EXHIBIT 10.22
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXECUTION COPY
RESEARCH COLLABORATION AND LICENSE AGREEMENT
BY AND AMONG
MERCK & CO., INC.,
ALNYLAM PHARMACEUTICALS, INC.,
AND
ALNYLAM HOLDING CO.
RESEARCH COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT effective as of September 8, 2003 (the "EFFECTIVE
DATE"), by and among MERCK & CO., INC., a corporation organized and existing
under the laws of New Jersey ("MERCK") on the one hand, and ALNYLAM
Pharmaceuticals, Inc., a corporation organized under the laws of Delaware and
ALNYLAM HOLDING CO. ("ALNYLAM HOLDING"), a corporation organized and existing
under the laws of Delaware (collectively, "ALNYLAM") on the other hand.
RECITALS:
WHEREAS, MERCK and ALNYLAM desire to enter into a research
collaboration to develop technology useful for in vitro and/or in vivo target
identification and/or target validation using RNAi and to develop RNAi
therapeutic products upon the terms and conditions set forth herein;
WHEREAS, ALNYLAM has developed ALNYLAM RNAi Technology (as hereinafter
defined) and has rights to ALNYLAM RNAi Patent Rights (as hereinafter defined);
WHEREAS, MERCK desires to obtain a license under the ALNYLAM RNAi
Patent Rights and the ALNYLAM RNAi Technology upon the terms and conditions set
forth herein and ALNYLAM desires to grant such a license;
WHEREAS, MERCK has developed MERCK RNAi Technology (as hereinafter
defined) and has rights to MERCK RNAi Patent Rights (as hereinafter defined);
WHEREAS, ALNYLAM desires to obtain a license under the MERCK RNAi
Patent Rights and MERCK RNAi Technology upon the terms and conditions set forth
herein and MERCK desires to grant such a license; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Parties hereby agree as follows:
1. DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "AAA" has the meaning set forth in Section 9.6.1 of this Agreement.
1.2 "ABANDONED MERCK RNAi NOVEL TARGET" has the meaning set forth in
Section 2.14.2 of this Agreement.
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1.3 "AFFILIATE" means (except as provided for in Section 3.1.8) (i) any
corporation or business entity of which fifty percent (50%) or more of
the securities or other ownership interests representing the equity,
the voting stock or general partnership interest are owned, controlled
or held, directly or indirectly, by MERCK or ALNYLAM, as the case may
be; (ii) any corporation or business entity, which, directly or
indirectly, owns, controls or holds fifty percent (50%) (or the maximum
ownership interest permitted by law) or more of the securities or other
ownership interests representing the equity, the voting stock or, if
applicable, the general partnership interest, of MERCK or ALNYLAM, as
the case may be, or (iii) any corporation or business entity, fifty
percent (50%) or more of the securities or other ownership interests
representing the equity of which is directly or indirectly, owned,
controlled or held by the same corporation, business entity or security
holders, or holders of ownership interests who own, control or hold
fifty percent (50%) or more of the securities or other ownership
interests representing the equity or the voting stock of MERCK or
ALNYLAM, as the case may be.
1.4 "ALNYLAM" has the meaning set forth in the preamble to this Agreement.
1.5 "ALNYLAM-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning
set forth in Section 2.7(d).
1.6 "ALNYLAM COLLABORATION INVENTIONS" means ALNYLAM Technology
Collaboration Inventions, ALNYLAM Therapeutic Collaboration Inventions,
ALNYLAM's interest in Joint Technology Collaboration Inventions, and
ALNYLAM's interest in Joint Therapeutic Collaboration Inventions,
collectively.
1.7 "ALNYLAM PRODUCT AGREEMENT" has the meaning set forth in Section
3.1.5(c).
1.8 "ALNYLAM RNAi PATENT RIGHTS" means any and all patents and patent
applications in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications
for certificates of invention and to exclude Joint Collaboration Patent
Rights) which, as of the Effective Date and/or during the Collaboration
Term, are Controlled by ALNYLAM or its Affiliates and which are
necessary or useful to MERCK in connection with the Technology
Collaboration and/or for in vitro and/or in vivo target identification
and/or target validation ("ALNYLAM TARGET IDENTIFICATION AND TARGET
VALIDATION RNAi PATENT RIGHTS") and/or in the research, development,
manufacture, marketing, use, import or sale of RNAi Therapeutic
Products within the Therapeutic Collaboration ("ALNYLAM THERAPEUTIC
RNAi PATENT RIGHTS"), including, but not limited to, those listed on
Schedule 1.8. "ALNYLAM RNAi Patent Rights" include but are not limited
to those which: (i) claim, cover or relate to RNAi Therapeutic Products
including but not limited to improvements; or (ii) claim, cover or
relate to ALNYLAM Collaboration Inventions; or (iii) are divisions,
continuations, any portions of continuations-in-part that are
themselves within the definition of ALNYLAM RNAi Patent Rights,
reissues, renewals, extensions, supplementary protection certificates,
and the like of any covered patents and patent applications and foreign
equivalents thereof.
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1.9 "ALNYLAM RNAi TECHNOLOGY" means any and all technology, information,
material, and know-how, including but not limited to inventions
(including without limitation ALNYLAM Collaboration Inventions and
ALNYLAM's rights in Joint Collaboration Inventions), discoveries,
improvements, processes, methods, protocols, formulas, data, and trade
secrets patentable or otherwise, which: (a) as of the Effective Date
and/or during the Collaboration Term, is in the Control of ALNYLAM or
its Affiliates, including without limitation, all technology,
information, and material, including inventions, discoveries and
know-how, patentable or otherwise, of ALNYLAM's scientific advisors and
consultants which are Controlled by ALNYLAM or its Affiliates, and (b)
is necessary or useful to MERCK for the Collaboration and/or for in
vitro and/or in vivo target identification and/or target validation
and/or for the research, development, manufacturing, marketing, use,
import or sale of Therapeutic Collaboration Products within the
Therapeutic Collaboration in the Territory including, but not limited
to, knowledge related to (i) the RNAi pathway and mechanism of action
in mammalian cells, (ii) informatics approaches to optimal siRNA design
for targeting specific genes and minimizing off-target effects, (iii)
optimal RNA chemistry for siRNA in vivo stability and delivery, (iv)
bio-analytical methods for measurement of pharmacokinetics and
biodistribution of siRNAs, and (v) RNAi delivery methods.
1.10 "ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAi PATENT
RIGHTS" has the meaning set forth in Section 1.8 of this Agreement.
1.11 "ALNYLAM TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
solely by employees of ALNYLAM or its Affiliates or other persons not
employed by MERCK acting on behalf of ALNYLAM during the Technology
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Technology Collaboration Term.
1.12 "ALNYLAM THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
solely by employees of ALNYLAM or its Affiliates or other persons not
employed by MERCK acting on behalf of ALNYLAM during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Therapeutic Collaboration Term,
including but not limited to ALNYLAM-Assigned Therapeutic Collaboration
Inventions (as defined in Section 2.7(d)).
1.13 "ALNYLAM THERAPEUTIC COLLABORATION IP" means any and all technology,
information, material, know-how, including, but not limited to
Inventions (including ALNYLAM Therapeutic Collaboration Inventions and
ALNYLAM's rights in Joint Therapeutic Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise, patents and patent
applications, which: (a) are Controlled by ALNYLAM or its Affiliates as
of the Effective Date or during the Collaboration Term, and (b) are
necessary or useful to MERCK in
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connection with the Therapeutic Collaboration and/or in the research,
development, manufacture, marketing, use, import or sale of Therapeutic
Collaboration Products.
1.14 "ALNYLAM THERAPEUTIC RNAi PATENT RIGHTS" has the meaning set forth in
Section 1.8 of this Agreement.
1.15 "CALENDAR QUARTER" means the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30
and December 31.
1.16 "CALENDAR YEAR" means each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.17 "CHANGE OF CONTROL" has the meaning set forth in Section 9.2 of this
Agreement.
1.18 "CODE" has the meaning set forth in Section 8.2.2(c) of this Agreement.
1.19 "CO-EXCLUSIVE" means with respect to any license of rights hereunder,
the grant of exclusive rights, but for the retention by the granting
Party of the same rights for itself and/or its Affiliates.
1.20 "COLLABORATION" means the Technology Collaboration and the Therapeutic
Collaboration, collectively.
1.21 "COLLABORATION TERM" means the duration of the Collaboration, as
described more fully in Section 2.8.
1.22 "COMBINATION PRODUCT" means an RNAi Therapeutic Product combined with
any other clinically active therapeutic ingredient. All references to
RNAi Therapeutic Product in this Agreement shall be deemed to include
Combination Product, to the extent applicable.
1.23 "COMPETING RNAi PRODUCT" has the meaning set forth in Section 7.3(a) of
this Agreement.
1.24 "COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
forth in Section 2.14.2(2) of this Agreement.
1.25 "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any
item of or right under ALNYLAM RNAi Patent Rights, MERCK RNAi Patent
Rights, ALNYLAM RNAi Technology, MERCK RNAi Technology, ALNYLAM
Therapeutic Collaboration IP, or MERCK RNAi Novel Target IP, the
possession of (whether by ownership or license, other than pursuant to
this Agreement) the ability by a Party to grant access to, or a license
or sublicense of, such items or right as provided for herein without
violating the terms of any agreement or other arrangement with any
Third Party existing at the time such Party would be required hereunder
to grant the other Party such access or license or sublicense.
1.26 "DISPUTE" has the meaning set forth in Section 9.6.1 of this Agreement.
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1.27 "EFFECTIVE DATE" has the meaning set forth in the preamble of this
Agreement.
1.28 "EXCLUDED CLAIM" has the meaning set forth in Section 9.6.1 of this
Agreement.
1.29 "EXTENDED THERAPEUTIC COLLABORATION TERM" has the meaning set forth in
Section 1.87 of this Agreement.
1.30 "FILING" of an NDA means the acceptance by a Regulatory Authority of an
NDA for filing.
1.31 "FIRST COMMERCIAL SALE" means, with respect to any Therapeutic
Collaboration Product, the first sale for end use or consumption of
such Therapeutic Collaboration Product in a country after all required
approvals, including Marketing Authorization, have been granted by the
Regulatory Authority of such country.
1.32 "FULL-TIME EQUIVALENT" or "FTE" means the equivalent of a full-time
scientist's work time over a twelve-month period (including normal
vacations, sick days and holidays). The portion of an FTE year devoted
by a scientist to the Technology Collaboration shall be determined by
dividing the number of full days (including full days consisting of
multiple partial days) during any twelve-month period devoted by such
scientist to the Technology Collaboration by the total number of
working days (excluding vacations, sick days and holidays) during such
twelve-month period.
1.33 "HUMAN MATERIALS" has the meaning set forth in Section 2.12 of this
Agreement.
1.34 "IND" means an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or
submission for approval to conduct human clinical investigations filed
with or submitted to a Regulatory Authority in conformance with the
requirements of such Regulatory Authority.
1.35 "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
toxicology, safety pharmacology, and sub-chronic toxicology studies in
species that satisfy applicable regulatory requirements using
applicable good laboratory practices which meet the standard necessary
for submission as part of an IND filing with a Regulatory Authority.
1.36 "INFORMATION" means any and all information and data, including without
limitation all ALNYLAM RNAi Technology and MERCK RNAi Technology, and
all other scientific, pre-clinical, clinical, regulatory,
manufacturing, marketing, financial and commercial information or data,
whether communicated in writing or orally or by any other method, which
is provided by one Party to the other Party in connection with this
Agreement.
1.37 "INITIAL MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
forth in Section 2.14.2(1) of this Agreement.
1.38 "INITIAL OPT-IN NEGOTIATION PERIOD" has the meaning set forth in
Section 2.14.3.3 of this Agreement.
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1.39 "INVENTION" means any process, method, composition of matter, article
of manufacture, discovery or finding that is conceived and/or reduced
to practice in the course of the Collaboration.
1.40 "JOINT COLLABORATION INVENTIONS" means Joint Technology Collaboration
Inventions and Joint Therapeutic Collaboration Inventions,
collectively.
1.41 "JOINT COLLABORATION PATENT RIGHTS" means any and all patent
applications and patents in the Territory (which for the purposes of
this Agreement shall be deemed to include certificates of invention and
applications for certificates of invention) which claim, cover or
relate to any Joint Collaboration Inventions. "Joint Collaboration
Patent Rights" include, but are not limited to, those patent
applications and patents which claim, cover or relate to Joint
Technology Collaboration Inventions or Joint Therapeutic Collaboration
Inventions; or are divisions, continuations, any portion of
continuations-in-part that are themselves within the definition of
Joint Collaboration Patent Rights, reissues, renewals, extensions,
supplementary protection certificates, and the like of any covered
patents and patent applications and foreign equivalents thereof.
1.42 "JOINT STEERING COMMITTEE" or "JSC" means the joint steering committee
as more fully described in Section 2.4.
1.43 "JOINT TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
jointly by employees of MERCK and ALNYLAM or their Affiliates or others
acting on behalf of MERCK and ALNYLAM during the Technology
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Technology Collaboration Term.
1.44 "JOINT THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
jointly by employees of MERCK and ALNYLAM or their Affiliates or others
acting on behalf of MERCK and ALNYLAM during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
termination or expiration of the Therapeutic Collaboration Term.
1.45 "XXXXXX PATENTS" means those patent rights set forth on Schedule 1.45
of this Agreement.
1.46 "MARKETING AUTHORIZATION" means any and all approvals (including
without limitation all applicable pricing and governmental
reimbursement approvals) necessary to receive permission from the
relevant Regulatory Authority to market and sell an RNAi Therapeutic
Product in any country.
1.47 "MATERIALS" has the meaning set forth in Section 2.10 of this
Agreement.
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1.48 "MERCK-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning
set forth in Section 2.7(d).
1.49 "MERCK BROAD RNAi PATENT RIGHTS" means any and all patent applications
and patents in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications
for certificates of invention and to exclude Joint Collaboration Patent
Rights), which, as of the Effective Date and/or during the
Collaboration Term, are Controlled by MERCK or Rosetta Inpharmatics LLC
("ROSETTA") or their wholly-owned subsidiaries and which are necessary
or useful to ALNYLAM for the Technology Collaboration and/or for in
vitro and/or in vivo target identification and/or target validation.
MERCK Broad RNAi Patent Rights include but are not limited to those
which: (i) claim, cover or relate to MERCK Technology Collaboration
Inventions; or (ii) are divisions, continuations, any portions of
continuations-in-part that are themselves within the definition of
MERCK Broad RNAi Patent Rights, reissues, renewals, extensions,
supplementary protection certificates, and the like of any covered
patents and patent applications and foreign equivalents thereof. "MERCK
Broad RNAi Patent Rights" shall include, without limitation, those
patents and patent applications set forth in Schedule 1.49. The term
"MERCK Broad RNAi Patent Rights" does not include any patents or patent
applications relating to MERCK Non-Druggable Targets, including but not
limited to patents or patent applications relating to MERCK RNAi Novel
Target IP.
1.50 "MERCK BROAD RNAi TECHNOLOGY" means any and all technology,
information, material, and know-how, including, but not limited to
inventions (including MERCK Technology Collaboration Inventions and
MERCK's rights in Joint Technology Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise which: (a) as of the
Effective Date and/or during the Collaboration Term, is in the Control
of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
necessary or useful to ALNYLAM for the Technology Collaboration and/or
for in vitro and/or in vivo target identification and/or target
validation including (i) data and methods for monitoring RNAi
selectivity and potency, and (ii) approaches to optimal design of
siRNAs, including but not limited to informatics approaches. "MERCK
Broad RNAi Technology" does not include technology, information, or
material, including inventions, discoveries and know-how, patentable or
otherwise, relating to MERCK Non-Druggable Targets, including but not
limited to MERCK RNAi Novel Target IP.
1.51 "MERCK COLLABORATION INVENTIONS" means MERCK Technology Collaboration
Inventions and MERCK Therapeutic Collaboration Inventions, MERCK's
interest in Joint Technology Collaboration Inventions, and MERCK's
interest in Joint Therapeutic Collaboration Inventions, collectively.
1.52 "MERCK NON-DRUGGABLE TARGETS" means [**] Controlled by MERCK or its
Affiliates and which MERCK deems to be [**]. Such targets [**] include
targets for which [**].
A MERCK Non-Druggable Target may also include:
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1. [**] for which [**] have been i[**], for example in [**];
2. [**] whereby [**] has been [**]; and
3. [**] where [**] in the [**].
MERCK Non-Druggable Targets must be [**]; that is they must be targets
for which: (a) MERCK [**] the target that is [**] which, [**], provides
[**] the MERCK Non-Druggable Target, [**] (b) MERCK believes there are
[**] of which would be [**] (i) by [**] the MERCK Non-Druggable Target
[**], or (ii) by the [**] MERCK Non-Druggable Target [**] in the [**].
1.53 "MERCK PRODUCT AGREEMENT" has the meaning set forth in Section
3.1.6(c).
1.54 "MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS" means any and all patent
applications and patents in the Territory (which for the purposes of
this Agreement shall be deemed to include certificates of invention and
applications for certificates of invention and exclude Joint
Collaboration Patent Rights) which: (a) as of the Effective Date and/or
during the Collaboration Term, are Controlled by MERCK or ROSETTA or
their wholly-owned subsidiaries, and (b) are necessary or useful to
ALNYLAM in connection with the research, development, manufacture,
marketing, use, import or sale of a specific RNAi Therapeutic Product
within the Therapeutic Collaboration. MERCK Product-Specific RNAi
Patent Rights include but are not limited to those which: (i) claim,
cover or relate to a specific RNAi Therapeutic Product within the
Therapeutic Collaboration; or (ii) claim, cover or relate to MERCK
Therapeutic Collaboration Inventions; or (iii) are divisions,
continuations, any portions of continuations-in-part that are
themselves within the definition of MERCK Product-Specific RNAi Patent
Rights, reissues, renewals, extensions, supplementary protection
certificates, and the like of any covered patents and patent
applications and foreign equivalents thereof. "MERCK Product-Specific
RNAi Patent Rights" include, without limitation, those patents and
patent applications set forth in Schedule 1.54. The term "MERCK
Product-Specific RNAi Patent Rights" does not include any patents or
patent applications relating to MERCK Non-Druggable Targets, including
but not limited to patents or patent applications relating to MERCK
RNAi Novel Target IP.
1.55 "MERCK PRODUCT-SPECIFIC RNAi TECHNOLOGY" means any and all technology,
information, material, and know-how, including, but not limited to
inventions (including MERCK Therapeutic Collaboration Inventions and
MERCK's rights in Joint Therapeutic Collaboration Inventions),
discoveries, improvements, processes, methods, protocols, formulas,
data, and trade secrets, patentable or otherwise which: (a) as of the
Effective Date and/or during the Collaboration Term, is in the Control
of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
necessary or useful to ALNYLAM for the research, development,
manufacturing, marketing, use, sale or import of a specific RNAi
Therapeutic Product within the Therapeutic Collaboration, and (c) is
not included in MERCK Broad RNAi Technology. The term "MERCK
Product-Specific Technology" does not include technology, information,
or material, including but not limited to
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inventions, discoveries and know-how, patentable or otherwise, relating
to MERCK Non-Druggable Targets, including but not limited to MERCK RNAi
Novel Target IP.
1.56 "MERCK RNAi NOVEL TARGET" means a MERCK Non-Druggable Target that
ALNYLAM, in its sole discretion, deems to be of sufficient scientific
interest and possesses sufficient intellectual property such that
ALNYLAM elects to develop an RNAi Therapeutic Product directed at such
MERCK Non-Druggable Target under the Therapeutic Collaboration. For
purposes of clarity, the term "MERCK RNAi Novel Target," shall not
include any Abandoned MERCK RNAi Novel Target.
1.57 "MERCK RNAi NOVEL TARGET IP" means any and all information, material,
know-how, patents and patent applications Controlled by MERCK or
ROSETTA or their wholly-owned subsidiaries as of the Effective Date
and/or during the Collaboration Term, and that both: (i) are necessary
or useful to ALNYLAM for research, development, manufacturing,
marketing, use, import or sale of RNAi Therapeutic Products within the
Therapeutic Collaboration, and (ii) claim, cover or relate to specific
MERCK RNAi Novel Targets.
1.58 "MERCK RNAi PATENT RIGHTS" means MERCK Broad RNAi Patent Rights and
MERCK Product-Specific Patent Rights, collectively. The term "MERCK
RNAi Patent Rights" shall not include patents or patent applications
that claim, cover or relate to MERCK Non-Druggable Targets or MERCK
RNAi Novel Target IP.
1.59 "MERCK RNAi TECHNOLOGY" means MERCK Broad RNAi Technology and MERCK
Product-Specific RNAi Technology, collectively.
1.60 "MERCK TECHNOLOGY COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Technology Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Technology
Collaboration Term and/or during the one (1) year period following the
expiration or termination of the Technology Collaboration Term.
1.61 "MERCK THERAPEUTIC COLLABORATION INVENTIONS" means any and all
discoveries, improvements, processes, methods, protocols, formulas,
data, Inventions, know-how and trade secrets, patentable or otherwise,
arising from the Therapeutic Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Therapeutic
Collaboration Term and/or during the one (1) year period following the
expiration or termination of the Therapeutic Collaboration Term,
including but not limited to MERCK-Assigned Therapeutic Collaboration
Inventions (as defined in Section 2.7(d)).
1.62 "NDA" means a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Application Authorization,
Section 510(k) filing or similar application or submission for
Marketing Authorization of a Therapeutic Collaboration Product filed
with a Regulatory Authority in a country or group of
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countries to obtain marketing approval for a biological, pharmaceutical
or other therapeutic product in that country or in that group of
countries.
1.63 "NET SALES" means the gross invoice price of a Therapeutic
Collaboration Product sold by MERCK or its Related Parties or by
ALNYLAM or its Related Parties to the first Third Party (other than a
sublicensee of a Party) after deducting, if not previously deducted,
from the amount invoiced or received:
(a) trade and quantity discounts actually given other than early
pay cash discounts;
(b) returns, rebates, chargebacks and other allowances actually
given;
(c) retroactive price reductions that are actually granted; and
(d) a fixed amount equal to [**] percent ([**]%) of the amount
invoiced to cover bad debt, sales or excise taxes, early
payment cash discounts, transportation and insurance, custom
duties, and other governmental charges.
With respect to sales of Combination Products, Net Sales shall be
calculated on the basis of the gross invoice price of the Therapeutic
Collaboration Product(s) containing the same composition and
concentration of RNAi oligonucleotide(s) or oligonucleotide-derivatives
sold without other clinically active ingredients.
In the event that the Therapeutic Collaboration Product is sold only as
a Combination Product and not sold without other clinically active
therapeutic ingredients, the Parties shall negotiate in good faith
another basis on which to calculate Net Sales with respect to a
Combination Product that fairly reflects the value of the Therapeutic
Collaboration Product relative to the other clinically active
therapeutic ingredients in the Combination Product, but in no event
shall such calculation result in the gross invoice price on which to
base Net Sales being less than [**] percent ([**]%) of the gross
invoice price of such Therapeutic Combination Product.
A percentage of the deductions set forth in paragraphs (a) through (d)
above equal to the ratio of the Net Sales for the Therapeutic
Collaboration Product to the Net Sales of the entire Combination
Product will be applied in calculating Net Sales for a Combination
Product.
1.64 "OPT-IN FEE" has the meaning set forth in Section 2.14.3.2.
1.65 "OPT-IN INFORMATION" has the meaning set forth in Section 2.14.3.2 and
as provided in Schedule 2.14.3.2.
1.66 "OPT-IN NEGOTIATION PERIOD" has the meaning set forth in Section
2.14.3.3.
1.67 "OPT-IN NOTICE" has the meaning set forth in Section 2.14.3.2.
1.68 "OPT-IN RIGHT" means MERCK's right, to be exercised upon the completion
of IND-Enabling GLP Toxicology Studies and MERCK's receipt of all
Opt-In Information from
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ALNYLAM, to elect to enter into a Therapeutic Collaboration Product
Agreement with ALNYLAM for a Therapeutic Collaboration Product as part
of the Therapeutic Collaboration, as described in Section 2.14.3.2.
1.69 "PARTY" means MERCK and/or ALNYLAM.
1.70 "PROVIDERS" has the meaning set forth in Section 2.12 of this
Agreement.
1.71 "R&D COSTS" has the meaning set forth in Section 2.14.3.2.
1.72 "REGULATORY AUTHORITY" means any applicable government regulatory
authority involved in granting approvals for the manufacturing,
marketing, reimbursement and/or pricing of an RNAi Therapeutic Product
in the Territory, including, in the United States, the United States
Food and Drug Administration and any successor governmental authority
having substantially the same function.
1.73 "RELATED PARTY" means the Party, its Affiliates and permitted
sublicensees ,which term does not include wholesale distributors of the
Party or its Affiliates who purchase Therapeutic Collaboration Products
from such Party or its Affiliates in an arm's length transaction and
who have no other obligation, including but not limited to a reporting
obligation, to such Party or its Affiliates. For purposes of clarity,
such wholesale distributors do not include those distributors whose
obligations to such Party or Affiliate include responsibility for sales
and/or marketing efforts in a Territory or sharing of costs and
expenses with respect to sales and/or marketing on behalf of a Party or
its Affiliates, which distributors shall be deemed to be permitted
sublicensees for purposes of this definition.
1.74 "RIBOPHARMA" means RIBOPHARMA AG, a company organized under the laws of
Germany and an Affiliate of ALNYLAM.
1.75 "RNAi TECHNOLOGY" means technology useful for in vitro and/or in vivo
target identification and/or target validation using RNA interference.
1.76 "RNAi THERAPEUTIC PRODUCTS" means oligonucleotide- or oligonucleotide
derivative-based therapeutic modalities for gene function modulation or
other moieties effective in gene function modulation that function
through RNA interference and which are discovered, derived or developed
by ALNYLAM or any person or entity acting on its behalf, including its
Affiliates, consultants and scientific advisors during the
Collaboration, and which are directed at MERCK RNAi Novel Targets.
"RNAi Therapeutic Products" include, but are not limited to, any and
all: (i) ALNYLAM Therapeutic Collaboration Inventions that are (a)
oligonucleotide- or oligonucleotide derivative-based therapeutic
modalities for gene function modulation or (b) moieties which are
effective in gene function modulation, and (c) function through RNA
interference and are directed at MERCK RNAi Novel Targets; and (ii)
therapeutic preparations of the RNAi Therapeutic Product in final form
for sale by prescription, over-the-counter or any other method for
therapeutic use, including, without limitation, any Combination
Product.
12
1.77 "STOCK PURCHASE AGREEMENT" has the meaning set forth in Section 5.1.3
of this Agreement.
1.78 "SUBSEQUENT OPT-IN NEGOTIATION PERIODS" has the meaning set forth in
Section 2.14.3.3 of this Agreement.
1.79 "TECHNOLOGY COLLABORATION" means the research activities undertaken by
the Parties hereto as set forth in Article 2 and Schedule 2.1.
1.80 "TECHNOLOGY COLLABORATION MILESTONE" means the [**], as provided in
Section 5.1.4, by ALNYLAM, or its Affiliates, or its permitted
collaborators (as provided for in Sections 2.2 and 2.13) if but only if
MERCK receives the same rights for in vitro and/or in vivo target
identification and/or target validation as ALNYLAM and its Affiliates
to any intellectual property relating to the Collaboration which is
developed by ALNYLAM or its Affiliates or such permitted collaborators,
during the Technology Collaboration Term, of [**] where [**] through
[**], excluding, however, [**].
1.81 "TECHNOLOGY COLLABORATION TERM" means the duration of the Technology
Collaboration and "Extended Technology Collaboration Term" means any
period of the Technology Collaboration as it may be extended by mutual
agreement of the Parties, as described more fully in Section 2.8.
1.82 "TECHNOLOGY MILESTONE DISPUTE" has the meaning set forth in Section
5.1.4.
1.83 "TERRITORY" means all of the countries in the world, and their
territories and possessions.
1.84 "THERAPEUTIC COLLABORATION" means the research, development and
commercialization activities undertaken by the Parties as set forth in
Article 2.
1.85 "THERAPEUTIC COLLABORATION PRODUCT" has the meaning set forth in
Section 2.14.3.2.
1.86 "THERAPEUTIC COLLABORATION PRODUCT AGREEMENT" has the meaning set forth
in Section 2.14.3.3 of this Agreement.
1.87 "THERAPEUTIC COLLABORATION TERM" means the duration of the Therapeutic
Collaboration and "Extended Therapeutic Collaboration Term" means any
period of the Therapeutic Collaboration as it may be extended by mutual
agreement of the Parties, as described more fully in Section 2.8.
1.88 "THIRD PARTY" means an entity other than a Party and its Affiliates.
1.89 "THIRD PARTY PATENT LICENSES" has the meaning set forth in Section
5.2.5 of this Agreement.
1.90 "VALID PATENT CLAIM" means a claim of: (a) an issued and unexpired
patent included within the ALNYLAM RNAi Patent Rights, the MERCK RNAi
Patent Rights, or the Joint Collaboration Patent Rights which (i)
covers the manufacture, use, sale or import of a Therapeutic
Collaboration Product; (ii) has not been revoked or held unenforceable
or
13
invalid by a decision of a court or other governmental agency of
competent jurisdiction, which is not appealable or has not been
appealed within the time allowed for appeal, and (iii) has not been
abandoned, disclaimed, denied or admitted to be invalid or
unenforceable through reissue, re-examination or disclaimer or
otherwise, or (b) a patent application within the Territory, which
covers the manufacture, use, sale or import of a Therapeutic
Collaboration Product, included within the ALNYLAM RNAi Patent Rights,
the MERCK RNAi Patent Rights or the Joint Collaboration Patent Rights
that has been pending less than [**] years from the earliest date on
which such patent application claims priority and such patent claim has
not been cancelled, withdrawn or abandoned.
2. COLLABORATION
2.1 GENERAL. ALNYLAM and MERCK shall engage in the Collaboration upon the
terms and conditions set forth in this Agreement. The activities to be
undertaken in the course of the Technology Collaboration are set forth
in the workplan attached hereto as Schedule 2.1, which may be amended
from time to time upon the mutual written agreement of authorized
representatives of the Parties.
2.2 CONDUCT OF RESEARCH. Each Party or its Affiliates shall commit the
following resources to carry out the activities set forth in Schedule
2.1:
- First year of the Technology Collaboration Term - [**] FTEs
- Second year of the Technology Collaboration Term - [**] FTEs
- Third year of the Technology Collaboration Term - [**] FTEs
ALNYLAM and MERCK shall be entitled to utilize the services of Third
Parties (including Third Party contract research organizations) to
perform their respective Technology Collaboration activities; provided
that each Party shall remain at all times fully liable for its
respective responsibilities under the Technology Collaboration. Neither
Party shall use Third Party contract resources to conduct part or all
of its obligations under the Technology Collaboration unless the other
Party's rights under the agreement with the Third Party contract
research organization guarantee the non-contracting Party the same
rights under this Agreement as if the contracting Party had done the
work itself. Third Party collaborations shall be governed by the terms
of Section 2.13.
2.2.1 MERCK FTE SUPPORT. Notwithstanding the above, MERCK may cease to
provide FTEs commencing one year after the Effective Date by written
notice to ALNYLAM specifying the date on which MERCK's FTEs will cease
work, in which event the license grant from ALNYLAM to MERCK shall be
modified as set forth in Section 3.1.1.1.
2.3 PRINCIPAL SCIENTISTS. The principal scientists for the Technology
Collaboration are Dr. [**] for ALNYLAM and Dr. [**] for MERCK. The
Technology Collaboration and all work assignments to be performed by
ALNYLAM and MERCK shall be carried out under the direction and
supervision of the principal scientists noted above. Each Party
14
shall immediately notify the other Party in the event that the Party's
principal scientist is not or will not direct or supervise the
Technology Collaboration or leaves the Party's employ.
2.4 JOINT STEERING COMMITTEE. The Parties hereby establish a committee to
facilitate the Technology Collaboration as follows:
2.4.1 COMPOSITION OF THE JOINT STEERING COMMITTEE. The Technology
Collaboration shall be conducted under the direction of a joint
steering committee (the "JSC") comprised of two (2) named
representatives of MERCK and two (2) named representatives of ALNYLAM,
one of whom shall be the Senior Vice President, Research and
Development of ALNYLAM. Each Party shall appoint its respective
representatives to the JSC from time to time, and may substitute one or
more of its representatives, in its sole discretion, effective upon
notice to the other Party of such change. These representatives shall
have appropriate technical credentials, experience and knowledge, and
ongoing familiarity with the Technology Collaboration. Additional
representatives or consultants may from time to time, by mutual consent
of the Parties, be invited to attend JSC meetings, subject to such
representative's and consultant's written agreement to comply with the
requirements of Section 4.1. Each Party shall bear its own expenses
relating to attendance at such meetings by its representatives.
2.4.2 JSC CHAIRPERSON. The JSC Chairperson shall rotate every six (6) months
between ALNYLAM and MERCK. The initial JSC Chairperson shall be a
representative of ALNYLAM. The Chairperson's responsibilities shall
include:
1. scheduling meetings at least quarterly, but more frequently if
the JSC determines it necessary;
2. setting agenda for meetings with solicited input from other
members;
3. delivering minutes to the JSC for review and approval; and
4. conducting effective meetings, including ensuring that
objectives for each meeting are set and achieved.
2.4.3 MEETINGS. The JSC shall meet in accordance with a schedule established
by mutual written agreement of the Parties, but no less frequently than
once per Calendar Quarter, with the location for such meetings
alternating between ALNYLAM and MERCK facilities (or such other
locations as is determined by the JSC). Alternatively, the JSC may meet
by means of teleconference, videoconference or other similar
communications equipment, but at least two meetings per year shall be
conducted in person.
2.4.4 JSC RESPONSIBILITIES. The JSC shall have the following responsibilities
with respect to the Technology Collaboration:
1. oversight of all activities relating to the Technology
Collaboration;
2. approving annual workplans, timelines, goals and objectives;
3. determining each Party's responsibilities under the workplans;
15
4. monitoring the progress of the Technology Collaboration,
including reviewing relevant data;
5. considering issues of priority;
6. monitoring the diligence of each Party in performing its
obligations hereunder;
7. identifying and prioritizing academic collaborations for
review by the appropriate level of management of ALNYLAM and
MERCK;
8. approving any material changes to workplans;
9. discussing the content of the data package to be provided to
the JSC to enable the JSC to determine if the Technology
Collaboration Milestone has been achieved pursuant to Section
5.1.4, provided, however, that there is no obligation on the
JSC to agree to the final content of the data package prior to
submission to the JSC; and
10. considering and advising on technical issues that arise.
The JSC shall attempt to resolve any and all disputes relating to the
Technology Collaboration by unanimous consensus; provided, however,
that all issues relating to budgets, expenditures or other economic
matters shall be made by the appropriate level of management of the
Parties and the JSC shall not have final decision-making authority
regarding such matters.
In the event the JSC is unable to reach a unanimous consensus with
respect to any Dispute, then the two (2) senior members of the JSC, one
from MERCK and one from ALNYLAM, shall attempt to resolve such Dispute.
If the senior members of the JSC are unable to resolve such Dispute,
then the Dispute shall be resolved in accordance with Section 9.6.1.
2.5 EXCHANGE OF INFORMATION. In accordance with the provisions of Article
3, upon execution of this Agreement and on an ongoing basis during the
Collaboration Term:
(a) ALNYLAM shall disclose to MERCK all ALNYLAM RNAi Technology
that is Controlled by ALNYLAM or its Affiliates as of the
Effective Date and/or during the first [**] years of the
Collaboration Term which has not been previously disclosed and
shall provide updates, at least quarterly, with regard to
ALNYLAM RNAi Technology that is Controlled by ALNYLAM or its
Affiliates as of the Effective Date and/or during the first
[**] years of the Collaboration Term, and ALNYLAM RNAi Patent
Rights that are Controlled by ALNYLAM or its Affiliates as of
the Effective Date and/or during the first [**] years of the
Collaboration Term, including but not limited to any and all
ALNYLAM RNAi Patent Rights filings related thereto, and
ALNYLAM Therapeutic Collaboration IP that is Controlled by
ALNYLAM or its Affiliates as of the Effective Date and/or
during the first [**] years of the Collaboration Term,
including but not limited to any and all ALNYLAM RNAi Patent
Rights filings related thereto;
(b) MERCK shall disclose to ALNYLAM all MERCK Broad RNAi
Technology that is Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries as of the Effective Date and/or
during the first [**] years of the Collaboration Term and
16
MERCK Product-Specific RNAi Technology that is Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term which has not been previously disclosed and
shall provide updates, at least quarterly, with regard to such
MERCK Broad RNAi Technology that is Controlled by MERCK or
ROSETTA or their wholly-owned subsidiaries as of the Effective
Date and/or during the first [**] years of the Collaboration
Term and MERCK Product-Specific RNAi Technology that is
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term and MERCK Broad RNAi
Patent Rights that are Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries as of the Effective Date and/or
during the first [**] years of the Collaboration Term,
including but not limited to any and all MERCK RNAi Patent
Rights filings related thereto; and
(c) each Party shall disclose to the other any and all Joint
Collaboration Inventions and Joint Collaboration Patent Rights
not previously disclosed and shall provide updates, at least
quarterly, with regard to such Joint Collaboration Inventions.
Disclosures required by this Section 2.5 shall be subject to
the confidentiality and non-use obligations of Third Party
agreements and the confidentiality provisions of Section 4.1
of this Agreement.
2.6 RECORDS AND REPORTS.
2.6.1 RECORDS. Each Party shall maintain records, in sufficient detail and in
good scientific manner appropriate for patent and regulatory purposes,
which shall fully and properly reflect all work done and results
achieved in the performance of the Collaboration by such Party.
2.6.2 COPIES AND INSPECTION OF RECORDS. Each Party shall have the right,
during normal business hours and upon reasonable notice, to inspect and
copy all records of the other Party referred to in Section 2.6.1
related to the Technology Collaboration and/or each Therapeutic
Collaboration Product with respect to which such Party has elected to
co-develop and co-promote pursuant to Section 2.14.3 or for which such
Party has received an exclusive license pursuant to Section 3.1.5 or
Section 3.1.6. The record-reviewing Party shall maintain such records
and the information disclosed therein in confidence in accordance with
Section 4.1. The record-reviewing Party shall have the right to arrange
for its employees and/or consultants involved in the activities
contemplated hereunder to visit the offices and laboratories of the
record-keeping Party, and any of its Third Party contractors as
permitted under Section 2.2, during normal business hours and upon
reasonable notice, to discuss the Technology Collaboration work and its
results in detail with the technical personnel and consultants of the
record-keeping Party. Upon request, the record-keeping Party shall
provide copies of the records described in Section 2.6.1 above.
2.6.3 REPORTS.
17
2.6.3.1 TECHNOLOGY COLLABORATION. Within thirty (30) days following the end of
each Calendar Quarter during the Technology Collaboration Term, each
Party shall provide to the other Party a written progress report in
English which shall describe the work performed to date by such Party
on the Technology Collaboration, provide an evaluation of the work by
such Party performed in relation to the goals, deliverables and
timelines of the Technology Collaboration, and provide such other
information required by the Technology Collaboration or reasonably
requested by the other Party relating to the progress of the goals,
deliverables, timelines or performance of the Technology Collaboration,
including the status and results of Third Party Collaborations covered
by Section 2.13.
2.6.3.2 THERAPEUTIC COLLABORATION. At least two (2) times a year during the
Therapeutic Collaboration Term, two (2) named representatives of MERCK
and two (2) named representatives of ALNYLAM shall meet to exchange
information relating to the Therapeutic Collaboration, to discuss
possible changes to Schedule 2.14.3.2 based on interactions with
Regulatory Authorities, and the provision by ALNYLAM to MERCK of a
brief, written summary progress report in English which shall describe
the work performed to date on the Therapeutic Collaboration, the
progress of the development of all RNAi Therapeutic Products and
Therapeutic Collaboration Products that are not yet the subject of a
Therapeutic Collaboration Product Agreement, a MERCK Product Agreement
or an ALNYLAM Product Agreement. Each Party shall appoint its
respective representatives from time to time, and may substitute one or
more of its representatives, in its sole discretion, effective upon
notice to the other Party of such change. These representatives shall
have appropriate technical credentials, experience and knowledge, and
ongoing familiarity with the Therapeutic Collaboration. Additional
representatives or consultants may from time to time, by mutual consent
of the Parties, be invited to attend meetings, subject to such
representative's and consultant's written agreement to comply with the
requirements of Section 4.1.
2.7 COLLABORATION INVENTIONS.
The entire right, title and interest in:
(a) ALNYLAM Technology Collaboration Inventions and ALNYLAM
Therapeutic Collaboration Inventions shall be owned solely by
ALNYLAM;
(b) MERCK Technology Collaboration Inventions and MERCK
Therapeutic Collaboration Inventions shall be owned solely by
MERCK;
(c) Joint Collaboration Inventions shall be owned jointly by
ALNYLAM and MERCK; and
(d) In the event MERCK, solely or jointly with ALNYLAM, makes any
discovery, improvement, or Invention with respect to a
Therapeutic Collaboration Product after receiving the Opt-In
Information for such Therapeutic Collaboration Product, and
18
prior to the earlier of ALNYLAM's opt-out pursuant to Section
2.14.3.3.1 or the execution of a Therapeutic Collaboration
Agreement or an ALNYLAM Product Agreement or a MERCK Product
Agreement or the expiration or termination of the Therapeutic
Collaboration Term, then MERCK shall assign the same to
ALNYLAM and it shall be an "ALNYLAM-ASSIGNED THERAPEUTIC
COLLABORATION INVENTION" and shall be included within the
definition of an ALNYLAM Therapeutic Collaboration Invention.
In the event ALNYLAM, solely or jointly with MERCK, makes any
discovery, improvement, or Invention with respect to a MERCK
Non-Druggable Target after receiving the Initial MERCK
Non-Druggable Target Information for such MERCK Non-Druggable
Target, and prior to its election either: (i) to select such
MERCK Non-Druggable Target as a MERCK RNAi Novel Target or
(ii) to decline to do so and ALNYLAM's return to MERCK of all
information and materials relating to the MERCK Non-Druggable
Target (as provided in Section 2.14.2), then ALNYLAM shall
assign the same to MERCK and it shall be a "MERCK-ASSIGNED
THERAPEUTIC COLLABORATION INVENTION" and shall be included
within the definition of a MERCK Therapeutic Collaboration
Invention.
ALNYLAM shall promptly disclose to MERCK the development, making,
conception or reduction to practice of ALNYLAM Technology Collaboration
Inventions and Joint Collaboration Inventions and MERCK shall promptly
disclose to ALNYLAM the development, making, conception or reduction to
practice of MERCK Technology Collaboration Inventions and Joint
Collaboration Inventions.
2.8 COLLABORATION TERM. Except as otherwise provided herein, the term of
the Collaboration shall commence on the Effective Date and continue
until the end of the Therapeutic Collaboration Term as set forth below
("COLLABORATION TERM"). The Technology Collaboration shall commence on
the Effective Date and continue for a period of three years
("TECHNOLOGY COLLABORATION TERM"), and the term of the Therapeutic
Collaboration shall commence on the one year anniversary of the
Effective Date and continue for a period of four years and thereafter
until (a) all Opt-In Negotiation Periods with respect to all
Therapeutic Collaboration Products hereunder have expired and/or
resulted in the execution of a Therapeutic Collaboration Agreement, a
MERCK Product Agreement or an ALNYLAM Product Agreement, and (b)
ALNYLAM has notified MERCK that there are no MERCK RNAi Novel Targets
that have not either become the subject of such an agreement or become
an Abandoned MERCK RNAi Novel Target ("THERAPEUTIC COLLABORATION
TERM"). The Parties may extend the term of the Collaboration, the
Technology Collaboration and/or the Therapeutic Collaboration by mutual
written agreement of authorized representatives of the Parties, and
shall, in such case, amend Schedule 2.1 as applicable.
2.9 COMPLIANCE. Each Party shall conduct the Collaboration in accordance
with all applicable laws, rules and regulations, including, without
limitation, all current governmental regulatory requirements concerning
good laboratory practices. In addition, if animals are used in research
hereunder, each Party shall comply with the Animal Welfare Act or any
other applicable local, state, national and international laws or
regulations relating to the care and use of laboratory animals. The
Parties encourage each other to use the highest standards, such as
those set forth in the Guide for the Care
19
and Use of Laboratory Animals (NRC, 1996), for the humane handling,
care and treatment of such research animals. Any animals which are used
in the course of the Collaboration, or products derived from those
animals, such as eggs or milk, will not be used for food purposes, nor
will these animals be used for commercial breeding purposes. Each Party
shall notify the other Party in writing of any deviations from
applicable regulatory or legal requirements. Each Party hereby
certifies that it will not and has not employed or otherwise used in
any capacity the services of any person debarred under Section 21 USC
335a in performing any services hereunder.
2.10 MATERIALS. Each Party shall provide the other Party with sufficient
quantities of the materials set forth in Schedule 2.10 ("MATERIALS"),
as updated from time to time, solely for the purposes of carrying out
the Parties' respective activities under the Technology Collaboration
in accordance with the terms of this Agreement. Each Party acknowledges
and agrees that Materials received from the other Party are not to be
used in humans. In addition, none of the Materials received from the
other Party, or any derivatives, analogs, modifications or components
thereof, shall be transferred, delivered or disclosed to any Third
Party, without the prior written approval of the Party which provided
the Materials, other than a permitted collaborator under Section 2.13,
a permitted Third Party under Section 2.2, or a Third Party performing
services on behalf of a Party in the development of a Therapeutic
Collaboration Product. Any unused Materials shall be, at the providing
Party's option, either returned to the providing Party or destroyed in
accordance with the providing Party's instructions.
2.11 EXCLUSIVE EFFORTS. Except as provided in Sections 2.13 and 3.1.1,
during the Technology Collaboration Term, ALNYLAM and RIBOPHARMA and
their Affiliates shall not enter into any agreement with a Third Party
to develop RNAi Technology for use in in vitro and/or in vivo target
identification and/or target validation; provided, however, that
ALNYLAM and RIBOPHARMA and their Affiliates may enter into a
collaboration with a Third Party, the primary purpose of which is the
development of therapeutic products using RNA interference and, if RNAi
Technology is developed therein for use in in vitro and/or in vivo
target identification and/or target validation, then it may only be
developed in the course of developing such therapeutic products.
Notwithstanding the foregoing, each of ALNYLAM and RIBOPHARMA and their
wholly-owned subsidiaries may, in its sole discretion, grant
non-exclusive licenses under the Xxxxxx Patents for the purpose of in
vitro and/or in vivo target identification and/or target validation
solely to Third Parties:
(i) with whom neither ALNYLAM nor RIBOPHARMA nor any of their
Affiliates has a collaboration or strategic alliance
agreement, or
(ii) with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
a collaboration or strategic alliance agreement, which has as
its primary purpose the development of therapeutic products
using RNA interference and, if RNAi Technology is developed
therein for use in in vitro and/or in vivo target
identification and/or target validation, then it may only be
developed in the course of developing such therapeutic
products, or
20
(iii) with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
a collaboration or strategic alliance agreement which does not
have in vitro and/or in vivo target identification and/or
target validation as a purpose.
2.12 USE OF HUMAN MATERIALS. If any human cell lines, tissue, human
clinical isolates or similar human-derived materials ("HUMAN
MATERIALS") have been or are to be collected and/or used in the
Collaboration, each Party represents and warrants (i) that it has
complied, or shall comply, with all applicable laws, guidelines and
regulations relating to the collection and/or use of the Human
Materials, and (ii) that it has obtained, or shall obtain, all
necessary approvals and appropriate informed consents, in writing, for
the collection and/or use of such Human Materials. Each Party shall
provide documentation of such approvals and consents upon the other
Party's request. Each Party further represents and warrants that such
Human Materials may be used as contemplated in this Agreement without
any obligation to the individuals or entities ("PROVIDERS") who
contributed the Human Materials, including, without limitation, any
obligation of compensation to such Providers or any other Third Party
for the intellectual property associated with, or commercial use of,
the Human Materials for any purposes.
2.13 THIRD PARTY COLLABORATIONS. In addition to the right to utilize the
services of Third Parties to perform Technology Collaboration
activities pursuant to Section 2.2, during the Technology Collaboration
Term, ALNYLAM and MERCK agree that it may be necessary or useful to
enter into Third Party collaborations which provide technology,
information, data or know-how, patentable or otherwise, which is
necessary or useful for MERCK and/or ALNYLAM to perform its obligations
under the Technology Collaboration. Such Third Party collaborations
shall not conflict with the terms and conditions of this Agreement,
including but not limited to Sections 2.11, 2.13 and 3.1.1, and shall
be structured consistently with ALNYLAM and RIBOPHARMA's obligations
and rights pursuant to this Agreement, including but not limited to
Sections 2.11, 2.13 and 3.1.1. In the event that any such Third Party
collaborations are contemplated in connection with the Technology
Collaboration, the JSC shall discuss, subject to Third Party
confidentiality obligations, whether to enter into such Third Party
collaborations. The costs of such Third Party collaborations shall be
borne by the Party(ies) entering into the agreement and such agreements
shall include confidentiality and non-use provisions which are no less
stringent than those set forth in Section 4.1 of this Agreement.
The Parties shall use good faith efforts to ensure that, to the extent
possible, all such Third Party collaborations shall provide that any
and all data and results, discoveries and inventions, whether
patentable or not, arising out of the Third Party collaboration may be
used by bona fide collaborators of the Party entering into the Third
Party collaboration agreement. In addition, the Party entering into
such Third Party collaborations shall use reasonable efforts to obtain
a right to sublicense to the other Party and its Affiliates any
intellectual property arising out of the Third Party collaboration for
use in connection with the Collaboration.
2.14 THERAPEUTIC COLLABORATION.
21
2.14.1 GOAL. The goal of the Therapeutic Collaboration is to develop RNAi
Therapeutic Products for disease-associated targets which are not
amenable to therapeutic intervention by conventional small molecule
chemistry. The activities to be undertaken in the course of the
Therapeutic Collaboration for each MERCK RNAi Novel Target shall be set
forth in a detailed workplan promptly after ALNYLAM has selected such
MERCK RNAi Novel Target as provided in Section 2.14.2(3).
2.14.2 PROVISION, SELECTION AND ABANDONMENT OF MERCK NON-DRUGGABLE TARGETS.
During the Therapeutic Collaboration Term, MERCK shall provide to
ALNYLAM a minimum of [**] MERCK Non-Druggable Targets which are
candidates for RNAi Therapeutic Products during the first [**] of each
of the first [**] years of the Therapeutic Collaboration Term,
beginning with the year starting September 1, 2004, in accordance with
the procedures set forth below. ALNYLAM shall notify MERCK, within [**]
of receiving the Complete MERCK Non-Druggable Target Information (as
defined below) for the last MERCK Non-Druggable Target received by
ALNYLAM during each year of the Therapeutic Collaboration Term for
which ALNYLAM requests the Complete MERCK Non-Druggable Target
Information, if it chooses to develop an RNAi Therapeutic Product
directed at any or all of such MERCK Non-Druggable Targets (whereupon
such MERCK Non-Druggable Target chosen by ALNYLAM for development shall
be a "MERCK RNAi NOVEL TARGET"). After selecting a MERCK RNAi Novel
Target, ALNYLAM shall use commercially reasonable efforts to develop an
RNAi Therapeutic Product directed at such MERCK RNAi Novel Target.
ALNYLAM may at any time notify MERCK that it has stopped work on a
particular MERCK RNAi Novel Target because the target is no longer
scientifically or commercially interesting to ALNYLAM ("ABANDONED MERCK
RNAi NOVEL TARGET"). Upon such abandonment, ALNYLAM and its Affiliates:
(a) shall immediately return to MERCK all information (including
Information), data and materials (including all MERCK intellectual
property) relating to the Abandoned MERCK RNAi Novel Target, including,
but not limited to that which was provided pursuant to Schedules
2.14.2(1) and 2.14.2(2), (b) shall have no rights to the Abandoned
MERCK RNAi Novel Target, and (c) shall be prohibited from researching,
developing or commercializing products, either alone or in
collaboration with another party, directed at the Abandoned MERCK RNAi
Novel Target or any fragment or common genetic variant thereof that
results from a point mutation in, or a single nucleotide polymorphism
with respect to, such Abandoned MERCK RNAi Novel Target for a period of
[**] commencing on the date of notification to MERCK of the abandonment
by ALNYLAM.
With regard to the provision of MERCK Non-Druggable Targets to ALNYLAM
by MERCK and notification to MERCK by ALNYLAM of its interest in
selecting such MERCK Non-Druggable Targets, the following step-wise
process shall apply:
(1) For each MERCK Non-Druggable Target provided by MERCK to
ALNYLAM, MERCK shall initially disclose to an individual
specified by ALNYLAM a limited amount of information as
provided in Schedule 2.14.2(1) ("INITIAL MERCK NON-DRUGGABLE
TARGET INFORMATION").
22
(2) Within [**] of receiving the Initial MERCK Non-Druggable
Target Information for the third MERCK Non-Druggable Target,
ALNYLAM shall notify MERCK if it wants to view the complete
MERCK Non-Druggable Target information relating to any or all
of the [**] MERCK Non-Druggable Targets provided in such year
as provided in Schedule 2.14.2(2) ("COMPLETE MERCK
NON-DRUGGABLE TARGET INFORMATION"), and MERCK will provide the
Complete MERCK Non-Druggable Target Information to an
individual specified by ALNYLAM within [**] of receipt of such
notice from ALNYLAM. If ALNYLAM has not received all Complete
MERCK Non-Druggable Target Information set forth in Schedule
2.14.2(2), or any portion thereof, ALNYLAM shall notify MERCK
of same, which notice shall specify any missing Complete MERCK
Non-Druggable Target Information or any portion thereof; and
MERCK shall, promptly after receipt of such notice, provide
any missing Complete MERCK Non-Druggable Target Information
identified in the notice to ALNYLAM. "Complete MERCK
Non-Druggable Target Information" shall include all
information, materials and/or data listed on Schedule
2.14.2(2) which is in MERCK's or ROSETTA's or their
fully-owned subsidiaries' possession (either by ownership or
license) and is directly relevant to the MERCK Non-Druggable
Target.
(3) Within [**] of receiving the Complete MERCK Non-Druggable
Target Information for the last MERCK Non-Druggable Target
received by ALNYLAM during each year for which ALNYLAM
requests the Complete MERCK Non-Druggable Target Information,
ALNYLAM shall notify MERCK in writing if it selects any of the
MERCK Non-Druggable Targets as a MERCK RNAi Novel Target.
In the event that ALNYLAM reviews the Complete MERCK Non-Druggable
Target Information for a MERCK Non-Druggable Target and then elects not
to select it as a MERCK RNAi Novel Target, ALNYLAM and its Affiliates
shall (a) immediately return to MERCK all information (including
Information), data and materials (including all MERCK intellectual
property) relating to the MERCK Non-Druggable Target, including, but
not limited to that which was provided pursuant to Schedules 2.14.2(1)
and 2.14.2(2), (b) have no rights to the MERCK Non-Druggable Target,
and (c) be prohibited from researching, developing or commercializing
products, either alone or in collaboration with another party, directed
at such MERCK Non-Druggable Target or any fragment or common genetic
variant thereof that results from a point mutation in, or a single
nucleotide polymorphism with respect to, such MERCK Non-Druggable
Target, for a period of [**] commencing on the date of notification to
MERCK of ALNYLAM's decision not to select such MERCK Non-Druggable
Target as a MERCK RNAi Novel Target.
In the event that ALNYLAM selects a MERCK Non-Druggable Target as a
MERCK RNAi Novel Target, MERCK shall be prohibited from researching,
developing or commercializing therapeutic products that involve the use
of RNA interference against such MERCK RNAi Novel Target, either alone
or in collaboration with another party, unless and until the earlier
of: (1) ALNYLAM has notified MERCK that such MERCK RNAi Novel Target is
an Abandoned MERCK RNAi Novel Target, or (2) the Agreement has been
terminated by MERCK pursuant to Section 8.2.1(a), or (3) ALNYLAM fails
to use commercially reasonable efforts to develop an RNAi Therapeutic
Product directed at
23
such MERCK RNAi Novel Target as provided for in Section 2.14.2, or (4)
[**] years following ALNYLAM's provision to MERCK of Opt-In Information
and MERCK's decision not to "opt-in" on co-development of such
Therapeutic Collaboration Product, provided, however, that nothing in
this paragraph shall limit the rights granted to ALNYLAM in Section
3.1.3.
2.14.3 OPT-IN.
2.14.3.1 DEVELOPMENT OF MERCK RNAi NOVEL TARGETS. ALNYLAM shall fund and be
responsible for conducting all research and development of MERCK RNAi
Novel Targets for discovery and development of RNAi Therapeutic
Products as set forth herein and in the workplan developed pursuant to
Section 2.14.1 through the completion of IND-Enabling GLP Toxicology
Studies, at which time MERCK may exercise its Opt-In Right as set forth
below. ALNYLAM shall not use Third Party contract resources to conduct
part or all of its research obligations under the Therapeutic
Collaboration unless ALNYLAM's rights under the agreement with the
Third Party contract research organization are sufficient to guarantee
MERCK the same rights under this Agreement as if ALNYLAM had done the
work itself. At the time of negotiating an agreement for Third Party
contract resources, the Parties agree to discuss a possible royalty due
to a Third Party contract manufacturer for development and transfer of
a manufacturing process.
2.14.3.2 OPT-IN PROCESS. Within [**] of completing the IND-Enabling GLP
Toxicology Studies for any RNAi Therapeutic Product, ALNYLAM shall
provide MERCK with all information, materials and data listed on
Schedule 2.14.3.2 (provided that, with respect to those categories
normally required for an IND filing, such information, materials or
data may be omitted if the omission is approved by the relevant
Regulatory Authority for an IND filing) ("OPT-IN INFORMATION") to
enable MERCK to evaluate and decide whether to "opt-in" on
co-development of such RNAi Therapeutic Product discovered by ALNYLAM
(any RNAi Therapeutic Product for which ALNYLAM provides the Opt-In
Information, whether or not chosen by MERCK, a "THERAPEUTIC
COLLABORATION PRODUCT"). Notwithstanding the above, "Opt-In
Information" shall include all information, materials and/or data
listed on Schedule 2.14.3.2 which is in ALNYLAM's or its Affiliate's
possession (either by ownership or license) and relating to the RNAi
Therapeutic Product.
MERCK shall have a period of [**] after receiving from ALNYLAM all
Opt-In Information relating to the Therapeutic Collaboration Product in
which to exercise its Opt-In Right with regard to such Therapeutic
Collaboration Product by written notice ("OPT-IN NOTICE") to ALNYLAM.
If MERCK has not received all Opt-In Information set forth in Schedule
2.14.3.2, or any portion thereof (other than the materials and data
which may be omitted pursuant to the first sentence of this Section
2.14.3.2), MERCK shall notify ALNYLAM of same, which notice shall
specify any missing Opt-In Information or any portion thereof; and
ALNYLAM shall, promptly after receipt of such notice, provide any
missing Opt-In Information identified in the notice to MERCK. If MERCK
does not deliver such Opt-In Notice to ALNYLAM in such [**] period,
then MERCK shall be deemed to have declined to exercise its Opt-
24
In Right and ALNYLAM shall have no further obligation to MERCK with
respect to such Therapeutic Collaboration Product, except as set forth
in Section 5.2.1(a) of this Agreement. In the event that MERCK does not
deliver such Opt-In Notice to Alnylam, MERCK and its Affiliates shall
(a) immediately return to ALNYLAM all information (including
Information), data and materials (including all ALNYLAM intellectual
property) relating to the Therapeutic Collaboration Product, including,
but not limited to that which was provided pursuant to Schedule
2.14.3.2.
Upon MERCK's giving an Opt-In Notice to ALNYLAM, MERCK shall deposit
into an escrow account a fee of [**] Dollars ($[**]) (the "OPT-IN-FEE")
plus [**] percent ([**]%) of the FTE and out-of-pocket research costs
which ALNYLAM incurred in developing the MERCK RNAi Novel Target from
the date ALNYLAM elected to develop the MERCK RNAi Novel Target until
the date of delivery of the Opt-In Information to MERCK ("R&D COSTS").
If the Parties fail to enter into a Therapeutic Collaboration Product
Agreement or a MERCK Product Agreement, then the total Opt-In Fee and
R&D Costs shall be returned promptly to MERCK. If the Parties enter
into a Therapeutic Collaboration Product Agreement or if the Parties
enter into a MERCK Product Agreement, then MERCK: (1) shall cause the
Opt-In Fee and the R&D Costs to be promptly released within [**] of the
execution thereof from such escrow account and delivered to ALNYLAM,
and (2) shall pay to ALNYLAM [**]percent ([**]%) of the FTE and
out-of-pocket research costs incurred by ALNYLAM from the date of
delivery of all Opt-In Information to MERCK until the effective date of
the Therapeutic Collaboration Product Agreement or MERCK Product
Agreement, as the case may be, within [**] of receiving such
information from ALNYLAM.
2.14.3.3 THERAPEUTIC COLLABORATION PRODUCT AGREEMENT. After MERCK provides
ALNYLAM with the applicable Opt-In Notice, the Parties shall negotiate
in good faith a definitive agreement to co-develop and co-promote a
Therapeutic Collaboration Product ("THERAPEUTIC COLLABORATION PRODUCT
AGREEMENT"). The provisions of any Therapeutic Collaboration Product
Agreement shall address the sharing of expenses and of net profits.
Such Therapeutic Collaboration Product Agreement shall contain terms
substantially similar to those set forth in Schedule 2.14.3.3. The
Therapeutic Collaboration Product Agreement with respect to the first
Therapeutic Collaboration Product that is entered into by the Parties
shall be completed and executed within [**] of ALNYLAM's receipt of
MERCK's Opt-In Notice ("INITIAL OPT-IN NEGOTIATION PERIOD"). The
Parties may mutually agree to extend the Initial Opt-In Negotiation
Period. Each additional Therapeutic Collaboration Product Agreement
entered into by the Parties, subsequent to the first Therapeutic
Collaboration Product Agreement between the Parties shall be completed
and executed by the Parties within [**] of ALNYLAM's receipt of the
relevant MERCK Opt-In Notice, unless otherwise agreed by the Parties
("SUBSEQUENT OPT-IN NEGOTIATION PERIODS") (the Initial and Subsequent
Opt-In Negotiation Periods shall each be referred to as an "OPT-IN
NEGOTIATION PERIOD" and collectively referred to as the "OPT-IN
NEGOTIATION PERIODS").
25
During each Opt-In Negotiation Period, the Parties shall establish an
Interim Joint Development Committee, comprised of an equal number of
representatives from MERCK and ALNYLAM, to monitor and advise on the
development of the relevant Therapeutic Collaboration Product;
provided, however, that ALNYLAM shall be responsible for continuing
the development of the Therapeutic Collaboration Product, including
filing the IND and initiating clinical trials, and ALNYLAM shall have
final decision-making authority with respect thereto during the
relevant Opt-In Negotiation Period and may proceed with continuing
development of the Therapeutic Collaboration Product without
requiring a decision of the Interim Joint Development Committee.
The Parties shall act in good faith to reach reasonable commercial
terms during the Opt-In Negotiation Periods. If the Parties do not
enter into a Therapeutic Collaboration Product Agreement during any
Opt-In Negotiation Period, then the unresolved issues shall be
submitted to the President of MERCK Research Laboratories and the CEO
of ALNYLAM for resolution. If such President and CEO cannot reach an
agreement regarding the unresolved issues, then such issues shall be
submitted to arbitration in accordance with Section 9.6.3.
2.14.3.3.1 ALNYLAM'S OPT-OUT RIGHT. With respect to each Therapeutic
Collaboration Product, during the first [**] of any Initial Opt-In
Negotiation Period or Subsequent Opt-In Negotiation Period, ALNYLAM
shall have the right to "opt-out" of co-developing and co-promoting
such Therapeutic Collaboration Product, in which case MERCK may
proceed to develop and promote such Therapeutic Collaboration Product
independently without ALNYLAM, subject to Sections 5.2.1(b) and 3.1.6
and the other terms and conditions of this Agreement and ALNYLAM
shall: (a) immediately cease development of such Therapeutic
Collaboration Product, (b) immediately return to MERCK all
information (including Information), data and materials (including
all MERCK intellectual property) relating to such Therapeutic
Collaboration Product, (c) have no rights to the MERCK RNAi Novel
Target against which such Therapeutic Collaboration Product is
directed, (d) be prohibited from researching, developing or
commercializing products, either alone or in collaboration with
another party, directed at such MERCK RNAi Novel Target until the
earlier of: (1) the Agreement has been terminated by ALNYLAM pursuant
to Section 8.2.1(a), or (2) MERCK fails to use commercially
reasonable efforts to develop such Therapeutic Collaboration Product
directed at such MERCK RNAi Novel Target, or (3) [**] years following
its notice to MERCK that it has elected to "opt-out" of the
co-development and co-promotion of such Therapeutic Collaboration
Product, provided, however, that nothing in this paragraph shall
limit the rights granted to MERCK in Article 3.
2.15 PAYMENTS TO THIRD PARTIES RESULTING FROM SUBLICENSES. During the
Collaboration Term, ALNYLAM and MERCK agree that it may be necessary or
useful to enter into license agreements with a Third Party which
provide technology, patentable or otherwise, which is necessary or
useful for MERCK and/or ALNYLAM to perform its obligations under the
Collaboration. Such Third Party license agreements shall not grant
rights to any Third Party that conflict with the terms and conditions
of this Agreement, including
26
but not limited to Sections 2.11, 2.15 and 3.1.1, and shall be
structured consistently with the Parties' obligations and rights
hereunder. The costs of such Third Party license agreements shall be
borne by the Party(ies) entering into the agreement and such agreements
shall include confidentiality and non-use provisions which are no less
stringent than those set forth in Section 4.1 of this Agreement. The
Party entering into such Third Party license agreement shall use
commercially reasonable efforts to obtain a right to sublicense to the
other Party and its Affiliates any intellectual property licensed under
or arising out of the Third Party license agreement for use in
connection with the Collaboration and shall offer the other Party such
a sublicense. In the event that either Party is obligated to make a
payment (other than a royalty payment) to a Third Party under a license
agreement with respect to the sublicense of rights to the other Party
hereunder, the Party receiving the sublicense shall reimburse the other
Party for such payments which are solely attributable to the grant of
such sublicense. The Parties agree that this Section 2.15 shall not
apply to any agreement entered into by either Party or its Affiliates
prior to the Effective Date of this Agreement.
3. LICENSES
3.1 LICENSE GRANTS.
27
3.1.1 ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION PATENT RIGHTS,
ALNYLAM RNAi PATENT RIGHTS AND ALNYLAM RNAi TECHNOLOGY. ALNYLAM hereby
grants to MERCK a royalty-free license in the Territory, with a right
to sublicense to its Affiliates, to the rights set forth below:
(a) under ALNYLAM Target Identification and Target Validation RNAi
Patent Rights, and
(b) under ALNYLAM's interest in Joint Collaboration Patent Rights
and Joint Collaboration Inventions, and
(c) under ALNYLAM Technology Collaboration Inventions, and
(d) to ALNYLAM RNAi Technology, and
(e) under ALNYLAM-Assigned Therapeutic Collaboration Inventions;
which license: (1) shall include and be Co-exclusive for (a) through
(e) that are Controlled by ALNYLAM or its Affiliates: (A) during the
Technology Collaboration Term, and (B) with regard to Joint
Collaboration Inventions and ALNYLAM Collaboration Inventions, during
the one (1) year period following the termination or expiration of the
Technology Collaboration Term, and (2) shall include and, to the extent
not Co-exclusive under (1) (A), be non-exclusive for (a) through (e)
that are owned and Controlled by ALNYLAM or its Affiliates during the
fourth and fifth years following the Effective Date:
(i) during the Collaboration Term to perform its obligations under
the Collaboration; and
(ii) during and after the Collaboration Term for the sole purpose
of in vitro and/or in vivo target identification and/or target
validation research relating to drug discovery and/or
development activities of MERCK and/or its Affiliates,
including in collaborations with Third Parties in which MERCK
and/or its Affiliates has any rights to discoveries made;
provided, however, that ALNYLAM shall retain the right, during and
after the Collaboration Term, including the right to sublicense to its
Affiliates (except as otherwise set forth in Section 3.1.8), to
practice the ALNYLAM RNAi Patent Rights, ALNYLAM's interest in Joint
Collaboration Patent Rights and under ALNYLAM Technology Collaboration
Inventions and ALNYLAM RNAi Technology (excluding ALNYLAM Therapeutic
Collaboration Inventions which are RNAi Therapeutic Products) for: (1)
internal research purposes, including without limitation, in vitro
and/or in vivo target identification and/or target validation research,
and (2) in collaborations with Third Parties the primary purpose of
which is the development of therapeutic products using RNA interference
and, if RNAi Technology is developed therein for use in in vitro and/or
in vivo target identification and/or target validation, then it may
only be developed in the course of developing such therapeutic
products.
28
Notwithstanding the foregoing, ALNYLAM's retained rights during the
Collaboration Term to practice any and all of such ALNYLAM Target
Identification and Target Validation RNAi Patent Rights, ALNYLAM RNAi
Patent Rights, ALNYLAM's interest in Joint Collaboration Patent Rights,
ALNYLAM Technology Collaboration Inventions, and/or ALNYLAM RNAi
Technology in collaboration with Third Parties shall not include the
right to perform in vitro and/or in vivo target identification and/or
target validation research for Third Parties unless such research is
performed in the course of a Third Party collaboration permitted under
subsection (2) of the preceding paragraph.
Notwithstanding any other provisions of this Agreement, the license
grant to MERCK under ALNYLAM-Assigned Collaboration Inventions shall be
perpetual.
3.1.1.1 TERMINATION OF MERCK FTE SUPPORT. If MERCK ceases to provide the
required FTEs commencing [**] after the Effective Date as provided in
Section 2.2.1, then: (1) the license grants provided by ALNYLAM to
MERCK under Section 3.1.1 shall become non-exclusive, and (2) if MERCK
has not paid the Technology Collaboration Milestone, then the license
grant provided by ALNYLAM to MERCK in Section 3.1.1 shall be modified
as follows: the definitions of ALNYLAM RNAi Patent Rights, ALNYLAM RNAi
Technology and ALNYLAM Technology Collaboration Inventions shall be
modified to exclude intellectual property rights Controlled by ALNYLAM
or its Affiliates which come into the Control of Alnylam or its
Affiliates more than one (1) year after the date specified in MERCK's
notice under Section 2.2.1 of this Agreement; provided, however, that,
if MERCK pays the Technology Collaboration Milestone at any time after
MERCK ceases to provide the required FTEs as set forth in the first
sentence of this paragraph, then the definitions of ALNYLAM RNAi Patent
Rights, ALNYLAM RNAi Technology and ALNYLAM Technology Collaboration
Inventions shall be modified to only exclude intellectual property
rights Controlled by ALNYLAM or its Affiliates which come into the
Control of ALNYLAM or its Affiliates after the later of: (1) the
earlier of: (a) the date upon which MERCK paid the Technology
Collaboration Milestone, or (b) the date upon which a Technology
Milestone Dispute relating to the Technology Collaboration Milestone
which was paid by MERCK was submitted to arbitration pursuant to
Section 9.7, or (2) [**] after the date specified in MERCK's notice
under Section 2.2.1 of this Agreement, and ALNYLAM and its Affiliates
shall immediately disclose and provide to MERCK all applicable
intellectual property not previously disclosed, including ALNYLAM RNAi
Patent Rights, ALNYLAM RNAi Technology, and ALNYLAM Technology
Collaboration Inventions.
3.1.2 MERCK BROAD RNAi PATENT RIGHTS, MERCK BROAD RNAi TECHNOLOGY, MERCK
PRODUCT-SPECIFIC RNAi PATENT RIGHTS AND MERCK PRODUCT-SPECIFIC RNAi
TECHNOLOGY. MERCK hereby grants to ALNYLAM a non-exclusive,
royalty-free license in the Territory with a right to sublicense its
Affiliates (except as set forth in Section 3.1.8):
(i) under MERCK Broad RNAi Patent Rights that are Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term; MERCK-Assigned Therapeutic
29
Collaboration Inventions; MERCK's interest in Joint
Collaboration Patent Rights; and MERCK Broad RNAi Technology
that is Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, during the Collaboration
Term solely to perform its obligations under the
Collaboration; and
(ii) under MERCK Product-Specific RNAi Patent Rights that are
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, MERCK Product-Specific
RNAi Technology that is Controlled by MERCK or ROSETTA or
their wholly-owned subsidiaries as of the Effective Date
and/or during the first [**] years of the Collaboration Term,
and MERCK's interest in Joint Therapeutic Collaboration Patent
Rights, during the Therapeutic Collaboration Term solely to
perform its obligations under the Therapeutic Collaboration
with regard to a specific RNAi Therapeutic Product within the
Therapeutic Collaboration; and
(iii) under MERCK Broad RNAi Patent Rights that are Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Effective Date and/or during the first [**] years of the
Collaboration Term, MERCK Broad RNAi Technology that is
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Effective Date and/or during the first
[**] years of the Collaboration Term, MERCK's interest in
Joint Collaboration Patent Rights, and MERCK-Assigned
Therapeutic Collaboration Inventions, during and after the
Collaboration Term for the sole purpose of research
(including, without limitation, for internal in vitro and/or
in vivo target validation and/or target identification
research), development, manufacture, use, import or sale of
therapeutic products based on RNA interference by ALNYLAM, its
Affiliates, or its Third Party collaborators.
For the avoidance of doubt, it is acknowledged that, with regard to
research and development activities under Sections 3.1.2(i)-(iii), such
license grant shall apply only to research and development activities
using RNA interference.
ALNYLAM's license under MERCK-Assigned Therapeutic Collaboration
Inventions shall be perpetual.
The Parties agree that neither ALNYLAM nor its Affiliates have the
right to sublicense any MERCK intellectual property, including MERCK
RNAi Patent Rights, MERCK's interest in Joint Collaboration Patent
Rights, and/or MERCK RNAi Technology to any Third Party other than as
provided in Section 3.1.5. The Parties further agree that neither
ALNYLAM nor its Affiliates have the right to provide any Third Party
with MERCK RNAi Technology, MERCK RNAi Patent Rights, or MERCK's
interest in Joint Collaboration Patent Rights as part of a research
collaboration unless the primary purpose of such collaboration is the
development of therapeutic products using RNA interference and, if RNAi
Technology is developed therein for use in in vitro and/or in vivo
target identification and/or target validation, then it may only be
developed in the course of developing such therapeutic products;
provided, further that, under no circumstance other than pursuant to
Section 3.1.5(a) or an ALNYLAM Product
30
Agreement, shall ALNYLAM or its Affiliates provide any Third Party with
MERCK Product-Specific RNAi Technology or MERCK Product-Specific RNAi
Patent Rights.
3.1.3 MERCK RNAi NOVEL TARGET IP. MERCK hereby grants ALNYLAM a worldwide,
royalty-free, Co-exclusive license, with the right to sublicense its
Affiliates (except as otherwise set forth in Section 3.1.8), to MERCK
RNAi Novel Target IP Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries solely to perform its obligations under the
Therapeutic Collaboration during the Therapeutic Collaboration Term
(for the avoidance of doubt, it is acknowledged that, with regard to
research and development activities, such license grant shall apply
only to research and development activities using RNA interference).
3.1.4 MERCK AND ALNYLAM CO-DEVELOP AND CO-COMMERCIALIZE A THERAPEUTIC
COLLABORATION PRODUCT. If MERCK exercises its Opt-In Right pursuant to
Section 2.14.3 and the Parties enter into a Therapeutic Collaboration
Product Agreement for a specific Therapeutic Collaboration Product,
then, as part of the Therapeutic Collaboration Product Agreement:
(a) ALNYLAM will grant to MERCK a worldwide, royalty-free,
Co-exclusive license, sublicensable to its Affiliates, to any
and all ALNYLAM RNAi Technology, ALNYLAM Collaboration
Inventions, ALNYLAM Therapeutic Collaboration IP, and ALNYLAM
RNAi Patent Rights, solely to perform its obligations under
the Therapeutic Collaboration Product Agreement to develop and
commercialize such Therapeutic Collaboration Product; and
(b) MERCK will grant to ALNYLAM a worldwide, royalty-free,
Co-exclusive license, sublicenseable to its Affiliates (except
as otherwise set forth in Section 3.1.8), to any and all MERCK
RNAi Technology, MERCK RNAi Patent Rights, MERCK Collaboration
Inventions and MERCK RNAi Novel Target IP which are Controlled
by MERCK or ROSETTA or their wholly-owned subsidiaries, solely
to perform its obligations under the Therapeutic Collaboration
Product Agreement to develop and commercialize such
Therapeutic Collaboration Product (for the avoidance of doubt,
it is acknowledged that, with regard to research and
development activities, such license grant shall apply only to
research and development activities using RNA interference).
3.1.5 ALNYLAM DEVELOPS THERAPEUTIC COLLABORATION PRODUCT WITHOUT MERCK. If
MERCK elects, pursuant to Section 2.14.3, not to opt-in on development
and commercialization of a specific Therapeutic Collaboration Product
with ALNYLAM or if the relevant Opt-In Negotiation Periods expire
without any action taken by MERCK, then:
(a) MERCK will grant to ALNYLAM a worldwide, royalty-bearing,
exclusive license, with the right to sublicense, to any and
all MERCK Product-Specific RNAi Technology, MERCK Broad RNAi
Technology, MERCK RNAi Novel Target IP, MERCK Product-Specific
RNAi Patent Rights and MERCK Broad RNAi Patent Rights which
are Controlled by MERCK or ROSETTA or their wholly-owned
31
subsidiaries and MERCK's interest in Joint Collaboration
Patent Rights which are applicable to the specific Therapeutic
Collaboration Product solely to research, develop,
manufacture, use, import, sell and commercialize such
Therapeutic Collaboration Product (for the avoidance of doubt,
it is acknowledged that such license grant shall apply only to
such Therapeutic Collaboration Product and shall not apply to
any other product, and shall apply only to research and
development activities using RNA interference); and
(b) ALNYLAM shall pay MERCK the royalties as provided in Section
5.2.1(a); and
(c) The Parties shall enter into an agreement with respect to such
license and royalties and patent ownership, patent
prosecution, patent enforcement and such other matters as the
Parties may agree upon (an "ALNYLAM PRODUCT AGREEMENT"). Such
agreement will contain the terms set forth in Sections
3.1.5(a), 5.2.1(a), 5.2.1(c) and 5.2.2 through 5.5 and will be
negotiated in the manner set forth in the last paragraph of
Section 2.14.3.3, with unresolved issues resolved as set forth
therein.
3.1.6 MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT ALNYLAM. If
MERCK elects, pursuant to Section 2.14.3, to opt-in on development and
commercialization of a specific Therapeutic Collaboration Product but
ALNYLAM "opts-out" of developing and commercializing such Therapeutic
Collaboration Product with MERCK pursuant to Section 2.14.3.3.1, then
with respect to each such Therapeutic Collaboration Product:
(a) ALNYLAM will grant to MERCK a worldwide, royalty-bearing,
exclusive license, with the right to sublicense, to any and
all ALNYLAM RNAi Technology, ALNYLAM Collaboration Inventions,
ALNYLAM Therapeutic Collaboration IP, ALNYLAM RNAi Patents and
ALNYLAM's interest in Joint Collaboration Patent Rights which
are applicable to the Therapeutic Collaboration Product solely
to research, develop, manufacture, use, import, sell and
commercialize such Therapeutic Collaboration Product (for the
avoidance of doubt, it is acknowledged that such license shall
apply only to such Therapeutic Collaboration Product and shall
not apply to any other product);
(b) MERCK shall pay ALNYLAM the royalties as provided in Section
5.2.1(b); and
(c) The Parties will enter into an agreement with respect to such
license and royalties and patent ownership, patent
prosecution, patent enforcement and such other matters as the
Parties may agree upon (a "MERCK PRODUCT AGREEMENT"). Such
agreement will contain the terms set forth in Sections
3.1.6(a), 5.2.1(b), 5.2.1(c) and 5.2.2 through 5.5 and will be
negotiated in the manner set forth in the last paragraph of
Section 2.14.3.3, with unresolved issues resolved as set forth
therein.
3.1.7 JOINT COLLABORATION INVENTIONS. Each Party shall have the right to
practice and to license to Third Parties any Joint Collaboration
Inventions except to the extent either has Co-exclusive or exclusive
rights hereunder, and/or under a Therapeutic Collaboration Product
Agreement, an ALNYLAM Product Agreement or a MERCK Product
32
Agreement; provided, however, that ALNYLAM does not have the right to
license to Third Parties or to any Affiliate excluded under Section
3.1.8 any Joint Collaboration Invention for the purpose of target
identification and/or target validation research except in a
collaboration with Third Parties in which the primary purpose of such
collaboration is the development of therapeutic products using RNA
interference and, if RNAi Technology is developed therein for use in in
vitro and/or in vivo target identification and/or target validation,
then it may only be developed in the course of developing such
therapeutic products.
3.1.8 ALNYLAM AFFILIATE RESTRICTIONS. For purposes of subsections 3.1.1 (but
not 3.1.1.1), 3.1.2, 3.1.3, 3.1.4 and 3.1.7, where noted, the term
"Affiliate" with respect to ALNYLAM shall not include any corporation
or business entity of which any of the securities or other ownership
interests representing the equity, the voting stock or general
partnership interest are owned, controlled or held, directly or
indirectly, by ALNYLAM and of which [**] percent ([**]%) or more of the
securities or other ownership interests representing the equity or
voting stock or general partnership interest are owned, controlled or
held by a pharmaceutical company, a biotechnology company, or a group
of such companies acting in concert, having annual sales revenues in
the aggregate amount of [**] U.S. dollars ($[**]) or by any investment
entity affiliated with any such pharmaceutical or biotechnology
company.
4. CONFIDENTIALITY AND PUBLICATION
4.1 NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to the
other Party hereunder shall be maintained in confidence by the
receiving Party and shall not be disclosed to a non-Party or used for
any purpose except as set forth herein without the prior written
consent of the disclosing Party, except to the extent that such
Information:
(a) is known by receiving Party at the time of its receipt, and
not through a prior disclosure by the disclosing Party, as
documented by the receiving Party's business records;
(b) is properly in the public domain;
(c) is subsequently disclosed to the receiving Party by a Third
Party who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party;
(d) is developed by the receiving Party independently of
Information received from the disclosing Party, as documented
by the receiving Party's business records;
(e) is deemed necessary by a Party to be disclosed to Related
Parties, agents, consultants, and/or other Third Parties for
any and all purposes such Party and its Affiliates deem
necessary or advisable in the ordinary course of business in
accordance with this Agreement on the condition that such
Third Parties agree to be bound by the confidentiality and
non-use obligations contained this Agreement; provided the
term of confidentiality for such Third Parties shall be no
less than seven (7) years.
33
Any combination of features or disclosures shall not be deemed to fall
within the foregoing exclusions merely because individual features are
published or available to the general public or in the rightful
possession of the receiving Party unless the combination itself and
principle of operation are published or available to the general public
or in the rightful possession of the receiving party.
Notwithstanding the obligations of confidentiality and non-use set
forth above, a receiving Party may provide Information disclosed to it
to (a) governmental or other regulatory agencies in order to obtain
patents or to gain or maintain approval to conduct clinical trials or
to market Therapeutic Collaboration Products; provided, that, such
disclosure shall be subject to the prior written consent of the Party
whose Information is intended to be disclosed (which consent shall not
be unreasonably withheld), and such Information shall be disclosed only
to the extent reasonably necessary to obtain patents or authorizations,
(b) governmental or other regulatory agencies to the extent required by
law or by the requirements of any nationally-recognized securities
exchange, quotation system or over-the-counter market on which such
Party has its securities listed or traded, (c) any actual or
prospective investors, lenders and other financing sources, provided,
however, that neither the Party nor its Affiliates shall disclose the
work plan or any portion thereof to such persons or entities, and (d)
actual or prospective collaborators or strategic partners who are
obligated to keep such information confidential; provided, however,
that the Party and/or its Affiliates shall only disclose to actual or
prospective collaborators and strategic partners the general subject
matter of this Agreement, the licenses granted hereunder, the
exclusivity provision set forth in Section 2.11, the provisions of
Article 4 and the patent provisions as set forth in Article 7.
If a Party is required by judicial or administrative process to
disclose Information that is subject to the non-disclosure provisions
of this Section 4.1 or Section 4.2, such Party shall promptly inform
the other Party of the disclosure that is being sought in order to
provide the other Party an opportunity to challenge or limit the
disclosure obligations. Information that is disclosed by judicial or
administrative process shall remain otherwise subject to the
confidentiality and non-use provisions of this Section 4.1 and Section
4.2, and the Party disclosing Information pursuant to law or court
order shall take all steps reasonably practical, including without
limitation seeking an order of confidentiality, to ensure the continued
confidential treatment of such Information.
4.2 PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's
interest in publishing the results of its research in order to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each Party also recognizes the mutual interest in
obtaining valid patent protection and in protecting business interests
and trade secret information. Consequently, except for disclosures
permitted pursuant to Section 4.1, either Party, its employees or
consultants wishing to make a publication, or a disclosure to a Third
Party relating to the Collaboration, shall deliver to the other Party a
copy of the proposed written publication or an outline of an oral
disclosure at least thirty (30) days prior to submission for
publication or presentation. The reviewing Party shall have the right
(a) to propose modifications to the publication or presentation for
patent reasons, trade secret reasons or business reasons, or (b) to
request a reasonable delay in publication or presentation in order to
protect patentable
34
information. If the reviewing Party requests a delay, the publishing
Party shall delay submission or presentation for a period of sixty (60)
days to enable patent applications protecting each Party's rights in
such information to be filed in accordance with Article 7 below. Upon
expiration of such sixty (60) days, the publishing Party shall be free
to proceed with the publication or presentation. If the reviewing Party
requests modifications to the publication or presentation, the
publishing Party shall edit such publication to prevent disclosure of
trade secret or proprietary business information prior to submission of
the publication or presentation.
4.3 PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the terms
of, this Agreement may be made by either Party, and no Party shall use
the name, trademark, trade name or logo of the other Party or its
employees in any publicity, news release or disclosure relating to this
Agreement or its subject matter, without the prior express written
permission of the other Party, except as may be required by law or
expressly permitted by the terms hereof.
Notwithstanding the foregoing, within five (5) business days following
the execution of this Agreement by both Parties, the Parties shall
agree in writing upon a press release and ALNYLAM may thereafter issue
such press release publicizing the Collaboration. Upon MERCK's prior
written agreement as to the text of the release, which agreement shall
be executed within ten (10) business days of MERCK's receipt of such
press release and shall not be unreasonably withheld, ALNYLAM may also
issue a press release announcing the achievement of the Technology
Collaboration Milestone. Once any press release or any other written
statement is approved in writing by both Parties, either Party may make
subsequent public disclosure of the information contained in such press
release or other written statement without the further approval of the
other Party.
5. PAYMENTS; ROYALTIES AND REPORTS
5.1 PAYMENTS.
5.1.1 SIGNATURE PAYMENT. Within twenty (20) days of the Effective Date, MERCK
shall pay ALNYLAM HOLDING Two Million Dollars ($2,000,000.00).
5.1.2 MAINTENANCE FEE. MERCK shall pay ALNYLAM HOLDING a maintenance fee of
[**] Dollars ($[**]) per annum for a period of [**] years upon the
terms and conditions contained herein. The first installment of [**]
Dollars ($[**]) shall be payable within [**] of the Effective Date and
the second installment of [**] Dollars ($[**]) shall be payable within
[**] of the Effective Date.
35
5.1.3 EQUITY INVESTMENT. Upon the terms and conditions set forth in the Stock
Purchase Agreement between the Parties and dated as of the Effective
Date (the "STOCK PURCHASE AGREEMENT"), MERCK shall purchase Five
Million Dollars ($5,000,000.00) of ALNYLAM HOLDING Series C Convertible
Preferred Stock at the purchase price per share set forth in the Stock
Purchase Agreement.
5.1.4 MILESTONE PAYMENTS. Subject to the terms and conditions of this
Agreement, MERCK shall pay to ALNYLAM HOLDING a milestone payment of
[**] Dollars ($[**]), and shall purchase [**] Dollars ($[**]) of
ALNYLAM HOLDING Series C Convertible Preferred Stock upon the terms and
conditions set forth in the Stock Purchase Agreement upon ALNYLAM's
achievement of the Technology Collaboration Milestone.
ALNYLAM shall notify the JSC and shall prepare and deliver a data
package for presentation to the JSC when ALNYLAM determines that it has
achieved the Technology Collaboration Milestone. Within fifteen (15)
business days following receipt of such data package, the JSC shall
convene to review the data package and determine whether the data is
sufficient to conclude that the Technology Collaboration Milestone has
been achieved. If the JSC determines that there is not sufficient data
to support the conclusion that the Technology Collaboration Milestone
has been achieved, the JSC shall provide written notice to ALNYLAM of
same, which notice shall specify all additional data that the JSC
determines in good faith is necessary to make the data package
sufficient to conclude that the Technology Collaboration Milestone has
been achieved. Thereafter, ALNYLAM shall either submit the additional
data to the JSC or notify the JSC that the sufficiency of the data is
in dispute. Any additional data provided by ALNYLAM at the JSC's
request shall be reviewed by the JSC within ten (10) business days
following the JSC's receipt thereof.
If the JSC determines there is sufficient data to support the
conclusion that the Technology Collaboration Milestone has been
achieved, the MERCK members of the JSC shall have thirty (30) days to
conduct an internal review of the data package with MERCK's management
and promptly thereafter and in any event no later than ten (10)
business days following the expiration of MERCK's internal review
period, the JSC shall determine whether the Technology Collaboration
Milestone has been achieved. If the JSC determines that the Technology
Milestone has been achieved, then MERCK shall make the milestone
payment and purchase the Series C Convertible Preferred Stock as set
forth in this Section 5.1.4 within ten (10) business days of such
determination. If MERCK or ALNYLAM disputes the sufficiency of the data
presented to the JSC or the determination of the JSC as to whether the
Technology Collaboration Milestone has been achieved or the JSC fails,
or the MERCK members of the JSC fail, to take action within the time
periods above, then the Parties shall be deemed to have a Technology
Milestone Dispute (the "TECHNOLOGY MILESTONE DISPUTE") which shall be
resolved as follows: In the event of a Technology Milestone Dispute,
the Parties agree that such Technology Milestone Dispute shall be
submitted to the President of MERCK Research Laboratories and the CEO
of ALNYLAM for resolution. If such President and CEO cannot reach an
agreement regarding the Technology Milestone Dispute within thirty (30)
days, then it shall be submitted to arbitration by either Party
pursuant to Section 9.7 of this Agreement. The milestone payments shall
be payable only upon the initial achievement
36
of the Technology Collaboration Milestone and no amounts shall be due
hereunder for subsequent or repeated achievement of such milestone.
5.1.5 USE OF PROCEEDS. ALNYLAM shall use all payments received from MERCK
pursuant to this Section 5.1 solely for the purpose of funding its
proposed business operations, including the subject matter of this
Agreement, which focus on RNAi Technology and development of drugs
based on RNA interference. Such payments are not creditable against any
future payments by MERCK to ALNYLAM.
5.2 ROYALTIES.
5.2.1 ROYALTIES PAYABLE BY THE PARTIES. Subject to the terms and conditions
of this Agreement, the royalty-paying Party shall pay to the
royalty-receiving Party the following royalties on a country-by-country
basis for Net Sales of each Therapeutic Collaboration Product by the
royalty-paying Party or its Related Parties pursuant to the provisions
of Section 5.2.1(c):
(a) ALNYLAM DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT
MERCK. If MERCK elects, pursuant to Section 2.14.3, not to
opt-in on development and commercialization of a Therapeutic
Collaboration Product with ALNYLAM or the relevant Opt-In
Negotiation Period expires, then (1) in the event that the
MERCK Non-Druggable Target against which the Therapeutic
Collaboration Product is directed satisfies clause (a) of the
definition of MERCK Non-Druggable Target and MERCK has the
belief set forth in clause (b) of such definition, then
ALNYLAM shall pay MERCK the following royalty rates with
respect to such Therapeutic Collaboration Product and (2) in
the event that such MERCK Non-Druggable Target satisfies
clause (a) of the definition, but MERCK does not have the
belief set forth in clause (b) of such definition, then
ALNYLAM shall pay MERCK one-half of the applicable royalty
rate set forth below with respect to such Therapeutic
Collaboration Product:
Annual Net Sales of Therapeutic
Collaboration Product Royalty on Annual Net Sales
--------------------- ---------------------------
Portion of Annual Net Sales < or = $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
(b) MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT
ALNYLAM. If MERCK elects pursuant to Section 2.14.3, to opt-in
on development and commercialization of a Therapeutic
Collaboration Product but ALNYLAM opts-out of development and
commercialization of such Therapeutic Collaboration Product
37
with MERCK, then MERCK shall pay ALNYLAM the following royalty
rates with respect to such Therapeutic Collaboration Product:
Annual Net Sales of Therapeutic
Collaboration Product Royalty on Annual Net Sales
--------------------- ---------------------------
Portion of Annual Net Sales < or = $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
Portion of Annual Net Sales > $[**] [**]%
(c) GENERAL TERMS. Royalties on each Therapeutic Collaboration
Product at the rates set forth in Section 5.2.1(a) and (b)
shall be effective as of the date of First Commercial Sale of
such Therapeutic Collaboration Product in a country and shall
continue until the later of (i) the expiration of the last
Valid Patent Claim covering the manufacture, use, sale or
import of the Therapeutic Collaboration Product in the country
of sale, or (ii) the tenth (10th) anniversary of the First
Commercial Sale in such country, subject to the following
conditions:
(x) that only one royalty shall be due with respect to
the same unit of Therapeutic Collaboration Product;
(y) that no royalties shall be due upon the sale or other
transfer among a Party or its Related Parties, but in
such cases the royalty shall be due and calculated
upon the Party's or its Related Party's Net Sales to
the first independent Third Party; and
(z) no royalties shall accrue on the disposition of
Therapeutic Collaboration Product in reasonable
quantities by a Party or its Related Parties as
samples (promotion or otherwise) or as donations (for
example, to non-profit institutions or government
agencies for a non-commercial purpose).
5.2.2 ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is understood
by the Parties that a Party may sell Therapeutic Collaboration Product
to an independent Third Party (such as a retailer or wholesaler) and
may subsequently perform services relating to a Therapeutic
Collaboration Product and other products under a managed pharmaceutical
benefits contract or other similar contract. In such cases, it is
agreed by the Parties that Net Sales shall be based on the average
invoice price at which similar quantities of such Therapeutic
Collaboration Product are sold in the country in question to Third
Parties without providing such services.
5.2.3 CHANGE IN SALES PRACTICES. The Parties acknowledge that during the term
of this Agreement, the royalty-paying Party's sales practices for the
marketing and distribution of Therapeutic Collaboration Product may
change to the extent to which the calculation of the payment for
royalties on Net Sales may become impractical or even impossible. In
38
such event the Parties agree to meet and discuss in good faith new ways
of compensating the royalty-receiving Party to the extent currently
contemplated under Section 5.2.1.
5.2.4 COMPULSORY LICENSES. If a compulsory license is granted to a Third
Party with respect to a Therapeutic Collaboration Product in any
country in the Territory with a royalty rate lower than the applicable
royalty rate set forth in Section 5.2.1, then the royalty rate to be
paid by the royalty-paying Party on Net Sales in that country under
Section 5.2.1 shall be reduced to the rate paid by the compulsory
licensee.
5.2.5 THIRD PARTY LICENSES. In the event the sale by one Party or its Related
Parties of a Therapeutic Collaboration Product results in an obligation
of the other Party to pay royalties or milestones to a Third Party
under a license that is sublicensed hereunder, then the selling Party
shall reimburse the other Party for such royalty or milestone. In the
event that (i) a Party is required to reimburse the other pursuant to
the preceding sentence, or (ii) one or more patent licenses (other than
patent licenses for delivery devices, delivery systems, formulations,
excipients and product components other than the active pharmaceutical
ingredients), from Third Parties are required by MERCK or its Related
Parties or ALNYLAM or its Related Parties in order to make, have made,
use, offer to sell, sell or import a Therapeutic Collaboration Product
(hereinafter "THIRD PARTY PATENT LICENSES"), [**]percent ([**]%) of the
consideration: (1) required to be reimbursed pursuant to the first
sentence of this section or actually paid under such Third Party Patent
Licenses by MERCK or its Related Parties or ALNYLAM or its Related
Parties for sale of such Therapeutic Collaboration Product in a
country, or (2) by a Party pursuant to the last sentence of Section
2.14.3.1 of this Agreement, for a Calendar Quarter shall be creditable
against the royalty payments due the royalty-receiving Party by the
royalty-paying Party with respect to the sale of such Therapeutic
Collaboration Products in such country in such Calendar Quarter;
provided, however, that in no event shall the royalties owed by the
royalty-paying Party to the royalty-receiving Party for such Calendar
Quarter in such country be reduced by more than [**] percent ([**]%).
5.2.6 REPORTS; PAYMENT OF ROYALTY. During the term of the Agreement following
the First Commercial Sale of each Therapeutic Collaboration Product,
the royalty-paying Party shall furnish to the royalty-receiving Party a
quarterly written report for the Calendar Quarter showing the quantity
of each Therapeutic Collaboration Product sold in each country (as
measured in grams of active pharmaceutical ingredient), the gross sales
of such Therapeutic Collaboration Product in each country, total
deductions for such Therapeutic Collaboration Product for each country
permitted by Section 1.63, the Net Sales in each country of such
Therapeutic Collaboration Product subject to royalty payments sold by
the royalty-paying Party or its Related Parties in the Territory during
the reporting period and the royalties payable under this Agreement.
Reports shall be due on the forty-fifth (45th) day following the close
of each Calendar Quarter. Royalties shown to have accrued by each
royalty report shall be due and payable on the date such royalty report
is due. The royalty-paying Party shall keep complete and accurate
records in sufficient detail to enable the royalties payable hereunder
to be determined.
39
5.3 AUDITS.
(a) Upon the written request of the royalty-receiving Party and
not more than once in each Calendar Year, the royalty-paying
Party and/or its Related Parties shall permit an independent
certified public accounting firm of nationally-recognized
standing selected by the royalty-receiving Party and
reasonably acceptable to the royalty-paying Party, at the
royalty-receiving Party's expense except as set forth below,
to have access during normal business hours to such of the
records of the royalty-paying Party as may be reasonably
necessary to verify the accuracy of the royalty reports
hereunder for any year ending not more than thirty-six (36)
months prior to the date of such request. The accounting firm
shall disclose to the royalty-receiving Party only whether the
royalty reports are correct or incorrect and the specific
details concerning any discrepancies. No other information
shall be provided to the royalty-receiving Party.
(b) If such accounting firm identifies a discrepancy made during
such period, the appropriate Party shall pay the other Party
the amount of the discrepancy within twenty (20) days of the
date the royalty-receiving Party delivers to the
royalty-paying Party such accounting firm's written report so
concluding, or as otherwise agreed by the Parties in writing.
Such written report shall be binding upon the Parties. The
fees charged by such accounting firm shall be paid by the
royalty-receiving Party, unless such discrepancy represents an
underpayment of the lesser of one million U.S. dollars
($1,000,000) or five percent (5%) of the total amounts due
hereunder, in which case such fees shall be paid by the
royalty-paying Party.
(c) The royalty-paying Party shall include in each sublicense
granted by it pursuant to this Agreement a provision requiring
the sublicensee to make reports to the royalty-paying Party,
to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by the
royalty-receiving Party's independent accountant to the same
extent required of the royalty-paying Party under this
Agreement. Upon the expiration of thirty-six (36) months
following the end of any year, the calculation of royalties
payable with respect to such year shall be binding and
conclusive upon the royalty-receiving Party, and the
royalty-paying Party and its sublicensees shall be released
from any further liability or accountability with respect to
royalties for such year.
(d) Unless an audit for such year has been commenced upon the
expiration of thirty-six (36) months following the end of any
year, the calculation of royalties payable with respect to
such year shall be binding and conclusive upon both the
royalty-receiving Party and the royalty-paying Party, and the
royalty-paying Party and its Related Parties shall be released
from any further liability or accountability with respect to
royalties for such year.
(e) The royalty-receiving Party shall treat all financial
information subject to review under this Section 5.3 or under
any sublicense agreement in accordance with the
confidentiality and non-use provisions of this Agreement, and
shall cause its accounting firm to enter into an acceptable
confidentiality agreement with the
40
royalty-paying Party and/or its Related Parties obligating it
to retain all such information in confidence pursuant to such
confidentiality agreement.
5.4 PAYMENT EXCHANGE RATE. All payments to be made under this Agreement
shall be made in United States dollars and may be paid by check made to
the order of the receiving Party or bank wire transfer in immediately
available funds to such bank account in the United States designated in
writing by the receiving Party from time to time. In the case of sales
outside the United States (i) by MERCK and its Related Parties, the
rate of exchange to be used in computing the amount of currency
equivalent in United States dollars due shall be made at the rate of
exchange utilized by MERCK in its worldwide accounting system,
prevailing on the third to the last business day of the month preceding
the month in which such sales are recorded, and (ii) by ALNYLAM and its
Related Parties, the rate of exchange to be used in computing the
amount of currency equivalent in United States dollars due shall be
made at the prevailing commercial rate of exchange for purchasing
dollars with such foreign currency as published in the Wall Street
Journal for the close of the last business day of the calendar quarter
for which the relevant royalty payment is to be made by ALNYLAM.
5.5 INCOME TAX WITHHOLDING. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set
forth in this Article 5, the paying Party shall make such withholding
payments as required and subtract such withholding payments from the
payments set forth in this Article 5. The paying Party shall submit
appropriate proof of payment of the withholding taxes to the receiving
Party within a reasonable period of time. At the request of the
receiving Party, the royalty-paying Party shall, at its cost, give the
royalty-receiving Party such reasonable assistance, which shall include
the provision of appropriate certificates of such deductions made
together with other supporting documentation as may be required by the
relevant tax authority, to enable the royalty-receiving Party to claim
exemption from such withholding or other tax imposed or obtain a
repayment thereof or reduction thereof and shall upon request provide
such additional documentation from time to time as is reasonably
required to confirm the payment of tax.
6. REPRESENTATIONS AND WARRANTIES
6.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and
warrants to the other Party that as of the Effective Date of this
Agreement:
(a) It is duly-organized and validly existing under the laws of
its jurisdiction of incorporation or formation, and has full
corporate or other power and authority to enter into this
Agreement and to carry out the provisions hereof.
(b) It is duly-authorized to execute and deliver this Agreement
and to perform its obligations hereunder, and the person or
persons executing this Agreement on its behalf has been
duly-authorized to do so by all requisite corporate action.
41
(c) This Agreement is legally binding upon it, enforceable in
accordance with its terms. Except as set forth in Section
6.1(c) of Schedule 6 to this Agreement, the execution,
delivery and performance of this Agreement by it does not
conflict with any agreement, instrument or understanding, oral
or written, to which it is a party and by which it may be
bound.
(d) Except as set forth in Section 6.1(d) of Schedule 6 to this
Agreement, It has not, and will not during the term of this
Agreement, grant any right to any Third Party which would
conflict with the rights granted to the other Party hereunder.
It has (or will have at the time performance is due)
maintained and will maintain and keep in full force and effect
all agreements (including license agreements) and filings
(including patent filings) necessary to perform its
obligations hereunder.
6.2 ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and warrants
to MERCK that as of the Effective Date of this Agreement:
(a) To the best of ALNYLAM's knowledge, the ALNYLAM RNAi Patent
Rights and ALNYLAM RNAi Technology exist and are not invalid
or unenforceable, in whole or in part;
(b) Except as set forth in Section 6.2(b) of Schedule 6 to this
Agreement, it has not previously assigned, transferred,
conveyed or otherwise encumbered its right, title and interest
in the ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi
Technology in a manner that conflicts with any rights granted
to MERCK hereunder; and
(c) Except as set forth in Section 6.2(c) of Schedule 6, there are
no claims, judgments or settlements against or owed by ALNYLAM
or pending or threatened claims or litigation relating to the
ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi Technology.
6.3 MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and warrants to
ALNYLAM that as of the Effective Date of this Agreement:
(a) to the best of MERCK's knowledge, the MERCK RNAi Patent Rights
and the patent rights within the MERCK RNAi Novel Target IP
and MERCK RNAi Technology exist and are not invalid or
unenforceable, in whole or in part;
(b) it has not previously assigned, transferred, conveyed or
otherwise encumbered its right, title and interest in the
MERCK RNAi Patent Rights, MERCK Novel Target IP or the MERCK
RNAi Technology in a manner that conflicts with the rights
granted to ALNYLAM hereunder; and
(c) there are no claims, judgments or settlements against or owed
by MERCK or pending or threatened claims or litigation
relating to the MERCK RNAi Patent Rights, MERCK RNAi Novel
Target IP or the MERCK RNAi Technology.
42
6.4 ASSIGNMENT BY INVENTORS. ALNYLAM shall cause and ensure that each and
every ALNYLAM employee, agent or representative, including consultants
and scientific advisors, working on the Collaboration has assigned or
will assign to ALNYLAM his/her rights to Inventions. MERCK shall cause
and ensure that each and every MERCK employee, agent or representative,
including consultants and scientific advisors, working on the
Collaboration has assigned or will assign to MERCK his/her rights to
Inventions.
6.5 INDEMNIFICATION.
(a) MERCK shall indemnify, hold harmless, and defend ALNYLAM, its
Affiliates and their respective directors, officers, employees
and agents from and against any and all claims, suits, losses,
liabilities, damages, costs, fees and expenses (including
reasonable attorneys' fees) arising out of or resulting from
the exercise of any rights, under this Agreement by MERCK, its
Affiliates and their respective sublicensees. This
indemnification shall include, but is not limited to, any and
all claims alleging product liability in connection with
Therapeutic Collaboration Products. This indemnification
excludes claims against ALNYLAM by any Third Party for
infringement of such Third Party's intellectual property
rights resulting from MERCK's exercise in accordance with the
terms of this Agreement of any intellectual property rights
granted by ALNYLAM hereunder. Furthermore, MERCK shall have no
obligation to indemnify ALNYLAM to the extent that the claim,
suit, loss, liability, damage, cost, fee or expense arises out
of or results from the negligence, willful misconduct or
breach of the terms of this Agreement of or by ALNYLAM, its
Affiliates, or their directors, officers, employees,
consultants, scientific advisors or agents.
(b) ALNYLAM shall indemnify, hold harmless, and defend MERCK, its
Affiliates and their respective directors, officers, employees
and agents from and against any and all claims, suits, losses,
liabilities, damages, costs, fees and expenses (including
reasonable attorneys' fees) arising out of or resulting from
the exercise of any rights under this Agreement by ALNYLAM,
its Affiliates and their respective sublicensees. This
indemnification shall include, but is not limited to, any and
all claims alleging product liability in connection with
Therapeutic Collaboration Products. This indemnification
excludes claims against MERCK by any Third Party for
infringement of such Third Party's intellectual property
rights resulting from ALNYLAM's exercise in accordance with
the terms of this Agreement of any intellectual property
rights granted by MERCK hereunder. Furthermore, ALNYLAM shall
have no obligation to indemnify MERCK to the extent that the
claim, suit, loss, liability, damage, cost, fee or expense
arises out of or results from the negligence, willful
misconduct or breach of the terms of this Agreement of or by
MERCK, its Affiliates, or their directors, officers,
employees, consultants, scientific advisors or agents.
7. PATENT PROVISIONS
7.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS. Except as otherwise
provided in Schedule 2.14.3.3, the Parties agree that:
43
(a) ALNYLAM or RIBOPHARMA has the sole responsibility, to, at
ALNYLAM's or RIBOPHARMA's discretion, file, conduct ex parte
and inter partes prosecution and maintain in the Territory,
the ALNYLAM RNAi Patent Rights owned by ALNYLAM or licensed by
RIBOPHARMA to ALNYLAM and licensed to MERCK under this
Agreement; and
(b) MERCK has the sole responsibility, to, at its discretion,
file, conduct ex parte and inter partes prosecution and
maintain in the Territory the MERCK RNAi Patent Rights and the
patent rights contained in the MERCK RNAi Novel Target IP
licensed to ALNYLAM under this Agreement.
provided, however, that, with respect to Joint Collaboration
Inventions, ALNYLAM shall have the first right to file, conduct ex
parte and inter partes prosecution and maintain patent applications and
patents for such Joint Collaboration Inventions. With respect to Joint
Collaboration Inventions, ALNYLAM may elect not to file, conduct ex
parte and inter partes prosecution and/or maintain patent applications
and patents and, if so, MERCK, and/or a law firm acting on its behalf,
shall have the right to file, conduct ex parte and inter partes
prosecution and maintain/or patent applications and patents, as
applicable.
In each case above, with respect to Joint Collaboration Inventions, (a)
the filing Party shall: (i) give the non-filing Party an opportunity to
review the text of the applications, (ii) consult with the non-filing
Party with respect thereto and give good faith consideration to the
requests and suggestions of the non-filing Party with respect to the
filing thereof, (iii) supply the non-filing Party with a copy of the
application as filed, together with notice of its filing date and
serial number, and (iv) shall keep the other Party advised on at least
a quarterly basis of the status of the actual and prospective patent
filings; and (b) the prosecuting Party shall give the non-prosecuting
Party copies of all correspondence from and to the U.S. and all other
patent offices related to the prosecution of patents or patent
applications covering such Joint Collaboration Inventions and give good
faith consideration to the requests and suggestions of the
non-prosecuting Party with respect to the prosecution thereof.
ALNYLAM shall promptly give notice to MERCK of the grant, lapse,
revocation, surrender, invalidation or abandonment of any ALNYLAM RNAi
Patent Rights licensed to MERCK.
MERCK shall promptly give notice to ALNYLAM of the grant, lapse,
revocation, surrender, invalidation or abandonment of any MERCK RNAi
Patent Rights and patent rights contained in MERCK RNAi Novel Target IP
licensed to ALNYLAM.
With respect to all filings, ex parte and inter partes prosecution and
maintenance hereunder (including, without limitation, any interference,
opposition, reexamination or reissue proceeding), the filing,
prosecuting or maintaining Party shall be responsible for payment of
all costs and expenses related to such filings, prosecution or
maintenance; provided, however, that, with respect to Joint Technology
Collaboration Inventions, the Parties shall equally share all costs and
expenses related to such filings, prosecution or
44
maintenance. With respect to patent applications or patents for Joint
Collaboration Inventions, if the Party which files, begins ex parte or
inter partes prosecution or maintenance, elects to abandon or otherwise
cease filing, ex parte or inter partes prosecution or maintenance, and
the other Party elects to continue, then the continuing Party shall
bear all expenses from the time it takes over the filing, ex parte or
inter partes prosecution or maintenance.
7.2 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. Except as
otherwise provided in Schedule 2.14.3.3, the Parties agree that:
(a) ALNYLAM shall, within ten (10) days of learning of such event,
inform MERCK of any request for, or filing or declaration of,
any interference, opposition or reexamination or reissue
relating to ALNYLAM RNAi Patent Rights.
(b) MERCK shall, within ten (10) days of learning of such event,
inform ALNYLAM of any request for, or filing or declaration
of, any interference, opposition, or reexamination or reissue
relating to MERCK RNAi Patent Rights and patent rights
contained in MERCK RNAi Novel Target IP.
(c) In connection with any interference with a Third Party patent
or patent application, opposition by a Third Party and not on
behalf of the other Party, reissue, or reexamination
proceeding (other than one instituted by the other Party)
relating to ALNYLAM RNAi Patent Rights, MERCK RNAi Patent
Rights, MERCK RNAi Novel Target IP, or Joint Collaboration
Patent Rights, MERCK and ALNYLAM shall cooperate fully and
shall provide each other with any information or assistance
that either may reasonably request. Each Party shall keep the
other Party informed of developments in any such action or
proceeding to the extent permissible by law and to the extent
allowed by a written agreement with a Third Party under which
a Party has obtained rights to the applicable patent rights.
7.3 ENFORCEMENT AND DEFENSE.
(a) ALNYLAM shall give MERCK notice of: (i) any infringement of
(x) Joint Collaboration Patent Rights relating to in vitro
and/or in vivo target validation and/or target identification;
and/or (y) ALNYLAM RNAi Patent Rights relating to in vitro
and/or in vivo target validation and/or target identification
that are (A) Controlled by ALNYLAM or its Affiliates and (B)
licensed co-exclusively or exclusively hereunder to MERCK by
ALNYLAM, and/or (ii) any misappropriation or misuse of ALNYLAM
RNAi Technology relating to in vitro and/or in vivo target
validation and/or target identification that is (A) Controlled
by ALNYLAM or its Affiliates and (B) licensed co-exclusively
or exclusively hereunder to MERCK by ALNYLAM, that may come to
ALNYLAM's attention. MERCK and ALNYLAM shall thereafter
consult and cooperate fully to determine a course of action,
including, but not limited to, the commencement of legal
action by either or both MERCK and/or ALNYLAM, to terminate
any infringement of such ALNYLAM RNAi Patent Rights or such
Joint Collaboration Patent Rights or any misappropriation or
misuse of such ALNYLAM RNAi Technology. However, ALNYLAM, upon
prompt written notice to MERCK,
45
shall have the first right to initiate and prosecute such
legal action at its own expense and in the name of ALNYLAM and
MERCK, and to control the defense of any declaratory judgment
action relating to such ALNYLAM RNAi Patent Rights or such
Joint Collaboration Patent Rights or such ALNYLAM RNAi
Technology at its own expense. ALNYLAM shall promptly inform
MERCK if it elects not to exercise such first right and MERCK
shall thereafter have the right to either initiate and
prosecute such action or to control the defense of such
declaratory judgment action in the name of MERCK and, if
necessary, ALNYLAM, only with respect to an infringement of
Joint Collaboration Patent Rights through the conduct of in
vitro and/or in vivo target identification and/or target
validation. Each Party shall have the right to be represented
by counsel of its own choice. For the avoidance of doubt, it
is agreed that MERCK shall have no right to initiate or
prosecute any action or control the defense of any declaratory
judgment action with respect to any ALNYLAM RNAi Patent Right
or misuse or misappropriation of ALNYLAM RNAi Technology.
ALNYLAM agrees that, in the event a Therapeutic Collaboration
Product becomes subject to a MERCK Product Agreement, and an
ALNYLAM RNAi Patent Right is infringed by a Third Party by the
sale of a therapeutic product using RNA interference against
the same MERCK RNAi Novel Target as such Therapeutic
Collaboration Product (a "COMPETING RNAi PRODUCT") then if (a)
there is no patent right Controlled by MERCK and no Joint
Collaboration Patent Right that can be asserted against the
alleged infringement, and (b) ALNYLAM does not assert at least
one ALNYLAM RNAi Patent Right against such alleged
infringement, then MERCK's license to such Therapeutic
Collaboration Product will become royalty-free in countries in
which the Competing RNAi Product is sold, for as long as such
Competing RNAi Product is being sold in such country. The
foregoing provision will be reflected in each MERCK Product
Agreement.
With respect to any action or defense provided for in this
paragraph (a), ALNYLAM shall not admit the invalidity or
unenforceability of any MERCK RNAi Patent Rights, MERCK RNAi
Novel Target IP or Joint Collaboration Patent Rights without
the prior written consent of MERCK.
(b) In the event that ALNYLAM elects not to initiate and prosecute
an action as provided in paragraph (a), and MERCK elects to do
so, the costs of any action to terminate such infringement of
Joint Collaboration Patent Rights, including without
limitation the costs of any legal action commenced or the
defense of any declaratory judgment, shall be borne by MERCK.
No suit or negotiation arising from such action may be settled
by MERCK without prior written notice to ALNYLAM. With respect
to any action or defense provided for in this paragraph (b),
MERCK shall not admit the invalidity or unenforceability of
any ALNYLAM RNAi Patent Rights or Joint Collaboration Patent
Rights without the written consent of ALNYLAM.
(c) For any such action to terminate any infringement of Joint
Collaboration Patent Rights relating to in vitro and/or in
vivo target validation and/or target identification, in the
event that MERCK is unable to initiate or prosecute such
action solely in its
46
own name, ALNYLAM will join such action voluntarily and will
execute and cause its Affiliates to execute all documents
necessary for MERCK to initiate litigation to prosecute and
maintain such action, at the expense of MERCK. In connection
with any action, MERCK and ALNYLAM will cooperate fully and
will provide each other with any information or assistance
that either may reasonably request. Each Party shall keep the
other informed of developments in any action or proceeding, to
the extent permissible by law.
(d) Any recovery obtained by either or both MERCK and ALNYLAM in
connection with or as a result of any action contemplated by
this section, whether by settlement or otherwise, shall be
shared in order as follows:
(i) the Party which initiated and prosecuted the action
shall recoup all of its costs and expenses incurred
in connection with the action;
(ii) the other Party shall then, to the extent possible,
recover its costs and expenses incurred in connection
with the action; and
(iii) the amount of any recovery remaining shall then be
allocated between the Parties as follows: (1) [**]
percent ([**]%) of the remaining amount to the Party
prosecuting such action and (2) [**] percent ([**]%)
to the other Party.
7.4 PATENT TERM RESTORATION. The Parties hereto shall cooperate with each
other in obtaining patent term restoration or supplemental protection
certificates or their equivalents in any country in the Territory where
applicable to ALNYLAM RNAi Patent Rights, Joint Collaboration Patent
Rights, and patent rights contained in MERCK RNAi Novel Target IP and
MERCK RNAi Patent Rights. The Parties shall mutually agree upon any
elections to be made with respect to obtaining such patent term
restoration with regard to Joint Collaboration Patent Rights.
8. TERM AND TERMINATION
8.1 TERM AND EXPIRATION. This Agreement shall be effective as of the
Effective Date and, unless terminated earlier pursuant to Sections 8.2
or 8.3 below, this Agreement shall continue in effect until expiration
of all royalty obligations hereunder and under all Therapeutic
Collaboration Product Agreements, ALNYLAM Product Agreements and MERCK
Product Agreements. Upon expiration of this Agreement, the Parties'
licenses pursuant to Section 3.1 shall become fully paid-up, perpetual
licenses.
8.2 TERMINATION FOR CAUSE.
8.2.1 CAUSE FOR TERMINATION. This Agreement may be terminated at any time
during the term of the Agreement:
(a) upon written notice by either Party if the other Party is in
breach of its material obligations hereunder by causes and
reasons within its control and has not cured such breach
within ninety (90) days after notice requesting cure of the
breach; provided,
47
however, in the event of a good faith dispute with respect to
the existence of a material breach, the ninety (90) day cure
period shall be tolled until such time as the Dispute is
resolved pursuant to Section 9.6 hereof; or
(b) by either Party upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings, or
upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other Party; provided,
however, in the case of any involuntary bankruptcy or
receivership proceeding such right to terminate shall only
become effective if the Party consents to the involuntary
bankruptcy, receivership or such proceeding is not dismissed
within ninety (90) days after the filing thereof.
8.2.2 EFFECT OF TERMINATION FOR CAUSE OR FOR CHANGE OF CONTROL.
(a) If MERCK terminates this Agreement under Section 8.2.1(a) or
terminates the Technology Collaboration or the Therapeutic
Collaboration or both pursuant to Section 9.2, the licenses
granted by ALNYLAM to MERCK pursuant to Section 3.1.1 shall
survive such termination. In addition,
(i) not later than thirty (30) days after the date of
such termination, each Party shall return or cause to
be returned to the other Party all Information in
tangible form received from the other Party and all
copies thereof and ALNYLAM shall return to or cause
to be returned to MERCK all substances or
compositions delivered or provided by MERCK, as well
as any other Materials provided by MERCK in any
medium, except that each Party may retain all
Information, substances, compositions and materials
relevant to licenses and rights it retains hereunder
and may retain one copy of Information in its
confidential files for record purposes;
(ii) MERCK shall have the right to continue to exercise
its rights to opt-in to develop any and all
Therapeutic Collaboration Products as set forth in
Section 2.14.3 and the licenses granted by MERCK to
ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
solely with respect to such Therapeutic Collaboration
Products;
(iii) all then-existing Therapeutic Collaboration Product
Agreements, ALNYLAM Product Agreements or MERCK
Product Agreements shall continue in effect;
(iv) with regard to termination pursuant to Section
8.2.1(a), ALNYLAM shall return to MERCK and cease to
work on, all MERCK RNAi Novel Targets and RNAi
Therapeutic Products for which the Opt-In Information
has not yet been provided by ALNYLAM to MERCK; and,
(v) with regard to termination pursuant to Section 9.2,
then: (x) ALNYLAM may continue to work on MERCK RNAi
Novel Targets that it has designated as such pursuant
to Section 2.14.2(3) by notice to MERCK prior to the
date on which ALNYLAM notified MERCK of such Change
of Control, subject to MERCK's Opt-In Rights, and the
licenses granted by MERCK to
48
ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
with respect to such MERCK RNAi Novel Targets, and
(y) all Opt-In Negotiation Periods shall continue,
and the licenses granted by MERCK to ALNYLAM in
Sections 3.1.2 and 3.1.3 shall survive with respect
to Therapeutic Collaboration Products subject to such
Opt-In Negotiation Periods.
(b) If ALNYLAM terminates this Agreement under Section 8.2.1(a),
the licenses granted by MERCK to ALNYLAM pursuant to Section
3.1.2 and 3.1.3 shall survive such termination. In addition,
(i) not later than thirty (30) days after the date of
such termination, each Party shall return or cause to
be returned to the other Party all Information,
substances, compositions and materials in tangible
form received from the other Party and all copies
thereof, except that each Party may retain all
Information relevant to licenses and rights it
retains hereunder and may retain one copy of
Information in its confidential files for record
purposes;
(ii) ALNYLAM shall continue to have the right to develop
without MERCK, but subject to royalty payments to
MERCK, as specified in Section 5.2.1(a), Therapeutic
Collaboration Products then subject to an Opt-In
Negotiation Period;
(iii) all then existing Therapeutic Collaboration Product
Agreements, ALNYLAM Product Agreements and MERCK
Product Agreements shall continue in effect; and
(iv) ALNYLAM shall have the right to develop without MERCK
any and all MERCK RNAi Novel Targets which ALNYLAM
has designated as such pursuant to Section 2.14.2(3)
by notice to MERCK prior to the termination date,
subject to royalty payments to MERCK as specified in
Section 5.2.1(a) on the same basis as if the product
was a Therapeutic Collaboration Product.
(c) If this Agreement is terminated by MERCK pursuant to Section
8.2.1(b) due to the rejection of this Agreement by or on
behalf of ALNYLAM under Section 365 of the United States
Bankruptcy Code (the "CODE"), all licenses and rights to
licenses granted under or pursuant to this Agreement by
ALNYLAM to MERCK are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Code, licenses of rights to
"intellectual property" as defined under Section 101(35A) of
the Code. The Parties agree that MERCK, as a licensee of such
rights under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Code, and
that upon commencement of a bankruptcy proceeding by or
against ALNYLAM under the Code, MERCK shall be entitled to a
complete duplicate of or complete access to (as MERCK deems
appropriate) any such intellectual property and all
embodiments of such intellectual property. Such intellectual
property and all embodiments thereof shall be promptly
delivered to MERCK (i) upon any such commencement of a
bankruptcy proceeding upon written request therefore by MERCK,
unless ALNYLAM elects to continue to perform all of its
obligations under
49
this Agreement, or (ii) if not delivered under (i) above, upon
the rejection of this Agreement by or on behalf of ALNYLAM
upon written request therefore by MERCK. The foregoing
provisions of subsection 8.2.2(c) are without prejudice to any
rights MERCK may have arising under the Code or other
applicable law.
(d) If this Agreement is terminated by ALNYLAM pursuant to Section
8.2.1(b) due to the rejection of this Agreement by or on
behalf of MERCK under Section 365 of the Code, the provisions
of subparagraph (c) shall apply mutatis mutandis.
8.3 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or
termination of the Agreement shall not relieve the Parties of any
obligation accruing prior to such expiration or termination. Any
expiration or termination of this Agreement shall be without prejudice
to the rights of either Party against the other accrued or accruing
under this Agreement prior to expiration or termination, including,
without limitation, the obligation to pay royalties for Therapeutic
Collaboration Products sold prior to such expiration or termination.
The provisions of Section 4.1 shall survive the expiration or
termination of the Agreement and with respect to the obligations of the
Parties shall continue in effect for seven (7) years. In addition, the
provisions of Articles 1, 7 and 8, and Sections 2.7, 2.10, 2.15, 5.4,
5.5, 9.3 through 9.18 shall survive any expiration or termination of
this Agreement. Except as set forth in this Article 8, upon termination
or expiration of this Agreement all other rights and obligations cease.
9. MISCELLANEOUS
9.1 FORCE MAJEURE. Neither Party shall be held liable to the other Party
nor be deemed to have defaulted under or breached the Agreement for
failure or delay in 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,
embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, fire, floods, or other acts of God, or acts,
omissions or delays in acting by any governmental authority or the
other Party. The affected Party shall notify the other Party of such
force majeure circumstances as soon as reasonably practical, and shall
promptly undertake all reasonable efforts necessary to cure such force
majeure circumstances.
9.2 ASSIGNMENT/CHANGE OF CONTROL. Except as provided in this Section 9.2,
this Agreement may not be assigned or otherwise transferred, nor may
any right or obligation hereunder be assigned or transferred, by either
Party without the consent of the other Party. MERCK may, without
ALNYLAM's consent, assign this Agreement and its rights and obligations
hereunder in whole or in part to a MERCK Affiliate or in whole in
connection with a Change of Control (as defined below) upon twenty (20)
days prior written notification to ALNYLAM. ALNYLAM may, without
MERCK's consent, assign this Agreement and its rights and obligations
hereunder in whole or in part to any wholly-owned subsidiary of ALNYLAM
or RIBOPHARMA (except as provided below) or in whole (except as
provided below) in connection with a Change of Control; provided,
however, that: (a) ALNYLAM must notify MERCK at least twenty (20) days
50
prior to completion of any such Change of Control, (b) MERCK shall have
the right, at any time after receipt of such notice but prior to the
end of the twenty (20) day period, to notify ALNYLAM of the termination
of the Technology Collaboration, the Therapeutic Collaboration
(including MERCK's obligation to deliver additional MERCK Non-Druggable
Targets), or both, (c) all ALNYLAM Product Agreements and MERCK Product
Agreements shall continue and each Therapeutic Collaboration Product
Agreement shall remain in effect or terminate as provided therein, (d)
ALNYLAM may continue to work on MERCK RNAi Novel Targets which it
designated as such pursuant to Section 2.14.2(3) by notice to MERCK
prior to the date on which ALNYLAM notified MERCK of the Change of
Control, subject to MERCK's Opt-In Rights, and (e) all Opt-In
Negotiation Periods shall continue. Upon such assignment or Change of
Control, MERCK's obligation to provide royalty reports pursuant to
Section 5.2.6 shall be limited to reporting Net Sales for each country
and MERCK's total worldwide royalty obligations.
Notwithstanding the foregoing, the rights of any permitted assignee of
ALNYLAM's rights to practice any of MERCK's intellectual property,
including but not limited to MERCK RNAi Patent Rights, MERCK RNAi
Technology and MERCK RNAi Novel Target IP, shall remain subject to the
limitations set forth in this Agreement. Any permitted assignee shall
assume all obligations of its assignor under this Agreement. Any
attempted assignment not in accordance with this Section 9.2 shall be
void. For purposes of this Section 9.2, a "CHANGE OF CONTROL" of a
Party shall be deemed to occur if such Party is involved in a merger,
reorganization or consolidation in which its shareholders immediately
prior to such transaction would hold less than fifty percent (50%) of
the securities or other ownership or voting interests representing the
equity of the surviving entity immediately after such merger,
reorganization or consolidation, or if there is a sale of all or
substantially all of such Party's assets or business relating to this
Agreement, or if a "Health Company Acquirer" (as defined below)
effectively acquires control of the management and policies of such
Party. A "HEALTH COMPANY ACQUIRER" is a pharmaceutical company,
biotechnology company, or group of such companies acting in concert,
with annual sales of human pharmaceutical products greater than [**]
U.S. dollars ($[**]).
9.3 SEVERABILITY. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby,
unless the absence of the invalidated provision(s) adversely affects
the substantive rights of the Parties. The Parties shall in such an
instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable
provision(s) which, insofar as practical, implement the purposes of
this Agreement.
9.4 NOTICES. All notices which are required or permitted hereunder shall be
in writing and sufficient if delivered personally, sent by facsimile
(and promptly confirmed by personal delivery, registered or certified
mail or overnight courier), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to ALNYLAM, to: ALNYLAM PHARMACEUTICALS, INC. and
ALNYLAM HOLDING CO.
51
000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
and: MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
AND POPEO, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
If to MERCK, to: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Office of Secretary
Facsimile No.: (000) 000-0000
and: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Chief Licensing Officer
Facsimile: (000) 000-0000
or to such other address as the Party to whom notice is to be given may
have furnished to the other Party in writing in accordance herewith.
Any such notice shall be deemed to have been given: (a) when delivered
if personally delivered or sent by facsimile on a business day; (b) on
receipt if sent by nationally-recognized overnight courier; and/or (c)
on receipt if sent by mail.
9.5 APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the patent laws
of the United States without reference to any rules of conflict of laws
or renvoi.
9.6 DISPUTE RESOLUTION.
9.6.1 The Parties shall negotiate in good faith and use reasonable efforts to
settle any dispute, controversy or claim arising from, or related to,
this Agreement or to the breach hereof, and to resolve any disagreement
between the Parties with respect to any Therapeutic Collaboration
Product Agreement, MERCK Product Agreement or ALNYLAM Product
Agreement, except as provided below and in Section 9.7 (collectively,
"DISPUTE"). In particular, the CEO of ALNYLAM and the Executive
Vice-President of Worldwide Basic Research for MERCK shall attempt to
resolve all Disputes except as otherwise provided for in Section 9.7
below. In the event that the CEO and the Executive Vice-
52
President cannot reach an agreement regarding a Dispute, and a Party
wishes to pursue the matter, each such Dispute that is not an "Excluded
Claim" shall be finally resolved by binding arbitration in accordance
with the Commercial Arbitration Rules and Supplementary Procedures for
Large Complex Disputes of the American Arbitration Association ("AAA")
and Section 9.6.2 below, and judgment on the arbitration award may be
entered in any court having jurisdiction thereof. As used in this
Section 9.6, the term "EXCLUDED CLAIM" shall mean a dispute that
concerns (a) the validity or infringement of a patent, trademark or
copyright, or (b) any antitrust, anti-monopoly or competition law or
regulation, whether or not statutory.
9.6.2 FULL ARBITRATION. Except as provided in Section 9.6.3, the arbitration
shall be conducted by a panel of three (3) persons experienced in the
pharmaceutical business who are independent of both Parties and neutral
with respect to the Dispute presented for arbitration. Within thirty
(30) days after initiation of arbitration, each Party shall select one
person to act as arbitrator and the two Party-selected arbitrators
shall select a third arbitrator within thirty (30) days of their
appointment. If the arbitrators selected by the Parties are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be
appointed by the AAA. The place of arbitration shall be New York, New
York, and all proceedings and communications shall be in English.
(a) Either Party may apply to the arbitrators for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. The arbitrators shall have no
authority to award punitive or any other type of damages not
measured by a Party's compensatory damages. Each Party shall
bear its own costs and expenses and attorneys' fees, and the
Party that does not prevail in the arbitration proceeding
shall pay the arbitrators' and any administrative fees of
arbitration.
(b) Except to the extent necessary to confirm an award or as may
be required by law, neither a Party nor an arbitrator may
disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties. In no event
shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the
applicable New York statute of limitations.
(c) The Parties agree that, in the event of a Dispute over the
nature or quality of performance under this Agreement, neither
Party may terminate the Agreement until final resolution of
the Dispute through arbitration or other judicial
determination. The Parties further agree that any payments
made pursuant to this Agreement pending resolution of the
Dispute shall be refunded if an arbitrator or court determines
that such payments are not due.
(d) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required
53
to be performed by a Party must be completed within a
reasonable time period following the final decision of the
arbitrator.
(e) The Parties hereby agree that any monetary payment to be made
by a Party pursuant to a decision of the arbitrator shall be
made in United States dollars, free of any tax or other
deduction. The Parties further agree that the decision of the
arbitrator shall be the sole, exclusive and binding remedy
between them regarding determination of the matters presented
to the arbitrator.
9.6.3 "BASEBALL STYLE" ARBITRATION. If the Parties cannot otherwise agree
upon reasonable commercial terms during the Opt-In Negotiation Periods
for any Therapeutic Collaboration Agreement as provided in Section
2.14.3.3, or any MERCK Product Agreement or ALNYLAM Product Agreement,
then such matters, shall be determined by binding arbitration pursuant
to this Section 9.6.3 by one (1) independent, neutral arbitrator who is
(i) mutually-acceptable to the Parties, and (ii) an expert in the
pharmaceutical industry. If the Parties are unable to agree upon a
mutually-acceptable arbitrator, the arbitrator shall be an independent
expert as described in the preceding sentence selected by the AAA
encompassing New York, New York. Except as set forth in this Section
9.6.3, any arbitration of a Dispute pursuant to this Section 9.6.3
shall be governed by the Commercial Arbitration Rules and Supplementary
Procedures for Large Complex Disputes of the AAA. The place of
arbitration shall be New York, New York, and all proceedings and
communications shall be in English.
(a) Either Party may apply to the arbitrator for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. Each Party shall bear its own
attorneys' fees. Except to the extent necessary to confirm an
award or as may be required by law, neither a Party nor an
arbitrator may disclose the existence, content, or results of
an arbitration without the prior written consent of both
Parties. In no event shall an arbitration be initiated after
the date when commencement of a legal or equitable proceeding
based on the dispute, controversy or claim would be barred by
the applicable New York statute of limitations.
(b) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required to
be performed by a Party must be completed within a reasonable
time period following the final decision of the arbitrator.
(c) The Parties further agree that the decision of the arbitrator
shall be the sole, exclusive and binding remedy between them
regarding determination of the matters presented to the
arbitrator.
9.6.4 For arbitration of Disputes subject to Section 9.6.3, each Party to the
arbitration shall prepare and submit a written proposal setting forth
its proposed commercial terms, which must include, without change, the
terms set forth in Schedule 2.14.3.3, Section 3.1.5 or
54
3.1.6, as applicable, Section 5.2.1 (a) or (b) as applicable, and other
terms agreed upon hereunder in the negotiation preceding the submission
to arbitration, together with a written explanation setting forth the
reasons for its position. After the arbitrator has received written
proposals from both Parties, the arbitrator shall forward a copy of the
other Party's proposal to each. Each Party shall have thirty (30) days
to prepare and submit a written rebuttal to such proposal and may then
amend its original proposal. Each Party shall have the right to make
oral presentations or present evidence as determined by the arbitrator
during the arbitration proceeding. The arbitrator shall select the
proposal of one of the Parties as his/her decision, and shall not have
the authority to render any substantive decision other than to so
select in its entirety the summary or proposal of one Party or the
other. Each Party shall bear its own costs and expenses and attorneys
fees. The administrative and arbitrator's fees shall be paid by the
non-prevailing Party. The arbitrator shall be directed that any
arbitration subject to Section 9.6.3 shall be completed within three
(3) months from the filing of notice of a request for such arbitration.
The arbitration proceedings and the decision shall not be made public
without the joint consent of the Parties and each Party shall maintain
the confidentiality of such proceedings and decision unless otherwise
permitted by the other Party.
9.7 TECHNOLOGY MILESTONE ARBITRATION. In the event of a Technology
Milestone Dispute, the Parties shall mutually select a single,
independent, neutral arbitrator who shall have sufficient scientific
background and experience, including, without limitation, expertise in
RNA interference, to make a reasonable scientific determination as to
whether the Technology Milestone has been achieved. If the Parties are
unable to reach agreement within fifteen (15) business days after
submission to arbitration under Section 5.1.4 on the selection of an
arbitrator, then either or both Parties shall immediately request the
AAA of New York, New York to select an arbitrator with such scientific
background, experience and expertise as set forth herein. Except as set
forth in this Section 9.7, any arbitration of the Technology Milestone
Dispute shall be governed by the Commercial Arbitration Rules and
Supplementary Procedures for Large Complex Disputes of the AAA. The
place of arbitration shall be New York, New York, and all proceedings
and communications shall be in English.
For arbitration of the Technology Milestone Dispute subject to this
Section 9.7, each Party shall prepare and submit one written summary of
such Party's position and any relevant evidence with respect to the
Technology Milestone Dispute to the arbitrator within thirty (30) days
of the selection of the arbitrator. Upon receipt of such summaries from
each Party, the arbitrator shall provide copies of the same to the
other Party. Within fifteen (15) days of the delivery of such
summaries, each Party shall submit a written rebuttal of the other
Party's summary and may then amend its original summary. Oral
presentations during the arbitration proceeding for any Technology
Milestone Dispute shall not be permitted unless otherwise requested by
the arbitrator. The arbitrator shall make a final decision with respect
to a Technology Milestone Dispute within thirty (30) days following
receipt of the last of such rebuttal statements submitted by the
Parties.
(a) Either Party may apply to the arbitrator for interim
injunctive relief until the arbitration award is rendered or
the controversy is otherwise resolved. Either Party also may,
without waiving any remedy under this Agreement, seek from any
court
55
having jurisdiction any injunctive or provisional relief
necessary to protect the rights or property of that Party
pending the arbitration award. Each Party shall bear its own
costs and expenses and attorneys' fees. The administrative and
arbitrator's fees shall be reimbursed and/or paid by the
non-prevailing Party.
(b) Except to the extent necessary to confirm an award or as may
be required by law, neither Party nor the arbitrator may
disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties. In no event
shall an arbitration be initiated after the date when
commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the
applicable New York statute of limitations.
(c) The Parties agree that, in the event of a Technology Milestone
Dispute, neither Party may terminate the Agreement until final
resolution of the Technology Milestone Dispute through
arbitration or other judicial determination. The Parties
further agree that any payments made pursuant to this
Agreement made pending resolution of the Dispute shall be
refunded if the arbitrator or court determines that such
payments are not due.
(d) The Parties hereby agree that if the arbitrator determines
that the Technology Collaboration Milestone has been met,
MERCK shall pay the milestone payment under Section 5.1.4
within ten (10) business days of the arbitrator's
determination.
(e) The Parties hereby agree that any payment to be made by a
Party pursuant to a decision of the arbitrator shall be made
in United States dollars, free of any tax or other deduction.
The Parties further agree that the decision of the arbitrator
shall be the sole, exclusive and binding remedy between them
regarding determination of the matters presented to the
arbitrator.
9.8 ENTIRE AGREEMENT; AMENDMENTS. The Agreement contains the entire
understanding of the Parties with respect to the Collaboration and
licenses granted hereunder. All express or implied agreements and
understandings, either oral or written, with regard to the
Collaboration and the licenses granted hereunder are superseded by the
terms of this Agreement. The Agreement (including Schedules hereto) may
be amended, or any term hereof modified, only by a written instrument
duly-executed by authorized representatives of both Parties hereto.
9.9 HEADINGS. The captions to the Articles and Sections hereof are not a
part of the Agreement, but are merely for convenience to assist in
locating and reading the several Articles and Sections hereof.
9.10 INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and MERCK
shall be independent contractors and that the relationship between
ALNYLAM and MERCK shall not constitute a partnership, joint venture or
agency. ALNYLAM shall not have the authority to make any statements,
representations or commitments of any kind, or to take any action,
which shall be binding on MERCK, without the prior written consent of
MERCK, and MERCK shall not have the authority to make any statements,
56
representations or commitments of any kind, or to take any action,
which shall be binding on ALNYLAM without the prior written consent of
such Party.
9.11 WAIVER. The waiver by either Party hereto of any right hereunder, or of
the failure of the other Party 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 such other Party whether of a similar
nature or otherwise.
9.12 CUMULATIVE REMEDIES. No remedy referred to in this Agreement is
intended to be exclusive, but each shall be cumulative and in addition
to any other remedy referred to in this Agreement or otherwise
available under law.
9.13 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction
that any ambiguity in this Agreement shall be construed against the
drafting Party shall not apply.
9.14 COUNTERPARTS. The 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.
9.15 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY
TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS
AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT
WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
9.16 LIMITATION OF LIABILITY. UNLESS RESULTING FROM A PARTY'S WILLFUL
MISCONDUCT OR EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, SPECIAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, OR (II) COST OF
PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
9.17 BINDING EFFECT. As of the Effective Date, this Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective permitted successors and permitted assigns.
9.18 NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated herein,
no Third Party, including any employee of any Party to this Agreement,
shall have or acquire any rights by reason of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
57
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
MERCK & CO., INC. ALNYLAM HOLDING CO.
BY: Xxxxxxx X. Xxxxxxxxx BY: /s/ Xxxx Xxxxxxxxxx
__________________________ __________________________
[NAME] [NAME]
TITLE: Chairman, President & CEO TITLE: President and CEO
DATE:_________________________ DATE:_________________________
ALNYLAM PHARMACEUTICALS, INC.
BY: /s/ Xxxx Xxxxxxxxxx
__________________________
[NAME]
TITLE: President and CEO
DATE:_________________________
58
SCHEDULE 1.8
ALNYLAM RNAi PATENT RIGHTS
A. ALNYLAM Therapeutic RNAi Patent Rights
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO.
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[**]* Under ALNYLAM's rights from MIT, Xxxxxxxxx Institute for Biomedical
Research, and Garching Innovation GmbH.
** Explicitly excluding claims No. 30-47 and the equivalent claims in any patent
applications and patents resulting from this PCT application.
*** Under ALNYLAM's co-ownership rights.
**** Licenses for applicable ALNYLAM Therapeutic RNAi Patent Rights shall be
granted for each specific Therapeutic Collaboration Product under each
Therapeutic Collaboration Product Agreement or MERCK Product Agreement upon the
execution thereof pursuant to Section 3.1.4 or 3.1.6, respectively.
61
SCHEDULE 1.8 (CONT'D)
ALNYLAM RNAi PATENT RIGHTS
B. ALNYLAM Target Identification and Target Validation RNAi Patent Rights
EXCLUDED FROM THESE PATENT RIGHTS ARE THE SHARP, TUSCHL, XXXXXX & XXXXXX PATENT
APPLICATION WO 01/75164, AND ITS FAMILY MEMBERS AND THE TUSCHL, ELBASHIR &
LENDECKEL PATENT APPLICATION WO 02/44321 AND ITS FAMILY MEMBERS
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO.
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SCHEDULE 1.45
XXXXXX PATENTS
CASE NO. FILING DATE INT. PUB. NO. SERIAL NO.
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any divisions, continuations, continuations-in-part thereof, any patents issuing
thereon and any reissues, reexams, renewals, extensions, supplementary
protection certificates and the like of any such patents or patent applications
and all foreign equivalents thereof
65
SCHEDULE 1.49
MERCK BROAD RNAi PATENT RIGHTS
TITLE FILING DATE INT. PUB. NO. SERIAL NO.
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[**] [**] [**]
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66
SCHEDULE 1.54
MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS
[**]
67
SCHEDULE 2.1
TECHNOLOGY COLLABORATION WORKPLAN
BACKGROUND:
MERCK is interested in developing and exploiting genetic knockdown technologies
to validate potential therapeutic targets in vivo. ALNYLAM is developing RNA
interference (RNAi) technology to use directly as a therapeutic. Both parties
could benefit from a collaborative effort that seeks to improve RNAi technology.
The collaboration will consist of two phases: an optimization phase and an
implementation phase. The aims of this collaboration are:
Phase I: Optimization (Years [**])
1) Understand the [**] in vitro.
2) Develop [**] in vivo.
3) Develop [**].
4) Develop [**] in vivo.
5) [**] in vitro and in vivo [**].
Phase II: Implementation (Years [**])
1) Continue [**] in vitro. (if necessary)
2) Apply knowledge [**] in vivo.
3) Continue [**] in vivo.
4) Develop [**] in vivo.
5) Evaluation of [**] efficacy.
PHASE I
IN VITRO [**] (MERCK AND ALNYLAM)
Aim 1a. Identification of [**] efficacy and specificity [**]
The current rules for [**] of the specific target. Efforts will be made [**].
MERCK proposes to [**] based on MERCK's prior experience. [**] will likely have
[**]. [**] will be designed [**] will be performed by MERCK's [**]. [**] will be
provided by ALNYLAM, who will [**]. [**] will be assessed by [**]. [**] will be
determined by [**] by MERCK. [**] will be quantitated by [**]. In addition, the
[**] will be assessed by [**]. All data will be evaluated by [**] the most [**]
amount [**].
In addition to the [**]indicated above, MERCK will [**]. [**] will be developed
to [**]. This [**] allows [**]. As this system is [**] can be [**]. [**] will be
subjected to [**]. These studies will [**] for in vivo studies, as well as [**]
to subject to [**] in vitro.
68
Aim 1b. (cont.) [**].
ALNYLAM's [**] will introduce [**]. Such [**]include, but are not limited to,
[**] that may [**] to the [**]. [**]will be subjected to [**]. [**] will
determine whether [**]. [**] of the [**] will determine whether these [**].
1. [**]
[**] will improve the [**]. This approach will be [**]. [**] will also [**].
[**] will be [**]. [**] will be [**] with the [**]. To this end, we will
determine the [**].
2. [**]
[**] will improve the [**]. [**] will include [**].
3. [**]
ALNYLAM will also determine the [**] (such as [**] etc.,), [**], on the
[**] achieved.
69
IN VIVO OPTIMIZATION (ALNYLAM)
Aim 2. [**] in vivo [**].
The development of [**]. [**] will include [**]. To identify [**], we will
generate [**]s. These will be [**]. The most [**] in vivo is to [**].
[**] that the [**] to the [**] and to the [**] of the [**]. Additionally, the
[**] for the [**]. Finally, the [**]can be [**], allowing for [**] in the [**].
[**] and will be used for [**] will be performed, by MERCK, [**] in vitro [**]
will be obtained. [**] in vitro [**] will be [**] with [**] will be tested for
efficacy in vivo [**]. Initial studies will utilize [**]. [**] activities in Aim
1 of in vitro [**] will be applied to the [**] for in vivo analysis.
For in vivo experiments, techniques will be developed[**]. These [**] techniques
will be developed in consultation with MERCK.
1. [**]
This [**] is distributed throughout [**] in the [**] in the [**].
2. [**]
This [**] which is [**] to the [**] in the liver [**] such as [**].
3. [**]
This [**] and shows [**] in the [**] can be [**] in the [**] can be [**] in the
[**] such as [**] in the [**].
4. [**]
70
This [**] and shows [**] in the [**] can be [**] in these [**] making [**]Recent
published reports have demonstrated in vivo efficacy [**] could be [**], as was
described in the literature, [**].
5. [**]
[**] can be generated [**]. Upon [**] can be monitored [**]. As is true for the
above models, the [**].
Aim 3. Identify [**] in vitro and in vivo models.
As a first step, [**] will be tested for their stability in vitro. [**] will be
[**] and possibly [**].
1. [**]
Will introduce [**] at the end of each strand
2. [**]
These [**] are more [**] than the [**] having [**] will be [**].
71
3. [**]
[**] are expected to [**]. Appropriate [**]will be placed at the [**].
4. [**]
Placement of [**] such as [**] and will be [**].
Aim 4a. [**].
Additional [**] will be used to [**] that will [**]. These [**] and will be [**]
with an [**] will be evaluated [**] in vivo.
1. [**]
[**] is expected to improve [**] will deliver [**] may be required [**].
2. [**]
72
[**] are expected to have [**] is expected to [**]. [**] should be sufficient.
3. [**] will be used to deliver [**] should be sufficient.
Aim 4b. Identify [**] as well as [**]
[**]
[**] are expected to target [**]. With appropriate [**] such as [**] is
expected. Similarly, [**] is expected to [**]
2. [**]
[**] will improve the [**] from the [**].
Aim 5. Correlate [**]effectiveness in vitro and in vivo with [**].
[**] as proposed in Aims 1, 3 and 4 above will be evaluated for [**].
73
PHASE II
IN VITRO [**]
Aim 1. Identification of [**]. (Will be continued from Phase I only if
necessary.)
The experiments described in Phase I are designed to cover [**]. Based on the
results of Phase I, it may be desirable to [**].
IN VIVO [**]
Aim 2. Develop in vivo models to [**].
In the second phase of the work ALNYLAM will introduce [**] into the program.
Stability chemistries developed in Phase I will be incorporated into [**]will be
made as in Phase I.
[**] will be designed using knowledge gained in Phase I. [**] the in vivo [**]
will be assessed for efficacy in vitro [**]. If the [**] will be employed for
determination of [**] will determine the best [**].
Once [**] issues have been addressed in [**] in Phase I, ALNYLAM will move to
[**]. Discoveries in Phase I will help determine the best model system and
target for these Phase II studies. [**] is a therapeutic area of interest to
both parties, Phase II studies may include [**]. If so, ALNYLAM will investigate
[**].
Aim 3. Continue investigation of [**]in vivo.
1. [**] will direct [**] which are [**] on many [**] of the [**] of these [**]
but the [**] for the [**] may be of value. [**] should be sufficient.
Aim 4. Develop [**] in vivo.
[**] methods will be developed using [**] will be useful in developing methods
for [**] and these will be analyzed by [**]. Additionally, these [**] will be
used for [**], to determine [**]
74
Aim 5. Evaluation of [**].
ALNYLAM will determine the [**] and the [**] caused by the [**]. This knowledge
will help us to understand the factors [**]. This information will help to
design and develop [**]. ALNYLAM will determine the [**] and also by [**] with
the [**]
SPECIFIC RESPONSIBILITIES OF ALNYLAM:
- ALNYLAM will provide all [**] required in this study,
including [**]. ALNYLAM will do [**] (in vitro and in vivo),
on all [**] developed for in vivo delivery and supply RNA to
MERCK for [**].
- ALNYLAM will perform all in vivo [**], and provide RNA to
MERCK for expression profiling.
SPECIFIC RESPONSIBILITIES OF MERCK:
- MERCK will design [**] in vitro [**].
- MERCK will perform all [**] data.
75
PROJECT SCHEDULE:
Diagram of project phases and projected completion dates has been deleted.
SCHEDULE 2.10
MATERIALS
Materials to be provided by MERCK:
PHASE I - OPTIMIZATION TECHNOLOGY COLLABORATION WORKPLAN
[**]
Materials to be provided by ALNYLAM:
PHASE I - OPTIMIZATION TECHNOLOGY COLLABORATION WORKPLAN
[**]5-Me-C
[**]
PHASE II - IMPLEMENTATION TECHNOLOGY COLLABORATION WORK PLAN
[To be completed and updated pursuant to Section 2.10 at the appropriate time]
77
SCHEDULE 2.14.2(1)
INITIAL MERCK NON-DRUGGABLE TARGET INFORMATION
1. General project description
2. Target name or gene accession number
3. [**]
4. [**]
5. [**]
6. Brief description [**], as applicable.
7. [**].
Notwithstanding the above, MERCK shall not provide any data, information,
patents, opinions or know-how which MERCK believes may be subject to
attorney/client privilege.
78
SCHEDULE 2.14.2(2)
COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION
1. Executive Summary providing [**] the MERCK Non-Druggable Target.
- Supporting data [**] as may be available.
- [**], which is directly relevant to the MERCK Non-Druggable
Target.
- [**] the MERCK Non-Druggable Target [**].
2. MERCK Non-Druggable Target [**].
- Copies of [**] relating to the MERCK Non-Druggable Target.
- Copies of [**] with regard to the MERCK Non-Druggable Target.
3. [**] the MERCK Non-Druggable Target and which is [**] a MERCK
Non-Druggable Target [**].
Notwithstanding the above, MERCK shall not provide any data, information,
patents, opinions or know-how which MERCK believes may be subject to
attorney/client privilege.
79
SCHEDULE 2.14.3.2
OPT-IN INFORMATION
1. Product description
2. Chemical structure (RNAi sequence)
3. Physicochemical properties
4. Patent status
5. Biochemical mechanism (activity, specificity)
- In vitro
- Animal model data (disease relevant)
6. Preclinical pharmacology (PK, PD, biodistribution)
7. Toxicology studies status
- Genotoxicity tests
- Acute and chronic toxicity tests
- Safety pharmacology tests
8. Dosage forms and formulations
9. Preclinical ADME
10. Projected dose regimen
11. Anticipated clinical safety issues, including expected adverse events,
anticipated precautions, and drug interactions
12. Anticipated product claims at launch
13. Known or suspected competitive agents
14. Possible promotable advantages over available agents in development, to
the extent known
15. Chemistry/manufacturing
- Raw materials
80
- Process & product development
- Chemical manufacturing
16. Total research and development expenses incurred by ALNYLAM on the
MERCK RNAi Novel Target from the date MERCK presented the MERCK RNAi
Novel Target to ALNYLAM until the date on which ALNYLAM provided MERCK
with Opt-In Information, including but not limited to all expenses
incurred relating to FTEs and all out-of-pocket expenses.
81
SCHEDULE 2.14.3.3
THERAPEUTIC COLLABORATION PRODUCT AGREEMENT TEMPLATE
Note: These terms are non-binding and are subject to further due diligence,
MERCK Senior Management approval and the negotiation and execution of the
definitive agreements.
Purpose:
MERCK and ALNYLAM mutually agree to co-develop and co-commercialize a
Therapeutic Collaboration Product for therapeutic use in the field of
[insert indications].
Territory:
Worldwide, as applicable.
Licenses:
ALNYLAM shall provide MERCK with a worldwide, royalty-free,
Co-exclusive license, sublicensable to Affiliates, to ALNYLAM RNAi
Technology, ALNYLAM Collaboration Inventions, ALNYLAM Therapeutic
Collaboration IP, and ALNYLAM RNAi Patent Rights, solely to perform its
obligations under the Therapeutic Collaboration to develop and
commercialize the Therapeutic Collaboration Product.
MERCK shall provide ALNYLAM with a worldwide, royalty-free,
Co-exclusive license, sublicensable to Affiliates, MERCK Collaboration
Inventions to MERCK RNAi Novel Target IP solely to perform its
obligations under the Therapeutic Collaboration to develop and
commercialize the Therapeutic Collaboration Product.
Co-Development:
The Parties agree to co-develop an Therapeutic Collaboration Product
according to the Therapeutic Collaboration Workplan. Such Workplan
shall be agreed upon by the Parties prior to execution of the
Therapeutic Collaboration Product Agreement. The Workplan will define
specific roles and responsibilities of each Party in the development of
the Therapeutic Collaboration Product. Upon execution of the
Therapeutic Collaboration Product Agreement, the Parties shall
establish a Joint Development Committee, which shall be comprised of an
equal number of representatives from MERCK and ALNYLAM, to work
collaboratively through final regulatory approval on issues relating to
clinical development, including regulatory issues, of the Therapeutic
Collaboration Product.
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Commercialization:
- MERCK shall be responsible for the worldwide commercialization
of Therapeutic Collaboration Products.
- ALNYLAM shall have the option to co-promote Therapeutic
Collaboration Products in the US by providing a minimum number
of representatives, such minimum number to be determined by
the Parties based upon the physician audience to which the
Therapeutic Collaboration Products will be marketed and to be
set forth in the Therapeutic Collaboration Product Agreement.
ALNYLAM must exercise its option to co-promote within the
required time period, set by MERCK, prior to launch, but no
sooner than [**] prior to filing the US NDA or equivalent.
- The Parties shall establish a Joint Commercialization
Committee, which shall be led by MERCK, responsible for all
strategic decisions relating to the commercialization of RNAi
Therapeutic Products.
- ALNYLAM's US co-promotion activity shall be fully-integrated
into MERCK's US promotion effort.
Development and Commercial Expenses:
- Parties shall equally share all development expenses
applicable to a US NDA through FDA approval.
- Parties shall equally share all US commercialization expenses.
- Each Party has the option to reduce its respective
US-applicable expense obligation, but in no event shall either
Party reduce its obligation to below [**]% of the total
expenses applicable to a US NDA approval and US
commercialization. This election shall be made prior to
execution of the Therapeutic Collaboration Product Agreement.
- MERCK shall bear all ex-US development and commercial
expenses.
Profit-Sharing:
- The Parties shall allocate the US net operating profits in the
percentage equal to the US-applicable development and
commercialization expenses contributed by each Party. "US Net
Operating Profits", "US Development Expenses," "US
Commercialization Expenses," "ex-US Development Expenses" and
"ex-US Commercialization Expenses" shall be defined in the
Therapeutic Collaboration Product Agreement.
- MERCK shall realize all operating profits ex-U.S. MERCK shall
pay to ALNYLAM a royalty of [**]%-[**]% on ex-US net product
sales as follows:
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For incremental net product sales of:
< or = to $[**], royalty shall be [**]%
> $[**] to < or = to $[**], royalty shall be [**] %
$[**] to < or = to $[**], royalty shall be [**]%
$[**], royalty shall be [**]%
There shall be a maximum offset of [**]% to the above royalties in the
event that additional third party licenses are required to
appropriately protect and/or commercialize the Therapeutic
Collaboration Product.
Manufacturing:
The Parties shall agree on a cost-effective strategy for commercial
manufacturing of the Therapeutic Collaboration Product, taking into
full consideration the expertise and cost of goods offered by Third
Party contractors.
Regulatory Filings:
- The Parties, through the Joint Development Committee, shall
work together collaboratively on all regulatory issues and
filings.
- Specific regulatory roles and responsibilities of each Party
during the various phases of development will be defined in
the Therapeutic Collaboration Workplan. MERCK shall be the
worldwide holder of the marketing authorization, and each
Party shall provide all relevant data and information in its
possession to assist MERCK in its regulatory filings
worldwide.
Intellectual Property:
- MERCK shall have full responsibility for all intellectual
property filings of Therapeutic Collaboration Products.
- All costs associated with any intellectual property filings
relating to Therapeutic Collaboration Products will be treated
as development expenses and shared as such by the Parties.
All terms not defined herein shall have the meaning set forth in the Agreement.
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SCHEDULE 6
EXCEPTIONS
Section 6.1(c):
Pursuant to a certain License and Cooperation Agreement with a third party (the
"License and Cooperation Agreement"), RIBOPHARMA has granted a non-exclusive
license to such third party under the Xxxxxx Patents for use in target
identification and validation and has agreed to provide a specific quantity of
siRNAs to such third party.
Pursuant to a certain Feasibility Agreement with a third party (the "FEASIBILITY
AGREEMENT"), RIBOPHARMA has granted a non-exclusive license to such third party
under the Xxxxxx Patents for use in in vitro studies for target validation and
has agreed to provide a limited number of RNAi molecules against a limited
number of such third party's targets.
Section 6.1(d):
Pursuant to the License and Cooperation Agreement, RIBOPHARMA has granted a
non-exclusive license to a third party under the Xxxxxx Patents for use in
target identification and validation and has agreed to provide a specific
quantity of siRNAs to such third party.
Pursuant to the Feasibility Agreement, RIBOPHARMA has granted a non-exclusive
license to a third party under the Xxxxxx Patents for use in in vitro studies
for target validation and has agreed to provide a limited number of RNAi
molecules against a limited number of such third party's targets.
Section 6.2(b):
Pursuant to the License and Cooperation Agreement, RIBOPHARMA has granted a
non-exclusive license to a third party under the Xxxxxx Patents for use in
target identification and validation and has agreed to provide a specific
quantity of siRNAs to such third party.
Pursuant to the Feasibility Agreement, RIBOPHARMA has granted a non-exclusive
license to a third party under the Xxxxxx Patents for use in in vitro studies
for target validation and has agreed to provide a limited number of RNAi
molecules against a limited number of such third party's targets.
Section 6.2(c):
There are currently multi-party oppositions against RIBOPHARMA European patent
1144623.
ALNYLAM has received a letter from Isis Pharmaceuticals dated July 28, 2003
regarding a licensing opportunity for RNA chemistry modifications, a copy of
which has been furnished to MERCK.
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