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EXHIBIT 10.5
Licensing Agreement
between
F.Hoffmann-La Roche Ltd, Grenzacherstrasse 124, CH-4070 Basel, Switzerland
("Roche Basel")
and
Syntex (U.S.A.) Inc., a Delaware corporation, through its Roche Bioscience
division, 3401 Hillview Avenue, Palo Alto, California 94304, USA ("Roche
Bioscience"), both, Roche Basel and Roche Bioscience jointly called ("Roche")
on the one hand
and
Pozen Inc., 6330 Quadrangle Drive, Suite 240, Chapel Hill, NC 27514, USA
("Pozen")
on the other hand
Whereas, Roche has certain patent rights (Roche Patents, as defined below) and
know how (Roche Know-how, as defined below) covering *****, a 5-HT2B receptor
antagonist being evaluated by Roche for the prophylactic treatment of migraine
Whereas, Pozen desires to be granted an exclusive license with the right to
sublicense to ***** and any pharmaceutical dosage form that includes ***** under
the Roche Patents and Roche Know-how in the Field throughout the Territory;
Whereas, Roche is willing to grant Pozen such license rights;
Now, therefore, in consideration of the foregoing recitals and the mutual
covenants, benefits and obligations set forth herein, Pozen and Roche agree as
follows:
1. Definitions
1.1. "Accounting Period" means a calendar half-year commencing on January
1 and July 1, respectively.
1.2. "Adjusted Gross Sales" means the gross sales of Products to Third
Parties less deductions for returns (including withdrawals and
recalls), rebates (price reductions, including Medicaid, performance
based and similar types of rebates e.g. chargebacks), volume
(quantity) discounts granted at the time of invoicing, sales taxes
and other taxes directly linked and included in the gross sales
amount. Where
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(i) a Product is sold together with other goods (a "combined
transaction") with or without a separate price for the Product;
or
(ii) the consideration for a Product shall include any non-cash
element; or
(iii) a Product is transferred in any manner other than as an invoiced
sale,
the Adjusted Gross Sales applicable to the quantity of such Product in
any such transaction shall be deemed to be the average Adjusted Gross
Sales for such quantity of such Product for all transactions of Product
other than those in (i), (ii) or (iii) made at the time of such
transaction in the country in which the transaction occurred.
In the case of Roche or a Roche licensee, Adjusted Gross Sales of the
Product will be as computed in the central Roche sales statistics for the
countries concerned or a Roche licensee's comparable measure of sales, as
applicable. In the case of Pozen, Adjusted Gross Sales of the Product
will be based on the sales statistics of Pozen and its sublicensees.
1.3. "Affiliated Company" means
a) an organization more than fifty percent (50%) of the voting stock of
which is owned and/or controlled directly or indirectly by either party
to this Agreement;
b) an organization which directly or indirectly owns and/or controls
fifty percent (50%) or more of the voting stock of either party of this
Agreement; or
c) an organization which is directly or indirectly under common control
with either party to this Agreement through common share holdings.
The term "Affiliated Company" in connection with Roche shall not include
Genentech Inc., 1 DNA Way, South San Francisco, CA 94080, USA, unless
Genentech meets the above definition of an Affiliated Company and Roche
opts for such inclusion by written notice to Pozen.
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1.4. "Agreement" means the present agreement together with all amendments,
appendices and schedules.
1.5. "Compound" means a 5-HT2B receptor antagonist having the chemical
name ***** and further identified with the internal Roche number
***** including its salts, isomers, metabolites and hydrates.
1.6. "Development Costs" means the direct and indirect costs incurred by
Pozen in any country in the Territory after the Effective Date in
order to obtain marketing approval in a country in the Territory that
are specifically attributable to the development of Products and are
consistent with activities as set out in the Development Plan.
Development Costs include Direct Costs and Indirect Costs incurred to
obtain the authorization to manufacture, formulate, fill, ship and/or
sell a Product in commercial quantities in the Territory and include
but are not limited to costs of: (i) studies on the toxicological,
pharmacokinetic, metabolic or clinical aspects of a Product, whether
conducted internally or by individual investigators or consultants;
(ii) manufacturing process development and scale up, (iii)
qualification lots; (iv) preparing, submitting, reviewing or
developing data or information necessary for the purpose of
submission to the FDA in order to obtain and/or maintain approval of
a Product in the Territory; (v) data management; (vi) statistical
designs and studies; (vii) document preparation and other
administration expenses associated with the clinical testing program.
Development Costs shall not include patent costs, pricing costs,
reimbursement costs, pre-registration marketing costs (e.g. trademark
costs, advertising agency selection costs, pre-marketing studies),
post-registration clinical and marketing studies (except for Phase IV
Studies required for registration) that are not conducted as part of
the Development Plan.
In determining Development Costs, Pozen will use its applicable
project cost system with the purpose of tracking costs as much as
possible on a product indication-by-product indication basis.
Pozen shall maintain, and cause the Third Parties acting for its
account to maintain, books of account and complete and accurate
records pertaining to the Development Costs in sufficient detail to
permit Roche to confirm the correct calculation of Development Costs.
1.7. "Development Plan" means the development plan which is attached
hereto as Appendix A and is hereby made a part of this Agreement.
1.8. "Development Program" means all normal and customary activities
undertaken following the Effective Date by or on behalf of Pozen or
Roche, independently or jointly, as the case may be, that are
reasonably undertaken to assure for the timely development of the
Compound and/or Products.
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1.9. "Direct Costs" means the direct costs of developing or manufacturing
Products, including, but not limited to: (i) direct labor (including
fringe benefits), (ii) direct materials (excluding any drug
substance or other materials supplied by Roche free of charge for
use in manufacturing Products), (iii) direct Product testing costs,
and (iv) Third Party contract costs undertaken to develop, test, or
manufacture Products.
1.10. "Drug Substance" means the pure Compound in a powder or other
physical form, agreed by Roche and Pozen ready for making any type
of galenical formulation.
1.11. "Effective Date" means September , 1999.
1.12. "FDA" means the United States Food and Drug Administration or an
equivalent regulatory agency for countries outside of the United
States.
1.13. "Field" means human medicinal use (other than diagnostic use) for
any indication other than ***** provided, however, that Field shall
include the ***** indications beginning on July 1, 2002.
1.14. "First Commercial Sale" means the first sale to a Third Party for
use or consumption of a Product in a country after any required pre-
marketing approval and, where applicable, pricing approval has been
granted by the appropriate regulatory authorities of such country;
provided, however, that no non-commercial sale or sale to an
academic or not-for-profit organization for research purposes only
shall be deemed a First Commercial Sale.
1.15. "Indirect Costs" means the indirect costs of developing or
manufacturing Products, including, but not limited to: items treated
as "overhead" which are allocated to development or manufacturing
activities based on a space-occupied, headcount or other activity
based accounting method and shall specifically include costs of
items such as (a) indirect labor and materials, (b) occupancy, (c)
payroll and purchasing functions, (d) information systems, (e)
depreciation of property, plant and equipment to the extent (and
only to the extent that) they are used in and allocable to the
development or manufacturing process. Indirect Costs shall not
include start-up and validation costs or idle or excess capacity
charges, and shall not ***** percent (***** %) of the fully burdened
Development Cost or Manufacturing Cost, as the case may be.
1.16. "IND" means Investigational New Drug application, the compilation of
clinical and non-clinical data, including all amendments and
additions, as described in Title 21,United States Code of Federal
Regulations section 312.3 (21 C.F.R. ' 312.3) or comparable
definitions in other countries, by which a party may conduct human
studies of therapeutic compounds.
1.17. "Major Countries" means USA, France, Germany, Italy and the UK.
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1.18. "Manufacturing Cost" shall mean the fully burdened manufacturing
costs of Products shipped for clinical or commercial use and
determined in accordance with generally accepted accounting
principles as consistently applied by Pozen and shall include the
Direct Costs and Indirect Costs, including royalties payable by
Pozen to Third Parties relating to the manufacturing, formulation,
and filling of the Product, for manufacturing or contracting for
each stage of the manufacturing process of the Product shipped.
Manufacturing Cost shall not include any costs associated with i)
process development, assay development, scale-up, qualification lots
and regulatory costs related to the manufacturing of the Product
which shall be considered as Development Costs, ii) royalties
payable by Pozen to Third Parties relating to the use or sale (but
not the manufacturing, formulation, or filling) of the Product, or
Products that have expired through the fault of Pozen.
1.19. "NDA" means a new drug or product license application filed with the
FDA or any successor agency thereto to obtain marketing
authorization in the USA, or the equivalent application in any other
country or group of countries or jurisdiction other than the USA to
obtain marketing authorization in or for that country or within that
group of countries or for that jurisdiction.
1.20. "Net Sales" means Adjusted Gross Sales less a lump sum deduction of
***** percent (**%) of Adjusted Gross Sales for those sales-related
adjustments that are not accounted for on a product-by-product basis
(e.g. outward freights, transportation insurance, packing materials
for dispatch of goods, custom duties, discounts granted later than
at the time of invoicing, cash discounts and other direct expenses.
If a Product is sold as a pharmaceutical preparation containing the
Compound and one or more other pharmaceutically active agents
("Combination Product"), the Parties shall negotiate an appropriate
royalty adjustment to reflect the relative significance of the
Compound compared to the other pharmaceutically active agent(s).
1.21. "Phase II" means that portion of the clinical development program
which provides for continued trials of a product on patients to
establish dose ranging and first indication of efficacy of a product
for the desired claims and indications, as more closely defined by
the rules and regulations of the FDA and corresponding rules and
regulations of other countries.
1.22. "Phase III" means that portion of the clinical development program
which provides for the continued trials of a product on sufficient
numbers of patients to establish the safety and efficacy of a
product for the desired claims and indications, as more closely
defined by the rules and regulations of the FDA and corresponding
rules and regulations of other countries.
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1.23. "Pozen Know-how" means any information and data concerning the
manufacture of Compound and Products and the chemical, physical,
pharmaceutical, toxicological, pre-clinical and clinical attributes
of Compound and Product thereof elaborated by Pozen during the term
of this Agreement. Pozen Know-how shall not include Roche Know-how.
1.24. "Pozen Patents" means
a) any patents, including applications for patents, owned or
controlled by Pozen or which Pozen otherwise has the right to grant
licenses under, relating to the Compound (including Products), the
manufacture thereof, or the use thereof in the Field whether
existing as of the Effective Date or arising thereafter;
b) all patents arising from said applications;
c) any additions, divisions, continuations, continuations-in-part,
amendments, amalgamations, reissues and re-examinations of such
applications or patents;
d) any confirmation, importation and registration patents thereof
or therefore; and
e) any extensions and renewals of all such patents and patent
applications, including supplementary protection certificates based
on such patents or patent applications and administrative rights,
e.g., so-called pipeline protection, in whatever legal form and by
whatever legal title they are granted.
1.25. "Product" means any pharmaceutical preparation that contains or
includes the Compound as an active ingredient.
1.26. "Product Option" means the exclusive option, as specifically set out
in Article 2.2, for Roche to re-acquire all of the rights granted to
Pozen under Article 2.1 below, as well as any data, documentation,
Pozen Know-how, as defined in Article 1.22 and any additional
intellectual property including but not limited to Pozen Patents,
generated, owned or controlled by Pozen to the extent specifically
related to Compound or a Product.
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1.27. "Reasonable Efforts" means efforts at the level which a reasonably
prudent pharmaceutical company would use in the development,
registration and commercialization of a substantially equivalent
product stemming from such company's own research. In the event that
the original Development Plan for the migraine prophylaxis
indication is delayed for more than ***** (**) months, such delay
shall be deemed to demonstrate a prima facie lack of Reasonable
Efforts by Pozen to develop Product for the indication, unless such
delay is due to (i) circumstances outside the control of Pozen (but
not circumstances related to Pozen's financial condition or changes
in corporate strategy), or
(ii) Pozen's good faith efforts to substantially enhance the
commercial value of Product through additional work directed to
enhance presentations or formulations, additional registration-
oriented clinical trials, or the like.
In the context of commercial marketing of a Product by a party,
Reasonable Efforts shall mean such marketing activities and business
practices that are intended to maximize the financial return from
sales of Product to the extent consistent with activities and
practices employed on substantially equivalent drug products being
marketed by the party at the same stage of the marketing life cycle.
1.28. "Roche Know-how" means any information and data concerning the
manufacture of Compound and Products and the chemical, physical,
pharmaceutical, toxicological, pre-clinical and clinical attributes
of Compound in the possession of Roche on the Effective Date. Roche
Know-how shall not include Pozen Know-how.
1.29. "Roche Patents" means
a) any patents, including applications for patents, owned or
controlled by Roche or which Roche otherwise has the right to grant
licenses under, relating to the Compound (including Products), the
manufacture thereof, or the use thereof in the Field whether
existing as of the Effective Date or arising thereafter, including
but not limited to, the patents listed in Appendix B to this
Agreement (which Roche shall update from time to time, at the
request of Pozen) which is attached hereto and is made a part
hereof;
b) all patents arising from said applications;
c) any additions, divisions, continuations, continuations-in-part,
amendments, amalgamations, reissues and re-examinations of such
applications or patents;
d) any confirmation, importation and registration patents thereof
or therefore; and
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e) any extensions and renewals of all such patents and patent
applications, including supplementary protection certificates based
on such patents or patent applications and administrative rights,
e.g., so-called pipeline protection, in whatever legal form and by
whatever legal title they are granted.
1.30. "Territory" means all countries of the world.
1.31. "Third Party" means any person or legal entity other than Roche,
Pozen, or an Affiliated Company of Roche or Pozen.
1.32. "USA" means the United States of America including Puerto Rico and
its other territories and possessions.
1.33. "Valid Claim" means a claim of any issued and unexpired patent that
has not been disclaimed, revoked or held unpatentable, invalid or
unenforceable by an unappealable final decision of a court or other
governmental agency of competent jurisdiction.
2. Scope of Agreement
2.1. License to Pozen
2.1.1. Roche hereby grants to Pozen a royalty-bearing exclusive
license to make, have made, use, sell, offer for sale and
import Compound and Product under the Roche Patents and
Roche Know-how in the Field throughout the Territory.
Following the expiration of Roche's Product Option, but not
before, the license to Pozen shall include the right to
sublicense. Pozen shall notify Roche of the identity of any
sublicensee and the territorial extent of the sublicense
within thirty (30) days from the date of any sublicense
agreement. Nothing contained in this Agreement shall be
construed to convey any rights or proprietary interest in
Compound or Product to either party except as expressly
provided for in this Agreement.
2.1.2. Roche will provide to Pozen, at no additional charge to
Pozen, all Drug Substance that is available to Roche on the
Effective Date on an as-is basis as further specified in
Article 6 and Appendix C. Roche warrants that the drug
substance provided by Roche will meet the manufacturing
control specifications set out in Roche's INDs for the
Compound so as to permit use by Pozen in its clinical
trials.
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2.1.3. Pozen, either by itself or through agreements with Third
Parties, provided such Third Parties are performing services
on behalf of Pozen (e.g. Contract Research Organizations),
shall undertake Reasonable Efforts, at no cost to Roche (but
subject to Art. 3.2.1(b) and 3.2.2 credits to be allowed to
Pozen), to develop, register and market Compound for use in
the Field in at least each of the Major Countries in
accordance with the Development Plan. The Development Plan
includes a trial in which ***** which trial is designed to be
completed at the beginning of the Phase III Product Option
period (described below) to provide Roche with ***** data. Any
modifications to the Development Plan which are material will
require the written notification to Roche, including but not
limited to, any delays in the Development Plan of ******
months or increases in the Development Plan of ******percent
(**%) or more beyond the original estimated costs. Pozen will
inform Roche, in writing, on the results of its development
and registration activities at least every six months.
Roche shall have no obligation to perform any work (e.g.
research, development or manufacturing work), with the
exception of that work described in Article 6 below, for
Pozen. Should Pozen wish to have Roche perform certain work
hereunder, it shall be in the sole discretion of Roche to
decide whether such work will be performed by Roche. If Roche
agrees to perform such work, Roche shall provide Pozen with a
cost estimate and Pozen shall decide in writing whether to
accept the estimated costs under the specified payment terms
prior to the performance of any work. Each party shall appoint
a designee as contact person with the other party.
2.1.4. Pozen and its permitted licensees shall have the right to
manufacture or have manufactured the Compound and Products and
shall undertake such manufacture as required to meet Pozen's
obligations under the Development Plan.
2.1.5. Pozen and its permitted licensees shall have the right to
commercialize Products under its own trademark or under
trademarks owned by Pozen licensees if Roche does not exercise
its Product Option.
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2.1.6. If Roche does not exercise its Product Option, and neither
Pozen nor a Pozen permitted licensee commences development of
a Product (i.e. doses a patient enrolled in a clinical trial)
in ***** within one year following the delivery to Roche of
the report required by Article 2.2.1(b), all rights granted by
Roche to Pozen under this Agreement shall be terminable by
Roche with respect to ******. Such termination with respect to
***** shall take effect if, after receipt of written notice of
such termination from Roche, Pozen fails within ninety (90)
days from the date of such notice to commence development of a
Product (i.e. dose a patient enrolled in a clinical trial) in
***** under a written development plan provided by Pozen to
Roche.
2.2. Product Option of Roche
2.2.1. Roche may exercise the Product Option with respect to
Compound only during two discrete periods by providing written
notice to Pozen as follows:
a) a one-time Phase II exercise: within ninety (90) days
after delivery to Roche by Pozen of a summary report providing
all material information relating to safety and efficacy of
Phase II trials, on the Compound, including access (including,
to the extent available, electronic access in a format
compatible with Roche's internal systems) to all available
preclinical and clinical data upon which the summary report is
based; or
b) a one-time Phase III exercise: within ninety (90) days
after delivery to Roche by Pozen of a summary report providing
all material information relating to safety and efficacy of a
pivotal Phase III efficacy trial on Compound including access
(including, to the extent available, electronic access in a
format compatible with Roche's internal systems) to all
available preclinical and clinical data upon which the summary
report is based, provided that the exercise period may be
extended, if necessary, to expire no fewer than sixty (60)
days after delivery to Roche by Pozen of a further summary
report providing all material information relating to safety
and efficacy of a ***** trial on Compound including access to
all available preclinical and clinical data upon which the
summary report for such ***** trial is based.
If at the time of issuing the summary report for such pivotal
Phase III clinical trial Pozen is conducting clinical trials
for any other indications, then Pozen shall provide to Roche
comparable access to any then-available preclinical and
clinical data for such other indications.
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2.2.2. In accordance with the Development Plan, Pozen will complete
***** trials of Compound for the ****** indication prior to
initiation of clinical trials for any other indication. In
accordance with the Development Plan, Pozen's ***** trial of
Compound will be for the ***** indication, unless Pozen has
made a determination, in light of Pozen's assessment of the
commercial potential for Compound as a human medicine, to
accelerate development of Compound for such other indication
such that Pozen's ****** clinical trial for Compound relates
to such non-migraine prophylaxis indication; provided,
however, that Pozen continues to pursue clinical development
for the migraine prophylaxis indication, i.e., the Development
Plan has not been amended as provided in Art. 2.3.2.
2.2.3. Where Pozen is allowed to first conduct a ***** trial for a
****** indication, Roche shall have its one-time ******Product
Option with respect to clinical trials relating to such ******
indication.
2.2.4. If Roche exercises the Product Option, Pozen will, within
sixty (60) days of such exercise, (i) provide to Roche full
copies of all data and documentation related to the Product
and its manufacture, and (ii) deliver to Roche control of all
Drug Substance, intermediates and finished Product then in
Pozen's possession, free of additional charge.
2.2.5. In the event of Phase II exercise, Pozen will transfer to
Roche or its designee, free of additional charge, any and all
regulatory applications and approvals relating to Products. In
the event of Phase III exercise, Pozen shall be responsible
for any and all regulatory applications and approvals relating
to Products which shall subsequently be transferred to Roche.
Roche shall reimburse the reasonable costs incurred by Pozen
in order to transfer all regulatory applications and
approvals. These costs will include both Direct Costs and
Indirect Costs and fees and expenses for external services and
agencies. Roche and Pozen will agree on these costs.
2.2.6. Roche may, at its election, request that one or more Roche
employees conduct one or more visits to Pozen and its
manufacturers, at reasonable times and for reasonable
durations, during Product Option exercise period(s), at which
visit(s) Pozen will provide Roche access to all available data
related to the Development Program.
2.2.7. If Roche exercises its Product Option,
a) the rights and obligations of Pozen set forth in Article
2.1.1 above shall terminate;
b) Roche shall have the right to commercialize Compound
and/or Products under its own trademark;
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c) The parties shall use all Reasonable Efforts to assure a
smooth and orderly transition of all ongoing activities
to Roche;
d) Pozen shall exclusively license to Roche in the Field any
Pozen Patents and/or other intellectual property to the
extent related to Compound or Products.
e) Roche shall use Reasonable Efforts to develop, register
and market Compound in the Field at its own cost in at
least the Major Countries; and
f) Roche shall further use all Reasonable Efforts to launch
any Product within ***** of NDA approval for such Product
in any Major Country and Japan.
2.3. Indications Other Than
2.3.1. The Development Plan foresees that Pozen will develop the
Product for the indication of *****. However, if Pozen wishes
to carry out any early stage research and development in the
Field in order to verify that a development program for the
Product for an indication other than ***** would be
worthwhile Pozen may do so. Such early stage research and
development shall be at no cost and expense to Roche, subject
to the remaining provisions of this Agreement.
2.3.2. If following such early stage research and development Pozen
wishes to carry out drug development activities on Compound
for any such other indication(s) in the Field it shall so
notify Roche and shall submit to Roche a proposed plan for
development of Product for such other indication(s) together
with details of Pozen's budgeted Development Costs. Pozen
shall be permitted to carry out development of Product for
such other indication(s). If Pozen proposes, and Roche
consents in writing, Pozen shall be entitled to amend the
Development Plan to delete the *** indication and substitute
therefor one of such other indications for which Pozen agrees
to proceed to develop in Phase III.
2.3.3. Notwithstanding any other provision of this Agreement, Pozen
shall not commence any research or development on Compound,
nor shall Pozen allow any Third Party to undertake such work,
related to ****** prior to July 1, 2002.
3. Financial conditions
3.1. Upfront payment to Roche
Within thirty (30) days from the Effective Date, Pozen shall make to
Roche a one-time non-refundable, and non-creditable payment of one
million dollars (US$ 1,000,000).
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3.2. Milestone payments to Roche
3.2.1. Subject to Article 2.2.2, in consideration of the license
granted by Roche to Pozen, Pozen will pay to Roche the
following:
a) a royalty of **** percent (**%) on Pozen's Net Sales;
and
b) ****** percent (**%) of
i) all payments (e.g. downpayments, milestone payments
or royalties) owed Pozen by sublicensees minus
ii) Pozen's actual incurred and paid Development Cost.
3.2.2. Royalties shall be calculated on a country by country basis
and shall be paid with respect to Net Sales until (i) the last
date on which the making, having made, using, selling,
offering for sale or importing of Product in the given country
would, but for the rights granted hereunder, infringe a Valid
Claim of a Roche Patent, or (ii) ten (10) years after First
Commercial Sale of the Product, whichever is longer.
Where Pozen has taken a credit under Article 3.2.1b) against
all payments owed by sublicensees, for Pozen's Development
Costs incurred as of the date of such payment, the total of
all Development Costs shall be reduced by the amount of the
credit taken and such reduced amount shall be deemed the
remaining incurred Development Costs for the purposes of
taking further credits under this Article.
3.2.3. With regard to royalties due on Net Sales in the USA with
respect to a Product, if expiration of the Roche Patents that,
absent rights thereunder, would be infringed by the
manufacture or use of the Product in the USA takes place prior
to the tenth anniversary of the First Commercial Sale in the
USA of the Product, the royalty rate in the USA applicable to
the Product shall be reduced to **** percent (****) of Net
Sales. Reduction of the royalty rate shall begin from the date
of expiration of such Roche Patents and continue for the
remainder of the period of ten years after the First
Commercial Sale of the first Product in the USA.
3.3. Payments to Pozen if Roche exercises its Product Option
3.3.1. If Roche exercises its Product Option in Phase II, the
following non-refundable, non-creditable payments shall be due
by Roche:
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a) upon exercise, a one-time payment of **** dollars (US$ ****);
b) upon the first NDA approval of the Product in a Major
Country, a one time payment of ***** dollars (US$ ****); and
c) a royalty of **** percent (****%) on Net Sales.
3.3.2. If Roche exercises the Product Option in Phase III, the following
non-refundable, non-creditable payments shall be due by Roche:
a) upon exercise, a one-time payment of **** dollars (US$ ****);
b) upon the first NDA approval of the Product in a Major
Country, a one-time payment of **** dollars (US$ ****); and
c) a royalty of **** percent (****%) on Net Sales.
3.3.3. Royalties shall be calculated on a country by country basis
and shall be paid with respect to Net Sales until (i) the last
date on which the making, having made, using, selling, offering
for sale or importing of Product in the given country would, but
for the rights granted hereunder, infringe a Valid Claim of a
Roche Patent or a Pozen Patent, or (ii) ten (10) years after
First Commercial Sale of the Product, whichever is longer.
3.3.4. With regard to royalties due on Net Sales in the USA with
respect to a Product, if expiration of the Roche Patents and the
Pozen Patents that, absent rights thereunder, would be infringed
by the manufacture or use of the Product in the USA takes place
prior to the tenth anniversary of the First Commercial Sale in
the USA of the Product, the royalty rate in the USA applicable to
the Product shall be reduced as follows: a) if Roche exercises
its Product Option in Phase II, the royalty rate shall be reduced
to **** percent (*%) of Net Sales and b) if Roche exercises its
Product Option in Phase III, the royalty rate shall be reduced to
**** percent (*%) of Net Sales. Reduction of the royalty rate
shall begin from the date of expiration of such Roche Patents and
continue for the remainder of the period of ten years after the
First Commercial Sale of the first Product in the USA.
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3.3.5. If Roche exercises its Product Option, any royalty payable
for Compound or Product to any Third Party shall be paid by
Roche (with the exception of royalties related to
manufacturing, formulation, and filling of Product where
Product is manufactured by Pozen for Roche, which royalties
shall be paid by Pozen), provided that **** percent (**%) of
any such Third Party royalty for Compound or Product may be
offset against any royalty due to Pozen hereunder in a given
country in a calendar year, but in no event shall such
reduction exceed **** percent (*%) of Net Sales in such
country during such calendar year. If Roche does not exercise
its Product Option, any royalty payable for Compound or for a
Product to any Third Party shall be paid by Pozen, provided
that **** percent (**%) of any such Third Party royalty for
Compound or Product may be offset against any royalty due to
Roche hereunder in a given country in a calendar year.
3.4. Payment terms
3.4.1. All payments shall be made in United States dollars (US$).
Downpayments, milestone payments, and other payments with a
set due date for payment upon the occurrence of an act (e.g.,
the date of a regulatory approval) shall be made within
thirty (30) days after they become due. Royalties on Net
Sales shall be paid semi-annually within ninety (90) days
after the end of each Accounting Period.
3.4.2. Whenever for the purpose of calculating royalties, conversion
from any foreign currency shall be required, such conversion
shall be made as follows: when calculating the Adjusted Gross
Sales, the amount of such sales in foreign currencies shall
be converted into United States dollars, using the average
monthly rate of exchange at the time for such currencies as
retrieved from the Reuters System or some other source agreed
upon in writing by the parties for any particular country.
3.4.3. With each payment, the Royalty Paying Party (RPP) shall
deliver to the Royalty Receiving Party (RRP) a full and
accurate accounting for the applicable Accounting Period.
Each accounting shall include at least the following
information for each Product subject to royalty sold by the
RPP, its Affiliated Companies and licensees:
a) by country, the total monthly Adjusted Gross Sales, in
local currency, the applicable rate of exchange into U.S.
dollars, and the total monthly Adjusted Gross Sales
converted into United States Dollars;
b) the total theoretical amount payable to the RRP before
any royalty reduction or deduction;
page 15 of 35
<PAGE>
c) any royalty reduction under Articles 3.2.3 and 3.3.4, if
applicable;
d) any royalty offsets under Article 3.3.5, if applicable.
3.4.4. All amounts owed under this Agreement shall be paid net of
all applicable taxes, fees, and other charges excluding only
taxes on a party's income. In particular, any tax required to
be withheld by the RPP under the laws of any country for the
account of the RRP (withholding taxes), shall be promptly
paid by the RPP for and on behalf of the RRP to the
appropriate governmental authority, and the RPP shall furnish
the RRP with proof of payment of such tax. Any such tax
actually paid on behalf of the RRP shall be deducted from
royalty payments due the RRP or promptly reimbursed to the
RPP if no further payments are due the RRP. The RPP shall use
reasonable efforts to assist the RRP in minimizing the
withholding taxes applicable to any payment made by the RPP
and in claiming tax refund at RRP's request.
3.4.5. If the fee reports and credits are not received as agreed to
above, the RPP shall pay to the RRP interest charges on the
outstanding payment at the then prevailing U.S. prime lending
rate (as quoted in the Wall Street Journal or comparable
financial publication as of the due date of such payment)
plus two percent (2%) provided that in no event shall such
rate exceed the maximum legal interest rate. Interest shall
be calculated from the date that payment was due until
actually received by the RRP.
page 16 of 35
<PAGE>
3.5. Audit
3.5.1. At the RRP's expense, RRP has the right to engage RPP's
independent public accountant to perform, on behalf of RRP,
an audit, conducted in accordance with generally accepted
auditing standards in the USA, of such books and records of
RPP that are deemed necessary by RPP's independent public
accountants to report on Net Sales of the Product and
Development Costs for the Accounting Period or Accounting
Periods requested by RRP.
Such audit shall not be performed more frequently than once
per calendar year nor more frequently than once with respect
to records covering any specific period of time, upon at
least 30 (thirty) working days' prior written notice, and
shall be conducted during regular business hours in such a
manner as to not unnecessarily interfere with RPP's normal
business activities.
All information, data documents and abstracts herein referred
to shall be used only for the purpose of verifying royalty
statements or compliance with this Agreement, shall be
treated as the RPP's confidential information subject to the
obligations of this Agreement and need be retained no more
than nor more than five (5) years from the end of the
calendar year to which each shall pertain.
3.5.2. If such audit discloses an underpayment of more than ****
percent (*%) from the amount of royalties due, the RPP shall
bear the reasonable fees and expenses in connection with such
audit. Any sums found to be owing to either party as a result
of the inspection shall be settled within thirty (30) days
from receipt of the auditors' report, together with interest
charges at the then prevailing U.S. prime lending rate (as
quoted in the Wall Street Journal or comparable financial
publication as of the due date of such payment) plus ****
percent (*%) provided that in no event shall such rate exceed
the maximum legal interest rate. Interest shall be calculated
from the date the underpayment occurred until actually
received by the RRP. Further, if any audit discloses an
underpayment of more than **** percent (**), the RRP shall
have the right at RRP's expense to audit the books and
records of the RPP for all Accounting Periods during which
Net Sales were made subject to the record retention
limitations contained in Article 3.5.1.
page 17 of 35
<PAGE>
3.6. Prohibited rates of Royalty
If rates of royalties provided for herein are prohibited by law or
regulation in any country where a Product is sold, the parties shall
meet and agree on an adjustment to the royalty rates under Articles
3.2 or 3.3 on the basis of the highest rate permitted in that country
for a license of the type herein granted, provided that such rate is
less than the highest rate applicable under Article 3.2 or 3.3.
3.7. Audit of sublicensing agreement and royalty payments
If Pozen sublicenses a Product to a Third Party or provides contracts
with a Third Party to develop a Product or the Compound, Roche has
the right to perform and Pozen shall include in any such Third Party
contract that Roche has the right to perform, an audit, to the same
extent that such sublicensing agreement would provide that Pozen
would have such a right to audit, of the sublicensing agreement and
royalty payments between Pozen and the Third Party with a view to
verifying Pozen's payment obligations to Roche under Article 3.2.1.
At Roche's option, such an audit shall be performed in a similar
fashion as described in Article 3.5.
page 18 of 35
<PAGE>
3.8. Cost of material
If Roche exercises its Product Option, Roche may require Pozen to
assign to Roche any Third Party manufacturing contracts under which,
absent Roche's option exercise, the Third Party would have supplied to
Pozen all or a part of Pozen's requirements for Compound and for a
Product. If Pozen itself has developed capabilities for manufacturing
all or part of its anticipated requirements of Compound or of the
Product, then Roche, upon exercise of its Phase III Product Option,
may require Pozen to provide Compound and Product to Roche (i) for a
reasonable period of time to allow Roche to obtain alternative
manufacturing capability, but not more than three (3) years after
Roche's first launch of a Product in a Major Country, and (ii) to the
extent of Pozen's then available capacity for manufacturing Compound
or the Product, provided that in no event will Pozen be required to
increase its then available capacity to meet Roche supply
requirements.
Pozen shall provide Product to Roche at ***** percent (**%) of Pozen's
Standard Manufacturing Cost for Product, such Standard Manufacturing
Cost to be determined by Pozen on an annual basis. Such Standard
Manufacturing Cost for Product will consider yields, success factors
(failures) and other pertinent data. In any case, yield losses and
failures which go beyond what was reasonably expected and included in
the calculation of the standard cost shall remain the sole costs of
Pozen.
Pozen, at its own expense, agrees to instruct its independent
accounting firm to verify to Roche the reasonableness of Pozen's
determination of its Standard Manufacturing Cost. Notwithstanding the
preceding, if after reviewing the information received from Pozen,
Roche believes that an additional audit is appropriate to deal with an
apparent unreasonableness, Roche shall have the right, by any
independent public accountant or audit specialty firm reasonably
acceptable to Pozen, employed by Roche and at Roche's own expense, to
interview knowledgeable employees of Pozen and to examine and make
notes of pertinent books and records of Pozen in order to deal with
that unreasonableness. Pozen shall not unreasonably withhold
acceptance of an independent certified public accountant appointed by
Roche. In the event that Pozen's Standard Manufacturing Costs must be
adjusted downward in order to be reasonable, such adjustments shall be
settled within thirty (30) days from the determination that the
Standard Manufacturing Costs were not reasonable. If Pozen's Standard
Manufacturing Costs must be adjusted downward based in part on the
results of the additional audit by Roche in an amount of more than
***** percent (**%) from the original Standard Manufacturing Cost,
then Pozen shall bear the reasonable fees and expenses in connection
with such audit.
page 19 of 35
<PAGE>
4. Patent prosecution
------------------
4.1. Roche shall have the sole responsibility for the filing, prosecution
and maintenance of the Roche Patents. Roche agrees to assign, at
Pozen's cost, the Roche Patents to Pozen, should it no longer be
interested in prosecuting or maintaining them and should Pozen ask for
such an assignment. Roche shall notify Pozen in writing not less than
ninety (90) days prior to ceasing the prosecution or maintenance of
any Roche Patent.
4.2. Pozen shall have the sole responsibility for the filing, prosecution
and maintenance of the Pozen Patents. Pozen agrees to assign, at
Roche's cost, the Pozen Patents to Roche, should it no longer be
interested in prosecuting or maintaining them and should Roche ask for
such an assignment. Pozen shall notify Roche in writing not less than
ninety (90) days prior to ceasing the prosecution or maintenance of
any Pozen Patent.
4.3. Pozen shall notify Roche in writing of any infringement in the Field
and Territory known to Pozen of the Roche Patents and shall provide
Roche with all available evidence of such infringement. Roche shall
have the right, but not the obligation, to bring at Roche's sole
expense and in its sole control an appropriate action against any
person or entity infringing the Roche Patents with regard to the
Compound and Product in the Field and Territory. If Roche does not
bring such action within ninety (90) days of written notification
thereof by Pozen, Pozen shall have the right, but not the obligation,
to bring such appropriate action at Pozen's sole expense and control
except that Pozen may not settle the action or otherwise consent to an
adverse judgment in such action that adversely affects the rights or
interests of Roche, including issues of patent validity of Roche
Patents, without the prior written consent of Roche. Where Pozen
exercises its right to bring an action as provided in this Article,
Roche agrees to join in such action whenever Roche would be a
necessary party to the action. The party not bringing an action shall
be entitled to separate representation in such action by counsel of
its own choice and at its own expense, but such party shall fully
cooperate with the party bringing such action and shall in this case
be considered a participating party. All monies recovered upon the
final judgment or settlement of any such action to enforce the Roche
Patents shall be divided, after reimbursement of the reasonable
expenses (including attorney's fees) of each participating party
according to the relative monetary damage that they have incurred as a
result of the infringement.
page 20 of 35
<PAGE>
4.4. Roche shall notify Pozen in writing of any infringement in the Field
and Territory known to Roche of the Pozen Patents and shall provide
Pozen with all available evidence of such infringement. Pozen shall
have the right, but not the obligation, to bring at Pozen's sole
expense and in its sole control an appropriate action against any
person or entity infringing the Pozen Patents with regard to the
Compound and Product in the Field and Territory. If Pozen does not
bring such action within ninety (90) days of written notification
thereof by Roche, Roche shall have the right, but not the obligation,
to bring such appropriate action at Roche's sole expense and control
except that Roche may not settle the action or otherwise consent to an
adverse judgment in such action that adversely affects the rights or
interests of Pozen, including issues of patent validity of Pozen
Patents, without the prior written consent of Pozen. Where Roche
exercises its right to bring an action as provided in this Article,
Pozen agrees to join in such action whenever Pozen would be a
necessary party to the action. The party not bringing an action shall
be entitled to separate representation in such action by counsel of
its own choice and at its own expense, but such party shall fully
cooperate with the party bringing such action and shall in this case
be considered a participating party. All monies recovered upon the
final judgment or settlement of any such action to enforce the Pozen
Patents shall be divided, after reimbursement of the reasonable
expenses (including attorney's fees) of each participating party
according to the relative monetary damage that they have incurred as a
result of the infringement.
5. Secrecy obligations
-------------------
5.1. Both Pozen and Roche agree to keep in strict confidence all
information and data received from the other party under the terms of
this Agreement ("Confidential Information") and not disclose it to any
Third Party. The parties agree to make use of Confidential Information
only in connection with its rights and obligations under this
Agreement. The secrecy obligations shall not apply to the extent that
such information and data must be submitted to local authorities for
the purpose of registering the Product. In addition, the secrecy
obligations shall not apply to the extent that such information and
data:
a) must be submitted to a governmental authority in compliance with
a requirement of law; provided that the non-disclosing party is
given notice sufficient to enable such party to limit or oppose
such disclosure,
b) were known by the recipient party at the date of disclosure as
demonstrated by written record, or
c) are public knowledge at the time of disclosure to the recipient
party, or
d) become public knowledge at a later date without any fault of the
recipient party, or
page 21 of 35
<PAGE>
e) are independently developed by the recipient party without
access to the confidential information of the disclosing party.
5.2 Confidential Information shall only be disclosed to permitted
sublicensees and Third Parties performing work on behalf of Pozen and
shall agree to be bound by the same obligations of confidentiality to
which Pozen is bound pursuant to this Agreement.
6. Transfer of material and data
-----------------------------
6.1. After the Effective Date to the extent Roche is not contractually
prohibited from doing so, Roche will provide Pozen with the Roche
Know-how not in Pozen's possession at the Effective Date. In
particular, within the time periods set out in Appendix D after the
Effective Date, Roche shall (i) provide to Pozen full copies of all
data and documentation related to the Compound and its manufacture
including without limitation analytical methods and (ii) deliver to
Pozen all Drug Substance as described in Appendix C which is not
needed for clinical manufacturing (not to exceed ** kg), in accordance
with Article 6.2 below, together with quality control data, then in
Roche's possession. For a period of one hundred and twenty (120)
daysfollowing the Effective Date (the "Technology Transfer Period"),
Roche shall additionally make available for consultation to Pozen, on
a reasonable basis, Roche personnel with knowledge of the Compound,
including knowledge of Compound non-clinical and clinical properties
and manufacturing know-how. Such consultation shall not exceed a
total of four man-weeks (but not more than three (3) man-weeks for
manufacturing).
6.2. Roche shall not later than ninety (90) days following the Effective
Date, provide Pozen with the lesser of (i) amounts of Compound and
Drug Substance necessary for clinical studies and the technical
development and (ii) the amounts available at Roche at the Effective
Date. Roche may retain samples of Compound or Product provided to
Pozen for its own records. As part of its obligation to provide
available Compound and Product to Pozen, Roche shall take all
reasonable steps required to recrystallize for use in clinical studies
all Drug Substance available to Roche as of the Effective Date.
6.3. Pozen will assume all responsibility for clinical manufacturing,
clinical packaging, quality control on finished product, stability
testing, storage and distribution of all Product and Compound provided
by Roche in accordance with Article 6.2 and all other Product and
Compound.
6.4. Roche shall use Reasonable Efforts and shall undertake all necessary
actions to have Pozen made the sponsor of record for the IND and
otherwise transfer to Pozen any and all regulatory applications and
approvals relating to the Compound or to Products as soon as
practicable.
page 22 of 35
<PAGE>
7. Term and Termination
--------------------
7.1. The Agreement shall enter into force on the Effective Date.
7.2. The royalty provisions and other payment obligations hereunder shall
survive any termination of the Agreement.
7.3. Until Roche has exercised the Product Option, Pozen may terminate the
Agreement at any time without cause on one-hundred-and-eighty (180)
days prior written notice. After Roche has exercised the Product
Option, Pozen may only terminate this Agreement in accordance with
Articles 7.5 and 7.6.
In the event of termination under this Article 7.3 prior to completion of
the Development Program by Pozen, Roche shall have the right to
acquire or reacquire from Pozen any regulatory filings or data
relating to Compound or Products; provided, however, that Roche shall
reimburse Pozen for its Development Costs from the date of Pozen's
notification of termination until the first to occur of (i) any
subsequent notification to Pozen by Roche that Roche elects not to
further develop a Product; (ii) any notification to Pozen by Roche
that Roche elects to proceed with Compound or Product development and
will assume responsibility for all of Pozen's ongoing Product
development activities and expenses; or (iii) the conclusion of the
180 day notice period.
7.4. After Roche has exercised the Product Option, Roche may terminate its
development and commercialization activities for Compound at any time
on one-hundred-and-eighty (180) days prior written notice to Pozen.
In such case and upon request of Pozen (to be provided within the
one-hundred-and-eighty (180) days termination period) all rights and
obligations existing prior to Roche's exercising its Product Option
(including the license grant to Pozen and the obligation by Pozen to
pay milestone payments and royalties) shall apply again and the term
Roche Know-how shall be amended to include all know-how resulting
from Roche's development activities hereunder at that time. If Roche
has assumed Pozen's manufacturing contract(s) with a Third Party
pursuant to Article 3.8, Roche shall be solely responsible for its
obligations under such contract unless otherwise agreed by Pozen for
a period of **** (**) years.
page 23 of 35
<PAGE>
7.5. Either party may terminate this Agreement with immediate effect if
the other party does not cure a material breach of any of its
obligations within ninety (90) days written notice of the non-
breaching party. In the event of termination for cause, any vested
rights of the terminating party, including license rights or options
rights granted to the terminating party by the breaching party, shall
survive termination.
If Roche materially breaches any of its obligations under this
Agreement during the first thirty (30) days following the Effective
Date and Pozen decides to terminate this Agreement in accordance with
the provisions of this Article 7.5, Roche shall return to Pozen all
payments Roche received from Pozen under Article 3.1.
7.6. Either party may terminate this Agreement with immediate effect if the
other party files for protection from creditors under the bankruptcy
laws of any jurisdiction, or is dissolved, liquidated or bankrupt,
provided that each party's financial obligations to the other party
will survive termination under this Article 7.6.
7.7. In case of a termination of this Agreement for cause under Article 7.5
all rights granted to the non-terminating party shall revert to the
terminating party and any trademarks related to a Product will revert
to the terminating party. In addition, if the Agreement is terminated
by Pozen in accordance with Article 7.3 or by Roche in accordance with
Articles 7.5 and 7.6, Roche shall have rights with respect to Pozen
Know-how and Pozen Patents to the same extent as though Roche had
exercised its Product Option under Article 2.2.
7.8. In case of termination under circumstances where one party or the
other has the right to acquire or reacquire rights from the other
party, both parties shall use all Reasonable Efforts to assure a
smooth and orderly transition of all ongoing activities (e.g. know-
how, registrations).
7.9. Articles 3, 4, 5, 8, 9, 10 and 11 shall survive any termination of
this Agreement.
page 24 of 35
<PAGE>
8. Miscellaneous Provisions
8.1. This Agreement, including the attachments and schedules, constitutes
the full agreement of the parties with respect to the subject matter of
this Agreement, and incorporates any prior discussions between them
with respect to such subject matter. This Agreement, including the
attachments hereto, shall not be amended, supplemented or otherwise
modified, except by an instrument in writing signed by duly authorized
officers of the parties.
8.2. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be given in person, delivered by a
nationally recognized overnight delivery service, sent by certified
mail or by telefax whose receipt is confirmed by confirming telefax.
The notice shall be addressed to each party as follows:
F.Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH-4070 Basel, Switzerland
Attention: Corporate Law
and
Syntex (U.S.A.) Inc.
3401 Hillview Avenue
Palo Alto, California 94304
Attention: Legal Services Division
and
Pozen Inc.
Suite 240
6330 Quadrangle Drive
Chapel Hill, NC 27514, USA
Attention: President
or to such other address as the addressee shall have last furnished in
writing in accordance with this provision to the addressor.
page 25 of 35
<PAGE>
8.3. This Agreement shall be assignable by Roche without the prior written
consent of Pozen. This Agreement shall be assignable by Pozen with the
prior written consent of Roche, which consent shall not be unreasonably
withheld. Pozen may assign this Agreement to an Affiliated Company of
Pozen without the prior written consent of Roche or to a successor
entity in the event of a merger or sale of all or substantially all of
Pozen's assets. In the event of any assignment to a successor entity
by Pozen, the assignee must expressly confirm in writing its acceptance
of all the obligations that, in the absence of the assignment, would
have been borne by Pozen, including the obligations of Pozen to
exercise Reasonable Efforts as provided in this Agreement.
8.4. If any provision of this Agreement is held to be invalid, such
invalidity shall not affect the validity of the remaining provisions.
8.5. If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable because it is invalid or in conflict
with any law of any relevant jurisdiction, the validity of the
remaining provisions shall not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular provisions held to be
unenforceable.
9. Publicity
Any publication or press release made by a party hereto regarding the
existence or the content of this Agreement as well as all matters
related to the collaboration shall require the prior written approval
of the other party, which approval shall not be unreasonably withheld.
However, either party may, for the purpose of securing corporate
financing (through equity, debt or otherwise) provide non-financial
information concerning the Agreement in a required disclosure document,
to the extent material to the party's financing efforts.
10. Governing law and arbitration
10.1. This Agreement shall be governed, construed and interpreted in
accordance with the laws of the State of New York.
10.2. Any dispute, controversy, or claims arising under, out of or relating
to this Agreement, its valid conclusion, binding effect, interpretation
performance, breach or termination, including tort claims, shall be
referred to and finally determined by arbitration in accordance with
the Rules of Arbitration of the American Arbitration Association as in
force at the time when initiating the arbitration. The arbitration
tribunal shall consist of three arbitrators. The place of arbitration
shall be New York City. The language to be used in the arbitration
proceedings shall be English.
page 26 of 35
<PAGE>
10.3. The obligations of either party hereunder (except for monetary
obligations) shall be excused during such period of time that such
obligations cannot be carried out because of Acts of God and other
events beyond the reasonable control of such party.
11. Representations, Warranties and Covenants
11.1. All parties hereby represent and warrant that such party is duly
organized and validly existing under the laws of the state or country
of its incorporation and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof.
11.2. All parties hereby represent and warrant that such party is duly
authorized to execute and deliver this Agreement and to perform its
obligations hereunder.
11.3. All parties hereby represent and warrant that this Agreement is a
legal and valid obligation binding upon it and is enforceable in
accordance with its terms and further that the execution, delivery and
performance of this Agreement by such party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is
a party or by which it may be bound, and does not violate any law or
regulation of any court, governmental body or administrative or other
agency having authority over it.
11.4. No party makes any representation or warranty with respect to the
safety or usefulness of any Compound or Product. EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, NO PARTY MAKES ANY REPRESENTATION OR
WARRANTY TO THE OTHER PARTY OF ANY NATURE, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF VALIDITY, NON-
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
11.5. Each Party ("Indemnifying Party") hereby agrees to save, defend and
hold the other party and its officers, directors, employees,
consultants and agents ("Indemnified Party") harmless from and against
any and all liabilities, expenses and losses, including reasonable
legal expense and attorneys' fees ("Losses") incurred as a result of
Third Party suits, claims, actions, or demands of personal injury or
death resulting from the manufacture, development, use, handling,
storage, sale or other disposition of Products by the Indemnifying
Party, its Affiliated Companies or sublicensees except to the extent
such Losses result from the gross negligence or willful misconduct of
the Indemnified Party. If a Party seeks indemnification under this
Article, it shall inform the Indemnifying Party of a claim as soon as
reasonably practicable after it receives notice of the claim, shall
permit the Indemnifying Party to assume direction and control of the
defense of the claim (including the right to settle the claim solely
for monetary consideration), and shall cooperate as requested (at the
expense of the Indemnifying Party) in the defense of the claim.
Pozen hereby agrees to save, defend and hold Roche and its officers,
page 27 of 35
<PAGE>
directors, employees, consultants and agents harmless from and against
any and all liabilities, expenses and losses, including reasonable
legal expense and attorneys' fees incurred as a result of Third Party
suits, claims, actions, or demands related to misappropriation by Pozen
of any know-how or infringement by Pozen of any patent claiming the use
of Compound for *****. Further, in the event Pozen is found to be in
breach of Pozen's limitations contained in this Agreement regarding the
use of Compound for ******, then the foregoing indemnification shall
apply to any breach of contract claims brought against Roche to the
extent based entirely on actions by Pozen that are in breach of
limitations contained in this Agreement regarding the use of Compound
for *****.
11.6. Except with respect to Roche Patents and Roche Know-how relating to
any use of Compound or Product for *****, for which Roche makes no
representations or warranties and expressly excludes any implied
representations and warranties, Roche hereby represents and warrants
to Pozen that to the best of Roche's actual knowledge as of the
Effective Date:
a) each of the Roche Patents set out in Appendix B is valid and in
full force and effect.
b) Roche owns, or has the right to use pursuant to valid and effective
agreements, all the Roche Patents and Roche Know-how, and the
consummation of the transactions contemplated hereby will not
materially adversely alter or impair any such rights.
c) No litigation or claims are pending against Roche by any person
with respect to the ownership or the use of any of the Roche
Patents or Roche Know-how or challenging or questioning the
validity or effectiveness of any license or agreement relating to
the same, and the current use by Roche of the Roche Patents and
Roche Know-how does not infringe upon or violate any patent,
copyright, trademark, trade secret or other intellectual property
rights of any Third Party.
d) No Roche Patent has been or is currently the subject of an
interference proceeding before the U.S. Patent Office.
e) No person or entity is presently selling or marketing a product
which is covered by the Roche Patents, and the Roche Patents have
not been challenged, infringed or threatened in any way.
f) All Roche Patents are currently in compliance with formal legal
requirements (including payment of filing, examination and
maintenance fees), and there is nothing known to Roche that would
render the Roche Patents invalid or unenforceable.
page 28 of 35
<PAGE>
g) Roche has not licensed any of the Roche Patents or Know-how to any
Third Party, and no Third Party shall continue to have any right to
use any of the Roche Patents or Know-how following the Effective
Date.
h) Roche has provided to Pozen or will provide to Pozen the
information set out in Appendix D during the Technology Transfer
Period.
______________________________________
page 29 of 35
<PAGE>
Basel, ................................, 1999 F.Hoffmann-La Roche Ltd
_________________________________
Palo Alto, ............................, 1999 Syntex (U.S.A) Inc.
_________________________________
Chapel Hill, .........................., 1999 Pozen Inc.
_________________________________
Appendix A Pozen Development Plan
Appendix B Roche Patents
Appendix C Characterization and Availability of Drug Substance
Appendix D Items Required by Pozen for Technology Transfer
page 30 of 35
<PAGE>
Appendix A
Pozen Development Plan
"Month 0" shall commence at the start of recrystallization of drug substance.
In the event that Pozen does not commence manufacture of drug substance into
Product prior to October 31,1999, then the start of Month 0 shall be delayed by
the period of delay in the commencement of such manufacture beyond October 31,
1999, provided, however, that in no event shall Month 0 commence later than
sixty (60) days after shipment of the recrystallized drug substance to Pozen by
Roche.
page 31 of 35
<PAGE>
Appendix B
Roche Patents of
Patent applications filed abroad, which include *****, are based on the US
priorities of Serial Nos. 60-018218/96 and 60-040377/97 filed on May 23, 1996
and March 10, 1997. These applications have been applied for in the following
countries:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Country Appl.dt. Appl.no. Grant dt Patent no. expiry
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Argentina 22.05.1997 970102176 22.05.2017
------------------------------------------------------------------------------------------------------------------
Australia 14.05.1997 28978/97 14.05.2017
------------------------------------------------------------------------------------------------------------------
Brazil 14.05.1997 PI9709599.0 14.05.2012
------------------------------------------------------------------------------------------------------------------
Canada 14.05.1997 2255705 14.05.2017
------------------------------------------------------------------------------------------------------------------
Chile 22.05.1997 970/97
------------------------------------------------------------------------------------------------------------------
China 14.05.1997 97196018.6 14.05.2017
------------------------------------------------------------------------------------------------------------------
Colombia 22.05.1997 97028097 22.05.2017
------------------------------------------------------------------------------------------------------------------
Croatia 20.05.1997 P970275A 20.05.2017
------------------------------------------------------------------------------------------------------------------
Czech 14.05.1997 PV 3803/98
------------------------------------------------------------------------------------------------------------------
Ecuador 22.05.1997 2134/97 22.05.2017
------------------------------------------------------------------------------------------------------------------
Europe 14.05.1997 97923071.1 14.05.2017
(17 countries)
------------------------------------------------------------------------------------------------------------------
Hong Kong
------------------------------------------------------------------------------------------------------------------
Hungary 14.05.1997 42345/98 14.05.2017
------------------------------------------------------------------------------------------------------------------
India 14.05.1997 1014/MAS/97 14.05.2004
------------------------------------------------------------------------------------------------------------------
Indonesia 23.05.1997 P-971727 23.05.2012
------------------------------------------------------------------------------------------------------------------
Israel 14.05.1997 127056 14.05.2017
------------------------------------------------------------------------------------------------------------------
Japan 14.05.1997 09-541482
------------------------------------------------------------------------------------------------------------------
Malaysia 20.05.1997 PI 9702204
------------------------------------------------------------------------------------------------------------------
Mexico 14.05.1997 989650
------------------------------------------------------------------------------------------------------------------
Morocco 21.05.1997 24630 21.05.2017
------------------------------------------------------------------------------------------------------------------
New Zealand 14.05.1997 332802 14.05.2017
------------------------------------------------------------------------------------------------------------------
Nigeria 16.05.1997 144/97 30.06.1997 RP 12776 16.05.2017
------------------------------------------------------------------------------------------------------------------
Norway 14.05.1997 19985392 14.05.2017
------------------------------------------------------------------------------------------------------------------
Pakistan 16.05.1997 324/97 16.05.2013
------------------------------------------------------------------------------------------------------------------
Peru 20.05.1997 393/97 98-685 20.05.2017
------------------------------------------------------------------------------------------------------------------
Philippines 21.05.1997 56514
------------------------------------------------------------------------------------------------------------------
Poland 14.05.1997 P-330069 14.05.2017
------------------------------------------------------------------------------------------------------------------
Russia 14.05.1997 98123001 14.05.2017
------------------------------------------------------------------------------------------------------------------
Saudi Arabia 01.07.1997 97180191
------------------------------------------------------------------------------------------------------------------
</TABLE>
page 32 of 35
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Singapore 14.05.1997 9805760.7
------------------------------------------------------------------------------------------------------------------
South Africa 16.05.1997 4281/97 28.01.1998 97/4281 16.05.2017
------------------------------------------------------------------------------------------------------------------
South Korea 14.05.1997 EP97/02454
------------------------------------------------------------------------------------------------------------------
Taiwan 09.05.1997 86106209 09.05.2017
------------------------------------------------------------------------------------------------------------------
Thailand 12.05.1997 37272 12.05.2017
------------------------------------------------------------------------------------------------------------------
Turkey 14.05.1997 98/02391 14.05.2017
------------------------------------------------------------------------------------------------------------------
USA 23.05.1996 60-018218/96 23.05.1997
priority
------------------------------------------------------------------------------------------------------------------
USA 10.03.1997 60-040377/97 10.03.1998
priority
------------------------------------------------------------------------------------------------------------------
USA 20.05.1997 858964/97 20.05.2017
------------------------------------------------------------------------------------------------------------------
USA 03.11.1997 08/963390
priority
------------------------------------------------------------------------------------------------------------------
USA 21.11.1997 08/976418
priority
------------------------------------------------------------------------------------------------------------------
Uruguay 22.05.1997 24560
------------------------------------------------------------------------------------------------------------------
Venezuela 22.05.1997 935/97 22.05.2017
------------------------------------------------------------------------------------------------------------------
Yugoslavia 14.05.1997 P-532/98 14.05.2017
------------------------------------------------------------------------------------------------------------------
</TABLE>
page 33 of 35
<PAGE>
Appendix C
Characterization and Availability of Drug Substance and Product
Active Pharmaceutical Ingredient
Chemical Name
. The production of ***** involves ***** synthetic steps and has been scaled-up
to the 200 gallon (27 kg) level.
. All existing clinical trials materials, including matching *****, unless such
existing clinical trials materials have expired in which case this amount
will only include the non-expired clinical trials materials.
. Approximately *** kg of drug substance from 2 batches (*** kg for human use
and *** kg for animal use).
. An additional ***** kg of drug substance to be made available in accordance
with Article 6.2.
. Validated analytical methods for drug substance.
page 34 of 35
<PAGE>
Appendix D
Items Required by Pozen for Technology Transfer
A. Items to be delivered to Pozen within seven (7) business days from the
Effective Date:
. Current IND as it exists on the Effective Date for the indication *****.
. Current IND as it exists on the Effective Date for the indication *****.
. Any and all correspondence between Roche and the FDA or other regulatory
authorities relating to Compound or Product.
. Complete batch records relating to the manufacture of Compound and Product.
. Analytical methods and validation reports for Drug Substance and Product.
. Stability data for Drug Substance (all lots) and Product (in all packaging
configurations).
. The 'pre-formulation book.'
B. Items to be delivered to Pozen within thirty (30) days from the Effective
Date:
. Formulation development report with animal data included.
. Drug metabolism package (preclinical metabolism and analytical procedures &
validation).
page 35 of 35
