Exhibit 10.14
CONFIDENTIAL TREATMENT
AGREEMENT
This Agreement (AGREEMENT) is entered into as of August 30, 2001 (EFFECTIVE
DATE) between NeoGenesis Drug Discovery, Inc., a Delaware corporation
(NEOGENESIS), and Tularik Inc. (TULARIK), a Delaware corporation, and sets forth
the terms and conditions that will apply to the provision by NeoGenesis to
Tularik of certain screening and analysis services.
BACKGROUND
Tularik is interested in identifying potential pharmaceutical products for
treatment of certain human diseases and wishes to identify compounds that
exhibit a high degree of chemical binding and functional activity to specific
protein targets. NeoGenesis has certain technology and know-how, including
screening processes and libraries of mass-encoded small molecule compounds,
relating to the identification, discovery, validation and optimization of novel
compounds which may be useful for development of novel therapeutics employing
targets implicated in a disease process. The parties wish to pursue a
collaborative screening process to identify compounds exhibiting a high degree
of chemical binding activity to targets designated by Tularik from among the
NeoGenesis libraries of mass-encoded small molecule compounds and which have
activity in bioassays or functional assays. The terms and conditions set forth
below shall govern the performance of such collaborative effort.
1. DEFINITIONS.
1.1 DEFINED TERMS. Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meaning set forth below.
AFFILIATE means with respect to either party, any Person that, directly or
indirectly, is controlled by, controls or is under common control with such
party. For purposes of this definition only, "CONTROL" means, with respect to
any Person, the direct or indirect ownership of more than fifty percent (50%) of
the voting or income interest in such Person or the possession otherwise,
directly or indirectly, of the power to direct the management or policies of
such Person.
ALIS means the Automated Ligand Identification System, an automated,
ultra-high throughput ligand selection system proprietary to NeoGenesis that is
used to identify multiple classes of chemical ligands against a target protein.
APPLICABLE LAWS means all applicable laws, statutes, regulations and
ordinances, including without limitation the FD&C Act.
COMMERCIALLY REASONABLE EFFORTS means (i) with respect to any objective by
any party, commercially reasonable, diligent, good faith efforts to accomplish
such objective as such party would normally use to accomplish a similar
objective under similar circumstances; and (ii) with respect to any objective
relating to the development or Commercialization of any Product or Shared
Product by any party, efforts and resources normally used by such party with
respect to a product owned by such party or to which such party has similar
rights which is of similar market potential at a similar stage in the
development or life of such product, taking into account issues of safety,
efficacy, product profile, the competitiveness of the marketplace, the
proprietary position of the product, the regulatory structure involved,
profitability of the product and other relevant commercial factors.
COMMERCIALIZATION means any and all activities of importing, exporting,
marketing, promoting, distributing, offering for sale and selling a Product or
Shared Product or Independent Product. When used as a verb, COMMERCIALIZE means
to engage in Commercialization.
CONFIDENTIAL INFORMATION means any proprietary or confidential information
of either party (including but not limited to all Tularik Intellectual Property
and all NeoGenesis Intellectual Property) disclosed to the other party pursuant
to this Agreement, except any portion thereof which: (i) is known to the
receiving party, as evidenced by the
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SEPARATELY WITH THE COMMISSION.
receiving party's prior written records, before receipt thereof under this
Agreement; (ii) is disclosed to the receiving party by a third person who is
under no obligation of confidentiality to the disclosing party hereunder with
respect to such information and who otherwise has a right to make such
disclosure; (iii) is or becomes generally known in the public domain through no
fault of the receiving party; or (iv) is independently developed by the
receiving party, as evidenced by the receiving party's written records, without
access to such information.
CONTROL OR CONTROLLED means, with respect to any intellectual property
right, the possession (whether by ownership or license) by a party or an
Affiliate thereof of the ability to grant to the other party access or a license
as provided herein under such item or right without violating the terms of any
agreement or other arrangements between such party or its Affiliate and any
third party existing before, or acquired after, the Effective Date.
COST OF GOODS means the cost of manufacturing the Designated Selected
Compound or Product or the Designated Shared Compound or Shared Product or
Independent Compound or Independent Product in bulk or finished form (including
samples) calculated in accordance with GAAP. Cost of Goods shall include: (a)
the Cost of Manufacture for Designated Selected Compounds and Products or the
Designated Shared Compounds and Shared Products or the Independent Compounds and
Independent Products manufactured by either party or the amount paid for
Designated Selected Compounds and Products or the Designated Shared Compounds
and Shared Products manufactured or the Independent Compounds and Independent
Products by a third party; and (b) the net cost or credit of any value-added
taxes or duties actually paid or utilized in respect of the Designated Selected
Compounds and Products or the Designated Shared Compounds and Shared Products or
the Independent Compounds and Independent Products.
COST OF MANUFACTURE means the fully-allocated cost of manufacturing
Designated Selected Compounds and Products or Designated Shared Compounds and
Shared Products or the Independent Compounds and Independent Products
(calculated in accordance with GAAP), including the direct and indirect cost of
any raw materials, packaging materials and labor (including the cost of employee
benefits) utilized in such manufacturing (including formulating, filling,
finishing, labeling and packaging, as applicable) plus factory overhead costs
(fixed and variable) allocated to the relevant Designated Selected Compound,
Product, Designated Shared Compound, Shared Product, Independent Compound or
Independent Product in accordance with normal accounting practices for all
products manufactured in the applicable facility.
DERIVATIVE COMPOUNDS means any analogs, homologs or isomers of a Designated
Screening Compound, a Designated Shared Compound and/or an Independent Compound,
as applicable.
DESIGNATED COMPOUNDS means Designated Screening Compounds and Designated
Shared Compounds.
DEVELOPMENT shall mean the development of any Shared Product occurring from
and after the filing of an IND, through and including approval of an NDA and any
other Regulatory Approvals required for the Manufacture and Commercialization of
such Shared Product in a country. Development shall not include Pre-Clinical
Development activities.
DEVELOPMENT COSTS shall mean all costs and expenses reasonably resulting
directly from the Pre-Clinical Development of any Designated Shared Compound or
Development of any Shared Product, as well as Overhead costs of the functions
that directly support such Pre-Clinical Development or Development (as
calculated in accordance with GAAP and using the same allocation methods that
the party incurring such costs uses throughout its operations, but in all events
excluding General Corporate Overhead), all as specified in the Development Plan
and the Development Budget. DEVELOPMENT COSTS shall include, without limitation:
(i) the Cost of Goods for the Designated Shared Compound used in such
Pre-Clinical Development or Shared Product used in such Development (including
early batches of the Shared Product for use in obtaining Regulatory Approval, to
the extent not re-used later in commercial sales); (ii) direct costs for third
party professional Pre-Clinical Development or Development services, including
without limitation toxicology studies or clinical studies performed by third
parties; (iii) direct charges for materials (including without limitation
chemicals, animals and lab supplies); (iv) labor and materials
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SEPARATELY WITH THE COMMISSION.
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costs and fees incurred in connection with securing Regulatory Approvals; (v)
labor and materials costs for the Development of the Manufacturing process for
Shared Products and scale-up of such process; and (vi) the costs of FTEs
dedicated to the foregoing activities.
DIRECT ADMINISTRATIVE EXPENSES means the costs of invoicing, tracking and
administering rebate and chargeback programs and product returns and of
establishing and maintaining contracts with managed care organizations and
governmental purchasers.
DISTRIBUTION COSTS means the costs of distributing and shipping the Shared
Product and samples to wholesalers, distributors, physicians and customers
(including costs of returns) and costs of collection. In the event that such
costs cannot be calculated on a Shared Product-by-Shared Product basis, such
costs shall be calculated by multiplying: (i) the aggregate distribution costs
incurred by the party's pharmaceutical business for all pharmaceutical products
that shall be calculated correspondingly according to the formula set forth in
this paragraph; by (ii) a fraction, (x) the numerator of which is the Net Sales
for such Shared Product; and (y) the denominator of which is the total net sales
of all pharmaceutical products of the party's pharmaceutical business that shall
be calculated correspondingly according to the formula for Net Sales under this
Agreement.
EXPENSES shall mean expenses incurred by a party to the extent allocable to
the Commercialization of Shared Products in all countries in the Territory,
calculated in accordance with GAAP. EXPENSES shall include, without limitation,
the following: (a) the Cost of Goods; (b) Pre-Launch Expenses; (c) Distribution
Costs; (d) Selling and Promotion Expenses; (e) Third Party Royalties; (f)
Post-Regulatory Approval Clinical Studies Expenses; (g) Direct Administrative
Expenses; (h) Recall Expenses; and (i) Other Allowable Expenses.
FDA means the United States Food and Drug Administration, or any successor
thereto.
FD&C ACT means the United States Federal Food, Drug and Cosmetic Act of
1938 and applicable regulations promulgated thereunder, as amended from time to
time.
FIELD means all preventative, therapeutic and diagnostic uses in humans.
FIRST COMMERCIAL SALE of product(s) means any transfer for value in an
arms'-length transaction to an independent third party distributor, agent or end
user in a country within the Territory after obtaining all necessary Regulatory
Approvals as may be necessary for such transfer in such country.
FORCE MAJEURE means any event beyond the control of the parties, including,
without limitation, power outages, fire, flood, riots, strikes, epidemics, war
(declared or undeclared and including the continuance, expansion or new outbreak
of any war or conflict now in existence), embargoes and governmental actions or
decrees.
FTE means the equivalent of a full time (12) months (including normal
vacations, sick days and holidays) work of a person, carried out by one or more
employees or agents of a party.
FTE RATE means an amount not to exceed [*] per FTE per year.
GAAP shall mean United States Generally Accepted Accounting Principles,
consistently applied.
GENERAL CORPORATE OVERHEAD shall mean all expenses that are not primarily
associated with research, Pre-Clinical Development or Development functions of
either party. Such expenses include salaries and benefits of executive officers
(unless primarily involved in research, Pre-Clinical Development or Development
activities), administrative support for such officers, and all costs of the
finance, purchasing, legal (including both in-house and outside counsel),
business development and corporate development functions of both parties. In the
event that such costs cannot be calculated on a Designated Shared
Compound-by-Designated Shared Compound or Shared Product-by-Shared Product
basis, such costs shall be calculated by multiplying: (i) the aggregate general
corporate overhead incurred by the party's pharmaceutical business for all
pharmaceutical products that shall be calculated
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correspondingly according to the formula set forth in this paragraph; by (ii) a
fraction, (x) the numerator of which is the Net Sales for such Shared Product;
and (y) the denominator of which is the total net sales of all pharmaceutical
products of the party's pharmaceutical business that shall be calculated
correspondingly according to the formula for Net Sales under this Agreement.
GOOD CLINICAL PRACTICES means the then current standards for clinical
trials for pharmaceuticals, as set forth in the FD&C Act and such standards of
good clinical practice as are required by the European Union and other
Regulatory Authorities in countries in which the relevant product is intended to
be sold, to the extent such standards are not in contravention with United
States Good Clinical Practices.
GOOD LABORATORY PRACTICES or GLP means the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FD&C Act and such
standards of good laboratory practice as are required by the European Union and
other Regulatory Authorities in countries in which the relevant product is
intended to be sold, to the extent such standards are not in contravention with
United States Good Laboratory Practices.
GOOD MANUFACTURING PRACTICES means the current standards for the
manufacture of pharmaceuticals, as set forth in the FD&C Act and such standards
of good manufacturing practice as are required by the European Union and other
Regulatory Authorities in countries in which the relevant product is intended to
be sold, to the extent such standards are not in contravention with United
States Good Manufacturing Practices.
IND means an investigational new drug application, as defined in the FD&C
Act, or any equivalent document filed with the FDA and necessary for beginning
clinical trials of any product in humans or any application or other
documentation filed with any Regulatory Authority of a country other than the
United States prior to beginning clinical trials of any product in humans in
that country.
INVENTION(S) means discoveries, inventions, know-how, trade secrets,
techniques, methodologies, modifications, improvements, works of authorship,
designs and data (whether or not protectable under patent, copyright, trade
secrecy or similar laws).
MAJOR COUNTRY mean the United States, the United Kingdom, France, Germany
or Japan, as the case may be.
MANUFACTURING means any and all activities involved in the production of a
Designated Screening Compound, a Designated Shared Compound or an Independent
Compound (and Derivative Compounds thereof) or a Product or a Shared Product or
a Independent Product to be developed and/or Commercialized under this
Agreement. When used as a verb, MANUFACTURE means to engage in Manufacturing.
MARKETING, ADVERTISING AND EDUCATION EXPENSES means the costs of public
relations, advertising, promotion and marketing of the Shared Product through
any means (including agency fees, advertisements, marketing management,
promotional literature, market research, symposia, exhibits and direct mail) and
the costs of educating physicians and customers about use of the Shared Product.
In the event that such costs cannot be calculated on a Shared Product-by-Shared
Product basis, such costs shall be calculated by multiplying: (i) the aggregate
marketing, advertising and education expenses incurred by the party's
pharmaceutical business for all pharmaceutical products that shall be calculated
correspondingly according to the formula set forth in this paragraph; by (ii) a
fraction, (x) the numerator of which is the Net Sales for such Shared Product;
and (y) the denominator of which is the total net sales of all pharmaceutical
products of the party's pharmaceutical business that shall be calculated
correspondingly according to the formula for Net Sales under this Agreement.
A MEDICINAL CHEMISTRY EFFORT begins, in the case of a Designated Screening
Compound, following the synthesis by Tularik of more than [*] of a Designated
Screening Compound provided by NeoGenesis, and, in the case of a Designated
Shared Compound, following the synthesis by the parties (as determined by the
Steering Committee) of more than a [*] of a Designated Shared Compound provided
by NeoGenesis.
NDA means a new drug application as defined in the FD&C Act and the
non-U.S. equivalent thereof.
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NEOGENESIS INTELLECTUAL PROPERTY means, individually and collectively, (a)
all Inventions that are conceived, discovered, developed, generated, created,
made or reduced to practice or tangible medium of expression solely by employees
or consultants of NeoGenesis at any time prior to the Effective Date, or after
the Effective Date if such Inventions are not based upon or related to the
performance of the Program; (b) any tangible materials provided by NeoGenesis to
Tularik for use in the conduct of the Program, together with, where applicable,
any analogs, derivatives, fragments, progeny, sub-cellular constituents or
expression products thereof; and (c) the NeoMorph Screening Library, ALIS and
QSCD. The term NeoGenesis Intellectual Property, HOWEVER, does not include any
techniques, methodologies, know-how, information and data which is, as of the
Effective Date, or later becomes, generally available to the public, other than
such techniques, methodologies, know-how, information and data included in
NeoGenesis Patent Rights.
NEOGENESIS PATENT RIGHTS means those (a) patents and patent applications
covering NeoGenesis Intellectual Property and Program Intellectual Property
owned by or licensed to NeoGenesis that are Controlled by NeoGenesis at any time
during the term of this Agreement; and (b) all divisionals, continuations,
continuations-in-part, reissues, extensions, supplementary protection
certificates and foreign counterparts thereof. NeoGenesis shall list all
NeoGenesis Patent Rights on ATTACHMENT D, which will be updated by NeoGenesis no
less frequently than quarterly during the term of this Agreement.
NEOMORPH CHEMISTRY means the process, proprietary to NeoGenesis, of forming
libraries and sub-libraries of discrete compounds by coupling a broad set of
diverse cores with diverse sets of building blocks employing proprietary
mass-coding algorithms.
NEOMORPH FOCUSED LIBRARIES means those compounds synthesized by NeoGenesis
based upon Selected Compounds identified by Tularik.
NEOMORPH SCREENING LIBRARY means the entire collection of libraries
consisting of mass-encoded small molecule organic compounds owned by NeoGenesis
and developed with NeoMorph Chemistry, comprising approximately ten million
(10,000,000) different compounds.
NET SALES means, with respect to any Product, Shared Product or Independent
Product, the aggregate gross amount received by Tularik, its Affiliates or any
of its sublicensees (in the case of a Product), by the parties, their Affiliates
or any of their sublicensees (in the case of a Shared Product) or by the
Independent Party, its Affiliates or any of its sublicensees (in the case of an
Independent Product) from unrelated third party distributors or agents (in each
case, who are not sublicensees), or end users in the Territory for the sale or
transfer for value of the applicable Product or Shared Product or Independent
Product LESS deductions for (a) trade, quantity and cash discounts and rebates
allowed to and taken by customers, (b) refunds, chargebacks and any other
allowances actually paid to or taken by customers, (c) amounts separately and
actually credited to customers for Product or Shared Product or Independent
Product returns, credits or allowances, (d) rebates actually paid or credited to
any governmental agency (or branch thereof) or to any third party payor,
administrator or contractee, (e) discounts mandated by, or granted to meet the
requirements of, applicable state, provincial or federal law, paid or credited
to a wholesaler, purchaser, third party or other contractee including required
chargebacks and retroactive price reductions, (f) special outbound packing,
transportation, freight, handling, postage charges and other charges such as
insurance relating thereto that are separately billed to the customer or prepaid
and (g) sales, excise, value added, turnover, use and other like taxes or
customs duties paid and any other governmental charges, excluding net income
tax, imposed upon the sale of the applicable Product or Shared Product or
Independent Product. The amounts of any deductions taken pursuant to clauses
(a)-(g) shall be determined from books and records maintained in accordance with
GAAP. Net Sales shall not include revenue received by a party (or any of its
Affiliates) from transactions with an Affiliate, where the Product or Shared
Product or Independent Product in question will be resold to an independent
third-party distributor or agent (in each case, who is not a sublicensee) or end
user by the Affiliate where such revenue received by the Affiliate from such
resale is included in Net Sales. Revenue received by a party (or any of its
Affiliates) from transactions with an Affiliate, where the Product or Shared
Product or Independent Product in question is used by the
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Affiliate solely for such Affiliate's internal purposes shall also be included
in Net Sales at a price equal to the fair market value of such transfer(s).
In the event the applicable Product or Shared Product or Independent Product is
sold as part of a combination product, or as part of a bundled product or as
part of a delivery system, the Net Sales from the combination product, bundled
product or delivery system, for the purposes of determining royalty payments,
shall be determined by multiplying the Net Sales (as defined above) of the
combination product by the fraction, A/(A+B) where A is the average sale price
of the Product or Shared Product or Independent Product when sold separately in
finished form and B is the average sale price of the other product(s) or system
sold separately in finished form or where A+B is the average sale price of the
product(s) and the delivery system together, as the case may be. In the event
that such average sale price cannot be determined for both the product and such
other product(s) or system 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 the party's Cost of
Goods of the Product or Shared Product or Independent Product and D is the
party's cost of goods for the other product(s) or system, determined in
accordance with the method of accounting normally employed by such party in
computing cost of goods.
OTHER ALLOWABLE EXPENSES means any costs incurred by the parties (i) in
obtaining and enforcing intellectual property rights relating to Shared
Products, included in the NeoGenesis Patent Rights, Tularik Patent Rights,
NeoGenesis Intellectual Property, Tularik Intellectual Property, Program Patent
Rights and Program Intellectual Property, (ii) in defending against any third
party claim of infringement of such third party's intellectual property rights
or of property damage or injury or death to persons arising out of or relating
to the Manufacturing, use, sale, offer for sale or import of Shared Products and
(iii) as set forth in Section 4A.24.
OVERHEAD shall mean facilities costs (including rent, depreciation,
utilities, insurance, taxes, repairs and maintenance), freight and
communications expenses, supervisory costs and costs of administrative support,
but shall not include General Corporate Overhead. In the event that such costs
cannot be calculated on a Designated Shared Compound-by-Designated Shared
Compound or Shared Product-by-Shared Product basis, such costs shall be
calculated by multiplying: (i) the aggregate overhead incurred by the party's
pharmaceutical business for all pharmaceutical products that shall be calculated
correspondingly according to the formula set forth in this paragraph; by (ii) a
fraction, (x) the numerator of which is the Net Sales for such Shared Product;
and (y) the denominator of which is the total net sales of all pharmaceutical
products of the party's pharmaceutical business that shall be calculated
correspondingly according to the formula for Net Sales under this Agreement.
PERSON means any individual, corporation, association, partnership (general
or limited), joint venture, trust, estate, limited liability company, limited
liability partnership, unincorporated organization, government (or any agency or
political subdivision thereof) or other legal entity or organization, other than
NeoGenesis or Tularik.
PHASE I CLINICAL TRIALS means any human clinical trials, the principal
purpose of which is a preliminary determination of safety of a Product, Shared
Product or Independent Product, as the case may be, for its intended use in
healthy individuals or patients to support its continued testing in similar
clinical trials prescribed by the relevant Regulatory Authorities.
PHASE II CLINICAL TRIALS means any human clinical trials for which a
Primary Endpoint is a preliminary determination of safety, biological activity,
efficacy or dose ranges of a Product, Shared Product or Independent Product, as
the case may be, in patients with the disease target being studied as required
by the relevant Regulatory Authorities.
PHASE III CLINICAL TRIALS means any safety and/or efficacy clinical studies
of any Product, Shared Product or Independent Product, as the case may be, in
human patients with the disease target being studied to determine safety and
efficacy of such Product, Shared Product or Independent Product, as the case may
be, in patients as required by the relevant Regulatory Authorities.
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POST-REGULATORY APPROVAL CLINICAL STUDIES EXPENSES means the cost of
conducting clinical trials conducted after Regulatory Approval of Shared
Products in a country, costs of monitoring adverse drug reactions, cost of
handling quality control complaints, costs associated with maintaining the
regulatory approval of Shared Products and reasonably allocable regulatory
affairs group overhead costs.
PRE-CLINICAL DEVELOPMENT means all aspects of all activities (including,
but not limited to: medicinal chemistry, cytotoxicity and target specificity,
chemical development/scale-up; formulation; stability; non-GLP, GLP, acute and
chronic toxicity studies; pharmacokinetics; absorption, distribution, metabolism
and excretion (ADME) studies; and safety pharmacology) that will be undertaken
with respect to a Designated Shared Compound or Independent Compound or
Derivative Compound thereof, as the case may be, that are necessary or desirable
to enable the filing of an IND for a Shared Product or Independent Product based
upon or incorporating such Designated Shared Compound or Independent Compound or
Derivative Compound thereof, including the preparation and filing of an IND.
PRE-LAUNCH EXPENSES means direct costs, specifically allocable to the
Shared Products, incurred prior to commencement of sales of the Shared
Product including advertising, education, sales force training, Phase IIIb
clinical trials, trademark selection, filing and enforcement costs and
includes the Marketing, Advertising and Education Expenses.
PRIMARY ENDPOINT means, with respect to a Phase II Clinical Trial, the
point at which positive statistical significance has been achieved with respect
to the primary endpoint specified in the protocol for such trial.
PRODUCT(S) means any product: (a) made up of, comprising or containing a
Designated Screening Compound or a Derivative Compound thereof; and (b) the
development, manufacture, use or sale of which, absent the license granted to
Tularik under Section 3.1 OR the rights assigned to Tularik under Section 3.2(d)
of this Agreement, would infringe the NeoGenesis Intellectual Property or
NeoGenesis Patent Rights or which make use of any Program Patent Rights with
respect to which NeoGenesis, its employees or agents is an inventor (as
determined under U.S. patent laws.).
PROGRAM means the Screening Program and the activities undertaken in
connection with Section 4A with respect to Designated Shared Compounds,
Derivative Compounds thereof, Shared Products, Independent Compounds, Derivative
Compounds thereof and Independent Products.
PROGRAM INTELLECTUAL PROPERTY means, individually and collectively, all
Inventions that are conceived, created, discovered, developed, generated, made
or reduced to practice or tangible medium of expression: (a) solely by one or
more employees or consultants of NeoGenesis at any time if such Inventions are
based upon or related to the performance of the Program; (b) jointly by one or
more employees or consultants of NeoGenesis and one or more employees or
consultants of Tularik at any time if such Inventions are based upon or related
to the performance of the Program; or (c) solely by one or more employees or
consultants of Tularik at any time if such Inventions are based upon or related
to the performance of the Program. Program Intellectual Property will be listed
in ATTACHMENT B, which shall be amended from time-to-time to include new Program
Intellectual Property, in accordance with Section 3.3.
PROGRAM PATENT RIGHTS means (a) those patents and patent applications
covering Program Intellectual Property and (b) all divisionals, continuations,
continuations-in-part, reissues, extensions, supplementary protection
certificates and foreign counterparts thereof.
QSCD means Quantized Surface Complimentary Diversity, a model proprietary
to NeoGenesis, pursuant to which discrete chemical compliments to the surfaces
of a Target are defined.
R&D PROGRAM means on a Designated Screening Compound-by-Designated
Screening Compound and country-by-country basis the activities Tularik deems
necessary or desirable to be undertaken in connection with the research and
development of such Designated Screening Compound with the goal of obtaining
Regulatory Approval for a Product in such country (regardless of the country in
which such activities are conducted).
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RECALL EXPENSES means expenses associated with any Shared Product recall or
any FDA (or its foreign equivalent) mandated communication relating to a
potential recall of any Shared Product.
REGULATORY APPROVALS means, for any country in the Territory, those
authorizations by the appropriate Regulatory Authority(ies) required for the
Manufacture, importation, marketing, promotion, pricing and sale of the
Product(s) or Shared Product(s) in such country.
REGULATORY AUTHORITY means any national, supra-national, regional, state or
local regulatory agency, department, bureau, commission, council or other
governmental entity in the Territory, including, without limitation, the FDA.
SCREENING PROGRAM means the screening program described in paragraphs 1-10
of ATTACHMENT A as the same may be amended by mutual written agreement of the
parties acting through the Steering Committee; but subject to the limitation
specified in Section 2.7(b)(i).
SCREENING TARGETS means Targets selected by Tularik for which the screening
fee described in Section 4.2, the success payment described in Section 4.3, the
milestone payments described in Section 4.4 and the royalties described in
Section 4.5 are due from Tularik to NeoGenesis as specified in Section 4.
SELLING AND PROMOTION EXPENSES means direct costs, specifically allocable
to a Shared Product, incurred for the sale (including costs of sales forces,
sales force incentives specific to a Shared Product, customer targeting, call
reporting and other monitoring/tracking costs, training of sales force and other
regional sales management) and the promotion (including costs of promotional
literature, symposia, industry trade shows, exhibits and direct mail) of a
Shared Product and which are not also characterized as Marketing, Advertising
and Education Expenses. In the event that such costs cannot be calculated on a
Shared Product-by-Shared Product basis, such costs shall be calculated by
multiplying: (i) the aggregate selling and promotion expenses incurred by the
party's pharmaceutical business for all pharmaceutical products that shall be
calculated correspondingly according to the formula set forth in this paragraph;
by (ii) a fraction, (x) the numerator of which is the Net Sales for such Shared
Product; and (y) the denominator of which is the total net sales of all
pharmaceutical products of the party's pharmaceutical business that shall be
calculated correspondingly according to the formula for Net Sales under this
Agreement.
SHARED PRODUCT(S) means any product made up of, comprising or containing a
Designated Shared Compound or a Derivative Compound thereof. SHARED PRODUCTS
shall not include Products.
SHARED PRODUCT LOSSES means in any calendar year the excess, if any, by
which Expenses exceed Net Sales.
SHARED PRODUCT PROFITS means in any calendar year the excess, if any, by
which Net Sales exceed Expenses.
SHARED TARGETS means Targets proposed by Tularik and approved by NeoGenesis
for which no screening fee, success payments, milestones or royalties are due.
Instead, NeoGenesis and Tularik shall contribute equally to the further
research, Pre-Clinical Development and Development of compounds active against
Shared Targets, and all costs related to such activities in respect of such
Shared Targets, and NeoGenesis and Tularik shall share equally in the proceeds
of any resulting product(s), as described in Section 4A.
SUBLICENSE REVENUES means revenues or other consideration received from
such sublicensee as consideration for the grant of such sublicense, less the
expenses directly attributable to supplying goods and services to such
sublicensees to enable their practice of such sublicenses (excluding all amounts
received for the purchase of an equity interest in, or as a loan to, a party, in
each case at the fair market value thereof.)
SUBSTANTIAL COMPETITION means market penetration in a country with respect
to a Product by one or more third parties with a product with the same active
ingredient, which market penetration, with respect to such Product, cumulatively
amounts to more than [*] market share of all products containing the same active
ingredient determined on a per unit basis in such country during a calendar
year.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
7
SUCCESS CRITERIA means that Tularik identifies at least one Designated
Screening Compound as set forth in Section 2.8 or elects to participate in the
Pre-Clinical Development of at least one Designated Shared Compound as set forth
in Section 4A.2, on each of at least two (2) Targets included in the Proof of
Concept Stage, and each such Designated Compound must show activity such that
Tularik initiates (in the case of a Designated Screening Compound) or the
parties (in the case of a Designated Shared Compound) initiate a Medicinal
Chemistry Effort with respect to such Designated Compound.
TARGET means a specific protein target(s) selected or proposed by Tularik,
as applicable, for which NeoGenesis will perform the Screening Program. A Target
may be either a Screening Target or a Shared Target. An Excluded Target is not a
Target for purposes of this Agreement until such time, if any, as it becomes a
Screening Target or a Shared Target.
TERRITORY means all the countries of the world.
THIRD PARTY ROYALTIES means any consideration approved by the Steering
Committee and paid to third parties pursuant to Section 4A.13.
TULARIK INTELLECTUAL PROPERTY means, individually and collectively, (a) all
Inventions that are conceived, discovered, developed, generated, created, made
or reduced to practice or tangible medium of expression solely by employees or
consultants of Tularik at any time prior to the Effective Date, or after the
Effective Date, if such Inventions are not based upon or related to the
performance of the Program; (b) any tangible materials provided by Tularik to
NeoGenesis for use in the conduct of the Program, together with, where
applicable, any analogs, derivatives, fragments, progeny, sub-cellular
constituents or expression products thereof; (c) the Targets or the uses
thereof; and (d) the functional and/or secondary assays provided by Tularik
under the Program. The term Tularik Intellectual Property, HOWEVER, does not
include any techniques, methodologies, know-how, information and data which is,
as of the Effective Date or later becomes, generally available to the public,
other than such techniques, methodologies, know-how, information and data
included in Tularik Patent Rights.
TULARIK PATENT RIGHTS means (a) those patents and patent applications
covering Tularik Intellectual Property and Program Intellectual Property owned
by or licensed to Tularik that are Controlled by Tularik at any time during the
term of this Agreement which relate to or otherwise would be infringed by the
performance of the Screening Program or the Development, Manufacture, use,
importation or sale of any Designated Shared Compound or Shared Product and, to
the extent permitted under Section 0X.00, Xxxxxxxxxxx Compounds and Independent
Products and (b) all divisionals, continuations, continuations-in-part,
reissues, extensions, supplementary protection certificates and foreign
counterparts thereof.
VALID CLAIM means (i) a claim of an unexpired and issued patent which has
not been found to be invalid or unenforceable by a court or other authority of
competent jurisdiction in the subject country in a decision which is
unappealable or not appealed; or (ii) a claim of a pending application, which
application, taking into consideration the earliest priority date, has not been
pending for more than five (5) years.
1.2 OTHER DEFINED TERMS. The following terms shall have the meanings set forth
in the section appearing opposite such term:
AGREEMENT Recitals
BANKRUPTCY CODE Section 3.1
COMPLETION OF SCREENING Section 4.2
CONVERTIBLE NOTE Section 4.1
DESIGNATED SCREENING COMPOUND(S) Section 2.8
DESIGNATED SHARED COMPOUND(S) Section 4A.2
DEVELOPMENT BUDGET Section 4A.7
DEVELOPMENT PLAN Section 4A.7
DISCONTINUED COMPOUND(S) Section 4A.3
DISCRETE COMPOUND(S) ATTACHMENT A
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
8
DISPUTE NOTICE Section 9.1
EFFECTIVE DATE Recitals
EXCLUDED TARGET Section 2.2
EXPANDED COLLABORATION Section 2.1
FINAL TARGET REPORT ATTACHMENT A
GENERIC RIGHTS Section 3.2
INDEMNIFIED PARTY(IES) Section 7.2
INDEMNIFYING PARTY Section 7.2
INDEPENDENT COMPOUND(S) Section 0X.00
XXXXXXXXXXX PARTY Section 0X.00
XXXXXXXXXXX PRODUCT Section 4A.15
IPO Section 4.1
LICENSED TECHNOLOGY Section 3.1
LOSSES Section 7.2
MARKETING BUDGET Section 4A.23
MARKETING PLAN Section 4A.23
NEOGENESIS Recitals
NON-PROPOSED COMPOUND(S) Section 4A.4
NON-PROPOSED COMPOUND INTERESTED PARTY Section 4A.4
OVERAGE THRESHOLD Section 4A.8
PRELIMINARY COMPOUND(S) ATTACHMENT A
PRIMARY ACTIVE COMPOUND(S) ATTACHMENT A
PROOF OF CONCEPT STAGE Section 2.1
RE-ENGAGEMENT AMOUNT Section 4A.16
RE-ENGAGEMENT EXPIRATION DATE Section 4A.16
RE-ENGAGEMENT NOTICE Section 4A.16
SELECTED COMPOUND(S) ATTACHMENT A
SELECTED SCREENING COMPOUND(S) ATTACHMENT A
SELECTED SHARED COMPOUND(S) ATTACHMENT A
SHARE OF LOSS Section 4A.17
SHARE OF PROFIT Section 4A.17
STEERING COMMITTEE Section 2.7
TERMINATED COUNTRIES Section 4A.23
TULARIK Recitals
2. SCREENING PROGRAM; R&D PROGRAM; COMMERCIALIZATION
2.1 PROOF OF CONCEPT STAGE; EXPANDED COLLABORATION STAGE. (a) The parties shall
conduct an initial program encompassing [*] Targets (the PROOF OF CONCEPT STAGE)
as described in Section 2.1(b). If the Proof of Concept Stage meets the Success
Criteria or if elected by Tularik upon Tularik's notice to NeoGenesis that
Tularik desires to initiate an expanded collaboration regardless of achievement
of the Success Criteria during the Proof of Concept Stage or as set forth in the
last sentence of Section 4.1(c), the parties shall expand such collaboration for
an additional three (3) years as described in Section 2.1(c) (the EXPANDED
COLLABORATION). The parties shall enter into the Expanded Collaboration or not
enter into the Expanded Collaboration, as the case may be, not later than [*]
after the date the Success Criteria are satisfied or, if the Success Criteria
are not satisfied, not later than [*] after the completion by NeoGenesis of the
Proof of Concept Stage.
(b) During the Proof of Concept Stage, Tularik shall provide NeoGenesis
with [*] Targets for screening: [*] Screening Targets and [*] Shared Targets.
Screening and, if elected by Tularik or the Steering Committee, as applicable,
optimization for each Target that is the subject of the Proof of Concept Stage
shall be completed within [*] following delivery of each Target to NeoGenesis,
such delivery to occur within [*] of the Effective Date. The [*] Targets and
their designation as Screening Targets or Shared Targets are identified in
ATTACHMENT C.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
9
(c) During the Expanded Collaboration (if any), Tularik shall select [*]
Targets as Screening Targets for the Expanded Collaboration. In addition, for
every [*] Screening Targets selected for the Expanded Collaboration, Tularik
shall propose [*] Shared Target to become the subject of the Expanded
Collaboration (up to a maximum of [*] Shared Targets during the Expanded
Collaboration). Timing for the screening of Screening Targets and Shared Targets
in the Expanded Collaboration shall be mutually agreed upon, but each such
screening shall be completed within [*] of delivery of the relevant Target to
NeoGenesis by Tularik.
(d) Notwithstanding any provision of this Agreement to the contrary,
Tularik shall not be permitted to screen more than [*] Screening Targets in the
aggregate that [*].
(e) The Proof of Concept Stage will have a duration of [*]. If applicable,
the Expanded Collaboration will have a duration of an additional thirty six
(36)-month period. The duration of the Screening Program will equal the duration
of the Proof of Concept Stage, and, if applicable, the Expanded Collaboration.
2.2 DISCLOSURE OF TARGETS. During the Program, Tularik shall from time to time
disclose Screening Targets selected by Tularik and/or Shared Targets proposed by
Tularik to NeoGenesis in writing. Within [*] of each disclosure of a selected or
proposed Target by Tularik, NeoGenesis shall notify Tularik as to whether such
Target is an Excluded Target. If NeoGenesis does not serve such notice within
the specified period, such Target shall not be an Excluded Target. NeoGenesis
may deem a Target as an Excluded Target if on the date NeoGenesis receives such
selected or proposed Target disclosure from Tularik: (a) NeoGenesis is
contractually prohibited from performing the screening contemplated in this
Agreement on such Target, (b) NeoGenesis has received a request from a third
party to provide screening on such Target and NeoGenesis reasonably expects to
commence such screening within [*] for such third party, or (c) NeoGenesis has
previously conducted screening on such Target for another party (each, an
EXCLUDED TARGET). Excluded Targets shall [*] Screening Targets to be supplied by
Tularik during the Expanded Collaboration. Such Excluded Targets shall not,
however, at Tularik's option, [*] Screening Targets to be supplied during the
Expanded Collaboration. NeoGenesis will promptly notify Tularik if an Excluded
Target that was excluded pursuant to Section 2.2(b) does not become the subject
of screening at NeoGenesis within said [*] period Tularik may have such Excluded
Target deemed a Target with notice to NeoGenesis.
2.3 DELIVERY OF TARGET PROTEINS. Tularik shall deliver the Targets for the Proof
of Concept Stage as set forth in Section 2.1. In the Expanded Collaboration,
Tularik shall deliver to NeoGenesis for screening (a) Screening Targets selected
by Tularik within [*] of selection or (b) Shared Targets proposed by Tularik
that have been accepted by NeoGenesis within [*] following written acceptance by
NeoGenesis of such Shared Targets. Tularik shall provide Targets in the
quantities and formats specified in ATTACHMENT A. Tularik shall also provide
NeoGenesis at the time of delivery with a written description of the
concentration and volume of the Target. Tularik shall deliver the Targets FOB to
NeoGenesis' Cambridge, Massachusetts facility.
2.4 EXCLUSIVITY. Notwithstanding any other provision in this Agreement, any
Targets screened by NeoGenesis on behalf of Tularik during the Proof of Concept
Stage or the Expanded Collaboration, as either Screening Targets or Shared
Targets, shall not be screened for a third party or internally at NeoGenesis
(nor shall NeoGenesis research, develop, make, use or sell any products active
against such Targets) during the Screening Program and for a period of [*]
following completion of all work by NeoGenesis under the Screening Program with
respect to such Target. Notwithstanding the foregoing, NeoGenesis shall not
screen any Target proprietary to Tularik: (a) for a third party, except upon the
request of such third party and not as a result of any solicitation by
NeoGenesis with respect to any Target, for a period of [*] following completion
of all work by NeoGenesis under the Screening Program with respect to such
Target; or (b) internally at NeoGenesis for a period of [*] following completion
of all work by NeoGenesis under the Screening Program with respect to such
Target. It is understood and acknowledged by NeoGenesis that the restrictions
imposed by this Section 2.4 will operate independently of and in addition to any
patent rights that Tularik may hold in respect of any Target and that,
notwithstanding the preceding sentence, NeoGenesis shall not screen any Target
covered by patent rights owned or controlled by Tularik.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10
2.5 GRANT OF RESEARCH LICENSES. (a) Tularik hereby grants NeoGenesis a
nonexclusive, nontransferable, royalty-free license to use Tularik
Intellectual Property and Program Intellectual Property owned by Tularik
(including Tularik Patent Rights) solely for purposes of conducting the
Screening Program and performing NeoGenesis' obligations under the Screening
Program. NeoGenesis will not use Tularik Intellectual Property and Program
Intellectual Property owned by Tularik for any other purpose, without
Tularik's prior written permission and except as otherwise permitted by the
licenses granted in Sections 3.1 and 3.2(f). NeoGenesis shall not (i) grant,
or attempt to grant, a sublicense under this Section 2.5 to use Tularik
Intellectual Property or Program Intellectual Property owned by Tularik to
any Person without the express written consent of Tularik or (ii) modify the
Targets supplied by Tularik, including, without limitation, the making of any
derivatives, analogs, fragments or components thereof. In the event that
NeoGenesis does not consume all of the Targets supplied by Tularik in
performance of the Screening Program, NeoGenesis will upon completion of the
Screening Program with respect to each particular Target, return to Tularik
any quantities of such Target and any derivatives, analogs, fragments or
components thereof.
(b) NeoGenesis hereby grants Tularik a nonexclusive, nontransferable,
royalty-free license to use NeoGenesis Intellectual Property and Program
Intellectual Property owned by NeoGenesis (including NeoGenesis Patent
Rights) solely for purposes of conducting the Screening Program, performing
Tularik's obligations under the Screening Program and identifying Designated
Compounds under Section 2.8. Tularik will not use NeoGenesis Intellectual
Property and Program Intellectual Property owned by NeoGenesis for any other
purpose, without NeoGenesis' prior written permission and except as otherwise
permitted by the licenses and assignments granted in Sections 3.1, 3.2(d),
3.2(e) and 3.2(i). Tularik shall not grant, or attempt to grant, a sublicense
under this Section 2.5 to use NeoGenesis Intellectual Property or Program
Intellectual Property owned by NeoGenesis to any Person without the express
written consent of NeoGenesis. In addition, Tularik shall not analyze the
structure of any Preliminary Compounds, Discrete Compounds or Primary Active
Compounds or otherwise seek to derive, independent of NeoGenesis, the
structure of such Preliminary Compounds, Discrete Compounds or Primary Active
Compounds until such time as Tularik designates Primary Active Compounds as
Selected Compounds in accordance with the procedure specified in ATTACHMENT A.
2.6 SCIENTIFIC REPORTS. (a) NeoGenesis will keep and maintain adequate records
containing laboratory data generated in the course of the Screening Program to
enable it to furnish complete and accurate information to Tularik regarding the
Screening Program activities and results, including all Preliminary Compounds,
Primary Active Compounds and NeoMorph Focused Libraries identified in the
Screening Program and all Program Intellectual Property described in clauses (a)
or (b) of the Program Intellectual Property definition. All such written records
of NeoGenesis shall be open to inspection by Tularik during normal business
hours upon reasonable prior notice.
(b) NeoGenesis shall provide Tularik with reasonably-detailed written
reports describing the results of the research performed pursuant to the
Screening Program including all Preliminary Compounds, Primary Active
Compounds and NeoMorph Focused Libraries identified in the Screening Program
and Program Intellectual Property described in clauses (a) or (b) of the
Program Intellectual Property definition. Such reports shall be delivered to
Tularik at least monthly during the Screening Program. Representatives of
NeoGenesis will make themselves reasonably available to discuss such reports
and the progress of the Screening Program. NeoGenesis will deliver a Final
Target Report (as defined in ATTACHMENT A) with respect to the Screening
Program work performed on each Target including a description of all the
Preliminary Compounds, Primary Active Compounds and NeoMorph Focused
Libraries identified during the Screening Program with respect to such Target.
2.7 STEERING COMMITTEE. (a) A Steering Committee (STEERING COMMITTEE) shall
be responsible for oversight of the Program. The Steering Committee shall
consist of four (4) members, two (2) members to be appointed by each of
NeoGenesis and Tularik, except as otherwise provided in Section 4A.7. Each
party may, with notice to the other, substitute any of its members serving on
the Steering Committee. The initial Tularik members shall be Xxx Xxxx and
Xxxx Xxxxxxx and the initial NeoGenesis members shall be Xxxxxx Xxxxxx and
Xxx Xxxx. Tularik shall have the right to appoint one of its members to be
the chairperson of the Steering Committee.
(b) The Steering Committee shall be responsible for the management and
conduct of the Program and shall in particular: (i) consider, review and
amend ATTACHMENT A from time to time in such manner as may be appropriate;
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11
PROVIDED, that the Steering Committee may not amend ATTACHMENT A in a manner
that would conflict with the time period for designating Designated Screening
Compounds specified in Section 2.8 or the time period for designating Designated
Shared Compounds specified in Section 4A.1 or the obligations specified in the
last sentence of Section 2.5(b), in each case without the prior written
agreement of both Tularik and NeoGenesis; (ii) monitor progress of the Program;
(iii) report regularly to the management of both parties upon the progress of
the Program; (iv) be the conduit for transfer of information between the
parties; and (v) conduct such other activities as set forth in Section 4A.
(c) The Steering Committee shall hold meetings as mutually agreed by the
parties (but in no event less than eight (8) times during the term of the
Screening Program if the parties enter into the Expanded Collaboration, unless
mutually agreed by the parties) to review the Program. The first meeting of the
Steering Committee shall be held within forty five (45) days of the Effective
Date and shall be held in Cambridge, Massachusetts. Thereafter, meetings may be
held by telephone or video conference, PROVIDED THAT the parties shall meet in
person at least two (2) times during the Screening Program. Minutes of all
meetings setting forth decisions of the Steering Committee relative to the
Program shall be prepared by the host party and circulated to both parties
within twenty five (25) days after each meeting, but minutes shall not become
official until approved by both parties (which approval the parties shall use
reasonable efforts to give within thirty (30) days of receipt of such minutes).
(d) The quorum for Steering Committee meetings shall be two (2) members,
provided there is at least one member from each of NeoGenesis and Tularik
present. The Steering Committee will render decisions by unanimous vote.
Disagreements among the Steering Committee regarding the Program will be
resolved via good-faith discussions; PROVIDED, that in the event of a
disagreement that cannot be resolved within thirty (30) days after the date on
which the disagreement arose, the matter shall be referred to Tularik's Chief
Executive Officer and NeoGenesis's Chief Executive Officer or their respective
designees. Thereafter, if any such disagreement is not resolved within forty
five (45) days, then Tularik will have the right to make the final decision,
unless it is otherwise expressly provided in Section 4A that a particular
decision of the Steering Committee shall be unanimous.
2.8 DESIGNATED SCREENING COMPOUNDS. (a) Within [*] following the delivery of
Selected Screening Compounds to Tularik for a particular Screening Target in
accordance with ATTACHMENT A and completion of optimization, if any, performed
by NeoGenesis on Selected Screening Compounds for such Screening Target in
accordance with ATTACHMENT A, Tularik shall notify NeoGenesis whether it will
classify any Selected Screening Compounds or compounds arising out of
NeoGenesis' optimization (if any) for such Screening Target as candidates for
further research (each, a DESIGNATED SCREENING COMPOUND). If Tularik does not
identify any Designated Screening Compound(s) against a particular Screening
Target within such period, the license granted Tularik under Section 3.1 shall
terminate and be of no further force or effect solely with respect to Designated
Screening Compounds and/or Products against the applicable Screening Target, and
no further payment from Tularik shall be due with respect to such Screening
Target. If Tularik does identify any Designated Screening Compounds, such
Designated Screening Compounds will be subject to the license granted Tularik
under Section 3.1 and shall no longer be available to NeoGenesis or any third
party in any NeoGenesis compound library, including its NeoMorph Screening
Library, or in any other manner. Not more than [*] Designated Screening
Compounds per Screening Target may be taken from the Preliminary Compounds
(without optimization through NeoMorph Focused Library(ies)) and not more than a
total of [*] Designated Screening Compounds in the aggregate for all Screening
Targets may be taken from the Preliminary Compounds (without optimization
through NeoMorph Focused Library(ies)). Unless otherwise agreed by the parties,
there shall be [*] Designated Screening Compounds that may be taken from
NeoMorph Focused Library(ies); PROVIDED, all such Designated Screening Compounds
have [*]. In addition, Tularik may take up to [*] Designated Screening Compounds
per Screening Target from NeoMorph Focused Library(ies) which Designated
Screening Compounds [*].
(b) Within [*] following receipt of notification from Tularik identifying
Designated Screening Compounds, NeoGenesis shall amend ATTACHMENT D to identify
any applicable NeoGenesis Patent Rights not previously identified to Tularik.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12
(c) Tularik shall have the right, with notice to NeoGenesis, to "undesignate"
those Designated Screening Compounds Tularik considers unsuitable for further
development. When a Designated Screening Compound is undesignated, Tularik shall
have the right to replace that compound with a new Designated Screening Compound
to the extent that such replacement compound is not otherwise subject to an
obligation to any third party; PROVIDED that Tularik returns such undesignated
compound to NeoGenesis upon the receipt of such replacement compound, any
restrictions with respect to such undesignated compound shall expire and
NeoGenesis shall be permitted to use such undesignated compound for any purpose
not otherwise prohibited by this Agreement or any patent rights owned or
Controlled by Tularik. Tularik may not: (i) undesignate any Designated Screening
Compound for which it has filed any patent applications covering such Designated
Screening Compound; (ii) undesignate more than [*] Designated Screening
Compounds per Screening Target; or (iii) undesignate more than (A) [*]
Designated Screening Compounds in the aggregate for all Screening Targets if the
parties do not enter into the Expanded Collaboration or (B) [*] Designated
Screening Compounds in the aggregate for all Screening Targets if the parties
enter into the Expanded Collaboration.
2.9 LIMITATIONS ON NEOGENESIS. Under no circumstances shall NeoGenesis disclose
any of the results (including without limitation any NeoMorph Focused
Library(ies) created during the Screening Program) or data arising out of the
Screening Program regarding the effectiveness or ineffectiveness of the
compounds in its compound libraries against all or any of the Targets to any
third party, or otherwise use such information for its own benefit or the
benefit of any third party, without Tularik's prior written consent; it being
understood that the use of the NeoMorph Screening Library may result in the
independent generation of results or data similar to the results or data
generated in the course of the Screening Program and that the use of such
independently generated results or data, if otherwise obtained and used in
accordance with Section 2.4 and the other provisions of the Agreement, shall not
constitute a breach of these obligations; PROVIDED FURTHER, that the obligations
of NeoGenesis to not make any Designated Compound available to NeoGenesis or any
third party in NeoGenesis' compound libraries, including its NeoMorph Screening
Library, shall operate independently of the foregoing exception. Subject to its
obligations under the Screening Program, nothing in the Agreement shall be
construed to prohibit Tularik, alone or with third parties, from performing
screening for compounds active against Targets, from performing any research and
development efforts with respect to such compounds or Targets or from making,
using or selling any products resulting from such research and development
efforts, without compensation or further obligation to NeoGenesis; PROVIDED,
that no NeoGenesis Intellectual Property or Program Intellectual Property owned
by NeoGenesis (including any intellectual property that is the subject of the
assignment set forth in Section 3.2(d)) is used in the development of such
products.
2.10 PRODUCT DEVELOPMENT. Tularik, [*], shall be responsible for and shall use
its Commercially Reasonable Efforts to conduct the R&D Program.
2.11 MANUFACTURE OF PRODUCT. Tularik, [*], shall be responsible for and shall
use its Commercially Reasonable Efforts to Manufacture any Products in
accordance with the Regulatory Approvals.
2.12 REGULATORY MATTERS. Tularik, [*], shall be responsible for the preparation
and filing, with the appropriate Regulatory Authorities, of all documents that
are necessary to conduct clinical studies of Products in connection with the R&D
Program. Tularik shall be responsible for and shall use Commercially Reasonable
Efforts to file Regulatory Approval applications and obtain applicable
Regulatory Approvals for at least one Product for each Screening Target in each
of the Major Countries. Simultaneously with the submission of each such
regulatory filing, Tularik shall notify NeoGenesis, in writing, that such
regulatory filing has been made. Tularik shall be responsible for reporting all
adverse events associated with any Product to the appropriate Regulatory
Authorities in accordance with Applicable Laws.
2.13 MARKETING AND SALE. Tularik, [*], shall be responsible for the
Commercialization of Products in the Territory and shall use its Commercially
Reasonable Efforts to Commercialize each Product in each of the Major Countries
in which it has obtained necessary Regulatory Approvals. Tularik shall be
responsible for establishing the price of each such Product sold by or on behalf
of it pursuant to this Agreement.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
13
2.14 THIRD PARTY LICENSES. Tularik, [*], shall be responsible for obtaining any
and all licenses from third parties necessary or desirable to perform the R&D
Program and/or to Commercialize any Product.
2.15 COMPLIANCE WITH LAW. Tularik shall conduct the R&D Program and conduct its
Manufacturing operations, and each party shall conduct its activities under the
Program, in a safe and prudent manner, in compliance with all Applicable Laws
(including, but not limited to, those relating to occupational safety and
health, public safety and health, protecting the environment, the disposal of
wastes, Good Clinical Practices, Good Laboratory Practices and Good
Manufacturing Practices), and in compliance with all applicable provisions of
this Agreement. Each party shall obtain all necessary registrations and permits
pertaining to its activities contemplated by this Agreement.
2.16 PERIODIC REVIEW. Tularik and NeoGenesis shall periodically meet, at such
times and places as are mutually agreed upon, and in person or by telephone or
videoconference as mutually agreed upon, for Tularik to provide NeoGenesis with
an update on the status of the progress of Tularik's R&D Program and
Commercialization of each Product, PROVIDED, HOWEVER, that such meetings shall
occur no more than twice per calendar year unless the parties agree, in writing,
to meet more or less often. Tularik and NeoGenesis shall each be responsible for
its own expenses incurred in connection with attending such meetings.
3. LICENSE; PROPRIETARY RIGHTS
3.1 GRANT OF LICENSE. (a) Subject to the terms and conditions of this Agreement,
NeoGenesis hereby grants to Tularik, and Tularik hereby accepts, a worldwide
right and license, without the right to sublicense (except as set forth in the
third sentence of this Section 3.1(a) with respect to Designated Screening
Compounds, Derivative Compounds thereof and Products), within the Territory, to
use (i) the NeoGenesis Intellectual Property and NeoGenesis Patent Rights and
(ii) the Program Intellectual Property owned by NeoGenesis, in each case with
application to the Field (collectively, the LICENSED TECHNOLOGY) to the extent
necessary or useful to research, develop, have developed, make, have made, use,
distribute, promote, market, offer for sale, sell, have sold, import and export
Designated Compounds, Derivative Compounds thereof, Products and Shared Products
and, to the extent permitted under Section 0X.00, Xxxxxxxxxxx Compounds,
Derivative Compounds thereof and Independent Products. The foregoing license
shall be exclusive with respect to Designated Screening Compounds, Derivative
Compounds thereof and Products and co-exclusive (with NeoGenesis) with respect
to Designated Shared Compounds, Derivative Compounds thereof, Shared Products,
Independent Compounds and Independent Products. Tularik may grant sublicenses of
its rights under this Section 3.1(a) with respect to Designated Screening
Compounds, Derivative Compounds thereof and Products; PROVIDED that Tularik: (1)
obtains each sublicensee's written agreement to be subject to the same
obligations as is Tularik under Sections 2.15, 2.16, 3.1(d), 4.7, 4.8, 5.2 and
8.3(c) (last sentence) of this Agreement (or substantially identical provisions)
and (2) shall remain responsible for the performance of all of its obligations
under this Agreement, whether such obligations are performed by Tularik, its
Affiliates or any of its sublicensees.
(b) Subject to the terms and conditions of this Agreement, Tularik hereby
grants to NeoGenesis, and NeoGenesis hereby accepts, a co-exclusive (with
Tularik), worldwide right and license, without the right to sublicense, within
the Territory, to use (i) the Tularik Intellectual Property and Tularik Patent
Rights and (ii) the Program Intellectual Property owned by Tularik, in each case
with application to the Field to the extent necessary or useful to research,
develop, have developed, make, have made, use, distribute, promote, market,
offer for sale, sell, have sold, import and export Designated Shared Compounds,
Derivative Compounds thereof and Shared Products and, to the extent permitted
under Section 0X.00, Xxxxxxxxxxx Compounds, Derivative Compounds thereof and
Independent Products.
(c) The licenses granted under this Section 3.1 shall be treated as a
license of rights to "intellectual property" (as defined in Section 101(56) of
Title 11 of the United States Code, as amended (the BANKRUPTCY CODE)) for
purposes of Section 365(n) of the Bankruptcy Code. The parties agree that the
party holding the license from the other party may elect to retain and may fully
exercise all of its rights and elections under the Bankruptcy Code, PROVIDED
that it abides by the terms of this Agreement.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
14
(d) Each party, as applicable, shall xxxx or have marked all containers or
packages of Products, Shared Products or Independent Products that are the
subject of the license granted under this Section 3.1 in accordance with the
patent marking laws of the jurisdiction in which such products are manufactured,
used or sold.
(e) Unless sooner terminated in accordance with Section 8.2, the license
under Section 3.1(a) with respect to Designated Screening Compounds, Derivative
Compounds thereof and Products will remain in effect on a compound-by-compound,
Product-by-Product and country-by-country basis until the LATER OF: (i) the
expiration or revocation or complete rejection (in the case of a patent
application) of the last to expire or to be revoked or to be completely rejected
(in the case of a patent application) of the NeoGenesis Patent Rights (including
those NeoGenesis Patent Rights assigned to Tularik pursuant to Section 3.2(d))
covering the Designated Screening Compounds, Derivative Compounds thereof or
corresponding Products, as the case may be, in such country or (ii) in the case
of a particular Product, twelve (12) years following the First Commercial Sale
of such Product.
(f) Subject to the next succeeding sentence and the provisions of Section
8.4, unless sooner terminated in accordance with Section 8.2, the licenses under
Sections 3.1(a) and 3.1(b) with respect to Designated Shared Compounds,
Derivative Compounds thereof, Shared Products, Independent Compounds, Derivative
Compounds thereof and Independent Products will remain in effect on a
compound-by-compound, product-by-product and country-by-country basis until the
earlier to occur of the first date on which: (i) Net Sales on Shared Products
and Independent Products, as the case may be, shall be reduced from a positive
number to zero; and (ii) neither party is then pursuing research, Pre-Clinical
Development or Development of the applicable Designated Shared Compound,
Derivative Compound thereof, Shared Product, Independent Compound, Derivative
Compound thereof or Independent Product, in each case using Commercially
Reasonable Efforts. If either party elects to terminate participation in the
Pre-Clinical Development or Development of any Designated Shared Compounds,
Derivative Compound thereof or Shared Product in accordance with Section 4A.14,
any license granted to the non-participating party with respect to the
applicable Designated Shared Compound, Derivative Compound thereof or Shared
Product shall terminate until such time (if any) as a party resumes
participation in the Pre-Clinical Development or Development of such Designated
Shared Compound, Derivative Compound thereof or Shared Product, in which case
such license shall revive and be of full force and effect with respect to such
Designated Shared Compound, Derivative Compound thereof or Shared Product until
terminated in accordance with the first sentence of this Section 3.1(f).
3.2 PROPRIETARY RIGHTS. (a) This Agreement does not convey to NeoGenesis any
rights in any Tularik Intellectual Property, Tularik Patent Rights or any other
intellectual property, patents or patent applications of Tularik by implication,
estoppel or otherwise except for the rights expressly granted in Sections 2.5,
3.1 and 3.2(f). Title to the Tularik Intellectual Property, Tularik Patent
Rights and any other intellectual property, patents or patent applications of
Tularik shall at all times remain vested in Tularik. This Agreement does not
convey to Tularik any rights in any NeoGenesis Intellectual Property, NeoGenesis
Patent Rights or any other intellectual property, patents or patent applications
of NeoGenesis by implication, estoppel or otherwise except for the rights
expressly granted in Sections 2.5, 3.1, 3.2(d), 3.2(e) and 3.2(i). Subject to
Section 3.2(i) and 3.2(d), title to the NeoGenesis Intellectual Property,
NeoGenesis Patent Rights and any other intellectual property, patents or patent
applications of NeoGenesis shall at all times remain vested in NeoGenesis. Title
to and any interest in Program Intellectual Property described in clause (a) of
the Program Intellectual Property definition (including corresponding Program
Patent Rights) shall be the property of NeoGenesis. Except as described in the
eighth sentence of this Section 3.2(a), title to and any interest in Program
Intellectual Property described in clause (b) of the Program Intellectual
Property definition (including corresponding Program Patent Rights) shall be
jointly held by Tularik and NeoGenesis. Title to and any interest in Program
Intellectual Property described in clause (c) of the Program Intellectual
Property definition (including corresponding Program Patent Rights) shall be the
property of Tularik. Notwithstanding any of the foregoing, Program Intellectual
Property, regardless of inventorship, shall be: (i) the property of NeoGenesis
if such Program Intellectual Property is directly related to the NeoMorph
Screening Library (except as described in Section 3.2(a)(ii)(B) below), ALIS or
QSCD; and (ii) the property of Tularik (A) if such Program Intellectual Property
is directly related to the Targets or the uses thereof or to Tularik's
functional or secondary assays, or to the Products, or (B) if such Program
Intellectual Property relates to Designated Compounds and Derivative Compounds
(including
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15
any generic composition of matter claims with respect thereto and any Selected
Compounds contained therein). The Program Intellectual Property described in
Section 3.2(a)(ii)(B) shall be referred to as the GENERIC RIGHTS.
(b) If required, patent counsel mutually acceptable to the parties and
selected by the Steering Committee shall determine inventorship of all Program
Intellectual Property in accordance with U.S. patent law (and other U.S.
intellectual property law, if applicable).
(c) NeoGenesis shall retain the following rights with respect to the
following NeoGenesis Intellectual Property and Program Intellectual Property
owned by NeoGenesis:
(i) Subject to Sections 2.2(last sentence), 2.4, 2.8, 2.9, 3.1(a),
3.2(a)(first two sentences), 3.2(c)(ii)(A), 3.2(f), 4A.2(a)(last sentence)
and 5.2, NeoGenesis may continue to use its NeoMorph Screening Library to
screen target proteins for other parties; and
(ii) NeoGenesis shall retain all rights and may continue to use Preliminary
Compounds created as part of the Screening Program but not selected as
Primary Active Compounds and Primary Active Compounds not selected as
Selected Compounds; provided, however, that such Preliminary Compounds and
Primary Active Compounds (A) may not be used against the Targets and (B)
shall only be used in the event and to the extent they result from use of
the NeoMorph Screening Library to screen target proteins for other parties.
(d) In addition to the license granted under Section 3.1 with respect to
Licensed Technology, NeoGenesis hereby assigns and agrees to assign to Tularik
all of NeoGenesis' right, title and interest in those Designated Screening
Compounds designated by Tularik in accordance with Section 2.8. Such assigned
Designated Screening Compounds and the corresponding NeoGenesis Patent Rights
shall, from the date of assignment by NeoGenesis, be treated as Tularik Patent
Rights for purposes of this Agreement (including Section 3.3(c) and Section 3.4)
and such assigned Designated Screening Compounds and the corresponding
NeoGenesis Intellectual Property shall, from the date of assignment by
NeoGenesis, be treated as Tularik Intellectual Property for purposes of this
Agreement (including Section 3.4). The date of assignment with respect to the
Designated Screening Compounds shall be the date Tularik notifies NeoGenesis
that a particular Selected Screening Compound has been designated as a
Designated Screening Compound and pays the fee for such Designated Screening
Compound specified in Section 4.3. Notwithstanding any provision of this
Agreement to the contrary, Tularik shall remain obligated to pay NeoGenesis in
respect of all such assigned Designated Screening Compounds (and any Derivative
Compounds thereof and any corresponding Product(s)) the milestone fees and
royalties due NeoGenesis under Section 4.4 and Section 4.5 of this Agreement
until the earlier of (i) such time as [*], or (ii) the LATER OF the expiration
or revocation or complete rejection (in the case of a patent application) of the
last to expire or to be revoked or to be completely rejected (in the case of a
patent application) of the patent rights within the assigned NeoGenesis Patent
Rights in this Section 3.2(d) covering such assigned Designated Screening
Compounds (and any Derivative Compounds thereof and any corresponding
Product(s)) or [*] following the First Commercial Sale of such Product(s).
(e) If, during the term of the Agreement, NeoGenesis has or obtains any
patent or other proprietary right in any Program Intellectual Property (by
ownership or license) that could be asserted to prevent Tularik from practicing
the Tularik Intellectual Property or Program Intellectual Property owned by
Tularik to research, develop, have developed, make, have made, use, distribute,
promote, market, offer for sale, sell, have sold, import and export compounds,
NeoGenesis will grant Tularik a non-exclusive, worldwide, perpetual license (or
sublicense, as the case may be), with the right to sublicense, to such patent or
other proprietary right to the extent necessary or useful to practice the
license granted under Section 3.1 and Tularik will [*]; provided, however, that
the foregoing shall not be construed to grant Tularik any license to utilize
NeoGenesis' NeoMorph Screening Library, ALIS or QSCD except as otherwise
expressly set forth in this Agreement.
(f) Tularik hereby grants NeoGenesis (i) an irrevocable, exclusive (except
as to Tularik as described below in this Section 3.2(f)), fully-paid, perpetual
license, including the right to grant sublicenses, to any Generic Rights for
which NeoGenesis or its employees and/or agents are the sole inventor, and (ii)
an irrevocable, co-exclusive, fully-paid, perpetual license, including the right
to grant sublicenses, to any Generic Rights for which NeoGenesis or its
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SEPARATELY WITH THE COMMISSION.
16
employees and/or agents are joint inventors, except that in each case Tularik
will retain exclusive rights in such Generic Rights to the extent necessary or
useful to research, develop, have developed, make, have made, use, distribute,
promote, market, offer for sale, sell, have sold, import and export Designated
Compounds, Derivative Compounds thereof, Products, Shared Products, Independent
Compounds, Derivative Compounds thereof and Independent Products.
(g) Neither party shall use Program Intellectual Property owned by the
other party or Confidential Information of the other party outside of the
performance of the Program or except as otherwise expressly permitted in this
Agreement.
(h) Both parties agree that Program Intellectual Property does not
include work done by either party with respect to a particular Screening
Target after the Screening Program activities are completed with respect to
such Screening Target.
(i) In the event that NeoGenesis has a patent, has filed a patent
application or files a patent application outside the Program that
encompasses a Designated Compound and/or any Derivative Compound and
NeoGenesis is not obligated to exclusively license or assign such patent or
patent application to a third party pursuant to another agreement in
existence at the Effective Date, NeoGenesis shall be deemed to be subject to
an obligation to assign such patent or patent application (or, where
possible, the relevant portion thereof) to Tularik without the payment of any
additional consideration by Tularik but subject to the license granted
NeoGenesis by Tularik under Section 3.2(f) (if applicable). Nothing in this
Section 3.2(i) shall, by implication or otherwise, absolve NeoGenesis of
liability for breach of its representation and warranty set forth in Section
6.2(b).
3.3 DISCLOSURE; PATENT PROSECUTION. (a) Each of NeoGenesis and Tularik shall
promptly disclose to the other in writing any Invention that might, under the
applicable U.S. patent laws, be patentable and constitutes Program
Intellectual Property. Such Program Intellectual Property will be added to
ATTACHMENT B. Within forty five (45) days following the date of such
disclosure regarding the existence of particular Program Intellectual
Property that is [*], the parties shall confer and mutually agree as to
appropriate protection for such Program Intellectual Property, including an
application, preparation, prosecution and maintenance strategy.
Notwithstanding the provisions of this Section 3.3, neither party shall file
any Program Patent Right relating to Program Intellectual Property that is [*]
.
(b) NeoGenesis shall have the sole right, but not the obligation, to file,
prosecute, and maintain, at NeoGenesis' sole expense, each of the NeoGenesis
Patent Rights throughout the Territory. NeoGenesis shall promptly furnish or
have furnished to Tularik copies of all patents, patent applications,
substantive patent office actions, and substantive responses received or filed
in connection with such applications (other than patents and patent applications
covering solely NeoGenesis Intellectual Property that is not licensed to Tularik
under Section 3.1 or assigned to Tularik under Section 3.2(d) or 3.2(i)). In the
case of patent applications and responses, copies will be furnished to Tularik
at least fifteen (15) days before filing or mailing, as the case may be. Tularik
may itself or through its attorney offer comments and suggestions with respect
to the matters that are the subject of this Section 3.3(b) and NeoGenesis agrees
to consider such comments and suggestions; PROVIDED that nothing herein shall
obligate NeoGenesis to adopt or follow such comments or suggestions. Tularik
shall cooperate in the preparation, filing, prosecution and maintenance of any
and all patent applications and patents covering Program Intellectual Property
owned by NeoGenesis. NeoGenesis shall promptly provide notice to Tularik as to
all matters that come to its attention that may affect the preparation, filing,
prosecution or maintenance of any patents or patent applications covering
Program Intellectual Property owned by NeoGenesis. NeoGenesis shall not seek
patent protection for any NeoGenesis Intellectual Property or Program
Intellectual Property owned by NeoGenesis that covers generic claims to any
class of compounds developed in the course of the Program until: (i) with
respect to the Screening Program, the earlier of (A) such time as Tularik has
designated Designated Screening Compounds in respect of such class of compounds
in accordance with Section 2.8 or (B) such time as the period of time for such
designation expires with respect to the Selected Screening Compounds derived
from such class of compounds; and (ii) with respect to activities conducted
under Section 4A, the date in Section 4A.2 for each party's election of
Designated Shared Compounds. In the event that NeoGenesis elects not to file for
patent protection under the NeoGenesis Patent Rights or elects not to prosecute
or maintain a patent or patent application under the NeoGenesis Patent Rights it
shall notify Tularik of such decision
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
17
at least forty five (45) days prior to the due date of any action or payment
due. Tularik shall then have the right, but not the obligation, to assume the
responsibility therefor at its own cost and expense.
(c) Tularik shall have the sole right, but not the obligation, to prepare,
file, prosecute, and maintain, at Tularik's sole expense (except as provided
below), each of the Tularik Patent Rights throughout the Territory. Tularik
shall promptly furnish or have furnished to NeoGenesis copies of all patents,
patent applications, substantive patent office actions and substantive responses
relevant to Generic Rights received or filed in connection with such
applications. In the case of such patent applications and responses, copies will
be furnished to NeoGenesis at least 15 days before filing or mailing, as the
case may be. NeoGenesis may itself or through its attorney offer comments and
suggestions with respect to the matters that are the subject of this Section
3.3(c) relating to Generic Rights and Tularik agrees to consider such comments
and suggestions; PROVIDED that nothing herein shall obligate Tularik to adopt or
follow such comments or suggestions. NeoGenesis shall be responsible for all
costs relating to the preparation, filing, prosecution and maintenance of any
and all patent applications covering Generic Rights for which NeoGenesis, its
employees or agents is the sole inventor and [*] of the costs relating to the
preparation, filing, prosecution and maintenance of any and all patent
applications covering Generic Rights for which NeoGenesis, its employees or
agents are [*]. NeoGenesis shall cooperate in the preparation, filing,
prosecution and maintenance of any and all patent applications and patents
covering Program Intellectual Property owned by Tularik or obtained by Tularik
under Section 3.2(d). Tularik shall promptly provide notice to NeoGenesis as to
all matters that come to its attention that may affect the preparation, filing,
prosecution or maintenance of any patents or patent applications covering
Program Intellectual Property owned by Tularik relating to Generic Rights.
Notwithstanding the provisions of this Section 3.3, Tularik shall not file any
patent application covering the Generic Rights without NeoGenesis' prior written
consent, with respect to the Screening Program, before the date specified in
Section 2.8 for Tularik's notice of selection of Designated Screening Compounds
or, with respect to activities conducted under Section 4A, the date in Section
4A.2 for each party's election of Designated Shared Compounds.
3.4 ENFORCEMENT. (a) NeoGenesis shall be solely responsible for defense and
enforcement of (i) NeoGenesis Intellectual Property and NeoGenesis Patent Rights
and (ii) Program Intellectual Property owned by NeoGenesis, but in each case
excluding Licensed Technology. Tularik shall be solely responsible for the
defense and enforcement of (A) Tularik Intellectual Property and Tularik Patent
Rights and (B) Program Intellectual Property owned by Tularik.
(b) Tularik shall have the first option to pursue any enforcement or
defense of Licensed Technology; PROVIDED, that Tularik pays all costs and
expenses related to the same, keeps NeoGenesis reasonably informed of its
progress and provides NeoGenesis with copies of any substantive documents
related to such proceedings and reasonable notice of all such proceedings.
Tularik's costs and expenses in prosecuting or defending such matters shall be
subject to reimbursement in accordance with Section 3.4(d). Tularik shall notify
NeoGenesis of its decision to exercise its right to enforce or defend Licensed
Technology as soon as possible, but not later than sixty (60) days following its
discovery or receipt of notice of the alleged infringement.
(c) If (i) Tularik notifies NeoGenesis that it will not exercise its option
to enforce or defend any Licensed Technology in accordance with Section 3.4(b);
(ii) Tularik and NeoGenesis have not otherwise agreed not to pursue or defend
against such infringement for business reasons; (iii) Tularik has not persuaded
the alleged infringer to desist or the person alleging the infringement to
forebear, (iv) Tularik is not diligently pursuing an infringement action or
diligently defending the validity or enforceability of Licensed Technology at
issue; or (v) Tularik has not provided NeoGenesis with evidence of bona fide
negotiations of an acceptable sublicense agreement with the alleged infringer or
person alleging infringement, then NeoGenesis shall have the right to pursue the
alleged infringer or take control of any action initiated by, or being defended
by, Tularik at NeoGenesis' own expense. In any such case, Tularik will, wherever
possible under Applicable Law, substitute NeoGenesis as party plaintiff for
purposes of pursuing any alleged infringer, or as defendant for defending any
Licensed Technology.
(d) Any recovery of damages with regard to Licensed Technology in any suit
handled by one party pursuant to Section 3.4(b) or Section 3.4(c) shall be
applied first in satisfaction of any unreimbursed expenses and legal fees of the
party handling the suit or settlement thereof. The balance of any recovery
obtained by settlement or otherwise relating to Designated Screening Compounds,
Derivative Compounds thereof and Products shall be distributed: (i)
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SEPARATELY WITH THE COMMISSION.
18
first to Tularik in an amount equal to its lost profits or a reasonable royalty
on the sales of the infringer (whichever measure of damages the court shall have
applied), and (ii) then to NeoGenesis in an amount equal to the royalties due
NeoGenesis based on such sales (if the court applies a sales of the infringer
measure of damages) or a reasonable approximation of the royalties that Tularik
would have owed to NeoGenesis on sales of Products that Tularik lost to the
infringer (if the court applies a lost profits measure of damages). The balance,
if any, remaining after Tularik has been compensated for lost profits or lost
sales and NeoGenesis has been compensated for lost royalties pursuant to Section
3.4(d)(i)-(ii) shall be paid to Tularik. The balance of any recovery obtained by
settlement or otherwise relating to Designated Shared Compounds, Derivative
Compounds thereof, Shared Products, Independent Compounds, Derivative Compounds
thereof and Independent Products shall be divided equally between the parties.
No settlement, consent judgment or other voluntary final disposition of any suit
regarding Licensed Technology may be entered into without the consent of the
other party, which consent shall not be unreasonably withheld.
(e) Notwithstanding the provisions of Section 3.4(b), in the event that a
declaratory judgment action alleging invalidity or non-infringement of any of
the patents within Licensed Technology that are within NeoGenesis Patent Rights
covering the NeoMorph Screening Library, ALIS or QSCD is filed, NeoGenesis shall
have the first option, within sixty (60) days after notification of same, to
assume defense of the action concerning such patents at its expense, but Tularik
shall be entitled to participate in such action, at its own expense.
(f) In any infringement suit as either party may institute to enforce
Licensed Technology, or in any declaratory judgment action alleging invalidity
or non-infringement of any Licensed Technology brought against NeoGenesis or
Tularik, the other party shall, at the request and expense of the party
initiating or defending the suit or action, cooperate and assist in all
reasonable respects, having its employees testify when requested and making
available relevant records, papers, information, specimens and the like.
(g) Notwithstanding any provisions of Section 3.4 to the contrary, each
party shall promptly give written notice to the other of any certification of
which it becomes aware filed pursuant to the Xxxxxx-Xxxxx Act (21 U.S.C.
Section 355(b)(2)(A), or Section 355(j)(2)(A)(vii)), or any amendment or
successor statute thereto, at least fourteen (14) days prior to expiration of
the forty five (45) day period set forth in 21 U.S.C. Section 355(c)(3)(c)
(or any amendment or successor statute thereto), then Tularik shall have the
right to bring such an infringement action, in its sole discretion and at its
own expense, in its own name and/or in the name of NeoGenesis. Any recoveries
obtained (by settlement or otherwise) by either party as a result of any
proceeding against a third party infringer brought under this Section 3.4(g)
shall be used to reimburse each party for all litigation costs in connection
with such proceeding paid by that party and any remainder: (i) shall be
deemed Net Sales and NeoGenesis shall receive an amount equal to the royalty
due on such Net Sales and Tularik shall receive the balance of such remainder
to the extent such proceeding relates to Designated Screening Compounds,
Derivative Compounds thereof and Products; and (ii) shall be shared equally
by the parties to the extent such proceeding relates to Designated Shared
Compounds, Derivative Compounds thereof, Shared Products, Independent
Compounds, Derivative Compounds thereof or Independent Products. If Tularik
or its sublicensee initiate suit pursuant to this Section 3.4(g), it will
promptly notify NeoGenesis.
4. PRICING; PAYMENT
4.1 TECHNOLOGY ACCESS FEE. (a) Upon initiation of the Expanded Collaboration,
Tularik will be obligated to pay NeoGenesis a technology access fee comprised of
one million dollars ($1,000,000) cash PLUS a loan to NeoGenesis of one million
dollars ($1,000,000) in exchange for a note convertible into NeoGenesis equity
on the terms below (CONVERTIBLE NOTE). Such technology access fee shall be
payable in two (2) installments. The first installment will be comprised of a
one million dollar ($1,000,000) loan in exchange for the Convertible Note
payable upon initiation of the Expanded Collaboration. Initiation of the
Expanded Collaboration will take place within thirty (30) days following the
date the Success Criteria are achieved or the date Tularik opts to move forward
with the Expanded Collaboration, regardless of achievement of the Success
Criteria. The second installment will be comprised of one million dollars
($1,000,000) in cash payable upon the earlier of (i) January 15, 2003 and (ii)
the first anniversary of initiation of the Expanded Collaboration. The second
installment will not be payable unless the first installment has been paid.
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SEPARATELY WITH THE COMMISSION.
19
(b) The convertible debt portion of such technology access fee will be made
pursuant to a Convertible
Note Purchase Agreement between the parties and a
Convertible Note will be issued by NeoGenesis to Tularik. The Convertible
Note
Purchase Agreement and the Convertible Note will be in the form of ATTACHMENT E
and will contain the specific terms described below. The Convertible Note will
bear interest at five and three quarter percent (5.75%) per annum and, unless
converted as set forth below, all principal and accrued interest shall be due
and payable on the fourth anniversary of the issuance of the Convertible Note.
The principal and any accrued interest under the Convertible Note shall either
(i) convert into NeoGenesis preferred stock at the time NeoGenesis completes its
next succeeding round of preferred stock financing; PROVIDED, that such
conversion shall only occur at Tularik's option if such financing is completed
with a corporate collaborator only, PROVIDED FURTHER, that if Tularik elects not
to participate in such round, such conversion shall occur at the next succeeding
preferred stock financing with a third party that is not a corporate
collaborator or in such a financing with a corporate collaborator at Tularik's
option; OR (ii) convert into NeoGenesis common stock at the time NeoGenesis
completes an initial public offering (IPO); at the price offered in such
financing or IPO, as the case may be. NeoGenesis may repay a portion of the
Convertible Note in cash prior to conversion of the Convertible Note as
permitted above in the event and to the extent that Tularik terminates the
Expanded Collaboration (other than for cause) prior to screening an aggregate of
ten (10) Targets. The amount of such cash repayment shall be determined as
follows: [amount of repayment] = ([10] - (actual number of Targets Tularik
provides for screening during Expanded Collaboration)) x ($100,000) PLUS accrued
interest on the Convertible Note.
(c) If NeoGenesis completes an IPO prior to the initiation of the Expanded
Collaboration, at Tularik's option, either (i) Tularik will be given adequate
notice and an opportunity to pay the first installment of the technology access
fee by purchasing one million dollars ($1,000,000) of NeoGenesis common stock in
the IPO at the price offered in the IPO, PROVIDED, this option may only be
exercised if the IPO occurs after the first anniversary of the Effective Date or
(ii) wait until the initiation of the Expanded Collaboration, and, at Tularik's
option, either pay the first installment of the technology access fee by
purchasing one million dollars ($1,000,000) of NeoGenesis common stock at its
then current fair market value or pay one million dollars ($1,000.000) in cash.
If Tularik selects option (i) in the foregoing sentence, Tularik shall be deemed
to have elected to initiate the Expanded Collaboration.
4.2 SCREENING FEE. Tularik shall pay NeoGenesis a fee of [*] for each
Screening Target screened pursuant to the Screening Program. Such fee shall
be payable in two (2) installments - the first installment of [*] at the time
such Screening Target is delivered to NeoGenesis and the second installment
of [*] within [*] of Completion of Screening; provided, however, that the
amount of the second installment shall be reduced for a particular Screening
Target by [*] if Completion of Screening does not occur within [*] following
delivery of such Screening Target to NeoGenesis. COMPLETION OF SCREENING
shall be deemed to occur upon delivery of Selected Screening Compounds for a
Screening Target to Tularik (or, if Tularik does not designate any Selected
Screening Compound(s) for such Screening Target within [*] of receipt of the
Final Target Report for such Screening Target, including any supplement
thereto as described in Paragraph 7 of ATTACHMENT A, then at the end of such
[*] period). No payment shall be due NeoGenesis under this Section 4.2 with
respect to Shared Targets.
4.3 SUCCESS PAYMENTS. For each Screening Target, Tularik shall pay NeoGenesis a
success payment of [*] if at least one Designated Screening Compound is
identified by Tularik that shows activity against such Screening Target such
that Tularik initiates a Medicinal Chemistry Effort with respect to such
Designated Screening Compound. Such payment shall be made within [*] after the
initiation of a Medicinal Chemistry Effort by Tularik; PROVIDED, that Tularik
has [*] after the date Tularik identifies the Designated Screening Compound for
such Screening Target to determine whether or not to initiate a Medicinal
Chemistry Effort for such Designated Screening Compound. No payment shall be due
NeoGenesis under this Section 4.3 with respect to Shared Targets.
4.4 MILESTONES. (a) Tularik will pay NeoGenesis milestone payments in respect of
the first Product that is active against each Screening Target as specified in
this Section 4.4.
(i) Within thirty (30) days following the date on which Tularik [*],
Tularik will pay NeoGenesis [*]. Tularik shall promptly notify
NeoGenesis of the decision to [*].
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SEPARATELY WITH THE COMMISSION.
20
(ii) Within thirty (30) days following the date on which [*] relating to
such Product, Tularik will pay NeoGenesis [*].
(iii) Within thirty (30) days following the date on which [*] relating to
such Product, Tularik will pay NeoGenesis [*].
(iv) Within thirty (30) days following the date on which [*] relating to
such Product, Tularik will pay NeoGenesis [*].
(v) Within thirty (30) days following the date on which [*], Tularik will
pay NeoGenesis [*].
(b) The milestones identified in Section 4.4(a)(i)-(v) shall be due only
for the first Product that is active against a particular Screening Target,
regardless of (i) the number of Products that are active against such Screening
Target that are identified by the Screening Program or developed and/or
Commercialized by Tularik, and (ii) the number of times a Product hits such
milestone (e.g., if different indications are pursued for the same Product);
PROVIDED, that if the first Product that is active against a Screening Target
does not achieve any milestone(s), such non-achieved milestones shall be paid on
any subsequent Product that is active against such Screening Target and that
achieves such milestone. On the date any one milestone with respect to a Product
is achieved, all lower numbered unachieved milestones shall be deemed to have
been achieved with respect to that Product and shall be paid (except to the
extent they have previously been paid with respect to another Product active
against the relevant Screening Target). No milestone payments shall be due
NeoGenesis under this Section 4.4 with respect to Products that are active
against Shared Targets.
4.5 ROYALTIES. (a) [*] commencing with the First Commercial Sale of each
Product that is active against a Screening Target screened pursuant to the
Screening Program in any country, Tularik shall pay to NeoGenesis royalties
on a Product-by-Product and country-by-country basis for the most recent [*]
period then ended, equal to (i) [*] of the portion of aggregate annual Net
Sales of such Product that [*] and (ii) [*] of the portion of aggregate
annual Net Sales of such Product that [*]. Annual Net Sales will be
calculated on a calendar year basis. Tularik shall pay royalties with respect
to each Product on a country-by-country basis for so long as the license
under Section 3.1 as applicable to such Product remains in effect in such
country.
(b) If a Product is not covered by a Valid Claim and Tularik notifies
NeoGenesis that there is Substantial Competition in a country with respect to
such Product in a calendar year, the foregoing royalty rates shall be reduced
for Net Sales in such country [*]. In the event that NeoGenesis disputes
Tularik's characterization of a country as one in which Substantial Competition
exists, the parties shall confer to resolve such matter before resorting to
litigation.
(c) If Tularik is required to make payments (including, without limitation,
royalties, option fees or license fees) to one or more third parties to obtain
licenses or similar rights under patents owned by a third party to avoid
infringement by any Designated Screening Compound, Derivative Compound thereof
or Product (or the Manufacture thereof) of such third party(ies)'
patent-protected technology, then Tularik may, beginning from the date of such
third party payments, deduct [*] of the amount of such third party payments in
any calendar quarter from the royalties payable to NeoGenesis in such calendar
quarter; provided that such deductions shall not exceed [*] of the royalties
otherwise payable to NeoGenesis in such calendar quarter with respect to such
Product.
(d) In the event that Tularik utilizes any Product against a target protein
that is not a Screening Target or a Shared Target (such that NeoGenesis is paid
pursuant to the provisions of Sections 4.4 and 4.5(a) or Section 4A.9 in respect
of such Product), then Tularik shall pay NeoGenesis milestones and royalties in
respect of such Product as used against such other target in accordance with the
provisions of Sections 4.4 and 4.5(a) at a rate equal to [*] of the applicable
milestones and royalties specified in Sections 4.4 and 4.5(a).
4.6 REMITTANCE. (a) Subject to Section 4.6(c), all royalties and milestone
payments required under this Section 4 and royalty payments required under
Sections 4A.18 and 4A.19 shall be payable in full in the United States in
United
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21
States Dollars, regardless of the countries in which sales are made. For the
purpose of computing Net Sales for which a currency other than United States
Dollars is received, such currency shall be converted into United States
Dollars at the simple average of all Mondays' exchange rate for buying United
States Dollars set forth in THE WALL STREET JOURNAL for the calendar quarter
in which such sales were made.
(b) In the event that any payment due either party under this Agreement is
not made when due, the amount due shall accrue interest beginning on the fifth
day following the final date on which such payment was due, calculated at the
annual rate equal to the prime interest rate reported in the WALL STREET JOURNAL
for the due date, or, if lower, the maximum rate permitted by law, calculated
from the due date until paid in full. Such payment when made shall be
accompanied by all interest so accrued. Said interest and the payment and
acceptance thereof shall not negate or waive the right of the party to whom
payment is due to any other remedy, legal or equitable, to which it may be
entitled because of the delinquency of the payment.
(c) If at any time legal restrictions within any country in the Territory
prevent the conversion of the local currency and such currency cannot be removed
from such country such that prompt remittance by the party owing a royalty of
any royalties owed in respect of sales in such country is prevented, the party
owing a royalty shall make payment through any lawful means or methods that may
be available as such party shall reasonably determine. If royalties in any
country cannot be remitted within three (3) months after the end of the relevant
royalty period, then the party owing a royalty shall pay the other party in the
local currency of such country by deposit of the relevant royalties in a bank
account in such country designated by the other party.
4.7 RECORDS. Tularik, its Affiliates and sublicensees shall keep and maintain
for a period of at least [*] from the date of each payment of royalties under
Section 4.5, records (prepared in accordance with GAAP) sufficient to determine
the amounts of Net Sales and payments due under Section 4.5. Within forty-five
(45) days following each March 31, June 30, September 30 and December 31 in
which payments are due under Section 4.5, Tularik shall provide NeoGenesis with
a report including at least: (a) the quantities of Products that Tularik, its
Affiliate(s) and sublicensee(s) sold during the preceding quarter in each
country in which Products or bundled products containing Products were sold; (b)
the monetary amount, in the national currency of such country, of such sales;
(c) actual Net Sales, by country; (d) the currency conversion rate used and U.S.
dollar-equivalent of such sales; (e) the calculation of royalties thereon; (f)
the then aggregate Net Sales for each Product for the applicable calendar year;
and (g) the total royalties so computed and due NeoGenesis. Upon delivery of the
report due for the period ending December 31 of each year, Tularik shall also
report to NeoGenesis the aggregate royalties due NeoGenesis for the entire
preceding year.
4.8 INSPECTION. Tularik and its Affiliates shall, and Tularik shall provide in
any agreements with any sublicensees that such sublicensees shall, each make its
records available for inspection by an independent certified public accountant,
mutually agreed to by NeoGenesis and Tularik, during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from NeoGenesis, to verify the accuracy of the reports and payments
required under this Section 4. Such inspection right shall not be exercised more
than [*] in any calendar year nor more than [*] with respect to sales of
Products in any given payment period. NeoGenesis agrees to hold in confidence
all information concerning royalty payments and reports, and all information
learned in the course of any inspection, except to the extent necessary for
NeoGenesis to reveal such information in order to enforce its rights under this
Agreement in a proceeding in accordance with Section 9.1 or if disclosure is
required by law, regulation or judicial order. Any person or entity conducting
such inspection will agree in writing with NeoGenesis to treat all records
reviewed in the course of the inspection as the Confidential Information of
Tularik under terms and conditions no less restrictive than the terms contained
in Section 5.2. The results of each inspection shall be binding on both parties
absent mathematical error. NeoGenesis shall pay for such inspections, except
that in the event there is any upward adjustment in aggregate royalties payable
for any year shown by such inspection of more than [*] of the amount paid,
Tularik shall pay for such inspection.
4.9 TAXES. If, at any time, any jurisdiction within the Territory requires
the withholding of income taxes or other taxes imposed upon payments set
forth in this Section 4, Tularik shall make such withholding payments as
required and subtract such withholding payments from the payments to be made
to NeoGenesis as set forth in this Section 4,
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22
or, if applicable, NeoGenesis will reimburse Tularik or its designee(s) for
the amount of such withholding payments that are not subtracted from the
payments made to NeoGenesis as set forth in this Section 4, within fifteen
(15) days of notice to NeoGenesis. Tularik shall provide NeoGenesis with
documentation of such withholding and payment in a manner that is
satisfactory for purposes of reporting to the U.S. Internal Revenue Service.
Any withholdings paid when due hereunder shall be for the account of
NeoGenesis. Withholding payments made by Tularik pursuant to this Section 4.9
shall be made based upon financial information provided to Tularik by
NeoGenesis, and to the extent that such information is incorrect, NeoGenesis
shall be liable for any deficiency, and any fine, assessment or penalty
imposed by any taxing authority in the Territory for any deficiency in the
amount of any such withholding or the failure to make such withholding
payment. If Tularik is required to pay any such deficiency, or any fine,
assessment or penalty for any such deficiency, NeoGenesis shall promptly
reimburse Tularik for such payments, within fifteen (15) days of notice to
NeoGenesis. The parties will cooperate to minimize, to the extent legally
permissible, the tax liabilities related to this Agreement. Notwithstanding
the foregoing, such cooperation shall not cause any adverse tax consequences
to be incurred by either party which would not have otherwise been incurred
under the provisions of this Agreement, including this Section 4.9.
4A. SHARED TARGET OBLIGATIONS
4A.1 IDENTIFICATION OF DESIGNATED SHARED COMPOUND CANDIDATES BY STEERING
COMMITTEE. (a) Within [*] following the delivery of Selected Shared Compounds
for a particular Shared Target in accordance with ATTACHMENT A and completion of
optimization, if any, performed on Selected Shared Compounds for such Shared
Target in accordance with ATTACHMENT A, either party may propose to the Steering
Committee one or more Selected Shared Compounds or compounds arising out of
optimization (if any) for such Shared Target as candidates to become Designated
Shared Compounds. The Steering Committee will promptly determine whether each
such Selected Shared Compound is a suitable candidate for Pre-Clinical
Development.
(b) Within [*] following receipt of notification from the Steering
Committee identifying candidates to become Designated Shared Compounds,
NeoGenesis shall amend ATTACHMENT D to identify any applicable NeoGenesis Patent
Rights not previously identified to the Steering Committee.
4A.2 ACCEPTANCE OF DESIGNATED SHARED COMPOUNDS. (a) If the Steering Committee
determines that a Selected Shared Compound is suitable for Pre-Clinical
Development, then, within [*] of such determination, each party shall provide to
the Steering Committee a written notice as to whether it elects to participate
in and, subject to Section 4A.8, commit resources to conduct, Pre-Clinical
Development and, if warranted based on the outcome of Pre-Clinical Development
activities, Development of such Selected Shared Compound pursuant to the
Development Plan and Development Budget. If both parties make an affirmative
election with respect to any Selected Shared Compound pursuant to this Section
4A.2, then such Selected Shared Compound shall become a DESIGNATED SHARED
COMPOUND. Thereafter, such Designated Shared Compounds will be subject to the
licenses granted pursuant to Section 3.1 and shall no longer be available to
NeoGenesis or any third party in any NeoGenesis compound library, including its
NeoMorph Screening Library, or in any other manner.
(b) If the Steering Committee determines that a Selected Shared Compound is
not suitable for Pre-Clinical Development, then, within [*] of such
determination, each party shall provide to the Steering Committee a written
notice as to whether it elects to designate such Selected Shared Compound as a
Designated Shared Compound and participate in, and commit resources to conduct,
Pre-Clinical Development of such Selected Shared Compound, notwithstanding that
the Steering Committee has determined that such Selected Shared Compound is not
suitable for Pre-Clinical Development. If both parties make an affirmative
election with respect to whether any Selected Shared Compound shall be
designated a Designated Shared Compound as set forth in Section 4A.2(a), such
Selected Shared Compound shall become a Designated Shared Compound. If one party
makes an affirmative election and the other party makes a negative election with
respect to whether any Selected Shared Compound shall be designated a Designated
Shared Compound, the party making an affirmative election will have the right to
proceed independently to develop such compound as an Independent Compound or
Independent Product under Section 4A.15.
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23
4A.3 DISCONTINUED COMPOUNDS. If neither party makes an affirmative election
with respect to any Selected Shared Compound being designated a Designated
Shared Compound pursuant to Section 4A.2, such Selected Shared Compound shall
be neither a Designated Shared Compound nor a compound that may be developed
under Section 4A.15, and Development of products based upon such non-elected
Selected Shared Compound (a DISCONTINUED COMPOUND) may only be subsequently
initiated by a party by notifying the other party of its interest in
initiating Pre-Clinical Development of such Discontinued Compound at any time
on or before [*]. If the other party indicates it is not interested in
participating in, and committing resources to, conduct Pre-Clinical
Development of such Discontinued Compound, the initiating party, upon notice
to the other party, may proceed with Pre-Clinical Development and Development
of such Discontinued Compound as an Independent Compound or an Independent
Product and the initiating party shall be deemed to be the Independent Party
therefor, as provided in Section 4A.15. If the other party indicates it is
interested in participating in and committing resources to conduct
Pre-Clinical Development of such Discontinued Compound, such Discontinued
Compound shall be designated as a Designated Shared Compound as set forth in
Section 4A.2(a). At any time after [*], either party may, upon written notice
to the other party, proceed with Pre-Clinical Development and Development of
a Discontinued Compound as an Independent Compound or an Independent Product,
and such party shall be deemed to be the Independent Party therefor, as
provided in Section 4A.15.
4A.4 NON-PROPOSED COMPOUNDS. If a Selected Shared Compound is not, at any
time, presented to the Steering Committee pursuant to Section 4A.1 (a
NON-PROPOSED COMPOUND), such Selected Shared Compound shall be neither a
Designated Shared Compound nor a compound that may be developed under Section
4A.15. If at any time on or before [*], a party hereunder (the NON-PROPOSED
COMPOUND INTERESTED PARTY) decides to initiate Pre-Clinical Development of
such Non-Proposed Compound, it shall provide written notice to the other
party of such interest and the reasons therefor. The other party will then
have [*] to indicate whether it also is interested in participating in and
committing resources to conduct Pre-Clinical Development of such Non-Proposed
Compound. If the other party is so interested, such Non-Proposed Compound
shall be designated a Designated Shared Compound as set forth in Section
4A.2(a). If the other party is not so interested, the Non-Proposed Compound
Interested Party may proceed with Pre-Clinical Development and Development of
such Non-Proposed Compound as an Independent Compound or an Independent
Product and the Non-Proposed Compound Interested Party shall be deemed to be
the Independent Party therefor, as provided in Section 4A.15. At any time
after [*], either party may, upon written notice to the other party, proceed
with Pre-Clinical Development and Development of a Non-Proposed Compound as
an Independent Compound or an Independent Product, and such party shall be
deemed to be the Independent Party therefor, as provided in Section 4A.15.
4A.5 PRE-CLINICAL DEVELOPMENT OF DESIGNATED SHARED COMPOUNDS. The parties,
under the direction of the Steering Committee, shall diligently conduct
Pre-Clinical Development with respect to any Designated Shared Compound in
accordance with the Development Plan. Unless otherwise agreed by the parties,
each party shall supply fifty percent (50%) of the total Pre-Clinical
Development effort for each Designated Shared Compound in the aggregate, as
determined by the Steering Committee. The costs of conducting such
Pre-Clinical Development shall be shared by the Parties as set forth in
Section 4A.8.
4A.6 DEVELOPMENT OF SHARED PRODUCTS. The parties will use Commercially
Reasonable Efforts to conduct the Development of Shared Products in
accordance with the Development Plan. The role of each party in the
Development process will be determined by the Steering Committee as described
in Section 4A.7, with the parties intending that each party will provide
advisory and supporting services with respect to any phase of the process in
which such party is not actively or primarily involved. Unless otherwise
agreed by the parties, each party shall supply fifty percent (50%) of the
total Development effort for each Shared Product in the aggregate, as
determined by the Steering Committee. The costs of conducting such
Development shall be shared by the Parties as set forth in Section 4A.8. The
Steering Committee will determine appropriate written standards for measuring
each party's required efforts and accounting procedures to confirm and
document each party's performance of its required efforts for any Shared
Product before the parties commence Development thereof. No clinical trials
involving any Shared Product shall be commenced by or on behalf of either
party without the prior approval of the Steering Committee. Nothing contained
in this Section 4A.6 shall be deemed to preclude either party from
terminating its participation in the collaborative Development of a Shared
Product pursuant to Section 4A.14. Any decision by a party not to
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24
participate in Development of a Shared Product pursuant to Section 4A.2, 4A.3
or 4A.4 or to terminate participation in the Development of a Shared Product
pursuant to Section 4A.14, shall not be deemed a breach of this Agreement.
The parties will conduct Pre-Clinical Development, Development, Manufacturing
and Commercialization activities in a manner calculated to minimize aggregate
Development Costs for such Shared Compound and Shared Product consistent with
the Development Plan and the Development Budget for such Shared Compound and
Shared Product.
4A.7 DEVELOPMENT PLAN AND DEVELOPMENT BUDGET. Promptly following acceptance
of a Designated Shared Compound, the Steering Committee, which, for this
purpose and for the purposes set forth in Sections 4A.8-4A.10 and 4A.23,
shall also include an equal number of financial personnel from each party,
shall initiate preparation of the development plan for the Pre-Clinical
Development and Development of such Designated Shared Compound and
Development of any resulting Shared Product (the DEVELOPMENT PLAN) and a
budget (the DEVELOPMENT BUDGET) for proposed Development Costs therefor. The
initial Development Plan for a Designated Shared Compound shall set time
lines and priorities for the various Pre-Clinical Development and Development
activities through Phase I Clinical Trials or Phase IIa Clinical Trials and
identify which party, or whether a third party, is to be responsible for each
activity. The Development Budget shall include a detailed short-term budget
covering all proposed Development Costs of the Development Plan expected
during the initial [*] of implementation of the Development Plan. Each
Development Plan and Development Budget shall be approved by the Steering
Committee unanimously. Both parties recognize that the Development Plan and
the Development Budget represent projections only and will be subject to
frequent changes during the Pre-Clinical Development and Development process.
Each such Development Plan and Development Budget shall be updated as deemed
appropriate by the Steering Committee, but in no event less frequently than
semi-annually, and approved, unanimously, by the Steering Committee not later
than thirty (30) days prior to each January 1 and July 1 of each applicable
calendar year.
4A.8 FUNDING OF PRE-CLINICAL DEVELOPMENT AND DEVELOPMENT. Tularik shall be
responsible for fifty percent (50%) of the Development Costs and NeoGenesis
shall be responsible for the remaining fifty percent (50%) of Development
Costs for each Designated Shared Compound, Derivative Compound thereof and
resulting Shared Product throughout the Territory. In the event the
Development Costs incurred by a party during any calendar quarter exceed [*]
of the Development Costs set forth in the most recently approved Development
Budget for activities to be conducted by such party during such quarter (the
OVERAGE THRESHOLD), then the other party shall not be responsible for paying
its fifty percent (50%) share of any Development Costs in excess of the
Overage Threshold incurred by the party triggering such overage unless such
overage had been approved in advance, or is subsequently ratified,
unanimously, by the Steering Committee (in which case each of the parties
shall be responsible for fifty percent (50%) of all such Development Costs).
In the event such overage has not been approved or ratified unanimously by
the Steering Committee, the party incurring Development Costs in a calendar
quarter exceeding the Overage Threshold in such quarter shall be responsible
for all of the portion of the Development Costs in excess of the Overage
Threshold.
4A.9 FTE RATE. In preparing the Development Budget and determining
Development Costs, each party will use an FTE rate for such party's
development personnel mutually agreed to by the parties based on the then
prevailing FTE rate for such party.
4A.10 PAYMENT OF DEVELOPMENT COSTS. Within thirty (30) days after each
calendar quarter, each party shall provide the Steering Committee with
detailed information concerning the Development Costs incurred by such party
during such quarter pursuant to the Development Plan and the Development
Budget. Promptly after receipt thereof, the Steering Committee will determine
the amount, if any, that either party has paid in excess of the amount to be
borne by such party for such quarter pursuant to Section 4A.8, and shall so
notify the parties. In the event of an overpayment by a party of its share of
Development Costs in a particular calendar quarter, the other party shall pay
to the party making the overpayment the amount by which such other party
underpaid within thirty (30) days after the underpaying party's receipt of
notice from the Steering Committee that an overpayment has occurred.
4A.11 REGULATORY APPROVALS. Consistent with the Development Plan and
Development Budget and as directed by the Steering Committee, the parties (or
their Affiliates) will (a) prepare and file all documents that are necessary
to conduct clinical studies of Shared Products in connection with the
Development Plan and (b) use Commercially
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25
Reasonable Efforts to file applications for Regulatory Approvals required before
commercial sale or use of a Shared Product as a drug in a country within the
Territory and obtain Regulatory Approvals in each country in the Territory in
which the parties, either individually or jointly, intend to Commercialize
Shared Products in accordance with the Development Plan. The Steering Committee
will be responsible for designating a party by unanimous agreement to be
responsible for filing all regulatory submissions in each country in the
Territory in which Shared Products will be Commercialized. The party not
responsible for filing regulatory submissions for a Shared Product in a country
pursuant to this Agreement shall have a right to cross-reference to all such
filings made by the other party for such Shared Product in any country. The
parties will cooperate in the preparation of all such regulatory filings and in
obtaining Regulatory Approvals under this Section 4A.11, including without
limitation providing access to each party's data and information obtained under
the Program and the Development Plan to the extent necessary for obtaining
Regulatory Approvals of Shared Products.
4A.12 LINE EXTENSIONS. NeoGenesis and Tularik may each prepare and submit to the
Steering Committee for consideration plans for Development of Shared Product
line extensions and the conduct of clinical trials covering indications other
than those for which Shared Products are then being Developed or Commercialized
in the Territory. Any such line extensions or any additional clinical trials for
additional indications will be subject to the approval and supervision of the
Steering Committee as part of the ongoing Development of such Shared Product.
4A.13 THIRD PARTY TECHNOLOGY; CONSENTS TO CERTAIN SUBLICENSES. If either party
becomes aware of (i) an opportunity to participate in research with a third
party that could advance the Pre-Clinical Development of a Designated Shared
Compound or Derivative Compound thereof or the Development of a Shared Product;
or (ii) an opportunity to obtain a license or other right owned or controlled by
a third party relating to the Manufacture, marketing, import, use or sale of a
Shared Product, it shall so notify the other party and the Steering Committee
will determine whether to pursue such opportunity. In the event that the parties
pursue such opportunity under subsection (i), they shall grant appropriate
licenses or sublicenses, as applicable, to such third party solely to perform
the tasks designated and approved by the Steering Committee for such third party
and provide for confidentiality and non-use obligations, and for ownership of or
licenses under such third party's inventions and related intellectual property
rights arising in the course of work performed by such third party pursuant to
this Agreement consistent with those provided in the applicable provisions of
this Agreement. If the parties, in connection with any opportunity described in
subsection (i) or (ii), incur obligations to make payments to a third party,
such payments shall be included in the calculation of Expenses or Development
Costs, as the case may be, of the party making such payment. Neither party shall
enter into any sublicense under which such party shall receive any consideration
from the relevant sublicensee in the form of an equity investment in, or as a
loan to, such party without the other party's prior written consent, not to be
unreasonably withheld.
4A.14 TERMINATION OF PARTICIPATION IN COLLABORATIVE DEVELOPMENT. (a) Either
party may elect, on a Designated Shared Compound-by-Designated Shared Compound,
Derivative Compound thereof-by-Derivative Compound thereof or Shared
Product-by-Shared Product basis, as the case may be, to terminate its
participation in, or to not participate in, the Pre-Clinical Development of a
given Designated Shared Compound or Derivative Compound thereof or Development
of a given Shared Product based upon or incorporating such Designated Shared
Compound or Derivative Compound thereof by written notice to the other party:
(i) [*] for such Designated Shared Compound or Derivative Compound thereof; (ii)
during the period commencing upon receipt by such party of final reports
covering all aspects of [*] for such Shared Product and [*]; or (iii) during the
period commencing [*] for such Shared Product and ending [*]. After receipt of
such notice by the other party in accordance with this Section 4A.14, the party
providing such notice shall no longer be responsible for bearing further
Development Costs for such Designated Shared Compound or Derivative Compound
thereof or Shared Product pursuant to Section 4A.8 (except as set forth in the
next succeeding sentence), in which event the other party will have the right to
proceed independently to Develop such Designated Shared Compound or Derivative
Compound thereof or Shared Product as an Independent Compound or Independent
Product, and the party continuing such Development shall thereafter be deemed to
be the Independent Party therefor, as provided in Section 4A.15. In the event a
party gives notice under this Section 4A.14, such non-Independent Party (i) will
remain responsible for its share of Development Costs for such Designated Shared
Compound or Derivative Compound thereof or Shared Product until [*], and (ii)
will make its personnel, relevant data and other resources available to the
Independent Party as necessary to effect an orderly
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26
transition of Pre-Clinical Development and Development responsibilities, with
the costs of such personnel, relevant data and resources to be [*] a notice
under this Section 4A.14. In the event of a party's termination of participation
in Pre-Clinical Development or Development of a Designated Shared Compound or
Derivative Compound thereof or Shared Product in accordance with this Section
4A.14, such party shall [*] to the Independent Party all Regulatory Approval
submissions, including all applications relating to such Designated Shared
Compound, Derivative Compound thereof and/or Shared Products based upon or
incorporating such Designated Shared Compound or Derivative Compound thereof,
together with all materials and data related thereto in its possession.
(b) If, at any time during Pre-Clinical Development or Development
activities, both parties elect, on a Designated Shared Compound-by-Designated
Shared Compound basis, Derivative Compound thereof-by-Derivative Compound
thereof basis or a Shared Product-by-Shared Product basis, as the case may be,
to terminate Pre-Clinical Development of a Designated Shared Compound or
Derivative Compound thereof or to terminate Development of a Shared Product, the
parties shall confer and mutually agree on a plan for seeking a purchaser for
the Designated Shared Compound, Derivative Compound thereof or Shared Product,
as applicable.
0X.00 XXXXXXXXXXX DEVELOPMENT. (a) In the event (i) a party, pursuant to
Sections 4A.2, 4A.3, 4A.4 or 4A.14, elects not to, or does not, participate in
and commit resources to the pre-clinical development of a Selected Shared
Compound as a Designated Shared Compound, or the pre-clinical development of a
Discontinued Compound or a Non-Proposed Compound, or (ii) any party unilaterally
terminates its participation in the Pre-Clinical Development or Development of a
Designated Shared Compound, Derivative Compound thereof or Shared Product
pursuant to Section 4A.14, then the party that either made an affirmative
election to conduct such Pre-Clinical Development of such Selected Shared
Compound, or the pre-clinical development of a Discontinued Compound or a
Non-Proposed Compound, or is continuing Pre-Clinical Development or Development
of a Designated Shared Compound, Derivative Compound thereof or Shared Product
(in either case, the INDEPENDENT PARTY), shall have the right to practice the
licenses granted in Section 3.1 and to undertake pre-clinical development of a
Selected Shared Compound, Discontinued Compound or Non-Proposed Compound or to
continue Pre-Clinical Development and Development of such Designated Shared
Compound, Derivative Compound thereof or Shared Product independently as an
INDEPENDENT COMPOUND or INDEPENDENT PRODUCT, [*]. Subject to reinstatement
pursuant to exercise of its Re-Engagement Option set forth in Section 4A.16, the
non-Independent Party's license under Section 3.1 shall be terminated with
respect to such Independent Compound or Independent Product. Neither party may
charge the services of its personnel or any third party to research or develop
an Independent Compound, Derivative Compound thereof or Independent Product to
the other party.
(b) Until the earlier of the Re-Engagement Expiration Date or the date on
which the Independent Party receives a Re-Engagement Notice for an Independent
Compound, Derivative Compound thereof or an Independent Product from the
non-Independent Party, the Independent Party will (i) inform the other party of
all material information developed in its research and development of each
Independent Compound, Derivative Compound thereof or Independent Product; and
(ii) provide the other party a copy of all proposed regulatory submissions
relating to such Independent Compound, Derivative Compound thereof or
Independent Product at least thirty (30) days prior to submitting such filing to
the applicable Regulatory Authority.
(c) In the event either party elects to proceed as an Independent Party,
subject to Section 4A.16, such Independent Party shall be entitled to develop
such Independent Compound or any Derivative Compound thereof and Commercialize
such Independent Product at its sole discretion, alone or with a third party
(subject to Section 4A.15(d)), with no obligation to the other party other than
the payment of royalties in accordance with Sections 4A.18 or 4A.19 and those
obligations imposed under Sections 4.6 and 4A.21.
(d) The Independent Party may not sublicense any intellectual property
rights to the extent such right is necessary or useful to research, Develop,
have Developed, make, have made, use, distribute, promote, market, offer for
sale, sell, have sold, import and export an Independent Compound, Derivative
Compound thereof or Independent Product to any third party without the consent
of the non-Independent Party prior to the Re-Engagement Expiration Date for such
Independent Compound, Derivative Compound thereof or Independent Product.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
(e) If either party terminates its research, Development or
Commercialization of an Independent Compound, Derivative Compound thereof or
an Independent Product, then (i) it shall promptly so notify the other party,
(ii) such compound shall no longer be an Independent Compound, Derivative
Compound thereof and such product shall no longer be an Independent Product;
(iii) the licenses granted to such Independent Party by the non-Independent
party for such compound or product shall terminate upon such other party's
receipt of such notice; and (iv) the parties will confer and mutually agree
on a plan for seeking a purchaser for such Independent Compound, Derivative
Compound thereof or Independent Product, as applicable.
4A.16 RE-ENGAGEMENT OPTION. (a) Either party may elect to resume its
participation in the Pre-Clinical Development or Development of an Independent
Compound, Derivative Compound thereof or Independent Product throughout the
Territory by so notifying the Independent Party for such Independent Compound,
Derivative Compound thereof or Independent Product (the RE-ENGAGEMENT NOTICE),
at any time prior to the expiration of the [*] period [*] (RE-ENGAGEMENT
EXPIRATION DATE) for such Independent Compound, Derivative Compound thereof or
Independent Product. If a party so elects to resume participation hereunder,
such Independent Compound, Derivative Compound thereof or Independent Product
shall immediately cease to be an Independent Compound, Derivative Compound
thereof or Independent Product, as applicable, and shall instead be designated a
Designated Shared Compound or Shared Product for all purposes under this
Agreement, including but not limited to calculating each party's responsibility
for paying Development Costs and Expenses and receiving the Share of Profit
commencing upon and continuing after the Independent Party's receipt of the
Re-Engagement Notice.
(b) If a party provides a Re-Engagement Notice pursuant to Section
4A.16(a), then such party shall pay to the Independent Party [*] of the
non-Independent Party's share, based on the allocation set forth in Section
4A.8, of the costs of Pre-Clinical Development and Development of the
Independent Compound, Derivative Compound thereof or Independent Product
incurred by the Independent Party after the date upon which it commenced
Pre-Clinical Development or Development of such compound or product as an
Independent Compound or Independent Product and prior to the date of the
Re-Engagement Notice, calculated as if such Independent Compound or Derivative
Compound thereof had been a Designated Shared Compound or such Independent
Product had been a Shared Product during such period of Pre-Clinical Development
and Development by the Independent Party therefor (the RE-ENGAGEMENT AMOUNT). In
calculating such amounts, the parties will use the FTE rate as set forth in
Section 4A.9. The non-Independent Party shall pay the Re-Engagement Amount in
[*] beginning on the [*] following the date upon which the Independent Party
receives the relevant Re-Engagement Notice.
4A.17 PROFITS AND LOSSES. Each party's SHARE OF PROFIT shall equal fifty
percent (50%) of all Shared Product Profits for all Shared Products sold in
the Territory, and each party's SHARE OF LOSS shall equal fifty percent (50%)
of all Shared Product Losses for all Shared Products sold in the Territory.
Each party shall be responsible for its Share of Loss and shall be entitled
to receive its Share of Profits. Each party shall also receive fifty percent
(50%) of all Sublicense Revenues in the Territory, which sublicense
agreements shall conform to the requirements of Section 4A.13. Shared Product
Profits, Shared Product Losses and Sublicense Revenues shall be determined
and paid as set forth in Section 4A.22.
4A.18 ROYALTIES PAYABLE ON SALES OF INDEPENDENT PRODUCTS AFTER REVOCATION OF
COMMERCIALIZATION RIGHTS. In the event a party elects to terminate its
participation in the Commercialization of a Shared Product in a country or
countries in the Territory pursuant to Section 4A.23(d), the parties shall
negotiate in good faith for a period of [*] following the non-terminating
party's receipt of such notice to determine the appropriate royalty to be paid
on Net Sales of such Shared Product as an Independent Product by the other party
as an Independent Party in such country or countries. In the event the parties
are unable to agree on the appropriate royalty pursuant to the immediately
preceding sentence, the Independent Party with respect to such Independent
Product shall pay to the other party a royalty on annual Net Sales of such
Independent Product in each such country in the Territory pursuant to Section
4A.19, except that the applicable royalty shall be: [*] of the portion of
aggregate annual Net Sales of such Independent Product in such country that is
[*] of the portion of annual aggregate Net Sales of such Independent Product in
such country that is [*]; and [*] of the portion of annual aggregate Net Sales
of such Independent Product in such country that is [*]. Such royalty will be
payable on [*] in respect of each country in which sales of such Shared Product
occur and in which a party has elected to terminate its participation in the
Commercialization of such
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
Shared Product until the expiration of the license granted to the
non-terminating party under Section 3.1 with respect to such Shared Product.
Such royalty is subject to offsets as provided in the last sentence of Section
4A.19.
4A.19 ROYALTIES PAYABLE BY THE INDEPENDENT PARTY OTHER THAN IN THE EVENT OF
REVOCATION OF PROMOTION RIGHTS. Except as otherwise provided in Section 4A.18,
the Independent Party will pay the non-Independent Party, in lieu of any Share
of Profits, a royalty on Net Sales of each Independent Product equal to:
(a) [*] of Net Sales of such Independent Product if the non-Independent
Party did not participate, or terminates its participation, in the
Pre-Clinical Development of the relevant compound [*];
(b) [*] of Net Sales of such Independent Product if the non-Independent
Party terminates its participation in the Development of the relevant
Designated Shared Compound pursuant to Section 4A.14 [*] but prior to
the [*];
(c) [*] of Net Sales of such Independent Product if the non-Independent
Party terminates participation in the Development of the relevant
Shared Product pursuant to Section 4A.14 [*]; or
(d) [*] of Net Sales of such Independent Product if the non-Independent
Party terminates participation in the Development of the relevant
Shared Product pursuant to Section 4A.14 [*].
Such royalty shall be payable on [*] in respect of each country in which sales
of such Independent Product occur until the expiration of the license granted
the Independent Party under Section 3.1 with respect to such Independent
Product. The Independent Party may offset [*] of any royalties it must pay to
third parties pursuant to any licenses necessary to Manufacture and
Commercialize Independent Products against royalties payable by the Independent
Party to the non-Independent Party; PROVIDED, HOWEVER, that in no event shall
the royalties payable by the Independent Party to the non-Independent Party be
reduced to less than [*] of the amounts that would have otherwise been due under
the percentages set forth in this Section 4A.19 or Section 4A.18, as applicable.
4A.20 TAXES. The burden of paying all withholding or similar taxes that may be
imposed by any governmental authority on royalty and Share of Profit payment
amounts provided in this Section 4A with respect to Shared Products shall be
shared equally by Tularik and NeoGenesis. The burden of paying all withholding
or similar taxes that may be imposed by any governmental authority on royalty
payment amounts provided in this Section 4A with respect to Independent Products
shall be paid by the party receiving such royalty, and the party making such
royalty payment shall make such withholding payments as required and subtract
such withholding payments from the payments to be made to the other party in
respect of such Independent Products, or, if applicable, the party receiving
such royalty payment will reimburse the other party or its designee(s) for the
amount of such withholding payments that are not subtracted from the payments
made to the party receiving such royalty payment as set forth in this Section
4A.20, within fifteen (15) days of notice from the party making such royalty
payment in respect of Independent Products. The party that makes any such
withholding payment shall provide the other party with documentation of such
withholding and payment in a manner that is satisfactory for purposes of
reporting to the U.S. Internal Revenue Service. Any withholdings paid when due
hereunder shall be for the account of the party receiving such royalty payment.
Withholding payments made by the party making such royalty payment in respect of
Independent Products pursuant to this Section 4A.20 shall be made based upon
financial information provided to such party by the party receiving such royalty
payment, and to the extent that such information is incorrect, the party
receiving such royalty payment shall be liable for any deficiency, and any fine,
assessment or penalty imposed by any taxing authority in the Territory for any
deficiency in the amount of any such withholding or the failure to make such
withholding payment. If the party making such royalty payment is required to pay
any such deficiency, or any fine, assessment or penalty for any such deficiency,
the party receiving such royalty payment shall promptly reimburse it for such
payments, within fifteen (15) days of notice to the party receiving such royalty
payment. The parties will cooperate to minimize, to the extent legally
permissible, the tax liabilities related to this Agreement. Notwithstanding the
foregoing, such cooperation shall not cause any adverse tax consequences to be
incurred by either party which would not have otherwise been incurred under the
provisions of this Agreement, including this Section 4A.20.
4A.21 RECORDS AND INSPECTION. (a) NeoGenesis and Tularik and, if applicable,
their respective Affiliates and sublicensees, each shall keep accurate books and
accounts of record (prepared in accordance with GAAP) in connection with the
Pre-Clinical Development, Development, Manufacture and/or Commercialization by
or for such
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
29
party of all Designated Shared Compounds, Derivative Compounds thereof, Shared
Products, Independent Compounds, Derivative Compounds thereof and Independent
Products in the Territory in sufficient detail to permit accurate determination
of all figures necessary for verification of Development Costs, royalties,
Shared Product Profits, Shared Product Losses, Sublicense Revenues, Expenses and
other compensation required to be paid or expenses required to be shared
hereunder. NeoGenesis and Tularik shall maintain such records for a period of
[*] after the end of the year in which such records were generated.
(b) Each party and, if applicable, its Affiliates shall, and shall provide
in any agreements with any sublicensees that such sublicensees shall, make such
records available for inspection by an independent certified public accountant,
mutually agreed to by the inspecting party and the party being inspected, during
regular business hours at such place or places where such records are
customarily kept, upon reasonable notice from the inspecting party, to verify
the accuracy of the reports and any compensation required to be paid or expenses
required to be shared hereunder. Such inspection right shall not be exercised
more than once in any calendar year. The inspecting party agrees to hold in
confidence all information concerning payments, expenses and reports, and all
information learned in the course of any inspection, except to the extent
necessary for the inspecting party to reveal such information in order to
enforce its rights under this Agreement in a proceeding in accordance with
Section 9.1 or if disclosure is required by law, regulation or judicial order.
Any person or entity conducting such inspection will agree in writing with the
inspecting party to treat all records reviewed in the course of the inspection
as the Confidential Information of the party being inspected under terms and
conditions no less restrictive than the terms contained in Section 5.2. The
results of each inspection shall be binding on both parties absent mathematical
error. The inspecting party shall pay for such inspections, except that in the
event there is any upward adjustment in aggregate amounts payable for any year
shown by such inspection of more than [*] of the amount paid, the party being
inspected shall pay for such inspection.
4A.22 SHARED PRODUCT REPORTING AND PAYMENTS OF THE PARTIES' SHARE OF
PROFIT/LOSS. (a) Payments and reporting for each Shared Product shall be made as
follows. Within forty five (45) days after the close of each party's accounting
year in which Shared Products are sold, or earlier if possible, each party shall
furnish to the other party a profit and loss statement for such accounting year
setting forth for each country in the Territory in which Shared Products were
developed or sold during such year, Net Sales of each Shared Product, Expenses,
Sublicense Revenues and all data on which the determination of each party's
Share of Profit, Share of Loss or share of Sublicense Revenues was calculated.
If either party owes an amount of Share of Profit or Share of Loss to the other
party pursuant to Section 4A.17, then it shall make such payment within thirty
(30) days after receipt of the profit and loss statement, but in no event shall
such payment be due earlier than sixty (60) days after the end of the relevant
period.
(b) For the purposes of calculating Shared Product Profit or Shared Product
Loss for a Shared Product, a given item of cost or expense shall be allocated
only to one category of cost and expense and not to multiple categories. Each
party agrees to determine such costs and expenses hereunder with respect to
Shared Products using its standard accounting procedures, consistently applied,
to the maximum extent practical, as if such Shared Product were a solely owned
product of the party, except as specifically provided in this Agreement. The
parties also recognize that such procedures may change from time to time and
that any such changes may affect the definitions of the elements of the Shared
Product Profit or Shared Product Loss. The parties agree that, where such
changes are economically material to either party, adjustments shall be made to
compensate the affected party in order to preserve the same economics as
reflected under this Agreement under such party's accounting procedures in
effect as of the date on which the activity in question (for example,
Development, marketing or Manufacturing) first commences under this Agreement.
Transfers between a party and its Affiliates (or between such Affiliates) shall
not have effect for purposes of calculating revenues, costs, profits, royalties
or other payments or expenses under this Agreement.
4A.23 COMMERCIALIZATION. (a) The Steering Committee shall oversee and implement
all Commercialization activities in the Territory for Shared Products, based on
the principle of maximizing profits from sales of Shared Products. The Steering
Committee shall have the ability to determine whether the objective of
maximizing profits from sales of Shared Products in the Territory is best
achieved through, INTER ALIA, granting sublicenses to a third party or third
parties, creating or entering into joint ventures with third parties or jointly
Commercializing such
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
30
Shared Products as provided in this Section 4A.23. In the event the Steering
Committee determines that the foregoing objective is best achieved by activities
other than as provided in this Section 4A.23, the Steering Committee shall
determine by unanimous decision the optimal alternative structure and the
duties, responsibilities and economic parameters for the parties and third
parties in such alternative structure.
(b) No later than [*] for a Shared Product, the Steering Committee shall
commence preparation of a marketing plan (MARKETING PLAN) and a marketing budget
(MARKETING BUDGET) for such Shared Product. The Commercialization of a Shared
Product in the Territory will be governed by the Marketing Plan and Marketing
Budget. The Marketing Plan and Marketing Budget will describe fully, to the
extent practicable, the proposed plan for Commercialization of the Shared
Product in each country in which the parties Commercialize Shared Products,
including overall marketing strategy, marketing, sales and promotion efforts to
be performed by each party, market and sales forecasts, pricing, reimbursement
and discounting analysis and estimated launch date, as well as preparation of
advertising and other promotional materials to be used in the promotion of
Shared Products. The Marketing Plan will take into consideration market
conditions, regulatory factors and competition with respect to the Shared
Product. The Marketing Budget will include all projected Expenses for the Shared
Product. The initial Marketing Plan and Marketing Budget shall be completed by
the Steering Committee no later than [*] for a Shared Product in any country in
the Territory. Each such Marketing Plan and Marketing Budget shall thereafter be
updated by the Steering Committee every six (6) months, or more frequently if
agreed by the parties.
(c) NeoGenesis and Tularik shall have the co-exclusive responsibility for
promoting such Shared Product in the Territory, except as otherwise provided in
Section 4A.23(a). Tularik and NeoGenesis shall each diligently perform its
respective obligations under the Marketing Plan and use Commercially Reasonable
Efforts to Commercialize Shared Products in the Territory pursuant to the terms
and conditions hereof. The parties intend that each party shall provide fifty
percent (50%) of the total promotional and marketing effort (including details,
if determined to be an appropriate sales activity for a party by the Steering
Committee) for each Shared Product being Commercialized by the parties in the
Territory, as determined by the Steering Committee. The Steering Committee will
determine appropriate written standards for measuring, and accounting procedures
to confirm and document, each party's marketing and promotional effort under the
Marketing Plan, no later than [*] for any Shared Product. Nothing contained in
this Section 4A.23 shall be deemed to preclude either party from relinquishing
its right to participate in the Commercialization of Shared Products in the
Territory pursuant to Section 4A.23(d), at any time.
(d) Either party may terminate its participation in the Commercialization
of a Shared Product in any country in the Territory at any time following [*]
prior written notice to the other party. In such case, the other party may
continue Commercialization of such Shared Product as an Independent Product,
either alone or with a third party, and shall thereafter be deemed to be an
Independent Party for such Independent Product solely with respect to such
country or countries, effective as of the date of the terminating party's notice
hereunder, in which case the terminating party's license under Section 3.1 shall
be terminated in the country or countries in which such party has terminated its
participation in the Commercialization of such Shared Product (the TERMINATED
COUNTRIES). In the event a party elects to cease participating in the
Commercialization of a Shared Product in a country in the Territory and the
other party proceeds to Commercialize such Shared Product in the Terminated
Countries as an Independent Product, the terminating party shall (i) [*] to the
Independent Party all regulatory submissions and Regulatory Approvals in such
country relating to such former Shared Product, together with all materials and
data related thereto in its possession, and (ii) [*] to the Independent Party
all other relevant information that will enable such Independent Party to
Commercialize such former Shared Product as an Independent Product in such
country. A non-Independent Party may not reinitiate its participation in the
Commercialization of a Shared Product in any country in the Territory in which
it relinquished such right hereunder. Any relinquishment of a party's right to
Commercialize Shared Products pursuant to this Section 4A.23(d) shall not be a
breach of this Agreement. If both parties terminate their participation in the
Commercialization of a Shared Product, the parties will confer and mutually
agree on a plan for seeking a third party to conduct such Commercialization.
(e) The parties shall disseminate in the Territory only those promotional
and advertising materials that have been provided or approved for use by the
Steering Committee, and the cost of producing such materials shall be an Expense
of [*]. All such materials shall be consistent with the relevant Marketing Plan
and Marketing Budget
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
31
approved, unanimously, by the Steering Committee and neither party shall make
any claims or representations in respect of the Shared Products outside the
scope of those previously approved by the Steering Committee.
(f) The Steering Committee shall designate a party as being primarily
responsible for each country in the Territory for booking sales, establishing
pricing for Shared Products based upon the market analyses performed by the
parties under the direction of the Steering Committee, obtaining necessary
pricing approvals, handling returns and customer complaints and providing
samples. In addition, the Steering Committee shall determine the policies and
procedures necessary to implement the foregoing, including coordination of the
parties' efforts to train sales and marketing representatives for Shared
Products.
4A.24 TRADEMARKS. (a) The parties shall mutually select the trademark or
trademarks for a Shared Product. To the extent commercially reasonable and
appropriate, a single trademark shall be used for each Shared Product in all
countries in the Territory. To the extent the parties determine that the use of
a single trademark for a given Shared Product is impractical or not advisable
given cultural and other differences among countries in the Territory, the
parties shall agree on the appropriate trademark for a Shared Product for use
within different countries within the Territory; PROVIDED that in no event shall
different trademarks be used for the same Shared Product within the same country
in the Territory (unless such Shared Product is being sold for more than one
indication and the parties mutually agree.) Each trademark shall be used only in
connection with the applicable Shared Product and shall not be used by either
party on, or in connection with, any other product. The Steering Committee shall
determine which party shall own each trademark used to promote Shared Products
in the Territory and assign responsibility to one or both parties for searching
candidate trademark names and filing, prosecuting, maintaining and all
reasonable steps necessary in defending each Shared Product trademark
application(s) and/or trademark(s) (as applicable).
(b) The party owning a given trademark and related intellectual property
rights in a country in the Territory shall, and hereby does, grant to the other
party a nonexclusive, royalty-free license, with the right to grant sublicenses
only with the prior written consent of the granting party, not to be
unreasonably withheld, to use such trademark to promote and Commercialize Shared
Products as permitted under this Agreement, provided that the party receiving
such license shall refrain from taking any actions that may dilute or otherwise
reduce the value of such trademark. The parties shall approve all trade dress,
logos, slogans, designs and copyrights used on and in connection with any Shared
Product in the Territory. During the term of this Agreement, the Screening
Committee shall approve all printed materials bearing each trademark for a
Shared Product in the Territory, including but not limited to business
materials, printed materials, advertising materials, promotional materials and
any such other materials that may reference or incorporate such trademark.
(c) In the event that any action or proceeding is brought against either or
both NeoGenesis or Tularik with respect to a Shared Product trademark in the
Territory or relating to any alleged infringement of a third party's trademark,
trade dress or similar intellectual property rights in the Territory arising out
of the parties' promotion or Commercialization of Shared Products pursuant to
this Agreement, each party shall promptly notify the other and cooperate in the
defense of any such action or proceeding, as applicable. The parties shall agree
on the management of such action. In the event Tularik or NeoGenesis becomes
aware of any actual or threatened violation of any trademark for a Shared
Product in any country in the Territory, that party shall promptly notify the
other party and the Steering Committee shall promptly discuss how to proceed in
connection with such actual or threatened violation. Any expenses incurred by
either or both parties for searching candidate trademark names, filing,
prosecuting, maintaining, defending and enforcing trademark application(s)
and/or trademark(s) (as applicable) for Shared Products shall be included as an
element of the Other Allowable Expenses.
4A.25 SUPPLY OF SHARED PRODUCT. The Steering Committee shall be responsible for
determining the sources of, and arrangements for, the clinical and commercial
Manufacture and supply of Designated Shared Compounds and Shared Products in a
manner designed to result in long-term profit maximization for such Shared
Products. The Steering Committee shall endeavor to establish multiple sources of
bulk material and fill and finish services and to establish policies for the
maintenance of inventories of key intermediates, bulk material and finished
products and for such other matters as necessary or useful to assure such supply
of Shared Products in the Territory. The Independent
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
32
Party shall arrange for the Manufacture and supply of Independent Compounds,
Derivative Compounds thereof and Independent Products, in both bulk and
finished form.
4A.26 SPECIFICATIONS FOR SHARED PRODUCTS. The parties shall designate one of
the parties to be responsible for establishing, subject to approval by the
Steering Committee, the specifications for bulk and finished Shared Product,
and providing and maintaining any necessary documentation, certificates of
analysis and test results, for each Shared Product. Copies of all such
specifications and other information and documentation will be provided
promptly to each party. In addition, notice of, and results and data from,
all FDA (or its foreign equivalent) audits relating to the Manufacture of
Shared Products will be provided to each party.
4A.27 TERMS OF MANUFACTURE AND SUPPLY. The parties shall establish procedures
acceptable to both parties regarding forecasting of and ordering for each
party's requirements of the Shared Products in the Territory.
4A.28 SIDE EFFECTS AND ADVERSE EVENTS. During the term of this Agreement, each
party shall promptly advise the other by telephone, telefax or overnight
delivery service of every serious or unexpected side effect, adverse reaction or
injury that has been brought to that party's attention and which is alleged to
have been caused by a Shared Product. For each country in the Territory, the
party that has the responsibility for filing the Regulatory Approval and the IND
(or foreign equivalent) in such country for such Shared Product shall have all
rights and responsibilities to report such side effect, adverse reaction or
injury to the appropriate Regulatory Authority(ies) as required by Applicable
Laws. The parties shall establish a procedure for such reporting obligations
prior to commencement of Phase I Clinical Trials for the first Shared Product.
4A.29 COMMUNICATION WITH REGULATORY AGENCIES. If a party is contacted by the FDA
or any equivalent regulatory agency in any country in the Territory during the
term of this Agreement pertaining to a Shared Product, Tularik and NeoGenesis
shall promptly, but always within [*], notify and consult with one another. The
party that has responsibility for regulatory filings for a Shared Product shall
provide an appropriate response to such contact after such consultation with the
other party, except where an earlier response may be required by law or to
assure patient safety.
4A.30 SHARED PRODUCT RECALL. In the event that NeoGenesis or Tularik determines
that an event, incident or circumstance has occurred that may result in the need
for a recall or other removal of any Shared Product or any lot or lots thereof
from the market in a country within the Territory, it shall promptly advise and
consult with the other party with respect thereto. Thereafter, on a
country-by-country basis, the owner of the Regulatory Approval for such Shared
Product in a country shall, in its sole discretion (except as otherwise required
by such government authority), have the right to order a recall or other removal
after such consultation, and the other party shall co-operate with such recall.
Any expenses related to a recall in the Territory for a Shared Product shall be
included in Recall Expenses.
5. CONFIDENTIALITY
5.1 PUBLICITY. The parties shall agree upon the text and the exact timing of an
initial public announcement relating to the transactions contemplated by this
Agreement as soon as practicable after the Effective Date (such agreement not to
be unreasonably withheld or delayed). Each party may thereafter disclose to
third parties the specific information contained in such public announcement
without the need for further approval by the other party. Thereafter, unless
permitted by the preceding sentence, each party agrees not to issue any press
release or other public statement, written or oral, to the public, the press,
the stockholders or otherwise, relating to this Agreement that has not
previously been approved in writing by the other party. Nothing in this Section
5.1 shall prohibit a party from making such disclosures to the extent required
under applicable federal or state securities laws or any rule or regulation of
any nationally recognized securities exchange. In such event, however, the
disclosing party shall use good faith efforts to notify and consult with the
other party prior to such disclosure and, where applicable, shall diligently
seek confidential treatment to the extent such treatment is available under
applicable securities laws.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
33
5.2 CONFIDENTIALITY. (a) Except as permitted in accordance with Section 5.1,
either party may only disclose the general nature, but not the specific
financial or other material terms, of this Agreement without the prior consent
of the other party; PROVIDED that either party may provide a copy of this
Agreement or disclose the terms of this Agreement (i) to any finance provider in
conjunction with a financing transaction, if such finance provider agrees to
keep this Agreement confidential, (ii) to enforce its rights under this
Agreement in a proceeding in accordance with Section 9.1, (iii) to any legal or
financial advisor of such party, or (iv) in response to a subpoena or other
validly issued administrative or judicial process requesting disclosure of same;
PROVIDED, the party that receives such order or process provides prompt notice
to the disclosing party before making any disclosure (to the extent possible)
and permits the disclosing party to oppose or narrow such request for disclosure
and supports any of disclosing party's reasonable efforts to oppose such request
(at disclosing party's expense) and shall disclose the terms of this Agreement
only in the event of a final judgment or administrative order requiring such
disclosure, and only to the extent necessary to comply with such request.
(b) Confidential Information of each party and Program Intellectual
Property owned by such party will be used by the other party solely for the
purposes permitted by this Agreement. All Confidential Information and any
Program Intellectual Property owned by a party will be received and held in
confidence by the receiving party, subject to the provisions of this Agreement.
Each party acknowledges that, except for the rights expressly granted under this
Agreement, it will not obtain any rights of any sort in or to the Confidential
Information of the other party as a result of such disclosure and that any such
rights must be the subject of separate written agreement(s).
(c) Each party will restrict disclosure of the other party's
Confidential Information and any Program Intellectual Property owned by such
party to those of its employees and consultants to whom it is necessary or
useful to disclose such Confidential Information and Program Intellectual
Property in connection with the purposes permitted under this Agreement. Each
party shall use reasonable efforts, including at least efforts fully
commensurate with those employed by the party for the protection of its own
Confidential Information, to protect the Confidential Information and Program
Intellectual Property of the other party.
(d) Either disclosing party may at any time notify the receiving party that
such receiving party must return to the disclosing party the disclosing party's
Confidential Information and any Program Intellectual Property owned by such
party. Each party hereby agrees to, within thirty (30) days of such
notification: (i) return all documents and tangible items it or its employees or
agents have received or created pursuant to this Agreement pertaining, referring
or relating to the other party's Confidential Information and any Program
Intellectual Property owned by such party; and (ii) return or certify (in a
writing attested to by a duly authorized officer of such party) destruction of
all copies, summaries, modifications or adaptations that such party or its
employees or agents have made from the materials provided by the disclosing
party; provided, however, that a party is permitted to retain one copy of such
materials in its legal files to be used to verify compliance with its
obligations hereunder.
(e) Nothing herein shall prevent a receiving party from disclosing all or
part of the Confidential Information and any Program Intellectual Property owned
by the disclosing party in response to a subpoena or other validly issued
administrative or judicial process requesting disclosure of same; PROVIDED, the
party that receives such order or process provides prompt notice to the
disclosing party before making any disclosure (to the extent possible) and
permits the disclosing party to oppose or narrow such request for disclosure and
supports any of the disclosing party's reasonable efforts to oppose such request
(at disclosing party's expense) and shall disclose such Confidential Information
or Program Intellectual Property only in the event of a final judgement or
administrative order requiring such disclosure, and only to the extent necessary
to comply with such request.
5.3 PUBLICATIONS. Each party recognizes that the publication of papers regarding
results of the Screening Program, including oral presentations and abstracts,
may be beneficial to both parties provided such publications are subject to
reasonable controls to protect Confidential Information. In particular, it is
the intent of the parties to maintain the confidentiality of any Confidential
Information regarding the compounds included in any patent application until
such patent application has been published. Accordingly, each party shall have
the right to review and comment upon any paper proposed for publication by the
other party regarding results of the
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
34
Screening Program hereunder, including oral presentations and abstracts, which
utilizes data generated from the Screening Program and/or includes Confidential
Information of the other party. Before any such paper is submitted for
publication, the party proposing publication shall deliver a complete copy to
the other party at least thirty (30) days prior to submitting the paper to a
publisher. The receiving party shall review any such paper and give its comments
to the publishing party within twenty (20) days of the delivery of such paper to
the receiving party. With respect to oral presentation materials, the parties
shall make reasonable efforts to expedite review of such materials, and shall
return such items as soon as practicable to the disclosing party with
appropriate comments, if any, but in no event later than twenty (20) days from
the date of delivery to the receiving party. The disclosing party shall comply
with the other party's request to delete references to such other party's
Confidential Information in any such paper and agrees to withhold publication of
same for an additional one hundred eighty (180) days (or longer if necessary) in
order to permit the parties to obtain patent protection, if either of the
parties deem it necessary, in accordance with the terms of this Agreement. If
there is a dispute regarding publications, such dispute shall be resolved by the
Steering Committee.
6. REPRESENTATIONS AND WARRANTIES.
6.1 AUTHORIZATION; ENFORCEABILITY. Each of Tularik and NeoGenesis represent and
warrant to the other that: (a) it is a corporation duly organized and validly
existing under the laws of its jurisdiction of organization and has all
requisite power and authority to enter into this Agreement; (b) it is duly
authorized by all requisite action to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby, and that the
same do not conflict or cause a default with respect to such party's obligations
under any other agreement; (c) it has duly executed and delivered this
Agreement; and (d) it is authorized to disclose any and all Confidential
Information made available to the other party pursuant to this Agreement.
6.2 PERFORMANCE. (a) NeoGenesis hereby represents and warrants to Tularik that:
(i) NeoGenesis shall perform the Screening Program using qualified personnel and
in a good and workmanlike manner consistent with industry standards of companies
that are comparable to NeoGenesis performing similar activities under similar
circumstances; and (ii) as of the Effective Date, there is no agreement known to
NeoGenesis to which it is a party and by which it is bound that would conflict
with or be breached by NeoGenesis granting Tularik the licenses in Sections 2.5,
3.1 and 3.2 (e) and the assignments in Section 3.2(d) and 3.2(i).
(b) NeoGenesis hereby represents and warrants to Tularik that it has not
sought, and will not seek, patent protection on any of the compounds that will
be screened in the conduct of the Screening Program.
(c) Tularik hereby represents and warrants to NeoGenesis that, as of the
Effective Date, there is no agreement known to Tularik to which it is a party
and by which it is bound that would conflict with or be breached by Tularik
granting NeoGenesis the licenses in Sections 2.5, 3.1 and 3.2(f).
6.3 DISCLAIMER. (A) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTIONS
6.1-6.2, NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING, WITHOUT LIMITATION ANY
WARRANTY AGAINST INFRINGEMENT OF ANY THIRD PARTY PATENT OR OTHER INTELLECTUAL
PROPERTY RIGHTS, ANY WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE WITH RESPECT TO ANY MATTER WHATSOEVER, INCLUDING BUT NOT
LIMITED TO, THE NEOMORPH SCREENING LIBRARY, THE NEOMORPH FOCUSED LIBRARIES,
QSCD, THE PRELIMINARY COMPOUNDS, THE PRIMARY ACTIVE COMPOUNDS, THE SELECTED
COMPOUNDS, THE DESIGNATED COMPOUNDS, THE TARGETS, THE PRODUCTS, THE SHARED
PRODUCTS, THE NEOGENESIS INTELLECTUAL PROPERTY, THE TULARIK INTELLECTUAL
PROPERTY, THE SCOPE, VALIDITY OR ENFORCEABILITY OF THE NEOGENESIS PATENT RIGHTS,
THE TULARIK PATENT RIGHTS OR PROGRAM PATENT RIGHTS, OR SUCH PARTY'S OBLIGATIONS
UNDER THIS AGREEMENT.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
35
(B) THE REPRESENTATIONS AND WARRANTIES OF EACH OF NEOGENESIS AND TULARIK
EXTEND ONLY TO THE OTHER PARTY. NEITHER PARTY WILL BE LIABLE FOR ANY CLAIM OR
DEMAND AGAINST SUCH OTHER PARTY BY A THIRD PARTY, EXCEPT TO THE EXTENT PROVIDED
IN SECTIONS 7.2-7.3.
7. RISK ALLOCATION
7.1 LIMITATION OF LIABILITY. EXCEPT FOR BREACH OF CONFIDENTIALITY OBLIGATIONS
UNDER SECTION 5 AND EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 7.2-7.3 WITH
RESPECT TO THIRD PARTY CLAIMS, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR LOST PROFITS OR SAVINGS OR FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, HOWEVER CAUSED,
UNDER ANY THEORY OF LIABILITY.
7.2 THIRD PARTY CLAIMS (EXCLUDING INFRINGEMENT). Subject to the provisions of
Section 7.4, each of NeoGenesis and Tularik (each, in such capacity, an
INDEMNIFYING PARTY) will defend, indemnify and hold harmless the other party,
its subsidiaries, parent corporations, affiliates, officers, directors,
partners, members, shareholders, employees, agents, and their successors and
assigns (each, in such capacity, an INDEMNIFIED PARTY) from and against any
claim, suit, demand, loss, damage, expense (including reasonable attorneys' fees
of Indemnified Party(ies) and those that may be asserted by a third party) or
liability including but not limited to claims for death or personal injury
(collectively, LOSSES) imposed upon the Indemnified Party(ies) by any third
party arising from or related to: (i) any material breach of the Indemnifying
Party's representations and warranties under this Agreement; or (ii) any
negligence or intentional misconduct by the Indemnifying Party (or its
employees, agents, representatives, Affiliates, licensees, sublicensees or
distributors) in performing its obligations under this Agreement; or (iii) the
labeling, packaging, package insert, other materials or promotional claims with
respect to any Shared Product or Independent Product or the Development,
testing, Manufacturing, Commercialization, use or other disposition of any
Shared Product or Independent Product by the Indemnifying Party or by an
Affiliate, licensee, sublicensee, distributor or agent of the Indemnifying
Party; or (iv) (with respect to Tularik as an Indemnifying Party) the labeling,
packaging, package insert, other materials or promotional claims with respect to
any Product or the development, testing, Manufacturing, Commercialization, use
or other disposition of any Product by Tularik or by an Affiliate, licensee,
sublicensee, distributor or agent of Tularik. The foregoing indemnification
action shall not apply in the event and to the extent that such Losses arose as
a result of any Indemnified Party's negligence, intentional misconduct or breach
of this Agreement.
7.3 INFRINGEMENT INDEMNIFICATION. (a) Subject to the provisions of Section 7.4,
NeoGenesis shall defend, indemnify and hold harmless the Tularik Indemnified
Party(ies) from and against any Losses imposed upon them by any third party and
arising from or related to a third party claim that use of NeoGenesis
Intellectual Property or practice of the NeoGenesis Patent Rights by Tularik in
accordance with the terms of this Agreement violates or infringes the
intellectual property rights of any third party. NeoGenesis shall have no
liability or obligation to Tularik under this Section 7.3(a) in the event and to
the extent that the alleged infringement results from willful misconduct or
negligent acts or omissions of Tularik or its Affiliates, or its or their
respective employees, officers, directors or agents.
(b) Subject to the provisions of Section 7.4, Tularik shall defend,
indemnify and hold harmless the NeoGenesis Indemnified Party(ies) from and
against any Losses imposed upon them by any third party and arising from or
related to a third party claim that use of the Tularik Intellectual Property or
practice of the Tularik Patent Rights by NeoGenesis in accordance with the terms
of this Agreement violates or infringes the intellectual property rights of any
third party. Tularik shall have no obligation or liability to NeoGenesis under
this Section 7.3(b) in the event and to the extent that the alleged infringement
(i) is covered by Section 7.3(a) or (ii) results from willful misconduct or
negligent acts or omissions of NeoGenesis or its Affiliates, or its or their
respective employees, officers, directors or agents.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
36
7.4 PROCEDURE. To receive the benefit of indemnification under Sections 7.2 or
7.3, the Indemnified Party must (a) promptly notify the Indemnifying Party of a
claim or suit; PROVIDED, that failure to give such notice shall not relieve
Indemnifying Party of its indemnification obligations except where, and solely
to the extent that, such failure actually and materially prejudices the rights
of Indemnifying Party; (b) provide reasonable cooperation to the Indemnifying
Party (and its insurer), as reasonably requested, at Indemnifying Party's cost
and expense; and (c) tender to the Indemnifying Party (and its insurer) full
authority to defend or settle the claim or suit; PROVIDED that no settlement
requiring any admission by the Indemnified Party or that imposes any obligation
on the Indemnified Party shall be made without the Indemnified Party's consent.
Neither party has any obligation to indemnify the other party in connection with
any settlement made without the Indemnifying Party's written consent. The
Indemnified Party has the right to participate at its own expense in the claim
or suit and in selecting counsel therefor.
8. TERM AND TERMINATION
8.1 TERM. This Agreement shall take effect as of the Effective Date and shall
remain in effect until the expiration of the last to expire of the licenses
granted hereunder, unless sooner terminated in accordance with Section 8.2.
8.2 TERMINATION. (a) NeoGenesis may suspend work pursuant to the Screening
Program or terminate the Screening Program with thirty (30) days' notice to
Tularik if Tularik fails to pay fees not contested in good faith due under the
Agreement or commits a material breach, unless the nonpayment or breach is cured
within the thirty (30)-day notice period. Tularik may terminate the Screening
Program with thirty (30) days' notice to NeoGenesis if NeoGenesis commits a
material breach unless the breach is cured within the thirty (30)-day notice
period.
(b) Either party may terminate the license under Section 3.1 with sixty
(60) days' notice if the other party commits a material breach (including
non-payment), unless the breach is cured within the sixty (60)-day notice
period; PROVIDED that if more than one compound is being developed or
commercialized by a party or its Affiliates hereunder, and the other party
terminates this Agreement pursuant to this Section 8.2(b) due to a breach
relating only to a single compound, then the terminating party shall be entitled
to terminate this Agreement only with respect to the applicable compound.
(c) The parties may terminate this Agreement, or the license under Section
3.1 on a compound-by-compound, product-by-product or country-by-country basis,
at any time upon mutual written agreement of the parties.
(d) Tularik shall have the right to terminate the license set forth in
Section 3.1 on a Designated Screening Compound-by-Designated Screening Compound,
Derivative Compound thereof-by-Derivative Compound thereof, Product-by-Product
or country-by-country basis at any time upon notice to NeoGenesis.
(e) If voluntary or involuntary proceedings by or against a party are
instituted in bankruptcy under any insolvency law, or a receiver or custodian is
appointed for such party, or proceedings are instituted by or against such party
for corporate reorganization or the dissolution of such party, which
proceedings, if involuntary, shall not have been dismissed within sixty (60)
days after the date of filing, or if such party makes an assignment for the
benefit of creditors, or substantially all of the assets of such party are
seized or attached and not released within sixty (60) days thereafter, the other
party may immediately terminate this Agreement effective upon notice of such
termination.
8.3 EFFECT OF TERMINATION. (a) Upon termination (including expiration) of
this Agreement: (i) the parties will terminate all tasks then in process in an
orderly manner, as soon as practical and in accordance with a schedule agreed to
by Tularik and NeoGenesis; (ii) if termination occurs prior to completion of the
Screening Program then NeoGenesis shall deliver to Tularik all materials
developed through the termination of this Agreement; (iii) each party shall pay
to the other party any uncontested monies due and owing up to the time of
termination; and (iv) within thirty (30) days following termination (including
expiration) of this Agreement, NeoGenesis shall deliver to Tularik a
reasonably-detailed written report describing the results of the research
performed under the Screening Program up to the date of such termination.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
37
(b) Upon termination (including expiration) of this Agreement each party
shall return to the other party or certify in writing to the other party that it
has destroyed all documents and other tangible items it or its employees or
agents have received or created pertaining, referring or relating to the
Confidential Information or Program Intellectual Property owned by the other
party; provided, however, that a party is permitted to retain one copy of such
materials in its legal files to be used to verify compliance with its
obligations hereunder.
(c) The license granted by NeoGenesis under Section 3.1(a) shall survive
any expiration or termination of the Screening Program or this Agreement with
respect to any Designated Compound, Derivative Compound thereof, Product and
Shared Product for which the applicable fees and milestone fees and royalties or
the amounts due under Section 4A, as applicable, have been paid and with respect
to any Independent Compound, Derivative Compound thereof and Independent Product
for which the amounts due under Section 4A have been paid (in each case in
accordance with the terms of this Agreement); PROVIDED that Tularik continues to
pay NeoGenesis the fees and royalties as required by Sections 4.3, 4.4 and 4.5
and complies with Sections 4.6-4.9, or to pay NeoGenesis the amounts due under
Section 4A, as applicable. The license granted by Tularik under Section 3.1(b)
shall survive any expiration or termination of this Agreement with respect to
any Designated Shared Compound, Derivative Compound thereof, Shared Product,
Independent Compound, Derivative Compound thereof and Independent Product for
which the amounts due under Section 4A have been paid (in accordance with the
terms of this Agreement). The license granted under Section 3.1 shall not
survive termination or expiration of the Screening Program or this Agreement
with respect to Designated Compounds, Derivative Compounds thereof, Products,
Shared Products, Independent Compounds, Derivative Compounds thereof and
Independent Products for which the applicable fees and milestone fees and
royalties or the amounts due under Section 4A, as applicable, have not been paid
in accordance with this Agreement. In the event the license granted to Tularik
under Section 3.1 terminates for any reason, each of Tularik's sublicensees at
such time shall continue to have the rights and license set forth in their
sublicense agreements, PROVIDED such sublicensee agrees in writing that
NeoGenesis is entitled to enforce all relevant provisions directly against such
sublicensee.
(d) Except as otherwise provided herein, neither party shall be liable to
the other party for any compensation or damages by reason of termination of this
Agreement in accordance with this Section 8.
(e) Nothing herein shall be construed to release either party of any
obligation which matured prior to the effective date of any termination. Either
party's liability for any uncontested charges, payments or expenses due to the
other party that accrued prior to the termination date shall not be extinguished
by termination, and such amounts (if not otherwise due on an earlier date) shall
be immediately due and payable on the termination date.
8.4 SURVIVAL. Sections 1, 2.4, 2.5 (last sentence), 2.6(a), 2.8, 2.9, 3.2, 3.3,
3.4, 4.7, 4.8, 4A.3 (last sentence), 4A.4 (last sentence), 4A.21(b) and 5-9
shall survive any termination or expiration of this Agreement. In addition, the
licenses granted under Section 3.1 shall survive to the extent necessary to
permit a party opting to proceed with Pre-Clinical Development, Development,
Manufacture and Commercialization of a Discontinued Compound or Non-Proposed
Compound as contemplated in the last sentence of Sections 4A.3 and 4A.4,
respectively; PROVIDED, that such party complies with the provisions of Section
4A.15(c) and the Sections referenced therein, which shall survive termination or
expiration for this purpose.
9. GENERAL PROVISIONS.
9.1 ISSUE RESOLUTION. The parties shall use their best efforts to resolve any
controversy or dispute that arises under or relates to this Agreement through
good faith discussions. The parties shall initiate such discussions using the
following procedure. Either party shall notify the other party of the nature of
the controversy or dispute, providing sufficient detail to permit the other
party to understand same (a DISPUTE NOTICE). The representatives of the parties
shall meet within thirty (30) days after the date that the non-sending party
receives the Dispute Notice to attempt in good faith to reach an agreement about
the nature of the dispute and a resolution of the dispute. Pending resolution
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
38
of any dispute covered by this Section 9.1, both parties will continue their
performance under this Agreement including, without limitation, the payment of
all amounts due to the other party that are not in dispute.
9.2 GOVERNING LAW. This Agreement shall be governed and construed in accordance
with the internal, substantive laws of the State of
Delaware to the exclusion of
any choice or conflict of laws rule or provision that would result in the
application of the substantive law of any other jurisdiction. Notwithstanding
the foregoing, the parties shall use United States (Federal) patent laws, as
applicable, for purposes of governing and construing Sections 3.2-3.4 of this
Agreement. The United Nations Convention on Contracts for the International Sale
of Goods shall not apply to the transactions contemplated by this Agreement.
9.3 AMENDMENT AND WAIVER. No provision of or right under this Agreement shall be
deemed to have been waived by any act or acquiescence on the part of either
party, its agents or employees, but only by an instrument in writing signed by
an authorized officer of each party. No waiver by either party of any breach of
this Agreement by the other party shall be effective as to any other breach,
whether of the same or any other term or condition and whether occurring before
or after the date of such waiver.
9.4 INDEPENDENT CONTRACTORS. Each party represents that it is acting on its own
behalf as an independent contractor and is not acting as an agent for or on
behalf of any third party. This Agreement and the relations hereby established
by and between Tularik and NeoGenesis do not constitute a partnership, joint
venture, franchise, agency or contract of employment. Neither party is granted,
and neither party shall exercise, the right or authority to assume or create any
obligation or responsibility on behalf of or in the name of the other party or
its Affiliates. Each party shall be solely responsible for compensating all its
personnel and for payment of all related FICA, workers' compensation,
unemployment and withholding taxes. Neither party shall provide the other
party's personnel with any benefits, including but not limited to compensation
for insurance premiums, paid sick leave or retirement benefits.
9.5 ASSIGNMENT. Neither party may assign this Agreement or any of its rights and
obligations under this Agreement without the prior written consent of the other
party; PROVIDED, that either party may assign this Agreement to (a) any Person
to which such party transfers all or substantially all of its assets or with
which such party is consolidated or merged; (b) any Person that owns a majority
of the voting stock of such party; or (c) a single Person of which such party
owns a majority of the voting stock; PROVIDED, FURTHER, that in each instance
the assignee expressly assumes all obligations imposed on the assigning party by
this Agreement in writing and the other party is notified in advance of such
assignment.
9.6 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
9.7 NOTICES. Unless otherwise provided herein, any notice, report, payment or
document to be given by one party to the other shall be in writing and shall be
deemed given when delivered personally or mailed by certified or registered
mail, postage prepaid (such mailed notice to be effective on the date which is
three (3) business days after the date of mailing), or sent by nationally
recognized overnight courier (such notice sent by courier to be effective one
business day after it is deposited with such courier), or sent by telefax (such
notice sent by telefax to be effective when sent, if confirmed by certified or
registered mail or overnight courier as aforesaid) to the address set forth on
the signature page to this Agreement or to such other place as any party may
designate as to itself by written notice to the other party.
9.8 SEVERABILITY. In the event any provision of this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof. The parties agree that they will negotiate in good faith or
will permit a court to replace any provision hereof so held invalid, illegal or
unenforceable with a valid provision which is as similar as possible in
substance to the invalid, illegal or unenforceable provision.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
39
9.9 CAPTIONS. Captions of the sections and subsections of this Agreement are
for reference purposes only and do not constitute terms or conditions of this
Agreement and shall not limit or affect the meaning or construction of the
terms and conditions hereof.
9.10 WORD MEANINGS. Words such as HEREIN, HEREINAFTER, HEREOF and HEREUNDER
refer to this Agreement as a whole and not merely to a section or paragraph
in which such words appear, unless the context otherwise requires. The
singular shall include the plural, and each masculine, feminine and neuter
reference shall include and refer also to the others, unless the context
otherwise requires.
9.11 ENTIRE AGREEMENT. The terms and provisions contained in this Agreement
(including the Attachments) constitute the entire understanding of the parties
with respect to the transactions and matters contemplated hereby and supersede
all previous communications, representations, agreements and understandings
relating to the subject matter hereof. No representations, inducements, promises
or agreements, whether oral or otherwise, between the parties not contained in
this Agreement shall be of any force or effect. No agreement or understanding
extending this Agreement or varying its terms (including any inconsistent terms
in any purchase order, acknowledgment or similar form) shall be binding upon
either party unless it is in a writing specifically referring to this Agreement
and signed by a duly authorized representative of the applicable party.
9.12 RULES OF CONSTRUCTION. The parties agree that they have participated
equally in the formation of this Agreement and that the language and terms of
this Agreement shall not be construed against either party by reason of the
extent to which such party or its professional advisors participated in the
preparation of this Agreement.
9.13 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
9.14 FORCE MAJEURE. Except as otherwise provided in this Agreement, in the event
that a delay or failure of a party to comply with any obligation created by this
Agreement is caused by a Force Majeure condition, that obligation shall be
suspended during the continuance of the Force Majeure condition.
9.15 FURTHER ASSURANCES. Each party covenants and agrees that, subsequent to the
execution and delivery of this Agreement and without any additional
consideration, it will execute and deliver any further legal instruments and
perform any acts which are or may become reasonably necessary to effectuate the
purposes of this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
their behalf by their duly authorized representatives intending it to take
effect as an instrument under seal as of the Effective Date.
NEOGENESIS DRUG DISCOVERY, INC. TULARIK INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------- ---------------------------------
Xxxxxx Xxxxxxx Xxxxxxx X. Xxxxxxx
Vice President, Business Development Executive Vice President,
Administration
NOTICE ADDRESS: NOTICE ADDRESS:
NeoGenesis Drug Discovery, Inc. Tularik Inc.
000 Xxxxxxxx Xxxxx Two Corporate Drive
Cambridge, MA 02139 Xxxxx Xxx Xxxxxxxxx, XX 00000
Phone: 000.000.0000 Phone: 000.000.0000
Fax: 000.000.0000 Fax: 000.000.0000
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
40
ATTACHMENT A
SCREEN PROGRAM
The Screening Program to be performed by NeoGenesis with respect to the Targets
will screen at least [*] compounds contained in the NeoGenesis NeoMorph
Screening Library against each Target using the protocol described below.
1. Tularik will provide NeoGenesis with at least [*] of each of the purified
functionally-active Target proteins and may, at Tularik's option, provide
additional quantities if requested by NeoGenesis. NeoGenesis will perform
initial experiments on the Targets to determine screening conditions in
NeoGenesis' ALIS protocols. NeoGenesis will establish SOPs for ALIS screening
based on the preceding experiments.
2. Using the SOPs, NeoGenesis will perform ALIS screening of at least [*] and up
to [*] compounds from the NeoMorph Screening Library against each Target. The
ALIS screening will be carried out under moderately stringent conditions to
identify compounds that bind to the Target with binding affinities better than
[*] micromolar (Kd < [*]) (each such compound is referred to as a PRELIMINARY
COMPOUND).
3. If NeoGenesis identifies a Preliminary Compound(s) for the Target and Tularik
is able to provide NeoGenesis with a second protein that differs from the Target
but is of the same functional class of protein as the Target, NeoGenesis will
screen such second protein against the Preliminary Compound(s) to determine the
relative selectivity of the Preliminary Compound for the Target(s).
Alternatively, if Tularik is unable to deliver a second protein of the same
functional class, NeoGenesis will screen an unrelated protein selected by the
Screening Committee against the Preliminary Compound(s) to assay the specificity
of the Preliminary Compounds.
4. If NeoGenesis identifies a Preliminary Compound(s) for the Target, NeoGenesis
will re-synthesize a NeoMorph library containing each such Preliminary Compound
and subject each such Preliminary Compound to ALIS screening for confirmation of
binding to the Target(s).
5. After performing the selectivity analysis and confirmatory ALIS screening
described in Paragraphs 3 and 4 above on the Preliminary Compound(s), the
Steering Committee will review the structure(s), binding affinities and target
specificities of such Preliminary Compound(s) and choose at least [*] (unless
there are fewer than [*]) Preliminary Compounds as discrete compound(s) (each
such compound is referred to as a DISCRETE COMPOUND) for further testing as
described below.
6. NeoGenesis will purify all Discrete Compounds and subject them to screening
on an individual basis for confirmation of binding to the Target. In addition,
at Tularik's option, either (i) NeoGenesis will deliver to Tularik between [*]
of each Discrete Compound and Tularik will evaluate the activity of these
Discrete Compound(s) in a Target-based functional assay and will notify
NeoGenesis of the results of such assays, including any Discrete Compounds which
have demonstrated activity in the Target-based functional assays (each, a
PRIMARY ACTIVE COMPOUND) within [*] after completion of such assays and not
later than [*] after the Discrete Compounds are delivered by NeoGenesis or, (ii)
NeoGenesis will evaluate the activity of the Discrete Compound(s) in
Target-based functional assay(s) that have been delivered to NeoGenesis by
Tularik and will notify Tularik of any Primary Active Compounds within [*] after
completion of such assays and not later than [*] after the Target-based
functional assay is delivered by Tularik.
7. If either Tularik or NeoGenesis identifies one or more Primary Active
Compounds pursuant to Paragraph 6, then NeoGenesis will prepare a report for all
Primary Active Compound(s) that details the chemical structures, binding
affinities, Target specificities, functional activities and competition analysis
data for such Primary Active Compound(s) (each, a FINAL TARGET REPORT).
NeoGenesis will deliver such Final Target Report to Tularik when it notifies
Tularik of such Primary Active Compounds or, if Tularik has conducted the
functional assays, within [*] of receipt of the results of such assays from
Tularik; PROVIDED that competition analysis data may be delivered as a
supplement to the Final Target Report within [*] of receipt of the results of
such assays from Tularik.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
41
8. Tularik will select up to [*] Primary Active Compounds per Screening Target,
for further study or optimization by NeoGenesis (each, a SELECTED SCREENING
COMPOUND). The Steering Committee will select up to [*] Primary Active Compounds
per Shared Target, for further study or optimization (each, a SELECTED SHARED
COMPOUND). Selected Screening Compounds and Selected Shared Compounds are
referred to, collectively, as SELECTED COMPOUNDS.
9. In the Proof of Concept Stage, NeoGenesis will perform, at Tularik's
option, either (a) [*] of optimization on [*] Selected Screening Compounds
identified by Tularik or (b) [*] of optimization on [*] Selected Screening
Compound identified by Tularik. To perform such optimization, NeoGenesis will
create NeoMorph Focused Libraries based upon such Selected Screening
Compounds and will perform high stringency-ALIS screening to improve Kd
values to [*] micromolar or better (i.e., Kd LESS THAN= [*](mu)M). In the
event that Tularik wishes to have NeoGenesis perform additional cycles of
optimization of other Selected Screening Compounds for a Screening Target in
the Proof of Concept Stage, the parties shall negotiate a budget and schedule
for such work (the budget to set forth expected hours of work payable at the
FTE Rate). In the event that Tularik wishes to have NeoGenesis perform
optimization in the Expanded Collaboration of Selected Screening Compounds,
the parties shall negotiate a budget and schedule for such work (the budget
to set forth expected hours of work payable at the FTE Rate.) Optimization on
Selected Shared Compounds will be performed as determined by the Steering
Committee.
10. (a) NeoGenesis will provide Tularik with at least [*] of each discrete
Selected Screening Compound(s) for further evaluation by Tularik in
Target-based secondary assays and, at Tularik's option, exploratory chemistry
or toxicological studies. Any additional quantities of Selected Screening
Compounds will be furnished to Tularik at cost, which shall be based on the
FTE Rate.
(b) NeoGenesis will provide Tularik with at least [*] of each discrete
Selected Shared Compound(s) for further evaluation by Tularik in Target-based
secondary assays and, at the option of the Steering Committee, exploratory
chemistry or toxicological studies. Tularik will notify NeoGenesis of any
such Selected Shared Compound(s) which demonstrate activity in the
Target-based secondary assays within [*] after completion of such assays and
not later than [*] after the discrete Selected Shared Compounds are delivered
by NeoGenesis. Any additional quantities of Selected Shared Compounds will be
furnished at the instruction of the Steering Committee.
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
42
ATTACHMENT B
PROGRAM INTELLECTUAL PROPERTY
[TO BE SUPPLIED AS DEVELOPED]
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
43
ATTACHMENT C
SHARED TARGETS:
[*]
SCREENING TARGETS:
[*]
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
44
ATTACHMENT D
NEOGENESIS PATENT RIGHTS
[TO BE SUPPLIED BY NEOGENESIS AS APPLICABLE]
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
45
ATTACHMENT E
NOTE PURCHASE AGREEMENT AND PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THIS NOTE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
NON-NEGOTIABLE
CONVERTIBLE PROMISSORY TERM NOTE
$1,000,000.00 ___________ __, 200_
Cambridge, Massachusetts
FOR VALUE RECEIVED, NeoGenesis Drug Discovery, Inc., a
Delaware corporation
("Payor"), subject to the terms of this Note, promises to pay to Tularik Inc., a
Delaware corporation, or its assigns ("Lender") the principal sum of One Million
Dollars ($1,000,000.00) on [the date that is four years after the date on which
this note is issued] (the "Maturity Date"), and to pay interest on the principal
amount, from the date hereof through and including the date on which such
principal amount is paid in full, at a rate of 5.75% per annum[, compounded
annually based on a 365-day year]. Interest hereunder shall commence with the
date hereof and shall continue to accrue on the outstanding principal until paid
in full on the Maturity Date. Any terms used herein but not otherwise defined
shall have the respective meanings given in that certain Agreement (the
"Screening Agreement") between Payor and Lender dated as of September [___],
2001.
1. This note ("Note") is issued pursuant to the terms of that certain
Note
Purchase Agreement (Convertible into Common Stock) ("
Note Purchase Agreement")
between Payor and Lender and dated as of the date hereof.
2. All payments of principal and interest shall be in lawful money of the United
States of America and shall be made to Lender at any address designated by
Lender. Notwithstanding anything contained to the contrary herein or in the
Note
Purchase Agreement, Payor may prepay the principal amount of this Note according
to the formula contained in this Section 2, without penalty or additional fees,
in the event that Lender terminates the Expanded Collaboration (other than for
cause) prior to the screening of an aggregate of ten (10) Targets. The maximum
amount of such prepayment shall equal the product of (A) ten (10) less the
number of Targets (as defined in the Screening Agreement) provided by Lender
during the Expanded Collaboration pursuant to the terms of the Screening
Agreement multiplied by (B) $100,000. All interest accrued and unpaid up to the
date of such prepayment shall also be prepaid by Payor, without penalty or
additional fees.
3. Subject to Section 4 below, in connection with Payor's consummation of a
preferred stock financing that occurs prior to the occurrence of an IPO
referenced in Section 5, the then outstanding principal balance and accrued and
unpaid interest shall be converted automatically into shares of Payor's
preferred stock issued in such financing (the "Preferred Stock"), at a
conversion price equal to the price of the Preferred Stock in such preferred
stock financing, such that the total number of shares of Preferred Stock issued
upon conversion shall equal the total amount of principal and accrued and unpaid
interest then outstanding under this Note divided by the gross per share sale
price of the Preferred Stock in such preferred stock financing. The Preferred
Stock received by Lender shall rank PARI PASSU with other Preferred Stock issued
in such preferred stock financing and contain the same terms and conditions as
enjoyed by other investors in such preferred stock financing.
4. Notwithstanding anything to the contrary contained in Section 3 above, Lender
shall have the option to convert all (but not less than all) of the principal
and interest then outstanding under this Note in the event Payor consummates a
preferred stock financing with a corporate collaborator. Upon such a preferred
stock financing with a corporate collaborator, at Lender's option, the principal
balance and interest then outstanding under this Note shall be converted into
shares of preferred stock at a conversion price equal to the per share
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
46
price of the preferred stock paid by such corporate collaborator in such
preferred stock financing, such that the total number of shares of Preferred
Stock issued upon conversion shall equal the total amount of principal and
accrued and unpaid interest then outstanding under this Note divided by the
gross per share sale price of the Preferred Stock in such preferred stock
financing with a corporate collaborator. A company shall be deemed a `corporate
collaborator' if such company has a commercial (other than solely as an investor
in Payor) or collaborative relationship with Payor.
5. In connection with Payor's consummation of an IPO that occurs prior to the
occurrence of a preferred stock financing referenced in Section 3 or Section 4,
the then outstanding principal balance and accrued and unpaid interest shall be
converted automatically into shares of Payor's common stock, par value $.001 per
share (the "Common Stock"), at a conversion price equal to the gross per share
price of the Common Stock sold in the IPO, such that the total number of shares
of Common Stock issued upon conversion shall equal the total amount of principal
and accrued and unpaid interest then outstanding under this Note divided by the
gross per share sale price of the Common Stock in the IPO. As used herein, the
term "IPO" shall mean the first public offering of Payor's Common Stock on a
firmly underwritten basis, pursuant to a registration statement on Form S-1 (or
a similar form of general application prescribed by the Securities and Exchange
Commission), filed under the Securities Act of 1933, as amended.
6. In the event of any default hereunder, Payor shall pay all reasonable
attorneys' fees and court costs incurred by Lender in enforcing and collecting
this Note.
7. Payor hereby waives demand, notice, presentment, protest and notice of
dishonor.
8. The terms of this Note shall be construed in accordance with the laws of the
State of
Delaware, as applied to contracts entered into by
Delaware residents
within the State of
Delaware, which contracts are to be performed entirely
within the State of
Delaware.
9. Any term of this Note may be amended or waived only with the written consent
of Payor and Lender hereof.
10. This Note is non-transferable except with the prior written consent of
Payor.
NeoGenesis Drug Discovery, Inc.
By: ________________________
Name: _______________________
Title: ________________________
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
47
NEOGENESIS DRUG DISCOVERY, INC.
--------------------------------
NOTE PURCHASE AGREEMENT
CONVERTIBLE INTO COMMON STOCK
--------------------------------
__________ __, 2001
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOTE PURCHASE AGREEMENT
CONVERTIBLE INTO COMMON STOCK
THIS
NOTE PURCHASE AGREEMENT is made as of _________ __, 200_ by and between
NeoGenesis Drug Discovery, Inc., a
Delaware corporation (the "Corporation"), and
Tularik Inc., a Delaware corporation (the "Lender").
In consideration of the mutual promises hereinafter set forth the parties
hereto agree as follows:
SECTION 1. TERMS OF THE LOAN
1.1 THE LOAN. Subject to the terms of this Agreement, the Corporation shall
borrow from the Lender and the Lender shall lend to the Corporation an amount
equal to One Million Dollars ($1,000,000) (the "Loan Amount") pursuant to that
non-negotiable convertible promissory note in the form attached hereto as
Exhibit A (the "Note").
SECTION 2. THE CLOSING
2.1 CLOSING DATE. The closing of the purchase and sale of the Note (the
"Closing") shall be held on ________ __, 200_ at 10:00 a.m. at the offices of
Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000 (the "Closing Date").
2.2 DELIVERY. At the Closing (i) the Lender will deliver to the Corporation a
check or wire transfer funds in the amount of the Loan Amount; and (ii) the
Corporation shall execute the Note and deliver the Note to the Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Lender as follows:
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
48
3.1 CORPORATE POWER. The Corporation will have at the Closing Date all requisite
corporate power to execute and deliver this Agreement and to carry out and
perform its obligations under the terms of this Agreement.
3.2 AUTHORIZATION. All corporate action on the part of the Corporation, its
directors and its stockholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Corporation and the
performance of the Corporation's obligations hereunder, including without
limitation the issuance and delivery of the Note, have been taken or will be
taken prior to the Closing. This Agreement and the Note, when executed and
delivered by the Corporation, shall constitute valid and binding obligations of
the Corporation enforceable in accordance with each of their terms. The
Corporation's common stock, par value $.001 per share (the "Common Stock"), or
preferred stock, par value $.001 per share (the "Preferred Stock"; the Common
Stock and the Preferred Stock, collectively, the "STOCK"), when issued in
compliance with the provisions of this Agreement and the Note, will be validly
issued, fully paid and nonassessable and free of any liens or encumbrances. The
Corporation will at all times reserve and keep available, solely for issuance
and delivery upon the conversion of the Preferred Stock, when such Preferred
Stock, if any, is issued to the lender, all Common Stock issuable from time to
time upon such conversion.
3.3 GOVERNMENTAL CONSENTS. All consents, approvals, orders, or authorizations
of, or registrations, qualifications, designations, declarations or filings
with, any governmental authority, required on the part of the Corporation in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Note and the Stock issuable upon conversion of the Note
or the consummation of any other transaction contemplated hereby shall have been
obtained and will be effective at the Closing, except for notices required or
permitted to be filed with certain state and federal securities commissions.
3.4 OFFERING. Assuming the accuracy of the representations and warranties of the
Lender contained in Section 4 hereof, the offer, issue and sale of the Note are
and will be exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "1933 ACT").
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE LENDER
4.1 PURCHASE FOR OWN ACCOUNT. The Lender represents that it is acquiring the
Note, and the Preferred Stock issuable upon conversion of the Note, solely for
its own account and beneficial interest for investment and not for sale or with
a view to distribution of the Note or the Preferred Stock or any part thereof,
has no present intention of selling (in connection with a distribution or
otherwise), granting any participation in or otherwise distributing the same,
and does not presently have reason to anticipate a change in such intention.
4.2 INFORMATION AND SOPHISTICATION. The Lender acknowledges that it has received
all the information it has requested from the Corporation and considers
necessary or appropriate for deciding whether to acquire the Note. The Lender
represents that it has had an opportunity to ask questions and receive answers
from the Corporation regarding the terms and conditions of the offering of the
Note and to obtain any additional information necessary to verify the accuracy
of the information given the Lender. The Lender further represents that it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risk of this investment.
4.3 ABILITY TO BEAR ECONOMIC RISK. The Lender acknowledges that its investment
in the Note involves a high degree of risk, and represents that it is able,
without materially impairing its financial condition, to hold the Preferred
Stock (if applicable) for an indefinite period of time and to suffer a complete
loss of its investment.
4.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, the Lender further agrees not to make any
disposition of all or any portion of the Preferred Stock (if applicable) unless
and until:
(a) There is then in effect a Registration Statement under the 1933 Act
covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
2
(b) (i) The Lender shall have notified the Corporation of the proposed
disposition and shall have furnished the Corporation with a detailed
statement of the circumstances surrounding the proposed disposition, and
(ii) if reasonably requested by the Corporation, such Lender shall have
furnished the Corporation with an opinion of counsel, reasonably
satisfactory to the Corporation, that such disposition will not require
registration under the 1933 Act.
Notwithstanding the provisions of Sections 4.4(a) and 4.4(b), no such
registration statement or opinion of counsel shall be necessary for a transfer
by the Lender to affiliates of the Lender, if such affiliates agree in writing
to be subject to the terms hereof to the same extent as if they were the Lender
hereunder.
4.5 EXPERIENCE. The Lender represents that it is an "accredited investor" as
such term is defined in Rule 501 under the 1933 Act.
4.6. LOCK UP. The Lender agrees not to effect (and to cause its affiliates not
to effect) any sale, distribution, pledge, encumbrance or any other transfer of
any kind (including any "hedging" or other transaction intended to shift or
limit risk of ownership) of the Stock (or any interest therein), including a
sale pursuant to Rule 144 (or any similar provision then in force) under the
1933 Act, during the 180-day period beginning on the date of any public offering
of the Common Stock of the Corporation.
SECTION 5. MISCELLANEOUS
5.1 BINDING AGREEMENT. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer
upon any third party any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.
5.2 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of the State of Delaware as applied to agreements among Delaware residents,
made and to be performed entirely within the State of Delaware.
5.3 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
5.5 NOTICES. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile, (iii) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit with a nationally
recognized overnight courier, having specified next day delivery, with written
verification of receipt.
5.6 MODIFICATION; WAIVER. No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and approved by the Corporation and the Lender.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth in the first paragraph hereof.
NEOGENESIS DRUG DISCOVERY, INC.
By: _____________________________
Name: ___________________________
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
3
Title: _________________________
TULARIK INC.
By: _____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President, Administration
Xxxxxxx Xxx Xxxxxxxxx Xxxxx
Xxxxx Xxx Xxxxxxxxx, XX 00000
Phone (000)-000-0000
Fax (000)-000-0000
EIN: 00-0000000
*=CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
4
