-----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, GMBry7jVYVrLBaXeHd8E4wRHiTB6rY2IhgNDC6Nc5Ntk8Fm16SkYtKyKWeuVF28B J9EsNXnuY+vQf6DnhMqPKA== 0000891618-97-003161.txt : 19970806 0000891618-97-003161.hdr.sgml : 19970806 ACCESSION NUMBER: 0000891618-97-003161 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970805 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COULTER PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000942416 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 943219075 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21905 FILM NUMBER: 97651531 BUSINESS ADDRESS: STREET 1: 550 CALIFORNIA AVE STE 200 CITY: PALO ALTO STATE: CA ZIP: 94306 BUSINESS PHONE: 4158427300 MAIL ADDRESS: STREET 1: 550 CALIFORNIA AVE STE 200 CITY: PALO ALTO STATE: CA ZIP: 94306 10-Q 1 FORM 10-Q FOR PERIOD END 6/30/97 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 period ended JUNE 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 No. 0-21905 COULTER PHARMACEUTICAL, INC. (Exact name of registrant as specified in its charter) Delaware 94-3219075 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 550 California Ave, Palo Alto, California 94306 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 415-842-7300 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- Number of shares outstanding of the issuer's Common Stock, par value $.001 per share, as of July 31, 1997: 10,350,245. 2 COULTER PHARMACEUTICAL, INC. INDEX
PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Consolidated Financial Statements and Notes 3 Consolidated Balance Sheets - June 30, 1997 and December 31, 1996 3 Consolidated Statements of Operations -- for the three months and six months ended June 30, 1997 and 1996 and for the period from inception (February 16, 1995) to June 30, 1997 4 Consolidated Statements of Cash Flows -- for the six months ended June 30, 1997 and 1996 and for the period from inception (February 16, 1995) to June 30, 1997 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 4. Submission of Matters to a Vote of Security Holders 11 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 SIGNATURES 12
2 3 PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements and Notes COULTER PHARMACEUTICAL, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) ASSETS
JUNE 30, DECEMBER 31, 1997 1996 -------- ------------ Current assets: (Unaudited) Cash and cash equivalents $ 11,368 $ 8,826 Short-term investments 29,670 7,617 Prepaid expenses and other current assets 518 499 Current portion of employee loans receivable 34 35 -------- -------- Total current assets 41,590 16,977 Property and equipment, net 1,515 924 Employee loans receivable 148 271 Other assets 234 149 -------- -------- $ 43,487 $ 18,321 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,528 $ 1,490 Payable to Coulter Corporation 85 111 Accrued liabilities 1,202 4,330 Current portion of equipment financing obligations and debt facility 576 309 -------- -------- Total current liabilities 4,391 6,240 Noncurrent portion of equipment financing obligations and debt facility 2,213 1,535 Commitments Stockholders' equity: Preferred stock, issuable in series, $.001 par value: 3,000,000 shares authorized; none and 19,797,940 shares issued and outstanding at June 30, 1997 and December 31, 1996, respectively - 28,355 Common stock, $.001 par value; 30,000,000 shares authorized; 10,335,484 shares and 437,612 shares issued and outstanding at June 30, 1997 and December 31, 1996, respectively 10 1 Additional paid-in capital 65,354 2,488 Net unrealized gain (loss) on securities available for sale 20 (3) Deferred compensation (1,370) (1,964) Deficit accumulated during the development stage (27,131) (18,331) -------- -------- Total stockholders' equity 36,883 10,546 -------- -------- $ 43,487 $ 18,321 ======== ========
See accompanying notes. 3 4 COULTER PHARMACEUTICAL, INC. (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD JUNE 30, JUNE 30, FROM INCEPTION ------------------- ------------------ (FEBRUARY 16, 1995) 1997 1996 1997 1996 TO JUNE 30, 1997 -------- ------- -------- ------- ------------------- Operating costs and expenses: Research and development $ 3,547 $ 3,223 $ 6,583 $ 4,940 $ 22,803 General and administrative 1,972 368 3,180 625 6,170 ------- ------- ------- ------- -------- Total operating costs and expenses 5,519 3,591 9,763 5,565 28,973 Interest income, net 525 221 963 254 1,842 ------- ------- ------- ------- -------- Net loss $(4,994) $(3,370) $(8,800) $(5,311) $(27,131) ======= ======= ======= ======= ======== Net loss per share $ (0.48) $ (0.44) $ (1.01) $ (0.69) ======= ======= ======= ======= Shares used in computing pro forma net loss per share 10,315 7,736 8,725 7,736 ====== ===== ===== =====
See accompanying notes. 4 5 COULTER PHARMACEUTICAL, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS Increase (decrease) in cash and cash equivalents (unaudited) (in thousands)
SIX MONTHS FOR THE PERIOD ENDED JUNE 30, FROM INCEPTION -------------------- (FEB. 16, 1995) 1997 1996 TO JUNE 30, 1997 -------- -------- ------------------- Cash flows from operating activities: Net loss $ (8,800) $ (5,311) $(27,131) Adjustments used to reconcile net loss to net cash used in operating activities: Depreciation and amortization 58 19 122 Amortization of deferred compensation 594 - 924 Changes in operating assets and liabilities: Prepaid expenses and other current assets (18) (163) (517) Employee loans receivable 37 (321) (269) Other assets 1 2 (151) Accounts payable 1,037 819 2,527 Payable to Coulter Corporation (26) 32 85 Accrued liabilities (3,128) 1,711 1,289 -------- ------- -------- Net cash used in operating activities (10,245) (3,212) (23,121) -------- ------- -------- Cash flows from investing activities: Purchases of short-term investments (31,035) - (39,644) Maturities of short-term investments 9,006 - 9,992 Purchases of property and equipment (649) (534) (1,630) -------- ------- -------- Net cash used in investing activities (22,678) (534) (31,282) -------- ------- -------- Cash flows from financing activities: Payments of equipment financing obligations and debt facility (214) - (258) Borrowings under equipment lease financing and debt facility 1,159 - 2,959 Proceeds from issuances of convertible preferred stock, net - 22,366 28,355 Proceeds from issuance of common stock 34,520 182 34,715 -------- ------- -------- Net cash provided by financing activities 35,465 22,548 65,771 -------- ------- -------- Net increase (decrease) in cash and cash equivalents 2,542 18,802 11,368 Cash and cash equivalents at beginning of period 8,826 3,438 - -------- ------- -------- Cash and cash equivalents at end of period $ 11,368 $22,240 $ 11,368 ======== ======= ========
See accompanying notes. 5 6 COULTER PHARMACEUTICAL, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1997 (unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The information at June 30, 1997, for the three and six month periods ended June 30, 1997 and 1996 and for the period from inception (February 16, 1995) to June 30, 1997 is unaudited but includes all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to state fairly the financial information set forth therein in accordance with generally accepted accounting principles. The interim results are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements for the fiscal year ended December 31, 1996 included in the Company's annual report to security holders furnished to the Securities and Exchange Commission pursuant to Rule 14a-3(b) in connection with the Company's 1997 Annual Meeting of Stockholders. The consolidated balance sheet at December 31, 1996 has been derived from audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Net Loss Per Share Net loss per share is computed using the weighted average number of common shares outstanding during the period. Common stock equivalents relating to stock options are excluded from the computation as their effect is antidilutive. For the period prior to the Company's initial public offering, the calculation includes those shares required by the Securities and Exchange Commission's staff accounting bulletins and guidelines. In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement No. 128, "Earnings Per Share" ("Statement 128"). The Statement is effective for both interim and annual financial statements for periods ending after December 15, 1997. Under Statement 128, primary EPS computed in accordance with Accounting Principle Board Opinion No. 25 will be replaced with a new simpler calculation called "basic EPS" and the Company will be required to restate comparative EPS amounts for all prior periods. Under the new requirements, basic EPS for the three and six month periods ended June 30, 1997 and 1996 will be unchanged from primary EPS as currently disclosed. Fully diluted EPS will not change significantly but has been renamed "diluted EPS". The Company will implement the Statement in the fourth quarter of 1997. In June 1997, the FASB issued Statement No. 130 "Reporting Comprehensive Income". Although the Company has only recently commenced evaluation of this new pronouncement, its impact is not expected to be significant. The Company will be required to comply with the revisions of the Statement in fiscal 1998. 6 7 2. INVESTMENTS Management determines the appropriate classification of debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. The Company's debt securities are classified as available-for-sale and are carried at estimated fair value in cash equivalents and short-term investments. Unrealized gains and losses are reported as a separate component of stockholders' equity. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses on available-for-sale securities are included in interest income and expense. The cost of securities sold is based on the specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income. The Company's cash equivalents and short-term investments as of June 30, 1997 are as follows (in thousands):
GROSS GROSS AMORTIZED UNREALIZED UNREALIZED ESTIMATED COST GAINS LOSSES FAIR VALUE --------- ---------- ---------- ---------- Money market funds $ 1,715 $ - $ - $ 1,715 Commercial paper 7,414 - (4) 7,410 Corporate bond 15,431 - (6) 15,425 U.S. Government backed securities 11,268 30 - 11,298 CDs 5,108 - - 5,108 -------- ----- ------- -------- Total 40,936 30 (10) 40,956 Less amounts classified as cash equivalents (11,286) - - (11,286) -------- ----- ------- -------- Total short-term investments $ 29,650 $ 30 $ (10) $ 29,670 ======== ==== ======= ========
At June 30, 1997, the contractual maturities of short term investments were as follows (in thousands):
ESTIMATED AMORTIZED COST FAIR VALUE -------------- ---------- Due in one year or less $19,859 $19,881 Due after one year through two years 9,791 9,789 ------- ------- $29,650 $29,670
3. STOCKHOLDERS' EQUITY On January 28, 1997, the Company completed its initial public offering of 2,500,000 shares of its common stock at a price to the public of $12.00 per share, resulting in net proceeds to the Company of approximately $27.9 million. A one-for-three reverse common stock split became effective prior to the commencement of the offering. All common share and per share amounts have been retroactively restated to reflect the reverse stock split. Also in January 1997, the Company received approximately $3.1 million from the cash exercise of warrants to purchase 385,315 shares of its common stock and issued an additional 37,785 shares of its common stock upon the net exercise of warrants to purchase 113,390 shares of its common stock. In February 1997, the Company received approximately $4.2 million from 7 8 the sale of 375,000 shares of its common stock pursuant to the exercise of the underwriters' over-allotment option in connection with the initial public offering. Upon completion of the initial public offering all of the 19,797,940 shares of Series A, B and C preferred stock outstanding converted to shares of common stock on a three-for-one basis. Also upon the completion of the offering, the Company filed an Amended and Restated Certificate of Incorporation authorizing the Company to issue 33,000,000 shares, 30,000,000 of which is designated Common Stock and 3,000,000 of which is designated Preferred Stock. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. Actual results may differ significantly from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. OVERVIEW Coulter Pharmaceutical, Inc. ("Coulter Pharmaceutical" or the "Company") is engaged in the development of novel drugs and therapies for the treatment of people with cancer. The Company's first product candidate, Bexxar(TM) (previously referred to as the B-1 Therapy), is based upon the antibody therapeutics program which originated in the late 1970s at Coulter Corporation. Coulter Corporation conducted research and development on the potential therapeutic applications of the B-1 Antibody as part of a broader antibody therapeutics program. To accelerate the pace of development of Bexxar and to obtain external sources of capital for the program, Coulter Corporation decided to create a separate Company into which it placed its conjugated antibody therapeutics assets. Thus, in February 1995, Coulter Pharmaceutical was incorporated and acquired worldwide rights to Bexxar and related intellectual property, know-how and other assets from Coulter Corporation. To date, the Company has devoted substantially all of its resources to its research and development programs. No revenues have been generated from product sales, and products resulting from the Company's research and development efforts, if any, are not expected to be available commercially for at least the next few years. The Company has a limited history of operations and has experienced significant operating losses to date. The Company expects to incur significant additional operating losses over the next several years and expects cumulative losses to increase substantially due to expanded research and development efforts, preclinical studies and clinical trials and development of manufacturing, marketing and sales capabilities. The Company expects that losses will fluctuate from quarter to quarter and that such fluctuations may be substantial. There can be no assurance that the Company will successfully develop, manufacture and commercialize its products or ever achieve or sustain product revenues or profitability. As of June 30, 1997, the Company's accumulated deficit during the development stage was approximately $27.1 million. RESULTS OF OPERATIONS Operating Costs and Expenses For the quarter ended June 30, 1997, research and development expenses increased $0.3 million to $3.5 million from $3.2 million for the same period in 1996. The Company's research and development expenses increased $1.7 million to $6.6 million for the six month period ended June 30, 1997 from $4.9 million for the same period in 1996. These increases were due 8 9 primarily to increases in staffing and expenditures associated with the development of Bexxar, including costs of clinical trials and manufacturing expenses. Included in manufacturing expenses are certain expenses associated with scaled-up production of monoclonal antibodies and the establishment of a centralized radiolabeling capability. The Company expects its research and development expenses to grow during the remainder of 1997, reflecting anticipated increased costs related to staffing, preclinical studies, clinical trials and manufacturing. General and administrative expenses were $2.0 million and $0.4 million for the quarters ended June 30, 1997 and 1996, respectively, representing an increase of $1.6 million. For the six month periods ended June 30, 1997 and 1996, such expenses were $3.2 million and $0.6 million, respectively, representing an increase of $2.6 million. These increases were incurred to support the Company's facilities and staffing expansion, increased research and development efforts, increased corporate development activities and related legal and patent activities. The Company expects its general and administrative expenses to continue to increase during the remainder of 1997 in support of its increased research and development, patent and corporate development activities, as well as increasing commercialization efforts in anticipation of potential product sales. Net Interest Income Net interest income was $525,000 and $221,000 for the quarters ended June 30, 1997 and 1996, respectively. Net interest income for the six month periods ended June 30, 1997 and 1996 was $963,000 and $254,000, respectively. These increases were due to higher average cash, cash equivalent and short-term investment balances as a result of the Company's sale of Preferred Stock in April 1996 and the completion of the Company's initial public offering in January 1997. LIQUIDITY AND CAPITAL RESOURCES Since its inception through June 30, 1997, the Company has financed its operations primarily through private and public equity financings totaling $63.4 million. In December 1996, the Company entered into a $3.8 million equipment financing agreement, $0.8 million of which is available at June 30, 1997. Cash, cash equivalents and short-term investments totaled $41.0 million at June 30, 1997. In January 1997, the Company completed its initial public offering of 2,500,000 shares of common stock at a price to the public of $12.00 per share resulting in net proceeds to the Company of approximately $27.9 million. Also in January 1997, the Company received an additional $3.1 million from the exercise of warrants to purchase 385,315 shares of common stock. In February 1997, the Company received an additional $4.2 million from the sale of 375,000 shares of its common stock pursuant to the exercise of the underwriters' over-allotment option in connection with the Company's initial public offering. The negative cash flows from operations result primarily from the Company's net operating losses and are expected to continue and to accelerate in the foreseeable future. The Company expects to incur substantial and increasing research and development expenses, including expenses related to additions to personnel, preclinical studies, clinical trials, manufacturing and commercialization efforts. The Company will need to raise substantial additional capital to fund its operations. The Company intends to seek such additional funding through public or private equity or debt financings from time to time, as market conditions permit. There can be no assurance that additional financing will be available on acceptable terms, if at all. If adequate funds are not available, the Company may be required to delay, reduce the scope of, or eliminate one or more of its research and development programs or obtain funds through arrangements with collaborative partners or others that may require the Company 9 10 to relinquish rights to certain of its technologies, product candidates or products that the Company would otherwise seek to develop or commercialize. Net cash used in operations was $10.2 million for the six month period ended June 30, 1997, compared to $3.2 million for the same period in 1996. This $7.0 million increase is primarily the result of the increased net loss for the six month period ended June 30, 1997, as well as a $3.1 million decrease in accrued liabilities resulting from payments primarily related to manufacturing activities. Net cash used in investing activities increased to $22.7 million for the six month period ended June 30, 1997 from $534,000 for the same period in 1996 primarily resulting from the purchase of $31.0 million in short-term investments using a portion of the proceeds of the Company's initial public offering. Maturities of such investments were $9.0 million during the six month period ended June 30, 1997. Net cash provided by financing activities increased to $35.5 million for the six month period ended June 30, 1997 resulting primarily from the completion of the Company's initial public offering. The Company expects that its existing capital resources, including the net proceeds of its initial public offering and interest thereon, will be adequate to satisfy the requirements of its current and planned operations through 1998. At June 30, 1997, the Company had no material commitments for capital expenditures. The Company's future capital requirements will depend on a number of factors, including: the scope and results of preclinical studies and clinical trials; continued progress of the Company's research and development of potential products; the cost, timing and outcome of regulatory approvals; the adequacy of its facilities; the expenses of establishing a sales and marketing force; the timing and cost of establishment or procurement of requisite production, radiolabeling and other capacities; the cost involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; the need to acquire licenses to new technology; the status of competitive products, and the availability of other financing. BUSINESS RISKS Except for the historical information contained herein, the matters discussed in this filing are forward-looking statements that involve risks and uncertainties, including uncertainties related to product development, uncertainties related to the need for regulatory and other government approvals, dependence on proprietary technology, uncertainty of market acceptance of Bexxar (TM) or the Company's other product candidates and other risks, including those detailed in the Company's other filings with the Securities and Exchange Commission. In particular, see "Item 1, Financial Business-Risk Factors," of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders of the Company held on May 30, 1997, the stockholders elected eight directors and ratified the selection of Ernst & Young LLP as independent auditors of the Company for its fiscal year ending December 31, 1997 (the "Selection of Auditors"). Of the 10,309,461 shares of Common Stock of the company outstanding as of the April 7, 1997 record date for the Annual Meeting (the "Outstanding Shares"), the votes regarding the election of directors were as follows:
Votes Votes Against or Broker For Withheld Abstentions Non-votes --------- ---------- ----------- --------- Brian G. Atwood 6,278,925 1,100 N/A 4,029,436 Michael F. Bigham 6,277,925 2,100 N/A 4,029,436 Joseph R. Coulter, III 6,278,525 1,500 N/A 4,029,436 Donald L. Lucas 6,277,925 2,100 N/A 4,029,436 Robert R. Momsen 6,278,925 1,100 N/A 4,029,436 Arnold L. Oronsky, Ph.D 6,278,925 1,100 N/A 4,029,436 George Sella, Jr 6,277,925 2,100 N/A 4,029,436 Sue Van 6,278,255 1,800 N/A 4,029,436
Of the Outstanding Shares, 6,273,925 shares were voted for the ratification of the Selection of Auditors; 2,200 shares were voted against or were withheld with respect to the ratification of the Selection of Auditors; 3,900 shares abstained; and no shares were broker non-votes. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit Number Description of Document 10.12+ Second Amendment to Manufacturing Agreement, dated June 30, 1997, by and between Lonza biologics PLC and the Company. 27 Financial Data Schedule. - ------------- + Portions omitted pursuant to a request of confidentiality filed separately with the Commission. (b) Reports on Form 8-K There were no reports on Form 8-K filed for the Quarter ended June 30, 1997. 11 12 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. COULTER PHARMACEUTICAL, INC. Date: August 5, 1997 /s/ Michael F. Bigham ------------------------------------- Michael F. Bigham President and Chief Executive Officer Date: August 5, 1997 /s/ William G. Harris ------------------------------------- William G. Harris Vice President and Chief Financial Officer 12 13
Exhibit Exhibit Footnote Number Description of Document 10.12+ Second Amendment to Manufacturing Agreement, dated June 30, 1997, by and between Lonza biologics PLC and the Company. 27 Financial Data Schedule
- ---------- +Portions omitted pursuant to a request of confidentiality filed separately with the Commission. EX-10.12 2 SECOND AMENDMENT TO MANUFACTURING AGMT. 1 ***TEXT OMITTED AND FILED SEPERATELY CONFIDENTIAL TREATMENT REQUESTED UNDER 17, C.F.R. SECTIONS 200.80(b)(4), 200.83 AND 240.24b-2 SECOND AMENDMENT TO LONZA AGREEMENT THIS SECOND AMENDMENT is made the 30th day of June, 1997 to an Agreement dated 20 August 1996, and amended 18th November 1996, ("the Agreement") between COULTER PHARMACEUTICAL, INC. of 550, California Avenue, Suite 200, Palo Alto, CA 94306, USA ("the Customer") and LONZA BIOLOGICS PLC of 228 Bath Road, Slough, Berkshire, SL1 4DY, England ("Lonza"). WHEREAS: A. The parties entered into the Agreement pursuant to which Lonza agreed to provide Services to the Customer to develop a Process for production of Product; and B. Customer now wishes Lonza to perform certain additional Services in association with the above mentioned development and manufacture of Product; and C. Lonza is prepared to provide such additional Services on the terms and conditions set out herein. NOW, THEREFORE, it is hereby agreed to amend the terms of the Agreement as follows: 1. 2 2. A new Stage 12 shall be added to Schedule 2 as follows: "Stage 12 - Production and Characterisation of a Post-Production Cell Bank for the Cell Line. 12.1 OBJECTIVES 12.1.1 To prepare Post-Production Cell Banks from the Cell Line. 12.1.2 To characterise one Post-Production Cell Bank. 12.2 ACTIVITIES 12.2.1 Take [. . . *** . . .]. 12.2.2 Select [. . . *** . . .] for further characterisation. 12.2.3 Characterise the cells from the selected [. . . ***. . .] in the following tests: [. . . *** . . .] 12.2.4 Issue cell bank testing results to the Customer. 12.3 TIMESCALE As at the date of signature of this amendment [. . . *** . . .]." * CONFIDENTIAL TREATMENT REQUESTED 2. 3 2. A new Stage 13 shall be added to Schedule 2 as follows: "Stage 13 - Consistency Studies on Manufacture of Product 13.1 OBJECTIVES 13.1.1 To demonstrate batch to batch consistency of [. . .*** . . .] and Product [. . . *** . . .]. 13.1.2 To demonstrate batch to batch consistency of [. . .*** . . .] and Product [. . . *** . . .]. 13.1.3 To determine the [. . . *** . . .]. 13.1.4 To evaluate the [. . . *** . . .]. 13.2 ACTIVITIES 13.2.1 Agree GLP protocols for the consistency studies with the Customer. 13.2.2 Prepare a sampling schedule for [. . . *** . . .]. These samples are in addition to the routine samples collected for GMP compliance. [. . . *** . . .]. Record [. . . *** . . .] to provide [. . . *** . . .]. 13.2.3 Analyse the samples [. . . *** . . .], as detailed in the agreed protocols. 13.2.4 Carry out [. . . *** . . .]. Summarise and review the key analytical and technical data as follows: [. . . *** . . .] 13.2.5 Prepare a sampling schedule for [. . . *** . . .]. Record [. . . *** . . .]. 13.2.6 Analyse the samples [. . . *** . . .]. The assays to be performed will be as set out below. Note: The Customer [. . . *** . . .]. * CONFIDENTIAL TREATMENT REQUESTED 3. 4 SCHEDULE OF SAMPLES TO BE ASSAYED IN THE CONSISTENCY STUDY (PURIFICATION)
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T = Test X = Not Test * CONFIDENTIAL TREATMENT REQUESTED 4. 5 13.2.7 Determine [. . . *** . . .] where assays have been performed according to activity 13.2.6. 13.2.8 Where appropriate, determine [. . . *** . . .]. Assess from [. . . *** . . .] 13.2.9 Carry out [. . . *** . . .]. Summarise and review the key technical data as follows: [. . . *** . . .] 13.2.10 Issue a report of activities at Lonza to the Customer. Note: Summaries of [. . . *** . . .] results for [. . . *** . . .] will be presented in the regulatory dossier, to be prepared under Stage 19, not in this report. 13.3 TIMESCALE Stage 13 shall be complete upon issue of the report of activities to the Customer (Section 13.2.10). It is estimated that this report will be issued [. . . *** . . .] from the approval of the study protocol by the Customer (13.2.1), provided that [. . . *** . . .] under Stage 5 of the Services and the sampling (13.2.2) has also been completed by that time." * CONFIDENTIAL TREATMENT REQUESTED 5. 6 3. A new Stage 14 shall be added to Schedule 2 as follows: "Stage 14 - Stability of Partially Purified Product at Stages during the Manufacturing Process (Intermediates Stability Study). 14.1 OBJECTIVE 14.1.1 To investigate the stability of Product [. . . *** . . .] to [. . . *** . . .] and provide an estimate of the stability of Product intermediates. 14.2 ACTIVITIES 14.2.1 Agree a GLP protocol for the study with the Customer. 14.2.2 Collect in-process samples of [. . . *** . . .] from [. . . *** . . .]. 14.2.3 At appropriate time points [. . . *** . . .]. 14.2.4 At the final time point, [. . . *** . . .]: [. . . *** . . .] [. . . *** . . .]. 14.2.5 Confirm [. . . *** . . .]. 14.2.6 Send [. . . *** . . .] for the [. . . *** . . .] to perform assays as appropriate. 14.2.7 Issue a report of the activities at Lonza to the Customer. 14.3 TIMESCALE Stage 14 shall be complete upon issue of the report of activities (activity 14.2.6) to the Customer. It is estimated that this report will be issued [. . . *** . . .] from commencement of activities." * CONFIDENTIAL TREATMENT REQUESTED 6. 7 4. A new Stage 17a shall be added to Schedule 2 as follows: "Stage 17a - Validation of A280 and Protein A Product Release Assays for Bulk Purified Product 17a.1 OBJECTIVE To validate A280 and Protein A Product release assays [. . . *** . . .]. Data will be generated by [. . . *** . . .]. [. . . *** . . .] will be used for [. . . *** . . .]. The studies will be carried out to GMP/GLP and [. . . *** . . .]. 17a.2 ACTIVITIES 17a.2.1 Protein A Assay Agree GMP study protocol with the Customer. Carry out validation of the assay for Protein A. [. . . *** . . .]. The following studies will be performed: [. . . *** . . .] 17a.2.2 A280 Assay Agree a GMP study protocol with the Customer. Validate the Lonza A280 assay for Product. 17a.2.3 Performance Review Review performance of the assays [. . . *** . . .]. 17a.2.4 Prepare reports and submit to the Customer. 17a.3 TIMESCALE Each assay programme will be complete upon issue of the report for each assay programme to the Customer. Stage 17a shall be complete upon the issue of the final assay programme report to the Customer. It is estimated that Stage 17a will take approximately [. . . *** . . .] to complete." * CONFIDENTIAL TREATMENT REQUESTED 7. 8 5. A new Stage 18 will be added to Schedule 2 as follows: "Stage 18 Analytical Cloning of the Cell Line 18.1 OBJECTIVES 18.1.1 To assess the clonality of the Cell Line by [. . . *** . . .]. 18.2 ACTIVITIES 18.2.1 Prepare a GLP study protocol and review with the Customer. 18.2.2 Carry out [. . . *** . . .]. 18.2.3 Carry out [. . . *** . . .]. 18.2.4 Analyse [. . . *** . . .]. 18.2.5 Issue a report of activities to the Customer. 18.3 TIMESCALE Stage 18 will be complete on issue of the report of activities and it is estimated that this will be issued [. . . *** . . .] from commencement of Stage 18." * CONFIDENTIAL TREATMENT REQUESTED 8. 9 6. The following Clauses shall be added to Schedule 4: 6.1 "Any proposed amendments to the GLP or GMP study protocols under which activities in Stages 13, 14, 15, 16 and 17 of the Services are being performed by Lonza, that Lonza consider to be significant, shall be submitted to the Customer prior to implementation for approval by the Customer. The Customer shall notify Lonza within 5 days of receipt of a proposed amendment its approval or otherwise, if no response is received Lonza shall consider the amendment to be approved. All deviations to the said GLP or GMP study protocols shall be notified to the Customer, and follow-up actions will be agreed between Lonza and the Customer." 6.2 "Lonza will notify the Customer in advance, in writing, of any proposed changes to the activities outlined in Schedule 2 of the Services. The Customer will review the proposed changes and inform Lonza within 7 days of receiving such notification of its approval or otherwise of the proposed changes. Lonza will not change the work programme outlined in Schedule 2 unless by agreement with the Customer." 6.3 "Lonza will inform the Customer of any significant GMP deviations during performance of the Services within 48 hours of the occurrence of the deviation." 7. The following shall be added to Clauses 1 and 2 of Schedule 3: "1 Price In consideration for Lonza carrying out the Services as detailed in Schedule 2 (Stages 12, 13, 14, 17a and 18) the Customer shall pay Lonza as follows:-
============================================================================= PRICE (UK STAGE STERLING) - ----------------------------------------------------------------------------- Stage 12 - Production and Characterisation of a Post- L.[...***...](1) Production Cell Bank for the Cell Line - ----------------------------------------------------------------------------- Stage 13 - Consistency Studies on Manufacture of L.[...***...] Product - ----------------------------------------------------------------------------- Stage 14 - Stability of Partially Purified Product at L.[...***...] Stages during the Manufacturing Process (Intermediates Stability Study) - ----------------------------------------------------------------------------- Stage 17a- Validation of A280 and Protein A Product Release Assays for Bulk Purified Product - ----------------------------------------------------------------------------- A280 L.[...***...] Protein A L.[...***...] - ----------------------------------------------------------------------------- Stage 18 - Analytical Cloning of the Cell Line L.[...***...] =============================================================================
(1)The Price for this Stage does not include Testing Laboratory charges which will be passed on directly to the Customer. * CONFIDENTIAL TREATMENT REQUESTED 9. 10 2. PAYMENT Payment by the Customer of the Price for Stages 12, 13, 14, 17a and 18 shall be made against Lonza's invoices as follows: 2.1 For Stage 12 50% (L.[...***...]) upon commencement of Stage 12 50% (L.[...***...]) upon completion of Stage 12 Testing House Laboratory charges will be invoiced on completion of Stage 12. 2.2 For Stage 13 50% (L.[...***...]) upon commencement of Stage 13 50% (L.[...***...]) upon completion of Stage 13 2.3 For Stage 14 50% (L.[...***...]) upon commencement of Stage 14 50% (L.[...***...]) upon completion of Stage 14 2.4 For Stage 17a 50% of the total Price for Stage 17a (L.[...***...]) upon commencement of Stage 17a 50% of the Price for the A280 assay (L.[...***...]) upon completion of the Services on the A280 assay. 50% of the Price for the Protein A assay (L.[...***...]) upon completion of the Services on the Protein A assay. 2.5 For Stage 18 50% (L.[...***...]) upon commencement of StaGE 18 50% (L.[...***...]) upon completion of Stage 18" * CONFIDENTIAL TREATMENT REQUESTED 10. 11 8. Save as expressly provided herein, the terms and conditions of the Agreement shall continue in full force and effect. AS WITNESS the hands of the duly authorised representatives of the parties hereto the day and year first above written. Signed for and on behalf of: LONZA BIOLOGICS COULTER PHARMACEUTICAL INC. By: /s/ Simon Sturge By: /s/ Michael F. Bigham ----------------------------- --------------------------------- Title: Chief Executive Officer Title: President and Chief Executive -------------------------- ------------------------------- Officer ------------------------------- 11. EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1996 JAN-01-1997 JUN-30-1997 11,368 29,670 182 0 0 41,590 1,630 115 43,487 4,391 0 0 0 10 36,873 43,487 0 0 0 0 5,519 0 113 (4,994) 0 (4,994) 0 0 0 (4,994) (0.48) 0
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