Accrued expenses consist of the following: DECEMBER 31, MARCH 31, 1999 2000 -------------------- -------------------- Accrued employee costs $ 37,000 $ 17,000 Accrued professional fees 92,000 91,000 Accrued severance 478,000 - -------------------- -------------------- $607,000 $108,000 ==================== ====================
5. COMPREHENSIVE INCOME Comprehensive loss for the three month period ended March 31, 1999 was $3,462,000 and comprehensive income for the three month period ended March 31, 2000 was $3,532,000. Net unrealized gain (loss) on marketable securities is comprised of the following:
THREE MONTHS ENDED MARCH 31, 1999 2000 ----------------- ------------------ Unrealized holding gain (loss) arising during the period $(2,000) $ - Reclassification adjustment for (gain) loss included in net income (3,000) - ----------------- ------------------ Net unrealized gain (loss) on marketable securities $(5,000) $ - ================= ==================
6 AUTOIMMUNE INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS OVERVIEW Since its inception through March 31, 2000, the Company has incurred ongoing losses from operations and has cumulative losses as of March 31, 2000 totaling $107,934,000. To date, the Company has not recorded any revenues from the sale of products. Revenues recorded through March 31, 2000 were earned in connection with the sale of certain patent rights, granting of certain short-term rights and contract research. The Company expects to remain in the development stage for the foreseeable future and accordingly, may continue to incur losses. The sections of "Management's Discussion and Analysis of Financial Condition and Results of Operations" captioned "Overview" and "Liquidity and Capital Resources" contain forward-looking statements which involve risks and uncertainties. What may occur in the future could differ significantly from what is discussed in the forward-looking statements due to a number of important factors, including, but not limited to, the developmental stage of the Company's products and uncertainties of clinical trial results and regulatory approval; the Company's capital requirements, history of operating losses and lack of product revenue and its limited manufacturing and marketing experience; and the risks of technological change and competition. These factors are more fully discussed in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission in the section captioned "Business - Factors to be Considered". The discussion in the Annual Report on Form 10-K is hereby incorporated by reference into this Quarterly Report. THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 2000 Revenue was $4,000,000 for the three month period ended March 31, 2000. This amount represents the initial payment by a subsidiary of Elan Plc for the purchase of certain patent rights related to Alzheimer's disease. There was no revenue in the three month period ended March 31, 1999. Research and development expenses were $3,174,000 and $345,000 for the three month periods ended March 31, 1999 and 2000, respectively. The decrease is due to the cessation of Colloral clinical trials and the elimination of research and development expenses except contract research support for The Brigham and Women's Hospital and costs associated with maintaining the Company's patent portfolio. General and administrative expenses were $491,000 and $256,000 for the three month periods ended March 31, 1999 and 2000, respectively. The decrease in general and administrative expenses is due to the reduction of personnel costs. Net interest income was $208,000 and $133,000 for the three month periods ended March 31, 1999 and 2000, respectively. The decrease is due to a lower balance of cash available for investment. The net loss was $3,457,000 for the three month period ended March 31, 1999 and net income was $3,532,000 for the three month period ended March 31, 2000. The change reflects the revenue generated in 2000 and the reduction of operating expenses. The net loss per share was $0.21 for the three months ended March 31, 1999 and net income per share was $0.21 for the three months ended March 31, 2000. 7 AUTOIMMUNE INC. LIQUIDITY AND CAPITAL RESOURCES The Company 's needs for funds have historically fluctuated from period to period as it has increased or decreased the scope of its research and development activities. Since inception, the Company has funded these needs almost entirely through sales of its equity securities. The Company's working capital and capital requirements will depend on numerous factors, including the strategic direction that the Company and its shareholders choose, the level of resources that the Company devotes to the development of its products, the extent to which it proceeds by means of collaborative relationships and its competitive environment. The Company believes that current cash and marketable securities, and the interest earned from the investment thereof, will be sufficient to meet the Company's operating expenses and capital requirements for at least five years. At the appropriate time, the Company may intend to seek additional funding through public or private equity or debt financing, collaborative arrangements or from other sources. If additional funds are necessary but not available, the Company will have to modify its business strategy, and its business will be materially adversely affected. In order to preserve principal and maintain liquidity, the Company's funds are invested in U.S. Treasury obligations and other short-term instruments. As of March 31, 2000, the Company's cash and cash equivalents and marketable securities totaled $10,261,000. Current liabilities at March 31, 2000 were $129,000. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company invests all of its cash in U.S. Treasury obligations and money market instruments. These investments are denominated in U.S. dollars. Due to the conservative nature of these instruments, the Company does not believe that it has material exposure to interest rate or market risk. 8 AUTOIMMUNE INC. PART II - OTHER INFORMATION Item 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (numbered in accordance with Item 601 of Regulation S-K) 10.32 Letter Agreement, dated January 31, 2000, between AutoImmune Inc. and Fletcher Spaght, Inc.++ 10.33 Agreement for Assignment of Patent Rights, dated effective as of January 29, 2000, among The Brigham and Women's Hospital, Inc., AutoImmune Inc. and Neuralab Limited++ 10.34 Letter Agreement, dated March 16, 2000 between AutoImmune Inc. and The Brigham and Women's Hospital Inc.++ ++ The Company has requested confidential treatment of the redacted portions of this exhibit pursuant to Rule 24b-2, under the Securities Exchange Act of 1934, as amended, and has separately filed a complete copy of this Exhibit with the Securities and Exchange Commission. (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 9 AUTOIMMUNE INC. SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: AUTOIMMUNE INC. Date: May 15, 2000 /s/ Robert C. Bishop --------------------------------------- Robert C. Bishop Chairman and Chief Executive Officer /s/ Heather A. Ellerkamp --------------------------------------- Heather A. Ellerkamp Director of Finance and Treasurer 10 EX-10.32 2 LETTERHEAD OF FLETCHER * * * * * PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24(B)-2. THE LOCATION OF THOSE OMITTED PORTIONS IS DENOTED BY BRACKETS. * * * * * Exhibit 10.32 [LETTERHEAD OF FLETCHER SPAGHT, INC.} January 31, 2000 Transmitted via fax: 781-237-7196 Robert Bishop, Ph.D. Chairman and CEO AutoImmune, Inc. 47 Carisbrooke Road Wellesley, MA 02481 Dear Bob: We are pleased to provide continued assistance to AutoImmune in the launch of Colloral(R) as a non-prescription nutraceutical. The remainder of this letter will describe the scope of our continued involvement and FSI's compensation for the work to be undertaken. BACKGROUND In September 1999, Fletcher Spaght, Inc. (FSI) was retained by AutoImmune to assess the potential of launching Colloral/(R)/ as a non-prescription nutraceutical. FSI was also asked to develop the strategy for that launch, if appropriate to do so. Based on FSI's efforts it was determined that Colloral/(R)/ has a potential market of [ ] at retail in the U.S. OTC nutraceutical market. Nutraceutical growth has been explosive in recent years given increased interest by consumers in homeopathic medicine, the aging of baby-boomers oriented to participation in management of their health and increased access to health-related information via the Internet. Nutraceuticals are no longer relegated to specialty retail channels but have become mainstream consumer items in traditional outlets, e.g., drug stores, supermarkets, mass merchandisers, etc. Several nutraceuticals have become sizeable market segments, most notably, chondroitin sulfate for osteoarthritis; sales of chondroitin sulfate were expected to exceed (greater than) $l00 million in 1999. Given the market potential and attractive outlook, FSI recommended moving forward to develop an OTC launch strategy for Colloral/(R)/. Given the market dynamics however OTC marketing knowledge/resources and multi-channel distribution will be critical to the success of Colloral/(R)/, as a non-prescription nutraceutical. Therefore, it is important that AutoImmune secure a strong marketing and distribution partner(s) with visibility/reach in specialty stores, traditional Robert Bishop, Ph.D. January 31, 2000 Page 2 outlets and with homeopathic/holistic health practitioners versus launch Colloral/(R)/ itself. For the right partner, AutoImmune could offer to license the product in its entirety (including production) or to develop only a marketing and distribution relationship. Manufacturing Colloral/(R)/ for the OTC market is not an issue; production costs are minimal and manufacturing can be outsourced at attractive margins. If the partnership approach is not successful, AutoImmune could launch the product itself as a "fall-back" option, pursuing an infomercial, mail campaign and web sales strategy. Ramp-up under this scenario, however, would be slow and resources which could otherwise be deployed in AutoImmune's base business, would be diverted. A comprehensive review of the industry identified (greater than) 120 potential partners of which (greater than) 55 were determined to be worth exploring further. Contacts with an initial group of 30 potential partners were initiated in November 1999 in anticipation of moving forward with the partnership strategy. CHARTER and APPROACH The objective of this effort is to secure one (or more) marketing partner(s) to commercialize Colloral/(R)/ in the U.S. and to maximize the potential value of the product/marketing license(s) to AutoImmune. To this end, Fletcher Spaght, Inc. (FSI) will: . Continue to identify, screen and prioritize commercialization partners on behalf of AutoImmune considering multiple factors including - types of customers served - appreciation for the clinical investigation/support AutoImmune has invested in - interest in RA - interest in a collagen product - size/presence in the relevant market - perceived capability to quickly ramp-up Colloral/(R)/ as a nonprescription nutraceutical . Contact potential partners on a "rolling basis" to develop interest in possible licensing of the product in its entirety or, alternatively, development of marketing and distribution arrangements - higher priority candidates to be contacted earlier in this process - contact priorities to take into consideration the extended review timeframes normally associated with large vs. small pharmaceutical/nutraceutical companies . Fol1ow-up/pursue interested contacts for introductions/establishment of negotiations with AutoImmune - in this process FSI will secure confidentiality agreements on behalf of AutoImmune Robert Bishop, Ph.D. January 31, 2000 Page 3 . Facilitate the license or marketing/distribution partnership negotiation process As you know, this effort is already underway following the completion of our market study in November. Some of the contacts identified to date have already expressed interest in the licensing opportunity and we are working diligent1y to expedite the introduction process. TIMING and COST This assignment is, to some extent, an open-ended process. However, we recognize that it would be desirable for AutoImmune to close on a Colloral(R) commercialization partnership quickly and at a high va1ue. In the spirit of partnership between FSI and AutoImmune we propose to structure our compensation to support these goals. Thus, we propose: . A monthly retainer of $10,000 for five months, plus . A success fee equal to 5% of like value (upfront, milestone and royalty payments or operating profit) AutoImmune receives for any or all U.S. rights to Colloral(R) for any deal completed on or before December 31, 2001, less accumulated retainer fees paid It is a possibility that AutoImmune could be acquired. Thus, in order to protect FSI it is appropriate to describe how FSI would be compensated if AutoImmune were to be acquired by/merged with another entity. If by reason of merger/acquisition on or before December 31, 2000, licening Colloral(R) to a third party is no longer of interest, FSI will receive a lump sum payment equal to three times the accumulated professional fees incurred (valued at FSI's normal billing rates) between January 1, 2000 and the termination of this agreement, less accumulated retainer fees paid. If by reason of merger/acquisition between January 1, 2001 and December 31, 2001, licensing Colloral(R) to a third party is no longer of interest, FSI will receive a lump sum payment equal to two times the accumulated professional fees incurred and the termination of this agreement, less accumulated retainer fees paid, In addition to our fees, FSI will request reimbursement of expenses associated with communications (e.g., telephone, facsimile), to be invoiced at 4% of professional fees, plus reimbursement for other expenses (e.g., overnight mail, travel, etc.) as incurred. Given that this project is underway, an invoice for the initial mouth's retainer of $10,000 has been sent to you. Future payments towards the retainer will be billed monthly, i.e., at the beginning of February, March, April and May. As well, expenses will be billed on a monthly basis until the completion of the effort. FSI asks that you honor all invoices within fifteen days of receipt. * * * * * 3 EX-10.33 3 AGREEMENT FOR ASSIGNMENT OF PATENT RIGHTS * * * * * PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24(B)-2. THE LOCATION OF THOSE OMITTED PORTIONS IS DENOTED BY BRACKETS. * * * * * Exhibit 10.33 AGREEMENT FOR ASSIGNMENT OF PATENT RIGHTS This Agreement for Assignment of Patent Rights ("AGREEMENT") is made effective as of the 29/th/ day of January, 2000 (the "EFFECTIVE DATE"), by and among The Brigham and Women's Hospital, Inc., a Massachusetts charitable corporation ("B&W") and AutoImmune Inc., a Delaware corporation ("AUTOIMMUNE") (sometimes collectively referred to as "SELLER") and Neuralab Limited, a Bermuda company ("BUYER"). RECITALS A. B&W is the owner of the Patent Rights (as defined below). B. AutoImmune contends that it is the exclusive licensee of the Patent Rights from B&W pursuant to a certain Amended and Restated Research and Development Agreement by and between B&W and AutoImmune dated as of September 9, 1988 and revised as of July 1, 1992 and April 14, 1995 (the "Exclusive License"). C. In order to permit the sale and transfer of the Patent Rights from B&W to Buyer free and clear of the Exclusive License, B&W and AutoImmune wish to terminate the Exclusive License as to the Patent Rights and B&W wishes to sell and assign, and Buyer wishes to purchase and acquire, all of B&W's right, title and interest in and to the Patent Rights, free and clear of the Exclusive License. D. Buyer is an Affiliate (as defined below) of Elan Pharmaceuticals, Inc., a Delaware corporation ("Elan"). AGREEMENT NOW, THEREFORE, in consideration of the mutual agreements, representations, warranties, covenants and promises set forth below, the parties hereby represent, warrant and agree as follows: 1. DEFINITIONS Terms in this Agreement that are capitalized shall have the meanings set forth below or defined elsewhere in this Agreement. All references to particular "Exhibits" and "Sections" mean Exhibits to and Sections of this Agreement. "AFFILIATE" shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, that Person, provided however, that in each case any such other Person shall be considered to be an Affiliate only during he time during which such control exists. For purposes of this definition, "control" (including, with correlative meaning, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct and/or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "CLOSING DATE" is defined in Section 3. "CONDITION PRECEDENT" shall mean the condition precedent that, at the time that a Subsequent Payment is due, there shall not be pending any written claim from any third party (including without limitation [________________________ _________]) directed to Buyer, B&W and/or AutoImmune, claiming any interest in the Patent Rights or to the underlying inventions or technology, including any claim of any ownership, license or other rights therein, under any legal or equitable theory, whether by implication, estoppel or in any other manner. "EXCLUSIVE LICENSE" shall have the meaning set forth in Recital B. "[________________________]" shall mean that certain [____________________] by and among [_________________________________________________________________ ______________] dated [_______________]. "PATENT RIGHTS" shall mean and include (i) all United States and foreign applications for patents listed in Exhibit A, as well as all United States and foreign patents that have or may hereafter issue in respect of such applications for patents, and (ii) all applications for patents whose subject matter in whole or in part is entitled to the benefit of the filing date(s) of any of the applications for patents listed on Exhibit A and all Untied States and foreign patents that have or may hereafter issue in respect of such applications for patents, including in each case of the foregoing clauses (i) and (ii) of this definition, without limitation, all continuations, continuations-in-part, divisional patents, substitutions, Patent Cooperation Treaty applications, United States provisional patent applications, continued prosecution applications, utility models, supplementary protection certificates, reexaminations, renewals, extensions and reissues, and all rights to sue for past or future infringement thereof. "PERSON" shall mean an individual or any legally recognized entity, including any corporation, partnership, limited partnership, limited liability company, association or trust. "SUBSEQUENT PAYMENTS" is defined in Section 2.2(b). 2. SALE AND PURCHASE OF PATENT RIGHTS 2.1 TERMINATION OF EXCLUSIVE LICENSE, SALE, PURCHASE AND ASSIGNMENT. Subject to the terms and conditions of this Agreement, on the Closing Date, B&W and AutoImmune -2- shall mutually terminate the Exclusive License as to the Patent Rights in writing on such terms as they may agree upon, which are approved in writing by Buyer, and B&W shall sell, assign and transfer to Buyer, and Buyer shall purchase and acquire from B&W, B&W's entire right, title and interest in and to the Patent Rights, free and clear of the Exclusive License. It is expressly agreed that Buyer is not assuming or agreeing to pay any liabilities or obligations of B&W and/or AutoImmune of any kind. 2.2 PURCHASE PRICE; PAYMENT; WARRANTS. (a) The purchase price to be paid by Buyer to AutoImmune on the Closing Date shall be $4,000,000. Such purchase price shall be paid by Buyer to AutoImmune on the Closing Date by a wire transfer of immediately available funds to such bank account(s) as AutoImmune designates in writing to Buyer. (AutoImmune has agreed to pay B&W a portion of the purchase price payments under this Agreement according to a separate agreement (the "SEPARATE AGREEMENT") by and between AutoImmune and B&W, which is and shall be of no concern of Buyer.) (b) Subject to the satisfaction of the Condition Precedent for each payment set forth below, Buyer shall pay AutoImmune additional subsequent payments of the purchase price as follows (collectively, the "SUBSEQUENT PAYMENTS"): (i) Eighteen (18) months from the Closing Date: $[_________] to AutoImmune; and (ii) Thirty-six (36) months from the Closing Date: $[_________] to AutoImmune. Each such payment shall be made by a wire transfer of immediately available funds to such bank accounts as AutoImmune may designate to Buyer in writing. If a written claim is made such that the Condition Precedent for a given Subsequent Payment is not satisfied, the party receiving the claim shall furnish a copy thereof to the other parties and all other information with respect thereto in its possession or in the possession of its Affiliates. In the event that the Condition Precedent for a given Subsequent Payment is not satisfied as of the date indicated, upon receipt of written notice from Buyer regarding any subject third party claim(s), each party shall defend itself (using counsel of its choice) against the subject third party claim(s) and Buyer's obligation to make the corresponding Subsequent Payment shall be deferred and suspended until such time as and when the subject third party claim(s) has been finally resolved or settled to the effect that the subject third party has no claim of any ownership, license or other rights therein, under any legal or equitable theory, whether by implication, estoppel or in any other manner. Each party shall provide such assistance to the other parties (such as by making relevant documents and personnel reasonably available to the other parties and by giving testimony and otherwise providing evidence, as appropriate) as the other parties may reasonably request in connection with the defense of any -3- such claim. Buyer shall be entitled to deduct and offset its attorneys' and experts' fees and other defense costs incurred in regard to any such claim from the Subsequent Payments. (c) Concurrently with each of the Subsequent Payments actually made by Buyer to AutoImmune in accordance with Section 2(b) above, AutoImmune shall issue to Buyer its (1) Common Stock Warrant to purchase up to 375,000 shares of the common stock of AutoImmune, and (II) Warrant Registration Rights Agreement, both in the respective forms attached as Exhibit B hereto; provided, however, that in the event AutoImmune is acquired prior to the date that the Common Stock Warrant is required to be issued, the Common Stock Warrant shall be issued by the entity that acquires AutoImmune and the number of shares of stock to be issued by the acquiror shall be determined under Section 7(c) of the Common Stock Warrant as if the Warrant had been issued by AutoImmune immediately prior to the acquisition. 3. CLOSING The closing shall take place simultaneously with the execution and delivery hereof (such date, the "Closing Date") at the offices of Athena Neurosciences, Inc., 800 Gateway Boulevard, South San Francisco, California. 4. REPRESENTATIONS AND WARRANTIES OF EACH PARTY B&W, AutoImmune and Buyer each hereby represent and warrant to the other parties that the following representations and warranties are true and correct as of the Effective Date: (a) Such Person is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, with full power to carry on its business and activities as now being conducted; (b) Such Person has the corporate power and authority to enter into this Agreement and to perform its obligations hereunder. No other act, approval or proceeding on such Person's part is or will be required to authorize the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby; (c) The execution and delivery by such Person of this Agreement will not, and the fulfillment of and compliance by it with the terms, conditions and provisions hereof will not: (i) conflict with any of the terms, conditions or provisions of such Person's articles or certificate of organization or by-laws, (ii) violate any term, condition or provision of, or require any consent, authorization or approval under, any judicial or arbitration judgment, order, award, writ, injunction or decree applicable to it, or (iii) conflict with, result in a breach of, constitute a default under (whether with or without the giving of notice or the lapse of time or both), or accelerate or permit the acceleration of the performance required by, or require any consent, authorization or approval under any document, instrument, agreement or -4- license other than the [__________________________] or the Exclusive License (which Exclusive License shall be terminated by B&W and AutoImmune as to the Patent Rights immediately prior to the Closing as provided herein) to which it is a party or by which it is bound or to which any of its assets or properties are subject. 5. REPRESENTATIONS AND WARRANTIES OF B&W AND AUTOIMMUNE B&W and AutoImmune each hereby respectively represent and warrant to Buyer separately and not collectively as to each specific matter separately identified that the following representations and warranties are true and correct as of the Effective Date: (a) B&W is the sole and exclusive owner of the entire right, title and interest in and to the Patent Rights, subject only to the [___________________________], the Exclusive License and any rights of the United States Government solely with respect to grant funding, if any; (b) AutoImmune represents and warrants that the Patent Rights are genuine and legitimate pending patent applications and it has not taken or failed to take and will not take or fail to take any action that might result in the unpatentability, invalidity and/or unenforceability of the Patent Rights against any third party. In addition, AutoImmune has received no information or claim (other than claims by the parties to this Agreement and other than the notice from the Mayo Foundation referred to in subsection (c) below) to the effect that the Patent Rights may be subject to challenge, invalid or unenforceable. B&W has not taken or failed to take and will not take or fail to take any action that might result in the unpatentability, invalidity and/or unenforceability of the Patent Rights against any third party. In addition, B&W has received no information or claim (other than claims by the parties to this Agreement and other than the notice from the Mayo Foundation referred to in subsection (c) below) to the effect that the Patent Rights may be subject to challenge, invalid or unenforceable; (c) Other than (i) a notice from the Mayo Foundation to the effect that the use of a certain mouse infringes the patent rights of Athena Neurosciences, Inc., and (ii) claims that have been made by Buyer or any of its Affiliates, and other than (A) United States Patent Nos. 5,753,624 and 5,851,996 assigned to Milkhaus Laboratories, Inc., and (B) International Application No. PCT/US91/01898 assigned to molecular RX, Inc., AutoImmune has not received any notice or claim to the effect that the inventions, discoveries, improvements or patentable subject matter covered by or included within the Patent Rights may infringe, violate or misappropriate the patent or trade secret rights of any third party. Other than (i) a notice from the Mayo Foundation to effect that the use of a certain mouse infringes the patent rights of Athena Neurosciences, Inc., an (ii) claims that have been made by Buyer or any of its Affiliates, and other than (A) United States Patent Nos. -5- 5,753,624 and 5,851,996 assigned to Milkhaus Laboratories, Inc., and (B) International Application No. PCT/US91/01898 assigned to molecular RX, Inc., B&W has not received any notice or claim to the effect that the inventions, discoveries, improvements or patentable subject matter covered by or included within the Patent Rights may infringe, violate or misappropriate the patent or trade secret rights of any third party; (d) Other than the [___________________________] and the Exclusive License, AutoImmune has not granted any license or sublicense (including by implication, estoppel or otherwise) or entered into any contract with any third party prior to the Effective Date relating to otherwise concerning the Patent Rights. Other than the [___________________________] and the Exclusive License, B&W has not granted any license or sublicense (including by implication, estoppel or otherwise) or entered into any contract with any third party prior to the Effective Date relating to or otherwise concerning the Patent Rights; (e) Apart from any rights of the Untied States Government with respect to grant funding, if any, or any claim (if any) of [___________________________________________________], the sale and transfer of the Patent Rights from B&W to Buyer as contemplated in this Agreement will be free and clear of the Exclusive License and any encumbrances, liens, claims or adverse interests created by AutoImmune. Apart from any rights of the United States Government with respect to grant funding, if any, or any claim (if any) of [___________________________________________________] the sale and transfer of the Patent Rights from B&W to Buyer as contemplated in this Agreement will be free and clear of the Exclusive License and any encumbrances, liens, claims or adverse interests created by B&W; and (f)(1) B&W represents and warrants with respect to the Patent Rights that it is ware of the provisions of 35 U.S.C. (S)(S) 201 through 211 (the statute) and 37 C.F.R. Part 401 (the regulations) and has determined that the Patent Rights do not constitute a "subject invention" under the statute or the regulations. (2) B&W undertakes, in the event that the United States were to claim that the Patent Rights do constitute a "subject invention," to resolve the claim of the United States in a manner consistent with B&W's representations and warranties in subsections (a) and (e) of this Article Five (excluding all exceptions therein respecting grant funding) using the procedure that 37 C.F.R. (S) 401.11(d) provides. Except as expressly provided in this Section 5, Seller makes no other representations or warranties concerning the Patent Rights including any warranties of merchantability or fitness for any particular purpose, express or implied. -6- 5.5 REPRESENTATION AND WARRANTY OF BUYER Buyer represents and warrants to B&W and AutoImmune that the following representation and warranty is true and correct as of the Effective Date: (a) Buyer has not received any written claim from any third party (including without limitation [___________________________________________________]) directed to Buyer claiming any interest in the Patent Rights or to the underlying inventions or technology, including any claim of any ownership, license or other rights therein, under any legal or equitable theory, whether by implication, estoppel or in any other manner. 6. BUYER'S CLOSING CONDITIONS The obligation of Buyer to consummate the transaction contemplated by this Agreement shall be subject to the fulfillment, or the waiver by Buyer, on or prior to the Closing Date, of the following conditions: 6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made by either Person of Seller pursuant to Section 4 and 5 shall have been true and correct as of the Effective Date and shall be true and correct at and as of the Closing Date (taking into account the termination of the Exclusive License) as though made at and as of the Closing Date. 6.2 NO ADVERSE CLAIM. There shall not be pending any written claim from any third party (including without limitation [_____________________________________________________]) directed to Buyer, AutoImmune and/or B&W claiming any interest in the Patent Rights or in the underlying inventions or technology, including any claim of any ownership, license or other rights therein, under any legal or equitable theory, whether by implication, estoppel or in any other manner. 6.3 INSTRUMENTS OF TERMINATION, CONVEYANCE AND ASSIGNMENT. At the Closing, B&W and AutoImmune shall have delivered to Buyer (a) a mutual termination agreement terminating the Exclusive License as to the Patent Rights in a form acceptable to Buyer, and (b) such assignment (in the form set forth in Exhibit C) and other good and sufficient instruments of conveyance, transfer and assignment, in form and substance reasonably satisfactory to Buyer and its counsel, as are effective to vest in Buyer all right, title, and interest in and to the Patent Rights, free and clear of the Exclusive License and all other encumbrances, liens, claims and adverse interest of any kind created by either Person of Seller other than any rights of the United States Government with respect to grant funding, if any, or any claim (if any) of [___________________________________________________]. -7- 6.4 RELEASE AGREEMENT. B&W, AutoImmune, Athena Neurosciences, Inc. and Elan shall have executed and delivered a Release Agreement in the form attached hereto as Exhibit D. 6.5 INVENTOR COOPERATION AGREEMENTS. Each of the inventors of the Patent Rights shall have executed and delivered to Buyer an Inventor Cooperation Agreement in the form attached hereto as Exhibit E. 7. SELLER'S CLOSING CONDITIONS The obligations of Seller to consummate the transaction contemplated by this Agreement shall be subject to the fulfillment, or the waiver by each Person of Seller, on or prior to the Closing Date, of the following conditions: 7.1 PURCHASE PRICE. The obligations of Seller to consummate the transactions contemplated hereby shall be subject to payment by Buyer, on the Closing Date, of the Closing Date purchase price in accordance with Section 2.2(a). 7.2 RELEASE AGREEMENT. B&W, AutoImmune, Athena Neurosciences, Inc. and Elan shall have executed and delivered a Release Agreement in the form attached hereto as Exhibit D. 7.3 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made by Buyer pursuant to Sections 4 and 5.5 shall have been true and correct as of the Effective Date and shall be true and correct at and as of the Closing Date as though made at and as of the Closing Date. 8. OBLIGATIONS AFTER CLOSING 8.1 DELIVERY OF CASE FILES, COOPERATION, ETC. No later than ten (10) days after the Closing Date, B&W and AutoImmune shall each deliver to Buyer its complete files, other than documents and other materials that constitute work product in the civil actions that are the subject of the Release Agreement that is attached to this Agreement as Exhibit D, relating to the Patent Rights, including all patent prosecution files therefor. B&W and AutoImmune shall each also, without further consideration, cause (i) its counsel to deliver their complete files, other than documents and materials that constitute work product in the civil actions that are the subject of the release that is attached to this Agreement as Exhibit D, relating to the Patent Rights to Buyer and to cooperate fully with Buyer to promptly transfer the prosecution of the Patent Rights to Buyer and its counsel, and (ii) the inventors of the Patent Rights to cooperate fully with Buyer (e.g., by signing assignments or other appropriate documents or papers, taking oaths, giving testimony and/or being interviewed by counsel, etc.) in the procurement, prosecution, maintenance, enforcement and/or defense of the Patent Rights worldwide. Notwithstanding the foregoing, B&W and AutoImmune shall not be obligated to transfer any -8- privileged documents relating to the civil actions that are the subject of the Release Agreement that is attached to this Agreement as Exhibit D. 8.2 FURTHER ASSURANCES. From and after the Closing Date, from time to time, at Buyer's request and without further consideration, B&W and AutoImmune shall each execute and deliver such other instruments and take such other action as Buyer may reasonably request to transfer, deliver and vest in Buyer title to and possession of the Patent Rights, to enforce Buyer's rights in the Patent Rights and otherwise to consummate the transactions contemplated by the Agreement. 8.3 INDEMNIFICATION. (A) To the extent provided in this Section 8.3, B&W and AutoImmune shall each indemnify and hold Buyer, its Affiliates and their respective officers, directors, agens and shareholders harmless from and against any claim, demand or action to the extent that such claim, demand or action arises from, is based on or otherwise results from any breach of such Person's representations, warranties or covenants under this Agreement. To the extent provided in this Section 8.3, such Person will bear the expense of the defense of any such claim, demand or action (including all attorneys' and experts' fees and court costs) and pay any damages and settlements finally awarded by a court of competent jurisdiction and all losses and costs that are attributable to such claim, demand or action, provided that Buyer notifies such Person promptly in writing of the claim, demand or action. Buyer shall allow such Person to direct the defense or settlement of such claim, demand or action through counsel of such Person's choice (reasonably acceptable to Buyer, such acceptance not be unreasonably withheld or delayed) and shall cooperate fully with such person in the defense thereof (such as by making relevant documents and personnel reasonably available to such Person and by giving testimony and otherwise providing evidence, as appropriate, at such Person's cost and expense), provided that no settlement or compromise of any such claim, demand or action admitting liability of or imposing duties of performance or non-performance upon Buyer may be effected without the prior written consent of Buyer. Notwithstanding the foregoing, Buyer shall be entitled (but not obligated) to participate in the defense of any such claim, demand or action through separate counsel of its choice at its expense. B&W and/or AutoImmune shall not be responsible for any settlement or compromise made without its consent, which consent shall not be unreasonably withheld or delayed. (B) The total aggregate liability of each of B&W and AutoImmune under this Section 8.3 or Article Five or otherwise for breach of any representation, warranty or covenant (inclusive of all defense costs such as attorneys' and experts' fees and court costs) shall be limited to (a) a right of deduction and offset against the Subsequent Payments (up to a maximum of $2,850,000 in the case of AutoImmune and a maximum of $150,000 in the case of B&W), provided that Buyer must first so exhaust the Subsequent Payments if circumstances permit it to do so, and (b) should the Subsequent Payments be so exhausted or in circumstances in which Buyer is unable to exercise its right of deduction and offset against -9- them, a right to make a claim against AutoImmune or B&W for an amount up to the amount of the purchase price that each has actually received hereunder or under the Separate Agreement (in the case of AutoImmune, a maximum of $3,800,000 in the event that the Subsequent Payments are exhausted and $6,650,000 in the event that circumstances do not permit Buyer to exercise its right to exhaust the Subsequent Payments; in the case of B&W, a maximum of $200,000 in the event that Subsequent Payments are exhausted and $350,000 in the event that circumstances do not permit Buyer to exercise its right to exhaust the Subsequent Payments). Buyer's right under clause (b) of this paragraph is subject to (i) the exception that, with respect to an indemnity claim by Buyer under this Section 8.3 or Article Five or otherwise resulting from a breach by either B&W or AutoImmune of its representations and warranties under Section 5(c), such total aggregate liability shall be limited to the Subsequent Payments actually paid or payable to each of them hereunder (a maximum of $2,850,000 in the case of AutoImmune and a maximum of $150,000 in the case of B&W) and (ii) the exception that, with respect to an indemnity claim by Buyer under this Section 8.3 or Article Five or otherwise resulting from a breach by B&W of its representations and warranties under Section 5(f), such total aggregate liability shall be limited to the Subsequent Payments actually paid or payable to B&W hereunder (a maximum of $150,000), and, in either case, Buyer shall, if circumstances permit, first exercise its right of deduction and offset against the Subsequent Payments. (C) Notwithstanding the limitations of Section B above, in the event Buyer is able to establish that AutoImmune had actual knowledge that B&W, at the time of entering into and closing this Agreement, was in breach any of its representations and warranties contained in Article 5, in addition to Buyer's rights against B&W under this Section 8.3, AutoImmune acknowledges and agrees that Buyer shall have a right of deduction and offset against the Subsequent Payments to be received by AutoImmune (up to a maximum of $2,850,000, and a right to make a claim against AutoImmune for an amount up to the amount of the purchase price that AutoImmune has actually received under this Agreement ($3,800,000 in the event that the Subsequent Payments have been exhausted and $6,650,000 in the event that circumstances do not permit Buyer to exercise its right to exhaust the Subsequent Payments), provided that Buyer shall, if circumstances permit, first exercise its right of deduction and offset against the Subsequent Payments. (D) AutoImmune and B&W shall have no liability to Buyer under or with respect to this Agreement except as provided in this Section 8.3. 8.4 DISCLAIMER OF CONSEQUENTIAL DAMAGES; ETC. Notwithstanding the provisions of Section 8.3 or otherwise, in no event will B&W, AutoImmune or Buyer be liable to any other party to this Agreement or its Affiliates for any incidental, special, punitive, consequential or exemplary damages or lost profits resulting from or arising under this Agreement, regardless of the cause or theory of action (whether contract, tort, including strict liability and negligence, or otherwise). -10- 9. GENERAL PROVISIONS 9.1 PAYMENT OF CERTAIN EXPENSES. Buyer shall be responsible for paying all recording fees necessary to record the instruments of conveyance and assignment contemplated herein. Subject to the foregoing, each party shall be liable for its own costs and expenses incurred in connection with the preparation, execution and performance of this Agreement. 9.2 WAIVER. Any of the terms and conditions of this Agreement may be waived at any time and from time to time in writing by the party or parties entitled to the benefits thereof without affecting any other terms or conditions of this Agreement. 9.3 GOVERNING LAW AND FORUM. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. In the event of any claim or dispute arising out of this Agreement, the parties hereby irrevocably consent and submit to the exclusive jurisdiction of the federal and state courts in the State of Delaware. Each party agrees to accept service of process by registered or certified mail or the equivalent thereof direct to the address in effect pursuant to the Release Agreement or by whatever other means are permitted by such court. The parties irrevocably waive any claim that any suit, action or proceeding brought in the federal or state court in the State of Delaware has been brought in an inconvenient forum. 9.4 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of an be binding upon the parties, and their successors and assigns. 9.5 INTERPRETATION. In any interpretation of this Agreement, it shall be deemed that this Agreement was prepared jointly by the parties, and no ambiguity shall be construed or resolved against any party on the premise or presumption that such party was responsible for drafting this Agreement. 9.6 SEVERABILITY. If any provision of this Agreement is declared or found to be illegal, unenforceable or void, then all parties shall be relieved of all obligations arising under such provision, but only to the extent that such provision is illegal, unenforceable or void. Further this Agreement shall be deemed amended by modifying such provision to the extent necessary to make it legal and enforceable while preserving its intent or, if that is not possible, by substituting therefor another provision that is legal and enforceable and achieves the same intended objective. If the remainder of this Agreement shall not be affected by such illegal, unenforceable or void provision and its capable of substantial performance, then each provision not so affected shall be enforced to the extent permitted by law. 9.7. SINGULAR/PLURAL. Whenever in the context it appears appropriate, each term stated either in the singular or the plural shall include both the singular and the plural. -11- 9.8 HEADINGS. Section and subsection headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 9.9 COUNTERPARTS. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same agreement. Each such agreement shall become effective upon the execution of a counterpart hereof or thereof by each of the parties hereto. 9.10 MEDIA RELEASES. All media releases, public announcements and public disclosures by B&W, AutoImmune or Buyer, or their respective Affiliates, representatives, employees or agents, relating to this Agreement or its subject matter or using the name of another party, but not including any announcement intended solely for internal distribution by a party or its Affiliate or any disclosure required (in the opinion of counsel for a party or its Affiliate) by legal, accounting or regulatory requirements, shall be coordinated with and approved in writing by the other parties prior to the release thereof. 9.11 WAIVER. No delay or omission by a party to exercise any right or power hereunder shall impair any right or power or be construed to be a waiver thereof. A waiver by any party of any of the covenants, conditions or agreements to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant, condition or agreement contained herein. All remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to any party at law, in equity or otherwise, and may be enforced concurrently therewith or from time to time. 9.12 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including its Exhibits) and the instruments of conveyance and other documents and agreements referred to herein contain the entire agreement between the parties with respect to the subject matter hereof, and supersede any prior agreement, understanding or representations relating thereto. No representation, promise or inducement has been made by either Person of Seller or Buyer that is not embodied in this Agreement (including its Exhibits) or the instruments of conveyance or other documents or agreements referred to herein. This Agreement may be amended or modified only by a written instrument executed by B&W, AutoImmune and Buyer or their respective successors and assigns. 9.13 SEVERAL AND NOT JOINT. All representations, warranties, covenants and agreements of AutoImmune and B&W under this Agreement shall be several and not joint. (Signatures continues on next page.) -12- IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement effective as of the Effective Date. SELLER: THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ William D. Terry ----------------------------------- Name: William D. Terry, M.D. ---------------------------------- Title: V.P. of CSR&L ------------------------------ AUTOIMMUNE INC. By: /s/ Robert C. Bishop ------------------------------------ Name: Robert C. Bishop, Ph.D. ----------------------------------- Title: Chief Executive Officer ----------------------------- BUYER: NEURALAB LIMITED By: /s/ Kevin Insley ------------------------------------ Name: Kevin Insley ----------------------------------- Title: Vice President ------------------------------ -13- GUARANTY OF ELAN ---------------- For the valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in consideration of B&W and AutoImmune (collectively, the "Seller") executing and delivering the within Agreement for Assignment of Patent Rights (the "Agreement"), Elan Pharmaceuticals, Inc. ("Elan") hereby unconditionally guarantees to Seller, their respective successors and assigns, full and prompt payment and performance of all of the obligations of Neuralab Limited under the Agreement. This guaranty shall operate as continuing, absolute and irrevocable. The liability of Elan hereunder shall be primary, and Elan hereby waives all suretyship defenses to enforcement of this Guaranty. The provisions of Section 9.3 of the Agreement shall apply to this Guaranty. ELAN PHARMACEUTICALS, INC. By: /s/ Paul Goddard ---------------- Name: Paul Goddard -------------- Title: President & CEO ----------------- EXHIBIT A PATENT RIGHTS U.S. Provisional Number [__________] filed [________________] U.S. Provisional Number [__________] filed [________________] U.S. Patent Application [____________] filed [________________] EXHIBIT B COMMON STOCK WARRANT WARRANT REGISTRATION RIGHTS AGREEMENT [to be attached] EXHIBIT C THIS ASSIGNMENT, by THE BRIGHAM AND WOMEN'S HOSPITAL, INC. a Massachusetts charitable corporation, and having its principal place of business in BOSTON, MASSACHUSETTS (hereinafter referred to as "the Assignor"), witnesseth: WHEREAS, by virtue of three (3) Assignments recorded in the United States Patent and Trademark Office, at reel [____], frame [___], reel [____], frame [____] and reel [____] frame [____] the Assignor is the owner of the entire right, title and interest of the inventions set forth as follows: Title of Invention: [_________________________________________________] Alzheimer's Disease Filing date: [________________] Serial No.: [__________]; Filing date: [________________] Serial No.: [__________]; and Filing date: [________________] Serial No.: [__________] WHEREAS, NEURALAB LIMITED, a corporation duly organized under and pursuant to the laws of BERMUDA, and having its principal place of business at 102 ST. JAMES COURT, FLATTS, SMITHS FL04 BERMUDA (hereinafter referred to as "the Assignee") has acquired the entire right, title and interest in and to said inventions, the right to file applications on said inventions and the entire right, title and interest in and to any applications, including provisional applications for Letters Patent of the United States or other countries claiming priority to said applications, and in and to any Letters Patent or Patents, United States or foreign, to be obtained therefor and thereon. NOW, THEREFORE, effective as of March _____, 2000, for good and sufficient consideration, the receipt and adequacy of which is hereby acknowledged, the Assignor has sold, assigned, transferred, and set over, and by these presents does sell, assign, transfer and set over, unto the Assignee, its successors, legal representatives and assigns the entire right, title and interest in and to the above-mentioned inventions, the right to file applications for Letters Patent or Patents of the United States or other countries claiming priority to said applications, and any and all Letters Patent or Patents of the United States of America and all foreign countries that may be granted therefor and thereon, and in and to any and all applications claiming priority to said applications, divisions, continuations and continuations-in-part of said applications, and reissues and extensions of said Letters Patent or Patents, and all rights under the International Convention for the Protection of Industrial Property and all rights to sue for past infringements thereof or thereon, the same to be held and enjoyed by the Assignee, for its own use and behalf and the use and behalf of its successors, legal representatives and assigns, to the full end of the term or terms for which Letters Patent or Patents may be granted as fully and entirely as the same would have been held and enjoyed by the Assignor had this sale and assignment not been made; AND for the same consideration, the Assignor hereby covenants and agrees to and with the Assignee, its successors, legal representatives and assigns, that the Assignor will, whenever counsel of the Assignee, or the counsel of its successors, legal representatives and assigns, shall advise that any proceeding in connection with said inventions or said applications for Letters Patent or Patents, or any proceeding in connection with Letters Patent or Patents for said inventions in any country, including interference proceedings, is lawful and desirable, or that any application claiming priority to said application, division, continuation, or continuation-in-part of any applications for Letters Patent or Patents, or any reissue or extension of any Letters Patent or Patents to be obtained thereon, is lawful and desirable, sign all papers and documents, take all lawful oaths, and do all acts necessary or required to be done for the procurement, maintenance, enforcement and defense of Letters Patent or Patents for said inventions, without charge to the Assignee, its successors, legal representatives and assigns, but at the cost and expense of the Assignee, its successors, legal representatives and assigns; AND the Assignor hereby requests the Commissioner of Patents to issue any and all said Letters Patent or Patents of the United States to the Assignee, as the Assignee of said inventions and the Letters Patent or Patents to be issued thereon for the sole use and behalf of the Assignee, its successors, legal representatives and assigns; AND Assignor acknowledges and confirms that this ASSIGNMENT is made in connection with a certain Agreement for Assignment of Patent Rights dated effective as of January 29, 2000 among Assignor, Assignee and AutoImmune, Inc., a Delaware corporation. IN TESTIMONY WHEREOF, Assignor confirms that Assignor has signed its name on the date indicated below. THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By: /s/ William D. Terry, M.D. ---------------------------- Title: Vice President -------------- Date: ----------------------- EXHIBIT D RELEASE AGREEMENT [to be attached] EXHIBIT E INVENTOR COOPERATION AGREEMENT For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Dr. [________________], of [_______________________________________] hereby agrees to assist Neuralab Limited a Bermuda company and/or its successors and assigns (the "BUYER"), in every way Buyer deems reasonably necessary or desirable (but at the Buyer's expense as provided below) to prosecute, procure and obtain and from time to time maintain, enforce and/or defend patent applications and patents worldwide on the inventions (the "INVENTIONS") which are claimed or based on or entitled to the priority date of U.S. Provisional Patent Applications numbered [__________], filed [______________] and [__________], filed [_________] and/or U.S. Patent Application [__________] (collectively, the "APPLICATIONS"). Accordingly, I agree that whenever counsel to the Buyer advises me that any proceeding in connection with the Applications or any patents resulting from any patent applications based on the Inventions or claiming priority from the Applications (collectively, the "PATENTS") in any country, including interference proceedings, is lawful and desirable, or that any patent application claiming priority from the Applications or claiming one or more of the Inventions, or any division, continuation or continuation-in-part of any such patent application, or any reissue or extension of any Patent, is lawful and desirable, that I will sign all lawful papers, instruments and documents, take all lawful oaths, give truthful testimony and do all acts reasonably necessary or required of me for the procurement, prosecution, maintenance, enforcement and/or defense of the Applications, resulting patent applications and/or Patents, without additional charge to the Buyer for my time during the period while I am employed at The Brigham and Women's Hospital, Inc., but at the cost and expense of the Buyer for all costs and expenses involved (e.g., travel expenses, postage, courier expenses, other out-of-pocket expenses, etc.). My obligation to assist the Buyer as aforesaid in any and all countries shall continue beyond the termination of my employment with The Brigham and Women's Hospital, Inc., but Buyer shall compensate me at a reasonable rate after such termination for my time actually spent at the Buyer's requested on such assistance. Further, in the event that Buyer is unable for any reason whatsoever to secure my signature to any lawful and necessary paper, document or instrument required to apply for, prosecute, execute, renew, maintain, enforce and/or defend any patent application, Patent or other document or instrument with respect to an Invention (including renewals, extensions, continuations, divisions or continuations in part thereof, but not including any declarations supporting experimental results or opinions), I hereby irrevocably designate and appoint Buyer and its duly authorized officers and agents, as my agents and attorneys-in-fact to act for and in my behalf and instead of me, to execute and file any such application, paper, document, instrument or renewal and to do all other lawfully permitted acts to further the procurement, prosecution, maintenance, enforcement and/or defense of the Applications, resulting patent applications or Patents with the same legal force and effect as if executed by me. Dated: March 15, 2000 ------------------ /s/ ------------------------------ Dr. [________________] EXHIBIT F INVENTOR COOPERATION AGREEMENT For good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, Dr. [________________], of [_______________________________________] hereby agrees to assist Neuralab Limited a Bermuda company and/or its successors and assigns (the "BUYER"), in every way Buyer deems reasonably necessary or desirable (but at the Buyer's expense as provided below) to prosecute, procure and obtain and from time to time maintain, enforce and/or defend patent applications and patents worldwide on the inventions (the "INVENTIONS") which are claimed or based on or entitled to the priority date of U.S. Provisional Patent Applications numbered [__________], filed [____________] and [_________], filed [___________] and/or U.S. Patent Application [__________] (collectively, the "APPLICATIONS"). Accordingly, I agree that whenever counsel to the Buyer advises me that any proceeding in connection with the Applications or any patents resulting from any patent applications based on the Inventions or claiming priority from the Applications (collectively, the "PATENTS") in any country, including interference proceedings, is lawful and desirable, or that any patent application claiming priority from the Applications or claiming one or more of the Inventions, or any division, continuation or continuation-in-part of any such patent application, or any reissue or extension of any Patent, is lawful and desirable, that I will sign all lawful papers, instruments and documents, take all lawful oaths, give truthful testimony and do all acts reasonably necessary or required of me for the procurement, prosecution, maintenance, enforcement and/or defense of the Applications, resulting patent applications and/or Patents, without additional charge to the Buyer for my time during the period while I am employed at The Brigham and Women's Hospital, Inc., but at the cost and expense of the Buyer for all costs and expenses involved (e.g., travel expenses, postage, courier expenses, other out-of-pocket expenses, etc.). My obligation to assist the Buyer as aforesaid in any and all countries shall continue beyond the termination of my employment with The Brigham and Women's Hospital, Inc., but Buyer shall compensate me at a reasonable rate after such termination for my time actually spent at the Buyer's requested on such assistance. Further, in the event that Buyer is unable for any reason whatsoever to secure my signature to any lawful and necessary paper, document or instrument required to apply for, prosecute, execute, renew, maintain, enforce and/or defend any patent application, Patent or other document or instrument with respect to an Invention (including renewals, extensions, continuations, divisions or continuations in part thereof, but not including any declarations supporting experimental results or opinions), I hereby irrevocably designate and appoint Buyer and its duly authorized officers and agents, as my agents and attorneys-in-fact to act for and in my behalf and instead of me, to execute and file any such application, paper, document, instrument or renewal and to do all other lawfully permitted acts to further the procurement, prosecution, maintenance, enforcement and/or defense of the Applications, resulting patent applications or Patents with the same legal force and effect as if executed by me. Dated: March 15, 2000 ----------------- /s/ ----------------------- Dr. [________________] EX-10.34 4 AMENDMENT AND RESTATED RESEARCH & DEV * * * * * PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT UNDER RULE 24(B)-2. THE LOCATION OF THOSE OMITTED PORTIONS IS DENOTED BY BRACKETS. * * * * * Exhibit 10.34 March 16, 2000 The Brigham and Women's Hospital, Inc. 75 Francis Street Boston, MA 02103 Ladies and Gentlemen: 1. Reference is made to the Amended and Restated Research and Development Agreement made as of September 9, 1988, and revised as of July 1, 1992, and April 14, 1995 (the "Research Agreement"). Capitalized terms used herein that are not otherwise defined are used with the meanings defined in the Research Agreement. 2. "Patent Rights" shall mean and include (i) all United States and foreign applications for patents listed in Exhibit A, as well as all United States and foreign patents that have or may hereafter issue in respect of such applications for patents, and (ii) all applications for patents whose subject matter in whole or in part is entitled to the benefit of the filing date(s) of any of the applications for patents listed on Exhibit A and all United States and foreign patents that have or may hereafter issue in respect of such applications for patents, including in each case of the foregoing clauses (i) and (ii) of this definition, without limitation, all continuations, continuations-in-part, divisional patents, substitutions, Patent Cooperation Treaty applications, United States provisional patent applications, continued prosecution applications, utility models, supplementary protection certificates, reexaminations, renewals, extensions and reissues, and all rights to sue for past or future infringement thereof. 3. A question has arisen as to whether the Patent Rights resulted from the Research Program and, therefore, constitute Developed Technology. 4. In order to resolve matters between the Company and BWH relating to the Patent Rights, the Company acknowledges and agrees that BWH is the owner of the Patent Rights and abandons its contention that the Company has any license (exclusive or non-exclusive) or other rights under the Research Agreement to the Patent Rights. BWH acknowledges and agrees that the purchase price to be received for the sale and transfer of the Patent Rights to Neuralab Limited, an affiliate of Elan Pharmaceuticals, Inc. (the "Buyer"), under a certain agreement with an effective date of January 29, 2000 (the "Agreement"), including both the initial payment of $4,000,000 and the two subsequent payments of $[_________] and $[_________] for which the agreement provides, shall be paid to the Company, except that the Company shall pay to BWH [____] percent ([_]%) of any purchase price (including both the initial payment of $4,000,000 and the two subsequent payments of $[_________] and $[_________] that the Company receives from the Buyer for the Patent Rights (the "[_]% payments"); further, the Company shall pay to BWH, in the event that the Company issues a warrant as provided in Section 2.2(c) of the Agreement and the warrant is exercised, a sum (the BWH warrant exercise sum) equal to [____] percent of the total exercise price that the Company receives under the warrant. BWH agrees to tender promptly to the Company [____] per cent (the BWH warrant purchase shares) of the total number of shares that the Company is required to issue upon the exercise of the warrant upon the Company's submission to BWH of evidence in form reasonably acceptable to BWH that the warrant has been exercised and that the Company has delivered the total number of shares to the Buyer. The Company and BWH acknowledge that the evidence in form reasonably acceptable to BWH that the warrant has been exercised and that the Company has delivered the total number of shares to the Buyer. The Company and BWH acknowledge that the Agreement provides that the Company may issue warrants subject to the terms of this Section Four on two occasions. The Company shall make each [_]% payment to BWH within ten business days following the Company's receipt of payment from the Buyer. The Company shall pay to BWH the warrant exercise sum prior to BWH's delivery to the Company of the BWH warrant purchase shares. 5. Subject to the foregoing, the Research Agreement shall continue in full force and effect in accordance with its terms. 6. This agreement may not be amended except by a written agreement executed by BWH and the Company. This agreement shall take effect as an instrument under seal, shall be binding upon and shall inure to the benefit of the Company and BWH and their respective successors and assigns, and constitutes the entire agreement between the parties with respect to its subject matter. If the foregoing accurately sets forth our agreement, please so indicate by signing below. Very truly yours, AUTOIMMUNE INC. By /s/ Robert C. Bishop -------------------- Robert C. Bishop , Ph.D. Its Chief Executive Officer AGREED: THE BRIGHAM AND WOMEN'S HOSPITAL, INC. By /s/ William D. Terry -------------------------------- William D. Terry, M.D. Its Vice President, Corporate Sponsored Research and Licensing EX-27 5 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 3,478,000 6,783,000 0 0 0 10,265,000 160,000 160,000 10,265,000 129,000 0 0 0 118,074,000 (107,938,000) 10,265,000 0 4,000,000 0 601,000 0 0 0 3,532,000 0 0 0 0 0 3,532,000 0.21 0.21
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