Exhibit 10.1
EXECUTION COPY
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
AMENDED AND RESTATED
RESEARCH COLLABORATION AND LICENSE AGREEMENT
BY AND AMONG
MERCK & CO., INC.
AND
ALNYLAM PHARMACEUTICALS, INC.
AMENDED AND RESTATED
RESEARCH COLLABORATION AND LICENSE AGREEMENT
THIS AGREEMENT effective as of July 3, 2006 (the "EFFECTIVE DATE"), by
and among MERCK & CO., INC., a corporation organized and existing under the laws
of New Jersey ("MERCK"), and ALNYLAM PHARMACEUTICALS, INC. (formerly known as
Alnylam Holding Co.), a corporation organized and existing under the laws of
Delaware ("ALNYLAM").
RECITALS:
WHEREAS, MERCK and ALNYLAM entered into a Research Collaboration and
License Agreement effective September 8, 2003 (the "ORIGINAL EFFECTIVE DATE")
(as amended by the Amendment To Research Collaboration And License Agreement
dated September 30, 2004, the "ORIGINAL AGREEMENT") to develop technology useful
for in vitro and/or in vivo target identification and/or target validation using
RNAi and to develop RNAi therapeutic products upon the terms and conditions set
forth therein;
WHEREAS, MERCK and ALNYLAM desire to amend and restate the Original
Agreement in order to, among other things, modify the procedures by which the
Parties will collaborate in the Therapeutic Collaboration (as hereinafter
defined) and to provide more detailed financial and other terms for the conduct
of the Therapeutic Collaboration and the development of MERCK Development
Products (as hereinafter defined); and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Parties hereby agree as follows:
1. DEFINITIONS
Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "AFFILIATE" means (except as provided for in Section 7.3.2) (i) any
corporation or business entity of which fifty percent (50%) or more of
the securities or other ownership interests representing the equity, the
voting stock or general partnership interest are owned, controlled or
held, directly or indirectly, by MERCK or ALNYLAM, as the case may be;
(ii) any corporation or business entity, which, directly or indirectly,
owns, controls or holds fifty percent (50%) (or the maximum ownership
interest permitted by law) or more of the securities or other ownership
interests representing the equity, the voting stock or, if applicable,
the general partnership interest, of MERCK or ALNYLAM, as the case may
be, or (iii) any corporation or business entity, fifty percent (50%) or
more of the securities or other ownership interests representing the
equity of which is directly or indirectly, owned, controlled or held by
the same corporation, business entity or security holders, or holders of
ownership interests who own, control or
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hold fifty percent (50%) or more of the securities or other ownership
interests representing the equity or the voting stock of MERCK or
ALNYLAM, as the case may be.
1.2 "ALNYLAM COLLABORATION INVENTIONS" means ALNYLAM Technology
Collaboration Inventions, ALNYLAM Therapeutic Collaboration Inventions,
and ALNYLAM's interest in Joint Collaboration Inventions, collectively.
1.3 "ALNYLAM IN-LICENSE" means an agreement between ALNYLAM and a Third
Party pursuant to which ALNYLAM has rights and obligations with respect
to, or which otherwise Cover, an RNAi Therapeutic Product and which is
necessary to Develop, Commercialize and/or Manufacture RNAi Therapeutic
Products in the Field in the Territory, including without limitation the
Existing ALNYLAM In-Licenses.
1.4 "ALNYLAM RNAI PATENT RIGHTS" means any and all Patent Rights in the
Territory (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention and to exclude Joint Collaboration Patent Rights) which, as of
the Original Effective Date and/or during the Collaboration Term, are
Controlled by ALNYLAM or its Affiliates and which are necessary or
useful to MERCK (a) for in vitro and/or in vivo target identification
and/or target validation ("ALNYLAM TARGET IDENTIFICATION AND TARGET
VALIDATION RNAI PATENT RIGHTS") and/or (b) in the Development,
Manufacture or Commercialization of RNAi Therapeutic Products within the
Therapeutic Collaboration, including, but not limited to, those listed
on Schedule 1.4. "ALNYLAM RNAi Patent Rights" include but are not
limited to those Patent Rights which: (i) claim or Cover RNAi
Therapeutic Products including but not limited to improvements; or (ii)
claim or cover ALNYLAM Collaboration Inventions; or (iii) are divisions
or continuations of ALNYLAM RNAi Patent Rights, or constitute such
portions of continuations-in-part as are themselves within the
definition of ALNYLAM RNAi Patent Rights.
1.5 "ALNYLAM RNAI TECHNOLOGY" means any and all Know-How (including without
limitation ALNYLAM Collaboration Inventions), which: (a) as of the
Original Effective Date and/or during the Collaboration Term, is in the
Control of ALNYLAM or its Affiliates, including without limitation, all
Know-How of ALNYLAM's scientific advisors and consultants which is
Controlled by ALNYLAM or its Affiliates, and (b) is necessary or useful
to MERCK for in vitro and/or in vivo target identification and/or target
validation and/or for the Development, Manufacture or Commercialization
of RNAi Therapeutic Products within the Therapeutic Collaboration,
including, but not limited to, knowledge related to (i) the RNAi pathway
and mechanism of action in mammalian cells, (ii) informatics approaches
to optimal siRNA design for targeting specific genes and minimizing
off-target effects, (iii) optimal RNA chemistry for siRNA in vivo
stability and delivery, (iv) bio-analytical methods for measurement of
pharmacokinetics and biodistribution of siRNAs, and (v) RNAi delivery
methods.
1.6 "ALNYLAM TECHNOLOGY COLLABORATION INVENTIONS" means any and all Know-How
arising from the Technology Collaboration and developed or invented
solely by
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employees of ALNYLAM or its Affiliates or other persons not employed by
MERCK acting on behalf of ALNYLAM during the Technology Collaboration
Term.
1.7 "ALNYLAM THERAPEUTIC COLLABORATION INVENTIONS" means any and all
Know-How arising from the Therapeutic Collaboration and developed or
invented solely by employees of ALNYLAM or its Affiliates or other
persons not employed by MERCK acting on behalf of ALNYLAM during the
Therapeutic Collaboration Term, including but not limited to
ALNYLAM-Assigned Therapeutic Collaboration Inventions (as defined in
Section 11.2(d)).
1.8 "ALNYLAM THERAPEUTIC COLLABORATION IP" means any and all Know-How
(including ALNYLAM Therapeutic Collaboration Inventions and ALNYLAM's
rights in Joint Therapeutic Collaboration Inventions) and Patent Rights,
which: (a) are Controlled by ALNYLAM or its Affiliates as of the
Original Effective Date or during the Collaboration Term, and (b) are
necessary or useful to MERCK in connection with the Therapeutic
Collaboration and/or in the Development, Manufacture and
Commercialization of RNAi Therapeutic Products within the Therapeutic
Collaboration.
1.9 "BROAD RNAI TECHNOLOGY" means RNAi Technology arising from or necessary
for the performance of a Program Workplan which relates to structural
features, properties, motifs, synthesis, analysis, modifications,
delivery and/or uses of siRNAs that has broader utility beyond the
specific embodiments represented by an RNAi Therapeutic Product and/or
particular uses of such RNAi Therapeutic Product.
1.10 "BROAD RNAI TECHNOLOGY COLLABORATION IP" means Joint Collaboration IP
that constitutes Broad RNAi Technology.
1.11 "CALENDAR QUARTER" means the respective periods of three (3) consecutive
calendar months ending on March 31, June 30, September 30 and December
31.
1.12 "CALENDAR YEAR" means each successive period of twelve (12) months
commencing on January 1 and ending on December 31.
1.13 "CLINICAL STUDY" means a Phase I Study, Phase II Study, Phase III Study
or Post-Approval Study, as applicable.
1.14 "CO-EXCLUSIVE" means with respect to any license of rights hereunder,
the grant of exclusive rights, but for the retention by the granting
Party of the same rights for itself and/or its Affiliates.
1.15 "COLLABORATION" means the Technology Collaboration and the Therapeutic
Collaboration, collectively.
1.16 "COLLABORATION TERM" means the duration of the Collaboration, as
described more fully in Section 12.1.1.
1.17 "COMBINATION PRODUCT" means a [**] Product or an RNAi Therapeutic
Product combined with any other clinically active ingredient. All
references to [**] Product and
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RNAi Therapeutic Product in this Agreement shall be deemed to include
Combination Product, to the extent applicable.
1.18 "COMMERCIALIZATION" or "COMMERCIALIZE" means any and all activities
directed to marketing, promoting, distributing, importing and selling a
product, including the conduct of Post-Approval Studies, and activities
directed to obtaining pricing and reimbursement approvals, as
applicable.
1.19 "COMMERCIALIZATION EXPENSES" means, with respect to each Profit-Sharing
Product, the following costs and expenses to the extent incurred by the
Parties and/or their Related Parties in the Commercialization and
Manufacturing of such Profit-Sharing Product in or for the United
States:
(a) Cost of Goods Sold;
(b) Manufacturing Development Expenses incurred after the First
Commercial Sale of such Profit-Sharing Product in the United
States;
(c) Distribution Expenses;
(d) Sales and Marketing Expenses;
(e) Losses arising out of Third Party product liability claims as
set forth in Section 10.5.3(c)(iii); and
(f) payments to Third Parties [**] pursuant to Section [**].
1.20 "COMMERCIALIZATION PLAN" means the multi-year business plan and annual
profit plan relating to each Profit-Sharing Product that is mutually
agreed between the Parties pursuant to Section 3.10.5.
1.21 "COMMERCIALLY REASONABLE EFFORTS" means the carrying out of obligations
in a diligent and sustained manner using such effort and employing such
resources as would normally be exerted or employed by a similarly
situated biopharmaceutical company for a product of similar market
potential at a similar stage of its product life.
1.22 "COMPLETION OF PHASE I" means, with respect to an RNAi Therapeutic
Product, the completion of data analysis for those Phase I Studies of
such RNAi Therapeutic Product that the Parties prospectively identify in
the applicable Program Workplan as the studies the data from which would
provide a sufficient basis to Initiate a Phase II Study.
1.23 "COMPLETION OF PHASE II" means, with respect to an RNAi Therapeutic
Product, the completion of data analysis for those Phase II Studies of
such RNAi Therapeutic Product that the Parties prospectively identify in
the applicable Program Workplan as the studies the data from which would
provide a sufficient basis to Initiate a Phase III Study.
1.24 "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any (a)
material, Know-How or other information or (b) intellectual property
right, the possession of
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(whether by ownership or license, other than pursuant to this
Agreement), or the ability of a Party or its Affiliates to grant access
to, or a license or sublicense of, such item or right as provided for
herein without violating the terms of any agreement or other arrangement
with any Third Party existing at the time such Party would be required
hereunder to grant the other Party such access or license or sublicense.
1.25 "CO-PROMOTION" means the joint promotion of an RNAi Therapeutic Product
by both Parties and/or their respective Affiliates under the same
product trademark(s). "CO-PROMOTE" when used as a verb shall mean to
engage in such Co-Promotion.
1.26 "COST OF GOODS SOLD" means, with respect to a Profit-Sharing Product or
a Royalty-Bearing Product, the reasonable internal and external costs of
a Party incurred in Manufacturing such RNAi Therapeutic Product
(including [**] to the extent that such costs are reasonably allocated
to the Manufacture of such RNAi Therapeutic Product, and product testing
and release activities relating to quality assurance and quality
control), including: (a) to the extent that such RNAi Therapeutic
Product is sourced from a Party, fully allocated cost of Manufacture of
such RNAi Therapeutic Product, consisting of direct material and direct
labor costs, plus Manufacturing overhead reasonably attributable to such
RNAi Therapeutic Product (including without limitation all directly
incurred Manufacturing variances and a reasonable allocation of related
Manufacturing administrative and facilities costs (such reasonable
allocation shall [**]) to be provided for such RNAi Therapeutic Product,
but excluding [**]), all calculated in accordance with generally
accepted accounting principles in the United States consistently applied
by the applicable Party, [**], and (b) to the extent that such RNAi
Therapeutic Product is sourced from a Third Party manufacturer, the
actual price paid by a Party to the Third Party for the Manufacture,
supply and packaging of such RNAi Therapeutic Product plus any
additional reasonable costs incurred by the Party relating to managing
the Third Party relationship. Cost of Goods Sold shall not include
royalties paid to Third Parties. If the non-Manufacturing Party believes
in good faith that the Cost of Goods Sold charged by the Manufacturing
Party for such RNAi Therapeutic Product [**] or that a Third Party
manufacturer, or an alternative Third Party manufacturer, [**] such RNAi
Therapeutic Product [**] Cost of Goods Sold, then the Parties [**] the
non-Manufacturing Party's [**], and the non-Manufacturing Party shall
[**] by the JSC or JCC, as the case may be. The non-Manufacturing
Party's [**] the cost of goods [**] shall be [**]; provided, however,
that the non-Manufacturing Party may [**] in the event that the
Manufacturing Party [**] Cost of Goods Sold for an RNAi Therapeutic
Product that is [**] for the equivalent period. If the JSC or JCC [**]
shall provide the non-Manufacturing Party [**].
1.27 "COUNTRY SALES" means the Net Sales of a Royalty-Bearing Product in a
Calendar Year by a Party or its Related Parties in a particular country,
converted into United States dollars as set forth in Section 9.6.
1.28 "COVER," "COVERING" OR "COVERS" means, with respect to an RNAi
Therapeutic Product, that in the absence of a license granted under a
Valid Claim, the Development, Manufacture or Commercialization of the
RNAi Therapeutic Product would infringe such Valid Claim.
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1.29 "DETAIL" OR "DETAILING" means a product presentation in a face-to-face
meeting in an individual or group practice setting between a
professional sales representative and a targeted prescriber in which one
or more key benefits of the Profit-Sharing Product are verbally
presented in a balanced manner.
1.30 "DEVELOPMENT," "DEVELOPING" or "DEVELOP" means the research and
development activities related to the generation, characterization,
optimization, construction, expression, use and production of RNAi
Therapeutic Products directed to any MERCK RNAi Novel Target, any other
research and development activities related to the clinical testing and
qualification of such RNAi Therapeutic Products for clinical testing,
and such other tests, studies and activities as may be required or
recommended from time to time by the JSC or JCC (in the case of
Profit-Sharing Products) or any Regulatory Authority to obtain
Regulatory Approval of such an RNAi Therapeutic Product, including
toxicology studies, statistical analysis and report writing,
pre-clinical testing, clinical studies and regulatory affairs, product
approval and registration activities.
1.31 "DEVELOPMENT EXPENSES" means, with respect to each Program Workplan, the
internal and external costs and expenses incurred by the Parties and/or
their Related Parties in the Development of Profit-Sharing Products, in
accordance with such Program Workplan and the related budget for
Development Expenses, including without limitation:
(a) all costs as set forth in the applicable Program Workplan that
are incurred in connection with the generation, characterization
and optimization of Profit-Sharing Products directed to the
Co-Development Target, and the subsequent pre-clinical and
clinical Development of such Profit-Sharing Products;
(b) all Development-related out-of-pocket costs and expenses as set
forth in the applicable Program Workplan that are incurred,
including without limitation payments to investigators, contract
research organizations (CROs), other Third Party Development
service providers and other contract labor services, relating to
Development activities, institutional study expenses,
investigator meeting expenses, central laboratory expenses, data
management, statistical designs and studies, and document
preparation;
(c) fees incurred in connection with filings relating to Regulatory
Approvals;
(d) Cost of Goods Sold of Profit-Sharing Product used in Development
activities, the costs and expenses incurred to purchase and/or
package comparator or combination drugs or devices, and costs
and expenses of disposal of clinical supplies;
(e) Manufacturing Development Expenses incurred with respect to a
Profit-Sharing Product prior to the First Commercial Sale of
such Profit-Sharing Product in the United States;
(f) the costs of internal scientific, medical, technical or
managerial personnel engaged in such efforts, which costs shall
be determined based on the FTE Costs, unless another basis is
otherwise agreed by the Parties in writing;
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(g) payments to Third Parties [**] pursuant to Section [**];
(h) Losses arising out of Third Party product liability claims as
set forth in Section 10.5.3(c)(ii);
(i) Patent Expenses as set forth in Section 11.3.7 and costs of
infringement suits as set forth in Section 11.6.2; and
(j) any other costs explicitly included in the budgets included in
the Program Workplan.
1.32 "DISTRIBUTION EXPENSES" means, with respect to a Profit-Sharing Product,
the expenses incurred by MERCK and its Related Parties in the
distribution of such Profit-Sharing Product in the United States,
calculated as a percentage of Net Sales of such Profit-Sharing Product
on the basis of the average distribution expenses of MERCK and its
Related Parties as a percentage of Net Sales of all products distributed
by MERCK and its Related Parties in the United States. The Parties will
agree upon the appropriate percentage for each Calendar Year, based upon
company-wide financial data from the prior Calendar Year.
1.33 "EXISTING ALNYLAM IN-LICENSES" means the Third Party agreements listed
on Schedule 1.33, as such schedule may be amended pursuant to Sections
7.4.1 or 7.5.
1.34 "FDA" means the United States Food and Drug Administration and any
successor governmental authority having substantially the same function.
1.35 "FIELD" shall mean the treatment and/or prophylaxis of diseases in
humans with RNAi Therapeutic Products; provided, however, that with
respect to the following Targets: (i) [**] (ii) any portions thereof,
(iii) all transcript variants and allelic variants thereof, (iv) any RNA
transcribed from within or overlapping this [**], (v) any proteins
encoded by any such RNA transcripts and (vi) [**] such proteins, the
Field shall exclude [**] and [**], including without limitation [**],
and all other [**] in which [**] in the [**], including without
limitation [**] of the [**]; but the Field shall not exclude [**] in
which [**], such as (by way of example only) [**].
1.36 "FILING" of an NDA means the acceptance by a Regulatory Authority of an
NDA for filing.
1.37 "FIRST COMMERCIAL SALE" means, with respect to any RNAi Therapeutic
Product, the first sale for end use or consumption of such RNAi
Therapeutic Product in a country after all required Regulatory Approvals
have been granted by the Regulatory Authority of such country. For the
avoidance of doubt, sales for clinical study purposes or compassionate
use, named patient or similar use, shall not constitute a First
Commercial Sale.
1.38 "FTE COSTS" means the amount determined by multiplying the number of
FTEs allocated by a Party to perform the applicable work during the
relevant time period, subject in the case of Profit-Sharing Products to
any limitations set forth in the applicable Program Workplan or budget
or otherwise established by the JSC, times the FTE Rate.
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"FTE RATE" means initially $[**] per FTE, to increase no more than once
annually by the percentage increase, if any, in the Consumer Price Index
for all Urban Consumers, as published by the U.S. Department of Labor,
Bureau of Statistics from the beginning of the prior Calendar Year.
1.39 "FULL-TIME EQUIVALENT" or "FTE" means a full time equivalent person year
(based on consistently applied practices of the applicable Party) of
scientific, medical, technical, quality control, quality assurance, or
managerial work performed by or on behalf of a Party. In no event shall
an employee account for more than one (1) FTE year.
1.40 "IND" means an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or
submission for approval to conduct human clinical investigations filed
with or submitted to a Regulatory Authority in conformance with the
requirements of such Regulatory Authority.
1.41 "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
toxicology, safety pharmacology, and sub-chronic toxicology studies in
species that satisfy applicable regulatory requirements using applicable
good laboratory practices which meet the standard necessary for
submission as part of an IND filing with a Regulatory Authority.
1.42 "INFORMATION" means any and all information and data, including without
limitation all ALNYLAM RNAi Technology and MERCK RNAi Technology, and
all other scientific, pre-clinical, clinical, regulatory, manufacturing,
marketing, financial and commercial information or data, whether
communicated in writing or orally or by any other method, which is
provided by one Party to the other Party in connection with this
Agreement.
1.43 "INITIATE", "INITIATED" or "INITIATION" means, with respect to a
Clinical Study, the administration of the first dose to a subject in
such Clinical Study.
1.44 "IN-LICENSES" means collectively, the ALNYLAM In-Licenses and the MERCK
In-Licenses.
1.45 "INVENTION" means any process, method, composition of matter, article of
manufacture, discovery or finding that is conceived and/or reduced to
practice in the course of the performance of activities pursuant to this
Agreement.
1.46 "JOINT COLLABORATION INVENTIONS" means Joint Technology Collaboration
Inventions and Joint Therapeutic Collaboration Inventions, collectively.
1.47 "JOINT COLLABORATION IP" means Joint Collaboration Inventions and Joint
Collaboration Patent Rights, collectively.
1.48 "JOINT COLLABORATION PATENT RIGHTS" means any and all Patent Rights in
the Territory (which for the purposes of this Agreement shall be deemed
to include certificates of invention and applications for certificates
of invention) which claim or Cover any Joint Collaboration Inventions.
"Joint Collaboration Patent Rights" include, but are not limited to,
those Patent Rights which claim or cover Joint Technology Collaboration
Inventions or Joint Therapeutic Collaboration Inventions; or are
divisions or continuations of Joint Collaboration Patent Rights, or
constitute such portions of
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continuations-in-part as are themselves within the definition of Joint
Collaboration Patent Rights.
1.49 "JOINT STEERING COMMITTEE" or "JSC" means the joint steering committee
as more fully described in Section 4.1.1.
1.50 "JOINT TECHNOLOGY COLLABORATION INVENTIONS" means any and all Know-How
arising from the Technology Collaboration and developed or invented
jointly by employee(s) of MERCK and/or its Affiliate and/or a Third
Party acting on behalf of MERCK or its Affiliate, on the one hand, and
employee(s) of ALNYLAM and/or its Affiliate and/or a Third Party acting
on behalf of ALNYLAM or its Affiliate, on the other hand, during the
Technology Collaboration Term.
1.51 "JOINT THERAPEUTIC COLLABORATION INVENTIONS" means any and all Know-How
arising from the Therapeutic Collaboration and developed or invented
jointly by employee(s) of MERCK and/or its Affiliate and/or a Third
Party acting on behalf of MERCK or its Affiliate, on the one hand, and
employee(s) of ALNYLAM and/or its Affiliate and/or a Third Party acting
on behalf of ALNYLAM or its Affiliate, on the other hand, during the
Therapeutic Collaboration Term.
1.52 "KNOW-HOW" means all biological materials and other tangible materials,
inventions, discoveries, improvements, practices, methods, protocols,
formulas, knowledge, know-how, trade secrets, processes, assays, skills,
experience, techniques and results of experimentation and testing,
including without limitation pharmacological, toxicological and
pre-clinical and clinical test data and analytical and quality control
data, patentable or otherwise.
1.53 "MANUFACTURING" or "MANUFACTURE" means, as applicable, all activities
associated with the production, manufacture, processing, filling,
finishing, packaging, labeling, shipping, and storage of RNAi
Therapeutic Products, including process and formulation development,
process validation, stability testing, manufacturing scale-up,
pre-clinical, clinical and commercial manufacture and analytical
development, product characterization, quality assurance and quality
control, whether such activities are conducted by (a) ALNYLAM, its
Affiliates or a Third Party contractor of ALNYLAM, or (b) MERCK, its
Affiliates or a Third Party contractor of MERCK.
1.54 "MANUFACTURING DEVELOPMENT EXPENSES" means, with respect to a
Profit-Sharing Product, to the extent not included in Development
Expenses or Cost of Goods Sold, the internal and external costs of a
Party incurred in process development, process validation, process
improvement, formulation development, product characterization,
manufacturing scale-up and recovery costs, the development of SOPs and
QA/QC methods and procedures, the production of qualification lots, all
costs incurred in obtaining and maintaining approval for the Manufacture
of such Profit-Sharing Product for commercial sale, and the costs of
preparing, submitting, reviewing and developing data and information for
the purpose of a drug master file or for submission to a Regulatory
Authority to obtain or retain such approvals. Manufacturing Development
Expenses shall
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be determined by a Party in accordance with generally accepted
accounting principles in the United States consistently applied by such
Party.
1.55 "MERCK BROAD RNAI PATENT RIGHTS" means any and all Patent Rights in the
Territory (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention and to exclude Joint Collaboration Patent Rights), which (a)
as of the Original Effective Date and/or during the Collaboration Term,
are Controlled by MERCK or ROSETTA or their wholly-owned subsidiaries
and (b) are necessary or useful to ALNYLAM for in vitro and/or in vivo
target identification and/or target validation. MERCK Broad RNAi Patent
Rights include but are not limited to those Patent Rights which: (i)
claim or cover MERCK Technology Collaboration Inventions; or (ii) are
divisions or continuations of MERCK Broad RNAi Patent Rights, or
constitute such portions of continuations-in-part as are themselves
within the definition of MERCK Broad RNAi Patent Rights. "MERCK Broad
RNAi Patent Rights" shall include, without limitation, those Patent
Rights set forth in Schedule 1.55. The term "MERCK Broad RNAi Patent
Rights" does not include any Patent Rights relating to MERCK RNAi Novel
Targets or arising from the development of MERCK Development Products,
including but not limited to Patent Rights relating to MERCK RNAi Novel
Target IP.
1.56 "MERCK BROAD RNAI TECHNOLOGY" means any and all Know-How (including
MERCK Technology Collaboration Inventions and MERCK's rights in Joint
Technology Collaboration Inventions) which: (a) as of the Original
Effective Date and/or during the Collaboration Term, is in the Control
of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
necessary or useful to ALNYLAM for in vitro and/or in vivo target
identification and/or target validation including (i) data and methods
for monitoring RNAi selectivity and potency, and (ii) approaches to
optimal design of siRNAs, including but not limited to informatics
approaches. "MERCK Broad RNAi Technology" does not include Know-How
relating to MERCK RNAi Novel Targets or arising from the development of
MERCK Development Products, including but not limited to MERCK RNAi
Novel Target IP.
1.57 "MERCK COLLABORATION INVENTIONS" means MERCK Technology Collaboration
Inventions, MERCK Therapeutic Collaboration Inventions, and MERCK's
interest in Joint Collaboration Inventions, collectively.
1.58 "MERCK IN-LICENSE" means an agreement between MERCK and a Third Party
pursuant to which MERCK has rights and obligations with respect to, or
which otherwise Cover, an RNAi Therapeutic Product and which is
necessary to Develop, Commercialize and/or Manufacture RNAi Therapeutic
Products in the Field in the Territory.
1.59 "MERCK PRODUCT-SPECIFIC RNAI PATENT RIGHTS" means any and all Patent
Rights in the Territory (which for the purposes of this Agreement shall
be deemed to include certificates of invention and applications for
certificates of invention and exclude Joint Collaboration Patent Rights)
which: (a) as of the Original Effective Date and/or during the
Collaboration Term, are Controlled by MERCK or ROSETTA or their
wholly-owned subsidiaries, and (b) are necessary or useful to ALNYLAM in
connection with the
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Development, Manufacturing and Commercialization of a specific RNAi
Therapeutic Product within the Therapeutic Collaboration. MERCK
Product-Specific RNAi Patent Rights include but are not limited to those
Patent Rights which: (i) claim or Cover a specific RNAi Therapeutic
Product within the Therapeutic Collaboration; or (ii) claim or cover
MERCK Therapeutic Collaboration Inventions; or (iii) are divisions or
continuations of MERCK Product-Specific RNAi Patent Rights, or
constitute such portions of continuations-in-part as are themselves
within the definition of MERCK Product-Specific RNAi Patent Rights.
"MERCK Product-Specific RNAi Patent Rights" include, without limitation,
those Patent Rights set forth in Schedule 1.57. The term "MERCK
Product-Specific RNAi Patent Rights" does not include any Patent Rights
relating to MERCK RNAi Novel Targets or arising from the development of
MERCK Development Products, including but not limited to patents or
patent applications relating to MERCK RNAi Novel Target IP.
1.60 "MERCK PRODUCT-SPECIFIC RNAI TECHNOLOGY" means any and all Know-How
(including without limitation MERCK Therapeutic Collaboration Inventions
and MERCK's rights in Joint Therapeutic Collaboration Inventions) which:
(a) as of the Original Effective Date and/or during the Collaboration
Term, is in the Control of MERCK or ROSETTA or their wholly-owned
subsidiaries, and (b) is necessary or useful to ALNYLAM for the
Development, Manufacture or Commercialization of a specific RNAi
Therapeutic Product within the Therapeutic Collaboration, and (c) is not
included in MERCK Broad RNAi Technology. The term "MERCK
Product-Specific RNAi Technology" does not include Know-How relating to
MERCK RNAi Novel Targets or arising from the development of MERCK
Development Products, including but not limited to MERCK RNAi Novel
Target IP.
1.61 "MERCK RNAI NOVEL TARGET" means a [**] Target that is covered by MERCK
RNAi Novel Target IP or intellectual property Controlled by MERCK or its
Affiliates and which MERCK deems to be a potential Target for RNAi
Therapeutic Products. Such Target is [**] based on the judgment of
MERCK, but would include without limitation a target for which [**] or
[**] is [**] to [**] target activity.
A MERCK RNAi Novel Target may also include, without limitation:
1. [**] for which [**] have been [**], for example in [**];
2. [**] that exist as [**] has been [**]; and
3. [**] and [**] where [**] in the public domain.
A MERCK RNAi Novel Target must be unique to MERCK at the time presented
to ALNYLAM; that is it must be a Target for which: (a) MERCK or its
Affiliate [**] on the MERCK RNAi Novel Target, whether or not (b) MERCK
believes there are [**], the claims of which would be infringed (i) by
the use of the MERCK RNAi Novel Target within the Therapeutic
Collaboration, or (ii) by the [**] within the Therapeutic Collaboration
in the absence of a license.
12
1.62 "MERCK RNAI NOVEL TARGET IP" means any and all Know-How and Patent
Rights Controlled by MERCK or ROSETTA or their wholly-owned subsidiaries
as of the Original Effective Date and/or during the Collaboration Term,
and that both: (i) are necessary or useful to ALNYLAM for research,
development, manufacturing, marketing, use, import or sale of RNAi
Therapeutic Products within the Therapeutic Collaboration, and (ii)
claim or cover specific MERCK RNAi Novel Targets.
1.63 "MERCK RNAI PATENT RIGHTS" means MERCK Broad RNAi Patent Rights and
MERCK Product-Specific Patent Rights, collectively. The term "MERCK RNAi
Patent Rights" shall not include Patent Rights that claim or Cover MERCK
RNAi Novel Targets or MERCK RNAi Novel Target IP.
1.64 "MERCK RNAI TECHNOLOGY" means MERCK Broad RNAi Technology and MERCK
Product-Specific RNAi Technology, collectively.
1.65 "MERCK TECHNOLOGY COLLABORATION INVENTIONS" means any and all Know-How
arising from the Technology Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Technology
Collaboration Term.
1.66 "MERCK THERAPEUTIC COLLABORATION INVENTIONS" means any and all Know-How
arising from the Therapeutic Collaboration and developed or invented
solely by employees of MERCK or its Affiliates or other persons not
employed by ALNYLAM acting on behalf of MERCK during the Therapeutic
Collaboration Term, including but not limited to MERCK-Assigned
Therapeutic Collaboration Inventions (as defined in Section 11.2(d)).
1.67 "MERCK THERAPEUTIC COLLABORATION IP" means any and all Know-How
(including MERCK Therapeutic Collaboration Inventions and MERCK's rights
in Joint Therapeutic Collaboration Inventions) and Patent Rights, which:
(a) are Controlled by MERCK or its Affiliates as of the Original
Effective Date or during the Collaboration Term, and (b) are necessary
or useful to ALNYLAM in connection with the Therapeutic Collaboration
and/or in the Development, Manufacture and Commercialization of RNAi
Therapeutic Products within the Therapeutic Collaboration.
1.68 "[**] PRODUCT" means a [**] RNAi Therapeutic Product that contains
siRNAs directed against [**] MERCK Novel RNAi Target.
1.69 "[**] PRODUCT TARGET" means a MERCK Novel RNAi Target against which an
siRNA in a [**] Product is directed.
1.70 "NDA" means a New Drug Application, Biologics License Application,
Worldwide Marketing Application, Marketing Authorization Application,
Section 510(k) filing or similar application or submission filed with a
Regulatory Authority in a country or group of countries to obtain
marketing approval for a biological, pharmaceutical or other therapeutic
or prophylactic product in that country or in that group of countries.
13
1.71 "NECESSARY THIRD PARTY IP" means, with respect to any country in the
Territory, on a country-by-country basis, Know-How or Patent Rights in
such country owned or controlled by a Third Party that Cover an RNAi
Therapeutic Product.
1.72 "NET SALES" means the gross invoice price of an RNAi Therapeutic Product
sold by MERCK or its Related Parties or by ALNYLAM or its Related
Parties to the first Third Party (other than a Sublicensee of a Party)
after deducting, if not previously deducted, from the amount invoiced or
received:
(a) trade and quantity discounts actually given other than early
payment cash discounts;
(b) returns, rebates, chargebacks and other allowances actually
given;
(c) retroactive price reductions that are actually granted; and
(d) a fixed amount equal to [**] percent ([**]%) of the amount
invoiced to cover bad debt, sales or excise taxes, early payment
cash discounts, transportation and insurance, custom duties, and
other governmental charges.
With respect to sales of Combination Products, Net Sales shall be
calculated on the basis of the gross invoice price of the RNAi
Therapeutic Product(s) containing the same composition and concentration
of RNAi oligonucleotide(s) or oligonucleotide-derivatives sold without
other clinically active ingredients. In the event that the RNAi
Therapeutic Product is sold only as a Combination Product and not sold
without other clinically active ingredients, the Parties shall negotiate
in good faith another basis on which to calculate Net Sales with respect
to a Combination Product that fairly reflects the value of the RNAi
Therapeutic Product relative to the other clinically active ingredients
in the Combination Product, but in no event shall such calculation
result in the gross invoice price on which to base Net Sales being less
than [**] percent ([**]%) of the gross invoice price of such Combination
Product.
A percentage of the deductions set forth in paragraphs (a) through (d)
above equal to the ratio of the Net Sales for the RNAi Therapeutic
Product to the Net Sales of the entire Combination Product will be
applied in calculating Net Sales for a Combination Product.
1.73 "OPT-OUT PERIOD" means the Pre-IND Filing Opt-Out Period, the Phase I
Completion Opt-Out Period or the Phase II Completion Opt-Out Period.
1.74 "PARTY" means MERCK and/or ALNYLAM.
1.75 "PATENT RIGHTS" means all patents (including all reissues, extensions,
substitutions, confirmations, re-registrations, re-examinations,
invalidations, supplementary protection certificates and patents of
addition) and patent applications (including all provisional
applications, continuations, continuations-in-part and divisions), and
all foreign equivalents of the foregoing.
14
1.76 "PHASE I STUDY" means a clinical study of an RNAi Therapeutic Product in
human volunteers or patients the purpose of which is preliminary
determination of safety and tolerability of a dosing regime and for
which there are no primary endpoints (as understood by the FDA or other
Regulatory Authorities) in the protocol relating to efficacy.
1.77 "PHASE I COMPLETION OPT-OUT PERIOD" means, with respect to an RNAi
Therapeutic Product, the period of [**] days after the Completion of
Phase I for such RNAi Therapeutic Product.
1.78 "PHASE II STUDY" means (a) a dose exploration, dose response, duration
of effect, kinetics, dynamic relationship or preliminary efficacy and
safety study of an RNAi Therapeutic Product in the target patient
population or (b) a controlled dose ranging clinical trial to evaluate
further the efficacy and safety of an RNAi Therapeutic Product in the
target patient population and to define the optimal dosing regimen.
1.79 "PHASE II COMPLETION OPT-OUT PERIOD" means, with respect to an RNAi
Therapeutic Product, the period of [**] days after the first "end of
Phase II" meeting with the applicable Regulatory Authority has been
concluded for such RNAi Therapeutic Product or as otherwise agreed by
the Parties in writing.
1.80 "PHASE III STUDY" means a controlled pivotal clinical study of an RNAi
Therapeutic Product that is prospectively designed to demonstrate
statistically whether such RNAi Therapeutic Product is effective and
safe for use in a particular indication in a manner sufficient to obtain
Regulatory Approval to market such RNAi Product.
1.81 "POST-APPROVAL STUDY" means a clinical study Initiated in a country
after receipt of Regulatory Approval for the RNAi Therapeutic Product in
such country.
1.82 "PRE-CLINICAL DEVELOPMENT ACTIVITIES" means the Development activities
undertaken by the Parties to (a) generate, characterize and optimize
Profit-Sharing Products and (b) support the filing of an IND for
Profit-Sharing Products, including without limitation, non-clinical
studies and Manufacturing development activities.
1.83 "PRE-EXISTING ALNYLAM ALLIANCE AGREEMENTS" means the agreements listed
on Schedule 1.83.
1.84 "PRE-EXISTING MERCK ALLIANCE AGREEMENTS" means the agreements listed on
Schedule 1.84.
1.85 "PRE-IND FILING OPT-OUT PERIOD" means, with respect to an RNAi
Therapeutic Product, the period commencing upon completion of the final
IND-Enabling GLP Toxicology Study for such RNAi Therapeutic Product, and
continuing until the later of: (a) [**] days after completion of the
final IND-Enabling GLP Toxicology Study for such RNAi Therapeutic
Product and (b) [**] for such RNAi Therapeutic Product to the applicable
Regulatory Authority.
15
1.86 "PRODUCT TRADEMARKS" means the trademark(s), service xxxx(s),
accompanying logos, trade dress and/or indicia of origin used in
connection with the distribution, marketing, promotion and sale of [**]
Products or RNAi Therapeutic Products in the Territory. For purposes of
clarity, the term Product Trademark(s) shall not include, without
limitation, the corporate names and logos of either Party, and shall
include any internet domain names incorporating such Product Trademarks
1.87 "REGULATORY APPROVAL" means any and all approvals (including without
limitation all applicable pricing and governmental reimbursement
approvals) licenses, registrations, or authorizations of any Regulatory
Authority necessary for the Development, Manufacture and
Commercialization of an RNAi Therapeutic Product in any country,
including the acceptance or non-rejection of INDs and the approval of
NDAs.
1.88 "REGULATORY AUTHORITY" means any applicable government regulatory
authority involved in granting approvals for the Development,
Manufacturing, and/or Commercialization of an RNAi Therapeutic Product
in the Territory, including, in the United States, the FDA.
1.89 "RELATED PARTY" means a Party's Affiliates and permitted Sublicensees,
which term does not include wholesale distributors of such Party or its
Affiliates who purchase RNAi Therapeutic Products from such Party or its
Affiliates in an arm's length transaction and who have no sales,
marketing or reporting obligation to such Party or its Affiliates. For
purposes of clarity, such wholesale distributors do not include those
distributors whose obligations to such Party or Affiliate include
responsibility for sales and/or marketing efforts in a country of the
Territory or sharing of costs and expenses with respect to sales and/or
marketing on behalf of a Party or its Affiliates, which distributors
shall be deemed to be permitted Sublicensees for purposes of this
definition.
1.90 "[**]" means the [**] any portions thereof, [**] thereof, [**] any [**]
from [**] or [**] any [**] such [**].
1.91 "RNAI PRODUCT" means a therapeutic and/or prophylactic product
containing, comprised of or based on siRNAs or siRNA derivatives or
other moieties effective in gene function modulation and designed to
modulate the function of particular genes or gene products through RNA
interference.
1.92 "RNAI TECHNOLOGY" means technology useful for in vitro and/or in vivo
target identification and/or target validation using RNA interference.
1.93 "RNAI THERAPEUTIC PRODUCTS" means RNAi Products that are directed at
MERCK RNAi Novel Targets and that are either (a) discovered, derived or
developed by ALNYLAM or MERCK or any person or entity acting on either
Party's behalf, including Affiliates, consultants and scientific
advisors during the Therapeutic Collaboration, or (b) contributed by a
Party to a Program in the Therapeutic Collaboration. "RNAi Therapeutic
Products" include, but are not limited to, any and all: (i) ALNYLAM
Therapeutic Collaboration Inventions and MERCK Therapeutic Collaboration
Inventions that, in each case, are RNAi Products and are directed at
MERCK RNAi Novel Targets;
16
and (ii) therapeutic preparations of the RNAi Therapeutic Product in
final form for sale by prescription, over-the-counter or any other
method for therapeutic use, including, without limitation, any
Profit-Sharing Products, Royalty-Bearing Products, MERCK Development
Products and/or Combination Products.
1.94 "ROSETTA" means Rosetta Inpharmatics LLC, a wholly-owned subsidiary of
MERCK.
1.95 "ROYALTY PAYOR" means, in relation to (a) a Royalty-Bearing Product, the
Party obligated to pay royalties to the other Party under the terms and
conditions of this Agreement, (b) a MERCK Development Product or a
Profit-Sharing Product outside the United States, MERCK, and (c) a [**]
Product in the event that MERCK does not exercise its Opt-In Right,
ALNYLAM.
1.96 "ROYALTY RECIPIENT" means, in relation to (a) a Royalty-Bearing Product,
the Party entitled to receive royalties from the other Party under the
terms and conditions of this Agreement, (b) a MERCK Development Product
or a Profit-Sharing Product outside the United States, ALNYLAM, and (c)
a [**] Product in the event that MERCK does not exercise its Opt-In
Right, MERCK.
1.97 "SALES AND MARKETING EXPENSES" means, with respect to a Profit-Sharing
Product, the internal and external costs and expenses incurred by the
Parties and their Related Parties in connection with the pre-launch
market development, and the promotion, marketing, selling and product
support of such Profit-Sharing Product in the United States, in
accordance with the Commercialization Plan for such Profit-Sharing
Product and the related budget for Sales and Marketing Expenses,
including without limitation:
(a) promotional and training materials for the sales
representatives;
(b) patient support program costs;
(c) disease management programs specifically developed for such
Profit-Sharing Product;
(d) outcomes and pharmacoeconomic studies and Post-Approval Studies
for Profit-Sharing Product;
(e) costs incurred in conducting joint meetings relating to
Commercialization of such Profit-Sharing Product (excluding JCC
meetings) prior to the date of First Commercial Sale of such
Profit-Sharing Product in the United States (including lodging
expenses and travel expenses associated with such a meeting);
(f) costs associated with Detailing to physicians;
(g) costs associated with market development activities and other
similar pre-launch activities;
(h) Cost of Goods Sold of samples of such Profit-Sharing Product
distributed in accordance with the Commercialization Plan;
17
(i) the costs of internal scientific, medical, technical, quality
assurance, quality control or managerial personnel engaged in
Commercialization efforts (including without limitation Health
Science Associates fielded by the Parties), which costs shall be
determined based on the FTE Costs, unless another basis is
otherwise agreed by the Parties in writing;
(j) other out-of-pocket costs and expenses related to promotion,
marketing, selling and product support of such Profit-Sharing
Product, including without limitation costs and expenses
associated with symposia, seminars, media advertising, market
research and direct mailing, that are incurred in accordance
with the applicable Commercialization Plan and the related
budget; and
(k) any other costs explicitly included in the budget for the
Commercialization Plan.
1.98 "SMALL INTERFERING RNA" or "SIRNA" means a double-stranded ribonucleic
acid (RNA) composition designed to act primarily through an RNA
interference mechanism that consists of either (a) two separate
oligomers of native or chemically modified RNA that are hybridized to
one another along a substantial portion of their lengths, or (b) a
single oligomer of native or chemically modified RNA that is hybridized
to itself by self-complementary base-pairing along a substantial portion
of its length to form a hairpin.
1.99 "SUBLICENSEE" means a Third Party to whom a Party grants a sublicense
under any ALNYLAM RNAi Technology, MERCK RNAi Technology or Joint
Collaboration IP, as the case may be, to Develop, Manufacture or
Commercialize an RNAi Therapeutic Product in the Field in the Territory
subject to Section 7.3 or otherwise grants rights to distribute, promote
or sell an RNAi Therapeutic Product.
1.100 "TARGET" shall mean: (a) a polypeptide or entity comprising a
combination of at least one polypeptide and other macromolecules, that
is a site or potential site of therapeutic intervention by a therapeutic
agent; or a nucleic acid which is required for expression of such
polypeptide; (b) variants of a polypeptide, cellular entity or nucleic
acid described in clause (a); (c) a defined non-peptide entity,
including a microorganism, virus, bacterium or single cell parasite;
provided that the entire genome of a virus shall be regarded as a single
Target; or (d) a naturally occurring interfering RNA or microRNA or
precursor thereof.
1.101 "TECHNOLOGY COLLABORATION" means the research activities undertaken by
the Parties during the Technology Collaboration Term pursuant to Article
2 of the Original Agreement, but excluding the [**] Program.
1.102 "TECHNOLOGY COLLABORATION TERM" means the period commencing on the
Original Effective Date and ending on the Effective Date.
1.103 "TERRITORY" means all of the countries in the world, and their
territories and possessions.
1.104 "THERAPEUTIC COLLABORATION" means the Development, Manufacture and
Commercialization activities undertaken by the Parties with respect to
Profit-Sharing
18
Products, Royalty-Bearing Products and MERCK Development Products in the
Field and in the Territory.
1.105 "THIRD PARTY" means an entity other than a Party and its Affiliates.
1.106 "VALID CLAIM" means a claim of: (a) an issued and unexpired patent which
(i) covers the Manufacture or Commercialization of a [**] Product or an
RNAi Therapeutic Product, as the case may be; (ii) has not been revoked
or held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, which decision is not
appealable or has not been appealed within the time allowed for appeal,
and (iii) has not been abandoned, disclaimed, denied or admitted to be
invalid or unenforceable through reissue, re-examination or disclaimer
or otherwise, or (b) a [**] within the Territory, which covers the [**]
of a [**] Product or an RNAi Therapeutic Product, as the case may be,
that has been [**] years from the earliest date [**] and such [**].
1.107 "WORLDWIDE SALES" means aggregate worldwide Net Sales of a
Royalty-Bearing Product or a [**] Product in a Calendar Year by a Party
or its Related Parties, as the case may be.
ADDITIONAL DEFINITIONS. The following terms have the meanings set forth in the
corresponding Sections of this Agreement:
TERM SECTION
------------------------------------------------------------------------ --------------
"AAA" 13.7.1
"ACQUIRED PARTY" 13.3.1
"ALNYLAM-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" 11.2(d)
"ALNYLAM INDEMNITEES" 10.5.1
"ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAI PATENT RIGHTS" 1.4
"ALNYLAM TECHNOLOGY" 7.1.3(a)
"AGREEMENT TERM" 12.1.2
"BANKRUPT PARTY" 12.3.5
"BREACHING PARTY" 12.2.1(a)
"CHANGE OF CONTROL" 13.3.3
"CHANGE OF CONTROL NOTICE" 13.3.1
"CODE" 12.3.5
"CO-DEVELOPMENT TARGET" 3.2.2(c)
"COLLABORATION MANAGER" 4.2
"CONTINUING PARTY" 5.1
"CO-PROMOTION AGREEMENT" 3.10.1
"CO-PROMOTION OPTION EXERCISE DATE" 3.10.1
"CRT AGREEMENT" 7.5
"DEFENDING PARTY" 11.6.4
"DISPUTE" 13.7.1
"DIVESTING PARTY" 13.3.1(c)(iii)
"DROPPED MERCK DEVELOPMENT TARGET" 6.8
"EFFECTIVE DATE" Preamble
"EXCLUDED CLAIM" 13.7.1
19
"EXPENSE SHARE REDUCTION OPTION" 3.9.1
"GATEKEEPER" 3.2.2(a)
"HUMAN MATERIALS" 10.1(e)
"INDEMNITEE" 10.5.4
"INFRINGEMENT CLAIM" 11.6.1
"INITIAL ENFORCEMENT RIGHTS PARTY" 11.5.3
"INITIAL NOTICE" 6.8
"JCC" 3.10.2
"JSC" 4.1.1
"JSC CHAIRPERSON" 4.1.2
"LOSSES" 10.5.1
"MERCK-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" 11.2(d)
"MERCK DEVELOPMENT PRODUCT" 3.2.2(d)
"MERCK DEVELOPMENT TARGET" 3.2.2(d)
"MERCK INDEMNITEES" 10.5.2
"MERCK RNAI NOVEL TARGET INFORMATION" 3.2.2(b)
"MERCK TECHNOLOGY" 7.1.3(a)
"NON-ACQUIRED PARTY" 13.3.1
"NON-BANKRUPT PARTY" 12.3.5
"NON-BREACHING PARTY" 12.2.1(a)
"NOVARTIS" Schedule 1.83
"NOVARTIS AGREEMENT" Schedule 1.83
"OPT-IN INFORMATION" 2.2.2(a)
"OPT-IN NOTICE" 2.2.2(b)
"OPT-IN PERIOD" 2.2.2(a)
"OPT-IN RIGHT" 2.2.2(a)
"OPT-OUT NOTICE" 5.1(a)
"OPT-OUT PARTY" 5.1(a)
"OPT-OUT POINT" 5.1(b)
"OPT-OUT RIGHT" 5.1
"ORIGINAL AGREEMENT" Recitals
"ORIGINAL EFFECTIVE DATE" Recitals
"PATENT EXPENSES" 11.3.7
"PROFIT-SHARING PRODUCT" 3.2.2(c)
"PROGRAM" 3.3
"PROGRAM WORKPLAN" 3.3
"PROSECUTING PARTY" 11.3.5
"PROVIDERS" 10.1(e)
"RECEIVING PARTY" 12.4.1
"REGION" 12.3.6
"REQUESTED PARTY" 3.7
"[**]" 2.2.1
"ROYALTY-BEARING PRODUCT" 5.1
"SECONDARY ENFORCEMENT RIGHTS PARTY" 11.5.3
"SELECTION NOTICE" 3.2.2(c)
"SIGNIFICANT PHARMACEUTICAL COMPANY" 13.3.3
20
"SOLE COMMERCIALIZATION PARTY" 13.3.1(c)(iii)
"SPC" 11.9
"[**]" 7.5
"TARGET RESPONSE NOTICE" 3.2.2(a)
"TARGET SET" 3.2.1
"THERAPEUTIC COLLABORATION TERM" 12.1.1
"TRANSFERRING PARTY" 12.4.1
"U.S. CO-PROMOTION OPTION" 3.10.1
"U.S. DEVELOPMENT EXPENSES" 3.9.1
"U.S. OPERATING PROFIT/LOSS" 9.3
2. TECHNOLOGY COLLABORATION
2.1 TERMINATION OF TECHNOLOGY COLLABORATION. ALNYLAM and MERCK hereby agree
that the Technology Collaboration shall terminate as of the Effective
Date and the Parties will mutually agree upon the contents and format of
a final report (if any) describing the work performed by each Party
under the Technology Collaboration.
2.2 [**].
2.2.1 [**]. Pursuant to the terms of the Original Agreement, ALNYLAM [**] for
the development of RNAi Products [**] and MERCK has [**] development and
commercialization of [**].
2.2.2 MERCK OPT-IN RIGHT.
(a) Within [**] days of completing the [**] for the first [**]
Product to reach such milestone, ALNYLAM shall provide MERCK
with all information, materials and data listed on Schedule
2.2.2 (provided that, with respect to those categories normally
required for an IND filing, such information, materials or data
may be omitted if the omission is approved by the relevant
Regulatory Authority for an IND filing) ("OPT-IN INFORMATION")
to enable MERCK to evaluate and decide whether to exercise its
right to co-develop RNAi Products directed to the [**] Target
under the Therapeutic Collaboration ("OPT-IN RIGHT").
Notwithstanding the above, "Opt-In Information" shall include
all information, materials and/or data listed on Schedule 2.2.2
which is in ALNYLAM's or its Affiliate's possession (either by
ownership or license) and relating to the [**] Target and any
[**] Products developed by ALNYLAM.
(b) MERCK shall have a period of [**] days after receiving from
ALNYLAM all Opt-In Information relating to the [**] Target
("OPT-IN PERIOD") in which to exercise its Opt-In Right by
written notice to ALNYLAM ("OPT-IN NOTICE"). If MERCK has not
received all Opt-In Information set forth in Schedule 2.2.2, or
any portion thereof (other than the materials and data which may
be omitted pursuant to the first sentence of this Section
2.2.2(b)), MERCK shall notify
21
ALNYLAM of same, which notice shall specify any missing Opt-In
Information or any portion thereof; and ALNYLAM shall, promptly
after receipt of such notice, provide any missing Opt-In
Information identified in the notice to MERCK. If MERCK does not
deliver such Opt-In Notice to ALNYLAM within the Opt-In Period,
then MERCK shall be deemed to have declined to exercise its
Opt-In Right, and the financial terms set forth in Section 9.4.1
shall apply. In the event that MERCK does not deliver such
Opt-In Notice to ALNYLAM, MERCK and its Affiliates shall (i)
immediately return to ALNYLAM all information (including
Information), data and materials (including all ALNYLAM
intellectual property) relating to the [**] Products and [**]
Target, including, but not limited to that which was provided
pursuant to Schedule 2.2.2, (ii) have no rights under this
Agreement to the [**] Target, and (iii) be prohibited, for a
period of [**] months commencing on the final day of the Opt-In
Period, from researching, developing or commercializing, either
alone or with or through any Third Party, any RNAi Product
directed at the [**] Target.
(c) Upon MERCK's giving an Opt-In Notice to ALNYLAM, MERCK shall pay
ALNYLAM a fee of [**] Dollars ($[**]) plus [**] percent ([**]%)
of the FTE Costs and out-of-pocket research costs which ALNYLAM
incurred in developing the [**] Target and [**] Products from
the date ALNYLAM elected to develop the [**] Target until the
date of the Opt-In Notice. Thereafter, the [**] Target shall be
deemed a Co-Development Target, the [**] Program shall be deemed
a Program under the Therapeutic Collaboration and any [**]
Products shall be deemed Profit-Sharing Products and shall be
subject to all the terms of this Agreement applicable to
Profit-Sharing Products other than the milestone payment
provisions of Section 9.2.1.
2.3 EXCHANGE OF INFORMATION. In accordance with the provisions of Article 7,
on an ongoing basis during the Collaboration Term:
(a) ALNYLAM shall disclose to MERCK all ALNYLAM RNAi Technology that
is Controlled by ALNYLAM or its Affiliates as of the Original
Effective Date and/or during the Technology Collaboration Term
which has not been previously disclosed and shall provide
updates, at least quarterly, with regard to ALNYLAM RNAi
Technology that is Controlled by ALNYLAM or its Affiliates as of
the Original Effective Date and/or during the Technology
Collaboration Term, and ALNYLAM RNAi Patent Rights that are
Controlled by ALNYLAM or its Affiliates as of the Original
Effective Date and/or during the Technology Collaboration Term,
including but not limited to any and all ALNYLAM RNAi Patent
Rights filings related thereto, and ALNYLAM Therapeutic
Collaboration IP that is Controlled by ALNYLAM or its Affiliates
as of the Original Effective Date and/or during the first [**]
years of the Collaboration Term, including but not limited to
any and all ALNYLAM RNAi Patent Rights filings related thereto;
(b) MERCK shall disclose to ALNYLAM all MERCK Broad RNAi Technology
that is Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Original Effective Date and/or during the
Technology Collaboration Term and
22
MERCK Product-Specific RNAi Technology that is Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Original Effective Date and/or during the first [**] years of
the Collaboration Term which has not been previously disclosed
and shall provide updates, at least quarterly, with regard to
such MERCK Broad RNAi Technology that is Controlled by MERCK or
ROSETTA or their wholly-owned subsidiaries as of the Original
Effective Date and/or during the Technology Collaboration Term
and MERCK Product-Specific RNAi Technology that is Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries as of the
Original Effective Date and/or during the first [**] years of
the Collaboration Term, MERCK Broad RNAi Patent Rights that are
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries as of the Original Effective Date and/or during the
Technology Collaboration Term, including but not limited to any
and all MERCK RNAi Patent Rights filings related thereto, and
MERCK Therapeutic Collaboration IP that is Controlled by MERCK
or ROSETTA or their wholly-owned subsidiaries as of the Original
Effective Date and/or during the first [**] years of the
Collaboration Term, including but not limited to any and all
MERCK RNAi Patent Rights filings related thereto; and
(c) each Party shall disclose to the other any and all Joint
Collaboration Inventions and Joint Collaboration Patent Rights
not previously disclosed and shall provide updates, at least
quarterly, with regard to such Joint Collaboration Inventions.
Disclosures required by this Section 2.3 shall be subject to the
confidentiality and non-use obligations of Third Party agreements and
the confidentiality provisions of Section 8.1 of this Agreement.
3. THERAPEUTIC COLLABORATION
3.1 OVERVIEW. The Parties shall collaborate in carrying out the Therapeutic
Collaboration with the objective of developing RNAi Therapeutic Products
for Targets associated with human diseases.
3.2 PROVISION AND SELECTION OF MERCK RNAI NOVEL TARGETS.
3.2.1 MERCK RNAI NOVEL TARGETS. During the Therapeutic Collaboration
Term, MERCK shall nominate nine (9) MERCK RNAi Novel Targets
which are candidates for RNAi Therapeutic Products as follows:
(a) three (3) such Targets within [**] days after the Effective
Date, (b) three (3) additional Targets by [**] and (c) three (3)
additional Targets by [**]. Each set of three (3) Targets is
hereinafter referred to as a "TARGET SET".
3.2.2 TARGET SELECTION. With regard to the nomination of MERCK RNAi
Novel Targets to ALNYLAM by MERCK and notification to MERCK by
ALNYLAM of its interest in selecting such MERCK RNAi Novel
Targets, the following step-wise process shall apply:
23
(a) For each Target Set, MERCK shall initially disclose to
an individual ALNYLAM employee specified by ALNYLAM and
reasonably acceptable to MERCK (the "GATEKEEPER") the
NCBI Gene ID number (or, if a NCBI Gene ID number is not
available, the specific sequence of the proposed MERCK
RNAi Novel Target) of three (3) Targets that MERCK [**]
to ALNYLAM as MERCK RNAi Novel Targets for such Target
Set. Within [**] days following the Gatekeeper's receipt
of such Targets, the Gatekeeper shall notify MERCK in
writing (a "TARGET RESPONSE NOTICE") which, if any, of
such Targets is either: (a) subject to a contractual
obligation to a Third Party that would be breached by
the inclusion of such Target as a MERCK RNAi Novel
Target under this Agreement, or (b) the subject of an
internal program to which ALNYLAM has committed or
allocated [**] period immediately preceding MERCK's
disclosure of the Target Set to the Gatekeeper. The
Gatekeeper shall keep all information relating to the
proposed MERCK RNAi Novel Target strictly confidential
and shall not disclose such information to any other
individual or entity, or use such information for any
purpose other than verification as to whether or not
such Target is available for nomination as a MERCK RNAi
Novel Target under this Agreement. If a Target submitted
to the Gatekeeper is [**], then MERCK [**] as a MERCK
RNAi Novel Target [**] pursuant to the foregoing
procedure for such Target Set. For clarity,
notwithstanding the [**] MERCK RNAi Novel Targets
evaluated by the Gatekeeper [**], MERCK shall not be
entitled to nominate more than three (3) MERCK RNAi
Novel Targets in any one Target Set, or to nominate more
than three (3) Target Sets, in each case for ALNYLAM's
consideration as potential Co-Development Targets.
(b) MERCK shall notify ALNYLAM in writing of the MERCK RNAi
Novel Targets that have been identified pursuant to the
foregoing procedure for each Target Set and identify
which Targets, if any, in such Target Set are [**]
Targets as described in Section 3.2.3. MERCK shall
provide to ALNYLAM the MERCK RNAi Novel Target
information described in Schedule 3.2.2 ("MERCK RNAI
NOVEL TARGET INFORMATION") for each of the MERCK RNAi
Novel Targets in each Target Set [**] Targets. If
ALNYLAM has not received all MERCK RNAi Novel Target
Information set forth in Schedule 3.2.2, or any portion
thereof, ALNYLAM shall notify MERCK of same, which
notice shall specify any missing MERCK RNAi Novel Target
Information or any portion thereof; and MERCK shall,
promptly after receipt of such notice, provide to
ALNYLAM any missing MERCK RNAi Novel Target Information
identified in the notice. "MERCK RNAi Novel Target
Information" shall include all information, materials
and/or data listed on Schedule 3.2.2 which is in MERCK's
or ROSETTA's or their fully-owned subsidiaries' Control
and is directly relevant to the MERCK RNAi Novel Target.
(c) As expeditiously as possible, but in no event later than
[**] months after receiving the MERCK RNAi Novel Target
Information for all of the MERCK RNAi Novel Targets in a
Target Set ([**]), ALNYLAM shall notify MERCK
24
in writing ("SELECTION NOTICE") as to whether or not it
is selecting one of the MERCK RNAi Novel Targets in a
Target Set (and if so, which one) for the Development
and Commercialization by both ALNYLAM and MERCK of RNAi
Therapeutic Products directed at such MERCK RNAi Novel
Target (each such Target, a "CO-DEVELOPMENT TARGET", and
each such RNAi Therapeutic Product, a "PROFIT-SHARING
PRODUCT").
(d) Any MERCK RNAi Novel Target in a Target Set that is not
selected by ALNYLAM as a Co-Development Target shall
automatically be deemed a Target for which MERCK may
Develop and Commercialize RNAi Therapeutic Products
directed to such Target (each such Target a "MERCK
DEVELOPMENT TARGET", and each such RNAi Therapeutic
Product, a "MERCK DEVELOPMENT PRODUCT"). ALNYLAM and its
Affiliates shall (i) immediately return to MERCK all
information (including Information), data and materials
(including all MERCK intellectual property) relating to
the MERCK Development Targets, including, but not
limited to that which was provided pursuant to Schedule
3.2.2, (ii) have no rights under this Agreement to the
MERCK Development Targets, and (iii) be prohibited from
researching, developing or commercializing, either alone
or with or through any Third Party, any RNAi Product
directed at such MERCK Development Target.
3.2.3 [**]. MERCK may designate [**] MERCK RNAi Novel Targets within
the first or second Target Set ([**]) as [**] Targets. Each such
[**] Target shall be deemed a MERCK Development Target and each
[**] a MERCK Development Product, and ALNYLAM shall not be
entitled to [**] Targets as Co-Development Targets. If MERCK
nominates (a) [**] Targets in the first or second Target Set and
ALNYLAM [**] as a Co-Development Target, or (b) [**] Targets in
the first or second Target Set, then [**] ALNYLAM, in its sole
discretion, may [**] as a Co-Development Target.
3.3 PROGRAM WORKPLANS. The activities to be undertaken in the course of the
Therapeutic Collaboration for each Co-Development Target (each, a
"PROGRAM") shall be set forth in a detailed workplan ("PROGRAM
WORKPLAN"). The Parties agree to conduct all their Development
activities relating to the RNAi Therapeutic Products directed to
Co-Development Targets in accordance with the applicable Program
Workplan. Within [**] days after the selection of each Co-Development
Target (or, in the event that MERCK exercises it Opt-In Right with
respect to the [**] Target and [**] Products, the date of the Opt-In
Notice), the JSC will agree upon a Program Workplan for a Program to
research and develop one or more RNAi Therapeutic Products directed to
each such Co-Development Target. The focus of the Program Workplans for
the Programs will be on generating, characterizing and optimizing RNAi
Therapeutic Products directed to the Co-Development Targets for further
Development in the Field, including Clinical Studies, and as
appropriate, the conduct of these studies. Each Party will contribute to
each Program any RNAi Therapeutic Products directed to the applicable
Co-Development Target that have been generated by such Party prior to
the selection of the applicable Co-Development Target, subject to any
rights such Party may have to Third Parties. The
25
Program Workplan for each Program will identify such RNAi Therapeutic
Products (if any).
3.4 COLLABORATION ACTIVITIES. The Program Workplans shall allocate
Development tasks between the Parties consistent with their respective
capabilities and, to the extent possible and scientifically sound, in a
manner to maximize the expeditious and cost-effective Development and
Manufacture of Profit-Sharing Products. With respect to each
Profit-Sharing Product and Program, ALNYLAM will be responsible for
leading the Pre-Clinical Development Activities under the applicable
Program Workplan. With respect to each Profit-Sharing Product and
Program, the Parties will discuss their respective responsibilities
regarding the Manufacture and supply of Profit-Sharing Products for
non-clinical studies and Clinical Studies initiated prior to the
Completion of Phase II. With respect to each Profit-Sharing Product and
Program, MERCK shall be responsible for the following activities under
the applicable Program Workplan: (a) filing the IND for all
Profit-Sharing Products, (b) leading non-clinical and clinical
Development activities after the applicable IND is filed and (c)
Manufacture and supply of Profit-Sharing Products for non-clinical
studies and Clinical Studies initiated after Completion of Phase II
(including, without limitation, any Manufacturing activities required to
be initiated prior to Completion of Phase II in order to supply
Profit-Sharing Products after Completion of Phase II in accordance with
the applicable Program Workplan).
3.5 DILIGENCE. Each Party shall use Commercially Reasonable Efforts to
perform its respective Development and Manufacturing activities under
the Program Workplans in accordance with this Agreement according to the
priorities established by the Program Workplans and the JSC.
3.6 RECORDS AND REPORTS. Each Party shall maintain scientific records, in
sufficient detail and in good scientific manner appropriate for patent
and regulatory purposes, which shall fully and properly reflect all work
done and results achieved in the performance of the Program Workplans by
such Party. Each Party shall have the right, during normal business
hours and upon reasonable notice, to inspect and copy (or request the
other Party to copy) all records of the other Party maintained in
connection with the work done and results achieved in the performance of
the Programs, but solely to the extent to which such records relate to
an Profit-Sharing Product or to the extent access to such records is
necessary for a Party to exercise its rights under this Agreement. All
such records and the information disclosed therein shall be maintained
in confidence by the recipient in accordance with Article 8.
3.7 AVAILABILITY OF EMPLOYEES. Each Party (the "REQUESTED PARTY") shall make
available its employees engaged in the Programs upon reasonable notice
during normal business hours and at their respective places of
employment to consult with the other Party on the progress of the
Programs, as coordinated through the Requested Party's Collaboration
Manager or such other individual as may be designated by the Requested
Party.
26
3.8 REGULATORY MATTERS AND COMPLIANCE FOR PROFIT-SHARING PRODUCTS.
3.8.1 OWNERSHIP AND REFERENCE RIGHT. MERCK shall own the Regulatory
Approvals and related regulatory documents submitted to the
applicable Regulatory Authorities for all Profit-Sharing
Products. The Party owning any Regulatory Approval and related
regulatory documents shall license, including for
cross-reference purposes, transfer, provide a letter of
reference with respect to, or take other action necessary to
make available such Regulatory Approvals and related regulatory
documents to the other Party as may be reasonably necessary to
enable such other Party to fulfill its obligations under the
applicable Program Workplan and/or Commercialization Plan and
exercise its rights under this Agreement with respect to the
Development and Commercialization of such Profit-Sharing
Products in the Territory.
3.8.2 REGULATORY COORDINATION. Except as otherwise provided in Section
3.8.3 or the applicable Program Workplan, MERCK shall (a)
oversee, monitor and coordinate all regulatory actions,
communications and filings with, and submissions to, each
Regulatory Authority, (b) be responsible for interfacing,
corresponding and meeting with each Regulatory Authority, and
(c) apprise ALNYLAM of all material communications from
Regulatory Authorities in [**] as soon as reasonably possible
but in any event within [**] business days, so as to permit
ALNYLAM to exercise its rights under this Section 3.8, and to
comply with its disclosure requirements under applicable
securities laws. Except as otherwise provided in Section 3.8.3,
ALNYLAM shall have the right at its sole expense to have a
representative participate in all material meetings and, to the
extent reasonably practicable for MERCK, material telephone
discussions with the FDA with respect to Profit-Sharing
Products.
3.8.3 MANUFACTURING REGULATORY COMMUNICATIONS. Notwithstanding any
provisions of Section 3.8.2 to the contrary, with respect to all
regulatory issues related to the Manufacture of Profit-Sharing
Products, including all matters relating to cGMP compliance, (a)
in the case of supply of a Profit-Sharing Product for
non-clinical studies and Clinical Studies initiated prior to the
Completion of Phase II, ALNYLAM shall and (b) in the case of
supply of a Profit-Sharing Product for non-clinical studies and
Clinical Studies initiated after the Completion of Phase II
(other than Phase III and Post-Approval Studies), MERCK shall:
(i) be primarily responsible for overseeing, monitoring and
coordinating all regulatory actions, communications and filings
with, and submissions to, each Regulatory Authority; (ii) be
primarily responsible for interfacing, corresponding and meeting
with each Regulatory Authority; (iii) be responsible for
maintaining all regulatory filings; (iv) notify the other Party
as soon as possible, but in any event within [**] business days,
of any action by a Regulatory Authority in [**] that would halt,
delay or otherwise impair the Development of a Profit-Sharing
Product; and (v) provide to the other Party a written report
once per Calendar Quarter of all material communications with
any Regulatory Authority in [**]; and (c) in the case of supply
of a Profit-Sharing Product for Phase III Study, Post-Approval
Study or Commercialization purposes, including all matters
relating to cGMP
27
compliance, MERCK shall: (i) oversee, monitor and coordinate all
regulatory actions, communications and filings with, and
submissions to, each Regulatory Authority, (ii) be responsible
for interfacing, corresponding and meeting with each Regulatory
Authority, (iii) be responsible for maintaining all regulatory
filings, (iv) notify ALNYLAM as soon as possible, but in any
event within [**] business days, of any action by a Regulatory
Authority in [**] that would prohibit the marketing or the
continued marketing of such Profit-Sharing Product or that would
result in any shortage or projected shortage of such
Profit-Sharing Product and (v) provide to ALNYLAM a written
report once per Calendar Quarter of all material communications
with any Regulatory Authority in [**].
3.8.4 REPORTING ADVERSE EXPERIENCES. The Parties will develop and
agree upon safety data exchange procedures governing the
coordination of collection, investigation, reporting, and
exchange of information concerning any adverse experiences, and
any product quality and product complaints involving adverse
experiences, related to a Profit-Sharing Product, sufficient to
permit each Party to comply with its legal obligations.
3.8.5 COMPLIANCE. Each Party shall conduct the Therapeutic
Collaboration and the Development, Manufacture and
Commercialization of Profit-Sharing Products in accordance with
all applicable laws, rules and regulations, including without
limitation current governmental regulations concerning good
laboratory practices, good clinical practices and good
manufacturing practices.
3.9 FUNDING OF THE THERAPEUTIC COLLABORATION.
3.9.1 U.S. DEVELOPMENT EXPENSES. From the date of approval by both
Parties of the Program Workplan with respect to a Profit-Sharing
Product, the Parties will [**] of all Development Expenses
incurred in the conduct of the Program Workplan for such
Profit-Sharing Product in order to generate data primarily to
support Regulatory Approval of such Profit-Sharing Product in
the United States ("U.S. DEVELOPMENT EXPENSES"). For the
avoidance of doubt, U.S. Development Expenses may include
expenses related to Clinical Studies performed outside of the
United States in support of Regulatory Approval in the United
States. The applicable Program Workplan will identify each
Clinical Study that is primarily in support of Regulatory
Approval of a Profit-Sharing Product in the United States. Prior
to the Initiation of the first Phase III Study with respect to
each Profit-Sharing Product, each Party has a one-time option to
reduce its percentage share of U.S. Development Expenses related
to such Profit-Sharing Product ("EXPENSE SHARE REDUCTION
OPTION"); provided, however, that in no event will such
percentage share be less than [**] percent ([**]%). A Party may
exercise such option by providing [**] months prior written
notice to the other Party of such exercise and the percentage
share of U.S. Development Expenses to be borne by such Party. In
the event that MERCK exercises its Expense Share Reduction
Option with respect to any Profit-Sharing Product, ALNYLAM shall
assume final decision-making authority over the Development,
Manufacturing and Commercialization activities for such
Profit-Sharing Product with respect to the
00
Xxxxxx Xxxxxx and the appropriate changes will be made to the
provisions of this Agreement to reflect ALNYLAM's assumption of
such final decision-making authority, including without
limitation, the reallocation of responsibility for Development,
Manufacturing and Commercialization activities and regulatory
coordination with respect to the United States.
3.9.2 EX-U.S. DEVELOPMENT EXPENSES. From the Effective Date, with
respect to each Profit-Sharing Product, MERCK will bear [**]
percent ([**]%) of the Development Expenses incurred in the
conduct of the Program Workplan for such Profit-Sharing Product
in order to generate data primarily to support Regulatory
Approval of such Profit-Sharing Product in the Territory outside
the United States.
3.9.3 DEVELOPMENT EXPENSE BUDGET. Each Program Workplan under the
Therapeutic Collaboration shall be accompanied by a budget
prepared by the Parties setting forth the projected Development
Expenses for such Program relating to the United States. Such
Program Workplan budgets shall be reviewed and approved at least
annually by the JSC pursuant to Section 4.1.4. U.S. Development
Expenses identified within the budget for the applicable Program
Workplan approved by the JSC shall initially be borne by the
Party incurring the cost or expense, subject to reimbursement as
provided in Section 3.9.4. ALNYLAM and MERCK shall report
quarterly to each other on their U.S. Development Expenses with
respect to the immediately preceding Calendar Quarter, if any,
with such reports to be submitted within [**] days after the end
of each Calendar Quarter. The Parties shall seek to resolve any
questions related to such U.S. Development Expenses within [**]
days following receipt.
3.9.4 EXPENSE RECONCILIATION. The Party that incurs more than its
share of the total actual U.S. Development Expenses for a
Profit-Sharing Product shall be paid by the other Party an
amount sufficient to reconcile to its agreed percentage of
actual U.S. Development Expenses in each Calendar Quarter;
provided that total actual U.S. Development Expenses for both
Parties for the Calendar Year to date have not exceeded [**]% of
budgeted U.S. Development Expenses for such Profit-Sharing
Product for the Calendar Year to date. If total actual U.S.
Development Expenses exceeded budgeted U.S. Development Expenses
by more than [**]% for the Calendar Year to date, the
reimbursing Party shall first pay the other Party an amount
sufficient to cause the reimbursing Party to have borne its
stated percentage of [**]% of the budgeted U.S. Development
Costs. Actual U.S. Development Expenses in excess of [**]% of
budgeted U.S. Development Expenses shall also be reimbursed if
(a) both Parties approve the additional U.S. Development
Expenses in advance or (b) such excess U.S. Development Expenses
are the result of work carried out in response to a governmental
requirement to do such work and the Party incurring such excess
U.S. Development Expenses has notified the other Party prior to
incurring such excess U.S. Development Expenses. Subject to the
foregoing clause (b), any proposal to increase U.S. Development
Expense for any Calendar Year by more than [**]% of the U.S.
Development Expenses budgeted for such Calendar Year, if the
Parties
29
are unable to reach consensus on such issue, after referral to
the executive officers of the Parties pursuant to Section
13.7.1, shall not be approved. Reconciling payments under this
Section 3.9.4 shall be made within [**] days of receipt of the
other Party's quarterly report.
3.10 COMMERCIALIZATION AND MANUFACTURE OF PROFIT-SHARING PRODUCTS. The rights
and obligations set forth in this Section 3.10 shall apply to both
Parties, as applicable, in respect of each Profit-Sharing Product.
3.10.1 U.S. CO-PROMOTION OPTION FOR PROFIT-SHARING PRODUCTS. Except in
the event that ALNYLAM has exercised its Expense Share Reduction
Option with respect to a Profit-Sharing Product, ALNYLAM shall
have the option to Co-Promote such Profit-Sharing Product with
MERCK in the United States (the "U.S. CO-PROMOTION OPTION"),
which option shall be exercisable at any time (the "CO-PROMOTION
OPTION EXERCISE DATE"), but no later than [**] months prior to
the target launch date for such Profit-Sharing Product in the
United States. If ALNYLAM exercises the U.S. Co-Promotion
Option, the Parties' respective Co-Promotion responsibilities in
the United States shall be negotiated in good faith and set
forth in a definitive agreement ("CO-PROMOTION AGREEMENT") to be
executed no later than [**] months prior to the target launch
date for such Profit-Sharing Product in the United States. Such
Co-Promotion Agreement shall contain terms substantially similar
to those set forth in Schedule 3.10.1.
3.10.2 JOINT COMMERCIALIZATION COMMITTEE. Within [**] months after
ALNYLAM has exercised its U.S. Co-Promotion Option the Parties
shall establish a Joint Commercialization Committee ("JCC") to
oversee Commercialization activities in the United States
relating to Profit-Sharing Products. The JCC will be chaired by
MERCK and shall be comprised of three (3) named representatives
of MERCK and three (3) named representatives of ALNYLAM. Each
Party shall appoint its respective representatives to the JCC
from time to time, and may substitute one or more of its
representatives, in its sole discretion, effective upon notice
to the other Party of such change. All JCC representatives shall
have appropriate marketing or commercialization expertise and
ongoing familiarity with the Profit-Sharing Products. Each Party
shall bear its own expenses relating to attendance at such
meetings by its representatives. The responsibilities of the JCC
shall include overseeing the Commercialization of each
Profit-Sharing Product, reviewing the Commercialization Plan and
related budget for each Profit-Sharing Product and facilitating
implementation of such Commercialization Plans and other related
activities; provided, however, that all issues relating to
Commercialization activities and budgets shall be subject to
MERCK's final decision-making authority as set forth in Section
4.4.1 and also subject to the proviso in Section 4.4.1; provided
further, that in recognition of the importance of budgets,
ALNYLAM shall have the full opportunity to review and comment on
the Commercialization budget before final approval by MERCK. Any
disputes related to Commercialization budgets shall be resolved
as described in Section 4.5.2, but with the substitution of the
JCC for the JSC. The meeting schedule and
30
additional responsibilities of the JCC shall be determined upon
establishment of the JCC.
3.10.3 DILIGENCE. MERCK agrees to use Commercially Reasonable Efforts
to Commercialize each Profit-Sharing Product in the Territory.
Upon exercise by ALNYLAM of its U.S. Co-Promotion Option with
respect to a Profit-Sharing Product, (a) the Parties agree to
diligently collaborate in the Commercialization of such
Profit-Sharing Product in the Field in the United States and (b)
ALNYLAM agrees to use Commercially Reasonable Efforts to
Commercialize such Profit-Sharing Product in the United States.
Except as otherwise set forth in this Section 3.10, all
activities shall be undertaken by the Parties in accordance with
the Commercialization Plan developed under Section 3.10.5 and
all sales shall be made under Product Trademark(s) selected by
MERCK and approved by the JSC, using only professional sales
representatives who are employees of the Parties, in the United
States, or outside the United States, using professional sales
representatives who are employees or direct independent
contractors of MERCK.
3.10.4 LEAD COMMERCIALIZATION PARTY; CERTAIN ALNYLAM RIGHTS. MERCK
shall be responsible for developing a suitable global marketing
strategy for each Profit-Sharing Product in the Territory and
for sales activities, the development of marketing materials and
the implementation of operational matters related to such
activities including marketing, sales, supply and distribution
of each Profit-Sharing Product in the Territory. MERCK shall be
responsible for booking sales and shall warehouse and distribute
the Profit-Sharing Product in the Territory. In the event that
ALNYLAM exercises its U.S. Co-Promotion Option pursuant to
Section 3.10.1, ALNYLAM shall have the right (but not the
obligation) to field Health Science Associates in support of
Profit-Sharing Products. The number and deployment of such
Health Science Associates shall be detailed in the
Commercialization Plan for each Profit-Sharing Product, and any
Health Science Associates fielded by ALNYLAM shall be fully
integrated into the efforts of MERCK's Health Science
Associates. Regardless of whether ALNYLAM has exercised its U.S.
Co-Promotion Option, the Parties shall mutually agree (such
agreement not to be unreasonably withheld) upon the
participation of key opinion leaders and/or investigators from
time to time in meetings with investors sponsored by ALNYLAM.
3.10.5 COMMERCIALIZATION PLAN. Prior to the [**] for a Profit-Sharing
Product, MERCK shall prepare a statement of interest with
respect to such Profit-Sharing Product for submission to the
JSC. The statement of interest shall provide [**] by such
Profit-Sharing Product. After submission of the statement of
interest, but prior to submission of the [**] to the JSC as
described below, [**] the Development of such Profit-Sharing
Product shall be submitted to the JSC as they become available.
[**] months prior to the completion of the design of the first
Phase III Study with respect to such Profit-Sharing Product,
MERCK shall prepare [**] for submission to the JSC. The [**]
will [**] for such Profit-Sharing Product and [**] such
Profit-Sharing Product. Thereafter on an annual basis (until
such time as such responsibility shifts to the JCC pursuant to
Section 3.10.2), MERCK shall
31
prepare a rolling [**] plan (a "COMMERCIALIZATION PLAN") for
Commercializing such Profit-Sharing Product in the Field in the
United States. The initial Commercialization Plan for such
Profit-Sharing Product shall include [**] the Commercialization
Plan. The subsequent Commercialization Plan will contain [**] in
the United States with respect to such Profit-Sharing Product
and shall contain [**]. Such subsequent Commercialization Plan
is expected to include, without limitation, [**] for the
Profit-Sharing Product. The Commercialization Plan shall also
include, as an appendix, [**] in and for the United States after
the First Commercial Sale of the relevant Profit-Sharing Product
in the United States.
3.10.6 MANUFACTURE. MERCK shall be responsible for the Manufacture and
supply of each Profit-Sharing Product for Commercialization
purposes. MERCK shall have the right to Manufacture the
Profit-Sharing Product or have the Profit-Sharing Product
Manufactured by an Affiliate or Third Party; provided that MERCK
shall remain at all times fully liable for the Manufacture of
the Profit-Sharing Product. In the event that MERCK uses a Third
Party to fulfill its obligations hereunder, such Third Party
shall be bound by confidentiality and non-use obligations which
are no less stringent than those set forth in Article 8 of this
Agreement.
4. COLLABORATION MANAGEMENT
4.1 JOINT STEERING COMMITTEE. The Parties hereby establish a committee to
facilitate the Development and Manufacturing of Profit-Sharing Products
under the Therapeutic Collaboration as follows:
4.1.1 COMPOSITION OF THE JOINT STEERING COMMITTEE. The Therapeutic
Collaboration shall be conducted under the direction of a joint
steering committee (the "JSC") comprised of two (2) named
representatives of MERCK and two (2) named representatives of
ALNYLAM. Each Party shall appoint its respective representatives
to the JSC from time to time, and may substitute one or more of
its representatives, in its sole discretion, effective upon
notice to the other Party of such change. Each Party shall have
at least one JSC representative who is a senior employee
(director level or above), and all JSC representatives shall
have appropriate research, preclinical, manufacturing, clinical
development or commercialization expertise and ongoing
familiarity with the Collaboration. Additional representatives
or consultants may from time to time, by mutual consent of the
Parties, be invited to attend JSC meetings, subject to such
representative's and consultant's written agreement to comply
with the requirements of Section 8.1. Each Party shall bear its
own expenses relating to attendance at such meetings by its
representatives.
4.1.2 JSC CHAIRPERSON. The JSC Chairperson shall rotate every twelve
(12) months between ALNYLAM and MERCK. The initial JSC
Chairperson shall be a representative of ALNYLAM. The
Chairperson's responsibilities shall include (a) scheduling
meetings at least quarterly, but more frequently if the JSC
determines it necessary; (b) setting agenda for meetings with
solicited input from
32
other members; (c) confirming and delivering minutes to the JSC
for review and approval; and (d) conducting effective meetings,
including ensuring that objectives for each meeting are set and
achieved.
4.1.3 MEETINGS. The JSC shall meet in accordance with a schedule
established by mutual written agreement of the Parties, but no
less frequently than once per Calendar Quarter, with the
location for such meetings alternating between ALNYLAM and MERCK
facilities (or such other locations as is determined by the
JSC). Alternatively, the JSC may meet by means of
teleconference, videoconference or other similar communications
equipment, but at least two meetings per year shall be conducted
in person.
4.1.4 JSC RESPONSIBILITIES. The JSC shall have the following
responsibilities with respect to Co-Development Targets and
Profit-Sharing Products (but shall have no oversight over MERCK
Development Products, [**] Products or Royalty-Bearing
Products):
(a) oversight of all Program activities relating to
Co-Development Targets and Profit-Sharing Products;
(b) determining the overall Development strategy for the
Programs and the Profit-Sharing Products in the Field in
the Territory;
(c) reviewing for approval the Program Workplans (including
without limitation, identifying each Clinical Study in
such Program Workplans that is primarily in support of
Regulatory Approval of a Profit-Sharing Product in the
United States) within [**] days after the selection of a
Co-Development Target by ALNYLAM (or, in the event that
MERCK exercises it Opt-In Right with respect to the [**]
Target and [**] Products, the date of the Opt-In
Notice), and reviewing for approval the related
Development Expense budgets described in Section 3.9.3
within [**] days after the selection of a Co-Development
Target by ALNYLAM (or, in the event that MERCK exercises
it Opt-In Right with respect to the [**] Target and [**]
Products, the date of the Opt-In Notice), in each case
with appropriate input from ALNYLAM and MERCK senior
management;
(d) reviewing for approval (i) an annual update to each
Program Workplan and the related Development Expense
budgets described in Section 3.9.3, no later than
December 31 of each Calendar Year, and (ii) any
modifications to such Program Workplans and Development
Expense budgets within [**] days of each submission to
the JSC (including without limitation, identifying each
Clinical Study in such updates and modifications to such
Program Workplans that is primarily in support of
Regulatory Approval of a Profit-Sharing Product in the
United States);
(e) determining each Party's responsibilities under the
Program Workplans consistent with Section 3.4;
33
(f) facilitating the transfer of Know-How and Information
between the Parties for purposes of conducting the
Program Workplans;
(g) regularly assessing the progress of the Parties in their
conduct of the Program Workplans and against the
timelines and budgets contained therein, reviewing
relevant data, considering issues of priority, and
determining which Profit-Sharing Products to advance
into clinical development;
(h) reviewing for approval any Manufacturing plans for
Profit-Sharing Products and overseeing activities
conducted thereunder;
(i) reviewing for approval, within the Parties' regular
business cycles, but no later than [**] days after a
proposal is made to the JSC by either Party, the entry
of any Profit-Sharing Product into IND-Enabling GLP
Toxicology Studies;
(j) monitoring the diligence of each Party in performing its
obligations with respect to the Co-Development Targets
and Profit-Sharing Products hereunder;
(k) identifying and prioritizing academic collaborations
relating to the Programs for review by the appropriate
level of management of ALNYLAM and MERCK;
(l) reviewing for approval the terms of any In-License under
Section 7.4.1;
(m) considering and advising on technical issues that arise
in the Programs; and
(n) performing such other activities relating to
Co-Development Targets and Profit-Sharing Products as
are contemplated under this Agreement or that the
Parties agree shall be the responsibility of the JSC.
4.2 APPOINTMENT OF SUBCOMMITTEES, PROJECT TEAMS AND COLLABORATION MANAGERS.
The JSC shall be empowered to create such subcommittees of itself and
additional project teams as it may deem appropriate or necessary. Each
such subcommittee and project team shall report to the JSC, which shall
have authority to approve or reject recommendations or actions proposed
thereby subject to the terms of this Agreement. Each Party shall also
designate a "COLLABORATION MANAGER" for each Profit-Sharing Product. The
Collaboration Managers for the Profit-Sharing Products will be
responsible for the day-to-day worldwide coordination of the Program for
the applicable Profit-Sharing Product and will serve to facilitate
communication between the Parties with respect to such Profit-Sharing
Product. Each Party may change its designated Collaboration Manager from
time to time upon written notice to the other Party.
4.3 REPORTS AND MINUTES. Each Party will provide the members of the JSC with
written copies of all materials they intend to present at the JSC
meeting. The JSC may also
34
request at any time specific data or information related to Development
activities in the Programs or that a written report be prepared in
advance of any meeting summarizing certain material data and information
arising out of the conduct of such Development activities and the Party
or appropriate committee to whom such request is made shall promptly
provide to the other Party or JSC such report, data or information. A
secretary shall be appointed for each meeting and shall prepare minutes
of the meeting, which shall provide a description in reasonable detail
of the discussions held at the meeting and a list of any actions,
decisions or determinations approved by the JSC.
4.4 DECISION-MAKING.
4.4.1 FINAL DECISION-MAKING. The JSC shall operate by consensus,
however, the JSC shall not have final decision-making authority
regarding issues relating to Pre-Clinical Development
Activities, Development activities and Commercialization
activities for each Profit-Sharing Product, which issues shall
be subject to MERCK's final decision-making authority; provided,
however, that if MERCK exercises its Expense Share Reduction
Option with respect to any Profit-Sharing Product pursuant to
Section 3.9.1, thereafter ALNYLAM shall have final
decision-making authority over Development and Commercialization
activities for such Profit-Sharing Product with respect to the
United States.
4.4.2 BUDGETS. As set forth in Sections 4.1.4(c) and (d), for
Profit-Sharing Products, the JSC shall have primary
responsibility, subject to each Party's normal budget approval
process, for the review and approval of Development Expense
budgets for Program Workplans, including budgets related to
Development activities over which one Party has final
decision-making authority pursuant to Section 4.4.1. In
recognition of the importance of budgets, each Party shall have
the full opportunity to review and comment on budgets before
final approval. Any disputes related to budgets shall be
resolved in accordance with Section 4.5.2.
4.4.3 VOTING. With respect to decisions of the JSC, the
representatives of each Party shall have collectively one vote
on behalf of such Party. For each meeting of the JSC, at least
two (2) representatives of each Party shall constitute a quorum.
Action on any matter may be taken at a meeting, by
teleconference, videoconference or by written agreement.
4.5 DISPUTES. The JSC shall attempt to resolve any and all disputes relating
to Co-Development Targets or Profit-Sharing Products by unanimous
consensus. In the event the JSC is unable to reach a unanimous consensus
with respect to any such dispute, then the following dispute resolution
provisions shall apply.
4.5.1 With respect to a dispute concerning a matter provided for in
Section 4.4.1, the Party with final decision-making authority
shall have the authority to resolve the dispute; provided,
however, that the Party with final decision-making authority
shall consult with the Party without final decision-making
authority, and give due consideration to such Party's expressed
interests regarding all such matters, and the Party without
final decision-making authority shall have the right to propose
35
an alternative plan for good faith consideration by the JSC
(such as, without limitation, an alternative non-clinical or
clinical plan), and if such alternative plan is rejected, then
the JSC shall provide the Party without final decision-making
authority with its rationale for such decision.
4.5.2 With respect to a dispute concerning a matter provided for in
Section 4.4.2, the Party with final decision-making authority
shall have the authority to resolve the dispute; provided,
however, that the Party without final decision-making authority
shall have the right to propose an alternative budget for good
faith consideration by the JSC, and if such alternative budget
is rejected, then the JSC shall provide the Party without final
decision-making authority with its rationale for such decision.
4.5.3 With respect to all other matters, except those relating to the
Cost of Goods Sold of a Profit-Sharing Product as described in
Section 1.26, if the JSC is unable to resolve such dispute, and
the dispute is material, then the dispute shall be submitted to
escalating levels of MERCK and ALNYLAM senior management for
review. If the dispute cannot be resolved despite escalation,
then the dispute resolution provisions of Section 13.7 shall
apply.
4.6 DISSOLUTION OF JSC. The JSC shall be dissolved at the end of the
Therapeutic Collaboration. Notwithstanding the foregoing, ALNYLAM will
participate on the JSC until the earlier of (1) the cessation of
Development activities with respect to Profit-Sharing Products under
this Agreement, or (b) Commercialization of the first Profit-Sharing
Product, after which event ALNYLAM will have the right, but not the
obligation to participate on the JSC.
5. OPT-OUT RIGHTS FOR PROFIT-SHARING PRODUCTS AND CO-DEVELOPMENT TARGETS
5.1 OPT-OUT RIGHTS. Each Party shall have the right to narrow the Parties'
Therapeutic Collaboration hereunder to exclude a Co-Development Target
and all RNAi Therapeutic Products directed to such Co-Development Target
(an "OPT-OUT RIGHT"), subject to the following terms and conditions:
(a) Either Party (the "OPT-OUT PARTY") may exercise its Opt-Out
Right with respect to a Co-Development Target by giving the
other Party [**] days' prior written notice ("OPT-OUT NOTICE")
of the Opt-Out Party's intent to exercise its Opt-Out Right;
provided, however, that except in the case that information
regarding a competing product or scientific information arises,
either within or outside of the Therapeutic Collaboration, which
has a significant adverse effect on the commercial value of RNAi
Therapeutic Products directed to such Co-Development Target or
on the probability of the development of safe and efficacious
RNAi Therapeutic Products directed to such Co-Development
Target, a Party may only exercise its Opt-Out Right with respect
to a Co-Development
36
Target during an Opt-Out Period for the most advanced RNAi
Therapeutic Product directed to such Co-Development Target.
(b) On the effective date of the exercise of such Opt-Out Right (the
"OPT-OUT POINT"), the definition of Co-Development Targets shall
thereafter be narrowed to exclude the applicable Co-Development
Target, and the definition of Programs shall thereafter be
narrowed to exclude the Program for such Co-Development Target.
(c) Within [**] days of the Opt-Out Point, by notice to the Opt-Out
Party, the other Party may elect to continue the Development and
Commercialization of RNAi Therapeutic Products directed to the
Target that is the subject of such Opt-Out Notice, in which
event:
(i) Such other Party will thereafter be deemed the
"CONTINUING PARTY" with respect to RNAi Therapeutic
Products directed to such Target;
(ii) Each Profit-Sharing Product directed to such Target will
be deemed a "ROYALTY-BEARING PRODUCT" and the provisions
of Section 12.4 shall apply to each such Royalty-Bearing
Product;
(iii) The Continuing Party shall be free to Develop,
Manufacture and Commercialize Royalty-Bearing Products
directed to such Co-Development Target, in the Field in
the Territory, with or without a partner or collaborator
and without any further obligation to the Opt-Out Party
with respect to such activities under this Agreement,
subject to the continuing obligations of the Parties
with respect to Royalty-Bearing Products set forth in
Article 6 and Sections 9.2.2 and 9.4.3;
(iv) For a period of [**] years after the Opt-Out Point
neither the Opt-Out Party nor any of its Affiliates
shall, alone or with a Third Party, research, develop,
Manufacture or Commercialize RNAi Products directed to
such Target in the Field in the Territory; and
(v) The licenses granted to the Opt-Out Party by the
Continuing Party with respect to such RNAi Therapeutic
Products set forth in Article 7 shall terminate and the
licenses granted to the Continuing Party by the Opt-Out
Party with respect to such RNAi Therapeutic Products set
forth in Article 7 shall continue in full force and
effect.
(d) If the Party that is not the Opt-Out Party does not elect to
become the Continuing Party with respect to the Target that is
the subject of an Opt-Out Notice, then:
(i) The definition of RNAi Therapeutic Product shall
thereafter be narrowed to exclude any RNAi Therapeutic
Products directed to such Target; and
37
(ii) Except for the provisions of this Agreement that survive
termination of this Agreement pursuant to Section 12.5
and this Section 5.2, the financial, license and other
terms of this Agreement shall no longer apply to such
Target or to the Development, Manufacture and
Commercialization of RNAi Therapeutic Products directed
to such Target.
6. DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF ROYALTY-BEARING
PRODUCTS, MERCK DEVELOPMENT PRODUCTS AND [**] PRODUCTS
The rights and obligations set forth in this Article 6 shall apply to
the Continuing Party with respect to the Development, Manufacture and
Commercialization of each Royalty-Bearing Product and/or to MERCK with
respect to the Development, Manufacture and Commercialization of each
MERCK Development Product and/or to ALNYLAM with respect to the
development, manufacture and commercialization of each [**] Product if
MERCK does not exercise its Opt-In Right.
6.1 DEVELOPMENT AND COMMERCIALIZATION.
6.1.1 MERCK DEVELOPMENT PRODUCTS. Upon designation of a MERCK
Development Target pursuant to Section 3.2.2(d), MERCK shall be
solely responsible for all Development, Manufacturing and
Commercialization activities relating to MERCK Development
Products directed to such MERCK Development Target, and shall
bear one hundred percent (100%) of all expenses for Development,
Manufacture and Commercialization of such MERCK Development
Products; provided, however, that at any time prior to the
completion of IND-Enabling GLP Toxicology Studies of a MERCK
Development Product, MERCK may request in writing that ALNYLAM
perform certain Development activities with respect to such
MERCK Development Product, and ALNYLAM, in its sole discretion,
may agree to perform such activities for MERCK. In such event,
MERCK will reimburse ALNYLAM for its direct out-of-pocket costs
and expenses incurred by ALNYLAM and its Affiliates in the
performance of such activities and the costs of internal
scientific, medical, technical or managerial personnel of
ALNYLAM and its Affiliates engaged in such efforts, which costs
shall be determined based on the FTE Costs, unless another basis
is otherwise agreed by the Parties in writing.
6.1.2 ROYALTY-BEARING PRODUCTS. Upon designation of a Royalty-Bearing
Product pursuant to Section 5.1, the Continuing Party shall be
solely responsible for all Development, Manufacturing (subject
to Section 6.4) and Commercialization activities relating to
such Royalty-Bearing Product and shall bear one hundred percent
(100%) of all expenses for the Development, Manufacture and
Commercialization of such Royalty-Bearing Product incurred after
the Opt-Out Point and the JSC and JCC shall cease to have
oversight or management responsibility with respect to such
Royalty-Bearing Product.
38
6.1.3 [**] PRODUCTS. Unless MERCK exercises its Opt-In Right, ALNYLAM
shall be solely responsible for all development, manufacturing
and commercialization activities relating to [**] Products, and
shall bear one hundred percent (100%) of all expenses for
development, manufacture and commercialization of such [**]
Products.
6.2 COMPLIANCE AND DILIGENCE. After the Opt-Out Point, the Continuing Party
shall use Commercially Reasonable Efforts to Develop, Manufacture
(subject to Section 6.4) and Commercialize the Royalty-Bearing Product.
All Development, Manufacturing and Commercialization activities with
respect to such Royalty-Bearing Product shall be conducted at the
Continuing Party's sole cost and expense and in accordance with all
applicable laws, rules and regulations, including without limitation
current governmental regulations concerning good laboratory practices,
good clinical practices and good manufacturing practices. Upon
designation of a MERCK Development Target pursuant to Section 3.2.2(d),
MERCK shall comply with the foregoing obligations of the Continuing
Party except that such obligation shall apply with respect to MERCK
Development Products directed to such MERCK Development Target. ALNYLAM
shall comply with the foregoing obligations of the Continuing Party
except that such obligation shall apply with respect to the [**]
Products directed to the [**] Target.
6.3 REPORTS. After the Opt-Out Point, the Continuing Party shall prepare and
deliver to the Opt-Out Party, by no later than each [**], a written plan
that summarizes the Development, Manufacturing and Commercialization
activities to be undertaken in the next Calendar Year and the dates by
which such activities are targeted to be accomplished. In addition, the
Continuing Party shall prepare and deliver to the Opt-Out Party, by no
later than each [**] (for the period ending December 31 of the prior
Calendar Year), written reports which shall update any prior report
filed hereunder, including a summary of the Continuing Party's
Development, Manufacturing and Commercialization activities performed to
date, as applicable. The Continuing Party shall provide the Opt-Out
Party with written notice of (a) all filings and submissions for
Regulatory Approval regarding Royalty-Bearing Products in a timely
manner; and (b) all Regulatory Approvals obtained or denied within [**]
days of receipt of written notice of such obtaining or denial; provided,
however, that for filings and submissions for Regulatory Approval, and
Regulatory Approvals obtained or denied, in the United States, the
European Union, Japan, and Canada, the Continuing Party will notify the
Opt-Out Party as soon as reasonably possible, but in any event within
[**] business days of the Continuing Party's receipt of notice of such
filing or submission for Regulatory Approval, or of the obtaining or
denial of such Regulatory Approval, as the case may be. At the Opt-Out
Party's reasonable request from time to time and without unduly
burdening the Continuing Party, the Continuing Party shall also provide
such other information and shall agree to meet with the Opt-Out Party as
needed (but not more than once each year) to keep the Opt-Out Party
reasonably informed of the Continuing Party's Development and
Commercialization activities. Upon designation of a MERCK Development
Target pursuant to Section 3.2.2(d), MERCK shall comply with the
foregoing obligations of the Continuing Party except that such
obligation shall apply with respect to all MERCK Development Products
directed to such MERCK Development Target. ALNYLAM shall comply with the
foregoing obligations of the Continuing Party
39
except that such obligation shall apply with respect to all [**]
Products directed to the [**] Target.
6.4 CLINICAL AND COMMERCIAL SUPPLY. In the event that ALNYLAM exercises its
Opt-Out Rights with respect to a Profit-Sharing Product prior to the
Completion of Phase II and MERCK is the Continuing Party for the
Royalty-Bearing Product, at MERCK's option ALNYLAM shall continue to
Manufacture and supply such Royalty-Bearing Product to MERCK until [**]
months after the applicable Opt-Out Point or such earlier time as may be
agreed by MERCK. In the event that: (a) MERCK exercises its Opt-Out
Rights with respect to a Profit-Sharing Product during the Phase II
Completion Opt-Out Period, (b) MERCK has commenced Manufacture of such
Royalty-Bearing Product at the time that MERCK exercises its Opt-Out
Rights, and (c) ALNYLAM is the Continuing Party for the Royalty-Bearing
Product, then, at ALNYLAM's option, MERCK shall continue to Manufacture
and supply such Royalty-Bearing Product to ALNYLAM for [**] months after
such Opt-Out Point or such earlier time as may be agreed by ALNYLAM. The
Continuing Party shall pay the Opt-Out Party for any such
Royalty-Bearing Product supplied pursuant to this Section 6.4 at the
Cost of Goods Sold of such Royalty-Bearing Product.
6.5 REGULATORY APPROVALS. Notwithstanding anything to the contrary contained
in Section 3.8, after the Opt-Out Point for a Royalty-Bearing Product,
the Continuing Party shall be the holder of all Regulatory Approvals
(including IND and NDA submissions) for such Royalty-Bearing Product. To
the extent permitted by law, and subject to any obligations the
Continuing Party may have to Third Parties, the Opt-Out Party will
assign to the Continuing Party, as soon as practical after the Opt-Out
Point, all regulatory filings related to such Royalty-Bearing Product to
the extent requested by the Continuing Party, including any draft IND
documents, and copies of all correspondence and notes of any oral
communication with Regulatory Authorities regarding such Royalty-Bearing
Product. The Opt-Out Party will execute such further instruments,
documents or certificates, as may be required to more effectively assign
the regulatory filings to the Continuing Party. To the extent the
Opt-Out Party cannot transfer all such Regulatory Approvals, the Opt-Out
Party shall permit the Continuing Party to use and cross-reference such
regulatory filings. Upon designation of a MERCK Development Target
pursuant to Section 3.2.2(d), MERCK shall be the holder of all
Regulatory Approvals (including IND and NDA submissions) for all MERCK
Development Products directed to such MERCK Development Target. Unless
MERCK exercises its Opt-In Right ALNYLAM shall be the holder of all
Regulatory Approvals (including IND and NDA submissions) for all [**]
Products.
6.6 MANUFACTURING REGULATORY COMMUNICATIONS. Notwithstanding any provisions
of Section 3.8 to the contrary, with respect to all Manufacturing issues
related to Royalty-Bearing Products and MERCK Development Products, and
all manufacturing issues related to [**] Products, including all matters
relating to cGMP compliance, the Continuing Party, in the case of
Royalty-Bearing Products, MERCK in the case of MERCK Development
Products, and ALNYLAM, in the case of [**] Products, shall: (a) oversee,
monitor and coordinate all regulatory actions, communications and
filings with, and submissions to, each Regulatory Authority, (b) be
responsible for interfacing,
40
corresponding and meeting with each Regulatory Authority and (c) be
responsible for maintaining all regulatory filings.
6.7 TECHNOLOGY TRANSFER. For a period of [**] months after the applicable
Opt-Out Point, each Party, subject to any obligations the Party may have
to Third Parties, shall provide to the other Party, at such other
Party's request, any and all Know-How related to the Royalty-Bearing
Products necessary for the other Party to perform its obligations or
exploit its rights under this Agreement. Such technology transfer shall
include, but not be limited to, technical assistance. The costs and
expenses directly related to such provision of Know-How and technical
assistance shall be calculated in accordance with the provisions related
to Development Expenses and Commercialization Expenses, as applicable,
and shall be borne equally by the Opt-Out Party and the Continuing
Party. Each Party shall use such Know-How of the other Party solely for
the purposes of performing its obligations or exploiting its rights
under this Agreement with respect to the Royalty-Bearing Products.
6.8 RIGHT OF FIRST NEGOTIATION FOR MERCK DEVELOPMENT TARGETS. During the
Agreement Term, MERCK agrees to promptly notify ALNYLAM in writing
("INITIAL NOTICE") if MERCK decides to discontinue the development and
commercialization of all RNAi Products directed to a MERCK Development
Target (the "DROPPED MERCK DEVELOPMENT TARGET"). Such Initial Notice
shall include material information relating to such Dropped MERCK
Development Target that is Controlled by MERCK and that ALNYLAM may
reasonably need in order for ALNYLAM to evaluate the Dropped MERCK
Development Target program, including without limitation, any
obligations MERCK may have to any Third Parties relating to such RNAi
Products or the Dropped MERCK Development Target; or, in the case where
MERCK has [**]. ALNYLAM shall have [**] days after receipt of the
Initial Notice to notify MERCK in writing of its interest in obtaining
exclusive rights to develop and commercialize RNAi Products directed to
such Dropped MERCK Development Target; provided, however, that ALNYLAM
shall have no such option if MERCK [**]. If ALNYLAM notifies MERCK in
writing within such [**] day period that it is interested in such
Dropped MERCK Development Target, then, subject to any obligations MERCK
may have to any Third Party relating to such RNAi Products or such
Dropped MERCK Development Target, the Parties shall promptly commence
good faith negotiations and MERCK will exclusively negotiate with
ALNYLAM for a period of up to [**] months after ALNYLAM receives the
Initial Notice in an effort to reach a mutually acceptable definitive
agreement for the exclusive rights to develop and commercialize RNAi
Products directed to such Dropped MERCK Development Target. If (a)
ALNYLAM does not notify MERCK in writing within such [**] day period
that it is interested in such Dropped MERCK Development Target, or (b)
despite each Party's good faith efforts, ALNYLAM and MERCK are not able
to reach agreement on and execute a definitive agreement within such
[**] month period, then the definition of MERCK Development Target shall
thereafter be narrowed to exclude the applicable Dropped MERCK
Development Target.
7. LICENSES
41
7.1 LICENSE GRANTS.
7.1.1 ALNYLAM GRANT TO MERCK. ALNYLAM hereby grants to MERCK a
royalty-free license in the Territory, with a right to sublicense to
its Affiliates, (a) under ALNYLAM Target Identification and Target
Validation RNAi Patent Rights, (b) under ALNYLAM's interest in Joint
Collaboration Patent Rights and Joint Collaboration Inventions, (c)
under ALNYLAM Technology Collaboration Inventions, (d) to ALNYLAM
RNAi Technology and (e) under ALNYLAM-Assigned Therapeutic
Collaboration Inventions, that in the case of each of (a), (c) and
(d) were Controlled by ALNYLAM or its Affiliates during the
Technology Collaboration Term; in each case during and after the
Collaboration Term, for the sole purpose of in vitro and/or in vivo
target identification and/or target validation research relating to
drug discovery and/or development activities of MERCK and/or its
Affiliates, including in collaborations with Third Parties in which
MERCK and/or its Affiliates has any rights (but not necessarily all
rights) to discoveries made. The foregoing license shall be
Co-exclusive until September 8, 2006, and thereafter shall be
non-exclusive. Notwithstanding any other provisions of this
Agreement, the license grant to MERCK under ALNYLAM-Assigned
Therapeutic Collaboration Inventions shall be perpetual.
7.1.2 MERCK GRANT TO ALNYLAM. MERCK hereby grants to ALNYLAM a
non-exclusive, royalty-free license in the Territory, with a right
to sublicense its Affiliates (except as set forth in Section 7.3.2),
under (a) MERCK Broad RNAi Patent Rights that were Controlled by
MERCK or ROSETTA or their wholly-owned subsidiaries during the
Technology Collaboration Term, (b) MERCK Broad RNAi Technology that
was Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries during the Technology Collaboration Term, (c) MERCK's
interest in Joint Collaboration Patent Rights, and (d)
MERCK-Assigned Therapeutic Collaboration Inventions; in each case
during and after the Collaboration Term, for the sole purpose of
research (including, without limitation, for internal in vitro
and/or in vivo target validation and/or target identification
research by ALNYLAM or its Affiliates), development, manufacture,
use, import or sale of therapeutic products based on RNA
interference, which products are to be sold by ALNYLAM, its
Affiliates, or its Third Party collaborators. For the avoidance of
doubt, it is acknowledged that, with regard to research and
development activities, such license grant shall apply only to
research and development activities using RNA interference.
ALNYLAM's license under MERCK-Assigned Therapeutic Collaboration
Inventions shall be perpetual.
The Parties agree that neither ALNYLAM nor its Affiliates have the
right to sublicense any MERCK intellectual property, including
without limitation MERCK RNAi Patent Rights, MERCK's interest in
Joint Collaboration Patent Rights, and/or MERCK RNAi Technology, to
any Third Party (including without limitation any Third Party
collaborator) other than as expressly provided in Section 7.3. The
Parties further agree that neither ALNYLAM nor its Affiliates have
the right to deliver or disclose to any Third Party (including
without
42
limitation any Third Party collaborator) any MERCK RNAi Technology
other than as expressly provided in Section 7.3; provided, further
that, under no circumstance other than pursuant to Section 7.1.3,
7.1.4 or 7.1.6, shall ALNYLAM or its Affiliates provide any Third
Party with MERCK Product-Specific RNAi Technology or MERCK
Product-Specific RNAi Patent Rights.
7.1.3 PROFIT-SHARING PRODUCTS.
(a) DEVELOPMENT LICENSES. Subject to the terms and conditions of
this Agreement, solely for the purpose of conducting each
Program in the Therapeutic Collaboration, (i) ALNYLAM hereby
grants to MERCK a worldwide, royalty-free, Co-exclusive
license, sublicensable to its Affiliates, under and to any and
all ALNYLAM RNAi Technology, ALNYLAM Collaboration Inventions,
ALNYLAM Therapeutic Collaboration IP, ALNYLAM RNAi Patent
Rights and ALNYLAM's interest in Joint Collaboration IP
(collectively, "ALNYLAM TECHNOLOGY"), to Develop
Profit-Sharing Products in such Program in the Field in the
Territory; and (ii) MERCK hereby grants to ALNYLAM a
worldwide, royalty-free, Co-exclusive license, sublicenseable
to its Affiliates (except as otherwise set forth in Section
7.3.2), under and to any and all MERCK RNAi Technology, MERCK
RNAi Patent Rights, MERCK Collaboration Inventions, MERCK
Therapeutic Collaboration IP, MERCK's interest in Joint
Collaboration IP and MERCK RNAi Novel Target IP which are
Controlled by MERCK or ROSETTA or their wholly-owned
subsidiaries (collectively, "MERCK TECHNOLOGY") to Develop
Profit-Sharing Products in such Program in the Field in the
Territory (for the avoidance of doubt, it is acknowledged
that, with regard to research and development activities, such
license grant shall apply only to research and development
activities using RNA interference). Such licenses shall
include the right for both Parties to grant sublicenses and
licenses as provided in Section 7.3 below.
(b) COMMERCIALIZATION LICENSES. Subject to the terms and
conditions of this Agreement, including without limitation
ALNYLAM's U.S. Co-Promotion Option set forth in Section
3.10.1, ALNYLAM hereby grants MERCK a license under and to any
and all ALNYLAM Technology to Commercialize Profit-Sharing
Products in the Field in the Territory. Such license shall be
exclusive in the United States with respect to each
Profit-Sharing Product, unless ALNYLAM exercises its U.S.
Co-Promotion Option, in which case such license shall be
Co-exclusive. Such license shall be exclusive and
royalty-bearing in the Territory outside the United States.
Subject to the terms and conditions of this Agreement, upon
ALNYLAM's exercise of its U.S. Co-Promotion Option, MERCK
hereby grants ALNYLAM a Co-exclusive license under and to any
and all MERCK Technology to Commercialize Profit-Sharing
Products in the Field in the United States. Such licenses
shall include the right for both Parties to grant sublicenses
and licenses as provided in Section 7.3 below.
43
(c) MANUFACTURING LICENSES. Subject to the terms and conditions of
this Agreement, only as permitted and solely for the purposes
set forth in Sections 3.4, 3.10.6 and 6.4, ALNYLAM hereby
grants MERCK a non-exclusive license under and to any and all
ALNYLAM Technology to Manufacture Profit-Sharing Products in
the Field for the Territory. Subject to the terms and
conditions of this Agreement, only as permitted and solely for
the purposes set forth in Sections 3.4 and 6.4, MERCK hereby
grants ALNYLAM a non-exclusive license under and to any and
all MERCK Technology to Manufacture Profit-Sharing Products in
the Field for the Territory. Such licenses shall include the
right for both Parties to grant sublicenses and licenses as
provided in Section 7.3 below.
(d) PRODUCT TRADEMARK LICENSES. Subject to the terms and
conditions of this Agreement, upon ALNYLAM's exercise of its
U.S. Co-Promotion Option with respect to a Profit-Sharing
Product, MERCK hereby grants ALNYLAM a Co-exclusive license to
use the Product Trademark(s) selected by MERCK and approved by
the JSC for such Profit-Sharing Product to Commercialize such
Profit-Sharing Product in the Field in the United States.
Furthermore, in the event that MERCK makes public use of
Product Trademark(s) in the Development of a Profit-Sharing
Product, MERCK shall grant ALNYLAM a Co-exclusive license to
use such Product Trademark(s) to perform its Development
obligations under this Agreement with respect to such
Profit-Sharing Product. Such licenses shall include the right
for both Parties to grant sublicenses and licenses as provided
in Section 7.3 below.
7.1.4 ROYALTY-BEARING PRODUCTS. Subject to the terms and conditions of
this Agreement, in relation to each Royalty-Bearing Product, the
Opt-Out Party hereby grants the Continuing Party a license under and
to ALNYLAM Technology (if the Opt-Out Party is ALNYLAM), or MERCK
Technology (if the Opt-Out Party is MERCK), that is applicable to
such Royalty-Bearing Product, to Develop, Manufacture and
Commercialize such Royalty-Bearing Product in the Field in the
Territory. Such license shall be exclusive and royalty-bearing for
the royalty term of such Royalty-Bearing Product as set forth in
Section 9.4.5 in each country in the Territory, and shall thereafter
be a non-exclusive, royalty-free license to Develop, Manufacture and
Commercialize such Royalty-Bearing Product in the Field in such
country. Such licenses shall include the right to grant sublicenses
and licenses as provided in Section 7.3 below. For the avoidance of
doubt, it is acknowledged that such license grant shall apply only
to such Royalty-Bearing Product and shall not apply to any other
product, and shall apply only to research and development activities
using RNA interference.
7.1.5 MERCK DEVELOPMENT PRODUCTS. Subject to the terms and conditions of
this Agreement, in relation to each MERCK Development Product,
ALNYLAM hereby grants MERCK a license under and to ALNYLAM
Technology which is necessary or useful to Develop, Manufacture
and/or Commercialize such MERCK Development Product in the Field in
the Territory. Such license shall be exclusive and royalty-bearing
for the royalty term of such MERCK Development Product as
44
set forth in Section 9.4.5 in each country in the Territory, and
shall thereafter be a non-exclusive, royalty-free license to
Develop, Manufacture and Commercialize such MERCK Development
Product in the Field in such country. As applicable pursuant to
Section 6.1.1, MERCK hereby grants ALNYLAM a worldwide,
royalty-free, non-exclusive license under and to MERCK Technology
which is applicable to the MERCK Development Product, to perform
Development activities under Section 6.1.1 with respect to such
MERCK Development Product in the Field in the Territory. Such
licenses shall include the right to grant sublicenses and licenses
as provided in Section 7.3 below. For the avoidance of doubt, it is
acknowledged that such license grant shall apply only to such MERCK
Development Product and shall not apply to any other product, and
shall apply only to research and development activities using RNA
interference.
7.1.6 [**] PRODUCTS. Subject to the terms and conditions of this
Agreement, in relation to each [**] Product, MERCK hereby grants
ALNYLAM a license under and to MERCK Technology which is necessary
or useful to develop, manufacture and commercialize such [**]
Product in the Field in the Territory. Such license shall be
exclusive and royalty-bearing for the royalty term of such [**]
Product as set forth in Section 9.4.5 in each country in the
Territory, and shall thereafter be a non-exclusive, royalty-free
license to develop, manufacture and commercialize such [**] Product
in the Field in such country. Such license shall terminate if MERCK
exercises its Opt-In Right pursuant to Section 2.2.2. Such license
shall include the right to grant sublicenses and licenses as
provided in Section 7.3 below. For the avoidance of doubt, it is
acknowledged that such license grant shall apply only to such [**]
Product and shall not apply to any other product, and shall apply
only to research and development activities using RNA interference.
7.2 JOINT COLLABORATION IP. Subject to the rights granted each Party under
this Agreement, including without limitation certain Co-exclusive
licenses, and except as otherwise provided in this Agreement, each Party
shall have the right to practice, use, sell, keep, license or assign to
Third Parties its interest in any Joint Collaboration IP and otherwise
undertake all activities a sole owner might undertake with respect to such
Joint Collaboration IP without the consent of and without accounting to
the other Party.
7.3 SUBLICENSES AND LICENSES OF JOINT COLLABORATION IP.
7.3.1 AFFILIATES. Subject to Section 7.3.2, each Party shall be entitled
to grant sublicenses of its rights under this Agreement (and
licenses under any Joint Collaboration IP) to its Affiliates for so
long as such entity remains an Affiliate.
7.3.2 ALNYLAM AFFILIATE RESTRICTIONS. For purposes of subsections 7.1.1,
7.1.2, 7.1.3, 7.1.4, 7.1.5 and 7.1.6 and 7.2, where noted, the term
"Affiliate" with respect to ALNYLAM shall not include any
corporation or business entity of which any of the securities or
other ownership interests representing the equity, the voting stock
or general partnership interest are owned, controlled or held,
directly or indirectly, by ALNYLAM and of which [**] or more of the
securities or other ownership interests representing the equity or
voting stock or general
45
partnership interest are owned, controlled or held by a Significant
Pharmaceutical Company or by any investment entity affiliated with
any such Significant Pharmaceutical Company.
7.3.3 PROFIT-SHARING PRODUCTS. With respect to Profit-Sharing Products,
each Party shall be entitled to grant sublicenses of its rights
under Section 7.1.3 (and licenses under any Joint Collaboration IP)
in connection with its activities under a Program Workplan or
Commercialization Plan to academic collaborators, and contract
service organizations, that in each case are approved by the JSC in
accordance with Section 4.1.4 to perform its obligations under such
Program Workplan or Commercialization Plan.
7.3.4 ROYALTY-BEARING PRODUCTS, MERCK DEVELOPMENT PRODUCTS AND [**]
PRODUCTS. Subject to the terms of Section 7.3.6, the Continuing
Party, in the case of Royalty-Bearing Products, MERCK, in the case
of MERCK Development Products, and ALNYLAM, in the case of [**]
Products, shall be entitled to grant sublicenses of its rights under
this Agreement (and licenses under any Joint Collaboration IP) with
respect to Royalty-Bearing Products, MERCK Development Products or
[**] Products, as the case may be, to Third Parties to Develop and
Commercialize (or in the case of [**] Products, develop and
commercialize) such Royalty-Bearing Products, MERCK Development
Products or [**] Products, as the case may be. The Continuing Party
shall notify the Opt-Out Party, MERCK shall notify ALNYLAM, and
ALNYLAM shall notify MERCK, following the grant of any such
sublicense or license to a Third Party, with respect to a
Royalty-Bearing Product, MERCK Development Product or [**] Product,
respectively.
7.3.5 MANUFACTURING SUBLICENSES. Subject to the terms of Section 7.3.6,
each Party entitled to Manufacture RNAi Therapeutic Products or
manufacture [**] Products under the terms and conditions of this
Agreement shall be entitled to grant sublicenses of its rights under
this Agreement (and licenses under any Joint Collaboration IP) to
Third Parties to Manufacture such RNAi Therapeutic Products or
manufacture [**] Products; provided, that such Party shall remain
primarily responsible with respect to such sublicense. Each such
sublicense with respect to a Profit-Sharing Product shall require
the approval of the JSC or JCC, as applicable. Each such sublicense
with respect to a Royalty-Bearing Product, MERCK Development Product
or [**] Product shall be discussed between the Parties for a period
of up to [**] days; provided, however, that the Continuing Party, in
the case of a Royalty-Bearing Product, or MERCK, in the case of a
MERCK Development Product, or ALNYLAM, in the case of a [**]
Product, may thereafter grant such sublicense in its sole
discretion.
7.3.6 TERMS. Each sublicense granted by a Party pursuant to Section 7.3.4
or Section 7.3.5 shall be subject and subordinate to the terms and
conditions of this Agreement and shall contain terms and conditions
consistent with those in this Agreement. Agreements with any
Commercializing or commercializing Sublicensee shall contain the
following provisions: (a) a requirement that such
46
Sublicensee submit applicable sales or other reports consistent with
those required hereunder; (b) an audit requirement similar to the
requirement set forth in Section 9.5; and (c) a requirement that
such Sublicensee comply with the confidentiality and non-use
provisions of Article 8 with respect to both Parties' Information.
7.3.7 LIABILITY. Each Party shall at all times be responsible for the
performance of its Sublicensees under this Agreement.
7.4 IN-LICENSES. All licenses and other rights granted to MERCK under this
Article 7 are subject to the rights granted to ALNYLAM under the ALNYLAM
In-Licenses, and are also subject to and limited to the extent of the
rights ALNYLAM has granted and is required to grant to Third Parties
pursuant to Pre-Existing ALNYLAM Alliance Agreements. All licenses and
other rights granted to ALNYLAM under this Article 7 are subject to the
rights granted to MERCK under the MERCK In-Licenses, and are also subject
to and limited to the extent of the rights MERCK has granted and is
required to grant to Third Parties pursuant to Pre-Existing MERCK Alliance
Agreements.
7.4.1 IN-LICENSES FOR PROFIT-SHARING PRODUCTS. With respect to each
Profit-Sharing Product, if either Party identifies any Necessary
Third Party IP that at the time of identification is not Controlled
by a Party, such Party shall notify the JSC and include in such
notification a summary of such Necessary Third Party IP, the
anticipated commercial terms of the necessary license and any other
relevant information. The [**] shall [**] a license [**] with the
[**] of the [**] and [**]. If [**], the [**] shall [**] shall [**]
and [**] shall be [**] Party. [**], the [**] shall [**] to the [**].
If [**], such [**] shall [**] under this Agreement. Each Party shall
comply with all applicable terms and conditions of the In-Licenses
of the other Party and shall take such actions as may be required to
allow such Party to comply with its obligations thereunder,
including obligations relating to patent matters, confidentiality,
indemnification and diligence. The Parties agree that this Section
7.4.1 shall not apply to any In-Licenses entered into by either
Party or its Affiliates prior to the Original Effective Date of this
Agreement.
7.4.2 CONTINUATION OF LICENSES GRANTED UNDER IN-LICENSES FOR
ROYALTY-BEARING PRODUCTS. With respect to In-Licenses of the Opt-Out
Party in existence at the Opt-Out Point that Cover the applicable
Royalty-Bearing Product, the Opt-Out Party will determine whether
(a) such In-Licenses may be assigned to the Continuing Party subject
to Third Party consent(s) and (b) the Opt-Out Party's interest in
retaining certain rights to exploit products other than such
Royalty-Bearing Product. If the Opt-Out Party determines that such
In-Licenses are assignable, the Opt-Out Party will assign such
In-Licenses to the Continuing Party subject to any Third Party
consents. With respect to such In-Licenses which are not assignable,
the Opt-Out Party shall maintain these licenses for the duration of
the sublicense granted by the Opt-Out Party to the Continuing Party
under this Agreement. All amounts payable with respect to such
non-assignable In-Licenses shall be shared by the Opt-Out Party and
the Continuing Party in proportion to the rights being utilized by
the Opt-Out Party and the Continuing Party under such In-Licenses;
provided that all amounts allocable to the rights sublicensed to the
47
Continuing Party shall be paid by the Opt-Out Party subject to
reimbursement by the Continuing Party pursuant to Section 9.4.9.2.
Such sublicense shall remain in full force and effect under the
terms of this Agreement so long as the Continuing Party complies
with all obligations relevant to such In-Licenses.
7.4.3 IN-LICENSES FOR MERCK DEVELOPMENT PRODUCTS. MERCK shall be solely
responsible for obtaining any licenses of Necessary Third Party IP
for the Development, Manufacturing or Commercialization of MERCK
Development Products. Such MERCK In-Licenses shall not grant rights
to any Third Party that conflict with the terms and conditions of
this Agreement. The costs of MERCK In-Licenses shall be borne by
MERCK and such MERCK In-Licenses shall include confidentiality and
non-use provisions which are no less stringent than those set forth
in Section 8.1 of this Agreement. In the event that ALNYLAM is
obligated to make a payment to a Third Party under an ALNYLAM
In-License of Necessary Third Party IP for the research,
development, Manufacturing or Commercialization of a MERCK
Development Product that is sublicensed to MERCK hereunder, then
MERCK shall reimburse ALNYLAM for such payments which are reasonably
allocable to such sublicensed rights. The Parties agree that this
Section 7.4.3 shall not apply to any agreement entered into by
either Party or its Affiliates prior to the Original Effective Date
of this Agreement.
7.4.4 IN-LICENSES FOR [**] PRODUCTS. Unless MERCK exercises its Opt-In
Right, ALNYLAM shall be solely responsible for obtaining any
licenses of Necessary Third Party IP for the development,
manufacturing or commercialization of [**] Products and the costs of
such licenses shall be borne by ALNYLAM. Such licenses shall (a) not
grant rights to any Third Party that conflict with the terms and
conditions of this Agreement and (b) include confidentiality and
non-use provisions which are no less stringent than those set forth
in Section 8.1 of this Agreement. In the event that MERCK is
obligated to make a payment to a Third Party under a MERCK license
of Necessary Third Party IP for the research, development,
manufacturing or commercialization of a [**] Product that is
sublicensed to ALNYLAM hereunder, unless MERCK exercises its Opt-In
Right, then ALNYLAM shall reimburse MERCK for such payments which
are reasonably allocable to such sublicensed rights. The Parties
agree that this Section 7.4.4 shall not apply to any agreement
entered into by either Party or its Affiliates prior to the Original
Effective Date of this Agreement.
7.5 CERTAIN PATENT RIGHTS. Notwithstanding anything to the contrary herein,
the licenses to ALNYLAM Technology hereunder initially shall not include
licenses to Patent Rights licensed by ALNYLAM or its Affiliates under
either (a) [**] or (b) [**]; provided that if any such Patent Rights
in-licensed by ALNYLAM become issued Patent Rights that Cover a
Profit-Sharing Product, MERCK Development Product or Royalty-Bearing
Product with respect to which MERCK is the Continuing Party, then ALNYLAM
shall so notify MERCK in writing, and MERCK shall have the option of
expanding its licenses to ALNYLAM Patent Rights hereunder to include such
issued Patent Rights by notifying ALNYLAM of such election in writing.
Upon such election, the [**] or the [**], as the
48
case may be, shall be deemed an Existing ALNYLAM In-License and Schedule
1.33 shall be amended accordingly.
7.6 NO OTHER RIGHTS. Except as otherwise expressly provided in this Agreement,
under no circumstances shall a Party hereto, as a result of this
Agreement, obtain any ownership interest or other right in any Know-How or
Patent Rights of the other Party, including items owned, controlled or
developed by the other Party, or provided by the other Party to the
receiving Party at any time pursuant to this Agreement.
8. CONFIDENTIALITY AND PUBLICATION
8.1 NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to the
other Party hereunder shall be maintained in confidence by the receiving
Party and shall not be disclosed to a non-Party or used for any purpose
except as set forth herein without the prior written consent of the
disclosing Party, except to the extent that such Information:
(a) is known by the receiving Party at the time of its receipt, and not
through a prior disclosure by the disclosing Party, as documented by
the receiving Party's business records;
(b) is in the public domain by use and/or publication before its receipt
from the disclosing Party, or thereafter enters the public domain
through no fault of the receiving Party;
(c) is subsequently disclosed to the receiving Party by a Third Party
who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party;
(d) is developed by the receiving Party independently of Information
received from the disclosing Party, as documented by the receiving
Party's business records;
(e) is deemed necessary by counsel to the receiving Party to be
disclosed to such Party's attorneys or independent accountants for
the sole purpose of enabling such attorneys or independent
accountants to provide advice to the receiving Party, on the
condition that such attorneys and independent accountants agree to
be bound by confidentiality and non-use obligations substantially
similar to those contained in this Agreement; provided, however,
that the term of confidentiality for such attorneys and independent
accountants shall be no less than [**] years; or
(f) is deemed necessary by a Party to be disclosed to Related Parties,
agents, consultants, and/or other Third Parties for the Development,
Manufacturing or Commercialization of an RNAi Therapeutic Product or
deemed necessary by ALNYLAM to be disclosed to such entities for the
development, manufacturing or commercialization of a [**] Product
(in each case, for such entities to determine their interest in
performing such activities) in accordance with this Agreement on the
condition that such Third Parties agree to be bound by
confidentiality and non-use obligations substantially similar to
those contained in
49
this Agreement provided, however, that the term of confidentiality
for such Third Parties shall be no less than [**] years.
Any combination of features or disclosures shall not be deemed to fall
within the foregoing exclusions merely because individual features are
published or available to the general public or in the rightful possession
of the receiving Party unless the combination itself and principle of
operation are published or available to the general public or in the
rightful possession of the receiving Party.
Notwithstanding the obligations of confidentiality and non-use set forth
above, a receiving Party may provide Information disclosed to it to (i)
governmental or other Regulatory Authorities in order to obtain patents or
to gain or maintain approval to conduct Clinical Studies or to otherwise
Develop, Manufacture or Commercialize RNAi Therapeutic Products or to
develop, manufacture or commercialize [**] Products; provided, that such
disclosure shall be subject to the prior written consent of the Party
whose Information is intended to be disclosed (which consent shall not be
unreasonably withheld), and such Information shall be disclosed only to
the extent reasonably necessary to obtain patents or authorizations, (ii)
the extent required by applicable law, including without limitation by the
rules or regulations of the United States Securities and Exchange
Commission or similar regulatory agency in a country other than the United
States or of any stock exchange or Nasdaq, (iii) any bona fide actual or
prospective underwriters, investors, lenders or other financing sources
who are obligated to keep such information confidential, to the extent
reasonably necessary to enable such actual or prospective underwriters,
investors, lenders or other financing sources to determine their interest
in underwriting or making an investment in, or otherwise providing
financing to, the receiving Party; provided, however, that in the case of
an investor that is a Significant Pharmaceutical Company, such disclosure
shall be subject to the prior written consent of the Party whose
Information is intended to be disclosed (which consent shall not be
unreasonably withheld), and (iv) in the event that the Party seeking to
provide Information of the other Party is the Continuing Party with
respect to a Royalty-Bearing Product, or MERCK with respect to a MERCK
Development Product, or ALNYLAM with respect to a [**] Product, any bona
fide actual or prospective collaborators or strategic partners with
respect to the Development or Commercialization of such Royalty-Bearing
Product, or MERCK Development Product, or [**] Product as the case may be,
who are obligated to keep such information confidential; provided,
however, that the Party and/or its Affiliates shall only disclose to
actual or prospective collaborators and strategic partners the general
subject matter of this Agreement, the licenses granted hereunder, the
provisions set forth in Sections 13.2 and 13.3, the provisions of Articles
8, 9, and 11, and such Know-How and Patent Rights relating to such
Royalty-Bearing Product, MERCK Development Product or [**] Product as the
receiving Party, in its reasonable judgment, considers necessary for such
actual or prospective collaborators or strategic partners to evaluate
their interest in such Royalty-Bearing Product, MERCK Development Product
or [**] Product, as the case may be.
If a Party is required by judicial or administrative process to disclose
Information that is subject to the non-disclosure provisions of this
Section 8.1 or Section 8.2, such Party shall promptly inform the other
Party of the disclosure that is being sought in order to
50
provide the other Party an opportunity to challenge or limit the
disclosure obligations. Information that is disclosed by judicial or
administrative process shall remain otherwise subject to the
confidentiality and non-use provisions of this Section 8.1 and Section
8.2, and the Party disclosing Information pursuant to law or court order
shall take all steps reasonably practical, including without limitation
seeking an order of confidentiality, to ensure the continued confidential
treatment of such Information. In addition to the foregoing restrictions
on public disclosure, if either Party concludes that a copy of this
Agreement must be filed with the Securities and Exchange Commission, such
Party shall provide the other Party with a copy of this Agreement showing
any sections as to which the Party proposes to request confidential
treatment, will provide the other Party with an opportunity to comment on
any such proposal and to suggest additional portions of the Agreement for
confidential treatment, and will take such Party's reasonable comments
into consideration before filing the Agreement.
8.2 PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's interest
in publishing the results of the research and Development under the
Collaboration. Each Party also recognizes the mutual interest in obtaining
valid patent protection and in protecting business interests and trade
secret information. Consequently, except for disclosures permitted
pursuant to Section 8.1, either Party, its Affiliates, or their respective
employees or consultants wishing to make a publication or a disclosure to
a Third Party relating to the Collaboration or any Profit-Sharing Product
shall deliver to the other Party a copy of the proposed written
publication or an outline of an oral disclosure at least thirty (30) days
prior to submission for publication or presentation. The reviewing Party
shall have the right (a) to propose modifications to the publication or
presentation for patent reasons, trade secret reasons or business reasons,
or (b) to request a reasonable delay in publication or presentation in
order to protect patentable information. If the reviewing Party requests a
delay, the publishing Party shall delay submission or presentation for a
period of sixty (60) days to enable patent applications protecting each
Party's rights in such information to be filed in accordance with Article
11 below. Upon expiration of such sixty (60) days, the publishing Party
shall be free to proceed with the publication or presentation. If the
reviewing Party requests modifications to the publication or presentation,
the publishing Party shall edit such publication to prevent disclosure of
trade secret or proprietary business information prior to submission of
the publication or presentation. With respect to any proposed publications
or disclosures by investigators or academic or non-profit collaborators,
such materials shall be subject to review under this Section 8.2 to the
extent that MERCK or ALNYLAM, as the case may be, has the right and
ability (after using reasonable efforts) to do so. For the avoidance of
doubt, subject to its obligations under Section 8.1, the Continuing Party
with respect to a Royalty-Bearing Product, MERCK with respect to a MERCK
Development Product, and ALNYLAM with respect to a [**] Product, may make
publications and disclosures to Third Parties relating to such
Royalty-Bearing Product, MERCK Development Product or [**] Product, as the
case may be, without any obligation to permit the Opt-Out Party, ALNYLAM,
or MERCK, respectively, to review or comment on such publication or
disclosure. Furthermore, subject to its rights under Section 8.1, the
Opt-Out Party with respect to a Royalty-Bearing Product shall have no
right to make any publications and disclosures to Third Parties relating
to such Royalty-Bearing Product, ALNYLAM shall have no right to make any
publications and
51
disclosures to Third Parties relating to such MERCK Development Product,
and MERCK shall have no right to make any publications and disclosures to
Third Parties relating to such [**] Product.
8.3 PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the terms
of, this Agreement may be made by either Party, and no Party shall use the
name, trademark, trade name or logo of the other Party or its employees in
any publicity, news release or disclosure relating to this Agreement or
its subject matter, without the prior express written permission of the
other Party, except as may be required by law or expressly permitted by
the terms hereof.
Notwithstanding the foregoing, prior to the execution of this Agreement by
both Parties, the Parties shall agree in writing upon a press release to
be issued jointly by the Parties publicizing the amended terms of the
Collaboration. After such initial press release, neither Party shall issue
a press release or public announcement relating to the Collaboration or
this Agreement without the prior written approval of the other Party,
which approval shall not be unreasonably withheld, except that a Party may
(a) once a press release or other written statement is approved in writing
by both Parties, make subsequent public disclosure of the information
contained in such press release or other written statement without the
further approval of the other Party, and (b) issue a press release or
public announcement as required, in the reasonable judgment of such Party,
by applicable law, including without limitation by the rules or
regulations of the United States Securities and Exchange Commission or
similar regulatory agency in a country other than the United States or of
any stock exchange or Nasdaq, in each case after first notifying the other
Party of such planned press release or public announcement at least seven
(7) business days in advance of issuing such press release or making such
public announcement (or, with respect to press releases and public
announcements made pursuant to the foregoing clause (b), with as much
advance notice as possible under the circumstances if it is not possible
to provide notice at least seven (7) business days in advance) for the
sole purpose of allowing the other Party to review the proposed press
release or public announcement for the inclusion of Confidential
Information or the use of its name.
9. PAYMENTS; ROYALTIES AND REPORTS
9.1 ORIGINAL AGREEMENT PAYMENTS; USE OF PROCEEDS. MERCK has made all payments
payable to ALNYLAM through the Effective Date pursuant to Section 5.1 of
the Original Agreement. ALNYLAM shall use all payments received from MERCK
pursuant to Section 5.1 of the Original Agreement solely for the purpose
of funding its proposed business operations, including the subject matter
of this Agreement, which focus on RNAi Technology and development of drugs
based on RNA interference. Such payments are not creditable against any
future payments by MERCK to ALNYLAM.
9.2 MILESTONE FEES.
52
9.2.1 PROFIT-SHARING PRODUCTS. MERCK shall make the non-refundable,
non-creditable milestone payments to ALNYLAM set forth below no
later than [**] calendar days after the earliest date on which the
corresponding milestone event has been achieved with respect to the
first Profit-Sharing Product in each Program to achieve such
milestone event.
MILESTONE EVENT PAYMENT
--------------- -------
Initiation of IND-Enabling GLP Toxicology Studies $[**]
Submission of IND $[**]
9.2.2 ROYALTY-BEARING PRODUCTS.
(a) If either Party has exercised its Opt-Out Right with respect
to a Co-Development Target during the Phase I Completion
Opt-Out Period for the most advanced RNAi Therapeutic Product
directed to such Target, and the other Party is the Continuing
Party with respect to such Target and Royalty-Bearing Products
directed thereto, then the Continuing Party shall make a
non-refundable, non-creditable milestone payment to the
Opt-Out Party in the amount of $[**] no later than [**]
business days after the earliest date on which the first NDA
Filing for the first such Royalty-Bearing Product has been
achieved.
(b) If either Party has exercised its Opt-Out Right with respect
to a Co-Development Target during the Phase II Completion
Opt-Out Period for the most advanced RNAi Therapeutic Product
directed to such Target, and the other Party is the Continuing
Party with respect to such Target and Royalty-Bearing Products
directed thereto, then the Continuing Party shall make the
non-refundable, non-creditable milestone payments to the
Opt-Out Party set forth below no later than [**] business days
after the earliest date on which the corresponding milestone
event has been achieved for the first time with respect to the
first such Royalty-Bearing Product.
MILESTONE EVENT PAYMENT
--------------- -------
Initiation of Phase III Study $[**]
First NDA Filing $[**]
9.2.3 MERCK DEVELOPMENT PRODUCTS. MERCK shall make the non-refundable,
non-creditable milestone payments to ALNYLAM set forth below with
respect to each MERCK Development Target, no later than [**]
business days after the earliest
53
date on which the corresponding milestone event has been achieved
for the first time with respect to a MERCK Development Product
directed to such MERCK Development Target. Each milestone payment
shall be payable only once with respect to each MERCK Development
Target, except in the case where a milestone event has been achieved
with respect to a Multi-Target Product which is Covered by a Valid
Claim at the time the milestone event is achieved, in which case the
applicable milestone payment amount shall be doubled regardless of
the number of Multi-Target Product Targets to which such
Multi-Target Product is directed.
MILESTONE EVENT PAYMENT
--------------- -------
Initiation of IND-Enabling GLP Toxicology Studies $[**]
Initiation of Phase I Study $[**]
Initiation of Phase II Study $[**]
Initiation of Phase III Study $[**]
First NDA Filing $[**]
First NDA Regulatory Approval $[**]
9.3 U.S. OPERATING PROFIT/LOSS FOR PROFIT-SHARING PRODUCTS. The Parties shall
share equally the U.S. Operating Profit/Loss for all Profit-Sharing
Products; provided, however, that if a Party exercises its Expense Share
Reduction Option pursuant to Section 3.9.1 to reduce its percentage share
of U.S. Development Expenses with respect to a Profit-Sharing Product, the
Parties' percentage shares of the U.S. Operating Profit/Loss for such
Profit-Sharing Product shall be the same as their respective percentage
shares of U.S. Development Expenses as adjusted pursuant to the Expense
Share Reduction Option.
"U.S. OPERATING PROFIT/LOSS" shall be calculated for each Profit-Sharing
Product by determining Net Sales of such Profit-Sharing Product in the
relevant time period in the United States and by then subtracting the
Commercialization Expenses accrued by either Party in respect of such
Profit-Sharing Product in the relevant time period in the United States.
Within [**] days after submission of the first Commercialization Plan for
such Profit-Sharing Product to the JCC, the Parties will discuss and agree
upon the procedures for reporting, reconciliation and payments with
respect to U.S. Operating Profit/Loss.
9.4 ROYALTIES.
9.4.1 ROYALTIES PAYABLE ON [**] PRODUCTS. Subject to the terms and
conditions of this Agreement, if MERCK elects, pursuant to Section
2.2.2(b), not to exercise its Opt-In Right, or fails to do so prior
to the expiration of the Opt-In Period, then
54
ALNYLAM shall pay MERCK royalties on Net Sales of each [**] Product
by ALNYLAM or its Related Parties as follows:
(a) in the event that [**] satisfied clause (a) of the definition
of "MERCK RNAi Novel Target" at the time [**] was presented to
ALNYLAM during the Technology Collaboration Term, and MERCK
had the belief set forth in clause (b) of such definition,
then ALNYLAM shall pay MERCK the royalty rates set forth
hereinbelow with respect to [**] Products; and
(b) in the event that [**] satisfied clause (a) of the definition
of "MERCK RNAi Novel Target" at the time [**] was presented to
ALNYLAM during the Technology Collaboration Term, but MERCK
did not have the belief set forth in clause (b) of such
definition, then ALNYLAM shall pay MERCK one-half of the
applicable royalty rate set forth hereinbelow with respect to
[**] Products.
ROYALTY
WORLDWIDE SALES (AS A PERCENTAGE OF WORLDWIDE SALES)
------------------------ ------------------------------------
$0 to $[**] [**]%
$[**] to $[**] [**]%
$[**] to $[**] [**]%
Greater than $[**] [**]%
Royalties on Worldwide Sales in a Calendar Year shall be paid at the
rate applicable to the portion of Worldwide Sales within each of the
Worldwide Sales levels above. For example, if, during a Calendar
Year, Worldwide Sales were equal to $[**], the royalties payable by
ALNYLAM would be calculated by adding (i) [**]% of the first $[**],
(ii) [**]% of the next $[**], and (iii) [**]% of the final $[**].
9.4.2 ROYALTIES PAYABLE ON PROFIT-SHARING PRODUCTS. Subject to the terms
and conditions of this Agreement, MERCK shall pay to ALNYLAM
royalties on aggregate Net Sales in the Territory outside the United
States of each Profit-Sharing Product by MERCK or its Related
Parties as follows:
CALENDAR YEAR NET SALES OF THE
PROFIT-SHARING PRODUCT IN THE TERRITORY ROYALTY
OUTSIDE THE UNITED STATES (AS A PERCENTAGE OF NET SALES)
--------------------------------------- ------------------------------
$0 - $[**] [**]%
$[**] - $[**] [**]%
$[**] - $[**] [**]%
Greater than $[**] [**]%
55
Royalties on aggregate Net Sales of the Profit-Sharing Products in
the Territory outside the United States in a Calendar Year shall
be paid at the rate applicable to the portion of Net Sales within
each of the Net Sales levels above during such Calendar Year. For
example, if, during a Calendar Year, aggregate Net Sales were
equal to $[**], the royalties payable by MERCK would be calculated
by adding (i) [**]% of the first $[**], (ii) [**]% of the next
$[**], and (iii) [**]% of the final $[**].
9.4.3 ROYALTIES PAYABLE ON ROYALTY-BEARING PRODUCTS. Subject to the
terms and conditions of this Agreement, the Royalty Payor shall
pay to the Royalty Recipient royalties on a country-by-country
basis for Worldwide Sales of each Royalty-Bearing Product, such
royalties to be calculated as set forth in Section 9.4.3.1.
9.4.3.1 GENERAL PROCEDURE FOR CALCULATION OF ROYALTIES. For each scenario
under which royalties are due from one Party to the other, Section
9.4.3.2 sets forth values for the following parameters: Sublicense
Revenue Fraction (expressed as a percentage), Royalty Rate One,
Royalty Rate Two, Royalty Rate Three and Royalty Rate Four. The
values set forth for these parameters in Section 9.4.3.2 shall be
used to calculate the royalties due under each scenario in
relation to each Royalty-Bearing Product, as follows:
(a) In the event that all of the Worldwide Sales for the
Royalty-Bearing Product are made by the Royalty Payor or its
Related Parties, the Royalty Payor shall pay the Royalty
Recipient royalties on Worldwide Sales as follows:
ROYALTY
WORLDWIDE SALES (AS A PERCENTAGE OF WORLDWIDE SALES)
---------------------- ------------------------------------
$0 to $[**] Royalty Rate One
$[**] to $[**] Royalty Rate Two
$[**] to $[**] Royalty Rate Three
Greater than $[**] Royalty Rate Four
Royalties on Worldwide Sales in a Calendar Year shall be paid at
the rate applicable to the portion of Worldwide Sales within each
of the Worldwide Sales levels above. For example, if, during a
Calendar Year, Worldwide Sales were equal to $[**], the royalties
payable by the Royalty Payor would be calculated by adding (i) the
royalties with respect to the first $[**] at Royalty Rate One,
(ii) the royalties with respect to the next $[**] at Royalty Rate
Two, and (iii) the royalties with respect to the final $[**] at
Royalty Rate Three.
56
(b) In the event that all of the Worldwide Sales for the
Royalty-Bearing Product are made through one or more
Sublicensees of the Royalty Payor, the Royalty Payor shall pay
the Royalty Recipient the lesser of (i) an amount equal to the
Sublicense Revenue Fraction multiplied by the revenues
received by the Royalty Payor from its Sublicensees in
relation to such Worldwide Sales, and (ii) the amounts that
would be due pursuant to Section 9.4.3.1(a) if all Worldwide
Sales had been made directly by the Royalty Payor or its
Related Parties, without a Sublicensee.
(c) In the event that some of the Worldwide Sales for the
Royalty-Bearing Product are made directly by the Royalty Payor
or its Related Parties, and some of the Worldwide Sales for
the Royalty-Bearing Product, in one or more countries, are
made through one or more Sublicensee(s), the royalties to be
paid by the Royalty Payor to the Royalty Recipient shall be
calculated as follows:
(i) The fraction of Worldwide Sales that were made in each
country shall be determined by dividing Country Sales in
such country by Worldwide Sales (such fraction, the
"COUNTRY FRACTION" for such country).
(ii) For each country:
v. "Level One Limit" shall be calculated by
multiplying the Country Fraction for such country
by $[**];
w. "Level Two Threshold" shall be calculated by
adding one dollar to "Level One Limit";
x. "Level Two Limit" shall be calculated by
multiplying the Country Fraction for such country
by $[**];
y. "Level Three Threshold" shall be calculated by
adding one dollar to "Level Two Limit"; and
z. "Level Three Limit" shall be calculated by
multiplying the Country Fraction for such country
by $[**].
(iii) For each country in the Territory in which Country Sales
are made by the Royalty Payor or its Related Parties and
not by a Sublicensee, the Royalty Payor shall pay the
Royalty Recipient royalties as follows:
ROYALTY
COUNTRY SALES IN COUNTRY IN THE (AS A PERCENTAGE OF
TERRITORY COUNTRY SALES)
-------------------------------------- -------------------
$0 to Level One Limit for such country Royalty Rate One
Level Two Threshold to Level Two Royalty Rate Two
Limit for such country
Level Three Threshold to Level Three Royalty Rate Three
Limit for such country
Greater than Level Three Limit for Royalty Rate Four
such country
57
(iv) Royalties on Country Sales of the Royalty-Bearing
Products in each country in the Territory in a Calendar
Year shall be paid at the rate applicable to the portion
of Country Sales within each of the Country Sales levels
above during such Calendar Year. For example, if, during
a Calendar Year, Country Sales of a Royalty-Bearing
Product were equal to $[**], and the Level One Limit is
$[**], the Level Two Limit is $[**], and the Level Three
Limit is $[**], then the royalties payable by the
Royalty Payor would be calculated by adding (i) the
royalties with respect to the first $[**] at Royalty
Rate One, (ii) the royalties with respect to the next
$[**] at Royalty Rate Two, (iii) the royalties with
respect to the next $[**] at Royalty Rate Three, and
(iv) the royalties with respect to the final $[**] at
Royalty Rate Four.
(v) For each country in which Country Sales are made through
one or more Sublicensees of the Royalty Payor, the
Royalty Payor shall pay the Royalty Recipient the lesser
of (x) an amount equal to the Sublicense Revenue
Fraction multiplied by the revenues received by the
Royalty Payor from its Sublicensees in relation to such
Country Sales, and (y) the amounts that would be due
pursuant to Section 9.4.3.1(c)(iii) if such Country
Sales had been made directly by the Royalty Payor or its
Related Parties, without a Sublicensee.
9.4.3.2 AFTER EXERCISE OF OPT-OUT RIGHTS. If either Party has exercised
its Opt-Out Right with respect to a Co-Development Target, and the
other Party elects to be the Continuing Party with respect to any
RNAi Therapeutic Product in the Program directed to such
Co-Development Target, then the Continuing Party shall be the
Royalty Payor and the Opt-Out Party shall be the Royalty Recipient
with respect to such Royalty-Bearing Product. With respect to the
Royalty-Bearing Product in such Program that is at the most
advanced stage of Development, the Royalty Payor shall pay the
Royalty Recipient royalties determined by the Opt-Out Period in
which such Opt-Out Rights were exercised, as set forth in clauses
(a)-(c) below, or if the Opt-Out Point did not occur in an Opt-Out
Period, determined by the Opt-Out Period most recently preceding
the Opt-Out Point. With respect to all other Royalty-Bearing
Products in such Program, the Royalty Payor shall pay the Royalty
Recipient [**] percent ([**]%) of the amount of royalties
calculated as set forth in clause (a) below for the exercise of
the Opt-Out Right during the Pre-IND Filing Opt-Out Period;
provided, however, that if ALNYLAM is the Opt-Out Party, in no
event shall the royalties payable to ALNYLAM with respect to Net
Sales in a country for any Calendar Quarter be less than the
amount of any royalties and any portions of milestones or other
payments under the Existing ALNYLAM In-Licenses that are
reasonably
58
allocable to the Commercialization or Manufacture of the
Royalty-Bearing Product in or for such country in the Field.
(a) If such exercise by MERCK or ALNYLAM of its Opt-Out Right
occurred during the Pre-IND Filing Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
(b) If such exercise by MERCK or ALNYLAM of its Opt-Out Right
occurred during the Phase I Completion Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
(c) If such exercise by MERCK or ALNYLAM of its Opt-Out Right
occurred during the Phase II Completion Opt-Out Period, then
(i) The Sublicense Revenue Fraction shall be [**] percent
([**]%);
(ii) Royalty Rate One shall be [**] percent ([**]%);
(iii) Royalty Rate Two shall be [**] percent ([**]%);
(iv) Royalty Rate Three shall be [**] percent ([**]%); and
(v) Royalty Rate Four shall be [**] percent ([**]%).
9.4.4 ROYALTIES PAYABLE ON MERCK DEVELOPMENT PRODUCTS. Subject to the
terms and conditions of this Agreement, MERCK shall pay to ALNYLAM
royalties on aggregate Net Sales in the Territory of each MERCK
Development Product by MERCK or its Related Parties as follows:
59
CALENDAR YEAR NET SALES OF THE ROYALTY
MERCK DEVELOPMENT PRODUCT IN THE TERRITORY (AS A PERCENTAGE OF NET SALES)
------------------------------------------ ------------------------------
$0 - $[**] [**]%
$[**] - $[**] [**]%
$[**] - $[**] [**]%
$[**] - $[**] [**]%
Greater than $[**] [**]%
Royalties on aggregate Net Sales of MERCK Development Products in
the Territory in a Calendar Year shall be paid at the rate
applicable to the portion of Net Sales within each of the Net
Sales levels above during such Calendar Year. For example, if,
during a Calendar Year, aggregate Net Sales were equal to $[**],
the royalties payable by MERCK would be calculated by adding (i)
[**]% of the first $[**], (ii) [**]% of the next $[**], and (iii)
[**]% of the final $[**].
9.4.5 ROYALTY TERM. The royalty payment obligations of the Royalty Payor
with respect to each [**] Product and each RNAi Therapeutic
Product at the rates set forth in Section 9.4.1, 9.4.2, 9.4.3 and
9.4.4 shall be effective as of the date of First Commercial Sale
of such [**] Product or RNAi Therapeutic Product, as the case may
be, in a country and shall continue until the later of (a) the
expiration of the last Valid Claim of the Patent Rights covering
the Manufacture or Commercialization of the [**] Product or RNAi
Therapeutic Product, as the case may be, in the country of sale
that are licensed to such Royalty Payor under this Agreement, or
(b) the [**] anniversary of the First Commercial Sale in such
country, subject to the following conditions:
(a) only one royalty shall be due with respect to the same unit
of [**] Product or RNAi Therapeutic Product;
(b) no royalties shall be due upon the sale or other transfer
among a Party or its Related Parties, but in such cases the
royalty shall be due and calculated upon the Party's or its
Related Party's Net Sales to the first independent Third
Party;
(c) no royalties shall accrue on the sale or other disposition
of the [**] Product or RNAi Therapeutic Product by the
Parties or their Related Parties for use in a Clinical
Study; and
(d) no royalties shall accrue on the disposition of [**] Product
or RNAi Therapeutic Product in reasonable quantities by a
Party or its Related Parties as samples (promotion or
otherwise) or as donations (for example, to non-profit
institutions or government agencies for a non-commercial
purpose).
60
9.4.6 ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is
understood by the Parties that the applicable Royalty Payor and
its Related Parties may sell a [**] Product or an RNAi Therapeutic
Product, as the case may be, to an independent Third Party (such
as a retailer or wholesaler) and may subsequently perform services
relating to such [**] Product or RNAi Therapeutic Product, as the
case may be, or other products, under a managed pharmaceutical
benefits contract or other similar contract. In such cases, it is
agreed by the Parties that Net Sales shall be based on the average
invoice price at which similar quantities of such [**] Product or
RNAi Therapeutic Product, as the case may be, are sold in the
country in question to Third Parties without providing such
services.
9.4.7 CHANGE IN SALES PRACTICES. The Parties acknowledge that during the
Agreement Term, a Royalty Payor's sales practices for the
marketing and distribution of a [**] Product or an RNAi
Therapeutic Product may change to the extent to which the
calculation of the payment for royalties on Net Sales may become
impractical or even impossible. In such event the Parties agree to
meet and discuss in good faith new ways of compensating the
Royalty Recipient to the extent currently contemplated under this
Section 9.4.
9.4.8 COMPULSORY LICENSES. If a compulsory license is granted to a Third
Party with respect to a [**] Product or an RNAi Therapeutic
Product in any country in the Territory with a royalty rate lower
than the applicable royalty rate set forth in this Section 9.4,
then the royalty rate to be paid by the Royalty Payor on Net Sales
in that country under this Section 9.4 shall be reduced to the
rate paid by the compulsory licensee.
9.4.9 NECESSARY THIRD PARTY IP.
9.4.9.1 PROFIT-SHARING PRODUCTS. If the Development, Manufacture or
Commercialization of a Profit-Sharing Product by a Party in
accordance with this Agreement infringes Necessary Third Party IP
then:
(a) The amount of any portions of milestones or other payments
paid by either Party under all In-Licenses of such Necessary
Third Party IP that are reasonably allocable to the
Development of the Profit-Sharing Product in the Field (i)
in the United States, shall be included in the U.S.
Development Expenses for such Profit-Sharing Product and
shared by the Parties pursuant to Section 3.9, and (ii) in
the Territory outside the United States, shall be borne by
MERCK.
(b) The amount of any royalties and any portions of milestones
or other payments paid by either Party under all In-Licenses
of such Necessary Third Party IP that are reasonably
allocable to the Commercialization or Manufacture of the
Profit-Sharing Product in or for the United States in the
Field, shall be Commercialization Expenses for purposes of
calculating U.S. Operating Profit/Loss for such
Profit-Sharing Product pursuant to Section 9.3.
61
(c) The applicable royalties in each country in the Territory
outside the United States payable by MERCK to ALNYLAM
pursuant to Section 9.4.2 will be (i) reduced by [**]
percent ([**]%) of the amount paid by MERCK and (ii)
increased by [**] percent ([**]%) of the amount paid by
ALNYLAM, in each case, of any royalties and any portions of
milestones or other payments under all In-Licenses of such
Necessary Third Party IP that are reasonably allocable to
the Commercialization or Manufacture of the Profit-Sharing
Product in or for such country in the Field; provided,
however, that, on a country-by-country basis, in no event
shall the royalties payable to ALNYLAM with respect to Net
Sales in a country for any Calendar Quarter be reduced below
the greater of (x) [**] percent ([**]%) of the royalties
otherwise payable by MERCK to ALNYLAM for such Calendar
Quarter as calculated pursuant to Section 9.4.2 or (y) [**]
that are reasonably allocable to the Commercialization or
Manufacture of the Profit-Sharing Product in or for such
country in the Field.
9.4.9.2 [**] PRODUCTS, ROYALTY-BEARING PRODUCTS AND MERCK DEVELOPMENT
PRODUCTS. If the Development, Manufacture or Commercialization of
a Royalty-Bearing Product by a Continuing Party, or a MERCK
Development Product by MERCK, or the development, manufacture or
commercialization of a [**] Product by ALNYLAM, in each case in
accordance with this Agreement, infringes Necessary Third Party
IP, the applicable royalties in each country in the Territory
payable to the Royalty Recipient in the case of a [**] Product
pursuant to Section 9.4.1, a Royalty-Bearing Product pursuant to
Section 9.4.3, or a MERCK Development Product pursuant to Section
9.4.4, will be (a) reduced by [**] percent ([**]%) of the amount
paid by the Royalty Payor and (b) increased by [**] percent
([**]%) of the amount paid by the Royalty Recipient (and not
already reimbursed by the Royalty Payor pursuant to Section 7.4.2,
7.4.3 or 7.4.4, as the case may be), in each case, of any
royalties and any portions of milestones or other payments under
all In-Licenses of such Necessary Third Party IP that are
reasonably allocable to the Development, Manufacture and
Commercialization of the Royalty-Bearing Product or the MERCK
Development Product, or the development, manufacture and
commercialization of a [**] Product, as the case may be, in or for
such country in the Field; provided, however, that, on a
country-by-country basis, in no event shall the royalties payable
to the Royalty Recipient with respect to Net Sales in a country
for any Calendar Quarter be reduced below the greater of (i) [**]
percent ([**]%) of the royalties otherwise payable by the Royalty
Payor to the Royalty Recipient for such Calendar Quarter as
calculated pursuant to 9.4.1 in the case of a [**] Product,
Section 9.4.3 in the case of Royalty-Bearing Products, or Section
9.4.4 in the case of MERCK Development Products, and (ii) if
ALNYLAM is the Royalty Recipient, [**] that are reasonably
allocable to the Commercialization or Manufacture of the
Royalty-Bearing Product or MERCK Development Product, as the case
may be, in or for such country in the Field.
9.4.10 BLENDED ROYALTY RATES. The Parties acknowledge and agree that the
Patent Rights and Know-How licensed pursuant to this Agreement
justify royalty rates of
62
differing amounts with respect to the sales of [**] Products or
RNAi Therapeutic Products, as the case may be, which rates could
be applied separately to [**] Products or RNAi Therapeutic
Products involving the exercise of such Patent Rights and/or the
incorporation of such Know-How, and that, if such royalties were
calculated separately, royalties relating to Patent Rights and
royalties relating to Know-How would last for different terms.
Notwithstanding the foregoing, the Parties have determined, for
reasons of convenience, that blended royalty rates for the Patent
Rights and the Know-How licensed hereunder, as set forth above,
will apply during a single royalty term. The Parties acknowledge
and agree that nothing in this Agreement (including without
limitation any exhibits or attachments hereto) shall be construed
as representing an estimate or projection of either (a) the number
of [**] Products or RNAi Therapeutic Products that will or may be
successfully Developed or Commercialized or (b) anticipated sales
or the actual value of any [**] Product or RNAi Therapeutic
Product, and that the figures set forth in this Section 9.4 or
elsewhere in this Agreement or that have otherwise been discussed
by the Parties are merely intended to define the Parties' royalty
payment obligations to each other in the event such sales
performance is achieved.
9.4.11 REPORTS; PAYMENT OF ROYALTY. During the Agreement Term, commencing
upon the First Commercial Sale of each [**] Product or RNAi
Therapeutic Product, as the case may be, the Royalty Payor shall
furnish to the Royalty Recipient a quarterly written report [**],
the Net Sales [**] of such [**] Product or RNAi Therapeutic
Product subject to royalty payments sold by the Royalty Payor or
its Related Parties during the reporting period and the royalties
payable under this Agreement. Quarterly reports shall be due no
later than the [**] day following the close of each Calendar
Quarter. Royalties shown to have accrued by each royalty report
shall be due and payable on the date such royalty report is due.
Each Party shall keep complete and accurate records in sufficient
detail to enable the royalties and other payments payable
hereunder to be determined, including without limitation records
of the items underlying U.S. Development Expenses and U.S.
Operating Profit/Loss, ALNYLAM's costs and expenses with respect
to its Development activities for MERCK Development Products
pursuant to Section 6.1.1 and its research and development
activities for the [**] Target and [**] Products pursuant to
Section 2.2.2(c).
9.5 AUDITS.
9.5.1 Upon the written request of a Party and not more than once in each
Calendar Year, the other Party and/or its Related Parties shall
permit an independent certified public accounting firm of
nationally-recognized standing selected by the requesting Party
and reasonably acceptable to the other Party, at the requesting
Party's expense except as set forth below, to have access during
normal business hours to such of the records of the other Party as
may be reasonably necessary to verify the accuracy of the royalty
and other reports hereunder for any year ending not more than
thirty-six (36) months prior to the date of such request for the
sole
63
purpose of verifying the basis and accuracy of payments made under
Sections 2.2.2(c), 3.9, 6.1.1 and 13.3 and this Article 9.
9.5.2 If such accounting firm identifies a discrepancy made during such
period, the appropriate Party shall pay the other Party the amount
of the discrepancy within [**] business days of the date the
requesting Party delivers to the other Party such accounting
firm's written report so concluding, or as otherwise agreed by the
Parties in writing. Such written report shall be binding upon the
Parties. The fees charged by such accounting firm shall be paid by
the requesting Party, unless such discrepancy represents an
underpayment by the other Party of the lesser of [**] U.S. dollars
($[**]) or [**] percent ([**]%) of the total amounts due
hereunder, in which case such fees shall be paid by the other
Party.
9.5.3 The Royalty Payor shall include in each sublicense granted by it
pursuant to this Agreement a provision requiring the Sublicensee
to make reports to the Royalty Payor, to keep and maintain records
of sales made pursuant to such sublicense and to grant access to
such records by the Royalty Recipient's independent accountant to
the same extent required of the Royalty Payor under this
Agreement.
9.5.4 Unless an audit for such year has been commenced upon the
expiration of thirty-six (36) months following the end of any
year, the calculation of royalties and other payments payable with
respect to such year shall be binding and conclusive upon both
Parties, and the Royalty Payor and its Related Parties shall be
released from any further liability or accountability with respect
to royalties for such year.
9.5.5 Each Party shall treat all financial information subject to review
under this Section 9.5 or under any sublicense agreement in
accordance with the confidentiality and non-use provisions of this
Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with the other Party and/or
its Related Parties obligating it to retain all such information
in confidence pursuant to such confidentiality agreement.
9.6 PAYMENT EXCHANGE RATE. All payments to be made under this Agreement shall
be made in United States dollars and shall be paid by bank wire transfer
in immediately available funds to such bank account in the United States
as may be designated in writing by the receiving Party from time to time.
In the case of sales outside the United States by each Party and its
Related Parties, the rate of exchange to be used in computing the amount
of currency equivalent in United States dollars due shall be made at the
rate of exchange utilized by such Party in its worldwide accounting
system, prevailing on the third to the last business day of the month
preceding the month in which such sales are recorded.
9.7 INCOME TAX WITHHOLDING. If laws, rules or regulations require withholding
of income taxes or other taxes imposed upon payments set forth in this
Article 9, the paying Party shall make such withholding payments as
required and subtract such withholding payments from the payments set
forth in this Article 9. The paying Party shall submit appropriate proof
of payment of the withholding taxes to the receiving Party within a
64
reasonable period of time. At the request of the receiving Party, the
paying Party shall, at its cost, give the receiving Party such reasonable
assistance, which shall include the provision of appropriate certificates
of such deductions made together with other supporting documentation as
may be required by the relevant tax authority, to enable the receiving
Party to claim exemption from such withholding or other tax imposed or
obtain a repayment thereof or reduction thereof and shall upon request
provide such additional documentation from time to time as is reasonably
required to confirm the payment of tax.
10. REPRESENTATIONS AND WARRANTIES
10.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants
to the other Party that as of the Effective Date of this Agreement:
(a) It is duly-organized and validly existing under the laws of its
jurisdiction of incorporation or formation, and has full corporate
or other power and authority to enter into this Agreement and to
carry out the provisions hereof.
(b) It is duly-authorized to execute and deliver this Agreement and to
perform its obligations hereunder, and the person or persons
executing this Agreement on its behalf has been duly-authorized to
do so by all requisite corporate action.
(c) This Agreement is legally binding upon it, enforceable in
accordance with its terms. The execution, delivery and performance
of this Agreement by it does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a
party and by which it may be bound.
(d) Except as set forth in Section 10.1(d) of Schedule 10 to this
Agreement, it has not, and will not during the term of this
Agreement, grant any right to any Third Party which would conflict
with the rights granted to the other Party hereunder. It has (or
will have at the time performance is due) maintained and will
maintain and keep in full force and effect all agreements
(including license agreements) and filings (including patent
filings) necessary to perform its obligations hereunder.
(e) If any human cell lines, tissue, human clinical isolates or
similar human-derived materials ("HUMAN MATERIALS") have been or
are to be collected and/or used in the Therapeutic Collaboration,
each Party represents and warrants (i) that it has complied, or
shall comply, with all applicable laws, guidelines and regulations
relating to the collection and/or use of the Human Materials, and
(ii) that it has obtained, or shall obtain, all necessary
approvals and appropriate informed consents, in writing, for the
collection and/or use of such Human Materials. Each Party shall
provide documentation of such approvals and consents upon the
other Party's request. Each Party further represents and warrants
that such Human Materials may be used as contemplated in this
Agreement without any obligation to the individuals or entities
("PROVIDERS") who contributed the Human Materials, including,
without limitation, any obligation of compensation to such
Providers or
65
any other Third Party for the intellectual property associated
with, or commercial use of, the Human Materials for any purposes.
(f) Neither Party nor any of its Affiliates has been debarred or is
subject to debarment and neither Party nor any of its Affiliates
will use in any capacity, in connection with the performance of
its obligations in the Development, Manufacture or
Commercialization of a [**] Product or an RNAi Therapeutic
Product, any person or entity that has been debarred pursuant to
Section 306 of the United States Federal Food, Drug, and Cosmetic
Act, or that is the subject of a conviction described in such
section. Each Party agrees to inform the other Party in writing
immediately if it or any person or entity that is performing
activities under the Collaboration is debarred or is the subject
of a conviction described in Section 306, or if any action, suit,
claim, investigation or legal or administrative proceeding is
pending or, to the best of such Party's knowledge, is threatened,
relating to the debarment or conviction of such Party or any
person or entity used in any capacity by such Party or any of its
Affiliates in connection with the Development, Manufacture or
Commercialization of a [**] Product or an RNAi Therapeutic
Product.
10.2 ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and warrants to
MERCK that as of the Effective Date of this Agreement:
(a) To the best of ALNYLAM's knowledge, the ALNYLAM RNAi Patent Rights
exist and are not invalid or unenforceable, in whole or in part;
(b) It has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in the ALNYLAM RNAi
Patent Rights or the ALNYLAM RNAi Technology in a manner that
conflicts with any rights granted to MERCK hereunder; and
(c) Except as set forth in Section 10.2(c) of Schedule 10, there are
no claims, judgments or settlements against or owed by ALNYLAM or
its Affiliates or pending or threatened claims or litigation
relating to the ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi
Technology.
10.3 MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and warrants to
ALNYLAM that as of the Effective Date of this Agreement:
(a) To the best of MERCK's knowledge, the MERCK RNAi Patent Rights and
the Patent Rights within the MERCK RNAi Technology exist and are
not invalid or unenforceable, in whole or in part;
(b) It has not previously assigned, transferred, conveyed or otherwise
encumbered its right, title and interest in the MERCK RNAi Patent
Rights, MERCK RNAi Novel Target IP or the MERCK RNAi Technology in
a manner that conflicts with the rights granted to ALNYLAM
hereunder; and
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(c) There are no claims, judgments or settlements against or owed by
MERCK or its Affiliates or pending or threatened claims or
litigation relating to the MERCK RNAi Patent Rights, MERCK RNAi
Novel Target IP or the MERCK RNAi Technology.
10.4 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY
OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO
ANY TECHNOLOGY, [**] PRODUCTS, RNAi THERAPEUTIC PRODUCTS, GOODS, SERVICES,
RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING. EACH
PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY [**] PRODUCT OR RNAi
THERAPEUTIC PRODUCT PURSUANT TO THIS AGREEMENT WILL BE SUCCESSFUL OR THAT
ANY PARTICULAR SALES LEVEL WITH RESPECT TO THE RNAi THERAPEUTIC PRODUCTS
WILL BE ACHIEVED.
10.5 INDEMNIFICATION.
10.5.1 GENERAL INDEMNIFICATION BY MERCK. MERCK shall indemnify, hold
harmless, and defend ALNYLAM, its Affiliates, and their respective
directors, officers, employees and agents ("ALNYLAM INDEMNITEES")
from and against any and all Third Party claims, suits, losses,
liabilities, damages, costs, fees and expenses (including
reasonable attorneys' fees) (collectively, "LOSSES") arising out
of or resulting from, directly or indirectly, (a) any breach of,
or inaccuracy in, any representation or warranty made by MERCK in
this Agreement, or any breach or violation of any covenant or
agreement of MERCK in or pursuant to this Agreement, or (b) the
negligence or willful misconduct by or of MERCK, its Affiliates
and their respective Sublicensees, and their respective directors,
officers, employees and agents. This indemnification excludes
Losses arising out of Third Party Infringement Claims resulting
from MERCK's exercise in accordance with the terms of this
Agreement of any intellectual property rights granted by ALNYLAM
hereunder. Furthermore, MERCK shall have no obligation to
indemnify the ALNYLAM Indemnitees to the extent that the Losses
arise out of or result from, directly or indirectly, any breach
of, or inaccuracy in, any representation or warranty made by
ALNYLAM in this Agreement, or any breach or violation of any
covenant or agreement of ALNYLAM in or pursuant to this Agreement,
or the negligence or willful misconduct by or of any of the
ALNYLAM Indemnitees.
10.5.2 GENERAL INDEMNIFICATION BY ALNYLAM. ALNYLAM shall indemnify, hold
harmless, and defend MERCK, its Affiliates and their respective
directors, officers, employees and agents ("MERCK INDEMNITEES")
from and against any and all Losses arising out of or resulting
from, directly or indirectly, (a) any
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breach of, or inaccuracy in, any representation or warranty made
by ALNYLAM in this Agreement, or any breach or violation of any
covenant or agreement of ALNYLAM in or pursuant to this Agreement,
or (b) the negligence or willful misconduct by or of ALNYLAM, its
Affiliates and their respective Sublicensees, and their respective
directors, officers, employees and agents. This indemnification
excludes Losses arising out of Third Party Infringement Claims
resulting from ALNYLAM's exercise in accordance with the terms of
this Agreement of any intellectual property rights granted by
MERCK hereunder. Furthermore, ALNYLAM shall have no obligation to
indemnify the MERCK Indemnitees to the extent that the Losses
arise out of or result from, directly or indirectly, any breach
of, or inaccuracy in, any representation or warranty made by MERCK
in this Agreement, or any breach or violation of any covenant or
agreement of MERCK in or pursuant to this Agreement, or the
negligence or willful misconduct by or of any of the MERCK
Indemnitees.
10.5.3 PRODUCT LIABILITY.
(a) MERCK shall indemnify and hold harmless the ALNYLAM
Indemnitees from, against and in respect of any and all
Losses arising out of Third Party product liability claims
incurred or suffered by the ALNYLAM Indemnitees, or any of
them, directly or indirectly relating to a [**] Product or
an RNAi Therapeutic Product and resulting from or arising
out of the negligence, willful misconduct, or breach of this
Agreement of or by MERCK or any of the other MERCK
Indemnitees, except to the extent caused by the negligence,
willful misconduct or breach of this Agreement of or by
ALNYLAM or any of the other ALNYLAM Indemnitees.
(b) ALNYLAM shall indemnify and hold harmless the MERCK
Indemnitees from, against and in respect of any and all
Losses arising out of Third Party product liability claims
incurred or suffered by the MERCK Indemnitees, or any of
them, directly or indirectly relating to a [**] Product or
an RNAi Therapeutic Product and resulting from or arising
out of the negligence, willful misconduct, or breach of this
Agreement of or by ALNYLAM or any of the other ALNYLAM
Indemnitees, except to the extent caused by the negligence,
willful misconduct or breach of this Agreement of or by
MERCK or any of the other MERCK Indemnitees.
(c) Any Losses arising out of Third Party product liability
claims (other than such claims entitled to indemnification
under Sections 10.5.3(a) or (b)) shall (i) be borne by the
Continuing Party, to the extent such Losses were incurred
with respect to the Development, Manufacture or
Commercialization of a Royalty-Bearing Product, (ii) be
included in U.S. Development Expenses and shared by the
Parties pursuant to Section 3.9.1, to the extent such Losses
were incurred with respect to the Development (and/or
related Manufacture) of a Profit-Sharing Product in the
United States, (iii) be included in Commercialization
Expenses for purposes of calculating U.S. Operating
Profit/Loss pursuant to Section 9.3,
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to the extent such Losses were incurred with respect to the
Commercialization (and/or related Manufacture) of a
Profit-Sharing Product in the United States, (iv) be borne
by MERCK, to the extent such Losses were incurred with
respect to Development, Manufacture or Commercialization of
a Profit-Sharing Product in the Territory outside the United
States or a MERCK Development Product in the Territory, or
(iv) unless MERCK exercises its Opt-In Right, be borne by
ALNYLAM to the extent such Losses were incurred with respect
to the development, manufacture or commercialization of a
[**] Product in the Territory.
10.5.4 INDEMNIFICATION PROCEDURE. In the event of any such claim against
any MERCK Indemnitee or ALNYLAM Indemnitee (individually, an
"INDEMNITEE"), the indemnified Party shall promptly notify the
other Party in writing of the claim and the indemnifying Party
shall manage and control, at its sole expense, the defense of the
claim and its settlement. The Indemnitee shall cooperate with the
indemnifying Party and may, at its option and expense, be
represented in any such action or proceeding. The indemnifying
Party shall not be liable for any settlements, litigation costs or
expenses incurred by any Indemnitee without the indemnifying
Party's written authorization. Notwithstanding the foregoing, if
the indemnifying Party believes that any of the exceptions to its
obligation of indemnification of the Indemnitees set forth in
Sections 10.5.1, 10.5.2 or 10.5.3 may apply, the indemnifying
Party shall promptly notify the Indemnitees, which shall then have
the right to be represented in any such action or proceeding by
separate counsel at their expense; provided, that the indemnifying
Party shall be responsible for payment of such expenses if the
Indemnitees are ultimately determined to be entitled to
indemnification from the indemnifying Party.
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11. INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS
11.1 INVENTORSHIP. Inventorship for patentable Inventions shall be determined
in accordance with United States patent laws for determining inventorship.
11.2 OWNERSHIP OF COLLABORATION INVENTIONS. The entire right, title and
interest in:
(a) ALNYLAM Technology Collaboration Inventions and ALNYLAM Therapeutic
Collaboration Inventions shall be owned solely by ALNYLAM;
(b) MERCK Technology Collaboration Inventions and MERCK Therapeutic
Collaboration Inventions shall be owned solely by MERCK;
(c) Joint Collaboration Inventions shall be owned jointly by ALNYLAM and
MERCK; and
(d) In the event MERCK, solely or jointly with ALNYLAM, makes any
discovery, improvement, or Invention with respect to a [**] Target
after receiving the Opt-In Information for such [**] Target, and
prior to the exercise of MERCK's Opt-In Right or MERCK's failure to
do so before the expiration of the Opt-In Right exercise period,
then MERCK shall assign the same to ALNYLAM and it shall be an
"ALNYLAM-ASSIGNED THERAPEUTIC COLLABORATION INVENTION" and shall be
included within the definition of an ALNYLAM Therapeutic
Collaboration Invention. In the event ALNYLAM, solely or jointly
with MERCK, makes any discovery, improvement, or Invention with
respect to a MERCK RNAi Novel Target after receiving the MERCK RNAi
Novel Target Information for such MERCK RNAi Novel Target, and prior
to its election either: (i) to select such MERCK RNAi Novel Target
as a Co-Development Target or (ii) to decline to do so and ALNYLAM's
return to MERCK of all information and materials relating to the
MERCK RNAi Novel Target (as provided in Section 3.2.2(d)), then
ALNYLAM shall assign the same to MERCK and it shall be a
"MERCK-ASSIGNED THERAPEUTIC COLLABORATION INVENTION" and shall be
included within the definition of a MERCK Therapeutic Collaboration
Inventions.
ALNYLAM shall promptly disclose to MERCK the development, making,
conception or reduction to practice of ALNYLAM Technology Collaboration
Inventions, ALNYLAM Therapeutic Collaboration Inventions and Joint
Collaboration Inventions and MERCK shall promptly disclose to ALNYLAM the
development, making, conception or reduction to practice of MERCK
Technology Collaboration Inventions, MERCK Therapeutic Collaboration
Inventions and Joint Collaboration Inventions.
ALNYLAM shall cause and ensure that each and every ALNYLAM employee, agent
or representative, including consultants and scientific advisors, working
on the Collaboration has assigned or will assign to ALNYLAM his/her rights
to Inventions. MERCK shall cause and ensure that each and every MERCK
employee, agent or representative,
70
including consultants and scientific advisors, working on the
Collaboration has assigned or will assign to MERCK his/her rights to
Inventions.
11.3 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.
11.3.1 MERCK TECHNOLOGY. MERCK has the sole responsibility to, at MERCK's
discretion, file, conduct ex parte and inter partes prosecution,
and maintain (including the defense of any interference or
opposition proceedings) in the Territory, all Patent Rights
comprising MERCK Technology (other than Joint Collaboration IP),
in MERCK's name.
11.3.2 ALNYLAM TECHNOLOGY. ALNYLAM has the sole responsibility to, at
ALNYLAM's discretion, file, conduct ex parte and inter partes
prosecution, and maintain (including the defense of any
interference or opposition proceedings) in the Territory, all
Patent Rights comprising ALNYLAM Technology (other than Joint
Collaboration IP), in ALNYLAM's name.
11.3.3 JOINT COLLABORATION IP. Subject to ALNYLAM's continuing right to
the prior review of, comment on, revision to and approval of
material documents, which shall not be unreasonably delayed or
withheld, MERCK has the sole responsibility to, at MERCK's
discretion, file, conduct ex parte and inter partes prosecution,
and maintain (including the defense of any interference or
opposition proceedings) in the Territory, all Patent Rights
comprising Joint Collaboration IP (other than Broad RNAi
Technology Collaboration IP), in the names of both ALNYLAM and
MERCK. Notwithstanding the foregoing, if (a) ALNYLAM is the
Continuing Party with respect to a Royalty-Bearing Product and the
Joint Collaboration IP Covers or claims such Royalty-Bearing
Product or (b) the Joint Collaboration IP Covers or claims a [**]
Product and MERCK has not exercised its Opt-In Right, then ALNYLAM
shall have the sole responsibility to, at ALNYLAM's discretion,
file, conduct ex parte and inter partes prosecution, and maintain
(including the defense of any interference or opposition
proceedings) in the Territory, all Patent Rights comprising Joint
Collaboration IP Covering or claiming such Royalty-Bearing Product
or such [**] Product in the names of both ALNYLAM and MERCK. Each
Party shall use Commercially Reasonable Efforts to make available
to the Prosecuting Party or its authorized attorneys, agents or
representatives, such of its employees as the Prosecuting Party in
its reasonable judgment deems necessary in order to assist it in
obtaining patent protection for such Joint Collaboration IP. Each
Party shall sign, or use Commercially Reasonable Efforts to have
signed, all legal documents necessary to file and prosecute patent
applications or to obtain or maintain patents in respect of such
Joint Collaboration IP, at no cost to the Prosecuting Party.
11.3.4 BROAD RNAI TECHNOLOGY COLLABORATION IP. Notwithstanding Section
11.3.3, subject to MERCK's continuing right to the prior review
of, comment on, revision to and approval of material documents
relating to Joint Collaboration IP, which shall not be
unreasonably delayed or withheld, and except as may be otherwise
agreed by the Parties, ALNYLAM has the sole responsibility to, at
ALNYLAM's
71
discretion, file, conduct ex parte and inter partes prosecution,
and maintain, including the defense of any interference or
opposition proceedings, in the Territory, all Patent Rights
comprising Broad RNAi Technology Collaboration IP in the names of
both ALNYLAM and MERCK. MERCK shall use Commercially Reasonable
Efforts to make available to ALNYLAM or its authorized attorneys,
agents or representatives, such of its employees as ALNYLAM in its
reasonable judgment deems necessary in order to assist it in
obtaining patent protection for such Broad RNAi Technology
Collaboration IP. MERCK shall sign or use Commercially Reasonable
Efforts to have signed all legal documents necessary to file and
prosecute patent applications or to obtain or maintain patents in
respect of such Broad RNAi Technology Collaboration IP, at no cost
to ALNYLAM.
11.3.5 CONTINGENT RIGHTS. The Party having the right to prosecute and
maintain patents under Sections 11.3.1, 11.3.2, 11.3.3 and 11.3.4
shall be referred to as the "PROSECUTING PARTY". In the event the
Prosecuting Party elects not to seek or continue to seek or
maintain patent protection on any ALNYLAM Collaboration
Inventions, MERCK Collaboration Inventions or Joint Collaboration
IP which are subject to the other Party's licensed rights under
Section 7 in the Territory, the other Party shall have the right
(but not the obligation), at its expense, to prosecute and
maintain in any country within the Territory patent protection on
such ALNYLAM Collaboration Inventions, MERCK Collaboration
Inventions or Joint Collaboration IP in the name of ALNYLAM, MERCK
or both Parties as set forth in Sections 11.3.1, 11.3.2, 11.3.3
and 11.3.4. The previously Prosecuting Party shall use
Commercially Reasonable Efforts to make available to the other
Party or its authorized attorneys, agents or representatives, such
of its employees as are reasonably necessary to assist the other
Party in obtaining and maintaining the patent protection described
under this Section 11.3.5. The previously Prosecuting Party shall
sign or use Commercially Reasonable Efforts to have signed all
legal documents necessary to file and prosecute such patent
applications or to obtain or maintain such patents.
11.3.6 COOPERATION. Each Party hereby agrees: (a) to make its employees,
agents and consultants reasonably available to the other Party (or
to the other Party's authorized attorneys, agents or
representatives), to the extent reasonably necessary to enable
such Party to undertake patent prosecution; (b) to provide the
other Party with copies of all material correspondence pertaining
to prosecution with the patent offices; (c) to cooperate, if
necessary and appropriate, with the other Party in gaining patent
term extensions wherever applicable to Patent Rights; and (d) to
endeavor in good faith to coordinate its efforts with the other
Party to minimize or avoid interference with the prosecution and
maintenance of the other Party's patent applications.
11.3.7 PATENT EXPENSES. The patent filing, prosecution and maintenance
expenses incurred after the Effective Date with respect to Patent
Rights comprised of ALNYLAM Technology and MERCK Technology
("PATENT EXPENSES") shall be borne by each Party having the right
to file, prosecute and maintain such Patent Rights under this
Section 11.3, except that Patent Expenses incurred (a) by the
72
Opt-Out Party with respect to a Royalty-Bearing Product shall be
reimbursed in full by the Continuing Party, (b) by a Party with
respect to a Profit-Sharing Product in the United States prior to
the First Commercial Sale of such product in the United States
shall be included in U.S. Development Expenses for such product
and shared by the Parties pursuant to Section 3.9, (c) by a Party
with respect to a Profit-Sharing Product in the United States
after the First Commercial Sale of such product in the United
States shall be included in Commercialization Expenses for such
product for purposes of calculating U.S. Operating Profit/Loss
pursuant to Section 9.3, (d) by ALNYLAM with respect to a
Profit-Sharing Product in the Territory outside the United States
or a MERCK Development Product in the Territory shall be
reimbursed in full by MERCK, or (e) unless MERCK has exercised its
Opt-In Right, by MERCK with respect to a [**] Product shall be
reimbursed in full by ALNYLAM.
11.4 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. The Parties agree
that:
(a) ALNYLAM shall, within ten (10) days of learning of such event,
inform MERCK of any request for, or filing or declaration of, any
interference, opposition or reexamination or reissue relating to
ALNYLAM RNAi Patent Rights.
(b) MERCK shall, within ten (10) days of learning of such event,
inform ALNYLAM of any request for, or filing or declaration of,
any interference, opposition, or reexamination or reissue relating
to MERCK RNAi Patent Rights and Patent Rights contained in MERCK
RNAi Novel Target IP.
(c) In connection with any interference with a Third Party Patent
Right, opposition by a Third Party and not on behalf of the other
Party, reissue, or reexamination proceeding (other than one
instituted by the other Party) relating to ALNYLAM RNAi Patent
Rights, MERCK RNAi Patent Rights, MERCK RNAi Novel Target IP, or
Joint Collaboration Patent Rights, MERCK and ALNYLAM shall
cooperate fully and shall provide each other with any information
or assistance that either may reasonably request. Each Party shall
keep the other Party informed of developments in any such action
or proceeding to the extent permissible by law and to the extent
allowed by a written agreement with a Third Party under which a
Party has obtained rights to the applicable patent rights.
11.5 THIRD PARTY INFRINGEMENT OF COLLABORATION INTELLECTUAL PROPERTY.
11.5.1 NOTICES. Each Party shall promptly report in writing to the other
Party during the Agreement Term any (a) known or suspected
infringement of any ALNYLAM Technology or MERCK Technology being
used in the Therapeutic Collaboration, including without
limitation any Joint Collaboration IP or (b) unauthorized use or
misappropriation of any Information by a Third Party of which it
becomes aware, and shall provide the other Party with all
available evidence supporting such infringement, or unauthorized
use or misappropriation.
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11.5.2 RIGHTS TO ENFORCE.
(a) MERCK'S FIRST RIGHT.
Subject to the provisions of Section 11.5.2(b) and the provisions
of any Third Party agreement under which MERCK's rights in MERCK
Technology are granted or ALNYLAM's rights in ALNYLAM Technology
are granted and of any In-License, in respect of each (i)
Profit-Sharing Product in the Field in the Territory, (ii)
Royalty-Bearing Product in the Field in the Territory for which
MERCK is the Continuing Party, and (iii) MERCK Development
Product, MERCK shall have the sole and exclusive right to initiate
an infringement or other appropriate suit anywhere in the world
against any Third Party who at any time has infringed, or is
suspected of infringing, any Patent Rights, or of using without
proper authorization any Know-How, comprising (x) MERCK Technology
or ALNYLAM Technology that is licensed to MERCK under Article 7
with respect to such Profit-Sharing Product, Royalty-Bearing
Product or MERCK Development Product, as the case may be, or (y)
Joint Collaboration IP Covering, claiming or relating to such
Profit-Sharing Product, Royalty-Bearing Product, or MERCK
Development Product, as the case may be.
(b) ALNYLAM'S FIRST RIGHT.
(i) Subject to the provisions of any Third Party agreement
under which ALNYLAM's rights in ALNYLAM Technology or
MERCK's rights in MERCK Technology are granted and of any
In-License, in respect of (x) each Royalty-Bearing Product
in the Field in the Territory for which ALNYLAM is the
Continuing Party, and (y) unless MERCK exercises its Opt-In
Right, each [**] Product, ALNYLAM shall have the sole and
exclusive right to initiate an infringement or other
appropriate suit anywhere in the world against any Third
Party who at any time has infringed, or is suspected of
infringing, any Patent Rights, or of using without proper
authorization any Know-How, comprising ALNYLAM Technology
or MERCK Technology that is licensed to ALNYLAM under
Section 7.1 with respect to such Royalty-Bearing Product or
[**] Product or Joint Collaboration IP Covering, claiming
or relating to such Royalty-Bearing Product or [**]
Product.
(ii) ALNYLAM shall have the sole and exclusive right to initiate
an infringement or other appropriate suit anywhere in the
world against any Third Party who at any time has
infringed, or is suspected of infringing, any Patent
Rights, or of using without proper authorization any
Know-How, comprising Broad RNAi Technology Collaboration
IP.
11.5.3 STEP-IN RIGHTS. Subject to the provisions of any Third Party
license agreement under which ALNYLAM's rights in ALNYLAM
Technology are granted or MERCK's rights in MERCK Technology are
granted, and of any In-Licenses, if the
74
Party with the first right to enforce (the "INITIAL ENFORCEMENT
RIGHTS PARTY") ALNYLAM Technology, MERCK Technology, Joint
Collaboration IP or Broad RNAi Technology Collaboration IP under
Section 11.5.2 fails to initiate a suit or take other appropriate
action that it has the initial right to initiate or take pursuant
thereto within [**] days after becoming aware of the basis for
such suit or action, then the other Party (the "SECONDARY
ENFORCEMENT RIGHTS PARTY") may, in its discretion, provide the
Initial Enforcement Rights Party with written notice of such
Secondary Enforcement Rights Party's intent to initiate a suit or
take other appropriate action. If the Secondary Enforcement Rights
Party provides such notice and the Initial Enforcement Rights
Party fails to initiate a suit or take such other appropriate
action within [**] days after receipt of such notice from the
Secondary Enforcement Rights Party, then the Secondary Enforcement
Rights Party shall have the right to initiate a suit or take other
appropriate action that it believes is reasonably required to
protect its ownership interest in and to, or licensed interest
under, as applicable, ALNYLAM Technology and MERCK Technology,
including without limitation, Joint Collaboration IP.
11.5.4 PROCEDURES; EXPENSES AND RECOVERIES. The Party having the right to
initiate any infringement suit under Section 11.5.2 above shall
have the sole and exclusive right to select counsel for any such
suit and shall pay all expenses of the suit, including attorneys'
fees and court costs and reimbursement of the other Party's
reasonable out-of-pocket expense in rendering assistance requested
by the initiating Party, except that such expenses in respect of
any Profit-Sharing Product in the United States (i) prior to the
First Commercial Sale of such Profit-Sharing Product in the United
States shall be included in U.S. Development Expenses for such
product and shared by the Parties pursuant to Section 3.9.1, and
(ii) after the First Commercial Sale of such Profit Sharing
Product in the United States shall be Commercialization Expenses
for purposes of calculating U.S. Operating Profit/Loss pursuant to
Section 9.3. If required under applicable law in order for the
initiating Party to initiate and/or maintain such suit, or if
either Party is unable to initiate or prosecute such suit solely
in its own name or it is otherwise advisable to obtain an
effective legal remedy, in each case, the other Party shall join
as a party to the suit and will execute and cause its Affiliates
to execute all documents necessary for the initiating Party to
initiate litigation to prosecute and maintain such action. In
addition, at the initiating Party's request, the other Party shall
provide reasonable assistance to the initiating Party in
connection with an infringement suit at no charge to the
initiating Party except for reimbursement by the initiating Party
of reasonable out-of-pocket expenses incurred in rendering such
assistance. The non-initiating Party shall have the right to
participate and be represented in any such suit by its own counsel
at its own expense. If the Parties obtain from a Third Party, in
connection with such suit, any damages, license fees, royalties or
other compensation (including any amount received in settlement of
such litigation), such amounts shall be allocated as follows:
(a) In all cases, to reimburse each Party for all expenses of
the suit, including attorneys' fees and disbursements,
court costs and other litigation expenses; and
75
(b) If the infringement by the Third Party is related to a
Profit-Sharing Product in the United States (i) prior to
the First Commercial Sale of the Profit-Sharing Product in
the United States, the balance shall be applied to
reimburse the Parties for U.S. Development Expenses in
accordance with their share of such expenses as set forth
in Section 3.9.1 and (ii) after the First Commercial Sale
of the Profit-Sharing Product in the United States, the
balance shall be deemed Net Sales for the purpose of
calculating U.S. Operating Profit/Loss for such
Profit-Sharing Product pursuant to Section 9.3; or
(c) If the infringement by the Third Party is related to a
Profit-Sharing Product in the Territory outside the United
States, the remaining amount shall be treated as if it were
Net Sales of MERCK, with ALNYLAM receiving a royalty on
such remaining amount pursuant to the terms of Section
9.4.2, and the balance being retained by MERCK; or
(d) If the infringement by the Third Party is related to a
Royalty-Bearing Product, the remaining amount shall be
treated as if it were Net Sales of the Continuing Party,
with the other Party receiving a royalty on such remaining
amount pursuant to the terms of Section 9.4.3, and the
balance being retained by the Continuing Party; or
(e) If the infringement by the Third Party is related to a
MERCK Development Product, the remaining amount shall be
treated as if it were Net Sales of MERCK, with ALNYLAM
receiving a royalty on such remaining amount pursuant to
the terms of Section 9.4.4, and the balance being retained
by MERCK; or
(f) If the infringement by the Third Party is related to a [**]
Product, unless MERCK has exercised its Opt-In Right, the
remaining amount shall be treated as if it were Net Sales
of ALNYLAM, with MERCK receiving a royalty on such
remaining amount pursuant to the terms of Section 9.4.1,
and the balance being retained by ALNYLAM.
11.6 CLAIMED INFRINGEMENT.
11.6.1 NOTICE. In the event that a Third Party at any time provides
written notice of a claim to, or brings an action, suit or
proceeding against, any Party, or any of their respective
Affiliates or Sublicensees, claiming infringement of its patent
rights or unauthorized use or misappropriation of its know-how,
based upon an assertion or claim arising out of the Development,
Manufacture or Commercialization of RNAi Therapeutic Products in
the Field in the Territory ("INFRINGEMENT CLAIM"), such Party
shall promptly notify the other Party of the claim or the
commencement of such action, suit or proceeding, enclosing a copy
of the claim and all papers served. Each Party agrees to make
available to the other Party its advice and counsel regarding the
technical merits of any such claim at no cost to
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the other Party and to offer reasonable assistance to the other
Party at no cost to the other Party.
11.6.2 PROFIT-SHARING PRODUCTS. Any Infringement Claim brought against
either Party or its Affiliates or Sublicensees arising out of the
Development, Manufacture or Commercialization of any
Profit-Sharing Product in the Field in the Territory, shall be
defended by MERCK if it so desires; provided, however, that
ALNYLAM shall defend any such Infringement Claim relating to Broad
RNAi Technology, if it so desires. All litigation costs and
expenses incurred by the Defending Party (defined below) in
connection with such Infringement Claim, and all damages, payments
and other amounts awarded against, or payable by, either Party
under any settlement with such Third Party (a) with respect to the
United States (i) prior to the First Commercial Sale of the
Profit-Sharing Product in the United States, shall be U.S.
Development Expenses for such Profit-Sharing Product as set forth
in Section 3.9 and (ii) after the First Commercial Sale of the
Profit-Sharing Product in the United States, shall be
Commercialization Expenses for purposes of calculating U.S.
Operating Profit/Loss in respect of such Profit-Sharing Product
pursuant to Section 9.3, and (b) with respect to the Territory
outside the United States, shall be borne by MERCK.
11.6.3 ROYALTY-BEARING PRODUCTS, MERCK DEVELOPMENT PRODUCTS AND [**]
PRODUCTS. In respect of any Royalty-Bearing Product, the
applicable Continuing Party shall assume full responsibility for
any Infringement Claims brought against either Party or its
Affiliates or Sublicensees arising out of the Development,
Manufacture or Commercialization of such Royalty-Bearing Product.
All liabilities, damages, costs and expenses arising out of such
Third Party Infringement Claims shall be borne by the Continuing
Party. In respect of any MERCK Development Product, (a) MERCK
shall assume full responsibility for any Infringement Claims
brought against either Party or its Affiliates or Sublicensees
arising out of the Development, Manufacture or Commercialization
of such MERCK Development Product and (b) all liabilities,
damages, costs and expenses arising out of such Third Party
Infringement Claims shall be borne by MERCK. Unless MERCK
exercises its Opt-In Right, in respect of any [**] Product, (i)
ALNYLAM shall assume full responsibility for any Infringement
Claims brought against either Party or its Affiliates or
Sublicensees arising out of the development, manufacture or
commercialization of such [**] Product and (ii) all liabilities,
damages, costs and expenses arising out of such Third Party
Infringement Claims shall be borne by ALNYLAM.
11.6.4 PROCEDURE. The Party having the initial right to defend an
Infringement Claim shall be referred to as the "DEFENDING Party."
The Defending Party shall have the sole and exclusive right to
select counsel for any Infringement Claim; provided, that it shall
consult with the other Party with respect to selection of counsel
for such defense. The Defending Party shall keep the other Party
informed, and shall from time to time consult with the other Party
regarding the status of any such claims and shall provide the
other Party with copies of all documents filed in, and all written
communications relating to, any suit brought in
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connection with such claims. The other Party shall also have the
right to participate and be represented in any such claim or
related suit, at its own expense. The other Party shall have the
sole and exclusive right to control the defense of an Infringement
Claim in the event the Defending Party fails to exercise its right
to assume such defense within [**] days following written notice
from the other Party of such Infringement Claim. No Party shall
settle any claims or suits involving rights of another Party
without obtaining the prior written consent of such other Party,
which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, the provisions of this Section 11.6.4 shall only
apply to a MERCK Development Product to the extent any ALNYLAM
Technology Covering or claiming such MERCK Development Product is
licensed to MERCK pursuant to Section 7.1 and to a [**] Product to
the extent any MERCK Technology Covering or claiming such [**]
Product is licensed to ALNYLAM pursuant to Section 7.1.
11.6.5 LIMITATIONS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 10,
THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF ALNYLAM AND
MERCK, AND THE SOLE AND EXCLUSIVE REMEDY OF ALNYLAM OR MERCK, AS
THE CASE MAY BE, IN THE CASE OF ANY CLAIMED INFRINGEMENT OF ANY
THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION
OF ANY THIRD PARTY'S KNOW-HOW.
11.7 OTHER INFRINGEMENT RESOLUTIONS. In the event of a dispute or potential
dispute that has not ripened into a demand, claim or suit of the types
described in Sections 11.5 and 11.6 of this Agreement (e.g., actions
seeking declaratory judgments and revocation proceedings), the same
principles governing control of the resolution of the dispute, consent to
settlements of the dispute, and implementation of the settlement of the
dispute (including the sharing in and allocating the payment or receipt
of damages, license fees, royalties and other compensation) shall apply.
11.8 PRODUCT TRADEMARKS.
11.8.1 OWNERSHIP OF PRODUCT TRADEMARKS. MERCK shall own the Product
Trademarks for Profit-Sharing Products and MERCK Development
Products in the Territory and shall be responsible for filing and
maintaining the Product Trademarks for such RNAi Therapeutic
Products in the Territory (including payment of costs associated
therewith), subject to reimbursement of such costs in the United
States as Commercialization Expenses for purposes of calculating
U.S. Operating Profit/Loss for such Profit-Sharing Product
pursuant to Section 9.3. Each Party shall have the right to
monitor the quality of Profit-Sharing Products in accordance with
reasonable procedures to be agreed upon by the Parties. The
Continuing Party shall own the Product Trademarks for
Royalty-Bearing Products and shall be solely responsible for
filing and maintaining the Product Trademarks for such RNAi
Therapeutic Products in the Territory (including payment of costs
associated therewith). Promptly after exercising its Opt-Out Right
with respect to such Royalty-Bearing Product, MERCK shall assign
to ALNYLAM all Product
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Trademarks for such Royalty-Bearing Product Controlled by MERCK in
accordance with terms and conditions to be negotiated by the
Parties in good faith. Unless MERCK exercises its Opt-In Right,
ALNYLAM shall own the Product Trademarks for [**] Products and
shall be solely responsible for filing and maintaining the Product
Trademarks for such [**] Products in the Territory (including
payment of costs associated therewith).
11.8.2 THIRD PARTY INFRINGEMENT.
(a) PROFIT-SHARING PRODUCTS. In the event that either Party
becomes aware of any infringement of a Product Trademark
for a Profit-Sharing Product by a Third Party, it shall
promptly notify the other and the Parties shall consult
with each other and jointly determine the best way to
prevent such infringement, including without limitation by
the institution of legal proceedings against such Third
Party. All out-of-pocket costs, including attorneys' fees,
relating to such legal proceedings incurred (a) with
respect to the United States (i) prior to the First
Commercial Sale of the Profit-Sharing Product in the United
States shall be included in U.S. Development Expenses for
such Profit-Sharing Product and shared by the Parties
pursuant to Section 3.9.1 and (ii) after the First
Commercial Sale of the Profit-Sharing Product in the United
States shall be included in Commercialization Expenses for
purposes of calculating U.S. Operating Profit/Loss for such
Profit-Sharing Product pursuant to Section 9.3 and (b) in
the Territory outside the United States shall be borne
solely by MERCK.
(b) ROYALTY-BEARING PRODUCTS, MERCK DEVELOPMENT PRODUCTS AND
[**] PRODUCTS. The applicable Continuing Party shall assume
full responsibility, at its sole cost and expense, for any
infringement of a Product Trademark for a Royalty-Bearing
Product by a Third Party. MERCK shall assume full
responsibility, at its sole cost and expense, for any
infringement of a Product Trademark for a MERCK Development
Product by a Third Party. Unless MERCK has exercised its
Opt-In Right, ALNYLAM shall assume full responsibility, at
its sole cost and expense, for any infringement of a
Product Trademark for a [**] Product by a Third Party.
11.8.3 CLAIMED INFRINGEMENT. If a Third Party challenges the Parties'
right to commercialize a Profit-Sharing Product under the selected
Product Trademark, the JSC shall consider the grounds for such
challenge and recommend to MERCK a course of action in the
affected market based on an assessment of the legal merits of such
Third Party claim. The foregoing procedure shall also be followed
in the event of an objection to the selected Product Trademark
raised by a Regulatory Authority. In the case of a Royalty-Bearing
Product, the Continuing Party will defend and indemnify the
Opt-Out Party for and against any claims of infringement of the
rights of a Third Party by the use of a Product Trademark in
connection with such Royalty-Bearing Product. In the case of a
MERCK
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Development Product, MERCK will defend and indemnify ALNYLAM for
and against any claims of infringement of the rights of a Third
Party by the use of a Product Trademark in connection with such
MERCK Development Product. In the case of a [**] Product, unless
MERCK has exercised its Opt-In Right, ALNYLAM will defend and
indemnify MERCK for and against any claims of infringement of the
rights of a Third Party by the use of a Product Trademark in
connection with such [**] Product.
11.9 PATENT TERM EXTENSIONS. The Parties shall use reasonable efforts to
obtain all available supplementary protection certificates ("SPC") and
other extensions of Patent Rights (including those available under the
Xxxxx-Xxxxxx Act) Covering or claiming RNAi Therapeutic Products. Each
Party shall execute such authorizations and other documents and take such
other actions as may be reasonably requested by the other Party to obtain
such extensions. The Parties shall cooperate with each other in gaining
patent term restorations, extensions and/or SPCs wherever applicable to
such Patent Rights. The Party first eligible to seek patent term
restoration or extension of any such Patent Rights or any SPC related
thereto shall have the right to do so; provided, that if in any country
the first Party has an option to extend the patent term for only one of
several patents, the first Party shall consult with the other Party
before making the election. If more than one patent is eligible for
extension or patent term restoration, the Parties shall agree upon a
strategy that shall maximize patent protection and commercial value for
RNAi Therapeutic Products. All filings for such extensions and
certificates shall be made by the Party to whom responsibility for
prosecution and maintenance of such Patent Rights are assigned, provided,
that in the event that the Party to whom such responsibility is assigned
elects not to file for an extension or SPC, such Party shall (i) inform
the other Party of its intention not to file and (ii) grant the other
Party the right to file for such extension or SPC in the patentee's name
and such Party shall provide all necessary assistance in connection
therewith. The provisions of this Section 11.9 shall also apply to Patent
Rights Covering or claiming a MERCK Development Product to the extent
such Patent Rights are included in ALNYLAM Technology licensed to MERCK
with respect to such MERCK Development Product pursuant to Section 7.1
and to a [**] Product to the extent such Patent Rights are included in
MERCK Technology licensed to ALNYLAM with respect to such [**] Product
pursuant to Section 7.1.
11.10 PATENT CERTIFICATION. To the extent required by law or permitted by law,
the Parties shall use Commercially Reasonable Efforts to maintain with
the applicable Regulatory Authorities during the Agreement Term correct
and complete listings of applicable Patent Rights for RNAi Therapeutic
Products and [**] Products being commercialized, including all so called
"Orange Book" listings required under the Xxxxx-Xxxxxx Act. The
provisions of this Section 11.10 shall apply to Patent Rights Covering or
claiming a MERCK Development Product to the extent such Patent Rights are
included in ALNYLAM Technology licensed to MERCK with respect to such
MERCK Development Product pursuant to Section 7.1 and to a [**] Product
to the extent such Patent Rights are included in MERCK Technology
licensed to ALNYLAM with respect to such [**] Product pursuant to Section
7.1.
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12. TERM AND TERMINATION
12.1 TERM AND EXPIRATION.
12.1.1 COLLABORATION TERM. Except as otherwise provided herein, the term
of the Collaboration shall commence on the Original Effective Date
and continue until the end of the Therapeutic Collaboration Term
as set forth below ("COLLABORATION TERM"). The term of the
Therapeutic Collaboration shall commence on the one (1) year
anniversary of the Original Effective Date and continue for a
period of four (4) years and thereafter until the date on which no
Profit-Sharing Products are being Developed or Commercialized by
the Parties ("THERAPEUTIC COLLABORATION TERM"). Expiration of the
Therapeutic Collaboration shall only affect the terms,
responsibilities and activities undertaken in accordance with the
Therapeutic Collaboration and shall not affect the other terms of
this Agreement.
12.1.2 EXPIRATION OF AGREEMENT. This Agreement shall be effective as of
the Original Effective Date and, unless terminated earlier
pursuant to Sections 12.2 below, this Agreement shall continue in
effect until expiration of all royalty obligations and
profit-sharing obligations hereunder ("AGREEMENT TERM"). Upon
expiration of the Agreement Term, all licenses of the Parties
under Article 7 then in effect shall become fully paid-up,
perpetual, non-exclusive licenses.
12.2 TERMINATION FOR CAUSE.
12.2.1 CAUSE FOR TERMINATION. This Agreement may be terminated at any
time during the Agreement Term:
(a) upon written notice by either Party (the "NON-BREACHING
PARTY") if the other Party (the "BREACHING PARTY") is in
breach of its material obligations hereunder by causes and
reasons within its control and has not cured such breach
within ninety (90) days after notice requesting cure of the
breach; provided, however, in the event of a good faith
dispute with respect to the existence of a material breach,
the ninety (90) day cure period shall be tolled until such
time as the Dispute is resolved pursuant to Section 13.6
hereof; or
(b) by either Party upon the filing or institution of
bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion
of the assets for the benefit of creditors by the other
Party; provided, however, in the case of any involuntary
bankruptcy or receivership proceeding such right to
terminate shall only become effective if the Party consents
to the involuntary bankruptcy, receivership or such
proceeding is not dismissed within ninety (90) days after
the filing thereof.
12.3 EFFECT OF TERMINATION FOR CAUSE.
12.3.1 MATERIAL BREACH RELATING TO THE DEVELOPMENT OR COMMERCIALIZATION
OF A ROYALTY-BEARING PRODUCT. If the material breach has, or is
reasonably likely to have, a material adverse effect for the
Non-Breaching Party with respect to the
81
Development, Manufacture or Commercialization of a particular
Royalty-Bearing Product in either a particular Region or Regions
or with respect to the entire Territory, then this Agreement shall
not terminate in its entirety, nor with respect to such
Royalty-Bearing Product or in the Territory outside of any
affected Region(s), provided that with respect to all affected
Region(s):
(a) except to the extent such licenses are necessary for the
Breaching Party to perform its obligations under clause (c)
below, the licenses granted to the Breaching Party under
this Agreement with respect to the Development, Manufacture
and Commercialization of such Royalty-Bearing Product in
such affected Region(s) shall terminate;
(b) the Breaching Party hereby grants to the Non-Breaching
Party an exclusive (even as to the Breaching Party),
non-royalty-bearing, perpetual license under (i) ALNYLAM
RNAi Technology, ALNYLAM Collaboration Inventions, ALNYLAM
Therapeutic Collaboration IP and ALNYLAM RNAi Patent Rights
if the Breaching Party is ALNYLAM, or (ii) MERCK RNAi
Technology, MERCK RNAi Patent Rights, MERCK Therapeutic
Collaboration IP, MERCK Collaboration Inventions and MERCK
RNAi Novel Target IP if the Breaching Party is MERCK, to
Develop, Manufacture and Commercialize such Royalty-Bearing
Product in the Field in such affected Region(s); provided,
however, that to the extent such license includes a
sublicense under Necessary Third Party IP, -------
including without limitation the Existing ALNYLAM
In-Licenses, the non-Breaching Party shall be fully
responsible for all royalties, milestones or other payments
under such In-Licenses reasonably allocable to such
Royalty-Bearing Product in such affected Region(s);
(c) in the event that the Breaching Party is Manufacturing and
supplying the Royalty-Bearing Product pursuant to Section
6.4, the Breaching Party shall have the obligation, if
requested by the Non-Breaching Party, to continue to
Manufacture and supply the Royalty-Bearing Product for such
affected Region(s) in accordance with, and for the time
period described in, Section 6.4; and
(d) in the event that the Non-Breaching Party is Manufacturing
and supplying the Royalty-Bearing Product pursuant to
Section 6.4, the Breaching Party shall have the obligation
to reimburse the Non-Breaching Party for any committed and
non-refundable or non-creditable costs or expenses incurred
by the Non-Breaching Party, as of the date of notice of
termination, with respect to the supply of such
Royalty-Bearing Product for the Breaching Party for such
affected Region(s), and shall purchase, at the Cost of
Goods Sold, any Royalty-Bearing Product Manufactured and
supplied by the Non-Breaching Party for such Region(s), as
well as any work in progress, raw materials, intermediates
or components relating to the Royalty-Bearing Product, in
each case in accordance with, and for the time period
described in Section 6.4.
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12.3.2 MATERIAL BREACH RELATING TO THE DEVELOPMENT OR COMMERCIALIZATION
OF A PROFIT-SHARING PRODUCT. If the material breach has, or is
reasonably likely to have, a material adverse effect on the
Development, Manufacture or Commercialization of a particular
Profit-Sharing Product in either a particular Region or Regions or
with respect to the entire Territory, then this Agreement shall
not terminate in its entirety, nor with respect to such
Profit-Sharing Product in the Territory outside of any affected
Region(s), provided that with respect to all affected Region(s):
(a) the licenses granted to the Breaching Party under this
Agreement with respect to the Development, Manufacture and
Commercialization of such Profit-Sharing Product in the
affected Region(s) shall terminate;
(b) the licenses granted to the Non-Breaching Party by the
Breaching Party with respect to such Profit-Sharing Product
in the affected Region(s) pursuant to Article 7 shall
continue in full force and effect; and
(c) the Non-Breaching Party shall have the right to Develop,
Manufacture and Commercialize such Profit-Sharing Product
in the Field in the affected Region(s), either alone or in
collaboration with Third Parties, without any financial
obligation to the Breaching Party; provided, however, that
to the extent the licenses in Section 12.3.2(b) include a
sublicense under Necessary Third Party IP, including
without limitation the Existing ALNYLAM In-Licenses, the
Non-Breaching Party shall be fully responsible for all
royalties, milestones or other payments under such
In-Licenses reasonably allocable to such Profit-Sharing
Product in the affected Region(s).
12.3.3 MATERIAL BREACH RELATING TO THE DEVELOPMENT OR COMMERCIALIZATION
OF A MERCK DEVELOPMENT PRODUCT OR [**] PRODUCT. If the material
breach has, or is reasonably likely to have, a material adverse
effect on the Development, Manufacture or Commercialization of a
particular MERCK Development Product in a particular Region or
Regions or with respect to the entire Territory, or a material
adverse effect on the development, manufacture or
commercialization of a particular [**] Product in a particular
Region or Regions or with respect to the entire Territory, then in
either case this Agreement shall not terminate in its entirety,
nor with respect to such MERCK Development Product or [**]
Product, as the case may be, in the Territory outside of any
affected Region(s); provided that with respect to such all
affected Region(s) the licenses granted to the Breaching
Party under this Agreement with respect to such MERCK Development
Product or [**] Product, as the case may be, and, in the case of
the MERCK Development Product, the prohibition in Section
3.2.2(d)(iii) with respect to such MERCK Development Product,
shall terminate.
12.3.4 OTHER MATERIAL BREACHES. If the material breach does not have, or
is not reasonably likely to have, a material adverse effect on the
Development, Manufacture or Commercialization of any RNAi
Therapeutic Product or [**]
83
Product, then the Non-Breaching Party shall be entitled to pursue
any and all remedies available to it for such breach, including
without limitation, damages and specific performance, other than
the termination of this Agreement in whole or in part.
12.3.5 TERMINATION UPON BANKRUPTCY OF A PARTY. If this Agreement is
terminated by either Party (the "NON-BANKRUPT PARTY") pursuant to
Section 12.2.1(b) due to the rejection of this Agreement by or on
behalf of the other Party (the "BANKRUPT PARTY") under Section 365
of the United States Bankruptcy Code (the "CODE"), all licenses
and rights to licenses granted under or pursuant to this Agreement
by the Bankrupt Party to the Non-Bankrupt Party are, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the
Code, licenses of rights to "intellectual property" as defined
under Section 101(35A) of the Code. The Parties agree that the
Non-Bankrupt Party, as a licensee of such rights under this
Agreement, shall retain and may fully exercise all of its rights
and elections under the Code, and that upon commencement of a
bankruptcy proceeding by or against the Bankrupt Party under the
Code, the Non-Bankrupt Party shall be entitled to a complete
duplicate of or complete access to (as the Non-Bankrupt Party
deems appropriate) any such intellectual property and all
embodiments of such intellectual property. Such intellectual
property and all embodiments thereof shall be promptly delivered
to the Non-Bankrupt Party (i) upon any such commencement of a
bankruptcy proceeding upon written request therefore by the
Non-Bankrupt Party, unless the Bankrupt Party elects to continue
to perform all of its obligations under this Agreement, or (ii) if
not delivered under (i) above, upon the rejection of this
Agreement by or on behalf of the Bankrupt Party upon written
request therefore by the Non-Bankrupt Party. The foregoing
provisions are without prejudice to any rights the Non-Bankrupt
Party may have arising under the Code or other applicable law.
12.3.6 DEFINITION OF REGION. For purposes of this Article 12, "REGION"
shall mean any of the following regions in the Territory: (a) the
United States; (b) the European Union, (c) the region comprised of
the following countries: Australia, Bangladesh, Bhutan, Brunei,
Darussalam, Burma, Cambodia, China (including Hong Kong), India,
Indonesia, Japan, Laos, Macao, Malaysia, Mongolia, Nepal, New
Zealand, Papua New Guinea, Pakistan, Philippines, Republic of
Korea, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam; and (d)
the region comprised of the countries of the world not included in
clauses (a), (b) or (c) above.
12.4 OTHER CONSEQUENCES OF TERMINATION OR THE EXERCISE OF OPT-OUT RIGHTS.
12.4.1 OTHER CONSEQUENCES OF TERMINATION. For purposes of this Section
12.4.1, "TRANSFERRING PARTY" shall mean the Breaching Party or the
Opt-Out Party, as the case may be, and "RECEIVING PARTY" shall
mean the Non-Breaching Party or the Continuing Party, as the case
may be. In addition to the consequences set forth in Sections 5.2
and 12.3 and without limiting any other legal or equitable
remedies that a Party may have, in the event of a termination
pursuant to Section
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12.2 with respect to the Region(s) to which such termination
applies, or upon the exercise by a Party of its Opt-Out Rights
pursuant to Section 5.2:
(a) with respect to each Royalty-Bearing Product or
Profit-Sharing Product that is the subject of the material
breach or the exercise of an Opt-Out Right, the
Transferring Party shall:
(i) promptly provide, or cause to be provided, to the
Receiving Party all Know-How it Controls that
pertains to the applicable Royalty-Bearing Product
or Profit-Sharing Product not previously provided by
it to the Receiving Party reasonably necessary for
the practice of the license rights granted to such
other Party under this Agreement;
(ii) promptly transfer, or cause to be transferred, to
the Receiving Party, subject to the completion of
the on-going Clinical Studies under subsection (c)
below, as applicable, all Regulatory Approvals and
related regulatory documents and publicly disclosed
Product Trademarks for the applicable
Royalty-Bearing Product or Profit-Sharing Product in
its possession (only with respect to the terminated
Region(s), in the event of termination pursuant to
Section 12.2), or, if transfer or assignment of any
such Regulatory Approvals is not legally
permissible, the Transferring Party shall grant the
Receiving Party, the right to access, use and
cross-reference such Regulatory Approvals and
related regulatory documents;
(iii) promptly transfer, or cause to be transferred, to
the Receiving Party any and all tangible
manifestations and embodiments of the other Party's
Know-How and other materials provided by it pursuant
to this Agreement in respect of such Royalty-Bearing
Product or Profit-Sharing Product (provided, that in
the event of termination pursuant to Section 12.2,
such transfer shall only be to the extent necessary
to enable the Receiving Party to exercise its rights
with respect to the terminated Region(s);
(iv) promptly assign, or cause to be assigned, to the
Receiving Party upon the Receiving Party's request,
any Third Party agreements to which the Transferring
Party is a party, to the extent such agreements
relate to the Development, Manufacture or
Commercialization of the applicable Royalty-Bearing
Product or Profit-Sharing Product (in the terminated
Region(s), in the event of termination pursuant to
Section 12.2);
(b) The Breaching Party will allow the Non-Breaching Party, or
its contract research organization, to complete any
on-going Clinical Studies already Initiated by the
Breaching Party or its contract research organization (with
respect to the terminated Region(s), in the event of
termination pursuant to Section 12.2), or if this is not
reasonably practicable, the Breaching Party will complete
such Clinical Studies at the Non-Breaching Party's expense.
At the option of the Non-Breaching Party, the Breaching
Party will assign
85
to the Non-Breaching Party, all investigator and other
agreements relating to other clinical trials (with respect
to the terminated Region(s), in the event of termination
pursuant to Section 12.2), to the extent legally
permissible; and
(c) The Transferring Party will cooperate in any reasonable
manner requested by the Receiving Party to achieve a smooth
transition of the development, manufacturing, marketing and
sales of the Royalty-Bearing Product or Profit-Sharing
Product to it or its licensees as contemplated by Section
5.2 or 12.3, as applicable, such as transfer of its
Know-How relating to Manufacturing and assistance in
connection with regulatory matters relating to the transfer
of the Royalty-Bearing Product or Profit-Sharing Product.
12.5 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or termination
of the Agreement shall not relieve the Parties of any obligation accruing
prior to such expiration or termination. Any expiration or termination of
this Agreement shall be without prejudice to the rights of either Party
against the other accrued or accruing under this Agreement prior to
expiration or termination, including, without limitation, the obligation
to pay royalties for RNAi Therapeutic Products and [**] Products sold
prior to such expiration or termination. The provisions of Articles 8,
11, and 13 and Sections 10.5, 12.3, 12.4 and 12.5 shall survive the
expiration or termination of the Agreement. Except as set forth in this
Article 12, upon termination or expiration of this Agreement all other
rights and obligations cease.
13. MISCELLANEOUS
13.1 FORCE MAJEURE. Neither Party shall be held liable to the other Party nor
be deemed to have defaulted under or breached the Agreement for failure
or delay in performing any obligation under this Agreement when such
failure or delay is caused by or results from causes beyond the
reasonable control of the affected Party including, but not limited to,
embargoes, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, fire, floods, or other acts of God, or acts, omissions or
delays in acting by any governmental authority or the other Party. The
affected Party shall notify the other Party of such force majeure
circumstances as soon as reasonably practical, and shall promptly
undertake all reasonable efforts necessary to cure such force majeure
circumstances.
13.2 ASSIGNMENT. Except as provided in this Section 13.2, this Agreement may
not be assigned or otherwise transferred, nor may any right or obligation
hereunder be assigned or transferred, by either Party without the consent
of the other Party. Either Party may, without the other Party's consent,
assign this Agreement and its rights and obligations hereunder in whole
or in part to an Affiliate. In any event, the assigning Party shall
remain responsible for the performance by its Affiliate of this Agreement
or any obligations hereunder so assigned to such Affiliate, and such
assignment shall terminate, and all rights so assigned shall revert to
the assigning Party, if and when such Affiliate
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ceases to be an Affiliate of the assigning Party. Furthermore, in
connection with a Change of Control (as defined below) of a Party,
subject to the provisions of Section 13.3, such Party may assign this
Agreement and its rights and obligations hereunder in whole to the
surviving entity or acquirer upon ninety (90) days' prior written
notification to the other Party. Any attempted assignment not in
accordance with this Section 13.2 shall be void.
Notwithstanding the foregoing, the rights of any permitted assignee of
ALNYLAM's rights to practice any of MERCK's intellectual property,
including but not limited to MERCK RNAi Patent Rights, MERCK RNAi
Technology and MERCK RNAi Novel Target IP, shall remain subject to the
limitations set forth in this Agreement.
13.3 CHANGE OF CONTROL.
13.3.1 In the event of a Change of Control of a Party, such Party (the
"ACQUIRED PARTY") shall provide prompt written notice to the other
Party (the "NON-ACQUIRED PARTY") of the effective date of such
Change of Control ("CHANGE OF CONTROL NOTICE"), the Parties will
promptly discuss and agree in good faith on procedures with
respect to any subject matter of this Agreement that is not
addressed by this Section 13.3, and each Party will ensure the
confidentiality of Information of the Parties. Furthermore, for
each Co-Development Target, the Non-Acquired Party may elect, by
written notice to the Acquired Party within [**] days after
receipt of the Change of Control Notice, to no longer participate
in the Development and Commercialization of any Profit-Sharing
Products directed to such Co-Development Target. If the
Non-Acquired Party makes such an election, then effective on the
date the Non-Acquired Party makes its election:
(a) for each Profit-Sharing Product with respect to which the
end of the Phase II Completion Opt-Out Period has not
occurred as of the effective date of the Change of Control:
(i) if the Acquired Party elects to become the
Continuing Party for such Profit-Sharing Product,
(w) such Profit-Sharing Product will be deemed a
Royalty-Bearing Product, (x) the provisions of
Sections 5.1(c) and 12.4 shall apply to such
Royalty-Bearing Product, with the Non-Acquired Party
deemed to be the Opt-Out Party with respect to such
Royalty-Bearing Product and the "Opt-Out Point" for
such Royalty-Bearing Product deemed to be the date
the Non-Acquired Party makes its election, (y) the
Acquired Party shall pay the Non-Acquired Party
milestones and royalties with respect to such
Royalty-Bearing Product, calculated as set forth in
Sections 9.2.2 and 9.4.3.2 respectively, in each
case as if the Non-Acquiring Party has exercised
Opt-Out Rights in respect of such Royalty-Bearing
Product during the Opt-Out Period in which the
Opt-Out Point occurred, or if the Opt-Out Point does
not occur during an Opt-Out Period, then as if the
exercise of Opt-Out Rights occurred during the
Opt-Out Period next succeeding the Opt-Out Point,
and (z) the Continuing Party
87
shall be free to Develop, Manufacture and
Commercialize such Royalty-Bearing Product in the
Field in the Territory, with or without a partner or
collaborator and without any further obligation to
the Non-Acquired Party with respect to such
activities under this Agreement, subject to the
continuing obligations of the Parties with respect
to Royalty-Bearing Products set forth in Articles 6
and 9; and
(ii) if the Acquired Party does not elect to become the
Continuing Party for such Profit-Sharing Product,
the definition of RNAi Therapeutic Product shall
thereafter be narrowed to exclude such product and
the financial, license and other terms of this
Agreement shall no longer apply to such product or
the Development, Manufacture and Commercialization
of such product.
(b) for each Profit-Sharing Product with respect to which a
Phase III Clinical Trial has been Initiated, but with
respect to which an NDA has not been filed as of the
effective date of the Change of Control:
(i) in the Territory outside of the United States, MERCK
shall retain the right to Develop, Manufacture and
Commercialize such Profit-Sharing Product and the
obligation to pay royalties with respect thereto to
ALNYLAM pursuant to Section 9.4.2; and
(ii) in the United States, such Profit-Sharing Product
shall be deemed a Royalty-Bearing Product, the
provisions of Sections 5.1(c) and 12.4 will apply to
such Royalty-Bearing Product, with the Non-Acquired
Party deemed to be the Opt-Out Party with respect to
such Royalty-Bearing Product and the "Opt-Out Point"
for such Royalty-Bearing Product deemed to be the
date the Non-Acquired Party makes its election;
provided, however, that the Acquired Party shall pay
the Non-Acquired Party (x) within [**] days after
making such election, $[**] for such Royalty-Bearing
Product; (y) a non-refundable, non-creditable
milestone payment in the amount of $[**] no later
than [**] business days after the date of the first
NDA Filing with respect to such Royalty-Bearing
Product; and (z) royalties on Net Sales of such
Royalty-Bearing Product calculated as set forth in
Section 9.4.3.1, with the following values:
(1) The Sublicense Revenue Fraction shall be [**]
percent ([**]%);
(2) Royalty Rate One shall be [**] percent
([**]%);
(3) Royalty Rate Two shall be [**] percent
([**]%);
(4) Royalty Rate Three shall be [**] percent
([**]%); and
(5) Royalty Rate Four shall be [**] percent
([**]%).
88
(c) for each Profit-Sharing Product with respect to which an
NDA has been filed:
(i) in the Territory outside of the United States, MERCK
shall retain the right to Develop, Manufacture and
Commercialize such Profit-Sharing Product and the
obligation to pay royalties with respect thereto to
ALNYLAM pursuant to Section 9.4.2;
(ii) in the United States, the Non-Acquired Party may
elect, by written notice to the Acquired Party
within [**] days after receipt of the Change of
Control Notice, to change the Commercialization
arrangements for such Profit-Sharing Product such
that MERCK shall have the sole right to
Commercialize the Profit-Sharing Product in the
United States (unless MERCK has exercised its
Expense Share Reduction Option with respect to such
Profit-Sharing Product, in which case the
Non-Acquired Party may elect to change such
Commercialization arrangements such that ALNYLAM
shall have the sole right to Develop and
Commercialize the Profit-Sharing Product in the
United States). If the Non-Acquired Party does not
so elect within such period, the Commercialization
arrangements between the Parties in existence in the
United States for such Profit-Sharing Product on the
effective date of the Change of Control shall
continue; and
(iii) if the Non-Acquired Party elects to change the
Commercialization arrangements between the Parties
within the United States for such Profit-Sharing
Product as set forth in clause (ii) above, such
change will be implemented during a transition
period not to exceed [**] days after the date of
such election and the Parties will cooperate to
ensure the orderly implementation of such
transition. Furthermore, the Party receiving sole
Commercialization rights (the "SOLE
COMMERCIALIZATION PARTY") shall pay to the other
Party (the "DIVESTING PARTY") in respect of such
Profit-Sharing Product, a percentage share of U.S.
Operating Profit/Loss for such Profit-Sharing
Product as calculated pursuant to Section 9.3, equal
to the Divesting Party's percentage share of U.S.
Development Expenses on the effective date of the
Change of Control. Such share of U.S. Operating
Profit/Loss shall be reported and paid on a
quarterly basis. Each quarterly report of U.S.
Operating Profit/Loss provided to the Divesting
Party shall include information about Net Sales of
the Profit-Sharing Product comparable to the
information specified for royalty reports in Section
9.4.11, and shall also include information in
summary form concerning the Commercialization
Expenses deducted from Net Sales of such
Profit-Sharing Product to calculate U.S. Operating
Profit/Loss during the applicable Calendar Quarter.
Quarterly reports shall be due no later than the
[**] day following the close of each Calendar
Quarter. If the
89
Divesting Party believes in good faith that the
Commercialization Expenses in any Calendar Quarter
expressed as a percentage of Net Sales exceed the
reasonable and customary amount of Commercialization
Expenses for products comparable to the
Profit-Sharing Product, the Parties shall discuss
the Divesting Party's concerns and the Sole
Commercialization Party shall consider the Divesting
Party's concerns in good faith.
13.3.2 Upon MERCK's receipt of a Change of Control Notice, with regard to
both: (a) all MERCK Development Targets and MERCK Development
Products directed thereto and (b) if MERCK does not elect to cease
participation in the Development and Commercialization of
Profit-Sharing Products directed to particular Co-Development
Targets, then with respect to such Co-Development Targets and the
Profit-Sharing Products directed thereto, MERCK may elect to
modify the terms of this Agreement such that: (i) the Parties
shall promptly discuss and agree in good faith on procedures with
respect to the operation of the JSC and the JCC, (ii) MERCK's
obligation to provide reports on the status of Programs shall be
limited to a summary report, (iii) the Gatekeeper shall be
replaced by an individual specified by MERCK and reasonably
acceptable to ALNYLAM, (iv) MERCK may terminate the U.S.
Co-Promotion Option at its sole discretion, and (v) MERCK's
obligation to provide royalty reports shall be limited to
reporting MERCK's total worldwide royalty obligations.
13.3.3 For purposes of this Section 13.3, a "CHANGE OF CONTROL" of a
Party shall be deemed to occur if such Party is involved in a
merger, reorganization or consolidation in which its shareholders
immediately prior to such transaction would hold fifty percent
(50%) or less of the securities or other ownership or voting
interests representing the equity of the surviving entity
immediately after such merger, reorganization or consolidation, or
if there is a sale of all or substantially all of such Party's
assets or business relating to this Agreement, or if a
"Significant Pharmaceutical Company" (as defined below)
effectively acquires control of the management and policies of
such Party. A "SIGNIFICANT PHARMACEUTICAL COMPANY" is a
pharmaceutical company, biotechnology company, or group of such
companies acting in concert, with annual sales of human
pharmaceutical products greater than [**] U.S. dollars ($[**]).
13.4 SEVERABILITY. If any one or more of the provisions contained in this
Agreement is held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby,
unless the absence of the invalidated provision(s) adversely affects the
substantive rights of the Parties. The Parties shall in such an instance
use their best efforts to replace the invalid, illegal or unenforceable
provision(s) with valid, legal and enforceable provision(s) which,
insofar as practical, implement the purposes of this Agreement.
13.5 NOTICES. All notices which are required or permitted hereunder shall be
in writing and sufficient if delivered personally, sent by facsimile (and
promptly confirmed by personal
90
delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
If to ALNYLAM, to: ALNYLAM PHARMACEUTICALS, INC.
000 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile No.: (000) 000-0000
and: FABER DAEUFER & XXXXXXXXX, P.C.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
and after June 1, 2006, to:
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Sumy X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to MERCK, to: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Office of Secretary
Facsimile No.: (000) 000-0000
and: MERCK & CO., INC.
Xxx Xxxxx Xxxxx
X.X. Xxx 000, XX0X-00
Xxxxxxxxxx Xxxxxxx, XX 00000-0000
Attention: Chief Licensing Officer
Facsimile: (000) 000-0000
or to such other address as the Party to whom notice is to be given may
have furnished to the other Party in writing in accordance herewith. Any
such notice shall be deemed to have been given: (a) when delivered if
personally delivered or sent by facsimile on a business day; (b) on
receipt if sent by nationally-recognized overnight courier; and/or (c) on
receipt if sent by mail.
13.6 APPLICABLE LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the patent laws of
the United States without reference to any rules of conflict of laws or
renvoi.
13.7 DISPUTE RESOLUTION.
13.7.1 DISPUTES. The Parties shall negotiate in good faith and use
reasonable efforts to settle any dispute, controversy or claim
arising from, or related to, this Agreement
91
or to the breach hereof (collectively, "DISPUTE"). In particular,
the CEO of ALNYLAM and the Executive Vice-President of Worldwide
Basic Research for MERCK shall attempt to resolve all Disputes. In
the event that the CEO and the Executive Vice-President cannot
reach an agreement regarding a Dispute, and a Party wishes to
pursue the matter, each such Dispute that is not an "Excluded
Claim" shall be finally resolved by binding arbitration in
accordance with the Commercial Arbitration Rules and Supplementary
Procedures for Large Complex Disputes of the American Arbitration
Association ("AAA") and Section 13.7.2 below, and judgment on the
arbitration award may be entered in any court having jurisdiction
thereof. As used in this Section 13.7, the term "EXCLUDED CLAIM"
shall mean a dispute that concerns (a) the validity or
infringement of a patent, trademark or copyright, or (b) any
antitrust, anti-monopoly or competition law or regulation, whether
or not statutory.
13.7.2 ARBITRATION. The arbitration shall be conducted by a panel of
three (3) persons experienced in the pharmaceutical business who
are independent of both Parties and neutral with respect to the
Dispute presented for arbitration. Within thirty (30) days after
initiation of arbitration, each Party shall select one person to
act as arbitrator and the two Party-selected arbitrators shall
select a third arbitrator within thirty (30) days of their
appointment. If the arbitrators selected by the Parties are unable
or fail to agree upon the third arbitrator, the third arbitrator
shall be appointed by the AAA. The place of arbitration shall be
New York, New York, and all proceedings and communications shall
be in English.
(a) Either Party may apply to the arbitrators for interim
injunctive relief until the arbitration award is rendered
or the controversy is otherwise resolved. Either Party also
may, without waiving any remedy under this Agreement, seek
from any court having jurisdiction any injunctive or
provisional relief necessary to protect the rights or
property of that Party pending the arbitration award. The
arbitrators shall have no authority to award punitive or
any other type of damages not measured by a Party's
compensatory damages. Each Party shall bear its own costs
and expenses and attorneys' fees, and the Party that does
not prevail in the arbitration proceeding shall pay the
arbitrators' and any administrative fees of arbitration.
(b) Except to the extent necessary to confirm an award or as
may be required by law, neither a Party nor an arbitrator
may disclose the existence, content, or results of an
arbitration without the prior written consent of both
Parties. In no event shall an arbitration be initiated
after the date when commencement of a legal or equitable
proceeding based on the dispute, controversy or claim would
be barred by the applicable New York statute of
limitations.
(c) The Parties agree that, in the event of a Dispute over the
nature or quality of performance under this Agreement,
neither Party may terminate the Agreement until final
resolution of the Dispute through arbitration or other
92
judicial determination. The Parties further agree that any
payments made pursuant to this Agreement pending resolution
of the Dispute shall be refunded if an arbitrator or court
determines that such payments are not due.
(d) The Parties hereby agree that any disputed performance or
suspended performances pending the resolution of the
arbitration that the arbitrator determines to be required
to be performed by a Party must be completed within a
reasonable time period following the final decision of the
arbitrator.
(e) The Parties hereby agree that any monetary payment to be
made by a Party pursuant to a decision of the arbitrator
shall be made in United States dollars, free of any tax or
other deduction. The Parties further agree that the
decision of the arbitrator shall be the sole, exclusive and
binding remedy between them regarding determination of the
matters presented to the arbitrator.
13.8 ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
understanding of the Parties with respect to the Collaboration and
licenses granted hereunder. All express or implied agreements and
understandings, either oral or written, with regard to the Collaboration
and the licenses granted hereunder are superseded by the terms of this
Agreement. On the Effective Date, the Original Agreement shall be amended
and restated in its entirety by this Agreement and the Original Agreement
shall thereafter be of no further force and effect. The Agreement
(including Schedules hereto) may be amended, or any term hereof modified,
only by a written instrument duly-executed by authorized representatives
of both Parties hereto.
13.9 HEADINGS. The captions to the Articles and Sections hereof are not a part
of the Agreement, but are merely for convenience to assist in locating
and reading the several Articles and Sections hereof.
13.10 INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and MERCK
shall be independent contractors and that the relationship between
ALNYLAM and MERCK shall not constitute a partnership, joint venture or
agency. ALNYLAM shall not have the authority to make any statements,
representations or commitments of any kind, or to take any action, which
shall be binding on MERCK, without the prior written consent of MERCK,
and MERCK shall not have the authority to make any statements,
representations or commitments of any kind, or to take any action, which
shall be binding on ALNYLAM without the prior written consent of such
Party.
13.11 WAIVER. The waiver by either Party hereto of any right hereunder, or of
the failure of the other Party to perform, or of a breach by the other
Party, shall not be deemed a waiver of any other right hereunder or of
any other breach or failure by such other Party whether of a similar
nature or otherwise.
93
13.12 CUMULATIVE REMEDIES. No remedy referred to in this Agreement is intended
to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to in this Agreement or otherwise available under
law.
13.13 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to
consult with counsel in connection with the review, drafting and
negotiation of this Agreement. Accordingly, the rule of construction that
any ambiguity in this Agreement shall be construed against the drafting
Party shall not apply.
13.14 COUNTERPARTS. The 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.
13.15 LIMITATION OF LIABILITY. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF THIS
AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS
ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF
ANY NOTICE OF SUCH DAMAGES, EXCEPT AS A RESULT OF A PARTY'S WILLFUL
MISCONDUCT OR A MATERIAL BREACH OF THE CONFIDENTIALITY AND NON-USE
OBLIGATIONS IN ARTICLE 8. NOTHING IN THIS SECTION 13.15 IS INTENDED TO
LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER
PARTY.
13.16 BINDING EFFECT. As of the Effective Date, this Agreement shall be binding
upon and inure to the benefit of the Parties and their respective
permitted successors and permitted assigns.
13.17 NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated herein, no
Third Party, including any employee of any Party to this Agreement, shall
have or acquire any rights by reason of this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
94
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
MERCK & CO., INC. ALNYLAM PHARMACEUTICALS, INC.
By: /s/ Xxxxxxx X. Friend By: /s/ Xxxx X. Xxxxxxxxxx
----------------------------------- --------------------------------
Name: Xxxxxxx X. Friend Name: Xxxx X. Xxxxxxxxxx
Title: Executive Vice President Title: President & Chief Executive
Advanced Technology & Oncology Officer
95
SCHEDULE 1.4
ALNYLAM RNAI PATENT RIGHTS
A. ALNYLAM THERAPEUTIC RNAI PATENT RIGHTS
1.4.1 PATENTS AND PATENT APPLICATIONS OWNED BY ALNYLAM OR LICENSED FROM THIRD
PARTIES OTHER THAN ISIS PHARMACEUTICALS, INC.
ALNYLAM RNAi Patent Rights include all claims of the patents and patent
applications listed in Schedule 1.4.1, attached, explicitly excluding [**]. The
patents and patent applications listed in Schedule 1.4.1 are either owned by
Alnylam or licensed from Third Parties other than Isis Pharmaceuticals, Inc.
("Isis").
1.4.2 PATENTS AND PATENT APPLICATIONS LICENSED FROM ISIS
ALNYLAM RNAi Patent Rights also include rights to a broad portfolio of patents
and patent applications ("the Isis Patents") licensed to Alnylam by Isis
pursuant to the Strategic Collaboration & License Agreement between Isis and
Alnylam dated March 11, 2004 ("the Isis Patents"). The Isis Patents are
described in Schedules 1-27 and 1-28 of the Isis Agreement, which are appended
to, and incorporated by reference into, this Schedule 1.4. Schedule 1.4.2(a)
lists those Isis Patents classified in the Isis Agreement as "Isis Current Motif
and Mechanism Patents" and listed in Schedule 1-28 of the Isis Agreement.
Schedule 1.4.2(b) lists those Isis Patents classified in the Isis Agreement as
"Isis Current Chemistry Patents" and listed in Schedule 1-27 of the Isis
Agreement.
B. ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAI PATENT RIGHTS
ALNYLAM Target Identification and Target Validation RNAi Patent Rights comprise
those Patent Rights listed under ALNYLAM Therapeutic RNAi Patent Rights
excluding the claims of the patents and patent applications listed in Schedule
1.4.1 whose case numbers have the following prefixes: [**].
96
SCHEDULE 1.4.1:
ALNYLAM RNAI PATENT RIGHTS
Case No. Title Country Type Application No. Filing Date Publication No. Publication Date Patent No. Issue Date
-------- ----- ------- ---- --------------- ----------- --------------- ---------------- ---------- ----------
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
97
SCHEDULE 1.4.2(a), ISIS CURRENT MOTIF AND MECHANISM PATENTS:
SCHEDULE 1-28 FROM ISIS AGREEMENT
SCHEDULE 1-28 ISIS CURRENT MOTIF AND MECHANISM PATENTS
ISIS DOCKET PATENT GRANT 3RD
NUMBER COUNTRY STATUS NUMBER DATE TITLE 3RD PARTY PARTY
----------- ------- ------ ------ ----- ----- --------- -----
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Schedule 1.4.2(a), Page 1
98
SCHEDULE 1.4.2(b), ISIS CURRENT CHEMISTRY PATENTS:
SCHEDULE 1-27 FROM ISIS AGREEMENT
SCHEDULE 1-27 ISIS CURRENT CHEMISTRY PATENTS
ISIS DOCKET PATENT GRANT 3RD
NUMBER COUNTRY STATUS NUMBER DATE TITLE 3RD PARTY PARTY
----------- ------- ------ ------ ----- ----- --------- -----
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.
Schedule 1.4.2(b), Page 1
99
SCHEDULE 1.33
EXISTING ALNYLAM IN-LICENSES
Existing ALNYLAM In-Licenses shall include the following Third Party agreements:
[**]
100
SCHEDULE 1.55
MERCK BROAD RNAI PATENT RIGHTS
TITLE FILING DATE INT. PUB. NO. SERIAL NO.
----- ----------- ------------- ----------
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**] [**]
[**] [**] [**]
[**] [**] [**]
101
SCHEDULE 1.59
MERCK PRODUCT-SPECIFIC RNAI PATENT RIGHTS
[**]
102
SCHEDULE 1.83
PRE-EXISTING ALNYLAM ALLIANCE AGREEMENTS
Research Collaboration and License Agreement between Novartis Institutes for
BioMedical Research, Inc. ("NOVARTIS") and Alnylam Pharmaceuticals, Inc. dated
October 12, 2005, together with the Addendum Re: Influenza Program to Research
Collaboration and License Agreement effective as of February 17, 2006 (as
further amended from time to time, the "NOVARTIS AGREEMENT").
Strategic Collaboration & License Agreement between Isis Pharmaceuticals, Inc.,
and Alnylam Pharmaceuticals, Inc., dated March 11, 2004, together with Letter
Agreements dated March 9, 2004 and March 11, 2004, respectively, and as amended
on June 14, 2005.
License and Option Agreement between GeneCare Research Institute Co., Ltd and
Alnylam Pharmaceuticals, Inc., dated January 6, 2005, together with a
Side-Letter Agreement dated January 6, 2005.
Collaboration Agreement by and between Alnylam Pharmaceuticals, Inc. and
Medtronic, Inc., dated February 08, 2005.
License Agreement between Benitec Australia, Ltd. and Alnylam Pharmaceuticals,
Inc., dated April 8, 2005.
License and Option Agreement between Nastech Pharmaceutical Company, Inc., and
Alnylam Pharmaceuticals, Inc., dated July 20, 2005.
103
SCHEDULE 1.84
PRE-EXISTING MERCK ALLIANCE AGREEMENTS
[**]
104
SCHEDULE 2.2.2
[**] OPT-IN INFORMATION
1. Product description
[**]
105
SCHEDULE 3.2.2
MERCK RNAI NOVEL TARGET INFORMATION
[**]
106
SCHEDULE 3.10.1
U.S. CO-PROMOTION AGREEMENT TERMS
Commercialization:
- ALNYLAM shall co-promote the Profit-Sharing Product in the United
States by providing a minimum number of medical sales
representatives, such minimum number to be determined by the Parties
based upon the Commercialization Plan and consistent with the
physician audience to which such Profit-Sharing Product will be
marketed. The costs of ALNYLAM's co-promotion efforts (consistent
with the Commercialization Plan) shall be included in
Commercialization Expenses for purposes of calculating U.S.
Operating Profit/Loss.
- ALNYLAM shall commit the required number of medical sales
representatives to support such Profit-Sharing Product in the United
States as set forth in the definitive Co-Promotion Agreement
relating to such Profit-Sharing Product that is executed by the
Parties pursuant to Section 3.10.1 of this Agreement. In the event
that [**] the [**] of [**] at the [**] of such [**] in the United
States, the Parties, [**] Co-Promotion Agreement, shall [**] in the
United States. [**] will [**] is [**]. Commencing [**] after such
launch, [**] shall [**] of [**] the Parties.
- ALNYLAM's U.S. Co-Promotion activity shall be fully integrated into
MERCK's U.S. promotion effort for such Profit-Sharing Product.
- The Co-Promotion Agreement will also contain, without limitation,
provisions with respect to the following matters: sales and
marketing responsibilities of the Parties; content, production and
approval of marketing materials and marketing activities; sales
training; compliance; regulatory interactions; and recalls.
107
SCHEDULE 10
EXCEPTIONS
Section 10.1(d):
All licenses and other rights granted to MERCK under this Agreement are subject
to the rights granted to ALNYLAM under the ALNYLAM In-Licenses, and are also
subject to and limited to the extent of, the rights ALNYLAM has granted and is
required to grant to Third Parties pursuant to Pre-Existing Alliance Agreements.
All licenses and other rights granted to ALNYLAM under this Agreement are
subject to the rights granted to MERCK under the MERCK In-Licenses, and are also
subject to and limited to the extent of, the rights MERCK has granted and is
required to grant to Third Parties pursuant to Pre-Existing MERCK Alliance
Agreements.
Section 10.2(c):
There are currently multi-party oppositions against the following European
patents included in ALNYLAM RNAi Patent Rights:
(i) Alnylam Europe AG European patent number 1144623. Amended claims for
this patent were upheld in the oral phase of the opposition
proceedings on June 21 and 22, 2006.
(ii) Alnylam Europe AG European patent number 1214945.
(iii) CRT European patent number 1230375.
A single party has also opposed Alnylam Europe AG Australian patent number
778474.
108
