Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
EXCLUSIVE LICENSE AGREEMENT
BY AND BETWEEN
XXX XXXXX AND COMPANY
AND
SEPRACOR INC.
Table of Contents
Page
ARTICLE 1 DEFINITIONS........................................................................................1
1.1 Affiliate..........................................................................................1
1.2 Basic Patent Rights................................................................................2
1.3 Business Day.......................................................................................2
1.4 Calendar Year......................................................................................2
1.5 Change of Control..................................................................................2
1.6 Combination Product................................................................................2
1.7 DDS Formulation....................................................................................2
1.8 Dollars............................................................................................2
1.9 Effective Date.....................................................................................3
1.10 First Commercial Sale..............................................................................3
1.11 HSR Act............................................................................................3
1.12 Improvement........................................................................................3
1.13 Improvement Patent Rights..........................................................................3
1.14 Licensed Technology................................................................................3
1.15 Native R-fluoxetine Product........................................................................3
1.16 NDA................................................................................................3
1.17 Net Sales..........................................................................................4
1.18 Patent Rights......................................................................................5
1.19 Payment Period.....................................................................................5
1.20 Permitted Sublicensee..............................................................................5
1.21 Phase I Clinical Study.............................................................................5
1.22 Phase III Clinical Study...........................................................................5
1.23 Product............................................................................................5
1.24 Proprietary Information............................................................................5
1.25 R-fluoxetine.......................................................................................6
1.26 Regulatory Application.............................................................................6
1.27 Sepracor Know-How..................................................................................6
1.28 United States......................................................................................7
1.29 Valid Claim........................................................................................7
ARTICLE 2 LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION............................................................................................7
2.1 Exclusive License Grant............................................................................7
(a) License.......................................................................7
(b) Right to Sublicense...........................................................7
2.2 Sepracor Transfers and Disclosure of Information...................................................8
(a) Transfer of IND/On-Going Studies..............................................8
(b) Disclosure of Sepracor Know-How...............................................8
i
2.3 HSR Filing and Approvals...........................................................................9
(a) HSR Filing....................................................................9
(b) Sepracor's Obligations.......................................................10
(c) Additional Approvals.........................................................10
(d) Costs of Filings.............................................................10
2.4 Lilly's Development Obligations...................................................................10
(a) Lilly Diligence..............................................................10
(b) Opportunity to Co-Promote In the United States...............................12
(c) Research and Development Activities..........................................14
(d) Product Registrations: Pricing Reimbursement Approvals
.............................................................................14
(e) Data.........................................................................14
(f) Assistance by Sepracor.......................................................14
2.5 Independent Discoveries by Lilly..................................................................15
2.6 Other Studies.....................................................................................15
2.7 Progress Reports to Sepracor......................................................................16
2.8 Conversion of License.............................................................................16
ARTICLE 3 PAYMENTS; ROYALTIES AND REPORTS...................................................................16
3.1 Consideration for License.........................................................................16
3.2 Milestones for License............................................................................16
3.3 Royalties, United States..........................................................................17
(a) Royalty Rates................................................................17
(b) Term of Royalty Obligations..................................................17
(c) Royalty Increase Date........................................................17
(d) Royalty Reductions...........................................................18
3.4 Royalties, Outside the United States..............................................................19
(a) Royalty Rate.................................................................19
(b) Term of Royalty Obligations..................................................19
(c) Royalty Reduction............................................................19
3.5 Third Party Royalties.............................................................................20
3.6 Obligations and Licenses After Royalty Term Expiration............................................21
3.7 Samples...........................................................................................21
3.8 One Royalty Payment...............................................................................21
3.9 Payment and Report Timing.........................................................................21
3.10 Payments to Sepracor..............................................................................22
3.11 Books and Records; Audits.........................................................................22
3.12 Reports and Invoices Conclusively Correct.........................................................23
3.13 No Reduction in Payments..........................................................................23
ARTICLE 4 PATENTS & TRADEMARKS..............................................................................23
4.1 Filing, Prosecution and Maintenance of Patent Rights..............................................23
(a) Prosecution by Sepracor......................................................23
(b) Option of Lilly to Prosecute and Maintain Patents............................24
ii
4.2 Lilly and Joint Inventions........................................................................24
4.3 Enforcement of Patents............................................................................24
4.4 Consent for Settlement............................................................................25
4.5 Actions Against the Parties.......................................................................25
4.6 Trademarks........................................................................................25
4.7 Studies and Information in Support of Patent Rights...............................................25
ARTICLE 5 INFORMATION AND CONFIDENTIALITY...................................................................25
5.1 Confidential Information and Nondisclosure........................................................25
(a) Confidential Information.....................................................25
(b) Disclosure to Agents.........................................................26
5.2 Public Announcements..............................................................................27
ARTICLE 6 NOTICES...........................................................................................27
ARTICLE 7 TERM AND TERMINATION..............................................................................28
7.1 Term..............................................................................................28
7.2 Termination.......................................................................................28
7.3 Liquidation.......................................................................................31
ARTICLE 8 FORCE MAJEURE.....................................................................................31
ARTICLE 9 REPRESENTATIONS & WARRANTIES, COVENANTS...........................................................31
ARTICLE 10 INDEMNIFICATION.............................................................................................33
10.1 Lilly.............................................................................................33
10.2 Sepracor..........................................................................................33
10.3 Conditions of Indemnification.....................................................................33
ARTICLE 11 MISCELLANEOUS...............................................................................................34
11.1 Modifications.....................................................................................34
11.2 Assignments and Change of Control.................................................................34
11.3 Headings..........................................................................................34
11.4 Invalidity........................................................................................34
11.5 Governing Law.....................................................................................34
11.6 Waiver............................................................................................34
11.7 No Other Relationship.............................................................................34
11.8 Entire Understanding..............................................................................35
11.9 Responsibility for Taxes..........................................................................35
11.10 Compliance With Laws..............................................................................35
11.11 Counterparts......................................................................................35
11.12 Exhibits and Appendices...........................................................................35
iii
APPENDIX 1.2
APPENDIX 1.13
APPENDIX 2.4(a)
APPENDIX 3.3
APPENDIX 5.2
APPENDIX 9.2
iv
EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is by and between
Xxx Xxxxx and Company, a corporation organized and existing under the laws of
Indiana and having its principal place of business at Lilly Xxxxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000 (hereinafter referred to as "Lilly")
and
Sepracor Inc., a Delaware corporation having its principal place of business at
000 Xxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000 (hereinafter referred to as
"Sepracor"). Sepracor and Lilly are sometimes referred to herein individually as
a party and collectively as the parties. References to "Lilly" and "Sepracor"
shall include their respective Affiliates (which term is hereinafter defined).
WHEREAS, Sepracor possesses certain intellectual property rights and
regulatory filings relating to R-fluoxetine; and
WHEREAS, Lilly possesses extensive capabilities in marketing,
manufacturing, development and commercialization of pharmaceutical products,
including fluoxetine, on a worldwide basis; and
WHEREAS, Lilly desires to engage in research, development, marketing
and sale of pharmaceutical products involving R-fluoxetine as an active
ingredient; and
WHEREAS, Lilly desires to acquire from Sepracor, and Sepracor is
willing to grant to Lilly, an exclusive license under Sepracor's intellectual
property rights relating to R-fluoxetine, including patents and know-how, upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, terms and conditions hereafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lilly and Sepracor hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the respective meanings set forth below:
1.1 Affiliate. "Affiliate" shall mean any individual or entity
directly or indirectly controlling, controlled by or under common control with,
a party to this Agreement.
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
For purposes of this Agreement, the direct or indirect ownership of greater than
[**] of the outstanding voting securities of an entity shall be deemed to
constitute control. An individual or entity shall be considered an "Affiliate"
only for so long as such control exists.
1.2 Basic Patent Rights. "Basic Patent Rights" shall mean rights
under any patents listed in Appendix 1.2 hereto, any and all substitutions,
divisions, continuations, continuations-in-part, reissues, renewals,
registrations, confirmations, re-examinations, extensions, supplementary
protection certificates or any like filing thereof, and provisional applications
of any such patents and patent applications, and any international equivalent of
any of the foregoing.
1.3 Business Day. "Business Day" shall mean a day on which banks are
open for business in both Marlborough, Massachusetts and Indianapolis, Indiana.
1.4 Calendar Year. "Calendar Year" shall mean each successive period
of twelve (12) months commencing on January 1 and ending on December 31, for so
long as this Agreement is in effect.
1.5 Change of Control. "Change of Control" shall mean acquisition by
a third party of [**] or more of the stock of a party to this Agreement, or
transfer to a third party of Effective Control of a party to this Agreement as a
result of any other transaction. "Effective Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of voting
securities, by contract or otherwise. Notwithstanding the applicability of the
foregoing, an entity which shall be consolidated pursuant to United States
Generally Accepted Accounting Principles ("GAAP") with either Lilly or Sepracor
shall be deemed under Effective Control for purposes of this Agreement.
1.6 Combination Product. "Combination Product" shall mean Product
which comprises two (2) or more active ingredients at least one (1) of which is
R-fluoxetine.
1.7 DDS Formulation. "DDS Formulation" shall mean Product based on a
drug delivery system that enables administration by a route other than oral
delivery, or which significantly alters release characteristics as compared to
conventional, non-controlled release oral formulations.
1.8 Dollars. "Dollar" shall mean lawful money of the United States of
America.
2
1.9 Effective Date. "Effective Date" shall mean the latest of (a) the
date on which Sepracor executes this Agreement; (b) the date on which Lilly
executes this Agreement; and (c) if applicable, the next Business Day following
the expiration or earlier termination of any notice and waiting period wider the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
1.10 First Commercial Sale. "First Commercial Sale" shall mean, with
respect to any Product, the first sale of Product by Lilly or Permitted
Sublicensee to an independent third party.
1.11 HSR Act. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
1.12 Improvement. "Improvement" shall mean any enhancement in the
formulation, ingredients, preparation, presentation, means of delivery, dosage,
package of, manufacture, or any new or expanded therapeutic indications(s) for
or uses of, Product or R-fluoxetine, in each case which is developed prior to or
during the term of this Agreement by or on behalf of Sepracor, or conceived
jointly by employees or agents of Sepracor and Lilly.
1.13 Improvement Patent Rights. "Improvement Patent Rights" shall
mean rights under any patent or patent application listed in Appendix 1.13
hereto, and any and all substitutions, continuations, divisions,
continuations-in-part, reissues, renewals, registrations, confirmations,
reexaminations, extensions including supplementary protection certificates,
foreign equivalents or counterparts, and other filings thereof, and any patent
or patent application, and any and all substitutions, continuations, divisions,
continuations-in-part, reissues, renewals, registrations, confirmations,
reexaminations, extensions including supplementary protection certificates,
foreign equivalents or counterparts, and other filings thereof, containing
claims that cover an Improvement.
1.14 Licensed Technology. "Licensed Technology" shall mean Patent
Rights, Sepracor Know-How, and Improvements.
1.15 Native R-fluoxetine Product. "Native R-fluoxetine Product" shall
mean Product that is neither Combination Product nor DDS Formulation.
1.16 NDA. "NDA" shall mean, with respect to the United States, a New
Drug Application filed with the United States Food and Drug Administration
seeking authorization to market Product in the United States, and with respect
to any country outside the United States, an application submitted to the
relevant drug regulatory authorities seeking authorization to market Product in
such country.
3
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.17 Net Sales. "Net Sales" shall mean, on a country by country
basis, with respect to a Product, the gross amount invoiced by Lilly or
Permitted Sublicensees to unrelated third parties, for the Product in the
country, less:
a. any [**];
b. any [**];
c. any [**]
d. any [**];
e. any [**]; and
f. any [**].
Such amounts shall be determined from the books and records of Lilly or any
United States Permitted Sublicensee maintained in accordance with United States
GAAP, or in the case of non- United States Permitted Sublicensees such other
similar applicable accounting standards, consistently applied. Lilly further
agrees in determining such amounts, it will use Lilly's then-current standard
procedures and methodology, including Lilly's then-current standard exchange
rate methodology for the translation of foreign currency sales into Dollars or
in the case of Permitted Sublicensees, similar methodology, consistently
applied. Lilly's standard exchange rate methodology will be consistent with that
used in Lilly's external financial reporting which shall be GAAP compliant or,
in the case of non-United States Affiliates and Permitted Sublicensees,
compliant with other similar applicable accounting standards.
(1) In the event that Product is sold as a Combination Product which
is [**] Net Sales of that Combination Product, for the purposes of determining
royalty payments, shall be determined by [**] shall be calculated [**]. It shall
be calculated by [**]. This calculation shall be performed on a
country-by-country basis for each country where Combination Product is sold.
(2) In the event that Product is sold as a Combination Product which
is [**], Net Sales of that Combination Product, for the purposes of determining
royalty payments shall be determined by [**] shall be calculated [**]. It shall
be calculated by [**]. This calculation shall be performed on a
country-by-country basis for each country where Combination Product is sold.
4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(3) In the event that Native R-fluoxetine Product is not sold at all
in a country, [**] of actual Net Sales of Combination Product in that country
shall be used for the purpose of determining royalty payments.
(4) Actual Net Sales of DDS Formulations shall be used for the
purpose of determining royalty payments.
For the purposes of this Section 1.17, the term "unit" shall mean a discrete
manufactured unit, such as a tablet, capsule, caplet, soft elastic gelatin
capsule, and the like.
1.18 Patent Rights. "Patent Rights" shall mean Basic Patent Rights
and Improvement Patent Rights.
1.19 Payment Period. "Payment Period" shall mean a calendar quarter
ending on March 31st, June 30th, September 30th, or December 31st.
1.20 Permitted Sublicensee. "Permitted Sublicensee" shall mean the
holder of any sublicense granted in writing pursuant to Section 2.1(b) of this
Agreement.
1.21 Phase I Clinical Study. "Phase I Clinical Study" shall mean a
clinical study conducted in accordance with good clinical practice ("GCP") in a
small number of healthy volunteers or patients designed or intended to establish
an initial safety profile, pharmacodynamics or pharmacokinetics of Product.
1.22 Phase III Clinical Study. "Phase III Clinical Study" shall mean
a human clinical trial involving Product conducted in accordance with 21 C.F.R.
ss. 312.21(c), or any successor thereto.
1.23 Product. "Product" shall mean any form or dosage of
pharmaceutical composition or preparation in final form (including Combination
Product and DDS Formulation) labeled and packaged for sale by prescription,
over-the-counter or any other method, which contains R-fluoxetine as an active
ingredient.
1.24 Proprietary Information. "Proprietary Information" shall mean
all technical and scientific know-how and information, pre-clinical and clinical
trial results, computer programs, knowledge, technology, means, methods,
processes, practices, formulas, techniques, procedures, technical assistance,
designs, drawings, apparatus, written and oral representations of data,
specifications, assembly procedures, schematics and other valuable information
of whatever nature, whether confidential or not, and all other scientific,
clinical, regulatory, marketing, financial and
5
commercial information or data, whether communicated in writing, verbally or
electronically, which is provided by one party to the other party in connection
with this Agreement. When Proprietary Information is disclosed in a manner other
than in writing, it shall be reduced to written form, marked "Confidential" and
transmitted to the receiving party within thirty (30) Business Days of
disclosure to the receiving party.
1.25 R-fluoxetine. "R-fluoxetine" shall mean any form (including,
without limitation, any salt, hydrate, crystalline structure or the like) of the
chemical compound known as the R(-) isomer of fluoxetine, also identified by the
chemical name (-)N-methyl-3-phenyl-3-[(oc,oc,oc-trifluoro-p-tolyl)-oxy]
-propylamine, or any metabolite thereof.
1.26 Regulatory Application. "Regulatory Application" shall mean any
application or request necessary for the development, manufacture, distribution,
marketing, promotion, offer for sale, use, import, export or sale of Product,
including but not limited to, any applications or requests for: (i) approval of
Product, including any NDAs, and supplements and amendments thereto; (ii) pre-
and post-approval marketing authorizations (including any applications for
prerequisite manufacturing approval or authorization related thereto); (iii)
labeling approval; (iv) technical, medical and scientific licenses; and (v)
registrations or authorizations from any national, regional, state or local
regulatory agency, department, bureau, commission, council or other governmental
entity necessary for the development, manufacture, distribution, marketing,
promotion, offer for sale, use, import, export or sale of Product.
1.27 Sepracor Know-How. "Sepracor Know-How" shall mean any of
Sepracor's information and materials, relating to the research, development,
registration, manufacture, marketing, use or sale of R-fluoxetine or Product
which prior to or during the term of this Agreement are developed by or at the
request of Sepracor or in Sepracor's possession or control through license or
otherwise (provided that Sepracor is permitted to make disclosure thereof to
Lilly without violating the terms of any third party agreement), and which are
not generally known. Sepracor Know-How shall include, without limitation,
discoveries, practices, methods, knowledge, processes, formulas, data, ideas,
skill, experience, inventions, technology, trade secrets, manufacturing
procedures, test procedures, purification and isolation techniques,
instructions, test data and other intellectual property (patentable or
otherwise) relating to R-fluoxetine or Product. Sepracor Know-How shall also
include, without limitation: (i) all biological, chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical, clinical, safety,
manufacturing and quality control data and information related to R-fluoxetine;
(ii) assays and biological methodology necessary or useful for development,
manufacture, use or sale of R-fluoxetine or Product; and (iii) all applications,
registrations, licenses, authorizations, approvals and correspondences submitted
to or received from any
6
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
regulatory authorities with jurisdiction over an investigational drug containing
R-fluoxetine created by or for Sepracor (including, without limitation, minutes
and official contact reports relating to any communications with any regulatory
authority with jurisdiction over an investigational drug containing
R-fluoxetine).
1.28 United States. "United States" shall mean the United States of
America and its territories and possessions.
1.29 Valid Claim. "Valid Claim" shall mean, with respect to a
country, a claim of any unexpired patent, included within Patent Rights, in such
country which (i) has not been revoked or held unenforceable or invalid by a
decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal; or (ii) has not
been abandoned, disclaimed, or admitted to be invalid or unenforceable through
reissue.
ARTICLE 2
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License. Sepracor hereby grants to Lilly, as of the Effective
Date, an exclusive, worldwide license (exclusive even as to Sepracor except as
may be required by Sepracor in order to comply with its obligations under this
Agreement) to discover, develop, make, have made, import, export, use,
distribute, market, promote, offer for sale and sell R-fluoxetine and Product
under Licensed Technology. In addition, Sepracor hereby grants to Lilly a right
of reference to Sepracor IND [**] as of the date this Agreement was fully
executed by the parties; provided, however, that such right of reference shall
be revoked in the event that this Agreement is not approved pursuant to the HSR
Act.
(b) Right to Sublicense. Lilly shall have the right to sublicense any
of the licenses granted under Section 2.1(a) through written sublicense
agreements only provided that Lilly remains responsible to Sepracor under this
Agreement, and each party granted a sublicense hereunder confirms in writing to
Lilly that it agrees to be bound by all of the terms and conditions contained in
the Agreement; provided further that any sublicense in the United States shall
require Sepracor's prior written consent, which shall not be unreasonably
withheld. Lilly shall have no other right to sublicense.
7
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
2.2 Sepracor Transfers and Disclosure of Information.
(a) Transfer of IND/On-Going Studies. Promptly after completion of
any on-going Phase I studies, Sepracor shall use reasonable efforts to transfer
Sepracor's IND [**] to Lilly. In addition, Sepracor shall proceed with the
orderly completion of any other on-going studies, including toxicology studies,
and transfer of any data or information arising therefrom, necessary to timely
and efficiently commence or complete any clinical studies. This obligation shall
also apply to any other Regulatory Application, data, or information in
Sepracor's possession or control for Product in any other country.
(i) With regard to Sepracor's on-going Phase I study identified
by Protocol [**], Lilly shall reimburse Sepracor for costs
and expenses incurred by Sepracor in connection with this
study the amount of [**] payable within [**] of the
Effective Date. Prior to payment by Lilly, Sepracor shall
provide to Lilly the amount of and supporting documentation
for any costs and expenses incurred by Sepracor before the
signing date of this Agreement, and estimates of costs and
expenses to be incurred after the signing date of this
Agreement.
(ii) With regard to Sepracor's Phase I study identified by
Protocol [**], Lilly shall promptly reimburse Sepracor for
reasonable direct costs and expenses, including direct costs
of time spent by Sepracor employees, incurred by Sepracor in
connection with this study. Sepracor shall provide Lilly
with an estimate of such costs and expenses. Sepracor shall
invoice Lilly for such costs and expenses, and shall provide
documentation for the invoice. The invoice shall be payable
to Sepracor or its designee(s) [**] after receipt by Lilly
of the invoice and supporting documentation.
(b) Disclosure of Sepracor Know-How.
(i) Except as provided in Section 2.2(a) above, promptly after
the Effective Date, Sepracor shall, at its own cost, use
good faith reasonable efforts to disclose to Lilly in
writing, or via mutually acceptable electronic media, copies
or reproductions of all written Sepracor Know-How reasonably
available to Sepracor not previously disclosed to Lilly in
order to enable Lilly to exploit the rights granted under
Section 2.1 of this Agreement.
8
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(ii) In addition, during the term of this Agreement, Sepracor
shall promptly disclose to Lilly in writing, or via
mutually acceptable electronic media, on an ongoing basis
copies or reproductions of all new written Sepracor
Know-How that is reasonably necessary to research, develop,
register, manufacture, market, use or sell R-fluoxetine or
Product. Such new Sepracor Know-How and other useful
information shall be automatically deemed to be within the
scope of the licenses granted herein without payment of any
additional compensation.
(iii) Upon Lilly's request, Sepracor shall provide reasonable
technical assistance and materials available to Sepracor to
enable Lilly to utilize Sepracor Know-How, provided that
Lilly shall promptly reimburse Sepracor for reasonable
direct costs and expenses, including direct costs of time
spent by Sepracor employees, incurred by Sepracor in
providing such technical assistance and materials. Sepracor
shall invoice Lilly for such costs and expenses, and shall
provide documentation for the invoice. The invoice shall be
payable to Sepracor or its designee(s) [**] after receipt
by Lilly of the invoice and supporting documentation
provided, however, that such costs and expenses must be
identified prior to being committed to by Sepracor and
provided to Lilly to determine whether Lilly agrees to have
the technical assistance provided at such cost and the
final amount sought to be reimbursed shall not exceed by
[**] the estimated cost without Lilly's prior written
consent. Lilly shall be under no obligation to reimburse
Sepracor for costs and expenses incurred by Sepracor
without Lilly's agreement. Lilly shall have the right to
use for all purposes in connection with any Regulatory
Application for Product all Sepracor Know-How and other
information disclosed pursuant to this Section and under
this Agreement.
2.3 HSR Filing and Approvals.
(a) HSR Filing. To the extent necessary, each of Sepracor and Lilly
shall file, within [**] after the date of this Agreement with the Federal Trade
Commission and the Antitrust Division of the United States Department of Justice
any notification and report form (the "Report") required of it in the reasonable
opinion of either or both parties under the HSR Act with respect to the
transactions as contemplated hereby and shall cooperate with the other party to
the extent necessary to assist the other party in the preparation of its Report
and to proceed to obtain necessary
9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
approvals under the HSR Act, including but not limited to the expiration or
earlier termination of any and all applicable waiting periods required by the
HSR Act.
(b) Sepracor's Obligations. Sepracor shall use good faith reasonable
efforts to assist Lilly in eliminating any concern on the part of any court or
government authority regarding the legality of the transaction proposed herein,
including, if required by federal or state antitrust authorities, Lilly's
promptly taking all reasonable steps to secure government antitrust clearance.
Sepracor shall cooperate in good faith at its own cost with any government
investigation regarding the legality of the transaction proposed herein and
promptly produce documents, witnesses, and information demanded by a request for
documents and witnesses if requested.
(c) Additional Approvals. Sepracor and Lilly will each cooperate and
use all reasonable efforts to make all other registrations, filings and
applications, to give all notices and to obtain as soon as practicable all
governmental or other consents, transfers, approvals, orders, qualifications,
authorizations, permits and waivers, if any, and to do all other things
reasonably necessary or desirable in Lilly's opinion for the consummation of
this Agreement as contemplated hereby including, without limitation, those acts
required to obtain necessary approvals under any foreign equivalent antitrust
statute to the HSR Act or regulation from any government or regulatory authority
having the requisite jurisdiction; provided, however, that Lilly shall promptly
reimburse Sepracor for reasonable direct costs and expenses, including direct
costs of time spent by Sepracor employees, incurred by Sepracor in providing
such cooperation. Sepracor shall invoice Lilly for such costs and expenses, and
shall provide documentation for the invoice. The invoice shall be payable to
Sepracor or its designee(s) [**] after receipt by Lilly of the invoice and
supporting documentation provided, however, that such cost and expenses must be
identified prior to being committed to by Sepracor and provided to Lilly to
determine whether Lilly agrees to have the assistance provided at such cost and
the final amount sought to be reimbursed shall not exceed by [**] the estimated
cost without Lilly's prior written consent. Lilly shall be under no obligation
to reimburse Sepracor for costs and expenses incurred by Sepracor without
Lilly's agreement.
(d) Costs of Filings. Except as specifically provided in Section
2.3(c), each party shall be responsible for its own costs, expenses, and filing
fees associated with any of its filings under the HSR Act and any foreign
equivalent thereof.
10
2.4 Lilly's Development Obligations.
(a) Lilly Diligence.
(i) At its own cost and expense, and subject to Sepracor's
compliance with its obligations under Sections 2.2(a),
2.2(b)(i), and 2.3(a), Lilly shall conduct preclinical
and clinical trials and apply for all governmental
approvals necessary to manufacture, sell, market, and
distribute Product, and to develop, submit Regulatory
Applications for, manufacture and commercialize Product
(such activities cumulatively referred to as
"Development"), in accordance with the Development Plan
appended hereto as Appendix 2.4(a) and incorporated
herein by reference. The parties acknowledge that lack
of diligence in Development of Product will diminish the
value of this Agreement to Sepracor; accordingly, Lilly
shall at all times put forth good faith commercially
reasonable efforts in connection with Development of
Product. Adherence to the timeline set forth in the
Development Plan is agreed by the parties to represent
good faith commercially reasonable efforts and sound
scientific judgment in Development of Product; provided,
however, that the parties understand and agree that the
timeline may from time to time be subject to reasonable
adjustment by Lilly in response to extenuating
circumstances not in the complete control of Lilly
including, but not limited to, force majeure, documented
changes in the requirements of regulatory agencies,
failed or inconclusive clinical studies, discovery of
unanticipated toxicity or adverse events of Product, or
a need for additional clinical studies to achieve
appropriate labeling of Product. Lilly shall use good
faith commercially reasonable efforts and sound
scientific judgment to fully exploit Product to the
extent of its commercial potential.
(ii) Subject to Section 2.4(a)(i) above, the parties
acknowledge and agree that all decisions including,
without limitation, decisions relating to Lilly's
research, development, registration, manufacture, sale,
commercialization, design, price, distribution,
marketing and promotion of Product covered under this
Agreement, shall be within the sole discretion of Lilly.
Sepracor acknowledges that Lilly is in the business of
developing, manufacturing and selling pharmaceutical
products and, subject to the provisions of Section
2.4(a)(i), nothing in this Agreement shall be construed
as restricting such business or imposing on Lilly the
duty to market and/or sell and exploit R-fluoxetine or
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Product for which royalties are payable hereunder to
the exclusion of, or in preference to, any other
product, or in any way other than in accordance with
its normal commercial practices.
(b) Opportunity to Co-Promote In the United States. If there is no
generic Product on the market in the United States, or if the only generic
Products on the market in the United States are authorized by or on behalf of
Lilly, then Sepracor shall have an opportunity to co-promote Product in the
United States subject to the following paragraphs (i) and (ii).
(i) In the event that (A) Product is launched in the United
States and (B) Net Sales of Product worldwide is below [**]
in any year-long period commencing after the [**] of First
Commercial Sale in the United States, as calculated at the
end of each Payment Period, before the [**] of First
Commercial Sale in the United States (the "Trigger
Period"), then Sepracor shall have the right (but not the
obligation) to co-promote all forms of Product that have
been commercialized during each of the preceding [**] as of
the date Sepracor exercises its option to copromote during
the Trigger Period (hereinafter "Co-Promotion Product").
Such co-promote rights shall extend only to the United
States, and Sepracor shall use its own sales force. The
co-promotion rights, which may be exercised only once,
shall commence immediately upon the close of the Trigger
Period and shall terminate upon the earlier of: (1) the
[**] of First Commercial Sale in the United States; and (2)
the launch of third-party generic Product in the United
States without authorization from Lilly. Sepracor shall
notify Lilly of its intent to exercise this right within
[**] after receiving Lilly's relevant reports for the
fourth quarter of the Trigger Period; if within this [**]
period Sepracor does not provide Lilly with notice of its
intent to exercise its co-promotion right, the right to
co-promote shall terminate.
(ii) All months or years referred to in this subsection are
months or years after First Commercial Sale in the United
States. For the purposes of determining Net Sales of
Product worldwide during the [**], the parties shall (1)
meet promptly during the [**] to discuss sales levels of
Product during the [**], and (2) immediately upon the
conclusion of the [**], Lilly shall prepare a projection of
Net Sales for the [**]. Such projection shall comprise the
actual Net Sales worldwide for [**], and a projection of
Net
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Sales worldwide for [**] based upon actual Net Sales
worldwide for [**] and taking into consideration trend
tines, including historical demand and shipment trends,
normal and customary buying patterns, and Lilly's normal
inventory loading patterns, for Product.
(iii) If Sepracor exercises its right to co-promote Co-Promotion
Product in the United States, the parties shall negotiate
in good faith a co-promotion agreement, the terms of which
shall include the following:
(A) The amount of Net Sales of Co-Promotion Product during
the [**] Trigger Period shall be referred to
hereinafter as the "Sales Base". During the term of
the co-promotion Sepracor shall receive a royalty as
per Section 3.3 on the Net Sales of Co-Promotion
Product up to the Sales Base. With regard to Product
other than Co-Promotion Product, Sepracor shall
continue to receive royalties in accordance with
Article 3.
(B) Sales shall be booked by Lilly and Lilly shall
continue to control Product pricing decisions.
(C) Lilly shall continue to promote Product and both
parties shall use commercially reasonable efforts, to
be defined in the co-promotion agreement, to promote
Co-Promotion Product through in-person presentations
to physicians. Sepracor shall receive a co-promotion
fee equal to [**]; provided, however, that the parties
shall agree to equitably share the aggregate sales
force and non-sales force promotional expenses
targeted to incremental sales of Co-Promotion Product
in excess of the Sales Base.
(D) Sales aids and any other materials made available to
Lilly's sales force for use in promoting Co-Promotion
Product or training of Lilly's sales force shall be
made available to Sepracor. If any such materials are
created by Sepracor they shall be subject to Lilly's
prior written approval before use, which approval
shall not unreasonably be withheld. Sepracor shall use
Lilly trademarks in accordance with standards to be
provided by Lilly.
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(c) Research and Development Activities. Subject to and in accordance
with its diligence obligations set forth in Section 2.4(a), following the
Effective Date, Lilly shall be responsible, at its cost and expense, and in its
sole judgment, for all research and development activities which are necessary
to submit Regulatory Applications for and obtain marketing authorization for,
Product, and any post-approval studies required as a condition of obtaining any
marketing authorization for Product. In addition, Lilly shall be responsible for
any other studies (or portions of studies) necessary or desirable, in its sole
judgment, for maintaining any NDA, as well as any pre-marketing studies prior to
marketing authorization, and post-marketing studies conducted following
marketing authorization.
(d) Product Registrations: Pricing Reimbursement Approvals. Subject
to and in accordance with its diligence obligations set forth in Section 2A(a),
Lilly shall be responsible, at its cost and expense, and in its sole judgment,
for determining the appropriate regulatory strategy, for submitting Regulatory
Applications, obtaining and maintaining marketing authorizations, and for
obtaining and maintaining any pricing and reimbursement approvals required for
the sale of Product. Each Regulatory Application and each pricing and
reimbursement approval shall be placed in Lilly's name unless applicable law
requires, or Sepracor and Lilly otherwise agree, that an approval be solely or
jointly in the name of Sepracor. Sepracor agrees that notwithstanding such
Regulatory Application or pricing and reimbursement approval in its name, Lilly
retains the exclusive rights granted to Lilly in Section 2.1.
(e) Data. Lilly shall own all data arising out of studies performed
by or on behalf of Lilly under this Article 2.
(f) Assistance by Sepracor. In connection with any NDA, or other
Regulatory Application relating to Product, Sepracor shall, at Lilly's request
but reasonably subject to Sepracor's other business requirements, provide to
Lilly in a prompt manner responses to questions which have been raised by any
regulatory authority in connection with such Regulatory Application and further
provide to Lilly estimates of Sepracor's costs for rendering such assistance.
Sepracor shall assist Lilly from time to time, at Lilly's request but reasonably
subject to Sepracor's other business requirements, in the design and
implementation of clinical studies. Lilly shall reimburse Sepracor for its
reasonable direct costs and expenses, including direct costs of time spent by
Sepracor employees, incurred in rendering assistance under this Section 2.4(f).
Sepracor shall invoice Lilly for such costs and expenses, and shall provide
documentation for the invoice. The invoice shall be payable to Sepracor or its
designee(s) [**] after receipt by Lilly of the invoice and supporting
documentation, provided, however, that such costs and expenses must be
identified prior to being
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committed to by Sepracor and provided to Lilly to determine whether Lilly agrees
to have the assistance provided at such cost and the final amount sought to be
reimbursed shall not exceed by [**] the estimated cost without Lilly's prior
written consent. Lilly shall be under no obligation to reimburse Sepracor for
costs and expenses incurred by Sepracor without Lilly's agreement.
2.5 Independent Discoveries by Lilly. Sepracor acknowledges that Lilly has had
long ongoing research programs which may now or in the future independently
discover or develop technologies or products relating to treatment and
prevention of any disease, disorder or condition in humans or animals including
those related to R-fluoxetine and its manufacture. Sepracor agrees that such
technologies and products, to the extent discovered by Lilly without use of
Sepracor Know-How or Improvements, will not be deemed to be Sepracor Know-How or
Improvements.
2.6 Other Studies.
(a) After the Effective Date and during the term of this Agreement,
Sepracor shall have the right to conduct process research, formulation research,
and preclinical studies involving R-fluoxetine in support of Patent Rights, and
to disclose the results of such studies pursuant to Sections 5.1(a)(iv) or (v)
and in furtherance of this Agreement, unless Lilly shall establish to Sepracor's
reasonable satisfaction that such disclosure would materially adversely affect
Lilly's interest in Product; provided that prior to First Commercial Sale,
disclosure of the results of any such studies are first notified to Lilly; and
provided, further that prior to initiating any preclinical studies (whether
conducted prior to or after First Commercial Sale), Sepracor shall obtain
Lilly's prior written approval, which will not be unreasonably withheld.
(b) Except as provided in Section 2.6(a), prior to First Commercial
Sale, Sepracor shall not initiate further studies, process research, formulation
research or preclinical or clinical trials with R-fluoxetine without the express
written consent of Lilly, including the prior written approval of any protocols
to be used and any amendments thereto. Sepracor shall request Lilly's written
consent by complying with the notice provisions of Article 6, and Lilly may
grant or withhold such consent in its sole discretion.
(c) Sepracor and Lilly acknowledge that all Sepracor research results
under Sections 2.6(a) and (b) shall constitute Sepracor Know-How; accordingly,
Sepracor shall provide to Lilly the results from such research and any
background information requested, at no additional cost or royalty. Sepracor
shall be permitted to disclose such results to third parties only as provided
under Section 5.1 below. At the option of Xxxxx, Xxxxx may have its
representative(s) monitor or assist with any preclinical,
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Securities and Exchange Commission. Asterisks denote omissions.
clinical or other studies approved by Lilly as provided in Section 2.6(b) and
conducted by Sepracor.
(d) Sections 2.6(a) and (b) notwithstanding, nothing in this
Agreement shall be construed to restrict or limit Sepracor's right to use
Product obtained from commercial sources in clinical trials following First
Commercial Sale provided that no Proprietary Information is utilized by Sepracor
in violation of this Agreement.
2.7 Progress Reports to Sepracor. During the term of this Agreement, Lilly shall
provide Sepracor with quarterly written reports, including a meaningful summary
of Development (including summary results from preclinical and clinical trials
conducted on Product) and registration progress under this Agreement. Such
reports shall also detail progress of Development against the timeline of the
Development Plan, any adjustments to the timeline, and the reasons for such
adjustments.
2.8 Conversion of License. Any other provision in this Agreement
notwithstanding, upon the conversion of any of the licenses granted herein to
fully paid up non-exclusive licenses pursuant to Section 3.6 or Section 7.1, as
appropriate, Sepracor shall not engage in sale of Product for [**] from the date
of conversion of the license. In addition, Sepracor shall not use Lilly
Confidential Information in violation of this Agreement.
ARTICLE 3
PAYMENTS; ROYALTIES AND REPORTS
3.1 Consideration for License. In partial consideration for the
licenses and rights granted to Lilly hereunder, Lilly shall pay to Sepracor a
non-refundable, non-creditable license fee ("License Fee") of [**], which
payment shall be due within [**] following the Effective Date.
3.2 Milestones for License. In partial consideration for the licenses
granted to Lilly hereunder, Lilly shall pay to Sepracor milestone payments up to
a total amount of [**] as set forth below:
(a) [**] for initiation of the first Phase I Clinical Study for
Product payable within [**] following the Effective Date;
(b) [**] within [**] following initiation of the first Phase III
Clinical Study for a Product; and
(c) [**] within [**] following First Commercial Sale in the United
States.
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All milestones shall be payable only once irrespective of the number of Products
that have achieved the milestone events set forth in (a), (b) and (c) above, and
once a milestone payment is due or paid it shall be non-refundable and shall not
be creditable against any payments that may become payable by Sepracor to Lilly,
subject to Section 3.13.
3.3 Royalties, United States.
(a) Royalty Rates. Lilly agrees to pay Sepracor, for the rights
granted to Lilly with respect to Product pursuant to Section 2.1 above, a
royalty for Product sold in the United States by or on behalf of Lilly,
Permitted Sublicensees or assigns. Such royalty shall be payable commencing upon
First Commercial Sale in the United States by or on behalf of Lilly, Permitted
Sublicensees or assigns. Such royalty for United States sales shall be:
(i) [**] in the United States in the relevant Calendar Year
[**] in that Calendar Year; and
(ii) [**] in the United States in the relevant Calendar Year
[**] in that Calendar Year [**]; and
(iii) [**] in the United States in the relevant Calendar year
[**] in that Calendar Year in [**].
An example royalty calculation is set forth in Appendix 3.3.
(b) Term of Royalty Obligations. Subject to Sections 3.3(c) and
3.3(d) below, the royalty described in Section 3.3(a) shall be payable on Net
Sales of a Product until the date upon which a generic equivalent of such
Product, approved without authorization of Lilly, is launched in the United
States; provided, however, that in the event that royalties are reduced pursuant
to Section 3.3(d) in respect of a Product, royalties on such Product shall be
payable until the date which is the earlier of(i) ten (10) years after the First
Commercial Sale of the first Product and (ii) the date upon which a generic
equivalent of such Product, approved without authorization of Lilly, is launched
in the United States.
(c) Royalty Increase Date. The royalty described in Section 3.3(a)
shall be [**]; provided however if approval or launch of generic racemic
fluoxetine is delayed or does not occur due to actions by Lilly or an agreement
involving Lilly (except for Lilly's defense of its own patents), then the
Royalty Increase Date shall be the later of [**]. Until the Royalty Increase
Date all royalties on Net Sales of Product in the
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Securities and Exchange Commission. Asterisks denote omissions.
United States shall be calculated on the basis of the royalty rate of Section
3.3(a)(i), irrespective of the amount of worldwide Net Sales of Product.
(d) Royalty Reductions. In respect of those Products for which no
Valid Claim of Improvement Patent Rights covers such Product, the royalty in
Section 3.3(a) shall be reduced by [**] from and after the time, if any, that
Basic Patent Rights expire or are rendered invalid, unenforceable, or not
patentable to Sepracor as a result of an executed decision from an
administrative or legal action brought by or on behalf of a third party and with
no involvement of Lilly, but only for so long as such executed decision shall
remain in effect; provided, however, that such royalty shall not be reduced to
less than [**] of Net Sales of Product. Additionally, as regards Combination
Product not covered by a Valid Claim of Improvement Patent Rights but covered by
a Valid Claim of a patent owned or controlled by Lilly which claims, generically
or specifically, (i) a non-R-fluoxetine active ingredient of such Combination
Product as a composition of matter, (ii) the labeled use of a non-R-fluoxetine
active ingredient of such Combination Product, (iii) the Combination Product
itself as a composition of matter, or (iv) the labeled use of such Combination
Product, the royalty of Section 3.3(a) shall be eliminated from and after the
later of (A) the date that Basic Patent Rights expire or are rendered invalid,
unenforceable, or not patentable to Sepracor as a result of an executed decision
from an administrative or legal action brought by or on behalf of a third party
with no involvement of Lilly, and (B) the date of launch in the United States of
a third party generic equivalent of Native R-fluoxetine Product not authorized
by Lilly.
The provisions of this Section 3.3 that call for reduction or elimination of
royalties when particular Patent Rights are rendered invalid, unenforceable, or
not patentable to Sepracor shall be referred to as "patent invalidation royalty
reduction provisions".
For the avoidance of any doubt, the parties expressly agree that royalties
payable to Sepracor shall not be reduced or eliminated pursuant to the patent
invalidation royalty reduction provisions of this Section 3.3(d) concerning
Basic Patent Rights if Basic Patent Rights are rendered invalid, unenforceable,
or not patentable to Sepracor in an administrative or legal action (including
but not limited to reexamination, reissue, or interference) brought by, on
behalf of or at the direction of, or in whole or in part by, Lilly or a
Permitted Sublicensee, or involving Lilly or a Permitted Sublicensee as a party
provided that Lilly or Permitted Sublicensee is not made a party to such
administrative or legal action due to the actions of another party thereto.
The parties further agree that royalties on a Product that at the time of sale
is not, but once was, covered by a Valid Claim of Improvement Patent Rights
shall not be
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Securities and Exchange Commission. Asterisks denote omissions.
reduced or eliminated pursuant to the patent invalidation royalty reduction
provisions of this Section 3.3(d) concerning Improvement Patent Rights if such
Valid Claim was rendered invalid, unenforceable, or not patentable to Sepracor
in an administrative or legal action (including but not limited to
reexamination, reissue, or interference) brought by, on behalf of or at the
direction of, or in whole or in part by, Lilly or a Permitted Sublicensee, or
involving Lilly or a Permitted Sublicense as a party provided that Lilly or
Permitted Sublicensee is not made a party to such administrative or legal action
due to the actions of another party thereto.
For the purposes of this Section, a Valid Claim of Improvement Patent Rights
shall be deemed to cover a Product if the sale or use of such Product would be
within the scope of such Valid Claim in accordance with the established
principles of patent claim interpretation in the United States.
3.4 Royalties, Outside the United States.
(a) Royalty Rate. Lilly agrees to pay Sepracor, for the rights
granted to Lilly with respect to Product pursuant to Section 2.1 above, a
royalty for Product sold outside the United States by or on behalf of Lilly or
its Permitted Sublicensees or assigns. Such royalty shall be payable on a
country by country basis commencing upon First Commercial Sale in such country
by or on behalf of Lilly or its Permitted Sublicensees or assigns. Such royalty
shall be, on a country by country basis:
(i) [**] in the relevant Calendar Year [**] in that Calendar
Year[**]; and
(ii) [**] in the relevant Calendar Year [**] in that Calendar
Year [**]; and
(iii) [**] in the relevant Calendar Year [**] in that Calendar
Year [**].
(b) Term of Royalty Obligations. In the event that a Valid Claim of
Improvement Patent Rights covering a Product exists in a particular country, the
royalty described in Section 3.4(a) shall be payable for Net Sales of such
Product in a country until the earlier of the date upon which such Valid Claim
expires or is rendered invalid or deemed unpatentable to Sepracor in a judicial
or administrative proceeding from which no appeal can be taken or the date upon
which a generic equivalent of such Product, approved without authorization of
Lilly, is launched.
(c) Royalty Reduction. In the event that, or from and after the date
after which, no Valid Claim of Improvement Patent Rights covering a Product
exists in a
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Securities and Exchange Commission. Asterisks denote omissions.
particular country, the royalty described in Section 3.4(a) shall be reduced by
[**] in such country (but shall not be reduced to less than [**]) and be payable
for Net Sales of such Product in such country until the later of(i) the date
which is five (5) years after the date of First Commercial Sale of the first
Product in such country, and (ii) the date of expiration of Lilly's regulatory
exclusivity in respect of such Product in such country. Additionally, as regards
Combination Product not covered by a Valid Claim of Improvement Patent Rights
but covered by a Valid Claim of a patent owned or controlled by Lilly, which
Valid Claim claims, generically or specifically, (i) a non-R-fluoxetine active
ingredient of such Combination Product as a composition of matter, (ii) the
labeled use of a non-R-fluoxetine active ingredient of such Combination Product,
(iii) the Combination Product itself as a composition of matter, or (iv) the
labeled use of such Combination Product, the royalty of Section 3.4(a) shall be
eliminated from and after the date of launch in the country in question of a
generic equivalent of Native R-fluoxetine Product by a third party not
authorized by Lilly.
The provisions of this Section 3.4 that call for reduction or elimination of
royalties when particular Patent Rights are rendered invalid, unenforceable, or
not patentable to Sepracor shall be referred to as "patent invalidation royalty
reduction provisions".
The parties further agree that royalties on a Product that at the
time of sale is not, but once was, covered by a Valid Claim of Improvement
Patent Rights shall not be reduced or eliminated pursuant to the patent
invalidation royalty reduction provisions of this Section 3.4 concerning
Improvement Patent Rights if such Valid Claim was rendered invalid,
unenforceable, or not patentable to Sepracor in an administrative or legal
action (including but not limited to reexamination, reissue, opposition, or
interference) brought by, on behalf of or at the direction of, or in whole or in
part by, Lilly or a Permitted Sublicensee, or involving Lilly or a Permitted
Sublicensee as a party provided that Lilly or Permitted Sublicensee is not made
a party to such administrative or legal action due to the actions of another
party thereto.
For the purposes of this Section, a Valid Claim of Improvement Patent Rights
shall be deemed to cover a Product if the sale of such Product would be within
the scope of such Valid Claim in accordance with the established principles of
patent claim interpretation of the jurisdiction where the Valid Claim applies.
3.5 Third Party Royalties. In the event that third party patent
licenses are required by Lilly or its Permitted Sublicensees in order to make,
have made, use or sell a DDS Formulation in any country, Lilly shall be solely
responsible for acquiring such licenses at Lilly's sole discretion and Lilly may
deduct [**]; provided, however,
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Securities and Exchange Commission. Asterisks denote omissions.
that Lilly may not deduct more than [**], and further provided, however, that
such deduction may be made by Lilly in respect of sales in a country only if
there exists no Valid Claim of Basic Patent Rights in such country, there exists
no Valid Claim of Improvement Patent Rights covering such DDS Formulation in
such country, and only from and after the time of launch in such country of a
generic equivalent of Native R-fluoxetine Product by a third party not
authorized by Lilly.
3.6 Obligations and Licenses After Royalty Term Expiration. On a
country by country and Product by Product basis, after the royalty term expires
under this Article 3 in a country, Lilly shall have no further obligation to pay
any royalty in such country on the Net Sales of such Product pursuant to Article
3 hereof, and the licenses granted to Lilly under this Agreement shall become
fully paid up non-exclusive licenses as regards such Product in such country.
3.7 Samples. No royalties shall accrue on the disposition of Product
by Lilly or its Permitted Sublicensees free of charge as samples (promotion or
otherwise) or as donations (for example, to non-profit institutions or
government agencies for a non-commercial purpose) or for clinical studies. Such
dispositions by Lilly free of charge shall not be included in the determination
of Net Sales.
3.8 One Royalty Payment. Only one royalty will be due on Net Sales
even though the manufacture, use or sale of Product may be covered by more than
one of Basic Patent Rights or Improvement Patent Rights in a country as licensed
under this Agreement.
3.9 Payment and Report Timing. Lilly shall remit royalty payments
under this Article 3, in Dollars, within [**] of the end of each Payment Period,
beginning with the first Payment Period after First Commercial Sale; provided,
however, that if Lilly enters an agreement with a third-party having terms
similar to those in this Agreement, wherein the royalty remittance period is
less than [**], such shorter remittance period shall be automatically applied to
this Agreement. With each payment, Lilly shall deliver to Sepracor a written
report describing, for the applicable Payment Period:
(a) the total worldwide Net Sales for Product;
(b) the Net Sales for Product on a country by country basis for the
top eight countries, and the number and description of each Product sold by or
on behalf of Lilly or Permitted Sublicensees or assigns during such Payment
Period for each of the top eight countries, and the exchange rate used to
convert sales from local currency to Dollars; and
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Securities and Exchange Commission. Asterisks denote omissions.
(c) the total royalty due.
3.10 Payments to Sepracor.
(a) All payments to Sepracor pursuant to this Agreement shall be made
by wire transfer, to Fleet Bank of Massachusetts, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 [**] or such other bank or account as Sepracor may from time
to time designate in writing. All such payments shall be made in Dollars.
(b) Whenever any payment hereunder shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the immediately
succeeding Business Day.
(c) Payments hereunder shall be considered to be made as of the day
on which they are received in Sepracor's designated bank account
(d) All payments due to Sepracor hereunder but not paid by Lilly on
the due date thereof shall bear interest (in Dollars) at the rate which is the
lesser of: (i) [**]; and (ii) [**]. Such interest shall accrue on the balance of
unpaid amounts from time to time outstanding from the date on which portions of
such amounts become due and owing until payment thereof in full.
3.11 Books and Records; Audits.
(a) Lilly shall keep and maintain, and shall cause Permitted
Sublicensees and assigns to keep and maintain, complete and accurate records and
books of account in sufficient detail and form so as to enable amounts payable
under Article 3 to be determined. Upon [**] prior written notice from Sepracor,
Lilly shall permit an independent certified public accounting firm of nationally
recognized standing selected by Sepracor, at Sepracor's expense, to have access
during normal business hours to audit pertinent books and records of Lilly, its
Permitted Sublicensees and assigns as may be reasonably necessary to verify the
accuracy of the royalty reports hereunder. The audit shall be limited to
pertinent books and records for any year ending not more than [**] prior to the
date of such request. Such audit shall be at Sepracor's expense unless the
examination should establish that Lilly's payment of such royalties for the
period examined were in error by [**] or more of the royalties which should have
been paid, in which case Lilly shall be responsible for the reasonable expenses
of such audit. An audit under this Section 3.11 shall not occur more than once
in any calendar year. Lilly may designate competitively sensitive information,
which such auditor may not disclose to Sepracor, provided, however,
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that such designation shall not encompass the auditor's conclusions, whether the
royalty reports are correct or incorrect, or the specific details concerning any
discrepancies.
(b) Prompt adjustment shall be made by Lilly or Sepracor, as
appropriate, to compensate the other for any errors or omissions revealed by an
audit under this Section 3.11. Information obtained during the course of such an
audit shall be kept confidential by Sepracor and its agents, except to the
extent necessary to enforce Sepracor's rights hereunder.
3.12 Reports and Invoices Conclusively Correct. All reports, invoices
and payments not disputed as to correctness by Sepracor within three (3) years
after receipt thereof shall thereafter conclusively be deemed correct for all
purposes.
3.13 No Reduction in Payments. No part of any amount payable to
Sepracor under this Agreement may be reduced due to any counterclaim, set-off,
adjustment or other right which Lilly might have against Sepracor, any other
party or otherwise, except for adjustments pursuant to Section 3.11(b), or
amounts due from Sepracor to Lilly pursuant to a final judgment entered against
Sepracor arising from Sepracor's violation of the terms or conditions of this
Agreement.
ARTICLE 4
PATENTS & TRADEMARKS
4.1 Filing, Prosecution and Maintenance of Patent Rights.
(a) Prosecution by Sepracor. Sepracor agrees to diligently file,
prosecute and maintain, all Patent Rights owned in whole or in part by Sepracor
and licensed to Lilly under this Agreement. Sepracor shall supply Lilly with a
copy of the applications as filed, together with notice of its filing date and
serial number. Sepracor shall keep Lilly regularly advised of the status of
pending patent applications (including, without limitation, the grant of any
Patent Rights), and upon the written request of Lilly shall provide copies of
any substantive papers as filed related to the filing, prosecution and
maintenance of such patent filings. All information, papers, and other materials
provided by Sepracor in accordance with this section shall be subject to the
confidentiality provisions of this Agreement.
(b) Option of Lilly to Prosecute and Maintain Patents. Sepracor shall
give [**] notice to Lilly of any desire to cease prosecution and/or maintenance
of a particular Patent Right and, in such case, shall permit Lilly, at its sole
discretion, to continue prosecution or maintenance at its own expense. If Lilly
elects to continue
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prosecution or maintenance, Sepracor shall execute such documents and perform
such acts, at Lilly's expense, as may be reasonably necessary to effect an
assignment of such Patent Rights to Lilly. Any such assignment shall be
completed in a timely manner to allow Lilly to continue such prosecution or
maintenance. Any patents or patent applications so assigned shall not be
considered Patent Rights.
4.2 Lilly and Joint Inventions. Any patentable inventions made by
Lilly in the course of performing its obligations under this Agreement will be
owned by and be the sole responsibility of Lilly. Any patentable inventions made
jointly as a result of the parties performing obligations under this Agreement
will be jointly owned by the parties, and each party may make, use, offer to
sell, or sell the invention without the consent of or accounting to the other
party, subject to the provisions of Section 2.1. The parties shall cooperate to
cause the filing of one or more patent applications covering any such joint
inventions, and counsel selected for preparation, filing, and prosecution of any
joint patent application(s) will be mutually acceptable to the respective
parties. Expenses and costs for filing, prosecuting and maintaining any such
joint patent application(s) shall be shared.
4.3 Enforcement of Patents. In the event that either Lilly or
Sepracor becomes aware of any infringement of any issued patent within the
Sepracor Patent Rights, which infringement involves Product, it will notify the
other Party in writing to that effect. Any such notice shall include evidence to
support an allegation of infringement by such third party. Sepracor shall use
reasonable efforts to obtain a discontinuance of such infringement, which may
include filing suit, against the third party infringer. Sepracor shall bear all
expense of any suit brought by it Lilly shall have the right, prior to
commencement of the trial, suit or action brought by Sepracor, to join any such
suit or action, and in such event shall pay one-half of the costs of such suit
or action. In the event that Lilly has joined in the action and shared in the
costs thereof as set forth above, no settlement, consent judgment or other
voluntary final disposition of the suit may be entered into without the consent
of Lilly. In the event that Lilly has not joined the suit or action, Lilly will
reasonably cooperate with Sepracor in preparing and presenting any such suit or
action and shall have the right to consult with Sepracor and be represented by
its own counsel at Lilly's own expense. Any recovery or damages derived from a
suit which Lilly has joined and shared costs shall be used first to reimburse
each of Sepracor and Lilly for its documented out-of-pocket legal expenses
relating to the suit, with any remaining compensatory damages to be treated as
Net Sales and any punitive damages to be shared equally by the parties. Any
recovery or damages derived from a suit which Lilly has not joined shall be
retained by Sepracor.
24
Confidential Materials omitted and filed with the
Securities and Exchange Commission. Asterisks denote omissions.
If the third party continues to infringe and Sepracor does not
initiate such action within [**] of the date of notice referred to in the
immediately preceding paragraph, then Lilly may at its option initiate and
control action or bring suit against the third party infringer. Lilly shall bear
all the costs and expenses of any such action or suit. Sepracor shall cooperate
with Lilly in preparing and presenting such action or suit, provided that Lilly
shall reimburse all Sepracor's direct cost and expenses, including direct costs
of time spent by Sepracor employees, incurred in providing such cooperation. Any
recovery or damages derived from such an action or suit shall be retained by
Lilly.
4.4 Consent for Settlement. Neither party shall enter into any
settlement or compromise which would in any manner alter, diminish or be in
derogation of the other party's rights under this Agreement without the prior
written consent of such other party. Any settlement amounts paid by Lilly and as
mutually agreed upon by the parties will be deducted from Net Sales.
4.5 Actions Against the Parties. If any third party brings suits or
actions against either party asserting any patent infringement related to
Product, both parties will consult with each other to determine the measures of
defense.
4.6 Trademarks. Lilly will own and be responsible for all trademarks
related to the marketing of Product and will be responsible for registering,
defending and maintaining such trademarks.
4.7 Studies and Information in Support of Patent Rights.
Notwithstanding any provision to the contrary in this Agreement, Sepracor shall
have the right to use and disclose, in accordance with Section 5.1(a)(iv) or (v)
any Sepracor Know-How and Improvements at its sole option and discretion for the
limited purpose of filing, prosecuting, and supporting Patent Rights; provided,
however, that Sepracor provide prior written notification to Lilly of any such
disclosure.
ARTICLE 5
INFORMATION AND CONFIDENTIALITY
5.1 Confidential Information and Nondisclosure.
(a) Confidential Information. All information generated and relating
to the research, development, registration for approval, marketing or sale of
R-fluoxetine or Product as well as the terms of this Agreement is confidential
information and will not be communicated by Lilly or Sepracor to any third
parties during the term of this
25
Agreement without the express written consent of the nondisclosing party except
for information which:
(i) is already known to the receiving party as evidenced by
their own written records prior to receipt under this
Agreement; or
(ii) is disclosed to the receiving party by a third party who
has the right to make such disclosure; or
(iii) is or becomes part of the public domain through no fault
of the receiving party; or
(iv) is disclosed to any institutional review board of any
entity conducting clinical trials or any governmental or
other regulatory agencies in order to obtain patents or to
gain approval to conduct clinical trials to market
R-fluoxetine or Product, but such disclosure may be made
only to the extent reasonably necessary to obtain such
patents or authorizations; or
(v) is required to be disclosed to a government agency
anywhere in the world for legitimate commercial or legal
purposes, relating to, inter alia, drug registration,
marketing, tax filings and patent applications (including
but not limited to filing and prosecution thereof)
provided the party required to make any such disclosure
first notifies the other party allowing for comment prior
to disclosure, and further provided that disclosures in
connection with tax filings may be made without prior
notification to the other party.
The parties agree to cooperate in good faith to provide any information
reasonably necessary to any disclosure made pursuant Sections 5.1(a)(iv) and
(v).
(b) Disclosure to Agents. Notwithstanding the provisions of Section
5.1(a) and subject to the other terms of this Agreement, each party shall have
the right to disclose confidential information to its Permitted Sublicensees,
agents, auditors, investment bankers, or consultants (collectively "Agents") in
accordance with this Section 5.1(b). Any such Agents must agree in writing to be
bound by confidentiality and non-use obligations essentially the same as those
contained in this Agreement. The term of confidentiality and non-use obligations
for such Agents shall be no less
26
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
than the term of this Agreement. As appropriate, each party shall be jointly and
severally liable for any disclosure of the other party's confidential
information by Agents.
5.2 Public Announcements. Neither party will issue any press release,
publication, or any other public announcement relating to this Agreement without
obtaining the other party's prior written approval, which approval will not be
unreasonably withheld. The parties shall issue a joint press release regarding
this Agreement, which has been agreed to by Sepracor and Lilly and which is
attached hereto as Appendix 5.2. During the term of this Agreement Lilly shall
publicly announce, or permit Sepracor to publicly announce, commencement and
completion of the major phases of clinical development of Product, including but
not limited to Phase II and Phase III clinical trials, NDA submission, NDA
filing, approvable and approval letters, and launch; provided, however, that the
parties shall cooperate in good faith to prepare mutually acceptable
announcements prior to release. The parties further agree to use reasonable
efforts to keep terms of this Agreement confidential including with respect to
public filings to the extent that confidential treatment may be available
through regulatory authorities. Lilly will have the right to redact, to the
extent permitted by law, the copy of the Agreement provided to the SEC;
provided, however, that Lilly shall provide Sepracor with its proposed redacted
copy of the Agreement within [**] of the Effective Date. Notwithstanding any of
the foregoing, each party may use the substance of previously approved public
announcements and the substance of other public announcements of the other party
without prior notice.
ARTICLE 6
NOTICES
Any notices, report or communication required or permitted to be
given by either party hereunder shall be deemed sufficiently given, if received
in person or received by facsimile transmission, followed by courier or mailed
by registered mail, return receipt requested, and addressed to the party to whom
notice is given and received as follows:
If to Lilly: Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: V.P., General Counsel
27
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
If to Sepracor: Sepracor Inc.
000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: General Manager, Pharmaceuticals
ARTICLE 7
TERM AND TERMINATION
7.1 Term. This Agreement will start on the Effective Date and remain
in effect as follows:
(a) until the later of the expiration of Patent Rights (including
extensions thereof) and the terms during which royalties are payable pursuant to
Article 3; or
(b) until terminated under Section 7.2 or 7.3.
Upon termination under Section 7.1(a) above, Lilly will have a paid-up,
royalty-free, non-exclusive license to use, sell, make or have made Product
under Sepracor Know-How.
7.2 Termination.
(a) If either party commits a material breach of this Agreement, the
other party shall have the right to terminate this Agreement by giving written
notice of termination to the breaching party in sufficient detail to ascertain
and respond to the alleged breach. Termination shall take effect [**] after
receipt of such notice unless the breach is corrected within the same time
period, except as otherwise provided in Section 7.2(c).
(b) If Sepracor terminates because of a material breach by Lilly
which is not cured within [**] after written notification of breach, then the
following shall apply: All rights and licenses granted by Sepracor to Lilly
hereunder shall immediately be revoked and reconveyed to Sepracor, and Lilly
shall have no right to any continued use of Licensed Technology. Lilly, upon
request of Sepracor and free of charge, shall execute any document reasonably
necessary to return to Sepracor or any person or organization designated by
Sepracor, the Licensed Technology including documents submitted to any
governmental regulatory agency for purposes of seeking marketing authorization
for Product, or making, using or selling Product. Moreover, all written Sepracor
Know-How and written Proprietary Information communicated to Lilly shall be
reconveyed to Sepracor. Lilly shall, to the extent permitted under the same
28
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
terms and conditions as Lilly is licensed, grant Sepracor a sublicense to make,
have made, use, or sell Product under any third party patents covering
manufacture, use, or sale of R-fluoxetine that Lilly may be licensed under.
Lilly shall grant to Sepracor a royalty free, exclusive license to make, have
made, use, or sell Product under any patents that may be owned by Lilly covering
manufacture, use, or sale of R-fluoxetine. Lilly shall transfer and grant to
Sepracor a royalty free, exclusive license to all R-fluoxetine information,
including but not limited to, results, data, and reports containing the same,
generated or otherwise possessed by Lilly and created prior to termination of
this Agreement, including also the right to read and reference all Native
R-fluoxetine Regulatory Applications. Any studies in progress pursuant to the
Development Plan shall be transferred to Sepracor in a manner that allows such
studies to continue uninterrupted to the extent reasonable and practical. In the
event that Lilly does not have a toxicology package satisfactory to the U.S. FDA
for approval of Native R-fluoxetine, to transfer to Sepracor, and Lilly does not
have in progress the toxicology studies necessary for a such toxicology package,
then Lilly shall grant Sepracor the right to reference the preclinical
toxicology section of Lilly's NDA for fluoxetine only for the purpose of
regulatory bridging. Lilly shall not be liable to Sepracor for any reason
whatsoever as a consequence of Sepracor's utilizing any information or documents
(one copy of which shall be retained by Lilly for legal purposes only) conveyed
as provided in this paragraph. For avoidance of doubt, Sepracor shall not have
access to fluoxetine regulatory files, information or data belonging to Lilly
except as otherwise provided above.
(c) The provisions of Sections 7.2(a) and 7.2(b) above
notwithstanding, if Lilly fails to substantially adhere to the timeline set
forth in the Development Plan in accordance with Section 2.4(a) and sound
scientific judgment and commercial reasonableness, then Sepracor shall have the
right to give Lilly written notice thereof stating in reasonable detail the
particular diligence failure(s). Lilly shall have a period of [**] from the
receipt of such notice to meet with Sepracor to discuss the activities that are
being pursued to address the failure of diligence. In any event, Lilly shall
initiate a program to address the failure of diligence within [**] from Lilly's
receipt of such notice, and the period for Lilly to cure the lack of diligence
shall not be longer than [**] from Lilly's receipt of such notice. If Lilly is
determined to have failed to meet the diligence obligations of this Agreement,
or to have unreasonably adjusted the timeline for Development of Product,
Sepracor shall have the right to terminate this Agreement. At Sepracor's
election, the provisions of Section 7.2(b) above shall apply.
(d) If Lilly terminates because of a material breach by Sepracor
which is not cured within [**] after written notification of breach, then
Sepracor, upon request of Lilly and free of charge, shall execute any document
reasonably necessary to transfer
29
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
to Lilly or any person or organization designated by Lilly, the necessary rights
in Licensed Technology concerning and related to Product including documents
submitted to any governmental regulatory agency for purposes of making, using or
selling Product, and Lilly shall have the exclusive, royalty free, worldwide
right to use such Licensed Technology as Xxxxx xxxxx appropriate to make, use
and sell Products. Sepracor, upon request of Lilly and free of charge, shall
execute any document necessary to return to Lilly or any person or organization
designated by Lilly, the Licensed Technology and rights thereto including
documents submitted to any governmental regulatory agency for purposes of
supporting Product. Moreover, all written Lilly know-how and written Proprietary
Information communicated to Sepracor shall be promptly returned to Lilly.
Sepracor shall not be liable to Lilly for any reason whatsoever as a consequence
of Lilly's utilizing any information, documents (one copy of which may be
retained by Sepracor for legal purposes only) Patent Rights or Sepracor Know-How
as provided in this paragraph.
(e) Lilly may terminate this Agreement it, in its sole discretion, it
determines to not develop, register or have developed or registered Product by
giving Sepracor [**] written notice. In the event of such a termination, the
provisions of Section 7.2(b) above shall apply. Lilly shall not be liable to
Sepracor for any reason whatsoever as a consequence of Sepracor's utilization of
any information, documents (one copy of which shall be retained for legal
purposes only) or Sepracor Know-How returned to Sepracor under this paragraph.
The right of either party to terminate this Agreement as herein above provided
shall not be affected in any way by its waiver of or failure to take action with
respect to any previous default. Any such termination shall be without prejudice
to any further rights and remedies vested in the parties. The license rights
granted herein shall survive the bankruptcy or reorganization of either party.
(f) Termination of this Agreement for any reason, except as under
Section 7.2, shall be without prejudice to:
(i) the rights and obligations hereunder that survive
termination, such as Article 5;
(ii) any other remedies which either party may then or
thereafter have hereunder; and
(iii) either party's obligation to make any payments due
pursuant to this Agreement which accrue prior to
termination, and at the time of termination, all such
payments due shall be made in full.
30
7.3 Liquidation. If one of the parties shall go into liquidation,
other than for the purpose of a bona fide reorganization, or a receiver or
trustee be appointed for its property or estate, or if such party shall make an
assignment for the benefit of its creditors, and whether or not any of the
aforesaid acts be the outcome of a voluntary act of that party, the other party
shall be entitled to terminate this Agreement forthwith by written notice to the
first party.
ARTICLE 8
FORCE MAJEURE
Neither of the undersigned parties shall be liable for failure to
perform its obligations under this Agreement when occasioned by contingencies
beyond its control, such as strikes or other work stoppages, lock-outs, riots,
wars, delay of third-party carriers, acts of God, such as fire, floods, storms,
and earthquakes. Each party will notify the other immediately should any such
contingency occur.
ARTICLE 9
REPRESENTATIONS & WARRANTIES, COVENANTS
9.1 Each Party represents and warrants that:
(i) it is a corporation or entity duly organized and validly
existing under the law of the state of its incorporation;
(ii) it has the full authority to enter into and perform all of
the duties and obligations contemplated under this
Agreement;
(iii) the execution, delivery and performance of this Agreement
by it has been duly authorized by all requisite corporate
action, subject only to approval of its board of
directors; and
(iv) to the best of its knowledge there are no third party
patents or pending patent applications which if issued
would preclude the use or sale of R-fluoxetine or Product.
9.2 Sepracor represents and warrants that, except as provided in
Appendix 9.2, it is the sole and exclusive owner or is exclusively licensed and
controls Patent Rights and Sepracor Know-How, and that such rights are not the
subject of any encumbrance, lien or claim of ownership by any third party.
Sepracor warrants and represents that it has no trade name, trademark or
trademark related material, such as USAN registrations, related to R-fluoxetine.
31
9.3 Sepracor represents and warrants that it has no knowledge of
written third party opinions that Patent Rights are invalid or unenforceable and
that there are no proceedings instituted, threatened or pending in any court of
law or patent office which challenge Patent Rights, validity or enforceability
as applicable thereto. Further, Sepracor knows of no claims, judgments or
settlements against or amounts with respect thereto owed by Sepracor or pending
or threatened claims or litigation against Sepracor relating to Product or
Sepracor Know-How.
9.4 Sepracor covenants that at no time during the term of this
Agreement shall Sepracor assign, transfer, encumber or grant rights in or with
respect to Patent Rights or Sepracor Know-How inconsistent with the grants and
other rights reserved to Lilly under this Agreement, provided, however, this
covenant shall not affect the absolute right of Sepracor to transfer title to
its exclusively owned Patent Rights or Sepracor Know-How to any successor to all
or substantially all of that portion of Sepracor's business.
9.5 Sepracor represents and warrants to the best of its knowledge
that data summaries provided in writing to Lilly by Sepracor prior to the
Effective Date relating to pre-clinical and clinical studies of the Product
accurately represent the raw data underlying such summaries; and it has provided
to Lilly a summary of all material adverse events known to it relating to the
Product. Further, Sepracor has no knowledge of any scientific facts or
circumstances that would negate the intended commercial utility of R-fluoxetine
or Product.
9.6 Sepracor represents and warrants that there are no marks or
trademarks proposed, filed or registered by Sepracor in connection with the
Product and that Sepracor will not seek to file or register any trademark or
xxxx in connection with Product.
9.7 Lilly covenants that at no time during the term of this Agreement
shall Lilly assign, transfer, encumber or grant rights in or with respect to
Product inconsistent with the grants and other rights reserved to Sepracor under
this Agreement, provided, however, this covenant shall not affect the absolute
right of Lilly to transfer title to its exclusive licensed rights under this
Agreement to any successor to all or substantially all of that portion of
Lilly's business.
ARTICLE 10
INDEMNIFICATION
10.1 Lilly. Lilly will indemnify (subject to Section 10.3), defend
and hold Sepracor harmless against any and all actions, suits, claims, demands,
prosecutions, liabilities, costs, and expenses based on or arising out of this
Agreement (including but not
32
limited to claims of patent infringement), resulting from Lilly's performance
under this Agreement including, the development, manufacture, packaging, use or
sale of Products, or use of Sepracor Know-How or Products by Lilly, its
Permitted Sublicensees or its (or their) customers or any representation made or
warranty given by Lilly or its Permitted Sublicensees with respect to Products.
10.2 Sepracor. Sepracor will indemnify (subject to Section 10.3),
defend and hold Lilly harmless against any and all actions, suits, claims,
demands, prosecutions, liabilities, costs, and expenses based on or arising out
of this Agreement, resulting from Sepracor's activities under this Agreement and
activities related to the research and development, manufacture, packaging, use
or sale of Products by Sepracor, or use of Sepracor Know-How or Products by
Sepracor, its other licensees or its (or their) customers or any representation
made or warranty given by Sepracor or its other licensees with respect to
Products.
10.3 Conditions of Indemnification. If either party proposes to seek
indemnification from the other under Sections 10.1 or 10.2, it shall notify the
other party within [**] of receipt of notice of any such claim or suits and
shall cooperate fully with the other party in the defense of all such claims or
suits. Failure of an indemnified party to provide notice of a claim to the
indemnifying party shall affect the indemnified party's right to indemnification
only to the extent that such failure has a material adverse effect on the
indemnifying party's ability to defend or the nature or the amount of the
liability. The indemnifying party shall have the right to assume the defense of
any suit or claim related to the liability if it has assumed responsibility for
the suit or claim in writing; however, if in the reasonable judgment of the
indemnified party, such suit or claim involves an issue or matter which could
have a materially adverse effect on the business operations or assets of the
indemnified party, the indemnified party may waive its rights to indemnity under
this Agreement and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any indemnification rights
such party may have at law or in equity. If the indemnifying party defends the
suit or claim, the indemnified party may participate in (but not control) the
defense thereof at its sole cost and expense. No settlement or compromise shall
be binding on a party hereto without its prior written consent and no party
shall be responsible for damages resulting from the negligence of the other
party.
ARTICLE 11
MISCELLANEOUS
11.1 Modifications. This Agreement supersedes all previous agreements
whether written or oral between the parties. No modifications or amendment of
this
33
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Agreement shall be of any force or effect unless it is in writing signed by the
parties to be bound thereby.
11.2 Assignments and Change of Control. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns and provided that neither party shall assign this
Agreement or any of its rights, privileges or obligations without the prior
written consent of the other party, which consent shall not be unreasonably
withheld; provided, however, that in the event of a Change of Control, written
notification will be required but not consent. Notwithstanding the two
immediately preceding sentences, in the event of a Change of Control of
Sepracor, [**].
11.3 Headings. All titles, headings and captions in the Agreement are
for convenience only, do not constitute part of this Agreement, and shall not be
of any meaning or substance or employed in interpreting this Agreement.
11.4 Invalidity. In the event that a court of competent jurisdiction
holds that a particular provision or requirement of this Agreement is in
violation of any law, such provision or requirement shall not be enforced except
to the extent that it is not in violation of such law and all other provisions
and requirements of this Agreement shall remain in full force and effect. The
parties shall replace such invalidated or unenforceable provision or requirement
by valid and enforceable provision or requirement which will achieve, to the
extent possible, the economic, business and other purposes of the replaced
provision.
11.5 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New York, applicable to
agreements made and to be fully performed therein, without giving effect to its
principles of conflicts of laws.
11.6 Waiver. A waiver of any breach of any provision of this
Agreement shall not be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement.
11.7 No Other Relationship. Nothing herein contained shall be deemed
to create a joint venture, agency or partnership relationship between the
parties hereto. Neither party shall have any power to enter into any contracts
or commitments in the name of, or on behalf of, the other party, or to bind the
other party in any respect whatsoever.
34
11.8 Entire Understanding. This embodies the entire understanding
between the parties relating to the subject matter hereof, whether written or
oral, and there are no prior representations, warranties or agreements between
the parties not contained in this Agreement. In the event of any inconsistencies
or conflicts between the terms of this Agreement and any exhibit or appendix
referred to herein, the terms of this Agreement shall govern.
11.9 Responsibility for Taxes. Lilly shall be responsible for payment
of taxes arising out of or related to Product sales made by Lilly and for
submission of proper documentation with respect thereto to the tax authorities.
Lilly shall indemnify and hold Sepracor harmless from and against any and all
claims and losses (including but not limited to attorney fees) arising out of
Lilly's failure or delay in paying such taxes or submitting such documentation.
11.10 Compliance With Laws. Each party covenants and agrees that all
of its activities under or pursuant to this Agreement shall comply with all
applicable laws, rules and regulations.
11.11 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart shall be deemed to be an original.
11.12 Exhibits and Appendices. All exhibits and appendices referred
to in this Agreement are attached hereto and incorporated herein by this
reference.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal and entered into by their duly authorized
representatives.
SEPRACOR INC. XXX XXXXX AND COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxxx By: /s/ August X. Xxxxxxxx
------------------------------- ----------------------------
Xxxxxxx X. Xxxxxxxxx August X. Xxxxxxxx, M.D.
President and Chief Executive Officer Executive V.P., Science &
Technology
Date: December 4, 1998 Date: December 4, 1998
35
APPENDIX 1.2
Basic Patent Rights
U.S. Patents Expires
5,708,035 January 13, 2015
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 1.13
Improvement Patent Rights
U.S. Patents Expires
5,648,396 July 15, 2014
Patent Applications Docket No.
[**] [**]
APPENDIX 2.4(a)
R-Fluoxetine Development Plan and Time Line
(See Attached)
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 2.4(a)
R-fluoxetine Development Plan
Key Plan Assumptions:
[**]
Development Plan Activities:
[**]
A timeline for the major activities that are included as part of this summary
development plan is attached to this appendix (Attachment 1).
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Summary Development Plan for R-fluoxetine Attachment 1
-----------------------------------------
[**]
APPENDIX 3.3
Sample Royalty Calculation
(See Attached)
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
Appendix 3.3
Example of Royalty Calculation
(Amounts in thousands of US dollars, some numbers have been rounded or truncated
to ease in the demonstration of the methodology to be employed and therefore are
not entirely accurate for calculation purposes.)
[**]
APPENDIX 5.2
Joint Press Release
(See Attached)
(000) 000-0000 - Xxxxx X. Xxxxxx (Lilly)
(000) 000-0000 - Xxxxx X. Xxxxxxxxx (Sepracor)
Lilly and Sepracor Announce Agreement on Next-Generation
Antidepressant
Xxx Xxxxx and Company (NYSE: LLY) and Sepracor Inc. (Nasdaq: SEPR), announced
today that they have entered into a license agreement that will enable Lilly to
exclusively develop and globally commercialize R-fluoxetine. R-fluoxetine, a new
chemical entity patented by Sepracor, is a modified form of an active ingredient
found in Prozac. Prozac was the first selective serotonin reuptake inhibitor
(SSRI) to enter the U.S. market more than 10 years ago. It is the world's most
widely prescribed brand-name antidepressant, having been prescribed to more than
35 million people in more than 100 countries with worldwide sales of
approximately $2.6 billion in 1997. R-fluoxetine is currently in Phase I
clinical development in the United States.
"R-fluoxetine is an exciting molecule with a good chance of becoming an
important new advance in treating depression. Despite recent advances in
diagnosing and treating clinical depression, this illness remains a vastly
underdiagnosed and therefore undertreated disease affecting more than 18 million
adults in the U.S. alone," said Xxxxxx Xxxxxx, Xxxxx president and chief
executive officer. "This licensing agreement with Sepracor, coupled with our
internal progress in developing new antidepressants, will enable Lilly to
introduce new and advanced treatments for this debilitating illness and to build
upon our leadership position in neuroscience products."
R-fluoxetine has been shown in preclinical studies to have the potential to
offer greater flexibility in treating depression compared to currently marketed
antidepressants. In addition, preclinical data suggest that R-fluoxetine has the
potential to provide treatment benefits in a broader range of patients and for a
broader range of indications than most currently available antidepressants,
including
Prozac. Based on current regulatory guidelines, Lilly hopes to complete the
clinical studies needed to thoroughly evaluate R-fluoxetine by 2001 with
regulatory submissions taking place at that time.
Under the terms of the agreement, Sepracor will receive an up-front milestone
payment and license fee of $20 million. The company will also receive up to $70
million in additional milestone payments, based on the progression of
R-fluoxetine through development. In addition, Sepracor will receive royalties
on R-fluoxetine worldwide sales beginning at product launch. In exchange, Lilly
will receive exclusive, worldwide rights to R-fluoxetine for all indications and
uses. Lilly will be responsible for all subsequent development work on
R-fluoxetine, regulatory submissions, product manufacturing, marketing and
sales.
"R-fluoxetine represents another significant opportunity to provide important
therapeutic advances through the development of single-isomer and metabolite
versions of existing pharmaceutical products," said Xxxxxxx X. Xxxxxxxxx,
Sepracor's president and chief executive officer.
"We believe Sepracor has undertaken some very insightful research toward the
development of a single-isomer version of fluoxetine that may have significant
clinical and commercial potential," said August X. Xxxxxxxx, M.D., Lilly
executive vice president, science and technology. "Our success in developing and
marketing Prozac, as well as our overall approach to discovering novel
antidepressants, uniquely qualifies us to take the development of R-fluoxetine
forward."
Sepracor's patent portfolio for R-fluoxetine includes a U.S. method-of-use
patent covering R-fluoxetine as an antidepressant that expires in 2015 and
several other patent filings, covering methods of treatment, unique formulations
and manufacturing processes.
Sepracor is a speciality pharmaceutical company that develops and commercializes
potentially improved versions of widely prescribed drugs. Referred to as
improved chemical entities (ICE), Sepracor's ICE pharmaceuticals are being
developed as proprietary, single-isomer or active-metabolite versions of leading
drugs. ICE pharmaceuticals are designed to offer meaningful improvements in
patient outcomes through reduced side effects, increased therapeutic efficiency,
improved dosage forms and, in some cases, the opportunity for additional
indications.
Lilly is a global research-based pharmaceutical corporation headquartered in
Indianapolis, Ind., that is dedicated to creating and delivering innovative
pharmaceutical-based health care solutions that enable people to live longer,
healthier and more active lives.
This release contains forward-looking statements that reflect management's
current views of the scientific and commercial potential of the R-fluoxetine
molecule. The information is based on management's current expectations but
actual results may differ materially due to various factors. As a product in the
earliest stages of clinical development, its success is subject to a number of
risks and uncertainties, including the successful outcome of clinical trials;
the timely receipt of regulatory approvals; the clinical profile and pricing of
competitive products; market conditions; and those outlined in Lilly and
Sepracor filings with the SEC.
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Prozac(R) (fluoxetine hydrochloride, Dista)
APPENDIX 9.2
Exclusive License Agreement by and between Sepracor Inc. and XxXxxx Hospital
Corporation which was previously provided to Lilly.
