Exhibit 10.12
CONFIDENTIAL TREATMENT
AGREEMENT
This Agreement (the "Agreement") is entered into as of the last date of
signature appearing below (the "EFFECTIVE DATE") between NeoGenesis Drug
Discovery, Inc., a Delaware corporation ("NEOGENESIS") and Schering-Plough Ltd.,
a Swiss corporation ("SPL"), and sets forth the terms and conditions that will
apply to the provision by NeoGenesis to SPL of certain screening and analysis
services.
BACKGROUND
SPL is interested in identifying potential pharmaceutical products for treatment
of certain human diseases and wishes to identify compounds that exhibit a high
degree of chemical binding and functional activity to specific protein targets.
NeoGenesis has certain technology and know-how, including screening processes of
libraries of mass-encoded small molecule compounds, relating to the
identification, discovery, validation and optimization of novel compounds which
may be useful for development of novel therapeutics employing targets implicated
in a disease process. The parties wish to pursue a collaborative screening
process to identify compounds exhibiting a high degree of chemical binding
activity to targets designated by SPL from among the NeoGenesis libraries of
mass-encoded small molecule compounds and which have activity in target-specific
functional assays. The terms and conditions set forth below shall govern the
performance of such collaborative effort.
1. DEFINITIONS.
The following capitalized terms used in this Agreement, whether in the
singular or plural, shall have the meaning set forth below.
1.1 "ACTIVE COMPOUND" means any Compound identified as having binding
activity when tested against a Target pursuant to the Screening Program and
which (a) has Kd values of [*] and (b) has demonstrated bioactivity in
functional assays against the applicable Target as determined by the Steering
Committee following SPL's performance of the procedure specified in Paragraph 3
of ATTACHMENT A.
1.2 "AFFILIATE" means with respect to either party, any Person that,
directly or indirectly, is controlled by, controls or is under common control
with such party. For purposes of this definition, control means, with respect to
any Person, the direct or indirect ownership of fifty percent (50%) or more of
the outstanding voting securities of an entity, or the right to receive fifty
percent (50%) or more of the profits or earnings of an entity, or the possession
otherwise, directly or indirectly, of the power to direct the management,
business and affairs of an entity.
1.3 "ALIS" means the Automated Ligand Identification System, an automated,
ultra-high throughput ligand selection system proprietary to NeoGenesis that is
used to identify multiple classes of chemical ligands against a target protein.
1.4 "CHEMOTYPE" means a family or group of Compounds closely structurally
related to one or more Active Compounds.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
1
1.5 "CIP" means "Carriage and Insurance Paid", as that expression is
defined in Incoterms 2000, ICC Publishing S.A.
1.6 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to (a) any
objective by either party, reasonable, diligent, good faith efforts to
accomplish such objective as such Party would normally use to accomplish a
similar objective under similar circumstances; and (b) with respect to any
objective relating to the development or commercialization of any Licensed
Product efforts and resources normally used by such party with respect to a
product owned by such party or to which such party has similar rights which is
of similar market potential at a similar stage in the development or life of
such product, taking into account issues of safety, efficacy, product profile,
the competitiveness of the marketplace, the proprietary position of the product,
the regulatory structure involved, profitability of the product and other
relevant commercial factors.
1.7 "COMPOUND" shall mean all proprietary compounds contained in the
NeoMorph Screening Library or any NeoMorph Focused Libraries which are screened
by NeoGenesis against one or more Targets in performance of the Screening
Program.
1.8 "COMPOUND PATENT RIGHTS" shall mean any Schering Patent Rights which
claim Selected Compounds, Derivative Compounds, Designated Compounds or Licensed
Product, or the manufacture or use thereof.
1.9 "CONFIDENTIAL INFORMATION" means any proprietary or confidential
information of either party (including but not limited to all Schering Know-How
and all NeoGenesis Know-How) disclosed to the other party pursuant to this
Agreement in written or other tangible medium and marked as confidential, or if
disclosed orally or displayed, confirmed in writing within thirty (30) days of
disclosure.
1.10 "DERIVATIVE COMPOUND" means a compound which is derived from a
Selected Compound or a Lead Compound by or on behalf of SPL, or by NeoGenesis in
performance of medicinal chemistry optimization pursuant to Section 2.2(b), and
having activity against the same Target as such Selected Compound and/or Lead
Compound. A compound will be deemed to have been "derived" from a Selected
Compound or a Lead Compound if it (i) is the result of a chemical modification
made to a Selected Compound or Lead Compound, (ii) is otherwise derived from a
chemical synthesis program based upon a Selected Compound or Lead Compound, or
(iii) is based on proprietary structure-function data obtained from Selected
Compounds or Lead Compounds. Derivative Compounds will include, without
limitation, all Compounds contained in the NeoMorph Focused Library(ies).
1.11 "DESIGNATED COMPOUND" means any Selected Compound or Derivative
Compound which becomes the subject of a development program conducted by SPL or
its Affiliates, as further defined in Section 2.8(b) of the Agreement.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
2
1.12 "EMEA" means the European Medicines Evaluation Authority, or any
successor thereto.
1.13 "FDA" means the United States Food and Drug Administration, or any
successor thereto.
1.14 "FD&C ACT" means the United States Federal Food, Drug and Cosmetic Act
of 1938, as amended.
1.15 "FIELD" means the treatment or prevention of any disease or condition
in humans or animals.
1.16 "FIRST COMMERCIAL SALE" means, with respect to a Licensed Product, the
first sale (or other transfer for value in an arms-length transaction) for end
use of such Licensed Product in a country within the Territory after obtaining
all necessary Regulatory Approvals for the marketing and sale of the Licensed
Product in such country.
1.17 "FTE" means the equivalent of a full time (12) months (including
normal vacations, sick days and holidays) work of an individual scientist,
carried out by one or more employees or agents of NeoGenesis, who devotes a
portion of his or her time to performing the Screening Program.
1.18 "GOOD CLINICAL PRACTICE" means the then current standards for clinical
trials for pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the European Union and
other Regulatory Authorities in countries in which the Product is intended to be
sold, to the extent such standards are not in contravention with United States
Good Clinical Practices.
1.19 "GOOD LABORATORY PRACTICE" means the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FD&C Act and
applicable regulations promulgated thereunder, as amended from time to time, and
such standards of good laboratory practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Laboratory Practices.
1.20 "GOOD MANUFACTURING PRACTICE" means the current standards for the
manufacture of pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good manufacturing practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Manufacturing Practices.
1.21 "IMPROVED ACTIVE COMPOUND" means any Compound identified as a result
of initial optimization of one or more Active Compounds by NeoGenesis (as
described in paragraph
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
3
4 of ATTACHMENT A) and having binding activity when tested against a Target
pursuant to the Screening Program with a Kd value of [*].
1.22 "IND" means an investigational new drug application, as defined in the
FD&C Act and applicable regulations thereunder, or any equivalent document,
filed with the FDA and necessary for beginning clinical trials of any Licensed
Product in humans or any application or other documentation filed with any
Regulatory Authority of a country other than the United States prior to
beginning clinical trials of any Licensed Product in humans in that country.
1.23 "INVENTIONS" means any and all discoveries, developments, inventions
and innovations (whether or not patentable) that are conceived and/or reduced to
practice (i) solely by one or more employees or consultants of NeoGenesis in
connection with the performance of the Screening Program; (ii) solely by one or
more employees or consultants of SPL in connection with the performance of the
Screening Program; or (iii) jointly by one or more employees or consultants of
NeoGenesis and one or more employees or consultants of SPL in connection with
the performance of the Screening Program.
1.24 "LEAD COMPOUNDS" means those Selected Compounds which are designated
by SPL as Lead Compounds (pursuant to Section 2.2(b) of the Agreement) for the
performance of medicinal chemistry optimization by NeoGenesis.
1.25 "LICENSED PRODUCT(S)" means any pharmaceutical product which contains
as an active ingredient a Selected Compound or Derivative Compound, and which is
covered by one or more claims of a NeoGenesis Patent Right and/or Compound
Patent Right.
1.26 "MAJOR MARKET COUNTRY" means the United States, Japan, or any three or
more of the following European countries, the United Kingdom, France, Germany,
Italy or Spain, as the case may be.
1.27 "NDA" means a new drug application or product license application,
each as defined in the FD&C Act and applicable regulations thereunder, seeking
approval to market and sell a Licensed Product in the United States.
1.28 "NEOGENESIS KNOW-HOW" means all proprietary information, data and
know-how relating to the NeoMorph Screening Library, NeoMorph Focused Libraries,
NeoMorph Chemistry, ALIS, QSCD, the Compounds, Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products together with, where applicable, any analogs, derivatives or
fragments thereof, which is (i) owned or controlled by NeoGenesis as of the
Effective Date, or (ii) developed by or on behalf of NeoGenesis during the term
of this Agreement.
1.29 "NEOGENESIS PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by NeoGenesis
(and/or any of its Affiliates), or to which NeoGenesis (and/or any of its
Affiliates)
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
4
through license or otherwise acquires rights, and which have claims covering:
(i) the NeoMorph Screening Library, the NeoMorph Focused Libraries, NeoMorph
Chemistry, ALIS or QSCD; or (ii) any Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products, or the manufacture or use of any of the foregoing; or (iii)
NeoGenesis Inventions (as defined in Section 3.5(a)); or (iv) NeoGenesis' rights
in Joint Inventions (as defined in Section 3.5(b)), as well as all divisionals,
continuations, continuations-in-part, reissues, re-examinations, extensions,
renewals, registrations, supplementary protection certificates and/or foreign
counterparts of any of the foregoing which are owned or controlled by NeoGenesis
and its Affiliates during the term of this Agreement. The NeoGenesis Patent
Rights shall include those listed in ATTACHMENT B pursuant to Section 3.8.
1.30 "NEOMORPH CHEMISTRY" means the process, proprietary to NeoGenesis, of
forming libraries and sub-libraries of discrete compounds by coupling a broad
set of diverse cores with diverse sets of building blocks employing proprietary
mass-coding algorithms.
1.31 "NEOMORPH FOCUSED LIBRARIES" means any and all compounds or
collections of compounds synthesized by NeoGenesis which are derived from or
based upon Lead Compounds, and which are designed to optimize the structure of
such Lead Compounds with respect to activity against one or more specific
Targets.
1.32 "NEOMORPH SCREENING LIBRARY" means the entire collection of libraries
consisting of mass-encoded small molecule organic compounds owned by NeoGenesis
and developed with NeoMorph Chemistry, comprising at least twelve million
(12,000,000) different compounds.
1.33 "NET SALES" means the proceeds actually received by SPL or any of its
Affiliates or sub-licensees on all sales of a Product in the Territory to an
unaffiliated third party (whether an end-user, a distributor or otherwise), and
exclusive of intercompany transfers or sales, less the reasonable and customary
deductions from such gross amounts including: (i) normal and customary trade,
cash and quantity discounts, allowances and credits; (ii) credits or allowances
actually granted for damaged goods, returns or rejections of a Product and
retroactive price reductions; (iii) sales or similar taxes (including duties,
value added taxes or other governmental charges otherwise measured by the
billing amount, when included in billing); (iv) freight, postage, shipping,
customs duties and insurance charges; (v) charge back payments and rebates
granted to managed health care organizations or to federal, state and local
governments, their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain and pharmacy
buying groups; (vi) commissions paid to third parties other than sales personnel
and sale representatives or sales agents; and (vii) rebates (or equivalents
thereof) granted to or charged by national, state or local governmental
authorities in countries other than the United States. If a Product is sold in
the form of a combination product with one or more other active ingredients, Net
Sales for such combination product with one or more active ingredients will be
calculated by multiplying actual Net Sales of such combination product by the
fraction A/(A+B) where:
"A" is the invoice price of the Product contained in the combination
product if sold separately by SPL or any of its Affiliates or sub-licensee;
and
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
5
"B" is the aggregate invoice price of any other active component(s) in the
combination product if sold separately by SPL or any of its Affiliates or
sub-licensee.
If one or more of the other active ingredients in the combination product are
not sold separately, then the above formula shall be modified such that:
"A" shall be the fully allocated manufacturing cost to SPL or any of its
Affiliates or sub-licensee of the Product, and
"B" shall be the fully allocated manufacturing cost to SPL or any of its
Affiliates or sub-licensee of any other active component(s) in the
combination,
such fully allocated manufacturing costs being determined in accordance with
generally accepted accounting principles.
1.34 "PERSON" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
limited liability partnership, unincorporated organization, government (or any
agency or political subdivision thereof) or other legal entity or organization.
1.35 "PRELIMINARY COMPOUND" means any Compound identified as having binding
activity when tested against a Target pursuant to the Screening Program and
which has Kd values of [*] or such other binding affinity threshold for a
specific Target as shall be agreed upon by the parties in writing.
1.36 "QSCD" means Quantisized Surface Complimentary Diversity, a model
proprietary to NeoGenesis, in terms of which discrete chemical compliments to
the surfaces of a Target are defined.
1.37 "REGULATORY APPROVAL" means, for any country in the Territory, those
authorizations by the appropriate Regulatory Authority(ies) required for the
manufacture, importation, distribution, marketing, promotion, pricing and sale
of the Licensed Product(s) in such country, including, without limitation, any
NDAs, Health Registration Dossiers, supplements, amendments, pre- and
post-approvals, marketing authorizations based upon such approvals (including
any prerequisite manufacturing approvals or authorizations related thereto) and
pricing, third party reimbursement or labeling approval(s), technical, medical
and scientific licenses, registrations or authorizations.
1.38 "REGULATORY AUTHORITY" means any national, supra-national, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity in the Territory, including, without limitation, the
FDA and the EMEA.
1.39 "SCHERING KNOW-HOW" means all information, data and know-how which is
owned or controlled by SPL or its Affiliates as of the Effective Date, or
developed by or on behalf of SPL or its Affiliates during the term of this
Agreement, related to the Screening Program, the Targets, Active Compounds,
Improved Active Compounds, Selected Compounds, Derivative Compounds, Designated
Compounds or Licensed Products. Schering Know-How includes, without limitation,
all processes, formulas, discoveries and inventions whether relating to
biological, chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
6
safety, quality control and clinical data, including, without limitation,
clinical study data related to Designated Compounds and/or Licensed Products.
Schering Know-How also includes relevant medical information relating to the
Licensed Products (such as Regulatory Authority questions, responses thereto and
adverse drug event history) in the possession of SPL, its Affiliates or
sublicensees.
1.40 "SCHERING PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by SPL (and/or any
of its Affiliates), or to which SPL (and/or any of its Affiliates) through
license or otherwise acquires rights, which have claims covering: (i) Selected
Compounds, Derivative Compounds, Designated Compounds or Licensed Products, or
the manufacture or use of any of the foregoing; (ii) the Targets; or (iii)
Schering Inventions (as defined in Section 3.5(a)) or Joint Inventions (as
defined in Section 3.5(b)), as well as all divisionals, continuations,
continuations-in-part, reissues, re-examinations, extensions, renewals,
registrations, supplementary protection certificates and/or foreign counterparts
of any of the foregoing which are owned or controlled by SPL and its Affiliates
during the term of this Agreement.
1.41 "SELECTED COMPOUND" means any and all Active Compounds and/or Improved
Active Compounds which have demonstrated bioactivity in secondary functional
assays against the applicable Target as determined by SPL in accordance with
Section 2.7, and which are designated by SPL pursuant to Section 2.7(a) of the
Agreement.
1.42 "SCREENING PROGRAM" means the screening program described in
ATTACHMENT A (including as it may be amended by the Steering Committee) to
identify Active Compounds and Improved Active Compounds against one or more
Targets.
1.43 "STEERING COMMITTEE" means the joint steering committee established by
the parties pursuant to Section 2.6 of the Agreement.
1.44 "SUCCESS CRITERIA" means the success criteria, to be defined by the
Steering Committee with respect to a given Target, for determining whether or
not Selected Compounds and/or Derivative Compounds have a certain desired degree
of chemical binding activity, activity in Target-based functional assays, and
other chemical, biological, pharmacological and toxicological properties,
suitable for drug development.
1.45 "TARGET" means a specific biological target (including, without
limitation, nucleic acids and proteins, and/or active fragments thereof) that a
small molecule is screened against in order to determine whether the small
molecule demonstrates a specific biochemical or pharmaceutical effect, selected
by SPL and accepted by NeoGenesis in accordance with Section 2.1(b) for which
NeoGenesis will perform the Screening Program.
1.46 "TERRITORY" means all of the countries and territories of the world
(including Puerto Rico), except for the United States and it territories,
possessions and commonwealths other than Puerto Rico.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
7
1.47 "US AGREEMENT" means the contemporaneous Agreement entered into by
NeoGenesis and Schering's Affiliate, Schering Corporation relating to the United
States and its territories, possessions and commonwealths, excluding Puerto
Rico.
1.48 "VALID CLAIM" means a composition-of-matter or method-of-use claim of
an issued and unexpired patent included within (i) the NeoGenesis Patent Rights
or (ii) Compound Patent Rights, and in each case which has not been revoked or
held unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been disclaimed, denied or admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise.
2. SCREENING PROGRAM
2.1 DELIVERY OF TARGETS.
(a) SPL shall deliver one or more of the Targets listed in ATTACHMENT
A to NeoGenesis for screening within [*] following the Effective Date. SPL shall
provide the Targets in the quantities and formats specified in ATTACHMENT A,
along with a written description of the concentration and volume of the Target.
(b) From time to time during the term of this Agreement, SPL may
select additional Targets for screening under the Screening Program. In such
event, SPL shall notify NeoGenesis in writing of the additional Target(s) to be
provided for screening. NeoGenesis shall notify SPL in writing within [*] of
such notice whether the Target is approved for inclusion in the Screening
Program. Subject to the terms of Section 2.1(c), the Target will be accepted for
inclusion in the Screening Program unless the proposed Target: (i) is subject to
an exclusivity period in an existing agreement between NeoGenesis and a third
party; or (ii) is the subject of an existing internal research program at
NeoGenesis. The parties shall promptly amend ATTACHMENT A to include each
additional Target added to the Screening Program pursuant to this Section
2.1(b). SPL shall thereafter provide the Targets to NeoGenesis in appropriate
quantities and formats for screening, along with a written description of the
concentration and volume of the Target. The Steering Committee shall establish a
schedule for delivery of the additional Targets to NeoGenesis based on the time
necessary to prepare and validate the approved Target; PROVIDED, that such
period shall not exceed [*] from NeoGenesis' notice to SPL that a Target is
approved.
(c) The parties acknowledge and agree that the Screening Program will
be limited to active screening and/or optimization programs at NeoGenesis
directed to [*] distinct Targets, based upon research support for [*] FTEs at
NeoGenesis. In the event that the screening and optimization programs directed
to a specific Target are completed or discontinued, SPL shall have the right to
select an additional Target to replace such discontinued Target. Further, in the
event that the number of FTEs working on the Screening Program is increased,
pursuant to Section 2.2(f), the limit on the number of active Targets shall be
increased proportionately.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
8
(d) All Targets to be supplied by SPL hereunder shall be delivered
CIP to NeoGenesis' Cambridge facility using a carrier selected by SPL. The
Targets are and shall remain the sole and exclusive property of SPL. NeoGenesis
will only use the Targets for screening in performance of the Screening Program
and will not use the Targets for any other purpose without SPL's prior written
consent.
(e) SPL will identify to NeoGenesis all Targets provided by SPL for
use in the Screening Program. The identity of the Targets and any other
information related thereto will be considered Schering Confidential
Information. During the applicable Exclusivity Period (as defined below) for a
Target, NeoGenesis shall not screen the NeoMorph Screening Library for itself or
for any third party against the same Target, without SPL's prior written
approval. The "Exclusivity Period" for a given Target shall begin on the date
the Target is accepted for inclusion in the Screening Program pursuant to
Section 2.1(b) and shall expire:
(i) if NeoGenesis does not perform any medicinal chemistry
optimization activities pursuant to Section 2.2(b) to develop
NeoMorph Focused Libraries with respect to the Target, [*] after
NeoGenesis delivers to SPL the Final Target Report with respect
to such Target; or
(ii) if NeoGenesis does perform medicinal chemistry optimization
activities pursuant to Section 2.2(b) to develop NeoMorph Focused
Libraries with respect to such Target, [*] after the later of the
date upon which SPL files an IND for a Licensed Product directed
to the Target or discontinues the development of Licensed
Products against such Target.
Upon the expiration of the Screening Program, and annually thereafter, SPL shall
notify NeoGenesis in writing of the list of Targets with respect to which SPL
has ongoing programs to discover and develop Licensed Products. SPL shall
promptly notify NeoGenesis in writing in the event that it discontinues the
development of Licensed Products against a Target. For purposes of this Section
2.1(e), SPL shall be deemed to have discontinued development of Licensed
Products against a Target if it ceases to maintain a minimum of [*] FTEs
assigned full time to work on the discovery and pre-clinical development of
Licensed Products against a Target. During the term of the Screening Program, if
NeoGenesis intends to screen the NeoMorph Screening Libraries (including all
newly created Compounds contained therein) for a third party against a Target
with respect to which SPL's Exclusivity Period has expired pursuant to
subsection (i), above, NeoGenesis shall first offer SPL the opportunity to
screen the NeoMorph Screening Libraries against the Target. SPL shall have [*]
in which to accept or reject such offer. If SPL accepts the offer, such
screening shall be conducted under the terms of this Agreement and SPL shall
have a renewed Exclusivity Period with respect to such Target. If NeoGenesis
does perform medicinal chemistry optimization activities pursuant to Section
2.2(b) to develop NeoMorph Focused Libraries with respect to a Target, then
notwithstanding the expiration of the applicable Exclusivity Period pursuant
subsection (ii), above, NeoGenesis shall be permanently prohibited from
screening the NeoMorph Screening Libraries against the Target for itself and in
such instance may only perform such screening for third parties. In the event
that NeoGenesis
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
9
does screen the NeoMorph Screening Libraries against a Target for itself or a
third party as permitted under this Section 2.1(e), NeoGenesis shall not use (i)
any Schering Know-How (including without limitation any of SPL's proprietary
information related to the existence of or uses for the Target), or (ii) any
NeoGenesis Know-How related to the Target and developed in performance of the
Screening Program, in connection with such screening activities.
(f) For purposes of this Agreement, and in particular with respect to
the provisions of Sections 2.1(b) and 2.1(e), a Target identified by SPL for
screening under this Agreement will encompass the nucleic acid or amino acid
sequence of the actual Target to be provided by SPL, and in the case of a Target
which is a human biological molecule, shall be further defined by the nucleic
acid or protein encoded by the specified genomic location of origin (which will
be identified by SPL in the notification to NeoGenesis of a proposed Target
pursuant to Section 2.1(b)) and natural polymorphic variants thereof such as
SNP, insertion, deletion and splice variants or the synthetic equivalent
thereof. If a Target can not be distinguished from another biological target
based on the above, then the Target shall be considered the same as another
biological target if the other biological target comprises a contiguous region
of [*] identical to the Target or is derived from such Target by modification.
If a Target is a biological molecule of non-human origin, then the Target shall
be considered the same as another target if they are both derived from the
comparable chromosomal location of related strains of the applicable species.
For example, a target defined by [*] shall be considered the same as a target
specified by the [*] including targets derived by modification. Similarly, a
target specified by a chromosomal location in one particular strain of [*] shall
be considered identical to a target specified by the analogous location in a
second strain of bacteria. If the chromosomal locations of two targets can not
be defined, then a target shall be considered the same as a second target if it
comprises a contiguous region of [*] to said second target or is derived from
such a second Target by modification. It is expressly understood that a
non-human target falling outside the criteria defined above may not be screened
using the NeoMorph Screening Libraries with the intent of developing a product
affecting the activity of a human target that would meet the identity criteria.
For clarity, a primate ortholog of a human gene or protein may not be screened
using the Neomorph Screening Libraries if the intent is to develop a product for
human use against an otherwise excluded target. Nothing in this paragraph shall
limit the screening of non-human targets for non-human usage.
2.2 SCREENING PROGRAM.
(a) During the term of the Screening Program, NeoGenesis will utilize its
proprietary technology and methods, including without limitation the ALIS
method, to screen the NeoMorph Screening Library for activity with respect to
each Target for purposes of identifying Active Compounds for further evaluation
and development. Screening will be performed pursuant to the protocol for the
Screening Program, as set forth in paragraphs 1-2 of ATTACHMENT A. With respect
to each accepted Target provided by SPL under Section 2.1, NeoGenesis shall
complete the screening of the NeoMorph Screening Library within [*] following
the date that the Target is delivered to NeoGenesis. The results of such
screening shall be provided to SPL through the Steering Committee in the form of
a Preliminary Target Report (as defined in ATTACHMENT A). NeoGenesis shall
provide SPL with samples of all Preliminary Compounds selected by the
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10
Steering Committee for further evaluation by SPL pursuant to paragraph 3 of
ATTACHMENT A. SPL will evaluate such Preliminary Compounds in Target-based
functional assays and/or secondary assays to identify Active Compounds, and will
report the results of such evaluations to the Steering Committee, and NeoGenesis
will promptly thereafter provide SPL with all available structural information
for each Active Compound so identified. NeoGenesis will, at the direction of the
Steering Committee, conduct initial optimization activities, as described in
paragraph 4, of ATTACHMENT A, to identify Improved Active Compounds. It is
acknowledged that all compounds generated from such initial optimization
activities and having activity against the relevant Target shall be deemed to be
Improved Active Compounds; provided that such optimization activities and all
Improved Active Compounds arising therefrom shall not be deemed to be
optimization of Lead Compounds for purposes of Section 2.1(e) or for determining
SPL's financial obligations under Sections 4.3 and 4.4.
(b) NeoGenesis will, at the direction of the Steering Committee,
conduct a full program of medicinal chemistry optimization activities, based
upon those Selected Compounds identified as Lead Compounds that are suitable for
optimization. Such optimization activities shall include the design and
preparation of NeoMorph Focused Libraries based upon such Lead Compounds, and
the screening of the NeoMorph Focused Libraries against the relevant Target(s).
The parties acknowledge and agree that, subject to the terms of Sections 3.5(a),
and effective on the date that SPL acquires an exclusive license to the relevant
Selected Compound(s) pursuant to Sections 2.7(c), 3.1 and 3.2, any and all
Compounds which are included in NeoMorph Focused Libraries prepared against the
relevant Target shall be the exclusive property of SPL. NeoGenesis shall not use
the NeoMorph Focused Libraries, any Compounds contained therein, or any
structural information or other know-how related thereto, for any purpose other
than the performance of the Screening Program. NeoGenesis shall not provide any
NeoMorph Focused Libraries, any Compounds contained therein, or any structural
information or other NeoGenesis Know-How related thereto, to any third party
without the prior written consent of SPL. Notwithstanding the foregoing
limitations, it is expressly understood and agreed that NeoGenesis may, through
use of the NeoMorph Screening Library on behalf of third parties independently
generate results or data similar to the results or data generated in the course
of the Screening Program and that the use of such independently generated
results or data shall not constitute a breach of NeoGenesis' obligations under
this Section 2.2(b); PROVIDED, that NeoGenesis has complied with its obligations
to mask Compounds in accordance with Section 2.3 of this Agreement.
(c) NeoGenesis shall not perform any tests on or using any of the
Targets that are outside the scope of the Screening Program, or attempt to
modify the Targets supplied by SPL, including, without limitation, the making of
any derivatives, analogs or components thereof. In the event that NeoGenesis
does not consume all of the Targets supplied by SPL in performance of the
Screening Program, NeoGenesis will upon completion of the Screening Program
promptly, return to SPL any quantities of such Target(s) and any derivatives,
analogs or components thereof.
(d) The term of the Screening Program shall begin on the Effective
Date and shall continue in effect for a period of two (2) years. SPL shall have
the right to extend the term
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11
of the Screening Program for up to three additional one (1) year terms, by
providing NeoGenesis with written notice to that effect at least sixty (60) days
prior to the expiration of the then current term of the Screening Program and
subject to the provisions of Section 4.1 concerning research funding for such
extension term. The Screening Program shall remain in effect for the period
specified in this Section 2.2(d), including as it may be extended, unless sooner
terminated in accordance with Section 8.2 or Section 9.5.
(e) During the term of the Screening Program, upon request,
NeoGenesis shall provide SPL with samples of Selected Compounds and Derivative
Compounds from NeoMorph Focused Libraries in a form and quantity suitable to
enable SPL to conduct additional testing to confirm the specific binding
activity of such Compounds and to evaluate and determine the functional activity
of the Selected Compounds and/or Derivative Compounds. SPL may also elect to
perform medicinal chemistry research using such Selected Compounds and/or
Derivative Compounds to discover and evaluate additional Derivative Compounds.
SPL shall keep NeoGenesis reasonably informed of the results of such activities
through the Steering Committee.
(f) During the term of the Screening Program NeoGenesis shall provide
appropriately trained dedicated scientific personnel to perform the Screening
Program in accordance with the terms of this Agreement. During the initial two
(2) year term of the Screening Program, NeoGenesis shall provide such support at
the level of [*] FTEs during each year of the Screening Program, it being
understood that NeoGenesis may allocate such FTE time within any calendar year
in a manner consistent with its obligations under the Screening Program based on
the workload for such Screening Program at any particular time during the
Screening Program. In addition, NeoGenesis will, upon written request by SPL,
provide additional FTE support for the Screening Program of up to an additional
[*] FTEs during the term of the Screening Program. In the event that the term of
the Screening Program is extended pursuant to Section 2.2(d), the Steering
Committee shall establish the number of FTEs to be provided by NeoGenesis for
performance of the Screening Program during the extended term.
(g) NeoGenesis shall monitor expenditures, in accordance with its
corporate policies, to ensure that the funds provided by SPL are spent in
accordance with this Agreement. NeoGenesis shall keep and maintain adequate
books and records to furnish information to SPL regarding calculation of the
amounts expended by NeoGenesis on the Screening Program according to the
provisions of this Agreement. During the Screening Program and for two (2) years
following the expiration of the Screening Program, NeoGenesis shall permit SPL
to examine such books and records during normal business hours, upon thirty (30)
days notice to NeoGenesis. Upon the expiration of the two (2) year period, the
calculation of the amounts expended on each year of the Screening Program shall
be binding and conclusive upon the parties and NeoGenesis shall be released from
any further accountability with respect to the Screening Program.
(h) NeoGenesis will perform its screening obligations in accordance
with all applicable laws, rules and regulations.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12
2.3 COMPOUND MASKING.
(a) Upon the identification of Preliminary Compounds and Active
Compounds through screening of the NeoMorph Screening Library against a
particular Target, NeoGenesis shall mask such Preliminary Compounds and Active
Compounds from the NeoMorph Screening Library by removing such Compounds from
the compound resource information associated with the NeoMorph Screening Library
and shall take all other steps reasonably necessary to ensure that information
with regard to such Compounds is not available or accessible to any third party,
including third parties for which NeoGenesis is screening the NeoMorph Screening
Library against other biological targets. NeoGenesis shall similarly mask any
Improved Active Compounds which are discovered pursuant to Section 2.2(a).
(b) NeoGenesis shall have the right to unmask any Preliminary
Compounds which are not confirmed as Active Compounds and are not in the same
Chemotype as such Active Compounds. In addition, upon expiration of SPL's right
to designate Selected Compounds with regard to a specific Target, pursuant to
Section 2.7(a), NeoGenesis shall have the right to unmask any Active Compounds
and/or Improved Active Compounds identified through screening against that
Target which are not (i) Selected Compounds or (ii) Preliminary Compounds,
Active Compounds and/or Improved Active Compounds of the same Chemotype as such
Selected Compounds.
2.4 GRANT OF RESEARCH LICENSES.
(a) SPL hereby grants NeoGenesis a nonexclusive, nontransferable,
royalty-free license under the Schering Patent Rights and to use the Schering
Know-How solely for the purpose of conducting the Screening Program. NeoGenesis
will not use Schering Know-How or Schering Patent Rights for any other purpose,
and shall not offer or grant a sub-license to use Schering Know-How or Schering
Patent Rights to any third party, without the express prior written consent of
SPL.
(b) NeoGenesis hereby grants SPL a nonexclusive, nontransferable,
royalty-free license under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How solely for the purpose of conducting SPL's activities under
the Screening Program. SPL will not use NeoGenesis Know-How or NeoGenesis Patent
Rights for any other purpose, and shall not offer or grant a sub-license to use
NeoGenesis Know-How or NeoGenesis Patent Rights to any third party, without the
express prior written consent of NeoGenesis (not to be unreasonably withheld).
(c) With respect to Selected Compounds identified pursuant to Section
2.7(a), NeoGenesis hereby grants SPL, during the relevant Option Period (as
defined in Section 2.7(b)), an exclusive, nontransferable, royalty-free license
under the NeoGenesis Patent Rights and to use the NeoGenesis Know-How solely for
the purpose of performing research and development work necessary to enable SPL
to determine whether or not to exercise its option to obtain an exclusive
license with respect to such Selected Compounds.
2.5 RECORD KEEPING AND REPORTS.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
13
(a) NeoGenesis will keep and maintain complete and accurate records
of all laboratory data and results generated in the course of the Screening
Program, including records of all Preliminary Compounds, Active Compounds, and
Improved Active Compounds identified, and any Inventions discovered and/or
developed by NeoGenesis, during the Screening Program. All such written records
of NeoGenesis shall be open to inspection by SPL during normal business hours
upon reasonable prior written notice; provided, however, that except with
respect to (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds, NeoGenesis shall not provide SPL with access to any chemical
structures or structural data.
(b) NeoGenesis shall provide SPL with reasonably-detailed written
reports describing the results of the research performed pursuant to the
Screening Program including all Preliminary Compounds, Active Compounds and
Improved Active Compounds identified in the Screening Program but shall not
include any chemical structures or structural data with respect to any Compounds
which are not (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds. Such reports shall be delivered to SPL at least quarterly
during the term of the Screening Program. In addition, with respect to each
Target, promptly following the completion of screening of the entire NeoMorph
Screening Library against such Target, NeoGenesis will deliver to SPL a
Preliminary Target Report (as defined in ATTACHMENT A) with respect to any and
all Preliminary Compounds identified during the Screening Program as having
activity with respect to such Target. Each Preliminary Target Report shall
include the binding affinities for all such Preliminary Compounds, as well as
any information generated by NeoGenesis with regard to Target specificities and
functional activities of such Preliminary Compounds. NeoGenesis shall also
provide SPL with a Final Target Report (as defined in ATTACHMENT A) in
accordance with the provisions of Paragraph 4 of ATTACHMENT A. NeoGenesis shall
also provide SPL with reports at least one (1) week prior to each Steering
Committee Meeting detailing the results of any Lead Compound optimization
activities performed by NeoGenesis pursuant to Section 2.2(b) and ATTACHMENT A,
which reports shall include the chemical structures and binding affinities of
all Derivative Compounds contained in NeoMorph Focused Libraries prepared by
NeoGenesis based upon such Lead Compound(s) and other information generated by
NeoGenesis with respect thereto.
2.6 STEERING COMMITTEE.
(a) Promptly after the Effective Date, the parties shall establish a
joint committee (the "STEERING COMMITTEE") having oversight responsibility for
the day-to-day management and performance of the Screening Program. The Steering
Committee shall consist of six (6) members, three (3) members to be appointed by
each of NeoGenesis and SPL. Each party shall notify the other party of the names
and contact information for its members of the Steering Committee, and
thereafter may with notice to the other substitute any of its members serving on
the Steering Committee. Each member of the Steering Committee will have one vote
and all decisions of the Steering Committee will be by unanimous agreement. The
quorum for Steering Committee meetings shall be two, provided there is at least
one member from each of NeoGenesis and SPL present. The Steering Committee will
render decisions by unanimous vote.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
14
(b) The Steering Committee shall be responsible for the management
and conduct of the Screening Program and shall in particular: (i) consider,
review and amend the Screening Program from time to time in such manner as may
be appropriate; (ii) monitor progress of the Screening Program; (iii) report
regularly to the management of both parties upon the progress of the Screening
Program; and (iv) be the initial medium for transfer of information between the
parties. SPL shall keep the Steering Committee reasonably informed of the status
of SPL's activties with respect to the discovery and development of Licensed
Products against each Target.
(c) During the term of the Screening Program, the Steering Committee
shall hold meetings as mutually agreed by the parties (but in no event less
quarterly) to review the Screening Program. The first meeting of the Steering
Committee shall be held within forty-five (45) days of the Effective Date and
shall be held in Cambridge, MA. Thereafter, meetings may be held by telephone or
video conference if requested by either party in writing to the other, PROVIDED
THAT the parties shall meet in person at least four (4) times per year during
the term of the Screening Program. Minutes of all meetings setting forth
decisions of the Steering Committee relative to the Screening Program shall be
prepared by the host party and circulated to both parties within fifteen (15)
days after each meeting, but minutes shall not become official until approved
and countersigned by both parties (which approval the parties shall use
reasonable efforts to give within thirty (30) days of receipt of such minutes).
(d) In the event that the Steering Committee is unable to reach
agreement, the issue in dispute shall be referred to an "OVERSIGHT COMMITTEE"
consisting of the Executive Vice President, Discovery Research of the
Schering-Plough Research Institute (an Affiliate of SPL) and NeoGenesis' Chief
Executive Officer, or their respective designees, for resolution. If the
disagreement is not resolved by the Oversight Committee within thirty (30) days,
then SPL shall have the right to make the final decision on such matter;
PROVIDED, that in the event and to the extent that any dispute concerns whether
or not budgeted FTE funding for the Screening Program has been expended in
accordance with the provisions of this Agreement such matter shall be resolved
using the procedure specified in Section 9.1.
2.7 SELECTED COMPOUNDS.
(a) From time to time during the term of this Agreement, SPL may
designate, by written notice to NeoGenesis, one or more Active Compounds and/or
Improved Active Compounds identified by screening of the NeoMorph Screening
Libraries pursuant to Section 2.2 as Selected Compounds; provided, that at any
given time SPL may not designate Active Compounds and Improved Active Compounds
representing more than [*] different Chemotypes against a given Target from the
NeoMorph Screening Library. The parties acknowledge and agree that the foregoing
limitation does not apply to the NeoMorph Focused Libraries. [*] Selected
Compounds that SPL may designate from the NeoMorph Focused Libraries. With
respect to each Target, SPL shall use diligent efforts to identify and designate
at least one Selected Compound within [*] following SPL's receipt of the Final
Target Report for all screening against such Target in accordance with Section
2.5(b) and ATTACHMENT A. In the event
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15
that the SPL does not designate any Selected Compounds with respect to such
Target, then upon expiration of the applicable [*] period, SPL's right to
designate Selected Compounds with respect to such Target shall expire. If the
NeoMorph Screening Library is subsequently re-screened against a given Target
pursuant to Section 2.1(e) and new Active Compounds and/or Improved Active
Compounds are identified as a result of such re-screening, then to the extent
SPL's right to designate Selected Compounds against such Target has previously
expired, SPL shall have a renewed right to designate Selected Compounds arising
from such re-screening on the same terms as set forth above.
(b) Effective upon the date of receipt by NeoGenesis of notice from
SPL, pursuant to Section 2.7(a) that one or more Active Compounds and/or
Improved Active Compounds have been designated as Selected Compounds, NeoGenesis
grants to SPL an exclusive option to obtain the exclusive license provided for
in Article 3 with respect to such Selected Compounds and related Derivative
Compounds (including without limitation any Compounds contained in a NeoMorph
Focused Library prepared based upon such Selected Compound). The masking of the
Selected Compound(s) (and any Preliminary Compounds, Active Compounds and
Improved Active Compounds of the same Chemotype(s) as such Selected Compound(s))
from the NeoMorph Screening Library in accordance with Section 2.3 shall be
maintained during the applicable Option Period (as defined below). In addition,
within [*] following receipt of notification from SPL identifying Selected
Compounds, NeoGenesis shall amend ATTACHMENT B to identify any applicable
NeoGenesis Patent Rights not previously identified to SPL. The "OPTION PERIOD"
with respect to each Selected Compound identified pursuant to Section 2.7(a),
shall extend until the later of: (i) the [*] anniversary of the expiration of
the Screening Program for the applicable Target, or (ii) in the event that SPL
is conducting an active internal medicinal chemistry research program to
identify Derivative Compounds based upon such Selected Compound (as documented
with written notice to NeoGenesis), a period of [*] following the termination of
such medicinal chemistry program. For purposes of this Section 2.7(b), SPL shall
be deemed to be conducting an active medicinal chemistry program if [*] working
full time on the design and discovery of Derivative Compounds with respect to a
given Selected Compound. SPL shall provide NeoGenesis with written
certification, at least [*] every [*], during the performance of such medicinal
chemistry program for purposes of monitoring the expiration of the Option
Period.
(c) SPL shall have the right to exercise the option granted to it
under Section 2.7(b) with respect to one or more Selected Compounds (and related
Derivative Compounds, including without limitation any Compounds contained in a
NeoMorph Focused Library prepared based upon such Selected Compound) at any time
prior to the expiration of the applicable Option Period, by providing written
notice to NeoGenesis to that effect. The exclusive licenses granted to SPL
pursuant to Article 3 with respect to such Selected Compounds (and related
Derivative Compounds, including without limitation any Compounds contained in a
NeoMorph Focused Library prepared based upon such Selected Compound) shall
become effective upon NeoGenesis' receipt of such notice, and SPL shall pay the
applicable license fee under Section 4.2 to NeoGenesis within five (5) business
days of such notice. As of such date of such notice, the masking of the
applicable Selected Compound(s) (and related Derivative Compounds, including
without limitation any Compounds contained in a NeoMorph Focused Library
prepared
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
16
based upon such Selected Compound), as well as any Preliminary Compounds, Active
Compounds and Improved Active Compounds of the same Chemotype as such Selected
Compound, from the NeoMorph Screening Library in accordance with Section 2.3
shall become permanent, and during the term of this Agreement NeoGenesis shall
continue take such other steps as are reasonably necessary to ensure that
information with regard to the Selected Compounds and the relevant Active
Compounds, Improved Active Compounds and Preliminary Compounds of the same
Chemotype as such Selected Compounds are no longer available or accessible to
any third party.
(d) In the event that SPL fails to exercise its option rights with
respect to one or more Selected Compounds prior to the expiration of the
applicable Option Period, then upon expiration of the Option Period SPL's option
right shall expire with respect to the applicable Selected Compound(s), the
licenses provided for in Article 3 with respect to such Selected Compound(s)
shall be void and of no further force or effect, and NeoGenesis shall be free to
unmask such Selected Compound(s) in the NeoMorph Screening Library.
(e) In the event that during the applicable Option Period, one or
more Selected Compounds with respect to a given Target become Designated
Compounds and SPL has not, as of the effective date of such designation,
exercised the option and paid the license fee due under section 4.2 with respect
to Selected Compounds against such Target, then the license fee shall be paid
concurrently with the milestone payment due upon designation of such Designated
Compounds in accordance with Section 2.8.
(f) SPL shall not begin screening any Selected Compound or related
Derivative Compounds against any biological targets other than Targets until
such time as it has exercised its option in accordance with Section 2.7(c) and
paid the applicable licensee fee.
2.8 PRODUCT DEVELOPMENT.
(a) During the term of this Agreement, SPL shall, at its expense,
conduct a research and development program to evaluate Selected Compounds and
Derivative Compounds as potential candidates for commercial development as
Licensed Products. Such efforts may include the performance of further medicinal
chemical research based upon such Selected Compounds and Derivative Compounds,
as well as biological, pharmacokinetic and toxicology studies and other
preclinical research activities. SPL shall have sole discretion over the scope
of such research and development program, and the selection of which Selected
Compounds and Derivative Compounds will be the focus of such activities.
(b) SPL shall notify NeoGenesis in writing in the event that SPL, in
its sole discretion (based on SPL's good faith evaluation of the satisfaction of
the applicable Success Criteria by such Selected Compound or Derivative
Compound), decides to proceed with a development program for any Selected
Compounds or Derivative Compounds as suitable candidates for drug development
(thereafter, each a "DESIGNATED COMPOUND"). A Selected Compound or Derivative
Compound will be deemed to be a Designated Compound upon the earlier of that
date on which (i) SPL (or its Affiliate) formally approves proceeding with full
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
17
development of such Compound, or (ii) SPL (or its Affiliate) initiates IN VIVO
toxicology trials necessary, and meeting U.S. FDA (or corresponding European or
Japanese) standards, for obtaining approval for use of such Compound in human
clinical trials, unless SPL sooner designates such Selected Compound or
Derivative Compound as a Designated Compound with notice to NeoGenesis. Upon
SPL's designation of a Designated Compound, SPL shall thereafter, at its
expense, use Commercially Reasonable Efforts to develop and commercialize
Licensed Products incorporating the Designated Compound in the Territory. SPL
shall be solely responsible for determining in which countries in the Territory
to develop and commercialize each Licensed Product, provided that it shall use
Commercially Reasonable Efforts to obtain Regulatory Approval and to market and
sell each Licensed Product in the Major Market Countries.
(c) Subject to SPL's diligence obligations under this Agreement, the
Parties acknowledge and agree that all business decisions regarding research,
development and commercialization of Designated Compounds and Licensed Products
including, without limitation, decisions relating to the design, development,
manufacture, sale, price, distribution, marketing and promotion of Licensed
Products under this Agreement, and the decision of whether to develop a
particular Designated Compound, or to develop and commercialize a particular
Licensed Product, shall be within the sole discretion of SPL.
(d) SPL shall have no quotas or other minimum diligence obligations
with regard to the number of Designated Compounds and/or Licensed Products to be
developed and commercialized hereunder. The parties acknowledge and agree that
so long as SPL is using Commercially Reasonable Efforts to discover, develop and
commercialize [*] Licensed Product in the Territory, SPL shall be deemed to be
in compliance with its diligence obligations under this Agreement.
2.9 COMMERCIALIZATION OF LICENSED PRODUCTS. With respect to each Licensed
Product developed and commercialized by SPL, or its designated Affiliates, under
this Agreement, SPL shall be solely responsible, at its sole expense, for all
aspects of the development and commercialization of the Licensed Product in the
Territory, including, without limitation:
(i) the manufacture of Designated Compounds and Licensed Products in
accordance with the applicable Regulatory Approvals, laws, Good
Laboratory Practices and Good Manufacturing Practices;
(ii) preparation, filing, obtaining, maintaining and supporting, in its own
name or that of its designated Affiliate, with the appropriate
regulatory authorities of all regulatory approvals, authorizations,
permits and licenses (including, without limitation, all Regulatory
Approvals) that are necessary to conduct clinical studies of Licensed
Products and/or to manufacture, import, distribute, market and sell
Licensed Products;
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
18
(iii) the reporting all adverse events associated with any Licensed Product
to the appropriate regulatory authorities in accordance with
applicable laws, rules and regulations in the Territory; and
(iv) the distribution, marketing, promotion and sale of Licensed Products.
Following the expiration of the Screening Program, SPL shall provide NeoGenesis
with semi-annual reports summarizing the status of SPL's development and
commercialization activities with respect to each Licensed Product being
developed under this Agreement. In addition, SPL shall notify NeoGenesis in
writing upon the filing of each application for Regulatory Approval of a
Licensed Product in the Territory.
2.10 DILIGENCE EXCEPTIONS. All of SPL's diligence obligations hereunder
with respect to each Licensed Product being developed or commercialized
hereunder are expressly conditioned upon the continuing absence of any adverse
condition or event which warrants a delay in commercialization of the Licensed
Product due to an adverse condition or event relating to the safety or efficacy
of such Licensed Product or unfavorable pricing, pricing reimbursement, labeling
or lack of regulatory approval, and SPL shall have no obligation to develop or
market any such Licensed Product so long as in SPL's reasonable opinion any such
condition or event exists.
2.11 THIRD PARTY LICENSES. SPL shall be solely responsible for (a)
obtaining any and all licenses from third parties necessary or desirable to
develop or commercialize any Licensed Product and (b) any and all consideration
payable with respect to such licenses. The decision as to whether or not to
obtain any such third party licenses relating to Licensed Products, and the
negotiation and acceptance of the terms and conditions for any such licenses,
shall be within the sole discretion and control of SPL, and nothing herein shall
be construed as obligating SPL to obtain any such third party licenses.
2.12 COMPLIANCE WITH LAW. SPL shall be responsible for ensuring that all
activities related to the development and commercialization of Licensed Products
conducted by or on its behalf are performed in compliance with all applicable
laws, rules and regulations (including, but not limited to, those related to
occupational safety and health, public safety and health, protecting the
environment, the disposal of wastes, Good Clinical Practices, Good Laboratory
Practices and Good Manufacturing Practices, as applicable).
3. LICENSES; INTELLECTUAL PROPERTY RIGHTS
3.1 LICENSE TO LICENSED PRODUCTS. NeoGenesis hereby grants to SPL, and SPL
hereby accepts, an exclusive (even as to NeoGenesis), right and license in the
Territory and within the Field under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How to make, have made, use, distribute, promote, market, offer
for sale, sell, import and export Licensed Products. The licenses granted to SPL
under this Section 3.1 include the right to grant sublicenses to Affiliates or
third parties in accordance with the provisions of Section 3.3. SPL
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
19
shall xxxx or have marked all containers or packages of Licensed Products that
are the subject of the license granted under this Section 3.1 in accordance with
the patent marking laws of the jurisdiction in which such Licensed Products are
manufactured, used or sold. For purposes of clarity and avoidance of doubt, it
is acknowledged that the exclusive licenses granted hereunder shall not be
construed as encompassing Compounds other than Selected Compounds (and Active
Compounds, Improved Active Compounds and Preliminary Compounds of the same
Chemotype as such Selected Compounds), Derivative Compounds and Designated
Compounds.
3.2 LICENSE TO COMPOUNDS. NeoGenesis hereby grants to SPL, and SPL hereby
accepts, an exclusive (even as to NeoGenesis), right and license in the
Territory and within the Field under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How to research, develop, make, have made, import, export and
use the Selected Compounds (and Active Compounds, Improved Active Compounds and
Preliminary Compounds of the same Chemotype as such Selected Compounds),
Designated Compounds and Derivative Compounds, for research purposes and to
develop Licensed Products. The licenses granted to SPL under this Section 3.2
include the right to grant sublicenses to Affiliates or third parties in
accordance with the provisions of Section 3.3. SPL shall xxxx or have marked all
containers or packages of Selected Compounds Derivative Compounds and Designated
Compounds that are the subject of the license granted under this Section 3.1 in
accordance with the patent marking laws of the jurisdiction in which such
Selected Compounds, Derivative Compounds and Designated Compounds are
manufactured, used or sold.
3.3 SUBLICENSING. SPL's shall have the right to grant sublicenses under
this Agreement to third parties and/or Affiliates; provided that all such
sublicenses shall be consistent with the terms and conditions of this Agreement,
and in particular shall include provisions to ensure that such sublicense is
subject to the obligations set forth in Section 3.1(last sentence), 4.4, 4.5,
4.6, 4.7 and 8.3(b) (last sentence) of this Agreement. SPL shall remain
responsible to NeoGenesis for all of its sublicensees financial and other
obligations under this Agreement. SPL's sublicensees shall have no further right
to grant sublicenses, and any sublicense granted by SPL under this Agreement
shall not be assigned, transferred or otherwise conveyed by the sublicensee to
any third party, as a matter of law or through any action by sublicensee,
without the prior written consent of NeoGenesis.
3.4 RETAINED RIGHTS.
(a) Title to the NeoGenesis Know-How and NeoGenesis Patent Rights
shall at all times remain vested in NeoGenesis, and this Agreement does not
convey to SPL any ownership rights or other interest in any NeoGenesis Know-How
or NeoGenesis Patent Rights, by implication, estoppel or otherwise, except for
those rights and licenses expressly granted under this Agreement.
(b) Title to the Schering Know-How and Schering Patent Rights shall
at all times remain vested in SPL, and this Agreement does not convey to
NeoGenesis any ownership rights or other interest in any Schering Know-How or
Schering Patent Rights, by implication, estoppel or otherwise, except for the
rights and licenses expressly granted under this Agreement.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
20
(c) The parties acknowledge and agree that notwithstanding the
exclusive licenses granted to SPL hereunder, with respect to the NeoGenesis
Know-How and NeoGenesis Patent Rights, NeoGenesis shall retain the right to
continue to use its NeoMorph Screening Library to screen target proteins (other
than Targets) for third parties; PROVIDED that NeoGenesis complies with all of
its obligations with respect to the masking of Preliminary Compounds, Active
Compounds, Improved Active Compounds and Selected Compounds from the NeoMorph
Screening Library.
3.5 INVENTIONS.
(a) Title to and ownership of all Inventions directly related to (i)
Selected Compounds, Derivative Compounds, Designated Compounds and Licensed
Products, or the manufacture or use thereof, or (ii) Targets provided to
NeoGenesis by SPL, in each case regardless of inventorship, as well as those
Inventions subject to Section 3.5(b)(ii), shall be the sole property of SPL
(hereinafter "SCHERING INVENTIONS") and are included in Schering Know-How and/or
Schering Patent Rights, as the case may be. NeoGenesis hereby assigns and agrees
to assign to SPL all of NeoGenesis' right, title and interest in such Schering
Inventions; such assignment to take effect with respect to particular Selected
Compounds (and related Derivative Compounds, Designated Compounds and Licensed
Products) upon the date NeoGenesis receives notice from SPL pursuant to Section
2.7(c) that SPL has decided to exercise its option to exclusively license the
Selected Compounds and related Derivative Compounds; and NeoGenesis shall use
Commercially Reasonable Efforts to perfect such assignment (at SPL's expense).
Title to and ownership of all Inventions directly related to the NeoMorph
Screening Library, ALIS screening technology or QSCD (regardless of
inventorship), as well as those Inventions subject to Section 3.5(b)(i)
(hereinafter "NEOGENESIS INVENTIONS"), shall be the sole property of NeoGenesis
and are included in NeoGenesis Know-How and/or NeoGenesis Patent Rights, as the
case may be. SPL hereby assigns and agrees to assign to NeoGenesis, all of SPL's
right title and interest (if any) in such NeoGenesis Inventions and SPL shall
use Commercially Reasonable Efforts to perfect such assignment (at the
NeoGenesis' expense).
(b) Title to and ownership of all other Inventions arising from the
Screening Program and which are not covered by Section 3.5(a) shall be
determined as follows:
(i) Inventions made solely by one or more employees or agents of
NeoGenesis shall be the sole property of NeoGenesis are
NeoGenesis Inventions and are included in NeoGenesis Know-How
and/or NeoGenesis Patent Rights, as the case may be.
(ii) Inventions made solely by one or more employees or agents of SPL
shall be the sole property of SPL, are Schering Inventions, and
are included in Schering Know-How and/or Schering Patent Rights,
as the case may be.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
21
(iii) Inventions made jointly by one or more employees or agents of
NeoGenesis and one or more employees or agents of SPL shall be
the joint property of NeoGenesis and SPL (hereinafter "JOINT
INVENTIONS").
In determining each party's contribution to Inventions arising under this
Agreement, inventorship shall be determined in accordance with United States
patent law.
3.6 PATENT PROTECTION FOR INVENTIONS. Each of NeoGenesis and SPL shall
promptly disclose to the other knowledge of any Inventions arising in connection
with the Screening Program. Responsibility for the preparation, filing,
prosecution and maintenance of any patent applications and patents claiming such
Inventions shall be determined based upon ownership of the Inventions and shall
be handled in accordance with the provisions of this Section 3.6. Within forty
five (45) days following disclosure of any Invention(s), the parties shall
classify such Invention as a Schering Invention, a NeoGenesis Invention or a
Joint Invention and shall update ATTACHMENT C to add such Invention and reflect
such classification.
(a) NeoGenesis shall have the right and responsibility to prepare,
file, prosecute, and maintain all patent applications and patent within the
NeoGenesis Patent Rights throughout the Territory at NeoGenesis sole expense,
including, without limitation, those with respect to NeoGenesis Inventions.
NeoGenesis shall have sole discretion as to all such activities with regard to
the NeoGenesis Patent Rights. NeoGenesis shall keep SPL currently advised as to
the status of all patents and patent applications with respect to the NeoGenesis
Patent Rights and shall supply SPL promptly with copies of all patents, patent
applications, substantive patent office actions, substantive responses received
or filed in connection with such applications. SPL may offer comments and
suggestions with respect to the matters that are the subject of this Section
3.6(a) and NeoGenesis agrees to consider such comments and suggestions; PROVIDED
that nothing herein shall obligate NeoGenesis to adopt or follow such comments
or suggestions. In the event that NeoGenesis elects not to file for patent
protection for any NeoGenesis Inventions or elects not to continue to prosecute
or maintain a patent or patent application under the NeoGenesis Patent Rights it
shall notify SPL of such decision at least forty-five (45) days prior to the due
date of any action or payment due with respect thereto. SPL shall have the
right, but not the obligation to assume the responsibility therefor at its own
cost and expense.
(b) SPL and NeoGenesis, acting through the Steering Committee, shall
select and retain patent counsel mutually acceptable to each of them for the
purpose of preparing, prosecuting, issuing and maintaining appropriate patent
applications concerning Joint Inventions. NeoGenesis, in consultation with SPL,
shall be primarily responsible for the preparation, filing (including foreign
filing decisions), prosecution and maintenance of such patent applications and
patents relating to Joint Inventions. NeoGenesis shall furnish or have furnished
to SPL copies of documents relevant to the same and provide SPL with the
opportunity to review and comment on patent decisions made by patent counsel.
Any disagreements between NeoGenesis and SPL with respect to preparation,
filing, prosecution, issuance and maintenance matters will be discussed and
resolved to their mutual satisfaction using the procedures specified in Section
9.1, if necessary; PROVIDED, that to the extent that any disagreement regards
only the costs associated with a particular proposed action, NeoGenesis may
assume responsibility for such costs and the
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
22
requirement that the parties mutually agree upon resolution of the matter shall
not apply. Each party shall be responsible for fifty percent (50%) of all
expenses associated with the preparation, filing, prosecution, issuance and
maintenance of patents or other intellectual property protection for Joint
Inventions. In the event that either party elects not to pursue a particular
action with respect to which the parties disagree regarding costs, the other
party shall have the right to assume such costs and to have such action taken;
PROVIDED FURTHER that the non-paying party's licenses hereunder shall exclude
any intellectual property rights that are the subject of such action (e.g.,
patent coverage in a particular country) unless and until such party reimburses
the other party for one-half (50%) of the costs of such action.
(d) SPL shall have the sole right, but not the obligation, to file,
prosecute, and maintain, at SPL's sole expense, each of the Schering Patent
Rights throughout the Territory. Upon request, and at SPL's expense, NeoGenesis
will provide SPL with reasonable assistance to prepare, file, prosecute,
maintain and defend the Schering Patent Rights, and will take all steps
necessary to enable SPL to perfect its rights and title to the Schering Patent
Rights with respect to any Schering Inventions. Reasonable assistance shall
include, without limitation, providing SPL any data and information relating to
such Schering Inventions and access to the NeoGenesis employees who are
inventors of such Schering Inventions, as well as causing the execution of any
patent assignment or other documents.
3.7 ENFORCEMENT. Each party shall promptly notify the other of its
knowledge of any actual or potential infringement of the NeoGenesis Patent
Rights, the Schering Patent Rights or any Joint Inventions.
(a) NeoGenesis shall be solely responsible for defense and
enforcement of NeoGenesis Know-How and NeoGenesis Patent Rights. SPL shall be
solely responsible for the defense and enforcement of Schering Know-How and
Schering Patent Rights. In the event that either party recovers any sums in such
litigation by way of damages or in settlement thereof, such party shall have the
right to retain all such sums; PROVIDED that any recovery of ordinary damages by
SPL to the extent based upon third party sales of products that infringe upon
Compound Patent Rights shall be deemed to be Net Sales and SPL shall pay
NeoGenesis an amount calculated in accordance with Section 4.4 to reimburse
NeoGenesis for royalties due on lost sales of Licensed Product represented by
such ordinary damages; PROVIDED FURTHER that this allocation shall not apply
with respect to special or punitive damages, and that SPL shall be entitled to
deduct all litigation costs incurred by it in connection therewith from such
settlement or award prior to calculating such royalties.
(b) SPL shall have the first option to pursue any enforcement or
defense of any patents claiming Joint Inventions within the Field and the
Territory ("JOINT PATENT RIGHTS"); PROVIDED, that SPL pays all costs and
expenses related thereto. SPL shall have three (3) months from the date it
receives notice of such infringement to obtain a discontinuance of such
infringement or bring suit against the third party infringer. SPL shall keep
NeoGenesis reasonably informed of the status of such activities. NeoGenesis
shall provide reasonable assistance to SPL in any suit for infringement of a
Joint Patent Right brought by SPL against a third party, and shall have the
right to consult with SPL and to participate in and be represented
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
23
by independent counsel in such litigation at its own expense. For purposes of
this Section 3.7(b), reasonable assistance shall mean providing SPL reasonable
access to information, materials and NeoGenesis personnel which SPL reasonably
determines is necessary to enable SPL to conduct the suit. SPL shall
periodically reimburse NeoGenesis for its out-of-pocket costs (excluding the
costs of retaining independent counsel) incurred in cooperating with SPL. SPL
shall incur no liability to NeoGenesis as a consequence of such litigation or
any unfavorable decision resulting therefrom, including any decision holding any
of the Joint Patent Rights invalid or unenforceable. In the event that SPL
recovers any sums in such litigation by way of damages or in settlement thereof,
SPL shall have the right to retain all such sums; PROVIDED that any recovery of
ordinary damages to the extent based upon third party sales of products that
infringe upon the Joint Patent Rights shall be deemed to be Net Sales and SPL
shall pay NeoGenesis an amount calculated in accordance with Section 4.4 to
reimburse NeoGenesis for royalties due on lost sales of Licensed Product
represented by such ordinary damages; PROVIDED FURTHER that this allocation
shall not apply with respect to special or punitive damages and that SPL shall
be entitled to deduct all litigation costs incurred by it in connection
therewith from such settlement or award prior to calculating such royalties.
(c) If, after the expiration of the three (3) month period specified
in Section 3.6(b), SPL has not overcome the allegation of infringement, obtained
a discontinuance of such infringement, or brought suit against the third party
infringer, then, provided such infringement is substantial, NeoGenesis shall
have the right, but not the obligation, to bring suit against such infringer
under the Joint Patent Right, provided that NeoGenesis shall bear all the
expenses of such suit. SPL shall provide reasonable assistance to NeoGenesis in
any suit for infringement of a Joint Patent Right brought by NeoGenesis against
a third party, and shall have the right to consult with NeoGenesis and to
participate in and be represented by independent counsel in such litigation at
its own expense. For purposes of this Section 3.6(c), reasonable assistance
shall mean providing NeoGenesis reasonable access to information, materials and
SPL personnel which NeoGenesis reasonably determines is necessary to enable
NeoGenesis to conduct the suit. NeoGenesis shall periodically reimburse SPL for
its out-of-pocket costs (excluding the costs of retaining independent counsel)
incurred in cooperating with NeoGenesis. NeoGenesis shall incur no liability to
SPL as a consequence of such litigation or any unfavorable decision resulting
therefrom, including any decision holding any of the Joint Patent Rights invalid
or unenforceable. In the event that NeoGenesis recovers any sums in such
litigation by way of damages or in settlement thereof, NeoGenesis shall have the
right to retain all such sums.
(d) Each party shall immediately give written notice to the other of
any certification of which it becomes aware filed pursuant to the Xxxxxx-Xxxxx
Act (21 U.S.C. Section 355(b)(2)(A), or Section 355(j)(2)(A)(vii)), or any
amendment or successor statute thereto, at least fourteen (14) days prior to
expiration of the forty five (45) day period set forth in 21 U.S.C. Section
355(c)(3)(c) (or any amendment or successor statute thereto).
3.8 LIST OF NEOGENESIS PATENT RIGHTS. The NeoGenesis Patent Rights
exclusively licensed to SPL pursuant to Sections 3.1 and 3.2 shall be listed in
ATTACHMENT B, which shall be amended from time to time during the term of this
Agreement to reflect additions or changes to the NeoGenesis Patent Rights in
accordance with Section 2.7. For the avoidance of doubt, to the
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
24
extent that ATTACHMENT B is not updated to include any NeoGenesis Patent Rights
that are directly related to any Selected Compounds (and Active Compounds and
Improved Active Compounds of the same Chemotype as such Selected Compounds),
Designated Compounds, Derivative Compounds and/or Licensed Products within the
scope of an exclusive license granted to SPL under Sections 3.1 and 3.2,
NeoGenesis agrees that it shall not have any action against SPL in relation
thereto and shall automatically amend ATTACHMENT B to include such NeoGenesis
Patent Rights.
4. CONSIDERATION
4.0 ADDITIONAL PAYMENT OBLIGATIONS. The parties acknowledge that SPL's
payment obligations as set forth in Sections 4.1, 4.2, 4.3 and 4.4 of this
Agreement are in addition to the payment obligations of Schering Corporation set
forth in Sections 4.1, 4.2, 4.3 and 4.4 of the US Agreement.
4.1 RESEARCH FUNDING. In consideration for the performance of the
Screening Program and activities related thereto by NeoGenesis, SPL shall pay to
NeoGenesis research funding during the term of the Screening Program at the rate
of [*] per FTE per year during the initial two year term of the Screening
Program. Such payments constitute [*] payment for FTEs at a rate of [*] per year
per FTE, with [*] of such funding to be paid by Schering Corporation under the
terms of the US Agreement. The amount of such funding shall be based upon the
actual number of FTEs assigned by NeoGenesis to work on the Screening Program
pursuant to Section 2.2(f), it being understood that except as otherwise agreed
by the parties in writing, research funding shall be paid based upon [*] FTEs.
Research funding shall be payable in equal quarterly installments during the
term of the Screening Program, with the first such payment due within [*] after
the Effective Date and each successive payment due quarterly in advance on the
first day of each calendar quarter starting on October 1, 2001. It is understood
and agreed by the parties that first two research funding payments due under
this Agreement [*] represents payment for work performed by NeoGenesis in
connection with the Screening Program during the entire 2001 calendar year,
including activities performed during the period extending from January 1, 2001
until the Effective Date. In the event that the term of the Screening Program is
extended, the FTE rate payable under this Section 4.1 in each such extension
year shall be increased by the CPI (as defined below). If SPL is unwilling to
provide funding for such documented cost increases and the parties are unable to
resolve such funding matter to their mutual satisfaction within forty five (45)
days then the Screening Program shall not be extended for such extension year.
If in any quarterly funding period, actual expenditures by NeoGenesis with
respect to FTE's exceed the amount budgeted for the period, the overrun will be
carried forward for the next period and paid for from the next payment(s);
PROVIDED, that SPL payment obligations for any year of the Screening Program
shall not exceed the budgeted amount for such year unless SPL has agreed to fund
additional FTE work beyond that budgeted for such year by means of a written
amendment to this Agreement approved in writing by the parties. For purposes of
this Section 4.1, "CPI" means the Consumer Price Index [*], as published by the
Bureau of Labor Statistics of the United States Department of Labor. In the
event that the Bureau of Labor Statistics ceases to publish the CPI or
substantially changes its content or format in a manner that
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
25
precludes its further use hereunder, SPL and NeoGenesis shall substitute
therefor another comparable measure published by an agreed-upon source.
4.2 LICENSE FEES.
(a) In partial consideration for the licenses and other rights
granted to SPL hereunder, SPL shall pay to NeoGenesis a license fee of [*] with
respect to each Target for which one or more Selected Compounds are designated
pursuant to Section 2.7. Each such license fee shall be payable within [*] after
the effective date of the licenses to such Selected Compounds, as provided under
Section 2.7(b). The license fee shall be payable [*], irrespective of the number
of Selected Compounds, Designated Compounds or Licensed Products which may be
identified and/or developed with respect thereto. Payment of any license fees
under this Section 4.2(a) shall be made concurrently with payment of the
corresponding license fees under Section 4.2(a) of the US Agreement.
4.3 MILESTONES. In partial consideration for the licenses and other rights
granted to SPL hereunder, SPL shall pay to NeoGenesis the following payments
upon the occurrence of the indicated milestone event.
(a) with respect to any Designated Compound (and any Licensed
Products based upon such Designated Compound) which is being developed based
upon activity with respect to a specific Target, and was discovered as a result
of optimization of one or more Lead Compounds by NeoGenesis pursuant to Section
2.2(b):
(i) [*] upon designation of such Designated Compound pursuant to
Section 2.8;
(ii) [*] upon initiating treatment of the first patient in a
Phase I clinical trial for the applicable Licensed Product
under an approved IND (or its equivalent);
(iii) [*] upon initiating treatment of the first patient in a
Phase III clinical trial for the applicable Licensed
Product;
(iv) [*] upon filing and acceptance of the first NDA (or its
European or Japanese equivalent) for the applicable Licensed
Product; and
(v) [*] upon receipt of the first Regulatory Approval for the
applicable Licensed Product in a Major Market Country.
(b) with respect to any Designated Compound (and any Licensed
Products based upon such Designated Compound) which is being developed based
upon activity with respect to a specific Target, but was not discovered as a
result of optimization of one or more Lead Compounds by NeoGenesis pursuant to
Section 2.2(b):
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
26
(i) [*] upon designation of such Designated Compound pursuant to
Section 2.8;
(ii) [*] upon initiating treatment of the first patient in a
Phase I clinical trial for the applicable Licensed Product
under an approved IND (or its equivalent);
(iii) [*] upon initiating treatment of the first patient in a
Phase III clinical trial for the applicable Licensed
Product;
(iv) [*] upon filing and acceptance of the first NDA (or its
European or Japanese equivalent) for the applicable Licensed
Product; and
(v) [*] upon receipt of the first Regulatory Approval for the
applicable Licensed Product in a Major Market Country.
(c) All payments made to NeoGenesis by SPL pursuant to Section 4.3(a)
or (b) shall be due within thirty (30) days after the achievement of the
corresponding milestone and shall be nonrefundable and not creditable against
other amounts due to NeoGenesis. The payments provided for under this Section
4.3 shall only be payable once upon the first achievement of the indicated
milestone with respect to Designated Compound and/or Licensed Product developed
against a particular Target and no additional payments shall be due on
subsequent or repeated achievement of the same milestone for another Designated
Compound and/or Licensed Product developed against the same Target. No
milestones shall be payable under this Section 4.3 with respect to (i) any
compounds or products other than Designated Compounds and Licensed Products, or
(ii) any Designated Compounds or Licensed Products being developed based upon
[*].
(d) In the event that SPL ceases all clinical development for a
Designated Compound/Licensed Product (a "Discontinued Product") for which one or
more milestones have been paid pursuant to this Section 4.3, no payment shall be
due under this Section 4.3 with respect to the achievement of the same
milestone(s) with respect to the another Designated Compound or Licensed Product
discovered or developed against the same Target as the Discontinued Product (a
"Back-up Product"). In the event that the Back-up Product achieves milestones
which were not previously achieved by the relevant Discontinued Product, such
milestone payments will be paid in accordance with this Section 4.3.
4.4 ROYALTIES. In partial consideration for the licenses and other rights
granted to SPL hereunder, SPL shall pay royalties to NeoGenesis based upon Net
Sales of Licensed Products in the Territory.
(a) The royalties payable to NeoGenesis on Net Sales of Licensed
Products in the Territory by SPL, its Affiliates and sublicensees, shall be
determined as follows:
(i) [*] of Net Sales of Licensed Products in the Territory where
the Designated Compound in such Licensed Product was
discovered as a
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
result of optimization of one or more Lead Compounds by
NeoGenesis pursuant to Section 2.2(b); or
(ii) [*] of Net Sales of Licensed Products in the Territory where
the Designated Compound in such Licensed Product was not
discovered as a result of optimization of one or more Lead
Compounds by NeoGenesis pursuant to Section 2.2(b); or
(iii) [*] of Net Sales of Licensed Products in the Territory
where the Designated Compound in such Licensed Product is a
Derivative Compound derived from an Selected Compound
identified through SPL's screening of a Selected Compound
against a target other than the specific Target(s) for which
the Selected Compound was screened by NeoGenesis.
(b) Starting with the First Commercial Sale of each Licensed Product
in the Territory, SPL shall provide NeoGenesis with quarterly reports of Net
Sales by country of each Licensed Product in the Territory. Each such quarterly
report shall be provided to NeoGenesis not later than sixty (60) days following
the close of the relevant calendar quarter, (i.e., following each March 31, June
30, September 30 and December 31). Concurrently with the making of such reports,
SPL shall pay to NeoGenesis royalties due for such period at the rates specified
in Section 4.4(a). The report due for the quarter ending December 31 of each
year shall also include the aggregate royalties due NeoGenesis for the entire
year.
(c) SPL's obligation to pay royalties with respect to each Licensed
Product shall expire on a country-by-country basis upon the later of (i) the
expiration (or revocation or complete rejection) of the last to expire (or to be
revoked or to be completely rejected) of any NeoGenesis Patent Right and/or
Compound Patent Right having a Valid Claim covering such Licensed Product in the
country, or (ii) ten (10) years from the First Commercial Sale of the Licensed
Product in such country. No royalties shall accrue on the disposition of any
Licensed Product in reasonable quantities by SPL, its Affiliates or its
sublicenses at no charge as samples (promotional or otherwise) or as donations
(for example, to non-profit institutions or government agencies for a
non-commercial purpose) or for clinical studies.
4.5 REMITTANCE.
(a) All royalties, milestone and other payments required under this
Article 4 shall be made by bank wire transfer in United States dollars in
immediately available funds to an account designated by NeoGenesis. Royalties
shall be deemed payable by the entity making the Net Sales from the country in
which earned in local currency and subject to foreign exchange regulations then
prevailing. Royalty payments shall be made in United States dollars to the
extent that free conversion to United States dollars is permitted. The rate of
exchange to be used in any such conversion from the currency in the country
where such Net Sales occurs shall be in accordance with the policy set forth in
ATTACHMENT D attached hereto.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
(b) In the event that any payment due NeoGenesis under this Agreement
is not made when due, the amount due shall accrue interest beginning on the
fifth day following the final date on which such payment was due, calculated at
the annual rate equal to two percent (2%) above the prime interest rate reported
in the WALL STREET JOURNAL for the due date, calculated from the due date until
paid in full. Such payment when made shall be accompanied by all interest so
accrued.
(c) If at any time legal restrictions or prohibitions imposed by
national or international authority prevent the conversion of the local currency
and such currency cannot be removed from such country such that prompt
remittance by SPL of any royalties owed by SPL to NeoGenesis in respect of sales
in such country is prevented, the parties shall consult with a view to finding a
prompt and acceptable solution, and SPL or its designated Affiliates will make
payment through any means as NeoGenesis may lawfully direct at no additional
out-of-pocket expense to SPL.. Notwithstanding the foregoing, if royalties in
any country cannot be remitted to NeoGenesis for any reason within three (3)
months after the end of the calendar quarter during which they are earned, then
SPL shall be obligated to pay NeoGenesis in the local currency of such country
and shall deposit the relevant royalties in a bank account in such country
designated by NeoGenesis and in the name of NeoGenesis.
4.6 RECORDS. SPL, its Affiliates and sublicensees shall keep and maintain
complete, true and accurate books of account and records (prepared in accordance
with United States Generally Accepted Accounting Principles, consistently
applied) sufficient to determine the amounts of Net Sales and any royalty
payments due with respect thereto. All such books and records shall be
maintained in accordance with SPL's records retention policies consistently
applied but for a period of at least thirty six (36) months from the date of
each payment of royalties.
4.7 INSPECTION. Upon prior written notice SPL and its Affiliates shall,
within a period not to exceed forty-five (45) days, permit an independent
certified public accounting firm of nationally recognized standing selected by
NeoGenesis and reasonably acceptable to SPL, at NeoGenesis' expense, to have
access during regular business hours to examine pertinent books and records of
SPL and its Affiliates necessary to verify the accuracy of the royalty reports
and payments by SPL hereunder. The examination shall be limited to pertinent
books and records for any calendar year ending not more than twenty-four (24)
months prior to the date of such request. Such inspection right shall not be
exercised more than once in any calendar year. The accounting firm employees
shall sign confidentiality agreements reasonably acceptable to SPL as a
condition precedent to their inspection. SPL may designate competitively
sensitive information which such auditor may not disclose to NeoGenesis;
PROVIDED, HOWEVER, that such designation shall not encompass the auditor's
conclusions. The accounting firm shall disclose to NeoGenesis only whether the
royalty reports are correct or incorrect and the specific details concerning any
discrepancies. No other information shall be provided to NeoGenesis. In the
event that the accounting firm correctly concludes that a variation or error has
occurred resulting in an underpayment of royalties by SPL of five percent (5%)
or more of the amount actually due for the period covered by the inspection, SPL
shall pay to NeoGenesis in addition to such underpayment, the costs relating to
the inspection, within thirty (30) days of receipt of an invoice
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
29
for such amounts. Any overpayment of royalties by SPL discovered through such
audit shall be fully creditable against royalties subsequently due hereunder.
SPL shall include in each sublicense granted by it pursuant to this Agreement a
provision requiring the sublicensee to make reports to SPL, to keep and maintain
records of sales made pursuant to such sublicense and to grant access to such
records by NeoGenesis' independent accountant to the same extent required of SPL
under this Agreement. Upon expiration of the twenty-four (24) month period
immediately following the receipt by NeoGenesis of SPL's fourth quarter royalty
report for a given calendar year, the calculation of royalties payable with
respect to such year shall be binding and conclusive upon NeoGenesis, and SPL,
its Affiliates and its sublicensees shall be released from any liability or
accountability with respect to royalties for such year, except for instances of
fraud or other intentional misconduct.
4.8 TAXES. If at any time, any jurisdiction within the Territory requires
the withholding of income taxes or other taxes imposed upon payments set forth
in this Article 4, SPL shall make such withholding payments as required and
subtract such withholding payments from the payments to be made to NeoGenesis as
set forth in this Article 4, or if applicable, NeoGenesis will promptly
reimburse SPL or its designee(s) of the amount of such withholding payments that
are not subtracted from the payments made to NeoGenesis as set forth in this
Article 4. SPL shall provide NeoGenesis with documentation of such withholding
and payment in a manner that is satisfactory for purposes of reporting to the
U.S. Internal Revenue Service. Any withholdings paid when due hereunder shall be
for the account of NeoGenesis. Withholding payments made by SPL pursuant to this
Section 4.8 shall be made based upon financial information provided to SPL by
NeoGenesis, and to the extent that such information is incorrect, NeoGenesis
shall be liable for any deficiency, and any fine, assessment or penalty imposed
by any taxing authority in the Territory for any deficiency in the amount of any
such withholding or the failure to make such withholding payment. If SPL is
required to pay any such deficiency, or any fine, assessment or penalty for any
such deficiency, NeoGenesis shall promptly reimburse SPL for such payments.
5. CONFIDENTIALITY
5.1 PUBLICITY. Each of the parties hereto agrees not to disclose to any
third party the existence or the terms of this Agreement without the prior
written consent of the other party hereto. Notwithstanding the foregoing, the
parties may agree upon an initial press release to announce the execution of
this Agreement, together with a corresponding Q&A outline for use in responding
to inquiries about the Agreement. In the event of such agreed upon press
release, each party may thereafter disclose to third parties the specific
information contained in such press release and Q&A without the need for further
approval by the other party. Nothing in this Section 5.1 shall prohibit a party
from making such disclosures to the extent required under applicable federal or
state securities laws or any rule or regulation of any nationally recognized
securities exchange. In such event, however, the disclosing party shall use good
faith efforts to notify and consult with the other party prior to such
disclosure and, where applicable, shall diligently seek confidential treatment
to the extent such treatment is available under applicable securities laws.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
30
5.2 CONFIDENTIALITY.
(a) Confidential Information received by one party (the "RECEIVING
PARTY") from the other party (the "DISCLOSING PARTY") in connection with this
Agreement will be used by the Receiving Party solely for the performance of the
Screening Program or as otherwise expressly permitted by this Agreement. All
Confidential Information will be received and held in confidence by the
Receiving Party, and shall not be disclosed to any third party without the prior
written consent of the Disclosing Party. Each party acknowledges that, except as
expressly set forth herein, it will not obtain any rights of any sort in or to
the Confidential Information of the Disclosing Party as a result of such
disclosure.
(b) The Receiving Party will restrict disclosure of the Disclosing
Party's Confidential Information to those of the Receiving Party's and its
Affiliates' employees, officers, directors, consultants and agents to whom it is
necessary to disclose such Confidential Information in connection with the
performance of its obligations under this Agreement. The Receiving Party shall
use all reasonable efforts, which shall be at least fully commensurate with
those employed by the Receiving Party for the protection of its own Confidential
Information, to protect the Confidential Information of the Disclosing Party.
(c) The confidentiality and use restrictions set forth in this
Article 5 shall not apply to Confidential Information to the extent such
information:
(i) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of disclosure;
(ii) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the
Receiving Party;
(iii) became generally available to the public or otherwise part
of the public domain after its disclosure and other than
through any act or omission of the Receiving Party in breach
of this Agreement;
(iv) was independently developed by the Receiving Party without
the aid, application or use of the Disclosing Party's
Confidential Information, as demonstrated by documented
evidence prepared contemporaneously with such independent
development; or
(v) was subsequently lawfully disclosed to the Receiving Party,
other than under a duty of confidentiality, by a third party
that had the right to make such disclosure.
(d) Each party hereto may use or disclose Confidential Information
disclosed to it by the other party to the extent (i) such use or disclosure is
reasonably necessary and
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
31
permitted in the exercise of the rights granted hereunder in filing or
prosecuting patent applications and prosecuting or defending litigation, (ii)
such disclosure is reasonably required to be made to any institutional review
board of any entity conducting clinical trials with Designated Compound(s)
and/or Licensed Product(s), or to any governmental or other regulatory agency,
in order to gain approval to conduct clinical trials or to market Designated
Compound(s) and/or Licensed Products, (iii) such disclosure is required by law,
regulation, rule, act or order of any governmental authority, court, or agency,
or is made in connection with submitting required information to tax or other
governmental authorities, or (iv) such disclosure or use is reasonably required
in conducting clinical trials, or making a permitted sublicense or otherwise
exercising license rights expressly granted to it by the other party pursuant to
the terms of this Agreement; in each case, provided that if the Receiving Party
is required to make any such disclosure of the Disclosing Party's Confidential
Information, other than pursuant to a confidentiality agreement, it will give
reasonable advance notice to the Disclosing Party of such disclosure and, except
to the extent inappropriate in the case of patent applications, will use its
reasonable diligent efforts to secure confidential treatment of such
Confidential Information in consultation with the Disclosing Party prior to its
disclosure (whether through protective orders or otherwise) and disclose only
the minimum necessary to comply with such requirements.
(e) Following the termination of this Agreement, or at any time upon
written request by the Disclosing Party, the Receiving Party shall promptly
return to the Disclosing Party all of the Disclosing Party's Confidential
Information, including all copies thereof, in its possession; provided that the
Receiving Party's legal counsel may retain one (1) copy of the Disclosing
Party's Confidential Information in a secure location solely for the purpose of
determining its obligations under this Agreement.
5.3 PUBLICATION. Each of SPL and NeoGenesis acknowledges the other party's
interest in publishing its results to obtain recognition within the scientific
community and to advance the state of scientific knowledge. Each party also
recognizes the mutual interest in obtaining valid patent protection and in
protecting business interests and trade secret information. Consequently, either
party, its Affiliates, employees or consultants wishing to make a publication
relating to the results of the Screening Program shall deliver to the other
party a copy of the proposed written publication or an outline of an oral
disclosure at least sixty (60) days prior to submission for publication or
presentation. For purposes of this Agreement, the term "publication" shall
include, without limitation, abstracts and manuscripts for publication, slides
and texts of oral or other public presentations, and texts of any transmission
through any electronic media, any computer access system such as the internet,
world wide web, or similar medium. The reviewing party shall have the right to
(i) propose modifications to the publication for patent reasons, trade secret
reasons or business reasons or (ii) delay the 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
not to exceed eighteen (18) months from the filing date of the first patent
application covering the information contained in the proposed publication, or
shall modify such Publication to eliminate such patentable information. If the
reviewing party requests modifications to the publication, the publishing party
shall edit such publication to prevent disclosure or trade secret or proprietary
business information prior to submission of the publication or presentation.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
32
6. REPRESENTATIONS AND WARRANTIES.
6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of NeoGenesis and
SPL hereby represents, warrants and covenants to the other party hereto as
follows:
(a) it is a corporation or entity duly organized and validly existing
under the laws of the state or other jurisdiction of its incorporation or
formation;
(b) the execution, delivery and performance of this Agreement by such
party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such party of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (i) a loan agreement, guaranty, financing
agreement, agreement affecting a product or other agreement or instrument
binding or affecting it or its property; (ii) the provisions of its charter or
operative documents or bylaws; or (iii) any order, writ, injunction or decree of
any court or governmental authority entered against it or by which any of its
property is bound;
(e) except for the governmental and regulatory approvals required to
market the Licensed Product(s), the execution, delivery and performance of this
Agreement by such party does not require the consent, approval or authorization
of, or notice, declaration, filing or registration with, any governmental or
regulatory authority and the execution, delivery or performance of this
Agreement will not violate any law, rule or regulation applicable to such party;
(f) this Agreement has been duly authorized, executed and delivered
and constitutes such party's legal, valid and binding obligation enforceable
against it in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to the availability of particular
remedies under general equity principles; and
(g) it shall comply with all applicable material laws and regulations
relating to its activities under this Agreement.
6.2 NEOGENESIS' REPRESENTATIONS. NeoGenesis hereby represents, warrants
and covenants to SPL as follows:
(a) to the best of NeoGenesis' knowledge, as of the Effective Date,
NeoGenesis is the sole and exclusive owner of the NeoMorph Screening Library,
the NeoGenesis
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
33
Patent Rights and the NeoGenesis Know-How free and clear of all liens, charges
and encumbrances and no other person, corporate or other private entity, or
governmental entity or subdivision thereof, has or shall have any claim of
ownership with respect thereto;
(b) as of the Effective Date it has the full right, power and
authority to grant all of the right, title and interest in the licenses and
other rights granted to SPL under this Agreement;
(c) to the best of NeoGenesis' knowledge, as of the Effective Date
the NeoMorph Screening Library, NeoGenesis Patent Rights and NeoGenesis
Know-How, and the use thereof in performance of the Screening Program as
contemplated hereunder, do not infringe on any intellectual property rights
owned or possessed by any third party;
(d) during the term of this Agreement, NeoGenesis shall not grant or
attempt to grant any licenses, options or other rights to any third party that
are contrary to or otherwise inconsistent with the licenses and other rights
granted to SPL hereunder;
(e) as of the Effective Date there are no claims, judgments or
settlements against or owed by NeoGenesis or pending or, to the best of
NeoGenesis' knowledge, threatened claims or litigation against NeoGenesis
relating to the NeoMorph Screening Library, NeoGenesis Patent Rights and
NeoGenesis Know-How;
(f) as of the Effective Date, it is in compliance in all material
respects with any agreements with third parties, and during the term of this
Agreement (i) it will use diligent efforts not to diminish the rights under the
NeoGenesis Patent Rights and NeoGenesis Know-How granted to SPL hereunder,
including without limitation, by not committing or permitting any actions or
omissions which would cause the breach of any agreements between itself and
third parties which provide for intellectual property rights applicable to the
performance of the Screening Program, and (ii) it will provide SPL promptly with
notice of any such alleged breach; and
(g) during the term of this Agreement it will not use in any
capacity, in connection with any activities to be performed under this
Agreement, any individual who has been debarred pursuant to the United States
Food, Drug and Cosmetic Act.
6.3 SPL'S REPRESENTATIONS. SPL hereby represents, warrants and covenants
to NeoGenesis as follows:
(a) during the term of this Agreement it will not use in any
capacity, in connection with any services to be performed under this Agreement,
any individual who has been debarred pursuant to the United States Food, Drug
and Cosmetic Act;
(b) to the best of SPL's knowledge, as of the Effective Date it is
the sole and exclusive owner or licensee of the Schering Patent Rights and the
Schering Know-How, all of which is free and clear of any liens, charges and
encumbrances, and no other person, corporate or
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
34
other private entity, or governmental entity or subdivision thereof, has or
shall have any claim of ownership with respect thereto;
(c) to the best of SPL's knowledge, as of the Effective Date it is
the owner of the Targets and any other tangible materials to be provided to
NeoGenesis hereunder for use in the Screening Program;
(d) to the best of SPL's knowledge, as of the Effective Date, the use
of the Targets in performance of the Screening Program as contemplated
hereunder, does not infringe a valid and enforceable claim of any issued U.S.
patent owned or possessed by any third party; and
(e) as of the Effective Date, there are no claims, judgments or
settlements against or owed by SPL or pending or, to the best of SPL's
knowledge, threatened claims or litigation against SPL relating to the Schering
Patent Rights and Schering Know-How.
6.4 DISCLAIMER.
(a) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTIONS 6.1-6.3,
NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING, WITHOUT LIMITATION ANY WARRANTY
AGAINST INFRINGEMENT OF ANY THIRD PARTY PATENT OR OTHER INTELLECTUAL PROPERTY
RIGHTS, ANY WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE NEOMORPH SCREENING LIBRARY, THE NEOMORPH
FOCUSED LIBRARIES, QSCD, THE COMPOUNDS, THE ACTIVE COMPOUNDS, THE IMPROVED
ACTIVE COMPOUNDS, THE SELECTED COMPOUNDS, THE DESIGNATED COMPOUNDS, THE TARGETS,
THE LICENSED PRODUCTS, THE NEOGENESIS KNOW-HOW, THE SCHERING KNOW-HOW, THE
SCOPE, VALIDITY OR ENFORCEABILITY OF THE NEOGENESIS PATENT RIGHTS OR THE
SCHERING PATENT RIGHTS, OR SUCH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
(b) THE REPRESENTATIONS AND WARRANTIES OF EACH OF NEOGENESIS AND SPL
EXTEND ONLY TO THE OTHER PARTY. NEITHER PARTY WILL BE LIABLE FOR ANY CLAIM OR
DEMAND AGAINST SUCH OTHER PARTY BY A THIRD PARTY, EXCEPT TO THE EXTENT PROVIDED
IN SECTIONS 7.2-7.3.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY SPL. SPL shall indemnify, defend and hold harmless
NeoGenesis and its Affiliates, and each of its and their respective employees,
officers, directors and agents from and against any and all liability, loss,
claims, damage, cost, and expense (including reasonable attorneys' fees) arising
out of or in connection with third party claims relating to (i) the discovery,
development, manufacture, use, testing, marketing, sale or other
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
35
disposition of Designated Compounds and/or Licensed Products by or on behalf of
SPL or its Affiliates or sublicensees, (ii) performance of the Screening Program
by SPL, (iii) the use of any and all Targets with respect to which screening or
other research activities are conducted in the Screening Program, or (iv) any
breach by SPL of its representations and warranties under this Agreement,
except, in each case, to the extent such liability, loss, claims, damage, cost
or expense is caused by the negligence or willful misconduct of NeoGenesis, its
Affiliates, or any of their respective employees, officers, directors or agents.
7.2 INDEMNIFICATION BY NEOGENESIS. NeoGenesis shall indemnify, defend and
hold harmless SPL and its Affiliates, and each of its and their respective
employees, officers, directors and agents from and against any and all
liability, loss, claims, damage, cost, and expense (including reasonable
attorneys' fees) arising out of or in connection with third party claims
relating to (i) the performance of the Screening Program by NeoGenesis, except
to the extent directly related to the use of Targets provided by SPL, (ii) any
breach of NeoGenesis' contractual obligations to third parties, or (iii) any
breach by NeoGenesis of its representations and warranties made under this
Agreement, except, in each case, to the extent such liability, loss, claims,
damage, cost, and expense is caused by the negligence or willful misconduct of
SPL, its Affiliates, or any of their respective employees, officers, directors
or agents.
7.3 PROCEDURE. As a condition to the indemnification provided for under
Sections 7.1 and 7.2, the indemnified party shall promptly notify the party from
whom indemnification is sought (the "INDEMNIFYING PARTY") in writing of any
claim or suit; PROVIDED, that failure to give such notice shall not relieve
Indemnifying Party of its indemnification obligations under this Article 7,
except to the extent such failure actually and materially prejudices the rights
of Indemnifying Party to defend against such claim or suit. The Indemnifying
Party shall have the right to assume the defense of any suit or claim related to
the liability if it has assumed responsibility for the suit or claim in writing;
however, if in the reasonable judgment of the indemnified party, such suit or
claim involves an issue or matter which could have a materially adverse effect
on the business operations or assets of the indemnified party, the indemnified
party may retain control of the defense or settlement thereof by providing
written notice of such effect to the Indemnifying Party, but in no event shall
such action or notice be construed as a waiver of any indemnification rights
that the indemnified party may have at law or in equity. If the Indemnifying
Party defends the suit or claim, the indemnified party may participate in (but
not control) the defense thereof at its sole cost and expense. If Indemnifying
Party elects to compromise or defend a claim that is the subject of this Article
7, it shall notify the indemnified party of its decision within thirty (30) days
after delivery of the notice described above (or sooner if the nature of the
third party claim requires). If Indemnifying Party elects not to defend the
indemnified party or fails to notify the indemnified party of its election as
provided in this Section 7.3, the indemnified party may pay, compromise or
settle such claim (subject to the provisions of Section 7.5) and the indemnified
party shall be free to pursue such remedies as may be available under applicable
law to recover from Indemnifying Party.
7.4 LIMITATIONS ON LIABILITY. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
36
breach shall be limited under this Agreement or otherwise at law or equity to
direct damages only and in no event shall a party be liable for punitive,
exemplary or consequential damages; PROVIDED that this limitation shall not
apply to the extent arising under third party claims which are subject to
indemnification under Section 7.1 or Section 7.2.
7.5 SETTLEMENTS. Neither party may settle a claim or action related to a
liability, loss, claims, damage, cost or expense arising in connection with this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld, if such settlement would impose any monetary obligation
on the other party or require the other party to submit to an injunction or
otherwise limit the other party's rights under this Agreement. Any payment made
by a party to settle any such claim or action shall be at its own cost and
expense; PROVIDED, that in the event and to the extent that an indemnified party
enters into a settlement of a matter with respect to which it believes it is
entitled to indemnification under this Article 7 after the other party has
refused to assume the defense of such matter, the provisions of this Section 7.5
shall not constitute a waiver of such party's right to seek remedies from the
other party concerning such matter.
7.6 INSURANCE. Each party acknowledges and agrees that during the term of
this Agreement it shall maintain adequate insurance and/or a self-insurance
program for liability insurance, including products liability and contractual
liability insurance, to cover such party's obligations under this Agreement.
Each party shall provide the other party with evidence of such insurance and/or
self-insurance program, upon request.
8. TERM AND TERMINATION
8.1 TERM. This Agreement shall take effect as the Effective Date and
shall, unless sooner terminated in accordance with Section 8.2 or Section
9.5(a), expire on a Licensed Product-by -Licensed Product and country-by-country
basis upon the later of: (i) the expiration of the last-to-expire of the
NeoGenesis Patent Rights having a Valid Claim covering the Licensed Product in
such country, or (ii) ten (10) years following the First Commercial Sale of the
Licensed Product in such country. Upon expiration of this Agreement with respect
to a Licensed Product in a given country, the licenses granted to SPL hereunder
with respect to such Licensed Product in such country shall become fully paid,
royalty-free, irrevocable licenses.
8.2 TERMINATION.
(a) SPL shall have the right to terminate this Agreement, with or
without cause at any time following the first anniversary of the Effective Date
upon one hundred and eighty (180) days written notice.
(b) During the term of the Screening Program, either party may
terminate the Screening Program and this Agreement (i) upon thirty (30) days
written notice to the other party if the other party fails to pay any amounts
properly due and owing under this Agreement, unless such amount is paid prior to
the expiration of such thirty (30) day period, or (ii) upon ninety (90)
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
37
days written notice to the other party if the other party commits a material
breach of this Agreement (other than non-payment), unless such breach is cured
within the ninety (90) day notice period, or if such breach is not capable of
being cured within ninety (90) days unless such party during such ninety (90)
day period initiates actions reasonably expected to cure the breach and
thereafter diligently proceeds to cure the breach.
(c) Following completion of the Screening Program, either party may
terminate this Agreement (i) upon thirty (30) days written notice to the other
party if the other party fails to pay any amounts properly due and owing under
this Agreement, unless such amount is paid prior to the expiration of such
thirty (30) day period, or (ii) upon ninety (90) days written notice to the
other party if the other party commits a material breach of this Agreement
(other than non-payment), unless such breach is cured within the ninety (90) day
notice period, or if such breach is not capable of being cured within ninety
(90) days unless such party during such ninety (90) day period initiates actions
reasonably expected to cure the breach and thereafter diligently proceeds to
cure the breach. Notwithstanding the foregoing, in the event that the
non-payment or breach is related to a Licensed Product, any such termination
shall be effective only with respect to such Licensed Product and this Agreement
shall remain in full force and effect with respect to any other Licensed
Products being developed and commercialized by SPL under this Agreement.
(d) This Agreement may be terminated 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, or in the event a receiver or
custodian is appointed for such party's business, or if a substantial portion of
such party's business is subject to attachment or similar process; provided,
however, that in the case of any involuntary bankruptcy proceeding such right to
terminate shall only become effective if the proceeding is not dismissed within
sixty (60) days after the filing thereof.
8.3 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement pursuant to Section 8.2: (i)
NeoGenesis will terminate all tasks then in process in an orderly manner, as
soon as practical and in accordance with a schedule agreed to by SPL and
NeoGenesis; (ii) NeoGenesis shall deliver to SPL all materials developed through
the termination of this Agreement; (iii) SPL shall pay NeoGenesis any monies due
and owing NeoGenesis up to the time of termination for services actually
performed (including all work-in process), and (iv) within thirty (30) days
following termination (including expiration) of this Agreement, NeoGenesis shall
deliver to SPL a reasonably-detailed written report describing the results of
the research performed up to the date of such termination. In addition, upon
termination (including expiration) of this Agreement each party shall return to
the other party or certify in writing to the other party that it has destroyed
all Confidential Information of the other party in its possession.
(b) The licenses granted by NeoGenesis under Article 3 shall survive
any expiration or termination of the Screening Program or the termination of
this Agreement with respect to any Designated Compound or Licensed Product for
which the applicable service fees
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
38
and milestone fees and royalties have been paid (when due in accordance with the
terms of this Agreement) and SPL shall continue to have the right to develop,
have developed, make, have made, use, distribute, offer for sale, import, export
and sell Licensed Products relating to such Designated Compounds; PROVIDED that
SPL continues to pay NeoGenesis milestone fees and royalties as required by
Sections 4.3 and 4.4 and complies with Sections 4.5-4.8. In the event the
licenses granted to SPL under Article 3 terminates for any reason, each of SPL's
sublicensees at such time shall continue to have the rights and license set
forth in their sublicense agreements, PROVIDED such sublicensee agrees in
writing that NeoGenesis is entitled to enforce all relevant provisions directly
against such sublicensee.
(c) Nothing herein shall be construed to release either party of any
obligation which matured prior to the effective date of any termination. SPL's
liability for any charges, payments or expenses due to NeoGenesis that accrued
prior to the termination date shall not be extinguished by termination, and such
amounts (if not otherwise due on an earlier date) shall be immediately due and
payable on the termination date.
(d) Termination of this Agreement by either party pursuant to Section
8.2 or 9.5(a) hereof shall constitute termination of the U.S. Agreement under
the corresponding provisions thereof.
8.4 SURVIVAL. Articles 1, 5, 6, 7 and 9 and Sections 2.2(b), 2.2(c),
2.2(g), 2.5, 3.4, 3.5, 3.6, 3.7, 4.6, 4.7, 4.8 and 8.3(a-c), and the second and
third sentences of Section 2.1(c), shall survive any termination or expiration
of this Agreement.
9. GENERAL PROVISIONS.
9.1 DISPUTE RESOLUTION. Any controversy or dispute that arises under or
relates to this Agreement (with the exception to disputes relating to the
performance of the Screening Program which are governed by the terms of Section
2.6(d)) shall be referred to the Oversight Committee (as defined in Section
2.6(d)) for resolution. If the Oversight Committee is unable to resolve the
dispute within thirty (30) days, the dispute shall be resolved by binding
arbitration pursuant to the provisions of Schedule 9.1 (attached hereto).
Nothing herein shall prevent the parties from settling any dispute by mutual
agreement at any time.
9.2 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard for any
conflict of laws rule or provision thereof that would result in the application
of the substantive laws of any other jurisdiction. Notwithstanding the
foregoing, the parties (and the arbitrators) shall use United States (Federal)
patent and copyright laws for purposes of governing and construing Sections 3.5,
3.6 or 3.7 of this Agreement. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to the transactions contemplated by
this Agreement.
9.3 AMENDMENT AND WAIVER. This Agreement may only be modified or amended
by a written instrument signed by authorized representatives of each party. No
provision of or right
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
39
under this Agreement shall be deemed to have been waived by any act or
acquiescence on the part of either party, its agents or employees, but only by
an instrument in writing signed by an authorized officer of each party. No
waiver by either party of any breach of this Agreement by the other party shall
be effective as to any other breach, whether of the same or any other term or
condition and whether occurring before or after the date of such waiver.
9.4 INDEPENDENT CONTRACTORS. Each party represents that it is acting on
its own behalf as an independent contractor and is not acting as an agent for or
on behalf of any third party. This Agreement and the relations hereby
established by and between SPL and NeoGenesis do not constitute a partnership,
joint venture, franchise, agency or contract of employment. Neither party is
granted, and neither party shall exercise, the right or authority to assume or
create any obligation or responsibility on behalf of or in the name of the other
party or its Affiliates. NeoGenesis shall be solely responsible for compensating
all its personnel and for payment of all related FICA, workers' compensation,
unemployment and withholding taxes.
9.5 ASSIGNMENT. (a) This Agreement, and any of a party's rights and
obligations under this Agreement, may not be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party without the
prior written consent of the other party; PROVIDED, that either party may assign
this Agreement to an Affiliate or in connection with the transfer or sale of all
or substantially all of its assets related to the division or the subject
business, or in the event of its merger or consolidation or change in control or
similar transaction PROVIDED, FURTHER, that in each instance the assignee
expressly assumes all obligations imposed on the assigning party by this
Agreement in writing. This Agreement shall be binding upon, and inure to the
benefit of, each party, its Affiliates, and its permitted successors and
assigns. Each party shall be responsible for the compliance by its Affiliates
with the terms and conditions of this Agreement.
(b) In the event that any (i) third party or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act of 1934, as amended) other
than the current officers and directors of NeoGenesis or SPL, as the case may
be, has acquired, directly or indirectly, the beneficial ownership, by way of
merger, consolidation or otherwise of 50% of the voting power of NeoGenesis or
SPL, as the case may be, on a fully-diluted basis or (ii) the sale, lease or
transfer of all or substantially all of the assets of NeoGenesis or SPL to any
third party or group not controlled directly or indirectly by such party (each,
a "CHANGE IN CONTROL") during the term of the Screening Program causes either
party's rights and obligations hereunder to pass to any third party, the other
party shall have the right to terminate the Screening Program and this Agreement
upon written notice within thirty (30) days of receipt of actual knowledge of
such Change of Control, without providing the party that is the subject of such
Change in Control any opportunity to cure. Thereafter, such party shall also
have the right to terminate this Agreement if the assignee of the party that is
the subject of such Change in Control does not provide the writing required
under Section 9.5(a). In addition, if the beneficial ownership (in the manner
described in Section 9.5(b)(i)-(ii)) of more than fifty percent (50%) of the
voting or income interest in NeoGenesis or SPL, as applicable, on a fully
diluted basis, is acquired by a third party or group that is reasonably regarded
as a competitor of the other party, such determination being made with reference
to the products and services that such third party then markets or for which
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
40
it has made regulatory submissions with the FDA or an equivalent Regulatory
Authority in another Major Country or for which it has publicly announced its
intention to do either of the foregoing, the other party shall have the right,
but not the obligation, to terminate the Screening Program with six (6) months
notice to the party being acquired.
9.6 NOTICES. Any notice required or permitted to be given or sent under
this Agreement shall be hand delivered or sent by express delivery service or
certified or registered mail, postage prepaid, or by facsimile transmission
(with written confirmation copy by registered first-class mail) to the parties
at the addresses and facsimile numbers indicated below.
If to NeoGenesis, to:
NeoGenesis Drug Discovery, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President and CSO
Fax: (000) 000-0000
If to SPL, to:
Schering-Plough Ltd.
Xxxxxxxxxxxxxx 0
XX 0000 Xxxxxxx
Xxxxxxxxxxx
Attention: President
Facsimile No.: (011) (41) (00) 000 00 00
with copies to:
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President, Business Development
Facsimile No.: (000) 000-0000
and
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Law Department - Staff Vice-President,
Licensing
Facsimile No.: (000) 000-0000
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
41
Any such notice shall be deemed to have been received on the earlier of the date
actually received or the date five (5) days after the same was posted or sent.
Either party may change its address or its facsimile number by giving the other
party written notice, delivered in accordance with this Section 9.6.
9.7 PROVISIONS FOR INSOLVENCY.
(a) All rights and licenses granted under or pursuant to this
Agreement by NeoGenesis to SPL are, for all purposes of Section 365(n) of Title
11 of the United States Code ("TITLE 11"), licenses of rights to "intellectual
property" as defined in Title 11. NeoGenesis agrees during the term of this
Agreement to create and maintain current copies or, if not amenable to copying,
detailed descriptions or other appropriate embodiments, to the extent feasible,
of all such intellectual property. If a case is commenced by or against
NeoGenesis under Title 11, then, unless and until this Agreement is rejected as
provided in Title 11, NeoGenesis (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Title 11 Trustee (as defined therein)) shall, as SPL may elect in
a written request, immediately upon such request:
(i) perform all of the obligations provided in this Agreement to be
performed by NeoGenesis including, where applicable and without
limitation, providing to SPL portions of such intellectual
property (including embodiments thereof) held by NeoGenesis and
such successors and assigns or otherwise available to them; or
(ii) provide to SPL all such intellectual property (including all
embodiments thereof) held by NeoGenesis and such successors and
assigns or otherwise available to them.
(b) If a Title 11 case is commenced by or against NeoGenesis, and
this Agreement is rejected as provided in Title 11, and SPL elects to retain its
rights hereunder as provided in Title 11, then NeoGenesis (in any capacity,
including debtor-in-possession) and its successors and assigns (including,
without limitation, a Title 11 Trustee) shall provide to SPL all such
intellectual property (including all embodiments thereof) held by NeoGenesis and
such successors and assigns, or otherwise available to them, immediately upon
SPL's written request. Whenever NeoGenesis or any of its successors or assigns
provides to SPL any of the intellectual property licensed hereunder (or any
embodiment thereof) pursuant to this Section 9.7, SPL shall have the right to
perform the obligations of NeoGenesis hereunder with respect to such
intellectual property, but neither such provision nor such performance by SPL
shall release NeoGenesis from any such obligation or liability for failing to
perform it.
(c) All rights, powers and remedies of SPL provided herein are in
addition to and not in substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity (including, without
limitation, Title 11). In the event of the commencement of a Title 11 case by or
against NeoGenesis, SPL, in addition to the rights, power and remedies expressly
provided herein, shall be entitled to exercise all other such rights and powers
and resort
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
42
to all other such remedies as may now or hereafter exist at law or in equity
(including, without limitation, Title 11) in such event. The parties agree that
they intend the foregoing SPL rights to extend to the maximum extent permitted
by law, including, without limitation, for purposes of Title 11:
(i) the right of access to any intellectual property (including all
embodiments thereof) of NeoGenesis, or any third party with whom
NeoGenesis contracts to perform an obligation of NeoGenesis under
this Agreement, and, in the case of the third party, which is
necessary for the development, registration, manufacture and
marketing of Designated Compounds and/or Licensed Products; and
(ii) the right to contract directly with any third party described in
(i) to complete the contracted work.
9.8 SEVERABILITY. In the event any provision of this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof. The parties agree that they will negotiate in good faith to
replace any provision hereof so held invalid, illegal or unenforceable with a
valid provision which is as similar as possible in substance to the invalid,
illegal or unenforceable provision.
9.9 CAPTIONS. Captions of the sections and subsections of this Agreement
are for reference purposes only and do not constitute terms or conditions of
this Agreement and shall not limit or affect the meaning or construction of the
terms and conditions hereof.
9.10 ENTIRE AGREEMENT. This Agreement (including the Attachments or
Schedules hereto) constitutes the entire understanding of the parties with
respect to the transactions and matters contemplated hereby and supersedes all
previous communications, representations, agreements and understandings, whether
written or verbal, relating to the subject matter hereof. No representations,
inducements, promises or agreements, whether oral or otherwise, between the
parties not contained in this Agreement shall be of any force or effect.
9.11 RULES OF CONSTRUCTION. The parties agree that they have participated
equally in the formation of this Agreement and that the language and terms of
this Agreement shall not be construed against either party by reason of the
extent to which such party or its professional advisors participated in the
preparation of this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.13 FORCE MAJEURE. Failure of any party to perform its obligations under
this Agreement (except the obligation to make payments when properly due) shall
not subject such party to any liability or place them in breach of any term or
condition of this Agreement to the
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
43
other party if such failure is due to any cause beyond the reasonable control of
such non-performing party ("FORCE MAJEURE"), unless conclusive evidence to the
contrary is provided. Causes of non-performance constituting force majeure shall
include, without limitation, acts of God, fire, explosion, flood, drought, war,
riot, sabotage, embargo, strikes or other labor trouble, failure in whole or in
part of suppliers to deliver on schedule materials, equipment or machinery,
interruption of or delay in transportation, a national health emergency or
compliance with any order or regulation of any government entity acting with
color of right. The party affected shall promptly notify the other party of the
condition constituting force majeure as defined herein and shall exert
reasonable efforts to eliminate, cure and overcome any such causes and to resume
performance of its obligations with all possible speed; provided that nothing
herein shall obligate a party to settle on terms unsatisfactory to such party
any strike, lockout or other labor difficulty, any investigation or other
proceeding by any public authority or any litigation by any third party. If a
condition constituting force majeure as defined herein exists for more than
ninety (90) consecutive days, the parties shall meet to negotiate a mutually
satisfactory resolution to the problem, if practicable. If the parties cannot in
good faith reach a satisfactory resolution to the problem within sixty (60) days
of meeting, the matter shall be referred to binding arbitration pursuant to
Section 9.1.
9.14 RELATIONSHIP TO US AGREEMENT, CONTROLLING PROVISIONS. The parties
acknowledge that this Agreement and the US Agreement are intended to operate
together as a single worldwide agreement governing the rights and obligations of
NeoGenesis, SPL and Schering Corporation. For purposes of clarity and avoidance
of doubt, the parties agree that rights and obligations of the parties under
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 and 2.8 of this Agreement shall be
controlled by the corresponding provisions of the U.S. Agreement. The parties
further agree that SPL's rights and obligations under Sections 3.5, 3.6 and 3.7
of this Agreement shall be exercised and performed by the employees and/or
agents of Schering Corporation having responsibility for Schering Corporation's
rights and obligations under Sections 3.5, 3.6 and 3.7 of the US Agreement, and
that all such activities will be performed in a coordinated manner.
9.15 FURTHER ASSURANCES. Each party agrees that, subsequent to the
execution and delivery of this Agreement and without any additional
consideration, it will execute and deliver any further legal instruments and
perform any acts which are or may become reasonably necessary to effectuate the
purposes of this Agreement.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
44
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
their behalf by their duly authorized representatives.
NEOGENESIS DRUG DISCOVERY, INC. SCHERING-PLOUGH LTD.
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------ ------------------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxxx, Ph.D.
President and CSO Prokurist
Date: August 2, 2001 Date: August 2, 2001
---------------------------- ----------------------------
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
45
ATTACHMENT A
SCREENING PROGRAM
The Screening Program to be performed by NeoGenesis with respect to the Targets
will screen up to [*] Compounds contained in the NeoGenesis NeoMorph Screening
Library against each Target using the protocol described below.
1. SPL will provide NeoGenesis with approximately [*] of each of the purified
functionally-active Target proteins. Control experiments will be performed with
each of the Targets to determine screening characteristics in NeoGenesis' ALIS
protocols. Follow-up control experiments will be performed using SPL ligands (if
available) to validate the retention of binding activity of the Targets. Written
Standard Operating Procedures ("SOPS") will be established by the Steering
Committee for ALIS screening based on the preceding experiments.
2. Using the SOPs, NeoGenesis will perform ALIS screening of the NeoMorph
Screening Library against each Target. The ALIS screening will be carried out to
identify Target-specific Compounds that bind to the SPL Target with binding
affinities less than [*] micromolar (Kd < [*]), or such other binding affinity
threshold for a specific Target as shall be agreed upon by the parties in
writing (each, a Preliminary Compound as defined in Section 1.36).
3. NeoGenesis will deliver to SPL [*] of each of the discrete Preliminary
Compounds. SPL will evaluate the activity of these discrete compound(s) in a
Target-based functional assay and/or secondary assay and will notify NeoGenesis
of any such Preliminary Compound(s) which has demonstrated activity in the
Target-based functional assays (each, an Active Compound as defined in Section
1.1 within [*] after completion of such assays and not later than [*] after the
discrete compounds are delivered by NeoGenesis. NeoGenesis will prepare a report
for all Preliminary Compound(s) that details the binding affinities of such
Preliminary Compound(s) (each, a "PRELIMINARY TARGET REPORT"). NeoGenesis will
deliver such Preliminary Target Report when it delivers the discrete compounds.
4. Following identification of Active Compounds by SPL, NeoGenesis will
disclose to SPL the structures of all Active Compounds and Preliminary Compounds
of the same Chemotype. At the direction of the Steering Committee, NeoGenesis
will perform initial optimization of such Active Compounds to obtain compounds
with binding affinities of [*] micromolar or less (Kd < [*]) (each, an Improved
Active Compound as defined in Section 1.21 and NeoGenesis will provide SPL with
[*] of discrete Improved Active Compounds. SPL will evaluate the activity of
these discrete compound(s) in a Target-based functional assay and/or secondary
assay and will notify NeoGenesis of any such Improved Active Compound(s) which
has demonstrated activity in the Target-based functional assays within [*] after
completion of such assays and not later than [*] after the discrete Improved
Active Compounds are delivered by NeoGenesis. NeoGenesis will prepare a report
for all Improved Active Compound(s) that details the chemical structures,
binding affinities and competition analysis data for such Improved Active
Compound(s) (each, a "FINAL TARGET REPORT"). NeoGenesis will deliver such Final
Target Report when it delivers the discrete Improved Active Compounds. In the
event and to the extent that the Steering
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
46
Committee determines that the aggregate amount of initial optimization
activities performed by NeoGenesis pursuant to this Paragraph 4 will adversely
effect the ability of NeoGenesis to perform initial screening activities for the
Targets that are the subject of the Screening program during a particular
funding period, the Screening Committee may determine that SPL rather than
NeoGenesis should perform certain optimization activities.
5. SPL will select those Improved Active Compounds with respect to each Target
that have demonstrated activity in the Target-based functional assay and/or
secondary assay and that it considers worthy of further study or optimization as
Selected Compounds in accordance with Section 2.7 of the Agreement. In addition,
those Selected Compounds which are to be optimized by NeoGenesis as Lead
Compounds pursuant to Section 2.2(b) of the Agreement will also be identified by
SPL at the time it designates Selected Compounds for the applicable Target.
6. At the request of SPL in accordance with Section 2.2(b), NeoGenesis will
perform medicinal chemistry optimization on each Lead Compound.
LIST OF ACCEPTED TARGETS
1. [*]
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
47
ATTACHMENT B
NEOGENESIS PATENT RIGHTS
[TO BE SUPPLIED BY NEOGENESIS AS APPLICABLE]
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
48
ATTACHMENT C
INVENTIONS
[TO BE SUPPLIED AS DEVELOPED]
ATTACHMENT D
BOOKKEEPING EXCHANGE RATE POLICY
PURPOSE
To provide general guidelines for the establishment and communication of current
bookkeeping exchange rates by Corporate Treasury to divisions and subsidiaries.
APPLICATION
Applies to Schering-Plough Corporation, its divisions and all subsidiaries.
POLICY
ESTABLISHMENT OF RATES
The current bookkeeping exchange rates will be determined monthly by S-P
Corporate Treasury. The rates will be based on:
- The market rates for selling foreign currencies in
New York on the
morning of the 25th of each month; the 31st in December; or
- In thinly traded currencies the local rate established in that country
for buying U.S. dollars.
If the 25th occurs on a holiday, Saturday or Sunday, the rates used are those of
the last business day prior to the 25th. If for any reason a rate established is
significantly different from the rate prevailing locally, the Chief Financial
Officer of the subsidiary should promptly telex Corporate Treasury.
NOTIFICATION
Rates will be communicated to subsidiaries on the last day of each accounting
period by Corporate Treasury (1st workday of ensuing year at year-end). The
communication will advise each subsidiary of all Corporate wide current rates,
regardless of whether or not they have changed from the prior accounting period.
As there is no January closing, January rates will not be issued and December
rates will remain in effect until the February month-end closing.
RECORDKEEPING OF RATES
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
49
At the beginning of each year, a worksheet will be sent to all subsidiaries by
Corporate Treasury. Each subsidiary will maintain a monthly record of all
exchange rates throughout the Corporate system which may affect its accounting
transactions and reporting.
The worksheet lists all countries in which subsidiaries are located and for each
country gives:
1. The cable code (based on country abbreviation) so as to identify the
country for which there is a change in exchange rate.
2. The average exchange rate used in the Operating Plan for the current
year and
3. The exchange rate established as of the end of the previous year.
Twelve columns are provided for the subsidiary to record changes in
exchange rates from communication received each month.
QUOTING OR RATES
To conform with practices generally prevailing in each country, and to avoid any
confusion, ALL exchange rates will be quoted in terms of the number of foreign
currency units per U.S. dollar. This means that for those foreign currency units
that are valued at more than one U.S. dollar, the exchange rates are quoted as a
decimal of the foreign currency unit.
For example, the pound sterling plan rate is quoted as (pound).571 per U.S.
dollar rather than U.S.$1.75 per pound sterling.
Exchange rates are generally quoted as follows:
- In THREE decimals for currencies with less than one unit per U.S.
dollar (e.g., UK .571)
- In TWO decimals for those with one or more but less than ten units
(e.g., France 5.70)
- In ONE decimal for those with ten or more but less than 100 units
(e.g., Austria 12.0) and
- With NO decimals for those with 100 or more units (e.g. Italy 1270)
Rates will be quoted in more than three digits only when necessary to conform to
rates required for official purposes locally or when the exchange rate exceeds
1,000 (e.g., Italy 1270). If the rate exceeds 1,000, it should be rounded to
three significant digits (e.g., rate of 4633 would be shown as 4630).
RESPONSIBILITY
The Corporate Treasury Department will:
A. Distribute the Current Bookkeeping Exchange rate Worksheet at the
beginning of each year to all divisions and subsidiaries.
B Establish and communicate the Current Bookkeeping Exchange rate as
stated in the above policy.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
50
The chief financial officer of each subsidiary will maintain monthly records of
communicated exchange rates.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
51
ATTACHMENT E
DISPUTE RESOLUTION
(a) SCOPE. Subject to and in accordance with the terms of this Agreement and
this Schedule 9.1, all differences, disputes, claims or controversies arising
out of or in any way connected or related to this Agreement, whether arising
before or after the expiration of the term of this Agreement, and including,
without limitation, its negotiation, execution, delivery, enforceability,
performance, breach, discharge, interpretation and construction, existence,
validity and any damages resulting therefrom or the rights, privileges, duties
and obligations of the parties under or in relation to this Agreement (including
any dispute as to whether an issue is arbitrable) shall be referred to binding
arbitration in accordance with the rules set forth herein and of the American
Arbitration Association, as in effect at the time of the arbitration. The time
frames set forth herein shall control the timing of the arbitration procedure.
(b) PARTIES TO ARBITRATION. For the purposes of each arbitration under this
Agreement, SPL shall constitute one party to the arbitration and NeoGenesis
shall constitute the other party to the arbitration.
(c) NOTICE OF ARBITRATION. A party requesting arbitration hereunder (the
"REQUESTING PARTY") shall give a notice of arbitration to the other party (the
"NON-REQUESTING PARTY") containing a concise description of the matter submitted
for arbitration (a "NOTICE OF ARBITRATION"). Notice of Arbitration shall be
delivered to the other party in accordance with Section 9.6 of the Agreement.
(d) RESPONSE. The Non-Requesting Party must respond in writing within thirty
(30) days of receiving a Notice of Arbitration with an explanation responding to
each issue raised, including references to the relevant provisions of the
Agreement. The Non-Requesting Party may add additional issues to be submitted to
arbitration by including a description of such issue in the response.
(e) MEETING. Within fifteen (15) days of receipt of the response from the
Non-Requesting Party pursuant to Paragraph (d), the parties shall meet and
discuss in good faith options for resolving the dispute. The Requesting Party
must initiate the scheduling of this resolution meeting. Each party shall make
available appropriate personnel to meet and confer with the other party during
such fifteen (15) day period.
(f) SELECTION OF ARBITRATOR. Any and all disputes that cannot be resolved
pursuant to Paragraphs (c), (d) and (e) shall be submitted to an arbitrator (the
"ARBITRATOR") to be selected by mutual agreement of the parties. The Arbitrator
shall be a retired judge of a state or federal court, to be chosen from a list
of such retired judges to be prepared jointly by the parties within fifteen (15)
days following the response, with each party entitled to submit the names of
three such retired judges for inclusion in the list, provided that to the extent
the dispute involves issues of patent law the parties shall limit such list to
judges retired from federal courts having jurisdiction
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
52
over patent law issues; PROVIDED FURTHER, that in the event a dispute relates to
matters that are the subject Section 3.4, 3.5 or 3.6 such judge shall be a
retired federal judge with expertise in patent law. Upon completion of the list,
the parties shall decide within ten (10) days thereafter which of the retired
judges will be selected as the Arbitrator. No Arbitrator appointed or selected
hereunder shall be an employee, director or shareholder of, or otherwise have
any current or previous relationship with, any party or its respective
Affiliates. If the parties fail to agree on the selection of the Arbitrator
within the allotted time frame, the Arbitrator shall be designated by the then
President of the American Arbitration Association.
(g) POWERS OF ARBITRATOR. The Arbitrator may determine all questions of law and
jurisdiction (including questions as to whether a dispute is arbitrable) and all
matters of procedure relating to the arbitration, except that the Arbitrator
shall be bound by the time frames set forth herein in connection with such
arbitration. The Arbitrator shall have the right to grant legal and equitable
relief (including injunctive relief) and to award costs (including reasonable
legal fees and costs of arbitration) and interest. The Arbitrator is not
permitted to award punitive, exemplary or any similar damages.
(h) ARBITRATION PROCEDURE. The arbitration shall take place in the City and
State of
New York at such place and time, consistent with the time frames set
forth herein, as the Arbitrator may fix for the purpose of hearing the evidence
and representations that the parties may present. The arbitration proceedings
shall be conducted in the English language. The law applicable to the
arbitration shall be the law of the State of
New York.
(i) DISCOVERY AND HEARING. During the meeting referred to in Paragraph (e), the
parties shall negotiate in good faith the scope and schedule of discovery,
relating to depositions, document production and other discovery devices, taking
into account the nature of the dispute submitted for resolution. If the parties
are unable to reach agreement as to the scope and schedule of discovery, the
Arbitrator may order such discovery as it deems necessary. The parties and the
Arbitrator must adhere to the following schedule: (1) all discovery shall be
completed within forty-five (45) days from the date of the selection of the
Arbitrator, and (2) the arbitration hearing shall commence within fifteen (15)
days after completion of such discovery. At the arbitration hearing, the parties
may present testimony (either live witness or deposition), subject to
cross-examination, and documentary evidence. To the extent practicable taking
into account the nature of the dispute submitted for resolution and the
availability of the Arbitrator, the hearing shall be conducted over a period not
to exceed ten (10) consecutive calendar days, with each party entitled to one
half of the allotted time.
(j) WITNESS LISTS. At least twenty (20) calendar days prior to the date set for
the hearing, each party shall submit to each other party and the Arbitrator a
list of all documents on which such party intends to rely in any oral or written
presentation to the Arbitrator and a list of all witnesses, if any, such party
intends to call at such hearing and a brief summary of each witness' testimony.
Each party shall be given the opportunity to depose any such designated
witnesses not already deposed during the discovery phase. At least five (5)
calendar days prior to the hearing, each party must submit to the Arbitrator and
serve on each other party a proposed findings of fact and conclusions of law on
each issue to be resolved. Following the close of hearings, the parties
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
2
may each submit such post-hearing briefs to the Arbitrator addressing the
evidence and issues to be resolved as may be required or permitted by the
Arbitrator. No later than fifteen (15) calendar days after hearing the
representations and evidence of the parties, the Arbitrator shall make its
determination in writing and deliver one copy to each of the parties.
(k) CONFIDENTIALITY. The arbitration proceedings shall be confidential and,
except as required by law, no party shall make, or instruct the Arbitrator to
make, any public announcement with respect to the proceedings or decision of the
Arbitrator without the prior written consent of the other party. The existence
of any dispute submitted to arbitration and the award of the Arbitrator shall be
kept in confidence by the parties and the Arbitrator, except as required in
connection with the enforcement of such award or as otherwise required by law.
(l) AWARDS AND APPEAL. Subject to the provisions of this Schedule 9.1, the
decision of the Arbitrator shall be final and binding upon the parties in
respect of all matters relating to the arbitration, the conduct of the parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.
(m) COSTS OF ARBITRATION. The costs of any arbitration hereunder shall be borne
by the parties in the manner specified by the Arbitrator in its determination.
(n) PERFORMANCE OF THE AGREEMENT. During the pendency of the arbitration
proceedings, the parties shall continue to fully perform their respective
obligations under the Agreement; PROVIDED that if the matter which is the
subject of such arbitration proceeding is a matter relating to SPL's development
of Designated Compounds and/or Licensed Products, then the matter shall be
performed by SPL, in its sole discretion; and if the matter which is the subject
of such arbitration proceeding is a matter relating to payment for the Screening
Program services, then the Screening Program shall be performed by NeoGenesis in
its sole discretion. For purposes of this Paragraph (n) the term "pendency of
the arbitration proceeding" shall mean the period starting on the date on which
arbitration proceedings are commenced by a party in accordance with Paragraph
(c) of this Schedule 9.1 and ending on the date on which the Arbitrator delivers
its final determination in writing to the parties.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
3
