EXHIBIT 10.6
CONFIDENTIAL INFORMATION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT
ASTERISKS (*) DENOTE SUCH OMISSIONS
AGREEMENT
BETWEEN
PRAECIS PHARMACEUTICALS INCORPORATED
AND
ROCHE PRODUCTS INC.
TABLE OF CONTENTS
Page
Article 1 - Definitions.......................................................2
Article 2 - Grant of Rights...................................................9
Article 3 - Development......................................................13
Article 4 - Manufacturing....................................................25
Article 5 - Commercialization................................................26
Article 6 - Consideration....................................................28
Article 7 - Information......................................................42
Article 8 - Patents..........................................................48
Article 9 - Term and Termination.............................................58
Article 10 - Warranties and Indemnities......................................61
Article 11 - Dispute Resolution..............................................65
Article 12 - Miscellaneous...................................................66
Exhibit 1....................................................................74
Exhibit 2....................................................................76
Exhibit 3....................................................................77
Exhibit 4....................................................................82
Exhibit 5....................................................................89
AGREEMENT
This Agreement ("Agreement") is made and is effective as of the 21st day
of August, 1997 ("Effective Date"), by and between PRAECIS PHARMACEUTICALS
INCORPORATED, a Delaware Corporation having a principal place of business at 0
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 ("PRAECIS") and ROCHE PRODUCTS
INC., a corporation of Panama having a principal place of business at Manati,
Puerto Rico ("ROCHE").
WHEREAS, the parties entered into an option agreement dated as of August
21, 1997 ("Option Agreement") under which ROCHE obtained an option to enter into
a collaboration with PRAECIS for the development and commercialization of
pharmaceutical products which contain any LHRH receptor antagonist(s) owned by
or licensed (with the right to grant sublicenses) to PRAECIS, including, but not
limited to the decapeptide known as abarelix.
WHEREAS, ROCHE is hereby exercising its rights under the Option Agreement.
WHEREAS, the parties have prepared this binding Agreement which shall
replace and supersede the Option Agreement and the Summary of Terms attached
thereto.
NOW THEREFORE, for and in consideration of the mutual covenants set forth
below, PRAECIS and ROCHE agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 "Affiliate" shall mean:
a) an organization fifty percent (50%) or more of the voting stock of
which is owned and/or controlled directly or indirectly by a party to this
Agreement;
b) an organization which directly or indirectly owns and/or controls fifty
percent (50%) or more of the voting stock of a party to this Agreement; or
c) an organization which is directly or indirectly under common control
with a party to this Agreement through common share holdings.
The term Affiliate shall not include Genentech, Inc., 0 XXX Xxx, Xxxxx Xxx
Xxxxxxxxx, California, U.S.A., unless ROCHE, in its sole discretion,
notifies PRAECIS that Genentech shall be so considered an Affiliate and
Genentech agrees in writing to be bound by the terms and obligations of
this Agreement.
1.2 "Term of the Agreement" shall mean the time period set forth in Section 9.1
of this Agreement.
1.3 "Territory" shall mean all the countries and territories of the world
excluding the countries set forth on Exhibit 1 to this Agreement.
2
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
1.4 "Compound" shall mean all LHRH receptor antagonist(s) owned by or licensed
(with the right to grant sublicenses) to PRAECIS including, but not limited to,
the decapeptide known as abarelix represented by the following sequence:
***.
Compounds shall include the salts and prodrugs of Compound.
1.5 "Product" shall mean any pharmaceutical product which contains Compound.
1.6 "Agreed Upon Indication" shall mean prostate cancer or any other indication
for which the Joint Steering Committee has agreed to develop Product in the
Territory pursuant to Section 3.2.
1.7 "FDA" shall mean the United States Food and Drug Administration and
equivalent governmental agencies in the Territory.
1.8 "Technical Information" shall mean any and all technical data, information,
materials including samples of Product, chemical manufacturing data,
toxicological data and pharmacological data, clinical data, medical uses,
formulations, specifications, quality control testing data, and all submissions
and correspondence to and from the FDA with regard to Product made by or on
behalf of PRAECIS or its Affiliates, which is reasonably useful to enable ROCHE
to make, have made, use, offer for sale, sell or import Product in the
Territory.
3
1.9 "PRAECIS Invention" means any invention relating to the making, having made,
using, offering for sale, selling or importing of Product, whether or not
patentable, which is conceived and reduced to practice during the Term of the
Agreement solely by a person or persons contractually required to transfer (such
as by assignment) or license patent rights relating to such inventions to
PRAECIS or its Affiliates.
1.10 "Joint Invention" means any invention relating to the making, having made,
using, offering for sale, selling or importing of Product (whether or not
patentable) which is jointly conceived and reduced to practice during the Term
of the Agreement by (i) at least one person contractually required to transfer
(such as by assignment or license) patent rights relating to such inventions to
PRAECIS or its Affiliates and (ii) at least one person contractually required to
transfer such as by assignment or license patent rights related to such
inventions to ROCHE or its Affiliates.
1.11 "ROCHE Invention" means any invention relating to the making, having made,
using, offering for sale, selling or importing of Product (whether or not
patentable) which is conceived and reduced to practice during the Term of the
Agreement solely by a person or persons contractually required to transfer (such
as by assignment or license) patent rights relating to such inventions to ROCHE
or its Affiliates.
1.12 "PRAECIS Proprietary Rights" shall mean (i) the patent applications and
patents in all countries of the Territory (including patent applications and
patents claiming PRAECIS Inventions and Joint Inventions) and (ii) know-how
(including Technical Information), owned by or licensed (with the right to grant
sublicenses) to PRAECIS on the Effective Date or at any time during the Term of
this Agreement, relating to the making, having made, using, offering for sale,
selling and importing of Product in the
4
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
Territory. Such PRAECIS Proprietary Rights include all those patents and patent
applications as set forth in Exhibit 2. PRAECIS, from time to time, but not less
than once a year during the Term of the Agreement shall, if there are any
changes, update Exhibit 2 and provide the updated Exhibit 2 to ROCHE.
1.13 "Semi-Finished Dosage Form" shall mean Product in finished dosage
pharmaceutical form, including vial (sterilized or unsterilized), for
distribution or sale to the ultimate user or dispenser but before labeling and
packaging.
1.14 "Development Costs" shall have the meaning set forth in Exhibit 3.
1.15 "Initial Cost of Goods" (for commercial quantities) shall mean the cost of
Compound, Semi-Finished Dosage Form or other form of Product as initially
supplied to the parties for commercial quantities, whether such Compound,
Semi-Finished Dosage Form or other form of Product is supplied by a third party
vendor or PRAECIS, determined on the basis of the following formula:
*** of Compound multiplied by the number of grams of Compound (or
fraction thereof) included in a dosage unit plus a *** overage factor.
Based upon current assumptions, the Initial Cost of Goods for Semi-finished
Dosage Form assuming a vial content of ***, would be equal to a cost per vial of
$***, plus a ***% premium to reflect transportation, insurance, warehousing,
obsolescence, handling and other costs, plus $*** per vial for the Sustained
Release Formulation, Fill and Finish, QA/QC and vial cost, etc., for a total
cost per vial of approximately $***.
5
1.16 "NDA" shall mean a New Drug Application or Product License Application
filed with the FDA, or its foreign equivalent, for approval to market and sell a
drug or biological.
1.17 "Phase III" shall mean the third phase of human clinical trials of Product
required by the FDA to gain evidence of efficacy in the target population and
obtain expanded evidence of safety for Product, as described in 21 CFR Part 312
as it may be amended.
1.18 "Initiation of First Phase III" shall mean the date that the first patient
is entered and randomized (if appropriate) into Phase III in the United States.
1.19 "Launch of Product" shall mean the first shipment of Product by ROCHE or
any of ROCHE's Affiliates or sublicensees to a wholesaler or distributor in
commercial quantities for sale in a country in the Territory.
1.20 "Adjusted Gross Sales" shall mean the gross sales amount invoiced by ROCHE,
its Affiliates, or sublicensees for the Product to non-Affiliated third party
purchasers in the Territory less, to the extent such amounts are included in the
amount of gross sales invoiced, deductions of returns (including withdrawals and
recalls), rebates (price reductions, including Medicaid or performance based and
similar types of rebates e.g., chargebacks or retroactive price reductions),
volume (quantity) discounts, discounts granted at the time of invoicing, sales
taxes and other taxes directly linked to the gross sales amount as computed on a
product-by-product basis in ROCHE's sales statistics for the countries
concerned.
6
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
1.21 "Net Sales" shall mean the amount calculated by subtracting from Adjusted
Gross Sales a lump sum deduction of *** (***%) percent of Adjusted Gross Sales
for those sales related deductions which are not accounted for on a
product-by-product basis.
1.22 "Valid Claim" means a claim in any (i) unexpired and issued patent that is
a PRAECIS Proprietary Right and that has not been dedicated to the public,
disclaimed, revoked or held invalid by a final unappealable decision or
unappealed decision of a court of competent jurisdiction, or (ii) pending patent
application that is a PRAECIS Proprietary Right which patent application has not
been on file with the applicable patent office for more than seven (7) years
from the earliest date from which the patent application 1) was filed or 2)
claims priority.
1.23 "Non-Disclosure Agreement" shall mean a non-disclosure agreement dated
December 16, 1996 under which the parties have shared information with regard to
the research, development and commercialization of LHRH antagonists.
1.24 "Information" shall mean any and all materials, trade secrets or other
information related to the making, having made, using, offering for sale,
selling or importing Product (including, without limitation, Technical
Information and business information or objectives) which is disclosed in
writing by one party ("Disclosing Party") to the other party ("Receiving Party")
under (i) the Non-Disclosure Agreement, (ii) the Option Agreement, or (iii) this
Agreement. Notwithstanding the foregoing, materials, trade secrets or other
information which is orally, electronically or visually disclosed to the
7
Receiving Party by the Disclosing Party, shall constitute "Information" if the
Disclosing Party, within thirty (30) days after such disclosure, delivers to the
Receiving Party a written document or documents which describes in detail or
summarizes the materials, trade secrets or other information and references the
place and date of such oral, electronic, or visual disclosure and the names of
the persons to whom such disclosure was made.
1.25 "Synthelabo Agreement" shall mean an agreement dated May 13, 1997 (as
amended) between PRAECIS and Synthelabo, a societe anonyme organized in France
("Synthelabo"), with respect to the development and commercialization of
Products outside the Territory. PRAECIS shall promptly provide to ROCHE any and
all documents which amend, expressly or by implication, the Synthelabo
agreement, which documents PRAECIS may redact with respect to financial
information. ROCHE shall maintain any and all such documents as Information in
accordance with the requirements of this Agreement.
1.26 "COGS Amount" shall mean the Initial Cost of Goods for the applicable form
of Product, as adjusted pursuant to the provisions of the Heads of Supply
Agreement and, upon execution in accordance with the terms thereof, the Supply
Agreement (as defined in the Heads of Supply Agreement).
1.27 "Revenue Share" shall mean the amount provided for and determined as set
forth in Section 6.2 of this Agreement, which amount reflects both a mark-up on
Initial Cost of Goods and a payment.
8
1.28 "Product Revenue" shall mean the sum of the COGS Amount and the Revenue
Share with respect to Product.
2. GRANT OF RIGHTS
2.1 Territory Rights. PRAECIS grants ROCHE the sole and exclusive right and
license, with the right to sublicense (except as set forth in Sections 2.2 and
2.3), to make and have made (subject to the provisions of Article 4), use, offer
for sale, import and sell Product under the PRAECIS Proprietary Rights in the
Territory.
2.2 Sublicenses. Except as otherwise provided in Section 2.3 below, ROCHE shall
have the right to sublicense the rights granted under Section 2.1 above to any
given third party.
If ROCHE grants a sublicense, all of the terms and conditions of this
Agreement shall apply to the sublicensee to the same extent as they apply to
ROCHE for all purposes. ROCHE assumes full responsibility for the performance of
all obligations so imposed on such sublicensee and will itself pay and account
to PRAECIS for all payments due under this Agreement by reason of the operations
of any such sublicensee.
2.3 PRAECIS Right to Sublicense in the United States. In the event ROCHE desires
to sublicense the rights to Products granted pursuant to Section 2.1 above to
any third party in the United States, ROCHE shall first present an offer to
PRAECIS. PRAECIS and ROCHE shall negotiate such offer in good faith for up to
ninety (90) days from the date the offer is received by PRAECIS. If, at the end
of such ninety (90)
9
day period, the parties have been unable to reach agreement on the essential
terms of such sublicense, ROCHE shall be free to offer sublicensing rights to
Products in the United States to any third party. However, prior to entering
into any such agreement with a third party, ROCHE shall (i) summarize in writing
such terms ("Third Party Terms") to PRAECIS for PRAECIS to consider whether the
Third Party Terms would be more favorable to PRAECIS than the offer last made to
PRAECIS by ROCHE ("PRAECIS Offer") and (ii) request written consent from PRAECIS
to such grant to the third party ("Sublicensee Notice").
If PRAECIS, in good faith, determines that (i) the Third Party Terms are
more favorable than the PRAECIS Offer (a "PRAECIS Third Party Terms
Determination") and/or (ii) such grant to the third party would have a material
adverse impact on the potential of Product in the Territory from a business or
scientific viewpoint ("PRAECIS Material Adverse Impact Determination"), then
PRAECIS shall so notify ROCHE in writing of such Determination(s) and provide
ROCHE with reasons for such Determination(s) within thirty (30) days after
receiving ROCHE's Sublicensee Notice. In the event ROCHE disagrees with either
or both of PRAECIS' Determination(s), ROCHE shall so notify PRAECIS in writing
within thirty (30) days after receiving PRAECIS' notice. XXXXXXX shall then have
thirty (30) days from XXXXX'x notice to submit all matters in dispute to
arbitration generally in accordance with the procedures set forth in Article 11
of this Agreement. Should PRAECIS not submit one or both of the two matters to
arbitration within such thirty (30) days, then such corresponding
Determination(s) and PRAECIS' notice shall be considered untimely and withdrawn.
In the event (1) PRAECIS makes a PRAECIS Third Party Terms Determination
and ROCHE agrees with such Determination or (2) such Determination is timely
10
submitted to arbitration as described above and the arbitrator agrees with such
Determination, ROCHE shall grant a sublicense to PRAECIS under the Third Party
Terms. In the event PRAECIS makes a PRAECIS Third Party Terms Determination
which is timely submitted to arbitration as described above and the arbitrator
does not agree with such Determination, ROCHE shall be free to grant such
sublicense to the third party under the Third Party Terms, except as provided in
this Section 2.3 with respect to a PRAECIS Material Adverse Impact
Determination.
In the event (1) PRAECIS makes a PRAECIS Material Adverse Impact
Determination and ROCHE agrees with such determination or (2) such Determination
is timely submitted to arbitration as described above and the arbitrator agrees
with such Determination, then ROCHE shall not be permitted to grant such
sublicense to such third party. In the event PRAECIS makes a PRAECIS Material
Adverse Impact Determination which is timely submitted to arbitration as
described above and the arbitrator does not agree with such Determination, ROCHE
shall be free to grant such sublicense to the third party under the Third Party
Terms, except as provided above with respect to a PRAECIS Third Party Terms
Determination.
2.4 Non-Territory Rights. The parties acknowledge that PRAECIS and Synthelabo
have entered into the Synthelabo Agreement. In the event rights under patents
applications, patents and know-how owned by or licensed (with the right to grant
sublicenses) to PRAECIS now or at any time during the Term of the Agreement,
relating to the making, having made, using, offering for sale, selling or
importing of Products in a country outside the Territory become available for
licensing due to any i) expiration, (ii) modification, (iii) termination by
PRAECIS or Synthelabo, or (iv) exercise of rights by PRAECIS or Synthelabo,
under the Synthelabo Agreement, PRAECIS,
11
should it choose not to retain such rights for itself, shall first present an
offer to ROCHE in writing to obtain such available rights. PRAECIS and ROCHE
shall negotiate such offer in good faith for up to ninety (90) days from the
date the offer is received by ROCHE. If, at the end of such ninety (90) day
period, the parties have been unable to reach agreement on the essential terms
of an agreement granting such available rights in the country to ROCHE, PRAECIS
shall be free to offer the available rights in the country to any third party;
provided, however, that prior to entering into any such agreement with a third
party, PRAECIS shall summarize in writing such terms to ROCHE ("PRAECIS Third
Party Terms") for ROCHE to consider whether the PRAECIS Third Party Terms would
be more favorable to ROCHE than the offer last made to ROCHE by PRAECIS ("ROCHE
Offer").
If ROCHE, in good faith, determines that the PRAECIS Third Party Terms are
more favorable than the ROCHE Offer, then ROCHE shall so notify PRAECIS in
writing of such determination and shall provide reasons for such determination.
ROCHE shall provide such notice and reasons to PRAECIS within thirty (30) days
after XXXXX'x receipt of the PRAECIS Third Party Terms. In the event PRAECIS
disagrees with XXXXX'x determination, PRAECIS shall so notify ROCHE in writing
within thirty (30) days after receiving ROCHE's notice. ROCHE shall then have
thirty (30) days from PRAECIS' notice to submit the matter to arbitration
generally in accordance with the procedures set forth in Article 11 of this
Agreement. Should ROCHE not timely submit the matter to arbitration within such
thirty (30) days, then XXXXX'x determination and notice shall be considered
untimely and withdrawn.
In the event (1) XXXXXXX agrees with XXXXX'x determination or (2) the
matter is timely submitted to arbitration as described above and the arbitrator
agrees with
12
ROCHE's determination, PRAECIS shall grant to ROCHE a license or sublicense to
the available rights in the country under the PRAECIS Third Party Terms. In the
event the matter is timely submitted to arbitration as described above and the
arbitrator does not agree with XXXXX'x determination, PRAECIS shall be free to
grant such available rights to the third party under the PRAECIS Third Party
Terms.
3. DEVELOPMENT
3.1 Cooperation. ROCHE and XXXXXXX will collaborate in developing procedures for
each party to provide input into the development of Product, including, without
limitation, regulatory submissions for Agreed Upon Indications.
3.2 Joint Steering Committee.
a) The parties shall form a Joint Steering Committee ("JSC"), consisting
of an equal number of representatives from each of ROCHE and PRAECIS, which
equal number shall not exceed two (2). The JSC shall establish, in writing, the
Agreed Upon Indications. The JSC shall be chaired, on a rotating annual calendar
year basis, by a senior representative from ROCHE or PRAECIS, with the initial
chairperson to be designated by ROCHE. The JSC shall have the following
responsibilities: (a) establish the Agreed Upon Indications, as provided above,
but with no recourse to Arbitration under Article 11; (b) establish policies
for the development of Product for all Agreed Upon Indications in the Territory;
(c) establish policies for manufacture and formulation activities with respect
to Product, including, without limitation, alternative sustained release
formulations to maximize sales of the Product in the Territory; (d) approve and
monitor annual development programs and modifications thereto; (e) establish
13
subcommittees and project teams on an as-needed basis; and (f) undertake such
other activities as may be agreed upon by the parties.
b) To implement its policies, the JSC shall establish a Development
Project Team ("DPT") containing representatives from ROCHE and PRAECIS. The DPT
will (a) prepare and submit to the JSC for approval annual development plans and
budgets for Product ("Development Program"), and, (b) under the oversight of the
JSC, implement and monitor the Development Program, including submitting
proposed modifications thereof to the JSC for its approval. The DPT shall be
chaired by a Roche representative who shall lead the day-to-day operations of
the DPT in implementing and monitoring the Development Program.
c) The DPT will annually establish the Development Program, consisting of
a development plan and a development budget, for Product in all Agreed Upon
Indications. The development plan shall identify the activities to be conducted
by the DPT, for at least eight (8) calendar quarters in advance and shall be
updated on a quarterly basis. A rolling development budget in US dollars will be
derived from such development plan and shall identify manpower used, expressed
as Full Time Equivalents ("FTE"), and costs to be incurred by each party,
either internally or externally, for at least the next eight (8) calendar
quarters. The rolling development budget shall identify activities for each main
development function, as detailed in Exhibit 3, in sufficient activity detail to
allow monitoring of expenses versus budget. The parties shall update the
development budget on a quarterly basis and may revise it if changes in the
Development Program warrant.
14
3.3 JSC Decisions.
a) Consensus. Decisions of the JSC regarding development of Product shall
be made by consensus. If the JSC is unable to reach consensus on any development
decision, the issue shall be submitted for consideration to the Head of
Development for the Pharmaceutical Division of X.Xxxxxxxx-Xx Xxxxx Ltd, a Swiss
Corporation having a principal place of business at Basel, Switzerland
("ROCHE-Basel") and to the Chief Executive Officer of PRAECIS.
b) Agreed Upon Indication. In the event that the issue can not be resolved
by the individuals named in subparagraph (a) and the issue is a development
commitment which relates to an Agreed Upon Indication, then the party proposing
the commitment ("Proposing Party") may proceed with such development commitment.
In such event the issue must promptly be brought to an independent neutral
expert selected by the parties or, if within thirty (30) days the parties are
unable to agree upon an independent neutral expert, one selected by the American
Arbitration Association ("AAA"), to determine whether such development
commitment is reasonably necessary, consistent with prudent business practices,
to obtain approval of Product for an Agreed Upon Indication. Such determination
shall include consideration of whether development or commercialization,
directly or indirectly, would have a material adverse impact on the potential of
Product in the Territory from a business or scientific viewpoint. If the neutral
expert determines that the commitment is reasonably necessary, then costs
associated with such commitment shall be considered as Development Costs. If the
neutral expert determines that the commitment is not reasonably necessary, then
the costs incurred in connection with such commitment shall not be considered
part of Development Costs and shall be paid solely by the Proposing Party.
15
c) Other Indications.
i) In the event that the issue can not be resolved by the
individuals named in subparagraph (a) and the issue is a development commitment
relating to an indication other than an Agreed Upon Indication, then the
Proposing Party may proceed with such development commitment as set forth below,
at its sole cost. In such event, the other party shall lose its rights with
respect to such indication (other than under the Heads of Supply Agreement set
forth as Exhibit 4 to this Agreement), including (1) in the case of PRAECIS, any
copromotion rights and rights to financial consideration including Revenue Share
under Section 6.2 and ex-US royalties under Section 6.3(a) with respect to such
indication, and, (2) in the case of ROCHE, its license and related rights under
Article 2 with respect to such indication, except as described below.
ii) Should PRAECIS be the Proposing Party, ROCHE shall have the
option to reassume rights lost in subsection (c)(i) above with respect to such
indication ("ROCHE Opt-in Right") by so notifying PRAECIS in writing before the
filing of the NDA for such indication. In the event ROCHE exercises the Roche
Opt-in Right with respect to an indication, ROCHE shall, within sixty (60) days
after receiving an invoice with detailed cost information, reimburse PRAECIS for
the amount of PRAECIS' documented costs in developing such indication (to the
extent such costs would otherwise have been reimbursable as a Development Cost)
and after XXXXX'x exercise of the ROCHE Opt-in Right, share in the Development
Costs for the indication in accordance with Section 3.4. Should PRAECIS be the
Proposing Party and ROCHE does not exercise the ROCHE Opt-in Right, then upon
notice to ROCHE, PRAECIS may develop and commercialize the indication either
alone or in collabora-
16
tion with or through one or more third parties and PRAECIS shall continue to
supply Compound or Product in accordance with Article 4 for all other
indications.
Notwithstanding the above, PRAECIS shall not develop or commercialize such
indication if the JSC decides that such development or commercialization,
directly or indirectly, would have a material adverse impact on the potential of
the Product in the Territory from a business or scientific viewpoint ("Impact").
Should the JSC not be able to reach a decision with respect to Impact, then the
issue shall be submitted for consideration to the Head of Development for the
Pharmaceutical Division of ROCHE-Basel and to the Chief Executive Officer of
PRAECIS. In the event that such issue cannot be resolved by these individuals
after a good faith discussion to resolve the issue, then either party may submit
the matter to arbitration generally in accordance with the procedures set forth
in Article 11 (other than Section 11.1(a) and 11.1(c) below) of this Agreement.
iii) Should ROCHE be the Proposing Party, PRAECIS shall have the option to
reassume rights lost in subsection (c)(i) above including the right to obtain
Revenue Share under Section 6.2 and ex-US royalties under Section 6.3(a) with
respect to such indication ("PRAECIS Opt-in Right") by so notifying ROCHE in
writing before the filing of the NDA for such indication. In the event PRAECIS
exercises the PRAECIS Opt-in Right with respect to an indication, PRAECIS shall,
within sixty (60) days after receiving an invoice with detailed cost
information, reimburse ROCHE for the amount of ROCHE's documented costs in
developing such indication (to the extent such costs would otherwise have been
reimbursable as a Development Cost) and after PRAECIS exercises the PRAECIS
Opt-in Right share in the Development Costs for the indication in accordance
with Section 3.4. Should ROCHE be the Proposing Party and
17
PRAECIS does not exercise the PRAECIS Opt-in Right, then upon notice to PRAECIS,
ROCHE may develop and commercialize the indication either alone or in
collaboration with or through one or more third parties and PRAECIS shall
continue to supply Compound or Product in accordance with Article 4 for all
other indications.
Notwithstanding the above, ROCHE shall not develop or commercialize such
indication if the JSC decides that such development or commercialization,
directly or indirectly, would have a material adverse impact on the potential of
the Product in the Territory from a business or scientific viewpoint ("Impact").
Should the JSC not be able to reach a decision with respect to Impact, then the
issue shall be submitted for consideration to the Head of Development for
ROCHE-Basel and to the Chief Executive Officer of PRAECIS. In the event that
such issue cannot be resolved by these individuals after a good faith discussion
to resolve the issue, then either party may submit the matter to arbitration
generally in accordance with the procedures set forth in Article 11 (other than
Section 11.1(a) and 11.1(c) below) of this Agreement.
iv) When needed under Section 3.3(c)(iii), the parties shall agree
upon mechanisms and equally share costs to account for sales which are
attributable to such indications that are not Agreed Upon Indications.
3.4 Development Costs. Except as set forth in Section 3.8, the parties shall
share equally Development Costs, after subtracting amounts paid by Synthelabo.
Notwithstanding the above, ROCHE shall not be responsible for Development
Costs incurred or commitments made before the Effective Date even if such costs
or commitments are actually paid for or conducted after such date.
18
The parties shall conduct the Development Program in accordance with
annual budgets included therein. On or after the date ROCHE exercises its option
under the Option Agreement, i) on a monthly basis thereafter, within fifteen
(15) days after the end of each calendar month during the Term of the Agreement,
a given party shall provide a report to the other party and the JSC identifying
the estimated expenses incurred by such party during the prior calendar month,
and ii) within thirty (30) days after the end of each calendar quarter during
the Term of the Agreement, a given party shall provide a final report to the
other party and the JSC of actual Development Costs incurred by such party
during the prior calendar quarter. Each monthly and quarterly report will be
accompanied by and include reasonable documentation, in accordance with Exhibit
3, which itemizes and explains the costs incurred as to allow comparison to the
annual budget. Based on the quarterly reports, the JSC shall, within thirty (30)
days after the receipt of quarterly reports from each party, determine the net
amount owed by one party to the other party, and the party owing such net amount
will make such payment within five (5) business days after such determination.
Except as set forth in the Development Program, one party shall not bind another
party to any financial obligation whatsoever without the other party's prior
written approval.
Reports provided to ROCHE shall be sent to:
Roche Products Inc.
State Road #670 km 2.7
Manati, Puerto Rico 00647-0452
Attn: President
or to any other address that ROCHE may advise in writing.
19
Reports provided to PRAECIS shall be sent to:
PRAECIS PHARMACEUTICALS INCORPORATED
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Financial Officer
or to any other address that PRAECIS may advise in writing.
All Development Costs payable to a party under this Agreement shall be
payable in U.S. Dollars by wire transfer to a bank account designated by the
party. Development Costs incurred by a party in a country having a currency
other than US Dollars shall be converted into US Dollars. ROCHE shall convert
Development Costs incurred by PRAECIS in a country having a currency other than
US Dollars for a given calendar month using the average of the daily official
rates of exchange for each day in the calendar month, using the rates of
exchange as computed in ROCHE's central foreign currency exchange data base
derived from the Reuters System. PRAECIS shall convert Development Costs
incurred by ROCHE in a country having a currency other than US Dollars for a
given calendar month using the average of the daily official rates of exchange
for each day in the calendar month, using the rates of exchange from the Reuters
System.
3.5 Audit. Each party shall keep accurate and correct records appropriate to
determine the amounts due under Article 3 of this Agreement. Such records shall
be retained for at least four (4) years following the end of the calendar year
to which such records pertain.
A party or its authorized independent public accountant ("auditing party")
shall have the right to engage a partner (or person comparable in position and
technical
20
expertise to a partner), located in the country where the audit would occur,
from the other party's independent public accountant, to perform, on behalf of
the auditing party, an audit of such books and records of the other party
("audited party") that are deemed reasonably necessary by such partner to verify
the audited party's report(s) for the period(s) requested. The partner can not
be responsible for supervising or conducting audits of the audited party's books
and records. The audit shall be conducted in accordance with generally accepted
auditing standards in the United States of America.
The audit rights under this Section of this Agreement may be exercised by
a party (1) no more often than once per year (2) not more frequently than once
with respect to records covering any specific period of time, and (3) only
within four (4) years after the payment period to which such records relate. The
audit shall be performed upon no less than thirty (30) days prior written notice
to the audited party, during the audited party's normal business hours. The
terms of this Section 3.5 shall survive the Term of the Agreement for a period
of four (4) years.
The auditing party will bear the full cost any such audit unless such
audit discloses an underpayment to the auditing party of more than five percent
(5%) from the amounts paid. The audited party shall promptly (1) pay any
underpayment due the auditing party and, (2) if the underpayment due to the
auditing party is more than five percent (5%) of the amount paid, the audited
party shall bear the full reasonable cost of such audit. Any overpayment by the
audited party shall be deducted from the next payment due the auditing party
under Section 3 of this Agreement or, if no such further payments are due
promptly reimbursed to the auditing party.
21
3.6 Diligence. Each party shall use reasonable diligence consistent with prudent
business practices to develop Product and obtain and maintain necessary
governmental approval to market Product in the Territory in accordance with the
Development Program which includes all normal and customary activities necessary
for timely development of Product for the Agreed Upon Indications. Reasonable
diligence for a party shall mean the same standard of effort as would be used by
the party in the development, testing, and manufacturing of its products of its
own innovation of similar scientific and business potential in the Territory.
3.7 NDA. In the United States, the NDA for Product shall be owned by PRAECIS and
filed by ROCHE or its Affiliates on behalf of PRAECIS. Outside the United States
and within the Territory, the NDA for Product shall be owned by ROCHE or its
Affiliates and filed by ROCHE or its Affiliates. Each party, upon request,
shall supply the other party with a copy of all communications related to
Product to or from any governmental agency of all countries in the Territory.
ROCHE shall have primary responsibility for compiling and submitting the
NDA documentation for all countries in the Territory, except for a given country
of the Territory if, for the given country, the JSC concludes that the
submission of the NDA in the given country would be materially delayed by ROCHE
compiling and submitting such documentation.
Consistent with the role of an NDA owner, PRAECIS shall promptly act upon
any promotional material related to Product provided by ROCHE for submission to
the FDA.
22
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
3.8 Data. All data generated on account of the Development Program shall be
owned jointly by ROCHE and PRAECIS and shall not be provided to any third party
without the consent of both parties, except to Synthelabo to the extent required
by (i) applicable regulatory authorities or (ii) the Synthelabo Agreement as of
the Effective Date. PRAECIS will use best efforts to ensure that Synthelabo
timely provides to ROCHE, free of charge, all data relating to the safety of
Compound and Product and all other data relating to clinical studies.
3.9 Additional Trial. PRAECIS and ROCHE, subject to approval by the JSC pursuant
to Section 3.3, may conduct an additional clinical study on ***. Should the JSC
decide to have such study conducted, for the first *** dollars ($***) of
Development Costs associated with the ***, ROCHE shall be responsible for
sharing *** and PRAECIS shall be responsible for sharing the remaining
Development Costs associated with ***. For any Development Costs associated
with the *** in excess of *** dollars ($***), the parties shall share equally
such additional Development Costs, after subtracting amounts paid by Synthelabo
to PRAECIS with respect to those additional Development Costs. PRAECIS shall use
best efforts to secure the agreement of Synthelabo to pay a sum which *** of the
Development Costs of the ***. Any payments by Synthelabo with respect to the
first *** dollars ($***) of Development Costs associated with the *** will not
be deducted in determining ROCHE's funding obligation for the ***.
23
3.10 Withholding Tax. With respect to Development Costs, each party will remit
payments to the other party due under this Article 3 without deduction of any
withholding taxes which may otherwise be due.
3.11 Trademarks. It is the objective of the parties to have a single worldwide
trademark for a given Product. ROCHE shall own the trademark for a given Product
only in the Territory. ROCHE shall bear the cost of obtaining and maintaining
the trademark for the Product in the Territory. Notwithstanding the above and
subject to Section 3.3, for a given Product, in the event PRAECIS or any of its
Affiliates or sublicensees (including Synthelabo), if any, has or acquires the
right to market and sell Product incorporating PRAECIS Proprietary Rights in the
Territory, then PRAECIS or such Affiliate or sublicensee shall have the right to
use the trademark for the Product on a royalty-free basis in connection with
marketing and selling such Product in the Territory.
Outside the Territory, upon written request from PRAECIS to ROCHE, PRAECIS
or any of its Affiliates or sublicensees (including Synthelabo) shall have the
right to use the same trademark for the same Product as it is used in the
Territory on a royalty-free basis unless ROCHE determines and demonstrates
within thirty (30) days after the date PRAECIS requested such use that such use
would have a material adverse impact on the potential of Product in the
Territory from a business viewpoint. In the event PRAECIS does not agree that
ROCHE has demonstrated that such use would have a material adverse impact on the
potential of Product in the Territory from a business viewpoint, PRAECIS shall
so notify ROCHE in writing within thirty (30) days after the date PRAECIS
requested such use. ROCHE shall then have thirty (30) days from XXXXXXX's notice
to submit the matter to arbitration generally in accordance with
24
the procedures set forth in Article 11 of this Agreement. Should ROCHE not
submit the matter to arbitration within such thirty (30) days, then XXXXX'x
determination and notice shall be considered untimely and withdrawn. In the
event (1) PRAECIS agrees with ROCHE or (2) the matter is timely submitted to
arbitration as described above and the arbitrator agrees with ROCHE, PRAECIS and
its Affiliates and sublicensees (including Synthelabo) shall not have the right
to use the trademark outside the Territory. In the event the matter is timely
submitted to arbitration as described above and the arbitrator does not agree
with XXXXX'x determination, PRAECIS and its Affiliates and sublicensees
(including Synthelabo) shall be free to use such trademark outside the Territory
for the same Product as used in the Territory on a royalty-free basis.
4. MANUFACTURING
4.1 Supply Agreement.
a) Heads. The parties shall enter into a Supply Agreement for PRAECIS to
exclusively make or have made and ROCHE to exclusively purchase its requirement
of Compound and/or Product in the Territory. A Heads of Supply Agreement is set
forth in Exhibit 4 to this Agreement and is binding on the parties. The Heads of
Supply Agreement shall be the basis for preparing a full Supply Agreement. It is
anticipated that the parties will negotiate in good faith additional specific
terms reflecting the understandings set forth in the Heads of Supply Agreement
and finalize the Supply Agreement within three (3) months after Initiation of
First Phase III.
25
b) Dispute. In the event that the parties are unable to resolve any issues
and thus are unable to finalize the Supply Agreement by three (3) months after
Initiation of First Phase III, the parties shall first refer such issues to the
President of Roche Laboratories Inc., a Delaware corporation which is an
Affiliate of ROCHE ("Roche Labs"), or its equivalent, and to the Chief Executive
Officer of PRAECIS for resolution. In the event that such issues cannot be
resolved by these individuals, then either party may initiate arbitration
generally in accordance with the procedures set forth in Article 11 (other than
Sections 11(a) and 11(c) below) of this Agreement. However, the decision of the
arbitrator pursuant to this Section 4.1 shall be based on the following factors
in descending order of importance: (a) consistency with the provisions of this
Agreement and Heads of Supply Agreement; (b) consistency with the intent of the
parties as reflected in this Agreement and Heads of Supply Agreement; and (c)
customary and reasonable provisions included in comparable supply agreements.
5. COMMERCIALIZATION
5.1 Diligence. ROCHE shall use reasonable diligence consistent with ROCHE's
typical prudent business practices to market and sell Product in the Territory.
Reasonable diligence for ROCHE under this Section 5.1 shall mean the same
standard of effort as would be used by ROCHE in the marketing and sale of
products of its own innovation of similar business potential in the Territory.
5.2 Cooperation. ROCHE and PRAECIS will collaborate in developing procedures for
PRAECIS to provide input into the promotion of Product. ROCHE shall retain
responsibility for leading the implementation of the promotion of Product and
making
26
decisions regarding marketing of Product. ROCHE shall present the ROCHE
marketing plan for Product to PRAECIS on at least an annual basis, and PRAECIS
shall have a reasonable opportunity to provide comments thereon to ROCHE.
5.3 US Copromotion Option.
a) Option. PRAECIS shall have an option to promote and detail in the
United States Product jointly with Xxxxxxxx-Xx Xxxxx Inc., a New Jersey
corporation, having a principal place of business at Nutley, New Jersey
("XXXXX-Xxxxxx") or, at XXXXX-Xxxxxx'x discretion, an Affiliate of XXXXX-Xxxxxx,
such option to be exercised in accordance with Section 1 of the Heads of
Agreement for Copromotion as set forth in Exhibit 5 to this Agreement
("Copromotion Option"). The Heads of Agreement for Copromotion is binding on the
parties, and shall be the basis for preparing a full Copromotion Agreement
("Copromotion Agreement"). It is anticipated that the parties will negotiate in
good faith additional specific terms reflecting the understandings set forth in
the Heads of Agreement for Copromotion and finalize the Copromotion Agreement
within three (3) months after PRAECIS exercises its Copromotion Option.
b) Dispute. In the event that the parties are unable to resolve any issues
and thus are unable to finalize the Copromotion Agreement by three (3) months
after the Copromotion Option is exercised, the parties shall first refer such
issues to the President of Roche Labs, or its equivalent, and to the Chief
Executive Officer of PRAECIS for resolution. In the event that such issues
cannot be resolved by these individuals, then either party may initiate
arbitration generally in accordance with the procedures set forth in Article 11
(other than Sections 11(a) and 11(c) below) of this Agreement. However, the
decision of the arbitrator pursuant to this Section 5.3 shall be based on the
following factors in descending order of importance: (a) consistency
27
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
with the provisions of this Agreement and Heads of Copromotion Agreement; (b)
consistency with the intent of the parties as reflected in this Agreement and
Heads of Copromotion Agreement; and (c) customary and reasonable provisions
included in comparable agreements.
6. CONSIDERATION
6.1 Development Payments.
a) Events. ROCHE shall make the following non-refundable payment(s) to
PRAECIS within thirty (30) days after (i) the first achievement of the
respective event(s) set forth below with respect to an Agreed Upon Indication
for Product and (ii) receipt of an invoice from PRAECIS:
TABLE # I
---------
------------------------------------------------------------
Event For an Agreed Upon United States Dollars
Indication (In Millions)
------------------------------------------------------------
*** ***
------------------------------------------------------------
Under Table I, ***.
28
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
Each of the above payments shall be payable no more than once and shall
encompass all products comprising Product and all indications taken together.
In the event the United States FDA waives Initiation of First Phase III for
Product, the payment that would otherwise have become due under this Section 6.1
for Initiation of First Phase III will be due and payable upon Filing NDA in the
United States.
b) Allocation. Based upon PRAECIS' allocation of PRAECIS Proprietary
Rights between (1) patents owned by PRAECIS and (2) those owned by third parties
(such as patents related to Product owned by the Indiana University Foundation
("IU")) and licensed to PRAECIS, the payments of Table 1 are allocated as
follows: ***% of each such payment shall be deemed to be attributable to the
PRAECIS Proprietary Rights owned by PRAECIS, and ***% of each such payment shall
be deemed to be attributable to that portion of the PRAECIS Proprietary Rights
owned by third parties and licensed to PRAECIS.
c) Withholding Tax. When due and payable, ROCHE will remit each of the
above payments under Section 6.1(a) to PRAECIS without deduction of any
withholding taxes which may otherwise be due.
29
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
6.2 Payments - United States.
a) Revenue Share. For the United States, during the Term of the Agreement
and following Launch of Product, for sales in the United States, within fifteen
(15) days after the end of each fiscal month, ROCHE shall provide PRAECIS with a
monthly report of estimated Net Sales of Product in the United States by ROCHE,
its Affiliates and sublicensees during the preceding month, which report shall
include information concerning total units of Product sold by ROCHE, its
Affiliates and sublicensees in the United States to non-Affiliated third party
purchasers during such month. Based upon this report and the form of Product
supplied by PRAECIS to ROCHE (e.g., Compound, Semi-Finished Dosage Form or
otherwise), PRAECIS shall submit an invoice to ROCHE stating the estimated
amounts due from ROCHE to PRAECIS on account of Product Revenue, itemizing
separately the COGS Amount and the Revenue Share.
Subject, inter alia, to Sections 3.3(c) and 8.1, the Revenue Share shall
equal a percentage of Net Sales of Product sold by ROCHE in the United States in
a calendar year as follows:
TABLE # II
----------
------------------------------------------------------------
Incremental Net Sales $ US (in Percentage (%) Millions)
------------------------------------------------------------
*** 25
------------------------------------------------------------
*** ***
------------------------------------------------------------
*** ***
------------------------------------------------------------
*** ***
------------------------------------------------------------
30
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
By way of illustration, assume in the calendar year 2001 that Net Sales of
Product in the United States total $***. The Revenue Share payable by ROCHE to
PRAECIS would be $***, calculated as follows:
TABLE # III
-----------
------------------------------------------------------------
Sales (million) x % Revenue Share (million)
------------------------------------------------------------
------------------------------------------------------------
*** x 25 ***
------------------------------------------------------------
------------------------------------------------------------
*** *** ***
------------------------------------------------------------
------------------------------------------------------------
*** *** ***
------------------------------------------------------------
------------------------------------------------------------
------- ---------
------------------------------------------------------------
------------------------------------------------------------
*** ***
------------------------------------------------------------
------------------------------------------------------------
The Revenue Share shall be an amount serving as consideration for PRAECIS
granting ROCHE the right and license to offer for sale, import and sell Product
under the PRAECIS Proprietary Rights in the United States.
b) Royalty. As additional consideration for PRAECIS granting ROCHE the
right and license to offer for sale, import and sell Product under the PRAECIS
Proprietary Rights in the United States, ROCHE shall pay to PRAECIS a one-time,
non-refundable royalty payment equal to $*** U.S. within thirty (30) days after
the first Launch of Product in the United States for an Agreed Upon Indication.
For purposes of this Section 6.2(b), such Launch of Product shall include
PRAECIS' supplying ROCHE with sufficient quantity of Product to (i) meet ROCHE's
forecast of ROCHE's requirements for Product, as provided by ROCHE to PRAECIS in
accordance with the
31
Heads of Supply Agreement set forth in Exhibit 4, for at least six (6)
consecutive month sales in the United States from Launch of Product and (ii)
allow ROCHE reasonable time to manufacture finished goods and distribute such
finished goods in adequate quantities for Launch of Product throughout the
United States.
c) Payment of COGS Amount. Based upon the invoice submitted under Section
6.2(a), in good faith, by PRAECIS to ROCHE, ROCHE shall pay the COGS Amount
within thirty (30) days after receipt by ROCHE of the invoice.
d) Payment of Revenue Share. During the Term of the Agreement and
following Launch of Product, within sixty (60) days after the end of each fiscal
quarter, ROCHE shall provide PRAECIS with a report of actual Net Sales of
Product sold by ROCHE in the United States for that fiscal quarter and shall
compute the actual amount of Revenue Share owed by ROCHE to PRAECIS, subject,
inter alia, to Sections 3.3(c) and 8.1. Payment of such Revenue Share shall
accompany this report.
In the event that there is a difference between the estimated units of
Product sold and the actual units of Product sold for the given fiscal quarter,
the parties shall make an adjustment to COGS Amount for the given period to
reflect the difference. If for a given fiscal quarter the amount of estimated
units of Products sold exceeded the amount of units of Product actually sold
("Overestimate"), ROCHE will deduct an amount reflecting the Overestimate from
the Revenue Share otherwise due PRAECIS under this Agreement on account of sales
of Product in the United States during the fiscal quarter.
Notwithstanding the foregoing, if ROCHE, in its sole determination,
concludes that a unit of Product, supplied by PRAECIS to ROCHE and intended
for sale in the United States, reaches obsolescence, then ROCHE shall, within
sixty (60) days after the end of the fiscal quarter in which such unit
reaches obsolescence, pay to PRAECIS the COGS Amount for such unit as an
inventory adjustment fee. In no event shall such obsolescence exceed the
expiration date of such unit of Product. Such payment shall reflect the form
of Product received from PRAECIS by ROCHE.
e) Duration. The duration of payment by ROCHE to PRAECIS of the Revenue
Share under Section 6.2 shall continue for the longer of (i) ten (10) years
from Launch of Product in the United States or (ii) the date of the last to
expire Valid Claim that would be infringed by ROCHE's making, having made,
using, importing, offering for sale or selling of Product in the United
States.
f) Third Party Entry in the United States. If, in the United States, in
any calendar quarter a third party other than an Affiliate or sublicensee of
ROCHE achieves market penetration which, with respect to a Product (including
all formulations containing the same Compound (including acids, salts or
esters thereof) as found in the given Product), cumulatively amounts to more
than a fifteen percent (15%) market share in the United States of units of
such Product as determined on a unit basis in such calendar quarter, the
Revenue Share otherwise due from ROCHE to PRAECIS under this Section 6.2
shall be reduced by an amount (not to exceed fifty percent (50%)) to be
agreed upon by the parties, such amount to reflect the (i) relative gross
margin and (ii) market share of ROCHE before and after such market
penetration. Such amount shall be determined by the mutual agreement of the
parties after good faith negotiations. Should the parties be unable to reach
mutual agreement
33
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
thereon, the matter shall be submitted to arbitration generally in accordance
with the procedures set forth in Article 11 of this Agreement.
g) Additional Consideration. ROCHE shall also pay PRAECIS a total sum
of one dollar ($1.00) as consideration for PRAECIS granting ROCHE the right
and license to make, have made and use Product under the PRAECIS Proprietary
Rights in the United States.
6.3 Payments - Outside the United States.
a) Ex-US Royalties. For sales in all countries in the Territory outside
the United States, during the Term of the Agreement for a given country,
ROCHE shall pay PRAECIS (a) an amount equal to the COGS Amount for the
applicable form of Product as reflected by the units supplied by PRAECIS to
ROCHE ("ex-US COGS ") and (b) a royalty of *** percent (***) of Net Sales -
of Product in each such country ("ex-US Royalties").
In accordance with the Heads of Supply Agreement as set forth in
Exhibit 4, ROCHE shall pay the ex-US COGS within thirty (30) days after
receipt by ROCHE of an invoice from PRAECIS for the Compound and/or Product
that has been delivered to ROCHE under a firm purchase order.
Within ninety (90) days after the end of each calendar quarter, ROCHE
shall provide PRAECIS with a report of Net Sales of Product sold by ROCHE in
countries of the Territory outside the United States for that calendar
quarter and compute the
34
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
amount of royalties owed by ROCHE to PRAECIS under this Section 6.3. Payment
of such royalties shall accompany this report.
b) Duration. The duration of payment of royalties under this Section
6.3 in a country shall continue for the longer of (i) ten (10) years from
Launch of Product in that country or (ii) the date of the last to expire
Valid Claim which except for this Agreement would be infringed by ROCHE's
making, having made, using, importing, offering for sale or selling of
Product in that country. The royalties set forth in this Section 6.3 shall be
reduced to *** percent (***) of Net Sales at any time and in any country in
which ROCHE's making, having made, using, importing, offering for sale or
selling of Product in such country would not infringe a Valid Claim in that
country.
c) Third Party Entry Outside the United States. If, in a country in the
Territory outside the United States, in any calendar quarter a third party
other than an Affiliate or sublicensee of ROCHE achieves market penetration
which, with respect to a Product (including all formulations containing the
same Compound (including acids, salts or esters thereof) as found in the
given Product), cumulatively amounts to more than a *** percent (***)
market share in such country of units of such product as determined on a unit
basis in such calendar quarter, the ex-US royalties otherwise due from ROCHE
to PRAECIS under this Section 6.3 shall be reduced by an amount (not to
exceed *** percent (***) to be agreed upon by the parties, such amount to
reflect the (i) relative gross margin and (ii) market share of ROCHE before
and after such market penetration. Such amount shall be determined by the
mutual agreement of the parties after good faith negotiations. Should the
parties be unable to reach mutual agreement thereon, the matter shall be
submitted to arbitration generally in accordance with the procedures set
forth in Article 11 of this Agreement.
35
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
6.4 Withholding Tax. All payments under Sections 6.2 and 6.3 shall be made in
full without deduction of taxes, charges and any other duties ("Taxes") that
may be imposed, provided, however, that ROCHE shall to the extent required
under the tax law of a given country, withhold such Taxes from any such sum
and forthwith upon paying such sum to the given countries' tax authorities
promptly furnish PRAECIS with the receipt thereof in respect of the same. The
parties agree to cooperate in all respects necessary to (a) take advantage of
reduced withholding tax rates available under any applicable tax treaties,
and (b) assist PRAECIS in obtaining any refunds for PRAECIS of amounts
withheld and paid to tax authorities.
Notwithstanding the above, ROCHE will be liable for, and will not
deduct any Tax imposed on payment of Revenue Share by the Commonwealth of
Puerto Rico.
6.5 ROCHE Third Party Payments. Except as provided in Section 6.6, if ROCHE,
in good faith, pays consideration under patent rights or know-how owned or
controlled by a party other than PRAECIS, which in ROCHE's opinion, is
reasonably required to allow ROCHE to make, have made, use, import, offer for
sale or sell Product (other than active ingredients which are not Compound)
in a given country, then the payments otherwise made by ROCHE to PRAECIS
under this Agreement (other than Development Costs under Section 3.4,
payments under Section 6.1, and payments relating to the COGS Amount and
ex-U.S. COGS under Sections 6.2 and 6.3 respectively) shall be reduced by
such consideration. However, in no event shall any such payment be reduced by
more than *** in any quarter as a result of such consideration,
36
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
with any amounts not utilized as a result of such limitation ("Unutilized
Amounts") being carried forward to future reporting periods. Within thirty
(30) days after the end of the Term of the Agreement for a given country,
PRAECIS shall reimburse ROCHE for an amount equal to the cumulative
Unutilized Amounts for such country.
6.6 PRAECIS Third Party Payments.
a) Third Parties. PRAECIS shall be solely responsible for all royalties
and other payments that may be due or payable by it to a third party.
b) Indiana University. Notwithstanding Section 6.6(a), the parties
acknowledge that PRAECIS and IU have entered into an agreement dated October
17, 1996 ("Indiana Agreement") and an Amendment which is being finalized by
PRAECIS (which Amendment, upon finalization, will immediately be sent to
ROCHE). ROCHE shall pay IU directly a portion of the royalty that is due IU
under the Indiana Agreement up to a maximum of *** (***%) of Net Sales of
Product in the Territory. Prior to Launch of Product, PRAECIS shall notify
ROCHE in writing of the address to where ROCHE shall pay such royalty due IU.
In addition, PRAECIS shall promptly notify ROCHE of any changes or
modifications to the IU Agreement.
PRAECIS warrants and represents that PRAECIS has obtained IU's approval
for ROCHE's use of the Net Sales definition as defined in Section 1.21 of
this Agreement rather than the net sales definition set forth in the Indiana
Agreement.
37
6.7 Royalties Due Once. Sales of Product between and among ROCHE, its
Affiliates and its sublicensees which are subsequently resold or to be resold
by ROCHE, its Affiliates or its sublicensees to a third party shall not be
subject to a royalty, but royalties shall be payable upon any such resale
other than by a licensee of PRAECIS outside the Territory with regard to
Product or any one in privity with any such licensee. The obligation to pay
royalties to PRAECIS under this Agreement is imposed only once with respect
to the same unit of Product.
6.8 Combination Products. For any product containing both a pharmaceutically
active agent which causes it to be considered a Product and one or more other
pharmaceutically active agents which are not Products ("Combination
Product"), the parties shall in good faith negotiate and agree to an
appropriate adjustment to the Net Sales to reflect the relative contribution
of each Product and each other pharmaceutically active agent which is not a
Product to the Combination Product. If, after good faith negotiations (not to
exceed ninety (90) days, which can be extended by mutual agreement), the
parties can not agree to an appropriate adjustment, Net Sales shall be equal
to Net Sales of the Combination Product multiplied by a fraction, the
numerator of which is the reasonable fair market value of the Compounds
contained in the Combination Product and the denominator of which is the
reasonable fair market value of all pharmaceutically active agents contained
in the Combination Product.
6.9 Currency. All amounts payable to PRAECIS under this Agreement shall be
payable in U.S. Dollars by wire transfer to a bank account designated by
PRAECIS. When calculating the Adjusted Gross Sales, the amount of such sales
in foreign currencies shall be converted into Swiss Francs as computed by
ROCHE-Basel for the countries concerned, using the average monthly rate of
exchange at the time for such
38
currencies calculated on the basis of the average daily rate of exchange as
retrieved from the Reuters System during such month. When calculating the
royalties on Net Sales, such conversion shall be at the average rate of Swiss
Franc to the United States currency calculated on the basis of the average
daily rate of exchange as retrieved from the Xxxxxx'x System for the
applicable reporting period.
6.10 Blocked Country. If at any time a Product is sold in a country in which
conditions or legal restrictions exist which prohibit remittance of United
States dollars or Swiss Francs ("Blocked Country") the following provisions
shall apply to the payment of the corresponding royalty, depending on where
the Product is made:
a) If such Product is made in the same or another Blocked Country,
ROCHE shall make such royalty payment by depositing the amount thereof in the
currency of the country of sale or manufacture, at PRAECIS's election, to
PRAECIS's account in a bank designated by PRAECIS in such country.
b) If such Product is made in a country which is not a Blocked Country,
then a "number" shall be obtained by multiplying the applicable royalty rate
by the price at which the Product is sold to the entity selling in the
Blocked Country. ROCHE or its Affiliate (i) shall pay that "number" to
PRAECIS as converted to US Dollars in accordance with Section 6.9, and (ii)
shall deposit the excess of the applicable royalty over the "number", in the
currency of the country of sale of the Product, to PRAECIS's account in a
bank designated by PRAECIS in such Blocked Country.
6.11 Audit. ROCHE shall keep, and shall require its Affiliates and
sublicensees to keep, accurate and correct records of Products sold under
this Agreement appropriate
39
to determine the amounts due hereunder to PRAECIS. Such records shall be
retained for at least four (4) years following the end of the calendar year
to which such records pertain.
PRAECIS or its authorized independent public accountant shall have the
right to engage a partner (or person comparable in position and technical
expertise to a partner), located in the country where the audit would occur,
from ROCHE's independent public accountant to perform, on behalf of PRAECIS
or its independent public accountant, an audit of such books and records of
ROCHE that are deemed reasonably necessary by such partner to verify ROCHE's
report(s) on Net Sales of Products for the period(s) requested. The partner
can not be responsible for supervising or conducting audits of ROCHE's books
and records. The audit shall be conducted in accordance with generally
accepted auditing standards in the United States of America.
The audit rights under this Agreement may be exercised by PRAECIS (1)
no more often than once per year, (2) not more frequently than once with
respect to records covering any specific period of time, and (3) within four
(4) years after the payment period to which such records relate. The audit
shall be performed upon no less than thirty (30) days prior written notice to
ROCHE, during ROCHE's normal business hours. The terms of this Section 6.11
shall survive the Term of the Agreement for a period of four (4) years.
PRAECIS will bear the full cost any such audit unless such audit
discloses an underpayment to PRAECIS of more than five percent (5%) from the
amounts paid. ROCHE shall promptly (1) pay any underpayment due to PRAECIS
and, (2) if the
40
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
underpayment is more than five percent (5%) of the amount paid, ROCHE shall
bear the full reasonable cost of such audit. Any overpayment by ROCHE shall
be deducted from the next payment due PRAECIS under Section 6 of this
Agreement or, if no such further payments are due, promptly reimbursed to
ROCHE by PRAECIS.
6.12 Mechanism for Adjustment. Should any amount such as reductions, credits
or deductions otherwise allowable to ROCHE for a country under this Agreement
not be utilized by ROCHE upon the termination of this Agreement (other than a
termination as a result of a material breach by ROCHE pursuant to Section
9.3), then PRAECIS shall promptly reimburse ROCHE for the allowable amount.
6.13 Low Sales Adjustment.
a) If, in the third (3rd) or any subsequent full calendar year up to
and including the eighth (8th) full calendar year after Launch of Product in
the United States, Net Sales in the United States do not exceed *** dollars
($***) in a given full calendar year, the following provisions shall apply.
At ROCHE's written request to PRAECIS (which request may be given more than
once), the parties promptly and in good faith shall (i) meet and consider
whether modifications to the consideration under the Agreement are required
in light of a goal for a fifty-fifty (50/50) sharing between the parties of
the net present value as of the Effective Date of the pretax net income for
Product during the Term of the Agreement ("NPV"), and (ii) if the parties
agree that a modification is required, negotiate modifications in light of
the above goal, taking into
41
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
account, without limitation, prudent business practices and all amounts paid
or to be paid by a party to the other under this Agreement including all
Development Costs.
b) The parties agree that any modifications under Section 6.13 shall be
prospective only. Additionally, the parties agree that any modifications
under Section 6.13 shall not be effective for a given calendar year in which
Net Sales in the United States equal or exceed *** dollars ($***).
c) The parties recognize that they have not disclosed to each other the
financial models that reflect expectations for such fifty-fifty (50/50)
sharing of NPV. The parties also further recognize that in implementing this
Section 6.13 additional financial information (for example, relative to
marketing, promotion, sales and expenses of Product) would need to be
disclosed and discussed. Neither party, by agreeing to the provisions of this
Section 6.13, concedes that any modification to the consideration would or
would not need to be made if Net Sales in the United States are less than ***
dollars ($***).
d) Should the parties be unable to agree upon (i) whether a
modification is required, or (ii) if required, how to modify the
consideration, then the arbitration procedures of Article 11 shall be
available.
42
7. INFORMATION
7.1 Exchange.
a) Mechanism. During the Term of the Agreement, the parties will, free
of charge, exchange and, to this end, the parties shall establish a mechanism
by which the parties will share, Information necessary for the parties to
meet their obligations under this Agreement.
In particular, a party shall, to the extent it is legally permitted to
do so, exchange all information coming into its possession or control, or its
representatives or Affiliates possession or control, relating to formulation,
manufacture, improvement, use and sale of Product in the Territory, including
any such information consisting of technical, pharmacological, preclinical,
clinical, biochemical, toxicological and pharmacokinetic experimental data
and results related to Product. Each party shall also permit a reasonable
number of representatives of the other party or its Affiliates, at reasonable
time and upon reasonable notice, to observe, review, make copies of, and/or
discuss with the party or its Affiliate's scientists and/or clinicians
supervising or conducting research related to Product, the results of studies
and/or submissions to governmental agencies concerning Products, at mutually
agreeable times and locations. Each party shall also permit a reasonable
number of representatives of the other party or its Affiliates, at reasonable
time and upon reasonable notice, to observe, review, make copies of, and/or
discuss with its or its Affiliate's scientists supervising or conducting
manufacture of Product or third party scientists supervising or conducting
manufacture on behalf of it, at mutually agreeable times and locations.
43
b) Adverse Events. During the Term of the Agreement, each party shall
notify the other of all information coming into its possession concerning
side effects, injury, toxicity, pregnancy or sensitivity reaction associated
with commercial or clinical uses, studies, investigations or tests with
Product, throughout the world, whether or not determined to be attributable
to Product ("Adverse Reaction Reports"). In the case of Adverse Reaction
reports within the scope of 21 CFR 314.80(c)(iii), PRAECIS shall transmit
such Adverse Reaction Reports relating to Product to ROCHE and XXXXX-Xxxxxx
so that they are received by both ROCHE and XXXXX-Xxxxxx within two (2)
calendar days after receipt by PRAECIS, or such other reporting period as may
be required by law, and ROCHE shall notify PRAECIS of any Adverse Reaction
Report relating to Product within two (2) calendar days after receipt thereof
by ROCHE.
7.2 Information. During the Term of the Agreement and for ten (10) years
after termination, a Receiving Party shall a) treat Information provided by a
Disclosing Party as it would treat its own information of a similar nature
and take all reasonable precautions not to disclose such Information to third
parties except Affiliates or actual or potential sublicensees who agree to be
bound by the same terms and conditions as found in this Article 7, without
the other party's prior written authorization and b) not use such Information
for other than the purposes of fulfilling its obligations under this
Agreement.
The provisions of this Section 7.2 shall not apply to such Information
which:
a) was known or used by the Receiving Party or its Affiliates prior to
its date of disclosure to the Receiving Party or its Affiliates by the
Disclosing Party or its
44
Affiliates, as evidenced by the prior written records of the Receiving Party
or its Affiliates; or
b) either before or after the date of the disclosure to the Receiving
Party or its Affiliates, is lawfully disclosed to the Receiving Party or its
Affiliates by a third party rightfully in possession of such information; or
c) either before or after the date of the disclosure to the Receiving
Party or its Affiliates, becomes published or generally known to the public
through no fault or omission on the part of the receiving Party or its
Affiliates, but such inapplicability applies only after such information is
published or becomes generally known; or
d) is independently developed by the Receiving Party or its Affiliates
without reference to or reliance upon any such information of the Disclosing
Party or its Affiliates; or
e) is required to be disclosed by the Receiving Party or its Affiliates
to comply with applicable laws, to defend or prosecute litigation or to
comply with governmental regulations, provided that, the Receiving Party or
its Affiliates provides prior written notice of such disclosure to the
Disclosing Party or its Affiliates and, to the extent practicable, takes
reasonable and lawful actions to avoid and/or minimize the degree of such
disclosure.
f) is permitted to be disclosed as provided in Section 12.2, provided
that such disclosure is made in compliance with such Section, and only to the
extent permitted under such Section.
45
7.3 Non-Disclosure Agreements.
a) Employees. Each party covenants and agrees that either (i) it or its
Affiliates has in place agreements requiring its employees, including the
employees of its Affiliates, to (A) maintain all Information provided by the
Disclosing Party in accordance with the requirements of this Agreement and
(B) to assign to such party all rights to inventions and other intellectual
property which its employees create during the course of their employment, or
(ii) such party or its Affiliates shall require its employees, and shall
require employees of its Affiliates, involved in the development,
manufacturing or marketing of Products to execute an agreement with terms as
set forth above.
b) Third Parties. Unless otherwise agreed to in writing, each party
shall, to the extent practicable, require all third parties other than
Affiliates, including consultants, subcontractors, sublicensees or agents,
involved in carrying out its obligations under this Agreement, to (i) execute
an agreement for the protection of Information provided by the Disclosing
Party to any such third party which shall require such third party to
maintain all Information in accordance with the requirements of this
Agreement, and (ii) assign inventions related to Products to the party to
this Agreement to the extent such inventions are useful in carrying out the
terms and objectives of this Agreement.
7.4 Publications. During the Term of the Agreement, the following
restrictions shall apply with respect to disclosure by any party (either the
Disclosing Party or the
46
Receiving Party) of Information in any publication or presentation
(collectively "Publications"):
a) A party ("Publishing Party") shall provide the other party with a
copy of any proposed Publication at least forty-five (45) days prior to
submission for publication so as to provide such other party with an
opportunity to recommend any changes it reasonably believes are necessary to
continue to maintain the Information disclosed by the other party to the
Publishing Party in accordance with the requirements of this Agreement. The
incorporation of such recommended changes shall not be unreasonably refused;
and
b) If such other party notifies ("Notice") the Publishing Party in
writing, within forty-five (45) days of receipt of the copy of the proposed
Publication, that such Publication in its reasonable judgment (i) contains an
invention, solely or jointly conceived and/or reduced to practice by the
other party, for which the other party reasonably desires to obtain patent
protection or (ii) could be expected to have a material adverse effect on the
commercial value of any Information disclosed by the other party to the
Publishing Party, the Publishing Party shall prevent such publication or
delay such publication for a mutually agreeable period of time. In the case
of inventions, a delay shall be for a period reasonably sufficient to permit
the timely preparation and filing of a patent application(s) or
applications(s)(s) on the Invention, and in no event less than one hundred
and eighty (180) days from the date of Notice. In the event the parties do
not agree as to whether such Publication (i) contains an invention, solely or
jointly conceived and/or reduced to practice by the other party, or (ii)
could be expected to have a material adverse effect on the commercial value
of any Information disclosed by the other party to the Publishing Party,
either party may
47
submit the matter to arbitration generally in accordance with the procedures
set forth in Article 11 of this Agreement.
7.5 Exceptions. The restrictions set forth in this Article 7 shall not
prevent either party from (i) preparing, filing, prosecuting or maintaining a
patent application or its resulting patents related to the making, having
made, using, offering for sale, selling or importing of Product, (ii)
disclosing Information provided by the Disclosing Party to persons working on
behalf of the Receiving Party or to governmental agencies, to the extent the
Receiving Party reasonably believes is required or desirable to secure any
government approval for the development, manufacture, marketing or sale of
Product in the Territory, or (iii) upon imminent approval or actual approval
for registration by a governmental agency in a country in the Territory of a
drug application on Product, disclosing Information to the extent reasonably
necessary to promote the use and sale of Product in the country.
7.6 Information Provided to Government Agency. Consistent with Section 3.3 of
this Agreement, it is contemplated and permitted that a party may (a) develop
Products for indications other than Agreed Upon Indication in the Territory,
and/or (b) may undertake a development commitment with respect to an Agreed
Upon Indication.
During the Term of the Agreement, a party shall provide the other party
with a copy of any proposed submission of Information by such party to
governmental agencies with respect to the development, manufacture, marketing
or sale of Product in the Territory, at least twenty (20) days prior to
submission to the government agency. The other party shall have an
opportunity, within such twenty (20) day period, to make recommendations that
the other party, in good faith, believes will prevent such
48
submission from having a material adverse impact on the potential of the
Product in the Territory from a business and scientific viewpoint. The party
proposing such disclosure shall consider, in good faith, the recommendations
of the other party.
8. PATENTS
8.1 Ownership of Technology.
a) PRAECIS. Subject to Section 8.1(b), ownership of PRAECIS Proprietary
Rights and other intellectual property owned or controlled by PRAECIS shall
remain vested at all times in PRAECIS. ROCHE hereby acknowledges that this
Agreement does not xxxxx XXXXX any ownership rights in any intellectual
property claiming or relating to PRAECIS Proprietary Rights or any other
intellectual property owned or controlled by PRAECIS.
b) Joint. Ownership of Joint Inventions and intellectual property
related to the making, having made, using, offering for sale, selling or
importing of Joint Inventions shall be vested jointly in PRAECIS and ROCHE,
subject to the licenses set forth in Section 2.1 of this Agreement. Unless
otherwise set forth in this Agreement, neither party shall be obligated to
account to the other for making, having made, using, offering for sale,
selling or importing Product under a patent application or patent claiming a
Joint Invention. Should the only remaining Valid Claim relating to a Product
in a country of the Territory be claims of a Joint Invention, the Revenue
Share or ex-
49
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
US royalties, as the case may be, that would otherwise be due from ROCHE to
PRAECIS under Article 6 for the Product shall be reduced by ***.
c) ROCHE. Ownership of ROCHE Inventions and intellectual property shall
remain vested at all times in ROCHE. PRAECIS hereby acknowledges that this
Agreement does not grant PRAECIS any ownership rights in any intellectual
property claiming or relating to ROCHE Inventions.
8.2 Patents.
a) PRAECIS Proprietary Rights other than Joint Inventions. Subject to
Section 8.2(b) and the further provisions of this Section 8.2(a), XXXXXXX
agrees to (i) prepare, file, prosecute and maintain all patents and patent
applications included within the PRAECIS Proprietary Rights in such countries
in the Territory as may be determined by the parties, (ii) consult with ROCHE
as to the preparing, filing, prosecuting and maintaining of such patent
applications and patents, and (iii) furnish to ROCHE copies of all documents
relevant to any such preparation, filing, prosecution or maintenance. PRAECIS
shall furnish such documents and consult with ROCHE in sufficient time before
any action by PRAECIS is due to allow ROCHE to provide comments thereon,
which comments PRAECIS shall consider. PRAECIS shall bear all costs and
expenses for preparing, filing, prosecuting and maintaining such patents and
patent applications in the Territory. At PRAECIS's reasonable request, ROCHE
shall cooperate, in all reasonable ways and at PRAECIS' cost, in connection
with the
50
preparing, filing, prosecuting and maintaining of all patent applications and
patents included within the PRAECIS Proprietary Rights in the Territory.
Should PRAECIS decide that it does not desire to file, maintain or prosecute
a patent or patent application within the PRAECIS Proprietary Rights in one
or more countries in the Territory, it shall promptly advise ROCHE thereof
and, at the request of ROCHE, PRAECIS shall assign to ROCHE its rights in and
to such patent or patent application in such country or countries, and ROCHE
will thereafter file, prosecute and/or maintain the same at ROCHE's own cost,
to the extent that ROCHE desires to do so.
b) Joint Invention. As soon as a party concludes that it wishes to file
a patent application claiming a Joint Invention, it shall immediately inform
the other party and consult about filing procedures and allocation of costs
concerning such patent application. The party also will provide the other
party with the determination of inventors and a copy of a draft
specification, if any, and the scope of claims as early as possible. Should a
party be faced with possible loss of rights, such communication may take
place promptly after filing a convention application. Subject to the further
provisions of this Section 8.2(b), the party performing a priority filing
agrees to (i) prepare, file, prosecute and maintain such priority patent
application, corresponding foreign patents, and resulting patents, in the
Territory (ii) consult with the other party as to the preparing, filing,
prosecuting and maintaining of such patent applications and resulting
patents, and (iii) furnish to the other party copies of all documents
relevant to any such preparation, filing, prosecution or maintenance. Unless
agreed otherwise, the filing party shall furnish such documents and consult
with the other party in sufficient time before any action by the filing party
is due to allow the other party to provide comments thereon, which comments
the filing party shall consider. The party performing the priority filing
shall bear all costs and expenses for preparing, filing,
51
prosecuting and maintaining such patent applications and resulting patents in
the Territory. On request of the party performing the filing, the other party
will cooperate, in all reasonable ways at the filing party's cost, in
connection with the preparing, filing, prosecuting and maintaining of such
patent applications and resulting patents in the Territory. Should the filing
party decide that it does not desire to file, maintain or prosecute a patent
or patent application claiming a Joint Invention in one or more countries in
the Territory, it shall promptly advise the other party thereof and, at the
request of the other party, the filing party shall assign to the other party
its rights in and to such patent or patent application in such country or
countries, and the other party will thereafter file, prosecute and/or
maintain the same at the other party's own cost, to the extent that the other
party desires to do so.
c) ROCHE Inventions. Subject to the further provisions of this Section
8.2(c), ROCHE agrees to (i) prepare, file, prosecute and maintain all patents
and patent applications claiming a ROCHE Invention in the Territory (ii)
consult with PRAECIS as to the preparing, filing, prosecuting and maintaining
of such patent applications and patents, and (iii) furnish to PRAECIS copies
of all documents relevant to any such preparation, filing, prosecution or
maintenance. ROCHE shall furnish such documents and consult with PRAECIS in
sufficient time before any action by ROCHE is due to allow PRAECIS to provide
comments thereon, which comments ROCHE shall consider. ROCHE shall bear all
costs and expenses for preparing, filing, prosecuting and maintaining such
patents and patent applications in the Territory. At ROCHE's reasonable
request, PRAECIS shall cooperate, in all reasonable ways and at ROCHE' cost,
in connection with the preparing, filing, prosecuting and maintaining of all
patent applications and patents claiming a ROCHE Invention in the Territory.
Should ROCHE decide that it does not desire to file, maintain or prosecute a
patent or patent applica-
52
tion claiming a ROCHE Invention in one or more countries in the Territory, it
shall promptly advise PRAECIS thereof and, at the request of PRAECIS, ROCHE
shall assign to PRAECIS its rights in and to such patent or patent
application in such country or countries and PRAECIS will thereafter file,
prosecute and/or maintain the same at PRAECIS' own cost, to the extent that
PRAECIS desires to do so.
8.3 Infringement by Third Parties.
a) ROCHE Brings Suit. Each party shall promptly provide written notice
to the other party during the Term of the Agreement of any (i) known
infringement or suspected infringement in the Territory of any PRAECIS
Proprietary Rights, or patent claiming a ROCHE Invention, or (ii) known or
suspected unauthorized use or misappropriation of any Technical Information
by a third party, and shall provide the other party with all evidence in its
possession supporting such infringement or unauthorized use or
misappropriation.
Subject to Section 8.3(c), within a period of ninety (90) days after
ROCHE provides or receives such written notice ("Decision Period"), ROCHE, in
its sole discretion, shall decide whether or not to initiate an infringement
or other appropriate suit under the above rights, patents or Technical
Information and shall advise PRAECIS of its decision in writing, unless the
parties agree to an extension. Should ROCHE not advise PRAECIS within the
Decision Period, then ROCHE shall be deemed as having decided not to initiate
an infringement or other appropriate suit.
After ROCHE advises PRAECIS of its decision to initiate suit, ROCHE may
immediately initiate such suit, subject to Section 8.3(c). ROCHE shall keep
PRAECIS
53
promptly and fully informed of the status of any such suit and shall provide
PRAECIS with copies of all substantive documents filed in, and all
substantive written communications relating to such suit. ROCHE shall have
the sole and exclusive right to select counsel for any such suit.
ROCHE shall, except as provided below, pay all expenses of the suit,
including, without limitation, XXXXX'x attorneys' fees and court costs.
PRAECIS may elect in writing, within ninety (90) days after its receipt of
notice from ROCHE of the initiation of the suit, to contribute to such
expenses. Should PRAECIS not so elect within said ninety (90) day period,
PRAECIS shall have no right to contribute and any contributions shall be
considered untimely. If ROCHE initiates suit and PRAECIS timely contributes
to the expenses thereof, any damages, settlement fees or other consideration
for past infringement received as a result of such suit shall be shared by
ROCHE and PRAECIS based on their respective sharing of the expenses of such
suit. Any recovery of damages owed to IU under the Indiana Agreement shall be
the sole responsibility of PRAECIS.
If ROCHE believes it reasonably necessary and PRAECIS consents (such
consent not to be unreasonably withheld), PRAECIS shall join as a party to
the suit but shall be under no obligation to participate except to the extent
that such participation is required as the result of its being a named party
to the suit. At ROCHE's written request, PRAECIS shall offer reasonable
assistance to ROCHE in connection therewith at no charge to ROCHE except for
reimbursement of reasonable out-of-pocket expenses incurred by PRAECIS in
rendering such assistance. PRAECIS shall have the right to participate and be
represented in any such suit by its own counsel at its own expense.
54
b) PRAECIS Brings Suit. In the event that ROCHE does not in writing
advise PRAECIS under subsection (a) within the Decision Period that ROCHE
will initiate suit, or if ROCHE fails to initiate suit or otherwise prosecute
such suit with reasonable diligence, PRAECIS shall thereafter have the right
to initiate, or assume control of the prosecution, of such suit and shall
provide written notice to ROCHE of any such action. PRAECIS shall keep ROCHE
promptly and fully informed of the status of any such suit and shall provide
ROCHE with copies of all substantive documents filed in, and all substantive
written communications relating to, such suit. In exercising its rights
pursuant to this subsection 8.3(b), PRAECIS shall have the sole right to
select counsel, but ROCHE may be represented in any such suit by its own
counsel at its own expense.
As used in this Section 8.3(b), "reasonable diligence" shall mean the
same standard of effort as would be used by ROCHE in the prosecution of a
patent infringement litigation of its patent which protects a product of its
own innovation having similar commercial potential in the country of suit.
Should the parties be unable to reach agreement as to whether ROCHE has
exercised reasonable diligence as used in this Section 8.3(b) with respect to
a given suit, the matter may be submitted to arbitration generally in
accordance with the procedures set forth in Article 11 of this Agreement, and
ROCHE shall retain control of such suit during such arbitration.
PRAECIS shall pay all expenses of the suit incurred from the time of
such initiation or assumption of control by PRAECIS, including without
limitation PRAECIS's attorneys' fees and court costs. ROCHE may elect in
writing within ninety (90) days after its receipt of notice from PRAECIS of
the initiation of the suit by PRAECIS, to contribute to such expenses. Should
ROCHE not so elect within said ninety (90) day
55
period, ROCHE shall have no right to contribute and any contributions shall
be considered untimely. If PRAECIS initiates suit or assumes control after
arbitration and ROCHE timely contributes to the expenses thereof, any
damages, settlement fees or other consideration for past infringement
received as a result of such suit shall be shared by PRAECIS and ROCHE based
on their respective sharing of the costs of such suit. Any recovery of
damages owed to IU under the Indiana Agreement shall be the sole
responsibility of PRAECIS.
If PRAECIS believes it reasonably necessary and ROCHE consents (such
consent not to be unreasonably withheld), ROCHE shall join as a party to the
suit but shall be under no obligation to participate except to the extent
that such participation is required as a result of its being named party to
the suit. At PRAECIS's written request, ROCHE shall offer reasonable
assistance to PRAECIS in connection therewith at no charge to PRAECIS except
for reimbursement of reasonable out-of-pocket expenses incurred by ROCHE in
rendering such assistance. ROCHE shall have the right to be represented in
any such suit by its own counsel at its own expense.
c) IU Patent. 1) For any patent that is a PRAECIS Proprietary Right by
virtue of the Indiana Agreement ("IU Patent"), PRAECIS warrants and
represents that PRAECIS has obtained IU's approval of the terms and
obligations of Section 8.3(a) and 8.3(b) of this Agreement rather than the
terms and conditions of Sections 10.04 - 10.07 of the Indiana Agreement with
respect to third party infringement of any such IU Patent.
2) Notwithstanding anything to the contrary, for any IU Patent, should
ROCHE or its Affiliates or sublicensees receive a certification pursuant to
the Drug
56
Price Competition and Patent Restoration Act of 1984 (Public Law 98-417) as
amended, or its equivalent in a country other than the United States of
America with respect to such patent, then (i) ROCHE or its Affiliate or
sublicensee shall immediately provide PRAECIS with a copy of such
certification and identify the date on which ROCHE, its Affiliate or
sublicensee received such certification ("Certification Date"), and (ii)
PRAECIS shall have thirty (30) days from the Certification Date to provide
ROCHE with written notice whether PRAECIS or IU will bring suit within a
forty five (45) day period (or any other mandatory time period) from the
Certification Date.
Should PRAECIS or its Affiliates or IU receive a certification pursuant
to the Drug Price Competition and Patent Restoration Act of 1984 (Public Law
98-417) as amended, or its equivalent in a country other than the United
States of America with respect to such patent, then (i) PRAECIS or its
Affiliate shall immediately provide, or cause IU to immediately provide,
ROCHE with a copy of such certification and identify the date on which
PRAECIS, its Affiliate or IU received such certification ("Certification
Date"), and (ii) PRAECIS shall have thirty (30) days from the Certification
Date to provide ROCHE with written notice whether PRAECIS or IU will bring
suit within a forty five (45) day period (or any other mandatory time period)
from the Certification Date.
Should any such thirty (30) day period pass without PRAECIS authorizing
ROCHE to bring suit or without PRAECIS or IU initiating suit, then ROCHE
shall be free to immediately bring suit for patent infringement in its name.
If PRAECIS or IU initiates a suit within the forty-five (45) day
period, PRAECIS will promptly notify ROCHE. At PRAECIS's or IU's request,
ROCHE, its Affiliate or sublicensee shall immediately become a party to the
suit, and PRAECIS may use the
57
name of ROCHE, its Affiliate or sublicensee as a party plaintiff. If ROCHE
initiates suit pursuant to this Section 8.3(d), it will promptly notify
PRAECIS. At ROCHE's request, (1) PRAECIS or its Affiliate shall immediately
become party to the suit and/or cause IU to become party to the suit, and (2)
ROCHE may use the name of PRAECIS or its Affiliate as a party plaintiff
and/or PRAECIS shall cause IU to allow ROCHE to use the name of IU as a party
plaintiff.
8.4 Infringement of Third Party Rights. In the event that a third party at
any time provides written notice to, or commences an action, suit or
proceeding against, a party or such party's Affiliates, sublicensees or
distributors, claiming infringement of the third party's patent rights or
copyrights or unauthorized use or misappropriation of its technology, based
upon an assertion or claim arising out of the making, having made, using,
offering for sale, selling or importing of a Product, such party shall
promptly notify the other party of the claim or the commencement of such
action, suit or proceeding, enclosing a copy of the claim and/or all papers
served.
The parties shall discuss in good faith an appropriate response to such
claim or commencement of such action, suit or proceeding, and each party
shall provide reasonable assistance to the other party in connection
therewith. Such party and the other party must mutually agree upon a
settlement or compromise of any such claim, action, suit or proceeding before
execution of such settlement or compromise, to the extent such settlement or
compromise would restrict the scope or enforceability of any right, including
without limitation any patent rights or other proprietary rights, of the
other party. In the event that any such claim, action, suit or proceeding
results in an obligation to make payments to a third party, Section 6.5 also
shall apply.
58
9. TERM AND TERMINATION
9.1 Term. The Term of the Agreement shall commence on the Effective Date and,
unless sooner terminated as provided in this Article, expire on a
country-by-country basis on the expiration of ROCHE's payment obligations set
forth in Sections 6.2 and 6.3. After expiration, ROCHE shall have a fully paid
up license under PRAECIS Proprietary Rights, on a country-by-country basis.
9.2 Termination. ROCHE shall have the right to terminate this Agreement on a
country-by-country basis by providing PRAECIS with the following prior written
notice:
a) If ROCHE has sold Product in commercial quantity in the given country,
one (1) year's notice, effective as of the date notice is provided; or
b) If ROCHE has not sold Product in commercial quantity in the given
country, one hundred eighty days' (180) notice, effective as of the date notice
is provided.
9.3 Material Breach. In the event of a material breach of this Agreement by
either party, the non-breaching party shall have the right to terminate this
Agreement by providing written notice of such breach to the breaching party,
specifying the nature of such breach ("Breach Notice"). The non-breaching party
shall thereupon have the right to terminate this Agreement immediately upon
written notice if the breaching party fails to cure such breach within sixty
(60) days after receipt of the Breach Notice.
9.4 Effect of Termination.
59
a) By ROCHE without cause. Termination of this Agreement by ROCHE under
Section 9.2 shall not relieve either party of the performance of any obligations
incurred or payments due prior to the effective date of termination.
b) By either party for cause. Termination of this Agreement by either
party under Section 9.3 shall (i) not relieve either party of the performance of
any obligations incurred or payments due prior to the date of breach, and (ii)
be without prejudice to any remedy that any party may have in addition to those
rights as provided under this Agreement.
c) By ROCHE for Cause. In the event of termination of the Agreement by
ROCHE under Section 9.3, the rights and licenses granted by PRAECIS to ROCHE
under this Agreement shall, at ROCHE's option, remain in effect. If ROCHE
chooses for such rights and licenses to remain in effect, ROCHE's payment
obligations under Article 6 shall continue; provided, however, that the amounts
of such payments shall be decreased to reflect the following factors: the nature
of PRAECIS' breach, the damage to ROCHE caused thereby, and the relative
contributions of the parties to the development of Product. Such amounts shall
be determined by the mutual agreement of the parties after good faith
negotiations; provided, however, that if the parties are unable to reach mutual
agreement thereon, the matter shall be submitted to arbitration generally in
accordance with the procedures set forth in Article 11 of this Agreement, and
the arbitrator shall base his/her decision on the above factors.
d) By PRAECIS For Cause. In the event of termination of this Agreement by
PRAECIS under Section 9.3, (i) all licenses granted by PRAECIS to ROCHE shall
60
terminate, (ii) at the request of PRAECIS, ROCHE shall assign to PRAECIS all
regulatory filings, regulatory approvals and clinical data owned and controlled
by ROCHE relating to PRODUCTS, or, if such assignment is not legally
permissible, grant PRAECIS the right to access, use and cross reference such
filings, approval and data, and (iii) ROCHE shall assign to PRAECIS all rights
in the trademarks referred to in Section 3.11.
In the event that PRAECIS requests the assignment of any regulatory
filings, regulatory approvals or clinical data pursuant to subsection 9.4(d),
then PRAECIS shall pay ROCHE a royalty upon sales of Product reasonably related
to such assigned filings, approvals or data. The amount of such royalty shall be
determined by mutual agreement of the parties after good faith negotiation;
provided, however, that if the parties are unable to reach mutual agreement
thereon, the matter shall be submitted to arbitration generally in accordance
with the procedures set forth in Article 11 of this Agreement, and the
arbitrator shall base his/her decision on the following factors: (i) the value
of the assigned filings, approvals and/or data as related to the
commercialization of Product; (ii) the relative contributions of the parties to
the development of Product; and (iii) the nature of ROCHE's breach and the
damages caused to PRAECIS thereby.
9.5 Survival. Notwithstanding any termination of this Agreement, the obligations
of the parties with respect to audit under Sections 3.5 and 6.11 and Information
under Article 7, as well as any other provisions which by their nature are
intended to survive any such termination, shall survive and continue to be
enforceable.
10. WARRANTIES AND INDEMNITIES
61
10.1 PRAECIS Warranties. PRAECIS warrants and represents that, as of the date
PRAECIS signs this Agreement and to the best of its knowledge, under PRAECIS
Proprietary Rights, it has the entire right, title and interest to make, have
made, use, offer for sale, sell and import Compound and/or Product in the
Territory; that it has no knowledge of the existence of any patent or patent
application owned by or licensed to anyone other than PRAECIS which could be
asserted to claim the Compound and/or Product and/or could be asserted to
prevent PRAECIS or ROCHE from importing, making, having made, using, offering to
sell, or selling the Compound and/or Product in the Territory.
PRAECIS warrants and represents that it has identified on Exhibit 2 all of
the patents or patent applications that, as of the date PRAECIS signs this
Agreement, it owns or licenses in the Territory which, in its reasonable
opinion, would preclude ROCHE from making, having made, using, offering for
sale, selling or importing Product in the Territory for any use.
10.2 Warranties of Both Parties. Each party warrants that, as of the date
PRAECIS signs this Agreement, it has the full right and authority to enter into
this Agreement, and that it is not aware of any impediment that would inhibit
its ability to perform its obligations hereunder. Each party warrants and
represents to the other that, as of the date it signs this Agreement to the best
of its knowledge, it or its Affiliates has disclosed all information in
possession or control of it or its Affiliates which, in the opinion of it or its
Affiliates, would be material to the other party entering into this Agreement,
and such information does not contain any untrue statement of material fact or
omit to state a material fact.
62
10.3 Grant. PRAECIS represents and warrants to ROCHE that, as of the date
PRAECIS signs this Agreement it has the right to xxxxx XXXXX the rights and
licenses described in this Agreement.
10.4 Indiana Agreement. PRAECIS represents and warrants that it has provided to
ROCHE in writing the entire understanding between PRAECIS and IU relating to
Product as of the date PRAECIS signs this Agreement. XXXXXXX agrees that (1) no
amendment or modification to the Indiana Agreement will be made unless made in
writing between PRAECIS and IU and, (2) if such amendment or modification
adversely affects ROCHE's rights under this Agreement, either expressly or by
implication, such amendment or modification must be agreed and accepted in
writing by ROCHE before made.
10.5 DISCLAIMER. THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF ALL
OTHER REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY SET FORTH HEREIN. PRAECIS AND
ROCHE DISCLAIM ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO
EACH OF THEIR RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS HEREUNDER,
INCLUDING, WITHOUT LIMITATION, WHETHER THE PRODUCTS CAN BE SUCCESSFULLY
DEVELOPED OR MARKETED, THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY,
TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY OR FITNESS
FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS. IN NO EVENT SHALL EITHER
PRAECIS OR ROCHE BE LIABLE FOR SPECIAL, INDIRECT,
63
INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT BASED ON
CONTRACT, TORT OR ANY OTHER LEGAL THEORY.
10.6 Indemnification by ROCHE. ROCHE agrees to defend, indemnify and hold
PRAECIS and its directors, officers, employees and agents (the "PRAECIS
Indemnified Parties") harmless from and against any losses, costs, and damages,
including reasonable costs and expenses arising out of the development,
manufacture, use, sale or other disposition of any Product by ROCHE, its
Affiliates, its sublicensees, its distributors, or representatives, except to
the extent that such losses, costs and damages are due to the negligence or
wrongful acts or failures to act of PRAECIS. In the event of any such claim
against the PRAECIS Indemnified Parties by a third party, PRAECIS shall promptly
notify ROCHE in writing of the claim and ROCHE shall undertake and shall solely
manage and control, at its sole expense, the defense of the claim and its
settlement. The PRAECIS Indemnified Parties shall cooperate with ROCHE and may,
at their option and expense, be represented in any such action or proceeding.
ROCHE shall not be liable for any litigation costs or expenses incurred by the
PRAECIS Indemnified Parties without XXXXX'x written authorization. ROCHE shall
not settle any such claim against PRAECIS unless such settlement fully and
unconditionally releases PRAECIS from all liability relating thereto, unless
PRAECIS otherwise agrees in writing.
10.7 INDEMNIFICATION BY PRAECIS. XXXXXXX agrees to defend, indemnify and hold
ROCHE and its directors, officers, employees and agents (the "ROCHE Indemnified
Parties") harmless from and against any losses, costs, and damages, including
reasonable costs and expenses arising out of the development, manufacture, use,
sale or other disposition of any Product by PRAECIS, its Affiliates, licensees
(other than
64
ROCHE), distributors, or representatives, except to the extent that such losses,
costs and damages are due to the negligence or wrongful acts or failures to act
of ROCHE. In the event of any such claim against the Roche Indemnified Parties
by a third party, ROCHE shall promptly notify PRAECIS in writing of the claim
and PRAECIS shall undertake and shall solely manage and control, at its sole
expense, the defense of the claim and its settlement. The Roche Indemnified
Parties shall cooperate with PRAECIS and may, at their option and expense, be
represented in any such action or proceeding. PRAECIS shall not be liable for
any litigation costs or expenses incurred by the Roche Indemnified Parties
without PRAECIS's written authorization. PRAECIS shall not settle any such claim
against ROCHE unless such settlement fully and unconditionally releases ROCHE
from all liability relating thereto, unless ROCHE otherwise agrees in writing.
ARTICLE 11. DISPUTE RESOLUTION
11.1 Procedure.
a) Internal Escalation. Unless otherwise explicitly set forth in this
Agreement, in the event that the parties are unable to resolve any dispute,
controversy or claim arising out of, or in relation to this Agreement, or the
breach, termination or invalidity thereof (collectively "Issue"), the parties
shall first refer such Issue to the Head of Pharmaceuticals of ROCHE-Basel and
to the Chief Executive Officer of PRAECIS. In the event that such Issue cannot
be resolved by these individuals after a good faith discussion to resolve the
issue, then either party may initiate arbitration in accordance with this
subsection under the guidelines of AAA in New York City, New
65
York, under the commercial rules then in effect for AAA, except as provided for
herein.
b) Procedure. A party shall notify the other in writing should it intend
to initiate arbitration. The parties shall select, by mutual agreement, one
arbitrator within a time period of thirty (30) days after receipt of such
notice. Should no arbitrator be chosen within the above period, the AAA shall
appoint the arbitrator within thirty (30) days after the end of such period.
Within thirty (30) days after selection of such arbitrator, each party shall
submit to the arbitrator a proposed resolution of the Issue and the reasons for
proposing the resolution. Should either party desire, a joint meeting before the
arbitrator shall be held within thirty (30) days after the end of the above
resolution submission period.
Within thirty (30) days after the later of (i) the end of the resolution
submission period or (ii) holding of the joint meeting, the arbitrator shall
decide the matter by selecting only one of such resolutions, and shall have no
authority to modify its proposed terms.
c) Factors. Unless otherwise agreed to by the parties, the arbitrator
shall make such decision based on the following factors in descending order of
importance: (a) consistency with the provisions of this Agreement; (b)
consistency with the intent of the parties as reflected in this Agreement; and
(c) customary and reasonable provisions included in comparable agreements. The
decision of the arbitrator will be binding upon the parties without the right of
appeal, and judgment upon the decision rendered by the arbitrator may be entered
in any court having jurisdiction thereof.
66
11.2 Cost. The parties shall share equally the reasonable documented cost of
such arbitration proceeding, but not the individual cost of the parties in
participating in such proceeding.
12. MISCELLANEOUS
12.1 Indiana Agreement. PRAECIS shall promptly inform ROCHE if (a) (i) IU
notifies PRAECIS that a breach of the Indiana Agreement has occurred, and
PRAECIS will further notify ROCHE as to when such breach has been or is intended
to be cured; and (ii) PRAECIS notifies IU that a breach of the Indiana Agreement
has occurred, and PRAECIS will notify ROCHE as to when such breach has been or
is intended to be cured or (b) the rights to PRAECIS under the Indiana Agreement
are converted, or IU intends to convert such rights, from exclusive to
non-exclusive.
12.2 Disclosure of Agreement and Press Releases and Information. Neither party
will disclose the terms or conditions of this Agreement to any third party or
issue any press release relating to the terms and conditions of this Agreement
for any purpose without the prior written consent of the other party, except as
required by law (including without limitation any regulatory agency or
commission of competent jurisdiction). Each party, however, shall have the right
to disclose, without the prior written consent of the other party, the terms and
conditions of this Agreement or Information to its actual or potential lending
institutions, financial advisors, and shareholders (collectively, "investors"),
provided such investors agree in writing to maintain the terms and conditions of
this Agreement and Information in confidence.
67
If it is impracticable for a party to obtain written agreement from
investors to maintain the terms and conditions of this Agreement and Information
in confidence, such party may disclose the terms and conditions of this
Agreement and Information to such investors to the extent there is a reasonable
need for them to know, provided such party obtains the prior written consent of
the other party, which consent the other party shall not unreasonably withhold.
Once a party has consented to the disclosure of specific terms and conditions of
this Agreement or specific Information, it shall be deemed to have consented to
the same type of disclosure of the same specific terms and conditions or the
same specific Information to other investors of the like kind without the need
to obtain separate consents in each instance (For example, a previously approved
disclosure of specific Information to a financial advisor would permit
disclosure of the same Information only to other financial advisors, but would
not permit disclosure of the same Information to a lending institution(s)).
12.3 Force Majeure. If either party shall be delayed, interrupted or prevented
with respect to the performance of any obligation hereunder by reason of an act
of God, fire, flood, war (declared or undeclared), public disaster, strike or
labor dispute, governmental enactment, rule or regulation, or any similar cause
beyond such party's control, such party shall not be liable to the other
therefor; and the time for performance of such obligation shall be extended for
a period equal to the duration of the contingency which occasioned the delay,
interruption or prevention.
Within fifteen (15) days after the beginning of the force majeure, the
party invoking its force majeure rights must notify the other party of this fact
in accordance with Section 12.7. The other party must also be notified of the
termination of the force majeure within fifteen (15) days after such
termination. If the force majeure renders
68
either of the required notifications impossible, notification must be given as
soon as possible.
If the delay resulting from the force majeure exceeds six (6) months, the
injured party may elect to treat such delay as a material breach and may
terminate this Agreement pursuant to the provisions of Section 9.3, or may elect
to extend the Term of this Agreement for an amount of time equal to the delay.
If no notice of such election is given prior to termination of the force
majeure, this Agreement will continue in effect without modification.
12.4 Bankruptcy. In the event that PRAECIS shall become insolvent, shall make an
assignment to the benefit of creditors, or shall have a petition in bankruptcy
filed for or against it (which, in the case of an involuntary petition, is not
dismissed or stayed within sixty (60) days after such petition is filed), all
rights and licenses granted under or pursuant to this Agreement by PRAECIS to
ROCHE are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of Title 11, US Code (the "Bankruptcy Code"), licenses of rights to
"intellectual property" as defined under Section 101(60) of the Bankruptcy Code.
The parties agree that ROCHE, as a licensee or sublicensee of such rights under
this Agreement, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code, subject to the continued performance of its
obligations under this Agreement.
12.5 Law. This Agreement will be interpreted in accordance with the laws of the
state of New York.
69
12.6 Waiver. The waiver by a party of a breach or a default of any provision of
this Agreement by the other party shall not be construed as a waiver of any
succeeding breach of the same or any other provision, nor shall any delay or
omission on the part of a party to exercise or avail itself of any right, power
or privilege that it has or may have hereunder operate as a waiver of any right,
power or privilege by such party.
12.7 Notices. Any notice or communication (including invoices) required to be
given hereunder shall be in writing and shall be considered properly given when
(a) personally delivered or sent by telefax (other than for invoices) or
overnight mail with a confirmation copy, (b) three (3) business days after being
sent by certified or registered mail to the respective address of a party, or
(c) the next business day after being sent by overnight mail or over night
courier as follows:
If to ROCHE: Roche Products Inc.
State Road #670 km 2.7
Manati, Puerto Rico 00647-0452
Attn.: President
or any other address that ROCHE may advise in writing;
If to PRAECIS: Praecis Pharmaceuticals Incorporated
0 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Vice President of Corporate Development
or any other address that PRAECIS may advise in writing.
12.8 No Agency. Nothing herein shall be deemed to constitute either party as the
agent or representative of the other party. Each party shall be an independent
70
contractor, not an employee or partner of the other party. Each party shall be
responsible for the conduct of activities at its own facilities and for any
liabilities resulting therefrom. Neither party shall be responsible for the acts
or omissions of the other party, and neither party will have authority to speak
for, represent or obligate the other party in any way without prior written
authority from the other party.
12.9 Entire Agreement. This Agreement (including its Exhibits) constitutes the
entire agreement between the parties with respect to the subject matter and
supersedes all previous agreements, whether oral or written, including the
Non-Disclosure Agreement. This Agreement can only be changed or modified by
written agreement of the parties.
12.10 Captions. The captions herein are for convenience only and shall not be
interpreted as having any substantive meaning.
12.11 Severability. In the event that any provision of this Agreement is held by
a court of competent jurisdiction to be unenforceable because it is invalid or
in conflict with any law of any relevant jurisdiction, the validity of the
remaining provisions shall not be affected, and the parties shall negotiate a
substitute provision that, to the extent possible, accomplishes the original
business purpose.
12.12 Assignment. This Agreement shall be binding upon and shall inure to the
benefit of successors of the parties hereto and to the assigns of all good will
and entire business and assets of a party hereto, but shall otherwise not be
assignable without prior written consent of the other party. Notwithstanding the
above, without notice to PRAECIS, ROCHE may at any time and for any reason
assign all or certain rights and
71
obligations to its Affiliates who agree to be bound by the terms and obligations
of this Agreement. Such assignment shall be considered as effective on the date
specified by ROCHE in its notice, even if retroactive. Such assignment shall not
relieve or alter in any manner the obligations of ROCHE-Basel under Section
12.13.
12.13 Guarantee. ROCHE-Basel guarantees the full and timely performance by ROCHE
or any of its Affiliates of all their respective obligations under this
Agreement. In particular, in the event ROCHE or its Affiliates fails to make a
payment due PRAECIS or perform an obligation required under this Agreement, such
payment due PRAECIS or obligation required under this Agreement shall be made by
or be the responsibility of ROCHE-Basel.
12.14 Interpretation. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." All defined terms in this Agreement shall have the
meaning assigned thereto by this Agreement, whether such terms are used in the
singular or plural. All references herein to Articles, Sections, and Exhibits
shall be deemed references to Articles and Sections of, and Exhibits to, this
Agreement unless the context shall otherwise require. All Exhibits to this
Agreement are attached hereto and made a part hereof. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with United States generally accepted accounting
principles, as in effect from time to time.
72
12.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of such together
shall constitute one and the same instrument.
73
IN WITNESS WHEREOF, PRAECIS PHARMACEUTICALS INCORPORATED and ROCHE
PRODUCTS INC. have caused this Agreement to be duly executed by their authorized
representatives on the dates written below.
PRAECIS PHARMACEUTICALS ROCHE PRODUCTS INC.
INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxx
------------------------------- -------------------------------
Title: Chairman & CEO Title: President & General Manager
---------------------------- ----------------------------
Date: 6/4/98 Date: 5/29/98
----------------------------- -----------------------------
Approved and accepted by:
X.XXXXXXXX-XX XXXXX LTD
By: /s/ X. Xxxxxxx By: /s/ X. Xxxxx
------------------------------- -------------------------------
Name: X. Xxxxxxx Name: X. Xxxxx
----------------------------- -----------------------------
Title: Director Title: Licensing Manager
---------------------------- ----------------------------
Date: 6/4/98 Date: 6/4/98
----------------------------- -----------------------------
Exhibit 1 - Countries Excluded from Territory
Exhibit 2 - Patent included within PRAECIS Proprietary Rights
Exhibit 3 - Development Costs
Exhibit 4 - Heads of Supply Agreement
Exhibit 5 - Heads of Copromotion Agreement
74
EXHIBIT 1
Countries Excluded From Territory*
----------------------------------
*All countries not listed are included in the Territory
--------------------------------------------------------------------------------
Austria Belgium Denmark Greece
--------------------------------------------------------------------------------
Finland France Germany Luxembourg
--------------------------------------------------------------------------------
Ireland Italy Liechtenstein Spain
--------------------------------------------------------------------------------
Monaco Netherlands Norway Portugal
--------------------------------------------------------------------------------
San Marino Sweden Switzerland United Kingdom
--------------------------------------------------------------------------------
Vatican Iceland Andora
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Belize Costa Rica Guatemala Honduras
--------------------------------------------------------------------------------
Mexico Nicaragua Panama San Salvador
--------------------------------------------------------------------------------
Argentina Bolivia Brazil Chile
--------------------------------------------------------------------------------
Columbia Ecuador French Guyana Guyana
--------------------------------------------------------------------------------
Paraguay Peru Uruguay Venezuela
--------------------------------------------------------------------------------
75
--------------------------------------------------------------------------------
Albania Armenia Azerbaijan Belarusse
--------------------------------------------------------------------------------
Bosnia- Bulgaria Croatia Czech Republic
Herzegovina
--------------------------------------------------------------------------------
Estonia Georgia Hungary Kazakhstan
--------------------------------------------------------------------------------
Kyrgyzstan Latvia Lithuania Macedonia
--------------------------------------------------------------------------------
Moldavia Poland Romania Russia
--------------------------------------------------------------------------------
Slovakia Slovenia Tadzhikistan Turkmenistan
--------------------------------------------------------------------------------
Ukrania Uzbekistan Yugoslavia
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Algeria Benin Burkina Faso Cameroon
--------------------------------------------------------------------------------
Central African Chad Congo Djibouti
Republic
--------------------------------------------------------------------------------
Gabon Guinea Guinea Bissau Ivory Coast
--------------------------------------------------------------------------------
Madagascar Mali Mauritania Morocco
--------------------------------------------------------------------------------
Niger Rwanda Senegal Seychelles
--------------------------------------------------------------------------------
Tunisia Zaire South Africa
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Iran Iraq Xxxxxx Xxxxxx
--------------------------------------------------------------------------------
Kuwait Lebanon Oman Saudi Arabia
--------------------------------------------------------------------------------
South Yemen Syria Turkey Yemen
--------------------------------------------------------------------------------
Cyprus United Arab Bahrain
Emirates
--------------------------------------------------------------------------------
Malta Qatar
--------------------------------------------------------------------------------
76
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
EXHIBIT 2
---------------------------------------------------------------------------------------------------
FILING DATE ISSUE
COUNTRY SERIAL NO. TITLE (PRIORITY) PATENT NO. DATE
---------------------------------------------------------------------------------------------------
USA 08/480,494 LHRH ANTAGONIST
PEPTIDES ***
---------------------------------------------------------------------------------------------------
USA 08/973,378 LHRH ANTAGONIST
PEPTIDES ***
---------------------------------------------------------------------------------------------------
Australia 61680/96 LHRH ANTAGONIST
PEPTIDES ***
---------------------------------------------------------------------------------------------------
Canada 2,220,459 LHRH ANTAGONIST
PEPTIDES ***
---------------------------------------------------------------------------------------------------
Japan 09-502050 LHRH ANTAGONIST
PEPTIDES ***
---------------------------------------------------------------------------------------------------
USA 08/762,747 PHARMACEUTICAL
FORMULATIONS
FOR SUSTAINED ***
DRUG DELIVERY
---------------------------------------------------------------------------------------------------
USA 08/988,851 PHARMACEUTICAL
FORMULATIONS
FOR SUSTAINED ***
DRUG DELIVERY
---------------------------------------------------------------------------------------------------
PCT PCT/US97/22 PHARMACEUTICAL
881 FORMULATIONS
FOR SUSTAINED ***
DRUG DELIVERY
---------------------------------------------------------------------------------------------------
USA 08/573,109 METHODS FOR
TREATING PROSTATE ***
CANCER WITH LHRH
ANTAGONISTS
---------------------------------------------------------------------------------------------------
USA 08/755,593 METHODS FOR
TREATING PROSTATE ***
CANCER WITH LHRH
ANTAGONISTS
---------------------------------------------------------------------------------------------------
PCT PCT/US96/18 METHODS FOR
911 TREATING PROSTATE ***
CANCER
---------------------------------------------------------------------------------------------------
77
---------------------------------------------------------------------------------------------------
WITH LHRH ANTAGONISTS
---------------------------------------------------------------------------------------------------
78
EXHIBIT 3
DEVELOPMENT COSTS
Development Costs shall mean the costs attributable to the development of the
Product and actually incurred or committed by a party after the Effective Date
of this Agreement through the termination of development efforts or the date of
marketing approval for the final Agreed Upon Indication for which marketing
approval is sought in the Territory.
Such Development Costs shall:
1) include those costs incurred in the Territory as well as those costs incurred
in geographical areas other than the Territory, provided that the activities
related with such costs are planned in the Development Program for the purpose
of generating data or information required to obtain the authorization and/or
ability to market and sell the Product in commercial quantities in the Territory
to third parties,
2) include those reasonable and prudent costs, both direct and indirect (i.e.:
fully burdened costs), which are ordinary and customary for a like product at a
like stage of development, and which are required to obtain the above mentioned
authorization and/or ability in the Territory,
3) include but not be limited to those costs of studies on the toxicological,
pharmacokinetic, metabolical or clinical aspects of the Product conducted
internally or by individual investigators or consultants,
79
CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
4) include expenses for data management, statistical designs and studies,
document preparation, and other administration expenses associated with the
clinical testing program. They shall also include expenses for post-registration
clinical studies which are conducted as part of the Development Program in the
Territory,
5) include CMC development costs i.e.: manufacturing process development,
scale-up and qualification lot costs, the cost for manufacturing Compound and
Product used to register the drug ("Registration Batches"). If Compound or
Product manufactured for Registration Batches is sold by ROCHE, then ROCHE
shall not be responsible for additional payments to PRAECIS for supplying such
Compound or Product. Moreover, Development Costs shall include the costs paid by
PRAECIS to *** prior to the date all parties sign this Agreement and the costs
paid thereafter to *** or any third party by the parties as related to improving
the process for manufacturing abarelix,
6) include those costs for preparing, submitting, reviewing or developing data
or information for the purpose of submission to the FDA and necessary to obtain
approval to market and sell the Product in commercial quantities in the
Territory. Such costs shall include those which are related to establishing or
expanding the labeling for an Agreed Upon Indication,
7) not include process improvement, modification costs and associated scale-up
costs incurred after initial approval of Product by the FDA and, the associated
costs for preparing, submitting, reviewing or developing data or information and
necessary to
80
maintain approval by the FDA to manufacture the Product in commercial quantities
in the Territory, all of which costs are the sole responsibility of PRAECIS,
8) except as provided in Paragraph 5, not include the cost of identifying and
enabling a secondary supplier and, patent costs (including costs incurred to a
third party for rights to make, have made, import, use or sell or offer for sale
Product in Territory), all of which costs are the sole responsibility of
PRAECIS,
9) except as provided in Paragraph 6, not include costs associated with Phase
III b and Phase IV clinical studies which are not part of the Development
Program, all such costs being considered as marketing costs.
In determining Development Costs, each Party will use its applicable project
cost system with the purpose of tracking costs as much as possible on a product
indication-by-product indication basis. If expenses are common to several
product indications comprised in the Development Program, they will be charged
either to the product indication that is expected to be filed in first instance,
or as determined by the JSC.
Such Development Costs consist of payments to third parties and in-house
personnel costs.
The third party payments associated with the Development Program reflect all
significant payments made to third parties as part of the development activities
under the Development Program. Such expenses would include, but not be limited
to, payments to investigators, laboratories, consultants, patients and clinical
research organizations for services, cost of materials and drugs purchased,
expenses related to
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
information technology equipment and services, and other outside services. In
order to simplify the cost determination, minor out-of-pocket expenses will be
calculated as part of a standardized human resource cost per FTE ("Standard FTE
Rate"); such costs would include travel, office supplies, and minor expenses.
Commencing July 1, 1998, the cost of personnel associated with the Development
Program shall be calculated using a Standard FTE Rate for each FTE charged to
development activities under the Development Program. Aggregate FTE costs shall
be calculated by applying an agreed Standard FTE Rate to the number of FTEs
assigned to and charging development activities under the Development Program
(as determined by time sheets of the individuals charging such activities). The
Standard FTE Rate shall include the direct and indirect cost (i.e., fully
burdened costs) associated with an average, full-time development staff. Such
costs would include, but not be limited to, the following: salaries, fringe
benefits, travel, supplies, minor outside services and overhead (general and
administrative costs, including, but not limited to, salaries and fringe
benefits of development management personnel and central service charges
including depreciation). Both parties shall utilize the same Standard FTE Rate
on a July 1 to June 30 fiscal year basis. The initial Standard FTE Rate for the
fiscal year beginning 1998 shall be $***. This Standard FTE Rate shall be
increased by a fixed amount in each subsequent fiscal year to reflect the impact
of inflation after agreement between both parties.
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The Development Costs shall be reported as follows:
A) External costs: Value
Preclinical development ......................
Clinical development ......................
Chem/Manuf/Control (CMC) ......................
Project management ......................
Regulatory and documentation ......................
----------------------
----------------------
External costs (1)
External expenses shall be charged on the basis of the actual costs invoiced by
the external third parties with supporting comments on the activities behind
such expenses. No overhead charges will be added.
B) Internal costs :
Units Manuf. Cost Value
Clinical material : ............... .......... ................ (2)
Other Internal :
FTE's Value
Preclinical development ............. ......................
Clinical development .............. ......................
Chem/Manuf/Control (CMC) (*) .............. ......................
Project management .............. ......................
Regulatory and documentation .............. ......................
--------------------
--------------------
Other internal costs (3)
Other Internal Costs shall be planned and charged on the basis of a Standard FTE
Rate which shall be agreed between the parties.
(*) Other Internal CMC costs does not include clinical material manufacturing
costs
Total DEVELOPMENT COSTS = (1) + (2) + (3)
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
EXHIBIT 4
HEADS OF SUPPLY AGREEMENT
This Heads of Supply Agreement sets forth the basic understanding between
the parties with respect to the supply of Compound and/or Product. This Heads of
Supply Agreement shall be binding on the parties. The full terms of the supply
agreement between the parties will be set forth in a full agreement which shall
be consistent with the terms as described below ("Supply Agreement").
1 Orders. The parties shall discuss and agree upon the stage of processing
in which the Compound and/or Product should be provided to ROCHE for
further manufacture to best advance the goals established by the JSC, and
the price for Compound and/or Product shall be adjusted accordingly.
Illustratively, (i) PRAECIS may supply ROCHE with sterilized vials
containing abarelix in depot formulation, i.e. Semi-finished Dosage Form,
and ROCHE will in turn label and package the sterile vials, or (ii)
PRAECIS may supply ROCHE with abarelix in depot formulation which ROCHE
will put into vials and have sterilized and labeled ("fill and finish").
On behalf of and exclusively in the Territory for ROCHE, PRAECIS shall
supply, and ROCHE shall purchase as provided for below, ROCHE's
requirements for Compound and/or Product. Such Compound and/or Product for
commercial sale shall have at least *** (***%) of its shelf life remaining
at the time of supply.
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ROCHE will provide PRAECIS with non-binding forecasts of ROCHE's
requirements for Compound and/or Product in six (6) month increments for
the upcoming eighteen (18) month period, to be updated quarterly on a
rolling basis. ROCHE shall provide PRAECIS with firm purchase orders for
Compound and/or Product in a commercially reasonable period of time (the
exact period of time to be negotiated by the parties in the Supply
Agreement) before the order must be delivered by PRAECIS to ROCHE.
2 Price. During the Term of the Agreement, for Compound and/or Product
supplied by PRAECIS to ROCHE for sale in the United States, ROCHE shall
pay to PRAECIS the amount specified under and in accordance with Section
6.2 of the Agreement. During the Term of the Agreement, for Compound
and/or Product supplied by PRAECIS to ROCHE for sale in the Territory
outside the United States, ROCHE shall pay to PRAECIS the ex-COGS amount
specified under and in accordance with Section 6.3 of the Agreement.
In the event that the Compound and/or Product becomes unfit for use due to
reasons within PRAECIS' control, for example because it fails to meet
specifications or GMP standards, then ROCHE shall have the right to
return the Compound and/or Product to PRAECIS and shall have no liability
whatsoever for the Compound and/or Product.
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
3 Process Savings and Improvement. a) ROCHE and PRAECIS shall share on a ***
basis all savings from Initial Cost of Goods resulting from decreased
manufacturing costs (including but not limited to scale-up, technical
process improvements (such as changes in synthesis, improved efficiency),
and those improvements arising from investments through Development Costs)
in supplying Compound for as long as such savings from Initial Cost of
Goods are realized. Accordingly, *** of such savings will be deducted from
the Initial Cost of Goods.
b) However, if technical process improvements made solely by a party or
its Affiliates (without the other party's technical or financial
contribution such as through paying its share of Development Costs) result
in savings from Initial Cost of Goods on account of decreased
manufacturing costs in supplying Compound, the parties shall share any
substantial (*** or greater) savings resulting from such technical process
improvements. The other party's share of such savings in excess of the ***
shall equal *** of the excess savings for as long as such savings are
realized. Accordingly, the first *** of savings will not be deducted from
the Initial Cost of Goods; *** of savings in excess of *** will be
deducted from the Initial Cost of Goods. Technical process improvements
made by UCB Pharma and PLAS shall be excluded from such technical process
savings, and shall be shared on a *** basis in accordance with paragraph
3(a) of this Heads of Supply Agreement less any process improvement
payments made by Synthelabo.
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4 Approvals and Supply. Subject to Section 7, PRAECIS, at its cost, shall
make or have made Compound and/or Product in accordance with written
manufacturing procedures and product specifications that have been
accepted in writing by ROCHE and which meet the requirements of all laws
and governmental regulations including but not limited to current Good
Manufacturing Procedures and foreign equivalents and validation
requirements. PRAECIS shall, at its own expense (other than with respect
to expenses which constitute Development Costs), obtain and maintain all
necessary permits required to meet its manufacturing obligations. PRAECIS
shall also use best efforts to ensure that sufficient stock of Compound
and Product is available in its inventory to promptly fill orders to the
trade in the Territory. PRAECIS and ROCHE shall also use best efforts to
establish manufacturing capacity to supply ROCHE's forecasts.
5 Rights of Inspection and Reports. PRAECIS shall timely provide ROCHE with
all documentation requested by ROCHE reasonably related to manufacture of
Compound and/or Product, and obtaining and maintaining regulatory approval
of Product. ROCHE's authorized representatives shall be entitled, on
reasonable prior notice, to visit and inspect the areas where Compound
and/or Product is produced or stored, whether at PRAECIS or at one of
PRAECIS' manufacturing contractors, during normal business hours at
reasonable times to be agreed by the parties. XXXXX'x authorized
representatives shall be entitled on reasonable prior notice to review the
manufacturing process and technical records insofar as they relate to the
manufacture of Compound and/or Product. The above visits, inspections and
reviews are without limitation to other rights ROCHE would have to
determine the adequacy of the facilities and records and whether the
services are being conducted in compliance with this Agreement
87
and relevant laws and regulations. Although ROCHE shall possess this right
to visit, inspect and review, it shall have no obligation to make such
visitations, inspections and reviews.
6 Audit. PRAECIS shall keep full, true, and accurate records documenting the
actual cost of manufacturing Compound and/or Product. ROCHE shall have the
right to audit such records to ascertain the baseline cost of
manufacturing Compound and/or Product. Thereafter, ROCHE shall have the
right to audit PRAECIS' records on an annual basis to ascertain the cost
of manufacturing Compound and/or Product.
7 Source of Supply. The parties shall work together to secure primary and
secondary sources of supply for Compound and/or Product. The parties
envision that UCB Pharma will be the primary manufacturer of Compound for
development, Launch of the Product, and for up to seven (7) years after
Launch of the Product. ROCHE shall have the right to be the secondary
manufacturer for Compound while UCB Pharma is the primary manufacturer.
Thereafter, ROCHE shall have the right to be the primary manufacturer for
Compound. The parties also envision, that Xxxxxxxx Chemicals, Inc. of
Xxxxxxx City, Iowa ("Xxxxxxxx") will be the primary manufacturer of depot
formulation used in manufacturing the final Product for development,
Launch of the Product, and for up to five (5) years after Launch of the
Product. PRAECIS shall be the secondary manufacturer of depot formulation
used in manufacturing the final Product while Xxxxxxxx is the primary
manufacturer. Thereafter, the parties envision that PRAECIS first and
ROCHE second will become the primary manufacturer of the depot formulation
used in manufacturing the final Product.
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Notwithstanding the above, if PRAECIS or ROCHE are to supply Product in
depot formulation and/or Compound, then they shall do so at a price no
higher than that which could be obtained from a third party supplier for
similar quantities and delivery schedules. With regard to the fill and
finish of the Product, ROCHE shall have the right to be the primary party
for conducting such activities but shall do so at a price that is no
higher than that which could be obtained from a third party supplier for
similar quantities and delivery schedules.
If ROCHE becomes a manufacturer of Compound, the parties will consider
terms under which ROCHE may, at its option, supply Compound to PRAECIS for
use outside the Territory.
8 Supply Failure. In the event that PRAECIS manufactures and is unwilling or
unable to supply sufficient amount of Product to be used to satisfy ROCHE
purchase orders and/or forecasts (within ordinary and customary time
limits and cure periods to be negotiated in the Supply Agreement), and/or
meet established procedures and specifications, (i) ROCHE shall be free
to make, or have a third party make such Product to fill orders in the
Territory during the period of PRAECIS' unwillingness or inability, or for
the period during which ROCHE becomes obligated to obtain Product from a
third party; and (ii) PRAECIS agrees, free of charge, to disclose
sufficient information to ROCHE to make or have made Products, to permit
ROCHE to cross reference the regulatory filings, and to provide copies of
all proprietary information (including regulatory filings and materials
which in ROCHE's reasonable opinion is needed to manufacture Product). All
costs associated with PRAECIS' unwillingness or inability to
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manufacture, including qualification of such additional manufacturing with
FDA, shall be deducted by ROCHE from any amounts owed to PRAECIS.
9 Term and Extension. The Supply Agreement shall be in effect for a period
of time which begins on the date on which the Supply Agreement is entered
into and continues for the Term of the Agreement on a country-by-country
basis. Thereafter, the Supply Agreement shall continue to remain in full
force on a country-by-country basis for two (2) additional terms of five
(5) years each; provided however, that it can be terminated by either
party upon three (3) year's prior written notice to the other party but in
no event shall such written notice be provided before three (3) years
prior to the end of the Term of the Agreement (original term or as
extended).
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EXHIBIT 5
HEADS OF AGREEMENT FOR COPROMOTION
This Heads of Agreement for Copromotion sets forth the basic understanding
between the parties with respect to the collaboration relating to the
copromotion of a given Product. This Heads of Agreement for Copromotion shall be
binding on the parties. The full terms of the copromotion agreement between the
parties will be set forth in a full agreement which shall be consistent with the
terms as described below.
1. Exercise of Copromotion Option. The Copromotion Option with respect to a
given Product shall be exercisable by PRAECIS by giving ROCHE at least
nine (9) months advanced written notice (Notice). Such Notice must be
given after the beginning of the third full calendar year and before the
end of the first quarter of the fourth full calendar year after Launch of
the Product in the United States ("Notice Period"). Should Notice not be
given during the Notice Period, then the PRAECIS' Copromotion Option as
related to the Product (including subsequently approved indications and
formulations containing the same Compound (including acids, salts or
esters thereof) as found in the given Product) shall be null and void.
Copromotion for the given Product shall start at the beginning of the next
full calendar year after the year in which Notice is given provided ROCHE
receives Notice at least six (6) months before copromotion commences.
Additionally, PRAECIS shall not be entitled to exercise such Copromotion
Option if Adjusted Gross Sales in the United States
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
in the full calendar year immediately prior to Notice and copromotion do
not exceed *** dollars ($***).
For example, if (a) Launch of the Product in the United States occurs in
June, 1999, and (b) Adjusted Gross Sales in the United States in calendar
year 1999 are *** dollars ($***), and (c) Adjusted Gross Sales in the
United States in calendar year 2000 are *** dollars ($***), (d) Adjusted
Gross Sales in the United States in calendar year 2001 are *** dollars
($***), and (e) Adjusted Gross Sales in the United States in calendar year
2002 are *** dollars ($***), PRAECIS may give Notice to ROCHE between
January 1, 2002 and March 31, 2003. If ROCHE receives Notice on June 30,
2002, copromotion would start January 1, 2003.
As another example, if (a) Launch of the Product in the United States
occurs in June, 1999, and (b) Adjusted Gross Sales in the United States in
calendar year 1999 are *** dollars ($***), and (c) Adjusted Gross Sales in
the United States in calendar year 2000 are *** dollars ($***), (d)
Adjusted Gross Sales in the United States in calendar year 2001 are ***
dollars ($***), and (e) Adjusted Gross Sales in the United States in
calendar year 2002 are *** dollars ($***), PRAECIS may give Notice to
ROCHE between January 1, 2003 and March 31, 2003 and Copromotion would
start on January 1, 2004.
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CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS (*) DENOTE SUCH OMISSIONS.
2. Details. The rights of PRAECIS to copromote in the United States shall
also be subject to PRAECIS providing at least a level of *** (***%)
percent and no more than (***%) *** percent of the total promotional
effort in a given calendar year as established by number and type of
details in accordance with the Copromotion Plan as described in paragraph
6 below. Once PRAECIS establishes its level of participation, such level
shall not be modified without the prior approval of ROCHE and PRAECIS. In
the event PRAECIS does not fulfill its detailing obligations as
established under the Copromotion Plan, PRAECIS' right to copromote shall
terminate.
3. Reimbursement. In addition to the compensation under paragraph 6 of this
Agreement, ROCHE shall reimburse PRAECIS for PRAECIS' copromotional
activities at a cost based on fixed rate(s) per actual type and position
of detail performed by PRAECIS. The rate shall take into consideration the
position of the presentation of the Product and shall be in accordance
with usual and customary industry standards for details of a like nature.
Such fixed rate(s) shall be established annually.
4. Copromotion Term. The Copromotion Term starts on the date of Notice and
ends on the expiration of XXXXX'x payment obligations in the United States
as set forth in Article 6.2 of this Agreement.
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5. Grant. Subject to Paragraph 16, during the Copromotion Term, ROCHE grants
PRAECIS the right to promote and detail Product in the United States
jointly with ROCHE or its Affiliates for all indications. ROCHE and
PRAECIS will jointly promote and detail the Product in accordance with all
federal and state laws and regulations.
6. Copromotion Plans. Taking into consideration input from PRAECIS, ROCHE
shall establish copromotional programs and budgets (Copromotion Plan).
ROCHE shall retain responsibility for leading the implementation of the
Copromotion Plan and making decisions regarding marketing of Product.
7. Joint Promotional Team. A Joint Promotional Team ("JPT") comprised of
representatives from ROCHE and PRAECIS will be formed to oversee
copromotional activities of the Product in accordance with the Copromotion
Plan and shall meet at least annually. Consistent with prudent business
practices, the JPT will discuss copromotional activities with the Product
and establish mechanisms for achieving an effective copromotional
collaboration between ROCHE and PRAECIS in aspects which include
professional educational activities. PRAECIS shall have the right to
comment upon and make recommendations to ROCHE regarding copromotional
activities, which recommendations ROCHE shall evaluate and consider,
taking into account each party's expertise and experience with ethical
pharmaceutical products in the United States. The JPT shall be chaired by
a senior representative from ROCHE.
8. JPT Decisions. Any decisions regarding the implementation of the
Copromotion Plan shall be made by ROCHE taking into consideration comments
of
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PRAECIS. The final decision in such copromotional matter resides with
ROCHE.
9. Product Responsibility.
a. To the extent permitted by law, ROCHE is responsible, at its cost, for
taking all actions with respect to the Product as would normally be
conducted to market a major ethical pharmaceutical product in the United
States. These actions include:
preparing training materials and advertisement;
taking final responsibility with respect to detailing and
promotional strategies;
receiving orders, booking sales, invoicing, distributing Product,
handling returns, recalls, inventory and receivables of Product; and
communicating with governmental agencies regarding post approval
activity and issues.
b. PRAECIS is responsible for:
95
assuming all costs directly associated with its sales force,
including travel and other expenses subject to reimbursement under
paragraph 3 of this Heads;
ensuring that it follows the detailing and promotional strategies
which are established in the Copromotion Plan; and
promptly advising ROCHE of any issues relating to safety, customer
orders or regulatory questions of which it becomes aware.
x. XXXXX will be responsible for handling all inquiries for medical
information regarding the Product. ROCHE and XXXXXXX will collaborate in
developing procedures for providing information on such inquiries to
ROCHE for response.
x. XXXXX will be responsible for processing all adverse reaction and
product complaint reports regarding the Product. ROCHE and XXXXXXX will
collaborate in developing procedures for providing to ROCHE any
information coming into PRAECIS' possession concerning adverse events or
product complaints with the Product.
10. Other Selling Activity.
96
x. XXXXX has responsibility for managing all corporate accounts activity
including conducting Account Management activities such as Managed Care,
Contracting, and Disease Management.
x. XXXXX has responsibility for managing relationships with the trade.
ROCHE and XXXXXXX agree to collaborate in developing procedures for
providing information on orders or other trade inquires to ROCHE for
action.
11. Product Sale. ROCHE is solely responsible for establishing and modifying
the terms and conditions with respect to the sale of the Product,
including without limitation price.
12. Training Materials and Personnel. ROCHE provides PRAECIS with a master
copy of training materials regarding the detailing and promotion of
Product, free of charge. PRAECIS supplies all necessary copies of such
training materials to its sales force at its own cost. ROCHE may elect, at
its option, to make available, free of charge, sales and training
personnel to assist PRAECIS' management team in training PRAECIS' sales
force to detail and promote the Product. The details provided by ROCHE and
PRAECIS shall be carried out by a fully trained professional sales force
who are (i) employed by ROCHE and PRAECIS, respectively, and (ii) trained
according to a level specified by the JPT. Each party has final
responsibility to train its sales force with respect to the Product.
13. Sales and Promotional Materials. ROCHE develops sales and promotional
materials for distribution to the medical community. ROCHE supplies the
sales
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and promotional materials with respect to the Product to PRAECIS, free of
charge, in a manner that is equitable.
14. Sampling Program. ROCHE will establish a sampling program for Product and
strategy of such program, including the allotment of samples to PRAECIS.
ROCHE will supply the samples of the Product, free of charge, to PRAECIS.
15. Product Presentation. Before PRAECIS' exercise of the Copromotion Option,
ROCHE will acknowledge on promotional material and at promotional events
that the Product is licensed from PRAECIS and is being jointly developed.
During the Copromotion Term, the Product will be presented to the medical
community as being jointly promoted by ROCHE and PRAECIS. ROCHE will use
reasonable efforts consistent with prudent business practice to include
PRAECIS' name and logo on appropriate promotional materials. All such
activities shall be consistent with all laws and governmental regulations.
16. Reporting and Performance Measurement. Appropriate reporting and
performance measurement provisions will be agreed upon by the parties and
included in the Copromotion Agreement.
17. Third Party Copromotion. ROCHE retains the right to copromote the Product
with a third party except to the extent that PRAECIS exercises its right
to copromote hereunder. Before entering into a third party copromotion
arrangement, ROCHE shall advise PRAECIS as to such potential copromotion
with a third party and provide PRAECIS with an opportunity to discuss with
ROCHE
98
such potential copromotion. ROCHE shall retain the right to solely
determine if it shall enter into such third party copromotion.
18. Diligence. Each party shall use reasonable diligence consistent with
prudent business practices to copromote the Product in the United States
in accordance with the Copromotion Plan.
19. Indemnification. A party indemnifies the other for all claims related to
the Product to the extent the party is negligent or fails to promote the
Product in accordance with federal and state laws.
20. Non-Assignability. (a) The Copromotion Option and the right to copromote
granted herein to PRAECIS shall not be transferred or assigned, even to a
successor of PRAECIS or an assignee of all the good will and entire
business and assets of PRAECIS, except with the prior written consent of
ROCHE, which consent ROCHE may not unreasonably withhold; provided that
the foregoing shall not prohibit, or require the consent of ROCHE for any
such transfer or assignment if such transfer or assignment is pursuant to
a transaction which is not and does not result in a Change of Control (as
defined below) of PRAECIS. Moreover, any Change in Control (as defined
below) of PRAECIS after the Effective Date of this Agreement shall render
the Copromotion Option and the right to copromote thereunder null and
void, except with the prior written consent of ROCHE, which consent ROCHE
may not unreasonably withhold. At least thirty (30) days prior to any
intended transfer or assignment of the Copromotion Option, PRAECIS shall
provide ROCHE with written notice of such
99
intended transfer or assignment, and how such transfer or assignment is
permitted hereunder.
(b) As used herein, "Change of Control" of PRAECIS shall occur or be
deemed to occur only if any of the following events occur:
(i) any "person," as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than (A) PRAECIS, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of PRAECIS, (C)
any corporation owned directly or indirectly by the stockholders of
PRAECIS in substantially the same proportion as their ownership of
stock of PRAECIS, or (D) any stockholder of PRAECIS as of the
Effective Date is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of PRAECIS representing more than 30% of the combined
voting power of the Company's then outstanding securities;
(ii) individuals who, as of the Effective Date, constitute the
PRAECIS Board of Directors (the "Incumbent Board") cease for any
reason to constitute at least a majority of such Board of Directors,
provided that any person becoming a director of PRAECIS subsequent
to the date hereof whose election, or nomination for election by
PRAECIS stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an
100
actual or threatened election contest relating to the election of
the directors of PRAECIS, as such terms are used in Rule 14a--11 of
Regulation 14A under the Exchange Act) shall be, for purposes of
this Agreement, considered as though such person were a member of
the Incumbent Board; or
(iii) consummation by PRAECIS of a merger or consolidation other
than
(1) a merger or consolidation which would result in the voting
securities of PRAECIS outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity
or the ultimate parent entity thereof) more than 60% of the
combined voting power of the voting securities of such
surviving entity outstanding immediately after such merger or
consolidation; or
(2) a merger or consolidation effected to implement a
recapitalization of PRAECIS (or similar transaction) in which
no "person" (as defined in subparagraph (i) above) acquires
more than 30% of the combined voting power of the Company's
then outstanding securities; or
(iv) consummation by PRAECIS of a sale of all or substantially all
of its assets, other than to a wholly-owned subsidiary or an entity
which
101
owns all the outstanding capital stock of PRAECIS solely as part of
a reorganization or recapitalization transaction; or
(v) the stockholders of PRAECIS approve a plan of complete
liquidation of PRAECIS in the event of bankruptcy or receivership.
(c) For the purposes of the foregoing definition of "Change of Control,"
the term "PRAECIS" shall mean either PRAECIS PHARMACEUTICALS INCORPORATED
or a corporation referred to in clause (c) of paragraph (i) of such
definition.
(d) Notwithstanding anything to the contrary in this Heads of Agreement
for Copromotion, should a pharmaceutical entity (or a parent or subsidiary
thereof) acquire PRAECIS or more than fifty percent (50%) of the voting
securities of PRAECIS, the Copromotion Option and the right to copromote
shall not be transferred and shall become null and void, except with the
prior written consent of ROCHE.
21. Full Agreement. Consistent with the Heads of Agreement for Copromotion,
the Copromotion Agreement will contain ordinary and customary terms for an
agreement in which a pharmaceutical product of like nature is jointly
copromoted and detailed in the United States, such as insurance,
additional warranties and the like.
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