Exhibit 10.7
RESEARCH COLLABORATION AND LICENSE AGREEMENT
between
MERCK & CO., INC.
and
NEOGENESIS, INC.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
RESEARCH COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT effective as the date of the signature of the last party
to sign this Agreement, (the "Effective Date") between Merck & Co., Inc., a
corporation organized and existing under the laws of New Jersey ("MERCK") and
NEOGENESIS, Inc. a corporation organized and existing under the laws of Delaware
("NEOGENESIS")
WITNESSETH:
WHEREAS, NEOGENESIS has proprietary technology and expertise in the
identification, discovery, validation and optimization of novel, small molecule
ligands; and
WHEREAS, NEOGENESIS has developed the Automated Ligand Identification
System ("ALIS") and NEOGENESIS Know-How (as hereinafter defined), and has rights
to NEOGENESIS Patent Rights (as hereinafter defined);
WHEREAS, MERCK and NEOGENESIS desire to enter into a research
collaboration to identify, screen and optimize Compound(s) (as hereinafter
defined) upon the terms and conditions set forth herein;
WHEREAS, MERCK desires to obtain a license under NEOGENESIS Patent Rights
and NEOGENESIS Know-How, upon the terms and conditions set forth herein, and
NEOGENESIS desires to grant such a license;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Unless specifically set forth to the contrary herein, the following
terms, whether used in the singular or plural, shall have the respective
meanings set forth below:
1.1 The term "Affiliate" shall mean (i) any corporation or business entity of
which [*] or more of the securities or other ownership interests
representing the equity, the voting stock or general partnership
interests are owned, controlled or held, directly or indirectly, by MERCK
or NEOGENESIS; or (ii) any corporation or business entity which, directly
or indirectly, owns, controls or holds [*] (or the maximum ownership
interest permitted by law) or more of the securities or other ownership
interests representing the equity, the voting stock or, if applicable,
the general partnership interests, of MERCK or NEOGENESIS.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
1
1.2 The term "Calendar Quarter" shall mean the respective periods of three
(3) consecutive calendar months ending on March 31, June 30, September 30
and December 31.
1.3 The term "Calendar Year" shall mean each successive period of twelve (12)
months commencing on January 1 and ending on December 31.
1.4 The term "Combination Product" shall mean a Product which includes one or
more active ingredients, other than a Compound that is directed against
the specified Target for which it was developed under the Research
Program, in combination with such Compound.
1.5 The term "Committee" shall mean the Joint Research Committee described in
Section 2.5.1.
1.6 The term "Compound" shall mean any chemical entity that i) binds to a
Target with [*] for which MERCK requests NEOGENESIS to prepare a Focused
Library, and that ii) is identified, invented, discovered and/or
synthesized under the Research Program either solely by NEOGENESIS or
jointly by MERCK and NEOGENESIS, or [*].
1.7 The term "Drug Development Program" shall mean the drug development
program to be carried out by MERCK in accordance with Section 2.12.
1.8 The term "FDA" shall mean the United States Food and Drug Administration,
or equivalent governmental agency or authority in the Territory, and any
successor agency having substantially the same functions.
1.9 The term "Field" shall mean any and all uses for human and animal health.
1.10 The term "First Commercial Sale" shall mean, with respect to any Product,
the first sale for end use or consumption of such Product in a country
after all required approvals, including marketing and pricing approvals,
have been granted by the governing health authority of such country.
1.11 The term "Focused Library" shall mean a set of compounds determined by a
common template that has been reacted with a set of analogous building
blocks. The function of a Focused Library is to optimize the potency and
affinity of derivative compounds. Compounds that are prepared in a
Focused Library represent a close set of analogs and a structural
activity relationship cluster set.
1.12 The term "Full Time Equivalent" or "FTE" shall mean the equivalent of a
full-time scientist's work time over a twelve-month period (including
normal vacations, sick days and holidays). The portion of an FTE year
devoted by a scientist to the Research Program shall be determined by
dividing the number of days during any twelve-month period devoted by
such employee to
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
2
the Research Program by the total number of working days during such
twelve-month period.
1.13 The term "Material" shall mean the material provided by MERCK to
NEOGENESIS for the purposes of carrying out the Research Program,
including without limitation assays, protocols, methods, and cell lines
as may specifically be set forth in Attachments 1.27 and 2.1 hereof.
1.14 The term "MERCK Know-How" shall mean any and all MERCK information and
materials, including but not limited to, Material, discoveries,
processes, formulas, assays, methods, clinical and other data,
inventions, know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement are in the possession of Merck, are not
generally known, and which are, in MERCK's opinion, necessary or useful
to NEOGENESIS in the performance of its obligations under the Research
Program.
1.15 The terms "MERCK Patent Rights" shall mean issued patents and patent
applications in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications for
certificates of invention) which during the term of this Agreement are
owned by MERCK or to which MERCK through license or otherwise acquires
rights, which: (i) claim, cover or relate to Compound and/or Product; or
(ii) claim, cover or relate to Materials; or (iii) are divisions,
continuations, continuations-in-part, reissues, renewals, extensions,
supplementary protection certificates, utility models and the like of any
such patents and patient applications and foreign equivalents thereof.
1.16 The term "NDA" shall mean a New Drug Application or Marketing
Authorization Approval filed with the FDA or its foreign equivalents for
marketing authorization of a Product.
1.17 The term "NEOGENESIS Know-How" shall mean all information and materials,
including but not limited to compounds, discoveries, processes, formulas,
data, inventions, know-how and trade secrets, patentable or otherwise,
which during the term of this Agreement are in NEOGENESIS's possession or
control, are not generally known and which are reasonably necessary or
useful to MERCK in connection with the performance of Merck's obligations
under the Research Program or the research, development, registration,
manufacture, marketing, use or sale of Compound or Product in the
Territory.
1.18 The term "NeoMorph Screening Library" shall mean the NEOGENESIS
proprietary compound library consisting of approximately 5,000,000
diverse, small organic compounds distributed in a number of libraries
each containing approximately 500 to 5,000 such compounds.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
3
1.19 The term "Net Sales" shall mean the gross invoice price of Product sold
by MERCK, its affiliates or sublicensees (which term does not include
distributors) to the first independent third party after deducting, if
not previously deducted, in the amount invoiced or received:
(a) trade and/or quantity discounts paid to independent third parties in
amounts customary to the trade;
(b) credits and allowances separately and actually credited to customers
on account of returned or rejected Products;
(c) rebates, chargebacks and other amounts paid on sale or dispensing of
Product in amounts customary to the trade;
(d) retroactive price reductions;
(e) sales commissions paid to independent third party distributors
and/or selling agents in amounts customary to the trade;
(f) a fixed amount equal to [*] of the amount invoiced to cover cash
discounts, bad debt, sales or excise taxes, transportation and
insurance charges and additional special transportation, custom
duties, and other governmental charges; and
(g) the inventory cost of devices or delivery systems used for
dispensing or administering Product, special packaging or Product,
and diluents or similar exogenous materials which accompany Product
as it is sold, determined in accordance with Merck's standard
accounting procedures consistently applied.
With respect to sales of Combination Products, Net Sales shall be
calculated on the basis of the invoice price of Product(s) containing the
same strength of Compound that is directed against the specified Target
for which it was developed under the Research Program sold without other
active ingredients. In the event that Product is sold only as a
Combination Product, Net Sales shall be calculated on the basis of the
invoice price of the Combination Product multiplied by a fraction, the
numerator of which shall be the inventory cost of such Compound in the
Combination Product and the denominator of which shall be the inventory
cost of all of the active ingredients in the Combination Product.
Inventory cost shall be determined in accordance with MERCK's regular
accounting methods consistently applied.
1.20 The terms "NEOGENESIS Patent Rights" shall mean issued patents and patent
applications in the Territory (which for the purposes of this Agreement
shall be deemed to include certificates of invention and applications for
certificates of invention) which during the term of this Agreement are
owned by NEOGENESIS or to which NEOGENESIS through
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
4
license or otherwise acquires rights which: (i) claim, cover or relate to
Compounds; or (ii) claim, cover or relate to Technology Improvements; or
(iii) are divisions, continuations, continuations-in-part, reissues,
renewals, extensions, supplementary protection certificates, utility,
models and the like of any such patents and patent applications and
foreign equivalents thereof.
1.21 The term "Patent Claim" means a claim to a Compound that is directed
against the specified Target for which it was developed under the
Research Program appearing in an issued and unexpired patent included
within the MERCK Patent Rights, which has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed with the
time allowed for appeal, and which has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
1.22 The term "Product(s)" shall mean preparation(s) in final form for sale by
prescription, over-the-counter or any other method for all uses in humans
and/or animals which contain Compound that is directed against the
specified Target for which it was developed under the Research Program,
including, without limitation, any Combination Product.
1.23 The term "Proprietary Information" shall mean any and all confidential
information and data, whether communicated in writing, orally or by any
other means, which is provided by one party to the other party in
connection with this Agreement. Proprietary Information includes, but is
not limited to, MERCK Know-How, Material, and NEOGENESIS Know-How.
1.24 The term "Research Program Information and Inventions" shall have the
meaning set forth in Section 2.8.
1.25 The terms "Research Program Term" and "Extended Research Program Term"
shall have the meanings set forth in Section 2.9.
1.26 The term "Safety Assessment Candidate" shall mean a [*].
1.27 The term "Target" shall mean a purified, functionally-active target
protein provided by MERCK to NEOGENESIS for use in the Research Program.
Each such Target is identified in Attachment 2.1.
1.28 The term "Technology Improvement" shall mean any enhancement or
improvement relating solely to the ALIS and/or NeoMorph Screening Library
which is generated solely or jointly by MERCK and/or NEOGENESIS under the
Research Program, and which exists independently of the Compounds and
Material.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
5
1.29 The term "Territory" shall mean all of the countries in the world.
ARTICLE II
RESEARCH PROGRAM
2.1 GENERAL. NEOGENESIS and MERCK shall engage in the Research Program upon
the terms and conditions set forth in this Agreement. For the purposes of
conducting the Research Program, MERCK will provide to NEOGENESIS [*]
proprietary and non-proprietary MERCK Targets as set forth in the Work
Plan attached hereto in Attachment 2.1. NEOGENESIS will utilize its
proprietary ALIS and NeoMorph Screening Library to identify Compounds
directed against the Targets. During the Research Program, NEOGENESIS and
MERCK shall decide jointly which active Compounds will be selected for
high stringency ALIS-driven optimization by NEOGENESIS which will be
carried out by synthesis of Focused Libraries. The activities to be
undertaken under the Research Program are set forth in this Article II
and in Attachment 2.1 hereto, which may be amended from time to time upon
the mutual agreement of the parties.
2.2 CONDUCT OF RESEARCH. NEOGENESIS and MERCK each shall conduct the Research
Program in good scientific manner, and in compliance in all material
respects with all requirements of applicable laws, rules and regulations
and all applicable good laboratory practices to attempt to achieve their
objectives efficiently and expeditiously. NEOGENESIS and MERCK each shall
proceed diligently with the work set out in the Research Program by using
their respective good faith efforts, and will provide sufficient time,
effort, equipment and facilities for the Research Program, and will use
personnel with sufficient skill and experience as are required to
accomplish the goals of the Research Program.
2.3 USE OF RESEARCH FUNDING. NEOGENESIS shall apply the research funding it
receives from MERCK under this Agreement to carry out NEOGENESIS's
responsibilities under the Research Program.
2.4 PRINCIPAL SCIENTISTS. The principal scientists and primary contacts for
the Research Program are [*] for NEOGENESIS and [*] for MERCK. The
Research Program and all work assignments to be performed by the
NEOGENESIS and MERCK shall be carried out under the direction and
supervision of the principal scientists noted above. Each party shall
notify the other party as soon as practicable upon the changing of
principal scientist; PROVIDED, HOWEVER, in no event may the NEOGENESIS
assign a principal scientist other than the individual identified above
without the prior written consent of MERCK; AND PROVIDED, FURTHER, that
in the event that the NEOGENESIS principal scientist is not available to
direct and supervise the Research Program or leaves NEOGENESIS's employ,
NEOGENESIS shall immediately notify MERCK, and, if, in Merck's opinion,
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
6
a suitable replacement cannot be identified, this Agreement may be
terminated by MERCK in accordance with Section 8.3.1(a).
2.5 JOINT RESEARCH COMMITTEE. The parties hereby establish a committee to
direct and monitor the Research Program as follows:
2.5.1 COMPOSITION OF THE JOINT RESEARCH COMMITTEE. The Research Program shall
be conducted under the direction of a Joint Research Committee (the
"Joint Research Committee") comprised of three (3) named representatives
of MERCK and three (3) named representatives of NEOGENESIS. Each party
shall appoint its respective representatives to the Joint Research
Committee from time to time, and may substitute one or more of its
representatives, in its sole discretion, effective upon notice to the
other party of such change. These representatives shall have appropriate
technical credentials, experience and knowledge, and ongoing familiarity
with the Research Program. Additional representatives or consultants may
from time to time, by mutual consent of the parties, be invited to attend
Joint Research Committee meetings, subject to compliance with Section
4.1. The Chair of the Joint Research Committee shall be a representative
of Merck. The Vice-Chair shall be a representative of NEOGENESIS.
2.5.2 MEETINGS. The Joint Research Committee shall meet at least once each
calendar month with the location for such meetings alternating between
NEOGENESIS and MERCK facilities (or such other locations as is determined
by the Joint Research Committee). Alternatively, the Joint Research
Committee may meet by means of teleconference, videoconference or other
similar communications equipment. The Joint Research Committee shall
confer regarding the status of the Research Program, review relevant
data, consider and advise on any technical issues that arise, consider
issues of priority, and review and advise on any budgetary and economic
matters relating to the Research Program which is referred to the Joint
Research Committee, provided that the Joint Research Committee shall not
have the authority to decide on technical, budgetary or economic matters.
Decisions of the Joint Research Committee shall be made [*] of the
members. In the event that the Joint Research Committee cannot or does
not, after good faith efforts, reach agreement on an issue, the issue
shall be referred to an executive officer of each of NEOGENESIS and MERCK
(which officer shall not be a member of the Joint Research Committee) for
resolution. In the event such officers are unable to resolve the matter,
the resolution and/or course of conduct shall be determined by MERCK, in
its sole discretion. Each party shall bear its own expenses related to
the attendance of such meetings by its representatives.
2.5.3 RECORDS. The Joint Research Committee shall maintain accurate records to
document the discussion and decisions at each meeting. Meeting minutes or
summaries shall be prepared in accordance with the procedures established
by the Joint Research Committee at its first meeting and shall be
distributed
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
7
to all members of the Joint Research Committee after approval of the
drafts by the Chairman.
2.6 EXCHANGE OF INFORMATION. During the term of this Agreement, NEOGENESIS
shall disclose to MERCK in English and in writing on an on-going basis
all NEOGENESIS Know-How and relevant NEOGENESIS Patent Rights, [*].
2.7 RECORDS AND REPORTS.
2.7.1. RECORDS. NEOGENESIS shall maintain records, in sufficient detail and in
good scientific manner appropriate for patent purposes in connection with
Merck Patent Rights and for regulatory purposes in connection with
regulatory filings with the FDA for Compound and Products in the
Territory. Such records shall be complete and shall fully and properly
reflect all work done and results achieved in the performance of the
Research Program.
2.7.2. COPIES AND INSPECTION OF RECORDS. MERCK or its designated representative
shall have the right, during normal business hours and upon reasonable
notice, to inspect and copy all such records of the NEOGENESIS referred
to in Section 2.7.1. NEOGENESIS shall maintain such records and the
information disclosed therein in confidence in accordance with Section
4.1. MERCK shall have the right to arrange for its employees and/or
consultants involved in the activities contemplated hereunder to visit
NEOGENESIS at its offices and laboratories during normal business hours
and upon reasonable notice, and to discuss the Research Program work and
its results in detail with the technical personnel and consultants of
NEOGENESIS.
2.7.3. REPORTS. Within six (6) months after the Effective Date, NEOGENESIS shall
provide to MERCK a written progress report which shall describe the work
performed to date on the Research Program, evaluate the work performed in
relation to the goals of the Research Program and provide such other
information required by the Research Program or reasonably requested by
MERCK relating to the progress of the goals or performance of the
Research Program. At the end of the Research Program Term, NEOGENESIS
will provide Merck with a full report of all experiments conducted and
results obtained in the Research Program. Upon request, NEOGENESIS shall
provide copies of the records described in Section 2.7.1. above.
2.8 RESEARCH PROGRAM INFORMATION AND INVENTIONS.
(a) The entire right, title and interest in and to all results,
discoveries, improvements, processes, formulas, materials, data,
inventions, know-how and trade secrets, patentable or otherwise,
arising from the Research Program including without limitation any
and all Compounds and improvements to Materials developed or
invented
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
8
either solely or jointly by employees of NEOGENESIS and/or MERCK
(all being "Research Program Information and Inventions") shall be
owned by MERCK, excluding, however, all Technology Improvements,
which shall be the sole property of NEOGENESIS.
(b) For any compound which does not meet the Research Program criteria
for selectivity and activity toward the specified therapeutic Target
as set forth in Section 1.6 herein, then such compound shall not be
considered a Compound for purposes of this Agreement, shall no
longer be subject to the terms of this Agreement, and NEOGENESIS
shall be entitled to return such compound to its compound library.
(c) NEOGENESIS shall promptly disclose to MERCK the development, making,
conception and/or reduction to practice of Research Program
Information and Inventions.
2.9 RESEARCH PROGRAM TERM. Except as otherwise provided herein, the term of
the Research Program shall commence on the Effective Date and continue
for a period of one (1) year ("Research Program Term"). The parties may
extend the term of the Research Program by mutual written agreement
("Extended Research Program Term"). Upon extension of the term of
Research Program, if applicable, Attachment 2.1 setting forth the
Research Program shall be amended in writing by mutual agreement.
2.10 EXCLUSIVE EFFORTS. During the initial one (1) year Research Program Term
NEOGENESIS shall work exclusively with MERCK in efforts to screen,
synthesize and optimize compounds directed to each and every Target so
long as such Target remains the subject of the research program during
such Term. Notwithstanding the foregoing, NEOGENESIS shall not be in
breach of its exclusivity obligation under this Section 2.10 in the event
that, during such initial one (1) year Research Program Term, NEOGENESIS
conducts a screening program directed against the Targets with or on
behalf of a third party where such third party is unwilling to disclose
and does not disclose the identify of the Targets included in such
screening program.
2.11 ADDITIONAL FTE'S. In the event that the Research Program yields a
Compound that satisfies the criteria for selectivity and activity toward
a Target set forth in the Research Program, and upon completion of the
Research Program activities, Merck will notify NEOGENESIS of MERCK's
interest in carrying out a subsequent Research Program to conduct
chemistry optimization activities, and the parties will amend Attachment
2.1 accordingly. In the event that the parties agree that an increased
number of FTE's are required to carry out such optimization activities at
NEOGENESIS, MERCK shall be responsible for the costs of such FTE's at the
rate of [*] per FTE.
2.12 DRUG DEVELOPMENT PROGRAM.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
9
2.12.1 For any Compound which is identified by the Joint Research Committee as
meeting the Research Program criteria for selectivity and activity toward
the specified Target as set forth in Section 1.6 herein, Merck may, at
its sole discretion, elect to take such Compound forward within MERCK
[*]. After [*], Merck may, at its sole discretion, undertake, and shall
own the results of, all preclinical development, toxicology, clinical
development, and Compound research and development. MERCK shall make
any and all regulatory filings for such Compound and Product as Merck,
in its sole discretion, deems appropriate, and shall be the sole owner
of all regulatory submissions and government approvals.
2.12.2 For any Compound which Merck can show (i) existed in MERCK's collection
prior to receipt of such Compound from NEOGENESIS or (ii) was
licensed-in, or identified by or for MERCK independently of the Research
Program, then such Compound shall not be considered a Compound hereunder,
and shall not be subject to the terms of this Agreement, provided that,
in the case of any Compound described in this Section 2.12.2 (i), MERCK
shall notify NEOGENESIS that such Compound exists in MERCK's collection
no later than the earlier of: a) the date on which MERCK requests
NEOGENESIS to prepare a Focused Library for such Compound, or b) within
ninety (90) days after NEOGENESIS provides the structure of such Compound
to MERCK.
2.13 MATERIALS. Merck shall provide NEOGENESIS with the Material(s) as
specified in Attachments 1.27 and 2.1 which shall be used by NEOGENESIS
solely for the purposes of conducting its activities under the Research
Program. Any unused Materials shall be destroyed or returned to Merck, at
Merck's option.
ARTICLE III
LICENSE; EXCHANGE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION
3.1 LICENSE GRANT.
(a) During the Research Program Term and any Extended Research Program
Term, NEOGENESIS hereby grants to MERCK an exclusive license in the
Territory (sublicensable to MERCK AFFILIATES and third party
research collaborators) to practice under NEOGENESIS Patent Rights
and to utilize NEOGENESIS Know-How and Technology Improvements to
carry out MERCK's activities under the Research Program directed to
the Targets, subject to NEOGENESIS's right to practice under
NEOGENESIS Patent Rights and to utilize NEOGENESIS Know-How and
Technology Improvements to carry out its Research Program
obligations on behalf of MERCK contemplated under this Agreement.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10
(b) NEOGENESIS hereby grants to MERCK an exclusive, sublicensable
license in the Territory to practice under applicable NEOGENESIS
Patent Rights and to utilize NEOGENESIS Know-How and Technology
Improvements to develop, make, have made, use, sell, offer to sell
or import Compound, and Product containing Compound.
3.2 NON-EXCLUSIVE LICENSE GRANT. In the event the development, making, having
made, use, sale or import by MERCK, its Affiliates and/or sublicensees of
such Compound(s) or Product(s) would infringe during the term of this
Agreement a claim of issued letters patent which NEOGENESIS owns or has
the rights to license and which patents are not covered by the grant in
Section 3.1, NEOGENESIS hereby grants to MERCK, to the extent NEOGENESIS
is legally able to do so, a non-exclusive, royalty-free license in the
Territory under such issued letters patent solely for MERCK to develop,
make, have made, use, sell, offer for sale or import such Compound(s) and
Product(s) in the Territory.
3.3 DEVELOPMENT AND COMMERCIALIZATION. MERCK shall use reasonable efforts,
consistent with the usual practice followed by MERCK in pursuing the
commercialization and marketing of similar pharmaceutical products of
similar market potential, at its own expense, to develop and
commercialize a Product on a commercially reasonable basis in such
countries in the Territory where in MERCK's opinion it is commercially
viable to do so.
3.4 EXCUSED PERFORMANCE. In addition to the provisions of Section 9.1 hereof,
the obligation of MERCK with respect to any Product under Section 3.3 are
expressly conditioned upon the continuing absence of any adverse
condition or event relating to the safety or efficacy of the Product, and
the obligation of MERCK to develop or market any such Product shall be
delayed or suspended so long as in MERCK's opinion any such condition or
event exists.
3.5 MERCK KNOW-HOW AND MATERIAL. Merck hereby grants Neogenesis the right to
utilize Merck Know-How and Material solely for the purposes of performing
its obligations under the Research Program.
ARTICLE IV
CONFIDENTIALITY AND PUBLICATION
4.1 NONDISCLOSURE OBLIGATION. All Proprietary Information disclosed by one
party to the other party hereunder shall be maintained in confidence by
the receiving party and shall not be disclosed to a non-party or used for
any purpose except as expressly permitted herein without the prior
written consent of the disclosing party. The foregoing obligations shall
not apply to the extent that such Proprietary Information:
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11
(a) is known by recipient at the time of its receipt, and not through a
prior disclosure by the disclosing party, as documented by
recipients' business records;
(b) is properly in the public domain;
(c) is subsequently disclosed to a receiving party by a third party who
may lawfully do so and is not under an obligation of confidentiality
to the disclosing party;
(d) is developed by the receiving party independently of Proprietary
Information received from the other party;
(e) is disclosed to governmental or other regulatory agencies by MERCK
in order to obtain patents or to gain approval to conduct clinical
trials or to market Product, but such disclosure may be only to the
extent reasonably necessary to obtain patents or authorizations;
(f) is deemed necessary by MERCK to be disclosed to sublicensees,
agents, consultants, Affiliates and/or other third parties for the
research and 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 third parties agree to be bound by the
confidentiality obligations contained this Agreement, PROVIDED the
term of confidentiality for such third parties shall be no less than
[*]; or
(g) is required to be disclosed by law or 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.
4.2 PUBLICATION. MERCK and NEOGENESIS each acknowledge the other party's
interest in publishing its results to obtain recognition within the
scientific community and to advance the state of scientific knowledge.
Each party also recognizes the mutual interest in obtaining valid patent
protection and in protecting business interests and trade secret
information. Consequently, either party, its employees or consultants
wishing to make a publication with respect to the results of the Research
Program shall deliver to the other party a copy of the proposed written
publication or an outline of an oral disclosure at least sixty (60) days
prior to submission for publication or presentation. The reviewing party
shall have the right (a) to propose modifications to the publication for
patent reasons, trade secret reasons or business reasons or (b) to
request a reasonable delay in publication or presentation in order to
protect patentable information. If the reviewing party requests a delay,
the publishing party shall delay submission or presentation for a period
of ninety (90) days to enable patent applications protecting each party's
rights in such
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12
information in accordance with the terms of this Agreement to be filed in
accordance with Article VII below. If the reviewing party requests
modifications to the publication, the publishing party shall edit such
publication to prevent disclosure of trade secret or other Proprietary
Information prior to submission of the publication or presentation.
4.3 PUBLICITY. Neither party shall disclose the existence of or terms of the
Agreement, or make any public announcements or issue any press releases
concerning this Agreement or its subject matter without the prior review
of and written consent for such public announcement or press release by
the other party.
ARTICLE V
PAYMENTS; ROYALTIES AND REPORTS
5.1 RESEARCH PROGRAM FUNDING.
a) In consideration for NEOGENESIS's commitment to perform its
obligations under the Research Program and the license granted
herein, upon the terms and conditions contained herein, MERCK shall
pay NEOGENESIS an amount equal to [*] payable within [*] after the
Effective Date. Such [*] payment shall include all Research Program
activity for total screening for [*] Targets, and the development of
one Focused Library for any [*] Target, such Target to be chosen at
the sole discretion of Merck.
b) In consideration of NEOGENESIS's development of additional Focused
Libraries in accordance with the requirements of Attachment 2.1,
Exhibit A, Section 3 (b), to be conducted at the sole discretion of
MERCK, MERCK shall pay NEOGENESIS [*] upon delivery to Merck of a
report as specified in Attachment 2.1 documenting each such
additional Focused Library for each additional Target after the
first Target set forth in Section 5.1(a).
5.2 MILESTONE PAYMENTS. Subject to the terms and conditions in this
Agreement, MERCK shall pay to NEOGENESIS the following milestone payments
with respect to each Compound that is directed against the specified
Target for which it was developed under the Research Program as set forth
below, each milestone payment to be made no more than once with respect
to each such Compound, and provided that Milestone (1) shall be payable
only once during the term of the Agreement for the first such Compound
approved by MERCK as a Safety Assessment Candidate.
1. Acceptance of the first Compound [*] [*]
2. Initiation of Phase I clinical trials for a Compound [*]
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
13
3. Initiation of Phase III clinical trials for a Compound [*]
4. Upon filing of an NDA or equivalent in the first of the [*]
United States, United Kingdom, France, Germany, Italy,
Spain or Japan
5. Upon approval by the FDA or equivalent of such NDA in the [*]
first of the United States, United Kingdom, France, Germany,
Italy, Spain or Japan
MERCK shall notify NEOGENESIS in writing within thirty (30) days upon the
achievement of each milestone, such notice to be accompanied by payment
of the appropriate milestone payment. Milestone payments [*] shall be
payable only upon the initial achievement of each such milestone with
respect to each Compound that is directed against the specified Target
for which it was developed under the Research Program and no amounts
shall be due hereunder for subsequent or repeated achievement of any such
milestone.
For Compounds that NEOGENESIS provides, but that already exist in the
Merck compound library, no milestones payments shall be due to
NEOGENESIS, provided that MERCK shall notify NEOGENESIS that such
Compound exists in MERCK's collection no later than the earlier of a) the
date on which MERCK requests NEOGENESIS to prepare a Focused Library for
such Compound, or b) within ninety (90) days after NEOGENESIS provides
the structure of such Compound to MERCK.
5.3 ROYALTIES.
5.3.1 ROYALTIES PAYABLE BY MERCK. Subject to the terms and conditions of this
Agreement, for each Product containing Compound directed against the
specified Target for which it was developed under the Research Program
MERCK shall pay to NEOGENESIS royalties, on a country-by-country basis,
in an amount equal to:
(a) [*] of Net Sales of Products by MERCK, its Affiliates or
sublicensees, provided the sale of the Product would, but for
[*], infringe a Patent Claim in the country of sale, or
(b) [*] of Net Sales of Products by MERCK, its Affiliates or
sublicensees for sales other than those covered in Subsection
5.3.1(a) above, such royalty to be payable for [*] of the First
Commercial Sale of such Product in such country.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
14
Royalties on each Product at the rate set forth above shall be effective
as of the date of First Commercial Sale of Product in a country and shall
continue until either (i) the expiration of the last applicable patent on
such Product in such country in the case of sales under Subsection 5.3.1
(a) above or (ii) until [*] anniversary of the First Commercial Sale in
such country in the case of sales of Product under Subsection 5.3.1 (b)
above, subject to the following conditions:
(x) that only one royalty shall be due with respect to the same unit of
Product; and,
(y) no royalties shall accrue on the disposition of Product in
reasonable quantities by MERCK, Affiliates or its sublicenses as
samples (promotion or otherwise) or as donations (for example, to
non-profit institutions or government agencies for a non-commercial
purpose).
For Compound(s) that NEOG0ENESIS provides, but that already exist in the
Merck compound library, no royalty payments shall be due to NEOGENESIS.
5.3.2 MANAGED PHARMACEUTICAL CONTRACT. MERCK may sell Product(s) to an
independent third party (such as a retailer or wholesaler) and may
subsequently perform services relating to Product(s) and other products
under a managed pharmaceutical benefits contract or other similar
contract. In such cases, it is agreed by the parties that Net Sales shall
be based on the invoice price to independent retailer or wholesaler, as
set forth in the definition of Net Sales in Article I hereof,
notwithstanding that MERCK may receive compensation arising from the
performance of such services.
5.3.3 CHANGE IN SALES PRACTICES. The parties acknowledge that during the term
of this Agreement, MERCK's sales practices for the marketing and
distribution of Product may change to the extent to which the calculation
of the payment for royalties on Net Sales may become impractical or even
impossible. In such event the parties agree to meet and discuss in good
faith new ways of compensating NEOGENESIS to the extent currently
contemplated under Section 5.3.1.
5.3.4. ROYALTIES FOR BULK COMPOUND. In those cases where MERCK sells bulk
Compound that is directed against the Target for which it was developed
under the Research Program, rather than Product in packaged form, to an
independent third party, and does not sell the Product in packaged form
that is prepared by such third party, the royalty obligations of this
Article V shall be applicable to such bulk Compound sold.
5.3.5 COMPULSORY LICENSES. If a compulsory license is granted to a third party
with respect to Product in any country in the Territory with a royalty
rate lower than the royalty rate provided by Section 5.3.1., then the
royalty rate to be
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15
paid by MERCK on Net Sales in that country under Section 5.3.1 shall be
reduced to the rate paid by the compulsory licensee.
5.3.6 THIRD PARTY LICENSES. If, in any country, MERCK requires one or more
patent licenses from third party(ies) in order to make, have made, use or
sell Compound or Product in such country, then [*] the payment of
royalties for such license, and Merck may withhold, as of the effective
date of such third party license(s), up to [*] of the royalties that
otherwise would be owed by MERCK to NEOGENESIS under Section 5.3.1 in
order to pay royalties under such third party license(s). Unused credit
may be carried over into subsequent royalty periods. For purposes of
this Section 5.3.6, the computation of MERCK's total royalty obligation
will not include royalties payable to MERCK Affiliates. MERCK shall
notify NEOGENESIS if MERCK's royalty obligation is reduced pursuant to
this Section 5.3.6 and MERCK shall include an appropriate explanation
of the reduction in the royalty report.
5.4 REPORTS; PAYMENT OF ROYALTY. During the term of this Agreement following
the First Commercial Sale of a Product, within sixty (60) days after the
end of each Calendar Quarter, MERCK shall furnish to NEOGENESIS a
quarterly written report for the Calendar Quarter showing the sales of
all Products subject to royalty payments hereunder sold by MERCK, its
Affiliates and its sublicensees in the Territory during such Calendar
Quarter and the royalties payable under this Agreement, the withholding
taxes, if any, required by law to be deducted with respect to such sales.
Royalties shown to have accrued by each royalty report shall be due and
payable on the date such royalty report is due. MERCK shall keep complete
and accurate records in sufficient detail to enable the royalties payable
hereunder to be determined.
5.5 AUDITS.
(a) Upon the written request of NEOGENESIS and not more than once in
each Calendar Year, MERCK shall permit an independent certified
public accounting firm of nationally recognized standing selected by
NEOGENESIS and reasonably acceptable to MERCK, at NEOGENESIS's
expense, to have access during normal business hours to such of the
records of MERCK as may be reasonably necessary to verify the
accuracy of the royalty reports hereunder for any year ending not
more than twenty-four (24) months prior to the date of such request.
The accounting firm shall disclose to NEOGENESIS only whether the
royalty reports are correct or incorrect and the specific details
concerning any such discrepancies. No other information shall be
provided to NEOGENESIS.
(b) If such accounting firm concludes that additional royalties were
owed during such period, MERCK shall pay the additional royalties
within thirty (30) days of the date NEOGENESIS delivers to MERCK
such
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
16
accounting firm's written report so concluding. The fees charged by
such accounting firm shall be paid by NEOGENESIS, provided that, if
any audit correctly determines that the additional royalties payable
by Merck for such period exceed [*] of the royalties actually paid
for such period, [*], then Merck shall pay the reasonable fees and
expenses charged by such accounting firm.
(c) NEOGENESIS shall treat all information subject to review under this
Section 5.5 in accordance with the confidentiality provisions of
this Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with MERCK obligating it to
retain all such information in confidence.
5.6 PAYMENT EXCHANGE RATE. All payments to be made by MERCK to NEOGENESIS
under this Agreement shall be made 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 NEOGENESIS from
time to time. In the case of sales outside the United States, exchange
conversion of such sales into United States dollars shall be made on a
monthly basis and shall be made at the rate of exchange utilized by MERCK
in its worldwide accounting system prevailing on the [*] business day
preceeding the month in which such sales are recorded by MERCK.
5.7 INCOME TAX WITHHOLDING. If laws, rules or regulations require withholding
of income taxes or other taxes imposed upon payments otherwise due
hereunder, MERCK shall make such withholding payments as required and
subtract such withholding payments from the payments set forth in this
Article V. MERCK shall deliver appropriate proof of payment of the
withholding taxes to NEOGENESIS within a reasonable period of time and
shall make reasonable efforts to cooperate with NEOGENESIS in its efforts
to minimize such withholding taxes.
ARTICLE VI
REPRESENTATIONS, WARRANTIES AND INDEMNITY
6.1 REPRESENTATION AND WARRANTY. NEOGENESIS represents and warrants to MERCK
that as of the date of this Agreement:
(a) to the best of NEOGENESIS's knowledge, the NEOGENESIS Patent Rights
and NEOGENESIS Know-How are subsisting and are not invalid or
unenforceable, in whole or in part;
(b) the compounds contained in the NeoMorph Screening Library are
proprietary NEOGENESIS compounds and, to the best knowledge of
NEOGENESIS, no third party has any rights, intellectual property or
otherwise in or to such compounds;
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
17
(c) it has the full right, power and authority to enter into this
Agreement, to perform the Research Program and to grant the licenses
granted under Article III hereof,
(d) it has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in NEOGENESIS Patent
Rights, NEOGENESIS Know-How, or the compounds contained in the
NeoMorph Screening Library that are the subject of this Agreement;
(e) to the best of NEOGENESIS's knowledge, it is the sole and exclusive
owner of NEOGENESIS Patent Rights, NEOGENESIS Know-How, and the
NeoMorph Screening Library, all of which are free and clear of any
liens, charges and encumbrances, and no other person, corporate or
other private entity, or governmental entity or subdivision thereof,
has or shall have any claim of ownership with respect to the
NEOGENESIS Patent Rights or NEOGENESIS Know-How licensed to MERCK
hereunder, or the compounds contained in the NeoMorph Screening
Library; and
(f) there are no claims, judgments or settlements against or owed by the
NEOGENESIS or, to the best of NEOGENESIS' knowledge, pending or
threatened claims or litigation relating to the NEOGENESIS Patent
Rights, NEOGENESIS Know-How, or the NeoMorph Screening Library.
6.2 INDEMNITY.
(a) Except to the extent due to the negligence or willful misconduct of
MERCK, or material breach by MERCK of any warranty, representation
or obligation under this Agreement, NEOGENESIS shall indemnify,
defend and hold MERCK and its Affiliates, and their respective
directors, officers, employees and agents harmless from and against
any losses, costs, claims, damages, liabilities or expenses
(including reasonable attorneys' fees) to the extent related to
third party claims resulting from (i) the negligence or willful
misconduct of NEOGENESIS under this Agreement or (ii) the material
breach by NEOGENESIS of any warranty, representation or obligation
under this Agreement.
(b) Except to the extent due to the negligence or willful misconduct of
NEOGENESIS, or material breach by NEOGENESIS of any warranty,
representation or obligation under this Agreement, MERCK shall
indemnify, defend and hold NEOGENESIS and its Affiliates, and their
respective directors, officers, employees and agents harmless from
and against any losses, costs, claims, damages, liabilities or
expenses (including reasonable attorney's
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
18
fees) to the extent related to the third party claims resulting from
(i) the negligence or willful misconduct of MERCK under this
Agreement, (ii) the material breach by MERCK of any warranty,
representation or obligation of MERCK under this Agreement, (iii)
the use, manufacture or sale by MERCK of any Compound or Product, or
(iv) claims for infringement of third party intellectual property
rights based on incorporation of MERCK or third party components
(excluding Compounds) into Products.
(c) If a party (the "Indemnitee") intends to claim indemnification under
Section 6.2 herein, it shall promptly notify the other party (the
"Indemnitor") in writing of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such
Indemnification. The failure of the Indemnitee to deliver written
notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve the Indemnitor of any obligation
to the Indemnitee under Section 6.2 herein with respect to any such
action. The Indemnitee, its employees and agents, shall reasonably
cooperate with the Indemnitor and its legal representatives in
connection with any claim, demand, action or other proceeding
covered by this Section 6.2.
(d) Except for third party claims pursuant to Section 6.2, and except
for breach of the confidentiality and non-use obligation under
Section 4.1, neither party shall be liable for indirect,
consequential, special, or punitive damages under this Agreement.
ARTICLE VII
PATENT PROVISIONS
7.1 FILING, PROSECUTION, MAINTENANCE, ENFORCEMENT AND DEFENSE OF MERCK PATENT
RIGHTS. MERCK shall have the sole right, at its expense, to prepare,
file, prosecute, maintain, enforce and defend the Merck Patent Rights
including without limitation patents and patent applications which claim,
cover or relate to Compounds and/or Products, provided that NEOGENESIS
shall have the right and the obligation, at its expense, to prepare,
file, prosecute, maintain, enforce and defend the NEOGENESIS Patent
Rights which claim, cover or relate to Compounds so long as such
NEOGENESIS Patent Rights are not assigned to Merck pursuant to Section
7.2 below.
7.2 ASSIGNMENT OF PATENT RIGHTS IN COMPOUNDS. In the event of any issued
patents or patent applications included within the NEOGENESIS Patent
Rights which claim, cover or relate to Compounds, NEOGENESIS shall
promptly disclose to MERCK such issued patents and patent applications
and all reasonably relevant information regarding such issued patents and
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
19
patent application including all patent opinions obtained by NEOGENESIS
related thereto. Further, NEOGENESIS hereby agrees to make all reasonable
efforts to assign all right, title and interest in and to such issued
patents or patent applications to MERCK to the extent that such issued
patents or patent applications claim, cover or relate to Compounds.
NEOGENESIS shall execute such documents and perform such acts at MERCK's
expense as may be reasonably necessary to effect an assignment of such
NEOGENESIS Patent Rights to MERCK in a timely manner. Any patents or
patent applications so assigned to MERCK shall be MERCK Patent Rights
hereunder. In connection with any such assignment, NEOGENESIS and MERCK
will cooperate fully and will provide each other with any information or
assistance that either may reasonably request.
7.3 FILING, PROSECUTION, AND MAINTENANCE OF NEOGENESIS PATENT RIGHTS.
NEOGENESIS shall have the sole right, at its expense, to prepare, file,
prosecute, maintain, enforce and defend the NEOGENESIS Patent Rights
including without limitation patents and patent applications which claim,
cover or relate to Technology Improvements.
7.4 OPTION OF MERCK TO PROSECUTE AND MAINTAIN NEOGENESIS PATENT RIGHTS.
NEOGENESIS shall give notice to MERCK of any desire to cease prosecution
and/or maintenance of NEOGENESIS Patent Rights licensed to MERCK
hereunder, and, in such case, shall permit MERCK, at its sole discretion,
to continue prosecution or maintenance at its own expense. If MERCK
elects to continue prosecution or maintenance, NEOGENESIS shall execute
such documents and perform such acts at MERCK's expense as may be
reasonably necessary to effect an assignment of such NEOGENESIS Patent
Rights to MERCK in a timely manner to allow MERCK to continue such
prosecution or maintenance. Any patents or patent applications so
assigned shall be MERCK Patent Rights hereunder.
7.5 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE.
(a) NEOGENESIS shall, within ten (10) days of learning of such event,
inform MERCK of any request for, or filing or declaration, any
interference, opposition, or reexamination relating to NEOGENESIS
Patent Rights licensed to MERCK hereunder. MERCK and NEOGENESIS
shall thereafter consult and cooperate fully to determine a course
of action with respect to any such proceeding. MERCK shall have the
right to review and approve any submission to be made in connection
with such proceeding.
(b) NEOGENESIS shall keep MERCK 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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
20
(c) NEOGENESIS shall bear the expense of any interference, opposition,
reexamination, or reissue proceeding relating NEOGENESIS Patent
Rights.
7.6 ENFORCEMENT AND DEFENSE.
(a) NEOGENESIS shall give MERCK notice of either (i) any infringement of
NEOGENESIS Patent Rights licensed to MERCK hereunder , or (ii) any
misappropriation or misuse of NEOGENESIS Know-How, that may come to
NEOGENESIS's attention. MERCK and NEOGENESIS shall thereafter
consult and cooperate fully to determine a course of action,
including but not limited to the commencement of legal action by
either or both MERCK and NEOGENESIS, to terminate any infringement
of such NEOGENESIS Patent Rights or any misappropriation or misuse
of NEOGENESIS Know-How. However, NEOGENESIS, upon notice to MERCK,
shall have the first right to initiate and prosecute such legal
action at its own expense and in the name of NEOGENESIS and MERCK,
or to control the defense of any declaratory judgment action
relating to such NEOGENESIS Patent Rights or NEOGENESIS Know-How.
NEOGENESIS shall promptly inform MERCK if it elects not to exercise
such first right and MERCK shall thereafter have the right to either
initiate and prosecute such action or to control the defense of such
declaratory judgment action in the name of MERCK and, if necessary,
NEOGENESIS.
(b) In the event that NEOGENESIS elects not to initiate and prosecute an
action as provided in paragraph (a), and MERCK elects to do so, the
costs of any agreed-upon course of action to terminate infringement
of such NEOGENESIS Patent Rights or misappropriation or misuse of
NEOGENESIS Know-How, including the costs of any legal action
commenced or the defense of any declaratory judgment, shall be
shared equally by NEOGENESIS and MERCK.
(c) For any action to terminate any infringement of NEOGENESIS Patent
Rights or any misappropriation or misuse of NEOGENESIS Know-How, in
the event that MERCK is unable to initiate or prosecute such action
solely in its own name, NEOGENESIS will join such action voluntarily
and will execute and cause its Affiliates to execute all documents
necessary for MERCK to initiate litigation to prosecute and maintain
such action. In connection with any action, MERCK and NEOGENESIS
will cooperate fully and will provide each other with any
information or assistance that either may reasonably request. Each
party shall keep the other informed of developments in any action or
proceeding, including, to the extent permissible by law, the status
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
21
of any settlement negotiations and the terms of any offer related
thereto.
(d) Any recovery obtained by either or both MERCK and NEOGENESIS in
connection with or as a result of any action contemplated by Section
7.6, whether by settlement or otherwise, shall be shared in order as
follows: [*]
7.7 NEOGENESIS shall inform MERCK of any certification regarding any
NEOGENESIS Patent Rights it has received pursuant to either 21 U.S.C.
ss.ss.355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under Canada's Patented
Medicines (Notice of Compliance) Regulation Article 5 and shall provide
MERCK with a copy of such certification within five (5) days of receipt.
NEOGENESIS's and MERCK's rights with respect to the initiation and
prosecution of any legal action as a result of such certification or any
recovery obtained as a result of such legal action shall be as defined in
Section 7.6 hereof; provided, however, the NEOGENESIS shall exercise its
first right to initiate and prosecute any action and shall inform MERCK
of such decision within ten (10) days of receipt of the certification,
after which time MERCK shall have the right to initiate and prosecute
such action.
7.8 ABANDONMENT. NEOGENESIS shall promptly give notice to MERCK of the grant,
lapse, revocation, surrender, invalidation or abandonment of any
NEOGENESIS Patent Rights licensed to MERCK for which NEOGENESIS is
responsible for the filing, prosecution and maintenance.
7.9 PATENT TERM RESTORATION. The parties hereto shall cooperate with each
other in obtaining patent term restoration or supplemental protection
certificates or their equivalents in any country in the Territory where
applicable to NEOGENESIS Patent Rights. In the event that elections with
respect to obtaining such patent term restoration are to be made, MERCK
shall have the right to make the election and NEOGENESIS agrees to abide
by such election.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
22
ARTICLE VIII
TERM AND TERMINATION
8.1 TERM AND EXPIRATION. This Agreement shall be effective as of the
Effective Date and unless terminated earlier pursuant to Sections 8.2 or
8.3 below, the term of this Agreement shall continue in effect until
expiration of all royalty obligations hereunder. Upon expiration of this
Agreement due to expiration of all royalty obligations hereunder, MERCK's
licenses pursuant to Section 3.1 and 3.2 shall become fully paid-up,
perpetual licenses.
8.2 TERMINATION BY MERCK. Notwithstanding anything contained herein to the
contrary, MERCK shall have the right to terminate this Agreement at any
time in its sole discretion by giving ninety (90) days advance written
notice to NEOGENESIS. In the event of such termination (i) the rights and
obligations of the parties hereunder shall terminate and (ii) MERCK shall
pay NEOGENESIS any amounts due and owing under Section 5.1, provided that
NEOGENESIS has performed all of its obligations required to be performed
as of the date of termination. Notwithstanding the foregoing, termination
of this Agreement under Section 8.2 shall not affect NEOGENESIS' rights
under Section 5.2 or 5.3 with respect to any Compound as defined in
Section 1.6 herein (or Product containing such Compound) where such
Compound or Product (a) is directed against the specified Target for
which it was developed under the Research Program, and (b) achieves the
requirements of Sections 5.2 or 5.3 in accordance with the terms and
conditions set forth therein, provided that NEOGENESIS has performed all
of its obligations required to be performed as of the effective date of
termination.
8.3 TERMINATION.
8.3.1 TERMINATION FOR CAUSE. This Agreement may be terminated by notice by
either party at any time during the term of this Agreement:
(a) if the other party is in breach of its material obligations
hereunder by causes and reasons within its control and has not cured
such breach within ninety (90) days after notice requesting cure of
the breach; or
(b) upon the filing or institution of bankruptcy, reorganization,
liquidation or receivership proceedings, or upon an assignment of a
substantial portion of the assets for the benefit of creditors by
the other party; PROVIDED, HOWEVER, in the case of any involuntary
bankruptcy proceeding such right to terminate shall only become
effective if the party consents to the involuntary bankruptcy or
such proceeding is not dismissed within ninety (90) days after the
filing thereof.
(c) NEOGENESIS may, in lieu of termination under Section 8.3.1 (a)
above, suspend work under this Agreement, upon written notice to
MERCK, if MERCK fails to pay to NEOGENESIS any amounts due
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
23
and owing under this Agreement, which payment has not been received
by NEOGENESIS within thirty (30) days of receipt of such notice by
MERCK.
8.3.2 EFFECT OF TERMINATION FOR CAUSE ON LICENSE.
(a) In the event MERCK terminates this Agreement under Section 8.3.1 (a)
due to material breach by NEOGENESIS then, in addition to any other
remedies available to MERCK at law or equity, MERCK's licenses
pursuant to Sections 3.1 and 3.2 shall become perpetual licenses and
the milestone and/or royalty payment[s] to be paid by MERCK, if any,
shall be determined by the arbitrators. NEOGENESIS shall, within
thirty (30) days after such termination return or cause to be
returned to MERCK all Compounds, Materials, MERCK Proprietary
Information and MERCK Know-How in NEOGENESIS's possession, as well
as any other material provided by MERCK in any medium. In the event
that NEOGENESIS terminates this Agreement under Section 8.3.1(a),
MERCK's licenses pursuant to Section 3.1 and 3.2 shall terminate as
of such termination date and MERCK shall, within thirty (30) days
after such termination, return or cause to be returned to NEOGENESIS
all NEOGENESIS Proprietary Information.
(b) In the event that MERCK terminates this Agreement under Section
8.3.1 (b) or this Agreement is terminated due to the rejection of
this Agreement by or on behalf of NEOGENESIS under Section 365 of
the United States Bankruptcy Code (the "Code"), all licenses and
rights to licenses granted under or pursuant to this Agreement by
NEOGENESIS to MERCK are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Code, licenses of rights to
"intellectual property" as defined under Section 101(35A) of the
Code. The parties agree that MERCK, as a licensee of such rights
under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Code, and that upon commencement of a
bankruptcy proceeding by or against NEOGENESIS under the Code, MERCK
shall be entitled to a complete duplicate of or complete access to
(as MERCK deems appropriate), any such intellectual property and all
embodiments of such intellectual property. Such intellectual
property and all embodiments thereof shall be promptly delivered to
MERCK (i) upon any such commencement of a bankruptcy proceeding upon
written request therefore by MERCK, unless NEOGENESIS elects to
continue to perform all of its obligations under this Agreement or
(ii) if not delivered under (i) above, upon the rejection of this
Agreement by or on behalf of NEOGENESIS upon written request
therefore by MERCK.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
24
The foregoing is without prejudice to any rights MERCK may have
arising under the Code or other applicable law.
8.4 EFFECT OF EXPIRATION OR TERMINATION. Expiration or termination of the
Agreement shall not relieve the parties of any obligation accruing prior
to such expiration or termination, and the provisions of Section 2.8 and
Article IV shall survive the expiration or termination of the Agreement,
and the provisions of Article IV shall continue in effect for [*]. Any
expiration or early termination of this Agreement shall be without
prejudice to the rights of either party against the other accrued or
accruing under this Agreement prior to termination.
ARTICLE IX
MISCELLANEOUS
9.1. FORCE MAJEURE. Neither party shall be held liable or responsible to the
other party nor be deemed to have defaulted under or breached the
Agreement for failure or delay 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, but
not limited to, fire, floods, embargoes, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes,
lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party. The
affected party shall notify the other party of such force majeure
circumstances as soon as reasonably practical.
9.2. ASSIGNMENT. The Agreement may not be assigned or otherwise transferred,
nor, except as expressly provided hereunder, may any right or obligations
hereunder be assigned or transferred, by either party without the consent
of the other party; PROVIDE , 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 related to a Product or to its
business, or in the event of its merger or consolidation or change in
control or similar transaction. any permitted assignee shall assume all
obligations of its assignor under the Agreement. Any attempted assignment
not in accordance with this Section 9.2 shall 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 shall not in any way be affected or impaired
thereby, unless the absence of the invalidated provision(s) adversely
affect the substantive rights of the parties. The parties shall in such
an instance use their best efforts to replace the invalid, illegal or
unenforceable provision(s) with valid, legal
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
25
and enforceable provision(s) which, insofar as practical, implement the
purposes of this Agreement.
9.4. NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally, sent by telecopier (and promptly confirmed by personal
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to NEOGENESIS, to: Neogenesis, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxx,
President & Chief Scientific
Officer
if to MERCK, to: Merck & Co., Inc.
Xxx Xxxxx Xxxxx X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Vice President,
External Scientific Affairs,
Worldwide
with a copy to: Attention: Office of the Secretary
or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any
such communication shall be deemed to have been given when delivered if
personally delivered or sent by telecopier on a business day, on the
business day after dispatch if sent by nationally-recognized overnight
courier and on the third business day following the date of mailing if
sent by mail.
9.5. APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the state of New Jersey and the patent laws
of the United States without reference to any rules of conflict of laws
or renvoi.
9.6. DISPUTE RESOLUTION. The parties shall negotiate in good faith and use
reasonable efforts to settle any dispute, controversy or claim arising
from or related to this Agreement or the breach thereof. If the parties
do not fully settle, and a party wishes to pursue the matter, each such
dispute, controversy or claim that is not an "Excluded Claim" shall be
finally resolved by binding arbitration in accordance with the Commercial
Arbitration Rules and Supplementary Procedures for Large Complex Disputes
of the American Arbitration Association ("AAA"), and judgment on the
arbitration award may be entered in any court having jurisdiction
thereof. The arbitration shall be conducted by a panel of three persons
experienced in the biotechnology and pharmaceutical business: within 30
days after initiation of arbitration, each party shall select one person
to act as arbitrator and the two party-selected arbitrators shall select
a third arbitrator within 30 days of their
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
26
appointment. If the arbitrators selected by the parties are unable or
fail to agree upon the third arbitrator, the third arbitrator shall be
appointed by the AAA. The place of arbitration shall be New York, New
York. Either party may apply to the arbitrators for interim injunctive
relief until the arbitration award is rendered or the controversy is
otherwise resolved. Either party also may, without waiving any remedy
under this Agreement, seek from any court having jurisdiction any
injunctive or provisional relief necessary to protect the rights or
property of that party pending the arbitration award. The arbitrators
shall have no authority to award punitive or any other type of damages
not measured by a party's compensatory damages. Each party shall bear its
own costs and expenses and attorneys' fees and an equal share of the
arbitrators' and any administrative fees of arbitration, provided that
the non-prevailing party in any arbitration hereunder shall reimburse the
reasonable fees and costs of the prevailing party for such arbitration.
Except to the extent necessary to confirm an award or as may be required
by law, neither a party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written consent
of both parties. In no event shall an arbitration be initiated after the
date when commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the applicable New York
statute of limitations. As used in this Section, the term "Excluded
Claim" shall mean a dispute, controversy or claim that concerns (a) the
validity or infringement of a patent, trademark or copyright; or (b) any
antitrust, anti-monopoly or competition law or regulation, whether or not
statutory.
9.7 ENTIRE AGREEMENT. The Agreement contains the entire understanding of the
parties with respect to the Research Program. All express or implied
agreements and understandings, either oral or written, heretofore made
with respect to the Research Program are expressly merged in and made a
part of the Agreement. The Agreement may be amended, or any term hereof
modified, only by a written instrument duly executed by both parties
hereto.
9.8 HEADINGS. The captions to the several Articles and Sections hereof are
not a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
9.9 INDEPENDENT CONTRACTORS. It is expressly agreed that NEOGENESIS and MERCK
shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture or agency.
Neither NEOGENESIS nor MERCK shall have the authority to make any
statements, representations or commitments of any kind, or to take any
action, which shall be binding on the other, without the prior written
consent of the other party.
9.10 WAIVER. The waiver by either party hereto of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed
a
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
waiver of any other right hereunder or of any other breach or failure by
said other party whether of a similar nature or otherwise.
9.11 COUNTERPARTS. The Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
9.12 WAIVER OF RULE OF CONSTRUCTION. Each party has had the opportunity to
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction that
any ambiguity in this Agreement shall be construed against the drafting
party shall not apply.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
MERCK & CO., INC. NEOGENESIS
/s/ XXXXXXX X. XXXXXXXXX /s/ XXXXXX XXXXXX
------------------------------------ ------------------------------------
BY: Xxxxxxx X. Xxxxxxxxx BY: Xxxxxx Xxxxxx
TITLE: Chairman, President & CEO TITLE: President & CEO
DATE: 11/20/00 DATE: 11/15/00
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
