REDACTED VERSION
EXHIBIT 10.10
To
Targeted Genetics Corporation's
Form 10-K
For the Year Ended
December 31, 1997
"[ * ]" = omitted, confidential material, which material
has been separately filed with the Securities and Exchange Commission pursuant
to a request for confidential treatment.
EXHIBIT 10.10
NATIONAL INSTITUTES OF HEALTH
CENTERS FOR DISEASE CONTROL
PATENT LICENSE AGREEMENT - EXCLUSIVE
COVER PAGE
------------------------------------------------------------------------
For Office of Technology Transfer/NIH internal use only:
------------------------------------------------------------------------
Patent License Number: L-059-93
Serial Numbers of Licensed Patents: USPA SN 07/891,962
Licensee: Targeted Genetics Corporation
CRADA Number (if applicable): Not-applicable
Additional Remarks:
------------------------------------------------------------------------
This Patent License Agreement, hereinafter referred to as the "Agreement,"
consists of this Cover Page, an attached Agreement, a Signature Page, Appendix A
(Patent or Patent Application), Appendix B (Fields of Use and Territory),
Appendix C (Royalties), Appendix D (Modifications), and Appendix E (Benchmarks).
This Cover Page serves to identify the Parties to this Agreement:
1) The National Institutes of Health ("NIH") or the Centers for Disease
Control ("CDC"), hereinafter singly or collectively referred to as
"PHS," agencies of the United States Public Health Service within the
Department of Health and Human Services ("DHHS"); and
2) The person, corporation, or institution identified above and/or on the
Signature Page, having offices at the address indicated on the
Signature Page, hereinafter referred to as "Licensee."
PHS PATENT LICENSE AGREEMENT-EXCLUSIVE
PHS and Licensee agree as follows:
1. BACKGROUND
----------
1.01 In the course of conducting biomedical and behavioral research, PHS
investigators made inventions that may have commercial
applicability.
1.02 By assignment of rights from PHS employees and other inventors,
DHHS, on behalf of the United States Government, owns intellectual
property rights claimed in any United States and foreign patent
applications or patents corresponding to the assigned inventions.
DHHS also owns any tangible embodiments of these inventions actually
reduced to practice by PHS.
1.03 The Assistant Secretary for Health of DHHS has delegated to PHS the
authority to enter into this Agreement for the licensing of rights
to these inventions under 35 U.S.C. (S)(S) 200-212, the Federal
Technology Transfer Act of 1986, 15 U.S.C. (S) 3710a, and/or the
regulations governing the licensing of Government-owned inventions,
37 CFR Part 404.
1.04 PHS desires to transfer these inventions to the private sector
through commercialization licenses to facilitate the commercial
development of products and processes for public use and benefit.
1.05 Licensee desires to acquire commercialization rights to certain of
these inventions in order to develop processes, methods, or
marketable products for public use and benefit.
2. DEFINITIONS
-----------
2.01 "Licensed Patent Rights" shall mean:
a) U.S. patent applications and patents listed in Appendix A, all
divisions and continuations of these applications, all patents
issuing from such applications, divisions, and continuations, and
any reissues, reexaminations, and extensions of all such patents;
2
b) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above: i)
continuations-in-part of a) above; ii) all divisions and
continuations of these continuations-in-part; iii) all patents
issuing from such continuations-in-part, divisions, and
continuations; and iv) any reissues, reexaminations, and
extensions of all such patents;
c) to the extent that the following contain one or more claims
directed to the invention or inventions claimed in a) above: all
counterpart foreign applications and patents to a) and b) above,
including those listed in Appendix A.
Licensed Patent Rights shall not include b) or c) above to the
extent that they contain one or more claims directed to new
matter which is not the subject matter of a claim in a) above.
2.02 "Licensed Product(s)" means tangible materials which, in the course
of manufacture, use, or sale would, in the absence of this
Agreement, infringe one or more claims of the Licensed Patent Rights
that have not been held invalid or unenforceable by an unappealed or
unappealable judgement of a court of competent jurisdiction.
2.03 "Licensed Process(es)" means processes which, in the course of being
practiced would, in the absence of this Agreement, infringe one or
more claims of the Licensed Patent Rights that have not been held
invalid or unenforceable by an unappealed or unappealable judgment
of a court of competent jurisdiction.
2.04 "Licensed Territory" means the geographical area identified in
Appendix B.
2.05 "Net Sales" means the total gross receipts for sales of Licensed
Products or practice of Licensed Processes by or on behalf of
Licensee or its sublicensees, and from leasing, renting, or
otherwise making Licensed Products available to others without sale
or other dispositions, whether invoiced or not, less returns and
allowances actually granted, packing costs, insurance costs, freight
out, taxes or excise duties imposed on the transaction (if
separately invoiced), and wholesaler and cash discounts in amounts
customary in the trade. No deductions shall be made for commissions
paid to individuals, whether they be with independent sales agencies
or regularly
3
employed by Licensee, or sublicensees, and on its
payroll, or for the cost of collections.
2.06 "First Commercial Sale" means the initial transfer by or on behalf of
Licensee or its sublicensees of Licensed Products or the initial
practice of a Licensed Process by or on behalf of Licensee or its
sublicensees in exchange for cash or some equivalent to which value
can be assigned for the purpose of determining Net Sales.
2.07 "Government" means the government of the United States of America.
2.08 "Licensed Fields of Use" means the fields of use identified in
Appendix B.
3. GRANT OF RIGHTS
---------------
3.01 PHS hereby grants and Licensee accepts, subject to the terms and
conditions of this Agreement, an exclusive license to Licensee under
the Licensed Patent Rights in the Licensed Territory to make and
have made, to use and have used, and to sell and have sold any
Licensed Products in the Licensed Fields of Use and to practice and
have practiced any Licensed Processes in the Licensed Fields of Use.
3.02 This Agreement confers no license or rights by implication,
estoppel, or otherwise under any patent applications or patents of
PHS other than Licensed Patent Rights regardless of whether such
patents are dominant or subordinate to Licensed Patent Rights.
4. SUBLICENSING
------------
4.01 Upon written approval by PHS, which approval will not be
unreasonably withheld, Licensee may enter into sublicensing
agreements under the Licensed Patent Rights.
4.02 Licensee agrees that any sublicenses granted by it shall provide
that the obligations to PHS of Paragraphs 5.01-5.05, 8.01, 10.01,
10.02, 12.05, and 13.08-13.11 of this Agreement shall be binding
upon the sublicensee as if it were a party to this Agreement.
Licensee further agrees to attach copies of these Paragraphs to all
sublicense agreements.
4
4.03 Any sublicenses granted by Licensee shall provide for the
termination of the sublicense, or the conversion to a license
directly between such sublicensees and PHS, at the option of the
sublicensee, upon termination of this Agreement under Article 13.
Such conversion is subject to PHS approval and contingent upon
acceptance by the sublicensee of the remaining provisions of this
Agreement.
4.04 Licensee agrees to forward to PHS a copy of each fully executed
sublicense agreement postmarked within sixty (60) days of the
execution of such agreement.
5. STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS
-------------------------------------------------------------
5.01 PHS reserves on behalf of the Government an irrevocable,
nonexclusive, nontransferable, royalty-free license for the practice
of all inventions licensed under the Licensed Patent Rights
throughout the world by or on behalf of the Government and on behalf
of any foreign government or international organization pursuant to
any existing or future treaty or agreement to which the Government
is a signatory.
5.02 Licensee agrees that products used or sold in the United States
embodying Licensed Products or produced through use of Licensed
Processes shall be manufactured substantially in the United States,
unless a written waiver is obtained in advance from PHS.
5.03 Licensee acknowledges that PHS may enter into future Cooperative
Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of
this Agreement. Licensee agrees not to unreasonably deny requests
for sublicense or cross-license rights from such future
collaborators with PHS when acquiring such derivative rights is
necessary in order to make a CRADA project feasible. Licensee may
request an opportunity to join as a party to the proposed CRADA.
5.04 DHHS has responsibility for funding basic biomedical research, for
funding medical treatment through programs such as Medicare and
Medicaid, for providing direct medical care and, more generally, for
protecting the health and safety of the public. Because of these
5
responsibilities, and the public investment in the research that
culminated in the Licensed Patent Rights, PHS may require Licensee
to submit documentation in confidence showing a reasonable
relationship between the pricing of a Licensed Product, the public
investment in that product, and the health and safety needs of the
public. This paragraph shall not restrict the right of Licensee to
price a Licensed Product or Licensed Process so as to obtain a
reasonable profit for its sale or use. This Paragraph 5.04 does not
permit PHS to set or dictate prices for Licensed Products or
Licensed Processes.
5.05 In addition to the reserved license of Paragraph 5.01 above, PHS
reserves the right to grant nonexclusive licenses to make and to use
the inventions defined by the Licensed Patent Rights for purposes of
research involving the inventions themselves, and not for purposes
of commercial manufacture or in lieu of purchase if the inventions
are available as commercial products for research purposes. The
purpose of this research license is to encourage basic research,
whether conducted at an academic or corporate facility. In order to
safeguard the Licensed Patent Rights, however, PHS shall consult
with Licensee before granting to commercial entities a research
license or providing to them research samples of the materials
claimed in the Licensed Patent Rights.
6. ROYALTIES AND REIMBURSEMENT
---------------------------
6.01 Licensee agrees to pay to PHS a noncreditable, nonrefundable license
issue royalty as set forth in Appendix C within thirty (30) days
from the date that this Agreement becomes effective.
6.02 Licensee agrees to pay to PHS a nonrefundable minimum annual royalty
as set forth in Appendix C. The minimum annual royalty is due and
payable on January 1 of each calendar year and may be credited
against any earned royalties due for sales made in that year. The
minimum annual royalty due for the first calendar year of this
Agreement may be prorated according to the fraction of the calendar
year remaining between the effective date of this Agreement and the
next subsequent January 1.
6.03 Licensee agrees to pay PHS earned royalties as set forth in Appendix
C.
6
6.04 Licensee agrees to pay PHS benchmark royalties as set forth in
Appendix C.
6.05 A claim of a patent or patent application licensed under this
Agreement shall cease to fall within the Licensed Patent Rights for
the purpose of computing the minimum annual royalty and earned
royalty payments in any given country on the earliest of the dates
that a) the claim has been abandoned but not continued, b) the
patent expires, c) the patent is no longer maintained by the
Government, or d) all claims of the Licensed Patent Rights have been
held to be invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or administrative
agency.
6.06 No multiple royalties shall be payable because any Licensed Products
or Licensed Processes are covered by more than one of the Licensed
Patent Rights.
6.07 On sales of Licensed Products by Licensee to sublicensees or
affiliated parties or on sales made in other than an arm's-length
transaction, the value of the Net Sales attributed under this
Article 6 to such a transaction shall be that which would have been
received in an arm's-length transaction, based on sales of like
quantity and quality products on or about the time of such
transaction.
6.08 As an additional royalty, Licensee agrees to pay PHS, within sixty
(60) days of PHS's submission of a statement and request for
payment, an amount equivalent to all reasonable expenses previously
incurred by PHS in the preparation, filing, prosecution, and
maintenance of Licensed Patent Rights. Licensee further agrees to
pay PHS annually, within sixty (60) days of PHS's submission of a
statement and request for payment, a royalty amount equivalent to
all such future patent expenses incurred during the previous
calendar year, as of the date the statement and request for payment
is sent by PHS to Licensee. Fifty percent (50%) of the cumulative
amount of such payments may be credited against royalties due under
Paragraph 6.03; however, the net royalty payment in any calendar
year may not be lower than the minimum annual royalty specified in
Appendix B. Licensee may elect to surrender its rights in any
country of the Licensed Territory under any Licensed Patent Rights
upon sixty (60) days' written notice to PHS and owe no payment
obligation under this paragraph for subsequent patent-related
expenses incurred in that country.
7
7. DOMESTIC AND FOREIGN PATENT FILING, PROSECUTION, AND MAINTENANCE
----------------------------------------------------------------
7.01 PHS agrees to take responsibility for, but to consult with the
Licensee in, the preparation, filing, prosecution, and maintenance
of any and all patent applications or patents included in the
Licensed Patent Rights and shall furnish copies of relevant patent-
related documents to Licensee.
7.02 Each party shall promptly inform the other as to all matters that
come to its attention that may affect the preparation, filing,
prosecution, or maintenance of the Licensed Patent Rights and permit
each other to provide comments and suggestions with respect to the
preparation, filing, and prosecution of Licensed Patent Rights,
which comments and suggestions shall be considered by the other
party.
8. RECORD KEEPING
--------------
8.01 Licensee agrees to keep accurate and correct records of Licensed
Products made, used, or sold and Licensed Processes practiced under
this Agreement appropriate to determine the amount of royalties due
PHS. Such records shall be retained for at least five (5) years
following a given reporting period. They shall be available during
normal business hours for inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS for the sole
purpose of verifying reports and payments hereunder. The accountant
or auditor shall only disclose to PHS information relating to the
accuracy of reports and payments made under this Agreement. If an
inspection shows an underreporting or underpayment in excess of five
percent (5%) for any twelve (12) month period, then Licensee shall
reimburse PHS for the cost of the inspection at the time Licensee
pays the unreported royalties, including any late charges as
required by Paragraph 7.06 of this Agreement. All payments required
under this Paragraph shall be due within thirty (30) days of the
date PHS provides Licensee notice of the payment due.
9. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
----------------------------------------------------
9.01 Prior to signing this Agreement, Licensee has provided to PHS a
written commercialization plan ("Commercial Development Plan")
8
under which Licensee intends to bring the subject matter of the
Licensed Patent Rights into commercial use. The Commercial
Development Plan is hereby incorporated by reference into this
Agreement. Based on this plan, performance benchmarks are determined
as specified in Appendix E ("Benchmarks").
9.02 Licensee shall provide written annual reports on its product
development progress or efforts to commercialize under the
Commercial Development Plan for each of the Licensed Fields of Use
within sixty (60) days after December 31 of each calendar year.
These progress reports shall include, but not be limited to:
progress on research and development, status of applications for
regulatory approvals, manufacturing, sublicensing, marketing, and
sales during the preceding calendar year, as well as plans for the
present calendar year. If reported progress differs from that
projected in the Commercial Development Plan and Benchmarks,
Licensee shall explain the reasons for such differences. Licensee
may propose amendments in any such annual report to the Commercial
Development Plan, acceptance of which by PHS may not unreasonably be
denied. Licensee agrees to provide any additional data reasonably
required by PHS to evaluate Licensee's performance. Licensee may
amend the Benchmarks at any time upon written consent by PHS. PHS
shall not unreasonably withhold approval of any request of Licensee
to extend the time periods of this schedule if such request is
supported by a reasonable showing by Licensee of diligence in its
performance under the Commercial Development Plan and toward
bringing the Licensed Products to the point of practical application
as defined in 37 CFR 404.3(d). Licensee shall amend the Commercial
Development Plan and Benchmarks at the request of PHS to address any
Licensed Fields of Use not specifically addressed in the plan
originally submitted.
9.03 Licensee shall report to PHS the date of the First Commercial Sale
in each country in the Licensed Territory within thirty (30) days of
such occurrence.
9.04 Licensee shall submit to PHS within sixty (60) days after each
calendar half-year ending June 30 and December 31 a royalty report
setting forth for the preceding half-year period the amount of the
Licensed Products sold or Licensed Processes practiced by or on
behalf of Licensee in each country within the Licensed Territory,
the
9
Net Sales, and the amount of royalty accordingly due. With each
such royalty report, Licensee shall submit payment of the earned
royalties due. If no earned royalties are due to PHS for any
reporting period, the written report shall so state. The royalty
report shall be certified as correct by an authorized officer of
Licensee and shall include a detailed listing of all deductions made
under Paragraph 2.05 to determine Net Sales made under Article 6 to
determine royalties due.
9.05 Licensee agrees to forward semi-annually to PHS a copy of such
reports received by Licensee from its sublicensees during the
preceding half-year period as shall be pertinent to a royalty
accounting to PHS by Licensee for activities under the sublicense.
9.06 Royalties due under Article 6 shall be paid in U.S. dollars. For
conversion of foreign currency to U.S. dollars, the conversion rate
shall be the rate quoted in The Wall Street Journal on the day that
the payment is due. All checks and bank drafts shall be drawn on
United States banks and shall be payable to NIH/Patent Licensing at
the address shown on the Signature Page below. Any loss of
exchange, value, taxes, or other expenses incurred in the transfer
or conversion to U.S. dollars shall be paid entirely by Licensee.
All royalty payments due under this Agreement shall be mailed to the
following address: NIH, P.O. Box 360120, Pittsburgh, Pennsylvania
15251-6120. The royalty report required by paragraph 9.04 of this
Agreement shall accompany each such payment and a copy of such
report shall also be mailed to PHS at its address for notices
indicated on the Signature Page of this Agreement.
9.07 Late charges will be applied to any overdue payments as required by
the U.S. Department of Treasury in the Treasury Fiscal Requirements
Manual, Section 8025.40. The payment of such late charges shall not
prevent PHS from exercising any other rights it may have as a
consequence of the lateness of any payment.
9.08 All plans and reports required by this Article 9 and marked
"confidential" by Licensee shall be treated by PHS as commercial and
financial information obtained from a person and as privileged and
confidential and, to the extent permitted by law, shall not be
subject to disclosure under the Freedom of Information Act, 5 U.S.C.
(S) 552.
10
10. PERFORMANCE
-----------
10.01 Licensee shall use its reasonable best efforts to introduce the
Licensed Products into the commercial market or apply the Licensed
Processes to commercial use as soon as practicable. "Reasonable
best efforts" for the purpose of this provision shall include, but
not be limited to, adherence to the Commercial Development Plan and
performance of the Benchmarks. The efforts of a sublicensee shall
be considered the efforts of Licensee.
10.02 Upon the First Commercial Sale, until the expiration of this
Agreement, Licensee shall use its reasonable best efforts to keep
Licensed Products and Licensed Processes reasonably accessible to
the public.
11. INFRINGEMENT AND PATENT ENFORCEMENT
-----------------------------------
11.01 PHS and Licensee agree to notify each other promptly of each
infringement or possible infringement, as well as any facts which
may affect the validity, scope, or enforceability of the Licensed
Patent Rights of which either Party becomes aware.
11.02 Pursuant to this Agreement and the provisions of Chapter 29 of Title
35, United States Code, Licensee may a) bring suit in its own name,
at its own expense, and on its own behalf for infringement of
presumably valid claims in the Licensed Patent Rights; b) in any
such suit, enjoin infringement and collect for its use, damages,
profits, and awards of whatever nature recoverable for such
infringement; and c) settle any claim or suit for infringement of
the Licensed Patent Rights-provided, however, that PHS and
appropriate Government authorities shall have the first right to
take such actions and shall have a continuing right to intervene in
such suit. Licensee shall take no action to compel the Government
either to initiate or to join in any such suit for patent
infringement. Licensee may request the Government to initiate or
joining any such suit if necessary to avoid dismissal of the suit.
Should the Government be made a party to any such suit, Licensee
shall reimburse the Government for any costs, expenses, or fees
which the Government incurs as a result of such motion or other
action, including any and all costs incurred by the Government in
opposing any such motion or other action. Upon Licensee's payment
of all costs incurred by the Government as a result of Licensee's
joinder motion or other action, these actions by
11
Licensee will not be considered a default in the performance of any
material obligation under this Agreement. In all cases, Xxxxxxxx
agrees to keep PHS reasonably apprised of the status and progress of
any litigation. Before Licensee commences an infringement action,
Licensee shall notify PHS and give careful consideration to the
views of PHS and to any potential effects of the litigation on the
public health in deciding whether to bring suit.
11.03 In any infringement action commenced under Paragraph 11.02, the
expenses including costs, fees, attorney fees, and disbursements,
shall be paid by Licensee. Up to fifty percent (50%) of such
expenses may be credited against the royalties payable to PHS under
Paragraph 6.03 under the Licensed Patent Rights in the country in
which such a suit is filed. In the event that fifty percent (50%)
of such expenses exceed the amount of royalties payable by Licensee
in any calendar year, the expenses in excess may be carried over as
a credit on the same basis into succeeding calendar years. A credit
against litigation expenses, however, may not reduce the royalties
due in any calendar year to less than the minimum annual royalty.
Any recovery made by Licensee, through court judgment or settlement,
first shall be applied to reimburse PHS for royalties withheld as a
credit against litigation expenses and then to reimburse Licensee
for its litigation expense. Any remaining recoveries shall be
shared equally by Licensee and PHS.
11.04 PHS shall cooperate fully with Licensee in connection with an
infringement action initiated under Paragraph 11.02. PHS agrees
promptly to provide access to all necessary documents and to render
reasonable assistance in response to a request by Licensee.
11.05 In the event that a declaratory judgment action alleging invalidity
or non-infringement of any of the Licensed Patent Rights shall be
brought against Licensee or raised by way of counterclaim or
affirmative defense in an infringement suit brought by Licensee
under Paragraph 11.02, pursuant to this Agreement and the provisions
of Chapter 29 of Title 35, United States Code or other statutes,
Licensee may a) defend the suit in its own name, at its own expense,
and on its own behalf for presumably valid claims in the Licensed
Patent Rights; b) in any such suit, ultimately to enjoin
infringement and to collect for its use, damages, profits, and
awards of whatever nature recoverable for such infringement; and c)
settle
12
any claim or suit for declaratory judgment involving the Licensed
Patent Rights-provided, however, that PHS and appropriate Government
authorities shall have the first right to take such actions and
shall have a continuing right to intervene in such suit. Licensee
shall take no action to compel the Government either to initiate or
to join in any such declaratory judgment action. Licensee may
request the Government to initiate or joining any such suit if
necessary to avoid dismissal of the suit. Should the Government be
made a party to any such suit by motion or any other action of
Licensee, Licensee shall reimburse the Government for any costs,
expenses, or fees which the Government incurs as a result of such
motion or other action. Upon Licensee's payment of all costs
incurred by the Government as a result of Licensee's joinder motion
or other action, these actions by Licensee will not be considered a
default in the performance of any material obligation under this
Agreement. If Licensee elects not to defend against such declaratory
judgment action, PHS, at its option, may do so at its own expense.
In all cases, Xxxxxxxx agrees to keep PHS reasonably apprised of the
status and progress of any litigation. Before Licensee commences an
infringement action, Licensee shall notify PHS and give careful
consideration to the views of PHS and to any potential effects of
the litigation on the public health in deciding whether to bring
suit.
12. NEGATION OF WARRANTIES AND INDEMNIFICATION
------------------------------------------
12.01 PHS offers no warranties other than those specified in Article 1.
12.02 PHS does not warrant the validity of the Licensed Patent Rights and
makes no representations whatsoever with regard to the scope of the
Licensed Patent Rights, or that the Licensed Patent Rights may be
exploited without infringing other patents or other intellectual
property rights of third parties.
12.03 PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER DEFINED BY
THE CLAIMS OF THE LICENSED PATENT RIGHTS.
12.04 PHS does not represent that it will commence legal actions against
third parties infringing the Licensed Patent Rights.
13
12.05 Licensee shall indemnify and hold PHS, its employees, students,
fellows, agents, and consultants harmless from and against all
liability, demands, damages, expenses, and losses, including but not
limited to death, personal injury, illness, or property damage in
connection with or arising out of a) the use by or on behalf of
Licensee, its sublicensees, directors, employees, or third parties
of any Licensed Patent Rights, or b) the design, manufacture,
distribution, or use of any Licensed Products, Licensed Processes or
materials, or other products or processes developed in connection
with or arising out of the Licensed Patent Rights. Licensee agrees
to maintain a liability insurance program consistent with sound
business practice.
13. TERM, TERMINATION, AND MODIFICATION OF RIGHTS
---------------------------------------------
13.01 This Agreement is effective when signed by all parties and shall
extend to the expiration of the last to expire of the Licensed
Patent Rights unless sooner terminated as provided in this Article
13.
13.02 In the event that Licensee is in default in the performance of any
material obligations under this Agreement, and if the default has
not been remedied within ninety (90) days after the date of notice
in writing of such default, PHS may terminate this Agreement by
written notice.
13.03 At least thirty (30) days prior to filing a petition in bankruptcy,
Licensee must inform PHS in writing of its intention to file the
petition in bankruptcy or of a third party's intention to file an
involuntary petition in bankruptcy.
13.04 In the event that Licensee becomes insolvent, files a petition in
bankruptcy, has such a petition filed against it, determines to file
a petition in bankruptcy, or receives notice of a third party's
intention to file an involuntary petition in bankruptcy, Licensee
shall immediately notify PHS in writing. Furthermore, PHS shall
have the right to terminate this Agreement by giving Licensee
written notice. Termination of this Agreement is effective upon
Licensee's receipt of the written notice.
13.05 Licensee shall have a unilateral right to terminate this Agreement
and/or any licenses in any country by giving PHS sixty (60) days'
written notice to that effect.
14
13.06 PHS shall specifically have the right to terminate or modify, at its
option, this Agreement, if PHS determines that the Licensee: 1) is
not executing the Commercial Development Plan submitted with its
request for a license and the Licensee cannot otherwise demonstrate
to PHS's satisfaction that the Licensee has taken, or can be
expected to take within a reasonable time, effective steps to
achieve practical application of the Licensed Products or Licensed
Processes; 2) has not achieved the Benchmarks as may be modified
under Paragraph 9.02; 3) has willfully made a false statement of, or
willfully omitted, a material fact in the license application or in
any report required by the license agreement; 4) has committed a
substantial breach of a covenant or agreement contained in the
license; 5) is not keeping Licensed Products or Licensed Processes
reasonably available to the public after commercial use commences;
6) cannot reasonably satisfy unmet health and safety needs; or 7)
cannot reasonably justify a failure to comply with the domestic
production requirement of Paragraph 5.01 unless waived. In making
this determination, PHS will take into account the normal course of
such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual reports
submitted by Licensee under Paragraph 9.02. Prior to invoking this
right, PHS shall give written notice to Licensee providing Licensee
specific notice of, and a ninety (90) day opportunity to respond to,
PHS's concerns as to the previous items 1) to 7). If Licensee fails
to alleviate PHS's concerns as to the previous items 1) to 7) or
fails to initiate corrective action to PHS's satisfaction, PHS may
terminate this Agreement.
13.07 When the public health and safety so require, and after written
notice to Licensee providing Licensee a sixty (60) day opportunity
to respond, PHS shall have the right to require Licensee to grant
sublicenses to responsible applicants, on reasonable terms, in any
Licensed Fields of Use under the Licensed Patent Rights, unless
Licensee can reasonably demonstrate that the granting of the
sublicense would not materially increase the availability to the
public of the subject matter of the Licensed Patent Rights. PHS
will not require the granting of a sublicense unless the responsible
applicant has first negotiated in good faith with Licensee.
13.08 PHS reserves the right according to 35 U.S.C. (S) 209(f)(4) to
terminate or modify this Agreement if it is determined that such
15
action is necessary to meet requirements for public use specified by
Federal regulations issued after the date of the license and such
requirements are not reasonably satisfied by Licensee.
13.09 Within thirty (30) days of receipt of written notice of PHS's
unilateral decision to modify or terminate this Agreement, Licensee
may, consistent with the provisions of 37 CFR (S) 404.11, appeal the
decision by written submission to the Director of NIH or designee.
The decision of the NIH Director or designee shall be the final
agency decision. Licensee may thereafter exercise any and all
administrative or judicial remedies that may be available.
13.10 Within ninety (90) days of termination of this Agreement under this
Article 13 or expiration under Paragraph 3.02, a final report shall
be submitted by Licensee. Any royalty payments, including those
related to patent expense, due to PHS shall become immediately due
and payable upon termination or expiration. If terminated under
this Article 13, sublicensees may elect to convert their sublicenses
to direct licenses with PHS pursuant to Paragraph 4.03.
14. GENERAL PROVISIONS
------------------
14.01 Neither Party may waive or release any of its rights or interests in
this Agreement except in writing. The failure of the Government to
assert a right hereunder or to insist upon compliance with any term
or condition of this Agreement shall not constitute a waiver of that
right by the Government or excuse a similar subsequent failure to
perform any such term or condition by Licensee.
14.02 This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of the Licensed Patent Rights, and
all prior negotiations, representations, agreements, and
understandings are merged into, extinguished by, and completely
expressed by this Agreement.
14.03 The provisions of this Agreement are severable, and in the event
that any provision of this Agreement shall be determined to be
invalid or unenforceable under any controlling body of law, such
determination shall not in any way affect the validity or
enforceability of the remaining provisions of this Agreement.
16
14.04 If either Party desires a modification to this Agreement, the
Parties shall, upon reasonable notice of the proposed modification
by the Party desiring the change, confer in good faith to determine
the desirability of such modification. No modification will be
effective until a written amendment is signed by the signatories to
this Agreement or their designees.
14.05 The construction, validity, performance, and effect of this
Agreement shall be governed by Federal law as applied by the Federal
courts in the District of Columbia.
14.06 All notices required or permitted by this Agreement shall be given
by prepaid, first class, registered or certified mail properly
addressed to the other Party at the address designated on the
following Signature Page, or to such other address as may be
designated in writing by such other Party, and shall be effective as
of the date of the postmark of such notice.
14.07 This Agreement shall not be assigned by Licensee except a) with the
prior written consent of PHS, such consent to be reasonably given;
or b) as part of a sale or transfer of substantially the entire
business of Licensee relating to operations which concern this
Agreement. Licensee shall notify PHS within ten (10) days of any
assignment of this Agreement by Licensee.
14.08 Licensee agrees in its use of any PHS-supplied materials to comply
with all applicable statutes, regulations, and guidelines, including
Public Health Service and National Institutes of Health regulations
and guidelines. Licensee agrees not to use the materials for
research involving human subjects or clinical trials in the United
States without complying with 21 CFR Part 50 and 45 CFR Part 46.
Licensee agrees not to use the materials for research involving
human subjects or clinical trials outside of the United States
without notifying PHS, in writing, of such research or trials and
complying with the applicable regulations of the appropriate
national control authorities. Written notification to PHS of
research involving human subjects or clinical trials outside of the
United States shall be given no later than sixty (60) days prior to
commencement of such research or trials.
14.09 Licensee acknowledges that it is subject to and agrees to abide by
the United States laws and regulations (including the Export
17
Administration Act of 1979 and Arms Export Control Act) controlling
the export of technical data, computer software, laboratory
prototypes, biological material, and other commodities. The
transfer of such items may require a license from the cognizant
agency of the U.S. Government or written assurances by Licensee that
it shall not export such items to certain foreign countries without
prior approval of such agency. PHS neither represents that a
license is or is not required or that, if required, it shall be
issued.
14.10 Licensee agrees to mark the Licensed Products or their packaging
sold in the United States with all applicable U.S. patent numbers
and similarly to indicate "Patent Pending" status. All Licensed
Products manufactured in, shipped to, or sold in other countries
shall be marked in such a manner as to preserve PHS patent rights in
such countries.
14.11 By entering into this Agreement, PHS does not directly or indirectly
endorse any product or service provided, or to be provided, by
Licensee whether directly or indirectly related to this Agreement.
Licensee shall not state or imply that this Agreement is an
endorsement by the Government, PHS, any other Government
organizational unit, or any Government employee. Additionally,
Licensee shall not use the names of NIH, CDC, or PHS or their
employees in any advertising, promotional, or sales literature
without the prior written consent of PHS.
14.12 The Parties agree to attempt to settle amicably any controversy or
claim arising under this Agreement or a breach of this Agreement,
except for appeals of modification or termination decisions provided
for in Article 13. Licensee agrees first to appeal any such
unsettled claims or controversies to the Director of NIH, or
designee, whose decision shall be considered the final agency
decision. Thereafter, Licensee may exercise any administrative or
judicial remedies that may be available.
14.13 Nothing relating to the grant of a license, nor the grant itself,
shall be construed to confer upon any person any immunity from or
defenses under the antitrust laws or from a charge of patent misuse,
and the acquisition and use of rights pursuant to 37 CFR Part 404
shall not be immunized from the operation of state or Federal law by
reason of the source of the grant.
18
14.14 Paragraphs 4.03, 8.01, 9.06, 9.07, 12.01-12.05, 13.09, 13.10, and
14.12 of this Agreement shall survive termination of this Agreement.
SIGNATURES BEGIN ON NEXT PAGE
19
PHS PATENT LICENSE AGREEMENT - EXCLUSIVE
SIGNATURE PAGE
--------------
FOR PHS:
by: Xxxxxxx XxXxxxx 3/18/94
-------------------------- ---------------
Xxxxxxx XxXxxxx, X.X. Date
Deputy Director, Office of Technology Transfer
National Institutes of Health
Mailing Address for Notices:
Office of Technology Transfer
National Institutes of Health
Box XXX
Bethesda, Maryland 20892
FOR Licensee (Upon information and belief, the undersigned expressly certifies
or affirms that the contents of any statements of Licensee made or referred to
in this document are truthful and accurate.):
by: X. Xxxxxxx Xxxxxx March 10, 1994
----------------------------- -----------------
X. Xxxxxxx Xxxxxx Date
President and Chief Executive Officer
Targeted Genetics Corporation
Mailing Address for Notices:
Targeted Genetics Corporation
0000 Xxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
20
APPENDIX A - PATENT OR PATENT APPLICATION
-----------------------------------------
Patent or Patent Application:
U.S. Patent Application SN 07/891,962 entitled "Modified Adeno-Associated Virus
Vector Capable Of Expression From A Novel Promoter" and corresponding foreign
applications.
21
APPENDIX B - LICENSED FIELDS OF USE AND TERRITORY
-------------------------------------------------
Licensed Territory: World-wide.
Licensed Fields of Use: Vector-based gene therapy for cystic fibrosis.
22
APPENDIX C - ROYALTIES
----------------------
Royalties:
Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue
royalty in the amount of [ * ] according to the following
payment schedule:
A. [ * ] within thirty (30) days from the Effective
Date; and
B. [ * ] within three hundred sixty-five (365) days
from the Effective Date.
Licensee agrees to pay to PHS a nonrefundable minimum annual royalty in the
amount of [ * ].
Licensee agrees to pay PHS earned royalties on Net Sales as follows:
A. [ * ] of Net Sales by Licensee or an Affiliate of
Licensee of all Licensed Products manufactured and sold in the
Licensed Territory; and;
B. Licensee shall be entitled to a [ * ] credit against
the earned royalty rate for each percent of royalty in excess of [
* ] Licensee must pay to other unaffiliated licensors for the
manufacture and sale of Licensed Products. Said reduction, however,
shall not reduce the royalty rate for Licensed Products below [
* ] provided for under Paragraph A above.
Licensee agrees to pay PHS Sublicensing Royalties as follows:
A. [ * ] of Net Sales by Sublicensee, or an Affiliate
of Sublicensee of all Licensed Products manufactured and sold in the
Licensed Territory plus [ * ] of the value of any
consideration received in granting the sublicense.
B. Licensee shall be entitled to a [ * ] credit against
the earned sublicensing royalty rate for each percent of royalty in
excess of [ * ]. Sublicensee must pay to other
unaffiliated licensors for the manufacture and sale of Licensed
Products. Said reduction, however, shall not reduce the sublicensing
royalty rate for Licensed Products [ * ] provided for
under Paragraph A above.
[*] Confidential Treatment Requested
23
Licensee agrees to pay PHS benchmark royalties as follows:
[ * ] upon first human use of Licensed Products.
[ * ] upon approval of each Product License Application
(PLA) for Licensed Products.
24
APPENDIX D - MODIFICATIONS
--------------------------
PHS and Licensee agree to the following modifications to the Articles and
Paragraphs of this Agreement:
ARTICLE FIVE
5.03 (revised) Licensee acknowledges that PHS may enter into future
Cooperative Research and Development Agreements (CRADAs) under the Federal
Technology Transfer Act of 1986 that relate to the subject matter of this
Agreement. Licensee agrees not to unreasonably deny requests for sublicense or
cross license rights from such future collaborators with PHS when acquiring such
derivative rights is necessary in order to make a CRADA project feasible.
Licensee may request an opportunity to join as a party to the proposed CRADA.
Notwithstanding the foregoing, the grant of such derivative rights to a
prospective PHS collaborator by Licensee shall include the right to sell or have
sold the inventions defined by the Licensed Patent Rights in Licensed Fields of
Use only at the option of Licensee.
5.05 (revised) In addition to the reserved license of Paragraph 5.01
above, PHS reserves the right to grant nonexclusive licenses to make and to use,
but not to sell or have sold, the inventions defined by the Licensed Patent
Rights for purposes of research involving the inventions themselves, and not for
purposes of commercial manufacture or in lieu of purchase if the inventions are
available as commercial products for research purposes. The purpose of this
research license is to encourage basic research, whether conducted at an
academic or corporate facility. In order to safeguard the Licensed Patent
Rights, however, PHS shall consult with Licensee before granting to commercial
entities a research license or providing to them research samples of the
materials claimed in the Licensed Patent Rights. In the event that Licensee can
provide convincing written evidence to PHS that a commercial entity that has
been granted a research license to Licensed Patent Rights is developing the
inventions for commercial manufacture or in lieu of purchase if the inventions
are available as commercial products, then Licensee can request that PHS
terminate its research license with such commercial entities, such request not
to be unreasonably denied.
25
ARTICLE SIX
6.01 (revised) Licensee agrees to pay to PHS a noncreditable,
nonrefundable license issue royalty as set forth in Appendix C.
6.05 (revised) A claim of a patent or patent application licensed under
this Agreement shall cease to fall within the Licensed Patent Rights for the
purpose of computing the minimum annual royalty and earned royalty payments in
any given country on the earliest of the dates that a) the claim has been
abandoned but not continued, b) the patent expires, c) the patent is no longer
maintained by the Government or Licensee, or d) all claims of the Licensed
Patent Rights have been held to be invalid or unenforceable by an unappealed or
unappealable decision of a court of competent jurisdiction or administrative
agency.
ARTICLE SEVEN
7.01 (revised) Upon Effective Date, Licensee agrees to take the
responsibility and pay for, but to consult with PHS, in the preparation, filing,
prosecution, and maintenance of any and all patent applications or patents
included in the Licensed Patent Rights and shall furnish copies of relevant
patent-related documents to PHS, who shall retain its principle power of
attorney. Fifty percent (50%) of the cumulative amount of such payments may be
credited against royalties due under Paragraph 6.03; however, the net royalty
payment in any calendar year may not be lower than the minimum annual royalty
specified in Appendix B. Licensee may elect to surrender its rights in any
country of the Licensed Territory under any Licensed Patent Rights upon sixty
(60) days' written notice to PHS and owe no payment obligation under this
paragraph for subsequent patent-related expenses incurred in that country.
ARTICLE NINE
9.04 (revised) Beginning after the date of the First Commercial Sale,
Licensee shall submit to PHS within sixty (60) days after each calendar half-
year ending June 30 and December 31 a royalty report setting forth for the
preceding half-year period the amount of the Licensed Products sold or Licensed
Processes practiced by or on behalf of Licensee in each country within the
Licensed Territory, the Net Sales, and the amount of royalty accordingly due.
With each such royalty report, Licensee shall submit payment of the earned
royalties due. If no earned royalties are due to PHS for any reporting period,
the written report shall so state. The royalty report shall be certified as
correct by an authorized officer of Licensee and shall include a detailed
listing of all deductions made under Paragraph 2.05 to determine Net Sales made
under Article 6 to determine royalties due.
26
ARTICLE THIRTEEN
13.01 (revised) This Agreement is effective when signed by all parties
("Effective Date") and shall extend to the expiration of the last to expire of
the Licensed Patent Rights unless sooner terminated as provided in this Article
13.
27
APPENDIX E - BENCHMARKS
-----------------------
Licensee agrees to the following Benchmarks for its performance under this
Agreement and, within ten (10) days of achieving a Benchmark, shall notify PHS
that the Benchmark has been achieved:
1. Complete development of a manufacturing process for a Licensed Product
within nine (9) months of the Effective Date.
2. Initiate toxicology studies for a Licensed Product within twelve (12)
months of the Effective Date.
3. File an investigational New Drug (IND) application for a Licensed
Product within eighteen (18) months of the Effective Date.
4. Initiate Phase I clinical trials for a Licensed Product within twenty-
four (24) months of the Effective Date.
5. Initiate Phase II or equivalent (e.g. Phase Ib) clinical trials for a
Licensed Product within forty-eight (48) months of the Effective Date.
6. Initiate Phase III or equivalent (e.g. Phase II/III) clinical trials
for a Licensed Product within eighty-four (84) months of the Effective
Date.
28
TARGETED GENETICS CORPORATION
COMMERCIAL DEVELOPMENT PLAN
U.S.P.A. 07/891,962
BACKGROUND
Cystic fibrosis (CF) is an autosomal recessive disease that afflicts 30,000
people in the United States and 60,000 worldwide. The hallmarks of the disease
include thick, dehydrated airway mucus, chronic Pseudomonas lung infection,
pancreatic insufficiency, bile duct obstruction, infertility in males, reduced
fertility in females, intestinal obstruction, nasal polyp formation and chronic
sinusitis. CF is caused by a defect in a protein called CFTR, found in
epithelial cells.
Approximately 90% of the mortality in CF patients is related to pulmonary
disease, caused by Pseudomanas infection and airway inflammation. It is
believed that the pathology associated with CF may begin very early in life.
Thus, treating the patient very early in life before significant lung disease
occurs may be crucial. Currently, the average life span of a CF patient is 29.
Recently, Genentech's DNase received a unanimous recommendation for approval by
an FDA advisory committee. DNase is a useful product for the treatment of the
effects of CF, but does not address the causes of this disease.
Several gene therapy companies have developed adenovirus vector systems to
deliver the CFTR gene into the lungs of CF patients. The single ongoing
clinical trial with an adenovirus delivery system, however, has yielded toxicity
problems relating to lung tissue inflammation caused by the vector. These
results may serve to confirm preclinical animal studies conducted previously
with adenovirus-CFTR vectors where serious lung inflammation was also observed.
In addition to this toxicity concern, adenovirus is unable to sustain expression
of the CFTR gene in vivo beyond a few weeks. Liposomes, which are in
preclinical development as delivery vehicles for the CFTR gene, have a similar
limitation.
TGC APPROACH
Adeno-associated virus (AAV) is a non-pathogenic human isolate which integrates
stably and with high efficiency into the genome of respiratory epithelial cells.
This type of vector may be used for stable correction of the gene defect early
in life, prior to onset of irreversible lung disease.
29
TGC will initially deliver the Licensed Product vector directly into lungs of
patients via a bronchoscope. An aerosol delivery system may be developed for
the vector if treatment is required more than two or three times per year.
Prior to initiation of clinical trials, TGC will be required to develop a
manufacturing process for the Licensed Product. It is expected that this will
be completed by the end of 1994. In parallel with this effort, the company will
initiate toxicology studies in large animals at Xxxxx Xxxxxxx University. The
project is expected to be completed by the first quarter of 1995. An
Investigational New Drug Application is scheduled to be filed by the end of
1995, with Phase I clinical studies slated to begin by the first quarter of
1996.
Phase I clinical studies for the Licensed Product will be conducted at Xxxxx
Xxxxxxx University under the director of Xx. Xxxxxxx Xxxxxx. Xx. Xxxxxx
recently completed studies at Xxxxx Xxxxxxx that demonstrated that CFTR
expression could be sustained for up to six months in the lungs of rabbits
receiving direct in vivo delivery of the Licensed Product.
The sequence of clinical trials needed to move the Licensed Product into PLA
filing position differs substantially from standard clinical trial design. The
first Phase I trial will be designed to evaluate toxicity in adult CF patients
following delivery to a single lung lobe. Subsequent Phase Ib or Phase II
studies are expected to be initiated by early 1998, and will be designed to
evaluate, from a safety and efficacy standpoint, bilateral whole lung delivery
in adults, repeated delivery of vector, as well as delivery to neonatal and
pediatric populations. Phase III or Phase II/III clinical studies are expected
to begin by the first quarter of 2001, and will be designed on the basis of the
results from the Phase Ib or Phase II trials, as well as from additional pre-
clinical studies that may be conducted in parallel with the clinical trials.
Among the factors that will dictate how the Phase III (or II/III) trials are
designed are those following:
. Whether differential toxicity and/or efficacy profiles are observed
between the pediatric and adult populations enrolled in the trial
. Whether adult patients in the trial derived significant efficacy from
the therapy in the setting of chronic inflammation and scarring.
. Whether repeated delivery or non-bronchoscopic delivery was necessary
for long-term efficacy of the vector.
Given the uncertainty regarding the design of the Phase III or Phase II/III
trials, it is difficult at this stage to predict when a Product Licensing
Application will be filed for the Licensed Product.
30
