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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
0-15507
Commission file number
IMMUCELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 01-0382980
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 Evergreen Drive
Portland, ME 04103
(Address of principal executive office and zip code)
(207) 878-2770
(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
Class of Securities: Outstanding at May 9, 1996:
Common Stock, par value $.10 per share 2,329,564
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IMMUCELL CORPORATION
INDEX TO FORM 10-Q
March 31, 1996
PART I: FINANCIAL INFORMATION
PAGE
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated Balance Sheets-
March 31, 1996 and December 31, 1995 3-4
Consolidated Statements of Operations for the
three month periods ended March 31, 1996 and 1995 5
Consolidated Statement of Stockholders' Equity for the
three month period ended March 31, 1996 6
Consolidated Statements of Cash Flows for the
three month periods ended March 31, 1996 and 1995 7
Notes to Unaudited Consolidated Financial Statements 8-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9-11
PART II: OTHER INFORMATION
Items 1 through 6 11
Signatures 12
IMMUCELL CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
1996 1995
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $1,143,309 $1,550,011
Accounts receivable, net 533,721 357,533
Inventories 585,128 636,203
Prepaid expenses and
accrued interest 38,433 26,600
Total current assets 2,300,591 2,570,347
EQUIPMENT, BUILDING AND
IMPROVEMENTS, at cost:
Laboratory equipment 875,653 844,254
Building and improvements 530,845 431,114
Office furniture and equipment 77,312 77,312
Land 50,000 50,000
1,533,810 1,402,680
Less - Accumulated depreciation (755,068) (740,751)
Net equipment, building and
improvements 778,742 661,929
OTHER ASSETS 3,000 2,150
TOTAL ASSETS $3,082,333 $3,234,426
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
IMMUCELL CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
1996 1995
(unaudited)
CURRENT LIABILITIES:
Accrued expenses $ 297,137 $ 250,412
Accounts payable 154,802 236,471
Current portion of long term debt 176,634 168,884
Deferred income -- 65,000
Total current liabilities 628,573 720,767
LONG TERM DEBT:
Notes Payable 353,977 401,055
Mortgage loans 206,145 207,288
Total long term debt 560,122 608,343
STOCKHOLDERS' EQUITY:
Common stock, Par value--$.10 per share
Authorized--8,000,000 shares
Issued--2,681,579 shares 268,159 268,159
Capital in excess of par value 8,105,448 8,105,448
Accumulated deficit (5,893,234) (5,881,556)
Treasury stock, at cost--
389,598 shares (586,735) (586,735)
Total stockholders' equity 1,893,638 1,905,316
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,082,333 $3,234,426
============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31,
(Unaudited)
1996 1995
REVENUES:
Product sales $1,266,000 $1,361,408
Collaborative research
and development revenue 65,000 --
Grant income 85,011 113,778
___________ ____________
Total revenues 1,416,011 1,475,186
___________ ____________
COSTS AND EXPENSES:
Product costs 545,056 618,827
Research and development
expenses 501,058 373,463
Sales and marketing
expenses 195,852 232,210
General and administrative
expenses 179,796 152,379
___________ ____________
Total costs and expenses 1,421,762 1,376,879
___________ ____________
Interest and other income 13,818 20,731
Interest expense 19,745 16,644
___________ ____________
Net interest and other (5,927) 4,087
___________ ____________
NET (LOSS) PROFIT $ (11,678) $ 102,394
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NET (LOSS) PROFIT PER SHARE $ -- $ .04
=========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,291,981 2,291,981
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
IMMUCELL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996
(Unaudited)
Common Stock
$.10 Par Value Capital in Treasury Stock Total
-------------------- Excess of Accumulated ------------------- Stockholders'
Shares Amount Par Value Deficit Shares Amount Equity
BALANCE,
December 31, 1995 2,681,579 $268,159 $8,105,448 $(5,881,556) 389,598 $(586,735) $1,905,316
Net Loss -- -- -- (11,678) -- -- (11,678)
BALANCE,
March 31, 1996 2,681,579 $268,159 $8,105,448 $(5,893,234) 389,598 $(586,735) $1,893,638
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
THREE MONTH PERIODS ENDED MARCH 31,
(UNAUDITED)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) profit $ (11,678) $ 102,394
Adjustments to reconcile net (loss)
profit to net cash (used for)
provided by operating activities-
Depreciation and amortization 31,945 58,120
Changes in:
Accounts receivable (176,188) (124,913)
Inventories 51,075 87,222
Prepaid expenses and accrued interest (11,833) 1,661
Accounts payable (81,669) 9,956
Accrued expenses 46,725 4,535
Deferred income (65,000) --
Net cash (used for) provided by
operating activities (216,623) 138,975
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short-term investments -- (449,276)
Purchases of equipment, building
and improvements, net (148,757) (4,381)
Increase in other assets (850) (57)
Net cash used for
investing activities (149,607) (453,714)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt obligations (40,472) (27,293)
Stock issuance costs -- (8,018)
Net cash used for
financing activities (40,472) (35,311)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (406,702) (350,050)
BEGINNING CASH AND CASH EQUIVALENTS 1,550,011 1,295,246
ENDING CASH AND CASH EQUIVALENTS $1,143,309 $ 945,196
========== ===========
CASH PAID FOR INTEREST $ 19,993 $ 18,359
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL
STATEMENTS.
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The accompanying statements have been prepared by ImmuCell Corporation
(the "Company") without audit, and reflect the adjustments, all of which are
of a normal recurring nature, that are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. Certain
information and footnote disclosures normally included in the annual financial
statements which are prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, the Company believes
that although the disclosures are adequate to make the information presented
not misleading, these financial statements should be read in conjunction with
the financial statements and the notes to the financial statements as of
December 31, 1995, contained in the Company's Annual Report to shareholders on
Form 10-K as filed with the Securities and Exchange Commission.
The consolidated financial statements of the Company include the
accounts of the Company and its wholly-owned subsidiary, the Kamar Marketing
Group, Inc. All intercompany accounts and transactions have been eliminated in
consolidation.
(2) Net (Loss) Profit Per Common Share
The 1996 net loss per common share has been computed by dividing the
net loss by the weighted average number of common shares outstanding during the
period. Common stock equivalents outstanding have not been included in the
computation, as the effect would be antidilutive, thereby decreasing the net
loss per common share. The 1995 net profit per common share has been computed
by dividing the net profit by the weighted average number of common shares
outstanding during the period. The effect of including common stock
equivalents outstanding in this computation was less than $.01 per share.
(3) Inventories
Inventories consist of the following:
March 31, December 31,
1996 1995
Raw materials $ 43,149 $ 69,297
Work-in-process 450,802 513,956
Finished goods 91,177 52,950
_________ _________
$585,128 $636,203
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IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
(4) Debt Obligations
The Company has long term debt obligations, net of current maturities,
as follows:
March 31, December 31,
1996 1995
9.5% Bank mortgage, collateralized by first security
interest in building, due 1996 to 2000 $210,976 $212,044
10.27% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets,
due 1996 to 1998 346,687 375,420
9.62% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets,
due 1996 to 1999 179,093 189,763
736,756 777,227
Less current portion 176,634 168,884
Long term debt $560,122 $608,343
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Principal payments under the above debt obligations due subsequent to
March 31, 1996 areapproximately as follows: $129,000 - 1996; $187,000 - 1997;
$181,000 - 1998; $50,000 -1999 and $190,000 - 2000.
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31,
1996
Total revenues equalled $1,416,000 for the three months ended March 31,
1996 compared to $1,475,000 for the same period in 1995, a decrease of $59,000
(4%). Total revenues include $85,000 of grant income and $65,000 of
collaborative research and development revenue for the three month period ended
March 31, 1996 as compared to $114,000 of grant income and no collaborative
research and development revenue during the first quarter of 1995. The grant
income was recognized primarily under three federally sponsored research grants
that support two of the Company's passive antibody development programs.
For the three months ended March 31, 1996, product sales decreased to
$1,266,000 from $1,361,000 for the three months ended March 31, 1995, a
decrease of $95,000 (7%). Sales of FIRST DEFENSE{R} and the KAMAR HEATMOUNT
DETECTOR aggregated 84% of total product sales for the three month period ended
March 31, 1996. Comparatively, sales of these two products aggregated 86% of
total product sales for the three month period ended March 31, 1995. Sales of
these two products decreased by 9% during the three month period ended
March 31, 1996 compared to the same period in 1995.
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The gross margin on product sales improved to 57% of product sales for
the three month period ended March 31, 1996, as compared to 55% of product
sales for the three month period ended March 31, 1995. This gross margin
decreased by $22,000 (3%) to $721,000 during the three months ended March 31,
1996 over the corresponding period in the prior year.
Research and development expenses increased by $128,000 (34%) to
$501,000 during the three month period ended March 31, 1996 compared to the
same period in 1995. These expenses were incurred primarily to develop
specific antibodies to be used to prevent gastrointestinal infections in
humans. The first quarter of 1996 expenses included significant clinical trial
expenses not incurred during the first quarter of 1995.
Research and development expenses exceeded grant income and
collaborative research and development revenue by $351,000 during the three
months ended March 31, 1996 and by $260,000 during the three months ended March
31, 1995. Management believes that the loss incurred resulting from the
increasing investment in the research and development of new products is
necessary to foster growth for the Company in the future. It has been, and
continues to be, the Company's strategy to demonstrate efficacy in Phase I/II
clinical trials and then actively pursue corporate partners to fund continued
development in exchange for marketing rights.
Sales and marketing expenses decreased by $36,000 (16%) during the
three months ended March 31, 1996 compared to the three months ended March 31,
1995. General and administrative expenses increased by $27,000 (18%) to
$180,000 for the three months ended March 31, 1996.
The increase in research and development expenses, described above,
principally caused the operating loss of $12,000 during the three month period
ended March 31, 1996. This loss compares to a net operating profit of $102,000
in the same period of the prior year. In order to aggressively develop
products to prevent gastrointestinal infections in humans, the Company expects
to incur further operating losses.
LIQUIDITY AND CAPITAL RESOURCES
Total assets decreased by approximately $152,000 to $3,082,000 at March
31, 1996 from $3,234,000 at December 31, 1995. Cash and cash equivalents
decreased by approximately $407,000 to $1,143,000 at March 31, 1996 from
$1,550,000 at December 31, 1995. Net working capital decreased by $178,000 to
$1,672,000 at March 31, 1996 from $1,850,000 at December 31, 1995. The
Company invested approximately an additional $150,000 in new equipment and
building improvements during the first quarter of 1996. Additionally, similar
purchases aggregating approximately $75,000 were made in the fourth quarter
of 1995. These investments are part of a planned investment aggregating
approximately $400,000 in new equipment and building improvements.
In April 1994, the Company obtained notice from the National Institute
of Allergy and Infectious Diseases ("NIAID") that it had been awarded a Phase
II Small Business Innovation Research ("SBIR") grant aggregating approximately
$435,000 over two years. In April 1996, this grant period was extended through
October 1996. These funds will be used to develop recombinant vaccines to
CRYPTOSPORIDIUM PARVUM. In July 1994, the Company obtained notice from the
NIAID that it had been awarded a second Phase II SBIR grant aggregating
approximately $500,000 over two years. These funds will be used to develop a
passive antibody product for the prevention and/or treatment of
cryptosporidiosis in AIDS patients. In April 1995, the Company obtained notice
from the NIAID that it had been awarded a Phase I SBIR grant aggregating
approximately $100,000 through December 1995. These funds were used to develop
the Company's passive
antibody product for the prevention of diarrhea caused by enterotoxigenic E.
COLI (commonly known as Travelers' Diarrhea). Approximately 65% of the
combined aggregate proceeds of approximately $1,035,000
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
is designated to fund internal research and development expenses, and the
balance is designated to fund development services performed under contract by
outside laboratories. As of March 31, 1996, approximately $188,000 remained
available to fund future grant expenditures. Approximately 83% of this
$188,000 will be used to fund internal research and development expenses, and
the balance will fund development services performed under contract by outside
laboratories.
The Company believes that it has sufficient capital resources to meet
its working capital requirements and to finance its ongoing business operations
during the next twelve months.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1* License Agreement dated March 25, 1996 between
the Registrant and CSI Clinical Trials, Inc. of
Fort Lauderdale, Florida.
(b) Reports on Form 8-K
None
* Confidential Treatment as to certain portions has been requested effective
until March 25, 2006. The copy filed as an exhibit omits the information
subject to the confidentiality request.
IMMUCELL CORPORATION
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 hereunto duly authorized.
ImmuCell Corporation
Registrant
Date: May 9, 1996 By: /s/ Thomas C. Hatch
Thomas C. Hatch
President and Chief
Executive Officer
Date: May 9, 1996 By: /s/ Michael F. Brigham
Michael F. Brigham
Chief Financial Officer,
Treasurer and Secretary
IMMUCELL CORPORATION
EXHIBIT INDEX
10.1 License Agreement dated March 25, 1996 between the Registrant and CSI
Clinical Trials, Inc. of Fort Lauderdale Florida.
27.1 Financial Data Schedule.
IMMUCELL CORPORATION
EXHIBIT 10.1
License Agreement dated March 25, 1996 between the Registrant and CSI Clinical
Trials, Inc. of Fort Lauderdale Florida.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made as of this 25th day
of March, 1996, by and between ImmuCell Corporation, a Delaware corporation
with its principal place of business at 56 Evergreen Drive, Portland, Maine
04103, U.S.A. ("ImmuCell"), and CSI Clinical Trials, Inc., a Florida
corporation with its principal place of business at 515 East Las Olas Blvd,
Suite 1600, Fort Lauderdale, Florida 33301 ("CSI").
RECITALS
WHEREAS, ImmuCell owns or controls certain proprietary and other
rights relating to one or more products comprising bovine anti-cryptosporidium
immunoglobulins ("BACI"), and
WHEREAS, one or more of these products may have application in the
prevention of cryptosporidiosis in immune compromised individuals, and
WHEREAS, CSI is a network of primary care clinics emphasizing
delivery of medical care to HIV+ and AIDS patients, and
WHEREAS, ImmuCell desires to have CSI provide certain clinical testing
services to ImmuCell to determine if BACI can be shown to be effective in
treating and/or preventing cryptosporidiosis, and
WHEREAS, CSI desires to obtain a royalty on sales of BACI on the
terms and conditions set forth below;
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties hereto agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 Affiliate shall mean any corporation or business entity
controlled by, controlling, or under common control with, a party to this
Agreement. For this purpose, "control" shall mean direct or indirect
beneficial ownership of at least fifty percent (50%) of the voting stock or
income interest in such corporation or other business entity, or such other
relationship as, in fact, constitutes actual control.
1.2 Confidential Information shall mean any know-how, technology,
expertise and information, whether or not patented or patentable, copyrighted
or copyrightable, and any designs, processes, procedures, formulae, or
improvements which relate to the development, formulation, production,
manufacture or marketing of BACI and which are confidential and commercially
valuable in the sense that their confidentiality affords the disclosing party a
competitive advantage over its competitors.
1.3 BACI shall mean a hyperimmune gamma globulin product for the
treatment and/or prevention of cryptosporidiosis in humans. Such product is
derived from the colostrum or milk of dairy cows or other domestic animals that
have been stimulated using Crytpo Vaccine, defined herein. The product
contains specific antibodies against Cryptosporidium parvum. BACI shall
further comprise improvements developed by CSI or ImmuCell.
1.4 Crypto Vaccine shall mean ImmuCell's proprietary vaccine
(including any vaccine licensed by it from third parties) used to stimulate the
production of antibodies in dairy cows or other domestic animals for the
production of BACI, together with any Improvements thereto.
1.5 Effective Date shall mean the date set forth above, which shall
be the last date on which this Agreement is fully executed by the parties.
1.6 FDA shall mean the United States Food and Drug Administration.
1.7 Improvements shall mean any and all inventions, modifications,
discoveries, ideas, developments and enhancements related to BACI, which are
conceived or first reduced to practice prior to the expiration or termination
of this Agreement.
1.8 U.S. Territory shall mean the United States of America.
1.9 Non-U.S. Territory shall mean everything in the world except the
United States.
1.10 CryptoGAM(tm) is a trademark owned by ImmuCell and used to
denote BACI.
1.11 Net Sales shall mean sales of BACI, less any discounts, made by
ImmuCell.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
2.1 By ImmuCell. ImmuCell hereby represents and warrants to CSI the
following:
(a) It is a corporation validly formed and existing under the
laws of the State of Delaware.
(b) To the best of ImmuCell's knowledge, the production and use of the
Crypto Vaccine and the production, use and sale of BACI, do not violate or
infringe upon any patent or proprietary rights of any third party. The orphan
drug law may prevent ImmuCell from selling BACI if ImmuCell is not the first to
receive product approval from the FDA.
(c) The execution, delivery and performance of this Agreement
(i) have been duly and effectively authorized by all necessary corporate or
other actions and (ii) do not violate, conflict with, or result in the
breach of any provision of its Certificate of Incorporation, Bylaws or any
comparable document, or of any agreement to which it is a party.
(d) ImmuCell makes no warranty or representation whatsoever as to
the nature or quality of BACI that it can be manufactured or commercially sold
in the Territory.
(e) This Agreement is binding on and enforceable against
ImmuCell in accordance with its terms.
2.2 By CSI. CSI hereby represents and warrants to ImmuCell the
following:
(a) It is a corporation validly formed and existing under the
laws of the State of Florida.
(b) There are no prior or contemporaneous assignments, grants,
licenses, encumbrances, obligations or agreements, either written or oral,
express or implied, to which it is a party, that are inconsistent with this
Agreement.
(c) The execution, delivery and performance of this Agreement
(i) have been duly and effectively authorized by all necessary corporate or
other actions and (ii) do not violate, conflict with, or result in the
breach of any provision of its Certificate of Incorporation, Bylaws or any
comparable document, or of any agreement to which it is a party.
(d) CSI will not, by itself or with another party, develop,
manufacture or perform clinical testing services on a product directly
competitive to BACI during the term of this Agreement or for a period of two
years following early termination, except as provided in Section 5.2.
(e) CSI acknowledges that BACI and processes to make BACI are the
sole and exclusive property of ImmuCell and represent valuable know-how and
tradesecrets of ImmuCell. Notwithstanding any other provision of this
Agreement, CSI shall not use or disclose ImmuCell know-how or trade secrets for
any purpose outside of this Agreement.
CONFIDENTIAL
TREATMENT
(f) CSI acknowledges that the trademark CryptoGAM is the sole and
exclusive property of ImmuCell.
(g) This Agreement is binding on and enforceable against CSI in
accordance with its terms.
ARTICLE 3 - ROYALTY PAYMENTS
3.1 Royalty In consideration of the completion of the clinical
studies contemplated in 4.2, ImmuCell agrees to pay CSI a running royalty on
Net Sales of BACI as follows:
(a) XXXXXXX of Net Sales of BACI sold by ImmuCell for use by
patients in the U.S. Territory; or,
(b) XXXXXXXXXXX of Net Sales of BACI sold by ImmuCell for use by
patients in Non-U.S. Territory.
Such royalties are to be paid on a quarterly basis within sixty days of the end
of the quarter for which royalties are owed.
3.2 Reporting. ImmuCell agrees to maintain adequate records and
agrees that such records will be open to inspection at any reasonable time
during normal business hours once each calendar year for a period of one (1)
year after the quarter to which those records relate by an independent
certified public accountant selected and compensated by the examining party,
who shall have the right to examine and make an abstract of such records and
report findings of said examination to the examining party. If it is
determined during any such examination that any adjustments are necessary to
prior payments, such adjustments shall be made promptly.
ARTICLE 4 - RESEARCH AND DEVELOPMENT;
REGULATORY APPROVALS
4.1 Product Manufacture for Clinical Development. ImmuCell shall
manufacture BACI at its own expense and provide to CSI free of charge to be
used in the BACI clinical testing program. Such product will comply with
current Good Manufacturing Practice with full supporting documentation and
appropriate Quality Control.
4.2 Clinical Development. In consideration for payment of the
royalties described in Article 3, CSI shall perform in a timely fashion at its
own expense the clinical testing program outlined in Appendix A in its
network of primary care clinics. Clinical trials outlined in Appendix A may be
modified by mutual agreement pending outcome of such trials and FDA disposition
to results. CSI will be responsible for all IRB approvals which are required
for clinical testing to proceed. CSI further agrees to conduct clinical
studies according to current Good Clinical Practices, to maintain appropriate
documentation and to subject said documentation and patient records to
appropriate Quality Control CSI shall provide ImmuCell access to all data and
information relating to the clinical trial. Such data and information shall be
the exclusive property of ImmuCell and shall constitute Confidential
Information. Lab work, such as stool examinations for C. parvum oocysts and
anti-C. parvum immune responses in stool or blood, performed by ImmuCell in
its own labs shall be paid for by ImmuCell.
4.3 CSI and ImmuCell will jointly develop clinical testing protocols
and case report forms. CSI and ImmuCell will be jointly responsible for
statistical analysis of any and all clinical trials conducted under this
agreement.
4.4 Regulatory Affairs. ImmuCell will maintain primary responsibility
for regulatory activities on BACI with CSI providing input. ImmuCell will be
responsible for all interactions with the FDA. Such interactions include all
clinical protocols, investigator data, manufacturing updates, lot release
documents, adverse event reporting, and all reports required under applicable
sections of 21 CFR 312. CSI will provide ImmuCell with
any and all clinical information and data in support of regulatory
requirements described herein. At such time that ImmuCell determines that the
clinical results and commercial market warrant filing for a Product License
Application (PLA) with the FDA, ImmuCell may at its option file PLA and ELA
with the FDA. CSI agrees not to hold ImmuCell liable for any damages or
breach of contract if the FDA does not approve the ELA or PLA if submitted or
if ImmuCell is unable to manufacture BACI or if the manufacture and sale of
BACI is uneconomical.
ARTICLE 5 - TERM AND TERMINATION
5.1 Term. The term of this Agreement shall be effective from the date
the Agreement is signed by both parties and shall end ten (10) years from the
date of first commercial sale of BACI in Territory or December 31, 2000 in the
event no commercial sale has taken place.
5.2 Termination by CSI. CSI may terminate this Agreement at any time
by giving ImmuCell one hundred eighty (180) days notice in writing. If CSI so
terminates this Agreement, all rights to royalties shall cease as of the date
written notice is given to terminate the Agreement. Obligations under the
clinical testing program will continue for one hundred eighty days. All
rights provided under Sections 2.2(d), 2.2(e), 6.1, 6.2, 6.3, 7.9, 7.10 and
7.11 shall survive any termination by CSI under this Section 5.2. Upon
termination in accordance with this Section 5.2, CSI agrees to transfer to
ImmuCell, at no cost, all data and analysis pertaining to BACI in its
possession at the termination date. ImmuCell shall own and have rights to use
all such data and analyses.
5.3 Termination by ImmuCell. ImmuCell may terminate this Agreement at
any time upon thirty (30) days' advance notice to CSI if CSI breaches any
material term, provision or covenant hereof which is not cured by CSI within
the thirty (30) day notice period provided above. In the event CSI disputes
any ImmuCell claim of an event of breach under this Section, and such dispute
is submitted to arbitration under Section 7.10, the cure period for the alleged
breach shall be tolled until the earlier of (a) an agreement by the parties to
settle the matter in dispute without further arbitration, or (b) a final
decision of the arbitration panel. If ImmuCell so terminates this Agreement,
except for Sections 2.2(d), 2.2(e), 6.1, 6.2, 6.3, 7.9, 7.10 and 7.11
hereof, all rights and future obligations of the parties shall cease as of the
effective date of termination.
ARTICLE 6 - INDEMNITY AND INSURANCE
6.1 General Indemnification. Each party agrees to indemnify and hold
the other party harmless against any and all losses, liabilities, damages,
claims, judgments, demands, and expenses, reasonable attorneys' fees
and all other costs (hereinafter collectively or individually referred to as a
"Loss") arising out of or in connection with (i) the breach by the
indemnifying party of any of its representations or warranties contained
in this Agreement, or (ii) the nonperformance, partial or total, of any
covenants of the indemnifying party contained in this Agreement. As a
condition to the indemnified party's right to indemnification under this
Section 6.1, the indemnified party shall give prompt notice to the indemnifying
party of any suits, claims or demands by third parties which may give rise to
any Loss for which indemnification may be required under this Section. The
indemnifying party shall be entitled to assume the defense and control of any
suit, claim or demand of any third party at its own cost and expense.
6.2. General Indemnification. Each party agrees to indemnify and hold
the other party harmless against any and all losses, liabilities, damages,
claims, judgments, demands, and expenses, reasonable attorneys' fees
and all other costs (hereinafter collectively or individually referred to as a
"Loss") arising out of or in connection rising out of occurrences on the
premises of such party or involving a claim of an employee or representative or
agent of such party.
6.3 Specific Indemnification. Without limiting the general indemnity
provisions of Section 6.1 CSI shall indemnify ImmuCell for any Loss arising out
of or connected with any negligence or willful misconduct of CSI. Without
limiting the general indemnity provisions of Section 6.1 ImmuCell shall
indemnify CSI for any damages to study patients arising out of defects in the
manufacturing process of BACI or adverse reactions by study patients to BACI.
6.4 Insurance. CSI and ImmuCell agree to maintain during the term
hereof general liability insurance against loss or damage related to the
testing of BACI in the minimum amount of $1,000,000 per occurrence and in a
minimum aggregate of $1,000,000. Each party will name the other as an
additional insured on said policy(ies), and will, upon written request, provide
a certificate of insurance evidencing such coverage.
ARTICLE 7 - GENERAL PROVISIONS
7.1 Notices. Except as otherwise specified herein, any notices
permitted or required by this Agreement shall be sent by telephonically
confirmed telecopy, by recognized overnight mail service or by certified or
registered mail, return receipt requested except that normal correspondence not
related to termination, defaults, or rights to manufacture may be sent by first
class mail. Any such notice shall be effective when received if sent and
addressed as follows or to such other address as may be designated by such
party in writing and delivered in accordance with this Section 7.1:
If to ImmuCell:
ImmuCell Corporation
56 Evergreen Drive
Portland, Maine 04103
Telephone: (207) 878-2770 Fax: 2117
Attention: Thomas Hatch
with a copy to:
Jeffrey A. Clopeck, Esq.
Day, Berry & Howard
260 Franklin Street
Boston, Massachusetts 02110-3109
Telephone: (617) 345-4600 Fax: (617) 439-4453
If to CSI
Center for Special Immunology
515 East Las Olas Blvd, Suite 1600
Fort Lauderdale, Florida 33301
Telephone: 954 766-2552 Fax: 954 767-4715
Attention: William M. Reiter, MD
with a copy to:
Susanne Loarie, Vice-President Business Development
Center for Special Immunology
515 E. Las Olas Blvd., Suite 1600
Fort Lauderdale, FL 33301
Telephone: 954 766-2552 ext. 106: Telefax: 954 767-4715
7.2 Entire Agreement; Amendment. The parties acknowledge that this
Agreement sets forth the entire agreement and understanding of the parties and
supersedes all prior written or oral agreements or understandings with respect
to the subject matter hereof. No modification or amendment of any of the terms
of this Agreement shall be deemed to be valid unless in writing and signed by
both parties hereto.
7.3 Waiver. No waiver by any party of any default shall operate as a
waiver of any other default or of the same default on a future occasion.
7.4 Assignment. Neither party shall assign or transfer this Agreement
without the other party's prior written consent This Agreement shall be
binding on and inure to the benefit of each party's permitted successors and
assigns.
7.5 Governing Law. This Agreement shall be governed by and construed
under the substantive and procedural laws of the State of Delaware without
giving effect to choice of law principles.
7.6 Severability. If any term, provision or condition of this Agreement,
or the application thereof to any person or circumstance, shall be invalid,
illegal or unenforceable in any respect, the remainder of this Agreement shall
be construed without such provision and the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid, illegal or unenforceable, as the case may be, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
7.7 Counterparts. This Agreement may be executed in any number of
duplicate originals and each such duplicate original shall be deemed to
constitute one and the same instrument.
7.8 Headings. The headings of the paragraphs of this Agreement are for
convenience only and have no meaning with respect to this Agreement or the
rights or obligations of the parties.
7.9 Independent Contractor. The parties are each independent contractors
and nothing herein shall be deemed to establish a relationship of principal and
agent between them, nor any of their agents or employees for any purpose
whatsoever. This Agreement shall not be construed as constituting the parties
as partners, or as creating any other form of legal association or arrangement
which would impose liability upon one party for the act or failure to act of
the other party.
7.10 Arbitration and Jurisdiction.
(a) All disputes arising between CSI and ImmuCell under this
Agreement shall be settled by arbitration conducted in accordance with the
procedures of the commercial Arbitration Rules of the American Arbitration
Association, before a panel of three arbitrators, one of whom shall be selected
by CSI, one of whom shall be selected by ImmuCell, and one of whom shall be
selected by CSI and ImmuCell (or by the other two arbitrators, if the parties
cannot agree). The parties will request an expedited hearing for any
dispute related to a nonpayment hereunder, and will otherwise cooperate with
each other in causing the arbitration to be held in as efficient and
expeditious a manner as practicable. Any arbitration proceeding shall
be conducted in Portland, Maine.
(b) Any award rendered by the arbitrators shall be binding upon the
parties hereto and shall be final, subject to review by a court of competent
jurisdiction under the statutory standard of review applicable to arbitrations.
Judgment upon the award may be entered in any court of competent jurisdiction.
Each party shall pay its own expenses of arbitration and the expenses of the
arbitrators shall be equally shared except that if, in the opinion of the
arbitrators, any claim by a party hereto or any defenses or objection thereto
by the other party was unreasonable, the arbitrators may in their discretion
assess as part of their award all or any part of the arbitration expenses of
the other party (including reasonable attorney's fees) and expenses of the
arbitrators against the party raising such unreasonable claim, defense or
objection. Nothing herein shall prevent the parties from settling any dispute
by mutual agreement at any time.
(c) The parties irrevocably and unconditionally (i) agree that
any suit, action or other legal proceeding for the review of any arbitration
proceeding under this Agreement may be brought in the United States District
Court located in ImmuCell's jurisdiction.
7.11 Confidentiality. CSI and ImmuCell shall not disclose any
Confidential Information of the other party received pursuant to this Agreement
or otherwise, or use any such Confidential Information in any manner, or for
any purpose, that is not expressly or implicitly permitted hereby, for a period
of four years without the prior written consent of such other party. These
obligations shall not apply to: (a) information which is known to the receiving
party at the time of disclosure or independently developed by the receiving
party, and documented by written records; (b) information disclosed to the
receiving party by a third party which has a right to make such disclosure; (c)
information which becomes patented, published or otherwise part of the public
domain as a result of acts by the disclosing party; or (d) disclosures of such
Confidential Information to the Affiliates or employees of the disclosing party
on a need-to-know basis, provided the disclosing party takes reasonable
precautions to preclude any further disclosures of such Confidential
Information. Upon request by the party providing the Confidential Information,
at the expiration or earlier termination of this Agreement, the other party
shall return all Confidential Information and all copies thereof that are in
its possession.
7.12 Force Majeure Events. Failure of either party to perform its
obligations under this Agreement (except the obligation to make payments) shall
not subject such party to any liability to the other party if such failure is
caused by any cause beyond the reasonable control of such nonperforming party,
including, but not limited to, acts of God, fire explosion, flood, drought,
war, riot, sabotage, embargo, strikes or other labor trouble, failure in whole
or in part of suppliers to deliver on schedule materials, equipment or
machinery, interruption of or delay in transportation, a national health
emergency or compliance with any order or regulation of any government entity
acting with color of right.
7.13 Use of Names. ImmuCell shall not use CSI's name in sales
promotion, advertising, or any other form of publicity without the prior
written approval of CSI, which approval shall not be unreasonably withheld.
CSI shall not use ImmuCell's name in sales promotion, advertising or any other
form of publicity without the prior written approval of ImmuCell, which
approval shall not be unreasonably withheld. In no event shall ImmuCell's use
of CSI's name or CSI's use of ImmuCell's name suggest any association between
the companies other than as independent contractors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
IMMUCELL CORPORATION
By: /s/ Thomas C. Hatch
Name: Thomas C. Hatch
Title: President and CEO
Date: March 25, 1996
CENTER FOR SPECIAL IMMUNOLOGY
By: /s/ William M. Reiter, M.D.
Name: William M. Reiter, M.D.
Title: President and CEO
Date: March 25, 1996
IMMUCELL CORPORATION
EXHIBIT 27.1