On May 7, 1996, the Company executed definitive agreements with
SmithKline Beecham Corporation and SmithKline Beecham Biologicals
Manufacturing s.a. ("SmithKline"), effective March 1, 1996, which established
MCHV, to develop and commercialize human bacterial vaccines utilizing the
Company's proprietary technologies. The agreements provide for the following:
a payment of $3,000,000 to the Company in connection with SmithKline's
acquisition of a 26.25% equity interest in MCHV; payments totalling $2,400,000
and $2,600,000 to the Company to fund research and development for the first
year and second year, with SmithKline having the option to fund future years;
two separate options granted to SmithKline expiring October 1, 1997 and 1998,
respectively, to acquire from the Company additional equity interests in MCHV;
an exchange option granted by the Company to SmithKline enabling SmithKline to
convert its equity interest in MCHV for up to 4,793,685 shares of the Company's
common stock, under specified conditions; and a warrant granted by the Company to SmithKline enabling SmithKline to acquire up to 7,682,637 shares of the Company's common stock, under specified conditions, and only to the extent that certain options and warrants previously granted and outstanding as of the date of the establishment of the strategic alliance are exercised. The agreements also provide for SmithKline to make milestone payments and pay royalties to MCHV; and for SmithKline to reimburse the Company for expenses the Company incurs for agreed upon production lots of vaccines for clinical trials, the conduct of agreed upon clinical trials, and the agreed upon prosecution and maintenance of the Company's patents and patent applications. As further stipulated in the
agreements, SmithKline will be responsible for conducting additional clinical
trials, manufacturing, and sales and distribution. On October 1, 1997,
SmithKline's first option to acquire from the Company an additional equity
interest in MCHV expired unexercised. SmithKline has committed to fund
research and development for the third fiscal year, ending February 28, 1999,
in the amount of approximately $3,000,000. Effective November 1, 1997, in
accordance with the provisions of the SmithKline warrant, the maximum number of
warrants exercisable was reduced to 5,761,978.
In August 1994, the Company entered into a CRADA with the United States
Navy, whereby the Company granted Government Purpose License Rights to its
Campylobacter vaccine technology. In exchange for the rights granted, the
United States Navy agreed to conduct and fund the costs involved in Phase I, II
and III clinical trials for the vaccine, subject to the availability of
required funds. Two Phase I trials have been successfully completed and a
Phase II trial is ongoing. The Company retained all commercial rights to
develop, produce and market any product involving its proprietary Campylobacter
technology. Either party may terminate the CRADA upon thirty days written
notice. |
