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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 0-28494
MILLENNIUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3177038
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
75 SIDNEY STREET, CAMBRIDGE, MA 02139
(Address of principal executive offices, including zip code)
617-679-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Number of shares of Common Stock, $.001 par value per share, outstanding as of
July 26, 1999 was 36,201,748.
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MILLENNIUM PHARMACEUTICALS, INC.
REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets
June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Operations
for the three and six months ended June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 8
CONDITION AND RESULTS OF OPERATIONS
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 14
PART II - OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
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<TABLE>
<CAPTION>
MILLENNIUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1999 1998
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 40,447 $ 138,284
Marketable securities 175,465 52,680
Due from strategic partners 13,879 6,660
Prepaid expenses and other current assets 7,179 5,033
--------- ---------
Total current assets 236,970 202,657
Property and equipment, net 49,004 38,170
Restricted cash and other assets 12,408 11,416
Intangible asset, net 4,359 5,711
--------- ---------
Total assets $ 302,741 $ 257,954
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,227 $ 6,918
Accrued expenses 8,523 6,186
Deferred revenue 8,416 2,501
Current portion of capital lease obligations 8,514 8,657
--------- ---------
Total current liabilities 38,680 24,262
Capital lease obligations, net of current portion 25,466 24,827
Minority interest 15,220 2,503
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $0.001 par value; 5,000 shares
authorized: none issued
Common stock, $0.001 par value; 100,000 shares authorized:
36,017 shares in 1999 and 34,923 shares in 1998 issued and
outstanding 36 35
Additional paid-in capital 310,614 296,370
Deferred compensation (543) (957)
Notes receivable from officers (46) (87)
Other comprehensive income (loss) (734) 29
Accumulated deficit (85,952) (89,028)
--------- ---------
Total stockholders' equity 223,375 206,362
--------- ---------
Total liabilities and stockholders' equity $ 302,741 $ 257,954
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
MILLENNIUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1999 1998 1999 1998
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenue under strategic alliances $ 47,273 $ 28,236 $ 88,265 $ 49,279
Costs and expenses:
Research and development 39,484 28,036 74,917 50,465
General and administrative 8,502 5,927 15,628 11,838
Amortization of intangible asset 675 676 1,351 1,351
-------- -------- -------- --------
48,661 34,639 91,896 63,654
-------- -------- -------- --------
Loss from operations (1,388) (6,403) (3,631) (14,375)
Interest income 3,133 1,339 5,892 2,786
Interest expense (775) (479) (1,472) (1,124)
Minority interest 34 3,342 2,287 6,086
-------- -------- -------- --------
Net income (loss) $ 1,004 $ (2,201) $ 3,076 $ (6,627)
======== ======== ======== ========
Basic net income (loss) per share $ 0.03 $ (0.07) $ 0.09 $ (0.23)
======== ======== ======== ========
Diluted net income (loss) per share $ 0.03 $ (0.07) $ 0.08 $ (0.23)
======== ======== ======== ========
SHARES USED IN CALCULATING:
Basic net income (loss) per share 35,819 29,501 35,570 29,397
======== ======== ======== ========
Diluted net income (loss) per share 38,491 29,501 38,188 29,397
======== ======== ======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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<TABLE>
<CAPTION>
MILLENNIUM PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED JUNE 30,
(IN THOUSANDS) 1999 1998
--------- --------
<S> <C> <C>
CASH PROVIDED BY (USED IN) OPERATIONS $ 15,600 $(17,906)
--------- --------
INVESTING ACTIVITIES
Purchase of property and equipment (14,931) (3,004)
Sale of marketable securities 31,025 35,785
Purchase of marketable securities (154,573) (48,936)
--------- --------
Net cash used in investing activities (138,479) (16,155)
--------- --------
FINANCING ACTIVITIES
Proceeds from sale of subsidiary stock 15,000 --
Net proceeds from stock option exercises 14,247 2,134
Repurchase of Common Stock (1) (15)
Payments of capital lease obligations (4,204) (3,216)
--------- --------
Net cash provided by (used in) financing activities 25,042 (1,097)
--------- --------
Decrease in cash and cash equivalents (97,837) (35,158)
Cash and cash equivalents at beginning of period 138,284 69,236
--------- --------
Cash and cash equivalents at end of period $ 40,447 $ 34,078
========= ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital leases $ 4,700 $ 5,395
========= ========
</TABLE>
See notes to condensed consolidated financial statements.
<PAGE> 6
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(unaudited)
1- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Interim results for the three and six month periods ended June
30, 1999 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1999. For further information, refer to the
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 which was filed
with the Securities and Exchange Commission on March 24, 1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", which is effective for fiscal years beginning after
June 15, 2000. The Company believes the adoption of this new accounting standard
will not have a significant effect to its financial statements as the Company's
investment policies prohibit the use of derivatives.
Comprehensive income (loss) is composed of net income (loss) and other
comprehensive income (loss). Other comprehensive income (loss) is composed of
changes in equity that are excluded from net income (loss) resulting from
unrealized holding gains and losses on available-for-sale marketable securities.
Comprehensive income (loss) for the three months ended June 30, 1999 and 1998
was $0.4 million and $ (2.2) million, respectively. Comprehensive income (loss)
for the six months ended June 30, 1999 and 1998 was $2.3 million and $ (6.6)
million, respectively.
Net income per share for the three and six months ended June 30, 1999 is
computed using the weighted-average number of common shares and
dilutive-equivalent shares from stock options and warrants using the treasury
stock method. Net loss per share for the three and six months ended June 30,
1998 is computed using the weighted-average number of common shares outstanding.
For the three and six months ended June 30, 1999 the difference between basic
and diluted shares used in the computation of earnings per share is 2.7 million
and 2.6 million weighted-average common equivalent shares resulting from
outstanding common stock options and warrants, respectively.
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2- STRATEGIC ALLIANCE
On February 22, 1999, the Company announced the formation of a strategic
alliance in the diagnostics field between its wholly-owned subsidiary,
Millennium Predictive Medicine, Inc. ("MPMx") and Becton, Dickinson and Company
("Becton Dickinson"). The five-year, genomics-based research collaboration
focuses on several areas of oncology.
Under the alliance, MPMx has agreed to undertake a research program to
identify genetic markers and related assays that may be used to develop
diagnostic products for several types of cancer. Becton Dickinson has agreed to
manufacture and market any products that result, and MPMx will receive a royalty
based upon gross profits from any related product sales.
On March 31, 1999, Becton Dickinson made an equity investment in MPMx of
$15.0 million, representing approximately an 11% voting interest in MPMx, and
paid a $3.0 million licensing fee to MPMx. Becton Dickinson has agreed to pay
MPMx up to $51.5 million in research funding and additional annual license fees,
provided the alliance continues for the full five-year term. Becton Dickinson
has agreed to pay milestones and royalties to MPMx in connection with the
commercialization and sale of any products developed through the alliance.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. A number of these factors are set forth under the caption "Factors
That May Affect Results" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1998, which "Factors That May Affect Results" discussion
is expressly incorporated by reference herein.
OVERVIEW
Millennium Pharmaceuticals, Inc. ("Millennium" or the "Company"), was
founded in 1993 and has developed a comprehensive integrated science and
technology platform which incorporates large-scale genetics, genomics, high
throughput screening, and informatics. We apply this technology platform
primarily in discovering and developing proprietary therapeutic and diagnostic
human healthcare products and services. As used herein, the terms "the Company"
and "Millennium" include the Company's subsidiaries, Millennium BioTherapeutics,
Inc, ("MBio") and Millennium Predictive Medicine, Inc. ("MPMx"), where
appropriate in the context.
To date, all of our revenue has resulted from payments from strategic
partners and United States Government research grants. We have not received any
revenue from the sale of products.
These strategic alliance agreements have provided Millennium with various
combinations of equity investments, up-front and follow-on fees and research
funding. These alliances may also provide certain additional payments upon the
attainment of research and regulatory milestones as well as royalty and/or
profit sharing payments based on sales of any products resulting from the
collaborations. However, there can be no assurance that any of our strategic
alliance agreements will continue for their full term or be renewed on terms
favorable to the Company if at all or that any of the discoveries will result in
marketed products.
During 1999, we expect to continue to pursue additional alliances, and will
consider joint development and acquisition opportunities that may provide
Millennium with access to products on the market or in later stages of
commercial development than those represented within our current programs. We
expect that Millennium will incur increasing expenses and may incur increasing
operating losses for at least the next several years, primarily due to expansion
of facilities and research and development programs as a result of acquisitions
and as a result of
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efforts to advance acquired products or our own development programs to
commercialization. Our revenues under existing and new strategic alliances may
fluctuate from period to period or year to year; these fluctuations, as well as
fluctuations in spending, may result in periods of profitability and periods of
losses. Therefore, Millennium's results of operations for any period may not be
indicative of future results of operations.
RESULTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1999 AND JUNE 30, 1998
For the quarter ended June 30, 1999 (the "1999 Quarterly Period"), the
Company reported net income of $1.0 million or $0.03 per basic and diluted share
as compared to a net loss of $2.2 million or $0.07 per basic and diluted share
for the quarter ended June 30, 1998 ("the 1998 Quarterly Period").
Revenue under strategic alliances increased to $47.3 million for the 1999
Quarterly Period from $28.2 million for the 1998 Quarterly Period. The increase
in revenue is primarily due to revenue from an alliance with Bayer AG that was
not in place in the 1998 Quarterly Period. We expect revenues to increase in the
near term, however, revenues may fluctuate from period to period and there can
be no assurance that strategic alliance agreements will continue for their
initial term or beyond.
Research and development expenses increased to $39.5 million for the 1999
Quarterly Period from $28.0 million for the 1998 Quarterly Period. The increase
was primarily attributable to increased personnel and facilities expenses,
increased purchases of laboratory supplies, and increased equipment
depreciation. We expect research and development expenses to continue to
increase as personnel are added and as research and development activities are
expanded to accommodate our existing and additional strategic alliances and
development efforts for potential new product candidates.
General and administrative expenses increased to $8.5 million for the 1999
Quarterly Period from $5.9 million for the 1998 Quarterly Period. The increase
was attributable primarily to increased facilities and personnel expenses as the
Company has hired additional management, business development, and
administrative personnel. We expect that general and administrative expenses
will continue to increase as we add capabilities to support the further
advancement of new product candidates.
Interest income increased to $3.1 million for the 1999 Quarterly Period
from $1.3 million for the 1998 Quarterly Period. The increase resulted from an
increase in the Company's average balance of cash, cash equivalents and
marketable securities. Interest expense increased to $0.8 million for the 1999
Quarterly Period from $0.5 million for the 1998 Quarterly Period due to
increased capital lease obligations.
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Minority interest represents the minority shareholder interest of Eli Lilly
and Company ("Lilly") in the net income or loss for the 1998 Quarterly Period of
the Company's majority-owned subsidiary, MBio, as well as the minority
shareholder interest of Becton, Dickinson and Company ("Becton Dickinson") in
the net income or loss for the 1999 Quarterly Period of the Company's
majority-owned subsidiary, MPMx.
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 1998
For the six months ended June 30, 1999 (the "1999 Six Month Period"), the
Company reported net income of $3.1 million or $0.09 per basic share and $0.08
per diluted share as compared to a net loss of $6.6 million or $0.23 per basic
and diluted share for the six months ended June 30, 1998 (the "1998 Six Month
Period").
Revenue under strategic alliances increased to $88.3 million for the 1999
Six Month Period from $49.3 million for the 1998 Six Month Period. The increase
is primarily due to revenue from an alliance with Bayer AG that was not in place
in the 1998 Six Month Period. We expect revenues to increase in the near term,
however, revenues may fluctuate from period to period and there can be no
assurance that strategic alliance agreements will continue for their initial
term or beyond.
Research and development expenses increased to $74.9 million for the 1999
Six Month Period from $50.5 million for the 1998 Six Month Period. The increase
was attributable primarily to increased personnel expenses as the Company hired
additional research and development personnel, increased purchases of laboratory
supplies, and increased equipment depreciation and facilities expenses in
connection with the expansion of the Company's research efforts. We expect
research and development expenses to continue to increase as personnel are added
and as research and development activities are expanded to accommodate our
existing strategic alliances and development efforts for potential new product
candidates.
General and administrative expenses increased to $15.6 million for the 1999
Six Month Period from $11.8 million for the 1998 Six Month Period. The increase
was attributable primarily to increased personnel expenses as the Company hired
additional management, business development, and administrative personnel, and
to increased facilities costs and professional fees in connection with the
further expansion of the Company's operations. We expect that general and
administrative expenses will continue to increase as we add capabilities to
support the further advancement of new product candidates.
Interest income increased to $5.9 million for the 1999 Six Month Period
from $2.8 million for the 1998 Six Month Period. The increase resulted from an
increase in the Company's average balance of cash, cash equivalents and
marketable securities. Interest expense increased to $1.5 million for the 1999
Six Month Period from $1.1 million for the 1998 Six Month Period due to
increased capital lease obligations.
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Minority interest represents the minority shareholder interest of Lilly in
the net income or loss for the 1999 and 1998 Six Month Periods of the Company's
majority-owned subsidiary, MBio, as well as the minority shareholder interest of
Becton Dickinson in the net income or loss for the 1999 Six Month Period of the
Company's majority-owned subsidiary, MPMx.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, the Company had approximately $215.9 million in cash,
cash equivalents and marketable securities. This excludes $11.2 million of
interest-bearing marketable securities classified as restricted cash and other
assets on the balance sheet which serve as security deposits for certain of the
Company's facilities leases.
During the six months ended June 30, 1999, $15.6 million of cash was
provided by operations. Other inflows of cash were generated from the sale of
marketable securities of $31.0 million, the sale of MPMx stock of $15.0 million
to Becton Dickinson and proceeds from exercise of stock options of $14.2
million. Cash outflows included the purchase of $14.9 million of property and
equipment, $154.6 million of investments in marketable securities and $4.2
million to pay capital lease obligations.
On February 22, 1999, the Company announced the formation of a strategic
alliance in the diagnostics field between its wholly-owned subsidiary, MPMx, and
Becton Dickinson. The five-year genomics-based research collaboration focuses on
several areas of oncology. On March 31, 1999, Becton Dickinson made an equity
investment in MPMx of $15.0 million, representing approximately an 11% voting
interest in MPMx, and paid a $3.0 million licensing fee to MPMx. Becton
Dickinson has agreed to pay MPMx up to $51.5 million in research funding and
additional annual license fees, over the five-year term. Becton Dickinson has
agreed to pay milestones and royalties to MPMx in connection with the
commercialization and sale of any products developed through the alliance.
Millennium has financed its operations since inception primarily through
strategic alliances, equity security offerings, issuance of debt, and capital
leases.
We believe that existing cash and investment securities, and anticipated
cash flow from our current strategic alliances will be sufficient to support our
existing operations for the near term. Millennium's actual future cash
requirements, however, will depend on many factors, including progress of our
disease research programs, the number and breadth of these programs, achievement
of milestones under strategic alliance arrangements, acquisitions, our ability
to establish and maintain additional strategic alliance and licensing
arrangements, and the progress of the development efforts of our strategic
partners. We expect that Millennium will require significant additional
financing in the future, which we may seek to raise through public or private
equity offerings, debt financings, additional strategic alliances or other
financing vehicles. However, we can make no assurance that additional financing,
strategic alliances or licensing arrangements will be available when needed or
that, if available, such financing will be
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obtained on terms favorable to the Company or its stockholders. The Company's
forecast of the period of time through which its financial resources will be
adequate to support its operations is forward-looking information, and, as such,
actual results may vary.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", which is effective for fiscal years beginning after
June 15, 2000. The Company believes the adoption of this new accounting standard
will not have a significant effect on its financial statements as the Company's
investment policies prohibit the use of derivatives.
IMPACT OF YEAR 2000
The Year 2000 issue is the result of computer programs that were written
using two digits rather than four to define the applicable year. Any computer
program that has date-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. It is possible that this incorrect
recognition of dates could cause system failures or miscalculations of data. If
these errors were to occur in Millennium systems, they could cause us to be
unable to process data and engage in normal business activities.
Millennium has determined that we have Year 2000 exposure in the following
areas: (i) software and hardware embedded in our laboratory equipment and used
in our research and development programs, (ii) computer software and hardware
used in our business and facilities operations and (iii) computer systems used
by vendors and suppliers with whom we do business. In addition, we have Year
2000 exposure with respect to internally developed informatics application
software that is used by Millennium and certain alliance partners who have
access to our technology platform.
Millennium has a Year 2000 task force that is evaluating our internal
computer programs, systems and equipment and overseeing our Year 2000 efforts.
We are using both internal and external resources to identify potential issues,
costs and solutions to address Year 2000 concerns. For this effort, we are using
procedures outlined in the Government Accounting Office's Y2K Guide. We have
completed an inventory and assessment of our informatics applications. In
addition, we have inventoried a substantial amount of software and hardware
embedded in our laboratory and facilities equipment as part of our effort to
determine Year 2000 compliance. We are also making inquiries of our important
suppliers and vendors to assess their Year 2000 readiness. We have inventoried
software used in our business operations as well. We have identified critical
systems and equipment on which to focus our inquiries, remediation efforts, and
testing.
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To date, we have identified aspects of our computer hardware, network
infrastructure and business systems that are not Year 2000 compliant. We have
obtained and begun to implement vendor recommendations for correcting these
deficiencies for identified critical systems and equipment. We have also
identified aspects of internally developed software applications that are not
Year 2000 compliant and have begun testing and corrective programs in this area.
We expect to complete testing and remediation for critical computer hardware,
network infrastructure, business systems and internally developed software
applications by the end of the third quarter of 1999.
We completed an initial inventory and preliminary risk assessment of
critical laboratory and facilities equipment and systems during the first
quarter of 1999. We obtained and reviewed vendor provided documentation for
these items. We expect to complete testing and any remediation of critical
laboratory and facilities equipment by the end of the year.
There can be no assurance that we will not find problems that will require
us to incur substantial costs to correct or that will disrupt our business.
Should such problems occur, they could have a material adverse effect on our
business, financial position or results of operations. At the current time, we
expect to be able to correct the problems of which we are aware in a reasonable
and timely manner. We are not experiencing and do not anticipate any
forward-looking problems.
We have begun developing contingency plans for critical aspects of our
systems and operations to address Year 2000 problems that may arise despite our
Year 2000 compliance efforts.
We have not incurred material remediation costs to date and we do not
currently expect that the aggregate cost of our efforts will be material to our
operations or financial position taken as a whole. However, it is possible that
remediation costs will be greater than we anticipate and that such costs could
have a material adverse effect on our financial position or results of
operations. Our alliance partners or collaborators may also experience
disruption as a result of the Year 2000 issue. If our alliance partners and
collaborators experience disruption, it is possible that our alliances with
these partners could be adversely affected, which could have a material adverse
effect on our financial position and results of operations.
There can be no assurance that we will identify all Year 2000 compliance
problems as a result of our efforts or that we will be able to correct
compliance problems that are identified in a timely manner. If we are unable, in
a timely manner, to identify and correct compliance problems in critical systems
and equipment, our business, financial position and results of operations could
be adversely affected.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company maintains an investment portfolio in accordance with its
Investment Policy. The primary objectives of the Company's Investment Policy are
to preserve principal, maintain proper liquidity to meet operating needs and
maximize yields. The Company's Investment Policy specifies credit quality
standards for the Company's investments and limits the amount of credit exposure
to any single issue, issuer or type of investment.
The Company does not believe that there is any material market risk
exposure with respect to derivative or other financial instruments which would
require disclosure under this item.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 Annual Meeting of Stockholders was held on June 2, 1999
(the "Annual Meeting"). The following is a summary of each matter voted upon at
the Annual Meeting and the number of votes cast for, against or withheld, and
broker non-votes and abstentions, as to each such matter:
1. Election of three Class III directors, each for a term of three years.
Mark J. Levin: For: 31,210,928 Withheld: 329,395
Joshua Boger, Ph.D.: For: 31,210,928 Withheld: 329,395
A. Grant Heidrich III: For: 31,194,388 Withheld: 345,935
2. Approval of an amendment to the Company's 1996 Equity Incentive Plan
increasing the number of shares of Common Stock reserved for issuance from
4,100,000 to 5,600,000.
For: 16,735,659 Against: 10,071,581 Abstain: 30,222 Non-votes: 4,702,861
3. Approval of an amendment to the Company's 1997 Equity Incentive Plan
increasing the number of shares of Common Stock reserved for issuance from
2,000,000 to 4,000,000.
For: 17,659,014 Against: 9,143,931 Abstain: 34,517 Non-votes: 4,702,861
4. Approval of an amendment to the Company's 1996 Employee Stock Purchase
Plan increasing the number of shares of Common Stock reserved for issuance
from 350,000 to 650,000.
For: 26,677,003 Against: 127,880 Abstain: 32,579 Non-votes: 4,702,861
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits listed in the Exhibit Index are included in this report.
(b) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MILLENNIUM PHARMACEUTICALS, INC.
(Registrant)
Date: July 30, 1999 By: /s/ Kevin P. Starr
------------------------------------
Kevin P. Starr
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on Form
10-Q:
Exhibit
No. Description
- ------- -----------
+10.1 Agreement dated February 21, 1999 by and between Millennium
Predictive Medicine, Inc. and Becton, Dickinson and Company
10.2 Amended and Restated Rights Exchange Agreement dated February 1,
1999 between Millennium Pharmaceuticals, Inc. and Millennium
Predictive Medicine, Inc.
10.3 Technology Transfer and License Agreement dated February 1, 1999
between Millennium Pharmaceuticals, Inc. and Millennium
Predictive Medicine, Inc.
27.1 Financial Data Schedule for the quarter ended June 30, 1999
99.1 Pages 45 through 59 of the Company's Annual Report of Form 10-K
for the year ended December 31, 1998, as filed with the
Securities Exchange Commission (which are deemed filed except to
the extent that portions are not expressly incorporated by
reference herein).
+ Confidential treatment requested with respect to certain portions
17
<PAGE> 1
EXHIBIT 10.1
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
COLLABORATION AND LICENSE AGREEMENT
BY AND BETWEEN
BECTON, DICKINSON AND COMPANY
AND
MILLENNIUM PREDICTIVE MEDICINE, INC.
<PAGE> 2
TABLE OF CONTENTS
Page
Article I
Definitions.................................................................. 1
Section 1.1 "Affiliate"............................................... 1
Section 1.2 "Amortizable License Payments"............................ 2
Section 1.3 "Approved Sublicensees"................................... 2
Section 1.4 "Assays".................................................. 3
Section 1.5 "Bayer Agreement"......................................... 3
Section 1.6 "Becton Dickinson Platform Intellectual Property"......... 3
Section 1.7 "Becton Dickinson Platform Know-How"...................... 3
Section 1.8 "Becton Dickinson Platform Patent Rights"................. 3
Section 1.9 "Becton Dickinson Program Intellectual Property".......... 3
Section 1.10 "Becton Dickinson Program Know-How"....................... 4
Section 1.11 "Becton Dickinson Program Patent Rights".................. 4
Section 1.12 "Blocking Third Party Intellectual Property".............. 4
Section 1.13 "Candidate Marker"........................................ 4
Section 1.14 "Change of Control"....................................... 4
Section 1.15 "Co-Exclusive Pharmacogenomic Product Opportunity"........ 5
Section 1.16 "Colon Product Area"...................................... 5
Section 1.17 "Confidential Information"................................ 5
Section 1.18 "Contract Quarter"........................................ 5
Section 1.19 "Contract Year"........................................... 5
Section 1.20 "Cost of Goods Sold"...................................... 5
Section 1.21 "Development Program"..................................... 6
Section 1.22 "Diagnostic Product"...................................... 6
Section 1.23 "Direct Cost of Goods Sold"............................... 6
Section 1.24 "DOJ"..................................................... 7
Section 1.25 "Effective Date".......................................... 7
Section 1.26 "Enabling Third Party Intellectual Property".............. 7
Section 1.27 "Enhancing Third Party Intellectual Property"............. 7
Section 1.28 "Equity Closing Date"..................................... 8
Section 1.29 "Exclusive Non-Colon Product Area"........................ 8
Section 1.30 "Exclusive Product Area".................................. 8
Section 1.31 "Executive Officers"...................................... 8
Section 1.32 "FDA"..................................................... 8
Section 1.33 "Field"................................................... 8
Section 1.34 "First Commercial Sale"................................... 8
Section 1.35 "FTC"..................................................... 8
Section 1.36 "FTE"..................................................... 8
Section 1.37 "Gross Profit"............................................ 9
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<PAGE> 3
Section 1.38 "Home Brew Product"....................................... 9
Section 1.39 "HSR Act"................................................. 9
Section 1.40 "HSR Clearance Date"...................................... 9
Section 1.41 "HSR Filing".............................................. 9
Section 1.42 "Joint Program Intellectual Property"..................... 9
Section 1.43 "Joint Program Know-How".................................. 9
Section 1.44 "Joint Program Patent Rights"............................. 9
Section 1.45 "Kit"..................................................... 9
Section 1.46 "Know-How"................................................ 9
Section 1.47 "Lilly Research and License Agreement".................... 10
Section 1.48 "Major Market Country".................................... 10
Section 1.49 "Marker Validation Project"............................... 10
Section 1.50 "MBio".................................................... 10
Section 1.51 "MPI"..................................................... 10
Section 1.52 "MPMx Program Intellectual Property"...................... 10
Section 1.53 "MPMx Program Know-How"................................... 10
Section 1.54 "MPMx Program Patent Rights".............................. 11
Section 1.55 "Net Sales"............................................... 11
Section 1.56 "Non-Colon Product Area".................................. 12
Section 1.57 "Non-Exclusive Non-Colon Product Area".................... 12
Section 1.58 "Non-Exclusive Pharmacogenomic Product Opportunity"....... 12
Section 1.59 "Non-Exclusive Product Area".............................. 12
Section 1.60 "Party"................................................... 12
Section 1.61 "Patent Rights"........................................... 12
Section 1.62 "PGX Project Proposal".................................... 12
Section 1.63 "Pharmacogenomic Product"................................. 12
Section 1.64 "Pharmacogenomic Service"................................. 13
Section 1.65 "Product"................................................. 13
Section 1.66 "Product Area"............................................ 13
Section 1.67 "Program Candidate Marker"................................ 13
Section 1.68 "Program Diagnostic Product".............................. 13
Section 1.69 "Program Director"........................................ 13
Section 1.70 "Program Home Brew Product"............................... 13
Section 1.71 "Program Intellectual Property"........................... 13
Section 1.72 "Program Know-How"........................................ 13
Section 1.73 "Program Patent Rights"................................... 14
Section 1.74 "Program Pharmacogenomic Product"......................... 14
Section 1.75 "Program Pharmacogenomic Service"......................... 14
Section 1.76 "Program Product"......................................... 14
Section 1.77 "Program Term"............................................ 14
Section 1.78 "Program Validated Marker"................................ 14
Section 1.79 "Research Plan"........................................... 14
Section 1.80 "Research Program"........................................ 14
Section 1.81 "Reserved Non-Colon Product Area"......................... 15
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<PAGE> 4
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Section 1.82 "Reserved Product Area"................................... 15
Section 1.83 "ROFN Products"........................................... 15
Section 1.84 "Stock Purchase Agreement"................................ 15
Section 1.85 "Territory"............................................... 15
Section 1.86 "Third Party Pharmacogenomic Product"..................... 15
Section 1.87 "U.S. GAAP"............................................... 15
Section 1.88 "Validated Marker"........................................ 15
Section 1.89 "Viable Platform"......................................... 15
Section 1.90 Additional Definitions.................................... 15
Article II
Research Program............................................................. 18
Section 2.1 Exclusivity............................................... 18
Section 2.2 Joint Steering Committee.................................. 19
Section 2.3 Management of Research Program............................ 22
Section 2.4 Non-Colon Cancer Programs................................. 22
Section 2.5 Colon Cancer Programs..................................... 25
Section 2.6 Right of MPMx to Develop Third Party
Pharmacogenomic Products.................................. 28
Section 2.7 Research Program Responsibilities......................... 29
Section 2.8 Revision or Early Termination of Research
Program Relating to Year [**] Milestone................... 31
Section 2.9 Revision or Early Termination of Research
Program for Change of Control............................. 32
Section 2.10 Development Program....................................... 33
Section 2.11 Commercialization......................................... 33
Section 2.12 Becton Dickinson Development and
Commercialization Diligence Obligations................... 34
Section 2.13 Progress Reports.......................................... 38
Article III
Grant of Rights.............................................................. 38
Section 3.1 MPMx Grants............................................... 38
Section 3.2 Becton Dickinson Grants................................... 40
Section 3.3 MPMx Retained Rights...................................... 41
Section 3.4 Becton Dickinson's [**]................................... 41
Section 3.5 Section 365(n) of the Bankruptcy Code..................... 42
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<PAGE> 5
Article IV
Financial Provisions........................................................ 42
Section 4.1 License Payment.......................................... 42
Section 4.2 Additional Payment....................................... 42
Section 4.3 Equity Investment........................................ 42
Section 4.4 Convertible Note......................................... 43
Section 4.5 Research Funding......................................... 44
Section 4.6 Milestone Payments....................................... 45
Section 4.7 Royalty Payments to MPMx................................. 50
Section 4.8 Royalty Payments to Becton Dickinson..................... 52
Section 4.9 Length of Royalty Payments............................... 52
Section 4.10 Royalties Payable Only Once.............................. 52
Section 4.11 Royalty Reports and Accounting........................... 53
Section 4.12 Currency and Method of Payments; Late Payments........... 53
Section 4.13 Tax Withholding.......................................... 54
Section 4.14 Blocked Payments......................................... 54
Article V
Intellectual Property Ownership, Protection and Related Matters............. 54
Section 5.1 Ownership of Inventions.................................. 54
Section 5.2 Prosecution and Maintenance of Patent Rights............. 55
Section 5.3 Exploitation of Joint Program Intellectual
Property................................................. 56
Section 5.4 Blocking, Enabling and Enhancing Third Party
Intellectual Property.................................... 56
Section 5.5 Third Party Infringement................................. 58
Section 5.6 Claimed Infringement; Claimed Invalidity................. 59
Section 5.7 Patent Term Extensions................................... 60
Section 5.8 Patent Marking........................................... 61
Article VI
Confidentiality............................................................. 61
Section 6.1 Confidential Information................................. 61
Section 6.2 Disclosure of Provisions of Agreements................... 62
Section 6.3 Employee and Advisor Obligations......................... 62
Section 6.4 Term..................................................... 62
Section 6.5 Publications............................................. 62
Article VII
Representations and Warranties.............................................. 63
Section 7.1 Representations of Authority............................. 63
Section 7.2 Consents................................................. 63
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<PAGE> 6
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Section 7.3 No Conflict.............................................. 63
Section 7.4 Employee Obligations..................................... 64
Section 7.5 Third Party Rights....................................... 64
Section 7.6 Agreements with MPI...................................... 65
Section 7.7 Year 2000 Compliance..................................... 66
Section 7.8 No Warranties............................................ 66
Article VIII
Term and Termination........................................................ 66
Section 8.1 Term..................................................... 66
Section 8.2 Survival of Licenses..................................... 66
Section 8.3 Termination For Material Breach.......................... 66
Section 8.4 No Effectiveness Upon HSR Denial or Termination
of Stock Purchase Agreement.............................. 67
Section 8.5 Effect of Termination.................................... 67
Article IX
Dispute Resolution.......................................................... 68
Section 9.1 Alternative Dispute Resolution........................... 68
Section 9.2 No Limitation............................................ 68
Article X
Miscellaneous Provisions.................................................... 69
Section 10.1 Product Liability Indemnification........................ 69
Section 10.2 Governing Law............................................ 70
Section 10.3 Assignment............................................... 70
Section 10.4 Amendments............................................... 70
Section 10.5 Notices.................................................. 70
Section 10.6 Force Majeure............................................ 71
Section 10.7 Public Announcements..................................... 71
Section 10.8 Independent Contractors.................................. 72
Section 10.9 No Strict Construction................................... 72
Section 10.10 Headings................................................. 72
Section 10.11 No Implied Waivers; Rights Cumulative.................... 72
Section 10.12 Severability............................................. 72
Section 10.13 Execution in Counterparts................................ 72
Section 10.14 HSR Filing............................................... 72
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Exhibits
Exhibit A -- Non-Colon Product Areas
Exhibit B -- Research Plan
Exhibit C -- Year [**] Milestone
Exhibit D -- Form of Convertible Note
Exhibit E -- Research Funding Payments for First Contract Year
Exhibit F -- Alternative Dispute Resolution Process
Exhibit G -- Guaranty
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<PAGE> 8
COLLABORATION AND LICENSE AGREEMENT
This Collaboration and License Agreement (the "Agreement"), dated the
21st day of February, 1999 (the "Execution Date"), is by and between Becton,
Dickinson and Company, a corporation organized and existing under the laws of
New Jersey and having its principal office at One Becton Drive, Franklin Lakes,
New Jersey 07417 ("Becton Dickinson") and Millennium Predictive Medicine, Inc.,
a corporation organized and existing under the laws of the State of Delaware and
having its principal office at 640 Memorial Drive, Cambridge, Massachusetts
02139 ("MPMx").
INTRODUCTION
1. MPMx is engaged in the business of using genetics, genomics
and proteomics technologies to discover and develop diagnostic and
pharmacogenomic products and to provide pharmacogenomic services.
2. Becton Dickinson is engaged in the business of discovering,
developing and marketing diagnostic products.
3. Becton Dickinson and MPMx are interested in collaborating in
certain areas of cancer to discover and commercialize novel diagnostic and
pharmacogenomic products.
NOW, THEREFORE, Becton Dickinson and MPMx agree as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, each of the following terms shall have the
meanings set forth in this Article I:
SECTION 1.1 "AFFILIATE" means any corporation, company, partnership,
joint venture or other entity which controls, is controlled by, or is under
common control with a Party or, solely with respect to Section 2.1(c), MPI. For
purposes of this Section 1.1, "control" shall mean (a) in the case of corporate
entities, direct or indirect ownership of at least fifty percent (50%) of the
stock or shares having the right to vote for the election of directors, and (b)
in the case of non-corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the equity interest with the power to direct the
management and policies of such non-corporate entities.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 1.2 "AMORTIZABLE LICENSE PAYMENTS" means amounts determined as
follows: In the event that Becton Dickinson shall pay to a third party (or MPMx
shall pay to a third party and be reimbursed by Becton Dickinson pursuant to
Section 5.4) any license, access or similar fee in respect of licenses obtained
to Blocking Third Party Intellectual Property, Enabling Third Party Intellectual
Property or Enhancing Third Party Intellectual Property, [**] in the case of
both Blocking Third Party Intellectual Property and Enabling Third Party
Intellectual Property, and (b) [**], in the case of Enhancing Third Party
Intellectual Property, shall be deemed to be Amortizable License Payments and
shall be amortized in quarterly amounts, and each such quarterly amount shall be
added to Cost of Goods Sold as follows: Becton Dickinson shall include in Costs
of Goods Sold an amount equal to [**] for the applicable Program Product (the
"Per Product License Amortization Amount") until the total amount of the Per
Product License Amortization Amounts included in Cost of Goods Sold is
equivalent to the Adjusted Amortizable License Payment. For purposes of this
Section 1.2, "Adjusted Amortizable License Payment" shall mean the total amount
of the Amortizable License Payment for the applicable Program Product plus
interest compounded quarterly on the unamortized balance of such amount at the
[**] in effect at the time the obligation to make the Amortizable License
Payment was incurred (i.e. the date the applicable license was obtained). For
example, assuming that (i) Becton Dickinson paid [**] in license fees to a
third-party on [**], with respect to Blocking Third Party Intellectual Property
that covers Program Product X, (ii) the [**] on [**] (iii) no Net Sales of
Program Product X occur in [**], and Net Sales of Program Product X during the
calendar quarter ending on [**], respectively, then (A) the amount included in
Cost of Goods Sold for Program Product X for the quarter ended [**] will be [**]
and (B) the amount included in Cost of Good Sold for Program Product X for the
quarter ended [**] will be [**] but cumulatively capped in the aggregate by the
Adjusted Amortizable License Payment of [**] per annum compounded quarterly x
[**] years = [**] per annum compounded quarterly x [**] years = [**]).
SECTION 1.3 "APPROVED SUBLICENSEES" means (a) a third party with which
Becton Dickinson is, as of the Execution Date, negotiating to enter into a
collaborative alliance, the purpose of which is to develop a nucleic acid-based
platform for in vitro diagnostic and pharmacogenomic tests; (b) academic
institutions which are engaged for conducting clinical trials on behalf of
Becton Dickinson relating to the Development Program, PROVIDED THAT (i) any
sublicense to such an academic institution shall be limited to the conduct of
such clinical trials for non-commercial purposes only and (ii) Becton Dickinson
shall review with the Joint Steering Committee the choice of such academic
institutions; (c) any direct or indirect wholly-owned subsidiary of Becton
Dickinson; and (d) such other persons or entities as may be designated in
accordance with the following procedures: (i) if Becton Dickinson, in its sole
discretion, determines that it would be advantageous to grant a sublicense to
secure access to technological or commercialization resources or expertise
useful
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<PAGE> 10
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
for the development or commercialization of a Program Product, it shall notify
the Joint Steering Committee, including in such notice the scope of the proposed
sublicense and the names of any proposed sublicensees; and (ii) the Joint
Steering Committee shall be responsible for determining the scope of any such
sublicense and for selecting and approving any such sublicensee, whether one of
the potential sublicensees suggested by Becton Dickinson or such other person or
entity as the Joint Steering Committee shall determine to be appropriate.
SECTION 1.4 "ASSAYS" means formatted reagents for conducting a
diagnostic or pharmacogenomic test using (i) an instrument(s) owned by Becton
Dickinson, or to which Becton Dickinson otherwise has access, and/or (ii) any
other platform(s) designated by the Joint Steering Committee.
SECTION 1.5 "BAYER AGREEMENT" means the Agreement dated September 22,
1998 by and between MPI and Bayer AG ("Bayer").
SECTION 1.6 "BECTON DICKINSON PLATFORM INTELLECTUAL PROPERTY" means
Becton Dickinson Platform Know-How and Becton Dickinson Platform Patent Rights,
collectively.
SECTION 1.7 "BECTON DICKINSON PLATFORM KNOW-HOW" means equipment
existing as of the Effective Date and new versions of such equipment, and Know-
How relating to such equipment and new versions of such equipment, including
without limitation Becton Dickinson's [**] and all Know-How and equipment
relating to sample [**] (a) that is reasonably necessary to make [**] (b) that
is owned or controlled by, or licensed to, Becton Dickinson, and (c) to which
Becton Dickinson has the right to grant licenses or sublicenses without
violating the terms of any agreement with a third party.
SECTION 1.8 "BECTON DICKINSON PLATFORM PATENT RIGHTS" means a Patent
Right (a) that covers Becton Dickinson Platform Know-How, (b) that is owned or
controlled by, or licensed to, Becton Dickinson, and (c) to which Becton
Dickinson has the right to grant licenses or sublicenses without violating the
terms of any agreement with a third party.
SECTION 1.9 "BECTON DICKINSON PROGRAM INTELLECTUAL PROPERTY" means
Becton Dickinson Program Know-How and Becton Dickinson Program Patent Rights,
collectively.
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<PAGE> 11
SECTION 1.10 "BECTON DICKINSON PROGRAM KNOW-HOW" means any Know-How
that (a) is developed using MPMx Program Intellectual Property, (b) either (i)
Becton Dickinson or an Approved Sublicensee develops or acquires in the course
of the Research Program and/or the Development Program, or (ii) Becton Dickinson
or an Approved Sublicensee develops or acquires during the term of, but not in
the course of, the Research Program and/or the Development Program, and (c) is
owned or controlled by, or licensed to, Becton Dickinson or such Approved
Sublicensee and to which Becton Dickinson or such Approved Sublicensee has the
right to grant licenses or sublicenses without violating the terms of any
agreement with a third party; PROVIDED THAT Becton Dickinson Program Know-How
shall not include Becton Dickinson Platform Know-How and Joint Program Know-How.
SECTION 1.11 "BECTON DICKINSON PROGRAM PATENT RIGHTS" means a Patent
Right (a) that covers Becton Dickinson Program Know-How, (b) that is owned or
controlled by, or licensed to, Becton Dickinson or an Approved Sublicensee, and
(c) to which Becton Dickinson or an Approved Sublicensee has the right to grant
a license or sublicense without violating the terms of any agreement with a
third party.
SECTION 1.12 "BLOCKING THIRD PARTY INTELLECTUAL PROPERTY" means, with
respect to any country in the Territory, on a country-by-country basis, Patent
Rights in such country owned or controlled by a third party that cover either
(a) the composition of matter of a Program Validated Marker, or (b) a method of
using a Program Validated Marker that is independent of platform, but only if
the manufacture, use, offer for sale, sale, or import of a Program Product for
use in the Field in such country would, in the absence of a license granted by
such third party, infringe such Patent Rights, as determined pursuant to Section
5.4, PROVIDED, HOWEVER, that Blocking Third Party Intellectual Property shall
only include those Patent Rights to which a license is necessary to enable
Becton Dickinson to develop and commercialize a Program Product that contains
such Program Validated Marker and to enable MPMx to research and develop such
Program Validated Marker for use in a Program Product.
SECTION 1.13 "CANDIDATE MARKER" means any reagent, including without
limitation DNA, RNA, protein or antibody, which is suggested by scientific data
to be of potential use as a Product or component thereof.
SECTION 1.14 "CHANGE OF CONTROL" means (a) a merger, consolidation or
other transaction or series of related transactions as a result of which persons
who were shareholders of MPMx immediately prior thereto would not immediately
thereafter beneficially own (as defined in Rule 13d-3 promulgated under the
Exchange Act) at least [**] of the combined voting power of MPMx or the
surviving entity immediately after such transaction; or (b) any one person or
"group", as such terms are used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than any trustee or
other fiduciary holding securities under an
4
<PAGE> 12
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
employee benefit plan of MPMx), together with any of such person's "affiliates"
or "associates", as such terms are used in the Exchange Act, becoming the
beneficial owner (as defined in Rule 13d-3 promulgated under the Exchange Act)
of [**] or more of the combined voting power of the outstanding securities of
MPMx.
SECTION 1.15 "CO-EXCLUSIVE PHARMACOGENOMIC PRODUCT OPPORTUNITY" means a
Co-Exclusive Colon Pharmacogenomic Product Opportunity and/or a Co-Exclusive
Non-Colon Pharmacogenomic Product Opportunity.
SECTION 1.16 "COLON PRODUCT AREA" means a Staging or Screening Product
application in colon cancer.
SECTION 1.17 "CONFIDENTIAL INFORMATION" means all Know-How or other
information, including, without limitation, proprietary information and
materials (whether or not patentable) regarding a Party's technology, products,
business information or objectives, which is designated as confidential in
writing by the disclosing Party, whether by letter or by the use of an
appropriate stamp or legend, prior to or at the time any such Know-How or other
information is disclosed by the disclosing Party to the other Party.
Notwithstanding the foregoing, (a) all Program Know-How, Program Patent Rights
and Becton Dickinson Platform Intellectual Property shall constitute
Confidential Information and (b) Know-How or other information which is orally,
electronically or visually disclosed by a Party, or is disclosed in writing
without an appropriate letter, stamp or legend, shall constitute Confidential
Information of a Party (i) if the disclosing Party, within thirty (30) days
after such disclosure, delivers to the other Party a written document or
documents describing the Know-How or other information and referencing the place
and date of such oral, visual, electronic or written disclosure and the names of
the persons to whom such disclosure was made, or (ii) such Know-How or other
information is of the type that is customarily considered to be confidential
information by persons engaged in activities that are substantially similar to
the activities being engaged in by the Parties pursuant to this Agreement.
SECTION 1.18 "CONTRACT QUARTER" means the period beginning on the first
day of the First Contract Year and ending on March 31, 1999, and each succeeding
quarter thereafter during the Program Term.
SECTION 1.19 "CONTRACT YEAR" means (a) the period beginning on February
1, 1999 and ending on September 30, 1999 (the "First Contract Year"), (b) each
of the four (4) succeeding twelve (12) month periods thereafter during the
Program Term (referred to as the "Second Contract Year", "Third Contract Year",
etc.), and (c) the period beginning on October 1, 2003 and ending January 31,
2004 (the "Sixth Contract Year").
5
<PAGE> 13
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 1.20 "COST OF GOODS SOLD" means, with respect to each Program
Product for each calendar quarter, Direct Cost of Goods Sold for such Program
Product for such calendar quarter plus (a) [**] of the royalties accrued in such
calendar quarter by Becton Dickinson (or paid by MPMx and reimbursed by Becton
Dickinson pursuant to Section 5.4 below) to third parties based on the sale of
such Program Product pursuant to licenses obtained by a Party from such third
parties with respect to Blocking Third Party Intellectual Property relating to
such Program Product; (b) [**] of the royalties accrued in such calendar quarter
by Becton Dickinson (or paid by MPMx and reimbursed by Becton Dickinson pursuant
to Section 5.4 below) to third parties based on the sale of such Program Product
pursuant to licenses obtained by a Party from such third parties with respect to
Enabling Third Party Intellectual Property incorporated in such Program Product;
(c) [**] of the royalties accrued in such calendar quarter by Becton Dickinson
(or paid by MPMx and reimbursed by Becton Dickinson pursuant to Section 5.4
below) to third parties pursuant to licenses obtained by a Party from such third
parties based on the sale of such Program Product with respect to Enhancing
Third Party Intellectual Property incorporated in such Program Product; and (d)
the portion of any Amortizable License Payment allocable to such Program Product
for such calendar quarter. Notwithstanding the foregoing, royalty and/or
license, access or similar fees paid to third parties pursuant to licenses
obtained to Blocking Third Party Intellectual Property, Enabling Third Party
Intellectual Property or Enhancing Third Party Intellectual Property shall only
be included in the definition of "Cost of Goods Sold" if the Party obtaining
such licenses has complied with the terms of Section 5.4.
SECTION 1.21 "DEVELOPMENT PROGRAM" means the product development
program to be performed by Becton Dickinson and Approved Sublicensees, if any,
during and after the term of the Research Program, to develop Program Products
for use in the Field, the term of which shall continue until [**] after the
termination of the Research Program.
SECTION 1.22 "DIAGNOSTIC PRODUCT" means any Kit that (a) contains one
or more Validated Markers, and (b) identifies patients having a particular
disease, or having a predisposition to a particular disease (a "Screening
Product"), and/or monitors the aggressivity or prognosis of any disease in
patients (a "Staging Product"). The term Diagnostic Product includes both Home
Brew Products and products that have received regulatory review and/or approval.
SECTION 1.23 "DIRECT COST OF GOODS SOLD" means, with respect to each
Program Product for each calendar quarter, the sum of (a) Becton Dickinson's
cost of [**]
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<PAGE> 14
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
quarter (as calculated on an annual basis in accordance with and consistent with
the methods used by Becton Dickinson to calculate direct costs for its other
product lines), and (b) the amortizable cost of any Special Purpose Equipment.
As used herein, the term "Special Purpose Equipment" means manufacturing
equipment that is (x) [**] and (y) [**] all as determined by the Joint Steering
Committee. Special Purpose Equipment shall be amortized monthly on a straight
line basis for a number of months not to exceed the period set forth in Becton
Dickinson's Finance Policy Guide in effect as of the time such Special Purpose
Equipment was purchased by Becton Dickinson; provided that under no
circumstances shall the Special Purpose Equipment be amortized over a period of
less than sixty (60) months. The monthly amortization of Special Purpose
Equipment shall be included in Direct Cost of Goods Sold beginning with the
first month in which Program Products manufactured with the Special Purposes
Equipment are sold and shall be included each month thereafter until the full
amortizable cost of the Special Purpose Equipment has been included in Direct
Cost of Goods Sold.
SECTION 1.24 "DOJ" means the United States Department of Justice.
SECTION 1.25 "EFFECTIVE DATE" means the later of the HSR Clearance Date
and the Equity Closing Date.
SECTION 1.26 "ENABLING THIRD PARTY INTELLECTUAL PROPERTY" means, with
respect to any country in the Territory, on a country-by-country basis, Patent
Rights in such country owned or controlled by a third party that cover either
(a) the composition of matter of a Validated Marker that is not a Program
Validated Marker, or (b) a method that is independent of platform of using a
Validated Marker which is not a Program Validated Marker, but only if (x) such
Validated Marker is included in a Program Product because such Program Product
would have no medical value in the Field without the inclusion of such Validated
Marker, and (y) the manufacture, use, offer for sale, sale, or import of such
Program Product for use in the Field in such country would, in the absence of a
license granted by such third party, infringe such Patent Rights, all as
determined pursuant to Section 5.4, PROVIDED, HOWEVER, that Enabling Third Party
Intellectual Property shall only include those Patent Rights to which a license
is necessary to enable Becton Dickinson to develop and commercialize a Program
Product that contains such Validated Marker and to enable MPMx to research and
develop such Validated Marker for use in a Program Product.
SECTION 1.27 "ENHANCING THIRD PARTY INTELLECTUAL PROPERTY" means, with
respect to any country in the Territory, Patent Rights in such country owned or
controlled by a third party that cover either (a) the composition of matter of a
Validated Marker
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<PAGE> 15
that is not a Program Validated Marker, or (b) a method of using a Validated
Marker which is not a Program Validated Marker that is independent of platform,
but only if (x) such Validated Marker is included in a Program Product because
such Validated Marker materially enhances the commercial value of such Program
Product for use in the Field, and (y) the manufacture, use, offer for sale,
sale, or import of such Program Product for use in the Field in such country
would, in the absence of a license granted by such third party, infringe such
Patent Rights, all as determined pursuant to Section 5.4, PROVIDED, HOWEVER,
that Enabling Third Party Intellectual Property shall only include those Patent
Rights to which a license is necessary to enable Becton Dickinson to develop and
commercialize a Program Product that contains such Validated Marker and to
enable MPMx to research and develop such Validated Marker for use in a Program
Product.
SECTION 1.28 "EQUITY CLOSING DATE" means the Closing Date (as defined
in the Stock Purchase Agreement).
SECTION 1.29 "EXCLUSIVE NON-COLON PRODUCT AREA" means a Non-Colon
Product Area that (a) is selected by Becton Dickinson for inclusion in the
Research Program; and (b) is (i) an active area of research by MPMx and Becton
Dickinson within the Research Program with a committed staffing and funding
level and appropriate scientific rationale that is approved by the Joint
Steering Committee and/or (ii) a Product Area for which a Program Diagnostic
Product that was developed within the Research Program is being further
developed in the Development Program or is being commercialized by Becton
Dickinson or an Approved Sublicensee.
SECTION 1.30 "EXCLUSIVE PRODUCT AREA" means an Exclusive Colon Product
Area and/or an Exclusive Non-Colon Product Area.
SECTION 1.31 "EXECUTIVE OFFICERS" means the Chief Executive Officer of
Becton Dickinson (or a senior executive officer of Becton Dickinson designated
by Becton Dickinson) and the President of MPMx (or a senior executive officer of
MPMx designated by MPMx).
SECTION 1.32 "FDA" means the United States Food and Drug
Administration.
SECTION 1.33 "FIELD" means, collectively, the following human diseases:
melanoma, breast cancer, uterine cancer, ovarian cancer, cervical cancer,
prostate cancer and colon cancer. Each of the foregoing human diseases is
referred to as a "Disease Area".
SECTION 1.34 "FIRST COMMERCIAL SALE" means, for each Program Product,
the first commercial sale in a country by Becton Dickinson, its Affiliates
and/or Approved Sublicensees as part of a nationwide product introduction. Sales
for test
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marketing, clinical trial purposes or compassionate or similar use shall not be
considered to constitute a First Commercial Sale.
SECTION 1.35 "FTC" means the United States Federal Trade Commission.
SECTION 1.36 "FTE" means a full time equivalent person year (consisting
of a total of one thousand eight hundred eighty (1,880) hours per year) of
scientific, technical or managerial work on or directly related to the Research
Program and/or the Development Program.
SECTION 1.37 "GROSS PROFIT" means, with respect to a Program Product
for each calendar quarter, Net Sales for such Program Product for such calendar
quarter less Cost of Goods Sold for such Program Product for such calendar
quarter.
SECTION 1.38 "HOME BREW PRODUCT" means a Product that (a) is sold or
licensed solely to reference laboratories, and (b) has not been approved by
applicable regulatory authorities.
SECTION 1.39 "HSR ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (15 U.S.C. Sec. 18a), and the rules and
regulations promulgated thereunder.
SECTION 1.40 "HSR CLEARANCE DATE" means the earlier of (a) the date on
which the FTC shall notify Becton Dickinson and MPMx of early termination of the
applicable waiting period under the HSR Act, or (b) the day after the date on
which the applicable waiting period under the HSR Act expires.
SECTION 1.41 "HSR FILING" means filings by Becton Dickinson and MPMx
with the FTC and the Antitrust Division of the DOJ of a Notification and Report
Form for Certain Mergers and Acquisitions (as that term is defined in the HSR
Act) with respect to the matters set forth in this Agreement and the Stock
Purchase Agreement, together with all required documentary attachments thereto.
SECTION 1.42 "JOINT PROGRAM INTELLECTUAL PROPERTY" means Joint Program
Know- How and Joint Program Patent Rights, collectively. For purposes of this
Agreement, Blocking Third Party Intellectual Property, Enabling Third Party
Intellectual Property and Enhancing Third Party Intellectual Property that is
licensed-in pursuant to Section 5.4 shall be considered to be Joint Program
Know-How and/or Joint Program Patent Rights, as applicable.
SECTION 1.43 "JOINT PROGRAM KNOW-HOW" means any Know-How that is
developed or acquired jointly by the Parties in the course of the Research
Program and/or the Development Program, including Joint Inventions, as that term
is defined in Section 5.1(c).
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SECTION 1.44 "JOINT PROGRAM PATENT RIGHTS" means a Patent Right that
covers Joint Program Know-How.
SECTION 1.45 "KIT" means the Validated Markers and set of reagents and
other materials that are consumed, that constitute a Product.
SECTION 1.46 "KNOW-HOW" means any information, inventions, copyrights,
trade secrets, data or materials, including without limitation biological
materials (such as cell lines, RNA, RNA fragments, DNA, DNA fragments,
organisms, proteins, polypeptides, plasmids, vectors, fragments of such
proteins, polypeptides, plasmids and vectors, and unmodified derivatives,
progeny and variants of all of the foregoing), and software.
SECTION 1.47 "LILLY RESEARCH AND LICENSE AGREEMENT" means the Amended
and Restated Research and License Agreement dated December 22, 1998 by and
between MPI and Eli Lilly and Company ("Lilly").
SECTION 1.48 "MAJOR MARKET COUNTRY" means the United States, the United
Kingdom, Germany, France, Italy or Japan.
SECTION 1.49 "MARKER VALIDATION PROJECT" means a project undertaken by
MPMx in the course of the Research Program pursuant to Section 2.8(b), Section
2.9(b), or Section 4.5(c), with the goal of validating a Program Candidate
Marker or a set of Program Candidate Markers, delivered by MPMx to Becton
Dickinson pursuant to the Research Plan, to the extent necessary to qualify any
such marker(s) as a Program Validated Marker(s).
SECTION 1.50 "MBIO" means Millennium BioTherapeutics, Inc., (a) a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 640 Memorial Drive, Cambridge, Massachusetts
02139, and (b) an Affiliate of MPMx, as of the Execution Date.
SECTION 1.51 "MPI" means Millennium Pharmaceuticals, Inc., (a) a
corporation organized and existing under the laws of the State of Delaware and
having its principal office at 640 Memorial Drive, Cambridge, Massachusetts
02139, and (b) an Affiliate of MPMx, as of the Execution Date.
SECTION 1.52 "MPMX PROGRAM INTELLECTUAL PROPERTY" means MPMx Program
Know-How and MPMx Program Patent Rights, collectively.
SECTION 1.53 "MPMX PROGRAM KNOW-HOW" means any Know-How that (a) MPMx
reasonably determines to be useful to discover and develop Validated Markers
relevant to the Field and to develop, make, use, sell or seek approval to
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
market Products for use in the Field, (b) either (i) is in MPMx's possession on
the Effective Date and is used in the course of the Research Program, or (ii)
MPMx develops or acquires in the course of the Research Program, or (iii) MPMx
acquires during the term, but not in the course, of the Research Program, and
(c) is owned or controlled by, or licensed to, MPMx and to which MPMx has the
right to grant licenses or sublicenses without violating the terms of any
agreement with a third party; PROVIDED THAT MPMx Program Know-How shall not
include (A) methods or technology, including without limitation software, for
conducting genomic, proteomic, pharmacogenomic and diagnostic research and
development, (B) Joint Program Know-How and (C) Know-How developed or acquired
by MPMx in the course of the research and development of products in
Non-Exclusive Product Areas or Non-Exclusive Pharmacogenomic Product
Opportunities.
SECTION 1.54 "MPMX PROGRAM PATENT RIGHTS" means a Patent Right (a) that
covers MPMx Program Know-How, (b) that is owned or controlled by, or is licensed
to MPMx, and (c) to which MPMx has the right to grant a license or sublicense
without violating the terms of any agreement with a third party.
SECTION 1.55 "NET SALES" means the gross amount invoiced by Becton
Dickinson, its Affiliates and/or Approved Sublicensees on sales or other
dispositions of a Program Product to unrelated third parties, less the following
items:
a. [**] with respect to such sales; and
b. [**]
It is understood by the Parties that a Program Product may be sold
under a reagent rental agreement, or analogous agreement, where a purchaser is
provided an instrument for use in conjunction with a Program Product and the
costs associated with the placement and use of the instrument are not separately
billed, but instead represent some portion of the purchase price of the Program
Product, such that the transaction does not enable determination of the Net
Sales solely with respect to a Program Product. In such event, the Net Sales for
those units of such a particular Program Product which are sold on a reagent
rental or analogous basis shall be calculated by multiplying for each Program
Product on a country-by-country basis, (i) the average Net Sales price per unit
when the said Program Product is sold during the royalty-paying period in
question to end users on other than a reagent rental or analogous basis, by (ii)
the number of such units of said Program Product sold on a reagent rental or
analogous basis during the period for which Net Sales is being calculated.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
If no Program Products are sold other than under a reagent rental
agreement or analogous basis during the period for which Net Sales is being
calculated, then the Net Sales for purposes of determining royalty payments
shall be the Net Sales reduced by the amount of allocated instrument price (to
include instrument interest and service, if applicable), that amount being
calculated by multiplying the number of cumulative installed instruments
amortized for that period, that amortization being established in accordance
with U.S. GAAP.
In the event Program Products are sold together with other products at
a single price, or a Program Product is configured as a combination package
containing other products which do not interact with the Program Validated
Marker to yield a diagnostic or pharmacogenomic result (e.g. sample collection,
stabilization or purification products), such single price shall be allocated
among Program Products and the other products based on the market price for such
products when sold separately, PROVIDED THAT if either of such products is not
also then being sold alone, Becton Dickinson and MPMx shall agree upon the
market price that could reasonably be expected for that product or a comparable
product.
c. All such amounts as described in this Section 1.47
shall be determined from the books and records of Becton Dickinson, its
Affiliates and/or Approved Sublicensees, maintained in accordance with U.S.
GAAP.
SECTION 1.56 "NON-COLON PRODUCT AREA" means [**] that is not colon
cancer, as shown in EXHIBIT A.
SECTION 1.57 "NON-EXCLUSIVE NON-COLON PRODUCT AREA" means a Non-Colon
Product Area that is neither an Exclusive Non-Colon Product Area nor a Reserved
Non-Colon Product Area.
SECTION 1.58 "NON-EXCLUSIVE PHARMACOGENOMIC PRODUCT OPPORTUNITY" means
a Non-Exclusive Colon Pharmacogenomic Product Opportunity and/or a Non-
Exclusive Non-Colon Pharmacogenomic Product Opportunity.
SECTION 1.59 "NON-EXCLUSIVE PRODUCT AREA" means a Non-Exclusive Colon
Product Area and/or a Non-Exclusive Non-Colon Product Area.
SECTION 1.60 "PARTY" means Becton Dickinson or MPMx; "PARTIES" means
Becton Dickinson and MPMx. As used in this Agreement, references to "third
parties" do not include a Party or its Affiliates.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 1.61 "PATENT RIGHTS" means a U.S. and/or foreign patent or
patent application and all divisions, continuations, continuations-in-part,
reissues, reexaminations and extensions thereof, in whole or in part.
SECTION 1.62 "PGX PROJECT PROPOSAL" means a Colon PGX Project Proposal
and/or a Non-Colon PGX Project Proposal.
SECTION 1.63 "PHARMACOGENOMIC PRODUCT" means any Kit that contains one
or more Validated Markers, and (a) is used to [**]. The term "Pharmacogenomic
Product" includes both Home Brew Products and products that have received
regulatory review and/or approval.
SECTION 1.64 "PHARMACOGENOMIC SERVICE" means a service in which any Kit
incorporating a Validated Marker is used for the selection of patients for
participation in a clinical trial organized by a third party to evaluate at
least one therapeutic drug candidate or prophylactic drug candidate that has not
previously failed in development.
SECTION 1.65 "PRODUCT" means a Diagnostic Product and/or a
Pharmacogenomic Product, as the case may be.
SECTION 1.66 "PRODUCT AREA" means a Colon Product Area and/or a
Non-Colon Product Area.
SECTION 1.67 "PROGRAM CANDIDATE MARKER" means a Candidate Marker that
(a) incorporates, is derived from, is developed using or is covered by Program
Intellectual Property and (b) has been shown in a study of clinically annotated
human tissue samples to be of potential use in the development of a Program
Product or a component thereof. The determination that a Candidate Marker has
achieved the status of a Program Candidate Marker shall be made in good faith by
the Joint Steering Committee.
SECTION 1.68 "PROGRAM DIAGNOSTIC PRODUCT" means a Diagnostic Product
that (a) contains one or more Program Validated Markers, and (b) is developed
for use in one or more of the Disease Areas.
SECTION 1.69 "PROGRAM DIRECTOR" means the research executive appointed
by a Party to serve as such Party's principal coordinator and liaison for the
Research Program. The Program Director appointed by Becton Dickinson is referred
to as the "Becton Dickinson Program Director," and the Program Director
appointed by MPMx is referred to as the "MPMx Program Director."
SECTION 1.70 "PROGRAM HOME BREW PRODUCT" means a Home Brew Product that
contains one or more Program Validated Markers.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 1.71 "PROGRAM INTELLECTUAL PROPERTY" means Program Know-How and
Program Patent Rights, collectively.
SECTION 1.72 "PROGRAM KNOW-HOW" means MPMx Program Know-How, Becton
Dickinson Program Know-How and Joint Program Know-How, collectively.
SECTION 1.73 "PROGRAM PATENT RIGHTS" means MPMx Program Patent Rights,
Becton Dickinson Program Patent Rights and Joint Program Patent Rights,
collectively.
SECTION 1.74 "PROGRAM PHARMACOGENOMIC PRODUCT" means a Pharmacogenomic
Product that (a) contains one or more Program Validated Markers, and (b) is
developed for use with any drug or class of drugs with an approved indication in
one or more of the Disease Areas.
SECTION 1.75 "PROGRAM PHARMACOGENOMIC SERVICE" means a Pharmacogenomic
Service that (a) is provided using one or more Program Validated Markers, and
(b) relates to a therapeutic and/or prophylactic agent which is intended to
treat and/or prevent an indication in one or more of the Disease Areas.
SECTION 1.76 "PROGRAM PRODUCT" means a Program Diagnostic Product
and/or Program Pharmacogenomic Product, as the case may be.
SECTION 1.77 "PROGRAM TERM" means the period commencing on the
Effective Date and ending on the earlier of (a) the last day of the Sixth
Contract Year, (b) the termination of the Research Program pursuant to Section
2.8 or 2.9 or (c) the date of the termination of this Agreement.
SECTION 1.78 "PROGRAM VALIDATED MARKER" means a Program Candidate
Marker or set of Program Candidate Markers that has been validated by MPMx in a
clinically relevant population mirroring the intended use of the Product to
demonstrate clinical significance and [**]. The determination that a Program
Candidate Marker has achieved the status of a Program Validated Marker shall be
approved in good faith by the Joint Steering Committee.
SECTION 1.79 "RESEARCH PLAN" means (a) the generic research and
development plan to be undertaken in the Research Program and Development
Program, which is attached as EXHIBIT B to this Agreement, as such plan may be
updated or amended pursuant to Section 2.3(c), and (b) a more specific research
and development plan for each Exclusive Product Area, Co-Exclusive Colon Product
Area, Exclusive Colon
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Pharmacogenomic Product Opportunity and Co-Exclusive Pharmacogenomic Product
Opportunity, as reviewed and approved by the Joint Steering Committee.
SECTION 1.80 "RESEARCH PROGRAM" means the research program to be
undertaken by the Parties to develop Products for use in the Field, including
Screening Products, Staging Products and Pharmacogenomic Products, as more fully
set forth in the Research Plan. The Research Program does not encompass
activities undertaken by either Party with respect to Non-Exclusive Product
Areas or NonExclusive Pharmacogenomic Product Opportunities.
SECTION 1.81 "RESERVED NON-COLON PRODUCT AREA" means a Non-Colon
Product Area that (a) is selected by Becton Dickinson; (b) is not an Exclusive
Non-Colon Product Area; and (c) can become EITHER an Exclusive Non-Colon Product
Area upon selection by Becton Dickinson OR a Non-Exclusive Non-Colon Product
Area.
SECTION 1.82 "RESERVED PRODUCT AREA" means a Reserved Colon Product
Area and/or a Reserved Non-Colon Product Area.
SECTION 1.83 [**] means [**].
SECTION 1.84 "STOCK PURCHASE AGREEMENT" means the Stock Purchase
Agreement between Becton Dickinson and MPMx dated as of the Execution Date.
SECTION 1.85 "TERRITORY" means all countries of the world.
SECTION 1.86 "THIRD PARTY PHARMACOGENOMIC PRODUCT" means a
Pharmacogenomic Product for use in the Field developed in the course of the
provision by MPMx of Pharmacogenomic Services to a third party.
SECTION 1.87 "U.S. GAAP" means United States generally accepted
accounting principles, consistently applied.
SECTION 1.88 "VALIDATED MARKER" means a Candidate Marker that has been
shown by statistically significant data in a study of human materials to be of
use as a Product or a component thereof.
SECTION 1.89 "VIABLE PLATFORM" means a semi or fully automated
instrument used to detect and/or measure clinically relevant analyte(s) of test
specimens, which instrument is [**].
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 1.90 ADDITIONAL DEFINITIONS. Each of the following definitions
is set forth in the section of this Agreement indicated below:
DEFINITION SECTION
- ---------- -------
"1974 Convention" 10.3
"501(k)" 2.12(a)(i)
"[**]" 2.12(d)(i)
"Adjusted Amortizable License Payment" 1.2
"ADR" 9.1
"Affected Program Product" 4.7(d)(i)(a)
"Agreement" Preamble
"Annual Adjustment" 4.5(a)
"Bayer" 1.5
"Becton Dickinson" Preamble
"Becton Dickinson Indemnified Parties" 10.1(b)
"Becton Dickinson Inventions" 5.1(a)
"Becton Dickinson Program Director" 1.62
"Breaching Party" 8.3
"Co-Exclusive Colon Pharmacogenomic Product Opportunity" 2.5(b)(ii)(e)
"Co-Exclusive Colon Product Area" 2.5(a)(iii)
"Co-Exclusive Non-Colon Pharmacogenomic Product Opportunity" 2.4(b)(iii)
"Colon Diagnostic Project" 2.5(a)(i)
"Colon Diagnostic Project Proposal" 2.5(a)(iii)
"Colon PGX Project" 2.5(b)(i)
"Colon PGX Project Proposal" 2.5(b)(ii)(b)
"Commercial Requirement" Exhibit C
"Competing Generic Product" 4.7(d)(i)(a)
"Convertible Note" 4.4(c)
"CPR" 10.2
"Disease Area" 1.30
"Exchange Act" 1.13
"Exclusive Colon Pharmacogenomic Product Opportunity" 2.5(b)(ii)(e)
"Exclusive Colon Product Area" 2.5(a)(iii)
"Execution Date" Preamble
"FDA Approval" 2.12(a)(ii)
"FDC Act" 2.12(a)(ii)
"First Diligence Benchmark" 2.12(a)(i)
"Funding Amount" 4.5(a)
"Independent Party" Exhibit C
"Initial Public Offering" 4.4(a)
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
"Intellectual Property Requirement" Exhibit C
"Invalidity Claim" 5.6(d)
"Joint Inventions" 5.1(c)
"Joint Steering Committee" 2.2(a)
"Licensed Intellectual Property" 7.5(e)
"Lilly" 1.47
"Loan Option" 4.4(a)
"Loan Option Conditions" 4.4(a)
"Marker Validation Project Proposal" 2.8(b)
"Market Analysis" Exhibit C
"MBio/MPI Rights Exchange Agreement" 2.1(c)
"Migrated Product" 4.6(b)(ii)
"Milestone Achievement Date" 4.6
"Milestoned Program Diagnostic Product 4.6(b)(i)
"Milestoned Program Pharmacogenomic Product 4.6(b)(i)
"MPMx" Preamble
"MPMx Indemnified Parties" 10.1(a)
"MPMx Inventions" 5.1(b)
"MPMx/MPI Rights Exchange Agreement" 7.6(a)
"MPMx Program Director" 1.62
"MPMx Royalty-Bearing Product" 4.8
"New PGX Product 4.6(b)
"Non-Breaching Party" 8.3
"Non-Colon PGX Project" 2.4(b)(iv)
"Non-Colon PGX Project Proposal" 2.4(b)(ii)
"Non-Exclusive Colon Pharmacogenomic Product Opportunity" 2.5(b)(ii)(f)
"Non-Exclusive Colon Product Area" 2.5(a)(ii), (iv)
"Non-Exclusive Non-Colon Pharmacogenomic Product Opportunity" 2.4(b)(iv)
"Per Product License Amortization Amount" 1.2
"Performance Specifications" 2.2(b)
"PGX Approval Period" 2.5(b)
"PMA" 2.12(a)(i)
"Product Related Information" 2.12(e)(i)
"Reserved Colon Product Area" 2.5(a)(ii)
"Responsible Party" 5.5(c)
"Response Period" 3.4
"Requirements" Exhibit C
"[**]" 3.4
"Scientific/Clinical Requirement" Exhibit C
"Screening Product" 1.19
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
"SEC" 6.3
"Second Anniversary Year" 2.4(a)(ii)
"Second Diligence Benchmark" 2.12(a)(i)
"Securities Act" 4.4(a)
"[**]" 4.7(d)
"Special Purpose Equipment" 1.20
"Staging Product" 1.19
"Successful Projects" Exhibit C
"Third Anniversary Year" 2.4(a)(iii)
"Third Diligence Benchmark" 2.12(a)(i)
"Third Party Claim" 5.6
"Third Party Damages" 5.6(b)
"Third Party Settlement Payments" 5.6(c)
"Transfer Documents" 7.6(a)
"Unmet Benchmark" 2.12(a)(i)
"Unspent Funding Amount" 4.5(c)
"Waived Non-Colon PGX Project" 2.4(b)(iv)
"Year [**] Milestone" 2.8(a)
ARTICLE II
RESEARCH PROGRAM
SECTION 2.1 EXCLUSIVITY.
a. MPMX OBLIGATION. During the Program Term, MPMx agrees
that [**], (i) [**] pursuant to this Agreement), as part of a [**], in any such
case [**] for the development of Diagnostic Products for use in any [**] or (ii)
[**], in either case [**].
b. BECTON DICKINSON OBLIGATION. During the Program Term,
Becton Dickinson agrees that [**], in any such case [**] development of
Diagnostic Products for use in any [**] or (ii) [**], in either case [**].
c. MPI OBLIGATIONS. For the period that begins on the
Execution Date and ends on the earlier to occur of (i) the termination of the
Program Term and (ii) the termination of the MPMx/MPI Rights Exchange Agreement,
MPI agrees that [**] and covenants that its Affiliates (other than MPMx and
MBio) [**] (A) [**] (B) [**] (including to either Lilly or Bayer pursuant to an
amendment to the Lilly Research and License Agreement or the Bayer Agreement,
respectively) [**] granted to Lilly
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
pursuant to the Lilly Research and License Agreement. For the period that begins
on the Execution Date and ends [**] as those agreed to by MPI pursuant to the
preceding sentence.
SECTION 2.2 JOINT STEERING COMMITTEE.
a. COMPOSITION; RESPONSIBILITIES. The Parties shall
establish a joint steering committee (the "Joint Steering Committee"), comprised
of (i) three (3) representatives of Becton Dickinson and three (3) senior
executives of MPMx, and (ii) the Program Directors. Each Party shall make its
designation of its representatives not later than thirty (30) days after the
Effective Date. Each Party shall use reasonable efforts to designate as its
representatives individuals that shall have the requisite experience and
knowledge to oversee the Research Program and the Development Program. The Joint
Steering Committee shall meet within forty-five (45) days after the Effective
Date and, thereafter, at least quarterly during the course of the Research
Program and at least once every six (6) months during the course of the
Development Program or until termination of this Agreement, if earlier, to (i)
review the efforts of the Parties in the conduct of the Research Program and the
Development Program, (ii) review and approve amendments to the Research Plan,
(iii) review the annual development plan to be prepared by Becton Dickinson for
the Development Program, (iv) review and approve the committed staffing and
funding levels and scientific rationale for each Product Area that is proposed
by a Party as an Exclusive Product Area and for each Pharmacogenomic Product
Opportunity that is proposed by a Party as an Exclusive Colon Pharmacogenomic
Product Opportunity or a Co-Exclusive Pharmacogenomic Product Opportunity, (v)
establish Performance Specifications in accordance with subsection (b) below,
(vi) determine whether the Year [**] Milestone (as defined in Section 2.8) has
been accomplished, (vii) approve the determination of the Program Directors as
to which, if any, Program Candidate Markers have been validated as Program
Validated Markers, (viii) determine the allocation of the Funding Amount for
each Contract Year after the First Contract Year, (ix) consider and act upon
such other matters as are specified in this Agreement and (x) attempt to resolve
any disputes relating to this Agreement that may arise between the Parties. The
location of such meetings of the Joint Steering Committee shall alternate
between Massachusetts and Maryland, or as otherwise agreed by the Parties. The
Joint Steering Committee may also meet by means of a telephone conference call.
Each Party may change any one or more of its representatives to the Joint
Steering Committee at any time upon notice to the other Party. Each Party shall
use reasonable efforts to cause its representatives to attend the meetings of
the Joint Steering Committee. If a representative of a Party is unable to attend
a meeting, such Party may designate an alternate to attend such meeting in place
of the absent
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
representative. In addition, each Party may, at its discretion, invite
non-voting employees, and, with the consent of the other Party, consultants or
scientific advisors (provided they are engaged under obligations of
confidentiality) to attend the meetings of the Joint Steering Committee to,
among other things, review and discuss the Research Program and/or the
Development Program, as the case may be, and its results.
b. ESTABLISHING PRODUCT PERFORMANCE SPECIFICATIONS.
Within [**] after the initiation of work under the Research Program for each
Exclusive Product Area, Co-Exclusive Colon Product Area, Exclusive Colon
Pharmacogenomic Product Opportunity or Co-Exclusive Pharmacogenomic Product
Opportunity (other than for a Third Party Pharmacogenomic Product), the Joint
Steering Committee shall, in consultation with marketing and other specialists,
agree upon performance specifications ("Performance Specifications") including
without limitation, quantitative levels of sensitivity and/or specificity and
positive and/or negative predictive value for each Program Product for such
Exclusive Product Area, Co-Exclusive Colon Product Area, Exclusive Colon
Pharmacogenomic Product Opportunity or Co-Exclusive Pharmacogenomic Product
Opportunity. In defining Performance Specifications, the Joint Steering
Committee shall consider commercially available products, if any, which are
"market leaders" either in terms of market share and/or technical performance.
Such commercial product or products shall serve as a reference for establishing,
as applicable, sensitivity and/or specificity and positive and/or negative
predictive value guidelines for each Program Product. Performance Specifications
may be modified from time to time by the Joint Steering Committee during the
Program Term and the term of the Development Program.
c. DECISION MAKING.
i. In general, matters to be agreed upon or
approved by the Parties shall be referred to the Joint Steering Committee. Upon
five business days written notice, either Party may convene a special meeting of
the Joint Steering Committee for the purpose of resolving disputes. All
decisions of the Joint Steering Committee (including, without limitation,
resolution of disputes) shall be made by majority vote of all of the members of
the Joint Steering Committee (i.e., the affirmative vote of not less than five
(5) members), and the goal of all decision making shall be to achieve consensus.
If the Joint Steering Committee is unable to reach agreement on any matter
referred to it for resolution by the Parties within one month after the matter
is referred to it, such matter shall be referred to the Executive Officers. Any
resolution of the Executive Officers shall be final and binding on the Parties.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
ii. Each Executive Officer shall have the right
to engage the services of any number of independent experts in the field in
question (each individual so engaged by each Executive Officer to be engaged
under obligations of confidentiality and with consideration of competitive
issues for the other Party) to assist the Executive Officers in making a joint
determination in the best interests of the collaboration, and each Executive
Officer shall be obligated to consider in good faith the analyses and opinions
of any such independent experts engaged by either of them in making a
determination.
iii. If the Executive Officers are unable to
resolve a matter referred to them under this Section within one month after the
matter is referred to them, the provisions of Article IX shall apply; PROVIDED
THAT (A) if the Executive Officers are unable to resolve a disagreement of the
Joint Steering Committee with respect to the selection of a specific Approved
Sublicensee then the Parties agree that [**]; (B) if the Executive Officers are
unable to resolve a disagreement of the Joint Steering Committee with respect to
Blocking Third Party Intellectual Property, Enabling Third Party Intellectual
Property and/or Enhancing Third Party Intellectual Property, the provisions of
Section 5.4 shall govern the resolution of such disagreement; (C) any dispute
with respect to patent validity or inventorship shall be determined by mutually
acceptable independent patent counsel not regularly engaged by either Party; (D)
if the Executive Officers are unable to resolve a disagreement with respect to
adjustments to the Funding Amount pursuant to Section 4.5(a)(i), then no such
adjustment shall be made; (E) if the Executive Officers are unable to resolve a
disagreement relating to Special Purpose Equipment, the relevant Special Purpose
Equipment shall not become a component of the Direct Cost of Goods Sold and (F)
if the Executive Officers are unable to resolve a disagreement of the Joint
Steering Committee with respect to changes or modifications to the Year [**]
Milestone pursuant to Section 2.8, the Year [**] Milestone shall not be changed
or modified.
SECTION 2.3 MANAGEMENT OF RESEARCH PROGRAM.
a. PROGRAM DIRECTORS. Becton Dickinson and MPMx shall
each appoint a Program Director prior to the Effective Date. Each Party shall
have the right, after consultation with the other Party, to designate a
different Program Director. The Program Directors shall jointly oversee the
conduct of the Research Program and shall be responsible for, among other
things, (i) determining which Program Candidate Markers, if any, have been
validated as Program Validated
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Markers and (ii) recommending to the Joint Steering Committee any changes to the
Research Plan.
b. PROJECT TEAMS. The Program Directors shall appoint
one or more appropriate project teams, in each case consisting of
representatives from Becton Dickinson and MPMx, to facilitate the conduct of
elements of the Research Program and the collaboration of the Parties in (i) the
areas set forth in the Research Plan; and (ii) such other areas as may be agreed
upon by the Joint Steering Committee.
c. RESEARCH PLAN. The Parties shall undertake the
Research Program during the Program Term in accordance with the Research Plan.
The Research Plan shall set forth the research goals for the Research Program
during each Contract Year. The Program Directors shall review the Research Plan
on at least an annual basis and submit any proposed modifications or updates to
the Joint Steering Committee for its review, as well as proposed revised
research goals for the following Contract Year. Any such modifications, updates
or research goals shall not become effective until approved by the Joint
Steering Committee. The Joint Steering Committee shall review and consider any
such proposed modifications, updates or research goals on an expeditious basis.
d. Notwithstanding anything in this Section 2.3 to the
contrary, Becton Dickinson shall have the right, in its discretion, to modify
the Research Program in order to pursue other Research Plans, provided the Joint
Steering Committee or Executive Officers agree as to whether any adjustment to
the Year [**] Milestone should be made pursuant to Section 2.8 as a result
thereof. In modifying Research Plans, Becton Dickinson shall consider the impact
of such actions on commitments (financial or otherwise) made by MPMx and/or the
Parties to third parties (e.g. academic institutions) pursuant to the Research
Program.
SECTION 2.4 NON-COLON CANCER PROGRAMS.
a. EXCLUSIVE, RESERVED AND NON-EXCLUSIVE NON-COLON
PRODUCT AREAS.
i. EXCLUSIVE AND RESERVED NON-COLON PRODUCT
AREAS AS OF THE EXECUTION DATE. The Parties have agreed to [**] Exclusive
Non-Colon Product Areas as of the Execution Date that are identified in the
Research Plan. The [**] remaining Non-Colon Product Areas shall be Reserved
Non-Colon Product Areas.
ii. EXCLUSIVE, RESERVED AND NON-EXCLUSIVE
NON-COLON PRODUCT AREAS AS OF THE [**. At the end of the [**] period immediately
following the Effective Date (the "[**]"), the Research Program shall include
Exclusive Non-Colon Product Areas that are selected by Becton Dickinson and
approved by the Joint Steering
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Committee, which approval shall be based on a determination by the Joint
Steering Committee that, with respect to each such Exclusive Non-Colon Product
Area, there is an appropriate scientific rationale and a commitment by Becton
Dickinson of appropriate funding. The number of Reserved Non-Colon Product Areas
on the Second Anniversary Date shall be [**]; these Reserved Non-Colon Product
Areas shall be selected by Becton Dickinson from the Non-Colon Product Areas
which have not been selected by Becton Dickinson as Exclusive Non-Colon Product
Areas. Following the [**], the Non-Colon Product Areas that are neither
Exclusive nor Reserved Non-Colon Product Areas shall be Non-Exclusive Non-Colon
Product Areas.
iii. EXCLUSIVE AND NON-EXCLUSIVE NON-COLON
PRODUCT AREAS AS OF THE [**]. At the end of the [**] period immediately
following the Effective Date ("Third Anniversary Date"), the Research Program
shall include Exclusive Non-Colon Product Areas that are selected by Becton
Dickinson and approved by the Joint Steering Committee, which approval shall be
based on a determination by the Joint Steering Committee that, with respect to
each such Exclusive Non-Colon Product Area, there is an appropriate scientific
rationale and a commitment by Becton Dickinson of appropriate funding. The
number of Reserved Non-Colon Product Areas on the [**] shall be [**] the
category of Reserved Non-Colon Product Areas. Following the [**], the Non-Colon
Product Areas that are not Exclusive Non-Colon Product Areas shall be
Non-Exclusive Non-Colon Product Areas.
b. NON-COLON PHARMACOGENOMIC PROJECTS.
i. OVERVIEW. The Parties contemplate that, from
time to time during the Program Term, either Party may become aware of projects
relating to the research and development of a Pharmacogenomic Product in the
Field outside of the Disease Area of colon cancer (each, a "Non-Colon PGX
Project"). The Parties hereby agree [**] with the provisions of this Section
2.4(b).
ii. NON-COLON PGX PROJECT PROPOSAL. In the event
that either Party wishes to either include a Non-Colon PGX Project in the
Research Program or undertake a Non-Colon PGX Project during the Program Term in
collaboration with a third party, such Party shall first submit to the Joint
Steering Committee a proposal with respect to such Non-Colon PGX Project (a
"Non-Colon PGX Project Proposal"). A Non-Colon PGX Project Proposal may relate
to a therapeutic or prophylactic drug or class of therapeutic or prophylactic
drugs or class of compounds containing a therapeutic or prophylactic drug. A
Non-Colon PGX Project Proposal shall include (A) a scientific rationale
reasonably designed to lead to the discovery of Program Validated Markers of
sufficient importance that Program Pharmacogenomic Products incorporating such
Program Validated Markers would be likely to provide a meaningful clinical
advance; (B) a project plan describing the required research headcount for such
project and timelines to the identification of Program Validated
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with the Securities and Exchange Commission. Asterisks denote omissions.
Markers; (C) a description of the resources, if any, required from third
parties, including without limitation academic and/or clinical organizations,
and the plan to access such resources; (D) a definition of the scope of the
project with respect to the approved drug(s) and/or class of compounds
containing such approved drug; and (E) an analysis of intellectual property
relating to the proposed Program Pharmacogenomic Product and Validated Markers
contemplated for use in such Program Pharmacogenomic Product. The Joint Steering
Committee shall have a period of [**] days after receipt of a Non-Colon PGX
Project Proposal in which to approve the Non-Colon PGX Project described therein
for inclusion in the Research Program (the "PGX Approval Period"). Such approval
shall be based on a determination by the Joint Steering Committee that, with
respect to such Non-Colon PGX Project, there is an appropriate scientific
rationale and a commitment by Becton Dickinson of appropriate funding. The
Parties hereby agree that a commitment by Becton Dickinson of appropriate
funding may include a situation in which either:
(a) Becton Dickinson indicates in
writing that it will provide the requisite funding on a specified date that is
[**] after the expiration of the applicable PGX Approval Period, or
(b) Becton Dickinson indicates in
writing that it will provide the requisite funding on a specified date following
such determination by the Joint Steering Committee (which date shall [**] after
the expiration of the applicable PGX Approval Period), but only if (x) [**]
during the time period between the initiation of such Non-Colon PGX Project and
the provision of funding by Becton Dickinson, (y) [**] Becton Dickinson [**] of
such project, and (z) the Parties reach agreement prior to the expiration of the
applicable PGX Approval Period with respect to financial arrangements intended
to [**] which arrangements may include incremental royalty payments, milestone
payments or other financial considerations.
iii. APPROVED NON-COLON PGX PROJECTS. In the
event that the Joint Steering Committee approves a Non-Colon PGX Project, the
Parties shall expeditiously amend the Research Plan in order to accommodate and
reflect the inclusion of such Non-Colon PGX Project. Each Non-Colon PGX Project
that is included in the Research Program shall define a Pharmacogenomic Product
opportunity, the scope of which shall be determined by the scope of the
Non-Colon PGX Project and as to which Becton Dickinson shall have co-exclusive
rights as set forth in Section 3.1(b)(ii), subject to Becton Dickinson's
obligation to meet development and commercialization obligations set forth in
Section 2.12 (a "Co-Exclusive Non-Colon Pharmacogenomic Product Opportunity").
iv. WAIVED PGX NON-COLON PROJECTS. In the event
that the Joint Steering Committee does not approve a Non-Colon PGX Project, then
such Non-Colon PGX Project shall not be included in the Research Program (a
"Waived
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with the Securities and Exchange Commission. Asterisks denote omissions.
Non-Colon PGX Project"). Each Waived Non-Colon PGX Project shall define a
Pharmacogenomic Product opportunity, the scope of which shall be determined by
the scope of the Waived Non-Colon PGX Project and as to which Becton Dickinson
shall have non-exclusive rights as set forth in Section 3.1(b)(iv) (a
"Non-Exclusive Non-Colon Pharmacogenomic Product Opportunity"). Each Party shall
have the right to undertake such Waived Non-Colon PGX Project, either alone or
in collaboration with a third party, and shall have no further obligation to the
other Party with respect to such Waived Non-Colon PGX Project and any
Pharmacogenomic Product resulting therefrom (except that to the extent that any
such Pharmacogenomic Product is a Program Product, in which case the provisions
of this Agreement shall generally apply); PROVIDED THAT if neither Party begins
such Waived Non-Colon PGX Project either alone or in collaboration with a
commercial third party within one (1) year after the Joint Steering Committee
failed to approve such project, then neither Party shall subsequently undertake
such Waived Non-Colon PGX Project in collaboration with a commercial third party
without first re-submitting such project to the Joint Steering Committee for
inclusion in the Research Program, in accordance with the procedures set forth
in this Section 2.4.
SECTION 2.5 COLON CANCER PROGRAMS.
a. COLON DIAGNOSTIC PROJECTS.
i. The Parties contemplate that, from time to
time during the Program Term, either Party may desire to undertake a project
relating to the research and development of a Diagnostic Product for a Colon
Product Area (a "Colon Diagnostic Project"). The Parties hereby agree [**],
unless it complies with the provisions of this Section 2.5(a).
ii. The Parties have agreed that during the [**]
period immediately following the Effective Date, [**] Colon Product Areas shall
be deemed to be a "Reserved Colon Product Area", unless [**] such Colon Product
Areas is made an Exclusive Colon Product Area or a Co-Exclusive Colon Product
Area, as further provided in Section 2.5(a)(iii) below. In the event that [**]
Reserved Colon Product Areas is made an Exclusive Colon Product Area or a
Co-Exclusive Colon Product Area during the [**] period immediately following the
Effective Date, then (A) [**] Colon Product Area shall remain a Reserved Colon
Product Area until [**] of the Effective Date, unless such Colon Product Area is
made an Exclusive Colon Product Area or a Co-Exclusive Colon Product Area
pursuant to Section 2.5(a)(iii) below, or a Non-Exclusive Colon Product Area
pursuant to Section 2.5(a)(iv) below, and (B) if [**] Colon Product Area has
remained a Reserved Colon Product Area as of [**] of the Effective Date, then
such Colon Product Area shall be deemed to be a "Non-Exclusive Colon Product
Area" on such [**] date. In the event that [**] Reserved Colon Product Areas is
made an Exclusive Colon Product Area or a Co-Exclusive Colon Product
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with the Securities and Exchange Commission. Asterisks denote omissions.
Area on or prior to [**] of the Effective Date, [**] of the Effective Date. With
respect to a Reserved Colon Product Area, MPMx shall retain the right to (1)
obtain a license to third party intellectual property relevant to such Reserved
Colon Product Area, and/or (2) undertake, in the absence of a commercial third
party collaborator, a Colon Diagnostic Project that addresses such Reserved
Colon Product Area, and/or (3) enter into a co-exclusive agreement with a
commercial third party collaborator to undertake a Colon Diagnostic Project that
addresses such Reserved Colon Product Area, PROVIDED, HOWEVER, that MPMx shall
promptly, upon the initiation of any such project or the execution of any such
license or agreement, submit to the Joint Steering Committee a proposal with
respect to such Reserved Colon Product Area, in accordance with the provisions
of Section 2.5(a)(iii) below.
iii. In the event that either Party wishes to
include in the Research Program a Colon Diagnostic Project that addresses a
Reserved Colon Product Area (or, in the case of MPMx pursuant to the provisions
of Section 2.5(a)(ii) above, MPMx is obligated to offer a Colon Diagnostic
Project that addresses a Reserved Colon Product Area to the Joint Steering
Committee for inclusion in the Research Program), then such Party shall submit
to the Joint Steering Committee a proposal with respect to such Colon Diagnostic
Project (a "Colon Diagnostic Project Proposal") which shall include the
information set forth in Section 2.4(b)(ii)(A), (B), (C), and (E) with respect
to such Colon Diagnostic Product. A Colon Diagnostic Project shall be included
in the Research Program, and the Colon Product Area addressed by such Colon
Diagnostic Project shall be deemed to be a "Co-Exclusive Colon Product Area", in
the event that the Joint Steering Committee approves the Colon Diagnostic
Project Proposal that describes such Colon Diagnostic Project, which approval
shall be based on a determination by the Joint Steering Committee that, with
respect to such project, there is an appropriate scientific rationale and a
commitment by both Parties of appropriate funding. Appropriate funding shall
include (A) a commitment by each Party [**] required to identify the set of
Program Candidate Markers to be provided to Becton Dickinson for Assay
formatting in the course of the Colon Diagnostic Project, and (B) a commitment
by Becton Dickinson [**] with respect to such Colon Diagnostic Project,
PROVIDED, HOWEVER, that MPMx shall [**] with respect to the [**] by an [**]
third party intellectual property relevant to such Colon Diagnostic Project that
MPMx elects to contribute to such project, such value to be determined in good
faith by the Joint Steering Committee. In the event that (1) MPMx [**] that in
the opinion of the Joint Steering Committee has an appropriate scientific
rationale and (2) MPMx [**] with respect to such Colon Diagnostic Project, then
Becton Dickinson shall [**] with respect to such Colon Diagnostic Project and
such Colon Diagnostic Project shall be included in the Research Program and the
Colon Product Area addressed by such Colon Diagnostic Project shall be deemed to
be an "Exclusive Colon Product Area".
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with the Securities and Exchange Commission. Asterisks denote omissions.
iv. In the event that a Colon Diagnostic Project
that is the subject of a Colon Diagnostic Project Proposal submitted to the
Joint Steering Committee during the [**] period immediately following the
Effective Date is not approved, then such project shall not be included in the
Research Program and the Colon Product Area addressed by such Colon Diagnostic
Project shall remain a Reserved Colon Product Area until such Product Area is
deemed to be an Exclusive, Co-Exclusive or Non-Exclusive Colon Product Area
[**]. In the event that a Colon Diagnostic Project that is the subject of a
Colon Diagnostic Project Proposal submitted to the Joint Steering Committee
following [**] of the Effective Date is not approved, then such project shall
not be included in the Research Program and the Colon Product Area addressed by
such Colon Diagnostic Project shall be deemed to be a "Non-Exclusive Colon
Product Area" at the time that the Joint Steering Committee makes its
determination not to approve such project.
b. COLON PHARMACOGENOMIC PROJECTS.
i. The Parties contemplate that, from time to
time during the Program Term, either Party may wish to undertake a project
relating to the research and development of a Pharmacogenomic Product in colon
cancer (a "Colon PGX Project"). The Parties hereby agree [**] unless it complies
with the provisions of this Section 2.5(b).
ii. The process under which a Colon PGX Project
shall be considered for inclusion in the Research Program shall be as follows:
(a) With respect to any Colon PGX
Project, [**] (1) obtain a license to third party intellectual property relevant
to such Colon PGX Project, and/or (2) undertake such Colon PGX Project in the
absence of a commercial third party collaborator, and/or (3) enter into a
co-exclusive agreement with a commercial third party collaborator to undertake
such Colon PGX Project, PROVIDED, HOWEVER, that (A) [**] upon the initiation of
any such project or the execution of any such license or agreement, [**] with
respect to such Colon PGX Project, in accordance with the provisions of this
Section 2.5(b), and (B) under no circumstance (except as provided in Section
2.6), during [**] immediately following the Effective Date, shall [**] enter
into an exclusive agreement with a commercial third party collaborator to
undertake a Colon PGX Project.
(b) In the event that either Party
wishes to include in the Research Program a Colon PGX Project (or, [**] pursuant
to the provisions of subsection (a) above, [**] a Colon PGX Project to [**] in
the Research Program), then such Party shall submit to the Joint Steering
Committee a proposal with respect to such Colon PGX Project (a "Colon PGX
Project Proposal") which shall include the information set forth in Sections
2.4(b)(ii)(A), (B), (C), (D) and (E) with respect to such
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with the Securities and Exchange Commission. Asterisks denote omissions.
Colon PGX Project, and shall define the scope of the Pharmacogenomic Product
opportunity addressed by such Colon PGX Project; PROVIDED, HOWEVER, that the
Parties shall only present a Colon PGX Project to the Joint Steering Committee
in the situation in which [**] into the Research Program during [**] period
immediately following the Effective Date and a Colon Product Area has been made
into an Exclusive Colon Product Area or a Co-Exclusive Colon Product Area.
(c) The process by which a Colon PGX
Project shall be considered for inclusion in the Research Program shall be the
same as that observed for inclusion of a Colon Diagnostic Project, as set forth
in Section 2.5(a)(iii) above.
(d) If the Joint Steering Committee
approves a Colon PGX Project for inclusion in the Research Program, then the
Pharmacogenomic Product opportunity addressed by such Colon PGX Project shall be
deemed to be an "Exclusive Colon Pharmacogenomic Product Opportunity" or a
"Co-Exclusive Colon Pharmacogenomic Product Opportunity", as the case may be,
[**] as described in Section 2.5(a)(iii) above for Colon Diagnostic Projects.
(e) If the Joint Steering Committee
determines that a Colon PGX Project shall not be included in the Research
Program [**] of the Effective Date, then the Colon Pharmacogenomic Product
Opportunity addressed by such Colon PGX Project shall be deemed to be a
"Non-Exclusive Colon Pharmacogenomic Product Opportunity".
(f) [**] of the Effective Date, [**].
SECTION 2.6 RIGHT OF MPMX TO DEVELOP THIRD PARTY PHARMACOGENOMIC
PRODUCTS. Notwithstanding the provisions of Sections 2.4(b) and 2.5(b), if in
the course of [**] to participate in the development and commercialization of
such Third Party Pharmacogenomic Product under the Research Program and the
Development Program. However, [**] to such Third Party Pharmacogenomic Product,
then (i) such [**] in collaboration with MPMx), [**], and (ii) MPMx shall have
[**] with respect to, or to undertake with [**] for use in conjunction with a
therapeutic and/or prophylactic drug that is in the same class of compounds as
the therapeutic and/or prophylactic [**] with MPMx), [**]. In the event that
[**] in researching and developing Program Pharmacogenomic Products for use in
conjunction with a class of therapeutic or prophylactic drugs as a result of a
Pharmacogenomic Services arrangement [**] in which [**] then the [**] shall be
[**]. In the event that [**] in researching and developing Program
Pharmacogenomic Products for use in conjunction with a second class of
therapeutic or prophylactic drugs as a result of the same or another
Pharmacogenomic Services arrangement [**].
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SECTION 2.7 RESEARCH PROGRAM RESPONSIBILITIES.
a. GENERAL. Each Party agrees to use commercially
reasonable efforts to (i) undertake the responsibilities assigned to such Party
in the Research Plan, including, but not limited to, the dedication of
laboratory facilities, equipment and personnel appropriate to such efforts, (ii)
perform its obligations hereunder in good faith in a scientific/commercially
reasonable and workpersonlike manner; (iii) as appropriate, make available to
the other Party those resources set forth in the Research Plan; and (iv) carry
out all work done in the course of the Research Program in material compliance
with all applicable federal, state or local laws, regulations and guidelines
governing the conduct of such work, including, without limitation, all
applicable export and import control laws.
b. MPMX RESPONSIBILITIES., MPMx shall undertake those
activities set forth in the Research Plan which are to be undertaken by MPMx in
connection with the Research Program, including, but not limited to: (i)
obtaining access to appropriate biological resources; (ii) discovery and
development of Program Candidate Markers and Program Validated Markers; (iii)
preparation, filing, prosecution and maintenance of patent applications and
patents relating to MPMx Program Intellectual Property and Joint Program
Intellectual Property developed during the Research Program, as further provided
in Section 5.2; (iv) provision to Becton Dickinson on an annual basis of a
written description of MPMx Program Patent Rights originating outside the course
of the Research Program including a title, U.S. patent number or application
serial number and list of other countries in which a corresponding patent
application has been filed, (v) disclosure to Becton Dickinson of issued patents
and pending foreign patent applications known to MPMx that are owned by third
parties and required to commercialize Program Validated Markers as Program
Products for use in the Field and (vi) sharing expertise and providing such
support as is reasonably required by Becton Dickinson in order for Becton
Dickinson to perform its responsibilities under Section 2.7 (c) below.
c. BECTON DICKINSON RESPONSIBILITIES. Becton Dickinson
shall undertake those activities set forth in the Research Plan which are to be
undertaken by Becton Dickinson in connection with the Research Program,
including but not limited to (i) sharing expertise and providing such support as
is reasonably required by MPMx in order for MPMx to perform its responsibilities
under Section 2.7(b) above and (ii) undertaking all activities with respect to
the development of reagents, prototype Assays and Assays, including but not
limited to, the identification of a Viable Platform on which such Assays will be
analyzed;
d. PROGRAM KNOW-HOW TRANSFER.
i. For the purposes of facilitating the conduct
of the Research Program and/or the Development Program, each Party shall provide
to the other Party such Program Know-How as the other Party shall reasonably
require to conduct the Research Program and/or the Development Program, based on
the reasonable determination of the Party providing such Program Know-How,
including
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with the Securities and Exchange Commission. Asterisks denote omissions.
without limitation (A) the transfer by MPMx to Becton Dickinson of Program
Validated Markers and (B) the transfer by Becton Dickinson to MPMx of Assays, in
each case as specified from time to time in the Research Plan. Each Party agrees
to provide all such Program Know-How to the other Party in accordance with the
Research Plan.
ii. For the purposes of enabling MPMx to exploit
its retained rights set forth in Section 3.3, Becton Dickinson shall provide to
MPMx such Becton Dickinson Program Know-How and Joint Program Know-How as MPMx
shall reasonably require.
iii. The Parties agree that: (A) all Program
Know-How provided by one Party to the other shall be used in material compliance
with all applicable federal, state or local laws, regulations and guidelines and
consistent with the scope of the licenses to such Program Know-How which are set
forth in this Agreement; (B) all such Program Know-How is provided without any
warranties, express or implied; and (C) the Party providing such Program
Know-How shall obtain (or cause its third party collaborators to obtain or
certify that they have obtained) all required consents from the source of such
Program Know-How.
e. BECTON DICKINSON PLATFORM KNOW-HOW TRANSFER. Becton
Dickinson shall provide to MPMx the Becton Dickinson Platform Know-How specified
in the Research Plan and such other Becton Dickinson Platform Know-How as MPMx
may reasonably request from time to time in conjunction with the rights granted
to MPMx by Becton Dickinson under Section 3.2(b)(ii). The Parties agree that:
(i) all Becton Dickinson Platform Know-How provided by Becton Dickinson to MPMx
shall be used in material compliance with all applicable federal, state or local
laws, regulations and guidelines and consistent with the scope of the licenses
to such Becton Dickinson Platform Know-How which are set forth in this
Agreement; and (ii) all such Becton Dickinson Platform Know-How is provided
without any warranties, express or implied other than customary warranties
provided by Becton Dickinson to its customers in the ordinary course of business
with respect to its products and equipment.
SECTION 2.8 REVISION OR EARLY TERMINATION OF RESEARCH PROGRAM RELATING
TO YEAR [**] MILESTONE.
a. YEAR [**] MILESTONE. Becton Dickinson shall have the
right to revise or terminate the Research Program if the milestone for the
Research Program set forth on EXHIBIT C to this Agreement relating to the [**]
period immediately following February 1, 1999 (the "Year [**] Milestone") is not
achieved, such right to be exercised within [**] after the Joint Steering
Committee (or the Executive Officers in the event of disagreement, as provided
in Section 2.2(b)) has determined that such
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with the Securities and Exchange Commission. Asterisks denote omissions.
Year [**] Milestone has not been achieved. It is the expectation of the Parties
that the Year [**] Milestone shall be adjusted, to the extent appropriate, by
the Joint Steering Committee to reflect any changes or modifications to the
Research Plans approved by the Joint Steering Committee following the Execution
Date.
b. REVISION OF RESEARCH PROGRAM. In the event that
Becton Dickinson elects to revise the Research Program pursuant to Section
2.8(a), Becton Dickinson shall have a period of [**] after the determination is
made that the Year [**] Milestone has not been achieved in which to submit a
proposal to the Joint Steering Committee with respect to the Marker Validation
Project(s) that Becton Dickinson has selected for MPMx to undertake (a "Marker
Validation Project Proposal"). The Joint Steering Committee shall have a period
of [**] after receipt of the Marker Validation Project Proposal in which to
approve the Marker Validation Project(s) described therein. Such approval shall
be based on a determination by the Joint Steering Committee that, with respect
to such Marker Validation Project(s), there is an appropriate scientific
rationale and a commitment by Becton Dickinson of appropriate funding.
c. TERMINATION OF RESEARCH PROGRAM. In the event that
(i) Becton Dickinson elects to terminate the Research Program pursuant to
Section 2.8(a) or (ii) the Joint Steering Committee fails to approve a Marker
Validation Project Proposal, if any, provided by Becton Dickinson pursuant to
Section 2.8(b), then the Research Program shall terminate. This Agreement,
including all terms, provisions, representations, rights and obligations set
forth herein that do not relate to the Research Program, shall survive any
termination of the Research Program pursuant to this Section 2.8.
d. RESOLUTION OF DISPUTES. If the Joint Steering
Committee is unable to reach a determination with respect to whether or not the
Year [**] Milestone has been achieved and the Executive Officers are also unable
to reach such determination, the following provisions shall govern the
resolution of such matter:
i. with respect to a disagreement that relates
to the Scientific/Clinical Requirement, the matter shall be resolved by the
determination of a mutually acceptable independent scientific expert not
regularly engaged by either Party;
ii. with respect to a disagreement that relates
to the Intellectual Property Requirement, the matter shall be resolved by the
determination of a mutually acceptable independent patent counsel not regularly
engaged by either Party; and
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with the Securities and Exchange Commission. Asterisks denote omissions.
iii. with respect to the Commercial Requirement,
the determination by the Independent Party selected by the Parties to undertake
the Market Analysis shall be binding on the Joint Steering Committee.
In the event of any dispute with respect to the Year [**] Milestone, each of the
Parties is relieved of its obligations with respect to the Research Program
during the term of such dispute.
SECTION 2.9 REVISION OR EARLY TERMINATION OF RESEARCH PROGRAM FOR
CHANGE OF CONTROL.
a. CHANGE OF CONTROL. If a Change of Control occurs
during the Research Program, MPMx shall give prompt written notice to Becton
Dickinson of such Change of Control. Becton Dickinson shall have the right, in
its sole discretion, to revise or terminate the Research Program by giving MPMx
written notice within [**] after such Change of Control.
b. REVISION OF RESEARCH PROGRAM. In the event that
Becton Dickinson elects to revise the Research Program pursuant to Section
2.9(a), Becton Dickinson shall submit a Marker Validation Project Proposal to
the Joint Steering Committee with respect to the Marker Validation Project(s)
that Becton Dickinson has selected for MPMx to undertake. The Joint Steering
Committee shall have a period of [**] after receipt of the Marker Validation
Project Proposal in which to approve the Marker Validation Project(s) described
therein. Such approval shall be based on a determination by the Joint Steering
Committee that, with respect to such Marker Validation Project(s), there is an
appropriate scientific rationale and a commitment by Becton Dickinson of
appropriate funding.
c. TERMINATION OF RESEARCH PROGRAM. In the event that
(i) Becton Dickinson elects to terminate the Research Program pursuant to
Section 2.9(a) or (ii) the Joint Steering Committee fails to approve a Marker
Validation Project Proposal, if any, provided by Becton Dickinson pursuant to
Section 2.9(b), then the Research Program shall terminate. This Agreement,
including all terms, provisions, representations, rights and obligations set
forth herein that do not relate to the Research Program, shall survive any
termination of the Research Program pursuant to this Section 2.9.
SECTION 2.10 DEVELOPMENT PROGRAM. Becton Dickinson shall have
responsibility for undertaking the conduct of the Development Program, which
activities shall include but not be limited to:
a. identifying one or more appropriate clinical
laboratories to provide fee-for-services using Program Home Brew Products;
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
b. conducting all clinical trials which are required for
Becton Dickinson to obtain regulatory approval to manufacture, market and sell
Program Products in the Territory;
c. determining the nature and content of any submissions
to the FDA or any foreign regulatory agencies which are necessary for Becton
Dickinson to obtain approval to manufacture, market and sell Program Products in
the Territory and the preparation and filing of any such submissions; PROVIDED
THAT MPMx shall have an opportunity (not to exceed [**]) to review in advance
all regulatory submissions to be made by Becton Dickinson in Major Market
Countries and, at the option of Becton Dickinson, shall be permitted to attend
all preparatory and regulatory meetings with the FDA or any foreign regulatory
agencies in Major Market Countries concerning such submissions;
d. obtaining all regulatory and other approvals
necessary for Becton Dickinson to manufacture, market and sell Program Products
in the Territory.
SECTION 2.11 COMMERCIALIZATION.
a. RESPONSIBILITIES. Becton Dickinson shall have the
responsibility of undertaking the commercialization of Program Products, which
shall include the manufacture, marketing, promotion, sale and distribution of
Program Products in the Territory after such time as all required regulatory and
other approvals have been obtained; PROVIDED THAT Becton Dickinson and MPMx
shall discuss issues concerning marketing, including without limitation product
labeling, advertising strategies and patient and physician education strategies;
and FURTHER PROVIDED THAT, Becton Dickinson and MPMx shall jointly develop and
implement marketing activities with respect to Program Products which relate to
melanoma.
b. PRODUCT LABELING. All Program Products shall carry
the Becton Dickinson name and logo and, unless otherwise requested by MPMx, the
MPMx name and logo (or any successor name and logo) on the product label to the
extent MPMx has rights to use and license such name and logo, PROVIDED THAT,
Becton Dickinson may omit the MPMx name, but not the MPMx logo, on the product
label if, and only if, a space constraint precludes the use of the MPMx name.
Becton Dickinson shall in its reasonable discretion determine how the MPMx logo
and/or name shall be incorporated on the label. All written materials associated
with each Program Product shall indicate that the Program Product was developed
with the use of MPMx technology. If the MPMx name and/or logo appears on the
product label for any Program Products, either MPMx or an Affiliate designated
by MPMx shall have the right to monitor the quality of such Program Products in
accordance with reasonable procedures to be agreed upon by the Parties.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 2.12 BECTON DICKINSON DEVELOPMENT AND COMMERCIALIZATION
DILIGENCE OBLIGATIONS.
a. TABLE I DILIGENCE OBLIGATIONS. Table I below sets
forth Becton Dickinson's specific diligence obligations with respect to the
development and commercialization of Program Products for each Exclusive Product
Area, Exclusive Colon Pharmacogenomic Product Opportunity and Co-Exclusive
Pharmacogenomic Product Opportunity. Becton Dickinson shall meet, for at least
one Program Product for each Exclusive Product Area, Co-Exclusive Colon Product
Area, Exclusive Colon Pharmacogenomic Product Opportunity or Co-Exclusive
Pharmacogenomic Product Opportunity, the First Diligence Benchmark, Second
Diligence Benchmark and Third Diligence Benchmark (as those terms are defined
below) within the time periods specified in Table I. With respect to each such
Program Product, Becton Dickinson's development and commercialization diligence
obligations shall commence upon the selection and transfer to Becton Dickinson
of Program Candidate Markers for use in formatting an Assay.
i. FIRST DILIGENCE BENCHMARK. To meet the
"First Diligence Benchmark" with respect to a Program Product, Becton Dickinson
must:
(a) [**];
(b) [**]; and,
(c) as determined necessary by the
Joint Steering Committee, [**].
ii. SECOND DILIGENCE BENCHMARK. To meet the
"Second Diligence Benchmark" with respect to a Program Product, Becton Dickinson
must:
(a) [**]; and
(b) [**].
iii. THIRD DILIGENCE BENCHMARK. To meet the
"Third Diligence Benchmark" with respect to a Program Product, Becton Dickinson
must [**].
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Table I
<TABLE>
<CAPTION>
Number of Months
-----------------------------------------
Program
Screening Staging Pharmacogenomic
Event Product Product Product
- ----- --------- ------- ---------------
<S> <C> <C> <C>
MPMx, in consultation with [**] [**] [**]
Becton Dickinson, selects and
transfers Program Candidate
Markers for Becton Dickinson's
use in Assay formatting
- --------------------------------------------------------------------------------
First Diligence Benchmark [**] [**] [**]
- --------------------------------------------------------------------------------
Second Diligence Benchmark [**] [**] [**]
- --------------------------------------------------------------------------------
Third Diligence Benchmark [**]
</TABLE>
Notwithstanding anything to the contrary in this Section 2.12(a), in the event
Becton Dickinson fails to meet any diligence benchmark described in this Section
2.12(a) with respect to a Program Product (an "Unmet Benchmark"), [**] under
this Section 2.12(a) with respect to such Program Product if:
1. Becton Dickinson can demonstrate
that it has [**] such Program Product [**].
2. the Joint Steering Committee [**]
in which event [**] as shall be agreed upon by the Joint Steering Committee)
[**]; and
3. [**].
b. GENERAL DILIGENCE OBLIGATIONS. In addition to the
specific diligence obligations set forth in Section 2.12(a) above, Becton
Dickinson shall [**] for each Exclusive Product Area, Co-Exclusive Colon Product
Area, Exclusive Colon Pharmacogenomic Product Opportunity and Co-Exclusive
Pharmacogenomic Product Opportunity in each Major Market Country. Such efforts
and commitment shall not be less than the efforts and commitment expended by
Becton Dickinson in connection with its other development and commercialization
projects that are at a comparable stage of its development and commercialization
process and that are of comparable scientific and commercial potential.
Specifically, for each Program Product in clinical development for each
Exclusive Product Area, Co-Exclusive Colon Product Area,
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Exclusive Colon Pharmacogenomic Product Opportunity and Co-Exclusive
Pharmacogenomic Product Opportunity, Becton Dickinson agrees [**] for such
Program Product in each Major Market Country. Upon receipt of regulatory
approval, Becton Dickinson agrees to use commercially reasonable efforts to
market and sell each such Program Product in each Major Market Country.
c. PROGRESS REPORTS. Becton Dickinson shall provide MPMx
with a quarterly written report describing Becton Dickinson's progress
consistent with Exhibit B in developing and commercializing all Program Products
upon commencement of the diligence obligations set forth in Section 2.12(a)
above. Such reports shall be provided within [**] after the conclusion of the
first Contract Year in which such diligence obligations commenced and quarterly
thereafter for each Program Product until the First Commercial Sale of each such
Program Product in each Major Market Country.
d. PROCESS FOR DETERMINATION OF DILIGENCE. In the event
that MPMx does not believe that Becton Dickinson has satisfied its diligence
obligations under this Section 2.12, MPMx shall notify Becton Dickinson in
writing specifying the diligence obligation believed not to be satisfied. Any
such notice prior to the First Commercial Sale of a Program Product in each
Major Market Country shall be delivered to Becton Dickinson within [**] of MPMx'
receipt of a progress report pursuant to Section 2.12(c). If Becton Dickinson
believes that it has satisfied such obligations, it shall so notify MPMx within
[**] after receipt of MPMx's notice. Such notice by Becton Dickinson shall
indicate the reasons that Becton Dickinson believes it has satisfied its
obligations under Sections 2.12(a) and (b), as applicable, and provide
supporting information for such position. If MPMx disagrees with Becton
Dickinson's response, the Parties shall attempt in good faith to resolve the
disagreement, referring the matters to the Executive Officers for resolution
pursuant to Section 2.2(b), if necessary.
e. FAILURE TO MEET DILIGENCE.
i. Subject to the provisions of Section
2.12(d), if Becton Dickinson fails to meet any diligence benchmark as set forth
in Section 2.12(a) above, then, [**] as the case may be. In addition to the
foregoing, Becton Dickinson shall (A) deliver to MPMx copies of any and all
regulatory and clinical information related to the Program Validated Market
included in such Program Product (but excluding information relating to the
related Viable Platform, Assay formats and manufacturing processes) that Becton
Dickinson owns or otherwise controls and as to which Becton Dickinson has the
right to grant licenses or sublicenses without violating the terms of any
agreement (the "Product Related Information"), and (B) grant to MPMx a fully
paid-up, non-royalty bearing license, with the right to grant sublicenses, to
use, copy, display, modify and create derivative works of such Product Related
Information to
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develop and commercialize such Program Product for such Non-Exclusive Product
Area or such Non-Exclusive Pharmacogenomic Product Opportunity, as the case may
be.
ii. Subject to the provisions of Section
2.12(d), in the event Becton Dickinson fails to meet its diligence obligations
with respect to a Major Market Country, as set forth in Section 2.12(b) above,
then, [**], as the case may be, [**] for such Major Market Country (an [**]) and
such Product Area or such product opportunity shall be deemed to be a
Non-Exclusive Product Area or a Non-Exclusive Pharmacogenomic Product
Opportunity, as the case may be, [**]. In addition, Becton Dickinson shall (A)
deliver to MPMx any and all Product Related Information for such Program Product
[**] and (B) grant to MPMx a fully paid-up non-royalty bearing license with the
right to grant sublicenses, to use, copy, display, modify and create derivative
works of such Product Related Information to develop and commercialize such
Program Product in the Abandoned Market for such NonExclusive Product Area or
such Non-Exclusive Pharmacogenomic Product Opportunity, as the case may be.
iii. The rights of MPMx under Sections 2.12(e)(i)
and (ii) shall be MPMx' sole and exclusive remedies for Becton Dickinson's
failure to meet any of its diligence obligations under Sections 2.12(a) and/or
(b).
SECTION 2.13 PROGRESS REPORTS. Within [**] after the end of each
calendar quarter, each Party shall provide to the Joint Steering Committee a
written report summarizing the activities undertaken by such Party during the
preceding calendar quarter in connection with the Research Program and the
Development Program.
ARTICLE III
GRANT OF RIGHTS
SECTION 3.1 MPMX GRANTS.
a. RESEARCH LICENSES. Subject to the terms and
conditions of this Agreement, MPMx hereby grants to Becton Dickinson, a
non-exclusive, non-royalty- bearing right and license in the Territory, without
the right to grant sublicenses except as provided in Section 3.1(c) below, under
the MPMx Program Intellectual Property, to (i) make and use Program Candidate
Markers and Program Validated Markers in the course of the Research Program to
the extent necessary for Becton Dickinson to undertake its responsibilities as
set forth in the Research Plan and (ii) make and use Program Validated Markers
in the course of the Development Program to research and develop Program
Products for use in the Field.
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b. PRODUCT COMMERCIALIZATION LICENSES.
i. Subject to the terms and conditions of this
Agreement, MPMx hereby grants to Becton Dickinson an exclusive, royalty-bearing
right and license in the Territory, without the right to grant sublicenses
except as provided in Section 3.1(c) below, under the MPMx Program Intellectual
Property and MPMx' rights in the Joint Program Intellectual Property, to make,
use, import, offer to sell and sell (A) any Program Product inside any Exclusive
Product Area or to address any Exclusive Colon Pharmacogenomic Product
Opportunity, and (B) any Program Diagnostic Product that contains a Program
Validated Marker that was developed for an Exclusive Non-Colon Product Area
inside the Disease Area that includes such Exclusive Non-Colon Product Area.
ii. Subject to the terms and conditions of this
Agreement, MPMx hereby grants to Becton Dickinson a co-exclusive (with MPMx and
its Affiliates), royalty-bearing right and license in the Territory, without the
right to grant sublicenses except as provided in Section 3.1(c) below, under the
MPMx Program Intellectual Property and MPMx' rights in the Joint Program
Intellectual Property, to make, use, import, offer to sell and sell any Program
Product to address any Co-Exclusive Non-Colon Pharmacogenomic Product
Opportunity.
iii. Subject to the terms and conditions of this
Agreement, MPMx hereby grants to Becton Dickinson a co-exclusive (with MPMx, its
Affiliates and no more than one sublicensee in the case of each of the
Co-Exclusive Colon Product Areas and each of the Co-Exclusive Colon
Pharmacogenomic Product Opportunities), royalty-bearing right and license in the
Territory, without the right to grant sublicenses, under the MPMx Program
Intellectual Property and MPMx' rights in the Joint Program Intellectual
Property, to make, use, import, offer to sell and sell any Program Product
inside any Co-Exclusive Colon Product Area or to address any Co-Exclusive Colon
Pharmacogenomic Product Opportunity.
iv. Subject to the terms and conditions of this
Agreement and except as specifically provided for in Section 3.1(b)(i)(B), MPMx
hereby grants to Becton Dickinson a non-exclusive, royalty-bearing right and
license in the Territory, under the MPMx Program Intellectual Property and MPMx'
rights in the Joint Program Intellectual Property, to make and have made, use
and have used, import, offer to sell and sell any Program Product inside any
Non-Exclusive Product Area and to address any Non-Exclusive Pharmacogenomic
Product Opportunity.
c. BECTON DICKINSON SUBLICENSE RIGHTS. Becton Dickinson
shall have the right to grant sublicenses under the licenses from MPMx set forth
in Sections 3.1(a) and (b)(i) and (ii) above to Approved Sublicensees; PROVIDED,
HOWEVER, that Approved Sublicensees shall have no right to grant further
sublicenses without the prior written consent of MPMx. Becton Dickinson shall
have responsibility for all obligations of Approved Sublicensees and guarantees
to MPMx the performance of all such obligations. The payment of royalties by
Becton Dickinson under Section 4.7
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
below shall be the obligation of Becton Dickinson regardless of whether sales
are made by Becton Dickinson or an Approved Sublicensee.
d. LICENSE TO PROVIDE PROGRAM PHARMACOGENOMIC SERVICES.
Subject to the terms and conditions of this Agreement, MPMx hereby grants to
Becton Dickinson a non-exclusive, royalty-bearing right and license in the
Territory, without the right to grant sublicenses, under the MPMx Program
Intellectual Property and MPMx' rights in the Joint Program Intellectual
Property, to make, import and use Program Validated Markers in order to provide
Program Pharmacogenomic Services in the Field.
e. THIRD PARTY LICENSES. MPMx represents and warrants
that, in the event that MPMx seeks to grant to a third party a license or
sublicense with respect to Program Products as permitted under Sections
3.1(b)(ii), 3.1(b)(iii), 3.1(b)(iv) and 3.1(d), it is the intention of MPMx to
seek royalty and financial provisions that are at least as favorable to MPMx as
the applicable provisions of Article IV of this Agreement, provided that the
Parties recognize that the foregoing is an expression of MPMx' intention and
shall not preclude MPMx from consummating a transaction on terms less favorable
to MPMx than the applicable terms of this Agreement.
SECTION 3.2 BECTON DICKINSON GRANTS.
a. RESEARCH LICENSE. Subject to the terms and conditions
of this Agreement, Becton Dickinson hereby grants to MPMx and its Affiliates a
non-exclusive, non-royalty-bearing right and license in the Territory, with the
right to grant sublicenses as contemplated by the Research Plan or as otherwise
approved by the Joint Steering Committee, under the Becton Dickinson Program
Intellectual Property and the Becton Dickinson Platform Intellectual Property,
to make and use Program Candidate Markers and Program Validated Markers in the
course of the Research Program to the extent necessary for MPMx to research and
develop Program Products for use in the Field.
b. LICENSES TO EXPLOIT MPMX RETAINED RIGHTS.
i. Subject to the terms and conditions of this
Agreement, Becton Dickinson hereby grants to MPMx a non-exclusive,
non-royalty-bearing (except as provided below) right and license in the
Territory, with the right to grant sublicenses as provided in Section 3.2(c),
under the Becton Dickinson Program Intellectual Property and Becton Dickinson's
rights in the Joint Program Intellectual Property, to the extent necessary to
exploit MPMx's retained rights, as set forth in Section 3.3 below. In the event
that Becton Dickinson owes a royalty to a third party on the sale by MPMx or its
sublicensees of products covered by Becton Dickinson Program Patent Rights,
Becton Dickinson shall notify MPMx of such royalty
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
obligation as soon as practicable (and, in any event, no later than [**] after
the execution of the agreement with such third party giving rise to such royalty
obligation), including in such notice the pertinent details of the royalty
obligation. Within [**] after receipt of such notice, MPMx shall provide Becton
Dickinson written notice of its election to either (A) pay Becton Dickinson an
amount equal to the royalty payable to the third party on account of such sales
by MPMx or its sublicensees, or (B) relinquish its rights under this Section
3.2(b)(i) under such Becton Dickinson Program Patent Rights.
ii. Subject to the terms and conditions of this
Agreement (including without limitation the right of first negotiation with
respect to ROFN Products set forth in Section 3.4 below), Becton Dickinson
hereby grants to MPMx (A) a non-royalty-bearing, non-exclusive right and license
in the Territory, without the right to grant sublicenses except as provided in
Section 3.2 (c) below, under the Becton Dickinson Platform Intellectual
Property, to research and develop Products for use outside the Field, and (B) to
the extent Becton Dickinson may do so, without violating the terms of any
agreement with a third party executed prior to MPMx' notice to Becton Dickinson
under Section 4.8 with respect to each MPMx Royalty- Bearing Product, a
non-exclusive, royalty-bearing right and license in the Territory, without the
right to grant sublicenses except as provided in Section 3.2 (c) below, under
Becton Dickinson Platform Intellectual Property, to make, use, import, offer to
sell and sell Products for use outside the Field.
c. MPMX SUBLICENSE RIGHTS. MPMx shall have the right to
grant sublicenses under the licenses from Becton Dickinson set forth in Section
3.2(b)(i) and (ii), PROVIDED THAT, with respect to sublicense grants under
Section 3.2(b)(ii), MPMx shall only grant sublicenses to parties collaborating
with MPMx in the research, development and commercialization of Products for use
outside the Field, which sublicenses Becton Dickinson has approved, which
approval shall not be unreasonably withheld, after MPMx has (i) provided prior
written notice to Becton Dickinson of any such proposed sublicense, and (ii)
provided Becton Dickinson with information concerning the name of such proposed
sublicensee and the scope of the sublicense.
SECTION 3.3 MPMX RETAINED RIGHTS. Except as specifically provided for
herein (including without limitation the right of first negotiation with respect
to ROFN Products set forth in Section 3.4 below), MPMx retains all rights and
licenses to exploit MPMx Program Intellectual Property, including but not
limited to MPMx's rights to research, develop, make, use, import, sell and offer
for sale, and to sublicense others to research, develop, make, use, import, sell
and offer for sale, with respect to:
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
a. therapeutic and/or prophylactic products for any
indications inside and outside the Field,
b. Diagnostic Products for use inside the Field, other
than a Diagnostic Product inside any Exclusive Product Area or Reserved Product
Area and except as specifically provided for in Section 3.1(b)(i)(B),
c. Diagnostic Products for use outside the Field;
d. Pharmacogenomic Products for use inside and outside
the Field, other than a Pharmacogenomic Product to address any Exclusive Colon
Pharmacogenomic Product Opportunity;
e. Pharmacogenomic Services inside and outside the
Field.
Nothing contained in this Agreement shall be construed to restrict or
limit the right of MPMx to exploit any of such retained rights through or with
any of its Affiliates, including the right to assign any of such retained rights
to one or more Affiliates.
SECTION 3.4 BECTON DICKINSON'S [**]. If, prior to the expiration of the
Program Term, MPMx seeks to commercialize [**] in collaboration with a third
party, MPMx shall [**]. Becton Dickinson shall [**] Becton Dickinson indicates
that [**], the Parties shall [**] as may be mutually agreeable. [**] reach
mutual agreement.
SECTION 3.5 SECTION 365(N) OF THE BANKRUPTCY CODE. All rights and
licenses granted under or pursuant to any section of this Agreement are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
Bankruptcy Code, licenses of rights to "intellectual property" as defined under
Section 101(35A) of the Bankruptcy Code. The Parties shall retain and may fully
exercise all of their respective rights and elections under the Bankruptcy Code.
Upon the bankruptcy of any Party, the non-bankrupt Party shall further be
entitled to a complete duplicate of (or complete access to, as appropriate) any
such intellectual property, and such, if not already in its possession, shall be
promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects
to continue, and continues, to perform all of its obligations under this
Agreement.
ARTICLE IV
FINANCIAL PROVISIONS
SECTION 4.1 LICENSE PAYMENT. On the Effective Date, and in
consideration of the grant by MPMx to Becton Dickinson of the rights granted
under Article III,
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
Becton Dickinson shall make an initial non-refundable license payment to MPMx of
[**].
SECTION 4.2 ADDITIONAL PAYMENT. On each anniversary of the Effective
Date during the Program Term, and in consideration for the rights granted by
MPMx to Becton Dickinson under MPMx Program Patent Rights originating subsequent
to the Effective Date during each Contract Quarter of the Program Term, but
outside the course of the Research Program, Becton Dickinson shall make a
payment to MPMx of [**].
SECTION 4.3 EQUITY INVESTMENT. On the Execution Date, MPMx and Becton
Dickinson shall execute the Stock Purchase Agreement pursuant to which Becton
Dickinson shall purchase, and MPMx shall sell, as of the Effective Date,
1,200,000 shares of MPMx Series C Convertible Preferred Stock at a purchase
price of $12.50 per share.
SECTION 4.4 CONVERTIBLE NOTE.
a. MPMX OPTION. Subject to the provisions of Section
2.6, MPMx shall have the option to require that Becton Dickinson make a loan or
loans in an aggregate amount up to [**] in accordance with this Section 4.4 (the
"Loan Option") in the event that the following conditions (the "Loan Option
Conditions") have been met: (i) at the time MPMx exercises such option, MPMx has
neither (A) completed an initial public offering of any class of its equity
securities (an "Initial Public Offering") pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended (the "Securities
Act"), nor (B) filed a registration statement meeting the requirements of the
Securities Act for the purpose of completing an Initial Public Offering, which
has not been withdrawn by MPMx or otherwise terminated prior to effectiveness;
(ii) either (A) the [**] has been achieved, or (B) if the [**] has not been
achieved, Becton Dickinson has not elected to terminate the Research Program
pursuant to Section 2.8; (iii) at the time MPMx exercises such option, MPMx is
not in breach of this Agreement; (iv) there shall not have occurred and be
continuing an Event of Default (as defined in the Convertible Note); (v) the
Guaranty Agreement, in substantially the form attached hereto as EXHIBIT G,
shall be in full force and effect, (vi) MPMx shall have certified to Becton
Dickinson that the representations and warranties of MPMx set forth in the
Convertible Note are true and correct as of the closing date specified pursuant
to subsection (b), (vii) there shall not have occurred a Change of Control, and
(viii) MPMx shall have not exercised its conversion rights under Section 1 of
the Convertible Note.
b. EXERCISE OF MPMX OPTION. Subject to the provisions of
Section 2.6, MPMx may exercise the Loan Option at any time or times after the
Third Anniversary Date and prior to the end of the Sixth Contract Year so long
as, with
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
respect to each exercise thereof, each of the Loan Option Conditions have been
met at the time of such exercise. MPMx shall exercise the Loan Option by
providing written notice to Becton Dickinson specifying (i) the desired amount
of the loan (not to exceed an aggregate of [**] for all such loans), and (ii)
the desired closing date for the loan (which shall be at least thirty (30) days
following the date of such notice). Each exercise of the Loan Option shall be
for a loan of not less than [**].
c. FORM OF LOAN; CLOSING. Any loan or loans made to MPMx
by Becton Dickinson pursuant to this Section 4.4 shall be evidenced by an
interest-bearing convertible note in substantially the form of EXHIBIT D to this
Agreement (the "Convertible Note"). It shall be a condition to the making of any
loan by Becton Dickinson pursuant to this Section 4.4 that MPMx shall have
executed and delivered the Convertible Note to Becton Dickinson. On the closing
date specified pursuant to subsection (b), Becton Dickinson shall transmit funds
to MPMx in the form of a wire transfer equal to the principal amount specified
pursuant to subsection (b). Becton Dickinson shall note on the Schedule to the
Convertible Note the amount of all loans made pursuant to this Section 4.4 and
payments of principal (including amounts set off against Becton Dickinson's
royalty obligations hereunder) and interest made in connection therewith. The
failure of Becton Dickinson to make such notation upon the making of any loan or
the payment (or set-off) of any principal or interest, however, shall not alter
or impair the rights and remedies of Becton Dickinson if a loan has actually
been made, or the rights and remedies of MPMx if payment (or set-off) of
principal or interest has been made, in accordance with the terms of this
Agreement and the Convertible Note.
SECTION 4.5 RESEARCH FUNDING.
a. FUNDING AMOUNT. In support of the Research Program
and MPMx's contribution to the Development Program, if any, Becton Dickinson
shall pay to MPMx a total of [**] during the six (6) Contract Years of the
Program Term (the "Funding Amount"), such amount to be (i) subject to adjustment
upwards or downwards by the Joint Steering Committee, (ii) subject to the Annual
Adjustment (as defined below) and (iii) allocated by the Joint Steering
Committee among the Contract Years pursuant to subsection (b), PROVIDED THAT in
no event shall the Funding Amount for any of the Second Contract Year, Third
Contract Year and Fourth Contract Year be [**] per Contract Year. The Funding
Amount shall be subject, beginning with the Third Contract Year, to an annual
adjustment equal to the percentage increase or decrease in the United States
Consumer Price Index for the preceding twelve (12) month period (the "Annual
Adjustment"). The Funding Amount provided by Becton Dickinson to MPMx shall
consist of (i) amounts allocated for support of MPMx personnel (at a rate of
[**] per FTE annually, subject to the Annual Adjustment), (ii) amounts for the
funding of external relationships with third parties (e.g., costs associated
with collaborations and the in-licensing of
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
technology (including tissues and samples) other than Blocking Third Party
Intellectual Property, Enabling Third Party Intellectual Property and Enhancing
Third Party Intellectual Property from academic and clinical institutions)
undertaken from time to time as part of the Research Program.
b. PAYMENTS. Within [**] after the Effective Date,
Becton Dickinson shall pay to MPMx the Funding Amount for the first Contract
Quarter, as specified in EXHIBIT E. On or prior to the first day of each
subsequent calendar month after the end of the first Contract Quarter during the
First Contract Year, Becton Dickinson shall pay to MPMx the Funding Amount for
such calendar month, as specified in EXHIBIT E. At least [**] prior to the
commencement of each subsequent Contract Year, the Joint Steering Committee
shall agree upon the allocation of the Funding Amount for each Contract Quarter
of such Contract Year. On or prior to the first day of each calendar month
during each such Contract Quarter, Becton Dickinson shall pay to MPMx [**] of
the Funding Amount for such Contract Quarter.
c. ADJUSTMENTS. Within [**] after the completion of each
Contract Quarter during the Program Term, MPMx shall provide Becton Dickinson
with a written statement setting forth the number of FTEs working on the
Research Program and a description of the work completed, and external
collaboration funding and the purpose of such funding during the preceding
Contract Quarter. Except as provided below, MPMx shall provide to Becton
Dickinson a credit for any amounts overpaid by Becton Dickinson (except that
with respect to the last Contract Quarter of the last Contract Year, MPMx shall
reimburse Becton Dickinson for any amounts overpaid by Becton Dickinson) or
invoice Becton Dickinson for any amounts underpaid during such Contract Quarter
(except that Becton Dickinson shall not be obligated to pay to MPMx an amount
that exceeds (i) the funding levels set forth in EXHIBIT E, with respect to the
First Contract Year, or (ii) the funding levels established by the Joint
Steering Committee, with respect to subsequent Contract Years). Notwithstanding
the foregoing, if any of the Funding Amount remains unspent at the end of the
Sixth Contract Year (the "Unspent Funding Amount") then Becton Dickinson may
allocate (a) all or some portion of the Unspent Funding Amount to one or more
Marker Validation Projects and (b) if any remains, up to [**] of the Unspent
Funding Amount to the completion of one or more aspects of the Development
Program or Becton Dickinson's activities relating to the commercialization of
Program Products.
d. RECORDS AND AUDITS. MPMx shall keep, and shall
require its Affiliates to keep, complete and accurate records relating to
funding of the Research Program by Becton Dickinson and MPMx' expenses for MPMx
Program Patent Rights, all in accordance with U.S. GAAP. Becton Dickinson shall
have the right once each Contract Year at Becton Dickinson's expense to retain
an independent, certified public accountant, selected by Becton Dickinson and
reasonably acceptable to MPMx, to review such records in the location(s) where
such records are maintained by
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
MPMx upon reasonable notice and during regular business hours and under
obligations of strict confidence for the sole purposes of verifying the number
of FTEs working on the Research Program and the work performed and external
collaborations undertaken as part of the Research Program for which MPMx has
provided funding pursuant to the Research Program. Results of such review shall
be made available to both Parties. If the review reflects an overpayment of
funding to MPMx, such overpayment shall be promptly remitted to Becton
Dickinson, together with interest calculated in accordance with Section 4.12. If
the overpayment is equal to or greater than [**] of the actual annual funding
amount that was otherwise due, Becton Dickinson shall be entitled to have MPMx
pay all of the costs of such review.
SECTION 4.6 MILESTONE PAYMENTS.
a. PAYMENT SCHEDULE. Becton Dickinson shall make the
following milestone payments to MPMx in connection with Program Products
licensed to Becton Dickinson under this Agreement upon achievement by Becton
Dickinson or any Approved Sublicensee of the applicable milestones:
<TABLE>
<CAPTION>
Payment Due
Upon Achievement
Milestone of Milestone
--------- ------------
<S> <C>
1. Upon [**] of the following Disease Areas:
a. [**] [**]
b. [**] [**]
c. [**] [**]
d. [**] [**]
e. [**] [**]
f. [**] [**]
2. Upon [**] [**]
3. Upon [**] [**]
4. Upon [**] [**]
</TABLE>
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
<TABLE>
<CAPTION>
Payment Due
Upon Achievement
Milestone of Milestone
--------- ------------
<S> <C>
5. Upon the earlier of [**] in each of the
following Disease Areas:
a. [**] [**]
b. [**] [**]
c. [**] [**]
d. [**] [**]
e. [**] [**]
6. Upon the [**] except as provided in [**]
subsection (b) below
7. Upon the [**], except as provided in [**]
subsection (b) below
8. Upon the [**] except as provided in [**]
subsection (b) below
9. Upon the [**] except as provided in [**]
subsection (b) below
10. Upon the [**] [**]
11. Upon the [**] [**]
12. Upon [**] [**]
13. Upon [**] [**]
14. Upon [**]
(a) [**] then the following milestone payments shall be made:
i. Upon the [**] [**]
ii. Upon the [**] [**]
iii. Upon the [**] [**]
iv. Upon the [**] [**]
</TABLE>
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
(b) Alternatively, [**] then the following milestone payments shall
be made:
i. Upon the [**] [**]
ii. Upon the [**] [**]
iii. Upon the [**] [**]
iv. Upon the [**] [**]
b. MIGRATION ADJUSTMENT. Notwithstanding the milestone
payments set forth in Items 6, 7, 8 and 9 of subsection (a) above, in the event
that:
i. Becton Dickinson has made a milestone
payment to MPMx with respect to a Program Diagnostic Product under Item 5 of
subsection (a) above (a "Milestoned Program Diagnostic Product") or has made or
is obligated to make milestone payments to MPMx with respect to a Program
Pharmacogenomic Product under Items 6 and 7 or 8 and 9 of subsection (a) above
(a "Milestoned Program Pharmacogenomic Product"); AND
ii. either (A) the Milestoned Program Diagnostic
Product receives FDA Approval as a Program Pharmacogenomic Product (a "Migrated
Product"), or (B) the Milestoned Program Pharmacogenomic Product receives FDA
Approval for a different drug and/or Disease Area than the drug and/or Disease
Area for which the milestone referred to in subsection (i) was paid (a "New PGX
Product"),
then, [**].
c. TIMING OF PAYMENTS. Each milestone payment shall be
made by Becton Dickinson to MPMx within [**] after the achievement of the
applicable milestone.
SECTION 4.7 ROYALTY PAYMENTS TO MPMX. Becton Dickinson shall pay to
MPMx royalties as follows:
a. PROGRAM PRODUCTS. With respect to each sale of any
Program Product by Becton Dickinson, its Affiliates or Approved Sublicensees,
Becton Dickinson shall pay to MPMx a royalty equal to [**] on such Program
Product.
b. THIRD PARTY PHARMACOGENOMIC PRODUCTS. With respect to
each sale of each Third Party Pharmacogenomic Product by Becton Dickinson, its
Affiliates or Approved Sublicensees, Becton Dickinson shall pay to MPMx a
royalty of (i) [**]
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
on such Third Party Pharmacogenomic Product if MPMx has retained, and has
licensed to Becton Dickinson, exclusive rights to commercialize such Third Party
Pharmacogenomic Product, or (ii) [**] on such Third Party Pharmacogenomic
Product if MPMx has retained, and has licensed to Becton Dickinson,
non-exclusive rights to commercialize such Third Party Pharmacogenomic Product.
c. PROGRAM PHARMACOGENOMIC SERVICES. Becton Dickinson
shall pay to MPMx a royalty in connection with the use of any product which
contains a Program Validated Marker in Program Pharmacogenomic Services provided
by Becton Dickinson. [**] for such service shall be considered to be the [**].
d. [**]
i. [**]. The royalty rates set forth in
subsections (a), (b) and (c) above shall [**] (as described below). As used in
this subsection, [**] as follows:
(a) If, in any country, any third party
shall sell or otherwise distribute [**]; and
(b) The regulatory requirements (if
any) [**]; and
(c) The [**]; and
(d) The dollar sales of the [**], as
measured by publicly available industry data (such as IMS data);
then [**] shall be deemed to exist [**] of the Affected Program Product. If
Becton Dickinson [**] in any country with respect to an Affected Program
Product, it shall provide written notice to MPMx providing supporting evidence
thereof. MPMx shall indicate to Becton Dickinson within [**] after receipt of
such notice whether it [**]. If MPMx [**], the provisions of subsection (ii)
shall apply; if MPMx [**], and the Parties are unable in good faith to reach
agreement, then [**] shall be submitted to the Executive Officers.
ii. ROYALTY ADJUSTMENT. During the period in
which [**], the royalty rates set forth in subsections (a), (b) and (c) shall be
[**] during the applicable calendar quarter and whose [**] in the affected
country during the applicable calendar quarter, PROVIDED THAT in no event shall
such royalty rates [**]. For example, [**] royalty rate under subsection (a)
shall be [**].
SECTION 4.8 ROYALTY PAYMENTS TO BECTON DICKINSON. In the event that
MPMx intends to commercialize a Product that is covered by the license to Becton
Dickinson Platform Intellectual Property granted pursuant to Section
3.2(b)(ii)(B) above but is
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with the Securities and Exchange Commission. Asterisks denote omissions.
not commercialized in collaboration with Becton Dickinson pursuant to Section
3.4 (an "MPMx Royalty-Bearing Product"), MPMx shall notify Becton Dickinson in
writing of such intent. Such notice shall be provided [**] to the anticipated
date of the commercial introduction of such MPMx Royalty-Bearing Product.
Promptly following such notice, the Parties shall negotiate in good faith the
royalty rates (which shall be [**] of Net Sales) and royalty-related and other
terms applicable to such MPMx Royalty-Bearing Product. If the Parties have not
agreed upon such royalty rates and royalty-related terms within [**] after such
notice, the matter shall be submitted to the Executive Officers, and, failing
resolution by them, to ADR proceedings pursuant to Section 9.1, PROVIDED that
with respect to any such ADR proceeding, (a) the Parties agree to select a
neutral party to preside in the resolution of such disagreement who has
appropriate industry experience as to make a determination of what a reasonable
royalty rate should be, and (b) such neutral party shall select a royalty rate
[**].
SECTION 4.9 LENGTH OF ROYALTY PAYMENTS. The royalties payable under
Section 4.7 shall be paid on a country-by-country basis on each such Program
Product, Third Party Pharmacogenomic Product or Program Pharmacogenomic Service
until the later of (a) the expiration of all Program Patent Rights which cover
such Program Product, Third Party Pharmacogenomic Product or Program
Pharmacogenomic Service in such country or (b) [**] after the First Commercial
Sale of such Program Product, Third Party Pharmacogenomic Product or Program
Pharmacogenomic Service in such country.
SECTION 4.10 ROYALTIES PAYABLE ONLY ONCE. Becton Dickinson's obligation
to pay royalties under Section 4.7 is imposed only once with respect to the same
unit of Program Product, Third Party Pharmacogenomic Product and/or Program
Pharmacogenomic Service. Except as specifically provided in this Agreement,
there shall be no deductions from the royalties payable hereunder.
SECTION 4.11 ROYALTY REPORTS AND ACCOUNTING.
a. ROYALTY REPORTS; ROYALTY PAYMENTS. Becton Dickinson
shall deliver to MPMx, within [**] after the end of each calendar quarter,
reasonably detailed written accountings of Gross Profits on Program Products,
Third Party Pharmacogenomic Products and/or Pharmacogenomic Services that are
subject to royalty payments due to MPMx for such calendar quarter. Such
quarterly reports shall indicate (i) gross sales and Net Sales on a
product-by-product basis, (ii) the determination of Direct Cost of Goods Sold
and Cost of Goods Sold, and (iii) the calculation of royalties from such gross
sales, Gross Profits and Net Sales. When Becton Dickinson delivers such
accounting to MPMx, Becton Dickinson shall also deliver all royalty payments due
under Section 4.7 to MPMx for the calendar quarter.
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b. AUDITS BY MPMX. Becton Dickinson shall keep, and
shall require its Approved Sublicensees to keep, complete and accurate records
of the latest three (3) years relating to Net Sales, Direct Cost of Goods Sold,
Cost of Goods Sold, Gross Profits, and Sections 4.12, 4.13 and 4.14. For the
sole purpose of verifying royalties payable to MPMx, MPMx shall have the right
annually at MPMx's expense to retain an independent, certified public accountant
selected by MPMx and reasonably acceptable to Becton Dickinson, to review such
records in the location(s) where such records are maintained by Becton
Dickinson, its Affiliates or Approved Sublicensees upon reasonable notice and
during regular business hours and under obligations of strict confidence.
Results of such review shall be made available to both Parties. If the review
reflects an underpayment of royalties to MPMx, such underpayment shall be
promptly remitted to MPMx, together with interest calculated in the manner
provided in Section 4.12 below. If the underpayment is equal to or greater than
[**] of the royalty amount that was otherwise due, MPMx shall be entitled to
have Becton Dickinson pay all of the costs of such review.
SECTION 4.12 CURRENCY AND METHOD OF PAYMENTS; LATE PAYMENTS. All
payments under this Agreement shall be made in United States dollars by transfer
to such bank account as MPMx may designate from time to time within no more than
[**] of invoice or when such payment is due in accordance with the provisions of
this Agreement. Any royalty payments due hereunder with respect to sales outside
of the United States shall be payable in U.S. Dollars; provided, however, that
if any payment on account of Net Sales is received by Becton Dickinson in a
foreign currency, such amount shall be converted monthly to United States funds
at the rate published by Reuters on the last Wednesday of the month in which Net
Sales occurred (or such other publicly available source as Becton Dickinson may
subsequently utilize generally in its currency accounting procedures, in which
case Becton Dickinson shall provide notice to MPMx promptly of any such change).
Becton Dickinson shall pay interest to MPMx on the aggregate amount of any
payments that are not paid on or before the date such payments are due under
this Agreement at a rate per annum equal to the lesser of the U.S. prime rate
reported by THE WALL STREET JOURNAL for the applicable period, or the highest
rate permitted by applicable law, calculated on the number of days such payment
is delinquent. In the event any invoice issued by MPMx contains any terms which
conflict with the terms of this Agreement, the terms of this Agreement shall
prevail.
SECTION 4.13 TAX WITHHOLDING. The Parties shall use all reasonable and
legal efforts to reduce tax withholding on payments made to MPMx hereunder.
Notwithstanding such efforts, if Becton Dickinson concludes that tax
withholdings under the laws of any country are required with respect to payments
to MPMx, Becton Dickinson shall withhold the required amount and pay it to the
appropriate governmental authority. In such a case, Becton Dickinson shall
promptly provide MPMx with original receipts or other evidence reasonably
required and sufficient to allow MPMx to document such tax withholdings
adequately for purposes of claiming foreign tax credits and similar benefits.
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SECTION 4.14 BLOCKED PAYMENTS. In the event that, by reason of
applicable laws or regulations in any country, it becomes impossible or illegal
for Becton Dickinson or its Affiliates or Approved Sublicensees, to transfer, or
have transferred on its behalf, royalties or other payments to MPMx, such
royalties or other payments shall be deposited in local currency in the relevant
country to the credit of MPMx in a recognized banking institution designated by
MPMx or, if none is designated by MPMx within a period of thirty (30) days, in a
recognized banking institution selected by Becton Dickinson or its Affiliates or
Approved Sublicensees, as the case may be, and identified in a notice in writing
given to MPMx.
ARTICLE V
INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS
SECTION 5.1 OWNERSHIP OF INVENTIONS.
a. BECTON DICKINSON INVENTIONS. Becton Dickinson shall
exclusively own all inventions made solely by its employees, agents and
consultants in the course of the Research Program and the Development Program
("Becton Dickinson Inventions").
b. MPMX INVENTIONS. MPMx shall exclusively own all
inventions made solely by its employees, agents and consultants in the course of
the Research Program and the Development Program ("MPMx Inventions").
c. JOINT INVENTIONS. All inventions made jointly by
employees, agents and consultants of Becton Dickinson and employees, agents and
consultants of MPMx in the course of the Research Program and/or the Development
Program ("Joint Inventions") shall be owned jointly on the basis of each Party
having an undivided interest in the whole.
d. INVENTORSHIP. The determination of inventorship shall
be made in accordance with relevant patent laws. In the event of a dispute
regarding inventorship, if the Parties are unable to resolve the dispute,
mutually acceptable independent patent counsel not regularly employed by either
Party shall resolve such dispute.
SECTION 5.2 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.
a. BECTON DICKINSON INVENTIONS. Becton Dickinson shall
have the exclusive right and option to file and prosecute any patent
applications and to maintain any patents covering Becton Dickinson Inventions;
PROVIDED THAT in the event that Becton Dickinson declines the option to file and
prosecute any such patent applications or maintain any such patents covering any
Becton Dickinson Invention, it shall give MPMx reasonable notice to this effect
and thereafter MPMx may, upon written notice to Becton Dickinson, file and
prosecute such patent applications and maintain such patents in Becton
Dickinson's name, all at MPMx's expense, and all
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
such Becton Dickinson Inventions shall remain owned exclusively by Becton
Dickinson.
b. MPMX INVENTIONS. MPMx shall have the exclusive right
and option to file and prosecute any patent applications and maintain any
patents covering MPMx Inventions; PROVIDED THAT in the event that MPMx declines
the option to file and prosecute any such patent applications or maintain any
such patents covering any MPMx Invention, it shall give Becton Dickinson
reasonable notice to this effect and thereafter Becton Dickinson may, upon
written notice to MPMx, file and prosecute such patent applications and maintain
such patents in MPMx's name, all at Becton Dickinson's expense, and all such
MPMx Inventions shall remain owned exclusively by MPMx.
c. JOINT INVENTIONS. MPMx shall have the exclusive right
and option to file and prosecute any patent applications and to maintain any
patents covering Joint Inventions made in the course of the Research Program;
PROVIDED THAT in the event that MPMx declines the option to file and prosecute
any such patent applications or maintain any such patents covering any such
Joint Inventions, it shall give Becton Dickinson reasonable notice to this
effect and thereafter Becton Dickinson may, upon written notice to MPMx, file
and prosecute such patent applications and maintain such patents jointly in both
Parties' names. Becton Dickinson shall have the exclusive right and option to
file and prosecute any patent applications and to maintain any patents covering
Joint Inventions made in the course of the Development Program; PROVIDED THAT in
the event that Becton Dickinson declines the option to file and prosecute any
such patent applications or maintain any such patents covering any such Joint
Inventions, it shall give MPMx reasonable notice to this effect and thereafter
MPMx may, upon written notice to Becton Dickinson, file and prosecute such
patent application and maintain such patents jointly in both Parties' names.
d. COSTS AND EXPENSES. Each Party shall bear its own
costs and expenses in preparing, filing, prosecuting, maintaining and extending
Program Patent Rights, except that Becton Dickinson shall reimburse MPMx for
[**] of the internal and external costs and expenses incurred by MPMx on and
after the Effective Date under Section 5.2(b) and (c) for preparing, filing,
prosecuting, maintaining and extending Program Patent Rights, PROVIDED, HOWEVER,
that (i) reimbursed internal MPMx costs shall be limited to costs incurred by
MPMx attorneys, patent agents, technical specialists and administrative
assistants for work on or directly related to preparing, filing, prosecuting,
maintaining and extending Program Patent Rights, and (ii) such reimbursement to
MPMx shall be reduced by any reimbursed amounts received by MPMx from third
parties relating to the same Patent Rights.
e. COOPERATION. Each Party agrees to cooperate with the
other with respect to the filing, prosecution, maintenance and extension of
patents and patent
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
applications pursuant to this Section 5.2, including, without limitation, the
execution of all such documents and instruments and the performance of such acts
as may be reasonably necessary in order to permit the other Party to continue
any filing, prosecution, maintenance or extension of patents and patent
applications that such Party has elected not to pursue, as provided for in
Sections 5.2(a), (b) and (c).
SECTION 5.3 EXPLOITATION OF JOINT PROGRAM INTELLECTUAL PROPERTY.
Subject to all provisions of this Agreement, including without limitation (a)
the grant of licenses to Becton Dickinson and MPMx, respectively, under Article
III; and (b) Becton Dickinson's royalty obligations pursuant to Article IV, each
Party shall be free to exploit Joint Program Intellectual Property worldwide
without restriction and without payment of any additional compensation to the
other Party.
SECTION 5.4 BLOCKING, ENABLING AND ENHANCING THIRD PARTY INTELLECTUAL
PROPERTY.
a. GENERAL. If either Party believes that there exists
third party intellectual property which constitutes Blocking Third Party
Intellectual Property, Enabling Third Party Intellectual Property or Enhancing
Third Party Intellectual Property, it shall notify the Joint Steering Committee.
The Joint Steering Committee shall then determine (i) whether or not such third
party Patent Rights constitute Blocking Third Party Intellectual Property,
Enabling Third Party Intellectual Property or Enhancing Third Party Intellectual
Property, as the case may be, and, if so, whether the Program Validated Marker
or Validated Marker, as applicable, should be included in the Program Product;
and (ii) if the determination of the Joint Steering Committee is affirmative,
then whether, on what terms (economic or otherwise), and by which Party such
Blocking Third Party Intellectual Property, Enabling Third Party Intellectual
Property or Enhancing Third Party Intellectual Property, as the case may be,
shall be licensed for the purposes of this Agreement.
b. RESOLUTION OF DISPUTES. If the Joint Steering
Committee is unable to reach a determination with respect to any third party
Patent Rights under subsection (a)(i) or (a)(ii) above and the Executive
Officers are also unable to reach such a determination, the following provisions
shall govern the resolution of such matter:
i. with respect to Blocking Third Party
Intellectual Property, (A) Becton Dickinson shall make the determination as to
whether a Program Validated Marker should be included in a Program Product, and
(B) the determination of whether third party Patent Rights cover such Program
Validated Marker (i.e. that such Patent Rights constitute Blocking Third Party
Intellectual Property) shall be made by mutually acceptable independent patent
counsel not regularly engaged by either Party;
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
ii. with respect to Enabling Third Party
Intellectual Property, (A) the determination of whether a Program Product would
have no medical value in the Field without the inclusion of a Validated Marker
shall be made by a mutually acceptable technical expert not regularly employed
by either Party; and (B) the determination of whether third party Patent Rights
cover such Validated Marker shall be made by mutually acceptable independent
patent counsel not regularly engaged by either Party;
iii. with respect to Enhancing Third Party
Intellectual Property, if the Joint Steering Committee is unable to make a
determination as to whether a Validated Marker materially enhances the
commercial value of a Program Product, or whether third party Patent Rights
cover such Validated Marker or the terms of the license for such third party
Patent Rights, then such third party Patent Rights shall not constitute
Enhancing Third Party Intellectual Property; and
iv. with respect to the terms under which
Blocking or Enabling Third Party Intellectual Property shall be licensed, Becton
Dickinson shall make the determination.
c. REIMBURSEMENT. If the Joint Steering Committee
determines that it shall be the responsibility of MPMx to license any Blocking
Third Party Intellectual Property, Enabling Third Party Intellectual Property or
Enhancing Third Party Intellectual Property, as the case may be, then Becton
Dickinson shall reimburse MPMx for [**] of any royalties and/or license fees
paid by MPMx to a third party for such Blocking Third Party Intellectual
Property, Enabling Third Party Intellectual Property or Enhancing Third Party
Intellectual Property, as the case may be, subject to Becton Dickinson's right
to treat such reimbursed costs as if it had made the payments directly for
purposes of determining Cost of Goods Sold.
SECTION 5.5 THIRD PARTY INFRINGEMENT.
a. REASONABLE ACTION. MPMx and Becton Dickinson each
agrees to take reasonable actions to protect the Program Patent Rights from
infringement in the Field and to protect the Program Know-How from unauthorized
use in the Field, when, from its own knowledge or upon notice from the other
Party, the Party with knowledge or receiving notice becomes aware of the
reasonable probability that such infringement or unauthorized use exists in the
Field.
b. INFRINGEMENT ACTION. Within [**] of becoming aware of
the infringement of the Program Patent Rights in the Field or unauthorized use
of the Program Know-How in the Field, the Responsible Party (as defined below)
shall decide whether to institute an infringement suit or take other appropriate
action that it believes is reasonably required to protect the Program Patent
Rights and Program Know-How in the Field. If the Responsible Party fails to
institute such suit or take
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
such action within such ninety (90) day period, then the other Party shall have
the right at its sole discretion to institute such suit or other appropriate
action in the name of either or both Parties. In such event, the Responsible
Party shall cooperate with the other Party to the extent reasonably possible,
including the joining of suit if necessary or desirable.
c. RESPONSIBLE PARTY. As used herein, the term
"Responsible Party" means (i) Becton Dickinson with respect to Becton Dickinson
Program Patent Rights and/or Becton Dickinson Program Know-How, (ii) MPMx with
respect to MPMx Program Patent Rights and/or MPMx Program Know-How, and (iii)
MPMx with respect to Joint Program Patent Rights and/or Joint Program Know-How.
d. COSTS. Each Party shall assume and pay all of its own
out-of-pocket costs incurred in connection with any litigation or proceedings
described in this Section 5.5, including, without limitation, the fees and
expenses of that Party's counsel.
e. RECOVERIES. Any recovery obtained by any Party as a
result of any proceeding described in this Section 5.5 or from any counterclaim
or similar claim asserted in a proceeding described in Section 5.6, by
settlement or otherwise, shall be applied in the following order of priority:
i. first, to reimburse each Party for all
litigation costs in connection with such proceeding paid by that Party and not
otherwise recovered (on a pro rata basis based on each Party's respective
litigation costs, to the extent the recovery was less than all such litigation
costs); and
ii. second, the remainder of the recovery shall
be paid [**] to the Responsible Party and [**] to the other Party, PROVIDED,
HOWEVER, that if the Responsible Party does not institute suit or take action as
set forth in Section 5.5(b) or elects not to respond to an invalidity claim
pursuant to Section 5.6, then the recovery shall be paid fifty percent (50%) to
each Party.
SECTION 5.6 CLAIMED INFRINGEMENT; CLAIMED INVALIDITY.
a. DEFENSE OF THIRD PARTY INFRINGEMENT CLAIMS. If the
activities of either Party in connection with the Research Program, or if the
making, importing, using, offering to sell or selling of a Program Product in
the Field or providing of Program Pharmacogenomic Services in the Field result
in a claim of patent infringement or other violation of the intellectual
property rights of any third party (a "Third Party Claim"), the Party which is
accused of such infringement shall defend itself at its sole cost. The other
Party shall cooperate with the accused Party in such defense and shall have the
right to be represented by counsel of its own choice.
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with the Securities and Exchange Commission. Asterisks denote omissions.
b. TREATMENT OF DAMAGE AWARDS. In the event that in any
judicial proceeding referred to in subsection (a) above involving a Third Party
Claim that Blocking Third Party Intellectual Property exists with respect to the
sale of a Program Product, judgment is rendered against Becton Dickinson and
damages are awarded to a third party relating to such claim of Blocking Third
Party Intellectual Property, such damages shall be paid by Becton Dickinson and
such damages (other than any enhanced damages which, in such judgment, are
attributed to willful infringement by Becton Dickinson) ("Third Party Damages")
shall, for purposes of this Agreement, be treated as follows:
i. If Becton Dickinson is not enjoined from
selling such Program Product, then:
(a) [**] for the applicable Program
Product; and
(b) [**] for the applicable Program
Product.
ii. If Becton Dickinson is enjoined from selling
such Program Product, then:
(a) [**] for other Program Products;
and
(b) [**] and shall be [**] of Becton
Dickinson.
c. TREATMENT OF SETTLEMENT PAYMENTS. In the event that
in any judicial proceeding referred to in subsection (a) above involving a Third
Party Claim that Blocking Third Party Intellectual Property exists with respect
to the sale of a Program Product, Becton Dickinson settles such judicial
proceeding and agrees to make payments to a third party relating to such claim
of Blocking Third Party Intellectual Property ("Third Party Settlement
Payments") such payments shall be made by Becton Dickinson and shall, for
purposes of this Agreement, be treated as follows:
i. [**] shall be deemed [**] for the applicable
Program Product; and
ii. [**] shall be deemed [**] for the applicable
Program Product.
d. PATENT INVALIDITY CLAIM. If a third party at any time
asserts a claim that any Program Patent Right is invalid or otherwise
unenforceable (an "Invalidity Claim"), whether as a defense in an infringement
action brought by Becton Dickinson or MPMx pursuant to Section 5.5 or in an
action brought against Becton Dickinson or MPMx under Section 5.6(a), the
Parties shall cooperate with each other
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in preparing and formulating a response to such Invalidity Claim. The Party
responsible for responding to such claim, at its sole expense, shall be
initially the Responsible Party, subject to the other Party's right, at its sole
expense, to assume responsibility if the Responsible Party elects not to do so.
Neither Party shall settle or compromise any Invalidity Claim without the
consent of the other Party, which consent shall not be unreasonably withheld.
SECTION 5.7 PATENT TERM EXTENSIONS. The Parties shall cooperate, if
necessary and appropriate, with each other in gaining patent term extension
wherever applicable to Program Patent Rights covering Program Products. The
Parties shall, if necessary and appropriate, use reasonable efforts to agree
upon a joint strategy relating to patent term extensions, but, in the absence of
mutual agreement with respect to any extension issue, a patent shall be extended
if either Party elects to extend such patent. All filings for such extension
shall be made by the Party to whom the patent is assigned, PROVIDED, HOWEVER,
that in the event that the Party to whom the patent is assigned elects not to
file for an extension, such Party shall (i) inform the other Party of its
intention not to file and (ii) grant the other Party the right to file for such
extension.
SECTION 5.8 PATENT MARKING. Becton Dickinson agrees to comply with the
patent marking statutes in each country in which Program Products are sold by
Becton Dickinson or Approved Sublicensees.
ARTICLE VI
CONFIDENTIALITY
SECTION 6.1 CONFIDENTIAL INFORMATION. All Confidential Information
disclosed by a Party to the other Party during the term of this Agreement shall
not be used by the receiving Party except in connection with the activities
contemplated by this Agreement, shall be maintained in confidence by the
receiving Party (except to the extent reasonably necessary for regulatory
approval of products developed by Becton Dickinson or MPMx or any of their
respective Affiliates or Approved Sublicensees or for the filing, prosecution
and maintenance of Patent Rights), and shall not otherwise be disclosed by the
receiving Party to any other person, firm, or agency, governmental or private,
without the prior written consent of the disclosing Party, except to the extent
that the Confidential Information (as determined by competent documentation):
a. was known or used by the receiving Party prior to its
date of disclosure to the receiving Party; or
b. either before or after the date of the disclosure to
the receiving Party is lawfully disclosed to the receiving Party by sources
other than the disclosing Party rightfully in possession of the Confidential
Information and not bound by confidentiality obligations to the disclosing
party; or
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c. either before or after the date of the disclosure to
the receiving Party is or becomes published or generally known to the public
(including information known to the public through the sale of products in the
ordinary course of business) through no breach hereof on the part of the
receiving Party or its sublicensees; or
d. is independently developed by or for the receiving
Party without reference to or reliance upon the Confidential Information; or
e. is required to be disclosed by the receiving Party to
comply with applicable laws, to defend or prosecute litigation or to comply with
governmental regulations, PROVIDED THAT the receiving Party provides prior
written notice of such disclosure to the disclosing Party and takes reasonable
and lawful actions to avoid and/or minimize the degree of such disclosure.
SECTION 6.2 DISCLOSURE OF PROVISIONS OF AGREEMENTS.
a. Each Party agrees to hold as confidential the terms
of this Agreement and the Stock Purchase Agreement except that each Party shall
have the right to disclose such terms to potential investors and other third
parties in connection with financing activities, PROVIDED THAT any such third
party has entered into a written obligation with the disclosing Party to treat
such information and materials as confidential. At the request of the other
Party, the disclosing Party shall use commercially reasonable efforts to enforce
such obligations against such third parties.
b. In the event that this Agreement or the Stock
Purchase Agreement shall be included in any report, statement or other document
filed by either Party or an Affiliate of either Party with the SEC, such Party
shall use, or shall cause its Affiliate, as the case may be, to use, reasonable
efforts to obtain confidential treatment from the SEC of any financial
information or other information of a competitive or confidential nature, and
shall include in such confidentiality request such provisions of this Agreement
as may be reasonably requested by the other Party.
SECTION 6.3 EMPLOYEE AND ADVISOR OBLIGATIONS. Becton Dickinson and MPMx
each agree that they shall provide Confidential Information received from the
other Party only to their respective employees, consultants and advisors, and to
the employees, consultants and advisors of such Party's Affiliates, who have a
need to know, PROVIDED THAT such employees, consultants and advisors agree to
treat such information and materials as confidential.
SECTION 6.4 TERM. All obligations of confidentiality imposed under this
Article VI shall expire five (5) years following termination or expiration of
this Agreement.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
SECTION 6.5 PUBLICATIONS. The Parties acknowledge that scientific lead
time is a key element of the value of the Research Program and further agree
that scientific publications must be strictly monitored to prevent any adverse
effect of the premature publication of results of the Research Program and the
Development Program. The Parties shall establish a procedure for publication
review and approval and each Party shall first submit to the other Party an
early draft of all such publications, whether they are to be presented orally or
in written form, at least two (2) months prior to presentation or submission for
publication. Each Party shall review each such proposed publication in order to
avoid the unauthorized disclosure of a Party's Confidential Information and to
preserve the patentability of inventions arising from the Research Program and
the Development Program. If, as soon as reasonably possible but no longer than
[**] following receipt of an advance copy of a Party's proposed publication, the
other Party informs such Party that its proposed publication contains
Confidential Information of the other Party, then such Party shall delete such
Confidential Information from its proposed publication. If, as soon as
reasonably possible but no longer than [**] following receipt of an advance copy
of a Party's proposed publication, the other Party informs such Party that its
proposed publication could be expected to have a material adverse effect on any
Patent Rights or Know-How of such other Party, then such Party shall delay such
proposed publication, for up to [**] from the date the other Party informed such
Party of its objection to the proposed publication, to permit the timely
preparation and first filing of patent application(s) on the information
involved. The Parties agree that all publications of results of the Research
Program shall acknowledge the contribution of the other Party and third party
collaborators to such results.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 REPRESENTATIONS OF AUTHORITY. Becton Dickinson and MPMx
each represents and warrants to the other that as of the Execution Date it has,
and as of the Effective Date it will have, full right, power and authority to
enter into this Agreement and to perform its respective obligations under this
Agreement. Becton Dickinson and MPMx each represents and warrants to the other
that it has the right to grant to the other the licenses and sublicenses granted
pursuant to this Agreement, and that, to the best of its knowledge, it has, as
of the Effective Date, access to and the right to use its Know-How necessary to
perform its obligations hereunder. Becton Dickinson and MPMx each represents and
warrants that (a) the execution, delivery and performance by it of this
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by all necessary corporate action, and (b) this
Agreement has been duly executed and delivered by it and constitutes a valid and
binding obligation of it, enforceable in accordance with its terms.
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SECTION 7.2 CONSENTS. Becton Dickinson and MPMx each represents and
warrants that all necessary consents, approvals and authorizations of all
government authorities and other persons required to be obtained by such Party
in connection with the execution, delivery and performance of this Agreement
have been obtained, except with respect to approvals required under the HSR Act.
SECTION 7.3 NO CONFLICT. Becton Dickinson and MPMx each represents and
warrants that the execution and delivery of this Agreement, the performance of
such Party's obligations hereunder and the conduct of the Research Program and
the Development Program by it (a) do not conflict with or violate any
requirement of applicable laws or regulations and (b) do not and shall not
conflict with, violate or breach or constitute a default (with or without the
giving of notice or lapse of time, or both) or require any consent under, any
contractual obligations of such Party or order, judgement or decree to which
such Party or any of its assets are bound, except such consents as shall have
been obtained prior to the Effective Date.
SECTION 7.4 EMPLOYEE OBLIGATIONS. Becton Dickinson and MPMx each
represents and warrants that all of its employees, officers, consultants and
advisors who are or will be involved in the Research Program and in the
Development Program have executed or will have executed agreements or have
existing obligations under law requiring assignment to such Party of all
intellectual property made during the course of and as the result of their
association with such Party, and obligating the individual to maintain as
confidential such Party's Confidential Information, to the extent required to
support such Party's obligations under this Agreement. Becton Dickinson and MPMx
each represents and warrants that to its knowledge, none of its employees who
are or will be involved in the Research Program are, as a result of the nature
of such Research Program to be conducted by the Parties, in violation of any
covenant in any contract with a third party relating to non-disclosure of
proprietary information, non-competition or non-solicitation.
SECTION 7.5 THIRD PARTY RIGHTS.
a. To the knowledge of MPMx, as of the Execution Date
and the Effective Date, the conduct by MPMx of the Research Program and the
practice by Becton Dickinson under the rights and licenses granted by MPMx
herein does not and shall not knowingly infringe or conflict with the rights of
any third party in respect of Know-How or issued patents or published patent
applications owned by such third party. To the knowledge of MPMx, as of the
Execution Date, none of the Know-How or Patent Rights owned, controlled or used
by MPMx that is expected to be utilized by MPMx in the Research Program is being
infringed by any third party. As of the Execution Date, there is no claim or
demand of any person pertaining to, or any proceeding which is pending or, to
the knowledge of MPMx, threatened, that challenges the rights of MPMx in respect
of Know-How or Patent Rights owned, controlled or used by MPMx.
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b. To the knowledge of Becton Dickinson, as of the
Execution Date and the Effective Date, the conduct by Becton Dickinson of the
Research Program and the Development Program does not and shall not knowingly
infringe or conflict with the rights of any third party in respect of Know-How
or issued patents or published patent applications owned by such third party. To
the knowledge of Becton Dickinson, as of the Execution Date, none of the Becton
Dickinson Platform Know- How or Becton Dickinson Platform Patent Rights owned,
controlled or used by Becton Dickinson that is expected to be utilized by Becton
Dickinson in the Research Program and the Development Plan is being infringed by
any third party. As of the Execution Date, there is no claim or demand of any
person pertaining to, or any proceeding which is pending or, to the knowledge of
Becton Dickinson, threatened, that challenges the rights of Becton Dickinson in
respect of Becton Dickinson Platform Know-How or Becton Dickinson Platform
Patent Rights.
c. MPMx represents and warrants that it, as of the
Execution Date and the Effective Date, owns, free and clear of all encumbrances,
or to the knowledge of MPMx, has the valid right to use, all Know-How and Patent
Rights owned, controlled or used by MPMx that are expected to be utilized by
MPMx in the Research Program. To the knowledge of MPMx, as of the Execution Date
and the Effective Date, no person or entity (other than Lilly under the Lilly
Research and License Agreement, Bayer under the Bayer Agreement, MBio under the
MBio/MPI Rights Exchange Agreement and third parties granted non-exclusive
licenses in the ordinary course of MPMx' business) has any rights to any of the
Know-How or Patent Rights owned, controlled or used by MPMx and expected to be
utilized by MPMx in the Research Program that would limit MPMx in the conduct of
the Research Program or Becton Dickinson in the practice of its rights and
licenses granted by MPMx herein.
d. Becton Dickinson represents and warrants that, as of
the Execution Date and the Effective Date, it owns, free and clear of all
encumbrances, or to the knowledge of Becton Dickinson, has the valid right to
use, all Becton Dickinson Platform Know-How and Becton Dickinson Platform Patent
Rights owned, controlled or used by Becton Dickinson that are expected to be
utilized by Becton Dickinson in the Research Program.
e. MPMx and Becton Dickinson each represents and
warrants that (i) it has taken reasonable precautions (A) to protect its rights
in its Know-How and Patent Rights to which it has granted a license herein
("Licensed Intellectual Property") and (B) to maintain the confidentiality of
its confidential Licensed Intellectual Property, and (ii) to its knowledge,
there have been no acts or omissions (other than those made based on reasonable,
good faith business decisions) by its officers, directors, shareholders and
employees, the result of which would be to materially compromise its rights to
apply for or enforce appropriate legal protection of its Licensed Intellectual
Property.
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SECTION 7.6 AGREEMENTS WITH MPI.
a. MPMx represents and warrants to Becton Dickinson that
it has delivered to Becton Dickinson true and correct copies of (i) the Rights
Exchange Agreement dated February 1, 1999 by and between MPMx and MPI (the
"MPMx/MPI Rights Exchange Agreement"), (ii) the Technology Transfer and License
Agreement, (iii) the Trademark License Agreement, (iv) the Administrative
Services Agreement and (v) the Research Services Agreement, each dated as of
February 1, 1999 and by and between MPMx and MPI. The foregoing agreements are
herein referred to as the "Transfer Documents". MPMx hereby further represents
and warrants to Becton Dickinson that each of the Transfer Documents is in full
force and effect and has not been amended or modified.
b. MPMx covenants and agrees with Becton Dickinson that
MPMx shall perform all of its obligations arising under the Transfer Documents
and that MPMx shall not, without the prior written consent of Becton Dickinson,
terminate any of the Transfer Documents, or modify or amend any of the Transfer
Documents to the extent that any such amendment or modification would adversely
affect the ability of MPMx to fulfill its obligations hereunder.
SECTION 7.7 YEAR 2000 COMPLIANCE. To the knowledge of MPMx, the
statements to be set forth in MPI's Annual Report on Form 10-K for the year
ending December 31, 1998 under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations - - Impact on Year 2000," a
draft of which has been furnished to Becton Dickinson, are true and correct in
all material respects.
SECTION 7.8 NO WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH
HEREIN OR IN THE STOCK PURCHASE AGREEMENT, THE PARTIES MAKE NO REPRESENTATIONS
AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AND
PARTICULARLY THAT PROGRAM PRODUCTS OR THIRD PARTY PHARMACOGENOMIC PRODUCTS WILL
BE SUCCESSFULLY DEVELOPED HEREUNDER, AND IF DEVELOPED, WILL HAVE COMMERCIAL
UTILITY OR MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
ARTICLE VIII
TERM AND TERMINATION
SECTION 8.1 TERM. This Agreement shall become effective as of the
Effective Date, may be terminated as set forth in this Article VIII, and
otherwise remains in effect until the expiration of all of the obligations to
pay royalties set forth in Article IV.
SECTION 8.2 SURVIVAL OF LICENSES.
a. LICENSE TO BECTON DICKINSON. Upon the expiration of
Becton Dickinson's obligations to pay royalties to MPMx under Section 4.7 with
respect to each Program Product, Third Party Pharmacogenomic Product or
Pharmacogenomic Service in any country, the licenses under MPMx Program
Intellectual Property and MPMx' rights in the Joint Program Intellectual
Property set forth in Section 3.1(b) and Section 3.1(d) shall be deemed to be
perpetual, fully paid up, non-exclusive licenses with respect to such Program
Product, Third Party Pharmacogenomic Product or Pharmacogenomic Service in such
country.
b. LICENSES TO MPMX. Upon the expiration of MPMx'
obligation to pay royalties to Becton Dickinson under Section 4.8 with respect
to each MPMx Royalty Bearing Product in any country, the licenses under Becton
Dickinson Platform Know- How and Becton Dickinson Platform Patent Rights set
forth in Section 3.2(b)(ii) shall be deemed to be perpetual, fully paid-up,
non-exclusive licenses with respect to such MPMx Royalty Bearing Product in such
country.
SECTION 8.3 TERMINATION FOR MATERIAL BREACH. Upon any material breach
of a material provision of this Agreement by a Party (in such capacity, the
"Breaching Party"), the other Party (in such capacity, the "Non-Breaching
Party") may terminate this Agreement by providing [**] written notice to the
Breaching Party, specifying the material breach. The termination shall become
effective at the end of the [**] period unless (a) the Breaching Party cures
such breach during such [**] period, or (b) if such breach is not susceptible to
cure within [**] of the receipt of written notice of the breach, the Breaching
Party is diligently pursuing a cure. Notwithstanding the foregoing, if such
breach, by its nature, is incurable the Agreement may be terminated immediately.
The Parties shall use reasonable efforts to work together to cure any breach. In
the event of a dispute concerning whether a material breach has occurred, the
[**] cure period specified above shall be suspended during the period (not to
exceed [**]) commencing upon the submission of such dispute for resolution to
the Executive Officers and continuing until the earlier of the resolution of
such dispute and the end of such [**] period.
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SECTION 8.4 NO EFFECTIVENESS UPON HSR DENIAL OR TERMINATION OF STOCK
PURCHASE AGREEMENT. The Agreement shall not become effective (and accordingly
shall immediately terminate) in the event that (a) the FTC and/or the DOJ shall
seek a preliminary injunction against MPMx and Becton Dickinson to enjoin the
transactions contemplated by this Agreement and/or the Stock Purchase Agreement;
or (b) the HSR Clearance Date shall not have occurred on or prior to June 30,
1999.
SECTION 8.5 EFFECT OF TERMINATION.
a. GENERAL. In the event this Agreement is terminated by
either Party, all rights and obligations of the Parties, including performance
of work under the Research Program and the Development Program and Becton
Dickinson's right to commercialize and develop Program Products, shall cease,
except as follows:
i. except as set forth in subsection b(i) or
b(ii) below, all licenses set forth in Sections 3.1 and 3.2 shall survive such
termination, subject to continued compliance with obligations related to such
licenses, such as the milestone and royalty payments, reports, accounting and
auditing provisions of Article IV;
ii. all financial obligations under Article IV
or Article V owed as of the effective date of such termination shall remain
effective and shall be timely paid;
iii. the right to complete the manufacture and
sale of Program Products which qualify as "work in process" under generally
accepted cost accounting standards or which are in stock at the date of
termination, and the obligation to pay royalties on Gross Profits of such
Program Products;
iv. obligations set forth in Section 2.12;
v. obligations set forth in Sections 5.5 and\
5.6;
vi. obligations regarding confidentiality set
forth in Article VI;
vii. obligations of defense and indemnity set
forth in Section 10.1, which obligations shall continue in full force and effect
for an unlimited period;
viii. any cause of action or claim of MPMx or
Becton Dickinson accrued or to accrue because of any breach or default by the
other party hereunder; and
ix. all other terms, provisions,
representations, rights and obligations contained in this Agreement which by
their sense and context are intended to survive termination of this Agreement.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
b. TERMINATION OF LICENSES.
i. If this Agreement is terminated under
Section 8.3 and MPMx is the Breaching Party, the licenses granted by Becton
Dickinson to MPMx under Section 3.2(a) and 3.2(b) shall terminate as of the
effective date of such termination, and all sublicenses granted to third parties
by MPMx pursuant to Section 3.2 shall also terminate as of such date.
ii. If this Agreement is terminated under
Section 8.3 and Becton Dickinson is the Breaching Party, the licenses granted by
MPMx to Becton Dickinson under Section 3.1(a), (b) and (d) shall terminate, and
all sublicenses granted to third parties by Becton Dickinson pursuant to Section
3.1(c) shall also terminate as of such date.
ARTICLE IX
DISPUTE RESOLUTION
SECTION 9.1 ALTERNATIVE DISPUTE RESOLUTION. If any controversy, claim
or dispute arising out of or relating to [**] with respect to a dispute relating
to the issue of [**] of this Agreement has not been resolved by the Executive
Officers within thirty (30) days of referral in accordance with Section 2.2 or
any other applicable provisions of this Agreement, or if the Executive Officers
fail to meet within such thirty (30) days, then either Party may initiate an
Alternative Dispute Resolution ("ADR") proceeding as provided in EXHIBIT F
hereto; PROVIDED THAT with respect to any such controversy, claim or dispute
relating to Section 4.8, the neutral party shall have the qualifications
referenced in Section 4.8. The Parties shall have the right to be represented by
counsel in such a proceeding.
SECTION 9.2 NO LIMITATION. Notwithstanding the foregoing, nothing in
this Article IX shall be construed as limiting in any way the right of a Party
to bring suit with respect to any matter relating to this Agreement or to seek
injunctive or other equitable relief from a court of competent jurisdiction with
respect to any actual or threatened breach of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 PRODUCT LIABILITY INDEMNIFICATION.
a. BECTON DICKINSON. Becton Dickinson agrees to defend
MPMx and its Affiliates at its cost and expense, and shall indemnify and hold
MPMx and its
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Affiliates and their respective directors, officers, employees and agents (the
"MPMx Indemnified Parties") harmless from and against any losses, costs,
damages, fees or expenses arising out of any claim relating to (i) any breach by
Becton Dickinson of any of its representations, warranties or obligations
pursuant to this Agreement or (ii) personal injury from the development,
manufacture, use, sale or other disposition of any Program Products offered by
Becton Dickinson, its Affiliates and/or Approved Sublicensees. In the event of
any such claim against the MPMx Indemnified Parties by any third party, MPMx
shall promptly notify Becton Dickinson in writing of the claim and Becton
Dickinson shall manage and control, at its sole expense, the defense of the
claim and its settlement. The MPMx Indemnified Parties shall cooperate with
Becton Dickinson and may, at their option and expense, be represented in any
such action or proceeding. Becton Dickinson shall not be liable for any
litigation costs or expenses incurred by the MPMx Indemnified Parties. In
addition, Becton Dickinson shall not be responsible for the indemnification of
any MPMx Indemnified Party arising from any negligent or wrongful acts by such
party, or as the result of any settlement or compromise by the MPMx Indemnified
Parties without Becton Dickinson's prior written consent.
b. MPMX. MPMx agrees to defend Becton Dickinson and its
Affiliates at its cost and expense, and shall indemnify and hold Becton
Dickinson and its Affiliates and their respective directors, officers, employees
and agents (the "Becton Dickinson Indemnified Parties") harmless from and
against any losses, costs, damages, fees or expenses arising out of any claim
relating to (i) any breach by MPMx of any of its representations, warranties or
obligations pursuant to this Agreement or (ii) personal injury from the
development, manufacture, use, sale or other disposition of any MPMx
Royalty-Bearing Products offered by MPMx, its Affiliates and/or its
sublicensees. In the event of any claim against the Becton Dickinson Indemnified
Parties by any third party, Becton Dickinson shall promptly notify MPMx in
writing of the claim and MPMx shall manage and control, at its sole expense, the
defense of the claim and its settlement. The Becton Dickinson Indemnified
Parties shall cooperate with MPMx and may, at their option and expense, be
represented in any such action or proceeding. MPMx shall not be liable for any
litigation costs or expenses incurred by the Becton Dickinson Indemnified
Parties. In addition, MPMx shall not be responsible for the indemnification of
any Becton Dickinson Indemnified Party arising from any negligent or wrongful
acts by such party, or as the result of any settlement or compromise by the
Becton Dickinson Indemnified Parties without MPMx's prior written consent.
SECTION 10.2 GOVERNING LAW. This Agreement shall be construed and the
respective rights of the Parties determined (including in any arbitration
proceeding under Article IX) according to the substantive laws of the State of
Delaware notwithstanding the provisions governing conflict of laws under such
Delaware law to the contrary and without giving effect to the United Nations
Convention on Contracts for the International Sale of Goods, the 1974 Convention
on the Limitation Period in the International Sale of Goods (the "1974
Convention") and the Protocol amending the 1974 Convention, done at Vienna April
11, 1980, except matters of
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intellectual property law which shall be determined in accordance with the
national intellectual property laws relevant to the intellectual property in
question.
SECTION 10.3 ASSIGNMENT. Neither MPMx nor Becton Dickinson may assign
this Agreement in whole or in part without the consent of the other Party, which
consent shall not be unreasonably withheld, PROVIDED, HOWEVER, that MPMx may
assign this Agreement without the consent of Becton Dickinson if such assignment
is in connection with a Change of Control.
SECTION 10.4 AMENDMENTS. This Agreement constitutes the entire
agreement between the Parties with respect to the subject matter hereof, and
supersedes all previous arrangements with respect to the subject matter hereof,
whether written or oral. Any amendment or modification to this Agreement shall
be made in writing signed by both Parties.
SECTION 10.5 NOTICES.
Notices to MPMx shall be addressed to:
Millennium Predictive Medicine, Inc.
640 Memorial Drive
Cambridge, MA 02139
Attn: President
with a copy to:
Millennium Predictive Medicine, Inc.
640 Memorial Drive
Cambridge, MA 02139
Attention: Legal Department
Notices to Becton Dickinson shall be addressed to:
Caroline Popper
Becton Dickinson BioSciences
54 Loveton Circle
Sparks, MD 21152
with copies to:
Becton, Dickinson and Company
1 Becton Drive
Franklin Lakes, NJ 07417
Attn: Vice President and Chief Intellectual Property Counsel
JoAnn Boland
Becton Dickinson BioSciences
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11435 Saddlewood Lane
Concord, OH 44077
Any Party may change its address by giving notice to the other Party in
the manner herein provided. Any notice required or provided for by the terms of
this Agreement shall be in writing and shall be (a) sent by registered or
certified mail, return receipt requested, postage prepaid, (b) sent via a
reputable overnight courier service, or (c) sent by facsimile transmission with
an original to be followed the same day via a reputable overnight courier
service, in each case properly addressed in accordance with the paragraph above.
The effective date of notice shall be the actual date of receipt by the Party
receiving the same.
SECTION 10.6 FORCE MAJEURE. No failure or omission by the Parties in
the performance of any obligation of this Agreement shall be deemed a breach of
this Agreement or create any liability if the same shall arise from any cause or
causes beyond the control of the Parties, including, but not limited to, the
following: acts of God; acts or omissions of any government; any rules,
regulations or orders issued after the Execution Date by any governmental
authority or by any officer, department, agency or instrumentality thereof;
fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot;
and invasion and provided that such failure or omission resulting from one of
the above causes is cured as soon as is practicable after the occurrence of one
or more of the above-mentioned causes.
SECTION 10.7 PUBLIC ANNOUNCEMENTS. Any announcements or similar
publicity with respect to the execution of this Agreement or the Stock Purchase
Agreement shall be agreed upon among the Parties in advance of such announcement
as set forth herein. Either Party may make such public announcements with
respect hereto. The Parties agree that any such announcement shall not contain
Confidential Information and, if disclosure of Confidential Information is
required by law or regulation, shall make reasonable efforts to minimize such
disclosure and obtain confidential treatment for any such information which is
disclosed to a governmental agency or group. Each Party agrees to provide to the
other Party with a copy of any public announcement as soon as reasonably
practicable under the circumstances prior to its scheduled release. Except under
extraordinary circumstances, each Party shall provide the other with an advance
copy of any public announcement at least five (5) business days prior to the
scheduled disclosure. Each Party shall have the right to expeditiously review
and recommend changes to any announcement regarding this Agreement or the
subject matter of this Agreement, PROVIDED THAT such right of review and
recommendation shall only apply for the first time that specific information is
to be disclosed, and shall not apply to the subsequent disclosure of
substantially similar information that has previously been disclosed. Except as
otherwise required by law, the Party whose public announcement has been reviewed
shall remove or revise any information the reviewing Party reasonably deems to
be inappropriate for disclosure.
SECTION 10.8 INDEPENDENT CONTRACTORS. It is understood and agreed that
the relationship between the Parties hereunder is that of independent
contractors and
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that nothing in this Agreement shall be construed as authorization for either
MPMx or Becton Dickinson to act as agent for the other. The Program Directors
and members of Project Teams shall remain employees of Becton Dickinson or MPMx,
as the case may be.
SECTION 10.9 NO STRICT CONSTRUCTION. This Agreement has been prepared
jointly and shall not be strictly construed against any Party.
SECTION 10.10 HEADINGS. The captions or headings of the sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.
SECTION 10.11 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the
part of MPMx or Becton Dickinson to exercise, and no delay in exercising, any
right, power, remedy or privilege under this Agreement, or provided by statute
or at law or in equity or otherwise, shall impair, prejudice or constitute a
waiver of any such right, power, remedy or privilege or be construed as a waiver
of any breach of this Agreement or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power, remedy or privilege.
SECTION 10.12 SEVERABILITY. If any provision hereof should be held
invalid, illegal or unenforceable in any respect in any jurisdiction, then, to
the fullest extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the Parties as nearly as may
be possible and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction.
SECTION 10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed
in counterparts, each of which counterparts, when so executed and delivered,
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
SECTION 10.14 HSR FILING. As soon as practicable after the Execution
Date, each of Becton Dickinson and MPMx shall promptly file any Notification and
Report Forms and related materials that either such Party may be required to
file with the FTC and the DOJ under the HSR Act, shall seek to obtain an early
termination of the applicable waiting period, and shall promptly make any
further filings or information submissions pursuant thereto, or responses to
requests to additional information thereunder, that may be necessary, proper or
advisable.
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[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.
MILLENNIUM PREDICTIVE MEDICINE, INC.
By: /s/ Kenneth J. Connroy
----------------------------------------
Name: Kenneth J. Connroy
Title: President
By: /s/ Lawrence W. Reid
----------------------------------------
Name: L. Reid
Title: Senior Director, Research and
Development
BECTON, DICKINSON AND COMPANY
By: /s/ Vincent Forlenza
----------------------------------------
Name: Vincent Forlenza
Title: Senior Vice President
By: /s/ Deborah J. Neff
----------------------------------------
Name: Deborah J. Neff
Title: President-BDB
Millennium Pharmaceuticals, Inc. hereby agrees to (a) fulfill its obligations
under Section 2.1(c), and (b) for so long as MPMx remains an Affiliate of MPI,
unconditionally guarantee the obligations and liabilities of MPMx under this
Agreement. MPI hereby acknowledges and agrees that (i) MPMx and Becton Dickinson
may amend or modify this Agreement without the requirement of providing notice
of such amendment or modification to MPI or of obtaining MPI's consent thereto
and (ii) Becton Dickinson shall be entitled to interact and deal with MPMx on
all matters relating to this Agreement (and any modifications or amendments
hereto) without regard to the guaranty made by MPI hereunder, and that in each
such case, the obligations and liabilities of MPI under this guaranty shall not
be released or otherwise affected or impaired as a result thereof.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Mark Levin
-----------------------------------------
Name: Mark Levin
Title: CEO
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT A
NON-COLON PRODUCT AREAS
Disease Area Staging Product Screening Product
------------ --------------- -----------------
[**] [**] [**]
- --------------------------------------------------------------------------------
[**] [**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
[**] [**]
- --------------------------------------------------------------------------------
An "x" indicates an Exclusive Product Area as of the Execution Date.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT B
RESEARCH AND DEVELOPMENT PLAN
The goals of the program are to develop more effective cancer screening
tools, diagnostic staging assays, and diagnostic tools to direct the appropriate
regime of chemotherapy. The goal of screening assays is to identify disease in
the absence of clinical symptoms. The test will likely be an immunochemistry
test for the detection of circulating shedded antigens and the determination of
the tissue of origin. The goal of staging assays is to provide accurate staging
and assessment of aggressiveness to determine the course of therapy. The goal of
chemoprediction assays is to identify effective therapy of the diagnosed cancer.
The specific program milestones are to discover novel genetic markers,
validate the clinical utility of the markers, submit for regulatory approval and
commercialize as diagnostic and pharmacogenomic tests. MPMx will discover the
markers and validate the clinical efficacy. The development of the assay in a
homebrew format may be done by MPMx or Becton Dickinson, dependent of the
particular product. Becton Dickinson will develop the assay in a commercial
format, conduct clinical trials in support of regulatory approval and
commercialize the assay.
GENERAL PROGRAM TASKS AND MILESTONES
[**].
Milestones by Phase are:
PHASE 0:
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
PHASE 1:
- [**]
- [**]
- [**]
- [**]
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
PHASE 2:
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
PHASE 3:
- [**]
- [**]
- [**]
- [**]
- [**]
- [**]
PHASE 4:
- [**]
- [**]
- [**]
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT C
YEAR [**] MILESTONE
a. YEAR [**] MILESTONE COMPOSITION.
i. The Year [**] Milestone consists of [**] all more
fully described below. Successful achievement of the Year [**] Milestone by MPMx
shall occur once it has been determined that all the requirements for each
component ("Requirements") have been met by [**].
ii. Specific Components of the Year [**] Milestone.
(a) [**]
(i) The Requirements for fulfilling the
[**] shall consist of subsections(a)(ii) - (A), (B), (C), (a)(iii), (a)(iv),
(a)(v), and (a)(vi) below.
(ii) At least [**] of the overall total
projects in the Exclusive Product Area(s) [**] initiated during the [**] being
referred to herein, as "Successful Projects") shall have met the following
achievements:
(A) [**];
(B) [**] Product.
(C) [**] Product.
(iii) [**] PROVIDED, HOWEVER, that [**];
(iv) For projects in [**] of MPMx's
research milestones [**] set forth in the Research Plans [**];
(v) [**] the [**] by the Joint Steering
Committee for such Research Plans.
(vi) [**] agreed to by the Joint
Steering Committee for the Research Plans for such Products.
(b) [**]
(i) The Requirements for fulfilling the
[**] shall consist of subsections (b)(ii) and (b)(iii) below.
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
(ii) [**] under the Research Program
have been [**].
(iii) [**] under the Research Program
have [**].
(c) [**]
(i) The Requirements for fulfilling the
II shall consist of subsections (c)(ii) - (iii) below.
(ii) No later than [**], the Parties
shall by mutual agreement [**] of the [**]. Specifically, the [**] shall include
an [**] and for which Research Plans [**].
(iii) In the event that [**].
b. ADJUSTMENTS [**]
Notwithstanding anything to the contrary in this Exhibit C, as
a condition precedent to MPMx's timely performance of its obligations with
respect to the [**] as described in each Research Plan [**] for such
Requirements [**].
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EXHIBIT D
FORM OF CONVERTIBLE NOTE
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Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks denote omissions.
EXHIBIT E
RESEARCH FUNDING PAYMENTS
FOR FIRST CONTRACT YEAR
PAYMENT TO BE AMOUNT OF
PERIOD MADE ON OR BEFORE PAYMENT
---------------------- -------------------- ---------
FIRST CONTRACT QUARTER WITHIN 10 DAYS AFTER [**]
EFFECTIVE DATE
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
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EXHIBIT F
ALTERNATIVE DISPUTE RESOLUTION PROCEDURES
a. To begin an ADR proceeding, a Party shall provide written
notice to the other Party of the issues to be resolved by ADR. Within fourteen
(14) days after its receipt of such notice, the other Party may, by written
notice to the Party initiating the ADR, add additional issues subject to ADR
pursuant to Section 9.1 to be resolved within the same ADR.
b. Within twenty-one (21) days following receipt of the original
ADR notice, the Parties shall select a mutually acceptable neutral party to
preside in the resolution of any disputes in this ADR proceeding. If the Parties
are unable to agree on a mutually acceptable neutral party within such period, a
Party may request the President of the CPR Institute for Dispute Resolution
("CPR"), 366 Madison Avenue, 14th Floor, New York, New York 10017, to select a
neutral party pursuant to the following procedures:
i. The CPR shall submit to the Parties a list of not
less than five (5) candidates within fourteen (14) days after receipt of the
request, along with a Curriculum Vitae for each candidate. No candidate shall be
an employee, director or shareholder of a Party or any of their Affiliates.
ii. Such list shall include a statement of disclosure by
each candidate of any circumstances likely to affect his or her impartiality.
iii. Each Party shall number the candidates in order of
preference (with the number one (1) signifying the greatest preference) and
shall deliver the list to the CPR within seven (7) days following receipt of the
list of candidates. If a Party believes a conflict of interest exists regarding
any of the candidates, that Party shall provide a written explanation of the
conflict to the CPR along with its list showing its order of preference for the
candidates. Any Party failing to return a list of preferences on time shall be
deemed to have no order of preference.
iv. If the Parties collectively have identified fewer
than three (3) candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral party the candidate for whom Becton Dickinson on the
one hand, and MPMx on the other hand, have indicated the greatest preference. If
a tie should result between two candidates, the CPR may designate either
candidate. If the Parties collectively have identified three (3) or more
candidates deemed to have conflicts, the CPR shall review the explanations
regarding conflicts and, in its sole discretion, may either (i) immediately
designate as the neutral party the candidate for whom the Parties collectively
have indicated the greatest preference, or (ii) issue a new list of not less
than five (5) candidates, in which case the procedures set forth in subsection
b(i)-(iv) shall be repeated.
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c. No earlier than twenty-eight (28) days or later than fifty-six
(56) days after selection, the neutral party shall hold a hearing to resolve
each of the issues identified by the Parties. The ADR proceeding shall take
place at a location agreed upon by the Parties. If the Parties cannot agree, the
neutral party shall designate a location other than the principal place of
business of either Party or any of their Affiliates.
d. At least seven (7) days prior to the hearing, each Party shall
submit the following to the other Party and the neutral party:
i. a copy of all exhibits on which such Party intends to
rely in any oral or written presentation to the neutral party;
ii. a list of any witnesses such Party intends to call at
the hearing, and a short summary of the anticipated testimony of each witness;
iii. a proposed ruling on each issue to be resolved,
together with a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any recitation of the
facts or any legal arguments and shall not exceed one (1) page per issue.
iv. a brief in support of such Party's proposed rulings
and remedies, provided that the brief shall not exceed twenty (20) pages. This
page limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
Consistent with subsections d(i)-(iv), the neutral party shall
establish the rules for discovery, including depositions, interrogatories,
requests for admissions, or production of documents.
e. The hearing shall be conducted on two (2) consecutive days and
shall be governed by the following rules:
i. Each Party shall be entitled to five (5) hours of
hearing time to present its case. The neutral party shall determine whether each
Party has had the five (5) hours to which it is entitled.
ii. Each Party shall be entitled, but not required, to
make an opening statement, to present regular and rebuttal testimony, documents
or other evidence, to cross-examine witnesses, and to make a closing argument.
Cross- examination of witnesses shall occur immediately after their direct
testimony, and cross-examination time shall be charged against the party
conducting the cross- examination.
iii. The Party initiating the ADR shall begin the hearing
and, if it chooses to make an opening statement, shall address not only issues
it raised but
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Exhibit 10.2
AMENDED AND RESTATED RIGHTS EXCHANGE AGREEMENT
This Amended and Restated Agreement is effective as of February 1, 1999
(the "Effective Date") by and between Millennium Pharmaceuticals, Inc., a
Delaware corporation having its principal office at 640 Memorial Drive,
Cambridge, Massachusetts 02139-4815 ("MPI"), and Millennium Predictive Medicine,
Inc., a Delaware corporation having its principal place of business at 640
Memorial Drive, Cambridge, Massachusetts 02139-4815 ("MPMx").
INTRODUCTION
1. MPI is engaged in the discovery and development of pharmaceutical
products, and has entered into a number of collaboration agreements with
pharmaceutical companies relating to such discovery and development activities.
2. MPI has established MPMx as a subsidiary and, pursuant to a Technology
Transfer and License Agreement of even date herewith, has transferred and/or
licensed certain technology to MPMx in exchange for, among other consideration,
the issuance of 6,250,000 shares of Series A Convertible Preferred Stock of
MPMx.
3. MPMx has been established in order to pursue the identification,
discovery, research, development and commercialization of products and services
in the MPMx Core Field (as defined below).
4. MPI has agreed to transfer and assign to MPMx certain existing and
future rights that it may develop or acquire in the MPMx Core Field and MPMx
wishes to accept such assignment.
5. MPMx has agreed to transfer and assign to MPI certain existing and
future rights that it may develop or acquire in the MPI Core Field (as defined
below) and MPI wishes to accept such assignment.
NOW THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, MPI and MPMx hereby agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
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1.1 AGREEMENT, PARTY AND OTHER GENERAL TERMS.
"AFFILIATE" means any corporation, company partnership, joint venture
and/or firm which controls, is controlled by or is under common control with a
Party. For the purposes of this definition, "control" shall mean, (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
"AGREEMENT TERM" means the period commencing on the Effective Date and
ending on the later of (a) the fifth anniversary of the Effective Date and (b)
the date on which MPMx ceases to be an Affiliate of MPI.
"COLLABORATIVE PARTNER" means a party (other than MPI or an MPI Subsidiary
or MPMx) to an MPI Collaboration Agreement or an MPMx Collaboration Agreement.
"CONFIDENTIAL INFORMATION" means all trade secrets or confidential or
proprietary information designated as such in writing, whether by letter or by
the use of an appropriate proprietary stamp or legend, prior to or at the time
any such trade secret or confidential or proprietary information is disclosed to
the receiving Party. Notwithstanding the foregoing, information which is orally
or visually disclosed to the receiving Party, or is disclosed in writing without
an appropriate letter, proprietary stamp or legend, shall constitute
Confidential Information if (i) it would be apparent to a reasonable person,
familiar with the business and the industry of the disclosing Party, that such
information is of a confidential or proprietary nature the maintenance of which
is important to the disclosing Party or if (ii) the disclosing Party, within
thirty (30) days after such disclosure, delivers to the receiving Party a
written document or documents describing such information and referencing the
place and date of such oral, visual or written disclosure and the names of the
employees or officers.
"FAMILY COUNCIL" means a governing body consisting of the chief executive
officer, chief business officer, chief financial officer and general counsel of
MPI (to the extent such offices are filled), any additional employees of MPI as
may be selected by the chief executive officer of MPI, the senior executive
officer of each MPI Subsidiary so long as such MPI Subsidiary remains an
Affiliate of MPI, and the senior executive officer of MPMx so long as MPMx
remains an Affiliate of MPI. Each of the foregoing representatives shall have
the right to invite one additional non-voting designee to attend meetings of the
Family Council.
"FULLY-LOADED COST" means (a) costs directly attributable to an activity
(i.e., those costs which vary with such activity), including, but not limited
to, direct labor and benefit expenses for such activity and consumable bulk and
other materials, plus (b) fixed overhead costs allocable to the activity,
including, but not limited to, direct benefit and labor expenses for technical
services and support services, rent, utilities, building supplies, depreciation,
maintenance and repairs and
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<PAGE> 3
insurance costs associated with such activity, plus (c) a percentage of indirect
overhead costs allocable to the activity, including, but not limited to,
consulting costs, lab supplies and services, information systems, equipment
service, safety compliance, applicable license fees and collaborative expenses.
"MPI SUBSIDIARY" shall mean a subsidiary established by MPI to operate
within all or any portion of the MPI Core Field.
"PARTY" means MPI or MPMx; "PARTIES" means MPI and MPMx.
"PERSON" means any individual, partnership, corporation, firm, association,
unincorporated organization, joint venture, trust or other entity.
"TECHNOLOGY TRANSFER AND LICENSE AGREEMENT" means the Technology Transfer
and License Agreement between MPI and MPMx of even date herewith.
1.2 SCIENTIFIC AND PRODUCT TERMS.
"DIAGNOMICS" means products and services used to describe a patient's
medical condition in a form or manner which has inherent prognostic, therapeutic
or economic benefit.
"DIAGNOMIC AND PHARMACOGENOMIC DATABASES" means compilations of data and
other information for Diagnomic and Pharmacogenomic purposes. Diagnomic and
Pharmacogenomic Databases shall not include compilations of data and other
information which relate to MPI's (or, if so authorized by MPI, an MPI
Subsidiary's) development and/or commercialization of products or services in
the MPI Core Field.
"DIAGNOMIC AND PHARMACOGENOMIC PROCESS TECHNOLOGY" means technology which
is related to or necessary for the generation and interpretation of Diagnomic
and Pharmacogenomic Databases and/or the use of Diagnomic and Pharmacogenomic
Software.
"DIAGNOMIC AND PHARMACOGENOMIC SOFTWARE" means software for the generation
and interpretation of Diagnomic and Pharmacogenomic Databases including, but not
limited to, software used in connection with Patient Management Services.
"DIAGNOSTIC PRODUCTS" means any product which is offered, or is reasonably
intended by MPMx to be offered, for sale to third parties (e.g., testing
laboratories, physicians, hospitals and patients) pursuant to an arms-length
transaction, in the form of a device, compound or kit, that is used to identify
patients having a particular disease or predisposition to a disease and/or to
monitor the course, prognosis or recurrence of such disease in such patients.
"DIAGNOSTIC PRODUCTS/TESTING SERVICES RESEARCH AND DEVELOPMENT SERVICES"
means any research and development service which is provided, or is reasonably
intended by MPMx to be
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provided, to third parties (e.g., diagnostics development and manufacturing
companies) pursuant to an arms-length transaction in order to develop and/or
commercialize Diagnostic Products or Diagnostic Testing Services.
"DIAGNOSTIC TESTING SERVICES" means any testing service which is provided,
or is reasonably intended by MPMx to be provided, to third parties (e.g.,
physicians, hospitals and patients) pursuant to an arms-length transaction, in
order to identify patients having a particular disease or predisposition to a
disease and/or to monitor the course, prognosis or recurrence of such disease in
such patients.
"MPMx PRODUCTS" means Diagnomic and Pharmacogenomic Databases, Diagnomic
and Pharmacogenomic Process Technology, Diagnomic and Pharmacogenomic Software,
Diagnostic Products and Pharmacogenomic Products.
"MPMx SERVICES" means Diagnostic Products/Testing Services Research and
Development Services, Diagnostic Testing Services, Patient Management Services,
Pharmacogenomics-Mediated Drug Research and Development Services,
Pharmacogenomic Products/Testing Services Research and Development Services and
Pharmacogenomic Testing Services.
"PATIENT MANAGEMENT SERVICES" means the provision of medical practice
guidelines based on Diagnomics and Pharmacogenomics.
"PHARMACOGENOMICS" means the correlation, based on analysis of animal
and/or human tissue (including, without limitation, cell lines), of a biological
marker (e.g., DNA, RNA or protein) with measurements of the safety and/or
efficacy of a preventative and/or therapeutic substance or candidate.
"PHARMACOGENOMICS-MEDIATED DRUG RESEARCH AND DEVELOPMENT SERVICES" OR
"PMDRDS" means any research and development service which is provided, or is
reasonably intended by MPMx to be provided, to third parties engaged in
developing therapeutic and/or preventative products (e.g., biotechnology and
pharmaceutical companies) pursuant to an arm's-length transaction in order to
assess on behalf of any such third party the Pharmacogenomic properties of an
existing candidate therapeutic or preventative product or an existing
therapeutic or preventative product being developed by such third party.
Pharmacogenomics-Mediated Drug Research and Development Services shall not
include the provision of research and development services in order to discover
or identify candidate therapeutic or preventative products.
"PHARMACOGENOMIC PRODUCTS" means any product which is offered, or is
reasonably intended by MPMx to be offered, for sale to third parties (e.g.,
testing laboratories, physicians and hospitals) pursuant to an arms-length
transaction, in the form of a device, compound or kit, that is used to identify
patients (e.g., the genetic disaggregation of patient populations) based on
their response to a pharmaceutical compound.
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"PHARMACOGENOMIC PRODUCTS/TESTING SERVICES RESEARCH AND DEVELOPMENT
SERVICES" OR "PPTSRDS" means any research and development service which is
provided, or is reasonably intended by MPMx to be provided, to third parties
(e.g., diagnostic development and manufacturing companies) pursuant to an
arms-length transaction in order to develop and/or commercialize Pharmacogenomic
Products or Pharmacogenomic Testing Services. Pharmacogenomic Products/Testing
Services Research and Development Services shall not include the provision of
research and development services in order to discover or identify candidate
therapeutic or preventative products or the provision of
Pharmacogenomics-Mediated Drug Research and Development Services.
"PHARMACOGENOMIC TESTING SERVICES" means any testing service which is
provided, or is reasonably intended by MPMx to be provided, to third parties
(e.g., pharmaceutical companies, clinical research organizations, physicians and
hospitals) pursuant to an arms-length transaction, in order to identify patients
(e.g., the genetic disaggregation of patient populations) based on their
response to a pharmaceutical compound.
1.3 FIELD, PATENT, RETAINED RIGHT AND TECHNOLOGY TERMS.
"MPI COLLABORATION AGREEMENTS" means the MPI Existing Collaboration
Agreements and the MPI Future Collaboration Agreements.
"MPI CORE FIELD" shall mean the identification, discovery, research,
development and commercialization of all products and services outside of the
MPMx Core Field. MPI may assign all or any portion of the MPI Core Field to an
MPI Subsidiary.
"MPI EXISTING COLLABORATION AGREEMENTS" means the agreements (as the same
may be amended from time to time) listed in EXHIBIT A to this Agreement.
"MPI FUTURE COLLABORATION AGREEMENTS" means collaboration agreements,
strategic alliances, license agreements and similar arrangements (as the same
may be amended from time to time) entered into by MPI or an MPI Subsidiary from
time to time during the Agreement Term pursuant to which, and to the extent
that, MPI or the MPI Subsidiary retains or obtains research, development or
commercialization rights in the MPMx Core Field.
"MPI RETAINED RIGHTS" shall mean all research, development and
commercialization rights, if any, retained by MPI or an MPI Subsidiary in the
MPMx Core Field pursuant to the MPI Collaboration Agreements.
"MPMx COLLABORATION AGREEMENTS" means collaboration agreements, strategic
alliances, license agreements and similar arrangements (as the same may be
amended from time to time) entered into by MPMx during the Agreement Term,
pursuant to which, and to the extent that,
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MPMx retains or obtains research, development or commercialization rights in the
MPI Core Field.
"MPMx CORE FIELD" means the identification, discovery, research,
development and commercialization of MPMx Products and MPMx Services.
"MPMx RETAINED RIGHTS" means all research, development and
commercialization rights, if any, retained by MPMx in the MPI Core Field
pursuant to the MPMx Collaboration Agreements.
"PROCESS TECHNOLOGY" means methods, systems, programs, technology,
algorithms and software (including source code), together with all unpatentable
intellectual property related thereto (including, without limitation, know-how,
trade secrets and copyrights), for the identification, discovery, research,
development and/or production of products and services in the MPI Core Field
and/or the MPMx Core Field. Examples of Process Technology include, without
limitation, DNA sequencing technologies, transcriptional profiling, genotyping
technologies, protein analytics, methods for screening small molecule libraries,
methods for automating and increasing throughput of process technologies,
software systems for the control and management of automated process
technologies, and software systems for DNA sequencing analysis, transcriptional
profiling, genotyping analysis, protein profiling analysis and drug discovery
informatics.
"PRODUCT TECHNOLOGY" means technology in the form of biological materials
and chemical compounds and the data relating thereto, together with all
unpatentable intellectual property related thereto (including, without
limitation, know-how, trade secrets and copyrights), that directly relates to
the development, manufacture and/or commercialization of a product or service in
the MPI Core Field and/or the MPMx Core Field. Product Technology shall exclude
Process Technology. Examples of Product Technology include, without limitation,
genes, gene fragments, proteins, peptides, vectors, cell lines, cells, small
molecules and natural product compounds and libraries.
SECTION 2. CORE FIELD OPPORTUNITIES
(a) MPMx CORE FIELD. MPMx and MPI agree that MPMx has been
organized in order to operate in the MPMx Core Field. Except as provided in
subsections (c) and (d) below, MPI hereby agrees that it shall transfer, assign
and/or license to MPMx or otherwise make available to MPMx, all product and
service development opportunities and other technology rights developed or
acquired or otherwise controlled by MPI during the Agreement Term to the extent
applicable to the MPMx Core Field, including, but not limited to, the transfer
and assignment of MPI Retained Rights pursuant to Section 3 below. In addition,
MPI agrees that it will contractually require each MPI Subsidiary, until such
time as it is no longer an Affiliate of MPI and except as provided in
subsections (c) and (d) below, to transfer, assign and/or license to MPMx
(either directly
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or through MPI), or to otherwise make available to MPMx (either directly or
through MPI), all product and service development opportunities and other
technology rights developed or acquired or otherwise controlled by such MPI
Subsidiary during the Agreement Term to the extent applicable to the MPMx Core
Field, including, but not limited to, the transfer and assignment of MPI
Retained Rights. Except as provided in subsections (c) and (d) below, MPI shall
not engage in the development or commercialization of products in the MPMx Core
Field during the Agreement Term without the prior written consent of MPMx. In
addition, MPI agrees that it will contractually prohibit each MPI Subsidiary,
until such time as it is no longer an Affiliate of MPI and except as provided in
subsections (c) and (d) below, from engaging in the development or
commercialization of products and services in the MPMx Core Field during the
Agreement Term without the prior written consent of MPMx.
(b) MPI CORE FIELD. MPI and MPMx agree that MPI's business is
the MPI Core Field. Except as provided in subsections (c) and (d) below, MPMx
hereby agrees that it shall transfer, assign and/or license to MPI (or, at the
request of MPI, the MPI Subsidiary whose core field is involved), or to
otherwise make available to MPI (or, at the request of MPI, the MPI Subsidiary
whose core field is involved), all product and service development opportunities
and other technology rights developed or acquired or otherwise controlled by
MPMx during the Agreement Term to the extent applicable to the MPI Core Field,
including, but not limited to, the transfer and assignment of MPMx Retained
Rights pursuant to Section 4 below. Except as provided in subsections (c) and
(d) below, MPMx shall not engage in the development or commercialization of
products or services in the MPI Core Field during the Agreement Term without the
prior written consent of MPI.
(c) OVERRIDE RIGHTS. MPI recognizes that MPMx intends, and MPMx
recognizes that MPI and the MPI Subsidiaries intend, to enter into collaboration
agreements, strategic alliances, license agreements and similar arrangements
with Collaborative Partners ("Collaboration Agreements"). MPI agrees to use
commercially reasonable efforts in negotiating such arrangements (and any
amendments to such arrangements) to limit the licenses and rights granted to a
Collaborative Partner to the MPI Core Field and agrees to contractually require
each MPI Subsidiary, until such time as it is no longer an Affiliate of MPI, to
use commercially reasonable efforts in negotiating such arrangements (and any
amendments thereto) to limit the licenses and rights granted to a Collaborative
Partner to the MPI Core Field. Similarly, MPMx agrees to use commercially
reasonable efforts in negotiating such arrangements (and any amendments thereto)
to limit the licenses and rights granted to a Collaborative Partner to the MPMx
Core Field. Notwithstanding the foregoing:
(i) MPI/MPI SUBSIDIARY OVERRIDE RIGHTS.
(x) in the event that MPI or an MPI Subsidiary, in
negotiating a Collaboration Agreement, or an amendment to a Collaboration
Agreement, believes in good faith that the failure to include in such agreement
or amendment rights and licenses to Product Technology developed or acquired
pursuant to the Collaboration Agreement or the amendment thereto for use in the
MPMx Core Field would have a material impact on the willingness of the
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Collaborative Partner to enter into a Collaboration Agreement, an amendment
thereto, or the financial terms thereof; and
(y) the grant of such rights and licenses to the
Collaborative Partner would not constitute a breach by MPMx of any MPMx
Collaboration Agreement, or a breach by MPI (or by any MPI Subsidiary) of any
contractual obligations in such Collaboration Agreement made by it to MPMx's
Collaborative Partner; then
MPI or the MPI Subsidiary, as applicable, shall have the right
to enter into such Collaboration Agreement and/or amendment thereof and the
provisions of subsection (a) above shall not apply to the licenses and rights so
granted, provided that the conditions of subsection (d) below are met and the
grant of such licenses and rights outside the MPI Core Field is incidental to
(that is, not the primary purpose of) a bona fide agreement or amendment
pertaining to the MPI Core Field.
(ii) MPMx OVERRIDE RIGHTS.
(x) in the event that MPMx, in negotiating a
Collaboration Agreement, or an amendment to a Collaboration Agreement, believes
in good faith that the failure to include in such agreement or amendment rights
and licenses to Product Technology developed or acquired pursuant to the
Collaboration Agreement or amendment thereto for use in the MPI Core Field would
have a material impact on the willingness of the Collaborative Partner to enter
into a Collaboration Agreement, an amendment thereto, or the financial terms
thereof; and
(y) the grant of such rights and licenses to the
Collaborative Partner would not constitute a breach by MPI (or any MPI
Subsidiary) of any MPI or MPI Subsidiary Collaboration Agreement, or a breach by
MPMx of any contractual obligations in such Collaboration Agreement made by it
to MPI's (or such MPI Subsidiary's) Collaborative Partner; then
MPMx shall have the right to enter into such Collaboration
Agreement and/or amendment thereof and the provisions of subsection (b) above
shall not apply to the licenses and rights so granted, provided that the
conditions of subsection (d) below are met and the grant of such licenses and
rights outside the MPMx Core Field is incidental to (that is, not the primary
purpose of) a bona fide agreement or amendment pertaining to the MPMx Core
Field.
(d) CONDITIONS TO OVERRIDE.
(i) EXERCISE BY MPI. In the event that MPI desires to
exercise the override right set forth in subsection (c) above with respect to
the MPMx Core Field, MPI shall notify MPMx in writing, discuss on an expedited
basis with MPMx the facts relating to the proposed Collaboration Agreement
and/or amendment thereof, and, to the extent feasible and appropriate, involve
MPMx in negotiations with the Collaborative Partner. In addition, MPI shall
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contractually require each MPI Subsidiary, until such time as it is no longer an
Affiliate of MPI, in the event that it desires to exercise the override right
set forth in subsection (c) above with respect to the MPMx Core Field, to notify
MPMx in writing, discuss on an expedited basis with MPMx the facts relating to
the proposed Collaboration Agreement and/or amendment thereof, and, to the
extent feasible and appropriate, involve MPMx in negotiations with the
Collaborative Partner. Notwithstanding anything contained in this Agreement to
the contrary, MPI shall not amend an MPI Collaboration Agreement in a manner
which would constitute an exercise of the override right set forth in subsection
(c) above without MPMx's prior written consent; in addition, MPI shall
contractually prohibit each MPI Subsidiary, until such time as it is no longer
an Affiliate of MPI, from amending a Collaboration Agreement in a manner which
would constitute an exercise of the override right set forth in subsection (c)
above without MPMx's prior written consent.
(ii) EXERCISE BY MPMx. In the event that MPMx desires to
exercise the override right set forth in subsection (c) above with respect to
the MPI Core Field, MPMx shall notify MPI (or, at the request of MPI, the MPI
Subsidiary whose core field is involved) in writing, discuss on an expedited
basis with MPI (or, at the request of MPI, the MPI Subsidiary whose core field
is involved) the facts relating to the proposed Collaboration Agreement and/or
amendment thereof, and, to the extent feasible and appropriate, involve MPI (or,
at the request of MPI, the MPI Subsidiary whose core field is involved) in
negotiations with the Collaborative Partner. Notwithstanding anything contained
in this Agreement to the contrary, MPMx shall not amend an MPMx Collaboration
Agreement in a manner which would constitute an exercise of the override right
set forth in subsection (c) above without MPI's (or, if an MPI Subsidiary's core
field is involved, such MPI Subsidiary's) prior written consent.
(iii) EXERCISE BY EITHER MPI OR MPMx. In the event that
MPI or an MPI Subsidiary or MPMx exercises the override right set forth in
subsection (c) above, such party shall provide compensation to the party whose
core field is involved. Such compensation shall be negotiated in good faith by
the parties involved and MPI shall contractually require each MPI Subsidiary,
until such time as it is no longer an Affiliate of MPI, to so negotiate.
(e) OTHER EXCEPTIONS TO RIGHTS OF MPMx. Although the MPMx Core
Field includes the provision of PMDRDS, MPI (or, if authorized by MPI, an MPI
Subsidiary) may engage in the discovery, development and commercialization of
therapeutic and/or preventative products, and, in doing so, shall have the right
to use Pharmacogenomics as part of its overall drug research and development
methodologies, whether alone or in collaboration with third parties, so long as
MPI (or, if applicable, the MPI Subsidiary) is actively engaged in the
development and/or commercialization of the products as to which it chooses to
employ Pharmacogenomics. Additionally, MPI and MPMx recognize that Persons may
wish to engage MPMx for the provision of PMDRDS in connection with existing
candidate therapeutic or preventative products or existing therapeutic or
preventative products which are, in MPI's (or, if applicable, the MPI
Subsidiary's) reasonable opinion, competitive with candidate therapeutic or
preventative products or therapeutic or preventative products under development
by MPI (or, if applicable, the MPI Subsidiary), whether alone or in
collaboration with third parties ("Competitive Products"). In the
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event that MPMx desires to provide PMDRDS to a Person for the purpose of
assessing the Pharmacogenomic properties of a Competitive Product which has not
yet advanced to the stage of clinical studies (and not with respect to a
Competitive Product which has advanced to the stage of clinical studies), MPMx
shall discuss with MPI (or, at the request of MPI, the MPI Subsidiary whose core
field is involved) the proposed transaction in advance in order to determine if
the provision of such PMDRDS by MPMx would have a material adverse affect on
MPI's business or, if applicable, the MPI Subsidiary's business. If, in MPI's
(or, if applicable, the MPI Subsidiary's) reasonable opinion, the provision of
such PMDRDS by MPMx would have a material adverse affect on MPI's business or,
if applicable, the MPI Subsidiary's business, MPMx shall not engage in the
provision of such PMDRDS.
(f) LIMITATIONS TO OVERRIDE. In the event that MPI exercises
the override right set forth in subsection (c) above, such exercise shall
pertain only to the grant of licenses and rights to MPI's Collaborative Partner,
and shall not be construed to permit MPI to collaborate with, or provide
services or assistance to, such Collaborative Partner with respect to the
development of Product Technology in the MPMx Core Field, without MPMx's prior
written consent. In addition, MPI shall contractually require of each MPI
Subsidiary, until such time as it is no longer an Affiliate of MPI, that in the
event it exercises the override right set forth in subsection (c) above, such
exercise shall pertain only to the grant of licenses and rights to the MPI
Subsidiary's Collaborative Partner, and shall not be construed to permit such
MPI Subsidiary to collaborate with, or provide services or assistance to, such
Collaborative Partner with respect to the development of Product Technology in
the MPMx Core Field, without MPMx's prior written consent. In the event that
MPMx exercises the override right set forth in subsection (c) above, such
exercise shall pertain only to the grant of licenses and rights to MPMx's
Collaborative Partner, and shall not be construed to permit MPMx to collaborate
with, or provide services or assistance to, such Collaborative Partner with
respect to the development of Product Technology in the MPI Core Field, without
MPI's (or, if applicable, an MPI Subsidiary's) prior written consent.
SECTION 3. TRANSFER OF MPI RETAINED RIGHTS
(a) MPI EXISTING COLLABORATION AGREEMENTS. MPI hereby transfers
and assigns to MPMx all MPI Retained Rights under the MPI Existing Collaboration
Agreements, subject to receipt of approvals and consents to such transfer and
assignment from the applicable Collaborative Partners (to the extent required
under the applicable MPI Existing Collaboration Agreements). MPI agrees to use
commercially reasonable efforts to obtain such approvals and consents as soon as
reasonably practicable following the Effective Date. By accepting the transfer
and assignment of MPI Retained Rights under each MPI Existing Collaboration
Agreement, MPMx agrees to perform all obligations, and to undertake all
responsibilities, financial or otherwise, relating to the exploitation of the
MPI Retained Rights.
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(b) OTHER MPI COLLABORATION AGREEMENTS. The Parties anticipate
that from time to time after the Effective Date and during the Agreement Term,
MPI and MPI Subsidiaries will enter into MPI Future Collaboration Agreements
with Collaborative Partners pursuant to which MPI Retained Rights may exist. MPI
hereby agrees to transfer and assign to MPMx all MPI Retained Rights under each
such MPI Future Collaboration Agreements, if any, and shall use commercially
reasonable efforts to include in each such MPI Future Collaboration Agreement
provisions enabling MPI to effect such transfer and assignment, or to obtain
such approval or consent thereafter. In addition, MPI shall contractually
require each MPI Subsidiary, until such time as it is no longer an Affiliate of
MPI, to transfer and assign to MPMx (either directly or indirectly through MPI)
all MPI Retained Rights under each MPI Future Collaboration Agreement entered
into by such MPI Subsidiary and shall contractually require each MPI Subsidiary,
until such time as it is no longer an Affiliate of MPI, to use commercially
reasonable efforts to include in each such MPI Future Collaboration Agreement
provisions enabling the MPI Subsidiary to effect such transfer and assignment,
or to obtain such approval or consent thereafter. By accepting the transfer and
assignment of MPI Retained Rights under each MPI Future Collaboration Agreement,
MPMx agrees to perform all obligations, and to undertake all responsibilities,
financial or otherwise, relating to the exploitation of the MPI Retained Rights.
(c) FAILURE TO OBTAIN APPROVAL AND CONSENT. In the event that
MPI or an MPI Subsidiary is unable to obtain any approval or consent required
from a Collaborative Partner in connection with the transfer and assignment of
MPI Retained Rights under any MPI Existing or Future Collaboration Agreement
(referred to as "Nonassigned MPI Retained Rights"), MPI shall, and shall
contractually require each such MPI Subsidiary to, in consultation with and at
the direction of MPMx, take such commercially reasonable actions as shall be
necessary to confer the benefits of any Nonassigned MPI Retained Rights to MPMx,
including undertaking research or development work, granting sublicenses to
relevant patent rights and know-how to MPMx or its designees and taking such
other reasonable actions as may be agreed upon by the parties, in all cases at
the expense of MPMx.
(d) DIRECT AGREEMENT. At MPI's or an MPI Subsidiary's request,
MPMx shall use commercially reasonable efforts to enter into an agreement
directly with MPI or the MPI Subsidiary and the Collaborative Partner with
respect to the MPI Retained Rights, on such terms as shall be mutually
agreeable.
(e) NO ADDITIONAL COMPENSATION. MPMx shall not be required to
account to MPI or an MPI Subsidiary with respect to its exploitation of the MPI
Retained Rights, and shall not be obligated to make any royalty or other
payments to MPI or an MPI Subsidiary relating thereto.
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SECTION 4. TRANSFER OF MPMx RETAINED RIGHTS
(a) MPMx COLLABORATION AGREEMENTS. The Parties anticipate that
from time to time from and after the Effective Date and during the Agreement
Term, MPMx will enter into MPMx Collaboration Agreements with Collaborative
Partners pursuant to which MPMx Retained Rights may exist. MPMx hereby agrees to
transfer and assign to MPI (or, at the request of MPI, the MPI Subsidiary whose
core field is involved) all MPMx Retained Rights under each such MPMx
Collaboration Agreement, if any, and shall use commercially reasonable efforts
to include in each such MPMx Collaboration Agreement provisions enabling MPMx to
effect such transfer and assignment, or to obtain such approval or consent
thereafter. By accepting the transfer and assignment of MPMx Retained Rights
under each MPMx Collaboration Agreement, MPI agrees to perform all obligations,
and to undertake all responsibilities, financial or otherwise, relating to the
exploitation of the MPMx Retained Rights. In addition, MPI agrees that it will
require each MPI Subsidiary, by accepting the transfer and assignment of MPMx
Retained Rights under each MPMx Collaboration Agreement, to agree to perform all
obligations, and to undertake all responsibilities, financial or otherwise,
relating to the exploitation of the MPMx Retained Rights.
(b) FAILURE TO OBTAIN APPROVAL AND CONSENT. In the event that
MPMx is unable to obtain any approval or consent required from a Collaborative
Partner in connection with the transfer and assignment of MPMx Retained Rights
under any MPMx Collaboration Agreement (referred to as "Nonassigned MPMx
Retained Rights"), MPMx shall, in consultation with and at the direction of MPI
(or, at MPI's request, the MPI Subsidiary whose core field is involved) take
such commercially reasonable actions as shall be necessary to confer the
benefits of any Nonassigned MPMx Retained Rights to MPI (or, at the request of
MPI, the MPI Subsidiary whose core field is involved) including undertaking
research and development work, granting sublicenses to relevant patent rights
and know-how to MPI (or, at the request of MPI, the MPI Subsidiary whose core
field is involved) or its designees and taking such other commercially
reasonable actions as may be agreed upon by the parties, in all cases at the
expense of MPI or the MPI Subsidiary whose core field is involved.
(c) DIRECT AGREEMENT. At MPMx's request, MPI shall use
commercially reasonable efforts to enter into an agreement directly with MPMx
and the Collaborative Partner with respect to the MPMx Retained Rights under a
MPMx Collaboration Agreement, on such terms as shall be mutually agreeable. In
addition, MPI agrees that it will contractually require each MPI Subsidiary, at
MPMx's request, to use commercially reasonable efforts to enter into an
agreement directly with MPMx and the Collaborative Partner with respect to the
MPMx Retained Rights, on such terms as shall be mutually agreed.
(d) NO ADDITIONAL COMPENSATION. Neither MPI nor an MPI
Subsidiary shall be required to account to MPMx with respect to its exploitation
of the MPMx Retained Rights and neither MPI nor an MPI Subsidiary shall be
obligated to make any royalty or other payments to MPMx relating thereto.
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SECTION 5. PROVISION OF CONTRACT RESEARCH SERVICES.
(a) MPMx PROVISION ON BEHALF OF MPI IN MPMx CORE FIELD. Except
for de minimus requirements, in the event that MPI requires the performance of
research services in the MPMx Core Field in order to support work being
conducted by it in the MPI Core Field (whether for itself or on behalf of a
Collaborative Partner), MPI, consistent with valid scientific and business
judgment, shall contract with MPMx for the provision of such research services.
In addition, except for de minimus requirements, MPI shall contractually require
each MPI Subsidiary in the event that it requires the performance of research
services in the MPMx Core Field in order to support work being conducted by it
in the MPI Core Field (whether for itself or on behalf of a Collaborative
Partner), consistent with valid scientific and business judgment, to contract
with MPMx for the provision of such research services. MPMx, consistent with
valid scientific and business judgment, shall provide such research services to
MPI and the MPI Subsidiaries..
(b) MPI PROVISION ON BEHALF OF MPMx IN MPI CORE FIELD. Except
for de minimus requirements, in the event that MPMx requires the performance of
research services in the MPI Core Field in order to support work being conducted
by it in the MPMx Core Field (whether for itself or on behalf of a Collaborative
Partner), MPMx, consistent with valid scientific and business judgment, shall
contract with MPI or the MPI Subsidiary whose core field is involved for the
provision of such research services. MPI, consistent with valid scientific and
business judgment, shall provide such research services to MPMx and shall
contractually require each MPI Subsidiary, consistent with valid scientific and
business judgment, to provide such services to MPMx.
(c) MPI PROVISION ON BEHALF OF MPMx IN MPMx CORE FIELD. In the
event that MPMx has insufficient internal resources (e.g., manpower or capacity)
to perform research services in the MPMx Core Field (whether for itself or on
behalf of a Collaborative Partner), MPMx shall, consistent with valid scientific
and business judgment, contract with MPI for the provision of such research
services, and MPI, consistent with valid scientific and business judgment, shall
provide such research services to MPMx.
(d) COMPENSATION FOR CONTRACT RESEARCH SERVICES. In general,
MPMx shall be reimbursed for its Fully-Loaded Cost associated with the rendering
of research services to MPI or an MPI Subsidiary and shall reimburse MPI and the
MPI Subsidiaries for their Fully-Loaded Cost associated with the rendering of
research services to MPMx. Notwithstanding the foregoing, in the event that the
provision of a certain type of research service constitutes an independent
service which is marketed and sold to third parties by MPI or an MPI Subsidiary
or by MPMx (including, without limitation, PMDRDS and PPTSRDS by MPMx), such
party shall be reimbursed at fair market value (or such other value as may be
mutually agreed upon by the parties) for the provision of such research
services.
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(e) OWNERSHIP OF TECHNOLOGY. With respect to the contract
research services contemplated in subsections (a)-(c) above, unless otherwise
mutually agreed, the party performing the research services shall solely own all
Process Technology developed by it and the party contracting for performance of
the research services shall solely own all Product Technology developed by the
performing party, provided that Product Technology which has application in the
core fields of both parties shall be jointly owned by the parties. The ownership
provisions set forth in this subsection (e) shall survive any expiration of the
Agreement Term.
(f) TERM. If MPMx ceases to be an Affiliate of MPI, the
provisions of subsections (a)-(d) shall cease to apply to MPMx, provided that
MPMx and MPI and the MPI Subsidiaries shall agree on terms for a transition
period not to exceed two (2) years. If an MPI Subsidiary ceases to be an
Affiliate of MPI, the provisions of subsections (a)-(d) shall cease to apply
with respect to such MPI Subsidiary, provided that MPMx, MPI and such MPI
Subsidiary shall agree on terms for a transition period not to exceed two (2)
years.
SECTION 6. CONFIDENTIAL INFORMATION.
6.1 CONFIDENTIAL INFORMATION. Any party receiving Confidential Information
shall maintain the confidential and proprietary status of such Confidential
Information, keep such Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any activity with respect
to the Confidential Information that is not specifically authorized by this
Agreement, use commercially reasonable efforts to prevent the disclosure of any
Confidential Information to any other Person, and use commercially reasonable
efforts to ensure that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however, that such
restriction shall not apply to any Confidential Information which is (a)
independently developed by the receiving party, (b) in the public domain at the
time of its receipt or thereafter becomes part of the public domain through no
fault of the receiving party, (c) received without an obligation of
confidentiality from a third party having the right to disclose such
information, (d) released from the restrictions of this Section 6.1 by the
express written consent of the disclosing party, (e) disclosed to any permitted
assignee, permitted sublicensee or permitted subcontractor of either MPI or MPMx
hereunder (if such assignee, sublicense or subcontractor is subject to the
provisions of this Section 6.1 or comparable provisions of such other
documents), or (f) required by law, statute, rule or court order to be disclosed
(the disclosing party shall, however, use commercially reasonable efforts to
obtain confidential treatment of any such disclosure).
6.2 EMPLOYEE OBLIGATIONS. MPI and MPMx each agree that it shall provide
Confidential Information received from the other Party only to its employees,
consultants and advisors who have a need to know and have an obligation to treat
such information and materials as confidential. Without limiting the generality
of the foregoing, MPI and MPMx each shall use commercially reasonable efforts to
obtain confidentiality agreements from its respective
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employees and agents, similar in scope to Section 6.1, to protect the
Confidential Information. Notwithstanding anything to the contrary herein, MPI
and MPMx shall each be deemed to have satisfied its obligations under Section
6.1 if it protects the Confidential Information of the other party with the same
degree of care that it uses to protect its own similar Confidential Information.
6.3 THIRD PARTY OBLIGATIONS. Each Party acknowledges that the other Party
may from time to time have agreements with other persons which impose
obligations or restrictions on such other Party with respect to the disclosure
or use of inventions or information relating to the subject matter of such
agreements ("Third Party Agreements"). Each Party agrees to be bound by all such
obligations and restrictions which are made known to it under Third Party
Agreements relating to Confidential Information.
6.4 PERMITTED DISCLOSURES. Notwithstanding the provisions of Section 6.1
hereof, MPI and MPMx may, to the extent necessary, disclose and use Confidential
Information, consistent with the rights of MPI and MPMx otherwise granted
hereunder (a) for the purpose of engaging in research and development,
conducting clinical testing and marketing programs, or securing institutional or
government approval to clinically test or market any product, (b) for the
purpose of sharing clinical trial results and data with third parties conducting
clinical trials on products arising from MPI Retained Rights or MPMx Retained
Rights, as applicable, (c) for the purpose of securing patent protection for an
invention arising from the exploitation of MPI Retained Rights or MPMx Retained
Rights, as applicable, (d) for the purpose of obtaining private investment, or
(e) for the purpose of discussing potential business and collaborative
relationships in each Party's core field.
6.5 TERM The obligations set forth in this Section 6 shall survive for a
period of five (5) years from the expiration of the Agreement Term. ----
SECTION 7. DISCLAIMER OF WARRANTY; CONSEQUENTIAL DAMAGES.
7.1 DISCLAIMER OF WARRANTY. Nothing in this Agreement shall be construed
as a representation made or warranty given by either party that the practice by
the other party of any rights transferred hereunder, or that the exploitation of
any MPI Retained Rights or MPMx Retained Rights, will not infringe the patent or
proprietary rights of any other Person. In addition, MPI and MPMx acknowledge
that THE MPI RETAINED RIGHTS AND MPMx RETAINED RIGHTS ARE TRANSFERRED, AS THE
CASE MAY BE, TO MPMx AND MPI, RESPECTIVELY, AS IS, AND MPI AND MPMx EXPRESSLY
DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO SUCH TECHNOLOGY, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. In turn, MPI
shall contractually require each MPI Subsidiary to acknowledge that MPMx makes
no representation or warranty that such MPI Subsidiary's practice of any rights
transferred to it hereunder or that such MPI Subsidiary's exploitation of any
MPMx Retained Rights will not
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infringe the patent or proprietary rights of any other Person, to acknowledge
that the MPMx Retained Rights are transferred to such MPI Subsidiary as is, and
to expressly disclaim and waive, release and renounce any warranty, express or
implied, with respect to such technology, including, without, any warranty of
merchantability or fitness for a particular purpose.
7.2 CONSEQUENTIAL DAMAGES. EXCEPT AS OTHERWISE SET FORTH HEREIN,
NEITHER PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO RECOVER FROM THE OTHER ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
SECTION 8. INDEMNIFICATION
8.1 INDEMNIFICATION BY MPI. MPI agrees to defend MPMx, at MPI's cost and
expense, and will indemnify and hold MPMx and its directors, officers, employees
and agents (the "MPMx Indemnified Parties") harmless from and against, any
losses, costs, damages, fees or expenses arising out of any claim relating to
personal injury from the exploitation by MPI or an MPI Subsidiary or their
licensees of the MPMx Retained Rights or other rights transferred by MPMx to MPI
or an MPI Subsidiary pursuant to Section 2, including the development,
manufacture, use, sale or other disposition of products or services resulting
therefrom. In the event of any such claim against the MPMx Indemnified Parties
by any party, MPMx shall promptly notify MPI in writing of the claim and MPI
shall manage and control, at its sole expense, the defense of the claim and its
settlement. The MPMx Indemnified Parties shall cooperate with MPI and may, at
their option and expense, be represented in any such action or proceeding. MPI
shall not be liable for any litigation costs or expenses incurred by the MPMx
Indemnified Parties or for any costs or expenses of settlements made by any MPMx
Indemnified Parties without MPI's prior written authorization. In addition, MPI
shall not be responsible for the indemnification of any MPMx Indemnified Party
arising from any negligent or intentional acts by such party.
8.2 INDEMNIFICATION BY MPMx. MPMx agrees to defend MPI, at MPMx's cost and
expense, and will indemnify and hold MPI and its directors, officers, employees
and agents (the "MPI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MPMx or its licensees of the MPI Retained Rights
or other rights transferred by MPI or an MPI Subsidiary to MPMx pursuant to
Section 2, including the development, manufacture, use, sale or other
disposition of products or services resulting therefrom. In the event of any
such claim against the MPI Indemnified Parties by any party, MPI shall promptly
notify MPMx in writing of the claim and MPMx shall manage and control, at its
sole expense, the defense of the claim and its settlement. The MPI Indemnified
Parties shall cooperate with MPMx and may, at their option and expense, be
represented in any such action or proceeding. MPMx shall not be liable for any
litigation costs or expenses incurred by the MPI Indemnified Parties or any
costs or expenses of settlements made by any MPI Indemnified Parties without
MPMx's prior written authorization. In
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addition, MPMx shall not be responsible for the indemnification of any MPI
Indemnified Party arising from any negligent or intentional acts by such party.
8.3 TERM The obligations set forth in this Section 8 shall survive any
expiration of the Agreement Term.
SECTION 9. GOVERNANCE.
(a) ROLE OF FAMILY COUNCIL. The relationship among MPMx, MPI and the MPI
Subsidiaries shall be guided by the Family Council. The purpose of the Family
Council shall be to provide guidance to MPMx, MPI and each of the MPI
Subsidiaries on matters relating to the definition of the MPMx Core Field, the
MPI Core Field and any portion of the MPI Core Field assigned to an MPI
Subsidiary, MPMx's proposed provision of PMDRDS in connection with a Competitive
Product which has not yet advanced to the stage of clinical studies, the
licensing of technology, the allocation and management of business opportunities
among MPMx, MPI and the MPI Subsidiaries, the allocation of compensation and
costs among MPMx, MPI and the MPI Subsidiaries, conflicts among MPMx, MPI and
the MPI Subsidiaries, and other related issues. The Family Council shall
endeavor to reach consensus on all conflicts brought before it by any of MPMx,
MPI or an MPI Subsidiary. To the extent that conflicts brought before the Family
Council specifically or disproportionately implicate the interests of MPMx, MPI
or an MPI Subsidiary, the Family Council shall be deferential to that entity's
recommendations consistent with MPI's overall business strategy. If the Family
Council cannot reach a consensus on any conflict brought before it, the conflict
shall be referred to the boards of directors of the parties involved.
(b) TERM. If MPMx ceases to be an Affiliate of MPI, subsection (a) above
shall cease to apply with respect to MPMx. If an MPI Subsidiary ceases to be an
Affiliate of MPI, subsection (a) above shall cease to apply with respect to such
MPI Subsidiary.
SECTION 10. GENERAL PROVISIONS
10.1 PRIOR AGREEMENTS WITH MPI SUBSIDIARIES. MPMx acknowledges that MPI
has entered into a Rights Exchange Agreement and Technology Transfer and License
Agreement with its subsidiary Millennium BioTherapeutics, Inc. ("MBio"). To the
extent that such agreements are not substantially consistent with MPI's
obligations to MPMx under this Agreement or the Technology Transfer and License
Agreement, MPI agrees to use commercially reasonable and diligent efforts to
amend such agreements (including obtaining any consents necessary to amend such
agreements) so that they are substantially consistent with MPI's obligations to
MPMx under this Agreement and the Technology Transfer and License Agreement. If,
despite such efforts, MPI is unable to so amend the agreements, the provisions
of this Agreement and the Technology Transfer and License Agreement shall
nevertheless continue to apply to the relationship among
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MPI, any other MPI Subsidiary and MPMx, and MPI shall not be deemed to be in
breach of this Agreement or the Technology Transfer and License Agreement.
10.2 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of
MPI or MPMx to exercise and no delay in exercising any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
10.3 FORCE MAJEURE. Neither Party to this Agreement shall be responsible
to the other Party for nonperformance or delay in performance of the terms or
conditions of the Agreement due to acts of God, acts of governments, war, riots,
strikes, accidents in transportation, or other causes beyond the reasonable
control of such Party.
10.4 COOPERATION. Each party agrees to cause each of its employees and
agents to take all actions and to execute, acknowledge and deliver all
instruments or agreements reasonably requested by the other party, and necessary
for the perfection, maintenance, enforcement or defense of that party's rights
as set forth herein.
10.5 NOTICES. All notices, requests and other communications to MPI or
MPMx hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission or by certified mail, return receipt requested, postage prepaid, in
each case to the respective address specified below (or to such other address as
may be specified in writing to the other party hereto):
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
ATTENTION: Chief Business Officer (with a copy to Legal Department)
Millennium Predictive Medicine, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
ATTENTION: President (with a copy to Legal Department)
Any notice or communication given in conformity with this Section 10.5 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.
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10.6 FURTHER ASSURANCES. Each of MPI and MPMx agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
10.7 SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, MPI, MPMx, and their
respective successors and assigns. Notwithstanding the foregoing, except as
otherwise contemplated herein, neither MPI nor MPMx may assign or otherwise
transfer any of its rights and interests, nor delegate any of its respective
obligations hereunder, including, without limitation, pursuant to a merger or
consolidation, without the prior written consent of the other party hereto,
which consent shall not be unreasonably withheld. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section 10.7 shall
be null and void. Subject to the foregoing, any reference to MPI and MPMx
hereunder shall be deemed to include the successors thereto and assigns thereof.
10.8 AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
MPI or MPMx therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by MPI and MPMx,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreements course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by MPI and MPMx.
10.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts
notwithstanding the provisions governing conflict of laws under the laws of the
Commonwealth of Massachusetts to the contrary.
10.10 SEVERABILITY. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law, (a) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly as may be
possible and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, MPI and MPMx hereby
waive any provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
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10.11 HEADINGS. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration
interpreting, this Agreement.
10.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
10.13 ENTIRE AGREEMENT. This Agreement, together with the Technology
Transfer and License Agreement, the Trademark License Agreement dated the
Effective Date, the Administrative Services Agreement dated the Effective Date,
the Research Services and Collaboration Agreement dated the Effective Date and
the Tax Sharing Agreement dated the Effective Date, constitute the entire
agreement of MPI and MPMx with respect to the subject matter hereof, and all
prior or contemporaneous understandings or agreements, whether written or oral,
between MPI and MPMx with respect to such subject matter are hereby superseded
in their entirety.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
MILLENNIUM PHARMACEUTICALS, INC.
By:
-----------------------------
Steven H. Holtzman
Chief Business Officer
MILLENNIUM PREDICTIVE MEDICINE, INC.
By:
-----------------------------
Kenneth J. Conway
President
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EXHIBIT A
MPI EXISTING COLLABORATION AGREEMENTS
1. Research and License Agreement between MPI and Hoffmann-LaRoche, Inc. dated
March 25, 1994.
2. Collaborative Research Agreement between Pfizer, Inc. and Myco
Pharmaceuticals, Inc. (later renamed ChemGenics Pharmaceuticals, Inc.)
dated January 1, 1995, as amended.
3. License Option, License and Royalty Agreement between Pfizer, Inc. and Myco
Pharmaceuticals, Inc. (later renamed ChemGenics Pharmaceuticals, Inc.)
dated January 1, 1995, as amended.
4. Research and License Agreement between MPI and Eli Lilly and Company dated
October 2, 1995, as amended.
5. Research and License Agreement between MPI and Astra AB, dated December 9,
1995, as amended.
6. Research and License Agreement between MPI and Eli Lilly and Company dated
March 31, 1996.
7. Research and License Agreement between MPI and American Home Products
Corporation, dated August 1, 1996, as amended.
8. Collaborative Research and License Agreement between American Home Products
represented by its Wyeth-Ayerst Laboratories Division and ChemGenics
Pharmaceuticals, Inc. dated November 1, 1996.
9. Collaboration Agreement between MBio and Eli Lilly and Company dated May
28, 1997.
10. Agreement by and between MPI, Monsanto Company and Monsanto Agricultural
Genomics II LLC dated October 27, 1997.
11. Agreement by and between Bayer AG and MPI dated September 22, 1998.
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Exhibit 10.3
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
This Agreement is effective as of February 1, 1999 (the "Effective
Date") by and between Millennium Pharmaceuticals, Inc., a Delaware corporation
having its principal office at 640 Memorial Drive, Cambridge, Massachusetts
02139-4815 ("MPI"), and Millennium Predictive Medicine, Inc., a Delaware
corporation having its principal place of business at 640 Memorial Drive,
Cambridge, Massachusetts, 02139-4815 ("MPMx").
INTRODUCTION
1. MPI is willing to transfer and license to MPMx, and MPMx desires
to acquire and license from MPI, certain technology and intellectual property
rights thereto for the purpose of allowing MPMx to develop and market products
and services in the MPMx Core Field (as defined below) using such technology and
intellectual property rights thereto.
2. In the future, MPI may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MPI is
willing to grant to MPMx a license or sublicense to use such developments,
technology or rights for research and to exploit such developments, technology
or rights for development and commercialization in the MPMx Core Field.
3. In the future, MPMx may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MPMx is
willing to grant to MPI a license or sublicense to use such developments,
technology or rights for research and to exploit such developments, technology
or rights for development or commercialization in the MPI Core Field (as defined
below).
4. In consideration of the transfer and license by MPI to MPMx of
such technology and rights, MPMx has agreed to issue certain equity securities
to MPI.
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MPI and MPMx hereby agree as
follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below:
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1.1 AGREEMENT, PARTY AND OTHER GENERAL TERMS.
"AFFILIATE" means any corporation, company partnership, joint venture
and/or firm which controls, is controlled by or is under common control with a
Party. For the purposes of this definition, "control" shall mean, (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
"AGREEMENT TERM" means the period commencing on the Effective Date and
ending on the later of (a) the fifth anniversary of the Effective Date and (b)
the date on which MPMx ceases to be an Affiliate of MPI.
"COLLABORATIVE PARTNER" means a party (other than MPI or an MPI
Subsidiary or MPMx) to a collaboration agreement with either of MPI or MPMx.
"CONFIDENTIAL INFORMATION" means all trade secrets or confidential or
proprietary information designated as such in writing, whether by letter or by
the use of an appropriate proprietary stamp or legend, prior to or at the time
any such trade secret or confidential or proprietary information is disclosed to
the receiving Party. Notwithstanding the foregoing, information which is orally
or visually disclosed to the receiving Party, or is disclosed in writing without
an appropriate letter, proprietary stamp or legend, shall constitute
Confidential Information if (i) it would be apparent to a reasonable person,
familiar with the business and the industry of the disclosing Party, that such
information is of a confidential or proprietary nature the maintenance of which
is important to the disclosing Party or if (ii) the disclosing Party, within
thirty (30) days after such disclosure, delivers to the receiving Party a
written document or documents describing such information and referencing the
place and date of such oral, visual or written disclosure and the names of the
employees or officers.
"DESIGNATED COORDINATORS" means the employees of the Parties (who shall
be designated by the Parties within 30 days of the Effective Date) responsible
for updating the schedules to this Agreement as required by Section 3.2 and for
maintaining the list of biological materials required by Section 3.3.
"FAMILY COUNCIL" means a governing body consisting of the chief
executive officer, chief business officer, chief financial officer and general
counsel of MPI (to the extent such offices are filled), any additional employees
of MPI as may be selected by the chief executive officer of MPI, the senior
executive officer of each MPI Subsidiary so long as such MPI Subsidiary remains
an Affiliate of MPI, and the senior executive officer of MPMx so long as MPMx
remains an Affiliate of MPI. Each of the foregoing representatives shall have
the right to invite one additional non-voting designee to attend meetings of the
Family Council.
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<PAGE> 3
"FULLY-LOADED COST" means (a) costs directly attributable to an
activity (i.e., those costs which vary with such activity), including, but not
limited to, direct labor and benefit expenses for such activity and consumable
bulk and other materials, plus (b) fixed overhead costs allocable to the
activity, including, but not limited to, direct benefit and labor expenses for
technical services and support services, rent, utilities, building supplies,
depreciation, maintenance and repairs and insurance costs associated with such
activity, plus (c) a percentage of indirect overhead costs allocable to the
activity, including, but not limited to, consulting costs, lab supplies and
services, information systems, equipment service, safety compliance, applicable
license fees and collaborative expenses.
"MPI SUBSIDIARY" shall mean a subsidiary established by MPI to operate
within all or any portion of the MPI Core Field.
"PARTY" means MPI or MPMx; "PARTIES" means MPI and MPMx.
"PERSON" means any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity.
"RIGHTS EXCHANGE AGREEMENT" means the Rights Exchange Agreement between
MPI and MPMx of even date herewith.
"THIRD PARTY LICENSEE" means a bona fide collaborator, permitted
customer or service recipient, or third party licensee of MPI or an MPI
Subsidiary within the MPI Core Field or of MPMx within the MPMx Core Field.
1.2 SCIENTIFIC AND PRODUCT TERMS.
"DIAGNOMICS" means products and services used to describe a patient's
medical condition in a form or manner which has inherent prognostic, therapeutic
or economic benefit.
"DIAGNOMIC AND PHARMACOGENOMIC DATABASES" means compilations of data
and other information for Diagnomic and Pharmacogenomic purposes. Diagnomic and
Pharmacogenomic Databases shall not include compilations of data and other
information which relate to MPI's (or, if so authorized by MPI, an MPI
Subsidiary's) development and/or commercialization of products or services in
the MPI Core Field.
"DIAGNOMIC AND PHARMACOGENOMIC PROCESS TECHNOLOGY" means technology
which is related to or necessary for the generation and interpretation of
Diagnomic and Pharmacogenomic Databases and/or the use of Diagnomic and
Pharmacogenomic Software.
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"DIAGNOMIC AND PHARMACOGENOMIC SOFTWARE" means software for the
generation and interpretation of Diagnomic and Pharmacogenomic Databases
including, but not limited to, software used in connection with Patient
Management Services.
"DIAGNOSTIC PRODUCTS" means any product which is offered, or is
reasonably intended by MPMx to be offered, for sale to third parties (e.g.,
testing laboratories, physicians, hospitals and patients) pursuant to an
arms-length transaction, in the form of a device, compound or kit, that is used
to identify patients having a particular disease or predisposition to a disease
and/or to monitor the course, prognosis or recurrence of such disease in such
patients.
"DIAGNOSTIC PRODUCTS/TESTING SERVICES RESEARCH AND DEVELOPMENT
SERVICES" means any research and development service which is provided, or is
reasonably intended by MPMx to be provided, to third parties (e.g., diagnostics
development and manufacturing companies) pursuant to an arms-length transaction
in order to develop and/or commercialize Diagnostic Products or Diagnostic
Testing Services.
"DIAGNOSTIC TESTING SERVICES" means any testing service which is
provided, or is reasonably intended by MPMx to be provided, to third parties
(e.g., physicians, hospitals and patients) pursuant to an arms-length
transaction, in order to identify patients having a particular disease or
predisposition to a disease and/or to monitor the course, prognosis or
recurrence of such disease in such patients.
"MPMx PRODUCTS" means Diagnomic and Pharmacogenomic Databases,
Diagnomic and Pharmacogenomic Process Technology, Diagnomic and Pharmacogenomic
Software, Diagnostic Products and Pharmacogenomic Products.
"MPMx SERVICES" means Diagnostic Products/Testing Services Research and
Development Services, Diagnostic Testing Services, Patient Management Services,
Pharmacogenomics-Mediated Drug Research and Development Services,
Pharmacogenomic Products/Testing Services Research and Development Services and
Pharmacogenomic Testing Services.
"PATIENT MANAGEMENT SERVICES" means the provision of medical practice
guidelines based on Diagnomics and Pharmacogenomics.
"PHARMACOGENOMICS" means the correlation, based on analysis of animal
and/or human tissue (including, without limitation, cell lines), of a biological
marker (e.g., DNA, RNA or protein) with measurements of the safety and/or
efficacy of a preventative and/or therapeutic substance or candidate.
"PHARMACOGENOMICS-MEDIATED DRUG RESEARCH AND DEVELOPMENT SERVICES" or
"PMDRDS" means any research and development service which is provided, or is
reasonably intended by
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MPMx to be provided, to third parties engaged in developing therapeutic and/or
preventative products (e.g., biotechnology and pharmaceutical companies)
pursuant to an arm's-length transaction in order to assess on behalf of any such
third party the Pharmacogenomic properties of an existing candidate therapeutic
or preventative product or an existing therapeutic or preventative product being
developed by such third party. Pharmacogenomics-Mediated Drug Research and
Development Services shall not include the provision of research and development
services in order to discover or identify candidate therapeutic or preventative
products.
"PHARMACOGENOMIC PRODUCTS" means any product which is offered, or is
reasonably intended by MPMx to be offered, for sale to third parties (e.g.,
testing laboratories, physicians and hospitals) pursuant to an arms-length
transaction, in the form of a device, compound or kit, that is used to identify
patients (e.g., the genetic disaggregation of patient populations) based on
their response to a pharmaceutical compound.
"PHARMACOGENOMIC PRODUCTS/TESTING SERVICES RESEARCH AND DEVELOPMENT
SERVICES" or "PPTSRDS" means any research and development service which is
provided, or is reasonably intended by MPMx to be provided, to third parties
(e.g., diagnostic development and manufacturing) pursuant to an arms-length
transaction in order to develop and/or commercialize Pharmacogenomic Products or
Pharmacogenomic Testing Services. Pharmacogenomic Products/Testing Services
Research and Development Services shall not include the provision of research
and development services in order to discover or identify candidate therapeutic
or preventative products or the provision of Pharmacogenomics-Mediated Drug
Research and Development Services.
"PHARMACOGENOMIC TESTING SERVICES" means any testing service which is
provided, or is reasonably intended by MPMx to be provided, to third parties
(e.g., pharmaceutical companies, clinical research organizations, physicians and
hospitals) pursuant to an arms-length transaction, in order to identify patients
(e.g., the genetic disaggregation of patient populations) based on their
response to a pharmaceutical compound.
1.3 FIELD, PATENT, RETAINED RIGHT AND TECHNOLOGY TERMS.
"MPI CORE FIELD" means the identification, discovery, research,
development and commercialization of all products and services outside of the
MPMx Core Field. MPI may assign all or any portion of the MPI Core Field to an
MPI Subsidiary.
"MPI PROCESS TECHNOLOGY" means all Process Technology which is solely
or jointly developed, acquired or otherwise controlled by MPI during the
Agreement Term (excluding, however, Process Technology licensed to MPI by MPMx
pursuant to this Agreement and Process which MPI does not have the right to
sublicense to MPMx). MPI Process Technology shall include MPI Subsidiary Process
Technology. MPI Process Technology existing as of the date hereof includes,
without limitation, the Process Technology set forth on SCHEDULE A.
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"MPI PROCESS TECHNOLOGY PATENT RIGHT(S)" means a Patent Right that
covers MPI Process Technology.
"MPI PRODUCT TECHNOLOGY" means all Product Technology which is solely
or jointly developed, acquired or otherwise controlled by MPI during the
Agreement Term (excluding, however, Product Technology licensed to MPI by MPMx
pursuant to this Agreement and Product Technology which MPI does not have the
right to sublicense to MPMx). MPI Product Technology shall include MPI
Subsidiary Product Technology.
"MPI PRODUCT TECHNOLOGY PATENT RIGHT(S)" means a Patent Right that
covers MPI Product Technology.
"MPI SUBSIDIARY PROCESS TECHNOLOGY" means all Process Technology which
is solely or jointly developed, acquired or otherwise controlled during the
Agreement Term by an MPI Subsidiary which is an Affiliate of MPI at the time of
such development, acquisition or control (excluding, however, Process Technology
licensed to an MPI Subsidiary by MPI and Process Technology which the MPI
Subsidiary does not have the right to sublicense to MPI). MPI Subsidiary Process
Technology existing as of the date hereof includes, without limitation, the
Process Technology set forth on SCHEDULE B.
"MPI SUBSIDIARY PRODUCT TECHNOLOGY" means all Product Technology which
is solely or jointly developed, acquired or otherwise controlled during the
Agreement Term by an MPI Subsidiary which is an Affiliate of MPI at the time of
such development, acquisition or control (excluding, however, Product Technology
licensed to an MPI Subsidiary by MPI and Product Technology which an MPI
Subsidiary does not have the right to sublicense to MPI).
"MPMx CORE FIELD" means the identification, discovery, research,
development and commercialization of MPMx Products and MPMx Services.
"MPMx PROCESS TECHNOLOGY" means all Process Technology which is solely
or jointly developed, acquired or otherwise controlled by MPMx during the
Agreement Term (excluding, however, Process Technology licensed to MPMx by MPI
pursuant to this Agreement and Process Technology which MPMx does not have the
right to sublicense to MPI). MPMx Process Technology existing as of the date
hereof includes, without limitation, the Process Technology set forth on
SCHEDULE C.
"MPMx PROCESS TECHNOLOGY PATENT RIGHT(S)" means a Patent Right that
covers MPMx Process Technology.
"MPMx PRODUCT TECHNOLOGY" means all Product Technology which is solely
or jointly developed, acquired or otherwise controlled by MPMx during the
Agreement Term (excluding,
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however, Product Technology licensed to MPMx by MPI pursuant to this Agreement
and Product Technology which MPMx does not have the right to sublicense to MPI).
"MPMx PRODUCT TECHNOLOGY PATENT RIGHT(S)" means a Patent Right that
covers MPMx Product Technology.
"MPMx RETAINED RIGHTS" means all research, development and
commercialization rights, if any, retained by MPMx in the MPI Core Field
pursuant to the MPMx Collaboration Agreements.
"PATENT RIGHT" means a patent or patent application and all divisions,
continuations, continuations-in-part (but solely to the extent directed to
claims made in patents issued or patent applications filed expiration of the
Agreement Term), reissues, reexaminations, extensions, Supplementary Protection
Certificates and foreign counterparts thereof that is owned or otherwise
controlled by MPI or an MPI Subsidiary or MPMx.
"PROCESS TECHNOLOGY" means methods, systems, programs, technology,
algorithms and software (including source code), together with all unpatentable
intellectual property related thereto (including, without limitation, know-how,
trade secrets and copyrights), for the identification, discovery, research,
development and/or production of products and services in the MPI Core Field
and/or the MPMx Core Field. Examples of Process Technology include, without
limitation, DNA sequencing technologies, transcriptional profiling, genotyping
technologies, protein analytics, methods for screening small molecule libraries,
methods for automating and increasing throughput of process technologies,
software systems for the control and management of automated process
technologies, and software systems for DNA sequencing analysis, transcriptional
profiling, genotyping analysis, protein profiling analysis and drug discovery
informatics.
"PRODUCT TECHNOLOGY" means technology in the form of biological
materials and chemical compounds and the data relating thereto, together with
all unpatentable intellectual property related thereto (including, without
limitation, know-how, trade secrets and copyrights), that directly relates to
the development, manufacture and/or commercialization of a product or service in
the MPI Core Field and/or the MPMx Core Field. Product Technology shall exclude
Process Technology. Examples of Product Technology include, without limitation,
genes, gene fragments, proteins, peptides, vectors, cell lines, cells, small
molecules and natural product compounds and libraries.
SECTION 2. LICENSES
2.1 LICENSES TO PROCESS TECHNOLOGY. Subject to the terms and
conditions of this Agreement, MPI and MPMx hereby grant the following Process
Technology licenses.
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(a) MPI PROCESS TECHNOLOGY. MPI hereby grants to MPMx a royalty-free,
non-exclusive right and license, without the right to grant sublicenses
(except to the limited extent set forth in Section 6), to MPI's
interest in all MPI Process Technology (excluding software source code
unless reasonably required for the purposes set forth in subsection (c)
below) and all MPI Process Technology Patent Rights reasonably related
to, or reasonably useful or necessary for use in, the MPMx Core Field
for use by MPMx and MPMx's permitted sublicensees solely in the MPMx
Core Field. Additionally, during the Agreement Term, except with the
written consent of MPMx, MPI shall not be permitted or authorized to
use or practice the MPI Process Technology or MPI Process Technology
Patent Rights in the MPMx Core Field. Upon expiration of the Agreement
Term, the foregoing non-exclusive license granted to MPMx to use such
MPI Process Technology and MPI Process Technology Patent Rights solely
in the MPMx Core Field shall survive and shall include an unrestricted
right to grant sublicenses.
(b) MPMx PROCESS TECHNOLOGY. MPMx hereby grants to MPI a royalty-free,
non-exclusive right and license, with the right to grant sublicenses
(subject, however, to the restrictions set forth in Section 6), to
MPMx's interest in (i) all MPMx Process Technology (including software
source code) and all MPMx Process Technology Patent Rights reasonably
related to, or reasonably useful or necessary for use in, the MPI Core
Field for use by MPI and MPI's permitted sublicensees in the MPI Core
Field and (ii) all MPMx Process Technology (including software source
code) and all MPMx Process Technology Patent Rights reasonably related
to, or reasonably useful or necessary for use in, the MPMx Core Field
for use by MPI and MPI's permitted sublicensees in the MPMx Core Field.
Additionally, during the Agreement Term, except with the written
consent of MPI or the MPI Subsidiary whose core field would be
affected, MPMx shall not be permitted or authorized to use or practice
the MPMx Process Technology or MPMx Process Technology Patent Rights
outside the MPMx Core Field. Notwithstanding the non-exclusive license
granted to MPI in clause (ii) above, during the Agreement Term, except
with the written consent of MPMx, MPI shall not be permitted or
authorized to use or practice the MPMx Process Technology or MPMx
Process Technology Patent Rights in the MPMx Core Field. Upon
expiration of the Agreement Term, the non-exclusive license granted to
MPI in clause (i) above shall survive and shall include the
unrestricted right to grant sublicenses; provided, however, that MPI
shall have no right to sublicense MPMx Process Technology which also
constitutes an MPMx Product to Persons other than MPI Subsidiaries.
Although the non-exclusive license granted to MPI in clause (ii) above
shall not survive expiration of the Agreement Term, any sublicenses
granted by MPI (in accordance with Section 6) prior to the expiration
of the Agreement Term to Third Party Licensees to use the MPMx Process
Technology and MPMx Process Technology Patent Rights in the MPMx Core
Field shall survive the expiration of the Agreement Term. Moreover, to
the extent that MPI (in accordance with Section 5) shall have incurred
support obligations to Third Party Licensees of the MPMx Process
Technology and MPMx Process Technology Patent Rights in the MPMx Core
Field prior to the
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expiration of the Agreement Term, MPI shall have the right to use the
MPMx Process Technology and MPMx Process Technology Patent Rights in
order to fulfill such support obligations.
(c) OTHER PROVISIONS FOR SOFTWARE WITHIN THE MPI PROCESS TECHNOLOGY.
Situations in which the Parties anticipate that MPI will license to
MPMx the source code for software within the MPI Process Technology
include, without limitation, situations in which the Parties will
undertake collaborative software development work and situations in
which MPMx desires to develop software products incorporating software
included within the MPI Process Technology. With respect to specific
types of software included within the MPI Process Technology, the
Parties may mutually agree from time to time to enter into separate
software licensing agreements for the purpose of setting forth more
detailed rights and obligations of the Parties with respect to such
software.
2.2 LICENSES TO PRODUCT TECHNOLOGY. Subject to the terms and
conditions of this Agreement, MPI and MPMx hereby grant the following Product
Technology licenses.
(a) MPI PRODUCT TECHNOLOGY. MPI hereby grants to MPMx a royalty-free,
exclusive right and license, with the right to grant sublicenses, to
MPI's interest in all MPI Product Technology and all MPI Product
Technology Patent Rights reasonably related to, or reasonably useful or
necessary for use in, the MPMx Core Field for use by MPMx and MPMx's
permitted sublicensees solely in the MPMx Core Field. Upon expiration
of the Agreement Term, the foregoing exclusive license granted to MPMx
to use the MPI Product Technology and MPI Product Technology Patent
Rights solely in the MPMx Core Field shall survive. Notwithstanding the
foregoing, in the event that, during the Agreement Term, MPI or an MPI
Subsidiary enters into a collaboration agreement, strategic alliance,
license agreement or similar arrangement with a Collaborative Partner
(a "Collaboration Agreement"), and pursuant to Section 2(c) of the
Rights Exchange Agreement, MPI or an MPI Subsidiary is permitted to
grant licenses and rights to such Collaborative Partner in the MPMx
Core Field, then the license set forth in this subsection (a) shall not
apply with respect to MPI Product Technology and MPI Product Technology
Patent Rights developed or acquired pursuant to such Collaboration
Agreement.
(b) MPMx PRODUCT TECHNOLOGY. MPMx hereby grants to MPI a royalty-free,
exclusive right and license, with the right to grant sublicenses, to
MPMx's interest in all MPMx Product Technology and all MPMx Product
Technology Patent Rights reasonably related to, or reasonably useful or
necessary for use in, the MPI Core Field for use by MPI and MPI's
sublicensees solely in the MPI Core Field. Upon expiration of the
Agreement Term, the foregoing exclusive license granted to MPI to use
the MPMx Product Technology and MPMx Product Technology Patent Rights
solely in the MPI Core Field shall survive. Notwithstanding the
foregoing, in the event that, during the Agreement Term, MPMx enters
into a Collaboration Agreement with a Collaborative Partner, and
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pursuant to Section 2(c) of the Rights Exchange Agreement, MPMx is
permitted to grant licenses and rights to such Collaborative Partner
in the MPI Core Field, then the license set forth in this subsection
(b) shall not apply with respect to such MPMx Product Technology and
MPMx Product Technology Patent Rights developed or acquired pursuant
to such Collaboration Agreement.
2.3 EXCEPTIONS TO ROYALTY-FREE LICENSES. Notwithstanding the
royalty-free provisions of Sections 2.1 and 2.2, the following terms shall
apply.
(a) VARIATIONS FOR TECHNOLOGY WHICH CONSTITUTES A PRODUCT. With
respect to MPI Subsidiary Process Technology or MPI Subsidiary Product
Technology which also constitutes an independent product which is
marketed and sold to third parties by an MPI Subsidiary, MPI shall
have the right to alter the financial basis on which such MPI
Subsidiary Process Technology or MPI Subsidiary Product Technology
shall be provided to MPMx, it being understood that MPMx shall have no
obligation to use or practice such MPI Subsidiary Process Technology
or MPI Subsidiary Product Technology. With respect to MPMx Process
Technology or MPMx Product Technology which may also constitute an
MPMx Product, the Parties have agreed to the financial variations
listed on SCHEDULE D.
(b) SHARING OF COSTS ASSOCIATED WITH TECHNOLOGY. In the event that MPI,
an MPI Subsidiary or MPMx in the ordinary course of its business
licenses from a third party any Process Technology or Product
Technology which has broad application across the MPI Core Field and
MPMx Core Field, prior to the commencement of each calendar year, MPI,
each MPI Subsidiary which is an Affiliate of MPI, and MPMx shall agree
on an annual fixed percentage cost-sharing arrangement in respect of
the costs associated with such license from such third party. In the
event that such Process Technology or Product Technology does not have
broad application across the MPI Core Field and MPMx Core Field, the
parties who are anticipated to use such Process Technology or Product
Technology shall negotiate on a case-by-case basis an appropriate
cost-sharing arrangement. In the event that MPI or an MPI Subsidiary
outside the ordinary course of its business acquires from a third party
any Process Technology or Product Technology which has application in
the MPMx Core Field or in the event that MPMx outside the ordinary
course of its business acquires from a third party any Process
Technology or Product Technology which has application in the MPI Core
Field, the parties who are anticipated to use such Process Technology
or Product Technology shall negotiate on a case-by-case basis an
appropriate cost-sharing arrangement in respect of the costs associated
with such acquisition.
2.4 TRADEMARK LICENSES. The trademarks and service marks "Millennium"
and "Millennium Predictive Medicine" shall be co-exclusively licensed to MPMx
for use in the MPMx Core Field in accordance with the terms of the Trademark
License Agreement between MPI and
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MPMx of even date herewith (the "Trademark License Agreement"). The trademarks
and service marks "Diagnomics," "MPMx" and "Changing the Practice of Medicine"
shall be either exclusively licensed to MPMx in perpetuity or transferred to and
owned by MPMx.
SECTION 3. DISCLOSURE AND TRANSFER OF TECHNOLOGY
3.1 MPI shall disclose to MPMx on an ongoing basis during the Agreement
Term all MPI Process Technology and MPI Product Technology which MPI reasonably
believes to be pertinent to the MPMx Core Field. Notwithstanding the foregoing,
MPI need not disclose to MPMx any MPI Process Technology and/or MPI Product
Technology which MPI is precluded from disclosing under any agreement binding
upon it. Within 30 days of the end of each calendar quarter, the Designated
Coordinators shall update SCHEDULE A and SCHEDULE B.
3.2 MPMx shall disclose to MPI on an ongoing basis during the Agreement
Term all MPMx Process Technology and shall disclose to MPI on an ongoing basis
during the Agreement Term all MPMx Product Technology which MPMx reasonably
believes to be pertinent to the MPI Core Field. Notwithstanding the foregoing,
MPMx need not disclose to MPI any MPMx Process Technology and/or MPMx Product
Technology which MPMx is precluded from disclosing under any agreement binding
upon it. Within 30 days of the end of each calendar quarter, the Designated
Coordinators shall update SCHEDULE C
3.3 MPI shall provide to MPMx biological materials related to the MPMx Core
Field and MPMx shall provide to MPI biological materials related to the MPI Core
Field in either case, such as genes, gene fragments, vectors, cell lines,
strains, transgenic organisms, model organisms, DNA and DNA fragments, as well
as information relating to such materials. At the time of each transfer of
biological material the Designated Coordinators shall establish a written record
evidencing the transfer and indicating the type and amount of transfer and any
limitations on the transferred biological materials. The written record shall be
initialed by the appropriate officer or senior employee of each Party. With
respect to transfers which may have occurred prior to the Effective Date, the
Designated Coordinators shall promptly prepare a written record of such
previously transferred biological materials. Except for transfers from MPI to
the MPI Subsidiaries, the Party receiving such transferred biological materials
shall not be permitted or authorized to transfer such biological material to a
third party without the prior written authorization of the providing Party.
Notwithstanding the foregoing, neither Party is required to transfer any
biological materials which such Party is precluded from transferring under any
agreement binding upon such Party.
3.4 MPI shall provide reasonable technical assistance and instruction, at
MPMx's sole option and expense, in understanding, interpreting and applying MPI
Process Technology and MPI Product Technology, and MPMx shall provide reasonable
technical assistance and instruction, at MPI's sole option and expense, in
understanding, interpreting and applying MPMx
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Process Technology and MPMx Product Technology. Each Party shall make its
employees reasonably available for consultation by telephone, or in person at
the Party's offices, in connection with such assistance and instruction, all at
the requesting Party's expense.
SECTION 4. ISSUANCE OF EQUITY
In consideration for the transfers and licenses set forth herein, MPMx
hereby agrees to issue, and MPI hereby agrees to accept, among other
consideration, 6,250,000 shares of Series A Convertible Preferred Stock of MPMx.
SECTION 5. SUPPORT OF PROCESS TECHNOLOGY AND RELATED COMPENSATION.
(a) GENERAL OBLIGATIONS OF MPI, MPMx AND MPI SUBSIDIARIES. MPI shall be the
central repository for all Process Technology. Except as set forth in this
subsection (a) and as provided for in subsection (c) below, MPI shall have
the right and responsibility for supporting all Process Technology. Such
support obligation shall extend to MPMx, each MPI Subsidiary which is an
Affiliate of MPI, and each permitted sublicensee of Process Technology.
With respect to MPMx Process Technology, MPMx shall provide reasonable
assistance to MPI in connection with MPI's support obligations and, with
respect to MPI Subsidiary Process Technology, MPI shall contractually
require each MPI Subsidiary, until such time as it is no longer an
Affiliate of MPI, to provide reasonable assistance to MPI in connection
with its support obligations. Notwithstanding the foregoing, with respect
to MPMx Process Technology which also constitutes an MPMx Product, MPMx
shall have the right and responsibility for supporting Third Party
Licensees of such MPMx Process Technology in lieu of MPI and, with respect
to MPI Subsidiary Process Technology which also constitutes an independent
product which is marketed and sold to third parties by an MPI Subsidiary,
such MPI Subsidiary shall have the right and responsibility for supporting
Third Party Licensees of such MPI Subsidiary Process Technology in lieu of
MPI.
(b) COMPENSATION TO MPI. Prior to the commencement of each calendar year,
MPMx, each MPI Subsidiary which is an Affiliate of MPI, and MPI shall agree
on an annual support budget for MPI in exchange for MPI's performance of
its support obligations that run to MPMx and such MPI Subsidiaries. In the
event that MPMx or an MPI Subsidiary requires an unusual amount of support
from MPI in a given calendar year, MPMx or the MPI Subsidiary, as
applicable, and MPI shall negotiate on a case-by-case basis additional
compensation to be paid MPI by MPMx or the MPI Subsidiary, as applicable.
MPI shall be compensated for its support obligations that run to all other
permitted sublicensees of Process Technology by such sublicensees as
provided for in MPI's licensing arrangement with such sublicensees.
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(c) ELECTION NOT TO SUPPORT PROCESS TECHNOLOGY. Despite MPI's general
obligation to support all Process Technology, MPI shall have the right to
elect not to support certain components of the Process Technology. In the
case of any such MPMx Process Technology or MPI Subsidiary Process
Technology, MPMx or the applicable MPI Subsidiary shall have the right, but
not the obligation, to support such MPMx Process Technology or MPI
Subsidiary Process Technology for itself, each MPI Subsidiary which is an
Affiliate of MPI, and MPI, and shall have the option of extending support
of such MPMx Process Technology or MPI Subsidiary Process Technology to all
other permitted sublicensees of the MPMx Process Technology or MPI
Subsidiary Process Technology. In the event that MPMx declines to undertake
such right and option, MPMx and MPI may consent to such undertaking by an
MPI Subsidiary which is an Affiliate of MPI. In the event that the
applicable MPI Subsidiary declines to undertake such right and option, the
applicable MPI Subsidiary and MPI may consent to such undertaking by MPMx
or an MPI Subsidiary which is an Affiliate of MPI. In the case of any such
MPI Process Technology which is not MPI Subsidiary Process Technology, in
the event that MPMx or an MPI Subsidiary which is an Affiliate of MPI
desires to undertake such right and option, MPI may consent to such
undertaking by MPMx or such MPI Subsidiary. With respect to all components
of the Process Technology that MPI elects not to support, MPI shall provide
reasonable assistance to the party providing the support.
(d) COMPENSATION TO MPMx AND MPI SUBSIDIARIES. In the event that MPMx
elects to support components of the Process Technology on behalf of itself,
each MPI Subsidiary which is an Affiliate of MPI, and MPI, MPMx shall be
reimbursed by the MPI Subsidiaries and MPI for its Fully-Loaded Cost
associated with the rendering of such support services. In the event that
an MPI Subsidiary elects to support components of the Process Technology on
behalf of itself, MPMx, each MPI Subsidiary which is an Affiliate of MPI,
and MPI, such MPI Subsidiary shall be reimbursed by MPMx, the MPI
Subsidiaries and MPI for its Fully-Loaded Cost associated with the
rendering of such services. In the event that MPMx or an MPI Subsidiary
supports any other permitted sublicensee of Process Technology, MPMx or the
MPI Subsidiary shall be compensated for such support obligations by such
sublicensee as provided for in the licensing arrangement with such
sublicensee.
(e) TERM. If MPMx ceases to be an Affiliate of MPI, the provisions of
subsections (a)-(d) shall cease to apply to MPMx, provided that MPMx and
MPI and the MPI Subsidiaries shall agree on terms for a transition period
not to exceed two (2) years. During such transition period, at a minimum,
the former supporting parties shall provide MPMx with reasonable technical
assistance and instruction in the use of MPI Process Technology in the MPMx
Core Field and such former supporting parties shall be reimbursed for their
Fully-Loaded Cost associated with such assistance and instruction.
Additionally, with respect to software included within the MPI Process
Technology that
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remains non-exclusively licensed to MPMx pursuant to Section 2, if MPI does
not agree to continue support of such software in any transitional or final
support arrangement agreed to with MPMx, MPI shall provide MPMx with the
source code necessary in order for MPMx to exploit its continuing license
to such software. If an MPI Subsidiary ceases to be an Affiliate of MPI,
the provisions of subsections (a)-(d) shall cease to apply with respect to
such MPI Subsidiary, provided that MPMx, MPI and such MPI Subsidiary shall
agree on terms for a transition period not to exceed two (2) years. During
such transition period, at a minimum, the former supporting parties shall
provide the MPI Subsidiary with reasonable technical assistance and
instruction in the use of MPI Process Technology and MPMx Process
Technology in the portion of the MPI Core Field assigned to such MPI
Subsidiary and such former supporting parties shall be reimbursed for their
Fully-Loaded Cost associated with such assistance and instruction.
SECTION 6. LICENSING OF PROCESS TECHNOLOGY AND RELATED COMPENSATION.
(a) GENERAL OUT-LICENSING OBLIGATIONS. Except as set forth in this
subsection (a) and as provided for in subsection (c) below, MPI shall have
the right and responsibility for licensing all Process Technology and
related Patent Rights. Notwithstanding the foregoing, without the written
consent of MPMx, MPI shall have no right to grant such licenses if the
intended principal use of the Process Technology or related Patent Rights
is in the MPMx Core Field. At the request of MPMx, which request shall not
be unreasonably refused by MPI, MPI shall license the Process Technology
and related Patent Rights to a Third Party Licensee of MPMx for use in the
MPMx Core Field. At the request of an MPI Subsidiary, which request shall
not be unreasonably refused by MPI, MPI shall license the Process
Technology and related Patent Rights to a Third Party Licensee of such MPI
Subsidiary for use in the portion of the MPI Core Field assigned to such
MPI Subsidiary. Notwithstanding the foregoing, with respect to MPMx Process
Technology which also constitutes an MPMx Product, MPMx shall have the
right and responsibility for licensing such MPMx Process Technology to
Third Party Licensees in lieu of MPI and, with respect to MPI Subsidiary
Process Technology which also constitutes an independent product which is
marketed and sold to third parties by an MPI Subsidiary, such MPI
Subsidiary shall have the right and responsibility for licensing such MPI
Subsidiary Process Technology to Third Party Licensees in lieu of MPI.
(b) COMPENSATION FOR LICENSING BY MPI. MPI shall be entitled to retain all
compensation received by it in connection with its licensing of Process
Technology and related Patent Rights, provided that in the event that MPI
licenses the Process Technology and related Patent Rights to a Third Party
Licensee of MPMx for use in the MPMx Core Field or to a Third Party
Licensee of an MPI Subsidiary for use in the portion of the MPI Core Field
assigned to such MPI Subsidiary, MPMx or the MPI Subsidiary, as applicable,
shall be entitled to retain such compensation. In the event that MPI
licenses the Process
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Technology and related Patent Rights to a Third Party Licensee for use in
both the MPMx Core Field and the MPI Core Field, the parties whose core
fields are involved shall negotiate on a case-by-case basis an appropriate
sharing of the compensation received by MPI.
(c) NON-SUPPORTED PROCESS TECHNOLOGY. In the event that MPI shall elect not
to support certain components of the Process Technology, MPI shall cease to
have the right and responsibility for licensing such components of the
Process Technology and their related Patent Rights. In the case of
components of the MPMx Process Technology, MPMx shall have the right, but
not the obligation, to license such components of the Process Technology
and their related Patent Rights to Third Party Licensees for use in the
MPMx Core Field. In the case of components of the MPI Subsidiary Process
Technology, the applicable MPI Subsidiary shall have the right, but not the
obligation, to license such components of the MPI Subsidiary Process
Technology and their related Patent Rights to Third Party Licensees for use
in the portion of the MPI Core Field assigned to such MPI Subsidiary. In
the event that an MPI Subsidiary desires to license components of the MPMx
Process Technology and their related Patent Rights to a Third Party
Licensee for use in the portion of the MPI Core Field assigned to such MPI
Subsidiary, if MPMx and MPI so consent, which consent shall not be
unreasonably refused, MPMx (or, at the option of MPMx, such MPI Subsidiary)
shall grant such license. In the event that MPMx or another MPI Subsidiary
desires to license components of the MPI Subsidiary Process Technology and
their related Patent Rights to a Third Party Licensee for use in the MPMx
Core Field or the portion of the MPI Core Field assigned to such MPI
Subsidiary, respectively, if the applicable MPI Subsidiary and MPI so
consent, which consent shall not be unreasonably refused, the applicable
MPI Subsidiary (or, at the option of the applicable MPI Subsidiary, MPMx or
such other MPI Subsidiary) shall grant such license. In the case of
components of the MPI Process Technology which are not MPI Subsidiary
Process Technology, in the event that MPMx or an MPI Subsidiary desires to
license such components of the MPI Process Technology and their related
Patent Rights to a Third Party Licensee for use in the MPMx Core Field or
the portion of the MPI Core Field assigned to such MPI Subsidiary,
respectively, if MPI so consents, which consent shall not be unreasonably
refused, MPMx or such MPI Subsidiary shall have the right to grant such
license.
(d) COMPENSATION FOR LICENSING BY MPMx OR MPI SUBSIDIARIES. In the event
that MPMx licenses components of the Process Technology and their related
Patent Rights in the MPMx Core Field in accordance with subsection (c)
above, MPMx shall be entitled to retain all compensation received from such
Third Party Licensees. In the event that an MPI Subsidiary licenses
components of the Process Technology and their related Patent Rights in the
portion of the MPI Core Field assigned to such MPI Subsidiary in accordance
with subsection (c) above, such MPI Subsidiary shall be entitled to retain
all compensation received from such Third Party Licensees.
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(e) SURVIVAL OF LICENSES. Upon the expiration of the Agreement Term, the
provisions of subsections (a)-(d) shall cease to apply, provided that any
license granted in accordance with subsections (a)-(d) above prior to the
expiration of the Agreement Term shall survive any expiration of the
Agreement Term.
SECTION 7. PATENT RIGHTS
The Patent Rights of the Parties on a country by country basis shall be as
defined below, provided that, in no event shall either Party have the right to
prepare and prosecute a patent application which discloses Confidential
Information of the other Party without the prior written consent of the other
Party.
7.1 PATENT RIGHTS OF MPI.
(a) PROCESS TECHNOLOGY PATENT RIGHTS. MPI shall have the exclusive right,
at its expense and in its sole discretion, to prepare, file and prosecute
patent applications, and to maintain and enforce any patents issued
thereon, with respect to inventions relating to MPI Process Technology and
to inventions relating to MPMx Process Technology, provided that in the
case of inventions relating to MPMx Process Technology, MPI shall consult
with MPMx concerning such patent prosecution and give due consideration to
the comments and suggestions of MPMx, and further provided that in the case
of claims that relate solely to the MPMx Core Field, MPI shall follow the
advice of MPMx absent compelling reasons to the contrary. Additionally, in
the event that MPI elects not to file or prosecute a patent application or
elects not to maintain a patent covering an invention relating to MPMx
Process Technology, MPI shall promptly notify MPMx and MPMx shall have the
right, at its expense, to assume the patent filing, prosecution or
maintenance for such invention.
(b) MPI PRODUCT TECHNOLOGY PATENT RIGHTS IN THE MPI CORE FIELD. MPI shall
have the exclusive right, at its expense and its sole discretion, to
prepare, file and prosecute patent applications, and to maintain and
enforce any patents issued thereon, with respect to inventions relating to
MPI Product Technology in the MPI Core Field other than that jointly owned
by MPI and MPMx.
(c) MPI PRODUCT TECHNOLOGY PATENT RIGHTS IN THE MPMx CORE FIELD. At MPMx's
expense, MPI shall prepare, file and prosecute patent applications and
shall maintain and enforce any patents issued thereon, with respect to MPI
Product Technology in the MPMx Core Field other than that jointly owned by
MPI and MPMx. In the event that MPMx elects not to assume these costs in
any country, MPI shall have the right and option to undertake such
responsibilities, at its sole expense. If MPI undertakes such
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responsibilities at its sole expense, then (i) the license under Section 2
to any such MPI Product Technology Patent Right in such country shall
terminate and (ii) MPI shall have the exclusive right to develop and/or
commercialize such MPI Product Technology in either the MPMx Core Field or
the MPI Core Field.
7.2 PATENT RIGHTS OF MPMx.
(a) MPMx PRODUCT TECHNOLOGY PATENT RIGHTS IN THE MPMx CORE FIELD. MPMx
shall have the exclusive right, at its expense and its sole discretion, to
prepare, file and prosecute patent applications, and to maintain and
enforce any patents issued thereon, with respect to inventions relating to
MPMx Product Technology in the MPMx Core Field other than that jointly
owned by MPMx and MPI.
(b) MPMx PRODUCT TECHNOLOGY PATENT RIGHTS IN THE MPI CORE FIELD. At MPI's
expense, MPMx shall prepare, file and prosecute patent applications and
shall maintain and enforce any patents issued thereon, with respect to MPMx
Product Technology in the MPI Core Field other than that jointly owned by
MPMx and MPI. In the event that MPI elects not to assume these costs in any
country, MPMx shall have the right and option to undertake such
responsibilities, at its sole expense. If MPMx undertakes such
responsibilities at its sole expense, then (i) the license under Section 2
to any such MPMx Product Technology Patent Right in such country shall
terminate and (ii) MPMx shall have the exclusive right to develop and/or
commercialize such MPMx Product Technology in either the MPMx Core Field or
the MPI Core Field.
7.3 JOINT PRODUCT TECHNOLOGY PATENT RIGHTS. Patent applications relating
to MPI Product Technology and MPMx Product Technology jointly owned by MPI and
MPMx shall be prepared, filed and prosecuted by the Party in whose core field
the technology is most relevant; provided that, if the technology is relevant to
the core fields of both Parties then MPI shall prepare, file and prosecute such
patent application. The costs of such preparation, filing and prosecution of
such patent applications, and the maintenance of any patent issuing thereon,
shall be borne equally by the Parties. Should either Party determine that it no
longer desires to file or prosecute such patent application or maintain any
patent issued thereon, then such Party shall be obligated to transfer its entire
right, title and interest in and to such patent application or patent to the
other Party and such patent application or patent shall not be subject to the
license provisions of Section 2.
7.4 IMPROVEMENTS.
(a) IMPROVEMENTS MADE BY MPI TO MPMx PRODUCT TECHNOLOGY. MPMx shall have
the right to prohibit MPI from preparing, filing and prosecuting a patent
application directed to any improvement made by MPI to MPMx Product
Technology. If MPMx
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consents to the preparation, filing and prosecution of such patent
application, then such patent application shall be prepared and prosecuted,
in MPI's name and at MPI's expense, by MPMx. If MPI decides not to prepare,
file and prosecute such patent application, then MPMx shall not have the
right to assume the preparation and prosecution of such patent application.
(b) IMPROVEMENTS MADE BY MPMx TO MPI PRODUCT TECHNOLOGY. MPI shall have the
right to prohibit MPMx from preparing, filing and prosecuting a patent
application directed to any improvement made by MPMx to a MPI Product
Technology. If MPI consents to the preparation, filing and prosecution of
such patent application, then such patent application shall be prepared,
filed and prosecuted, in MPMx's name and at MPMx's expense, by MPI. If MPMx
decides not to prepare, file and prosecute such patent application, then
MPI shall not have the right to assume the preparation, filing and
prosecution of such patent application.
(c) JOINT IMPROVEMENTS. The Parties shall discuss and shall mutually agree
to prepare, file and prosecute patent applications relating to jointly
owned improvements to any of the MPI Product Technology or MPMx Product
Technology, provided that the Party from whose technology such improvement
derives shall have the right to prohibit the preparation, filing and
prosecution of any such patent applications. If the Parties agree to
prepare, file and prosecute any such patent applications, then the
preparation, filing and prosecution shall be controlled by the Party to
whose technology such improvement relates. The costs of the preparation,
filing and prosecution of such patent applications shall be borne equally
by the Parties. Should either Party determine that it no longer desires to
file or prosecute such patent application or maintain any patent issued
thereon, then such Party shall be obligated to transfer its entire right,
title and interest in and to such patent application or patent to the other
Party and such patent application or patent shall not be subject to the
license provisions of Section 2.
SECTION 8. CONFIDENTIAL INFORMATION.
8.1 CONFIDENTIAL INFORMATION. Any Party receiving Confidential Information
shall maintain the confidential and proprietary status of such Confidential
Information, keep such Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any activity with respect
to the Confidential Information that is not specifically authorized by this
Agreement, use commercially reasonable efforts to prevent the disclosure of any
Confidential Information to any other Person, and use commercially reasonable
efforts to ensure that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however, that such
restriction shall not apply to any Confidential Information which is (a)
independently developed by the receiving Party, (b) in the public domain at the
time of its receipt or thereafter becomes part of the public domain through no
fault of the receiving
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Party, (c) received without an obligation of confidentiality from a third
party having the right to disclose such information, (d) released from the
restrictions of this Section 8.1 by the express written consent of the
disclosing Party, (e) disclosed to any permitted assignee, permitted
sublicensee or permitted subcontractor of either MPI or MPMx hereunder (if
such assignee, sublicense or subcontractor is subject to the provisions of
this Section 8.1 or comparable provisions of such other documents), or (f)
required by law, statute, rule or court order to be disclosed (the
disclosing Party shall, however, use commercially reasonable efforts to
obtain confidential treatment of any such disclosure).
8.2 EMPLOYEE OBLIGATIONS. MPI and MPMx each agree that it shall provide
Confidential Information received from the other Party only to its employees,
consultants, advisors and third party collaborators who have a need to know and
have an obligation to treat such information and materials as confidential.
Without limiting the generality of the foregoing, MPI and MPMx each shall use
commercially reasonable efforts to obtain confidentiality agreements from its
respective employees and agents, similar in scope to Section 8.1, to protect the
Confidential Information.
8.3 THIRD PARTY OBLIGATIONS. Each Party acknowledges that the other Party
may from time to time have agreements with other persons which impose
obligations or restrictions on such other Party with respect to the disclosure
or use of inventions or information relating to the subject matter of such
agreements ("Third Party Agreements"). Each Party agrees to be bound by all such
obligations and restrictions which are made known to it under Third Party
Agreements relating to Confidential Information.
8.4 PERMITTED DISCLOSURES. Notwithstanding the provisions of Section 8.1
hereof, MPI and MPMx may, to the extent necessary, disclose and use Confidential
Information, consistent with the rights of MPI and MPMx otherwise granted
hereunder (a) for the purpose of engaging in research and development,
conducting clinical testing and marketing programs, or securing institutional or
government approval to clinically test or market any product, (b) for the
purpose of sharing clinical trial results and data with third parties conducting
clinical trials, (c) for the purpose of securing patent protection to the extent
provided in Section 7, (d) for the purpose of obtaining private investment, or
(e) for the purpose of discussing potential business and collaborative
relationships in each party's core field.
8.5 TERM The obligations set forth in this Section 8 shall survive for a
period of five (5) years from the expiration of the Agreement Term.
SECTION 9. TERM
This Agreement becomes effective as of the Effective Date and shall remain
in effect during the Agreement Term. Upon the expiration of the Agreement Term,
the provisions of Section 2.1 (as provided for therein), Section 2.2 (as
provided for therein), Section 2.3(a),
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Section 2.4, Section 5(e), Section 6(e), Section 7, Section 8, Section 10,
Section 11, Section 12(b) and Section 13 shall survive the expiration of the
Agreement Term.
SECTION 10. DISCLAIMER OF WARRANTY; CONSEQUENTIAL DAMAGES.
10.1 DISCLAIMER OF WARRANTY. Nothing in this Agreement shall be construed
as a representation made or warranty given by either Party hereto that any
patents will issue based on pending applications or that any such pending
applications or patents issued thereon will be valid, or that the practice by
the other Party hereto of any license granted hereunder will not infringe the
patent or proprietary rights of any other Person. In addition, MPI and MPMx
acknowledge that ALL KNOW-HOW LICENSED OR TRANSFERRED HEREUNDER IS LICENSED AND
TRANSFERRED, AS TO THE CASE MAY BE, TO MPMX AND MPI, RESPECTIVELY, AS IS, AND
MPI AND MPMX EXPRESSLY DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO SUCH KNOW-HOW, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
In turn, MPI shall contractually require each MPI Subsidiary to acknowledge that
MPMx makes no representation or warranty that any patents will issue based on
pending applications or that any such pending applications or patents issued
thereon will be valid, to acknowledge that MPMx makes no representation or
warranty that the practice by such MPI Subsidiary of any license granted
hereunder will not infringe the patent or proprietary rights of any other
Person, to acknowledge that all know-how is licensed or transferred to such MPI
Subsidiary as is, and to expressly disclaim and waive, release and renounce any
warranty, express or implied, with respect to such know-how, including, without,
any warranty of merchantability or fitness for a particular purpose.
10.2 CONSEQUENTIAL DAMAGES. EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER
PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO RECOVER FROM TO THE OTHER ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
SECTION 11. INDEMNIFICATION
11.1 INDEMNIFICATION BY MPI. MPI agrees to defend MPMx at MPI's cost and
expense, and will indemnify and hold MPMx and its directors, officers, employees
and agents (the "MPMx Indemnified Parties") harmless from and against any
losses, costs, damages, fees or expenses arising out of any claim relating to
personal injury from the exploitation by MPI or an MPI Subsidiary or their
licensees of the licenses granted by MPMx pursuant to Section 2, including the
development, manufacture, use sale or other disposition of products or services
resulting therefrom. In the event of any such claim against the MPMx Indemnified
Parties by any party, MPMx shall promptly notify MPI in writing of the claim and
MPI shall manage and control, at its
20
<PAGE> 21
sole expense, the defense of the claim and its settlement. The MPMx Indemnified
Parties shall cooperate with MPI and may, at their option and expense, be
represented in any such action or proceeding. MPI shall not be liable for any
litigation costs or expenses incurred by the MPMx Indemnified Parties or for any
costs or expenses of settlements made by any MPMx Indemnified Parties without
MPI's prior written authorization. In addition, MPI shall not be responsible for
the indemnification of any MPMx Indemnified Party arising from any negligent or
intentional acts by such party.
11.2. INDEMNIFICATION BY MPMx. MPMx agrees to defend MPI at MPMx's cost and
expense, and will indemnify and hold MPI and its directors, officers, employees
and agents (the "MPI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MPMx or its licensees of the licenses granted by
MPI pursuant to Section 2, including the development, manufacture, use sale or
other disposition of products or services resulting therefrom. In the event of
any such claim against the MPI Indemnified Parties by any party, MPI shall
promptly notify MPMx in writing of the claim and MPMx shall manage and control,
at its sole expense, the defense of the claim and its settlement. The MPI
Indemnified Parties shall cooperate with MPMx and may, at their option and
expense, be represented in any such action or proceeding. MPMx shall not be
liable for any litigation costs or expenses incurred by the MPI Indemnified
Parties or any costs or expenses of settlements made by any MPI Indemnified
Parties without MPMx's prior written authorization. In addition, MPMx shall not
be responsible for the indemnification of any MPI Indemnified Party arising from
any negligent or intentional acts by such party.
SECTION 12. GOVERNANCE.
(a) ROLE OF FAMILY COUNCIL. The relationship among MPMx, MPI and the MPI
Subsidiaries shall be guided by the Family Council. The purpose of the Family
Council shall be to provide guidance to MPMx, MPI and each of the MPI
Subsidiaries on matters relating to the definition of the MPMx Core Field, the
MPI Core Field and any portion of the MPI Core Field assigned to an MPI
Subsidiary, MPMx's proposed provision of PMDRDS in connection with a Competitive
Product which has not yet advanced to the stage of clinical studies, the
licensing of technology, the allocation and management of business opportunities
among MPMx, MPI and the MPI Subsidiaries, the allocation of compensation and
costs among MPMx, MPI and the MPI Subsidiaries, conflicts among MPMx, MPI and
the MPI Subsidiaries, and other related issues. The Family Council shall
endeavor to reach consensus on all conflicts brought before it by any of MPMx,
MPI or an MPI Subsidiary. To the extent that conflicts brought before the Family
Council specifically or disproportionately implicate the interests of MPMx, MPI
or an MPI Subsidiary, the Family Council shall be deferential to that entity's
recommendations consistent with MPI's overall business strategy. If the Family
Council cannot reach a consensus on any conflict brought before it, the conflict
shall be referred to the boards of directors of the parties involved.
21
<PAGE> 22
(b) TERM. If MPMx ceases to be an Affiliate of MPI, subsection (a) above
shall cease to apply with respect to MPMx. If an MPI Subsidiary ceases to be an
Affiliate of MPI, subsection (a) above shall cease to apply with respect to such
MPI Subsidiary.
SECTION 13. GENERAL PROVISIONS
13.1 PRIOR AGREEMENTS WITH MPI SUBSIDIARIES. MPMx acknowledges that MPI has
entered into a Rights Exchange Agreement and Technology Transfer and License
Agreement with its subsidiary Millennium BioTherapeutics, Inc. To the extent
that such agreements are not substantially consistent with MPI's obligations to
MPMx under this Agreement or the Rights Exchange Agreement, MPI agrees to use
commercially reasonable and diligent efforts to amend such agreements (including
obtaining any consents necessary to amend such agreements) so that they are
substantially consistent with MPI's obligations to MPMx under this Agreement and
the Rights Exchange Agreement. If, despite such efforts, MPI is unable to so
amend the agreements, the provisions of this Agreement and the Rights exchange
Agreement shall nevertheless continue to apply to the relationship among MPI,
any other MPI Subsidiary and MPMx, and MPI shall not be deemed to be in breach
of this Agreement or the Rights Exchange Agreement.
13.2 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of MPI
or MPMx to exercise, and no delay in exercising, any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
13.3 FORCE MAJEURE. Neither Party to this Agreement shall be responsible to
the other Party for nonperformance or delay in performance of the terms or
conditions of the Agreement due to acts of God, acts of governments, war, riots,
strikes, accidents in transportation, or other causes beyond the reasonable
control of such Party.
13.4 COOPERATION. Each Party agrees to cause each of its employees and
agents to take all actions and to execute, acknowledge and deliver all
instruments or agreements reasonably requested by the other Party, and necessary
for the perfection, maintenance, enforcement or defense of that Party's rights
as set forth herein.
13.5 NOTICES. All notices, requests and other communications to MPI or MPMx
hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission or by certified mail, return receipt requested, postage prepaid, in
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<PAGE> 23
each case to the respective address specified below (or to such other address as
may be specified in writing to the other Party hereto):
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
ATTENTION: Chief Business Officer
with a copy to: Legal Department
Millennium Predictive Medicine, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
ATTENTION: President
with a copy to: Legal Department
Any notice or communication given in conformity with this Section 13.5 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.
13.6 FURTHER ASSURANCES. Each of MPI and MPMx agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other Party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other Party its rights and remedies under, this Agreement.
13.7 SUCCESSORS AND ASSIGNS. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, MPI, MPMx, and their
respective successors and assigns. Notwithstanding the foregoing, except as
otherwise contemplated herein, neither MPI nor MPMx may assign or otherwise
transfer any of its rights and interests, nor delegate any of its respective
obligations hereunder, including, without limitation, pursuant to a merger or
consolidation, without the prior written consent of the other Party hereto,
which consent shall not be unreasonably withheld. Any attempt to assign or
delegate any portion of this Agreement in violation of this Section 13.7 shall
be null and void. Subject to the foregoing, any reference to MPI and MPMx
hereunder shall be deemed to include the successors thereto and assigns thereof.
13.8 AMENDMENTS. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
MPI or MPMx therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by MPI and MPMx,
and each such amendment, modification, waiver, termination or discharge shall be
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<PAGE> 24
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreements course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by MPI and MPMx.
13.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts
notwithstanding the provisions governing conflict of laws under the laws of the
Commonwealth of Massachusetts to the contrary.
13.10 SEVERABILITY. If any provision hereof should be held invalid, illegal
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible and (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, MPI and MPMx hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
13.11 HEADINGS. Headings used herein are for convenience only and shall not
in any way affect the construction of, or be taken into consideration
interpreting, this Agreement.
13.12 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
13.13 ENTIRE AGREEMENT. This Agreement, together with the Rights Exchange
Agreement, the Trademark License Agreement, the Administrative Services
Agreement dated the Effective Date, the Research Services and Collaboration
Agreement dated the Effective Date and the Tax Sharing Agreement dated the
Effective Date, constitute the entire agreement of MPI and MPMx with respect to
the subject matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, between MPI and MPMx with respect to such
subject matter are hereby superseded in their entirety.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
MILLENNIUM PHARMACEUTICALS, INC.
By:
----------------------------
24
<PAGE> 25
Steven H. Holtzman
Chief Business Officer
MILLENNIUM PREDICTIVE MEDICINE, INC.
By:
----------------------------
Kenneth J. Conway
President
25
<PAGE> 26
SCHEDULE A
MPI PROCESS TECHNOLOGY
RADE [ ]
Transcriptional Profiling
Mouse Models, including transgenic and knock-out technologies
Sequencing, including sequence analysis
cDNA and genomic library screening methodologies
Protein Biochemistry, including proteomics and PARADE [ ]
Histology
Vector Biology
Cell Biology, including bioassay technology
Yeast Two-Hybrid technology
Automation
<PAGE> 27
SCHEDULE B
MPI SUBSIDIARY PROCESS TECHNOLOGY
<PAGE> 28
SCHEDULE C
MPMx PROCESS TECHNOLOGY
<PAGE> 29
SCHEDULE D
VARIATIONS FOR TECHNOLOGY WHICH CONSTITUTES A PRODUCT
There shall be no variations for Process Technology or Product Technology which
constitutes an MPMx Product except as set forth below.
Diagnomic and Pharmacogenomic Databases shall be licensed to MPI on the
following basis. So long as MPMx remains an Affiliate of MPI, MPI shall not be
obligated to pay MPMx any licensing, subscription or upfront payments in order
to use Diagnomic and Pharmacogenomic Databases, but shall be obligated to pay
MPMx downstream fees and charges, such as milestones and royalties, associated
with the fair market value sales of Diagnomic and Pharmacogenomic Databases to
third parties. So long as an MPI Subsidiary remains an Affiliate of MPI, such
MPI Subsidiary shall not be obligated to pay MPMx any licensing, subscription or
upfront payments in order to use Diagnomic and Pharmacogenomic Databases, but
shall be obligated to pay MPMx downstream fees and charges, such as milestones
and royalties, associated with the fair market value sales of Diagnomic and
Pharmacogenomic Databases to third parties. If MPMx ceases to be an Affiliate of
MPI, MPI and the MPI Subsidiaries shall also be required to pay to MPMx any
licensing, subscription or upfront payments associated with the fair market
value sales of Diagnomic and Pharmacogenomic Databases, provided that MPMx, MPI
and the MPI Subsidiaries shall agree on terms for a transition period not to
exceed two (2) years. If an MPI Subsidiary ceases to be an Affiliate of MPI,
such MPI Subsidiary shall also be required to pay to MPMx any licensing,
subscription or upfront payments associated with the fair market value sales of
Diagnomic and Pharmacogenomic Databases, provided that MPMx, MPI and the MPI
Subsidiary shall agree on terms for a transition period not to exceed two (2)
years.
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<PAGE> 1
Exhibit 99.1
FACTORS THAT MAY AFFECT RESULTS
This Annual Report on Form 10-K contains forward-looking statements. For this
purpose, any statements contained in this Annual Report that are not statements
of historical fact may be considered to be forward-looking statements. Although
this is not a complete list, we use the words "believes," "anticipates,"
"plans," "expects," "intends," and similar expressions to identify
forward-looking statements. There are a number of important factors that could
cause our actual results to differ materially from those that are indicated by
forward-looking statements. Those factors include, without limitation, those
listed below and elsewhere in this Annual Report on Form 10-K.
UNCERTAINTIES RELATING TO TECHNOLOGICAL APPROACHES; RISKS RELATED TO PRODUCT
DEVELOPMENT. To date, we have not developed or commercialized any products or
services based on our genomics and related technologies. Millennium's lead
programs and development focus have been primarily directed to disease that may
be linked to several or many genes, working in combination. The scientific and
medical communities have a limited understanding relating to the role of genes
in these diseases. Relatively few products and services based on gene
discoveries have been developed and commercialized. Our technological approach
to gene identification and target validation may not consistently enable
Millennium to successfully identify and characterize genes that predispose
individuals to diseases.
Any therapeutic, diagnostic or pharmacogenomic products and services based on
gene discoveries that Millennium or any of our current and future strategic
partners may develop in
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<PAGE> 2
the future will require significant research, development, testing and
regulatory approvals prior to commercialization. Development of these products
and services will be subject to the risks of failure that accompany the
development of products and services based on new technologies. These risks
include the possibilities that any products or services based on these
technologies will be found to be ineffective, unreliable or unsafe, or otherwise
fail to receive necessary regulatory approvals; that products or services, if
safe and effective, will be difficult to manufacture on a large scale or will be
uneconomical to market; that proprietary rights of third parties will preclude
us or our strategic partners from marketing products or services; and that third
parties will market superior or equivalent products or services.
Accordingly, even if Millennium is successful in identifying genes associated
with specific diseases, there can be no assurance that our gene discoveries will
lead to the development of therapeutic and diagnostic products capable of
addressing these diseases. The failure to successfully commercialize products
based on Millennium-discovered genes would have a material adverse effect on our
business, financial condition and operating results.
HISTORY OF OPERATING LOSSES; ANTICIPATION OF FUTURE LOSSES; UNCERTAINTY OF
ADDITIONAL FUNDING. To date, substantially all of our revenues have resulted
from payments from strategic partners. We have not yet generated any therapeutic
or diagnostic products or services that have entered preclinical studies. We
have not generated any revenue from therapeutic or diagnostic product sales. We
anticipate that it will be a number of years, if ever, before we will recognize
revenue from therapeutic or diagnostic product sales or royalties.
As of December 31, 1998, Millennium had an accumulated deficit of approximately
$89 million including a non-recurring charge of $83.8 million in 1997 for
acquired in-process research and development related to the acquisition of
ChemGenics. We may incur losses for at least the next several years, or may show
periods of profitability and periods of losses. Losses may increase as we
expand our infrastructure, research and development, and commercialization
activities. To achieve sustained profitability, Millennium, alone or with
others, must successfully develop therapeutic, diagnostic and pharmacogenomic
products or services, conduct clinical trials, obtain required regulatory
approvals and successfully manufacture, market and sell such therapeutic or
diagnostic products or services. The time required to reach commercial revenue
and profitability is highly uncertain. Millennium may not be able to achieve any
such revenue and profitability on a sustained basis, if at all.
Our approach of applying a comprehensive platform of genomics and related
technologies in the discovery of life-science based products and services has
required that Millennium establish a substantial scientific infrastructure.
Millennium has consumed substantial amounts of cash to date and expects capital
and operating expenditures to increase over the next several years as we expand
our infrastructure, research and development, and commercialization activities.
We believe that existing cash and investment securities and anticipated cash
flow from existing strategic alliances will be sufficient to support our
operations for the foreseeable future. Our actual future capital requirements,
however, will depend on many factors, including progress of our development and
discovery programs, the number and breadth of these programs, costs
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<PAGE> 3
associated with acquisition of products and other opportunities, achievement of
milestones under strategic alliance arrangements, our ability to establish and
maintain additional strategic alliance and licensing arrangements, and the
progress of the development efforts of our strategic partners. Other factors
that may affect our future capital requirements include the level of our
activities relating to commercialization rights it has retained in its strategic
alliance arrangements, competing technological and market developments, costs
associated with acquiring rights to technologies developed outside Millennium,
costs associated with facility expansion, costs associated with collection of
patient information and DNA samples, costs involved in enforcing patent claims
and other intellectual property rights and the costs and timing of regulatory
approvals.
We expect that Millennium will require significant additional financing in the
future, which we may seek to raise through public or private equity offerings,
debt financings or additional strategic alliance and licensing arrangements.
Such additional financing may not be available when needed, or may not be
available on terms that are favorable to Millennium or our stockholders. To the
extent we raise additional capital by issuing equity securities, ownership
dilution to stockholders will result. To the extent that we raise additional
funds through strategic alliance and licensing arrangements, we may be required
to relinquish rights to certain of our technologies or product candidates, or to
grant licenses on terms that are unfavorable, either of which could have a
material adverse effect on our business, financial condition and results of
operations. In the event that adequate funds are not available, our business
would be adversely affected.
RELIANCE ON STRATEGIC PARTNERS. Millennium's strategy for development and
commercialization of therapeutic, diagnostic and pharmacogenomic products and
services based upon our gene discoveries depends upon the formation of various
strategic alliances. We may not be able to establish additional strategic
alliance or licensing arrangements necessary to develop and commercialize
products and services based upon our discovery and development programs. Any
such arrangements or licenses may not be on terms favorable to us. Moreover, any
current or future strategic alliances or licensing arrangements ultimately may
not be successful.
In certain of our strategic alliances, we are dependent on our partners for the
development, regulatory approval, and commercialization of therapeutic,
diagnostic and pharmacogenomic products and services based on the results of
these collaborative programs. The agreements with these strategic partners allow
them significant discretion in electing whether to pursue any of these
activities. We cannot control the amount and timing of resources our strategic
partners devote to our discovery and development programs or to the potential
products or services which may result from these programs.
If any of our strategic partners were to breach or terminate its agreement with
us or otherwise fail to conduct its collaborative activities successfully in a
timely manner, our discovery and development programs, including the preclinical
or clinical development or commercialization of products or services, would be
delayed or terminated. Any such delay or termination could have a material
adverse effect on our business, financial condition and results of operations.
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<PAGE> 4
We rely on our strategic partners for strategic alliances in support of our
discovery and development programs. We could be required to devote additional
internal resources to our product and service development, or scale back or
terminate certain development programs or seek alternative collaborative
partners, if funding from one or more of our collaborative programs were reduced
or terminated.
Disputes may arise in the future with respect to the ownership of rights to any
technology developed with strategic partners. These and other possible
disagreements between strategic partners and Millennium could lead to delays in
the collaborative research, development or commercialization of certain products
and services, or could require or result in litigation or arbitration, which
could be time consuming and expensive. Such disagreements could have a material
adverse effect on our business, financial condition and results of operations.
Recently there have been a significant number of consolidations among
pharmaceutical companies. Any such consolidation involving a company with which
Millennium is collaborating could result in the diminution or termination of, or
delays in, the development or commercialization of products or research programs
under one or more of our strategic alliances.
In each of our strategic alliances, we generally agree not to conduct certain
research and development, independently or with any commercial third party, that
is in the same field as the research and development conducted under the
alliance agreement. Consequently, these arrangements may have the effect of
limiting the areas of research and development we may pursue, either alone or
with others. Our strategic partners, however, may develop, either alone or with
others, products and services that are similar to or competitive with the
products and services that are the subject of our collaborations with such
partners. Competing products and services, either developed by a strategic
partner or to which the strategic partner has rights, may result in the partner
withdrawing financial and related support for our product and service
candidates, which could have a material adverse effect on Millennium's business,
financial condition and results of operations.
All of our strategic alliance agreements are subject to termination under
various circumstances. Each strategic partner has the right to terminate its
agreement with Millennium (while maintaining rights and licenses to certain
Company discoveries) should we fail to meet certain performance criteria
specified in the relevant strategic alliance agreement. Certain of our strategic
alliance agreements provide that, upon expiration of a specified period after
commencement of the agreement, our strategic partner has the right to terminate
the agreement on short notice without cause. We may not be able to successfully
negotiate a continuation of such agreements, if we seek to do so. The
termination or non-renewal of any strategic alliance could have a material
adverse effect on our financial condition and results of operations.
RISKS ASSOCIATED WITH ESTABLISHMENT OF SUBSIDIARIES. Millennium has adopted a
strategy of establishing business divisions and subsidiaries in order to pursue
multiple business opportunities and increase our capabilities and involvement in
the later stages of drug discovery and development. In 1997, we organized three
subsidiaries, MBio, MPMx and MInfo. During 1998, we combined MPMx and MInfo. We
do not hold all of the equity in MBio and, if the
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<PAGE> 5
alliance between MPMx and Becton Dickinson receives clearance under the
Hart-Scott-Rodino Antitrust Improvements Act, we will not hold all of the equity
of MPMx. We anticipate that there could be additional minority stockholders in
both subsidiaries in the future.
Millennium has sought to develop both informal and formal relationships between
and among subsidiaries and divisions to provide each unit within the overall
group with access to the assets and capabilities of the overall group that are
relevant to the business of the particular unit. However, conflicts could arise
in the future between or among Millennium and its divisions and subsidiaries
with respect to, among other things, future business opportunities and the
sharing of rights, technologies, facilities, administrative services or other
resources.
Certain officers and directors of Millennium, including Mark Levin, Chief
Executive Officer and Chairman of the Board of Directors, and Steven Holtzman,
Chief Business Officer, currently serve as directors of each of the
subsidiaries. Mr. Levin also serves as the President of MBio. Our present
executive officers and managers may assume other positions within Millennium's
current or future subsidiaries, causing them to be unavailable to serve the
parent company or to reduce the amount of time they devote to its affairs.
Furthermore, members of the Board of Directors of Millennium and the officers of
Millennium who are also affiliated with one or more of the subsidiaries will be
required to consider not only the short-term and long-term impact of operating
decisions on the parent company, but also the impact of such decisions on the
subsidiaries. In some cases, the impact of such decisions could be
disadvantageous to Millennium or to any or all of the subsidiaries. Conflicts
may arise among the parent company and its subsidiaries and/or the minority
stockholders of such subsidiaries, which could have a material adverse effect on
our business, financial condition or results of operations.
RISKS ASSOCIATED WITH ACQUISITIONS. As part of our business strategy, we may
acquire assets and businesses relating or complementary to our operations and
business. Such acquisitions could include companies, specific technology, or
in-licensed products that are in later stages of development than those in our
current programs. Any acquisitions we may make will be accompanied by the risks
commonly encountered in acquisitions of companies or products. Such risks
include, among other things, potential exposure to unknown liabilities of
acquired companies or to acquisition costs and expenses exceeding amounts
anticipated for such purposes, the difficulty and expense of assimilating the
operations, acquired technology and personnel of the acquired businesses, the
potential disruption of our ongoing business, diversion of management time and
attention, and the potential failure to achieve anticipated financial, operating
and strategic benefits from such acquisitions.
In order to finance any such acquisition, it may be necessary for Millennium to
raise additional funds through public or private financing. Such financing, if
available at all, may be on terms which are not favorable to us, and, in the
case of equity financings, may result in dilution to Millennium stockholders.
There can be no assurance that we would be successful in overcoming these risks
or any other problems encountered in connection with any such acquisitions. If
Millennium is unsuccessful
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<PAGE> 6
in doing so, our business, financial condition and results of operations could
be materially and adversely affected.
EXPANSION OF OPERATIONS; MANAGEMENT OF GROWTH. We have significantly increased
the scale of our operations to support the expansion of our disease research
programs and our strategic alliances, including expansion due to the acquisition
of ChemGenics in 1997, the organization during 1997 of subsidiaries, the
initiation of a major strategic alliance with Monsanto in October 1997 and the
initiation of an alliance with Bayer in November 1998. This expansion has
included the hiring of a significant number of additional personnel. As of March
1, 1999, Millennium and its subsidiaries had approximately 730 full-time
employees, an increase of 210 employees since March 1, 1998. We plan to hire up
to approximately 200 new employees by the end of 1999. In addition to hiring new
employees, our growth has required and will continue to require the acquisition
of significant amounts of additional equipment, including software and
informatics resources, and the leasing of additional facilities.
Our growth has resulted in an increase in responsibilities placed upon
management and has placed added pressures on our operational and financial
systems. Our ability to manage such growth effectively will depend upon our
ability to broaden our management team and to attract, hire and retain skilled
employees. Our success will also depend on the ability of our officers and key
employees to continue to implement and improve our operational, management
information and financial control systems and to expand, train and manage our
employee base. If we are unable to manage growth effectively, such inability
could have a material adverse effect on our business, financial condition and
operating results.
INTENSE SCIENTIFIC AND COMMERCIAL COMPETITION. The fields of genomics and
pharmaceuticals are highly competitive. Millennium's competitors in the genomics
area include, among others, public companies such as Genome Therapeutics
Corporation, Human Genome Sciences, Inc., Incyte Pharmaceuticals, Inc., Myriad
Genetics, Inc. and Sequana Therapeutics, Inc., as well as private companies and
major pharmaceutical companies. Universities and other research institutions,
including those receiving funding from the federally funded Human Genome
Project, also compete with Millennium. A number of entities are attempting to
rapidly identify and patent randomly sequenced genes and gene fragments,
typically without specific knowledge of the function of such genes or gene
fragments. In addition, certain other entities are pursing a gene
identification, characterization and product development strategy based on
positional cloning and other genomics technologies.
Many of the organizations competing against Millennium have greater capital
resources, research and development staffs and facilities, and greater
experience in drug discovery and development, obtaining regulatory approvals and
product manufacturing and greater marketing capabilities than us. Our
competitors may discover, characterize or develop therapeutic or diagnostic
products or services for important genes in advance of Millennium or may make
discoveries which render non-competitive or obsolete the products or services
that Millennium or our strategic alliance partners may seek to develop, any of
which could have a material adverse effect on any related Millennium disease
research program. We expect competition to intensify in genomics research as
technical advances in the field are made and become more widely known.
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Generally, our strategic alliance agreements do not restrict the strategic
partner from pursuing competing development efforts. Any product candidate of
Millennium, therefore, may be subject to competition with a potential product
under development by a strategic partner.
PATENTS AND PROPRIETARY RIGHTS; THIRD PARTY RIGHTS. Millennium's commercial
success will depend in part on obtaining patent protection on gene discoveries
and on products, methods and services based on such discoveries. As of March 1,
1999, Millennium and its subsidiaries own, or are the exclusive licensee under,
more than 500 pending U.S. and international patent applications and 25 issued
U.S. patents.
The patent positions of pharmaceutical, biopharmaceutical and biotechnology
companies, including Millennium, are generally uncertain and involve complex
legal and factual questions. Patent law relating to the scope of claims in the
technology fields in which Millennium operates is still evolving, and the extent
of protection for our discoveries is therefore uncertain. We may not be issued
patents in respect of the patent applications that we file relating to our
technology pending patent applications will result in issued patents. Millennium
may not develop additional proprietary technologies that are patentable, and any
patents issued to either Millennium or our strategic partners may not provide a
basis for commercially viable products. Any issued patents may not provide us
with any competitive advantages or may not be challenged by third parties.
The patents of others may adversely affect our ability to do business. For
example, others may independently develop similar or alternative technologies,
duplicate any of our technologies, or design around the patented technologies we
develop. In addition, others may discover uses for genes, proteins and small
molecules other than those uses covered in our patents and patent applications,
and these other uses may be separately patentable. It is possible, therefore,
that we could be excluded from selling a product for which we have a composition
of matter claim if another party were to hold a patent covering the use of a
product of that same composition. It is also possible that Millennium could
incur substantial costs in litigation if we are required to defend ourselves in
patent suits brought by third parties, or if we initiate litigation against
others.
Millennium has applied for patent protection for novel, full-length genes,
partial gene sequences of novel genes and novel uses for known genes identified
through its research programs. There has been and continues to be uncertainty
regarding the patentability of partial gene sequences and full-length genes
absent functional data and the scope of patent protection available for
full-length genes and partial gene sequences. Based on recent technological
advances in gene sequencing technology, a number of groups other than Millennium
are attempting to rapidly identify gene sequences, whose functions have not been
characterized. Washington University (in conjunction with Merck & Co., Inc.) and
The Institute for Genomic Research (in collaboration with the National Center
for Biological Information) have made certain gene sequences available in
publicly accessible databases. It is possible that these and other similar
disclosures could adversely affect our ability to obtain patent protection for
full-length genes claimed in subsequent patent applications. We routinely
conducts searches of publicly available databases to determine whether other
parties have previously identified gene sequences corresponding to the various
partial gene sequences and full-length genes that Millennium has
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discovered. To the extent any patents issue to other parties on such gene
sequences, the risk increases that Millennium's or Millennium's partners'
potential products and processes may give rise to claims of patent infringement.
Others may have filed and in the future are likely to file patent applications
covering inventions that are similar or identical to inventions that we have
made. Any such patent applications covered have priority over patent
applications filed by Millennium. We believe that certain of our patent
applications cover genes that may also be claimed in patent applications filed
by other parties. Interference proceedings before the United States Patent and
Trademark Office may be necessary to establish which party was the first to
discover a particular gene.
Our potential products and services may conflict with patents that have been or
may be granted to competitors, universities or others. As the biotechnology and
biopharmaceutical industries expand and more patents are issued, the risk
increases that our potential products and services may give rise to claims that
they infringe the patents of others. Other parties could bring legal actions
against Millennium or our strategic partner claiming damages and seeking to
enjoin clinical testing, manufacturing and marketing of the affected products
and services. If any such actions are successful, in addition to any potential
liability for damages, We or our strategic partner could be required to obtain a
license in order to continue to manufacture or market the affected products and
processes. We cannot assure that we or our strategic partners would prevail in
any such action or that any license required under any such patent would be made
available on commercially acceptable terms, if at all. We believe that there
will continue to be significant litigation in the industry regarding patent and
other intellectual property rights. If Millennium becomes involved in such
litigation, it could consume a substantial portion of the our managerial and
financial resources.
There is substantial uncertainty concerning whether human clinical data will be
required for issuance of patents for human therapeutics. If such data is
required, our ability to obtain patent protection could be delayed or otherwise
adversely affected. Although the USPTO issued new utility guidelines in July
1995 that address the requirements for demonstrating utility for biotechnology
inventions, particularly for inventions relating to human therapeutics, utility
will be determined on a case-by-case basis. Moreover, we cannot assure that the
USPTO's position will not change with respect to what is required to establish
utility for biotechnology inventions.
Millennium relies upon trade secret protection for its confidential and
proprietary information. We believe that we have developed proprietary
technology for use in gene discovery and characterization, including proprietary
genetic marker sets, proprietary software (including proprietary software for
the capture, storage and analysis of DNA and protein sequence data) and an
integrated informatics system. We have not sought patent protection for many of
these technologies. In addition, Millennium has developed databases of
proprietary gene sequences and biological information, which are updated on an
ongoing basis. We have taken security measures to protect our data and we
continue to explore ways to further enhance data security. We cannot assure,
however, that such measures will provide adequate protection for our trade
secrets or other proprietary information. While we require employees, academic
collaborators and consultants to enter into confidentiality agreements, we
cannot assure that proprietary
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information will not be disclosed, that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets or disclose such technology, or that we can
meaningfully protect our trade secrets.
Millennium's academic collaborators have certain rights to publish data and
information in which we have rights. While we believe that the limitations on
publication of data developed by its collaborators pursuant to its collaboration
agreements will be sufficient to permit Millennium to apply for patent
protection, there is considerable pressure on academic institutions to publish
discoveries. We cannot assure that such publication would not affect our ability
to obtain patent protection for some inventions in which we may have an
interest.
Millennium is a party to various license agreements that give us rights to use
certain technologies in our research and development processes. We cannot assure
that we will be able to continue to license such technology on commercially
reasonable terms, if at all. Our failure to maintain rights to such technology
could have a material adverse effect on our business, financial condition and
results of operations.
IMPACT OF THE YEAR 2000
The Year 2000 issue is the result of computer programs that were written using
two digits rather than four to define the applicable year. Any computer program
that has date-sensitive software may recognize a date using "00" as the year
1900 rather than the Year 2000. It is possible that this incorrect recognition
of dates could cause system failures or miscalculations of data. If these errors
were to occur in Millennium systems, they could cause us to be unable to process
data and engage in normal business activities.
Millennium has determined that we have Year 2000 exposure in the following
areas: (i) software and hardware embedded in our laboratory equipment and used
in our research and development programs, (ii) computer software and hardware
used in our business and facilities operations and (iii) computer systems used
by vendors and suppliers with whom we do business. In addition, we have Year
2000 exposure with respect to internally developed informatics application
software that is used by Millennium and certain alliance partners who have
access to our technology platform.
Millennium has a Year 2000 task force that is evaluating our internal computer
programs, systems and equipment and overseeing our Year 2000 efforts. We are
using both internal and external resources to identify potential issues, costs
and solutions to address Year 2000 concerns. For this effort, we are using
procedures outlined in the Government Accounting Office's Y2K Guide. We have
completed a preliminary inventory of our informatics applications, and we are
conducting an in-depth assessment of this inventory. In addition, we have
inventoried a substantial amount of software and hardware embedded in our
laboratory and facilities equipment as part of our effort to determine Year 2000
compliance. We are also making inquiries of our important suppliers and vendors
to assess their Year 2000 readiness. We have inventoried software used in our
business operations as well. We intend to identify critical systems and
equipment on which to focus our inquiries and testing.
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To date, we have identified aspects of our computer hardware, network
infrastructure and business systems that are not Year 2000 compliant. We have
obtained and begun to implement vendor recommendations for correcting these
deficiencies. We have also identified aspects of internally developed software
applications that are not Year 2000 compliant and have begun testing and
corrective programs in this area. In addition, we expect to complete an
inventory and assessment of critical laboratory and facilities equipment and
systems by the end of the first quarter of 1999. We expect to complete testing
and remediation for critical computer hardware, network infrastructure, business
systems and internally developed software applications by the end of the third
quarter of 1999. We expect to complete testing and any remediation of critical
laboratory and facilities equipment by the end of the year. We are not
experiencing and do not anticipate any forward-looking problems.
At the current time, we expect to be able to correct the problems of which we
are aware in a reasonable and timely manner. As we have not completed our
evaluation of all of our critical systems, software or equipment, there can be
no assurance that we will not find problems that will require us to incur
substantial costs to correct or will disrupt our business. Should such problems
occur, they could have a material adverse effect on our business, financial
position or results of operations.
We do not currently have contingency plans for all critical aspects of our
systems and operations in the event that we or any of our important suppliers or
vendors are not able to become Year 2000 compliant. We expect to develop
contingency plans for critical areas if we determine that we or any important
vendors or suppliers are not likely to become Year 2000 compliant.
We have not incurred material remediation costs to date and we do not currently
expect that the aggregate cost of our efforts will be material to our operations
or financial position taken as a whole. However, it is possible that remediation
costs will be greater than we anticipate and that such costs could have a
material adverse effect on our financial position or results of operations. Our
alliance partners or collaborators may also experience disruption as a result of
the Year 2000 issue. If our alliance partners and collaborators experience
disruption, it is possible that our alliances with these partners could be
adversely affected, which could have a material adverse effect on our financial
position and results of operations.
There can be no assurance that we will identify all Year 2000 compliance
problems as a result of our efforts or that we will be able to correct
compliance problems that are identified in a timely manner. If we are unable, in
a timely manner, to identify and correct compliance problems in critical systems
and equipment, our business, financial position and results of operations could
be adversely affected.
UNCERTAINTY OF GOVERNMENT REGULATORY APPROVALS. The FDA, FTC and comparable
agencies in foreign countries impose substantial requirements upon the
manufacturing and marketing of human therapeutic, diagnostic and vaccine
products and services such as those proposed to be developed by Millennium or
its strategic alliance partners. Failure to comply with applicable regulations
or to obtain the necessary marketing clearances or approvals will significantly
impair Millennium's ability to market its products and services. The process of
obtaining FDA and
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other required regulatory approvals is lengthy and expensive. The time required
for FDA and other clearances or approvals is uncertain and typically takes a
number of years, depending on the complexity and novelty of the product. We
and/or our strategic alliance partners may encounter significant delays or
excessive costs in our efforts to secure necessary clearances, approvals or
licenses.
Because certain of the products likely to result from the our research and
development programs involve the application of new technologies and may be
based on a new therapeutic approach, such products may be subject to substantial
additional review by various governmental regulatory authorities. As a result,
regulatory approvals may be obtained more slowly than for products using more
conventional technologies. For example, proposals to conduct clinical research
involving gene therapy at institutions supported by the National Institutes of
Health ("NIH") must be approved by the Recombinant DNA Advisory Committee
("RAC") and the NIH. In addition, the U.S. Government has recently established a
working group to assess whether additional regulations in the area of genetic
testing may be appropriate, which could result in further regulation.
There can be no assurance that FDA or other clearances or approvals will be
obtained in a timely manner, if at all. Any delay in obtaining, or the failure
to obtain, such clearances or approvals could materially adversely affect our
ability to generate product or service or royalty revenues. Furthermore, such
clearances or approvals may include significant limitations on indications for
use for which the product or service may be marketed. Even if FDA or other
clearances or approvals are obtained, the marketing and manufacturing of
diagnostic and therapeutic products are subject to continuing FDA and other
regulatory review. Later discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on the product or
manufacturer, including, suspension, revocation, or withdrawal of product
approvals or clearances and/or withdrawal of the product from the market.
Violations of the Act or regulatory requirements at any time during the product
development process, approval process, or after approval may result agency
enforcement actions, including voluntary or mandatory recall, seizure of
products, fines, injunctions and/or civil or criminal penalties. Any such agency
action could have a material adverse effect on Millennium.
Millennium cannot predict the nature of any future laws, regulations,
interpretations, or applications, nor can it predict what effect additional
governmental regulations or administrative orders, when and if promulgated,
would have on its business in the future. Any such requirements could delay or
prevent regulatory approval or clearance of products under development. Any such
requirements could have a material adverse effect on Millennium's business,
financial condition, results of operations, and ability to market its products.
Our research and development activities involve the controlled use of hazardous
materials, chemicals and various radioactive materials. Millennium is subject to
federal, state and local laws and regulations governing the use, storage,
handling and disposal of such materials and certain waste products. Although we
believe that our safety procedures for handling and disposing of such materials
comply with the standards prescribed by federal, state and local laws and
regulations, the risk of accidental contamination or injury from these materials
cannot be
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completely eliminated. In the event of such an accident, Millennium could be
held liable for any damages that result and any liability could exceed our
resources.
UNCERTAINTY ASSOCIATED WITH PRECLINICAL AND CLINICAL TESTING. The grant of
regulatory approval for the commercial sale of any of our potential products
will depend in part on us and/or our strategic alliance partner successfully
conducting extensive preclinical and clinical testing to demonstrate the
product's safety and efficacy in humans. We have limited experience in
conducting preclinical and clinical development activities. Neither Millennium
nor any strategic alliance partner has submitted an IND to the FDA for any
product candidate based upon our discoveries.
The results of preclinical studies by Millennium and/or our strategic alliance
partners may be inconclusive and may not be indicative of results that will be
obtained in human clinical trials. In addition, results attained in early human
clinical trials relating to the products under development may not be indicative
of results that will be obtained in later clinical trials. As results of
particular preclinical studies and clinical trials are received, we and/or our
strategic alliance partners may abandon projects which we might otherwise have
believed to be promising.
We may not be permitted to undertake and complete human clinical trials of any
of our potential products, either in the U.S. or elsewhere. If such trials are
permitted. The products under development covered have undesirable side effect
or other characteristics that may prevent them from being approved or limit
their commercial use if approved. Clinical testing is very expensive, and we
and/or our strategic alliance partners will have to devote substantial resources
for the payment of clinical trial expenses.
In certain circumstances we may rely, in part, on our strategic alliance
partners, academic institutions and on clinical research organizations to
conduct and monitor certain clinical trials. Such entities may not conduct the
clinical trials successfully. Furthermore, we will have less control over such
trials than if Millennium were the sole sponsor. As a result, these trials may
not begin or be completed as planned. Failure to begin or complete any of our
planned clinical trials could have a material adverse effect on our business,
financial condition or results of operations.
ABSENCE OF SALES AND MARKETING EXPERIENCE; LIMITED MANUFACTURING CAPABILITY.
Although Millennium plans to rely significantly on strategic alliance partners
for the marketing and distribution of its products and services once developed,
we may market and sell certain of our products and services directly and may
engage in certain other marketing activities in collaboration with our strategic
alliance partners. During 1999, we intend to consider joint development, merger,
or acquisition opportunities that could provide Millennium with access to
products on the market or in later stages of commercial development than those
represented within our current programs. We have no experience in sales,
marketing or distribution. We do not expect to establish a direct sales
capability until such time as we have one or more products or services in
development which are approaching marketing approval.
To the extent Millennium enters into marketing or distribution arrangements with
strategic alliance partners, any revenues we receive will depend upon the
efforts of third parties. Any
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third party may not market our products and services successfully any
third-party collaboration may not be on terms favorable to us. If any marketing
partner did not market a product or service successfully, our business and
financial results would suffer. If our plan to rely on strategic alliance
partners for significant aspects of marketing and selling our products were
unsuccessful for any reason, Millennium would need to recruit and train a
marketing and sales force which would require us to incur significant additional
costs.
Millennium may not be able to attract and build a sufficient marketing staff or
sales force, the cost of establishing such a marketing staff or sales force may
not be justifiable in light of any product or service revenues, and our direct
sales and marketing efforts would be successful. In addition, if Millennium
succeeds in bringing one or more products or services to market, we may compete
with other companies that currently have extensive and well-funded marketing and
sales operations. Our marketing and sales efforts may not enable us to compete
successfully against such other companies.
Millennium does not have commercial-scale facilities to manufacture any products
under development in accordance with current Good Manufacturing Practices
("GMP") requirements prescribed by the FDA. We expect to be dependent on third
party manufacturers or collaborative partners for our clinical trials and
commercial production of products. In the event that we were unable to obtain
contract manufacturing, we may not be able to commercialize our products. Where
third-party arrangements are established, we expect to depend upon these third
parties to manage our clinical trials and meet our production needs in a timely
manner. Any such third parties we depend on may not perform. Any failures by
third parties could delay clinical trial development or the submission of
products for regulatory approval, impair our ability to commercialize products
as planned and deliver products on a timely basis, or otherwise harm our
competitive position, all of which could have a material adverse effect on our
business, financial condition or result or operation.
If we determined to develop our own manufacturing capabilities, we would need to
recruit qualified personnel and build or lease the requisite facilities and
equipment. We do not have any experience in manufacturing on a commercial scale
and do not have manufacturing facilities or equipment. We may not be able to
successfully develop our own manufacturing capabilities in a cost-effective or
timely manner. In addition, the manufacture of any potential Millennium products
regulated by the FDA and comparable agencies in foreign countries. Our delay in
complying, or our failure to comply with these agencies' manufacturing
requirements could materially adversely affect the marketing of our products and
our business, financial condition and results of operations.
AVAILABILITY OF, AND COMPETITION FOR, FAMILY RESOURCES. Our gene identification
strategy includes genetic studies of families and populations prone to
particular diseases. These studies are based upon statistical analyses of
disease inheritance patterns and require the collection of large numbers of DNA
samples from affected individuals, their families and other suitable
populations. We are dependent upon collaborations with a number of academic
centers for the identification of donor populations and the collection and
supply of the DNA samples used in its human disease gene research programs. The
availability of DNA samples from large, family-
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based or other suitable populations is therefore critical to our ability to
discover the genes responsible for human diseases through human genetic
approaches. The competition for these resources is intense and certain of our
competitors have obtained rights to significantly more family resources than we
have obtained. We may not be able to obtain access to DNA samples necessary to
support our human gene discovery programs and any material lack of availability
of such DNA samples would have an adverse effect on our business.
ATTRACTION AND RETENTION OF KEY EMPLOYEES AND CONSULTANTS. We are highly
dependent on the principal members of our management and scientific staff, none
of whom is bound by a long-term employment agreement. The loss of services of
any of these personnel could impede significantly the achievement of our
development objectives and could have a material adverse effect on our business,
financial condition and operating results. Furthermore, recruiting and retaining
qualified scientific personnel to perform research and development work in the
future will also be critical to our success. There is intense competition among
pharmaceutical and health care companies, universities and nonprofit research
institutions for experienced scientists, and there can be no assurance that we
will be able to attract and retain personnel on acceptable terms.
In addition, we rely on our scientific advisors to assist us in formulating our
discovery and developing strategy. All of the scientific advisors are employed
by employers other than Millennium and have commitments to other entities that
may limit their availability to us. Some of our scientific advisors also consult
for companies that may be competitors of Millennium.
DEPENDENCE ON RESEARCH COLLABORATORS AND SCIENTIFIC ADVISORS. We have
relationships with collaborators at academic and other institutions who conduct
research at our request. Such collaborators are not Millennium employees. All of
Millennium's consultants are employed by employers other than us and may have
commitments to, or consulting or advisory contracts with, other entities that
may limit their availability to Millennium. As a result, we have limited control
over their activities and, except as otherwise required by our collaboration and
consulting agreements, can expect only limited amounts of their time to be
dedicated to our activities. Our ability to discover genes involved in human
disease and commercialize products based on those discoveries may depend in part
on continued collaborations with researchers at academic and other institutions.
We may not be able to negotiate additional acceptable collaborations with
collaborators at academic and other institutions and our existing collaborations
may not be successful.
Our research collaborators and scientific advisors sign agreements which provide
for confidentiality of Millennium's proprietary information and results of
studies. There can be no assurance, however, that we will be able to maintain
the confidentiality of our technology and other confidential information in
connection with every collaboration, and any unauthorized dissemination of our
confidential information could have an adverse effect on our business.
UNCERTAINTY OF THERAPEUTIC AND DIAGNOSTIC PRICING, REIMBURSEMENT AND RELATED
MATTERS. Millennium's business, financial condition and results of operations
may be materially adversely affected by the continuing efforts of government and
third party payors to contain or reduce the
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costs of health care through various means. For example, in certain foreign
markets pricing and profitability of prescription pharmaceuticals are subject to
government control. In the United States, we expect that there will continue to
be a number of federal and state proposals to implement similar government
control. In addition, increasing emphasis on managed care in the United States
will continue to put pressure on the pricing of therapeutic, diagnostic and
pharmacogenomic products and services. Cost control initiatives could decrease
the price that we or any of our strategic partners receives for any therapeutic,
diagnostic and pharmacogenomic products or services in the future and have a
material adverse effect on our business, financial condition and results of
operations. Further, to the extent that cost control initiatives have a material
adverse effect on our strategic partners, Millennium's ability to commercialize
our products and to realize royalties may be adversely affected.
The ability of Millennium and any strategic partner to commercialize
therapeutic, diagnostic and pharmacogenomic products and services may depend in
part on the extent to which reimbursement for the products and services will be
available from government and health administration authorities, private health
insurers and other third party payors. Significant uncertainty exists as to the
reimbursement status of newly approved health care products and services. Third
party payors, including Medicare, increasingly are challenging the prices
charged for medical products and services. Government and other third party
payors are increasingly attempting to contain health care costs by limiting both
coverage and the level of reimbursement for new therapeutic and diagnostic
products and services and by refusing in some cases to provide coverage for uses
of approved products for disease indications for which the FDA has not granted
labeling approval. Any third party insurance coverage may not be available to
patients for any products and services discovered and developed by Millennium or
our strategic partners. If adequate coverage and reimbursement levels are not
provided by government and other third party payors for our products and
services, the market acceptance of these products and services may be reduced,
which may have a material adverse effect on our business, financial condition
and results of operations.
PRODUCT LIABILITY EXPOSURE. Clinical trials, manufacturing, marketing and sale
of any of Millennium's or our strategic partners' potential therapeutic products
may expose Millennium to liability claims from the use of such therapeutic
products. We currently do not carry product liability insurance. There can be no
assurance that we or our strategic partners will be able to obtain such
insurance or, if obtained, that sufficient coverage can be acquired at a
reasonable cost. An inability to obtain sufficient insurance coverage at an
acceptable cost or otherwise to protect against potential product liability
claims could prevent or inhibit the commercialization of therapeutic products
developed by Millennium or our strategic partners. A product liability claim or
recall could have a material adverse effect on the business or financial
condition of Millennium. While under certain circumstances we are entitled to be
indemnified against losses by its strategic partners, there can be no assurance
that this indemnification would be available or adequate should any such claim
arise.
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