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EXHIBIT 10.2
CONFIDENTIAL TREATMENT REQUESTED UNDER
17 C.F.R. SECTIONS 200.80(b)(4), 200.83
AND 240.24B-2. * INDICATES OMITTED
MATERIAL THAT IS THE SUBJECT OF A
CONFIDENTIAL TREATMENT REQUEST THAT IS
FILED SEPARATELY WITH THE COMMISSION
RESEARCH COLLABORATION AND LICENSE AGREEMENT
by and among
MERCK & CO., INC.
and
ISIS PHARMACEUTICALS, INC.
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TABLE OF CONTENTS
PAGE
ARTICLE I - DEFINITIONS .................................................................... 1
ARTICLE II - RESEARCH PROGRAM AND DRUG DEVELOPMENT PROGRAM ................................. 7
2.1 General............................................................................. 7
2.2 Description of Research............................................................. 7
2.3 Conduct Research.................................................................... 8
2.4 Joint Research Committee............................................................ 8
2.5 Exchange of Information............................................................. 9
2.6 Records and Reports................................................................. 10
2.7 Research Information and Inventions................................................. 10
2.8 Research Program Term............................................................... 10
2.9 Provision of Compounds.............................................................. 11
ARTICLE III - LICENSE; DEVELOPMENT AND COMMERCIALIZATION ................................... 12
3.1 License Grant....................................................................... 12
3.2 Retained Rights..................................................................... 12
3.3 Merck Grant......................................................................... 12
3.4 Development and Commercialization................................................... 13
3.5 Cell Adhesion Preclusion............................................................ 13
ARTICLE IV - CONFIDENTIALITY AND PUBLICATION................................................ 14
4.1 Non-disclosure and Non-Use Obligations.............................................. 14
4.2 Permitted Disclosure of Proprietary Information..................................... 14
4.3 Dual Information.................................................................... 15
4.4 Publication and Public Disclosures ................................................. 15
ARTICLE V - PAYMENTS; ROYALTIES AND REPORTS ................................................ 15
5.1 Commitment Fee and Option Payment................................................... 15
5.2 Research Program Funding............................................................ 15
5.3 Milestone Payments.................................................................. 16
5.4 Royalties........................................................................... 18
5.5 Reports; Payment of Royalty......................................................... 20
5.6 Audits.............................................................................. 21
5.7 Payment Exchange Rate............................................................... 21
5.8 Income Tax Withholding.............................................................. 22
ARTICLE VI - REPRESENTATIONS AND WARRANTIES................................................. 22
6.1 Isis Representations and Warranties................................................. 22
6.2 Merck Representations and Warranties................................................ 22
ARTICLE VII - PATENT MATTERS ............................................................... 23
7.1 Filing, Prosecution and Maintenance of Patents...................................... 23
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7.2 Right of Other Parties to Prosecute and Maintain Patents............................ 23
7.3 Interference, Opposition, Reexamination and Reissue................................. 23
7.4 Enforcement and Defense............................................................. 24
7.5 Patent Term Restoration............................................................. 25
ARTICLE VIII - TERM AND TERMINATION......................................................... 25
8.1 Term and Expiration................................................................. 25
8.2 Termination by Notice............................................................... 25
8.3 Termination......................................................................... 26
8.4 Effect of Expiration or Termination................................................. 27
ARTICLE XI - PUBLICITY...................................................................... 27
9.1 Public Disclosure .................................................................. 27
ARTICLE X - MISCELLANEOUS................................................................... 27
10.1 Force Majeure..................................................................... 27
10.2 Assignment........................................................................ 28
10.3 Severability...................................................................... 28
10.4 Notices........................................................................... 28
10.5 Applicable Law.................................................................... 29
10.6 Dispute Resolution................................................................ 29
10.7 Entire Agreement.................................................................. 29
10.8 Headings.......................................................................... 30
10.9 Independent Contractors........................................................... 30
10.10 Waiver............................................................................ 30
10.11 Counterparts...................................................................... 30
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6/1/98
RESEARCH COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT effective as of June 1, 1998 (the "Effective Date")
between Merck & Co., Inc., a corporation organized and existing under the laws
of New Jersey ("Merck") and Isis Pharmaceuticals, Inc., a corporation organized
and existing under the laws of Delaware ("Isis") together referred to as the
"Parties".
WITNESSETH:
WHEREAS, Isis has expertise in the area of nucleoside and nucleotide
chemistry and is willing to utilize that expertise to discover Research
Compounds (as hereinafter defined) under the terms of this Agreement; and
WHEREAS, Merck and Isis desire to enter into a research collaboration to
discover Research Compounds (as hereinafter defined) upon the terms and
conditions set forth herein; and
WHEREAS, Merck desires to obtain a license under Isis Intellectual
Property (as hereinafter defined), upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Parties hereby agree as follows:
ARTICLE I
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 "Affiliate" shall mean (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 a Party; or (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 a
Party.
1.2 "Anti-Viral Animal Product(s)" shall mean Anti-Viral Products for animal
use.
1.3 "Anti-Viral Human Product(s)" shall mean Anti-Viral Products for human
use.
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1.4 "Anti-Viral Product(s)" ( * )
1.5 "Calendar Quarter" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30
and December 31.
1.6 "Calendar Year" shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.7 ( * )
1.8 "Collection Animal Products" shall mean Collection Products for animal
use.
1.9 "Collection Human Products" shall mean Collection Products for human
use.
1.10 "Collection Products". ( * )
1.11 "Combination Product" shall mean a Royalty Bearing Product which
includes one or more therapeutically active ingredients other than
Compound, in combination with Compound.
1.12 "Compounds" shall mean Research Compounds and Derived Compounds.
1.13 "Derived Compound(s)" shall mean a chemical entity derived by Merck from
a Research Compound after the term of the Research Program or any
derivative or analog of any such chemical entity or salt or ester
thereof, including but not limited to Oligonucleotides.
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1.14 "Effective Date" shall mean the date first set forth above.
1.15 "Extended Research Program Term" shall have the meaning set forth in
Section 2.8.
1.16 "FDA" shall mean the United States Food and Drug Administration and any
successor agency having substantially the same functions.
1.17 "First Commercial Sale" shall mean, with respect to any Royalty Bearing
Product, the first sale for end use or consumption of such Royalty
Bearing Product in a country after all required approvals, including
marketing and pricing approvals, have been granted by the governing
health authority of such country.
1.18 "Full Time Equivalent" or "FTE" shall mean 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 Research Program shall be determined by dividing
the number of working days during any twelve-month period devoted by
such employee to the Research Program by the total number of working
days during such twelve-month period.
1.19 "HCV Human Products" shall mean HCV Products for human use.
1.20 HCV Product(s)" shall mean any preparations in final form for sale by
prescription, over-the-counter or any other method for any indication,
including human or animal use, which contain Compound(s) which (i) are
approved as an RMC Development Candidate during the Research Program
or within ten (10) years thereafter and (ii) are initially developed for
the prevention and/or treatment of infections caused by hepatitis C
virus. It is understood that Compounds which are claimed in or covered
by Isis Patent Assets or Isis Research Patent Assets and which meet the
criteria set forth in (ii) above but do not meet the criteria set forth
in (i) above are Compounds included in Article 1.10.
1.21 "Isis Compounds" shall mean nucleoside and/or nucleotide small molecules
identified and/or discovered by Isis (i) prior to the commencement of
this Agreement or (ii) during the term of the Research Program but
outside the course of the Research Program which are, in the sole
discretion of Isis, provided by Isis to Merck under the terms of this
Agreement.
1.22 "Isis Field" shall mean the use of Research Compounds solely for the
purpose of developing Oligonucleotide products for therapeutic
indications other than the prevention and/or treatment of infections
caused by Hepatitis C virus.
1.23 "Isis Intellectual Property" shall mean (i) Isis Know-How, (ii) Isis
Patent Assets, (iii) Isis Research Know-How and (iv) Isis Research
Patent Assets to the extent that (iii) and (iv) are owned solely by
Isis.
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1.24 "Isis Know-How" shall mean all information and materials, including but
not limited to, discoveries, processes, formulas, data, non-patented
inventions, know-how and trade secrets of Isis conceived prior to the
Effective Date or during the term of the Research Program but outside
its scope, to the extent Isis is not precluded from licensing such
know-how to Merck by the terms of any third party agreement, which are
necessary or useful to Merck (a) in the conduct of Merck's activities
under the Research Program or (b) to make, have made, use, import or
sell Research Compounds and to incorporate Research Compounds into
Licensed Products.
1.25 "Isis Patent Assets" shall mean issued patents and patent applications
(which shall be deemed to include certificates of invention and
applications for certificates of invention), other than Isis Research
Patents Assets, which during the Research Program or any Extended
Research Program Term are owned by Isis or which Isis through license or
otherwise acquires rights, to the extent Isis is not precluded from
licensing such Isis Patent Assets to Merck by the terms of any third
party agreement, which claim or cover Research Compounds and/or Derived
Compounds their uses or a method of their manufacture, including all
divisions, continuations, continuations-in-part, reissues, renewals,
extensions, supplementary protection certificates or the like of any
such patents and patent applications and foreign equivalents thereof;
provided, however, that if a patent (other than an Isis Patent Asset) of
which Isis is the sole or joint owner issues after the Research Program
Term or any Extended Research Program Term which (i) claims or covers a
composition of matter or a process and (ii) prevents Merck from making,
having made, using, importing and/or selling a Research Compound, then
such patent shall be deemed to be part of Isis Patent Assets solely to
the extent such patent is necessary to enable Merck to make, have made,
use, import and/or sell such, Research Compound (or any Derived Compound
claimed in or covered by such patent, other than an Oligonucleotide).
1.26 "Isis Research Know-How" shall mean all information and Materials,
including but not limited to, discoveries, processes, formulas, data,
non-patented inventions, know-how and trade secrets of Isis conceived in
the course of the Research Program, including know-how conceived jointly
with Merck. It is understood that, notwithstanding the foregoing, Merck
retains its joint ownership of know-how conceived jointly with Isis
during the Research Program.
1.27 "Isis Research Patent Assets" shall mean patents and patent applications
(which shall be deemed to include certificates of invention and
applications for certificates of invention) which claim inventions
conceived solely by Isis or jointly by Isis and Merck in the course of
the Research Program and all divisions, continuations,
continuations-in-part, reissues, renewals, extensions, supplementary
protection certificates or the like of any such patents and patent
applications and foreign equivalents thereof. It is understood that,
notwithstanding the foregoing, Merck
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retains its joint ownership of patents and patent applications of
inventions conceived in the course of the Research Program jointly with
Isis.
1.28 "Joint Research Committee" shall mean the committee described in Section
2.4.
1.29 "Licensed Product" shall mean any preparation, including but not limited
to a Royalty Bearing Product, in final form for sale by prescription,
over-the-counter or any other method for any indication, including human
or animal use, which contains one or more Compound(s), including in
combination with a therapeutically active ingredient which is not a
Compound.
1.30 "Major Market Country" shall mean Japan, the United Kingdom, France,
Germany, Italy or Spain.
1.31 "Merck Know-How" shall mean all information and materials, including but
not limited to, discoveries, processes, formulas, data, non-patented
inventions, knowhow and trade secrets of Merck, to the extent Merck is
not precluded from licensing such know-how to Isis by the terms of any
third party agreement, which during the term of the Research Program are
not generally known and which are necessary to Isis in the performance
of its obligations under the Research Program.
1.32 "Merck Patent Assets" shall mean issued patents and patent applications
(which shall be deemed to include certificates of invention and
applications for certificates of invention which are owned by Merck and
which claim or cover-the manufacture, use or sale of Compounds and all
divisions, continuations, continuations in-part, reissues, renewals,
extensions, supplementary protection certificates or the like of any
such patents and patent applications and foreign equivalents thereof.
1.33 "NDA" shall mean a new drug application filed with the FDA for marketing
authorization of a Royalty Bearing Product.
1.34 "Net Sales" shall mean ( * )
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1.35 "Oligonucleotide" shall mean ( * )
1.36 "Proprietary Information" shall mean any and all scientific, clinical,
regulatory, marketing, financial and commercial information or data,
whether communicated in writing, orally or by any other means, which is
provided by one Party to the other Party in connection with this
Agreement. Proprietary Information shall include, without limitation,
Merck Know-How and Isis Know-How and Isis Research Know-How.
1.37 "RMC Development Candidate" shall mean a Compound which has been
approved, in Merck's sole discretion, by the Merck Research Management
Committee (or its successor) for initiation of formal development
studies, including safety assessment.
1.38 "Research Compounds" shall mean ( * )
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1.39 "Research Field" shall mean chemistry efforts to design ( * ) small
molecules which inhibit hepatitis C virus polymerase.
1.40 "Research Program" shall mean the collaborative research effort between
the parties as described in Attachment 2.1 to identify and discover
nucleoside and nucleotide analogs which may be useful in the prevention
and/or treatment of infections caused by Hepatitis C virus and other
indications.
1.41 "Research Program Term" shall have the meaning set forth in Section 2.8.
1.42 "Royalty Bearing Products" shall mean HCV Products, Anti-Viral Products
and Collection Products.
1.43 "Territory" shall mean all countries of the world.
1.44 "Valid Patent Claim" shall mean a claim of an issued and unexpired
patent included within Isis Patent Assets, Isis Research Patent Assets
or Merck Patent Assets, which has not been revoked or held unenforceable
or invalid by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
ARTICLE II
RESEARCH PROGRAM
2.1 General. Isis and Merck shall engage in the Research Program upon the
terms and conditions set forth in this Agreement. The activities to be
undertaken in the course of the Research Program are set forth in this
Article II and in Attachment 2.1 which may be amended from time to time
upon the mutual agreement of the parties. Isis shall dedicate the
efforts of at least ( * ) during each year of the Research Program Term.
2.2 Description of Research. Isis and Merck will cooperate in the design,
synthesis and evaluation of nucleosides and nucleotides as candidate
inhibitors of the ( * ) hepatitis C virus. Isis and Merck chemists will
collaborate in the design of the modular synthesis and purification of
the ( * ) Isis will prepare ( * ) for screening by Merck. Prodrug and
other modifications of selected compounds will also be synthesized by
Isis to explore structure-activity relationships. It is understood that
Merck, in its sole discretion, may also perform the activities to be
carried out by Isis. Merck ( * ) will provide support for the modular
syntheses
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at Isis by supplying (as agreed by Isis and Merck) pre-weighed samples,
with structures, of various starting materials from the Merck
proprietary chemical compound collection. All biochemical and biological
studies of ( * ) prepared by Isis, which will be directed to the
identification and optimization of lead compounds, will be performed by
Merck. It is understood that Merck's activities under the Research
Program may also, in Merck's discretion, be carried out by Merck's
Affiliates and at other Merck sites.
2.3 Conduct of Research. Isis and Merck each shall conduct the Research
Program in a good scientific manner, and in compliance in all material
respects with all requirements of applicable laws, rules and regulations
and all applicable standard laboratory practices to attempt to achieve
their objectives efficiently and expeditiously. Isis and Merck each
shall proceed diligently with the work set out in the Research Program
by using their respective good faith efforts.
2.4 Joint Research Committee. The parties hereby establish a joint research
committee to direct and monitor the Research Program as follows:
2.4.1 Composition of the Committee. The Research Program shall be
conducted under the direction of a joint research committee (the
"Joint Research Committee") comprised of three named
representatives of Merck and three named representatives of
Isis. Each of Merck and Isis shall appoint its respective
representatives to the Joint Research Committee, and from time
to time may substitute one or more of its representatives, in
its sole discretion, effective upon notice to the other Party of
such change. It is anticipated that these representatives shall
have appropriate technical credentials and knowledge, and
ongoing familiarity with the Research Program. The Merck
representatives initially shall be ( * ) and the Isis
representatives initially shall be ( * ) Additional employees of
Isis or Merck (or its Affiliates) may from time to time, by
mutual consent of the parties, be invited to attend Joint
Research Committee meetings. To the extent a party's
representative is unable to attend a Joint Research Committee
meeting, his or her vote on any matter coming before the Joint
Research Committee may be cast by another representative of that
party.
2.4.2 Chairman and Vice Chairman. The Chairman of the Joint Research
Committee shall be selected by Merck and the Vice Chairman shall
be selected by Isis. The Chairman and the Vice Chairman shall be
the primary contacts between the parties with respect to the
Research Program. Each Party shall notify the other as soon as
practicable upon changing this appointment.
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2.4.3 Meetings and Decisions. The Joint Research Committee shall meet
at least once each Calendar Quarter at such locations as shall
be determined by the Joint Research Committee. Each Party shall
bear its own expenses related to attendance of such meetings by
its representatives. At the first such meeting, which shall take
place within thirty (30) days after the Effective Date, the
Joint Research Committee shall discuss any necessary or
recommended changes in the Research Program. The Joint Research
Committee may meet by means of teleconference or video
conference or other similar communications equipment. The Joint
Research Committee shall confer and make decisions regarding the
status and direction of the Research Program and the other
matters specified in the Research Program and shall also advise
on issues regarding any technical, budgetary or economic matters
relating to the Research Program, provided that the Joint
Research Committee shall not have authority to decide on
technical, budgetary or economic matters. Decisions of the Joint
Research Committee shall be made by a majority of the members.
In the event that the Joint Research Committee cannot or does
not, after good faith efforts, achieve a majority on an issue,
the Chief Executive Officer of Isis, or his designee, acting as
the duly authorized representative of Isis, and the Executive
Vice President of Merck Research Laboratories, acting as the
duly authorized representative of Merck, shall discuss the
matter and attempt, in good faith, to reach agreement with
respect to such decision. In the event that the Chief Executive
Officer of Isis, or his designee, and the Executive Vice
President of Merck Research Laboratories shall be unable to
reach agreement, Merck shall, in its sole discretion, make the
final decision.
2.4.4 Records. The Joint Research Committee shall maintain accurate
records to document the discussions and decisions at each
meeting. Meeting minutes or summaries shall be prepared in
accordance with procedures established by the Joint Research
Committee at its first meeting and shall be distributed to all
members of the Joint Research Committee after approval of drafts
by the Chairman and Vice Chairman.
2.5 Exchange of Information. Merck and Isis, respectively, shall promptly
disclose to each other during the Research Program Term or the Extended
Research Program Term all Merck Know-How and Isis Know-How and Isis
Research Know-How and any relevant Isis Patent Assets. During the term
of the Research Program and for a period of ten (10) years thereafter,
Isis agrees that Merck (including any agents or Affiliates of Merck)
shall have the freedom to operate under Isis Patent Assets for the
purpose of performing any Research Program activities or any other
activities necessary or useful for the identification or development of
Compounds and/or Derived Compounds ( * )
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2.6 Records and Reports.
2.6.1 Records. Isis shall maintain records in sufficient detail and in
good scientific manner appropriate for patent and regulatory
purposes, which shall be complete and accurate and shall fully
and properly reflect all work done and results achieved in the
performance of the Research Program.
2.6.2 Copies and Inspection of Records. Merck shall have the right,
during normal business hours and upon reasonable notice, to
inspect and copy all such records of Isis referred to in Section
2.6.1. Merck shall maintain such records and the information
disclosed therein in confidence in accordance with Section 4.1.
Merck shall have the right to arrange for its employees, agents
and outside consultants to visit Isis at its offices and
laboratories during normal business hours and upon reasonable
notice, and to discuss the Research Program and its results in
detail with the technical personnel of Isis.
2.6.3 Progress Reports. Within sixty (60) days following the end of
the Research Program Term (or the Extended Research Program Term
if applicable), Isis shall provide to the Joint Research
Committee a written final report which shall describe the work
performed on the Research Program, evaluate the work performed
in relation to the goals of the Research Program and provide
such other information required by the Research Program or
reasonably requested by Merck relating to the progress of the
goals or performance of the Research Program. Upon request, Isis
shall provide copies of the records described in Section 2.6.1.
above.
2.7 Research information and inventions. All information and inventions
conceived or reduced to practice in the course of the Research Program:
(a) solely by employees of Isis shall be owned solely by Isis;
(b) solely by employees of Merck (or its agents or Affiliates) shall
be owned solely by Merck;
(c) jointly by employees of Isis and Merck (or its Affiliates) shall
be owned jointly by Isis and Merck.
Isis shall promptly disclose to Merck the development, making,
conception or reduction to practice of the research information and
inventions referred to in subsections (a) and (c) herein.
2.8 Research Program Term. The term of the Research Program shall commence
on the Effective Date and continue for a period of three years (the
"Research Program Term"). Merck may terminate the Research Program Term
upon six (6) months prior written notice given at the completion of the
second year of the Research
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Program Term. Termination will be within six (6) months of the notice.
In such event, Merck will be liable for funding of the Research Program
until its termination. It is understood that Merck, in its sole
discretion, may reduce its efforts under the Research Program during the
six month notice period. Unless the Research Program is terminated, the
parties may agree to extend the Research Program Term for (a) one or
more additional one-year terms or (b) one additional term of a period of
at least six (6) months but less than one (1) year (each an "Extended
Research Program Term". Neither party may terminate an Extended Research
Program Term, other than a termination for cause as set forth in Article
8.3.1. The parties shall agree to any such extension at least ninety
(90) days prior to the end of the current Research Program Term or
Extended Research Program Term and shall negotiate in good faith to
complete a mutually acceptable schedule of Research Program activities
to be carried out during such Extended Research Program Term. The
Schedule shall include the number of FTE's to be devoted to the Research
Program by Isis during the Extended Research Program Term.
2.9 Use of Compounds. Research Compounds and Derived Compounds will be
incorporated by Merck into Merck's chemical compound collection. It is
understood that Merck may utilize Research Compounds and Derived
Compounds for any purpose, including the provision of samples of such
Compounds to third parties, subject to the license granted to Isis in
the Isis Field. It is further understood that, subject to the
limitations of paragraph 3.5 hereof, Merck may develop such Research
Compounds and Derived Compounds for any purpose subject to any royalty
obligations set forth in Article 5. Isis Compounds may be screened by
Merck only for activity relative to Hepatitis C polymerase and other
anti-viral activity and will be returned to Isis at the end of the
Research Program, unless Merck is developing such Isis Compound(s) for
any anti-viral indication. It is understood that should Merck thereafter
abandon development of such Isis Compound(s), Merck will return such
Isis Compound(s) to Isis at that time.
2.10 Exclusive Efforts. During the Research Program Term and any Extended
Research Program Term, Isis shall work exclusively with Merck in
the Research Field. Upon completion of the Research Program Term or any
Extended Research Program Term(s), Isis agrees to refrain from
conducting any activities in the Research Field for a period equal to
the lesser of ( * )
To the extent that, at the end of the period set forth in the prior
sentence, Merck has an HCV Product in development, pending regulatory
approval or on the market, Isis shall continue to refrain from
conducting any activities in the Research Field during the pendency of
any such activities for a period not to exceed ( * ) additional years.
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ARTICLE III
LICENSE; DEVELOPMENT AND COMMERCIALIZATION
3.1 License Grant
(a) Isis hereby grants to Merck an exclusive, sublicensable license in
the Territory, subject to the rights retained by Isis in Article 3.2,
under Isis Research Know-How and Isis Research Patent Assets, to utilize
Isis Research Know-How for any and all purposes and to practice all
inventions claimed in Isis Research Patent Assets, including but not
limited to the right to make, have made, use, import and/or sell
Compounds ( * ) and Licensed Products.
(b) Isis hereby grants to Merck an exclusive, sublicensable
license in the Territory, subject to the rights retained by Isis in
Article 3.2, under Isis Know-How, to make, have made, use, import and/or
sell Compounds (except for a Derived Compound which is an
Oligonucleotide) and Licensed Products.
(c) At the time of the approval of an RMC Development Candidate
which is a Research Compound, Isis agrees to grant to Merck an
exclusive, sublicensable, license in the Territory, subject to the
rights retained by Isis in Article 3.2, under those Isis Patent Assets
which are necessary or useful to make, have made, use, import and/or
sell such Research Compound and Licensed Products which contain such
Research Compound.
(d) At the time of approval of an RMC Development Candidate
which is a Derived Compound ( * ) Isis agrees to grant to Merck a
non-exclusive, sublicensable license in the Territory, subject to rights
retained by Isis in Article 3.2, under those Isis Patent Assets
necessary or useful to make, have made, use and/or sell such-Derived
Compounds.
3.2 Isis Retained Rights. Except as specifically set forth herein, Merck is
not granted any other license by implication or otherwise and Isis
expressly reserves all rights not granted to Merck hereunder.
Notwithstanding the licenses granted in Article 3.1, Isis shall retain
the right to use Isis Research Know-How and to practice under Isis
Research Patent Assets for the purpose of performing its obligations
under the Research Program and in the Isis Field. The rights retained by
Isis in the Isis Field under this Article 3.2 shall be exclusive, but
for a research license granted to Merck and its Affiliates to conduct
research in the Isis Field during the term of this Agreement.
3.3 Merck Retained Rights. Except as specifically set forth herein, Isis is
not granted any other license by implication or otherwise and Merck
expressly reserves all rights not granted to Isis hereunder.
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3.4 Merck Grant. Merck grants to Isis an exclusive, royalty-free,
sublicensable license in the Territory under those Merck Patent Assets
or Isis Research Patent Assets which are owned by Merck during the
Research Term or any Extended Research Term and Merck Know-How to
develop, make, have made, use and sell Research Compounds in the Isis
Field, subject to a research license retained by Merck and its
Affiliates in the Isis Field. In addition, Merck grants to Isis the
right to utilize Merck Know-How solely for the purpose of performing its
obligations under the Research Program. To the extent a Merck Patent
Asset which is filed within one (1) year of the Research Program (i)
claims or covers a composition of matter or a process and (ii) prevents
Isis from making, having made, using, importing and/or selling a
Research Compound in the Isis Field, Merck shall grant Isis an
exclusive, royalty-free, sublicensable license in the Territory under
such Merck Patent Assets to make, have made, use and/or sell Research
Compounds in the Isis Field.
3.5 Development and Commercialization. Merck shall use reasonable efforts,
consistent with the usual practice followed by Merck in pursuing the
commercialization and marketing of pharmaceutical products of similar
market potential, at its own expense, to develop and commercialize one
HCV Product and any Royalty Bearing Product for which Merck has been
granted a license under Paragraph 3.1(c) or (d) on a commercially
reasonable basis in such countries in the Territory where in Merck's
reasonable opinion it is commercially viable to do so. In the event
that, at any time during the term of the Agreement Merck, in good faith,
determines that the use of Compounds for Hepatitis C polymerase
inhibition is not scientifically or commercially viable, Merck will have
no further due diligence obligation for HCV Products under this
Agreement. In the event that Merck determines that the therapeutic
target of a Compound for which it has been granted a license under
Paragraph 3.1(c) or (d) is no longer scientifically or commercially
viable, the license under paragraph 3.1(c) or (d) for such Compound will
terminate. To the extent Merck thereafter requests Isis to regrant such
license under the terms and conditions of this Agreement, Isis will do
so unless precluded by a third party agreement.
3.6 ( * ) Merck may not utilize Isis Intellectual Property to develop
inhibitors of ( * ) nor may Merck utilize Research Compounds identified
and/or discovered solely by Isis or jointly by Merck and Isis to
identify inhibitors of ( * ) during the time that Isis is precluded from
doing so by the terms of its Collaborative Agreement with ( * )
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ARTICLE IV
CONFIDENTIALITY AND PUBLICATION
4.1 Non-Disclosure and Non-Use Obligations. All Proprietary Information
disclosed by one Party to the other Party hereunder shall be maintained
in confidence and shall not be disclosed to any non-party or used for
any purpose except as expressly permitted herein without the prior
written consent of the disclosing Party. The foregoing non-disclosure
and non-use obligations shall not apply to the extent that such
Proprietary Information:
(a) is known by the receiving Party at the time of its receipt, and
not through a prior disclosure by the disclosing Party, as
documented by business records;
(b) is properly in the public domain;
(c) is subsequently disclosed to a receiving Party by a third party
who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party; or
(d) is developed by the receiving Party independently of Proprietary
Information received from the other Party, as documented by
written records.
4.2 Permitted Disclosure of Proprietary Information. Notwithstanding Section
4.1, a Party receiving Proprietary Information of the other Party may
disclose such Proprietary Information:
(a) to governmental or other regulatory agencies in order to obtain
patents subject to this Agreement, or to gain approval to
conduct clinical trials or to market Licensed Product pursuant
to this Agreement, but such disclosure may be only to the extent
reasonably necessary to obtain such patents or authorizations;
(b) by Merck to its permitted sublicensees, agents, consultants,
Affiliates and/or other third parties for the research and
development, manufacturing and/or marketing of Compound(s)
and/or Licensed Product(s) (or for such parties to determine
their interest in performing such activities) in accordance with
this Agreement on the condition that such third parties agree to
be bound by the confidentiality obligations contained in this
Agreement; or
(c) if required to be disclosed by law or court order, provided that
notice is promptly delivered to the non-disclosing Party in
order to provide an opportunity to challenge or limit the
disclosure obligations.
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4.3 Dual Information. It is understood that Isis Research Know-How will be
deemed to be Proprietary Information of both Merck and Isis.
4.4 Publication and Public Disclosures. Merck and Isis each acknowledge the
other Party's interest in publishing its research results. Each Party
also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information.
Consequently, either Party wishing to make a publication or to make an
oral disclosure regarding any activity of the Research Program shall
deliver to the other Party a copy of the proposed written publication or
an outline of an oral disclosure at least sixty (60) days prior to
submission for publication or presentation. The reviewing Party shall
have the right (a) to propose modifications to the publication or oral
disclosure for patent reasons, trade secret reasons or business reasons
or (b) to request a reasonable delay in publication or oral disclosure
in order to protect patentable information. If the reviewing Party
requests a delay, the publishing or disclosing 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 VII below. Upon expiration of
such sixty (60) days, the publishing Party shall be free to proceed with
the publication or oral disclosure. If the reviewing Party requests
modifications to the publication or oral disclosure, the publishing
Party shall edit such publication to prevent disclosure of trade secret
or proprietary business information prior to submission of the
publication or prior to oral disclosure.
ARTICLE V
PAYMENTS; ROYALTIES AND REPORTS
5.1 Commitment Fee and Option Payment. In consideration for Isis's
commitment to perform its obligations under the Research Program and for
access to the Isis Intellectual Property granted hereunder, Merck shall
pay to Isis a non-refundable commitment fee of ( * ) within thirty (30)
days after the Effective Date.
5.2 Research Program Funding. In consideration for Isis's performance of its
obligations under the Research Program and subject to the terms and
conditions contained herein, Merck shall pay Isis:
(a) During the First Three Years of the Research Program Term: an amount
equal to ( * ) per year payable in four quarterly installments of ( * )
for a minimum of ( * ) FTE's for each year. The first such annual
installment shall be due no later than June 30, 1998. The remaining
installments shall be due at the end of each succeeding calendar
quarter.
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(b) For any Additional Year(s) of the Research Program Term: If the
Research Program Term is extended for one (1) or more subsequent periods
in accordance with Section 2.8 above, payments for such additional year
or years shall be negotiated annually, based upon an adjusted FTE rate
calculated as follows multiplied by the agreed upon number of FTE's. The
FTE rate shall be determined for the first extension by applying the
percentage change in the Consumer Price Index for urban wage earners and
clerical workers - U.S. City Average, from December 1, 1999 to May 30,
2001 to the FTE rate in effect during the Research Program of ( * ). For
any additional extension, the percentage change in the Index for the
twelve (12) months preceding the extension shall be applied to the
current FTE rate in effect.
5.3 Milestone Payments.
5.3.1 Subject to the terms and conditions contained in this Agreement,
Merck shall pay to Isis the following non-refundable milestone payments
as set forth in this Article V:
(a) ( * ) upon approval by Merck's Research Management Committee (or
its successors) in its sole discretion, of a Compound as ( * )
(b) ( * )
(c) ( * )
(d) ( * )
and
(e) ( * )
5.3.2 ( * )
5.3.3 ( * )
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5.3.4 ( * )
5.3.5 ( * )
5.3.6 In the event Milestones are paid pursuant to Sections
5.3.1-5.3.5 for a Royalty Bearing Product and the Royalty
Bearing Product is thereafter developed for an indication which
would have incurred greater Milestones if the product had
initially been developed for the additional indication, the
greater Milestone payments will apply and the Royalty Bearing
Product will be considered to have been developed for the
additional indication initially for purposes of the Milestones.
5.3.7 In addition to the milestones set forth above, Merck shall pay
Isis (*) in consideration of Isis's efforts in identifying
Research Compounds for the prevention and/or treatment of
infections caused by Hepatitis C virus, in the event Merck
elects to continue efforts to pursue an HCV Product at the
conclusion of the Research Program Term or within (3) months
thereafter.
5.3.8 Merck shall notify Isis in writing within thirty (30) days after
the achievement of each milestone, and such notice shall be
accompanied by payment of the appropriate milestone payment.
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5.3.9 ( * )
5.4 Royalties.
5.4.1 Royalties Payable By Merck. Subject to the terms and conditions
of this Agreement, for each Royalty Bearing Product, Merck shall
pay to Isis royalties on a country-by-country basis as follows:
(a) if the sale of an HCV Human Product would, but for the
licenses granted under this Agreement, infringe a Valid Patent
Claim of an Isis Patent Asset, an Isis Research Patent Asset or a
Merck Patent Asset covering the sale of such product in the
country of sale, Merck shall pay a royalty of ( * ) of Net Sales
(i) in the case of an Isis Patent Asset or an Isis Research
Patent Asset, until the last to expire of such patent(s) or (ii)
in the case of a Merck Patent Asset, ( * )
(b) for sales of HCV Human Product(s) other than those covered in
Subsection 5.4.1(a) above, Merck shall pay a royalty of ( * ) of
Net Sales for a period of ( * ) from First Commercial Sale in
each country;
(c) if the sale of an Anti-Viral Human Product would, but for the
licenses granted pursuant to this Agreement, infringe a Valid
Patent Claim of an Isis Patent Asset, an Isis Research Patent
Asset or a Merck Patent Asset in the country of sale, Merck shall
pay a royalty of ( * ) of Net Sales (i) in the case of an Isis
Patent Asset or an Isis Research Patent Asset, until the last to
expire of such patent(s) or (ii) in the case of a Merck Patent
Asset, ( * )
(d) for sales of Anti-Viral Human Products, other than those
covered in subsections 5.4.1(c) above, Merck shall pay a royalty
of ( * ) of Net Sales for a period of ( * ) from First Commercial
Sale in each country;
(e) if the sale of a Collection Human Product would, but for the
license granted under this Agreement, infringe a Valid Patent
Claim of an Isis Patent Asset or an Isis Research Patent Asset
covering the sale of such product in the country of sale, Merck
shall pay a royalty of ( * ) of Net Sales until the last to
expire of such patent(s);
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(f) for sales of Collection Human Products other than those
covered in subsection 5.4.1(e) above, Merck shall pay a royalty
of ( * ) of Net Sales for a period of ( * ) from First Commercial
Sale in each country;
(g) for Anti-Viral Animal Products and Collection Animal
Products, Merck shall pay ( * ) of the royalties set forth in
this Section 5.4.1 for, respectively, the corresponding
Anti-Viral Human Products and Collection Human Products;
(h) in the event a Royalty Bearing Product is initially marketed
as an ( * ) and is thereafter marketed as an ( * ) the royalties
set forth in Section 5.4.1(a) and (b), as the case may be, will
apply instead of the royalties set forth in Sections 5.4.1 (c)
and (d), as the case may be, in each country where an HCV
indication is approved commencing with the approval of the HCV
indication in each such country.
Royalties on each Royalty Bearing Product at the rate set forth above shall be
effective as of the date of First Commercial Sale of a Royalty Bearing Product
in a country and shall continue during the term(s) set forth above subject to
the following:
(x) that only one royalty shall be due with respect to the same
unit of Royalty Bearing Product;
(y) that no royalties shall be due upon the sale or other
transfer among Merck, its Affiliates or sublicensees, but in such
cases the royalty shall be due and calculated upon Merck's or its
Affiliate's or its sublicensee's Net Sales to the
first-independent third party; and
(z) no royalties shall accrue on the disposition of Royalty
Bearing Products in reasonable quantities by Merck, its
Affiliates or sublicenses as sample(s) (promotion or otherwise)
or as donations (for example, to non-profit institutions or
government agencies).
5.4.2 No Other Royalties. It is understood that no royalties
shall be due and owing to Isis by Merck on sales of Licensed
Products which are not Royalty Bearing Products.
5.4.3 Managed Pharmaceutical Contract. Merck may sell Royalty
Bearing Products to an independent third party (such as a
retailer or wholesaler) and may subsequently perform services
relating to Royalty Bearing Products 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 invoice price to an independent
retailer or wholesaler, as set
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forth in the definition of Net Sales in Article I hereof,
notwithstanding that Merck may receive compensation arising from
the performance of such services.
5.4.4 Change in Sales Practices. The parties acknowledge that during
the term of this Agreement, Merck's sales practices for the
marketing and distribution of Royalty Bearing Products may change
to the extent to which the calculation of the payment for
royalties on Net Sales may become impractical or even impossible.
In such event the parties agree to meet and discuss in good faith
new ways of compensating Isis to the extent currently
contemplated under Section 5.4.1.
5.4.5 Royalties for Bulk Compound. In those cases where Merck sells
bulk Compound rather than a Royalty Bearing Product in packaged
form to an independent third party, the royalty obligations of
this Article V shall be applicable to the bulk Compound sold.
5.4.6 Compulsory Licenses. If a compulsory license is granted to a
third party with respect to a Royalty Bearing Product in any
country in the Territory with a royalty rate lower than the
royalty rate provided by Section 5.4.1., then the royalty rate to
be paid by Merck on Net Sales in that country under Section 5.4.1
shall be reduced to the rate paid by the compulsory Third Party
licensee.
5.4.7 Third Party Licenses. If one or more licenses from a third party
or parties are required by Merck, its Affiliates and/or
sublicensees in order to develop, make, have made, use, sell or
import Royalty Bearing Products, ( * ) of any royalties actually
paid under such third party licenses by Merck for sale of such
Royalty Bearing Product shall be creditable against the royalty
payments to be paid to Isis by Merck with respect to the sale of
such Royalty Bearing Products in such country, provided, however,
that the royalties set forth in Article 5.4.1 shall not be
reduced to less than ( * ) of the amounts set forth therein.
Unused credits may be carried over into subsequent royalty
periods.
5.5 Reports; Payment of Royalty. Following the First Commercial Sale of a
Royalty Bearing Product and during the term of the Agreement, Merck
shall furnish to Isis a quarterly written report for the Calendar
Quarter showing all Net Sales of Royalty Bearing Products subject to
royalty payments sold by Merck, its Affiliates and its sublicensees in
the Territory during the reporting period and the royalties payable
under this Agreement. Reports shall be due on the thirtieth (30th) 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. Merck shall keep complete and accurate records in
sufficient detail to enable the royalties payable hereunder to be
determined.
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5.6 Pass Through Royalties. In the event the licenses granted by Isis under
Article 3 would include rights licensed to Isis by a third party, Isis
shall inform Merck prior to providing such rights to Merck, and shall
advise Merck of any payments that would be due to the third party. In
the event that Merck is agreeable to making such payments, Isis will
include the third party rights in the license grant to Merck. The
parties will discuss in good faith a reasonable apportionment to Merck
of fees which are not measured by Net Sales of Compounds or Licensed
Products.
5.7 Audits.
(a) Upon the written request of Isis and not more than once in each
Calendar Year, Merck shall permit an independent certified public
accounting firm of nationally recognized standing selected by Isis
and reasonably acceptable to Merck, to have access during normal
business hours to such of the records of Merck as may be reasonably
necessary to verify the accuracy of the royalty reports hereunder
for any year ending not more than twenty-four (24) months prior to
the date of such request. The accounting firm shall disclose to
Isis only whether the royalty reports are correct or incorrect and
the specific details concerning any discrepancies. Upon the
expiration of twenty-four (24) months following the end of any
year, the calculation of royalties payable with respect to such
year shall be binding and conclusive upon Isis, and Merck and its
sublicensees shall be released from any liability or accountability
with respect to royalties for such year.
(b) If such accounting firm correctly concludes that additional
royalties were owed during such period, Merck shall pay the
additional royalties within thirty (30) days of the date Isis
delivers to Merck such accounting firm's written report so
correctly concluding. The fees charged by such accounting firm
shall be paid by Isis unless the additional royalties owed by Merck
exceed ( * ) of the royalties paid for the royalty period subject
to the audit, in which case Merck shall pay the reasonable fees of
the accounting firm.
(c) Merck shall include in each sublicense granted by it pursuant to
this Agreement a provision requiring the sublicensee to make
reports to Merck, to keep and maintain records of sales made
pursuant to such sublicense and to grant access to such records by
Isis's independent accountant to the same extent required of Merck
under this Agreement.
(d) Isis shall treat all financial information subject to review under
this Section 5.7 or under any sublicense agreement in accordance
with the confidentiality provisions of this Agreement, and shall
cause its accounting firm to enter into an acceptable
confidentiality agreement with Merck obligating it to retain all
such financial information in confidence pursuant to such
confidentiality agreement.
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5.8 Payment Exchange Rate. All payments to Isis under this Agreement shall
be made in United States dollars by bank wire transfer in immediately
available funds to such bank account in the United States designated in
writing by Isis from time to time. In the case of sales outside the
United States, the rate of exchange to be used in computing the amount
of currency equivalent in United States dollars due Isis 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 Calendar
Quarter to which such payments relate.
5.9 Income Tax Withholding. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set
forth in this Article V, Merck shall make such withholding payments as
required and subtract such withholding payments from the payments set
forth in this Article V. Merck shall submit appropriate proof of payment
of the withholding taxes to Isis within a reasonable period of time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Isis Representations and Warranties. Isis represents and warrants to
Merck that as of the date of this Agreement:
(a) it has the full right, power and authority to enter into this
Agreement, to perform the Research Program and to grant the
licenses granted under Article III hereof,
(b) to the best of its knowledge, Isis has not previously assigned,
transferred, conveyed or otherwise encumbered its right, title
and interest in the Isis Intellectual Property so as to interfere
with Isis' ability to perform the Research Program activities or
grant the licenses contemplated hereunder;
(c) Isis has not taken nor will not take any action which would, in
Isis's good faith judgment, interfere with any obligations of
Isis set forth in this Agreement, including but not limited to
the obligation to grant Merck the licenses described in
Paragraphs 3.1(c) and (d).
6.2 Merck Representations and Warranties. Merck represents and warrants to
Isis that as of the date of this Agreement it has the full right, power
and authority to enter into this Agreement and to perform the Research
Program.
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ARTICLE VII
PATENT MATTERS
7.1 Filing, Prosecution and Maintenance of Patents. Merck shall have the
first right to file, prosecute and maintain the Isis Research Patent
Assets upon appropriate consultation with Isis and Isis shall cooperate
fully in the filing and prosecution of such patents. In the event that
Merck decides not to file, prosecute or maintain the Isis Research
Patent Assets, Isis may do so. In each case, the filing party shall
consult with the non-filing party with respect thereto, and shall supply
the non-filing party with a copy of the application as filed, together
with notice of its filing date and serial number. Each party shall keep
the other party advised of the status of the actual and prospective
patent filings. Isis shall promptly give notice to Merck of the grant,
lapse, revocation, surrender, invalidation or abandonment of any Isis
Research Patent Asset or Isis Patent Asset licensed or sub-licensed to
Merck by Isis for which Isis is responsible and Merck shall give such
notice to Isis for Isis Research Patent Assets for which Merck is
responsible. The Party that is the filing party under this Section shall
be responsible for the payment of all costs and expenses related to such
filing.
7.2 Right of Other Parties to Prosecute and Maintain Patents. Any Party
having the first right to file, prosecute and maintain the patent
applications and patents referred to in Section 7.1 shall give notice to
the other Party of any desire to cease prosecution and/or maintenance of
such patent and, in such case, shall permit the other Party, at the
other Party's sole discretion, to continue prosecution or maintenance at
its own expense.
7.3 Interference, Opposition, Reexamination and Reissue.
(a) Each Party, within ten (10) days of learning of such an event,
shall inform the other of any request for, or filing or
declaration of, any interference, opposition or reexamination
relating to Isis Research Patent Assets. Merck and Isis
thereafter shall consult and cooperate fully to determine an
appropriate course of action with respect to any such proceeding
and shall agree upon the Parties' rights of review and approval
of submissions relating to such proceeding, provided, that Merck
shall have the first right to control any such proceeding.
(b) In connection with any interference, opposition, reissue, or
reexamination proceeding relating to Isis Research Patent
Assets, Merck and Isis will cooperate fully and will provide
each other with any information or assistance that either
reasonably may request. Merck shall keep Isis informed of
developments in any such action or proceeding, including, to the
extent permissible, the status of any settlement negotiations
and the terms of any offer related thereto.
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(c) Merck shall bear the expense of any interference, opposition,
reexamination, or reissue proceeding relating to Isis Research
Patent Assets, provided that Merck is prosecuting the
interference or opposition or that Merck has prosecuted the
application resulting in the re-examination or reissue.
7.4 Enforcement and Defense.
(a) Each Party shall promptly give the other party notice of any
infringement of Isis Research Patent Assets, or any
misappropriation or misuse of Isis Research Know-How, that comes
to such Party's attention. The Parties shall thereafter consult
and cooperate fully to determine a course of action, including,
without limitation, the commencement of legal action by one or
both of the Parties. Merck shall have the first right to
initiate and prosecute such legal action at its own expense and
in the name of Merck and if necessary, Isis, or to control the
defense of any declaratory judgment action relating to Isis
Research Patent Assets or Isis Research Know-How. Merck shall
promptly inform Isis if it elects not to exercise such first
right, and Isis thereafter shall have the right either to
initiate and prosecute such action or to control the defense of
such declaratory judgment action in the name of Isis.
(b) If Merck elects not to initiate and prosecute an infringement
action as provided in Subsection 7.4(a), and Isis elects to do
so, the cost of any agreed upon course of action, including the
costs of any legal action commenced or the defense of any
declaratory judgment, shall be borne solely by Isis.
(c) For any such legal action, in the event that any Party is unable
to initiate or prosecute such action solely in its own name, the
other Party will join such action voluntarily and will execute
and cause its Affiliates under its control to execute all
documents necessary for the Party to prosecute and maintain such
action. In connection with any such action, the Parties will
cooperate fully and will provide each other with any information
or assistance that either reasonably may request Each Party
shall keep the other informed of developments in any such action
or proceeding, including, to the extent permissible by law, the
status of any settlement negotiations and the terms of any offer
related thereto.
(d) Any recovery obtained by Merck or Isis shall be shared as
follows:
(i) the Party that initiated and prosecuted the action shall
recoup all of its costs and expenses incurred in
connection with the action, whether by settlement or
otherwise;
(ii) the other Party shall then, to the extent possible,
recover its costs and expenses incurred in connection
with the action;
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(iii) the remaining recovery shall be allocated between the
parties on a pro rata basis under which Isis shall
receive a proportion based on the royalties it lost and
Merck shall receive a proportion based on its lost
profits.
(e) Isis shall inform Merck of any certification regarding any Isis
Research Patent Assets it has received pursuant to either 21
U.S.C. Sections 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under
Canada's Patented Medicines (Notice of Compliance) Regulations
Article 5 and shall provide Merck with a copy of such
certification within five (5) business days of receipt. Isis's
and Merck's rights with respect to the initiation and prosecution
of any legal action as a result of such certification or any
recovery obtained as a result of such legal action shall be
allocated as defined in Subsections 7.4(a) through (d).
7.5 Patent Term Restoration. The Parties shall cooperate in obtaining patent
term restoration or supplemental protection certificates or their
equivalents in any country in the Territory where applicable. If
elections with respect to obtaining such patent term restoration are to
be made, Merck shall have the right to make the election and Isis shall
abide by such election.
ARTICLE VIII
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, the term of-this Agreement shall continue in effect until
expiration of all royalty obligations hereunder. Upon expiration of this
Agreement due to expiration of all royalty obligations hereunder,
Merck's licenses pursuant to Section 3.1 shall become fully paid-up,
perpetual licenses.
8.2 Termination by Notice. Notwithstanding anything contained herein to the
contrary, after expiration or termination of the initial Research
Program Term or any Extended Research Program Term, Merck shall have the
right to terminate this Agreement at any time by giving ninety (90) days
advance written notice to Isis. In the event of such termination, (i)
the rights and obligations hereunder, including any payment obligations
not due and owing as of the termination date shall terminate and (ii)
Merck shall have no further rights with respect to Isis Intellectual
Property, other than the right to utilize Research Compounds and Derived
Compounds in its chemical collection for any purpose, subject to the
payment by Merck of milestones and royalties set forth in Article 5,
including royalties on HCV Products and Anti-Viral Products.
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8.3 Termination.
8.3.1 Termination for Cause. Any Party may terminate this Agreement by
notice to the other Party at any time during the term of this
Agreement:
(a) 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; or
(b) 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 proceeding such right to terminate shall only
become effective if the Party consents to the
involuntary bankruptcy or such proceeding is not
dismissed within ninety (90) days after the filing
thereof.
8.3.2 Effect of Termination for Cause on License.
(a) In the event that Merck terminates this Agreement under
Section 8.3.1(a), Merck's licenses pursuant to this
Agreement shall become perpetual licenses, and Isis
shall, within one month from such termination, return or
cause to be returned to Merck all substances or
compositions delivered or provided by Merck hereunder,
as well as any other materials provided by Merck. It is
understood that in the event Merck contends it suffers
damages as a result of the breach, Merck may place a
portion of the payments to be made by Merck pursuant to
Article 5 that would reasonably cover Merck's alleged
damages, into an interest-bearing escrow account pending
resolution of any dispute between the parties relating
to the material breach or termination of the agreement,
including a dispute over damages, pursuant to paragraph
9.6.
(b) In the event that Isis terminates this Agreement under
Section 8.3.1(a), Merck's exclusive licenses set forth
under Article 3 will terminate and become non-exclusive.
Merck shall pay to Isis fifty percent (50%) of the
royalty payments set forth in Article 5. No milestone
payments will be due from Merck.
(c) In the event Merck terminates this Agreement under
Section 8.3.1(b) or this Agreement is otherwise
terminated under 8.3.1(b), all rights and licenses
granted pursuant to this Agreement are, and shall
otherwise be deemed to be, for purposes of Section
365(n) of the Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section
101(35A) of the Bankruptcy Code. The Parties
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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 Bankruptcy Code. The
Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against Isis
under the Bankruptcy Code, Merck shall be entitled to a
complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all
embodiments of such intellectual property upon written
request therefore by Merck. 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
Isis elects to continue to perform its respective
obligations under this Agreement or (ii) if not delivered
under (i) above, upon the rejection of this Agreement by
or on behalf of Isis, as the case may be, upon written
request therefor by Merck.
8.4 Effect of Expiration or Termination. Expiration or termination of this
Agreement shall not relieve the parties of any obligation accruing prior
to such expiration or termination, and Merck shall be obligated to pay
and shall pay to Isis, within thirty (30) calendar days of such
expiration or termination, all payments and royalties due or accrued
pursuant to the terms of Article V herein. The provisions of Article IV
shall survive the expiration or termination of this Agreement and shall
continue in effect for ( * ) years from the date of expiration or
termination. Any expiration or early termination of this Agreement shall
be without prejudice to the rights of any Party against the others
accrued or accruing under this Agreement prior to termination, including
the obligation to pay royalties for Royalty Bearing Product(s) sold
prior to such termination.
ARTICLE IX
PUBLICITY
9.1 Public Disclosure. Neither party may make a public announcement or other
disclosure of the terms of this Agreement or its existence, except as
may be required by law or if the text of such announcement is agreed to
in writing by the parties.
ARTICLE X
MISCELLANEOUS
10.1 Force Majeure. No Party shall be held liable or responsible to the other
Party nor be deemed to have defaulted under or breached the Agreement
for failure or delay
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in fulfilling or performing any term of the Agreement (except payment
obligations) when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected Party including,
but not limited to, fire, flood, embargo, war, acts of war (whether war
be declared or not), insurrection, riot, civil commotion, strike,
lockout or other labor disturbance, act of God or act, omission or delay
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.
10.2 Assignment. The Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred, by a Party without the
consent of the other Party; provided, however, that any Party may,
without such consent, assign the Agreement and its rights and
obligations hereunder to an Affiliate or in connection with the transfer
or sale of all or substantially all of its assets related to a Licensed
Product or its business, or in the event of its merger or consolidation
or change in control or similar transaction. Any permitted assignee
shall assume all obligations of its assignor under this Agreement.
10.3 Severability. In the event that any of the provisions contained in this
Agreement are 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 affect the
substantive rights of the parties. The Parties shall 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.
10.4 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by telecopier (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 Isis, to: Isis Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Chief Executive Officer
Telecopier No.: 000-000-0000
with a copy to: Attention: General Counsel
Telecopier No.: 000-000-0000
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if to Merck, to: Merck & Co., Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Office of Secretary
Telecopier No.: 000-000-0000
with a copy to: Attention: Office of Assistant General
Counsel Telecopier No.: 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 communication shall be deemed to have been given when delivered if
personally delivered or sent by telecopier on a business day, on the
business day after dispatch if sent by nationally-recognized overnight
courier and on the third business day following the date of mailing if
sent by mail.
10.5 Applicable Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the United States
without reference to any rules of conflict of laws or renvoi.
10.6 Dispute Resolution. The Parties agree to attempt initially to solve all
claims, disputes, or controversies arising under, out of, or in
connection with this Agreement by conducting good faith negotiations. If
the Parties are unable to settle the matter between themselves, the
matter shall thereafter be resolved by a final and binding arbitration.
Whenever a Party shall decide to institute arbitration proceedings, it
shall give written notice to that effect to the other Party. The Party
giving such notice shall refrain from instituting the arbitration
proceedings for a period of sixty (60) days following such notice.
During such period, the Parties shall make good faith efforts to
amicably resolve the dispute without arbitration. Any arbitration
hereunder shall be conducted under the rules of the American Arbitration
Association. Each such arbitration shall be conducted by a panel of
three arbitrators: one arbitrator shall be appointed by each of Merck
and Isis and the third shall be appointed by the American Arbitration
Association. Any such arbitration shall be held in Dallas, Texas. The
arbitrators shall have the authority to grant specific performance.
Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be.
In no event shall a demand for arbitration be made after the date when
institution of a legal or equitable proceeding based on such claim,
dispute or other matter in question would be barred by the applicable
statute of limitations.
10.7 Entire Agreement. This Agreement contains the entire understanding of
the Parties with respect to the subject matter hereof. All express or
implied agreements and understandings, either oral or written,
heretofore made are expressly merged in and made a part of this
Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by the Parties hereto.
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10.8 Headings. The captions to the several Articles and Sections hereof are
not a part of the Agreement, but are merely guides or labels to assist
in locating and reading the several Articles and Sections hereof.
10.9 Independent Contractors. It is expressly agreed that the Parties shall
be independent contractors and that the relationship between the
Parties shall not constitute a partnership, joint venture or agency. No
Party shall have the authority to make any statements, representations
or commitments of any kind, or to take any action, which shall be
binding on the other Parties, without the prior consent of such other
Parties.
10.10 Waiver. The waiver by a Party hereto of any right hereunder or the
failure to perform or of a breach by another Party shall not be deemed
a waiver of any other right hereunder or of any other breach or failure
by said other Party whether of a similar nature or otherwise.
10.11 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.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
MERCK & CO., INC. ISIS PHARMACEUTICALS, INC.
BY: /s/ Xxxxxxx X. Xxxxxxxxx BY: /s/ B. Xxxxx Xxxxxxxx
-------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxxxx Name: B. Xxxxx Xxxxxxxx
Title: Chief Executive Officer Title: Executive Vice President
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Research Program
Discovery of Inhibitors of HCV Polymerase
Isis' Activities
Isis will prepare ( * ) screening by Merck. SAR studies ( * ) will be performed
on selected compounds. Particular attention will be paid to accelerated
synthesis and purification processes. The following compounds will be
synthesized:
1. a. A series of ( * )
b. A series of ( * )
C. A series of ( * )
d. A series of ( * )
2. ( * )
3. ( * )
4. ( * )
5. ( * )
Merck's Activities
A. Merck chemists at ( * ) will provide support to the modular syntheses at
Isis by supplying (as agreed by Isis and Merck) pre-weighed samples, with
structures, of various starting materials from the Merck proprietary
Sample Collection.
B. All biochemical and biological studies of ( * ) and its inhibition by
( * ) prepared by Isis, which will be directed to the
identification and optimization of lead compounds, will be performed at
( * ) in the Department of Antiviral Research.
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Research Program - Page 2
Biochemical analyses will include:
1. Purification of the ( * ) and any related accessory proteins deemed necessary
during the course of this collaboration for the catalysis of ( * )
2. Characterization of the ( * ) activity to allow facile design of necessary
assay protocols for analyses of inhibition;
3. Any kinetic studies when of interest and if necessary. For example,
investigations of ( * )
Mechanistic studies will include:
1. Determinations of percentage (%) inhibition of ( * ) with use of selected
( * )
2. Determinations of ( * ) for selected ( * ), as determined
jointly by ( * ) and ISIS, with use of ( * )
3. Determination of mode of inhibition for selected ( * )
4. Counter-screening hits against ( * )
Biological studies will include:
1. Determination of antiviral activity using both a ( * ) (These assays are
currently in place and can be scaled up to evaluate large numbers of
compounds as necessary.)
2. Characterization of biological activity on ( * )
3. Optimization and characterization of the ( * )
4. Mechanistic analysis of biological activity including ( * )
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Research Program Page 3
Other biological, biochemical and/or enzymatic analyses for the optimization of
lead ( * ) will also be performed as necessary.
*CONFIDENTIAL TREATMENT REQUESTED
