Exhibit 2.5
*Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4)
200.83 and 240.24b-2
DEVELOPMENT AND LICENSE AGREEMENT
BETWEEN
XXX XXXXX AND COMPANY
AND
ISIS PHARMACEUTICALS, INC.
DEVELOPMENT AND LICENSE AGREEMENT
THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made as of
August 14, 2001 (the "Signing Date") between Xxx Lilly and Company, a
corporation organized and existing under the laws of the State of Indiana
("LILLY") and Isis Pharmaceuticals, Inc., a corporation organized and existing
under the laws of the State of Delaware ("ISIS").
RECITALS
WHEREAS, ISIS has discovered ISIS 3521, an antisense oligonucleotide,
and is developing a product containing ISIS 3521 for the treatment of cancer;
and
WHEREAS, LILLY and ISIS desire to enter into an agreement whereby LILLY
will complete the development of, and commercialize the ISIS 3521 product upon
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement have the meanings set forth in Exhibit
A.
ARTICLE 2
DEVELOPMENT PROGRAM
2.1 GENERAL.
(a) ISIS will use commercially reasonable efforts to complete ongoing
clinical trials and studies of the Product for non-small cell lung
cancer and non-Hodgkin's lymphoma, as further described in the
Development Plan set forth in Exhibit C hereto, and will participate in
related activities, including the provision of consulting support to
LILLY, in furtherance of the Development Program under the terms and
conditions set forth in this Agreement.
(b) LILLY will undertake all future clinical trials and studies of the
Product as further described in the Development Plan. LILLY will
provide financial and other support for the Development Program and,
other than as provided in subsection (a) above, will be responsible for
implementing the Development Plan.
1.
(c) While the parties will endeavor to reach a consensus with respect to
amendments to the Development Plan and decisions affecting the
Development Program, all final decisions regarding the content of the
Development Plan and conduct of the Development Program will be made by
LILLY after consideration of ISIS' input as provided in Section 2.2(a)
below; provided, however, that ISIS cannot be compelled by LILLY to
perform any studies or other tasks without its consent; and provided
further that LILLY will provide ISIS with reasonable advance notice of
any proposed changes to the Development Plan relating to ISIS's
participation.
2.2 JOINT DEVELOPMENT COMMITTEE.
(a) For so long as ISIS is performing work pursuant to the Development
Plan, the Development Program will be conducted under the overall
oversight of a joint development committee ("JDC") comprised of 2
representatives each from LILLY and ISIS. Each party will designate a
representative as a project leader to serve as the contact person for
that party. The parties may agree to add additional members to the JDC,
as long as equal representation is maintained. LILLY will designate one
of its representatives as chairman of the JDC. In the event of a tied
vote, the JDC chairman will have final decision-making authority.
(b) The JDC will be responsible for overseeing the parties' performance of
the Development Program and for making strategic decisions related to
that program. The JDC will be responsible for approving or disapproving
any amendments to the Development Plan proposed by either party. The
JDC will provide to the parties copies of the amended Development Plan
promptly after approval by the JDC.
(c) During the term of ISIS's participation in the Development Program, the
JDC will meet on a regular basis, and at least quarterly, either in
person, or as the parties otherwise may agree. The JDC will review the
progress of the activities carried out under the Development Program
and will consider proposed modifications to the strategy and goals of
that program. The frequency, dates and times of all meetings will be
mutually agreed upon by the parties, as will the location for
face-to-face meetings, alternating between Indianapolis, Indiana and
Carlsbad, California, or such other location as members of the JDC will
agree. At its first meeting, the JDC will decide upon the
organizational rules under which it will operate during the term of
this Agreement.
(d) Upon completion of the activities required to be performed by ISIS
under the Development Plan, the JDC will be disbanded, and LILLY will
assume full control over the conduct of the Development Program.
However, ISIS and LILLY will meet to discuss the plans for and the
progress of development of the Product on a semi-annual basis for the
duration of the clinical development of the Product. Such meetings may
be held in conjunction with the meetings of LILLY's Therapeutic Area
Steering Committee for Oncology (or any successor committee or group
charged with the oversight of the development of the Product).
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2.3 DEVELOPMENT PROGRAM; ROLES AND RESPONSIBILITIES OF ISIS AND LILLY.
(a) ISIS' RESPONSIBILITIES.
(i) The activities to be undertaken by ISIS in the course of the
Development Program are set forth in the Development Plan
attached hereto as Exhibit C, as amended from time to time by
the JDC. ISIS will not initiate any activities with the
Product not provided for in the Development Plan, except with
the approval of the JDC.
(ii) A budget estimate and related assumptions for certain
activities to be undertaken by ISIS in the course of the
Development Program and certain other activities to be
undertaken by ISIS pursuant to the Supply Agreement are set
forth in Exhibit E. The budget is a good faith estimate only
of the activities described in the assumptions, and actual
labor and expenses will be determined by more detailed work
plans and approved by the JDC.
(iii) ISIS will conduct its portion of the Development Program in a
good scientific manner and in compliance in all material
respects with all requirements of applicable laws, rules and
regulations, including cGCPs, cGLPs and cGMPs, to achieve the
objectives efficiently and expeditiously. ISIS will proceed
diligently with the ISIS projects set out in the Development
Plan using commercially reasonable efforts, such efforts to be
at least equivalent to those efforts that ISIS uses on its own
products of similar commercial potential value and at a
similar stage of the product life cycle, to provide sufficient
time, effort, equipment, facilities and skilled personnel.
(iv) ISIS will perform CMC activities, technology transfer
activities, and various additional activities in support of
the Development Program and the NDA, all as further described
in the Supply Agreement.
(v) ISIS will provide LILLY with all reasonable assistance and
take all actions reasonably requested by LILLY, at LILLY's
expense and without changing the allocation of
responsibilities assigned in the Development Plan, that are
necessary or desirable to enable LILLY to comply with the
terms and intent of this Agreement.
(b) LILLY'S RESPONSIBILITIES.
(i) The activities to be undertaken by LILLY in the course of the
Development Program are set forth in the Development Plan
attached hereto as Exhibit C, as amended from time to time by
the JDC. LILLY will use commercially reasonable efforts, such
efforts to be at least equivalent to those efforts that LILLY
uses on its own products of similar commercial potential value
and at a similar stage of the product life cycle, to develop
and obtain Marketing Approval for the Product in all Major
Markets and to maximize the commercial value of the Product.
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(ii) LILLY will conduct its portion of the Development Program in a
good scientific manner and in compliance in all material
respects with all requirements of applicable laws, rules and
regulations, including cGCPs, cGLPs and cGMPs, to achieve the
objectives efficiently and expeditiously. LILLY will proceed
diligently with the LILLY projects set out in the Development
Plan using commercially reasonable efforts, such efforts to be
at least equivalent to those efforts that LILLY uses on its
own products of similar commercial potential value and at a
similar stage of the product life cycle, to provide sufficient
time, effort, equipment, facilities and skilled personnel.
(iii) LILLY will provide ISIS with all reasonable assistance and
take all actions reasonably requested by ISIS, at LILLY's
expense and without changing the allocation of
responsibilities assigned in the Development Plan, that are
necessary or desirable to enable ISIS to comply with the terms
and intent of this Agreement.
2.4 FUNDING OF DEVELOPMENT PROGRAM.
(a) LILLY will pay to ISIS US$20,000,000 for the conduct and conclusion of
preclinical and clinical studies relating to Product and conducted by
ISIS, including the pivotal, on-going Phase III study. Such payment
will be made within [*] days after the Effective Date, and LILLY will
use its best efforts to make such payment no later than September 30,
2001.
(b) LILLY will pay to ISIS [*] for the budgeted expenses in the third
Calendar Quarter of 2001 and [*] for the budgeted expenses in the
fourth Calendar Quarter of 2001 for work performed by ISIS through
December 31, 2001. Such payment will be made within [*] days after the
Effective Date, and LILLY will use its best efforts to make such
payment no later than September 30, 2001.
(c) LILLY will pay for all activities as described in the Development Plan
or as approved by the JDC and performed by ISIS in the course of the
Development Program beginning January 1, 2002 on a time and materials
basis, including Cost of Manufacture of API used by ISIS in the
performance of the Development Program. Labor will be billed at the
ISIS FTE Rate, and Out-of-Pocket Expenses will be passed through to
LILLY at actual cost on a dollar-for-dollar basis.
(d) LILLY will pay ISIS for such activities referred to in Article 2.4(c)
on a quarterly basis [*] for the time and Out-of-Pocket Expenses
budgeted to be expended by ISIS in the performance of the Development
Plan during the [*] Calendar Quarter. ISIS will submit an invoice for
such expenditures to LILLY [*] days prior to the beginning of each
Calendar Quarter beginning in 2002, and LILLY will pay such invoices
within [*] days from date of invoice. Within [*]days after the end of
each Calendar Quarter, ISIS will provide to LILLY a statement
reconciling the budgeted expenditures and the actual expenditures
incurred by ISIS in the performance of the Development Plan during the
preceding Calendar Quarter. Any amounts over- or underpaid by LILLY
will be credited
*Confidential Treatment Requested
4
against or charged to LILLY with the next invoice prepared by ISIS as
provided above. Interest will be charged on late payments as provided
in Section 5.6.
(e) Materials for use in clinical studies conducted by or for LILLY will be
paid in accordance with Section 5.1 of the Supply Agreement as
described in Exhibit 7 of the Supply Agreement.
(f) LILLY will pay all costs of the Development Program, whether incurred
by ISIS (in accordance with the Development Plan or as approved by the
JDC) or by LILLY, and will perform and pay for any other activities
LILLY desires to conduct or which are required to fulfill its
obligations hereunder.
2.5 COMMERCIALIZATION.
(a) Prior to the launch of a Product, LILLY will prepare a global
integrated Product plan outlining the key aspects of market launch and
commercialization (the "Integrated Product Plan" or IPP). The
Integrated Product Plan will contain information customarily contained
in LILLY's commercialization plans, including Product charter,
strategic intent, a market analysis (event maps - demographics, market
dynamics), label need and wants (based on the Development Plan),
Product life overview, geographic overview and financial overview. In
addition, a global marketing plan will be developed which includes
analysis of market (disease overview, Product profile, archetype,
patient segmentation), strategic ends (strategic intent, product
positioning, brand character, core messages, critical success factors,
marketing objectives), strategic means (global Product, place, price,
promotion, launch, market research programs), operational plan
(implementation plan, marketing activities) and budget for the
execution of the plan. Each plan will be updated annually in accordance
with LILLY's internal planning and budgeting process.
(b) LILLY will provide to ISIS a copy of the final draft of the IPPs
(original and updates) for each Major Market. LILLY and ISIS will meet
to discuss the draft IPPs and LILLY will consider, in its discretion,
any proposals and comments made by ISIS for incorporation in the final
Commercialization Plan.
(c) As soon as is commercially reasonable and practicable after Marketing
Approval and pricing approval, if necessary, have been obtained in a
particular country, LILLY will commence and continuously market,
promote, sell and distribute the Product in each such country. As used
in this Article 2.5, "commercially reasonable" means efforts at least
equivalent to those efforts that LILLY uses on its own products of
similar commercial potential value and at a similar stage of the
product life cycle.
(d) LILLY will use commercially reasonable efforts to Manufacture, market,
promote, distribute and sell the Product on a worldwide basis, and
LILLY will apply resources and expend funds in connection with such
activities in a manner and to an extent consistent with and comparable
to LILLY's own oncology pharmaceutical products of similar commercial
potential at a similar stage of the product life cycle.
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2.6 REGULATORY COOPERATION
(a) The parties will provide each other with all reasonable assistance and
take all actions reasonably requested by the other party, at LILLY's
expense and without changing the allocation of responsibilities
assigned in the Development Plan, that is necessary or desirable to
enable the other party to comply with the terms and conditions of this
Agreement, and any law or regulation applicable to the Product,
including the parties meeting their reporting and other obligations to
(i) obtain, maintain, and update Marketing Approval application or
Marketing Approval for the Product and any filings under this Agreement
or the Development Plan, (ii) report adverse drug experience reports
and serious adverse drug experience reports to the FDA and/or other
governmental or Regulatory Authorities and (iii) submit or file
promotional materials with the FDA and/or other governmental or
Regulatory Authorities.
(b) Such assistance and actions will include keeping the other party
informed, commencing within 48 hours of notification of any action by,
or notification or other information which it receives from, the FDA or
any other governmental or Regulatory Authority, which (a) raises any
material concerns regarding the safety or efficacy of the Product, (b)
which indicates or suggests a potential material liability for either
party to third parties arising in connection with the Product, or (c)
which is reasonably likely to lead to a recall or market withdrawal of
the Product.
(c) Information that will be disclosed pursuant to this Section 2.6 will
include:
1. governmental or Regulatory Authority inspections of
Manufacturing, distribution or other related facilities;
inquiries by governmental or Regulatory Authorities concerning
clinical investigation activities (including inquiries of
investigators, clinical monitoring organizations and other
related parties); any communication from governmental or
Regulatory Authorities involving the Manufacture, sale,
promotion or distribution of Product or any other governmental
or Regulatory Authority reviews or inquiries relating to the
Product;
2. receipt of a warning letter or other notice of alleged
non-compliance with FDA laws or regulations from the FDA
relating to the Product; and
3. an initiation of any governmental or Regulatory Authority
investigation, detention, seizure or injunction concerning the
Product.
2.7 RECORDS.
(a) Each party will maintain records, in sufficient detail and in good
scientific manner, which will fully and properly reflect all work done
and results achieved in the performance of its responsibilities under
the Development Plan. Each party will have the right, during normal
business hours and upon reasonable prior notice, to inspect and copy
those records of the other party referred to herein that are necessary
or useful to the inspecting party for the purposes of making any
required filings with Regulatory Authorities in
6
order to obtain Manufacturing Approvals and/or Marketing Approvals.
Each party will maintain such records and the information disclosed
therein in confidence in accordance with Article 4.
(b) In addition to the foregoing, LILLY will have the right to arrange for
its employees and/or consultants involved in the activities
contemplated hereunder to visit the offices, laboratories and other
facilities of ISIS where activities of the Development Program are
being performed during normal business hours and upon reasonable
notice, subject to any restrictions imposed by ISIS in order to protect
the confidentiality of programs, activities and information unrelated
to the Development Program or ISIS 3521.
ARTICLE 3
GRANT OF RIGHTS; REPLACEMENT PRODUCT; TARGET EXCLUSIVITY
3.1 LICENSE GRANTS.
(a) ISIS hereby grants to LILLY an exclusive, worldwide, sublicensable,
royalty-bearing license under the ISIS Patent Rights to make, have
made, use, import, offer for sale and sell the Product.
(b) ISIS hereby grants to LILLY a non-exclusive, worldwide, sublicensable,
royalty-bearing license under the Core Technology Patent Rights only to
the extent such license is required for LILLY to effectively practice
the license granted to LILLY under subsection (a) above and to fulfill
its duties and obligations hereunder.
(c) ISIS retains the right to practice under the ISIS Patent Rights as
necessary to carry out ISIS' obligations under this Agreement and the
Supply Agreement, and for any purpose other than to make, have made,
use, import, offer for sale and sell the Product. LILLY will not
practice the ISIS Patent Rights and the Core Technology Patent Rights
other than as expressly licensed in subsection (a) and (b) above.
(d) Any sublicense granted by LILLY under this Agreement is subject to and
will be consistent with the terms and conditions of this Agreement. The
grant of any such sublicense hereunder will not relieve LILLY of
responsibility for its obligations under this Agreement, including
ensuring that such sublicensees will perform such obligations as
required. LILLY will promptly provide ISIS with copies of those
sublicenses as well as Sublicensee contact information.
3.2 UPSTREAM LICENSES AND ACQUISITION OF PATENT RIGHTS.
(a) The parties will consult about the need to license any patents
Controlled by Third Parties that claim the composition of matter of
ISIS 3521 or the method of use of ISIS 3521 in the field of oncology.
If it is agreed that there is a need for a license or to acquire any
such patent, the parties will negotiate in good faith regarding (i) the
share of the financial
7
obligations relating to the license or acquisition that each party will
bear; (ii) the compensation of any acquisition costs incurred in
connection with obtaining the patent rights; and (iii) an agreement by
the parties to abide by all terms of the agreement under which the
patent rights are granted.
(b) In the event that (i) ISIS has obtained Control of a Patent claiming
Core Technology Improvements during the term of this Agreement, or (ii)
a change in the Manufacturing Process requires access of LILLY to
Manufacturing Patent Rights or Manufacturing Technology Improvements
Controlled by ISIS that were not practiced in the Manufacture of the
Product prior to such change (the "Additional Rights"), and LILLY
wishes to obtain access to such Additional Rights under this Agreement,
then the license from ISIS to LILLY of such Additional Rights pursuant
to Section 3.1(a) and (b) (the "Downstream License") is conditioned on
the prior agreement to be negotiated in good faith by the parties
regarding (1) the assumption by LILLY of all financial obligations to
ISIS' licensors or collaborators, if any, arising from the grant to
LILLY of the Downstream License and the practice under such Downstream
License by LILLY, its Affiliates or Sublicensees; (2) the compensation
of a reasonable portion of any acquisition costs paid by ISIS to its
licensors or collaborators in connection with obtaining Control of such
Additional Rights; and (3) an agreement by LILLY to abide by all terms
that ISIS is obligated to have any person that accesses such Additional
Rights abide by under the agreement under which ISIS has obtained or
retained Control of such Additional Rights.
3.3 REPLACEMENT PRODUCT OPTION.
(a) In the event LILLY decides to abandon the Development of the Product
because of an unfavorable outcome of a Pivotal Trial or other technical
failure, failure to obtain a Marketing Approval of the Product or
unfavorable market conditions associated with commercialization of the
Product, LILLY will have the right to terminate this Agreement and the
Supply Agreement with written notice to ISIS, and all rights to ISIS
3521 will be returned to ISIS.
(b) Upon such termination, all licenses granted under this Agreement
terminate, and LILLY will assign and transfer to ISIS all its rights
and Information relating specifically to ISIS 3521 obtained or
generated by LILLY during the term of the Agreement. For clarification,
data relating to other LILLY products, including Gemzar and Alimta will
not be returned, provided that ISIS will have the right to access and
reference data obtained in combination trials of ISIS 3521 and other
LILLY products after consultation with LILLY to ensure a reasonable use
of such data in compliance with applicable laws and regulations.
(c) Upon termination of this Agreement pursuant to subsection (a) above,
LILLY will have the right to obtain a license to another antisense
therapeutic compound Controlled by ISIS that is not further advanced in
development than ISIS 3521 as of the Effective Date. The terms of the
license agreement under which such license is granted will be
substantially similar to the terms of this Agreement, except that ISIS
will waive any up-front license fees.
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3.4 TARGET EXCLUSIVITY.
ISIS will not commercialize any antisense compounds and products that target the
genetic sequence of [*] This obligation will expire upon the earlier of (i)
expiration of the Agreement, or (ii) termination by LILLY of its activities
directed to the development or commercialization of the Product.
ARTICLE 4
CONFIDENTIALITY AND PUBLICATION
4.1 NONDISCLOSURE OBLIGATION.
All Proprietary Information disclosed by one party to the other party hereunder
will be maintained in confidence by the receiving party and will not be
disclosed to a Third Party or Affiliate or used for any purpose except as set
forth below.
4.2 PERMITTED DISCLOSURES.
A party may disclose Proprietary Information received from the other party:
(a) to governmental or other regulatory agencies in order to obtain
Patents, for SEC or tax purposes as required by law, to obtain approval
to conduct clinical trials, or to gain Marketing Approval; provided
that such disclosure may be made only to the extent reasonably
necessary to obtain such patents, purposes or approvals;
(b) to Affiliates, Sublicensees, agents, consultants, and/or other Third
Parties for the development, Manufacturing and/or marketing of the
Product (or for such parties to determine their interest in performing
such activities) in accordance with this Agreement on the condition
that such Affiliates and Third Parties agree to be bound by the
confidentiality obligations contained in this Agreement, provided the
term of confidentiality for such Affiliates and Third Parties will be
no less than 7 years; or
(c) if such disclosure is required by law, including without limitation
disclosures required by court order, provided that notice is promptly
delivered to the other party in order to provide an opportunity to
challenge or limit the disclosure obligations.
4.3 PUBLICATION.
(a) LILLY agrees that it is customary in the industry to publish results
obtained from clinical trials and other studies of the Product, and
that ISIS may publish such information obtained by ISIS in the
performance of the Development Program, subject to the provisions of
this Section 4.3.
*Confidential Treatment Requested
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(b) Except as provided otherwise herein, the parties will be entitled to
publish or present on the results of the Development Program, ISIS 3521
and the Product, provided that the party seeking to publish will
deliver to the other party for its review a copy of any proposed
publication or an abstract of any oral presentation of clinical results
at scientific meetings involving ISIS 3521, the Product, or the
Proprietary Information of the other party, at least [*] prior to
submission of scientific publications and [*] with respect to abstracts
of oral presentations. The reviewing party will have the absolute right
to request that any of its Proprietary Information be deleted from such
publication or presentation, and the disclosing party will comply with
that request. If the disclosing party does not receive any feedback
from the reviewing party within that [*] period, respectively, the
disclosing party will be free to proceed with the publication or
presentation, with the following limitations:
(i) ISIS will be permitted to publish on matters relating to ISIS
3521 or Product during the term of this Agreement only upon
the prior written approval of LILLY, which may be reasonably
withheld by LILLY unless such publication is permitted to be
made under any publication rights granted by ISIS to clinical
investigators of the 3521 Product prior to the Effective Date.
(ii) LILLY will be permitted to publish on matters relating to any
Manufacturing Technology or Manufacturing Technology
Improvements during the term of this Agreement only upon the
prior written approval of ISIS, which may be given at ISIS'
sole discretion.
(c) The parties recognize that it may not be practical under all
circumstances to comply with the [*] notice requirements for review of
publications and abstracts as provided in subsection (b) above. Each
party will reasonably review proposed publications and abstracts
submitted by the other party as promptly as possible and will not
unreasonably withhold its consent to such publications or presentations
that have been submitted for review with less than the required notice
period.
4.4 PUBLICITY.
(a) The parties will issue a joint press release regarding the execution of
this Agreement.
(b) Except as otherwise provided herein or required by law, neither party
will originate any publication, news release or other public
announcement, written or oral, whether in the public press, or
otherwise, about this Agreement, and neither party will use the name,
trademark, trade name, logo or likeness of the other party or its
employees in any publicity, news release or disclosure about this
Agreement without the prior express written permission of the other
party.
(c) The parties will inform each other of any press releases relating to
the Product permitted hereunder or required to be made by law in
advance of general release to the public.
*Confidential Treatment Requested
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ARTICLE 5
PAYMENTS, ROYALTIES AND REPORTS
5.1 LICENSE FEE.
LILLY will pay to ISIS an up-front license fee of [*] Such payment will be made
within [*] days after the Effective Date, and LILLY will use its best efforts to
make such payment no later than September 30, 2001.
5.2 MILESTONE PAYMENTS.
(a) LILLY will pay to ISIS the following milestone payments with respect to
the Product developed for the first Major Tumor within 30 days of the
achievement of the corresponding milestone events:
MILESTONE EVENT MILESTONE PAYMENT
[*]
(b) LILLY will pay to ISIS the following milestone payments with respect to
the Product developed for each Major Tumor subsequent to the first
Major Tumor within [*] of the achievement of the corresponding
milestone events:
MILESTONE EVENT MILESTONE PAYMENT
[*]
(c) LILLY will inform ISIS within 10 days of achieving each milestone.
*Confidential Treatment Requested
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5.3 ROYALTIES.
(a) LILLY will pay ISIS a royalty on Net Sales of the Product according to
the schedule set forth below:
CONSOLIDATED WORLDWIDE ANNUAL NET SALES OF THE PRODUCT ROYALTY RATE
[*]
(b) The increments of the annual Net Sales tiers set forth in subsection
(a) above will be adjusted for the immediately preceding Calendar Year
as follows: the annual Net Sales of the Product set out above are in
2001 U.S. dollars. Such numbers will be adjusted upward on a Calendar
Year basis commencing January 1, 2002 (and on January 1 of each year
thereafter during the term of this Agreement) using the CPI for all
urban consumer series ID CUUR0000SA0 as published from time to time by
the US Bureau of Labor Statistics, where June 2001 was 178.
(c) If the Product is Manufactured in a country where such Manufacture does
not infringe on any ISIS Patent Rights or Core Technology Patent
Rights, and is sold in a country where the Manufacture, use,
importation, offer for sale or sale of the Product does not infringe
any ISIS Patent Rights or Core Technology Patent Rights in the country
of sale, [*]
(d) If the royalty payable by LILLY [*]
(e) [*].
(f) The royalty payment obligation of LILLY under this Section will expire
on a country-by-country basis upon the later of (i) expiration of a
period of [*] from the date of First Commercial Sale in a particular
country and (ii) the expiration of the last to expire Patent within
ISIS Patent Rights and Core Technology Patent Rights in a particular
country.
5.4 PAYMENT OF ROYALTY; REPORTS.
LILLY will provide to ISIS within [*] after the end of each Calendar Quarter a
written report [*] LILLY will make royalty payments to ISIS for the Product sold
during a Calendar Quarter within [*] of the last day of that Calendar Quarter.
Each royalty payment will be accompanied by a written report for that Calendar
Quarter showing the cumulative Net Sales of the Product sold by LILLY, its
Affiliates and its Sublicensees on a country-by-country basis worldwide during
the quarterly reporting period and the corresponding royalties payable under
this Agreement.
*Confidential Treatment Requested
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5.5 AUDITS.
(a) Upon the written request of ISIS and not more than once in each
Calendar Year, LILLY will permit an independent certified public
accounting firm of nationally recognized standing selected by ISIS and
reasonably acceptable to LILLY, at ISIS' expense, to have access during
normal business hours to those records of LILLY that may be necessary
to verify the accuracy of the royalty reports hereunder for any year
ending not more than 24 months prior to the date of such request. ISIS
will submit an audit plan, including audit scope, to LILLY for LILLY's
approval, which will not be unreasonably withheld, prior to audit
implementation. The accounting firm will disclose to ISIS only whether
the royalty reports of LILLY are correct or incorrect, the specific
details concerning any discrepancies, and the corrected amount of Net
Sales. No other information will be provided to ISIS.
(b) At the request of ISIS, LILLY will direct its Affiliates to permit
audits of the Affiliates' records in accordance with the provisions of
subsection (a) above. Further, LILLY will include in each sublicense
granted by it pursuant to this Agreement a provision requiring the
Sublicensee to submit reports to LILLY, to keep and maintain records of
sales made pursuant to such sublicense and to grant access to such
records by ISIS' independent accounting firm, to the same extent
required of LILLY under Sections 5.4 and 5.5. ISIS' independent
accounting firm will be granted access to such reports in LILLY'S
possession as part of the audit referenced in subparagraph (a) above.
(c) If ISIS' independent accounting firm determines that Net Sales were
underreported or overreported and additional royalties are owed or have
been overpaid, LILLY or ISIS will pay or repay the additional royalties
within [*] days of the date ISIS delivers to LILLY such accounting
firm's written report. The fees charged by such accounting firm will be
paid by ISIS provided that, if the audit determines that the additional
royalties payable by LILLY for such period exceed [*] of the royalties
actually paid for such period, then LILLY will pay the reasonable fees
and expenses charged by such accounting firm. If the audit conducted on
behalf of ISIS reveals an overpayment by XXXXX, XXXXX will pay the fees
and expenses charged by the accounting firm upon receipt of the payment
by ISIS of such overpaid royalties.
(d) ISIS will treat all financial information subject to review under this
Section 5.5 or under any sublicense agreement as Proprietary
Information of LILLY in accordance with Article 4, and will cause its
accounting firm to enter into an acceptable confidentiality agreement
with LILLY and its Sublicensees obligating such accounting firms to
retain all such financial information in confidence pursuant to such
confidentiality and non-use provisions.
5.6 PAYMENT MODALITIES; FOREIGN CURRENCY CONVERSION; LATE PAYMENT CHARGES.
(a) All payments to be made by LILLY to ISIS under this Agreement will be
made by LILLY in United States dollars and may be paid by bank wire
transfer in immediately available funds to such bank account in the
United States designated in writing by ISIS
*Confidential Treatment Requested
13
from time to time. If the payment is made from outside the U.S., LILLY
will make the payment in a manner that will not result in a tax
liability for ISIS larger than it would be if the payment were made
from inside the U.S with no additional delays in payment when compared
to the timing of payment made in the U.S.
(b) For purposes of calculating royalties due on Net Sales generated
outside the United States, all Net Sales amounts in non-US currency
will be converted into US dollars using LILLY's then current standard
exchange rate methodology. This methodology is used by LILLY in the
translation of its foreign currency operating results, is consistent
with generally accepted accounting principles, is audited by LILLY's
independent certified public accountants in connection with the audit
of the consolidated financial statements of LILLY, and is used for
external reporting of foreign currency operating results.
(c) LILLY will pay a late payment service charge of [*] per month [*] on
all past-due amounts owed under this Agreement.
5.7 INCOME TAX WITHHOLDING.
ISIS will be responsible for its own tax liabilities resulting from the payments
received from LILLY under this Agreement. If laws, rules or regulations require
withholding of income taxes or other taxes imposed upon payments set forth in
this Article 5, LILLY will make such withholding payments as required and
subtract such withholding payments from the payments set forth in this Article
5. LILLY will submit appropriate proof of payment of the withholding taxes to
ISIS within a reasonable period of time.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
6.1 REPRESENTATIONS AND WARRANTIES OF ISIS.
ISIS represents and warrants to LILLY that, as of the date of this Agreement:
(a) it has the full right, power and authority to enter into this
Agreement, to perform the Development Program, to grant the licenses
granted under Article 3 hereof, and to consummate the transaction
contemplated herein;
(b) it has duly and properly taken all action required by its articles of
incorporation and its bylaws to authorize the execution, delivery, and
performance by it of this Agreement;
(c) this Agreement has been duly executed and delivered by ISIS and
constitutes a legal, valid, and binding agreement of ISIS enforceable
against it in accordance with its terms, except as enforcement may be
affected by bankruptcy, insolvency, or other similar laws and by
general principles of equity as applied by a court of competent
jurisdiction;
*Confidential Treatment Requested
14
(d) it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in ISIS Patent Rights in a
manner that would interfere with ISIS' ability to grant the licenses
granted to LILLY under this Agreement;
(e) it is the sole and exclusive owner the Compound Patent Rights, all of
which are free and clear of any liens, claims and encumbrances;
(f) all Patents Controlled by ISIS as of the Effective Date that
specifically claim the composition of matter or the use of ISIS 3521
are listed in Exhibit D under the heading of "Compound Patent Rights";
(g) all Patents Controlled by ISIS as of the Effective Date that are
necessary for performing the process steps set forth in master batch
records for ISIS 3521 in the version existing as of the Effective Date
are listed in Exhibit D under the heading of "Manufacturing Patent
Rights";
(h) to the best of ISIS' knowledge, the Manufacture, use and sale of ISIS
3521 and the Product do not infringe any Patents owned by any Third
Party;
(i) there are no claims, judgments or settlements against or owed by ISIS
or pending or threatened claims or litigation relating to the ISIS
Patent Rights; and
(j) ISIS has disclosed to LILLY all patent opinions obtained by ISIS
regarding ISIS Patent Rights.
6.2 REPRESENTATIONS AND WARRANTIES OF LILLY.
LILLY represents and warrants to ISIS that, as of the date of this Agreement:
(a) it has the full right, power and authority to enter into this
Agreement, to perform the Development Program and to consummate the
transaction contemplated herein;
(b) it has duly and properly taken all action required by its articles of
incorporation and its bylaws to authorize the execution, delivery, and
performance by it of this Agreement; and
(c) this Agreement has been duly executed and delivered by LILLY and
constitutes a legal, valid, and binding agreement of LILLY enforceable
against it in accordance with its terms, except as enforcement may be
affected by bankruptcy, insolvency, or other similar laws and by
general principles of equity as applied by a court of competent
jurisdiction.
6.3 INDEMNIFICATION.
(a) ISIS will indemnify, defend and hold LILLY and its Affiliates, and
their respective directors, officers, employees and agents ("LILLY
Indemnitees") harmless against any and all losses, costs, liabilities
and expenses (including reasonable attorneys' fees) ("Losses"), arising
in connection with actions, suits, claims, demands and prosecution
15
that may be brought or instituted by Third Parties ("Third Party
Claims") against LILLY Indemnitees to the extent based upon or arising
out of (i) the gross negligence or willful misconduct of ISIS under
this Agreement, or (ii) the material breach by ISIS of any warranty,
representation or obligation of ISIS under this Agreement, except to
the extent that such Losses are the result of (i) the gross negligence
or willful misconduct of LILLY under this Agreement, or (ii) the
material breach by LILLY of any warranty, representation or obligation
of LILLY under this Agreement.
(b) LILLY will indemnify, defend and hold ISIS and its Affiliates, and
their respective directors, officers, employees and agents ("ISIS
Indemnitees"), harmless against any and all Losses arising in
connection with Third Party Claims that may be brought or instituted
against ISIS Indemnitees to the extent based upon or arising out of (i)
the gross negligence or willful misconduct of LILLY under this
Agreement, (ii) the material breach by LILLY of any warranty,
representation or obligation of LILLY under this Agreement, or (iii)
the Manufacture, use, import or sale by LILLY, its Affiliates or
Sublicensees of ISIS 3521 or Product, except to the extent that such
Losses are the result of (i) the gross negligence or willful misconduct
of ISIS under this Agreement, or (ii) the material breach by ISIS of
any warranty, representation or obligation of ISIS under this
Agreement.
(c) A party that intends to claim indemnification under this Section (the
"Indemnitee") will (i) notify the other party (the "Indemnitor") in
writing of any Losses and Third Party Claims with respect to which the
Indemnitee intends to claim indemnification as soon as practicable
after the Indemnitee becomes aware of any such losses and claims; (ii)
permit the Indemnitor to assume the defense thereof with counsel
selected by the Indemnitor; and (iii) cooperate with the Indemnitor, at
the Indemnitor's expense, in the defense thereof.
(d) Indemnitee will have the right to participate and be represented (at
the Indemnitor's expense) by legal counsel of the Indemnitee's choice
in all proceedings and negotiations, if representation by counsel
retained by Indemnitor would be inappropriate due to actual or
potential differing interests between the Indemnitee and any other
party represented by such counsel in such proceedings.
(e) The indemnity agreement in this Section will not apply to amounts paid
in settlement of any Third Party Claim if such settlement is effected
without the consent of the Indemnitor, which consent will not be
unreasonably withheld. The Indemnitor will not settle or compromise any
Third Party Claim in any manner that admits fault on the part of the
Indemnitee without the express prior written consent of the Indemnitee,
which consent may be withheld for any reason or no reason.
(f) Failure of the Indemnitee to deliver notice to the Indemnitor within a
reasonable time after becoming aware of potential Losses will not
relieve the Indemnitor of any liability to the Indemnitee pursuant to
this Section, except to the extent such delay prejudices the
Indemnitor's ability to defend the Third Party Claim.
16
ARTICLE 7
INTELLECTUAL PROPERTY
7.1 NO IMPLIED LICENSES.
Except as expressly provided otherwise herein, neither party hereto will be
deemed by this Agreement to have been granted any license or other rights to the
other party's intellectual property rights.
7.2 COMPOUND IMPROVEMENTS.
(a) The entire right, title, and interest in and to all Compound
Improvements developed or invented solely by employees or consultants
of LILLY during the term of this Agreement will be the sole and
exclusive property of LILLY. LILLY hereby grants ISIS a worldwide,
royalty-free, nonexclusive license to practice under LILLY's rights to
any such LILLY Compound Improvements to carry out the activities
contemplated by this Agreement.
(b) The entire right, title, and interest in and to all Compound
Improvements developed or invented solely by employees or consultants
of ISIS during the term of this Agreement will be the sole and
exclusive property of ISIS, subject to the license granted to LILLY
under Section 3.1.
(c) The entire right, title, and interest in and to all Compound
Improvements developed or invented jointly by employees or consultants
of ISIS and LILLY during the term of this Agreement will be the joint
property of ISIS and LILLY. Each party will have an undivided joint
ownership interest in such Compound Improvements, and may license its
rights under such Compound Improvements for its own account and without
the consent of the other party, subject to the license granted to LILLY
under Section 3.1.
(d) Promptly after the filing of a patent application claiming a Compound
Improvement, the filing party will disclose to the other party each
Patent claiming such improvements.
7.3 CORE TECHNOLOGY IMPROVEMENTS.
(a) The entire right, title, and interest in and to all Core Technology
Improvements developed or invented solely by employees or consultants
of LILLY during the term of this Agreement will be the sole and
exclusive property of LILLY. LILLY hereby grants ISIS a worldwide,
royalty-free, sublicensable, perpetual, nonexclusive license to
practice under LILLY's rights to any such LILLY Core Technology
Improvements to carry out the activities contemplated by this
Agreement, and to make, have made, use, import, offer for sale and sell
products other than the Product.
(b) The entire right, title, and interest in and to all Core Technology
Improvements developed or invented solely by employees or consultants
of ISIS during the term of this
17
Agreement will be the sole and exclusive property of ISIS, subject to
the license granted to LILLY under Section 3.1.
(c) The entire right, title, and interest in and to all Core Technology
Improvements developed or invented jointly by employees or consultants
of ISIS and LILLY during the term of this Agreement will be the joint
property of ISIS and LILLY. Each party will have an undivided joint
ownership interest in such Core Technology Improvements, and may
license its rights under such Core Technology Improvements for its own
account and without the consent of the other party, subject to the
license granted to LILLY under Section 3.1.
(d) Promptly after the filing of a patent application claiming Core
Technology Improvements, the filing party will disclose to the other
party each Patent claiming such improvements.
7.4 MANUFACTURING TECHNOLOGY IMPROVEMENTS.
(a) The entire right, title, and interest in and to all Manufacturing
Technology Improvements developed or invented solely by employees or
consultants of LILLY during the term of this Agreement will be the sole
and exclusive property of LILLY. LILLY hereby grants ISIS a worldwide,
royalty-free, sublicensable, perpetual, nonexclusive license to
practice under LILLY'S rights to any such Manufacturing Technology
Improvements to carry out the activities contemplated by this Agreement
and to make, have made, use, import, offer for sale and sell products
other than the Product.
(b) The entire right, title, and interest in and to all Manufacturing
Technology Improvements developed or invented solely by employees or
consultants of ISIS during the term of this Agreement will be the sole
and exclusive property of ISIS, subject to the license granted to LILLY
under Section 3.1.
(c) The entire right, title, and interest in and to all Manufacturing
Technology Improvements developed or invented jointly by employees or
consultants of ISIS and LILLY during the term of this Agreement will be
the joint property of ISIS and LILLY. Each party will have an undivided
joint ownership interest in such Manufacturing Technology Improvements,
and may license its rights under such Manufacturing Technology
Improvements for its own account and without the consent of the other
party, subject to the license granted to LILLY under Section 3.1.
(d) Promptly after the filing of a patent application claiming a
Manufacturing Technology Improvement, the filing party will disclose to
the other party each Patent claiming such improvements.
18
7.5 FILING, PROSECUTION AND MAINTENANCE OF PATENTS AND PATENT APPLICATIONS
UNDER ISIS PATENT RIGHTS.
(a) During the term of this Agreement, LILLY will file, prosecute and
maintain the Compound Patent Rights, any Patents filed on Compound
Improvements owned solely by LILLY or jointly by ISIS and LILLY, and
any Patents filed on Core Technology Improvements and Manufacturing
Technology Improvements owned solely by LILLY (the "LILLY Patent
Portfolio"), at its own expense, using patent counsel of its choice,
but reasonably acceptable to ISIS. LILLY will keep ISIS advised of the
status of the actual and prospective patent filings pursuant to this
subsection (a) on a semi-annual basis and upon the request of ISIS,
LILLY will provide copies of any papers related to the filing,
prosecution and maintenance of such patent filings. If LILLY decides to
discontinue the prosecution or maintenance of a Patent within the LILLY
Patent Portfolio entirely or in a particular country, it will inform
ISIS thereof with sufficient time for ISIS to assume the prosecution or
maintenance of such Patent, and, if ISIS continues such prosecution or
maintenance, such Patent in such country will thereafter be included in
the ISIS Patent Rights hereunder, including, without limitation, for
purposes of calculating royalties due and owing to ISIS hereunder.
(b) ISIS will be responsible for filing, prosecuting and maintaining
worldwide the Manufacturing Patent Rights and any Patents filed on Core
Technology Improvements and Manufacturing Technology Improvements owned
jointly by ISIS and LILLY (the "ISIS Patent Portfolio"), at its
expense, using patent counsel of its choice, but reasonably acceptable
to LILLY. ISIS will keep LILLY advised of the status of the actual and
prospective patent filings of Patents within the ISIS Patent Portfolio
on a semi-annual basis and upon the request of LILLY, ISIS will provide
copies of any papers related to the filing, prosecution and maintenance
of such patent filings. If ISIS decides to discontinue the prosecution
or maintenance of any Patent within the ISIS Patent Portfolio entirely
or in a particular country, it will inform LILLY thereof with
sufficient time for LILLY to assume the prosecution or maintenance of
such Patent, and LILLY may assume such prosecution or maintenance if
such Patent provides a substantial competitive advantage to LILLY with
respect to any Product in the applicable country in coordination with
any Third Party to whom ISIS has granted rights under such Patent if
such Patent also provides a substantial competitive advantage to such
Third Party in the applicable country.
7.6 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE.
(a) Either party will, within 10 days of learning of such event, inform the
other party of any request for, or filing or declaration of, any
interference, opposition, or reexamination relating to Patents within
the LILLY Patent Portfolio and the ISIS Patent Portfolio. LILLY and
ISIS will thereafter consult and cooperate fully to determine a course
of action with respect to any such proceeding subject to the provisions
of this Section set forth below.
19
(b) Any interference, opposition, reissue, or reexamination proceedings
relating to the LILLY Patent Portfolio will be conducted at LILLY'S
expense. LILLY and ISIS will cooperate fully and will provide each
other with any information or assistance that any party may reasonably
request. LILLY will keep ISIS informed of developments in any such
action or proceeding. Decisions on whether to initiate such a
proceeding and the course of action in such proceeding, including
settlement negotiations and terms, will be made by mutual agreement of
ISIS and LILLY.
(c) Any interference, opposition, reissue, or reexamination proceeding
relating to the ISIS Patent Portfolio will be conducted by ISIS at
ISIS' expense. To the extent that such interference, opposition,
reissue, or reexamination proceeding materially impacts the commercial
value of the Product in the marketplace, LILLY and ISIS will cooperate
fully and will provide each other with any information or assistance
that either may reasonably request. ISIS will keep LILLY informed of
developments in any such action or proceeding, including, to the extent
permissible, the status of any settlement negotiations and the terms of
any offer related thereto, except that ISIS must obtain LILLY'S consent
to any settlement terms which materially affect LILLY'S freedom to
operate under the licenses granted to LILLY under this Agreement.
7.6 ENFORCEMENT AND DEFENSE.
(a) Either party will, within 10 days of learning of such event, inform the
other party of any infringement of Patents within the LILLY Patent
Portfolio or the ISIS Patent Portfolio. LILLY and ISIS will thereafter
consult and cooperate fully to determine a course of action including,
without limitation, the commencement of legal action by either or both
LILLY and ISIS, to terminate any infringement, subject to the
provisions of this Section 7.6 set forth below.
(b) If there is any infringement of Patents within the LILLY Patent
Portfolio, LILLY will have the first right to initiate and prosecute
such legal action at its own expense and in the name of ISIS and LILLY,
or to control the defense of any declaratory judgment action relating
to Compound Patent Rights. LILLY will promptly inform ISIS if it elects
not to exercise such first right and ISIS will thereafter have the
right to either initiate and prosecute such action or to control the
defense of such declaratory judgment action in the name of ISIS and, if
necessary, LILLY.
(c) In the event that LILLY elects not to initiate and prosecute an action
as provided in subsection (b), and ISIS elects to do so, the costs of
any agreed-upon course of action to terminate infringement of Patents
within the LILLY Patent Portfolio, including the costs of any legal
action commenced or the defense of any declaratory judgment, will be
borne by ISIS, except that the cost of any such action related solely
to ISIS 3521 will be borne by LILLY.
(d) For any action by LILLY pursuant to subsection (b) above, in the event
that LILLY is unable to initiate or prosecute such action solely in its
own name, ISIS will join such action voluntarily and will execute and
cause its Affiliates to execute all documents
20
necessary for LILLY to initiate litigation to prosecute and maintain
such action. In connection with any action, LILLY and ISIS will
cooperate fully and will provide each other with any information or
assistance that either may reasonably request. Each party will keep
the other informed of developments in any action or proceeding,
including, to the extent permissible by law, the status of any
settlement negotiations and the terms of any offer related thereto.
(e) If there is any infringement of Patents within the ISIS Patent
Portfolio, ISIS will have the first right to initiate and prosecute
such legal action at its own expense and in the name of ISIS and LILLY,
or to control the defense of any declaratory judgment action relating
to Patents within the ISIS Patent Portfolio. To the extent that
infringement materially impacts the commercial value of the Product in
the marketplace, ISIS will promptly inform LILLY if it elects not to
exercise such first right and LILLY will thereafter have the right to
either initiate and prosecute such action or to control the defense of
such declaratory judgment action in the name of LILLY and, if
necessary, ISIS.
(f) In the event that ISIS elects not to initiate and prosecute an action
as provided in subsection (e) above, and LILLY elects to do so, the
costs of any agreed-upon course of action to terminate infringement of
Patents within the ISIS Patent Portfolio, including the costs of any
legal action commenced or the defense of any declaratory judgment, will
be shared equally by ISIS and LILLY.
(g) For any action to terminate any infringement of Patents within the ISIS
Patent Portfolio, in the event that ISIS is unable to initiate or
prosecute such action solely in its own name, LILLY will join such
action voluntarily and will execute and cause its Affiliates to execute
all documents necessary for ISIS to initiate litigation to prosecute
and maintain such action. In connection with any action, ISIS and LILLY
will cooperate fully and will provide each other with any information
or assistance that either may reasonably request. Each party will keep
the other informed of developments in any action or proceeding,
including, to the extent permissible by law, the status of any
settlement negotiations and the terms of any offer related thereto.
(h) Except as provided otherwise herein, any recovery obtained by either or
both LILLY and ISIS in connection with or as a result of any action
contemplated by this Section, whether by settlement or otherwise, will
be shared in order as follows:
(i) the party which initiated and prosecuted the action will
recoup all of its costs and expenses incurred in connection
with the action;
(ii) the other party will then, to the extent possible, recover its
costs and expenses incurred in connection with the action;
(iii) the amount of any recovery remaining from actions relating to
Compound Patents Rights, Manufacturing Technology Patents,
Patents claiming Manufacturing Technology Improvements or
Patents claiming Compound Improvements will then be allocated
between the parties on a PRO RATA basis based on the amounts
of
21
proportionate lost royalties of ISIS and lost profits of
LILLY under which ISIS will receive a proportion based on the
royalties it lost and LILLY will receive a proportion based on
its lost profits.
7.7 PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE OF PATENTS CONTROLLED
BY ISIS.
ISIS will have the sole and exclusive right, in its sole discretion, to file,
prosecute, enforce and defend any Patents within Core Technology Patent Rights
and Patents claiming Compound Improvements, Manufacturing Technology
Improvements and Core Technology Improvements Controlled by ISIS.
7.8 THIRD PARTY PATENTS.
If either party receives notice that a Product infringes a Third Party Patent,
and the parties hereto agree to settle with and pay royalties to such Third
Party, [*] If all the foregoing conditions are met, additional royalties payable
to such Third Party [*]
7.9 CERTIFICATION UNDER DRUG PRICE COMPETITION AND PATENT RESTORATION ACT.
ISIS and LILLY each will immediately give notice to the other of any
certification of which they become aware filed under the United States "Drug
Price Competition and Patent Term Restoration Act of 1984" claiming that
Compound Patent Rights or Manufacturing Patent Rights covering ISIS 3521 or
Product are invalid or that infringement will not arise from the Manufacture,
use or sale of ISIS 3521(s) or Product(s) by a Third Party. If ISIS or LILLY
(depending on which party is defending the relevant ISIS Patent Rights) decides
not to bring infringement proceedings against the entity making such a
certification, such party will give notice to the other party of its decision
not to bring suit within 21 days after receipt of notice of such certification.
The party receiving such notice may then, but is not required to, bring suit
against the party that filed the certification. Any suit by LILLY or ISIS will
either be in the name of LILLY or in the name of ISIS, or jointly by LILLY and
ISIS. For this purpose, the party not bringing Suit will execute such legal
papers necessary for the prosecution of such suit as may be reasonably requested
by the party bringing suit.
7.10 ABANDONMENT.
ISIS will promptly give notice to LILLY of the grant, lapse, revocation,
surrender, invalidation or abandonment of any ISIS Patent Rights licensed to
LILLY for which ISIS is responsible for the filing, prosecution and maintenance.
7.11 PATENT TERM RESTORATION.
The parties hereto will cooperate with each other in obtaining patent term
restoration or supplemental protection certificates or their equivalents in any
country worldwide where applicable to ISIS Patent Rights. In the event that
elections with respect to obtaining such patent term restoration are to be made,
LILLY will have the right to make the election and ISIS agrees to abide by such
election.
22
7.12 PATENT STATUS.
At least 60 days before projected Marketing Approval of a Product, the parties
will agree on which ISIS Patent Rights cover the manufacture, use or sale of
such Product on a country-by-country basis, and such Patents will be deemed to
be "relevant" to such Product. Within 60 days after each calendar year-end
beginning upon Marketing Approval of a Product, ISIS will provide LILLY with a
report describing the status of the ISIS Patent Rights relevant to such Product.
Such report will include, at a minimum, the patent country, patent and
application numbers, filing date, issue date, expiration date and any other
relevant information for ISIS Patent Rights relevant to such Product. Such
report will be mailed to:
Xxx Xxxxx and Company
Attention: Royalty Administration D.C. 0000
Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
ARTICLE 8
TERM AND TERMINATION
8.1 TERM AND EXPIRATION.
This Agreement will be effective as of the Effective Date and unless terminated
earlier pursuant to Section 8.2 below, the term of this Agreement will continue
in effect until expiration of all royalty obligations hereunder.
8.2 TERMINATION FOR CAUSE.
(a) This Agreement may be terminated upon written notice by either party to
the other at any time during the term of this Agreement if the other
party is in material breach of its obligations hereunder and has not
cured such breach within 90 days after written notice requesting cure
of the breach; providing, however, that in the event of a good faith
dispute with respect to the existence of a material breach, the 90-day
cure period will be stayed until such time as the dispute is resolved
pursuant to Subsection 9.6 hereof.
(b) Upon material breach by ISIS of its obligations in the performance of
the Development Program, if LILLY decides not to terminate the
Agreement, LILLY will have the right to offset any costs it may incur
as a result of curing such breach against the amounts payable to ISIS
for the performance of such obligations. Further, to the extent that a
party prevails in a law suit brought against the other party for
material breach of this Agreement, such prevailing party will be
entitled to collect from the other party reasonable attorneys' fees and
legal costs incurred in connection with such law suit commensurate with
extent that its claim is upheld.
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8.3 EFFECT OF EXPIRATION OR TERMINATION.
(a) In the event this Agreement is terminated by either party under Section
8.2(a), LILLY's license pursuant to Section 3.1 will terminate as of
such termination date. Promptly upon termination, the parties will
prepare a transition plan to ensure the seamless transition of any
clinical studies and distribution and sales activities relating to the
Product. Further, LILLY will transfer all Marketing Approvals to ISIS,
and will instruct its patent counsel to coordinate transfer of the
relevant patent files with ISIS. Once all such files and
responsibilities have been assigned and/or transferred back to ISIS,
LILLY will have no further obligation to pay for the filing,
prosecution or maintenance of such patents and patent applications. In
addition, LILLY will provide ISIS with any and all data relating to
ISIS 3521 and/or to the ISIS Patent Rights that are in LILLY's
possession or control. Further, the licenses granted by LILLY to ISIS
under Compound Improvements, Core Technology Improvements and
Manufacturing Technology Improvements pursuant to Section 7.2(a),
7.3(a) and 7.4(a) will each convert to a worldwide, royalty-free,
sublicensable, perpetual, nonexclusive license to practice under such
LILLY's rights to any such improvements, and to make, have made, use,
import, offer for sale and sell products and Products.
(b) In the event this Agreement is terminated by ISIS under Section 8.2(a),
if LILLY has granted any sublicenses under this Agreement, those
sublicenses will continue, provided that such sublicenses are
consistent with the terms of this Agreement and further provided that
Sublicensees make all royalty payments directly to ISIS effective as of
the termination date of this Agreement.
(c) The foregoing rights and remedies of the parties are non-exclusive and
without prejudice to any rights that either party may have arising
under applicable law or equity.
8.4 SURVIVAL OF CERTAIN RIGHTS AND OBLIGATIONS.
Expiration or termination of the Agreement will not relieve the parties of any
obligation accruing prior to such expiration or termination. The provisions of
following Sections will survive expiration or termination of the Agreement:
3.3(b) and (c); 5.5 to 5.7; 6.3; 7.2(c), 7.3(c) and 7.4(c), other than the
reference to Section 3.1 therein; 8.3 to 8.5; 9.5; 9.7 to 9.13. The provisions
of Section 4.1 and 4.2 will survive the termination or expiration of the
Agreement and will continue in effect for 10 years thereafter. Any expiration or
early termination of this Agreement will be without prejudice to the rights of
either party against the other accrued or accruing under this Agreement prior to
termination, including the obligation to pay royalties for Product sold prior to
such termination.
8.5 RIGHTS IN BANKRUPTCY.
All rights and licenses granted under or pursuant to this Agreement by ISIS and
LILLY are, and will otherwise be deemed to be, for purposes of Section 365(n) of
the United States Bankruptcy Code, licenses of rights to "intellectual property"
as defined under Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code. The parties
agree that the parties, as licensees of such rights under this
24
Agreement, will retain and may fully exercise all of their rights and
elections under the United States Bankruptcy Code. The parties further agree
that, in the event of the commencement of a bankruptcy proceeding by or
against a party under the United States Bankruptcy Code, the party hereto
that is not a party to such proceeding will be entitled to a complete
duplicate of (or complete access to, as appropriate) any such intellectual
property and all embodiments of such intellectual property, which, if not
already in the non-subject party's possession, will be promptly delivered to
it (a) upon any such commencement of a bankruptcy proceeding upon the
non-subject party's written request therefor, unless the party subject to
such proceeding continues to perform all of its obligations under this
Agreement or (b) if not delivered under clause (a) above, following the
rejection of this Agreement by or on behalf of the party subject to such
proceeding upon written request therefor by the non-subject party.
ARTICLE 9
MISCELLANEOUS
9.1 FORCE MAJEURE.
Neither party will be held liable or responsible to the other party nor be
deemed to have defaulted under or breached the Agreement for failure or delay in
fulfilling or performing any term of the Agreement when such failure or delay is
caused by or results from causes beyond the reasonable control of the affected
party including, without limitation, embargoes, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, or acts of God. The affected party will notify the
other party of such force majeure circumstances as soon as reasonably practical
and will make every reasonable effort to mitigate the effects of such force
majeure circumstances.
9.2 ASSIGNMENT.
This Agreement will inure to the benefit and be binding upon each party, its
successors and assigns. The Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligation hereunder be assigned or transferred by either party without the
prior written consent of the other party; provided, however, that either party
may, without such consent, assign the Agreement and its rights and obligations
hereunder to an Affiliate or in connection with the transfer or sale of all or
substantially all of its assets, or in the event of its merger or consolidation
or change in control or similar transaction. Any permitted assignee will assume
all obligations of its assignor under the Agreement. Any attempted assignment
not in accordance with this Section 9.2 will be void.
9.3 SEVERABILITY.
In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby, unless the absence of the
invalidated provision(s) adversely affect the substantive rights of the
25
parties. The parties will in such an instance use their best efforts to
replace the invalid, illegal or unenforceable provision(s) with valid, legal
and enforceable provision(s) which, insofar as practical, maintains the
balance of the rights and obligations of the parties under this Agreement.
9.4 NOTICES.
All notices which are required or permitted hereunder will be in writing and
sufficient if delivered personally, sent by facsimile or email (and promptly
confirmed by personal delivery, registered or certified mail or overnight
courier), sent by nationally-recognized overnight courier or sent by registered
or certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to ISIS, to: Isis Pharmaceuticals, Inc.
Carlsbad Research Center
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Executive Vice President
Fax No.: (000) 000-0000
E-Mail: xxxxxxxxx@xxxxxx.xxx
with a copy to: Attention: General Counsel
Fax No.: (000) 000-0000
E-Mail: xxxxxx@xxxxxx.xxx
if to LILLY, to: Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Patent Counsel
Fax No.: (000) 000-0000
E-Mail: xxxxxxxx_xxxxxx_x@xxxxx.xxx
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
will be deemed to have been given when delivered if personally delivered or sent
by facsimile on a business day, on the business day after dispatch if sent by
nationally-recognized overnight courier and on the third business day following
the date of mailing if sent by mail.
9.5 APPLICABLE LAW.
The Agreement will be governed by and construed in accordance with the laws of
the State of Delaware without reference to any rules of conflict of laws.
9.6 DISPUTE RESOLUTION; OVERSIGHT COMMITTEE.
The parties recognize that disputes may from time to time arise between the
parties during the term of this Agreement. In the event of such a dispute,
either party, by written notice to the other
26
party, may have such dispute referred to the Oversight Committee, the
function of which is to attempt resolution of any disputes arising under this
Agreement by good faith negotiations. The Oversight Committee will endeavor
to resolve such disputes within 30 days after such notice is received. The
Oversight Committee will be comprised of two designated executive officers
(or their successors), one from each party. Said designated officers are as
follows:
For ISIS: Chief Executive Officer
For LILLY: Executive Vice President
9.7 REMEDIES.
In the event the parties are unable to resolve any disputes hereunder pursuant
to the dispute resolution measures provided herein, each party may pursue its
rights and remedies in law or equity in any court of competent jurisdiction.
9.8 ENTIRE AGREEMENT.
This Agreement and the Supply Agreement contain the entire understanding of the
parties with respect to the license, development and commercialization of ISIS
3521 and Product. All express or implied agreements and understandings, either
oral or written, heretofore made by the parties on the same subject matter are
expressly superseded by this Agreement. The Agreement may be amended, or any
term hereof modified, only by a written instrument duly executed by both parties
hereto.
9.9 HEADINGS.
The captions to the several Articles and Sections hereof are not a part of the
Agreement nor affect the interpretation of any of its provisions, but are merely
a convenience to assist in locating and reading the several Articles and
Sections hereof.
9.10 INDEPENDENT CONTRACTORS.
It is expressly agreed that ISIS and LILLY will be independent contractors and
that the relationship between the two parties will not constitute a partnership,
joint venture or agency. Neither ISIS nor LILLY will have the authority to make
any statements, representations or commitments of any kind, or to take any
action, which will be binding on the other, without the prior consent of the
other party.
9.11 WAIVER.
The waiver by either party hereto of any right hereunder, or the failure to
perform, or a breach by the other party will not be deemed a waiver of any other
right hereunder or of any other breach or failure by said other party whether of
a similar nature or otherwise.
27
9.12 COUNTERPARTS.
The Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.
9.13 WAIVER OF RULE OF CONSTRUCTION.
Each party has had the opportunity to consult with counsel in connection with
the review, drafting and negotiation of this Agreement. Accordingly, the rule of
construction that any ambiguity in this Agreement will be construed against the
drafting party will not apply.
ARTICLE 10
XXXX-XXXXX-XXXXXX FILING
10.1 HSR ACT COMPLIANCE.
Notwithstanding anything to the contrary in this Agreement, the Effective Date
of this Agreement and the rights and obligations of the parties hereunder shall
not occur until such time as (a) the parties shall have complied with all
applicable requirements of the Xxxx Xxxxx Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"); (b) the waiting period under the HSR Act shall
have expired or earlier been terminated; (c) no judicial or administrative
proceeding opposing consummation of all or any part of this Agreement shall be
pending; (d) no injunction (whether temporary, preliminary or permanent)
prohibiting consummation of the transactions contemplated by this Agreement or
any material portion hereof shall be in effect; and (e) no requirements or
conditions shall have been imposed in connection therewith which are not
reasonably satisfactory to the parties (the "HSR Conditions"). Upon satisfaction
of the HSR Conditions, the parties shall enter into the Supply Agreement.
10.2 COOPERATION ON FILING.
Both LILLY and ISIS shall file, as soon as reasonably practicable after the
Signing Date of this Agreement, with the Federal Trade Commission ("FTC") and
the Antitrust Division of the United States Department of Justice ("DOJ") the
notification and report form ("Report") required of each of them in the
reasonable opinion of either or both parties under the HSR Act with respect to
the transactions described in this Agreement and any other agreements between
the parties contemplated hereby (collectively, the "Transactions"). Each party
shall cooperate with the other to the extent necessary to assist the other party
in the preparation of its Report and to proceed to obtain necessary approvals
under the HSR Act to complete the Transactions including, but not limited to,
the expiration or earlier termination of any and all applicable waiting periods
required by the HSR Act ("Required Approval"). Each party will use reasonable
efforts to obtain the Required Approval. Each party will use reasonable best
efforts to assist the other party in eliminating any concern on the part of any
court of governmental authority regarding the legality of the Transactions. Such
assistance shall include, if required by federal or state antitrust authorities,
such party's taking all reasonable steps to secure Required Approval. The other
party shall cooperate in good faith, at its own cost, with any government
investigation
28
regarding the legality of the Transactions and promptly produce documents,
witnesses, and information demanded by the FTC or DOJ, whether by informal
request or by formal HSR Act Second Request or other legal process, provided,
however, that neither party shall be obligated to proceed with litigation if the
transaction is challenged by the FTC or the DOJ. If either party determines that
it does not wish to proceed with the Report process, because of litigation, the
parties will discuss in good faith whether there are any modifications to the
Agreement or any other agreement between the parties contemplated hereby that
will avoid antitrust issues and facilitate obtaining the Required Approval.
Neither party shall be obligated in any way to engage in further negotiations of
the terms of this Agreement or any other agreement between the parties
contemplated hereby, even if modifications are identified that will facilitate
obtaining Required Approval. If litigation is commenced, either party may
terminate this Agreement.
29
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
XXX XXXXX AND COMPANY ISIS PHARMACEUTICALS, INC.
By: /s/ AUGUST X. XXXXXXXX By:/s/ B. XXXXX XXXXXXXX
------------------------------- --------------------------------------
Name: August X. Xxxxxxxx Name: B. Xxxxx Xxxxxxxx
----------------------------- ------------------------------------
Title: Executive Vice President Title: Executive Vice President and CFO
---------------------------- -----------------------------------
30
EXHIBIT A
DEFINITIONS
Each of the capitalized terms used in this Agreement (other than the headings of
the Articles and Sections), whether used in the singular or the plural, will
have the meaning as set forth below or, if not listed below, the meaning as
designated in places throughout this Agreement.
1.1 "AFFILIATE" with respect to either party means any person,
organization, corporation or other business entity (collectively,
"Person") controlling, controlled by, or under common control with such
party. For purposes of this definition, "control" refers to (a) the
possession, directly or indirectly, of the power to direct the
management or policies of a Person, whether through the ownership of
voting securities, by contract or otherwise, and (b) the ownership,
directly or indirectly, of at least 50% of the voting securities or
other ownership interest of a Person.
1.2 "CALENDAR QUARTER" means the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30
and December 31.
1.3 "CALENDAR YEAR" means each successive period of 12 months commencing on
January 1 and ending on December 31.
1.4 "COMBINATION PRODUCT" means any pharmaceutical product that comprises
ISIS 3521 and at least one other active compound(s) and/or ingredients.
All references to the Product in this Agreement will be deemed to
include Combination Product.
1.5 "COMPOUND IMPROVEMENT" means any and all modifications and enhancements
that specifically and solely relate to the composition of matter of
ISIS 3521 or the method of use of ISIS 3521, except pharmaceutical
formulations and dosage forms for administration of the Product,
developed by or coming under Control of a party after the Effective
Date.
1.6 "COMPOUND PATENT RIGHTS" means the Patents Controlled by ISIS as of the
Effective Date that specifically claim the composition of matter or the
use of ISIS 3521 that are Valid and would be infringed by the
Manufacture, use, importation, offer for sale or sale of ISIS 3521 by
an unlicensed Third Party. The Compound Patent Rights are listed in
Exhibit D.
1.7 "CONTROL" or "CONTROLLED" means with respect to any intellectual
property right, that the party owns or has a license to such
intellectual property right and has the ability to grant access, a
license, or a sublicense to such intellectual property right to the
other party as provided for in this Agreement without violating an
agreement with, or infringing any rights of, a Third Party as of the
time the party would be first required under this Agreement to grant
the other party such access, license or sublicense.
1.8 "CORE TECHNOLOGY PATENT RIGHTS" means the Patents Controlled by ISIS as
of the Effective Date that are Valid and would be infringed by the
Manufacture, use,
1
importation, offer for sale or sale of ISIS 3521 by an unlicensed Third
Party that do not constitute Compound Patent Rights or Manufacturing
Patent Rights, such as Patents which claim, cover or relate to the
cellular mechanisms of action by which phosphorothioate antisense
oligonucleotides exert their effect, or to methods of treatment using
such oligonucleotides. The Core Technology Patent Rights are listed in
Exhibit D.
1.9 "CORE TECHNOLOGY IMPROVEMENT" means any and all modifications and
enhancements of antisense technology Controlled by ISIS or LILLY, as
appropriate, after the Effective Date that claim, cover or relate to
the cellular mechanisms of action by which phosphorothioate antisense
oligodeoxynucleotides exert their effect, or to methods of treatment
using such oligodeoxynucleotides, and that are necessary or useful for
the Manufacture or use of the Product. The definition of Core
Technology Improvements does not include any modifications or
enhancements that are Compound Improvements or Manufacturing Technology
Improvements.
1.10 "COST OF MANUFACTURE" means the cost incurred by ISIS in the
Manufacture of API as described in Exhibit 7 of the Supply Agreement.
1.11 "CS17 STUDY" means the Phase III clinical trial conducted by ISIS that
is ongoing as of the Effective Date, as further described in the
Development Plan.
1.12 "DEVELOPMENT PLAN" means the plan for the development of ISIS 3521
attached hereto as Exhibit C.
1.13 "DEVELOPMENT PROGRAM" means the activities undertaken by ISIS and LILLY
as set forth in the Development Plan.
1.14 "EC APPROVAL" means approval of a Product for marketing in the European
Union by the European Commission ("EC") upon recommendation by the
European Medicines Evaluation Agency ("EMEA") or, if LILLY seeks
approval through mutual recognition therein, by the Ministry of Health
of the United Kingdom, France, Germany, Italy or Spain (each a "Major
European Country"), without the requirement for price having been
approved. If a Product is sold in a Major European Country without EC
or Ministry of Health approval, EC Approval will be deemed to have been
obtained on the date of first sale of a Product in a Major European
Country.
1.15 "EFFECTIVE DATE" means the latest of (a) the date on which the last
party executes this Agreement and shall be the Signing Date or, (b) if
applicable, the next day following the Required Approval (as defined in
Section 10.2).
1.16 "FIRST COMMERCIAL SALE" means the first sale of a Product by LILLY, its
Affiliates or a Sublicensee to an independent Third Party in a
particular country after Marketing Approval has been obtained.
1.17 "FTE" means the equivalent of the scientific or technical work of at
least a total of [*] hours per year on or directly related to the
Development Program carried out by a qualified employee or consultant.
[*]
2
*Confidential Treatment Requested
1.18 "INFORMATION" means any information exchanged by the parties under the
confidentiality agreement executed by the parties on December 5, 2000
or generated by a party during the term of this Agreement and includes,
but is not limited to, any and all inventions, know-how, developments,
improvements, materials, data, analyses, and the like, regardless of
whether the information is stored or transmitted in oral, documentary,
or electronic form. "Information" also includes, without limitation,
information relating to research and development plans, experiments,
results, compounds, therapeutic leads, candidates and products,
clinical and preclinical data, trade secrets and Manufacturing,
marketing, financial, regulatory, personnel and other business
information and plans, all scientific, clinical, regulatory, marketing,
financial and commercial information or data.
1.19 "ISIS 3521" means the phosphorothioate oligodeoxyribonucleotide that
targets human protein kinase C alpha disclosed and claimed (as SEQ ID
NO 2) in U.S. Patent No. 5,703,054.
1.20 "ISIS FTE RATE" means [*]
1.21 "ISIS PATENT RIGHTS" means Compound Patent Rights, Manufacturing Patent
Rights, and ISIS' rights and interest in Patents claiming Compound
Improvements and Manufacturing Technology Improvements.
1.22 "JAPANESE APPROVAL" means the approval of a Product for marketing in
Japan by the Japanese Ministry of Health and Welfare (or any future
equivalent process), together with any other approval necessary to make
and sell Product commercially in Japan without the requirement for
price having been approved. If a Product can be sold in Japan without
Ministry of Health and Welfare approval, Japanese Approval will be
deemed to have been obtained on the first sale of a Product in Japan.
1.23 "MAJOR MARKET" means any one of the following countries: United States,
Japan, the United Kingdom, France, Germany, Italy or Spain.
1.24 "MAJOR TUMOR" means one of following tumors: non-small cell lung
cancer, pancreatic, ovarian, lymphoma, hepatoma, breast, colon,
prostate, and bladder.
1.25 "MANUFACTURE" OR "MANUFACTURING" OR "MANUFACTURED" means all operations
involved in the manufacturing, quality control testing (including
in-process, release and stability testing, if applicable), releasing,
and shipping the Product.
1.26 "MANUFACTURING APPROVAL" means the act of a Regulatory Authority
necessary for the Manufacture of the Product in a country or regulatory
jurisdiction.
1.27 "MANUFACTURING PATENT RIGHTS" means Patents Controlled by ISIS that
claim the Manufacturing Technology that are Valid and would be
infringed by the Manufacture, use, importation, offer for sale or sale
of ISIS 3521 by an unlicensed Third Party. The Manufacturing Patent
Rights are listed in Exhibit D.
3
*Confidential Treatment Requested
1.28 "MANUFACTURING PROCESS" means the process steps set forth in master
batch records for ISIS 3521 in the version existing as of the Effective
Date, including reasonable minor variants and extensions of process
steps thereof.
1.29 "MANUFACTURING TECHNOLOGY" means any and all scientific and technical
data and information including without limitation formulas, methods,
techniques, protocols, and processes Controlled by ISIS as of the
Effective Date which are necessary for performing the Manufacturing
Process.
1.30 "MANUFACTURING TECHNOLOGY IMPROVEMENT" means any and all modifications
and enhancements in the Manufacturing Technology, developed by or
coming under Control of a party after the Effective Date.
1.31 "MARKETING APPROVAL" means the act of a Regulatory Authority necessary
for the marketing and sale of the Product in a country or regulatory
jurisdiction, including, without limitation, the approval of the NDA by
the FDA, EC Approval, and Japanese Approval.
1.32 "NDA" means a new drug application or other application filed with the
FDA to obtain approval for marketing a Product in the United States, or
any future equivalent process.
1.33 "NET SALES" means the gross amount invoiced by LILLY, its Affiliates,
or any Sublicensee thereof to unrelated Third Parties, excluding any
Sublicensee, for the Product, less:
(a) Trade, quantity and cash discounts allowed;
(b) Commissions, discounts, refunds, rebates, chargebacks,
retroactive price adjustments; and any other allowances which
effectively reduce the net selling price;
(c) Refunds or credits for actual Product returns;
(d) the cost of drug delivery systems used for the administration
of the Product;
(e) Any tax imposed on the production, sale, delivery or use of
the Product, including, without limitation, sales, use, excise
or value added taxes;
(f) Allowance for distribution expenses; and
(g) Any other similar and customary deductions.
Such amounts will be determined from the books and records of Lilly or
sublicensee, maintained in accordance with U. S. Generally Accepted
Accounting Principles or, in the case of sublicensees, such similar
accounting principles, consistently applied.
Net Sales excludes:
(i) The transfer of reasonable and customary quantities of free
samples of Product(s) and the transfer of Product(s) as
clinical trial materials, other than for subsequent resale;
and
(ii) Use by LILLY or its Affiliates or Sublicensees of Product for
any use connected with the securing of regulatory approval or
validating of the Manufacturing
4
Process or the obtaining of other necessary Marketing
Approvals for Product (unless such Product is subsequently
sold).
In the event that the Product is sold as part of a Combination Product
(where "Combination Product" means any pharmaceutical product which
comprises the Product and other active compound(s) and/or ingredients),
the Net Sales of the Product, for the purposes of determining royalty
payments, will be determined by multiplying the Net Sales of the
Combination Product (as defined in the standard Net Sales definition)
by the fraction, A / (A+B) where A is the weighted average sale price
of the Product when sold separately in finished form, and B is the
weighted average sale price of the other product(s) sold separately in
finished form.
In the event that the weighted average sale price of the Product can be
determined but the weighted average sale price of the other product(s)
cannot be determined, Net Sales for purposes of determining royalty
payments will be calculated by multiplying the Net Sales of the
Combination Product by the fraction A / C where A is the weighted
average sale price of the Product when sold separately in finished form
and C is the weighted average selling price of the Combination Product.
In the event that the weighted average sale price of the other
product(s) can be determined but the weighted average sale price of the
Product cannot be determined, Net Sales for purposes of determining
royalty payments will be calculated by multiplying the Net Sales of the
Combination Product by the following formula: one (1) minus B / C where
B is the weighted average sale price of the other product(s) when sold
separately in finished form and C is the weighted average selling price
of the Combination Product.
In the event that the weighted average sale price of both the Product
and the other product(s) in the Combination Product cannot be
determined, the Net Sales of the Product will be negotiated by the
parties in good faith. If the parties cannot reach agreement on the
appropriate allocation, the Net Sales of the Product will be deemed to
be equal to fifty percent (50%) of the Net Sales of the Combination
Product.
The weighted average sale price for a Product, other product(s), or
Combination Product will be calculated once each Calendar Year and such
price will be used during all applicable royalty reporting periods for
the entire following Calendar Year. When determining the weighted
average sale price of a Product, other product(s), or Combination
Product, the weighted average sale price will be calculated by dividing
the sales dollars (translated into U.S. dollars) by the units of active
ingredient sold during the twelve (12) months (or the number of months
sold in a partial calendar year) of the preceding Calendar Year for the
respective Product, other product(s), or Combination Product. In the
initial Calendar Year, a forecasted weighted average sale price will be
used for the Product, other product(s), or Combination Product. Any
over or under payment due to a difference between forecasted and actual
weighted average sale prices will be paid or credited in the first
royalty payment of the following Calendar Year.
5
1.34 "OUT-OF-POCKET EXPENSES" means costs, other than labor costs, that are
directly related to the activities outlined in the Development Plan and
the Supply Agreement, including, without limitation, costs of travel,
supplies, outside services and consultants.
1.35 "PATENT" or "PATENTS" means (a) patent applications (including
provisional applications and applications for certificates of
invention); (b) any patents issuing from such patent applications
(including certificates of invention); (c) all patents and patent
applications based on, corresponding to, or claiming the priority
date(s) of any of the foregoing; (d) any reissues, substitutions,
confirmations, registrations, validations, re-examinations, additions,
continuations, continued prosecution applications,
continuations-in-part, or divisions of or to any of the foregoing; and
(e) term extension or other governmental action which provide exclusive
rights to a Product beyond the original patent expiration date.
1.36 "PIVOTAL TRIAL" means a pivotal human clinical trial in any country,
the results of which could be used to establish safety and efficacy of
a ISIS 3521 as a basis for an application for a Marketing Approval or
that would otherwise satisfy the requirements of 21 CFR 312.21(c) or
its foreign equivalent.
1.37 "PRODUCT" means preparation(s) containing ISIS 3521 or a Compound
Improvement.
1.38 "PROPRIETARY INFORMATION" means any and all Information, whether
communicated in writing, orally or by any other means, which is
provided by one party to the other party in connection with this
Agreement. Proprietary Information will not include Information that:
a) is known by the receiving party at the time of its receipt,
and not through a prior disclosure by the disclosing party, as
documented by written records;
b) is properly in the public domain through no fault of the
receiving party;
c) is, subsequent to the disclosure by the disclosing party,
disclosed to the receiving party by a Third Party who may
lawfully do so and is not under an obligation of
confidentiality to the disclosing party; or
d) is developed by the receiving party independently of
Proprietary Information received from the other party , as
documented by written records.
1.39 "REGULATORY AUTHORITY" means any applicable government regulatory
authority involved in granting approvals for the marketing, and/or
pricing of a Product worldwide, including without limitation, in the
United States, the Food and Drug Administration ("FDA"), and any
successor government authority having substantially the same function,
and foreign equivalents thereof.
1.40 "SUBLICENSEE" means any Third Party (including a distributor) to which
LILLY or any of its Affiliates grants any right to make, use, market,
or import and sell a Product. A Third
6
Party who is granted only the right to import and sell a Product (such
as a wholesaler) will not be considered a Sublicensee.
1.41 "SUPPLY AGREEMENT" means the supply agreement for ISIS 3521 to be
entered into by the parties on the Effective Date in the form attached
hereto as Exhibit B.
1.42 "THIRD PARTY" means any party other than ISIS or LILLY and their
respective Affiliates.
1.43 "VALID" means (a) with respect to an issued patent that such patent is
issued and unexpired, has not been revoked, held unenforceable or
invalid by an unappealed or unappealable decision of a court or other
governmental agency of competent jurisdiction, and has not been
admitted by the owner of such patent to be invalid or unenforceable,
and (b) with respect to a patent application that such patent
application has been pending for no more than seven (7) years.
7
EXHIBIT B
ISIS 3521 CLINICAL SUPPLY AGREEMENT
(See Exhibit 2.6 to this 8-K)
1
EXHIBIT C
DEVELOPMENT PLAN
DELETE IN ENTIRETY
[*]
2
*Confidential Treatment Requested
EXHIBIT D
COMPOUND PATENT RIGHTS
[*]
MANUFACTURING PATENT RIGHTS
[*]
CORE TECHNOLOGY PATENT RIGHTS
[*]
3
*Confidential Treatment Requested
EXHIBIT E
BUDGET ESTIMATE AND ASSUMPTIONS
DELETE IN ENTIRETY
[*]
4
*Confidential Treatment Requested
