-----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, HtQ7Q3VYd1m4OswNQTtg587aoEPgYYURSv4+PAy8DHU7okjuE3bOSuxLPZnvW3AR 5SLRG+y2y45XT8uM2STw4A== 0000950135-97-004459.txt : 19971114 0000950135-97-004459.hdr.sgml : 19971114 ACCESSION NUMBER: 0000950135-97-004459 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARIAD PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000884731 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 223106987 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21696 FILM NUMBER: 97713846 BUSINESS ADDRESS: STREET 1: 26 LANDSDOWNE ST CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6174940400 MAIL ADDRESS: STREET 2: 26 LANDSDOWNE CITY: CAMBRIDGE STATE: MA ZIP: 02139 10-Q 1 ARIAD PHARMACEUTICALS 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1997 OR ( ) 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: 0-21696 ARIAD PHARMACEUTICALS, INC. (Exact name of Registrant as specified in its charter) DELAWARE 22-3106987 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 26 LANDSDOWNE STREET, CAMBRIDGE, MASSACHUSETTS 02139 (Address of principal executive offices)(Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 494-0400 Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report: Not Applicable 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 --- --- The number of shares of the Registrant's common stock outstanding as of October 20, 1997 was 19,302,095. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 ARIAD PHARMACEUTICALS, INC. TABLE OF CONTENTS
Page No. -------- PART I. FINANCIAL INFORMATION ITEM 1. UNAUDITED FINANCIAL STATEMENTS: Condensed Consolidated Balance Sheets - September 30, 1997 and December 31, 1996................................................1 Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 1997 and 1996.......2 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1997 and 1996........................3 Notes to Unaudited Condensed Consolidated Financial Statements.......4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................6 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.....................................11
3 PART I. FINANCIAL INFORMATION ITEM 1. UNAUDITED FINANCIAL STATEMENTS ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ------------ Current assets: Cash and cash equivalents $ 9,786,607 $ 2,906,851 Marketable securities 23,365,470 12,795,449 Accounts receivable and other 1,092,891 2,569,404 ------------ ------------ Total current assets 34,244,968 18,271,704 ------------ ------------ Property and equipment: Leasehold improvements 7,012,507 7,000,873 Equipment and furniture 5,007,669 4,256,805 Construction in progress 5,199,429 ------------ ------------ Total 17,219,605 11,257,678 Less accumulated depreciation and amortization 5,933,597 4,748,275 ------------ ------------ Property and equipment, net 11,286,008 6,509,403 ------------ ------------ Licensed technology and patent application costs, net 3,215,396 1,357,470 ------------ ------------ Investment in Genomics Center 1,235,804 ------------ Other assets, net 1,334,777 1,466,416 ------------ ------------ Total $ 51,316,953 $ 27,604,993 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 1,806,082 $ 1,275,956 Accounts payable 3,195,556 788,282 Accrued liabilities 892,098 639,026 Advance from Genomics Center 2,103,163 Deferred revenue 3,666,665 3,666,665 ------------ ------------ Total current liabilities 11,663,564 6,369,929 ------------ ------------ Long-term debt 5,614,390 1,472,812 ------------ ------------ Deferred revenue 577,782 3,077,781 ------------ ------------ Stockholders' equity: Series B convertible preferred stock, $.01 par value; authorized, 5,000,000 shares; issued and outstanding, 2,526,316 shares in 1997 (liquidation preference, $24,000,000) 25,263 Common stock, $.001 par value; authorized, 60,000,000 shares; issued and outstanding, 19,301,916 shares in 1997 and 19,036,723 shares in 1996 19,302 19,037 Additional paid-in capital 94,804,109 70,593,840 Net unrealized loss on marketable securities (52,143) (102,699) Accumulated deficit (61,335,314) (53,825,707) ------------ ------------ Stockholders' equity 33,461,217 16,684,471 ------------ ------------ Total $ 51,316,953 $ 27,604,993 ============ ============
See notes to unaudited condensed consolidated financial statements. 1 4 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenue: Research revenue (principally related parties) $ 2,235,806 $ 2,109,333 $ 6,698,348 $ 6,260,999 Interest income 511,237 365,215 1,329,167 1,001,538 ----------- ----------- ----------- ----------- Total revenue 2,747,043 2,474,548 8,027,515 7,262,537 ----------- ----------- ----------- ----------- Operating expenses: Research and development 4,666,954 3,831,267 13,197,182 11,218,929 General and administrative 591,869 459,136 2,075,751 1,661,452 Interest expense 152,676 63,760 264,189 202,030 ----------- ----------- ----------- ----------- Total operating expenses 5,411,499 4,354,163 15,537,122 13,082,411 ----------- ----------- ----------- ----------- Net loss $(2,664,456) $(1,879,615) $(7,509,607) $(5,819,874) =========== =========== =========== =========== Net loss per share $ (.14) $ (.10) $ (.39) $ (.31) =========== =========== =========== =========== Weighted average number of shares of common stock outstanding 19,297,504 19,006,714 19,235,918 18,990,027
See notes to unaudited condensed consolidated financial statements. 2 5 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities: Net loss $ (7,509,607) $ (5,819,874) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,813,729 1,704,093 Deferred revenue (2,499,999) (2,499,999) Stock-based compensation 52,726 15,571 Increase (decrease) from: Accounts receivable and other 1,476,513 (1,140) Other assets (311,094) (115,990) Accounts payable 2,407,274 192,919 Accrued liabilities 253,072 (228,371) Advance from Genomics Center 2,103,163 ------------ ------------ Net cash used in operating activities (2,214,223) (6,752,791) ------------ ------------ Cash flows from investing activities: Acquisitions of marketable securities (23,881,266) (13,788,564) Proceeds from sales and maturities of marketable securities 13,277,940 23,630,820 Investment in Genomics Center (1,255,836) Investment in property and equipment, net (7,109,953) (1,108,360) Acquisitions of licensed technology and patents (1,939,704) (387,974) ------------ ------------ Net cash (used in) provided by investing activities (20,908,819) 8,345,922 ------------ ------------ Cash flows from financing activities: Proceeds from issuance of series B preferred stock 24,000,000 Proceeds from borrowings 6,000,000 Repayment of borrowings (1,328,296) (1,146,691) Proceeds from sale/leaseback of equipment 1,148,026 836,057 Proceeds from the issuance of common stock pursuant to stock option and purchase plans 183,068 111,337 ------------ ------------ Net cash provided by (used in) financing activities 30,002,798 (199,297) ------------ ------------ Net increase in cash and equivalents 6,879,756 1,393,834 Cash and equivalents, beginning of period 2,906,851 3,750,082 ------------ ------------ Cash and equivalents, end of period $ 9,786,607 $ 5,143,916 ============ ============
See notes to unaudited condensed consolidated financial statements. 3 6 ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. MANAGEMENT STATEMENT In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 1997 and December 31, 1996 and the results of operations for the three-month and nine-month periods ended September 30, 1997 and 1996. The results of operations for the three-month and nine-month periods ended September 30, 1997 are not necessarily indicative of the results to be expected for the full year. 2. MARKETABLE SECURITIES The Company has classified its marketable securities as available for sale and, accordingly, carries such securities at aggregate fair value. At September 30, 1997 and December 31, 1996, the Company's marketable securities consisted of the following:
Aggregate Amortized Gross Unrealized September 30, 1997 Fair Value Cost Basis Gains Losses - ------------------ ----------- ----------- ------- ---------- U.S. Government obligations $ 4,362,466 $ 4,409,433 $ 133 $ (47,100) Corporate debt securities 19,003,004 19,008,180 14,135 (19,311) ----------- ----------- ------- --------- Total $23,365,470 $23,417,613 $14,268 $ (66,411) ----------- ----------- ------- --------- December 31, 1996 - ----------------- U.S. Government obligations $ 4,444,217 $ 4,507,983 $ 580 $ (64,346) Corporate debt securities 8,101,761 8,140,694 3,120 (42,053) Certificate of deposit 249,471 249,471 ----------- ----------- ------- --------- Total $12,795,449 $12,898,148 $ 3,700 $(106,399) ----------- ----------- ------- ---------
At September 30, 1997, approximately $22,322,000 of investments in marketable securities had contractual maturities of one year or less. Realized gains and losses on sales of marketable securities were not material during the quarter ended September 30, 1997; the net unrealized loss of $52,143 is included in stockholders' equity. 3. HOECHST-ARIAD GENOMICS CENTER, LLC In March 1997, the Company entered into an agreement which established a 50/50 joint venture with Hoechst Marion Roussel, Inc. ("HMR") to pursue functional genomics (the "1997 HMR Genomics Agreement") with the goal of identifying novel therapeutic proteins and small-molecule drug targets. The joint venture, named the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"), is located at the Company's research facilities in Cambridge, Massachusetts. Under the terms of the 1997 HMR Genomics Agreement, the Company and HMR agreed to commit up to $85,000,000 to the 4 7 establishment of the Genomics Center and its first five years of operation. The Company and HMR will jointly fund $78,500,000 of operating and related costs, and ARIAD will fund up to $6,500,000 in leasehold improvements and equipment. HMR committed to provide ARIAD with capital adequate to fund ARIAD's share of such costs through the purchase of up to $49,000,000 of ARIAD series B preferred stock over the five-year period, including an initial investment of $24,000,000, which was completed in March 1997. The Company also entered into agreements with the Genomics Center to provide research and administrative services (the "Services Agreements") to the Genomics Center on a cost reimbursement basis. ARIAD's costs of providing the research and administrative services to the Genomics Center are charged to research and development expense and general and administrative expense in the consolidated financial statements. Under the Services Agreements, ARIAD bills the Genomics Center for 100% of its costs of providing the research and administrative services; however, because ARIAD is providing 50% of the funding of the Genomics Center, ARIAD recognizes as revenue only 50% of the costs. ARIAD accounts for its investment in the Genomics Center using the equity method. Revenue recognized pursuant to the Services Agreements amounted to $696,000 for the nine-month period ended September 30, 1997. Costs incurred in the development of the joint venture are being amortized over a five-year period beginning April 1, 1997. 4. COMMITMENTS In March 1997, in connection with the formation of the Genomics Center, the Company entered into a collaborative agreement with Incyte Pharmaceuticals, Inc. ("Incyte") providing access to the LifeSeq (R) Database. As required by the agreement, in order to secure the Company's obligation for installation and payment of certain access fees, the Company obtained an irrevocable standby letter of credit in the amount of $3,000,000 to the benefit of Incyte, which expires on January 10, 1998. 5. NET LOSS PER SHARE The shares of series B convertible preferred stock issued in March 1997 are common stock equivalents, but have been excluded from the computation of net loss per share because their effect is not dilutive. 6. NEW ACCOUNTING PRONOUNCEMENT The Company will adopt Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," in the fourth quarter of 1997, as required. The standard specifies the computation, presentation and disclosure requirements for earnings per share. The Company will continue to apply Accounting Principle Board Opinion No. 15, "Earnings Per Share," until the adoption of SFAS No. 128. 5 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW ARIAD Pharmaceuticals, Inc. (the "Company" or "ARIAD") is engaged in the discovery and development of novel pharmaceuticals based on signal transduction pathways and the genes that regulate them. The Company is currently focusing its efforts in three areas: (i) the development of orally administered drugs to block intracellular signal transduction pathways that are critical to major diseases such as osteoporosis, allergy/asthma and immune-related disorders; (ii) the development of a system to regulate gene therapy using orally administered drugs; and (iii) the identification of new small-molecule drug targets and therapeutic proteins through functional genomics. ARIAD has assembled a broad portfolio of advanced technologies for the identification, validation and optimization of novel drugs. These technologies have been integrated into a drug discovery platform that, in conjunction with the Company's expertise in signal transduction, forms the basis for multiple business opportunities, each with a diversity of potential products. In each of its three areas of drug discovery, the Company has entered into a strategic alliance with a collaborator to complement its drug discovery technologies or to support its commercialization efforts. Since its inception in 1991, the Company has devoted substantially all of its resources to its research and development programs. The Company receives no revenue from the sale of pharmaceutical products, and substantially all revenue to date has been received in connection with the Company's research collaborations. The Company has not been profitable since inception and expects to incur substantial losses for the foreseeable future, primarily due to the expansion of its research and development programs, including the establishment of the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"). The Company expects that losses will fluctuate from quarter to quarter and that such fluctuations may be substantial. As of September 30, 1997, the Company had an accumulated deficit of $61,335,000. 6 9 RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 1996 REVENUE The Company recognized research revenue of $2,236,000 for the quarter ended September 30, 1997 compared to $2,109,000 for the same period in 1996. Research revenue is comprised principally of revenue from the Company's 1995 collaborative research and development agreement with Hoechst Marion Roussel, Inc. ("HMR") (the "1995 HMR Osteoporosis Agreement"), government-sponsored research grants and, beginning in 1997, research revenue recognized for services provided to the Genomics Center. The increase in research revenue of $127,000 is the result of services provided to the Genomics Center offset partially by decreased activity under government-sponsored research grants. Research revenue resulting from the services agreements with the Genomics Center is expected to increase over the next three years. Interest income increased to $511,000 for the quarter ended September 30, 1997, up $146,000 from $365,000 for the same period in 1996 primarily as a result of higher levels of funds invested. OPERATING EXPENSES Research and development expenses increased to $4,667,000 for the quarter ended September 30, 1997 from $3,831,000 for the same period in 1996 due to increased expenses incurred in the regulated gene therapy program, including manufacturing development and other preclinical development costs, research services provided to the Genomics Center and increased research activity under the 1995 HMR Osteoporosis Agreement. The Company expects its research and development expenses to increase significantly as a result of research services to be provided to the Genomics Center, as well as increased manufacturing and other preclinical development costs associated with advanced preclinical studies and planned clinical studies of its first gene therapy drug candidate. General and administrative expenses increased to $592,000 for the quarter ended September 30, 1997 from $459,000 for the corresponding period in 1996 primarily due to increased expenses in connection with the formation of the Genomics Center and other administrative expenses. The Company incurred interest expense of $153,000 for the quarter ended September 30, 1997 compared to $64,000 for the corresponding period in 1996. The increase is due to a higher level of long-term debt during the period. 7 10 OPERATING RESULTS The Company incurred losses of $2,664,000 for the quarter ended September 30, 1997 and $1,880,000 for the corresponding period in 1996, or $.14 and $.10 per share, respectively. The Company expects that substantial operating losses will continue for several more years, will increase as its activities expand and increased research services are provided to the Genomics Center and will fluctuate as a result of differences in the timing and composition of revenue earned and expenses incurred. NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 1996 REVENUE Revenue for the nine months ended September 30, 1997 was $8,028,000 compared to $7,263,000 for the corresponding period in 1996. Research revenue earned during this period in 1997 increased by $437,000 over 1996 principally as a result of services provided to the Genomics Center. Interest income for the nine months ended September 30, 1997 increased by $327,000 over the corresponding period in 1996 primarily as a result of a higher level of funds invested. OPERATING EXPENSES Research and development expenses increased to $13,197,000 for the nine months ended September 30, 1997, up 18% from $11,219,000 for the corresponding period in 1996, primarily due to increased expenses incurred in the regulated gene therapy program, including manufacturing development and other preclinical development costs, research services provided to the Genomics Center and increased research activity as a result of the 1995 HMR Osteoporosis Agreement. General and administrative expenses increased by 25% to $2,076,000 for the nine months ended September 30, 1997 compared to $1,661,000 for the corresponding period in 1996, primarily due to increased expenses in connection with the formation of the Genomics Center, the joint venture with Genovo Inc. and other administrative expenses. The Company incurred interest expense of $264,000 for the nine months ended September 30, 1997 compared to $202,000 for the corresponding period in 1996 as a result of a higher level of long-term debt. OPERATING RESULTS The Company incurred losses of $7,510,000 for the nine months ended September 30, 1997 and $5,820,000 for the corresponding period in 1996, or $.39 and $.31 per share, respectively. The Company expects that substantial operating losses will continue for several more years, will increase as its activities expand and increased research services are provided to 8 11 the Genomics Center and will fluctuate as a result of differences in the timing and composition of revenue earned and expenses incurred. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations and investments in property and equipment primarily through the private placement and public offering of its securities, including, most recently, the sale of series B preferred stock to HMR in connection with the formation of the Genomics Center in March 1997, the increase in June 1997 of its long-term debt and, commencing in April 1997, the services agreements with the Genomics Center. Other sources of funds have included sale/leaseback and capital lease transactions, interest income, government-sponsored research grants and research revenue under the 1995 HMR Osteoporosis Agreement. As of September 30, 1997, the Company had cash, cash equivalents and marketable securities totaling $33,152,000 and working capital of $22,581,000 compared to cash, cash equivalents and marketable securities totaling $15,702,000 and working capital amounting to $11,902,000 at December 31, 1996. The primary uses of cash during the nine months ended September 30, 1997 were $2,214,000 to finance the Company's operations and working capital requirements, $7,110,000 to purchase laboratory equipment and to renovate space for the Genomics Center, $1,328,000 to repay long-term debt, $1,256,000 for investment in the Genomics Center and $1,940,000 to acquire licensed technology and patents, including the purchase, in July 1997, of pending patent applications and related intellectual property rights from Mitotix, Inc. The primary sources of cash during the nine months ended September 30, 1997 were $24,000,000 from the issuance of series B preferred stock to HMR, $5,000,000 of research funding from the 1995 HMR Osteoporosis Agreement, $6,000,000 in additional long-term debt and $2,103,000 in advances from the Genomics Center. In February 1997, the Company began renovation of approximately 35,000 square feet of previously leased space to provide laboratories and offices for the Genomics Center and to expand existing chemistry and pharmacology laboratories. The leasehold improvements were substantially completed in October 1997 at an aggregate cost of approximately $5,500,000. In June 1997, the Company amended its existing debt agreement with its principal bank and borrowed $6,000,000. The five-year bank term note bears interest at prime plus 1% and is repayable in monthly installments of $100,000, commencing August 1, 1997. In September 1997, the Company entered into a master lease credit agreement with an equipment lessor providing up to $5,000,000 in equipment financing. The lease agreement is classified as an operating lease and has a term of five years with a lease renewal or purchase option at the end of the term. Through September 30, 1997, the Company placed equipment with a cost of $1,148,000 under the agreement. 9 12 The Company has substantial fixed commitments under various research and licensing agreements, consulting and employment agreements, lease agreements, long-term debt instruments and funding obligations related to the operations of the Genomics Center. The Company will require substantial additional funding for its research and product development programs, for operating expenses, for the pursuit of regulatory clearances and for the manufacturing, sales and marketing of its products. Adequate funds for these purposes, whether obtained through financial markets or collaborative or other arrangements with corporate partners, from public or private sales of equity securities, debt securities or convertible securities or from other sources, may not be available when needed or on terms acceptable to the Company. The Company believes that its available cash and existing sources of funding will be adequate to satisfy its capital and operating requirements through 1998. However, there can be no assurance that changes in the Company's research and development plans or other events affecting the Company's operating expenses will not result in the Company depleting its funds earlier. SECURITIES LITIGATION REFORM ACT Safe harbor statement under the Private Securities Litigation Reform Act of 1995: Except for the historical information contained in this Quarterly Report on Form 10-Q, the matters discussed herein are forward-looking statements that involve risks and uncertainties, including but not limited to risks and uncertainties regarding the receipt of revenues under the Company's 1995 HMR Osteoporosis Agreement and the Services Agreements, the actual research and development expenses and other costs associated with the Genomics Center, the success of the Company's preclinical studies, the ability of the Company to commence clinical studies, the adequacy of the Company's capital resources and the availability of additional funding, as well as general economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices, and other factors discussed under the heading "Cautionary Statement Regarding Forward-Looking Statements" in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission. As a result of these factors, actual events or results could differ materially from those described herein. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the quarter ended September 30, 1997. 10 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed herewith: Exhibit 10.39: License Agreement, dated July 17, 1997, between ARIAD Pharmaceuticals, Inc. and Mitotix, Inc. Exhibit 10.40: Technology Purchase and Sale Agreement and related agreements, dated July 17, 1997, between ARIAD Pharmaceuticals, Inc. and Mitotix, Inc. (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter ended September 30, 1997. 11 14 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. ARIAD Pharmaceuticals, Inc. (Registrant) By: /s/ Jay R. LaMarche -------------------------------------- Jay R. LaMarche Executive Vice President, and Chief Financial Officer (Duly authorized Officer and Principal Financial Officer) Date: November 12, 1997 12 EX-10.2 2 LICENSE AGREEMENT 1 EXHIBIT 10.39 ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.39 PORTIONS OF THE AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. LICENSE AGREEMENT This License Agreement, dated as of July 17, 1997 (the "Effective Date"), is between ARIAD Pharmaceuticals, Inc. 26 Landsdowne Street, Cambridge, MA 02139 ("ARIAD"),and Mitotix, Inc., One Kendall Square, Building 600, Cambridge, MA 02139 ("Mitotix"). W I T N E S S E T H : WHEREAS, ARIAD has acquired from Mitotix a certain Invention and certain Licensed Patents and Licensed Know-How (all as hereinafter defined) pursuant to a Technology Purchase and Sale Agreement of even date herewith (the "Technology Purchase Agreement"); and WHEREAS, in connection with such acquisition, ARIAD has agreed to [*] license Mitotix under such Invention, Licensed Patents and Licensed Know-How in the field of Diagnostic Products (as hereinafter defined) in accordance with the terms of this Agreement. NOW THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the parties hereto mutually agree as follows: ARTICLE I - DEFINITIONS 1.1 "AFFILIATE" shall mean any corporation, company, partnership and/or firm which controls or is controlled by or is under common control with Mitotix. For the purposes of this 2 Paragraph, control shall mean: (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or participating shares entitled to vote for the election of directors; and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest or the power to direct the management and policies of such entity. 1.2 "FIELD" shall mean the field of Diagnostic Products. 1.3 "DIAGNOSTIC PRODUCTS" shall mean products which are intended to monitor the course of disease or therapy in humans, predict, detect or identify a disease in humans or determine the outcome of a pathological condition in humans. 1.4 "INVENTION" shall have the meaning set forth in the Technology Purchase Agreement. 1.5 "LICENSED PATENTS" shall mean those U.S. patent applications listed on Schedule A attached hereto, any and all patents issuing from such applications, together with any divisionals and continuations and certain continuations-in-part as set forth below of said applications and any re-examinations, extensions, or reissues of the foregoing and patents of addition thereto; and any and all foreign counterparts of any of the foregoing; provided, however, that continuations-in-part shall include only those applications claiming the benefit of the filing date of an application listed on Schedule A in which all new matter is directed to subject matter specifically described in an application listed on Schedule A. 1.6 "LICENSED KNOW-HOW" shall mean any and all Know-How, as defined in the Technology Purchase Agreement, transferred by Mitotix to ARIAD pursuant to the Technology Purchase Agreement. 2 3 ARTICLE II - LICENSE GRANT 2.1 ARIAD hereby grants to Mitotix and Mitotix hereby accepts [*] royalty-free license [*] in the Field under the Invention, the Licensed Patents and Licensed Know-How to develop, use, make, have made, sell and import Diagnostic Products. 2.2 Notwithstanding the foregoing, ARIAD hereby retains [*] the Licensed Patents and the Licensed Know-How to develop, use, make, have made, sell and import Diagnostic Products (i) for use in connection with therapeutic or prophylactic products that are developed, manufactured, imported or sold by ARIAD and/or parties licensing such therapeutic or prophylactic products from ARIAD ("ARIAD Therapeutic Products"), (ii) for use in determining how to utilize (e.g., dosing regimen or drug monitoring) ARIAD Therapeutic Products to treat a particular disease or patient, or (iii) for monitoring the effect of ARIAD Therapeutic Products. The foregoing right reserved to ARIAD shall not include the right to develop, use, make, have made, sell and import Diagnostic Products to generally determine the presence or absence of, or predisposition to, a disease state independent of a determination relative to the use of ARIAD Therapeutic Products. 2.3 The license granted to Mitotix under Paragraph 2.1 of this article shall include the right to grant sublicenses of no greater scope than the license granted to Mitotix hereunder. 2.4 In the event that prosecution of any of the Licensed Patents leads to the issuance of claims directed to [*] as defined in the Technology Purchase Agreement), ARIAD covenants that it will not enforce such claims against Mitotix or any licensee or sublicensee of Mitotix (i) to which Mitotix licenses technology developed by Mitotix which utilizes such an assay, or (ii) with which Mitotix is collaborating on a program or project which utilizes such an assay. Any such licensee or sublicensee of Mitotix may rely on ARIAD's covenant as an intended third party 3 4 beneficiary. No license or covenant to refrain from enforcing any other patent rights owned or licensed by ARIAD is hereby expressed or implied. ARTICLE III - PROPRIETARY POSITION; INFRINGEMENT 3.1 ARIAD shall be responsible, [*] for the preparation, filing, prosecution and maintenance of all patent applications and patents included in the Licensed Patents and shall use commercially reasonable efforts to obtain the issuance of [*] claims in the Field in such applications. ARIAD shall keep Mitotix reasonably informed on a timely basis as to the status of the patent applications and the patents. ARIAD shall provide advance written notice to Mitotix if, for any reason, it elects not to continue the preparation, filing, prosecution or maintenance of any of the patent applications or patents included in the Licensed Patents, [*]. 3.2 If at any time either party becomes aware of any infringement by any commercial third parties of any Licensed Patent (excluding claims of [*] as defined in the Purchase Agreement) in the Field, such party shall provide the other party with the available evidence, if any, of such infringement. 3.3 If at any time any third party shall infringe any unexpired Licensed Patent in the Field and Mitotix shall give notice in writing to ARIAD of the existence of such infringement, then ARIAD shall have the right, but not the obligation, in the exercise of its commercially reasonable judgment, to take action to abate such infringement. [*] In the event ARIAD does not take such actions, then, subject to ARIAD's right set forth in Section 3.4, Mitotix may at its election bring suit in its own name or in the name of ARIAD against such infringer, all at the expense of Mitotix. ARIAD shall execute such legal papers necessary for the prosecution of such suit as may be reasonably requested by Mitotix. Mitotix shall be entitled to receive and retain all recoveries of compensatory damages, in any form, from any suit so brought by 4 5 Mitotix, except that ARIAD and Mitotix shall be entitled to receive an amount equal to their reasonable expenses in prosecuting the suit (in the case of Mitotix) or providing any cooperation (in the case of ARIAD) under this section. In any suit brought hereunder, (i) the parties hereto shall each cooperate in the conduct of any suit hereunder at their own expense, (ii) the parties shall share equally any recoveries, in any form, other than compensatory damages, and (iii) if the party bringing suit decides to enter into a settlement of the suit, such settlement shall require the consent of the other party hereto, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, [*] except that ARIAD and Mitotix shall be entitled to receive an amount equal to their reasonable expenses in connection with such suit. In all events, if damages or the proceeds of settlement are not sufficient to pay the expenses of both ARIAD and Mitotix as provided above, the available amount shall be used to pay such expenses on a pro-rata basis. 3.4 If Mitotix wishes to bring any suit pursuant to Section 3.3, it shall give ARIAD thirty (30) days' written notice. Notwithstanding the foregoing, ARIAD shall have the right to deny Mitotix the right to bring any such suit proposed to be brought by Mitotix under Section 3.3 above by written notice to Mitotix within such thirty (30) day period if ARIAD in good faith believes that the commencement or prosecution of any such suit will create an unreasonable risk of invalidating or otherwise jeopardizing the value of the Licensed Patents. ARTICLE IV - TERMINATION If any material terms or conditions of this Agreement are breached by a party (the "breaching party") and such breach is not corrected within sixty (60) days after written notice thereof is given to the breaching party by the non-breaching party, then the non-breaching party shall have the option to terminate this Agreement by giving written notice thereof to the breaching party. 5 6 ARTICLE V - ASSIGNABILITY [*] ARTICLE VI - STATUS OF THE PARTIES No partnership, joint venture, agency or employer-employee relationship is created hereby and neither party is authorized or empowered to make any statement, contract, warranty, representation or commitment on behalf of the other. ARTICLE VII - INDEMNIFICATION; DISCLAIMER 7.1 Except to the extent that any claims or causes of action are based upon [*] Mitotix shall defend, indemnify and hold ARIAD harmless against any and all liability, damage, loss, cost or expense resulting from any claim, suit or other action arising out of or based on Mitotix's (or its Affiliates' or sublicensees') development, manufacture, use or sale of any Diagnostic Products licensed hereunder. ARIAD shall promptly notify Mitotix of any such claim of which it has actual notice and shall cooperate with Mitotix, at Mitotix's sole expense, in the defense thereof, but the omission to so notify Mitotix will not relieve Mitotix from any liability it will have to ARIAD other than under Section 7.1 or to the extent Mitotix is not actually prejudiced as a result of such omission. The parties shall use joint counsel, selected jointly by them, in the defense of any such claim, unless ARIAD, in the exercise of commercially reasonable judgment, determines that it needs to retain separate counsel because of an actual or potential conflict of interest between ARIAD and Mitotix. [*] 7.2 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A 6 7 PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING. ARTICLE VII - NOTICE Any notice required under this Agreement shall be considered given upon the earlier of: (i) when actually received at the address set forth below; or (ii) two business days after such notice, properly addressed and shipped by overnight service providing evidence of delivery or by certified mail, return receipt requested, is sent by either party to the other. The proper addresses for notice are as follows: If to ARIAD: ARIAD Pharmaceuticals, Inc. 26 Landsdowne Street Cambridge, MA 02139 Attention: Chief Executive Officer If to Mitotix: Mitotix, Inc. One Kendall Square Building 600 Cambridge, MA 02139 Attention: President ARTICLE IX - MISCELLANEOUS 9.1 This Agreement shall be governed by and construed in accordance with the internal laws of The Commonwealth of Massachusetts. Any controversy, dispute or claim arising out of or in connection with this Agreement, or the breach, termination or validity hereof, shall be settled by final and binding arbitration to be conducted by an arbitration tribunal in Boston, Massachusetts pursuant to the rules of the American Arbitration Association. The arbitration tribunal shall consist of three arbitrators. The party initiating arbitration shall nominate one arbitrator in the request for arbitration and the other party shall nominate a second in the answer thereto within thirty (30) days of receipt of the request. The two arbitrators so 7 8 named will then jointly appoint the third arbitrator. If the answering party fails to nominate its arbitrator within the thirty (30) day period, or if the arbitrators named by the parties fail to agree on the third arbitrator within sixty (60) days, the office of the American Arbitration Association in Boston, Massachusetts shall make the necessary appointments of such arbitrator(s). Each party shall pay the costs of its respective arbitrator, and the parties shall share equally the costs of the third arbitrator. The decision or award of the arbitration tribunal (by a majority determination, or if there is no majority, then by the determination of the third arbitrator, if any) shall be final, and judgment upon such decision or award may be entered in any competent court or application may be made to any competent court for judicial acceptance of such decision or award and an order of enforcement. In the event of any procedural matter not covered by the aforesaid rules, the procedural law of The Commonwealth of Massachusetts shall govern. 9.2 This Agreement, in conjunction with the Technology Purchase Agreement, constitutes the entire Agreement between the parties hereto with respect to the subject matter hereof and as such supersedes all previous written and oral negotiations, agreements, contracts, representations, letters of intent, understandings and commitments with respect thereto. This Agreement may be modified, discharged, amended, or extended only by a writing signed by a duly authorized representative of the parties. 9.3 Should any court of competent jurisdiction later consider any portion of this Agreement to be invalid, illegal or unenforceable, it shall be considered severed from this Agreement. All other provisions, rights or obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties. 8 9 9.4 The parties will agree upon a press release which shall be issued promptly after the Closing under the Technology Purchase Agreement. Except as set forth in the preceding sentence, neither Mitotix nor ARIAD shall make any news release or other public statement disclosing the terms of this Agreement or of any amendment hereto, or the performance hereunder or the existence of the arrangement between the parties without the prior approval of the other party, except as required by applicable law, rule or regulation, which approval shall not be unreasonably withheld. Once a particular item of information has been disclosed as aforesaid, either party may make subsequent disclosure of such information without further approval of the other party. 9.5 Headings in this Agreement are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 9.6 No failure or delay of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. 9 10 IN WITNESS WHEREOF, and intending to be bound hereby, the parties have caused this agreement to be signed by their duly authorized representatives. MITOTIX, INC. By:/s/ ---------------------------- Name: Title: ARIAD PHARMACEUTICALS, INC. By:/s/ ---------------------------- Name: Title: 10 11 SCHEDULE A LICENSED PATENTS 1 [*] 2. [*] 3. [*] 4. [*] 5. [*] 6. [*] 7. [*] 8. [*] EX-10.3 3 PURCHASE AND SALES AGREEMENT 1 EXHIBIT 10.40 ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.40 PORTIONS OF THE AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. TECHNOLOGY PURCHASE AND SALE AGREEMENT This Technology Purchase Agreement and Sale Agreement (the "Agreement") is entered into as of July 17, 1997 by and between ARIAD Pharmaceuticals, Inc. (the "Buyer") and Mitotix, Inc. (the "Seller"). WHEREAS, the Seller desires to sell and the Buyer desires to buy the right, title and interest of the Seller in certain intellectual property, patent applications, know-how and reagents relating to the inventions disclosed in the Patents (as hereinafter defined), except as excluded by Section 1.05 hereof (the "Invention"). NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. PURCHASE AND SALE OF ASSETS. 1.01 TRANSFERRED ASSETS. Upon the terms and conditions set forth in this Agreement, at the Closing (as defined in Section 1.06) the Seller shall transfer to the Buyer good and valid title to the Patents (as defined below in Section 1.01(a)) and all of its right, title and interest in and to the Know-How and Reagents (as defined below in Sections 1.01(b) and (c), respectively). The Patents, Know-How and Reagents shall hereinafter be collectively referred to as the "Transferred Assets". The Transferred Assets shall consist of: (a) The patent applications listed on SCHEDULE 2.05, the prosecution files for such patent applications (including, without limitation, all drafts, notes, drawings or figures, official correspondence with patent offices, other correspondence and copies of cited references, copies of which the Seller may retain), and all intellectual property rights (other than rights pertaining to [*] as hereinafter defined) in such applications, including without limitation the right to claim the priority benefit thereof and to prosecute and to enforce any patents arising therefrom (collectively, the "Patents"). 2 (b) All laboratory notebooks and other primary data, research results, records and documentation, research plans, proposals, conclusions, know-how, specifications and information, to the extent any of the foregoing are recorded in any tangible form (including, without limitation, gels, photographs, print-outs, electronic files and paper documents), which are owned by, licensed to or in the possession of the Seller and which relate to the discovery of or are necessary or materially useful for the practice of the Invention, the Patents or the Reagents, and all intellectual and tangible property rights in the foregoing, including the right to file additional patent applications based thereon (collectively, the "Know-How"). (c) The reagents listed on, and in the quantities listed on, SCHEDULE 2.04 attached hereto (the "Reagents"). Except as set forth in this Agreement, the Transferred Assets shall be transferred on an "AS IS" basis. The Seller shall transfer the Transferred Assets to the Buyer pursuant to a Bill of Sale in substantially the form of EXHIBIT 1.01A attached hereto (the "Bill of Sale") and an Assignment of Patents substantially in the form of EXHIBIT 1.01B attached hereto (the "Patent Assignment"). 1.02 NO LIABILITIES. The Buyer shall not assume any liabilities of the Seller in connection with the Invention, the Transferred Assets or the transactions contemplated by this Agreement. 1.03 CONSIDERATION FOR THE TRANSFERRED ASSETS. In consideration for the transfer of the Transferred Assets, upon the terms and subject to the conditions set forth in this Agreement, the Buyer shall pay the Seller an aggregate sum of [*] (the "Purchase Price") payable as follows: (a) [*] shall be paid at the Closing (the "Closing Payment"); and (b) An additional [*] shall be paid on each of the dates which is [*] after the Closing Date (as defined in Section 1.07) (the "Installments"). The Closing Payment and each of the Installments shall be made by wire transfer to an account designated by the Seller. 1.04 LICENSE. As additional consideration for the Transferred Assets, effective upon the completion of the Closing, the parties shall enter into a license agreement granting to the Seller a [*] license, with the right to grant sublicenses, to develop, use, make, have made, sell and import Diagnostic Products (as hereinafter defined) using the Invention, the Patents and the Know-How (the "License"). Notwithstanding the foregoing, the License shall retain for the Buyer, the [*] right, [*] to develop, use, make, have made, sell and import Diagnostic Products (i) for use in connection with therapeutic or prophylactic products that are developed, manufactured, imported or sold by the Buyer and/or parties licensing such therapeutic or prophylactic products from the Buyer ("Buyer Therapeutic Products"), (ii) for use in determining how to utilize (e.g., dosing regimen or drug monitoring) Buyer Therapeutic Products to treat a particular disease or patient, or (iii) for monitoring the effect of Buyer Therapeutic Products. The 2 3 foregoing right reserved to the Buyer shall not include the right to develop, use, make, have made, sell and import Diagnostic Products to generally determine the presence or absence of, or predisposition to, a disease state independent of a determination relative to the use of Buyer Therapeutic Products. For purposes of this Agreement and the License, "Diagnostic Products" shall mean products which are intended to monitor the course of disease or therapy in humans, predict, detect or identify a disease in humans, or determine the outcome of a pathological condition in humans. 1.05 EXCLUSION OF [*]. For the purpose of this Agreement, [*] and all uses disclosed for any of the foregoing. The parties expressly agree that [*] is not included within the subject matter transferred and assigned hereunder and is expressly excluded from the definitions of the Invention, the Patents and the Know-How. The Seller shall have an unrestricted right to prosecute claims relating to [*]. 1.06 FURTHER ASSURANCES. At any time and from time to time after the date hereof, at the request of the Buyer and without further consideration, the Seller will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to more effectively transfer, convey and assign to the Buyer and to confirm the Buyer's title to the Transferred Assets. 1.07 CLOSING. The closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts contemporaneously with the execution of this Agreement. At the Closing: (a) The Seller shall deliver or cause to be delivered to the Buyer the following: (i) The Bill of Sale; (ii) The Patent Assignment; (iii) The Reagents; (iv) All of the books, data, documents, instruments and other records and materials described in Sections 1.01(a) and 1.01(b), which shall include identification by the Seller from the materials described therein of the records believed by the Seller to document the earliest making of the inventions claimed in the Patents and any additional records corroborating the foregoing. The Seller may retain copies of the Know-How in microfiche or other format. The original copies of the Know-How and Patents transferred to the Buyer shall be retained by the Buyer and made available to the Seller for use in connection with the Seller's rights under the License, for the prosecution, defense, maintenance or enforcement of patent applications and patents other than the Patents, and for all purposes unrelated to the Invention or the Transferred Assets. [*] 3 4 (v) A Confidentiality Agreement substantially in the form of EXHIBIT 1.07(a)(v) attached hereto (the "New Confidentiality Agreement"); and (vi) Cooperation Agreements executed by each of the inventors named in the Patents (the "Inventors") substantially in the form of EXHIBIT 1.07(a)(vi) attached hereto. (b) The Buyer shall deliver or cause to be delivered to the Seller the Closing Payment; and (c) The parties shall execute and deliver the License. 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. As an inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, the Seller hereby represents and warrants to the Buyer as follows: 2.01 ORGANIZATION AND QUALIFICATION. The Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is duly licensed or qualified to transact business as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse impact on the Seller's ability to sell the Transferred Assets. 2.02 CORPORATE POWER AND AUTHORITY. The Seller has the corporate power and authority to execute, deliver and perform this Agreement and the documents and transactions contemplated hereby. The execution, delivery and performance of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action required of the Seller. This Agreement and the other agreements, documents and instruments to be executed and delivered by the Seller hereunder have been duly executed and delivered by, and constitute the legal, valid and binding obligations of the Seller enforceable against the Seller in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought. 2.03 VALIDITY, ETC. Neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other agreements in compliance with the terms and conditions hereof and thereof will (i) violate or result in any breach of the Seller's Certificate of Incorporation or By-Laws, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority or any other third party, (iii) violate or result in a breach of any mortgage, indenture, note, license, agreement or other instrument or obligation related to the Seller or to the Seller's ability to consummate the transactions contemplated hereby or thereby, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained in writing, (iv) violate any judgment, order, writ, injunction, decree, 4 5 statute, rule or regulation applicable to the Seller or (v) result in the creation of any Claim (as defined in Section 2.07) upon the Transferred Assets. 2.04 REAGENTS. SCHEDULE 2.04 contains a true and complete list all reagents in Seller's possession which, to the knowledge of Seller, are materially useful in connection with the Invention and the quantities thereof. 2.05 PATENTS AND KNOW-HOW. SCHEDULE 2.05 sets forth a list of all the Seller's patent applications related to the Invention. All patent applications listed therein have been filed and prosecuted in good faith as required by law and, to the knowledge of the Seller, are in good standing. To the knowledge of the Seller, the inventors of such patent applications are as set forth in the respective patent documents and all such inventors have assigned their rights in the Invention and the Patents to the Seller. No third party has notified the Seller of any claim of infringement by the Seller of any patents or other intellectual property rights of others in connection with the Invention, the Patents or Know-How. To the knowledge of the Seller, no interference or opposition proceeding is pending or threatened relating to the Patents. Except as contemplated by this Agreement, the Seller has not granted any person or entity any right to use the Invention, the Patents or the Know-How for any purpose. 2.06 PROPRIETARY INFORMATION OF THIRD PARTIES. To the knowledge of the Seller, no third party has claimed or has reason to claim that any person employed by or affiliated with the Seller has, in any way related to the Invention, (a) violated or may be violating any of the terms or conditions of such person's employment, non-competition or non-disclosure agreement with such third party or (b) disclosed or may be disclosing or utilized or may be utilizing any trade secret or proprietary information or documentation of such third party. No third party has requested information from the Seller which suggests that such a claim might be contemplated. To the knowledge of the Seller, no person employed by or affiliated with the Seller has employed or proposes to employ in connection with the Invention any trade secret or any information or documentation proprietary to any former employer or other third party and no person employed by or affiliated with the Seller has violated any confidential relationship which such person may have had with any third party, in connection with the development of the Invention. 2.07 TITLE. Upon delivery to the Buyer of the Bill of Sale and the Patent Assignment, (i) the Buyer will receive good and valid title to the Patents free and clear of all claims, charges, liens, contracts, rights, options, security interests, mortgages, encumbrances and restrictions (collectively, "Claims"), and (ii) the Buyer will receive all of the Seller's right, title and interest in and to the Invention, the Know-How and the Reagents, free and clear of all Claims known to the Seller or that arise out of or result from any action or failure to act of the Seller, or, to the knowledge of the Seller, the Inventors, or any other agent, employee or consultant of the Seller. 2.08 LITIGATION. There is no action, suit, claim, proceeding or investigation pending, or, to the knowledge of the Seller, threatened against the Seller and, to the knowledge of the Seller, there is no action, suit, claim, proceeding or investigation pending or threatened against any of the Inventors affecting the Transferred Assets (a) at law or in equity, or before any federal, state, municipal or other governmental commission, board, bureau, agency or instrumentality, 5 6 domestic or foreign or (b) before any arbitration panel. To the knowledge of the Seller, there are no outstanding writs, judgments, injunctions or decrees of any court, governmental agency or arbitration tribunal against, involving or affecting the Transferred Assets. There is no action or suit by the Seller pending or threatened against others involving the Transferred Assets. 2.09 TAXES. The Seller has not taken or failed to take any action which could create any tax lien on the Transferred Assets. 3. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the Seller as follows: 3.01 ORGANIZATION. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and is duly licensed or qualified to transact business as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse impact on the Buyer's ability to purchase the Transferred Assets. 3.02 CORPORATE POWER AND AUTHORITY. The Buyer has the corporate power and authority to execute, deliver and perform this Agreement and the documents and transactions contemplated hereby. The execution, delivery and performance of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action required of the Buyer. This Agreement and the other agreements, documents and instruments to be executed and delivered by the Buyer hereunder have been duly executed and delivered by, and constitute the legal, valid and binding obligations of the Buyer enforceable against the Buyer in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought. 3.03 VALIDITY, ETC. Neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other agreements in compliance with the terms and conditions hereof and thereof will (i) violate or result in any breach of the Buyer's Certificate of Incorporation or By-Laws, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority or any other third party, (iii) violate or result in a breach of any mortgage, indenture, note, license, agreement or other instrument or obligation related to the Buyer or to the Buyer's ability to consummate the transactions contemplated hereby or thereby, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite waivers or consents have been obtained in writing, or (iv) violate any judgment, order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer. 4. COVENANTS OF THE SELLER. The Seller covenants and agrees with the Buyer that, following the Closing, the Seller shall cooperate with the Buyer in prosecuting the 6 7 patent applications and in defending as necessary the Patents, the Know-How and the Invention against any claims or objections of third parties. Such cooperation shall include, without limitation, [*]. Without limiting the generality of the foregoing, the Seller agrees that the Buyer shall have the right to enforce the rights of the Seller pursuant to Subsection 2(c) of the Invention, Non-Disclosure and Non-Competition Agreements between the Seller and each of the Inventors in so far as such rights pertain to the Invention, the Know-How and the Patents, as fully as if the Buyer were a party to each of such agreements in the place of the Seller. 5. COVENANTS OF THE BUYER AND SELLER. The Buyer covenants and agrees with the Seller that the Buyer shall not renew or prosecute any claims of the Patents pertaining specifically to [*]. The Seller covenants and agrees with the Buyer that the Seller shall not prosecute or assert any claims to the Invention except as may be permitted under the License. The Seller further covenants and agrees that it shall not take any action which will adversely affect the prosecution of the claims to the Invention by the Buyer and the Buyer further covenants and agrees that it shall not take any action which will adversely affect the prosecution of the claims to [*] by the Seller. 6. MISCELLANEOUS. 6.01 NOTICES. All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to such other address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by recognized overnight courier, or (iv) sent by registered or certified mail, return receipt requested, postage prepaid. If to the Buyer: ARIAD Pharmaceuticals, Inc. 26 Landsdowne Street Cambridge, MA 02139 Attn: Chief Executive Officer Fax No.: (617) 494-1828 If to the Seller: Mitotix, Inc. One Kendall Square, Building 600 Cambridge, MA 02139 Attn: President Fax No.: (617) 225-0005 All notices, requests, consents and other communications hereunder shall be deemed to have been (i) if by hand, at the time of the delivery thereof to the receiving party at the address of such party set forth above, (ii) if made by telex, telecopy or facsimile transmission, at the time that receipt thereof has been acknowledged by electronic confirmation or otherwise, (iii) if sent by overnight courier, on the next business day following the day such notice is delivered to the courier service, or (iv) if sent by registered or certified mail, on the fifth (5th) business day following the day such mailing is made. 7 8 6.02 ENTIRE AGREEMENT. This Agreement together with the Bill of Sale, Patent Assignment, New Confidentiality Agreement and License (together, the "Documents") embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. In addition, the Buyer acknowledges that the Cooperation Agreements embody the entire understanding with respect to the subject matter hereof between the Buyer and the Inventors. No statement, representation, warranty, covenant or agreement of any kind not expressly set forth in the Documents shall affect, or be used to interpret, change or restrict, the express terms and provisions of this Agreement. 6.03 MODIFICATIONS AND AMENDMENTS. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by both parties hereto. 6.04 WAIVERS AND CONSENTS. No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of the party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. The terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent. 6.05 ASSIGNMENT. [*] 6.06 ARBITRATION. Any controversy, dispute or claim arising out of or in connection with this Agreement, or the breach, termination or validity hereof, shall be settled by final and binding arbitration to be conducted by an arbitration tribunal in Boston, Massachusetts pursuant to the rules of the American Arbitration Association. The arbitration tribunal shall consist of three arbitrators. [*] In the event of any procedural matter not covered by the aforesaid rules, the procedural law of The Commonwealth of Massachusetts shall govern. 6.07 GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the internal law of The Commonwealth of Massachusetts, without giving effect to the conflict of law principles thereof. 6.08 SEVERABILITY. In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Agreement shall be void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court determines it enforceable, and as so limited shall remain in full force and effect. In the 8 9 event that such court shall determine any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. 6.09 HEADINGS AND CAPTIONS. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify, or affect, or be considered in construing or interpreting the meaning or construction of any of the terms or provisions hereof. 6.10 EXPENSES. Each of the parties hereto shall pay its own fees and expenses in connection with this Agreement and the transactions contemplated hereby whether or not the transactions contemplated hereby are consummated. 6.11 SURVIVAL. All representations and warranties in this Agreement shall survive the Closing. 6.12 COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 6.13 PUBLICITY. The parties will agree upon a press release which shall be issued promptly after the Closing hereunder. Except as set forth in the preceding sentence, neither Mitotix nor ARIAD shall make any news release or other public statement disclosing the terms of this Agreement or of any amendment hereto, or the performance hereunder or the existence of the arrangement between the parties without the prior approval of the other party, except as required by applicable law, rule or regulation, which approval shall not be unreasonably withheld. Once a particular item of information has been disclosed as aforesaid, either party may make subsequent disclosure of such information without further approval of the other party. 9 10 IN WITNESS WHEREOF, the Buyer and the Seller have executed this Agreement as an instrument under seal as of the date first above written. ARIAD PHARMACEUTICALS, INC. By:/s/ ----------------------------------- Name: Title: MITOTIX, INC. By:/s/ ----------------------------------- Name: Title: 10 11 SCHEDULE 2.04 REAGENTS BOX 1: [*] [*] BOX 2: [*] [*] BOX 3: [*] [*] 12 SCHEDULE 2.05 PATENTS 1. [*] 2. [*] 3. [*] 4. [*] 5. [*] 6. [*] 7. [*] 8. [*] 13 EXHIBIT 1.01A BILL OF SALE This Bill of Sale, dated this _____ day of July, 1997, is executed and delivered by Mitotix, Inc. (the "Seller"), to ARIAD Pharmaceuticals, Inc. (the "Purchaser"). All capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Technology Purchase and Sale Agreement, dated as of the date hereof, between the Seller and the Purchaser (the "Agreement"). WHEREAS, pursuant to the Agreement, the Seller has agreed to sell, transfer, convey, assign and deliver to the Purchaser certain Transferred Assets. NOW, THEREFORE, in consideration of the execution and delivery of the Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Seller hereby sells, transfers, conveys, assigns and delivers to the Purchaser, its successors and assigns, to have and to hold forever, all of the Seller's rights, title and interest in and to the Invention and: (a) The Patents; (b) The Know-How; and (c) The Reagents. IN WITNESS WHEREOF, the Seller has caused this Bill of Sale to be executed under seal as of the date first above written. MITOTIX, INC. By: ------------------------------- Name: Title: 14 EXHIBIT 1.01B ASSIGNMENT OF PATENTS WHEREAS, Mitotix, Inc. (hereafter "Assignor"), a corporation having a principal place of business at One Kendall Square, Cambridge, Massachusetts 02139, is the sole and exclusive owner of all right, title and interest in and to the United States Patents and Patent Applications set forth on Schedule A attached hereto; and WHEREAS, ARIAD Pharmaceuticals, Inc. (hereafter "Assignee"), a corporation having a principal place of business at 26 Landsdowne Street, Cambridge, Massachusetts 02139, is desirous of acquiring the entire right, title and interest in and to said Patents and Patent Applications except for all rights in and to [*] and, to the extent disclosed in said Patents and Patent Applications, all embodiments of, and all inventions pertaining to, [*] including, without limitation, [*] and all uses disclosed for any of the foregoing. The parties expressly agree that claims relating to [*] are not included within the subject matter transferred and assigned hereunder and the Seller shall have an unrestricted right to prosecute claims relating to [*]. NOW, THEREFORE, TO ALL WHOM IT MAY CONCERN, BE IT KNOWN, that for good and valuable consideration, the receipt of which is hereby acknowledged, Assignor has sold, assigned, transferred and conveyed and by these presents does hereby sell, assign, transfer and convey, unto said Assignee, its successors and assigns, the entire right, title and interest in and to the Patents and Patent Applications as set forth and described in Schedule A attached hereto and all divisions, continuations, continuations-in-part and renewals thereof, and all Patents of the United States which may be granted thereon and all reissues, re-examinations and extensions thereof; and all applications for industrial property protection, including, without limitation, all applications for patents, utility models, and designs which may hereafter be filed for an invention described in any of the foregoing applications in any country or countries foreign to the United States, together with the right to file such applications and the right to claim for the same the priority rights derived from said United States applications under the Patent Laws of the United States, the International Convention for the Protection of Industrial Property, or any other international agreement or the domestic laws of the country in which any such application is filed, as may be applicable; and all forms of industrial property protection, including, without limitation, patents, utility models, inventors' certificates and designs which may be granted for said invention in any country or countries foreign to the United States and all extensions, renewals and reissues thereof; together with all claims for damages by reason of past infringement, with the right to sue for, and collect the same for the use of Assignee, its successors and assigns; provided, however, that there shall be excluded from the foregoing conveyance any claims of said Patents and Patent Applications set forth on Schedule A that pertain specifically to [*] as defined above. Assignor hereby authorizes and requests the Commissioner of Patents and Trademarks of the United States, and any official of any country or countries foreign to the United States, whose duty it is to issue patents or other evidence or forms of industrial property protection on 15 applications as aforesaid, to issue the same to the Assignee, its successors, legal representatives and assigns, in accordance with the terms of this instrument. Assignor hereby covenants and agrees that it has full right to convey the entire interest herein assigned, and that it has not executed, and will not execute, any agreement in conflict herewith. This assignment is effective as of this _____ day of July, 1997. IN WITNESS WHEREOF, Assignor has caused these presents to be signed by a duly authorized officer. MITOTIX, INC., Assignor By: ------------------------------------ Name: Title: Witnesses: Signature: - ------------------------- Name Signature: - ------------------------- Name: 16 SCHEDULE A 1. [*] 2. [*] 17 EXHIBIT 1.07(a)(v) CONFIDENTIALITY AGREEMENT This Confidentiality Agreement (the "Agreement") is made as of July __, 1997 by and between ARIAD Pharmaceuticals, Inc. ("ARIAD") and Mitotix Inc. ("Mitotix"). All capitalized terms used herein and not defined herein shall have the meanings ascribed to such terms in the Technology Purchase and Sale Agreement between ARIAD and Mitotix dated as of the date hereof (the "Purchase Agreement"). WHEREAS, pursuant to the Purchase Agreement, Mitotix has transferred all of its right, title and interest in the Invention, the Know-How and the Patents to ARIAD and ARIAD has granted a license under the Invention, the Know-How and the Patents in the Field of Diagnostic Products pursuant to a License Agreement of even date herewith between ARIAD and Mitotix (the "License"). NOW, THEREFORE, in consideration of the Purchase Agreement and for other good and valuable and consideration, the receipt and sufficiency which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITION OF CONFIDENTIAL INFORMATION. For purposes of this Agreement, "Confidential Information" shall mean (a) the Know-How, (b) all Confidential Items as defined in the Confidential Disclosure Agreement between ARIAD and Mitotix dated September 20 and September 24, 1996, (c) all information concerning the terms of the Purchase Agreement [*]. Notwithstanding the foregoing, Confidential Information shall not include information which: [*] 2. DISCLOSURE OF CONFIDENTIAL INFORMATION. (a) From and after the date hereof, Mitotix shall hold in confidence and shall not disclose any Confidential Information except (i) as expressly permitted under this Agreement, the Purchase Agreement or the License, or (ii) as required by applicable law or legal process, in which instance Mitotix shall provide ARIAD with prior written notice of any such disclosure so that ARIAD can seek an appropriate protective order. [*] (b) From and after the date hereof, ARIAD shall hold in confidence and shall not disclose any Confidential Information which either (1) relates solely to the Field of Diagnostic Products or to [*] (as defined in the Purchase Agreement), or (2) represents business or commercial information of Mitotix which does not constitute or relate solely to the Transferred Assets except (i) as expressly permitted under this Agreement, the Purchase Agreement or the License, or (ii) as required by applicable law or legal process, in which instance ARIAD shall 18 provide Mitotix with prior written notice of any such disclosure so that Mitotix can seek an appropriate protective order. [*] (c) Either party may disclose or permit the disclosure of any Confidential Information to its directors, officers, employees, consultants and advisors who are obligated to maintain the confidential nature of such Confidential Information and who need to know such Confidential Information for purposes contemplated by the Agreement, the License or the Purchase Agreement. 3. MISCELLANEOUS. (a) ENTIRE AGREEMENT. This Agreement together with the Purchase Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. (b) MODIFICATIONS AND AMENDMENTS. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by both parties hereto. (c) ASSIGNMENT. [*] (d) GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the internal law of The Commonwealth of Massachusetts, without giving effect to the conflict of law principles thereof. (e) SEVERABILITY. In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Agreement shall be void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court determines it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall determine any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. (f) HEADINGS AND CAPTIONS. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify, or affect, or be considered in construing or interpreting the meaning or construction of any of the terms or provisions hereof. (g) COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 2 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as an instrument under seal as of the date first above written. ARIAD PHARMACEUTICALS, INC. By: ______________________________ Name: Title: MITOTIX INC. By: ______________________________ Name: Title: 3 20 EXHIBIT 1.07(a)(vi) COOPERATION AGREEMENT This Cooperation Agreement (the "Agreement") is executed and delivered by the undersigned (the "Inventor") as of July ____, 1997. WHEREAS, pursuant to the Technology Purchase and Sale Agreement by and between ARIAD Pharmaceuticals Inc. ("ARIAD") and Mitotix, Inc. ("Mitotix") dated as of the date hereof (the "Purchase Agreement"), Mitotix has transferred all of its right, title and interest in and to the Invention, the Patents and the Know-How to ARIAD and has agreed to cooperate with ARIAD in the prosecution of the Patents after the date hereof; and WHEREAS, the Inventor is an employee of Mitotix and is listed as an inventor in one or more of the patent applications included in the Patents, and the Inventor has executed and delivered to Mitotix a Invention, Non-Disclosure and Non-Competition Agreement (the "Prior Agreement") pursuant to which the Inventor has agreed, among other things, to keep confidential certain Proprietary Information (as defined therein), to assign to Mitotix all the Inventor's right, title and interest in and to the Invention and the Patents and to cooperate fully with Mitotix, both during and after the Inventor's employment with Mitotix, with respect to the procurement, maintenance and enforcement of the Patents. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Inventor hereby covenants and agrees with ARIAD as follows: 1. DEFINITIONS. For purposes of this Agreement: (a) The "Confidential Information" shall mean all materials, information and know-how, whether or not in writing, concerning the Invention, the Patents, the Supplemental Patent Materials and the Know-How. (b) The "Invention" shall mean the inventions disclosed in the Patents (as hereinafter defined) except as excluded by Section 1.05 of the Purchase Agreement. (c) The "Patents" shall mean patent applications listed on Schedule A, and all intellectual property rights (other than rights pertaining to [*] as defined in the Purchase Agreement) in such applications. (d) The "Supplemental Patent Materials" shall mean the prosecution files for the patent applications listed on Schedule A (including, without limitation, all drafts, notes, drawings or figures, official correspondence with patent offices, other correspondence and copies of cited references). 21 (e) The "Know-How" shall mean all laboratory notebooks and other primary data, research results, records and documentation, research plans, proposals, conclusions, know-how, specifications and information, to the extent any of the foregoing are recorded in any tangible form (including, without limitation, gels, photographs, print-outs, electronic files and paper documents), which are owned by, licensed to or in the possession of Mitotix and which relate to the discovery of or are necessary or materially useful for the practice of the Invention, the Patents or the Reagents (as defined in the Purchase Agreement), and all intellectual and tangible property rights in the foregoing, including the right to file additional patent applications based thereon. (f) The "License" shall mean the License Agreement dated as of even date herewith between ARIAD and Mitotix. 2. CONFIDENTIALITY. The Inventor acknowledges that, as between ARIAD and the Inventor, the Confidential Information shall be the exclusive property of ARIAD. [*] the Inventor will not disclose any Confidential Information to others or use the same for any purposes without the prior written approval of ARIAD, unless and until such Confidential Information has become public knowledge without fault by the Inventor. 3. INVENTOR REPRESENTATIONS. The Inventor represents, warrants and confirms to ARIAD that the Inventor has assigned all of the Inventor's right, title and interest in and to the Invention, the Patents and the Know-How to Mitotix. [*] 4. COOPERATION. The Inventor agrees to cooperate reasonably with ARIAD with respect to the procurement, maintenance and enforcement of the Patents (both in the United States and foreign countries) and the Know-How, provided that (a) the Inventor will be entitled to reasonable compensation and reimbursement from ARIAD for time and expenses incurred by the Inventor in connection with such cooperation, other than for time spent as an employee of Mitotix, (the specific terms of such compensation and reimbursement to be determined by mutual agreement prior to the provision of such cooperation), and (b) such cooperation and assistance by the Inventor shall be scheduled and coordinated by mutual agreement between the Inventor and ARIAD so as not to interfere with the Inventor's performance of services to Mitotix or any subsequent employer. Notwithstanding the foregoing, the Inventor shall not be required to spend more than [*] in any [*] period performing services for ARIAD under this Agreement. 5. CONSENT OF MITOTIX. Mitotix hereby confirms that the Inventor has executed this Agreement at the request of Mitotix and that Mitotix consents to the performance by the Inventor of the obligations of the Inventor hereunder and agrees that the performance of such obligations by the Inventor shall not be considered by Mitotix to be inconsistent with the Inventor's obligations as an employee of Mitotix. 6. MISCELLANEOUS. 2 22 (a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. (b) MODIFICATIONS AND AMENDMENTS. The terms and provisions of this Agreement may be modified or amended only by written agreement executed by both parties hereto. (c) ASSIGNMENT. This Agreement and any right hereunder may not be assigned by ARIAD without the written consent of the Inventor, which shall not be unreasonably withheld, except that ARIAD may, without such consent, assign this Agreement and its rights hereunder, in whole or in part, (i)to any of its affiliates, [*]. (d) GOVERNING LAW. This Agreement and the rights and obligations of the parties hereunder shall be construed in accordance with and governed by the internal law of The Commonwealth of Massachusetts, without giving effect to the conflict of law principles thereof. (e) SEVERABILITY. In the event that any court of competent jurisdiction shall finally determine that any provision, or any portion thereof, contained in this Agreement shall be void or unenforceable in any respect, then such provision shall be deemed limited to the extent that such court determines it enforceable, and as so limited shall remain in full force and effect. In the event that such court shall determine any such provision, or portion thereof, wholly unenforceable, the remaining provisions of this Agreement shall nevertheless remain in full force and effect. (f) HEADINGS AND CAPTIONS. The headings and captions of the various subdivisions of this Agreement are for convenience of reference only and shall in no way modify, or affect, or be considered in construing or interpreting the meaning or construction of any of the terms or provisions hereof. (g) EXPENSES. Mitotix agrees to pay the reasonable expenses of the Inventor in connection with the negotiation of this Agreement. (h) [*] (i) TERMINATION. [*] This Agreement shall terminate on [*], but may be extended by ARIAD for [*] additional years on sixty (60) days prior notice in the event that [*]. 3 23 IN WITNESS WHEREOF, the Inventor has executed this Agreement as an instrument under seal as of the date first above written. THE INVENTOR ------------------------------- Name: AGREED AND ACCEPTED: ARIAD PHARMACEUTICALS, INC. By:/s/ --------------------------------- --------------------- Name: Date: Title: MITOTIX, INC. By:--------------------------------- --------------------- Name: Date: Title: 4 24 SCHEDULE A PATENTS 1. [*] 2. [*] 3. [*] 4. [*] 5. [*] 6. [*] 7. [*] 8. [*] EX-27 4 FINANCIAL DATA SCHEDULE
5 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 9,786,607 23,365,470 0 0 0 34,244,968 17,219,605 5,933,597 51,316,953 11,663,564 5,614,390 0 25,263 19,302 33,416,652 51,316,953 0 8,027,515 0 0 15,272,933 0 264,189 (7,509,607) 0 0 0 0 0 (7,509,607) (.39) (.39)
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