<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report - November 14, 1996
(Date of earliest event reported)
ALKERMES, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 0-19267 23-2472830
(State of incorporation) (Commission file number) (IRS employer
identification
number)
64 Sidney Street, Cambridge, Massachusetts 02139
(Address of principal executive offices, zip code)
Area Code (617) 494-0171
(Telephone number)
<PAGE>
Item 5. Other Information.
-----------------
As reported in the press release of Alkermes, Inc. (the "Company")
published December 2, 1996, the Company entered into a collaboration with The R.
W. Johnson Pharmaceutical Research Institute ("PRI"), a division of Ortho
Pharmaceutical Corporation, for the development of ProLease sustained release
formulations of a PRI proprietary compound. Pursuant to the Development and
License Agreement, dated as of August 1, 1996, in exchange for worldwide rights
to products resulting from the collaboration, PRI will provide Alkermes with
development funding, milestone payments and royalty payments based on sales. PRI
will be responsible for conducting clinical trials and securing regulatory
approvals and, together with its affiliates, will be responsible for marketing
of the products. Alkermes is expected to manufacture the ProLease products for
commercial sales pursuant to the Supply and License Agreement, dated as of
August 1, 1996. Funding to Alkermes for this phase of the collaboration is
expected to be approximately $20 million assuming the development of the product
candidate proceeds as planned. The press release and the agreements are
incorporated by reference herein and a copy of each has been filed as an exhibit
to this report.
As reported in the press release of the Company published November 14,
1996, the Company entered into a collaboration with Genentech, Inc. The Company
entered into a License Agreement, dated November 13, 1996, with Genentech,
granting a license to the Company's ProLease technology for Genentech's human
growth hormone in humans. Subject to completion of certain specified events,
Alkermes will receive milestone payments from Genentech. Alkermes will also
receive royalties from Genentech based upon sales of any product developed and
commercialized. Alkermes is expected to manufacture the ProLease formulation of
human growth hormone to support clinical trials. Assuming development of the
product candidate proceeds as planned, funding to Alkermes under this agreement
will support clinical manufacturing, process development and clinical trials and
is expected to be in excess of $20 million. In addition, Alkermes could
potentially receive from Genentech as much as $10 million in milestone payments
as well as manufacturing payments and royalties based on product sales. The
press release and the agreement are incorporated by reference herein and a copy
of each has been filed as an exhibit to this report.
The expected results stated above constitute forward-looking statements
under Federal securities laws. Consequently, actual results may differ
materially from expectations. Meaningful factors that may affect the realization
of these expected results include: (i) Alkermes could not be permitted by
regulatory authorities to undertake additional clinical trials for the product
candidates; (ii) product candidates could be ineffective or unsafe during
clinical trials; and (iii) technological change in the pharmaceutical industry
could render the product candidates obsolete or noncompetitive. For further
discussion of factors that may affect expected results, see Alkermes' Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.
2
<PAGE>
Item 7. Financial Statements and Exhibits.
----------------------------------
(c) Exhibits
10.1 Development and License Agreement, dated as of August 1,
1996, by and between The R. W. Johnson Pharmaceutical Research
Institute, Alkermes, Inc. and Alkermes Controlled Therapeutics, Inc.*
10.2 Supply and License Agreement, dated as of August 1, 1996,
by and between The R. W. Johnson Pharmaceutical Research Institute,
Alkermes, Inc. and Alkermes Controlled Therapeutics, Inc.*
10.3 License Agreement, dated as of November 13, 1996, by and
between Genentech, Inc. and Alkermes Controlled Therapeutics, Inc.*
99.1 Press Release, dated December 2, 1996
99.2 Press Release, dated November 14, 1996
* Confidential status has been requested for certain portions thereof.
Such provisions have been filed separately with the Commission.
3
<PAGE>
SIGNATURES
----------
Pursuant to requirements of Section 13 or 15(d) 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.
Dated: January 3, 1997 Alkermes, Inc.
By: /s/ Michael J. Landine
-------------------------------------
Michael J. Landine
Senior Vice President and Chief
Financial Officer
4
<PAGE>
ALKERMES, INC.
CURRENT REPORT ON FORM 8-K
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
10.1 Development and License Agreement, dated as of August 1, 1996,
by and between The R. W. Johnson Pharmaceutical Research
Institute, Alkermes, Inc. and Alkermes Controlled
Therapeutics, Inc.*
10.2 Supply and License Agreement, dated as of August 1, 1996, by
and between The R. W. Johnson Pharmaceutical Research
Institute, Alkermes, Inc. and Alkermes Controlled
Therapeutics, Inc.*
10.3 License Agreement, dated as of November 13, 1996, by and
between Genentech, Inc. and Alkermes Controlled Therapeutics,
Inc.*
99.1 Press Release, dated December 2, 1996
99.2 Press Release, dated November 14, 1996
* Confidential status has been requested for certain portions thereof. Such
provisions have been filed separately with the Commission.
5
<PAGE>
EXHIBIT 10.1
DEVELOPMENT
AND
LICENSE
AGREEMENT
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
ARTICLE I - DEFINITION
<S> <C> <C>
1.1 "ACT Know-How"...................................................... 2
1.2 "ACT Patent"........................................................ 3
1.3 "Affiliate"......................................................... 3
1.5 "Collaboration Product"............................................. 3
1.6 "Collaboration Tangible Research Product"........................... 4
1.7 "Contract Year"..................................................... 4
1.8 "Control"........................................................... 4
1.9 "Date of First Sale"................................................ 4
1.10 "Development Supply Cost"........................................... 4
1.11 "Drug Approval Application"......................................... 5
1.12 "Effective Date".................................................... 5
1.13 "FDA"............................................................... 5
1.14 "Field"............................................................. 5
1.15 "FTE"............................................................... 5
1.16 "IND"............................................................... 6
1.17 "Information"....................................................... 6
1.18 "Major European Country"............................................ 7
1.19 "Negotiated Labor Rate"............................................. 7
1.20 "NDA"............................................................... 7
1.21 "Net Sales"......................................................... 7
1.23 "Non-Product Program Patent"........................................ 9
1.24 "Patent"............................................................ 9
1.25 "Patent Costs"...................................................... 10
1.26 [xxxxxxxxxxxxx]..................................................... 10
1.27 "Phase I"........................................................... 10
1.28 "Phase II".......................................................... 10
1.29 "Phase III"......................................................... 11
1.30 "Pre-Phase I"....................................................... 11
1.31 "PRI Know-how"...................................................... 11
1.32 "PRI Patent"........................................................ 12
1.33 "Product"........................................................... 12
1.34 "Program Patent".................................................... 12
1.35 "Regulatory Approval"............................................... 12
1.36 "Research".......................................................... 13
1.37 "Research Plan"..................................................... 13
1.38 "Research Services Cost"............................................ 13
1.39 "Research Term"..................................................... 13
1.40 "Third Party"....................................................... 13
1.41 "Valid Patent Claim"................................................ 14
ARTICLE II - RESEARCH
2.1 Collaborative Research Program...................................... 14
2.2 The JRC............................................................. 14
</TABLE>
i
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<CAPTION>
<S> <C> <C>
2.3 Information and Reports............................................. 16
2.4 ACT Research Efforts................................................ 17
2.5 PRI's Research Efforts.............................................. 17
2.6 Research Capital Expenditures....................................... 18
2.7 PRI's Option to Extend Research Term................................ 18
2.8 Additional Extension by Mutual Consent.............................. 18
2.9 Collaboration Tangible Research Products............................ 18
2.10 Research Audit...................................................... 19
ARTICLE III - PRODUCT DEVELOPMENT
3.1 PRI's Responsibilities.............................................. 19
3.2 ACT's Responsibilities.............................................. 20
3.3 Adverse Event Reporting Requirement................................. 20
3.4 Filing Reports...................................................... 22
ARTICLE IV - COMMERCIALIZATION
4.1 Marketing Obligations............................................... 23
4.2 Trademarks.......................................................... 23
ARTICLE V - OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT
RIGHTS
5.1 Ownership Of Program Patents....................................... 23
5.2 Ownership Of Non-Product Program Patents........................... 24
5.3 Disclosure Of Patentable Inventions................................ 24
5.4 Non-Product Program Patent Filings................................. 24
5.5 Program Patent Filings............................................. 26
5.6 Enforcement Rights - Non-Product Program Patents................... 27
5.7 Enforcement Rights - Program Patents............................... 28
5.8 Defense and Settlement of Third Party Claims to
Collaboration Products............................................. 29
ARTICLE VI - LICENSE GRANTS
6.1 Patents for Collaboration Product.................................. 29
6.2 Know-How for Collaboration Product................................. 30
6.3 Patent Licenses for Research....................................... 30
6.4 Nonexclusive Know-How License to PRI............................... 30
6.5 Nonexclusive Know-How License to ACT............................... 31
6.6 Other Exclusive Licenses........................................... 31
ARTICLE VII - PAYMENTS
7.1 Research Payments.................................................. 32
7.2 Development Payments............................................... 32
7.3 Milestone Payments................................................. 33
7.4 Milestone Payment Timing........................................... 35
7.5 Earned Royalties for Collaboration Products........................ 35
</TABLE>
ii
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<CAPTION>
<S> <C> <C>
7.6 Generic Competition................................................ 36
7.7 Collaboration Product Earned Royalty Term.......................... 36
7.8 Special European Union Provisions.................................. 37
7.9 Foreign Exchange................................................... 37
7.10 Blocked Currency................................................... 37
7.11 Taxes.............................................................. 38
7.12 Records and Reports................................................ 38
7.13 Accounting......................................................... 39
7.14 Third Party Patents................................................ 40
7.15 Compulsory License................................................. 40
ARTICLE VIII - MANUFACTURE
8.1 PRI's Responsibility............................................... 40
ARTICLE IX - CONFIDENTIALITY
9.1 Disclosed Confidential Information................................. 41
9.2 Shared Confidential Information.................................... 41
9.3 Permitted Disclosure............................................... 42
9.4 Integration........................................................ 43
ARTICLE X - REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY
10.1 Representations and Warranties..................................... 43
10.2 Performance By Affiliates.......................................... 44
ARTICLE XI - TERM AND TERMINATION
11.1 Term............................................................... 44
11.2 Termination For Breach............................................. 44
11.3 Termination For Bankruptcy......................................... 45
11.4 Termination By PRI For Cause....................................... 45
11.5 Termination By PRI Without Cause................................... 45
11.6 Surviving Rights................................................... 45
11.7 Accrued Rights, Surviving Obligations.............................. 46
11.8 Termination Not Sole Remedy........................................ 46
ARTICLE XII - INDEMNIFICATION
12.1 Research and Development Indemnification........................... 46
12.2 PRI Indemnification................................................ 47
12.3 Notification....................................................... 47
ARTICLE XIII - DISPUTE RESOLUTION
13.1 Disputes........................................................... 47
13.2 Alternative Dispute Resolution..................................... 47
13.3 Arbitration Procedure.............................................. 48
13.4 Survivability...................................................... 52
</TABLE>
iii
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<CAPTION>
<S> <C> <C>
13.5 Jurisdiction....................................................... 52
ARTICLE XIV - LICENSOR BANKRUPTCY
14.1 Licensor Bankruptcy................................................ 53
ARTICLE XV - NOTICES
15.1 Notice............................................................. 54
ARTICLE XVI - ASSIGNMENT
16.1 Assignment......................................................... 55
ARTICLE XVII - PUBLICITY
17.1 Publicity.......................................................... 55
ARTICLE XVIII - FORCE MAJEURE
18.1 Force Majeure...................................................... 56
ARTICLE XIX - INTEGRATION
19.1 Integration........................................................ 56
ARTICLE XX - MISCELLANEOUS
20.1 Amendments......................................................... 57
20.2 Laws............................................................... 57
20.3 Severability....................................................... 58
20.4 Headings........................................................... 58
20.5 Waiver............................................................. 58
20.6 Representations.................................................... 58
20.7 Compliance with Laws............................................... 59
20.8 Relationship of Parties............................................ 59
20.9 Counterparts....................................................... 59
20.10 Limited Liability.................................................. 59
20.11 Electronic Copies.................................................. 59
</TABLE>
iv
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
DEVELOPMENT AND LICENSE AGREEMENT
THIS AGREEMENT is made effective as of the 1st day of August, 1996 by and
between, The R. W. Johnson Pharmaceutical Research Institute, a division of
Ortho Pharmaceutical Corporation, having a business address at U. S. Route 202,
Raritan, New Jersey 08869-0602 (hereinafter referred to as "PRI"), and Alkermes,
Inc. and Alkermes Controlled Therapeutics, Inc., both having a business address
at 64 Sidney Street, Cambridge, MA 02139-4136 (hereinafter collectively referred
to as "ACT"). ACT and PRI are each referred to herein by name or as a "Party"
or, collectively, as "Parties".
RECITALS
1. ACT has an on-going research program in the field of injectable
biodegradeable polymers for the sustained delivery of peptides and has developed
certain technology in this field.
2. PRI possesses pharmaceutical research, development and
commercialization capabilities, as well as proprietary technology in the field
of [xxxxxxxxxxxxxxx].
3. The Parties desire to engage in collaborative research to conduct a
discovery program to identify and develop a
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
delivery system for a [xxxxxxxxxxxxxx] as initially described in the
Research Plan attached hereto as Exhibit A.
4. If the collaborative research is successful, the resulting [xxxxxxxx]
and delivery system may be employed in the therapeutic treatment, prevention
and/or diagnosis of diseases.
5. PRI and ACT are interested in a collaborative research arrangement
with PRI developing and commercializing any [xxxxxxxxxxxx] and delivery system
combination resulting from such research.
Now, therefore, in consideration of the premises and mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I - DEFINITION
The following terms shall have the following meanings as used in this
Agreement:
1.1 "ACT KNOW-HOW" means Information which (a) ACT discloses to PRI under
or in connection with this Agreement and
2
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(b) is within the Control of ACT. Notwithstanding anything herein to the
contrary, ACT Know-How excludes ACT Patents.
1.2 "ACT PATENT" means the rights granted by any governmental authority
under a Patent which covers a method, apparatus, material or manufacture
relating to formulations containing bioabsorbable polymers leading to sustained
release upon injection, which Patent is owned or Controlled by ACT, including
its interest in Program Patents and Non-Product Program Patents.
1.3 "AFFILIATE" means an individual, trust, business trust, joint
venture, partnership, corporation, association or any other entity which
(directly or indirectly) is controlled by, controls or is under common control
with a Party. For the purposes of this definition, the term "control"
(including, with correlative meanings, the term "controlled by" and "under
common control with") as used with respect to any Party, shall mean the
possession (directly or indirectly) of power to direct or cause the direction of
the management or policies of such Party.
1.5 "COLLABORATION PRODUCT" means any and all formulations of a [xxxxxx]
(A) based on bioabsorbable polymers leading to sustained release of such
[xxxxxxxxxxx] upon
3
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
injection and (B) is discovered, identified or formulated by or on behalf of ACT
during the Research Term.
1.6 "COLLABORATION TANGIBLE RESEARCH PRODUCT" means any product of
Research, including, but not limited to, compounds, compositions of matter,
research tools, screening methods, techniques and components thereof.
1.7 "CONTRACT YEAR" means a year of 365 days (or 366 days in a leap year)
beginning on of the Effective Date and ending one (1) year thereafter and so on
year-by-year.
1.8 "CONTROL" means possession of the ability to grant a license or
sublicense as provided for herein without violating the terms of any agreement
or other arrangements with any Third Party.
1.9 "DATE OF FIRST SALE" means the day on which PRI, its Affiliate or its
sublicensee first sells a Collaboration Product to a Third Party in an arms
length transaction.
1.10 "DEVELOPMENT SUPPLY COST" means the unit cost calculated as follows:
unit cost = Negotiated Labor Rate x actual FTE required/unit.
4
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
It is acknowledged by both Parties that no other costs for supply of
Product for development will be owed.
1.11 "DRUG APPROVAL APPLICATION" means an application for Regulatory
Approval required before commercial sale or use of a Product as a drug in a
regulatory jurisdiction.
1.12 "EFFECTIVE DATE" means the date first written above.
1.13 "FDA" means the United States Food and Drug Administration.
1.14 "FIELD" means the discovery, synthesis and identification of
Collaboration Products and the development, use, manufacture, marketing,
distribution, packaging and sale of Collaboration Products.
1.15 "FTE" means a full-time person dedicated to work directly related to
Research or other work funded by PRI hereunder, or in the case of less than a
full-time dedicated person, a full-time, equivalent person year, based upon a
total of fifty-two (52) weeks or two thousand eighty (2,080) hours per year of
work, on or directly related to Research or other work funded by PRI hereunder,
carried out by an employee. In the case of Research and when calculating the
FTEs required, work on or
5
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
directly related to Research to be performed by employees can include, but is
not limited to, experimental laboratory work, recording and writing up results,
reviewing literature and references, holding scientific discussions, attending
appropriate seminars and symposia, managing and leading scientific staff, and
carrying out management duties related to the Research. Generally when
calculating the FTEs required, work specifically excludes work associated with
non-work specific administration, finance, accounting, legal and human
resources.
1.16 "IND" means an investigational new drug application filed with the
FDA as more fully defined in 21 C.F.R. (S)312.3.
1.17 "INFORMATION" means information generally not known to the public
directly relating to the Field including, but not limited to, (a) techniques and
data relating to the Field, including, but not limited to, inventions,
practices, methods, knowledge, know-how, skill, experience, test data including
pharmacological, toxicological and clinical test data, analytical and quality
control data, marketing, pricing, distribution, costs, sales, manufacturing,
patent and legal data or descriptions; and (b) compositions of matter, assays
and biological materials relating to the Field.
6
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1.18 "MAJOR EUROPEAN COUNTRY" means Germany, Spain, France, United Kingdom
or Italy.
1.19 "NEGOTIATED LABOR RATE" is calculated for 1997 at the start of ACT's
fiscal year by dividing the total expenses of ACT by the number of direct
personnel. These personnel exclude G&A, finance, legal and human resources.
The 1997 fiscal year Negotiated Labor Rate is [ ]. This Negotiated Labor
Rate will be adjusted for any year following 1997 according to the Consumer
Price Index as published in the Federal Register.
1.20 "NDA" means a complete New Drug Application and all supplements
thereto filed with the FDA including all documents, data, and other information
concerning a Product which are necessary for, or included in, FDA approval to
market such Product as more fully defined in 21 C.F.R. (S)314.5 et seq.
1.21 "NET SALES" means the gross sales price billed by PRI or an Affiliate
or a sublicensee for sales of Collaboration Products to an unrelated Third Party
less: (a) standard trade discounts, including cash discounts, or rebates,
retroactive price reductions or allowances actually allowed or granted from the
billed amount, (b) credits or allowances actually granted upon claims,
rejections or returns of Collaboration Products, including recalls, regardless
of the Party requesting such, (c)
7
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
freight, postage, shipping and insurance charges, to the extent billed, and (d)
taxes, duties or other governmental charges levied on or measured by the billing
amount when included in billing, as adjusted for rebates and refunds and (e)
provisions for actual uncollectible accounts determined in accordance with
reasonable accounting methods, consistently applied. In the event ACT is
receiving royalties under this Agreement from any Collaboration Product sold in
a form containing in addition to simple Collaboration Product, a further
component or components related to the Collaboration Product, Net Sales for such
combination Collaboration Product will be calculated by multiplying actual Net
Sales of such combination Collaboration Product by the fraction A/(A+B) where A
is the invoice price of the Collaboration Product if sold separately, and B is
the total invoice price of any other component or components, including devices,
in the combination, if sold separately. For purposes of clarification, further
component or components will not include standard packaging, which includes,
optionally, diluents and standard hardware for administration. If, on a
country-by-country basis, the other component or components in the combination
are not sold separately in said country, Net Sales for the purpose of
determining royalties of the combination Collaboration Product shall be
calculated by multiplying actual Net Sales of such combination Collaboration
Product by the fraction A/C where A is the invoice price of the Collaboration
8
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Product, if sold separately, and C is the invoice price of the combination
Collaboration Product. If, on a country-by-country basis, neither the
Collaboration Product nor the other component or components of the combination
Collaboration Product is sold separately in said country, Net Sales for the
purposes of determining royalties of the combination Product shall be determined
by the Parties in good faith.
In general, the Parties agree to negotiate in good faith for an equitable
determination of Net Sales of Collaboration Product, on a country-by-country
basis, in the event that PRI sells Collaboration Product in such a manner that
that gross sales of the same are not readily identifiable.
1.23 "NON-PRODUCT PROGRAM PATENT" means any Patent, the subject of which
is an invention directed to a Collaboration Tangible Research Product which is
other than a Collaboration Product and which is conceived or reduced to practice
by ACT, or by PRI and ACT jointly, or by a Third Party under a contract with ACT
or an Affiliates of either of them, in the course of the Research, or prior to
the first anniversary of the end of the Research Term.
1.24 "PATENT" means (a) valid and enforceable Letters Patent in any
country, including any extension, registration,
9
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
confirmation, reissue, continuation, divisionals, continuation-in-part or re-
examination or renewal thereof and (b) pending applications for Letters Patents.
1.25 "PATENT COSTS" means the fees and expenses paid to outside legal
counsel and other Third Parties, and filing and maintenance expenses, incurred
in connection with the establishment and maintenance of rights under Patents.
1.26 [xxxxxxxxxxxx]
1.27 "PHASE I" shall mean that portion of the FDA submission and approval
process which provides for the first introduction into humans of a Product with
the purpose of determining human toxicity, metabolism, absorption, elimination
and other pharmacological action as more fully defined in 21 C.F.R.
(S)312.21(a).
1.28 "PHASE II" means that portion of the FDA submission and approval
process which provides for the initial trials of Product on a limited number of
patients for the purposes of determining dose and evaluating safety and efficacy
in the proposed
10
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
therapeutic indication as more fully defined in 21 C.F.R. (S)312.21(b)
1.29 "PHASE III" means that portion of the clinical development program
which provides for continued trials of a Product on sufficient numbers of
patients to establish the safety and efficacy of a Product and generate, if
required, pharmacoeconomics data to support regulatory approval in the proposed
therapeutic indication as more fully defined in 21 C.F.R. (S)312.21(c).
1.30 "PRE-PHASE I" means that portion of the development program which
starts with the selection of a Collaboration Product for development and the
beginning of at least toxicological studies relating to such compound. Pre-
Phase I includes, but is not limited to, toxicological and pharmacological
studies and manufacturing development, including scale up for clinical supplies,
necessary to obtain the permission of regulatory authorities to begin and
continue subsequent human clinical testing.
1.31 "PRI KNOW-HOW" means Information which (a) PRI discloses to ACT under
or in connection with this Agreement and (b) is within the Control of PRI.
Notwithstanding anything herein to the contrary, PRI Know-how shall exclude PRI
Patents.
11
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1.32 "PRI PATENT" means the rights granted by any governmental authority
under a Patent which covers a method, apparatus, material or manufacture
relating to the Field, which Patent is owned or Controlled by PRI, including its
interest in Program Patents and Non-Product Program Patents.
1.33 "PRODUCT" means any form or dosage for pharmaceutical use in humans
or animals.
1.34 "PROGRAM PATENT" means any Patent, the subject of which is an
invention directed to a Collaboration Product conceived or reduced to practice
by ACT or by PRI and ACT, jointly, or by a Third Party under a contract with
ACT, in the course of the Research, or ACT's work in the Field during the one
year period following the end of the Research Term.
1.35 "REGULATORY APPROVAL" means any and all approvals (including pricing
and reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture, use, storage, import,
transport or sale of Products in a regulatory jurisdiction.
12
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1.36 "RESEARCH" means all work performed by the Parties or on their behalf
directly related to the discovery, identification and synthesis of Collaboration
Products during the Research Term.
1.37 "RESEARCH PLAN" has the meaning described in Paragraph 2.1 hereof and
shall be attached as Exhibit A.
1.38 "RESEARCH SERVICES COST" means the sum payable for Research and
calculated as follows:
sum = Negotiated Labor Rate x actual FTE required for Research.
It is acknowledged by both Parties that no other costs for Research will be
owed.
1.39 "RESEARCH TERM" means the period commencing on the Effective Date and
ending on the first to occur of (i) termination of this Agreement by either
Party under Paragraph 11.2 hereof or (ii) termination of the Agreement at the
convenience of PRI according to Paragraph 11.5; or (iii) three years from the
Effective Date, which may be extended under Paragraph 2.7.
1.40 "THIRD PARTY" means any entity other than ACT or PRI, and their
respective Affiliates.
13
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1.41 "VALID PATENT CLAIM" means a claim in any unexpired ACT Patent,
including its interest in Program Patents and Non-Product Program Patents, which
has matured into an issued patent or in any pending application for a Patent for
which not more than five (5) years have elapsed since the filing date of such
application for priority purposes, in each case which has not been held invalid
by a non-appealed or unappealable decision by a court or other appropriate body
of competent jurisdiction. The scope of a Valid Patent Claim shall be limited to
its terms as set forth in the Patent itself or as defined by any court or
appropriate body of competent jurisdiction.
ARTICLE II - RESEARCH
2.1 COLLABORATIVE RESEARCH PROGRAM. ACT and PRI agree that they will
conduct the Research on a collaborative basis with a goal of discovering,
identifying and synthesizing Collaboration Products that are suitable for
development into Product for commercialization. The Parties have agreed to an
initial Research Plan, as described in Exhibit A attached hereto.
2.2 THE JRC. The Parties shall establish a Joint Research Committee
("JRC") promptly after the Effective Date. The JRC shall be comprised of
representatives of each Party with the size of the JRC to be agreed upon by the
Parties from time-to-time.
14
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
The purpose of the JRC is to coordinate the Research effort of the Parties and
to expedite the progress of work being done under the Research Plan and other
work directed to developing a Collaboration Product under this Agreement. The
JRC will set specific Research goals, will evaluate the results of the Research,
discuss information relating to the Research and; will ensure that there is
appropriate scientific direction for the collaboration. The JRC shall develop
and periodically modify the Research Plan, commencing with the current Research
Plan attached hereto as Exhibit A. The Research Plan, among other things, shall
specify scientific direction and Research milestones and allocate Research
responsibilities and resources (including the estimated Research Services Cost,
on an activity by activity basis, for such Research) in a manner consistent with
this Agreement. Regardless of the number of representatives from each Party,
each Party shall present one consolidated view on any issue in dispute. If the
JRC fails to reach unanimous agreement on any matter before it for
consideration, the matter shall be resolved consistent with PRI's position
(except where the disagreement concerns the amount of the estimated Research
Services Cost for Research payable under Paragraph 7.1 or a substantial increase
in the total manpower committed by ACT to Research or the scheduling of ACT
critical facilities where the scheduling is less than one year in advance).
Disputes involving the estimated Research Services Cost and other issues on
which
15
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
PRI does not have final say will be referred to the Chief Financial Officer of
ACT and the Chairman of PRI. The JRC shall meet from time-to-time as agreed to
by the Parties.
2.3 INFORMATION AND REPORTS. ACT will make available and disclose to PRI
all Information known by ACT as of the Effective Date and at any time on or
before the end of the Research Term or prior to the first anniversary of the end
of the Research Term. All discoveries or inventions made by ACT in the Field,
including, but not limited to information regarding initial lead compositions,
activities of lead compositions, modifications of lead compositions, and results
of in vitro and in vivo studies, assay techniques and new assays, will be
promptly disclosed, with significant discoveries or advances being communicated
as soon as practical after such Information is obtained or its significance is
appreciated. Compositions shall be transferred by ACT to PRI as reasonably
required by PRI. The Parties will exchange, at a minimum, monthly verbal or
written reports, and quarterly, a written report presenting a meaningful summary
of Research done under this Agreement. PRI and ACT shall continue to provide
such quarterly written reports in the one (1) year period after the end of the
Research Term. Each Party will make periodic presentations to the other of its
Research under this Agreement to inform the other Party of the work done under
this Agreement including any work done prior to the Effective Date thereof.
16
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Each Party will use reasonable efforts consistent with its normal business
practices not to communicate information to the other which has no application
to the Field. Each Party will provide the other with copies of raw data for
work carried out in the course of the Research under this Agreement if
requested.
2.4 ACT RESEARCH EFFORTS. ACT agrees to commit the resources set forth in
this Paragraph 2.4, to exert the efforts necessary and reasonable and consistent
with its normal business practices to execute and substantially perform the
Research Plan (including extensions for the balance of the Research Term), to
maintain and utilize the scientific staff, laboratories, offices and other
facilities consistent with such undertaking, and to reasonably cooperate with
PRI in the conduct of the Research. The Parties hereby agree that ACT's current
laboratories, offices and other facilities are satisfactory for purposes of this
Paragraph 2.4.
2.5 PRI'S RESEARCH EFFORTS. PRI agrees to commit its own Research
efforts the resources which it believes are reasonable and necessary based upon
the outcome of the Research conducted by ACT. At a minimum, PRI agrees to commit
reasonable efforts to Research through its own resources or by funding the
efforts of ACT commensurate in scope to efforts which it commits to similar
projects of similar potential.
17
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
2.6 RESEARCH CAPITAL EXPENDITURES. The purchase of any capital item
reasonably required by ACT to conduct Research shall be ACT's obligation and
responsibility and all costs associated therewith are to the account of ACT.
2.7 PRI'S OPTION TO EXTEND RESEARCH TERM. PRI shall have an option to
extend the Research Term under this Agreement on an annual basis for up to three
(3) additional one-year terms beyond the initial term of three years by giving
notice to ACT that it intends to exercise its option to extend for an additional
year at least ninety (90) days prior to the end of the Research Term then in
effect.
2.8 ADDITIONAL EXTENSION BY MUTUAL CONSENT. The Parties may, by mutual
written consent, extend the Research Term beyond the period set forth above, on
such terms and conditions as the Parties may then agree in writing.
2.9 COLLABORATION TANGIBLE RESEARCH PRODUCTS. Collaboration Tangible
Research Products, excepting compositions embodying Collaboration Products,
shall be jointly owned by ACT and PRI. After the first anniversary of the end of
the Research Term, neither Party shall be required to provide the other with
data or other information relating to Collaboration Tangible Research Products.
18
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
2.10 RESEARCH AUDIT. ACT will maintain complete and accurate records
which are relevant to its expenditure of Research manpower provided to it under
this Agreement pursuant to the Research Plan. With reasonable notice, such
records shall be open during reasonable business hours for a period of from
three years from the creation of individual records for examination at PRI's
expense and not more often than once each year by an independent certified
public accountant appointed by PRI and reasonably acceptable to ACT. Such
examination will be for the sole purpose of verifying for PRI the cost of the
Research conducted and whether or not funds received by ACT from PRI were used
for conducting Research.
ARTICLE III - PRODUCT DEVELOPMENT
3.1 PRI'S RESPONSIBILITIES. PRI shall be solely responsible for and have
the sole right to select a Collaboration Product to enter Pre-Phase I. Once a
Collaboration Product is selected to enter Pre-Phase I, PRI shall be solely
responsible for and shall have the sole right to develop the Collaboration
Product through Pre-Phases I and Phases I, II and III including making all Drug
Approval Applications and obtaining all Regulatory Approvals on a worldwide
basis. In this regard, PRI agrees to commit reasonable efforts to carry out
development of such Collaboration Product consistent with its normal business
19
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
practices. Moreover, PRI shall be responsible for all cost and expenses in
connection with such development efforts.
3.2 ACT'S RESPONSIBILITIES. As reasonably requested by PRI, ACT will
provide PRI all Information in ACT's Control relating to Collaboration Products
selected for development and/or being developed by PRI. According to a plan
developed and approved by the JRC, ACT agrees to maintain a validated facility
and process and supply any Collaboration Product reasonably required for
clinical trials. The specifications for such clinical trial Collaboration
Product will be established by the JRC. ACT's requirements of [xxxxxxxxxx] to
supply PRI clinical trial Collaboration Product will be supplied to ACT at no
cost to ACT. In addition to supplying any Collaboration Product reasonably
required for clinical trials, ACT will supply PRI with all required CM&C
documentation and data. ACT agrees to carry out any further developmental work
reasonably within its capabilities as requested by the JRC. Any Information
disclosed by PRI to ACT about development hereunder may be used by ACT solely in
connection with the Research.
3.3 ADVERSE EVENT REPORTING REQUIREMENT. The Parties recognize that PRI
as the holder of all Drug Approval Applications and Regulatory Approval may be
required to submit information and file reports to various governmental agencies
on
20
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Collaboration Products under clinical investigation, Collaboration Products
proposed for marketing, or marketed Collaboration Products. The information
must be submitted at the time of initial filing for investigational use in
humans and at the time of a request for market approval of a new Collaboration
Product. In addition, supplemental information must be provided on
Collaboration Products at periodic intervals and adverse drug experiences must
be reported at more frequent intervals depending on the severity of the
experience. Consequently, to the extent ACT obtains the following and
appropriate persons within ACT are aware thereof, ACT agrees to:
(A) provide to PRI for initial and/or periodic submission to government
agencies significant information on the Collaboration Product and components
thereof from preclinical laboratory, animal toxicology and pharmacology studies,
as well as adverse drug experience reports from clinical trials and commercial
experiences with the Collaboration Product or components thereof;
(B) in connection with investigational drugs, report to PRI within three
(3) days of the initial receipt of a report of any serious adverse experiences
with the Collaboration Product or components thereof, or sooner if required, for
PRI to comply with regulatory requirements; and
21
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(C) in connection with marketed Collaboration Products, report to PRI
including, but not limited to, by telephone and telefax within three (3)
business days of the initial receipt of a report of any adverse experience with
the Collaboration Product that is serious or sooner if required for PRI to
comply with regulatory requirements. For the purposes of this Agreement, serious
adverse experiences mean any experience that suggests a significant hazard,
contraindication, side effect or precaution, or any experience that is fatal or
life threatening, is permanently disabling, requires or prolongs inpatient
hospitalization, or is a congenital anomaly, cancer, or overdose or as defined
in the most current US regulations and/or regulations of a Major European
Country.
PRI recognizes that ACT has a reporting requirement to Regulatory
Authorities on delivery systems that may be similar to delivery systems employed
in Collaboration Products. Accordingly, PRI agrees to a reciprocal obligation
to ACT under this Paragraph.
The Parties will agree to reasonable procedures for data exchange
hereunder.
3.4 FILING REPORTS. Reports made to regulatory agencies in connection
with any Collaboration Product hereunder including adverse reaction reports
shall be made exclusively by PRI.
22
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ARTICLE IV - COMMERCIALIZATION
4.1 MARKETING OBLIGATIONS. All business decisions, including, but not
limited to, the design, sale, price and promotion of Collaboration Products
under this Agreement and the decision whether to market any particular
Collaboration Product shall be within the sole discretion of PRI. Any marketing
of a Collaboration Product in one market or country shall not obligate PRI to
market said Collaboration Product in any other market or country. Furthermore,
PRI makes no representation or warranty that the marketing of a Collaboration
Product shall be the exclusive means by which PRI will participate in any
therapeutic field.
4.2 TRADEMARKS. PRI shall select its own trademarks under which it
will market Collaboration Products and shall own all such trademarks.
ARTICLE V - OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT
RIGHTS
5.1 OWNERSHIP OF PROGRAM PATENTS. All inventions and discoveries
which may be filed as Program Patents shall be owned jointly by PRI and ACT.
23
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
5.2 OWNERSHIP OF NON-PRODUCT PROGRAM PATENTS. Non-Product Program
Patents shall be owned by the Party inventing the same, and if invented by joint
inventors where there is one or more inventor from each Party, the Non-Product
Program Patents shall be jointly owned.
5.3 DISCLOSURE OF PATENTABLE INVENTIONS. In addition to the disclosures
required under Article II hereof, each Party shall provide to the other any
invention disclosure related to the Field which has been submitted in the normal
course of disclosing an invention and which has arisen in the course of the
Research hereunder. Such invention disclosures shall be provided to the other
Party promptly after submission and in no event later than ten (10) days after
the end of the calendar quarter in which the disclosure was submitted.
5.4 NON-PRODUCT PROGRAM PATENT FILINGS. If the invention is solely
owned, the Non-Product Program Patents will be filed by the Party who is the
sole owner of the same according to Paragraph 5.2. The sole owner of Non-Product
Program Patents will bear all Patent Costs related thereto and make all
decisions regarding the same without obligation to the other Party.
If the invention is jointly owned, the Non-Product Program Patent will be
filed by the Party on whose site the invention was
24
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
identified. The Party which is responsible for filing the jointly owned Non-
Product Program Patent will be termed the "filing Party". The filing Party shall
keep the other Party apprised of the status of each jointly owned Non-Product
Program Patent and shall seek the advice of the other Party with respect to Non-
Product Program Patent strategy and draft applications and shall give reasonable
consideration to any suggestions or recommendations of the other Party
concerning the preparation, filing, prosecution, maintenance and defense
thereof. The Parties shall cooperate reasonably in the prosecution of all
jointly owned Non-Product Program Patents hereunder and will share all Patent
costs associated therewith and all material information relating thereto
promptly after receipt of such information. The determination of the countries
in which to file shall be made by mutual agreement of the Parties. If, however,
there is dispute as to where to file, the filing Party shall decide, provided
that, in the case where the non-filing Party requests worldwide filing, the
filing Party shall at least file in the U.S., EPO designating all EPO countries,
Canada, Australia, and Japan either directly or through the PCT route. In the
event either Party, for whatever reason, does not wish to obtain such patent or
other intellectual property protection, the other Party shall be entitled to
apply in its sole name, at its own expense, for such protection and the first
Party shall cooperate in any reasonable manner therein. Further, if, during the
term of this
25
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Agreement, either Party desires to allow any jointly owned Non-Product Program
Patent to lapse or become abandoned without having first filed a substitute,
that Party shall, whenever practicable, notify the other Party of such intention
at least sixty (60) days prior to the date upon which such jointly owned Non-
Product Program Patent shall lapse or become abandoned without further action,
and the other Party shall thereupon have the right, but not the obligation, to
assume responsibility for the prosecution, maintenance and defense thereof in
its sole name and at its own expense. Neither Party makes any warranty with
respect to the validity, perfection or dominance of any jointly owned Non-
Product Program Patent or other proprietary right.
5.5 PROGRAM PATENT FILINGS. PRI and ACT shall prosecute Program Patents
to cover effectively and broadly discoveries and inventions relating to the
Field and shall use reasonable efforts to file initially all applications as
follows. The Parties will engage the services of outside counsel, mutually
agreeable to both Parties, to file and prosecute the Program Patents. The
outside counsel will keep both Parties fully informed of all actions in the
course of its work and provide adequate opportunity for both Parties to comment
on any decisions or actions undertaken. The Parties will cooperate reasonably in
filing and prosecuting the Program Patents with such outside counsel and with
each other and will share all material
26
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
information relating thereto promptly after receipt. In the event the Parties,
working with the outside counsel are unable to agree as to any action or
decision in regard to the filing and prosecution of Program Patents, then the
Chief Patent Counsel of Johnson and Johnson will have the final say on the
matter with the basis for the decision being effective and broad coverage of
discoveries and inventions by Program Patents.
If there is a dispute as to where to file, Program Patents will be filed in
at least the U.S., EPO designating all EPO countries, Canada, Australia and
Japan either directly or through the PCT route.
Neither Party makes any warranty with respect to the validity,
perfection or dominance of any jointly owned Program Patent or other proprietary
right.
The Parties' Patent Costs relating to the Program Patents shall be the sole
responsibility of PRI. ACT may choose to file at its own expense Program Patents
in disputed countries.
5.6 ENFORCEMENT RIGHTS - NON-PRODUCT PROGRAM PATENTS. With respect to
infringement of any Non-Product Program Patent, in the absence of agreement with
respect to infringement, each Party may proceed in such manner as the law
permits.
27
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
5.7 ENFORCEMENT RIGHTS - PROGRAM PATENTS. If any Program Patent is
infringed by a Third Party in any country in connection with the manufacture,
use and sale of a Collaboration Product, the Party to this Agreement first
having knowledge of such infringement shall promptly notify the other in
writing, setting forth the known facts of that infringement in reasonable
detail. The Party marketing the Collaboration Product shall have the primary
right, but not the obligation, to institute, prosecute, and control any action
or proceeding with respect to such infringement of the Program Patent, by
counsel of its own choice, and the Party due royalties shall have the right, at
its own expense, to be represented in that action by counsel of its own choice.
If the Party marketing the Collaboration Product fails to bring an action or
proceeding within a period of one hundred eighty (180) days after a request by
the other Party to do so, the Party due royalties shall have the right to bring
and control any such action by counsel of its own choice, and the Party
marketing the Product shall have the right to be represented in any such action
by counsel of its own choice at its own expense. If one Party brings any such
action or proceeding, the second Party agrees to be joined as a Party plaintiff
and to give the first Party reasonable assistance and authority to file and
prosecute the suit. The costs and expenses of the Party bringing suit under
this Paragraph and any damages or other monetary awards recovered shall be
retained by the Party bringing suit. A
28
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
settlement or consent judgment or other voluntary final disposition of a suit
under this Paragraph 5.7 may be entered into without the consent of the Party
not bringing the suit; provided that such settlement, consent judgment or other
disposition does not admit the invalidity or unenforceability of any Program
Patent; and provided further, that any right of a Third Party to continue the
infringing activity in such settlement, consent judgment or other disposition
shall be limited to the Product or activity that was the subject of the suit.
5.8 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS TO COLLABORATION
PRODUCTS. If a Third Party asserts that a Patent or other right owned by it is
infringed by the manufacture, use or sale of any Collaboration Product, PRI
shall be solely responsible for defending against any such assertions at its
cost and expense.
ARTICLE VI - LICENSE GRANTS
6.1 PATENTS FOR COLLABORATION PRODUCT. ACT hereby grants to PRI an
exclusive, worldwide, royalty bearing license with the right to grant
sublicenses, under ACT Patents, including its interest in Program Patents and
Non-Product Program Patents, to make, have made, use, sell and have sold
Collaboration Products.
29
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
6.2 KNOW-HOW FOR COLLABORATION PRODUCT. ACT hereby grants to PRI an
exclusive, worldwide, royalty bearing license with the right to grant
sublicenses, under ACT Know-How to make, have made, use, sell and have sold
Collaboration Products.
6.3 PATENT LICENSES FOR RESEARCH. Notwithstanding anything herein to the
contrary ACT grants PRI an exclusive (except as to ACT) paid-up, worldwide
license, with the right to grant sublicenses to Affiliates only, under ACT
Patents, including its interest in Non-Product Program Patents and Program
Patents, to make and use methods and materials solely to carry out the Research.
PRI grants ACT a non-exclusive, paid-up, worldwide license, with the right to
grant sublicenses to Affiliates only, under PRI Patents, including its interest
in Non-Product Program Patents and Program Patents, to make and use methods and
materials solely to carry out the Research.
6.4 NONEXCLUSIVE KNOW-HOW LICENSE TO PRI. Subject to Paragraphs 9.1
and 9.2 and 6.2, ACT grants PRI a paid-up, non-exclusive, worldwide license to
use ACT Know-How for any purpose related to injectable Products containing a
[xxxxxx] in an bioabsorbable polymeric delivery system. Such license shall
include the right to grant sublicenses to non-Affiliates commencing on the tenth
anniversary of the end of the Research Term, and to disclose the ACT Know-How at
that time to
30
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
sublicensees and potential sublicensees subject to a binder of confidentiality
so long as the provisions of Article IX hereof hereby remain in effect.
6.5 NONEXCLUSIVE KNOW-HOW LICENSE TO ACT. Subject to Paragraphs 9.1
and 9.2 hereof, PRI grants ACT a paid-up, non-exclusive, worldwide license to
use PRI Know-How for any purpose related to injectable Products containing a
[XXXXXXXXXXXXXXXXXX] in an bioabsorbable polymeric delivery system. Such license
shall include the right to grant sublicenses to non-Affiliates commencing on the
tenth anniversary of the end of the Research Term, and to disclose the PRI Know-
How at that time to sublicensees and potential sublicensees subject to a binder
of confidentiality so long as the provisions of Article IX hereof hereby remain
in effect.
6.6 OTHER EXCLUSIVE LICENSES. In addition to any of the above
licenses and without effecting other licenses granted herein, ACT hereby grants
to PRI an exclusive, worldwide, royalty free license with the right to grant
sublicenses, under ACT Patents, including its interest in Program Patents and
Non-Product Program Patents, to make, have made or use, but not to sell and have
sold injectable Products containing a [XXXXXXXXXXXXXXXXXXXXXXX] in an
bioabsorbable polymeric delivery system.
31
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ARTICLE VII - PAYMENTS
In consideration of the assignments, rights and licenses granted under
this Agreement, PRI agrees to pay ACT as follows:
7.1 RESEARCH PAYMENTS. PRI shall pay to ACT its Research Services Costs
as based on the number of FTEs ordinarily and necessarily required for execution
of Research as approved in the Research Plan. Payments by PRI to ACT for
Research shall be made in arrears beginning after the Effective Date, within 30
days of receiving an invoice therefor. Cost overruns where the actual Research
Services Cost exceeds the estimated Research Services Costs as approved in the
Research Plan of up to [X] are expected by the Parties. Cost overruns exceeding
[X] are to the account of ACT except that PRI, in its sole discretion, may
choose to pay such overruns where circumstances warrant. ACT will notify PRI of
cost overruns of which it becomes aware within a reasonable time period.
7.2 DEVELOPMENT PAYMENTS. PRI shall pay to ACT its Development Supply
Costs as based on the number of FTEs ordinarily and necessarily required for the
supply of Collaboration Product for clinical trials. PRI will pay ACT for all
other developmental work required or requested by PRI based on the number of
FTEs ordinarily and necessarily required for
32
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
execution of such work as approved by PRI. Payments by PRI to ACT hereunder
shall be made after the Effective Date, within 30 days of receiving an invoice
for expenses owed from previous work or clinical supply Collaboration Product
delivered. Cost overruns where the actual Development Supply Costs exceeds the
estimated Development Supply Costs as approved in the Research Plan of up to [X
] are expected by the Parties. Cost overruns exceeding [X] are to the account of
ACT except that PRI, in its sole discretion, may choose to pay such overruns
where circumstances warrant. ACT will notify PRI of cost overruns of which it
becomes aware within a reasonable time period.
The purchase of any item reasonably required by ACT to supply Collaboration
Product for clinical trials shall be ACT's obligation and responsibility.
7.3 MILESTONE PAYMENTS. PRI agrees to make the following payments
recited hereinafter in this Paragraph to ACT upon the first occurrence of each
milestone event for a Collaboration Product during the term of this Agreement.
The total milestone payments that may be due and payable hereunder cannot exceed
[XXXXXXXXX]. It is understood that milestones will be paid only once, even
though multiple formulations may be made and developed for multiple indications.
For example, if a first Collaboration Product achieves the first two (2)
milestones, the payments are made by PRI, and development of the Collaboration
Product is
33
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
discontinued, PRI shall not be obligated to again pay the same two (2) payments
in connection with subsequent Collaboration Products.
MILESTONE CASH PAYMENT
- --------- ------------
Upon signing the Agreement $[XXXXXXXXX]
Identification of the first
Collaboration Product demonstrating
positive results in a probative
PK study in man and an arbitrary
decision on the part of PRI to proceed
to filing an IND or the equivalent
filing with a regulatory authority
in a Major European Country. $[XXXXXXXXX]
Filing IND or the equivalent filing
with a regulatory authority in
a Major European Country $[XXXXXXXXX]
Begin Phase III trials or the
the equivalent in any country $[XXXXXXXXX]
Filing NDA or the equivalent filing
with a regulatory authority in
a Major European Country $[XXXXXXXXX]
Regulatory Approval in the US or
in a Major European Country $[XXXXXXXXX]
In the event that PRI decides to skip the pre-IND, probative PK study
in man, the following will apply: [XXXXXX] will be payable to ACT at that
decision and the [XXXXXXXX] milestone will become [XXXXXXXX].
An IND or equivalent filing will not be considered filed hereunder
until the period expires in which the FDA or other regulatory authority can
object to such filing. An NDA or equivalent filing will not be considered filed
hereunder until
34
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
the U.S. FDA or other regulatory authority accepts such filing for review at
which point the milestone of NDA or equivalent filing shall be considered to
have occurred.
7.4 MILESTONE PAYMENT TIMING. The payments set forth in Paragraph
7.3 hereof shall each be due and payable by PRI to ACT within thirty (30) days
of the demonstration of the milestone event set forth therein.
7.5 EARNED ROYALTIES FOR COLLABORATION PRODUCTS. PRI shall pay ACT a
royalty based on Net Sales in connection with the annual Net Sales of
Collaboration Products sold for the therapeutic treatment of humans or animals
by PRI or its Affiliates or sublicensees according to the following schedule:
(a) in countries and for the period in which a Valid Patent Claim
exists that would be infringed by the sale or use of the Collaboration Product,
(i) for Collaboration Product that is not manufactured by ACT and where such
non-manufacture by ACT is not due to breach by ACT of any supply agreement
between the Parties, [XXXXXXXXXXXXXXX], from the Date of First Sale and
continuing for two years and [XXXXXXXXXXXXXXXX] from two years after the Date of
First Sale, and (ii) for Collaboration Product not meeting the criteria of
(a)(i), [XXXXXXXXXXXXXXXX], from the Date of First Sale and continuing for two
years and [XXXXXXXXXXXXXXXXX] from two years after the Date of First Sale; and
(b) in all other countries, (i) for Collaboration Product that is not
manufactured by ACT and where such non-manufacture by ACT is not due to breach
by ACT of any supply agreement between the Parties, [XXXXXXXXXXXXXXXXXXXXXXX],
beginning on the Date of First Sale and continuing for two years and [XXXXXXX]
beginning two years after the Date of First Sale, and (ii) for Collaboration
Product not meeting the
35
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
criteria of (b)(i), [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX], beginning on the Date of
First Sale and continuing for two years and [XXXXXXXXXXXXXXXXXXXXXXXXXXXXX]
beginning two years after the Date of First Sale.
7.6 GENERIC COMPETITION. The royalty rates recited in Paragraph 7.5
hereof shall be reduced by [X], on a Product-by-Product and country-by-country
basis, should competition from the same Product having substantially the same
formulation and substantially the same duration of release reach [XXXX] market
share on a unit basis by such competition in that country. Notwithstanding
anything herein to the contrary, such royalty rate reduction shall not be
available if a Valid Patent Claim in a PRI Patent covering the Product exists
and PRI does not attempt to enforce it against the infringer.
7.7 COLLABORATION PRODUCT EARNED ROYALTY TERM. Royalties payable
under Paragraph 7.5 shall be paid on a country-by-country and Product-by-Product
basis from the Date of First Sale of each Product with respect to which a
royalty is due for a period which is the longer of:
(a) the last to expire of any ACT Patent containing a Valid Patent Claim
in such country covering the composition of matter or use of the Collaboration
Product on which royalties are payable; or
(b) 10 years following the Date of First Sale of such Product in such
country provided such 10 year period does not extend beyond the last to expire
of any ACT Patent containing a Valid Patent Claim covering a composition of
matter or use of a Collaboration Product anywhere.
36
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Upon termination of the royalty payment obligation, PRI shall thereafter
have, in perpetuity, a fully paid up license under ACT patents or ACT Know-How
to make, have made, use, sell, have sold and import Collaboration Products,
without further accounting to ACT.
7.8 SPECIAL EUROPEAN UNION PROVISIONS. For all member countries of the
European Union only, the exclusive, worldwide, royalty bearing license with the
right to grant sublicenses, under ACT Know-How granted to PRI by ACT hereunder,
to the extent that such ACT Know-How is related to a Collaboration Product,
shall be converted to a non-exclusive license following the period of ten (10)
years from the Date of First Sale of such Collaboration Product in the European
Union. On a country-by-country basis in the European Union, where royalties are
being paid at the rate as determined by Paragraph 7.5(b) and upon the license
being converted to a non-exclusive license by operation of this Paragraph, then
the royalty rate of Paragraph 7.5(b) shall be reduced by [X].
7.9 FOREIGN EXCHANGE. The remittance of royalties payable on Net Sales
will be payable in U.S. dollars to ACT at a bank and to an account designated by
ACT using a rate of exchange of the currency of the country from which the
royalties are payable in accordance with PRI's or its Affiliates' usual and
customary translation procedures consistently applied. All references to dollars
hereunder are references to U.S. dollars.
7.10 BLOCKED CURRENCY. Where royalties are due for Net Sales in a country
where by reason of currency regulations of any kind or taxes of any kind imposed
after the Date of First Sale in such country it is impossible to make royalty
payments for that country's Net Sales in accordance with Paragraphs 7.5, said
37
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
royalties shall be deposited in whatever currency is allowable for the benefit
or credit of ACT in any accredited bank in that country as shall be acceptable
to ACT. Moreover, in order to facilitate payments from countries other than the
United States, when requested by PRI, ACT shall enter into direct license
agreements with PRI Affiliates or sublicensees designated by PRI, whereby such
Affiliate or sublicensee will be obligated to remit royalty payments due for Net
Sales in such country directly to ACT. Each such license agreement shall recite
generally the same terms as this Agreement insofar as such terms are lawful
under applicable laws and regulations of the particular country.
7.11 TAXES. Any income tax required to be withheld by PRI or any
Affiliate or sublicensee under the laws of any foreign country for the account
of ACT under this Article VII shall be promptly paid by PRI or said Affiliate or
sublicensee for and on behalf of ACT to the appropriate governmental authority,
and PRI or the Affiliate shall furnish ACT with proof of payment of such income
tax together with official or other appropriate evidence issued by the
appropriate governmental authority sufficient to enable ACT to support a claim
for income tax credit in respect of any sum so withheld. Any such tax required
to be withheld shall be an expense of, and borne solely by ACT.
7.12 RECORDS AND REPORTS. PRI shall keep complete and accurate
records of the sale of Collaboration Products with respect to which a royalty is
payable according to this Agreement. Within sixty (60) days following each
quarterly period of a calendar year after the date on which royalties are due
under this Agreement, PRI shall render to ACT a written report setting forth the
Net Sales of such Products sold and the royalty due and payable, and PRI shall,
upon rendering such
38
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
report, remit to ACT the amount of royalty shown thereby to be due.
7.13 ACCOUNTING. A Party shall have the right, at its own expense
and with reasonable notice to the other Party, to nominate an independent
certified public accountant acceptable to and approved by the other Party, said
approval not to be unreasonably withheld, who shall have access to the other
Party's records during reasonable business hours for the purpose of verifying
the royalties payable for any period within the preceding three (3) years as
provided for in this Agreement or, in the case of PRI, for verifying the
expenditures by ACT of research funding paid hereunder to ACT. This right may
not be exercised more than once in any calendar year, and said accountant shall
disclose to the Party requesting the audit, only information relating solely to
the accuracy of the royalty report, the royalty payments, or research
expenditures according to this Agreement. If any audit or examination shall
reveal a deficiency of any royalty payment due, the Party owing the royalty
shall make payment to the other Party of such deficiency plus interest for the
period of such deficiency. If any audit or examination shall reveal that ACT
has not properly spent the research funding pursuant to the terms of this
Agreement and therefore misused such funding, ACT shall refund any monies not so
properly spent to PRI. Payment of such deficiencies or misused research funding
shall be made within five (5) days following notification of the auditing Party
to the Party being audited of the monies owed. In the event that such an audit
or examination shall reveal a deficiency of any royalty payment due in an amount
equalling or exceeding [XXXXXXXXXXXXXXX] of accounting of the undisputed
royalties or expenditures, the Party shall reimburse the other Party for the
reasonable costs of such audit.
39
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
7.14 THIRD PARTY PATENTS. If a Patent or Patents of a Third Party should
exist in any country during the term of this Agreement covering the manufacture,
use or sale of any Collaboration Product, and if it should prove in PRI's
reasonable judgment impractical or impossible for PRI or any Affiliate or
sublicensee to continue the activity or activities licensed hereunder without
obtaining a royalty bearing license from such third party under such Patent or
Patents in said country, then PRI shall be entitled to a credit against the
royalty payments due hereunder of an amount equal to the royalty paid to such
Third Party, not to exceed [XXXXXXXXXXXXXXXX] of the royalty rate due under this
Agreement, arising from the manufacture, use or sale of the Collaboration
Product in said country.
7.15 COMPULSORY LICENSE. If at any time and from time to time a Third
Party in any country shall, under the right of a compulsory license granted or
ordered to be granted by a competent governmental authority, manufacture, use or
sell any Collaboration Product with respect to which royalties would be payable
pursuant to Paragraph 7.5 hereof, then PRI may reduce the royalty on sales in
such country of such Collaboration Product to an amount no greater than the
amount payable by said Third Party as consideration for the compulsory license.
ARTICLE VIII - MANUFACTURE
8.1 PRI'S RESPONSIBILITY. PRI shall be responsible for making or having
made Collaboration Products. The Parties refer to the License and Supply
Agreement between PRI and ACT of even date herewith.
40
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ARTICLE IX - CONFIDENTIALITY
9.1 DISCLOSED CONFIDENTIAL INFORMATION. In the course of performance of
this Agreement, one Party may disclose to the other or receive from the other
written Information and other confidential and proprietary written information
disclosed or received pursuant to this Agreement which information, if so
identified in writing either pursuant to this Section 9.1 or otherwise upon
disclosure, shall be considered to be the disclosing Party's "Disclosed
Confidential Information." Each Party agrees that it will take the same steps to
protect the confidentiality of the other Party's Disclosed Confidential
Information as it takes to protect its own proprietary and confidential
information. Each Party shall protect and keep confidential and shall not use,
publish or otherwise disclose to any third party, except as contemplated by this
Agreement or with the other Party's written consent, the other Party's Disclosed
Confidential Information for a period of five (5) years from the date of
termination of this Agreement.
9.2 SHARED CONFIDENTIAL INFORMATION. In the course of performance of
this Agreement, the Parties may jointly develop, invent or discover Information,
including such on substances or processes, which shall be considered to be the
"Shared Confidential Information" of both Parties. Each Party agrees that it
will take the same steps to protect the confidentiality of the Shared
Confidential Information as it takes to protect its own proprietary and
confidential information. Each Party shall protect and keep confidential and
shall not publish or otherwise disclose to any third party, except as
contemplated by this Agreement or with the other Party's written consent, the
Shared Confidential Information for a period of five (5) years from the date of
termination of this Agreement. Each Party may, however,
41
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
use any Shared Confidential Information for any purpose; provided that such use
shall not be deemed a license or a grant of any additional right or license
other than or in addition to the right and license granted in this Agreement.
9.3 PERMITTED DISCLOSURE. In addition, each Party shall be entitled to
disclose, under a binder of confidentiality containing provisions as protective
as this Article IX, "Confidential Information", which shall include Disclosed
Confidential Information and Shared Confidential Information to consultants and
other third parties for any purpose provided for in this Agreement. The Parties
shall consult prior to the submission of any manuscript for publication if the
publication will contain any Confidential Information of the other Party. Such
consultation shall include providing a copy of the proposed manuscript to the
other Party at least sixty (60) days prior to the proposed date of submission to
a publisher, incorporating appropriate changes proposed by the other Party into
the manuscript submission and deletion of all Confidential Information of which
such Party does not agree to the publication. The foregoing notwithstanding,
Confidential Information may be disclosed as a part of a patent application
filed on inventions made under this Agreement and during any official proceeding
before a court or governmental agency if reasonably related and necessary to
that proceeding and where reasonably required in the development or marketing of
a Collaboration Product. For the purposes of this Agreement, Confidential
Information shall not include such information that:
(i) was known to the receiving Party at the time of disclosure as
evidenced by written records; or
42
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(ii) was generally available to the public or was otherwise part of
the public domain at the time of disclosure or became generally available to the
public or otherwise part of the public domain after disclosure other than
through any act or omission of the receiving Party in breach of this Agreement;
or
(iii) became known to the receiving Party after disclosure from a
source that had a lawful right to disclose such information to others; or
(iv) was independently developed by the receiving Party where such
independent development can be established by written documentation.
9.4 INTEGRATION. This Article IX supersedes any confidential
disclosure agreement between the Parties as to the subject matter hereof. Any
confidential information under such agreement shall be treated as Confidential
Information hereunder.
ARTICLE X - REPRESENTATIONS AND WARRANTIES; EXCLUSIVITY
10.1 REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and
warrants and covenants as follows:
(A) This Agreement is a legal and valid obligation binding upon such
Party and enforceable in accordance with its terms. The execution, delivery and
performance of the Agreement by such Party does not conflict with any agreement,
instrument or understanding, oral or written, to which it is a Party or by which
it is bound, nor violate any law or regulation of any court, governmental body
or administrative or other agency having jurisdiction over it.
43
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(B) Neither Party has granted, nor during the term of the Agreement
will grant any right to any Third Party relating to its respective technology in
the Field which would conflict with the rights granted to the other Party
hereunder.
(C) Each Party owns all of the rights, title and interest in and to its
Know-How.
10.2 PERFORMANCE BY AFFILIATES. The Parties recognize that each may
perform some or all of its obligations under this Agreement through Affiliates,
provided, however, that each Party shall remain responsible and be guarantor of
the performance by its Affiliates and shall cause its Affiliates to comply with
the provisions of this Agreement in connection with such performance.
ARTICLE XI - TERM AND TERMINATION
11.1 TERM. This Agreement shall commence as of the Effective Date
and, unless sooner terminated as provided herein, shall continue in effect until
the latest of (a) the end of the Research Term or (b) the date on which ACT is
no longer entitled to receive a royalty on any Product under this Agreement.
11.2 TERMINATION FOR BREACH. In the event that (a) either Party
shall default or breach at any time in connection with any material obligation
under this Agreement and (b) such defaulting Party shall fail to remedy such
default or breach within sixty (60) days after the receipt of notice thereof by
the non-defaulting Party to the defaulting Party, then the non-defaulting Party
may at any time thereafter terminate this Agreement.
44
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
11.3 TERMINATION FOR BANKRUPTCY. Either Party hereto shall have the right
to terminate this Agreement forthwith by written notice to the other Party (a)
if the other Party is declared insolvent or bankrupt by a court of competent
jurisdiction, (b) if a voluntary or involuntary petition in bankruptcy filed in
any court of competent jurisdiction and any such involuntary petition is not
dismissed with 60 days of filing against the other Party, or (c) if the other
Party shall make or execute an assignment for the benefit of creditors.
11.4 TERMINATION BY PRI FOR CAUSE. In the event of termination of this
Agreement by PRI pursuant to Paragraph 11.2, the licenses granted in Article VI
hereof shall survive termination under this Paragraph. However, the royalty rate
recited in Paragraph 7.5 hereof shall be reduced to [x] of Net Sales.
11.5 TERMINATION BY PRI WITHOUT CAUSE. PRI may terminate this Agreement
for any reason (a) prior to filing an NDA on a Collaboration Product, upon
ninety (90) days prior written notice, (b) subsequent to filing an NDA on a
Collaboration Product, upon six (6) months prior written notice. In the case
where PRI terminates before the end of the scheduled Research Term, then PRI
shall pay Alkermes [x] of Research Services Costs estimated under the Research
Plan for a 90 day period following such termination.
11.6 SURVIVING RIGHTS. Except as modified above in Paragraphs 11.2, 11.3
and 11.4 hereof, the obligations and rights of the Parties under Paragraphs 3.3,
3.4, 5.1, 5.2, 6.4, 6.5, 7.5 to 7.15, 10.1, 11.6, 11.7 and 11.8 and Articles I,
IX, XII, XIII, XV shall survive termination or expiration of this Agreement.
45
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
11.7 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Termination, relinquishment
or expiration of the Agreement for any reason shall be without prejudice to any
rights which shall have accrued to the benefit of either Party prior to such
termination, relinquishment or expiration, including damages, the payment
obligations hereof and any and all obligations arising from any breach
hereunder.
11.8 TERMINATION NOT SOLE REMEDY. Termination is not the sole remedy
under this Agreement and, whether or not termination is effected, all other
remedies will remain available except as agreed to otherwise herein.
ARTICLE XII - INDEMNIFICATION
12.1 RESEARCH AND DEVELOPMENT INDEMNIFICATION. Each Party (the
"Indemnifying Party") shall indemnify, defend and hold the other Party (the
"Indemnified Party") harmless from and against any and all liabilities, claims,
damages, costs, expenses or money judgments incurred by or rendered against the
Indemnified Party and its Affiliates and sublicensees arising out of any
injuries to person and/or damage to property resulting from (a) negligent acts
of the Indemnifying Party performed in carrying out its obligations hereunder,
including failure by the Indemnifying Party to provide the Indemnified Party
with any Information of the Indemnifying Party's which, if timely received would
have avoided injury, death or damage, provided such failure to provide such
Know-How is due to negligence on the part of the Indemnifying Party, and (b)
personal injury to the Indemnified Party's employees or agents or damage to the
Indemnified Party's property resulting from acts performed by, under the
direction of, or at the request of the Indemnifying Party in carrying out
activities contemplated by this Agreement.
46
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
12.2 PRI INDEMNIFICATION. In addition to its obligations in Paragraph
12.1 hereof PRI shall indemnify and hold ACT harmless from and against any and
all liabilities, claims, damages, costs, expenses or money judgments which
result from the manufacture, use, promotion and sale of Products under this
Agreement.
12.3 NOTIFICATION. The Indemnifying Party's obligations hereunder as to
any claim are subject to (i) its being given prompt notice thereof; (ii) the
sole right to control the defense and settlement; and (iii) the lack of
negligence or wilfull misconduct leading to the claim by the Indemnified Party.
ARTICLE XIII - DISPUTE RESOLUTION
13.1 DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights and/or obligations hereunder or thereunder. It is the
objective of the Parties to establish procedures to facilitate the resolution of
disputes arising under this Agreement in an expedient manner by mutual
cooperation and without resort to litigation. To accomplish this objective, the
Parties agree to follow the procedures set forth in this Article XIII if and
when a dispute arises under this Agreement.
13.2 ALTERNATIVE DISPUTE RESOLUTION. Any dispute controversy or claim
arising out of or relating to the validity, construction, enforceability or
performance of this Agreement, including disputes relating to alleged breach or
to termination of this Agreement or the scope of this arbitration provision,
shall be settled by binding Alternative Dispute Resolution ("ADR") in the manner
described below:
47
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(A) If a Party intends to begin an ADR to resolve, after an initial 30
day waiting period after any such dispute arises in which the Parties shall work
reasonably and in good faith to amicably resolve the dispute without resorting
to this article, a dispute, such Party shall provide written notice (the "ADR
Request") to counsel for the other Party informing such other Party of such
intention and the issues to be resolved. From the date of the ADR Request and
until such time as any matter has been finally settled by ADR, the running of
the time periods contained in Paragraph 11.2 as to which Party must cure a
breach of this Agreement shall be suspended as to the subject matter of the
dispute.
(B) Within thirty (30) business days after the receipt of the ADR
Request, the other Party may, by written notice to the counsel for the Party
initiating ADR, add additional issues to be resolved.
13.3 ARBITRATION PROCEDURE. The ADR and all pre-hearing, hearing and
post-hearing arbitration procedures, shall be conducted in English pursuant to
the Commercial Arbitration Rules of the American Arbitration Association for
Large, Complex Cases then in effect, as amended by the following provisions.
(A) Arbitrator. To the extent that the Parties cannot agree on a single
arbitrator, the arbitration shall be conducted by a panel of three arbitrators
("the Panel"). Each Party shall have the right to appoint one (1) member of the
Panel, with the third member to be mutually agreed by the two Panel members
appointed by the Parties or appointed in accordance with the rules of the
American Arbitration Association. All panel members shall be selected from a
pool of independent arbitrators. Each Party shall make its appointment within
twenty (20) days of
48
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
receipt of the ADR request and the third panel member shall be selected by the
two panel members within ten (10) days of the selection of the first two panel
members.
(B) Proceedings. The Parties will cooperate in good faith in the
voluntary, prompt and informal exchange of non-privileged documents and other
information relevant to the Arbitration. The Parties and the Panel will make
every effort to conclude the information exchange process within ninety (90)
days after the Panel is selected. Within seven (7) days after selection of the
Panel, each Party may serve on any other Party up to ten (10) interrogatories
(or a number otherwise set by the arbitrators), without subparts, for the
purpose of identification of documents and witnesses. These interrogatories will
be answered within seven (7) days.
At any time after the selection of the Panel, but no later than thirty (30)
days before the Arbitration hearing, each Party may take up to three (3)
depositions (or a number otherwise set by the arbitrators) of an opposing Party
as a matter of right. The Parties will attempt to agree to time, location and
duration of the deposition, and if the Parties do not agree these will be
determined by the Panel.
Any Party may conduct depositions of its own witnesses which may be
introduced as evidence at the Arbitration hearing if the other Party was given
fair opportunity to attend the deposition and cross-examine.
Upon the request of any Party, the Panel will conduct a conference for the
purpose of determining additional information to be exchanged. Parties may
request additional depositions, interrogatories or document Production. If the
Panel determines that the requesting Party has a reasonable need for the
requested information and that the request is not overly burdensome on the
49
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
opposing Party, the Panel shall order the additional information exchange.
As they become aware of new documents or information, including experts who
may be called upon to testify, all Parties remain under a continuing obligation
to provide documents upon which they rely, to supplement their responses, and to
honor any informal agreements or understandings between the Parties regarding
documents or information to be exchanged. Documents which have not been
previously exchanged will not be considered by the Panel at the hearing, unless
agreed by the Parties.
The Parties will promptly notify the Panel when an unresolved dispute
exists regarding discovery issues. The Panel will discuss the matter with the
Parties to determine the nature of the dispute and will attempt to resolve that
dispute. If the Panel does not resolve the dispute, the Panel will arrange a
conference concerning the dispute before the Panel by telephone, or in person,
and the Panel will decide the dispute.
The Panel will determine the date and time of the Arbitration hearing and
other proceedings after consultation with the Panel and the Parties and will
provide reasonable notice of the hearing date and time. The Panel will make
every effort to schedule the Arbitration hearing within one hundred and twenty
(120) days of the commencement of the Arbitration, absent unusual circumstances.
The Parties may agree on or the Panel for good cause may order a
rescheduling of the hearing date.
The Panel will ordinarily conduct the Arbitration hearing in the manner set
forth in these Rules. The Panel may vary these procedures if the Panel
determines it is reasonable and appropriate to do so. The Panel may impose
reasonable time limits on each phase of the proceeding and may limit testimony
to exclude evidence that would be immaterial or unduly repetitive,
50
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
provided that all Parties are afforded the opportunity to present material and
relevant evidence.
The Panel will require witnesses to testify under oath if requested by any
Party.
The Panel will determine the order of proof, which will generally be
similar to that of a court trial, including opening and closing statements.
When the Panel determines that all relevant and material evidence and
arguments have been presented, the Panel will declare the hearing closed. The
Panel may defer the closing of the hearing for up to twenty (20) days to permit
the Parties to submit post-hearing briefs and or to make closing arguments, as
the Panel deems appropriate, before rendering an award.
The Panel will render the award within ten (10) days after the date of the
closing of the hearing or, if an Arbitration hearing has been waived, within ten
(10) days after the date of the Panel's receiving all materials specified by the
Parties. The decision and award of majority of the Panel will constitute the
Arbitration Award and will be binding on the Parties. The Arbitration Award
shall include specific findings of fact and shall reach conclusions of law based
on the submissions and evidence of the Parties and shall be delivered via
written decision explaining the basis for the decision.
The Panel shall, in rendering its decision, apply the substantive law of
the State of New York, without regard to its conflict of laws provisions, except
that the interpretation of and enforcement of this Article shall be governed by
the Federal Arbitration Act and the arbitrators shall base their decision on the
express terms, covenants and conditions of this Agreement. The proceeding shall
take place in New York, New York. The fees of the Panel shall be paid by the
losing Party which shall be designated by the Panel. If the Panel is unable to
designate a
51
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
losing party, it shall so state and the fees shall be split equally between the
Parties.
(C) Award. The Panel is empowered to award any remedy allowed by law,
including money damages, multiple damages, prejudgment interest and attorneys'
fees, and to grant final, complete, interim, or interlocutory relief, including
injunctive relief. Notwithstanding the foregoing, punitive damages may not be
awarded and express terms of this Agreement may not be altered.
(D) Costs. Except as set forth in Paragraph 12.4(b), above, each Party
shall bear its own legal fees.
(E) Confidentiality. The ADR proceeding shall be confidential and the
Panel shall issue appropriate protective orders to safeguard each Party's
Confidential Information. Except as required by law, including applicable
securities law, no Party shall make (or instruct the panel to make) any public
announcement with respect to the proceedings or decision of the Panel without
prior written consent of each other Party. The existence of any dispute
submitted to ADR, and the award, shall be kept in confidence by the Parties and
the Panel, except as required in connection with the enforcement of such award
or as otherwise required by applicable law.
13.4 SURVIVABILITY. Any duty to arbitrate under this Agreement shall
remain in effect and enforceable after termination of this Agreement for any
reason.
13.5 JURISDICTION. For the purposes of this Section XIII, the Parties
acknowledge their diversity (ACT having its principal place of business in
Cambridge, Massachusetts and PRI having its
52
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
principal place of business in Raritan, New Jersey) and agree to accept the non-
exclusive jurisdiction of the Federal District Court in Newark, New Jersey for
the purposes of enforcing awards entered pursuant to this Article XIII and for
enforcing the agreements reflected in this Article XIII.
ARTICLE XIV - LICENSOR BANKRUPTCY
14.1 LICENSOR BANKRUPTCY. All rights and licenses granted under or
pursuant to this Agreement by ACT to PRI are, and shall otherwise be deemed to
be, for purposes of Section 365(n) of Title 11, U.S. code (the "Bankruptcy
Code"), licenses of rights to "intellectual property" as defined under section
101(60) of the Bankruptcy Code. The Parties agree that PRI, as a licensee of
such rights under this Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code. ACT agrees during the term of
this Agreement to create and maintain current copies or, if not amenable to
copying, detailed descriptions or other appropriate embodiments, of all such
intellectual property. The Parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against ACT under the Bankruptcy
Code, PRI shall be entitled to a complete duplicate of (or complete access to,
as appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession shall be
promptly delivered to PRI (a) upon any such commencement of a bankruptcy
proceeding upon written request therefor by PRI, unless ACT elects to continue
to perform all of its obligations under this Agreement or (b) if not delivered
under (a) above, upon the rejection of this Agreement by or on behalf of ACT
upon written request therefor by PRI.
53
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ARTICLE XV - NOTICES
15.1 NOTICE. Any payment, notice or other communication required or
permitted to be made or given to either Party hereto pursuant to this Agreement
shall be in writing in case of a notice or communication and shall be deemed
given if delivered personally or by facsimile transmission (receipt verified),
telexed, mailed by registered or certified mail (return receipt requested),
postage prepaid, or sent by express courier service, to the Parties and be
deemed received upon actual receipt at the following addresses (or at such other
address for a Party as shall be specified by like notice; provided, that notices
of a change of address shall be effective only upon receipt thereof:
In the case of ACT:
Alkermes Controlled Therapeutics, Inc.
64 Sidney Street
Cambridge, MA 02139-4136
Attention: President
Telephone: (617) 494-0171
Telefax: (617) 494-9255
With a copy to:
Ballard, Spahr, Andrews & Ingersoll
1735 Market Street, 51st Floor
Philadelphia, PA 19103
Attention: Morris Cheston, Jr. & Martha J. Hays
Telephone: (215) 665-8500
Telefax: (215) 864-8999
54
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
In case of PRI:
The R. W. Johnson Pharmaceutical Research Institute
700 U.S. Route 202 South
P.O. Box 300
Raritan, New Jersey 08869-0602
Attention: Chairman
Telephone: (908) 704-4210
Telefax: (908) 707-1895
With a copy to:
Office of General Counsel
Johnson and Johnson
One Johnson and Johnson Plaza
New Brunswick, New Jersey 08933
Telephone: (908) 524-2485
Telefax: (908) 524-2788
ARTICLE XVI - ASSIGNMENT
16.1 ASSIGNMENT. Neither Party shall have the right to assign, transfer
or encumber its rights or obligations under this Agreement without the prior
written consent of the other, except that PRI or ACT may make such assignment
without prior consent to any Affiliate or a purchaser or transferee of all or
substantially all of the assets of its business to which this Agreement relates
upon written notice to the other Party.
ARTICLE XVII - PUBLICITY
17.1 PUBLICITY. In the absence of specific agreement between the Parties,
neither Party shall originate any publicity, news release or public
announcement, written or oral, whether to the public or press, relating to this
Agreement, including its existence, the subject matter to which it relates,
performance under it or any of its terms, to any amendment hereto or save
55
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
only such announcements as in the opinion of counsel for the Party making such
announcement is required by law to be made. Any such announcements shall be
factual and as brief as possible. If a Party decides to make an announcement
required by law , it will give the other Party twenty (20) days' advance written
notice, where possible, of the text of the announcement so that the other Party
will have an opportunity to comment upon the announcement. Routine references
to this Agreement and the arrangements hereunder without undue frequency and
without emphasis shall be allowed in the usual course of business provided that
notice of such use is given to the other Party.
ARTICLE XVIII - FORCE MAJEURE
18.1 FORCE MAJEURE. Neither Party hereto shall be liable to the other
Party for any losses or damages attributable to a default in or breach of this
Agreement which is the result of war (whether declared or undeclared), acts of
God, revolution, strike, fire, earthquake, flood, pestilence, riot, enactment or
change of laws and regulations, accident(s), labor trouble, or shortage of or
inability to obtain material, equipment or transport or any other cause beyond
the reasonable control of the Parties, and the performance of obligations
hereunder shall be suspended during, but no longer than, the existence of such
cause.
ARTICLE XIX - INTEGRATION
19.1 INTEGRATION. It is the mutual desire and intent of the Parties to
provide certainty as to their future rights and remedies against each other by
defining the extent of their mutual undertakings as provided herein. The Parties
have in this Agreement incorporated all representations, warranties,
56
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
covenants, commitments, and understandings on which they have relied in entering
into this Agreement and, except as provided for herein, neither Party has made
any covenant or other commitment to them concerning its future action.
Accordingly, this Agreement and all Exhibits attached hereto (a) constitute the
entire agreement and understanding between the Parties with respect to the
matters contained herein, and there are no promises, representations,
conditions, provisions, or terms related thereto other than those set forth in
this Agreement, and (b) supersedes all previous understandings, agreements and
all exhibits attached hereto, and representations between the Parties, written
or oral relating to the subject matter hereof. The parties hereto may from time
to time during the continuance of this Agreement modify, vary or alter any of
the provisions of this Agreement and all exhibits attached hereto, but only by
an instrument duly executed by all Parties hereto.
ARTICLE XX - MISCELLANEOUS
20.1 AMENDMENTS. This Agreement will not be binding upon the Parties
until it has been signed hereinbelow by or on behalf of each Party, in which
event it shall be effective as of the Effective Date. No amendment or
modification hereof shall be valid or binding upon the Parties unless made in
writing and signed as aforesaid.
20.2 LAWS. All matters affecting the interpretation, validity, and
performance of this Agreement shall be governed by the internal laws of the
State of New York, U.S.A. without regard to its conflict of law principles,
except as otherwise expressly provided herein.
57
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
20.3 SEVERABILITY. Any provision hereof which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
only to the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof or affecting the validity or enforceability of
such provision in any other jurisdiction.
20.4 HEADINGS. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
20.5 WAIVER. No failure or delay by any Party to insist upon the strict
performance of any term, condition, covenant or agreement of this Agreement, or
to exercise any right, power or remedy hereunder or consequent upon a breach
hereof shall constitute a waiver of any such term, condition, covenant,
agreement, right, power or remedy of any such breach or preclude such Party from
exercising any such right, power or remedy at any later time or times.
20.6 REPRESENTATIONS. Each of the Parties hereto acknowledges and agrees
(a) that no representation or promise not expressly contained in this Agreement
has been made by the other Party hereto or by any of its agents, employees,
representatives or attorneys with respect to the subject matter of this
Agreement; (b) that this Agreement is not being entered into on the basis of, of
in reliance on, any promise or representation, expressed or implied, covering
the subject matter hereof, other than those which are set forth expressly in
this Agreement; and (c) that each Party has had the opportunity to be
represented by counsel of its own choice in this matter, including the
negotiations which preceded the execution of this Agreement.
58
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
20.7 COMPLIANCE WITH LAWS. The Parties shall comply with all applicable
laws, rules, regulations and orders of the United States and all jurisdictions
and any agency or court thereof in connection with this Agreement and the
transactions contemplated thereby.
20.8 RELATIONSHIP OF PARTIES. Nothing herein shall be construed to create
any relationship of employer and employee, agent and principal, partnership or
joint venture between the Parties. Each Party is an independent contractor.
Neither Party shall assume, either directly or indirectly, any liability of or
for the other Party. Neither Party shall have the authority to bind or obligate
the other Party and neither Party shall represent that it has such authority.
20.9 COUNTERPARTS. This Agreement may be executed in counterparts, any
one of which need not contain the signatures of more than one Party, but both of
which, taken together, shall constitute one and the same agreement.
20.10 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT
OR OTHERWISE, NEITHER PARTY WILL BE LIABLE TO THE OTHER WITH RESPECT TO ANY
SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL OR CONSEQUENTIAL
DAMAGES.
20.11 ELECTRONIC COPIES. Promptly upon ACT's request, PRI shall deliver or
cause to be delivered to ACT or its counsel a formatted diskette containing a
conformed copy of this Agreement that was prepared using PRI's or its counsel's
word processing system.
59
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
THE R. W. JOHNSON PHARMACEUTICAL
RESEARCH INSTITUTE
By: /s/ William Duncan
--------------------------------
Title: Chairman
Date: November 25, 1996
ALKERMES CONTROLLED THERAPEUTICS, INC.
By: /s/ Michael J. Landine
----------------------
Title: Vice President
Date: November 25, 1996
ALKERMES, INC.
By: /s/ Richard F. Pops
-------------------
Title: CEO
Date: November 25, 1996
60
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ATTACHMENT A
------------
PROLEASE-[xxxxxxxxxxxx] Development and Manufacturing Plan
[xxxxxxxxxxxxxxx]
<PAGE>
SUPPLY
AND
LICENSE
AGREEMENT
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
1. Definitions...................................................... 2
1.2 "Collaboration Product"..................................... 2
1.3 "Standard Manufacturing Cost"............................... 2
1.4 "Supply Territory".......................................... 5
1.5 "Supply Price" or "SP"...................................... 5
2. Purchase and Sale of Products.................................... 5
3. Licenses......................................................... 9
4. Forecasts and Orders............................................. 10
5. Acceptance of Products; Corrective Actions....................... 10
6. Representations and Warranties................................... 14
7. Inspection of Premises........................................... 15
8. Labeling; Artwork; Proprietary Rights............................ 16
9. Indemnification.................................................. 16
10. Term............................................................. 18
11. Termination...................................................... 18
12. Confidentiality.................................................. 19
13. Manufacturing Facilities......................................... 19
14. Taxes............................................................ 21
15. Relationship of the Parties...................................... 21
16. Publicity........................................................ 21
17. Construction..................................................... 21
18. Entire Agreement................................................. 22
19. Headings......................................................... 23
20. Notices.......................................................... 23
21. Failure to Exercise.............................................. 23
</TABLE>
i
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
<TABLE>
<S> <C>
22. Assignment....................................................... 23
23. Force Majeure.................................................... 24
24. Severability..................................................... 24
25. Electronic Copies................................................ 25
</TABLE>
ii
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
SUPPLY AND LICENSE AGREEMENT
----------------------------
This Agreement (the "Agreement") is made as of the 1st day of August, 1996,
("Effective Date") by and between The R. W. Johnson Pharmaceutical Research
Institute, a division of Ortho Pharmaceutical Corporation, having a business
address at U. S. Route 202, Raritan, New Jersey 08869-0602 (hereinafter "PRI" or
"Buyer"), and Alkermes, Inc., and Alkermes Controlled Therapeutics, Inc., both
having a business address at 64 Sidney Street, Cambridge, MA 02139-4136
(hereinafter collectively referred to as "ACT" or "Seller"). ACT and PRI may
each be referred to herein as a "Party" or, collectively, as "Parties".
The Parties refer to the Development and License Agreement of even date
herewith by and between the Parties (hereinafter the "Development and License
Agreement"). The capitalized terms defined therein, particularly in Article I
thereof, have the same meanings herein. Certain definitions are repeated as a
matter of convenience only.
In consideration of the mutual promises, covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1. DEFINITIONS.
-----------
When used herein, the following capitalized terms shall have the meanings
specified below:
1.2 "COLLABORATION PRODUCT" means a Product comprised of a
Collaboration Delivery System and a [XXXXXXXXXX].
1.3 "STANDARD MANUFACTURING COST" shall include the following:
1) Material Cost shall mean the prices paid for raw material
components and purchased finished goods which are purchased from outside vendors
a well as any freight and duty where applicable.
2) Standard Material Cost includes the quantity of the
components included in the bill of material times the purchase price and the
waste factor (i.e., scrap percentage) included in the bill of materials. It also
includes the normal casted quality assurance sample quantity which is included
in the bill of materials. Raw material prices shall be adjusted on an annual
basis by the purchasing department.
3) Direct Labor Costs shall mean the standard labor hours
required for an operation according to standard operating procedures multiplied
by the direct labor rate for work centers within the relevant manufacturing
operating unit.
4) Overhead Costs shall mean other costs associated with the
operating unit(s) manufacturing a
2
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Collaboration Product, provided, however, that such Overhead Costs shall exclude
-------- -------
costs associated with unused manufacturing capacity and any administrative
costs other than indirect labor of the manufacturing department specifically
attributable to the Collaboration Product in question. Overhead Costs shall
include expenses associated with quality assurance, manufacturing and
engineering associated with the operating unit(s) manufacturing a Collaboration
Product and shall include depreciation and property taxes associated with the
plant(s) manufacturing a Collaboration Product. These costs shall be allocated
to each product line in such operating unit(s) or plant(s), whichever is
applicable, based on specific criteria consistent with the standard operating
procedures for each Product and work center overhead rates of the Party
performing the work determined and allocated in a manner consistently applied
within and across its operating units.
5) Manufacturing Variances shall include:
(A) Purchase Price Variance shall mean the difference
between the actual price paid the vendor versus the standard cost of such
material, times the quantity received.
(B) Spending Variance shall mean the difference between
actual department spending and the budgeted spending included in Standard
Manufacturing Cost for the relevant manufacturing operating unit.
(C) Absorption volume variances shall mean the difference
between actual product hours earned (or units
3
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
produced) and the hours budgeted for the period (or projected production units
used) in the development of Standard Manufacturing Costs times the standard
labor and overhead content of those units.
(D) Material usage shall mean the difference between the
actual quantity of component raw materials or work-in-process used in the
production of work-in-process or finished goods versus the standard quantity
included in the bill of materials times the standard cost of the component or
work-in-process item.
(E) Rework shall mean the additional standard cost of
components or work-in-process items used to turn rejected inventory into usable
inventory. No labor or overhead rate is assigned to rework orders, only the
additional value of the inventory which is issued to the other. Additionally, no
production/absorption credit is generated for rework orders since the credit was
already generated the first time the production occurred.
The purchase of any capital item reasonably required by ACT to manufacture
shall be ACT's obligation and responsibility.
ACT's costs associated with failed batches or batches that fail to meet
Product Specifications, except where such failure is attributable to PRI, shall
not be included in the definition of Standard Manufacturing Cost.
4
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
In the event that ACT, at its option, does not implement a standard costing
system, then the Parties will agree to a definition for Standard Manufacturing
Cost which makes reasonable allowances for the above factors and meets generally
accepted accounting procedures.
1.4 "SUPPLY TERRITORY" means the world.
1.5 "SUPPLY PRICE" OR "SP" will be calculated on a unit basis for
any year following the Date of First Sale anywhere on a Product-by-Product basis
as follows:
SP\\year x\\ = (BMP\\year x\\ - CSP\\year x\\)[XXXX] + CSP\\year x\\
where
BMP = Bench Mark Price, which is the lower of [XXXXXXXX] of Net Sales
adjusted to a unit basis in the first year of sale or the Calculated Supply
Price in the first year of sale and adjusted annually thereafter according to
the Purchase Price Index as published in the Federal Register.
CSP = Calculated Supply Price, which is Standard Manufacturing Cost +
[XXXXXXX], adjusted to a unit basis.
2. PURCHASE AND SALE OF PRODUCTS.
-----------------------------
(A) Beginning no more than 3 months after regulatory approval to
market Collaboration Product anywhere, Seller shall supply Buyer with those
quantities of Collaboration Products as
5
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
ordered by Buyer pursuant to this Agreement and Buyer shall order from Seller no
less than 100% of Buyer's needs from Seller in the Supply Territory for 2 years
from the Date of First Sale anywhere. The Products will conform to the
specifications (which specifications may include standard operating procedures
for product production and quality acceptance procedures) set forth by the
Seller for its own goods (the "Product Specifications"). Once Product
Specifications are established, any changes, modifications or revisions must be
approved by Buyer and Seller, which approval will not be unreasonably withheld.
Buyer may elect, upon 90 days written notice to Seller, to perform itself or
have performed certain processes relating to the Collaboration Product, such as
packaging or sterilization. Sellers requirements of [XXXXXXXXXXXXXXXXXXXXX] to
supply Buyer will be supplied to Seller at no cost to Seller, except that Seller
shall bear the risk of loss of [XXXXXXXXXXXXXXXXXXXXX] during storage, bulk
handling and transportation beginning at such time as the active is received on
their premises and that Buyer and Seller shall share the risk of loss of [XXXXXX
XXXX] in processing or formulating Collaboration Product according to the terms
of Paragraph 5(a) below. Such active will conform to specifications as agreed to
and necessary to permit its formulation into Collaboration Product and Buyer
will provide a certificate of analysis confirming conformity to specifications.
During the above period of two years from the Date of First Sale
6
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
anywhere, if Seller is unable to supply Buyer with 100% of its requirements of
Collaboration Product for a period exceeding 2 months from the date on which
Buyer is otherwise entitled to such supply, then Buyer is free to manufacture
Collaboration Product or have a Third Party manufacture Collaboration Product
regardless of whether such failure to supply is a breach of this Agreement by
Seller.
(B) On a unit basis, the purchase price for the Collaboration Product
shall be the Supply Price, but not less than the Standard Manufacturing Cost +
[XXXXXXXXXXX]. For any year, Collaboration Product will be provisionally paid
for by Buyer at the prior year's Standard Manufacturing Cost + [XXXXXXXXXXXX].
At each year end, the Supply Price will be calculated and the Parties will
reconcile any differences between the Supply Price and the provisional payment.
For the first year's sales, provisional payment will be based on Seller's good
faith estimate of Standard Manufacturing Cost + [XXXXXXXXXXXXX]. In no event,
regardless of the above, will the Supply Price, on a unit basis for a given
accounting year of the Buyer, exceed [XXXXXXXXXXXX] of Net Sales on a unit
basis, for that accounting year. Seller shall use reasonable efforts to keep its
Standard Manufacturing Costs down without sacrificing product quality. If Buyer
assumes responsibility for any of the processes related to the Collaboration
Product pursuant to Section 2(a) or if the deliverable Collaboration Product is
otherwise modified from that which was used as a basis
7
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
to calculate BMP\\year 1\\ then BMP\\year x\\ shall be modified accordingly to
reflect the increased or decreased cost.
(C) The prices charged by Seller to Buyer shall include all delivery
costs for F.O.B. the site of the last process performed by Seller. Seller will
pack all Collaboration Products ordered hereunder in a manner suitable for
shipment and to enable such to withstand the effects of shipping, including
handling during loading and unloading. Payment terms shall be net 30 days,
payable in U.S. Dollars for each respective shipment of Collaboration Products
from Buyer's receipt of such Collaboration Products (and applicable invoices
therefor), provided that such Collaboration Products comply with the terms of
this Agreement. Buyer's obligation to pay within 30 days hereunder will not be
delayed by Buyer's time period to determine conformity to Product Specifications
below.
(D) Buyer shall have the right with reasonable notice to Seller, at
its own expense, to nominate an independent certified public accountant
acceptable to and approved by the Seller, said approval not to be unreasonably
withheld, who shall have access to the Seller's records during reasonable
business hours for the purpose of verifying the Supply Price payable for any
period within the preceding two (2) years as provided for in this Agreement.
This right may not be exercised more than once in any calendar year, and said
accountant shall disclose to the Buyer requesting the audit, only information
relating solely to
8
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
the accuracy of the Supply Price. If any audit or examination shall reveal a
deficiency or excess of any payment due, the Party owing the deficiency or
excess shall make payment to the other Party of such deficiency or excess plus
customary interest for the period of such deficiency or excess. Payment of such
sums shall be made within fifteen (15) days following the report of the auditor
of the monies owed. In the event that such an audit or examination shall reveal
an excess of any payment due in an amount equalling or exceeding [XXXXXXXXXXXX]
accounting of the undisputed payments or expenditures, the Seller shall
reimburse the Buyer for the reasonable costs of such audit.
3. Licenses.
--------
(A) PRI hereby grants to ACT a non-exclusive, license fee free and
royalty free license with no right to grant sublicenses, under ACT Patents
(under which PRI is an exclusive licensee) and under PRI Patents to make
Collaboration Products in the United States or European Union as ordered by
Buyer under this Agreement.
(B) PRI hereby grants to ACT a non-exclusive, license fee free and
royalty free license with no right to grant sublicenses, under ACT Know-How and
PRI Know-How to make Collaboration Products in the United States or European
Union as ordered by Buyer under this Agreement.
9
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
4. FORECASTS AND ORDERS.
--------------------
(A) Buyer shall provide Seller with a non-binding, 12-month rolling
forecast of Buyer's expected requirements for Collaboration Products in the
Supply Territory. The first three months of any forecast shall be a binding
purchase order for Collaboration Products, which shall be placed in writing at
least 90 days prior to the desired date of delivery. The Parties acknowledge
that Buyer is not obligated to buy any specific amount of Products under this
Agreement, except for the quantities which Buyer shall actually order through
binding purchase orders.
(B) PRI shall place binding purchase orders for Collaboration Products
with accompanying schedules of delivery from time to time pursuant to this
Agreement. ACT shall deliver such binding purchase orders +/- 10 business days
from the specified delivery date and +/- 7% of the ordered quantity specified in
the binding purchase order.
(C) To the extent of any conflict or inconsistency between this
Agreement and any purchase order, purchase order release, confirmation,
acceptance or any similar document, the terms of this Agreement shall govern.
5. ACCEPTANCE OF PRODUCTS; CORRECTIVE ACTIONS.
------------------------------------------
(A) Delivery of any Collaboration Product by Seller to Buyer shall
constitute a certification by Seller that the
10
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Collaboration Product has been tested and has been found to conform fully to the
Product Specifications. After delivery of a shipment of any Collaboration
Products to Buyer, Buyer shall have 45 days to examine the Collaboration
Products to determine if they conform to the Product Specifications, and, on the
basis of such examination, to accept or reject such shipment. Any claims for
failure to so conform to Product Specifications ("Claims") shall be made by
Buyer in writing to Seller, indicating the nonconforming characteristics of the
Collaboration Products and establishing that Buyer appropriately handled and
stored the Collaboration Product before and during testing. Buyer shall have no
obligation to pay for Collaboration Products that are subject to Claims.
However, if payment has already been made by Buyer, then as promptly as possible
after the submission of a Claim by Buyer, Seller shall, at Buyer's option,
provide Buyer with (i) a refund of the full amount paid by Buyer for such
Products, (ii) a credit against future billings equal to the full amount paid by
Buyer for such Collaboration Products or (iii) replacement Collaboration
Products. Seller shall pay for all shipping costs of returning Collaboration
Products that are the subject of Claims. Seller shall bear the risk of loss for
such Collaboration Products, beginning at such time as they are taken at Buyer's
premises for return delivery. Buyer and Seller shall share the risk of loss of
[XXXXXXXXXXXXXXXXXXXXXXX] in processing or formulating Collaboration Product,
whether such loss is due to
11
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
nonconforming Product or otherwise, as follows: in the first two years
following the Date of First Sale of any Collaboration Product, Buyer will assume
[XXXX] of such cost; in years 3 and 4 following the Date of First Sale of any
Collaboration Product, Buyer will assume [XXXX] of such cost and Seller will
assume [XXXX] of such cost; in years 5 and 6 following the Date of First Sale of
any Collaboration Product, Buyer and Seller will each assume [XXXX] of such
cost; and in year 7 and thereafter following the Date of First Sale of any
Collaboration Product, Buyer will assume [XXXX] of such cost and Seller will
assume [XXXX] of such cost. In regard to risk of loss of [XXXXXXXXXXXXXXXXXXXXX]
in processing or formulating Collaboration Product, Buyer must consent to the
initial batch size employed to make Collaboration Product and to subsequent
changes to such batch size, which consent will not be unreasonably withheld
considering Seller's cost of manufacture.
(B) Any shipment of Collaboration Products for which Buyer shall not
submit a Claim within 45 days of delivery shall be deemed accepted. Upon
acceptance, Buyer shall release Seller from all Claims for non-conformity. The
acceptance by Buyer of such Collaboration Products shall not constitute a waiver
of any rights of Buyer or a release of any obligations of Seller including,
without limitation, the obligations set forth in Section 9(a). In the event
that Buyer makes a Claim that Collaboration Product has not met the Product
Specifications and Seller does not agree, then an independent expert skilled in
the
12
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
art of analysis (the "Expert) appointed by Seller and reasonably acceptable to
Buyer shall visit the Buyer. The Expert will repeat the analysis of the samples
of the relevant shipment in the presence of the appropriate Seller and Buyer
personnel. After the Expert shall have executed an appropriate Confidentiality
Agreement approved in form and substance by Seller and Buyer, Buyer and Seller
shall supply the Expert with copies of all tests, data, documentation,
standards, etc., that the Expert may reasonably require in connection with such
analysis. The Expert's decision as to whether such lot has met the Product
Specifications shall be final and binding on the Parties. All analytical tests
and techniques performed hereunder shall conform to the Product Specifications
where applicable. All expenses and costs of such expert shall be borne by the
Party whose contention is finally rejected by the Expert.
(C) Buyer shall be responsible for all costs and expenses of any
Collaboration Product recall, customer notice, restriction, change, corrective
action or market action or any Product change except as provided herein. In the
event any governmental agency having jurisdiction shall request or order, or if
Buyer shall reasonably determine to undertake, any corrective action with
respect to Collaboration Products supplied hereunder, including any
Collaboration Product recall, customer notice, restriction, change, corrective
action or market action or any product change, and the cause or basis of such
corrective
13
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
action is primarily attributable to a breach by Seller of any of its warranties,
guarantees, representations, obligations or covenants contained herein, then
Seller shall be liable, and shall reimburse Buyer for the reasonable costs of
such action including the cost of any Collaboration Product affected thereby
whether or not such particular Collaboration Product shall be established to be
in breach of any warranty by Seller hereunder.
6. REPRESENTATIONS AND WARRANTIES.
------------------------------
Seller represents and warrants to Buyer that, at the time of manufacture,
all Collaboration Products supplied in connection with this Agreement shall be
manufactured and provided by Seller (i) in accordance and conformity with the
Product Specifications and in compliance with this Agreement and (ii) in
compliance with all applicable federal, state or municipal statutes, laws, rules
or regulations, including those relating to the environment, food or drugs and
occupational health and safety, including, without limitation, those enforced or
promulgated by the United States Food and Drug Administration (including,
without limitation, compliance with then current Good Manufacturing Practices).
Seller further represents and warrants to Buyer that the performance of its
obligations under this Agreement will not result in a violation or breach of,
and will not conflict with or constitute a default under its Articles of
Incorporation or corporate bylaws or any agreement, contract, commitment or
14
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
obligation to which Seller or any of its Affiliates is a party or by which it is
bound. The foregoing warranties are exclusive and in lieu of all other
warranties written, oral or implied. THERE ARE NO WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
7. INSPECTION OF PREMISES.
----------------------
Buyer shall have the right, upon reasonable notice to Seller and during
regular business hours, to inspect and audit the facilities being used by Seller
for production of the Collaboration Products to assure compliance by Seller with
applicable rules and regulations and with other provisions of this Agreement.
Seller shall, within ten business days of any written notice of any deficiencies
discovered during such inspection, remedy any deficiencies which may be noted in
any such audit, and the failure by Seller to remedy any such deficiencies within
such ten day period shall be deemed a material breach of this Agreement unless
waived in writing. Seller acknowledges that the provisions of this Article
granting Buyer certain audit rights shall in no way relieve Seller of any of its
obligations under this Agreement, nor shall such provisions require Buyer to
conduct any such audits.
15
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
8. LABELING; ARTWORK; PROPRIETARY RIGHTS.
-------------------------------------
(A) Buyer shall have the right to determine the appearance and text
of all labeling used in connection with the Collaboration Products; provided
that Seller shall have the opportunity to review and comment on any reference to
or use of Seller's name or trademarks.
(B) Seller acknowledges that Buyer is the exclusive owner of and has
all rights to its patents, trademarks, copyrights, plans, ideas, names, slogans,
artwork and all other intellectual property that appear on or are otherwise used
in connection with the packaging, marketing and sale of Collaboration Products.
9. INDEMNIFICATION.
---------------
(A) Seller shall indemnify and hold harmless Buyer and its
Affiliates and their officers, directors and employees from and against any and
all claims, losses, damages, judgements, costs, awards, expenses (including
reasonable attorneys' fees) and liabilities of every kind (collectively,
"Losses") arising out of or resulting from any breach by Seller of any of its
warranties, guarantees, representations, obligations or covenants contained
herein.
(B) Buyer shall indemnify and hold harmless Seller and its
Affiliates and their officers, directors and employees from and against any and
all Losses arising out of or resulting from
16
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
any breach by Buyer of any of its obligations or covenants contained herein.
(C) Each indemnified party agrees to give the indemnifying party
prompt written notice of any matter upon which such indemnified party intends to
base a claim for indemnification (an "Indemnity Claim") under Article 9. The
indemnifying party shall have the right to participate jointly with the
indemnified party in the indemnified party's defense, settlement or other
disposition of any Indemnity Claim. With respect to any Indemnity Claim
relating solely to the payment of money damages and which could not result in
the indemnified party's becoming subject to injunctive or other equitable relief
or otherwise adversely affect the business of the indemnified party in any
manner, and as to which the indemnifying party shall have acknowledged in
writing the obligation to indemnify the indemnified party hereunder, the
indemnifying party shall have the sole right to defend, settle or otherwise
dispose of such Indemnity Claim, on such terms as the indemnifying party, in its
sole discretion, shall deem appropriate, provided that the indemnifying party
shall provide reasonable evidence of its ability to pay any damages claimed and
with respect to any such settlement shall have obtained the written release of
the indemnified party from the Indemnity Claim. The indemnifying party shall
obtain the written consent of the indemnified party, which shall not be
unreasonably withheld, prior to ceasing to
17
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
defend, settling or otherwise disposing of any Indemnity Claim if as a result
thereof the indemnified party would become subject to injunctive or other
equitable relief or the business of the indemnified party would be adversely
affected in any manner.
(D) PRI shall indemnify and hold ACT harmless from and against any
and all liabilities, claims, damages, costs, expenses or money judgments which
result from the manufacture, use, promotion and sale of Products under this
Agreement and in regard to which, ACT is not in breach of this Agreement.
(E) This Article 9 shall survive any termination of this Agreement.
10. TERM. This Agreement shall commence on the Effective Date and,
----
unless sooner terminated as provided herein, shall continue in effect to
termination of the License and Development Agreement between the Parties of even
date herewith.
11. TERMINATION.
-----------
(A) This Agreement may be terminated earlier than as provided by
Article 10, by either party, if the other party shall materially breach or
materially fail in the observance or performance of any representation,
warranty, guarantee, covenant or obligation under this Agreement or the License
and Development Agreement of even date herewith, and if such material breach or
material failure remains uncured for {sixty (60)} days after notice
18
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
thereof is given to such other party by the party seeking to terminate.
(B) Notwithstanding the termination of this Agreement for any
reason, each party hereto shall be entitled to recover any and all damages which
such party shall have sustained by reason of the breach by the other party
hereto of any of the terms of this Agreement. Termination of this Agreement for
any reason shall not release either party hereto from any liability which at
such time has already accrued or which thereafter accrues from a breach or
default prior to such expiration or termination, nor affect in any way the
survival of any other right, duty or obligation of either party hereto which is
expressly stated elsewhere in this Agreement to survive such termination. In the
case of a termination under Section 11(a) above, the non-defaulting party may
pursue any remedy available in law or in equity with respect to such breach.
12. CONFIDENTIALITY. The Parties refer to the confidentiality provisions
---------------
of Article VIII of the Development and License Agreement between the Parties of
even date herewith.
13. MANUFACTURING FACILITIES. Seller will establish a first
------------------------
manufacturing facility in the United States. To minimize the likelihood of a
supply deficiency with respect to a Collaboration Product, by the end of Phase
III of a Collaboration
19
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Product, Seller will demonstrate an ability, in a detailed plan, to supply
Collaboration Product within 3 months of supply disruption, whether such supply
disruption is due to destruction of ACT's manufacturing facility, a force
majeure under Article 23, or otherwise. In the event that either Party can show
both feasibility and economic savings, the 3 month requirement for supply, in
the event of supply disruption, may be extended based on maintaining adequate
stocks of Collaboration Product. Where the plan calls for transferring
manufacture from one manufacturing facility to another manufacturing facility of
a Third Party, then such Third Party will be an industry recognized reputable
manufacturer having experience in making injectable delivery systems and PRI
will provided the necessary contingent licenses. Buyer will reimburse the
actual cost (or its allocated portion of the actual cost) of establishing a
second manufacturing facility. Seller shall register its manufacturing facility
or facilities for Collaboration Products with the Federal Food and Drug
Administration (the "FDA") or, the equivalent appropriate regulatory authority
in a country of the European Union, and permit representatives of the FDA or
such regulatory authority to inspect any such facility upon request. Buyer is
responsible for obtaining FDA approval for the Collaboration Products in the
Supply Territory.
20
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
14. TAXES. Buyer shall assume liability for all taxes, excises or other
-----
charges which relate to the Collaboration Products and are imposed by any local,
state or federal authority after title to the Collaboration Products passes to
Buyer. Buyer further agrees to indemnify Seller against any and all such
liability for taxes as well as any reasonable legal fees or costs incurred by
Seller in connection therewith. To the best of Seller's knowledge, there are no
such taxes, excises or other charges now in effect.
15. RELATIONSHIP OF THE PARTIES. The relationship of Buyer and Seller
---------------------------
established by this Agreement is that of independent contractors, and nothing
contained herein shall be construed to (i) give either party any right or
authority to create or assume any obligation of any kind on behalf of the other
or (ii) constitute the parties as partners, joint venturers, co-owners or
otherwise as participants in a joint or common undertaking.
16. PUBLICITY. The Parties refer to the publicity provisions of Article
---------
XVII of the Development and License Agreement between the Parties of even date
herewith.
17. CONSTRUCTION. This Agreement shall be governed by, and shall be
------------
construed in accordance with, the laws of the State of New York. Any
controversy or claim arising out of or relating to
21
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
this Agreement, or the parties' decision to enter into this Agreement, or the
breach thereof, shall be settled by arbitration per Article XIII of the
Development and License Agreement. This Article will survive termination of
this Agreement.
18. ENTIRE AGREEMENT. It is the mutual desire and intent of the Parties
----------------
to provide certainty as to their future rights and remedies against each other
by defining the extent of their mutual undertakings as provided herein. The
Parties have in this Agreement incorporated all representations, warranties,
covenants, commitments, and understandings on which they have relied in entering
into this Agreement and, except as provided for herein, neither Party has made
any covenant or other commitment to them concerning its future action.
Accordingly, this Agreement and all Exhibits attached hereto (a) constitutes the
entire agreement and understanding between the Parties with respect to the
matters contained herein, and there are no promises, representations,
conditions, provisions, or terms related thereto other than those set forth in
this Agreement, and (b) supersedes all previous understandings, agreements, and
representations between the Parties, written or oral relating to the subject
matter hereof. The parties hereto may from time to time during the continuance
of this Agreement modify, vary or alter any of the provisions of this Agreement,
but only by an instrument duly executed by all Parties hereto.
22
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
19. HEADINGS. The headings used herein have been inserted for
--------
convenience only and shall not affect the interpretation of this Agreement.
20. NOTICES. Notices are to be given under this Agreement as directed in
-------
Paragraph 15.1 of the Development and License Agreement between the Parties of
even date herewith.
21. FAILURE TO EXERCISE. The failure of either party to enforce at any
-------------------
time for any period any provision hereof shall not be construed to be a waiver
of such provision or of the right of such party thereafter to enforce each such
provision, nor shall any single or partial exercise of any right or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right or remedy. Remedies provided herein are cumulative and not
exclusive of any remedies provided at law.
22. ASSIGNMENT. This Agreement may not be assigned by either Party
----------
without the prior written consent of the other, except that either Party may
assign its rights and/or obligations hereunder to any of its Affiliates.
Subject to the foregoing sentence, this Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
23
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
23. FORCE MAJEURE. Neither Party hereto shall be liable to the other
-------------
Party for any losses or damages attributable to a default in or breach of this
Agreement which is the result of war (whether declared or undeclared), acts of
God, revolution, strike, fire, earthquake, flood, pestilence, riot, enactment or
change of laws and regulations, accident(s), labor trouble, or shortage of or
inability to obtain material, equipment or transport or any other cause beyond
the reasonable control of the Parties, and the performance of obligations
hereunder shall be suspended during, but no longer than, the existence of such
cause. In the event of a force majeure hereunder, Seller will allocate
available capacity among its customers based on allocation of capacity in the
year preceding the force majeure.
24. SEVERABILITY. Any term or provision of this Agreement which is
------------
invalid or unenforceable in any jurisdiction shall, to the extent the economic
benefits conferred by this Agreement to both parties remain substantially
unimpaired, be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction.
24
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
25. ELECTRONIC COPIES. Promptly upon ACT's request, PRI shall deliver or
-----------------
cause to be delivered to ACT or its counsel a formatted diskette containing a
conformed copy of this Agreement that was prepared using PRI's or its counsel's
word processing system.
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.
AGREED TO AND ACCEPTED BY:
ALKERMES CONTROLLED THE R. W. JOHNSON PHARMACEUTICAL
THERAPEUTICS, INC. RESEARCH INSTITUTE, A DIVISION OF
ORTHO PHARMACEUTICAL CORPORATION
By: /s/ Michael J. Landine By: /s/ William Duncan
---------------------- ------------------
Title: Vice President Title: Chairman
Date: November 25, 1996 Date: November 25, 1996
AGREED TO AND ACCEPTED BY:
ALKERMES, INC.
By: /s/ Richard F. Pops
-------------------
Title: CEO
Date: November 25, 1996
25
<PAGE>
EXHIBIT 10.3
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is entered into effective as of November 13, 1996
(the "Effective Date") between ALKERMES CONTROLLED THERAPEUTICS, INC., a
Pennsylvania corporation ("Alkermes"), located at 64 Sidney Street, Cambridge,
Massachusetts 02139 and GENENTECH, INC., a Delaware corporation ("Genentech"),
located at 460 Point San Bruno Boulevard, South San Francisco, California 94080.
Alkermes possesses certain technology currently known as the ProLease(R)
delivery system, consisting of patents and know-how, that permits PLGA
encapsulation of particular molecules leading to sustained release of such
molecules when injected under the skin.
Genentech wishes to incorporate such technology in formulations of
recombinant human growth hormone for use in human beings and, accordingly,
wishes to obtain a license from Alkermes for such use of the Alkermes
technology.
Therefore, Alkermes and Genentech agree as follows:
1. DEFINITIONS.
1.1 "AFFILIATE" shall mean an entity that, directly or indirectly,
through one or more intermediaries, is controlled by Alkermes or Genentech. As
used herein, the term "control" will mean the direct or indirect ownership of
fifty percent (50%) or more of the stock having the right to vote for directors
thereof or the ability to otherwise control the management of the corporation or
other business entity.
1.2 "ALKERMES KNOWHOW" shall mean any and all proprietary information,
data, test results, safety and efficacy data, knowledge, discoveries,
inventions, materials, specifications, designs, regulatory filings, methods,
processes and techniques which are now or hereafter owned by or in the
possession or control of Alkermes and which Alkermes has the right to transfer
or sublicense and which are related to the encapsulation of proteins in
microspheres utilizing the ProLease(R) delivery system and any improvements
thereto. Alkermes Knowhow does not include any of the foregoing which is
generally ascertainable from publicly available information or which was known
to Genentech prior to disclosure to Genentech by Alkermes, as evidenced by prior
competent proof or which Genentech obtained independently or in collaboration
with another partner and not in violation of any obligation of confidentiality.
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
1.3 "ALKERMES PATENTS" shall mean the patents and patent applications
listed on Exhibit A hereto and their foreign counterparts and all patents
(including inventor's certificates) and patent applications containing claims to
the encapsulation of proteins in microspheres and substitutions, extensions,
reissues, renewals, divisions, continuations or continuation-in-parts of any of
the foregoing, which Alkermes presently or hereafter owns or controls, either
solely or jointly with Genentech or a third party, and which Alkermes now has or
hereafter shall have the right to grant sublicenses to. Alkermes shall use its
best efforts to amend Exhibit A by December 31 of each year to include any
Alkermes Patents that have arisen in the period since the Effective Date or
since the last amendment to Exhibit A; provided, however, that if Alkermes does
not so amend Exhibit A by December 31 of any year, Alkermes shall so amend
Exhibit A within thirty (30) days after receipt of a written request from
Genentech to do so.
1.4 "ALKERMES TECHNOLOGY" shall mean the Alkermes Patents and the
Alkermes Knowhow.
1.5 "BLA" shall mean a Biologics License Application as that term is used
in Title 21 of the Code of Federal Regulations.
1.6 "COLLABORATION AGREEMENT" shall mean the Collaborative Development
Agreement between Genentech and Alkermes dated as of January 9, 1995.
1.7 "COMMERCIAL INTRODUCTION" shall mean the date of first commercial
sale of a Licensed Product by Genentech.
1.8 "FULLY BURDENED MANUFACTURING COST" shall mean the sum of: (a) the
cost of goods produced, determined in accordance with generally accepted
accounting principles in the United States as consistently applied by a Party,
including but not limited to direct labor, material and product testing costs of
the Licensed Product, as well as allocable overhead, (b) any intellectual
property acquisition and licensing costs directly allocable to the manufacture,
use or sale of Licensed Products by a Party, as determined in accordance with
generally accepted accounting principles in the United States as consistently
applied by a Party, and (c) any other costs borne by a Party for the transport,
customs clearance, and storage of the Licensed Product (e.g., freight, duties,
insurance and warehousing).
1.9 "FIELD OF USE" shall mean the prevention, treatment, and diagnosis of
any human disease or condition using any Licensed Product.
1.10 "GENENTECH KNOWHOW" shall mean any and all proprietary information,
data, test results, safety and efficacy data, knowledge, discoveries,
inventions, materials, specifications, and designs and other information owned
or controlled by or in the possession of Genentech and which Genentech has the
right to transfer or sublicense which is
2
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
specifically and only directed at the manufacture of a Licensed Product
(including all research, preclinical, clinical data specific for or a Licensed
Product), but only to the extent derived by Genentech pursuant to or in the
course of research conducted pursuant to the Collaboration Agreement. Genentech
Knowhow does not include any of the foregoing which are generally ascertainable
from publicly available information.
1.11 "GENENTECH PATENTS" shall mean any patents (including inventor's
certificates) and patent applications containing claims to the composition or
use of Licensed Products, as well as substitutions, extensions, reissues,
renewals, divisions, continuations, or continuations-in-part of any of the
foregoing, which Genentech own or control, either solely or jointly with
Alkermes, and as to which Genentech now have or hereafter shall have the right
to grant sublicenses.
1.12 "GENENTECH TECHNOLOGY" shall mean the Genentech Patents and the
Genentech Knowhow.
1.13 "LICENSED PRODUCT(S)" shall mean any pharmaceutical formulation for
use in or for humans which contains human growth hormone or analogues thereof or
contains nucleic acids meant to be incorporated into cells, causing production
of human growth hormone or analogues thereof, and (i) which, but for the license
granted herein, cannot be manufactured, used or sold without infringing a Valid
Claim which is contained in an Alkermes Patent, or (ii) which utilizes or was
made utilizing, contains, is based upon, is derived from, or could not have been
made but for, the Alkermes Technology.
1.14 "MAJOR MARKET COUNTRY" shall include each of the following: Germany,
France, Italy, Japan, the United Kingdom or Spain.
1.15 "NDA" shall mean a New Drug Application as that term is used in Title
21 of the Code of Federal Regulations.
1.16 "NET SALES" shall mean the gross invoiced sales price charged for all
Licensed Products sold or commercially disposed of for value by Genentech, in
arm's length sales to independent third parties after deduction of the following
items, to the extent such items are incurred, provided that such items are
included in the gross price charged and do not exceed reasonable and customary
amounts for each such item in the market in which such sale occurred:
(A) trade, cash and quantity discounts or rebates actually allowed
and taken;
3
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(B) credits or allowances given or made for rejection or return of,
and for uncollectible amounts on, a previously sold Licensed Product or for
retroactive price reductions;
(C) any tax or government charge (including any tax such as a value
added or similar tax or government charge other than an income tax) levied on
the sale, transportation or delivery of a Licensed Product and borne by the
seller thereof; and
(D) any charges allowed or prepaid for freight or insurance billed to
the final customer.
In the event Alkermes is receiving royalties under this Agreement from any
Licensed Product sold in a form containing in addition to simple Licensed
Product, at least one other ingredient which is Therapeutically Active but
excluding diluents, vehicles or specific adjuvants, Net Sales for such
combination Licensed Product will be calculated by multiplying actual Net Sales
of such combination Licensed Product by the fraction A/(A+B) where A is the
invoice price of the Licensed Product if sold separately, and B is the total
invoice price of any other ingredient which is Therapeutically Active in the
combination, if sold separately. If, on a country-by-country basis, the other
ingredient which is Therapeutically Active in the combination is not sold
separately in said country, Net Sales for the purpose of determining royalties
of the combination Licensed Product shall be calculated by multiplying actual
Net Sales of such combination Licensed Product by the fraction A/C where A is
the invoice price of the Licensed Product, if sold separately, and C is the
invoice price of the combination Licensed Product. If, on a country-by-country
basis, neither the Licensed Product nor the other ingredient which is
Therapeutically Active of the combination Licensed Product is sold separately in
said country, Net Sales for the purpose of determining royalties of the
combination Product shall be determined by the Parties in good faith. For
purposes of this Section 1.16, "Therapeutically Active" shall mean biologically
active but shall not include diluents, vehicles or specific adjuvants or any
other ingredient (other than a Licensed Product) which does not have any, or
only incidental, therapeutic properties when present alone.
In general, the Parties agree to negotiate in good faith for an equitable
determination of Net Sales of Licensed Product, on a country-by-country basis,
in the event that Genentech sells Licensed Product in such a manner that gross
sales of the same are not readily identifiable.
1.17 "PARTY" shall mean Genentech or Alkermes and, when used in the
plural, shall mean Genentech and Alkermes.
1.18 "PHASE I/II CLINICAL TRIAL" shall mean studies in humans of the
pharmacokinetics, pharmacodynamics, safety, dose ranging and efficacy of a
Licensed
4
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Product which are designed to generate sufficient data to commence a Phase III
Clinical Trial.
1.19 "PHASE III CLINICAL TRIAL" shall mean as to a specific Licensed
Product, a controlled (or uncontrolled if appropriate) study in humans of the
efficacy and safety of such Licensed Product which is prospectively designed to
demonstrate statistically whether the Licensed Product is effective for use in a
particular indication in a manner sufficient to file a BLA or NDA to obtain
regulatory approval to market that Licensed Product for the indication being
investigated by the Phase III Clinical Trial.
1.20 "REGULATORY APPROVAL" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
federal, state or local regulatory agency, department, bureau or other
governmental entity, necessary for the manufacture and sale of a Licensed
Product in a regulatory jurisdiction.
1.21 "TERRITORY" shall mean all of the countries in the world except the
United States.
1.22 "VALID CLAIM" shall mean a subsisting claim of an issued and
unexpired Alkermes Patent (i) that has not been declared invalid, unpatentable
or unenforceable by a decision of a governmental body or court of competent
jurisdiction, (ii) that is unappealable or unappealed within the time allowed
for appeal, (iii) that has not been rendered unenforceable through disclaimer or
otherwise, and (iv) that is not subject to an interference claim.
2. LICENSES AND OPTIONS TO GENENTECH AND ALKERMES.
2.1 GRANT OF LICENSE RIGHT TO GENENTECH.
(A) Alkermes hereby grants to Genentech a coexclusive right and
license along with Alkermes within the United States and within the Field of Use
and an exclusive right and license (even as to Alkermes) within the Territory
and within the Field of Use, under the Alkermes Patents and the Alkermes Knowhow
to perform research and development on, to manufacture and have manufactured,
use, import, offer for sale and sell any Licensed Product containing human
growth hormone. Genentech may not sublicense any of the rights granted in this
Section 2.1. Alkermes hereby agrees not to grant any further licenses to the
rights it retains pursuant to this Section 2.1.
2.2 GRANT OF LICENSE RIGHT TO ALKERMES. Genentech hereby grants to
Alkermes a coexclusive royalty-free right and license along with Genentech
within the United States, under the Genentech Technology to perform research and
development on and to manufacture any Licensed Product pursuant to Section 5
hereof.
5
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
3. PAYMENTS TO ALKERMES.
3.1 MILESTONE PAYMENTS. Genentech shall pay Alkermes the amounts
specified below upon completion of the listed events:
Events Milestone Payment
- -------------------------------------------------------------------------------
Fifteen days after the execution of this Agreement $[XXXXXXX]
Upon completion of the first Phase III Clinical Trial of $[XXXXXXX]
the Licensed Product
Filing of the first application for Regulatory Approval $[XXXXXXX]*
from the FDA for the Licensed Product
Receipt of Regulatory Approval from the FDA for the $[XXXXXXX]*
Licensed Product
Receipt of the first Regulatory Approval $[XXXXXXX]*
from one of the Major Market Countries for the
Licensed Product
3.2 ROYALTIES.
(A) ROYALTIES PAYABLE BY GENENTECH. Genentech shall pay royalties to
Alkermes of [XXXXXXXXXXXXXXXXXXX] of Net Sales of Licensed Products sold by
Genentech, in each country in the United States and the Territory.
(B) OFFSETS FOR THIRD PARTY ROYALTIES. The royalties otherwise
payable by Genentech hereunder shall be reduced by [XXXXX] of the amounts that
Genentech must pay to any third party due to manufacture, use, or sale of
Licensed Products and caused by the fact that the Licensed Product incorporates
the Alkermes Technology, on a country-by-country basis; provided, however, that
in no event shall the royalties payable hereunder be reduced by [XXXXXXXXXXX].
(C) MILESTONE CREDITS. [XXXXXXXXXXXXX] of the milestone payments
marked with an asterisk made with respect to the events described in Section 3.1
shall be creditable by Genentech against future royalties to be paid to Alkermes
pursuant to Section 3.2.
(D) ROYALTY REDUCTION. The royalties otherwise payable by Genentech
hereunder shall be reduced to [XXXXXXXXXXXXXXXXXXXX] of Net Sales of Licensed
Products sold by Genentech in the United States, effective automatically if (and
when) Alkermes commences
6
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
development and commercialization, outside of the scope of the collaboration
with Genentech pursuant to this Agreement, of any pharmaceutical formulation of
human growth hormone using any Alkermes Technology and any human growth hormone
or analogues thereof (or nucleic acids meant to be incorporated into cells,
causing production of human growth hormone or analogues thereof) not within the
Genentech Technology. Any such pharmaceutical formulation is referred to herein
as a "Competing Product". Such development and commercialization shall be
deemed to include commencement of any human clinical trial of any Competing
Product, and Alkermes shall be required to notify Genentech of the commencement
of any such trial not later than the date of enrollment of the first subject in
such trial. However, the automatic royalty reduction herein shall apply even if
Alkermes fails to provide such notice, and if Genentech continues to pay
royalties at the higher rate under Section 3.2(a) for any time period during
which it later learns that Alkermes had commenced development and
commercialization of a Competing Product, Genentech shall be entitled to offset
against any future payments owed under this Agreement the full amount of any
excess royalties paid to Alkermes during such time period that the reduced
royalty rate herein should have applied (plus interest thereon at a rate equal
to [XXXXXXXXXXXXXX] over the prime rate of interest as reported by Bank of
America NT&SA in San Francisco, California from time to time)."
3.3 MODE OF PAYMENT OF ROYALTIES. For purposes of determining when a sale
of a Licensed Product occurs, the sale shall be deemed to occur on the earlier
of: (i) the date the Licensed Product is shipped, or (ii) the date of the
invoice to the purchaser of the Licensed Product. All royalty payments shall be
made within ninety (90) days of the end of each calendar quarter in which the
sale was made. Such royalty payments shall be accompanied by a detailed
statement that shall include for each country in which sales of Licensed
Products occurred: the gross sales (if available) and Net Sales in each
country's currency; the applicable royalty rate; the royalties payable in each
country's currency, including an accounting of all deductions taken in the
calculation of Net Sales and a separate accounting for all Combination Products
sold and the formulas used in the calculation of royalties owed thereon; the
applicable exchange rate to convert from each country's currency to U.S.
Dollars; and the royalties payable in U.S. Dollars. Royalty payments shall first
be calculated in the currency in which sales took place and then converted to
United States Dollars at an average of the prices reported by the western
edition of the Wall Street Journal, on the first and the last business day of
the calendar quarter for which such payment is due. All royalty payments
hereunder shall be made to Alkermes in U.S. Dollars by bank wire transfer in
immediately available funds to such account designated by Alkermes. Genentech
shall provide notice at least five (5) days prior to the wire transfer date of
the amount of payment, the nature of the payment (with reference to the
applicable section of this Agreement) and the date of receipt of good funds.
Such notice should be given to the Treasurer of Alkermes at the address set
forth in the Notices and Deliveries Section of this Agreement or such other
address directed by Alkermes. All payments hereunder shall be made free and
clear of any taxes, duties, levies, fees or charges, except for withholding
taxes
7
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(to the extent applicable). Genentech shall make any withholding payments due on
behalf of Alkermes and shall promptly provide Alkermes with written
documentation of any such payment sufficient to satisfy any requirements of the
United States Internal Revenue Service related to an application by Alkermes for
a foreign tax credit for such payment. Genentech agrees to take reasonable and
lawful steps as Alkermes may request to minimize the amount of tax to which
payments to Alkermes are subject.
3.4 RESTRICTIONS ON PAYMENT. If by law, regulations or fiscal policy of a
particular country, remittance of royalties in U.S. Dollars is restricted or
forbidden, notice thereof will be promptly given to Alkermes, and payment of the
royalty shall be made by the deposit thereof in local currency to the credit of
Alkermes in a recognized banking institution designated by Alkermes. When in any
country the law or regulations prohibit both the transmittal and deposit of
royalties on sales in such a country, royalty payments shall be suspended for as
long as such prohibition is in effect and as soon as such prohibition ceases to
be in effect, all royalties that Genentech would have been under obligation to
transmit or deposit but for the prohibition, shall forthwith be deposited or
transmitted promptly to the extent allowable. Genentech will first obtain
written agreement from Alkermes before selling a Licensed Product in a country
known to Genentech to restrict or forbid remittance of royalties in U.S.
Dollars.
3.5 RECORDS RETENTION. Genentech agrees to keep for at least three (3)
years, records of all sales of Licensed Products in sufficient detail to permit
Alkermes to confirm the accuracy of Genentech's royalty calculations. At the
request of, upon at least five (5) days' prior written notice, and at the
expense of Alkermes, Genentech shall permit a nationally recognized,
independent, certified public accountant appointed by Alkermes and reasonably
acceptable to Genentech to examine these records solely to the extent necessary
to verify such calculations, provided that such accountant has entered into a
confidentiality agreement with Genentech substantially similar to the
confidentiality provisions of this Agreement, limiting the use and disclosure of
such information to purposes germane to this Section 3.5. Results of any such
examination shall be made available to Alkermes and to Genentech. If such
examination reveals an underpayment of royalties by ten percent (10%) or more,
Genentech shall pay all costs of such examination. In the event such accountant
concludes that additional royalties are owed, the additional royalties shall be
paid within thirty (30) days of the date Alkermes delivers to Genentech the
accountant's written report reflecting such conclusion. This Section 3.5 shall
survive any termination of this Agreement for three (3) years.
8
<PAGE>
3.6 MILESTONE PAYMENTS FOR CLINICAL DEVELOPMENT AND PROCESS SCALE-UP.
(A) Genentech shall pay Alkermes the amounts specified below if the
listed events are completed on or before the listed dates and Alkermes performs
the clinical development and process scale-up work necessary for the completion
of the particular event.
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
(B) If Alkermes performs the Phase I/II and Phase III Clinical Trials
referred to above and completes event number 6 above on or before the listed
date for that event, then in addition to the milestone payment for event number
6, Genentech shall pay Alkermes [xxxxx] of all previous milestone payments to
the extent not previously paid.
3.7 OPTION FOR [xxxxx] For a period of twelve (12) months from the
Effective Date, the Parties will exclusively discuss with each other in good
faith the terms under which Genentech may obtain a license to the Alkermes
ProLease(R) delivery system for the PLGA encapsulation of [xxxxx]. As a
starting point, the Parties agree that the financial terms for such a license
shall be those set forth in Exhibit B of the Collaborative Development Agreement
between the Parties dated January 9, 1995. At the end of such twelve-month
period, if the Parties have not agreed to the major terms of an agreement for
such a license, they may either mutually agree to continue their negotiations or
to end such discussions with no further obligations with respect to such a
license on either Party's part.
4. DEVELOPMENT.
4.1 CLINICAL DEVELOPMENT OF LICENSED PRODUCT BY ALKERMES.
(A) Alkermes shall be solely responsible for and shall use its
commercially reasonable efforts to perform Phase I/II Clinical Trials of
Licensed Product to treat pediatric GHD and make any associated filings with
regulatory agencies. For the purposes of this Agreement, "commercially
reasonable" efforts shall mean those efforts expended by Alkermes on its own
high priority projects. Genentech may determine, in its sole discretion, to have
Alkermes take responsibility for and use its commercially reasonable efforts to
perform Phase III Clinical Trials and make any associated filings with
regulatory agencies for Licensed Product to treat pediatric GHD and/or to
perform clinical trials for other indications. Genentech may also, in its sole
discretion, determine to have Alkermes make filings for Regulatory Approval.
Within thirty (30) days of the Effective Date, the Parties will establish a
Joint Development Committee ("JDC") to oversee clinical development and
regulatory filings and to carry out plans for clinical development and
regulatory filings
9
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
communicated to it by Genentech. The JDC will have three representatives
appointed by each of Genentech and Alkermes. Such representatives will have
expertise in any of the areas of clinical development, process sciences,
manufacturing or regulatory affairs. Either Party may replace any or all of its
representatives at any time upon written notice to the other Party. The JDC will
meet at least once each calendar quarter or at such other times as directed by
Genentech. While the Alkermes representatives may comment on any development and
regulatory filing plans, Genentech shall have the final say and shall direct the
process, except that Alkermes shall make the final determination if there is a
disagreement on a matter that would lead to a substantial increase in the total
manpower committed by Alkermes or the scheduling of Alkermes critical facilities
when the scheduling is less than one year in advance. Reimbursement of Alkermes'
expenses for performing its clinical development and regulatory filing
obligations hereunder shall be made as set forth in (b) below. Exhibit B
attached hereto sets forth the anticipated timeline, requirements and estimated
costs for the Phase II and Phase III and any follow-on Clinical Trials and
associated regulatory filings. The JDC shall suggest necessary changes to
Exhibit B to Genentech each year no later than September 30, but Genentech shall
make all final decisions on any changes or additions to Exhibit B.
(B) Genentech will reimburse the costs incurred by Alkermes pursuant
to Section 4.1(a) above at Alkermes' actual cost of performing the obligations
set forth in that section, as determined by Alkermes in accordance with, an FTE
rate agreed upon by the JDC at the beginning of each Alkermes fiscal year, to be
consistently applied throughout the year, plus external costs of performing
clinical trials as agreed upon by the JDC. Alkermes shall submit a reasonably
detailed invoice to Genentech at the end of each quarter during which it incurs
costs under Section 4.1(a) setting forth activities completed and costs for such
activities, which shall be reasonably in accordance with amounts previously
agreed upon by the JDC for such activities. Genentech shall reimburse Alkermes'
costs within thirty (30) days of receiving each invoice.
(C) At any time, if, in Genentech's sole discretion, Genentech
believes that Alkermes is not using its commercially reasonable efforts to
complete or is not capable of completing any of the clinical development tasks
for which Alkermes is given responsibility, Genentech may so notify Alkermes and
complete such task itself. Alkermes shall be reimbursed for work completed up to
the time Alkermes receives notification that Genentech intends to complete such
task and for any remaining non-cancellable obligations.
4.2 SUPPLY OF CLINICAL MATERIAL BY ALKERMES.
(A) Alkermes shall be responsible for, and shall use its commercially
reasonable efforts to, supply all clinical needs and requirements of Licensed
Product. Such Licensed Product shall be produced under GMP and all other
applicable laws and regulations. Attached hereto as Exhibit C is Alkermes'
estimated timeline, requirements, and
10
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
costs for supplying Licensed Product for the Phase II and Phase III Clinical
Trials containing Licensed Product. Alkermes will provide, and the Parties will
agree upon, additions to Exhibit C for other clinical trials of Licensed
Products.
(B) Genentech shall pay Alkermes at an FTE rate, which will be
consistently applied, to be agreed upon at the beginning of each Alkermes fiscal
year by the JDC for Alkermes' cost of producing and supplying clinical material.
Alkermes shall provide an invoice to Genentech at the end of each quarter in
which it provides Licensed Product for clinical use which sets forth in
reasonable detail the amount of Licensed Product supplied and the calculation of
such cost. Alkermes shall only ship to Genentech and invoice Genentech for
amounts of Licensed Product ordered pursuant to binding purchase orders.
Genentech shall pay such invoices within thirty (30) days of receipt.
4.3 SCALE-UP OF THE MANUFACTURING PROCESS BY ALKERMES.
(A) Alkermes shall be responsible for, and shall use its commercially
reasonable efforts to, scale up the process for producing Licensed Product for
both clinical and (unless Genentech manufactures commercial Licensed Product
pursuant to Section 5) commercial requirements provided that Genentech supplies
sufficient quantities of human growth hormone (at Genentech's expense) to enable
Alkermes to do so. Exhibit C attached hereto sets forth the anticipated
timeline, requirements and costs for scaling-up the manufacturing process for
making Licensed Product for clinical and commercial use to treat pediatric GHD.
Genentech shall not be responsible for any of Alkermes' capital cost of its
facilities except as otherwise set forth in Exhibit C or approved by the JDC for
the facility in which commercial Licensed Product is to be manufactured. The
Parties will prepare and agree upon a separate document setting forth the
anticipated timeline, requirements and costs for scaling-up the manufacturing
process for other applications of the Licensed Product.
(B) Genentech will reimburse the costs incurred by Alkermes pursuant
to Section 4.3(a) above at Alkermes' actual cost of performing the obligations
set forth in that section, as determined by Alkermes in accordance with an FTE
rate established as set forth above as consistently applied by Alkermes.
Alkermes shall submit a reasonably detailed invoice to Genentech at the end of
each quarter during which it incurs costs under Section 4.3(a) setting forth
activities completed and costs for such activities, which shall be reasonably in
accordance with amounts previously agreed upon by the JDC for such activities.
Genentech shall reimburse Alkermes' costs within thirty (30) days of receiving
each invoice.
11
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
5. MANUFACTURE OF LICENSED PRODUCT.
5.1 MANUFACTURE BY ALKERMES. Alkermes shall be responsible for, and shall
use its commercially reasonable efforts to, supply all clinical and commercial
requirements of Licensed Product in either final vial form or bulk form as
agreed upon by the Parties. The provisions governing production of material for
clinical trials are set forth in Section 4.2. The provisions governing the
production of commercial material shall be set forth in a Supply Agreement
entered into by the Parties on or before the completion of the first Phase III
Clinical Trial. The price of supply of commercial material in the Supply
Agreement will be a purchase price per vial (or similar quantity) of [xxxx] of
the gross invoiced sales price per vial (or similar quantity) used in the
calculation of Net Sales less the deductions used in the calculation of Net
Sales. Prior to Commercial Introduction, the purchase price will be based on the
expected gross invoiced sales price and expected deductions upon Commercial
Introduction. If Alkermes supplies only bulk product in this situation,
Genentech shall be entitled to deduct its Fully Burdened Manufacturing Cost of
filling and finishing Licensed Product from the amount otherwise payable to
Alkermes. Genentech will supply the necessary amount of growth hormone free-of-
charge to enable Alkermes to fulfill its supply obligations. Alkermes will
permit Genentech representatives to review periodically Alkermes' quality
control procedures and records, and to visit Alkermes' facilities, upon prior
written notice to Alkermes and at reasonable times for quality assurance
purposes.
5.2 MANUFACTURE BY GENENTECH. If in Genentech's reasonable opinion,
Alkermes is unable to manufacture all clinical and commercial quantities of
Licensed Product, Alkermes shall transfer to and fully enable Genentech with the
then most current version of all materials, regulatory filings, know-how,
reagents and expertise necessary for Genentech to undertake the manufacture of
Licensed Products. All transfers of materials and information to Genentech shall
be free of charge to Genentech if the transfer occurs due to a breach of this
Agreement by Alkermes. If the transfer occurs due to any other inability to
perform of Alkermes, Genentech shall reimburse Alkermes for all reasonable costs
of transfer of materials and information. Alkermes shall continue to manufacture
Licensed Product until, in Genentech's reasonable opinion, Genentech is fully
enabled to manufacture. Manufacture of Licensed Product may be done partially by
Alkermes and partially by Genentech in this situation. If that is the case, and
the situation is caused by a breach of this Agreement by Alkermes, the price
otherwise payable by Genentech to Alkermes under the provisions of Section 5.1
shall be reduced to [xxxxxxxx] of the gross invoiced sales price per vial (or
similar quantity) used in the calculation of Net Sales less the deductions used
in the calculation of Net Sales. Otherwise, the price otherwise payable will be
prorated based on the percentage of the total manufacture of Licensed Product
being done by each Party.
6. COMMERCIALIZATION. Genentech agrees to pursue a diligent sales and
marketing effort for a Licensed Product to be sold by Genentech relative to
other products of similar commercial potential that are being sold and marketed
by Genentech. A default by
12
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Genentech with respect to pursuing a diligent sales and marketing effort for a
Licensed Product in one country shall not constitute a default by Genentech with
respect to any other country.
7. REPRESENTATIONS AND WARRANTIES.
7.1 REPRESENTATIONS AND WARRANTIES OF ALKERMES. Alkermes hereby
represents and warrants that:
(A) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly authorized by all
appropriate Alkermes corporate action;
(B) this Agreement is a legal and valid obligation binding upon
Alkermes and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by Alkermes does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it is bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it;
(C) Alkermes has the right to grant the licenses granted in Section
2.1, and has no knowledge of any rights of any third parties that would
interfere with the practice of the Alkermes Technology by Genentech as
contemplated under this License Agreement; and
(D) to the best of its knowledge, Alkermes is not obligated under any
agreement as of the date hereof to pay any third party royalties with respect to
the Alkermes Technology;
7.2 REPRESENTATIONS AND WARRANTIES OF GENENTECH. Genentech represents and
warrants that:
(A) the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby have been duly authorized by all
appropriate Genentech corporate action;
(B) this Agreement is a legal and valid obligation binding upon
Genentech and enforceable in accordance with its terms. The execution, delivery
and performance of the Agreement by Genentech does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a party
or by which it is bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over it;
and
13
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(C) Genentech has the right to grant the license granted herein.
8. CONFIDENTIALITY.
8.1 DISCLOSED CONFIDENTIAL INFORMATION. In the course of performance of
this Agreement, one Party may disclose to the other or receive written
information from the other relating to the subject matter of this Agreement
which information, if so identified in writing either pursuant to this Section
8.1 or otherwise upon disclosure, shall be considered to be the disclosing
Party's "Disclosed Confidential Information." Each Party agrees that it will
take the same steps to protect the confidentiality of the other Party's
Disclosed Confidential Information as it takes to protect its own proprietary
and confidential information. Each Party shall protect and keep confidential and
shall not use, publish or otherwise disclose to any third party, except as
contemplated by this Agreement or with the other Party's written consent, the
other Party's Disclosed Confidential Information for a period of five (5) years
from the date of termination of this Agreement.
8.2 SHARED CONFIDENTIAL INFORMATION. In the course of performance of this
Agreement, the Parties may jointly develop, invent or discover information,
substances or processes, which shall be considered to the "Shared Confidential
Information" except as otherwise set forth in Section 9.6. Each Party agrees
that it will take the same steps to protect the confidentiality of the Shared
Confidential Information as it takes to protect its own proprietary and
confidential information. Each Party shall protect and keep confidential and
shall not publish or otherwise disclose to any third party, except as
contemplated by this Agreement or with the other Party's written consent, the
Shared Confidential Information for a period of five (5) years from the date of
termination of this Agreement. Each Party may, however, use any Shared
Confidential Information for any purpose; provided that such use shall not be
deemed a license or a grant of any additional right or license other than or in
addition to the right and license granted in Section 2 of this Agreement.
8.3 PERMITTED DISCLOSURE. In addition, each Party shall be entitled to
disclose, under a binder of confidentiality containing provisions as protective
as this Section 8, "Confidential Information," which shall include Disclosed
Confidential Information and Shared Confidential Information, to consultants and
other third parties for any purpose provided for in this Agreement. The Parties
shall consult prior to the submission of any manuscript for publication if the
publication will contain any Confidential Information of the other Party unless
the laws and regulations applicable to the third party submitting such
manuscript prohibit such consultation. Such consultation shall include providing
a copy of the proposed manuscript to the other Party at least sixty (60) days
prior to the proposed date of submission to a publisher, incorporating
appropriate changes proposed by the other Party into the manuscript submission
and deletion of all Confidential Information of which such Party does not agree
to the publication. The foregoing notwithstanding, Confidential Information may
be disclosed as a part of a patent application filed on inventions made under
14
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
this Agreement and during any official proceeding before a court or governmental
agency if reasonably related and necessary to that proceeding. For the purpose
of this Agreement, Confidential Information shall not include such information
that:
(i) was known to the receiving Party at the time of disclosure; or
(ii) was generally available to the public or was otherwise part of
the public domain at the time of disclosure or became generally available to the
public or otherwise part of the public domain after disclosure other than
through any act or omission of the receiving Party in breach of this Agreement;
or
(iii) became known to the receiving Party after disclosure from a
source that had a lawful right to disclose such information to others; or
(iv) was independently developed by the receiving Party where such
independent development can be established by written documentation.
8.4 INTEGRATION. This Section 8 supersedes any confidential disclosure
agreement between the Parties as to the subject matter hereof. Any confidential
information under any such agreement shall be treated as Confidential
Information hereunder.
9. TERM; TERMINATION.
9.1 TERM; TERMINATION AT FULL TERM. This Agreement shall commence as of
the Effective Date and, except as provided in the next sentence or unless sooner
terminated as provided hereunder, shall terminate on a country-by-country basis
on the later of (i) 10 years after Commercial Introduction in that country, or
(ii) the expiration of the last Valid Claim of an Alkermes Patent in that
country. Notwithstanding any termination at the full term of this Agreement,
which shall occur upon termination as described in the preceding sentence in
each country in the Territory, or termination as otherwise provided in this
Section 9, the provisions of Sections 8,10, 11 and 12 will not terminate on said
date but will continue in full effect. Upon termination of the royalty
obligations in any country, Genentech shall thereafter have in perpetuity a
fully paid up, royalty-free exclusive license in that country under the Alkermes
Technology to import, make, have made, use, offer for sale and sell Licensed
Products in the Field of Use without any accounting to Alkermes.
9.2 UNILATERAL TERMINATION. Genentech shall have the right following
thirty (30) days written notice to Alkermes to terminate this Agreement at any
time for any reason except for material breach by Alkermes, which shall be
governed by Section 9.3 hereof. In the event that a Licensed Product has
received Regulatory Approval and Alkermes is manufacturing such Licensed Product
for commercial sale, Genentech may so terminate this Agreement only after
providing six (6) months written notice. In any event, Alkermes shall
15
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
be reimbursed for any non-cancellable obligations it has incurred for which
Genentech would otherwise be obligated to pay if this Agreement had not been
terminated. If Genentech terminates this Agreement pursuant to this Section 9.2,
all rights granted hereunder by Alkermes to Genentech shall immediately revert
to Alkermes, neither Party shall have any further obligation to the other
hereunder except to the extent otherwise accrued under this Agreement, and no
amounts paid by Genentech to Alkermes hereunder shall be refunded. If
manufacturing technology has been transferred to Genentech by Alkermes other
than by reason of a material breach by Alkermes, then Genentech shall transfer
all such technology back to Alkermes, at Alkermes' expense. Genentech shall be
entitled to a complete refund of its [XXXX] milestone payment for mutual signing
of the Agreement pursuant to Section 3.1, and its [XXXX] milestone payment
pursuant to Section 3.6(a) (Event. no. 1), effective immediately in the event
Genentech provides written notice to Alkermes requesting such refund not later
than thirty (30) days after the Effective Date, based on the results of
Genentech's review, in its sole determination, of patents relating to the
Alkermes Technology, and Genentech has given written notice of termination of
this Agreement under this Section 9.2 at the same time. Genentech shall not be
entitled to any such refund if its written notice to Alkermes is not provided
within the deadline specified herein. Alkermes agrees to pay the full amount of
such refund to Genentech within five (5) days of receipt of such timely notice
from Genentech (if any).
9.3 BREACH. Failure by either Party to comply with any of the material
obligations contained in this Agreement shall entitle the other Party (the "Non-
Defaulting Party") to give to the Party (the "Defaulting Party") in default
written notice specifying the nature of the default and requiring it to make
good such default. If such default is not cured within ninety (90) days after
the receipt of such notice, the Non-Defaulting Party shall be entitled, without
prejudice to any of its other rights conferred on it by this Agreement, in
addition to any other remedies available to it by law or in equity, immediately
to terminate this Agreement by giving written notice to the Defaulting Party.
With respect to either party, a default with respect to its obligations in one
country shall not constitute a default with respect to its obligations in any
other country. The termination of this Agreement by Alkermes under this Section
9.3 shall terminate all rights granted to it hereunder. The right of a Party to
terminate this Agreement, as hereinafter provided, shall not be affected in any
way by its waiver or failure to take action with respect to any previous
default. Upon any termination by Genentech under this Section 9.3, the Parties
shall have the rights and obligations set forth in Section 9.7.
9.4 INSOLVENCY OR BANKRUPTCY. Either Party may, in addition to any other
remedies available to it by law or in equity, terminate this Agreement, by
written notice to the other Party in the event the other Party shall have become
insolvent or bankrupt, or shall have made an assignment for the benefit of its
creditors, or there shall have been appointed a trustee or receiver of the other
Party or for all or a substantial part of its property, or any case or
proceeding shall have been commenced or other action taken by or against the
other
16
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Party in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment of its debts or any other
relief under any bankruptcy, insolvency, reorganization or other similar act or
law of any jurisdiction now or hereafter in effect, or there shall have been
issued a warrant of attachment, execution, distraint or similar process against
any substantial part of the property of the other Party, and any such event
shall have continued for sixty (60) days undismissed, unbonded and undischarged.
9.5 ACCRUED RIGHTS. Termination, relinquishment or expiration of this
Agreement for any reason shall be without prejudice to any rights which shall
have accrued to the benefit of either Party prior to such termination or
expiration. Such termination, relinquishment or expiration shall not relieve
either Party from obligations which are expressly indicated to survive
termination or expiration of this Agreement.
9.6 OWNERSHIP OF CLINICAL DATA. All data produced as a result of clinical
trials conducted under this Agreement shall be owned by Genentech, except to the
extent in conflict with the requirements of any regulatory agency from which the
Parties have received, will apply to receive or have applied to receive
Regulatory Approval, and such ownership shall survive any expiration or
termination of this Agreement. Genentech shall be named as the applicant in any
regulatory submission to be made hereunder and shall be the holder of all
Regulatory Approvals. Alkermes may use such data for any purpose contemplated
by this Agreement. Such data shall be considered Disclosed Confidential
Information.
9.7 RIGHTS AND OBLIGATIONS UPON TERMINATION. In the event of termination
by Genentech for a material breach by Alkermes or upon expiration of this
Agreement, if Alkermes was previously manufacturing Licensed Product for
Genentech, Alkermes shall remain responsible for its supply obligations
hereunder until Alkermes has fully transferred and enabled Genentech or its
designee to perform all of Alkermes' supply obligations. Such transfer shall
include making its personnel and other resources reasonably available to
Genentech as necessary to effect an orderly transition of manufacture of
Licensed Product, with the costs of providing such personnel and resources to be
borne by Genentech, in the event of expiration, and by Alkermes, in the event of
termination by Genentech for material breach. Such transfer will take place, at
Genentech's option, at any time after expiration in any of the Major Market
Countries or the U.S. until expiration in the last country, in the event of
transfer due to expiration. In addition, Genentech shall thereafter have an
exclusive license in all countries after termination by Genentech for a material
breach by Alkermes for which it shall pay a [XXXX] royalty on Net Sales if
Alkermes had previously completed a Phase I/II Clinical Trial.
17
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
10. PATENT RIGHTS.
10.1 SOLE INVENTIONS. The Parties recognize that either Party may
independently and separately make inventions during the course of this Agreement
relating to human growth hormone, delivery systems for human growth hormone,
PLGA encapsulation of proteins or otherwise related to the scope of this
Agreement but not as a result of activities performed pursuant to this
Agreement. Each Party shall retain title to inventions and knowhow, whether or
not patentable, made or owned solely by it or on its behalf which do not arise
out of the activities performed by it or on its behalf under this Agreement
("Sole Knowhow"). In such event, the Party making the invention shall be the
sole owner of that invention and of any patent applications and patents thereon
(including inventor's certificates) and shall be solely responsible for the
filing, prosecution and maintenance of all such patent application and patents.
Except as provided in this Agreement, neither Party shall have any right to use
or license knowhow to which the other Party has sole title.
10.2 JOINT PATENTS. All inventions conceived or first reduced to practice
hereunder shall be jointly owned by Genentech and Alkermes. In addition, in the
event that it is determined, in accordance with applicable law, that both: (i)
employees or agents of Genentech or any other persons obliged to assign such
invention to Genentech, and (ii) employees or agents of Alkermes or any other
persons obliged to assign such invention to Alkermes, are joint inventors of an
invention, the Parties shall jointly own patents, inventor's certificates and
applications therefor covering such invention. With respect to any joint
invention or jointly-owned invention, Genentech shall prosecute all such patents
relating to Genentech Technology and Alkermes shall prosecute all such patents
relating to the Alkermes Technology. The party having such obligation to
prosecute will be referred to herein as the "Controlling Party". The
Controlling Party shall have the right (but not the obligation) to undertake
such filings, prosecutions and maintenance at its sole expense, provided that:
(a) the Controlling Party notifies the non-Controlling Party within one (1)
month after the filing of any patent application by the Controlling Party; (b)
the Controlling Party provides the non-Controlling Party promptly with copies of
all communications received from or filed in patent office(s) with respect to
such filings; and (c) the Controlling Party provides the non-Controlling Party,
a reasonable time prior to taking or failing to take any action that would
substantially affect the scope or validity of rights under any patent
applications or patents (including but not limited to substantially narrowing or
canceling any claim without reserving the right to file a continuing or
divisional application (which shall not be unreasonably delayed), abandoning any
patent or not filing or perfecting the filing of any patent application), with
notice of such proposed action or inaction so that the non-Controlling Party has
a reasonable opportunity to review and make comments. In the event that the
Controlling Party breaches the foregoing obligations regarding updating and
consultation and such breach is not cured within thirty (30) days of a written
notice from the non-Controlling Party to the Controlling Party describing such
breach, or in the event that the Controlling Party fails to undertake the filing
of a patent application (or continuing or divisional
18
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
application) within ninety (90) days of being designated as the Controlling
Party with respect to such patent application, the non-Controlling Party may
undertake such filing, prosecution and maintenance at its sole expense, in which
case such patent application and subsequently issued patent thereon shall be
owned solely by the non-Controlling Party. Notwithstanding the foregoing, the
Parties shall assist each other to the maximum extent reasonable in securing
intellectual property rights resulting from activities conducted hereunder. As
to enforcement of jointly-owned patents, including actions against an infringer,
the Parties shall consult with each other in good faith as to the best manner in
which to proceed. The Parties agree as a basic principle that in the case of
such actions against infringers, the expenses incurred and damages awarded shall
be for the account of the Party or Parties which take such actions to the extent
of their financial participation therein. Either Party may withdraw from or
abandon any jointly-owned patent or patent application, on reasonable prior
notice to the other providing a free-of-charge option to assume the prosecution
and/or maintenance thereof.
10.3 INFRINGEMENT CLAIMS RELATING TO GENENTECH TECHNOLOGY. Genentech
shall defend, at its sole cost and expense, any legal proceedings brought
against it or Alkermes claiming that Alkermes' manufacture of any Licensed
Product under this Agreement constitutes an infringement of third party patent
rights arising out of the use of Genentech Knowhow or the practice of Genentech
Patents, except to the extent that any such proceedings shall arise from the
gross negligence or willful misconduct of Alkermes and shall indemnify and hold
Alkermes harmless from any damages or expenses incurred or awarded as the result
of any settlement related thereto agreed to by Genentech or judgment against
Alkermes, provided that Alkermes gives Genentech written notice of any such
claim or the institution of any suit or suits against it within 30 days after
Alkermes has knowledge of any such claim or suit or suits, that Alkermes assist
Genentech, at Genentech's expense, in the investigation of, preparation for and
defense of any such claim or suit or suits, and that Alkermes not compromise or
settle any such claim or suit or suits without Genentech's written consent.
Alkermes' failure to notify Genentech of such claim or suit or suits within 30
days shall not obviate its right to receive indemnification hereunder so long as
such failure does not materially prejudice the defense of such claim or suit or
suits. Genentech shall promptly notify Alkermes in writing of the institution of
any suit by a third party against Genentech for patent infringement involving
the manufacture, use, sale, distribution or marketing of Licensed Product
arising out of the activities carried out pursuant to this Agreement.
10.4 INFRINGEMENT CLAIMS RELATING TO THE ALKERMES TECHNOLOGY. Alkermes
shall defend, at its sole cost and expense, any legal proceedings brought
against it or Genentech claiming that Alkermes' manufacture of any Licensed
Product or Genentech's manufacture, use, sale, distribution or marketing of
Licensed Product hereunder constitutes an infringement of third party patent
rights arising out of the use of Alkermes Knowhow or the practice of Alkermes
Patents, except to the extent that any such proceedings shall arise
19
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
from the gross negligence or willful misconduct of Genentech, and shall
indemnify and hold Genentech harmless from any damages or expenses incurred or
awarded as the result of any settlement related thereto agreed to by Alkermes or
judgment against Genentech, provided that Genentech gives Alkermes written
notice of any such claim or the institution of any suit or suits against it
within 30 days after Genentech has knowledge of any such claim or suit or suits,
that Genentech assist Alkermes, at Alkermes' expense, in the investigation of,
preparation for and defense of any such claim or suit or suits, and that
Genentech not compromise or settle any such claim or suit or suits without
Alkermes' written consent. Genentech's failure to notify Alkermes of such claim
or suit or suits within 30 days shall not obviate its right to receive
indemnification hereunder so long as such failure does not materially prejudice
the defense of such claim or suit or suits. Alkermes shall promptly notify
Genentech in writing of the institution of any suit by a third party against
Alkermes for patent infringement involving the manufacture, use, sale,
distribution or marketing of Licensed Product arising out of the activities
carried out pursuant to this Agreement.
10.5 SURVIVAL. This Section 10 shall survive the termination or
expiration of this Agreement.
11. INDEMNIFICATION.
(A) Genentech hereby agrees to save, defend and hold Alkermes and its
agents and employees harmless from and against any and all suits, claims,
actions, demands, liabilities, expenses and/or loss, including reasonable legal
expense and attorneys' fees ("Losses") except for patent claims handled under
Section 10, resulting directly from the marketing, packaging, testing, labeling,
manufacture, use, or sale of Licensed Products in the United States and the
Territory by Genentech, except to the extent such Losses result from the
negligence or willful misconduct of Alkermes.
(B) Alkermes hereby agrees to save, defend and hold Genentech and its
agents and employees harmless from and against any and all Losses except for
patent claims handled under Section 10, resulting directly from the manufacture
of Licensed Products by Alkermes, except to the extent such Losses result from
the negligence or willful misconduct of Genentech.
(C) In the event that one Party is seeking indemnification under this
Section 11 (the "Indemnified Party"), it shall inform the other Party (the
"Indemnifying Party") of a claim as soon as reasonably practicable after the
Indemnified Party 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.
20
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
(D) This Section 11 shall survive termination or expiration of this
Agreement.
12. MISCELLANEOUS PROVISIONS.
12.1 NO PARTNERSHIP. Nothing in this Agreement is intended or shall be
deemed to constitute a partnership, agency, distributorship, employer-employee
or joint venture relationship between the Parties. No Party shall incur any
debts or make any commitments for the other, except to the extent, if at all,
specifically provided herein.
12.2 ASSIGNMENTS. Neither Party shall assign any of its rights or
obligations hereunder except: (i) as incident to the merger, consolidation,
reorganization or acquisition of stock or assets affecting substantially all of
the assets or voting control of the assigning Party; (ii) to any wholly-owned
subsidiary if the assigning Party remains liable and responsible for the
performance and observance of all of the subsidiary's duties and obligations
hereunder; or (iii) with the consent of the other Party. This Agreement shall
be binding upon the successors and permitted assigns of the Parties, and the
name of a Party appearing herein shall be deemed to include the names of such
Party's successor's and permitted assigns to the extent necessary to carry out
the intent of this Agreement. Any assignment not in accordance with this
Section 12.2 shall be void.
12.3 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
12.4 NO TRADEMARK RIGHTS. Except as otherwise provided herein, no right,
express or implied, is granted by this Agreement to use in any manner the names
"Alkermes" or "Genentech" or any other trade name or trademark of Alkermes or
Genentech in connection with the performance of this Agreement.
12.5 PUBLIC ANNOUNCEMENTS. Except as may otherwise be required by law or
regulation, neither Party shall make any public announcement concerning this
Agreement or the subject matter hereof without the prior consent of the other
Party unless the nature of the information has been previously approved for
disclosure. If the nature of the information has been approved, this Section
12.5 will no longer apply to that information.
12.6 ADVERSE EVENT REPORTS. In order to comply with adverse event
reporting regulations of the FDA (as provided in Title 21 of the Code of Federal
Regulations) and other international regulatory agencies, each of Genentech and
Alkermes acknowledge that once the Parties hereunder are selling and/or
clinically testing in humans any Licensed Product they must report promptly to
each other the occurrence of adverse events regarding such products for timely
reporting to the FDA and other reporting agencies. The specific
21
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
terms of the adverse event data exchange between the appropriate parties shall
be set forth in a separate agreement and identify the departments responsible
for safety surveillance at each entity. The appropriate parties, which shall be
designated within three weeks of the Effective Date, shall begin negotiating
such agreement no less six months after the Effective Date.
12.7 ENTIRE AGREEMENT OF THE PARTIES; AMENDMENTS. This Agreement
constitutes and contains the entire understanding and agreement of the Parties
and cancels and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether verbal or written, between the Parties
respecting the subject matter hereof. No waiver, modification or amendment of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each of the Parties.
12.8 SEVERABILITY. In the event any one or more of the provisions of this
Agreement should for any reason be held by any court or authority having
jurisdiction over this Agreement or either of the parties to be invalid, illegal
or unenforceable, such provision or provisions shall be validly reformed to as
nearly as possible approximate the intent of the Parties and, if unreformable,
shall be divisible and deleted in such jurisdiction; elsewhere, this Agreement
shall not be affected so long as the Parties are still able to realize the
principal benefits bargained for in this Agreement.
12.9 CAPTIONS. The captions to this Agreement are for convenience only,
and are to be of no force or effect in construing or interpreting any of the
provisions of this Agreement.
12.10 APPLICABLE LAW. This Agreement shall be governed by and interpreted
in accordance with the laws of the State or California applicable to contracts
entered into and to be performed entirely within the State of California.
12.11 NOTICES AND DELIVERIES. Any notice, requests, delivery, approval or
consent required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been sufficiently given if delivered in
person, transmitted by telecopy with a confirming copy sent by overnight
courier, overnight courier, or registered mail to the Party to whom it is
directed at its address shown below or such other address as such party shall
have last given by notice to the other Party. Any such notice, requests,
delivery, approval or consent shall be deemed received on the date of telecopy
or hand delivery, one business day after deposit with an overnight courier, or 3
days after deposit of the registered mail with the U. S. postal service.
22
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
If to Alkermes, addressed to:
Alkermes Controlled Therapeutics, Inc.
64 Sidney Street
Cambridge, MA 02139
Attention: President
Telephone: (617) 494-0171
Telecopy: (617) 494-9255
If to Genentech, addressed to:
Genentech, Inc.
460 Point San Bruno Boulevard
South San Francisco, California 94080
Attention: Corporate Secretary
Telephone: (415) 225-1000
Telecopy: (415) 952-9881
12.12 PREVAILING PARTY. In the event of any dispute which results in a
suit or other legal proceeding to construe or enforce any provision of this
Agreement or because of an alleged breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the parties agree that
the prevailing party or parties (in addition to all other amounts and relief to
which such party or parties may be entitled) shall be entitled to recover
reasonable attorney's fees and other costs incurred in any action or proceeding.
12.13 COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.14 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by a Party and shall be able to
be relied fully on by the Parties.
23
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written, each copy of which shall for all purposes be deemed to be an original.
ALKERMES CONTROLLED THERAPEUTICS, INC. GENENTECH, INC.
BY: /s/ Michael J. Landine BY: /s/ Nicholas J. Drien
----------------------------- ------------------------------
TITLE: Vice President TITLE: Vice President
24
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT A: "ALKERMES PATENTS"
- ------------------------------
1. "Very Low Temperature Casting of Controlled Release Microspheres" US Patent
No. 5,019,400; issued May 28, 1991
2. "Process for Producing Small Particles of Biologically Active Molecules"
U.S.S.N. 07/345,684; filed May 1, 1989
3. "Production Scale Method of Forming Microparticles" U.S.S.N. 08/443,726;
filed May 18, 1995
4. "Controlled Release Growth Hormone Containing Microspheres" U.S.S.N.
07/984,323; filed December 2, 1992
5. "Composition for Sustained Release of Human Growth Hormone" U.S.S.N.
08/473,544 and 08/477,725; filed June 7, 1995
6. "Modulated Release from Biocompatible Polymers" U.S.S.N. 08/237,057; filed
May 3, 1994
7. "Method for Fabricating Polymer-Based Controlled Release Devices" U.S.S.N.
08/649,128; filed May 14, 1996
8. "Device for the Sustained Release of Aggregation-Stabilized, Biologically
Active Agent" U.S.S.N. 08/521,744 and 60/003,079; filed June 7, 1995
9. "Compositions and Methods for Controlling Release from Microparticles with
a Hydrophobic Material" U.S.S.N. not yet assigned; filed August 21, 1996
A-1
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT B: PROLEASE(R) - HGH CLINICAL PLAN
- -------------------------------------------
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
B-1
<PAGE>
THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS BRACKETED AND HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT C: PROLEASE-HGH DEVELOPMENT AND MANUFACTURING PLAN
- -----------------------------------------------------------
[xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx]
C-1
<PAGE>
EXHIBIT 99.1
64 Sidney Street
Cambridge
Massachusetts
02139-4136 USA
News Release
Alkermes
For Immediate Release
- ---------------------
ALKERMES ANNOUNCES NEW PROLEASE(R) COLLABORATION WITH
JOHNSON & JOHNSON
Third Major Agreement for ProLease Sustained Release
Drug Delivery System
Cambridge, MA, December 2, 1996 - Alkermes, Inc. (NASDAQ:ALKS) today announced
the signing of an agreement with R.W. Johnson Pharmaceutical Research Institute
(PRI), a division of Johnson & Johnson, for the development of ProLease
sustained release formulations of a PRI proprietary compound. The agreement
announced today builds upon the successful completion of a feasibility agreement
between the two parties entered into earlier this year. Funding to Alkermes for
this phase of the collaboration is expected to be approximately $20 million
assuming the development of the product candidate proceeds as planned.
The objective of the collaboration is to apply the ProLease drug delivery system
to a PRI proprietary compound being developed for the treatment of hormone
mediated disorders, enabling single injections of the compound to last for
several weeks. Pursuant to the agreement announced today, in exchange for
worldwide rights to products resulting from the collaboration, PRI will provide
Alkermes with development funding, milestone payments and royalty payments based
on sales. Alkermes is expected to manufacture the commercialized ProLease
products. PRI will be responsible for conducting clinical trials and securing
regulatory approvals and Ortho McNeil Pharmaceutical, together with its
affiliates, will be responsible for marketing of the products.
<PAGE>
Alkermes' ProLease drug delivery system enables the creation of injectable
sustained release formulations of fragile pharmaceutical compounds by
encapsulating them in microspheres made of common medical polymers. In addition
to its collaboration with PRI, Alkermes has announced collaborations for
ProLease product candidates with Genentech (for human growth hormone) and
Schering-Plough (for alpha interferon). Sustained release formulations of drugs
are designed to provide significant cost, safety and/or efficacy benefits to
patients and physicians by enabling single injections to last for days to weeks.
This is the latest collaboration for the development of injectable sustained
release products to be announced between Alkermes and Johnson & Johnson. In
May, 1996, Alkermes announced a collaboration with Janssen Pharmaceutica, a
subsidiary of Johnson & Johnson, for the development of a product based on
Alkermes' Medisorb(R) drug delivery system. On October 24, 1996, Alkermes
announced an expansion of this collaboration including further clinical trials
and scale up activities.
"Our collaboration with PRI adds another important product candidate to the
ProLease portfolio," said Richard F. Pops, Chief Executive Officer of Alkermes.
"With the successful completion of the feasibility phase of the program our
efforts are now shifting to more advanced product development activities in
preparation for human clinical trials, manufacturing scale-up and expected
product launch."
Alkermes is a leader in the development of products based on sophisticated drug
delivery technologies. Alkermes' focus is on two important drug delivery
opportunities: (i) controlled, sustained release of injectable drugs lasting
several days to several weeks, utilizing its ProLease and Medisorb technologies;
and (ii) the delivery of drugs into the brain past the blood-brain barrier,
utilizing its RMP-7/TM/ technology. In addition to its Cambridge, Massachusetts
headquarters, Alkermes operates a manufacturing facility in Ohio and a medical
office in Cambridge, England.
2
<PAGE>
The expected results stated above constitute forward-looking statements under
Federal securities laws. Consequently, actual results may differ materially
from expectations. Meaningful factors that may affect the realization of these
expected results include: (i) Alkermes and PRI could not be permitted by
regulatory authorities to undertake clinical trials for the product candidates;
(ii) product candidates could be ineffective or unsafe during clinical trials;
and (iii) technological change in the pharmaceutical industry could render the
product candidates obsolete or noncompetitive. For further discussion of
factors that may affect expected results, see Alkermes' Annual Report on Form
10-K for the fiscal year ended March 31, 1996.
Contact:
- --------
Richard F. Pops Press Relations: Investor Relations:
Chief Executive Officer Thomas A. Pearson Reagan Codner
Alkermes, Inc. Pearson Communications Burns McClellan
(617) 494-0171 (610) 995-9730 (212) 505-1919
3
<PAGE>
EXHIBIT 99.2
News Release
64 Sidney Street
Cambridge
Massachusetts
02139-4136 USA
Alkermes
For Immediate Release
- ---------------------
ALKERMES AND GENENTECH EXPAND COLLABORATION
TO DEVELOP PROLEASE(R) HUMAN GROWTH HORMONE
Multi-center U.S. pediatric clinical trial commences following
successful outcome of Phase I adult study
Cambridge, MA/South San Francisco, CA, November 14, 1996 -- Alkermes, Inc.
(NASDAQ: ALKS) and Genentech, Inc. (NYSE: GNE) announce today that based upon
the encouraging results of a recently completed Phase I clinical trial of
ProLease human growth hormone in adults, the parties have signed an expanded
collaboration agreement and started a multi-center Phase I/II clinical trial in
children with growth hormone deficiency. Assuming the development of the
product candidate proceeds as planned, funding to Alkermes for this phase of the
collaboration will support clinical manufacturing, process development and
clinical trials and is expected to be in excess of $20 million.
ProLease human growth hormone is a sustained release formulation of Genentech's
recombinant human growth hormone (hGH) based on Alkermes' ProLease injectable
sustained release drug delivery system. Genentech's hGH products, Protropin(R),
Nutropin(R), and Nutropin AQ/TM/, are approved for marketing in the United
States for the treatment of children with growth hormone deficiencies and growth
failure due to renal insufficiency. ProLease hGH is designed to reduce the need
for daily injections of hGH by encapsulating the drug in microspheres that, once
injected, slowly release hGH over a period of weeks.
"This phase of our collaboration with Alkermes will advance ProLease hGH into
expanded clinical trials," said William D. Young, Executive Vice President of
Genentech, Inc. "Genentech is committed to improving the lives of patients with
growth hormone deficiency and other growth disorders. We believe that Alkermes'
ProLease drug delivery system could offer important advantages for patients
receiving growth hormone therapy."
Pursuant to the joint development and commercialization agreement announced
today, Alkermes is scaling-up the manufacturing process and manufacturing
supplies of ProLease hGH to support
<PAGE>
clinical trials. In addition, Alkermes will conduct the clinical trails of
ProLease hGH in growth hormone deficient children, including the multi-center
Phase I/II clinical trial that was announced today.
The dose ranging Phase I/II clinical trial will test the safety,
pharmacokinetics and preliminary efficacy of multiple doses of ProLease hGH
administered to children with growth hormone deficiency.
"We believe that reducing the need for daily injections would greatly benefit
growth hormone deficient children, their parents and physicians," said Richard
F. Pops, Chief Executive Officer of Alkermes. "Genentech is a recognized leader
in the development and commercialization of hGH. The expansion of our
collaboration for ProLease hGH, and the commencement of this clinical trial, are
important milestones in the development of this product candidate."
The two companies announced the initial phase of their collaboration in January
1995. Pursuant to the agreement, Genentech provided $3.5 million of funding to
Alkermes to develop and test a ProLease formulation of hGH through adult Phase I
clinical trials. Upon the completion of the first clinical study, which
occurred in August 1996, Genentech had the option to proceed into an expanded
joint development and commercialization phase. After exercising this option
pursuant to the agreement announced today, Genentech has obtained a license to
Alkermes' ProLease technology for Genentech's hGH. In addition to the funding
described above, Alkermes could potentially receive from Genentech as much as
$10 million in milestone payments as well as manufacturing payments and
royalties based on product sales.
In a separate announcement, Alkermes today announced results from a Phase I
clinical trail of ProLease hGH which were presented today at the Second
International Meeting of the Growth Hormone Research Society in London, England.
Genentech is a leading biotechnology company that discovers, develops,
manufactures, and markets human pharmaceuticals for significant unmet medical
needs. The company has headquarters in South San Francisco, California and is
traded on the New York and Pacific Stock Exchanges under the symbol GNE.
Alkermes, Inc. develops products based on sophisticated drug delivery
technologies, Alkermes' focus is on two important drug delivery opportunities:
(1) controlled, sustained release of injectable drugs lasting several days to
several weeks; and (2) the delivery of drugs into the brain past the blood-brain
barrier. In addition to its Cambridge, Massachusetts headquarters, Alkermes
operates a manufacturing facility in Ohio and a medical affairs office in
Cambridge, England.
The expected results stated above constitute forward-looking statements under
Federal securities laws. Consequently, actual results may differ materially
from expectations. Meaningful factors that may affect the realization of these
expected results include: (i) Alkermes could not be
-more-
<PAGE>
permitted by regulatory authorities to undertake additional clinical trials for
the product candidates; (ii) product candidates could be ineffective or unsafe
during clinical trials; and (iii) technological change in the pharmaceutical
industry could render the product candidates obsolete or noncompetitive. For
further discussion of factors that may affect expected results, see Alkermes'
Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
###
Contact
- -------
Richard F. Pops Kathleen R. Rinehart
Chief Executive Officer Genentech, Inc.
Alkermes, Inc. (415)225-8681
(617) 494-0171
Press Relations: Thomas A. Pearson
Pearson Communications
(610) 407-9260
Investor Relations: Reagan Codner Susan Bentley
Burns McClellan Genentech, Inc.
(212) 505-1919 (415) 225-1034
