1 EXHIBIT 10.11 AMENDMENT NO. 1 TO SERVICE AGREEMENT This Amendment No. 1 to Service Agreement (the "Amendment") is made between Seragen, Inc., a Delaware corporation having a usual place of business at 97 South Street, Hopkinton, Massachusetts ("Seragen"), and Marathon Biopharmaceuticals, LLC, a Massachusetts limited liability company having a usual place of business at 97 South Street, Hopkinton, Massachusetts (the "Service Provider"), as successor by assignment of Trustees of Boston University ("BU"), as of May 11, 1998, for the purpose of amending that certain Service Agreement, dated as of February 14, 1997 (the "Service Agreement"), between Seragen and BU. This Amendment is made with reference to the following facts: A. Seragen entered into the Service Agreement to purchase certain services relating to product research, development, manufacturing, clinical trial, quality control, and quality assurance. B. Service Provider is the successor by assignment to BU, one of the original parties to the Service Agreement. C. Seragen has made certain business decisions that will result in a reduction of the amount of product research, development, manufacturing, clinical trial, quality control, and quality assurance services that will be required in the second Contract Year (as defined in the Service Agreement). D. Seragen is willing, on the terms set forth in this Amendment, to perform for itself certain clinical trial services originally subject to the Service Agreement and Service Provider desires to make available to Seragen the assets necessary for Seragen to perform those services. E. Section 2.01 of the Service Agreement provides that, in the event that Seragen's research and development requirements change, the parties to the Service Agreement shall negotiate amendments (including appropriate price reductions) to the services required to be performed under the Service Agreement. Section 4.01 of the Service Agreement provides that, in such an event, the parties shall agree on appropriate adjustments to the Technology Service Fees (as defined in the Service Agreement) payable under the Service Agreement; provided, however, that in no event shall the Technology Service Fees payable with respect to any Contract Year be reduced to less than $4,300,000. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Amendment, the parties to this Amendment, intending to be legally bound, agree as follows: 2 1. In lieu of the services required to be provided pursuant to Schedule 1 to the Service Agreement by Service Provider in the second Contract Year, Service Provider shall provide the services specified in Schedule 1 attached to this Amendment. 2. In light of the reduced services to be provided to Seragen in the second Contract Year, the Technology Service Fees for the second Contract Year shall be $4,300,000. 3. Service Provider shall make available without any additional compensation to Seragen all assets necessary for Seragen to perform such clinical trial services at the facility located at 99 South Street, Hopkinton, Massachusetts, as Seragen may from time to time reasonably specify, which services are not required to be performed by Service Provider under this Amendment. 4. Capitalized terms used in this Amendment and not otherwise defined shall have the meaning given those terms in the Service Agreement. 5. Except as expressly modified by this Amendment, the Service Agreement shall remain in full force and effect. 3 Seragen and Service Provider have executed this Amendment effective as of the date first set forth above. SERAGEN, INC. /s/ Reed R. Prior --------------------------------- By: Reed R. Prior Chairman, Chief Executive Officer & Treasurer MARATHON BIOPHARMACEUTICALS, LLC Service Provider /s/ Kenneth G. Condon --------------------------------- By: Kenneth G. Condon Manager 4 SCHEDULE 1- SERVICE AGREEMENT SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: MANUFACTURING OF BATCHES - 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS Fermentation cost of 6 batches of Master Batch Record 22-004, Q4 98 Q2 98 Fermentation plans from DAB389IL-2 30-004 1997 to be conducted in Q1/Q2 1998 for PAI will provide sufficient inventory Purification cost of 10 batches of Master Batch Record 31-304, Q2 98 Eliminated Sufficient inventories 2nd Generation - DAB389IL-2 32-304, 34-304, 60-304 for clinicals permit shift to 1999 Purification cost of 13 batches of Master Batch Record 31-004, Q3 98 Q2 98 Purification plans from 1st Generation - DAB389IL-2 32-004, 60-104 1997 to be conducted in Q1/Q2 1998 for PAI will provide sufficient inventory to cover product launch Fermentation cost of 5 batches of Master Batch Record 22-007, Q3 98 DAB389EGF* 24-007 Purification cost of 10 batches of Master Batch Record 31-007, Q4 98 DAB389EGF* 34-007, 44-007, 47-007, 65-007, 66-007 and 70-007 Manufacture of formulation buffer* Q1 98 For Lilly PAI Includes raw materials, labor and utilities Schedule 1 - Page 1 5 SCHEDULE 1- SERVICE AGREEMENT SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: MANUFACTURING FILL OF BATCHES - 1998: ORIGINAL ESTIMATED SERVICE SPECIFICATIONS COMPLETION DATE CURRENT PLANS FOR 1998 COMMENTS Fill of DAB389EGF Performed at fill-finish Q4 98 Eliminated Shift to Q2 99 site following their Master Batch Record(s). Prior to fill, formulation performed at Service Provider following Master Batch Record 65-007, 66-007, 70-007. Fill of DAB389IL-2 Performed at fill-finish Q4 98 1 - 4 fills between Fills planned for 1997 to 1st Generation site following their Q2 - Q4 98 be conducted in Q3/Q4 Master Batch Records(s) 1998 will provide sufficient inventory to cover product launch Fill of DAB389IL-2 Performed at fill-finish Q4 98 Eliminated Shift to Q2 99 2nd Generation site following their Master Batch Record(s). Prior to fill formulation performed at Service Provider following Master Batch Record 70-304, 70-404. Fill of formulation buffer for PAI* Q2 98 Schedule 1 - Page 2 6 SCHEDULE 1- SERVICE AGREEMENT Shipment of bulk to fill sites. Storage of fermentation pellets, purified drug substance, in process samples and final drug product (clinical trial material only). Shipment of clinical trial material to clinical sites (also return, accountability). Shipment of material to sites for non-clinical use. Label control for clinical and non-clinical materials (i.e. not market product)* SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: QUALITY CONTROL AND RELEASE TESTING OF BATCHES - 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS QC testing of 6 fermentation batches Product spec. 30-004 Q4 98 - ongoing Q2 98 - ongoing of DAB389IL-2 QC testing of 13 purification batches Product spec. 60-304 Q4 98 - ongoing Q2 98 - ongoing of 1st Generation DAB389IL-2 QC testing of 5 fermentation batches Q3 98 of DAB389EGF* QC testing of 10 purification batches Product spec. 60-007 Q4 98 - ongoing Q4 98 - ongoing of DAB389EGF QC testing of Fills, DAB389IL-2 Product spec. 90-204-02 Q4 98 - ongoing Q2 98 - ongoing 1st Generation QC testing of Fills, DAB389IL-2 Product spec. 70-304 and Q4 98 - ongoing Eliminated Shift to 1999 2nd Generation 91-304-01; 5 mg/ml QC testing of Fills, DAB389IL-2 Product spec. 70-404 and Q4 98 - ongoing Eliminated Shift to 1999 2nd Generation 91-404-02; 150 ug/ml QC testing of Fills, DAB389EGF Product spec. 70-007 and Q4 98 - ongoing Eliminated Shift to 1999 91-007 Schedule 1 - Page 3 7 SCHEDULE 1- SERVICE AGREEMENT Stability testing of Q4 98 - ongoing Q1 98 - on-going DAB389IL-2 and DAB389EGF products held by service provider for Seragen Includes raw materials, labor and overhead SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: QUALITY ASSURANCE - 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS Documentation and auditing Q4 98 Q1 98 - on-going (audit report) specific to the products in Manufacturing and Product Development. Review and approval of all Master Batch Records, SOPs and reports as listed in services agreement. Certificate of Analysis and Appropriate SOP's and Q4 98 On-going release notification for release documents batches and lots listed in services agreement Provide copies of all manufacturing records, laboratory records, deviation reports and other records and documents to Seragen for review* Schedule 1 - Page 4 8 SCHEDULE 1- SERVICE AGREEMENT Provide reports, data and other information needed for Seragen to assess compliance with regulatory requirements* Preparation for PAI - implement audit - specified and other changes to GMP systems, procedures and documents as necessary to prepare for FDA inspection. Provide periodic progress reports to Seragen. Notify Seragen of any significant issues impacting on ability to correct deficiencies and prepare for inspections* Includes raw materials, labor and overhead SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: PRODUCT DEVELOPMENT - 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS 2nd Generation; improve lyophilization - Q2 98 Eliminated and characterization of new DMF EGF process development continue responses - Q4 98 Eliminated for BLA Development of topical formulations and - Q4 98 Eliminated new molecules Includes labor and direct materials Schedule 1 - Page 5 9 SCHEDULE 1- SERVICE AGREEMENT SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: CLINICAL / PRE-CLINICAL / REGULATORY STUDIES - 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS Phase I/II Psoriasis* Protocol 96-04-21 Trial on-going Trial on-going - estimated completion Q4 98 Phase I/II Psoriasis Protocol 96-04-19 Q2 97 Trial on-going Trial on-going - estimated completion Q4 98 Phase I (SC) Psoriasis Protocol 98-08-01 Q3 98 Q3 98 Estimated start - Q3 98 with completion Q3 99 Schedule 1 - Page 6 10 SCHEDULE 1- SERVICE AGREEMENT Phase I/II EGF Protocol 96-02-03 Q3 97 Trial on-going Trial on-going - estimated completion Q4 98 Limited use - Rheumatoid Protocol 95-04-18 Trial on-going Trial on-going Arthritis* Phase I 2nd Generation - Q1 98 Eliminated Psoriasis Phase II/III NHL - Q4 98 Eliminated Phase I (SC) Derm - Q4 98 Eliminated Phase I/II (IV) Other - Q4 98 Eliminated Includes clinical trail site fees, labs, pathology fees, supplies and overhead, clinical assays SERVICES TO BE PERFORMED BY SERVICE PROVIDER FOR SERAGEN IN 1998: CLINICAL / PRE-CLINICAL / REGULATORY STUDIES AND OTHER- 1998: ORIGINAL ESTIMATED COMPLETION SERVICE SPECIFICATIONS DATE CURRENT PLANS FOR 1998 COMMENTS CTCL trials: service provider -Protocols for studies 93-04-11, Q4 98 On-going Estimated completion labor and outside contract 93-04-14 date Q2 labor CTCL 00 Non-Besselaar contracts Pre-Clinical studies: new Q4 98 Eliminated refold 2nd generation and EGF studies - includes labor, supplies and overhead Schedule 1 - Page 7 11 SCHEDULE 1- SERVICE AGREEMENT * Services were included in original Schedule 1 to Service Agreement but are being specifically mentioned in this amendment for clarity. PRICE FOR SERVICES RENDERED IN 1997 - $6,605,651(Original estimate) PRICE FOR SERVICES RENDERED IN 1997 - $4,300,000 (Revised estimate) Initials: - --------------- ---------------- --------------- Pat Bacha Elizabeth Chen Jean Nichols - --------------- ---------------- John O'Loughlin Tony Rotunno Schedule 1 - Page 8