Exhibit 10.1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXCLUSIVE LICENSE AND
RESEARCH COLLABORATION AGREEMENT
BY AND BETWEEN
MERCK & CO., INC.
AND
IDERA PHARMACEUTICALS, INC.
TABLE OF CONTENTS
1. DEFINITIONS............................................................. 1
2. RESEARCH PROGRAM........................................................ 11
2.1 General........................................................ 11
2.2 Conduct of Research............................................ 11
2.3 Use of Research Funding; FTE Commitments....................... 11
2.4 Principal Scientists........................................... 12
2.5 Joint Research Committee....................................... 12
2.6 Exchange of Information........................................ 13
2.7 Records and Reports............................................ 13
2.8 Disclosure, Evaluation and Selection of Collaboration
Compounds................................................... 14
2.9 Ownership of Materials, Information and Inventions............. 15
2.10 Research Program Term.......................................... 16
2.11 Merck Materials................................................ 16
2.12 Exclusive Efforts.............................................. 16
2.13 Use of Human Materials......................................... 16
3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION............................. 17
3.1 License Grants to Merck........................................ 17
3.2 License Grants to Idera........................................ 18
3.3 No Implied Licenses............................................ 18
3.4 Development and Commercialization.............................. 18
3.5 Excused Performance............................................ 18
3.6 Exclusive Negotiation Period................................... 19
3.7 Adverse Experience Reporting................................... 19
4. CONFIDENTIALITY AND PUBLICATION...................................... 20
4.1 Nondisclosure Obligation....................................... 20
4.2 Idera Know-How................................................. 21
4.3 Publication.................................................... 21
4.4 Publicity/Use of Names......................................... 22
5. PAYMENTS; ROYALTIES AND REPORTS......................................... 22
5.1 License Fee.................................................... 22
5.2 Research Program FTE Funding; Additional Supply................ 22
5.3 Milestone Payments............................................. 23
5.4 Royalties...................................................... 25
5.5 Reports; Payment of Royalty.................................... 28
5.6 Audits......................................................... 28
5.7 Payment Exchange Rate.......................................... 29
5.8 Income Tax Withholding......................................... 29
6. REPRESENTATIONS AND WARRANTIES; COVENANTS............................... 29
6.1 Representations and Warranties of Idera........................ 29
6.2 Representations and Warranties of Merck........................ 30
6.3 Covenants of Idera............................................. 30
7. PATENT PROVISIONS....................................................... 30
7.1 Filing, Prosecution and Maintenance of Patents................. 30
7.2 Option of Merck to Prosecute and Maintain Patents.............. 31
7.3 Interference, Opposition, Reexamination and Reissue............ 32
7.4 Enforcement and Defense........................................ 32
7.5 Cooperation; Patent Term Extension and Restoration............. 34
8. TERM AND TERMINATION.................................................... 34
8.1 Term and Expiration............................................ 34
8.2 Termination by Merck........................................... 34
8.3 Termination for Cause.......................................... 35
8.4 Effect of Expiration or Termination; Survival.................. 37
9. INDEMNIFICATION......................................................... 37
9.1 Indemnification by Merck....................................... 37
9.2 Indemnification by Idera....................................... 37
9.3 Claims for Indemnification..................................... 37
9.4 Limitation of Liability........................................ 38
10.MISCELLANEOUS........................................................... 38
ii
10.1 Force Majeure.................................................. 38
10.2 Assignment/ Change of Control.................................. 38
10.3 Severability................................................... 39
10.4 Notices........................................................ 40
10.5 Applicable Law................................................. 40
10.6 Dispute Resolution............................................. 40
10.7 Entire Agreement; Amendments................................... 41
10.8 Affiliates..................................................... 42
10.9 Headings....................................................... 42
10.10 Independent Contractors........................................ 42
10.11 Waiver......................................................... 42
10.12 Cumulative Remedies............................................ 42
10.13 Waiver of Rule of Construction................................. 42
10.14 Counterparts................................................... 42
SCHEDULES
SCHEDULE 1.18 EVALUATION CRITERIA.................................... i
SCHEDULE 1.25 IDERA BACKGROUND PATENT RIGHTS......................... ii
SCHEDULE 1.29 IDERA MATERIALS........................................ ix
SCHEDULE 1.50 MERCK MATERIALS........................................ x
SCHEDULE 1.73 SELECTION CRITERIA..................................... xi
SCHEDULE 2.1 RESEARCH PROGRAM....................................... xii
SCHEDULE 2.3.2 DEPLOYMENT OF FTEs..................................... xvi
SCHEDULE 2.12 IDERA OBLIGATIONS UNDER THE IMMUNE RESPONSE CORPORATION
AGREEMENT........................................... xvii
SCHEDULE 4.4 FORM OF PRESS RELEASE.................................. xviii
SCHEDULE 5.4.4 ROYALTY REDUCTION...................................... xxii
SCHEDULE 6.1(d) SCHEDULE OF EXCEPTIONS................................. xxiii
iii
EXECUTION COPY
EXCLUSIVE LICENSE AND RESEARCH COLLABORATION AGREEMENT
THIS AGREEMENT (this "Agreement"), effective as of December 8, 2006 (the
"Effective Date"), by and between Merck & Co., Inc., a corporation organized and
existing under the laws of New Jersey ("Merck"), and Idera Pharmaceuticals,
Inc., a corporation organized and existing under the laws of Delaware ("Idera").
RECITALS:
WHEREAS, Idera has expertise and possesses Idera Technology (as hereinafter
defined) relating to certain Toll-like Receptor agonists;
WHEREAS, Merck has expertise and possesses Merck Technology (as hereinafter
defined) relating to the research, development, manufacturing and marketing of
Vaccines and other related biological products;
WHEREAS, Merck and Idera desire to enter into a research collaboration to
develop Collaboration Compounds (as hereinafter defined) for use in Merck's
Vaccines upon the terms and conditions set forth herein;
WHEREAS, Merck desires to obtain a license upon the terms and conditions
set forth herein and Idera desires to grant such a license; and
WHEREAS, Merck and Idera have entered into a Stock Purchase Agreement and
Registration Rights Agreement as of the Effective Date;
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 "ACT" shall mean, as applicable, the United States Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq., and/or the Public Health
Service Act, 42 U.S.C. Sections 262 et seq., as such may be amended from
time to time.
1.2 "ADJUVANT" shall mean a compound, complex or other agent that enhances the
immune response to an Antigen or Antigens and is intended to act as an
agonist to XXX 0, XXX 8, TLR 7/8 and/or TLR 9.
1.3 "AFFILIATE" shall mean, with respect to a Person, any corporation or
business entity of which more than fifty percent (50%) 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 such Person.
1
1.4 "ALZHEIMER'S DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of Alzheimer's disease.
1.5 "ANTIGEN" shall mean any ingredient that either alone or as part of a
Vaccine elicits a specific immune response to itself and/or to a pathogenic
micro-organism or a human self molecule, including, without limitation,
live attenuated or modified micro-organisms, whole killed micro-organisms,
proteins, polysaccharides, polysaccharide conjugates, peptides, recombinant
proteins, glycolipids and fragments thereof.
1.6 "CALENDAR QUARTER" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.
1.7 "CALENDAR YEAR" shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.8 "CHANGE OF CONTROL" shall mean with respect to a Party: (i) the sale of all
or substantially all of such Party's assets or business relating to this
Agreement; (ii) the closing of a merger, reorganization or consolidation
involving such Party in which the voting securities of such Party
outstanding immediately prior thereto cease to represent at least fifty
percent (50%) of the combined voting power of the surviving entity
immediately after such merger, reorganization or consolidation; or (iii) a
person or entity, or group of persons or entities, acting in concert to
acquire more than [**] percent ([**]%) of the voting equity securities or
management control of such Party.
1.9 "CLINICAL TRIAL" shall mean a Phase I Clinical Trial, Phase II Clinical
Trial or Phase III Clinical Trial, as applicable.
1.10 "COLLABORATION COMPOUNDS" shall mean (a) any IMO provided by Idera to Merck
under this Agreement, (b) any other IMO created, modified or developed by
the Parties pursuant to the Research Program and (c) any improvement or
enhancement to the IMOs described in (a) or (b).
1.11 "COMPETING PHARMA CHANGE OF CONTROL" means a Change of Control involving a
Person or group of Persons acting in concert (a) with annual worldwide
sales of human pharmaceutical, vaccine and/or biological products greater
than [**] Dollars ($[**]) or (b) having a market capitalization greater
than [**] U.S. Dollars ($[**]) or (c) having an active clinical development
or commercialization program for any prophylactic and/or therapeutic
Vaccine for the prevention and/or treatment of Alzheimer's Disease, any
type of cancer and/or any disease within the Infectious Disease Field.
1.12 "COMBINATION PRODUCT" shall mean, on a country by country basis, with
respect to a given Product, a Product that contains one or more Antigens in
addition to the Antigen(s) contained in the given Product at the time it
achieves First Commercial Sale in such country. For example, if a given
Product in a country, at the time it achieves First Commercial Sale
contains Antigens A and B, a Combination Product with respect to such given
Product in such country would be a Product that contains at least one other
Antigen, in addition to Antigens A and B, and achieves First Commercial
Sale in such country after the given Product has achieved First Commercial
Sale.
1.13 "COMPETING PRODUCT" shall mean, with respect to a Product in a country, a
Vaccine product that (a) contains a compound targeting the same TLR as the
Adjuvant contained in the Product and
2
has received Marketing Authorization for the same Indication in a Field for
which the Product has received Marketing Authorization in such country and
(b) has safety and efficacy equivalent or materially similar to the Product
and has or attains on a Calendar Year basis a market share of [**] percent
([**]%) or more in the country as measured by prescriptions or other
similar information.
1.14 "CONTROL," "CONTROLS" OR "CONTROLLED BY" shall mean with respect to any
item or right under Patent Rights, know-how or other intellectual property
right or technology, the possession of (whether by ownership or license,
other than pursuant to this Agreement), or the ability of a Party to grant
access to, or a license or sublicense of, such item 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.
1.15 "DATA PROTECTION" shall mean the exclusive right to reference data filed in
a Marketing Authorization with a Regulatory Authority in such country for
Selected Collaboration Compound or Product under a pharmaceutical law,
regulation or any other governmental decree or order of such country within
the Territory. For the purposes of clarity, such exclusive right to
reference data shall exclude any party other than Merck or its Related
Parties from referencing such data in such party's own regulatory filings
for authorization to register or sell a generic product in such country
filed with the Regulatory Authority.
1.16 "EMEA" shall mean the European Medicines Agency.
1.17 "EVALUATION COLLABORATION COMPOUND" shall have the meaning given such term
in Section 2.8.1.
1.18 "EVALUATION CRITERIA" shall mean the criteria set forth in Schedule 1.18
attached hereto.
1.19 "FIELDS" shall mean the Oncology Field, the Infectious Disease Field and
the Alzheimer's Disease Field, collectively.
1.20 "FILING" of an IND or NDA shall mean the acceptance by a Regulatory
Authority of an IND or NDA for filing, if such a legally-recognized concept
applies to filings in the applicable jurisdiction or, if such concept does
not apply, the filing of the IND or NDA.
1.21 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the first
sale for end use or consumption of such Product in a country, excluding,
however, any sale or other distribution for use in a Clinical Trial.
1.22 "FULL TIME EQUIVALENT" or "FTE" shall mean the equivalent of a full-time
scientist's work time over a twelve (12) month period (including normal
vacations, sick days and holidays), provided that a single person cannot
account for more than one FTE over the course of any Calendar Year. For
example, a single person cannot equal one FTE plus a portion of an
additional FTE resulting in more than one FTE (i.e. 1.5 FTE's) in a given
Calendar Year, regardless of the aggregate number of hours worked by such
person during that Calendar Year. The portion of an FTE year devoted by a
scientist to the Research Program shall be determined by dividing the
number of full 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.
3
1.23 "FTE RATE" shall mean the amount Merck will pay Idera over a consecutive
twelve (12) month period during the Research Program Term to support one
(1) Idera FTE dedicated to the Research Program. The FTE Rate shall be [**]
dollars (USD $[**]) per FTE. The FTE Rate shall include all personnel,
equipment, reagents and all other expenses including support staff and
overhead for or associated with an FTE.
1.24 "GLP" or "GOOD LABORATORY PRACTICE" shall mean the applicable then-current
standards for laboratory activities for pharmaceuticals or biologicals, as
set forth in the Act and any regulations or guidance documents promulgated
thereunder, as amended from time to time, together with any similar
standards of good laboratory practice as are required by any Regulatory
Authority in the country in which the laboratory activities are conducted.
1.25 "IDERA BACKGROUND PATENT RIGHTS" shall mean any and all Patent Rights
Controlled by Idera on the Effective Date that claim or cover (a) the
composition of matter or method of use of an Evaluation Collaboration
Compound or a Selected Collaboration Compound or (b) Idera Materials, and
any divisionals, continuations, continuations-in-part, reissues, renewals,
substitutions, registrations, re-examinations, revalidations, supplementary
protection certificates, pediatric exclusivity periods, any other patent
term extensions and exclusivity periods and the like of any such Patent
Rights, and any and all U.S. and foreign equivalents of the foregoing. As
of the Effective Date, the Idera Background Patent Rights include, without
limitation, the Patent Rights set forth on Schedule 1.25.
1.26 "IDERA FIELD" shall mean the use of Non-Selected Collaboration Compounds
for any and all purposes outside of the Fields.
1.27 "IDERA INFORMATION AND INVENTIONS" shall mean (a) all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that is developed or invented solely by
employees of Idera or its Affiliates or other Persons acting on their
behalf (other than Merck, its Affiliates or other Persons acting on their
behalf) and (b) Idera Oligonucleotide Inventions but shall exclude Merck
Materials Inventions.
1.28 "IDERA KNOW-HOW" shall mean all information and materials, including but
not limited to discoveries, improvements, processes, methods, protocols,
formulas, data, inventions (including, without limitation, Idera
Information and Inventions and Idera's rights in Joint Information and
Inventions), know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement (i) are in the Control of Idera, (ii) are
not generally known and (iii) are necessary or useful to Merck with respect
to an Evaluation Collaboration Compound or Selected Collaboration Compound
in the Fields, including without limitation, in connection with the
Research Program and the research, development, manufacture, marketing, use
or sale of Product in the Territory.
1.29 "IDERA MATERIALS" shall mean those IMOs to be provided by Idera as set
forth on Schedule 1.29, which may be amended from time to time.
1.30 "IDERA OLIGONUCLEOTIDE INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that are solely related to the modification of,
derivatives of, manufacture or use of immunomodulatory oligonucleotide
structures which do not include Merck Technology, regardless of whether the
4
invention is conceived and/or reduced to practice (a) solely by employees
of Idera or its Affiliates or other Persons acting on their behalf (other
than Merck, its Affiliates or a Third Party acting on their behalf); (b)
solely by employees of Merck or its Affiliates or other Persons acting on
their behalf (other than Idera, its Affiliates or a Third Party acting on
their behalf); or (c) jointly by employee(s) of Merck, its Affiliate or a
Third Party acting on behalf of Merck or its Affiliate within the scope of
the Research Program, on the one hand, and employee(s) of Idera, its
Affiliate or a Third Party acting on behalf of Idera or its Affiliate
within the scope of the Research Program, on the other hand.
1.31 "IDERA PATENT RIGHTS" shall mean any Idera Background Patent Rights and
Idera Program Patent Rights.
1.32 "IDERA PROGRAM PATENT RIGHTS" shall mean any and all Patent Rights other
than Idera Background Patent Rights, that (a) during the term of this
Agreement are Controlled by Idera and claim or cover (i) the composition of
matter or method of use of an Evaluation Collaboration Compound or a
Selected Collaboration Compound or (ii) Idera Materials, Idera Information
and Inventions or Joint Information and Inventions; or (b) claim or cover
Idera Oligonucleotide Inventions. For avoidance of doubt, Idera Program
Patent Rights shall not include any Patent Rights that claim or cover Merck
Materials, including, without limitation, any modifications, derivatives,
or methods of manufacture thereof.
1.33 "IDERA TECHNOLOGY" shall mean Idera Patent Rights, Idera Know-How, Idera
Materials and Idera Information and Inventions.
1.34 "IMO" shall mean any and all immune modulatory oligonucleotides, the
primary purpose of which is to induce or modulate an immune response and
that are targeted to and intended to act as agonists of XXX 0, XXX 0, XXX
7/8 or TLR 9, as the case may be.
1.35 "IND" shall mean 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.
1.36 "INDICATION" shall mean a separate and distinct disease or medical
condition in humans which a Product is intended to treat and/or prevent and
for which the Product has received Marketing Authorization.
1.37 "INFECTIOUS DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of any viral and/or
microbial infectious disease, provided that the following diseases shall be
excluded: (i) [**]; (ii) [**]; (iii) [**]; and (iv) [**].
1.38 "INFORMATION" shall mean any and all information and data, including
without limitation all Merck Know-How, Idera Know-How, 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.
1.39 "JOINT INFORMATION AND INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas,
5
data, composition of matter, article of manufacture, know-how and trade
secrets combining Merck Technology and Idera Technology, that is conceived
and/or reduced to practice as a result of the Research Program, whether or
not patentable, and is conceived and/or reduced to practice jointly by
employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
Merck or its Affiliate within the scope of the Research Program, on the one
hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
behalf of Idera or its Affiliate within the scope of the Research Program,
on the other hand. Idera Oligonucleotide Inventions and Merck Materials
Inventions shall be excluded from Joint Information and Inventions.
1.40 "JOINT PATENT RIGHTS" shall mean any and all Patent Rights which claim
Joint Information and Inventions. For avoidance of doubt, Joint Patent
Rights shall exclude Idera Patent Rights and Merck Patent Rights.
1.41 "JOINT PROGRAM TECHNOLOGY" shall mean Joint Patent Rights and Joint
Information and Inventions.
1.42 "JRC" shall mean the joint research committee established to facilitate the
Research Program, as more fully described in Section 2.5.1.
1.43 "KNOW-HOW ROYALTY" shall have the meaning given such term in Section 5.4.1
hereof.
1.44 "MAJOR EU MARKET" shall mean France, Germany, Italy, Spain or the United
Kingdom.
1.45 "MARKETING AUTHORIZATION" shall mean all approvals from the relevant
Regulatory Authority necessary to market and sell a Product in any country
(including without limitation, all applicable pricing and governmental
reimbursement approvals even if not legally required to sell Product in a
country).
1.46 "MAJOR INDICATION" shall mean an Indication for the treatment of the
following solid tumor cancers: non-small cell lung cancer, prostate cancer,
breast cancer and colo-rectal cancer.
1.47 "MERCK ADJUVANT" shall mean a compound, complex or other agent that
enhances the immune response to an Antigen or Antigens that is Controlled
by Merck or its Affiliates other than pursuant to this Agreement.
1.48 "MERCK INFORMATION AND INVENTIONS" shall mean (a) all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that is developed or invented solely by
employees of Merck or its Affiliates or other Persons acting on their
behalf (other than Idera, its Affiliates or other Persons acting on their
behalf) and (b) Merck Materials Inventions but shall exclude Idera
Oligonucleotide Inventions.
1.49 "MERCK KNOW-HOW" shall mean any information and materials, including but
not limited to discoveries, improvements, processes, methods, protocols,
formulas, data, inventions (including without limitation Merck's
Information and Inventions and Merck's rights in Joint Information and
Inventions), know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement, (i) are in the Control of Merck or its
Affiliates, (ii) are not generally known and (iii) are necessary to Idera
in the performance of its obligations under the Research Program.
1.50 "MERCK MATERIALS" shall mean [**] and other materials to be provided by
Merck as set forth on
6
Schedule 1.50, which may be amended from time to time.
1.51 "MERCK MATERIALS INVENTIONS" shall mean all information and inventions,
including, but not limited to, all discoveries, findings, improvements,
processes, methods, protocols, formulas, data, composition of matter,
article of manufacture, know-how and trade secrets, that is conceived
and/or reduced to practice as a result of the Research Program, whether or
not patentable, that are solely related to the modification of, derivatives
of, manufacture or use of Merck Materials and which do not include Idera
Technology, regardless of whether the inventions are conceived and/or
reduced to practice (a) solely by employees of Idera or its Affiliates or
other Persons acting on their behalf (other than Merck, its Affiliates or a
Third Party acting on their behalf); (b) solely by employees of Merck or
its Affiliates or other Persons acting on their behalf (other than Idera,
its Affiliates or a Third Party acting on their behalf); or (c) jointly by
employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
Merck or its Affiliate within the scope of the Research Program, on the one
hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
behalf of Idera or its Affiliate within the scope of the Research Program,
on the other hand, but shall exclude Idera Oligonucleotide Inventions.
1.52 "MERCK PATENT RIGHTS" shall mean (a) Patent Rights Controlled by Merck or
its Affiliates that are necessary to Idera in the performance of Idera's
obligations under the Research Program and (b) Patent Rights that claim or
cover Merck Materials Inventions.
1.53 "MERCK TECHNOLOGY" shall mean Merck Patent Rights, Merck Know-How, Merck
Materials and Merck Information and Inventions.
1.54 "NDA" shall mean a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Authorization Application,
filing pursuant to Section 510(k) of the United States Federal Food, Drug
and Cosmetics Act, or similar application or submission for Marketing
Authorization of a Product filed with a Regulatory Authority to obtain
marketing approval for a biological, pharmaceutical or diagnostic product
in that country or in that group of countries.
1.55 "NET SALES" shall mean the gross invoice price of Product sold by Merck or
its Related Parties to the first Third Party after deducting, if not
previously deducted, from the amount invoiced or received:
(A) trade and quantity discounts other than early payment cash discounts;
(B) returns, rebates, chargebacks and other allowances;
(C) retroactive price reductions that are actually allowed or granted; and
(D) a fixed amount equal to [**] percent ([**]%) of the amount invoiced to
cover bad debt, early payment cash discounts, transportation and
insurance, and custom duties.
For the avoidance of doubt, the gross invoice price of Product does not
include value added taxes and other similar taxes on Product.
With respect to sales of Combination Products, Net Sales shall be
calculated using the following formula:
7
[**] * Net Sales of = Net Sales for the purpose of calculating
Combination Product royalties for Combination Product
Where:
(I) "A" equals the invoice price of Product containing the same Antigen(s)
sold without containing one or more other Antigens;
(II) "B" equals the invoice price of the Combination Product; and
(III) all invoice prices of the Product and the Combination Product shall
be calculated as the average invoice price during the applicable
accounting period for which the Net Sales are being calculated. The
deductions set forth in paragraphs (a) through (d) above will be
applied in calculating Net Sales for a Combination Product. If,
however, the Product is sold only as a Combination Product, then the
Parties shall negotiate in good faith an appropriate calculation of
Net Sales that is subject to the royalty payment under this Agreement
so as to fairly allocate the relative value of the active ingredients
in the Combination Product.
With respect to a given Product (containing a given Selected Collaboration
Compound) to achieve First Commercial Sale in a country, such Product shall
not be deemed a Combination Product in such country, in which case the
above Combination Product Net Sales formula shall not apply to such given
Product, but only to subsequent Combination Products.
1.56 "NON-SELECTED COLLABORATION COMPOUND" shall have the meaning given such
term in Section 2.8.4.
1.57 "NOVARTIS AGREEMENTS" shall mean the Research Collaboration and Option
Agreement, dated May 31, 2005, by and between Idera (formerly known as
Hybridon, Inc.) and Novartis International Pharmaceutical Ltd. and the
License, Development and Commercialization Agreement, dated May 31, 2005,
by and between Idera (formerly known as Hybridon, Inc.) and Novartis
International Pharmaceutical Ltd., as such agreements may be amended from
time to time.
1.58 "ONCOLOGY FIELD" shall mean the use of Evaluation Collaboration Compound(s)
and Selected Collaboration Compound(s) as an Adjuvant contained in or
administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of any type of cancer. For
avoidance of doubt, Vaccines for the prevention and/or treatment of human
papilloma virus and other viruses that are considered precursors to cancer
are included in the Oncology Field.
1.59 "PARTY" shall mean Merck and Idera, individually, and "PARTIES" shall mean
Merck and Idera, collectively.
1.60 "PATENT RIGHTS" shall mean any and all issued 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 any divisionals, continuations,
continuations-in-part, reissues, renewals, substitutions, registrations,
re-examinations, revalidations, supplementary protection certificates,
pediatric exclusivity periods, any other patent term extensions and
exclusivity periods and the like of any such patents and patent
applications, and any and all U.S.
8
and foreign equivalents of the foregoing.
1.61 "PERSON" shall mean any individual, corporation, joint venture, limited
liability company, partnership, limited partnership, limited liability
partnership, trust or any other private, public or governmental entity.
1.62 "PHASE I CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(a) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trial
in such country.
1.63 "PHASE II CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(b) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trial
in such country.
1.64 "PHASE III CLINICAL TRIAL" shall mean a human clinical trial in the United
States that would satisfy the requirements of 21 CFR 312.21(c) or an
equivalent human clinical trial in any country outside the United States
that would satisfy the requirements applicable to such human clinical trail
in such country.
1.65 "PRODUCT(S)" shall mean any prophylactic or therapeutic Vaccine(s) that
contains Selected Collaboration Compound or is administered in conjunction
with Selected Collaboration Compound, for any and all uses in the Fields,
including without limitation any Combination Product, (i) in final form for
sale by prescription, over-the-counter or any other method, or (ii) for
administration in a Clinical Trial.
1.66 "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, dated as of the Effective Date, by and between Idera and Merck.
1.67 "REGULATORY AUTHORITY" shall mean any applicable government regulatory
authority involved in granting approvals for the manufacturing, marketing,
reimbursement and/or pricing of a 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.
1.68 "REGULATORY-BASED EXCLUSIVITY" shall mean, with respect to a Product in a
country in the Territory, that Merck and/or any of the Related Parties has
been granted the exclusive legal right by a Regulatory Authority (or is
otherwise entitled to the exclusive legal right by operation of law) in
such country to market and sell the Product in such country, including,
without limitation, through orphan drug exclusivity or Data Protection.
1.69 "RELATED PARTY" shall mean each of Merck, its Affiliates, and their
respective sublicensees (which term does not include distributors), as
applicable.
9
1.70 "RESEARCH PROGRAM" shall mean the research activities undertaken by the
Parties hereto as set forth in Article 2 and Schedule 2.1.
1.71 "RESEARCH PROGRAM TERM" shall have the meaning given such term in Section
2.10. All references to Research Program Term shall be deemed to include
any Research Program Term extension provided pursuant to Section 2.10.
1.72 "SELECTED COLLABORATION COMPOUND" shall have the meaning given such term in
Section 2.8.3.
1.73 "SELECTION CRITERIA" shall mean those criteria set forth on Schedule 1.73
attached hereto.
1.74 "SENSITIVE INFORMATION" shall have the meaning given such term in Section
10.2.3(d).
1.75 "STARTING MATERIAL" shall have the meaning given such term in Section
2.8.1.
1.76 "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated
as of the Effective Date, by and between Idera and Merck.
1.77 "TERRITORY" shall mean all of the countries in the world, and their
territories and possessions.
1.78 "THE IMMUNE RESPONSE CORPORATION AGREEMENT" shall mean the Collaboration
and License Agreement, dated October 8, 2003, by and between Idera
(formerly known as Hybridon, Inc.) and The Immune Response Corporation, as
such agreement may be amended from time to time.
1.79 "THIRD PARTY" shall mean any Person other than Merck and its Related
Parties, and Idera and its Affiliates.
1.80 "TLR" shall mean Toll-like Receptor.
1.81 "TYPE I PRODUCT" shall mean a Product(s) containing or administered in
conjunction with (i) a Selected Collaboration Compound targeting and which
is intended to act as an agonist of TLR 9; or (ii) a Selected Collaboration
Compound targeting and which is intended to act as an agonist of TLR 9 and
a Selected Collaboration Compound targeting XXX 0 xxx/xx XXX 8.
1.82 "TYPE II PRODUCT" shall mean a Product(s) containing or administered in
conjunction with (i) a Selected Collaboration Compound targeting and which
is intended to act as an agonist of TLR 7; (ii) a Selected Collaboration
Compound targeting and which is intended to act as an agonist of TLR 8; or
(iii) a Selected Collaboration Compound targeting and which is intended to
act as an agonist of both TLR 7 and TLR 8.
1.83 "VACCINE" shall mean any preparation that elicits a cellular mediated
and/or humoral immune response in humans provided that in each case such a
preparation contains an Antigen or Antigens.
1.84 "VALID PATENT CLAIM" shall mean a claim of an issued and unexpired patent
included within the Idera Patent Rights or Joint Patent Rights which claims
a Selected Collaboration Compound as a composition of matter or method of
use, which claim has not been revoked or held unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction
(which decision is not appealable or has not been appealed within the time
allowed for appeal), and which claim has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue, re-examination or
disclaimer or otherwise.
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2. RESEARCH PROGRAM
2.1 GENERAL
Idera 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 Schedule 2.1, which may
be amended from time to time upon mutual written agreement of the JRC in
accordance with this Article 2. The objectives of the Research Program are
(a) to discover and synthesize Evaluation Collaboration Compounds that are
intended to act as agonists of XXX 0, XXX 8 or both TLR 7 and TLR 8, from
which Merck will identify Selected Collaboration Compounds for further
development by Merck as Type II Products in the Fields and (b) to evaluate
Evaluation Collaboration Compounds that are intended to act as agonists of
TLR 9, from which Merck will identify Selected Collaboration Compounds for
further development by Merck as Type I Products in the Fields.
2.2 CONDUCT OF RESEARCH
Idera and Merck each shall proceed diligently with the work set out in the
Research Program by using their respective good faith efforts to allocate
sufficient time, effort, equipment and facilities to the Research Program
and to use personnel with sufficient skills and experience as are required
to accomplish the Research Program in accordance with the terms of this
Agreement and Schedule 2.1.
Merck shall be entitled to utilize the services of its Affiliates and Third
Parties to perform its Research Program activities. Idera shall be entitled
to utilize the services of Third Parties to perform its Research Program
activities only upon Merck's prior written consent or as specifically set
forth in Schedule 2.1, provided that Merck shall not unreasonably withhold,
delay or condition its consent to Idera's use of Third Party service
providers. Notwithstanding any such consent, each Party shall remain at all
times fully liable for its respective responsibilities under the Research
Program.
2.3 USE OF RESEARCH FUNDING; FTE COMMITMENTS
2.3.1 Idera shall apply the FTE funding it receives from Merck under this
Agreement pursuant to Section 5.2 solely to carry out its Research
Program activities in accordance with Schedule 2.1 and the terms and
conditions of this Agreement.
2.3.2 During the Research Program Term, Idera shall provide the number of
FTEs that are approved by the Joint Research Committee pursuant to
Section 2.5.2 to work on the Research Program. Such FTEs shall be
funded by Merck in accordance with Section 5.2. The number of FTEs to
be dedicated by Idera to the Research Program during the first two
years is set forth in Schedule 2.3.2. If the Research Program Term is
extended by Merck as provided in Section 2.10 or is otherwise extended
by mutual agreement of the Parties, the Parties shall discuss in good
faith the level of FTE staffing during the extended Research Program
Term. During the Research Program Term, the Joint Research Committee
shall provide Idera with at least 90 days prior written notice of any
required increase or decrease in the number of such FTEs, provided
that the Joint Research Committee cannot increase the number of FTEs
such that the total number of FTEs exceeds [**].
11
2.3.3 Idera shall require (i) by written agreement that all FTEs and all
other Idera personnel, employees, and agents involved in the Research
Program have entered into confidentiality and invention assignment
agreements that are consistent with the provisions of this Agreement
and shall be obligated to assign any rights they may have in any Idera
Information and Inventions and Joint Information and Inventions made
during such work to Idera consistent with any rights granted to Merck
in any such Information and Inventions under this Agreement; and (ii)
that each FTE who works on the Research Program is qualified by
appropriate experience and qualifications to perform the Research
Program work assigned to such FTE in a capable and professional
manner.
2.4 PRINCIPAL SCIENTISTS
The principal scientists for the Research Program are [**] for Idera and
[**] for Merck. The Research Program and all work assignments to be
performed by Idera and Merck shall be carried out under the direction and
supervision of the principal scientists noted above. During the first year
of the Research Program Term, [**] shall serve as the principal scientists
for Idera.
After the first year of the Research Program Term, each Party shall notify
the other Party as soon as practicable upon the changing of its principal
scientist and shall require that its principal scientist be qualified by
the appropriate experience and qualifications to direct and supervise its
performance of the Research Program.
2.5 JOINT RESEARCH COMMITTEE
The Parties hereby establish a committee to facilitate the Research Program
as follows:
2.5.1 Composition of the Joint Research Committee. The Research Program
shall be conducted under the direction of a joint research committee
(the "JRC") comprised of three (3) representatives of Merck and three
(3) representatives of Idera. Each Party shall name its JRC
representatives and notify the other Party of its JRC representatives
promptly following the Effective Date. Each Party may change its
representatives to the JRC from time to time, 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 Research
Program. Additional representatives or consultants may from time to
time, by mutual consent of the Parties, be invited to attend JRC
meetings, subject to such representatives' or consultants' written
agreement to comply with the requirements of Section 4.1. The JRC
shall be chaired by a representative of Merck. Each Party shall bear
its own expenses related to the attendance at such meetings by its
representatives.
2.5.2 Scope of JRC Oversight. The JRC's oversight responsibilities shall be
limited to the Research Program activities specified in Schedule 2.1
and within such scope the JRC shall (a) confer regularly regarding the
status of the Research Program, (b) review relevant data, consider and
advise on any technical issues that arise, (c) consider issues of
priority, (d) review and approve the efforts of the Parties in the
conduct of the Research Program; (e) review and approve amendments to
the Research Program as set forth in Schedule 2.1; (f) reallocate
resources, including FTEs, within the Research Program; (g) subject to
Section 2.3.2, designate the number of FTEs for each Calendar Quarter,
(h) receive updates on the identity of any Third Party conducting
Research Program work on behalf of either Party in accordance with
Section 2.2 (which each Party shall provide to the JRC), (i) address
such other matters relating to the activities of the Research Program
as either Party may bring before the JRC; and (j) attempt to resolve
any disputes within
12
the JRC on an informal basis. Notwithstanding anything to the contrary
in the foregoing, the JRC shall not (i) have any supervisory or
decision making authority beyond the Research Program activities
specified in Schedule 2.1; (ii) without the consent of Idera, require
Idera to commit its FTE resources beyond those set forth in Section
2.3.2; or (iii) except for Schedule 2.1, modify or amend any terms of
this Agreement.
2.5.3 Decision-Making. Decisions of the JRC shall be made unanimously, with
each Party having one vote. In the event that the JRC cannot or does
not, after good faith efforts, reach agreement on an issue, the issue
shall be elevated to a Vice President of MRL for Merck and the Chief
Scientific Officer for Idera. If such executives cannot resolve the
issue, it shall be further elevated to an Executive Vice President or
Franchise Head of MRL for Merck and the Chief Executive Officer of
Idera for Idera. If such executives cannot resolve the issue, the
resolution and/or course of conduct shall be determined by Merck in
good faith, taking Idera's reasonable interests into account.
2.5.4 Meetings. The JRC 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 Idera and Merck facilities (or such other
location as may be determined by the JRC). Alternatively, the JRC may
meet by means of teleconference, videoconference or other similar
communications equipment.
2.6 EXCHANGE OF INFORMATION
Upon execution of this Agreement, and on an ongoing basis during the
Research Program Term, Idera shall promptly disclose to Merck in writing or
in an electronic format all Idera Know-How not previously disclosed. Merck
shall promptly disclose to Idera during the Research Program Term all Merck
Know-How.
2.7 RECORDS AND REPORTS
2.7.1 Records. Idera 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 Research Program by Idera.
2.7.2 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 Idera referred to in Section 2.7.1. 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 and/or consultants involved in the
activities contemplated hereunder to visit the offices and
laboratories of Idera and any of its Third Party contractors as
permitted under Section 2.2 during normal business hours and upon
reasonable notice, and at reasonable intervals, to discuss in the
presence of Idera's principal scientist the Research Program work and
its results in detail with the technical personnel of Idera involved
in the Research Program. Upon request, Idera shall provide copies of
the records described in Section 2.7.1 above.
2.7.3 Quarterly Reports. Within thirty (30) days following the end of each
Calendar Quarter during the Research Program Term, Idera shall provide
to Merck a written progress report in English which shall describe in
sufficient detail the work performed to date by Idera so that Merck
may evaluate Idera's progress in relation to the goals of the Research
13
Program. Further, Idera shall promptly respond to reasonable requests
by Merck for additional information regarding Idera's performance of
Research Program activities.
2.8 DISCLOSURE, EVALUATION AND SELECTION OF COLLABORATION COMPOUNDS
2.8.1 Disclosure of Evaluation Collaboration Compounds and Starting
Material. Following the Effective Date and during the Research Program
Term, Idera shall disclose to Merck in writing all Collaboration
Compounds satisfying the Evaluation Criteria as set forth in Schedule
1.18 ("EVALUATION COLLABORATION COMPOUNDS") in the manner and to the
extent described below. In addition, Idera shall provide Merck with
sufficient samples of such Evaluation Collaboration Compounds, along
with their structures, results of characterization studies on the
Evaluation Collaboration Compounds and such other information as may
be required by Schedule 2.1.
During the first [**] months of the Research Program Term, Idera shall
provide Merck with a total of [**] Evaluation Collaboration Compounds
targeting TLR 9 and a total of [**] Evaluation Collaboration Compounds
targeting XXX 0, XXX 8 and/or TLR 7 and TLR 8 (collectively "STARTING
MATERIAL"). The Starting Material shall not incorporate any Merck
Material. Idera shall use reasonable efforts to deliver Starting
Material according to the following schedule: [**] Evaluation
Collaboration Compounds targeting TLR 9 and [**] Evaluation
Collaboration Compounds targeting XXX 0, XXX 8 and/or TLR 7 and TLR 8
at the beginning of each [**]. Idera may, subject to JRC approval,
change the delivery schedule of Starting Material. Following the
initial delivery of Starting Material, Idera shall use commercially
reasonable efforts to incorporate guidance from Merck regarding the
desired properties of the Starting Material so that Idera can
synthesize and/or modify new Starting Material incorporating such
guidance from Merck or provide Starting Material from Idera's existing
library to address Merck's guidance. The benchmark for synthesizing
Starting Material shall be those Collaboration Compounds listed in
Schedule 1.18. In the event that the JRC determines that the benchmark
Collaboration Compounds should be replaced by different Collaboration
Compounds, Schedule 1.18 shall be amended to reflect the new benchmark
Collaboration Compounds subject to the written consent of both
Parties, which consent shall not be unreasonably withheld. Subject to
Section 2.8.2, Merck covenants and agrees, for itself and its Related
Parties, not to re-create any Starting Material.
2.8.2 Creation and Modification of Evaluation Collaboration Compounds
Targeting XXX 0, XXX 8 and/or TLR 7 and TLR 8. As set forth in
Schedule 2.1, the Parties shall use commercially reasonable efforts to
perform their respective obligations in the creation, modification and
development of Evaluation Collaboration Compounds targeting XXX 0, XXX
8 and/or TLR 7 and TLR 8 throughout the Research Program Term. There
shall be no limit on the number of such Evaluation Collaboration
Compounds that the Parties may create, modify or develop during the
Research Program Term, provided that the number of Starting Materials
as set forth in Section 2.8.1 cannot be changed without the mutual
written consent of both Parties.
2.8.3 Designation of Selected Collaboration Compounds. Upon receipt of
samples of Evaluation Collaboration Compounds and the information set
forth above, Merck shall use reasonable efforts to evaluate such
Evaluation Collaboration Compounds to determine in its sole discretion
whether they satisfy the Selection Criteria. If an Evaluation
Collaboration Compound satisfies the Selection Criteria, Merck shall
promptly notify Idera in writing and such Evaluation Collaboration
Compound shall be deemed a "SELECTED COLLABORATION COMPOUND." Merck
may designate such Selected
14
Collaboration Compounds at any time during the Research Program but no
later than [**] following the end of the Research Program Term. With
respect to Evaluation Collaboration Compounds targeting XXX 0, Xxxxx
shall have the right to select up to [**] Selected Collaboration
Compounds for use in the Fields. With respect to Evaluation
Collaboration Compounds targeting XXX 0 xxx/xx XXX 8, Merck shall have
the right to select up to [**] Selected Collaboration Compounds for
use in the Fields.
In the event that a Selected Collaboration Compound fails in
pre-clinical and/or clinical development for reasons due to safety,
tolerability or efficacy, then at Merck's request, Idera shall provide
additional Evaluation Collaboration Compounds for consideration as a
Selected Collaboration Compound in the applicable Field at any time
during the term of the Agreement, provided that Merck may exercise
such right only for a period of [**] from the expiration of the
Research Program Term. In the event that Merck, in its sole
discretion, determines such Evaluation Collaboration Compound
satisfies the Selection Criteria, such Evaluation Collaboration
Compound shall be deemed a Selected Collaboration Compound.
2.8.4 Designation of Non-Selected Collaboration Compounds. Within [**] of
the end of the Research Program Term, Merck shall designate among the
Evaluation Collaboration Compounds which ones shall be deemed
"NON-SELECTED COLLABORATION COMPOUNDS." Idera may develop and
commercialize Non-Selected Collaboration Compounds only in the Idera
Field. For avoidance of doubt, Merck and its Affiliates shall retain
the right to use any Non-Selected Collaboration Compounds that are
claimed in or covered by the Joint Information and Inventions solely
for internal research purposes of Merck or its Affiliates which
includes research carried out by any Third Party on behalf of Merck or
its Affiliates. Internal research purposes expressly excludes use of
any Non-Selected Collaboration Compounds by Merck or its Related
Parties in any Clinical Trial.
2.9 OWNERSHIP OF MATERIALS, INFORMATION AND INVENTIONS
2.9.1 Ownership of Materials. Neither Party shall obtain any ownership
rights in the materials of the other Party by virtue of this
Agreement. Except to the extent licensed herein, Merck shall retain
all right, title and interest in and to the Merck Materials, and Idera
shall retain all right, title and interest to the Idera Materials.
Ownership of materials will remain with the respective Parties
regardless of any modification or derivative thereof made by either
Party solely or by both Parties jointly. Each Party shall have the
right to license or transfer any such modification and/or derivative
thereof, to any Third Party in the Party's sole discretion for any
purpose, provided that such uses do not conflict with the licenses
granted under this Agreement.
2.9.2 Ownership of Information and Inventions. The entire right, title and
interest in:
(A) Idera Information and Inventions shall be owned solely by Idera;
(B) Merck Information and Inventions shall be owned solely by Merck;
and
(C) Joint Information and Inventions shall be owned jointly by Idera
and Merck.
Idera shall promptly disclose to Merck in writing the development,
making, conception or reduction to practice of Idera Information and
Inventions, Joint Information and Inventions and Merck Materials
Inventions. Merck shall promptly disclose to Idera in
15
writing the development, making, conception or reduction to practice
of Idera Oligonucleotide Inventions and Joint Information and
Inventions.
2.9.3 Inventorship. Inventorship of inventions, whether or not patentable,
conceived and/or reduced to practice by the Parties in the course of
exercising rights or performing obligations pursuant to this
Agreement, all related intellectual property rights, and all other
information developed in the course of the Parties' exercise of rights
under or performance of this Agreement shall be determined in
accordance with the rules of inventorship under United States patent
laws.
2.9.4 Assignment of Inventions. The Parties shall execute such documents
and perform such acts, at their own expense, as may be reasonably
necessary to effect an assignment of Patent Rights relating to
Oligonucleotide Inventions and Merck Materials Inventions, as the case
may be, to the other Party in a timely manner to allow such Party to
prosecute and maintain Patent Rights relating to such inventions.
2.10 RESEARCH PROGRAM TERM
Except as otherwise provided herein, the initial term of the Research
Program shall commence on the Effective Date and continue for a period of
two (2) years. Merck may extend such term by an additional year by
providing Idera with ninety (90) days written notice, for a total of up to
two (2) renewals. Merck shall provide Idera with written notice of such
one-year renewal and the Parties shall amend Schedule 2.1 as applicable.
The initial term and subsequent extension terms are collectively referred
to in this Agreement as the "RESEARCH PROGRAM TERM."
2.11 MERCK MATERIALS
Merck shall provide Idera with sufficient quantities of the materials set
forth in Schedule 1.50 ("MERCK MATERIALS") solely for the purpose of
enabling Idera to perform its activities under the Research Program in
accordance with the terms of this Agreement. Idera covenants and agrees,
for itself and its Affiliates, not to re-create or modify any Merck
Materials. The Merck Materials are not to be used in humans, nor shall any
of the Merck Materials, or any derivatives, analogs, modifications or
components thereof, be transferred, delivered or disclosed to any Third
Party without the prior written approval of Merck. Any unused Merck
Materials and any derivatives, analogs, modifications or components thereof
shall be, at Merck's option, either returned to Merck, or destroyed in
accordance with instructions by Merck.
2.12 EXCLUSIVE EFFORTS
During the term of the Agreement, except as set forth in Schedule 2.12,
Idera shall work exclusively (even as to Idera itself) with Merck and its
Affiliates in efforts to research, develop and commercialize any
Adjuvant(s) for use in conjunction with Vaccine(s) or Vaccine products
containing such Adjuvant(s), including without limitation, Evaluation
Collaboration Compound(s) and Selected Collaboration Compound(s), for the
prevention and/or treatment of Alzheimer's Disease, any type of cancer
and/or any disease within the Infectious Disease Field.
2.13 USE OF HUMAN MATERIALS
If any human primary cell lines, human tissue, human clinical isolates or
similar human-derived materials ("HUMAN MATERIALS") have been or are to be
collected and/or used in the Research Program, Idera represents and
warrants (i) that it has complied, or shall comply, with all
16
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. Idera shall
provide documentation of such approvals and consents upon Merck's request.
Idera further represents and warrants that such Human Materials may be used
as contemplated in this Agreement without any obligations to the
individuals or entities ("PROVIDERS") who contributed the Human Materials,
including, without limitation, any obligations of compensation to such
Providers or any other Third Party for the intellectual property associated
with the Human Materials or the commercial use thereof for any purposes.
3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION
3.1 LICENSE GRANTS TO MERCK
3.1.1 Exclusive License Grant. Subject to the terms and conditions of this
Agreement, Idera hereby grants to Merck an exclusive license (even as
to Idera) in the Territory under Idera Technology and Idera's interest
in Joint Program Technology, with a right of sublicense, (a) to
research and develop Evaluation Collaboration Compounds in the Fields
and (b) to research, develop, make, have made, use, offer to sell,
sell, have sold, import and export Selected Collaboration Compound(s)
and Product(s) in the Fields. The foregoing exclusive license is
subject to the non-exclusive rights granted to The Immune Response
Corporation as set forth in Schedule 2.12 attached hereto.
Notwithstanding anything to the contrary contained in this Agreement,
Idera retains all rights under Idera Technology and Idera's interest
in Joint Program Technology to research, develop, make, have made,
use, offer to sell, sell, have sold, import and export IMO-2055 and
IMO-2125 outside the Fields, both during and after the Research
Program Term.
3.1.2 Non-Exclusive License Grant. In the event that the researching,
developing, making, having made, use, offer for sale, sale, import or
export by Merck, or Merck's Related Parties, of Evaluation
Collaboration Compound(s), Selected Collaboration Compound(s) or
Product(s) in accordance with the license granted pursuant to Section
3.1.1 would infringe during the term of this Agreement a claim of
issued letters patent which Idera Controls and which patents are not
covered by the grant in Section 3.1.1, Idera hereby grants to Merck,
to the extent Idera is legally able to do so, a non-exclusive,
sublicensable, royalty-free license in the Territory under such issued
letters patent for Merck and Merck's Related Parties to research,
develop, make, have made, use, sell, offer for sale, import and export
such Evaluation Collaboration Compound(s), Selected Collaboration
Compound(s) and Product(s) in the Fields.
3.1.3 Sublicense Rights. Subject to the terms and conditions of this
Agreement, Merck shall have the right to grant sublicenses of the
rights granted to it under this Section 3.1 to (i) its Affiliates,
(ii) Third Parties engaged in research, development and marketing of
Products, and (iii) contract service providers providing services for
Merck or its Affiliates, to the extent such sublicenses are necessary
for the research, development, manufacturing and commercialization of
Evaluation Collaboration Compounds, Selected Collaboration Compounds
and Products in the Fields by or on behalf of Merck or its Affiliates.
Merck shall require each sublicensee to be bound by the applicable
terms of this Agreement.
17
3.2 LICENSE GRANTS TO IDERA
3.2.1 Exclusive License Grant. Subject to the terms and conditions of this
Agreement, Merck hereby grants to Idera an exclusive (even as to
Merck), royalty-free license in the Territory under Merck's interest
in Joint Program Technology, with a right of sublicense, to research,
develop, make, have made, use, offer to sell, sell, have sold, import
and export Non-Selected Collaboration Compounds, IMO-2055 and IMO-2125
in the Idera Field. For avoidance of doubt, except for IMO-2055 and
IMO-2125, this exclusive license grant shall not include the grant of
any rights to Idera to research, develop, make, have made, use, offer
to sell, sell, have sold, import and export Selected Collaboration
Compounds for any purpose, including, without limitation, in the Idera
Field.
3.2.2 Non-Exclusive License Grant. Merck hereby grants to Idera a
non-exclusive, non-sublicensable, royalty-free license in the
Territory under Merck Technology for the sole purpose of discharging
Idera's obligations under the Research Program during the Research
Program Term.
3.3 NO IMPLIED LICENSES
Except as specifically set forth in this Agreement, neither Party shall
acquire any license or other intellectual property interest, by implication
or otherwise, in any Information or materials disclosed to it under this
Agreement or under any patents or patent applications owned or Controlled
by the other Party or its Affiliates.
3.4 DEVELOPMENT AND COMMERCIALIZATION
Merck shall use reasonable efforts and resources, including reasonably
necessary personnel and financial resources, consistent with the usual
practice followed by Merck in pursuing the commercialization and marketing
of its other Vaccine products of a similar commercial value, at its own
expense, to develop and commercialize a Product in such countries in the
Territory where in Merck's opinion it is commercially viable to do so. To
the extent reasonable and relevant, Merck shall take into consideration the
following factors: issues of safety and efficacy, Product profile,
difficulty in developing or manufacturing the Product, competitiveness of
alternative Third Party products in the marketplace, the patent or other
proprietary position of the Product, the regulatory structure involved and
market potential of the Product. During the term of the Agreement, Merck
shall keep Idera regularly informed regarding the development of Products
by Merck or its Affiliates. Such information shall be communicated to Idera
through the JRC during the Research Program Term. After the end of the
Research Program Term, and until the First Commercial Sale of a Product,
Merck shall promptly respond to reasonable requests by Idera for
information regarding development activities by Merck and its Related
Parties but no more than twice per year.
3.5 EXCUSED PERFORMANCE
The obligations of Merck with respect to any Product under Section 3.4 are
expressly conditioned upon the continuing absence of any material adverse
condition or event relating to the safety or efficacy of the Product, and
the obligation of Merck to develop or market any such Product shall be
delayed or suspended so long as in Merck's opinion any such condition or
event exists. In resolving or addressing such material adverse condition or
event, Merck shall apply the level of efforts and resources described in
Section 3.4 that Merck typically devotes to overcome similar
18
material adverse conditions and events with respect to its own compounds or
products, regardless of whether such compound or product is subject to a
license from a Third Party.
3.6 EXCLUSIVE NEGOTIATION PERIOD
Idera agrees that for a period of three (3) months commencing on the
Effective Date, Idera shall not enter into any negotiations or any
agreement with any Third Party regarding any rights or licenses to develop
and commercialize TLR antagonists in the area of immunosuppression. After
such three (3) month period, Idera shall be free to grant rights and
licenses to Third Parties with respect to the development and
commercialization of TLR antagonists in the area of immunosuppression,
subject to any agreement that the Parties may elect, in each Party's
absolute discretion, to enter into during such three (3) month period.
3.7 ADVERSE EXPERIENCE REPORTING
Idera agrees throughout the term of this Agreement to notify Merck within
two (2) working days in English of any information of which Idera becomes
aware in the Territory concerning any side effect, injury, toxicity or
sensitivity reaction, or any unexpected incident, and the severity thereof,
whether or not determined to be attributable to any Evaluation
Collaboration Compound or Selected Collaboration Compound (hereinafter
"Adverse Experience"), where such Adverse Experience is serious and
associated with the clinical uses, studies, investigations, tests and
marketing of Evaluation Collaboration Compounds or Selected Collaboration
Compounds, whether or not determined to be attributable to Evaluation
Collaboration Compound or Selected Collaboration Compound. With respect to
all other adverse experiences (non-serious expected or non-serious
unexpected adverse experiences), Idera shall furnish Merck with copies of
such non-serious adverse experiences reported to Idera in connection with
the marketing of Evaluation Collaboration Compound or Selected
Collaboration Compound in English within 10 working days after receipt. For
clarity, Idera shall provide Adverse Experience reports to Merck with
respect to those Adverse Experiences relating to IMO-2055 under The Immune
Response Corporation Agreement, to the extent Idera is aware of such
information, in accordance with the term of this Section 2.7. Merck shall
provide Adverse Experience reports to Idera with respect to IMO-2055 and
IMO-2125 within the same time frames as set forth above. The Parties
acknowledge that information provided in the timeframes set forth in this
Section 3.7 may be in the form of raw data.
"Serious" as used in this Section refers to an experience which results in
death, is immediately life threatening, results in persistent and
significant disability/incapacity or requires in-patient hospitalization,
or prolongation of existing hospitalization, or is a congenital anomaly,
cancer or an overdose. Other important medical events that may jeopardize
the patient or may require intervention to prevent one of the outcomes
previously listed should also be considered serious. "Unexpected" as used
in this Section refers to a condition or development not listed in the
current labeling for Evaluation Collaboration Compound or Selected
Collaboration Compound, and includes an event that may be symptomatically
and pathophysiologically related to an event listed in the labeling, but
differs from the event because of increased frequency or greater severity
or specificity. Furthermore, Idera agrees throughout the Term to notify
Merck in English of any "Serious" Adverse Experience which occurs in the
Territory within two (2) working days after Idera becomes aware of such
event and of any Non-serious Adverse Experience which occurs in the
Territory within 10 working days after Idera becomes aware of such event.
It is understood and agreed that these adverse experience reporting
requirement provisions are based on the policies and procedures of Merck
and regulatory reporting requirements.
19
Accordingly, in the event of changes to regulatory requirements for adverse
experience reporting, Idera agrees to comply with such revised notification
requirements.
As soon as practicable after the Execution Date, but no later than the
start of Merck Clinical Trials, the Parties shall enter into a separate and
more detailed agreement concerning adverse experience exchange and
reporting.
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 its Affiliates and
shall not be disclosed to any Third 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 the 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 in the public domain by use and/or publication before its receipt
from the disclosing Party, or thereafter enters the public domain
through no fault of the receiving Party;
(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 reasonably necessary to disclose to governmental or other
regulatory agencies (i) in order to obtain patents or to gain or
maintain approval to conduct clinical trials or to market Product, but
such disclosure may be only to the extent reasonably necessary to
obtain patents or Marketing Authorizations or (ii) to comply with
disclosure obligations under securities laws, rules or regulations,
including, without limitation, the rules and regulations of any stock
exchange;
(F) is deemed necessary by Merck to be disclosed to subliceenses, agents,
consultants, and/or other Third Parties for any and all purposes Merck
and its Affiliates deem necessary or advisable to research, develop
and commercialize Evaluation Collaboration Compounds, Selected
Collaboration Compounds and Products in accordance with this Agreement
on the condition that such Persons agree to be bound by the
confidentiality and non-use obligations at least as strict as those
contained in this Agreement; provided, however, that the term of
confidentiality for such Third Parties shall be no less than [**]
years;
(G) is deemed necessary by counsel to the receiving Party to be disclosed
to such Party's attorneys, independent accountants or financial
advisors for the sole purpose of enabling such attorneys, independent
accountants or financial advisors to provide advice to the receiving
Party, on the condition that such attorneys, independent accountants
and financial advisors agree to be bound by confidentiality and
non-use obligations at least as strict as those contained in this
Agreement; provided, however, that the term of confidentiality for
such attorneys, independent accountants and financial advisors shall
be no less than [**] years;
20
(H) is deemed necessary by the receiving Party to be disclosed to a Third
Party that has provided the receiving Party with a bona fide written
offer to purchase all or substantially all of the assets of the
receiving Party or acquire fifty percent (50%) or more of the voting
equity securities or management control of such receiving Party, on
the condition that such Third Party and its attorneys, independent
accountants and financial advisors agree to be bound by
confidentiality and non-use obligations at least as strict as those
contained in this Agreement; provided, however, that the term of
confidentiality for such Third Party and its attorneys, independent
accountants and financial advisors shall be no less than [**] years;
or
(I) is an Adverse Experience relating to IMO-2055, provided that such
disclosure may be made by Idera only to The Immune Response
Corporation as required by The Immune Response Corporation Agreement.
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.
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.
4.2 IDERA KNOW-HOW
Idera agrees to keep all Idera Information and Inventions solely related to
Evaluation Collaboration Compounds and Selected Collaboration Compounds in
the Fields confidential subject to exceptions (b) and (e) in Section 4.1
above and subject to Section 4.3.
4.3 PUBLICATION
Merck and Idera 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, prior to the expiration of the one-year anniversary of the end
of the Research Program Term, either Party, its employees or consultants
wishing to make a publication regarding an Evaluation Collaboration
Compound 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
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 information. If the reviewing Party requests a
delay, the publishing Party shall delay submission or presentation for a
period of ninety (90) 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 ninety (90) days, the publishing Party shall
be free to proceed with the publication or presentation. If the reviewing
21
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. For the avoidance of doubt, Merck acknowledges
and agrees that Idera shall have the right to publish the results of its
research with respect to XXX-0000, XXX-0000, IDR-002 and IDR-004 outside
the Fields.
4.4 PUBLICITY/USE OF NAMES
Upon execution of this Agreement, the Parties shall issue a joint press
release in the form attached hereto as Schedule 4.4. No disclosure of the
existence, or the terms, of this Agreement, the Stock Purchase Agreement or
the Registration Rights Agreement may be made by either Party, and neither
Party shall use the name, trademark, trade name or logo of the other Party,
its Affiliates or their respective employees in any publicity, promotion,
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. With respect to the achievement of
milestones as set forth in Section 5.3.2, Idera may issue a press release
regarding such achievement, provided that Merck is given five (5) business
days to review and comment on the proposed press release or public
disclosure.
5. PAYMENTS; ROYALTIES AND REPORTS
5.1 LICENSE FEE
In consideration for the licenses granted herein under Idera Technology and
Idera's interest in Joint Program Technology and other rights granted under
this Agreement upon the terms and conditions contained herein, Merck shall
pay to Idera Twenty Million Dollars (USD $20,000,000) within ten (10)
business days after the Effective Date and shall make an equity investment
of Ten Million Dollars (USD $10,000,000) in Idera accordance with the terms
and conditions of the Stock Purchase Agreement and Registration Rights
Agreement.
5.2 RESEARCH PROGRAM FTE FUNDING; ADDITIONAL SUPPLY
Merck shall fund each JRC-approved FTE provided by Idera pursuant to
Section 2.3 at the FTE Rate. Merck will pay Idera the FTE Rate [**]
installments, each installment equal to [**] of the FTE Rate multiplied by
the number of FTEs for the subsequent [**]; provided that the FTE payment
for (a) the first [**] shall be prorated from the Effective Date and will
be due within [**] days of the Effective Date and (b) the final [**] during
the Research Program Term shall be pro rated to the date of expiration or
termination of the Research Program Term. If for any [**] during the
Research Program Term, the number of Idera FTEs dedicated to the Research
Program falls below the number funded by Merck, Idera will promptly notify
Merck of such discrepancy, and, without limiting any other rights Merck may
have under this Agreement, Merck will be entitled to adjust the Research
Program funding payment under this Section as appropriate. In the event
that the Research Program Term is terminated in accordance with this
Agreement, Merck shall be entitled to a refund of any prepaid FTE funding
to the extent it covers any period after the effective date of such
termination. If Merck requests quantities of Evaluation Collaboration
Compound from Idera in excess of [**] for any study, Merck shall reimburse
Idera for Idera's out-of-pocket expenses incurred in procuring such
additional quantities within [**] days of receipt of such materials and an
invoice from Idera.
22
5.3 MILESTONE PAYMENTS
5.3.1 Pre-Clinical Development Milestones. Subject to the terms and
conditions of this Agreement, Merck shall pay to Idera the following
milestone payments based upon the achievement of such milestones:
(A) In the Oncology Field, [**] Dollars (USD $[**]) upon
demonstration of the following: (i) [**]; (ii) [**]; and (iii)
[**]. The baseline for comparison shall be the [**] that does not
[**] or [**] in the [**].
(B) In the Infectious Disease Field or Alzheimer's Disease Field,
[**] Dollars (USD $[**]) upon demonstration of a [**] after the
[**] or [**] in [**]. The baseline for comparison shall be the
[**] containing a [**] but not an [**] or [**].
Merck shall notify Idera in writing within fifteen (15) days following
the achievement of each milestone, and shall make the appropriate
milestone payment to Idera within thirty (30) days after providing
such written notice. Each of the above milestone payments described in
subsections (a) and (b) hereof shall be payable only once upon the
initial achievement of such milestone and no amounts shall be due
hereunder for subsequent or repeated achievement of such milestone.
For the avoidance of doubt, the achievement of the above milestones
does not affect the obligations of the Parties to develop
Collaboration Compounds under the Research Program.
5.3.2 Clinical Development Milestones. With respect to each Type I Product
and each Type II Product in the Fields, Merck shall pay to Idera the
following milestone payments upon the achievement of such milestones
subject to the terms and conditions of this Agreement.
23
(A) Oncology Field
TYPE I PRODUCT TYPE II PRODUCT
-------------- ---------------
(i) [**] [**] [**]
(ii) [**] [**] [**]
(iii) [**] [**] [**]
(iv) [**] [**] [**]
(v) [**] [**] [**]
(vi) [**] [**] [**]
(vii) [**] [**] [**]
(viii) [**] [**] [**]
(ix) [**] [**] [**]
(x) [**] [**] [**]
(xi) [**] [**] [**]
(B) Infectious Disease Field
TYPE I PRODUCT TYPE II PRODUCT
-------------- ---------------
(i) [**] [**] [**]
(ii) [**] [**] [**]
(iii) [**] [**] [**]
(iv) [**] [**] [**]
(v) [**] [**] [**]
(vi) [**] [**] [**]
(vii) [**] [**] [**]
(viii) [**] [**] [**]
24
(C) Alzheimer's Disease Field
TYPE I PRODUCT TYPE II PRODUCT
-------------- ---------------
(i) [**] [**] [**]
(ii) [**] [**] [**]
(iii) [**] [**] [**]
(iv) [**] [**] [**]
(v) [**] [**] [**]
(vi) [**] [**] [**]
(vii) [**] [**] [**]
(viii) [**] [**] [**]
Each of the above milestones shall be payable once with respect to each
Type I Product and each Type II Product that achieves such milestone. In
the event that a milestone is skipped for a Product, the corresponding
milestone payment shall become due upon the achievement of the next
milestone event with respect to such Product. Merck shall notify Idera in
writing within fifteen (15) days following the achievement of each
milestone, and shall make the appropriate milestone payment to Idera within
thirty (30) days after providing such written notice.
5.4 ROYALTIES
5.4.1 Royalties Payable By Merck. Subject to the terms and conditions of
this Agreement, Merck shall pay Idera royalties, calculated on a
Product-by-Product basis, as set forth in this Section 5.4.1.
(A) Patent Royalties. Subject to the provisions of Section 5.4.1(b),
Merck shall pay Idera royalties in an amount equal to a certain
percentage of Net Sales of Product(s) by Merck or its Related
Parties as set forth below, provided that the sale of such
Product(s) would infringe a Valid Patent Claim in the country of
sale ("PATENT ROYALTY"):
(I) Type I Products - Oncology Field. Merck shall pay Idera
royalties in an amount equal to the following percentage of
Net Sales of Type I Products in the Oncology Field by Merck
or its Related Parties, provided that the sale of such
Products would infringe a Valid Patent Claim in the country
of sale:
(AA) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year up to and including [**] Dollars (USD
$[**]);
(BB) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]) up to and including [**]
Dollars (USD $[**]); and
(CC) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]).
(II) Type I Products -Alzheimer's Disease Field. Merck shall pay
Idera royalties in an amount equal to the following
percentage of Net Sales of
25
Type I Products in the Alzheimer's Disease Field by Merck or
its Related Parties, provided that the sale of such Products
would infringe a Valid Patent Claim in the country of sale:
(AA) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year up to and including [**] Dollars (USD
$[**]);
(BB) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]) up to and including [**]
Dollars (USD $[**]); and
(CC) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]).
(III) Type I Products - Infectious Disease Field. Merck shall pay
Idera royalties in an amount equal to the following
percentage of Net Sales of Type I Products in the Infectious
Disease Field by Merck or its Related Parties, provided that
the sale of such Products would infringe a Valid Patent
Claim in the country of sale:
(AA) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year up to and including [**] Dollars (USD
$[**]);
(BB) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]) up to and including [**]
Dollars (USD $[**]); and
(CC) [**] percent ([**]%) of worldwide Net Sales in each
Calendar Year for the portion of Net Sales exceeding
[**] Dollars (USD $[**]).
(IV) Type II Products - All Fields. Merck shall pay Idera
royalties in an amount equal to the following percentage of
Net Sales of Type II Products in each of the Oncology,
Alzheimer's Disease and Infectious Disease Fields by Merck
or its Related Parties, provided that the sale of such
Products would infringe a Valid Patent Claim in the country
of sale:
(AA) [**] percent ([**]%) of worldwide Net Sales in the
applicable Field in each Calendar Year up to and
including [**] Dollars (USD $[**]);
(BB) [**] percent ([**]%) of worldwide Net Sales in the
applicable Field in each Calendar Year for the portion
of Net Sales exceeding [**] Dollars (USD $[**]) up to
and including [**] Dollars (USD $[**]); and
(CC) [**] percent ([**]%) of worldwide Net Sales in the
applicable Field in each Calendar Year for the portion
of Net Sales exceeding [**] Dollars (USD $[**]).
(B) Know-How Royalty. Notwithstanding the provisions of Section
5.4.1(a) above, in countries where the sale of Product by Merck
or its Related Parties would not
26
infringe a Valid Patent Claim, Merck shall pay royalty rates that
shall be set at [**] percent ([**]%) of the applicable royalty
rate determined according to Section 5.4.1(a) hereof ("Know-How
Royalty"). Such royalties shall be calculated after first
calculating royalties under Section 5.4.1(a) above.
(C) Royalty Tiers; Royalty Term. Royalty tiers pursuant to 5.4.1(a)
and 5.4.1(b) shall be calculated based on worldwide Net Sales of
each Product, provided that the determination of whether the
royalty shall be calculated under 5.4.1(a) or 5.4.1(b) shall be
determined on a country-by-country basis. Patent Royalties on
each Product at the rates set forth in Section 5.4.1(a) shall
continue on a country-by-country basis until the expiration of
the later of: (i) the last-to-expire Valid Patent Claim which
would otherwise be infringed by sale of Product in such country
or (ii) the expiration of Regulatory-Based Exclusivity. Know-How
Royalties on each Product at the rates set forth in Section
5.4.1(a) shall continue on a country-by-country basis until ten
(10) years from the date of First Commercial Sale of the Product
in such country, provided that during any period in which sales
of a Competing Product by a third party(ies) are equal to at
least [**] percent ([**]%) of the aggregate volume of the Product
and Competing Product in such country (the volume as measured by
prescriptions or other similar information available in such
country), all applicable Know-How Royalties in effect with
respect to such Product in such country shall be reduced to [**]
percent ([**]%). The foregoing Competing Product reduction
applies only in those countries where Know-How Royalties would be
payable and does not apply to Patent Royalties.
All royalties are subject to the following conditions:
(I) that only one royalty shall be due with respect to the same
unit of Product;
(II) that no royalties shall be due upon the sale or other
transfer among Merck or its Related Parties, but in such
cases the royalty shall be due and calculated upon Merck's
or its Related Party's Net Sales to the first independent
Third Party;
(III) no royalties shall accrue on the sale or other disposition
of Product by Merck or its Related Parties for use in a
Clinical Trial or other clinical trial conducted after the
First Commercial Sale of Product; and
(IV) no royalties shall accrue on the disposition of Product in
reasonable quantities by Merck 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) consistent with Merck's
practices for its products other than the Product.
5.4.2 Royalties for Bulk Compound. In those cases in which Merck sells bulk
Selected Collaboration Compound rather than Product in packaged form,
or sells Selected Collaboration Compound and Vaccine separately for
use in conjunction with one another, to an independent Third Party,
the royalty obligations of Section 5.4.1 shall be applicable to (a)
the bulk Selected Collaboration Compound together with other
components of the Product sold by Merck or its Related Party (i.e. the
royalty shall be payable in respect of the entire Product and not just
the Selected Collaboration Compound) or (b) the separately sold
Selected Collaboration Compound and Vaccine (i.e. the royalty shall be
27
payable in respect of the Selected Collaboration Compound and
Vaccine), as the case may be.
5.4.3 Compulsory Licenses. If a compulsory license required pursuant to
applicable law or regulation in a country is granted to a Third Party
with respect to 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
licensee.
5.4.4 Royalty Abatement; Third Party Licenses. In the event that (a) one or
more patent licenses from other Third Parties are required by Merck or
its Related Parties in order to make, have made, use, offer to sell,
sell or import Selected Collaboration Compound or Product(s) in a
country (hereinafter "THIRD PARTY PATENT LICENSES"), including,
without limitation, any patent license claiming a Merck Adjuvant and
(b) the total royalty percentage rate payable by Merck under the Third
Party Patent Licenses (including royalties payable to Idera) exceeds
[**] percent ([**]%), the royalty obligation to Idera shall be reduced
by the formula set forth in Schedule 5.4.4, provided, however, that in
no event shall the royalties owed by Merck to Idera for such Product
in such Calendar Quarter in such country be reduced by more than [**]
percent ([**]%).
5.5 REPORTS; PAYMENT OF ROYALTY
During the term of this Agreement following the First Commercial Sale of a
Product, Merck shall furnish to Idera a quarterly written report for the
Calendar Quarter showing the Net Sales on a country-by-country basis of all
Products subject to royalty payments sold by Merck and its Related Parties
in the Territory during the reporting period, total deductions and the
royalties payable under this Agreement. Reports shall be due on the [**]
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.
5.6 AUDITS
(A) Upon the written request of Idera and not more than once in each
Calendar Year, Merck shall permit an independent certified public
accounting firm of nationally recognized standing selected by Idera
and reasonably acceptable to Merck, at Idera's expense, 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 Idera only whether the royalty reports are correct or incorrect and
the amount of any discrepancy. No other information shall be provided
to Idera.
(B) If such accounting firm correctly identifies a discrepancy made during
such period, the appropriate Party shall pay the other Party the
amount of the discrepancy within thirty (30) days of the date Idera
delivers to Merck such accounting firm's written report so correctly
concluding, or as otherwise agreed upon by the Parties. The fees
charged by such accounting firm shall be paid by Idera; provided,
however, that if such audit uncovers an underpayment of royalties by
Merck that exceeds [**] Dollars (USD $[**]) and five percent (5%) of
the total royalties owed, then the fees of such accounting firm shall
be paid by Merck.
28
(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 Idera's independent
accountant to the same extent required of Merck under this Agreement.
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 Idera, and Merck and its
Related Parties shall be released from any liability or accountability
with respect to royalties for such year.
(D) Idera shall treat all financial information subject to review under
this Section 5.6(d) 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 Merck and/or its Related Parties
obligating it to retain all such information in confidence pursuant to
such confidentiality agreement.
5.7 PAYMENT EXCHANGE RATE
All payments to be made by Merck to Idera under this Agreement shall be
made in United States dollars and may be paid by check made to the order of
Idera or bank wire transfer in immediately available funds to such bank
account in the United States as may be designated in writing by Idera from
time to time. In the case of sales outside the United States, the rate of
exchange to be used in computing the monthly amount of currency equivalent
in United States dollars due Idera shall be made at the monthly 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 by Merck.
5.8 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, Merck shall make
such withholding payments as may be required and shall subtract such
withholding payments from the payments set forth in this Article 5. Merck
shall submit appropriate proof of payment of the withholding taxes to Idera
within a reasonable period of time. Merck shall reasonably cooperate with
Idera to minimize such withholdings, subject to compliance with all
applicable laws and regulations. If Merck had a duty to withhold taxes in
connection with any payment it made to Idera under the Agreement but Merck
failed to withhold, and such taxes were assessed against and paid by Merck,
then Idera will reimburse and hold harmless Merck from and against such
taxes (including interest). If Merck makes a claim under this section, it
will comply with the obligations imposed by this section as if Merck had
withheld taxes from a payment to Idera.
6. REPRESENTATIONS AND WARRANTIES; COVENANTS
6.1 REPRESENTATIONS AND WARRANTIES OF IDERA
Idera represents and warrants to Merck that as of the Effective Date:
(A) to the best of Idera's knowledge, Idera Know-How exists and Idera
Patent Rights (i) if granted, are not invalid or unenforceable, in
whole or in part; and (ii) if pending, are patentable;
29
(B) it has all requisite corporate power and authority to enter into this
Agreement, to perform its obligations under the Research Program, to
grant the licenses to Merck as set forth in Sections 3.1.1 and 3.1.2
and to otherwise perform its obligations under this Agreement;
(C) except as set forth in Schedule 2.12, it has not previously assigned,
transferred, conveyed or otherwise encumbered its right, title and
interest in Idera Patent Rights, Idera Know-How or Idera Materials;
(D) except as set forth in Schedule 6.1(d), it is the sole and exclusive
owner of Idera Patent Rights, Idera Know-How and Idera Materials, all
of which are free and clear of any liens, charges and encumbrances in
the Fields, and no other Person has any claim of ownership whatsoever
with respect to Idera Patent Rights, Idera Know-How and Idera
Materials;
(E) to the best of Idera's knowledge, the exercise of the license granted
to Merck with respect to Evaluation Collaboration Compounds and
Selected Collaboration Compounds under Idera Technology, including
without limitation the research, development, manufacture, use, sale
and import of Evaluation Collaboration Compounds and Selected
Collaboration Compounds in the Fields does not interfere with or
infringe any intellectual property rights owned or possessed by any
Third Party claiming or covering the composition of matter or method
of use of such Evaluation Collaboration Compounds or Selected
Collaboration Compounds;
(F) there are no claims, judgments or settlements against or owed by Idera
and to the best of Idera's knowledge, no pending or threatened claims
or litigation relating to Idera Patent Rights, Idera Know-How and
Idera Materials;
(G) Idera has provided to Merck, except for redacted confidential
information, full and complete copies of the Novartis Agreements and
The Immune Response Corporation Agreement.
6.2 REPRESENTATIONS AND WARRANTIES OF MERCK
Merck represents and warrants to Idera that as of the date of this
Agreement it has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations under the Research Program, to
grant the licenses set forth in Sections 3.2.1 and 3.2.2 and to otherwise
perform its obligations under this Agreement.
6.3 COVENANTS OF IDERA
During the term of this Agreement, Idera covenants and agrees that it will
not amend the Novartis Agreements or The Immune Corporation Agreement in
any manner that would interfere with or diminish the licenses to Merck as
set forth in Sections 3.1.1 and 3.1.2 and other rights granted to Merck and
its Affiliates in this Agreement.
7. PATENT PROVISIONS
7.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS
(A) Idera agrees to prosecute and maintain in the Territory the Idera
Background Patent Rights. Such prosecution shall be at Idera's sole
expense, discretion, and control. Idera
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agrees to file, prosecute and maintain in the Territory, upon
appropriate consultation with Merck, the Idera Program Patent Rights
licensed to Merck under this Agreement.
(B) With respect to Joint Information and Inventions, the Parties agree to
select outside counsel acceptable to both Parties to file prosecute
and maintain in the Territory, upon appropriate consultation with the
Parties, patent applications and patents with respect to Joint
Information and Inventions. The costs, fees and expenses related to
patent applications and patents for Joint Information and Inventions
shall be shared equally by Idera and Merck.
(C) The Parties agree that whenever possible, Idera Oligonucleotide
Inventions and Merck Materials Inventions shall be filed in separate
patent applications.
(D) With respect to Idera Information and Inventions, Idera may elect not
to file and if so, Idera shall promptly notify Merck and Merck shall
have the right to file such patent applications. In such event, Idera
shall execute such documents and perform such acts at Idera's expense
as may be reasonably necessary to effect an assignment of such Idera
Program Patent Rights to Merck in a timely manner to allow Merck to
continue such prosecution or maintenance. In each case, the filing
Party shall give the non-filing Party an opportunity to review the
text of the application before filing, 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. The filing Party shall keep the
non-filing Party advised of the status of the actual and prospective
patent filings and, upon the non-filing Party's request, shall provide
advance copies of any papers related to the filing, prosecution and
maintenance of such patent filings. The filing Party shall promptly
give notice to the non-filing Party of the grant, lapse, revocation,
surrender, invalidation or abandonment of any Patent Rights licensed
to the non-filing Party. Except as provided in Section 7.2(b), the
filing Party shall be responsible for payment of all costs and
expenses related to all filings hereunder.
(E) The Parties shall consult on the prosecution of any patent
application(s) within the Idera Patent Rights which includes a
claim(s) that covers a Selected Collaboration Compound as a
composition of matter, method of manufacture or a method of use. As to
such Idera Patent Rights, within [**] days of receipt by Idera, or
Idera's prosecution counsel, of any United States or European patent
office communication(s), Idera shall use reasonable efforts to provide
to Merck a copy of the communication and a draft of a response
thereto. Merck shall use reasonable efforts to promptly deliver
comments on the communication and draft response to Idera, but in no
event later than [**] days after receiving Idera's draft response.
Thereafter, the Parties shall in good faith consult on Merck's
comments and the drafting of the response to the patent office. The
time periods in this Section 7.1(e) may be extended by mutual
agreement of the Parties.
7.2 OPTION OF MERCK TO PROSECUTE AND MAINTAIN PATENTS
(A) Idera shall give prompt written notice to Merck of its desire to cease
prosecution (including the filing of continuations and divisional
applications) and/or maintenance of Idera Background Patent Rights on
a country by country basis in the Territory and, in such case, shall
permit Merck, in its sole discretion, to continue prosecution or
maintenance of such Idera Background Patent Rights, in Idera's name,
at Merck's own expense. Idera shall provide Merck with any Powers of
Attorney necessary for Merck to conduct such prosecution or
maintenance. If Merck elects to continue such prosecution or
maintenance of such Idera Background Patent Rights, such patents or
patent
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applications shall no longer constitute Idera Patent Rights for
purposes of determining Patent Royalties under this Agreement.
(B) For patent applications within the Idera Patent Rights, Merck and
Idera shall consult on, and Merck may request, the filing of a
continuation or divisional patent application(s) having a claim(s)
that solely covers a Selected Collaboration Compound as a composition
of matter, a method of manufacture or a method of use. If Merck
requests the filing of such continuation or divisional application,
then Merck shall reimburse Idera for the costs, fees and expenses of
filing, prosecuting, and maintaining said application. Merck and Idera
shall consult in good faith on the prosecution of such applications.
Any continuation or divisional application(s) requested hereunder by
Merck will remain within the Idera Patent Rights.
7.3 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE
(A) Idera shall inform Merck of any request for, or filing or declaration
of, any interference, opposition, reissue or reexamination of Idera
Patent Rights within [**] days of becoming aware of such event. Merck
and Idera shall thereafter consult and cooperate fully to determine a
course of action with respect to any such proceeding. In the case of
any such proceedings on Idera Program Patent Rights, Merck shall have
the right to review and approve any submission to be made in
connection with such proceeding. In the case of any such proceedings
on Idera Background Patent Rights, to the extent that Idera's
attorney-client privilege is not breached and to the extent
permissible under Idera's express obligations under Idera's agreements
with Third Parties, Merck shall have the right to review and comment
on any submission to be made in connection with such proceeding.
(B) Idera shall not initiate any reexamination, interference or reissue
proceeding of Idera Program Patent Rights without the prior written
consent of Merck, which consent shall not be unreasonably withheld.
(C) In connection with any interference, opposition, reissue, or
reexamination proceeding of Idera Patent Rights, Merck and Idera will
cooperate fully and will provide each other with any information or
assistance that either Party may reasonably request. Idera shall keep
Merck informed of developments in any such action or proceeding,
including, without limitation and to the extent permissible by law,
consultation on and approval of any settlement, the status of any
settlement negotiations and the terms of any offer related thereto.
(D) The Parties shall share equally the expense of any interference,
opposition, reexamination, or reissue proceeding relating to Idera
Patent Rights that claim or cover Selected Collaboration Compounds.
(E) If an interference, opposition, reexamination or reissue proceeding
involves an Idera Program Patent Right in a Selected Collaboration
Compound, Merck may, at its discretion, direct the course of action
with respect to such proceeding to the extent any action impacts
Merck's interest in the Selected Collaboration Compound.
7.4 ENFORCEMENT AND DEFENSE
(A) Idera shall give Merck prompt written notice of (i) any infringement
of Idera Background Patent Right in any of the Fields, (ii) any
infringement of Idera Program Patent Rights, or (iii) any
misappropriation or misuse of Idera Know-How.
32
(B) In the case of infringement of Idera Program Patent Rights or
misappropriation or misuse of Idera Know-How, Merck and Idera shall
consult and cooperate fully to determine a course of action, including
but not limited to, the commencement of legal action by either Merck
or Idera or both Parties, to terminate any infringement of Idera
Program Patent Rights or any misappropriation or misuse of Idera
Know-How. However, Idera, upon notice to Merck, shall have the first
right (i) to initiate and prosecute such legal action at its own
expense and subject to Merck's written consent, initiate and prosecute
such legal action in the name of Idera and Merck and (ii) to control
the defense of any declaratory judgment action relating to Idera
Program Patent Rights or Idera Know-How. In either such case, Idera
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 subject to Idera's written
consent, in the name of Merck and Idera. For any case that Merck
either initiates or prosecutes, Merck shall reasonably consider the
rights and interests of Idera. Each Party shall have the right to be
represented by counsel of its own choice.
(C) In the case of infringement of Idera Background Patent Rights outside
the Fields, Idera shall in its sole discretion, determine a course of
action, including but not limited to, the commencement of legal
action, to terminate any such infringement of Idera Background Patent
Rights. Idera shall have the right to initiate and prosecute such
legal action at its own expense and in the name of Idera, or to
control the defense of any declaratory judgment action relating to
Idera Background Patent Rights. For any case that Idera either
initiates, prosecutes or participates in, Idera shall reasonably
consider the rights and interests of Merck and regularly confer with
Merck regarding the status of such litigation. To the extent that
Idera's attorney-client privilege is not breached and to the extent
permissible under Idera's express obligations under Idera's agreements
with Third Parties, Idera shall also provide Merck with the
opportunity to review and comment on filings and the conduct of such
litigation.
(D) In the case of infringement of Idera Background Patent Right in a
Selected Collaboration Compound within any of the Fields, Merck and
Idera shall consult and cooperate fully to determine a course of
action, including but not limited to, the commencement of legal action
by either Merck or Idera or both Parties, to terminate any such
infringement of Idera Background Patent Rights. However, Idera, upon
written notice to Merck, shall have the first right to initiate and
prosecute such legal action at its own expense and subject to Merck's
written consent, in the name of Idera and Merck, or to control the
defense of any declaratory judgment action relating to Idera Program
Patent Rights or Idera Know-How. In such case, Idera 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, subject to Idera's written consent, in the
name of Merck and Idera. For any action that Merck either initiates or
prosecutes, Merck shall reasonably consider the rights and interests
of Idera. Each Party shall have the right to be represented by counsel
of its own choice.
(E) In the event that Idera elects not to initiate and prosecute an action
as provided in Sections 7.4 (b) and (d) and Merck elects to do so, the
costs of any agreed-upon course of action to terminate infringement of
Idera Patent Rights or misappropriation or misuse of Idera Know-How,
including without limitation, the costs of any legal action commenced
or the defense of any declaratory judgment, shall be paid by Merck.
33
(F) For any action to terminate any infringement of Idera Patent Rights or
any misappropriation or misuse of Idera Know-How, in the event that
Merck is unable to initiate or prosecute such action solely in its own
name, Idera will join such action voluntarily and will execute and
cause its Affiliates to execute all documents necessary for Merck to
initiate litigation and to prosecute and maintain such action. In
connection with any action, Merck and Idera will cooperate fully and
will provide each other with any information or assistance that either
Party may reasonably request. Each Party shall keep the other informed
of developments in any action or proceeding, including, without
limitation and to the extent permissible by law, consultation on and
approval of any settlement, the status of any settlement negotiations
and the terms of any offer related thereto.
(G) Any recovery obtained by either Merck or Idera or both Parties in
connection with or as a result of any action for (i) infringement of
Idera Program Patent Rights, (ii) misappropriation or misuse of Idera
Know-How or (iii) infringement of Idera Background Patent Rights in
any of the Fields, whether by settlement or otherwise, shall be shared
in the following order of priority:
(I) [**];
(II) [**]; and
(III) [**].
7.5 COOPERATION; PATENT TERM EXTENSION AND RESTORATION
The Parties agree to cooperate and to take reasonable actions to maximize
the protections available under the provisions of 35 U.S.C. 103(c) for U.S.
patents/patent applications. The Parties hereto shall cooperate with each
other, including without limitation, to provide necessary information and
assistance as the other Party may reasonably request, in obtaining patent
term extension, restoration or supplemental protection certificates or
their equivalents in any country in the Territory where applicable to Idera
Patent Rights. In the event that elections with respect to obtaining such
patent term restoration are to be made, Merck shall have the right to make
the election and Idera agrees to abide by such election. All costs, fees
and expenses incurred in obtaining patent term extensions, restorations or
supplemental protection certificates shall be borne by Idera, unless such
election was made by Merck.
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. Upon expiration of this Agreement, Merck's licenses pursuant to
Sections 3.1.1 and 3.1.2 shall become fully paid-up, perpetual licenses.
8.2 TERMINATION BY MERCK
Notwithstanding anything contained herein to the contrary, Merck shall have
the right to terminate this Agreement at any time in its sole discretion by
giving one hundred eighty (180)
34
days' advance written notice to Idera during the Research Program Term and
ninety (90) days' advance written notice to Idera once the Research Program
Term has expired. No later than [**] days after the effective 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; provided, however, that Idera may retain any
Information reasonably necessary for such Party's continued practice under
any license(s) which do not terminate pursuant to this Section 8.2, and
each Party may keep one copy of Information received from the other Party
in its confidential files for record purposes to ensure its compliance with
the terms of this Agreement. In the event of termination under this Section
8.2: (i) each Party shall pay all amounts then due and owing as of the
termination date; and (ii) except for the license rights set out in Section
3.2.1 which shall become a fully paid-up, perpetual license and the
surviving provisions set forth in Section 8.4 hereof, the rights and
obligations of the parties hereunder shall terminate as of the date of such
termination.
8.3 TERMINATION FOR CAUSE
8.3.1 Cause for Termination. This Agreement may be terminated at any time
during the term of this 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
[**] days after notice requesting cure of the breach; provided,
however, that in the event of a good faith dispute with respect
to the existence of a material breach, the [**] day cure period
shall be tolled until such time as the dispute is resolved
pursuant to Section 10.6 hereof;
(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, that
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 one hundred twenty (120) days after the filing thereof;
and
(C) (i) each Party shall pay all amounts then due and owing as of the
termination date; and (ii) except as provided in Section 8.3.2
and except for the surviving provisions set forth in this Article
8 hereof, the rights and obligations of the Parties hereunder
shall terminate as of the date of such termination.
8.3.2 Effect of Termination for Cause on License; Section 365(n) Rights
(A) If Idera terminates this Agreement under Section 8.3.1(a) and an
arbitration award has been granted pursuant to Section 10.6
finding that Merck has breached a material obligation, (i)
Idera's license pursuant to Section 3.2.1 shall become a fully
paid-up, perpetual license; (ii) Merck's licenses pursuant to
Sections 3.1.1 and 3.1.2 shall terminate as of such termination
date; (iii) Merck shall pay all amounts then due and owing as of
the terminate date; and (iv) Merck shall, within [**] days after
the effective date of such termination, return or cause to be
returned to Idera all Information in tangible form and all
substances or compositions delivered or provided by Idera,
including Idera Material, as well as any other material provided
by Idera in any medium.
35
(B) If Merck terminates this Agreement under Section 8.3.1(a) and an
arbitration award has been granted pursuant to Section 10.6
finding that Idera has breached a material obligation, Merck's
licenses pursuant to Sections 3.1.1 and 3.1.2 shall become fully
paid-up, perpetual licenses and Merck's financial obligations
pursuant to Sections 5.3 and 5.4 shall remain in full force and
effect; provided, however, that Merck may (i) offset against such
financial obligations the amount of any damages resulting from
such material breach by Idera that are awarded to Merck pursuant
to Section 10.6; (ii) in the case of Idera's breach of a material
obligation that relates to or arises out of Idera's obligations
under the Research Program or Idera's exclusive efforts under
Section 2.12, reduce by [**]% any milestone and royalty payments
that may become due and owing; and (iii) in the event such
termination occurs before the one year anniversary of the end of
the Research Program Term, Merck shall be entitled to exercise
its right under Section 2.8.3 to select up to [**] Selected
Collaboration Compounds targeting TLR 9, along with [**] back-up
Selected Collaboration Compounds, and [**] Selected Collaboration
Compounds targeting XXX 0, XXX 8 or both TLR 7 and TLR 8, along
with [**] back-up Selected Collaboration Compounds, within 180
days of the date of termination by Merck. Idera shall, within
[**] days after the effective date of such termination, return or
cause to be returned to Merck all Information in tangible form,
and all substances or compositions delivered or provided by
Merck, including Merck Material, as well as any other material
provided by Merck in any medium.
(C) Upon termination of this Agreement by Merck pursuant to Section
8.2, or by Idera pursuant to Section 8.3.1(a), Merck and its
Affiliates, sublicensees and distributors shall be entitled,
during the twelve (12) month period immediately following the
effective date of termination, to finish any work-in-progress and
to sell any Products remaining in inventory, in accordance with
the terms of this Agreement.
(D) All licenses and rights to licenses granted under or pursuant to
this Agreement to either Party are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the United States
Bankruptcy Code (the "CODE"), licenses of rights to "intellectual
property" as defined under Section 101(35A) of the Code. The
Parties agree that the 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 the licensor under the Code,
the licensee shall be entitled to a complete duplicate of, or
complete access to (as the licensee 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 the licensee (i) upon any such
commencement of a bankruptcy proceeding upon written request
therefor by the licensee, unless the licensor elects to continue
to perform all of its obligations under this Agreement or (ii) if
not delivered under (i) above, upon the rejection of this
Agreement by or on behalf of the licensor upon written request
therefor by the licensee.
The foregoing provisions of this Section 8.3.2(d) are without
prejudice to any rights the licensee may have arising under the
Code or other applicable law.
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8.4 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL
Expiration or termination of this 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 Product(s) or Selected Collaboration
Compound(s) sold prior to such expiration or termination. The provisions of
Article 4 shall survive the expiration or termination of this Agreement and
shall continue in effect for [**]. In addition, the provisions of Articles
1, 7, 8 and 9, and Sections 2.9, 3.7, 10.4 through 10.7, 10.9 and 10.12
shall survive any expiration or termination of this Agreement.
In the event of termination of any of Merck's licenses hereunder, Merck
shall be responsible for notifying each sublicensee of such termination and
for ensuring that such sublicensee discontinues its practice of the rights
sublicensed to it under the licenses granted to Merck in this Agreement. In
the event of a material default by any sublicensee under a sublicense
agreement, Merck will inform Idera and take such action, after consultation
with Idera, that in Merck's reasonable business judgment will address such
default.
9. INDEMNIFICATION
9.1 INDEMNIFICATION BY MERCK
Subject to the limitation of liability set forth in Section 9.4, Merck
agrees to defend Idera, its Affiliates and their respective directors,
officers, employees and agents at Merck's cost and expense, and shall
indemnify and hold harmless Idera and its Affiliates and their respective
directors, officers, employees and agents from and against any liabilities,
losses, costs, damages, fees or expenses arising out of any Third Party
claim relating to (i) any breach by Merck of any of its representations,
warranties or material obligations pursuant to this Agreement or (ii)
personal injury and property damage resulting from the development,
manufacture, use or sale of Selected Collaboration Compound(s) or
Product(s) by Merck or its Related Parties, except to the extent such
liabilities, losses, costs, damages, fees or expenses result from the gross
negligence or willful misconduct of Idera.
9.2 INDEMNIFICATION BY IDERA
Subject to the limitation of liability set forth in Section 9.4, Idera
agrees to defend Merck, its Affiliates and their respective directors,
officers, employees and agents at Idera's cost and expense, and shall
indemnify and hold harmless Merck and its Affiliates and their respective
directors, officers, employees and agents from and against any liabilities,
losses, costs, damages, fees or expenses arising out of any Third Party
claim relating to (i) any breach by Idera of any of its representations,
warranties or material obligations pursuant to this Agreement or (ii)
personal injury and property damage resulting from the development,
manufacture, use or sale of Non-Selected Collaboration Compound(s) or
product(s) containing such Non-Selected Collaboration Compounds by Idera or
its sublicensees pursuant to Section 3.2.1, except to the extent such
liabilities, losses, costs, damages, fees or expenses result from the gross
negligence or willful misconduct of Merck.
9.3 CLAIMS FOR INDEMNIFICATION
A Person entitled to indemnification under this Article 9 (an "INDEMNIFIED
PARTY") shall give prompt written notification to the Person from whom
indemnification is sought (the "INDEMNIFYING PARTY") of the commencement of
any action, suit or proceeding relating to a
37
Third Party claim for which indemnification may be sought or, if earlier,
upon the assertion of any such claim by a Third Party (it being understood
and agreed, however, that the failure by an Indemnified Party to give
notice of a Third-Party claim as provided in this Section 9.3 shall not
relieve the Indemnifying Party of its indemnification obligation under this
Agreement except and only to the extent that such Indemnifying Party is
actually damaged as a result of such failure to give notice). Within thirty
(30) days after delivery of such notification, the Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such Third Party claim with counsel reasonably satisfactory to
the Indemnified Party. If the Indemnifying Party does not assume control of
such defense, the Indemnified Party shall control such defense. The Party
not controlling such defense may participate therein at its own expense.
The Party controlling such defense shall keep the other Party advised of
the status of such action, suit, proceeding or claim and the defense
thereof and shall consider recommendations made by the other Party with
respect thereto. The Indemnified Party shall not agree to any settlement of
such action, suit, proceeding or claim without the prior written consent of
the Indemnifying Party, which shall not be unreasonably withheld, delayed
or conditioned. The Indemnifying Party shall not agree to any settlement of
such action, suit, proceeding or claim or consent to any judgment in
respect thereof that does not include a complete and unconditional release
of the Indemnified Party from all liability with respect thereto or that
imposes any liability or obligation on the Indemnified Party without the
prior written consent of the Indemnified Party.
9.4 LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL,
PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING,
WITHOUT LIMITATION, ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE,
LOSS OR INACCESSIBILITY OF DATA, OR INTERRUPTION OF BUSINESS, ARISING UNDER
OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10. MISCELLANEOUS
10.1 FORCE MAJEURE
Neither Party shall be held liable to the other Party nor be deemed to have
defaulted under or breached this Agreement for failure or delay in
performing any obligation under this Agreement to the extent that such
failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, potentially including, but not limited to,
embargoes, war, acts of war (whether war be declared or not), acts of
terrorism, 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.
10.2 ASSIGNMENT/ CHANGE OF CONTROL
10.2.1 Except as provided in this Section 10.2, 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.
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10.2.2 Merck may, without Idera's consent, assign this Agreement and its
rights and obligations hereunder in whole or in part to a Merck
Affiliate or in connection with a Change of Control.
10.2.3 Idera may, without Merck's consent, assign this Agreement and its
rights and obligations hereunder in whole in connection with a Change
in Control; provided, however, that Idera must notify Merck at least
[**] days prior to completion of any such Change of Control except
that in the case of a Change of Control as set forth in Section
1.8(iii) only, Idera shall provide Merck such notice [**] days after
Idera becomes aware of such Change of Control.
In connection with such Competing Pharma Change of Control, Merck
shall have the right, at any time after receipt of such notice, to:
(A) terminate the Research Program and all FTE funding, in which
event the Parties shall be released of their respective
obligations under Article 2 and the non-exclusive license granted
by Merck to Idera under Section 3.2.2 under this Agreement shall
terminate;
(B) limit its obligations to provide Idera royalty related reports
pursuant to Section 5.5 to reporting only Merck's worldwide
royalty obligations;
(C) convert without penalty the exclusive license granted by Merck to
Idera under Section 3.2.1 of this Agreement into a non-exclusive
license; and/or
(D) require Idera, including the Change of Control party, to adopt
reasonable procedures to be agreed upon in writing with Merck to
prevent the disclosure of all Information of Merck and its
Affiliates and other information with respect to the development
of Evaluation Collaboration Compounds and Selected Collaboration
Compounds (collectively "SENSITIVE INFORMATION") beyond Idera
personnel having access to and knowledge of Sensitive Information
prior to the Change of Control and to control the dissemination
of Sensitive Information disclosed after the Change of Control.
The purposes of such procedures shall be to strictly limit such
disclosures to only those personnel having a need to know
Sensitive Information in order for Idera to perform its
obligations under this Agreement and to prohibit the use of
Sensitive Information for competitive reasons against Merck and
its Related Parties, including without limitation, the use of
Sensitive Information for the development or commercialization of
competing products.
10.2.4 Any permitted assignee shall assume all assigned obligations of its
assignor under this Agreement. Any attempted assignment not in
accordance with this Section 10.2 shall be void.
10.3 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.
39
10.4 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 Idera, to: Idera Pharmaceuticals, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
and Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Merck, to: Merck & Co., Inc.
One Merck Drive (WS 3A-65)
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Office of Secretary
Facsimile: (000) 000-0000
and Merck & Co., Inc.
One Merck Drive (WS 2A-30)
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Chief Licensing Officer
Facsimile: (000) 000-0000
or to such other address(es) 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 (or if
delivered or sent on a non-business day, then on the next business day);
(b) on the business day after dispatch, if sent by nationally-recognized
overnight courier; or (c) on the fifth (5th) business day following the
date of mailing, if sent by mail.
10.5 APPLICABLE LAW
This 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.
10.6 DISPUTE RESOLUTION
10.6.1 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 the breach thereof. If
40
the Parties do not fully settle, and a Party wishes to pursue the
matter, each such dispute, controversy or claim 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 judgment on the arbitration award may be
entered in any court having jurisdiction thereof.
10.6.2 The arbitration shall be conducted by a panel of three persons
experienced in the pharmaceutical business. 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.
10.6.3 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 an equal share of
the arbitrators' fees and any administrative fees of arbitration.
10.6.4 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.
10.6.5 The Parties agree that, in the event of a dispute over the nature or
quality of performance under this Agreement, neither Party may
terminate this 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.
10.6.6 As used in this Section 10.6, the term "EXCLUDED CLAIM" shall mean a
dispute, controversy or claim 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.
10.7 ENTIRE AGREEMENT; AMENDMENTS
This Agreement, together with the Stock Purchase Agreement and Registration
Rights Agreement, contains the entire understanding of the Parties with
respect to the subject matter hereof. Any other express or implied
agreements and understandings, either oral or written, with respect to the
subject matter hereof are superseded by the terms of this Agreement.
Notwithstanding the foregoing, the Material Transfer Agreement dated
January 23, 2006 between Idera and Merck, as amended on July 28, 2006 and
August 16, 2006, shall remain in full force
41
and effect in accordance with its terms with respect to transfers of
materials and disclosures of information governed thereby through the
Effective Date, but shall be superseded by this Agreement with respect to
such transfers and disclosures occurring on or after the Effective Date.
This Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by authorized representatives of both
Parties hereto.
10.8 AFFILIATES
Merck may perform its obligations hereunder personally or through one of
more Affiliates, although Merck shall nonetheless be solely responsible for
the performance of its Affiliates. Merck shall not permit any of its
Affiliates to commit any act (including any act or omission) which Merck is
prohibited thereunder from committing directly.
10.9 HEADINGS
The captions to the several Articles and Sections hereof are not a part of
this Agreement, but are merely for convenience to assist in locating and
reading the several Articles and Sections hereof.
10.10 INDEPENDENT CONTRACTORS
It is expressly agreed that Idera and Merck shall be independent
contractors and that the relationship between the Parties shall not
constitute a partnership, joint venture or agency. Neither Idera nor Merck
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 Party, without the prior written consent of the other Party.
10.11 WAIVER
The waiver by either Party hereto of any right hereunder, or of any failure
of the other Party to perform, or of any breach by the other Party, shall
not be deemed a waiver of any other right hereunder or of any other breach
by or failure of such other Party, whether of a similar nature or
otherwise.
10.12 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.
10.13 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.
10.14 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
42
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.
MERCK & CO., INC. IDERA PHARMACEUTICALS, INC.
By: /s/ Xxxxx X. Xxx By: /s/ Xxxxxx Xxxxxxx
--------------------------------- ------------------------------------
Xxxxx X. Xxx Xxxxxx Xxxxxxx
President, Merck Research Chief Executive Officer
Laboratories
43
SCHEDULE 1.18
EVALUATION CRITERIA
Evaluation Criteria for Compounds Targeting TLR 9
[**]
Evaluation Criteria for Compounds Targeting XXX 0, XXX 8 and/or TLR 7 and TLR 8
[**]
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SCHEDULE 1.25
IDERA BACKGROUND PATENT RIGHTS
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SCHEDULE 1.29
IDERA MATERIALS
(A)
[**]
(B)
Any other IMO to be provided by Idera to Merck pursuant to Schedule
1.18 or Schedule 2.1.
ix
SCHEDULE 1.50
MERCK MATERIALS
To be provided within thirty (30) days of the Execution Date.
x
SCHEDULE 1.73
SELECTION CRITERIA
The criteria set forth in this Schedule 1.73 is subject to the sole discretion
of Merck and is listed here as a guideline only.
I. ONCOLOGY FIELD
[**]
II. INFECTIOUS DISEASE FIELD
Formulation
[**]
III. ALZHEIMER'S DISEASE FIELD
Formulation
[**]
xi
SCHEDULE 2.1
RESEARCH PROGRAM
BACKGROUND
Toll like receptor (TLR) agonists have been shown to be potent adjuvants to
vaccines for a variety of indications in a number of experimental systems as
well as in the clinic. In particular, agonists to TLR7, TLR8 and TLR9 have
elicited a great deal of attention in view of the key role played by these
receptors in modulating the immune response and in determining the amplitude and
efficacy of immunization regimens. Idera structure-activity relationship studies
have identified a portfolio of oligodeoxynucleotides as agonists of TLR9 that
induce potent Th-1 immune responses. These studies have provided the insights of
design and development of nucleic acid-based TLR agonists.
Single-stranded viral RNA and certain endogenous RNAs are natural ligands for
TLRs7 and 8. Delivery of RNA or oligoribonucleotides as agonists of TLR7/8 are
limited due to their instability against nucleases and RNases. Idera has
identified novel RNA structures that [**]. These oligoribonucleotides contain
[**]. These RNA compounds are referred to as SIMRA (Stabilized Immune Modulatory
RNA). Idera studies have shown that these SIMRA compounds activate TLR8 or TLR7
and 8 depending on the [**]. SIMRA compounds have [**]. Specific recognition of
SIMRA compounds by TLR7 and 8 is modulated by the [**].
Based on these initial designs, [**]. These novel [**] may be provided by either
MRL or Idera. A key objective of the Research Plan is to determine the impact of
Idera's proprietary TLR agonists, as well as TLR agonists derived jointly under
the research collaboration, on the immunogenicity and efficacy of Merck's
proprietary vaccines for Cancer, Infectious Disease (ID) and Alzheimer (AD)
[**]. Another objective of the Research Plan is to [**].
PROPOSAL
[**] under the Research Plan. Idera will [**]. Merck will [**]. Additionally
[**].
xii
SPECIFIC EXPERIMENTAL PLAN
1. [**] SIMRA COMPOUNDS WILL BE [**] UNDER THE RESEARCH PLAN.
(a) Merck will [**] Idera.
i. MRL (RY and IRBM) will [**].
ii. Following [**], MRL and Idera will [**].
(b) SIMRA compounds will be [**].
[**] involves the following steps
- Synthesis of nucleoside phosphoramidites
- Synthesis of oligos on automated RNA/DNA synthesizers,
- Purification using HPLC techniques,
- Desalting/Lyophilization,
- Analysis and characterization by:
- Capillary gel electrophoresis,
- Ion-exchange HPLC,
- PAGE,
- MALDI-TOF Mass spectrometry.
2. IDERA WILL [**].
(a) [**] SIMRA Compounds synthesized will be [**].
- [**] against [**]
- [**] cytokine profiles [**] using luminex multiplex assay
(b) Depending on the [**] compounds [**] of the compounds will be
synthesized [**] and [**]
Based on the [**] Idera and Merck [**] will be [**] by Idera to [**] with
[**] in [**] will be [**] at Merck.
- [**], in order to conduct the experiments indicated in the Research
Program.
- Additionally, [**] including chemical structure.
It is projected that [**] by Idera, from which [**]. The [**] at Merck's
discretion.
xiii
3. MERCK WILL TEST THE TLR7, TLR8, TLR7/8 AND TLR9 AGONISTS PROVIDED BY IDERA
IN COMBINATION WITH MERCK PROPRIETARY CANCER, ID, AND AD VACCINES IN
APPROPRIATE [**] MODELS.
(a) Perform evaluation studies [**]. Merck expects to [**] depending on
the Field.
(b) Evaluation experiments will [**] as follows:
Cancer Vaccines
Synergy between [**]. If appropriate, [**] will also be [**].
[**] vaccination will take place by i.m. (DNA-EP/Ad) or i.d. (peptides)
immunization. [**] according to [**] procedures to [**].
ID Vaccines
Selected Idera's TLR agonists will be [**] (based on, but not restricted
to, [**]) and/or in [**].
xiv
AD Vaccines
Selected Idera's TLR agonists will be [**] and/or [**].
If appropriate, [**].
ENDPOINT:
The [**] will be judged on the basis of [**].
ID Vaccines
Immunogenicity markers will include, but will not be restricted to: [**].
The nature of a chosen marker(s) will depend on [**]. Whenever possible,
[**] will be assessed for [**].
Cancer Vaccines
Immunogenicity markers will include, but will not be restricted to: [**].
AD Vaccines
The markers will primarily include: [**].
Other factors that will [**].
4. MERCK WILL MONITOR THE [**].
(a) The [**] will be assessed [**] for their ability to induce [**] as
measured by ELISA, MesoScale, Multiplex or qPCR analyses, or to [**].
If appropriate, [**].
(b) At [**] may similarly be evaluated [**].
(c) [**] will be evaluated for the ability to [**].
(d) If appropriate, [**] to verify whether [**] effects can be obtained.
xv
SCHEDULE 2.3.2
DEPLOYMENT OF FTES
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
[**]
xvi
SCHEDULE 2.12
IDERA OBLIGATIONS
UNDER THE IMMUNE RESPONSE CORPORATION AGREEMENT
Idera has granted a non-exclusive license under Idera's intellectual property
rights to The Immune Response Corporation to research, develop and commercialize
IMO-2055 for use as an adjuvant in vaccine products for the treatment and
prevention of HIV. [**].
xvii
SCHEDULE 4.4
FORM OF PRESS RELEASE
(MERCK LOGO)
IDERA PHARMACEUTICALS MERCK & CO., INC.
Media: Xxxx Xxxxxx Media: Xxxxx Xxxxxxxx
(000) 000-0000 (000) 000-0000
Investors: Xxxxx Xxxxxxx Investors: Xxxxxx Xxxx
(000) 000-0000 (000) 000-0000
MERCK & CO., INC. AND IDERA PHARMACEUTICALS SIGN COLLABORATION AGREEMENT
INCORPORATING IDERA'S TOLL-LIKE RECEPTOR AGONISTS IN MERCK'S VACCINE PROGRAMS
CAMBRIDGE, MASS. AND WHITEHOUSE STATION, N.J., DEC. 11, 2006 - Merck & Co., Inc.
(NYSE: MRK) and Idera Pharmaceuticals (AMEX: IDP) announced today that they have
formed a broad collaboration to research, develop and commercialize Idera's
Toll-like Receptor (TLR) agonists by incorporating them in therapeutic and
prophylactic vaccines being developed by Merck for oncology, infectious diseases
and Alzheimer's disease.
"Our collaboration with Idera is part of Merck's long-standing commitment to
research and develop novel vaccines and medicines that can improve human
health," said Xxxxx X. Xxx, Ph.D., president, Merck Research Laboratories. "We
believe that vaccines combined with TLR-targeted compounds offer great promise
in treating and preventing serious diseases, and look forward to integrating
Idera's TLR agonists into our vaccine development programs."
Under the terms of the agreement, Merck will receive worldwide exclusive rights
to a number of Idera's agonist compounds targeting TLR 7, 8 and 9 for use in
combination with Merck's therapeutic and prophylactic vaccines under development
for oncology, infectious diseases and Alzheimer's disease. Merck and Idera will
engage in a two-year research and development collaboration to generate novel
agonists targeting TLR 7 and TLR 8 and incorporating both
- more -
xviii
Merck and Idera chemistry for use in the licensed fields.
Merck has agreed to pay an upfront license fee of $20 million to Idera and to
purchase $10 million of its common stock at $5.50 per share. In addition, Merck
will fund the research and development collaboration. Idera is eligible to
receive milestone payments of up to $165 million if vaccines are successfully
developed in each of the three fields. Additional milestones of up to $260
million would be payable for follow-on indications in the oncology field and the
successful development of additional vaccines containing Idera's TLR agonists.
There is no limit to the number of vaccines to which Merck can apply Idera's
agonists within the licensed fields. In addition, Idera will receive royalties
on products commercialized under the collaboration.
"We are extremely pleased to collaborate with Merck, a global pharmaceutical
leader with a reputation for innovative research," said Xxxxxx Xxxxxxx, D.
Phil., chief executive officer and chief scientific officer of Idera. "This
agreement enables Idera to increase the potential of our TLR 7, 8 and 9 targeted
compounds in the field of therapeutic and prophylactic vaccines. Furthermore, we
look forward to working closely with Merck's world-class chemists to expand our
portfolio of novel TLR 7 and TLR 8 agonist compounds."
"TLRs are critical mediators of the human immune response. We believe a
chemistry-based approach may be an efficient way to harness the activity of TLRs
to train the immune system to recognize antigens, thereby potentially enhancing
the effect of vaccines," said Xxxxxxx X. Friend, M.D., Ph.D., executive vice
president of Advanced Technologies and Oncology at Merck. "We are pleased to
collaborate with Idera, which has established a robust TLR-based discovery
platform that is synergistic with our internal chemistry programs and has
yielded an extensive portfolio of TLR agonist compounds that can be applied
across our multiple areas of interest for new vaccine development."
ABOUT TLRS
Toll-like Receptors (TLR) function in human immune cells as the sensors of
pathogens. They recognize different microbial products present in pathogens such
as bacteria, viruses and parasites, and mount an appropriate immune response
against the foreign invaders. TLRs have become attractive targets for developing
immune modulators to treat a number of diseases,
- more -
xix
including cancer, asthma, allergies, and infectious diseases.
ABOUT IDERA PHARMACEUTICALS, INC.
Idera Pharmaceuticals, Inc. is a drug discovery and development company that is
developing drug candidates to treat cancer and infectious, respiratory, and
autoimmune diseases, and for use in combination with therapeutic and
prophylactic vaccines. Idera's proprietary drug candidates are designed to
modulate Toll-like Receptors, the body's first line of immune defense. Idera's
pioneering DNA chemistry expertise enables it to identify drug candidates for
internal development and creates opportunities for multiple collaborative
alliances. For more information, visit xxx.xxxxxxxxxxx.xxx.
IDERA FORWARD LOOKING STATEMENT
This press release contains forward-looking statements concerning Idera
Pharmaceuticals, Inc. that involve a number of risks and uncertainties. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "estimates,"
"intends," "should," "could," "will," "may," and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause Idera's actual results to differ materially from those
indicated by such forward-looking statements, including whether the
collaboration with Merck will be successful and whether the Company will receive
any of the milestones provided for under the collaboration; whether products
based on Idera's technology will advance into or through the clinical trial
process on a timely basis or at all and receive approval from the United States
Food and Drug Administration or equivalent foreign regulatory agencies; whether,
if the Company's products receive approval, they will be successfully
distributed and marketed; whether Idera's cash resources will be sufficient to
fund product development and clinical trials; and such other important factors
as are set forth under the caption "Risk Factors" in Idera's Quarterly Report on
Form 10-Q filed on November 13, 2006, which important factors are incorporated
herein by reference. Idera disclaims any intention or obligation to update any
forward-looking statements.
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ABOUT MERCK & CO., INC.
Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated
to putting patients first. Established in 1891, Merck currently discovers,
develops, manufactures and markets vaccines and medicines to address unmet
medical needs. The Company devotes extensive efforts to increase access to
medicines through far-reaching programs that not only donate Merck medicines but
help deliver them to the people who need them. Merck also publishes unbiased
health information as a not-for-profit service. For more information, visit:
xxx.xxxxx.xxx.
MERCK FORWARD-LOOKING STATEMENT
This press release contains "forward-looking statements" as that term is defined
in the Private Securities Litigation Reform Act of 1995. These statements are
based on management's current expectations and involve risks and uncertainties,
which may cause results to differ materially from those set forth in the
statements. The forward-looking statements may include statements regarding
product development, product potential or financial performance. No
forward-looking statement can be guaranteed, and actual results may differ
materially from those projected. Merck undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new information,
future events, or otherwise. Forward-looking statements in this press release
should be evaluated together with the many uncertainties that affect Merck's
business, particularly those mentioned in the cautionary statements in Item 1 of
Merck's Form 10-K for the year ended Dec. 31, 2005, and in its periodic reports
on Form 10-Q and Form 8-K, which the company incorporates by reference.
# # #
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SCHEDULE 5.4.4
ROYALTY REDUCTION
Total aggregate royalty rate * [**]% = Amount of royalty rate reduction
obligation exceeding [**]%
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SCHEDULE 6.1(D)
SCHEDULE OF EXCEPTIONS
The following patent applications are jointly owned by Idera and The Immune
Response Corporation:
Application Number 11/078,654 (Publication Number 20050266015
Application Number PCT/US04/16298 (Publication Number WO 05/089231A2
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