AMENDED AND RESTATED COLLABORATION AGREEMENT GENENTECH, INC. AND IDEC PHARMACEUTICALS CORPORATION
EXHIBIT 10.2
AMENDED
AND RESTATED
GENENTECH,
INC. AND
IDEC
PHARMACEUTICALS CORPORATION
1
THIS
AMENDED AND RESTATED COLLABORATION AGREEMENT
(this
“Agreement) is made effective as of the 19th day of June, 2003 (the "Restated
Effective Date") by and between IDEC Pharmaceuticals Corporation, a Delaware
corporation having its principal place of business at 0000 Xxxxxx Xxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000 ("IDEC") and GENENTECH,
INC., a
Delaware
corporation having its principal place of business at 0 XXX Xxx, Xxxxx Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000 ("Genentech"), each on behalf of itself and its
Affiliates. IDEC and Genentech are sometimes referred to herein individually
as
a "Party" and collectively as the "Parties," and references to "IDEC" and
"Genentech" shall include their respective Affiliates.
RECITALS
1. Genentech
and IDEC entered into that certain Collaboration Agreement dated as of March
16,
1995 related to the development and commercialization of Licensed Products,
including without limitation C2B8 (the “Original Agreement”).
2. In
the
Original Agreement, IDEC granted to Genentech, and Genentech obtained, rights
to
co-promote Licensed Products in the United States and Canada and to develop
and
market Licensed Products in the rest of the world (excluding certain Asian
countries, which were added to the Original Agreement by amendment at a later
date).
3. Simultaneously
with the execution of the Original Agreement, IDEC and Genentech entered into
a
Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") of even
date
therewith, pursuant to which Genentech purchased $5 million of Preferred Stock
of IDEC in accordance with the terms and conditions thereof.
4. Simultaneously
with the execution of the Original Agreement, IDEC and Genentech entered into
the Expression Technology License of even date therewith granting Genentech
rights to certain enabling technology (the "Expression Technology
License").
5. Following
the execution of the Original Agreement, the Parties entered into a first
amendment to the Collaboration Agreement of November 30, 1995 (the “First
Amendment”) expanding Genentech’s rights to develop and market Licensed Products
in the world to include certain Asian countries.
6. Following
the execution of the Original Agreement, the parties entered into an amendment
of June 15, 1998 (the "Second Amendment") approving the assignment of certain
rights of Genentech in Canada with respect to C2B8 to X.
Xxxxxxxx
Xx Xxxxx Ltd.
7. The
Parties
desire to amend and restate the Original Agreement to include certain additional
products (“New Products”, as defined below) whose mechanism of action is
initiated by interaction with the CD20 B-cell determinant, including without
limitation the humanized molecule created by Genentech known as G2H7, in each
case on the terms and subject to the conditions set forth in this
Agreement.
2
8. In
an effort
to be efficient in the drafting of this Agreement, the Parties have elected
to
preserve substantial portions of the historical content of the Original
Agreement, the First Amendment and the Second Amendment in this Agreement (with
the expressed understanding that such content is not given any renewed or
additional meaning by its inclusion herein).
9. The
Parties
desire to coordinate the commercial efforts related to Licensed Products with
the development efforts related to New Products, and subsequently to synchronize
the commercial efforts and financial treatment of all Licensed Products and
New
Products marketed by the Parties in the Co-Promotion Territory.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the Parties agree as follows:
ARTICLE
1.
DEFINITIONS
Capitalized
terms not otherwise defined herein have the meaning given them in the Schedule
of Master Definitions attached hereto as Appendix 1.
ARTICLE
2.
SCOPE
OF COLLABORATION; DEVELOPMENT COSTS
2.1 Initial
Licensed Product.
The
Parties will focus their initial efforts on the development of C2B8 in the
Field.
2.2 Y2B8
and In2B8 Option and Phase II Trial.
If IDEC
decides, or the Parties mutually agree, to commence a Phase II Clinical Trial
of
IDEC's [*]
("Y2B8")
and IDEC's [*]
("In2B8")
(the "Y2B8 Phase II Trial"), IDEC shall give notice, including the number of
evaluable patients, of such proposed Y2B8 Phase II Trial (the "Y2B8 Phase II
Notice") to Genentech. If Genentech notifies IDEC within sixty (60) days of
receipt of the Y2B8 Phase II Notice that it intends to participate with IDEC
in
the Y2B8 Phase II Trial, then Genentech shall bear [*]of
the costs
of the Y2B8 Phase II Trial up to a maximum Genentech contribution of
[*].
Once
Genentech has reached its maximum contribution, [*]
for the
Y2B8 Phase II Trial in excess of this amount shall be borne 100% by IDEC. If
IDEC does not receive timely notice from Genentech of its intention to
participate in the Y2B8 Phase II Trial, then IDEC may proceed with the Y2B8
Phase II Trial provided that IDEC shall bear the cost of the Y2B8 Phase II
Trial. Upon completion of the Y2B8 Phase II Trial and delivery to Genentech
of a
final report with respect thereto, Genentech shall have 120 days to exercise
an
option to include Y2B8 and In2B8 as Licensed Products (the "Y2B8 Option").
The
Y2B8 Option shall be exercisable by written notice to IDEC ("Notice of
Y2B8/In2B8 Exercise") together with payment in the amount of [*]
(the
"Option
Fee"). Notwithstanding the foregoing, if Genentech shall have elected to
participate with IDEC in the Y2B8 Phase II Trial and contribute up to
[*]
toward
the
costs of such Y2B8 Phase II Trial, then the Option Fee shall be reduced to
[*].
Within
60
days of the Notice of Y2B8/1n2B Exercise, the Parties shall agree upon the
terms
and conditions governing the development and commercialization of products
derived
3
from
Y2B8
and In2B8, taking into account the commercial value of Y2B8 and In2B relative
to
C2B8. In any event, no later than publication of the Pivotal Phase III Clinical
Trial results of C2B8, the Parties shall discuss in good faith the initiation
of
the Y2B8 Phase II Trial.
2.3 Development
Costs for C2B8.
(a) Except
as
set forth below, or unless otherwise agreed to in writing by Genentech, IDEC
shall bear all costs for development and obtaining Regulatory Approval of C2B8
in the Field in the Co-Promotion Territory through the date of Regulatory
Approval of C2B8 in the United States, including but not limited to certain
manufacturing process improvements for the current production process and using
the existing cell line. Genentech agrees, however, that it shall bear the costs
of the following development activities incurred in connection with C2B8 through
the date of the first Regulatory Approval in
the
United
States:
(i) accelerated
product stability studies conducted by Genentech as set forth in Appendix I
of
the Development Plan and, if a replacement formulation is deemed necessary
by
the JDC, reasonable assistance for development of such formulation and attendant
studies;
(ii) assistance
with assays as set forth in Appendix I to the Development Plan;
(iii) assistance
provided by [*]
or
equivalents from Genentech, deployed at the direction of the persons designated
by the JDC to supervise the Pivotal Phase III Clinical Trial; and
(iv) the
process
development and manufacturing approvals of a reamplified cell-line or the
current cell-line if a reamplified cell-line scale-up is not feasible as
specified in Section 8.1.
(b) Subject
to
Section 2.7 and Section A.11 of Exhibit A, all Development Costs for Licensed
Products incurred by the Parties for development or marketing in the
Co-Promotion Territory after the first Regulatory Approval for C2B8 in the
United States shall be charged against Operating Profits (or
Losses).
(c) Subject
to
Section A.11 of Exhibit A, Genentech shall bear all Development Costs for
Licensed Products for development or marketing in the Field in the Licensed
Territory, unless otherwise agreed in writing by the Parties.
2.4 Initial
New Product.
From and
after the date of the payment in Section 7.1(b)(i), G2H7 shall be deemed a
New
Product, the development and commercialization of which shall be governed by
this Agreement. Following the Restated Effective Date, the Parties shall focus
their initial efforts with regard to New Products on the development of G2H7
in
the Field in the Co-Promotion Territory.
2.5 IDEC’s
Rights Regarding New Products Other Than G2H7.
(a) Opt-in
Notice for New Products Other Than G2H7.
For so
long as the Parties are entitled to receive a share of Operating Profits or
Losses on any Franchise Product hereunder, Genentech agrees to keep IDEC
informed as to the existence of research and/or development
4
activities
regarding Potential New Products other than G2H7. With respect to [*]
Potential
New Products and Genentech Potential New Products, within thirty (30) days
of
the date that Genentech’s portfolio planning committee (or successor committee
or process thereto, “PPC”) makes a formal decision, as recorded in the minutes
of the relevant PPC meeting, to commence clinical development of such a
Potential New Product (or a similar development decision is made as part of
any
successor process), Genentech shall provide IDEC with the same development
assessment package that was provided to the PPC as the basis of its development
decision (or otherwise reviewed in connection with such decision), including
an
identification as to whether such product is a [*]
Potential
New Product [*]
Potential
New Product. Without limiting the foregoing, such development assessment package
shall include a summary of the preclinical data and the proposed Development
Plan including proposed clinical study designs, manufacturing cost estimates,
timelines, program cost, target product profile(s), and market forecast. With
respect to [*]
Potential
New Products, [*]
Genentech
will provide to IDEC a summary of Genentech’s rights (and IDEC’s potential
rights) to develop and commercialize such [*]
Potential
New Product, as well as relevant information about the product, including
preclinical and clinical data and reports
[*].
(b) Exercise
of Opt-In by IDEC. IDEC
shall
have sixty (60) days from the date of Genentech's notice to IDEC of the
availability of a Potential New Product to provide written notice to Genentech
that it elects to participate in the development and commercialization of such
Potential New Product. In
order for
IDEC to preserve any rights under Section 2.5(c) with respect to Genentech
Potential New Products, notice of an election to not
opt-in with
respect to such product under this Section 2.5(b) must be provided to Genentech
within such sixty (60) day period.
(i) Genentech
Potential New Products. Within
ten
(10) days following an election to participate in a Genentech Potential New
Product, IDEC shall pay Genentech the opt-in fee set forth in Section 7.1(b)(ii)
or (iii), as the case may be. From and after the date of the payment of such
fee, such Genentech Potential New Product shall be deemed a New Product under
this Agreement, and IDEC shall have the right to participate with Genentech
with
respect to such product [*]
New
Product.
(ii) [*]
Potential New Products. For
a period
of thirty (30) days following an election by IDEC to participate in an
[*]
Potential
New Product, Genentech and IDEC shall use good faith efforts to agree upon
the
amount of the opt-in fee IDEC shall pay in order to obtain the right to include
such [*]
Potential
New Product as a New Product hereunder; such amount to be in any event
[*]
cost of
such product attributable to rights in the United States. In determining such
cost, the Parties shall take into consideration [*]
in
developing such product to such stage, including without limitation any
[*].
If the
Parties are unable to agree upon the amount of the opt-in fee for such
[*]
Potential
New Product, either Party may, by written notice to the other, have such matter
referred to an independent investment banker, mutually agreeable to both
Parties, to determine the amount of such opt-in fee; such determination to
be
binding upon both Parties. Within ten (10) days following the Parties agreement
upon, or the independent investment banker’s determination of, such opt-in fee,
IDEC shall pay Genentech such amount. From and after the date of the payment
of
such fee, such Potential New Product shall be deemed a New Product under this
Agreement, and:
5
(1)
IDEC
shall have the right to participate with Genentech with respect to such product
in the United States [*];
or
(2)
to the
extent that Genentech was able at the time of Genentech’s [*]
in
the
development and commercialization activities with [*]
participate
in the development and commercialization [*].
Notwithstanding
anything to the contrary in this Agreement, it is understood and agreed that,
with respect to [*]
Potential
New Products for which IDEC has timely opted-in and paid the opt-in fee
hereunder, Genentech is under no obligation under this Agreement to offer or
grant to IDEC any rights to such [*]
Potential
New Products outside the United States, or make any payments to IDEC with
respect to Genentech’s development and commercialization of such [*]
Potential
New Products outside the United States.
Failure
by
IDEC under this Section 2.5(b) to provide a timely election notice or to timely
pay the opt-in fee, or rejection by IDEC of a independent investment banker’s
determination of the amount of the opt-in fee (when provided in the manner
set
forth above with respect to [*]
Potential
New Products), will be deemed to be an election not to participate in such
Potential New Product (and following any such failure or rejection, Genentech
shall (except as provided in Section 2.5(c) with respect to Genentech Potential
New Products) have no further obligation to offer such Potential New Product
to
IDEC and IDEC shall have no further rights under this Agreement with respect
to
such Potential New Product).
(c) [*].
With
respect
to each Genentech Potential New Product for which IDEC was provided the
opportunity to opt-in pursuant to Section 2.5(a) before the same shall have
[*]
and for
which IDEC pursuant to Section 2.5(b) timely elected to not opt-in (but not
including a failure to elect to opt-in), promptly following [*]
for such
Genentech Potential New Product, Genentech shall provide IDEC with [*]
data
package
for such Genentech Potential New Product that summarizes the clinical data
and
the proposed Development Plan going forward, including proposed clinical study
designs, timelines and program costs.
IDEC shall
have sixty (60) days from the date of Genentech's notice to IDEC of such
development assessment package to provide written notice to Genentech that
it
elects to participate in the development and commercialization of such Genentech
Potential New Product. Within ten (10) days following an election to participate
in such Genentech Potential New Product, IDEC shall pay Genentech the opt-in
fee
set forth in Section 7.1(b)(iv). From and after the date of the payment of
such
fee, such Genentech Potential New Product shall be deemed a New Product under
this Agreement, and the Parties shall [*]
New Product
as provided herein. Failure by IDEC under this Section 2.5(c) to provide a
timely election notice or to timely pay the opt-in fee will be deemed to be
an
election not to participate in such Genentech Potential New Product, and
following any such failure, Genentech shall have no further obligation to offer
such Genentech Potential New Product to IDEC and IDEC shall have no further
rights under this Agreement with respect to such Genentech Potential New
Product.
2.6 IDEC
Right of Negotiation for Third Party Anti-CD20 Products.
(a) Right
of Negotiation. If
Genentech
decides to seek a license to develop and/or commercialize a Third Party
Anti-CD20 Product, Genentech shall promptly notify IDEC of such
6
decision
in
writing (such occurrence to “seek a license” shall be deemed to have occurred no
later than the date that [*].
IDEC shall
have thirty (30) days to elect in writing to participate in negotiations, and
a
failure to timely so elect shall be deemed a decision not to participate in
such
negotiations (and following any such failure, Genentech shall have no further
obligation to offer such Third Party Anti-CD20 Product to IDEC and IDEC shall
have no further rights under this Agreement with respect to such Third Party
Anti-CD20 Product). In the event that IDEC timely notifies Genentech of its
desire to participate in such negotiations, then for a period of ninety (90)
days, Genentech and IDEC shall use good faith efforts to agree upon terms with
the Third Party for a license to such Third Party Anti-CD20 Product that
includes the participation of IDEC and Genentech, vis-à-vis each other, in the
United States [*]
provided,
at Genentech’s reasonable discretion, Genentech may choose to negotiate with
such Third Party alone (but to the extent reasonably possible, on terms and
conditions reasonably acceptable to IDEC). In the event that IDEC and Genentech
have not agreed upon terms with such Third Party within ninety (90) days of
IDEC’s election to participate, or if the Parties have not entered into a
definitive agreement with such Third Party within one hundred and eighty (180)
days of IDEC’s election to participate, then Genentech may enter into a
definitive agreement on its own and at its sole discretion with such Third
Party
for such Third Party Anti-CD20 Product; provided, Genentech will use its
commercially reasonable and diligent efforts to obtain the right for IDEC to
participate with Genentech with respect to such product in the United
States.
(b) Third
Party Anti-CD20 Product In-licensed After the Restated Effective
Date.
(i) Notice.
If,
following IDEC’s timely notification to Genentech pursuant to Section 2.6(a) to
participate in negotiations with a Third Party for a Third Party Anti-CD20
Product, Genentech enters into a definitive agreement with such Third Party
for
such Third Party Anti-CD20 Product without IDEC, then Genentech shall promptly
notify IDEC of the existence of such definitive agreement and provide IDEC
with
a summary of the terms, including any data package provided by such Third Party
to Genentech, under which IDEC may participate with Genentech in the United
States for such Third Party Anti-CD20 Product (such terms, vis-à-vis each other,
other than the amount of the opt-in fee to be paid by IDEC to Genentech pursuant
to this Section 2.6(b), to the extent reasonably possible under such Third
Party
agreement, to be on [*].
(ii) Opt-in
Fee. The
opt-in
fee under Section 2.6(b)(i) above, to be determined by Genentech [*]
shall
be
based on the terms of the agreement with such Third Party attributable to rights
in the United States, and shall be intended to compensate Genentech for
[*]
of
Genentech’s costs in acquiring the rights in the United States to such product
under such agreement with such Third Party [*].
The Parties
shall seek to agree on the amount of such opt-in fee, and to the extent the
Parties are unable to agree within a twenty (20) day period, such dispute shall
be subject to Section 17.2.
(c) Third
Party Anti-CD20 Product In-licensed Prior to the Restated Effective
Date.
(i) Notice.
With
respect
to any Third Party Anti-CD20 Products for which Genentech obtained a license
to
develop and commercialize such product from a Third Party prior to the Restated
Effective Date, within thirty (30) days of the date that Genentech’s PPC makes a
formal decision, as recorded in the minutes of the relevant PPC meeting,
[*]
Genentech
shall provide IDEC with the same development assessment package that was
provided to the PPC as the basis of its [*]
7
including
a
summary of the terms of the license from such Third Party under which IDEC
may
participate with Genentech in the United States for such Third Party Anti-CD20
Product, (such terms, other than the amount of the opt-in fee to be paid by
IDEC
to Genentech pursuant to this Section 2.6(c)(i), to the extent reasonably
possible under such Third Party agreement, to be on [*]
Without
limiting the foregoing, such development assessment package shall include a
summary of the preclinical data and the proposed Development Plan including
proposed clinical study designs, manufacturing cost estimates, timelines,
program cost, target product profile(s), and market forecast, and any data
package provided by such Third Party to Genentech.
(ii) Opt-in
Fee. The
opt-in
fee under Section 2.6(c)(i) above, to be determined by Genentech [*]
shall be
[*]
cost
of such
product attributable to rights in the United States[*].
The Parties
shall seek to agree on the amount of such opt-in fee, and to the extent the
Parties are unable to agree within a twenty (20) day period, such dispute shall
be subject to Section 17.2.
(d) Election.
IDEC
shall
have thirty (30) days from the date of Genentech’s notice under Section
2.6(b)(i) or 2.6(c)(i) above to elect in writing to participate with Genentech
on such terms under such definitive agreement, including without limitation
the
opt-in fee (and to the extent the amount of the opt-in fee is not agreed upon
at
the time of such election, the amount of the opt-in fee as determined by the
arbitration panel under Section 17.2; such amount to be paid upon the earlier
of
agreement by the Parties on such amount, or final determination by such
arbitration panel of such amount), and a failure to so elect shall be deemed
a
decision not to participate with Genentech with respect to such Third Party
Anti-CD20 Product, and following any such failure, Genentech shall have no
further obligation to offer such Third Party Anti-CD20 Product to IDEC and
IDEC
shall have no further rights under this Agreement with respect to such Third
Party Anti-CD20 Product.
(e) Any
agreement which IDEC and Genentech enter into under this Section 2.6 to develop
and commercialize a Third Party Anti-CD20 Product in the United States shall
provide for licenses from each Party to the other Party necessary to develop
and
commercialize such product under such agreement; such licenses, to the extent
permissible under the terms of the license from such related Third Party, to
be
commensurate in scope with the licenses granted under Section 9.2.
(f) Notwithstanding
anything to the contrary in this Agreement, it is understood and agreed that
Genentech is under no obligation to offer or grant to IDEC any rights to any
Third Party Anti-CD20 Product outside the United States, or make any payments
to
IDEC with respect to Genentech’s development and commercialization of any Third
Party Anti-CD20 Product outside the United States.
(g) Genentech
represents and warrants that, to the best of its knowledge, it has not, prior
to
the Restated Effective Date initiated clinical development with (i) any proteins
or peptides that meet the definition of Potential New Products (other than
G2H7), or (ii) any Third Party Anti-CD20 Product for which Genentech obtained
a
license to develop and commercialize such product from a Third Party prior
to
the Restated Effective Date, in each case as recorded in the minutes of its
PPC.
2.7 Development
Costs for New Products.
Unless
otherwise agreed in writing by the Parties, from and after the Restated
Effective Date, and notwithstanding a Party’s share in Operating Profits (or
Losses), all Development Costs for New Products for development or marketing
in
the
8
Co-Promotion
Territory shall be shared by the Parties[*]
by
Genentech
and [*]
by
IDEC
until [*]
After
[*]
the
Parties
will share in the Development Costs for Franchise Products for development
or
marketing in the Co-Promotion Territory commensurate with the profit/loss
sharing relationship specified in Section A.9.3 and the guidelines for charging
costs specified in Section A.11 of Exhibit A for such products. Genentech shall
bear [*]
Development
Costs for New Products for development or marketing in the Licensed Territory,
unless otherwise agreed in writing by the Parties.
ARTICLE
3.
MANAGEMENT
OF
THE
COLLABORATION
3.1 Management
Committee.
(a) Within
thirty (30) days of the Original
Effective Date,
the
Parties will establish a Management Committee to oversee and manage the
collaboration in the Co-Promotion Territory contemplated by this Agreement.
The
Management Committee will be composed of three representatives appointed and
replaced by IDEC and three representatives appointed and replaced by Genentech.
All such representatives will be senior officers and/or managers of IDEC or
Genentech. Either Party may replace any or all of its representatives at any
time upon prior written notice to the other Party. The Management Committee
will
meet at least once each calendar quarter, or more frequently, as agreed by
the
Management Committee, and will operate by consensus, except as expressly set
forth herein. If the Management Committee is unable to resolve a dispute
regarding any issue presented to it, such dispute shall be resolved in
accordance with Article 17 below.
(b) The
Management Committee shall perform the following functions:
(i) determine
the overall strategy for the collaboration in the manner contemplated by this
Agreement, including without limitation, overseeing and determining the strategy
for the coordination, development and commercialization of Licensed Products
and
New Products so as to maximize the Operating Profits of all Franchise
Products;
(ii) coordinate
the activities of the Parties hereunder;
(iii) establish
a
governance structure for the collaboration including overseeing the
establishment and organization of one or more Operating Committees, or other
structure to implement this Agreement. The establishment of certain Operating
Committees is provided for in Sections 3.2, 3.3 and 3.4 of this Agreement.
Each
Operating Committee contemplated by this Agreement shall be subordinate to
the
Management Committee. If any Operating Committee contemplated by this Agreement
is not constituted or continued, any reference to such Committee in this
Agreement shall be deemed to be a reference to the Management Committee or
such
other committees or structures to which the Management Committee may delegate
responsibility;
(iv) settle
disputes or disagreements that are unresolved by an Operating Committee unless
otherwise indicated in this Agreement; and
9
(v) perform
such
other functions as appropriate to further the purposes of this Agreement as
determined by the Parties.
3.2 Joint
Development Committee.
(a) Within
thirty (30) days of the Original Effective Date, the Parties will establish
the
Joint Development Committee to oversee and control all development of Franchise
Products in the Co-Promotion Territory, in the Field, including pre-clinical
research, clinical research, manufacturing, regulatory filings and post-approval
development studies. The JDC will be composed of three representatives appointed
by each of IDEC and Genentech. Each representative will have one vote on all
matters within the JDC's purview. Such representatives will include individuals
with expertise and responsibilities in the areas of preclinical development,
clinical development, process sciences, manufacturing or regulatory affairs.
Either Party may replace any or all of its representatives at any time upon
written notice to the other Party. The JDC will meet at least once each calendar
quarter, or more frequently, as agreed by the JDC. The JDC will operate by
consensus, except as expressly set forth herein. If the JDC is unable to resolve
a dispute regarding any issue presented to it, such dispute shall be resolved
in
accordance with Article 17 below.
(b) The
JDC
shall coordinate, expedite and guide the development of Franchise Products,
including review and approval of Development Plans for New Products, to obtain
Regulatory Approvals in the Co-Promotion Territory, and in a manner consistent
with maximizing the Operating Profits for all Franchise Products, as set forth
in Article 4. The JDC will update the Development Plans from time to time as
it
deems necessary.
(c) The
JDC
shall also be the forum for exchange of information on Genentech's substantive
development of Franchise Products in the Licensed Territory, unless an IDEC
representative is permitted to attend meetings of a Genentech development
committee as set forth in Section 6.4. While the IDEC representatives may
comment on such development, Genentech shall have the final say.
(d) If
any
Genentech European development partner so requests, IDEC will consider in good
faith allowing a representative of such partner to attend the JDC
meetings.
(e) The
term of
the JDC will be determined by the Management Committee.
3.3 Joint
Commercialization Committee.
(a) Within
thirty (30) days of the Original Effective Date, the Parties will establish
the
Joint Commercialization Committee. When established, the JCC shall be composed
of two representatives appointed by each of IDEC and Genentech. Either Party
may
replace any or all of its representatives at any time upon prior written notice
to the other Party. The JCC will be an operational committee made up of
individuals with expertise and responsibilities in the areas of product
development and marketing, sales management or market research. The JCC will
meet on a quarterly basis, except that from submission of a BLA for a Franchise
Product in the Co-Promotion Territory until the end of the second year of sales
for such Franchise Product in the Co-
10
Promotion
Territory, the JCC shall meet more frequently in order to prepare for and
oversee the launch of such Franchise Product. The JCC will operate by consensus,
except as expressly set forth herein. Each representative will have one vote.
If
the JCC is unable to resolve a dispute regarding any issue presented to it,
such
dispute shall be resolved in accordance with Section 17.1.
(b) The
purposes
of the JCC shall be to (i) monitor, review and approve commercialization plans
with regard to the commercialization of Franchise Products in the Co-Promotion
Territory, including, in accordance with Section 5.4, top-line annual marketing
and sales budgets (as described in Section A.1(a) of Exhibit A), annual
forecasts of sales and production requirements, the annual marketing plan,
broad
product positioning, initial product pricing, and Phase IV clinical strategy
(e.g. overall plans for investigator sponsored trials and publication studies)
as well as (ii) select trademarks for Franchise Products.
(c) The
JCC
shall have no involvement in the commercialization of Licensed Products in
the
Licensed Territory, which shall be solely the responsibility of Genentech at
its
expense.
(d) The
term of
the JCC will be determined by the Management Committee.
3.4 Joint
Finance Committee.
(a) Within
thirty (30) days of the Original Effective Date, the Parties will establish
the
Joint Finance Committee to be composed of two representatives appointed
by
each of
IDEC and Genentech. Either Party may replace any or all of its representatives
at any time upon prior written notice to the other Party. Such representatives
will include individuals with expertise and responsibilities in the areas of
accounting, cost allocation, budgeting and financial reporting. The JFC will
operate by consensus, except as expressly set forth herein. If the JFC is unable
to resolve a dispute regarding any issue presented to it, such dispute shall
be
resolved in accordance with Article 17.
(b) The
JFC
shall operate under the direction of the Management Committee to provide
services to and consult with the JDC and the JCC in order to address the
financial, budgetary and accounting issues which arise in connection with the
Development Plans and updates thereto as described in Exhibit A, as well as
commercialization plans and updates thereto.
(c) The
JFC
shall have no involvement in the development of Licensed Products in the
Licensed Territory, which shall be the responsibility of Genentech, subject
to
the terms and conditions of this Agreement.
(d) The
JFC will
cease operating and have no further function hereunder on the date on which
the
Parties are no longer sharing Operating Profits or Losses with respect to any
Franchise Product in the Co-Promotion Territory.
3.5 Collaboration
Co-Chairpersons.
Within
sixty (60) days of the Restated
Effective Date,
each Party
shall designate a Collaboration Co-Chairperson. Each such Collaboration
Co-Chairperson shall be a vice president, unless otherwise agreed, and shall
serve as a member or an ex-officio member of the Management Committee and each
Operating Committee and shall be
11
responsible
(together, or as the Collaboration Co-Chairpersons may elect to divide
responsibilities) to set the agenda of, call and take minutes of meetings of
each Committee. In the event of any reasonable dispute between the Collaboration
Co-Chairpersons as to any matter to include in the agenda of a meeting, such
matter shall by default be included in the agenda.
ARTICLE
4.
DEVELOPMENT
IN THE CO-PROMOTION TERRITORY
4.1 Development
Efforts for C2B8.
IDEC and
Genentech each agree to collaborate diligently in the development of C2B8 in
the
Field and to use commercially reasonable and diligent
efforts to develop and bring C2B8 to market in the Field as soon as practicable.
The Parties further agree to execute and substantially perform the Development
Plan for C2B8 and to cooperate with the other in carrying out such Development
Plan. Upon the entry of New Products into the development pipeline in accordance
with Section 2.4 or 2.5, it is anticipated that the parties may elect to develop
and commercialize one or more such New Product(s) in a manner that might
adversely affect the development and/or commercialization of C2B8, but in any
event such efforts shall be directed towards maximizing the Operating Profits
of
the Franchise Products in the aggregate. As used in this Agreement, the term
commercially reasonable and diligent efforts will mean those efforts consistent
with the exercise of prudent scientific and business judgment, as applied to
other pharmaceutical products of similar potential and market size by the Party
in question.
4.2 Drug
Approval Applications for C2B8.
Consistent
with the Development Plan, IDEC (or Genentech, if appropriate) shall file Drug
Approval Applications and seek Regulatory Approvals for C2B8 in the Co-Promotion
Territory. Prior to submitting any Drug Approval Application, the Parties,
through the JDC, shall consult, cooperate in preparing and mutually agree on
such Applications and their content and scope. Each Party shall own all
regulatory submissions including all Drug Approval Applications for C2B8 that
such Party files in the Co-Promotion Territory. The Parties will endeavor to
include on all package labels and inserts for C2B8 sold in the Co-Promotion
Territory, where appropriate (i.e., to the extent such materials identify or
otherwise make reference to either of the Parties), the names and logos of
each
of IDEC and Genentech with equal prominence, to the extent permitted by the
applicable regulatory authorities.
4.3. Development
Efforts for New Products.
IDEC and
Genentech each agree to collaborate diligently in the development of New
Products in the Co-Promotion Territory in the Field and to use commercially
reasonable and diligent
efforts to develop and bring each New
Product
to market
in the Co-Promotion Territory in the Field as soon as practicable so as to
maximize the potential Operating Profits as to Franchise Products in the
aggregate
in the
Co-Promotion Territory.
The
Parties further agree to execute and substantially perform the Development
Plan
for each New Product and to cooperate with the other in carrying out each such
Development Plan.
4.4 Drug
Approval Applications for New Products.
Consistent
with the Development Plans for New Products, unless otherwise agreed in writing,
Genentech shall file Drug Approval Applications and seek Regulatory Approvals
for New Products in the Co-
12
Promotion
Territory. Prior to submitting any Drug Approval Application, the Parties,
through the JDC, shall consult, cooperate in preparing and mutually agree upon
such Application and its content and scope. Each Party shall own all regulatory
submissions including all Drug Approval Applications for New Products that
such
Party files in the Co-Promotion Territory. The Parties will endeavor to include
on all package labels and inserts for New Products sold in the Co-Promotion
Territory, when appropriate (i.e., to the extent such materials identify or
otherwise make reference to either of the Parties), the names and logos of
each
of IDEC and Genentech with equal prominence, to the extent permitted by the
applicable regulatory authorities.
4.5 Development
Activities for Franchise Products.
With
regard to the development of New Products, including, without limitation, G2H7,
and with regard to all Franchise Products (including, without limitation, C2B8)
[*]
Genentech
will be responsible for proposing strategic plans (including plans to initiate
a
company sponsored trial), as well as Development Plans, for such Franchise
Products. Such Development Plans shall include, where appropriate and without
limitation, clinical development plans, timelines, and overall budgets
(consisting of aggregate estimated annual expenditures and top line expenses
for
clinical development) for such Franchise Products. Such strategic plans and
Development Plans and other materials shall be delivered to the JDC for review
and approval by unanimous consent. Once a Development Plan has been approved
by
the JDC, Genentech shall be responsible for implementing such Development Plans,
except to the extent that the JDC allocates particular activities, by unanimous
consent, to IDEC. In addition, and notwithstanding the dispute resolution
provisions of Sections 3.1 through 3.4, with regard to the development of New
Products, including without limitation G2H7, and with regard to all Franchise
Products (including without limitation C2B8) [*]
Genentech
shall have final decision-making control over the implementation of each such
Development Plan, including without limitation, clinical development, provided,
however, that Genentech shall not have the right to (i) exceed the annual
aggregate budget approved with a Development Plan [*]
without the
unanimous approval of the JDC, (ii) assign tasks to IDEC that were not otherwise
approved by unanimous consent of the JDC, or (iii) materially amend a
Development Plan without the unanimous approval of the JDC. For the avoidance
of
doubt, it is understood and agreed that Genentech’s implementation of a
Development Plan shall not be deemed a material amendment to such Development
Plan, unless such implementation would (x) materially modify the strategic
direction agreed upon by the Parties thereunder, or (y) result in an agreed
upon
timeline thereunder being [*].
4.6 Clinical
Trials Not Approved by the JDC.
In the
event that Genentech proposes a particular clinical trial as part of a
Development Plan (other than a clinical trial proposed for C2B8 prior to the
First New Product FDA Approval ) and such trial is not approved by the JDC
within thirty (30) days of the date that such trial was proposed to the JDC
(or
in the event such trial was proposed to the JDC other than at a meeting of
the
JDC, within thirty (30) days of the date that the JDC first meets (whether
in
person or by teleconference) following the date such trial was proposed to
the
JDC), then Genentech shall have the right to conduct such trial at its own
expense. During such thirty (30) day period, Genentech shall timely provide
all
information reasonably requested by any member of the JDC that would be material
to making a determination as whether such proposed clinical trial should be
approved. If in such circumstance, Genentech elects to conduct such trial within
a reasonable period of time thereafter, and such trial meets all of its primary
endpoints, then IDEC shall reimburse Genentech for [*]
of the
Development Costs related
13
to
such
trial that IDEC would otherwise have been responsible for if the JDC had
approved such trial (i.e[*]
total
Development Costs).
ARTICLE
5.
COMMERCIALIZATION
IN THE CO-PROMOTION TERRITORY
5.1 Commercialization
Efforts
(a) Commercialization
Efforts for Licensed Products.
IDEC and
Genentech each agree to (i) collaborate diligently in the commercialization
of
C2B8 and (ii) use commercially reasonable and diligent efforts to commercialize
C2B8 promptly and in such a manner as to maximize Operating Profits as to
Franchise Products in the aggregate in the Co-Promotion Territory. The Parties
agree that Genentech will play the primary role and IDEC the secondary role
in
all sales, marketing and product launch activities and tactical execution of
marketing and sales promotional programs in the Co-Promotion Territory. The
Parties shall be guided by a standard of reasonableness in economic terms and
of
fairness to each of the Parties, striving to balance as best they can the
legitimate interests and concerns of the Parties and to realize the economic
potential of C2B8.
(b) Commercialization
Efforts for New Products.
IDEC
and
Genentech each agree to (i) collaborate diligently in the commercialization
of
New Products in the Co-Promotion Territory and (ii) use commercially reasonable
and diligent efforts to commercialize New Products promptly and in such a manner
as to maximize Operating Profits as to Franchise Products in the aggregate
in
the Co-Promotion Territory. The Parties agree that, as to New Products,
Genentech will be responsible for all marketing and product launch activities
and tactical execution of marketing and sales promotional programs in the
Co-Promotion Territory. Genentech and IDEC shall deploy a co-promotion sales
force according to section 5.2 below. The Parties shall be guided by a standard
of reasonableness in economic terms and of fairness to each of the Parties,
striving to balance as best they can the legitimate interests and concerns
of
the Parties and to realize the economic potential of New Products in the
Co-Promotion Territory.
5.2 Sales
Efforts in the Co-Promotion Territory.
(a) Although
Genentech has the primary marketing role, IDEC shall have the right to deploy
a
co-promotion sales force in the Co-Promotion Territory; such IDEC sales force
shall comprise [*]
of
Sales
Representatives consistent with [*]
between
IDEC
and Genentech, or as otherwise determined by the unanimous consent of the JCC.
As of [*]
such
sales
forces deployed by Genentech and/or IDEC shall be solely dedicated to selling
(i) Franchise Products and (ii) products that are not Franchise Products
[*]
(b) In
addition,
Genentech
shall have the right, at its election, to [*]
as
follows:
(i) Genentech
shall provide written notice to IDEC of the specific date upon which
[*]
(such
notice to be provided at least [*]
.
(ii) To
the
extent [*]
and
14
(iii) To
the
extent [*]
IDEC
shall
timely provide Genentech with invoices for any [*]
incurred
under this Section 5.2(b), and Genentech shall pay such invoices within sixty
(60) days thereof. Genentech shall have the right to audit such
invoiced[*]
no more
than once a calendar year, such audit to be conducted in accordance with Section
A.6 of Exhibit A.
As
used
herein:
[*]
"IDEC
Sales
Force FTEs" means that number of additional incremental IDEC FTEs actually
allocated by IDEC to its sales force in a given calendar year to convert a
portion of such sales force to a sales force dedicated to selling [*]
(“Y2B8”)
(and to the extent IDEC elects to allocate any of such sales force dedicated
to
selling [*]
to also
selling non-Franchise Products [*]
it
is
understood that [*]
provided
such FTE's shall not include that portion of any FTEs allocated by IDEC to
selling [*]
prior
to the
date of Genentech’s written notice to IDEC under Section 5.2(b)(i) above nor as
of the Restated Effective Date;
"FTE"
means
the equivalent of a full-time employee (or [*]
assigned to
selling, supporting or overseeing the sale activity of [*]
in the
Co-Promotion Territory over a calendar year (including normal vacation, sick
days and holidays), and in the case of less than a full-time employee (or
[*]
the portion
of an FTE year devoted by an employee (or [*]
to the
[*]
sales force
shall be determined by dividing the number of days (or partial days) during
any
calendar year devoted by such employee (or [*]
to the
[*]
sales force
by the total number of working days of a full-time employee (or [*]
during such
calendar year; and
"FTE
Rate"
means [*]
per FTE per
calendar year.
(c) Unless
the
JCC shall otherwise unanimously agree: (i) each Party shall be entitled to
assign its respective sales force to such markets and accounts as it shall
determine in its reasonable discretion, and (ii) there shall be no prohibition
on the sales forces of both Parties calling on any individual customer; provided
in each case, such sales force shall conduct such activities in accordance
with
coordinated messages approved by the JCC.
(d) The
Parties
shall recover their Sales Costs in accordance with Exhibit A.
5.3 Sales
and Distribution.
Unless
otherwise agreed in writing, Genentech shall have the sole responsibility with
respect to the following:
(a) Booking
sales for and distributing Franchise Products. If IDEC receives any orders
for
Franchise Products, it shall refer such orders to Genentech.
(b) Handling
all
returns of Franchise Products. If Franchise Products are returned to IDEC,
it
shall promptly be shipped to the facility responsible for shipment of Franchise
Products in the country in question to the attention of the Returned Goods
Department or another location as may be designated by
Genentech.
15
(c) Handling
all
recalls of Franchise Products. IDEC will make available to Genentech, upon
request, all of its pertinent records which Genentech may reasonably request
to
assist Genentech in effecting any recall.
(d) Handling
all
aspects of order processing, invoicing and collection, Franchise Products
distribution, warehousing, inventory and receivables, and collection of data
of
sales to hospitals and other end users (e.g., DDD data).
(e) Handling
all
other customer service related functions.
5.4 Commercialization
Plans and Materials.
(a) Marketing
and Promotional Materials for Licensed Products.
All
marketing and promotional materials related to Licensed Products shall be
prepared by Genentech, and all marketing and promotional strategies and
campaigns shall be subject to review and approval by the JCC. Genentech shall
be
entitled to select any Third Parties involved in the preparation of such
materials. With respect to written and visual promotional or educational
materials, to the extent such materials identify or otherwise make reference
to
either of the Parties, IDEC and Genentech shall both be presented and described
with equal prominence and emphasis as having joined and participated in the
development and joint commercialization of Licensed Products, as permitted
by
the applicable laws and regulations of each country in which such materials
are
to be presented. All documentary information, promotional materials and oral
presentations (where practical) regarding the detailing and promoting of
Licensed Products shall maximize the brand equity of the products and state
this
arrangement and display, where appropriate (i.e., to the extent such materials
identify or otherwise make reference to either of the Parties), the names and
logos of each of IDEC and Genentech, with equal prominence.
(b) Commercialization
Plans and Materials for Franchise Products.
With
regard to the commercialization of New Products, including without limitation
G2H7, and with regard to all Franchise Products (including without limitation
C2B8)
[*]
Genentech
will be responsible for proposing strategic plans and strategies, as well as
commercialization plans, for such Franchise Products. Such commercialization
plans shall include, where appropriate and without limitation, life cycle plans,
long range plans, three year brand plans, pricing strategies and Annual
Commercial Operating Budgets for such Franchise Products. Such commercialization
plans shall be delivered to the JCC for review and approval by unanimous consent
(such delivery to take place upon completion of such plan or upon completion
of
an updated plan, as the case may be, regardless of when such completion occurs
during the calendar year). Once a commercialization plan has been approved
by
the JCC, Genentech shall be responsible for implementing such commercialization
plan, except to the extent that the JCC allocates particular activities, by
unanimous consent, to IDEC. In addition, and notwithstanding the dispute
resolution provisions
of Sections 3.1 through 3.4, with regard to the commercialization of New
Products, including without limitation G2H7, and with regard to all Franchise
Products (including without limitation C2B8) [*]
Genentech
shall have final decision-making control over the implementation of each such
commercialization plan, including without limitation, marketing and promotional
activities and materials (e.g., medical education, medical information, public
relations, investigator sponsored studies, publication planning, sales resource
analysis and key opinion leader development),
16
provided,
however, that Genentech shall not have the right to (i) exceed (in the
aggregate) the Annual Commercial Operating Budget approved with such
commercialization plan by [*]
without the
unanimous approval of the JCC, (ii) assign tasks to IDEC that were not otherwise
approved by unanimous consent of the JCC, (iii) assign an initial pricing for
a
Franchise Product, unless such initial pricing is within [*]
of
the
current price for C2B8, or (iv) materially amend a commercialization plan
without the unanimous approval of the JCC. For the avoidance of doubt, it is
understood and agreed that Genentech’s implementation of a commercialization
plan shall not be deemed a material amendment to such commercialization plan,
unless such implementation would materially modify the strategic direction
agreed upon by the Parties thereunder. All documentary information, promotional
materials and oral presentations (where practical) regarding the detailing
and
promoting of New Products shall maximize the brand equity of the products and
display, where appropriate (i.e., to the extent such materials identify or
otherwise make reference to either of the Parties), the names and logos of
each
of IDEC and Genentech with equal prominence.
5.5 Training
Program.
Genentech
shall develop training programs relating to Franchise Products for the sales
forces of each respective Party and for any Third Parties engaged in selling
or
promotion, and shall assign responsibility to itself, IDEC or a Third Party
for
the preparation of materials and conduct of training. The Parties agree to
utilize such training programs on an ongoing basis to assure a consistent,
focused promotional strategy. The initial training as to any Franchise Product
shall be carried out at a time which is mutually acceptable to the Parties,
and
which is prior to but reasonably near the date on which the first Regulatory
Approval for such Franchise Product is expected in the Co-Promotion Territory.
As additional members are added to the Parties' respective sales forces,
training will be given to groups of the newly selected members.
ARTICLE
6.
DEVELOPMENT
AND COMMERCIALIZATION IN LICENSED TERRITORY
6.1 Development
Efforts.
Genentech
will use commercially reasonable and diligent efforts to develop C2B8,
including
pursuing preclinical development and clinical development of C2B8
and
obtaining Regulatory Approvals therefor in all countries in the Licensed
Territory, taking into account the scientific and commercial potential of
C2B8,
including,
without limitation, each of the potential indications in the Field for
C2B8.
Within
ninety (90) days of the Original Effective Date, Genentech agrees to provide
IDEC with a written development strategy for C2B8
in
the
Licensed Territory indicating (i) whether Genentech will develop C2B8
alone
or
with a partner in Europe, (ii) the identity of its European partner (if any),
and (iii) a list of clinical trials which Genentech would conduct for
C2B8
approval
in
Europe assuming adequate quantities of C2B8
are
available.
6.2 Marketing
Efforts.
Genentech
will use commercially reasonable and diligent efforts to commercialize
C2B8
in
each
country in which Regulatory Approval is granted, taking into account the
scientific and commercial potential for C2B8,
including
without limitation each of the potential indications therefor.
17
6.3 Development
Costs and Marketing Costs.
Genentech
shall bear all Development Costs and Marketing Costs for C2B8
for
development or marketing in
the
Licensed Territory. Genentech shall have the sole responsibility for, and right
to make all decisions regarding, all development and marketing activities in
the
Licensed Territory.
6.4 Cooperation
on Development Efforts.
To
facilitate cooperation between the Parties on the worldwide development and
marketing of C2B8,
Genentech
shall keep IDEC informed of all substantive development activities in the
Licensed Territory, and agrees to use its good faith efforts to have an IDEC
representative attend meetings of any development committee or similar body
governing development activities of Licensed Products in the Licensed Territory.
Genentech shall consider in good faith any comments made by such IDEC
representative. The Parties agree that they will do nothing during C2B8
development
activities to imperil early Regulatory Approvals in any country in any
territory. Genentech further agrees that its European development plan for
Licensed Products will not specify clinical trials on a time line that would
delay or slow Regulatory Approval in the United States.
ARTICLE
7.
MILESTONES,
PROFIT SHARING, ROYALTIES AND OTHER PAYMENTS
7.1 (a) Payments
by Genentech upon Execution of Original Agreement.
Genentech
made the following payments to IDEC at the times set forth herein or in the
operative agreement:
(i) [*]
within
10
days of the Original Effective Date;
(ii) [*];
and
(iii) $5,000,000
to purchase shares of IDEC Preferred Stock as set forth in the Stock Purchase
Agreement.
(b) Payment
by IDEC upon Execution of this Agreement; Opt-in Fees.
IDEC
shall
make the following payments to Genentech at the times set forth
herein:
(i) [*]
within 10
days of the Restated Effective Date;
(ii) [*]
within
10
days of making an opt-in election pursuant to Section 2.5(b) for the first
New
Product other than G2H7 for which such an election is made, provided, however,
that if a fee is paid under Section 7.1(b)(iv) before any fee is paid under
this
Section 7.1(b)(ii), then this Section 7.1(b)(ii) shall be deemed void
ab
initio
and the
word “second” in Section 7.1(b)(iii) shall be deemed changed to
“first”;
(iii) [*]
within 10
days of making an opt-in election pursuant to Section 2.5(b) for the second
and
each subsequent New Product other than G2H7 for which such an election is
made.
18
(iv) [*]
within
10
days of making an opt-in election pursuant to Section 2.5(c) for the first
and
each subsequent New Product other than G2H7 for which such an election is
made.
7.2 Additional
Equity Purchases.
Genentech
shall make certain additional equity purchases in accordance with the terms
and
conditions of the Stock Purchase Agreement.
7.3 Special
Pre-Approval Debt or Equity Purchase.
Genentech
shall, at the election of IDEC, make an additional investment or loan in
accordance with the terms and conditions of an Option Agreement of even date
of
the Original Effective Date between IDEC and Genentech (the "Option
Agreement").
7.4 Milestone
Payments.
Subject to
the terms of the equity purchases set forth in the Stock Purchase Agreement
and
the credit as provided in the Option Agreement, Genentech made or shall make
the
following payments to IDEC, within 30 days after the first achievement of each
of the following milestones for C2B8:
MILESTONE Payment
(a) Upon
Regulatory Approval in the United States [*]
(b) Upon
Regulatory Approval in the First [*]
Major
European Country
(c) Patent
Milestone Event [*]
7.5 Share
of Operating Profits or Losses.
Upon the
first Regulatory Approval in the United States, IDEC and Genentech shall share
in Operating Profits or Losses from sales of Franchise Products in the
Co-Promotion Territory as provided in Exhibit A.
7.6 Term
of Operating Profits or Losses.
The
Parties shall share Operating Profits or Losses hereunder in the Co-Promotion
Territory until the earlier of the date the Parties mutually agree to terminate
the collaboration in the Co-Promotion Territory, or as provided in Section
15.2.
7.7 Royalties.
(a) Licensed
Products.
Genentech
shall pay IDEC a royalty on Royalty-Bearing Sales of Licensed Products in the
Licensed Territory as follows: (i) the royalty rate shall be [*]of
Royalty-Bearing Sales in the Licensed Territory in any calendar year, and (ii)
the royalty rate shall [*]
of
Royalty-Bearing Sales in the Licensed Territory in
any
calendar
year.
(b) New
Products.
Genentech
shall pay IDEC a [*]
royalty
on
Royalty-Bearing Sales in the Licensed Territory of G2H7 and each other New
Product; provided however, that no such royalty shall be due on any [*]
Potential
New Product that was deemed a New Product pursuant to Section 2.5(b)(ii), nor
on
any Third Party Anti-CD20 Product for which IDEC enters into a written agreement
with Genentech pursuant to Section 2.6.
19
(c) Royalties
owed to any Third Party on account of sales of Franchise Products in the
Co-Promotion Territory will be charged against Co-Promotion Profits, except
that
IDEC will pay any payments owed to ML/MS Partners on account of any sales of
Licensed Products in any territory.
(d) Genentech
shall pay any Third Party royalties (except to ML/MS Partners) owed on account
of sales of Franchise Product in the Licensed Territory, including royalties
owed due to the manufacture of Franchise Products by Genentech or IDEC.
Genentech shall receive a credit of [*]
of
the
royalties it pays on account of the manufacture, use or sale of Licensed
Products against royalties it owes to IDEC. Prior to the Original Effective
Date
, Genentech discussed with IDEC the significant Third Party royalties that
it
believed at such time would be payable on sales of Licensed Products. In
addition, Genentech shall receive a credit of [*]
of
the
royalties it pays on account of the manufacture, use or sale of New Products
against royalties it owes to IDEC; provided, however that the royalty that
would
otherwise be due under Section 7.7(b) shall not be reduced below a [*]
royalty.
(e) The
Parties
(i) shall, within ninety (90) days following the Original Effective Date, amend
the Cabilly license dated December 7, 1993 between Genentech and IDEC (the
"Cabilly License") to waive any royalties owed by IDEC to Genentech on
manufacture, use or sale of Licensed Products covered by the Cabilly License
in
the Co-Promotion Territory, and (ii) to the extent IDEC would be obligated
to
pay royalties (if any) under the Cabilly License in order to manufacture, use
or
sell any New Products in the Co-Promotion Territory, Genentech agrees to amend
such license to waive any such royalties; provided, however, that any payment
Genentech must make to any Third Party on account of the development,
manufacture, use or sale of Franchise Products covered by the patents included
in the Cabilly License shall be included in Cost of Sales of such Franchise
Products.
(f) If
the
Parties mutually agree to develop an anti-CD19 protein under this Agreement
covered by a claim of a Patent included in the Cabilly License, Genentech will
make available a license for CD19 antigens to Patents included in the Cabilly
License as part of the commercial terms for the development of such
product.
7.8 Royalty
Payment Reports.
Royalty
payments under this Agreement shall be made to IDEC or its designee quarterly
within sixty (60) days following the end of each calendar quarter for which
royalties are due. Each royalty payment shall be accompanied by a report
summarizing the Royalty-Bearing Sales during the relevant three-month
period.
7.9 Term
of Royalty Obligations.
(a) Genentech
shall pay royalties hereunder with respect to Franchise Products in each country
in the Licensed Territory for eleven (11) years from the date of first
commercial sale of such Franchise Product in such country.
(b) Upon
expiration of the royalty term for a Licensed Product in a country as described
above, Genentech shall thereafter have an exclusive, fully paid-up, irrevocable
license under the
20
IDEC
Patents, IDEC Know-how and IDEC regulatory submissions to make, use, sell,
offer
for sale, have sold and import that Licensed Product in that country. Upon
expiration of the royalty term for a New Product in a country as described
above, Genentech shall thereafter have an non-exclusive, fully paid-up,
irrevocable license under the IDEC Patents, IDEC Know-how and IDEC regulatory
submissions to make, use, sell, offer for sale, have sold and import that New
Product in that country.
7.10 Taxes.
IDEC shall
pay any and all taxes levied on account of, or measured exclusively by, any
payment including royalties it receives under this Agreement. If laws or
regulations require that taxes be withheld, Genentech will (i) deduct those
taxes from the remittable royalty, (ii) timely pay the taxes to the proper
taxing authority, and (iii) send proof of payment to IDEC within sixty (60)
days
following that payment.
7.11 Blocked
Currency.
In each
country where the local currency is blocked and cannot be removed from the
country, at the election of Genentech, royalties accrued in that country shall
be paid to IDEC in the country in local currency by deposit in a local bank
designated by IDEC.
7.12 Foreign
Exchange.
For the
purpose of computing Royalty-Bearing Sales for Franchise Products sold in a
currency other than United States Dollars, such currency shall be converted
into
United States Dollars in accordance with Genentech's customary and usual
translation procedures consistently applied.
7.13 Payments
to or Reports by Affiliates.
Any
payment required under any provision of this Agreement to be made to either
Party or any report required to be made by any Party shall be made to or by
an
Affiliate of that Party if designated by that Party as the appropriate recipient
or reporting entity.
7.14 Sales
By Sublicensees.
In the
event Genentech grants licenses or sublicenses to others to make or sell
Franchise Products in the Licensed Territory, such licenses or sublicenses
shall
include an obligation for the licensee or sublicensee to account for and report
its Royalty-Bearing Sales of such Franchise Products on the same basis as if
such sales were Royalty-Bearing Sales by Genentech, and Genentech shall pay
royalties to IDEC as if the Royalty-Bearing Sales of the licensee or sublicensee
were Royalty-Bearing Sales of Genentech.
ARTICLE
8.
MANUFACTURE
AND SUPPLY
8.1 Process
Development, Manufacturing Approvals of C2B8.
IDEC shall
be responsible for, at its own expense, process development, scale-up,
validation and FDA licensure of its existing C2B8-producing CHO cell line to
the
2,750 liter fermenter scale. As soon as practicable
after the Original Effective Date, IDEC will transfer to Genentech a
re-amplified CHO C2B8-producing cell line, and, within 30 days of the Original
Effective Date, transfer the technology to be licensed to Genentech under the
terms and conditions of the Expression Technology License of even date herewith,
and provide reasonable training of Genentech personnel as requested by Genentech
necessary to allow Genentech to scale up C2B8 process with the re-amplified
cell
line. Immediately after receipt of IDEC's re-amplified CHO C2B8 producing cell
line by Genentech, Genentech will begin work, at its own expense, on the
scale-up of a
re-amplified
cell line in
21
optimal
growth media to produce C2B8 at commercial scale. If Genentech determines that
such scale up is not commercially feasible, it will so notify the JDC. Upon
the
decision of the JDC to go forward, Genentech will, at its own expense, attempt
to scale up another cell line selected by the JDC or the cell line used for
2,750 liter fermenter scale production. If Genentech has successfully scaled
up
a cell line to its commercial scale and IDEC is then manufacturing C2B8,
Genentech will, at its own expense, transfer the optimized cell line and
information sufficient to allow IDEC to manufacture C2B8 by essentially the
same
process used by Genentech except for the size of the fermentation vessel. If
bridging or any other studies are required to permit the use or sale of C2B8
produced by Genentech by the optimized process, the costs of such clinical
studies shall be paid by Genentech, but shall be charged against Operating
Profits over the first three years after the first commercial sale of C2B8
produced by the optimized process. IDEC will otherwise be responsible, at its
own expense, for all expenses incurred in obtaining Regulatory Approvals for
the
manufacturing process used to produce C2B8, except that Genentech, at its own
expense, will pay the expenses incurred to receive FDA licensure of Genentech
facilities. Notwithstanding anything to the contrary in this Section 8.1, costs
incurred by either Party under this Section 8.1 after Regulatory Approval in
the
United States shall be charged to Operating Profits.
8.2 Manufacture
and Supply of C2B8.
IDEC
shall,
pursuant to a Supply Agreement to be entered into between the Parties prior
to
the date of the first submission of an application or registration for
Regulatory Approval, supply all requirements for C2B8 in final vial form for
commercial sale in all territories for the first two years after the first
Regulatory Approval in the United States or Europe, whichever comes earlier
(the
"Initial Commercial Period"). The average annual Cost of Goods Sold of C2B8
packaged in final vial form during the Initial Commercial Period shall be the
lower of (i) [*]
or (ii)
[*]
IDEC
may
continue to supply, at its option, commercial requirements for C2B8 up to the
capacity of its current manufacturing plant [*]
in San
Diego (the "Supply Option"). The Supply Option shall be exercised, if at all,
by
written notice on or before the date of the first Regulatory Approval including
a good faith estimate of IDEC's planned production levels. If the parties
determine that the FDA will not grant establishment licenses to two
manufacturing facilities using different scales of production, then the parties
will use best efforts to develop a manufacturing capacity plan by the first
Regulatory Approval. Subsequent to the Initial Commercial Period, if both
Parties are manufacturing Licensed Product at the same time, the Cost of Goods
Sold for both Parties used
for
calculation of Operating Profits shall be the lower of Genentech's or IDEC's
actual cost of Goods Sold for commercial production of C2B8 packaged in final
vial form. After the Initial Commercial Period, Genentech shall manufacture
all
requirements of C2B8 for commercial sale in excess of that which IDEC has agreed
to produce.
8.3 Transfer
of Materials and Know-how for C2B8.
(a) IDEC
shall
on Genentech's request at any time transfer to, and fully enable Genentech
with,
the then most current version of all biological materials, know-how, reagents
and expertise necessary for Genentech to undertake the manufacture of C2B8.
IDEC
shall periodically update biological materials and information related to C2B8
previously transferred to Genentech. All transfers of materials and information
to Genentech shall be free of charge to Genentech; provided, however, IDEC's
obligation to train Genentech personnel in the use of such material and
information shall be limited to [*]
person
hours.
22
(b) At
the time
Genentech completes the commercialization scale-up described in
Section 8.1, if IDEC continues to manufacture commercial quantities of
C2B8, Genentech will transfer to, and fully enable IDEC with, the then most
current version of all biological materials, know-how, reagents and expertise
applicable to the actual manufacturing process in use by IDEC necessary for
IDEC
to undertake the manufacture of C2B8 provided that IDEC uses such biological
materials, know-how, reagents and expertise solely to manufacture C2B8.
Genentech's obligation to train IDEC personnel in the use of such materials
or
information shall be limited to [*]
person
hours.
(c) IDEC
agrees
to allow Genentech to audit, at its expense, any Regulatory Approval
documentation in the possession of IDEC concerning products other than the
Licensed Products to determine if such products utilize Genentech Patents or
Genentech Know-how. Such audit(s) shall be conducted by an independent party
to
be mutually agreed upon by Genentech and IDEC, and shall be limited to one
audit
during any twelve month period.
8.4 Transfer
Price of Products for C2B8.
The
transfer price for C2B8 supplied to Genentech for sale in the Licensed Territory
will be the [*].
IDEC will
invoice Genentech within 10 days after each shipment of C2B8 to the Licensed
Territory on a shipment by shipment basis. Genentech shall pay each invoice
within thirty (30) days of receipt of both of C2B8 and invoice.
8.5 Manufacture
of C2B8 for Clinical Trials.
(a) IDEC
will
supply at no cost all quantities of C2B8 for pre-clinical studies and clinical
trials in the Co-Promotion Territory directed toward obtaining the first
Regulatory Approval in the Co-Promotion Territory.
(b) IDEC
shall
supply to Genentech, at IDEC's [*]
until the
beginning of the Initial Commercial Period and at [*]
thereafter,
all quantities of C2B8 for preclinical studies and clinical trials in the
Licensed Territory or for expanded needs beyond those set forth in the original
Development Plan.
8.6 Manufacture
and Supply of Franchise Products (other than C2B8).
Genentech
shall be responsible, and have complete decision making control for all process
development, scale-up, validation and FDA licensure for the manufacture of
all
Franchise Products (other than C2B8) in the Co-Promotion Territory, the cost
of
which shall be considered Development Costs pursuant to this Agreement. In
addition, Genentech, either itself or through a third party manufacturer, shall
be responsible for the manufacture and supply of clinical and commercial supply
of New Products for the Co-Promotion Territory (Genentech shall use commercially
reasonable and diligent efforts to maintain a reasonable Cost of Goods Sold
for
manufacture and supply of all Franchise Products).
8.7 Right
of First Negotiation for Manufacture and Supply of Franchise Products in the
Co-Promotion Territory.
In the
event Genentech decides to seek a Third Party (other than X. Xxxxxxxx La Xxxxx
XX) to manufacture and supply a particular Franchise Product in the Co-Promotion
Territory, Genentech shall promptly notify IDEC in writing. IDEC shall have
thirty (30) days from the date of Genentech’s notice to IDEC to provide written
notice to Genentech that
23
it
elects to
negotiate with Genentech the rights under which it may manufacture and supply
such Franchise Product in the Co-Promotion Territory, and a failure to timely
so
elect shall be deemed a decision not to negotiate for such rights. In
the event
that IDEC timely notifies Genentech of its desire to engage in such
negotiations, then for a period of ninety (90) days, Genentech and IDEC shall
use good faith efforts to agree upon terms under which IDEC would manufacture
and supply such Franchise Product in the Co-Promotion Territory. In the event
that IDEC and Genentech have not entered into a definitive agreement within
ninety (90) days of IDEC’s election to negotiate, then Genentech shall be free
to grant to any Third Party the right to manufacture and supply such Franchise
Product in the Co-Promotion Territory on any terms that Genentech considers
appropriate.
ARTICLE
9.
LICENSES
9.1 Licensed
Products
(a) Licenses
To Genentech Within The Field.
IDEC
grants to Genentech a worldwide license (including Asia, pursuant to the First
Amendment) under the IDEC Patents and IDEC Know-how and IDEC regulatory
submissions in the Field to develop, make, have made, use, sell, offer for
sale,
have sold and import Licensed Products. Such license shall be co-exclusive
with
IDEC in the Co-Promotion Territory and exclusive even as to IDEC in the Licensed
Territory.
(b) Nonexclusive
License To IDEC.
Genentech
grants IDEC a nonexclusive license in the United States and Canada to use
Genentech Know-how and Genentech Patents in the Field solely for the purposes
of
developing, manufacturing, having manufactured, using, selling, offering for
sale, having sold and importing C2B8 and such additional Licensed Products
as
the Parties mutually agree to develop in the Co-Promotion Territory. IDEC
covenants and agrees not to develop, make, have made, use, sell, offer for
sale,
have sold or import any product using any of the Genentech Know-how or Genentech
Patents outside of the Field. If Genentech is sublicensing any Third Party
patents under this grant, IDEC shall pay any royalties owed to any such Third
Party on account of the manufacture, use or sale of any Licensed Products by
IDEC. Genentech further grants to IDEC a co-exclusive (with Genentech) license
to use Genentech regulatory submissions in the Field solely for the purposes
of
developing, manufacturing, having manufactured, using, selling, offering for
sale, having sold and importing C2B8 and such additional Licensed Products
as
the Parties mutually agree to develop in the Co-Promotion
Territory.
9.2 New
Products
(a) Nonexclusive
License to Genentech.
IDEC
grants to Genentech a worldwide, nonexclusive license under the IDEC Patents,
IDEC Know-how and IDEC regulatory submissions in the Field to develop, make,
have made, use, sell, offer for sale, have sold and import G2H7 and each other
New Product.
(b) License
to IDEC in the Co-Promotion Territory.
Genentech
grants to IDEC a co-exclusive (with Genentech) license under the Genentech
Patents, Genentech NP
24
Patents,
Genentech Know-how and Genentech regulatory submissions in the Field in the
United States to develop, use, sell, offer for sale, have sold and import G2H7
and each other New Product. Genentech does not grant any license or rights
to
IDEC regarding development or commercialization of New Products outside the
Field or outside of the United States, and nothing in this Agreement shall
be
construed as granting IDEC any license or right to control the development
and/or commercialization of New Products outside the Field and outside the
United States.
9.3 Sublicensing.
Genentech
may grant sublicenses to its rights under this Agreement with the prior written
consent of IDEC, such consent not to be unreasonably withheld. IDEC hereby
consents to such a sublicense to X. Xxxxxxxx Xx Xxxxx or any of its affiliates.
Unless otherwise agreed, each sublicensee shall be subject to all of the
obligations of Genentech hereunder applicable to that part of the territory
being licensed.
9.4 Inclusion
of Asia in the Licensed Territory.
If a
license in Asia becomes available on an exclusive basis with respect to C2B8,
IDEC shall notify Genentech in writing. If such notification is prior to or
on
December 31, 1995, then Genentech shall pay IDEC [*]
upon
signing
of an amendment to this Agreement to include such territory in the Licensed
Territory. After December 31, 1995, Genentech shall have the option to include
Asia in the Licensed Territory, if available, on sixty (60) days written notice,
for the [*]
license
issue fee payable pursuant to this Section. IDEC agrees to use its best efforts
within 90 days of the Original Effective Date to obtain at least a co-exclusive
license for Genentech in the Asian territory. The consideration to IDEC for
a
co-exclusive license involving Genentech in the Asian
territory shall not be less than [*]
of
which
Genentech shall pay no more than [*].
If
Asia is
added to the Licensed Territory, it shall be subject to the same terms and
conditions set forth in this Agreement, provided that Genentech shall have
no
obligation to make any additional payments with respect to such added Asian
territory other than royalties as specified in this Agreement. Notwithstanding
the foregoing provisions of this Section 9.4, the Parties acknowledge that
Asia,
pursuant to the First Amendment, is included within the Licensed
Territory.
9.5 Shared
Information.
All of the
information described in Section 14.1 below shall be deemed IDEC Know-how and
Genentech Know-how for purposes of this Article 9 and the licenses granted
herein.
9.6 Third
Party Rights.
In the
event that IDEC or Genentech becomes aware of any Third Party rights that may
be
relevant to
development, manufacture or commercialization of the Franchise Products in
the
Co-Promotion Territory, that
Party
shall promptly notify the other Party. To the extent that the Parties mutually
agree that such rights are necessary to
develop,
manufacture or commercialize the Franchise Products in the Co-Promotion
Territory, the Parties shall discuss an appropriate course of action to obtain
a
license to such rights in order to further the objectives of the Parties under
this Agreement.
ARTICLE
10.
TRADEMARKS
25
10.1 (a) Product
Trademarks for Licensed Products.
All
Licensed Products shall be sold in the Co--Promotion Territory under trademarks
selected by the JCC and owned jointly by Genentech and IDEC in the Co-Promotion
Territory and Licensed Territory. The JCC shall use best efforts to select
a
worldwide trademark. Each Party hereby grants the other a fully-paid
co--exclusive license to use its trademarks in the Co-Promotion Territory for
the Co-Promotion activities provided for in this Agreement. IDEC shall control
preparation, prosecution and maintenance of applications related to such
trademarks and the costs in the Co-Promotion Territory ("Trademark Costs")
shall
(i) prior to Regulatory Approval in the United States, be paid by IDEC, and
(ii)
after Regulatory Approval in the United States, be included in Other Operating
Income/Expense pursuant to Exhibit A. Genentech shall control preparation,
prosecution, maintenance and applications related to trademarks in the Licensed
Territory and shall pay all costs incurred with respect thereto, and will notify
IDEC if Genentech believes in good faith that sole ownership of the trademark
in
a particular country in the Licensed Territory is the best method to protect
the
trademark, in which case Genentech shall be the sole owner of such
trademark.
(b) Trademarks
for New Products.
G2H7 and
each other New Product shall
be
sold in the Co-Promotion Territory under trademarks selected by the JCC and
owned jointly by Genentech and IDEC in the Co-Promotion Territory. The JCC
shall
use best efforts to select a worldwide trademark. Each Party hereby grants
the
other a fully-paid co-exclusive license to use its trademarks in the
Co-Promotion Territory for the Co-Promotion activities provided for in this
Agreement. Genentech shall control preparation, prosecution and maintenance
of
applications related to such trademarks and the Trademark Costs associated
with
New Products in the Co-Promotion Territory shall be included in Other Operating
Income/Expense pursuant to Exhibit A. Genentech shall solely own, and control
preparation, prosecution, maintenance and applications related to such
trademarks outside the United States and shall pay all costs incurred with
respect thereto.
10.2 Infringement
of Trademarks.
Each Party
shall notify the JCC promptly upon learning of any actual, alleged or threatened
infringement of a trademark applicable to a Franchise Product (the "Trademark")
in the Co-Promotion Territory or of any unfair trade practices, trade dress
imitation, passing off of counterfeit goods, or like offenses in the
Co--Promotion Territory. Upon learning of such offenses from a Party regarding
a
jointly owned Trademark, the JMC shall confer with the Parties regarding which
Party and counsel should be assigned to defend the Trademark. The Party
defending the Trademark shall take all reasonable and appropriate steps to
protect, defend and maintain the Trademark for use by the Parties in connection
with the Franchise Product. Upon learning of such an offense from a Party
regarding a Trademark owned solely by one of the Parties, and not provided
for
above in this Section, the JCC shall confer with the Parties regarding the
defense of such Trademark. The decision whether and how to defend such a
Trademark owned solely by one Party will rest with such Party.
10.3 Costs
of Defense for Jointly Owned Trademark.
All of the
costs, expenses and legal fees in bringing, maintaining and prosecuting any
action to maintain, protect or defend a jointly owned Trademark in the
Co-Promotion Territory, and any recovery shall be included in the Other
Operating Income/Expense. All of the costs, expenses and legal, fees in
bringing, maintaining and prosecuting any action to maintain, protect or defend
a Trademark in the Licensed Territory shall be paid by, and any recovery shall
be paid to, Genentech.
26
ARTICLE
11.
CONFIDENTIALITY
11.1 Confidentiality;
Exceptions.
Except to
the extent expressly authorized by this Agreement or otherwise agreed in
writing, the Parties agree that, for the term of this Agreement and for seven
(7) years thereafter, the receiving Party shall keep confidential and shall
not
publish or otherwise disclose or use for any purpose other than as provided
for
in this Agreement any Information and other information and materials furnished
to it by the other Party pursuant to this Agreement (collectively, "Confidential
Information"), except to the extent that it can be established by the receiving
Party that such Confidential Information:
(a) was
already
known to the receiving Party, other than under an obligation of confidentiality,
at the time of disclosure by the other Party;
(b) was
generally available to the public or otherwise part of the public domain at
the
time of its disclosure to the receiving Party;
(c) became
generally available to the public or otherwise part of the public domain after
its disclosure and other than through any act or omission of the receiving
Party
in breach of this Agreement;
(d) was
disclosed to the receiving Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the disclosing Party
not to disclose such information to others; or.
(e) was
subsequently developed by the receiving Party without use of the Confidential
Information as demonstrated by competent written records.
11.2 Authorized
Disclosure.
Each Party
may disclose Confidential Information hereunder to the extent such disclosure
is
reasonably necessary in filing or prosecuting patent applications, prosecuting
or defending litigation, complying with applicable governmental regulations
or
conducting preclinical or clinical trials, provided that if a Party is required
by law or regulation to make any such disclosure of the other Party's
Confidential Information it will, except where impracticable for necessary
disclosures, for example in the event of medical emergency, give reasonable
advance notice to the other Party of such disclosure requirement and, except
to
the extent inappropriate in the case of patent applications, will use its
reasonable efforts to secure confidential treatment of such Confidential
Information required to be disclosed. In addition, each Party shall be entitled
to disclose, under a binder of confidentiality containing provisions as
protective as those of this Article 11, Confidential Information to consultants
and other Third Parties only for any purpose provided for in this Agreement.
Nothing in this Article 11 shall restrict any Party from using for any purpose
any Information developed by it during the course of the collaboration
hereunder.
11.3 Survival.
This
Article 11 shall survive the termination or expiration of this Agreement for
a
period of seven (7) years.
27
11.4 Termination
of Prior Agreement.
This
Agreement supersedes the Confidentiality Agreement between the Parties dated
September 9, 1994. All Information exchanged between the Parties under that
Agreement shall be deemed Confidential Information and shall be subject to
the
terms of this Article 11.
11.5 Publications.
Prior to
the end of Phase II Clinical Trials of each Franchise Product in the
Co-Promotion Territory and subject to the applicable publication provisions
of
any Clinical Trial Agreements with investigators, the JDC with appropriate
input
from the JCC will determine the overall strategy for publication in support
of
such Franchise Product in the Co-Promotion Territory. Except as required by
law,
each Party agrees that it shall not publish or present the results of studies
carried out as part of the collaboration without the approval of the JDC and
the
opportunity for prior review by the other Party. Each Party shall provide to
the
other the opportunity to review any proposed abstracts, manuscripts or
presentations (including information to be presented verbally) which relate
to
any Franchise Product at least thirty (30) days prior to their intended
submission for publication and such submitting Party agrees, upon written
request from the other Party, not to submit such abstract or manuscript for
publication or to make such presentation until the other Party is given a
reasonable period of time to seek patent protection for any material in such
publication or presentation which it believes is patentable.
ARTICLE
12.
OWNERSHIP
OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
12.1 Modified
Definitions.
For
purposes of this Article 12, IDEC Patents, Genentech Patents and Genentech
NP
Patents shall not include Patents owned jointly by the Parties. "Joint Patents"
shall mean Patents owned jointly by the Parties which cover the manufacture,
use
or sale of Franchise Products.
12.2 Ownership
of Intellectual Property.
IDEC shall
own all inventions made under this Agreement solely by it or its employees.
Genentech shall own all inventions made under this Agreement solely by its
employees. All inventions made under this Agreement jointly by employees of
IDEC
and Genentech will be owned jointly by IDEC and Genentech
and each Party shall retain full ownership under any Patents resulting
therefrom, with full ownership rights in any field and subject to the licenses
granted in Article 9, the right to sublicense without the consent of the other
Party, without accounting. The laws of the United States with respect to joint
ownership of inventions shall apply in all jurisdictions giving force and effect
to this Agreement. The Parties shall jointly own Joint Know-how.
12.3 Disclosure
of Patentable Inventions.
In
addition to the disclosures required under Article 14, each Party shall provide
to the other, any written invention disclosure submitted to a Party's legal
department in the normal course which discloses an invention made under this
Agreement that is useful in the Field. Such invention disclosures shall be
provided to the other Party within thirty (30) days after the Party commences
preparation of a patent application based on such disclosure.
28
12.4 Coordination.
The
Parties intend to prosecute and manage IDEC Patents, Genentech Patents and
Genentech NP Patents for the purpose of providing the broadest protection for
Franchise Products. The Parties will share information and each Party will
consider the views of the other Party with respect to the scope of claims and
decisions regarding the prosecution and maintenance of such Patents as necessary
to achieve such purpose.
12.5 Prosecution
of Existing Patents.
(a) IDEC
shall
disclose to Genentech the complete texts of all IDEC Patents filed by IDEC
prior
to the Restated Effective Date which claim the manufacture, use or sale of
Franchise Products as well as all information received concerning the
institution or possible institution of any interference, opposition,
reexamination, reissue, revocation, nullification or any official proceeding
involving an IDEC Patent anywhere in the Co-Promotion Territory or Licensed
Territory. Genentech shall have the right to review all such IDEC Patents and
all proceedings related thereto and make recommendations to IDEC concerning
them
and their conduct and IDEC shall consider in good faith for the Co-Promotion
Territory and take into account for the Licensed Territory Genentech's
reasonable comments related thereto. IDEC agrees to keep Genentech promptly
and
fully informed of the course of patent prosecution or other proceedings of
such
IDEC Patents including by providing Genentech with copies of substantive
communications, search reports and third party observations submitted to or
received from patent offices within the Co-Promotion Territory or Licensed
Territory. Genentech shall provide such patent consultation to IDEC related
to
such IDEC Patents at no cost to IDEC. All reasonable costs that IDEC incurs
after the Original Effective Date in filing, prosecuting and maintaining IDEC
Patents in the Co-Promotion Territory shall be borne by IDEC until the date
of
Regulatory Approval and thereafter shall be charged to Other Operating
Income/Expense. All such reasonable costs which IDEC will incur in the Licensed
Territory shall be reimbursed by Genentech; provided, however, that Genentech
shall have the right to determine which countries within the Licensed Territory
in which to file, prosecute and maintain IDEC Patents. Genentech shall hold all
information disclosed to it under this Article 12 as confidential subject to
the
provisions of Article 11 of this Agreement. Genentech shall have the right
to
assume responsibility for any IDEC Patent or any part of any such Patent which
IDEC intends to abandon or otherwise cause or allow to be forfeited provided
that the claims of such IDEC Patent covers Franchise Product or formulations,
methods of manufacture or methods of use thereof.
(b) Genentech
shall have the right, using in-house or outside legal counsel selected at
Genentech's sole discretion, to prepare, file, prosecute, maintain and obtain
extensions of Genentech Patents, Genentech NP Patents or Joint Patents filed
prior to the Restated Effective Date in countries of Genentech's choice
throughout the Licensed Territory and in such countries within the Co-Promotion
Territory as
agreed
by
the Parties with appropriate credit to IDEC representatives, including the
naming of such parties as inventors where appropriate. Genentech shall bear
the
costs relating to such activities in the Licensed Territory at all times and
in
the Co-Promotion Territory until Regulatory Approval in the United States.
Such
costs in the Co-Promotion Territory after Regulatory Approval in the United
States shall be included in Other Operating Income/Expense pursuant to Exhibit
A. Genentech shall disclose to IDEC the complete text of, and shall use
reasonable efforts to solicit IDEC's advice and review of the nature and text
of, all Genentech Patents, Genentech NP Patents and Joint Patents and material
prosecution
29
matters
related thereto in reasonably sufficient time prior to filing thereof, and
Genentech shall consider in good faith for the Co-Promotion Territory and take
into account for the Licensed Territory IDEC's reasonable comments related
thereto.
12.6 Prosecution
of New Patents.
(a) Genentech
shall have the first right, using in-house or outside legal counsel selected
at
Genentech's sole discretion, to prepare, file, prosecute, maintain and obtain
extensions of Genentech Patents, Genentech NP Patents or Joint Patents filed
after the Restated Effective Date in countries of Genentech's choice throughout
the Licensed Territory and in such countries within the Co-Promotion Territory
as
agreed
by
the Parties with appropriate credit to IDEC representatives, including the
naming of such parties as inventors where appropriate. Genentech shall bear
the
costs relating to such activities in the Licensed Territory at all times and
in
the Co-Promotion Territory until Regulatory Approval in the United States.
Such
costs in the Co-Promotion Territory after Regulatory Approval in the United
States shall be included in Other Operating Income/Expense pursuant to Exhibit
A. Genentech shall disclose to IDEC the complete text of, and shall use
reasonable efforts to solicit IDEC's advice and review of the nature and text
of, all Genentech Patents, Genentech NP Patents and Joint Patents and material
prosecution matters related thereto in reasonably sufficient time prior to
filing thereof, and Genentech shall consider in good faith IDEC's reasonable
comments related thereto.
(b) IDEC
shall
have the first right, using in-house or outside legal counsel selected at IDEC's
sole discretion, to prepare, file, prosecute, maintain and obtain extensions
of
IDEC Patents filed after the Restated Effective Date in countries agreed to
by
the Parties within the Co-Promotion Territory and in countries of Genentech's
choice within the Licensed Territory. IDEC shall disclose to Genentech the
complete text of, and shall use reasonable efforts to solicit Genentech's advice
and review of the nature and text of, such IDEC Patents and material prosecution
matters related thereto in reasonably sufficient time prior to filing thereof,
and IDEC shall (i) in the Co-Promotion Territory consider in good faith
Genentech's reasonable comments related thereto and (ii) in the Licensed
Territory take into account Genentech's reasonable comments related thereto.
All
reasonable costs related to preparing, filing, prosecuting, maintaining and
extending IDEC Patents shall be (i) prior to Regulatory Approval in the United
States, paid by IDEC and (ii) after Regulatory Approval in the United States,
included in Other Operating Income/Expense pursuant to Exhibit A for activities
within the Co-Promotion Territory and reimbursed by Genentech to IDEC for
activities within the Licensed Territory.
(c) If
Genentech, prior or subsequent to filing any Genentech Patents, Genentech NP
Patents or Joint Patents, elects not to file, prosecute or maintain such Patents
or certain claims encompassed by such Patents, Genentech shall give IDEC notice
thereof within a reasonable period prior to allowing such Patents or certain
claims encompassed by such Patents to lapse or become abandoned or
unenforceable, and IDEC shall thereafter have the right, at its sole expense,
to
prepare, file, prosecute and maintain Patents or certain claims encompassed
by
such Patents that claim Franchise Products or formulations, methods of
manufacture or methods of use thereof in countries of its choice throughout
the
world. If IDEC, prior or subsequent to filing IDEC Patents, elects not to file,
prosecute or maintain such Patents or certain claims encompassed by such Patents
that claim Franchise Products or formulations, methods of manufacture or methods
of use
30
thereof,
IDEC shall give Genentech notice thereof within a reasonable period prior to
allowing such Patents or certain claims encompassed by such Patents to lapse
or
become abandoned or unenforceable,
and Genentech shall thereafter have the right, at its sole expense, to prepare,
file prosecute and maintain such Patents or certain claims encompassed by such
Patents in countries of its choice throughout the world.
(d) The
Party
filing Joint Patents shall do so in the name of and on behalf of both Genentech
and IDEC. Each of IDEC and Genentech shall hold all information it presently
knows or acquires under this Paragraph which is related to all such Patents
as
confidential subject to the provisions of Article 11 of this
Agreement.
12.7 Waiver.
(a) IDEC
on
behalf of itself and its directors, employees, officers, shareholders, agents,
successors and assigns hereby waives any and all actions and causes of action,
claims and demands whatsoever, in law or equity of any kind it or they may
have
against Genentech, its officers, directors, employees, shareholders, agents,
successors and assigns, which may arise in any way except as a result of
Genentech's gross negligence, recklessness, or willful misconduct in performance
of its rights or obligations under Section 12.5 or Section 12.6 of this
Agreement.
(b) Genentech
on
behalf of itself and its directors, employees, officers, shareholders, agents,
successors and assigns hereby waives any and all actions and causes of action,
claims and demands whatsoever, in law or equity of any kind it or they may
have
against IDEC, its officers, directors, employees, shareholders, agents,
successors and assigns, which may arise in any way except as a result of IDEC's
gross negligence, recklessness, or willful misconduct in performance of its
rights or obligations under Section 12.5 or Section 12.6 of this
Agreement.
12.8 Further
Assurances.
Notwithstanding the provisions of Section 12.5 or Section 12.6 of this
Agreement, each Party shall, at its own expense, provide reasonable assistance
to the other Party to facilitate filing of all Patents covering inventions
referred to in Section 12.2 of this Agreement and shall execute all documents
deemed necessary or desirable therefor.
12.9 Initial
Filings If Made Outside of the United States.
The
Parties agree to use reasonable efforts to ensure that any IDEC Patent,
Genentech Patent, Genentech NP Patent or Joint Patent filed outside of the
United States prior to a U.S. filing will be in a form sufficient to establish
the date of original filing as a priority date for the purposes of a subsequent
U.S. filing and that the requisite foreign filing license will be
obtained.
12.10 Patent
Enforcement.
(a) Notice.
In the
event that IDEC or Genentech becomes aware of actual or threatened infringement
of a patent related to Franchise Product, anywhere in the world, that Party
shall promptly notify the other Party in writing.
(b) IDEC
Patents.
IDEC shall
have the first right but not the obligation to bring an infringement action
or
file any other appropriate action or claim directly related to
infringement
31
of
an IDEC
Patent , wherein such infringement relates to Franchise Product, against any
Third Party. The costs of patent enforcement and related recoveries associated
with the Co-Promotion Territory incurred by IDEC shall be included in Other
Operating Income/Expense. Such patent enforcement costs in the Licensed
Territory shall be borne by IDEC. If IDEC does not commence a particular
infringement action within ninety (90) days after it received such written
notice, Genentech, after notifying IDEC in writing, shall be entitled to bring
such infringement action or any other appropriate action or claim at its own
expense. The Party conducting such action shall consider in good faith the
other
Party's comments on the conduct of such action. Recovery from any settlement
or
judgment from such action in the Licensed Territory shall go first to reimburse
the expenses of the Parties and the remainder shall be shared by the Parties
in
proportion to their respective economic interests. In any event, IDEC and
Genentech shall assist one another and reasonably cooperate in any such
litigation at the other's request without expense to the requesting
Party.
(c) Genentech
Patents and Genentech NP Patents.
Genentech
shall have the first right but not the obligation to bring an infringement
action or file any other appropriate action or claim directly related to
infringement of a Genentech Patent or Genentech NP Patent, wherein such
infringement relates to Franchise Product, against any Third Party. The costs
of
patent enforcement and related recoveries associated with the Co-Promotion
Territory incurred by Genentech shall be charged to Other Operating
Income/Expense. Such patent enforcement costs in the Licensed Territory shall
be
borne by Genentech. Recovery from any settlement or judgment from such action
in
the Licensed Territory shall go first to reimburse the expenses of the Parties
and the remainder shall be shared by the Parties in proportion to their
respective economic interests.
(d) Joint
Patents.
Upon
notice of an alleged infringement of a Joint Patent, the Parties will discuss
in
good faith an appropriate course of action to further the objectives of the
Parties under this Agreement.
12.11 Infringement
Defense.
(a) Defense
in the Co-Promotion Territory.
If a Third
Party asserts that a patent or other right owned by it is infringed by any
Franchise Product in the Co-Promotion Territory, the JMC shall establish a
plan
for a common defense and select the Party responsible for managing such plan.
The costs of any such action incurred by one or both of the Parties at the
direction of the JMC (including the costs of any judgment, award, decree or
settlement) will be chargeable to the collaboration as Other Operating
Income/Expense pursuant to Exhibit A.
(b) Defense
in the Licensed Territory.
If a Third
Party asserts that a patent or other right owned by it is infringed by any
Franchise Product in the Licensed Territory, Genentech will be solely
responsible for deciding how and whether to defend against any such assertions
at its cost and expense. If Genentech is required to pay royalties to such
Third
Party as a result of such action, it will be entitled to deduct [*]
of such
royalties against royalties owing to IDEC under, but only to the extent
permitted by, Section 7.7(d).
32
ARTICLE
13.
REPRESENTATIONS
AND WARRANTIES
13.1 Representations
and Warranties.
Each of
the Parties hereby represents and warrants, as of the Restated Effective Date,
as follows:
(a) This
Agreement is a legal and valid obligation binding upon such Party and
enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a party or by
which
it is bound, nor violate any law or regulation of any court, governmental body
or administrative or other agency having jurisdiction over it.
(b) Such
Party
has not, and during the term of the Agreement will not, grant any right to
any
Third Party relating to its respective Patents and Know-how in the Field which
would conflict with the rights granted to the other Party
hereunder.
(c) Each
Party
represents and warrants that it has the right to grant the licenses granted
herein.
(d) Except
as
set forth on Exhibit D of the Original Agreement, IDEC is not obligated under
any agreement as of the Original Effective Date to pay any Third Party royalties
with respect to C2B8
As
used in
this Section 13.1, “Patents” means IDEC
Patent
with respect to IDEC, and Genentech Patents and Genentech NP Patents with
respect to Genentech; and “Know-how” means IDEC Know-how with respect to IDEC,
and Genentech Know-how with respect to Genentech.
13.2 Performance
by Affiliates.
The
Parties recognize that each may perform some or all of its obligations under
this Agreement through Affiliates, provided,
however, that
each
Party shall remain responsible and be guarantor of the performance by its
Affiliates and shall cause its Affiliates to comply with the provisions of
this
Agreement in connection with such performance.
ARTICLE
14.
INFORMATION
AND REPORTS
14.1 Information.
Genentech
and IDEC will disclose and make available to each other all preclinical,
clinical, regulatory, commercial and other information, including without
limitation all information relevant to the joint promotion of Franchise
Products, developed
by
Genentech or IDEC concerning Franchise
Products at
any time
during the term of this Agreement. Each Party will use commercially reasonable
and diligent efforts to disclose to the other Party all significant information
promptly after it is learned or its significance is appreciated. Each Party
shall own and maintain its own database of clinical trial data accumulated
from
all clinical trials of Franchise
Products for
which it
was responsible and of adverse drug event information for
all
Franchise
Products.
At the
option of the requesting Party, such data shall be provided in
a
33
computer
readable format by the providing Party, to the extent available, which shall
also assist in the transfer and validation of such data to the receiving
Party.
14.2 Complaints.
Each Party
shall maintain a record of all complaints it receives with respect to any
Franchise
Product.
Each Party
shall notify the other of any complaint received by it in sufficient detail
and
within five (5) business days after the event, and in any event in sufficient
time to allow the responsible Party to comply with any and all regulatory
requirements imposed upon it in any country.
14.3 Adverse
Drug Events.
The
Parties recognize that the holder of a Drug Approval Application may be required
to submit information and file reports to various governmental agencies on
compounds under clinical investigation, compounds proposed for marketing, or
marketed drugs. Information must be submitted at the time of initial filing
for
investigational use in humans and at the time of a request for market approval
of a new drug. In addition, supplemental information must be provided on
compounds at periodic intervals and adverse drug experiences must be reported
at
more frequent intervals depending on the severity of the experience.
Consequently, each Party agrees to:
(a) provide
to
the other for initial and/or periodic submission to government agencies
significant information on the drug from preclinical laboratory, animal
toxicology and pharmacology studies, as well as adverse drug experience reports
from clinical trials and commercial experiences with the compound;
(b) in
connection with investigational drugs, report to the other within three (3)
days
of the initial receipt of a report of any unexpected or serious experience
with
the drug, or sooner if required for either Party to comply with regulatory
requirements; and
(c) in
connection with marketed drugs, report to the other within five (5) business
days of the initial receipt of a report of any adverse experience with the
drug
that is serious and unexpected or sooner if required for either Party to comply
with regulatory requirements. Serious adverse experiences mean any experience
that suggests a significant hazard, contraindication, side effect or precaution,
or any experience that is fatal or life threatening, is permanently disabling,
requires or prolongs inpatient hospitalization, or is a congenital anomaly,
cancer, or overdose. An unexpected adverse experience is one not identified
in
nature, specificity, severity or frequency in the current investigator brochure
or the U.S. labeling for the drug. Each Party also agrees that if it contracts
with a Third Party for research to be performed by such Third Party on the
drug,
that Party agrees to require such Third Party to report to contracting Party
the
information set forth in subparagraph (a), (b), and (c) above.
14.4 Records
of Net Sales and Costs.
Each Party
will maintain complete and accurate records which are relevant to costs,
expenses, sales and payments under this Agreement and such records shall be
open
during reasonable business hours for a period of
three (3)
years from creation of individual records for examination at the other Party's
expense, and, with respect to the audit provisions of Section A.6.1 and A.6.2
of
Exhibit A, such examination shall not be conducted more often than once each
year by an independent public accountant selected by the other Party as
described in A.6 of Exhibit A. Any records or accounting information received
from the other
34
Party
shall
be Confidential Information for purposes of Article 11. Results of any such
audit shall be provided to both Parties, subject to Article 11.
14.5 Publicity
Review.
The
Parties agree that the public announcement of the execution of this Agreement
shall be in the form of a press release to be agreed upon on or before the
Restated Effective Date and thereafter each Party shall be entitled to make
or
publish any public statement consistent with the contents thereof. Thereafter,
IDEC and Genentech will
jointly
discuss and agree, based on the principles of this Section 14.5, on any
statement to the public regarding this Agreement or any aspect of this Agreement
subject in each case to disclosure otherwise required by law or regulation
as
determined in good faith by each Party. The principles to be observed by IDEC
and Genentech in such public disclosures will be: accuracy, the requirements
for
confidentiality under Article 11, the advantage a competitor of IDEC or
Genentech may gain from any public statements under this Section 14.5, and
the
standards and customs in the biotechnology and pharmaceutical industries for
such disclosures by companies comparable to IDEC and Genentech. The terms of
this Agreement may also be disclosed to (i) government agencies where required
by law, or (ii) Third Parties with the prior written consent of the other Party,
which consent shall not be unreasonably withheld, so long as such disclosure
is
made under a binder of confidentiality and so long as highly sensitive terms
and
conditions such as financial terms are extracted from the Agreement or not
disclosed upon the request of the other Party.
ARTICLE
15.
TERM
AND TERMINATION
15.1 Term.
This
Agreement, which shall commence as of the Restated Effective Date, shall
continue the collaboration contemplated by the Parties under the Original
Agreement, including the First Amendment and Second Amendment thereto, as
modified hereby. The Parties have specifically provided elsewhere in this
Agreement the term during which certain rights and obligations hereunder shall
apply. Unless sooner terminated as provided herein and except as provided in
Section 15.2 below, (a) the remaining provisions of this Agreement relating
to
activities in the Co-Promotion Territory shall continue in effect until the
date
on which the Parties are no longer entitled to receive a share of Operating
Profits or Losses on any Franchise
Product
and
(b) the remaining provisions of this Agreement relating to activities in the
Licensed Territory shall continue in effect until the date on which Genentech
is
no longer required to pay a royalty on Royalty-Bearing Sales in the Licensed
Territory. Those provisions shall govern the term of the rights and obligations
specifically covered thereby. Upon the expiration, but not an earlier
termination, of this Agreement, all licenses granted by either Party to the
other Party hereunder shall become fully paid up and irrevocable.
15.2 Sale
or Purchase of Co-Promotion Rights on Change of Control.
(a) Purchase
Option with respect to all Franchise Products and Third Party Anti-CD20
Products. Genentech
may, by written notice by certified mail, return receipt requested, to IDEC
(the
"Auction Notice"), indicate a single price (the "Auction Price") at which
Genentech would be willing to purchase from IDEC all of the rights held by
IDEC
hereunder with respect to
35
all
Licensed
Products in the Co-Promotion Territory (the "Purchase Option"). This right
will
be exercisable at any time if (i) a single stockholder or group of affiliated
stockholders, other than Genentech or an Affiliate, who would be required to
file a Schedule 13D under the Securities Exchange Act of 1934, as amended,
acquires or obtains the right to acquire voting stock of IDEC so that its total
holdings of such stock equal or exceed fifty percent (50%) of the then
outstanding voting stock of IDEC, or (ii) a Third Party acquires or obtains
the
right to acquire all or substantially all of the assets of IDEC, in which case
Genentech must exercise such right within ninety (90) days after the date on
which such stockholder or group of stockholders passes the fifty percent (50%)
threshold or the date of such acquisition. Either such event shall be referred
to as a "Change of Control Event." IDEC shall promptly notify Genentech upon
IDEC's receipt of written notice that such Change of Control Event will be
occurring and shall use best efforts to ensure that such notice is given to
Genentech at least ninety (90) days before the occurrence of such Change of
Control Event. The Auction Price may be in the form of (i) cash, (ii) a royalty
on sales of the Licensed Products in the Co-Promotion Territory or (iii) some
combination of the foregoing. Concurrent
with the initiation of an Auction Notice by Genentech under this Section 15.2,
a
royalty price (the "Royalty Price") at which Genentech will purchase from IDEC
all of the rights held by IDEC hereunder with respect to all New
Products
(including G2H7), and
Third
Party Anti-CD20 Products for which IDEC entered into a written agreement with
Genentech pursuant to Section 2.6 prior to such date, in
the
United States shall be set. The
Royalty
Price with respect to such New Products and Third Party Anti-CD20 Products
shall
be based
on the
[*]
of
such
product at the time of Genentech's written notice to IDEC under this Section
15.2 as follows:
|
Stage
of Product
|
Royalty
Price
|
|
Prior
to completion of the initial
Phase II Clinical Trial(s)
for
the product:
|
Compensation
equivalent to [*]
of
such product in the United States; provided, IDEC (or its successor)
timely reimburses Genentech, on a calendar quarter basis, [*]
of
its Development Costs for developing or marketing such product in
the
Co-Promotion Territory through [*]
for
such product. Genentech shall timely provide IDEC (or its successor)
with
quarterly invoices for Development Costs incurred under this section,
and
IDEC (or its successor) shall pay such invoices within sixty (60)
days
thereof. IDEC (or its successor) shall have the right to audit such
invoices no more than once a calendar year, such audit to be conducted
as
provided in accordance with Section 15.2(c)(iii).
|
|
After
completion of the [*]
for
the product, but prior to [*]
of
such product:
|
Compensation
equivalent to [*]
of
such product in the United States.
|
|
After
[*]
of
the
product:
|
With
respect to such New Products, compensation to IDEC or payment by
IDEC to
Genentech equivalent to [*]
for
such New Product in the United States, and
With
respect to such Third Party Anti-CD20 Products, compensation to IDEC
or
payment by IDEC to Genentech equivalent to the amount otherwise specified
to be paid on such product in the United States [*]
as
established pursuant to the provisions of Section
2.6.
|
36
It
is
understood and agreed that Genentech shall only be required to make Royalty
Price payments on such New Products or Third Party Anti-CD20 Products (which
were opted in by IDEC pursuant to Section 2.6 prior to the Auction Notice)
which
were under development pursuant to an approved or proposed Development Plan
or
being commercially sold at the time of such Auction Notice, and that subsequent
development of any products incorporating any protein or peptide, other than
the
proteins or peptides that were incorporated into such New Products or Third
Party Anti-CD20 Products, shall not be subject to such Royalty Price
payments.
(b) Sales
Option with respect to all Licensed Products. Within
thirty (30) days of receipt of the Auction Notice, IDEC shall notify Genentech
in writing whether it elects to accept the Auction Price for its rights with
respect to all Licensed Products or pay Genentech the Profit Sharing Ratio
times
the Auction Price for such Licensed Products (where "the Profit Sharing Ratio"
[*]
to purchase
all of the rights held by Genentech hereunder with respect to Licensed Products
in the Co-Promotion Territory (the "Sales Option"); provided,
however, if
IDEC does
not notify Genentech of its election within such period, IDEC shall be deemed
to
have sold its rights hereunder with respect to the Licensed Products in the
Co-Promotion Territory at the Auction Price under the Purchase Option. If
Genentech has not received a response within twenty (20) days after Genentech
sends its initial notice hereunder, Genentech shall on the twentieth (20th)
day
after sending such initial notice, deliver a second notice by certified mail,
return receipt requested. For the avoidance of doubt, it is understood and
agreed that IDEC shall have no right under this Agreement to purchase any of
the
rights held by Genentech hereunder with respect to New Products, and/or Third
Party Anti-CD20 Products for which IDEC entered into a written agreement with
Genentech pursuant to Section 2.6 prior to such date.
(c) On
that date
which is thirty (30) days after receipt of the Auction Notice:
(i) all
rights
held by IDEC (including any successor in interest) under Section 2.5 and 2.6,
other than with respect to New Products and/or Third Party Anti-CD20-Products
for which IDEC entered into a written agreement with Genentech pursuant to
Section 2.6 prior to such date, shall terminate;
(ii) all
rights
held by IDEC (including any successor in interest) hereunder with respect to
New
Products in the United States, and Third Party Anti-CD20 Products for which
IDEC
entered into a written agreement with Genentech pursuant to Section 2.6 prior
to
such date, including the right to receive further payments from Genentech shall
terminate and Genentech shall thereafter pay IDEC the Royalty Price for each
such product in the United States, without offset of any kind; such obligation
to continue, on a product-by-product basis, for eleven (11) years from the
date
of first commercial sale of such product in the United States (for avoidance
of
doubt, a sale for “compassionate use” shall not be deemed a first commercial
sale);
(iii) Genentech
or
its designee shall make its Royalty Price payments to IDEC or its designee
quarterly within sixty (60) days following the end of each calendar quarter
for
which such payments are due. Each Royalty Price payment shall be accompanied
by
a report
37
summarizing
the Net Sales or Operating Profits (or Losses), as applicable, for such New
Product or Third Party Anti-CD20 Product, during the relevant calendar quarter.
IDEC
shall have the right, upon
written
notice to Genentech, and not more often than once each calendar year, to have
an
independent accounting firm, selected by IDEC and reasonably approved by
Genentech, inspect Genentech's books of accounts for the sole purpose of
verifying the correctness of calculations or such costs, expenses or payments
made under this Section 15.2 with respect to sales of such products. Such audits
will be conducted at the expense of IDEC; provided, however, that if the audit
results in an adjustment of greater than [*]
or
Operating Profits (or Losses), as applicable, in any period, the cost of the
audit will be borne by Genentech. Audit results will be shared with both
Parties. Audits are limited to results in the two (2) years prior to audit
notification;
(iv) if
the
Purchase Option was elected (or deemed to be elected) pursuant to Section
15.2(b) with respect to all Licensed Products, all rights held by IDEC hereunder
with respect to the Licensed Products in the Co-Promotion Territory including
the right to receive further payments from Genentech shall terminate and
Genentech shall pay IDEC [*]
of the
Auction Price that is payable in cash on such date;
(v) if
the Sales
Option was elected pursuant to Section 15.2(b) with
respect
to all Licensed Products,
all rights
held by Genentech hereunder with respect to the Licensed
Products
in the
Co-Promotion Territory shall terminate and IDEC shall pay Genentech [*]
of
the price
[*]
that is
payable in cash on such date;
(vi) the
purchasing Party's rights under the selling Party's Patents and Know-how shall
become exclusive (with right of sublicense) and non-revocable with
respect
to all Licensed Products in
the Field
and in the Co-Promotion Territory (and to the extent not already included on
such date, such rights shall include the right to manufacture and have
manufactured under the selling Party’s Patents and Know-How), and the selling
Party's license under the purchasing Party's Patents and Know-how with
respect
to all Licensed Products in
the Field
and in the Co-Promotion Territory shall terminate;
(vii) the
selling
Party shall (x) extend to the purchasing Party the opportunity to acquire a
non-exclusive license under any Third Party rights Controlled by the selling
Party as of such date, such terms, to the extent reasonably practicable, to
be
on the same financial terms as the selling Party has with respect to such Third
Party rights; and (y) to the extent the selling Party is licensed under any
Third Party rights not Controlled by the selling Party on such date, use its
commercially reasonable and diligent efforts to assist the purchasing Party
in
obtaining a license for such Third Party rights under the same financial terms,
to the extent reasonably practicable, as the selling Party has with respect
to
such Third Party rights, in each case, to the extent such rights are necessary
for the purchasing Party to develop, manufacture or commercialize the Franchise
Products purchased by the purchasing Party as of such date.
(viii) the
selling
Party shall use commercially reasonable and diligent efforts to transfer to
the
purchasing Party any technology, materials, data and regulatory submissions,
existing and utilized in the development, manufacture and commercialization
of
the Franchise Product as of such date, so as to fully enable the purchasing
Party to develop, manufacture and commercialize the Franchise
Product, with the costs of such transfer to be borne by the purchasing
Party;
38
(ix) the
selling
Party shall make its personnel and other resources reasonably available to
the
purchasing Party as necessary to effect an orderly transition of development,
manufacturing and commercialization responsibilities, with the cost of making
such personnel and resources to be borne by the purchasing Party;
and
(x) the
remaining [*]
of
the
Auction Price that is payable in cash shall be paid upon the later to occur
of
(A) thirty (30) days of the date thereafter on which the purchasing Party
manufactures and sells any Licensed
Product
in the
Co-Promotion Territory or (B) the date on which such technology transfer
(including data and regulatory submissions) is substantially
complete.
As
used in
this Section 15.2(c), “Patents” means IDEC
Patent
with respect to IDEC, and Genentech Patents and Genentech NP Patents with
respect to Genentech; and “Know-how” means IDEC Know-how with respect to IDEC,
and Genentech Know-how with respect to Genentech.
(d) In
the event
of a buy-out of a Franchise Product pursuant to this Sections 15.2:
(i) the
Party
selling its rights to the Franchise Product shall continue to supply the amounts
of such Franchise Product it was obligated to supply at the time of such buy-out
for a [*]
to
allow the
purchasing Party to obtain an alternate source of supply, if
necessary;
(ii) the
Party
purchasing the rights to the Franchise Product going forward shall also receive
from the selling Party an exclusive license to use any and all jointly-owned
trademarks pursuant to Section 10.1; and
(iii) the
Party
purchasing the rights to a Franchise Product shall, to the extent Third Party
rights are passed by the selling Party to the purchasing Party, pay any and
all
Third Party royalties.
15.3 Accrued
Rights, Surviving Obligations.
Termination, relinquishment or expiration of the Agreement for any reason shall
be without prejudice to any rights which shall have accrued to the benefit
of
either Party prior to such termination (including paid up irrevocable licenses),
relinquishment or expiration, including damages arising from any breach
hereunder. Such termination, relinquishment or expiration shall not relieve
either Party from obligations under Articles 11, 12, 16 and 18 herein, and
any
other obligations which are expressly indicated to survive termination or
expiration of the Agreement.
ARTICLE
16.
INDEMNIFICATION
16.1 Indemnification
in the Licensed Territory.
(a) Genentech
hereby agrees to save, defend and hold IDEC and its agents and employees
harmless from and against any and all suits, claims, actions, demands,
liabilities, expenses and/or loss, including reasonable legal expense and
attorneys' fees ("Losses") resulting directly from the manufacture, use,
handling, storage, sale or other disposition of chemical agents
or
39
Franchise
Products sold or used in the Licensed Territory by Genentech, its Affiliates,
agents or sublicensees except to the extent such Losses result from the
negligence of IDEC.
(b) In
the event
that IDEC is seeking indemnification under Section 16.1(a), it shall inform
Genentech of a claim as soon as reasonably practicable after it receives notice
of the claim, shall permit Genentech to assume direction and control of the
defense of the claim (including the right to settle the claim solely for
monetary consideration), and shall cooperate as requested (at the expense of
Genentech) in the defense of the claim.
(c) IDEC
hereby
agrees to save, defend and hold Genentech and its agents and employees harmless
from and against any and all suits, claims, actions, demands, liabilities,
expenses and/or loss, including reasonable legal expense and attorneys' fees
("Losses") resulting directly from the manufacture by IDEC of Licensed Products
sold or used in the Licensed Territory by Genentech, its Affiliates, agents
or
sublicensees.
(d) In
the event
Genentech is seeking indemnification under Section 16.1(c), it shall inform
IDEC
of a claim as soon as reasonably practicable after it receives notice of the
claim, shall permit IDEC to assume direction and control of the defense of
the
claim (including the right to settle the claim solely for monetary
consideration), and shall cooperate as requested (at the expense of IDEC) in
the
defense of the claim.
16.2 Indemnification
in the Co-Promotion Territory.
(a) Each
Party
hereby agrees to save, defend and hold the other Party and its agents and
employees harmless from and against any and all losses resulting directly or
indirectly from the manufacture, use, handling, storage, sale or other
disposition of chemical agents or Franchise Products sold or used in the
Co-Promotion Territory by the indemnifying Party, its Affiliates, agents or
sublicensees, but only to the extent such losses result from the negligence
or willful misconduct of the indemnifying Party or its employees and agents
and
do not also result from the negligence or willful misconduct of the Party
seeking indemnification. Any other losses resulting directly or indirectly
from
the manufacture, use, handling, storage, sale or other disposition of chemical
agents or Franchise Products in the Co-Promotion Territory shall be charged
to
the collaboration as an Other Operating income/Expense at the time such claim
is
finally determined, whether by judgment, award, decree or
settlement.
(b) In
the event
that either Party receives notice of a claim with respect to a Franchise Product
in the Co-Promotion Territory, such Party shall inform the other Party as soon
as reasonably practicable. The Parties shall confer how to respond to the claim
and how to handle the claim in an efficient manner.
ARTICLE
17.
DISPUTE
RESOLUTION
17.1 Disputes.
The
Parties recognize that disputes as to certain matters may from time to time
arise during the term of this Agreement which relate to either Party's rights
and/or
40
obligations
hereunder. It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation and without resort to litigation. To
accomplish this objective, the Parties agree to follow the procedures set forth
in this Article 17, if and when a dispute arises under this Agreement. Unless
otherwise specifically recited in this Agreement, disputes among members of
each
Operating Committee will be resolved as recited in this Article 17. Any disputes
among members of Operating Committees formed hereunder relating to the
collaboration, and which are within the scope of such Operating Committee’s
responsibilities, shall be first referred to the Management Committee by either
Party at any time after such dispute has arisen and such Party believes that
there has been sufficient discussion of the matter at the Operating Committee
level. If the Management Committee is unable to resolve such a dispute within
thirty (30) days of being requested by a Party to resolve an Operating Committee
dispute, any Party may, by written notice to the other, have such dispute
referred to their respective chief executive officers, for attempted resolution
by good faith negotiations within fourteen (14) days after such notice is
received. In the event the designated executive officers are not able to resolve
such dispute, such dispute shall be resolved as follows:
(a)
[*]
if
such
dispute relates to issues of commercialization of Franchise Products that are
within the scope of the JCC’s responsibilities (including post-marketing and
investigator sponsored trails), Genentech shall have final decision making
authority with respect to such dispute; provided however, that Genentech may
not
make a final decision which decision would: (i) establish or amend an Annual
Commercial Operating Budget; (ii) result in the Annual Commercial Operating
Budget approved with a commercialization plan being exceeded [*]
(and to the
extent such budget is not exceeded [*]
such
activities shall not be deemed an amendment to the budget for purposes of
17.1(a)(i) above); (iii) assign tasks to IDEC that were not otherwise approved
by unanimous consent of the JCC; (iv) restrict a Party’s rights under Section
5.2(c), or with respect to the first sentence of Section 5.2(a) restrict a
Party’s rights to deploy a co-promotion sales force in the Co-Promotion
Territory as specified in Section 5.2(a)(except as modified by Section 5.2(b)),
in each case, unless the JCC unanimously agrees otherwise, (v) assign an initial
pricing for a Franchise Product, unless such initial pricing is within
[*]
of
the
current price for C2B8; (vi) materially amend a commercialization plan without
the unanimous approval of the JCC (where “materially amend” means to materially
modify the strategic direction agreed upon by the Parties under such
commercialization plan ); or (vii) result in the cessation of development and/or
commercialization of a Franchise Product in the Co-Promotion Territory without
the consent of IDEC (such consent not to be unreasonably withheld); and
(b)
with
respect to all other disputes, either Party may at anytime after the 14-day
period invoke the provisions of Section 17.2 hereinafter.
17.2 Arbitration.
The
parties agree that any dispute, controversy or claim (except as to any issue
relating to intellectual property owned in whole or in part by IDEC or
Genentech) arising out of or relating to this Agreement, or the breach,
termination, or invalidity thereof, shall be resolved through negotiation and/or
binding arbitration. If a dispute arises between the parties, and if said
dispute cannot be resolved pursuant to Section 17.1, the Parties agree that
any
unresolved controversy or claim between the parties shall be resolved by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, except as modified herein. The Company and Buyer shall
each select one arbitrator and the two arbitrators
41
so
selected
shall choose a third arbitrator to resolve the dispute. The arbitration decision
shall be rendered in a writing stating the basis on which the decision was
made
within six months of conclusion of arbitration and shall be binding and not
be
appealable to any court in any jurisdiction. The prevailing Party may enter
such
decision in any court having competent jurisdiction. The arbitration proceeding
shall be conducted at the location of the Party not originally requesting the
resolution of the dispute. The Parties agree that they shall share equally
the
cost of the arbitration filing and hearing fees, and the cost of the arbitrator.
Each Party must bear its own attorney's fees and associated costs and
expenses.
17.3 Jurisdiction.
For the
purposes of this Article 17, the Parties agree to accept the jurisdiction of
the
federal courts located in the Northern District of California for the purposes
of enforcing awards entered pursuant to this Article and for enforcing the
agreements reflected in this Article.
17.4 Determination
of Patents and Other Intellectual Property.
Any
dispute relating to the determination of validity of a Party's Patents or other
issues relating solely to a Party's intellectual property shall be submitted
exclusively to the federal court located in the location of the defendant,
and
the Parties hereby consent to the jurisdiction and venue of such
court.
ARTICLE
18.
MISCELLANEOUS
18.1 Assignment.
(a) With
respect
to: (i) Licensed Products, either Party may assign any of its rights under
this
Agreement in any country to any Affiliates and, with the prior written consent
of the other Party, may delegate its obligations under this Agreement in any
country to any Affiliates; and (ii) New Products, IDEC may, with the prior
written consent of Genentech, assign and/or delegate any of its rights under
this Agreement in any country to any Affiliates; provided,
however, that
such
assignment shall not relieve the assigning Party of its responsibilities for
performance of its obligations under this Agreement. Genentech may assign and/or
delegate its rights with respect to any New Product in any country to any
Affiliates.
(b) Either
Party
may assign all of its rights and obligations under this Agreement in connection
with a merger or similar reorganization or the sale of all or substantially
all
of its assets, or otherwise with the prior written consent of the other Party;
provided, however, that IDEC may not so assign its rights and obligations if
it
is in breach of the provisions of Section 7.7. This Agreement shall survive
any
such merger or reorganization of either Party with or into, or such sale of
assets to, another party and no consent (except as otherwise set forth above)
for such merger, reorganization or sale shall be required
hereunder.
(c) This
Agreement shall be binding upon and inure to the benefit of the successors
and
permitted assigns of the Parties. Any assignment not in accordance with this
Agreement shall be void.
42
18.2 Non-Solicitation.
The
Parties recognize that each Party has a substantial interest in preserving
and
maintaining confidential its Confidential Information hereunder. Each Party
recognizes that certain of the other Party's employees, including those engaged
in development, marketing and sale of any Franchise Product, may have access
to
such Confidential Information of the other Party. The Parties therefore agree
not to solicit or otherwise induce or attempt to induce for purposes of
employment, any employees from the other Party involved in the development,
marketing or sales of any Franchise Product during the period in which any
Party
is developing or commercializing a Franchise Product in the Co-Promotion
Territory hereunder and for a period of two years thereafter.
18.3 Consents
Not Unreasonably Withheld.
Whenever
provision is made in this Agreement for either Party to secure the consent
or
approval of the other, that consent or approval shall not unreasonably be
withheld, and whenever in this Agreement provision is made for one Party to
object to or disapprove a matter, such objection or disapproval shall not
unreasonably be exercised.
18.4 Retained
Rights.
Nothing in
this Agreement shall limit in any respect the right of either Party to conduct
research and development with respect to and market products outside the Field
using such Party's technology.
18.5 Force
Majeure.
Neither
Party shall lose any rights hereunder or be liable to the other Party for
damages or losses on account of failure of performance by the defaulting Party
if the failure is occasioned by government action, war, earthquake, fire,
explosion, flood, strike,
lockout,
embargo, mycoplasmal contamination, act of God, or any other cause beyond the
control of the defaulting Party, provided that the Party claiming force majeure
has exerted all reasonable efforts to avoid or remedy such force majeure;
provided
however, that
in no
event shall a Party be required to settle any labor dispute or
disturbance.
18.6 Further
Actions.
Each Party
agrees to execute, acknowledge and deliver such further instruments, and to
do
all such other acts, as may be necessary or appropriate in order to carry out
the purposes and intent of this Agreement.
18.7 No
Right to Use Names.
Except as
otherwise provided herein, no right, express or implied, is granted by the
Agreement to use in any manner the name "IDEC," "Genentech" or any other trade
name or trademark of the other Party or its Affiliates in connection with the
performance of the Agreement.
18.8 Notices.
All
notices hereunder shall be in writing and shall be deemed given if delivered
personally or by facsimile transmission (receipt verified), telexed, mailed
by
registered or certified mail (return receipt requested), postage prepaid, or
sent by express courier
service, to the Parties at the following addresses (or at such other address
for
a Party as shall be specified by like notice; provided, that notices of a change
of address shall be effective only upon receipt thereof).
If
to IDEC,
addressed
to: IDEC
PHARMACEUTICALS CORPORATION
43
0000
Xxxxxx
Xxxx
Xxx
Xxxxx,
XX 00000
Attention: Corporate
Secretary
Telephone: (000)
000-0000
Telecopy: (000)
000-0000
If
to Genentech,
addressed
to: GENENTECH.
INC.
0
XXX Xxx
Xxxxx
Xxx
Xxxxxxxxx, XX 00000
Attention: Corporate
Secretary
Telephone: (000)
000-0000
Telecopy: (000)
000-0000
18.9 Waiver.
Except
as
specifically provided for herein, the waiver from time to time by either of
the
Parties of any of their rights or their failure to exercise any remedy shall
not
operate or be construed as a continuing waiver of same or of any other of such
Party's rights or remedies provided in this Agreement.
18.10
Severability.
If any
term, covenant or condition of this Agreement or the application thereof to
any
Party or circumstance shall, to any extent, be held to be invalid or
unenforceable, then (i) the remainder of this Agreement, or the application
of
such term, covenant or condition to Parties or circumstances other than those
as
to which it is held invalid or unenforceable, shall not be affected thereby
and
each term, covenant or condition of this Agreement shall be valid and be
enforced to the fullest extent permitted by law; and (ii) the Parties hereto
covenant and agree to renegotiate any such term, covenant or application thereof
in good faith in order to provide a reasonably acceptable alternative to the
term, covenant or condition of this Agreement or the application thereof that
is
invalid or unenforceable, it being the intent of the Parties that the basic
purposes of this Agreement are to be effectuated.
18.11 Governing
Law.
This
Agreement shall be governed by and construed in accordance with, the laws of
the
State of California without giving effect to principles of conflict of
laws.
18.12 Ambiguities.
Ambiguities, if any, in this Agreement shall not be construed against any Party,
irrespective of which Party may be deemed to have authorized the ambiguous
provision.
18.13 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
18.14 Entire
Agreement.
This
Agreement, including all Exhibits and the Appendix attached hereto which are
hereby incorporated herein by reference, sets forth all the covenants, promises,
agreements, warranties, representations, conditions and understandings between
the Parties hereto and supersedes and terminates the Original Agreement between
the Parties; provided, Exhibits B and D to the Original Agreement and the First
Amendment and the Second Amendment shall as of the Restated Effective Date
be
incorporated herein by reference and
44
deemed
Exhibits B and D, the First Amendment and the Second Amendment, respectively
to
this Agreement; provided further, with respect to any conflict between this
Agreement and the Original Agreement (including Exhibits B and D, the First
Amendment and the Second Amendment thereto), as to any acts or omissions by
the
parties that occurred after the Original Effective Date but prior to the
Restated Effective Date, the terms of the Original Agreement shall prevail.
There are no covenants, promises, agreements, warranties, representations,
conditions or understandings, either oral or written, between the Parties other
than as set forth herein and therein; provided, to the extent the Parties
entered into any written agreements (other than the Original Agreement, the
First Amendment or the Second Amendment) with respect to Third Party
intellectual property rights regarding the development, manufacture or
commercialization of Licensed Products prior to the Restated Effective Date,
and
to the extent such agreements are in full force and effect immediately prior
to
the Restated Effective Date, such agreements (including without limitation,
that
certain Letter Agreement between the Parties of May 21, 1996 relating to the
Original Agreement) shall continue in full force and effect under their
respective terms and not be deemed to be superseded by this Agreement. No
subsequent alteration, amendment, change or addition to this Agreement shall
be
binding upon the Parties hereto unless reduced to writing and signed by the
respective authorized officers of the Parties.
IN
WITNESS
WHEREOF,
the
Parties
have executed this Agreement in duplicate originals by their proper officers
as
of the date and year first above written.
|
IDEC
PHARMACEUTICALS CORPORATION
|
GENENTECH,
INC.
|
||||
|
By:
|
/s/ XXXXXXX
X. XXXXXXXXX
|
By:
|
/s/ XXXXXX
X. XXXXXXXX
|
||
|
Xxxxxxx
X. Xxxxxxxxx
Title: Chairman
and CEO
|
Xxxxxx
X. Xxxxxxxx
Title: Chairman
and CEO
|
||||
GNE
134943.12
45
APPENDIX
1
TO
THE
AMENDED
AND RESTATED COLLABORATION BETWEEN IDEC
PHARMACEUTICALS
CORPORATION AND GENENTECH, INC.
SCHEDULE
OF MASTER DEFINITIONS
1. "Administration
Costs"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
2. "Affiliate"
means an
entity that, directly or indirectly, through one or more intermediaries, is
controlled by IDEC or Genentech. As used herein, the term "control" will mean
the direct or indirect ownership of fifty percent (50%) or more of the stock
having the right to vote for directors thereof or the ability to otherwise
control the management of the corporation or other business entity. For the
avoidance of doubt, as of the Restated Effective Date, X. Xxxxxxx-Xx Xxxxx
AG
shall not be considered an Affiliate of Genentech.
3. "Allocable
Overhead"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
4. "Ancillary
Agreements"
shall mean
the License Agreements, Preferred Stock Purchase Agreement, Option Agreement,
Registration Rights Agreement and Standstill Agreement.
5. “Annual
Commercial Operating Budget”
means an
annual top line budget with respect to commercialization activities in any
one
fiscal year in respect of Franchise Products in the form attached hereto as
Section A.1(a) of Exhibit A.
6 "Approvable
Process Event"
means a
determination by the JDC that the formulation of C2B8 and the process for C2B8
recovery are commercially viable as more fully described in Appendix I to the
Development Plan.
7. "Asia"
means
Japan, Bangladesh, Myanmar, Cambodia, Indonesia, People's Republic of China,
Hong Kong, Republic of Korea, Laos, Malaysia, Papua New Guinea, Philippines,
Singapore, Sri Lanka, Republic of China (Taiwan) and Thailand and the
territories and possessions of each.
8. "Business
Day"
means a day
on which banking institutions are open for business in California.
9. "C2B8"
means that
certain monoclonal antibody to B cells more particularly described on Exhibit
B
to the Collaboration Agreement.
1
10. "Certificate
of Determination of Preferred Stock"
means the
Certificate of Determination of Series A-1 Preferred Stock, Series A-2 Preferred
Stock, Series A-3 Preferred Stock, Series A-4 Preferred Stock, Series A-5
Preferred Stock, Series A-6 Preferred Stock and Series A7 Preferred Stock,
to be
filed with the Secretary of State of the State of California.
11. "Collaboration
Agreement"
shall mean
the Collaboration Agreement dated the Restated Effective Date between IDEC
and
Genentech.
12. "Combination
Product Adjustment"
means the
following: in the event a Franchise Product is sold in the form of a combination
product containing one or more active ingredients in addition to a Franchise
Product, Royalty-Bearing Sales or Net Sales for such combination product will
be
adjusted by multiplying actual Royalty-Bearing Sales, or Net Sales as
applicable, of such combination product by the fraction A/(A + B) where A is
the
invoice price of the Franchise Product, if sold separately, and B is the invoice
price of any other active component or components in the combination, if sold
separately. If, on a country-by-country basis, the other active component or
components in the combination are not sold separately in said country,
Royalty-Bearing Sales or Net Sales shall be calculated by multiplying actual
Royalty-Bearing Sales or Net Sales of such combination product by the fraction
A/C where A is the invoice price of the Franchise Product if sold separately,
and C is the invoice price of the combination product. If, on a
country-by-country basis, neither the Franchise Product nor the other active
component or components of the combination product is sold separately in said
country, Royalty-Bearing Sales or Net Sales shall be determined by the Parties
in good faith.
13. "Control"
or "Controlled"
means
possession of the ability to grant a license or sublicense as provided for
herein without violating the terms of any agreement or other arrangement with
any Third Party.
14. "Co-Promote"
means to
promote jointly Franchise Products through Genentech, IDEC and their respective
sales forces under a single trademark in a given country in the Co-Promotion
Territory.
15. "Co-Promotion
Profits"
shall have
the same meaning as Operating Profits or Losses.
16. "Co-Promotion
Territory"
means, with
regard to Licensed Products, the United States and Canada, with
regard
to New Products, the United States only.
17. "Cost
of Goods Sold" shall
have
the meaning set forth in Exhibit A to the Collaboration Agreement.
18. “Cost
of Sales” shall
have
the meaning set forth in Exhibit A to the Collaboration Agreement.
19. "Delay
Option"
means the
option exercisable by IDEC upon written notice to Genentech at least thirty
(30)
days prior to the First Anniversary Date that IDEC elects to delay [*]
of
Genentech's investment on the First Anniversary Date such that either (i) IDEC
shall receive in
2
lieu
of such
delayed portion of the investment, a [*]
payment
upon
the occurrence of the Patent Milestone Event or instead issue shares of Series
A
Preferred Stock, or if the Patent Milestone Event does not occur prior to the
Third Anniversary Date, then (ii) IDEC shall receive the delayed investment
in
accordance with Section 2(d) of the Preferred Stock Purchase Agreement; provided
that this Delay Option will not be exercisable by IDEC if the Approvable Process
Event does not occur on or prior to the First Anniversary Date.
20. "Development
Costs"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
21. "Development
Plan"
means the
comprehensive plan for the development of a Franchise Product, designed to
generate the preclinical, process development, manufacturing scale-up, clinical
and regulatory information required to obtain Regulatory Approval in the
Co-Promotion Territory, and which may be modified from time to time by the
JDC.
Development shall refer to all activities related to preclinical testing,
toxicology, formulation, process development, manufacturing scale-up, quality
assurance/quality control, clinical studies and regulatory affairs for a
Franchise Product in connection with obtaining Regulatory Approvals of such
Franchise Product.
22. "Distribution
Costs"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
23. "Drug
Approval Application" means
an
application for Regulatory Approval required for commercial sale or use of
a
Franchise Product as a drug in the Field in a regulatory
jurisdiction.
24. “Excluded
Patent”
means the
rights under any Patent within the following, as defined in Exhibit G:
the
Cabilly Patents and the Itakura/Xxxxx Patents.
25. "First
Anniversary Date"
means the
date which is twelve (12) calendar months following the Original Effective
Date.
26. “First
New Product FDA Approval”
means
the
date upon which final approval is received from the United States Food and
Drug
Administration with respect to the first New Product (immediately following
which such New Product may be manufactured and commercially sold in the United
States).
27. "FDA
Approval Date" means
the
date on which the United States Food and Drug Administration grants Regulatory
Approval of C2B8 for manufacture and sale in the United States.
28. "FDA
Approval Event"
means the
FDA Approval Date occurs on or before the Fifty-Four Month Anniversary
Date.
29. "FDA
Review Event" means
the
date on which the relevant United States Food and Drug Administration public
advisory committee meets to determine whether to recommend approval of the
manufacture and sale in the United States of C2B8.
3
30. "Field"
means
the
use of Franchise Product in humans.
31. "Fifty-Four
Month Anniversary Date"
means that
date which is fifty-four (54) calendar months following the Original Effective
Date.
32. “Franchise
Products”
means
Licensed Products and New Products.
33. “G2H7”
means (i)
that certain humanized monoclonal antibody [*].
34. "Genentech"
means
Genentech, Inc., a Delaware corporation, and its Affiliates.
35. "Genentech
Know-how"
means
Information which (i) Genentech discloses to IDEC under the Collaboration
Agreement and (ii) is within the Control of Genentech.
36. “Genentech
NP Patent”
means the
rights under any Patent, other than a Genentech Patent or Excluded Patent,
which
covers
a method, apparatus, material, manufacture, use, treatment, process, compound,
composition, or product-by-process necessary to develop, make, use or sell
a New
Product in the Field in the Co-Promotion Territory, which Patent is Controlled
by Genentech, including its interest in any Patents owned jointly by the Parties
as provided hereunder.
37. "Genentech
Patent"
means the
rights under any Patent, other than an Excluded Patent, which covers a method,
apparatus, material, manufacture, use, treatment, process, compound,
composition, or product-by-process necessary to develop, make, use or sell
a
Licensed Product in the Field, which Patent is Controlled by Genentech,
including its interest in any Patents owned jointly by the Parties as provided
hereunder.
38. "Gross
Sales"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
39. "IDEC"
means IDEC
Pharmaceuticals Corporation, a Delaware corporation, and its
Affiliates.
40. "IDEC
Know-how"
means
Information which (i) IDEC discloses to Genentech under the Collaboration
Agreement and (ii) is within the Control of IDEC.
41. "IDEC
Patent"
means the
rights under a Patent which covers a method, apparatus, material, manufacture,
use, treatment, process, compound, composition or product-by-process (i) useful
in the development, manufacture, use or sale of Licensed Products, or (ii)
necessary to develop, make, use or sell a New Product, in each case which Patent
is Controlled by IDEC, including its interest in any Patents owned jointly
by
the Parties as provided hereunder.
42. "In2B8"
shall have
the meaning set forth in Section 2.2. of the Collaboration
Agreement.
4
43. "Information"
means
techniques and data relating to the Franchise Products, including, but not
limited to, biological materials, inventions, practices, methods, knowledge,
know-how, skill, experience, test data (including pharmacological, toxicological
and clinical test data), analytical and quality control data, marketing,
pricing, distribution, cost, sales, manufacturing, patent data or
descriptions.
44. "Joint
Commercialization Committee" or "JCC"
means that
committee established pursuant to Section 3.3 of the Collaboration
Agreement.
45. "Joint
Development Committee" or "JDC"
means that
committee established pursuant to Section 3.2 of the Collaboration
Agreement.
46. "Joint
Finance Committee" or "JFC"
means that
committee established pursuant to Section 3.4 of the Collaboration
Agreement.
47. “Joint
Know-how”
means
Information developed by or on behalf of a Party hereunder and which is
co-funded by the Parties, including without limitation being charged against
Operating Profits (or Losses).
48. "Licensed
Product(s)"
means any
compound or composition of matter [*]
(including
C2B8, but excluding Y2B8 and In2B8 unless the option set forth in Section 2.3
of
the Collaboration Agreement is exercised) (a) developed by IDEC or (b) the
intellectual property rights to which are owned or Controlled, in whole or
in
part, by IDEC, in either (a) or (b) as of the Original Effective Date or during
the term of the Collaboration Agreement. Notwithstanding
the foregoing, Licensed Products shall not be considered New Products or Third
Party Anti-CD20 Products.
49. "Licensed
Territory" means
worldwide (including Asia, pursuant to the First Amendment (as defined in the
Collaboration Agreement)), excluding the Co-Promotion Territory.
50. "Major
European Country"
means the
United Kingdom, Italy, Germany, France or Spain.
51. "Management
Committee"
means that
committee established pursuant to Section 3.1 of the Collaboration
Agreement.
52. "Marketing
Costs"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement
53. "ML/MS
Agreement"
means the
Preferred and Common Stock Purchase Agreement dated March 16, 1995 by and
between ML/MS Associates, L.P. and IDEC, whereby IDEC reacquired the rights
to
certain technologies for the treatment of B-cell lymphomas funded and developed
by ML/MS Partners pursuant to a Development Agreement and related agreements,
dated as of February 17, 1988 and October 27, 1988.
5
54. "ML/MS
Partners"
shall mean
ML Technology Ventures, L.P. and Xxxxxx Xxxxxxx Ventures, L.P., and any assignee
or successor to ML/MS Partners.
55. "National
Exchange"
shall mean
the Nasdaq National Market or any other national exchange on which the Common
Stock of IDEC is listed.
56. "Net
Sales"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
57. “New
Product”
means
(i) G2H7
(from and after the date of payment pursuant to Section 7.1(b)(i) of the
Collaboration Agreement) and (ii) any Potential New Product for which IDEC
has
exercised an opt-in pursuant to Section 2.5 of the Collaboration Agreement
(from
and after the date of payment pursuant to Section 7.1(b)(ii), (iii) or (iv),
as
applicable, of the Collaboration Agreement). At the time a Potential New Product
becomes a New Product, such New Product shall be defined to include the
[*]
was
(were)
the subject of such Potential New Product, as well as (x) any modifications
to
[*]
which
result from [*]
are not
required to obtain Regulatory Approval, and (y) modifications or derivatives
to
[*]
which
result
from activities specified in the Development Plan [*].
58. "Operating
Committee"
means a
committee established by the Management Committee, including but not limited
to,
the Joint Development Committee, Joint Commercialization Committee and the
Joint
Finance Committee.
59. "Operating
Profits or Losses"
shall have
the meaning set forth in Exhibit A of the Collaboration Agreement.
60. "Option
Agreement"
means the
Option Agreement to be dated as of the Original Effective Date between Genentech
and IDEC.
61. "Original
Agreement"
shall mean
that
certain
collaboration agreement by and between the Parties dated March 16,
1995.
62. "Original
Effective Date"
means March
16, 1995.
63. "Party"
means IDEC
or Genentech, as applicable.
64. "Parties"
means
IDEC
and Genentech.
65. "Patent(s)"
means (i)
valid and enforceable letters patent, including any extension, registration,
confirmation, reissue, re-examination or renewal thereof and (ii) pending
applications for letters patent, including any continuation, division or
continuation-in-part.
66. "Patent
Costs"
means the
fees and expenses paid to outside legal counsel and experts, and filing and
maintenance expenses, (i) incurred after the Original Effective Date in
connection with the establishment and maintenance of rights under Patents
covering any Licensed Product, and (ii) incurred after the Restated Effective
Date in connection with the establishment
6
and
maintenance of rights under Patents covering any New Product, including, in
each
case, costs of patent interference, reexamination, reissue, opposition and
revocation proceedings.
67. "Patent
Milestone Event"
means the
notice of grant in the European Patent Office or issuance in a Major European
Country of the first valid and enforceable letters patent covering
C2B8.
68. "Phase
II Clinical Trial"
means such
studies in humans of the safety, dose ranging and efficacy of a Franchise
Product which have generated sufficient data to commence a Phase III Clinical
Trial.
69. "Phase
III Clinical Trial"
means a
study in humans of the efficacy and safety of a Franchise Product which is
prospectively designed to demonstrate statistically whether the Franchise
Product is effective for use in a particular indication in a manner sufficient
to obtain Regulatory Approval to market that Franchise Product and which the
Joint Development Committee designates as a Phase III Clinical
Trial.
70. "Phase
III Milestone Event"
means
completion of the Pivotal Phase III Clinical Trial and presentation of the
results of the entire Pivotal Phase III Clinical Trial in a peer-reviewed
journal or public forum.
71. "Pivotal
Phase III Clinical Trial" means
IDEC
Protocol #102-05, as amended, and as further amended by the agreement of the
JDC
or as otherwise agreed by the JDC.
72. “Potential
New Product”
means any
protein(s) or peptide(s) (other than G2H7) [*],
and
such
protein(s) or peptide(s):
(a) was
(were)
acquired by [*]
from
a Third
Party [*]
(such
Potential New Product a [*]
Potential New Product”);
or
(b) was
(were)
acquired by [*]
from a
Third Party [*]
(such
Potential New Product a [*]
Potential New Product”)
(collectively, [*]
Potential
New Products and [*]
Potential
New Products may be referred to herein as “[*]
Potential New Products”);
or
(c) was
(were)
developed
by
Genentech (including any protein(s) or peptide(s) acquired by [*]
(such
Potential New Product a [*]
Potential
New Product”)).
As
used in
this Collaboration Agreement, “protein” or “peptide” means any protein or
peptide having a [*];
and
“acquired”
means, in addition to the direct acquisition of rights to a product, the
indirect acquisition of rights to a product through the acquisition
of [*] Notwithstanding
the foregoing, [*]
and
Potential New Products and New Products shall not be considered Third Party
Anti-CD20 Products.
73. "Preferred
Stock Purchase Agreement"
means the
Preferred Stock Purchase Agreement dated the Original Effective Date between
IDEC and Genentech.
7
74. "Proceed
with Formulation Event"
means the
affirmative decision by the JDC to proceed with the current formulation
(including modified formulations, if any, not requiring a halt in current
clinical trials) of C2B8 more fully described in Appendix I to the Development
Plan.
75. "Product
License Application Filing Event"
shall mean
the date on which the first product license application is filed with the United
States Food and Drug Administration for approval of the manufacture and sale
of
C2B8 in the United States.
76. "Regulatory
Approval"
means any
approvals (including pricing and reimbursement approvals), licenses,
registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other governmental entity, necessary for the
manufacture and sale of a Franchise Product in a regulatory
jurisdiction.
77. "Registration
Rights Agreement"
means the
1995 Registration Rights Agreement dated as of the Original Effective Date
between Genentech, ML/MS Associates, L.P. and IDEC.
78. "Royalty-Bearing
Sales"
means, as
to each Franchise Product in the Licensed Territory, the gross amount invoiced
by Genentech or its permitted sublicensees for sales to an unrelated Third
Party
of a Franchise Product in the Licensed Territory, less (i) trade, cash and
quantity discounts or rebates, (ii) credits or allowances given or made for
rejection or return of, and for uncollectible amounts on, previously sold
products or for retroactive price reductions (including rebates similar to
Medicare), (iii) taxes, duties or other governmental charges levied on or
measured by the billing amount, as adjusted for rebates and refunds, (iv)
charges for freight and insurance directly related to the distribution of
Franchise Products (to the extent not paid by the Third Party customer), and
(v)
credits or allowances given or made for wastage replacement, indigent patient
and similar programs (but only to the extent such amounts were included in
the
gross amount invoiced). The amount obtained by deducting (i) through (v) from
the gross amount invoiced shall then be adjusted by the Combination Product
Adjustment, if applicable. For the avoidance of doubt, Royalty-Bearing Sales
will, following the Restated Effective Date, be determined in a manner
consistent with the practice immediately prior to the Restated Effective Date,
unless otherwise agreed to in writing by the Parties.
79. "Sales
Costs"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
80. "Sales
Returns and Allowances"
shall have
the meaning set forth in Exhibit A to the Collaboration Agreement.
81. "Sales
Representative"
means an
employee of either Party or its Affiliates (i) who is responsible for contacting
customers and others who can buy or influence the buying decision on the
applicable Franchise Product in the applicable country in the Co-Promotion
Territory, and (ii) whose success at such activities is a significant factor
in
the ongoing employment of the individual, and shall exclude an employee of
either Party or an Affiliate engaged in telemarketing, professional education,
and similar indirect activities in support of direct selling.
8
82. "Stability
Benchmark Date"
means the
date on which the accelerated stability study has been completed and data has
been reviewed by the JDC as more fully described on Appendix I to the
Development Plan.
83. "Standstill
Agreement"
means the
Standstill Agreement to be dated as of the Original Effective Date between
Genentech and IDEC.
84. "Third
Anniversary Date"
means that
date which is thirty-six months following the Original
Effective
Date.
85. "Third
Party"
means any
entity other than IDEC or Genentech.
86. “Third
Party Anti-CD20 Products”
means
any protein
or peptide [*]
that
is
controlled (either before or after Genentech decides to seek a license to the
same) by any Third Party. As used in the previous sentence, “controlled”
means that such Third Party had the ability to grant a license or sublicense
to
develop and commercialize such product without violating the terms of any
agreement or other arrangement it had with any other Third Party.
Notwithstanding the foregoing, Third Party Anti-CD20 Products shall not be
considered Potential New Products or New Products.
87. "Third
Party Royalties" means
royalties payable by either Party to a Third Party in connection with the
manufacture, use or sale of Franchise
Products.
88. "Y2B8"
shall have
the meaning set forth in Section 2.2 of the Collaboration
Agreement.
#133618
v10
9
EXHIBIT
A
FINANCIAL
PLANNING, ACCOUNTING AND REPORTING
FOR
THE
AMENDED
AND RESTATED IDEC/GENENTECH COLLABORATION AGREEMENT
This
Exhibit
A to the Amended and Restated Collaboration Agreement (the "Collaboration
Agreement") dated as of June 19, 2003, between IDEC Pharmaceuticals Corporation
("IDEC") and Genentech, Inc. ("Genentech") addresses the financial planning,
accounting policies and procedures to be followed in determining Operating
Profits or Losses and related sharing of revenue and expenses in the
Co-Promotion Territory. Terms not defined in this Exhibit shall have the
meanings set forth in the Schedule of Master Definitions which is attached
as
Appendix 1 to the Collaboration Agreement, or to the extent not in the Schedule
of Master Definitions, in the Collaboration Agreement.
This
Exhibit
sets forth the principles for reporting actual results and budgeted plans of
the
combined operations in the Co-Promotion Territory, the frequency of reporting,
the use of a single functional currency for reporting, and the methods of
determining payments to the Parties and auditing of accounts.
For
purposes
of this Exhibit only, the consolidated accounting of operations for the
collaboration in the Co-Promotion Territory shall be referred to as GenIDEC.
GenIDEC is not a legal entity and has been defined for identification purposes
only.
A.1. Principles
of Reporting
The
results
of operations of GenIDEC will be presented in the following format (as to all
Franchise Products and also on a product-by-product basis), with the categories
as defined in Section A.4 below:
|
A.1
(a) Income
Statement
|
|||
|
IDEC
|
Genentech
|
Total
|
|
|
Gross
Sales
less
Sales Returns and Allowances
=
Net
Sales
less
Cost of Sales
=
Gross Profits
less
Marketing Costs
less
Sales Costs
less
Development Costs chargeable to GenIDEC
less
Other Operating Income/Expense
=
Contribution
less
Distribution Costs
less
Administration Costs
=
Operating Profit (Loss)
|
|||
1
It
is the
intention of the Parties that the interpretation of these definitions will
be
consistent with generally accepted accounting principles in the United
States.
A.1
(b) Subcomponent
Reporting
For
reporting purposes only, expenses will be identified for the budget, forecast,
and quarterly actuals reporting events within this Section A.1 by the following
detail sub-components within the aggregate Income Statement expense components
specified under Section A.1(a):
Cost
of
Sales - cost of goods sold (COGS), cost of sales royalties, freight &
other
Marketing
-
marketing promotion, market research, marketing headcount
Sales
-
sales headcount, sales promotion & sales operations
Development
- by indication label-enabling activities & trials, by indication
post-marketing activities & trials
The
requirement defined within Section 4.5, 5.4 (b) and 17.1(a) not to exceed budget
by [*]
without
unanimous JDC or JCC approval, as applicable, shall not apply to these reporting
detail sub-components, but shall only apply to the aggregate expense components
specified within the Income Statement format specified within Section
A.1(a).
A.2. Frequency
of Reporting
The
fiscal
year of GenIDEC will be a calendar year.
Reporting
by
each Party for GenIDEC revenues and expenses will be performed as follows (with
copies provided to the JFC and to the other Party):
|
Reporting
Event
|
Frequency
|
Timing
of Submission
|
|
Actuals
|
Quarterly
|
Q1-Q3:
+30
days
Q4:
+45
days
|
|
Forecasts
(rest
of year - by month)
|
Quarterly
|
Mid
Quarter
|
|
Budgets
(one
year - by month)
|
Annually
|
October
31st
|
|
Long
Range Plan
(current
year plus 5 years)
|
Annually
|
July
31st
|
2
Genentech
will be responsible for the preparation of consolidated reporting (actuals,
budgets, forecasts, and long range plans), calculation of the profit/loss
sharing and determination of the cash settlement. Genentech will provide
the JFC
(and IDEC) within five working days of the submission date shown above, a
statement showing the consolidated results (and forecasts) and calculations
of
the profit/loss sharing and cash settlement required in a format agreed to
by
the Parties.
Reports
of
actual results compared to budget (as to all Franchise Products and also
on a
product-by-product basis) will be made to the Operating Committees on a
quarterly basis. After approval by the JFC as to amounts, the JFC will forward
the report to the Management Committee for its approval. Line item variances
from budgets judged to be significant by the JFC will only be included in
calculation of Operating Profit and Loss when approved by the JCC and the
Management Committee.
On
a monthly
basis Genentech will supply IDEC with Gross Sales (as to all Franchise Products
and also on a product-by-product basis) in units, local currency and U.S.
dollars by country of each month’s sales according to Genentech's sales
reporting system, which shall be consistent with the definitions in Section
A.4.
The
Joint
Finance Committee will meet as appropriate to review and approve the following
(as to all Franchise Products and also on a product-by-product
basis):
| - |
Actual
Results
|
| - |
Forecasts
|
| - |
Budget
|
| - |
Inventory
Levels
|
| - |
Sales
Returns and Allowances
|
| - | Other financial matters, including each Party's methodologies for charging costs and allocating Sales Representatives to GenIDEC for actuals, forecasts, budgets and long range plans and the results of applying such methodologies. |
A.3. Budget
and Long Range Plan
Responsibility
for the Budget and Long Range Plan with regard to Licensed Products,
[*]
will rest
with the JCC and the JDC, who will develop budgets for development and
commercialization in coordination with the Joint Finance Committee, subject
to
final approval by the Management Committee.
Responsibility
for the Budget and Long Range Plan with
regard
to New Products, including, without limitation, G2H7, and with regard to all
Franchise Products (including, without limitation, C2B8) [*]
will rest
with Genentech, who will develop budgets for development and commercialization
in coordination with the Joint Finance Committee, subject to final approval
by
the Management Committee.
3
Budgets
will
be prepared annually for the following full calendar year containing monthly
details/numbers.
Budgets
will
be supplemented with high level business plans and costs for clinical trials,
registration applications, and plans for product introduction, sales efforts
and
promotion as approved by the Joint Development Committee and Joint
Commercialization Committee. Budgets, once ratified by the Management Committee,
can only be changed with the approval of the Management Committee (with the
exception of the provisions outlined in Sections 4.5 and 5.4(b) of the
Collaboration Agreement).
A
five-year
Long Range Plan for GenIDEC will be established on a yearly basis under the
direction of the Management Committee and submitted to Genentech and IDEC by
July 31st.
A.4. Definitions
A.4.1
"Administration
Costs" means,
as to
each Franchise Product in the Co-Promotion Territory, costs chargeable to
GenIDEC equal to [*]
of
the sum
of each Party's own Marketing Costs and Sales Costs and Development Costs (each,
only to the extent chargeable to GenIDEC), subject to a cap for each Party,
as
to all Franchise Products, in each calendar year of [*]
(subject to
annual increases per the PPI).
A.4.2 "Allocable
Overhead" means
costs
incurred by a Party or for its account which are attributable to a Party's
supervisory, services, occupancy costs, corporate bonus (to the extent not
charged directly to department), and its payroll, information systems, human
relations or purchasing functions and which are allocated to company departments
based on space occupied or headcount or other activity-based method. Allocable
Overhead shall not include any costs attributable to general corporate
activities including, by way of example, executive management, investor
relations, business development, legal affairs and finance.
A.4.3. "Cost
of Goods Sold" means,
as to
each Franchise Product in the Co-Promotion Territory, the fully burdened cost
of
such Franchise Product in final therapeutic form as limited by Section 8.2
or
Section 8.6. The fully burdened cost of each Franchise Product will be
determined in accordance with generally accepted accounting principles in the
United States as applied by the Party performing or contracting for each stage
of the manufacturing process and will include direct labor, material, product
testing costs and Allocable Overhead.
A.4.4. "Cost
of Sales" means,
as to
each Franchise Product in the Co-Promotion Territory, Cost of Goods Sold, Third
Party Royalties (except to ML/MS Partners) (i.e., any allocable intellectual
property acquisition and licensing costs) and outbound freight on sales if
borne
by the seller.
A.4.5. "Development
Costs" means,
as to
each Franchise Product in the Co-Promotion Territory, costs, including Allocable
Overhead, required to obtain the authorization and/or ability to manufacture,
formulate, fill, ship and/or sell such Franchise
Product
in
the Field in commercial quantities in the Co-Promotion Territory. Development
Costs shall include but are not limited to the cost of studies on the
toxicological, pharmacokinetic, metabolic or clinical
4
aspects
of
such Franchise
Product
conducted internally or by individual investigators, or consultants necessary
for the purpose of obtaining and/or maintaining approval of such Franchise
Product
in
the Field by a government organization in a country of the Co-Promotion
Territory, and costs for preparing, submitting, reviewing or developing data
or
information for the purpose of a submission to a governmental authority to
obtain and/or maintain approval of such Franchise
Product
in
the Field in a country of the Co-Promotion Territory as well as costs of process
development scale-up and recovery (including plant costs). In addition,
Development Costs in the Co-Promotion Territory shall include the cost of
post-launch clinical studies in support of such Franchise
Product
in
the Field in the Co-Promotion Territory. Development Costs in the Co-Promotion
Territory shall include expenses for compensation, benefits and travel and
other
employee-related expenses, as well as data management, statistical designs
and
studies, document preparation, and other expenses associated with the clinical
testing program. Development Costs that are to be paid solely by one but not
both of the Parties as set forth in Section 2.3 of the Collaboration Agreement
shall not be included in the determination of Operating Profits
(Losses).
A.4.6. "Distribution
Costs" means,
as to
each Franchise Product in the Co-Promotion Territory, the costs, including
Allocable Overhead, specifically identifiable to the distribution of such
Franchise
Product
including customer services, collection of data of sales to hospitals and other
end users (e.g. DDD sales data), order entry, billing, credit and collection
and
other activities described in Section 5.3 of the Agreement. For the purpose
of
this Agreement, only Genentech will charge GenIDEC for Distribution Costs an
amount of [*]
of Net
Sales in a lump sum.
A.4.7. "Gross
Sales"
means, as
to each Franchise Product in the Co-Promotion Territory, the gross amount
invoiced by either Party or their Affiliates or permitted sublicensees for
sales
of such Franchise
Product
to
Third Parties in the Co-Promotion Territory.
A.4.8. "Marketing
Costs"
means, as
to each Franchise Product in the Co-Promotion Territory, the costs, excluding
Allocable Overhead, of marketing, promotion, advertising, professional
education, product related public relations, relationships with opinion leaders
and professional societies, market research, healthcare economics studies and
other similar activities directly related to such Franchise
Product
and
approved by the Joint Commercialization Committee. Such costs will include
both
internal costs (e.g., salaries, benefits, supplies and materials, etc.) as
well
as outside services and expenses (e.g., consultants, agency fees, meeting costs,
etc.). Marketing Costs shall also include activities related to obtaining
reimbursement from payers and costs of sales and marketing data. Marketing
Costs
will specifically exclude the costs of activities which promote (i) either
Party’s business as a whole without being product specific (such as corporate
image advertising), or (ii) non-Franchise Products.
A.4.9. "Net
Sales" means
Gross
Sales less Sales Returns and Allowances.
A.4.10. "Operating
Profit or Loss" means,
as to
all Franchise Products (or, where applicable, on a product-by-product basis),
GenIDEC’s Net Sales less the following items: Cost of Sales, Marketing Costs,
Sales Costs, Development Costs, (to the extent chargeable to GenIDEC), Other
Operating Income/Expense, Distribution Costs and Administrative Costs, for
a
given period.
5
A.4.11.
"Other
Operating Income/Expense" means
other
operating income or expense from or to third parties which is not part of the
primary business activity of GenIDEC, but is considered and approved by the
Joint Finance Committee as income or expense generated from GenIDEC operations,
and limited to the following:
- Inventory
Write-Offs
- Patent
Costs
(as defined and to the extent permitted in the Collaboration
Agreement)
- Product
liability insurance to the extent the Parties obtain a joint policy
- Other
(To be
approved by JFC)
A.4.12. "Sales
Costs" means,
as to
each Franchise Product in the Co-Promotion Territory (to the extent practicable
and without being overly burdensome to provide, Sales Costs will be identifed
on
a product-by-product basis, otherwise such Sales Costs shall be attributed
between the products in a reasonable manner as determined by the JFC), costs,
including Allocable Overhead, approved by the JCC and the annual budget and
specifically identifiable to the sales of such Franchise
Product
to
all markets in the Co-Promotion Territory including the managed care market.
Sales Costs shall include costs associated with Sales Representatives, including
compensation, benefits and travel, supervision and training of the Sales
Representatives, sales meetings, and other sales expenses. Sales Costs will
not
include the start-up costs associated with either Party's sales force, including
recruiting, relocation and other similar costs.
A.4.13. "Sales
Returns and Allowances"
means, as
to each Franchise Product in the Co-Promotion Territory, the sum of (a), (b)
and
(c) where (a) is a provision, determined under generally accepted accounting
principles in the United States, for (i) trade, cash and quantity discounts
or
rebates (other than price discounts granted at the time of invoicing and which
are included in the determination of Gross Sales), (ii) credits or allowances
given or made for rejection or return of, and for uncollectible amounts on,
previously sold products or for retroactive price reductions (including Medicare
and similar types of rebates), (iii) taxes, duties or other governmental charges
levied on or measured by the billing amount, as adjusted for rebates and
refunds, (iv) charges for freight and insurance directly related to the
distribution of such Franchise Product, and (v) credits or allowances given
or
made for wastage replacement, indigent patient and any other sales programs
agreed to by the Parties, (b) is a periodic adjustment of the provision
determined in (a) to reflect amounts actually incurred for (i), (ii), (iii),
(iv) and (v), and (c) is the Combination Product Adjustment as defined in the
Agreement, if any. Provisions allowed in (a) and adjustments made in (b) and
(c)
will be reviewed by the Joint Finance Committee.
A.5. Foreign
Exchange
The
functional currency for accounting for operating profit will be U.S.
Dollars.
The
statement of operations will be translated into U.S. dollars using the average
exchange rate for the reporting period.
A.6 Audit
and Interim Reviews
6
A.6.1 Either
Party
shall have the right to request that an independent accounting firm selected
by
such requesting Party, and approved by the other Party (such approval not to
be
unreasonably withheld), perform an audit or interim review of the other Party's
books (as to all Franchise Products and also on a product-by-product basis)
in
order to express an opinion regarding said Party's compliance with generally
accepted accounting principles. Such audits or review will be conducted at
the
expense of the requesting Party.
A.6.2 Either
Party
shall have the right to request that an independent public accounting firm
selected by such requesting Party, and approved by the other Party (such
approval not to be unreasonably withheld), perform an audit of the other Party's
books of accounts (as to all Franchise Products and also on a product-by-product
basis) for the sole purpose of verifying compliance with the Agreement. Such
audits will be conducted at the expense of the requesting Party; provided,
however, that if the audit results in an adjustment of greater that [*]
of
Operating
Losses or Profits in any period, the cost of the audit will be borne by the
Party audited. Audit results will be shared with both Parties. Audits are
limited to results in the two (2) years prior to audit
notification.
A.6.3 Each
Party
shall provide the other Party, as reasonably requested, sharable work product
generated by such Party or its accountants with respect to Franchise Products
in
preparation of such providing Party’s obligation to comply with the reporting
obligations mandated under the Sarbanes Oxley Act of 2002 (including implemented
federal regulations thereunder); provided, such providing Party shall have
the
right to redact such work product to (i) remove any reference to any products
other than a Franchise Product, and (ii) to preserve any right of
confidentiality not otherwise governed by the terms of Article 11 of the
Collaboration Agreement; provided further, such receiving Party shall only
use
such information disclosed hereunder to assist it in complying with the
reporting obligations mandated under the Sarbanes Oxley Act of 2002. All costs
incurred by the providing Party in complying with such request shall be
reimbursed by the receiving Party.
A.6.4 At
either
Party’s written request, the other Party shall, to the extent commercially
reasonable and practicable, commission, facilitate, support, and/or assist
an
independent accounting firm with the execution of an agreed-upon procedures
engagement (and written report thereon), whose scope, frequency and timing
will
be mutually agreed upon by the Parties, to support the requesting Party's
relevant internal control understanding and compliance assertions. All costs
incurred by the other Party in complying with such request shall be reimbursed
by the requesting Party.
A.7. Payments
between the Parties
Balancing
payments between the Parties will be approved by the Management Committee based
on Operating Profit or Loss. Payments will be made quarterly based on actual
results within 60 days after the end of each quarter, adjusted for reimbursement
of the net expenses or income incurred or received by each Party.
A.8. Accounting
for Development Costs, Marketing Costs and Sales Costs
All
Development Costs, Marketing Costs and Sales Costs will be based on the
appropriate costs definition stated in Section A.4 of this
Exhibit.
7
Each
party
shall report Development Costs in a manner consistent with its Project Cost
System. In general, these project cost systems report actual time spent on
specific projects, apply the actual labor costs, capture actual costs of
specific projects and allocate other expenses to projects. For Marketing Costs,
the Parties will report costs based on spending in Marketing departments. The
Parties acknowledge that the methodologies used will be based on systems in
place and consistent with Section A.11 of this Exhibit.
For
the
purpose of determining Sales Costs, the Parties, through the JCC and JFC shall
determine the number of Sales Representatives selling Franchise Products during
the period and develop a method consistent with Sections A.4 and A.11 of this
Exhibit to allocate Sales Costs to those Sales Representatives.
A.9. Sharing
of Operating Profits and Losses
The
Parties
agree to share the Operating Profit or Loss resulting from the collaborative
arrangement in the Co-Promotion Territory according to the following
manner:
A.9.1 Licensed
Products.
With
regard to Licensed Products, including without limitation, C2B8, for each
calendar year or portion thereof prior to the First New Product FDA Approval,
IDEC and Genentech shall receive 30% and 70%, respectively, of the first $50
million in Operating Profits (calculated solely with respect to Licensed
Products) and 40% and 60%, respectively, of Operating Profits (calculated solely
with respect to Licensed Products) in excess of $50 million. To the extent
there
is an Operating Loss (calculated solely with respect to Licensed Products)
on
sales of Licensed Product in the Co-Promotion Territory in any calendar year,
IDEC shall absorb 30% and Genentech 70% of such loss; provided, however, that:
(i) Genentech shall finance the cost of building inventory necessary for product
launch, bridging or other studies required under Section 8.1 of the
Collaboration Agreement and other pre-launch marketing or commercial activities
approved by the Joint Commercialization Committee and the Joint Finance
Committee, and (ii) IDEC shall repay its 30% share of such costs following
product approvals from the Operating Profits allocated to IDEC in any calendar
quarter. If repayment is not complete three years following first approval,
IDEC
shall complete repayment in a lump sum at the end of the next calendar quarter.
Interest on any such repayment will be charged at a rate equal to the sum of
[*].
A.9.2 New
Products Prior to the First New Product FDA Approval. With
regard
to New Products (including without limitation G2H7), prior to the First New
Product FDA Approval, in each calendar year IDEC and Genentech shall pay 30%
and
70% respectively,
of all Operating Losses (calculated solely with respect to New
Products).
A.9.3 All
Franchise Products following the First New Product FDA
Approval.
With
regard to all Franchise Products, including without limitation C2B8 and G2H7,
following the First New Product FDA Approval, for each calendar year or portion
thereof, IDEC and Genentech shall receive (or pay):
(i)
30% and
70%, respectively, of the first 50 million in Operating Profits (calculated
with
respect to all Franchise Products); except that for the calendar year in which
the First New Product FDA Approval occurs, this first 50 million Operating
Profits tier shall only apply with respect to
8
Operating
Profits of all Franchise Products if this first 50 million Operating Profits
tier has not been completely achieved, and then only to the extent it has not
been achieved, with respect to Operating Profits of Licensed Products (as
defined within A.9.1) prior to the First New Product FDA Approval; and
(ii)
38% and
62%, respectively, of the Operating Profits (calculated with respect to all
Franchise Products) in excess of the first 50 million in
Operating
Profits (calculated with respect to all Franchise Products) until the First
Threshold Date (as used herein the “First Threshold Date” means the later of (x)
the first date the Gross Sales in any calendar year (calculated only with
respect to the New Products in the United States) reaches $150,000,000 or (v)
January 1 of the calendar year following the calendar year in which the First
New Product FDA Approval occurs if Gross Sales of New Products reached
$150,000,000 within the same calendar year in which the First New Product FDA
Approval occurred); and
(iii)
35%
and 65% respectively, of the Operating Profits (calculated with respect to
all
Franchise Products) in excess of the first 50 million
in
Operating Profits (calculated with respect to all Franchise Products) following
the First Threshold Date and until the Second Threshold Date (as used herein
the
“Second Threshold Date” means the later of (x) the first date the Gross Sales in
any calendar year (calculated only with respect to New Products in the United
States) reaches $350,000,000 or (y) January 1 of the calendar year following
the
calendar year in which the First Threshold Date occurs); and
(iv)
30% and
70%, respectively, of the Operating Profits (calculated with respect to all
Franchise Products) following the Second Threshold Date; and
(v)
30% and
70%, respectively,
of any Operating Losses, calculated with respect to all Franchise
Products.
Within
a
calendar month that the First Threshold Date or the Second Threshold Date is
met, Operating Profits shall be calculated by (x) pro-rating the expenses in
such month on a straight line basis to pre and post threshold time frames,
(y)
identifying daily product sales within such calendar month by the pre and post
threshold timeframes and (z) allocating their related Cost-of-Sales by the
proper product sales proportions for pre and post threshold
timeframes.
A.10. Start
of Operations
Operation
of
GenIDEC will be deemed to have commenced on April 1, 1995. Costs incurred prior
to April 1, 1995, are not chargeable to GenIDEC. Costs incurred with respect
to
a Potential New Product prior to the time such product becomes a New Product
under the Collaboration Agreement are not chargeable to GenIDEC.
A.11. Guidelines
for Charging Costs
The
following guidelines shall be used in determining amounts chargeable to GenIDEC
subject to the cost definitions in Section A.4 of this Exhibit. Disputes over
the allocation of costs are not subject to Genentech’s tie breaking vote under
Section 17.1.
9
|
A.11.1
|
If
an
expense is specifically and exclusively (i.e., for no other product)
used
for the development or commercialization of a Franchise
Product
in the Field in the Co-Promotion Territory, then 100% of the
expense will
be charged to GenIDEC.
|
|
A.11.2
|
If
an
expense is specifically and exclusively (i.e., for no other product)
used
for the development or commercialization of a Franchise
Product
in the Field in both the Co-Promotion Territory and the Licensed
Territory, then the following shall
apply:
|
|
(a)
|
If
the
portion of that expense used for the development or commercialization
of
such Franchise
Product
in the Field in the Licensed Territory can be objectively determined
through specific means (e.g., man hours of effort, amounts consumed,
etc.), then the amount so used will be charged to Genentech and
the
remaining portion will be charged to
GenIDEC.
|
|
(b)
|
If
the
Franchise Product is a Licensed Product and if the portion of that
expense
used for the development or commercialization of such Franchise
Product
in the Field in the Licensed Territory cannot be objectively determined
through specific means, then only the direct and incremental costs
related
to such Franchise
Product
in the Field in the Licensed Territory will be charged to Genentech
and
the remaining portion will be charged to
GenIDEC.
|
|
(c)
|
If
the
Franchise Product is a New Product and if the portion of that expense
used
for the development or commercialization of such Franchise Product
in the
Field in the Licensed Territory cannot be objectively determined
through
specific means, then only the direct and incremental costs related
to such
Franchise Product in the Field in the Co-Promotion Territory will
be
charged to GenIDEC and the remaining portion will be charged to
Genentech.
|
|
A.11.3
|
If
an
expense within the Co-Promotion Territory is not specifically
and
exclusively (i.e., for other products in addition to a Franchise
Product)
used for the development or commercialization of a Franchise
Product
in the Field in the Co-Promotion Territory, then the following
shall
apply:
|
|
(a)
|
If
the
portion of that expense used for the development or commercialization
of a
Franchise
Product
in the Field in the Co-Promotion Territory can be objectively determined
through specific means (e.g., man hours of effort, amounts consumed,
etc.), then the amount so used will be charged to
GenIDEC.
|
|
(b)
|
If
the
portion of that expense used for the development or commercialization
of a
Franchise
Product
in the Field in the Co-Promotion Territory cannot be objectively
determined through specific means, then only the direct and incremental
costs related to the Franchise
Product
in the Field shall be charged to
GenIDEC.
|
10
Exhibit
B
C2B8
“C2B8”
shall have the meaning as defined in Exhibit B to the Original
Agreement.
1
Exhibit
D
IDEC
- Third Party License Agreements
“IDEC-
Third Party License Agreements” shall have the meaning as defined in Exhibit D
to the Original Agreement.
1
Exhibit
G
Excluded
Patents
Cabilly
Patents
“Cabilly
Patents” shall mean the “Licensed Patents” as defined in Section 1.09 of the
Cabilly License (as defined in the Collaboration Agreement).
Itakura/Xxxxx
Patents
“Itakura/Xxxxx
Patents” shall mean any of the U.S. patents listed below and any and all
divisionals, continuations, continuations-in-part, reissues, reexaminations
or
extensions of these patents or of any application from which these U.S patents
claim priority, as well as foreign counterparts of the foregoing.
U.S.
4,356,270
U.S.
4,366,246
U.S.
4,425,437
U.S.
4,431,739
U.S.
4,563,424
U.S.
4,571,421
U.S.
4,704,362
U.S.
4,812,554
U.S.
5,221,619
U.S.
5,420,020
U.S.
5,583,013
1
