EXHIBIT 10.15
Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks denote omissions.
--------------------------------------------------------------------------------
COLLABORATION AND LICENSE AGREEMENT
between
LEXICON GENETICS INCORPORATED
and
XXXXXXX-XXXXX SQUIBB COMPANY
--------------------------------------------------------------------------------
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (this "Agreement") is dated as of
December 17, 2003 (the "Effective Date") and is made by and between LEXICON
GENETICS INCORPORATED, a Delaware corporation ("Lexicon"), and XXXXXXX-XXXXX
SQUIBB COMPANY, a Delaware corporation ("BMS"). Lexicon and BMS are sometimes
referred to herein individually as a "party" and collectively as the "parties."
R E C I T A L S
WHEREAS, Lexicon and BMS are each in the business of discovering,
developing and commercializing pharmaceutical products; and
WHEREAS, Lexicon is engaged in the identification and validation of
targets for use in the discovery of compounds potentially useful to prevent or
treat diseases and conditions of the central nervous system;
WHEREAS, Lexicon and BMS are interested in collaborating in the discovery,
development and commercialization of compounds for use in the prevention or
treatment of such diseases and conditions;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
The terms in this Agreement with initial letters capitalized, whether used
in the singular or the plural, shall have the meaning set forth below or, if not
listed below, the meaning designated in places throughout this Agreement.
1.1 "Affiliate" means any corporation, company, partnership, joint venture
and/or firm that controls, is controlled by or is under common control with a
party to this Agreement. For purposes hereof, "control" means (a) in the case of
corporate entities, direct or indirect ownership of more than fifty percent
(50%) of the stock or shares entitled to vote for the election of directors; and
(b) in the case of non-corporate entities, direct or indirect ownership of more
than fifty percent (50%) of the equity interest with the power to direct the
management and policies of such non-corporate entities.
1.2 "Agreement" means this Collaboration and License Agreement, including
all Exhibits hereto.
1.3 "Alliance Manager" has the meaning set forth in Section 3.12.
1.4 "Annual Research Plan" means the plan to be developed by the Joint
Scientific Committee and approved by the Joint Management Committee for each
Contract Year, to be updated as necessary during each Contract Year, setting
forth, among other things, a master plan for the Research Program during the
Research Program Term and the matters described in Section 2.7 hereof.
1.5 "Background Materials" means BMS Background Materials and Lexicon
Background Materials.
1.6 "Background Technology" means BMS Background Technology and Lexicon
Background Technology.
1
1.7 "Back-up Compound" means a Program Compound acting through the same
Selected Target as a Development Candidate and designated by the Joint
Management Committee as a back-up for such Development Candidate, including,
without limitation, any Program Compound for which the Joint Management
Committee authorizes the conduct of preclinical work sufficient to support the
filing of an IND.
1.8 "Blended Rate" means (a) the total amount of royalties (stated in U.S.
dollars) that would be payable in a Contract Year with respect to a Product
under Section 5.5.1 or 5.5.2, as applicable, [**] divided by (b) the total Net
Sales (stated in U.S. dollars) of such Product in that Contract Year, expressed
as a percentage.
1.9 "BMS" means Xxxxxxx-Xxxxx Squibb Company and its Affiliates.
1.10 "BMS Background Materials" means any compounds, assays or other
materials that are (a) necessary or useful for the conduct of the Research
Program, (b) Controlled by BMS, (c) utilized in the Research Program (but only
to the extent so utilized) and (d) either in BMS's or any of its Affiliates'
possession as of the Effective Date or are discovered or acquired by BMS or any
of its Affiliates during the Research Program Term but outside of the conduct of
the Research Program. BMS Background Materials excludes Selected Targets and
Program Compounds.
1.11 "BMS Background Technology" means any inventions, information,
methods, know-how, trade secrets or data that (a) are necessary or useful for
the performance of the Research Program, (b) are Controlled by BMS, (c) are
utilized in the Research Program (but only to the extent so utilized) and (d)
either are in BMS's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by BMS or any of its Affiliates during the
Research Program Term but outside of the conduct of the Research Program.
1.12 "BMS Development Compound" means any and all of the following:
(a) a Development Candidate for a BMS Target that is so designated
under Section 2.5 hereof; and
(b) any Back-up Compound(s) designated for such Development
Candidate; and
(c) any other Small Molecule Compound that acts through the same BMS
Target:
(i) that is made in the course of performing medicinal
chemistry on or optimizing such Development Candidate and Back-up
Compound(s), or performing structure activity relationship
activities using such Development Candidate, Back-up Compound(s) or
other Program Compounds active against such BMS Target; provided
that such Small Molecule Compound [**]; or
(ii) that is Covered by a Valid Claim of any Program Patent
Rights; and
(d) any salts of any of the foregoing.
1.13 "BMS Inactive Selected Target" has the meaning set forth in Section
2.3.4.4.
1.14 "BMS Product" means a pharmaceutical product containing a BMS
Development Compound as an active ingredient.
2
1.15 "BMS Target" means a Selected Target that is so designated under
Section 2.5 hereof.
1.16 "CNS Field" means the prevention, palliation, control or treatment in
humans of (a) depression, schizophrenia, bipolar disease, dementia, anxiety,
attention deficit hyperactivity disorder, anorexia nervosa and other affective
disorders, (b) Alzheimer's disease and other cognitive disorders, (c)
Parkinson's disease, amyotrophic lateral sclerosis and other neurodegenerative
disorders, (d) pain, (e) epilepsy, (f) insomnia, narcolepsy and other sleep
disorders, (g) substance abuse and (h) migraine.
1.17 "Compound Library Screening" means screening of compound libraries to
identify Small Molecule Compounds that are active against a Selected Target
using an assay that meets requirements (for example, with respect to throughput)
established by, or the use of which is otherwise approved by, the Joint
Scientific Committee. For purposes of this Agreement, "commencement of Compound
Library Screening" for a Selected Target means the initiation of Compound
Library Screening for such Selected Target, following Joint Management Committee
authorization, by either BMS or Lexicon.
1.18 "Confidential Information" means any information and data received by
a party (the "Receiving Party") from the other party or its Affiliates (the
"Disclosing Party") in connection with this Agreement (including, without
limitation, all information disclosed by the parties under Article 2 hereof and
any research, testing, clinical, regulatory, marketing or other scientific or
business information, plans, or data pertaining to any Product of the Disclosing
Party). Notwithstanding the foregoing, Confidential Information shall not
include any part of such information or data that:
(a) is or becomes part of the public domain other than by
unauthorized acts of the Receiving Party or its Affiliates;
(b) can be shown by written documents to have been already in the
possession of the Receiving Party or its Affiliates prior to disclosure
under this Agreement, provided such information or data was not obtained
directly or indirectly from the Disclosing Party under an obligation of
confidentiality;
(c) can be shown by written documents to have been disclosed to the
Receiving Party or its Affiliates by a Third Party, provided such
information or data was not obtained directly or indirectly from the
Disclosing Party under an obligation of confidentiality; or
(d) can be shown by written documents to have been independently
developed by the Receiving Party or its Affiliates without use, aid or
application of Confidential Information of the Disclosing Party.
Specific Confidential Information of a Disclosing Party shall not be deemed to
come under the foregoing exceptions merely because it is embraced by more
general information that is or becomes part of the public domain, or is known
by, disclosed to or independently developed by the Receiving Party.
1.19 "Contract Year" means (a) with respect to the first Contract Year,
the period beginning on the Effective Date and ending on December 31, 2004 (the
"First Contract Year"), and (b) with respect to each subsequent Contract Year,
the twelve (12) month period beginning on the day following the end of the First
Contract Year and each succeeding twelve (12) month period thereafter during the
term of the Agreement (except that the last Contract Year shall end on the
effective date of any termination or expiration of this Agreement). Each
Contract Year (other than the First and last Contract Year) shall be divided
into four (4) "Contract Quarters" comprised of successive three (3) month
periods. In the First Contract Year, the first Contract Quarter shall begin on
the Effective Date and end on March 31, 2004,
3
and in the last Contract Year, the last Contract Quarter shall end on the
effective date of any termination or expiration of this Agreement.
1.20 "Control" or "Controlled" means, with respect to any (a) material,
document, item of information, method, data or other know-how or (b) Patent
Right or other intellectual property right, the possession (whether by ownership
or license, other than by a license granted pursuant to this Agreement) by a
party or its Affiliates of the ability to grant to the other party access,
ownership, a license and/or a sublicense as provided herein under such item or
right without violating the terms of any agreement or other arrangement with any
Third Party as of the time such party would first be required hereunder to grant
the other party such access, ownership, license or sublicense.
1.21 "Cover," "Covered" or "Covering" means, with respect to a Patent
Right, that, but for rights granted to a person or entity under such Patent
Right, the practice by such person or entity of an invention claimed in such
Patent Right would infringe a Valid Claim included in such Patent Right, or in
the case of a Patent Right that is a patent application, would infringe a Valid
Claim in such patent application if it were to issue as a patent.
1.22 "Development Candidate" means a Program Compound that has been
selected by the Joint Management Committee for full preclinical development in
preparation for the commencement of a Phase 1 Trial and that has been designated
by the Joint Management Committee as a "Development Candidate" in accordance
with Section 3.4, including, without limitation, any Program Compound for which
the Joint Management Committee authorizes the commencement of a Phase 1 Trial.
1.23 "Development Compound" means a BMS Development Compound or a Lexicon
Development Compound.
1.24 "Diligent Efforts" means the carrying out of obligations or tasks by
a party in a sustained manner using good faith commercially reasonable and
diligent efforts, which efforts shall be consistent with the exercise of prudent
scientific and business judgment in accordance with the efforts such party
devotes to products or research, development or marketing projects of similar
scientific and commercial potential. Diligent Efforts requires that the party:
(a) promptly assign responsibility for such obligations to specific employees
who are held accountable for progress and monitor such progress on an on-going
basis, (b) set and consistently seek to achieve specific and meaningful
objectives for carrying out such obligations, and (c) consistently make and
implement decisions and allocate resources designed to advance progress with
respect to such objectives.
1.25 "Disclosing Party" has the meaning specified in Section 1.18 hereof.
1.26 "Effective Date" means the date specified in the initial paragraph of
this Agreement.
1.27 "Escrow Agent" means an independent Third Party consultant to the
parties with whom BMS shall deposit a list of Excluded Targets and who shall
notify Lexicon which, if any, Targets submitted in accordance with Section 2.2.4
are Excluded Targets.
1.28 "Excluded Target" means a Target that BMS has elected to exclude from
consideration for the Research Program. A list of such Excluded Targets shall be
provided to the Escrow Agent who shall notify Lexicon which, if any, Targets
submitted in accordance with Section 2.2.4 are Excluded Targets. [**].
1.29 "First Commercial Sale" means the first sale for use or consumption
by the general public of a Product in a country after Regulatory Approval has
been obtained in such country. For clarity, First
4
Commercial Sale shall not include the sale of any Product for use in clinical
trials or for compassionate use prior to the approval of an NDA.
1.30 "FDA" means the United States Food and Drug Administration, or the
successor thereto.
1.31 "Full Phase Program" means a full medicinal chemistry and supporting
biology program involving the commitment of resources of the scope and nature
described in Exhibit A. For purposes of this Agreement, "commencement of a Full
Phase Program" means the authorization by the Joint Management Committee of the
commencement of activities for the first Full Phase Program for a given Selected
Target.
1.32 "FTE" means the equivalent of one employee working on a dedicated
full time basis for one year (consisting of [**] hours per year of dedicated
effort) performing scientific, technical or managerial work on or directly
related to the Target Discovery Program or the Research Program, as applicable.
Any person who [**], calculated in accordance with standards that shall be
consistent for both parties (as determined and monitored by the Joint Management
Committee), shall be [**].
1.33 "Inactive Selected Target" has the meaning specified in Section 2.3.4
hereof. Any BMS Inactive Selected Target or Lexicon Inactive Selected Target
shall remain an Inactive Selected Target unless and until it becomes a BMS
Target or Lexicon Target.
1.34 "Indemnitee" has the meaning specified in Section 10.4 hereof.
1.35 "Indemnitor" has the meaning specified in Section 10.4 hereof.
1.36 "IND" means an Investigational New Drug application filed with the
U.S. Food and Drug Administration or a similar application for the clinical
testing of a Product in human subjects filed with a foreign regulatory
authority.
1.37 "Joint Management Committee" has the meaning specified in Section
3.1.1 hereof.
1.38 "Joint Program Inventions" has the meaning specified in Section
7.1.3.3 hereof.
1.39 "Joint Research Project Team" has the meaning specified in Section
3.1.2 hereof.
1.40 "Joint Scientific Committee" has the meaning specified in Section
3.1.2 hereof.
1.41 "Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign.
1.42 "Level 1 Phenotypic Analysis" means the analyses of the phenotypes of
Mutant Mice described in Exhibit B.
1.43 "Level 2 Phenotypic Analysis" means any one or more of the analyses
of the phenotypes of Mutant Mice described in Exhibit C. The Level 2 Phenotypic
Analysis for a given Target shall be as determined by the Joint Scientific
Committee as set forth in Section 3.5.
1.44 "Lexicon" means Lexicon Genetics Incorporated and its Affiliates.
1.45 "Lexicon Background Materials" means any compounds, assays or other
materials that are (a) necessary or useful for the conduct of the Research
Program, (b) Controlled by Lexicon, (c)
5
utilized in the Research Program (but only to the extent so utilized) and (d)
either in Lexicon's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by Lexicon or any of its Affiliates during
the Research Program Term but outside of the conduct of the Research Program.
Lexicon Background Materials excludes Selected Targets and Program Compounds.
1.46 "Lexicon Background Technology" means any inventions, information,
methods, know-how, trade secrets or data that (a) are necessary or useful for
the performance of the Research Program, (b) are Controlled by Lexicon, (c) are
utilized in the Research Program (but only to the extent so utilized) and (d)
either are in Lexicon's or any of its Affiliates' possession as of the Effective
Date or are discovered or acquired by Lexicon or any of its Affiliates during
the Research Program Term but outside of the conduct of the Research Program.
1.47 "Lexicon Development Compound" means any and all of the following:
(a) a Development Candidate for a Lexicon Target that is so
designated under Section 2.5 hereof; and
(b) any Back-up Compound(s) designated for such Development
Candidate; and
(c) any other Small Molecule Compound that acts through the same
Lexicon Target:
(i) that is made in the course of performing medicinal
chemistry on or optimizing such Development Candidate and Back-up
Compound(s), or performing structure activity relationship
activities using such Development Candidate, Back-up Compound(s) or
other Program Compounds active against such Lexicon Target; provided
that such Small Molecule Compound [**]; or
(ii) that is Covered by a Valid Claim of any Program Patent
Rights; and
(d) any salts of any of the foregoing.
1.48 "Lexicon Inactive Selected Target" has the meaning set forth in
Section 2.3.4.4.
1.49 "Lexicon Product" means a pharmaceutical product containing a Lexicon
Development Compound as an active ingredient.
1.50 "Lexicon Target" means a Selected Target that is so designated under
Section 2.5 hereof.
1.51 "LexVision Agreement" means the LexVision Database and Collaboration
Agreement dated September 26, 2000 between Lexicon and BMS, as amended.
1.52 "LG617 Compound" means a Small Molecule Compound acting through the
LG617 Target.
1.53 "LG617 License" has the meaning specified in Section 4.4 hereof.
1.54 "LG617 Negotiation Period" has the meaning specified in Section 4.4
hereof.
1.55 "LG617 Option Period" has the meaning specified in Section 4.4
hereof.
1.56 "LG617 Target" means the Target designated by Lexicon as LG617.
6
1.57 "Listed Target" means the Targets for which Lexicon has completed
[**] and that have been separately identified to BMS prior to the Effective Date
by their Lexicon designation, and are listed as follows: [**].
1.58 "MAA Approval" means the final marketing authorization approval,
including full marketing, pricing and reimbursement approval, for the applicable
Product, in [**].
1.59 "MAA Filing" means the filing of a marketing authorization
application or other application for marketing approval for the applicable
Product filed (a) in [**] or (b) in the European Medicines Evaluation Agency
under the centralized European procedure.
1.60 "Mid-Phase Program" means a mid-phase medicinal chemistry and
supporting biology program involving the commitment of resources of the scope
and nature described in Exhibit D.
1.61 "Mutant Mouse" means mouse cell or mouse containing a selected
mutation in the murine ortholog of a Target that is made or produced by Lexicon.
A "line of Mutant Mice" means Mutant Mice having the same selected mutation.
1.62 "NDA" means a New Drug Application filed with the FDA required for
marketing approval for the applicable Product in the U.S.
1.63 "NDA Approval" means the final approval of an NDA by the FDA for the
applicable Product in the U.S.
1.64 "NDA Filing" means the acceptance by the FDA of the filing of an NDA
for the applicable Product.
1.65 "Net Sales" means, with respect to a Product, the gross amount
invoiced by BMS, Lexicon, Sublicensees of BMS or Lexicon, and their respective
Affiliates for sales of such Product to customers which are not Affiliates (or
which are Affiliates but are end users of such Product), less:
(a) trade, quantity and cash discounts actually allowed;
(b) discounts, refunds, rebates, chargebacks, retroactive price
adjustments, billing errors and any other allowances (including, without
limitation, government-mandated and managed health care-negotiated rebates)
actually granted which effectively reduce the net selling price;
(c) product returns credits and allowances actually granted;
(d) any tax imposed on the production, sale, delivery or use of the
product (excluding federal, state or local taxes based on income);
(e) freight, postage, shipping, customs duties, excises, tariffs,
surcharges, other governmental charges (excluding federal, state or local taxes
based on income) and insurance charges actually allowed or paid for delivery of
Products;
(f) payments or rebates paid with respect to such Product in connection
with state or federal Medicare, Medicaid or similar programs in the United
States or in connection with similar programs in other countries in which there
are sales; and
7
(g) amounts repaid, credited or written off by reason of uncollectible
debt, and amounts written off on account of factoring of receivables to the
extent consistent with the selling party's normal business practices.
Such amounts shall be determined from the books and records of BMS, Lexicon,
Sublicensees of BMS or Lexicon, and their respective Affiliates, as the case may
be, maintained in accordance with U.S. generally accepted accounting principles,
consistently applied.
In the event the Product is sold as part of a Combination Product (as
defined below), the Net Sales from the Combination Product, for the purposes of
determining royalty payments, will be determined by multiplying the actual Net
Sales of the Combination Product by the fraction A/(A+B) where A is the average
sale price of the Product when sold separately in finished form and B is the
total average sale price of the other active ingredient or ingredients in the
Combination Product sold separately in finished form.
In the event that the average sales price of both the Product and the
other active compounds or ingredients in the Combination Product cannot be
determined, the adjusted Net Sales of the Combination Product for the purpose of
determining royalties shall be negotiated by the parties in good faith and in an
equitable manner consistent with the intent of this Agreement.
The Net Sales price for a Combination Product in a given country will be
calculated once each Contract Year and such price will be used during all
applicable royalty reporting periods for the entire Contract Year for such
country, absent extraordinary conditions or events. When determining the average
sale price of a Product or the other active compounds or ingredients in the
Combination Product, the average sale price will be calculated using data
arising from the twelve (12) months preceding the calculation of the Net Sales
price for the Combination Product. As used above, the term "Combination Product"
means any Product sold in conjunction with any other active component(s)
(whether packaged together or in the same therapeutic formulation).
If BMS, Lexicon, Sublicensees of BMS or Lexicon, or any of their
respective Affiliates sells any Product to a customer which also purchases other
products or services from such seller or any of its Affiliates in a bundled,
combination or capitated transaction (a "Bundled Transaction"), and such seller
discounts the sales price of the Product to a greater degree than such seller or
its Affiliates generally discount the price of its other products to such
customer, then the aggregate amount received with respect to such Bundled
Transaction shall be allocated to Net Sales pursuant to the formula set forth in
Exhibit E hereto. For purposes of the foregoing, "discounting" includes
establishing the list price at lower than the seller's normal pricing level.
Free samples of Product and/or the disposition of Product for, or the use
of Product in, pre-clinical or clinical (Phase 1 - 3) trials or other
market-focused (Phase 4) trials in which Product is provided to patients without
any payment shall not result in any Net Sales.
1.66 "Patent Prosecution" has the meaning specified in Section 7.2.1
hereof.
1.67 "Patent Rights" means all existing patents and patent applications
and all patent applications hereafter filed and patents hereafter issued,
including, without limitation, any continuations, continuations-in-part,
divisions, provisionals or any substitute applications, any patent issued with
respect to any such patent applications, any reissue, reexamination, renewal or
extension (including any supplemental protection certificate) of any such
patent, and any confirmation patent or registration patent or patent of addition
based on any such patent, and all foreign counterparts of any of the foregoing.
8
1.68 "Phase 1 Trial" shall mean a human clinical trial [**] that is
intended to initially evaluate the safety, pharmacokinetic and/or
pharmacological effect of a Product in subjects in accordance with or otherwise
in satisfaction of the requirements of 21 CFR 312.21(a). For purposes of this
Agreement, "commencement of a Phase 1 Trial" for a Product shall mean the first
dosing of such Product into a human patient in a Phase 1 Trial.
1.69 "Phase 2 Trial" means a human clinical trial [**] that is intended to
initially evaluate the dosing and effectiveness of a Product for a particular
indication or indications in patients with the disease or indication under study
in accordance with or otherwise in satisfaction of the requirements of 21 CFR
312.21(b). For purposes of this Agreement, "commencement of a Phase 2 Trial" for
a Product shall mean the first dosing of such Product into a human patient in a
Phase 2 Trial.
1.70 "Phase 3 Trial" means a pivotal human clinical trial [**] the results
of which could be used to establish safety and efficacy of a Product as a basis
for an NDA in accordance with or otherwise in satisfaction of the requirements
of 21 CFR 312.21(c). For purposes of this Agreement, "commencement of a Phase 3
Trial" for a Product shall mean the first dosing of such Product into a human
patient in a Phase 3 Trial.
1.71 "Post Opt-out Product" has the meaning set forth in Section 2.5.3.3.
1.72 "Pre-existing Obligations" means:
(a) with respect to [**], the obligations of Lexicon existing under
agreements in effect prior to the Effective Date and separately disclosed
to BMS prior to the Effective Date; and
(b) with respect to any [**], the obligations of Lexicon or BMS, as
may be applicable, existing under agreements in effect prior to [**], for
any [**] that (i) is in such party's or any of its Affiliates' possession
as of the Effective Date or (ii) is discovered or acquired by such party
or any of its Affiliates during the Research Program Term but outside of
and independently of the conduct of the Research Program and without
breach of any obligation of such party under this Agreement.
1.73 "Product" means a BMS Product or a Lexicon Product.
1.74 "Product Licensee" means (a) with respect to a BMS Product, BMS, and
(b) with respect to a Lexicon Product, Lexicon.
1.75 "Product Licensor" means (a) with respect to a BMS Product, Lexicon,
and (b) with respect to a Lexicon Product, BMS.
1.76 "Program Committee" means the Joint Management Committee or the Joint
Scientific Committee.
1.77 "Program Compound" means a Small Molecule Compound that:
(a) (i) is selected by the Joint Scientific Committee for
optimization, characterization and/or preclinical evaluation in the
conduct of the Research Program,
(ii) is Controlled by a party,
9
(iii) either is in a party's or any of its Affiliates'
possession as of the Effective Date or is discovered or acquired by
either or both parties or any of their respective Affiliates during
the Research Program Term but outside the conduct of the Research
Program, and
(iv) inhibits, agonizes or otherwise modulates (i.e., acts
through) a Selected Target; or
(b) is first [**] in the conduct of the Research Program; or
(c) is Covered by any Valid Claim of a Program Patent Right; or
(d) is otherwise designated a Program Compound by the Joint
Management Committee;
provided, however, that in no event shall [**] become a Program Compound unless
such designation is affirmatively agreed to by the Joint Management Committee.
1.78 "Program Director" has the meaning specified in Section 3.2 hereof.
1.79 "Program Intellectual Property" means Program Patent Rights and any
other proprietary rights in Program Material and Program Technology.
1.80 "Program Invention" has the meaning specified in Section 7.1.3.3
hereof.
1.81 "Program Material" means (a) any Program Compounds and (b) any
material first identified or discovered in the conduct of the Research Program.
1.82 "Program Patent Rights" means any Patent Rights that are Controlled
by one or both parties and that Cover any Program Technology or Program
Materials. For clarification, such Program Patent Rights include the entire
scope of all of the claims contained in such Patent Rights.
1.83 "Program Technology" means any invention, information, methods,
know-how, trade secrets or data that (a) is Controlled by a party or jointly by
the parties and (b) either (i) relates to the use in the CNS Field of Small
Molecule Compounds acting through a Selected Target, or the use in the CNS Field
of a Selected Target to identify Small Molecule Compounds acting through such
Selected Target, or (ii) is first identified or discovered in the conduct of the
Research Program. Program Technology specifically includes any invention,
information, methods, know-how, trade secrets or data with respect to the [**].
Program Technology excludes any invention, information, methods, know-how, trade
secrets or data with respect to the [**], or the [**] acting through such
Selected Target, in each case that is first identified or discovered by a party
outside of the conduct of the Research Program; provided, however, that, [**].
In addition, Program Technology excludes Program Materials.
1.84 "Proposed Target" means a Target proposed for designation as a
Selected Target in accordance with Section 2.3.1 hereof
1.85 "Receiving Party" has the meaning specified in Section 1.18 hereof.
1.86 "Regulatory Approval" means any and all approvals (including any
applicable governmental price and reimbursement approvals), licenses,
registrations, or authorizations of any federal, national, multinational, state,
provincial or local regulatory agency, department bureau or other
10
governmental entity that are necessary for the manufacture, use, storage,
import, transport, promotion, marketing and sale of a Product in a country or
group of countries.
1.87 "Released Target" means [**] or a Target designated as a Released
Target in accordance with Section 2.3.2 hereof.
1.88 "Research Program" has the meaning specified in Section 2.1.1 hereof.
1.89 "Research Program Activities" has the meaning specified in Section
2.1.1 hereof.
1.90 "Research Program Term" has the meaning specified in Section 2.1.2
hereof.
1.91 "Research Program Costs" means the FTE costs and out-of-pocket
expenditures that are incurred after the Effective Date by a party in performing
activities approved by the Joint Management Committee in support of the Research
Program, for purposes of which the cost of an FTE shall be [**] per FTE per
year. Research Program Costs shall not include [**]. In addition, Research
Program Costs shall not include [**].
1.92 [**] has the meaning specified in Section 2.3.3 hereof.
1.93 "Reviewing Party" has the meaning specified in Section 8.4 hereof.
1.94 "Selected Target" means any Target that is selected for research by
the Joint Management Committee in accordance with Section 2.3.2 hereof.
1.95 "Selected Target Inventions" has the meaning specified in Section
7.1.3.2 hereof.
1.96 "Small Molecule Compound" means a chemical compound having a
molecular weight of less than 1,000 Daltons, [**]. For clarity, Small Molecule
Compound specifically excludes any compound that consists of or incorporates as
an active ingredient [**] (a) a protein, (b) an antibody or any fragment
thereof, (c) an antisense product or (d) an oligonucleotide.
1.97 "Sole Program Inventions" has the meaning specified in Section
7.1.3.3 hereof.
1.98 "Sublicensee" means (a) in the case of a BMS Product, any Third Party
which is licensed by BMS to market and sell such BMS Product, and (b) in the
case of a Lexicon Product, any Third Party which is licensed by Lexicon to
market and sell such Lexicon Product.
1.99 "Submitting Party" has the meaning specified in Section 8.4 hereof.
1.100 "Target" means a human gene and the products encoded by such gene,
including, without limitation, (a) any [**] from such gene [**], (b) any [**]
encoded by any such gene, and/or (c) any [**] encoded by any such gene. Each
Target shall be identified by the full length cDNA and/or amino acid sequence of
the gene or, in the event the gene has more than one splice variant form, by the
full length cDNA and/or amino acid sequence of at least one splice variant form
of such gene.
1.101 "Target Discovery Program" has the meaning specified in Section
2.1.1 hereof.
1.102 "Target Discovery Program Term" has the meaning specified in Section
2.2.2 hereof.
1.103 "Territory" means all countries and jurisdictions throughout the
world.
11
1.104 "Third Party" means any person or entity other than Lexicon, BMS and
their respective Affiliates.
1.105 "Third Party Opportunity" has the meaning specified in Section 2.11
hereof.
1.106 "Valid 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 that is not
admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise, or (b) a claim of a pending patent application that has not been
[**], provided, however, that (x) Valid Claim shall exclude any such pending
claim that has not been granted within [**] following [**] (unless and until
such claim is granted) and (y) [**].
ARTICLE 2. RESEARCH PROGRAM
2.1 General.
2.1.1 Objectives. The parties intend to carry out a research program
(the "Research Program") in which Lexicon and BMS will collaborate to
identify, characterize and carry out the preclinical development of Small
Molecule Compounds that act through Selected Targets for use in the CNS
Field, consistent with the objectives set forth in and the resources
allocated to such activities in the then-current Annual Research Plan
("Research Program Activities"). It is intended that the Research Program
will be conducted as a unified collaborative effort with activities by the
parties carried out primarily at each party's respective facilities, and
this intent shall be reflected in the Annual Research Plans. It is further
intended that each party shall contribute to fifty (50%) of the Research
Program Costs, and the Annual Research Plans will be consistent with and
provide for such equal contribution. In support of the Research Program,
Lexicon will continue its efforts, using its technology for the generation
and analysis of the phenotypes of Mutant Mice, to identify and validate
Targets with potential utility in the CNS Field (the "Target Discovery
Program").
2.1.2 Research Program Term. The Research Program shall commence on
the Effective Date and continue during the Target Discovery Program Term
and thereafter until all Selected Targets have become BMS Targets, Lexicon
Targets or Inactive Selected Targets and thereafter for so long as the
parties continue to conduct Research Program Activities with respect to
any BMS Targets or Lexicon Targets (the "Research Program Term").
2.2 Target Discovery Program.
2.2.1 Generation and Analysis of Mutant Mice. In the Target Discovery
Program, Lexicon shall complete (a) the development and Xxxxx 0 Xxxxxxxxxx
Xxxxxxxx of [**] lines of Mutant Mice and (b) Level 2 Phenotypic Analysis
of such lines of Mutant Mice, from the first [**] lines of Mutant Mice for
which Level 1 Phenotypic Analysis was completed, that displayed a
phenotype suggestive, as determined by [**], of the potential utility of
the corresponding Target in the CNS Field. All lines of Mutant Mice
developed by Lexicon [**] shall be [**]. Lexicon shall use Diligent
Efforts to complete such work by the end of the third Contract Year of the
Research Term and, if necessary, shall continue to use Diligent Efforts
thereafter until such work is complete, [**]. The Target Discovery Program
Term shall continue until such work is complete.
12
2.2.2 Target Discovery Program Term. The Target Discovery Program
shall continue until the end of the third Contract Year of the Research
Program Term (and thereafter until the work set forth in Section 2.2.1 is
completed) (the "Target Discovery Program Term"); provided that BMS shall
have the option to extend the Target Discovery Program Term for an
additional two Contract Years (which two-year period may be further
extended as set forth below) on the terms set forth below:
(a) BMS may extend the Target Discovery Program to include the
completion by Lexicon in the Target Discovery Program of (i) the
development and Xxxxx 0 Xxxxxxxxxx Xxxxxxxx of [**] lines of Mutant
Mice (to the extent not already completed by the end of the third
Contract Year of the Research Program Term) and (ii) Level 2
Phenotypic Analysis of such lines of Mutant Mice, from such [**] lines
of Mutant Mice, that displayed a phenotype suggestive, as determined
by [**], of the potential utility of the corresponding Target in the
CNS Field. Lexicon shall use Diligent Efforts to complete such work by
the end of the fifth Contract Year of the Research Term and, if
necessary, shall continue to use Diligent Efforts thereafter until
such work is complete, [**]. The Target Discovery Program Term shall
continue until such work is complete.
(b) BMS may extend the Target Discovery Program to include the
completion by Lexicon in the Target Discovery Program of (i) the
development and Xxxxx 0 Xxxxxxxxxx Xxxxxxxx of [**] lines of Mutant
Mice and (ii) Level 2 Phenotypic Analysis of such lines of Mutant
Mice, from such [**] lines of Mutant Mice, that displayed a phenotype
suggestive, as determined by [**], of the potential utility of the
corresponding Target in the CNS Field. Lexicon shall use Diligent
Efforts to complete such work by the end of the fifth Contract Year of
the Research Term and, if necessary, shall continue to use Diligent
Efforts thereafter until such work is complete, [**]. The Target
Discovery Program Term shall continue until such work is complete.
BMS may exercise the foregoing option by delivery to Lexicon of written
notice of such exercise (specifying the subsection above under which such
option is being exercised) no fewer than [**] days before the end of the
third Contract Year of the Research Program Term.
2.2.3 Reporting and Oversight of Target Discovery Program Progress.
Lexicon shall keep the Joint Scientific informed of the progress of its
activities under this Section 2.2. At a minimum, within [**] days
following [**] during the Target Discovery Program Term, Lexicon shall
prepare, and provide to the Joint Scientific Committee, a reasonably
detailed written summary report which shall describe (a) the work
performed by Lexicon during the preceding [**], including, without
limitation, the status of Lexicon's development of Mutant Mice and the
conduct of Level 1 Phenotypic Analysis and Level 2 Phenotypic Analysis (or
only Level 1 Phenotypic Analysis if Level 2 Phenotypic Analysis has not
been performed) of such Mutant Mice, and (b) identify phenotypes
identified through such Xxxxx 0 Xxxxxxxxxx Xxxxxxxx xxx Xxxxx 0 Xxxxxxxxxx
Analysis that are suggestive, in Lexicon's good faith scientific judgment,
of the potential utility of the corresponding Targets in the CNS Field. In
addition, Lexicon shall provide the Joint Scientific Committee with access
to [**], in each case promptly following the generation thereof, so as to
enable the Joint Scientific Committee to [**]; provided, that Lexicon
shall not be required to disclose to BMS the identity of such Target (by
sequence or otherwise in a manner that would reveal the identity of the
Target) except in accordance with Section 2.2.4 below. Following the
receipt of such information by the Joint Scientific Committee, the Joint
Scientific Committee may request that [**]. The parties shall at all times
exercise good faith scientific judgment in making the determinations
contemplated by this Section 2.2.3.
13
2.2.4 Disclosure of Target Identity. Prior to first disclosing to BMS
the identity of any Target (by sequence or otherwise in a manner that
would reveal the identity of the Target), Lexicon shall submit the
identity of the Target to the Escrow Agent, who will notify Lexicon
whether such Target matches any Excluded Target. Lexicon shall not submit
the Target to the Escrow Agent until Lexicon has first (a) [**] and (b)
[**]. In the event a Target matches an Excluded Target, as determined by
the Escrow Agent, Lexicon shall promptly notify BMS of such fact and, if
requested by BMS within [**] days thereafter, shall provide BMS with the
phenotypic data relating to the corresponding line of Mutant Mice and such
additional information with respect to any Target (without disclosing the
identity of such Target) that is [**]. In such event, BMS shall have the
right, within [**] days after receiving such information, to submit to the
Escrow Agent a second list of Excluded Targets, in which case the Escrow
Agent shall determine whether the Target in question matches any Target on
the second list of Excluded Targets. If the Target in question does not
match any Target on the second list of Excluded Targets, the Escrow Agent
shall so notify Lexicon and BMS, and such Target shall not be considered
an Excluded Target and may be considered for proposal as a Proposed
Target. BMS shall not be entitled to designate a Target as an Excluded
Target following Lexicon's disclosure to BMS of the identity of such
Target in accordance with this Section 2.2.4. The parties may mutually
agree in writing to redesignate any Excluded Target as a non-Excluded
Target that may be considered for proposal as a Proposed Target.
2.2.5 BMS's Option to Obtain Mutant Mice [**]. Within [**] following
Lexicon's delivery to the members of the Joint Scientific Committee of the
results contemplated by Section 2.2.3 with respect to the phenotype of a
line of Mutant Mice, BMS shall have the option, exercisable by delivery to
Lexicon of a signed material transfer agreement in the form attached
hereto as Exhibit F, to obtain Mutant Mice displaying a phenotype
suggestive, [**], of the potential utility of the corresponding Target in
the CNS Field, on the terms contemplated by such material transfer
agreement [**]. For each line of Mutant Mice so requested, Lexicon shall
provide to BMS with such [**]. BMS shall [**]. Notwithstanding any
provision of this Agreement to the contrary, [**]; provided that, unless
otherwise specifically agreed by [**].
2.3 Target Selection.
2.3.1 Proposal of Targets. Following Lexicon's completion of Xxxxx 0
Xxxxxxxxxx Xxxxxxxx of a line of Mutant Mice corresponding to a Target
[**], BMS and Lexicon shall each have the right to propose such Target for
inclusion in the Research Program as a Selected Target. Within [**]
following the proposal by either party that such Proposed Target be
considered for designation as a Selected Target [**], BMS and Lexicon
shall provide the Joint Scientific Committee with the following
information:
(a) all relevant scientific data in BMS's possession (and which
BMS has the right to disclose to Lexicon) and all relevant scientific
data in Lexicon's possession (and which Lexicon has the right to
disclose to BMS) relating specifically to such Proposed Target,
including, without limitation, any bioinformatics and expression
analyses conducted by BMS or Lexicon with respect to such Proposed
Target, and any phenotypic data with respect to mice (including,
without limitation, Mutant Mice) with a mutation in the murine
ortholog of such Proposed Target;
(b) the results of genomic analysis and druggability assessment
with respect to such Proposed Target by BMS and/or Lexicon;
(c) whether (and, if so, to what extent) such Proposed Target is
[**]; and
14
(d) whether BMS or Lexicon, respectively, has [**] and, in the
event BMS or Lexicon, respectively, has [**], such party shall [**].
2.3.2 Designation of Proposed Targets as Selected Targets or Released
Targets. Within [**] following receipt by Joint Scientific Committee of a
complete package of all of the information set forth in Section 2.3.1 for
a Proposed Target, the Joint Scientific Committee shall make a
recommendation to the Joint Management Committee as to whether to
designate such Proposed Target as a Selected Target or a Released Target.
If the Joint Scientific Committee determines that [**] before a Proposed
Target should be considered for designation as a Selected Target or
Released Target, the parties shall [**], before it is reconsidered for
designation as a Selected Target or Released Target. In the event the
members of the Joint Management Committee are unable to reach agreement by
consensus regarding such designation within [**] following its receipt of
the Joint Scientific Committee recommendation, [**].
2.3.3 [**]. Upon recommendation by the Joint Scientific Committee, the
Joint Management Committee may, by agreement, designate one or more
Selected Targets that are associated with another Selected Target as being
[**]. During the period in which they are designated as [**] by the Joint
Management Committee [**].
2.3.4 Inactive Selected Targets.
2.3.4.1 A Selected Target shall become an "Inactive Selected
Target" upon the occurrence of any of the following: (a) at such time
that there has been no material activity by either party with respect
to studies to further evaluate the utility of such Selected Target or
the development of assays or the discovery or development of Program
Compounds acting through such Selected Target for a period of [**],
and [**]; (b) upon the election of a party that does not wish to
proceed with the discovery or development of Program Compounds acting
through a Selected Target, when the other party does wish to proceed,
such that such other party could proceed with the discovery or
development of Program Compounds acting through such Inactive Selected
Target, without the participation of the party making such election
(and, in accordance with Section 2.4.7, upon such election, the party
making such election shall notify the Joint Management Committee if it
wishes to [**]; or (c) upon the election of the Joint Management
Committee, in order to equalize each party's participation in the
Research Program (measured by Research Program Costs), such that one
party could proceed with the discovery or development of Program
Compounds acting through such Inactive Selected Target, without the
participation of the other party.
2.3.4.2 The Joint Management Committee shall determine how the
parties shall proceed with respect to the Inactive Selected Target;
provided that, in the event that one party desires to proceed with the
discovery or development of Program Compounds acting through such
Inactive Selected Target, and the other party does not wish to proceed
with such discovery and development efforts in the Research Program
(or if one party has been given the opportunity to pursue the
discovery or development of Program Compounds acting through such
Inactive Selected Target under Section 2.3.4.1(b) or (c) above), such
party may elect to proceed with such discovery or development for its
own account (using Diligent Efforts), without participation of the
other party. In such case, (a) the other party shall reasonably
cooperate with the party electing to proceed with the discovery and
development of Program Compounds acting through such Inactive Selected
Target, at the developing party's expense, in transitioning such
activities to such developing party (including, without limitation,
the transfer of relevant Program
15
Material) and (b) upon the commencement of a Phase 1 Trial for a
Program Compound acting through such Inactive Selected Target (and
notwithstanding anything to the contrary in Section 2.5), such
Inactive Selected Target shall then be designated as and treated as a
BMS Target or Lexicon Target (depending on the party that proceeds
with such discovery and development) for all purposes, except that the
milestone payments and royalties payable with respect to BMS Products
(under Sections 5.4.1 and 5.5.1) or Lexicon Products (under Sections
5.4.2 and 5.5.2), as the case may be, shall be [**] of those otherwise
payable. Prior to the commencement of a Phase 1 Trial for a Product
acting through an Inactive Selected Target, such Inactive Selected
Target shall remain designated as an Inactive Selected Target.
2.3.4.3 If neither party elects to proceed with such discovery
and development of Program Compounds acting through such Inactive
Selected Target for its own account, Lexicon shall have the right to
pursue the out licensing of such Inactive Selected Target, provided
that BMS and Lexicon shall [**] with respect to such out licensing,
after Lexicon and BMS have first been reimbursed from such
consideration for [**].
2.3.4.4 An Inactive Selected Target for which BMS proceeds with
the discovery and development of Program Compounds acting through such
Inactive Selected Target, without the participation of Lexicon, as set
forth above, shall be designated as a "BMS Inactive Selected Target."
An Inactive Selected Target for which Lexicon proceeds with the
discovery and development of Program Compounds acting through such
Inactive Selected Target, without the participation of BMS, as set
forth above, shall be designated as a "Lexicon Inactive Selected
Target."
2.4 Conduct of Research Program.
2.4.1 Scope. Following the designation of a Selected Target, the
parties will use Diligent Efforts, under the direction of the Joint
Management Committee and Joint Scientific Committee, to carry out the
following principal activities with respect to the Selected Target: (a) to
carry out studies to further evaluate the biology and the utility of the
Selected Target ([**]), (b) to develop assays for such Selected Target
amenable to Compound Library Screening, (c) to conduct Compound Library
Screening against such Selected Target, (d) to carry out a Mid-Phase
Program to develop lead compounds suitable to chemically recapitulate the
phenotype seen in the Mutant Mice for the Selected Target, (e) to carry
out a follow-up Full Phase Program with the objective of identifying
Program Compounds meeting the criteria required for designation as
Development Candidates that are suitable for further development, and (f)
to carry out preclinical work on selected Development Candidates and
Back-up Compounds in preparation for Phase 1 Trials. The parties will
carry out other specific activities in support of these principal
activities.
2.4.2 Efforts. The Joint Management Committee shall adopt project
progression guidelines, including criteria for the selection of Program
Compounds, Development Candidates and Back-up Compounds for the Research
Program. The criteria established by the Joint Management Committee for
the selection of Development Candidates shall [**]. The parties shall
conduct the Research Program in good scientific manner in accordance with
such project progression guidelines and in compliance with applicable
Laws. Each party shall use Diligent Efforts to conduct the activities of
the Research Program that are assigned to it in the then-applicable Annual
Research Plan, and each shall devote sufficient resources to timely
perform such respective activities. While the parties acknowledge and
agree that neither party guarantees the success of the Research Program or
any individual task undertaken thereunder, each party
16
agrees that it will perform the activities assigned to it under the
Research Program in a professional manner in accordance with the highest
industry standards.
2.4.3 Resources. Over the course of the Research Program, tasks under
the Research Program will be allocated between the parties with the goal
that each party's participation in the Research Program (based on FTE
utilization and out-of-pocket expenditures) and Research Program Costs
will be substantially equal. Particular tasks and responsibilities shall
be assigned in a manner consistent with each party's respective
capabilities, capacity and expertise. For purposes of this Agreement,
"out-of-pocket expenditures" includes, but is not limited to, the cost of
subcontractors related to the Research Program, but specifically excludes
the cost of laboratory supplies, laboratory space and capital equipment.
Either party may at its sole discretion reduce its required contribution
to the Research Program Costs by designating one or more Selected Targets
as Inactive Selected Targets that may be pursued by the other party as
contemplated in Section 2.3.4.
2.4.4 FTE Levels. The parties anticipate that the combined total
personnel the parties will commit to the Research Program will start at an
average of [**] FTEs for the First Contract Year and will escalate to an
average of [**] FTEs for the Second Contract Year, [**] FTEs in the Third
Contract Year and [**] FTEs for the Fourth Contract Year (i.e., these are
the expected number of FTEs to be included in the Research Program Costs).
For clarification, the number of FTEs referenced in the previous sentence
shall not include Lexicon FTEs working on the Target Discovery Program,
except as set forth in Section 2.2.5. Each party agrees in good faith to
expedite the hiring and utility of such FTEs as early in the applicable
Contract Year as possible. In the event that the Research Program
generates more projects that qualify for lead optimization than are
contemplated by the foregoing resource commitment, the parties agree to
discuss in good faith a possible increase in the number of FTEs devoted to
the Research Program, and may discuss changes in the allocation of
Research Program Costs; provided that any such increase in the number of
FTEs or change in the allocation of Research Program Costs shall be
subject to the mutual agreement of the parties. The Annual Research Plans
shall set forth specific FTE levels for each Contract Year to be assigned
to specific activities.
2.4.5 Subcontractors. In accordance with Section 2.4.3, the parties
will endeavor to optimize the allocation of their resources for the
conduct of the Research Program. As necessary and in furtherance of the
Research Program, however, either party may enter into research-related
agreements or subcontracts in accordance with this Section 2.4.5; provided
that (a) none of the rights of the other party hereunder are diminished or
otherwise adversely affected as a result of such subcontracting, (b) such
party obtains the written approval of the other party prior to engaging
any subcontractor, which approval shall not be unreasonably withheld or
delayed, (c) the subcontractor undertakes in writing obligations of
confidentiality and non-use regarding the other party's Confidential
Information that are substantially the same as those undertaken by BMS and
Lexicon pursuant to Article 8 hereof, and (d) where possible, the
subcontractor agrees in writing to assign to the party inventions made by
such subcontractor in performing services for the party. In the event a
party performs one or more of its obligations under the Research Program
through a subcontractor, then such Party shall at all times be responsible
for the performance of such subcontractor. The Joint Management Committee
shall decide whether the cost of such agreement shall be shared equally
between the parties or if the cost is to be borne by one party and whether
it can be allocated to offset obligations with respect to FTE levels as
set forth in Section 2.4.4 of this Agreement.
2.4.6 Reports. Each party shall submit [**] reports to the Joint
Management Committee, and additional reports as may be required by the
then-current Annual Research Plans,
17
detailing its activities under the Research Program. The Joint Management
Committee shall use such [**] reports to monitor the parties' respective
contributions to the Research Program. The Joint Management Committee may
amend the Annual Research Plan as necessary to maintain substantial
equality in resources devoted and participation by the parties over the
course of the Research Program, as measured by Research Program Costs.
2.4.7 Adjustments. If either party believes that the parties are not
devoting substantially equal resources and participation to the Research
Program, measured by the aggregated Research Program Costs incurred by
each party, such party may submit the matter to the Joint Management
Committee in writing, providing a reasonably detailed description of its
reasons for such belief. Taking into account historical and prospective
participation and resource devotion of the parties during the current
Contract Quarter and the immediately following Contract Quarter, the Joint
Management Committee shall take such steps as may be reasonably necessary
to ensure substantial equality in resources devoted to and participation
by the parties in the Research Program including, with respect to any
out-of-pocket expenditures, a reimbursement by one party to the other
party. In addition or as an alternative to taking steps to reallocate
resources and participation in the Research Program, the Joint Management
Committee may, by agreement, take one or more of the following actions in
order to equalize each party's participation in the Research Program
(measured by the aggregated Research Program Costs): (a) designate a
Selected Target as an Inactive Selected Target, such that one party could
proceed with the discovery or development of Program Compounds acting
through such Inactive Selected Target, without the participation of the
other party (and such that the developing party's activities with respect
to such Inactive Selected Target would no longer be included in the
Research Program Costs) or (b) provide for the payment by one party to the
other party of one-half of the Research Program Costs attributable to
unmatched FTEs provided by such other party in support of Research Program
Activities. In addition, a party may elect to designate a Selected Target
as an Inactive Selected Target to be pursued by the other party as set
forth in Section 2.3.4.1(b), and upon such election, the party making such
election shall notify the Joint Management Committee if it wishes to
maintain the level of its FTE contribution to the Research Program Costs
by allocating FTEs to another Selected Target or to reduce the total
number of FTEs the party contributes to the Research Program Costs. At the
request of a party, the other party shall permit an independent, certified
accountant appointed by the requesting party and reasonably acceptable to
the other party, at reasonable times and upon reasonable notice but no
more than [**], to examine, at the sole cost of the requesting party, the
records of the other party to verify the accuracy of any reports submitted
by the other party to the Joint Management Committee regarding the
Research Program Costs devoted to the Research Program by such party.
2.5 Development and Commercialization of Products.
2.5.1 Designation of BMS Targets and Lexicon Targets. Upon the
commencement of a Phase 1 Trial for the first pharmaceutical product
acting through a given Selected Target that contains a Development
Candidate as an active ingredient, BMS will have the first option,
exercisable by written notice to Lexicon, to obtain exclusive rights under
Section 4.1.1.3 and Section 4.2.1 with respect to such Selected Target,
upon the exercise of which option (a) such Selected Target shall be
designated as a "BMS Target," (b) BMS shall then be the Product Licensee
with respect to such BMS Target and (c) the exclusive licenses granted to
BMS under Section 4.1.1.3 and Section 4.2.1 shall apply to such BMS
Target. BMS shall deliver written notice to Lexicon within [**] days of
the commencement of such Phase 1 Trial of its election whether or not to
be the Product Licensee for such Selected Target. If BMS fails, within
such [**] period, to deliver written notice to Lexicon of its election
whether or not to be the Product Licensee for such Selected Target,
Lexicon shall provide notice to BMS advising BMS that such
18
notice by BMS is required. If BMS does not remedy such failure within [**]
days following Lexicon's notice, then Lexicon shall have the option to
obtain exclusive rights under Section 4.1.2.3 and Section 4.2.2 with
respect to such Selected Target, upon the exercise of which option (a)
such Selected Target shall be designated as a "Lexicon Target," (b)
Lexicon shall then be the Product Licensee with respect to such Lexicon
Target and (c) the exclusive licenses granted to Lexicon under Section
4.1.2.3 and Section 4.2.2 shall apply to such Lexicon Target.
2.5.2 Responsibility for Development and Commercialization Activities.
From and after the time that a party is designated as the Product Licensee
with respect to a Selected Target, such party shall then have full
responsibility (including responsibility for funding, resourcing and
decision-making) for all research, development and commercialization
activities relating to Development Compounds and Products that act through
such Selected Target, subject to the provisions of Section 2.5.3 and
Article 6 hereof.
2.5.3 Continuation of Research Program Activities.
2.5.3.1 The party that is designated as the Product Licensee
with respect to a Selected Target may, at its option, request that
Research Program Activities (including but not limited to work on
Back-up Compounds) continue following the designation of such Selected
Target as a BMS Target or Lexicon Target, as applicable. In such
event, the parties shall continue to carry out such Research Program
Activities with respect to such Selected Target as may be reasonably
requested by the Product Licensee (with the allocation of
responsibilities determined by the Joint Management Committee and
reflected in the Annual Research Plans) until the earlier of (a) the
first NDA Approval or MAA Approval of a Product acting through such
Selected Target or (b) the Product Licensor notifies the Product
Licensee of its election to discontinue further Research Program
Activities with respect to such Selected Target.
2.5.3.2 In the event the Product Licensor notifies the Product
Licensee of its election to discontinue further Research Program
Activities with respect to such Selected Target, (a) the Product
Licensor shall have no further obligation with respect to further
Research Program Activities related to such Selected Target other than
to reasonably cooperate with the Product Licensee, at the Product
Licensee's expense, in transitioning such activities to the Product
Licensee (including, without limitation, the transfer of relevant
Program Material), (b) no further activities of the Product Licensee
related to such Selected Target shall be considered Research Program
Activities for purposes of the parties' participation in the Research
Program or Research Program Costs and (c) the milestone payments and
royalties with respect to BMS Products (under Sections 5.4.1 and
5.5.1) or Lexicon Products (under Sections 5.4.2 and 5.5.2), as the
case may be, that are Post Opt-out Products (as defined below) shall
be [**].
2.5.3.3 As used in this Agreement, a "Post Opt-out Product"
shall mean a Product acting through a Selected Target for which the
Product Licensor has elected to discontinue further Research Program
Activities under this Section 2.5.3, which Product does not contain as
an active ingredient a Development Candidate or Back-up Compound for
which [**].
2.5.3.4 The milestone payments and royalties with respect to BMS
Products (under Sections 5.4.1 and 5.5.1) or Lexicon Products (under
Sections 5.4.2 and 5.5.2) (a) that are Post Opt-out Products and that
contain [**] as an active ingredient shall be [**]
19
and (b) that are Post Opt-out Products and that do not contain [**] as
an active ingredient shall be [**].
2.6 Exclusivity.
2.6.1 During the Research Program Term, each party shall work
exclusively with the other party under the terms of the Agreement with
respect to discovery and development activities directed to identifying
and developing Small Molecule Compounds that act through Selected Targets,
on a Selected Target-by-Selected Target basis, until the later to occur
of:
(a) such time as the applicable Selected Target either:
(i) becomes an Inactive Selected Target, or
(ii) is designated as a BMS Target or a Lexicon Target and
either (A) the Product Licensee has obtained an NDA Approval or
MAA Approval of a Product acting through such Selected Target or
(B) the Product Licensor has notified the Product Licensee of
its election to discontinue further Research Program Activities
with respect to such Selected Target; or
(b) such time as the specific and substantial medical utility of
such Selected Target in the CNS Field is or becomes (through no
wrongful act of a party) available in the public domain through:
(i) publication of [**];
(ii) publication of [**];
(iii) publication of [**];
(iv) publication of [**];
(v) publication of [**];
(vi) publication of [**];
(vii) publication in a single reference of [**]; or
(viii) public disclosure that [**]; or
information with respect to such Selected Target of the nature set
forth above (but that is not in the public domain) that BMS or Lexicon
can show by written documents or other tangible evidence is disclosed
to BMS or Lexicon by a Third Party with the lawful right to disclose
such information to BMS or Lexicon.
The expiration or termination of the parties' exclusivity obligations with
respect to a Selected Target under this Section 2.6.1 shall not be
construed as granting any right or license under any Background Materials,
Background Technology or Program Intellectual Property related thereto.
2.6.2 During the Target Discovery Program Term, Lexicon shall work
exclusively with BMS and shall not enter into discussions with any Third
Party with respect to activities directed
20
to the identification of novel Targets for the identification and
development of Small Molecule Compounds for use in the CNS Field, provided
that Lexicon may pursue discussions with third parties with respect to
Released Targets and Inactive Selected Targets that the parties have
agreed to out-license. During the Target Discovery Program Term, Lexicon
shall work exclusively with BMS under the terms of the Agreement with
respect to all Targets identified by Lexicon as of the Effective Date and
thereafter as having potential utility in the CNS Field, with the
exception of Lexicon's LG617 Target (which is subject to Section 4.4) and
Released Targets.
2.6.3 Except as otherwise provided for in this Agreement, and without
granting any right or license under any Lexicon Background Materials or
Lexicon Background Technology with respect thereto, for a period of [**]
years following the proposal that a Proposed Target be considered for
designation as a Selected Target under Section 2.3.2, BMS shall not,
unless such Proposed Target was so designated, research, develop or
commercialize any pharmaceutical product for any indication within the CNS
Field that specifically targets such Proposed Target. For the avoidance of
doubt, the parties agree that this covenant not to compete is not meant to
restrict BMS from researching, developing and/or commercializing
pharmaceutical products that do not specifically target a Proposed Target
but that nevertheless bind to such Proposed Target; provided that such
pharmaceutical products specifically target, and achieve their intended
physiological effects by binding to, a Target other than the Proposed
Target. Without granting any right or license, BMS's obligations under
this Section 2.6.3 with respect to a Proposed Target shall terminate on
the earlier of:
(a) the medical utility in the disclosed indication of such
Proposed Target is or becomes (through no wrongful act of BMS)
available in the public domain through:
(i) publication of [**];
(ii) publication of [**];
(iii) publication of [**];
(iv) publication of [**];
(v) publication of [**];
(vi) publication of [**];
(vii) publication in a single reference of [**]; or
(viii) public disclosure that [**]; or
(b) information with respect to such Proposed Target of the
nature set forth above (but that is not in the public domain) that BMS
can show by written documents or other tangible evidence, (i) is in
the possession of BMS prior to the Effective Date; (ii) is disclosed
to BMS by a Third Party with the lawful right to disclose such
information to BMS; or (iii) is independently developed by or on
behalf of BMS without use of Confidential Information disclosed by
Lexicon to BMS pursuant to this Agreement.
21
2.7 Annual Research Plan.
2.7.1 The Joint Scientific Committee shall prepare and the Joint
Management Committee shall approve the Annual Research Plan for every
Contract Year (other than the First Contract Year) at least [**] prior to
the commencement of such Contract Year. The Annual Research Plan for the
First Contract Year shall be prepared by the Joint Scientific Committee
and approved by the Joint Management Committee within [**] after the
Effective Date.
2.7.2 The Joint Management Committee shall update and amend, as
appropriate, the then-current Annual Research Plan from time to time.
2.7.3 Each Annual Research Plan shall contain the specific research
objectives to be achieved during the relevant Contract Year, the specific
activities to be performed under the Research Program during such year and
the timeline for performing such activities, and shall designate which
party shall be responsible for performing each of such activities.
2.7.4 Each Annual Research Plan shall be consistent with the other
terms and conditions of this Agreement, including without limitation the
objectives set forth in Section 2.1.1 and the terms and conditions set
forth in Section 2.4, and each Annual Research Plan for Contract Years
after the First Contract Year shall be substantially the same in form,
including the items itemized in, the Annual Research Plan for the First
Contract Year.
2.8 Research Program Records.
2.8.1 All work conducted by each party in the course of the Research
Program shall be completely and accurately recorded, in reasonable detail
and in good scientific manner, in separate laboratory notebooks. On
reasonable notice, and at reasonable intervals, each party shall have the
right to inspect and copy all such records of the other party reflecting
Program Technology or work done under the Research Program, to the extent
reasonably required to carry out its respective obligations and to
exercise its respective rights hereunder. The parties acknowledge and
agree that neither party guarantees the success of the Research Program
tasks undertaken hereunder.
2.8.2 In order to protect the parties' Patent Rights under U.S. law in
any inventions conceived or reduced to practice during or as a result of
the Research Program, each party agrees to maintain a policy that requires
its employees to record and maintain all data and information developed
during the Research Program in such a manner as to enable the parties to
use such records to establish the earliest date of invention and/or
diligence to reduction to practice. At a minimum, the policy shall require
such individuals to record all inventions generated by them in standard
laboratory notebooks or other suitable means that are dated and
corroborated by non-inventors on a regular, contemporaneous basis.
2.9 Disclosure of Research Program Results. Subject to restrictions
imposed by a party's confidentiality obligations to any Third Party with respect
to Background Materials or Background Technology, each party will disclose to
the Joint Scientific Committee all Program Technology that is discovered,
invented or made by such party during the course of the Research Program and
that is useful in or relates to the Research Program, including, without
limitation, information regarding Selected Targets, Small Molecule Compounds
identified in the Research Program through the use of Selected Targets,
activities of such Small Molecule Compounds, derivatives and results of in vitro
and in vivo studies, assay techniques and new assays. Such Program Technology
will be promptly disclosed to the Joint Scientific Committee, with meaningful
discoveries or advances being communicated as promptly as
22
practicable after such information is obtained or its significance is
appreciated. Upon written request by any member of the Joint Scientific
Committee, each party will provide the other with copies of the raw data
generated in the course of the Research Program, if reasonably necessary to the
other party's work under the Research Program. Any information disclosed
pursuant to this Section 2.9 may be used by the other party solely for the
purposes of the Research Program or as otherwise expressly permitted in this
Agreement.
2.10 Material Transfer. In order to facilitate the Research Program,
either party may provide to the other party certain Program Materials and
Background Materials Controlled by the supplying Party for use by the other
party in furtherance of the Research Program. All such Program Materials shall
be considered the Confidential Information of both parties and shall be subject
to the restrictions in Article 8. All Background Materials shall be considered
the Confidential Information of the supplying Party and shall be subject to the
restrictions in Article 8. Except as otherwise provided under this Agreement,
all such Program Materials and Background Materials delivered to the other party
shall remain the sole property of the supplying party, shall be used only in
furtherance of the Research Program and solely under the control of the other
party and its Affiliates, shall not be used or delivered to or for the benefit
of any Third Party without the prior written consent of the supplying party and
shall not be used in research or testing involving human subjects. The Program
Materials and Background Materials supplied under this Section 2.10 must be used
with prudence and appropriate caution in any experimental work, since not all of
their characteristics may be known. THE PROGRAM MATERIALS AND BACKGROUND
MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT
THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.
2.11 Third Party Opportunities. In the event that a party is presented
with an opportunity to obtain a license from a Third Party for the development
and commercialization of a Small Molecule Compound acting through a Selected
Target (a "Third Party Opportunity"), then the party may pursue such Third Party
Opportunity, but only in the manner provided in this Section 2.11. For purposes
of Third Party Opportunities, Section 2.6.1(a) shall not apply with respect to
the parties' rights and obligations under this Section 2.11 and, accordingly,
either party shall have the right to pursue any Third Party Opportunity, and
enter into an agreement with a Third Party with respect to such Third Party
Opportunity, in accordance with this Section 2.11 provided that Section 2.6.1(b)
alone is satisfied.
2.11.1 Third Party Opportunities for Selected Targets. In the event
that a party is presented with a Third Party Opportunity for the
development and commercialization of a Small Molecule Compound acting
through a Selected Target that has not been previously designated as an
Inactive Selected Target, a BMS Target or a Lexicon Target, then the party
may pursue such Third Party Opportunity, but only in the manner provided
in this Section 2.11.1. The party shall present the Third Party
Opportunity, including all relevant terms and conditions relating thereto
(subject to any confidentiality obligations to the Third Party), to the
Joint Management Committee. In the event that the Joint Management
Committee elects to pursue such Third Party Opportunity, then the parties
shall negotiate (with one another and with the Third Party, as
appropriate) in a good faith effort to reach an agreement whereby the
Third Party Opportunity can be included as a Product under the Agreement.
In the event that the parties and the Third Party reach an agreement to
include such Third Party Opportunity as a Product under the Agreement,
then (a) the Third Party Opportunity shall be included as a Product under
the Agreement, subject (unless otherwise agreed to by the parties) to
[**], and (b) the payments and royalties payable to such Third Party in
consideration for such Third Party Opportunity shall be treated [**]. In
the event that the Joint Management Committee does not elect to pursue
such Third Party
23
Opportunity, then, subject to the parties' obligations under Section
2.6.1(b) and Article 8, either party shall have the right to pursue such
Third Party Opportunity and, upon completion of an agreement with such
Third Party for such Third Party Opportunity, shall, by notice to the
other party, either (i) include such Third Party Opportunity as a Product
under this Agreement, [**], or (ii) designate such Selected Target as an
Inactive Selected Target to be pursued by the other party.
2.11.2 Third Party Opportunities for Inactive Selected Targets, BMS
Targets or Lexicon Targets. In the event that a party is presented with a
Third Party Opportunity for the development and commercialization of a
Small Molecule Compound acting through a Selected Target that has been
previously designated as an Inactive Selected Target, a BMS Target or a
Lexicon Target, then the party may pursue such Third Party Opportunity,
but only in the manner provided in this Section 2.11.2 and subject to the
parties' obligations under Section 2.6.1(b) and Article 8.
2.11.2.1 If the party pursuing such Third Party Opportunity
[**], the party shall present the Third Party Opportunity, including
all relevant terms and conditions relating thereto (subject to any
confidentiality obligations to the Third Party), to the Joint
Management Committee. In the event that the Joint Management
Committee elects to pursue such Third Party Opportunity, then the
parties shall negotiate (with one another and with the Third Party,
as appropriate) in a good faith effort to reach an agreement whereby
the Third Party Opportunity can be included as a Product under the
Agreement. In the event that the parties and the Third Party reach
an agreement to include such Third Party Opportunity as a Product
under the Agreement, then (a) the Third Party Opportunity shall be
included as a Product under the Agreement, subject (unless otherwise
agreed to by the parties) to [**], and (b) the payments and
royalties payable to such Third Party in consideration for such
Third Party Opportunity shall be treated [**]. In the event that the
Joint Management Committee does not elect to pursue such Third Party
Opportunity, then, subject to the parties' obligations under Section
2.6.1(b) and Article 8, [**] shall have the right to pursue such
Third Party Opportunity. If the party pursuing such Third Party
Opportunity holds exclusive rights under Article 4 with respect to
such Selected Target, upon completion of an agreement with such
Third Party for such Third Party Opportunity, such party shall, by
notice to the other party, either (i) include such Third Party
Opportunity as a Product under this Agreement, subject to [**], or
(ii) [**].
2.11.2.2 If the party pursuing such Third Party Opportunity
[**], the party to whom the Third Party Opportunity is presented
shall have the right, at its sole discretion, but subject to its
obligations under Section 2.6.1(b) and Article 8, to [**]; provided
that [**].
2.11.2.3 In the event the Product Licensee for a Selected
Target (or the holder of exclusive rights under Section 4.1 with
respect to an Inactive Selected Target) enters into an agreement for
a Third Party Opportunity [**], such party shall [**]. In the event
such party [**], the party entering into the agreement for such
Third Party Opportunity shall [**], and the other party shall [**].
24
ARTICLE 3. COLLABORATION MANAGEMENT
3.1 Program Committees.
3.1.1 Joint Management Committee. As soon as practicable after the
Effective Date, BMS and Lexicon shall establish a Joint Management
Committee (the "Joint Management Committee") comprised of [**]
representatives designated by BMS and [**] representatives designated by
Lexicon, each of whom shall have experience and seniority sufficient to
enable him or her to make decisions on behalf of the party he or she
represents; provided that BMS and Lexicon may, by mutual agreement,
designate an appropriate number of additional representatives from time to
time.
3.1.2 Joint Scientific Committee. As soon as practicable after the
Effective Date, BMS and Lexicon shall establish a Joint Scientific
Committee (the "Joint Scientific Committee") comprised of [**]
representatives designated by BMS and [**] representatives designated by
Lexicon, each of whom shall have experience and seniority sufficient to
enable him or her to make decisions on behalf of the party he or she
represents; provided that BMS and Lexicon may, by mutual agreement,
designate an appropriate number of additional representatives from time to
time. From time to time during the Research Program Term, the Joint
Scientific Committee may establish one or more Joint Research Project
Teams (each, a "Joint Research Project Team") to implement various aspects
of the Annual Research Plan. Such teams shall be governed in the same
manner and subject to the relevant requirements as set forth herein for
the Joint Scientific Committee.
3.2 Program Directors. Each party shall appoint one of its designees on
the Joint Management Committee or the Joint Scientific Committee to serve as a
program director (each, a "Program Director") with responsibility for overseeing
the day-to-day activities of the parties with respect to the Research Program
and for being the primary point of contact between the parties with respect to
the Research Program.
3.3 Replacement of Program Committee Representatives and Program
Directors. Each party shall be free to replace its representative members of any
Program Committee and its Program Director with new appointees who have
authority to act on behalf of such party, on notice to the other party.
3.4 Responsibilities of Joint Management Committee. The Joint Management
Committee shall be responsible for overseeing and directing the parties'
interaction and performance of their respective obligations under this
Agreement. Without limiting the generality of the foregoing, its duties shall
include, and it shall be responsible for decisions with respect to, the
following:
(a) designation of Selected Targets and Released Targets in
accordance with Section 2.3.2 hereof;
(b) review and approval of Annual Research Plans;
(c) oversight of the implementation of Annual Research Plans and
allocation of resources and other activities in support of the Research
Program, including the matters contemplated by Section 2.4 hereof;
(d) designation of Selected Targets as [**] in accordance with
Section 2.3.3 hereof;
25
(e) classification of Selected Targets as Inactive Selected Targets
in accordance with Section 2.3.4 hereof;
(f) authorization of the commencement of Compound Library Screening
for a Selected Target;
(g) determination as to which Selected Targets should be pursued
with a Mid-Phase Program and which party should perform such Mid-Phase
Program;
(h) determination as to which Selected Targets should be pursued
with a Full Phase Program and which party should perform such Full Phase
Program;
(i) establishment of criteria for designation of Development
Candidates (for purposes of which [**]) and Back-up Compounds;
(j) designation of Development Candidates (for purposes of which
[**]) and Back-up Compounds;
(k) decisions with respect to the preclinical development of
Development Candidates and Back-up Compounds leading to the commencement
of a Phase 1 Trial;
(l) prioritization of programs and activities where resources are
constrained;
(m) resolving matters within the responsibilities of the Joint
Scientific Committee as to which the members of the Joint Scientific
Committee are unable to reach a consensus; and
(n) addressing scientific issues and resolving differences that may
arise between the parties related to the performance of the Target
Discovery Program or the Research Program.
The Joint Management Committee shall not have the power to amend or waive
compliance with this Agreement.
3.5 Responsibilities of Joint Scientific Committee. The Joint Scientific
Committee shall be responsible for preparing for approval by the Joint
Management Committee and implementing the Annual Research Plans, allocation of
resources and other activities in support of the Research Program, with the
objective of expeditiously identifying Selected Targets and identifying
compounds meeting the criteria for designation as Development Candidates.
Without limiting the generality of the foregoing, its duties shall include (a)
establishing requirements (including, for example, with respect to throughput)
for, or otherwise approving the use of, assays for Compound Library Screening,
(b) selecting Small Molecule Compounds for optimization, characterization and/or
preclinical evaluation in the conduct of the Research Program, (c) monitoring,
reviewing and reporting on the progress of the Research Program, and (d) setting
the agenda for the Joint Management Committee for scientific and technical
matters relating to the Research Program and recommending actions by the Joint
Management Committee. The Joint Scientific Committee shall further have
responsibility during the Target Discovery Program Term for (i) determining,
promptly following the completion of Xxxxx 0 Xxxxxxxxxx Xxxxxxxx of a line of
Mutant Mice, whether [**] and [**] (provided that no affirmative action of the
Joint Scientific Committee shall be required to effect such determination if
[**]) and (ii) monitoring and reviewing the progress of the Target Discovery
Program. The Joint Scientific Committee shall not have the power to amend or
waive compliance with this Agreement. As appropriate, the Joint Scientific
Committee shall establish subcommittees and working groups, having an equal
number of representatives of Lexicon and BMS, which will work closely and meet
frequently to further the objectives of this Agreement.
26
3.6 Meetings of Program Committees. Each Program Committee shall meet at
least [**], and more frequently as the parties deem appropriate, on such dates
and at such times as the parties shall agree, on [**] days' written notice to
the other party unless such notice is waived by the parties. The first meeting
of the Joint Management Committee shall take place within [**] days after the
Effective Date, at Lexicon's facility in The Woodlands, Texas. Each Program
Committee may convene or be polled or consulted from time to time by means of
telecommunications, videoconferences or correspondence, as deemed necessary or
appropriate by the parties. To the extent that meetings are held in person, they
shall alternate between the offices of the parties unless the parties otherwise
agree.
3.7 Decisions.
3.7.1 Quorum; Voting. A quorum for a meeting of a Program Committee
shall require the presence of at least one Lexicon member (or designee)
and at least one BMS member (or designee) in person or by telephone. All
decisions made or actions taken by a Program Committee shall be made
unanimously by its members, with the Lexicon members cumulatively having
one vote and the BMS members cumulatively having one vote; provided that,
in the event the members of the Joint Management Committee are unable to
reach unanimity as to a decision under Section [**], [**]; and provided
further, that at such time that a party is designated as a Product
Licensee with respect to a Selected Target under Section 2.5, such Product
Licensee shall then have final decision-making authority with respect to
decisions concerning all further research and development activities with
respect to such Selected Target.
3.7.2 Dispute Resolution.
3.7.2.1 In the event that unanimity cannot be reached by the
Joint Scientific Committee with respect to a matter that is a
subject of its decision-making authority, then the matter shall be
referred for further review and resolution to the Alliance Managers
and the Joint Management Committee. Except as provided in Section
3.7.1, in the event that unanimity cannot be reached by the Joint
Management Committee with respect to a matter that is a subject of
its decision-making authority, then the matter shall be referred for
further review and resolution to [**]. The designated officers of
each party shall use reasonable efforts to resolve the matter within
[**] days after the matter is referred to them.
3.7.2.2 If the designated officers cannot resolve any matter
described in Section 3.4 within such [**] period, the matter shall
be referred to a Third Party arbitrator or arbitrators, in
accordance with the following procedures, whose decision shall be
[**]. In such event, the parties shall attempt to mutually agree
upon a single independent Third Party arbitrator, who shall be a
scientific professional with appropriate experience in the subject
matter at issue in such disagreement, within [**] days after the
initial referral of such matter to the designated officers. If the
parties are unable to mutually agree upon one such person, then each
party shall appoint one independent Third Party scientific
professional with appropriate experience in the subject matter at
issue in such disagreement prior to the expiration of such [**]
period, and within [**] days after the initial referral of such
matter to the designated officers, such person(s) shall select a
single independent Third Party arbitrator, who shall be a scientific
professional with appropriate experience in the subject matter at
issue in such disagreement. Each party shall present all information
presented to the Joint Management Committee and all other
information as such party reasonably desires regarding such
disagreement. Within [**] days after the initial referral of such
matter to the designated officers, the arbitrator shall
27
provide written notice to the parties regarding his or her
determination regarding such disagreement.
3.8 Administration. The chairperson of each Program Committee shall be
designated annually on an alternating basis between the parties. The initial
chairperson shall be selected by BMS. The party not designating the chairperson
shall designate one of its representative members as secretary to such Program
Committee for such year. The chairperson shall be responsible for calling
meetings of such Program Committee, sending notices of meetings to all members
and for leading such meetings.
3.9 Minutes. Within [**] days after each Program Committee meeting, the
secretary of such Program Committee shall prepare and distribute minutes of the
meeting, which shall provide a description in reasonable detail of the
discussions had at the meeting and a list of any actions, decisions or
determinations approved by such Program Committee. The secretary shall be
responsible for circulation of all draft and final minutes. Draft minutes shall
be first circulated to the chairperson, edited by the chairperson and then
circulated in final draft form to all members of such Program Committee
sufficiently in advance of the next meeting to allow adequate review and comment
prior to the meeting. Minutes shall be approved or disapproved, and revised as
necessary, at the next meeting. Final minutes shall be distributed to the
members of such Program Committee.
3.10 Term. The Joint Scientific Committee and the Joint Management
Committee shall exist until the termination or expiration of the Research
Program Term and for such longer period as necessary to perform the
responsibilities assigned to it under this Agreement.
3.11 Expenses. Each party shall be responsible for all travel and related
costs for its representatives to attend meetings of, and otherwise participate
on, the Joint Scientific Committee and the Joint Management Committee.
3.12 Alliance Managers. Each party shall appoint one senior representative
who possesses a general understanding of the scientific and business issues
relevant to this Agreement to act as its respective alliance manager (each, an
"Alliance Manager") for the relationship of the parties under this Agreement.
Each party may change its designated Alliance Manager from time to time upon
notice to the other party. Any Alliance Manager may designate a substitute to
temporarily perform the functions of that Alliance Manager. Each Alliance
Manager shall be charged with creating and maintaining a collaborative work
environment within and among the Joint Management Committee and Joint Scientific
Committee and any other committees or working groups that may be formed pursuant
to this Agreement. Each Alliance Manager will also:
(a) be the point of first referral in all matters of conflict
resolution;
(b) provide a single point of communication for seeking consensus
both internally within the respective parties organizations and together
regarding key strategy and plan issues;
(c) plan and coordinate cooperative efforts and internal and
external communications; and
(d) take responsibility for ensuring that governance activities
occur as set forth in this Agreement, in particular ensuring that Joint
Scientific Committee and Joint Management Committee meetings occur, and
that minutes are developed from such meetings, in accordance with this
Agreement, and that action items determined at such meetings are
appropriately carried out or otherwise addressed.
28
The Alliance Managers shall be entitled to attend meetings of any of the
Joint Scientific Committee and Joint Management Committee and other committees
that may be formed, but shall not have, or be deemed to have, any rights or
responsibilities of a member of any committee. Each Alliance Manager may bring
any matter to the attention of any committee where such Alliance Manager
reasonably believes that such matter requires such attention.
Any dispute between the parties arising under this Agreement shall be
brought to the attention of the Alliance Managers for resolution. The Alliance
Managers will endeavor to propose and define mutually acceptable solutions and
facilitate communications in an attempt to bring the dispute to a mutually
agreeable resolution. If the Alliance Managers cannot find an acceptable
solution to a dispute and if the Joint Management Committee cannot resolve any
matter properly referred to it, such dispute shall be resolved as set forth in
Section 3.7.2 or Section 12.6, as applicable.
ARTICLE 4. GRANTS OF RIGHTS
4.1 Grants of Research Licenses.
4.1.1 By Lexicon.
4.1.1.1 Selected Targets. Subject to the terms of this
Agreement and any applicable [**], during the Research Program Term,
Lexicon hereby grants to BMS and its Affiliates, within the
Territory, (a) a non-exclusive right and license (without any right
to sublicense, except as set forth below) under Lexicon's rights in
the Lexicon Background Materials and the Lexicon Background
Technology and (b) a co-exclusive right and license (without any
right to sublicense, except as set forth below) under Lexicon's
rights in the Program Intellectual Property to (i) identify and
validate Selected Targets (other than Selected Targets that have
become BMS Inactive Selected Targets, Lexicon Inactive Selected
Targets, BMS Targets or Lexicon Targets) for the identification,
evaluation and optimization of Small Molecule Compounds that are
active against such Selected Targets for use in the CNS Field, (ii)
identify Small Molecule Compounds that are active against such
Selected Targets through the use of such Selected Targets and (iii)
undertake preclinical research and evaluation of Program Compounds,
in each case in the conduct of the Research Program. Such right and
license shall include the right to grant sublicenses to Third
Parties that are approved by the Joint Management Committee.
4.1.1.2 BMS Inactive Selected Targets. Subject to the terms of
this Agreement and any applicable [**], Lexicon hereby grants to BMS
and its Affiliates, within the Territory, (a) a non-exclusive right
and license (without any right to sublicense, except as set forth
below) under Lexicon's rights in the Lexicon Background Materials
and the Lexicon Background Technology and (b) an exclusive right and
license (without any right to sublicense, except as set forth below)
under Lexicon's rights in the Program Intellectual Property to (i)
validate BMS Inactive Selected Targets for the identification,
evaluation and optimization of Small Molecule Compounds that are
active against such Selected Targets for use in the CNS Field, (ii)
identify Small Molecule Compounds that are active against such BMS
Inactive Selected Targets through the use of such BMS Inactive
Selected Targets and (iii) undertake preclinical research and
evaluation of Small Molecule Compounds that are active against such
BMS Inactive Selected Targets. Such right and license shall include
the right to grant sublicenses to Third Parties in connection with,
and incident to, a sublicense granted to such Third Party under the
rights and licenses granted under Section 4.2.1. The rights and
licenses granted under this Section
29
4.1.1.2 shall be in effect during the Research Program Term and
thereafter so long as BMS is using Diligent Efforts in exercising
its rights under this license.
4.1.1.3 BMS Targets. Subject to the terms of this Agreement
and any applicable [**], Lexicon hereby grants to BMS and its
Affiliates, within the Territory, (a) a non-exclusive right and
license (without any right to sublicense, except as set forth below)
under Lexicon's rights in the Lexicon Background Materials and the
Lexicon Background Technology and (b) an exclusive right and license
(without any right to sublicense, except as set forth below) under
Lexicon's rights in the Program Intellectual Property to (i)
identify Small Molecule Compounds that are active against BMS
Targets through the use of such BMS Targets and (ii) undertake
preclinical research and evaluation of Small Molecule Compounds that
are active against such BMS Targets. Such right and license shall
include the right to grant sublicenses to Third Parties in
connection with, and incident to, a sublicense granted to such Third
Party under the rights and licenses granted under Section 4.2.1.
4.1.2 By BMS.
4.1.2.1 Selected Targets. Subject to the terms of this
Agreement and any applicable [**], during the Research Program Term,
BMS hereby grants to Lexicon and its Affiliates, within the
Territory, (a) a non-exclusive right and license (without any right
to sublicense, except as set forth below) under BMS's rights in the
BMS Background Materials and the BMS Background Technology and (b) a
co-exclusive right and license (without any right to sublicense,
except as set forth below) under BMS's rights in the Program
Intellectual Property to (i) identify and validate Selected Targets
(other than Selected Targets that have become BMS Inactive Selected
Targets, Lexicon Inactive Selected Targets, BMS Targets or Lexicon
Targets) for the identification, evaluation and optimization of
Small Molecule Compounds that are active against such Selected
Targets for use in the CNS Field, (ii) identify Small Molecule
Compounds that are active against such Selected Targets through the
use of such Selected Targets and (iii) undertake preclinical
research and evaluation of Program Compounds, in each case in the
conduct of the Research Program. Such right and license shall
include the right to grant sublicenses to Third Parties that are
approved by the Joint Management Committee.
4.1.2.2 Lexicon Inactive Selected Targets. Subject to the
terms of this Agreement and any applicable [**], BMS hereby grants
to Lexicon and its Affiliates, within the Territory, (a) a
non-exclusive right and license (without any right to sublicense,
except as set forth below) under BMS's rights in the BMS Background
Materials and the BMS Background Technology and (b) an exclusive
right and license (without any right to sublicense, except as set
forth below) under BMS's rights in the Program Intellectual Property
to (i) validate Lexicon Inactive Selected Targets for the
identification, evaluation and optimization of Small Molecule
Compounds that are active against such Selected Targets for use in
the CNS Field, (ii) identify Small Molecule Compounds that are
active against such Lexicon Inactive Selected Targets through the
use of such Lexicon Inactive Selected Targets and (iii) undertake
preclinical research and evaluation of Small Molecule Compounds that
are active against such Lexicon Inactive Selected Targets. Such
right and license shall include the right to grant sublicenses to
Third Parties in connection with, and incident to, a sublicense
granted to such Third Party under the rights and licenses granted
under Section 4.2.2. The rights and licenses granted under this
Section 4.1.2.2 shall be in effect during the Research Program Term
and
30
thereafter so long as Lexicon is using Diligent Efforts in
exercising its rights under this license.
4.1.2.3 Lexicon Targets. Subject to the terms of this
Agreement and any applicable [**], BMS hereby grants to Lexicon and
its Affiliates, within the Territory, (a) a non-exclusive right and
license (without any right to sublicense, except as set forth below)
under BMS's rights in the BMS Background Materials and the BMS
Background Technology and (b) an exclusive right and license
(without any right to sublicense, except as set forth below) under
BMS's rights in the Program Intellectual Property to (i) identify
Small Molecule Compounds that are active against Lexicon Targets
through the use of such Lexicon Targets and (ii) undertake
preclinical research and evaluation of Small Molecule Compounds that
are active against such Lexicon Targets. Such right and license
shall include the right to grant sublicenses to Third Parties in
connection with, and incident to, a sublicense granted to such Third
Party under the rights and licenses granted under Section 4.2.2.
4.1.3 Restrictions on Clinical Development of Products. Neither
party nor their respective Affiliates shall administer to humans any Product
that incorporates or is derived from any Program Compound, unless and until (and
then only to the extent that) such party has received Joint Management Committee
approval or has received a license under Section 4.2 for the clinical
development and commercialization of such Product.
4.2 Grants of Development and Commercialization Licenses.
4.2.1 By Lexicon. Subject to the terms of this Agreement and any
applicable [**], Lexicon hereby grants to BMS and its Affiliates, within the
Territory, an exclusive right and license, with the right to sublicense, under
Lexicon's rights in the Program Intellectual Property to develop, make, have
made, import, use, have used, offer for sale, sell and have sold BMS Development
Compounds and BMS Products. Any sublicense under this Section 4.2.1 shall be set
forth in a written agreement containing confidentiality, non-use, ownership of
intellectual property and audit provisions consistent with and no less
restrictive than those contained herein, shall be subject and subordinate to the
terms and conditions of this Agreement, and shall obligate the Sublicensee to
make the milestone and royalty payments required hereunder; provided that BMS
shall remain responsible for all payments due to Lexicon hereunder. BMS shall
provide Lexicon with an [**] copy of each sublicense agreement promptly after
executing the same; provided, however, that subject to the exceptions set forth
in Section 1.18, each such sublicense agreement shall be Confidential
Information of BMS.
4.2.2 By BMS. Subject to the terms of this Agreement and any
applicable [**], BMS hereby grants to Lexicon and its Affiliates, within the
Territory, an exclusive right and license, with the right to sublicense, under
BMS's rights in the Program Intellectual Property to develop, make, have made,
import, use, have used, offer for sale, sell and have sold Lexicon Development
Compounds and Lexicon Products. Any sublicense under this Section 4.2.2 shall be
set forth in a written agreement containing confidentiality, non-use, ownership
of intellectual property and audit provisions consistent with and no less
restrictive than those contained herein, shall be subject and subordinate to the
terms and conditions of this Agreement, and shall obligate the Sublicensee to
make the milestone and royalty payments required hereunder; provided that
Lexicon shall remain responsible for all payments due to BMS hereunder. Lexicon
shall provide BMS with an [**] copy of each sublicense agreement promptly after
executing the same; provided, however, that subject to the exceptions set forth
in Section 1.18, each such sublicense agreement shall be Confidential
Information of Lexicon.
31
4.3 No Grant of Other Technology or Patent Rights. Except as otherwise
expressly provided in this Agreement, under no circumstances shall a party
hereto, as a result of this Agreement, obtain any ownership interest in or other
right to any technology, know-how, patents, patent applications, gene or genomic
xxxxxxxx xxxx or information, products, or biological materials of the other
party, including items owned, controlled or developed by, or licensed to, the
other party, or transferred by the other party to said party, at any time
pursuant to this Agreement.
4.4 Right of First Offer for LG617 Target Collaboration. Lexicon agrees
that, during the period beginning on the Effective Date and ending on the later
of (a) the expiration of the Target Discovery Program Term or (b) the
commencement of a Phase 1 Trial in the U.S. for an XX000 Xxxxxxxx (xxx "XX000
Option Period"), BMS shall have the following right of first offer. During the
LG617 Option Period, Lexicon shall not grant any license or otherwise transfer
rights to any Third Party for the development or commercialization of any LG617
Compound (any such arrangement being referred to herein as an "LG617 License"),
[**] unless and until [**]. In the event that, at any time during the LG617
Option Period after an LG617 Compound [**], Lexicon desires to enter into an
LG617 License (or after the LG617 Option Period, if Lexicon has not previously
notified BMS of such desire), [**], Lexicon shall first notify BMS of its desire
to enter into an LG617 License and, if requested by BMS within [**] days of such
notice, shall enter into good faith negotiations with BMS with respect to an
LG617 License for a period of [**] days following such notice (the "LG617
Negotiation Period"). In the event Lexicon and BMS do not enter into an LG617
License within such LG617 Negotiation Period, Lexicon will be free, at any time
thereafter, to enter into negotiations with respect to an LG617 License with any
Third Party; provided that, during the LG617 Option Period (but not thereafter),
[**], Lexicon shall [**]. Notwithstanding the foregoing, in the event that [**],
Lexicon shall not [**] unless it shall have [**]. Lexicon shall likewise [**],
but shall have no obligation to [**].
ARTICLE 5. PAYMENTS
5.1 Upfront Payment. In consideration of the rights granted to BMS under
this Agreement, BMS shall pay to Lexicon an upfront payment of thirty-six
million dollars (U.S. $36,000,000), which shall be due and payable within ten
(10) business days of the Effective Date, but in no event later than December
31, 2003.
5.2 Target Discovery Program Payments. Subject to the other terms and
conditions of this Agreement, in consideration for and as a contribution toward
the Lexicon's costs of development and analysis of Mutant Mice in the Target
Discovery Program, BMS shall make the following payments to Lexicon on the
following schedule:
(a) annual research payments of ten million dollars (U.S.
$10,000,000) for each of the first three Contract Years of the Target
Discovery Program Term, which annual research payments shall be payable
[**];
(b) in the event BMS elects to extend the Target Discovery Program
Term under Section 2.2.2(a), annual research payments of [**] for each of
the fourth and fifth Contract Years of the Target Discovery Program Term,
which annual research payments shall be payable [**]; and
(c) in the event BMS elects to extend the Target Discovery Program
Term under Section 2.2.2(b), annual research payments of [**] for each of
the fourth and fifth Contract Years of the Target Discovery Program Term,
which annual research payments shall be payable [**].
32
5.3 Research Program Milestone Payments. BMS shall pay Lexicon the
following Research Program milestone payments within [**] days of the occurrence
of the event giving rise to such payment:
(a) after Compound Library Screening has been first commenced for a
total of [**] Selected Targets [**], BMS shall pay Lexicon [**] for each
subsequent Selected Target for which Compound Library Screening is first
commenced [**];
(b) during the Target Discovery Program Term, after a Full Phase
Program has been first commenced for [**] Selected Target [**], BMS shall
pay Lexicon [**] for each subsequent Selected Target [**] for which a Full
Phase Program is first commenced; and
(c) during the period beginning after the Target Discovery Program
Term, after Full Phase Programs have been first commenced for a total of
[**] Selected Targets in the Research Program (a total of [**] Selected
Targets in the event BMS elected to extend the Target Discovery Program
Term under Section 2.2.2), BMS shall pay Lexicon [**] for each subsequent
Selected Target for which a Full Phase Program is first commenced;
provided that [**]. The Research Program milestone payments payable under this
Section 5.3 shall not be considered part of, or included in the calculation of
the Research Program Costs contributed by BMS to the Research Program. For
clarification, for purposes of determining the above Research Program milestone
payments, [**].
5.4 Product Development Milestone Payments.
5.4.1 BMS Products. For each BMS Target, BMS shall pay Lexicon the
following milestone payments for [**]:
PAYMENTS FOR BMS PAYMENTS FOR BMS
MILESTONE EVENT TARGET FOR WHICH [**] TARGET FOR WHICH [**]
----------------------------------------- --------------------- ---------------------
IND filing U.S. $ [**] U.S. $ [**]
Commencement of a Phase 2 Trial [**] [**]
Commencement of a Phase 3 Trial [**] [**]
NDA Filing [**] [**]
MAA Filing [**] [**]
NDA Approval or MAA Approval (upon the
first to occur) [**] [**]
---------------- ----------------
TOTAL U.S. $50,000,000 U.S. $76,000,000
Subject to Section 5.4.3, BMS shall pay Lexicon milestone payments for
[**]. For each BMS Product that is a Post Opt-out Product, milestone
payment [**] as set forth in Section 2.5.3.4. For each BMS Product that
acts through a BMS Target that was designated from a BMS Inactive Selected
Target, the milestone payment [**] as set forth in Section 2.3.4.2.
33
5.4.2 Lexicon Products. For each Lexicon Target, Lexicon shall pay
BMS the following milestone payments for [**]:
PAYMENTS FOR LEXICON
MILESTONE EVENT TARGET
----------------------------------------------------- --------------------
IND filing U.S. $ [**]
Commencement of a Phase 2 Trial [**]
Commencement of a Phase 3 Trial [**]
NDA Filing [**]
MAA Filing [**]
NDA Approval or MAA Approval (upon the first to occur) [**]
----------------
TOTAL U.S. $25,000,000
Subject to Section 5.4.3, Lexicon shall pay BMS milestone payments for [**]. For
each Lexicon Product that is a Post Opt-out Product, milestone payment [**] as
set forth in Section 2.5.3.4. For each Lexicon Product that acts through a
Lexicon Target that was designated from a Lexicon Inactive Selected Target, the
milestone payment [**] as set forth in Section 2.3.4.2.
5.4.3 Milestone Conditions. The milestone payments payable under Sections
5.4.1 and 5.4.2 with respect to Products acting through a given BMS Target or
Lexicon Target, as the case may be, shall be subject to the following
conditions.
(a) Only one set of milestone payments will be paid for all
Products containing a given Development Compound (including all forms and
formulations of Products containing such Development Compound) upon the
first occurrence of the milestone event for a Product containing that
Development Compound, regardless of the number of times a milestone event
may be achieved for Products containing such Development Compound (for
example, regardless of the number of Phase 3 Trials and NDA Filings and
Approvals that may be obtained for Products containing such Development
Compound).
(b) Each milestone payment shall be payable upon the first
achievement of the milestone event for a given Development Compound;
provided, however, for each subsequent Product containing a different
Development Compound, the milestone payments for such subsequent Product
shall [**]. Once [**], any [**]; provided that, [**], any milestone
payments made for such Product shall be [**]. As [**], [**] milestone
payments will be paid consistent with the foregoing principles.
(c) Subject to the foregoing provisions of this Section 5.4.3,
if any milestone event for a Product is achieved prior to or in the
absence of the achievement of any preceding milestone event for such
Product (e.g., an NDA filing for a Product without a Phase 3 Trial) then,
effective upon achievement of any such milestone event, all previously
unpaid payments for any such preceding milestone event(s) shall also
become due and payable.
5.4.4 Notice of Milestone Achievement. Each Product Licensee shall
promptly notify the Product Licensor of the first occurrence of any milestone
with respect to each Selected Target, and milestone payments shall be made
within [**] days after such occurrence. Such milestone payments shall be
non-refundable and shall not be credited against royalties payable to the
Product Licensee under this Agreement, subject to Section 6.2.
34
5.5 Product Royalties.
5.5.1 BMS Products. For each BMS Product, BMS shall pay to Lexicon the
following royalties on aggregate annual Net Sales in the Territory of such BMS
Product:
ROYALTY ON NET
SALES FOR BMS ROYALTY ON NET
PRODUCT ACTING SALES FOR BMS
THROUGH A BMS PRODUCT ACTING
TARGET THAT IS THROUGH A BMS
AGGREGATE ANNUAL WORLDWIDE NOT A LISTED TARGET THAT IS A
NET SALES OF BMS PRODUCT IN CONTRACT YEAR TARGET LISTED TARGET
---------------------------------------------- ------------------ -----------------
Under U.S. $[**] [**]% [**]%
From U.S. $[**]to U.S. $[**] [**]% [**]%
Above $[**] [**]% [**]%
By way of example, in a given Contract Year, if the aggregate annual worldwide
Net Sales of a given BMS Product acting through a BMS Target that is not a
Listed Target is [**], the following royalty payment would be payable under this
Section 5.5.1: [**]. For BMS Products which are Post Opt-out Products, the
foregoing royalty payment amounts [**] as provided in Section 2.5.3.4. For BMS
Products that act through a BMS Target that was designated from a BMS Inactive
Selected Target, the above royalty payment amounts shall be reduced as set forth
in Section 2.3.4.2.
5.5.2 Lexicon Products. For each Lexicon Product, Lexicon shall pay to BMS
the following royalties on aggregate annual Net Sales in the Territory of such
Lexicon Product:
AGGREGATE ANNUAL WORLDWIDE ROYALTY ON NET
NET SALES OF LEXICON PRODUCT IN CONTRACT YEAR SALES
----------------------------------------------------- -----------------------
Under U.S. $[**] [**]%
From U.S. $[**] to U.S. $[**] [**]%
Above $[**] [**]%
By way of example, in a given Contract Year, if the aggregate annual worldwide
Net Sales of a given Lexicon Product is [**], the following royalty payment
would be payable under this Section 5.5.2: [**]. For Lexicon Products which are
Post Opt-out Products, the foregoing royalty payment amounts [**] as provided in
Section 2.5.3.4. For Lexicon Products that act through a Lexicon Target that was
designated from a Lexicon Inactive Selected Target, the above royalty payment
[**] as set forth in Section 2.3.4.2.
5.5.3 Royalty Term. Royalties shall be payable, on a Product-by-Product
and country-by-country basis, on Net Sales of Products for the longer of (a) the
term of any Patents Rights Controlled by a party with a Valid Claim Covering the
composition of matter or therapeutic use of such Product and providing marketing
exclusivity for such Product in such country or (b) [**] years after the First
Commercial Sale of such Product in such country.
5.5.4 Royalty Reduction. The royalty amounts set forth above shall be
reduced by [**] on a country by country basis at any such time that [**], and
[**] shall be reduced by [**] on a country by country basis at any such time
that [**]. For such purposes, the reduction will be calculated assuming that the
royalty rate in such country is the Blended Rate (e.g., the reduced royalty rate
for such country shall be [**] of the Blended Rate, as applicable). In no event
shall the royalty amounts payable in any such country be reduced below [**] of
the amount otherwise
35
payable with respect to such Product under Section 5.5.1 or 5.5.2, as
applicable. As used in this Section 5.5.4, [**].
5.5.5 Third Party Patents. If the Product Licensee, in its reasonable
judgment, is required to obtain a license from any Third Party under any patent
in order to [**], and if the Product Licensee is required to pay to such Third
Party a royalty under such license calculated on sales of a Product, and the
infringement of such patent cannot reasonably be avoided by the Product
Licensee, or if the Product Licensee is required by a court of competent
jurisdiction to pay such a royalty to such a Third Party (and the infringement
of such patent cannot reasonably be avoided by the Product Licensee), then the
Product Licensee's obligation to pay royalties under Section 5.5.1 and 5.5.2
hereof shall be reduced by [**] of the amount of the royalty paid to such Third
Party, provided however, that the royalties payable under Section 5.5.1 and
5.5.2 hereof shall not be reduced in any such event below [**] of the amounts
set forth in Section 5.5.1 and 5.5.2. In addition, if the Product Licensee is
required to pay upfront payments or milestone payments to such Third Party in
consideration for such license, or if the Product Licensee is required by a
court of competent jurisdiction to pay a similar such payment, then the
royalties payable under Section 5.5.1 and 5.5.2 shall be reduced by [**] of the
amount of such upfront payments or milestone payments paid to such Third Party,
provided however, that the royalties payable under Section 5.5.1 and 5.5.2 shall
not be reduced in any such event below [**] of the amounts set forth in Section
5.5.1 and 5.5.2. The Product Licensee shall use its commercially reasonable
efforts to minimize the amount of any of the foregoing payments owed by the
Product Licensee to a Third Party. Prior to the Product Licensee exercising its
reasonable judgment under this Section 5.5.5, the Product Licensee shall provide
the Product Licensor with written notice of a potential need to obtain any
license from Third Parties. The parties shall discuss the best course of action
to resolve such potential license requirement(s), provided that such discussions
shall not limit the Product Licensee's right to exercise its reasonable
judgment.
5.5.6 Royalty Conditions. The royalties under Section 5.5.1 and 5.5.2
shall be subject to the following conditions:
(a) that only one royalty shall be due with respect to the same unit
of Product;
(b) that no royalties shall be due upon the sale or other transfer
among Product Licensee, its Affiliates or Sublicensees, but in such cases
the royalty shall be due and calculated upon Product Licensee's or its
Affiliate's or Sublicensee's Net Sales of Product to the first independent
Third Party; and
(c) no royalties shall accrue on the disposition of Product in
reasonable quantities by Product Licensee, its Affiliates or Sublicensees
as part of an expanded access program or as bona fide samples or as
donations to non-profit institutions or government agencies for
non-commercial purposes, provided, in each case, that neither Product
Licensee, its Affiliate or Sublicensees receives any payment for such
Product.
5.5.7 Royalty Reports; Exchange Rates. During the term of this Agreement
following the First Commercial Sale of any Product, the Product Licensee shall
provide Product Licensor, within [**] days after the end of each Contract
Quarter, an initial quarterly royalty report in a manner sufficient to enable
Product Licensor to comply with its reporting requirements. Within [**] days
after each Contract Quarter, Product Licensee shall furnish to the Product
Licensor a written quarterly report showing, on a Product-by-Product basis:
36
(a) the gross sales and Net Sales of Products sold by such Product
Licensee, its Sublicensees and their respective Affiliates during the
reporting period and the calculation of Net Sales from such gross sales;
(b) the royalties payable in United States dollars which shall have
accrued hereunder in respect of such Net Sales;
(c) withholding taxes, if any, required by applicable Law to be
deducted in respect of such royalties;
(d) the dates of the First Commercial Sales of Products in any
country during the reporting period; and
(e) the exchange rates used in determining the amount of United
States dollars payable hereunder.
Royalties payable on sales in countries other than the United States shall be
calculated in accordance with the standard exchange rate conversion practices
used by the Product Licensee for financial accounting purposes. If no royalty or
payment is due for any royalty period hereunder, the Product Licensee shall so
report. Each Product Licensee shall keep, and shall require its Sublicensees to
keep (all in accordance with generally accepted accounting principles,
consistently applied), complete and accurate records in sufficient detail to
properly reflect all gross sales and Net Sales and to enable the royalties
payable hereunder to be determined.
5.5.8 Audits. Upon the written request of a Product Licensor, the Product
Licensee shall permit an independent certified public accountant selected by the
Product Licensor and acceptable to the Product Licensee, which acceptance shall
not be unreasonably withheld, to have access, at reasonable times and during
normal business hours, to such records of the Product Licensee as may be
reasonably necessary to verify the accuracy of the royalty reports described
herein, in respect of any fiscal year ending not more than [**] prior to the
date of such request. The Product Licensor and the Product Licensee shall use
commercially reasonable efforts to schedule all such verifications within [**]
days after the Product Licensor makes its written request. All such
verifications shall be conducted not more than [**]. The report of the Product
Licensor's independent certified public accountant shall be made available to
both parties. Subject to the Product Licensee's rights under Section 12.6, in
the event the Product Licensor's independent certified public accountant
concludes that additional royalties were owed to the Product Licensor for such
period, the additional royalty shall be paid by the Product Licensee within [**]
days of the date the Product Licensor delivers to the Product Licensee such
independent certified public accountant's written report so concluding, unless
such report contains manifest error. In the event the Product Licensor's
independent certified public accountant concludes that there was an overpayment
of royalties to the Product Licensor during such period, the overpayment shall
be repaid by the Product Licensor within [**] days of the date the Product
Licensor received such independent certified public accountant's written report
so concluding, unless such report contains manifest error. The fees charged by
such independent certified public accountant shall be paid by the Product
Licensor unless such audit discloses an underpayment of more than [**] of the
amount due under this Agreement for the period in question, in which case the
Product Licensee will bear the full cost of such audit. The Product Licensee
shall include in each agreement with each applicable Sublicensee a provision
requiring such Sublicensee to make reports to the Product Licensee, to keep and
maintain records of sales made pursuant to such agreement and to grant access to
such records by the Product Licensor's independent certified public accountant
to the same extent required of the Product Licensee under
37
this Agreement. The Product Licensor agrees that all information subject
to review under this Section 5.5.8 or under any agreement with a
Sublicensee of the Product Licensee is confidential and that the Product
Licensor shall cause its independent certified public accountant to retain
all such information in confidence. The Product Licensor's independent
certified public accountant shall only report to the Product Licensor as
to the computation of the royalties and other payments due to the Product
Licensor under this Agreement and shall not disclose to the Product
Licensor any other information of the Product Licensee or its Sublicensee.
5.5.9 Royalty Payment Terms. Royalty payments for each Contract
Quarter shall be due at the time the Product Licensee's report under
Section 5.5.7 for such Contract Quarter shall be due.
5.6 Withholding Taxes. In the event that any royalties or other payments
due to a Product Licensor are subject to withholding tax required by applicable
Law to be paid to the taxing authority of any foreign country, the amount of
such tax may be withheld from the applicable royalties or other payment due the
Product Licensor. The Product Licensee shall promptly pay such tax on behalf of
the Product Licensor and shall furnish the Product Licensor with a certificate
of withholding tax so deducted for the Product Licensor's avoidance of duplicate
taxation in United States. The Product Licensee may not deduct any other
withholding or any other governmental charges from the payments agreed upon
under this Agreement, except to the extent same are paid on behalf of, or for
the benefit of, the Product Licensor. The Product Licensee shall maintain
official receipts of payment of any such withholding taxes and shall forward
such receipts to the Product Licensor.
5.7 Blocked Currency. If by applicable Law or fiscal policy of a
particular country, conversion into United States dollars or transfer of funds
of a convertible currency to the United States is restricted or forbidden, the
Product Licensee shall give the Product Licensor prompt written notice and shall
pay the royalty due under this Article 5 through such means or methods as are
lawful in such country as the Product Licensor may reasonably designate. Failing
the designation by the Product Licensor of such lawful means or methods within
[**] days after such written notice is given to the Product Licensor, the
Product Licensee shall deposit such royalty payment in local currency to the
credit of the Product Licensor in a recognized banking institution designated by
the Product Licensor, or if none is designated by the Product Licensor within
the [**] period described above, in a recognized banking institution selected by
the Product Licensee and identified in a written notice to the Product Licensor
by the Product Licensee, and such deposit shall fulfill all obligations of the
Product Licensee to the Product Licensor with respect to such royalties.
5.8 Interest on Late Payments. A Product Licensor shall have the right to
seek to collect interest on any payments that are not paid on or before [**]
days after the date such payments are due under this Agreement at a rate equal
to [**], calculated on the total number of days payment is delinquent.
5.9 Manner of Payment. Except as provided in Section 5.7, payments to be
made by a Product Licensee to the Product Licensor under this Agreement shall be
payable in United States dollars and shall be paid by check delivered to the
Product Licensor at its principal office at the address for notice indicated in
this Agreement or bank wire transfer in immediately available funds to such bank
account in the state in which such principal office is located as is designated
in writing by the Product Licensor from time to time.
ARTICLE 6. PRODUCT DEVELOPMENT DILIGENCE
6.1 Diligence Obligations. Each Product Licensee shall use Diligent
Efforts to pursue the research and development of, and to obtain Regulatory
Approvals in major markets throughout the world
38
as expeditiously as possible for, at least one Product that acts through each
Selected Target for which such Product Licensee holds a license under Section
4.2 and, following such Regulatory Approvals, to maximize Net Sales of such
Product(s), in each case in a manner consistent with the efforts such party
devotes to products or research, development or marketing projects of similar
market potential, profit potential or strategic value resulting from its own
research efforts, based on conditions then prevailing, without any diminution on
account of any interest of such Product Licensee in any competitive product in
development or being marketed for the same indication(s).
6.2 Effect of Failure to Satisfy Diligence Obligations.
6.2.1 With respect to each Selected Target for which the Product
Licensee fails to satisfy its Product diligence obligations under Section
6.1 above, at the option of the other party as its sole and exclusive
remedy therefor, (a) the commercial licenses granted under Section 4.2
with respect to such Product(s) and related Selected Target shall
terminate and (b) the Product Licensee shall deliver to the other party
[**]; provided, however, that Product Licensee's exclusive rights under
Section 4.1 and 4.2 shall not terminate as set forth above and Product
Licensee shall not be required to deliver [**] unless (i) Product Licensee
is given [**] days' prior written notice by Product Licensor of Product
Licensor's intent to terminate such licenses, stating the reasons and
justification for such termination and recommending steps which Product
Licensee should take, and (ii) Product Licensee, or any Sublicensee, has
not used Diligent Efforts during such [**] period to pursue the research
and/or development of, and/or to obtain Regulatory Approvals for, Products
with respect to such Selected Target. The Product Licensor shall have the
right, within the period of [**] days following the Product Licensee's
delivery of [**], to obtain [**] by delivering written notice thereof to
the Product Licensee, subject to the obligation (A) to [**] and (B) to
[**]..
6.2.2 With respect to each Selected Target and related Products and
Development Compounds for which a party exercises its right, under Section
6.2.1, to obtain [**], the other party promptly shall deliver to such
party [**], and shall [**] relating to such Product and related
Development Compounds.
6.3 Research and Development Reports. Each party shall keep complete and
accurate records of its activities conducted under this Agreement and the
results thereof. Within [**] after the end of each [**] following the end of the
Research Program Term, each party shall prepare and provide the other party with
a reasonably detailed written report of the activities conducted under this
Agreement, and the results thereof, through such date with respect to the
development and/or commercialization of Products.
ARTICLE 7. INTELLECTUAL PROPERTY
7.1 Ownership of Intellectual Property.
7.1.1 Ownership by BMS of the BMS Background Materials and BMS
Background Technology. Subject to the rights and licenses granted under
this Agreement, BMS (and its licensors, as applicable) shall own and
retain all rights to the BMS Background Materials and BMS Background
Technology.
7.1.2 Ownership by Lexicon of the Lexicon Background Materials and
Lexicon Background Technology. Subject to the rights and licenses granted
under this Agreement, Lexicon (and its licensors, as applicable) shall own
and retain all rights to the Lexicon Background Materials and Lexicon
Background Technology. Without limiting the foregoing,
39
subject to the rights and licenses granted under this Agreement, Lexicon
shall own and retain all rights to (a) all Mutant Mice and progeny thereof
and any cells or other materials derived by Lexicon therefrom and (b) any
invention or discovery that is conceived or first reduced to practice by
Lexicon or any of its Affiliates during the course of any analysis of
Mutant Mice performed in the Target Discovery Program.
7.1.3 Ownership of Program Intellectual Property.
7.1.3.1 Inventorship. Inventorship for patentable inventions
and discoveries conceived or reduced to practice during the course
of the performance of activities pursuant to this Agreement shall be
determined in accordance with U.S. patent laws for determining
inventorship. In the event of a dispute regarding inventorship, if
the parties are unable to resolve such inventorship dispute, the
Joint Management Committee shall establish a procedure to resolve
such dispute, which may include engaging a Third Party patent
attorney jointly selected by the parties to resolve such dispute,
which resolution by such patent attorney shall be binding upon the
parties.
7.1.3.2 Ownership of Program Technology and Program
Intellectual Property for Selected Targets. Subject to the rights
and licenses granted under this Agreement, Lexicon shall own all
Program Technology and Program Intellectual Property that directly
relates to (a) [**], (b) [**], (c) [**] or (d) [**] ("Selected
Target Inventions"), whether such Selected Target Invention was
invented or discovered by employees, Affiliates, agents, independent
contractors or consultants of BMS, Lexicon or both parties;
provided, however, that Selected Target Inventions shall not include
Program Technology and Program Intellectual Property that relates to
[**]. In the event BMS would otherwise be deemed to be an owner or
joint owner of any such Selected Target Invention, then BMS shall
assign to Lexicon its entire right, title and interest in such
Selected Target Invention.
7.1.3.3 Ownership of Other Program Technology and Program
Intellectual Property. Except as set forth in Section 7.1.3.2, title
to all Program Technology and Program Intellectual Property shall be
based upon the inventorship for such Program Technology and Program
Intellectual Property. Except as set forth in Section 7.1.3.2,
Lexicon shall own, Program Technology and Program Intellectual
Property invented solely by employees, agents, consultants and/or
contractors of Lexicon or a Lexicon Affiliate ("Lexicon Sole Program
Inventions"). Except as set forth in Section 7.1.3.2, BMS shall own,
Program Technology and Program Intellectual Property invented solely
by employees, agents, consultants and/or contractors of BMS or a BMS
Affiliate ("BMS Sole Program Inventions"). Lexicon and BMS shall
jointly own Program Technology and Program Intellectual Property
invented jointly by employees, agents, consultants and/or
contractors of both Lexicon and BMS or Affiliates of Lexicon and BMS
("Joint Program Inventions"). All Joint Program Inventions, BMS Sole
Program Inventions, Lexicon Sole Program Inventions and Selected
Target Inventions shall be collectively the "Program Inventions."
Each party shall disclose to the other party promptly any Program
Inventions made by such party's Affiliates, employees, agents or
consultants.
7.2 Prosecution and Maintenance of Program Patent Rights.
7.2.1 Primary Prosecution Rights. The responsibility for (a)
preparing, filing and prosecuting patent applications (including, but not
limited to, provisional, reissue, continuing, continuation,
continuation-in-part, divisional, and substitute applications and any
foreign
40
counterparts thereof) Covering a Program Invention; (b) maintaining any
Program Patent Rights; and (c) managing any interference or opposition or
similar proceedings relating to the foregoing ((a) through (c),
collectively, "Patent Prosecution") shall be the responsibility of the
party owning such Program Invention; provided, however, that with respect
to any Joint Program Inventions, such responsibility shall be assigned by
the Joint Management Committee on a case-by-case basis. In determining
which party shall be responsible for Patent Prosecution of a jointly owned
patent application, the Joint Management Committee shall consider, among
other factors, the relative contribution of each party to the claimed
subject matter and the relatedness of the claimed subject matter to that
in other patent applications being prosecuted by each party. Each party
shall bear all Patent Prosecution expenses, including attorneys' fees,
incurred by such party in the performance of Patent Prosecution, except
that, unless the parties agree otherwise the Patent Prosecution expenses,
including attorneys' fees, for Joint Program Inventions shall be shared
equally by the parties.
7.2.2 Secondary Prosecution Rights. If the prosecuting party elects
not to continue pursuing Patent Prosecution for Program Inventions (and
the other party has joint ownership of or a license under such Program
Patent Rights pursuant to this Agreement), then the prosecuting party
shall notify the other party in writing of such election at least [**]
days prior to the last available date for action to preserve such Program
Patent Rights. If such other party elects to continue Patent Prosecution,
it may do so at its own expense. The party taking over Patent Prosecution
responsibility will not be liable to the other party in any way with
respect to its handling of, or the results obtained from, such Patent
Prosecution. The other party will provide the party taking over Patent
Prosecution with such assistance and execute such documents as are
necessary to continue or permit such Patent Prosecution.
7.2.3 Cooperation. Each party hereby agrees:
(a) to take all reasonable additional actions and execute such
agreements, instruments and documents as may be reasonably required
to perfect the other's ownership interest in accordance with the
intent of this Agreement;
(b) to make its employees, Affiliates, agents, independent
contractors and consultants reasonably available to the other party
(or to the other party's authorized attorneys, agents or
representatives), to the extent reasonably necessary to enable the
prosecuting party to undertake Patent Prosecution;
(c) to provide the other party with copies of all material
correspondence with the U.S. Patent and Trademark Office or its
foreign counterparts;
(d) to cooperate, if necessary and appropriate, with the other
party in gaining patent term extensions wherever applicable to
Program Patent Rights for Program Inventions; and
(e) to endeavor in good faith to coordinate its efforts with
the other party to minimize or avoid interference with the Patent
Prosecution of the other party's patent applications related to
Program Inventions.
7.3 Patent Term Extension. The Product Licensor shall cooperate with the
Product Licensee in obtaining patent term extension or supplemental protection
certificates or their equivalents in any country with respect to the Program
Patent Rights. In the event that elections with respect to obtaining such patent
term extension, supplemental protection certificates or their equivalents are to
be made, the
41
Product Licensee shall have the right to make the election and the Product
Licensor agrees to abide by such election, provided that such election by the
Product Licensee will be made so as to maximize the period of marketing
exclusivity for the Product.
7.4 Enforcement of the Program Patent Rights.
7.4.1 Notices of Third Party Infringement. Each Party shall promptly
provide the other Party with written notice reasonably detailing any known
or alleged infringement of Program Patent Rights by a Third Party.
7.4.2 Xxxxx-Xxxxxx Notifications. Each party shall provide to the
other party copies of any allegations of alleged patent invalidity,
unenforceability or non-infringement of a patent or patents with respect
to Program Technology, Program Materials or Products pursuant to a
Paragraph IV Patent Certification by a Third Party filing an Abbreviated
New Drug Application (i.e., an action under the Xxxxx-Xxxxxx Act). Such
copies shall be provided promptly after receipt of such certification.
7.4.3 Other Notifications. Each party shall provide to the other
party copies of any notices it receives from Third Parties regarding any
patent nullity actions, any declaratory judgment actions, any alleged
infringement of Program Patent Rights or any alleged misappropriation of
intellectual property with respect to Program Technology, Program
Materials or Products. Such copies shall be provided promptly following
receipt thereof.
7.4.4 Product-Related Infringement.
7.4.4.1 The Product Licensee for a Product shall have the sole
right, but not the obligation, to institute and direct legal
proceedings against any Third Party believed to be infringing the
Program Patent Rights of either party (including, without
limitation, the Program Patent Rights Claiming Selected Target
Inventions related to the Selected Target through which such Product
acts) by the manufacture, use, importation, offer for sale or sale
of a product competitive with such Product (whether a clinical or
commercial product). Each party will bear its own costs, including
attorneys' fees, relating to such legal proceedings; provided that
the Product Licensee shall bear the Product Licensor's out-of-pocket
expenses, including attorneys' fees, incurred in complying with
requests for cooperation made by the Product Licensee. Any recovery
in connection with such suit or proceeding will first be applied to
reimburse the parties for their out-of-pocket expenses, including
attorney's fees. All recoveries resulting from such legal
proceedings that are in excess of the parties' costs of bringing or
participating in such action, including attorney's fees, shall be
allocated fifty percent (50%) to BMS and fifty percent (50%) to
Lexicon; provided, however, that, in the event the [**], the Product
Licensee shall [**]. The Product Licensee and the Product Licensor
shall share in any enhanced damages due to willful infringement in
proportion to their entitlement to actual damages.
7.4.4.2 In the event that a Product Licensee takes action
under this Section 7.3.2, the other party shall cooperate to the
extent reasonably necessary at the sole expense of the Product
Licensee. Upon the reasonable request of the Product Licensee, the
other party shall join the suit and shall be represented in any such
legal proceedings using counsel of its own choice. Neither party
shall settle any claim or proceeding relating to Program Patent
Rights Controlled in whole or in part by the other party or licensed
under this Agreement to the other party without the prior written
consent of such other party, which consent shall not be unreasonably
withheld.
42
7.4.5 Non-Product-Related Infringement. Each party shall have the
sole right, but not the obligation, to institute and direct legal
proceedings against any Third Party believed to be infringing the Sole
Program Patent Rights of such party other than infringement relating to a
Product. All costs, including attorneys' fees, relating to such legal
proceedings shall be borne by the party instituting such legal
proceedings, and all recoveries resulting from such legal proceedings
shall be retained by such party. The parties shall consult with each other
regarding the institution, prosecution and control of any action or
proceeding with respect to infringement of any of the Joint Program Patent
Rights other than infringement relating to a Product.
7.5 Notices of Other Proceedings.
7.5.1 Each party shall notify the other in writing of any
allegations it receives from a Third Party that the manufacture, use,
sale, offer for sale or import of Program Technology, Program Materials or
any Product infringes the intellectual property rights of such Third
Party. Such notice shall be provided promptly following receipt of such
allegations.
7.5.2 In the event that a party receives notice that it or any of
its Affiliates have been individually named as a defendant in a legal
proceeding by a Third Party alleging infringement of a Third Party patent
or other intellectual property right as a result of the manufacture, use,
sale, offer for sale or import of Program Technology, Program Materials or
a Product, such party shall immediately notify the other party in writing
after the receipt of such notice. Such written notice shall include a copy
of any summons or complaint (or the equivalent thereof) received regarding
the foregoing.
ARTICLE 8. CONFIDENTIALITY
8.1 Nondisclosure Obligations.
8.1.1 General. Except as otherwise provided in this Article 8, each
Receiving Party shall maintain the Confidential Information of each
Disclosing Party in confidence and use it only for purposes specifically
authorized under this Agreement. Except as otherwise specifically provided
in this Article 8, each party shall disclose Confidential Information of
the other party only to those employees, representatives and agents
requiring knowledge thereof in connection with fulfilling the party's
obligations under this Agreement, and not to any other Third Party. Each
party further agrees to inform all such employees, representatives and
agents of the terms and provisions of this Agreement relating to
Confidential Information and their duties hereunder and to have obtained
their prior written agreement to keep such Confidential Information in
confidence under terms and conditions no less restrictive than those
contained herein. Each party shall exercise the same standard of care as
it would itself exercise in relation to its own confidential information
(but in no event less than a reasonable standard of care) to protect and
preserve the proprietary and confidential nature of the Confidential
Information disclosed to it by the other party. Upon termination or
expiration of this Agreement, each party shall promptly, upon request of
the other party, use good faith commercially reasonable efforts to return
or destroy (as requested by the disclosing party) all documents and any
copies thereof containing Confidential Information belonging to, or
disclosed by, such other party, save that it may retain one copy of the
same solely for the purposes of ensuring compliance with this Section 8.1.
Any breach of this Section 8.1 by any person to whom Confidential
Information is disclosed by a party is considered a breach by the party
itself.
8.1.2 Limitations. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights
under this Agreement and subject to advance written notification
43
to the Disclosing Party: (a) a party may disclose to Third Parties
Confidential Information it is otherwise obligated not to disclose under
this Section 8.1, to its Affiliates, Sublicensees, consultants, outside
contractors and clinical investigators, on a strict need-to-know basis for
the purposes contemplated by this Agreement and on the condition that such
entities or persons agree to keep the Confidential Information
confidential for the same time periods and to the same extent as such
party is required to keep the Confidential Information confidential
hereunder; and (b) a party or its Sublicensees may disclose, using
appropriate measures to preserve confidentiality, such Confidential
Information to government or other regulatory authorities to the extent
that such disclosure is reasonably necessary to obtain authorizations to
conduct clinical trials of, and to commercially market, Products pursuant
to this Agreement. Furthermore, a Receiving Party may request permission
from the Disclosing Party to disclose such Confidential Information to the
extent that such disclosure is [**].
8.1.3 Required Disclosure. A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for
information or documents, subpoena, civil investigative demand issued by a
court or governmental agency or as otherwise required by Law; provided,
however, that the Receiving Party shall notify the Disclosing Party
promptly upon receipt thereof, giving [**] the Disclosing Party sufficient
advance notice to permit it to oppose, limit or seek confidential
treatment for such disclosure; and provided, further, that the Receiving
Party shall furnish only that portion of the Confidential Information
which it is advised by counsel is legally required whether or not a
protective order or other similar order is obtained by the Disclosing
Party.
8.1.4 Securities Filings. In the event either party proposes to file
with the Securities and Exchange Commission or the securities regulators
of any state or other jurisdiction a registration statement or any other
disclosure document which describes or refers to this Agreement under the
Securities Act of 1933, as amended, the Securities Exchange Act, of 1934,
as amended, or any other applicable securities law, the party shall notify
the other party of such intention and shall provide such other party with
a copy of relevant portions of the proposed filing not less than ten (10)
business days prior to such filing (and any revisions to such portions of
the proposed filing a reasonable time prior to the filing thereof),
including any exhibits thereto relating to the Agreement, and shall [**]
to obtain confidential treatment of any information concerning the
Agreement that such other party requests be kept confidential, and shall
only disclose Confidential Information which it is advised by counsel is
legally required to be disclosed. No such notice shall be required under
this Section 8.1.4 if the substance of the description of or reference to
this Agreement contained in the proposed filing has been included in any
previous filing made by the either party hereunder or otherwise approved
by the other party.
8.2 Terms of Agreement. The existence and the terms and conditions of the
Agreement that the parties have not specifically agreed to disclose pursuant to
Section 8.1.4 and Section 12.8 shall be considered Confidential Information of
both parties. Either party may disclose such terms to bona fide potential
Sublicensee, investor, investment banker, acquiror, merger partner or other
potential financial partner, and their attorneys and agents, provided that each
such person to whom such information is to be disclosed is informed of the
confidential nature of such information and has entered into a written agreement
with the party requiring such person to keep such information confidential.
8.3 Injunctive Relief. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 8 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf.
44
Accordingly, each party shall be entitled to the granting of injunctive relief
by a court of competent jurisdiction against any action that constitutes any
such breach of this Article 8.
8.4 Publication. BMS and/or Lexicon (each, a "Submitting Party") may each
publish or present data and/or results relating to a Product for which the
Submitting Party holds a commercial license, subject to the prior written
approval of the other party and the prior review of the proposed disclosure by
the other party (each, a "Reviewing Party"), solely to determine (a) whether the
proposed disclosure contains the Confidential Information of the Reviewing Party
or (b) whether the information contained in the proposed disclosure should be
the subject of a patent application to be filed prior to such disclosure. The
Submitting Party shall provide the Reviewing Party with the opportunity to
review any proposed abstract, manuscript or presentation which discloses the
results of research relating to the Product by delivering a copy thereof to the
Reviewing Party no less than [**] days before its intended submission for
publication or presentation. The Reviewing Party shall have [**] days from its
receipt of any such abstract, manuscript or presentation in which to notify the
Submitting Party in writing of any specific objections to the disclosure, based
on either the need to seek patent protection or concern regarding the specific
disclosure of the Confidential Information of the Reviewing Party. In the event
the Reviewing Party objects to the disclosure, the Submitting Party agrees not
to submit the publication or abstract or make the presentation containing the
objected-to information until the Reviewing Party is given a reasonable
additional period of time (not to exceed an additional [**] days) to seek patent
protection for any material in the disclosure which the Reviewing Party believes
is patentable (subject, in all events, to Section 8.3) or, in the case of
Confidential Information, to allow the Submitting Party to delete any
Confidential Information of the Reviewing Party from the proposed disclosure.
The Submitting Party agrees to delete from the proposed disclosure any
Confidential Information of the Reviewing Party upon request.
ARTICLE 9. REPRESENTATIONS AND WARRANTIES
9.1 Representations, Warranties and Covenants of Lexicon. Lexicon
represents and warrants to and covenants with BMS that:
9.1.1 Lexicon is a corporation duly organized, validly existing and
in corporate good standing under the Laws of the state of Delaware;
9.1.2 Lexicon has the corporate and legal right, authority and power
to enter into this Agreement, and to extend the rights and licenses
granted to BMS in this Agreement;
9.1.3 Lexicon has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
9.1.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of Lexicon,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting creditors' and contracting parties' rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
9.1.5 the performance of Lexicon's obligations under this Agreement
will not conflict with its charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party; and
45
9.1.6 Lexicon will not after the Effective Date enter into any
agreements, contracts or other arrangements with others that would be
inconsistent with or in conflict with or in derogation of BMS's rights and
licenses under this Agreement or Lexicon's obligations under this
Agreement;
9.1.7 except as otherwise disclosed to BMS prior to the Effective
Date, Lexicon is not aware of any legal obstacles, including the patent
rights of others, that are likely to prevent it from carrying out the
provisions of this Agreement;
9.1.8 Lexicon has enforceable written agreements with all of its
employees who receive Confidential Information under this Agreement
assigning to Lexicon ownership of all intellectual property rights created
in the course of their employment;
9.1.9 except for Pre-existing Obligations disclosed to BMS prior to
the Effective Date, no other person or organization presently has [**];
9.1.10 Lexicon has not granted or permitted to be attached any lien
or security interest with respect to the Lexicon Background Technology
and/or Lexicon Background Materials that is licensed to BMS under this
Agreement; and
9.1.11 except for [**], the [**] are not subject to Pre-existing
Obligations as of the Effective Date [**], in each case that would [**].
9.2 Representations, Warranties and Covenants of BMS. BMS represents and
warrants to and covenants with Lexicon that:
9.2.1 BMS is a corporation duly organized, validly existing and in
corporate good standing under the Laws of the state of Delaware;
9.2.2 BMS has the corporate and legal right, authority and power to
enter into this Agreement, and to extend the rights and licenses granted
to Lexicon in this Agreement;
9.2.3 BMS has taken all necessary action to authorize the execution,
delivery and performance of this Agreement;
9.2.4 upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of BMS
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar Laws affecting creditors' and contracting parties' rights
generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
9.2.5 the performance of its obligations under this Agreement will
not conflict with BMS's charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party; and
9.2.6 BMS will not after the Effective Date enter into any
agreements, contracts or other arrangements with others that would be
inconsistent with or in conflict with or in derogation of its obligations
under this Agreement;
46
9.2.7 except as otherwise disclosed to Lexicon prior to the
Effective Date, BMS is not aware of any legal obstacles, including the
patent rights of others, that are likely to prevent it from carrying out
the provisions of this Agreement;
9.2.8 BMS has enforceable written agreements with all of its
employees who receive Confidential Information under this Agreement
assigning to BMS ownership of all intellectual property rights created in
the course of their employment; and
9.2.9 except for [**], the [**] are not subject to Pre-existing
Obligations as of the Effective Date [**], in each case that would [**].
9.3 Warranty Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY PRODUCT, PATENT
RIGHTS, GOODS, SERVICES, PROGRAM MATERIALS, BACKGROUND MATERIALS OR ANY OTHER
SUBJECT MATTER OF THIS AGREEMENT, AND EACH PARTY HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
9.4 Limited Liability. EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT,
NEITHER LEXICON NOR BMS WILL BE LIABLE WITH RESPECT TO ANY MATTER ARISING UNDER
THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL
OR EQUITABLE THEORY FOR ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OR LOST PROFITS.
ARTICLE 10. INDEMNITY
10.1 BMS Indemnity Obligations. BMS agrees to defend, indemnify and hold
Lexicon, its Affiliates and their respective employees and agents harmless from
all claims, losses, damages or expenses (including reasonable attorneys' fees
and costs of litigation) in connection with any claims made or suits brought
against Lexicon by a Third Party relating to this Agreement arising as a result
of: (a) actual or asserted violations of any applicable Law by BMS, its
Sublicensees and their respective Affiliates by virtue of which any BMS Products
manufactured, distributed or sold hereunder shall be alleged or determined to be
adulterated, misbranded, mislabeled or otherwise not in compliance with any
applicable Law; (b) claims for bodily injury, death or property damage
attributable to the manufacture, distribution, sale or use of any BMS Products
by BMS, its Sublicensees and their respective Affiliates; (c) a BMS Product
recall ordered by a governmental agency or required by a confirmed BMS Product
failure as reasonably determined by the parties hereto; (d) BMS's breach of any
of its representations, warranties or covenants hereunder; or (e) the negligence
or willful misconduct of BMS, its officers, employees or agents.
10.2 Lexicon Indemnity Obligations. Lexicon agrees to defend, indemnify
and hold BMS, its Affiliates and their respective employees and agents harmless
from all claims, losses, damages or expenses (including reasonable attorneys'
fees and costs of litigation) in connection with any claims made or suits
brought against BMS by a Third Party relating to this Agreement arising as a
result of: (a) actual or asserted violations of any applicable Law by Lexicon,
its Sublicensees and their respective Affiliates by virtue of which any Lexicon
Products manufactured, distributed or sold hereunder shall be alleged or
determined to be adulterated, misbranded, mislabeled or otherwise not in
compliance with any applicable Law; (b) claims for bodily injury, death or
property damage attributable to the manufacture, distribution, sale or use of
any Lexicon Products by Lexicon, its Sublicensees and their respective
Affiliates; (c) a
47
Lexicon Product recall ordered by a governmental agency or required by a
confirmed Lexicon Product failure as reasonably determined by the parties
hereto; (d) Lexicon's breach of any of its representations, warranties or
covenants hereunder; or (e) the negligence or willful misconduct of Lexicon, its
officers, employees or agents.
10.3 Limitation on Indemnity Obligations. Neither party, its Affiliates or
their respective employees and agents shall be entitled to the indemnities set
forth in Sections 10.1 or 10.2, respectively, to the comparative extent the
claim, loss, damage or expense for which indemnification is sought was caused by
the negligence, willful misconduct, reckless or intentional act or omission or
material breach of this Agreement by such party, its directors, officers,
employees or authorized agents.
10.4 Procedure. If a party or any of its Affiliates or their respective
employees or agents (collectively, the "Indemnitee") intends to claim
indemnification under this Article 10, 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 selected by the
Indemnitor and reasonably acceptable to the Indemnitee, provided, however, that
an Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitee, 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 Indemnitor shall have the
right to settle or compromise any claims for which it is providing
indemnification under this Article 10, provided that the consent of the
Indemnitee (which shall not be unreasonably withheld or delayed) shall be
required in the event any such settlement or compromise would adversely affect
the interests of the Indemnitee. The indemnity agreement in this Article 10
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. The failure to deliver notice to the Indemnitor within a reasonable
time after the commencement of any such action, if prejudicial to the
Indemnitor's ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Article 10, but the omission so to
deliver notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Article 10. The Indemnitee
under this Article 10, 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.
10.5 Insurance. Each party shall maintain appropriate product liability
insurance (and/or self-insurance) with respect to development, manufacture and
sale of Products by such party in such amount as such party customarily
maintains with respect to sales of its other products. Each party shall maintain
such insurance for so long as it continues to manufacture or sell Products, and
thereafter for so long as such party customarily maintains insurance with
respect to sales of its other products.
ARTICLE 11. EXPIRATION AND TERMINATION
11.1 Term of Agreement. The term of this Agreement shall commence on the
Effective Date and shall continue, unless earlier terminated under Section 11.2,
until the later of (a) the expiration of the obligations of both parties to pay
royalties under this Agreement and (b) the expiration or termination of the last
to expire of any Valid Claim included in the Program Patent Rights. The
expiration or termination of the Target Discovery Term and Research Program Term
shall not affect the term of this Agreement.
11.2 Termination for Material Breach.
48
11.2.1 If either party believes that the other is in material breach
of this Agreement, then the non-breaching party may deliver notice of such
breach to the other party. In such notice, the non-breaching party shall
identify the actions or conduct that such party would consider to be an
acceptable cure of such breach. For any breach arising from a failure to
make a payment set forth in Article 5, the allegedly breaching party shall
have [**] days to cure such breach, unless such payment is in dispute. For
all material breaches other than a failure to make a payment set forth in
Article 5, the allegedly breaching party shall have [**] days to either
cure such breach or, if cure cannot be reasonably effected within such
[**] period, to deliver to the other party a plan for curing such breach
that is reasonably sufficient to effect a cure. Such a plan shall set
forth a program for achieving cure as rapidly as practicable. Following
delivery of such plan, the breaching party shall use Diligent Efforts to
carry out the plan and cure the material breach.
11.2.2 If the party receiving notice of material breach fails to
cure such breach within the [**] period or [**] period (as applicable),
the party originally delivering the notice shall have the right, at its
option exercisable in its sole discretion, in addition to any other rights
or remedies available to it at law or in equity and subject to the
limitations set forth in Sections 3.7.2, 9.4 and 12.6 hereof, to terminate
this Agreement upon [**] days' notice thereof to the other party, in which
case the licenses granted to the defaulting party pursuant to Article 4
shall terminate; provided that such termination shall apply to the rights
and licenses granted to the defaulting party under Section 4.2 with
respect to a Selected Target and related Products and Development
Compounds only in the event, and to the extent, that such default relates
to such specific Selected Target and related Products and Development
Compounds. The provisions of Sections 5.3 through 5.9 hereof and Article 6
shall survive any such termination of this Agreement. The rights and
licenses granted to the defaulting party under Section 4.2 with respect to
any Selected Target and related Products and Development Compounds with
respect to which no default has occurred shall, subject to such party's
obligations to pay milestones and royalties pursuant to Article 5,
continue.
11.3 Effect of Expiration or Termination of Agreement. The expiration or
termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination. The provisions of Articles 7,
8, 9, 10 and 11, and Sections 12.2 through 12.6 hereof shall survive the
expiration or termination of this Agreement. The provisions of Sections 5.3
through 5.9 hereof and Article 6 shall survive any termination of this Agreement
under which a party, its Sublicensees or their respective Affiliates retains the
right to sell Products until such time as all royalty payment obligations
applicable to such Products under Section 5.5 have expired in accordance with
their terms.
ARTICLE 12. MISCELLANEOUS
12.1 Force Majeure. Neither party shall be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any obligation under this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority; provided, however, that the party so affected shall use
reasonable commercial efforts to avoid or remove such causes of nonperformance,
and shall continue performance hereunder with reasonable dispatch whenever such
causes are removed. Either party shall provide the other party with prompt
written notice of any delay or failure to perform that occurs by reason of force
majeure. The parties shall mutually seek a resolution of the delay or the
failure to perform as noted above.
49
12.2 Assignment. This Agreement may not be assigned or otherwise
transferred, in whole or in part, by either party without the consent of the
other party; provided, however, that either Lexicon or BMS may, without such
consent, assign its rights and obligations under this Agreement (a) to any
Affiliate, or (b) in connection with a merger, consolidation or sale of all or
substantially all of its business assets to an unrelated Third Party; provided,
further, that such party's rights and obligations under this Agreement shall be
assumed by its successor in interest in any such transaction and shall not be
transferred separate from all or substantially all of its other business assets,
including those business assets that are the subject of this Agreement. Any
purported assignment in violation of the preceding sentence shall be void. Any
permitted assignee shall assume all obligations of its assignor under this
Agreement, unless the parties otherwise agree.
12.3 Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions in lieu of such invalid provisions. In case
such valid provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are 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 provisions.
12.4 Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the notification parties hereto to
the other shall be in writing, delivered personally or by facsimile (and
promptly confirmed by telephone, personal delivery or courier) or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by the
addressee.
If to Lexicon: Lexicon Genetics Incorporated
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Lexicon Genetics Incorporated
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to BMS: Xxxxxxx-Xxxxx Squibb Company
X.X. Xxx 0000
Xxxxx 000 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President, External Science,
Technology & Licensing
Telephone: 000-000-0000
Facsimile: 000-000-0000
50
With a copy to: Xxxxxxx-Xxxxx Squibb Company
X.X. Xxx 0000
Xxxxx 000 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President & Senior Counsel,
Corporate Development
Telephone: 000-000-0000
Facsimile: 000-000-0000
All such communications shall be effective upon receipt.
12.5 Applicable Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without reference to the
conflicts of law principles thereof.
12.6 Dispute Resolution. Subject to Section 3.7.2, the parties hereby
agree that they will first attempt in good faith to resolve any dispute arising
out of or relating to this Agreement promptly by negotiations. Any such dispute
shall be brought to the attention of the Alliance Managers for resolution. The
Alliance Managers will endeavor to propose and define mutually acceptable
solutions and facilitate communications in an attempt to bring the dispute to a
mutually agreeable resolution. If after discussing the matter in good faith and
attempting to find a mutually satisfactory resolution to the issue, the parties
are unable to resolve such dispute, the matter shall be referred to the [**]
(the "Representatives"). If the matter has not been resolved within [**] days of
the first meeting of the Representatives of the parties (which period may be
extended by mutual agreement) concerning such matter, the parties shall be free
to pursue all available recourse both at law and in equity, subject to the
following. Any dispute between the parties arising out of or relating to the
validity or interpretation of, compliance with, breach or alleged breach of or
termination of this Agreement that is not finally resolved by the Joint
Management Committee or executive officers as described above will be resolved
through binding arbitration as set forth below. Any such binding arbitration
shall be conducted in accordance with the then current Commercial Arbitration
Rules of the American Arbitration Association. To the extent the parties cannot
agree on a single arbitrator, each party shall have the right to designate one
arbitrator, who shall have no prior or existing personal or financial
relationship with the designating party, and the two (2) arbitrators shall
designate a third arbitrator. If the two (2) arbitrators cannot agree on the
designation of the third arbitrator, the American Arbitration Association shall
designate the third arbitrator. Unless otherwise agreed by the parties, any
arbitration initiated by BMS shall be conducted in Houston, Texas and any
arbitration initiated by Lexicon shall be conducted in New York, New York. In
any such arbitration proceeding, the parties shall be entitled to all remedies
to which they would be entitled in a United States District Court and to full
discovery to the same degree permitted under the Federal Rules of Civil
Procedure. Any such arbitration shall be completed and an award rendered within
[**] days of the notice of dispute. The arbitrator shall render a "reasoned
decision" within the meaning of the Commercial Arbitration Rules which shall
include findings of fact and conclusions of law. For avoidance of doubt, the
decisions set forth in Section 3.4 shall not be subject to arbitration under
this Section.
12.7 Entire Agreement. This Agreement, together with the exhibits and
appendices hereto and any confidentiality agreement(s) executed in contemplation
of this Agreement, contains the entire understanding of the parties with respect
to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties
hereto. Notwithstanding the foregoing, the LexVision Agreement shall remain in
full force and effect in accordance with its terms.
12.8 Publicity. Upon execution of this Agreement, the parties shall issue
the press release announcing the existence of this Agreement in the form and
substance previously agreed to by the parties.
51
Any announcements or similar publicity with respect to this Agreement shall be
agreed upon between the parties in advance of such announcement. The parties
understand that this Agreement is likely to be of significant interest to
investors, analysts and others, and that the parties therefore may make such
public announcements with respect thereto, subject to the remainder of this
Section 12.8. The parties agree that any such announcement will not contain
confidential business or technical information and, if disclosure of
confidential business or technical information is required by Law, the parties
will use reasonable efforts to minimize such disclosure and obtain confidential
treatment for any such information which is disclosed to a governmental agency.
Each party agrees to provide to the other party a copy of any public
announcement regarding this Agreement or the subject matter thereof as soon as
reasonably practicable under the circumstances prior to its scheduled release.
Except under extraordinary circumstances, each party shall provide the other
with an advance copy of any such announcement at least [**] prior to its
scheduled release. Each party shall have the right to expeditiously review and
recommend changes to any such announcement and, except as otherwise required by
Law, the party whose announcement has been reviewed shall remove any information
the reviewing party reasonably deems to be inappropriate for disclosure. The
contents of any announcement or similar publicity which has been reviewed and
approved by the reviewing party can be re-released by either party without a
requirement for re-approval.
12.9 Headings. The captions to the several Articles and Sections hereof
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
12.10 No Partnership. It is expressly agreed that the relationship between
Lexicon and BMS shall not constitute a partnership, joint venture or agency.
Neither Lexicon nor BMS shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the other party to do so.
12.11 Exports. The parties acknowledge that the export of technical data,
materials or products is subject to the exporting party receiving any necessary
export licenses and that the parties cannot be responsible for any delays
attributable to export controls which are beyond the reasonable control of
either party. Lexicon and BMS agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control Laws. Lexicon and BMS agree to obtain similar
covenants from their Sublicensees and contractors with respect to the subject
matter of this Section 12.11.
12.12 Interpretation.
12.12.1 In the event an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
12.12.2 The definitions of the terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The
word "will" shall be construed to have the same meaning and effect as the
word "shall". The word "any" shall mean "any and all" unless otherwise
clearly indicated by context.
12.12.3 Unless the context requires otherwise, (a) any definition of
or reference to any agreement, instrument or other document herein shall
be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or
52
otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein or therein), (b) any
reference to any laws herein shall be construed as referring to such laws
as from time to time enacted, repealed or amended, (c) any reference
herein to any person shall be construed to include the person's successors
and assigns, (d) the words "herein", "hereof" and "hereunder", and words
of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, and (e) all
references herein to Articles, Sections, Appendices or Schedules, unless
otherwise specifically provided, shall be construed to refer to Articles,
Sections, Appendices and Schedules of this Agreement.
12.12.4 References to sections of the Code of Federal Regulations
and to the United States Code shall mean the cited sections, as these may
be amended from time to time.
12.13 Waiver. The waiver by either party hereto of any right hereunder or
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.
12.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* * *
[signature page follows]
53
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute and deliver this Agreement as of the Effective Date.
LEXICON GENETICS INCORPORATED
By: /s/ Xxxxxx X. Xxxxx Date: December 17, 2003
-----------------------------------------
Xxxxxx X. Xxxxx, M.D., Ph.D.
President and Chief Executive Officer
XXXXXXX-XXXXX SQUIBB COMPANY
By: /s/ Xxxxx X. X. Xxxxxx Date: December 17, 2003
-----------------------------------------
Name: Xxxxx X. X. Xxxxxx
Title: President, Research and Development
54
EXHIBIT A
DESCRIPTION OF FULL PHASE PROGRAM (SEE SECTION 1.31)
OBJECTIVE: Optimization and characterization of
lead Program Compounds with the
objective of identifying Development
Candidate(s) and Back-up Compound(s)
acting through a Selected Target for
full pre-clinical and clinical
development.
ESTIMATED ANNUALIZED FTE COMMITMENTS: [**]
55
EXHIBIT B
DESCRIPTION OF LEVEL 1 PHENOTYPIC ANALYSIS (SEE SECTION 1.42)
Level 1 Phenotypic Analysis is an initial screen designed to identify
primary characteristics resulting from selected mutations in Mutant Mice. Level
1 Phenotypic Analysis currently includes the following assays, which may be
changed from time to time (a) by the Joint Scientific Committee, at the Joint
Scientific Committee's reasonable scientific discretion, for assays employed in
behavioral analysis, and (b) at Lexicon's reasonable scientific discretion, for
assays in other categories.
[**]
56
EXHIBIT C
DESCRIPTION OF LEVEL 2 PHENOTYPIC ANALYSIS (SEE SECTION 1.43)
Level 2 Phenotypic Analysis involves one or more of the following
analyses, as appropriate, of the effects of selected mutations in Mutant Mice.
[**]
57
EXHIBIT D
DESCRIPTION OF MID-PHASE PROGRAM (SEE SECTION 1.60)
OBJECTIVE: Identification and characterization of
Program Compounds with the objective of
identifying lead Program Compounds that
justify optimization efforts in a Full
Phase Program and that can be used to[**]
ESTIMATED ANNUALIZED FTE COMMITMENTS: [**]
58
EXHIBIT E
ALLOCATION OF NET SALES IN BUNDLED TRANSACTION (SEE SECTION 1.65)
With respect to Products sold in a Bundled Transaction in which BMS,
Lexicon or any of their respective Affiliates or Sublicensees discounts the
sales price of the Products to a greater degree than BMS, Lexicon, their
Affiliates or Sublicensees, respectively, generally discounts the price of its
other products to such customer, the amount to be included in Net Sales of such
Products shall be calculated in accordance with the following formula:
(ASP-P) x (N-P)
NS-P = ----------------------------------------- x BTF
(SIGMA)m=(1) (ASP-p(i)) x (N-p(i)) + (ASP-P) x (N-P)
Where:
NS-P = Amount allocated to Net Sales of the Product
ASP-P = Average Selling Price (as defined below) per unit,
during the applicable period, of the Product when sold
alone
ASP-p(i) = Average Selling Price per unit, during the applicable
period, of each product, other than a Product, in the
Bundled Transaction when sold alone
N-P = Total number of units of Product included in the
Bundled Transaction during the applicable period
N-p(i) = Total number of units (i.e., corresponding to the same
ASP-pi) of each product, other than a Product, included
in the Bundled Transaction during the applicable period
(SIGMA)=(1)= The sum of the products of the formula (ASP-p(i)) x
(N-pi) for each and every product, other than a
Product, included in the Bundled Transaction during
the applicable period
BTF = The aggregate amounts paid to the seller for the
Bundled Transaction during the applicable period
The Average Selling Price shall be based on the actual average selling
price of the applicable Product or product other than a Product, as the case may
be, determined for the applicable period.
If a Product or other product is not sold separately, the Average Selling
Price with respect thereto shall be the bona fide list price.
If a Product or other product is not sold separately and no bona fide list
price exists for such Product or other product, the Parties shall agree upon an
imputed bona fide list price for such Product or other product, and the Average
Selling Price with respect thereto shall be based on such imputed list price.
59
EXHIBIT F
FORM OF MATERIAL TRANSFER AGREEMENT FOR TRANSFER OF MUTANT MICE TO BMS
(SEE SECTION 2.2.5)
MATERIAL TRANSFER AGREEMENT
THIS MATERIAL TRANSFER AGREEMENT (this "Agreement") is entered into
effective as of the last date set forth on the signature page hereof (the
"Effective Date") by and between Lexicon Genetics Incorporated, a Delaware
corporation ("Lexicon"), and Xxxxxxx-Xxxxx Squibb Company, a Delaware
corporation ("BMS").
R E C I T A L S
WHEREAS, Lexicon and BMS are parties to that certain Collaboration and
License Agreement dated December 17, 2003 (the "Collaboration Agreement");
WHEREAS, BMS has the right under Section 2.2.5 of the Collaboration
Agreement to obtain certain Mutant Mice;
WHEREAS, BMS desires to exercise such option with respect to the line of
Mutant Mice specified in Appendix A;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, BMS agrees with Lexicon as follows:
1. DEFINITIONS
1.1 "Materials" means the Mutant Mice provided to BMS under this
Agreement, any Progeny of such Mutant Mice and any cells, tissues and other
biological materials derived from any of the foregoing.
1.2 "Progeny" means mice, including successive generations thereof, that
are produced or developed by BMS by breeding Mutant Mice with other Mutant Mice
or any other mice; provided that Progeny shall not include any mouse that does
not contain the same Selected Mutation as the Mutant Mice provided to BMS under
this Agreement.
1.3 "Research Field" means use by BMS, at the internal research facilities
of BMS, solely for the purposes of conducting research in support of the efforts
of the parties under the Collaboration Agreement.
Capitalized terms used without definition in this Agreement shall have the
meanings given to such terms in the Collaboration Agreement. Capitalized terms
defined in both this Agreement and the Collaboration Agreement shall have the
meanings given to such terms in this Agreement.
2. REQUEST FOR AND DELIVERY OF MUTANT MICE
2.1 Request for Mutant Mice. BMS hereby requests, pursuant to the
provisions of Section 2.2.5 of the Collaboration Agreement and subject to the
terms thereof, that Lexicon deliver the Mutant Mice specified in Appendix A on
the terms specified in this Agreement.
60
2.2 Processing and Delivery of Mutant Mice. Upon Lexicon's receipt and
acceptance of an executed copy of this Agreement, and subject to the terms of
this Agreement, Lexicon will deliver the quantity Mutant Mice and wild-type
littermates specified in Appendix A, in accordance with the determination of the
Joint Scientific Committee.
2.3 Delivery Conditions for Mutant Mice. Lexicon shall be responsible for
making shipping arrangements for the Mutant Mice to be delivered to BMS under
this Agreement; provided that BMS shall be responsible for (a) paying all
shipment and delivery charges in connection therewith, (b) obtaining, if
desired, and paying for any insurance relating thereto, and (c) complying with
all customs, regulations, veterinary handling procedures and protocols, and
obtaining any and all permits, forms or permissions that may be required for BMS
to accept shipment of Mutant Mice from Lexicon. Lexicon shall ship Mutant Mice
promptly following its receipt of written confirmation that BMS is prepared to
accept such shipment. If BMS fails to provide such written confirmation within
thirty (30) days after the Effective Date, BMS shall pay Lexicon a storage and
maintenance charge of Five Thousand Dollars ($5,000) for each month or partial
month thereafter until Lexicon receives such written confirmation. If BMS fails
to provide such written confirmation within three (3) months after the Effective
Date, Lexicon shall have no further obligation to maintain Mutant Mice for
delivery to BMS under this Agreement and may dispose of such Mutant Mice at its
discretion
3. USE OF THE MATERIALS
3.1 Non-Exclusive License Grant to Materials. Subject to the terms and
conditions of this Agreement, Lexicon hereby grants to BMS and its Affiliates a
non-transferable, non-exclusive right and license to use the Materials in the
Research Field. BMS agrees to use the Materials solely for purposes of
conducting research, at the internal research facilities of BMS, in accordance
with the terms and conditions of this Agreement, and not to use the Materials
for any purposes for any Third Party or to transfer to or license the use of or
make the Materials available to any Third Party.
3.2 No Further Rights. Except as expressly provided herein, no right,
title or interest is granted hereunder by Lexicon in, to or under any Lexicon
Background Materials, Lexicon Background Technology or any other inventions,
information, methods, know-how, trade secrets or data. Without limiting the
foregoing, (a) nothing in this Agreement shall be deemed to restrict Lexicon's
rights to use any Materials or, subject to the nonexclusive rights and licenses
granted to BMS hereunder and the exclusivity obligations of Lexicon under the
Collaboration Agreement, to sell, license or otherwise transfer any Materials to
Third Parties, and (b) nothing in this Agreement shall be deemed to modify any
of the rights and obligations of the parties under the Collaboration Agreement.
4. INTELLECTUAL PROPERTY RIGHTS AND OWNERSHIP
4.1 Ownership of the Materials. Subject to the non-exclusive rights and
licenses granted to BMS hereunder, Lexicon shall own and retain all rights to
the Materials, including, without limitation, rights to use, produce, breed,
sell and license Mutant Mice.
4.2 Ownership of the Results of Research Using Materials. Subject to the
non-exclusive rights and licenses granted hereunder and the rights and licenses
granted by Lexicon in the Collaboration Agreement, as between the parties, the
rights of Lexicon and BMS with respect to inventions, information, methods,
know-how, trade secrets or data discovered, conceived, made, developed and/or
reduced to practice through the use of Materials shall be governed by the
provisions of the Collaboration Agreement.
61
5. TERM AND TERMINATION
5.1 Term. The term of this Agreement shall commence on the Effective Date
and shall remain in effect until the expiration of the last-to-expire Valid
Claim of any Patent Rights Controlled by Lexicon that Cover any Materials,
unless earlier terminated as set forth herein.
5.2 Termination for Default. An event of default (an "Event of Default")
shall have occurred upon the occurrence of a material breach of this Agreement
if the breaching party fails to remedy such breach within sixty (60) days after
written notice thereof by the non-breaching party.
5.3 Effect of an Event of Default.
(a) Remedies Available to Lexicon. If an Event of Default occurs
relating to BMS, and BMS fails to cure such default during any applicable
cure period, then Lexicon shall have the right, at its option exercisable
in its sole discretion, in addition to any other rights or remedies
available to it at law or in equity, to terminate this Agreement upon
notice thereof to BMS, in which case (i) the licenses granted to BMS
pursuant to Section 3 shall terminate, (ii) BMS shall return to Lexicon,
or, upon Lexicon's written instruction, destroy all information, materials
or documentation provided or made available by Lexicon pursuant to this
Agreement, and any copies thereof (including electronic copies), and (iii)
BMS shall return to Lexicon, or, upon Lexicon's written instruction,
destroy any Materials.
(b) Remedies Available to BMS. If an Event of Default occurs
relating to Lexicon, and Lexicon fails to cure such default during any
applicable cure period, then BMS shall have the right, at its option
exercisable in its sole discretion, in addition to any other rights or
remedies available to it at law or in equity and subject to the
limitations set forth in Section 6, to terminate this Agreement upon
notice thereof to Lexicon.
5.4 Effect of Expiration or Termination of Agreement. The expiration or
termination of this Agreement shall not relieve the parties of any obligation
accruing prior to such expiration or termination. The provisions of Sections 1,
3.2, 4, 6 and 7 hereof shall survive the expiration or termination of this
Agreement.
6. DISCLAIMER OF WARRANTIES AND LIMITATION OF LIABILITY
6.1 Disclaimer of Warranties. THE MUTANT MICE AND OTHER MATERIALS ARE
BEING SUPPLIED TO BMS WITH NO WARRANTIES, EXPRESS OR IMPLIED. LEXICON HEREBY
DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
LEXICON MAKES NO REPRESENTATION OR WARRANTY THAT THE USE OF THE MATERIALS OR THE
CONDUCT OF RESEARCH WITHIN THE RESEARCH FIELD HEREUNDER WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHTS OF THIRD PARTIES.
6.2 Experimental Nature of Materials. THE MATERIALS ARE EXPERIMENTAL IN
NATURE AND SHOULD BE USED WITH CAUTION SINCE ALL OF THEIR CHARACTERISTICS ARE
NOT KNOWN. BMS AGREES TO COMPLY WITH ALL FEDERAL, STATE AND LOCAL STATUTES,
RULES AND REGULATIONS RELATING TO THE USE, HANDLING AND STORAGE OF THE
MATERIALS.
6.3 Limitation of Liability. Lexicon shall in no event be liable for any
use by BMS of the Materials or any loss, claim, damage or liability, of whatever
kind or nature, which may arise from or in
62
connection the use, handling or storage of the Materials by BMS. NOTWITHSTANDING
ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE TO THE CONTRARY, NEITHER LEXICON
NOR BMS WILL BE LIABLE WITH RESPECT TO ANY MATTER ARISING UNDER THIS AGREEMENT
UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE
THEORY FOR (A) ANY PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES OR
LOST PROFITS OR (B) COST OF PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR
SERVICES.
7. INDEMNIFICATION
Except to the extent prohibited by law, BMS shall assume all liability
for, and shall defend, indemnify and hold Lexicon, its Affiliates and their
respective employees and agents harmless from, all claims, losses, damages or
expenses (including reasonable attorneys' fees) arising as a result of the use
by BMS or its Affiliates of the Materials, except for and to the extent that any
such liability results from the gross negligence or willful misconduct of
Lexicon.
8. MISCELLANEOUS
8.1 Entire Agreement. This Agreement, together with the Collaboration
Agreement, constitutes the entire and exclusive agreement between the parties
with respect to the subject matter hereof and, with respect to any conflicting
terms from prior agreements between the parties, supersedes and cancels such
conflicting sections from all previous registrations, agreements, commitments
and writings in respect thereof. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties
hereto.
8.2 Assignment and Waiver. This Agreement may not be assigned or otherwise
transferred by either party without the consent of the other party; provided,
however, that Lexicon or BMS may, without such consent, assign its rights and
obligations under this Agreement to a permitted assignee under the Collaboration
Agreement; provided, however, that such assigning party's rights and obligations
under this Agreement shall be assumed by such permitted assignee shall not be
transferred except in connection with an assignment of the assigning party's
rights and obligations under the Collaboration Agreement. Any purported
assignment in violation of the provisions of this Section 8.2 shall be void. The
waiver by either party hereto of any right hereunder or the failure to perform
or of a breach by the other party shall not be deemed a waiver of any other
right hereunder or of any other breach or failure by said other party whether of
a similar nature or otherwise.
8.3 Force Majeure. Neither party shall be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any obligation under this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected party, including but not limited to fire,
floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party; provided, however, that the party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either party shall provide the other
party with prompt written notice of any delay or failure to perform that occurs
by reason of force majeure. The parties shall mutually seek a resolution of the
delay or the failure to perform as noted above.
8.4 Applicable Law. This Agreement shall be governed by, construed, and
interpreted in accordance with, the laws of the State of Delaware, United States
of America, without reference to conflict of laws principles.
63
8.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.
8.6 Severability. Each party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are 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 provisions.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute and deliver this Agreement as of the Effective Date.
XXXXXXX-XXXXX SQUIBB COMPANY
By:
____________________________________________________
(Signature of Authorized Representative)
Printed Name:
______________________________________________
Title:
____________________________________________________
Date:
____________________________________________________
LEXICON GENETICS INCORPORATED
By:
____________________________________________________
(Signature of Authorized Representative)
Printed Name:
______________________________________________
Title:
____________________________________________________
Date:
____________________________________________________
64
APPENDIX A
MUTANT MICE
1. Identity of the line of Mutant Mice to which this Agreement relates:
___________________
2. Numbers of mice to be delivered:
a. Male Mutant Mice homozygous for the selected mutation: ____
b. Female Mutant Mice homozygous for the selected mutation: ____
c. Male wild-type littermates: ____
d. Female wild-type littermates: ____
65
