0000912057-01-537858.txt : 20011119
0000912057-01-537858.hdr.sgml : 20011119
ACCESSION NUMBER: 0000912057-01-537858
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20010930
FILED AS OF DATE: 20011106
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: DYAX CORP
CENTRAL INDEX KEY: 0000907562
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731]
IRS NUMBER: 043053198
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-24537
FILM NUMBER: 1776233
BUSINESS ADDRESS:
STREET 1: ONE KENDALL SQ BLDG 600 5TH FL
CITY: CAMBRIDGE
STATE: MA
ZIP: 02139
MAIL ADDRESS:
STREET 1: ONE KENDALL SQ BLDG 600
STREET 2: 5TH FL
CITY: CAMBRIDGE
STATE: MA
ZIP: 02139
FORMER COMPANY:
FORMER CONFORMED NAME: BIOTAGE INC
DATE OF NAME CHANGE: 19951117
10-Q
1
a2062558z10-q.txt
FORM 10-Q
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 period ended September 30, 2001
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 No. 000-24537
DYAX CORP.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 04-3053198
(State of Incorporation) (I.R.S. Employer Identification Number)
ONE KENDALL SQUARE, CAMBRIDGE, MA 02139
(Address of Principal Executive Offices)
(617) 225-2500
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----
Number of shares outstanding of Dyax Corp.'s Common Stock as of November 6,
2001:
Common Stock, par value $.01 19,278,284 shares outstanding
DYAX CORP.
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Unaudited Consolidated Financial Statements
Consolidated Balance Sheets (Unaudited)
September 30, 2001 and December 31, 2000 .................................3
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
For the three months ended September 30, 2001 and 2000 and for the
nine months ended September 30, 2001 and 2000.............................4
Consolidated Statements of Cash Flows (Unaudited)
For the nine months ended September 30, 2001 and 2000.....................5
Notes to Unaudited Interim Consolidated Financial Statements.....................6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations ..................................10
Item 3 - Quantitative and Qualitative Disclosures About Market Risk .....................13
PART II- OTHER INFORMATION
Item 2 - Use of Proceeds from Registered Securities .....................................13
Item 6(a) - Exhibits.....................................................................13
Item 6(b) - Reports on Form 8-K .........................................................14
Signatures ..............................................................................15
Exhibit Index............................................................................16
2
PART I - FINANCIAL INFORMATION
Item 1 - Unaudited Consolidated Financial Statements
DYAX CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2001 2000
-------------------- ---------------
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 55,992,000 $ 74,205,000
Accounts receivable, net....................................... 5,928,000 6,509,000
Inventories.................................................... 3,028,000 2,719,000
Current portion of notes receivable, officers.................. 213,000 412,000
Other current assets........................................... 898,000 780,000
------------ ------------
Total current assets......................................... 66,059,000 84,625,000
Fixed assets, net................................................. 8,637,000 4,101,000
Notes receivable, officers........................................ 1,357,000 1,380,000
Goodwill and other intangibles, net............................... 380,000 1,100,000
Restricted cash................................................... 4,279,000 --
Other assets...................................................... 158,000 199,000
------------ ------------
Total assets................................................. $ 80,870,000 $ 91,405,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.......................... $ 7,303,000 $ 7,983,000
Current portion of deferred revenue............................ 4,668,000 4,161,000
Current portion of capital leases.............................. 1,105,000 683,000
------------ ------------
Total current liabilities.................................... 13,076,000 12,827,000
Deferred revenue.................................................. 5,679,000 7,141,000
Capital leases.................................................... 2,003,000 1,580,000
------------ ------------
Total liabilities............................................ 20,758,000 21,548,000
Commitments
Stockholders' equity:
Common stock, $0.01 par value; 50,000,000 shares authorized at September 30,
2001 and December 31, 2000; 19,270,158 shares issued and outstanding at
September 30, 2001 and 19,046,711
shares issued at December 31, 2000........................... 193,000 190,000
Additional paid-in capital..................................... 141,155,000 140,936,000
Receivable from officer for common stock purchase.............. (418,000) (418,000)
Accumulated (deficit) ......................................... (78,076,000) (66,844,000)
Treasury stock (0 and 1,378 common shares at cost at September
30, 2001 and December 31, 2000, respectively)................ -- --
Deferred compensation.......................................... (2,738,000) (3,980,000)
Accumulated other comprehensive loss........................... (4,000) (27,000)
------------ ------------
Total stockholders' equity................................... 60,112,000 69,857,000
------------ ------------
Total liabilities and stockholders' equity................... $ 80,870,000 $ 91,405,000
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
3
DYAX CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- --------------------
2001 2000 2001 2000
---- ---- ---- ----
Revenues:
Product revenues.......................... $ 4,798,000 $ 3,604,000 $ 13,272,000 $ 10,291,000
Product development and license fee revenues 4,248,000 2,692,000 11,051,000 6,269,000
------------- ------------ ------------ ------------
Total revenues............................... 9,046,000 6,296,000 24,323,000 16,560,000
Operating expenses:
Cost of products sold..................... 2,305,000 1,710,000 6,151,000 4,780,000
Research and development:
Other research and development.......... 4,529,000 3,521,000 13,574,000 10,514,000
Noncash compensation.................... 163,000 211,000 502,000 606,000
Selling, general and administrative:
Other selling, general and administrative 6,339,000 3,683,000 16,661,000 12,049,000
Noncash compensation.................... 207,000 257,000 622,000 740,000
------------- ------------ ------------ ------------
Total operating expenses..................... 13,543,000 9,382,000 37,510,000 28,689,000
------------- ------------ ------------ ------------
Loss from operations......................... (4,497,000) (3,086,000) (13,187,000) (12,129,000)
Interest income, net...................... 480,000 592,000 1,955,000 911,000
------------- ------------ ------------ ------------
Net loss..................................... (4,017,000) (2,494,000) (11,232,000) (11,218,000)
------------- ------------ ------------ ------------
Other comprehensive loss:
Foreign currency translation adjustments.. 252,000 (190,000) 23,000 (47,000)
------------- ------------ ------------ ------------
Comprehensive loss........................... $ (3,765,000) $ (2,684,000) $(11,209,000) $(11,265,000)
============= ============ ============ ============
Basic and diluted net loss per share......... $ (.21) $ (.24) $ (.59) $ (2.20)
============= ============ ============ ============
Shares used in computing basic and diluted net
loss per share............................ 19,264,790 10,558,553 19,195,586 5,105,308
============= ============ ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
4
DYAX CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30,
-------------------------
2001 2000
---- ----
Cash flows from operating activities:
Net loss........................................................... $(11,232,000) $ (11,218,000)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization..................................... 986,000 669,000
Amortization of goodwill and other intangibles.................... 720,000 668,000
Compensation expenses associated with stock options............... 1,124,000 1,346,000
Changes in operating assets and liabilities:
Accounts receivable............................................... 531,000 (1,993,000)
Inventories....................................................... (317,000) (262,000)
Notes receivable, officers........................................ 222,000 (89,000)
Other assets...................................................... (74,000) (532,000)
Accounts payable and accrued expenses............................. (664,000) (1,772,000)
Deferred revenue.................................................. (952,000) 6,556,000
------------ ------------
Net cash used in operating activities.................................. (9,656,000) (6,627,000)
------------ ------------
Cash flows from investing activities:
Purchase of fixed assets............................................ (5,538,000) (1,543,000)
------------ ------------
Cash flows from financing activities:
Net proceeds from the issuance of common stock from initial public
offering.......................................................... -- 62,350,000
Proceeds from the issuance of common stock and the exercise of stock
options and warrants.............................................. 340,000 573,000
Proceeds from sale-leaseback of equipment............................ 1,121,000 1,186,000
Increase in restricted cash for facility lease....................... (4,279,000) --
Repayment of capital lease obligations............................... (266,000) (366,000)
------------ ------------
Net cash (used in) provided by financing activities.................... (3,084,000) 63,743,000
Effect of foreign currency translation on cash balances................ 65,000 196,000
------------ ------------
Net (decrease) increase in cash and cash equivalents................... (18,213,000) 55,769,000
Cash and cash equivalents at beginning of the period................... 74,205,000 16,726,000
------------ ------------
Cash and cash equivalents at end of the period......................... $ 55,992,000 $ 72,495,000
============ ============
Supplemental disclosure of cash flow information:
Interest paid....................................................... $ 102,000 $ 135,000
============ ============
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property and equipment under capital leases.......... $ 1,121,000 $ 1,186,000
============ ============
Deferred compensation............................................... $ -- $ 1,368,000
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE INTERIM
CONSOLIDATED FINANCIAL STATEMENTS.
5
DYAX CORP.
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Dyax Corp. (the "Company") is a biopharmaceutical company that has
developed and patented phage display technology with applications in the
discovery and development of a broad range of compounds for the treatment and
diagnosis of diseases and for the purification and manufacture of
biopharmaceuticals and other chemicals. Through the use of phage display
technology, Dyax's scientists, collaborators and licensees seek to discover
proteins and peptides, including human antibodies, that bind tightly to specific
molecular targets. The Company, through its Biotage subsidiary, develops,
manufactures and sells chromatography separations systems and products.
The accompanying unaudited interim financial statements have been
prepared by the Company in accordance with accounting principles generally
accepted in the United States of America ("GAAP")for interim financial
information and with the instructions to Form 10-Q. The consolidated
financial statements include the accounts of the Company and its
subsidiaries. All material intercompany balances and transactions have been
eliminated. Certain amounts from prior years have been reclassified in the
accompanying financial statements in order to be consistent with the current
year's classifications.
The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect (i) the
reported amounts of assets and liabilities, (ii) disclosure of contingent assets
and liabilities at the dates of the financial statements and (iii) the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates. The results of operations for the three month
and nine month periods ended September 30, 2001 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2001.
It is management's opinion that the accompanying interim financial
statements reflect all adjustments (which are normal and recurring) necessary
for a fair presentation of the results for the interim periods. The interim
financial statements should be read in conjunction with the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000.
2. INVENTORY
Inventories consist of the following:
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
Raw materials........................................ $1,910,000 $1,627,000
Work in process...................................... 187,000 231,000
Finished products.................................... 931,000 861,000
---------- ----------
$3,028,000 $2,719,000
========== ==========
6
3. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------ ------------
Accounts payable..................................... $4,196,000 $4,489,000
Accrued wages and related taxes...................... 1,967,000 2,311,000
Accrued warranty costs............................... 146,000 146,000
Other accrued liabilities............................ 994,000 1,037,000
---------- ----------
$7,303,000 $7,983,000
========== ==========
4. NET LOSS PER SHARE
Net loss per share is computed under Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share. Basic net loss per share is
computed using the weighted average number of shares of common stock
outstanding. Diluted loss per share does not differ from basic loss per share
since potential common shares from the conversion of preferred stock and
exercise of stock options and warrants are antidilutive for all periods
presented and therefore are excluded from the calculation of diluted net loss
per share.
The following sets forth the computation of net loss per share:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2001 2000 2001 2000
---- ---- ---- ----
Numerator: Net Loss.......................... $(4,017,000) $(2,494,000) $(11,232,000) $(11,218,000)
=========== =========== ============ ============
Denominator: Weighted average common shares,
basic and diluted......................... 19,264,790 10,558,553 19,195,586 5,105,308
=========== =========== ============ ============
Net loss per share: Basic and diluted........ $ (.21) $ (.24) $ (.59) $ (2.20)
=========== =========== ============ ============
At September 30, 2001 and 2000, the following potentially dilutive
common shares were excluded because their effect was antidiliutive:
September 30,
-------------------------------------
2001 2000
--------- ----------
Stock options............................. 3,148,926 2,312,292
Unvested restricted stock................. -- 14,265
5. COMPREHENSIVE LOSS
Accumulated other comprehensive loss is calculated as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2001 2000 2001 2000
Accumulated other comprehensive loss:
Foreign currency translation adjustment:
Balance at beginning of period....... $ (256,000) $ 35,000 $ (27,000) $ (108,000)
Change during period................. 252,000 (190,000) 23,000 (47,000)
------------ ------------- ------------ -------------
Balance at end of period............. $ (4,000) $ (155,000) $ (4,000) $ (155,000)
============ ============ ============ ============
7
6. BUSINESS SEGMENTS
The Company discloses business segments under SFAS No. 131, Disclosures
about Segments of an Enterprise and Related Information. Segment data does not
include allocation of corporate administrative costs to each of its operating
segments. The Company evaluates the performance of its segments and allocates
resources to them based on losses before corporate administrative costs,
interest and taxes.
The Company has two reportable segments: Separations and Therapeutics/
Diagnostics. The Separations segment develops, manufactures and sells
chromatography separations systems and products through the Company's Biotage
subsidiary. The Therapeutics/Diagnostics segment develops therapeutic and
diagnostic products using the Company's proprietary phage display technology,
licenses this proprietary technology to third parties and licenses affinity
ligands developed using the Company's phage display technology to third parties
for separations applications.
The Company's reportable segments are strategic business units that
offer different products and services. They are managed separately because each
business requires different technologies and marketing strategies.
The following table presents certain segment financial information and
the reconciliation of segment financial information to consolidated totals as
of:
THERAPEUTICS/
SEPARATIONS DIAGNOSTICS TOTAL
----------- ------------- -----------
THREE MONTHS ENDED SEPTEMBER 30, 2001
Revenue from external customers........................ $ 4,798,000 $ 4,248,000 $ 9,046,000
Segment loss from operations........................... $ (619,000) $(2,091,000) $(2,710,000)
Segment assets......................................... $11,597,000 $ 2,505,000 $14,102,000
THERAPEUTICS/
SEPARATIONS DIAGNOSTICS TOTAL
THREE MONTHS ENDED SEPTEMBER 30, 2000 ----------- ------------- -----------
Revenue from external customers........................ $ 3,604,000 $ 2,692,000 $ 6,296,000
Segment loss from operations........................... $ (882,000) $ (663,000) $(1,545,000)
Segment assets......................................... $ 8,317,000 $ 2,958,000 $11,275,000
THERAPEUTICS/
SEPARATIONS DIAGNOSTICS TOTAL
NINE MONTHS ENDED SEPTEMBER 30, 2001 ----------- ------------- -----------
Revenue from external customers........................ $13,272,000 $11,051,000 $24,323,000
Segment loss from operations........................... $(1,967,000) $(5,215,000) $(7,182,000)
Segment assets......................................... $11,597,000 $ 2,505,000 $14,102,000
THERAPEUTICS/
SEPARATIONS DIAGNOSTICS TOTAL
NINE MONTHS ENDED SEPTEMBER 30, 2000 ----------- ------------- -----------
Revenue from external customers........................ $10,291,000 $ 6,269,000 $16,560,000
Segment loss from operations........................... $(2,428,000) $(4,738,000) $(7,166,000)
Segment assets......................................... $ 8,317,000 $ 2,958,000 $11,275,000
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2001 2000 2001 2000
---- ---- ---- ----
RECONCILIATIONS:
Loss from operations:
Loss from operations from reportable
segments................................ $ (2,710,000) $ (1,545,000) $ (7,182,000) $ (7,166,000)
Unallocated amounts:
Corporate expenses................... (1,787,000) (1,541,000) (6,005,000) (4,963,000)
Interest income, net................. 480,000 592,000 1,955,000 911,000
------------ ------------ ------------ ------------
Consolidated net loss..................... $ (4,017,000) $ (2,494,000) $(11,232,000) $(11,218,000)
============ ============ ============ ============
8
7. RECENTLY ISSUED ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS 141 requires that all business combinations be accounted
for using the purchase method only and that certain acquired intangible assets
in a business combination be recognized as assets apart from goodwill. SFAS 142
requires that ratable amortization of goodwill be replaced with periodic tests
of the goodwill's impairment and that intangible assets other than goodwill be
amortized over their useful lives. SFAS 141 is effective for all business
combinations initiated after June 30, 2001 and for all business combinations
accounted for by the purchase method for which the date of acquisition is after
June 30, 2001. The provisions of SFAS 142 will be effective for fiscal years
beginning after December 15, 2001, and will thus be adopted by the Company, as
required, in fiscal year 2002. The impact of SFAS 141 and SFAS 142 on the
Company's financial statements has not yet been determined.
In October 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS 144 supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of and provides a single accounting model for long-lived assets to
be disposed of. SFAS 144 is effective for fiscal years beginning after December
15, 2001 and will thus be adopted by the Company, as required, on January 1,
2002. The Company does not expect the adoption of SFAS 144 to have a material
impact on its financial position or operating results.
8. COMMITMENTS AND CONTINGENCIES
On June 13, 2001, the Company signed a ten-year lease with the
Massachusetts Institute of Technology. The leased property is located in
Cambridge, Massachusetts and will serve as the Company's corporate headquarters
and main research facility. Under the terms of the lease, the Company will
initially lease 67,197 square feet. The Company expects to occupy this space in
the first quarter of 2002. The Company is obligated to lease an additional
24,122 square feet by the sixtieth month from the initial occupancy date. The
Company has the option to extend the lease for two additional five-year terms.
The Company must provide the lessor with a Letter of Credit in the amount of
$4,279,000 which may be reduced after the fifth year of the lease term. This
amount is included as restricted cash on the balance sheet.
Minimum future lease payments for the new property as of the years
ending December 31 are as follows:
2002 $ 3,629,000
2003 3,629,000
2004 3,629,000
2005 3,629,000
2006 and thereafter 30,567,000
9. COLLABORATION AND LICENSE AGREEMENTS
In October 2001, the Company's collaboration and license agreement
with Human Genome Sciences, Inc. ("HGSI") was modified effective as of July
1, 2001. Under the modified agreement, which provides the Company
non-exclusive research access to up to 20 HGSI targets, the Company will fund
its own research in connection with such targets through June 2003 using
one-half of the research personnel previously allocated to the HGSI funded
research effort. This modification reduces the overall funding commitment of
HGSI by approximately $4 million. The Company has options to
9
obtain exclusive licenses to develop therapeutic product candidates for up to
three of the targets for which it funds the research, subject to achieving
specified research goals, and HGSI has options to assume development and
commercialization of the product candidates. The modified agreement also adds
technical milestones that may be payable to the Company in connection with the
portion of the research that continues to be funded by HGSI until March 2003.
The upfront license fees received in March 2000 will now be recognized as
revenue over the term of the modified agreement.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
We are a biopharmaceutical company that has developed and patented
phage display technology with applications in the discovery and development of a
broad range of compounds for the treatment and diagnosis of diseases and for the
purification and manufacture of biopharmaceuticals and other chemicals. We are
using phage display to build a broad portfolio of product candidates that we
plan to develop and commercialize either ourselves or through collaborations. We
are further leveraging this technology platform with collaborative arrangements
and licenses that can produce revenues through research funding, patent and
library license fees, milestone payments and royalties. We are currently engaged
in funded collaborative arrangements with biotechnology and pharmaceutical
companies for the discovery and/or development of biopharmaceutical, separations
and diagnostic lead compounds, and we have over 50 licensees.
We also develop, manufacture and sell chromatography separations
systems and products through our Biotage subsidiary. We are a leading developer,
manufacturer and supplier of chromatography separations systems that use
disposable cartridges to separate and purify pharmaceuticals being produced for
research and clinical development.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
Total revenues for the three month period ended September 30, 2001
("2001 Quarter") were $9.0 million, compared with $6.3 million for the three
month period ended September 30, 2000 ("2000 Quarter"), an increase of $2.8
million or 44%. Product sales and product development and license revenues
accounted for 53% and 47% respectively, of total revenues in the 2001 Quarter,
as compared with 57% and 43% in the 2000 Quarter. Product sales increased to
$4.8 million in the 2001 Quarter from $3.6 million in the 2000 Quarter, an
increase of $1.2 million or 33%. The increase in product sales is primarily due
to increased unit sales of Biotage's pharmaceutical discovery systems and
cartridges. We expect that product sales and total revenues in the fourth
quarter of 2001 will approximate levels in the fourth quarter of 2000.
Product development and license fee revenues increased to $4.2
million for the 2001 Quarter from $2.7 million for the 2000 Quarter, an
increase of $1.6 million or 58%. The increase in product development and
license fee revenues is due to the continued expansion of our phage display
licensing program, for which revenue increased to $2.7 million in the 2001
Quarter from $1.1 million in the 2000 Quarter, including the recognition of a
fully paid up patent license.
Cost of products sold for the 2001 Quarter was $2.3 million compared to
$1.7 million for the 2000 Quarter, an increase of $595,000 or 35%. The cost of
products sold as a percentage of product sales remained relatively stable,
increasing to 48% in the 2001 Quarter from 47% for the 2000 Quarter.
Research and development expenses for the 2001 Quarter were $4.7
million, compared with $3.7 million for the 2000 Quarter, an increase of $1.0
million or 26%. This increase resulted primarily from increased clinical trial
costs for our lead compounds and increased headcount to expand internal efforts
to develop biopharmaceuticals, diagnostic products and industrial enzymes. The
increase was partially offset by a reduction in research and development
expenses at our Biotage subsidiary.
10
Selling, general and administrative expenses increased to $6.5 million
for the 2001 Quarter compared to $3.9 million for the 2000 Quarter, an increase
of $2.6 million or 66%. This increase is primarily due to increased personnel in
sales and marketing functions at Biotage, increased headcount to support
corporate administrative functions in legal, finance, business development and
human resources and increased legal fees related to intellectual property.
Net interest income decreased to $480,000 for the 2001 Quarter from
$592,000 for the 2000 Quarter, due to lower interest rates.
Our net loss for the 2001 Quarter was $4.0 million compared to $2.5
million for the 2000 Quarter.
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
Total revenues for the nine months ended September 30, 2001 ("2001
Period") were $24.3 million, compared with $16.6 million for the nine months
ended September 30, 2000 ("2000 Period"), an increase of $7.7 million or 47%.
Product sales and product development and license revenues accounted for 55% and
45% respectively, of total revenues in the 2001 Period, as compared with 62% and
38% in the 2000 Period. Product sales increased to $13.3 million in the 2001
Period from $10.3 million in the 2000 Period, an increase of $3.0 million or
29%. The increase in product sales is primarily due to increased unit sales of
Biotage's pharmaceutical discovery systems.
Product development and license fee revenues increased to $11.1
million for the 2001 Period from $6.3 million for the 2000 Period, an
increase of $4.8 million or 76%. The increase in product development and
license fee revenues is due to funded collaborative arrangements that began
in 2000 and the continued expansion of our phage display licensing program,
for which revenue increased to $5.3 million in the 2001 Period from $2.5
million in the 2000 Period, including the recognition of a fully paid up
patent license in 2001.
Cost of products sold for the 2001 Period was $6.2 million compared to
$4.8 million for the 2000 Period, an increase of $1.4 million or 29%. The cost
of products sold as a percentage of product sales remained stable at 46% for the
2001 and 2000 Periods.
Research and development expenses for the 2001 Period were $14.1
million, compared with $11.1 million for the 2000 Period, an increase of $3.0
million or 27%. This increase resulted primarily from increased clinical trial
costs for our lead compounds and increased headcount to expand internal efforts
to develop biopharmaceutical, diagnostic products and industrial enzymes. The
increase was partially offset by a reduction in research and development
expenses at Biotage.
Selling, general and administrative expenses increased to $17.3 million
for the 2001 Period compared to $12.8 million for the 2000 Period, an increase
of $4.5 million or 35%. This increase is primarily due to increased personnel in
sales and marketing functions at Biotage, increased headcount to support
corporate administrative functions in legal, finance, business development and
human resources and increased legal fees related to intellectual property.
Net interest income increased to $2.0 million for the 2001 Period, from
$911,000 for the 2000 Period, due to a higher average balance available for
investment as a result of the proceeds from our initial public offering in
August 2000, offset by lower interest rates.
Our net loss for both the 2001 and 2000 Periods was $11.2 million.
11
LIQUIDITY AND CAPITAL RESOURCES
On August 18, 2000, the Company completed its initial public offering
of 4,600,000 shares of common stock at a price of $15.00 per share resulting in
net proceeds to the Company, after commissions and expenses, of $62.4 million.
Through September 30, 2001, we have funded our operations principally through
the sale of equity securities, which have provided aggregate net cash proceeds
since inception of approximately $131.3 million. We have also generated funds
from product sales, product development and license fee revenues, interest
income and other sources. As of September 30, 2001, we had cash and cash
equivalents of approximately $56.0 million, a decrease of $18.2 million from
December 31, 2000. Our funds are currently invested in U.S. Treasury
obligations.
Our operating activities used cash of $9.7 million and $6.6 million
for the 2001 and 2000 Periods, respectively. The use of cash in the 2001
Period resulted primarily from our losses from operations and changes in our
working capital accounts, net of depreciation, amortization and non-cash
compensation expense. Cash used by operating activities for the 2000 Period
was primarily due to our losses from operations, net of depreciation,
amortization and noncash compensation expense, offset by cash received from
funded collaboration arrangements included in deferred revenue. Our deferred
revenue decreased from $11.3 million at December 31, 2000 to $10.3 million at
September 30, 2001 due to recognition of upfront product development fees and
amortization of license fees received in 2000. Based on the October 2001
modification of our collaboration and license agreement with HGSI, which
provides us non-exclusive research access to up to 20 HGSI targets, we will
fund our own research in connection with such targets through June 2003 using
one-half of the research personnel previously allocated to the HGSI funded
research effort. This modification reduces the overall funding commitment of
HGSI by approximately $4 million.
Our investing activities used cash of $5.5 million and $1.5 million for
the 2001 and 2000 Periods, respectively. Our investing activities for the 2001
Period consisted of purchases of equipment and land. We anticipate that we will
invest $6.0 million to $8.0 million in the next twelve months for leasehold
improvements to satisfy facilities requirements for our research activities.
Additionally, our Biotage subsidiary plans to begin construction on a 51,000
square foot facility in the University of Virginia's North Fork Research Park in
Charlottesville, Virginia at an estimated cost of $6.0 million. The land for
this facility was purchased during September 2001.
Our financing activities used cash of $3.1 million and provided cash of
$63.7 million for the 2001 and 2000 Periods, respectively. Our financing
activities for the 2001 Period consisted primarily of restricting cash as part
of a facility lease offset by proceeds from the exercise of stock options, and
proceeds from the sale-leaseback of equipment. Our financing activities for the
2000 Period consisted primarily of proceeds from the issuance of common stock
from our initial public offering, proceeds from the exercise of stock options
and proceeds from the sale-leaseback of equipment, offset by repayments of
capital lease obligations.
We currently have a $3.0 million loan facility available from Genzyme
Corporation that was established as part of the collaboration to bring DX-88 to
market. Interest on any outstanding balance accrues at a rate equal to one
percent over the prime rate. There are currently no amounts outstanding under
this facility.
We believe that existing cash and cash equivalents plus anticipated
cash flow from product sales and existing collaborations will be sufficient
to support our current operating plan for the foreseeable future. If our
existing resources are insufficient to satisfy our liquidity requirements, we
may need to sell additional equity or debt securities. The sale of any equity
or debt securities may result in additional dilution to our stockholders, and
we cannot be certain that additional financing will be available in amounts
or on terms acceptable to us, if at all. If we are unable to obtain any
required additional financing, we may be required to reduce the scope of our
planned research, development and commercialization activities, which could
harm our financial condition and operating results.
12
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATIONS AND RESULTS
This Quarterly Report on Form 10-Q contains forward-looking
statements, including statements regarding our strategies, results of
operations, research and development programs and collaborations. Statements
that are not historical facts are based on our current expectations, beliefs,
assumptions, estimates, forecasts and projections about the industry and
markets in which we compete. The statements contained in this report are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions which are difficult to predict. Therefore, actual outcomes and
results may differ materially from what is expressed in such forward-looking
statements. Important factors, which may affect future operating results,
include, without limitation, those set forth in Exhibit 99.1 entitled,
"Factors Affecting Future Operating Results" filed with our Annual Report on
Form 10-K for the year ended December 31, 2000 filed with the Securities and
Exchange Commission on April 2, 2001 (File No. 000-24537).
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk is confined to our cash and cash
equivalents. We place our investments in high-quality financial instruments,
primarily U.S. government securities money market funds, which we believe are
subject to limited credit risk. We currently do not hedge interest rate
exposure. As of September 30, 2001, we had cash and cash equivalents of $56.0
million consisting of cash and highly liquid, short-term investments. Our
short-term investments will decline by an immaterial amount if market interest
rates increase, and therefore, our exposure to interest rate changes is
immaterial. Declines of interest rates over time will, however, reduce our
interest income from our short-term investments. Our outstanding capital lease
obligations are all at fixed interest rates and therefore have minimal exposure
to changes in interest rates.
Most of our transactions are conducted in U.S. dollars. We have
collaboration, technology license agreements and product sales with parties
located outside the United States. Transactions under certain other agreements
are conducted in the local foreign currency. We do not believe that there would
be a material impact on our results of operations or cash flows; unless the
exchange rate undergoes a change of 10% or more.
PART II - OTHER INFORMATION
Item 2 - Use of Proceeds from Registered Securities
On August 14, 2000 the Securities and Exchange Commission declared
effective our Registration Statement on Form S-1 (File No. 333-37394) in
connection with the initial public offering of our common stock. On August 18,
2000, we sold 4,600,000 shares of our common stock (including 600,000 shares
pursuant to the exercise by the underwriters of their overallotment option) at a
price of $15.00 per share to the underwriters. We received net proceeds in the
initial public offering of approximately $62,350,000. No expenses were paid or
payments made to our directors, officers or affiliates or 10% owners of any
class of our equity securities in connection with the offering. From August 18,
2000 through September 30, 2001, we invested the net proceeds from the offering
in highly liquid, short-term investments.
Item 6(a) - Exhibits
EXHIBITS DESCRIPTION
10.1 Amendment to the Collaboration and License
Agreement Between Human Genome Sciences, Inc.
and Dyax Corp. dated July 1, 2001
13
Item 6(b) - Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
14
DYAX CORP.
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.
DYAX CORP.
Date: November 6, 2001 /s/ STEPHEN S. GALLIKER
----------------------------------
Executive Vice President, Finance
and Administration, and Chief
Financial Officer
15
DYAX CORP.
EXHIBIT INDEX
EXHIBITS DESCRIPTION
10.1 Amendment to the Collaboration and License
Agreement Between Human Genome Sciences, Inc.
and Dyax Corp. dated July 1, 2001
16
EX-10.1
3
a2062558zex-10_1.txt
EXHIBIT 10.1
EXHIBIT 10.1
AMENDMENT TO THE
COLLABORATION AND LICENSE AGREEMENT
BETWEEN HUMAN GENOME SCIENCES, INC. AND
DYAX CORP.
This Amendment, dated July 1, 2001 ("Amendment Effective Date"), is entered into
by Human Genome Sciences, Inc., a Delaware corporation, having its principal
offices at 9410 Key West Avenue, Rockville, Maryland 20850 and Dyax Corp., a
Delaware corporation having its principal offices at One Kendall Square, Bldg.
600, Suite 623, Cambridge, Massachusetts 02139.
WITNESSETH
WHEREAS, Human Genome Sciences, Inc. (HGS) and Dyax Corp. (Dyax) entered into
the Collaboration and License Agreement (Agreement) dated March 17, 2000;
WHEREAS, HGS and Dyax now wish to amend the Agreement to reflect changes in the
cost, work and number of the FTEs;
WHEREAS, HGS and Dyax further wish to amend the Agreement to modify the
collaboration, milestone and royalty provisions and to provide for the research,
development and commercialization of therapeutic products by Dyax; and
NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, the parties agree as follows:
1. AMENDMENT
1.1. Subsection 1.10 is deleted in its entirety and replaced with the following
subsection 1.10:
"1.10 "FTE" shall mean a full time equivalent employee assigned to HGS
pursuant to Paragraph 4.4 or to Dyax pursuant to Paragraph 4.9."
1.2 Section 1 of the Agreement is amended to include the following new
subsection 1.30:
"1.30 "DYAX THERAPEUTIC PRODUCT" shall mean any therapeutic product
directed to an HGS TARGET that incorporates or is derived from any peptide
or
antibody compound, and the sequences contained therein, discovered by DYAX
using the DYAX TECHNOLOGY with FTEs funded by Dyax."
1.3 Section 2 of the Agreement is amended to include the following new
subsections 2.11 through 2.22:
"2.11 HGS hereby grants to DYAX an option to a non-exclusive,
worldwide license (without the right to sublicense) to HGS PATENT RIGHTS to
research, using the DYAX-funded FTEs in Section 4.9, DYAX THERAPEUTIC
PRODUCTS, directed to up to ten (10) HGS TARGETS per year for two years
from the Amendment Effective Date, each such target having been selected
and approved in accordance with Section 4.10.
2.12 HGS hereby grants to DYAX an option to an exclusive, worldwide
license (without the right to sublicense) to research, develop, make, have
made, use, import, offer to sell and sell DYAX THERAPEUTIC PRODUCTS
directed to up to three (3) HGS TARGETS discovered using the DYAX funded
FTEs, each such target having been selected and approved in accordance with
Section 2.13 through 2.16.
2.13 For a period of up to twelve (12) months from the receipt of a
clone for an HGS TARGET under which DYAX has obtained rights under Section
4.10 of this Amendment, DYAX may obtain an option to an exclusive license
to such HGS TARGET, provided:
(1) Dyax submits a Research Plan that demonstrates evidence of IN VIVO
activity for an active molecule directed to such HGS TARGET in a relevant
animal model for a proposed clinical indication. (**********) .
(2) The preparation used to demonstrate (**********) shall be:
(i) (**********)
(ii) (**********)
2.14 HGS will notify DYAX in writing within ten (10) working days of
receipt of such Research Plan as to whether or not such Research Plan
received meets the requirements set forth in this Amendment, and if it does
meet such requirements, HGS has the right and the obligation to grant DYAX
the option to an exclusive license under Section 2.12. If HGS does not have
the right or the obligation, HGS will not grant DYAX the option to the
exclusive license. For the purposes of this Amendment, HGS shall not have
the right or the obligation to grant DYAX an option to an exclusive license
under Section 2.12, if (**********). If HGS does have the right and the
obligation, HGS will grant DYAX an option to an exclusive license under
Section 2.12.
2.15 If DYAX does not file a Research Plan within the twelve (12)
month period from receipt of the clone, DYAX's non-exclusive license will
automatically terminate
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2
on the last day of the period. DYAX shall not be permitted to substitute
another HGS TARGET for the target on which the license has terminated.
Notwithstanding the foregoing, if DYAX has made substantial progress toward
the submission of a Research Plan, but does not have sufficient data to
submit a Research Plan by the end of the twelve (12) month period, HGS, in
its sole discretion, may grant DYAX an additional three (3) months to
submit a Research Plan. In order to permit HGS to consider such an
extension, DYAX shall submit a written request to HGS at least ten (10)
days prior to the expiration of the twelve (12) month period wherein such
request shall contain supporting data substantiating evidence of DYAX's
reasonable progress toward submission of a Research Plan.
2.16 If DYAX obtains an option to an HGS TARGET under Section 2.14,
DYAX shall (**********) . If DYAX does not (**********), DYAX's option to
the exclusive license will automatically terminate on the last day of the
period. DYAX shall not be permitted to substitute another HGS TARGET for
the target on which the license has terminated
2.17 If the requirements of Section 2.16 are met, DYAX may request
from HGS an exclusive license pursuant to Section 2.12. DYAX shall make its
request for exclusivity by providing written notice to HGS specifying the
HGS TARGET. Such written notice shall contain a certification that DYAX has
(**********).
2.18 A request by DYAX for an exclusive license under 2.17 may only be
made during the period not to exceed twelve (12) months after the two (2)
year period from the Amendment Effective Date.
2.19 DYAX hereby grants to HGS an option to assume the development and
commercialization of any and all such DYAX THERAPEUTIC PRODUCT upon the
completion of the first Phase IIa clinical trial for such product according
to the procedures set forth in Section 2.20.
2.20 Within ten (10) business days after completion of the first Phase
IIa clinical trial, for a DYAX THERAPEUTIC PRODUCT, DYAX shall notify HGS
in writing that such clinical trial has been completed and shall provide
HGS with a copy of all study reports, all FDA filings or other
correspondence with FDA (including a copy of the IND submission), and any
other material data or information generated on such DYAX THERAPEUTIC
PRODUCT. Completion of the clinical trial shall mean the generation of a
final report for submission to FDA based on the data from the clinical
trial. Within sixty (60) days of receipt by HGS of all reports, data, and
information described above, HGS shall notify DYAX in writing if HGS wishes
to assume all development and commercialization of such DYAX THERAPEUTIC
PRODUCT, and, if so, DYAX shall thereafter comply with the provisions of
Section 2.21. If HGS notifies DYAX that it does not wish to assume the
development and commercialization of the DYAX THERAPEUTIC PRODUCT, DYAX,
upon thirty
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3
(30) days written notice, shall be free to develop and commercialize such
product or to sublicense such product, subject to the payment of the
royalties and milestones set forth in Section 3 and subject to Section
2.22.
2.21 Upon receipt by DYAX of a written notice from HGS pursuant to
Section 2.20 that HGS wishes to assume the development and
commercialization of a DYAX THERAPEUTIC PRODUCT, and upon receipt of the
payment due to DYAX pursuant to Section 3.11, all rights to such DYAX
THERAPEUTIC PRODUCT shall revert to HGS and DYAX shall transfer to HGS all
materials, know-how and information relating to the DYAX THERAPEUTIC
PRODUCT and shall assist HGS in the transfer of the IND from DYAX to HGS.
Such transfer shall be completed, to the extent possible, within sixty (60)
days.
2.22 If HGS notifies DYAX that it does not wish to assume the
development and commercialization of a DYAX THERAPEUTIC PRODUCT, and if
DYAX fails to make the payment required pursuant to Section 3.12 or any
subsequent payment or royalty or ceases to diligently develop and
commercialize such product, DYAX shall promptly notify HGS that it has
ceased development and commercialization, shall destroy all materials and
information related to such product and shall certify in writing to HGS
that all materials and information have been destroyed. In such event, all
rights to the HGS TARGET shall revert to HGS."
1.4 Subsections 3.2 (a) through (e) are renumbered as Subsections (c) through
(g).
1.5 Section 3 is further amended to include the following new subsections 3.2
(a) and (b):
"(a) (**********) U.S. Dollars (**********) upon the (**********);
(b) (**********) U.S. Dollars (**********) upon the (**********)"
1.6 Subsections 3.11 through 3.17 are renumbered as Subsections 3.16 through
3.22.
1.7 Section 3 is amended to include the following new subsections 3.11 through
3.15:
"DYAX THERAPEUTIC PRODUCTS
3.11 Upon HGS exercising its option granted in Section 2.19 to develop
and commercialize DYAX THERAPEUTIC PRODUCTS developed by FTEs funded by
DYAX, HGS shall pay to DYAX (**********) U.S. Dollars (**********) for each
such product within thirty (30) days of its written notice to DYAX that it
will exercise its option.
3.12 Should HGS choose not to exercise its option granted in Section
2.19 to a DYAX THERAPEUTIC PRODUCT, DYAX shall have the right to develop
and
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4
commercialize such product. In order to retain this right, DYAX shall pay
to HGS (**********) U.S. Dollars (**********) for such product within
thirty (30) days of HGS' written notice to DYAX that it will not exercise
its option.
3.13 Subject to Paragraphs 3.4 and 3.16, for each DYAX THERAPEUTIC
PRODUCT and for which HGS exercises its option under Section 2.19, HGS
shall pay to DYAX the following royalties and milestone payments (which
milestone payments under this Paragraph 3.13 shall be due and payable
within thirty (30) days after the applicable milestone event is achieved by
or on behalf of HGS or its AFFILIATE):
(a) (**********) U.S. Dollars (**********) upon start of a Phase III
clinical trial (as defined in Section 3.18) for such DYAX THERAPEUTIC
PRODUCT;
(b) (**********) U.S. Dollars (**********) upon the first regulatory
approval in a MAJOR COUNTRY of such DYAX THERAPEUTIC PRODUCT for commercial
sale; and
(c) a royalty of (**********) of NET SALES of such DYAX THERAPEUTIC PRODUCT
sold by HGS or its AFFILIATES or its sublicensees.
HGS shall have no obligation to pay each milestone payment to DYAX under
this Paragraph 3.13 more than once for each different DYAX THERAPEUTIC
PRODUCT. For purposes of determining the milestone payments owing under
this Paragraph 3.13, a DYAX THERAPEUTIC PRODUCT containing an antibody
directed to an HGS TARGET shall constitute the same DYAX THERAPEUTIC
PRODUCT as any other DYAX THERAPEUTIC PRODUCT, if such DYAX THERAPEUTIC
PRODUCT contains an antibody directed to the same HGS TARGET as the other
DYAX THERAPEUTIC PRODUCT, without regard to the formulation or means of
administration thereof. Similarly, a DYAX THERAPEUTIC PRODUCT containing a
peptide directed to an HGS TARGET shall constitute the same DYAX
THERAPEUTIC PRODUCT as any other DYAX THERAPEUTIC PRODUCT, if such DYAX
THERAPEUTIC PRODUCT contains a peptide directed to the same HGS TARGET as
the other DYAX THERAPEUTIC PRODUCT, without regard to the formulation or
means of administration thereof. If HGS develops and markets separate
antibody and peptide products directed to the same HGS TARGET, HGS shall
have an obligation to pay a full set of separate milestone payments for
each class of products.
3.14 Subject to Paragraph 3.15, for each DYAX THERAPEUTIC PRODUCT for
which HGS does not exercise its option under Section 2.19, but DYAX wishes
to retain the exclusive right to develop and commercialize such product,
DYAX shall pay to HGS the following royalties and milestone payments (which
milestone payments under this Paragraph 3.14 shall be due and payable
within thirty (30) days
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5
after the applicable milestone event is achieved by or on behalf of DYAX or
its AFFILIATE):
(a) (**********) U.S. Dollars (**********) upon start of a Phase III
clinical trial (as defined in Section 3.19) for such DYAX THERAPEUTIC
PRODUCT;
(b) (**********) U.S. Dollars (**********) upon the first regulatory
approval in a MAJOR COUNTRY of such DYAX THERAPEUTIC PRODUCT for commercial
sale; and
(c) a royalty of (**********) of NET SALES of such DYAX THERAPEUTIC PRODUCT
sold by DYAX or its AFFILIATES or its sublicensees.
DYAX shall have no obligation to pay each milestone payment to HGS under
this Paragraph 3.14 more than once for each different DYAX THERAPEUTIC
PRODUCT. For purposes of determining the milestone payments owing under
this Paragraph 3.14, a DYAX THERAPEUTIC PRODUCT containing an antibody
directed to an HGS Target shall constitute the same DYAX THERAPEUTIC
PRODUCT as any other DYAX THERAPEUTIC PRODUCT, if such DYAX THERAPEUTIC
PRODUCT contains an antibody directed to the same HGS TARGET as the other
DYAX THERAPEUTIC PRODUCT, without regard to the formulation or means of
administration thereof. Similarly, a DYAX THERAPEUTIC PRODUCT containing a
peptide directed to an HGS Target shall constitute the same DYAX
THERAPEUTIC PRODUCT as any other DYAX THERAPEUTIC PRODUCT, if such DYAX
THERAPEUTIC PRODUCT contains a peptide directed to the same HGS TARGET as
the other DYAX THERAPEUTIC PRODUCT, without regard to the formulation or
means of administration thereof. If DYAX develops and markets separate
antibody and peptide products directed to the same HGS TARGET, DYAX shall
have an obligation to pay a full set of separate milestone payments for
each class of products."
3.15 Royalty and revenue obligations under Paragraph 3.14, with
respect to DYAX THERAPEUTIC PRODUCTS, shall terminate on a
country-by-country basis and on a product by product basis on the later of
(i) ten (10) years after first country-wide launch of such product in such
country or (ii) expiration of the last to expire patent (whether or not
owned by DYAX) on the relevant product licensed to DYAX under this
Agreement which covers the making, having made, importing, offering to sell
or using or selling of such product in the country in which such product
was developed, made, sold or used.
1.8 Subsection 4.4 is deleted in its entirety and replaced with the following
subsection 4.4:
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6
"4.4 Subject to Paragraph 4.5, DYAX shall provide to HGS at DYAX's
facilities at least (**********) FTEs (**********). Such FTEs, at HGS' sole
direction, shall be available for and may be used: (**********).
1.9 Subsections 4.4.1 through 4.4.3 are deleted in their entirety and replaced
with the following subsections 4.4.1 through 4.4.3:
"4.4.1 DYAX shall appoint a project team which includes a project
leader ("DYAX PROJECT LEADER") to coordinate the work of the (**********)
FTEs and such DYAX PROJECT LEADER shall coordinate with an HGS designated
project leader ("HGS PROJECT LEADER") all work to be done pursuant to this
Article.
4.4.2 Within thirty (30) days of the Effective Date, the HGS PROJECT
LEADER, in consultation and collaboration with the DYAX PROJECT LEADER,
shall prepare a six-month work plan for the (**********) FTEs.
4.4.3 The DYAX PROJECT LEADER shall be responsible for coordinating
the (**********) FTEs and insuring that all diligent efforts are made to
complete the objectives of the work plan in a timely and efficient manner,
and such work of the DYAX PROJECT LEADER shall be part of the FTEs assigned
to HGS. The DYAX PROJECT LEADER shall provide written quarterly updates
reflecting the tasks performed by and accomplishments of the FTEs and the
hours worked by each FTE."
1.10 Subsection 4.6 is deleted in its entirety and replaced with the following
subsection 4.6:
"4.6 HGS shall pay to DYAX research support payments based on the
level of FTEs assigned to HGS pursuant to Paragraph 4.4, (**********). In
addition, HGS shall reimburse DYAX for any mutually agreed upon
out-of-pocket external expenses incurred during the Collaboration Term;
provided, however, DYAX acknowledges that the payment made pursuant to
Paragraph 3.1 is intended, among other things, to cover the costs of any
additional facilities and equipment required to support the (**********)
FTEs."
1.11 Section 4 is further amended to include the following new subsections 4.9
through 4.11:
"4.9. DYAX will support (**********) FTEs to (**********).
4.10 DYAX may select up to (**********) HGS TARGETS (**********)
during the (**********) from the Amendment Effective Date. The option
granted to DYAX in Section 2.11 for the (**********) HGS TARGETS will
automatically expire
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7
(**********) from the Amendment Effective Date if such option has not been
exercised. The option granted to DYAX in Section 2.11 for the (**********)
HGS TARGETS will automatically expire (**********) from the Amendment
Effective Date. DYAX may only select up to (**********) TARGETS
(**********); provided, however, DYAX is (**********) TARGETS in the
(**********) and (**********) TARGETS which would otherwise only be
available in the (**********) period. If DYAX should (**********)TARGETS,
the total number available (**********). HGS will assist DYAX in the
identification of (**********) HGS TARGETS by providing a list of HGS
TARGETS in published HGS PATENT RIGHTS. In order to exercise its option to
HGS TARGETS under Section 2.11, DYAX shall provide to HGS a written notice
that includes the common name of each target, (**********). For each TARGET
for which DYAX submits a notice, HGS will notify DYAX whether such HGS
TARGET is available, that is, that HGS has both the right and the
obligation to grant such an option. If HGS does not have the right or the
obligation, HGS will not grant DYAX the option to the non-exclusive
license. For the purposes of this Amendment, HGS shall not have the right
or the obligation to grant DYAX an option to the non-exclusive license
under Section 2.11, if (**********). If such HGS TARGET is available to
DYAX, HGS will provide DYAX with a clone, subject to availability, for such
HGS TARGET and a summary of the biological data, if any, HGS has on the
target. At any time after DYAX has exercised its option pursuant to Section
2.11 on an HGS TARGET, if such HGS TARGET becomes unavailable for
exclusivity purposes prior to DYAX exercising its exclusivity option under
Section 2.12, HGS shall promptly notify DYAX in writing of such
unavailability.
4.11 DYAX shall provide to HGS by (**********)
1.12 All other terms and conditions of the Agreement shall remain in full force
and effect. This Amendment, entered into as of the Amendment Effective Date,
together with the Agreement, constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes all previous
writings and understandings relating to such subject matter. No terms or
provisions of the Agreement or Amendment shall be varied or modified by any
prior or subsequent statement, conduct or act of either of the parties, except
that the parties may amend this Amendment by written instruments specifically
referring to and executed in the same manner as this Amendment.
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8
IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this Amendment as of its Amendment Effective Date.
DYAX CORP.
BY: /S/ GREGORY D. PHELPS
----------------------------------------------
Gregory D. Phelps
Vice-Chairman
HUMAN GENOME SCIENCES, INC.
BY: /S/ ELLEN S. BARON
----------------------------------------------
Ellen S. Baron, Ph.D.
Senior Vice President