Certain portions of this
exhibit have been
omitted based upon
a request for confidential
treatment. Omitted portions
have been separately filed
with the Securities and
Exchange Commission.
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This Agreement made as of ... June 1997 (the "Effective Date"), between OSIRIS
THERAPEUTICS, INC., a company organized under the laws of the State of
Delaware, of 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000, XXX
(hereinafter "Osiris") and NOVARTIS PHARMACEUTICALS CORPORATION, a corporation
organized under the laws of the State of Delaware, of Xxxxx 00, Xxxx Xxxxxxx,
Xxx Xxxxxx, XXX (hereinafter "Novartis").
WITNESSETH
WHEREAS, Osiris owns, or is exclusive licensee with the right to sublicense,
certain patent rights and know-how relating to the isolation and use of
mesenchymal stem cells as hereinafter defined (hereinafter "MSCs "); and
WHEREAS, Novartis desires to obtain a license from Osiris to manufacture, use
and sell products containing MSCs for certain therapeutic uses under such
patent rights and know-how; and
WHEREAS, both Osiris and Novartis desire to enter into a research
collaboration in the Field as hereinafter defined; and
WHEREAS, Novartis' Affiliate Novartis Pharma AG desires to make an equity
investment in Osiris;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE 1. DEFINITIONS
The following terms shall have the following meanings:
1.1 "Affiliate" means any corporation or other entity which
controls, is controlled by, or is under common control with, a party to this
Agreement. A corporation or other entity shall be regarded as in control of
another corporation or entity if it owns or directly or indirectly controls
more than fifty percent (50%) of the voting stock or other ownership interest
of the other corporation or entity, or if it possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the corporation or other entity.
1.2 "Area" means a subdivision of the Field, which is either the
Bone Therapy Area, the Cartilage Therapy Area, or the Gene Therapy Area.
1.3 "Bone Therapy Area" means the systemic or local treatment of
diagnosed osteoporosis (OP), but does not include acute and non-degenerative
bone defects, other degenerative bone defects, and large segmental defects.
1.4 "Cartilage Therapy Area" means the treatment of acute articular
hyaline cartilage injury, other non-degenerative articular hyaline cartilage
defects, and diagnosed osteoarthritis (OA).
1.5 "E.U. Countries" means the Member States of the European Union
as of the Effective Date, and such other countries as may in the future join
the European Union, in each case for so long as such country remains a member
of the European Union.
1.6 "FDA" means the United States Food and Drug Administration.
1.7 "Field" means all three of the Areas Cartilage Therapy, Bone
Therapy and Gene Therapy, as defined herein, or, to the extent that the Field
has been restricted according to the provisions of Art. 4.7, any one or two of
said Areas.
1.8 "First Commercial Sale" of Product shall mean the first bona
fide sale for use or consumption by the general public of Product in a
country after required marketing and pricing approval has been granted by
the governing health authority of such country.
1.9 "Gene Therapy Area" means the use of transduced MSCs for the
delivery of a gene and/or polypeptide, which becomes part of the Gene
Therapy Area pursuant to any part of Article 4.8.
1.10 "Gene Therapy Product" means a product or process which
comprises or is used for producing transduced MSCs for the delivery of a gene
and/or polypeptide and which is in the Gene Therapy Area.
1.11 "IND" means an Investigational New Drug application, or an
Investigational Device Exemption (IDE), as defined in the US Food, Drug and
Cosmetic Act and the regulations promulgated thereunder for initiating
clinical trials in the USA, or any corresponding application in a country
other than the USA.
1.12 "Joint Patent Rights" means patent rights which are jointly
owned by Novartis and by Osiris under the provisions of Art. 11.1.
1.13 "JSC" means the Joint Steering Committee set up under the
provisions of Art. 5.
1.14 "Making and having made" includes the expansion and/or
differentiation of MSCs in vitro and/or combining such MSCs or differentiated
products thereof with a delivery vehicle.
1.15 "MSCs" means human mesenchymal stem cells which can
differentiate into cells of more than one connective tissue type.
1.16 "MSC Product" means a product, process or service in the
Cartilage Therapy Area or the Bone Therapy Area and containing non-transduced
or transduced MSCs, or cells derived from isolated MSCs which have been
differentiated in vitro into a specific lineage.
1.17 "NDA" means a New Drug Application; a Biologics License
Application; or a Pre-Marketing Approval for a device, as defined in the US
Food, Drug and Cosmetic Act and the regulations promulgated thereunder or any
other governmental approval to market a Product in the USA,
or any corresponding application for marketing approval in a country other
than the USA.
1.18 "Net Sales" with respect to any Product means the gross invoice
price of such Product sold to Third Parties in bona fide, arms-length
transactions by Novartis or its Affiliates, licensees or sublicensees, less
(i) quantity and/or cash discounts actually allowed or taken; (ii) freight,
postage and insurance; (iii) amounts repaid or credited by reasons of
rejections or return of goods or because of retroactive price reductions
specifically identifiable to Product; (iv) amounts payable resulting from
Governmental (or agency thereof) mandated rebate programs; (v) third-party
rebates to the extent actually allowed; vi) custom duties and taxes (excluding
income, value-added and similar taxes), if any, directly related to the sale;
and (vii) any other specifically identifiable amounts included in Product's
gross sales that will be credited for reasons substantially equivalent to
those listed hereinabove; all as determined in accordance with Novartis'
standard allocation procedure and accountancy methods, which are in accordance
with generally acceptable accountancy principles {GAAP}).
In the event a Product is sold in a combination product with other
pharmacologically active components, Net Sales, for purposes of royalty
payments on the combination product, shall be calculated by multiplying the
Net Sales of that combination product by the fraction A/B, where A is the
gross selling price of the Product sold separately and B is the gross selling
price of the combination product. In the event that no such separate sales
are made by Novartis or an Affiliate, licensee or sublicensee, Net Sales for
royalty determination shall be calculated by multiplying Net Sales of the
combination product by the fraction C/(C+D) where C is the fully allocated
cost of the Product and D is the fully allocated cost of such other
pharmacologically active component. In no event shall Net Sales of any
Product calculated under this provision with respect to any combination
product be less than fifty percent of the Net Sales of such combination
product.
1.19 "North America" means Canada, Mexico and the United States of
America, its territories and possessions, including Puerto Rico.
1.20 "Novartis Know-How" means any and all data, substances,
processes, materials, formulas, inventions (whether or not patentable),
results or information which is useful for the research, development, making,
or using of MSCs or products produced therefrom and which is owned by Novartis
or its Affiliates or as to which Novartis or its Affiliates has transferable
rights.
1.21 "Novartis Patent Rights" means any and all patents and patent
applications owned by Novartis or its Affiliates or including Novartis'
interest in Joint Patent Rights or as to which Novartis or its Affiliates has
transferable rights, in each case to the extent that they claim Novartis
Know-How.
1.22 "Osiris Know-How" means any and all data, substances, processes,
materials, formulas, inventions (whether or not patentable), results or
information which is useful for the research, development, making or using of
Product and which results from Novartis funding and/or is owned by Osiris or
to which Osiris has transferable rights, including rights obtained from Osiris
Affiliates.
1.23 "Osiris Patent Rights" means any and all patents and patent
applications owned by Osiris including Osiris' interest in Joint Patent Rights
or as to which Osiris has a transferable rights in each case to the extent
that they claim Osiris Know-How. The Osiris Patent Rights include the patents
and applications of Schedule B.
1.24 "Patents and patent applications" includes divisions,
continuations, reissues, provisional applications, continuations-in part,
reexaminations, extensions and supplemental protection certificates.
1.25 "Primary Country" means any of the United States, Canada, Japan,
France, Germany, Italy, the United Kingdom and Switzerland.
1.26 "Product" means an MSC Product or a Gene Therapy Product.
1.27 "Research Program" means the program of research described in
the detailed plan set out in Schedule C of this Agreement for the first two
years of the Research Term, and as subsequently amended or extended as
provided in this Agreement.
1.28 "Research Term" means, with respect to an Area and the Products
in the Area, the period during which research by Osiris in an Area is being
funded by Novartis.
1.29 "Royalty Term" means with respect to each Product in each
country the period of time equal to the longer of (a) ten (10) years from the
date of the First Commercial Sale of such Product in such country or (b) if
after such ten (10) year period the manufacture, use or sale of such Product
in such country is covered by a Valid Patent Claim of an Osiris Patent Right,
the term for which such Valid Patent Claim or any new Valid Patent Claim
remains in effect and would if in a granted patent be infringed but for the
license granted by this Agreement.
1.30 "Start-up Date" means 1 July 1997.
1.31 "Territory" means all countries in the world.
1.32 "Third Party" means any party other than Osiris, Novartis and
their Affiliates.
1.33 "Valid Patent Claim" means either (a) a claim of an issued and
unexpired patent which has not been held permanently revoked, unenforceable
or invalid by a decision of a court or other governmental agency of competent
jurisdiction, unappealable or unappealed within the time allowed for appeal,
and which has not been admitted to be invalid or unenforceable through reissue
or disclaimer or otherwise or (b) a claim of a pending patent application
which claim was filed in good faith and has not been abandoned or finally
disallowed without the possibility of appeal or refiling of said application.
ARTICLE 2. LICENSE GRANT
2.1 License Grant by Osiris: Subject to the terms and conditions of
this Agreement, Osiris hereby grants to Novartis an exclusive license, or
where applicable an exclusive sublicense, under Osiris Patent Rights and
Osiris Know-How to use, import, sell and offer to sell Product in the
Territory; to make and to have made Gene Therapy Product in the Territory; to
make and to have made MSC Product for sale and use in all countries of the
Territory other than North America; and to the extent that Novartis is granted
the right to make or have made MSC Product for sale and use in North America
under the provisions of Article 14.2 or the Supply Agreement entered between
the parties pursuant to Article 14.1, to make and to have made MSC Product
for sale and use in North America. It is expressly
understood that Novartis shall not have the right to grant a sublicense under
the licenses granted to Novartis hereunder, except as provided in Article 2.5.
2.2 Exclusivity Term in E.U.: Respecting E.U. Countries, the
exclusivity provided by Osiris in respect of a specific Product shall be
limited to a period of ten (10) years from First Commercial Sale of that
Product in an EU Country, provided, however, that in the E.U. Countries in
which Patent Rights relevant to that Product remain valid after expiration of
the ten-year period, the exclusivity will continue until expiration of said
Patent Rights. For avoidance of doubt, Novartis acknowledges that termination
of exclusivity in E.U. Countries pursuant to the preceding sentence shall not
reduce, impair or otherwise affect Novartis' obligation to continue to pay
royalties provided in Article 8 hereof, in such countries.
2.3 DARPA Agreement: It is expressly understood that no rights are
transferred by Osiris with respect to developments under the Agreement between
Defense Advanced Research Projects Agency (DARPA) and Osiris.
2.4 License Grant by Novartis:
2.4.1 Novartis on behalf of itself and its Affiliates grants to Osiris
an exclusive royalty free license in the Field under Novartis Know-How and
under Novartis Patents with respect to any and all Products in any and all
countries as to which Product and country(ies) the license granted to Novartis
by Osiris hereunder has been terminated under the provisions of Art. 4.7, 6.5,
6.6, 17.2, 17.3, or 17.4.
2.4.2 Novartis on behalf of itself and its Affiliates grants to Osiris
a royalty bearing worldwide license under Novartis Know-How and under Novartis
Patents to use, import, sell, offer to sell, make and have made any and all
products outside the Field. The license shall be exclusive except as to
Novartis and its Affiliates. The royalty shall be negotiated in good faith
between the parties and if the parties cannot reach agreement, the royalty
shall be submitted to arbitration pursuant to Schedule A hereto.
2.4.3 The licenses granted under Sections 2.4.1 and 2.4.2 include the
right to grant sublicenses.
2.5 Sublicenses:
2.5.1 Novartis shall have the right to grant a sublicense to any
Novartis Affiliate. Further, Novartis shall have the right to grant a
sublicense to a Third Party with the prior consent of Osiris, which shall not
be unreasonably withheld. In any sublicense granted by Novartis, Novartis
shall require the sublicensee to become bound to the terms and conditions of
Articles 6, 9.5, 16.1, 16.4, 18.2.2, 18.2.3, 18.4 and 18.6 of this Agreement,
with Osiris being made a third party beneficiary of such obligations of the
sublicense. A breach of such terms by the sublicensee shall be a breach by
Novartis under this Agreement. Any such sublicense shall prohibit any further
sublicensing and shall provide that a termination of Novartis' license shall
terminate the sublicensed rights.
2.5.2 To the extent that a party to this Agreement receives a license
under this Agreement which is a sublicense under an agreement with a Third
Party ("Third Party Agreement"), the party receiving such sublicense
understands and agrees as follows:
(i) The sublicense granted under this Agreement is subject to the
terms, limitations, restrictions and obligations of the Third
Party Agreement; and
(ii) such party will comply with the terms, obligations, limitations
and restrictions of such Third Party Agreement applicable to a
sublicensee, to the extent that such party is advised thereof.
2.5.3 Subject to the rights retained by Case Western Reserve
University (Case Western), Osiris is the exclusive licensee of Case Western to
US Patent 5,591,625 and to US patent applications [*CONFIDENTIALITY REQUESTED*]
and equivalents thereof, which are included in the Patent Rights set out in
Schedule B of this Agreement. Osiris warrants that it has the right to grant
sublicenses under such Patent Rights, and that Novartis shall have no direct
financial or other liability to Case Western as a result of entering into this
Agreement with Osiris.
2.5.4 If Novartis receives a sublicense under Osiris Know-How or
Osiris Patent Rights as to which Osiris has transferable rights under a
license from a Third Party, and said license was obtained from said Third
Party during the Research Term, then no payment additional to those specified
in Articles 7 and 8 shall be required in order for Novartis to make use of
such sublicense, and any royalties due to said Third Party shall be paid by
Osiris. If Novartis receives a sublicense under Osiris Know-How or Osiris
Patent Rights as to which Osiris has transferable rights under a license from
a Third Party, and said license was obtained from said Third Party subsequent
to the Research Term, then if Novartis wishes to make use of such sublicense
any royalties due to said Third Party shall be paid by Novartis in addition to
the royalty payments due to Osiris.
ARTICLE 3. KNOW-HOW
Insofar as this has not already occurred, Osiris shall disclose to
Novartis the existing Osiris Know-how within thirty (30) days of the Effective
Date. Osiris and Novartis shall further disclose to one another all Osiris
Know-how and Novartis Know-how hereinafter developed or acquired by either
party during the term of this Agreement, to the extent that it is licensed to
the other party.
ARTICLE 4. RESEARCH PROGRAM
4.1. Conduct of the Research Program: The conduct of the Research
Program shall be the primary responsibility of Osiris with participation by
Novartis and its Affiliates. The Research Program shall be conducted in
compliance, where required, with Good Laboratory Practice, and in all
material respects with applicable legal requirements, to attempt to achieve
efficiently and expeditiously its objectives described in the work plan set
forth in Schedule C hereto. Osiris and Novartis shall proceed diligently with
the work set out in the Research Program by using their respective good faith
efforts considering, in the case of Osiris, the funding received from Novartis.
4.2. Use of Research Funding: Osiris shall apply the research
funding it receives from Novartis under this Agreement for the purpose of
identification and pre-clinical development of Products, applying the number
of Full Time Equivalents (FTEs) specified in Schedule C. At least 25% (twenty
five percent) of the FTEs specified for each Area shall be assigned to the
Research Program in that Area within one (1) month from the Start-up Date, at
least 60% (sixty percent) within two (2) months from the Start-up Date, and at
least 100% (one hundred percent) within three (3) months from the Start-up
Date, whereby any under-allocation of FTEs during this initial
three (3) month period shall be made good by the first anniversary of the
Start-up Date. It is also understood and agreed that an FTE may be provided by
one, two or more persons. For each Area, a senior scientist, mutually
acceptable to both parties, shall be appointed as Program Leader for the
Research Program in that Area.
In no event shall Osiris be obligated to perform work under the Research
Program beyond that which is funded by Novartis, except as otherwise provided
in Art. 4.6. It is expressly understood that no representations or warranties
or agreement is made that the objectives set forth in the work plan will in
fact be achieved.
With respect to each Area, during the period which Novartis is
funding research in such Area under this Agreement, Osiris agrees not to
perform any research and development work for any Third Party in such Area.
It is also expressly understood that the research funding may be employed for
research to be performed by Osiris under this Agreement and/or for research to
be performed under a subcontract, as provided in Article 4.3.
4.3. Subcontracts: Subject to the provisions of Art. 16, Osiris and
Novartis may each subcontract portions of the Research Program to be performed
by them in the normal course of their business to a Third Party without the
prior consent of the other; provided, however, that the other party is
informed, and that either such Third Party has entered into an appropriate
confidentiality agreement with Osiris or Novartis, or such subcontracting
would not require the transfer of confidential information to the Third Party.
The use of subcontractors by Osiris shall not add to the financial liabilities
of Novartis under this Agreement, whether in terms of Research Funding, of
royalties, or in any other respect; however, the research funding may be used
for funding any such subcontracts.
4.4. Data: Osiris and Novartis and their respective Affiliates and
subcontractors shall each maintain records in sufficient detail and in good
scientific manner appropriate for patent purposes and as will properly reflect
all work done and results achieved in the performance of the Research
Program (including all data in the form required to be maintained under any
applicable governmental regulations). Osiris and Novartis shall each provide
the other the right to inspect such records, and shall provide copies of all
requested records, to the extent reasonably required for the performance of
the requesting party's obligations under this Agreement; provided, however,
that each party shall maintain such records and the information of the other
contained therein in confidence in accordance with Article 16 below and shall
not use such records or information except to the extent otherwise permitted
by this Agreement.
4.5 Term of Research Funding: The term during which Novartis will
fund the research of Osiris shall be determined independently for each of the
Areas. For each of the Bone Therapy and the Cartilage Therapy Areas,
independently, the term shall be five (5) years from the Start-up Date,
unless earlier terminated by Novartis in its sole discretion. Such notice of
early termination may be given by Novartis no later than twenty four (24)
months from the Start-up Date, to take effect at thirty (30) months from the
Start-up Date; or no later than forty two (42) months from the Start-up Date,
to take effect at forty eight (48) months from the Start-up Date. For the
Gene Therapy Area, the term shall be thirty (30) months from the Start up
Date provided, however, that Novartis shall have the right to extend such
term for an additional thirty (30) months with respect to the Gene Therapy
Area as it exists as of such date upon agreement by the parties to the funding
therefor, which funding shall
be no less than $500,000 per calendar quarter, and subject to termination by
Novartis, in its sole discretion, eighteen months after the start of such
extended term, by at least six months prior written notice.
4.6 Amount of Research Funding: Novartis will fund the research of
Osiris in the Field, subject to the provisions of Art. 4.5, by quarterly
payments in advance throughout the Research Term, beginning on the Start-up
Date. The amount of each of the first ten quarterly payments shall be
[*CONFIDENTIALITY REQUESTED*]. Thereafter, the amount of each quarterly payment
shall depend upon the agreed budget for those Areas in which research is still
being funded, but shall not be less than [*CONFIDENTIALITY REQUESTED*] if one
of the Cartilage Therapy and Bone Therapy Areas is being funded, and not less
than [*CONFIDENTIALITY REQUESTED*] if both of said Areas are being funded. This
funding shall provide the number of FTEs in each Area as specified in Schedule
C hereto, inclusive of personnel costs, lab materials and supplies, electronic
data processing expenditures, travel expenditures, depreciation, occupancy fees
and all other costs. One FTE shall be provided by Osiris for each
[*CONFIDENTIALITY REQUESTED*] of funding provided by Novartis; in addition,
Osiris shall provide, at its own cost and without further charge to Novartis,
one (1) FTE in the Cartilage Therapy Area and one (1) FTE in the Bone Therapy
Area in each full year of the Research Term for such Area, provided, however,
that Osiris shall not be obligated to provide such FTE in an Area as from the
date of notice of early termination of research funding for such Area according
to Art. 4.5.
4.7 Restriction of Rights on early Termination: If Novartis gives
notice of early termination of research funding for the Bone Therapy Area
and/or the Cartilage Therapy Area under the provisions of Article 4.5, the
Areas for which research funding has been terminated shall no longer be part
of the Field, the license granted to Novartis for MSC Product in each such
Area shall be terminated and Novartis shall have no further rights in respect
of such Area.
4.8 Scope of Gene Therapy Area:
4.8.1 Initial Designation: Within ninety (90) days of the Effective
Date, Novartis shall designate three genes or polypeptides which shall be used
for transducing MSCs for delivery of a gene and/or polypeptide and the use of
such transduced MSCs shall become part of the Gene Therapy Area.
4.8.2 Right of First Refusal: Novartis may at any time up to 31
December 1997 propose to Osiris that the use in transduced MSCs of one or more
of the specific genes or polypeptides in a list given to Osiris within ninety
(90) days of the Effective Date shall be added to the Gene Therapy Area within
this Agreement. The list shall include only those genes and polypeptides the
use of which Novartis in good faith believes may be added to the Gene Therapy
Area. When such genes and polypeptides are proposed, the parties shall then
discuss the financial terms upon which the Gene Therapy Area may be so
extended. Such terms [*CONFIDENTIALITY REQUESTED*] as set out in this
agreement. Non-financial terms of this Agreement shall not be affected. If the
parties have not reached agreement upon such terms within sixty (60) days
from the date of Novartis' proposal, Osiris may offer a license for such
subject matter to a Third Party provided that the financial terms thereof, as
a whole, are no more favorable to such Third Party than those last offered to
Novartis. If Osiris desires to offer a Third Party a license for such subject
matter at terms more favorable, then Osiris shall offer such more favorable
terms to Novartis and if within thirty (30) days of such offer, Novartis
informs Osiris that it is prepared to enter into an agreement with Osiris in
accordance with such terms, Osiris shall conclude such agreement with Novartis
upon such terms. If no such
statement is made by Novartis within said thirty (30) days, Osiris shall be
free to enter into an agreement in accordance with such terms with a third
party.
4.8.3 Right of First Negotiation: Novartis may at any time up to 31
December 1997 propose to Osiris that the use in transduced MSCs of one or more
genes or polypeptides other than those listed in Art. 4.8.2 above shall be
added to the Gene Therapy Area within this Agreement, and the parties shall
then discuss the financial terms upon which the Gene Therapy Area may be so
extended. Such terms [*CONFIDENTIALITY REQUESTED*] shall not change the
royalty rates as set out in this Agreement. Non-financial terms of this
Agreement shall not be affected. If the parties have not reached agreement
upon such terms within sixty (60) days from the date of Novartis' proposal,
Osiris shall be free to enter into a license agreement for such subject matter
with a Third Party without further reference to Novartis.
4.8.4 Amendment to Schedule C: When the scope of the Gene Therapy
Area is initially defined or extended by the provisions of Art. 4.8.1, 4.8.2
or 4.8.3, Schedule C of this Agreement shall be modified accordingly.
4.9 Visit to Premises: At any time during the Research Term for any
Area, Novartis members of the JSC or other designated employees of Novartis or
its Affiliates may upon reasonable notice visit the premises of Osiris or its
subcontractors in order to inform themselves of the progress of work funded by
Novartis under this Agreement.
ARTICLE 5. JOINT STEERING COMMITTEE
5.1 Membership and Responsibilities: A Joint Steering Committee
("JSC") shall be established, consisting of three (3) representatives
appointed by each of Novartis and Osiris. Each party may replace its JSC
representatives at any time, after discussion with the other party, with
subsequent written notice to the other party. Osiris and Novartis shall each
appoint one of their JSC representatives to be responsible for co-ordinating
communications between Osiris and Novartis (the "Primary Contact Person").
The JSC shall be chaired by a research manager appointed by Novartis. The JSC
shall have responsibility, inter alia, for:
(i) monitoring the progress of the parties' research in the Field
and assaying its overall scientific and therapeutic relevance
and competitiveness;
(ii) fostering the collaborative relationship between Osiris and
Novartis
(iii) facilitating all required technology transfer; and
(iv) reviewing and allocating annual FTEs, within the framework of
the contractually agreed funding level. Modifications of the
Research Program and of individual Program budget items within
the contractually agreed overall yearly funding level may be
made only with the approval of the JSC.
(v) clearance of scientific publications relating to the Field,
containing work from either party.
5.2. Quarterly Reports: Within thirty (30) days following the end of
each calendar quarter, Osiris and Novartis shall each provide to the members
of the JSC written reports which shall summarize in reasonable detail the work
each has performed under the Research Program during the preceding calendar
quarter by the parties and any subcontractors of either party, and, in the
case of Osiris, shall give an account of its allocation of FTEs in that
quarter. In addition, Osiris
shall report on a monthly basis the activities
and results of the FTEs assigned to the Research Program.
5.3 Decision Making: Decisions of the JSC shall be made by
unanimous approval. In the event the parties are unable to agree, the dispute
will be referred to Osiris's President (or designee of similar rank) and
Novartis's CEO (or designee of similar rank), who shall promptly meet in
person or by means of telephone or video conference and endeavour to resolve
the dispute in a timely manner. In the event such individuals are unable to
resolve the dispute, it shall be settled by binding arbitration in accordance
with Schedule A hereto.
5.4 JSC Meetings: During the Research Term, the JSC shall meet at
regular intervals, as agreed by the parties, in person at such locations as
the parties agree, or by means of telephone or video conference. With the
consent of the parties, other representatives of Osiris or Novartis may
attend JSC meetings as nonvoting observers. The party hosting a particular
JSC meeting shall promptly prepare and deliver to the members of the JSC,
within thirty (30) days after the date of each meeting, minutes of such
meeting setting forth, inter alia, all decisions of the JSC, and including a
report on the progress of the research in each Area. In case of telephone and
video conferences, this responsibility will alternate between the parties.
5.5 Voting: Each party shall have one vote at each JSC meeting and
a quorum for such a meeting shall require at least one member appointed by
each party. A failure to establish a quorum for a meeting on which a matter
is to be voted shall be considered a disagreement under Article 5.3.
ARTICLE 6. DEVELOPMENT OF PRODUCT
6.1 Responsibilities: Novartis will plan and execute all clinical
development and registration activities within the Field in the Territory, at
its own expense. Novartis shall own all registration dossiers, INDs and NDAs.
6.2 Reasonable Commercial Efforts: Novartis agrees to use
reasonable commercial efforts, similar to those used for products originating
in Novartis, to obtain NDA approval in all Primary Countries and to market and
sell Product in all Primary Countries as promptly as is reasonably
practicable, and thereafter to use reasonable commercial efforts, as for
products originating in Novartis, to continue to market and sell Product in
all Primary Countries.
6.3 Notification of Lack of Interest: If at any time Novartis does
not have a meaningful interest in developing, marketing and selling and
continuing to develop, market and sell any Product in any country, Novartis
shall notify Osiris promptly thereof.
6.4 Reporting: Novartis shall provide Osiris with written reports
within thirty (30) days after June 30 and December 31 of each year concerning
the efforts being made by Novartis, its Affiliates and licensees to research,
develop, obtain regulatory approval, market and sell Product, and shall
provide Osiris with any other information reasonably requested by Osiris in
this respect. To the extent that Novartis makes reports to the Joint Steering
Committee under Article 5.2, such reports shall satisfy the obligation of this
Article 6.4.
6.5 Right to Terminate for Primary Countries: In the event that
Novartis does not meet its obligations with respect to a Product in a Primary
Country, or Novartis notifies Osiris that Novartis does not have an interest
in continuing to develop, market or sell a Product in a Primary Country,
Osiris shall have the right to terminate the rights and licenses granted to
Novartis under this Agreement with respect to such Product in such country
or countries by sixty (60) days written notice and such rights and licenses
shall be terminated after sixty (60) days unless such failure is cured prior
thereto.
6.6 Right to Terminate for other Countries: In the event that
Novartis' rights are terminated with respect to a Product in a Primary
Country (other than by reason of Novartis surrendering rights in such Primary
Country) or in the event that Novartis notifies Osiris that Novartis does not
have an interest in developing or marketing or continuing to develop or market
a Product in a country other than a Primary Country, then in the case where
Novartis' rights have been terminated with respect to a Product in a Primary
Country, Osiris will have the right to terminate Novartis' right with respect
to such Product in any country other than a Primary Country for which Novartis
is not exerting reasonable commercial efforts, similar to those used for
products originating in Novartis, to research, develop, obtain regulatory
approval and to market and sell such Product in such a country by written
notice to Novartis and such rights shall be terminated in such country or
countries unless within sixty (60) days after such notice, Novartis cures such
failure; or in the case where Novartis notifies Osiris that it does not have
an interest in a country with respect to a Product, then Osiris shall have the
right to terminate Novartis' rights to such Product in such country by
written notice to Novartis.
ARTICLE 7. UPFRONT AND MILESTONE PAYMENTS
7.1 Upfront Payment: Novartis shall pay Osiris the sum of
$3,000,000 (three million dollars), due upon the Effective Date. This payment
shall be non-refundable and non-creditable against future earned royalties.
7.2 Milestone Payments
7.2.1 Bone Therapy Area: When each separate Product developed in the
Bone Therapy Area shall reach one of the following milestones, Novartis shall
pay the indicated sum to Osiris:
[*CONFIDENTIALITY REQUESTED*]
The total milestone payments made by Novartis in respect of the Bone
Therapy Area shall not [*CONFIDENTIALITY REQUESTED*] for each separate Product
which is commercially introduced.
7.2.2 Cartilage Therapy Area: One the first occasion on which a
Product developed in the Cartilage Therapy Area for the indication acute
articular hyaline cartilage injury shall reach one of the following
milestones, Novartis shall pay the indicated sum to Osiris:
[*CONFIDENTIALITY REQUESTED*]
For each occasion on which each separate Product developed for any indication
in the Cartilage Therapy Area, (other than the first Product for acute
articular hyaline cartilage injury, for which the milestone payments set out in
this Art. 7.2.2 above shall apply) shall reach one of the said milestones,
Novartis shall pay to Osiris the corresponding sum as set out in Art. 7.2.1
above. The total milestone payments made by Novartis in respect of the
Cartilage Therapy Area shall not exceed (a) [*CONFIDENTIALITY REQUESTED*] in
respect of the first Product to be commercially introduced for the indication
acute articular hyaline cartilage injury, [*CONFIDENTIALITY REQUESTED*] in
respect of the first separate Product which is commercially introduced for any
other indication in the Area, and (c) [*CONFIDENTIALITY REQUESTED*] for each
subsequent separate Product which is commercially introduced for any indication
in the Area.
7.2.3 Gene Therapy Area: When each separate Product developed in the
Gene Therapy Area shall reach one of the following milestones, Novartis shall
pay the indicated sum to Osiris:
[*CONFIDENTIALITY REQUESTED*]
The total milestone payments made by Novartis in respect of the Gene
Therapy Area shall not exceed [*CONFIDENTIALITY REQUESTED*], for each separate
Product which is commercially introduced.
7.2.4 Back-up Products: If a Product is abandoned during development
after one or more of the first three (3) milestone payments according to Art.
7.2.1, 7.2.2 or 7.2.3 above has been made, and if a back-up Product is
developed to replace such abandoned Product, then no milestone payment shall
be made in respect of the back-up Product which milestone payment has already
been made in respect of the abandoned Product.
7.2.5 Separate Products: A later developed or later introduced
Product shall be considered as separate from an earlier Product in the same
Area, and therefore as potentially giving rise to a new set of milestone
payments, if at least one of the following criteria is met:
a) [*CONFIDENTIALITY REQUESTED*]
b) [*CONFIDENTIALITY REQUESTED*]
c) [*CONFIDENTIALITY REQUESTED*]
In the event of a dispute between the parties as to whether or not a
later developed or later introduced Product is a separate Product according to
this Article 7.2.5, the dispute shall be settled by the arbitration procedure
of Schedule A to this Agreement.
7.2.6 Overlap of Area: If a Gene Therapy Product containing
transduced cells also meets the definition of an MSC Product, it shall be
considered as an MSC Product for the purpose of determining milestone payments
under this Agreement, and only the milestone payments appropriate for the Bone
Therapy Area or the Cartilage Therapy Area, as the case may be, shall be
payable by Novartis.
7.3 Refunds and Credits: The milestone payments made according to
Art. 7.2 above shall be non-refundable, [*CONFIDENTIALITY REQUESTED*], for the
same Product, provided that the total royalties due within any one calendar
year, as adjusted by Art. 8.3 if applicable, [*CONFIDENTIALITY REQUESTED*] as
a result of this provision shall be carried forward for future deduction.
7.4 Reports: Novartis shall promptly report to Osiris the
occurrence of any event which would trigger a milestone payment according to
Art. 7.2 above.
ARTICLE 8. ROYALTIES
8.1 Royalty levels:
8.1.1 MSC Products: Novartis shall pay Osiris, for each separate MSC
Product, the following royalties as a percentage of all Net Sales of that
Product in the Territory by Novartis, its Affiliates, licensees and
sublicensees:
Annual World-wide Net Sales (Million dollars) Applicable royalty
[*CONFIDENTIALITY REQUESTED*]
For the avoidance of doubt, the above table means, for example, that the
royalty payable upon world-wide Net Sales of a Product of [*CONFIDENTIALITY
REQUESTED*].
If a Product has world-wide Net Sales above [*CONFIDENTIALITY
REQUESTED*], the applicable royalty shall be calculated as a percentage of the
total Net Sales by applying the overall royalty rate shown below:
Annual World-wide Net Sales (Million dollars) Applicable overall royalty
[*CONFIDENTIALITY REQUESTED*]
8.1.2 Gene Therapy Products: Novartis shall pay Osiris, for each
individual Gene Therapy Product, the following royalties as a percentage of
all Net Sales of that Product in the Territory made by Novartis, its
Affiliates, licensees and sublicensees:
Annual world-wide Net Sales (Million dollars) Applicable royalty
[*CONFIDENTIALITY REQUESTED*]
For the avoidance of doubt, the above table means, for example, that
the royalty payable upon world-wide Net Sales of a Gene Therapy Product
of [*CONFIDENTIALITY REQUESTED*]
8.1.3. Overlap of Areas: If a Gene Therapy Product containing
transduced cells also meets the definition of an MSC Product, it shall be
considered as an MSC Product for the purpose of determining royalty payments
under this Agreement, and the applicable royalty rates will be as set out in
Art. 8.1.1.
In no event shall royalty payments be additive for the same Product.
8.2 Third Party Royalties: If Novartis is required to pay royalties
to any Third Party in order to exercise its rights to sell a Product in a
country, then [*CONFIDENTIALITY REQUESTED*] of the royalties payable to such
Third Party in any calendar quarter for such Product in such country shall be
deductible from the royalties paid to Osiris under this Agreement in respect
of that Product for the same calendar quarter for such Product in such
country, provided that a) such deduction shall not reduce the royalty payment
due under Art. 8.1 in respect of that Product for that quarter in such country
by [*CONFIDENTIALITY REQUESTED*],and b) in no event shall the royalty due
[*CONFIDENTIALITY REQUESTED*] of Net Sales for an MSC Product or
[*CONFIDENTIALITY REQUESTED*]of Net Sales for a Gene Therapy Product. For the
purposes of this Art. 8.2, the royalties payable for a Product in a country
shall be calculated based upon the average worldwide royalty rate for such
Product in the applicable calendar year
8.3 Unlicensed Competition: If in any country a Third Party sells a
Product ("Third Party Product") and such Third Party Product in such country
is not covered by a Valid Patent Claim of an Osiris Patent Right and/or a
patent or patent application owned by or licensed to Novartis and in such
country such Third Party Product directly competes with a Product sold by
Novartis for which Novartis owes royalties to Osiris under this Agreement,
then for the period in which the sales of such Third Party Product in such
country are [*CONFIDENTIALITY REQUESTED*] of the sales of the Product sold
by Novartis in such country, the royalties owed by Novartis for such Product
in such country for such period shall be [*CONFIDENTIALITY REQUESTED*] of the
royalties provided in Section 8.1, but in no event shall the royalties owed
for such Product in such country when combined with [*CONFIDENTIALITY
REQUESTED*] provided under Article 8.2 reduce the royalties for such Product
in such country by [*CONFIDENTIALITY REQUESTED*]. For the purposes of this
Art. 8.3, the royalties payable for a Product in a country shall be calculated
based upon the average worldwide royalty rate for such Product in the
applicable calendar year
8.4 Paid-up License: For each country, following expiration of the
Royalty Term in respect of a Product, Novartis shall have a perpetual
nonexclusive transferable paid-up royalty free license under Osiris Know-How
and under Osiris Patent Rights, in each case which are in existence at the end
of the Royalty Term, to use and sell that Product in that country and to make
Product for use and sale in that country, subject to any Supply Agreement for
North America as contemplated in Article 14.1. Any such transfer shall be
subject to the confidentiality and non-use obligations of this Agreement.
ARTICLE 9. RECORDS AND PAYMENTS
9.1 Research Funding, Upfront and Milestone Payments: Payments to
be made under Articles 4.6, 7.1 and 7.2 shall be paid by Novartis upon
presentation of an invoice by Osiris. Payment shall be made no later than (a)
the due date or (b) thirty (30) days after receipt of the corresponding
invoice, whichever is the later.
9.2 Royalties: Royalties as provided in Article 8 shall be
calculated quarterly on the last day of each calendar quarter during the term
of this Agreement and shall be paid to Osiris within sixty
(60) days after said last day with an accounting report showing the amount of
each Product sold by Novartis and its Affiliates, licensees and sublicensees
during each quarterly period; total receipts for each Product; an accounting
and calculation of Net Sales for each such Product; an accounting for amounts
deductible, if any against royalty; and total royalties payable to Osiris for
each Product. In
addition, Novartis shall respond to reasonable inquiries by Osiris with
respect to any report made to Osiris under this Agreement.
9.3 Royalty Calculation: Royalties provided to Osiris shall be
determined on the basis of Novartis' monthly standard account of sales
which represents the conversion of all local currency sales to Swiss Francs at
the average monthly exchange rate of sales, as calculated by Novartis in the
ordinary course of business. The royalty report provided under Art. 9.2 shall
provide information as to such calculation for each Product.
9.4 Method of Payment: Royalties and payments provided to Osiris
shall be made in United States dollars by telegraphic transfer to Osiris's
bank account as directed by Osiris. The exchange rate between the Swiss Franc
and US Dollar shall be the rate published in the London Times at the close of
business in London on the last business day of the calendar quarter for which
the royalties are being paid.
9.5 Records: Novartis and its Affiliates shall keep accurate
records and books of accounts in accordance with generally accepted accounting
principles consistently applied and containing all the data reasonably
required for calculation and verification of payments made. During the term of
this Agreement and two (2) years thereafter, Novartis shall retain accounting
records of the previous three (3) years. At Osiris's request, Novartis shall
make records available, no more than twice per year, during reasonable working
hours for review by an independent accounting firm acceptable to both parties,
at Osiris's expense, for the sole purpose of verifying their accuracy. In the
event that any such review indicates an underpayment of royalties by Novartis
in excess of five percent (5%), Novartis shall pay the cost of such review.
Any reported underpayment of royalties shall be immediately due and payable.
9.6 Confidentiality: Osiris agrees that all information subject to
review under Art. 9.5. or under any sublicense agreement is confidential and
that Osiris shall cause its accountant to retain all such information in
confidence.
9.7 Taxes: All royalty amounts required to be paid to Osiris
pursuant to this Agreement shall be paid with deduction for withholding for or
on account of any taxes (other than taxes imposed on or measured by net
income) or similar governmental charge imposed by a jurisdiction other than
the U.S. on Osiris ("Withholding Taxes"). Novartis shall provide Osiris a
certificate evidencing payment of any Withholding Taxes hereunder and provide
reasonable assistance to recover such taxes.
ARTICLE 10. EQUITY INVESTMENT
Novartis or its designate shall make an equity investment of $10 Million in
Osiris according to the terms and conditions set out in the Stock Purchase
Agreement of even date herewith.
ARTICLE 11. INVENTIONS AND PATENTS
11.1. Ownership of Inventions: The entire right, title and interest in
all inventions within the Field, and any patent applications, or patents based
thereon (collectively, the "Inventions") that are made or conceived (i) solely
by employees of Osiris or others acting on behalf of Osiris ("Osiris
Inventions") shall be owned by Osiris (ii) solely by employees of Novartis or
others acting on behalf of Novartis ("Novartis Inventions") shall be owned by
Novartis and (iii) jointly by employees
or others acting on behalf of Osiris and Novartis ("Joint Inventions") shall
be owned jointly by Novartis and Osiris. Each party shall promptly disclose
to the other party the Inventions made by employees or others acting on behalf
of such party to the extent that the other party has a license thereto under
this Agreement. Each party represents and agrees that all employees and
other persons acting on its behalf in performing its obligations under this
Agreement shall be obligated under a binding written agreement to assign to
such party, or as such party shall direct, all Inventions made by such
employee or other person, or in the case of non-employees working for other
companies or institutions on behalf of Osiris or Novartis and using Novartis
research funding, Osiris or Novartis, as applicable, shall have the right to
license all Inventions made by such non-employees on behalf of Osiris or
Novartis, as applicable, in accordance with the policies of said company or
institution. Osiris and Novartis agree to undertake to enforce such
agreements (including, where appropriate, by legal action) considering, among
other things, the commercial value of such Inventions.
11.2. Patent Applications
11.2.1. Priority filings: When an Osiris Invention or a Joint
Invention has been made which may reasonably be considered to be patentable
and as to which Novartis is licensed under this Agreement, a priority patent
application shall be filed by Osiris in the United States as soon as
reasonably possible. Osiris shall give Novartis an opportunity to review the
text of any application for a Joint Invention before filing and shall supply
Novartis with a copy of the application as filed, together with a note of its
filing date and serial number. The costs of such priority filings shall be
borne by Osiris in the case of an Osiris Invention, and by Novartis in the
case of a Joint Invention.
11.2.2. Foreign Filing Decisions: No later than nine (9) months
following the filing date of a priority patent application filed according to
Art. 11.2.1., the parties shall consult together, through the JSC or
otherwise, and agree whether such priority application should be abandoned
without replacement; abandoned and refiled; proceeded with in the country of
filing only; or used as the basis for a claim of priority under the Paris
Convention for corresponding applications in other countries. The same shall
apply to any priority patent application which, as of the Effective Date, is
part of the Osiris Patent Rights and for which no corresponding foreign
applications have been filed.
11.2.3 Osiris Patent Rights: Any patent application filed in any
country in respect of an Osiris Invention as to which Novartis is licensed
under this Agreement shall be added to the Osiris Patent Rights.
11.2.4 Prosecution and Maintenance: Osiris shall bear cost and
responsibility for prosecution and maintenance of the Osiris Patent Rights. At
regular intervals, or upon request, Osiris shall provide Novartis with updated
information on its patent portfolio as to which Novartis is licensed under
this Agreement, and Schedule B hereto shall be amended accordingly. Novartis
shall bear the cost for prosecution and maintenance of the Joint Patent Rights
with Osiris having responsibility therefor in the United States and Novartis
in the rest of the world. Novartis and Osiris shall consult with each other as
to the prosecution and maintenance of such patent applications and patents. If
at any time Novartis or Osiris shall elect not to continue to prosecute or
maintain any patent application or patent included in the Joint Patent Rights
or the Osiris Patent Rights respectively, the party making such election shall
so notify the other party within thirty (30) days of such determination. If
Novartis shall elect not to continue to prosecute or maintain any patent
application or patent included in the Joint Patent Rights, then that patent
application or patent shall be transferred to the sole ownership of Osiris,
and shall not be included in the licensed Osiris Patent Rights. If Osiris
shall elect not to continue to prosecute or maintain any patent application
or patent included in the Osiris Patent Rights, then Osiris shall give
Novartis the timely opportunity to direct Osiris to continue to prosecute
or maintain the patent application or patent in Osiris' name and at Novartis'
expense.
11.3. Notification of Patent Term: Osiris shall notify Novartis of
the issuance of each patent included within the Osiris Patent Rights as to
which Novartis is licensed under this Agreement, giving the date of issue,
patent number and normal expiry date for each such patent. Osiris shall
notify Novartis of each filing for patent term restoration under the United
States Drug Price Competition and Patent Term Restoration Act of 1984, any
allegations of failure to show due diligence, and all awards of patent term
restoration in the United States and extensions (including the grant of
Supplemental Protection Certificates) in other countries with respect to the
Osiris Patent Rights as to which Novartis is licensed under this Agreement.
Novartis shall make corresponding notifications to Osiris in respect of any
patent included within the Joint Patent Rights, or within the Novartis Patent
Rights licensed to Osiris under this Agreement.
ARTICLE 12. PATENT INFRINGEMENT
12.1 Enforcement: Each party shall promptly notify the other of its
knowledge of any actual or potential infringement of the Osiris Patent Rights
or the Joint Patent Rights (collectively, the "Patent Rights") by a Third
Party with respect to a Product as to which Novartis is licensed under this
Agreement. Novartis shall have the right to enforce the Patent Rights in the
Territory in its discretion with respect to a Product as to which Novartis is
licensed under this Agreement. If within six (6) months following receipt of
notice from Osiris, Novartis fails to take action to halt infringement, Osiris
shall, in its sole discretion, have the right, at its expense, to take such
action in its own name or jointly with Novartis. Each party agrees to
render such reasonable assistance as the prosecuting party may request. Costs
of maintaining any such action therefrom shall be paid by the party or parties
bringing the action. Neither party shall enter into any settlement which
admits or concedes that any aspect of the Patent Rights is invalid or
unenforceable without the prior written consent of the other party.
Notwithstanding the foregoing, in the event either party receives notice of a
Third Party who has filed an Abbreviated NDA ("ANDA") or paper NDA with
respect to a Product as to which Novartis is licensed under this Agreement
containing a certification of patent invalidity or non-infringement of one or
more of the Osiris Patent Rights in the United States, the notified party
shall notify the other party within ten (10) days thereof. Novartis shall have
the right, but not the obligation, to bring an action for infringement within
twenty (20) days from the date it receives notice, or if Novartis fails to
bring such action, Osiris shall, in its sole discretion, have the right, at
its expense, to take such action in its own name or jointly with Novartis.
Any recovery of damages by Novartis with respect to any such suit shall be
applied first to satisfy the expenses and legal fees of Novartis with respect
to such suit. The balance remaining from any such recovery shall be divided
between Novartis and Osiris such that Osiris receives the royalty Osiris would
have received under this Agreement if such sales had been made by Novartis.
With respect to any such suit brought by Novartis, Osiris shall have the right
within its sole discretion to join such suit as a plaintiff at its sole cost
and expense.
12.2 Infringement Claims: If the manufacture, sale or use of Product
pursuant to this Agreement results in any claim, suit or proceeding lodged by
a Third Party alleging patent infringement by Osiris or Novartis (or its
licensees or sublicensees), or by an Affiliate of Osiris or Novartis, such
party shall promptly notify the other party hereto in writing. The party
subject to such claim shall have the exclusive right to defend and control the
defence of any such claim, suit or proceeding, at its own expense, using
counsel of its own choice; provided, however, that Novartis shall not enter
into any settlement which admits or concedes that any aspect of the Osiris
Patent Rights is invalid or unenforceable without the prior written consent of
Osiris. The party subject to the claim shall keep the other party hereto
reasonably informed of all material developments in connection with any such
claim, suit or proceeding.
12.3 Enforcement by Osiris: The rights and obligations of Article
12.1 shall apply mutatis mutandis with respect to Novartis Patent Rights,
Products and products outside the Field as to which Osiris is licensed under
this Agreement.
ARTICLE 13. TRADEMARKS
Novartis shall be free to use and to register in any trademark office
any trademark for use with Product it desires in its sole discretion.
Novartis shall own all right, title and interest in and to any trademark in
its own name during and after the term of this Agreement. Nothing in this
Article 13 is to be construed as granting any rights to Novartis with respect
to any trademark owned by Osiris.
ARTICLE 14. MANUFACTURING AND SUPPLY
14.1 Supply by Osiris: Novartis shall notify Osiris when any MSC
Product being developed by Novartis or its Affiliates enters into Clinical
Phase 3. Within thirty (30) days of such notification, Osiris may at its
discretion notify Novartis that Osiris wishes to supply Novartis and its
Affiliates with that MSC Product for sale in North America. If Osiris does not
make such notification within said thirty (30) day period, then Novartis'
license under this Agreement shall include a license to make and have made
said MSC Product for sale in North America. If such notification by Osiris is
timely made, then, subject to Art. 14.3 below, Novartis and its Affiliates
agree to purchase exclusively from Osiris, and Osiris agrees to sell
exclusively to Novartis and its Affiliates during the term of the Agreement,
Novartis and its Affiliates' total requirements for said MSC Product for sale
in North America. No later than ninety (90) days after such notification by
Osiris, the parties or their Affiliates shall enter into a separate
Manufacturing, Supply and Distribution Agreement ("Supply Agreement") for such
Product which shall provide, among other matters, for a system of advance
ordering of requirements by Novartis and its Affiliates; for quality control
of Product; and for a system whereby, for autologous MSC products, bone
marrow is collected from patients, dispatched to an Osiris manufacturing
facility for isolation and culture of MSCs and manufacture of Product, and
the Product is returned to the doctor or hospital at which the Product will be
delivered to the patient. If no agreement is reached within the above ninety
(90) day period on the terms of such Supply Agreement, the terms shall be
settled by binding arbitration as described in Schedule A. Such Supply
Agreement shall provide for a full and free mutual exchange of manufacturing
technology for such Product between the parties. Such Supply Agreement shall
terminate no later than the expiry of Novartis' obligation to pay royalties on
sales of said MSC Product in all North American countries. No later than six
(6) months before such date, Novartis shall notify Osiris whether it wishes to
extend the supply period for all or part of Novartis' North American
requirements for Product for a further period, in which case a further
Supply Agreement will be negotiated in good
faith and entered into by the parties to the first Supply Agreement. If no
such further Supply Agreement is concluded between the parties, then Novartis
or a Novartis Affiliate shall have the right to manufacture Product itself or
have Product manufactured by a Third Party of its choice.
14.2 U.S. Manufacturing Facility: The Supply Agreement shall provide
that Osiris will assume full cost and responsibility for constructing,
operating and maintaining one or more United States manufacturing facilities
together capable of supplying the expected commercial requirements of Novartis
and its Affiliates in North America with respect to MSC Product for which an
NDA has been approved in the United States. Such Supply Agreement shall
provide that if Osiris is unable to supply such MSC Product in accordance with
the forecasting requirements set forth in such Agreement, then to the extent
that Osiris cannot meet such requirements, and for the period for which Osiris
cannot meet such requirements, Novartis or a Novartis Affiliate shall have the
right to manufacture itself or to have a Third Party manufacture such MSC
Product. Such period shall be extended to the extent that a Thirty Party
manufacturer requires Novartis to obligate itself to a longer period of
supply, whereby the Supply Agreement shall define a maximum duration for such
permissible extension. The Supply Agreement shall give a precise definition of
the term "unable to supply". Osiris shall provide Novartis or such Third Party
with sufficient technical information to enable the manufacture of such
Product, all under suitable confidentiality requirements and requirements that
it be used only to the extent necessary to manufacture for Novartis and its
Affiliates the amount of MSC Product which Osiris cannot provide, and for the
period for which Novartis is required to obligate itself to have a Third Party
manufacture such MSC Product.
14.3 Supply Price: The Supply Agreement shall provide that Osiris
shall supply Product to Novartis and its Affiliates at [*CONFIDENTIALITY
REQUESTED*], and shall set out the elements which are to be taken into
account in calculating [*CONFIDENTIALITY REQUESTED*]. It shall further
provide that if a Third Party supplier can manufacture MSC Product in the
United States of a quality which is equivalent to that provided by Osiris,
without using Osiris' proprietary information, under the same terms and
conditions and specifications as that provided in the Supply Agreement, and
the bona fide price which is to be charged by such Third Party to Novartis and
its Affiliates for such MSC Product is [*CONFIDENTIALITY REQUESTED*] of the
price being charged by Osiris, then Novartis and its Affiliates shall have the
right to purchase such MSC Product from such Third Party unless Osiris reduces
the price charged to Novartis and its Affiliates for such MSC Product to the
price charged by such Third Party. In addition, the Supply Agreement shall
also provide that if Novartis itself or by an Affiliate is able to produce
Product in its own manufacturing facility in the United States (after making
allowance for economy of scale adjustments) which is of equivalent quality
and which meets the specifications of the MSC Product to be provided by
Osiris and Novartis' cost for producing such MSC Product is [*CONFIDENTIALITY
REQUESTED*] of Osiris' cost for producing such MSC Product, with such costs
being calculated on an equivalent basis, then Novartis and its Affiliates
shall have the right to manufacture such MSC Product in such facility in the
United States unless Osiris reduces the cost for such MSC Product used
in calculating the price to be charged to Novartis for such MSC Product such
that it is equal to Novartis' cost for producing such MSC Product.
14.4 Gene Therapy Products: Novartis shall have the right to
manufacture Gene Therapy Products for sale in any country of the Territory,
including North America. If Novartis does not intend by itself or by an
Affiliate to manufacture Gene Therapy Products for sale in North America,
Novartis shall obtain its requirements of MSCs for Gene Therapy Products for
sale in North America from Osiris,
upon the same conditions as set out above for MSC Products, as specified
in a corresponding Supply Agreement. Any vectors for the transformation of
such MSCs shall be manufactured by Novartis or its Affiliate.
14.5 Non-Commercial Supply: All quantities of Product reasonably
required by Novartis for commercial samples and clinical trials shall be
supplied by Osiris at cost price plus [*CONFIDENTIALITY REQUESTED*].
ARTICLE 15. PRODUCT LIABILITY
15.1 Indemnification by Novartis: Novartis shall defend, indemnify
and hold harmless Osiris, Affiliates of Osiris, licensors of Osiris, and their
respective directors, officers, shareholders, agents and employees (each an
"Osiris Indemnified Party"), from and against any and all liability, loss,
damages and expenses (including attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted against any of
them arising out of the manufacture, possession, distribution, use, testing,
sale or other disposition of Products by or through Novartis or its
Affiliates, licensees or sublicensees. Novartis' obligation to defend,
indemnify and hold harmless shall include claims, demands, costs or judgments,
whether for money damages or equitable relief by reason of alleged personal
injury (including death) to any person or alleged property damage, provided,
however, the indemnity shall not extend to any claims against an Osiris
Indemnified Party which result from the gross negligence or willful misconduct
of an Osiris Indemnified Party. Novartis shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by
Novartis hereunder, including the right to select counsel acceptable to Osiris
to defend Osiris, and to settle any claim, provided that, without the written
consent of Osiris (which shall not be unreasonably withheld or delayed),
Novartis shall not agree to settle any claim against Osiris to the extent such
claim has a material adverse effect on Osiris. The provisions of this
paragraph shall survive and remain in full force and effect after any
termination, expiration or cancellation of this Agreement and Novartis'
obligation hereunder shall apply whether or not such claims are rightfully
brought.
15.2 Indemnification by Osiris: Osiris shall defend, indemnify and
hold harmless Novartis and its Affiliates, licensors of Novartis, and their
respective directors, officers, shareholders, agents and employees (each a
"Novartis Indemnified Party"), from and against any and all liability, loss,
damages and expenses (including attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted against any of
them arising out of the manufacture, possession, distribution, use, testing,
sale or other disposition of Product by or through Osiris or its Affiliates
(or their licensees or sublicensees) as to which product Osiris has been
granted a license by Novartis under this Agreement. Osiris' obligation to
defend, indemnify and hold harmless shall include claims, demands, costs or
judgments, whether for money damages or equitable relief by reason of alleged
personal injury (including death) to any person or alleged property damage,
provided, however, the indemnity shall not extend to any claims against an
indemnified party which result from the gross negligence or willful misconduct
of a Novartis Indemnified Party. Osiris shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by
Osiris hereunder, including the right to select counsel acceptable to Novartis
to defend Novartis, and to settle any claim, provided that, without the
written consent of Novartis (which shall not be unreasonably withheld or
delayed), Osiris shall not agree to settle any claim against Novartis to the
extent such claim has a material adverse effect on Novartis. The provisions
of this paragraph shall survive and remain in full force and effect after any
termination,
expiration or cancellation of this Agreement and Osiris' obligation
hereunder shall apply whether or not such claims are rightfully brought.
15.3 Procedure in Event of Claim: Any Osiris Indemnified Party or
Novartis Indemnified Party that intends to claim indemnification under this
Article 15 (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor
shall assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an Indemnitee shall have the right to retain
its own counsel, with the fees and expenses to be paid by the Indemnitor if
Indemnitor does not assume the defense; or, if representation of such
Indemnitee by the counsel retained by the Indemnitor would be inappropriate
due to actual or potential differing interests between such Indemnitee and any
other party represented by such counsel in such proceedings. The indemnity
agreement in this Article 15 shall not apply to amounts paid in settlement
of any loss, claim, damage, liability or action if such settlement is effected
without the consent of the Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, if prejudicial to
its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 15, but the omission to
deliver notice to the Indemnitor will not relieve it of any liability
that it may have to the Indemnitee otherwise than under this Article 15. The
Indemnitee under this Article 15, its employees and agents, shall cooperate
fully with the Indemnitor and its legal representatives in the investigation
of any action, claim or liability covered by this indemnification. In the
event that each party claims indemnity from the other and one party is
finally held liable to indemnify the other, the Indemnitor shall additionally
be liable to pay the reasonable legal costs and attorneys' fees incurred by
the Indemnitee in establishing its claim for indemnity.
15.4 Reporting: Each party hereto agrees to report promptly to the
other party any information concerning serious or unexpected side effects,
injury, toxicity, reactions or any unexpected event associated with clinical,
investigational or commercial use whether or not finally attributable to
Product. Such information shall also include pre-existing diseases, syndromes,
or abnormal diagnostic tests results which re-appear or are exacerbated by use
of Product. Upon receipt of such information by either party hereto, both
parties shall promptly consult each other and use best efforts to arrive at a
mutually acceptable procedure for taking the appropriate actions under the
circumstances; provided, however, that nothing contained herein shall restrict
the right of either party to make a submission to a regulatory authority or
take other actions it deems to be appropriate or necessary.
ARTICLE 16. SECRECY
16.1 Confidential Information: Except as otherwise contemplated by
this Agreement, any information supplied by one party to the other pursuant
to, or in contemplation of, this Agreement shall be retained in confidence and
not used or disclosed by the recipient during the term of this Agreement and
for five (5) years thereafter. The confidentiality obligations provided herein
shall not apply to information which
(i) is or becomes known publicly through no fault of the receiving party;
(ii) is obtained by the receiving party without duty of non-disclosure from a
Third Party entitled to disclose it;
(iii) was already known by the receiving party at the time of disclosure
hereunder as shown by prior written records of the receiving party; or
(iv) is developed by the receiving party independently of
information obtained or disclosed hereunder.
16.2 Permitted use: Notwithstanding the provisions of the above,
each party shall have a right to use such information for development,
production and marketing of products, processes and services in accordance
with the licenses granted under this Agreement as provided in this Agreement
and further has a right to disclose such information to a governmental agency
or other competent body as and when required by law and regulation, or to an
Affiliate. Notwithstanding the provisions of the above, each party shall have
a right to disclose such information to a Third Party for the purpose of
exercising rights granted to it under this Agreement provided that such Third
Party enters into an agreement of confidentiality and non-use essentially
identical to those set forth in this Agreement and that such Third Party
agrees that the party whose confidential information is being disclosed to
such Third Party shall be a third party beneficiary with respect to such
obligation of confidentiality and non-use.
16.3 Nondisclosure of terms: Each of the parties agrees not to
disclose to any Third Party the terms of this Agreement without the prior
written consent of the other party, except to such party's attorneys,
advisors, investors, potential investors and others on a need to know basis
under circumstances that reasonably ensure the confidentiality thereof, or to
the extent required by law, rules and regulations (including, but not limited
to, disclosure required by U.S. securities laws). Notwithstanding the
foregoing, the parties shall agree upon a press release to announce the
execution of this Agreement, thereafter, Osiris and Novartis may each disclose
to Third Parties the information contained in such press release without the
need for further approval by the other. Other than the above, neither party
nor its officers and employees shall make any public statements as to the
contents of this Agreement without the prior written consent of the other
party, which consent shall not be unreasonably withheld.
16.4. Publications: During the term of this Agreement, Osiris and
Novartis each acknowledge the other party's interest in publishing certain of
its results to obtain recognition within the scientific community and to
advance the state of scientific knowledge. Each party also recognizes the
mutual interest in obtaining valid patent protection. Consequently, either
party, its employees or consultants wishing to make a publication (including
any oral disclosure made without obligation of confidentiality) relating to
work performed by such party as part of the Research Program (the "Publishing
Party") shall transmit to the other party (the "Reviewing Party") a copy of
the proposed written publication at least forty-five (45) days prior to
submission for publication; or an abstract for oral disclosure or poster
presentation at least fifteen (15) days prior to submission of the abstract;
or slides or overheads for an oral presentation without abstract at least
fifteen (15) days prior to the oral disclosure. The Reviewing Party shall
have the right (a) to propose modifications to the publication for patent
reasons and (b) to request a delay in publication or presentation in order
to protect patentable information. If the Reviewing Party requests such a
delay, the Publishing Party shall delay submission or presentation of the
publication
for a period of sixty (60) days to enable patent applications
protecting each party's rights in such information to be filed. Upon the
expiry of forty-five (45) days, in the case of proposed written disclosures,
or fifteen (15) days, in the case of an abstract of proposed oral disclosures,
from transmission of such proposed disclosures to the Reviewing Party, the
Publishing Party shall be free to proceed with the written publication or the
oral presentation, respectively, unless the Reviewing Party has requested the
delay described above. Nothing in this Article 16.4 is to be construed as
permitting a party to disclose or publish confidential information of the
other party without the other party's permission.
ARTICLE 17. TERM AND TERMINATION
17.1 Term: Except as set forth below, the term of this Agreement
shall begin as of the Effective Date and continue in full force and effect, on
a country-by-country basis, unless terminated earlier as provided in this
Article 17, until Novartis has no remaining royalty payment obligations in
any country.
17.2 Termination for Cause: Either party to this Agreement may
terminate this Agreement in the event that the other party shall have
materially breached or defaulted in the performance of any of its material
obligations hereunder, and such breach or default shall have continued for
thirty (30) days with respect to a payment breach or for sixty (60) days with
respect to other breaches after written notice thereof was provided to the
breaching party by the nonbreaching party. Any termination shall become
effective at the end of such thirty (30) or sixty (60) day period unless the
breaching party has cured any such breach or default prior to the expiration
of the thirty (30) or sixty (60) day period. A breach under any Supply
Agreement entered into by the parties pursuant to Article 14.1 shall be a
breach of this Agreement.
17.3 Termination for Insolvency: If voluntary or involuntary
proceedings by or against a party are instituted in bankruptcy under any
insolvency law, or a receiver or custodian is appointed for such party, or
proceedings are instituted by or against such party for corporate
reorganization or the dissolution of such party, which proceedings, if
involuntary, shall not have been dismissed within sixty (60) days after the
date of filing, or if such party makes an assignment for the benefit of
creditors, or substantially all of the assets of such party are seized or
attached and not released within sixty (60) days thereafter, the other party
may immediately terminate this Agreement effective upon notice of such
termination.
17.4 Permissive Termination: At any time after the end of the
Research Term for all Areas, Novartis may terminate this Agreement at its
discretion upon one hundred and eighty (180) days written notice.
17.5 Effect of Termination:
17.5.1: Upon termination of this Agreement by Osiris or Novartis in
accordance with Article 17.2 or 17.3, or by Novartis in accordance with 17.4 ,
the licenses granted to Novartis hereunder shall be forthwith terminated, and
Novartis shall cease to develop and market Product and discontinue the use of,
and return to Osiris within sixty (60) days after termination, all Osiris Know-
how (including INDs and NDAs, if any) and shall assign, free of charge, to
Osiris, any governmental approvals of Novartis with respect to Product to
assure an orderly transfer of rights and transition of responsibility for such
documentation. Notwithstanding the above, Novartis may sell existing
inventory of Product for up to six (6) months after the date of termination,
provided royalties are paid thereon. The provisions of this Article 17.5.1
shall also be applicable, mutatis mutandis, to the termination of a license
to a Product in a country according to Art. 6.5 or 6.6.
17.5.2: Termination of this Agreement for any reason shall not release
any party hereto from any liability which, at the time of such termination,
has already accrued to the other party or which is attributable to a period
prior to such termination, nor preclude either party from pursuing all rights
and remedies it may have hereunder or at law or in equity with respect to any
breach of this Agreement.
17.6 Survival: Articles 2.4, 9.5, 13, 15, 16, 17.5.2, 17.6 & 18 of
this Agreement shall survive the expiration or termination of this Agreement
for any reason.
ARTICLE 18. MISCELLANEOUS PROVISIONS
18.1 Governing Laws: This Agreement and any dispute arising from
the construction, performance or breach hereof shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without resort to its choice of law principles.
18.2 Warranties & Covenants
18.2.1: Osiris and Novartis each warrants to the other that it has full
right and authority to enter into this Agreement; and that the performance of
this Agreement does not conflict with any obligations under other contracts,
or with obligations under funding schemes from any private or public funding
agency.
18.2.2 Novartis agrees that Novartis will use Novartis Know-How with
respect to MSCs or products produced thereby and Osiris Know-How only for
research, development, making, using and selling of Product for which Novartis
retains a license from Osiris under this Agreement and only with respect to
those countries for which Novartis retains a license under this Agreement.
18.2.3 Osiris and Novartis each warrants, represents and agrees that
each of its Affiliates shall comply with the terms, obligations and conditions
of this Agreement as if they were signatories to this Agreement and Osiris and
Novartis each unconditionally guarantees such compliance and performance by
its Affiliates.
18.2.4 Osiris warrants that, as of the date of this Agreement, to its
knowledge all granted patents within the Osiris Patent Rights were validly
obtained and are enforceable.
18.3 Waiver: It is agreed that no waiver by any party hereto of any
breach or default of any of the covenants or agreements herein set forth
shall be deemed a waiver as to any subsequent and/or similar breach or default.
18.4 Assignment: Subject to Art. 8.4 above, this Agreement shall not
be assignable by either party to any Third Party without the written consent
of the other party hereto except in the case of Novartis to an Affiliate,
except that, subject to Art. 17.5, either party may assign this Agreement,
without such consent, to an entity that acquires all or substantially all of
the business or assets of such
party, whether by merger, reorganization, acquisition, sale, or otherwise.
This Agreement shall be binding upon and inure to the benefit of any
permitted assignee, and any such assignee shall agree to perform the
obligations of the assignor. Novartis may, without assignment of the entire
Agreement, assign any of its rights and obligations under this Agreement to
a designated Novartis Affiliate.
18.5 Independent Contractors: The relationship of the parties
hereto is that of independent contractors. The parties hereto are not
deemed to be agents, partners or joint venturers of the others for any purpose
as a result of this Agreement or the transactions contemplated thereby.
18.6 Compliance with Laws: In exercising their rights under this
license, the parties shall fully comply in all material respects with the
requirements of any and all applicable laws, regulations, rules and orders
of any governmental body having jurisdiction over the exercise of rights under
this license including, without limitation, those applicable to the discovery,
development, manufacture, distribution, import and export and sale of medical
products pursuant to this Agreement.
18.7 Severability: In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, and the parties shall amend the Agreement to
the extent feasible to lawfully include the substance of the excluded term to
as fully as possible realize the intent of the parties and their commercial
bargain, unless the invalid provision is of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have
entered into this Agreement without the invalid provision.
18.8 Force Majeure: Non-performance of any party (except for payment
obligations) shall be excused to the extent that performance is rendered
impossible by strike, fire, earthquake, flood, governmental acts or orders or
restrictions, failure of suppliers, or any other reason where failure to
perform is beyond the reasonable control and not caused by the negligence,
intentional conduct or misconduct of the non-performing party, provided such
party uses its best efforts to resume performance as promptly as possible.
18.9 No Consequential Damages: In no event shall any party to this
Agreement have any liability to the other for any special, consequential or
incidental damages arising under this Agreement under any theory of liability.
18.10 Complete Agreement: This Agreement with its Schedules,
constitutes the entire agreement between the parties with respect to the
subject matter hereof, and all prior agreements respecting the subject matter
hereof, either written or oral, expressed or implied, shall be null and void
and of no effect. No amendment or addition hereto shall be effective or
binding on either of the parties unless reduced to writing and executed by the
respective duly authorized representatives of Osiris and Novartis.
18.11 Notices: Any notice required, or permitted to be given, under
this Agreement, shall be deemed sufficiently given, if sent to the party to be
notified at its address, shown at the beginning of this Agreement or at such
other address as may be furnished in writing to the notifying party, by
facsimile transmission, confirmed by certified or registered mail, or by an
internationally recognized overnight delivery service. Time of notice or other
communication shall be deemed to be the date of postmark.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives and delivered in duplicate
originals as of the Effective Date.
NOVARTIS PHARMACEUTICALS OSIRIS THERAPEUTICS, INC.
CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxxx Name: Xxxxx X. Xxxxx
Title: President & CEO Title: President & CEO
SCHEDULES:
A: Arbitration Provision
B: List of Patent Rights
C: Research Plan
SCHEDULE A: ARBITRATION PROVISION
In the event tha parties are unable to reach agreement with respect to
any matter which is subject to arbitration in accordance with the Agreement, as
applicable, such will be determined through binding arbitration in New York, NY,
in accordance with the Commercial Rules of Arbitration of the American
Arbitration Association.
The arbitration panel shall be comprised of three (3) arbitrators. Each
party shall be entitled to appoint one arbitrator. The parties shall appoint
their respective arbitrators within thirty (30) days after submission for
arbitration. If either party shall fail to make timely appointment of its
arbitrator, the arbitration shall be heard and decided by the sole arbitrator
duly appointed by the other party. Where both parties have timely appointed
their respective arbitrators, the two arbitrators so appointed shall agree on
the appointment of the third arbitrator from the list of arbitrators maintained
by the American Arbitration Association. If the parties' appointed arbitrators
all fail to agree within thirty (30) days from the date both parties'
arbitrators have been appointed, on the identity of the third arbitrator, then
such arbitrator shall be appointed by the appropriate administrative body of the
American Arbitration Association.
Within ten (10) days of appointment of the full arbitration panel, the
parties shall exchange their final proposed positions with respect to the
matters to be arbitrated, which shall approximate as closely as possible the
closest positions of the parties previously taken in the submit to the
arbitrators a copy of the proposed position which it previously delivered to the
other party, together with a brief or other written memorandum supporting the
merits of its proposed position. The arbitration panel shall promptly convene a
hearing, at which time each party shall have one (1) hour to argue in support of
its proposed posititon. the parties will not call any witnesses in support of
their arguments.
The arbitration panel shall select either of the party's proposed
position on the issue as the binding final decision to be embondied as an
agreement between the parties. In making their selection, the arbitrators
shall not modify the terms or conditions of either party's proposed position;
nor will the arbitrators combine provisions from both proposed positions. In
making their selection, the arbitrators shall consider the terms and conditions
of this Agreement, the relative merits of the proposed position and the written
and oral arguments of the parties. In the event the arbitrators seek the
guidance of the law of any jurisdiction, the law of the State of New York shall
govern.
The arbitrators shall make their decision known to the parties as quickly
as possible by delivering written notice of their decision to both parties.
Such written notice need not justify their decision. The parties will execute
any and all papers necessary to obligate the parties to the positin selected by
the parties to the position selected by the arbitration panel within five (5)
business days of receipt of notice of such selection. The decision of the
arbitrators shall be final and binding on the parties, and specific performance
may be ordered by any court of competent jurisdiction.
The parties will bear their own costs in preparing for the arbitration.
The costs of the arbitrators will be equally dived between the parties.
Notwithstanding anything to the contraty, prior to initiating
arbitration, the issues shall be submitted to the Chief Executive Officer of
each of the parties in an attmept to resolve the isssues by good faith,
mediation or negotiations by such Chief Executive Officers. If the issues have
not been resolved within thirty (30) days after submission to the Chief
Executive Officers, then either party may initiate arbitration as set forth
herein.
SCHEDULE B: LIST OF PATENTS AND PATENT APPLICATIONS INCLUDED
WITHIN THE OSIRIS PATENT RIGHTS
[*CONFIDENTIALITY REQUESTED*]
SCHEDULE C RESEARCH PLAN FOR FIRST TWO YEARS OF RESEARCH TERM
[*CONFIDENTIALITY REQUESTED*
