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EXHIBIT 10.27
RESEARCH AND LICENSE AGREEMENT
This Agreement, effective as of October 15, 1996 ("Effective Date"),
between XXX XXXXX AND COMPANY, a corporation organized under the laws of the
State of Indiana, having its principal place of business at Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, and its Affiliates, hereinafter
collectively called "Lilly",
AND
NEUROCRINE BIOSCIENCES, INC., a corporation organized under the laws of the
State of Delaware, having its principal place of business at 0000 Xxxxxxx Xxxx
Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000-0000, and its Affiliates, hereinafter
collectively called "Neurocrine".
RECITALS
1. Neurocrine is in the business of conducting research in the field of
mammalian receptor systems. An objective of Neurocrine's research is the
discovery of potential human drug receptor targets, assays for use in drug
discovery and compounds having activity at such receptor targets.
2. Neurocrine is engaged in a specific research program aimed at
understanding the pharmacological implications of Corticotropin Releasing Factor
and, in particular, Corticotropin Releasing Factor-Binding Protein and
Corticotropin Releasing Factor-Receptor 2. The purpose of such program is to
identify high affinity Corticotropin Releasing Factor-Binding Protein Ligand
Inhibitors and Corticotropin Releasing Factor-Receptor 2 Agonists, as well as to
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better understand the interaction between Corticotropin Releasing Factor,
Corticotropin Releasing Factor-Binding Protein and Corticotropin Releasing
Factor-Receptor 2 and various disease states, such as Alzheimer's disease and
eating disorders.
3. Lilly is in the business of discovering, developing and marketing
pharmaceuticals and animal health products. Lilly has substantial experience and
expertise in developing drugs which are useful in nervous system disorders.
4. Lilly is interested in funding and collaborating with Neurocrine in
screening compounds developed by Lilly or Neurocrine using Corticotropin
Releasing Factor-Binding Protein and Corticotropin Releasing Factor-Receptor 2
assay systems developed by Neurocrine, looking to the possible commercial
development of therapeutic agents useful in treating Corticotropin Releasing
Factor related disorders. Lilly is also interested in funding and collaborating
with Neurocrine on increasing the level of understanding regarding the
interaction between Corticotropin Releasing Factor and Corticotropin Releasing
Factor Receptor-2 and various Corticotropin Releasing Factor related disorders.
5. Neurocrine is willing to collaborate with Lilly on identifying
compounds suitable for commercial development for treating Corticotropin
Releasing Factor related disorders and to use its novel Corticotropin Releasing
Factor-Binding Protein and Corticotropin Releasing Factor- Receptor 2 assay
systems (providing same to Lilly as appropriate) in screening compounds
furnished by Lilly and Neurocrine. Neurocrine is also willing to continue
research on Corticotropin Releasing Factor-Binding Protein and Corticotropin
Releasing Factor-Receptor 2 to make the results of its research available to
Lilly.
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NOW, THEREFORE, in consideration of the above premises and the mutual
covenants hereinafter recited, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.00 General. When used in this Agreement, each of the following
terms shall have the meaning, set forth in this Article I.
Section 1.01 "Affiliate" means (a) any corporation or business entity of
which Lilly or Neurocrine, at the time in question, owns or controls, directly
or indirectly, fifty percent (50%) or more of the stock of said corporation
having the right to vote for directors thereof or otherwise control the
management of said corporation or business entity, or (b) any corporation,
individual or business entity which now or hereafter owns or controls, directly
or indirectly, fifty percent (50%) or more of the stock of Lilly or Neurocrine
having the right to vote for directors thereof.
Section 1.02 "Corticotropin Releasing Factor" means that certain 41
amino acid peptide referred to as rat/human Corticotropin Releasing Factor and
described in Rivier, et al., Characterization of rat hypothalamic
corticotropin-release factor, Vol. 80 Proceedings of the National Academy of
Sciences (1983).
Section 1.03 "Corticotropin Releasing Factor-Binding Protein" means
that certain protein described in Potter, et al., Cloning and characterization
of the cDNAs for the human and rat corticotropin releasing factor binding
proteins, Vol. 349 Nature (1991), homologs or splice variants that bind
bioactive compounds,
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including but not limited, to Corticotropin Releasing Factor or Urocortin, with
an affinity of at least [ * ].
Section 1.04 "Corticotropin Releasing Factor-Binding Protein Ligand
Inhibitor" means a compound which inhibits or dissociates the binding of
bioactive compounds including, but not limited to, Corticotropin Releasing
Factor or Urocortin from Corticotropin Releasing Factor-Binding Protein at a
concentration of [ * ].
Section 1.05 "Corticotropin Releasing Factor-Receptor 1" means that
certain receptor described in Chen, et al., Expression cloning of a
humancorticotropin releasing factor receptor, Vol. 90 Proceedings of the
National Academy of Sciences (1993).
Section 1.06 "Corticotropin Releasing Factor-Receptor 2" means that
certain receptor described in Liaw, et al., Cloning and characterization of the
human corticotropin-releasing factor-2 receptor complimentary deoxyribonucleic
acid, Vol. 137 Endocrinology (1966), homologs or splice variants that bind
Corticotropin Releasing Factor or Urocortin with an affinity of at least [*].
Section 1.07 "Corticotropin Releasing Factor-Receptor 2 Agonist" means a
compound which activates the Corticotropin Releasing Factor-Receptor 2 and has
selectively for such Receptor over Corticotropin Releasing Factor-Receptor 1 and
other neuropeptide receptors.
Section 1.08 "Cost of Manufacturing" shall include standard cost of
production, variances, royalties, distribution expenses, and all other amounts
customarily deducted by Lilly as determined in accordance with the method of
accounting normally employed by Lilly in compiling cost of goods in accordance
with United States generally accepted accounting principles ("GAAP"). In
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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determining such Cost pursuant to this Agreement, Lilly will treat such
determination in the same manner as for all other products sold by Lilly.
Section 1.09 "Dementia" means a disorder characterized by a general loss
of intellectual abilities involving impairment of memory, judgment and abstract
thinking as well as changes in personality. Such disorders include disorders
caused by Alzheimer's disease, multi-infarct dementia, central nervous system
infection, brain trauma, Wernicke-Korsakoff syndrome, Huntington's chorea,
multiple sclerosis and Xxxxxxxxx'x disease, but do not include disorders caused
by delirium, depression or other functional mental disorder.
Section 1.10 "Direct Marketing Expenses" includes all costs necessary,
at Lilly's discretion, to market Product for sale. Such costs will include, but
not necessarily be limited to, promotional materials, advertising campaigns,
compensation and benefits of assigned marketing personnel, marketing surveys,
supplies, telephone, telecommunication costs, facilities, and other costs
associated with Product. Expenses will be determined from the books and records
of Lilly maintained in accordance with GAAP. In determining such Expenses
pursuant to this Agreement, Lilly will treat such determination in the same
manner as for all other products sold by Lilly.
Section 1.11 "Excluded Compound" means a Lilly Compound which (i) is
either a Project Team Compound or is actively being considered by Lilly as a
candidate for becoming a Project Team Compound as of the Effective Date or (ii)
operates as a pharmaceutically active agent via a mechanism of action other than
through Corticotropin Releasing Factor receptors or as a Corticotropin Releasing
Factor-Binding Protein Ligand Inhibitor and, as a consequence of which, Lilly,
therefore, does not develop or promote in its Phase III Clinical Trials as
having
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pharmaceutical activity via a Corticotropin Releasing Factor receptor or as a
Corticotropin Releasing Factor-Binding Protein Ligand Inhibitor mechanism of
action. A list of compounds falling within the scope of (i), above, is set forth
in Appendix I attached hereto. Further, should Lilly ever determine, or have
Neurocrine determine, a dose response curve on any compound listed in Appendix I
in any assay which utilizes Existing Neurocrine Technology or Project
Technology, such compound shall no longer be considered an Excluded Compound if
such response curve indicates that such compound's affinity is weaker than [ * ]
Section 1.12 "Existing Lilly Compound" means any Lilly Compound in
Lilly's possession on or before October 31, 1996, the identification, selection
or development of which as a pharmaceutical health product for the treatment of
indications associated with the Field is based upon the use of Existing
Neurocrine Technology or Project Technology. The individual optical isomers of a
racemic mixture and the salts and solvates of a chemical compound in Lilly's
possession on or before October 31, 1996, shall be deemed to also be in Lilly's
possession as of that time.
Section 1.13 "Existing Neurocrine Compound" means any Neurocrine
Compound in Neurocrine's possession on or before October 31, 1996, the
identification, selection or development of which as a pharmaceutical health
product for the treatment of indications associated with the Field is based upon
the use of Existing Neurocrine Technology or Project Technology. The individual
optical isomers of a racemic mixture and the salts and solvates of a chemical
compound in Neurocrine's possession on or before October 31, 1996, shall be
deemed to also be in Neurocrine's possession as of that time.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 1.14 "Existing Neurocrine Technology" means Neurocrine's
confidential and/or proprietary technical information, data and materials
including DNA sequences, target cell lines, expression vectors and genes in the
Field, to the extent such Technology was in Neurocrine's possession on or before
October 31, 1996.
Section 1.15 "Field" means Corticotropin Releasing Factor-Binding
Protein Ligand Inhibitors and Corticotropin Releasing Factor-Receptor 2 Agonists
and all diseases and disorders associated with same which are mediated by the
central nervous system regardless of peripheral effects.
Section 1.16 "Gross Profits" means Net Sales of Product in the United
States less the sum of (i) the Cost of Manufacturing such Products plus [ * ]
and (ii) Direct Marketing Expenses.
Section 1.17 "Joint Compound" means a chemical compound conceived and
synthesized jointly by Lilly and Neurocrine.
Section 1.18 "Lilly Compound" means a chemical compound conceived and
synthesized or acquired by Lilly.
Section 1.19 "Lilly Information" means information and data provided to
Neurocrine by Lilly concerning Lilly Compounds and data and information
generated by Neurocrine concerning Lilly Compounds. Such Information shall be
the property of Lilly.
Section 1.20 "Lilly's Strategic Focus" means those therapeutic areas and
diseases in which Lilly, at the time in question, has an interest in developing
and marketing pharmaceutically active agents.
Section 1.21 "Major Europe" means Germany, Italy, France and the
United Kingdom.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 1.22 "Net Sales" means, with respect to Product, the gross
amount invoiced by Lilly to unrelated third parties for the Product less:
(a) trade, quantity and cash discounts allowed;
(b) commissions, discounts, refunds, rebates, chargebacks,
retroactive price adjustments, and any other allowances
which effectively reduce the net selling price;
(c) actual product returns and allowances;
(d) that portion of the sales value associated with delivery
systems to the extent such delivery systems can be sold
separately from Product;
(e) any tax imposed on the production, sale, delivery or use
of the product;
(f) allowance for distribution expenses; and
(g) any other similar and customary deductions.
Such amounts shall be determined from the books and records of Lilly maintained
in accordance with GAAP consistently applied. Such formula for determining Net
Sales shall, furthermore, be employed by Lilly in substantially the same manner
in determining the net sales of all of Lilly's other products.
In the event Product is sold as part of a combination product or as a
bundle of products (hereinafter "combination product"), the Net Sales from the
combination product, for the purposes of determining royalty payments, shall be
determined by multiplying the Net Sales of the combination product (as defined
in the above Net Sales Definition) by the fraction, A/A+B where A is the average
sale price of Product when sold separately in finished form and B is the average
sale price of the other product(s) sold separately in finished form. In the
event that
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such average sale price cannot be determined for both Product and other
product(s) in combination, Net Sales for purposes of determining royalty
payments shall be calculated by multiplying the Net Sales of the combination
products by the fraction C/C+D where C is Lilly's cost of goods of Product and D
is Lilly's cost of goods of the other product(s), determined in accordance with
the method of accounting normally employed by Lilly in computing cost of goods.
Section 1.23 "Neurocrine Compound" means a chemical compound conceived
and synthesized or acquired by Neurocrine provided Neurocrine has the ability to
transfer rights to same to Lilly.
Section 1.24 "New Compound" means any Lilly Compound or Neurocrine
Compound synthesized or acquired by Lilly or Neurocrine, respectively, on or
after November 1, 1996, the identification, selection or development of which as
a pharmaceutical health product for the treatment of indications associated with
the Field is based upon the use of Existing Neurocrine Technology or Project
Technology.
Section 1.25 "Obesity" means a condition involving an increase in body
weight beyond the limitation of skeletal and physical requirements and disorders
associated with such condition such as diabetes mellitus, atherosclerosis and
hypertension.
Section 1.26 "Patent Rights" means patents and patent applications owned
or controlled by Neurocrine or by Lilly relating to Products, Project Technology
or Existing Neurocrine Technology and all divisions, continuations,
continuations-in-part, reissues, extensions and foreign counterparts thereof at
least one claim of which covers the making, using or selling of Products,
Project Technology or Existing Neurocrine Technology. "Neurocrine Patent Rights"
means patents and
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patent applications owned or controlled by Neurocrine. "Lilly Patent Rights"
means patents and patent applications owned or controlled by Lilly. A list of
certain particularly relevant Neurocrine Patent Rights is set forth in Appendix
II.
Section 1.27 "Phase I Clinical Trials" means small scale human clinical
trials, the protocols of which are as previously disclosed to Neurocrine prior
to the start of such trials, conducted in normal volunteers and designed to
indicate product safety.
Section 1.28 "Phase II Clinical Trials" means small scale human clinical
trials, the protocols of which are as previously disclosed to Neurocrine prior
to the start of such trials, conducted in patients and designed to indicate a
statistically significant level of efficacy in the particular indication tested,
as well as to obtain some indication of the dosage regimen required.
Section 1.29 "Phase III Clinical Trials" means large scale human
clinical trials, the protocols of which are as previously disclosed to
Neurocrine prior to the start of such trials, conducted in patients and designed
to establish Product efficacy in the particular indication tested and required
to obtain clinical registration of Product with health regulatory authorities.
Successful completion of such Clinical Trials shall be deemed to have occurred
if such Trials establish the end points they were designed to show.
Section 1.30 "Positive Hit" means a compound from the Research Records
Cassette which, in Neurocrine's reasonable opinion, has interesting activity in
the assay system employed and has a KI of less than [ * ].
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 1.31 "Product" means a composition for use as a pharmaceutical
consisting of an Existing Lilly Compound, an Existing Neurocrine Compound, a New
Compound or a Joint Compound, but excluding Excluded Compounds.
Section 1.32 "Product Decision" means a decision made at [ * ]
discretion after completion of Phase II Clinical Trials that the compound tested
in such trials continues to be a viable pharmaceutical candidate for the
treatment of Dementia or Obesity and that, therefore, Phase III Clinical Trials
on such compound for either or both of such indications are warranted.
Section 1.33 "Project" means the research and development program to be
conducted by Neurocrine in the Field in collaboration with Lilly according to
the schedule and staffing in Appendix III and the screening by Neurocrine of
Neurocrine Compounds, Joint Compounds and those Lilly Compounds submitted by
Lilly pursuant to Section 2.03.
Section 1.34 "Project Team Compound" means a compound which has been
accepted for further development by Lilly's Project Team Approval Committee, or
its successor, or by whatever decision making mechanism is employed by Lilly in
deciding what compounds are suitable for clinical development and is provided
resources for such development by Lilly's Portfolio Management Committee, or its
successor, or by whatever decision making mechanism is employed by Lilly in
deciding how resources should be allocated for clinical development. In making a
decision as to whether to accept any Existing Lilly Compound, Existing
Neurocrine Compound, New Compound or Joint Compound for further development, or
in deciding to provide resources for the development of such Compound, Lilly
agrees that it shall treat any of such
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Compounds in the same manner as it treats its own compounds of similar
commercial significance.
Section 1.35 "Project Technology" means the confidential and/or
proprietary technical information and data concerning Corticotropin Releasing
Factor-Binding Protein Ligand Inhibitors, Corticotropin Releasing
Factor-Receptor 2 Agonists and related DNA sequences, binding assays, functional
assays, in vivo assays and biological materials, including target cell lines,
expression vectors and genes, developed or acquired by Lilly and/or Neurocrine
in connection with the Project during the term of the Project. Non-patented
Project Technology which relates to Corticotropin Releasing Factor-Binding
Protein Ligand Inhibitors and Corticotropin Releasing Factor-Receptor 2
Agonists, as well as formulations thereof and methods of using same, shall be
the property of Lilly. All other non-patented Project Technology shall be the
property of Neurocrine.
Section 1.36 "Research Records Cassette" means a library, as presented
to Neurocrine on September 12, 1996, consisting of approximately [ * ] compounds
preselected from Lilly's archive historical library, wherein the compounds are
provided in 96-well format.
Section 1.37 "Research Team" means six (6) representatives, three (3)
from Neurocrine and three (3) from Lilly, who are designated to direct and
monitor the Project.
Section 1.38 "Scientific Person Year" means a total of 47 weeks or 1,880
person hours per year of scientific work, on or directly related to the Project,
carried out by Neurocrine employees having at least a Bachelors Degree in a
science, or experience equivalent thereto.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Scientific work on or directly related to the Project to be performed by
Neurocrine employees can include, but is not limited to, experimental laboratory
work, recording and writing up results, reviewing literature and references,
holding scientific discussions, attending appropriate seminars and symposia,
managing and leading scientific staff, and carrying out Project management
duties or such other activities as may be appropriate to the conduct of the
Project.
Section 1.39 "United States" means the United States of America and its
territories and possessions.
Section 1.40 "Urocortin" means the certain sequence described in
Xxxxxxxxx, et al, Cloning and characterization of human urocortin, Vol. 137
Endocrinology (1996).
ARTICLE II
STAFFING, PLANNING AND EXECUTION OF PROJECT
Section 2.00 Neurocrine Effort on Project. Neurocrine and Lilly shall
use reasonably diligent efforts to conduct work on the Project so as to endeavor
to achieve the schedule and goals set forth in Appendix III. Initially
Neurocrine shall assign the personnel specified in Appendix III to the Project.
Neurocrine may reassign any of these personnel to any other project without the
approval of the Research Team, provided that if Neurocrine fails to achieve its
goals as set forth in Appendix III within the timetable set by the Research Team
for the attainment of such goals, Lilly shall then have the right to review
Neurocrine's staffing of the Project and Lilly may, further, request that
certain Neurocrine employees be utilized on the Project. Lilly shall, further,
have the ability to request that Neurocrine shift its focus on the Project from
research to
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development if Lilly believes such shift will further the progress of the
Project. If any of these personnel ceases to be an employee of Neurocrine,
Neurocrine shall assign a substitute of equal suitability as evidenced by equal
or greater educational background or laboratory experience. Neurocrine shall for
each year during the term of the Project assign to the Project sufficient
personnel to devote [ * ] Scientific Person Years. At least [ * ] of the
Scientific Person Years shall be provided by scientists with a Ph.D. degree or
equivalent scientific experience. In 1997 and each year thereafter during the
term of the Project, the Research Team will by October 31 of that year prepare
and submit to Lilly and Neurocrine the schedules, goals, staffing and budget for
the upcoming year.
Section 2.01 Research Team Formation. Promptly upon signing of this
Agreement by both parties, Neurocrine and Lilly shall each appoint[ * ]
representatives to serve as members of the Research Team. The respective
individual representatives for each party may be changed, from time to time at
the discretion of Neurocrine or Lilly, upon written notification by the party
making such change to the other. Neurocrine and Lilly within sixty (60) days
after the Effective Date shall agree upon an initial plan for research tasks to
be completed under the Project. Such plan, once complete, shall be attached to
this Agreement as Appendix III. The Research Team shall review (and where
necessary modify), and approve subject, of course, to final review by Lilly and
Neurocrine, all plans for research to be done under the Project, and shall
review the personnel assigned to the Project and all results of work done under
the Project. From time to time, the Research Team may establish subcommittees to
oversee particular projects or activities, and such subcommittees will be
constituted as the Research Team agrees. The Research Team shall meet regularly
according to a mutually
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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agreed schedule (alternating sites of the meeting between San Diego and
Indianapolis, with each Party being responsible for the travel, lodging and
other expenses incurred by its own members of the Research Team), provided such
meetings occur at least semi-annually, to review the Project, to modify the
scope and goals of the Project if deemed necessary by the Research Team, to
prepare the schedules and budget pursuant to Section 2.00 and to prepare the
reports required under Section 4.00. Upon conclusion of any meeting of the
Research Team, the Team shall appoint one of its members to prepare written
minutes of the meeting, which minutes shall be reviewed and approved, if
appropriate, by both Lilly and Neurocrine. Any modification to the scope and
goals of the Project as described in Appendix III shall require the approval of
the Research Team, and the appropriate written amendment to Appendix III.
Decisions with regard to the scope and goals of the Research Team shall be made
by [ * ] and if the Research Team is unable to reach such [ * ] on any such
issue involving the Project, the issue shall be referred to the [ * ] or the
equivalent thereof, for further discussion. If such discussions fail to resolve
such issue, if the issue arises prior to the start of Phase I Clinical Trials on
any Product associated with such issue, the parties may then resolve such issue
by any mechanism available, including litigation. For all unresolved issues
which arise after the start of Phase I Clinical Trials on any Product associated
with such issue, the [ * ] or the equivalent thereof, shall have the final
decision.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 2.02 Conduct of Studies. All work done in connection with the
Project shall be carried out in strict compliance with any federal, state, or
local laws, regulations, or guidelines governing the conduct of research at the
site where such work is being conducted.
Section 2.03 Screening Lilly Compounds. As a part of the Project, Lilly
shall have the right to submit such Lilly Compounds as it deems appropriate to
Neurocrine for testing using assay systems developed by Neurocrine in connection
with Existing Neurocrine Technology or Project Technology. The number and
scheduling of such submissions and the particular assays used shall be
determined by the Research Team. Neurocrine agrees that it shall not subject any
Lilly Compound so submitted to any binding or other assay which has not been
previously specifically authorized by the Research Team. Complete results from
any such assay shall be provided to Lilly pursuant to the schedule established
by the Research Team.
Section 2.04 Treatment of Lilly Compounds. Neurocrine agrees that it
will not chemically or physically analyze or have analyzed any Lilly Compound to
determine its structure. Neurocrine shall not permit any third party to observe
or have access to any Lilly Compound. All information, results and data
generated in connection with any assay of Lilly Compounds shall be Project
Technology. Lilly agrees to provide Neurocrine with handling instructions
including all safety information relating to the particular compound known to
Lilly.
Section 2.05 Screening of Neurocrine Compounds and Joint Compounds. As
part of the Project, Neurocrine shall test all Neurocrine Compounds and Joint
Compounds using assay systems developed by Neurocrine in connection with
Existing Neurocrine Technology or Project Technology. The scheduling of such
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testing and the particular assays used shall be determined by the Research Team.
Complete results from any such assay shall be provided to Lilly pursuant to the
schedule established by the Research Team. All information, results and data
Generated in connection with any assay of Joint Compounds or Neurocrine
Compounds shall be Project Technology.
Section 2.06 Electronic Mail Transmissions. If Lilly and Neurocrine
determine that, during the term of the Project, it is necessary to communicate
with one another by electronic mail or some other similar medium of
communication, Lilly and Neurocrine shall each bear its own out-of-pocket
expenses required in order to provide such method of communication. Further, if
such a method of communication is employed, the parties will utilize all
reasonably appropriate diligence in order to protect the confidentiality and
security of information transmitted between Lilly and Neurocrine.
ARTICLE III
FUNDING OF PROJECT
Section 3.00 Duration and Amount of Funding. Lilly shall provide
Neurocrine with financial support for the Project for the period from November
1, 1996 to October 31, 1999, unless the Project is terminated early pursuant to
Article X. The financial support provided to Neurocrine by Lilly shall be [*]
per Scientific Person Year for [*] Scientific Person Years for each twelve (12)
month period of the Project. The amount per Scientific Person Year set forth
above shall not be adjusted for inflation during the term of the Project.
Consistent with the foregoing, the budget prepared by the Research Team and
submitted to Neurocrine and Lilly by September 15 of each year pursuant to
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 2.00 shall be a total budget including costs for the proposed Scientific
Person Years and any other anticipated Project expenses and shall be reviewed
and approved with or without modification by both Lilly and Neurocrine within
sixty (60) days of submission by the Research Team. In the event that the
parties cannot agree on a budget for the upcoming year before the end of the
sixty-day period, the budget for that upcoming year will be for the number of
Scientific Person Years provided hereinabove, i.e., [*] and the activities of
the Project shall be adjusted accordingly. The amount per Scientific Person Year
shall be the total amount paid to Neurocrine by Lilly for Neurocrine's effort on
the Project with Neurocrine being responsible for all wages, supplies,
facilities, utilities and all other employee-related expenses in connection with
performing services for the Project.
Section 3.01 Manner of Payments. All funding by Lilly during this
Project shall be paid to Neurocrine by Lilly in U.S. Dollars. Unless otherwise
agreed in writing by Lilly, payments shall be made in four equal installments.
During the first year of the Project, the first installment shall be paid within
thirty (30) days of the Effective Date, and the remaining three installments
shall be paid on or before February 15, May 15 and August 15, respectively.
During subsequent years of the Project, such installments shall be paid on or
before November 15, February 15, May 15 and August 15, respectively.
Section 3.02 Accounting. Neurocrine shall provide Lilly on a semi-annual
basis during the term of the Project a report detailing how Neurocrine allocated
Scientific Person Years to the Project. Such report shall provide Lilly with the
names of the Neurocrine employees which make up the Scientific Person Years the
amount of each employees time devoted to the Project, associated with the
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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tasks listed in Appendix III during the semi-annual period at issue. Neurocrine
shall, further, maintain records in reasonable detail of all monies paid by
Neurocrine for research under the Project and shall provide Lilly, within ninety
(90) days of the end of each calendar year, with a report stating the dollar
amount of funds supplied by Lilly that were expended on research activities
during any year for which the report is made, using Neurocrine's standard
project accounting procedures, and such supporting details as are reasonably
required by Lilly.
Within one year from receipt of the reports, Lilly may, at its expense,
request an audit by Neurocrine's independent certified public accountants. The
independent certified public accountant shall have the right to examine all
necessary records kept pursuant to this Section and report to Lilly the findings
of said examination of records insofar as necessary to verify the reports. Said
findings shall be maintained in confidence by Lilly.
ARTICLE IV
RESULTS OF PROJECT
Section 4.00 Reports. Neurocrine shall disclose to the Research Team all
Project Technology reasonably promptly following its discovery. Disclosure of
Project Technology may take the form of visits by Lilly personnel, at reasonable
times and upon reasonable prior notice, to the facilities being used for the
Project to permit observation of the procedures being employed. The Research
Team shall submit to Neurocrine and Lilly a detailed written report on the
progress of the Project within sixty (60) days following each calendar quarter
of the term of
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the Project and, within ninety (90) days after completion of the Project, shall
provide Neurocrine and Lilly with a comprehensive final written report.
Section 4.01 Assay Materials. During the Project, Neurocrine shall
provide Lilly promptly upon Lilly's request with samples of cell lines or any
materials required to conduct in vitro assays which are Existing Neurocrine
Technology, as set forth in Appendix IV, as well as those in vitro or in vivo
assays which are produced or developed within the scope of the Project,
immediately upon development by Neurocrine, along with sufficient technical
information and know how to enable Lilly to conduct such in vitro or in vivo
assays or binding studies and/or functional assays with such cell lines or
materials. Lilly shall then be entitled to use same to test any Lilly Compound
Lilly so desires or any Neurocrine Compound or Joint Compound the Research Team
desires. All information, results and data generated in connection with any such
testing by Lilly during the course of the Project shall be Project Technology.
No later than sixty (60) days following termination of the Project, Neurocrine
shall provide to Lilly any remaining Existing Neurocrine Technology and the
Project Technology including without limitation DNA sequences encoding
Corticotropin Releasing Factor-Binding Protein and Corticotropin Releasing
Factor-Receptor 2, binding sites, binding assays, functional assays and in vitro
or in vivo assays.
Section 4.02 Patentable Inventions. If a patentable invention is
conceived in the course of the parties' work on the Project and is reduced to
practice during such work on the Project or within six months of termination of
the Project, Lilly and Neurocrine shall discuss such invention and the
desirability of filing a United States patent application covering such
invention as well as any foreign counterparts. The party owning the invention
(or both parties if the invention is a
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joint invention) shall make the final decision with respect to any such filings.
All patent applications and patents on inventions made in the course of the
parties' work on the Project solely by employees of Lilly shall be owned by
Lilly. All patent applications and patents on inventions made in the course of
the parties' work on the Project solely by employees of Neurocrine shall be
owned by Neurocrine. All patent applications and patents on inventions made
jointly by employees of Lilly and employees of Neurocrine shall be jointly
owned. If such joint invention is within the Field, Article V shall determine
Lilly's rights with respect to Neurocrine's interest in such joint invention. If
such joint invention is outside the Field, Lilly shall have a right of first
negotiation as to Neurocrine's interest in such joint invention and the parties
shall negotiate in good faith the terms under which Lilly can exclusively
commercialize such invention. Should Lilly choose not to commercialize such
invention, Neurocrine shall then have a right of first negotiation as to Lilly's
share of such joint invention and the parties shall negotiate in good faith the
terms under which Neurocrine can exclusively commercialize such invention. If
the parties, despite good faith negotiations, fail to reach agreement on terms
which would allow either Lilly or Neurocrine, as appropriate, to exclusively
commercialize such invention, either party may develop and commercialize such
invention and such development/commercialization shall not in any way affect the
other parties right to develop and commercialize such joint invention as well.
Lilly shall bear its own expenses incurred in filing, prosecuting and
maintaining patent applications, and any patents resulting therefrom, under this
Section 4.3. Lilly shall, further, file all applications on joint inventions and
Lilly shall be totally responsible for the preparation, prosecution and
maintenance of
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such applications and any patents resulting therefrom. Neurocrine agrees to
cooperate with Lilly as needed in the preparation and prosecution of such
applications covering joint inventions.
Neurocrine shall bear its own expenses incurred in filing, prosecuting
and maintaining patent applications and any patents resulting therefrom under
this Section 4.3 or the Neurocrine Patent Rights set forth in Appendix II to the
extent such patents or applications do not contain claims to an Existing
Neurocrine Compound or a New Compound which is a Neurocrine Compound. If such
patent applications or patents contain claims to an Existing Neurocrine Compound
or a New Compound which is a Neurocrine Compound, the parties shall share
equally all expenses incurred in filing, prosecuting and maintaining such
applications/patents, provided such expenses were incurred after the Effective
Date.
Each party shall provide to the other a copy of any patent application
which discloses Existing Neurocrine Technology or Project Technology, prior to
filing in the United States if reasonably possible, for review and comment by
the other party. Any such patent application shall be maintained in confidence
by the receiving party pursuant to Section 9.00.
If Lilly files a patent application on a joint invention encompassed by
this Article and yet, later, decides that it no longer wishes to continue
prosecution and/or maintenance of such application (or any patent resulting
therefrom), Lilly shall inform Neurocrine of its decision to discontinue
prosecution and/or maintenance prior to discontinuance. Neurocrine may then
elect to continue prosecution and/or maintenance of such application or patent
at its sole expense, provided that if it does elect to continue prosecution
and/or maintenance,
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Neurocrine shall reimburse Lilly for all out-of-pocket expenses previously
incurred by Lilly in filing, prosecuting or maintaining such application or
patent and Lilly shall provide all reasonable assistance (including preparing
any papers required to allow Neurocrine to prosecute and/or maintain such
application) required by Neurocrine in prosecuting and/or maintaining such
application or patent. If Lilly elects to discontinue prosecuting and/or
maintenance of an application or patent encompassed hereunder, and Neurocrine
elects to continue prosecution and/or maintenance of such application or patent,
Lilly shall lose all ownership rights to such application or patent and such
rights shall vest totally in Neurocrine. The decision by Lilly not to proceed
into the National Phase of the Patent Cooperation Treaty patenting process in
every country originally designated as a Designated Country in any Patent
Cooperation Treaty patent application encompassed by this Article, shall not, by
itself, be considered as an election to discontinue prosecution.
If Neurocrine files during the term of this Agreement or has filed prior
to the Effective Date a patent application on Existing Neurocrine Technology or
Project Technology owned by Neurocrine and yet, later, decides that it no longer
wishes to continue prosecution and/or maintenance of such application (or any
patent resulting therefrom), Neurocrine shall inform Lilly of its decision to
discontinue prosecution and/or maintenance prior to discontinuance. Lilly may
then elect to continue prosecution and/or maintenance of such application or
patent at its sole expense, provided that if it does elect to continue
prosecution and/or maintenance, Lilly shall reimburse Neurocrine for all
out-of-pocket expenses previously incurred by Neurocrine in filing, prosecuting
or maintaining such application or patent and Neurocrine shall provide all
reasonable assistance
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(including preparing any papers required to allow Lilly to prosecute and/or
maintain such application) required by Lilly in prosecuting and/or maintaining
such application or patent. If Neurocrine elects to discontinue prosecuting
and/or maintenance of an application or patent encompassed hereunder, and Lilly
elects to continue prosecution and/or maintenance of such application or patent,
Neurocrine shall lose all ownership rights to such application or patent and
such rights shall vest totally in Lilly. The decision by Neurocrine not to
proceed into the National Phase of the Patent Cooperation Treaty patenting
process in every country originally designated as a Designated Country in any
Patent Cooperation Treaty patent application encompassed by this Article, shall
not, by itself, be considered as an election to discontinue prosecution. Should
Neurocrine ever fail to inform Lilly in a timely manner of its decision to
discontinue prosecution or maintenance of a patent or patent application
encompassed hereunder prior to such discontinuance, and such patent or patent
application, therefore, goes abandoned, Lilly shall have the right to deduct
from any payments owed Neurocrine by Lilly pursuant to Article V the damages
caused to Lilly by Neurocrine's action. Should the parties fail to mutually
agree on the extent of Lilly's damages, both parties agree to submit the issue
of damages to a third party who is mutually acceptable to both parties and such
third party's decision on such issue shall be final.
Section 4.03 Publications. Lilly and Neurocrine agree that neither party
shall publish the results of their studies carried out under this Agreement
without the prior approval of the other party. Each party agrees to provide the
other the opportunity to review any proposed manuscripts or abstracts which
relate to the Project at least thirty (30) days prior to their intended
submission for
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publication and to not submit such manuscript or abstracts without the written
authorization of the reviewing party. If such written authorization is not
provided, within such period, authorization shall be presumed to be granted.
Furthermore, such authorization shall not be unreasonably denied. Nothing
contained in this Section 4.4 shall prohibit the inclusion of information
necessary for a patent application provided the non-filing party is given a
reasonable opportunity to review the information to be included. Finally, Lilly
and Neurocrine both agree to withhold publication of any manuscript or abstract
for a maximum of sixty (60) days if either party reasonably believes such
manuscript or abstract would jeopardize the patentability of any invention made
under this Agreement.
ARTICLE V
COMMERCIAL RIGHTS
Section 5.00 License to Lilly. In consideration for the payments made to
Neurocrine by Lilly pursuant to Article VI and Article III, as well as in
consideration for access to the Research Records Cassette as described in
Article VII and the co-promotion option granted by Lilly as described in Article
VIII, Neurocrine grants Lilly
(a) an exclusive, worldwide, right and license within the
Field to make, use and have used Existing Neurocrine
Technology and Project Technology owned or acquired by
Neurocrine for the purpose of assay modification or
development, and the screening, identification,
selection and/or development of drugs subject to
Neurocrine retaining the right to use Existing
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Neurocrine Technology and Project Technology owned or
acquired by Neurocrine for Lilly's benefit in connection
with this Agreement;
(b) an exclusive, worldwide, right and license to make, have
made, use, sell and have sold for any indication within
the Field any New Compound synthesized or developed by
Neurocrine in the course of the Project or any Existing
Neurocrine Compound;
(c) an exclusive, worldwide, right and license to make, have
made, use, sell and have sold for any indication within
the Field Neurocrine's interest in any Joint Compounds;
and
(d) an exclusive, worldwide, license within the Field under
any Neurocrine Patent Rights which would be infringed by
Lilly's exercise of its rights under this Agreement.
Section 5.01 Collaboration. In the event the parties become aware of
technology of a third party within the Field, the Research Team will determine
whether such technology should be brought into the Project and how the cost of
acquiring the technology should be shared by the parties. Any such cost sharing
will recognize those expenses already incurred by a party hereto in connection
with acquiring the technology. The Research Team will make a recommendation to
Neurocrine and Lilly concerning the acquisition of technology and the sharing of
cost. Each party shall then have thirty (30) days in which to accept or reject
the recommendation or propose an alternative arrangement. The parties will
conduct any negotiations concerning acquiring such technology in good faith with
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the interest of advancing the Project. Neurocrine and Lilly shall not
collaborate with any third party on research within the Field during the term of
the Project.
Section 5.02 Commercialization Efforts. Lilly agrees to exercise
reasonably diligent efforts toward developing and commercializing Products
according to its usual business practices for products of similar potential and
value. In connection with developing a particular Existing Lilly Compound,
Existing Neurocrine Compound, Joint Compound or New Compound, Lilly shall
provide to Neurocrine an annual report summarizing the efforts devoted to such a
Compound in that year, including all protocols used by Lilly to test any of such
Compounds in any Phase I, Phase II and/or Phase III Clinical Trials conducted by
Lilly during that year. All such reports and all information contained in such
reports, including without limitation, information relating to the purpose for
which such Compounds are being developed, which of such Compounds are being
developed and the status of such development, are Lilly Information. The
obligation to provide such reports shall begin upon selection of a particular
Existing Lilly Compound, Existing Neurocrine Compound, Joint Compound or New
Compound for development and shall continue until development is terminated or
upon the first sale of Product consisting of such Compound, provided however,
upon the sale by Neurocrine of all or substantially all of its assets to which
this Agreement relates, such reporting obligations shall be limited, at Lilly's
option, to stating that such development is continuing or is terminated and
reporting when the milestones of Section 6.1(e) have been reached.
Section 5.03 Sublicenses. [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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[ * ]
Section 5.04 Assay of Excluded Compounds. Neurocrine acknowledges and
agrees that subjecting an Excluded Compound to assays using Existing Neurocrine
Technology or Project Technology shall not result in any royalty or milestone
obligations to Neurocrine.
Section 5.05 Regulatory Responsibility. Unless otherwise agreed between
the parties, [ * ] shall have sole responsibility for all governmental health
authority regulatory aspects associated with developing Products.
ARTICLE VI
COMMERCIAL TERMS
Section 6.00 Payment by Lilly. In addition to the Project funds of
Article III, Lilly agrees to pay Neurocrine the following monies in
consideration for the rights and licenses granted by Neurocrine and the
obligations assumed by Neurocrine hereunder:
(a) [ * ] United States Dollars [ * ] to be paid by Lilly to
Neurocrine within thirty (30) days of the date when Neurocrine
informs Lilly, in writing, that it has finished screening the
Research Records Cassette against Neurocrine's Corticotropin
Releasing Factor-Binding Protein Ligand Inhibitor assays (to the
extent such
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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payment has not already been made to Neurocrine pursuant to
Section 10.8, below);
(b) A running royalty, subject to Section 8.3, of [ * ] of the Net
Sales of each Product sold by Lilly for the treatment of
Dementia in countries outside of the United States;
(c) A running royalty of [ * ] of the Net Sales of each Product sold
by Lilly for the treatment of indications associated with the
Field other than Dementia in countries outside of the United
States;
(d) A running royalty of [ * ] of the Net Sales of each Product sold
by Lilly for the treatment of indications associated with the
Field other than Dementia in the United States; and
(e) Milestone payments as follows:
Milestone Payment
(United States Dollars)
First Product for Second Product
Dementia or for Dementia or
Milestone Event Obesity Obesity
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
[ * ] [ * ] [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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The milestones set forth above will be paid for the first
Product to achieve the required status and the first of such
Products to obtain Project Team Compound status shall determine
the milestone stream associated with the particular indication
at issue (i.e., if the first Product to obtain Project Team
Compound status is being developed for the treatment of Obesity,
the larger milestone stream set forth in the table above shall
be associated with Obesity and the smaller milestone stream set
forth in the Table above shall be associated with Dementia and
vice versa if the first Product to obtain Project Team Compound
status is being developed for the treatment of Dementia).
Further, no Product will receive more than one milestone stream
(i.e., no milestone payment required for a second indication of
any Product) and no milestone payment need be made more than
once.
Section 6.01 Term of Royalty Payment. Running royalties paid by Lilly
pursuant to Section 6.1(b), (c) or (d) shall be paid on a country-by-country
basis from the date of the first sale of each Product in a particular country
until the later of (a) the last to expire of any Patent Rights in the particular
country for which a valid claim thereof covers the sale of the Product or (b)
the last to expire of any Patent Rights in the country in which the Product is
manufactured for which a valid claim of such Patent Rights covers all making,
using or selling of the Product in the country of manufacture. As used herein,
the term "valid claim" refers to a claim of an issued patent which has not been
found to be unpatentable,
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invalid or unenforceable by a court or other authority in the subject country,
from which decision no appeal is taken or can be taken.
Section 6.02 Payments. Royalty payments hereunder shall be made to
Neurocrine or its designee quarterly within sixty (60) days following the end of
each calendar quarter for which royalties are due and shall be made in United
States dollars. Each royalty payment shall be accompanied by a statement stating
the Net Sales of Product during the relevant three (3) month period. Lilly's
current standard exchange rate methodology will be employed for the translation
of foreign currency sales into United States dollars. This methodology is used
by Lilly in the translation of its foreign currency operating results for
external reporting, is consistent with generally accepted accounting principles,
and is approved and reviewed by Lilly's independent certified public
accountants.
Section 6.03 Records. Lilly shall keep and maintain records of sales of
Product. Such records shall be open to inspection, at any reasonable time within
two (2) years after the royalty period to which such records relate, by Lilly's
independent certified public accountant and such inspection shall be at
Neurocrine's expense. The independent certified public accountant shall have the
right to examine the records kept pursuant to this Section 6.4 and report to
Neurocrine the findings of said examination of records insofar as necessary to
verify the statements made pursuant to Section 6.3. Said findings shall be
maintained in confidence by Neurocrine. If the accountant's findings vary by
more than five (5) percent from Lilly's statement and such variance is to the
disadvantage of Neurocrine, Lilly will refund Neurocrine the cost of such audit
examination.
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Section 6.04 Taxes. Any and all taxes levied on account of royalties
accruing under this Article shall be paid by Neurocrine. If laws or regulations
require withholding of said taxes, such taxes will be deducted by Lilly from
such remittable royalty and will be paid by Lilly to the proper taxing
authority, and proof of payment shall be sent to Neurocrine, in the form of a
copy of the wire transfer Lilly utilized to make such payments, within sixty
(60) days following payment thereof.
ARTICLE VII
RESEARCH RECORDS CASSETTE
Section 7.00 Supply of the Research Records Cassette. By January 1,
1997, Lilly shall supply Neurocrine with a copy of the Research Records Cassette
(or a portion thereof should Lilly have insufficient quantities of any of the
compounds contained in such Cassette). The compounds contained within such
Cassette shall be supplied to Neurocrine in the form of [ * ] solution and all
compounds supplied to Neurocrine hereunder shall be supplied blinded. Neurocrine
agrees that it (i) will store the Research Records Cassette in a locked, secure
facility and will ensure that only authorized Neurocrine employees have access
to the Research Records Cassette; (ii) will not test the compounds of the
Research Records Cassette other than as allowed in Section 7.2; (iii) will not
attempt to determine the structures of the compounds contained in the Research
Records Cassette; and (iv) will not attempt to replicate the Research Records
Cassette or any compound contained therein without Lilly's prior written
permission. Neurocrine, further, agrees that Lilly shall have the ability to
audit Neurocrine's compliance with its obligations with respect to the Research
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Records Cassette under this Section at such times and intervals as is reasonably
convenient to both parties.
Section 7.01 Neurocrine's Use of the Research Records Cassette. Should
Neurocrine develop or obtain an assay outside the Field and wish to test the
Research Records Cassette against such assay in order to assess the activity of
the compounds contained within such Cassette in such assay system, Neurocrine
may do so provided at least [ * ] of such assays are predictive of
pharmacological uses which fall within Lilly's Strategic Focus. Prior to
actually testing the compounds contained within such Cassette against the assay
at issue, Neurocrine shall supply Lilly with sufficient information regarding
the assay system, and the known and the potential pharmacological uses
associated with such assay system, for Lilly to determine whether the
pharmacological uses associated with such assay system fall within Lilly's
Strategic Focus. Lilly shall consider the information supplied by Neurocrine as
expeditiously as reasonably practical, and shall then inform Neurocrine, in
writing, as to whether the pharmacological uses associated with the assay system
fall within Lilly's Strategic Focus, should such uses fall within Lilly's
Strategic Focus, Lilly shall have the ability to prevent Neurocrine's testing of
the Research Records Cassette in the assay at issue only if (i) Lilly has an
internal program which would compete with the assay at issue; (ii) Lilly already
has a contractual obligation, or has a good faith belief that it is about to
enter into a transaction for which Lilly had been engaged in substantial
negotiations prior to receipt of the information from Neurocrine, which would
prohibit Neurocrine from testing the Research Records Cassette in the assay at
issue, (iii) Lilly has a good faith belief that it has already tested the
Research Records Cassette in the assay at issue; or (iv) Lilly has
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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a good faith belief that the assay at issue is not predictive of the
pharmacological utility claimed by Neurocrine. All other tests of the Research
Records Cassette by Neurocrine within Lilly's Strategic Focus shall be allowed.
Furthermore, all tests of the Research Records Cassette by Neurocrine outside of
Lilly's Strategic Focus shall be allowed, provided Neurocrine complies with the
requirements in this first sentence of this Section 7.2 that at least[ * ]
assays tested by Neurocrine are predictive of pharmacological uses which fall
within Lilly's Strategic Focus. At the time Lilly informs Neurocrine as to
whether the pharmacological uses associated with the assay system fall within
Lilly's Strategic Focus, Lilly shall also notify Neurocrine, in writing, as to
whether any of items (i) - (iv), above, apply.
Section 7.02 Results. Once Neurocrine has completed its testing of the
compounds contained within the Research Records Cassette, it shall provide Lilly
with a written copy of its test results and shall, further, advise Lilly, in
writing, of any Positive Hits which resulted from its testing. Neurocrine shall,
further, at Lilly's discretion, destroy or return to Lilly all remaining
portions of the Cassette. Within thirty (30) days of receipt of the list of
Positive Hits from Neurocrine, Lilly shall then provide Neurocrine with the
structures of such Positive Hits, such additional quantity of material as is
reasonably necessary for Neurocrine to conduct dose response curve studies on
such Positive Hits and a list of any patents and/or patent applications which
Lilly owns the claims of which cover the Positive Hits, to the extent Lilly does
not have pre-existing obligations with respect to such Hits which would prevent
such disclosure.
Section 7.03 Ownership and Patent Applications. To the extent Lilly does
not already own a patent or patent application which covers any particular
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Positive Hit, Neurocrine shall own all inventions, patentable or otherwise,
information and data generated during the course of its work under this Article
with respect to such Hit. Should a patentable invention arise during the course
of such work, Lilly and Neurocrine shall consult with each other as to the
desirability of filing a patent application on such invention. If the parties
concur that filing of a patent application is appropriate, Neurocrine shall file
such application and Neurocrine shall be totally responsible for the
preparation, prosecution and maintenance of such application and any patents
resulting therefrom. Lilly agrees to cooperate with Neurocrine as needed in the
preparation and prosecution of such application. Neurocrine agrees that, if such
application contains a claim which encompasses the Positive Hit within the scope
of such claim, it will xxxxx Xxxxx a worldwide, non-exclusive license (with
right to sublicense) with respect to such Positive Hit and will supply Lilly
with a copy of such patent application within fifteen (15) days of the filing of
such application with the United States Patent Office so that Lilly can consider
whether such filings unduly prejudices its interests in the Positive Hit or
compounds similar in structure thereto. If Lilly reasonably believes such filing
unduly prejudices its interest, Lilly and Neurocrine agree to discuss in good
faith how to ameliorate Lilly's concerns regarding such application. Should
Neurocrine ultimately commercialize such Positive Hit, the non-exclusive license
granted to Lilly above shall terminate.
Finally, if Neurocrine files a patent application on an invention
encompassed by this Article and yet, later, decides that it no longer wishes to
continue prosecution and/or maintenance of such application (or any patent
resulting therefrom), Neurocrine shall inform Lilly of its decision to
discontinue
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prosecution and/or maintenance prior to discontinuance. Lilly may then elect to
continue prosecution and/or maintenance of such application or patent at its
sole expense, provided that if it does elect to continue prosecution and/or
maintenance, Lilly shall reimburse Neurocrine for all out-of-pocket expenses
previously incurred by Neurocrine in filing, prosecuting or maintaining such
application or patent and Neurocrine shall provide all reasonable assistance
(including preparing any papers required to allow Lilly to prosecute and/or
maintain such application) required by Lilly in prosecuting and/or maintaining
such application or patent. If Neurocrine elects to discontinue prosecuting
and/or maintenance of an application or patent encompassed hereunder, and Lilly
elects to continue prosecution and/or maintenance of such application or patent,
Neurocrine shall lose all ownership rights to such application or patent and
such rights shall vest totally in Lilly. The decision by Neurocrine not to
proceed into the National Phase of the Patent Cooperation Treaty patenting
process in every country originally designated as a Designated Country in any
Patent Cooperation Treaty patent application encompassed by this Article shall
not, by itself, be considered as an election to discontinue prosecution.
Section 7.04 License. Lilly shall grant Neurocrine a worldwide license
to any patents owned by Lilly which would be infringed by Neurocrine's exercise
of its rights under this Agreement, to the extent Lilly does not have a
pre-existing obligation which would be inconsistent with such license grant to
Neurocrine. Such license grant, moreover shall be limited to Positive Hits
(non-exclusive license unless such Positive Hit is being commercially developed
by Neurocrine in which case the license shall be exclusive) and those
pharmacological uses associated with same as disclosed to Lilly by Neurocrine
pursuant to Section 7.00,
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above (exclusive license). All other uses shall remain the exclusive property of
Lilly. Any licenses granted to Neurocrine herein may be sublicensed to a third
party provided the terms of such sublicense are consistent with the terms of
Neurocrine's license as described in this Article.
Section 7.05 Compensation. Compensation to Lilly for providing
Neurocrine access to the Research Records Cassette and for the licenses granted
to Neurocrine pursuant to Section 7.5, above, shall be as set forth in Sections
7.7 and 7.8, below.
Section 7.06 License Outside of Lilly's Strategic Focus. As compensation
for pharmaceutical uses which are not within Lilly's Strategic Focus (as
determined pursuant to the provisions of Section 7.2, above), Neurocrine agrees
to pay Lilly the following monies:
(a) a running royalty of [ * ] of the net sales (where net sales
shall be as defined in Section 1.23 above except that
"Neurocrine" shall be substituted for "Lilly" and "product"
shall be substituted for "Product" in the definition set forth
in such Section) of any product [where product shall be defined
as the Positive Hit or any compound generated by Neurocrine as
part of a structure activity relationship (SAR) study around
such Positive Hit] sold by Neurocrine, or any sublicensees
thereof, for such pharmaceutical uses in any country in the
world; and
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(b) milestone payments as follows:
Milestone Payment
Milestone Event (U.S. Dollars)
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
The milestones set forth above in this Section 7.4 will be paid
for each product which achieves the required status and such
milestones shall be payable upon the first to occur of (i) the
sublicense of Neurocrine's rights on product to a third party
(in which case such sublicense milestone and any milestones
previously achieved by Neurocrine shall be payable) or (ii) FDA
approval of the product (in which case all milestones shall be
payable).
Section 7.07 License Inside Lilly's Strategic Focus. With respect to any
license granted to Neurocrine pursuant to the provisions of Section 7.5, above,
which encompasses pharmaceutical uses which are within Lilly's Strategic Focus
(as determined pursuant to the provisions of Section 7.1, above), Neurocrine
agrees to xxxxx Xxxxx a first right of negotiation should Neurocrine elect to
seek a partner to develop such Positive Hit (or any compound generated by
Neurocrine as part of an SAR study around such Positive Hit) for any of such
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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pharmaceutical uses. Such first right of negotiation shall last for a [ * ]
month period, which period shall commence upon Neurocrine's notification to
Lilly, via registered mail, that Neurocrine is interested in collaborating with
another party on developing the Positive Hit or any compound generated by
Neurocrine as part of an SAR study around such Positive Hit.
Should Neurocrine and Lilly, despite good faith negotiations, fall to
reach agreement on an appropriate co-development agreement during the requisite
[ * ] month period, Neurocrine shall then be free to pursue opportunities with
other partners. Lilly, moreover, shall have the right to continue to negotiate
with Neurocrine on an appropriate co-development agreement even after expiration
of Lilly's [ * ] month period of exclusivity. However, in order to accept an
opportunity with a partner other than Lilly, Neurocrine must achieve economics
greater than [ * ] above the last offer received from Lilly (to the extent Lilly
has made an offer), calculated as follows:
[ * ]
[ * ]
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Item (c) above, shall be calculated by multiplying the probability of reaching
each clinical development milestone from the following chart by the milestone
payment set forth below.
[ * ]
The discount rate for the probablized net present value cash flow calculation
shall be [ * ] Should Neurocrine be able to obtain an arrangement with a party
other than Lilly which exceeds the economics described above, Neurocrine shall
pay Lilly the following monies:
(a) a running royalty of [ * ] of the net sales (where net sales is
as defined in Section 7.7, above) of any product (where product
is also as defined in Section 7.7, above) sold by Neurocrine, or
any sublicensee thereof, for pharmaceutical uses within Lilly's
Strategic Focus in any country in the world; and
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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(b) milestone payments as follows:
[ * ]
The milestones set forth above will be paid for each product
which achieves the required status and such milestones shall be
payable upon the first to occur of (i) the sublicense of
Neurocrine's rights on product to a third party (in which case,
such sublicense milestone and any milestones previously achieved
by Neurocrine shall be payable) or (ii) FDA approval of the
product (in which case, all milestones shall be payable).
Finally, should Neurocrine be unable to obtain an arrangement with a
party other than Lilly which exceeds the economics described above within [ * ]
year of the expiration of Lilly's right of first negotiation, Neurocrine shall
then xxxxx Xxxxx a further first right of negotiation with respect to such
product. Such additional first right of negotiation shall last for a [ * ]
period as well. If, after expiration of this additional first right of
negotiation period, the parties still are unable to reach an arrangement with
respect to the product, Neurocrine shall then be free and clear to make an
arrangement with another party.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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However, upon expiration of such additional first right of negotiation
period, Neurocrine shall pay Lilly all of the milestones set forth above except
for the sublicense milestone. Such sublicense milestone, moreover, shall become
payable should Neurocrine later sublicense its rights on product to a third
party.
However, in the event that Lilly does not make a good faith offer to
Neurocrine in the additional [ * ] first right of negotiation period, upon
expiration of such period, Neurocrine shall be obligated to pay to Lilly any
milestones heretofore achieved, and shall be further obligated to pay remaining
milestones as follows: (i) upon the sublicense of Neurocrine's rights on product
to a third party (in which case, such sublicense milestone and any additional
milestones achieved by Neurocrine as of the time of such sublicense shall be
payable) or (ii) upon FDA approval of the product (in which case, all milestones
shall be payable).
Section 7.08 Term of Royalty Payment. Running royalties paid by
Neurocrine, or a sublicensee thereof, pursuant to Section 7.7(a) or 7.8(a),
shall be paid on a country-by-country basis from the date of the first
commercial sale of each product in a particular country until the later of (a)
the last to expire of any patent rights in the particular country for which a
valid claim thereof covers the sale of the product, or (b) the last to expire of
any patent rights in the country in which the product is manufactured for which
a valid claim of such patent rights covers all making, using or selling of the
product in the country of manufacture. As used herein, the term "valid claim"
refers to a claim of an issued patent which has not been found to be
unpatentable, invalid or unenforceable by a court or other authority in the
subject country, from which decision no appeal is taken or can be taken.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Section 7.09 Payments. Royalty payments made pursuant to this Article
shall be made to Lilly or its designee quarterly within sixty (60) days
following the end of each calendar quarter for which royalties are due and shall
be made in United States dollars. Each royalty payment shall be accompanied by a
statement stating the net sales of product during the relevant three (3) month
period. Exchange rates obtained from the Wall Street Journal as of the close of
each calendar quarter for which royalties are due will be employed for the
translation of foreign currency sales into United States dollars.
Section 7.10 Records. Neurocrine shall keep and maintain records of
sales of product. Such records shall be open to inspection, at any reasonable
time within two (2) years after the royalty period to which such records relate,
by Neurocrine's independent certified public accountant and such inspection
shall be at Lilly's expense. The independent certified public accountant shall
have the right to examine the records kept pursuant to this Section 7.11 and
report to Lilly the findings of said examination of records insofar as necessary
to verify the statements made pursuant to Section 7.10. Said findings shall be
maintained in confidence by Lilly. If the accountants' findings vary by more
than five (5) percent from Neurocrine's statement, and such statement is to the
disadvantage of Lilly, Neurocrine will refund Lilly the cost of such audit
examination.
Section 7.11 Taxes. Any and all taxes levied on account of royalties
accruing under this Article shall be paid by Lilly. If laws or regulations
require withholding of said taxes, such taxes will be deducted by Neurocrine
from such remittable royalty and will be paid by Neurocrine to the proper taxing
authority, and proof of payment shall be sent to Lilly within sixty (60) days
following payment thereof.
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Section 7.12 Commercialization Efforts. Should any Positive Hits result
from Neurocrine's testing pursuant to this Article, Neurocrine agrees to
exercise reasonably diligent efforts toward developing and commercializing any
products which result from such Hits according to its usual business practices
for products of similar potential and value. In connection with developing such
Hits, or any compound generated by Neurocrine as part of an SAR study around
such Positive Hit, Neurocrine shall provide to Lilly an annual report
summarizing the efforts devoted to such a compound in that year. All such
reports and all information contained in such reports, including without
limitation, information relating to the purpose for which such compounds are
being developed, which of such compounds are being developed and the status of
such development, shall be maintained in confidence by Lilly. The obligation to
provide such reports shall begin once a compound is identified as a Positive Hit
and shall continue until development of such compound, or any compound generated
by Neurocrine as part of an SAR study around such compound, is terminated or
upon the first sale of product comprising any of such compounds.
ARTICLE VIII
CO-PROMOTION
Section 8.00 Co-Promotion Option. Lilly hereby grants to Neurocrine an
option to co-promote any Product sold by Lilly for Dementia in the United
States. Lilly shall totally fund the development effort of any such Product up
to [ * ]. At that point in time Lilly shall advise Neurocrine, in
writing, of the fact that a Product being developed for Dementia has reached
[ * ] and shall provide Neurocrine with an estimate of all remaining
costs required to
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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obtain FDA approval of Product for Dementia and a budget for such costs.
Neurocrine shall then have [ * ] in which to advise Lilly, in writing, as to
whether it intends to exercise its co-promotion option. If Neurocrine elects to
exercise its option, Neurocrine shall then be responsible for [ * ] of all
further external expenses associated with obtaining regulatory approval of such
Product from the FDA. Neurocrine shall, further, be responsible for [ * ] of any
internal expenses incurred by Lilly in obtaining such regulatory approval as
well, and such internal expenses shall be charged to Neurocrine on a fully
allocated basis. Should Neurocrine elect not to exercise its co-promotion option
within the requisite [ * ] day period, Neurocrine shall lose all rights to
co-promote such Product for Dementia and Lilly shall then remain totally
responsible for obtaining regulatory approval of such Product from the FDA.
Section 8.01 Compensation/Exercise of Options. If Neurocrine elects to
exercise its option to co-promote as set forth in Section 8.1, above, Neurocrine
shall receive [ * ] of the Gross Profits on sales of such Product for Dementia
in the United States. To retain its right to co-promote such Product for
Dementia in the United States, Neurocrine shall provide at least [ * ] of the
sales details (as determined by IMS audit or any other sales or promotional
audit mutually acceptable to the parties) required for such Product on an annual
basis.
Alternatively, if Neurocrine determines that it would like to provide
less than [ * ] of the sales details, Neurocrine may do so and still retain its
right to co-promote, provided it reimburses Lilly for the additional details
which Lilly is then required to conduct in order to adequately detail the
market.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Such reimbursement to Lilly shall be on a fully allocated cost per
detail basis. In no respect, however, shall Neurocrine's level of detail effort
fall below [ * ] of the sales details required for such Product on an annual
basis. Should Neurocrine ever be unable to participate even at this minimal
[ * ] detail level, Neurocrine will lose its right to co-promote such Product
for Dementia in the United States. Compensation to Neurocrine for such sales of
Product for Dementia in the United States shall then be provided by a running
royalty of [ * ] of the Net Sales of such Product for Dementia in the United
States.
With respect to such co-promotion arrangement, each party agrees to bear
their own costs of promotion and detailing. All methods and materials used in
any such co-promotion shall be within the bounds of the New Drug Application for
the Product and shall be subject to prior review by Lilly. The remaining
conditions of a co-promotion agreement between the parties, including the
procedures utilized to establish the total details expected by the parties on an
annual basis, shall be negotiated and agreed upon no later than [ * ] months
prior to the anticipated introduction of Product in the United States and shall
contain such terms as are normal and customary in the pharmaceutical industry
for similar co-promotion arrangements.
Section 8.02 Co-Promotion/No Exercise of Option. If Neurocrine fails to
exercise its option to co-promote as set forth in Section 8.1, above, within the
requisite [ * ] day time period, Neurocrine shall lose its right to
co-promote such Product for Dementia in the United States. Compensation to
Neurocrine for such sales of Product for Dementia in the United States shall
then be provided by a running royalty of [ * ] of the Net Sales
of such Product for
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Dementia in the United States. In addition, the running royalty rate on Net
Sales of such Product for Dementia in countries outside of the United States
shall increase from [ * ] to [ * ]
Section 8.03 Co-Promotion/Obesity. Within [ * ] after Lilly notifies
Neurocrine, in writing, of the [ * ] for
any Product for Obesity, Neurocrine may notify Lilly, in writing, of its desire
to co-promote such Product. The parties will then meet promptly to discuss in
good faith whether it would be commercially appropriate, and on what basis it
would be commercially appropriate, for Neurocrine to participate in marketing
such Product with Lilly in the United States. The ultimate decision as to
whether or not it is commercially appropriate for Neurocrine to participate in
marketing such Product, however, shall be [ * ], provided [ * ] makes such
decision in good faith.
ARTICLE IX
CONFIDENTIALITY
Section 9.00 Except as otherwise expressly provided in this Agreement,
both Lilly and Neurocrine shall use their best efforts to retain in confidence
and not use except as provided in this Agreement all information relating to
Existing Neurocrine Technology or Project Technology or received from the other
during the course of the Project including Lilly Information. Such information
may, however, be disclosed insofar as such disclosure is necessary (where
possible, with adequate safeguards for confidentiality) to allow either party to
defend against litigation with a third-party, to file and prosecute patent
applications or to comply with governmental regulations provided Neurocrine
shall not use Lilly
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Information in any patent application without Lilly's written approval
and Lilly shall not use Existing Neurocrine Technology or Project Technology
owned by Neurocrine in any patent application without Neurocrine's written
approval. Such obligation of confidentiality shall be waived as to information
which (i) is in the public domain, (ii) comes into the public domain through no
fault of the party claiming waiver, (iii) the party claiming waiver can show by
written records was known by it prior to disclosure hereunder, or (iv) is
disclosed to the party claiming waiver without obligation of confidentiality by
a third party having a lawful right to make such disclosure. Either Neurocrine
or Lilly, in furtherance of the objectives of the Project, may disclose
confidential information obtained or generated under this Agreement to third
parties who have agreed in writing to be bound by the same or similar
obligations of confidence set forth herein, and provided such third parties
agree not to use such confidential information other than in furtherance of the
objectives of the Project. All obligations of confidentiality and nonuse imposed
upon Neurocrine and Lilly under this Agreement shall expire on the later of ten
years from termination of the Project, as such term is described in Section
10.2, or expiration of all royalty obligations pursuant to Article VI or Article
VII whichever is later.
ARTICLE X
TERM AND TERMINATION
Section 10.00 Agreement Term. This Agreement shall become effective on
the Effective Date and shall remain in effect, unless terminated earlier
pursuant to Sections 10.5 or 10.6, until the later of the expiration of all
royalty obligations pursuant to Article VI or Article VII, or the expiration of
all obligations of
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confidentiality under Article IX, whereupon Lilly shall have fully paid up
licenses pursuant to Section 5.1.
Section 10.01 Project Term. Unless extended pursuant to Sections 10.3 or
10.4, or terminated early pursuant to Sections 10.5 or 10.6, the Project shall
terminate on October 31,1999.
Section 10.02 Voluntary Extension of Project. By mutual agreement of
Neurocrine and Lilly, the Project may be extended for additional periods which
contemplate additional funding by Lilly and continuing studies by Neurocrine and
Lilly.
Section 10.03 Mandatory Extension of Project. The term of the Project
shall be automatically extended for two (2) additional years provided at least
one (1) Project Team Compound results from Project during the first three years
of the Project and either (i) Neurocrine and Lilly discover a new disease or
disorder within the Field other than Obesity or Dementia or (ii) the Research
Team determines that continuation of the Project is of interest to both Lilly
and Neurocrine. If at least two (2) Project Team Compounds have not resulted
from the Project, Lilly may terminate Project early, with three (3) months
written notice to Neurocrine, provided such notice may not be provided to
Neurocrine prior to July 31, 2000. During such mandatory extension of Project,
Lilly agrees that during the fourth year of such Project, Lilly shall provide
funding for the Project pursuant to the provisions of Article III. In the fifth
year of such Project, however, the Research Team shall determine the goals to be
achieved during such fifth year and then shall determine, in good faith, whether
Neurocrine is able to provide [ * ] Scientific Person Years worth of expertise
capable of helping achieve the goals set by the Research Team. If the Research
Team, in
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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good faith, determines that Neurocrine is not able to provide such amount of
expertise, Lilly can then reduce the number of Scientific Person Years being
funded at Neurocrine, provided, however, that in no event shall Lilly reduce the
number of Scientific Person Years being funded at Neurocrine to less than nine
(9) Scientific Person Years. If such mandatory extension of Project occurs, all
terms of the present Agreement, except for the number of Scientific Person Years
funded by Lilly in the fifth year of the Project, shall apply to such extension.
Section 10.04 Early Termination-Breach. If either party shall be in
default of any of its material obligations under this Agreement and shall fail
to remedy such default within ninety (90) days after receipt of written notice
thereof, the party not in default shall have the option of terminating the
Project or this Agreement upon giving three (3) months written notice of such
termination. In the event Neurocrine assigns this Agreement to an acquiring
third-party pursuant to Section 15.6, Neurocrine's co-promotion options under
Article VIII shall terminate but all other provisions of this Agreement shall
survive.
Section 10.05 Early Termination-Blocking Patents. If any third party
patents which would make it impractical to continue the Project and/or this
Agreement come to the attention of either of the Parties, both Parties shall
have the right to terminate the Project or this Agreement upon giving three (3)
months written notice of such termination.
Section 10.06 Effect of Termination-Project. Termination of the Project
shall not affect the rights and obligations of the parties accrued under this
Agreement prior to termination. In particular, all licenses granted under
Articles V (provided Lilly is not the defaulting party) and VII (provided
Neurocrine is not a defaulting party), all royalties owed under Articles VI and
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VII, Neurocrine's co-promotion options under Article VIII (provided Neurocrine
is not a defaulting party) and all obligations under Article IX shall survive.
All levels of continued funding from the notice of termination, if termination
is pursuant to Section 10.5, above, until the effective date of termination
shall be in accordance with the budget then in effect at the time of notice of
termination.
Section 10.07 Effect of Termination-Agreement. Termination of this
Agreement shall not affect the rights and obligations of the parties accrued
under this Agreement prior to termination. In particular, all royalties owed
under Articles VI and VII and all obligations under Article IX shall survive.
Section 10.08 Failure to Timely Deliver Records and Cassette. If Lilly
fails to deliver the Research Records Cassette by January 1, 1997, such failure
to deliver the Cassette in a timely manner shall be considered a breach of this
Agreement. Neurocrine's sole remedy for such breach shall be a lump sum payment
from Lilly to Neurocrine of [ * ] United States dollars [ * ] which payment
shall be considered liquidated damages recompensing Neurocrine's injuries for
Lilly's breach.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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ARTICLE XI
DISCLOSURE OF AGREEMENT
Section 11.00 Disclosure of Agreement. Except as provided below, neither
Neurocrine nor Lilly shall release any information to any third party with
respect to the existence and terms of this Agreement without the prior written
consent of the other. This prohibition includes, but is not limited, to further
press releases, educational and scientific conferences, promotional materials,
governmental filings, and discussions with public officials and the media.
If either party determines a release of further information is required
by law or governmental regulation, it shall notify the other in writing at least
thirty (30) days before the time of the proposed release. The notice shall
include the exact text of the proposed release and the time and manner of the
release. At the other party's request and before the release, the party desiring
to release such further information shall consult with the other party on the
necessity for the disclosure and the text of the proposed further release. In no
event shall a release include further information regarding the existence or
terms of this Agreement that is not required by law or governmental regulation
or unless already publicly disclosed.
Appendix V is a press release, and questions and answers thereto, and
other information regarding the Agreement, which the parties will prepare and
release within thirty (30) days of signing this Agreement. Lilly and Neurocrine
acknowledge that release of the materials contained in Appendix V does not
violate the provisions of this Section 11.1. Except for those materials in
Appendix V, the restriction of Section 11.1 shall apply.
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ARTICLE XII
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS
Section 12.00 Warranty of Title. Lilly and Neurocrine hereby warrant
that they have the right to enter into this Agreement, to grant the rights
contained herein and to provide the information and biological materials
hereunder.
Section 12.01 Prior Art. Except for broad-based university-owned patents
for which non-exclusive licenses are available, Lilly and Neurocrine represent
and warrant that, as of October 1, 1996, they and their employees have no
knowledge of any United States or foreign pending patent application or issued
patent which might be infringed by the practice of Existing Neurocrine
Technology or in carrying out the Project.
Section 12.02 Employee Obligations. Lilly and Neurocrine represent and
warrant that all of their respective employees, officers, and consultants have
legal obligations whether imposed by agreement or law requiring assignment to
Neurocrine or Lilly, as appropriate, all inventions relating to Existing
Neurocrine Technology, Project Technology and Existing Lilly Compound made
during the course of and as the result of their association with Neurocrine or
Lilly, as appropriate, and obligating the individual to maintain as confidential
Neurocrine's or Lilly's, as appropriate, confidential information as well as any
confidential information of a third party which Neurocrine or Lilly may receive.
Section 12.03 Acknowledgment of Reliance. Neurocrine acknowledges that
Lilly in entering into this Agreement has materially relied on the
representations and warranties of Neurocrine contained in this Article XII.
Lilly acknowledges that Neurocrine in entering into this Agreement has
materially relied on the representations and warranties of Lilly contained in
this Article XII.
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Section 12.04 Acknowledgment of Lilly's Research. Neurocrine
acknowledges and agrees that Lilly has substantial existing technology relating
to Dementia, Obesity as well as, potentially, other disorders associated with
Corticotropin Releasing Factor, and that Lilly will continue to maintain an
ongoing independent research effort outside the Field directed to Dementia,
Obesity and such other disorders. This effort may result in drugs with no
royalty obligations to Neurocrine. This research effort will not affect any
royalties owed to Neurocrine under this Agreement.
ARTICLE XIII
INFRINGEMENT OF THIRD PARTY'S RIGHTS
Section 13.00 Settlement. If a third party asserts that a patent or
other right owned by it is infringed by the unauthorized use of Existing
Neurocrine Technology or Project Technology or the making, use or sale by Lilly
or its sublicenses of an Existing Neurocrine Compound, a Joint Compound or a New
Compound developed or acquired by Neurocrine, Neurocrine and Lilly working
together may attempt to resolve the problem raised by the asserted infringement.
The matter shall be deemed resolved if Neurocrine or Lilly obtains: (a) a
license permitting Lilly to use Existing Neurocrine Technology and Project
Technology and to make, have made, use and sell such Existing Neurocrine
Compound, Joint Compound or New Compound in such country with no additional
royalties payable by Lilly; or (b) a statement or representation from such third
party that: (1) no action will be taken against Lilly or Lilly's sublicenses, or
(2) that the patent or other right is not infringed by Lilly or Lilly's
sublicensees; or (c) a holding that
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the patent is invalid, or the patent or other right is unenforceable or not
infringed by a court of competent jurisdiction from which no appeal has or can
be taken.
Section 13.01 Litigation. If the use of Existing Neurocrine Technology
or Project Technology or the making, use or sale of an Existing Neurocrine
Compound, a Joint Compound or a New Compound developed or acquired by
Neurocrine, results in a claim for patent infringement against Lilly, the party
to this Agreement first having notice of such claim shall promptly notify the
other party in writing, which notice shall set forth the facts of such claim in
reasonable detail. Neurocrine shall cooperate with Lilly at Lilly's request and
expense, in the defense of any such claim. Neurocrine shall have the right to be
represented by counsel of its own choice and at Neurocrine's expense.
Section 13.02 Royalty Reduction. If, as a result of settlement
procedures or litigation under Sections 13.1 or 13.2, Lilly is required to pay
the third party a royalty or make any payment of any kind for the right to make,
have made, use, and sell or continue to make, have made, use, and sell such
Existing Neurocrine Compound, Joint Compound or New Compound, or to use Existing
Neurocrine Technology or Project Technology in a particular country, Lilly may
deduct, from the amount of royalties owed to Neurocrine in connection with the
same country, [ * ] of the amount of the royalty or such other amount payable to
the third party up to, but no more than, [ * ] of the amounts otherwise payable
to Neurocrine in connection with the particular country.
Section 13.03 Third Party Infringement. If any patent obtained by
Neurocrine for Existing Neurocrine Technology, Project Technology, an Existing
Neurocrine Compound or a New Compound which is a Neurocrine Compound is
infringed by a third party, the party to this Agreement first having knowledge
of
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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such infringement shall promptly notify the other in writing, which notice shall
set forth the facts of such infringement in reasonable detail. Neurocrine shall
have the primary right, but not the obligation, to institute, prosecute, and
control any action or proceeding with respect to such infringement of its Patent
Rights, by counsel of its own choice, and Lilly shall have the right, at its own
expense, to be represented in such action by counsel of its own choice. If
Neurocrine shall fail to bring such action or proceeding within a period of one
hundred twenty (120) days after receiving written notice from Lilly or otherwise
having knowledge of such infringement, Lilly shall have the right to bring and
control any such action by counsel of Lilly's own choice, and Neurocrine shall
have the right, at its own expense, to be represented in any such action by
counsel of its own choice. If one party brings any such action or proceeding,
the second party agrees, if necessary, to be joined as a party plaintiff and to
give the first party reasonable assistance and authority to file and to
prosecute such suit. The costs and expenses of all suits brought by either party
under this Section 13.4 shall be reimbursed on a pro-rata basis to both parties
out of any damages or other monetary awards recovered therein in favor of
Neurocrine and/or Lilly. Any remaining damages shall then belong to the party
bringing and prosecuting such action or proceeding. No settlement or consent
judgment or other voluntary final disposition of a suit under this Section 13.4
may be entered into without the joint consent of Neurocrine and Lilly (which
consent shall not be withheld unreasonably).
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ARTICLE XIV
GOVERNMENT CONTROL
Section 14.00 Authority. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States which may be imposed upon or related to Neurocrine or Lilly from
time to time by the government of the United States. Furthermore, each party
hereto agrees that it will not export, directly or indirectly, any technical
information acquired from the other under this Agreement or any products using
such technical information to any country for which the United States government
or any agency thereof at the time of export requires an export license or other
governmental approval, without first obtaining the written consent to do so from
the Department of Commerce or other agency of the United States government when
required by an applicable statute or regulation.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.00 No Agency. It is understood and agreed that Neurocrine
shall have the status of an independent contractor under this Agreement and that
nothing in this Agreement shall be construed as authorization for either Lilly
or Neurocrine to act as agent for the other. Members of the Research Team shall
be and shall remain employees of Neurocrine or Lilly, as the case may be, and
Lilly shall not incur any liability for any act or failure to act by members of
the Research Team who are employees of Neurocrine. Likewise, Neurocrine shall
not incur any liability for any act or failure to act by employees of Lilly,
including members of the Research Team who are employees of Lilly.
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Section 15.01 Force Majeure. Both parties to the Agreement shall be
excused from the performance of their obligations under this Agreement if such
performance is prevented by force majeure and notice of such prevention of
performance is promptly provided by the nonperforming party to the other party.
Such excuse shall be continued so long as the condition constituting force
majeure continues and the nonperforming party takes reasonable efforts to remove
the condition. For purposes of this Agreement, force majeure shall include
conditions beyond the control of the parties, including without limitation, an
act of God, voluntary or involuntary compliance with any regulation, law or
order of any government, war, civil commotion, epidemic, failure or default of
public utilities or common carriers, destruction of production facilities or
materials by fire, earthquake, storm or like catastrophe.
Section 15.02 Amendment. This Agreement may not be amended,
supplemented, or otherwise modified except by an instrument in writing signed by
both parties.
Section 15.03 Notices. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been
sufficiently given for all purposes if mailed by first class certified or
registered mail, postage prepaid. Unless otherwise specified in writing, the
mailing addresses of the parties shall be as described below.
For Neurocrine: Neurocrine Biosciences, Inc.
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: President
For Lilly: Xxx Xxxxx and Company
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Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Patent Division
Section 15.04 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction.
Section 15.05 Assignment. Neither party may assign its rights and
obligations under this Agreement without the prior written consent of the other
except a party may make such an assignment without the other party's consent in
the event of a merger or in connection with the sale of all or substantially all
of its assets to which this Agreement relates.
Section 15.06 Consents Not Unreasonably Withheld. Whenever provision is
made in this Agreement for either party to secure the consent or approval of the
other, such consent or approval shall not unreasonably be withheld, and whenever
in this Agreement provisions are made for one party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
Section 15.07 No Strict Construction. This Agreement has been prepared
jointly and shall not be strictly construed against either party.
Section 15.08 Entire Agreement. The parties acknowledge and agree that
this Agreement includes the Appendices and, in combination with the
Confidentiality Agreement previously executed between Lilly and Neurocrine, and
the amendments thereto effective January 26 and March 27, 1996, respectively
(Appendix VI), constitutes the entire agreement and understanding relating to
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the subject matter of this Agreement, provided, however, that should there be
any conflict between the terms of this Agreement (excluding Appendices) and the
terms of an Appendix, then this Agreement (excluding Appendices) shall control.
As such, with the exception of the Confidentiality Agreement, and the amendments
thereto, between Lilly and Neurocrine, the instant Agreement supersedes all
previous communications, proposals, representations and agreements, whether oral
or written, relating to the subject matter of this Agreement.
Section 15.09 Severability Each party agrees that, should any provision
of this Agreement be determined by a court of competent jurisdiction to violate
or contravene any applicable law or policy, such provision will be severed or
modified by the court to the extent necessary to comply with the applicable law
or policy, and such modified provision and the remainder of the provisions
hereof will continue in full force and effect.
Section 15.10 Waiver The waiver of a breach hereunder may be effected
only by a writing signed by the waiving party and shall not constitute a waiver
of any other breach.
Section 15.11 Headings The captions or headings of the Sections and
Articles are inserted only as a matter of convenience or for reference and shall
have no effect on the meaning of the provisions hereof.
Section 15.12 Counterparts This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same agreement.
62
Research and License Agreement Page
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate originals, by their respective officers thereunto duly authorized, the
day and year herein written.
XXX XXXXX AND COMPANY NEUROCRINE BIOSCIENCES, INC.
By: /SIG/ By: XXXX X. XXXXX
-------------------------- --------------------------
Xxxxxx Xxxxxx Xxxx X. Xxxxx
President and Chief Operating Officer President
Date: Oct 15, 1996 Date: Oct 12, 1996
-------------------------- --------------------------
63
APPENDIX I
PROJECT TEAM COMPOUNDS AND POTENTIAL PROJECT TEAM COMPOUNDS
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
The above-mentioned list shall include the non-salt, salt, and solvate forms of
any compounds set forth above, as well as the racemate and stereoisomer forms of
any chiral compounds.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
64
APPENDIX II
NEUROCRINE PATENT RIGHTS
TITLE SERIAL NUMBER FILING DATE STATUS
====================================== ========================= ===================== =================
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ]
[ * ] [ * ] [ * ] [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
65
APPENDIX III
RESEARCH AND DEVELOPMENT PROGRAM
66
APPENDIX IV
EXISTING NEUROCRINE TECHNOLOGY PROVIDED PURSUANT TO SECTION 4.01
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
67
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
68
APPENDIX V
PRESS RELEASE
69
APPENDIX VI
MUTUAL CONFIDENTIALITY AGREEMENT
In order to encourage a complete and free exchange of information during
discussions regarding neurosteroids for the treatment of central nervous system
disorders, and regarding CRF receptor antagonists and CRF binding proteins for
the same use to be held in the period ending November 30, 1993, between
Neurocrine Biosciences, Inc. having an address at 0000 Xxxxxxxx Xxxxxx, Xxxxx
000, Xx Xxxxx, Xxxxxxxxxx 00000, (NEUROCRINE) and Xxx Xxxxx and Company having
an address at Lilly Xxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 (LILLY), and
specifically to protect the confidential and proprietary name of certain
information to be disclosed during the discussions ("Information"), the parties
agree as follows:
Each party receiving Information from the other agrees:
1. To receive and to hold such Information in confidence;
2. To exercise all reasonable precautions to prevent the
disclosure of such Information to others; and
3. To use such Information only to evaluate a possible
future relationship between the parties.
The foregoing commitments shall expire on November 30, 1998, and shall
not impose any obligation upon any party with respect to any portion of the
Information which such party can establish:
1. Was known to the receiving party prior to the receipt of
the same directly or indirectly from the disclosing
party; or
2. Is now, or becomes in the future, public knowledge other
than through acts or omissions of the receiving party;
or
3. Is disclosed at any time to the receiving party by a
third party that had a lawful right to disclose it.
70
Information disclosed other than in written form shall be subject to the
terms of this Agreement only if confirmed in writing to the other parties within
thirty (30) days of initial disclosure and specifying with particularity that
Information disclosed other than in written form which is subject to the
Agreement.
It is further agreed that the furnishing of Information shall not
constitute any grant, option, or license under any patent or other rights now or
hereinafter held by any party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
NEUROCRINE BIOSCIENCES, INC. LILLY RESEARCH LABORATORIES
A Division of
XXX XXXXX AND COMPANY
By: XXXX XXXXX By: XXXX X. XXXXXXX
------------------------- -------------------------
Printed: Xxxx X. Xxxxxxx, Ph.D.
Title: Vice President
Date: 6/9/93 Date: 5/27/93
----------------------- ----------------------
-2-
71
AMENDMENT
TO
MUTUAL CONFIDENTIALITY AGREEMENT
AMENDMENT (effective as of the date of signature by the last signing
party) to the Mutual Confidentiality Agreement, dated as of June 9, 1993, (the
"Agreement"), by and between Neurocrine Biosciences, Inc. ("Neurocrine"), and
Xxx Xxxxx and Company ("Lilly").
WHEREAS, Neurocrine and Lilly desire to amend the Agreement, as more
fully set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree to amend the
Agreement as follows:
The scope of the Agreement shall be enlarged to cover discussions
regarding antagonist(s) of the interaction of CRF and CRF binding protein.
Additionally, the Agreement shall relate to discussions held on or after
December 20, 1995. The Agreement shall now expire on December 20, 2000.
All other terms of the Agreement shall remain in place without revision.
NEUROCRINE BIOSCIENCES, INC.
By: /SIG/
-------------------------------
Title: Exec. V.P. R&D
Date: 7/26/96
-----------------------------
XXX XXXXX AND COMPANY
By: /SIG/
-------------------------------
Title: Vice President
Date: Dec 20, 1995
-----------------------------
72
AMENDMENT
TO
MUTUAL CONFIDENTIALITY AGREEMENT
AMENDMENT (effective as of the date of signature by the last signing
party) to the Mutual Confidentiality Agreement, dates as of June 3, 1993 and as
amended January 26, 1996 (the "Agreement") by and between Neurocrine
Biosciences, Inc. ("Neurocrine"), and Xxx Lilly and Company ("Lilly").
WHEREAS, Neurocrine and Lilly desire to amend the agreement solely for
the purpose of allowing Xxx Xxxxx to more fully evaluate Neurocrine's
CRF-binding protein program;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereby agree to amend the
Agreement as follows:
Neurocrine will provide information regarding chemical structures to
Lilly. With regard to any such information regarding chemical structures, Lilly
agrees to use such information solely for the purposes of evaluating a possible
future relationship between the parties, and shall not use the information for
any other purpose, including use in the development of any compounds or to
assist in the development of any research or commercial program. Upon the
request of Neurocrine, all information provided to Lilly regarding chemical
structures shall be returned or destroyed, with the exception that one copy of
the information may be retained solely for the purpose of insuring compliance
with the restrictions provided herein.
Notwithstanding anything set forth above, the foregoing commitments
shall not impose any obligation on Lilly with respect to any information
regarding the structures which Lilly can establish:
1. Was known to Lilly prior to the receipt of same from Neurocrine;
or
73
2. Is now, or becomes in the future, public knowledge other than
through acts or omissions of Lilly; or
3. Is disclosed at any time to Lilly by a third party that had a
lawful right to disclose it.
All other terms of the Agreement shall remain in place without revision
including the Agreements expiration on December 20, 2000.
NEUROCRINE BIOSCIENCES, INC. XXX XXXXX AND COMPANY
By: /SIG/ By: XXXXXX X. XXXX
----------------------------- -----------------------------
Title: /TITLE/ Title: Xxxxxx X. Xxxx, Vice President
-------------------------- --------------------------
Date: 3/27/96 Date: 3/26/96
--------------------------- ---------------------------
